Flagstar's 1Q Earnings Dip

April 29, 2005
Text Size:

TROY — Flagstar Bancorp Inc. has announced that its fiscal 2005 first quarter profit has dropped 47 percent, to $17.2 million, from the year-ago quarter. Riding the tailwind of the refinancing boom of the past few years, first quarter 2004 produced net earnings of $37 million, compared to the $17.2 million reported Friday morning.

While the diluted per-share earnings of 31 cents falls within the company’s previously issued guidance of 30 cents to 45 cents, its position at the bottom of that range is a significant indicator that the refinance market — which drove earnings of 57 cents per share a year ago — may soon be in freefall.

The second-largest banking institution headquartered in Michigan, Flagstar operates 109 loan centers in 27 states and is one of the nation’s largest originators of residential mortgage loans.

Sales of mortgage loans dropped to $9.8 million from $32.1 million in the year-ago quarter. The company attributed the decrease to the $2.2 billion decrease in the amount of loans sold during the quarter and a decreasing sale margin. The gain on sale spread equaled 14 basis points vs. 44 basis points in the first quarter of 2004.

The company originated $7.1 billion in residential mortgage loans in the first quarter of 2005, compared to the $9.5 billion originated in the year-ago quarter.

In a related announcement, Flagstar Director and CFO Michael Carrie will retire on June 20. Carrie played a key role in helping the company’s assets grow from $150 million in 1993 to more than $14 billion today, Chairman Thomas Hammond said in a press release.

“His leadership and commitment to Flagstar helped us expand from a privately held, single-brand institution to a NYSE-traded company with 125 banking centers today,” Hammond said.

Some highlights of the quarter include: retail banking earned 98.2 percent of pretax earnings for the quarter; a sequential quarterly increase of 12 basis points in the net interest margin; a first quarter annualized balance sheet growth of 35 percent; a 9.2 percent increase of total assets to $14.3 billion; and the opening of Flagstar’s 123rd banking center.    

Editor's Picks

Comments powered by Disqus