<PAGE> 1
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, 1999
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 sixty days. Yes X No .
--- ---
As of the July 30, 1999 record date, 13,687,833 shares of the
registrant's Common Stock, $0.01 par value, were issued and outstanding.
<PAGE> 2
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, 1999
(unaudited) and December 31, 1998.
Unaudited Consolidated Statements of Earnings - For the three and six
months ended June 30, 1999 and 1998.
Unaudited Consolidated Statements of Cash Flows - For the six months
ended June 30, 1999 and 1998.
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> 3
FLAGSTAR BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
ASSETS 1999 1998
---------------------------------------------
(unaudited)
<S> <C> <C>
Cash and cash equivalents $ 73,097 $ 75,799
Loans receivable
Mortgage loans available for sale 2,399,217 1,831,531
Loans held for investment 893,194 747,185
Less: allowance for losses (21,500) (20,000)
----------- -----------
Loans receivable, net 3,270,911 2,558,716
Federal Home Loan Bank stock 59,050 57,837
Other investments -- 500
----------- -----------
Total earning assets 3,329,961 2,617,053
Accrued interest receivable 22,283 24,812
Repossessed assets 23,279 22,966
Premises and equipment 35,807 31,124
Mortgage servicing rights 151,004 150,258
Other assets 113,850 124,433
=========== ===========
Total assets $ 3,749,281 $ 3,046,445
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposit accounts $ 2,146,357 $ 1,923,370
Federal Home Loan Bank advances 897,977 456,019
Long term debt 74,750 --
----------- -----------
Total interest bearing liabilities 3,119,084 2,379,389
Accrued interest payable 17,906 16,659
Undisbursed payments on
loans serviced for others 96,969 184,498
Escrow accounts 138,336 104,455
Liability for checks issued 70,442 65,634
Federal income taxes payable 42,239 49,265
Other liabilities 79,397 82,693
----------- -----------
Total liabilities 3,564,373 2,882,593
STOCKHOLDERS' EQUITY
Common stock - $.01 par value,
40,000,000 shares authorized, 13,685,000 and
13,670,000 shares issued and outstanding at
June 30, 1999 and December 31, 1998, respectively 137 137
Additional paid in capital 30,170 29,988
Retained earnings 154,601 133,727
----------- -----------
Total stockholders' equity 184,908 163,852
=========== ===========
Total liabilities and stockholders' equity $ 3,749,281 $ 3,046,445
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
<PAGE> 4
FLAGSTAR BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED JUNE 30, FOR THE SIX MONTHS ENDED JUNE 30,
1999 1998 1999 1998
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 57,441 $ 45,418 $108,674 $ 82,503
Other 1,222 1,060 2,418 1,883
-------- -------- -------- --------
Total 58,663 46,478 111,092 84,386
INTEREST EXPENSE
Deposits 28,396 19,514 55,178 36,243
FHLB advances 10,515 12,770 19,951 22,492
Other 2,911 1,719 4,915 2,680
-------- -------- -------- --------
Total 41,822 34,003 80,044 61,415
-------- -------- -------- --------
Net interest income 16,841 12,475 31,048 22,971
Provision for losses 972 5,618 3,045 8,239
-------- -------- -------- --------
Net interest income after provision for losses 15,869 6,857 28,003 14,732
NON-INTEREST INCOME
Loan administration 7,519 8 10,670 88
Net gain on loan sales 11,748 29,173 30,956 45,975
Net gain on sales of mortgage servicing rights 227 999 922 2,883
Other fees and charges 3,064 1,285 6,306 2,396
-------- -------- -------- --------
Total 22,558 31,465 48,854 51,342
NON-INTEREST EXPENSE
Compensation and benefits 9,736 6,304 19,147 10,567
Occupancy and equipment 5,223 4,347 9,785 8,079
General and administrative 5,426 7,488 12,389 14,792
-------- -------- -------- --------
Total 20,385 18,139 41,321 33,438
-------- -------- -------- --------
Earnings before federal income taxes 18,042 20,183 35,536 32,636
Provision for federal income taxes 6,343 10,000 12,474 14,700
======== ======== ======== ========
NET EARNINGS $ 11,699 $ 10,183 $ 23,062 $ 17,936
======== ======== ======== ========
EARNINGS PER SHARE - BASIC $ 0.86 $ 0.74 $ 1.69 $ 1.31
======== ======== ======== ========
EARNINGS PER SHARE - DILUTED $ 0.83 $ 0.73 $ 1.63 $ 1.27
======== ======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE> 5
FLAGSTAR BANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
1999 1998
---------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 23,062 $ 17,936
Adjustments to reconcile net earnings to net cash used in operating activities
Provision for losses 3,045 8,239
Depreciation and amortization 11,842 15,401
Net gain on the sale of assets (174) (486)
Net gain on loan sales (30,956) (45,975)
Gain on sales of mortgage servicing rights (922) (2,883)
Proceeds from sales of loans available for sale 8,265,243 7,654,161
Originations and repurchases of loans available for sale, net of principal repayments (8,813,466) (8,007,193)
Decrease (increase) in accrued interest receivable 2,528 (8,889)
Decrease (increase) in other assets 9,926 (7,344)
Increase in accrued interest payable 1,247 725
Increase in liability for checks issued 4,807 31,235
Decrease in current federal income taxes payable (19,003) (2,105)
Provision for deferred federal income taxes payable 11,977 16,813
(Decrease) increase in other liabilities (3,296) 67,141
----------- -----------
Net cash used in operating activities (534,140) (263,224)
INVESTING ACTIVITIES
Maturity of other investments 500 2
Originations of loans held for investment, net of principal repayments (146,009) (206,852)
Purchase of Federal Home Loan Bank stock (1,213) (12,475)
Proceeds from the disposition of repossessed assets 9,825 7,175
Acquisitions of premises and equipment (8,056) (3,464)
Increase in mortgage servicing rights (117,810) (99,140)
Proceeds from the sale of mortgage servicing rights 110,159 35,883
----------- -----------
Net cash used in investing activities (152,604) (278,871)
FINANCING ACTIVITIES
Net increase in deposit accounts 222,987 264,932
Net increase in Federal Home Loan Bank advances 441,957 219,122
Issuance of Junior Subordinated Debentures 74,750 --
Net (disbursement) receipt of payments of loans serviced for others (87,528) 17,037
Net receipt of escrow payments 33,881 41,136
Net proceeds from the exercise of common stock options 182 --
Dividends paid to stockholders (2,187) (1,777)
----------- -----------
Net cash provided by financing activities 684,042 540,450
----------- -----------
Net decrease in cash and cash equivalents (2,702) (1,645)
Beginning cash and cash equivalents 75,799 21,928
=========== ===========
Ending cash and cash equivalents $ 73,097 $ 20,283
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Loans receivable transferred to repossessed assets $ 9,948 $ 11,031
=========== ===========
Total interest payments made on deposits and other borrowings $ 78,798 $ 60,690
=========== ===========
Federal income taxes paid $ 10,000 $ --
=========== ===========
Loans held for investment transferred to loans available for sale $ -- $ --
=========== ===========
Loans available for sale transferred to loans held for investment $ 310,594 $ --
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
5
<PAGE> 6
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, 1999.
6
<PAGE> 7
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, 1999 June 30, 1998 June 30, 1999 June 30, 1998
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Return on average assets 1.31% 1.49% 1.34% 1.43%
Return on average equity 25.94% 29.40% 26.44% 26.81%
Efficiency ratio 52.10% 41.24% 51.71% 44.13%
Equity/assets ratio (average for the period) 5.03% 5.06% 5.05% 5.35%
Mortgage loans originated or purchased $ 4,419,296 $ 4,616,445 $9,213,929 $ 8,247,773
Mortgage loans sold $ 4,256,747 $ 4,476,229 $8,176,740 $ 7,564,646
Interest rate spread 1.73% 1.47% 1.79% 1.60%
Net interest margin 2.14% 2.02% 2.07% 2.03%
Charge-offs to average loans outstanding 0.12% 0.10% 0.10% 0.16%
<CAPTION>
June 30, 1999 March 30, December 31, June 30, 1998
1999 1998
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Equity-to-assets ratio 4.93% 4.75% 5.38% 5.55%
Tangible capital ratio (1) 7.87% 5.78% 6.44% 5.67%
Core capital ratio (1) 7.93% 5.85% 6.54% 5.81%
Risk-based capital ratio (1) 15.56% 11.32% 11.83% 10.74%
Total risk-based capital ratio (1) 16.58% 12.38% 12.93% 12.28%
Book value per share $ 13.51 $ 12.74 $ 11.98 $ 10.44
Mortgage loans serviced for others $11,130,708 $10,511,935 $11,472,211 $10,375,460
Value of mortgage servicing rights 1.36% 1.31% 1.31% 1.33%
Allowance for losses to non performing loans 57.12% 57.46% 53.78% 33.65%
Allowance for losses to total loans 0.66% 0.67% 0.78% 0.54%
Non performing assets to total assets 1.62% 1.68% 1.97% 2.26%
Number of bank branches
31 30 28 24
Number of loan origination centers
36 35 31 32
Number of correspondent offices
15 15 15 15
Number of employees 1,913 1,899 1,675 1,461
</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> 8
RESULTS OF OPERATIONS
NET EARNINGS
Net earnings for the three months ended June 30, 1999 were $11.7 million ($.83
per share-diluted), a $1.5 million increase from the $10.2 million ($.73 per
share-diluted) reported in 1998. The increase resulted from a $4.3 million
increase in net interest income, a $4.6 million decrease in the provision for
losses, and a $3.7 million decrease in the provision for federal income taxes,
offset by a $8.9 decrease in non-interest income, and a $2.3 million increase in
operating expenses.
Net earnings for the six months ended June 30, 1999 were $23.1 million ($1.63
per share-diluted), a $5.2 million increase from the $17.9 million ($1.27 per
share-diluted) reported in 1998. The increase resulted from a $8.0 million
increase in net interest income, a $5.2 million decrease in the provision for
losses, and a $2.2 million decrease in the provision for federal income taxes,
offset by a $2.4 million decrease in non-interest income and a $7.9 million
increase in operating expenses.
NET INTEREST INCOME
Net interest income increased $4.3 million, or 34.4%, to $16.8 million for the
three months ended June 30, 1999, from $12.5 million for the 1998 period. This
increase was due to a $687.2 million increase in average interest-earning assets
between the comparable periods, offset by a $705.9 million increase in
interest-bearing liabilities necessary to fund the growth. At the same time, the
Company's interest rate spread increased from 1.47% in the 1998 period to 1.73%
for the three months ended June 30, 1999. The increased spread offset by the
$18.7 million decrease in the excess of average earning assets over average
interest-bearing liabilities resulted in an increase in the Company's net
interest margin by 0.12% to 2.14% for the three months ended June 30, 1999 from
2.02% for the comparable 1998 period.
Net interest income increased $8.0 million, or 34.8%, to $31.0 million for the
six months ended June 30, 1999, from $23.0 million for the comparable 1998
period. This increase was due to a $752.1 million increase in average
interest-earning assets between the comparable periods, offset by a $793.6
million increase in interest-bearing liabilities necessary to fund the growth.
The Company's interest rate spread increased from 1.60% for the 1998 period to
1.79% for the six months ended June 30, 1999. The increased spread offset by the
$41.5 million decrease in the excess of average earning assets over average
interest-bearing liabilities, resulted in a net increase in the Company's net
interest margin by 0.04% to 2.07% for the six months ended June 30, 1999 from
2.03% for the comparable 1998 period.
8
<PAGE> 9
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,
------------------------------------------------------------------------------------
1999 1998
-------------------------------------- ------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
-------------- ------------ ---------- -- ---------------- ------------- -----------
INTEREST-EARNING ASSETS: (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Loans receivable, net $ 3,136,382 $ 57,441 7.33% $ 2,456,220 $ 45,418 7.40%
FHLB stock 58,500 1,180 8.00 51,600 1,018 8.00
Other 3,165 42 5.31 2,938 42 5.72
-------------------------- ------------------------
Total interest-earning assets 3,198,047 $ 58,663 7.34% 2,510,758 $ 46,478 7.41%
Other assets 384,815 225,315
------------ -----------
Total assets $ 3,582,862 $ 2,736,073
============ ===========
INTEREST-BEARING LIABILITIES:
Deposits $ 2,110,291 $ 28,396 5.40% $ 1,380,763 $ 19,514 5.73%
FHLB advances 783,753 10,515 5.38 858,428 12,770 6.03
Other 131,599 2,911 8.87 80,500 1,719 8.47
-------------------------- ------------------------
Total interest-bearing liabilities 3,025,643 $ 41,822 5.61% 2,319,691 $ 34,003 5.94%
Other liabilities 376,836 277,819
Stockholders equity 180,383 138,563
------------ -----------
Total liabilities and
stockholders equity $ 3,582,862 $ 2,736,073
============ ===========
Net interest-earning assets $ 172,404 $ 191,067
============ ===========
-------- --------
Net interest income $ 16,841 $ 12,475
======== ========
---- ----
Interest rate spread 1.73% 1.47%
==== ====
Net interest margin 2.14% 2.02%
==== ====
Ratio of average interest-
earning assets to
interest-bearing liabilities 106% 108%
==== ====
</TABLE>
9
<PAGE> 10
TABLE 2
AVERAGE YIELDS EARNED AND RATES PAID
<TABLE>
<CAPTION>
Six months ended June 30,
------------------------------------------------------------------------------------
1999 1998
-------------------------------------- ------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
-------------- ------------ ---------- -- ---------------- ------------- -----------
INTEREST-EARNING ASSETS: (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Loans receivable, net $ 2,963,777 $ 108,674 7.33% $ 2,225,972 $ 82,503 7.41%
FHLB stock 58,521 2,321 8.00 45,750 1,825 8.00
Other 3,561 97 5.45 2,061 58 5.63
------------------------- -------------------------
Total interest-earning assets 3,025,859 $ 111,092 7.34% 2,273,783 $ 84,386 7.42%
Other assets 428,371 227,120
----------- -----------
Total assets $ 3,454,230 $ 2,500,903
=========== ===========
INTEREST-BEARING LIABILITIES:
Deposits $ 2,054,478 $ 55,178 5.42% $ 1,278,039 $ 36,243 5.69%
FHLB advances 740,056 19,951 5.44 760,534 22,492 5.93
Other 115,705 4,915 8.57 78,066 2,680 6.88
------------------------- -------------------------
Total interest-bearing liabilities 2,910,239 $ 80,044 5.55% 2,116,639 $ 61,415 5.82%
Other liabilities 369,560 250,484
Stockholders equity 174,431 133,780
----------- -----------
Total liabilities and
Stockholders equity $ 3,454,230 $ 2,500,903
=========== ===========
Net interest-earning assets $ 115,620 $ 157,144
=========== ===========
-------- --------
Net interest income $ 31,048 $ 22,971
======== ========
---- ----
Interest rate spread 1.79% 1.60%
==== ====
Net interest margin 2.07% 2.03%
==== ====
Ratio of average interest-
earning assets to
interest-bearing liabilities 104% 107%
==== ====
</TABLE>
10
<PAGE> 11
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 utilizing the average outstanding
rates).
TABLE 3
<TABLE>
<CAPTION>
Quarter ended June 30,
------------------------------------------
1999 versus 1998
Increase (Decrease) due to:
Rate Volume Total
------------- -------------- ------------
INTEREST INCOME: (In Thousands)
<S> <C> <C> <C>
Loans receivable, net ($ 554) $ 12,577 $ 12,023
FHLB stock 0 162 162
Other (3) 3 0
-------- -------- --------
Total ($ 557) $ 12,742 $ 12,125
INTEREST EXPENSE:
Deposits ($ 1,764) $ 10,646 $ 8,882
FHLB advances (1,277) (978) (2,255)
Other 132 1,060 1,192
-------- -------- --------
Total ($ 2,909) $ 10,728 $ 7,819
======== ======== ========
Net change in net interest income $ 2,352 $ 2,014 $ 4,366
======== ======== ========
</TABLE>
TABLE 4
<TABLE>
<CAPTION>
Six months ended June 30,
-----------------------------------------
1999 versus 1998
Increase (Decrease) due to:
Rate Volume Total
------------- -------------- ------------
INTEREST INCOME: (In Thousands)
<S> <C> <C> <C>
Loans receivable, net ($ 1,175) $ 27,346 $ 26,171
FHLB stock (1) 497 496
Other (3) 42 39
-------- -------- --------
Total ($ 1,179) $ 29,063 $ 26,706
INTEREST EXPENSE:
Deposits ($ 2,786) $ 21,721 $ 18,935
FHLB advances (1,830) (711) (2,541)
Other 973 1,262 2,235
-------- -------- --------
Total ($ 3,643) $ 22,272 $ 18,629
======== ======== ========
Net change in net interest income $ 2,464 $ 5,613 $ 8,077
======== ======== ========
</TABLE>
11
<PAGE> 12
PROVISION FOR LOSSES
The provision for losses was reduced to $1.0 million for the three months ended
June 30, 1999 from $5.6 million during the same period in 1998. The provision
for losses decreased to $3.0 million for the six months ended June 30, 1999 from
$8.2 million during the same period in 1998. The increases recorded in the 1998
periods were made in order to increase the level of the general allowance for
losses. An increase was made to the general reserve of $5.0 million and $6.5
million for the three and six months ended June 30, 1998, respectively. During
the 1999 periods no increase was made during the three months ended June 30,
1999 and $1.5 million was added to the reserve during the six month period ended
June 30, 1999. The allowance which totals $21.5 million is 0.66% of loans and
57.12% of non performing loans. The allowance stood at 0.54% and 0.78% of loans
and 33.65% and 53.78% of non performing loans at June 30, 1998 and December 31,
1998, respectively.
Non-performing loans stood at $37.6 million at June 30, 1999, up slightly from
$37.4 million at March 31, 1999, and $37.2 million at December 31, 1998, a
increase of 0.01% and 1.1%, respectively. Net charge-offs were an annualized
0.12% and 0.10% of average loans outstanding during the three months and six
months ended June 30, 1999, respectively.
NON-INTEREST INCOME
During the three months ended June 30, 1999, non-interest income decreased $8.9
million, or 28.3%, to $22.6 million from $31.5 million. This decrease was
primarily attributable to a decrease in net gain on loan sales and net gain on
the sales of mortgage servicing rights, offset by an increase in loan
administration fees and other fees and charges.
During the six months ended June 30, 1999, non-interest income decreased $2.4
million, or 4.7%, to $48.9 million from $51.3 million. This decrease was also
attributable to a decrease in net gain on loan sales and net gain on the sales
of mortgage servicing rights, offset by an increase in loan administration fees
and other fees and charges.
LOAN ADMINISTRATION
Net loan administration fee income increased to $7.5 million during the three
months ended June 30, 1999, from $8,000 in the 1998 period. This increase
resulted primarily from a decrease in the amortization of mortgage servicing
rights caused by a reduction in prepayments from the underlying mortgage loans.
Fee income before the amortization of serving rights increased only $2.4 million
for the three months ended June 30, 1999, to $9.0 million compared to the 1998
period. The 1999 period contained a decrease in the amortization of $5.1
million. At June 30, 1999, the unpaid principal balance of loans serviced for
others was $11.1 billion versus $10.4 billion serviced at June 30, 1998 and
$11.5 billion serviced at December 31, 1998. At June 30, 1999 the weighted
average servicing fee on loans serviced for others was 0.278% (i.e., 27.8 basis
points).
Loan administration fee income increased to $10.7 million for the six months
ended June 30, 1999, from $88,000 for the 1998 period. This increase also was
the result of the decrease in the amortization of mortgage servicing rights
caused by the decrease in prepayments on the underlying mortgage loans. Fee
income before the amortization of serving rights actually increased $6.6 million
for the six months ended June 30, 1999, to $18.5 million from $11.9 million for
the comparable 1998 period.
12
<PAGE> 13
NET GAIN ON LOAN SALES
For the three months ended June 30, 1999, net gain on loan sales decreased $17.5
million, to $11.7 million, from $29.2 million in the 1998 period. The 1999
period reflects the sale of $4.3 billion in loans versus $4.5 billion sold in
the 1998 period. The higher and rising interest rate environment in the 1999
period resulted in a smaller mortgage loan origination volume ($4.4 billion in
the 1999 period vs. $4.6 billion in the 1998 period) and a smaller or narrower
gain on sale spread recorded when the loans were sold.
For the six months ended June 30, 1999, net gain on loan sales decreased $15.0
million, to $31.0 million, from $46.0 million in the comparable 1998 period. The
1999 period includes the sale of $8.2 billion in loans versus $7.6 billion sold
in the 1998 period. For the six month period ended June 30, 1999, the higher and
rising interest rate environment also resulted in a smaller or narrower gain on
sale spread recorded when the loans were sold but the Company's production
continued to exceed 1998 mortgage loan origination volume ($9.2 billion in the
1999 period vs. $8.2 billion in the 1998 period).
NET GAIN ON THE SALE OF MORTGAGE SERVICING RIGHTS
For the three months ended June 30, 1999, the net gain on the sale of mortgage
servicing rights decreased $772,000 to $227,000, from $999,000 for the same
period in 1998. The gain on sale of mortgage servicing rights decreased because
the $3.2 billion sale of bulk servicing rights completed in 1999 was sold with
but a small gain versus a bulk sale of $1.3 billion in 1998 which generated $5.7
million net gains. The 1999, servicing rights sale included newly originated
servicing rights which were capitalized at a level equal to the current market
value whereas, the 1998 sales included seasoned servicing rights that had a book
value less than the market value.
Additionally the Company sold $29.2 million and $310.5 million in loans on a
servicing released basis during the 1999 and 1998 periods, respectively.
For the six months ended June 30, 1999, the net gain on the sale of mortgage
servicing rights decreased $2.0 million to $922,000, from $2.9 million for the
same period in 1998. The gain on sale of mortgage servicing rights decreased due
to the sale of $5.3 billion in newly originated servicing rights in 1999, which
had a book value which equaled the sales price. The bulk mortgage servicing
rights sold in 1998 was an accumulation of $3.6 billion in seasoned servicing
rights which included rights originated prior to 1995 and the adoption of FASB
122.
The Company also sold $52.3 million and $400.3 million in loans on a servicing
released basis during the 1999 and 1998 periods, respectively.
OTHER FEES AND CHARGES
During the three and six months ended June 30, 1999, the Company recorded $3.1
million and $6.3 million in other fees and charges, respectively. In the
comparable 1998 periods, the Company recorded $1.3 million and $2.4 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.
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
periods.
13
<PAGE> 14
NON-INTEREST EXPENSE (CONT'D)
<TABLE>
<CAPTION>
Quarter ended June 30, Six months ended June 30,
1999 1998 1999 1998
-------------- -------------- ------------ -----------
(In thousands)
<S> <C> <C> <C> <C>
Compensation and benefits $ 16,038 $ 14,874 $ 31,738 $ 27,214
Commissions 8,601 7,245 15,349 13,151
Occupancy and equipment 5,223 4,347 9,785 8,079
Advertising 366 476 1,219 758
Core deposit amortization 323 323 645 646
Federal insurance premium 307 203 607 368
General and administrative 7,534 10,161 17,953 20,155
-------- -------- -------- --------
Total 38,391 37,629 77,296 70,371
Less: capitalized direct costs of loan closings (18,006) (19,490) (35,975) (36,933)
======== ======== ======== ========
Total, net $ 20,385 $ 18,139 $ 41,321 $ 33,438
======== ======== ======== ========
Efficiency ratio 52.10% 41.24% 51.71% 44.13%
</TABLE>
Non-interest expense, excluding the capitalization of direct loan origination
costs, increased by $0.8 million, or 2.1%, to $38.4 million during the three
months ended June 30, 1999, from $37.6 million for the comparable 1998 period.
Although the overall increased costs were modest, the makeup of the expenses
varied greatly. 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 $1.4 million is the direct result of the
increase in mortgage loan originations during period. The majority of the $2.7
million decrease in general and administrative expenses and the $1.1 million
increase in compensation and benefits represents a shift from contract
underwriting costs to internalization of the underwriting function. The other
increases are reflective of the other costs associated with the mortgage loan
origination process. The Company also opened one new bank branches during the
quarter, and maintained seven more branches during the 1999 quarter than the
comparable 1998 period.
During the six months ended June 30, 1999, non-interest expense, excluding the
capitalization of direct loan origination costs, increased by $6.9 million, or
9.8%, to $77.3 million, from $70.4 million for the comparable 1998 period. The
increased costs are primarily attributable to the $1.0 billion increase (12.2%)
in mortgage loans originated during the comparable periods. The largest changes
occurred in the increased amounts of compensation and benefits and commissions,
offset by the large decrease in general and administrative expenses reported.
Additionally, there was a modest increase in the amount of occupancy and
equipment and advertising expenses recorded during the 1999 period.
The increased commission expense of $2.1 million and a large portion of the $4.5
million increase in compensation costs are the direct result of the increase in
mortgage loan originations during period. The majority of the $2.2 million
decrease in general and administrative expenses represents decreased contract
underwriting costs, due to internalization, offset by increases in other costs
associated with the mortgage loan production. The increased occupancy and
equipment expense of $1.7 million along with the increased advertising costs are
partly the result of the increased mortgage production, but also the costs
associated with the opening and maintenance of the seven bank branches operated
during 1999.
14
<PAGE> 15
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 31
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 36 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,
1999 1998 1999 1998
------------ ----------- ------------ -----------
(In thousands)
<S> <C> <C> <C> <C>
Revenues $ 14,757 $ 6,814 $ 28,615 $ 13,291
Earnings before taxes 10,769 3,563 20,607 7,500
Identifiable assets 1,349,024 736,066 1,349,024 736,066
</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,
1999 1998 1999 1998
------------ ----------- ------------ -----------
(In thousands)
<S> <C> <C> <C> <C>
Revenues $ 24,642 $ 37,126 $ 51,287 $ 61,022
Earnings before taxes 7,273 16,619 14,929 25,136
Identifiable assets 2,817,979 1,882,314 2,817,979 1,882,314
</TABLE>
15
<PAGE> 16
FINANCIAL CONDITION
ASSETS
The Company's assets totaled $3.7 billion at June 30, 1999, an increase of $0.7
billion, or 23.3%, as compared to $3.0 billion at December 31, 1998. This
increase was primarily due to increases in mortgage loans available for sale and
loans held for investment.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents decreased from $75.8 million at December 31, 1998 to
$73.1 million at June 30, 1999
LOANS RECEIVABLE, NET
Loans receivable, net increased $712.2 million, from $2.6 billion at December
31, 1998 to $3.3 billion at June 30, 1999.
Mortgage loans available for sale increased $567.7 million, or 31.0%, to $2.4
billion at June 30, 1999, from $1.8 billion at December 31, 1998. 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 $146.0 million, or 19.5%, from $747.2
million at December 31, 1998 to $893.2 million at June 30, 1999. This increase
is attributable to the purchase of mortgage loans by Flagstar Capital
Corporation, a subsidiary of the Bank, the origination or reclassification of
loans held for sale to the investment portfolio offset by a decreased use of
commercial lines of credit (i.e. warehouse lending) by mortgage banking
companies. The loans Flagstar Capital Corporation bought from the Bank and moved
to held for investment had a principal balance of $25.1 million. The amount of
loans originated or reclassified to the investment portfolio totaled $285.1
million. Warehouse lines used at June 30, 1999 totaled $100.2 million versus
$235.7 million at December 31, 1998.
ALLOWANCE FOR LOSSES
The allowance for losses totaled $21.5 million at June 30, 1999, an increase of
$1.5 million, or 7.5%, from $20.0 million at December 31, 1998. The allowance
for losses as a percentage of non-performing loans was 57.1% and 53.8% at June
30, 1999 and December 31, 1998, respectively. The Company's non-performing loans
totaled $37.6 million and $37.2 million at June 30, 1999 and December 31, 1998,
respectively. The allowance for losses as a percentage of total loans, was 0.66
and 0.78% at June 30, 1999 and December 31, 1998, 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, 1999, non-performing loans increased $0.4 million, or 1.1%, and
management increased the allowance for losses $1.5 million, creating an 0.6%
decrease in net non-performing loans.
FHLB STOCK
Holdings of FHLB stock increased from $57.8 million at December 31, 1998 to
$59.1 million at June 30, 1999 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> 17
ACCRUED INTEREST RECEIVABLE
Accrued interest receivable decreased from $24.8 million at December 31, 1998 to
$22.3 million at June 30, 1999 as the Company's total loan portfolio increased.
The Company typically collects loan interest in the following month after it is
earned. This 10.1% decrease is considered immaterial.
REPOSSESSED ASSETS
Repossessed assets increased from $23.0 million at December 31, 1998 to $23.3
million at June 30, 1999 as the Company's non-performing loans were foreclosed
upon by the Bank. This 1.3% increase is considered immaterial.
MORTGAGE SERVICING RIGHTS
Mortgage servicing rights totaled $151.0 million at June 30, 1999, an increase
of $0.7 million, or 0.5%, from $150.3 million at December 31, 1998. During the
six months ended June 30, 1999, the Company capitalized $117.8 million,
amortized $7.8 million, and sold $109.2 million in mortgage servicing rights.
The principal balance of the loans serviced for others stands at $11.1 billion
at June 30, 1999 versus $11.5 billion at December 31, 1998. The capitalized
value of the mortgage servicing rights was 1.36% and 1.31% value at June 30,
1999 and December 31, 1998, respectively.
OTHER ASSETS
Other assets decreased $10.5 million, or 8.4%, to $113.9 million at June 30,
1999, from $124.4 million at December 31, 1998. The majority of this decrease
was attributable to the collection of receivables previously recorded in
conjunction with the sale of residential mortgage loan servicing rights
completed on December 31, 1996 offset by similar receivables recorded for sales
completed during the six months ended June 30, 1999. 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 $681.8 million, or 23.7%, to $3.6
billion at June 30, 1999, from $2.9 billion at December 31, 1998. This increase
was attributable to an increase in most every liability account category.
DEPOSIT ACCOUNTS
Deposit accounts increased $223.0 million, or 11.6%, to $2.1 billion at June 30,
1999, from $1.9 billion at December 31, 1998. 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 28 at December 31,
1998 to 31 at June 30, 1999. The bank branches have generated $267.8 million in
new deposits, an annualized 63.4% growth rate, since December 31, 1998. At June
30, 1999, the Company's certificates of deposit totaled $1.7 billion, or 79.3%
of total deposits. These certificates carry an average balance of $49,498 and a
weighted average cost of 5.63%. Approximately $1.0 billion of the certificates
of deposit were brokered deposits or deposits garnered through the secondary
markets and carried a weighted average cost of 5.54%.
17
<PAGE> 18
FHLB ADVANCES
FHLB advances increased $442.0 million, or 96.9%, to $898.0 million at June 30,
1999, from $456.0 million at December 31, 1998. 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.
LONG TERM DEBT
On April 30, 1999, the Company issued $74.8 million of 9.50% preferred
securities to the general public in an initial public offering. The securities
were issued by the Company's subsidiary, Flagstar Trust, a Delaware trust. The
preferred securities mature in 30 years, pay interest quarterly, and the
interest expense is deductible for federal income tax purposes. The net proceeds
from the offering was contributed to Flagstar Bank as additional paid in capital
and is included as regulatory capital.
UNDISBURSED PAYMENTS ON LOANS SERVICED FOR OTHERS
Undisbursed payments on loans serviced for others decreased $87.5 million, or
47.4%, to $97.0 million at June 30, 1999, from $184.5 million at December 31,
1998. 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. This
substantial change is attributable to the general slowdown in the refinance
volume experienced in the mortgage servicing portfolio.
ESCROW ACCOUNTS
Customer escrow accounts increased $33.8 million, or 32.3%, to $138.3 million at
June 30, 1999, from $104.5 million at December 31, 1998. 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 $4.8 million, or 7.3%, to $70.4 million at
June 30, 1999, from $65.6 million at December 31, 1998. 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.
FEDERAL INCOME TAXES PAYABLE
Federal income taxes payable decreased $7.1 million, or 14.4%, to $42.2 million
at June 30, 1999, from $49.3 million at December 31, 1998. This decrease is
attributable to the payment of taxes during the six months ended June 30, 1999
offset by an increase in the deferred tax liability created through operations.
OTHER LIABILITIES
Other liabilities decreased $3.3 million, or 4.0%, to $79.4 million at June 30,
1999, from $82.7 million at December 31, 1998. This decrease is deemed
immaterial.
18
<PAGE> 19
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
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 10.89% for the month ended June 30, 1999.
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, 1999 totaled $4.3
billion, a decrease of $0.2 billion, or 4.4% from $4.5 billion sold during the
same period in 1998. This decrease in mortgage loan sales was attributable to
the 4.3% decrease in mortgage loan originations during the quarter. The Company
sold 96.3% and 96.7% of its mortgage loan originations during the three month
periods ended June 30, 1999 and 1998, respectively.
Mortgage loans sold during the six months ended June 30, 1999 totaled $8.2
billion, an increase of $0.6 billion, or 7.9% from $7.6 billion sold during the
same period in 1998. This increase in mortgage loan sales was attributable to
the 12.2% increase in mortgage loan originations. The Company sold 88.7% and
92.7% of its mortgage loan originations during the six month periods ended June
30, 1999 and 1998, 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 $898.0 million outstanding at June 30, 1999. 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 $1.3
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, 1999, 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 $38.5 million. Because such commitments may expire
without being drawn upon, they do not necessarily represent future cash
commitments. Also, at June 30, 1999, the Company had outstanding commitments to
sell $1.6 billion of mortgage loans. These commitments will be funded within 90
days. Total commercial and consumer unused lines of credit totaled $350.3
million at June 30, 1999. Such commitments include $409.7 million in warehouse
lines of credit to various mortgage companies, of which $100.2 million was
advanced at June 30, 1999.
CAPITAL RESOURCES.
At June 30, 1999, the Bank exceeded all applicable bank regulatory minimum
capital requirements. The Company is not subject to any such requirements.
19
<PAGE> 20
YEAR 2000
As with other companies, many of the Company's computer programs and other
applications were originally designed to recognize calendar years by their last
two digits. Calculations performed using these truncated fields will not work
properly with dates from the year 2000 and beyond. Many of the systems utilized
by the Company are vendor-supplied, and these vendors have provided the Company
with a certification of compliance. The Company began reviewing its year 2000
conversion needs in mid-1996 and has utilized two project committees to monitor
the status of these conversions. A comprehensive review to identify the systems
affected by this issue was completed and an implementation plan was compiled and
was executed. The Company has not spent any significant amounts with outside
contractors relative to the completion of these tasks. Therefore, costs did not
represent any material incremental costs, but rather has represented the
redeployment of existing technology resources. The Company presently believes
that all year 2000 compliance issues have been resolved. Additionally, the
Company believes that any related costs will not have a material impact on the
operations, cash flows, or financial condition of future periods.
ITEM 3. MARKET RISK
Management believes there has been no material change in either interest rate
risk or market risk since December 31, 1998.
20
<PAGE> 21
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
21
<PAGE> 22
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, 1999 /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)
22
<PAGE> 1
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,
1999 1998 1999 1998
----------- ----------- --------- ------------
(In thousands, except share data)
<S> <C> <C> <C> <C>
Net Earnings $11,699 $10,183 $23,062 $17,936
Average common shares outstanding 13,676 13,670 13,673 13,670
Net earnings per share - basic $ 0.86 $ 0.74 $ 1.69 $ 1.31
Average common share equivalents outstanding 14,082 14,219 14,178 14,156
Net earnings per share - diluted $ 0.83 $ 0.73 $ 1.63 $ 1.27
</TABLE>
23
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 73,097
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 59,050
<INVESTMENTS-MARKET> 0
<LOANS> 3,292,411
<ALLOWANCE> 21,500
<TOTAL-ASSETS> 3,749,281
<DEPOSITS> 2,146,357
<SHORT-TERM> 897,977
<LIABILITIES-OTHER> 445,289
<LONG-TERM> 74,750
0
0
<COMMON> 137
<OTHER-SE> 184,771
<TOTAL-LIABILITIES-AND-EQUITY> 3,749,281
<INTEREST-LOAN> 57,441
<INTEREST-INVEST> 1,180
<INTEREST-OTHER> 42
<INTEREST-TOTAL> 58,663
<INTEREST-DEPOSIT> 28,396
<INTEREST-EXPENSE> 13,426
<INTEREST-INCOME-NET> 16,841
<LOAN-LOSSES> 972
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 20,385
<INCOME-PRETAX> 18,042
<INCOME-PRE-EXTRAORDINARY> 18,042
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,699
<EPS-BASIC> 0.86
<EPS-DILUTED> 0.83
<YIELD-ACTUAL> 7.34
<LOANS-NON> 37,641
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 21,500
<CHARGE-OFFS> 972
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 21,500
<ALLOWANCE-DOMESTIC> 21,500
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
