Exhibit 99.1

 

		NEWS RELEASE For more information, contact: Paul D. Borja Executive Vice President / CFO Bradley T. Howes Investor Relations Officer (248) 312-2000   FOR IMMEDIATE RELEASE

Flagstar Reports Third Quarter 2011 Net Loss of $14.2 million

Strength of Mortgage Banking Franchise Drives 81 percent Quarterly Improvement in Bottom Line

TROY, Mich. (October 25, 2011) - Flagstar Bancorp, Inc. (NYSE:FBC) (the “Company”), the holding company for Flagstar Bank, FSB (the “Bank”), today reported a third quarter 2011 net loss applicable to common shareholders of $(14.2) million, as compared to a second quarter 2011 net loss of $(74.9) million and a third quarter 2010 net loss of $(22.6) million.

“Overall, we were pleased with the improvement in fundamentals on our core revenue drivers, even though such fundamentals continue to be offset by legacy credit costs. During the quarter, we reported our strongest earnings, before taxes and credit costs, since 2009. We experienced significant quarterly improvements in our bank net interest margin, our gain on loan sale income, and our mortgage originations and rate lock commitments. We also saw meaningful loan growth in our core portfolios, with our average held for investment loans increasing by an annualized rate of 13.6 percent from the prior quarter. We continue to execute on our commercial strategy, originating over $300 million in new core commercial and specialty loans, more than double the amount in the second quarter 2011,” commented Joseph P. Campanelli, Chairman of the Board, President and CEO.

Campanelli continued, “Our overall credit costs in the third quarter were relatively flat from the prior quarter, as we continue to work through challenges in our legacy balance sheet. We saw some encouraging trends in the third quarter, with 30-day delinquent and 60-day delinquent residential mortgage loans flat from the prior quarter, and the pace of increase slowing dramatically in the greater than 90 days delinquent residential first mortgage loans. Macroeconomic conditions and home prices remain challenging, however, we are confident we have the resources, including the capital, liquidity and leadership, necessary to support our business plan and continue our planned growth strategies.”

Third Quarter 2011 Highlights:

 

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Strong revenue growth, with our largest quarterly level of earnings, before taxes and credit costs, since 2009.

 

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Gain on loan sale income of $103.9 million (margin of 153 basis points), increased from prior quarter level of $39.8 million (91 basis points).

 

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Residential mortgage originations of $6.9 billion, increased 50 percent from prior quarter.

 

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Mortgage rate-lock commitments of $13.1 billion, increased 105 percent from prior quarter.

 

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Loan fees of $18.4 million, increased $3.7 million from prior quarter.

 

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Successfully converted our legacy residential mortgage servicing system to a nationally recognized loan servicing platform and restructured our residential servicing process, which management believes will materially improve efficiencies and loss mitigation activities.

 

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Entered into separate agreements to divest our 27 branch retail bank franchise in Georgia at break-even and to divest our 22 branch retail bank franchise in Indiana for a gain of approximately $24 million.

 

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Improved bank net interest margin to 2.30 percent, from 1.86 percent in prior quarter.

 

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Average bank yield on interest earning assets of 4.09 percent, improvement from prior quarter level of 3.82 percent.

 

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Overall bank cost of funds of 2.08 percent, improvement from prior quarter level of 2.20 percent.

 

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Meaningful growth in interest earnings assets, driven by increases in available-for-sale loan portfolio, and the warehouse lending and commercial and industrial portfolios.

 

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Increased average core deposits by 4.9 percent from prior quarter, to $2.8 billion.

 

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Continued to fortify balance sheet, selling $15.4 million of non-performing commercial real estate assets, resulting in a nominal gain.

 

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Capital and liquidity levels remained strong, with a Tier 1 capital ratio of 9.31 percent and cash and cash equivalents equal to 6.6 percent of total assets (does not include other marketable assets).

 

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Incurred total credit costs of $111.7 million, relatively flat from prior quarter.

 

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Loan loss provision expense decreased by $11.7 million due to lower historical residential first mortgage loss rates that offset the increase in greater than 90 days delinquent residential first mortgages.

 

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Secondary marketing reserve provision increased to $39 million, driven by a heightened level of loan repurchase requests primarily from Fannie Mae, consistent with industry trends.

 

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Asset resolution expense increased to $34.5 million as a result of increased costs associated with Ginnie Mae repurchased loans.

Third quarter 2011 net loss per share was $(0.03) per share (diluted) based on average shares outstanding of 554,489,000, as compared to a second quarter 2011 of $(0.14) per share (diluted) based on average shares outstanding of 553,946,000 and $(0.15) per share (diluted) based on average shares outstanding of 153,405,000 in the third quarter 2010.

For the nine months ended September 30, 2011, the net loss applicable to common stockholders totaled $(120.8) million, or $(0.22) per share (diluted) based on average shares outstanding of 554,000,000, a 40.1 percent improvement as compared to $(201.5) million or $(1.57) per share (diluted) based on average shares of 128,411,000 during the same period 2010.

Georgia and Indiana Branch Divestitures

During the third quarter, the Bank announced it had entered into separate agreements to divest its 27-branch Georgia and its 22-branch Indiana retail bank franchises, with PNC Bank, N.A., part of The PNC Financial Services Group, Inc. (“PNC”) and First Financial Bancorp (“First Financial”), respectively. Management believes that the Company’s presence in the Georgia and Indiana markets lacked market density and sufficient scale, and believes that these transactions are consistent with its strategic focus on its core Midwest banking markets, and on its deployment of capital towards its continuing growth in commercial and consumer banking in those markets, as well as the emerging Northeast market.

Under the Georgia agreement, PNC is to purchase the facilities or assume the leases associated with the branches and is to purchase associated business and retail deposits (approximately $233 million at September 30, 2011). PNC has also agreed to pay the net book value of the acquired real estate and fixed and other personal assets associated with the branches.

Under the Indiana agreement, First Financial is to pay a consideration equal to a seven percent premium on the consumer and commercial deposits. At September 30, 2011, the total amount of consumer and commercial deposits were $343 million, which translates to a one-time gain of approximately $24 million. First Financial will also pay net book value on real estate and personal assets of the bank branches and will assume the existing leases on 14 of the branches.

The Company predominantly originated residential mortgage loans for sale in the secondary market in both the Georgia and Indiana markets. Accordingly, the amount of loans on its balance sheet and potentially available to be transferred as part of these transactions was immaterial; thus no loans will be transferred in either transaction. Both transactions are anticipated to close during December 2011, subject to satisfaction of customary closing conditions and receipt of regulatory approvals.

 

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Net Interest Income and Margin

Third quarter 2011 net interest income was $65.6 million, as compared to $51.3 million during the second quarter 2011 and $41.1 million during the third quarter 2010. The $14.3 million increase from second quarter 2011 reflects an improvement in the net interest spreads, and a 3.4 percent increase in average interest-earning assets, driven primarily by increases in the available-for-sale, warehouse lending and commercial and industrial loan portfolios.

Net interest margin for the Bank was 2.30 percent for the third quarter 2011, as compared to 1.86 percent for the second quarter 2011 and 1.68 percent for the third quarter 2010. The increase for third quarter 2011 reflects a 3.4 percent increase in average interest earning assets to $11.7 billion, from $11.3 billion for the second quarter 2011. It also reflects a 7.1 percent increase in the average yield on interest earnings assets to 4.09 percent for the third quarter 2011. Third quarter 2011 overall cost of funds decreased to 2.08 percent from 2.20 percent in the second quarter 2011.

The Bank’s cost of deposits for the third quarter 2011 was 1.37 percent, an 8.7 percent decline, compared to 1.50 percent in the second quarter 2011, and a 37.4 percent decline, compared to 2.19 percent in the third quarter 2010. The decrease in overall funding costs for the third quarter 2011 was primarily due to the success of Bank’s initiatives to replace maturing high-cost certificates of deposit in part with lower cost core retail deposits. The Bank also refinanced $1.0 billion of long-term FHLB advances during September 2011, which is expected to reduce total interest expense by approximately $14.1 million annually.

Net interest margin for the Bank was 2.01 percent for the nine months ended September 30, 2011, as compared to 1.61 percent for the nine months ended September 30, 2010. The increase for the nine months ended September 30, 2011, compared to the same period in 2010, was primarily due to increased net interest income that offset the decline in average interest-earnings assets for the nine months ended September 30, 2011 as compared to the same period ended September 30, 2010.

Average interest-earning deposits, on which the Bank earns a minimal interest rate (25 basis points), were $718.6 million in the third quarter 2011, and represent 5.2 percent of total assets. Management believes the Bank’s interest-earning deposits allow it sufficient flexibility to fund its on-going strategic initiatives, which include increasing commercial and specialty lending, as well as other mortgage related initiatives.

Non-interest Income

Third quarter 2011 non-interest income was $112.6 million, as compared to $58.1 million for the second quarter 2011 and $144.9 million for the third quarter 2010. The increase in non-interest income was primarily due to the third quarter 2011 reduced mortgage interest rate environment and the resulting strength of the mortgage business.

In the third quarter 2011, gain on loan sales totaled $103.9 million, as compared to $39.8 million for the second quarter 2011 and $103.2 million for the third quarter 2010. The increase from the prior quarter was a result of both an increase in amount of interest rate lock commitments and an increase in associated margin. Gain on loan sale margin increased to 1.53 percent for the third quarter 2011, as compared to 0.91 percent for the second quarter 2011 and 1.35 percent for the third quarter 2010.

Residential mortgage loan originations, which are principally comprised of agency-eligible residential first mortgage loans, were $6.9 billion during the third quarter 2011, an increase from $4.6 billion in the second quarter 2011 and a decrease from $7.6 billion in the third quarter 2010. Loan sales for the third quarter of 2011 increased to $6.8 billion, as compared to $4.4 billion for the second quarter 2011 and decreased from $7.6 billion for the third quarter 2010. Mortgage rate lock commitments increased to $13.1 billion during the third quarter 2011, as compared to $6.4 billion during the second quarter 2011, and from $11.0 billion during the third quarter 2010.

Net servicing revenue, which is the combination of net loan administration income (including the off-balance hedges of mortgage servicing rights) and the gain (loss) on trading securities (the on-balance sheet hedges of mortgage servicing rights), decreased to $16.9 million during third quarter 2011, as compared to $30.5 million during second quarter 2011. The decrease as compared to second quarter 2011 was primarily attributable to historically low interest rate levels, increased prepayment activity, and a continued reduction in the capitalization of new servicing assets during the third quarter.

 

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At September 30, 2011, loans serviced for others totaled $56.8 billion with a weighted average servicing fee of 30.5 basis points. This was a decrease from $57.1 billion at June 30, 2011, with a weighted average servicing fee of 30.3 basis points, and an increase from $52.3 billion at September 30, 2010 with a weighted average servicing fee of 31.5 basis points. During the third quarter, the Company sold $31.3 million in residential first mortgage servicing rights, with $4.6 billion in underlying loans, through bulk sales.

Non-interest Expense

Non-interest expense was $150.7 million for the third quarter 2011, compared to $130.9 million in the second quarter 2011, and $162.6 million for the third quarter 2010. Excluding asset resolution expense, non-interest expense was $116.2 million in the third quarter 2011, compare to $107.6 million in the second quarter 2011. The third quarter 2011 increase in non-interest expense (excluding asset resolution expense) compared to second quarter 2011, was primarily driven by increased compensation and commissions related to the increase in the mortgage banking business and a $5.2 million general and administrative expense associated with a commercial letter of credit. Our efficiency ratio, as adjusted to exclude credit costs, improved to 53.5 percent during the third quarter 2011, as compared 82.3 percent during the second quarter 2011.

Compensation, benefits and commission expense increased by $4.2 million to $65.4 million for the third quarter 2011, as compared to $61.2 million in second quarter 2011, and compared to $59.8 million in third quarter 2010. The increase in compensation, benefits and commissions expense in the third quarter 2011 compared to second quarter 2011, was primarily due to a $3.1 million increase in commissions as a result of an increase in mortgage banking volumes during the third quarter 2011.

Warrant income, reflected as an offset under non-interest expense, was $4.2 million for the third quarter 2011, as compared to $2.0 million in the second quarter 2011, primarily due to the quarterly valuation of the outstanding warrant liability.

Balance Sheet and Funding

Total assets at September 30, 2011 were $13.7 billion, as compared to $12.7 billion at June 30, 2011 and $13.8 billion at September 30, 2010. The increase in total assets was primarily due to a $1.1 billion increase in total interest-earning assets, as the Bank was able to generate loan growth in warehouse lending and commercial and industrial loan portfolios, and an increase in the available-for-sale residential mortgage loan portfolio. The increase in warehouse lending and available-for-sale loans was attributable to the increase in residential mortgage originations.

The Bank’s primary sources of funds are deposits obtained through its community banking branches and its internet banking platform, as well as deposits obtained from municipalities and investment banking firms. Funds are also obtained from time to time through loan repayments and sales of loans and securities in the ordinary course of business, advances from the FHLB, community banking operations, customer escrow accounts and security repurchase agreements. The Bank relies upon several of these sources at different times to address its daily and forecasted liquidity needs for operational requirements and policy levels while managing overall net interest costs.

Total retail deposits were $5.5 billion at September 30, 2011, as compared to $5.2 billion at June 30, 2011 and $5.4 billion at September 30, 2010. The increase in retail deposits at September 30, 2011, compared to June 30, 2011, was due to an increase in both certificates of deposits and savings deposits.

At September 30, 2011, the Bank had a collateralized $4.6 billion line of credit with the FHLB, of which $3.6 billion was advanced or borrowed, and $921 million remained as borrowing capacity. The Bank also had approximately $900 million of cash on hand and interest-earning deposits, in addition to other marketable securities.

Credit Related Costs and Asset Quality

Credit related costs consist primarily of loan loss provision expense, secondary market reserve provision expense, asset resolution expense and impairment on investment securities available-for-sale. The Company’s credit related costs totaled

 

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$111.7 million for the third quarter 2011, as compared to $110.9 million for the second quarter 2011 and $113.3 million for the third quarter 2010.

Third quarter 2011 loan loss provision expense decreased by $11.7 million to $36.7 million, as compared to $48.4 million in second quarter 2011 and decreased compared to $51.4 million in third quarter 2010. The third quarter 2011 decrease from second quarter 2011 was primarily due to a $10.1 million decrease in provision related to residential first mortgages, consistent with a slowing pace of an increase on the greater than 90 days delinquent residential first mortgages. Third quarter 2011, 30 day and 60 day delinquent residential first mortgages were relatively unchanged from the second quarter 2011, indicating reduced levels of inflows.

For commercial real estate loans, loan loss provision decreased slightly from the second quarter 2011, and has now decreased for four consecutive quarters. The Company also sold $15.4 million of non-performing commercial real estate assets during the third quarter 2011, which resulted in a $0.1 million gain.

Third quarter 2011 secondary marketing reserve provision expense was $39.0 million, as compared to $21.4 million in the second quarter 2011 and $13.0 million in the third quarter 2010. Management believes the increase from prior quarter is consistent with recent industry trends, as the GSEs (a term generally used to refer collectively or singularly to Fannie Mae and Freddie Mac) continue to be more aggressive in the number of pre-2009 loans files being reviewed and their interpretation of their rights under the related representations and warranties. The Company has not experienced similar issues with its 2009, 2010 or 2011 vintages.

The Company maintains a secondary marketing reserve on the balance sheet, which reflects the estimate of probable losses that currently exists on loans which have sold or securitized into the secondary market, except for loans repurchased with government guarantees. The secondary marketing reserve was $85.0 million as of September 30, 2011, as compared to $79.4 million as of June 30, 2011 and $77.5 million at September 30, 2010.

Asset resolution expense, which are expenses associated with foreclosed properties (including the foreclosure claims in process with Ginnie Mae), increased by 48.2 percent to $34.5 million in the third quarter 2011, as compared to $23.3 million in the second quarter of 2011. The third quarter 2011 increase compared to second quarter 2011, was primarily due to continued pressure on home values and heightened costs associated with servicing the loans repurchased with government guarantees. During the third quarter 2011, the Company made improvements to the servicing processes within the loans repurchased with government guarantees portfolio, which management believes will provide a benefit in the next several quarters by reducing associated servicing costs.

Impairment on investment securities available-for-sale was $(1.3) million during the third quarter 2011, as compared to $(15.6) million incurred during in the second quarter 2011, and no impairment in the third quarter 2010. The decrease in impairment losses during the third quarter reflected the quarterly valuation impairment charge on the collateralized mortgage obligations in line with current industry forecasts for future home price expectations.

Non-performing assets held-for-investment were $558.3 million at September 30, 2011, as compared to $513.4 million at June 30, 2011, and $1.1 billion at September 30, 2010. Such loans are principally from the Company’s pre-2009 loan origination activity (referred to as “legacy loans”). This category of assets is comprised of non-performing loans (i.e., loans 90 days or more past due and matured loans), real estate owned and net repurchased assets, and it excludes repurchased loans that are guaranteed primarily by the Federal Housing Administration (FHA). The $44.9 million increase in the third quarter 2011, as compared to second quarter 2011, was driven primarily by a $55.0 million increase in non-performing residential first mortgage loans, offset by a $12.2 million decrease in non-performing commercial and commercial real estate loans. Management expects that the growth in non-performing loans will moderate as such loans are modified or foreclosed upon, and continues to aggressively look for opportunities to de-risk its legacy residential first mortgage and commercial real estate loan portfolios. Beginning in the fourth quarter 2010, the Company has now cumulatively sold $637.8 million in legacy non-performing assets through bulk sales, which are in addition to loan or property sales in the ordinary course of business.

Allowance for loan losses at September 30, 2011 was $282.0 million, or 4.1 percent of loans held-for-investment and 63.4 percent of non-performing loans held-for-investment, as compared to $274.0 million, or 4.6 percent of loans held-for-investment and 67.9 percent of non-performing loans held-for-investment at June 30, 2011. The slight increase in allowance for loan loss, as compared to second quarter 2011, was primarily due to an increase in residential non-performing loans. The decline in the ratio of allowance to loans held-for-investment reflects the changing composition of the loan portfolio, as warehouse loans and commercial and industrial loans, which usually have lower historical industry-

 

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wide loss rates than residential first mortgage loans, have increased the size of the held-for-investment loan portfolio. At September 30, 2010, the allowance for loan losses was $474.0 million, or 6.5 percent of loans held-for-investment and 52.0 percent of non-performing loans.

Capital

Flagstar Bank remained “well-capitalized” for regulatory purposes at September 30, 2011, with regulatory capital ratios of 9.31 percent for Tier 1 capital and 17.64 percent for total risk-based capital. The Company had an equity-to-assets ratio of 8.44 percent at September 30, 2011.

As Previously Announced

The Company’s quarterly earnings conference call will be held on Wednesday, October 26, 2011 from 11 a.m. until noon (Eastern).

Questions for discussion at the conference call may be submitted in advance by e-mail to investors@flagstar.com or asked live during the conference call.

The conference call and accompanying slide presentation will be webcast live on the Investor Relations section of the Company’s Web site, www.flagstar.com, with replays available at that site for at least 10 days.

To listen by telephone, please call at least 10 minutes prior to the start of the conference call at (866) 834-5823 toll free or (973) 341-3018 and use passcode: 14214072.

About Flagstar

Flagstar Bancorp is a full-service financial services company, offering a range of products and services to consumers, businesses, and homeowners. With $13.7 billion in total assets at September 30, 2011, Flagstar is the largest publicly held savings bank headquartered in the Midwest. As of September 30, 2011, Flagstar operated 162 branches in Michigan, Indiana, and Georgia, and has subsequently entered into agreements to sell or lease its 27 branches in Georgia and 22 branches in Indiana. Flagstar also operated, at September 30, 2011, 29 home loan centers in 14 states, and a total of four commercial banking offices in Massachusetts, Connecticut, and Rhode Island. Flagstar Bank originates loans nationwide and is one of the leading originators of residential mortgage loans. For more information, please visit flagstar.com.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that are difficult to predict and could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement. Forward-looking statements contained in this press release and any information related to expectations about future events or results are based upon information available to the Company as of the date hereof. Forward-looking statements can be identified by such words as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “expects”, “estimates,” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements made regarding the Company’s current expectations, plans or forecasts of its core business drivers, credit related costs, asset quality, capital adequacy and liquidity, the implementation of the Company’s business plan and growth strategies, the impact, timing and likelihood of consummation of the Company’s sale of its Georgia and Indiana retail bank franchises, the result of improvements to the Company’s servicing processes, and other similar matters. There is a risk that, because of business, economic or market conditions or for any other reasons within or outside of the Company’s discretion, the Company’s sale of its Georgia and Indiana retail bank franchises may not have the projected impact or be consummated in a timely manner or at all. For a further discussion of the factors that may cause actual results to differ materially from current expectations, please review the Company’s filings with the Securities and Exchange Commission (“SEC”), including but not limited to, our Forms 10-K and 10-Q. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the SEC, the Company undertakes no obligation to update any such statement to reflect events or circumstances after the date on which it is made.

 

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Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition

(In thousands, except share data)

 

		September 30, 2011				June 30, 2011				December 31, 2010				September 30, 2010
Assets			(Unaudited)
Cash and cash items		$	63,288			$	56,031			$	60,039			$	50,422
Interest-earning deposits			839,510				701,852				893,495				962,711
Cash and cash equivalents			902,798				757,883				953,534				1,013,133
Securities classified as trading			312,766				292,438				160,775				161,000
Securities classified as available-for-sale			521,259				551,173				475,225				503,568
Loans available-for-sale ($1,939,780, $1,870,499, $2,343,638 and $1,780,486 at fair value at September 30, 2011, June 30, 2011, December 31, 2010 and September 30, 2010, respectively)			2,080,926				2,002,888				2,585,200				1,943,096
Loans repurchased with government guarantees			1,745,974				1,711,591				1,674,752				1,500,635
Loans held-for-investment ($22,787, $21,514, $19,011 and $35,994 at fair value at September 30, 2011, June 30, 2011, December 31, 2010 and September 30, 2010, respectively)			6,821,737				5,975,134				6,305,483				7,312,226
Less: allowance for loan losses			(282,000	)			(274,000	)			(274,000	)			(474,000	)
Loans held-for-investment, net			6,539,737				5,701,134				6,031,483				6,838,226
Total interest-earning assets			12,040,172				10,961,076				11,820,930				11,909,236
Accrued interest receivable			100,442				91,527				83,893				86,347
Repossessed assets, net			113,365				110,050				151,085				198,585
Federal Home Loan Bank stock			301,737				301,737				337,190				373,443
Premises and equipment, net			250,674				244,565				232,203				233,235
Mortgage servicing rights at fair value			437,338				577,401				580,299				447,023
Other assets			427,013				320,425				377,865				538,282
Total assets		$	13,734,029			$	12,662,812			$	13,643,504			$	13,836,573
Liabilities and Stockholders’ Equity
Deposits		$	8,128,258			$	7,405,027			$	7,998,099			$	8,561,943
Federal Home Loan Bank advances			3,615,000				3,406,571				3,725,083				3,400,000
Long-term debt			248,585				248,610				248,610				248,610
Total interest-bearing liabilities			11,991,843				11,060,208				11,971,792				12,210,553
Accrued interest payable			8,452				10,935				12,965				18,338
Secondary market reserve			85,000				79,400				79,400				77,500
Other liabilities			489,395				337,829				319,684				469,453
Total liabilities			12,574,690				11,488,372				12,383,841				12,775,844
Stockholders’ Equity
Preferred stock $0.01 par value, liquidation value $1,000 per share, 25,000,000 shares authorized; 266,657 issued and outstanding and outstanding at September 30, 2011, June 30, 2011, December 31, 2010, and September 30, 2010, respectively			3				3				3				3
Common stock $0.01 par value, 700,000,000 shares authorized; 555,015,011, 554,163,337, 553,313,113 and 153,512,990 shares issued and outstanding at September 30, 2011, June 30, 2011, December 31, 2010 and September 30, 2010, respectively			5,550				5,542				5,533				1,535
Additional paid in capital – preferred			253,341				251,956				249,193				247,837
Additional paid in capital – common			1,465,554				1,464,131				1,461,373				1,079,042
Accumulated other comprehensive loss			(4,074	)			(357	)			(16,165	)			(19,484	)
Retained earnings (accumulated deficit)			(561,035	)			(546,835	)			(440,274	)			(248,204	)
Total stockholders’ equity			1,159,339				1,174,440				1,259,663				1,060,729
Total liabilities and stockholders’ equity		$	13,734,029			$	12,662,812			$	13,643,504			$	13,836,573

 

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Flagstar Bancorp, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

		For the Three Months Ended												For the Nine Months Ended
		September 30, 2011				June 30, 2011				September 30, 2010				September 30, 2011				September 30, 2010
Interest Income
Loans		$	109,966			$	98,155			$	121,834			$	310,234			$	354,069
Securities classified as available-for-sale or trading			9,626				8,949				10,968				26,673				47,069
Interest-earning deposits and other			433				957				505				2,358				1,631
Total interest income			120,025				108,061				133,307				339,265				402,769
Interest Expense
Deposits			22,679				24,902				40,270				74,603				123,677
FHLB advances			30,121				30,218				39,816				90,317				123,755
Security repurchase agreements			—				—				—				—				2,750
Other			1,611				1,617				2,017				4,834				8,060
Total interest expense			54,411				56,737				82,103				169,754				258,242
Net interest income			65,614				51,324				51,204				169,511				144,527
Provision for loan losses			36,690				48,384				51,399				113,383				200,978
Net interest expense after provision for loan losses			28,924				2,940				(195	)			56,128				(56,451	)
Non-Interest Income
Loan fees and charges			18,383				14,712				24,365				49,233				60,930
Deposit fees and charges			7,953				7,845				7,585				23,297				24,796
Loan administration			(3,478	)			30,450				12,924				66,308				(15,590	)
Gain (loss) on trading securities			20,385				102				10,354				20,414				76,702
Loss on residual and transferors’ interest			(186	)			(2,258	)			(4.665	)			(4,825	)			(11,660	)
Net gain on loan sales			103,858				39,827				103,211				193,869				220,034
Net loss on sales of mortgage servicing rights			(2,587	)			(2,381	)			(1,195	)			(5,080	)			(4,674	)
Net gain on securities available-for-sale			—				—				—				—				6,689
Net gain (loss) on sale of assets			1,041				1,293				—				1,297				—
Total other-than-impairment gain			51,003				39,725				—				35,993				35,200
Loss recognized in other comprehensive income before taxes			(52,325	)			(55,309	)			—				(52,899	)			(38,877	)
Net impairment losses recognized in earnings			(1,322	)			(15,584	)			—				(16,906	)			(3,677	)
Secondary market reserve – change in estimate			(38,985	)			(21,364	)			(12,958	)			(80,776	)			(51,174	)
Other fees and charges, net			7,489				5,436				5,267				20,064				14,841
Total non-interest income			112,551				58,078				144,888				266,895				317,217
Non-Interest Expense
Compensation, commissions and benefits			65,426				61,156				59,817				189,894				171,944
Occupancy and equipment			17,083				16,969				15,757				50,669				47,670
Asset resolution			34,515				23,282				44,323				95,906				119,569
Federal insurance premiums			10,665				10,789				8,522				30,180				29,209
Other taxes			647				667				1,964				2,178				3,660
Warrant (income) expense			(4,202	)			(1,998	)			(1,405	)			(7,027	)			(3,664	)
Loss on extinguishment of debt			—				—				11,855				—				20,826
General and administrative			26,557				20,057				21,756				67,044				58,985
Total non-interest expense			150,691				130,922				162,589				428,844				448,199
Loss before federal income taxes			(9,216	)			(69,904	)			(17,896	)			(105,821	)			(187,433	)
Provision for federal income taxes			264				264				—				792				—
Net Loss			(9,480	)			(70,168	)			(17,896	)			(106,613	)			(187,433	)
Preferred stock dividend/accretion			(4,719	)			(4,720	)			(4,690	)			(14,148	)			(14,059	)
Net loss applicable to common stock		$	(14,199	)		$	(74,888	)		$	(22,586	)		$	(120,761	)		$	(201,492	)
Loss per share
Basic		$	(0.03	)		$	(0.14	)		$	(0.15	)		$	(0.22	)		$	(1.57	)
Diluted		$	(0.03	)		$	(0.14	)		$	(0.15	)		$	(0.22	)		$	(1.57	)

 

8

---

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial and Statistical Data

(Dollars in thousands, except per share data)

(Unaudited)

 

		For the Three Months Ended												For the Nine Months Ended
Summary of Consolidated Statements of Operations		September 30, 2011				June 30, 2011				September 30, 2010				September 30, 2011				September 30, 2010
Return on average assets			(0.43	)%			(2.32	)%			(0.64	)%			(1.23	)%			(1.92	)%
Return on average equity			(4.90	)%			(24.87	)%			(8.35	)%			(13.39	)%			(26.85	)%
Efficiency ratio			84.6	%			119.7	%			82.9	%			98.3	%			97.1	%
Efficiency ratio (credit-adjusted) (1)			53.5	%			82.3	%			56.6	%			64.4	%			64.1	%
Equity/assets ratio (average for the period)			8.80	%			9.33	%			7.71	%			9.20	%			7.14	%
Residential first mortgage loans originated		$	6,926,451			$	4,642,706			$	7,613,502			$	16,425,699			$	17,396,195
Other loans originated		$	322,558			$	152,566			$	13,201			$	506,430			$	26,958
Mortgage loans sold and securitized		$	6,782,795			$	4,362,518			$	7,619,097			$	16,974,821			$	17,893,675
Interest rate spread – Bank only (2)			2.02	%			1.62	%			1.35	%			1.75	%			1.32	%
Net interest margin – Bank only (3)			2.30	%			1.86	%			1.68	%			2.01	%			1.61	%
Interest rate spread – Consolidated (2)			2.01	%			1.61	%			1.34	%			1.74	%			1.30	%
Net interest margin – Consolidated (3)			2.25	%			1.81	%			1.62	%			1.96	%			1.52	%
Average common shares outstanding			554,489,448				553,946,138				153,405,151				554,000,247				128,411,259
Average fully diluted shares outstanding			554,489,448				553,946,138				153,405,151				554,000,247				128,411,259
Average interest earning assets		$	11,677,994			$	11,297,984			$	12,623,592			$	11,483,759			$	12,551,298
Average interest paying liabilities		$	10,337,645			$	10,301,159			$	11,383,551			$	10,365,972			$	11,598,035
Average stockholder’s equity		$	1,159,825			$	1,204,652			$	1,082,499			$	1,202,923			$	1,000,644
Charge-offs to average investment loans (annualized)			1.83	%			3.15	%			5.90	%			2.36	%			4.53	%

 

		September 30, 2011				June 30, 2011				December 31, 2010				September 30, 2010
Equity/assets ratio			8.44	%			9.27	%			9.23	%			7.67	%
Core capital ratio (4)			9.31	%			10.07	%			9.61	%			9.12	%
Total risk-based capital ratio (4)			17.64	%			19.73	%			18.55	%			16.87	%
Book value per common share		$	1.63			$	1.66			$	1.83			$	5.30
Number of common shares outstanding			555,015,011				554,163,337				553,313,113				153,512,990
Mortgage loans serviced for others		$	56,772,598			$	57,087,989			$	56,040,063			$	52,287,204
Weighted average service fee (bps)			30.5				30.3				30.8				31.5
Capitalized value of mortgage servicing rights			0.77	%			1.01	%			1.04	%			0.85	%
Ratio of allowance for loan losses to non-performing loans held-for-investment (5)			63.4	%			67.9	%			86.1	%			52.0	%
Ratio of allowance for loan losses to loans held-for-investment (5)			4.13	%			4.59	%			4.35	%			6.48	%
Ratio of non-performing assets to total assets (bank only)			4.09	%			4.10	%			4.35	%			8.25	%
Number of bank branches			162				162				162				162
Number of loan origination centers			29				30				27				27
Number of employees (excluding loan officers and account executives)			2,993				2,990				3,001				2,922
Number of loan officers and account executives			306				316				278				285

 

(1)	Based on efficiency ratios as calculated, less secondary market reserve change in estimate and asset resolution expense.

(2)	Interest rate spread is the difference between the annualized average yield earned on average interest-earning assets for the period and the annualized average rate of interest paid on average interest-bearing liabilities for the period.

(3)	Net interest margin is the annualized effect of the net interest income divided by that period’s average interest-earning assets.

(4)	Based on adjusted total assets for purposes of core capital and risk-weighted assets for purposes of total risk-based capital. These ratios are applicable to the Bank only.

(5)	Bank only and does not include non-performing loans available-for-sale

 

9

---

Loan Originations

(Dollars in thousands)

(Unaudited)

 

		For the Three Months Ended
		September 30, 2011								June 30, 2011								September 30, 2010
Consumer loans:
Residential first mortgage		$	6,926,451				97.6	%		$	4,642,706				96.8	%		$	7,613,502				99.8	%
Other consumer (1)			4,338				0.1				2,684				0.1				486				—
Total consumer loans			6,930,789				97.7				4,645,390				96.9				7,613,988				99.8
Commercial loans (2)			318,220				2.3				149,882				3.1				12,715				0.2
Total loan originations		$	7,249,009				100.0	%		$	4,795,272				100.0	%		$	7,626,703				100.0	%

 

		For the Nine Months Ended
		September 30, 2011								September 30, 2010
Consumer loans:
Residential first mortgage		$	16,425,699				97.0	%		$	17,396,195				99.8	%
Other consumer (1)			7,991				0.1				2,046				0.1
Total consumer loans			16,433,690				97.1				17,398,241				99.9
Commercial loans (2)			498,439				2.9				24,912				0.1
Total loan originations		$	16,932,129				100.0	%		$	17,423,153				100.0	%

 

(1)	Other consumer loans include: second mortgage, construction, warehouse lending, HELOC and other consumer loans.

(2)	Commercial loans include: commercial real estate, commercial and industrial and commercial lease financing loans.

Loans Held-for-Investment

(Dollars in thousands)

(Unaudited)

 

		September 30, 2011								June 30, 2011								December 31, 2010								September 30, 2010
Consumer loans:
Residential first mortgage		$	3,827,356				56.2	%		$	3,744,342				62.7	%		$	3,784,700				60.1	%		$	4,479,814				61.4	%
Second mortgage			146,501				2.1				155,537				2.6				174,789				2.8				185,062				2.5
Construction			758				—				898				—				8,012				0.1				9,956				0.1
Warehouse lending			995,663				14.6				513,678				8.6				720,770				11.4				913,494				12.5
HELOC			232,796				3.4				241,396				4.0				271,326				4.3				265,240				3.6
Other			73,127				1.1				77,052				1.3				86,710				1.4				107,846				1.5
Total consumer loans			5,276,201				77.4				4,732,903				79.2				5,046,307				80.1				5,961,412				81.6
Commercial loans:
Commercial real estate			1,268,878				18.6				1,111,131				18.6				1,250,301				19.8				1,341,009				18.3
Commercial and industrial			234,148				3.4				99,173				1.8				8,875				0.1				9,805				0.1
Commercial lease financing			42,510				0.6				31,927				0.4				—				—				—				—
Total commercial loans			1,545,536				22.6				1,242,231				20.8				1,259,176				19.9				1,350,814				18.4
Total loans held-for-investment		$	6,821,737				100.0	%		$	5,975,134				100.0	%		$	6,305,483				100.0	%		$	7,312,226				100.0	%

 

10

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Composition of Mortgage Loans Held-for-Investment

(In thousands)

(Unaudited)

 

		September 30, 2011								June 30, 2011
		Portfolio Balance (1)				Allowance (1)				Portfolio Balance (1)				Allowance (1)
Performing modified (TDR)		$	488,981			$	41,381			$	529,588			$	44,838
Performing and not delinquent within last 36 months			2,160,067				25,752				2,237,486				26,696
Performing with government insurance			104,240				—				120,059				—
Other performing			801,269				33,693				650,706				35,963
Non-performing - 90+ day delinquent			291,826				64,722				241,258				53,077
Non-performing with government insurance			64,932				1,095				60,147				902
30 day and 60 day delinquent			63,301				4,030				61,533				4,103
Total		$	3,974,616			$	170,673			$	3,900,777			$	165,579

 

		December 31, 2010								September 30, 2010
		Portfolio Balance (1)				Allowance (1)				Portfolio Balance (1)				Allowance (1)
Performing modified (TDR)		$	576,594			$	46,857			$	615,998			$	47,943
Performing and not delinquent within last 36 months			2,084,578				27,700				2,260,229				29,750
Performing with government insurance			122,677				—				124,715				—
Other performing			987,975				43,462				1,002,378				55,428
Non-performing - 90+ day delinquent			76,572				19,786				531,296				164,010
Non-performing with government insurance			56,587				1,915				52,692				960
30 day and 60 day delinquent			62,518				4,866				87,524				4,470
Total		$	3,967,501			$	144,586			$	4,674,832			$	302,561

 

(1)	Includes residential first mortgage, second mortgage and construction loans.

Composition of Commercial Loans Held-for-Investment

(In thousands)

(Unaudited)

 

		September 30, 2011								June 30, 2011
		Portfolio Balance (1)				Allowance (1)				Portfolio Balance (1)				Allowance (1)
Performing – not impaired		$	1,197,714			$	31,559			$	966,754			$	34,190
Special mention – not impaired			145,524				10,322				91,104				7,901
Impaired			107,477				27,712				82,496				19,630
Non-performing – not impaired			173				4				402				17
Non-performing			94,648				17,683				101,475				21,885
Total		$	1,545,536			$	87,280			$	1,242,231			$	83,623

 

		December 31, 2010								September 30, 2010
		Portfolio Balance (1)				Allowance (1)				Portfolio Balance (1)				Allowance (1)
Performing – not impaired		$	933,557			$	31,291			$	911,629			$	32,069
Special mention – not impaired			85,103				5,907				126,833				7,387
Impaired			73,631				17,181				79,888				18,845
Non-performing – not impaired			6,485				752				4,939				327
Non-performing			160,400				39,847				227,525				67,820
Total		$	1,259,176			$	94,978			$	1,350,814			$	126,448

 

(1)	Includes commercial real estate, commercial and industrial, and commercial lease financing loans.

11

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Allowance for Loan Losses

(Dollars in thousands)

(Unaudited)

 

		For the Three Months Ended												For the Nine Months Ended
		September 30, 2011				June 30, 2011				September 30, 2010				September 30, 2011				September 30, 2010
Beginning balance		$	274,000			$	271,000			$	530,000			$	274,000			$	524,000
Provision for loan losses			36,690				48,384				51,399				113,383				200,978
Charge-offs
Consumer loans:
Residential first mortgage			(11,233	)			(8,383	)			(38,612	)			(22,098	)			(113,894	)
Second mortgage			(4,629	)			(6,138	)			(6,843	)			(16,545	)			(21,939	)
Construction			—				(419	)			(419	)			(419	)			(500	)
Warehouse lending			(272	)			(288	)			(151	)			(560	)			(1,900	)
HELOC			(3,477	)			(4,925	)			(4,704	)			(13,465	)			(16,944	)
Other			(1,208	)			(1,146	)			(1,299	)			(3,813	)			(4,300	)
Total consumer loans			(20,819	)			(21,299	)			(52,028	)			(56,900	)			(159,477	)
Commercial loans:
Commercial real estate			(9,853	)			(25,957	)			(57,281	)			(55,099	)			(97,017	)
Commercial and industrial			(587	)			(9	)			(529	)			(644	)			(992	)
Total commercial loans			(10,440	)			(25,966	)			(57,810	)			(55,743	)			(98,009	)
Total charge-offs			(31,259	)			(47,265	)			(109,838	)			(112,643	)			(257,486	)
Recoveries
Consumer loans:
Residential first mortgage			756				158				605				1,250				1,854
Second mortgage			371				344				536				1,581				1,194
Construction			—				—				2				1				7
Warehouse lending			—				—				391				5				444
HELOC			524				443				340				1,453				1,042
Other			423				474				385				1,284				1,185
Total consumer loans			2,074				1,419				2,259				5,574				5,726
Commercial loans:
Commercial real estate			373				462				165				1,564				765
Commercial and industrial			122				—				15				122				17
Total commercial loans			495				462				180				1,686				782
Total recoveries			2,569				1,881				2,439				7,260				6,508
Charge-offs, net of recoveries			(28,690	)			(45,384	)			(107,399	)			(105,383	)			(250,978	)
Ending balance		$	282,000			$	274,000			$	474,000			$	282,000			$	474,000
Net charge-off ratio			1.83	%			3.15	%			5.90	%			2.36	%			4.53	%

Composition of Allowance for Loan Losses

As of September 30, 2011

(In thousands)

(Unaudited)

 

		Collectively Evaluated Reserves (1)				Individually Evaluated Reserves (2)				Total
Consumer loans:
Residential first mortgage		$	87,606			$	68,223			$	155,829
Second mortgage			15,331				2,905				18,236
Construction			124				78				202
Warehouse lending			1,307				516				1,823
HELOC			14,681				—				14,681
Other			1,984				1				1,985
Total consumer loans			121,033				71,723				192,756
Commercial loans:
Commercial real estate			49,769				35,361				85,130
Commercial and industrial			2,044				1,760				3,804
Commercial lease financing			310				—				310
Total commercial loans			52,123				37,121				89,244
Total allowance for loan losses		$	173,156			$	108,844			$	282,000

 

(1)	Represents loans collectively evaluated for impairment in accordance with ASC 450-20, Loss Contingencies (formerly FAS 5), and pursuant to amendments by ASU 2010-20 regarding allowance for unimpaired loans.

(2)	Represents loans individually evaluated for impairment in accordance with ASC 310-10, Receivables (formerly FAS 114), and pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.

 

12

---

Non-Performing Loans and Assets

(Dollars in thousands)

(Unaudited)

 

		September 30, 2011				June 30, 2011				December 31, 2010				September 30, 2010
Non-performing loans held-for-investment		$	444,887			$	403,381			$	318,416			$	911,372
Real estate and other non-performing assets, net			113,365				110,050				179,557				229,750
Non-performing assets held-for-investment, net			558,252				513,431				497,973				1,141,122
Non-performing loans available-for-sale			3,331				5,341				94,889				—
Total non-performing assets including loans available-for-sale		$	561,583			$	518,772			$	592,862			$	1,141,122
Ratio of non-performing loans held-for-investment to loans held-for-investment			6.52	%			6.75	%			5.05	%			12.46	%
Ratio of non-performing assets to total assets			4.09	%			4.10	%			4.35	%			8.25	%

Asset Quality – Loans Held-for-Investment

(Dollars in thousands)

(Unaudited)

 

		30-59 Days Past Due				60-89 Days Past Due				Greater than 90 days				Total Past Due				Total Investment Loans
September 30, 2011
Consumer loans (1)		$	91,318			$	46,023			$	352,429			$	489,770			$	5,276,201
Commercial loans (1)			13,699				10,454				92,458				116,611				1,545,536
Total loans		$	105,017			$	56,477			$	444,887			$	606,381			$	6,821,737
June 30, 2011
Consumer loans (1)		$	91,185			$	46,082			$	298,751			$	436,018			$	4,732,903
Commercial loans (1)			1,392				187				104,630				106,209				1,242,231
Total loans		$	92,577			$	46,269			$	403,381			$	542,227			$	5,975,134
December 31, 2010
Consumer loans (1)		$	105,029			$	46,907			$	137,939			$	289,875			$	5,046,307
Commercial loans (1)			28,420				6,838				180,477				215,735				1,259,176
Total loans		$	133,449			$	53,745			$	318,416			$	505,610			$	6,305,483
September 30, 2010
Consumer loans (1)		$	97,662			$	49,786			$	670,064			$	817,512			$	5,961,412
Commercial loans (1)			15,079				23,954				241,308				280,341				1,350,814
Total loans		$	112,741			$	73,740			$	911,372			$	1,097,853			$	7,312,226

 

(1)	Consumer loans include: residential first mortgage, second mortgage, construction, warehouse lending, HELOC, and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and commercial lease financing loans.

 

13

---

Gain on Loan Sales and Securitizations

(Dollars in thousands)

(Unaudited)

 

		For the Three Months Ended
		September 30, 2011								June 30, 2011								September 30, 2010
		(000’s)				bps				(000’s)				bps				(000’s)				bps
Description
Valuation gain (loss):
Value of interest rate locks		$	79,078				117			$	(2,860	)			(7	)		$	4,380				6
Value of forward sales			(52,573	)			(78	)			(3,657	)			(8	)			31,619				42
Fair value of loans available for sale			132,285				195				82,760				190				140,993				185
LOCOM adjustments on loans held-for-investment			—				—				46				—				171				—
Total valuation gains			158,790				234				76,289				175				177,193				233
Sales gains (losses):
Marketing gains, net of adjustments			94,942				140				21,865				50				12,737				16
Pair-off gains (losses)			(148,078	)			(218	)			(56,951	)			(131	)			(77,404	)			(102	)
Provisions for secondary marketing reserve			(1,796	)			(3	)			(1,375	)			(3	)			(9,315	)			(12	)
Total sales gains			(54,932	)			(81	)			(36,462	)			(84	)			(73,982	)			(98	)
Total gain on loan sales and securitizations		$	103,858				153			$	39,827				91			$	103,211				135
Total loan sales and securitizations		$	6,782,795							$	4,362,518							$	7,619,097

 

		For the Nine Months Ended
		September 30, 2011								September 30, 2010
		(000’s)				bps				(000’s)				bps
Description
Valuation gain (loss):
Value of interest rate locks		$	75,602				45			$	40,479				23
Value of forward sales			(96,591	)			(57	)			(46,881	)			(27	)
Fair value of loans available for sale			259,367				152				303,713				170
LOCOM adjustments on loans held-for-investment			16				—				38				—
Total valuation gains			238,394				140				297,349				166
Sales gains (losses):
Marketing gains, net of adjustments			117,558				69				66,706				37
Pair-off gains (losses)			(156,572	)			(92	)			(120,776	)			(67	)
Provisions for secondary marketing reserve			(5,511	)			(3	)			(23,244	)			(13	)
Total sales gains			(44,525	)			(26	)			(77,314	)			(43	)
Total gain on loan sales and securitizations		$	193,869				114			$	220,034				123
Total loan sales and securitizations		$	16,974,821							$	17,893,675

 

14

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Average Balances, Yields and Rates

(Dollars in thousands)

(Unaudited)

 

		For the Three Months Ended
		September 30, 2011								June 30, 2011								September 30, 2010
		Average Balance				Annualized Yield/Rate				Average Balance				Annualized Yield/Rate				Average Balance				Annualized Yield/Rate
Interest-Earning Assets:
Loans available-for-sale		$	2,041,173				4.35	%		$	1,509,692				4.72	%		$	2,166,072				4.63	%
Loans repurchased with government guarantees			1,790,464				3.34				1,752,816				3.03				1,465,411				2.75
Loans held-for-investment:
Consumer loans (1)			4,857,771				4.54				4,551,267				4.59				5,860,749				4.77
Commercial loans (1)			1,429,449				4.82				1,211,284				4.85				1,418,011				4.63
Loans held-for-investment			6,287,220				4.60				5,762,551				4.65				7,278,760				4.74
Securities classified as available-for-sale or trading			840,490				4.58				724,694				4.94				863,201				5.08
Interest-earning deposits and other			718,647				0.24				1,548,231				0.25				850,148				0.25
Total interest-earning assets			11,677,994				4.09				11,297,984				3.82				12,623,592				4.21
Other assets			1,503,828								1,612,293								1,408,752
Total assets		$	13,181,822							$	12,910,277							$	14,032,344
Interest-Bearing Liabilities:
Demand deposits		$	401,647				0.31	%		$	409,663				0.33	%		$	378,193				0.48	%
Savings deposits			1,250,844				0.73				1,182,145				0.79				744,889				0.97
Money market deposits			580,508				0.65				579,361				0.73				542,350				0.96
Certificate of deposits			2,811,458				1.72				3,002,363				1.81				3,401,739				2.77
Total retail deposits			5,044,457				1.24				5,173,532				1.34				5,067,171				2.14
Demand deposits			84,114				0.54				66,549				0.55				214,866				0.26
Savings deposits			485,815				0.65				433,642				0.65				171,880				0.74
Certificate of deposits			289,063				0.54				237,600				0.67				440,540				0.94
Total government deposits			858,992				0.60				737,791				0.65				827,286				0.72
Wholesale deposits			657,557				3.41				741,024				3.46				1,427,463				3.18
Total deposits			6,561,006				1.37				6,652,347				1.50				7,321,920				2.18
FHLB advances			3,528,054				3.39				3,400,202				3.56				3,813,021				4.14
Other			248,585				2.57				248,610				2.61				248,610				3.22
Total interest-bearing liabilities			10,337,645				2.09				10,301,159				2.21				11,383,551				2.86
Other liabilities			1,684,352								1,404,466								1,566,294
Stockholder’s equity			1,159,825								1,204,652								1,082,499
Total liabilities and stockholder’s equity		$	13,181,822							$	12,910,277							$	14,032,344

 

(1)	Consumer loans include: residential first mortgage, second mortgage, construction, warehouse lending, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and commercial lease financing loans.

 

15

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Average Balances, Yields and Rates

(Dollars in thousands)

(Unaudited)

 

		For the Nine Months Ended
		September 30, 2011								September 30, 2010
		Average Balance				Annualized Yield/Rate				Average Balance				Annualized Yield/Rate
Interest-Earning Assets:
Loans available-for-sale		$	1,746,202				4.48	%		$	1,790,099				4.84	%
Loans repurchased with government guarantees			1,763,055				3.10				1,186,770				2.62
Loans held-for-investment:
Consumer loans (1)			4,675,795				4.66				5,876,872				4.84
Commercial loans (1)			1,290,474				4.84				1,518,134				4.58
Loans held-for-investment			5,966,269				4.70				7,395,006				4.78
Securities classified as available-for-sale or trading			732,316				4.86				1,217,123				5.16
Interest-earning deposits and other			1,275,917				0.25				962,296				0.22
Total interest-earning assets			11,483,759				3.93				12,551,294				4.27
Other assets			1,593,237								1,469,471
Total assets		$	13,076,996							$	14,020,765
Interest-Bearing Liabilities:
Demand deposits		$	403,236				0.34	%		$	378,900				0.54	%
Savings deposits			1,170,057				0.80				708,550				0.90
Money market deposits			572,041				0.72				562,068				0.93
Certificate of deposits			2,998,440				1.82				3,368,775				2.89
Total retail deposits			5,143,774				1.35				5,018,293				2.21
Demand deposits			76,160				0.54				299,325				0.39
Savings deposits			425,998				0.65				106,292				0.64
Certificate of deposits			259,573				0.63				320,587				0.86
Total government deposits			761,731				0.63				726,204				0.63
Wholesale deposits			745,879				3.40				1,614,283				3.08
Total deposits			6,651,384				1.50				7,358,780				2.25
FHLB advances			3,465,986				3.48				3,867,941				4.28
Security repurchase agreements			—				—				105,694				3.48
Other			248,602				2.60				265,620				4.06
Total interest-bearing liabilities			10,365,972				2.19				11,598,035				2.98
Other liabilities			1,508,101								1,422,085
Stockholder’s equity			1,202,923								1,000,645
Total liabilities and stockholder’s equity		$	13,076,996							$	14,020,765

 

(1)	Consumer loans include: residential first mortgage, second mortgage, construction, warehouse lending, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and commercial lease financing loans.

Pre-tax, pre-credit-cost Income

(Non GAAP measure)

(Dollars in thousands)

(Unaudited)

 

		For the Three Months Ended												For the Nine Months Ended
		September 30, 2011				June 30, 2011				September 30, 2010				September 30, 2011				September 30, 2010
Loss before tax provision		$	(9,216	)		$	(69,904	)		$	(17,896	)		$	(105,821	)		$	(187,433	)
Add back:
Provision for loan losses			36,690				48,384				51,399				113,383				200,978
Asset resolution			34,515				23,282				44,323				95,906				119,569
Other than temporary impairment on AFS investments			1,322				15,584				—				16,906				3,677
Secondary marketing reserve provision			38,985				21,364				12,958				80,776				51,174
Write down of residual interest			186				2,258				4,665				4,825				11,660
Reserve increase for reinsurance			—				—				—				—				433
Total credit-related-costs:			111,698				110,872				113,345				311,796				387,491
Pre-tax, pre-credit-cost income		$	102,482			$	40,968			$	95,449			$	205,975			$	200,058

 

16