<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 JUNE 30, 1998
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)
<TABLE>
<S> <C>
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)
</TABLE>
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 August 12, 1998, 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 are
as follows:
Consolidated Statements of Financial Condition - June 30, 1998 (unaudited)
and December 31, 1997.
Unaudited Consolidated Statements of Earnings - For the three and six
months ended June 30, 1998 and 1997.
Unaudited Consolidated Statements of Cash Flows - For the six months ended
June 30, 1998 and 1997.
Condensed Notes to Consolidated Financial Statements.
When used in this Form 10-Q or future filings by the Company with the Securities
and Exchange Commission, in the Company's press releases or other public or
stockholder communications, or in oral statements made with the approval of an
authorized executive officer, the words or phrases "would be", "will allow",
"intends to", "will likely result", "are expected to", "will continue", "is
anticipated", "estimate", "project", or similar expressions are intended to
identify "forward looking statement" within the meaning of the Private
Securities Litigation Reform Act of 1995.
The Company wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors, including regional and national economic
conditions, substantial changes in levels of market interest rates, credit and
other risks of lending and investment activities and competitive and regulatory
factors, could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from those
anticipated or projected.
The Company does not undertake, and specifically disclaims any obligation, to
update any forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
2
<PAGE>
FLAGSTAR BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
ASSETS 1998 1997
----------------------------
(unaudited)
<S> <C> <C>
Cash and cash equivalents $ 20,283 $ 21,928
Loans receivable
Mortgage loans available for sale 1,581,627 1,197,152
Loans held for investment 672,222 463,607
Less: allowance for losses (12,000) (5,500)
------------- -------------
Loans receivable, net 2,241,849 1,655,259
Federal Home Loan Bank stock 52,500 40,025
Other investments 536 538
------------- -------------
Total earning assets 2,294,885 1,695,822
Accrued interest receivable 25,381 16,492
Repossessed assets 22,603 18,262
Premises and equipment 29,702 29,131
Mortgage servicing rights 138,138 83,845
Other assets 42,288 35,604
------------- -------------
Total assets $2,573,280 $1,901,084
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposit accounts $1,374,865 $1,109,933
Federal Home Loan Bank advances 701,500 482,378
------------- -------------
Total interest bearing liabilities 2,076,365 1,592,311
Accrued interest payable 11,281 10,555
Undisbursed payments on
loans serviced for others 62,890 45,852
Escrow accounts 84,504 43,368
Liability for checks issued 77,131 45,896
Federal income taxes payable 35,515 20,808
Other liabilities 82,819 15,677
------------- -------------
Total liabilities 2,430,505 1,774,467
STOCKHOLDERS' EQUITY
Common stock - $.01 par value,
40,000,000 shares authorized,
13,670,000 shares issued at June 30, 1998 and
December 31, 1997 137 137
Additional paid in capital 29,988 29,988
Retained earnings 112,650 96,492
------------- -------------
Total stockholders' equity 142,775 126,617
------------- -------------
Total liabilities and stockholders' equity $2,573,280 $1,901,084
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
<PAGE>
FLAGSTAR BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest Income
Loans $45,418 $27,548 $82,503 $53,021
Other 1,060 538 1,883 1,057
-------- --------- -------- --------
Total 46,478 28,086 84,386 54,078
INTEREST EXPENSE
Deposits 19,514 11,600 36,243 21,336
FHLB advances 12,770 6,441 22,492 11,654
Other 1,719 297 2,680 595
-------- --------- -------- --------
Total 34,003 18,338 61,415 33,585
-------- --------- -------- --------
Net interest income 12,475 9,748 22,971 20,493
Provision for losses 5,618 1,652 8,239 2,314
-------- --------- -------- --------
Net interest income after provision for losses 6,857 8,096 14,732 18,179
NON-INTEREST INCOME
Loan administration 8 1,605 88 4,439
Net gain on loan sales 29,173 3,668 45,975 3,546
Net gain on sales of mortgage servicing rights 999 9,168 2,883 18,482
Other fees and charges 1,285 1,434 2,396 1,995
-------- --------- -------- --------
Total 31,465 15,875 51,342 28,462
NON-INTEREST EXPENSE
Compensation and benefits 6,303 6,847 10,567 14,081
Occupancy and equipment 4,347 3,112 8,079 6,477
General and administrative 7,489 5,898 14,792 10,864
-------- --------- -------- --------
Total 18,139 15,857 33,438 31,422
-------- --------- -------- --------
Earnings before federal income taxes 20,183 8,114 32,636 15,219
Provision for federal income taxes 10,000 2,973 14,700 5,557
-------- --------- -------- --------
NET EARNINGS $10,183 $ 5,141 $17,936 $ 9,662
======== ========= ======== ========
EARNINGS PER SHARE - BASIC $0.74 $0.40 $1.31 $0.80
======== ========= ======== ========
EARNINGS PER SHARE - DILUTED $0.73 $0.40 $1.27 $0.80
======== ========= ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE>
FLAGSTAR BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OR THE SIX MONTHS ENDED
JUNE 30,
1998 1997
----------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 17,936 $ 9,662
Adjustments to reconcile net earnings to net cash used in operating activities
Provision for losses 8,239 2,314
Depreciation and amortization 15,401 7,839
Net gain on the sale of assets (486) (633)
Net gain on loan sales (45,975) (3,546)
Gain on sales of mortgage servicing rights (2,883) (18,482)
Proceeds from sales of loans available for sale 7,654,161 2,700,741
Originations and repurchases of loans available for sale, net of principal (8,007,193) (2,903,477)
repayments
Increase in accrued interest receivable (8,889) (1,729)
(Increase) decrease in other assets (7,344) 6,123
Increase in accrued interest payable 725 3,405
Increase (decrease) in liability for checks issued 31,235 (2,086)
Decrease in current federal income taxes payable (2,105) (5,679)
Provision (benefit) for deferred federal income taxes payable 16,813 (773)
Increase (decrease) in other liabilities 67,141 (3,555)
----------- -----------
Net cash used in operating activities (263,224) (209,876)
INVESTING ACTIVITIES
Maturity of other investments 2 345
Originations of loans held for investment, net of principal repayments (206,852) (108,425)
Purchase of Federal Home Loan Bank Stock (12,475) (10,500)
Proceeds from the disposition of repossessed assets 7,175 2,802
Acquisitions of premises and equipment (3,464) (6,034)
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 (99,140) (31,841)
Proceeds from the sale of mortgage servicing rights 35,883 36,058
----------- -----------
Net cash used in investing activities (278,871) (114,127)
FINANCING ACTIVITIES
Net increase in deposit accounts 264,932 279,824
Net increase in Federal Home Loan Bank advances 219,122 27,332
Net (disbursement) receipt of payments of loans serviced for others 17,037 (37,885)
Net receipt of escrow payments 41,136 1,587
Proceeds from the sale of common stock - 27,230
Dividends paid to stockholders (1,777) -
----------- -----------
Net cash provided by financing activities 540,450 298,088
----------- -----------
Net decrease in cash and cash equivalents (1,645) (25,915)
Beginning cash and cash equivalents 21,928 44,187
----------- -----------
Ending cash and cash equivalents $ 20,283 $ 18,272
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Loans receivable transferred to repossessed assets $ 11,031 $ 4,601
=========== ===========
Total interest payments made on deposits and other borrowings $ 60,690 $ 30,179
=========== ===========
Federal income taxes paid $ - $ 12,000
=========== ===========
Loans held for investment transferred to loans available for sale $ - $ -
=========== ===========
Loans available for sale transferred to loans held for investment $ - $ -
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
5
<PAGE>
FLAGSTAR BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS
Flagstar Bancorp, Inc. ("Flagstar" or the "Company"), is the holding company for
Flagstar Bank, FSB (the "Bank"), a federally chartered stock savings bank
founded in 1987. Flagstar's primary business consists of attracting deposits
from the general public and originating or acquiring residential mortgage loans.
The Company also acquires funds on a wholesale basis from a variety of sources,
services a significant volume of loans for others, and to a lesser extent makes
consumer loans, commercial real estate loans, and non-real estate commercial
loans.
The Bank is a member of the Federal Home Loan Bank System ("FHLB") and is
subject to regulation, examination and supervision by the Office of Thrift
Supervision ("OTS") and the Federal Deposit Insurance Corporation ("FDIC"). The
Bank's deposits are insured by the FDIC through the Savings Association
Insurance Fund ("SAIF").
NOTE 2. BASIS OF PRESENTATION
---------------------
The accompanying consolidated unaudited financial statements of Flagstar
Bancorp, Inc. (the "Company"), 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, 1998.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SELECTED FINANCIAL RATIOS
<TABLE>
<CAPTION>
For the Quarter ended For the Six months ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Return on average assets 1.49% 1.30% 1.43% 1.30%
Return on average equity 29.40% 20.55% 26.81% 21.55%
Efficiency ratio 41.24% 60.53% 45.00% 63.53%
Equity-to-assets ratio (average for the 5.06% 6.31% 5.35% 6.02%
period)
Average shares outstanding 13,670 12,798 13,670 11,990
Mortgage loans originated or purchased $ 4,616,445 $1,574,467 $8,247,773 $3,070,765
Mortgage loans sold $ 4,476,229 $1,454,019 $7,564,646 $2,698,760
Interest rate spread 1.47% 2.41% 1.60% 2.46%
Net interest margin 2.02% 2.81% 2.03% 3.08%
Charge-offs to average loans outstanding .10% .36% .16% .19%
- ----------------------------------------------------------------------------------------------------------
June 30, March 31, December 31, June 30,
1998 1998 1997 1997
------------ ------------ ------------ -----------
Equity-to-assets ratio 5.55% 5.20% 6.66% 7.23%
Tangible capital ratio (1) 5.67% 6.90% 5.40% 6.89%
Core capital ratio (1) 5.81% 7.05% 5.62% 7.19%
Risk-based capital ratio (1) 10.74% 13.02% 11.22% 12.99%
Total risk-based capital ratio (1) 11.54% 13.47% 11.74% 13.46%
Book value per share $ 10.44 $ 9.77 $ 9.26 $ 8.44
Shares outstanding 13,670 13,670 13,670 13,670
Mortgage loans serviced for others $10,375,460 $6,483,836 $6,412,797 $4,036,395
Value of mortgage servicing rights 1.33% 1.31% 1.31% .99%
Non performing assets to total assets 2.26% 2.31% 3.29% 3.41%
Number of bank branches 24 22 19 19
Number of loan origination centers 32 30 35 35
Number of correspondent offices 15 16 16 16
Number of employees 1,461 1,330 1,184 1,248
</TABLE>
- ----------
(1) Based on adjusted total assets for purposes of tangible capital and core
capital, and risk-weighted assets for purposes of the risk-based capital
and the total risk-based capital. These ratios are applicable to Flagstar
Bank only.
7
<PAGE>
RESULTS OF OPERATIONS
NET EARNINGS
Net earnings for the three months ended June 30, 1998 were $10.2 million ( $.73
per share-diluted ), a $5.1 million increase from the $5.1 million ( $.40 per
share-diluted ) reported in 1997. The increase resulted from a $2.8 million
increase in net interest income, a $15.5 increase in non-interest income, offset
by a $3.9 million increase in the provision for losses, a $2.3 million increase
in operating expenses, and a $7.0 million increase in the provision for federal
income taxes.
Net earnings for the six months ended June 30, 1998 were $17.9 million ( $1.27
per share-diluted ), a $8.2 million increase from the $9.7 million ( $.80 per
share-diluted ) reported in 1997. The increase resulted from a $22.8 million
increase in non-interest income, a $2.5 million increase in net interest income
offset by a $5.9 million increase in the provision for losses, a $2.0 million
increase in operating expenses, and a $9.2 million increase in the provision for
federal income taxes.
NET INTEREST INCOME
Net interest income increased $2.8 million, or 28.9%, to $12.5 million for the
three months ended June 30, 1998, from $9.7 million for the 1997 period. This
increase was due to a $1.1 billion increase in average interest-earning assets
between the comparable periods, offset by a $1.0 billion increase in interest-
bearing liabilities necessary to fund the growth. At the same time, the
Company's interest rate spread decreased from 2.41% in the 1997 period to 1.47%
for the three months ended June 30, 1998. The decreased spread, along with the
$84.0 million increase in the excess of average earning assets over average
interest-bearing liabilities, resulted in a decrease in the Company's net
interest margin of .79% to 2.02% for the three months ended June 30, 1998 from
2.81% for the comparable 1997 period.
Net interest income increased $2.5 million, or 12.2%, to $23.0 million for the
six months ended June 30, 1998, from $20.5 million for the 1997 period. This
increase was due to a $941.8 million increase in average interest-earning assets
between the comparable periods, offset by a $920.5 million increase in interest-
bearing liabilities necessary to fund the growth. The Company's interest rate
spread decreased from 2.46% for the 1997 period to 1.60% for the six months
ended June 30, 1998. The decreased spread, along with the $21.2 million increase
in the excess of average earning assets over average interest-bearing
liabilities, resulted in a decrease in the Company's net interest margin of
1.05% to 2.03% for the six months ended June 30, 1998 from 3.08% for the
comparable 1997 period.
8
<PAGE>
AVERAGE YIELDS EARNED AND RATES PAID
Table 1 and Table 2 presents interest income from average earning assets,
expressed in dollars and yields, and interest expense on average interest-
bearing liabilities, expressed in dollars and rates. Interest income from
earning assets includes the amortization of net premiums and the amortization of
net deferred loan origination costs. Nonaccruing loans were included in the
average loan amounts outstanding.
TABLE 1
- -------
<TABLE>
<CAPTION>
Quarter Ended June 30,
-----------------------------------------------------------------------
1998 1997
---------------------------------- ---------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
-----------------------------------------------------------------------
( In Millions )
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans receivable, net $2,456,220 $45,418 7.40% $1,363,413 $27,548 8.08%
FHLB stock 51,600 1,018 8.00 26,263 515 7.85
Other 2,938 42 5.72 1,563 23 5.89
------------------------ -----------------------
Total interest-earning assets 2,510,758 $46,478 7.41% 1,391,239 $28,086 8.08%
Other assets 225,315 194,157
----------- -----------
Total assets $2,736,073 $1,585,396
=========== ===========
INTEREST-BEARING LIABILITIES:
Deposits $1,380,763 $19,514 5.73% $ 830,999 $11,600 5.66%
FHLB advances 858,428 12,770 6.03 433,646 6,441 5.93
Other 80,500 1,719 8.47 19,538 297 6.22
------------------------ -----------------------
Total interest-bearing
liabilities 2,319,691 $34,003 5.94% 1,284,183 $18,338 5.67%
Other liabilities 277,819 201,135
Stockholders equity 138,563 100,078
----------- -----------
Total liabilities and
stockholders equity $2,736,073 $1,585,396
=========== ===========
Net interest-earning assets $ 191,067 $ 107,056
=========== ===========
------------- ------------
Net interest income $12,475 $ 9,748
============= ============
---------- ----------
Interest rate spread 1.47% 2.41%
========== ==========
Net interest margin 2.02% 2.81%
========== ==========
Ratio of average interest-
earning assets to
interest-bearing liabilities 108% 108%
========== ==========
</TABLE>
9
<PAGE>
TABLE 2
- -------
AVERAGE YIELDS EARNED AND RATES PAID
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------------------------------------------
1998 1997
---------------------------------- ---------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
-----------------------------------------------------------------------
( In Millions )
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans receivable, net $2,225,972 $82,503 7.41% $1,303,564 $53,021 8.13%
FHLB stock 45,750 1,825 8.00 25,957 985 7.65
Other 2,061 58 5.63 2,461 72 5.90
------------------------ ------------------------
Total interest-earning assets 2,273,783 $84,386 7.42% 1,331,982 $54,078 8.12%
Other assets 227,120 158,200
----------- -----------
Total assets $2,500,903 $1,490,182
=========== ===========
INTEREST-BEARING LIABILITIES:
Deposits $1,278,039 $36,243 5.69% $ 781,598 $21,336 5.47%
FHLB advances 760,534 22,492 5.93 395,028 11,654 5.95
Other 78,066 2,690 6.88 19,451 595 6.17
------------------------ ------------------------
Total interest-bearing
liabilities 2,116,639 $61,415 5.82% 1,196,077 $33,585 5.66%
Other liabilities 250,484 204,430
Stockholders equity 133,780 89,675
----------- -----------
Total liabilities and
stockholders equity $2,500,903 $1,490,182
=========== ===========
Net interest-earning assets $ 157,144 $ 135,905
=========== ==========
------------- -------------
Net interest income $22,971 $20,493
============= =============
---------- ---------
Interest rate spread 1.60% 2.46%
========== =========
Net interest margin 2.03% 3.08%
========== =========
Ratio of average interest-
earning assets to
interest-bearing liabilities 107% 111%
========== =========
</TABLE>
10
<PAGE>
RATE/VOLUME ANALYSIS
Table 3 and Table 4 present the dollar amount of changes in interest income and
interest expense for the components of earning assets and interest-bearing
liabilities which are presented in Tables 1 and 2. Table 3 and 4 distinguishes
between the changes related to average outstanding balances (changes in volume
while holding the initial rate constant) and the changes related to average
interest rates (changes in average rates while holding the initial balance
constant).
TABLE 3
- -------
<TABLE>
<CAPTION>
Quarter Ended June30,
-----------------------------------------
1998 versus 1997
Increase (Decrease) Due To:
Rate Volume Total
-----------------------------------------
(In Thousands)
<S> <C> <C> <C>
INTEREST INCOME:
Loans receivable, net ($ 4,212) $22,082 $17,870
FHLB stock 19 484 503
Other (1) 20 19
-----------------------------------------
Total ($ 4,194) $22,586 $18,392
INTEREST EXPENSE:
Deposits $ 243 $ 7,671 $ 7,914
FHLB advances 221 6,108 6,329
Other 453 969 1,422
-----------------------------------------
Total $ 917 $14,748 $15,665
-----------------------------------------
Net change in net interest income ($ 5,111) $ 7,838 $ 2,727
=========================================
</TABLE>
TABLE 4
- -------
<TABLE>
<CAPTION>
Six Months Ended June30,
------------------------------------------
1998 versus 1997
Increase (Decrease) Due To:
Rate Volume Total
------------------------------------------
(In Thousands)
<S> <C> <C> <C>
INTEREST INCOME:
Loans receivable, net ($ 8,034) $37,516 $29,482
FHLB stock 80 760 840
Other (3) (11) (14)
------------------------------------------
Total ($ 7,957) $38,265 $30,308
INTEREST EXPENSE:
Deposits $ 1,359 $13,548 $14,907
FHLB advances (72) 10,910 10,838
Other 279 1,806 2,085
------------------------------------------
Total $ 1,566 $26,264 $27,830
------------------------------------------
Net change in net interest income ($ 9,523) $12,001 $ 2,478
==========================================
</TABLE>
11
<PAGE>
PROVISION FOR LOSSES
The provision for losses increased to $5.6 million for the three months ended
June 30, 1998 from $1.7 million during the same period in 1997. The provision
for losses increased to $8.2 million for the six months ended June 30, 1998 from
$2.3 million during the same period in 1997. These increases were recorded to
increase the level of the general allowance for losses to $12 million. The
allowance now stands at 0.54% of loans and 33.7% of non performing loans. The
allowance stood at 0.31% and 0.33% of loans and 16.4% and 12.4% of non
performing loans at March 31, 1998 and December 31, 1997, respectively.
Non-performing loans stood at $35.7 million at June 30, 1998, a decrease from
$42.7 at March 31, 1998 and $44.3 million at December 31, 1997, a decrease of
16.4% and 19.4%, respectively. Net charge-offs in the periods were an annualized
0.10% and 0.16% of average loans outstanding during the three months and six
months ended June 30, 1998, respectively. These ratios compare favorably to
0.36% and 0.19% in the comparable 1997 periods, respectively.
NON-INTEREST INCOME
During the three months ended June 30, 1998, non-interest income increased $15.5
million, or 97.5%, to $31.4 million from $15.9 million. This increase was
attributable to an increase in net gain on loan sales, offset by a decrease in
net gain on the sales of mortgage servicing rights and a decrease in loan
administration and other fees and charges.
During the six months ended June 30, 1998, non-interest income increased $22.8
million, or 80.0%, to $51.3 million from $28.5 million. This increase was
attributable to an increase in net gain on loan sales, offset by a decrease in
net gain on the sales of mortgage servicing rights and a decrease in loan
administration fees.
LOAN ADMINISTRATION
Loan administration fee income decreased $1.6 million, or 100.0%, to $8,000
during the three months ended June 30, 1998, from $1.6 million for the 1997
period. This decrease resulted primarily from an increase in the amortization of
mortgage servicing rights caused by prepayments in the underlying mortgage
loans. Fee income before the amortization of serving rights actually increased
$2.7 million for the three months ended June 30, 1998, to $6.6 million but was
offset by a $4.3 million increase in amortization. At June 30, 1998, the unpaid
principal balance of loans serviced for others was $10.4 billion versus $6.5
billion serviced at March 31, 1998 and $6.4 billion serviced at December 31,
1997. At June 30, 1998 the weighted average servicing fee on loans serviced for
others was 0.278% (i.e., 27.8 basis points).
Loan administration fee income decreased $4.3 million, or 97.7%, to $88,000 for
the six months ended June 30, 1998, from $4.4 million for the 1997 period. This
decrease also was the result of the increase in the amortization of mortgage
servicing rights caused by prepayments in the underlying mortgage loans. Fee
income before the amortization of serving rights actually increased $3.2 million
for the six months ended June 30, 1998, to $11.9 million but was offset by a
$7.5 million increase in amortization.
12
<PAGE>
NET GAIN ON LOAN SALES
For the three months ended June 30, 1998, net gain on loan sales increased $25.5
million, to $29.2 million, from a $3.7 million in the 1997 period. The 1998
period reflects the sale of $4.5 billion in loans versus $1.5 billion sold in
the 1997 period. The lower and falling interest rate environment in the 1998
period resulted in the recognition of a larger gain from the sale of loans. In
contrast, management believes the interest rate environment in the 1997 period
was more stable and constant which provided less gain.
For the six months ended June 30, 1998, net gain on loan sales increased $42.5
million, to $46.0 million, from $3.5 million in the comparable 1997 period. The
1998 period reflects the sale of $7.6 billion in loans versus $2.7 billion sold
in the 1997 period. The falling interest rate environment in the 1998 period
resulted in the recognition of a large gain from the sale of loans. In contrast,
management believes the interest rate environment in the 1997 period was more
stable and constant which provided a near break-even from loan sales.
NET GAIN ON THE SALE OF MORTGAGE SERVICING RIGHTS
For the three months ended June 30, 1998, the net gain on the sale of mortgage
servicing rights decreased $8.2 million to $1.0 million, from $9.2 million for
the same period in 1997. The gain on sale of mortgage servicing rights decreased
because there was no bulk servicing sales completed in 1998 versus a bulk sale
of $922.2 million in 1997.
Additionally the Company sold $310.5 million and $195.9 million in loans on a
servicing released basis during the 1998 and 1997 periods, respectively.
For the six months ended June 30, 1998, the net gain on the sale of mortgage
servicing rights decreased $15.6 million to $2.9 million, from $18.5 million for
the same period in 1997. The gain on sale of mortgage servicing rights decreased
due to the sale of $2.3 billion in newly originated servicing rights in 1998,
which had a book value which more closely mirrored the sales price. The bulk
mortgage servicing rights sold in 1997 was an accumulation of $2.3 billion in
rights originated prior to 1995 and the adoption of FASB 122..
The Company also sold $400.3 million and $648.3 million in loans on a servicing
released basis during the 1998 and 1997 periods, respectively.
OTHER FEES AND CHARGES
During the three and six months ended June 30, 1998, the Company recorded $1.3
million and $2.4 million in other fees and charges, respectively. In the
comparable 1997 periods, the Company recorded $1.4 million and $2.0 million,
respectively. The collection and recording of these fees are dependent on the
amount of deposit accounts, the number of certain types of loans closed and the
collection of any miscellaneous fees.
13
<PAGE>
NON-INTEREST EXPENSE
The following table sets forth components of the Company's non-interest expense,
along with the 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 as an
adjustment to the basis of the loans originated during a period. 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. 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 non-interest expense when comparing
two periods.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
( In thousands )
Compensation and benefits $ 14,874 $10,725 $ 27,214 $ 21,584
Commissions 7,245 3,226 13,151 5,907
Occupancy and equipment 4,347 3,113 8,079 6,477
Advertising 476 431 758 833
Core deposit amortization 323 323 645 645
Federal insurance premium 203 115 369 176
General and administrative 10,161 6,690 20,155 12,424
--------- ---------- --------- ----------
Total 37,629 24,623 70,371 48,046
Less: capitalized direct costs of loan
closings (19,490) (8,766) (36,933) (16,624)
--------- ---------- --------- ----------
Total, net $ 18,139 $15,857 $ 33,438 $ 31,422
========= ========== ========= ==========
Efficiency ratio 41.24% 60.53% 45.00% 63.53%
</TABLE>
Non-interest expense, excluding the capitalization of direct loan origination
costs, increased by $13.0 million, or 52.8%, to $37.6 million during the three
months ended June 30, 1998, from $24.6 million for the comparable 1997 period.
These increased costs are primarily attributable to the $3.0 billion increase
(188%) in mortgage loans originated during the comparable periods. The largest
changes occurred in the amount of compensation and benefits and commissions paid
and the general and administrative expenses reported.
The increased commission expense of $4.0 million and the $4.2 million
compensation cost increase is the direct result of the increase in mortgage loan
originations during period. The majority of the $3.5 million increase in general
and administrative expenses represents increased contract underwriting costs and
other costs associated with the mortgage loan production.
Additionally, the Company also opened two new bank branches during the quarter,
and maintained five more branches during the 1998 quarter than the comparable
1997 period.
During the six months ended June 30, 1998, non-interest expense, excluding the
capitalization of direct loan origination costs, increased by $22.4 million, or
46.7%, to $70.4 million, from $48.0 million for the comparable 1997 period.
These increased costs are primarily attributable to the $5.1 billion increase
(165%) in mortgage loans originated during the comparable periods. The largest
changes occurred in the amount of compensation and benefits and commissions paid
and the general and administrative expenses reported.
The increased commission expense of $7.3 million and the $5.6 million
compensation cost increase is the direct result of the increase in mortgage loan
originations during period. The majority of the $7.8 million increase in general
and administrative expenses represents increased contract underwriting costs and
other costs associated with the mortgage loan production.
Additionally, the Company also opened and maintained five more bank branches
during 1998, than in the comparable 1997 period.
14
<PAGE>
SEGMENT REPORTING
- -----------------
RETAIL BANKING OPERATIONS
The Company provides a full range of banking services to consumers and small
businesses in southern and western Michigan. The Bank operates a network of 24
bank branches. The Company has continued to focus on expanding its branch
network in order to increase its access to retail deposit funding sources. The
retail banking operation allows the Company to cross-market consumer banking
services to the Company's mortgage customers in Michigan.
MORTGAGE BANKING OPERATIONS
Flagstar's mortgage banking activities involve the origination of mortgage loans
or the purchase of mortgage loans from the originating lender. Company personnel
originate loans and conduct business from 32 loan origination centers located in
Michigan, Ohio, and Florida. Flagstar purchases mortgage loans on a wholesale
basis through a network of correspondents consisting of other banks, thrifts,
mortgage companies, and mortgage brokers. This mortgage banking network conducts
mortgage lending operations nationwide. The mortgage loans, the majority of
which are subsequently sold in the secondary mortgage market, conform to the
underwriting standards of FHLMC or FNMA.
The following tables present certain financial information concerning the
results of operations of Flagstar's retail banking and mortgage banking
operation.
TABLE 4
- -------
RETAIL BANKING OPERATIONS
<TABLE>
<CAPTION>
At or for the quarter ended At or for the six months ended
June 30, June 30,
1998 1997 1998 1997
------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
( In thousands )
Revenues $ 6,814 $ 4,400 $ 13,291 $ 9,938
Earnings before taxes 3,563 2,055 7,500 5,302
Identifiable assets 736,066 521,967 736,066 521,967
</TABLE>
TABLE 5
- -------
MORTGAGE BANKING OPERATIONS
<TABLE>
<CAPTION>
At or for the quarter ended At or for the six months ended
June 30, June 30,
1998 1997 1998 1997
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
( In thousands )
Revenues $ 37,126 $ 21,223 $ 61,022 $ 39,016
Earnings before taxes 16,619 6,059 25,136 9,916
Identifiable assets 1,882,314 1,181,345 1,882,314 1,181,345
</TABLE>
15
<PAGE>
FINANCIAL CONDITION
ASSETS
The Company's assets totaled $2.6 billion at June 30, 1998, an increase of
$672.2 million, or 35.4%, as compared to $1.9 billion at December 31, 1997. 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, mortgage servicing rights, repossessed assets, and other assets
offset in part by a decrease in cash and cash equivalents and an increase in the
allowance for losses.
LOANS RECEIVABLE, NET
Loans receivable, net increased $586.5 million, from $1.7 billion at
December 31, 1997 to $2.2 billion at June 30, 1998.
Mortgage loans available for sale increased $384.4 million, or 32.1%, to $1.6
billion at June 30, 1998, from $1.2 billion at December 31, 1997. This increase
is attributable to Company's ability to hold larger portions of its mortgage
loan production for longer periods until sold into the secondary market.
Loans held for investment increased $208.6 million, or 45.0%, from $463.6
million at December 31, 1997 to $672.2 million at June 30, 1998. This increase
is attributable to the purchase of mortgage loans by Flagstar Capital
Corporation, a subsidiary of the Bank, and an increased use of commercial lines
of credit (i.e. warehouse lending) by mortgage banking companies in order to
access funds for their mortgage closings. The loans Flagstar Capital Corporation
bought from the Bank and moved to held for investment had a principal balance at
June 30, 1998 of $120.1 million. Warehouse lines used at June 30, 1998 totaled
$175.1 million versus $77.5 million at December 31, 1997.
ALLOWANCE FOR LOSSES
The allowance for losses totaled $12.0 million at June 30, 1998, an increase of
$6.5 million, or 118.2%, from $5.5 million at December 31, 1997. The allowance
for losses as a percentage of non-performing loans was 33.7% and 12.4% at
June 30, 1998 and December 31, 1997, respectively. The Company's non-performing
loans totaled $35.7 million and $44.3 million at June 30, 1998 and December 31,
1997, respectively. The allowance for losses as a percentage of total loans, was
0.54% and 0.33% at June 30, 1998 and December 31, 1997, 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. During the six months
ended June 30, 1998, non-performing assets declined $4.3 million, or 6.7%, and
management increased the allowance for losses $6.5 million, creating an 18.9%
decrease in net non-performing assets.
FHLB STOCK
Holdings of FHLB stock increased from $40.0 million at December 31, 1997 to
$52.5 million at June 30, 1998 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.
16
<PAGE>
ACCRUED INTEREST RECEIVABLE
Accrued interest receivable increased from $16.5 million at December 31, 1997 to
$25.4 million at June 30, 1998 as the Company's total loan portfolio increased.
The Company typically collects loan interest in the following month after it is
earned.
REPOSSESSED ASSETS
Repossessed assets increased from $18.3 million at December 31, 1997 to $22.6
million at June 30, 1998 as the Company's non-performing loans were foreclosed
upon by the Bank. This 23.5% increase is the direct result of the 19.4% decrease
in the amount of non-performing loans.
MORTGAGE SERVICING RIGHTS
Mortgage servicing rights totaled $138.1 million at June 30, 1998, an increase
of $54.3 million, or 64.8%, from $83.8 million at December 31, 1997. During the
six months ended June 30, 1998, the Company capitalized $99.1 million, amortized
$11.8 million, and sold $33.0 million in mortgage servicing rights. The
principal balance of the loans serviced for others stands at $10.4 billion at
June 30, 1998 versus $6.5 billion at December 31, 1997. The capitalized value of
the mortgage servicing rights was 1.33 % and 1.31% value at June 30, 1998 and
December 31, 1997, respectively.
OTHER ASSETS
Other assets increased $6.7 million, or 18.8%, to $42.3 million at June 30,
1998, from $35.6 million at December 31, 1997. The majority of this increase was
attributable to the receivables recorded in conjunction with the sale of
residential mortgage loans completed during the three months ended June 30,
1998. Upon the sale of the residential mortgage loans a receivable is recorded
for a portion of the sale proceeds. The balance due is paid within 180 days
after the sale date.
LIABILITIES
The Company's total liabilities increased $656.0 million, or 37.0%, to $2.4
billion at June 30, 1998, from $1.8 billion at December 31, 1997. This increase
was attributable to an increase in every liability account category.
DEPOSIT ACCOUNTS
Deposit accounts increased $265.0 million, or 23.9%, to $1.4 billion at June 30,
1998, from $1.1 billion at December 31, 1997. 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 19 at December 31,
1997 to 24 at June 30, 1998. The bank branches have generated $97.5 million in
new deposits, an annualized 38.3% growth rate, since December 31, 1997. At June
30, 1998, the Company's certificates of deposit totaled $1.2 billion, or 86.7%
of total deposits. These certificates carry an average balance of $48,249 and a
weighted average cost of 5.94%. Approximately $768.1 million of the certificates
of deposit were brokered deposits or deposits garnered through the secondary
markets and carried a weighted average cost of 5.87%.
17
<PAGE>
FHLB ADVANCES
FHLB advances increased $219.1 million, or 45.4%, to $701.5 million at June 30,
1998, from $482.4 million at December 31, 1997. 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 ON LOANS SERVICED FOR OTHERS
Undisbursed payments on loans serviced for others increased $17.0 million, or
37.0%, to $62.9 million at June 30, 1998, from $45.9 million at December 31,
1997. 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 increase during a time of high payoff or refinance volume.
ESCROW ACCOUNTS
Customer escrow accounts increased $41.1 million, or 94.7%, to $84.5 million at
June 30, 1998, from $43.4 million at December 31, 1997. These amounts represent
payments received from borrowers for taxes and insurance payments, which have
not been remitted to the tax authorities or insurance providers. These balances
fluctuate with the size of the servicing portfolio and during the year before
and after the remittance of scheduled payments.
LIABILITY FOR CHECKS ISSUED
Liability for checks issued increased $31.2 million, or 68.0%, to $77.1 million
at June 30, 1998, from $45.9 million at December 31, 1997. 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 when
loan origination volume is down.
FEDERAL INCOME TAXES PAYABLE
Federal income taxes payable increased $14.7 million, or 70.7%, to $35.5 million
at June 30, 1998, from $20.8 million at December 31, 1997. This increase is
primarily attributable to the timing of payments and an increase in the deferred
tax liability.
OTHER LIABILITIES
Other liabilities increased $67.1 million, or 427.4%, to $82.8 million at June
30, 1998, from $15.7 million at December 31, 1997. This increase was primarily
attributable to the issuance of $57.5 million of preferred stock by Flagstar
Capital Corporation, a second tier subsidiary of the Company and an increase in
accrued accounts payable relating to compensation and mortgage loan production.
18
<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 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 discretion 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 14.48% for the month ended June 30, 1998.
A significant source of cash flow for the Company is the sale of mortgage loans
held for sale. Additionally, the Company receives funds from loan principal
repayments, advances from the FHLB, deposits from customers and cash generated
from operations.
Mortgage loans sold during the three months ended June 30, 1998 totaled $4.5
billion, an increase of $3.0 billion, or 200.0% from $1.5 billion sold during
the same period in 1997. This increase in mortgage loan sales was attributable
to the 187.5% increase in mortgage loan originations. The Company sold 96.7% and
93.3% of its mortgage loan originations during the three month periods ended
June 30, 1998 and 1997, respectively.
Mortgage loans sold during the six months ended June 30, 1998 totaled $7.6
billion, an increase of $4.9 billion, or 181.5% from $2.7 billion sold during
the same period in 1997. This increase in mortgage loan sales was attributable
to the 168.6% increase in mortgage loan originations. The Company sold 92.7% and
87.1% of its mortgage loan originations during the six month periods ended June
30, 1998 and 1997, 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 until a more cost-effective source of funds becomes
available. FHLB advances are used because of their flexibility. These funds are
typically borrowed for terms that are less than one year with no prepayment
penalty. The Company had $701.5 million outstanding at June 30, 1998. 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 $1.1
billion. 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 June 30, 1998, the Company had outstanding rate-lock commitments to lend $1.0
billion in mortgage loans, along with outstanding commitments to make other
types of loans totaling $21.7 million. Because such commitments may expire
without being drawn upon, they do not necessarily represent future cash
commitments. Also, at June 30, 1998, the Company had outstanding commitments to
sell $2.0 billion of mortgage loans. These commitments will be funded within 90
days. Total commercial and consumer unused lines of credit totaled $217.2
million at June 30, 1998. Such commitments include $346.3 million in warehouse
lines of credit to various mortgage companies, of which $175.1 million was
advanced at June 30, 1998.
CAPITAL RESOURCES.
At June 30, 1998, the Bank exceeded all applicable bank regulatory minimum
capital requirements. The Company is not subject to any such requirements.
ITEM 3. MARKET RISK
Management believes there has been no material change in either interest rate
risk or market risk since December 31, 1997.
19
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
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 11. Computation of Net Earnings per Share
Exhibit 27 (SEC Use only)
(b) Reports on Form 8-K
None
20
<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: August 14, 1998 /S/ Thomas J. Hammond
---------------------
Thomas J. Hammond
Chairman of the Board and
Chief Executive Officer
(Duly Authorized Officer)
/S/ Michael W. Carrie
---------------------
Michael W. Carrie
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
21
<PAGE>
EXHIBIT 11
Flagstar Bancorp, Inc.
Computation of Net Earnings per Share
Net earnings per share - basic and Net earnings per share - diluted are computed
by dividing this amount by the weighted average number of common stock and
common stock equivalents outstanding during the period, respectively.
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
(In thousands, except share data)
<S> <C> <C> <C> <C>
Net Earnings $10,183 $ 5,141 $17,936 $ 9,662
Average common shares outstanding 13,670 12,798 13,670 11,990
Net earnings per share - basic $ 0.74 $ 0.40 $ 1.31 $ 0.80
Average common share equivalents outstanding 14,222 12,798 14,154 11,990
Net earnings per share - diluted $ 0.73 $ 0.40 $ 1.27 $ 0.80
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<CASH> 20,283 21,928
<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> 2,241,849 1,655,259
<ALLOWANCE> 12,000 5,500
<TOTAL-ASSETS> 2,573,280 1,901,084
<DEPOSITS> 1,374,865 1,109,933
<SHORT-TERM> 701,500 482,378
<LIABILITIES-OTHER> 354,140 182,156
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 137 137
<OTHER-SE> 142,638 126,480
<TOTAL-LIABILITIES-AND-EQUITY> 2,573,280 1,901,084
<INTEREST-LOAN> 45,418 82,503
<INTEREST-INVEST> 0 0
<INTEREST-OTHER> 1,060 1,883
<INTEREST-TOTAL> 46,478 84,386
<INTEREST-DEPOSIT> 19,514 36,243
<INTEREST-EXPENSE> 34,003 61,415
<INTEREST-INCOME-NET> 12,475 22,971
<LOAN-LOSSES> 5,618 8,239
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 18,139 33,438
<INCOME-PRETAX> 20,183 32,636
<INCOME-PRE-EXTRAORDINARY> 20,183 32,636
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 10,183 17,936
<EPS-PRIMARY> .74 1.31
<EPS-DILUTED> .73 1.27
<YIELD-ACTUAL> 2.02 2.03
<LOANS-NON> 35,700 44,300
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 7,000 5,500
<CHARGE-OFFS> 618 1,739
<RECOVERIES> 0 0
<ALLOWANCE-CLOSE> 12,000 12,000
<ALLOWANCE-DOMESTIC> 0 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 12,000 12,000
</TABLE>
