Flagstar Bancorp Inc. in Troy, Mich., said its second-quarter loss expanded by 26% from a year earlier, to $97 million.

The $13.7 billion-asset company's net interest income totaled $42.4 million, up 12% from the first quarter, but down 30% from a year earlier.

The per-share loss was 63 cents. Analysts' estimates called for a 48-cent loss.

Flagstar cited higher-than-expected credit costs, reporting a loan-loss provision of $86 million. That was a 31% improvement from a year earlier but 36.5% higher than in the first quarter.

Although nonperforming assets remained high at $1.2 billion, they were down 7% from the first quarter.

Flagstar has been deeply affected by its exposure to mortgages and by the economic troubles in Michigan.

The most recent quarter was the first time the company reported a reduction in problem assets since the first quarter of 2007, when nonperforming assets totaled $159 million.

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