-----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, RM5Aw9z1QjwHe7FZGYSuDeabeIjvsruYUUxJ2elJ1Fvw/+6gWVJNDNXf2tWuAIRo 9AiC+cYub6JxXoJxpqXGGQ== 0000950124-04-000145.txt : 20040122 0000950124-04-000145.hdr.sgml : 20040122 20040122105623 ACCESSION NUMBER: 0000950124-04-000145 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040121 ITEM INFORMATION: FILED AS OF DATE: 20040122 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: 04536816 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 k82231e8vk.txt CURRENT REPORT 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): January 21, 2004 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. On January 20, 2004, Flagstar Bancorp, Inc. (the "Company") announced its financial results for the fourth quarter and year ended December 31, 2003. The full text of the press release is set forth in Exhibit 99.1 hereto. The information in this report, including the exhibit hereto, is being furnished pursuant to Item 12, "Results of Operations and Financial Condition," and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. 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: January 21, 2004 By: /s/ Michael W. Carrie ----------------------------------- Michael W. Carrie Executive Director, Chief Financial Officer and Treasurer (Duly Authorized Representative) EXHIBIT INDEX EXHIBIT NO. DESCRIPTION EX-99.1 Press Release EX-99.1 3 k82231exv99w1.txt PRESS RELEASE EXHIBIT 99.1 [FLAGSTAR BANCORP, INC. LOGO] NEWS RELEASE FOR MORE INFORMATION CONTACT: Michael W. Carrie Executive Director / CFO (248) 312-2000 FOR IMMEDIATE RELEASE FLAGSTAR ANNOUNCES FOURTH QUARTER NET EARNINGS OF $0.57 PER SHARE; Troy, Michigan (January 20, 2004) - Flagstar Bancorp, Inc. (NYSE:FBC), today reported quarterly earnings of $36.7 million, or $0.57 per share - diluted compared to $32.1 million, or $0.51 per share - diluted, reported in the comparable 2002 period. Net earnings for 2003 were $254.4 million, or $3.99 per share - diluted compared to the $129.3 million, or $2.09 per share - diluted reported for 2002. HIGHLIGHTS IN THE REPORT INCLUDE: - - An annualized return on average equity of 23.3% for the quarter and 47.6% for 2003; - - An annualized return on average assets of 1.36% for the quarter and 2.52% for 2003; - - A fourth quarter operating efficiency ratio of 50.3% and 37.4% for all of 2003. - - An annual balance sheet growth of 29.3% including an increase of 29.5% in the deposit portfolio and 70.0% in the investment loan categories; - - Mortgages serviced for others of $30.4 billion with a recorded value of 86 basis points; - - Mortgage origination volume of $7.8 billion for the quarter and a record $56.4 billion for 2003; RETAIL BANKING PROFITS The portion of the Company's net earnings attributable to the retail banking operation rose during the quarter. This primarily due to the reduced earnings recorded by the mortgage banking operation. During the quarter, the retail banking group provided 52.7% of net earnings, compared to 25.1% for all of 2003, 49.7% for all of 2002, and 21.1% reported in the third quarter. Current projections show the majority of net earnings will come from the retail banking operation in 2004. Flagstar's deposits were $5.7 billion at December 31, 2003 compared with $4.4 billion at December 31, 2002. Transaction account balances, including checking, savings and money market accounts, represented $2.0 billion and $1.3 billion at December 31, 2003 and 2002, respectively. Over the past year, the Company has reduced its cost of funds on deposits by 52 basis points. The Company's $2.4 billion growth in the balance sheet included a $1.3 billion increase in deposits and a $1.1 billion increase in advances from the Federal Home Loan Bank. These liabilities were used to fund the $2.3 billion increase in the earning asset portfolio. Mortgage loans held for investment increased $2.8 billion during the period, while assets held for sale decreased $530.7 million. (more) NET INTEREST INCOME VOLUME GROWS WITH BALANCE SHEET INCREASE Net interest income was reported at $44.4 million, equal to the $44.4 million reported in the comparable period last year and down $9.3 million, or 17.3% from the $53.7 million recorded in the September 2003 quarter. The net interest margin for the quarter was 1.80%, compared with 2.42% for the same period last year, and the 2.12% reported in the previous quarter. In each circumstance, the decrease in the yield on the Company's earning assets was not offset by a like reduction in liability costs. Additionally, management was not able to immediately reinvest the vast amount of cash created when the Company's investment loans refinanced. On a sequential quarter basis, the Company's net interest income was negatively impacted by a $169.3 million decrease in average earning assets, a $373.7 million increase in average overnight investments, and a 21 basis points decrease in the interest spread. Management did deploy all of the Company's excess cash into longer-term assets by December 31, 2003, but still has substantial leverage available in the current balance sheet. The sequential quarter decrease in the interest spread was caused by a 33 basis point decrease in the earning asset yield that was not offset by the 12 basis point decrease in liability costs. On December 31, 2003, the Company had an interest margin of approximately 2.26% within the current balance sheet. The margin was based on a $9.8 billion earning asset portfolio that yielded 5.25% and a $9.1 billion liability base that had a 3.23% cost. During 2003, net interest income grew $16.5 million, or 8.9%, versus 2002. The increase was attributable to the $2.9 billion, or 44.6% increase in average earning assets. This increase in earning assets was offset by a reduction of 70 basis points in the net interest margin. LOAN SALE GAINS Gains recorded on the sales of mortgage loans were $22.6 million during the quarter ended December 31, 2003 versus $72.9 million in the comparable 2002 period. This decrease was attributable to the $8.1 billion decrease in the amount of loans sold during the quarter. The gain on sale spread equaled 43 basis points in the fourth quarter and 75 basis points for year 2003 versus 63 basis points in the fourth quarter of 2002 and 53 basis points for all of 2002. The decrease in quarterly loan sales was caused by the $7.8 billion decrease in comparable loan originations. As previously reported, the Company recorded $7.8 billion in loan originations versus $15.6 billion originated in the 2002 period. This decrease was primarily attributable to a decrease in the amount of mortgage loans that were refinanced. During the fourth quarter, 70.5% of loan originations involved refinances of existing loans, whereas in the third quarter 88.1% of loan originations were refinances. During 2003, 85.1% of the Company's loan originations were refinances compared to 80.2% in 2002. In December 2003, 68.7% of loan originations were refinances. (more) MORTGAGE SERVICING LOANS SERVICED FOR OTHERS At year-end the Company serviced $30.4 billion in loans for others. This volume is up 40.7% from December 31, 2002. The portfolio contains 223,000 loans that have a weighted rate of 6.02%, a weighted service fee of 35.0 basis points, and a weighted nine months of seasoning. Gross portfolio revenue before amortization was reported at a record $28.9 million during the quarter, up $10.4 million, or 56.2% over the comparable 2002 period. MORTGAGE SERVICING RIGHTS The capitalized value of the servicing portfolio is $260.1 million, or 0.86% of the outstanding balance. The preliminary market value of the portfolio is $411.4 million. During the quarter, no impairment adjustment or recapture was made to the book value of the portfolio. The Company charged off $16.4 million in book value for loan prepayments and amortization during the quarter. ASSET QUALITY NON-PERFORMING LOANS Non-performing loans at year-end were $58.3 million, down $9.7 million from December 31, 2002. Total delinquencies in the Company's investment loan portfolio equaled 0.85% at December 31, 2003, compared with 1.71% at December 31, 2002. Consistent with the Company's business model over 95% of non-performing loans were backed by single family homes. Additionally, all of the Company's real estate owned are single-family homes acquired in the foreclosure process. PROVISION FOR LOAN LOSSES For the three months ended December 31, 2003, the provision for loan losses was reported at $2.6 million as compared to the $7.5 million during the fourth quarter of 2002. Net charge-offs were an annualized 0.17% and 0.45% of average investment loans during the three months ended December 31, 2003 and December 31, 2002, respectively. For the years 2003 and 2002, the provision for loan losses was reported as $22.2 million and $18.4 million, respectively. Net charge-offs were 0.43% and 0.31% of average investment loans during 2003 and 2002, respectively. ALLOWANCE FOR LOAN LOSSES During the fourth quarter, the Company segregated its allowance for loan losses into two categories, a loan loss segment and a secondary market repurchase segment. During 2003 and 2002, approximately 43.2% and 32.1% of the Company's recorded losses were attributable to loans sold to the secondary market, repurchased, and then acquired in foreclosure. As the dollar amount of the exposure to these repurchases has increased, we believe that the segregation of this allowance provides more meaningful disclosure. During the quarter, the Company reclassified $14.4 million of the previous allowance into this category. For comparability purposes, approximately $6.5 million was allocated to this allowance last year. The allowance for loan losses totaled $36.0 million at December 31, 2003. The unallocated portion of the secondary market reserve totals $10.3 million at December 31, 2003. The allowance for losses as a percentage of non-performing loans was 61.7% and 63.9% at December 31, 2003 and December 31, 2002, respectively. The allowance for losses as a percentage of investment loans was 0.53% and 1.09% at December 31, 2003 and December 31, 2002, respectively. (more) BALANCE SHEET AND CAPITAL MANAGEMENT Consolidated assets at December 31, 2003 were $10.6 billion, compared with $11.0 billion at September 30, 2003 and $8.2 billion at December 31, 2002. Flagstar's stockholders' equity now stands at $654.6 million, or 6.19% of total assets. The book value of the common stock at December 31, 2001 equaled $10.79 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 7.44% and the Total risk-based capital ratio stood at 13.50% at December 31, 2003. AS PREVIOUSLY ANNOUNCED The Company's quarterly earnings conference call will be held today, Tuesday, January 20, 2004, at 11:00 a.m. Eastern Time. To participate, please telephone at least ten minutes prior at (800) 289-0572. Flagstar Bancorp, which has $10.6 billion in total assets, is the second largest independent banking institution headquartered in Michigan. Flagstar operates 99 banking centers throughout Michigan and Indiana. Flagstar also operates 128 loan centers in 25 states and 14 correspondent lending offices located 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 SUMMARY OF THE CONSOLIDATED STATEMENTS OF EARNINGS
At or for the three months ended For the year ended December 31, December 31, 2003 2002 2003 2002 --------------- --------------- --------------- --------------- (Unaudited, In Thousands, Except Share Data) Interest income $ 124,885 $ 112,963 $ 511,185 $ 450,112 Interest expense 80,512 68,544 308,483 263,880 ------------ ------------ ------------ ------------ Net interest income 44,373 44,419 202,702 186,232 Provision for losses 2,607 7,537 22,245 18,423 ------------ ------------ ------------ ------------ Net interest income after provision 41,766 36,882 180,457 167,809 Loan servicing fees, net 12,543 (9,773) (18,660) (4,278) Gain on loan sales, net 22,648 72,922 359,440 183,909 Gain on MSR sales, net 21,102 710 67,302 14,474 Other income 18,124 12,054 51,844 31,613 Operating expenses 60,253 62,929 249,276 222,274 ------------ ------------ ------------ ------------ Earnings before federal tax provision and cumulative effect of a change in accounting principle 55,930 49,866 391,107 171,253 Provision for federal income taxes 19,259 17,800 136,755 60,626 ------------ ------------ ------------ ------------ Earnings before cumulative effect of a change in accounting principle 36,671 32,066 254,352 110,627 Cumulative effect of a change in accounting principle - - 18,716 ------------ ------------ ------------ ------------ NET EARNINGS $ 36,671 $ 32,066 $ 254,352 $ 129,343 ============ ============ ============ ============ Earnings per share before cumulative effect of a change in accounting principle* Basic $ 0.60 $ 0.55 $ 4.25 $ 1.90 Diluted $ 0.57 $ 0.51 $ 3.99 $ 1.79 Earnings per share from cumulative effect of a change in accounting principle* Basic - - - $ 0.32 Diluted - - - $ 0.30 ------------ ------------ ------------ ------------ Net earnings per share * Basic $ 0.60 $ 0.55 $ 4.25 $ 2.22 Diluted $ 0.57 $ 0.51 $ 3.99 $ 2.09 ============ ============ ============ ============ Dividends paid per common share * $ 0.15 $ 0.03 $ 0.50 $ 0.12 Interest rate spread 1.72% 2.27% 1.89% 2.74% Net interest margin 1.80% 2.42% 2.17% 2.87% Return on average assets 1.36% 1.62% 2.52% 1.79% Return on average equity 23.29% 31.81% 47.58% 37.14% Efficiency ratio 50.25% 51.20% 37.37% 52.64% Mortgage loans originated or purchased $ 7,800,580 $ 15,577,278 $ 56,378,151 $ 43,192,312 Mortgage loans sold $ 6,403,128 $ 14,508,176 $ 51,922,757 $ 40,495,894 Equity/assets ratio (average for the period) 5.83% 5.09% 5.30% 4.82% Ratio of charge-offs to average investment loans 0.17% 0.45% 0.43% 0.31%
* All statistics that relate to share data have been restated for a 2 for 1 stock dividend completed on May 15, 2003. Certain amounts within the accompanying summary of selected consolidated financial data have been reclassified to conform to the 2003 presentation. SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA-CONTINUED SUMMARY OF THE CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION:
December 31, September 30, December 31, December 31, 2003 2003 2002 2001 --------------- -------------- ------------ -------------- (Unaudited, In Thousands, Except Share Data) Total assets $ 10,570,193 $ 10,952,997 $ 8,206,712 $ 6,628,637 Loans held for sale 2,771,507 3,264,471 3,312,278 2,759,929 Investment loans, net 6,801,357 5,348,662 3,985,126 3,152,804 Allowance for losses 36,017 36,605 43,499 32,631 Mortgage servicing rights 260,128 229,515 230,756 168,469 Total deposits 5,680,167 5,662,737 4,373,889 3,608,103 FHLB advances 3,246,000 3,320,000 2,222,000 1,970,505 Stockholders' equity 654,591 618,704 418,946 291,488 OTHER FINANCIAL AND STATISTICAL DATA: Equity/assets ratio 6.19% 5.65% 5.11% 4.40% Core capital ratio 7.44% 6.89% 6.73% 6.13% Total risk-based capital ratio 13.50% 13.74% 12.01% 11.44% Book value per share * $ 10.79 $ 10.26 $ 7.08 $ 5.07 Shares outstanding * 60,671 60,273 59,190 57,420 Mortgage loans serviced for others $ 30,395,079 $ 29,312,081 $ 21,586,797 $ 14,222,802 Value of mortgage servicing rights 0.86% 0.78% 1.07% 1.18% Allowance for losses to non performing loans 61.7% 67.6% 63.9% 46.6% Allowance for losses to investment loans 0.53% 0.68% 1.09% 1.03% Non performing assets to total assets 1.01% 0.97% 1.50% 1.35% Number of bank branches 99 98 87 71 Number of loan origination centers 128 114 92 69 Number of correspondent offices 14 14 14 15 Number of employees 3,512 3,939 3,588 3,047
* All statistics that relate to share data have been restated for 2 for 1 stock dividends completed on May 15, 2003. Certain amounts within the accompanying summary of selected consolidated financial data have been reclassified to conform to the 2003 presentation. -----END PRIVACY-ENHANCED MESSAGE-----