Exhibit 99.1
| | | |
| | | NEWS RELEASE |
| | | For more information, contact: |
| | | Paul D. Borja |
| | Executive Vice President / CFO
(248) 312-2000 |
| |
FOR IMMEDIATE RELEASE |
FLAGSTAR REPORTS 2009 SECOND QUARTER RESULTS
TROY, Mich. (July 28, 2009) — Flagstar Bancorp, Inc. (NYSE:FBC), the holding company for Flagstar Bank FSB, today reported a second quarter 2009 net loss applicable to common stockholders of $76.6 million, or $(0.32) per share (diluted), as compared to a net loss of $67.4 million, or $(0.76) per share (diluted) on a linked quarter basis. Net earnings were $15.7 million, or $0.22 per share (diluted), in the second quarter 2008. For the six months ended June 30, 2009, Flagstar’s net loss applicable to common stockholders was $144.0 million, or $(0.88) per share (diluted), as compared to net earnings of $5.1 million, or $0.08 per share (diluted) for the same period 2008.
On a pre-tax, pre-credit cost basis, earnings before preferred dividends were $78.9 million in the second quarter 2009, as compared to earnings of $144.7 million in the first quarter 2009. For the second quarter 2009 as compared to the first quarter 2009, residential loan originations decreased to $9.3 billion from $9.5 billion, loan sales increased to $9.9 billion from $7.7 billion and the margin on loan sales decreased to 1.06% from 2.54%, respectively. For the six month periods ended June 30, 2009 and 2008, residential loan originations increased to $18.8 billion from $16.2 billion, loan sales increased to $17.6 billion from $15.3 billion and the margin on loan sales increased to 1.71% from 0.70%, respectively.
“Although it is always disappointing to lose money, we were able to continue to generate positive income on an operating basis and are encouraged by the improvement in mortgage delinquency trends that we experienced towards the end of the quarter,” said Mark T. Hammond, Chief Executive Officer.
Capital
At June 30, 2009, the wholly owned subsidiary Flagstar Bank remained “well-capitalized” for regulatory purposes, with capital ratios of 7.19% for Tier 1 capital and 13.67% for total risk-based capital. During the second quarter 2009, the final tranche of $50 million in capital investment from MP Thrift Investments was completed, which $30 million was invested into the Bank. This final tranche resulted in the total investment of MP Thrift Investments into Flagstar Bancorp to $350 million. This was in addition to the $266 million of preferred stock and warrants sold to the U.S. Treasury via the TARP program, during the first quarter 2009.
Assets
Total assets at June 30, 2009 were $16.4 billion as compared to $16.8 billion at March 31, 2009. The decrease was primarily a result of the decline in loans available for sale and loans held for investment., offset in part by an increase in cash and cash equivalents. Total assets were $14.2 billion at December 31, 2008 and $14.6 billion at June 30, 2008.
Operations
For the second quarter 2009, the net loss applicable to common stockholders of $76.6 million reflected the following:
| | • | | Gain on loan sales decreased to $104.7 million as compared to $195.7 million for the first quarter 2009, reflecting the decrease in the margin on loan sales during the second quarter 2009 to 1.06% from 2.54%. |
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| | • | | Provision for loan losses decreased to $125.7 million as compared to $158.2 million for the first quarter of 2009. |
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| | • | | Loan fees, resulting from originating loans, increased to $35.0 million in the second quarter 2009 as compared to $32.9 million during the first quarter 2009. This reflected an increase in warehouse draw fees, escrow waiver fees and underwriting fees in the second quarter 2009 as compared to the first quarter 2009. |
| |
| | • | | Non interest expense decreased to $171.8 million as compared to $182.7 million in the first quarter 2009. The decrease reflected a decline in commissions of $18.1 million due to lower loan origination volume in the second quarter 2009 and a revised commission structure, and it also reflected a $6.9 million decline in costs associated with foreclosed property. |
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| | • | | Net loan administration income reflected a gain of $41.9 million (offset by a loss of approximately $39.1 million on trading securities that were used for economic hedging purposes) as compared to a loss of $31.8 million for the first quarter 2009 (offset by a gain of approximately $23.7 million on trading securities that were used for economic hedging purposes). |
| |
| | • | | Warrant expense of $12.9 million was recorded in the second quarter of 2009 with respect to the Treasury warrants outstanding. This amount, together with the $9.1 million of Treasury warrant expense incurred during the first quarter of 2009 was added to equity upon receipt of stockholder approval of additional stock in May. Accordingly, no further expense will be recognized for the Treasury warrants, although these amounts must still be reflected as expenses during the first and second quarters of 2009. |
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| | • | | FDIC premium expense included a special assessment that was imposed on all banks during the second quarter 2009 and which totaled $7.8 million for the Bank. |
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| | • | | General and administrative expense for the second quarter 2009 included a $10.4 million reserve against possible reinsurance losses, as compared to no such expense for the second quarter 2008. |
Funding Sources
Flagstar Bank’s primary sources of funds are deposits, loan repayments and sales, advances from the Federal Home Loan Bank of Indianapolis (FHLB), cash generated from operations, customer escrow accounts and security repurchase agreements. Retail deposits were $6.0 billion at June 30, 2009, as compared to $6.2 billion at March 31, 2009 and $5.0 billion at June 30, 2008. At June 30, 2009, the Bank had a $7.0 billion line of credit with the FHLB, which was collateralized to $5.7 billion and of which $502.0 million was available, and a $426.0 million undrawn line of credit at the Federal Reserve discount window.
Net Interest Margin
Flagstar Bank increased its net interest margin to 1.69% for the second quarter 2009 as compared to 1.67% for the first quarter 2009 and 1.89% for second quarter 2008. For the six months ended June 30, 2009, the net interest margin was 1.68% as compared to 1.77% for the six months ended June 30, 2008.
Retail Banking Operations
Flagstar Bank had 175 retail banking branches at June 30, 2009 as compared to 177 branches at March 31, 2009 and 170 branches at June 30, 2008.
Mortgage Banking Operations
Loan production, substantially comprised of agency residential first mortgage loans, decreased to $9.3 billion for the second quarter 2009, as compared to $9.5 billion in the first quarter 2009, but increased from the $8.2 billion for the second quarter 2008.
For the six months ended June 30, 2009 loan production increased 16.0% to $18.8 billion, which was substantially all residential loans, as compared to $16.2 billion, including $15.9 billion of residential loans, for the six months ended June 30, 2008.
Gain on loan sales margins decreased to 1.06% for the second quarter 2009, as compared to 2.54% for the first quarter 2009, but increased from and 0.54% for the second quarter 2008. For the six months ended June 30, 2009, the gain on sale margin increased to 1.71% as compared to 0.70% for the same period in 2008.
At June 30, 2009, the unpaid principal balances of loans associated with the mortgage servicing rights portfolio totaled $61.5 billion and had a weighted average service fee of 33.1 basis points. This was an increase from $58.9 billion at March 31, 2009 with a weighted average servicing fee of 33.4 basis points and $45.8 billion at June 30, 2008 with an average weighted servicing fee of 34.2 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 $1.1 billion at June 30, 2009, from $1.0 billion at March 31, 2009 and $0.5 billion at June 30, 2008.
Non-performing loans, which exclude any FHA-insured loans, increased to $940.8 million (11.18% of loans held for investment) at June 30, 2009 as compared to $893.8 million (9.99% of loans held for investment) at March 31, 2009 and $363.9 million (4.00% of loans held for investment) at June 30, 2008.
Of the non-performing loans, residential first mortgage loans increased to $588.2 million at June 30, 2009, as compared to $561.5 million at March 31, 2009 and $232.6 million at June 30, 2008. Portfolio of single-family residential first mortgage loans held for investment at June 30, 2009 had an average original FICO credit score of 717 and an average original loan-to-value ratio of 74.33%.
Non-performing commercial real estate mortgages increased to $295.8 million at June 30, 2009 as compared to $260.9 million at March 31, 2009 and $112.1 million at June 30, 2008. These loans are individually evaluated for impairment and may require a specific loan loss reserve depending upon the sufficiency of collateral or cash flows.
The balance of our real estate owned, net of any FHA-insured assets, increased to $131.6 million at June 30, 2009 from $106.5 million at March 31, 2009 and $118.6 million at June 30, 2008. Repurchased assets were $18.4 million at June 30, 2009 as compared to $14.8 million at March 31, 2009 and $11.3 million at June 30, 2008.
Net loan charge-offs were $117.7 million for the second quarter 2009 as compared to $68.2 million for the first quarter 2009 and $11.2 million for the second quarter 2008. The provision for loan losses was $125.7 million for the second quarter 2009 as compared to $158.2 million for the first quarter 2009 and $43.8 million for the second quarter 2008. The allowance for loan losses was $474.0 million (5.63% of loans held for investment) at June 30, 2009 as compared to $466.0 million (5.21% of loans held for investment) at March 31, 2009 and $154.0 million (1.69% of loans held for investment) at June 30, 2008.
As Previously Announced
The Company’s quarterly earnings conference call will be held on Wednesday, July 29, 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 toinvestors@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: 17931011.
A replay will be available for five business days by calling (800) 642-1687 toll free or (706) 645-9291 using the passcode: 17931011.
Flagstar Bancorp, with $16.4 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. At June 30, 2009, Flagstar operated 175 banking centers in Michigan, Indiana and Georgia and 45 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 | | June 30, | | | March 31, | | | June 30, | |
| Statements of Operations | | 2009 | | | 2009 | | | 2008 | |
| Interest income | | $ | 187,848 | | | $ | 184,978 | | | $ | 200,564 | |
| Interest expense | | | (127,831 | ) | | | (128,248 | ) | | | (139,165 | ) |
| | | | | | | | | | |
| Net interest income | | | 60,017 | | | | 56,730 | | | | 61,399 | |
| Provision for loan losses | | | (125,662 | ) | | | (158,214 | ) | | | (43,833 | ) |
| | | | | | | | | | |
| Net interest (expense) income after provision | | | (65,645 | ) | | | (101,484 | ) | | | 17,566 | |
| Non-interest income | | | | | | | | | | | | |
| Deposit fees and charges | | | 7,984 | | | | 7,233 | | | | 6,815 | |
| Loan fees and charges, net | | | 35,022 | | | | 32,922 | | | | 617 | |
| Loan administration | | | 41,853 | | | | (31,801 | ) | | | 37,370 | |
| (Loss) gain on trading securities | | | (39,085 | ) | | | 23,747 | | | | — | |
| Gain on trading securities — residuals | | | (3,400 | ) | | | (12,535 | ) | | | (4,104 | ) |
| Net gain on loan sales | | | 104,664 | | | | 195,694 | | | | 43,826 | |
| Net loss on MSR sales | | | (2,544 | ) | | | (82 | ) | | | (834 | ) |
| Net impairment on securities available for sale | | | (327 | ) | | | (17,242 | ) | | | — | |
| Net gain on securities available for sale | | | — | | | | — | | | | 4,869 | |
| Other (loss) income | | | (9,630 | ) | | | (6,977 | ) | | | 11,718 | |
| | | | | | | | | | |
| Total non-interest income | | | 134,537 | | | | 190,959 | | | | 100,277 | |
| Non-interest expenses | | | | | | | | | | | | |
| Compensation and benefits | | | (56,584 | ) | | | (58,654 | ) | | | (54,411 | ) |
| Commissions | | | (15,302 | ) | | | (33,415 | ) | | | (30,788 | ) |
| Occupancy and equipment | | | (17,499 | ) | | | (18,879 | ) | | | (20,471 | ) |
| General and administrative | | | (42,112 | ) | | | (37,669 | ) | | | (14,879 | ) |
| Other | | | (40,571 | ) | | | (34,335 | ) | | | (6,670 | ) |
| | | | | | | | | | |
| Total non-interest expense | | | (172,068 | ) | | | (182,952 | ) | | | (127,219 | ) |
| Capitalized direct cost of loan closing | | | 250 | | | | 283 | | | | 33,483 | |
| | | | | | | | | | |
| Total non-interest expense after capitalized direct cost of loan closing | | | (171,818 | ) | | | (182,669 | ) | | | (93,736 | ) |
| | | | | | | | | | |
| (Loss) earnings before federal income tax and preferred stock dividends | | | (102,926 | ) | | | (93,194 | ) | | | 24,107 | |
| Benefit (provision) for federal income taxes | | | 31,261 | | | | 28,696 | | | | (8,361 | ) |
| | | | | | | | | | |
| Net (loss) earnings | | | (71,665 | ) | | | (64,498 | ) | | | 15,746 | |
| Preferred stock dividends | | | (4,921 | ) | | | (2,919 | ) | | | — | |
| | | | | | | | | | |
| Net (loss) earnings available to common stockholders | | $ | (76,586 | ) | | $ | (67,417 | ) | | $ | 15,746 | |
| | | | | | | | | | |
| Basic (loss) earnings per share | | $ | (0.32 | ) | | $ | (0.76 | ) | | $ | 0.24 | |
| | | | | | | | | | |
| Diluted (loss) earnings per share | | $ | (0.32 | ) | | $ | (0.76 | ) | | $ | 0.22 | |
| | | | | | | | | | |
| Net interest spread — Consolidated | | | 1.42 | % | | | 1.59 | % | | | 1.77 | % |
| Net interest margin — Consolidated | | | 1.61 | % | | | 1.59 | % | | | 1.80 | % |
| Interest rate spread — Bank only | | | 1.45 | % | | | 1.63 | % | | | 1.82 | % |
| Net interest margin — Bank only | | | 1.69 | % | | | 1.67 | % | | | 1.89 | % |
| Return on average assets | | | (1.83 | )% | | | (1.68 | )% | | | 0.41 | % |
| Return on average equity | | | (33.30 | )% | | | (33.64 | )% | | | 8.39 | % |
| Efficiency ratio | | | 88.3 | % | | | 73.8 | % | | | 58.0 | % |
| Average interest earning assets | | $ | 14,888,480 | | | $ | 14,026,946 | | | $ | 13,677,016 | |
| Average interest paying liabilities | | $ | 14,106,978 | | | $ | 14,057,366 | | | $ | 13,606,212 | |
| Average stockholders’ equity | | $ | 920,025 | | | $ | 801,534 | | | $ | 750,978 | |
| Equity/assets ratio (average for the period) | | | 5.48 | % | | | 5.00 | % | | | 4.91 | % |
| Ratio of charge-offs to average loans held for investment | | | 5.42 | % | | | 3.00 | % | | | 0.50 | % |
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
| | | | | | | | | |
| | | For the Six Months Ended | |
| Summary of Consolidated | | June 30, | | | June 30, | |
| Statements of Operations | | 2009 | | | 2008 | |
| Interest income | | $ | 372,826 | | | $ | 411,417 | |
| Interest expense | | | (256,079 | ) | | | (295,220 | ) |
| | | | | | | |
| Net interest income | | | 116,747 | | | | 116,197 | |
| Provision for loan losses | | | (283,876 | ) | | | (78,096 | ) |
| | | | | | | |
| Net interest (expense) income after provision | | | (167,129 | ) | | | 38,101 | |
| Non-interest income | | | | | | | | |
| Deposit fees and charges | | | 15,217 | | | | 12,846 | |
| Loan fees and charges, net | | | 67,944 | | | | 1,501 | |
| Loan administration | | | 10,053 | | | | 20,324 | |
| Loss on trading securities | | | (15,338 | ) | | | — | |
| Loss on trading securities — residuals | | | (15,935 | ) | | | (13,586 | ) |
| Net gain on loan sales | | | 300,358 | | | | 107,252 | |
| Loss on MSR sales, net | | | (2,626 | ) | | | (547 | ) |
| Impairment — securities available for sale | | | (17,569 | ) | | | — | |
| Gain on securities available for sale | | | — | | | | 4,869 | |
| Other (loss) income | | | (16,608 | ) | | | 20,293 | |
| | | | | | | |
| Total non-interest income | | | 325,496 | | | | 152,952 | |
| Non-interest expenses | | | | | | | | |
| Compensation and benefits | | | (115,238 | ) | | | (111,037 | ) |
| Commissions | | | (48,717 | ) | | | (60,103 | ) |
| Occupancy and equipment | | | (36,378 | ) | | | (40,324 | ) |
| General and administrative | | | (79,781 | ) | | | (11,927 | ) |
| Other | | | (74,906 | ) | | | (25,300 | ) |
| | | | | | | |
| Total non-interest expense | | | (355,020 | ) | | | (248,691 | ) |
| Capitalized direct cost of loan closing | | | 533 | | | | 65,786 | |
| | | | | | | |
| Total non-interest expense after capitalized direct cost of loan closing | | | (354,487 | ) | | | (182,905 | ) |
| | | | | | | |
| (Loss) earnings before federal income tax and preferred stock dividends | | | (196,120 | ) | | | 8,148 | |
| Benefit (provision) for federal income taxes | | | 59,957 | | | | (3,002 | ) |
| | | | | | | |
| Net (loss) earnings | | | (136,163 | ) | | | 5,146 | |
| Preferred stock dividends | | | (7,841 | ) | | | — | |
| | | | | | | |
| Net (loss) earnings available to common stockholders | | $ | (144,004 | ) | | $ | 5,146 | |
| | | | | | | |
| Basic (loss) earnings per share | | $ | (0.88 | ) | | $ | 0.08 | |
| | | | | | | |
| Diluted (loss) earnings per share | | $ | (0.88 | ) | | $ | 0.08 | |
| | | | | | | |
| Net interest spread — Consolidated | | | 1.50 | % | | | 1.62 | % |
| Net interest margin — Consolidated | | | 1.60 | % | | | 1.66 | % |
| Interest rate spread — Bank only | | | 1.53 | % | | | 1.67 | % |
| Net interest margin — Bank only | | | 1.68 | % | | | 1.77 | % |
| Return on average assets | | | (1.76 | )% | | | 0.07 | % |
| Return on average equity | | | (33.45 | )% | | | 1.43 | % |
| Efficiency ratio | | | 80.2 | % | | | 68.0 | % |
| Average interest earning assets | | $ | 14,460,094 | | | $ | 13,983,160 | |
| Average interest paying liabilities | | $ | 14,063,565 | | | $ | 13,841,065 | |
| Average stockholders’ equity | | $ | 861,107 | | | $ | 720,714 | |
| Equity/assets ratio (average for the period) | | | 5.25 | % | | | 4.66 | % |
| Ratio of charge-offs to average loans held for investment | | | 4.18 | % | | | 0.64 | % |
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Summary of the Consolidated | | June 30, | | March 31, | | December 31, | | June 30, |
| Statements of Financial Condition: | | 2009 | | 2009 | | 2008 | | 2008 |
| |
| Total assets | | $ | 16,423,292 | | | $ | 16,809,817 | | | $ | 14,203,657 | | | $ | 14,605,993 | |
| Securities — trading | | | 1,603,480 | | | | 1,693,140 | | | | 542,539 | | | | 33,782 | |
| Investment securities available for sale | | | 734,827 | | | | 775,812 | | | | 1,118,453 | | | | 978,033 | |
| Loans held for sale | | | 3,009,740 | | | | 3,660,259 | | | | 1,484,680 | | | | 2,706,372 | |
| Loans held for investment, net | | | 7,943,849 | | | | 8,480,195 | | | | 8,706,121 | | | | 8,937,262 | |
| Allowance for loan losses | | | (474,000 | ) | | | (466,000 | ) | | | (376,000 | ) | | | (154,000 | ) |
| Mortgage servicing rights | | | 664,292 | | | | 522,771 | | | | 520,763 | | | | 672,385 | |
| Deposits | | | 9,470,673 | | | | 9,785,701 | | | | 7,841,005 | | | | 7,478,188 | |
| FHLB advances | | | 5,151,907 | | | | 5,200,000 | | | | 5,200,000 | | | | 5,736,000 | |
| Repurchase agreements | | | 108,000 | | | | 108,000 | | | | 108,000 | | | | 108,000 | |
| Stockholders’ equity | | | 915,521 | | | | 930,734 | | | | 472,293 | | | | 801,764 | |
| | | | | | | | | | | | | | | | | |
Other Financial and Statistical Data: | | | | | | | | | | | | | | | | |
| Equity/assets ratio | | | 5.57 | % | | | 5.54 | % | | | 3.33 | % | | | 5.49 | % |
| Core capital ratio | | | 7.19 | % | | | 7.22 | % | | | 4.95 | % | | | 6.70 | % |
| Total risk-based capital ratio | | | 13.67 | % | | | 13.58 | % | | | 9.10 | % | | | 11.65 | % |
| Book value per common share | | $ | 1.38 | | | $ | 4.03 | | | $ | 5.65 | | | $ | 10.45 | |
| Shares outstanding at quarter-end | | | 468,530 | | | | 90,379 | | | | 83,627 | | | | 72,337 | |
| Average shares outstanding during the quarter | | | 239,425 | | | | 88,210 | | | | 72,153 | | | | 66,005 | |
| Average diluted shares outstanding during the quarter | | | 239,425 | | | | 88,210 | | | | 72,153 | | | | 71,746 | |
| Loans serviced for others | | $ | 61,531,058 | | | $ | 58,856,128 | | | $ | 55,870,207 | | | $ | 45,830,865 | |
| Weighted average service fee (bps) | | | 33.1 | | | | 33.4 | | | | 33.3 | | | | 34.2 | |
| Value of mortgage servicing rights | | | 1.07 | % | | | 0.88 | % | | | 0.93 | % | | | 1.47 | % |
| Allowance for loan losses to non performing loans | | | 50.4 | % | | | 52.1 | % | | | 52.1 | % | | | 42.3 | % |
| Allowance for loan losses to loans held for Investment | | | 5.63 | % | | | 5.21 | % | | | 4.14 | % | | | 1.69 | % |
| Non performing assets to total assets | | | 6.64 | % | | | 6.04 | % | | | 5.97 | % | | | 3.38 | % |
| Number of bank branches | | | 175 | | | | 177 | | | | 175 | | | | 170 | |
| Number of loan origination centers | | | 45 | | | | 61 | | | | 104 | | | | 121 | |
| Number of employees (excluding loan officers & account executives) | | | 3,290 | | | | 3,285 | | | | 3,246 | | | | 3,389 | |
| Number of loan officers and account executives | | | 457 | | | | 519 | | | | 674 | | | | 791 | |
Loan Originations
(Dollars in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended |
| | | June 30, | | March 31, | | June 30, |
| Loan type | | 2009 | | 2009 | | 2008 |
| | | | | | | |
| Residential mortgage loans | | $ | 9,287 | | | | 100.0 | % | | $ | 9,500 | | | | 99.8 | % | | $ | 8,060 | | | | 98.6 | % |
| Consumer loans | | | 1 | | | | — | | | | 3 | | | | — | | | | 46 | | | | 0.6 | |
| Commercial loans | | | 8 | | | | — | | | | 17 | | | | 0.2 | | | | 71 | | | | 0.8 | |
| | | | | | | |
| Total loan production | | $ | 9,296 | | | | 100.0 | % | | $ | 9,520 | | | | 100.0 | % | | $ | 8,177 | | | | 100.0 | % |
| | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | For the Six Months Ended |
| | | June 30, | | June 30, |
| Loan type | | 2009 | | 2008 |
| | | | | |
| Residential mortgage loans | | $ | 18,787 | | | | 99.9 | % | | $ | 15,920 | | | | 98.4 | % |
| Consumer loans | | | 4 | | | | — | | | | 95 | | | | 0.6 | |
| Commercial loans | | | 25 | | | | 0.1 | | | | 172 | | | | 1.0 | |
| | | | | |
| Total loan production | | $ | 18,816 | | | | 100.0 | % | | $ | 16,187 | | | | 100.0 | % |
| | | | | |
Loans Held for Investment
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | June 30, | | March 31, |
| | | 2009 | | 2009 |
| | | | | |
| First mortgage loans | | $ | 5,529,395 | | | | 65.7 | % | | $ | 5,754,604 | | | | 64.3 | % |
| Second mortgage loans | | | 246,895 | | | | 2.9 | | | | 266,198 | | | | 3.0 | |
| Commercial real estate loans | | | 1,692,052 | | | | 20.1 | | | | 1,758,612 | | | | 19.7 | |
| Construction loans | | | 36,599 | | | | 0.4 | | | | 45,187 | | | | 0.5 | |
| Warehouse lending | | | 383,368 | | | | 4.6 | | | | 569,120 | | | | 6.4 | |
| Consumer loans | | | 508,309 | | | | 6.0 | | | | 527,221 | | | | 5.9 | |
| Non-real estate commercial | | | 21,231 | | | | 0.3 | | | | 25,253 | | | | 0.2 | |
| | | | | |
| Total loans held for investment | | $ | 8,417,849 | | | | 100.0 | % | | $ | 8,946,195 | | | | 100.0 | % |
| | | | | |
| | | | | | | | | | | | | | | | | |
| | | December 31, | | June 30, |
| | | 2008 | | 2008 |
| | | | | |
| First mortgage loans | | $ | 5,958,748 | | | | 65.6 | % | | $ | 6,042,770 | | | | 66.5 | % |
| Second mortgage loans | | | 287,350 | | | | 3.2 | | | | 294,783 | | | | 3.2 | |
| Commercial real estate loans | | | 1,779,363 | | | | 19.6 | | | | 1,706,191 | | | | 18.8 | |
| Construction loans | | | 54,749 | | | | 0.6 | | | | 71,345 | | | | 0.8 | |
| Warehouse lending | | | 434,140 | | | | 4.8 | | | | 423,356 | | | | 4.7 | |
| Consumer loans | | | 543,102 | | | | 6.0 | | | | 529,034 | | | | 5.8 | |
| Non-real estate commercial | | | 24,669 | | | | 0.2 | | | | 23,783 | | | | 0.2 | |
| | | | | |
| Total loans held for investment | | $ | 9,082,121 | | | | 100.0 | % | | $ | 9,091,262 | | | | 100.0 | % |
| | | | | |
Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | |
| | | For the Three Months Ended |
| | | June 30 | | March 31, | | June 30, |
| | | 2009 | | 2009 | | 2008 |
| Description | | (000’s) | | (000’s) | | (000’s) |
| |
| Beginning Balance | | $ | (466,000 | ) | | $ | (376,000 | ) | | $ | (121,400 | ) |
| Provision for losses | | | (125,662 | ) | | | (158,214 | ) | | | (43,833 | ) |
| Charge offs, net of recoveries | | | | | | | | | | | | |
| First mortgage loans | | | 30,395 | | | | 24,941 | | | | 9,028 | |
| Second mortgage loans | | | 11,385 | | | | 12,603 | | | | 711 | |
| Commercial loans | | | 64,295 | | | | 22,633 | | | | 13 | |
| Construction loans | | | 745 | | | | 756 | | | | 58 | |
| Warehouse | | | 497 | | | | — | | | | 92 | |
| Consumer: | | | | | | | | | | | | |
| HELOC | | | 8,988 | | | | 6,127 | | | | 812 | |
| Other consumer loans | | | 1,081 | | | | 678 | | | | 206 | |
| Other | | | 276 | | | | 476 | | | | 313 | |
| | | |
| Charge-offs, net of recoveries | | | 117,662 | | | | 68,214 | | | | 11,233 | |
| | | |
| Ending Balance | | $ | (474,000 | ) | | $ | (466,000 | ) | | $ | (154,000 | ) |
| | | |
| | | | | | | | | |
| | | For the Six Months Ended |
| | | June 30, |
| | | 2009 | | 2008 |
| Description | | (000’s) | | (000’s) |
| |
| Beginning Balance | | $ | (376,000 | ) | | $ | (104,000 | ) |
| Provision for losses | | | (283,876 | ) | | | (78,096 | ) |
| Charge offs, net of recoveries | | | | | | | | |
| First mortgage loans | | | 55,336 | | | | 14,924 | |
| Second mortgage loans | | | 23,988 | | | | 947 | |
| Commercial loans | | | 86,928 | | | | 8,235 | |
| Construction loans | | | 1,501 | | | | 85 | |
| Warehouse | | | 497 | | | | 711 | |
| Consumer: | | | | | | | | |
| HELOC | | | 15,115 | | | | 1,785 | |
| Other consumer loans | | | 1,759 | | | | 765 | |
| Other | | | 752 | | | | 644 | |
| | | |
| Charge-offs, net of recoveries | | | 185,876 | | | | 28,096 | |
| | | |
| Ending Balance | | $ | (474,000 | ) | | $ | (154,000 | ) |
| | | |
Composition of Allowance for Loan Losses
As of June 30, 2009
(In thousands)
(Unaudited)
| | | | | | | | | | | | | |
| | | General | | | Specific | | | | |
| Description | | Reserves | | | Reserves | | | Total | |
| First mortgage loans | | $ | 187,945 | | | $ | 45,517 | | | $ | 233,462 | |
| Second mortgage loans | | | 32,219 | | | | — | | | | 32,219 | |
| Commercial real estate loans | | | 46,294 | | | | 116,438 | | | | 162,732 | |
| Construction loans | | | 2,889 | | | | 1,229 | | | | 4,118 | |
| Warehouse lending | | | 1,953 | | | | 2,282 | | | | 4,235 | |
| Consumer loans | | | 26,741 | | | | 716 | | | | 27,457 | |
| Non-real estate commercial | | | 587 | | | | 2,068 | | | | 2,655 | |
| Other and unallocated | | | 7,122 | | | | — | | | | 7,122 | |
| | | | | | | | | | |
| Total allowance for loan losses | | $ | 305,750 | | | $ | 168,250 | | | $ | 474,000 | |
| | | | | | | | | | |
Gain on Loan Sales and Securitizations
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | June 30, | | | March 31, | | | June 30, | |
| | | 2009 | | | 2009 | | | 2008 | |
| Description | | (000’s) | | | bps | | | (000’s) | | | bps | | | (000’s) | | | bps | |
| |
| Gain on loan sales and securitizations | | $ | 87,535 | | | | 89 | | | $ | 211,903 | | | | 274 | | | $ | 111,747 | | | | 138 | |
| Fair value adjustment for loans held for sale (1) | | | 20,388 | | | | 20 | | | | 21,955 | | | | 29 | | | | — | | | | — | |
| Hedging costs | | | 39,539 | | | | 40 | | | | (14,030 | ) | | | (18 | ) | | | 6,044 | | | | 7 | |
| LOCOM adjustments | | | (172 | ) | | | — | | | | (257 | ) | | | — | | | | (22,474 | ) | | | (28 | ) |
| Provision to SMR | | | (7,130 | ) | | | (7 | ) | | | (3,802 | ) | | | (5 | ) | | | (2,813 | ) | | | (3 | ) |
| Credit losses | | | 9 | | | | — | | | | 5 | | | | — | | | | (2,279 | ) | | | (3 | ) |
| Loan level pricing adjustments | | | (35,242 | ) | | | (36 | ) | | | (19,433 | ) | | | (25 | ) | | | (46,027 | ) | | | (57 | ) |
| Other transaction costs | | | (263 | ) | | | — | | | | (647 | ) | | | (1 | ) | | | (372 | ) | | | — | |
| | | |
| Net gain on loan sales and securitizations | | $ | 104,664 | | | | 106 | | | $ | 195,694 | | | | 254 | | | $ | 43,826 | | | | 54 | |
| | | |
| Total loan sales and securitizations | | $ | 9,878,035 | | | | | | | $ | 7,699,063 | | | | | | | $ | 8,106,544 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | |
| (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 Six Months Ended June 30, | |
| | | 2009 | | | 2008 | |
| Description | | (000’s) | | | Bps | | | (000’s) | | | bps | |
| |
| Gain on loan sales and securitizations | | $ | 299,752 | | | | 170 | | | $ | 205,820 | | | | 135 | |
| Fair value adjustment for loans held for sale | | | 42,343 | | | | 24 | | | | — | | | | — | |
| Hedging costs | | | 25,509 | | | | 15 | | | | 15,143 | | | | 10 | |
| LOCOM adjustments | | | (429 | ) | | | — | | | | (22,699 | ) | | | (15 | ) |
| Provision to SMR | | | (10,932 | ) | | | (6 | ) | | | (5,812 | ) | | | (4 | ) |
| Credit losses | | | 14 | | | | — | | | | (6,717 | ) | | | (4 | ) |
| Loan level pricing adjustments | | | (54,988 | ) | | | (31 | ) | | | (77,546 | ) | | | (51 | ) |
| Other transaction costs | | | (911 | ) | | | (1 | ) | | | (937 | ) | | | (1 | ) |
| | | |
| Net gain on loan sales and securitizations | | $ | 300,358 | | | | 171 | | | | 107,252 | | | | 70 | |
| | | |
| Total loan sales and securitizations | | $ | 17,577,097 | | | | | | | $ | 15,266,871 | | | | | |
| | | | | | | | | | | | | | | |
Asset Quality
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | June 30, 2009 | | | March 31, 2009 | |
| | | | | | | % of | | | | | | | % of | |
| Days delinquent | | Balance | | | Total | | | Balance | | | Total | |
| | | | | |
| 30 | | $ | 158,303 | | | | 1.9 | % | | $ | 172,214 | | | | 1.9 | % |
| 60 | | | 94,567 | | | | 1.1 | | | | 129,999 | | | | 1.5 | |
| 90 | | | 91,218 | | | | 1.1 | | | | 126,022 | | | | 1.4 | |
| 120 + | | | 849,559 | | | | 10.1 | | | | 767,786 | | | | 8.6 | |
| | | | | |
| Total | | $ | 1,193,647 | | | | 14.2 | % | | $ | 1,196,021 | | | | 13.4 | % |
| | | | | |
| Total loans held for investment | | $ | 8,417,849 | | | | | | | $ | 8,946,195 | | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | |
| | | December 31, 2008 | | | June 30, 2008 | |
| | | | | | | % of | | | | | | | % of | |
| Days delinquent | | Balance | | | Total | | | Balance | | | Total | |
| 30 | | $ | 145,407 | | | | 1.6 | % | | $ | 95,311 | | | | 1.1 | % |
| 60 | | | 111,404 | | | | 1.3 | | | | 69,930 | | | | 0.8 | |
| 90 | | | 137,683 | | | | 1.5 | | | | 54,214 | | | | 0.6 | |
| 120 + | | | 584,618 | | | | 6.4 | | | | 309,717 | | | | 3.3 | |
| | | | | |
| Total | | $ | 979,112 | | | | 10.8 | % | | $ | 529,172 | | | | 5.8 | % |
| | | | | |
| Total loans held for investment | | $ | 9,082,121 | | | | | | | $ | 9,091,262 | | | | | |
| | | | | |
Non-Performing Loans and Assets
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | June 30, | | | March 31, | | | December 31, | | | June 30, | |
| | | 2009 | | | 2009 | | | 2008 | | | 2008 | |
| | | |
| Non-performing loans | | $ | 940,777 | | | $ | 893,808 | | | $ | 722,301 | | | $ | 363,931 | |
| Real estate owned | | | 131,620 | | | | 106,546 | | | | 109,297 | | | | 118,582 | |
| Repurchased assets/non-performing assets | | | 18,384 | | | | 14,830 | | | | 16,454 | | | | 11,298 | |
| | | |
| Non-performing assets | | $ | 1,090,781 | | | $ | 1,015,184 | | | $ | 848,052 | | | $ | 493,811 | |
| | | |
| Non-performing loans as a percentage of investment loans | | | 11.18 | % | | | 9.99 | % | | | 7.95 | % | | | 4.00 | % |
| Non-performing assets as a percentage of total assets | | | 6.64 | % | | | 6.04 | % | | | 5.97 | % | | | 3.38 | % |
Deposit Portfolio
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | June 30, 2009 | | | March 31, 2009 | |
| Description | | Balance | | | Rate | | | Balance | | | Rate | |
| | | | | |
| Demand deposits | | $ | 455,083 | | | | 0.27 | % | | $ | 427,167 | | | | 0.30 | % |
| Savings deposits | | | 558,709 | | | | 1.27 | | | | 446,440 | | | | 1.79 | |
| Money market deposits | | | 717,816 | | | | 1.60 | | | | 662,273 | | | | 2.10 | |
| Certificates of deposits/ CDARS | | | 4,310,498 | | | | 3.62 | | | | 4,647,038 | | | | 3.66 | |
| | | | | |
| Total retail deposits | | | 6,042,106 | | | | 2.91 | | | | 6,182,918 | | | | 3.13 | |
| Company controlled custodial deposits | | | 1,217,163 | | | | — | | | | 749,102 | | | | — | |
| Public funds / CDARS | | | 420,512 | | | | 1.20 | | | | 616,318 | | | | 1.80 | |
| Wholesale deposits | | | 1,790,892 | | | | 3.68 | | | | 2,237,363 | | | | 3.23 | |
| | | | | |
| Total deposits | | $ | 9,470,673 | | | | 2.61 | % | | $ | 9,785,701 | | | | 2.83 | % |
| | | | | |
| | | | | | | | | | | | | | | | | |
| | | December 31, 2008 | | | June 30, 2008 | |
| Description | | Balance | | | Rate | | | Balance | | | Rate | |
| | | | | |
| Demand deposits | | $ | 416,920 | | | | 0.47 | % | | $ | 455,523 | | | | 0.65 | % |
| Savings deposits | | | 407,501 | | | | 2.24 | | | | 441,017 | | | | 2.39 | |
| Money market deposits | | | 561,909 | | | | 2.61 | | | | 544,390 | | | | 2.47 | |
| Certificates of deposits / CDARS | | | 3,967,985 | | | | 3.94 | | | | 3,616,013 | | | | 4.27 | |
| | | | | |
| Total retail deposits | | | 5,354,315 | | | | 3.40 | | | | 5,056,943 | | | | 3.59 | |
| Company controlled custodial deposits | | | 535,494 | | | | — | | | | 587,655 | | | | — | |
| Public funds / CDARS | | | 597,638 | | | | 2.84 | | | | 875,730 | | | | 2.98 | |
| Wholesale deposits | | | 1,353,558 | | | | 4.41 | | | | 957,860 | | | | 4.78 | |
| | | | | |
| Total deposits | | $ | 7,841,005 | | | | 3.30 | % | | $ | 7,478,188 | | | | 3.39 | % |
| | | | | |
Pre-tax, pre-credit-cost Income
(Non GAAP measure)
(Dollars in millions)
(Unaudited)
| | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | June 30, 2009 | | | March 31, 2009 | | | June 30, 2008 | |
| | | |
| (Loss) income before tax provision / benefit | | $ | (102.9 | ) | | $ | (93.2 | ) | | $ | 24.1 | |
| | | | | | | | | | | | | |
| Add back: | | | | | | | | | | | | |
| Provision for loan losses | | | 125.7 | | | | 158.2 | | | | 43.8 | |
| Asset resolution | | | 18.0 | | | | 24.9 | | | | 8.1 | |
| Other than temporary impairment (OTTI) on AFS securities | | | 0.3 | | | | 17.2 | | | | — | |
| Secondary marketing reserve provision | | | 24.0 | | | | 14.7 | | | | 2.7 | |
| Write down of residual interests | | | 3.4 | | | | 12.5 | | | | 4.1 | |
| Reserve increase for reinsurance | | | 10.4 | | | | 10.4 | | | | — | |
| | | |
| Total credit-related-costs: | | | 181.8 | | | | 237.9 | | | | 58.7 | |
| | | |
Pre-tax, pre-credit-cost income | | $ | 78.9 | | | $ | 144.7 | | | $ | 82.8 | |
| | | |
| | | | | | | | | |
| | | For the Six Months Ended | |
| | | June 30, 2009 | | | June 30, 2008 | |
| | | |
| (Loss) income before tax provision / benefit | | $ | (196.1 | ) | | $ | 8.1 | |
| | | | | | | | | |
| Add back: | | | | | | | | |
| Provision for loan losses | | | 283.9 | | | | 78.1 | |
| Asset resolution | | | 42.9 | | | | 11.8 | |
| Other than temporary impairment (OTTI) on AFS securities | | | 17.5 | | | | — | |
| Secondary marketing reserve provision | | | 38.7 | | | | (1.6 | ) |
| Write down of residual interests | | | 15.9 | | | | 13.7 | |
| Reserve increase for reinsurance | | | 20.9 | | | | — | |
| | | |
| Total credit-related-costs: | | | 419.8 | | | | 101.9 | |
| | | |
Pre-tax, pre-credit-cost income | | $ | 223.7 | | | $ | 110.0 | |
| | | |
