EXHIBIT 99.1
[FLAGSTAR BANCORP LOGO]
NEWS RELEASE
FOR MORE INFORMATION CONTACT:
Michael W. Carrie
Executive Director / CFO
(248) 312-2000
FOR IMMEDIATE RELEASE
FLAGSTAR REPORTS FIRST QUARTER RESULTS
Troy, Mich. (April 28, 2005) - Flagstar Bancorp, Inc. (NYSE:FBC), today released
first quarter net earnings of $19.8 million, or $0.31 per share - diluted. These
results are in line with the previously-issued Company guidance of $0.30 to
$0.45 per share.
On a year over year basis, the earnings are down $17.2 million from $37.0
million, or $0.57 per share - diluted, reported in the comparable 2004 period.
HIGHLIGHTS FROM THE QUARTERLY REPORT INCLUDE:
- - Retail banking earned 98.2% of pretax earnings for the quarter;
- - A sequential quarter increase of 12 basis points in the net interest
margin;
- - A first quarter annualized balance sheet growth of 35.0%, including an
annualized increase of 19.8% in the deposit portfolio and an annualized
growth of 24.2% in the investment loan categories;
- - Total assets increased 9.2% in the quarter to $14.3 billion;
- - The opening of the Company's 123rd banking center;
- - First quarter total loan production of $7.5 billion;
- - An annualized return on average equity of 10.69%;
- - Mortgages serviced for others of $22.5 billion;
- - A first quarter operating efficiency ratio of 63.24%.
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RETAIL BANKING OPERATIONS
The Company's pre-tax profits from its banking operation totaled approximately
$30.3 million during the quarter. These results were down 1.6% from the fourth
quarter of 2004 and up 7.4% from the comparative period last year. During the
current quarter, the Company increased its retail banking earning asset base
approximately 7.6%. During the quarter, the retail banking group provided 98.2%
of pre-tax operating earnings compared to 61.6% for all of 2004 and 77.9% of
earnings reported in the fourth quarter of 2004. The Company opened three
banking centers during the quarter.
Flagstar's deposits were $7.7 billion at March 31, 2005 compared with $7.4
billion at December 31, 2004 and $6.1 billion at March 31, 2004. At March 31,
2005, consumer transaction account balances, including checking, savings, and
money market accounts, represented $1.9 billion compared with $2.1 billion at
December 31, 2004. During the past quarter, the Company increased its cost of
funds on deposits by 27 basis points.
As a part of its asset-liability management, the Company's $1.2 billion growth
in the balance sheet included a $0.3 billion increase in deposits. This increase
included a $0.1 billion increase in consumer deposits, $0.3 billion increase in
municipal deposits and a $0.1 billion decrease in national deposits.
The Company's consumer certificate of deposit portfolio carries a weighted rate
of 3.54% and a weighted term of 18.4 months at March 31, 2005.
The municipal division totals $1.6 billion in funds from local governmental
entities within the Company's immediate market area. These deposits carry a
weighted rate of 2.95% and a weighted term of 2.8 months at March 31, 2005.
The national deposits are comprised of strategically placed duration specific
offerings solicited to a nation wide audience. These deposits carry a weighted
rate of 3.18% and a weighted term of 23.1 months at March 31, 2005.
NET INTEREST INCOME VOLUME GROWS WITH BALANCE SHEET INCREASE
Net interest income was reported at $65.2 million for the three months ended
March 31, 2005 compared to $51.0 million in the comparable period last year and
$57.1 million for the three months ended December 31, 2004. The net interest
margin for the quarter ended March 31, 2005 was 2.00%, which was identical to
the same period last year.
On a sequential quarter basis, the Company's net interest income increased
because of the $0.5 billion increase in the level of average earning assets and
the increase in the net interest margin. The net interest margin increased 12
basis points to 2.00% from the 1.88% recorded in the fourth quarter of 2004.
MORTGAGE BANKING OPERATIONS
LOAN SALE GAINS
Gains recorded on the sales of mortgage loans were $9.8 million during the
quarter ended March 31, 2005 from $32.1 million in the comparable 2004 period.
This decrease was attributable to the $2.2 billion decrease in the amount of
loans sold during the quarter along with a decreasing sale margin. The gain on
sale spread equaled 14 basis points in the first quarter of 2005 versus 44 basis
points in the first quarter of 2004.
As previously reported, the Company originated $7.1 billion in residential
mortgage loans in the first quarter of 2005. This production level compares to
the $9.5 billion originated in the comparable 2004 period. This decrease was
primarily attributable to a decrease in the amount of mortgage loan
refinancings.
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LOAN SALE GAINS - CONTINUED
For the three months ended
March 31, December 31, March 31,
2005 2004 2004
----------------- -------------------- --------------------
Net gain on loan sales $ 9,756 $ (4,173) $ 32,132
Plus: FASB 133 adjustment (3,135) 7,019 (6,704)
Plus: Provision charged to earnings 1,002 7,246 8,067
----------------- -------------------- --------------------
Gain on loan sales 7,623 10,092 33,495
================= ==================== ====================
Loans sold $ 5,438,047 $ 7,715,883 $ 7,640,738
Sales spread achieved 0.14% 0.13% 0.44%
MORTGAGE SERVICING
LOANS SERVICED FOR OTHERS
At March 31, 2005, the Company serviced $22.5 billion in loans for others. This
volume is up 5.1% from December 31, 2004 and down 24.7% from March 31, 2004.
During the quarter the Company sold approximately $2.5 billion of servicing
rights.
The current portfolio contains 174,374 loans that have a weighted rate of 6.08%,
a weighted service fee of 34.4 basis points, and a weighted 14 months of
seasoning. Revenue from the portfolio earned $22.1 million during the quarter,
down $6.9 million, or 23.8% over the comparable 2004 period.
MORTGAGE SERVICING RIGHTS
The capitalized value of the servicing portfolio is $215.0 million, or 0.95% of
the outstanding balance. The estimated market value of the portfolio is $287.5
million. During the quarter, no impairment adjustment was made to the book value
of the portfolio. The Company amortized $16.2 million in book value for loan
prepayments and amortizations.
ASSET QUALITY
NON-PERFORMING LOANS
Non-performing loans at March 31, 2005 were $57.3 million, up $0.4 million or
0.7% from year-end and down $4.5 million from March 31, 2004. Total
delinquencies in the Company's investment loan portfolio equaled 0.98% at March
31, 2005, compared with 0.99% at December 31, 2004 and 1.30% at March 31, 2004.
Consistent with the Company's business model, 90% of non-performing loans were
backed by single family homes.
PROVISION FOR LOSSES
The provision for losses was $6.2 million for the three months ended March 31,
2005 down from $9.3 million during the first quarter of 2004. We made no
provision for loan losses in the fourth quarter of 2004. Net charge-offs were an
annualized 0.26% and 0.26% of average investment loans during the three months
ended March 31, 2005 and March 31, 2004, respectively. Net charge-offs were
0.17% of average investment loans during 2004.
ALLOWANCE FOR LOSSES
The allowance for losses totaled $37.0 million at March 31, 2005. The allowance
stood at $37.6 million at December 31, 2004. The allowance for losses remained
relatively static due to a slight improvement in delinquencies and a minimal
change in non-performing loans.
The allowance for losses as a percentage of non-performing loans was 64.6%,
66.2%, and 66.1% at March 31, 2005, December 31, 2004, and March 31, 2004,
respectively. The allowance for losses as a percentage of investment loans was
0.33%, 0.36%, and 0.50% at March 31, 2005, December 31, 2004, and March 31,
2004, respectively.
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REPURCHASED ASSETS
Net repurchased assets pending foreclosure totaled $16.9 million at March 31,
2005, a decrease of $1.8 million, or 9.6%, compared to $18.7 million at March
31, 2004. During the first quarter of 2005, the Company repurchased $14.6
million in non-performing assets previously sold to the secondary market. During
2004, the Company repurchased a total of $68.7 million in non-performing assets.
SECONDARY MARKET RESERVE
The secondary market reserve totaled $15.2 million at March 31, 2005 compared to
$19.0 million at December 31, 2004. The secondary market reserve is recorded at
a level based upon management's analysis of the potential for future repurchased
loans. Provisions charged to earnings attributable to secondary market
activities totaled $1.0 million and $8.1 million for the three months ended
March 31, 2005 and 2004, respectively.
BALANCE SHEET AND CAPITAL ADEQUACY
Consolidated assets at March 31, 2005 were $14.3 billion, compared with $13.1
billion at December 31, 2004 and $12.2 billion at March 31, 2004.
Flagstar's stockholders' equity now stands at $743.2 million, or 5.21% of total
assets. The book value of the common stock at March 31, 2005 equaled $11.99 per
share. Flagstar Bank, the Company's wholly-owned subsidiary reported capital
ratios that categorize the Bank as a "well-capitalized" institution for
regulatory purposes. The Bank's Core capital ratio stood at 6.24% and the Total
risk-based capital ratio stood at 10.99% at March 31, 2005.
AS PREVIOUSLY ANNOUNCED
The Company's quarterly earnings conference call will be held on Friday, April
29, 2005 at 11:00 a.m. Eastern Time.
The conference call will also be webcast at
http://www.flagstar.com/inside/presentations.jsp
To participate, please telephone at least ten minutes prior at (719) 457-2662 or
toll free at (800) 946-0786, passcode: 6241973.
Flagstar Bancorp, which has $14.3 billion in total assets, is the second largest
banking institution headquartered in Michigan. Flagstar currently operates 125
banking centers with $7.7 billion in total deposits. Flagstar banking centers
are located throughout southern Michigan and Indiana. Flagstar also operates 109
loan centers in 27 states and 11 correspondent lending offices across the United
States. Flagstar Bank is one of the nation's largest originators of residential
mortgage loans.
The information contained in this release is not intended as a solicitation to
buy Flagstar Bancorp, Inc. stock and is provided for general information. This
release contains certain statements that may constitute "forward-looking
statements" within the meaning of federal securities laws. These forward-looking
statements include statements about the Company's beliefs, plans, objectives,
goals, expectations, anticipations, estimates, and intentions, that are subject
to significant risks and uncertainties, and are subject to change based upon
various factors (some of which may be beyond the Company's control). The words
"may," "could," "should," "would," "believe," and similar expressions are
intended to identify forward-looking statements.
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SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
(unaudited, in thousands, except share data)
SUMMARY OF THE CONSOLIDATED STATEMENTS OF At or for the three months ended
EARNINGS March 31,
2005 2004
----------------- ---------------
Interest income $ 163,125 $ 130,841
Interest expense 97,916 79,864
----------------- ---------------
Net interest income 65,209 50,977
Provision for losses 6,246 9,302
----------------- ---------------
Net interest income after provision 58,963 41,675
Loan fees and charges, net 2,622 4,071
Deposit fees and charges 3,577 2,868
Loan servicing fees, net 5,945 8,232
Gain on loan sales, net 9,756 32,132
Gain on MSR sales, net 4,248 21,785
Other income 9,414 8,993
Operating expenses 63,723 62,379
----------------- ---------------
Earnings before federal income tax 30,802 57,377
Provision for federal income taxes 11,024 20,420
----------------- ---------------
Net earnings $ 19,778 $ 36,957
================= ===============
Basic earnings per share: $0.32 $0.60
Diluted earnings per share: $0.31 $0.57
Dividends paid per common share $0.25 $0.25
Interest rate spread 1.90% 1.92%
Net interest margin 2.00% 2.00%
Return on average assets 0.57% 1.31%
Return on average equity 10.69% 22.57%
Efficiency ratio 63.24% 48.33%
Average earning assets $ 12,748,923 $ 10,262,129
Average paying liabilities $ 12,333,303 $ 10,096,102
Average stockholders' equity $ 739,784 $ 654,905
Mortgage loans originated or purchased $ 7,126,740 $ 9,450,310
Other loans originated or purchased $ 443,861 $ 163,145
Mortgage loans sold $ 5,438,047 $ 7,640,738
Equity/assets ratio (average for the period) 5.36% 5.81%
Ratio of charge-offs to average investment loans 0.26% 0.26%
SUMMARY OF THE CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION:
March 31, December 31, March 31,
2005 2004 2004
----------------- --------------- ----------------
Total assets $14,273,842 $13,125,488 $12,168,751
Loans available for sale 1,980,854 1,506,311 2,984,776
Investment loans portfolio, net 11,158,390 10,520,836 8,065,100
Allowance for losses 37,018 37,627 40,814
Mortgage servicing rights 215,043 187,975 261,132
Deposits 7,744,681 7,379,655 6,075,327
FHLB advances 4,738,000 4,090,000 4,067,409
Stockholders' equity 743,198 734,837 661,084
OTHER FINANCIAL AND STATISTICAL DATA:
Equity/assets ratio 5.21% 5.60% 5.43%
Core capital ratio 6.24% 6.19% 6.58%
Total risk-based capital ratio 10.99% 10.97% 12.01%
Book value per share $ 11.99 $ 11.98 $ 10.87
Shares outstanding 62,006 61,358 60,832
Mortgage loans serviced for others $22,518,180 $21,354,724 $29,858,203
Value of mortgage servicing rights 0.95% 0.88% 0.87%
Allowance for losses to problem loans 64.6% 66.2% 66.1%
Allowance for losses to total investment loans 0.33% 0.36% 0.50%
Non performing assets to total assets 0.92% 0.99% 0.96%
Number of bank branches 123 120 100
Number of loan origination centers 109 112 131
Number of salaried employees 2,404 2,396 2,502
Number of commissioned employees 838 980 1,124