The stock price for Flagstar Bancorp Inc. was down nearly 10% in midday trading after the company reported a $97 million second quarter loss, compared with a first quarter loss of $82 million and a second quarter 2009 loss of $77 million.
In a statement, Joseph P. Campanelli, chairman and chief executive, blamed "legacy credit costs" for the poor performance.
The Troy, Mich.-based company took an $86 million provision for loan losses in the period, up from $64 million in the first quarter, but less than the $126 million provision taken in the second quarter of 2009.
Non-performing assets decreased during the quarter by approximately $100 million to $1.2 billion, with non-performing residential mortgage loans declining by 6.5% to $663.5 million.
Real estate owned increased by over $30 million to $198 million as legacy commercial real estate loans cycle through the loss mitigation process.
Asset resolution expenses increased from $16.6 million in the first quarter to $45.4 million in the second. Of the nearly $29 million increase, Flagstar said $18 million was related to write-downs of properties based on updated appraisals and pending offers ($14 million for commercial properties), as it looks to accelerate the disposition of nonperforming assets.
Residential mortgage loan production for the quarter was $5.5 billion, down from $9.3 billion for 2Q09.
