The chief executive officer of Flagstar Bancorp Inc., himself, is jointly running the bank’s mortgage banking business until a permanent replacement is found, the earnings report said.
During the first-three months of this year, income before income taxes came to $40 million, falling from $60 million in the first quarter of last year.
The Troy, Michigan-based financial institution revealed the performance details, in addition to other metrics, in its first-quarter 2017 earnings report.
On a quarter-over-quarter basis, income was off more mildly from $42 million in the fourth-quarter 2016.
Mortgage revenues, including gain on sale and return on mortgage servicing rights, were up $10 million, or 19 percent, from the fourth-quarter 2016. The improvement was the result of improved MSR returns and increased purchase financing that “largely offset lower refinance levels.”
“We had another good quarter with solid results, despite facing the headwinds of seasonality and higher interest rates in our mortgage business,” Flagstar Bancorp President and Chief Executive Officer Alessandro DiNello said in the report.
Mortgage originations dropped to $5.912 billion in the first-quarter 2017 from $8.573 billion three months earlier and $6.352 billion one year earlier.
The CEO said a recent pair of acquisitions support its position as a national mortgage industry leader.
One was Stearns Lending’s delegated correspondent business this year — making Flagstar No 4 in the channel and adding 190 new correspondent clients.
Flagstar reported a total of 1,600 third-party originators.
The other acquisition was the completion of a deal to purchase assets from retail originator Opes Advisors, which originated $3 billion last year. The acquisition is expected to increase its distributed retail channel.
Flagstar noted that there are no strategic mortgage business buyers of size. It said the industry is highly fragmented with aging individual ownership.
The bank-holding company will consider accretive transactions that will incrementally add to annual originations.
Mortgage rate lock commitments dipped to $7.4 billion from the $7.6 billion in the fourth quarter.
The report indicated that mortgage banking is currently being run by DiNello and Flagstar Chief Operating Officer Lee M. Smith until an executive search is completed to replace Leonard Israel II, who the company said in February was leaving.
Flagstar serviced 150,731 residential loans with an unpaid principal balance of $34.132 billion as of the end of March 2017.
The servicing portfolio was down from 162,514 loans serviced for $37.023 billion as of year-end 2016 but inflated versus 147,846 loans serviced for $31.906 serviced as of the same date in 2016. The latest date consisted of $26.763 billion in third-party servicing and $7.369 billion in loans in its investment portfolio.
Another $48.940 billion in mortgages were sub-serviced as of the most-recent date, reportedly making Flagstar the 8th-largest sub-servicer.
Mortgage servicing rights
had a capitalization rate of 1.10 percent, up from 1.07 percent at the end of last year and 1.06 percent at the same point last year.
DiNello said, “In the second quarter, we have entered into pending bulk sales of an additional $195 million of mortgage servicing rights under contract at a break-even price, including transaction costs. Flagstar has retained servicing on roughly two-thirds of the total MSR sale amount.”
Residential loan assets totaled $2.839 billion as of March 31, 2017. Holdings ascended from $2.770 billion in the fourth quarter but slipped from $2.905 billion in the first-quarter 2016. Included in last month’s total were $2.463 billion in first mortgages, $0.086 billion in second mortgages and $0.290 billion in home-equity lines of credit.
Commercial real estate loan holdings grew to $1.399 billion from $1.261 billion and have ballooned since they were just $0.851 billion as of March 31, 2016.
In addition, there
were $0.840 billion in warehouse lending loans, less than $1.237 billion at the end of the fourth quarter and $1.282 billion at the close of the first quarter of last year. Its fourth-quarter 2016 commitments were $3.006 billion, reportedly No. 9 among all warehouse lenders. JPMorgan Chase & Co. was No. 1 with $9.000 billion, and Wells Fargo & Co. was No. 2 with $5.777 billion.
Flagstar’s repurchase pipeline has been slashed to $6 million from $16 million as of March 31, 2016.
The quarter closed out with 2,948 full-time employees.
The payroll grew from 2,886 people at year-end 2016Â and 2,771 employees as of the end of the first-quarter 2016.
Branch count was unchanged from the last report at 99.
