A quarterly leap in mortgage originations at Flagstar Bancorp Inc. is set to repeat in the current quarter. But the primary mortgage servicing portfolio was reduced.
The Troy, Michigan-based financial institution reported in its second-quarter 2017 earnings report that it earned $60 million before income taxes.
While results weakened from $69 million in the same quarter last year, a significant improvement was made versus $40 million earned in the first-quarter 2017.
Mortgage revenues, including gain on sale and return on mortgage servicing rights, were up 16 percent, or $10 million, from the first quarter, when there was also a $10 million improvement.
An increase in mortgage revenues was led by a seasonal rise in originations as well as recent acquisitions. Flagstar acquired Stearns Lending’s delegated correspondent business this year and operational assets of retail originator Opes Advisors last year.
Flagstar President and Chief Executive Officer Alessandro DiNello explained Opes is being integrated smoothly.
“The division is helping us maintain revenue in a softer mortgage origination market,” he said. “Opes brings us more than double our pre-acquisition distributed retail origination volume and puts us now in a strong position for the move to a purchase mortgage market.”
From April 1 through June 30, Flagstar originated $9.198 billion in
first mortgages and home-equity loans. Business was substantially better than $5.912 billion in the first quarter and also more than $8.330 billion in the same three months last year.
Full first-half 2017 production came to $15.110 billion.
Second-quarter 2017 conventional share was half, government share was 26.1 percent and jumbo share was 23.9 percent. Refinance share was 40.2 percent,
thinning from 47.5 percent three months prior.
Third-quarter 2017 business is poised for a further ascension based on fallout-adjusted rate-lock commitments, which soared to $9.0 billion in the second quarter from just $6.0 billion as of March 31.
Flagstar said it had more than 1,000 correspondent clients and nearly 700 mortgage broker clients as of the most-recent quarter.
At the end of the first half of this year, Flagstar serviced
96,981 loans with an aggregate unpaid principal balance of $23.300 billion. The portfolio was slashed from 150,731 loans for $34.132 billion three months earlier and 163,786 loans for $35.822 billion one year earlier. Last month’s total consisted of $16.144 billion in third-party servicing and $7.156 billion in loans owned by Flagstar.
Most recently, another 304,830 loans were subserviced for $63.991 billion.
DiNello confirmed that the sale of mortgage servicing rights on $191 million in loans
has been closed. He previously discussed the potential sale in the first-quarter earnings report.
“We are the subservicer on approximately 85 percent of the MSRs we sold, providing a boost to our subservicing business and helping us to exceed over 400,000 accounts serviced or subserviced,” the CEO said. “Our MSRs now stand at 13 percent of our Tier 1 capital, positioning us well for the full phase-in of Basel III.”
The capitalized value of mortgage servicing rights
was 1.14 percent, more than 1.10 percent three months earlier.
Flagstar’s balance sheet included $2.997 billion in single-family assets, more than $2.839 billion at the conclusion of the first quarter and $2.548 billion midway through last year. The most-recent number was comprised of $2.538 billion in first mortgages and $0.459 billion in home-equity assets.
Warehouse lending assets were bolstered to $1.155 billion from $0.840 billion but are still less than $1.651 billion as of June 30, 2016. There were 270 warehouse relationships as of the latest date. Flagstar cited data indicating it was the 10th largest warehouse lender in the first quarter of this year.
Commercial real estate loans grew to $1.557 billion from $1.399 billion as of March 31, 2017, and $0.976 billion as of mid-2016.
Full-time employee count climbed to 3,432 from 2,948 at the end of March and 2,894 at the conclusion of June last year.
There were 99 bank branches as of last month, the same as at the end of the previous period. Mortgage retail locations numbered 85.
