In a very challenging mortgage environment, Flagstar Bank, with a local branch on Niles Avenue in Southtown St. Joseph, says they were able to maintain market share and at the same time increase their gain on sale income during first quarter 2014.
Flagstar Bancorp, Inc, the holding company for Flagstar Bank reported a first quarter 2014 net loss applicable to common stockholders of $78.9-million, or $1.51 loss per share, as compared to net income of $160.5-million in the fourth quarter of 2013, or $2.77 earnings per diluted share, and net income of $22.2-million in the first quarter of 2013, or $0.33 earnings per diluted share. As a result, book value per common share decreased to $19.29 at March 31, 2014, as compared to $20.66 at December 31, 2013 and $16.46 a year earlier at March 31, 2013.
Sandro DiNello is President & CEO of Flagstar Bancorp. He says, "Our first quarter results were largely in-line with expectations except for our provision for loan losses and a one-time adjustment to our repurchased loans." He adds, "During the quarter, we made the determination to significantly bolster our loan loss reserve estimates which results in an increase to the loss coverage period from approximately 12 months to 18 months. As a result of this action, which was not driven by charge-offs, the allowance for loan losses increased to $307.0 million at March 31, 2014, from $207.0 million at December 31, 2013 and the ratio of allowance for loan losses to non-performing loans increased to 286.9 percent from 145.9 percent at December 31, 2013. Additionally, we recorded a $21.1 million reduction to the originally recorded fair value of loans that we repurchased from the GSEs and which were performing at that time."
Mr. DiNello continued, "In a very challenging mortgage environment, we were able to maintain our market share and at the same time increase our gain on sale income from $44.8 million in the fourth quarter 2013 to $45.3 million in the first quarter 2014, despite the industry-wide decline in mortgage production levels. Additionally, the Bank's net interest margin increased 125 basis points to 3.05 percent in the first quarter from a fourth quarter 2013 rate of 1.80 percent due primarily to the fourth quarter prepayment of our higher cost Federal Home Loan Bank advances. Furthermore, our continued focus on enhancing efficiency across the organization led to a reduction in noninterest expense as we completed the previously announced workforce reduction."
Mr. DiNello said this week, "We see significant opportunities to develop and nurture profitable consumer and business relationships as Michigan's leading community bank. We will continue to strengthen our mortgage platform and hope to achieve profitability in any mortgage environment and remain optimistic about the Company's future prospects."