The net loss sustained by the bank during the current quarter includes $114.7m in loan loss provision expense as well as increased loan modification activity.
The net loss was also attributed by $60.5m in provisions pertaining to the representation and warranty reserve that reflected both charge-offs of certain loans previously sold into the secondary market, said the firm.
Flagstar chairman of the board, president and CEO Joseph Campanelli said the first quarter performance reflects continued improvement and revenue growth in each of its core businesses, driving the historically high level of pre-tax, pre-credit-cost revenue.
"Although we incurred substantial credit costs, we remained well-capitalized with significant liquidity, experienced significant improvements in delinquent loan trends, continued our emphasis on putting pre-2009 portfolio challenges behind us, and further aligned our loss models with a more conservative regulatory approach as we transitioned to a new primary regulator," Campanelli said.
For the quarter ended on 31 March 2012, its net interest income stood at $74.7m, comparatively flat against $75.9m during the fourth quarter of 2011, due to decline in average interest-earning assets.
Average interest-earning assets declined to $12.6bn in the first quarter 2012, versus $12.8bn in 2011, mainly due to decline in the average balances of residential first mortgage loans held-for-investment, reflecting continued pay downs, charge-offs and occasional loan sales among others.
As of 31 March 2012, Flagstar Bancorp owned $14bn in total assets and offers banking services through 113 branches in Michigan, 28 home loan centers in 13 states across the US, and a total of four commercial banking offices in Massachusetts, Connecticut and Rhode island.
