Flagstar Posts $200.3 Million Quarterly Loss

Flagstar Bancorp Inc. (FBC), the holding company for Flagstar Bank FSB, announced Friday it had posted a net loss of $200.3 million, or $2.40 per share, in the fourth quarter — up more than 300 percent from the third-quarter loss of $62.1 million.  Non-performing assets including real estate-owned and repurchased assets increased to $755.2 million at the end of the fourth quarter, up from $548.3 million at the end of the third quarter. Of these assets, non-performing residential first mortgage loans increased to $432.6 million, net of any FHA-insured assets, from the $304.8 million reported at the end of the previous quarter. Net charge-offs of loans were $24.3 million in the fourth quarter, up from $19.6 million in the third quarter and nearly double the $12.2 million in the fourth quarter of 2007. As a result, the company reported an allowance for loan losses of $376 million — or 4.14 percent of loans held for investment — compared with the $224 million allowance in the third quarter. The bank reported $5.4 billion in residential mortgage originations for the quarter, down more than 19 percent from $6.7 billion in third-quarter originations. Year-over-year figures paint a somewhat more optimistic picture for Flagstar’s mortgage banking operations, with the bank reporting $28.3 billion in total loan production for all of 2008, up 6 percent from $26.7 billion in all of 2007. The bank neared the end of a tough quarter with an announcement on Dec. 18 that private equity firm MatlinPatterson Thrift Investments LP would inject $250 million in Flagstar, taking a 70 percent stake in the Troy, Mich.-based bank. The bank also said in its earnings statement that it expected a total of $523 million in capital from outside sources including MatlinPatterson. Flagstar said it expected $5.32 million in private investments from management, as well as a $266.6 million infusion through the capital purchase vehicle of the Treasury Department’s Troubled Asset Relief Program. These transactions are expected to close Jan. 30, the bank said. Flagstar shares were trading at 66 cents, down more than 4.3 percent  at the time this story was published. Read the earnings report. Write to Diana Golobay at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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