Flagstar Bancorp Inc., Troy, Mich., lost $45 million for the fourth quarter, which represents a vast improvement over the $192 million loss for the same period in 2010, attributing the results in part to "near-record revenues from our mortgage banking business."
For the full year 2011, the company lost $166 million, which is less than half of the $394 million loss posted for 2010.
The fourth quarter saw the company's mortgage banking operations post gain on sale income of $107 million, with a margin of 102 basis points; the margin was down from 153 basis points for the third quarter. For fourth quarter 2010, gain on sale was just $77 million.
Residential first-lien mortgage originations were $10.2 billion, up from $6.9 billion in the third quarter and $9.2 billion in the fourth quarter 2010.
Net servicing revenue for the fourth quarter was $29 million, up 71% over the third quarter. Flagstar said the increase was due to hedge positioning, reduced rate volatility and an increase in servicing fee income.
However, credit-related costs increased to $173 million from $112 million in the third quarter as Flagstar reported increases of $71 million in the allowance for loan losses and representations and warranty reserves.
Non-performing loans were $489 million as of Dec. 31, an increase of $44 million during the quarter. This consists of $32 million of residential first mortgage performing troubled debt restructurings, which must be classified as non-performing for six months following the modification date, and $9 million in commercial real estate non-performing loans.
Flagstar said that without those TDRs, the number of residential nonperforming loans was flat with the third quarter.
