TROY, Mich., July 17 MI-FlagstarBanc-earns
TROY, Mich., July 17 /PRNewswire-FirstCall/ -- Flagstar Bancorp, Inc.
(NYSE: FBC), the holding company for Flagstar Bank FSB, today reported a 2008
second quarter net earnings of $15.7 million, or $0.22 per share (diluted).
On a linked-quarter basis, Flagstar had a net loss in the first quarter 2008
of ($10.6) million, or $(0.17) per share (diluted). On a prior year basis,
second quarter 2007 net earnings were $15.1 million, or $0.25 per share
(diluted). For the six months ended June 30, 2008, Flagstar's net earnings
were $5.1 million, or $0.08 per share (diluted), as compared to $22.9 million,
or $0.37 per share (diluted) for the same period 2007.
Return on equity and return on average assets for the second quarter 2008
were 8.39% and 0.41%, respectively, as compared to (5.93%) and (0.27%) for the
first quarter 2008 and 7.69% and 0.38% for the second quarter 2007. Return on
average equity and average assets for the six months ended June 30, 2008 were
1.43% and 0.07%, respectively, as compared to 5.79% and 0.29% for the six
months ended June 30, 2007.
Total assets at June 30, 2008 were $14.6 billion as compared to $15.9
billion at March 31, 2008 and $16.2 billion at June 30, 2007.
Net earnings for Second Quarter 2008
Net earnings for the second quarter 2008 reflected an increase in net
interest income before provision for loan losses to $61.3 million as compared
to $54.8 million for the first quarter 2008, an increase in loan
administration income to $37.4 million as compared to a loss of ($17.0)
million for the first quarter 2008, and a decline in the impairment of
residuals to $4.1 million as compared to $9.5 million for the first quarter
2008. The benefit of these changes was offset by an increase in the provision
for loan losses to $43.8 million from $34.3 million for the first quarter
2008, a decline in gain on loan sales to $43.8 million as compared to $63.4
million for the first quarter 2008, and a markdown in real estate owned of
$10.0 million as compared to $3.7 million for the first quarter 2008.
Net earnings for the Six Months ended June 30, 2008
Net earnings for the six months ended June 30, 2008 reflected an increase
in net interest income before provision for loan losses to $116.2 million as
compared to $103.9 million for the same period in 2007, an increase in loan
administration income to $20.3 million as compared to $4.2 million for the
same period in 2007, and an increase in gain on loan sales to $107.3 million
as compared to $53.3 million for the same 2007 period. The benefit of these
increases was offset by an increase in the provision for loan losses to $78.1
million as compared to $19.7 million for the same period in 2007 and an
impairment of residuals of $13.6 million as compared to no such impairment for
the same 2007 period.
Liquidity
Flagstar's primary sources of funds are deposits, loan repayments and
sales, advances from the Federal Home Loan Bank of Indianapolis (FHLB), cash
generated from operations, customer escrow accounts and security repurchase
agreements. Retail deposits were $5.0 billion at June 30, 2008, as compared
to $ 5.2 billion at March 31, 2008 and $4.9 billion at June 30, 2007. At June
30, 2008, Flagstar had a $7.5 billion line of credit with the FHLB, as to
which $1.8 billion remained available, and a $0.9 billion undrawn line of
credit at the Federal Reserve discount window.
Capital
At June 30, 2008, Flagstar Bank remained "well-capitalized" for regulatory
purposes, with capital ratios of 6.70% for core capital and 11.65% for total
risk-based capital. During the quarter ended June 30, 2008, Flagstar
completed its $100 million equity offering and invested $72 million of the net
proceeds into Flagstar Bank as capital.
Net Interest Margin
Flagstar Bank increased its net interest margin to 1.89% for the 2008
second quarter as compared to 1.66% for the first quarter 2008 and 1.43% for
the second quarter 2007. For the six months ended June 30, 2008, its net
interest margin was 1.77% as compared to 1.42% for the six months ended
June 30, 2007.
Retail Banking Operations
Flagstar Bank had 170 retail banking branches at June 30, 2008 as compared
to 167 branches at March 31, 2008 and 156 branches at June 30, 2007.
Mortgage Banking Operations
Loan production for second quarter 2008 increased 2.5% to $8.2 billion,
including $8.1 billion of residential loans, as compared to loan originations
of $8.0 billion, including $7.9 billion in residential loans, in first quarter
2008. Loan production increased 10.8%, as compared to loan originations of
$7.4 billion, including $7.2 billion of residential loans, in second quarter
of 2007.
For the six months ended June 30, 2008 loan production increased 22.7% to
$16.2 billion, including $15.9 billion of residential loans, as compared to
$13.2 billion, including $12.7 billion of residential loans, for the six
months ended June 30, 2007.
The gain on loan sales and securitization margin was 54 basis points for
the quarter ended June 30, 2008, as compared to 89 basis points for the first
quarter 2008 and 49 basis points for the second quarter 2007. The decline in
the second quarter 2008 was due principally to a $22.5 million mark down in
the value of loans transferred from the available-for-sale portfolio to the
held-for-investment portfolio. For the six months ended June 30, 2008, the
gain on sale margin increased to 70 basis points as compared to 48 basis
points for the same period in 2007.
At June 30, 2008, the unpaid principal balances of loans associated with
Flagstar's mortgage servicing rights portfolio totaled $45.8 billion and had a
weighted average service fee of 34.2 basis points. This was an increase from
$38.4 billion at March 31, 2008 with a weighted average servicing fee of 35.0
basis points and $21.5 billion at June 30, 2007 with an average weighted
servicing fee of 36.9 basis points.
Asset Quality
Non-performing assets, which include non-performing loans, real estate
owned and repurchased assets, increased to $462.4 million at June 30, 2008,
from $372.8 million at March 31, 2008 and $190.7 million at June 30, 2007.
Total non-performing loans net of any federally insured assets, which are
loans 90 days or more past due and matured loans, increased to $332.5 million
(3.66% of loans held for investment) at June 30, 2008 as compared to $253.4
million (2.96% of loans held for investment) at March 31, 2008 and $99.3
million (1.30% of loans held for investment) at June 30, 2007.
Of the non-performing assets, non-performing residential first mortgage
loans increased to $232.6 million, net of any federally insured assets, at
June 30, 2008, as compared to $172.6 million at March 31, 2008 and $74.2
million at June 30, 2007. Single-family residential first mortgage loans held
for investment at June 30, 2008 had an average original FICO credit score of
719 and an average original loan-to-value ratio of 73.8%. Non-performing
commercial real estate mortgages increased to $80.7 million at June 30, 2008
as compared to $72.7 million at March 31, 2008 and $21.2 million at June 30,
2007. Non-performing commercial real estate loans are individually evaluated
for impairment and may not require a specific loan loss reserve depending upon
the sufficiency of collateral or cash flows.
Real estate owned net of any federally insured assets, increased to $118.6
million at June 30, 2008 from $109.7 million at March 31, 2008 and $78.9
million at June 30, 2007. Repurchased assets were $11.3 million at June 30,
2008 as compared to $9.6 million at March 31, 2008 and $12.5 million at
June 30, 2007.
Net charge-offs of loans were $11.2 million for the second quarter 2008 as
compared to $16.9 million for the first quarter 2008 and $6.6 million for the
second quarter 2007. The provision for loan losses was $43.8 million for the
second quarter 2008 as compared to $34.3 million for the first quarter 2008
and $11.5 million for the second quarter 2007. As a result, the allowance for
loan losses increased to $154.0 million (1.69% of loans held for investment)
at June 30, 2008 as compared to $121.4 million (1.42% of loans held for
investment) at March 31, 2008 and $53.4 million (0.70% of loans held for
investment) at June 30, 2007.
As Previously Announced
The Company's quarterly earnings conference call will be held on Friday,
July 18, 2008 from 11 a.m. until 12 noon (Eastern).
Questions for discussion at the conference call may only be submitted in
advance by e-mail to investors@flagstar.com.
The conference call and accompanying slide presentation will be webcast
live on the Investor Relations section of the Company's Web site,
www.flagstar.com, with replays available at that site for at least 10 days.
To listen by telephone, please call at least 10 minutes prior to the start
of the conference call at (719) 325-4776 or toll free at (877) 718-5107,
passcode: 4748348.
Flagstar Bancorp, with $14.6 billion in total assets, is the largest
publicly held savings bank headquartered in the Midwest. At June 30, 2008,
Flagstar operated 170 banking centers in Michigan, Indiana and Georgia and 121
home loan centers in 26 states. Flagstar Bank originates loans nationwide and
is one of the leading originators of residential mortgage loans.
The information contained in this release is not intended as a
solicitation to buy Flagstar Bancorp, Inc. stock and is provided for general
information. This release contains certain statements that may constitute
"forward-looking statements" within the meaning of federal securities laws.
These forward-looking statements include statements about the Company's
beliefs, plans, objectives, goals, expectations, anticipations, estimates, and
intentions, that are subject to significant risks and uncertainties, and are
subject to change based upon various factors (some of which may be beyond the
Company's control). The words "may," "could," "should," "would," "believe,"
and similar expressions are intended to identify forward-looking statements.
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
For the Three Months Ended
Summary of Consolidated June 30, March 31, June 30,
Statements of Operations 20082008 2007
Interest income$200,564$210,853$ 222,464
Interest expense (139,165) (156,055)(172,547)
Net interest income61,399 54,798 49,917
Provision for loan losses (43,833)(34,262) (11,452)
Net interest income after
provision 17,566 20,536 38,465
Non-interest income
Loan fees and charges, net 617 884 837
Deposit fees and charges 6,815 6,0315,710
Loan administration 37,370(17,046)3,149
Net gain on loan sales and
securitizations 43,826 63,425 28,144
Net gain on investments
available for sale 4,869 -
(Loss) gain on MSR sales, net (834)2875,610
Unrealized loss on trading
securities-residuals(4,104) (9,482) -
Unrealized gain (loss) on
interest rate swaps984 (1,611) -
Other income 10,734 10,186 13,994
Total non-interest income 100,277 52,674 57,444
Non-interest expenses
Compensation and benefits (54,411)(56,626) (42,847)
Commissions (30,788)(29,316) (19,517)
Occupancy and equipment (20,471)(19,853) (17,038)
General and administrative (14,879) (8,827) (11,178)
Other(6,670) (6,850) (5,366)
Total non-interest expense (127,219) (121,472) (95,946)
Capitalized direct cost of
loan closing33,483 32,304
23,712
Total non-interest expense
after capitalized direct
cost of loan closing (93,736)(89,168) (72,234)
Earnings (loss) before federal
income tax24,107 (15,958) 23,675
Provision (benefit) for federal
income taxes (8,361) (5,359) (8,544)
Net earnings (loss) $15,746$(10,599) $15,131
Basic earnings (loss) per share $0.24 $ (0.18) $ 0.25
Diluted earnings (loss) per share $0.22 $ (0.17) $ 0.25
Dividends paid per common share N/A N/A $ 0.10
Dividend payout ratio N/A N/A 39.7%
Net interest spread - Consolidated 1.77% 1.48%1.27%
Net interest margin - Consolidated 1.80% 1.55%1.35%
Interest rate spread - Bank only 1.82% 1.61%1.30%
Net interest margin - Bank only 1.89% 1.66%1.43%
Return on average assets 0.41% (0.27)% 0.38%
Return on average equity 8.39% (5.93)% 7.69%
Efficiency ratio79.54% 82.97% 67.28%
Average interest earning assets $13,677,016 $14,183,297 $14,799,436
Average interest paying
liabilities $13,606,212 $14,007,106 $14,582,350
Average stockholders' equity $750,978$715,262 $786,768
Equity/assets ratio (average
for the period) 4.91% 4.48%4.99%
Ratio of charge-offs to average
loans held for investment 0.50% 0.80%0.36%
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
For the Six Months Ended
Summary of Consolidated June 30, June 30,
Statements of Operations 2008 2007
Interest income $411,417 $443,033
Interest expense (295,220) (339,141)
Net interest income 116,197103,892
Provision for loan losses (78,096) (19,745)
Net interest income after provision 38,101 84,147
Non-interest income
Loan fees and charges, net 1,501 2,644
Deposit fees and charges12,846 10,688
Loan administration 20,324 4,168
Net gain on loan sales and securitizations 107,252 53,298
Net gain on investments available for sale 4,869 -
(Loss) gain on MSR sales, net (547) 5,725
Impairment - securities available for sale -729
Unrealized loss on trading securities
- residential (13,586) -
Unrealized loss on swaps (627) -
Other income20,920 18,494
Total non-interest income152,952 95,746
Non-interest expenses
Compensation and benefits (111,037) (85,496)
Commissions(60,103) (34,822)
Occupancy and equipment(40,324) (33,824)
General and administrative (23,707) (23,366)
Other (13,520)(8,872)
Total non-interest expense (248,691) (186,380)
Capitalized direct cost of loan closing 65,786 42,340
Total non-interest expense after
capitalized direct cost of loan closing(182,905) (144,040)
Earnings before federal income tax 8,148 35,853
Provision for federal income taxes(3,002) (12,963)
Net earnings $ 5,146$22,890
Basic earnings per share $0.08 $ 0.37
Diluted earnings per share $0.08 $ 0.37
Dividends paid per common share N/A $ 0.20
Dividend payout ratioN/A 53.9%
Net interest spread - Consolidated 1.62% 1.21%
Net interest margin - Consolidated 1.66% 1.39%
Interest rate spread - Bank only1.67% 1.26%
Net interest margin - Bank only 1.77% 1.42%
Return on average assets0.07% 0.29%
Return on average equity1.43% 5.79%
Efficiency ratio 67.96% 72.09%
Average interest earning assets $13,983,160$14,795,867
Average interest paying liabilities $13,841,065$14,642,313
Average stockholders' equity$720,714 $790,410
Equity/assets ratio (average for the period)4.66% 4.93%
Ratio of charge-offs to average loans
held for investment0.64% 0.33%
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
Summary of the
Consolidated June 30,March 31, December 31, June 30,
Statements of
Financial Condition: 2008 2008 20072007
Total assets $14,605,993 $15,923,312 $15,792,736 $16,179,478
Mortgage backed
securities held
to maturity --1,255,431 1,069,350
Investment securities
available for sale 978,0332,364,0071,308,608 973,787
Loans held for sale2,706,3723,137,4103,511,310 5,110,768
Loans held for
investment, net 9,091,2638,452,6248,030,397 7,602,073
Allowance for loan
losses 154,000 121,400 104,000 53,400
Mortgage servicing
rights 661,819 497,875 413,986 266,545
Deposits 7,478,1888,427,8048,236,744 7,697,810
FHLB advances 5,736,0006,207,0006,301,000 5,529,055
Repurchase agreements108,000 108,000 108,000 1,705,418
Stockholders' equity 801,764 703,654 692,978 770,275
Other Financial and
Statistical Data:
Equity/assets ratio 5.49%4.42%4.39% 4.76%
Core capital ratio 6.70%5.64%5.78% 6.04%
Total risk-based
capital ratio 11.65% 10.47% 10.66% 10.96%
Book value per
common share $11.08 $11.66 $11.50 $12.78
Shares outstanding72,337 60,325 60,271 60,260
Average shares
outstanding 66,005 60,312 61,152 62,051
Average diluted
shares outstanding 71,746 60,753 61,509 62,552
Loans serviced
for others $45,830,865 $38,378,056 $32,487,337 $21,508,835
Weighted average
service fee (bps) 34.2 35.0 36.036.9
Value of mortgage
servicing rights 1.47%1.30%1.27% 1.24%
Allowance for loan
losses to non
performing loans 46.3%47.9%52.8% 53.8%
Allowance for loan
losses to loans
held for investment1.69%1.42%1.28% 0.70%
Non performing assets
to total assets3.17%2.34%1.90% 1.18%
Number of bank
branches170 167 164 156
Number of loan
origination centers 121 138 143 73
Number of employees
(excluding loan
officers & account
executives) 3,3893,1703,083 2,689
Number of loan
officers and
account executives 791 839 877 462
Loan Originations
(Dollars in millions)
(unaudited)
For the Three Months Ended
June 30,March 31,June 30,
Loan type 20082008 2007
Residential
mortgage loans $ 8,060 98.6% $7,860 98.1% $7,16296.5%
Consumer loans460.6490.6 110 1.5
Commercial loans 710.8 1011.3 150 2.0
Total loan
production $ 8,177 100.0% $8,010 100.0% $7,422 100.0%
For the Six Months Ended
June 30,June 30,
Loan type20082007
Residential
mortgage loans $15,920 98.4% $12,652 96.0%
Consumer loans950.6 2141.6
Commercial loans 1721.0 3092.4
Total loan
production $16,187 100.0% $13,175 100.0%
Gain (Loss) on Loan Sales and Securitizations
(Dollars in millions)
(unaudited)
For the Three Months Ended
June 30, March 31, June 30,
2008 2008 2007
Description (000's) bps(000's) bps(000's) bps
Gain on loan sales $107,234 132 $ 96,936 155$27,710 49
Hedging costs 6,044 7 9,09913 21,018 36
LOCOM adjustments (22,474) (28) (225)-(63) -
Provision to SMR (2,813) (3)(2,999) (4)(2,379) (4)
Credit losses(2,279) (3)(4,438) (6) (333) (1)
Loan level pricing
adjustments(46,027) (57) (31,519) (44) (16,616) (29)
Other transaction
costs (372)- (566) (1)(1,193) (2)
Net gain on loan
sales 39,31348 66,288 113 28,144 49
Net gain (loss)
on securitizations 4,513 6 (2,863) (24) --
Net gain on loan sales
and securitizations$43,82654 $ 63,42589$28,144 49
Total loan sales
and securitizations $8,106,544 $7,160,328 $5,730,633
For the Six Months Ended
June 30,June 30,
20082007
Description(000's) bps(000's) bps
Gain on loan sales$204,170 134$67,311 61
Hedging costs 15,143 10 22,778 20
LOCOM adjustments (22,699)(15) (89) -
Provision to SMR(5,812) (4)(4,542) (4)
Credit losses (6,717) (4) (800) (1)
Loan level pricing
adjustments (77,546)(51) (28,581) (26)
Other transaction
costs(938) (1)(2,779) (2)
Net gain on loan
sales 105,601 69 53,298 48
Net gain on
securitizations 1,650 1 --
Net gain on loan sales
and securitizations $107,251 70$53,298 48
Total loan sales
and securitizations $15,266,871$11,020,249
Loans Held for Investment
(Dollars in thousands)
(unaudited)
DescriptionJune 30, 2008 March 31, 2008
First mortgage
loans$6,042,770 66.5% $6,103,777 71.2%
Second mortgage
loans 294,7833.260,917 0.7
Commercial real
estate loans 1,706,191 18.8 1,641,686 19.1
Construction loans71,3450.877,035 0.9
Warehouse lending423,3564.7 347,908 4.1
Consumer loans 529,0345.8 318,694 3.7
Non-real estate
commercial 23,7830.224,007 0.3
Total loans held
for investment $9,091,262 100.0% $8,574,024100.0%
Description December 31, 2007June 30, 2007
First mortgage
loans$5,823,952 71.6% $5,542,471 72.4%
Second mortgage
loans56,5160.761,107 0.8
Commercial real
estate loans 1,542,104 19.0 1,381,552 18.0
Construction loans90,4011.182,301 1.1
Warehouse lending316,7193.9 267,740 3.5
Consumer loans 281,6313.4 302,047 3.9
Non-real estate
commercial 22,9590.318,255 0.3
Total loans held
for investment $8,134,282 100.0% $7,655,473100.0%
Deposit Portfolio
(Dollars in thousands)
(unaudited)
June 30, 2008March 31, 2008
Description Balance Rate BalanceRate
Demand deposits $ 455,523 0.65%$415,4110.76%
Savings deposits 441,017 2.39 329,9832.32
Money market deposits 544,390 2.47 541,3742.57
Certificates of deposits3,597,842 4.273,908,3984.77
Total retail deposits 5,038,772 3.585,195,1664.06
Company controlled
custodial deposits 587,655- 698,344 -
Municipal deposits/CDARS 893,901 3.011,508,6443.75
Wholesale deposits957,860 4.781,025,6504.76
Total deposits$7,478,188 3.39% $8,427,8043.75%
December 31, 2007 June 30, 2007
Description Balance Rate BalanceRate
Demand deposits $436,239 1.60%$404,8371.58%
Savings deposits 237,762 2.90 133,0991.48
Money market deposits 531,587 3.86 611,5064.19
Certificates of deposits3,870,828 4.993,756,7185.00
Total retail deposits 5,076,416 4.484,906,1604.52
Company controlled
custodial deposits 473,384- 369,861 -
Municipal deposits/CDARS1,545,395 5.041,540,1775.35
Wholesale deposits 1,141,549 4.64 881,6123.72
Total deposits$8,236,744 4.35% $7,697,8104.38%
Asset Quality
(Dollars in thousands)
(unaudited)
June 30, 2008March 31, 2008
% of % of
Days delinquent BalanceTotal Balance Total
30$95,310 19.1% $81,34321.2%
60 69,930 14.0 48,82312.7
90 + and Matured Delinquent 332,540 66.9 253,42366.1
Total$497,780100.0%$383,589 100.0%
Investment loans $9,091,262$8,574,024
December 31, 2007 June 30, 2007
% of % of
Days delinquent BalanceTotal Balance Total
30$59,811 18.3% $50,20227.9%
60 70,450 21.5 30,45116.9
90 + and Matured Delinquent 197,149 60.2 99,29855.2
Total$327,410100.0%$179,951 100.0%
Investment loans $8,134,282$7,655,473
Non-Performing Loans and Assets at
June 30, March 31, Dec. 31, June 30,
2008 2008 2007 2007
Non-performing loans $332,540 $253,423 $197,149 $ 99,298
Real estate owned 118,582109,74995,074 78,916
Repurchased assets/
non-performing assets 11,299 9,633 8,079 12,501
Non-performing assets$462,420 $372,805 $300,302 $190,715
Non-performing loans as
a percentage of investment loans3.66% 2.96% 2.42%1.30%
Non-performing assets as
a percentage of total assets3.17% 2.34% 1.90%1.18%
SOURCE Flagstar Bancorp, Inc.
