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Joseph CampanelliThank you, Paul, and good morning everyone. I’d also like to welcome you to our first quarter 2012 earnings call. I’ll begin today with some high-level thoughts on our first quarter. After I finish my remarks, I’ll turn it back over to Paul, who will take us through a more detailed financial review, including the business driver outlook. Afterwards, Paul and I, along with the rest of the executive team, will be available to answer any questions you may have. During the first quarter, we continued to experience significant improvement across each of our business lines, specifically within the mortgage banking business, where we generated record revenues and anticipate gaining market share. Consistent with our business plan, we continue to use strong mortgage banking revenues to help fuel the growth in other lines of business, thus diversifying and lessening the volatility of our revenue streams over time. Our first quarter pre-tax, pre-credit cost revenue was $206.3 million or $.36 per share. As you can see on slide five, this is more than double the prior quarter level, and significantly higher than any other quarterly level in previous quarters. This revenue, however, was offset primarily by continued legacy credit costs, contributing to a net loss of $.02 per share for the quarter. Although we incurred substantial credit costs during the quarter, which I’ll provide more color on in just a moment, we remained well-capitalized with significant (inaudible) at the end of the period. We also experienced significant improvement in delinquent loan trends, as we continue our emphasis on putting challenges associated with the pre-2009 origination portfolio behind us. We believe our core business drivers are all moving in the right direction, with our continued emphasis on enhanced risk management and controlling credit costs, as well as the favorable underlying credit trends we experienced during the quarter. We still believe that we are on pace to return to profitability during 2012. This assumes that no material adverse changes in our expectations of economic and business trends.
Before I get into each of the business lines, I’d like to first discuss credit quality. For the quarter, credit-related costs totaled $213.6 million, as compared to $173.2 million in the fourth quarter. This increase was driven primarily by a $51.2 million increase in loan loss provision expense. Let’s first discuss the loan loss provision.The increase in provision expense from the prior quarter was driven by three key items. First, on our fourth quarter earnings call, we mentioned we would continue to enhance our loan loss model by incorporating more granular and segmented data. During the first quarter, we made refinements to both our allowance for loan losses and representation and warranty reserve models, inclusive of improved risk segmentation and quantitative analysis and modeling of the qualitative risk factors. We believe these are consistent with our ongoing risk assessment process, focused on the impacts of the current economic environment and related borrow repayment behavior on our credit performance, back testing and validation of the results of our qualitative modeling of the risk, in efforts to use better quality information. Such is consistent with the expectations of the bank’s primary regulator, in a continuing evolution of the performance dynamics within the mortgage banking industry. Part of the first quarter provision expenses are related to these refinements. Second, during the first quarter, we also eliminated our specific valuation allowance practice, to conform to regulatory guidance as we are now required to file an OCC quality report on a quarterly basis, beginning with the quarter ended March 31 st, 2012. Those specific reserves were charged off during the quarter, contributing in part to an increased provision expense. We expect that a portion of the first quarter provision relating to these items should not impact future quarters. Paul will address this further in his review of our outlook for our second quarter. Read the rest of this transcript for free on seekingalpha.com