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Flagstar Performance Better, Warehouse Assets Up

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Quarterly loan originations at Flagstar Bancorp Inc. jumped 28 percent and delinquency improved 220 basis points, though both metrics are worse when compared to the same time last year. Warehouse lending assets, however, have grown on a linked and year-over-year basis.

Flagstar reported today second-quarter residential originations of $5.5 billion, higher than $4.3 billion in the prior period. A year earlier, volume was $9.3 billion.

The Troy, Mich.-based corporation said loan production primarily consisted of agency-eligible residential first mortgages.

Less than $0.1 billion in commercial activity was reported in the most recent period.

New business appears headed even higher, with interest-rate lock commitments climbing to $8.3 billion from the first quarter’s $6.1 billion.

With a $50.4 billion third-party servicing portfolio, Flagstar increased the size of its portfolio from $48.3 billion on March 31. But loans serviced for investors still stand lower than $61.5 billion on June 30, 2009.

First-mortgage holdings fell to $4.6 billion from $4.8 billion at the end of the first quarter and had been $5.5 billion 12 months prior. Second-mortgage assets edged just below $0.2 billion from just above $0.2 billion in both prior periods.

Warehouse lending assets finished June at $0.7 billion, higher than $0.6 billion at the end of the previous quarter. Warehouse assets also grew from June 30, 2009, when the balance was $0.4 billion.

Commercial real estate loans landed at $1.4 billion, less than $1.6 billion on March 31.

On all of its investments, delinquency of at least 30 days improved to 16.4 percent as of June’s end from 18.6 percent at the end of the first quarter. The rate was still worse than 14.2 percent on June 30, 2009.

The gain on loan sales increased to $64 million from the first quarter’s $53 million. Gain-on-loan-sales margins improved to 1.22 percent from 1.05 percent three months earlier.

“We experienced a 26 percent increase in mortgage originations, a 16 percent increase in gain-on-sale margin, a 2 percent increase in core deposits, an 8 percent increase in bank net interest margin and a 14 percent reduction in total delinquent loans from the prior quarter,” Flagstar Chairman and Chief Executive Officer Joseph P. Campanelli boasted in the report — though he acknowledged that “continued losses, largely as a result of legacy credit costs, indicate that we are operating in a challenging economic environment.”

Earnings before taxes at Flagstar Bancorp Inc. were a $92 million loss, worse than the $77 million first-quarter loss but better than the $103 million loss in the second-quarter 2009.

Flagstar employed 296 loan officers and account executives as of the end of last month, down from 314 at the end of March and 457 on June 30, 2009. The number of loan origination centers operated by the company fell to 22 from 23 at the end of the first quarter.

Excluding LOs and AEs, headcount fell to 2,885 from 2,927 three months earlier and 3,290 a year earlier.

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