TROY, Mich., July 27, 2010 /PRNewswire via COMTEX/ --
Flagstar Bancorp, Inc. (NYSE: FBC) (the "Company"), the holding company for Flagstar Bank FSB, today reported a second quarter 2010 net loss applicable to common stockholders of $(97.0) million, or $(0.63) per share (diluted) based on average shares outstanding of 153,298,000, as compared to a net loss of $(81.9) million, or $(1.05) per share (diluted) based on average shares outstanding of 77,699,000 for the first quarter 2010.
"Despite the loss for the quarter, we are encouraged by a number of positive results in our core business," said Joseph P. Campanelli, Chairman and Chief Executive Officer. "We experienced a 26% increase in mortgage originations, a 16% increase in gain on sale margin, a 2% increase in core deposits, an 8% increase in Bank net interest margin, and a 14% reduction in total delinquent loans from the prior quarter. We are also pleased with the 56% increase in pre-tax, pre-credit-cost income, to $55.7 million in the second quarter 2010, from $35.7 million in the first quarter of 2010. Further, we maintained historically high regulatory capital ratios, while continuing to make progress in transforming to a more diversified super community bank."
Campanelli further stated, "Our continued losses, largely as a result of legacy credit costs, indicate that we are operating in a challenging economic environment, but we are encouraged by the improvement in asset quality, as evidenced by declining delinquencies and a lower level of non-performing loans. Despite these improvements, we believe it is prudent to continue to maintain a cautious outlook with regard to economic conditions, as reflected in our allowance for loan losses coverage level."
For the six months ended June 30, 2010, the net loss applicable to common stockholders totaled $(178.9) million, or $(1.55) per share (diluted) based on average shares outstanding of 115,707,000, as compared to a net loss of $(144.0) million, or $(8.77) per share (diluted) based on average shares outstanding of 16,424,000 during the same period 2009.
Highlights from the quarter include:
Asset Quality
Non-performing assets decreased to $1.2 billion at June 30, 2010, from $1.3 billion at March 31, 2010. These assets include non-performing loans (i.e., loans 90 days or more past due, and matured loans), real estate owned and net repurchased assets, excluding any Federal Housing Agency (FHA)-insured assets. The decline reflects a reduction in the amount of non-performing loans, offset in part by an increase in real estate owned.
The allowance for loan losses at June 30, 2010 equaled 7.20% of loans held for investment and 52.3% of non-performing loans. The allowance for loan losses at March 31, 2010 equaled 7.10% of loans held for investment and 47.4% of non-performing loans. The allowance for loan losses decreased to $530.0 million at June 30, 2010, as compared to $538.0 million at March 31, 2010 as the result of a decline in the balance of delinquent loans in both residential first mortgage and commercial real estate loans during the second quarter of 2010.
Non-performing residential first mortgage loans decreased 6.5%, to $663.5 million at June 30, 2010, as compared to $709.4 million at March 31, 2010. The decrease reflects improvements of $7.3 million in the 90-120 day category, $26.3 million in the over 120 - day category, and $12.3 million in matured delinquent loans. Non-performing commercial real estate mortgages that are seriously delinquent decreased to $324.9 million at June 30, 2010 as compared to $395.8 million at March 31, 2010.
Real estate owned ("REO"), net of any FHA-insured assets, increased to $198.2 million at June 30, 2010 from $167.3 million at March 31, 2010. The increase was attributable primarily to increases in commercial REO as legacy loans cycle through the loss mitigation process.
Capital
At June 30, 2010, Flagstar Bank remained "well-capitalized" for regulatory purposes, with capital ratios of 9.24% for Tier 1 capital and 17.20% for total risk-based capital.
On April 1, 2010, MP Thrift Investments, L.P., the Company's majority shareholder, exercised its right to convert $50 million of trust preferred securities into 6.25 million shares of common stock.
On May 28, 2010, the Company effected a one-for-ten reverse stock split following stockholder approval at its annual meeting. All per share amounts and share counts herein reflect the reverse stock split.
Mortgage Banking Operations
Gain on loan sales increased to $64.3 million in the second quarter of 2010 as compared to $52.6 million for the first quarter 2010.
Loan production, substantially comprised of agency eligible residential first mortgage loans, increased to $5.5 billion for the second quarter 2010, as compared to $4.3 billion in the first quarter 2010. Interest rate lock commitments also increased, to $8.3 billion for the second quarter 2010 as compared to $6.1 billion during the first quarter 2010.
Gain on loan sales margins increased to 1.22% for the second quarter 2010, as compared to 1.05% for the first quarter 2010.
At June 30, 2010, our loans serviced for others increased to $50.4 billion and had a weighted average servicing fee of 32.4 basis points. This was an increase from $48.3 billion at March 31, 2010 with a weighted average servicing fee of 33.0 basis points
Net Interest Margin
Net interest margin for the Bank increased to 1.53% for the second quarter 2010 as compared to 1.42% for the first quarter 2010. The increase from first quarter 2010 reflects a $200 million increase in the average balance of earning assets and a 0.04% increase in yields, together with a transition of cash to higher-yielding liquid securities. Funding costs remained unchanged, with a slight decline in interest-bearing liabilities.
Net Interest Income
- Net interest income increased to $42.4 million as compared to $37.3 million during the first quarter 2010.
- Delinquencies on first mortgage loans held for investment declined between March 31, 2010 and June 30, 2010. Delinquent first mortgage loans (90 days and over) held for investment were $663.5 million at June 30, 2010 and $709.4 million at March 31, 2010. Despite the decline in delinquencies, provision for loan losses increased to $86.0 million as compared to $63.5 million for the first quarter of 2010. The increase in the provision reflects increases in rolling average historical loss rates on the residential portfolio, which resulted from higher charge-offs experienced in more recent periods. Application of these higher loss rates resulted in a $4.1 million increase in residential loan provisions. There was also a $16.9 million increase in commercial real estate loan provisions based primarily upon the accelerated disposition of non-performing assets, as well as updated collateral valuations on several loans.
Non Interest Income
- Non interest income increased to $100.3 million as compared to $ 72.0 million for the first quarter of 2010 and included the following components:
- Gain on loan sales increased to $64.3 million as compared to $52.6 million for the first quarter 2010, reflecting both the increase in interest rate locks on mortgage loans, to $8.3 billion in the second quarter 2010 from $6.1 billion in the first quarter 2010, and the increase in residential mortgage loan sales, to $5.3 billion as compared to $5.0 billion in the first quarter of 2010. Margin on loan sales also increased during the second quarter 2010 to 1.22% from 1.05% during the first quarter 2010.
- Loan fees, resulting from the origination of residential mortgage loans, increased to $20.2 million for the second quarter 2010 as compared to $16.3 million for the first quarter 2010. The increase in loan fees reflected the increase in originations to $5.5 billion during the second quarter 2010 as compared to $4.3 billion during the first quarter 2010.
- Net servicing revenue, which is the combination of net loan administration income and the related hedging effect of gain (loss) on trading securities, was $15.0 million as compared to $22.9 million for the first quarter 2010.
- Other fees and charges were $(6.5) million, as compared to $(22.3) million for the first quarter 2010, principally as the result of a $15.4 million decline in secondary market reserve provisions accrued for expected losses on loans repurchased from the secondary market.
Non Interest Expense
- Non interest expense increased to $149.0 million as compared to $123.3 million in the first quarter 2010.
- Compensation expense declined $9.9 million as the result of a reduction in salaried employees.
- Asset resolution expenses, which are expenses associated with foreclosed property and repurchased assets, increased to $45.4 million, as compared to $16.6 million in the first quarter of 2010. Of the $28.8 million increase, $17.9 million was related to write-downs based upon updated appraisals and pending offers ($14.2 million for commercial properties and $3.7 million for residential properties) in large part due to efforts to accelerate the disposition of nonperforming assets. Valuation allowances relating to servicing costs associated with bulk repurchases of government insured assets (i.e., FHA loans) increased $7.6 million and the remaining increase of $3.3 million was the result of additional foreclosure expenses on recently repurchased assets.
- Loss on the early extinguishment of debt increased to $9.0 million, including the $7.9 million expense associated with a prepayment of a $250 million advance from the Federal Home Loan Bank of Indianapolis that had an interest rate of 4.86% and a maturity of February 28, 2011. An additional $1.1 million of expense was incurred upon the early payoff of $310.6 million in repurchase agreements, which had an average interest rate of 3.05% and maturities during the third quarter 2010. No such repayments were made in the preceding quarter.
- The effect of the valuation of warrants during the quarter was income of $3.5 million, as compared to an expense of $1.2 million for the first quarter of 2010, reflecting the change in the value of the underlying common stock of the Company since the first quarter.
Assets
Total assets at June 30, 2010 were $13.7 billion as compared to $14.3 billion at March 31, 2010. The decrease reflected sales of trading securities and securities available for sale and the continued run-off of the Bank's legacy held-for-investment portfolio.
Funding Sources
Flagstar Bank's primary sources of funds are deposits obtained through its 162 community banking branches and the internet banking platform as well as deposits obtained from municipalities and investment banking firms. Funds are also obtained through loan repayments and sales of loans and securities in the ordinary course of business, advances from the Federal Home Loan Bank of Indianapolis (FHLB), community banking operations, customer escrow accounts and security repurchase agreements. The Bank uses several of these sources at any one time to manage its daily and forecasted liquidity needs to satisfy operational requirements and policy levels while managing overall net interest costs. Retail deposits were $5.2 billion at June 30, 2010, as compared to $5.1 billion at March 31, 2010 and $6.0 billion at June 30, 2009. At June 30, 2010, the Bank had a collateralized $4.0 billion line of credit with the FHLB with $244.5 million of remaining capacity.
Community Banking Operations
Flagstar Bank had 162 community banking branches at both June 30, 2010 and March 31, 2010, and 175 branches at June 30, 2009.
As Previously Announced
The Company's quarterly earnings conference call will be held on Wednesday, July 28, 2010 from 11am until noon (Eastern).
Questions for discussion at the conference call may be submitted in advance by e-mail to investors@flagstar.com or during the conference call.
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 (702) 696-4911 or toll free at (866) 294-1212, passcode: 87865836.
Flagstar Bancorp, with $13.7 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. At June 30, 2010, Flagstar operated 162 banking centers in Michigan, Indiana and Georgia and 22 home loan centers in 14 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 2010 2010 2009
---- ---- ----
Interest income $130,022 $126,206 $187,848
Interest expense (87,617) (88,523) (127,831)
------- ------- --------
Net interest income 42,405 37,683 60,017
Provision for loan
losses (86,019) (63,559) (125,662)
------- ------- --------
Net interest (loss)
income after provision (43,614) (25,876) (65,645)
Non-interest income
Deposit fees and
charges 8,798 8,413 7,984
Loan fees and charges 20,236 16,329 35,022
Loan administration (54,665) 26,150 41,853
Net (loss) gain on
trading securities 69,660 (3,312) (39,085)
Loss on residuals and
transferors' interest (4,312) (2,682) (3,400)
Net gain on loan sales 64,257 52,566 104,664
(Loss) gain on sales of
mortgage servicing
rights (1,266) (2,213) (2,544)
Net (loss) gain on sale
securities available
for sale 4,523 2,166 --
Impairment -securities
available for sale (391) (3,286) (327)
Other fees (loss)
income (6,509) (22,133) (9,630)
------ ------- ------
Total non-interest
income 100,331 71,998 134,537
Non-interest expenses
Compensation, benefits
and commissions (51,206) (61,081) (71,886)
Occupancy and equipment (15,903) (16,011) (17,499)
Asset resolution (45,439) (16,573) (17,977)
Federal insurance
premiums (10,640) (10,047) (16,612)
Warrant income
(expense) 3,486 (1,227) (12,977)
Loss on extinguishment
of debt (8,971) -- --
Other (4,480) (4,226) (5,982)
General and
administrative (15,982) (14,237) (29,135)
------- ------- -------
Total non-interest
expense (149,135) (123,403) (172,068)
Capitalized direct cost
of loan closing 102 61 250
--- --- ---
Total non-interest
expense after (149,033) (123,342) (171,818)
capitalized direct cost
of loan closing -------- -------- --------
Loss before federal
income tax and
preferred (92,316) (77,220) (102,926)
stock dividend
Benefit for federal
income taxes -- -- 31,261
--- --- ------
Net loss (92,316) (77,220) (71,665)
Preferred stock
dividends (4,690) (4,680) (4,921)
------ ------ ------
Net loss available to
common stockholders $(97,006) $(81,900) (76,586)
======== ======== =======
Basic loss per share $(0.63) $(1.05) $(3.20)
====== ====== ======
Diluted loss per share (0.63) $(1.05) $(3.20)
===== ====== ======
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-
continued 2010 2010 2009
---- ---- ----
Net interest spread -
Consolidated 1.47% 1.40 % 1.42%
Net interest margin -
Consolidated 1.45% 1.29 % 1.61%
Net interest spread - Bank
only 1.49% 1.45 % 1.45%
Net interest margin - Bank
only 1.53% 1.42 % 1.69%
Return on average assets (2.72)% (2.38)% (1.83%)
Return on average equity (34.72)% (41.02)% (33.30%)
Efficiency ratio 104.4% 112.5% 88.3%
Average interest earning
assets $11,573,413 $11,364,244 $14,888,480
Average interest paying
liabilities $11,641,804 $11,773,032 $14,106,978
Average stockholders' equity $1,117,686 $798,629 $920,025
Equity/assets ratio (average
for the period) 7.84% 5.80% 5.48%
Ratio of charge-offs to
average loans held for
investment 5.07% 2.65% 5.42%
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 2010 2009
---- ----
Interest income $256,228 $372,826
Interest expense (176,139) (256,079)
-------- --------
Net interest income 80,089 116,747
Provision for loan losses (149,579) (283,876)
-------- --------
Net interest (loss) income after
provision (69,490) (167,129)
Non-interest income
Deposit fees and charges 17,211 15,217
Loan fees and charges 36,565 67,944
Loan administration (28,515) 10,053
Net (loss) gain on trading
securities 66,348 (15,338)
Loss on residuals and
transferors' interest (6,994) (15,935)
Net gain on loan sales 116,823 300,358
(Loss) gain on sales of mortgage
servicing rights (3,479) (2,626)
Net gain on sale securities
available for sale 6,689 --
Impairment -securities available
for sale (3,677) (17,569)
Other (loss) income (28,642) (16,608)
------- -------
Total non-interest income 172,329 325,496
Non-interest expenses
Compensation, benefits and
commissions (112,288) (163,955)
Occupancy and equipment (31,914) (36,378)
Asset resolution (62,012) (42,850)
Federal insurance premiums (20,688) (20,848)
Warrant income (expense) 2,259 (24,005)
Loss on extinguishment of debt (8,971) --
Other (8,706) (11,207)
General and administrative (30,219) (55,776)
------- -------
Total non-interest expense (272,539) (355,019)
Capitalized direct cost of loan
closing 163 534
--- ---
Total non-interest expense after (272,376) 354,487
capitalized direct cost of loan
closing -------- -------
Loss before federal income tax
and preferred (169,537) (196,120)
stock dividend
Benefit for federal income taxes -- 59,957
--- ------
Net loss (169,537) (136,163)
Preferred stock dividends (9,369) (7,841)
------ ------
Net loss available to common
stockholders $(178,906) $(144,004)
========= =========
Basic loss per share $(1.55) $(8.77)
====== ======
Diluted loss per share $(1.55) $(8.77)
====== ======
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-continued 2010 2009
---- ----
Net interest spread - Consolidated 1.44% 1.50%
Net interest margin - Consolidated 1.37% 1.60%
Net interest spread - Bank only 1.47% 1.53%
Net interest margin - Bank only 1.48% 1.68%
Return on average assets (2.55)% (1.76)%
Return on average equity (37.31)% (33.45)%
Efficiency ratio 107.9% 80.2%
Average interest earning assets $11,469,407 $14,460,094
Average interest paying liabilities $11,707,054 $14,063,565
Average stockholders' equity $959,039 $861,107
Equity/assets ratio (average for
the period) 6.84% 5.25%
Ratio of charge-offs to average
loans held for investment 5.42% 4.18%
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,
Statements of Financial
Condition: 2010 2010
---- ----
Total assets $13,693,830 $14,332,842
Securities classified as
trading 487,370 893,318
Securities classified as
available for sale 544,474 733,788
Loans available for sale 1,849,718 1,873,744
Loans available for investment,
net 6,835,817 7,042,679
Allowance for loan losses (530,000) (538,000)
Mortgage servicing rights 474,814 543,447
Deposits 8,254,046 8,145,679
FHLB advances 3,650,000 3,900,000
Repurchase agreements -- 108,000
Stockholders' equity 1,076,361 1,104,764
Other Financial and Statistical
Data:
Equity/assets ratio 7.86% 7.71%
Core capital ratio (bank only) 9.24% 9.39%
Total risk-based capital ratio
(bank only) 17.20% 17.98%
Book value per common share $5.28 $5.70
Shares outstanding at the
period ended 153,338 147,008
Average shares outstanding for
the period ended 115,707 77,699
(000's)
Average diluted shares
outstanding for the period 115,707 77,699
Ended (000's)
Loans serviced for others $50,385,208 $48,264,731
Weighted average service fee
(bps) 32.4 33.0
Value of mortgage servicing
rights 0.94% 1.12%
Allowance for loan losses to
non performing loans 52.3% 47.4 %
(bank only)
Allowance for loan losses to
loans held for 7.20%
investment (bank only) 7.10%
Non performing assets to total
assets (bank only) 9.06% 9.30%
Number of bank branches 162 162
Number of loan origination
centers 22 23
Number of employees (excluding
loan officers & 2,885 2,927
account executives)
Number of loan officers and
account executives 296 314
December
Summary of the Consolidated 31, June 30,
Statements of Financial
Condition: 2009 2009
---- ----
Total assets $14,013,331 $16,423,292
Securities classified as
trading 330,267 1,603,480
Securities classified as
available for sale 605,621 734,827
Loans available for sale 1,970,104 3,009,740
Loans available for investment,
net 7,190,308 7,943,849
Allowance for loan losses (524,000) (474,000)
Mortgage servicing rights 652,374 664,292
Deposits 8,778,469 9,470,673
FHLB advances 3,900,000 5,151,907
Repurchase agreements 108,000 108,000
Stockholders' equity 596,724 915,521
Other Financial and Statistical
Data:
Equity/assets ratio 4.26% 5.57%
Core capital ratio (bank only) 5.81% 7.19%
Total risk-based capital ratio
(bank only) 11.27% 13.67%
Book value per common share $7.00 $13.80
Shares outstanding at the
period ended 46,877 46,853
Average shares outstanding for
the period ended 31,766 16,424
(000's)
Average diluted shares
outstanding for the period 31,766 16,424
Ended (000's)
Loans serviced for others $56,521,902 $61,531,058
Weighted average service fee
(bps) 32.1 33.1
Value of mortgage servicing
rights 1.15% 1.07%
Allowance for loan losses to
non performing loans 48.9% 50.4%
(bank only)
Allowance for loan losses to
loans held for 6.79% 5.63%
investment (bank only)
Non performing assets to total
assets (bank only) 9.25% 6.67%
Number of bank branches 165 175
Number of loan origination
centers 23 45
Number of employees (excluding
loan officers & 3,075 3,290
account executives)
Number of loan officers and
account executives 336 457
Loans Held for Investment
(Dollars in thousands)
(unaudited)
Description June 30, 2010 March 31, 2010
----------- ------------- --------------
First mortgage
loans $4,614,822 62.7% $4,803,425 63.4 %
Second mortgage
loans 196,702 2.7 210,208 2.8
Commercial real
estate loans 1,439,324 19.5 1,555,163 20.5
Construction loans 13,003 0.2 15,544 0.2
Warehouse lending 702,455 9.5 576,719 7.6
Consumer loans 388,250 5.3 407,742 5.4
Non-real estate
commercial 11,261 0.1 11,878 0.1
------ --- ------ ---
Total loans held
for investment $7,365,817 100% $7,580,679 100.0%
December 31,
Description 2009 June 30, 2009
----------- ------------- -------------
First mortgage
loans $4,990,994 64.7% $5,529,395 65.7%
Second mortgage
loans 221,626 2.9 246,895 2.9
Commercial real
estate loans 1,600,271 20.7 1,692,052 20.1
Construction loans 16,642 0.2 36,599 0.4
Warehouse lending 448,567 5.8 383,368 4.6
Consumer loans 423,842 5.5 508,309 6.0
Non-real estate
commercial 12,366 0.2 21,231 0.3
------ --- ------ ---
Total loans held
for investment $7,714,308 100% $8,417,849 100.0%
Allowance for Loan Losses
(Dollars in thousands)
(unaudited)
For the Three Months Ended
--------------------------
June 30, March 31, June 30,
2010 2010 2009
---- ---- ----
Beginning Balance $(538,000) $(524,000) $(466,000)
Provision for losses (86,019) (63,559) (125,662)
Charge offs, net of
recoveries
First mortgage loans 45,012 29,021 30,395
Second mortgage loans 8,009 6,429 11,385
Commercial R/E loans 31,488 8,108 64,295
Construction loans 56 20 745
Warehouse 1,225 472 497
Consumer
HELOC 7,015 4,523 8,988
Other consumer loans 735 332 1,081
Other 479 654 276
--- --- ---
Charge-offs, net of
recoveries 94,019 49,559 117,662
------ ------ -------
Ending Balance $(530,000) $(538,000) $(474,000)
========= ========= =========
Allowance for Loan Losses
(Dollars in thousands)
(unaudited)
For the Six Months Ended
------------------------
June 30, June 30,
2010 2009
---- ----
Beginning Balance $(538,000) $(466,000)
Provision for losses (149,579) (283,876)
Charge offs, net of
recoveries
First mortgage loans 74,033 55,336
Second mortgage loans 14,438 23,988
Commercial R/E loans 39,596 86,928
Construction loans 76 1,501
Warehouse 1,697 497
Consumer
HELOC 11,538 15,115
Other consumer loans 1,067 1,759
Other 1,134 752
----- ---
Charge-offs, net of
recoveries 143,579 185,876
------- -------
Ending Balance $(530,000) $(474,000)
========= =========
Composition of Allowance for Loan Losses
As of June 30, 2010
(In thousands)
(unaudited)
-----------
General Specific
Description Reserves Reserves Total
----------- -------- --------- -----
First mortgage loans $249,929 $28,326 $278,255
Second mortgage loans 32,161 121 32,282
Commercial real estate
loans 46,264 120,626 166,890
Construction loans 1,891 103 1,994
Warehouse lending 3,358 1,338 4,696
Consumer loans 32,582 196 32,778
Non-real estate
commercial 900 1,992 2,892
Other and unallocated 10,213 - 10,213
------ --- ------
Total allowance for
loan losses $377,298 $152,702 $530,000
======== ======== ========
Loan Originations
(Dollars in thousands)
(unaudited)
For the Three Months Ended
--------------------------
June 30, March 31, June 30,
Loan type 2010 2010 2009
---- ---- ----
Residential
mortgage
loans $5,452,304 99.9% $4,330,388 99.8% $9,286,970 100.0%
Consumer loans 940 -- 621 -- 764 -
Commercial
loans 5,995 0.1 6,202 0.2 8,198 -
----- --- ----- --- ----- ---
Total loan
production $5,459,239 100.0% $4,337,211 100.0% $9,295,932 100.0%
========== ===== ========== ===== ========== =====
Loan Originations
(Dollars in thousands)
(unaudited)
For the Six Months Ended
------------------------
June 30, June 30,
Loan type 2010 2009
---- ----
Residential mortgage
loans $9,782,692 99.9% $18,786,714 99.9%
Consumer loans 1,561 -- 3,389 --
Commercial loans 12,197 0.1 25,600 0.1
------ --- ------ ---
Total loan production $9,796,450 100.0% $18,815,703 100.0%
========== ===== =========== =====
Gain on Loan Sales and Securitizations
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
--------------------------
June 30, March 31,
2010 2010
---- ----
Description (000's) bps (000's) bps
----------- ------- --- ------- ---
Valuation gain (loss):
Value of interest rate locks $33,075 63 $3,024 6
Value of forward sales (58,475) (111) (20,055) (40)
Fair value of loans AFS 103,643 197 59,077 118
LOCOM adjustments on loans
HFI (45) -- (88) --
--- --- --- ---
Total valuation gains 78,198 149 41,958 84
Sales gains (losses):
Marketing gains 29,473 55 29,946 59
Pair off losses (33,309) (63) (10,064) (20)
Sales adjustments (3,319) (6) (2,131) (4)
Provision for secondary
marketing reserve (6,786) (13) (7,143) (14)
------ --- ------ ---
Total sales (losses) gains (13,941) (27) 10,608 21
------- --- ------ ---
Net gain on loan sales and
securitizations $64,257 122 $52,566 105
======= === ======= ===
Total loan sales and
securitizations $5,259,830 $5,014,748
========== ==========
For the Three Months Ended
--------------------------
June 30,
2009
----
Description (000's) bps
----------- ------- ---
Valuation gain (loss):
Value of interest rate locks $(53,445) (54)
Value of forward sales 62,035 63
Fair value of loans AFS 20,388 20
LOCOM adjustments on loans
HFI (172) --
---- ---
Total valuation gains 28,806 29
Sales gains (losses):
Marketing gains 57,339 59
Pair off losses 30,949 31
Sales adjustments (5,300) (6)
Provision for secondary
marketing reserve (7,130) (7)
------ ---
Total sales (losses) gains (18,305) (19)
------- ---
Net gain on loan sales and
securitizations $104,664 106
======== ===
Total loan sales and
securitizations $9,878,035
==========
Gain on Loan Sales and Securitizations
(Dollars in thousands)
(Unaudited)
For the Six Months Ended
------------------------
June 30, June 30,
2010 2009
---- ----
Description (000's) bps (000's) bps
----------- ------- --- ------- ---
Valuation gain (loss):
Value of interest rate locks $36,099 35 $(49,413) (28)
Value of forward sales (78,530) (76) 64,719 37
Fair value of loans AFS 162,720 158 42,343 24
LOCOM adjustments on loans
HFI (133) -- (429) --
---- --- ---- ---
Total valuation gains 120,156 117 57,223 33
Sales gains:
Marketing gains 57,395 56 251,468 143
Pair off (losses) gains (43,373) (42) 10,203 6
Sales adjustments (3,426) (3) (7,604) (5)
Provision for secondary
marketing reserve (13,929) (14) (10,932) (6)
------- --- ------- ---
Total sales (losses) gains (3,333) (3) 243,135 138
------ --- ------- ---
Net gain on loan sales and
securitizations $116,823 114 $300,358 171
======== === ======== ===
Total loan sales and
securitizations $10,274,578 $17,577,097
=========== ===========
Asset Quality
(Dollars in thousands)
(Unaudited)
June 30, 2010 March 31, 2010
------------- --------------
% of % of
---- ----
Total Total
----- -----
Days delinquent Balance Balance
--------------- ------- -------
30 $112,694 1.5% $178,830 2.4%
60 83,046 1.1 95,258 1.3
90 + and matured
delinquent 1,013,829 13.8 1,136,205 14.9
--------- ---- --------- ----
Total $1,209,569 16.4% $1,410,293 18.6%
========== ==== ========== ====
Loans held for
investment $7,365,817 $7,580,679
December 31, 2009 June 30, 2009
----------------- -------------
% of
% of Total
---- -----
Total
-----
Days delinquent Balance Balance
--------------- ------- -------
30 $143.500 1.9% $158,303 1.9%
60 87,625 1.1 94,567 1.1
90 + and matured
delinquent 1,071,636 13.9 940,777 11.2
--------- ---- ------- ----
Total $1,302,761 16.9% $1,193,647 14.2%
========== ==== ========== ====
Loans held for
investment $7,714,308 $8,417,849
Non-Performing Loans and Assets
(Dollars in thousands)
(Unaudited)
June 30, March 31, December 31, June 30,
2010 2010 2009 2009
---- ---- ---- ----
Non-performing
loans $1,013,829 $1,136,205 $1,071,636 $940,777
Real estate owned 198,230 167,265 176,968 131,620
Net repurchased
assets/non-
performing assets 27,984 29,189 45,697 18,384
------ ------
Non-performing
assets $1,240,043 $1,332,659 $1,294,301 $1,090,781
========== ========== ========== ==========
Non-performing
loans as a
percentage of
loans held for
investment 13.76% 14.99% 13.89% 11.18%
Non-performing
assets as a
percentage of total
assets 9.06% 9.30% 9.25% 6.67%
Average Balances, Yields and Rates
(Dollars in thousands)
(unaudited)
For the Three Months Ended
--------------------------
June 30, 2010 March 31, 2010
------------- --------------
Annualized Annualized
Average Yield/ Average Yield/
Balance Rate Balance Rate
------- ---- ------- ----
Interest-
Earning
Assets:
Loans
available
for sale $1,675,502 5.00% $1,521,640 4.98%
Loans held
for
investment:
Mortgage
Loans 4,920,436 4.64 5,115,419 4.79
Commercial
Loans 2,101,113 4.72 1,956,926 4.89
Consumer
Loans 398,737 5.95 415,930 5.97
------- ---- ------- ----
Loans held
for
investment 7,420,286 4.73 7,488,275 4.88
Securities
classified
as
available
for sale 1,635,662 5.02 1,137,521 5.43
or trading
trading
Interest-
bearing
deposits 820,379 0.23 1,208,667 0.22
Other 3,584 0.14 8,141 0.03
----- ---- ----- ----
Total
interest-
earning
assets 11,573,413 4.49 11,364,244 4.45
Other assets 2,691,344 2,397,982
--------- ---------
Total assets $14,264,757 $13,762,226
=========== ===========
Interest-
Bearing
Liabilities:
Demand
deposits $388,402 0.57 $370,016 0.56
Savings
deposits 691,170 0.90 688,978 0.84
Money market
deposits 562,442 0.96 581,848 0.89
Certificates
of deposits 3,313,711 2.94 3,390,755 2.96
--------- ---- --------- ----
Total retail
deposits 4,955,725 2.24 5,031,597 2.26
Demand
deposits 392,054 0.48 291,901 0.38
Savings
deposits 68,722 0.59 77,233 0.48
Certificates
of deposits 245,702 0.81 273,685 0.76
------- ---- ------- ----
Total
government
deposits 706,478 0.60 642,819 0.55
Wholesale
deposits 1,628,940 3.14 1,790,434 2.95
--------- ---- --------- ----
Total
Deposits 7,291,143 2.28 7,464,849 2.28
FHLB
advances 3,891,758 4.34 3,900,000 4.35
Security
repurchase
agreements 210,268 3.05 108,000 4.33
Other 248,635 3.79 300,182 4.98
------- ---- ------- ----
Total
interest-
bearing
liabilities 11,641,804 3.02 11,773,031 3.05
Other
liabilities 1,505,267 1,190,566
Stockholders'
equity 1,117,686 798,629
--------- -------
Total
liabilities
and
stockholders
equity $14,264,757 $13,762,226
For the Three Months Ended
--------------------------
June 30, 2009
--------------
Annualized
Average Yield/
Balance Rate
------- ----
Interest-Earning Assets:
Loans available for sale $3,533,219 5.12%
Loans held for
investment:
Mortgage Loans 5,943,876 5.14
Commercial Loans 2,220,285 5.04
Consumer Loans 517,762 5.37
------- ----
Loans held for investment 8,681,923 5.14
Securities classified as
available for sale 2,402,234 5.11
or trading
trading
Interest-bearing
deposits 233,324 0.73
Other 37,780 0.01
------ ----
Total interest-earning
assets 14,888,480 5.05
Other assets 1,885,128
---------
Total assets $16,773,608
===========
Interest-Bearing
Liabilities:
Demand deposits $284,570 0.46
Savings deposits 503,216 1.55
Money market deposits 699,866 1.91
Certificates of deposits 4,001,652 4.07
--------- ----
Total retail deposits 5,489,304 3.38
Demand deposits 49,979 0.51
Savings deposits 83,780 0.80
Certificates of deposits 811,647 1.00
------- ----
Total government deposits 945,406 0.96
Wholesale deposits 1,955,966 4.56
--------- ----
Total Deposits 8,390,676 3.18
FHLB advances 5,359,076 4.29
Security repurchase
agreements 108,000 4.33
Other 249,226 4.56
------- ----
Total interest-bearing
liabilities 14,106,978 3.63
Other liabilities 1,746,605
Stockholders' equity 920,025
-------
Total liabilities and
stockholders equity $16,773,608
Average Balances, Yields and Rates
(Dollars in thousands)
(unaudited)
For the Six Months Ended June 30,
---------------------------------
2010 2009
---- ----
Annualized Annualized
Average Yield/ Average Yield/
Balance Rate Balance Rate
------- ---- ------- ----
Interest-Earning
Assets:
Loans available
for sale $1,598,996 4.99% $3,194,965 5.10%
Loans held for
investment
Mortgage Loans 5,017,389 4.72 6,072,875 5.30
Commercial Loans 2,029,418 4.80 2,285,394 5.16
Consumer Loans 407,286 5.96 526,944 5.31
------- ---- ------- ----
Loans held for
investment 7,454,093 4.81 8,885,113 5.28
Securities
classified as
available for
sale or 1,397,018 5.18 2,113,762 5.33
trading
Interest-bearing
deposits 1,013,450 0.22 229,652 1.13
Other 5,850 0.07 36,602 0.13
----- ---- ------ ----
Total interest-
earning assets 11,469,407 4.47 14,460,094 5.17
Other assets 2,545,473 1,942,661
--------- ---------
Total assets $14,014,880 $16,402,755
=========== ===========
Interest-Bearing
Liabilities:
Demand deposits $379,260 0.56 $277,957 0.52
Savings deposits 690,080 0.87 463,957 1.71
Money market
deposits 572,091 0.92 657,777 2.07
Certificates of
deposits 3,352,020 2.95 3,982,448 3.97
--------- ---- --------- ----
Total retail
deposits 4,993,451 2.25 5,382,139 3.37
Demand deposits 342,254 0.44 35,123 0.68
Savings deposits 72,954 0.53 82,025 0.96
Certificates of
deposits 259,616 0.78 907,166 1.83
------- ---- ------- ----
Total government
deposits 674,824 0.58 1,024,314 1.72
Wholesale deposits 1,709,241 3.04 1,985,111 3.59
--------- ---- --------- ----
Total Deposits 7,377,516 2.28 8,391,564 3.22
FHLB advances 3,895,856 4.34 5,315,056 4.33
Security
repurchase
agreements 159,416 3.48 108,000 4.33
Other 274,266 4.43 248,945 4.67
------- ---- ------- ----
Total interest-
bearing
liabilities 11,707,054 3.03 14,063,565 3.67
Other liabilities 1,348,787 1,478,083
Stockholders'
equity 959,039 861,107
------- -------
Total liabilities
and stockholders
equity $14,014,880 $16,402,755
For the Three Months Ended
--------------------------
March 31,
June, 2010 2010 June, 2009
---------- ---------- ----------
Loss before tax provision /
benefit $(92,163) $(77,220) $(102,926)
Add back:
Provision for loan losses 86,019 63,559 125,662
Asset resolution 45,439 16,573 17,977
Other than temporary
impairment on afs
investments 391 3,286 327
Secondary marketing reserve
provision 11,389 26,827 24,039
Write down of residual
interests 4,312 2,682 3,400
Reserve increase for
reinsurance 433 - 10,471
--- --- ------
Total credit-related-
costs: 147,983 112,927 181,876
------- ------- -------
Pre-tax, pre-credit-cost
income $55,667 $35,707 $78,950
======= ======= =======
Pre-tax, pre-credit-cost Income
(Non GAAP measure)
(Dollars in thousands)
(Unaudited)
For the Six Months Ended
------------------------
June, 2010 June, 2009
---------- ----------
Loss before tax provision / benefit $(169,537) $(196,120)
Add back:
Provision for loan losses 149,579 283,876
Asset resolution 62,012 42,850
Other than temporary impairment on
afs investments 3,677 17,569
Secondary marketing reserve
provision 38,216 38,669
Write down of residual interests 6,994 15,935
Reserve increase for reinsurance 433 20,901
--- ------
Total credit-related-costs: 260,911 419,800
------- -------
Pre-tax, pre-credit-cost income $91,374 $223,680
======= ========
SOURCE Flagstar Bancorp, Inc.
