Flagstar Bancorp Inc. is the holding company for Flagstar Bank FSB a federally chartered stock savings bank. Through its retail banking centers and e-commerce distribution channels Flagstar attracts deposits from the general public. The institution utilizes these deposits along with other funds garnered from the secondary market to originate or acquire loans on a nationwide basis. Flagstar Bancorp Inc. has a market cap of $173.5 million; its shares were traded at around $1.92 with and P/S ratio of 0.1. Flagstar Bancorp Inc. had an annual average earning growth of 16.6% over the past 10 years.
Highlight of Business Operations:Net loss applicable to common stockholders for the three months ended March 31, 2009 was $67.4 million, $(0.76) per share-diluted, a $56.8 million increase from the loss of $10.6 million, $(0.18) per share-diluted, reported in the comparable 2008 period. The overall increase resulted from a $93.5 million increase in non-interest expense and a $122.0 million decrease in net interest income after provision for loan losses, offset by a $138.3 million increase in non-interest income and a $23.3 million increase in federal income tax benefit and an increase of $2.9 million preferred stock dividends.
We recorded $56.7 million in net interest income before provision for loan losses for the three months ended March 31, 2009, a 3.5% increase from $54.8 million recorded for the comparable 2008 period. The increase reflects a $25.9 million decrease in interest income offset by a $27.8 million decrease in interest expense, primarily as a result of rates paid on deposits that decreased more than the decrease in yields earned on loans and mortgage-backed securities. In addition, in the three months ended March 31, 2009, as compared to the same period in 2008, our average interest-earning assets decreased by $0.2 billion and our average interest-paying liabilities increased by $0.1 billion.
Average Yields Earned and Rates Paid. The following table presents interest income from average interest-earning assets, expressed in dollars and yields, and interest expense on average interest-bearing liabilities, expressed in dollars and rates at the Company rather than the Bank. Interest income from earning assets includes the amortization of net premiums and net deferred loan origination costs of $1.7 million and $3.1 million for the three months ended March 31, 2009 and 2008, respectively. Non-accruing loans were included in the average loan amounts outstanding.
During the three months ended March 31, 2009, we recorded a provision for loan losses of $158.2 million as compared to $34.3 million recorded during the same period in 2008. The provisions reflect our estimates to maintain the allowance for loan losses at a level management believes is appropriate to cover probable losses inherent in the portfolio and had the effect of increasing our allowance for loan losses by $90.0 million. Net charge-offs increased in the 2009 period to $68.2 million, compared to $16.9 million for the same period in 2008, and as a percentage of investment loans, increased to an annualized 3.00% from 0.80%. The increase in charge-offs as a percentage of investment loans reflects the Banks worsening credit quality as demonstrated by increases in net charge-offs and non-performing loans. See Analysis of Items on Statement of Financial Condition Assets Allowance for Loan Losses, below, for further information.
Loan fees recorded during the three months ended March 31, 2009 totaled $32.9 million compared to $0.9 million collected during the comparable 2008 period. During the three month period ending March 31, 2009, we recorded gross loan fees and charges of $33.0 million, an increase of $7.4 million from the $25.6 million recorded in 2008. The increases in loan fees and charges resulted principally from our decision to account for the majority of our loans held for sale at fair value. As such, we no longer apply SFAS 91 to such loans. Prior to December 31, 2008, we recorded fee income net of any fees deferred for the purposes of complying with SFAS 91. In accordance with SFAS 91, loan origination fees are capitalized and added as an adjustment to the basis of the individual loans originated. These fees are accreted into income as an adjustment to the loan yield over the life of the loan or when the loan is sold. During the three month ended March 31, 2009, we deferred
only $35,000 of fee revenue in accordance with SFAS 91 for loans not accounted for under fair value, compared to $24.7 million in 2008.
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