Flagstar Reports 2010 Second Quarter Results
TROY, Mich., July 27 /PRNewswire-FirstCall/ -- 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 [email protected] 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. |
||||||
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 capitalized direct cost of loan closing |
(149,033) |
(123,342) |
(171,818) |
|||
Loss before federal income tax and preferred stock dividend |
(92,316) |
(77,220) |
(102,926) |
|||
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. |
||||||
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. |
|||||
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 capitalized direct cost of loan closing |
(272,376) |
354,487 |
|||
Loss before federal income tax and preferred stock dividend |
(169,537) |
(196,120) |
|||
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. |
||||
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 the Consolidated |
June 30, |
March 31, |
December 31, |
June 30, |
||||
Statements of Financial Condition: |
2010 |
2010 |
2009 |
2009 |
||||
Total assets |
$ 13,693,830 |
$ 14,332,842 |
$ 14,013,331 |
$ 16,423,292 |
||||
Securities classified as trading |
487,370 |
893,318 |
330,267 |
1,603,480 |
||||
Securities classified as available for sale |
544,474 |
733,788 |
605,621 |
734,827 |
||||
Loans available for sale |
1,849,718 |
1,873,744 |
1,970,104 |
3,009,740 |
||||
Loans available for investment, net |
6,835,817 |
7,042,679 |
7,190,308 |
7,943,849 |
||||
Allowance for loan losses |
(530,000) |
(538,000) |
(524,000) |
(474,000) |
||||
Mortgage servicing rights |
474,814 |
543,447 |
652,374 |
664,292 |
||||
Deposits |
8,254,046 |
8,145,679 |
8,778,469 |
9,470,673 |
||||
FHLB advances |
3,650,000 |
3,900,000 |
3,900,000 |
5,151,907 |
||||
Repurchase agreements |
-- |
108,000 |
108,000 |
108,000 |
||||
Stockholders' equity |
1,076,361 |
1,104,764 |
596,724 |
915,521 |
||||
Other Financial and Statistical Data: |
||||||||
Equity/assets ratio |
7.86% |
7.71% |
4.26% |
5.57% |
||||
Core capital ratio (bank only) |
9.24% |
9.39% |
5.81% |
7.19% |
||||
Total risk-based capital ratio (bank only) |
17.20% |
17.98% |
11.27% |
13.67% |
||||
Book value per common share |
$ 5.28 |
$ 5.70 |
$ 7.00 |
$ 13.80 |
||||
Shares outstanding at the period ended |
153,338 |
147,008 |
46,877 |
46,853 |
||||
Average shares outstanding for the period ended |
115,707 |
77,699 |
31,766 |
16,424 |
||||
Average diluted shares outstanding for the period |
115,707 |
77,699 |
31,766 |
16,424 |
||||
Loans serviced for others |
$ 50,385,208 |
$ 48,264,731 |
$ 56,521,902 |
$ 61,531,058 |
||||
Weighted average service fee (bps) |
32.4 |
33.0 |
32.1 |
33.1 |
||||
Value of mortgage servicing rights |
0.94% |
1.12% |
1.15% |
1.07% |
||||
Allowance for loan losses to non performing loans |
52.3% |
47.4 % |
48.9% |
50.4% |
||||
Allowance for loan losses to loans held for |
7.20% |
7.10% |
6.79% |
5.63% |
||||
Non performing assets to total assets (bank only) |
9.06% |
9.30% |
9.25% |
6.67% |
||||
Number of bank branches |
162 |
162 |
165 |
175 |
||||
Number of loan origination centers |
22 |
23 |
23 |
45 |
||||
Number of employees (excluding loan officers & |
2,885 |
2,927 |
3,075 |
3,290 |
||||
Number of loan officers and account executives |
296 |
314 |
336 |
457 |
||||
Loans Held for Investment |
|||||||||
Description |
June 30, 2010 |
March 31, 2010 |
December 31, 2009 |
June 30, 2009 |
|||||
First mortgage loans |
$ 4,614,822 |
62.7% |
$ 4,803,425 |
63.4 % |
$ 4,990,994 |
64.7% |
$ 5,529,395 |
65.7% |
|
Second mortgage loans |
196,702 |
2.7 |
210,208 |
2.8 |
221,626 |
2.9 |
246,895 |
2.9 |
|
Commercial real estate loans |
1,439,324 |
19.5 |
1,555,163 |
20.5 |
1,600,271 |
20.7 |
1,692,052 |
20.1 |
|
Construction loans |
13,003 |
0.2 |
15,544 |
0.2 |
16,642 |
0.2 |
36,599 |
0.4 |
|
Warehouse lending |
702,455 |
9.5 |
576,719 |
7.6 |
448,567 |
5.8 |
383,368 |
4.6 |
|
Consumer loans |
388,250 |
5.3 |
407,742 |
5.4 |
423,842 |
5.5 |
508,309 |
6.0 |
|
Non-real estate commercial |
11,261 |
0.1 |
11,878 |
0.1 |
12,366 |
0.2 |
21,231 |
0.3 |
|
Total loans held for investment |
$ 7,365,817 |
100% |
$ 7,580,679 |
100.0% |
$ 7,714,308 |
100% |
$ 8,417,849 |
100.0% |
|
Allowance for Loan Losses |
||||
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 |
||||
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 |
|||||||
Description |
General Reserves |
Specific 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 |
||||||||||
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 |
|||||||
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 |
|||||||||
For the Three Months Ended |
|||||||||
June 30, |
March 31, |
June 30, |
|||||||
2010 |
2010 |
2009 |
|||||||
Description |
(000's) |
bps |
(000's) |
bps |
(000's) |
bps |
|||
Valuation gain (loss): |
|||||||||
Value of interest rate locks |
$ 33,075 |
63 |
$ 3,024 |
6 |
$ (53,445) |
(54) |
|||
Value of forward sales |
(58,475) |
(111) |
(20,055) |
(40) |
62,035 |
63 |
|||
Fair value of loans AFS |
103,643 |
197 |
59,077 |
118 |
20,388 |
20 |
|||
LOCOM adjustments on loans HFI |
(45) |
-- |
(88) |
-- |
(172) |
-- |
|||
Total valuation gains |
78,198 |
149 |
41,958 |
84 |
28,806 |
29 |
|||
Sales gains (losses): |
|||||||||
Marketing gains |
29,473 |
55 |
29,946 |
59 |
57,339 |
59 |
|||
Pair off losses |
(33,309) |
(63) |
(10,064) |
(20) |
30,949 |
31 |
|||
Sales adjustments |
(3,319) |
(6) |
(2,131) |
(4) |
(5,300) |
(6) |
|||
Provision for secondary marketing reserve |
(6,786) |
(13) |
(7,143) |
(14) |
(7,130) |
(7) |
|||
Total sales (losses) gains |
(13,941) |
(27) |
10,608 |
21 |
(18,305) |
(19) |
|||
Net gain on loan sales and securitizations |
$ 64,257 |
122 |
$ 52,566 |
105 |
$ 104,664 |
106 |
|||
Total loan sales and securitizations |
$ 5,259,830 |
$ 5,014,748 |
$ 9,878,035 |
||||||
Gain on Loan Sales and Securitizations |
||||||||
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 |
|||||||||
June 30, 2010 |
March 31, 2010 |
December 31, 2009 |
June 30, 2009 |
||||||
% of Total |
% of Total |
% of Total |
% of Total |
||||||
Days delinquent |
Balance |
Balance |
Balance |
Balance |
|||||
30 |
$ 112,694 |
1.5% |
$ 178,830 |
2.4% |
$ 143.500 |
1.9% |
$ 158,303 |
1.9% |
|
60 |
83,046 |
1.1 |
95,258 |
1.3 |
87,625 |
1.1 |
94,567 |
1.1 |
|
90 + and matured delinquent |
1,013,829 |
13.8 |
1,136,205 |
14.9 |
1,071,636 |
13.9 |
940,777 |
11.2 |
|
Total |
$ 1,209,569 |
16.4% |
$ 1,410,293 |
18.6% |
$ 1,302,761 |
16.9% |
$1,193,647 |
14.2% |
|
Loans held for investment |
$ 7,365,817 |
$ 7,580,679 |
$ 7,714,308 |
$8,417,849 |
|||||
Non-Performing Loans and Assets |
|||||
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 |
|||||||||
For the Three Months Ended |
|||||||||
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
|||||||
Annualized |
Annualized |
Annualized |
|||||||
Average |
Yield/ |
Average |
Yield/ |
Average |
Yield/ |
||||
Balance |
Rate |
Balance |
Rate |
Balance |
Rate |
||||
Interest-Earning Assets: |
|||||||||
Loans available for sale |
$ 1,675,502 |
5.00% |
$ 1,521,640 |
4.98% |
$ 3,533,219 |
5.12% |
|||
Loans held for investment: |
|||||||||
Mortgage Loans |
4,920,436 |
4.64 |
5,115,419 |
4.79 |
5,943,876 |
5.14 |
|||
Commercial Loans |
2,101,113 |
4.72 |
1,956,926 |
4.89 |
2,220,285 |
5.04 |
|||
Consumer Loans |
398,737 |
5.95 |
415,930 |
5.97 |
517,762 |
5.37 |
|||
Loans held for investment |
7,420,286 |
4.73 |
7,488,275 |
4.88 |
8,681,923 |
5.14 |
|||
Securities classified as available for sale or trading trading |
1,635,662 |
5.02 |
1,137,521 |
5.43 |
2,402,234 |
5.11 |
|||
Interest-bearing deposits |
820,379 |
0.23 |
1,208,667 |
0.22 |
233,324 |
0.73 |
|||
Other |
3,584 |
0.14 |
8,141 |
0.03 |
37,780 |
0.01 |
|||
Total interest-earning assets |
11,573,413 |
4.49 |
11,364,244 |
4.45 |
14,888,480 |
5.05 |
|||
Other assets |
2,691,344 |
2,397,982 |
1,885,128 |
||||||
Total assets |
$ 14,264,757 |
$ 13,762,226 |
$ 16,773,608 |
||||||
Interest-Bearing Liabilities: |
|||||||||
Demand deposits |
$ 388,402 |
0.57 |
$ 370,016 |
0.56 |
$ 284,570 |
0.46 |
|||
Savings deposits |
691,170 |
0.90 |
688,978 |
0.84 |
503,216 |
1.55 |
|||
Money market deposits |
562,442 |
0.96 |
581,848 |
0.89 |
699,866 |
1.91 |
|||
Certificates of deposits |
3,313,711 |
2.94 |
3,390,755 |
2.96 |
4,001,652 |
4.07 |
|||
Total retail deposits |
4,955,725 |
2.24 |
5,031,597 |
2.26 |
5,489,304 |
3.38 |
|||
Demand deposits |
392,054 |
0.48 |
291,901 |
0.38 |
49,979 |
0.51 |
|||
Savings deposits |
68,722 |
0.59 |
77,233 |
0.48 |
83,780 |
0.80 |
|||
Certificates of deposits |
245,702 |
0.81 |
273,685 |
0.76 |
811,647 |
1.00 |
|||
Total government deposits |
706,478 |
0.60 |
642,819 |
0.55 |
945,406 |
0.96 |
|||
Wholesale deposits |
1,628,940 |
3.14 |
1,790,434 |
2.95 |
1,955,966 |
4.56 |
|||
Total Deposits |
7,291,143 |
2.28 |
7,464,849 |
2.28 |
8,390,676 |
3.18 |
|||
FHLB advances |
3,891,758 |
4.34 |
3,900,000 |
4.35 |
5,359,076 |
4.29 |
|||
Security repurchase agreements |
210,268 |
3.05 |
108,000 |
4.33 |
108,000 |
4.33 |
|||
Other |
248,635 |
3.79 |
300,182 |
4.98 |
249,226 |
4.56 |
|||
Total interest-bearing liabilities |
11,641,804 |
3.02 |
11,773,031 |
3.05 |
14,106,978 |
3.63 |
|||
Other liabilities |
1,505,267 |
1,190,566 |
1,746,605 |
||||||
Stockholders' equity |
1,117,686 |
798,629 |
920,025 |
||||||
Total liabilities and stockholders equity |
$ 14,264,757 |
$ 13,762,226 |
$ 16,773,608 |
||||||
Average Balances, Yields and Rates |
||||||
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 trading |
1,397,018 |
5.18 |
2,113,762 |
5.33 |
||
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 |
||||
June, 2010 |
March 31, 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 |
|||
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.
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