<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Mark One
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No.: 0-22353
-----------------
FLAGSTAR BANCORP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
MICHIGAN 38-3150651
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2600 TELEGRAPH ROAD, BLOOMFIELD HILLS, MICHIGAN 48302-0953
----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 338-7700
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety days. Yes X No.
----- ------
As of November 12, 1997, 13,670,000 shares of the registrant's Common
Stock, $0.01 par value, were issued and outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements of the Registrant and
its wholly-owned subsidiaries are as follows:
Consolidated Statements of Financial Condition - September 30, 1997
(unaudited) and December 31, 1996.
Unaudited Consolidated Statements of Earnings - For the three and nine
months ended September 30, 1997 and 1996.
Unaudited Consolidated Statements of Cash Flows - For the nine months
ended September 30, 1997 and 1996.
Condensed Notes to Consolidated Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------------ ------------------
( unaudited )
<S> <C> <C>
Cash and cash equivalents......................................................... $43,633 $44,187
Mortgage loans available for sale................................................. 1,407,055 840,767
Loans held for investment......................................................... 401,319 273,569
Less allowance for losses......................................................... (4,950) (3,500)
----------------- -----------------
Net loans................................................................. 1,803,424 1,110,836
36,925 19,725
539 887
----------------- -----------------
Total earning assets.............................................................. 1,840,888 1,131,448
12,273 6,626
17,659 10,363
20,789 20,866
51,713 30,064
46,305 53,672
================= =================
Total assets..................................................... $2,033,260 $1,297,226
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
- -----------
Deposit Accounts.................................................................. $1,011,594 $624,485
Federal Home Loan Bank advances................................................... 718,879 389,801
----------------- -----------------
Total interest bearing liabilities............................... 1,730,473 1,014,286
Accrued interest payable.......................................................... 8,117 2,712
Undisbursed payments on loans serviced for others................................. 36,426 61,445
Escrow accounts................................................................... 56,055 61,009
Liability for checks issued....................................................... 49,080 39,813
Federal income taxes payable...................................................... 16,615 22,548
Other liabilities................................................................. 14,945 16,945
----------------- -----------------
Total liabilities................................................ 1,911,711 1,218,758
STOCKHOLDERS' EQUITY
- --------------------
Common Stock -- $0.01 par value, 40,000,000 shares authorized, 13,670,000
shares issued and outstanding at September 30, 1997 and
11,250,000 at December 31, 1996................................... 137 112
Additional paid in capital........................................................ 30,018 2,816
Retained earnings................................................................. 91,394 75,540
----------------- -----------------
Total stockholders, equity.............................................. 121,549 78,468
================= =================
Total liabilities and stockholders, equity....................... $2,033,260 $1,297,226
================= =================
</TABLE>
3
<PAGE>
FLAGSTAR BANCORP, INC
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ---------------------------------
1997 1996 1997 1996
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans........................................................ $30,008 $18,239 $83,029 $56,430
Other........................................................ 703 364 1,760 1,249
------------- ------------- -------------- --------------
Total................................................. 30,711 18,603 84,789 57,679
INTEREST EXPENSE
Deposits..................................................... 13,646 7,425 34,982 22,074
FHLB advances................................................ 7,120 3,000 18,774 11,226
Other........................................................ 246 154 841 821
------------- ------------- -------------- --------------
Total................................................. 21,012 10,579 54,597 34,121
------------- ------------- -------------- --------------
Net interest income.......................................... 9,699 8,024 30,192 23,558
Provision for losses......................................... 1,416 488 3,730 1,140
------------- ------------- -------------- --------------
Net interest income after provision for losses............... 8,283 7,536 26,462 22,418
NON-INTEREST INCOME
Loan administration.......................................... 1,104 3,274 5,543 11,111
Net gain on loan sales....................................... 5,723 790 9,269 4,536
Net gain on sales of mortgage servicing rights............... 6,990 2,523 25,472 20,917
Other fees and charges....................................... 1,449 2,349 3,444 5,270
------------- ------------- -------------- --------------
Total................................................. 15,266 8,936 43,728 41,834
NON-INTEREST EXPENSE
Compensation and benefits.................................... 5,241 7,604 19,322 21,155
Occupancy and equipment...................................... 3,296 3,385 9,773 8,712
General and administrative................................... 5,285 8,471 16,149 16,627
------------- ------------- -------------- --------------
Total................................................. 13,822 19,460 45,244 46,494
------------- ------------- -------------- --------------
Earnings before federal income taxes......................... 9,727 (2,988) 24,946 17,758
Provision for federal income taxes........................... 3,533 (949) 9,090 6,418
------------- ------------- -------------- --------------
Net Earnings................................................. $ 6,194 ($2,039) $15,856 $11,340
============= ============= ============== ==============
Earnings per common share.................................... $0.45 ($0.18) $1.26 $1.01
============= ============= ============== ==============
</TABLE>
4
<PAGE>
FLAGSTAR BANCORP, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------------------
1997 1996
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings.............................................................. $ 15,856 $ 11,340
Adjustments to reconcile net earnings to net
cash used in operating activities:
Provision for losses...................................................... 3,730 1,140
Depreciation and amortization............................................. 12,033 12,346
Net gain on the sale of assets............................................ (971) (14)
Net gain on loan sales.................................................... (9,269) (4,536)
Net gain on sales of mortgage servicing rights............................ (25,472) (20,917)
(Benefit) provision for deferred federal
income taxes.......................................................... (773) 3,045
Proceeds from sales of loans held for sale................................ 4,522,703 5,302,867
Originations and repurchases of loans held for
sale, net of principal repayments..................................... (5,094,493) (5,331,191)
Increase in accrued interest receivable................................... (5,647) (1,672)
Decrease (increase) in other assets....................................... 5,864 (22,518)
Increase (decrease) in accrued interest payable........................... 5,405 (610)
Increase (decrease) in liability for checks issued........................ 9,268 (47,582)
(Decrease) increase in federal taxes payable.............................. (5,160) 1,073
(Decrease) increase in other liabilities.................................. (1,999) (5,291)
---------------- ----------------
Net cash used in operating activities................................. (568,925) (91,938)
INVESTING ACTIVITIES
Maturity of other investments............................................. 348 413
Purchase of other investments............................................. - (500)
Originations of loans held for investment,
net of principal repayments........................................... (127,740) 49,096
Purchase of Federal Home Loan Bank Stock.................................. (17,200) (2,700)
Proceeds from the disposition of repossessed assets....................... 5,824 920
Acquisitions of premises and equipment.................................... (6,812) (6,293)
Proceeds from the disposition of premises and
equipment............................................................. 2,733 -
Proceeds from the disposition of real estate held
for investment........................................................ 735 -
Increase in mortgage servicing rights..................................... (56,607) (50,709)
Proceeds from the sale of mortgage servicing rights....................... 53,650 50,070
---------------- ----------------
Net cash (used in) provided by investing activities................... (145,069) 40,297
FINANCING ACTIVITIES
Net increase in deposit accounts.......................................... 387,109 49,940
Net increase in Federal Loan Bank advances................................ 329,077 8,700
Net (decrease) increase in escrow accounts................................ (4,954) 3,129
Net disbursement of payments of
loans serviced for others............................................. (25,019) (8,874)
Net proceeds from the issuance of common stock............................ 27,227 -
Dividends paid to stockholders............................................ - (1,000)
---------------- ----------------
Net cash provided by financing activities............................. 713,440 51,895
Net (decrease) increase in cash and cash equivalents.......................... (554) 254
Beginning cash and cash equivalents........................................... 44,187 29,119
---------------- ----------------
Ending cash and cash equivalents.............................................. $ 43,633 $ 29,373
================ ================
Supplemental disclosure of cash flow information:
Loans receivable transferred to repossessed assets........................ $ 12,491 $ 3,062
================ ================
Total interest payments made on deposits
and other borrowings.................................................. $ 49,182 $ 34,731
================ ================
Federal income taxes paid................................................. $ 15,000 $ 2,300
================ ================
</TABLE>
5
<PAGE>
FLAGSTAR BANCORP, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Business
------------------
Flagstar Bancorp, Inc. is a non-diversified, unitary thrift
holding company. The Company provides retail banking services
in southern Michigan and mortgage lending services nationwide.
Note 2. Basis of Presentation
---------------------
The accompanying consolidated financial statements of Flagstar
Bancorp, Inc. (the "Company"), and its subsidiaries, have been
prepared in accordance with generally accepted accounting
principles for interim information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X as
promulgated by the Securities and Exchange Commission.
Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. All interim
amounts are subject to year-end audit, the results of operations
for the interim period herein are not necessarily indicative of
the results that may be expected for the year ending December 31,
1997.
Note 3. Initial Public Offering
-----------------------
On April 30, 1997, the Company's common stock began trading on the
Nasdaq Stock Market under the symbol "FLGS" on a "when-issued"
basis. On May 5, 1997, the Company sold 2,200,000 shares of its
Common Stock as part of the initial public offering of 5,000,000
shares of Common Stock, including 2,800,000 shares sold by the
stockholders of the Company. On May 12, 1997, the Company sold an
additional 220,000 shares of its Common Stock in connection with
the exercise, by the underwriters in the initial public offering,
of an option to acquire additional shares equal to not more than
10% of the shares sold in the initial public offering. The net
proceeds received by the Company totaled approximately $27.2
million.
Note 4. New Accounting Pronouncement
----------------------------
The FASB has issued Statement of Financial Accounting Standards
No. 128, Earnings Per Share, which is effective for financial
statements issued after December 15, 1997. Early adoption of the
standard is not permitted. The new standard eliminates primary and
fully diluted earnings per share and requires presentation of
basic and diluted earnings per share together with disclosure of
how the per share amounts were computed. The adoption of this new
standard is not expected to have a material impact on the
disclosure of earnings per share in the financial statements.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF fINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SELECTED FINANCIAL RATIOS
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine months Ended September 30,
-------------------------------- --------------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Return on average assets.............. 1.41% - .75% 1.34% 2.04%
Return on average equity.............. 21.01% -10.77% 21.32% 32.89%
Interest rate spread.................. 1.98% 2.43% 2.27% 2.22%
Net interest margin................... 2.43% 3.43% 2.83% 3.19%
Efficiency ratio...................... 55.36% 115.01% 61.21% 71.10%
<CAPTION>
CAPITAL RATIOS
At September 30, At December 31, 1996
----------------- --------------------
1997
% of Assets % of Assets
----------------- --------------------
<S> <C> <C>
Equity-to-assets ratio.................. 5.98% 6.05%
Tangible capital (1).................... 5.49% 5.58%
Core capital (1)........................ 5.71% 5.49%
Total risk-based capital (1)............ 10.83% 10.44%
</TABLE>
- ------------
(1) Based on adjusted total assets for purposes of tangible capital and core
capital requirements, and risk-weighted assets for purposes of the risk-
based capital requirement. These ratios are applicable to Flagstar Bank
only.
RESULTS OF OPERATIONS
NET EARNINGS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
Net earnings for the 1997 period were $6.2 million ( $.45 per share ), an $8.2
million increase from the $2.0 million loss ( $.18 loss per share ) reported in
1996. The increase resulted primarily from a $6.4 million increase in
non-interest income, and a $1.7 million increase in net interest income, a $5.7
million decrease in non interest expense, offset by a $928,000 increase in the
provision for losses and a $4.4 million increase in the provision for federal
income taxes.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
Net earnings increased by 40.7% to $15.9 million ($1.26 per share) in 1997 from
$11.3 million ($1.01 per share) in the same period in 1996. These increased
earnings were the result of a $6.6 million increase in net interest income, a
$1.9 million increase in non-interest income, and a decrease in non-interest
expenses of $1.3 million, offset by a $2.6 million increase in the provision for
losses and a $2.7 million increase in the provision for federal income taxes.
7
<PAGE>
NET INTEREST INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE THREE MONTHS ENDED
SEPTEMBER 30, 1996.
Net interest income increased $1.7 million, or 21.3%, to $9.7 million for the
1997 period, from $8.0 million for the 1996 period. This increase was due
primarily to a $670.2 million increase in average interest-earning assets
between the comparable periods, offset by a $710.4 million increase in
interest-bearing liabilities necessary to fund the growth and accommodate the
$57.6 million decrease in non interest-bearing liabilities. At the same time,
the Company's interest rate spread decreased from 2.43% for the 1996 period to
1.98% for the 1997 period. The decreased spread, along with the $40.1 million
decrease in the excess of average earning assets over average interest-bearing
liabilities, resulted in a decrease in the Company's net interest margin of
1.00% to 2.43% for the 1997 period from 3.43% for the 1996 period.
NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE NINE MONTHS ENDED
SEPTEMBER 30, 1996.
Net interest income for the period ended September 30, 1997 increased $6.6
million, or 28.0%, to $30.2 million as compared to $23.6 million for the period
ended September 30, 1996. This increase was caused primarily by a $439.1 million
increase in average interest-earning assets between the comparable periods.
Average interest-earning assets increased to $1.4 billion for the nine months
ended September 30, 1997 from $985.3 million for the nine months ended September
30, 1996. At the same time, the Company's interest rate spread increased from
2.22% in the 1996 period to 2.27% in the 1997 period. The Company's net interest
margin decreased from 3.19% in the 1996 period to 2.83% in the 1997 period.
The decrease in the Company's net interest margin was a direct result of the
leveraged asset growth employed by the Company. The ratio of average
interest-earning assets to average interest-bearing liabilities decreased to
111% for the period ended September 30, 1997, as compared to 121% for the period
ended September 30, 1996. This decrease occurred as a result of the Company
funding the total asset growth of $439.1 million with interest-bearing
liabilities. Additionally, the Company was forced to replace $33.6 million of
non interest-bearing liabilities ( i.e. escrow accounts and undisbursed payments
on loans serviced for others ) with interest-bearing liabilities. The Company's
interest rate spread was positively affected by an increase in the spread
between short-term funding liabilities and longer-term assets.
AVERAGE BALANCES, INTEREST RATES AND YIELDS.
Net interest income is affected by (i) the difference ("interest rate spread")
between rates of interest earned on interest-earning assets and rates of
interest paid on interest-bearing liabilities and (ii) the relative amounts of
interest-bearing liabilities and interest-earning assets. When the total of
interest-earning assets approximate or exceed interest-bearing liabilities, any
positive interest rate spread will generate net interest income. Financial
institutions have traditionally used interest rate spreads as a measure of net
interest income. Another indication of an institution's net interest income is
its "net yield on interest-earning assets" or " net interest margin" which is
net interest income divided by average interest-earning assets.
The following tables set forth certain information relating to the Company's
consolidated average interest-earning assets and interest-bearing liabilities
and reflects the average yield on assets and average cost of liabilities for the
periods indicated. Such yields and costs are derived by dividing income or
expense by the average monthly balance of assets or liabilities, respectively,
for the periods presented. During the periods indicated, non-accruing loans, are
included in the net loan category. Average balances are derived from daily
averages as well as month-end averages, wherever available. Management does not
believe that the use of month-end average balances instead of average daily
balances has caused any material difference in the information presented.
8
<PAGE>
<TABLE>
<CAPTION>
For the three months ended September 30,
----------------------------------------------------------------------------------------------
1997 1996
---------------------------------------------- --------------------------------------------
Amount Interest % Amount Interest %
---------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net $1,562,114 $30,008 7.68% $905,050 $18,239 8.06%
FHLB stock 32,763 669 8.17% 20,500 343 6.69%
Other 2,462 34 5.52% 1,524 21 5.51%
------------------------------ ----------------------------
Total 1,597,339 30,711 7.69% 927,074 18,603 8.03%
------------------------------ ----------------------------
Noninterest-earning assets 162,055 135,048
------------------ -------------
Total assets $1,759,394 $1,062,122
================== =============
Interest-bearing liabilities:
Demand deposits $61,031 301 1.96% $56,126 $600 4.24%
Savings deposits 77,052 871 4.48% 31,662 152 1.90%
Certificates of deposit 816,700 12,474 6.06% 455,126 6,674 5.82%
FHLB advances 486,181 7,120 5.81% 195,507 3,000 6.09%
Other 18,567 246 5.26% 10,714 153 5.67%
------------------------------ ----------------------------
Total interest-bearing liabilities: 1,459,531 21,012 5.71% 749,135 10,579 5.60%
Noninterest-bearing liabilities 181,947 239,465
------------------ -------------
Total liabilities: 1,641,478 988,600
Equity 117,916 73,522
------------------ -------------
Total liabilities and equity $1,759,394 $1,062,122
================== =============
Net interest-earning assets $137,808 $177,939
------------ ---------------
Net interest income $9,699 $8,024
============ ===============
----------- -----------
Interest rate spread 1.98% 2.43%
=========== ===========
Net interest margin 2.43% 3.43%
=========== ===========
Ratio of average interest earning
assets to interest bearing
liabilities 109% 124%
=========== ===========
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
For the nine months ended September 30,
---------------------------------------------------------------------------------------------
1997 1996
---------------------------------------------------------------------------------------------
Amount Interest % Amount Interest %
-------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net $1,396,010 $83,029 7.93% $963,956 $56,430 7.81%
FHLB stock 25,957 1,654 8.52% 19,370 1,157 7.99%
Other 2,448 106 5.79% 1,937 92 6.35%
---------------------------- ----------------------------
Total 1,424,415 84,789 7.94% 985,263 57,679 7.81%
---------------------------- ----------------------------
Noninterest-earning assets 156,755 129,005
------------- -----------
Total assets $1,581,170 $1,114,268
============= ===========
Interest-bearing liabilities:
Demand deposits $65,715 1,061 2.16% $89,754 $1,723 2.57%
Savings deposits 70,888 2,164 4.08% 28,050 282 1.34%
Certificates of deposit 704,825 31,757 6.02% 434,587 20,069 6.17%
FHLB advances 427,310 18,774 5.87% 244,222 11,226 6.15%
Other 19,451 841 5.78% 18,845 821 5.82%
---------------------------- ----------------------------
Total interest-bearing liabilities: 1,288,189 54,597 5.67% 815,458 34,121 5.59%
Noninterest-bearing liabilities 193,814 229,849
------------- -----------
Total liabilities: 1,482,003 1,045,307
Equity 99,167 68,961
------------- -----------
Total liabilities and equity $1,581,170 $1,114,268
============= ===========
Net interest-earning assets $136,226 $169,805
--------------- -----------------
Net interest income $30,192 $23,558
=============== =================
---- ----
Interest rate spread 2.27% 2.22%
==== ====
Net interest margin 2.83% 3.19%
==== ====
Ratio of average interest earning
assets to interest bearing
liabilities 111% 121%
==== ====
</TABLE>
10
<PAGE>
RATE/VOLUME ANALYSIS
The following table analyzes net interest income in terms of changes in the
volume of interest-earning assets and interest-bearing liabilities and changes
in yields and rates. The table reflects the extent to which changes in the
interest income and interest expense are attributable to changes in volume
(changes in volume multiplied by prior year rate) and changes in rate (changes
in rate multiplied by prior year volume). Changes attributable to the combined
impact of volume and rate have been allocated proportionately to changes due to
volume and changes due to rate.
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED SEPTEMBER 30,
THREE MONTHS NINE MONTHS
1997 VS. 1996 1997 VS. 1996
RATE VOLUME NET RATE VOLUME NET
------------------------------- -------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Loans receivable, net................. $(2,729) $14,561 $11,832 $ 871 $25,728 $26,599
FHLB stock............................ 43 221 264 69 428 497
Other 0 13 13 (7) 21 14
------------------------------- -------------------------------------
Total............................ (2,686) 14,795 12,109 933 26,177 27,110
INTEREST EXPENSE:
Demand deposits....................... (697) 398 (299) (134) (528) (662)
Savings deposits...................... 994 (275) 719 970 912 1,882
Certificates of deposit............... 988 4,812 5,800 (527) 12,217 11,690
FHLB advances......................... (675) 4,795 4,120 (580) 8,128 7,548
Other (36) 130 94 (6) 24 18
------------------------------- -------------------------------------
Total............................ 574 9,860 10,434 (277) 20,753 20,476
=============================== =====================================
Net change in net interest income..... $(3,260) $4,935 $1,675 $1,210 $5,424 $ 6,634
=============================== =====================================
</TABLE>
PROVISION FOR LOSSES
THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
The provision for losses increased to $1.4 million in the 1997 period from
$488,000 in the same period in 1996. The increase in the provision reflects the
increase in the level of non-performing loans to $44.1 million at September 30,
1997, from $42.0 million at June 30, 1997, an increase of approximately $2.1
million, or 5.0%, and the increase in the level of net charge-offs to 0.25%
(annualized) of average loans outstanding in the 1997 period from .09% in the
1996 period.
NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
The provision for losses increased to $3.7 million for the 1997 period from $1.1
million for the same period in 1996. The Company's determination of its
provision for losses reflects its consideration of the potential loss that may
arise from loans in its portfolio or which it services for others. The increase
in the provision reflected the increase in the level of non-performing loans to
$44.1 million at September 30, 1997, from $30.6 million at December 31, 1996, an
increase of approximately $13.5 million, or 44.1%, and the increase in the level
of net charge-offs to 0.22% (annualized) of average loans outstanding in the
1997 period from 0.03% in the 1996 period.
11
<PAGE>
NON-INTEREST INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
During 1997, non-interest income increased $6.4 million, or 71.9%, to $15.3
million from $8.9 million. This increase was attributable to an increase in net
gain on loan sales, and an increase in net gain on the sales of mortgage
servicing rights, offset by a decrease in loan administration fees.
NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
Non-interest income increased $1.9 million, or 4.5%, to $43.7 million in the
1997 period, from $41.8 million for the 1996 period. This increase resulted from
an increase in net gain on loan sales, and an increase in net gain on the sales
of mortgage servicing rights, offset by decreases in loan administration fees
and other fees and charges during the 1997 period.
LOAN ADMINISTRATION
THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
Loan administration fee income decreased $2.2 million, or 66.7%, to $1.1 million
for the 1997 period, from $3.3 million for the 1996 period. This decrease
resulted primarily from a decrease in mortgage loans serviced for others caused
by the sales of mortgage servicing rights completed during the quarter. At
September 30, 1997, the unpaid principal balance of loans serviced for others
was $4.1 billion versus $6.9 billion serviced at September 30, 1996. At
September 30, 1997 and 1996, the weighted average servicing fee on loans
serviced for others was 0.273% (i.e., 27.3 basis points) and 0.283%,
respectively.
NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
Loan administration fee income decreased $5.6 million, or 50.5%, to $5.5 million
for the 1997 period, from $11.1 million for the 1996 period. Similar to the
results of the three month period, this decrease was the direct result of the
decrease in the amount of mortgage loans serviced for others.
NET GAIN ON LOAN SALES
THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
For the 1997 period, net gain on loan sales increased $4.9 million, to $5.7
million, from $790 thousand in the 1996 period. Although, the 1997 period
reflects the sale of $1.5 billion in loans versus $1.8 billion sold in the 1996
period, management believes the interest rate environment in the 1996 period was
more volatile, which created more mismatches in the Company's hedging and
resulted in the recognition of a smaller gain. In contrast, management believes
the interest rate environment in the 1997 period was more stable.
NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
For the 1997 period, net gain on loan sales reported was $9.3 million versus
$4.5 million in the 1996 period. The 1997 period contained the sale of $4.5
billion in loans versus $5.3 billion sold in the 1996 period. The reduced amount
of loan sales is attributable to the Company's decision to retain more loans for
its own portfolio. The Company's ability to recognize more gain in 1997 despite
the reduced sale volume is, in management's opinion, a reflection of the more
stable interest rate environment in 1997 and the Company's effective hedging.
12
<PAGE>
NET GAIN ON SALES OF MORTGAGE SERVICING RIGHTS
THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
For the period ended September 30, 1997, net gain on sales of mortgage servicing
rights increased $4.5 million to $7.0 million, from $2.5 million for the same
period in 1996. The gain on sale of mortgage servicing rights increased due to a
$614 million, or 68.7%, increase in the underlying principal balance of the
mortgage servicing rights sold, from $894 million sold during the three months
ended September 30, 1996, versus $1.5 billion sold during the three months ended
September 30, 1997. Additionally, the bulk servicing sold in 1997 was aged
product which was being carried at a lower book value and generated a higher
gain than the bulk servicing sold in the 1996 period which was originated in
1996.
NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
For the 1997 period, net gain on sales of mortgage servicing rights were $25.5
million versus $20.9 million in the 1996 period. The 1997 period contained the
sale of $3.6 billion in bulk sales and $582 million in loans sold servicing
released (i.e., a total of $4.2 billion) versus the $3.5 billion sold in bulk
sales and $706 million in loans sold servicing released (i.e., a total of $4.2
billion) in the 1996 period. The bulk servicing sold in 1997 was aged product
which was being carried at a lower book value and generated a higher gain than
the bulk servicing sold in the 1996 period.
OTHER FEES AND CHARGES
THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
In the 1997 period, other fees and charges, which include certain loan fees
and charges, deposit-related fees and escrow waiver fees, decreased $900,000
from the 1996 period to $1.4 million.
NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
Other fees and charges decreased $1.9 million, or 35.8%, to $3.4 million for the
1997 period from $5.3 million for same period in 1996.
NON-INTEREST EXPENSE
The following table sets forth components of the Company's non-interest expense,
prior to allocation of expenses related to loan originations that are deferred
pursuant to SFAS No. 91, "Accounting for Nonrefundable Fees and Costs Associated
with Originating or Acquiring Loans and Initial Direct Costs of Leases." As
required by SFAS No. 91, mortgage loan fees and certain direct origination costs
(principally compensation and benefits) are capitalized and amortized rather
than immediately expensed. Certain other expenses associated with loan
production, however, are not required to be capitalized. These expense amounts
are reflected on the Company's statement of earnings net of the portion that
must be capitalized under SFAS No. 91. However, management believes that the
analysis of non-interest expense on a "gross" basis ( i.e., prior to the
deferral of capitalized loan origination costs ) more clearly reflects the
changes in total overhead costs associated with increased loan production.
13
<PAGE>
<TABLE>
<CAPTION>
For the period ended September 30,
Three months Nine months
1997 1996 1997 1996
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Compensation and benefits............................. $ 10,270 $ 10,163 $ 31,854 $ 30,327
Commissions........................................... 3,895 2,778 9,802 9,339
Occupancy and equipment............................... 3,296 3,385 9,773 8,712
Advertising........................................... 357 210 1,190 654
Core deposit premium amortization..................... 323 323 968 968
Federal deposit insurance premiums.................... 129 3,324 305 4,184
General and administrative............................ 6,633 5,811 19,057 14,853
-------- -------- --------- --------
Subtotal.................................... 24,903 25,994 72,949 69,037
Less: deferral of capitalized loan origination costs.. (11,081) (6,534) (27,705) (22,543)
-------- -------- --------- --------
Total....................................... $ 13,822 $ 19,460 $ 45,244 $ 46,494
======== ======== ======== ========
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
Non-interest expense, excluding the capitalization of direct loan origination
costs, decreased by $1.1 million, or 4.2%, to $24.9 million for the 1997 period
from $26.0 million for the 1996 period. Excluding the $3.2 million one time
Savings Association Insurance Fund assessment charged to the Bank on September
30, 1996, the Bank had a $2.1 million increase in other expenses. The largest
changes occurred in the amount of commissions paid and the general and
administrative expenses reported. The increased commission expense of $1.1
million is the direct result of the $900.0 million increase in mortgage loan
originations. The $800,000 increase in general and administrative expenses
represents increased contract underwriting costs along with other costs
associated with the increased mortgage loan production.
NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
Non-interest expense, before the capitalization of direct loan origination
costs, increased $3.9 million, or 5.7%, to $72.9 million from $69.0 million for
the same period in 1996. Excluding the $3.2 million one time SAIF assessment
charged to the Bank on September 30, 1996, the Bank had a $7.1 million, or
10.3%, increase in other expenses. This increase was primarily caused by
increased compensation and benefits of $1.6 million, increased general and
administrative expenses of $4.2 million, and increased occupancy and equipment
costs of $1.1 million.
Compensation and benefits totaled $31.9 million, and $30.3 million for the 1997
and 1996 periods, respectively. This increase was primarily a result of an
increase in the average number of full-time equivalent employees along with
normal cost of living salary adjustments.
Increased general and administrative expenses and occupancy and equipment
expenses for 1997 were attributable to an increased number of bank branches,
from 15 in 1996, to 19 at September 30, 1997. Additionally, an increased amount
of contract underwriting expenses were recorded.
FINANCIAL CONDITION
ASSETS
The Company's assets totaled $2.0 billion at September 30, 1997, an increase of
$736.0 million, or 56.7%, as compared to $1.3 billion at December 31, 1996. This
increase was primarily due to increases in mortgage loans available for sale and
loans held for investment, Federal Home Loan Bank stock, accrued interest
receivable, repossessed assets, and mortgage servicing rights, offset in part by
decreases in cash and cash equivalents and other assets.
14
<PAGE>
LOANS RECEIVABLE
Mortgage loans available for sale and loans held for investment increased $694.1
million, from $1.1 billion at December 31, 1996 to $1.8 billion at September 30,
1997. Mortgage loans available for sale increased $566.3 million, or 67.4%, to
$1.4 billion at September 30, 1997, from $840.8 million at December 31, 1996.
Loans held for investment increased $127.8 million, or 46.7%, from $273.6
million at December 31, 1996 to $401.3 million at September 30, 1997. These
increases are attributable to the increased leverage ability provided by
proceeds from the Company's initial public offering and the Company's decision
to hold larger portions of its mortgage loan production for longer periods.
ALLOWANCE FOR LOSSES
The allowance for losses totaled $5.0 million at September 30, 1997, an increase
of $1.5 million, or 42.9%, from $3.5 million at December 31, 1996. The allowance
for losses as a percentage of non-performing loans was 11.23% and 11.43% at
September 30, 1997 and December 31, 1996, respectively. The Company's
non-performing loans totaled $44.1 million and $30.6 million at September 30,
1997 and December 31, 1996, respectively. The allowance for losses as a
percentage of total loans, was .27% and .31% at September 30, 1997 and December
31, 1996, respectively. The increase in the dollar amount of the allowance for
losses was based upon management's assessment of relevant factors, including the
types and amounts of non-performing loans, historical, and anticipated loss
experience on such types of loans, and current and projected economic
conditions.
The increase in non-performing loans at September 30, 1997 from the amount at
December 31, 1996 resulted primarily from the repurchase of $52.3 million in
mortgage loans from secondary market investors during the first nine months of
1997. Approximately $14.7 million of the loans repurchased in 1997 were
non-performing, $2.0 million were delinquent, and $5.8 million were immediately
classified to a real estate owned status when repurchased. Loan repurchases are
an ongoing part of the Company's operations since all loans sold in the
secondary market are generally subject to detailed underwriting reviews by the
ultimate purchaser. Although the Company generally does not sell loans with
recourse, it typically is required to repurchase loans, including defaulted and
delinquent loans, which were not underwritten in strict compliance with the
underwriting standards of secondary market investors. As the volume of the
Company's loan production has increased substantially over the past several
years, the aggregate amount of loan delinquencies and foreclosures has also
increased, thereby increasing the number of loans potentially subject to
repurchase.
The Company believes that its risk of loss arising from its non-performing
loans, including loans acquired through repurchase from individual investors
after initial sale in the secondary market, has not materially increased as a
result of either the increase in repurchased loans or the overall increase in
non-performing loans. During 1997, 57.2% of the loans repurchased were
performing loans but were required to be repurchased for reasons (such as
failure to meet all of the secondary market investor's criteria for mortgagor
eligibility or failure to meet the investor's program eligibility requirements)
that do not significantly affect the ultimate collectibility of such loans or
significantly increase the Company's exposure to losses. A portion of the
repurchased loans are eligible for resale in the secondary market to other
investors, and the Company does not believe that the remaining repurchased loans
which are currently non-performing or which have been foreclosed, present any
risks of ultimate loss that are significantly different than the Company has
historically experienced. Of the Company's $44.1 million of non-performing loans
at September 30, 1997, $40.5 million, or 91.9%, were single family residential
mortgage loans, which generally represent minimal risk of ultimate loss because
of the nature of the collateral securing the loans, the presence of private
mortgage insurance for loans with over-80% LTV ratios, and the presence of
insurance or guarantees on certain loans from the FHA or VA. At September 30,
1997, $19.4 million of such loans were the subject of bankruptcy proceedings by
the mortgagor; however, it has been the Company's experience that such
proceedings usually result in full repayment to the Company and present minimal
risk of loss because the imposition of judicial scrutiny and related enforcement
powers supersede the less comprehensive collection methods normally available to
the Company.
15
<PAGE>
ACCRUED INTEREST RECEIVABLE
Accrued interest receivable increased from $6.6 million at December 31, 1996 to
$12.3 million at September 30, 1997 as the Company's total loan portfolio
increased. The Bank typically collects interest income in the following month
after it is earned.
REPOSSESSED ASSETS
Repossessed assets increased from $10.4 million at December 31, 1996 to $17.7
million at September 30, 1997 as the Company's non-performing loans were
foreclosed upon by the Bank. This 70.2% increase is the direct result of the
increased amount of non-performing loans and loan repurchases made during the
period.
FHLB STOCK
Holdings of FHLB stock increased from $19.7 million at December 31, 1996 to
$36.9 million at September 30, 1997 as the Company's total mortgage loan
portfolio increased. As a member of the FHLB, the Bank is required to hold
shares of FHLB stock in an amount at least equal to 1% of the aggregate unpaid
principal balance of its home mortgage loans, home purchase contracts and
similar obligations at the beginning of each year, or 1/20th of its FHLB
advances, whichever is greater.
MORTGAGE SERVICING RIGHTS
Mortgage servicing rights totaled $51.7 million at September 30, 1997, an
increase of $21.6 million, or 71.8%, from $30.1 million at December 31, 1996.
For the nine months ended September 30, 1997, $4.5 billion of mortgage servicing
rights were originated, and $5.2 billion were sold, prepaid, or amortized
resulting in a net decrease of $658.2 million. However, because the sales of
servicing rights completed in 1997 contained a larger percentage of servicing
rights which were originated during periods prior to 1997, the mortgage
servicing portfolio at September 30, 1997 contained a greater percentage of
recently originated and capitalized servicing rights than at December 31, 1996.
OTHER ASSETS
Other assets decreased $7.4 million, or 13.8%, to $46.3 million at September 30,
1997, from $53.7 million at December 31, 1996. The majority of this decrease was
attributable to the collection of receivables recorded in conjunction with the
sales of mortgage servicing rights completed during 1996. Upon a sale of
mortgage servicing rights, the Company receives a down payment from the
purchaser equivalent to approximately 20% of the total purchase price and
records a receivable account for the balance of the purchase price due. In
connection with the sale of mortgage servicing rights, the Company had
receivables of $30.0 million at September 30, 1997. The balance due is paid upon
transfer by the Company of the related mortgage loan servicing documents,
usually within 180 days after the initial closing.
LIABILITIES
The Company's total liabilities increased $693.0 million, or 56.9%, to $1.9
billion at September 30, 1997, from $1.2 billion at December 31, 1996. This
increase was primarily attributable to an increase in the Company's deposit
accounts, Federal Home Loan Bank advances, liabilities for checks issued, offset
in part by a decrease in the amount of undisbursed payments on loans serviced
for others, escrow accounts, and the amount of federal income taxes payable.
16
<PAGE>
DEPOSIT ACCOUNTS
Deposit accounts increased $387.1 million, or 62.0%, to $1.0 billion at
September 30, 1997, from $624.5 million at December 31, 1996. This increase
reflects the Company's deposit growth strategy through both its branch network
and the secondary market. The number of bank branches increased from 15 at
December 31, 1996 to 19 at September 30, 1997. These bank branches have
generated $119.3 million in net new deposits, a 29.0% increase, since December
31, 1996. At September 30, 1997, the Company's certificates of deposit totaled
$877.3 million, or 86.7% of total deposits. These certificates carry an average
balance of $41,502 and a weighted average cost of 6.04%. Approximately $480.4
million of the certificates of deposit were brokered deposits or deposits
garnered through secondary markets and carried a weighted average cost of 6.03%.
FHLB ADVANCES
FHLB advances increased $329.1 million, or 84.4%, to $718.9 million at September
30, 1997, from $389.8 million at December 31, 1996. The Company relies upon such
advances as a source of funding for the origination or purchase of loans which
are later sold into the secondary market. The outstanding balance of FHLB
advances fluctuates from time to time depending upon the Company's current
inventory of loans held for sale and the availability of lower cost funding from
its deposit base and its escrow accounts.
UNDISBURSED PAYMENTS
Undisbursed payments on loans serviced for others decreased $25.0 million, or
40.7%, to $36.4 million at September 30, 1997, from $61.4 million at December
31, 1996. These amounts represent payments received from borrowers for interest,
principal and related loan charges, which have not been remitted to the
respective investors. These balances fluctuate with the size of the servicing
portfolio and decrease during a time of low payoff or refinance volume.
LIABILITY FOR CHECKS ISSUED
Liability for checks issued increased $9.3 million, or 23.4%, to $49.1 million
at September 30, 1997, from $39.8 million at December 31, 1996. These amounts
represent checks issued to acquire mortgage loans which have not cleared for
payment. These balances fluctuate with the size of the mortgage pipeline,
increasing in lower interest rate scenarios and decreasing during a time of low
origination or refinance volume.
FEDERAL INCOME TAXES PAYABLE
Federal income taxes payable decreased $5.9 million, or 26.2%, to $16.6 million
at September 30, 1997, from 22.5 million at December 31, 1996. This decrease was
primarily attributable to the timing of payments and a decrease in the current
tax liability.
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
Liquidity refers to the ability or the financial flexibility to manage future
cash flows to meet the needs of depositors and borrowers and fund operations on
a timely and cost-effective basis. The Company has no other significant business
other than that of its wholly owned subsidiary, Flagstar Bank, FSB (the "Bank").
The Company's primary source of liquidity is dividends paid by the Bank.
Management of the Company believes that dividends that may be paid by the Bank
to the Company will provide sufficient funds for its operations and liquidity
needs; however, no assurance can be given that the Company will not have a need
for additional funds in the future. Further, the Bank is subject to certain
regulatory limitations with respect to the payment of dividends to the Company.
The Bank is required by the Office of Thrift Supervision ("OTS") regulations to
maintain minimum levels of liquid assets. This requirement, which may be changed
at the direction of the OTS depending upon economic conditions and deposit
flows, is based upon a percentage of deposits and short-term borrowings. The
required minimum ratio is currently 5.00%. While the Bank's liquidity ratio
varies from time to time, the Bank has generally maintained liquid assets
substantially in excess of the minimum requirements. The Bank's average daily
liquidity ratio was 8.49% for the month ended September 30, 1997.
A significant source of cash flow for the Company is the sale of mortgage loans
held for sale. Additionally, the Company receives funds from net interest
income, mortgage loan servicing fees, loan principal repayments, advances from
the FHLB, deposits from customers and cash generated from operations. Mortgage
loans sold during the three months ended September 30, 1997 totaled $1.8
billion, an increase of $431 million, or 31.0% from $1.4 billion sold during the
same period in 1996. This increase in mortgage loan sales was attributable to
the 68.0% increase in mortgage loan originations offset by the $566.3 million
increase in the amount of mortgage loans available for sale but not yet sold.
The Company sold 82.1% and 105.2% of its mortgage loan originations during the
three month periods ended September 30, 1997 and 1996, respectively.
The Company typically uses FHLB advances to fund its daily operational liquidity
needs and to assist in funding loan originations. The Company will continue to
use this source of funds unless a more cost-effective source of funds becomes
available. FHLB advances are used because of their flexibility. These funds are
typically borrowed for 90-day terms with no prepayment penalty. The Company had
$718.9 million outstanding at September 30, 1997. Such advances are repaid with
the proceeds from the sale of mortgage loans held for sale. The Company
currently has an authorized line of credit equal to $850 million. This line is
collateralized by non-delinquent mortgage loans. To the extent that the amount
of retail deposits or customer escrow accounts can be increased, the Company
expects to replace FHLB advances.
At September 30, 1997, the Company had outstanding rate-lock commitments to lend
$840.3 million for mortgage loans, along with outstanding commitments to make
other types of loans totaling $35.9 million. Because such commitments may expire
without being drawn upon, they do not necessarily represent future cash
commitments. Also, as of September 30, 1997, the Company had outstanding
commitments to sell $1.1 billion of mortgage loans. These commitments will be
funded within 90 days. Total commercial and consumer unused collateralized lines
of credit totaled $108.1 million at September 30, 1997. Such commitments include
$121.5 million in warehouse lines of credit to various mortgage companies, of
which $53.3 million was drawn upon as of September 30, 1997.
CAPITAL RESOURCES.
At September 30, 1997, the Bank exceeded all applicable bank regulatory minimum
capital requirements, See "Capital Ratios" above. The Company is not subject to
any such requirements.
18
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company and its subsidiaries are involved in various claims and legal
actions arising in the ordinary course of business. Management currently is not
aware of any material legal proceedings to which the Company or any of its
subsidiaries is a party or to which any of their property is subject.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 (SEC Use only)
(b) Reports on Form 8-K
None
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FLAGSTAR BANCORP, INC.
Date: November 12, 1997 /s/ Mark T. Hammond
------------------------------
Mark T. Hammond
Vice Chairman of the Board and
President
(Duly Authorized Officer)
/s/ Michael W. Carrie
------------------------------
Michael W. Carrie
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FLAGSTAR
BANCORP, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JUN-30-1997 JAN-01-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 43,633 43,633
<INT-BEARING-DEPOSITS> 0 0
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 0 0
<INVESTMENTS-CARRYING> 0 0
<INVESTMENTS-MARKET> 0 0
<LOANS> 1,808,374 1,808,374
<ALLOWANCE> (4,750) (4,750)
<TOTAL-ASSETS> 2,033,260 2,033,260
<DEPOSITS> 1,011,594 1,011,594
<SHORT-TERM> 718,879 718,879
<LIABILITIES-OTHER> 181,238 181,238
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 137 137
<OTHER-SE> 121,412 121,412
<TOTAL-LIABILITIES-AND-EQUITY> 2,033,260 2,033,260
<INTEREST-LOAN> 30,008 83,029
<INTEREST-INVEST> 0 0
<INTEREST-OTHER> 703 1,760
<INTEREST-TOTAL> 30,711 84,789
<INTEREST-DEPOSIT> 13,646 34,982
<INTEREST-EXPENSE> 21,012 54,597
<INTEREST-INCOME-NET> 9,689 30,192
<LOAN-LOSSES> 1,416 3,730
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 13,822 45,244
<INCOME-PRETAX> 9,727 24,946
<INCOME-PRE-EXTRAORDINARY> 6,194 15,856
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 6,194 15,856
<EPS-PRIMARY> .45 1.26
<EPS-DILUTED> .45 1.26
<YIELD-ACTUAL> 1.98 2.27
<LOANS-NON> 44,079 44,079
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 4,500 3,500
<CHARGE-OFFS> 966 2,280
<RECOVERIES> 0 0
<ALLOWANCE-CLOSE> 4,950 4,950
<ALLOWANCE-DOMESTIC> 0 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
