Flagstar Bancorp Inc. lost nearly $9 million in the first quarter, but that is an improvement over the loss of $78 million in the fourth quarter last year and $32 million in 1Q11. The Troy, Mich.-based company is predicting it will return to profitability sometime this year.
The first-quarter loss includes $115 million in loan loss provision expense as a result of refinements to the allowance for loan loss and representation and warranty reserve models; the new methodology is consistent with the approach taken by Flagstar's new primary regulator, the Office of the Comptroller of the Currency. There was a $61 million provision to the representation and warranty reserve in the period.
Offsetting the bad news, Flagstar chairman, president and CEO Joseph Campanelli said, was record mortgage banking revenue which offset the increased credit costs.
Flagstar had mortgage origination volume of $11.2 billion in the first quarter, up from $10.2 billion in the fourth quarter.
The company reported $205 million of gain-on-sale income, up from $107 million for 4Q11. Net servicing revenue for 1Q12 was $33 million, an increase of $4 million from the fourth quarter's $29 million.
