-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C6fqzj4zNVmOMPgKITZTUoFr1zxPYWtbItUQODf3OpAPyUikaFne/YoxLZGWUJ8H TB23P+GVn8Kf29HLwY0VIg== 0000950124-03-001371.txt : 20030424 0000950124-03-001371.hdr.sgml : 20030424 20030424154552 ACCESSION NUMBER: 0000950124-03-001371 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030422 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLAGSTAR BANCORP INC CENTRAL INDEX KEY: 0001033012 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 383150651 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16577 FILM NUMBER: 03662360 BUSINESS ADDRESS: STREET 1: 2600 TELEGRAPH ROAD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48032-0953 BUSINESS PHONE: 8103387700 MAIL ADDRESS: STREET 1: 2600 TELEGRAPH ROAD CITY: BLOOMFIELD HILLS STATE: MI ZIP: 48302 8-K 1 k76476e8vk.txt CURRENT REPORT DATED APRIL 22, 2003 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 22, 2003 FLAGSTAR BANCORP, INC. ---------------------- (Exact name of Registrant as specified in its charter) Michigan 0-22353 38-3150651 -------- ------- ---------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 5151 Corporate Drive, Troy, Michigan 48098 ------------------------------------------ (Address of principal executive offices) (248) 312-2000 -------------- Registrant's telephone number, including area code Not Applicable -------------- (Former Name or former address, if changed since last report) Item 12. Results of Operations and Financial Conditions (provided under "Item 9. Regulation FD Disclosure"). The information required by Item 12 is being provided under Item 9 pursuant to SEC interim filing guidance provided in SEC press release No. 2003-41. The information in this Form 8-K is furnished under "Item 12. Results of Operations and Financial Condition" in accordance with SEC Release No. 33-8216. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. On April 22, 2003, Flagstar Bancorp, Inc., issued a press release announcing financial results for the quarter ended March 31, 2003. A copy of this press release is attached hereto as Exhibit 99.1. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned hereunto duly authorized. FLAGSTAR BANCORP, INC. Date: April 24, 2003 By: /s/ Michael W. Carrie ----------------------------------- Michael W. Carrie Executive Director, Chief Financial Officer and Treasurer (Duly Authorized Representative) EX-99.1 3 k76476exv99w1.txt NEWS RELEASE Exhibit 99.1 NEWS RELEASE FOR MORE INFORMATION CONTACT: Michael W. Carrie Executive Director / CFO (248) 312-2000 FOR IMMEDIATE RELEASE FLAGSTAR REPORTS RECORD FIRST QUARTER RESULTS FLAGSTAR ANNOUNCES FIRST QUARTER NET EARNINGS OF $1.32 PER SHARE, UP 62.0% MORTGAGE BANKING OPERATION TURNS IN ANOTHER RECORD QUARTER RETAIL BANKING PROFITS CONTINUE TO INCREASE Troy, Mich. (April 22, 2003) - Flagstar Bancorp, Inc. (NYSE:FBC), today released record quarterly earnings of $41.3 million, or $1.32 per share - diluted. These earnings compare to $25.5 million, or $0.83 per share - diluted, reported in the comparable 2002 period. HIGHLIGHTS IN THE QUARTER INCLUDE: |X| An annualized return on average equity of 37.82%; |X| An annualized return on average assets of 1.86%; |X| A first quarter annualized balance sheet growth of 63.4%, including an annualized increase of 72.7% in the deposit portfolio and an annualized growth of 30.0% in the investment loan categories; |X| Net interest income of $53.6 million, a quarterly record; |X| A sequential quarter increase of 27 basis points in the net interest margin; |X| A record amount of mortgages serviced for others of $22.3 billion; |X| Record first quarter mortgage production volume of $15.1 billion; |X| Record monthly mortgage production volume of $5.3 billion reported for March; |X| A first quarter operating efficiency ratio of 44.0%. (more) RETAIL BANKING; PROFITS CONTINUE TO INCREASE The Company's profits from its retail banking operation rose during the quarter primarily because of the 70.6% annualized increase in the level of attributable assets. During the quarter, the retail banking group provided 39.2% of pretax recurring operating earnings compared to 50.0% for all of 2002 and 39.8% reported in the fourth quarter of 2002. The Company opened 4 banking centers during the quarter. Flagstar's deposits were $5.2 billion at March 31, 2003 compared with $4.4 billion at December 31, 2002 and $3.4 billion at March 31, 2002. At March 31, 2003, transaction account balances, including checking, savings, and money market accounts, represented $1.4 billion, compared with $1.3 billion at December 31, 2002. During the past quarter, the Company has reduced its cost of funds on deposits by 23 basis points. As a part of its asset-liability management, the Company's $1.3 billion growth in the balance sheet included a $0.8 billion increase in deposits. This increase included a $0.2 billion increase in retail deposits, $0.3 billion increase in public funds and a $0.3 billion increase in wholesale deposits. The Company's retail certificate of deposit portfolio carries a weighted rate of 3.65% and a weighted term of 21.4 months at March 31, 2003. The Public Funds Unit, which opened during 2001, totals $1.1 billion in funds from local governmental entities within the Company's retail market area. These deposits carry a weighted rate of 1.81% and a weighted term of 2.3 months at March 31, 2003. The wholesale deposits are comprised of strategically placed duration specific offerings solicited to a national audience. These deposits carry a weighted rate of 3.36% and a weighted term of 32.5 months at March 31, 2003. OUTLOOK "Our primary focus continues to be our development of the retail banking franchise. The growth in the first quarter and the completion of the 2003 scheduled expansion will lessen our reliance on our mortgage origination platform," stated Mark Hammond, president and chief executive officer. NET INTEREST INCOME VOLUME GROWS WITH BALANCE SHEET INCREASE Net interest was reported at $53.6 million compared to $49.2 million in the comparable period last year and $44.4 million in the December 2002 quarter. The net interest margin for the quarter was 2.69%, compared with 3.25% for the same period last year. The large decrease in the interest margin was primarily caused by the 131 basis point decrease in the yield on the earning asset portfolio which was not offset by the 75 basis point decrease in liability costs. On a sequential quarter basis, the Company's net interest income increased because of the $0.8 billion increase in the level of average earning assets and the increase in the net interest margin. The net interest margin increased 27 basis points to 2.69% from the 2.42% recorded in the fourth quarter of 2002. OUTLOOK "At the end of 2002, we believed our mortgage investment portfolio and our pipeline of mortgage loans held for sale were at levels that their repricing would dictate the direction of our spreads and margins in 2003. During the current quarter, there was an 11 basis point increase in rate related interest income caused by a more positive utilization of cash flows. This increase was recorded along with a 16 basis point decrease in the cost of our liabilities, causing the 27 basis point increase in our margin", stated Mark T. Hammond. (more) RECORD LOAN SALE GAINS Gains recorded on the sales of mortgage loans reached $90.9 million during the quarter ended March 31, 2003 from $50.8 million in the comparable 2002 period. This increase was attributable to the $4.3 billion increase in the amount of loans sold during the quarter. The gain on sale spread equaled 63 basis points in the first quarter of 2003 versus 57 basis points in the first quarter of 2002 and 61 basis points in the fourth quarter of 2002. As previously reported, the Company originated a first quarter record $15.1 billion in residential mortgage loans. This production level compares to the $9.3 billion originated in the comparable 2002 period. This increase was primarily attributable to an increase in the amount of mortgage loan refinancings. In March, Flagstar closed a monthly corporate record $5.3 billion in mortgage loans. OUTLOOK "The first quarter was our best quarter ever in our mortgage banking operation. We had record monthly originations in March, we begin the second quarter with a record pipeline of locked loans, and the 63 basis point profit margin on our sales is well above expectations. We expect to continue to originate loans at the current monthly pace of approximately $5 billion given the current rate scenario," Mark T. Hammond said. MORTGAGE SERVICING LOANS SERVICED FOR OTHERS At March 31, 2003, the Company serviced $22.3 billion in loans for others with an additional $11.5 billion of loans sub-serviced for others. This volume is up 3.2% from December 31, 2002 and 46.7% from March 31, 2002. The portfolio contains 162,000 loans that have a weighted rate of 6.37%, a weighted service fee of 34.3 basis points, and a weighted seven months of seasoning. Revenue from the portfolio earned a record $22.2 million during the quarter, up $9.0 million, or 68.2% over the comparable 2002 period. MORTGAGE SERVICING RIGHTS The capitalized value of the servicing portfolio is $181.6 million, or 0.81% of the outstanding balance. The preliminary market value of the portfolio is $243.4 million. During the quarter, no impairment adjustment was made to the book value of the portfolio. The Company wrote off $47.8 million in book value for loan prepayment and amortization. "We increased the size of our servicing portfolio slightly during the quarter. The retention of a larger portfolio will enhance our earnings potential when rates go up. We have continued to monitor our internal valuation models versus the market pricing on similar portfolios and sold approximately $10.0 billion in servicing during the quarter. Our ability to maintain a larger servicing portfolio is complementary to our retail banking and mortgage origination operations. Our business plan calls for a balancing of each business line to take advantage of the counter cyclical nature of each in order to manage earnings volatility," stated Mark T. Hammond. ASSET QUALITY NON-PERFORMING LOANS Non-performing loans at March 31, 2003 were $81.3 million, down $0.3 million or 0.2% from year-end and down $7.3 million from March 31, 2002. Total delinquencies in the Company's investment loan portfolio equaled 2.72% at March 31, 2003, compared with 3.69% at December 31, 2002 and 4.50% at March 31, 2002. Consistent with the Company's business model, 94.7% of non-performing loans were backed by single family homes. (more) PROVISION FOR LOSSES The provision for losses was increased to $9.5 million for the three months ended March 31, 2003 from $8.2 million during the first quarter of 2002. The provision for losses in the current quarter did not include an increase in the allowance for losses. The comparable 2002 quarter included a $3.0 million increase in the allowance for losses. Net charge-offs were an annualized 1.16% and 0.65% of average investment loans during the three months ended March 31, 2003 and March 31, 2002, respectively. Net charge-offs were 0.72% of average investment loans during 2002. ALLOWANCE FOR LOSSES The allowance for losses totaled $50.0 million at March 31, 2003. The allowance stood at $45.0 million at March 31, 2002. Management believes the increase was appropriate based upon the following factors: 1. A 40.0% increase in the investment loan portfolio during the twelve months ended March 31, 2003; 2. The Company's portfolio of non-first lien single family mortgage loans and non-single family mortgage loans has risen $510.1 million, or 58.5% during the twelve months ended March 31, 2003. The allowance for losses as a percentage of non-performing loans was 61.5% and 50.8% at March 31, 2003 and March 31, 2002, respectively. The allowance for losses as a percentage of investment loans was 1.17% and 1.49% at March 31, 2003 and March 31, 2002, respectively. BALANCE SHEET AND CAPITAL MANAGEMENT Consolidated assets at March 31, 2003 were $9.5 billion, compared with $8.2 billion at December 31, 2002 and $6.4 billion at March 31, 2002. Flagstar's stockholders' equity now stands at $457.9 million, or 4.82% of total assets. The book value of the common stock at March 31, 2003 equaled $15.43 per share. Flagstar Bank, the Company's wholly-owned subsidiary reported capital ratios that categorize the Bank as a "well-capitalized" institution for regulatory purposes. The Bank's Core capital ratio stood at 6.79% and the Total risk-based capital ratio stood at 12.33% at March 31, 2003. AS PREVIOUSLY ANNOUNCED The Company's quarterly earnings conference call will be held on Wednesday, April 23, 2003 at 11:00 a.m. Eastern Time. The conference call will also be webcast at http://www.flagstar.com/inside/presentations.jsp To participate, please telephone at least ten minutes prior at (800) 311-0799. Flagstar Bancorp, which has $9.5 billion in total assets, is the second largest banking institution headquartered in Michigan. Flagstar currently operates 91 banking centers with $5.2 billion in total deposits. Flagstar banking centers are located throughout southern Michigan and Indiana. Flagstar also operates 101 loan centers in 21 states and 14 correspondent lending offices across the United States. Flagstar Bank is one of the nation's largest 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. (more) SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA (unaudited, in thousands, except share data)
SUMMARY OF THE CONSOLIDATED STATEMENTS OF EARNINGS At or for the three months ended March 31, 2003 2002 ------------- ------------- Interest income $ 124,792 $ 114,821 Interest expense 71,238 65,663 ------------- ------------- Net interest income 53,554 49,158 Provision for losses 9,541 8,174 ------------- ------------- Net interest income after provision 44,013 40,984 Loan servicing fees, net (25,609) 780 Gain on loan sales, net 90,901 50,824 Gain on MSR sales, net 1,261 650 ` Other income 10,678 6,457 Operating expenses 57,571 60,268 ------------- ------------- Earnings before federal income tax 63,673 39,427 Provision for federal income taxes 22,346 13,904 ------------- ------------- Net earnings $ 41,327 $ 25,523 ============= ============= Basic earnings per share: $ 1.40 $ 0.89 Diluted earnings per share: $ 1.32 $ 0.83 Dividends paid per common share $ 0.10 $ 0.05 Interest rate spread 2.55% 3.10% Net interest margin 2.69% 3.25% Return on average assets 1.86% 1.55% Return on average equity 37.82% 33.58% Efficiency ratio 44.02% 55.87% Mortgage loans originated or purchased $ 15,062,099 $ 9,262,184 Mortgage loans sold $ 13,253,246 $ 8,944,320 Equity/assets ratio (average for the period) 4.92% 4.60% Ratio of charge-offs to average investment loans 1.16% 0.65%
SUMMARY OF THE CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION:
March 31, December 31, March 31, 2003 2002 2002 -------------- ------------- ------------- Total assets $ 9,506,721 $ 8,203,702 $ 6,402,675 Loans available for sale 4,357,802 3,302,212 2,685,184 Investment loans portfolio, net 4,224,196 3,948,682 2,968,356 Allowance for losses 50,000 50,000 45,000 Mortgage servicing rights 181,606 230,756 154,865 Deposits 5,178,966 4,373,889 3,380,854 FHLB advances 2,364,597 2,222,000 1,975,000 Stockholders' equity 457,883 418,946 317,232 OTHER FINANCIAL AND STATISTICAL DATA: Equity/assets ratio 4.82% 5.11% 4.95% Core capital ratio 6.79% 6.73% 6.70% Total risk-based capital ratio 12.33% 12.01% 12.45% Book value per share $ 15.43 $ 14.16 $ 10.95 Shares outstanding 29,666 29,595 28,968 Mortgage loans serviced for others $22,336,428 $21,586,797 $15,249,763 Value of mortgage servicing rights 0.81% 1.07% 1.02% Allowance for losses to problem loans 61.5% 61.3% 50.8% Allowance for losses to total investment loans 1.17% 1.25% 1.49% Non performing assets to total assets 1.34% 1.54% 2.08% Number of bank branches 91 87 74 Number of loan origination centers 101 92 73 Number of correspondent offices 14 14 15 Number of employees 3,777 3,588 3,071
* All statistics that relate to share data have been restated for 3 for 2 stock dividends completed on May 31, 2002. -----END PRIVACY-ENHANCED MESSAGE-----