Flagstar Bancorp in Troy, Mich., reported a third-quarter profit, as it originated more residential mortgages and recorded higher fee income.

The $12.5 billion-asset company swung to a profit of $47 million, or 69 cents per share, from a $28 million loss a year earlier. Last year's results included a $37.5 million penalty from the Consumer Financial Protection Bureau, related to its foreclosure activities. On a quarterly basis, Flagstar's net income rose 2.2%.

Fee income rose 51% to $128 million, compared to a year earlier, on a higher net gain on the sale of loans, and higher deposit service charges and loan administration income.

Net interest income rose 14% to $73 million, from a year earlier. Net total loans held for investment rose 37% to $5.3 billion. The net interest margin compressed 16 basis points to 2.75%.

Mortgage loans originated rose 9.6% to $7.9 billion.

Noninterest expense fell 27% to $131 million, on lower costs associated with compensation and commissions.

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