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TROY, Mich., Nov. 3 /PRNewswire-FirstCall/ -- Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank FSB, today announced third quarter results for the period ended September 30, 2009. In addition, Flagstar's Board of Directors announced several initiatives designed to strengthen Flagstar leadership, improve operational efficiency and enhance earnings capacity and long-term performance.
The Board announced it will move forward with the following:
-- The appointments of Salvatore Rinaldi to the position of Executive Vice
President and Chief of Staff and Marshall Soura to the position of
Executive Vice President and Director of Corporate Services.
-- A comprehensive effort to better align expenses with revenues and
appropriately rightsize the Flagstar enterprise.
-- A strategic focus on maximizing the value of Flagstar's 176-branch
community banking platform located in three states.
-- A continued emphasis on investing in Flagstar's position as one of the
leading residential mortgage originators in the country.
In addition, the Board announced the election of President and Chief Executive Officer Joseph P. Campanelli, to the position of Chairman. Mr. Campanelli replaces Thomas J. Hammond, who retired on October 22.
"In the geographies we serve, Flagstar has the ability to significantly enhance and diversify our earnings capacity," said Campanelli. "We will achieve this through organic growth and, where prudent, by taking advantage of consolidation opportunities. The senior management team I have assembled includes key executives already at Flagstar and seasoned banking executives with whom I have worked in the past and who join us with complementary skills and the experience of having accomplished this type of transformation on a platform with many similarities to Flagstar."
Mr. Rinaldi was formerly Executive Vice President and Chief of Staff of Sovereign Bancorp, Inc. until February 2009. Mr. Rinaldi joined Sovereign Bancorp in August 1998 and served in a variety of senior positions including managing all acquisitions and integrations for the organization. Additionally, Mr. Rinaldi managed most major initiatives for the bank as well as the supervision of the IT, Operations and Administrative functions.
Mr. Soura has over 40 years of banking industry experience, having served in executive positions at Sovereign Bank, Bank of America and BankOne. His responsibilities will include product development and strategic alliances.
Mr. Campanelli added, "We anticipate a significant level of industry consolidation and want to be active in that process. But in the near term, we will have to bring expenses into better alignment and make prudent operating decisions as we seek to broaden our earnings streams beyond our traditional mortgage activity. I believe that in the long-term these decisions will enhance shareholder value and create better opportunities to serve our communities. The infrastructure and people are in place to serve these communities in a more comprehensive manner. The combination of our efficiency and strategic focus on Flagstar's banking platform will enable us to execute this strategy. I look forward to communicating the progress of these activities in the coming quarters."
Third Quarter Earnings
Flagstar reported a third quarter 2009 net loss applicable to common stockholders of $298.5 million, or $(0.64) per share (diluted), as compared to a net loss of $76.6 million, or $(0.32) per share (diluted) on a linked quarter basis. During the third quarter 2009, Flagstar increased its provision for federal income taxes by $172.0 million to establish a valuation allowance on its federal deferred tax asset. In addition, Flagstar increased its valuation allowance for its deferred state tax asset by an additional $11.9 million, which was recorded in the other taxes expense category.
Net loss was $62.1 million, or $(0.79) per share (diluted), in the third quarter 2008. For the nine months ended September 30, 2009, Flagstar's net loss applicable to common stockholders was $442.2 million, or $(1.66) per share (diluted), as compared to net a loss of $56.9 million, or $(0.83) per share (diluted) for the same period 2008.
On a pre-tax, pre-credit cost basis, earnings before preferred dividends were $58.8 million in the third quarter 2009, as compared to such earnings of $78.9 million in the second quarter 2009.
Capital
At September 30, 2009, the wholly owned subsidiary Flagstar Bank remained "well-capitalized" for regulatory purposes, with capital ratios of 6.39% for Tier 1 capital and 12.06% for total risk-based capital.
Assets
Total assets at September 30, 2009 were $14.8 billion as compared to $16.4 billion at June 30, 2009. The decrease was primarily a result of the decline in loans available for sale, loans held for investment and trading securities. Total assets were $14.2 billion at both December 31, 2008 and September 30, 2008.
Operations
For the third quarter 2009, the net loss applicable to common stockholders of $298.2 million reflected the following:
-- Gain on loan sales decreased slightly to $104.4 million as compared to
$104.7 million for the second quarter 2009, reflecting the decrease in
loan sales to $7.6 billion as compared to $9.9 billion in the second
quarter of 2009. Margin on loan sales increased during the third quarter
2009 to 1.37% from 1.06%.
-- Provision for loan losses decreased slightly to $125.5 million as
compared to $125.7 million for the second quarter of 2009.
-- Loan fees, resulting from originating loans, decreased to $29.4 million
in the third quarter 2009 as compared to $35.0 million during the second
quarter 2009. This decrease reflects a reduction in loan originations of
$2.7 billion, to $6.6 billion for third quarter 2009.
-- Net loan administration income reflected a loss of $30.3 million (offset
by a gain of approximately $21.7 million on trading securities that were
used for economic hedging purposes) as compared to a gain of $41.9
million for the second quarter 2009 (offset by a loss of approximately
$39.1 million on trading securities that were used for economic hedging
purposes). The third quarter net loss of $8.6 million, as compared to
the second quarter 2009 net gain of $2.8 million, includes a decline in
the value of mortgage servicing rights sold during the third quarter.
Those rights related to $12.3 billion of agency residential mortgage
loans that were identified as having higher risks of default and
therefore had higher costs of servicing.
-- Non interest expense decreased to $166.9 million as compared to $171.8
million in the second quarter 2009. The decrease reflected a decline in
commissions of $3.2 million due to lower loan origination volume in the
third quarter 2009 and a revised commission structure, and it also
reflected a net $13.2 million decline in general and administrative
expenses. These declines were offset in part by an increase in other
expenses of $11.7 million.
-- Other expenses include an $8.9 million decline in FDIC premium expense
for the third quarter 2009 which equates to the absence of a $7.9
million special assessment that was imposed on all banks during the
second quarter 2009 and an $1.0 million decrease in the regular
assessment due to a decrease in deposits, offset by an $8.9 million
increase in costs associated with foreclosed properties and an increase
of $11.7 million in non-cash state tax expense as a result of recording
a valuation allowance on state deferred tax assets. The valuation
allowance, which is an offset against the tax asset rather than a
charge-off, is generally recoverable in future years as taxable income
is earned.
-- Provision for federal income taxes increased to $115.0 million as
compared to a benefit of $(31.3) million for the second quarter of 2009.
The increase is the result of a $172.0 million non-cash federal tax
expense as a result of recording a valuation allowance on federal
deferred tax assets, offset in part by the monthly benefit recorded of
$57.0 million. The valuation allowance, because it is an offset against
the tax asset rather than a charge-off , is generally recoverable in
future years as taxable income is earned.
Community Banking Operations
Flagstar Bank had 176 community banking branches at September 30, 2009 as compared to 175 branches at June 30, 2009 and 173 branches at September 30, 2008.
Net Interest Margin
Net interest margin decreased to 1.58% for the third quarter 2009 as compared to 1.69% for the second quarter 2009 and 1.93% for third quarter 2008. The decline from second quarter 2009 reflects a $1.2 billion decline in the average balance of loans available for sale as loan sales outpaced originations, and a $200 million decline in the average balance of loans held for investment due to loan payoffs and the absence of any significant new originations into that category. For the nine months ended September 30, 2009, the net interest margin was 1.65% as compared to 1.84% for the nine months ended September 30, 2008, primarily reflecting a 0.72% decline in yield during the 2009 declining interest rate environment that was only partly offset by a 0.52% decline in funding costs during the same period.
Mortgage Banking Operations
Loan production, substantially comprised of agency residential first mortgage loans, decreased to $6.6 billion for the third quarter 2009, as compared to $9.3 billion in the second quarter 2009, and from $6.7 billion for the third quarter 2008.
For the nine months ended September 30, 2009 loan production increased 11.3% to $25.5 billion, of which $25.4 billion were residential loans, as compared to $22.9 billion, including $22.6 billion of residential loans, for the nine months ended September 30, 2008.
Gain on loan sales margins increased to 1.37% for the third quarter 2009, as compared to 1.06% for the second quarter 2009, and from 0.33% for the third quarter 2008. For the nine months ended September 30, 2009, the gain on sale margin increased to 1.61% as compared to 0.59% for the same period in 2008.
At September 30, 2009, the unpaid principal balances of loans associated with the mortgage servicing rights portfolio totaled $53.2 billion and had a weighted average service fee of 32.6 basis points. This was a decrease from $61.5 billion at June 30, 2009 with a weighted average servicing fee of 33.1 basis points and an increase from $51.8 billion at September 30, 2008 with an average weighted servicing fee of 33.6 basis points.
Asset Quality
Non-performing assets, which include non-performing loans (i.e., loans 90 days or more past due, and matured loans), real estate owned and repurchased assets, but which exclude any FHA-insured assets, increased to $1.2 billion at September 30, 2009, from $1.1 billion at June 30, 2009 and $0.5 billion at September 30, 2008.
At September 30, 2008, the allowance for loan losses was $528.0 million, which equaled 50% of non-performing loans and 6.49% of loans held for investment. At June 30, 2009 and September 30, 2008, the allowance for loan losses were, respectively, $474.0 million (5.63% of loans held for investment) and $224.0 million (2.45% of loans held for investment) and equaled 50.4% and 54.1%, respectively, of non-performing loans.
Of the non-performing loans, residential first mortgage loans increased to $606.3 million at September 30, 2009, as compared to $588.2 million at June 30, 2009 and $304.8 million at September 30, 2008. Portfolio of single-family residential first mortgage loans held for investment at September 30, 2009 had an average original FICO credit score of 717 and an average original loan-to-value ratio of 74.4%.
Non-performing commercial real estate mortgages increased to $419.5 million at September 30, 2009 as compared to $295.8 million at June 30, 2009 and $146.9 million at September 30, 2008.
The balance of our real estate owned, net of any FHA-insured assets, increased to $164.9 million at September 30, 2009 from $131.6 million at June 30, 2009 and $119.2 million at September 30, 2008. Repurchased assets were $26.6 million at September 30, 2009 as compared to $18.4 million at June 30, 2009 and $15.4 million at September 30, 2008.
Net loan charge-offs were $71.5 million for the third quarter 2009 as compared to $117.7 million for the second quarter 2009 and $19.6 million for the third quarter 2008. The provision for loan losses was $125.5 million for the third quarter 2009 as compared to $125.7 million for the second quarter 2009 and $89.6 million for the third quarter 2008.
Funding Sources
Flagstar Bank's primary sources of funds are deposits obtained through its 176 community banking branches and the Internet as well as deposits obtained from municipalities and investment banking firms. Funds are also obtained through loan repayments and sales in the ordinary course of business, advances from the Federal Home Loan Bank of Indianapolis (FHLB), community banking operations, customer escrow accounts and security repurchase agreements. The Bank uses several of these sources at any one time to manage its daily and forecasted liquidity needs to satisfy operational requirements and policy levels while managing overall interest costs. Retail deposits were $5.7 billion at September 30, 2009, as compared to $6.0 billion at June 30, 2009 and $4.8 billion at September 30, 2008. At September 30, 2009, the Bank had a $7.0 billion line of credit with the FHLB, which was collateralized to $5.3 billion.
As Previously Announced
The Company's quarterly earnings conference call will be held on Tuesday, November 3, 2009 from 11 a.m. until 12 noon (Eastern).
Questions for discussion at the conference call may only be submitted in advance by e-mail to investors@flagstar.com.
The conference call and accompanying slide presentation will be webcast live on the Investor Relations section of the Company's Web site, www.flagstar.com, with replays available at that site for at least 10 days.
To listen by telephone, please call at least 10 minutes prior to the start of the conference call at
(702) 696-4911 or toll free at (866) 294-1212, passcode: 34161264.
A replay will be available for five business days by calling (800) 642-1687 toll free or (706) 645-9291 using the passcode: 34161264.
Flagstar Bancorp, with $14.8 billion in total assets, is the secondly largest publicly held savings bank headquartered in the Midwest. At September 30, 2009, Flagstar operated 176 banking centers in Michigan, Indiana and Georgia and 42 home loan centers in 18 states. Flagstar Bank originates loans nationwide and is one of the leading 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 o 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.
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
For the Three Months Ended
---------------------------------
Summary of Consolidated Sept. 30, June 30, Sept. 30,
Statements of Operations 2009 2009 2008
--------- -------- ---------
Interest income $167,107 $187,848 $188,537
Interest expense (119,513) (127,831) (128,696)
-------- -------- --------
Net interest income 47,594 60,017 59,841
Provision for loan losses (125,544) (125,662) (89,612)
-------- -------- --------
Net interest expense after provision (77,950) (65,645) (29,771)
Non-interest income
Deposit fees and charges 8,438 7,984 7,183
Loan fees and charges, net 29,422 35,022 777
Loan administration (30,293) 41,853 25,655
Gain (loss) on trading securities 21,714 (39,085) -
Loss on trading securities -
residuals (50,689) (3,400) (12,899)
Net gain on loan sales 104,416 104,664 22,152
Net (loss) gain on MSR sales (1,319) (2,544) 896
Net impairment on securities
available for sale (2,875) (327) -
Net gain on sales of securities
available for sale - - 149
Other (loss) income (12,582) (9,630) 9,475
-------- -------- --------
Total non-interest income 66,232 134,537 53,388
Non-interest expenses
Compensation and benefits (56,598) (56,584) (54,487)
Commissions (12,149) (15,302) (26,298)
Occupancy and equipment (17,175) (17,499) (19,492)
General and administrative (28,877) (42,112) (24,763)
Other (52,244) (40,571) (23,774)
-------- -------- --------
Total non-interest expense (167,043) (172,068) (148,814)
Capitalized direct cost of loan
closing 137 250 29,651
-------- -------- --------
Total non-interest expense after
capitalized direct cost of loan
closing (166,906) (171,818) (119,164)
-------- -------- --------
Loss before federal income tax and
preferred stock dividends (178,624) (102,926) (95,547)
(Provision) benefit for federal
income taxes (114,965) 31,261 33,456
-------- -------- --------
Net loss (293,589) (71,665) (62,091)
Preferred stock dividends (4,623) (4,921) -
-------- -------- --------
Net loss available to common
stockholders $(298,212) $(76,586) $(62,091)
======== ======== ========
Basic loss per share $(0.64) $(0.32) $(0.79)
======== ======== ========
Diluted loss per share $(0.64) $(0.32) $(0.79)
======== ======== ========
Net interest spread - Consolidated 1.48% 1.42% 1.74%
Net interest margin - Consolidated 1.46% 1.61% 1.82%
Interest rate spread - Bank only 1.53% 1.45% 1.78%
Net interest margin - Bank only 1.58% 1.69% 1.93%
Return on average assets (7.60)% (1.83)% (1.72)%
Return on average equity (130.64)% (33.30)% (32.15)%
Efficiency ratio 146.6% 88.3% 105.2%
Average interest earning assets $13,160,528 $14,888,480 $12,870,503
Average interest paying liabilities $13,217,383 $14,106,978 $12,794,464
Average stockholders' equity $913,059 $920,025 $772,660
Equity/assets ratio (average for
the period) 5.82% 5.48% 5.34%
Ratio of charge-offs to average
loans held for investment 3.48% 5.42% 0.83%
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
For the Nine Months Ended
-----------------------------
Summary of Consolidated September 30, September 30,
Statements of Operations 2009 2008
------------- -------------
Interest income $539,933 $599,954
Interest expense (375,593) (423,916)
------------- -------------
Net interest income 164,340 176,038
Provision for loan losses (409,420) (167,708)
------------- -------------
Net interest (expense) income after
provision (245,080) 8,330
Non-interest income
Deposit fees and charges 23,655 20,029
Loan fees and charges, net 97,366 2,278
Loan administration (20,240) 45,980
Gain on trading securities 6,377 -
Loss on trading securities - residuals (66,625) (26,485)
Net gain on loan sales 404,773 129,403
(Loss) gain on MSR sales, net (3,945) 348
Impairment - securities available for
sale (20,444) -
Gain on securities available for sale - 5,019
Other (loss) income (29,189) 29,768
------------- -------------
Total non-interest income 391,728 206,340
Non-interest expenses
Compensation and benefits (171,836) (165,524)
Commissions (60,866) (86,401)
Occupancy and equipment (53,553) (59,816)
General and administrative (108,658) (36,689)
Other (127,150) (49,075)
------------- -------------
Total non-interest expense (522,063) (397,505)
Capitalized direct cost of loan closing 671 95,437
------------- -------------
Total non-interest expense after
capitalized direct cost of loan closing (521,392) (302,068)
------------- -------------
Loss before federal income tax and preferred
stock dividends (374,744) (87,398)
(Provision) benefit for federal income taxes (55,008) 30,454
------------- -------------
Net loss (429,752) (56,944)
Preferred stock dividends (12,464) -
------------- -------------
Net loss available to common stockholders $(442,216) $(56,944)
============= =============
Basic loss per share $(1.66) $(0.83)
============= =============
Diluted loss per share $(1.66) $(0.83)
============= =============
Net interest spread - Consolidated 1.49% 1.64%
Net interest margin - Consolidated 1.56% 1.73%
Interest rate spread - Bank only 1.53% 1.69%
Net interest margin - Bank only 1.65% 1.84%
Return on average assets (3.65)% (0.50)%
Return on average equity (67.44)% (10.29)%
Efficiency ratio 93.8% 79.0%
Average interest earning assets $14,022,144 $13,609,567
Average interest paying liabilities $13,778,405 $13,534,108
Average stockholders' equity $878,614 $738,139
Equity/assets ratio (average for the period) 5.43% 4.88%
Ratio of charge-offs to average loans held
for investment 3.96% 0.71%
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
Summary of the Consolidated
Statements of Financial Sept. 30, June 30, Dec. 31, Sept. 30,
Condition: 2009 2009 2008 2008
-------------------------------------------------------------------------
Total assets $14,820,815 $16,423,292 $14,203,657 $14,159,369
Securities - trading 1,012,309 1,603,480 542,539 23,074
Investment securities
available for sale 817,424 734,827 1,118,453 1,041,446
Loans held for sale 2,070,878 3,009,740 1,484,680 1,961,352
Loans held for
investment, net 7,605,497 7,943,849 8,706,121 8,910,884
Allowance for loan losses (528,000) (474,000) (376,000) (224,000)
Mortgage servicing rights 567,800 664,292 520,763 732,151
Deposits 8,533,968 9,470,673 7,841,005 7,420,804
FHLB advances 4,800,000 5,151,907 5,200,000 5,438,000
Repurchase agreements 108,000 108,000 108,000 108,000
Stockholders' equity 667,597 915,521 472,293 676,471
Other Financial and
Statistical Data:
Equity/assets ratio 4.50% 5.57% 3.33% 4.78%
Core capital ratio 6.39% 7.19% 4.95% 6.29%
Total risk-based capital
ratio 12.06% 13.67% 9.10% 11.10%
Book value per common share $0.86 $1.38 $5.65 $8.09
Shares outstanding at
quarter-end 468,530 468,530 83,627 83,627
Average shares outstanding
during the quarter 468,530 239,425 72,153 68,301
Average diluted shares
outstanding during the
quarter 468,530 239,425 72,153 68,301
Loans serviced for others $53,159,885 $61,531,058 $55,870,207 $51,830,707
Weighted average service
fee (bps) 32.6 33.1 33.3 33.6
Value of mortgage servicing
rights 1.06% 1.07% 0.93% 1.41%
Allowance for loan losses
to non performing loans 50.0% 50.4% 52.1% 54.1%
Allowance for loan losses
to loans held for investment 6.49% 5.63% 4.14% 2.45%
Non performing assets to
total assets 8.41% 6.64% 5.97% 4.33%
Number of bank branches 176 175 175 173
Number of loan origination
centers 42 45 104 111
Number of employees
(excluding loan officers &
account executives) 3,220 3,290 3,246 3,291
Number of loan officers and
account executives 436 457 674 736
Loan Originations
(Dollars in millions)
(Unaudited)
For the Three Months Ended
--------------------------------------------
September 30, June 30, September 30,
Loan type 2009 2009 2008
------------ ------------ ------------
Residential mortgage loans $6,642 99.9% $9,287 100.0% $6,681 99.5%
Consumer loans 1 - 1 - 11 0.2
Commercial loans 4 0.1 8 - 23 0.3
------------ ------------ ------------
Total loan production $6,647 100.0% $9,296 100.0% $6,715 100.0%
============ ============ ============
For the Nine Months Ended
------------------------------------
September 30, September 30,
Loan type 2009 2008
--------------- ---------------
Residential mortgage loans $25,428 99.9% $22,600 98.7%
Consumer loans 5 - 106 0.5
Commercial loans 30 0.1 195 0.8
--------------- ---------------
Total loan production $25,463 100.0% $22,901 100.0%
=============== ===============
Loans Held for Investment
(Dollars in thousands)
(Unaudited)
September 30, June 30,
2009 2009
----------------- ----------------
First mortgage loans $5,304,950 65.2% $5,529,395 65.7%
Second mortgage loans 236,239 2.9 246,895 2.9
Commercial real estate loans 1,677,106 20.6 1,692,052 20.1
Construction loans 22,906 0.3 36,599 0.4
Warehouse lending 425,861 5.2 383,368 4.6
Consumer loans 452,548 5.6 508,309 6.0
Non-real estate commercial 13,887 0.2 21,231 0.3
----------------- ----------------
Total loans held for investment $8,133,497 100.0% $8,417,849 100.0%
================= ================
December 31, September 30,
2008 2008
----------------- -----------------
First mortgage loans $5,958,748 65.6% $6,134,305 67.2%
Second mortgage loans 287,350 3.2 291,523 3.2
Commercial real estate loans 1,779,363 19.6 1,737,152 19.0
Construction loans 54,749 0.6 65,814 0.7
Warehouse lending 434,140 4.8 344,731 3.8
Consumer loans 543,102 6.0 536,759 5.9
Non-real estate commercial 24,669 0.2 24,600 0.2
----------------- -----------------
Total loans held for investment $9,082,121 100.0% $9,134,884 100.0%
================= =================
Gain on Loan Sales and Securitizations
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
--------------------------------------------------------
September 30, June 30, September 30,
2009 (1) 2009 (1) 2008
Description (000's) bps (000's) bps (000's) bps
--------------------------------------------------------------------------
Valuation gain (loss):
Value of interest
rate locks $11,405 15 $(53,445) (54) $(15,015) (22)
Value of forward
sales (36,537) (48) 62,035 63 6,814 10
Fair value of AFS 151,911 200 114,550 116 - -
LOCOM adjustments
HFI 155 - (172) - (12,032) (18)
--------------------------------------------------------
Total valuation
gain (loss) 126,934 167 122,968 125 (20,233) (30)
Sales gains (losses)
Marketing gain
(loss) 4,372 6 (36,823) (37) 98,815 145
Pair off gain
(loss) (15,776) (22) 30,949 31 (3,094) (5)
Sales adjustments (4,108) (5) (5,300) (5) (50,960) (74)
Provision for SMR (7,006) (9) (7,130) (8) (2,376) (3)
--------------------------------------------------------
Total sales gains
(losses) (22,517) (30) (18,304) (19) 42,385 63
--------------------------------------------------------
Net gain on loan
sales and
securitizations $104,416 137 $104,664 106 $22,152 33
========================================================
Total loan sales
and
securitizations $7,606,304 $9,878,035 $6,809,608
========== ========== ==========
(1) On January 1, 2009, the Company adopted fair value accounting for its
residential first mortgage loans held for sale and originated on or
after that date.
For the Nine Months Ended September 30,
----------------------------------------
2009 (1) 2008
----------------------------------------
Description (000's) bps (000's) bps
Valuation gains (losses):
Value of interest rate locks $(38,008) (15) $(15,913) (7)
Value of forward sales 28,182 11 34,684 16
Fair value of AFS 424,542 168 - -
LOCOM adjustments HFI (274) - (34,731) (16)
----------------------------------------
Total valuation gain (loss) 414,442 164 (15,960) (7)
Sales gains (losses):
Marketing gain (loss) 102,885 41 304,101 138
Pair off gain (loss) (5,573) (2) (14,923) (7)
Sales adjustments (89,043) (35) (135,627) (61)
Provision for SMR (17,938) (7) (8,188) (4)
----------------------------------------
Total sales gains (losses) (9,669) (3) 145,363 66
----------------------------------------
Net gain on loan sales and
securitizations $404,773 161 129,403 59
========================================
Total loan sales and
securitizations $25,183,401 $22,076,479
=========== ===========
Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
-------------------------------------
September 30, June 30, September 30,
2009 2009 2008
-------------------------------------
Description (000's) (000's) (000's)
--------------------------------------------------------------------------
Beginning Balance $(474,000) $(466,000) $(154,000)
Provision for losses (125,544) (125,662) (89,612)
Charge offs, net of recoveries
First mortgage loans 36,772 30,395 12,853
Second mortgage loans 7,222 11,385 330
Commercial loans 15,724 64,295 4,050
Construction loans 951 745 84
Warehouse - 497 121
Consumer:
HELOC 9,711 8,988 1,566
Other consumer loans 638 1,081 205
Other 526 276 403
-------------------------------------
Charge-offs, net of recoveries 71,544 117,662 19,612
-------------------------------------
Ending Balance $(528,000) $(474,000) $(224,000)
=====================================
For the Nine Months Ended
-------------------------
September 30,
2009 2008
-------------------------
Description (000's) (000's)
-------------------------------------------------------------------------
Beginning Balance $(376,000) $(104,000)
Provision for losses (409,420) (167,708)
Charge offs, net of recoveries
First mortgage loans 92,658 27,753
Second mortgage loans 30,660 1,299
Commercial loans 102,651 12,285
Construction loans 2,453 169
Warehouse 496 832
Consumer:
HELOC 24,826 3,351
Other consumer loans 2,397 970
Other 1,279 1,049
-------------------------
Charge-offs, net of recoveries 257,420 47,708
-------------------------
Ending Balance $(528,000) $(224,000)
=========================
Composition of Allowance for Loan Losses
As of September 30, 2009
(In thousands)
(Unaudited)
General Specific
Description Reserves Reserves Total
-------- -------- --------
First mortgage loans $203,624 $42,690 $246,314
Second mortgage loans 35,639 - 35,639
Commercial real estate loans 55,304 140,031 195,335
Construction loans 2,766 482 3,248
Warehouse lending 1,425 2,231 3,656
Consumer loans 32,355 632 32,987
Non-real estate
commercial 358 2,794 3,152
Other and unallocated 7,669 - 7,669
-------- -------- --------
Total allowance for
loan losses $339,140 $188,860 $528,000
======== ======== ========
Asset Quality
(Dollars in thousands)
(Unaudited)
September 30, 2009 June 30, 2009
% of % of
Days delinquent Balance Total Balance Total
-------------------- --------------------
30 $118,597 1.5% $158,303 1.9%
60 100,078 1.2 94,567 1.1
90 91,426 1.1 91,218 1.1
120 + 963,933 11.9 849,559 10.1
-------------------- --------------------
Total $1,274,034 15.7% $1,193,647 14.2%
==================== ====================
Total loans held for
investment $8,133,497 $8,417,849
==================== ====================
December 31, 2008 September 30, 2008
-------------------- --------------------
% of % of
Days delinquent Balance Total Balance Total
--------------- -------------------- --------------------
30 $145,407 1.6% $107,313 1.2%
60 111,404 1.3 110,943 1.2
90 137,683 1.5 74,056 0.8
120 + 584,618 6.4 403,831 4.4
-------------------- --------------------
Total $979,112 10.8% $696,143 7.6%
==================== ====================
Total loans held for
investment $9,082,121 $9,134,884
==================== ====================
Non-Performing Loans and Assets
(Dollars in thousands)
(Unaudited)
Sept. 30, June 30, Dec. 31, Sept. 30,
2009 2009 2008 2008
------------------------------------------
Non-performing loans $1,055,358 $940,777 $722,301 $477,887
Real estate owned 164,898 131,620 109,297 119,205
Repurchased assets 26,601 18,384 16,454 15,377
------------------------------------------
Non-performing assets $1,246,857 $1,090,781 $848,052 $612,469
==========================================
Non-performing loans as
a percentage of investment
loans 12.98% 11.18% 7.95% 5.23%
Non-performing assets as a
percentage of total assets 8.41% 6.64% 5.97% 4.33%
Deposit Portfolio
(Dollars in thousands)
(Unaudited)
September 30, 2009 June 30, 2009
-------------------- --------------------
Description Balance Rate Balance Rate
----------- -------------------- --------------------
Demand deposits $471,847 0.30% $455,083 0.27%
Savings deposits 660,786 1.22 558,709 1.27
Money market deposits 747,507 1.58 717,816 1.60
Certificates of deposits
/ CDARS 3,819,351 3.41 4,310,498 3.62
---------- ----------
Total retail deposits 5,699,491 2.66 6,042,106 2.91
Company controlled custodial
deposits 951,780 - 1,217,163 -
Public funds / CDARS 650,666 0.79 420,512 1.20
Wholesale deposits 1,232,031 3.56 1,790,892 3.68
---------- ----------
Total deposits $8,533,968 2.35% $9,470,673 2.61%
========== ==========
December 31, 2008 September 30, 2008
-------------------- --------------------
Description Balance Rate Balance Rate
----------- -------------------- --------------------
Demand deposits $416,920 0.47% $419,109 0.63%
Savings deposits 407,501 2.24 410,069 2.50
Money market deposits 561,909 2.61 520,664 2.68
Certificates of deposits /
CDARS 3,967,985 3.94 3,418,840 4.05
---------- ----------
Total retail deposits 5,354,315 3.40 4,768,682 3.47
Company controlled custodial
deposits 535,494 - 468,715 -
Public funds / CDARS 597,638 2.84 1,213,150 3.17
Wholesale deposits 1,353,558 4.41 970,257 4.59
---------- ----------
Total deposits $7,841,005 3.30% $7,420,804 3.35%
========== ==========
Pre-tax, pre-credit-cost Income
(Non GAAP measure)
(Dollars in millions)
(Unaudited)
For the Three Months Ended
------------------------------------
Sept. 30, June 30, Sept. 30,
2009 2009 2008
------------------------------------
(Loss) income before tax
provision / benefit $(178.6) $(102.9) $(95.5)
Add back:
Provision for loan losses 125.5 125.7 89.6
Asset resolution 26.8 18.0 18.0
Other than temporary impairment
(OTTI) on AFS securities 2.9 0.3 -
Secondary marketing reserve
provision 27.6 24.0 3.5
Write down of residual interests 50.7 3.4 12.9
Reserve increase for reinsurance 4.0 10.5 4.8
------------------------------------
Total credit-related-costs: 237.5 181.9 128.8
------------------------------------
Pre-tax, pre-credit-cost income $58.8 $78.9 $33.2
====================================
For the Nine Months Ended
---------------------------
September 30, September 30,
2009 2008
---------------------------
(Loss) income before tax provision / benefit $(374.7) $(87.4)
Add back:
Provision for loan losses 409.4 167.7
Asset resolution 69.7 29.8
Other than temporary impairment (OTTI) on
AFS securities 20.4 -
Secondary marketing reserve provision 66.3 7.8
Write down of residual interests 66.6 26.5
Reserve increase for reinsurance 24.9 4.8
---------------------------
Total credit-related-costs: 657.3 236.6
---------------------------
Pre-tax, pre-credit-cost income
$282.5 $149.2
===========================
SOURCE Flagstar Bancorp, Inc.
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