-----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, CGT9dJHlcQVChwip9KrGrOc0pzaJLbOj+jkEW4Z7Of+6dovvm5SSnz8PPSrQs6S/ h6JrBBBU22yZPU5dtfVzyA== 0000950124-05-004550.txt : 20050729 0000950124-05-004550.hdr.sgml : 20050729 20050729171133 ACCESSION NUMBER: 0000950124-05-004550 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050727 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050729 DATE AS OF CHANGE: 20050729 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: 05985767 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 k97151e8vk.txt CURRENT REPORT, DATED JULY 27, 2005 =============================================================================== 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: JULY 27, 2005 FLAGSTAR BANCORP, INC. (Exact name of registrant as specified in its charter)
MICHIGAN 1-16577 38-3150651 (State or other jurisdiction of (Commission File (I.R.S. Employer incorporation) Number) Identification No.) 5151 CORPORATE DRIVE, TROY, MICHIGAN 48098 (Address of principal executive offices) (Zip Code)
(248) 312-2000 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) =============================================================================== ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On July 27, 2005, Flagstar Bancorp, Inc. issued a press release regarding its results of operations and financial condition for the three and six months ended June 30, 2005. The text of the press release is included as Exhibit 99.1 to this report. The information included in the press release text and the financial supplement is consider to be "furnished" under Securities Exchange Act 1934. The Company will include final financial statements and additional analyses for the three and six months ended June 30, 2005, as part of its Form 10-Q covering that period. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (c) The following exhibit is being furnished herewith:
Exhibit No. Exhibit Description - ----------- ------------------- 99.1 Press release of Flagstar Bancorp, Inc. dated July 27, 2005.
SIGNATURE 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. Dated: July 29, 2005 By: /s/ Paul D. Borja ---------------------------------- Paul D. Borja Executive Vice President and Chief Financial Officer 2 =============================================================================== EX-99.1 2 k97151exv99w1.txt PRESS RELEASE DATED JULY 27, 2005 EXHIBIT 99.1 [FLAGSTAR BANCORP LOGO] NEWS RELEASE FOR MORE INFORMATION CONTACT: Paul D. Borja Executive Vice Executive / CFO (248) 312-2000 FOR IMMEDIATE RELEASE FLAGSTAR REPORTS SECOND QUARTER RESULTS Troy, Mich. (July 27, 2005) - Flagstar Bancorp, Inc. (NYSE:FBC), today released second quarter net earnings of $27.8 million, or $0.43 per share - diluted. These results represent a 4.4% decrease when compared to previously-issued Company guidance of $0.45 to $0.60 per share. For the second quarter ended June 30, 2004 net earnings totaled $41.2 million, or $0.65 per share - diluted. For the six months ended June 30, 2005 net earnings totaled $47.6 million, or $0.74 per share - diluted. These results compare to $78.1 million, or $1.22 per share - diluted, reported in the comparable 2004 period. HIGHLIGHTS FROM THE QUARTERLY REPORT INCLUDE: - - An annualized return on average equity of 14.88%; - - Total assets increased 4.2% in the quarter to $14.9 billion; - - A second quarter annualized balance sheet growth of 27.5%, including an annualized increase of 13.5% in the deposit portfolio and an annualized growth of 24.8% in the investment loan categories; - - Second quarter total loan production of $7.5 billion; - - A second quarter operating efficiency ratio of 59.19%; - - The opening of the Company's 128th banking center; - - Retail banking earned 55.6% of pretax earnings for the quarter; - - Mortgages serviced for others of $26.6 billion. (more) RETAIL BANKING OPERATIONS The Company's pre-tax profits from its banking operations totaled approximately $24.1 million during the quarter. These results were down 20.5% from the first quarter of 2005 and down 35.8% from the second quarter of 2004. During the current quarter, the earning asset base of the retail banking operations increased 4.5% and provided 55.6% of pre-tax operating earnings compared to 61.6% for 2004. This compares with a 98.2% contribution to pre-tax operating earnings by the retail banking operation in the first quarter of 2005. This change reflects the compressed net interest margin experienced in the second quarter of 2005, resulting in lower earnings attributed to the retail banking operations, coupled with the $18.7 million increase in revenues attributable to the mortgage banking operations during the second quarter of 2005. The increase in mortgage banking revenues was primarily from increased loan sales. The Company opened five banking centers during the quarter and a total of eight during the first six-months of 2005. Flagstar's deposits were $7.9 billion at June 30, 2005 compared with $7.4 billion at December 31, 2004 and $6.5 billion at June 30, 2004. At June 30, 2005, consumer transaction account balances, including checking, savings, and money market accounts, represented $1.8 billion compared with $2.1 billion at December 31, 2004. During the past quarter, the Company's average weighted cost of deposits increased by 28 basis points. The Company's consumer certificate of deposit portfolio carries a weighted rate of 3.67% and a weighted term of 16.1 months at June 30, 2005. On a sequential quarter, the average weighted rate increased 3.7% from the 3.54% reported in the first quarter of 2005. The municipal division totals $1.5 billion in funds from local governmental entities within the Company's immediate market area. These deposits carry a weighted rate of 3.41% and a weighted term of 3.0 months at June 30, 2005. On a sequential quarter, the weighted rate on municipal deposits increased by 15.6% from the 2.95% reported in the first quarter of 2005. The national deposits are comprised of strategically placed duration specific offerings solicited to a nation wide audience. These deposits carry a weighted rate of 3.28% and a weighted term of 21.4 months at June 30, 2005. The weighted average rate for national deposits increased 3.1% from 3.18% reported for the quarter ended March 31, 2005. NET INTEREST INCOME Net interest income was $58.4 million for the three months ended June 30, 2005 compared to $59.3 million in the comparable period for 2004, and $123.7 million for the six months ended June 30, 2005 compared to $110.3 million in the same period last year. The net interest margin for the quarter ended June 30, 2005 was 1.79%, which was a decrease of 34 basis points when compared to the same period last year. The net interest margin for the six months ended June 30, 2005 was 1.90% compared to 2.07% for the six months ended June 30, 2004. On a sequential quarter basis, the Company's net interest income decreased because of the 19 basis point decrease in the interest rate spread. The net interest margin decreased 21 basis points to 1.79% from the 2.00% recorded in the first quarter of 2005. MORTGAGE BANKING OPERATIONS LOAN SALE GAINS Gains recorded on the sales of mortgage loans were $31.2 million during the quarter ended June 30, 2005 from $7.5 million recorded in the comparable 2004 period. This increase was attributable to the 30 basis point increase achieved on the gain on sale spread during the quarter ended June 30, 2005 compared to the same quarter in 2004. On a sequential quarter basis the gain on sale spread equaled 47 basis points in the second quarter of 2005 versus 14 basis points in the first quarter of 2005. (more) LOAN SALE GAINS (CONTINUED) As previously reported, the Company originated $7.1 billion in residential mortgage loans in the second quarter of 2005. This production level compares to the $9.1 billion originated in the comparable 2004 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 2005 June 2004 June 2005 June 2004 ------------ ------------ ------------ ------------ Net gain on loan sales $ 31,177 $ 7,513 $ 40,933 $ 39,645 Plus: FASB 133 adjustment (5,866) 159 (9,001) (6,545) Plus: Secondary Market Reserve 2,452 5,849 3,454 13,916 ------------ ------------ ------------ ------------ Gain on loan sales $ 27,763 $ 13,521 $ 35,386 $ 47,016 Loans sold $ 5,891,492 $ 8,085,479 $ 11,329,539 $ 15,726,216 Sales spread 0.47% 0.17% 0.32% 0.30%
MORTGAGE SERVICING LOANS SERVICED FOR OTHERS At June 30, 2005, the Company serviced $26.6 billion in loans for others. This volume is up 24.3% from December 31, 2004 and down 0.4% from June 30, 2004. During the first six months of 2005 the Company sold $2.5 billion in bulk servicing as compared to $8.8 billion of bulk servicing sales and $5.7 billion in flow servicing sales completed in the first six months of 2004. The current portfolio contains 198,102 loans that have a weighted rate of 6.03%, a weighted service fee of 34.8 basis points, and a weighted 14 months of seasoning. Revenue from the portfolio earned $21.7 million during the quarter, down $8.2 million, or 27.4% over the comparable 2004 period. For the six months ended June 30, 2005 revenue from the loan serviced for others portfolio totaled $43.8 million, a decrease of $15.2 million, or 25.8% compared to the six months ended June 30, 2004. MORTGAGE SERVICING RIGHTS The capitalized value of the servicing portfolio is $284.3 million, or 1.07% of the outstanding balance. The estimated market value of the portfolio was $314.1 million at June 30, 2005. The Company amortized $36.2 million in book value for loan prepayments and amortizations for the first six months of 2005. ASSET QUALITY NON-PERFORMING LOANS Non-performing loans at June 30, 2005 were $65.2 million, down $1.9 million or 2.8% from year-end and up $3.7 million from June 30, 2004. Total delinquencies in the Company's investment loan portfolio equaled 1.00% at June 30, 2005, compared with 0.99% at December 31, 2004 and 1.20% at June 30, 2004. Delinquent loans include $14.9 million in matured commercial real estate loans that are in the process of being renegotiated. Consistent with the Company's business model, 91% of non-performing loans were backed by single family homes. PROVISION FOR LOSSES The provision for losses was $2.9 million for the three months ended June 30, 2005 as compared to the $3.6 million recorded during the second quarter of 2004. Net charge-offs were an annualized 0.24% and 0.12% of average investment loans during the three months ended June 30, 2005 and June 30, 2004, respectively. Provision for losses were $9.2 million for the six months ended June 30, 2005, a decrease of $3.7 million, or 28.7% when compared to the same period in 2004. Net charge-offs were annualized at 0.24% of average investment loans for the six months ended June 30, 2005 and 0.17% for the six months ended June 30, 2004. (more) ALLOWANCE FOR LOSSES The allowance for losses totaled $33.3 million at June 30, 2005, as compared to $37.6 million at December 31, 2004 and $41.7 million at June 30, 2004. The allowance for losses decreased slightly on a sequential quarter basis due to a minimal improvement in delinquency ratios and a small decrease in non-performing loans. Non-performing loan to loans held for investment declined to 0.55% from 0.71% at June 30, 2004. The ratio of non-performing assets to total assets declined to 93 basis points at June 30, 2005 from 102 basis points at June 30, 2004. The allowance for losses as a percentage of non-performing loans was 51.2%, 56.1%, and 67.8% at June 30, 2005, December 31, 2004, and June 30, 2004, respectively. The allowance for losses as a percentage of investment loans was 0.28%, 0.36%, and 0.48% at June 30, 2005, December 31, 2004, and June 30, 2004, respectively. REPURCHASED ASSETS Net repurchased assets pending foreclosure totaled $15.8 million at June 30, 2005, a decrease of $1.3 million, or 7.6% compared to $17.1 million at December 31, 2004, and a decrease of $6.1 million, or 28.9%, compared to $21.9 million at June 30, 2004. During the first six months of 2005, the Company repurchased $27.6 million in non-performing assets previously sold to the secondary market. During 2004, the Company repurchased a total of $68.7 million in non-performing assets. SECONDARY MARKET RESERVE The secondary market reserve totaled $15.6 million at June 30, 2005 compared to $19.0 million at December 31, 2004. The secondary market reserve is determined based upon a systematic methodology that incorporates management's analysis of the potential for future repurchased loans and the effects of actual recoveries. Provisions charged to earnings attributable to secondary market activities totaled $2.5 million and $5.8 million for the three months ended June 30, 2005 and 2004, respectively. During the six months ended June 30, 2005 and 2004, provisions charged to earnings attributable to secondary market activities totaled $3.5 million and $13.9 million, respectively. BALANCE SHEET AND CAPITAL ADEQUACY Consolidated assets at June 30, 2005 were $14.9 billion, compared with $13.1 billion at December 31, 2004 and $11.9 billion at June 30, 2004. The Company's investment loan portfolio totaled $11.8 billion at June 30, 2005 as compared to $10.5 billion at December 31, 2004. The investment loan portfolio was comprised of the following loans:
June 30, December 31, June 30, DESCRIPTION: 2005 2004 2004 ----------- ----------- ----------- (In thousands) First mortgage loans $ 9,341,981 $ 8,657,293 $ 7,369,787 Second mortgage loans 293,582 196,518 133,769 Commercial real estate loans 846,706 751,730 575,459 Construction loans 67,749 67,640 67,793 Warehouse lending 289,244 249,291 237,343 Consumer loans 937,503 627,576 330,675 Non-real estate commercial loans 8,415 7,715 8,250 ----------- ----------- ----------- Total investment loan portfolio $11,784,480 $10,558,463 $ 8,723,076 =========== =========== ===========
Flagstar's stockholders' equity now stands at $755.3 million, or 5.06% of total assets. The book value of the common stock at June 30, 2005 equaled $12.13 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 6.07% and the total risk-based capital ratio stood at 10.50% at June 30, 2005. (more) AS PREVIOUSLY ANNOUNCED The Company's quarterly earnings conference call will be held on Thursday, July 28, 2005 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 (913) 981-5572 or toll free at (800) 406-5356, passcode: 4953117. Flagstar Bancorp, which has $14.9 billion in total assets, is the second largest banking institution headquartered in Michigan. Flagstar currently operates 128 banking centers with $7.9 billion in total deposits. Flagstar banking centers are located throughout southern Michigan, Indiana and Georgia. Flagstar also operates 114 loan centers in 27 states and 11 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 At or for the three months At or for the six months EARNINGS ended June 30, ended June 30, 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Interest income $ 166,111 $ 140,214 $ 329,237 $ 271,055 Interest expense 107,670 80,893 205,586 160,757 ----------- ----------- ----------- ----------- Net interest income 58,441 59,321 123,651 110,298 Provision for losses 2,904 3,603 9,150 12,905 ----------- ----------- ----------- ----------- Net interest income after provision 55,537 55,718 114,501 97,393 Loan fees and charges, net 3,213 6,017 5,835 10,088 Deposit fees and charges 4,400 3,291 7,977 6,159 Loan servicing fees, net 1,669 5,590 7,614 13,822 Gain on loan sales, net 31,177 7,513 40,933 39,645 Gain on MSR sales, net 2,262 37,248 6,510 59,033 Other income 12,148 11,380 21,561 20,373 Operating expenses 67,074 63,337 130,796 125,716 ----------- ----------- ----------- ----------- Earnings before federal income tax 43,332 63,420 74,135 120,797 Provision for federal income taxes 15,532 22,230 26,557 42,650 ----------- ----------- ----------- ----------- Net earnings $ 27,800 $ 41,190 $ 47,578 $ 78,147 =========== =========== =========== =========== Basic earnings per share $ 0.45 $ 0.68 $ 0.77 $ 1.29 Diluted earnings per share $ 0.43 $ 0.65 $ 0.74 $ 1.22 Dividends paid per common share $ 0.25 $ 0.25 $ 0.50 $ 0.50 Interest rate spread 1.71% 1.91% 1.71% 1.90% Net interest margin 1.79% 2.13% 1.90% 2.07% Return on average assets 0.78% 1.37% 0.67% 1.34% Return on average equity 14.88% 24.18% 12.80% 23.26% Efficiency ratio 59.19% 48.59% 61.10% 48.46% Average earning assets $13,061,872 $11,148,249 $13,108,399 $10,705,189 Average paying liabilities $12,795,846 $10,440,973 $12,576,554 $10,225,249 Average stockholders' equity $ 747,452 $ 681,407 $ 743,618 $ 669,086 Mortgage loans originated or purchased $ 7,103,622 $ 9,054,958 $14,316,714 $18,543,272 Other loans originated or purchased $ 427,368 $ 172,330 $ 784,876 $ 297,472 Mortgage loans sold $ 5,891,492 $ 8,085,479 $11,329,539 $15,726,216 Equity/assets ratio (average for the period) 5.27% 5.66% 5.25% 5.74% Ratio of charge-offs to average investment loans 0.24% 0.12% 0.24% 0.17%
=============================================================================== SUMMARY OF THE CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION:
June 30, March 31, December 31, June 30, 2005 2005 2004 2004 ----------- ----------- ----------- ----------- Total assets $14,916,627 $14,273,842 $13,125,488 $11,948,665 Loans held for sale 1,961,977 1,980,854 1,506,311 2,157,845 Investment loans portfolio, net 11,751,110 11,158,390 10,520,836 8,681,371 Allowance for losses 33,372 37,018 37,627 41,704 Mortgage servicing rights 284,331 215,043 187,975 236,211 Deposits 7,887,028 7,744,681 7,379,655 6,534,492 FHLB advances 5,161,035 4,738,000 4,090,000 3,633,199 Stockholders' equity 755,278 743,198 734,837 698,806 OTHER FINANCIAL AND STATISTICAL DATA: Equity/assets ratio 5.06% 5.21% 5.60% 5.85% Core capital ratio 6.07% 6.24% 6.19% 6.36% Total risk-based capital ratio 10.50% 10.99% 10.97% 11.72% Book value per share $ 12.13 $ 11.99 $ 11.98 $ 11.43 Shares outstanding 62,244 62,006 61,358 61,141 Mortgage loans serviced for others $26,646,531 $22,518,180 $21,354,724 $26,667,308 Value of mortgage servicing rights 1.07% 0.95% 0.88% 0.89% Allowance for losses to non performing loans 51.2% 64.6% 56.1% 67.8% Allowance for losses to loans held for 0.28% 0.33% 0.36% 0.48% Non performing assets to total assets 0.93% 0.92% 1.07% 1.02% Number of bank branches 128 123 120 103 Number of loan origination centers 114 109 112 137 Number of salaried employees 2,431 2,404 2,396 2,482 Number of commissioned employees 800 838 980 997
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