-----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, DqC88Mxa9fdf/PLQlr3eQfFoAVN3DmH7UEQ3d015wXEkW2HVZrq86CzICVe9KTcG XksU0QLQ1W7+s8gGpQkobg== 0000950124-03-002415.txt : 20030723 0000950124-03-002415.hdr.sgml : 20030723 20030723171714 ACCESSION NUMBER: 0000950124-03-002415 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030717 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030723 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: 03798933 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 k78477e8vk.txt CURRENT REPORT DATED JULY 17, 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): July 17, 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 July 17, 2003, Flagstar Bancorp, Inc., issued a press release announcing financial results for the quarter ended June 30, 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: July 23, 2003 By: /s/ Michael W. Carrie ---------------------------------- Michael W. Carrie Executive Director, Chief Financial Officer and Treasurer (Duly Authorized Representative) EXHIBIT INDEX Exhibit Description - ------- ----------- 99.1 Results of Operations & Financial Conditions EX-99.1 3 k78477exv99w1.txt RESULTS OF OPERATIONS & FINANCIAL CONDITIONS EXHIBIT 99.1 NEWS RELEASE FOR MORE INFORMATION CONTACT: Michael W. Carrie Executive Director / CFO (248) 312-2000 FOR IMMEDIATE RELEASE FLAGSTAR REPORTS SECOND QUARTER RESULTS FLAGSTAR ANNOUNCES NET EARNINGS OF $1.34 PER SHARE, UP 211.6% MORTGAGE BANKING OPERATION TURNS IN ANOTHER RECORD QUARTER RETAIL BANKING PROFITS CONTINUE TO INCREASE Troy, Mich. (July 17, 2003) - Flagstar Bancorp, Inc. (NYSE:FBC), today released record quarterly earnings of $85.6 million, or $1.34 per share -- diluted. These earnings compare to $26.4 million, or $0.43 per share -- diluted, reported in the comparable 2002 period. HIGHLIGHTS IN THE QUARTER INCLUDE: - - An annualized return on average equity of 69.6%; - - An annualized return on average assets of 3.48%; - - The assets of the Company surpassed the $10 billion milestone for the first time; - - A second quarter annualized balance sheet growth of 28.0%, including an annualized increase of 7.0% in the deposit portfolio and an annualized growth of 54.4% in the investment loan categories; - - Net interest income of $51.1 million; - - A record amount of mortgages serviced for others of $29.0 billion; - - A record amount of servicing revenue during the quarter, $24.7 million; - - A record second quarter mortgage production volume of $17.5 billion; - - A record gain on loan sale spread of 90 basis points; - - A record monthly mortgage production volume of $6.5 billion reported for June; - - A second quarter operating efficiency ratio of 31.9%. (more) RETAIL BANKING; PROFITS CONTINUE TO INCREASE The Company's profits from its retail banking operation continued to rise but were overshadowed by the comparable increase in the mortgage banking operation. During the quarter, the retail banking group provided 19.6% of pretax earnings compared to 50.0% for all of 2002 and 39.2% reported in the first quarter of 2003. On a sequential quarter basis, earnings from the retail banking operations were up an annualized 13.5%. The Company opened 4 banking centers during the quarter. Flagstar's deposits were $5.3 billion at June 30, 2003 compared with $4.4 billion at December 31, 2002 and $5.2 billion at March 31, 2003. At June 30, 2003, transaction account balances, including checking, savings, and money market accounts, represented $1.8 billion, compared with $1.3 billion at December 31, 2002. On a sequential quarter basis, the Company reduced its cost of funds on deposits by 12 basis points. As a part of its asset-liability management, the Company's $2.0 billion growth in the balance sheet since year-end included a $0.9 billion increase in deposits. This increase included a $0.5 billion increase in retail deposits, $0.1 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 3.59% and a weighted term of 20.0 months at June 30, 2003. The Public Funds Unit, which opened during 2001, totals $0.9 billion in funds from local governmental entities within the Company's retail market area. These deposits carry a weighted rate of 1.58% and a weighted term of 2.0 months at June 30, 2003. The wholesale deposits are offerings comprised of strategically placed durations which are provided to a national audience. These deposits carry a weighted rate of 3.33% and a weighted term of 30.3 months at June 30, 2003. NET INTEREST INCOME VOLUME GROWS WITH BALANCE SHEET INCREASE Net interest was reported at $51.1 million compared to $46.5 million in the comparable period last year and $53.6 million in the March 2003 quarter. The net interest margin for the quarter was 2.26%, compared with 3.05% for the same period last year. The large decrease in the interest margin was primarily caused by the 148 basis point decrease in the yield on the earning asset portfolio which was not offset by the 73 basis point decrease in liability costs. On a sequential quarter basis, the Company's net interest income decreased $2.5 million. The net interest margin decreased 43 basis points from the 2.69% recorded in the first quarter of 2003. The quarterly decrease was caused by a 53 basis point decrease in the interest rate spread that was made up of a 70 basis point decline in the yield on the earning asset portfolio and a 17 basis point decrease on the cost of interest bearing liabilities. (more) RECORD LOAN SALE GAINS Gains recorded on the sales of mortgage loans reached $155.9 million during the quarter ended June 30, 2003 from $25.1 million in the comparable 2002 period. This increase was attributable to the $10.5 billion increase in the amount of loans sold during the quarter. The gain on sale profit margin equaled 90 basis points in the second quarter of 2003 versus 37 basis points in the second quarter of 2002. This increased profit margin was a product of the increased loan volumes and the low interest rate environment experienced during the quarter. As previously reported, the Company originated a second quarter record $17.5 billion in residential mortgage loans. This production level compares to the $7.5 billion originated in the comparable 2002 period. In June, Flagstar closed a monthly corporate record $6.5 billion in mortgage loans. OUTLOOK "The second quarter was our best quarter ever in our mortgage banking operation. We had record monthly originations in June and we begin the third quarter with a record pipeline of locked loans. On a going forward basis, we expect a slight slowdown from the second quarter, but we still expect a monthly pace of approximately $4.5 billion, given the current rate scenario. Additionally, our 90 basis point profit margin on loan sales was well above expectations. We expect profit margins to normalize around 60 basis points," said Mark T. Hammond. MORTGAGE SERVICING LOANS SERVICED FOR OTHERS At June 30, 2003, the Company serviced $29.0 billion in loans for others. This volume is up 34.3% from December 31, 2002. The portfolio contains 210,000 loans that have a weighted rate of 6.13%, a weighted service fee of 34.6 basis points, and a weighted seven months of seasoning. Revenue from the portfolio earned a record $24.7 million during the quarter, up $9.9 million, or 66.7% over the comparable 2002 period. MORTGAGE SERVICING RIGHTS The capitalized value of the servicing portfolio is $210.9 million, or 0.73% of the outstanding balance of the underlying loans. The preliminary market value of the portfolio is $254.8 million. During the quarter, no impairment adjustment was made to the book value of the portfolio. The Company wrote off $37.8 million in book value for loan prepayments and scheduled amortization. ASSET QUALITY NON-PERFORMING LOANS Non-performing loans at June 30, 2003 were $69.7 million, down $11.9 million or 14.6% from year-end and down $11.6 million from March 31, 2003. Total delinquencies in the Company's investment loan portfolio equaled 2.36% at June 30, 2003, compared with 3.69% at December 31, 2002 and 2.72% at March 31, 2003. Consistent with the Company's business model, 95.0% of non-performing loans were backed by single-family homes. PROVISION FOR LOSSES The provision for losses was $8.4 million for the three months ended June 30, 2003 from $3.6 million during the second quarter of 2002 and $9.5 million in the quarter ended March 31, 2003. The provision for losses in the current quarter and the comparable quarter in 2002 did not include an increase in the allowance for losses. Net charge-offs were an annualized 0.73% and 0.34% of average investment loans during the three months ended June 30, 2003 and June 30, 2002, respectively. Net charge-offs were 0.72% of average investment loans during 2002. (more) ALLOWANCE FOR LOSSES The allowance for losses totaled $50.0 million at June 30, 2003. Management believes the current reserve is set at an appropriate level given the current business environment and the current portfolio of investment loans. The allowance for losses as a percentage of non-performing loans is 71.7%. The allowance for losses as a percentage of investment loans was 1.03% at June 30, 2003. BALANCE SHEET AND CAPITAL MANAGEMENT Consolidated assets at June 30, 2003 were $10.2 billion, compared with $8.2 billion at December 31, 2002 and $9.5 billion at March 31, 2003. Flagstar's stockholders' equity now stands at $535.2 million, or 5.26% of total assets. The book value of the common stock at June 30, 2003 equaled $8.99 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 6.58% and the Total risk-based capital ratio stood at 12.17% at June 30, 2003. AS PREVIOUSLY ANNOUNCED The Company's quarterly earnings conference call will be held on Friday, July 18, 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) 361-0912. Flagstar Bancorp, which has $10.2 billion in total assets, is the second largest banking institution headquartered in Michigan. Flagstar currently operates 96 banking centers with $5.3 billion in total deposits. Flagstar banking centers are throughout southern Michigan and Indiana. Flagstar operates 108 loan centers in 21 states and 15 correspondent lending offices across the nation. 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
SUMMARY OF THE CONSOLIDATED STATEMENTS OF EARNINGS At or for the three months ended At or for the six months ended June 30, June 30, 2003 2002 2003 2002 ------------ ------------ ------------ ------------ ( Unaudited, In Thousands, Except Share Data ) Interest income $ 126,323 $ 109,152 $ 251,115 $ 223,974 Interest expense 75,239 62,622 146,477 128,286 ------------ ------------ ------------ ------------ Net interest income 51,084 46,530 104,638 95,688 Provision for losses 8,426 3,589 17,967 11,763 ------------ ------------ ------------ ------------ Net interest income after provision 42,658 42,941 86,671 83,925 Loan servicing fees, net (13,056) 5,508 (38,665) 6,288 Gain on loan sales, net 155,910 25,117 246,811 75,941 Gain on MSR sales, net 320 10,179 1,581 10,830 Other income 11,387 5,840 22,065 12,297 Operating expenses 65,489 48,772 123,060 109,041 ------------ ------------ ------------ ------------ Earnings before federal income tax 131,730 40,813 195,403 80,240 Provision for federal income taxes 46,150 14,395 68,496 28,299 ------------ ------------ ------------ ------------ Net earnings $ 85,580 $ 26,418 $ 126,907 $ 51,941 ============ ============ ============ ============ Basic earnings per share * $ 1.44 $ 0.45 $ 2.14 $ 0.90 Diluted earnings per share * $ 1.34 $ 0.43 $ 2.00 $ 0.84 Dividends paid per common share * $ 0.10 $ 0.03 $ 0.15 $ 0.05 Interest rate spread 2.02% 2.77% 2.23% 2.92% Net interest margin 2.26% 3.05% 2.47% 3.13% Return on average assets 3.48% 1.53% 2.71% 1.54% Return on average equity 69.55% 32.00% 54.67% 32.75% Efficiency ratio 31.85% 52.35% 36.58% 54.24% Mortgage loans originated or purchased $ 17,488,383 $ 7,488,490 $ 32,550,482 $ 16,750,674 Mortgage loans sold $ 17,287,723 $ 6,818,644 $ 30,540,969 $ 15,762,964 Equity/assets ratio (average for the period) 5.00% 4.79% 4.96% 4.70% Ratio of charge-offs to average investment loans 0.73% 0.34% 0.84% 0.52% ================================================================================================================================ SUMMARY OF THE CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION: June 30, March 31, December 31, June 30, 2003 2003 2002 2002 ------------ ------------ ------------ ------------ Total assets $ 10,172,982 $ 9,506,721 $ 8,203,702 $ 6,788,880 Loans held for sale 3,731,829 4,357,802 3,302,212 2,755,274 Investment loans portfolio, net 4,798,327 4,224,196 3,948,682 3,285,480 Allowance for losses 50,000 50,000 50,000 46,000 Mortgage servicing rights 210,869 181,606 230,756 192,280 Deposits 5,269,463 5,178,967 4,373,889 3,593,615 FHLB advances 2,436,122 2,364,597 2,222,000 2,206,000 Stockholders' equity 535,187 457,883 418,946 343,849 OTHER FINANCIAL AND STATISTICAL DATA: Equity/assets ratio 5.26% 4.82% 5.11% 5.06% Core capital ratio 6.58% 6.79% 6.73% 6.73% Total risk-based capital ratio 12.17% 12.33% 12.01% 12.54% Book value per share * $ 8.99 $ 7.72 $ 7.08 $ 5.88 Shares outstanding * 59,499 59,332 59,190 58,478 Mortgage loans serviced for others $ 28,953,871 $ 22,336,428 $ 21,586,797 $ 19,390,204 Value of mortgage servicing rights 0.73% 0.81% 1.07% 0.99% Allowance for losses to non performing loans 71.7% 61.5% 61.3% 56.6% Allowance for losses to loans held for investment 1.03% 1.17% 1.25% 1.38% Non performing assets to total assets 1.14% 1.34% 1.54% 1.86% Number of bank branches 95 91 87 76 Number of loan origination centers 108 101 92 83 Number of correspondent offices 15 14 14 15 Number of employees 4,110 3,777 3,588 3,059
* All statistics that relate to share data have been restated for a 2 for 1 stock dividend announced April 23, 2003 and completed on May 15, 2003. -----END PRIVACY-ENHANCED MESSAGE-----