Flagstar Bancorp has released its first quarter of 2011 report, staing that compnay losses in Q1 2011 came in at $31.7 million, a marked year-over-year improvement when losses came in at $81.9 million for the first quarter of 2010. "We remain committed to continuing to derisk the balance sheet through opportunistic sale of assets," said Joseph Campanelli, Flagstar Bancorp chairman and chief executive officer. "During the first quarter, we sold $80.3 million non-performing residential first mortgage loans, which represents a vast majority of the loans which are moved to our available sale portfolio on our balance sheet. The $80.3 million in non-performing loans was essentially sold at the carrying value so there is no material effect on our profit and loss."
Flagstar formally launched its commercial banking initiative, adding several experienced and proven commercial banking executives to its leadership team during Q1. In addition, the liquidity Flagstar generated from sales of non-performing loans, seasonal pay-downs and reduced loan originations helps position the company to fund new commercial and industrial growth, while preserving its strong capital ratios.
"We reported first quarter net loss to common shareholders of approximately $32 million, as compared to $192 million loss in the fourth quarter of 2010 and then $82 million loss for the first quarter 2010," said Campanelli. "Our quarterly loss was an improvement from prior quarters and we believe we remain on track in meeting our primary goals and targets."
In the first quarter 2011, gain on loan sales was $50.2 million, as compared to $76.9 million for the fourth quarter 2010 and $52.6 million for the first quarter 2010. This reflects the decrease in interest rate lock commitments, a decrease in loan originations and a decline in margin. Gain on loan sale margins decreased to 0.86 percent for the first quarter 2011, as compared to 0.89 percent for the fourth quarter 2010 and 1.05 percent for the first quarter 2010.
Mortgage rate lock commitments decreased to $5.5 billion during the first quarter 2011, as compared to $8.9 billion during the fourth quarter 2010 and $6.1 billion during the first quarter 2010. Loan originations, substantially comprised of agency-eligible residential first mortgage loans, decreased to $4.9 billion in the first quarter 2011, as compared to $9.2 billion in the fourth quarter 2010, but increased from $4.3 billion in the first quarter 2010. Loan sales for the first quarter of 2011 decreased to $5.8 billion, as compared to $8.6 billion for the fourth quarter 2010, but increased in comparison to $5.0 billion for the first quarter 2010.
At March 31, 2011, loans serviced for others totaled $59.6 billion and had a weighted average servicing fee of 30.2 basis points. This was an increase from $56.0 billion at Dec. 31, 2010, with a weighted average servicing fee of 30.8 basis points, and $48.3 billion at March 31, 2010 with a weighted average servicing fee of 33.0 basis points.
"As to rule of fall within the forecasted range is going to be largely a function of refinance activity in the residential mortgage business as that drives both the outstanding balance on our AFS portfolio as well as draws on our warehouse business," said Campanelli. "With respect to—we're reiterating our forecast of $21 billion to $25 billion of residential mortgage originations. Our first quarter production of $4.9 billion is slightly below that range on a run-rate basis, but as advance in the buying season, we believe that buying will pick up and our expertise proportionally large market position with FHA originations positions us well to capitalize more purchase business in upcoming months."