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Flagstar Bancorp Inc. Reports Operating Results (10-Q)

August 05, 2009 | About:
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Flagstar Bancorp Inc. (FBC) filed Quarterly Report for the period ended 2009-06-30.

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 $82.2 million; its shares were traded at around $0.91 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:

Three Months. Net loss applicable to common stockholders for the three months ended June 30, 2009 was $(76.6) million, $(0.32) per share-diluted, a $92.3 million decrease from the earnings of $15.7 million, $0.22 per share-diluted, reported in the comparable 2008 period. The overall decrease resulted from a $78.1 million increase in non-interest expense and an $81.9 million increase in provision for loan losses, offset by a $34.2 million increase in non-interest income, a $39.7 million increase in federal income tax benefit and an increase of $4.9 million preferred stock dividends/accretion.

Six Months. Net loss applicable to common stockholders for the six months ended June 30, 2009 was $(144.0) million, $(0.88) per share-diluted, a $149.1 million decrease from the earnings of $5.1 million, $0.08 per share-diluted, reported in the comparable 2008 period. The overall decrease resulted from a $171.6 million increase in non-interest expense and a $205.8 million increase in provision for loan losses, offset by a $172.5 million increase in non-interest income, a $63.0 million increase in federal income tax benefit and an increase of $7.8 million preferred stock dividends/accretion.

Three Months. We recorded $60.0 million in net interest income before provision for loan losses for the three months ended June 30, 2009, a 2.3% decrease from $61.4 million recorded for the comparable 2008 period. The decrease reflects a $12.7 million decrease in interest income offset by a $11.3 million decrease in interest expense, primarily as a result of rates paid on deposits that decreased less than the decrease in yields earned on loans and mortgage-backed securities. In addition, in the three months ended June 30, 2009, as compared to the same period in 2008, our average interest-earning assets increased by $1.2 billion and our average interest-paying liabilities increased by $0.5 billion. Additionally, our interest income has been adversely affected by a significant increase in loans in which interest accruals have been discontinued. See Note 8 of the Notes to the Consolidated Financial Statements in Item 1. Financial Statements herein.

Six Months. We recorded $116.7 million in net interest income before provision for loan losses for the six months ended June 30, 2009, a 0.5% increase from $116.2 million recorded for the comparable 2008 period. The increase reflects a $38.6 million decrease in interest income offset by a $39.1 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 six months ended June 30, 2009, as compared to the same period in 2008, our average interest-earning assets increased by $0.5 billion and our average interest-paying liabilities increased by $0.2 billion. Additionally, our interest income has been adversely affected by a significant increase in loans in which interest accruals have been discontinued. See Note 8 of the Notes to the Consolidated Financial Statements in Item 1. Financial Statements herein.

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 $1.8 million and $3.5 million for the three months ended June 30, 2009 and 2008, respectively. Interest income from earning assets includes the amortization of net premiums and net deferred loan origination costs of $3.5 million and $6.7 million for the six months ended June 30, 2009 and 2008, respectively. Non-accruing loans were included in the average loan amounts outstanding.

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