-----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, DXt2ondAqfVErcQc50ceKhM+LY3T/8eJ01teqV6o6RhPoFIbkeKun8Iiagcqd8+O 2MBYwDKxklkteXA/uemwuQ== 0001157523-05-006501.txt : 20050726 0001157523-05-006501.hdr.sgml : 20050726 20050726082232 ACCESSION NUMBER: 0001157523-05-006501 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050726 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050726 DATE AS OF CHANGE: 20050726 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMERCIAL FEDERAL CORP CENTRAL INDEX KEY: 0000744778 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 470658852 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11515 FILM NUMBER: 05972806 BUSINESS ADDRESS: STREET 1: 13220 CALIFORNIA STREET CITY: OMAHA STATE: NE ZIP: 68154 BUSINESS PHONE: 4025549200 MAIL ADDRESS: STREET 1: COMMERCIAL FEDERAL BUILDING STREET 2: 13220 CALIFORNIA STREET CITY: OMAHA STATE: NE ZIP: 68154 8-K 1 a4937819.txt COMMERCIAL FEDERAL CORP. 8-K UNITED STATES 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 26, 2005 ------------- COMMERCIAL FEDERAL CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) NEBRASKA 1-11515 47-0658852 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification Number) 13220 CALIFORNIA STREET, OMAHA, NEBRASKA 68154 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (402) 554-9200 -------------- NOT APPLICABLE - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 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)) 1 COMMERCIAL FEDERAL CORPORATION ------------------------------ FORM 8-K -------- CURRENT REPORT -------------- Item 2.02 Results of Operations and Financial Condition: - -------------------------------------------------------- On July 26, 2005, the Registrant issued its earnings release for the three and six months ended June 30, 2005. The earnings release is attached to this report as Exhibit 99.1, which is furnished herewith. Item 9.01 Financial Statements and Exhibits: - -------------------------------------------- (c) Exhibits Exhibit 99.1 Press release dated July 26, 2005 2 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 thereunto duly authorized. COMMERCIAL FEDERAL CORPORATION ------------------------------------- (Registrant) Date: July 26, 2005 /s/ David S. Fisher ------------------- ------------------------------------- David S. Fisher Executive Vice President and Chief Financial Officer (Duly Authorized Officer) 3 EX-99.1 2 a4937819ex99_1.txt EXHIBIT 99.1 - PRESS RELEASE Exhibit 99.1 Commercial Federal Reports Second Quarter Net Income of $14.0 Million OMAHA, Neb.--(BUSINESS WIRE)--July 26, 2005--Commercial Federal Corporation (NYSE:CFB), today announced net income of $14.0 million, or $0.36 per diluted share, for the quarter ended June 30, 2005. This compares to reported net income of $18.7 million, or $0.45 per diluted share, for the same quarter one year earlier. Income for the current quarter was materially impacted due to a Bank Owned Life Insurance (BOLI) contract provision triggered by the Company's pending acquisition by Bank of the West, decreasing after-tax income by $6.6 million, or $0.17 per diluted share. Merger-Related Adjustments to Income As indicated, merger costs for the second quarter of 2005 included the write-off of an asset related to one of the Company's BOLI policies. Per the language in the BOLI policy, when the Company's board of directors approved the agreement and plan of merger with Bank of the West on June 13, 2005, it triggered a provision whereby the Claims Stabilization Reserve (CSR) for one of the BOLI policies could no longer be accounted for as an asset. This provision resulted in a $6.6 million non-tax deductible write-off, reducing reported earnings by $0.17 per diluted share. This component of the BOLI policy may be recorded as an asset again in the future after a certain conditions are met. "The recording of this BOLI adjustment resulted from application of a legal interpretation and accounting rule that is fully apart from the objective of the parties to the BOLI transaction. This non-cash charge has no bearing on the planned acquisition of the Company by Bank of the West," said David S. Fisher, executive vice president and chief financial officer. Also recorded in this caption for the current quarter were advisor-related merger costs associated with the pending acquisition of $1.0 million. Results for the Quarter "In anticipation of the merger later this year, I am very pleased to see that our core business is operating at a level that would have met or exceeded external earnings estimates for the Company. Absent merger-related charges, the mortgage servicing sale and related balance sheet actions completed in the first quarter have put us in a position to outperform analyst expectations for our margins and earnings," reported William A. Fitzgerald, chairman of the board and chief executive officer. Net Interest Income Net interest income totaled $67.1 million for the second quarter, compared with $71.4 million for the quarter ended June 30, 2004. Net interest margin improved year-over-year by 22 basis points, to 2.95%. While margin increased, actions taken in the first quarter of 2005 related to the sale of the mortgage servicing business shrank the absolute size of both interest earnings assets and liabilities to a point where the total dollar of net interest income declined. Noninterest Income Noninterest income increased 17% from the same quarter a year earlier to total $29.5 million for the quarter ended June 30, 2005. Retail fees were up a strong 12% over last year's second quarter. And, as is evident, mortgage banking results are no longer a material component of this income statement category. Operating Expenses For the quarter ended June 30, 2005, general and administrative expenses increased by $3.7 million to $70.9 million compared to $67.2 million for the same quarter a year earlier. Increases in compensation and benefits expenses were more than offset by decreases in other non-merger related items. Also included in this category for the current quarter were merger-related costs associated with the pending acquisition of the Company by Bank of the West of $7.6 million and trailing exit costs associated with the sale of mortgage servicing of $864,000. Credit Risk Management At the end of the second quarter, total nonperforming assets rose to $67.5 million from $61.9 million in the previous quarter. Despite the increase, overall credit quality remains strong with only 0.65% of total assets being considered nonperforming. Net loan charge-offs for the second quarter declined to $4.8 million, compared to $8.2 million in the previous quarter. The allowance for loan losses totaled $89.3 million at June 30, 2005, or 1.14% of loans outstanding versus $90.0 million, or 1.15%, at March 31, 2005. Balance Sheet and Capital Ratios Total assets as of June 30, 2005 were $10.3 billion, compared with $10.4 billion and $11.7 billion as of March 31, 2005 and June 30, 2004, respectively. The size of the balance sheet declined as expected, primarily driven by the Company's exit from the mortgage servicing business. For the second quarter, core deposits, including checking, money market and savings accounts (excluding custodial escrows) were up 9.7% or $348 million from a year prior. Total gross loans receivable held steady at $7.8 billion. As of June 30, 2005, stockholders' equity was $755.4 million, compared with $765.1 million at March 31, 2005 and $751.3 million at June 30, 2004. The capital ratios of the Company's banking subsidiary continued to exceed regulatory requirements for classification as "well-capitalized," the highest regulatory standard. Commercial Federal Corporation (NYSE:CFB) (the "Corporation") is the parent company of Commercial Federal Bank, a $10.3 billion federal savings bank with branches located in Nebraska, Iowa, Colorado, Kansas, Oklahoma, Missouri and Arizona. The Corporation's operations include consumer and commercial banking services, including retail banking, commercial and industrial lending, small business banking, construction lending, cash management, and insurance and investment services. The Corporation's website, http://www.comfedbank.com, includes access to company news releases, annual reports, quarterly financial statements and SEC filings. Certain statements contained in this release are forward-looking in nature. These statements are subject to risks and uncertainties that could cause the Corporation's actual results or financial condition to differ materially from those expressed in or implied by such statements. Factors of particular importance to the Corporation include, but are not limited to, changes in general economic conditions, changes in interest rates, changes in regulations or accounting methods, and price levels and conditions in the public securities markets generally. COMMERCIAL FEDERAL CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (Dollars in Thousands Except Par Value) - ---------------------------------------------------------------------- June 30, March 31, June 30, ASSETS 2005 2005 2004 - ---------------------------------------------------------------------- Cash (including short-term investments of $30,874, $2,592 and $1,841) $212,696 $163,793 $156,229 Investment securities available for sale, at fair value 522,403 519,964 1,031,111 Mortgage-backed securities available for sale, at fair value 608,906 702,984 1,133,434 Loans held for sale, net 198,570 211,154 444,774 Loans receivable, net of allowances of $89,268, $90,000 and $97,082 7,758,037 7,733,977 7,691,306 Federal Home Loan Bank stock 157,700 173,614 247,580 Foreclosed real estate 11,316 11,207 15,548 Premises and equipment, net 176,083 174,720 153,137 Bank owned life insurance 250,875 254,477 245,157 Other assets 250,317 268,701 418,451 Core value of deposits, net of accumulated amortization of $70,566, $69,596 and $66,652 10,483 11,453 14,397 Goodwill 159,229 159,229 162,717 - ---------------------------------------------------------------------- Total Assets $10,316,615 $10,385,273 $11,713,841 - ---------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY - ---------------------------------------------------------------------- Liabilities: Deposits $6,354,932 $6,545,720 $6,242,747 Advances from Federal Home Loan Bank 2,798,108 2,575,466 4,061,840 Other borrowings 306,848 327,587 427,274 Other liabilities 101,334 171,445 230,658 - ---------------------------------------------------------------------- Total Liabilities 9,561,222 9,620,218 10,962,519 - ---------------------------------------------------------------------- Commitments and Contingencies - - - - ---------------------------------------------------------------------- Stockholders' Equity: Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued - - - Common stock, $.01 par value; 120,000,000 shares authorized; 38,213,347, 39,019,557 and 39,870,919 shares issued and outstanding 382 390 399 Retained earnings 746,748 759,891 816,138 Accumulated other comprehensive income (loss), net 8,263 4,774 (65,215) - ---------------------------------------------------------------------- Total Stockholders' Equity 755,393 765,055 751,322 - ---------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $10,316,615 $10,385,273 $11,713,841 - ---------------------------------------------------------------------- COMMERCIAL FEDERAL CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in Thousands Except Per Share Data) - ---------------------------------------------------------------------- Three Months Ended June 30, March 31, June 30, --------------------------------- 2005 2005 2004 - ---------------------------------------------------------------------- Interest Income: Investment securities $8,199 $14,486 $13,616 Mortgage-backed securities 7,711 9,996 11,651 Loans receivable 120,585 114,539 119,750 - ---------------------------------------------------------------------- Total interest income 136,495 139,021 145,017 Interest Expense: Deposits 33,359 31,931 26,901 Advances from Federal Home Loan Bank 30,035 40,271 43,384 Other borrowings 6,038 10,562 3,310 - ---------------------------------------------------------------------- Total interest expense 69,432 82,764 73,595 Net Interest Income 67,063 56,257 71,422 Provision for Loan Losses (4,079) (8,320) (3,106) - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan Losses 62,984 47,937 68,316 Other Income (Loss): Retail fees and charges 18,853 16,102 16,881 Loan servicing fees 2,457 9,998 10,726 Amortization of mortgage servicing rights (58) (8,829) (14,900) Mortgage servicing rights valuation adjustment, net (702) 8,302 38,866 Gain (loss) on sales of investment securities 21 (5,676) (31,351) Gain (loss) on sales of mortgage- backed securities 1,717 (12,683) - Changes in fair values of derivatives, net (139) (1,147) (7,639) Loss on termination of interest rate swap agreements - (42,457) - Loss on early extinguishment of debt - (40,731) - Gain (loss) on sale of mortgage servicing rights and wholesale mortgage origination network (2,106) 5,412 - Gain on sales of loans 885 2,405 2,516 Bank owned life insurance 2,976 2,896 3,015 Other operating income 5,625 6,508 7,145 - ---------------------------------------------------------------------- Total other income (loss) 29,529 (59,900) 25,259 Other Expense: General and administrative expenses - Compensation and benefits 34,226 33,130 31,537 Occupancy and equipment 9,673 9,566 9,994 Data processing 5,103 5,075 4,643 Advertising 1,802 2,688 3,940 Communication 3,104 2,954 3,332 Item processing 3,040 2,738 3,156 Outside services 2,474 3,414 3,872 Loan expenses 1,021 1,798 2,445 Foreclosed real estate, net 510 1,434 (1,217) Other operating expenses 1,469 3,379 5,503 Merger costs 7,578 - - Exit costs 864 2,792 - - ---------------------------------------------------------------------- Total general and administrative expenses 70,864 68,968 67,205 Amortization of core value of deposits 970 977 1,218 Impairment of goodwill - 3,488 - - ---------------------------------------------------------------------- Total other expense 71,834 73,433 68,423 - ---------------------------------------------------------------------- Income (Loss) Before Income Taxes 20,679 (85,396) 25,152 Income Tax Provision (Benefit) 6,712 (32,184) 6,450 - ---------------------------------------------------------------------- Net Income (Loss) $13,967 $(53,212) $18,702 - ---------------------------------------------------------------------- Net Income (Loss) Per Basic Share $.37 $(1.36) $.46 Net Income (Loss) Per Diluted Share $.36 $(1.36) $.45 - ---------------------------------------------------------------------- Dividends Declared Per Common Share $.145 $.135 $.135 - ---------------------------------------------------------------------- Weighted Average Shares Outstanding Used in Basic EPS 38,124,743 39,009,537 40,527,096 Weighted Average Shares Outstanding Used in Diluted EPS (1) 38,760,806 39,009,537 41,199,954 - ---------------------------------------------------------------------- (1) The conversion of stock options for the three months ended March 31, 2005 is not assumed since the Corporation incurred a loss from operations. As a result, the diluted loss per share for the three months ended March 31, 2005 is computed the same as the basic loss per share. COMMERCIAL FEDERAL CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in Thousands Except Per Share Data) - ---------------------------------------------------------------------- Six Months Ended June 30, June 30, ---------------------- 2005 2004 - ---------------------------------------------------------------------- Interest Income: Investment securities $22,685 $27,915 Mortgage-backed securities 17,707 24,013 Loans receivable 235,124 239,861 - ---------------------------------------------------------------------- Total interest income 275,516 291,789 Interest Expense: Deposits 65,290 56,684 Advances from Federal Home Loan Bank 70,306 87,625 Other borrowings 16,600 5,087 - ---------------------------------------------------------------------- Total interest expense 152,196 149,396 Net Interest Income 123,320 142,393 Provision for Loan Losses (12,399) (7,959) - ---------------------------------------------------------------------- Net Interest Income After Provision for Loan Losses 110,921 134,434 Other Income (Loss): Retail fees and charges 34,955 31,378 Loan servicing fees 12,455 21,934 Amortization of mortgage servicing rights (8,887) (27,285) Mortgage servicing rights valuation adjustment, net 7,600 19,973 Loss on sales of investment securities (5,655) (14,375) Loss on sales of mortgage-backed securities (10,966) - Changes in fair values of derivatives, net (1,286) (6,233) Loss on termination of interest rate swap agreements (42,457) - Loss on early extinguishment of debt (40,731) - Gain on sale of mortgage servicing rights and wholesale mortgage origination network 3,306 - Gain on sales of loans 3,290 2,714 Bank owned life insurance 5,872 11,046 Other operating income 12,133 13,764 - ---------------------------------------------------------------------- Total other income (loss) (30,371) 52,916 Other Expense: General and administrative expenses - Compensation and benefits 67,356 64,423 Occupancy and equipment 19,239 20,158 Data processing 10,178 9,264 Advertising 4,490 7,495 Communication 6,058 6,478 Item processing 5,778 6,186 Outside services 5,888 7,744 Loan expenses 2,819 3,950 Foreclosed real estate, net 1,944 708 Other operating expenses 4,848 9,458 Merger costs 7,578 - Exit costs 3,656 - - ---------------------------------------------------------------------- Total general and administrative expenses 139,832 135,864 Amortization of core value of deposits 1,947 2,435 Impairment of goodwill 3,488 - - ---------------------------------------------------------------------- Total other expense 145,267 138,299 - ---------------------------------------------------------------------- Income (Loss) Before Income Taxes (64,717) 49,051 Income Tax Provision (Benefit) (25,472) 12,431 - ---------------------------------------------------------------------- Net Income (Loss) $(39,245) $36,620 - ---------------------------------------------------------------------- Net Income (Loss) Per Basic Share $(1.02) $.90 Net Income (Loss) Per Diluted Share (1) $(1.02) $.88 - ---------------------------------------------------------------------- Dividends Declared Per Common Share $.28 $.26 - ---------------------------------------------------------------------- Weighted Average Shares Outstanding Used in Basic EPS 38,567,140 40,750,584 Weighted Average Shares Outstanding Used in Diluted EPS (1) 38,567,140 41,478,014 - ---------------------------------------------------------------------- (1) The conversion of stock options for the six months ended June 30, 2005 is not assumed since the Corporation incurred a loss from operations. As a result, the diluted loss per share for the six months ended June 30, 2005 is computed the same as the basic loss per share. COMMERCIAL FEDERAL CORPORATION DEPOSITS AND LOANS (In Thousands) - ---------------------------------------------------------------------- June 30, March 31, June 30, 2005 2005 2004 - ---------------------------------------------------------------------- Deposits by State: Colorado $2,111,075 $2,123,105 $2,015,803 Nebraska 1,554,526 1,623,505 1,487,175 Iowa 1,035,106 1,085,039 1,043,580 Kansas 605,929 612,334 610,981 Oklahoma 499,300 537,901 548,469 Missouri 279,998 286,589 305,925 Arizona 268,998 277,247 230,814 ----------- ----------- ----------- Total deposits $6,354,932 $6,545,720 $6,242,747 =========== =========== =========== Deposits by Type: Checking accounts - Interest-bearing $565,449 $617,954 $581,571 Noninterest-bearing 723,647 724,188 607,790 ----------- ----------- ----------- Total checking excluding escrow accounts 1,289,096 1,342,142 1,189,361 Money market accounts 604,032 812,561 1,203,268 Savings accounts 2,059,182 1,855,227 1,211,344 ----------- ----------- ----------- Total core deposits 3,952,310 4,009,930 3,603,973 Custodial escrow accounts 263,468 260,576 285,667 Certificates of deposit 2,139,154 2,275,214 2,353,107 ----------- ----------- ----------- Total deposits $6,354,932 $6,545,720 $6,242,747 =========== =========== =========== - ---------------------------------------------------------------------- Loans Receivable, before allowance for losses: Commercial real estate $2,096,033 $2,056,774 $1,976,705 Commercial operating and other(1) 641,697 644,348 614,017 Construction, net of loans-in- process 797,297 759,777 543,719 Consumer home equity 1,057,477 1,020,662 914,967 Consumer other 881,063 835,583 760,898 ----------- ----------- ----------- Total commercial, construction and consumer loans 5,473,567 5,317,144 4,810,306 Residential real estate 2,373,738 2,506,833 2,978,082 ----------- ----------- ----------- Total loans receivable, before allowance for losses $7,847,305 $7,823,977 $7,788,388 =========== =========== =========== - ---------------------------------------------------------------------- (1) Includes small business, agricultural and Nebraska Investment Finance Authority loans in addition to commercial operating loans. COMMERCIAL FEDERAL CORPORATION ALLOWANCE FOR LOAN LOSSES (In Thousands) - ---------------------------------------------------------------------- June 30, March 31, June 30, 2005 2005 2004 - ---------------------------------------------------------------------- THREE MONTHS ENDED: - ------------------- Beginning balance $90,000 $89,841 $97,765 Provision for loan losses charged to operations 4,079 8,320 3,106 Charge-offs: Residential real estate (107) (262) (111) Commercial real estate (111) (2,142) (902) Construction (302) (567) (28) Commercial operating, small business and agricultural (302) (1,027) (57) Consumer (6,307) (5,533) (4,613) --------- --------- --------- Charge-offs (7,129) (9,531) (5,711) --------- --------- --------- Recoveries: Residential real estate 1 - - Commercial real estate 548 1 1 Construction 33 - 2 Commercial operating, small business and agricultural 23 76 111 Consumer 1,713 1,293 1,808 --------- --------- --------- Recoveries 2,318 1,370 1,922 - ---------------------------------------------------------------------- Ending balance $89,268 $90,000 $97,082 - ---------------------------------------------------------------------- SIX MONTHS ENDED: - ----------------- Beginning balance $89,841 $108,154 Provision for loan losses charged to operations 12,399 7,959 Charge-offs: Residential real estate (369) (202) Commercial real estate (2,253) (10,074) Construction (869) (61) Commercial operating, small business and agricultural (1,329) (1,484) Consumer (11,840) (10,702) --------- --------- Charge-offs (16,660) (22,523) --------- --------- Recoveries: Residential real estate 1 133 Commercial real estate 549 28 Construction 33 2 Commercial operating, small business and agricultural 99 195 Consumer 3,006 3,134 --------- --------- Recoveries 3,688 3,492 - ---------------------------------------------------------------------- Ending balance $89,268 $97,082 - ---------------------------------------------------------------------- Summary of charge-offs, net of recoveries: - ------------------------------------------ Three months ended $(4,811) $(8,161) $(3,789) ========= ========= ========= Six months ended $(12,972) $(19,031) ========= ========= - ---------------------------------------------------------------------- ALLOCATION OF ALLOWANCE FOR LOAN LOSSES: - ---------------------------------------------------------------------- Specific $8,889 $8,783 $4,613 Nonspecific 63,939 60,422 69,056 Unallocated 16,440 20,795 23,413 --------- --------- --------- Allowance for loan losses $89,268 $90,000 $97,082 ========= ========= ========= COMMERCIAL FEDERAL CORPORATION ASSET QUALITY (Dollars in Thousands) - ---------------------------------------------------------------------- June 30, March 31, June 30, 2005 2005 2004 - ---------------------------------------------------------------------- Nonperforming Assets: Nonperforming loans: Residential real estate $8,963 $7,803 $7,381 Residential construction 10,245 8,524 3,020 Commercial real estate 18,062 17,845 9,922 Commercial construction 1,155 731 842 Consumer 6,559 7,797 3,409 Commercial operating, small business and agricultural 5,327 2,142 4,002 ------------ ------------ ------------ Total nonperforming loans 50,311 44,842 28,576 ------------ ------------ ------------ Foreclosed real estate: Residential 6,908 7,162 12,315 Residential construction 1,384 516 1,009 Commercial 1,248 1,753 448 Commercial construction 1,776 1,776 1,776 ------------ ------------ ------------ Total foreclosed real estate 11,316 11,207 15,548 ------------ ------------ ------------ Troubled debt restructurings - commercial 5,846 5,846 4,690 ------------ ------------ ------------ Total nonperforming assets $67,473 $61,895 $48,814 ============ ============ ============ Total assets $10,316,615 $10,385,273 $11,713,841 ============ ============ ============ Nonperforming assets to total assets .65% .60% .42% ============ ============ ============ Summary of Nonperforming Assets: Residential $27,500 $24,005 $23,725 Nonresidential 39,973 37,890 25,089 ------------ ------------ ------------ $67,473 $61,895 $48,814 ============ ============ ============ - ---------------------------------------------------------------------- Nonperforming loans to loans receivable (1) .64% .57% .37% Nonperforming assets to total assets .65% .60% .42% Allowance for loan losses to: Loans receivable (1) 1.14% 1.15% 1.25% Total nonperforming loans 177.43% 200.70% 339.73% - ---------------------------------------------------------------------- Accruing loans 90 days or more past due: Residential real estate $16,235 $16,246 $20,443 ============ ============ ============ - ---------------------------------------------------------------------- (1) Ratios are calculated based on the net book value of loans receivable before deducting allowance for loan losses. COMMERCIAL FEDERAL CORPORATION SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS AND RATIOS (Dollars in Thousands Except Per Share Data) - ---------------------------------------------------------------------- June 30, March 31, June 30, 2005 2005 2004 - ---------------------------------------------------------------------- Cash, investment securities and FHLB stock $892,799 $857,371 $1,434,920 Mortgage-backed securities 608,906 702,984 1,133,434 Loans held for sale, net 198,570 211,154 444,774 Loans receivable, net 7,758,037 7,733,977 7,691,306 Core value of deposits, net 10,483 11,453 14,397 Goodwill 159,229 159,229 162,717 Other assets 688,591 709,105 832,293 Total assets 10,316,615 10,385,273 11,713,841 - ---------------------------------------------------------------------- Deposits 6,354,932 6,545,720 6,242,747 Advances from Federal Home Loan Bank 2,798,108 2,575,466 4,061,840 Other borrowings 306,848 327,587 427,274 Other liabilities 101,334 171,445 230,658 Stockholders' equity 755,393 765,055 751,322 Total liabilities and stockholders' equity 10,316,615 10,385,273 11,713,841 - ---------------------------------------------------------------------- Book value per common share $19.77 $19.61 $18.84 Stock price $33.68 $27.65 $27.10 Common shares outstanding 38,213,347 39,019,557 39,870,919 Weighted average shares outstanding per basic EPS 38,124,743 39,009,537 40,527,096 Weighted average shares outstanding per diluted EPS 38,760,806 39,009,537 41,199,954 - ---------------------------------------------------------------------- Nonperforming assets $67,473 $61,895 $48,814 Nonperforming assets to total assets .65% .60% .42% Quarterly weighted average interest rates on a taxable- equivalent basis: Yield on interest-earning assets 5.91% 5.54% 5.46% Rate on deposits and interest- bearing liabilities 2.92% 3.21% 2.68% Net interest rate spread 2.99% 2.33%(1) 2.78% Net interest margin 2.95% 2.28%(1) 2.73% - ---------------------------------------------------------------------- Three months ended: - ------------------- Return on average assets .54% (1.87)% .63% Return on average equity 7.46% (27.40)% 10.16% Average equity to average assets 7.26% 6.83% 6.20% G & A expenses to average assets 2.75% 2.43% 2.26% Operating efficiency ratio 73.36% N/M 69.51% - ---------------------------------------------------------------------- Six months ended: - ----------------- Return on average assets (.72)% n/a .61% Return on average equity (10.29)% n/a 9.82% Average equity to average assets 7.03% n/a 6.21% G & A expenses to average assets 2.58% n/a 2.26% Operating efficiency ratio 150.44% n/a 69.56% - ---------------------------------------------------------------------- (1) Reflects the effects of prepayment penalties of $4.6 million on the prepayment of reverse repurchase agreements. Excluding the effects of the prepayment penalties, the net interest rate spread and net interest margin would have been 2.51% and 2.46%, respectively. N/M - Ratio not meaningful since the total of net interest income and total other income is a loss. COMMERCIAL FEDERAL CORPORATION AVERAGE BALANCES AND REGULATORY CAPITAL (Dollars in Thousands) - ---------------------------------------------------------------------- June 30, March 31, December 31, 2005 2005 2004 - ---------------------------------------------------------------------- Three Months Ended: - ------------------- Average Balances: Total assets $10,316,781 $11,375,436 $11,416,319 Total loans, net 7,978,386 7,943,735 7,971,943 Total loans, before allowances for loan losses 8,067,971 8,033,507 8,066,058 Total mortgage-backed securities 648,626 946,715 1,021,536 Total deposits 6,474,440 6,440,077 6,407,960 Total stockholders' equity 748,618 776,767 769,737 Total interest-earning assets 9,325,324 10,183,505 10,281,148 Total deposits and interest- bearing liabilities 9,458,768 10,359,946 10,460,482 - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- September 30, June 30, 2004 2004 - ---------------------------------------------------------------------- Three Months Ended: - ------------------- Average Balances: Total assets $11,559,998 $11,878,729 Total loans, net 8,062,478 8,256,840 Total loans, before allowances for loan losses 8,159,234 8,354,536 Total mortgage-backed securities 1,086,720 1,181,297 Total deposits 6,254,687 6,409,826 Total stockholders' equity 764,614 736,133 Total interest-earning assets 10,406,515 10,726,414 Total deposits and interest- bearing liabilities 10,609,351 10,936,846 - ---------------------------------------------------------------------- June 30, December 31, ------------------------------------ 2005 2004 2003 - ---------------------------------------------------------------------- Year to Date: - ------------- Average Balances: Total assets $10,843,184 $11,752,057 $12,805,465 Total loans, net 7,961,156 8,145,192 8,704,321 Total loans, before allowances for loan losses 8,050,834 8,244,282 8,812,133 Total mortgage-backed securities 796,847 1,141,453 1,362,145 Total deposits 6,457,353 6,410,461 6,629,299 Total stockholders' equity 762,615 756,610 741,337 Total interest-earning assets 9,752,044 10,571,837 11,557,322 Total deposits and interest- bearing liabilities 9,906,867 10,797,654 11,697,711 - ---------------------------------------------------------------------- June 30, March 31, Dec. 31, Sept. 30, June 30, 2005 2005 2004 2004 2004 - ---------------------------------------------------------------------- Regulatory Capital: - ------------------- Tangible $689,957 $675,848 $695,213 $713,324 $727,684 Core 689,957 675,848 695,213 713,324 727,684 Total risk-based 808,157 794,963 812,259 833,679 855,225 Tier 1 risk-based 685,510 671,401 690,779 709,740 725,279 Tangible % 6.82% 6.63% 6.19% 6.37% 6.31% Core % 6.82% 6.63% 6.19% 6.37% 6.31% Total risk-based % 10.30% 10.49% 10.46% 10.78% 10.98% Tier 1 risk-based % 8.74% 8.86% 8.79% 9.18% 9.32% - ---------------------------------------------------------------------- COMMERCIAL FEDERAL CORPORATION MORTGAGE SERVICING RIGHTS (Dollars in Thousands) - ---------------------------------------------------------------------- Three Months Ended June 30, March 31, June 30, ------------------------------------- 2005 2005 2004 - ---------------------------------------------------------------------- Mortgage Servicing Rights (1): Beginning balance before valuation allowance $20,657 $162,423 $178,850 Mortgage servicing rights retained through loan sales 1,796 4,512 11,316 Sale of mortgage servicing rights (22,130) (137,449) - Amortization expense (58) (8,829) (14,900) ----------- ------------ ------------ Ending balance before valuation allowance 265 20,657 175,266 ----------- ------------ ------------ Valuation allowance, beginning balance 3,156 41,174 68,232 Amounts charged (credited) to operations 702 (8,302) (38,866) Sale of mortgage servicing rights (3,857) (29,716) - ----------- ------------ ------------ Valuation allowance, ending balance 1 3,156 29,366 ----------- ------------ ------------ Mortgage servicing rights, net of valuation allowance $264 $17,501 $145,900 =========== ============ ============ Fair value at the periods ended $352 $17,834 $157,955 =========== ============ ============ Mortgage servicing rights as a percentage of servicing portfolio (2) N/M 1.56% 1.32% =========== ============ ============ Mortgage servicing rights as a multiple of servicing fees (2) N/M 3.89x 3.88x =========== ============ ============ - ---------------------------------------------------------------------- Loans Serviced for Other Institutions (1): Beginning balance $1,120,505 $10,640,028 $11,166,995 Additions to portfolio 117,026 305,760 870,423 Sale of loans serviced and loan payments (1,183,183) (9,818,739) (976,213) Other items, net 3,222 (6,544) (11,446) ----------- ------------ ------------ Ending balance $57,570 $1,120,505 $11,049,759 =========== ============ ============ Weighted average servicing fee N/M 0.33% 0.34% =========== ============ ============ Weighted average coupon note rate N/M 5.86% 5.94% =========== ============ ============ Serviced loans sold with servicing retained until transfer $9,874,805 $9,289,733 $ - =========== ============ ============ - ---------------------------------------------------------------------- (1) The Corporation sold $1.2 billion and $9.3 billion, respectively, of its loans serviced for other institutions during the quarters ended June 30, 2005 and March 31, 2005. The Corporation serviced these loans until the servicing was transferred in July 2005. The remaining balance of loans serviced for other institutions at June 30, 2005 is expected to be sold in the third quarter of 2005. (2) Ratios are calculated based on the net book value of mortgage servicing after deducting the valuation allowance. N/M - Percents and multiples not meaningful given the residual balances of loans serviced for other institutions and related mortgage servicing rights. CONTACT: Commercial Federal Corporation, Omaha Investor Relations: Hal A. Garyn, 402-514-5336 -----END PRIVACY-ENHANCED MESSAGE-----