Exhibit 99.1
NEWS RELEASE
FOR MORE INFORMATION, CONTACT:
Paul D. Borja
Executive Vice President / CFO
(248) 312-2000
FOR IMMEDIATE RELEASE
FLAGSTAR REPORTS 2007 THIRD QUARTER RESULTS
TROY, Mich. (October 30, 2007) — Flagstar Bancorp, Inc. (NYSE:FBC), today reported a 2007 third quarter net loss of $32.1 million, or $(0.53) per share (diluted), as compared to a 2006, third quarter net earnings of $20.8 million, or $0.32 per share (diluted). For the nine months ended September 30, 2007, net loss totaled $9.2 million, or $(0.15) per share (diluted) compared to net earnings of $68.3 million, or $1.06 per share (diluted) for the same nine month period in 2006. On a linked-quarter basis, net earnings decreased $47.2 million from $15.1 million, or $0.25 per share (diluted) in the second quarter 2007.
The 2007 third quarter loss as compared to the same period in 2006 primarily reflects, a decrease in gains on sale of mortgage servicing rights, an increase in the provision for loan loss and an increase in losses on loan sales.
On a linked quarter basis, net earnings decreased as a result of a decrease in gain on loan sales, an increase in the provision for losses, and a decrease in gains on sales of mortgage servicing rights, offset in part by an increase in net interest income.
Consolidated assets increased $1.1 billion, or 7.1%, from $15.5 billion at December 31, 2006 to $16.6 billion at September 30, 2007 and increased $1.5 billion or 9.9% from $15.1 billion at September 30, 2006.
Liquidity
Flagstar’s primary sources of funds are deposits, loan repayments and sales, advances from the Federal Home Loan Bank, security repurchase agreements, cash generated from operations and customer escrow accounts. Retail deposits increased to $5.0 billion at September 30, 2007, as compared to $4.9 billion at December 31, 2006. At September 30, 2007, we had available collateral at the FHLB sufficient to access $7.4 billion of the line of which $1.0 billion was still available at September 30, 2007. Also at September 30, 2007, we had $1.2 billion of agency securities and $0.8 billion of non-agency securities available for uses as collateral in security repurchase agreements. We can also draw upon our $0.9 billion line of credit at the Federal Reserve discount window but have not used that facility as of September 30, 2007.
Capital
At September 30, Flagstar Bancorp had $728.9 million in equity. Flagstar Bank, our wholly owned subsidiary, was considered “well-capitalized” for regulatory purposes at September 30, 2007, with regulatory capital ratios of 5.78% core capital (based on $955.2 million of regulatory Tier 1 capital) and 10.65% risk-based capital (based on regulatory total risk-based capital of $977.4 million).
Net Interest Margin
Net interest margin increased on a linked quarter basis from second quarter 2007 to third quarter 2007 at both the Bancorp and Bank levels. Flagstar Bancorp’s net interest margin for the third quarter 2007 was 1.36%, as compared to 1.35% for the second quarter 2007 and 1.54% for the third quarter 2006. For the nine months ended September 30, 2007 the net interest margin was 1.38% as compared to 1.57% reported for the nine months ended September 30, 2006.
The net interest margin of its subsidiary Flagstar Bank for the third quarter 2007 was 1.52%, as compared to 1.43% for the second quarter 2007 and 1.67% for the third quarter 2006. For the nine months ended September 30, 2007 its net interest margin was 1.45% as compared to 1.65% for the nine months ended September 30, 2006.
Retail Banking Operations
Flagstar Bank had 158 retail banking branches at September 30, 2007, an increase of 8.2% as compared to 146 branches as of September 30, 2006 and an increase of 4.6% from 151 branches at December 31, 2006. For the fourth quarter 2007 and for 2008, Flagstar Bank plans to open a total of 20 more retail banking branches. During the third quarter of 2007, the total number of retail accounts increased 6.7% to 292,200 as compared to approximately 273,800 at September 30, 2006 and 5.1% to approximately 277,900 at December 31, 2006.
Mortgage Banking Operations
Loan production for third quarter 2007 decreased 8.1% to $6.8 billion, including $6.6 billion of residential loans, as compared to $7.4 billion, including $7.2 billion of residential loans, during second quarter 2007 and $4.8 billion, including $4.6 billion of residential loans, for third quarter of 2006.
For the nine months ended September 30, 2007 loan production increased 35.1% to $20.0 billion, including $19.2 billion of residential loans, as compared to $14.8 billion, including $13.9 billion of residential loans, for the nine months ended September 30, 2006. At September 30, 2007, subprime loans comprised approximately 1% of the investment loan portfolio.
Flagstar’s loss on sale spread was a negative 29 basis points for the quarter ended September 30, 2007, as compared to a gain on loan sale spreads of 52 basis points for the second quarter 2007 and a negative 20 basis points for the quarter ended September 30, 2006. Our calculation of net gain on loan sales reflects any mark to market adjustments on loan commitments and forward sales commitments in accordance with SFAS 133, lower of cost or market adjustments on loan transfers and provisions to our secondary market reserve. Net mark to market adjustments made in accordance with SFAS 133, amounted to $8.5 million, ($3.6) million and $7.1 million for the three months ended September 30, 2007, June 30, 2007 and September 30, 2006, respectively. Lower of cost or market adjustments on loan transfers amounted to $0.1 million for both the three months ended September 30, 2007 and June 30, 2007 and $1.1 million for the three months ended September 30, 2006. Provisions to our secondary market reserve amounted to $2.7 million, $2.4 million and $1.6 million for the three months ended September 30, 2007, June 30, 2007 and September 30, 2006, respectively. Also included in our net gain on loan sales are the capitalized value of our MSR’s, which totaled $93.6 million, $86.0 million and $61.6 million for the three months ended September 30, 2007, June 30, 2007 and September 30, 2006, respectively.
For the nine months ended September 30, 2007, the gain on sale spread increased 5 basis points to 21 basis points, as compared to 16 basis points for the same period in 2006. Our calculation of net gain on loan sales reflects any mark to market adjustments on loan commitments and forward sales commitments in accordance with SFAS 133, lower of cost or market adjustments on loan transfers and provisions to our secondary market reserve. Net mark to market adjustments made in accordance with SFAS 133, amounted to $0.1 million and ($2.4) million for the nine months ended September 30, 2007 and September 30, 2006, respectively. Lower of cost or market adjustments on loan transfers amounted to $0.2 million and $1.9 million for the nine months ended September 30, 2007 and 2006, respectively. Provisions to our secondary market reserve amounted to $7.2 million and $4.1 million for the nine months ended September 30, 2007 and 2006, respectively. Also included in our net gain on loan sales are the capitalized value of our MSR’s, which totaled $247.5 million and $171.1 million for the nine months ended September 30, 2007 and 2006, respectively.
At September 30, 2007, Flagstar’s mortgage servicing portfolio totaled $26.7 billion with a weighted average service fee of 36.4 basis points. This is an increase from $21.5 billion at June 30, 2007 with a weighted average servicing fee of 36.9 basis points. The capitalized value of Flagstar’s servicing portfolio at September 30, 2007 was $340.8 million, or 1.28% of the outstanding balance of loans serviced for others,
with an estimated market value of $385.6 million. This compares to the capitalized value at June 30, 2007 of $266.5 million, or 1.24% with an estimated market value of $333.3 million and a capitalized value at September 30, 2006 of $150.7 million, or 1.02% with an estimated market value of $180.0 million.
Asset Quality
During the third quarter 2007, Flagstar increased its allowance for loan losses to $77.8 million, or 1.11% of loans held for investment at September 30, 2007, from $53.4 million, or 0.70% of loans held for investment, at June 30, 2007 and from $42.7 million, or 0.48% of loans held for investment, at September 30, 2006. Single-family residential first mortgage loans held for investment at September 30, 2007 had an average FICO credit score of 719 and an average original loan-to-value ratio of 73.65%.
Net charge-offs of loans during the third quarter 2007 decreased to $5.8 million from $6.5 million during the second quarter 2007 and increased from $4.7 million during the third quarter 2006. Third quarter 2007 total non-performing assets increased to $221.0 million at September 30, 2007, from $160.2 million at December 31, 2006 and $158.8 million at September 30, 2006.
Non-performing loans, which include loans 90 days or more past due and matured loans, increased to $127.5 million at September 30, 2007 as compared to $99.3 at June 30, 2007 and $55.5 million at September 30, 2006. At September 30, 2007, 76.0% of non-performing loans were secured by first or second mortgages on single-family homes as compared to 78.1% at June 30, 2007 and 91.9% at September 30, 2006.
Loans 90 days or more past due and matured loans were 1.81% of loans held for investment at September 30, 2007 as compared to 1.30% at June 30, 2007 and 0.62% at September 30, 2006. The aggregate of loans past due 30 days or less and 60 days or less increased 46.1% to $117.9 million at September 30, 2007 from $80.7 million at June 30, 2007.
Of non-performing assets, real estate owned increased 4.0% to $84.2 million at September 30, 2007 from $81.0 million at December 31, 2006 and $71.5 million at September 30, 2006. Repurchased and non-performing assets decreased 57.9% to $9.3 million at September 30, 2007 compared to $22.1 million at December 31, 2006 and $31.9 million at September 30, 2006.
As Previously Announced
The Company’s quarterly earnings conference call will be held on Wednesday, October 31, 2007 from 11 a.m. until 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 (913) 312-0416 or toll free at (800) 289-0462, passcode: 4268862.
Flagstar Bancorp, with $16.6 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. At September 30, 2007, Flagstar operated 158 banking centers in Michigan, Indiana and Georgia and 151 home loan centers in 29 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 to change based upon various factors (some of which may be beyond the Company’s control). The words “may,” “could,” “should,” “would,” “believe,” and similar expressions are intended to identify forward-looking statements.
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Nine Months Ended | |
| Summary of Consolidated | | September 30, | | | June 30, | | | September 30, | | | September 30, | | | September 30, | |
| Statements of Operations | | 2007 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Interest income | | $ | 237,151 | | | $ | 222,464 | | | $ | 205,557 | | | $ | 680,185 | | | $ | 589,503 | |
| Interest expense | | | (183,215 | ) | | | (172,547 | ) | | | (151,929 | ) | | | (524,360 | ) | | | (426,462 | ) |
| | | | | | | | | | | | | | | | |
| Net interest income | | | 53,936 | | | | 49,917 | | | | 53,628 | | | | 155,825 | | | | 163,041 | |
| Provision for loan losses | | | (30,195 | ) | | | (11,452 | ) | | | (7,291 | ) | | | (49,941 | ) | | | (17,213 | ) |
| | | | | | | | | | | | | | | | |
| Net interest income after provision | | | 23,741 | | | | 38,465 | | | | 46,337 | | | | 105,884 | | | | 145,828 | |
| Non-interest income | | | | | | | | | | | | | | | | | | | | |
| Loan fees and charges, net | | | (218 | ) | | | 837 | | | | 2,146 | | | | 1,257 | | | | 4,996 | |
| Deposit fees and charges | | | 5,808 | | | | 5,710 | | | | 5,080 | | | | 16,496 | | | | 15,584 | |
| Loan servicing fees, net | | | 4,333 | | | | 3,149 | | | | 7,766 | | | | 10,097 | | | | 12,430 | |
| Net gain on securities available for sale | | | 668 | | | | — | | | | — | | | | 1,397 | | | | — | |
| Gain on loan sales, net | | | (17,457 | ) | | | 28,144 | | | | (8,197 | ) | | | 35,841 | | | | 18,538 | |
| Gain on MSR sales, net | | | 456 | | | | 5,610 | | | | 45,202 | | | | 6,181 | | | | 88,719 | |
| Residual Impairment | | | (3,612 | ) | | | — | | | | (2,144 | ) | | | (3,612 | ) | | | (5,701 | ) |
| Unrealized gain on trading securities | | | 1,914 | | | | — | | | | — | | | | 1,914 | | | | — | |
| Other income | | | 9,376 | | | | 13,994 | | | | 4,485 | | | | 29,039 | | | | 23,966 | |
| | | | | | | | | | | | | | | | |
| Total non-interest income | | | 1,268 | | | | 57,444 | | | | 54,338 | | | | 98,610 | | | | 158,532 | |
| Non-interest expenses | | | | | | | | | | | | | | | | | | | | |
| Compensation and benefits | | | (44,653 | ) | | | (42,847 | ) | | | (41,715 | ) | | | (129,924 | ) | | | (120,346 | ) |
| Commissions | | | (18,136 | ) | | | (19,517 | ) | | | (18,405 | ) | | | (52,959 | ) | | | (56,283 | ) |
| Occupancy and equipment | | | (17,622 | ) | | | (17,038 | ) | | | (17,749 | ) | | | (51,446 | ) | | | (51,405 | ) |
| General and administrative | | | (10,658 | ) | | | (11,178 | ) | | | (9,242 | ) | | | (33,841 | ) | | | (30,070 | ) |
| Other | | | (5,431 | ) | | | (5,366 | ) | | | (4,829 | ) | | | (14,303 | ) | | | (11,464 | ) |
| | | | | | | | | | | | | | | | |
| Total non-interest expense | | | (96,500 | ) | | | (95,946 | ) | | | (91,940 | ) | | | (282,473 | ) | | | (269,568 | ) |
| Capitalized direct cost of loan closing | | | 23,240 | | | | 23,712 | | | | 23,087 | | | | 65,581 | | | | 70,291 | |
| | | | | | | | | | | | | | | | |
| Total non-interest expense after capitalized direct cost of loan closing | | | (73,260 | ) | | | (72,234 | ) | | | (68,853 | ) | | | (216,892 | ) | | | (199,277 | ) |
| | | | | | | | | | | | | | | | |
| (Loss) Earnings before federal income tax | | | (48,251 | ) | | | 23,675 | | | | 31,822 | | | | (12,398 | ) | | | 105,083 | |
| (Benefit) Provision for federal income taxes | | | (16,196 | ) | | | (8,544 | ) | | | (11,070 | ) | | | (3,233 | ) | | | (36,780 | ) |
| | | | | | | | | | | | | | | | |
| Net (loss) earnings | | $ | (32,055 | ) | | $ | 15,131 | | | $ | 20,752 | | | $ | (9,165 | ) | | $ | 68,303 | |
| | | | | | | | | | | | | | | | |
| Basic (loss) earnings per share | | $ | (0.53 | ) | | $ | 0.25 | | | $ | 0.33 | | | $ | (0.15 | ) | | $ | 1.08 | |
| | | | | | | | | | | | | | | | |
| Diluted (loss) earnings per share | | $ | (0.53 | ) | | $ | 0.25 | | | $ | 0.32 | | | $ | (0.15 | ) | | $ | 1.06 | |
| | | | | | | | | | | | | | | | |
| Dividends paid per common share | | $ | 0.10 | | | $ | 0.10 | | | $ | 0.15 | | | $ | 0.30 | | | $ | 0.45 | |
| | | | | | | | | | | | | | | | |
| Dividend payout ratio | | | (18.8 | %) | | | 39.7 | % | | | 46.0 | % | | | (197.3 | %) | | | 41.9 | % |
| Net interest spread — Consolidated | | | 1.27 | % | | | 1.27 | % | | | 1.47 | % | | | 1.29 | % | | | 1.48 | % |
| Net interest margin — Consolidated | | | 1.36 | % | | | 1.35 | % | | | 1.54 | % | | | 1.38 | % | | | 1.57 | % |
| Interest rate spread — Bank only | | | 1.35 | % | | | 1.30 | % | | | 1.44 | % | | | 1.29 | % | | | 1.44 | % |
| Net interest margin — Bank only | | | 1.52 | % | | | 1.43 | % | | | 1.67 | % | | | 1.45 | % | | | 1.65 | % |
| Return on average assets | | | (0.77 | )% | | | 0.38 | % | | | 0.55 | % | | | (0.08 | )% | | | 0.60 | % |
| Return on average equity | | | (17.08 | )% | | | 7.69 | % | | | 10.10 | % | | | (1.57 | )% | | | 12.23 | % |
| Efficiency ratio | | | 133.45 | % | | | 67.28 | % | | | 63.77 | % | | | 85.24 | % | | | 61.97 | % |
| Average interest earning assets | | $ | 15,694,934 | | | $ | 14,799,436 | | | $ | 13,814,697 | | | $ | 15,063,143 | | | $ | 13,855,673 | |
| Average interest paying liabilities | | $ | 15,233,024 | | | $ | 14,582,350 | | | $ | 13,461,132 | | | | 14,802,878 | | | $ | 13,596,942 | |
| Average stockholders’ equity | | $ | 750,570 | | | $ | 786,768 | | | $ | 821,699 | | | | 776,989 | | | $ | 744,394 | |
| Equity/assets ratio (average for the period) | | | 4.51 | % | | | 4.99 | % | | | 5.46 | % | | | 4.79 | % | | | 4.93 | % |
| Ratio of charge-offs to average loans held for investment | | | 0.33 | % | | | 0.36 | % | | | 0.18 | % | | | 0.34 | % | | | 0.19 | % |
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Summary of the Consolidated | | September 30, | | June 30, | | December 31, | | September 30, |
| Statements of Financial Condition: | | 2007 | | 2007 | | 2006 | | 2006 |
| | | | | | | | | | | | | | | | | |
| Total assets | | $ | 16,564,999 | | | $ | 16,179,478 | | | $ | 15,497,205 | | | $ | 15,120,025 | |
| Mortgage backed securities held to maturity | | | 1,343,778 | | | | 1,069,350 | | | | 1,565,420 | | | | 1,552,040 | |
| Loans held for sale | | | 5,604,041 | | | | 5,110,768 | | | | 3,188,795 | | | | 3,286,263 | |
| Loans held for investment, net | | | 6,956,932 | | | | 7,602,073 | | | | 8,893,906 | | | | 8,881,437 | |
| Allowance for loan losses | | | 77,800 | | | | 53,400 | | | | 45,779 | | | | 42,744 | |
| Servicing rights | | | 340,814 | | | | 266,545 | | | | 173,288 | | | | 150,663 | |
| Deposits | | | 8,485,556 | | | | 7,697,810 | | | | 7,623,488 | | | | 8,212,773 | |
| FHLB advances | | | 6,392,000 | | | | 5,529,055 | | | | 5,407,000 | | | | 4,517,308 | |
| Repurchase agreements | | | 468,668 | | | | 1,705,418 | | | | 990,806 | | | | 734,495 | |
| Stockholders’ equity | | | 728,906 | | | | 770,275 | | | | 812,234 | | | | 815,012 | |
| | | | | | | | | | | | | | | | | |
Other Financial and Statistical Data: | | | | | | | | | | | | | | | | |
| Equity/assets ratio | | | 4.40 | % | | | 4.76 | % | | | 5.24 | % | | | 5.39 | % |
| Core capital ratio | | | 5.78 | % | | | 6.04 | % | | | 6.37 | % | | | 6.52 | % |
| Total risk-based capital ratio | | | 10.65 | % | | | 10.96 | % | | | 11.55 | % | | | 11.52 | % |
| Book value per share | | $ | 12.09 | | | $ | 12.78 | | | $ | 12.77 | | | $ | 12.82 | |
| Shares outstanding | | | 60,271 | | | | 60,260 | | | | 63,605 | | | | 63,571 | |
| Average shares outstanding | | | 61,450 | | | | 60,691 | | | | 63,588 | | | | 63,475 | |
| Average diluted shares outstanding | | | 61,874 | | | | 61,110 | | | | 64,328 | | | | 64,323 | |
| Loans serviced for others | | $ | 26,665,052 | | | $ | 21,508,835 | | | $ | 15,032,504 | | | $ | 14,829,396 | |
| Weighted average service fee (bps) | | | 36.4 | | | | 36.9 | | | | 37.1 | | | | 34.6 | |
| Value of servicing rights | | | 1.28 | % | | | 1.24 | % | | | 1.15 | % | | | 1.02 | % |
| Allowance for loan losses to non performing loans | | | 61.0 | % | | | 53.8 | % | | | 80.2 | % | | | 77.1 | % |
| Allowance for loan losses to loans held for investment | | | 1.11 | % | | | 0.70 | % | | | 0.51 | % | | | 0.48 | % |
| Non performing assets to total assets | | | 1.34 | % | | | 1.18 | % | | | 1.03 | % | | | 1.05 | % |
| Number of bank branches | | | 158 | | | | 156 | | | | 151 | | | | 146 | |
| Number of loan origination centers | | | 151 | | | | 73 | | | | 76 | | | | 85 | |
| Number of employees (excluding loan officers & account executives) | | | 2,939 | | | | 2,689 | | | | 2,510 | | | | 2,559 | |
| Number of loan officers and account executives | | | 852 | | | | 462 | | | | 444 | | | | 491 | |
Loan Originations
(Dollars in millions)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Nine Months Ended | |
| | | September 30, | | | June 30, | | | September 30, | | | September 30, | | | September 30 | |
| Loan type | | 2007 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Residential mortgage loans | | $ | 6,566 | | | | 96.1 | % | | $ | 7,162 | | | | 96.5 | % | | $ | 4,634 | | | | 95.9 | % | | $ | 19,218 | | | | 96.1 | % | | $ | 13,883 | | | | 94.0 | % |
| Consumer loans | | | 87 | | | | 1.3 | | | | 110 | | | | 1.5 | | | | 113 | | | | 2.3 | | | | 300 | | | | 1.5 | | | | 486 | | | | 3.3 | |
| Commercial loans | | | 176 | | | | 2.6 | | | | 150 | | | | 2.0 | | | | 87 | | | | 1.8 | | | | 485 | | | | 2.4 | | | | 399 | | | | 2.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total loan production | | $ | 6,829 | | | | 100.0 | % | | $ | 7,422 | | | | 100.0 | % | | $ | 4,834 | | | | 100.0 | % | | $ | 20,003 | | | | 100.0 | % | | $ | 14,768 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gain on Loan Sales
(Dollars in millions)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Nine Months Ended | |
| | | September 30, | | | June 30, | | | September 30, | | | September 30, | | | September 30 | |
| Description | | 2007 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Net (loss) gain on loan sales | | $ | (17,457 | ) | | $ | 28,144 | | | $ | (8,197 | ) | | $ | 35,841 | | | $ | 18,538 | |
| | | | | | | | | | | | | | | | |
| Loans sold | | $ | 5,955,396 | | | $ | 5,370,633 | | | $ | 4,045,915 | | | $ | 16,975,645 | | | $ | 11,904,611 | |
| Sales spread | | | (0.29 | %) | | | 0.52 | % | | | (0.20 | %) | | | 0.21 | % | | | 0.16 | % |
Loans Held for Investment
(Dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, | | | June 30, | | | December 31, | | | September 30, | |
| Description | | 2007 | | | 2007 | | | 2006 | | | 2006 | |
| First mortgage loans | | $ | 4,938,083 | | | | 70.2 | % | | $ | 5,542,471 | | | | 72.4 | % | | $ | 6,211,765 | | | | 69.4 | % | | $ | 6,427,010 | | | | 72.0 | % |
| Second mortgage loans | | | 58,224 | | | | 0.8 | | | | 61,107 | | | | 0.8 | | | | 715,154 | | | | 8.0 | | | | 589,860 | | | | 6.6 | |
| Commercial real estate loans | | | 1,463,222 | | | | 20.8 | | | | 1,381,552 | | | | 18.0 | | | | 1,301,819 | | | | 14.6 | | | | 1,260,338 | | | | 14.1 | |
| Construction loans | | | 88,018 | | | | 1.3 | | | | 82,301 | | | | 1.1 | | | | 64,528 | | | | 0.7 | | | | 64,014 | | | | 0.7 | |
| Warehouse lending | | | 175,496 | | | | 2.5 | | | | 267,740 | | | | 3.5 | | | | 291,656 | | | | 3.3 | | | | 203,187 | | | | 2.3 | |
| Consumer loans | | | 291,889 | | | | 4.1 | | | | 302,047 | | | | 3.9 | | | | 340,157 | | | | 3.8 | | | | 365,288 | | | | 4.1 | |
| Non-real estate commercial | | | 19,800 | | | | 0.3 | | | | 18,255 | | | | 0.3 | | | | 14,606 | | | | 0.2 | | | | 14,484 | | | | 0.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total loans held for investment | | $ | 7,034,732 | | | | 100.0 | % | | $ | 7,655,473 | | | | 100.0 | % | | $ | 8,939,685 | | | | 100.0 | % | | $ | 8,924,181 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Deposit Portfolio
(Dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2007 | | | June 30, 2007 | | | December 31, 2006 | | | September 30, 2006 | |
| Description | | Balance | | | Rate | | | Balance | | | Rate | | | Balance | | | Rate | | | Balance | | | Rate | |
| Demand deposits | | $ | 392,872 | | | | 1.59 | % | | $ | 404,837 | | | | 1.58 | % | | $ | 380,162 | | | | 1.28 | % | | $ | 351,233 | | | | 0.85 | % |
| Savings deposits | | | 171,381 | | | | 2.30 | | | | 133,099 | | | | 1.48 | | | | 144,460 | | | | 1.55 | | | | 159,769 | | | | 1.61 | |
| Money market deposits | | | 562,039 | | | | 4.04 | | | | 611,506 | | | | 4.19 | | | | 608,282 | | | | 4.05 | | | | 620,019 | | | | 3.98 | |
| Certificates of deposits | | | 3,863,249 | | | | 5.07 | | | | 3,756,718 | | | | 5.00 | | | | 3,763,781 | | | | 4.86 | | | | 3,846,023 | | | | 4.72 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total retail deposits | | | 4,989,541 | | | | 4.59 | | | | 4,906,160 | | | | 4.52 | | | | 4,896,685 | | | | 4.38 | | | | 4,977,044 | | | | 4.26 | |
| Company controlled custodial deposits | | | 357,207 | | | | — | | | | 369,861 | | | | — | | | | 244,193 | | | | — | | | | 377,135 | | | | — | |
| Municipal deposits / CDARS | | | 1,930,679 | | | | 5.42 | | | | 1,540,177 | | | | 5.35 | | | | 1,419,964 | | | | 5.33 | | | | 1,988,616 | | | | 5.41 | |
| Wholesale deposits | | | 1,208,129 | | | | 4.51 | | | | 881,612 | | | | 3.72 | | | | 1,062,646 | | | | 3.66 | | | | 1,247,113 | | | | 3.59 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | $ | 8,485,556 | | | | 4.57 | % | | $ | 7,697,810 | | | | 4.38 | % | | $ | 7,623,488 | | | | 4.30 | % | | $ | 8,589,908 | | | | 4.24 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Asset Quality
(Dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2007 | | | June 30, 2007 | | | December 31, 2006 | | | September 30, 2006 | |
| | | | | | | % of | | | | | | | % of | | | | | | | % of | | | | | | | % of | |
| Days delinquent | | Balance | | | Total | | | Balance | | | Total | | | Balance | | | Total | | | Balance | | | Total | |
| 30 | | $ | 73,382 | | | | 29.9 | % | | $ | 50,202 | | | | 27.9 | % | | $ | 40,140 | | | | 33.6 | % | | $ | 33,738 | | | | 32.0 | % |
| 60 | | | 44,481 | | | | 18.1 | | | | 30,451 | | | | 16.9 | | | | 22,163 | | | | 18.6 | | | | 16,150 | | | | 15.3 | |
| 90 + and Matured Delinquent | | | 127,506 | | | | 52.0 | | | | 99,298 | | | | 55.2 | | | | 57,071 | | | | 47.8 | | | | 55,464 | | | | 52.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 245,369 | | | | 100.0 | % | | $ | 179,951 | | | | 100.0 | % | | $ | 119,374 | | | | 100.0 | % | | $ | 105,352 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment loans | | $ | 7,034,732 | | | | | | | $ | 7,655,473 | | | �� | | | | $ | 8,939,685 | | | | | | | $ | 8,924,181 | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Non-Performing Loans and Assets at | |
| | | September 30, | | | June 30, | | | December 31, | | | September 30, | |
| | | 2007 | | | 2007 | | | 2006 | | | 2006 | |
| Non-Performing Loans | | $ | 127,506 | | | $ | 99,298 | | | $ | 57,071 | | | $ | 55,464 | |
| Real Estate Owned | | | 84,248 | | | | 78,916 | | | | 80,995 | | | | 71,514 | |
| Repurchased Assets/Non-Performing Assets | | | 9,261 | | | | 12,501 | | | | 22,096 | | | | 31,854 | |
| | | | | | | | | | | | | |
| Non-Performing Assets | | $ | 221,015 | | | $ | 190,715 | | | $ | 160,162 | | | $ | 158,832 | |
| | | | | | | | | | | | | |
| Non-Performing Loans as a Percentage of Investment Loans | | | 1.81 | % | | | 1.30 | % | | | 0.64 | % | | | 0.62 | % |
| Non-Performing Assets as a Percentage of Total Assets | | | 1.34 | % | | | 1.18 | % | | | 1.03 | % | | | 1.05 | % |
