Flagstar president and chief executive Michael Tierney pointed out that the bank has reported three consecutive profitable quarters.
“We are pleased to report fourth-quarter and full-year financial results that demonstrate continued performance improvement and sustainable profitability,” Tierney said.
Mortgage originations totaled $15.4 billion in the fourth quarter, up from $14.5 billion in the prior quarter and $10.2 billion a year ago.
Company executives noted that gain-on-sale margins fell to 1.53% in the fourth quarter from 2.42% in the third quarter, which sparked a lot of questions by equity analysts.
The bank posted a $239 million net gain on loan sales, compared to $334.4 million in the third quarter.
Servicing income totaled $25 million, up from $11.3 million in the third quarter.
Flagstar sold servicing rights on $13.8 billion of loans during the fourth quarter and recorded a net loss of $7.7 million on the sale.
Based in Troy, Mich., Flagstar is continuing to sell servicing to reduce its portfolio concentration. “We believe the market for mortgage servicing is becoming stronger as nonbank participants enter the market,” a Flagstar executive said.
The bank also benefited from lower provisions for repurchase demands. Provisioning fell to $25.2 million in the fourth quarter from $124.6 million in the third quarter.