-----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, PV70rWQjXCzwMbJstexsmTyrJBy19KGrJrQ0+F1SEcUY5FlbC9G57YTxRbKRnV1B B4mHs+RLvTcPtMLMUxCPuA== 0000950124-04-003251.txt : 20040719 0000950124-04-003251.hdr.sgml : 20040719 20040719161825 ACCESSION NUMBER: 0000950124-04-003251 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040715 ITEM INFORMATION: FILED AS OF DATE: 20040719 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: 04920234 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 k86892e8vk.txt CURRENT REPORT DATED JULY 15, 2004 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 15, 2004 FLAGSTAR BANCORP, INC. ---------------------- (Exact name of Registrant as specified in its charter) Michigan 001-16577 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 July 15, 2004, Flagstar Bancorp, Inc. (the "Company") announced its financial results for the quarter ended June 30, 2004. 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 its behalf by the undersigned hereunto duly authorized. FLAGSTAR BANCORP, INC. Date: July 19, 2004 By: /s/ Michael W. Carrie -------------------------------------- Michael W. Carrie Executive Director, Chief Financial Officer and Treasurer (Duly Authorized Representative) EXHIBIT INDEX EXHIBIT NO. Exhibit Description 99.1 Press Release dated July 15, 2004 EX-99.1 2 k86892exv99w1.txt PRESS RELEASE DATED JULY 15, 2004 EXHIBIT 99.1 [FLAGSTAR BANCORP LOGO] 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 $0.65 PER SHARE RETAIL BANKING PROFITS CONTRIBUTE 58.8% OF TOTAL Troy, Mich. (July 15, 2004) - Flagstar Bancorp, Inc. (NYSE:FBC), today released quarterly earnings of $41.2 million, or $0.65 per share -- diluted. HIGHLIGHTS IN THE QUARTER INCLUDE: o An annualized return on average equity of 23.8%; o An annualized return on average assets of 1.4%; o A retail banking contribution of approximately $0.38 per share; o Record net interest income of $59.3 million; (more) RETAIL BANKING The Company's retail banking operation provided 58.8% of net earnings compared to 33.0% for all of 2003 and 49.1% reported in the first quarter of 2004. The Company opened 3 banking centers during the quarter. Flagstar's deposits were $6.5 billion at June 30, 2004 compared with $5.7 billion at December 31, 2003 and $6.1 billion at March 31, 2004. At June 30, 2004, consumer direct transaction account balances, including checking, savings, and money market accounts, represented $2.1 billion, compared with $2.0 billion at December 31, 2003. On a sequential quarter basis, the Company's cost of deposits increased by 9 basis points. As a part of its asset-liability management, the Company's $1.4 billion growth in the balance sheet and $1.9 billion growth in its held for investment portfolio since year-end has included a $0.8 billion increase in deposits. NET INTEREST INCOME Net interest was reported at $59.3 million compared to $47.0 million in the comparable period last year and $51.0 million in the March 2004 quarter. The net interest margin for the quarter was 2.13%, compared with 2.26% for the same period last year. The decrease in the interest margin was primarily caused by the 10 basis point decrease in the spread between the yield on the earning asset portfolio that declined 55 basis points and was not offset by the 45 basis point decrease in liability costs. On a sequential quarter basis, the Company's net interest income increased $8.3 million. Also, the net interest margin increased 13 basis points from the 2.00% recorded in the first quarter of 2004. The quarterly increase was primarily caused by a $541.3 million increase in the amount of earning assets versus paying liabilities that was somewhat offset by a 2 basis point decrease in the interest rate spread. OUTLOOK "The second quarter margin was a bright spot in our quarterly earnings release and is a testament to what we are building. The record amount of interest income is part of our plan to significantly reduce our reliance on mortgage banking sale revenue. In the next two quarters, it is our intent to increase the earning asset portfolio by another $2.0 billion, while adhering to sound underwriting standards and maintaining our duration-matching guidelines," stated Mark T. Hammond, President and CEO. (more) LOAN SALE GAINS Gains recorded on the sales of mortgage loans were $7.5 million during the quarter ended June 30, 2004 from $154.3 million in the comparable 2003 period. This decrease was attributable to the $9.2 billion decrease in the amount of loans sold during the quarter. The gain on sale spread equaled 17 basis points in the second quarter of 2004 versus 96 basis points in the second quarter of 2003. As previously reported, the Company originated $9.0 billion in residential mortgage loans in the second quarter of 2004. This production level compares to the $17.5 billion originated in the comparable 2003 period. This decrease was primarily attributable to a decrease in the amount of mortgage loan refinancings.
For the three months ended For the six months ended June 2004 June 2003 June 2004 June 2003 -------------- -------------- --------------- -------------- Net gain on loan sales $ 7,514 $ 154,256 $ 39,645 $ 243,503 Plus: FASB 133 adjustment 159 5,881 (6,545) 13,304 Plus: Secondary Market Reserve 5,849 5,396 13,916 11,908 ------------ ------------ ------------ ------------ Gain on loan sales $ 13,522 $ 165,533 $ 47,016 $ 268,715 Loans sold $ 8,085,479 $ 17,287,723 $ 15,726,216 $ 30,540,969 Sales spread 0.17% 0.96% 0.30% 0.88%
OUTLOOK "The second quarter was a challenging quarter for our mortgage banking operation. The narrow amount of spread achieved on loan sales was caused by the competitive pricing observed in the origination market. Our gain on sale margins did improve as the quarter progressed but the average gain was the lowest in our history. We expect our origination volume to slow during the second half of the year and our gain on sale spreads to slightly increase from the second quarter's low," stated Mark T. Hammond. (more) MORTGAGE SERVICING LOANS SERVICED FOR OTHERS At June 30, 2004, the Company serviced $26.7 billion in loans for others. This volume is down 12.2% from December 31, 2003 and down 10.7% from March 31, 2004. During the quarter the Company originated $8.1 billion and sold $8.6 billion of servicing rights. The MSR sales consisted of $4.8 billion of bulk sales and $3.6 billion of flow sales. The current portfolio contains 200,296 loans that have a weighted rate of 5.96%, a weighted service fee of 34.8 basis points, and a weighted 12 months of seasoning. Revenue from the portfolio earned a record $29.9 million during the quarter, up $5.2 million over the comparable 2003 period.
For the three months ended For the six months ended June 2004 June 2003 June 2004 June 2003 ----------- ----------- ----------- ----------- Beginning balance $29,858,203 $22,336,428 $30,395,079 $21,586,797 Originations 8,085,479 17,287,722 15,726,216 30,540,969 Sales 8,599,572 7,774,003 14,957,626 18,202,613 Amortizations and prepayments 2,676,802 2,896,276 4,496,361 4,971,282 ----------- ----------- ----------- ----------- Ending balance $26,667,308 $28,953,871 $26,667,308 $28,953,871 =========== =========== =========== ===========
MORTGAGE SERVICING RIGHTS The capitalized value of the servicing portfolio is $236.2 million, or 0.89% of the outstanding balance of the underlying mortgage balances. The preliminary market value of the portfolio is $346.2 million. During the quarter, no impairment adjustment was made to the book value of the portfolio. The Company wrote off $24.3 million in book value for loan prepayment and amortization. OUTLOOK "During the first six months of 2004, we have sold 95% of the mortgage servicing rights we originated. On a going forward basis, the Company will continue to accumulate and sell servicing rights. Historically, we have sold 75% of our servicing originations, and in a rising or higher interest rate environment, we have sold between 100% and 140% of the period's originations," added Mr. Hammond. SECONDARY MARKET RESERVE REPURCHASED ASSETS Net repurchased assets pending foreclosure totaled $21.9 million at June 30, 2004 compared to $12.0 million at December 31, 2003 and $18.7 million at March 31, 2004. During the second quarter of 2004, the Company repurchased $18.1 million in non-performing assets previously sold to the secondary market. During 2003, the Company repurchased a total of $46.3 million in non-performing assets. RESERVE FOR LOSSES ON REPURCHASED ASSETS The reserve for losses on repurchased assets was increased $2.6 million, or 25.2% to $12.9 million at June 30, 2004 from $10.3 million at December 31, 2003. Losses attributable to repurchased assets totaled $5.0 million and $3.5 million for the three months ended June 30, 2004 and 2003, respectively. (more) ASSET QUALITY NON-PERFORMING LOANS Non-performing loans at June 30, 2004 were $59.6 million, up $1.3 million or 2.2% from year-end and down $2.2 million from March 31, 2004. Total delinquencies in the Company's investment loan portfolio equaled 1.20% at June 30, 2004, compared with 1.54% at December 31, 2003 and 1.30% at March 31, 2004. Consistent with the Company's business model, 94.8% of non-performing loans were backed by single-family homes. PROVISION FOR LOSSES The provision for losses was $3.6 million for the three months ended June 30, 2004 from $6.8 million during the second quarter of 2003 and $9.3 million in the quarter ended March 31, 2004. The provision for losses in the current quarter and the comparable quarter in 2003 included a $0.9 million and a $1.3 million increase in the allowance for losses, respectively. Net charge-offs were an annualized 0.12% and 0.73% of average investment loans during the three months ended June 30, 2004 and June 30, 2003, respectively. Net charge-offs were 0.35% of average investment loans during 2003. ALLOWANCE FOR LOSSES The allowance for losses totaled $41.7 million at June 30, 2004. 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 70.0%. The allowance for losses as a percentage of investment loans was 0.48% at June 30, 2004. BALANCE SHEET AND CAPITAL MANAGEMENT Consolidated assets at June 30, 2004 were $12.0 billion, compared with $10.6 billion at December 31, 2003 and $12.2 billion at March 31, 2004. Flagstar's stockholders' equity now stands at $709.8 million, or 5.93% of total assets. The book value of the common stock at June 30, 2004 equaled $11.61 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 6.41% and the Total risk-based capital ratio stood at 11.83% at June 30, 2004. AS PREVIOUSLY ANNOUNCED The Company's quarterly earnings conference call will be held on Friday, July 16, 2003 at 12:00 p.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) 289-0494; passcode 109085. Flagstar Bancorp is the second largest banking institution headquartered in Michigan. Flagstar operates over 100 banking centers in Michigan and Indiana and loan centers in 26 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 At or for the three months ended At or for the six months ended EARNINGS June 30, June 30, 2004 2003 2004 2003 ------------ ------------ ------------ ------------ (Unaudited, In Thousands, Except Share Data) Interest income $ 140,214 $ 122,201 $ 271,055 $ 246,993 Interest expense 80,893 75,239 160,757 146,477 ------------ ------------ ------------ ------------ Net interest income 59,321 46,962 110,298 100,516 Provision for losses 3,603 6,772 12,905 14,659 ------------ ------------ ------------ ------------ Net interest income after provision 55,718 40,190 97,393 85,857 Loan servicing fees, net 5,589 (13,056) 13,822 (38,665) Gain on loan sales, net 7,514 154,256 39,645 243,503 Gain on MSR sales, net 37,248 320 59,033 1,581 Other income 20,688 15,509 36,620 26,187 Operating expenses 63,337 65,489 125,716 123,060 ------------ ------------ ------------ ------------ Earnings before federal income tax 63,420 131,730 120,797 195,403 Provision for federal income taxes 22,230 46,150 42,650 68,496 ------------ ------------ ------------ ------------ Net earnings $ 41,190 $ 85,580 $ 78,147 $ 126,907 ============ ============ ============ ============ Basic earnings per share $ 0.68 $ 1.44 $ 1.29 $ 2.14 Diluted earnings per share $ 0.65 $ 1.34 $ 1.22 $ 2.00 Dividends paid per common share $ 0.25 $ 0.10 $ 0.50 $ 0.15 Interest rate spread 1.92% 2.02% 1.90% 2.23% Net interest margin 2.13% 2.26% 2.07% 2.47% Return on average assets 1.37% 3.48% 1.34% 2.71% Return on average equity 23.79% 69.55% 22.98% 54.67% Efficiency ratio 48.59% 31.85% 48.46% 36.58% Mortgage loans originated or purchased $ 9,001,224 $ 17,488,383 $ 18,451,534 $ 32,550,482 Mortgage loans sold $ 8,085,479 $ 17,287,723 $ 15,726,216 $ 30,540,969 Equity/assets ratio (average for the period) 5.75% 5.00% 5.83% 4.96% Ratio of charge-offs to average investment loans 0.12% 0.73% 0.17% 0.84% - ---------------------------------------------------------------------------------------------------------------- SUMMARY OF THE CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION: June 30, March 31, December 31, June 30, 2004 2004 2003 2003 ------------ ------------ ------------ ------------ Total assets $ 11,965,611 $ 12,185,697 $ 10,570,193 $ 10,179,678 Loans held for sale 2,157,845 2,984,776 2,759,551 3,731,829 Investment loans portfolio, net 8,681,371 8,065,100 6,804,235 4,799,097 Allowance for losses 41,704 40,814 36,017 41,509 Mortgage servicing rights 236,211 261,132 260,128 210,869 Deposits 6,534,492 6,075,328 5,680,167 5,269,463 FHLB advances 3,633,199 4,067,409 3,246,000 2,436,122 Stockholders' equity 709,821 672,098 654,683 535,187 OTHER FINANCIAL AND STATISTICAL DATA: Equity/assets ratio 5.93% 5.52% 6.19% 5.26% Core capital ratio 6.41% 6.58% 7.44% 6.58% Total risk-based capital ratio 11.83% 12.01% 13.47% 12.17% Book value per share $ 11.61 $ 11.05 $ 10.79 $ 8.99 Shares outstanding 61,141 60,832 60,675 59,499 Mortgage loans serviced for others $ 26,667,308 $ 29,858,203 $ 30,395,079 $ 28,953,871 Value of mortgage servicing rights 0.89% 0.87% 0.86% 0.73% Allowance for losses to non performing loans 70.0% 66.1% 61.7% 71.7% Allowance for losses to loans held for investment 0.48% 0.50% 0.53% 1.03% Non performing assets to total assets 1.00% 0.96% 1.01% 1.14% Number of bank branches 103 100 98 95 Number of loan origination centers 137 131 128 108 Number of salaried employees 2,482 2,502 2,523 3,106 Number of commissioned employees 997 1,124 989 1,004
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