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During the call, we may also discuss non-GAAP measures regarding our financial performance. A reconciliation of these measures to like-GAAP measures is provided in a table to our press release which was issued last night as well in the appendix to our earnings call slides.With that, I would like to now turn the call over to Joseph Campanelli, our Chairman and chief Executive Officer. Joseph Campanelli Thank you, Paul, and good morning, everyone. I would also like to welcome everyone to our second quarter in 2012 earnings call. As usual, I would like to begin today with some general comments on the second quarter. After I finish my comments, I will turn it back over to Paul who will take us to a more detailed financial review including our outlook for the third quarter. Afterwards, Paul and I along with the rest of the executive team will be available to answer any questions you may have. I am extremely pleased to report that Flagstar Bank has returned to profitability, both for the second quarter and on a year-to-date basis consistent with the guidance we provided early in the year. This is a significant milestone along the path of our transformation. So it’s important that I take a moment to thank our leadership team and all the more than 3,000 employees whose hard work and dedication have helped us achieve this important accomplishment. I would also like to thank all of our customers, business partners and investors that continue to support us. Our results this quarter, which I will get into in a moment, reflects significant time, effort and commitment over the past several years, but I want to stress we recognize we still have a lot of work ahead of us. In fact, in many ways, we are still in the early phase of our transformation. Now that we have returned to profitability we will continue to execute on our business plan becoming a more diversified super-community bank, focused on key markets and businesses that we know and understand while continuing as a national leader in the residential mortgage business.
We have identified opportunities in our core businesses in mortgage to drive sustainable profitability and continue to invest in product development and risk and compliance infrastructure. Our relentless focus on eliminating inefficiencies and redundancies is a necessary part of our daily activities given the industry wide pressure on margins, lower consumer transaction fees and higher regulatory costs as Dodd-Frank becomes fully implemented.We fully believe the strong risk management and compliance functions of our core competency is necessary for any successful company. Finally, we continue to implement lasting innovative ways to better serve our customers, all with the overriding goal of generating value for our shareholders. Last night, we reported second quarter net income of $86 million or $0.15 per share. Through the first six months to 2012 we have earned $77.3 million or $0.13 per share. Our second quarter net income was one of the most profitable quarters in the history of our 25 years. Our quarterly net income also contributed to an increase in our Tier 1 capital ratio to 9.07% and total risk based capital ratio in excess of 17%. On an annualized basis, second quarter return on average assets was 2.37% and return on average equity was in excess of 31%.Book vale also increased by nearly 11% to $1.65 per share as compared to $1.49 per share in the prior quarter. We continue to maintain a deferred tax asset allowance of approximately $348.7 million or $0.62 per share which consistent with GAAP is not included in our $1.65 book value per share. Our second quarter results reflect the strong earnings power of our mortgage banking business with second quarter gain on loan sale income of $212 million or 166 basis points. Second quarter residential first mortgage originations were $12.5 billion and residential first mortgage rate locks remains strong at $17.5 billion. Read the rest of this transcript for free on seekingalpha.com