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Annual Flagstar Production Doubles

Last year’s home-loan originations at Flagstar Bancorp Inc. more than doubled, and the third-party servicing portfolio was up 20 percent over the same period. The quarterly gain in residential production was far more subdued, while the servicing portfolio shrunk on a quarter-over-quarter basis.

Flagstar reported in its fourth-quarter financials that it originated $15.357 billion in residential first and second mortgages during the final three months of 2012.

Business improved from the third quarter, when fundings were $14.514 billion. In the same three months during 2011, the Troy, Mich.-based company originated $10.187 billion.

Refinances accounted for $12.441 billion of the latest activity, increasing from the previous three-month period’s $11.246 billion.

Overall fourth-quarter production brought full-year 2012 volume to $53.587 billion, leaping from the $26.613 billion originated during 2011.

After unloading servicing rights on $13.8 billion in mortgages, the third-party servicing portfolio landed at $76.821 billion. Mortgages serviced for others fell from $82.415 billion three months earlier but grew from $63.771 billion at the end of 2011.

Flagstar’s investment portfolio included $3.009 billion in residential loans, less than the $3.086 billion in home loans owned as of Sept. 30. The residential portfolio closed out the prior year at $3.750 billion.

Second mortgage assets were reduced to $0.115 billion from $0.122 billion and stood at $139 billion at the same point a year prior.

Another $0.179 billion in home-equity lines of credit were on the books. Flagstar cut HELOC holdings from $0.192 billion as of the end of the third quarter and $0.222 billion at the end of the fourth-quarter 2011.

Flagstar’s warehouse lending assets grew to $1.348 billion from $1.307 billion and were $1.174 billion at the same point in 2011.

At $0.689 billion, commercial real estate loans were down from $1.005 billion as of the close of September and $1.243 billion as of the end of 2011.

Total provisions for the representation and warranty reserve were slashed by 75 percent from the prior quarter to $33 million, while the total repurchase pipeline was cut by $201 million from the prior quarter to $224 million. The repurchase reserves were reduced to $193 million from the $202 million at the end of September.

Flagstar earned $72 million prior to income taxes, improving from $61 million in the third quarter and swinging from a $75 million fourth-quarter 2011 loss.

“With the recently announced sale of a substantial portion of Flagstar’s Northeast-based commercial loan portfolio, we are refocusing our business strategy on our national mortgage presence and our Michigan-based community banking model,” Flagstar Bancorp President and Chief Executive Officer Michael Tierney said in the report.

Flagstar finished last year with 334 loan originators and account executives, two fewer than as of Sept. 30 but more than 297 as of Dec. 31, 2011.

In addition, 3,328 people were on staff as of Dec. 31, 2012. The staff grew from 3,240 at the end of the prior quarter and 2,839 at the end of 2011.

There were 31 loan originations centers open as at the end of December the same as at the end of September but more than the 27 centers as of the end of the previous year.

Bank branch count was 111 as of the close of the fourth quarter, the same as at the close of the third quarter.

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