TROY, Mich., Jan 29, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Flagstar Bancorp, Inc.
(NYSE: FBC), today reported a net loss for 2007 of $39.2 million, or $(0.64)
per share (diluted) and a 2007 fourth quarter net loss of $30.1 million, or
$(0.50) per share (diluted). Full year 2006 earnings were $75.2 million, or
$1.17 per share (diluted) and 2006 fourth quarter net earnings were $6.9
million, or $0.11 per share (diluted). On a linked-quarter basis, the results
compared to a net loss of $32.1 million, or $(0.53) per share (diluted) in
third quarter 2007. Return on average equity for 2007 and the fourth quarter
2007 were (5.14%) and (16.67%), respectively, as compared to 9.42% and 3.41%
for the same periods in 2006.
The fourth quarter 2007 results as compared to the same period in 2006
were negatively impacted by a decrease in gain on sales of mortgage servicing
rights ("MSRs"), an increase in credit costs and an impairment in the value of
securities in the available for sale and the trading portfolios. These were
partially offset by an improvement in net interest income and an increase in
gains on sales of securities available for sale.
Full year 2007 results as compared to 2006 reflect an increase in gain on
loan sales, offset by a decrease in gain on sales of mortgage servicing rights
("MSRs"), an increase in credit costs and an impairment in the value of
securities available for sale portfolio and the trading portfolio.
Consolidated assets decreased $0.8 billion, or 4.8%, from $16.6 billion at
September 30, 2007 to $15.8 billion at December 31, 2007 but increased $0.3
billion or 1.9% from $15.5 billion at December 31, 2006.
"We will continue to focus on managing through a period of possible
further real estate declines and a weakening economy," said Mark Hammond,
president and chief executive officer of Flagstar. "At the same time, we
believe there are a number of positive trends and underlying fundamentals that
are currently occurring or are on the horizon. These include our increasing
market share for mortgage originations, increased residential loan production,
improving gain on sale spreads, the potential for higher Fannie Mae, Freddie
Mac and FHA loan limits, and increased credit spreads and lower funding costs,
which should result in an improving net interest margin."
Liquidity
Flagstar's primary sources of funds are deposits, loan repayments and
sales, advances from the Federal Home Loan Bank, security repurchase
agreements, cash generated from operations and customer escrow accounts.
Retail deposits increased to $5.1 billion at December 31, 2007, as compared to
$4.9 billion at December 31, 2006. At December 31, 2007, we had a $7.5
billion line of credit with the FHLB as to which collateral at the FHLB was
sufficient to access $7.0 billion of the line and of which $0.7 billion was
still available. Also at December 31, 2007, we had $1.6 billion of agency
securities and $0.7 billion of non-agency securities available for use as
collateral in security repurchase agreements. We also had a $0.8 billion
undrawn line of credit at the Federal Reserve discount window at December 31,
2007.
Capital
At December 31, 2007, Flagstar Bank, our wholly owned subsidiary, was
considered "well-capitalized" for regulatory purposes, with regulatory capital
ratios of 5.78% for core capital and 10.66% for total risk-based capital.
Net Interest Margin
The net interest margin of Flagstar Bank increased to 1.62%, as compared
to 1.52% for the third quarter 2007 and 1.58% for the fourth quarter 2006.
For the year ended December 31, 2007 its net interest margin was 1.50% as
compared to 1.63% for the year ended December 31, 2006.
Retail Banking Operations
Flagstar Bank had 164 retail banking branches at December 31, 2007, as
compared to 158 branches as of September 30, 2007 and 151 branches as of
December 31, 2006. During 2007, the total number of retail accounts increased
5.5% to 293,200 in its current retail banking footprint as compared to
approximately 277,900 at December 31, 2006.
Mortgage Banking Operations
Fourth quarter 2007 loan production was $6.7 billion, including $6.5
billion of residential loans, as compared to $6.8 billion, including $6.6
billion of residential loans, during third quarter 2007, and $5.4 billion,
including $5.1 billion of residential loans, during fourth quarter 2006.
For the year ended December 31, 2007 loan production increased 32.2% to
$26.7 billion, including $25.7 billion of residential loans, as compared to
$20.2 billion, including $19.0 billion of residential loans, for the year
ended December 31, 2006. At December 31, 2007, subprime loans comprised
approximately 1.0% of total assets.
Flagstar's net gain on loan sale spread was 32 basis points for the
quarter ended December 31, 2007, as compared to a net loss on loan sale spread
of (29) basis points for the third quarter 2007 and a net gain on loan sale
spread of 53 basis points for the quarter ended December 31, 2006. Our
calculation of net gain on loan sales reflects hedging costs, lower of cost or
market adjustments on loan transfers, provisions to our secondary market
reserve and other transaction costs and expenses. Gain on loan sale spreads,
before certain adjustments for costs, increased in the fourth quarter 2007 to
117 basis points from 71 basis points for the third quarter 2007 and 96 basis
points for the fourth quarter 2006. These amounts were offset by hedging
costs which amounted to 32 basis points during the fourth quarter 2007, 54
basis points during the third quarter 2007 and 19 basis points for the fourth
quarter 2006. Lower of cost or market adjustments on loan transfers reduced
the gain (loss) by 3 basis points for the fourth quarter 2007 and did not
affect either the third quarter 2007 or the fourth quarter 2006. Provisions
to our secondary market reserve reduced the gain (loss) by 3 basis points
during the fourth quarter 2007, 5 basis points for the third quarter 2007, and
4 basis points for the fourth quarter 2006. Loan level pricing adjustments
negatively affected the gain (loss) by 45 basis points during the fourth
quarter 2007, 40 basis points during the third quarter 2007 and 19 basis
points during the fourth quarter 2006. Credit losses associated with
available for sale portfolio reduced the gain (loss) by 3 basis points for the
fourth quarter 2007 and 1 basis point in both the third quarter 2007 and the
fourth quarter 2006.
For the year ended December 31, 2007 the net gain on loan sale spread
decreased 2 basis points to 24 basis points as compared to 26 basis points
for the same period in 2006. Our calculation of net gain on loan sales
reflects hedging costs, lower of cost or market adjustments on loan transfers,
provisions to our secondary market reserve and other transaction costs and
expenses. Gain on loan sale spreads, before certain adjustments for costs,
increased for the year ended December 31, 2007 to 80 basis points from 60
basis points for the same period in 2006. These amounts were negatively
impacted by hedging costs which amounted to 13 basis points for 2007 and 3
basis points for 2006. Lower of cost or market adjustments on loan transfers
reduced the gain by 1 basis point for both 2007 and 2006. Provisions to our
secondary market reserve reduced the gain by 4 basis points for both 2007 and
2006. Loan level pricing adjustments negatively affected the gain by 37 basis
points for 2007 and 25 basis points for 2006. Credit losses associated with
available for sale portfolio reduced the gain by 1 basis point for both 2007
and 2006.
At December 31, 2007, Flagstar's mortgage servicing portfolio totaled
$32.5 billion with a weighted average service fee of 36 basis points. This is
an increase from $26.7 billion at September 30, 2007 with a weighted average
servicing fee of 36.4 basis points and an increase from $15.0 billion at
December 31, 2006 with a weighted average servicing fee of 37.1 basis points.
The capitalized value of Flagstar's servicing portfolio at December 31, 2007
was $414.0 million, or 1.27% of the outstanding balance of loans serviced for
others, with an estimated market value of $457.9 million. This compares to
the capitalized value at September 30, 2007 of $340.8 million, or 1.28% with
an estimated market value of $385.6 million and a capitalized value at
December 31, 2006 of $173.3 million, or 1.15% with an estimated market value
of $197.6 million.
Asset Quality
During the fourth quarter 2007, Flagstar increased its allowance for loan
losses to $104.0 million, or 1.28% of loans held for investment at December
31, 2007, from $77.8 million, or 1.11% of loans held for investment, at
September 30, 2007 and from $45.8 million, or 0.51% of loans held for
investment, at December 31, 2006. Single-family residential first mortgage
loans held for investment at December 31, 2007 had an average FICO credit
score of 719 and an average original loan-to-value ratio of 73.4%.
Net charge-offs of loans during the fourth quarter 2007 increased to $12.2
million from $5.8 million during the third quarter 2007 and from $5.2 million
during the fourth quarter 2006. Net charge-offs for the full year 2007
increased to $30.1 million as compared to $18.8 million for 2006. Total non-
performing assets increased to $316.2 million at December 31, 2007, from
$221.0 million at September 30, 2007 and $160.2 million at December 31, 2006.
Non-performing loans, which are loans 90 days or more past due and matured
loans, increased to $197.1 million at December 31, 2007 as compared to $127.5
million at September 30, 2007 and $57.1 million at December 31, 2006. Non-
performing loans were 2.42% of loans held for investment at December 31, 2007
as compared to 1.81% at September 30, 2007 and 0.64% at December 31, 2006.
Loans past due 60 days or less increased 10.5% to $130.3 million at December
31, 2007 from $117.9 million at September 30, 2007. At December 31, 2007,
70.5% of non-performing loans were secured by first or second mortgages on
single-family homes as compared to 76.0% at September 30, 2007 and 90.7% at
December 31, 2006.
Of non-performing assets, real estate owned increased to $109.3 million at
December 31, 2007 from $84.2 million at September 30, 2007 and from $81.0
million at December 31, 2006. Repurchased and non-performing assets were $9.8
million at December 31, 2007 as compared to $9.3 million at September 30, 2007
and $22.1 million at December 31, 2006.
As Previously Announced
The Company's quarterly earnings conference call will be held on
Wednesday, January 30, 2008 from 11 a.m. until 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 (913) 312-4375 or toll free at (800) 801-6497,
passcode: 8845732.
Flagstar Bancorp, with $15.8 billion in total assets, is the largest
publicly held savings bank headquartered in the Midwest. At December 31, 2007,
Flagstar operated 164 banking centers in Michigan, Indiana and Georgia and 143
home loan centers in 27 states. Flagstar Bank originates loans nationwide and
is one of the leading originators of conforming single-family 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 December 31, September 30, December 31,
Statements of Operations 2007 2007 2006
Interest income $225,324 $237,151 $211,363
Interest expense (171,271) (183,215) (159,457)
Net interest income 54,053 53,936 51,906
Provision for loan losses (38,356) (30,195) (8,237)
Net interest income after
provision 15,697 23,741 43,669
Non-interest income
Loan fees and charges, net 240 (218) 2,444
Deposit fees and charges 6,502 5,808 5,310
Loan servicing fees, net 2,618 4,333 603
Net gain (loss) on
securities available for
sale 3,129 668 (462)
Gain on loan sales, net 23,189 (17,457) 23,843
Gain on MSR sales, net (283) 456 3,901
Impairment - residuals (14,799) (3,612) -
Impairment - securities
available for sale (2,793) - -
Unrealized gain on trading
securities (8,699) 1,914 -
Other income 9,401 9,376 7,991
Total non-interest
income 18,505 1,268 43,630
Non-interest expenses
Compensation and benefits (49,492) (44,653) (37,405)
Commissions (30,088) (18,136) (17,925)
Occupancy and equipment (17,772) (17,622) (18,914)
General and administrative (7,655) (10,658) (19,754)
Other (4,949) (5,431) (5,556)
Total non-interest
expense (109,956) (96,500) (99,554)
Capitalized direct cost
of loan closing 29,337 23,240 23,193
Total non-interest
expense after
capitalized direct
cost of loan closing (80,619) (73,260) (76,361)
(Loss) Earnings before federal
income tax (46,417) (48,251) 10,938
(Benefit) Provision for
federal income taxes (16,356) (16,196) 4,039
Net (loss) earnings $(30,061) $(32,055) $6,899
Basic (loss) earnings per share $(0.50) $(0.53) $0.11
Diluted (loss) earnings per
share $(0.50) $(0.53) $0.11
Dividends paid per common share $0.05 $0.10 $0.15
Dividend payout ratio (10.0%) (18.8%) 136.4%
Net interest spread -
Consolidated 1.48% 1.27% 1.38%
Net interest margin -
Consolidated 1.50% 1.36% 1.47%
Interest rate spread - Bank
only 1.54% 1.35% 1.32%
Net interest margin - Bank only 1.62% 1.52% 1.58%
Return on average assets (0.75)% (0.77)% 0.18%
Return on average equity (16.67)% (17.08)% 3.41%
Efficiency ratio 111.11% 133.45% 79.93%
Average interest earning
assets $14,665,289 $15,694,934 $14,168,117
Average interest paying
liabilities $14,595,558 $15,233,024 $13,784,942
Average stockholders' equity $721,322 $750,570 $809,655
Equity/assets ratio (average
for the period) 4.48% 4.51% 5.29%
Ratio of charge-offs to average
loans held for investment 0.58% 0.33% 0.23%
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
For the Years Ended
Summary of Consolidated December 31, December 31,
Statements of Operations 2007 2006
Interest income $905,509 $800,866
Interest expense (695,631) (585,919)
Net interest income 209,878 214,947
Provision for loan losses (88,297) (25,450)
Net interest income after provision 121,581 189,497
Non-interest income
Loan fees and charges, net 1,497 7,440
Deposit fees and charges 22,999 20,893
Loan servicing fees, net 12,715 13,032
Net gain (loss) on securities
available for sale 4,526 (6,163)
Gain on loan sales, net 59,030 42,381
Gain on MSR sales, net 5,898 92,621
Impairment - residuals (18,412) -
Impairment - securities available
for sale (2,793) -
Unrealized gain on trading
securities (6,785) -
Other income 38,440 31,957
Total non-interest income 117,115 202,161
Non-interest expenses
Compensation and benefits (179,417) (157,751)
Commissions (83,047) (74,208)
Occupancy and equipment (69,218) (70,319)
General and administrative (41,497) (49,824)
Other (19,249) (17,018)
Total non-interest expense (392,428) (369,120)
Capitalized direct cost of loan
closing 94,918 93,483
Total non-interest expense
after capitalized direct cost of
loan closing (297,510) (275,637)
(Loss) Earnings before federal income tax (58,814) 116,021
(Benefit) Provision for federal
income taxes (19,589) (40,819)
Net (loss) earnings $(39,225) $75,202
Basic (loss) earnings per share $(0.64) $1.18
Diluted (loss) earnings per share $(0.64) $1.17
Dividends paid per common share $0.35 $0.60
Dividend payout ratio (54.7%) 51.3%
Net interest spread - Consolidated 1.33% 1.42%
Net interest margin - Consolidated 1.40% 1.54%
Interest rate spread - Bank only 1.39% 1.41%
Net interest margin - Bank only 1.50% 1.63%
Return on average assets (0.24)% 0.49%
Return on average equity (5.14)% 9.42%
Efficiency ratio 90.98% 66.08%
Average interest earning assets $14,964,042 $13,951,393
Average interest paying liabilities $14,745,383 $13,562,001
Average stockholders' equity $762,958 $798,492
Equity/assets ratio (average for the
period) 4.71% 5.22%
Ratio of charge-offs to average loans
held for investment 0.35% 0.20%
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
Summary of the Consolidated December 31, September 30, December 31,
Statements of Financial
Condition: 2007 2007 2006
Total assets $15,792,736 $16,564,999 $15,497,205
Mortgage backed securities held
to maturity 1,255,431 1,343,778 1,565,420
Investment securities available
for sale 1,321,310 1,238,587 617,451
Loans held for sale 3,511,310 5,604,041 3,188,795
Loans held for investment, net 8,030,397 6,956,932 8,893,906
Allowance for loan losses 104,000 77,800 45,779
Servicing rights 413,986 340,814 173,288
Deposits 8,236,744 8,485,556 7,623,488
FHLB advances 6,301,000 6,392,000 5,407,000
Repurchase agreements 108,000 468,668 990,806
Stockholders' equity 692,978 728,906 812,234
Other Financial and Statistical Data:
Equity/assets ratio 4.39% 4.40% 5.24%
Core capital ratio 5.78% 5.78% 6.37%
Total risk-based capital ratio 10.66% 10.65% 11.55%
Book value per share $11.50 $12.09 $12.77
Shares outstanding 60,271 60,271 63,605
Average shares outstanding 61,152 61,450 63,588
Average diluted shares
outstanding 61,509 61,874 64,328
Loans serviced for others $32,487,337 $26,665,052 $15,032,504
Weighted average service fee
(bps) 36.0 36.4 37.1
Value of servicing rights 1.27% 1.28% 1.15%
Allowance for loan losses to non
performing loans 52.8% 61.0% 80.2%
Allowance for loan losses to
loans held for investment 1.28% 1.11% 0.51%
Non performing assets to total assets 2.00% 1.34% 1.03%
Number of bank branches 164 158 151
Number of loan origination centers 143 151 76
Number of employees (excluding
loan officers & account executives) 3,083 2,939 2,510
Number of loan officers and
account executives 877 852 444
Loan Originations
(Dollars in millions)
(unaudited)
For the Three Months Ended
December 31, September 30, December 31,
Loan type 2007 2007 2006
Residential
mortgage loans $6,493 97.1% $6,566 96.1% $5,083 93.4%
Consumer loans 42 0.6 87 1.3 85 1.6
Commercial loans 155 2.3 176 2.6 272 5.0
Total loan
production $6,690 100.0% $6,829 100.0% $5,440 100.0%
Loan Originations
(Dollars in millions)
(unaudited)
For the Years Ended
December 31, December 31,
Loan type 2007 2006
Residential mortgage loans $25,711 96.3% $18,966 93.9%
Consumer loans 342 1.3 571 2.8
Commercial loans 640 2.4 672 3.3
Total loan production $26,693 100.0% $20,209 100.0%
Gain on Loan Sales
(Dollars in millions)
(unaudited)
For the Three Months Ended
December 31, September 30, December 31,
Description 2007 2007 2006
Net gain (loss) on loan
sales $23,188 $(17,457) $23,843
Loans sold $7,279,469 $5,955,396 $4,466,314
Sales spread 0.32% (0.29%) 0.53%
Gain on Loan Sales
(Dollars in millions)
(unaudited)
For the Years Ended
December 31, December 31,
Description 2007 2006
Net gain (loss) on loan sales $59,030 $42,381
Loans sold $24,255,114 $16,370,925
Sales spread 0.24% 0.26%
Loans Held for Investment
(Dollars in thousands)
(unaudited)
December 31, September 30, December 31,
Description 2007 2007 2006
First mortgage
loans $5,823,952 71.6% $4,938,083 70.2% $6,211,765 69.5%
Second mortgage
loans 56,516 0.7 58,224 0.8 715,154 8.0
Commercial real
estate loans 1,542,104 19.0 1,463,222 20.8 1,301,819 14.5
Construction loans 90,401 1.1 88,018 1.3 64,528 0.7
Warehouse lending 316,719 3.9 175,496 2.5 291,656 3.3
Consumer loans 281,746 3.4 291,889 4.1 340,156 3.8
Non-real estate
commercial 22,959 0.3 19,800 0.3 14,607 0.2
Total loans held
for investment $8,134,397 100.0% $7,034,732 100.0% 8,939,685 100.0%
Deposit Portfolio
(Dollars in thousands)
(unaudited)
December 31, September 30, December 31,
2007 2007 2006
Description Balance Rate Balance Rate Balance Rate
Demand deposits $436,239 1.60% $392,872 1.59% $380,162 1.28%
Savings deposits 237,762 2.90 171,381 2.30 144,460 1.55
Money market
deposits 531,587 3.86 562,039 4.04 608,282 4.05
Certificates of
deposits 3,870,828 4.99 3,863,249 5.07 3,763,781 4.86
Total retail
deposits 5,076,416 4.48 4,989,541 4.59 4,896,685 4.38
Company controlled
custodial deposits 473,384 - 357,207 - 244,193 -
Municipal deposits
/ CDARS 1,545,395 5.04 1,930,679 5.42 1,419,964 5.33
Wholesale deposits 1,141,549 4.64 1,208,129 4.51 1,062,646 3.66
Total deposits $8,236,744 4.35% $8,485,556 4.57% $7,623,488 4.32%
Asset Quality
(Dollars in thousands)
(unaudited)
December 31, September 30, December 31,
2007 2007 2006
% of % of % of
Days delinquent Balance Total Balance Total Balance Total
30 $59,811 18.3% $73,382 29.9% $40,140 33.6%
60 70,450 21.5 44,481 18.1 22,163 18.6
90 + and Matured
Delinquent 197,149 60.2 127,506 52.0 57,071 47.8
Total 327,410 100.0% $245,369 100.0% $119,374 100.0%
Investment
loans $8,134,397 $7,034,732 $8,939,685
Non-Performing Loans and Assets at
December 31, September 30, December 31,
2007 2007 2006
Non-Performing Loans $197,149 $127,506 $57,071
Real Estate Owned 109,274 84,248 80,995
Repurchased Assets/Non-Performing
Assets 9,776 9,261 22,096
Non-Performing Assets $316,199 $221,015 $160,162
Non-Performing Loans as a Percentage
of Investment Loans 2.42% 1.81% 0.64%
Non-Performing Assets as a
Percentage of Total Assets 2.00% 1.34% 1.03%
SOURCE Flagstar Bancorp, Inc.
http://www.flagstar.com
