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As Of Filer Filing For·On·As Docs:Size Issuer Agent 11/06/07 Indymac Bancorp Inc 10-Q 9/30/07 10:3.1M RR Donnelley |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended September 30, 2007 | ||
or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
95-3983415 (I.R.S. Employer Identification No.) |
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888 East Walnut Street, Pasadena, California (Address of principal executive offices) |
91101-7211 (Zip Code) |
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EXHIBIT 4.1 | ||||||||
EXHIBIT 4.2 | ||||||||
EXHIBIT 10.1 | ||||||||
EXHIBIT 10.2 | ||||||||
EXHIBIT 10.3 | ||||||||
EXHIBIT 31.1 | ||||||||
EXHIBIT 31.2 | ||||||||
EXHIBIT 32.1 | ||||||||
EXHIBIT 32.2 |
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3
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
4
Three Months Ended | ||||||||||||||||||||
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
||||||||||||||||
2007 | 2007 | 2007 | 2006 | 2006 | ||||||||||||||||
Balance Sheet Information (at period end)(1)
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||||||||||||||||||||
Cash and cash equivalents
|
$ | 785 | $ | 618 | $ | 577 | $ | 542 | $ | 521 | ||||||||||
Securities (trading and available for sale)
|
5,732 | 5,608 | 5,253 | 5,443 | 4,950 | |||||||||||||||
Loans held for sale
|
14,022 | 11,762 | 10,511 | 9,468 | 8,341 | |||||||||||||||
Loans held for investment
|
8,553 | 8,648 | 8,988 | 10,177 | 10,030 | |||||||||||||||
Allowance for loan losses
|
(162 | ) | (77 | ) | (68 | ) | (62 | ) | (61 | ) | ||||||||||
Mortgage servicing rights
|
2,490 | 2,387 | 2,053 | 1,822 | 1,631 | |||||||||||||||
Other assets
|
2,313 | 2,713 | 2,380 | 2,105 | 1,973 | |||||||||||||||
Total Assets
|
$ | 33,733 | $ | 31,659 | $ | 29,694 | $ | 29,495 | $ | 27,385 | ||||||||||
Deposits
|
$ | 16,775 | $ | 11,747 | $ | 11,452 | $ | 10,898 | $ | 10,111 | ||||||||||
Advances from Federal Home Loan Bank
|
11,095 | 10,873 | 10,350 | 10,413 | 9,333 | |||||||||||||||
Other borrowings
|
2,189 | 4,527 | 4,313 | 4,637 | 4,595 | |||||||||||||||
Other liabilities and preferred stock in subsidiary
|
1,803 | 2,462 | 1,525 | 1,519 | 1,409 | |||||||||||||||
Total Liabilities and Preferred Stock in Subsidiary
|
$ | 31,862 | $ | 29,609 | $ | 27,639 | $ | 27,467 | $ | 25,447 | ||||||||||
Shareholders’ Equity
|
1,871 | 2,050 | 2,055 | 2,028 | 1,938 | |||||||||||||||
Income Statement Information(1)
|
||||||||||||||||||||
Net interest income
|
$ | 142 | $ | 149 | $ | 135 | $ | 133 | $ | 137 | ||||||||||
Provision for loan losses
|
(98 | ) | (17 | ) | (11 | ) | (9 | ) | (5 | ) | ||||||||||
Gain (loss) on sale of loans
|
(251 | ) | 101 | 118 | 165 | 160 | ||||||||||||||
Service fee income
|
213 | 86 | 49 | 22 | 21 | |||||||||||||||
Gain (loss) on MBS
|
(94 | ) | (46 | ) | (5 | ) | (4 | ) | 19 | |||||||||||
Fee and other income
|
46 | 25 | 16 | 13 | 14 | |||||||||||||||
Net revenues
|
(42 | ) | 298 | 302 | 320 | 346 | ||||||||||||||
Total expenses
|
(283 | ) | (224 | ) | (216 | ) | (211 | ) | (203 | ) | ||||||||||
(Provision) benefit for income taxes
|
122 | (29 | ) | (34 | ) | (36 | ) | (56 | ) | |||||||||||
Net earnings (loss)
|
$ | (203 | ) | $ | 45 | $ | 52 | $ | 72 | $ | 86 | |||||||||
Operating Data
|
||||||||||||||||||||
SFR mortgage loan production
|
$ | 16,816 | $ | 22,505 | $ | 25,569 | $ | 25,946 | $ | 23,968 | ||||||||||
Total loan production(2)
|
17,062 | 23,023 | 25,930 | 26,328 | 24,439 | |||||||||||||||
Mortgage industry market share(3)
|
3.06 | % | 3.24 | % | 4.05 | % | 3.76 | % | 3.44 | % | ||||||||||
Pipeline of SFR mortgage loans in process (at period end)
|
$ | 7,421 | $ | 13,376 | $ | 16,112 | $ | 11,821 | $ | 14,556 | ||||||||||
Loans sold
|
13,009 | 20,194 | 24,537 | 23,417 | 19,508 | |||||||||||||||
Loans sold/SFR mortgage loan production
|
77 | % | 90 | % | 96 | % | 90 | % | 81 | % | ||||||||||
SFR mortgage loans serviced for others (at period end)(4)
|
$ | 173,915 | $ | 167,710 | $ | 156,144 | $ | 139,817 | $ | 124,395 | ||||||||||
Total SFR mortgage loans serviced (at period end)
|
192,629 | 183,574 | 171,955 | 155,656 | 139,022 | |||||||||||||||
Average number of full-time equivalent employees
(“FTEs”)
|
9,890 | 9,431 | 8,755 | 8,477 | 8,186 | |||||||||||||||
Per Common Share Data
|
||||||||||||||||||||
Basic earnings (loss) per share(5)
|
$ | (2.77 | ) | $ | 0.62 | $ | 0.72 | $ | 1.02 | $ | 1.25 | |||||||||
Diluted earnings (loss) per share(6)
|
(2.77 | ) | 0.60 | 0.70 | 0.97 | 1.19 | ||||||||||||||
Dividends declared per share
|
0.50 | 0.50 | 0.50 | 0.50 | 0.48 | |||||||||||||||
Dividend payout ratio(7)
|
(18 | )% | 83 | % | 71 | % | 52 | % | 40 | % | ||||||||||
Book value per share (at period end)
|
$ | 24.31 | $ | 27.83 | $ | 27.93 | $ | 27.78 | $ | 27.35 | ||||||||||
Closing price per share (at period end)
|
23.61 | 29.17 | 32.05 | 45.16 | 41.16 | |||||||||||||||
Average Shares (in thousands):
|
||||||||||||||||||||
Basic
|
73,134 | 72,412 | 72,297 | 71,059 | 68,866 | |||||||||||||||
Diluted
|
73,134 | 73,976 | 74,305 | 74,443 | 72,286 | |||||||||||||||
Performance Ratios
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||||||||||||||||||||
Return on average equity (annualized)
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(39.15 | )% | 8.62 | % | 10.45 | % | 14.56 | % | 18.27 | % | ||||||||||
Return on average assets (annualized)
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(2.18 | )% | 0.50 | % | 0.60 | % | 0.85 | % | 1.17 | % | ||||||||||
Net interest margin, consolidated
|
1.78 | % | 1.92 | % | 1.77 | % | 1.76 | % | 2.13 | % | ||||||||||
Net interest margin, thrift(8)
|
2.37 | % | 2.29 | % | 2.11 | % | 2.09 | % | 2.50 | % | ||||||||||
Mortgage banking revenue (“MBR”) margin on loans
sold(9)
|
(1.54 | )% | 0.80 | % | 0.68 | % | 0.91 | % | 1.03 | % | ||||||||||
Efficiency ratio(10)
|
483 | % | 71 | % | 69 | % | 64 | % | 58 | % | ||||||||||
Operating expenses to total loan production
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1.58 | % | 0.97 | % | 0.83 | % | 0.80 | % | 0.83 | % | ||||||||||
Balance Sheet and Asset Quality Ratios
|
||||||||||||||||||||
Average interest-earning assets
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$ | 31,695 | $ | 31,255 | $ | 31,030 | $ | 29,868 | $ | 25,507 | ||||||||||
Average assets
|
36,833 | 35,837 | 35,341 | 33,765 | 29,140 | |||||||||||||||
Average equity
|
2,054 | 2,078 | 2,033 | 1,969 | 1,871 | |||||||||||||||
Debt to equity ratio (at period end)(11)
|
16.1:1 | 13.2:1 | 12.7:1 | 12.8:1 | 12.4:1 | |||||||||||||||
Tier 1 core capital ratio (at period end)(12)
|
7.48 | % | 8.10 | % | 7.41 | % | 7.39 | % | 7.60 | % | ||||||||||
Risk-based capital ratio (at period end)(12)
|
11.79 | % | 12.09 | % | 11.28 | % | 11.72 | % | 11.62 | % | ||||||||||
Non-performing assets to total assets (at period end)(13)
|
2.46 | % | 1.63 | % | 1.09 | % | 0.63 | % | 0.51 | % | ||||||||||
Allowance for loan losses to total loans held for investment (at
period end)
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1.89 | % | 0.89 | % | 0.75 | % | 0.61 | % | 0.61 | % | ||||||||||
Allowance for loan losses to non-performing loans held for
investment (at period end)
|
47.64 | % | 36.07 | % | 44.11 | % | 57.51 | % | 77.43 | % |
5
(1) | The items under the balance sheet and income statement sections are rounded individually and therefore may not necessarily add to the total. | |
(2) | Total loan production includes newly originated commitments on builder construction loans as well as commercial real estate loan production, which started in March 2007. | |
(3) | Mortgage industry market share is calculated based on our total SFR mortgage loan production, both purchased (correspondent and conduit) and originated (retail and wholesale), in all channels (the numerator) divided by the Mortgage Bankers Association (“MBA”) October 17, 2007 Mortgage Finance Long-Term Forecast estimate of the overall mortgage market (the denominator). Our market share calculation is consistent with that of our mortgage banking peers. It is important to note that these industry calculations cause purchased mortgages to be counted more than once, i.e., first when they are originated and again by the purchasers (through correspondent and conduit channels) of the mortgages. Therefore, our market share calculation may not be mathematically precise, but it is consistent with industry calculations, which provide investors with a good view of our relative standing compared to the other top mortgage lending peers. | |
(4) | SFR mortgage loans serviced for others represent the unpaid principal balance on loans sold with servicing retained by Indymac. Total SFR mortgage loans serviced include mortgage loans serviced for others and mortgage loans owned by and serviced for Indymac. | |
(5) | Net earnings (loss) for the period divided by weighted average basic shares outstanding for the period. | |
(6) | Net earnings (loss) for the period divided by weighted average dilutive shares outstanding for the period. | |
(7) | Dividend payout ratio represents dividends declared per share as a percentage of diluted earnings (loss) per share. | |
(8) | Net interest margin, thrift, represents the combined margin for thrift, elimination and other, and corporate overhead. | |
(9) | Mortgage banking revenue margin is calculated using the sum of consolidated gain (loss) on sale of loans and the net interest income earned on loans held for sale by our mortgage banking production divisions divided by total loans sold. | |
(10) | Efficiency ratio is defined as operating expenses divided by net revenues, excluding provision for loan losses. | |
(11) | In the debt to equity calculation, debt includes deposits. Preferred stock in subsidiary is excluded from the calculation. | |
(12) | The tier 1 core capital ratio and risk-based capital ratio are for Indymac Bank and exclude unencumbered cash at the Parent Company available for investment in Indymac Bank. The risk-based capital ratio is calculated based on the regulatory standard risk weightings adjusted for the additional risk weightings for subprime loans. | |
(13) | Non-performing assets are non-performing loans plus foreclosed assets. Loans are generally placed on non-accrual status when they are 90 days past due. |
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7
8
9
10
Mortgage |
Total |
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Banking |
Thrift |
Eliminations |
Operating |
Corporate |
Total |
|||||||||||||||||||
Segment | Segment | & Other(1) | Results | Overhead | Company | |||||||||||||||||||
Three Months Ended September 30, 2007
|
||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||
Net interest income
|
$ | 39,226 | $ | 73,829 | $ | 29,900 | $ | 142,955 | $ | (777 | ) | $ | 142,178 | |||||||||||
Provision for loan losses
|
— | (98,279 | ) | — | (98,279 | ) | — | (98,279 | ) | |||||||||||||||
Gain (loss) on sale of loans
|
(157,670 | ) | (35,783 | ) | (57,666 | ) | (251,119 | ) | — | (251,119 | ) | |||||||||||||
Service fee income (expense)
|
183,273 | 1,571 | 28,085 | 212,929 | — | 212,929 | ||||||||||||||||||
Gain on sale and leaseback of building
|
— | — | — | — | 23,982 | 23,982 | ||||||||||||||||||
Gain (loss) on MBS
|
(3,321 | ) | (91,617 | ) | 1,269 | (93,669 | ) | — | (93,669 | ) | ||||||||||||||
Other income (expense)
|
11,737 | 8,735 | 898 | 21,370 | 222 | 21,592 | ||||||||||||||||||
Net revenues (expense)
|
73,245 | (141,544 | ) | 2,486 | (65,813 | ) | 23,427 | (42,386 | ) | |||||||||||||||
Operating expenses
|
214,516 | 34,250 | 17,345 | 266,111 | 39,111 | 305,222 | ||||||||||||||||||
Severance charges
|
— | — | — | — | 27,634 | 27,634 | ||||||||||||||||||
Deferral of expenses under SFAS 91
|
(58,379 | ) | (4,349 | ) | — | (62,728 | ) | — | (62,728 | ) | ||||||||||||||
Pre-tax earnings (loss)
|
(82,892 | ) | (171,445 | ) | (14,859 | ) | (269,196 | ) | (43,318 | ) | (312,514 | ) | ||||||||||||
Minority interests
|
— | — | — | — | 12,396 | 12,396 | ||||||||||||||||||
Net earnings (loss)
|
$ | (50,512 | ) | $ | (104,411 | ) | $ | (9,017 | ) | $ | (163,940 | ) | $ | (38,777 | ) | $ | (202,717 | ) | ||||||
Performance Data
|
||||||||||||||||||||||||
Average interest-earning assets
|
$ | 14,591,406 | $ | 16,618,394 | $ | (94,598 | ) | $ | 31,115,202 | $ | 579,356 | $ | 31,694,558 | |||||||||||
Allocated capital
|
1,157,664 | 914,473 | 11,335 | 2,083,472 | (29,091 | ) | 2,054,381 | |||||||||||||||||
Loans produced
|
16,176,966 | 884,732 | N/A | 17,061,698 | — | 17,061,698 | ||||||||||||||||||
Loans sold
|
13,827,123 | 826,566 | (1,645,142 | ) | 13,008,547 | — | 13,008,547 | |||||||||||||||||
MBR margin
|
(0.77 | )% | (4.33 | )% | N/A | N/A | N/A | (1.54 | )% | |||||||||||||||
ROE
|
(17 | )% | (45 | )% | N/A | (31 | )% | N/A | (39 | )% | ||||||||||||||
Net interest margin
|
N/A | 1.76 | % | N/A | 1.82 | % | N/A | 1.78 | % | |||||||||||||||
Net interest margin, thrift
|
N/A | 1.76 | % | N/A | N/A | N/A | 2.37 | % | ||||||||||||||||
Average FTE
|
7,734 | 660 | 339 | 8,733 | 1,157 | 9,890 | ||||||||||||||||||
Three Months Ended September 30, 2006
|
||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||
Net interest income
|
$ | 37,707 | $ | 79,043 | $ | 22,034 | $ | 138,784 | $ | (2,073 | ) | $ | 136,711 | |||||||||||
Provision for loan losses
|
— | (4,988 | ) | — | (4,988 | ) | — | (4,988 | ) | |||||||||||||||
Gain (loss) on sale of loans
|
166,663 | 16,558 | (22,996 | ) | 160,225 | — | 160,225 | |||||||||||||||||
Service fee income (expense)
|
29,927 | (397 | ) | (8,472 | ) | 21,058 | — | 21,058 | ||||||||||||||||
Gain (loss) on MBS
|
15,622 | 1,976 | 1,370 | 18,968 | — | 18,968 | ||||||||||||||||||
Other income (expense)
|
2,802 | 10,631 | (610 | ) | 12,823 | 777 | 13,600 | |||||||||||||||||
Net revenues (expense)
|
252,721 | 102,823 | (8,674 | ) | 346,870 | (1,296 | ) | 345,574 | ||||||||||||||||
Operating expenses
|
182,026 | 31,757 | 12,937 | 226,720 | 42,606 | 269,326 | ||||||||||||||||||
Deferral of expenses under SFAS 91
|
(60,988 | ) | (4,492 | ) | (718 | ) | (66,198 | ) | — | (66,198 | ) | |||||||||||||
Pre-tax earnings (loss)
|
131,683 | 75,558 | (20,893 | ) | 186,348 | (43,902 | ) | 142,446 | ||||||||||||||||
Net earnings (loss)
|
$ | 80,041 | $ | 46,016 | $ | (13,141 | ) | $ | 112,916 | $ | (26,736 | ) | $ | 86,180 | ||||||||||
Performance Data
|
||||||||||||||||||||||||
Average interest-earning assets
|
$ | 9,798,354 | $ | 15,500,071 | $ | (93,621 | ) | $ | 25,204,804 | $ | 302,213 | $ | 25,507,017 | |||||||||||
Allocated capital
|
789,277 | 820,043 | 1,939 | 1,611,259 | 260,120 | 1,871,379 | ||||||||||||||||||
Loans produced
|
23,167,283 | 1,271,893 | — | 24,439,176 | — | 24,439,176 | ||||||||||||||||||
Loans sold
|
21,216,331 | 1,281,971 | (2,990,126 | ) | 19,508,176 | — | 19,508,176 | |||||||||||||||||
MBR margin
|
0.98 | % | 1.29 | % | N/A | N/A | N/A | 1.03 | % | |||||||||||||||
ROE
|
40 | % | 22 | % | N/A | 28 | N/A | 18 | % | |||||||||||||||
Net interest margin
|
N/A | 2.02 | % | N/A | 2.18 | N/A | 2.13 | % | ||||||||||||||||
Net interest margin, thrift
|
N/A | 2.02 | % | N/A | N/A | N/A | 2.50 | % | ||||||||||||||||
Average FTE
|
5,902 | 657 | 324 | 6,883 | 1,303 | 8,186 | ||||||||||||||||||
Quarter to Quarter Comparison
|
||||||||||||||||||||||||
% change in net earnings
|
(163 | )% | (327 | )% | 31 | % | (245 | )% | (45 | )% | (335 | )% | ||||||||||||
% change in capital
|
47 | % | 12 | % | 485 | % | 29 | % | (111 | )% | 10 | % |
(1) | Included are eliminations, deposits, and treasury items, the details of which are provided on page 31. |
11
12
Consumer |
Commercial |
Total |
||||||||||||||||||
Mortgage |
Mortgage |
Mortgage |
Mortgage |
Mortgage |
||||||||||||||||
Production |
Servicing |
Banking |
Banking |
Banking |
||||||||||||||||
Divisions | Division | O/H(1) | Division | Segment | ||||||||||||||||
Three Months Ended September 30, 2007
|
||||||||||||||||||||
Operating Results
|
||||||||||||||||||||
Net interest income
|
$ | 50,572 | $ | (12,080 | ) | $ | 632 | $ | 102 | $ | 39,124 | |||||||||
Provision for loan losses
|
— | — | — | — | — | |||||||||||||||
Gain (loss) on sale of loans
|
(159,817 | ) | 2,543 | (193 | ) | (203 | ) | (157,467 | ) | |||||||||||
Service fee income (expense)
|
11,753 | 171,508 | 9 | 3 | 183,273 | |||||||||||||||
Gain (loss) on MBS
|
— | (3,321 | ) | — | — | (3,321 | ) | |||||||||||||
Other income (expense)
|
7,014 | 3,778 | 755 | 190 | 11,737 | |||||||||||||||
Net revenues (expense)
|
(90,478 | ) | 162,428 | 1,203 | 92 | 73,245 | ||||||||||||||
Operating expenses
|
167,064 | 25,824 | 18,954 | 2,674 | 214,516 | |||||||||||||||
Deferral of expenses under SFAS 91
|
(54,672 | ) | (3,421 | ) | — | (286 | ) | (58,379 | ) | |||||||||||
Pre-tax earnings (loss)
|
(202,870 | ) | 140,025 | (17,751 | ) | (2,296 | ) | (82,892 | ) | |||||||||||
Net earnings (loss)
|
$ | (123,579 | ) | $ | 85,275 | $ | (10,810 | ) | $ | (1,398 | ) | $ | (50,512 | ) | ||||||
Performance Data
|
||||||||||||||||||||
Average interest-earning assets
|
$ | 13,040,013 | $ | 1,484,197 | $ | 2,109 | $ | 65,087 | $ | 14,591,406 | ||||||||||
Allocated capital
|
735,561 | 399,237 | 17,315 | 5,551 | 1,157,664 | |||||||||||||||
Loans produced
|
15,000,286 | 1,051,464 | N/A | 125,216 | 16,176,966 | |||||||||||||||
Loans sold
|
13,112,054 | 674,074 | N/A | 40,995 | 13,827,123 | |||||||||||||||
MBR margin
|
(0.83 | )% | 0.38 | % | N/A | N/A | (0.77 | )% | ||||||||||||
ROE
|
(67 | )% | 85 | % | N/A | (100 | )% | (17 | )% | |||||||||||
Net interest margin
|
1.54 | % | N/A | N/A | 0.62 | % | N/A | |||||||||||||
Average FTE
|
5,839 | 296 | 1,549 | 50 | 7,734 | |||||||||||||||
Three Months Ended September 30, 2006
|
||||||||||||||||||||
Operating Results
|
||||||||||||||||||||
Net interest income
|
$ | 41,218 | $ | (3,323 | ) | $ | (188 | ) | $ | — | $ | 37,707 | ||||||||
Provision for loan losses
|
— | — | — | — | — | |||||||||||||||
Gain (loss) on sale of loans
|
157,271 | 9,392 | — | — | 166,663 | |||||||||||||||
Service fee income (expense)
|
5,599 | 24,328 | — | — | 29,927 | |||||||||||||||
Gain (loss) on MBS
|
— | 15,622 | — | — | 15,622 | |||||||||||||||
Other income (expense)
|
303 | 1,653 | 846 | — | 2,802 | |||||||||||||||
Net revenues (expense)
|
204,391 | 47,672 | 658 | — | 252,721 | |||||||||||||||
Operating expenses
|
149,728 | 16,868 | 15,367 | 63 | 182,026 | |||||||||||||||
Deferral of expenses under SFAS 91
|
(58,860 | ) | (2,128 | ) | — | — | (60,988 | ) | ||||||||||||
Pre-tax earnings (loss)
|
113,523 | 32,932 | (14,709 | ) | (63 | ) | 131,683 | |||||||||||||
Net earnings (loss)
|
$ | 68,981 | $ | 20,056 | $ | (8,958 | ) | $ | (38 | ) | $ | 80,041 | ||||||||
Performance Data
|
||||||||||||||||||||
Average interest-earning assets
|
$ | 9,152,748 | $ | 645,565 | $ | 41 | $ | — | $ | 9,798,354 | ||||||||||
Allocated capital
|
509,136 | 269,464 | 10,677 | — | 789,277 | |||||||||||||||
Loans produced
|
22,446,264 | 721,019 | — | — | 23,167,283 | |||||||||||||||
Loans sold
|
20,562,308 | 654,023 | — | — | 21,216,331 | |||||||||||||||
MBR margin
|
0.97 | % | 1.44 | % | N/A | N/A | 0.98 | % | ||||||||||||
ROE
|
54 | % | 30 | % | N/A | N/A | 40 | % | ||||||||||||
Net interest margin
|
1.79 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Average FTE
|
4,652 | 175 | 1,074 | 1 | 5,902 | |||||||||||||||
Quarter to Quarter Comparison
|
||||||||||||||||||||
% change in net earnings
|
(279 | )% | 325 | % | (21 | )% | N/A | (163 | )% | |||||||||||
% change in equity
|
44 | % | 48 | % | 62 | % | N/A | 47 | % |
(1) | Included production division overhead, servicing overhead and secondary marketing overhead of $4.2 million, $3.7 million and $2.9 million, respectively, for the third quarter of 2007. For the third quarter of 2006, the production division overhead, servicing overhead and secondary marketing overhead were $3.8 million, $2.7 million and $2.5 million, respectively. |
13
14
Mortgage Professionals Group Division | ||||||||||||||||||||||||||||||||
Total Mortgage |
Total |
|||||||||||||||||||||||||||||||
Consumer |
Professionals |
Financial |
Mortgage |
|||||||||||||||||||||||||||||
Direct |
Retail |
Wholesale |
Correspondent |
Conduit |
Group |
Freedom |
Production |
|||||||||||||||||||||||||
Division | Channel | Channel | Channel | Channel | Division | Division | Divisions | |||||||||||||||||||||||||
Three Months Ended September 30, 2007
|
||||||||||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||||||||||
Net interest income
|
$ | 291 | $ | 1,508 | $ | 26,008 | $ | 5,666 | $ | 12,455 | $ | 45,637 | $ | 4,644 | $ | 50,572 | ||||||||||||||||
Provision for loan losses
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Gain (loss) on sale of loans
|
2,125 | (568 | ) | (53,466 | ) | (23,261 | ) | (98,961 | ) | (176,256 | ) | 14,314 | (159,817 | ) | ||||||||||||||||||
Service fee income (expense)
|
— | — | — | — | — | — | 11,753 | 11,753 | ||||||||||||||||||||||||
Gain (loss) on MBS
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other income (expense)
|
173 | 1,654 | 5,240 | — | (64 | ) | 6,830 | 11 | 7,014 | |||||||||||||||||||||||
Net revenues (expense)
|
2,589 | 2,594 | (22,218 | ) | (17,595 | ) | (86,570 | ) | (123,789 | ) | 30,722 | (90,478 | ) | |||||||||||||||||||
Operating expenses
|
5,369 | 31,448 | 78,111 | 9,672 | 10,235 | 129,466 | 32,229 | 167,064 | ||||||||||||||||||||||||
Deferral of expenses under SFAS 91
|
(2,514 | ) | (12,223 | ) | (29,689 | ) | (4,032 | ) | — | (45,944 | ) | (6,214 | ) | (54,672 | ) | |||||||||||||||||
Pre-tax earnings (loss)
|
(266 | ) | (16,631 | ) | (70,640 | ) | (23,235 | ) | (96,805 | ) | (207,311 | ) | 4,707 | (202,870 | ) | |||||||||||||||||
Net earnings (loss)
|
$ | (163 | ) | $ | (10,128 | ) | $ | (43,020 | ) | $ | (14,150 | ) | $ | (58,954 | ) | $ | (126,252 | ) | $ | 2,836 | $ | (123,579 | ) | |||||||||
Performance Data
|
||||||||||||||||||||||||||||||||
Average interest-earning assets
|
$ | 118,896 | $ | 205,379 | $ | 5,601,759 | $ | 1,257,571 | $ | 4,893,561 | $ | 11,958,270 | $ | 962,847 | $ | 13,040,013 | ||||||||||||||||
Allocated capital
|
6,053 | 17,939 | 275,232 | 64,199 | 236,397 | 593,767 | 135,741 | 735,561 | ||||||||||||||||||||||||
Loans produced
|
263,259 | 546,260 | 8,828,707 | 1,891,435 | 2,391,033 | 13,657,435 | 1,079,592 | 15,000,286 | ||||||||||||||||||||||||
Loans sold
|
238,189 | 400,705 | 7,770,432 | 1,722,851 | 2,862,416 | 12,756,404 | 117,461 | 13,112,054 | ||||||||||||||||||||||||
MBR margin
|
1.01 | % | 0.23 | % | (0.35 | )% | (1.02 | )% | (3.02 | )% | (1.02 | )% | 16.14 | % | (0.83 | )% | ||||||||||||||||
ROE
|
(11 | )% | (224 | )% | (62 | )% | (87 | )% | (99 | )% | (84 | )% | 8 | % | (67 | )% | ||||||||||||||||
Net interest margin
|
0.97 | % | 2.91 | % | 1.84 | % | 1.79 | % | 1.01 | % | 1.51 | % | 1.91 | % | 1.54 | % | ||||||||||||||||
Average FTE
|
280 | 1,282 | 2,571 | 232 | 132 | 4,217 | 1,342 | 5,839 | ||||||||||||||||||||||||
Three Months Ended September 30, 2006
|
||||||||||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||||||||||
Net interest income
|
$ | 504 | $ | 3 | $ | 15,939 | $ | 3,577 | $ | 18,327 | $ | 37,846 | $ | 2,868 | $ | 41,218 | ||||||||||||||||
Provision for loan losses
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Gain (loss) on sale of loans
|
5,957 | 48 | 79,916 | 7,897 | 17,905 | 105,766 | 45,548 | 157,271 | ||||||||||||||||||||||||
Service fee income (expense)
|
— | — | — | — | — | — | 5,599 | 5,599 | ||||||||||||||||||||||||
Gain (loss) on MBS
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other income (expense)
|
240 | 29 | — | — | (153 | ) | (124 | ) | 187 | 303 | ||||||||||||||||||||||
Net revenues (expense)
|
6,701 | 80 | 95,855 | 11,474 | 36,079 | 143,488 | 54,202 | 204,391 | ||||||||||||||||||||||||
Operating expenses
|
10,961 | 868 | 83,575 | 11,962 | 7,557 | 103,962 | 34,805 | 149,728 | ||||||||||||||||||||||||
Deferral of expenses under SFAS 91
|
(5,197 | ) | (22 | ) | (40,282 | ) | (5,767 | ) | — | (46,071 | ) | (7,592 | ) | (58,860 | ) | |||||||||||||||||
Pre-tax earnings (loss)
|
937 | (766 | ) | 52,562 | 5,279 | 28,522 | 85,597 | 26,989 | 113,523 | |||||||||||||||||||||||
Net earnings (loss)
|
$ | 570 | $ | (466 | ) | $ | 32,010 | $ | 3,215 | $ | 17,370 | $ | 52,129 | $ | 16,282 | $ | 68,981 | |||||||||||||||
Performance Data
|
||||||||||||||||||||||||||||||||
Average interest-earning assets
|
$ | 174,893 | $ | 1,339 | $ | 3,734,539 | $ | 830,710 | $ | 3,609,638 | $ | 8,176,226 | $ | 801,629 | $ | 9,152,748 | ||||||||||||||||
Allocated capital
|
8,755 | 67 | 192,689 | 42,780 | 149,894 | 385,430 | 114,951 | 509,136 | ||||||||||||||||||||||||
Loans produced
|
447,753 | 7,890 | 9,280,817 | 2,503,012 | 9,078,589 | 20,870,308 | 1,128,203 | 22,446,264 | ||||||||||||||||||||||||
Loans sold
|
448,113 | 5,947 | 9,050,759 | 2,385,091 | 7,600,746 | 19,042,543 | 1,071,652 | 20,562,308 | ||||||||||||||||||||||||
MBR margin
|
1.44 | % | 0.86 | % | 1.06 | % | 0.48 | % | 0.48 | % | 0.75 | % | 4.52 | % | 0.97 | % | ||||||||||||||||
ROE
|
26 | % | N/M | 66 | % | 30 | % | 46 | % | 54 | % | 56 | % | 54 | % | |||||||||||||||||
Net interest margin
|
1.14 | % | 0.89 | % | 1.69 | % | 1.71 | % | 2.01 | % | 1.84 | % | 1.42 | % | 1.79 | % | ||||||||||||||||
Average FTE
|
362 | 25 | 2,507 | 246 | 147 | 2,925 | 1,365 | 4,652 | ||||||||||||||||||||||||
Quarter to Quarter Comparison
|
||||||||||||||||||||||||||||||||
% change in net earnings
|
(129 | )% | N/M | (234 | )% | N/M | (439 | )% | (342 | )% | (83 | )% | (279 | )% | ||||||||||||||||||
% change in capital
|
(31 | )% | N/M | 43 | % | 50 | % | 58 | % | 54 | % | 18 | % | 44 | % |
(1) | MBR margin is calculated using the sum of consolidated gain (loss) on sale of loans and the net interest income earned on HFS loans by our mortgage banking production divisions divided to total loans sold. The gain (loss) on sale of loans includes fair value adjustments on HFS loans in our portfolio at the end of the period that are not included in the amount of total loans sold. |
15
Three Months Ended | ||||||||||||||||||||||||
September 30, |
September 30, |
Percent |
June 30, |
Percent |
||||||||||||||||||||
2007 | 2006 | Change | 2007 | Change | ||||||||||||||||||||
Key Production Drivers:
|
||||||||||||||||||||||||
Active customers(1)
|
9,223 | 7,686 | 20 | % | 9,187 | — | ||||||||||||||||||
Sales personnel
|
1,235 | 992 | 24 | % | 1,241 | — | ||||||||||||||||||
Number of regional offices
|
16 | 16 | — | 16 | — |
(1) | Active customers are defined as customers who funded at least one loan during the most recent 90-day period. |
16
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, |
September 30, |
Percent |
June 30, |
Percent |
September 30, |
September 30, |
Percent |
|||||||||||||||||||||||||
2007 | 2006 | Change | 2007 | Change | 2007 | 2006 | Change | |||||||||||||||||||||||||
Production by Division and Channel:
|
||||||||||||||||||||||||||||||||
SFR mortgage loan production:
|
||||||||||||||||||||||||||||||||
Mortgage professionals group division:
|
||||||||||||||||||||||||||||||||
Wholesale channel(1)
|
$ | 8,829 | $ | 9,281 | (5 | )% | $ | 10,238 | (14 | )% | $ | 29,699 | $ | 26,887 | 10 | % | ||||||||||||||||
Correspondent channel
|
1,891 | 2,503 | (24 | )% | 2,649 | (29 | )% | 7,564 | 7,307 | 4 | % | |||||||||||||||||||||
Conduit channel
|
2,391 | 9,078 | (74 | )% | 5,281 | (55 | )% | 16,040 | 20,685 | (22 | )% | |||||||||||||||||||||
Retail channel
|
546 | — | N/A | 376 | 45 | % | 971 | — | N/A | |||||||||||||||||||||||
Consumer direct division
|
263 | 456 | (42 | )% | 289 | (9 | )% | 872 | 1,533 | (43 | )% | |||||||||||||||||||||
Financial Freedom division
|
1,080 | 1,128 | (4 | )% | 1,258 | (14 | )% | 3,559 | 3,583 | (1 | )% | |||||||||||||||||||||
Servicing retention channel
|
1,052 | 721 | 46 | % | 1,490 | (29 | )% | 3,660 | 1,688 | 117 | % | |||||||||||||||||||||
Home equity division(2)
|
4 | 30 | (87 | )% | 7 | (43 | )% | 36 | 93 | (61 | )% | |||||||||||||||||||||
Consumer construction division(2)
|
760 | 771 | (1 | )% | 917 | (17 | )% | 2,489 | 2,229 | 12 | % | |||||||||||||||||||||
Total SFR mortgage loan production
|
16,816 | 23,968 | (30 | )% | 22,505 | (25 | )% | 64,890 | 64,005 | 1 | % | |||||||||||||||||||||
Commercial loan production:
|
||||||||||||||||||||||||||||||||
Commercial mortgage banking division
|
125 | — | N/A | 45 | 178 | % | 171 | — | N/A | |||||||||||||||||||||||
Homebuilder division(2)
|
121 | 471 | (74 | )% | 473 | (74 | )% | 954 | 1,365 | (30 | )% | |||||||||||||||||||||
Total loan production
|
$ | 17,062 | $ | 24,439 | (30 | )% | $ | 23,023 | (26 | )% | $ | 66,015 | $ | 65,370 | 1 | % | ||||||||||||||||
Total pipeline of SFR mortgage loans in process at period
end
|
$ | 7,421 | $ | 14,556 | (49 | )% | $ | 13,376 | (45 | )% | ||||||||||||||||||||||
(1) | Wholesale channel includes $1.4 billion, $898 million, and $1.4 billion of production from wholesale inside sales for the quarters ended September 30, 2007 and 2006 and June 30, 2007, respectively, and $4.1 billion, and $2.2 billion of production from wholesale inside sales for the nine months ended September 30, 2007 and 2006, respectively. The wholesale inside sales force focuses on small and geographically remote mortgage brokers through centralized in-house sales personnel instead of field sales personnel. | |
(2) | The amounts of home equity lines of credit (“HELOCs”), consumer construction loans and builder construction loans originated by these channels represent commitments. |
17
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, |
September 30, |
Percent |
June 30, |
Percent |
September 30, |
September 30, |
Percent |
|||||||||||||||||||||||||
2007 | 2006 | Change | 2007 | Change | 2007 | 2006 | Change | |||||||||||||||||||||||||
Production by Product Type:
|
||||||||||||||||||||||||||||||||
Standard first mortgage products:
|
||||||||||||||||||||||||||||||||
Prime
|
$ | 13,632 | $ | 19,363 | (30 | )% | $ | 18,536 | (26 | )% | $ | 52,887 | $ | 50,425 | 5 | % | ||||||||||||||||
Subprime
|
596 | 729 | (18 | )% | 751 | (21 | )% | 2,431 | 1,788 | 36 | % | |||||||||||||||||||||
Total standard first mortgage products (S&P evaluated)
|
14,228 | 20,092 | (29 | )% | 19,287 | (26 | )% | 55,318 | 52,213 | 6 | % | |||||||||||||||||||||
Specialty consumer home mortgage products:
|
||||||||||||||||||||||||||||||||
HELOCs(1)/Seconds
|
637 | 1,840 | (65 | )% | 876 | (27 | )% | 3,216 | 5,343 | (40 | )% | |||||||||||||||||||||
Reverse mortgages
|
1,080 | 1,128 | (4 | )% | 1,258 | (14 | )% | 3,559 | 3,583 | (1 | )% | |||||||||||||||||||||
Consumer construction(1)
|
871 | 908 | (4 | )% | 1,084 | (20 | )% | 2,797 | 2,866 | (2 | )% | |||||||||||||||||||||
Subtotal SFR mortgage production
|
16,816 | 23,968 | (30 | )% | 22,505 | (25 | )% | 64,890 | 64,005 | 1 | % | |||||||||||||||||||||
Commercial loan products:
|
||||||||||||||||||||||||||||||||
Commercial real estate
|
125 | — | N/A | 45 | 178 | % | 171 | — | N/A | |||||||||||||||||||||||
Builder construction commitments(1)
|
121 | 471 | (74 | )% | 473 | (74 | )% | 954 | 1,365 | (30 | )% | |||||||||||||||||||||
Total production
|
$ | 17,062 | $ | 24,439 | (30 | )% | $ | 23,023 | (26 | )% | $ | 66,015 | $ | 65,370 | 1 | % | ||||||||||||||||
Total S&P lifetime loss estimate(2)
|
0.49 | % | 0.87 | % | 0.63 | % | 0.68 | % | 0.81 | % |
(1) | Amounts represent total commitments. | |
(2) | While our production is evaluated using the Standard & Poor’s (“S&P”) Levels model, the data are not audited or endorsed by S&P. S&P evaluated production excludes second liens, HELOCs, reverse mortgages, and construction loans. |
18
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
||||||||||||||||
2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||
Distribution of Loans by Channel:
|
||||||||||||||||||||
Sales of GSE equivalent loans
|
64 | % | 16 | % | 40 | % | 41 | % | 18 | % | ||||||||||
Private-label securitizations
|
31 | % | 38 | % | 46 | % | 36 | % | 40 | % | ||||||||||
Whole loan sales, servicing retained
|
— | 38 | % | 13 | % | 20 | % | 36 | % | |||||||||||
Whole loan sales, servicing released
|
1 | % | 1 | % | — | 1 | % | 2 | % | |||||||||||
Subtotal sales
|
96 | % | 93 | % | 99 | % | 98 | % | 96 | % | ||||||||||
Investment portfolio acquisitions
|
4 | % | 7 | % | 1 | % | 2 | % | 4 | % | ||||||||||
Total loan distribution percentage
|
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
Total loan distribution
|
$ | 13,478 | $ | 20,914 | $ | 20,378 | $ | 58,789 | $ | 57,870 | ||||||||||
19
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, |
September 30, |
Percent |
June 30, |
Percent |
September 30, |
September 30, |
Percent |
|||||||||||||||||||||||||
2007 | 2006 | Change | 2007 | Change | 2007 | 2006 | Change | |||||||||||||||||||||||||
Total loans sold
|
$ | 13,009 | $ | 19,508 | (33 | )% | $ | 20,194 | (36 | )% | $ | 57,739 | $ | 55,632 | 4 | % | ||||||||||||||||
MBR margin after production hedging
|
0.48 | % | 1.32 | % | (64 | )% | 1.31 | % | (63 | )% | 1.04 | % | 1.47 | % | (29 | )% | ||||||||||||||||
MBR margin after credit costs
|
(1.26 | )% | 1.24 | % | (202 | )% | 1.01 | % | (225 | )% | 0.44 | % | 1.35 | % | (67 | )% | ||||||||||||||||
Net MBR margin
|
(1.54 | )% | 1.03 | % | (250 | )% | 0.80 | % | (293 | )% | 0.22 | % | 1.12 | % | (80 | )% |
20
Mortgage |
Total |
|||||||||||
Servicing |
Servicing |
Mortgage |
||||||||||
Rights |
Retention |
Servicing |
||||||||||
Channel | Channel | Division | ||||||||||
Three Months Ended September 30, 2007
|
||||||||||||
Operating Results
|
||||||||||||
Net interest income (expense)
|
$ | (15,042 | ) | $ | 2,962 | $ | (12,080 | ) | ||||
Provision for loan losses
|
— | — | — | |||||||||
Gain (loss) on sale of loans
|
279 | 2,264 | 2,543 | |||||||||
Service fee income (expense)
|
171,508 | — | 171,508 | |||||||||
Gain (loss) on MBS
|
(3,321 | ) | — | (3,321 | ) | |||||||
Other income (expense)
|
2,274 | 1,504 | 3,778 | |||||||||
Net revenues (expense)
|
155,698 | 6,730 | 162,428 | |||||||||
Operating expenses
|
11,874 | 13,950 | 25,824 | |||||||||
Deferral of expenses under SFAS 91
|
— | (3,421 | ) | (3,421 | ) | |||||||
Pre-tax earnings (loss)
|
143,824 | (3,799 | ) | 140,025 | ||||||||
Net earnings (loss)
|
$ | 87,589 | $ | (2,314 | ) | $ | 85,275 | |||||
Performance Data
|
||||||||||||
Average interest-earning assets
|
$ | 600,337 | $ | 883,860 | $ | 1,484,197 | ||||||
Allocated capital
|
358,217 | 41,020 | 399,237 | |||||||||
Loans produced
|
— | 1,051,464 | 1,051,464 | |||||||||
Loans sold
|
— | 674,074 | 674,074 | |||||||||
MBR margin
|
N/A | 0.34 | % | 0.38 | % | |||||||
ROE
|
97 | % | (22 | )% | 85 | % | ||||||
Net interest margin
|
N/A | 1.33 | % | N/A | ||||||||
Average FTE
|
89 | 207 | 296 | |||||||||
Three Months Ended September 30, 2006
|
||||||||||||
Operating Results
|
||||||||||||
Net interest income (expense)
|
$ | (4,600 | ) | $ | 1,277 | $ | (3,323 | ) | ||||
Provision for loan losses
|
— | — | — | |||||||||
Gain (loss) on sale of loans
|
1,575 | 7,817 | 9,392 | |||||||||
Service fee income (expense)
|
24,328 | — | 24,328 | |||||||||
Gain (loss) on MBS
|
15,622 | — | 15,622 | |||||||||
Other income (expense)
|
309 | 1,344 | 1,653 | |||||||||
Net revenues (expense)
|
37,234 | 10,438 | 47,672 | |||||||||
Operating expenses
|
8,605 | 8,263 | 16,868 | |||||||||
Deferral of expenses under SFAS 91
|
— | (2,128 | ) | (2,128 | ) | |||||||
Pre-tax earnings (loss)
|
28,629 | 4,303 | 32,932 | |||||||||
Net earnings (loss)
|
$ | 17,435 | $ | 2,621 | $ | 20,056 | ||||||
Performance Data
|
||||||||||||
Average interest-earning assets
|
$ | 273,277 | $ | 372,288 | $ | 645,565 | ||||||
Allocated capital
|
252,148 | 17,316 | 269,464 | |||||||||
Loans produced
|
— | 721,019 | 721,019 | |||||||||
Loans sold
|
19,249 | 634,774 | 654,023 | |||||||||
MBR margin
|
N/A | 1.23 | % | 1.44 | % | |||||||
ROE
|
27 | % | 60 | % | 30 | % | ||||||
Net interest margin
|
N/A | N/A | N/A | |||||||||
Average FTE
|
93 | 82 | 175 | |||||||||
Quarter to Quarter Comparison
|
||||||||||||
% change in net earnings
|
402 | % | (188 | )% | 325 | % | ||||||
% change in capital
|
42 | % | 137 | % | 48 | % |
21
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
||||||||||||||||
2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||
Unpaid principal balance of loans serviced at beginning of period
|
$ | 167,710 | $ | 109,989 | $ | 156,144 | $ | 139,817 | $ | 84,495 | ||||||||||
Additions
|
13,377 | 20,709 | 20,580 | 58,647 | 56,822 | |||||||||||||||
Clean-up
calls exercised
|
— | — | (153 | ) | (153 | ) | (31 | ) | ||||||||||||
Loan payments and prepayments
|
(7,172 | ) | (6,303 | ) | (8,861 | ) | (24,396 | ) | (16,891 | ) | ||||||||||
Unpaid principal balance of loans serviced at end of period
|
$ | 173,915 | $ | 124,395 | $ | 167,710 | $ | 173,915 | $ | 124,395 | ||||||||||
September 30, |
September 30, |
June 30, |
||||||||||
2007 | 2006 | 2007 | ||||||||||
By Product Type:
|
||||||||||||
Fixed-rate mortgages
|
37 | % | 34 | % | 36 | % | ||||||
Intermediate term fixed-rate loans
|
35 | % | 29 | % | 34 | % | ||||||
Pay option adjustable-rate mortgages (“ARMs”)
|
16 | % | 25 | % | 18 | % | ||||||
Reverse mortgages (all ARMs)
|
9 | % | 9 | % | 9 | % | ||||||
HELOCs
|
2 | % | 2 | % | 2 | % | ||||||
Other
|
1 | % | 1 | % | 1 | % | ||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
Additional Information(1):
|
||||||||||||
Weighted average FICO(2)
|
705 | 703 | 704 | |||||||||
Weighted average original loan-to-value (“LTV”)
ratio(3)
|
73 | % | 73 | % | 72 | % | ||||||
Average original loan size (in thousands)
|
243 | 228 | 239 | |||||||||
Percent of portfolio with prepayment penalty
|
37 | % | 42 | % | 39 | % | ||||||
Portfolio delinquency (% of unpaid principal balance)(4)
|
6.77 | % | 4.02 | % | 5.23 | % | ||||||
By Geographic Distribution:
|
||||||||||||
California
|
43 | % | 42 | % | 43 | % | ||||||
Florida
|
8 | % | 8 | % | 8 | % | ||||||
New York
|
8 | % | 8 | % | 8 | % | ||||||
New Jersey
|
4 | % | 4 | % | 4 | % | ||||||
Virginia
|
4 | % | 4 | % | 4 | % | ||||||
Other
|
33 | % | 34 | % | 33 | % | ||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
(1) | Portfolio delinquency is calculated for the entire servicing portfolio. All other information presented excludes reverse mortgages. | |
(2) | FICO scores are the result of a credit scoring system developed by Fair Isaacs and Co. and are generally used by lenders to evaluate a borrower’s credit history. FICO scores of 700 or higher are generally considered in the mortgage industry to be very high quality borrowers with low risk of default, but in general, the secondary market will consider FICO scores of 620 or higher to be prime. | |
(3) | Combined loan-to-value (“CLTV”) ratio for loans in the second lien position is used to calculate weighted average original LTV ratio for the portfolio. | |
(4) | Delinquency is defined as 30 days or more past the due date excluding loans in foreclosure. |
22
23
Non- |
||||||||||||||||||||||||||||||||||||||||
Investment |
Total |
|||||||||||||||||||||||||||||||||||||||
Investment |
Grade and |
Mortgage- |
SFR |
|||||||||||||||||||||||||||||||||||||
Grade |
Residual |
Backed |
Mortgage |
Home |
Consumer |
Warehouse |
Discontinued |
Total |
||||||||||||||||||||||||||||||||
Securities |
Securities |
Securities |
Loans HFI |
Equity |
Construction |
Homebuilder |
Lending |
Products |
Thrift |
|||||||||||||||||||||||||||||||
Channel | Channel | Division | Division | Division | Division | Division | Division | Division | Segment | |||||||||||||||||||||||||||||||
Three Months Ended
September 30, 2007 |
||||||||||||||||||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||||||||||||||||||
Net interest income
|
$ | 8,576 | $ | 16,560 | $ | 25,136 | $ | 10,948 | $ | 9,021 | $ | 14,228 | $ | 12,754 | $ | 1,321 | $ | 421 | $ | 73,829 | ||||||||||||||||||||
Provision for loan losses
|
— | — | — | (12,000 | ) | (800 | ) | (6,750 | ) | (78,191 | ) | (88 | ) | (450 | ) | (98,279 | ) | |||||||||||||||||||||||
Gain (loss) on sale of loans
|
— | — | — | (5,784 | ) | (37,051 | ) | 7,052 | — | — | — | (35,783 | ) | |||||||||||||||||||||||||||
Service fee income (expense)
|
— | — | — | — | 1,571 | — | — | — | — | 1,571 | ||||||||||||||||||||||||||||||
Gain (loss) on MBS
|
(19,213 | ) | (67,231 | ) | (86,444 | ) | — | (4,870 | ) | (303 | ) | — | — | — | (91,617 | ) | ||||||||||||||||||||||||
Other income (expense)
|
— | — | — | 543 | 1,606 | 6,415 | (204 | ) | 375 | — | 8,735 | |||||||||||||||||||||||||||||
Net revenues (expense)
|
(10,637 | ) | (50,671 | ) | (61,308 | ) | (6,293 | ) | (30,523 | ) | 20,642 | (65,641 | ) | 1,608 | (29 | ) | (141,544 | ) | ||||||||||||||||||||||
Operating expenses
|
59 | 842 | 901 | 4,649 | 3,490 | 18,755 | 5,410 | 980 | 65 | 34,250 | ||||||||||||||||||||||||||||||
Deferral of expenses under SFAS 91
|
— | — | — | — | (43 | ) | (2,862 | ) | (1,444 | ) | — | — | (4,349 | ) | ||||||||||||||||||||||||||
Pre-tax earnings (loss)
|
(10,696 | ) | (51,513 | ) | (62,209 | ) | (10,942 | ) | (33,970 | ) | 4,749 | (69,607 | ) | 628 | (94 | ) | (171,445 | ) | ||||||||||||||||||||||
Net earnings (loss)
|
$ | (6,514 | ) | $ | (31,371 | ) | $ | (37,885 | ) | $ | (6,664 | ) | $ | (20,688 | ) | $ | 2,892 | $ | (42,391 | ) | $ | 382 | $ | (57 | ) | $ | (104,411 | ) | ||||||||||||
Performance Data
|
||||||||||||||||||||||||||||||||||||||||
Average interest-earning assets
|
$ | 4,602,711 | $ | 403,030 | $ | 5,005,741 | $ | 5,455,887 | $ | 1,706,154 | $ | 2,963,940 | $ | 1,264,835 | $ | 190,996 | $ | 30,841 | $ | 16,618,394 | ||||||||||||||||||||
Allocated capital
|
88,247 | 229,011 | 317,258 | 199,024 | 124,106 | 151,704 | 104,399 | 15,211 | 2,771 | 914,473 | ||||||||||||||||||||||||||||||
Loans produced
|
— | — | — | — | 3,726 | 759,900 | 121,106 | — | — | 884,732 | ||||||||||||||||||||||||||||||
Loans sold
|
— | — | — | 329,996 | 82,596 | 413,974 | — | — | — | 826,566 | ||||||||||||||||||||||||||||||
ROE
|
(29 | )% | (54 | )% | (47 | )% | (13 | )% | (66 | )% | 8 | % | (161 | )% | 10 | % | (8 | )% | (45 | )% | ||||||||||||||||||||
Net interest margin, thrift.
|
0.74 | % | 16.30 | % | 1.99 | % | 0.80 | % | 2.10 | % | 1.90 | % | 4.00 | % | 2.74 | % | 5.42 | % | 1.76 | % | ||||||||||||||||||||
Efficiency ratio
|
(1 | )% | (2 | )% | (1 | )% | 81 | % | (12 | )% | 58 | % | 32 | % | 58 | % | 15 | % | (69 | )% | ||||||||||||||||||||
Average FTE
|
2 | 9 | 11 | 11 | 75 | 405 | 128 | 30 | — | 660 | ||||||||||||||||||||||||||||||
Three Months Ended
September 30, 2006 |
||||||||||||||||||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||||||||||||||||||
Net interest income
|
$ | 8,274 | $ | 11,002 | $ | 19,276 | $ | 20,430 | $ | 10,851 | $ | 10,454 | $ | 16,488 | $ | 1,035 | $ | 509 | $ | 79,043 | ||||||||||||||||||||
Provision for loan losses
|
— | — | — | (2,000 | ) | — | (720 | ) | (2,200 | ) | (18 | ) | (50 | ) | (4,988 | ) | ||||||||||||||||||||||||
Gain (loss) on sale of loans
|
— | — | — | 748 | 5,788 | 10,022 | — | — | — | 16,558 | ||||||||||||||||||||||||||||||
Service fee income (expense)
|
— | — | — | — | (397 | ) | — | — | — | — | (397 | ) | ||||||||||||||||||||||||||||
Gain (loss) on MBS
|
(361 | ) | 5,991 | 5,630 | — | (3,607 | ) | (47 | ) | — | — | — | 1,976 | |||||||||||||||||||||||||||
Other income (expense)
|
(14 | ) | — | (14 | ) | 429 | 2,392 | 6,655 | 703 | 466 | — | 10,631 | ||||||||||||||||||||||||||||
Net revenues (expense)
|
7,899 | 16,993 | 24,892 | 19,607 | 15,027 | 26,364 | 14,991 | 1,483 | 459 | 102,823 | ||||||||||||||||||||||||||||||
Operating expenses
|
315 | 658 | 973 | 1,365 | 5,607 | 17,690 | 4,911 | 1,134 | 77 | 31,757 | ||||||||||||||||||||||||||||||
Deferral of expenses under SFAS 91
|
— | — | — | — | (361 | ) | (2,321 | ) | (1,810 | ) | — | — | (4,492 | ) | ||||||||||||||||||||||||||
Pre-tax earnings (loss)
|
7,584 | 16,335 | 23,919 | 18,242 | 9,781 | 10,995 | 11,890 | 349 | 382 | 75,558 | ||||||||||||||||||||||||||||||
Net earnings (loss)
|
$ | 4,619 | $ | 9,948 | $ | 14,567 | $ | 11,109 | $ | 5,957 | $ | 6,696 | $ | 7,241 | $ | 213 | $ | 233 | $ | 46,016 | ||||||||||||||||||||
Performance Data
|
||||||||||||||||||||||||||||||||||||||||
Average interest-earning assets
|
$ | 3,603,050 | $ | 242,911 | $ | 3,845,961 | $ | 5,851,294 | $ | 1,947,724 | $ | 2,568,007 | $ | 1,112,338 | $ | 135,511 | $ | 39,236 | $ | 15,500,071 | ||||||||||||||||||||
Allocated capital
|
70,215 | 123,494 | 193,709 | 220,811 | 151,013 | 130,975 | 108,408 | 11,583 | 3,544 | 820,043 | ||||||||||||||||||||||||||||||
Loans produced
|
— | — | — | — | 29,806 | 770,937 | 471,150 | — | — | 1,271,893 | ||||||||||||||||||||||||||||||
Loans sold
|
— | — | — | — | 635,366 | 646,605 | — | — | — | 1,281,971 | ||||||||||||||||||||||||||||||
ROE
|
26 | % | 32 | % | 30 | % | 20 | % | 16 | % | 20 | % | 26 | % | 7 | % | 26 | % | 22 | % | ||||||||||||||||||||
Net interest margin, thrift.
|
0.91 | % | 17.97 | % | 1.99 | % | 1.39 | % | 2.21 | % | 1.62 | % | 5.88 | % | 3.03 | % | 5.15 | % | 2.02 | % | ||||||||||||||||||||
Efficiency ratio
|
4 | % | 4 | % | 4 | % | 6 | % | 35 | % | 57 | % | 18 | % | 76 | % | 15 | % | 25 | % | ||||||||||||||||||||
Average FTE
|
6 | 7 | 13 | 14 | 76 | 416 | 111 | 27 | — | 657 | ||||||||||||||||||||||||||||||
Quarter to Quarter Comparison
|
||||||||||||||||||||||||||||||||||||||||
% change in net earnings
|
(241 | )% | (415 | )% | (360 | )% | (160 | )% | (447 | )% | (57 | )% | N/M | 79 | % | (124 | )% | (327 | )% | |||||||||||||||||||||
% change in capital
|
26 | % | 85 | % | 64 | % | (10 | )% | (18 | )% | 16 | % | (4 | )% | 31 | % | (22 | )% | 12 | % |
24
September 30, 2007 | September 30, 2006 | December 31, 2006 | ||||||||||||||||||||||||||||||||||
Trading | AFS | Total | Trading | AFS | Total | Trading | AFS | Total | ||||||||||||||||||||||||||||
Mortgage Banking Segment: | ||||||||||||||||||||||||||||||||||||
AAA-rated agency securities
|
$ | 350,694 | $ | — | $ | 350,694 | $ | — | $ | — | $ | — | $ | — | $ | 2,915 | $ | 2,915 | ||||||||||||||||||
AAA-rated and agency interest-only securities
|
71,901 | — | 71,901 | 64,083 | — | 64,083 | 66,581 | — | 66,581 | |||||||||||||||||||||||||||
AAA-rated principal-only securities
|
72,488 | — | 72,488 | 35,158 | — | 35,158 | 38,478 | — | 38,478 | |||||||||||||||||||||||||||
Prepayment penalty and other securities
|
83,205 | — | 83,205 | 92,326 | — | 92,326 | 93,176 | — | 93,176 | |||||||||||||||||||||||||||
Total Mortgage Banking
|
578,288 | — | 578,288 | 191,567 | — | 191,567 | 198,235 | 2,915 | 201,150 | |||||||||||||||||||||||||||
Thrift segment:
|
||||||||||||||||||||||||||||||||||||
AAA-rated non-agency securities
|
152,773 | 3,762,877 | 3,915,650 | 33,829 | 4,130,995 | 4,164,824 | 43,957 | 4,604,489 | 4,648,446 | |||||||||||||||||||||||||||
AAA-rated agency securities
|
45,414 | 47,408 | 92,822 | — | 50,084 | 50,084 | — | 62,260 | 62,260 | |||||||||||||||||||||||||||
AAA-rated and agency interest-only securities
|
— | — | — | 4,357 | — | 4,357 | 6,989 | — | 6,989 | |||||||||||||||||||||||||||
Prepayment penalty and other securities
|
5,034 | — | 5,034 | 6,096 | — | 6,096 | 4,400 | — | 4,400 | |||||||||||||||||||||||||||
Other investment grade securities
|
255,390 | 468,766 | 724,156 | 29,906 | 163,289 | 193,195 | 29,015 | 160,238 | 189,253 | |||||||||||||||||||||||||||
Other non-investment grade securities
|
152,340 | 37,939 | 190,279 | 38,999 | 39,279 | 78,278 | 41,390 | 38,784 | 80,174 | |||||||||||||||||||||||||||
Non-investment grade residual securities
|
218,405 | 7,410 | 225,815 | 222,825 | 38,833 | 261,658 | 218,745 | 31,828 | 250,573 | |||||||||||||||||||||||||||
Total thrift
|
829,356 | 4,324,400 | 5,153,756 | 336,012 | 4,422,480 | 4,758,492 | 344,496 | 4,897,599 | 5,242,095 | |||||||||||||||||||||||||||
Total mortgage-backed securities
|
$ | 1,407,644 | $ | 4,324,400 | $ | 5,732,044 | $ | 527,579 | $ | 4,422,480 | $ | 4,950,059 | $ | 542,731 | $ | 4,900,514 | $ | 5,443,245 | ||||||||||||||||||
25
September 30, |
September 30, |
December 31, |
||||||||||
2007 | 2006 | 2006 | ||||||||||
Outstanding balance (book value)
|
$ | 4,913,471 | $ | 6,462,610 | $ | 6,519,340 | ||||||
Average loan size
|
344 | 304 | 310 | |||||||||
Non-performing loans
|
3.64 | % | 0.90 | % | 1.09 | % | ||||||
Estimated average life in years(1)
|
3.5 | 2.4 | 2.6 | |||||||||
Estimated average net duration in month(2)
|
2.2 | (1.0 | ) | (3.5 | ) | |||||||
Annualized yield
|
6.32 | % | 6.00 | % | 6.01 | % | ||||||
Percent of loans with active prepayment penalty
|
34 | % | 34 | % | 34 | % | ||||||
Fixed-rate mortgages
|
6 | % | 5 | % | 5 | % | ||||||
Intermediate term fixed-rate loans
|
16 | % | 14 | % | 15 | % | ||||||
Interest-only loans
|
54 | % | 61 | % | 60 | % | ||||||
Pay option ARMs
|
22 | % | 18 | % | 18 | % | ||||||
Other
|
2 | % | 2 | % | 2 | % | ||||||
Additional Information:
|
||||||||||||
Average FICO score
|
712 | 716 | 716 | |||||||||
Original average LTV ratio
|
73 | % | 73 | % | 73 | % | ||||||
Current average LTV ratio(3)
|
70 | % | 59 | % | 61 | % | ||||||
Geographic distribution of top five states:
|
||||||||||||
Southern California
|
33 | % | 32 | % | 32 | % | ||||||
Northern California
|
22 | % | 20 | % | 20 | % | ||||||
Total California
|
55 | % | 52 | % | 52 | % | ||||||
Florida
|
6 | % | 6 | % | 6 | % | ||||||
New York
|
5 | % | 4 | % | 4 | % | ||||||
Virginia
|
3 | % | 3 | % | 3 | % | ||||||
Arizona
|
3 | % | 3 | % | 3 | % | ||||||
Other
|
28 | % | 32 | % | 32 | % | ||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
(1) | Represents the estimated length of time, on average, the SFR loan portfolio will remain outstanding based on our estimates for prepayments. | |
(2) | Average net duration measures the expected change in the value of a financial instrument in response to changes in interest rates, taking into consideration the impact of the related hedges. The negative net duration implies an increase in value as rates rise while the positive net duration implies a decrease in value. | |
(3) | Current average LTV ratio is estimated based on the Office of Federal Housing Enterprise Oversight House Price Index Metropolitan Statistical Area data for the second quarter of 2007 on a loan level basis. |
26
September 30, |
September 30, |
December 31, |
||||||||||
2007 | 2006 | 2006 | ||||||||||
Outstanding balance (book value)
|
$ | 1,509,125 | $ | 765,760 | $ | 656,714 | ||||||
Total commitments(1)
|
3,149,353 | 2,115,407 | 2,211,298 | |||||||||
Average spread over prime
|
1.23 | % | 1.17 | % | 1.39 | % | ||||||
Average FICO score
|
729 | 736 | 737 | |||||||||
Average CLTV ratio(2)
|
77 | % | 77 | % | 77 | % |
Average Loan |
Current |
30+ Days |
||||||||||||||||||
September 30, 2007 |
Outstanding |
Commitment |
Average Spread |
Average |
Delinquency |
|||||||||||||||
CLTV Ratio
|
Balance | Balance | Over Prime | FICO | Percentage(3) | |||||||||||||||
96% to 100%
|
$ | 90,729 | $ | 87 | 2.45 | % | 698 | 5.59 | % | |||||||||||
91% to 95%
|
285,029 | 92 | 1.77 | % | 716 | 2.70 | % | |||||||||||||
81% to 90%
|
521,551 | 81 | 1.64 | % | 711 | 2.29 | % | |||||||||||||
71% to 80%
|
340,373 | 138 | 0.52 | % | 737 | 1.50 | % | |||||||||||||
70% or less
|
271,443 | 143 | 0.37 | % | 747 | 0.92 | % | |||||||||||||
Total
|
$ | 1,509,125 | 109 | 1.23 | % | 729 | 2.14 | % | ||||||||||||
September 30, 2006 CLTV Ratio |
||||||||||||||||||||
96% to 100%
|
$ | 80,904 | $ | 116 | 2.05 | % | 731 | 3.03 | % | |||||||||||
91% to 95%
|
99,220 | 99 | 2.10 | % | 713 | 0.62 | % | |||||||||||||
81% to 90%
|
304,942 | 92 | 1.48 | % | 718 | 0.92 | % | |||||||||||||
71% to 80%
|
161,165 | 165 | 0.35 | % | 745 | 0.50 | % | |||||||||||||
70% or less
|
119,529 | 158 | 0.15 | % | 752 | 0.83 | % | |||||||||||||
Total
|
$ | 765,760 | 126 | 1.17 | % | 736 | 1.00 | % | ||||||||||||
(1) | On funded loans. | |
(2) | The CLTV ratio combines the LTV on both the first mortgage loan and the HELOC. | |
(3) | 30+ days delinquency include loans that are 30 days or more past the due date including loans in foreclosure. |
27
September 30, |
September 30, |
December 31, |
||||||||||
2007 | 2006 | 2006 | ||||||||||
Outstanding balance (book value)
|
$ | 2,658,292 | $ | 2,271,995 | $ | 2,276,133 | ||||||
Total commitments
|
4,044,659 | 3,694,295 | 3,600,454 | |||||||||
Average loan commitment
|
478 | 477 | 474 | |||||||||
Non-performing loans
|
2.02 | % | 0.82 | % | 1.14 | % | ||||||
Fixed-rate loans
|
39 | % | 80 | % | 71 | % | ||||||
Adjustable-rate loans
|
61 | % | 20 | % | 29 | % | ||||||
Additional Information:
|
||||||||||||
Average LTV ratio(1)
|
74 | % | 73 | % | 73 | % | ||||||
Average FICO score
|
721 | 713 | 718 | |||||||||
Geographic distribution of top five states:
|
||||||||||||
Southern California
|
29 | % | 28 | % | 28 | % | ||||||
Northern California
|
13 | % | 15 | % | 15 | % | ||||||
Total California
|
42 | % | 43 | % | 43 | % | ||||||
Florida
|
7 | % | 9 | % | 9 | % | ||||||
Washington
|
4 | % | 4 | % | 4 | % | ||||||
New York
|
4 | % | 4 | % | 4 | % | ||||||
Arizona
|
4 | % | 3 | % | 3 | % | ||||||
Other
|
39 | % | 37 | % | 37 | % | ||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
(1) | The average LTV ratio is based on the estimated appraised value of the completed project compared to the commitment amount at the date indicated. |
28
• | Land acquisition and development loans: This category of 55 loans totals $372 million in outstanding balances, of which three loans totaling $21 million are non-accrual and an additional seven loans at $86 million were considered classified. | |
• | Land acquisition, development and construction loans: This category of 179 loans totals $803 million in outstanding balances, of which 6 loans totaling $85 million are non-accrual and an additional 20 loans at $138 million were considered classified assets at quarter-end. |
29
September 30, |
September 30, |
December 31, |
||||||||||
2007 | 2006 | 2006 | ||||||||||
Outstanding balance (book value)
|
$ | 1,175,473 | $ | 1,124,330 | $ | 1,144,835 | ||||||
Total commitments
|
1,783,395 | 2,093,345 | 2,010,727 | |||||||||
Average loan commitments
|
8,574 | 11,135 | 10,810 | |||||||||
Percentage of homes under construction or completed that are sold
|
34 | % | 41 | % | 37 | % | ||||||
Median sales price of homes
|
413 | 403 | 420 | |||||||||
Non-performing loans
|
9.03 | % | 0.00 | % | 0.78 | % | ||||||
Allowance for loan losses as a percentage of book value
|
8.48 | % | 1.72 | % | 1.79 | % | ||||||
Additional Information:
|
||||||||||||
Average LTV ratio(1)
|
76 | % | 73 | % | 73 | % | ||||||
Geographic distribution of top five states:
|
||||||||||||
Southern California
|
37 | % | 38 | % | 41 | % | ||||||
Northern California
|
29 | % | 19 | % | 19 | % | ||||||
Total California
|
66 | % | 57 | % | 60 | % | ||||||
Florida
|
11 | % | 12 | % | 11 | % | ||||||
Illinois
|
6 | % | 10 | % | 9 | % | ||||||
Oregon
|
4 | % | 6 | % | 6 | % | ||||||
Arizona
|
3 | % | 5 | % | 4 | % | ||||||
Other
|
10 | % | 10 | % | 10 | % | ||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
(1) | The average LTV ratio is based on the estimated appraised value of the completed project compared to the commitment amount at the date indicated. |
30
Eliminations | ||||||||||||||||||||||||
Interdivision |
||||||||||||||||||||||||
Interdivision |
Hedge |
|||||||||||||||||||||||
Deposits | Treasury | Loan Sales(1) | Transactions | Other | Total | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Three Months Ended September 30, 2007
|
||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||
Net interest income
|
$ | — | $ | 13,015 | $ | 10,422 | $ | — | $ | 6,463 | $ | 29,900 | ||||||||||||
Provision for loan losses
|
— | — | — | — | — | — | ||||||||||||||||||
Gain (loss) on sale of loans
|
— | — | (17,124 | ) | (43,884 | ) | 3,342 | (57,666 | ) | |||||||||||||||
Service fee income (expense)
|
— | — | — | 43,884 | (15,799 | ) | 28,085 | |||||||||||||||||
Gain (loss) on MBS
|
— | — | — | — | 1,269 | 1,269 | ||||||||||||||||||
Other income (expense)
|
1,152 | 237 | — | — | (491 | ) | 898 | |||||||||||||||||
Net revenues (expense)
|
1,152 | 13,252 | (6,702 | ) | — | (5,216 | ) | 2,486 | ||||||||||||||||
Operating expenses
|
7,314 | 15,247 | — | — | (5,216 | ) | 17,345 | |||||||||||||||||
Deferral of expenses under SFAS 91
|
— | — | — | — | — | — | ||||||||||||||||||
Pre-tax earnings (loss)
|
(6,162 | ) | (1,995 | ) | (6,702 | ) | — | — | (14,859 | ) | ||||||||||||||
Net earnings (loss)
|
$ | (3,753 | ) | $ | (1,215 | ) | $ | (4,049 | ) | $ | — | $ | — | $ | (9,017 | ) | ||||||||
Three Months Ended September 30, 2006
|
||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||
Net interest income
|
$ | — | $ | 8,912 | $ | 8,290 | $ | — | $ | 4,832 | $ | 22,034 | ||||||||||||
Provision for loan losses
|
— | — | — | — | — | — | ||||||||||||||||||
Gain (loss) on sale of loans
|
— | — | (22,996 | ) | — | — | (22,996 | ) | ||||||||||||||||
Service fee income (expense)
|
— | — | 422 | — | (8,894 | ) | (8,472 | ) | ||||||||||||||||
Gain (loss) on MBS
|
— | — | 1,370 | — | — | 1,370 | ||||||||||||||||||
Other income (expense)
|
896 | 150 | — | — | (1,656 | ) | (610 | ) | ||||||||||||||||
Net revenues (expense)
|
896 | 9,062 | (12,914 | ) | — | (5,718 | ) | (8,674 | ) | |||||||||||||||
Operating expenses
|
7,173 | 11,121 | — | — | (5,357 | ) | 12,937 | |||||||||||||||||
Deferral of expenses under SFAS 91
|
— | — | — | — | (718 | ) | (718 | ) | ||||||||||||||||
Pre-tax earnings (loss)
|
(6,277 | ) | (2,059 | ) | (12,914 | ) | — | 357 | (20,893 | ) | ||||||||||||||
Net earnings (loss)
|
$ | (3,823 | ) | $ | (1,254 | ) | $ | (7,865 | ) | $ | — | $ | (199 | ) | $ | (13,141 | ) | |||||||
(1) | Includes loans sold of $1.6 billion and $3.0 billion for the three months ended September 30, 2007 and 2006, respectively. |
31
32
Capital Ratios | ||||||||||||||||
Tangible | Tier 1 Core | Tier 1 Risk-Based | Total Risk-Based | |||||||||||||
September 30, 2007: | ||||||||||||||||
As reported pre-subprime risk-weighting
|
7.48 | % | 7.48 | % | 11.26 | % | 12.01 | % | ||||||||
Adjusted for additional subprime risk weighting
|
7.48 | % | 7.48 | % | 11.06 | % | 11.79 | % | ||||||||
Well-capitalized minimum
|
2.00 | % | 5.00 | % | 6.00 | % | 10.00 | % | ||||||||
Excess over well-capitalized minimum requirement
|
$ | 1,818,528 | $ | 823,114 | $ | 1,018,656 | $ | 360,630 |
33
34
Total Assets | Core | Risk-Based | ||||||||||||||||||||||||||||||||||||||
% of |
Avg. |
% of |
Avg. |
% of |
||||||||||||||||||||||||||||||||||||
Average |
Total |
Allocated |
Total |
Capital/ |
Allocated |
Total |
Capital/ |
|||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2007
|
Assets | Assets | Capital | Capital | Assets | ROE | Capital | Capital | Assets | ROE | ||||||||||||||||||||||||||||||
Mortgage Banking:
|
||||||||||||||||||||||||||||||||||||||||
Consumer Direct
|
$ | 124,560 | 0.3 | % | $ | 4,982 | 0.2 | % | 4.0 | % | (14 | )% | $ | 6,053 | 0.3 | % | 4.9 | % | (11 | )% | ||||||||||||||||||||
Retail
|
227,631 | 0.6 | % | 9,105 | 0.4 | % | 4.0 | % | (445 | )% | 17,939 | 0.9 | % | 7.9 | % | (224 | )% | |||||||||||||||||||||||
Wholesale
|
5,623,117 | 15.3 | % | 224,925 | 10.9 | % | 4.0 | % | (77 | )% | 275,232 | 13.4 | % | 4.9 | % | (62 | )% | |||||||||||||||||||||||
Correspondent
|
1,261,039 | 3.4 | % | 50,442 | 2.5 | % | 4.0 | % | (112 | )% | 64,199 | 3.1 | % | 5.1 | % | (87 | )% | |||||||||||||||||||||||
Conduit
|
4,958,140 | 13.5 | % | 198,326 | 9.7 | % | 4.0 | % | (119 | )% | 236,397 | 11.5 | % | 4.8 | % | (99 | )% | |||||||||||||||||||||||
Total Mortgage Professionals Group
|
12,069,927 | 32.8 | % | 482,798 | 23.5 | % | 4.0 | % | (105 | )% | 593,767 | 28.9 | % | 4.9 | % | (84 | )% | |||||||||||||||||||||||
Financial Freedom
|
1,263,677 | 3.4 | % | 146,331 | 7.1 | % | 11.6 | % | 8 | % | 135,741 | 6.6 | % | 10.7 | % | 8 | % | |||||||||||||||||||||||
Total Production Divisions
|
13,458,164 | 36.5 | % | 634,111 | 30.8 | % | 4.7 | % | (78 | )% | 735,561 | 35.8 | % | 5.5 | % | (67 | )% | |||||||||||||||||||||||
Mortgage Servicing Rights
|
3,714,352 | 10.1 | % | 243,378 | 11.8 | % | 6.6 | % | 141 | % | 358,217 | 17.4 | % | 9.6 | % | 97 | % | |||||||||||||||||||||||
Servicing/Customer Retention
|
887,211 | 2.4 | % | 35,488 | 1.7 | % | 4.0 | % | (26 | )% | 41,020 | 2.0 | % | 4.6 | % | (22 | )% | |||||||||||||||||||||||
Total Mortgage Servicing
|
4,601,563 | 12.5 | % | 278,866 | 13.5 | % | 6.1 | % | 120 | % | 399,237 | 19.4 | % | 8.7 | % | 85 | % | |||||||||||||||||||||||
Mortgage Bank Overhead
|
158,231 | 0.4 | % | 6,330 | 0.3 | % | 4.0 | % | N/A | 17,315 | 0.8 | % | 10.9 | % | N/A | |||||||||||||||||||||||||
Total Consumer Mortgage Banking
|
18,217,958 | 49.4 | % | 919,307 | 44.6 | % | 5.0 | % | (22 | )% | 1,152,113 | 56.0 | % | 6.3 | % | (17 | )% | |||||||||||||||||||||||
Commercial Mortgage Banking
|
68,200 | 0.2 | % | 2,728 | 0.1 | % | 4.0 | % | (207 | )% | 5,551 | 0.3 | % | 8.1 | % | (100 | )% | |||||||||||||||||||||||
Total Mortgage Banking
|
18,286,158 | 49.6 | % | 922,035 | 44.7 | % | 5.0 | % | (23 | )% | 1,157,664 | 56.3 | % | 6.3 | % | (17 | )% | |||||||||||||||||||||||
Thrift:
|
||||||||||||||||||||||||||||||||||||||||
Investment grade securities
|
4,628,416 | 12.6 | % | 185,137 | 9.0 | % | 4.0 | % | (12 | )% | 88,247 | 4.3 | % | 1.9 | % | (29 | )% | |||||||||||||||||||||||
Non-investment grade and residuals
|
448,297 | 1.2 | % | 17,932 | 0.9 | % | 4.0 | % | (733 | )% | 229,011 | 11.1 | % | 51.1 | % | (54 | )% | |||||||||||||||||||||||
Total Mortgage-Backed Securities
|
5,076,713 | 13.8 | % | 203,069 | 9.9 | % | 4.0 | % | (76 | )% | 317,258 | 15.4 | % | 6.2 | % | (47 | )% | |||||||||||||||||||||||
Consumer lending portfolio Prime SFR mortgage loans | 5,483,500 | 14.9 | % | 219,340 | 10.7 | % | 4.0 | % | (12 | )% | 199,024 | 9.7 | % | 3.6 | % | (13 | )% | |||||||||||||||||||||||
Home equity division
|
1,745,687 | 4.7 | % | 69,989 | 3.4 | % | 4.0 | % | (120 | )% | 124,106 | 6.0 | % | 7.1 | % | (66 | )% | |||||||||||||||||||||||
Total Consumer Loans
|
7,229,187 | 19.6 | % | 289,329 | 14.1 | % | 4.0 | % | (38 | )% | 323,130 | 15.7 | % | 4.5 | % | (34 | )% | |||||||||||||||||||||||
Consumer construction division
|
2,976,162 | 8.1 | % | 119,046 | 5.8 | % | 4.0 | % | 9 | % | 151,704 | 7.4 | % | 5.1 | % | 8 | % | |||||||||||||||||||||||
Total Consumer Thrift Activities
|
10,205,349 | 27.7 | % | 408,375 | 19.9 | % | 4.0 | % | (24 | )% | 474,834 | 23.1 | % | 4.7 | % | (20 | )% | |||||||||||||||||||||||
Home builder division
|
1,249,004 | 3.4 | % | 49,960 | 2.4 | % | 4.0 | % | (340 | )% | 104,399 | 5.1 | % | 8.4 | % | (161 | )% | |||||||||||||||||||||||
Warehouse Lending
|
182,644 | 0.5 | % | 7,306 | 0.4 | % | 4.0 | % | 17 | % | 15,211 | 0.7 | % | 8.3 | % | 10 | % | |||||||||||||||||||||||
Total Commercial Thrift Activities
|
1,431,648 | 3.9 | % | 57,266 | 2.8 | % | 4.0 | % | (295 | )% | 119,610 | 5.8 | % | 8.4 | % | (139 | )% | |||||||||||||||||||||||
Discontinued products
|
26,574 | 0.1 | % | 1,063 | 0.1 | % | 4.0 | % | (27 | )% | 2,771 | 0.1 | % | 10.4 | % | (8 | )% | |||||||||||||||||||||||
Total Thrift Activities
|
16,740,284 | 45.5 | % | 669,773 | 32.7 | % | 4.0 | % | (63 | )% | 914,473 | 44.4 | % | 5.5 | % | (45 | )% | |||||||||||||||||||||||
Consumer Bank — Deposits
|
59,589 | 0.2 | % | 2,384 | 0.1 | % | 4.0 | % | N/A | 11,335 | 0.6 | % | 19.0 | % | N/A | |||||||||||||||||||||||||
Treasury
|
— | — | — | — | N/A | N/A | — | — | N/A | N/A | ||||||||||||||||||||||||||||||
Eliminations
|
— | — | — | — | N/A | N/A | — | — | N/A | N/A | ||||||||||||||||||||||||||||||
Total Operating Activities
|
35,086,031 | 95.3 | % | 1,594,192 | 77.5 | % | 4.5 | % | (42 | )% | 2,083,472 | 101.3 | % | 5.9 | % | (31 | )% | |||||||||||||||||||||||
Corporate overhead
|
1,746,999 | 4.7 | % | 460,189 | 22.5 | % | 26.3 | % | N/A | (29,091 | ) | (1.3 | )% | (1.7 | )% | N/A | ||||||||||||||||||||||||
Total Company
|
$ | 36,833,030 | 100.0 | % | $ | 2,054,381 | 100.0 | % | 5.6 | % | (39 | )% | $ | 2,054,381 | 100.0 | % | 5.6 | % | (39 | )% | ||||||||||||||||||||
35
“Reserve” |
||||||||||||||
Credit Risk Area
|
Reserve Type
|
Balance | Balance | UPB | ||||||||||
Mortgage Banking:
|
||||||||||||||
Loans held for sale(1)
|
Market valuation reserve | $ | 14,022 | $ | 298 | $ | 14,081 | |||||||
Repurchase risk(2)
|
Secondary market reserve | N/A | 57 | 173,915 | ||||||||||
Thrift:
|
||||||||||||||
Loans held for investment(3)
|
Allowance for loan losses | 8,553 | 162 | 8,495 | ||||||||||
Non-investment grade and residual securities(4)
|
Loss assumption in valuations | 416 | 835 | 22,770 | ||||||||||
Foreclosed Assets
|
Reduction in book value due to liquidation costs and/or property value deterioration |
123 | 36 | 159 |
(1) | Risks include borrower’s credit deteriorating and adversely impacting loan saleability; further deterioration of credit quality of loans previously repurchased for repurchase/warranty issues or through called deals; and actual losses exceeding losses that are assumed in our valuations. The reserve includes credit marks on delinquent loans plus credit related marks on performing loans. | |
(2) | Risks include repurchase of impaired loans due to early payment default (“EPD”) or other repurchase and warranty violations beyond the amount reserved at time of sale. | |
(3) | Risk includes credit losses exceeding the risk priced for in the allowance. | |
(4) | Reserve balance for non-investment grade and residual securities represents the expected remaining cumulative losses. |
36
September 30, |
September 30, |
December 31, |
||||||||||
2007 | 2006 | 2006 | ||||||||||
Non-performing loans HFI
|
$ | 339,530 | $ | 78,831 | $ | 108,483 | ||||||
Non-performing loans HFS
|
365,794 | 42,717 | 54,347 | |||||||||
Total non-performing loans
|
705,324 | 121,548 | 162,830 | |||||||||
Foreclosed assets
|
123,330 | 18,498 | 21,638 | |||||||||
Total non-performing assets
|
$ | 828,654 | $ | 140,046 | $ | 184,468 | ||||||
Total non-performing assets to total assets
|
2.46 | % | 0.51 | % | 0.63 | % | ||||||
September 30, |
September 30, |
December 31, |
||||||||||
2007 | 2006 | 2006 | ||||||||||
SFR mortgage loans
|
$ | 176,107 | $ | 54,233 | $ | 66,360 | ||||||
Consumer construction division
|
52,901 | 18,693 | 25,957 | |||||||||
Homebuilder division
|
106,089 | — | 8,981 | |||||||||
Other(1)
|
4,433 | 5,905 | 7,185 | |||||||||
Total non-performing loans HFI
|
$ | 339,530 | $ | 78,831 | $ | 108,483 | ||||||
Allowance for loan losses to non-performing loans HFI
|
48 | % | 77 | % | 58 | % | ||||||
(1) | Includes loans from the home equity division, discontinued products and the warehouse lending division. |
37
Total |
||||||||||||
Allowance |
Reserves as a |
|||||||||||
for Loan |
Percentage of |
|||||||||||
By Division
|
Book Value | Losses | Book Value | |||||||||
SFR mortgage loans HFI division
|
$ | 4,883,392 | $ | 41,265 | 0.85 | % | ||||||
Consumer construction division
|
2,395,361 | 13,738 | 0.57 | % | ||||||||
Homebuilder division
|
1,175,473 | 99,638 | 8.48 | % | ||||||||
Other(1)
|
98,403 | 7,127 | 7.24 | % | ||||||||
Total HFI portfolio at September 30, 2007
|
$ | 8,552,629 | $ | 161,768 | 1.89 | % | ||||||
Total HFI portfolio at December 31, 2006
|
$ | 10,177,209 | $ | 62,386 | 0.61 | % | ||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Balance, beginning of period
|
$ | 76,856 | $ | 57,912 | $ | 62,386 | $ | 55,168 | ||||||||
Allowance transferred to loans HFS
|
— | — | (1,988 | ) | — | |||||||||||
Provision for loan losses
|
98,279 | 4,988 | 126,170 | 11,040 | ||||||||||||
Charge-offs:
|
||||||||||||||||
SFR mortgage loans HFI division
|
(7,170 | ) | (600 | ) | (13,149 | ) | (1,405 | ) | ||||||||
Consumer construction division
|
(4,816 | ) | (754 | ) | (7,950 | ) | (2,005 | ) | ||||||||
Other(1)
|
(1,816 | ) | (1,274 | ) | (6,174 | ) | (3,102 | ) | ||||||||
Total charge-offs
|
(13,802 | ) | (2,628 | ) | (27,273 | ) | (6,512 | ) | ||||||||
Recoveries:
|
||||||||||||||||
SFR mortgage loans HFI division
|
181 | 75 | 560 | 313 | ||||||||||||
Consumer construction division
|
15 | 219 | 65 | 231 | ||||||||||||
Other(1)
|
239 | 469 | 1,848 | 795 | ||||||||||||
Total recoveries
|
435 | 763 | 2,473 | 1,339 | ||||||||||||
Total charge-offs, net of recoveries
|
(13,367 | ) | (1,865 | ) | (24,800 | ) | (5,173 | ) | ||||||||
Balance, end of period
|
$ | 161,768 | $ | 61,035 | $ | 161,768 | $ | 61,035 | ||||||||
Annualized charge-offs to average loans HFI
|
0.62 | % | 0.08 | % | 0.36 | % | 0.08 | % |
(1) | Includes loans from the home equity, discontinued product and warehouse lending divisions. |
38
September 30, |
September 30, |
December 31, |
||||||||||
2007 | 2006 | 2006 | ||||||||||
Loans HFS before market valuation reserves
|
$ | 14,361,177 | $ | 8,368,626 | $ | 9,507,307 | ||||||
Market valuation reserves
|
(338,943 | ) | (27,704 | ) | (39,464 | ) | ||||||
Net loans HFS portfolio
|
$ | 14,022,234 | $ | 8,340,922 | $ | 9,467,843 | ||||||
Market valuation reserves as a percentage of gross loans HFS
|
2.36 | % | 0.33 | % | 0.42 | % | ||||||
Non-performing loans HFS before market valuation reserves
|
$ | 487,314 | $ | 63,422 | $ | 78,238 | ||||||
Market valuation reserves
|
(121,520 | ) | (20,705 | ) | (23,891 | ) | ||||||
Net non-performing loans HFS
|
$ | 365,794 | $ | 42,717 | $ | 54,347 | ||||||
Non-performing loans held for sale as a percentage of net loans
HFS portfolio
|
2.61 | % | 0.51 | % | 0.57 | % | ||||||
39
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Loans sold:
|
||||||||||||||||
GSEs and whole loans
|
$ | 8,804 | $ | 11,589 | $ | 36,765 | $ | 32,227 | ||||||||
Securitization trusts
|
4,205 | 7,919 | 20,974 | 23,405 | ||||||||||||
Total
|
$ | 13,009 | $ | 19,508 | $ | 57,739 | $ | 55,632 | ||||||||
Total repurchases(1)
|
$ | 118 | $ | 57 | $ | 562 | $ | 119 | ||||||||
Repurchases as a percentage of total loans sold during the period
|
0.91 | % | 0.29 | % | 0.97 | % | 0.21 | % |
(1) | Amounts exclude repurchases that are administrative in nature and generally are re-sold immediately at little or no loss. |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Balance, beginning of period
|
$ | 46,614 | $ | 35,402 | $ | 33,932 | $ | 27,638 | ||||||||
Additions/provisions
|
32,008 | 9,374 | 87,913 | 24,147 | ||||||||||||
Actual losses/mark-to-market
|
(21,909 | ) | (14,639 | ) | (65,773 | ) | (22,423 | ) | ||||||||
Recoveries on previous claims
|
404 | 53 | 1,045 | 828 | ||||||||||||
Balance, end of period
|
$ | 57,117 | $ | 30,190 | $ | 57,117 | $ | 30,190 | ||||||||
40
September 30, |
September 30, |
June 30, |
||||||||||
2007 | 2006 | 2007 | ||||||||||
Non-investment Grade and Residual Securities:
|
||||||||||||
Fair market value
|
$ | 416 | $ | 340 | $ | 443 | ||||||
As a percentage of tier 1 core capital
|
17 | % | 17 | % | 18 | % | ||||||
UPB of underlying collateral
|
$ | 22,770 | 11,575 | $ | 21,002 | |||||||
Credit reserves embedded in value
|
$ | 835 | 432 | $ | 698 | |||||||
Additions to credit reserves
|
$ | 228 | 61 | $ | 126 | |||||||
Net charge-off (losses)
|
$ | 91 | 7 | $ | 49 | |||||||
Credit reserves/NPAs
|
56 | % | 62 | % | 91 | % |
41
September 30, |
September 30, |
December 31, |
||||||||||
2007 | 2006 | 2006 | ||||||||||
Deposits
|
$ | 16,774,638 | $ | 10,111,019 | $ | 10,898,006 | ||||||
Advances from FHLB
|
11,094,800 | 9,332,800 | 10,412,800 | |||||||||
Other borrowings:
|
||||||||||||
Asset-backed commercial paper
|
1,504,678 | 499,244 | 2,114,508 | |||||||||
Loans and securities sold under agreements to repurchase
|
— | 2,874,048 | 1,405,505 | |||||||||
HELOC notes payable
|
243,019 | 807,932 | 659,283 | |||||||||
Trust preferred debentures
|
441,232 | 412,516 | 456,695 | |||||||||
Other notes payable
|
752 | 1,180 | 1,009 | |||||||||
Total other borrowings
|
2,189,681 | 4,594,920 | 4,637,000 | |||||||||
$ | 30,059,119 | $ | 24,038,739 | $ | 25,947,806 | |||||||
42
43
44
Three Months Ended | ||||||||||||||||||||||||||||||||||||
September 30, 2007 | September 30, 2006 | June 30, 2007 | ||||||||||||||||||||||||||||||||||
Average |
Yield/ |
Average |
Yield/ |
Average |
Yield/ |
|||||||||||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||||||
Securities
|
$ | 5,668,118 | $ | 101,901 | 7.13 | % | $ | 4,889,155 | $ | 86,212 | 7.00 | % | $ | 5,221,396 | $ | 95,537 | 7.34 | % | ||||||||||||||||||
Loans held for sale
|
16,019,841 | 283,882 | 7.03 | % | 10,825,266 | 196,924 | 7.22 | % | 16,208,651 | 289,262 | 7.16 | % | ||||||||||||||||||||||||
Mortgage loans held for investment
|
5,528,258 | 88,075 | 6.32 | % | 6,079,803 | 92,005 | 6.00 | % | 5,615,519 | 88,622 | 6.33 | % | ||||||||||||||||||||||||
Builder construction loans
|
826,952 | 18,186 | 8.72 | % | 773,132 | 21,191 | 10.87 | % | 815,861 | 20,209 | 9.94 | % | ||||||||||||||||||||||||
Consumer construction loans
|
2,284,744 | 45,788 | 7.95 | % | 2,085,453 | 38,292 | 7.28 | % | 2,190,732 | 44,519 | 8.15 | % | ||||||||||||||||||||||||
Investment in Federal Home Loan Bank stock and other
|
1,366,645 | 20,019 | 5.81 | % | 854,208 | 12,127 | 5.63 | % | 1,202,869 | 16,328 | 5.44 | % | ||||||||||||||||||||||||
Total interest-earning assets
|
31,694,558 | 557,851 | 6.98 | % | 25,507,017 | 446,751 | 6.95 | % | 31,255,028 | 554,477 | 7.12 | % | ||||||||||||||||||||||||
Mortgage servicing assets
|
2,375,127 | 1,552,295 | 2,153,439 | |||||||||||||||||||||||||||||||||
Other assets
|
2,763,345 | 2,080,669 | 2,428,034 | |||||||||||||||||||||||||||||||||
Total assets
|
$ | 36,833,030 | $ | 29,139,981 | $ | 35,836,501 | ||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity
|
||||||||||||||||||||||||||||||||||||
Interest-bearing deposits
|
$ | 12,943,759 | 170,540 | 5.23 | % | $ | 9,208,481 | 113,758 | 4.90 | % | $ | 10,761,811 | 138,618 | 5.17 | % | |||||||||||||||||||||
Advances from Federal Home Loan Bank
|
13,876,996 | 183,192 | 5.24 | % | 9,783,887 | 115,769 | 4.69 | % | 14,059,734 | 184,175 | 5.25 | % | ||||||||||||||||||||||||
Other borrowings
|
4,177,567 | 61,941 | 5.88 | % | 5,682,601 | 80,513 | 5.62 | % | 5,737,455 | 82,440 | 5.76 | % | ||||||||||||||||||||||||
Total interest-bearing liabilities
|
30,998,322 | 415,673 | 5.32 | % | 24,674,969 | 310,040 | 4.99 | % | 30,559,000 | 405,233 | 5.32 | % | ||||||||||||||||||||||||
Other liabilities
|
3,780,327 | 2,593,633 | 3,199,927 | |||||||||||||||||||||||||||||||||
Total liabilities
|
34,778,649 | 27,268,602 | 33,758,927 | |||||||||||||||||||||||||||||||||
Shareholders’ equity
|
2,054,381 | 1,871,379 | 2,077,574 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$ | 36,833,030 | $ | 29,139,981 | $ | 35,836,501 | ||||||||||||||||||||||||||||||
Net interest income
|
$ | 142,178 | $ | 136,711 | $ | 149,244 | ||||||||||||||||||||||||||||||
Net interest spread(1)
|
1.66 | % | 1.96 | % | 1.80 | % | ||||||||||||||||||||||||||||||
Net interest margin(2)
|
1.78 | % | 2.13 | % | 1.92 | % | ||||||||||||||||||||||||||||||
(1) | Net interest spread calculated as the yield on total average interest-earnings assets less the yield on total average interest-bearing liabilities. | |
(2) | Net interest margin calculated as annualized net interest income divided by total average interest-earning assets. |
45
Nine Months Ended | ||||||||||||||||||||||||
September 30, 2007 | September 30, 2006 | |||||||||||||||||||||||
Average |
Yield |
Average |
Yield |
|||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Securities
|
$ | 5,423,462 | $ | 289,717 | 7.14 | % | $ | 4,541,302 | $ | 233,693 | 6.88 | % | ||||||||||||
Loans held for sale
|
15,562,904 | 825,301 | 7.09 | % | 10,650,644 | 551,564 | 6.92 | % | ||||||||||||||||
Mortgage loans held for investment
|
6,081,216 | 285,691 | 6.28 | % | 6,014,437 | 260,276 | 5.79 | % | ||||||||||||||||
Builder construction loans
|
810,831 | 58,148 | 9.59 | % | 726,227 | 55,775 | 10.27 | % | ||||||||||||||||
Consumer construction loans
|
2,211,740 | 133,953 | 8.10 | % | 1,967,259 | 102,794 | 6.99 | % | ||||||||||||||||
Investment in Federal Home Loan Bank stock and other
|
1,238,677 | 52,195 | 5.63 | % | 834,396 | 32,706 | 5.24 | % | ||||||||||||||||
Total interest-earning assets
|
31,328,830 | 1,645,005 | 7.02 | % | 24,734,265 | 1,236,808 | 6.69 | % | ||||||||||||||||
Mortgage servicing assets
|
2,133,909 | 1,377,586 | ||||||||||||||||||||||
Other assets
|
2,546,210 | 1,695,257 | ||||||||||||||||||||||
Total assets
|
$ | 36,008,949 | $ | 27,807,108 | ||||||||||||||||||||
Liabilities and Shareholders’ Equity
|
||||||||||||||||||||||||
Interest-bearing deposits
|
$ | 11,356,004 | 441,225 | 5.19 | % | $ | 8,255,056 | 280,841 | 4.55 | % | ||||||||||||||
Advances from Federal Home Loan Bank
|
13,863,474 | 541,896 | 5.23 | % | 9,839,691 | 329,846 | 4.48 | % | ||||||||||||||||
Other borrowings
|
5,439,668 | 235,392 | 5.79 | % | 5,844,576 | 232,046 | 5.31 | % | ||||||||||||||||
Total interest-bearing liabilities
|
30,659,146 | 1,218,513 | 5.31 | % | 23,939,323 | 842,733 | 4.71 | % | ||||||||||||||||
Other liabilities
|
3,294,773 | 2,129,600 | ||||||||||||||||||||||
Total liabilities
|
33,953,919 | 26,068,923 | ||||||||||||||||||||||
Shareholders’ equity
|
2,055,030 | 1,738,185 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$ | 36,008,949 | $ | 27,807,108 | ||||||||||||||||||||
Net interest income
|
$ | 426,492 | $ | 394,075 | ||||||||||||||||||||
Net interest spread
|
1.71 | % | 1.98 | % | ||||||||||||||||||||
Net interest margin
|
1.82 | % | 2.13 | % | ||||||||||||||||||||
46
Increase/(Decrease) Due to | ||||||||||||||||
Volume(1) | Rate(2) | Mix(3) | Total Change | |||||||||||||
Three Months Ended September 30, 2007 vs. 2006 Interest income: | ||||||||||||||||
Securities
|
$ | 13,736 | $ | 1,685 | $ | 268 | $ | 15,689 | ||||||||
Loans held for sale
|
94,495 | (5,093 | ) | (2,444 | ) | 86,958 | ||||||||||
Mortgage loans held for investment
|
(8,346 | ) | 4,857 | (441 | ) | (3,930 | ) | |||||||||
Builder construction loans
|
1,475 | (4,189 | ) | (291 | ) | (3,005 | ) | |||||||||
Consumer construction loans
|
3,659 | 3,502 | 335 | 7,496 | ||||||||||||
Investment in Federal Home Loan Bank stock and other
|
7,275 | 386 | 231 | 7,892 | ||||||||||||
Total interest income
|
112,294 | 1,148 | (2,342 | ) | 111,100 | |||||||||||
Interest expense:
|
||||||||||||||||
Interest-bearing deposits
|
46,144 | 7,568 | 3,070 | 56,782 | ||||||||||||
Advances from Federal Home Loan Bank
|
48,432 | 13,389 | 5,602 | 67,423 | ||||||||||||
Other borrowings
|
(21,324 | ) | 3,743 | (991 | ) | (18,572 | ) | |||||||||
Total interest expense
|
73,252 | 24,700 | 7,681 | 105,633 | ||||||||||||
Net interest income
|
$ | 39,042 | $ | (23,552 | ) | $ | (10,023 | ) | $ | 5,467 | ||||||
Increase/(Decrease) Due to | ||||||||||||||||
Volume(1) | Rate(2) | Mix(3) | Total Change | |||||||||||||
Nine Months Ended September 30, 2007 vs. 2006 Interest income: | ||||||||||||||||
Securities
|
$ | 45,395 | $ | 8,900 | $ | 1,729 | $ | 56,024 | ||||||||
Loans held for sale
|
254,391 | 13,240 | 6,106 | 273,737 | ||||||||||||
Mortgage loans held for investment
|
2,890 | 22,278 | 247 | 25,415 | ||||||||||||
Builder construction loans
|
6,498 | (3,694 | ) | (431 | ) | 2,373 | ||||||||||
Consumer construction loans
|
12,775 | 16,352 | 2,032 | 31,159 | ||||||||||||
Investment in Federal Home Loan Bank stock and other
|
15,847 | 2,454 | 1,188 | 19,489 | ||||||||||||
Total interest income
|
337,796 | 59,530 | 10,871 | 408,197 | ||||||||||||
Interest expense:
|
||||||||||||||||
Interest-bearing deposits
|
105,496 | 39,900 | 14,988 | 160,384 | ||||||||||||
Advances from Federal Home Loan Bank
|
134,885 | 54,768 | 22,397 | 212,050 | ||||||||||||
Other borrowings
|
(16,076 | ) | 20,868 | (1,446 | ) | 3,346 | ||||||||||
Total interest expense
|
224,305 | 115,536 | 35,939 | 375,780 | ||||||||||||
Net interest income
|
$ | 113,491 | $ | (56,006 | ) | $ | (25,068 | ) | $ | 32,417 | ||||||
(1) | Changes in volume are calculated by taking changes in average balances multiplied by the prior period’s average interest rate. | |
(2) | Changes in the rate are calculated by taking changes in the average interest rate multiplied by the prior period’s average balance. | |
(3) | Changes in rate/volume (“mix”) are calculated by taking changes in rates times the changes in volume. |
47
Three Months Ended | ||||||||||||||||||||||||||||||||||||
September 30, 2007 | September 30, 2006 | June 30, 2007 | ||||||||||||||||||||||||||||||||||
Average |
Net |
Net |
Average |
Net |
Net |
Average |
Net |
Net |
||||||||||||||||||||||||||||
Earning |
Interest |
Interest |
Earning |
Interest |
Interest |
Earning |
Interest |
Interest |
||||||||||||||||||||||||||||
Assets | Income | Margin | Assets | Income | Margin | Assets | Income | Margin | ||||||||||||||||||||||||||||
By Segment:
|
||||||||||||||||||||||||||||||||||||
Thrift segment and other
|
$ | 17,103 | $ | 103 | 2.39 | % | $ | 15,709 | $ | 99 | 2.50 | % | $ | 16,621 | $ | 95 | 2.29 | % | ||||||||||||||||||
Mortgage banking segment
|
14,592 | 39 | 1.06 | % | 9,798 | 38 | 1.53 | % | 14,634 | 54 | 1.49 | % | ||||||||||||||||||||||||
Total Company
|
$ | 31,695 | $ | 142 | 1.78 | % | $ | 25,507 | $ | 137 | 2.13 | % | $ | 31,255 | $ | 149 | 1.92 | % | ||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||
September 30, 2007 | September 30, 2006 | |||||||||||||||||||||||
Average |
Net |
Net |
Average |
Net |
Net |
|||||||||||||||||||
Earning |
Interest |
Interest |
Earning |
Interest |
Interest |
|||||||||||||||||||
Assets | Income | Margin | Assets | Income | Margin | |||||||||||||||||||
By Segment:
|
||||||||||||||||||||||||
Thrift segment and other
|
$ | 17,029 | $ | 288 | 2.26 | % | $ | 15,201 | $ | 279 | 2.45 | % | ||||||||||||
Mortgage banking segment
|
14,300 | 138 | 1.29 | % | 9,533 | 115 | 1.62 | % | ||||||||||||||||
Total Company
|
$ | 31,329 | $ | 426 | 1.82 | % | $ | 24,734 | $ | 394 | 2.13 | % | ||||||||||||
48
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, |
September 30, |
Percent |
June 30, |
Percent |
September 30, |
September 30, |
Percent |
|||||||||||||||||||||||||
2007 | 2006 | Change | 2007 | Change | 2007 | 2006 | Change | |||||||||||||||||||||||||
Gross MBR margin
|
0.75 | % | 1.16 | % | (35 | )% | 0.91 | % | (18 | )% | 0.96 | % | 1.52 | % | (37 | )% | ||||||||||||||||
MBR margin after hedging(1)
|
0.48 | % | 1.32 | % | (64 | )% | 1.31 | % | (63 | )% | 1.04 | % | 1.47 | % | (29 | )% |
(1) | Before credit costs and SFAS 91 deferred costs. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
||||||||||||||||
2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||
Valuation adjustment due to market changes and external
benchmarking
|
$ | 7,421 | $ | (134,070 | ) | $ | 222,659 | $ | 260,920 | $ | 10,794 | |||||||||
Gain (loss) on financial instruments used to hedge MSRs
|
123,180 | 119,024 | (213,213 | ) | (118,781 | ) | (27,265 | ) | ||||||||||||
Hedge gain (loss) on AAA-rated and agency interest-only
securities
|
8,820 | 4,667 | (14,741 | ) | (6,356 | ) | (8,965 | ) | ||||||||||||
Unrealized gain (loss) on AAA-rated and agency interest-only
securities
|
(4,712 | ) | (8,629 | ) | 10,465 | 7,235 | 4,138 | |||||||||||||
Unrealized gain (loss) on principal-only securities
|
(146 | ) | 5,008 | (4,916 | ) | (4,761 | ) | (1,500 | ) | |||||||||||
Unrealized gain (loss) on prepayment penalty securities
|
(7,666 | ) | 13,250 | (21,658 | ) | (31,528 | ) | 17,907 | ||||||||||||
Net gain (loss) on MSRs, AAA-rated and agency interest-only
securities, and hedges
|
$ | 126,897 | $ | (750 | ) | $ | (21,404 | ) | $ | 106,729 | $ | (4,891 | ) | |||||||
49
50
September 30, 2007 | December 31, 2006 | |||||||||||||||||||||||
Effect of Change in |
Effect of Change in |
|||||||||||||||||||||||
Interest Rates | Interest Rates | |||||||||||||||||||||||
Decrease |
Increase |
Decrease |
Increase |
|||||||||||||||||||||
Fair Value | 100 bps | 100 bps | Fair Value | 100 bps | 100 bps | |||||||||||||||||||
Cash and cash equivalents
|
$ | 784,459 | $ | 784,459 | $ | 784,459 | $ | 541,545 | $ | 541,545 | $ | 541,545 | ||||||||||||
Trading securities
|
1,406,416 | 1,459,540 | 1,342,330 | 541,175 | 573,028 | 522,503 | ||||||||||||||||||
Available for sale securities
|
4,080,829 | 4,168,151 | 3,937,015 | 4,183,629 | 4,272,980 | 4,064,097 | ||||||||||||||||||
Loans held for sale
|
14,040,416 | 14,163,706 | 13,959,965 | 9,566,224 | 9,645,767 | 9,440,968 | ||||||||||||||||||
Loans held for investment
|
8,359,768 | 8,453,063 | 8,250,709 | 10,191,350 | 10,266,772 | 10,081,430 | ||||||||||||||||||
MSRs
|
2,489,611 | 1,927,163 | 2,852,581 | 1,822,455 | 1,393,979 | 2,142,276 | ||||||||||||||||||
Other assets
|
2,100,618 | 2,488,078 | 1,970,037 | 1,992,698 | 2,317,284 | 1,813,516 | ||||||||||||||||||
Total assets
|
$ | 33,262,117 | $ | 33,444,160 | $ | 33,097,096 | $ | 28,839,076 | $ | 29,011,355 | $ | 28,606,335 | ||||||||||||
Deposits
|
$ | 16,858,192 | $ | 16,909,730 | $ | 16,807,084 | $ | 11,045,977 | $ | 11,076,458 | $ | 11,015,812 | ||||||||||||
Advances from Federal Home Loan Bank
|
11,155,176 | 11,310,713 | 10,998,732 | 10,409,767 | 10,565,054 | 10,256,128 | ||||||||||||||||||
Other borrowings
|
1,505,093 | 1,505,718 | 1,504,469 | 3,464,290 | 3,466,577 | 3,462,006 | ||||||||||||||||||
Other liabilities
|
482,803 | 482,803 | 482,803 | 775,455 | 775,455 | 775,455 | ||||||||||||||||||
Total liabilities
|
30,001,264 | 30,208,964 | 29,793,088 | 25,695,489 | 25,883,544 | 25,509,401 | ||||||||||||||||||
Shareholders’ equity (NPV)
|
$ | 3,260,853 | $ | 3,235,196 | $ | 3,304,008 | $ | 3,143,587 | $ | 3,127,811 | $ | 3,096,934 | ||||||||||||
% Change from base case
|
(0.79 | )% | 1.32 | % | (0.50 | )% | (1.48 | )% | ||||||||||||||||
51
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
||||||||||||||||
2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||
Salaries and related
|
$ | 219,146 | $ | 177,564 | $ | 180,234 | $ | 581,854 | $ | 509,402 | ||||||||||
Premises and equipment
|
27,799 | 19,955 | 24,961 | 77,057 | 57,039 | |||||||||||||||
Loan purchase and servicing costs
|
14,127 | 14,246 | 14,057 | 43,210 | 40,301 | |||||||||||||||
Professional services
|
10,034 | 8,263 | 8,853 | 28,751 | 24,529 | |||||||||||||||
Data processing
|
20,002 | 16,831 | 20,331 | 60,089 | 46,864 | |||||||||||||||
Office and related
|
14,589 | 17,423 | 16,977 | 47,693 | 50,120 | |||||||||||||||
Advertising and promotion
|
8,804 | 10,742 | 9,659 | 28,098 | 34,368 | |||||||||||||||
Operations and sale of foreclosed assets
|
10,640 | 557 | 4,291 | 17,111 | 1,484 | |||||||||||||||
Other
|
7,285 | 3,315 | 5,920 | 18,242 | 9,640 | |||||||||||||||
Deferral of expenses under SFAS 91
|
(62,728 | ) | (66,198 | ) | (61,258 | ) | (192,632 | ) | (195,599 | ) | ||||||||||
Total operating expenses
|
269,698 | 202,698 | 224,025 | 709,473 | 578,148 | |||||||||||||||
Amortization of other intangible assets
|
430 | 430 | 430 | 1,290 | 694 | |||||||||||||||
Total non-interest expense
|
$ | 270,128 | $ | 203,128 | $ | 224,455 | $ | 710,763 | $ | 578,842 | ||||||||||
52
53
54
55
Home |
||||||||||||||||||||||||||||
Standard |
Specialty |
Loans & |
Specialty |
|||||||||||||||||||||||||
Consumer |
Consumer |
Related |
Commercial |
Total |
||||||||||||||||||||||||
Home Loans | Home Loans | Investments | Loans | Treasury | Overhead | Company | ||||||||||||||||||||||
Three Months Ended September 30, 2007
|
||||||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||||||
Net interest income
|
$ | 41,234 | $ | 45,187 | $ | 31,461 | $ | 16,732 | $ | 1,336 | $ | 6,228 | $ | 142,178 | ||||||||||||||
Provision for loan losses
|
— | (6,852 | ) | (12,000 | ) | (79,427 | ) | — | — | (98,279 | ) | |||||||||||||||||
Gain (loss) on sale of loans
|
(150,854 | ) | (96,628 | ) | (3,241 | ) | (203 | ) | — | (193 | ) | (251,119 | ) | |||||||||||||||
Service fee income (expense)
|
— | 22,780 | 189,646 | 3 | — | 500 | 212,929 | |||||||||||||||||||||
Gain (loss) on MBS
|
— | (57,671 | ) | (35,998 | ) | — | — | — | (93,669 | ) | ||||||||||||||||||
Gain on sale and leaseback of building
|
— | — | — | — | — | 23,982 | 23,982 | |||||||||||||||||||||
Other income (expense)
|
6,966 | 9,457 | 2,388 | 906 | 237 | 1,638 | 21,592 | |||||||||||||||||||||
Net revenue (expense)
|
(102,654 | ) | (83,727 | ) | 172,256 | (61,989 | ) | 1,573 | 32,155 | (42,386 | ) | |||||||||||||||||
Variable expenses
|
71,523 | 33,478 | 6,432 | 2,901 | — | — | 114,334 | |||||||||||||||||||||
Severance charges
|
— | — | — | — | — | 27,634 | 27,634 | |||||||||||||||||||||
Deferral of expenses under SFAS 91
|
(46,088 | ) | (12,376 | ) | (2,457 | ) | (1,807 | ) | — | — | (62,728 | ) | ||||||||||||||||
Fixed expenses
|
60,310 | 25,174 | 22,736 | 7,258 | 3,568 | 71,842 | 190,888 | |||||||||||||||||||||
Pre-tax earnings (loss)
|
(188,399 | ) | (130,003 | ) | 145,545 | (70,341 | ) | (1,995 | ) | (67,321 | ) | (312,514 | ) | |||||||||||||||
Minority interests
|
— | — | — | — | — | 12,396 | 12,396 | |||||||||||||||||||||
Net earnings (loss)
|
$ | (114,735 | ) | $ | (79,202 | ) | $ | 88,638 | $ | (42,838 | ) | $ | (1,215 | ) | $ | (53,365 | ) | $ | (202,717 | ) | ||||||||
Balance Sheet Data
|
||||||||||||||||||||||||||||
Average interest-earning assets
|
$ | 11,532,933 | $ | 6,076,629 | $ | 11,783,953 | $ | 1,738,414 | $ | — | $ | 562,629 | $ | 31,694,558 | ||||||||||||||
Allocated capital
|
$ | 555,858 | $ | 443,265 | $ | 825,952 | $ | 144,617 | $ | — | $ | 84,689 | $ | 2,054,381 | ||||||||||||||
Performance Ratios
|
||||||||||||||||||||||||||||
ROE
|
(82 | )% | (71 | )% | 43 | % | (118 | )% | N/A | N/A | (39 | )% | ||||||||||||||||
Net interest margin
|
1.42 | % | 2.95 | % | 1.06 | % | 3.82 | % | N/A | N/A | 1.78 | % | ||||||||||||||||
MBR margin
|
(0.91 | )% | (12.12 | )% | (0.32 | )% | N/A | N/A | N/A | (1.54 | )% | |||||||||||||||||
Efficiency ratio
|
(84 | )% | (60 | )% | 14 | % | 48 | % | N/A | N/A | 483 | % | ||||||||||||||||
Operating Data
|
||||||||||||||||||||||||||||
Loan production
|
$ | 12,796,864 | $ | 3,027,703 | $ | 954,343 | $ | 282,788 | $ | — | $ | — | $ | 17,061,698 | ||||||||||||||
Loans sold
|
$ | 11,302,561 | $ | 701,916 | $ | 1,004,070 | $ | — | $ | — | $ | — | $ | 13,008,547 | ||||||||||||||
Three Months Ended September 30, 2006
|
||||||||||||||||||||||||||||
Operating Results
|
||||||||||||||||||||||||||||
Net interest income
|
$ | 30,746 | $ | 38,672 | $ | 44,141 | $ | 20,768 | $ | 18 | $ | 2,366 | $ | 136,711 | ||||||||||||||
Provision for loan losses
|
— | (566 | ) | (2,000 | ) | (2,422 | ) | — | — | (4,988 | ) | |||||||||||||||||
Gain (loss) on sale of loans
|
87,979 | 62,106 | 10,140 | — | — | — | 160,225 | |||||||||||||||||||||
Service fee income (expense)
|
— | 6,965 | 13,572 | — | — | 521 | 21,058 | |||||||||||||||||||||
Gain (loss) on MBS
|
— | (3,945 | ) | 22,913 | — | — | — | 18,968 | ||||||||||||||||||||
Other income (expense)
|
— | 8,379 | 1,760 | 2,332 | 150 | 979 | 13,600 | |||||||||||||||||||||
Net revenue (expense)
|
118,725 | 111,611 | 90,526 | 20,678 | 168 | 3,866 | 345,574 | |||||||||||||||||||||
Variable expenses
|
57,213 | 42,428 | 4,098 | 2,225 | — | — | 105,964 | |||||||||||||||||||||
Deferral of expenses under SFAS 91
|
(44,393 | ) | (18,371 | ) | (1,538 | ) | (1,896 | ) | — | — | (66,198 | ) | ||||||||||||||||
Fixed expenses
|
48,004 | 25,262 | 14,013 | 5,173 | 2,227 | 68,683 | 163,362 | |||||||||||||||||||||
Pre-tax earnings (loss)
|
57,901 | 62,292 | 73,953 | 15,176 | (2,059 | ) | (64,817 | ) | 142,446 | |||||||||||||||||||
Net earnings (loss)
|
$ | 35,262 | $ | 37,782 | $ | 45,038 | $ | 9,243 | $ | (1,254 | ) | $ | (39,891 | ) | $ | 86,180 | ||||||||||||
Balance Sheet Data
|
||||||||||||||||||||||||||||
Average interest-earning assets
|
$ | 7,762,761 | $ | 5,737,934 | $ | 10,237,788 | $ | 1,498,138 | $ | — | $ | 270,396 | $ | 25,507,017 | ||||||||||||||
Allocated capital
|
$ | 346,735 | $ | 386,649 | $ | 641,818 | $ | 138,726 | $ | — | $ | 357,451 | $ | 1,871,379 | ||||||||||||||
Performance Ratios
|
||||||||||||||||||||||||||||
ROE
|
40 | % | 39 | % | 28 | % | 27 | % | N/A | N/A | 18 | % | ||||||||||||||||
Net interest margin
|
1.57 | % | 2.67 | % | 1.71 | % | 5.50 | % | N/A | N/A | 2.13 | % | ||||||||||||||||
MBR margin
|
0.76 | % | 2.27 | % | 1.55 | % | N/A | N/A | N/A | 1.03 | % | |||||||||||||||||
Efficiency ratio
|
51 | % | 44 | % | 18 | % | 24 | % | N/A | N/A | 58 | % | ||||||||||||||||
Operating Data
|
||||||||||||||||||||||||||||
Loan production
|
$ | 19,032,639 | $ | 4,278,249 | $ | 606,713 | $ | 521,575 | $ | — | $ | — | $ | 24,439,176 | ||||||||||||||
Loans sold
|
$ | 15,612,563 | $ | 3,241,590 | $ | 654,023 | $ | — | $ | — | $ | — | $ | 19,508,176 |
56
Standard Consumer Home Loans Held for Sale | ||||||||||||
Prime | Subprime | Total | ||||||||||
Three Months Ended September 30, 2007
|
||||||||||||
Operating Results
|
||||||||||||
Net interest income
|
$ | 40,020 | $ | 1,214 | $ | 41,234 | ||||||
Provision for loan losses
|
— | — | — | |||||||||
Gain (loss) on sale of loans
|
(127,927 | ) | (22,927 | ) | (150,854 | ) | ||||||
Service fee income (expense)
|
— | — | — | |||||||||
Gain (loss) on MBS
|
— | — | — | |||||||||
Other income (expense)
|
6,651 | 315 | 6,966 | |||||||||
Net revenues (expense)
|
(81,256 | ) | (21,398 | ) | (102,654 | ) | ||||||
Variable expenses
|
65,597 | 5,926 | 71,523 | |||||||||
Deferral of expenses under SFAS 91
|
(42,270 | ) | (3,818 | ) | (46,088 | ) | ||||||
Fixed expenses
|
55,434 | 4,876 | 60,310 | |||||||||
Pre-tax earnings (loss)
|
(160,017 | ) | (28,382 | ) | (188,399 | ) | ||||||
Net earnings (loss)
|
$ | (97,450 | ) | $ | (17,285 | ) | $ | (114,735 | ) | |||
Balance Sheet Data
|
||||||||||||
Average interest-earning assets
|
$ | 11,372,088 | $ | 160,845 | $ | 11,532,933 | ||||||
Allocated capital
|
$ | 546,082 | $ | 9,776 | $ | 555,858 | ||||||
Performance Ratios
|
||||||||||||
ROE
|
(71 | )% | (701 | )% | (82 | )% | ||||||
Net interest margin
|
1.40 | % | 2.99 | % | 1.42 | % | ||||||
MBR margin
|
(0.74 | )% | (7.67 | )% | (0.91 | )% | ||||||
Efficiency ratio
|
(97 | )% | (33 | )% | (84 | )% | ||||||
Operating Data
|
||||||||||||
Loan production
|
$ | 12,217,605 | $ | 579,259 | $ | 12,796,864 | ||||||
Loans sold
|
$ | 11,023,703 | $ | 278,858 | $ | 11,302,561 | ||||||
Three Months Ended September 30, 2006
|
||||||||||||
Operating Results
|
||||||||||||
Net interest income
|
$ | 28,035 | $ | 2,711 | $ | 30,746 | ||||||
Provision for loan losses
|
— | — | — | |||||||||
Gain (loss) on sale of loans
|
82,833 | 5,146 | 87,979 | |||||||||
Service fee income (expense)
|
— | — | — | |||||||||
Gain (loss) on MBS
|
— | — | — | |||||||||
Other income (expense)
|
— | — | — | |||||||||
Net revenues (expense)
|
110,868 | 7,857 | 118,725 | |||||||||
Variable expenses
|
49,834 | 7,379 | 57,213 | |||||||||
Deferral of expenses under SFAS 91
|
(38,667 | ) | (5,726 | ) | (44,393 | ) | ||||||
Fixed expenses
|
43,552 | 4,452 | 48,004 | |||||||||
Pre-tax income (loss)
|
56,149 | 1,752 | 57,901 | |||||||||
Net income (loss)
|
$ | 34,195 | $ | 1,067 | $ | 35,262 | ||||||
Balance Sheet Data
|
||||||||||||
Average interest-earning assets
|
$ | 7,331,198 | $ | 431,563 | $ | 7,762,761 | ||||||
Allocated capital
|
$ | 320,562 | $ | 26,173 | $ | 346,735 | ||||||
Performance Ratios
|
||||||||||||
ROE
|
42 | % | 16 | % | 40 | % | ||||||
Net interest margin
|
1.52 | % | 2.49 | % | 1.57 | % | ||||||
MBR margin
|
0.74 | % | 1.28 | % | 0.76 | % | ||||||
Efficiency ratio
|
49 | % | 78 | % | 51 | % | ||||||
Operating Data
|
||||||||||||
Loan production
|
$ | 18,321,539 | $ | 711,100 | $ | 19,032,639 | ||||||
Loans sold
|
$ | 14,997,083 | $ | 615,480 | $ | 15,612,563 |
57
Specialty Consumer Home Loans Held for Sale and/or Investment | ||||||||||||||||||||
HELOCs/ |
Reverse |
Discontinued |
||||||||||||||||||
Seconds | Mortgages | CTP/Lot | Products | Total | ||||||||||||||||
Three Months Ended September 30, 2007
|
||||||||||||||||||||
Operating Results
|
||||||||||||||||||||
Net interest income
|
$ | 23,936 | $ | 4,644 | $ | 16,186 | $ | 421 | $ | 45,187 | ||||||||||
Provision for loan losses
|
(800 | ) | — | (5,602 | ) | (450 | ) | (6,852 | ) | |||||||||||
Gain (loss) on sale of loans
|
(118,550 | ) | 14,314 | 7,608 | — | (96,628 | ) | |||||||||||||
Service fee income (expense)
|
11,027 | 11,753 | — | — | 22,780 | |||||||||||||||
Gain (loss) on MBS
|
(57,368 | ) | — | (303 | ) | — | (57,671 | ) | ||||||||||||
Other income (expense)
|
3,576 | 11 | 5,870 | — | 9,457 | |||||||||||||||
Net revenues (expense)
|
(138,179 | ) | 30,722 | 23,759 | (29 | ) | (83,727 | ) | ||||||||||||
Variable expenses
|
4,691 | 18,900 | 9,887 | — | 33,478 | |||||||||||||||
Deferral of expenses under SFAS 91
|
(3,377 | ) | (6,214 | ) | (2,785 | ) | — | (12,376 | ) | |||||||||||
Fixed expenses
|
4,007 | 13,329 | 7,773 | 65 | 25,174 | |||||||||||||||
Pre-tax earnings (loss)
|
(143,500 | ) | 4,707 | 8,884 | (94 | ) | (130,003 | ) | ||||||||||||
Net earnings (loss)
|
$ | (87,391 | ) | $ | 2,836 | $ | 5,410 | $ | (57 | ) | $ | (79,202 | ) | |||||||
Balance Sheet Data
|
||||||||||||||||||||
Average interest-earning assets
|
$ | 2,347,847 | $ | 962,847 | $ | 2,735,094 | $ | 30,841 | $ | 6,076,629 | ||||||||||
Allocated capital
|
$ | 253,384 | $ | 55,770 | $ | 131,340 | $ | 2,771 | $ | 443,265 | ||||||||||
Performance Ratios
|
||||||||||||||||||||
ROE
|
(137 | )% | 20 | % | 16 | % | (8 | )% | (71 | )% | ||||||||||
Net interest margin
|
4.04 | % | 1.91 | % | 2.35 | % | 5.42 | % | 2.95 | % | ||||||||||
MBR margin
|
(65.47 | )% | 16.14 | % | 1.84 | % | N/A | (12.12 | )% | |||||||||||
Efficiency ratio
|
(4 | )% | 85 | % | 51 | % | 15 | % | (60 | )% | ||||||||||
Operating Data
|
||||||||||||||||||||
Loan production
|
$ | 634,634 | $ | 1,079,592 | $ | 1,313,477 | $ | — | $ | 3,027,703 | ||||||||||
Loans sold
|
$ | 170,481 | $ | 117,461 | $ | 413,974 | $ | — | $ | 701,916 | ||||||||||
Three Months Ended September 30, 2006
|
||||||||||||||||||||
Operating Results
|
||||||||||||||||||||
Net interest income
|
$ | 23,771 | $ | 2,868 | $ | 11,524 | $ | 509 | $ | 38,672 | ||||||||||
Provision for loan losses
|
— | — | (516 | ) | (50 | ) | (566 | ) | ||||||||||||
Gain (loss) on sale of loans
|
3,885 | 45,548 | 12,673 | — | 62,106 | |||||||||||||||
Service fee income (expense)
|
1,366 | 5,599 | — | — | 6,965 | |||||||||||||||
Gain (loss) on MBS
|
(3,898 | ) | — | (47 | ) | — | (3,945 | ) | ||||||||||||
Other income (expense)
|
2,700 | 187 | 5,492 | — | 8,379 | |||||||||||||||
Net revenues (expense)
|
27,824 | 54,202 | 29,126 | 459 | 111,611 | |||||||||||||||
Variable expenses
|
13,444 | 20,319 | 8,665 | — | 42,428 | |||||||||||||||
Deferral of expenses under SFAS 91
|
(8,544 | ) | (7,592 | ) | (2,235 | ) | — | (18,371 | ) | |||||||||||
Fixed expenses
|
2,964 | 14,486 | 7,735 | 77 | 25,262 | |||||||||||||||
Pre-tax earnings (loss)
|
19,960 | 26,989 | 14,961 | 382 | 62,292 | |||||||||||||||
Net earnings (loss)
|
$ | 12,156 | $ | 16,282 | $ | 9,111 | $ | 233 | $ | 37,782 | ||||||||||
Balance Sheet Data
|
||||||||||||||||||||
Average interest-earning assets
|
$ | 2,589,343 | $ | 801,629 | $ | 2,307,726 | $ | 39,236 | $ | 5,737,934 | ||||||||||
Allocated capital
|
$ | 237,260 | $ | 34,404 | $ | 111,441 | $ | 3,544 | $ | 386,649 | ||||||||||
Performance Ratios
|
||||||||||||||||||||
ROE
|
20 | % | 188 | % | 32 | % | 26 | % | 39 | % | ||||||||||
Net interest margin
|
3.64 | % | 1.42 | % | 1.98 | % | 5.15 | % | 2.67 | % | ||||||||||
MBR margin
|
0.83 | % | 4.52 | % | 1.96 | % | N/A | 2.27 | % | |||||||||||
Efficiency ratio
|
28 | % | 50 | % | 48 | % | 15 | % | 44 | % | ||||||||||
Operating Data
|
||||||||||||||||||||
Loan production
|
$ | 1,839,049 | $ | 1,128,203 | $ | 1,310,997 | $ | — | $ | 4,278,249 | ||||||||||
Loans sold
|
$ | 1,523,333 | $ | 1,071,652 | $ | 646,605 | $ | — | $ | 3,241,590 |
58
Home Loans and Related Investments | ||||||||||||||||
Retained Servicing |
SFR Loans |
|||||||||||||||
and Retention |
Held for |
|||||||||||||||
Activities | MBS | Investment | Total | |||||||||||||
Three Months Ended September 30, 2007
|
||||||||||||||||
Operating Results
|
||||||||||||||||
Net interest income
|
$ | 146 | $ | 19,199 | $ | 12,116 | $ | 31,461 | ||||||||
Provision for loan losses
|
— | — | (12,000 | ) | (12,000 | ) | ||||||||||
Gain (loss) on sale of loans
|
2,543 | — | (5,784 | ) | (3,241 | ) | ||||||||||
Service fee income (expense)
|
189,646 | — | — | 189,646 | ||||||||||||
Gain (loss) on MBS
|
(4,959 | ) | (31,039 | ) | — | (35,998 | ) | |||||||||
Other income (expense)
|
1,845 | — | 543 | 2,388 | ||||||||||||
Net revenues (expense)
|
189,221 | (11,840 | ) | (5,125 | ) | 172,256 | ||||||||||
Variable expenses
|
6,432 | — | — | 6,432 | ||||||||||||
Deferral of expenses under SFAS 91
|
(2,457 | ) | — | — | (2,457 | ) | ||||||||||
Fixed expenses
|
17,186 | 901 | 4,649 | 22,736 | ||||||||||||
Pre-tax earnings (loss)
|
168,060 | (12,741 | ) | (9,774 | ) | 145,545 | ||||||||||
Net earnings (loss)
|
$ | 102,349 | $ | (7,759 | ) | $ | (5,952 | ) | $ | 88,638 | ||||||
Balance Sheet Data
|
||||||||||||||||
Average interest-earning assets
|
$ | 1,479,652 | $ | 4,870,947 | $ | 5,433,354 | $ | 11,783,953 | ||||||||
Allocated capital
|
$ | 391,005 | $ | 236,824 | $ | 198,123 | $ | 825,952 | ||||||||
Performance Ratios
|
||||||||||||||||
ROE
|
104 | % | (13 | )% | (12 | )% | 43 | % | ||||||||
Net interest margin
|
0.04 | % | 1.56 | % | 0.88 | % | 1.06 | % | ||||||||
MBR margin
|
0.38 | % | N/A | N/A | (0.32 | )% | ||||||||||
Efficiency ratio
|
11 | % | (8 | )% | 68 | % | 14 | % | ||||||||
Operating Data
|
||||||||||||||||
Loan production
|
$ | 954,343 | $ | — | $ | — | $ | 954,343 | ||||||||
Loans sold
|
$ | 674,074 | $ | — | $ | 329,996 | $ | 1,004,070 | ||||||||
Three Months Ended September 30, 2006
|
||||||||||||||||
Operating Results
|
||||||||||||||||
Net interest income
|
$ | 2,945 | $ | 19,276 | $ | 21,920 | $ | 44,141 | ||||||||
Provision for loan losses
|
— | — | (2,000 | ) | (2,000 | ) | ||||||||||
Gain (loss) on sale of loans
|
9,392 | — | 748 | 10,140 | ||||||||||||
Service fee income (expense)
|
13,572 | — | — | 13,572 | ||||||||||||
Gain (loss) on MBS
|
17,283 | 5,630 | — | 22,913 | ||||||||||||
Other income (expense)
|
1,345 | (14 | ) | 429 | 1,760 | |||||||||||
Net revenues (expense)
|
44,537 | 24,892 | 21,097 | 90,526 | ||||||||||||
Variable expenses
|
4,098 | — | — | 4,098 | ||||||||||||
Deferral of expenses under SFAS 91
|
(1,538 | ) | — | — | (1,538 | ) | ||||||||||
Fixed expenses
|
11,675 | 973 | 1,365 | 14,013 | ||||||||||||
Pre-tax earnings (loss)
|
30,302 | 23,919 | 19,732 | 73,953 | ||||||||||||
Net earnings (loss)
|
$ | 18,454 | $ | 14,567 | $ | 12,017 | $ | 45,038 | ||||||||
Balance Sheet Data
|
||||||||||||||||
Average interest-earning assets
|
$ | 559,843 | $ | 3,845,961 | $ | 5,831,984 | $ | 10,237,788 | ||||||||
Allocated capital
|
$ | 228,070 | $ | 193,709 | $ | 220,039 | $ | 641,818 | ||||||||
Performance Ratios
|
||||||||||||||||
ROE
|
32 | % | 30 | % | 22 | % | 28 | % | ||||||||
Net interest margin
|
2.09 | % | 1.99 | % | 1.49 | % | 1.71 | % | ||||||||
MBR margin
|
1.44 | % | N/A | N/A | 1.55 | % | ||||||||||
Efficiency ratio
|
32 | % | 4 | % | 6 | % | 18 | % | ||||||||
Operating Data
|
||||||||||||||||
Loan production
|
$ | 606,713 | $ | — | $ | — | $ | 606,713 | ||||||||
Loans sold
|
$ | 654,023 | $ | — | $ | — | $ | 654,023 |
59
Specialty Commercial Loans Held for Sale and/or Investment | ||||||||||||||||||||
Warehouse |
Commercial |
|||||||||||||||||||
Single Spec | Subdivision | Lending | Lending | Total | ||||||||||||||||
Three Months Ended September 30, 2007
|
||||||||||||||||||||
Operating Results
|
||||||||||||||||||||
Net interest income
|
$ | 2,555 | $ | 12,754 | $ | 1,321 | $ | 102 | $ | 16,732 | ||||||||||
Provision for loan losses
|
(1,148 | ) | (78,191 | ) | (88 | ) | — | (79,427 | ) | |||||||||||
Gain (loss) on sale of loans
|
— | — | — | (203 | ) | (203 | ) | |||||||||||||
Service fee income (expense)
|
— | — | — | 3 | 3 | |||||||||||||||
Gain (loss) on MBS
|
— | — | — | — | — | |||||||||||||||
Other income (expense)
|
545 | (204 | ) | 375 | 190 | 906 | ||||||||||||||
Net revenues (expense)
|
1,952 | (65,641 | ) | 1,608 | 92 | (61,989 | ) | |||||||||||||
Variable expenses
|
628 | 1,785 | — | 488 | 2,901 | |||||||||||||||
Deferral of expenses under SFAS 91
|
(77 | ) | (1,444 | ) | — | (286 | ) | (1,807 | ) | |||||||||||
Fixed expenses
|
467 | 3,625 | 980 | 2,186 | 7,258 | |||||||||||||||
Pre-tax earnings (loss)
|
934 | (69,607 | ) | 628 | (2,296 | ) | (70,341 | ) | ||||||||||||
Net earnings (loss)
|
$ | 569 | $ | (42,391 | ) | $ | 382 | $ | (1,398 | ) | $ | (42,838 | ) | |||||||
Balance Sheet Data
|
||||||||||||||||||||
Average interest-earning assets
|
$ | 217,496 | $ | 1,264,835 | $ | 190,996 | $ | 65,087 | $ | 1,738,414 | ||||||||||
Allocated capital
|
$ | 19,456 | $ | 104,399 | $ | 15,211 | $ | 5,551 | $ | 144,617 | ||||||||||
Performance Ratios
|
||||||||||||||||||||
ROE
|
12 | % | (161 | )% | 10 | % | (100 | )% | (118 | )% | ||||||||||
Net interest margin
|
4.66 | % | 4.00 | % | 2.74 | % | 0.62 | % | 3.82 | % | ||||||||||
Efficiency ratio
|
33 | % | 32 | % | 58 | % | N/A | 48 | % | |||||||||||
Operating Data
|
||||||||||||||||||||
Loan production
|
$ | 36,466 | $ | 121,106 | $ | — | $ | 125,216 | $ | 282,788 | ||||||||||
Loans sold
|
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Three Months Ended September 30, 2006
|
||||||||||||||||||||
Operating Results
|
||||||||||||||||||||
Net interest income
|
$ | 3,245 | $ | 16,488 | $ | 1,035 | $ | — | $ | 20,768 | ||||||||||
Provision for loan losses
|
(204 | ) | (2,200 | ) | (18 | ) | — | (2,422 | ) | |||||||||||
Gain (loss) on sale of loans
|
— | — | — | — | — | |||||||||||||||
Service fee income (expense)
|
— | — | — | — | — | |||||||||||||||
Gain (loss) on MBS
|
— | — | — | — | — | |||||||||||||||
Other income (expense)
|
1,163 | 703 | 466 | — | 2,332 | |||||||||||||||
Net revenues (expense)
|
4,204 | 14,991 | 1,483 | — | 20,678 | |||||||||||||||
Variable expenses
|
709 | 1,516 | — | — | 2,225 | |||||||||||||||
Deferral of expenses under SFAS 91
|
(86 | ) | (1,810 | ) | — | — | (1,896 | ) | ||||||||||||
Fixed expenses
|
581 | 3,395 | 1,134 | 63 | 5,173 | |||||||||||||||
Pre-tax earnings (loss)
|
3,000 | 11,890 | 349 | (63 | ) | 15,176 | ||||||||||||||
Net earnings (loss)
|
$ | 1,827 | $ | 7,241 | $ | 213 | $ | (38 | ) | $ | 9,243 | |||||||||
Balance Sheet Data
|
||||||||||||||||||||
Average interest-earning assets
|
$ | 250,289 | $ | 1,112,338 | $ | 135,511 | $ | — | $ | 1,498,138 | ||||||||||
Allocated capital
|
$ | 18,735 | $ | 108,408 | $ | 11,583 | $ | — | $ | 138,726 | ||||||||||
Performance Ratios
|
||||||||||||||||||||
ROE
|
39 | % | 26 | % | 7 | % | N/A | 27 | % | |||||||||||
Net interest margin
|
5.14 | % | 5.88 | % | 3.03 | % | N/A | 5.50 | % | |||||||||||
Efficiency ratio
|
27 | % | 18 | % | 76 | % | N/A | 24 | % | |||||||||||
Operating Data
|
||||||||||||||||||||
Loan production
|
$ | 50,425 | $ | 471,150 | $ | — | $ | — | $ | 521,575 | ||||||||||
Loans sold
|
$ | — | $ | — | $ | — | $ | — | $ | — |
60
Mortgage |
||||||||||||||||||||
Servicing | Banking | Deposit | Corporate(1) | Total Overhead | ||||||||||||||||
Three Months Ended September 30, 2007
|
||||||||||||||||||||
Operating Results
|
||||||||||||||||||||
Net interest income
|
$ | (68 | ) | $ | 700 | $ | 6,463 | $ | (867 | ) | $ | 6,228 | ||||||||
Provision for loan losses
|
— | — | — | — | — | |||||||||||||||
Gain (loss) on sale of loans
|
(189 | ) | (4 | ) | — | — | (193 | ) | ||||||||||||
Service fee income (expense)
|
— | — | — | 500 | 500 | |||||||||||||||
Gain (loss) on MBS
|
— | — | — | — | — | |||||||||||||||
Gain on sale and leaseback of building
|
— | — | — | 23,982 | 23,982 | |||||||||||||||
Other income (expense)
|
579 | 176 | 1,152 | (269 | ) | 1,638 | ||||||||||||||
Net revenues (expense)
|
322 | 872 | 7,615 | 23,346 | 32,155 | |||||||||||||||
Variable expenses
|
— | — | — | — | — | |||||||||||||||
Severance costs
|
— | — | — | 27,634 | 27,634 | |||||||||||||||
Deferral of expenses under SFAS 91
|
— | — | — | — | — | |||||||||||||||
Fixed expenses
|
6,375 | 12,579 | 13,777 | 39,111 | 71,842 | |||||||||||||||
Pre-tax earnings (loss)
|
(6,053 | ) | (11,707 | ) | (6,162 | ) | (43,399 | ) | (67,321 | ) | ||||||||||
Minority interests
|
— | — | — | 12,396 | 12,396 | |||||||||||||||
Net earnings (loss)
|
$ | (3,686 | ) | $ | (7,130 | ) | $ | (3,753 | ) | $ | (38,796 | ) | $ | (53,365 | ) | |||||
Balance Sheet Data
|
||||||||||||||||||||
Average interest-earning assets
|
$ | — | $ | 2,109 | $ | 171 | $ | 560,349 | $ | 562,629 | ||||||||||
Allocated capital
|
$ | 376 | $ | 16,939 | $ | 11,335 | $ | 56,039 | $ | 84,689 | ||||||||||
Performance Ratios
|
||||||||||||||||||||
ROE
|
N/A | N/A | N/A | N/A | N/A | |||||||||||||||
Net interest margin
|
N/A | N/A | N/A | N/A | N/A | |||||||||||||||
Efficiency ratio
|
N/A | N/A | N/A | N/A | N/A | |||||||||||||||
Operating Data
|
||||||||||||||||||||
Loan production
|
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Loans sold
|
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Three Months Ended September 30, 2006
|
||||||||||||||||||||
Operating Results
|
||||||||||||||||||||
Net interest income
|
$ | (115 | ) | $ | (73 | ) | $ | 3,954 | $ | (1,400 | ) | $ | 2,366 | |||||||
Provision for loan losses
|
— | — | — | — | — | |||||||||||||||
Gain (loss) on sale of loans
|
— | — | — | — | — | |||||||||||||||
Service fee income (expense)
|
— | — | — | 521 | 521 | |||||||||||||||
Gain (loss) on MBS
|
— | — | — | — | — | |||||||||||||||
Other income (expense)
|
730 | 116 | 896 | (763 | ) | 979 | ||||||||||||||
Net revenues (expense)
|
615 | 43 | 4,850 | (1,642 | ) | 3,866 | ||||||||||||||
Variable expenses
|
— | — | — | — | — | |||||||||||||||
Deferral of expenses under SFAS 91
|
— | — | — | — | — | |||||||||||||||
Fixed expenses
|
5,104 | 10,263 | 11,127 | 42,189 | 68,683 | |||||||||||||||
Pre-tax earnings (loss)
|
(4,489 | ) | (10,220 | ) | (6,277 | ) | (43,831 | ) | (64,817 | ) | ||||||||||
Net earnings (loss)
|
$ | (2,734 | ) | $ | (6,224 | ) | $ | (3,823 | ) | $ | (27,110 | ) | $ | (39,891 | ) | |||||
Balance Sheet Data
|
||||||||||||||||||||
Average interest-earning assets
|
$ | — | $ | 41 | $ | 172 | $ | 270,183 | $ | 270,396 | ||||||||||
Allocated capital
|
$ | 177 | $ | 10,500 | $ | 1,939 | $ | 344,835 | $ | 357,451 | ||||||||||
Performance Ratios
|
||||||||||||||||||||
ROE
|
N/A | N/A | N/A | N/A | N/A | |||||||||||||||
Net interest margin
|
N/A | N/A | N/A | N/A | N/A | |||||||||||||||
Efficiency ratio
|
N/A | N/A | N/A | N/A | N/A | |||||||||||||||
Operating Data
|
||||||||||||||||||||
Loan production
|
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Loans sold
|
$ | — | $ | — | $ | — | $ | — | $ | — |
(1) | Corporate overhead under the product profitability analysis is different from the corporate overhead under the business segment results as certain elimination items are included here. |
61
Three Months Ended | ||||||||||||
September 30, |
September 30, |
June 30, |
||||||||||
2007 | 2006 | 2007 | ||||||||||
Total S&P average lifetime loss estimates
|
0.49 | % | 0.87 | % | 0.63 | % | ||||||
Total S&P evaluated production(1)
|
$ | 14,228 | $ | 20,092 | $ | 19,287 |
(1) | While our production is evaluated using the S&P Levels model, the data is not audited or endorsed by S&P. S&P evaluated production excludes second liens, HELOCs, reverse mortgages, and construction loans. |
Three Months Ended | ||||||||||||||||||||||||||||||||||||
September 30, 2007 | September 30, 2006 | June 30, 2007 | ||||||||||||||||||||||||||||||||||
Production | FICO | CLTV | Production | FICO | CLTV | Production | FICO | CLTV | ||||||||||||||||||||||||||||
Total production
|
$ | 17,062 | N/A | N/A | $ | 24,439 | N/A | N/A | $ | 23,023 | N/A | N/A | ||||||||||||||||||||||||
Less:
|
||||||||||||||||||||||||||||||||||||
HELOCs(1)/Seconds
|
637 | 731 | 80 | % | 1,840 | 716 | 87 | % | 876 | 724 | 85 | % | ||||||||||||||||||||||||
Reverse mortgages
|
1,080 | N/A | 58 | % | 1,128 | N/A | 53 | % | 1,258 | N/A | 57 | % | ||||||||||||||||||||||||
Consumer construction(1)
|
871 | 728 | 75 | % | 908 | 722 | 76 | % | 1,084 | 724 | 74 | % | ||||||||||||||||||||||||
Commercial real estate
|
125 | N/A | 66 | % | — | N/A | — | 45 | N/A | 67 | % | |||||||||||||||||||||||||
Builder construction commitments(1)
|
121 | N/A | 77 | % | 471 | N/A | 74 | % | 473 | N/A | 70 | % | ||||||||||||||||||||||||
Total S&P evaluated production
|
$ | 14,228 | 705 | 78 | % | $ | 20,092 | 702 | 81 | % | $ | 19,287 | 705 | 78 | % | |||||||||||||||||||||
(1) | Amounts represent total commitments. |
62
As of and for the Three Months Ended | ||||||||||||||||||||
September 30, |
September 30, |
Percent |
June 30, |
Percent |
||||||||||||||||
2007 | 2006 | Change | 2007 | Change | ||||||||||||||||
Production and Pipeline by Purpose:
|
||||||||||||||||||||
SFR mortgage loan production:
|
||||||||||||||||||||
Purchase transactions
|
$ | 5,889 | $ | 9,682 | (39 | )% | $ | 7,285 | (19 | )% | ||||||||||
Cash-out refinance transactions
|
7,389 | 10,656 | (31 | )% | 10,577 | (30 | )% | |||||||||||||
Rate/term refinance transactions
|
3,538 | 3,630 | (3 | )% | 4,643 | (24 | )% | |||||||||||||
Total SFR mortgage loan production
|
$ | 16,816 | $ | 23,968 | (30 | )% | $ | 22,505 | (25 | )% | ||||||||||
% purchase and cash-out refinance transactions
|
79 | % | 85 | % | 79 | % | ||||||||||||||
Mortgage industry market share
|
3.06 | % | 3.44 | % | (11 | )% | 3.24 | % | (6 | )% | ||||||||||
SFR mortgage loan pipeline at period end(1):
|
||||||||||||||||||||
Purchase transactions
|
$ | 2,811 | $ | 4,595 | (39 | )% | $ | 5,003 | (44 | )% | ||||||||||
Cash-out refinance transactions
|
2,871 | 5,210 | (45 | )% | 4,848 | (41 | )% | |||||||||||||
Rate/term refinance transactions
|
1,640 | 1,930 | (15 | )% | 2,979 | (45 | )% | |||||||||||||
Total specific rate locks
|
7,322 | 11,735 | (38 | )% | 12,830 | (43 | )% | |||||||||||||
Non-specific rate locks on bulk purchases
|
99 | 2,821 | (96 | )% | 546 | (82 | )% | |||||||||||||
Total SFR mortgage loan pipeline
|
$ | 7,421 | $ | 14,556 | (49 | )% | $ | 13,376 | (45 | )% | ||||||||||
(1) | Total pipeline of loans in process includes rate lock commitments we have provided on loans that are specifically identified or non-specific bulk packages, and loan applications we have received for which the borrower has not yet locked in the interest rate commitment. Non-specific bulk packages represent pools of loans we have committed to purchase, where the pool characteristics are specified but the actual loans are not. |
Three Months Ended | ||||||||||||
September 30, |
September 30, |
June 30, |
||||||||||
2007 | 2006 | 2007 | ||||||||||
SFR Mortgage Production by Amortization Type:
|
||||||||||||
Fixed-rate mortgages
|
25 | % | 20 | % | 24 | % | ||||||
Intermediate term fixed-rate loans
|
7 | % | 7 | % | 7 | % | ||||||
Interest-only loans
|
46 | % | 39 | % | 47 | % | ||||||
Pay option ARMs
|
8 | % | 23 | % | 11 | % | ||||||
Other ARMs
|
14 | % | 11 | % | 11 | % | ||||||
100 | % | 100 | % | 100 | % | |||||||
63
Three Months Ended | ||||||||||||
September 30, |
September 30, |
June 30, |
||||||||||
2007 | 2006 | 2007 | ||||||||||
Geographic distribution:
|
||||||||||||
California
|
41 | % | 45 | % | 45 | % | ||||||
Florida
|
8 | % | 8 | % | 8 | % | ||||||
New York
|
7 | % | 6 | % | 7 | % | ||||||
New Jersey
|
4 | % | 4 | % | 4 | % | ||||||
Washington
|
3 | % | 2 | % | 3 | % | ||||||
Other
|
37 | % | 35 | % | 33 | % | ||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||
Production |
||||||||||||||||||||||||||||||||||||||||||||
Secondary |
Total |
Credit |
Net MBR |
|||||||||||||||||||||||||||||||||||||||||
MBR |
Net HFS |
Market |
Production |
Costs/MBR |
After |
FAS 91 |
||||||||||||||||||||||||||||||||||||||
Loans |
Gross |
Pipeline |
After |
Credit |
Reserve |
Credit |
After |
Production |
Deferred |
Net MBR |
||||||||||||||||||||||||||||||||||
Sold | MBR | Hedging | Hedging(a) | Losses | Accrual | Costs(b) | Hedging (b/a) | Credit Costs | Cost | Reported | ||||||||||||||||||||||||||||||||||
Quarter ended | (In millions) | |||||||||||||||||||||||||||||||||||||||||||
13,009 | 75 | (27 | ) | 48 | (149 | ) | (25 | ) | (174 | ) | 360 | % | (126 | ) | (28 | ) | (154 | ) | ||||||||||||||||||||||||||
19,508 | 116 | 16 | 132 | (3 | ) | (5 | ) | (8 | ) | 6 | % | 124 | (21 | ) | 103 | |||||||||||||||||||||||||||||
20,194 | 91 | 40 | 131 | (18 | ) | (12 | ) | (30 | ) | 23 | % | 101 | (21 | ) | 80 |
Three Months Ended | ||||||||||||||||||||||||
September 30, |
BPS |
September 30, |
BPS |
June 30, |
UPB |
|||||||||||||||||||
2007 | UPB | 2006 | UPB | 2007 | BPS | |||||||||||||||||||
Service fee income:
|
||||||||||||||||||||||||
Gross service fee income
|
$ | 180,446 | 42 | $ | 133,818 | 46 | $ | 182,175 | 45 | |||||||||||||||
Change in value due to portfolio run-off
|
(98,118 | ) | (23 | ) | (97,714 | ) | (33 | ) | (106,003 | ) | (26 | ) | ||||||||||||
Service fee income, net of change in value due to portfolio
run-off
|
82,328 | 19 | 36,104 | 13 | 76,172 | 19 | ||||||||||||||||||
Change in value due to application of external benchmarking
policies
|
— | — | (599 | ) | — | 3,920 | 1 | |||||||||||||||||
Valuation adjustment due to market changes
|
7,421 | 2 | (133,471 | ) | (46 | ) | 218,739 | 54 | ||||||||||||||||
Gain (loss) on financial instruments used to hedge MSRs
|
123,180 | 29 | 119,024 | 41 | (213,213 | ) | (53 | ) | ||||||||||||||||
Total service fee income
|
$ | 212,929 | 50 | $ | 21,058 | 8 | $ | 85,618 | 21 | |||||||||||||||
64
Nine Months Ended | ||||||||||||||||
September 30, |
BPS |
September 30, |
BPS |
|||||||||||||
2007 | UPB | 2006 | UPB | |||||||||||||
Service fee income:
|
||||||||||||||||
Gross service fee income
|
$ | 527,496 | 44 | $ | 349,798 | 45 | ||||||||||
Change in value due to portfolio run-off
|
(321,902 | ) | (27 | ) | (254,133 | ) | (33 | ) | ||||||||
Service fee income, net of change in value due to portfolio
run-off
|
205,594 | 17 | 95,665 | 12 | ||||||||||||
Change in value due to application of external benchmarking
policies
|
3,920 | — | (16,459 | ) | (2 | ) | ||||||||||
Valuation adjustment due to market changes
|
257,000 | 22 | 27,253 | 4 | ||||||||||||
Loss on financial instruments used to hedge MSRs
|
(118,781 | ) | (10 | ) | (27,265 | ) | (4 | ) | ||||||||
Total service fee income
|
$ | 347,733 | 29 | $ | 79,194 | 10 | ||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
||||||||||||||||
2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||
Balance at beginning of period
|
$ | 2,387,077 | $ | 1,598,821 | $ | 2,052,822 | $ | 1,822,455 | $ | 1,094,490 | ||||||||||
Cumulative-effect adjustment due to change in accounting for MSRs
|
— | — | — | — | 17,561 | |||||||||||||||
Net additions from loan sale or securitization
|
191,885 | 258,249 | 272,260 | 783,808 | 756,821 | |||||||||||||||
Purchase or assumption
|
— | 8,631 | 2,268 | 2,268 | 8,658 | |||||||||||||||
Transfers to prepayment penalty and/or AAA-rated and agency
interest-only securities
|
— | (2,601 | ) | (56,040 | ) | (57,065 | ) | (2,601 | ) | |||||||||||
Transfers due to
clean-up
calls and other
|
1,346 | — | (889 | ) | (873 | ) | (274 | ) | ||||||||||||
Change in fair value due to run-off
|
(98,118 | ) | (97,714 | ) | (106,003 | ) | (321,902 | ) | (254,133 | ) | ||||||||||
Change in fair value due to market changes
|
3,554 | (133,471 | ) | 218,739 | 253,133 | 27,253 | ||||||||||||||
Change in fair value due to application of external benchmarking
policies
|
3,867 | (599 | ) | 3,920 | 7,787 | (16,459 | ) | |||||||||||||
Balance at end of period
|
$ | 2,489,611 | $ | 1,631,316 | $ | 2,387,077 | $ | 2,489,611 | $ | 1,631,316 | ||||||||||
MSRs as basis points of unpaid principal balance
|
143 | 131 | 142 | 143 | 131 |
65
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
||||||||||||||||||||
2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||||||
Net gain (loss) on MBS:
|
||||||||||||||||||||||||
Realized gain (loss) on available for sale securities
|
$ | — | $ | 3,520 | $ | — | $ | (486 | ) | $ | 3,520 | |||||||||||||
Impairments on available for sale securities
|
(4,361 | ) | (3,782 | ) | — | (6,418 | ) | (5,718 | ) | |||||||||||||||
Unrealized gain (loss) on prepayment penalty securities
|
(7,666 | ) | 13,250 | (21,658 | ) | (31,527 | ) | 17,907 | ||||||||||||||||
Unrealized gain (loss) on late fee securities
|
(675 | ) | — | 582 | (93 | ) | — | |||||||||||||||||
Unrealized gain (loss) on AAA-rated and agency interest-only
securities
|
(5,221 | ) | (8,629 | ) | 10,504 | 6,764 | 4,138 | |||||||||||||||||
Unrealized gain (loss) on non-investment grade residual
securities
|
(38,672 | ) | 8,125 | (12,088 | ) | (53,385 | ) | 7,208 | ||||||||||||||||
Net gain (loss) on trading securities and other instrument(1)
|
(37,074 | ) | 6,484 | (23,687 | ) | (60,217 | ) | (2,444 | ) | |||||||||||||||
Total gain (loss) on MBS, net
|
$ | (93,669 | ) | $ | 18,968 | $ | (46,347 | ) | $ | (145,362 | ) | $ | 24,611 | |||||||||||
(1) | The amount for the three months ended September 30, 2007 includes $29.8 million of credit related losses on non-investment grade securities. |
September 30, |
September 30, |
June 30, |
||||||||||
2007 | 2006 | 2007 | ||||||||||
Amortized cost
|
$ | 4,411,854 | $ | 4,449,860 | $ | 4,564,495 | ||||||
Gross unrealized holding gains
|
6,871 | 16,231 | 3,984 | |||||||||
Gross unrealized holding losses
|
(94,325 | ) | (43,611 | ) | (68,572 | ) | ||||||
Estimated fair value
|
$ | 4,324,400 | $ | 4,422,480 | $ | 4,499,907 | ||||||
66
As of September 30, 2007 | ||||||||||||||||||||||||
Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
Unrealized |
Unrealized |
Unrealized |
||||||||||||||||||||||
Losses | Fair Value | Losses | Fair Value | Losses | Fair Value | |||||||||||||||||||
Securities — available for sale:
|
||||||||||||||||||||||||
AAA-rated non-agency securities
|
$ | (16,947 | ) | $ | 1,279,753 | $ | (39,538 | ) | $ | 1,340,963 | $ | (56,485 | ) | $ | 2,620,716 | |||||||||
AAA-rated agency securities
|
(964 | ) | 30,905 | (56 | ) | 12,925 | (1,020 | ) | 43,830 | |||||||||||||||
Other investment grade securities
|
(35,990 | ) | 404,060 | (689 | ) | 19,439 | (36,679 | ) | 423,499 | |||||||||||||||
Residual securities
|
(141 | ) | 3,131 | — | — | (141 | ) | 3,131 | ||||||||||||||||
Total securities — available for sale
|
$ | (54,042 | ) | $ | 1,717,849 | $ | (40,283 | ) | $ | 1,373,327 | $ | (94,325 | ) | $ | 3,091,176 | |||||||||
67
December 31, |
||||||||||||||||||||
September 30, 2007 | 2006 | |||||||||||||||||||
Current |
Net Premium |
|||||||||||||||||||
Face |
(Discount) to |
Amortized |
||||||||||||||||||
Value | Face Value | Cost | Fair Value | Fair Value | ||||||||||||||||
AAA-rated mortgage-backed securities:
|
||||||||||||||||||||
AAA-rated non-agencies securities
|
$ | 3,940,397 | $ | 27,389 | $ | 3,967,786 | $ | 3,915,650 | $ | 4,648,446 | ||||||||||
AAA-rated agency securities
|
442,901 | 1,603 | 444,504 | 443,516 | 65,175 | |||||||||||||||
AAA-rated and agency interest-only securities
|
— | — | — | 71,901 | 73,570 | |||||||||||||||
AAA-rated principal-only securities
|
— | — | — | 72,488 | 38,478 | |||||||||||||||
Total AAA-rated mortgage-backed securities
|
$ | 4,383,298 | $ | 28,992 | $ | 4,412,290 | $ | 4,503,555 | $ | 4,825,669 | ||||||||||
Prepayment penalty and late fee securities
|
$ | 88,239 | $ | 97,576 | ||||||||||||||||
Other investment grade mortgage-backed securities:
|
||||||||||||||||||||
AA+
|
$ | 13,807 | $ | (866 | ) | $ | 12,941 | $ | 12,437 | $ | 7,513 | |||||||||
AA
|
417,485 | (12,792 | ) | 404,693 | 381,785 | 86,311 | ||||||||||||||
AA-
|
18,976 | (741 | ) | 18,235 | 16,506 | 14,138 | ||||||||||||||
A+
|
6,438 | (190 | ) | 6,248 | 5,836 | — | ||||||||||||||
A
|
170,782 | (13,308 | ) | 157,474 | 150,496 | 2,160 | ||||||||||||||
A-
|
13,650 | (68 | ) | 13,582 | 12,281 | — | ||||||||||||||
BBB+
|
1,810 | (706 | ) | 1,104 | 1,104 | — | ||||||||||||||
BBB
|
106,112 | (17,667 | ) | 88,445 | 86,062 | 20,734 | ||||||||||||||
BBB-
|
64,150 | (7,522 | ) | 56,628 | 57,649 | 58,397 | ||||||||||||||
Total other investment grade mortgage-backed securities
|
$ | 813,210 | $ | (53,860 | ) | $ | 759,350 | $ | 724,156 | $ | 189,253 | |||||||||
Non-investment grade mortgage-backed securities:
|
||||||||||||||||||||
BB+
|
$ | 37,072 | $ | (8,679 | ) | $ | 28,393 | $ | 28,393 | $ | 7,299 | |||||||||
BB
|
154,972 | (44,051 | ) | 110,921 | 111,140 | 49,856 | ||||||||||||||
BB-
|
22,022 | (2,393 | ) | 19,629 | 19,629 | 21,170 | ||||||||||||||
B
|
66,368 | (46,894 | ) | 19,474 | 19,896 | 1,442 | ||||||||||||||
CCC+
|
5,042 | (2,949 | ) | 2,093 | 2,093 | — | ||||||||||||||
CCC
|
4,096 | (2,497 | ) | 1,599 | 1,599 | — | ||||||||||||||
C
|
5,705 | (3,721 | ) | 1,984 | 1,984 | — | ||||||||||||||
Other
|
49,550 | (44,228 | ) | 5,322 | 5,545 | 407 | ||||||||||||||
Total other non-investment grade mortgage-backed securities
|
$ | 344,827 | $ | (155,412 | ) | $ | 189,415 | $ | 190,279 | $ | 80,174 | |||||||||
Non-investment grade residual securities
|
$ | 225,815 | $ | 250,573 | ||||||||||||||||
Total mortgage-backed securities
|
$ | 5,732,044 | $ | 5,443,245 | ||||||||||||||||
68
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
||||||||||||||||
2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||
AAA-rated and agency interest-only and other investment grade
securities:
|
||||||||||||||||||||
Beginning balance
|
$ | 702,852 | $ | 252,318 | $ | 375,434 | $ | 262,823 | $ | 170,851 | ||||||||||
Retained investments from securitizations
|
135,988 | 18,149 | 233,375 | 428,553 | 63,954 | |||||||||||||||
Purchases
|
80,807 | 7,369 | 60,048 | 199,654 | 72,366 | |||||||||||||||
Transfer from MSRs
|
— | — | 56,040 | 56,040 | — | |||||||||||||||
Transfer to non-investment grade securities
|
(4,896 | ) | — | (4,163 | ) | (10,498 | ) | — | ||||||||||||
Impairments
|
(134 | ) | — | — | (316 | ) | (183 | ) | ||||||||||||
Sales
|
(54,581 | ) | (7,039 | ) | (16,644 | ) | (71,225 | ) | (29,978 | ) | ||||||||||
Clean-up
calls exercised
|
— | — | — | — | (108 | ) | ||||||||||||||
Cash received, net of accretion
|
(15,118 | ) | (3,503 | ) | (6,097 | ) | (28,287 | ) | (19,073 | ) | ||||||||||
Valuation gains (losses) before hedges
|
(48,861 | ) | (5,659 | ) | 4,859 | (40,687 | ) | 3,806 | ||||||||||||
Ending balance
|
$ | 796,057 | $ | 261,635 | $ | 702,852 | $ | 796,057 | $ | 261,635 | ||||||||||
Principal-only securities:
|
||||||||||||||||||||
Beginning balance
|
$ | 69,127 | $ | 129,951 | $ | 55,977 | $ | 38,478 | $ | 9,483 | ||||||||||
Retained investments from securitizations
|
3,931 | 3,238 | 1,118 | 7,686 | 10,907 | |||||||||||||||
Purchases
|
— | — | 17,733 | 32,658 | 121,281 | |||||||||||||||
Sales
|
— | (100,761 | ) | — | — | (100,761 | ) | |||||||||||||
Cash received, net of accretion
|
(424 | ) | (2,278 | ) | (785 | ) | (1,573 | ) | (4,252 | ) | ||||||||||
Valuation gains (losses) before hedges
|
(146 | ) | 5,008 | (4,916 | ) | (4,761 | ) | (1,500 | ) | |||||||||||
Ending balance
|
$ | 72,488 | $ | 35,158 | $ | 69,127 | $ | 72,488 | $ | 35,158 | ||||||||||
Prepayment penalty and late fee securities:
|
||||||||||||||||||||
Beginning balance
|
$ | 88,613 | $ | 80,036 | $ | 93,106 | $ | 97,576 | $ | 75,741 | ||||||||||
Retained investments from securitizations
|
11,047 | 13,801 | 22,058 | 41,210 | 35,858 | |||||||||||||||
Transfer from MSRs/residual securities
|
1,985 | 3,642 | 1,211 | 3,359 | 3,642 | |||||||||||||||
Cash received, net of accretion
|
(5,065 | ) | (12,307 | ) | (6,686 | ) | (22,285 | ) | (34,726 | ) | ||||||||||
Valuation gains (losses) before hedges
|
(8,341 | ) | 13,250 | (21,076 | ) | (31,621 | ) | 17,907 | ||||||||||||
Ending balance
|
$ | 88,239 | $ | 98,422 | $ | 88,613 | $ | 88,239 | $ | 98,422 | ||||||||||
Non-investment grade securities:
|
||||||||||||||||||||
Beginning balance
|
$ | 183,323 | $ | 88,045 | $ | 110,204 | $ | 80,173 | $ | 57,712 | ||||||||||
Retained investments from securitizations
|
21,446 | 3,324 | 65,908 | 113,265 | 34,205 | |||||||||||||||
Purchases
|
— | — | 9,758 | 11,585 | — | |||||||||||||||
Transfer from investment grade securities
|
4,896 | — | 4,163 | 10,498 | — | |||||||||||||||
Impairments
|
(223 | ) | (156 | ) | — | (326 | ) | (610 | ) | |||||||||||
Sales
|
— | (12,401 | ) | — | — | (12,401 | ) | |||||||||||||
Cash received, net of accretion
|
(413 | ) | 296 | (969 | ) | (539 | ) | 392 | ||||||||||||
Valuation losses before hedges
|
(18,750 | ) | (830 | ) | (5,741 | ) | (24,377 | ) | (1,020 | ) | ||||||||||
Ending balance
|
$ | 190,279 | $ | 78,278 | $ | 183,323 | $ | 190,279 | $ | 78,278 | ||||||||||
Residual securities(1):
|
||||||||||||||||||||
Beginning balance
|
$ | 259,872 | $ | 240,522 | $ | 270,831 | $ | 250,573 | $ | 167,771 | ||||||||||
Retained investments from securitizations, net(2)
|
1,679 | 23,608 | 13,397 | 38,783 | 109,417 | |||||||||||||||
Transfer to prepayment penalty securities
|
(2,000 | ) | (1,041 | ) | (1,076 | ) | (3,076 | ) | (1,041 | ) | ||||||||||
Transfer due to
clean-up
calls and other
|
— | — | — | (5,615 | ) | — | ||||||||||||||
Impairments
|
(4,004 | ) | (3,626 | ) | — | (5,774 | ) | (4,926 | ) | |||||||||||
Clean-up
calls exercised
|
— | — | (2,106 | ) | (2,106 | ) | — | |||||||||||||
Cash received, net of accretion
|
7,115 | (6,431 | ) | (7,565 | ) | 6,414 | (15,735 | ) | ||||||||||||
Valuation gains (losses) before hedges
|
(36,847 | ) | 8,626 | (13,609 | ) | (53,384 | ) | 6,172 | ||||||||||||
Ending balance
|
$ | 225,815 | $ | 261,658 | $ | 259,872 | $ | 225,815 | $ | 261,658 | ||||||||||
(1) | Included in the residual securities balance at September 30, 2007 were $7.4 million of HELOC residuals retained from two separate guaranteed mortgage securitization transactions. There was no gain on sale of loans recognized in connection with these transactions. | |
(2) | Amounts retained consist of 100% in HELOCs for the three months ended September 30, 2007. |
69
Actual | Valuation Assumptions | |||||||||||||||||||||||||||||||||||||||
Gross Wtd. |
Servicing |
3-Month |
Weighted |
Lifetime |
3-Month |
Remaining |
||||||||||||||||||||||||||||||||||
Book |
Collateral |
Average |
Fee/Interest |
Prepayment |
Average |
Prepayment |
Prepayment |
Discount |
Cumulative |
|||||||||||||||||||||||||||||||
Value | Balance | Coupon | Strip | Speeds | Multiple | Speeds | Speeds | Yield | Loss Rate(1) | |||||||||||||||||||||||||||||||
MSRs
|
$ | 2,489,611 | $ | 173,915,457 | 7.04 | % | 0.34 | % | 12.0 | % | 4.18 | 20.1 | % | 16.5 | % | 9.1 | % | N/A | ||||||||||||||||||||||
AAA-rated interest-only securities
|
$ | 71,901 | $ | 5,398,591 | 6.60 | % | 0.49 | % | 12.1 | % | 2.70 | 18.5 | % | 15.0 | % | 12.9 | % | N/A | ||||||||||||||||||||||
Prepayment penalty securities
|
$ | 68,760 | $ | 20,130,891 | 7.44 | % | N/A | 11.5 | % | N/A | 22.6 | % | 17.7 | % | 21.5 | % | N/A | |||||||||||||||||||||||
Lot loan residual securities
|
64,702 | $ | 1,896,031 | 9.82 | % | 3.72 | % | 32.7 | % | 0.92 | 47.1 | % | 48.5 | % | 21.8 | % | 0.81 | % | ||||||||||||||||||||||
HELOC residual securities
|
61,039 | $ | 2,803,733 | 9.27 | % | 2.77 | % | 27.3 | % | 0.79 | 30.5 | % | 26.3 | % | 19.0 | % | 4.62 | % | ||||||||||||||||||||||
Closed-end seconds residual securities
|
22,616 | $ | 2,157,271 | 10.55 | % | 1.79 | % | 16.1 | % | 0.59 | 17.7 | % | 28.0 | % | 23.2 | % | 10.88 | % | ||||||||||||||||||||||
Subprime residual securities
|
77,458 | $ | 5,176,606 | 8.30 | % | 2.59 | % | 23.1 | % | 0.58 | 31.3 | % | 27.8 | % | 19.0 | % | 6.99 | % | ||||||||||||||||||||||
Total non-investment grade residual securities
|
$ | 225,815 | ||||||||||||||||||||||||||||||||||||||
MSRs
|
$ | 1,631,316 | $ | 124,394,943 | 6.96 | % | 0.37 | % | 18.2 | % | 3.59 | 24.8 | % | 18.2 | % | 9.6 | % | N/A | ||||||||||||||||||||||
AAA-rated interest-only securities
|
$ | 68,440 | $ | 4,424,080 | 6.68 | % | 0.52 | % | 12.7 | % | 2.95 | 16.7 | % | 17.2 | % | 13.6 | % | N/A | ||||||||||||||||||||||
Prepayment penalty securities
|
$ | 98,422 | $ | 19,441,542 | 7.17 | % | N/A | 23.0 | % | N/A | 25.3 | % | 18.8 | % | 22.9 | % | N/A | |||||||||||||||||||||||
Lot loan residual securities
|
66,133 | $ | 2,262,810 | 8.95 | % | 3.50 | % | 34.9 | % | 0.83 | 39.8 | % | 38.6 | % | 23.0 | % | 0.56 | % | ||||||||||||||||||||||
HELOC residual securities
|
95,745 | $ | 2,661,610 | 9.65 | % | 3.21 | % | 44.5 | % | 1.12 | 50.0 | % | 48.7 | % | 19.9 | % | 0.81 | % | ||||||||||||||||||||||
Closed-end seconds residual securities
|
14,841 | $ | 1,222,620 | 10.43 | % | 4.14 | % | 18.7 | % | 0.29 | 36.7 | % | 22.5 | % | 24.9 | % | 7.65 | % | ||||||||||||||||||||||
Subprime residual securities
|
84,939 | $ | 5,427,460 | 7.68 | % | 1.70 | % | 28.0 | % | 0.92 | 39.4 | % | 35.8 | % | 20.2 | % | 5.47 | % | ||||||||||||||||||||||
Total non-investment grade residual securities
|
$ | 261,658 | ||||||||||||||||||||||||||||||||||||||
MSRs
|
$ | 2,387,077 | $ | 167,710,148 | 7.06 | % | 0.35 | % | 18.1 | % | 4.12 | 20.7 | % | 19.1 | % | 8.7 | % | N/A | ||||||||||||||||||||||
AAA-rated interest-only securities
|
$ | 136,267 | $ | 5,860,016 | 6.57 | % | 0.74 | % | 17.5 | % | 3.14 | 19.6 | % | 18.5 | % | 12.7 | % | N/A | ||||||||||||||||||||||
Prepayment penalty securities
|
$ | 75,730 | $ | 20,181,683 | 7.36 | % | N/A | 14.9 | % | N/A | 23.4 | % | 23.2 | % | 17.3 | % | N/A | |||||||||||||||||||||||
Lot loan residual securities
|
67,398 | $ | 2,021,954 | 9.64 | % | 4.14 | % | 36.7 | % | 0.81 | 41.3 | % | 39.7 | % | 21.8 | % | 0.73 | % | ||||||||||||||||||||||
HELOC residual securities
|
90,150 | $ | 2,898,580 | 9.58 | % | 2.64 | % | 38.0 | % | 1.18 | 43.3 | % | 43.3 | % | 19.3 | % | 1.85 | % | ||||||||||||||||||||||
Closed-end seconds residual securities
|
28,303 | $ | 2,260,980 | 10.56 | % | 4.78 | % | 14.7 | % | 0.26 | 20.3 | % | 23.8 | % | 23.0 | % | 9.86 | % | ||||||||||||||||||||||
Subprime residual securities
|
74,021 | $ | 5,570,118 | 8.17 | % | 1.91 | % | 25.1 | % | 0.69 | 29.9 | % | 24.5 | % | 19.3 | % | 6.31 | % | ||||||||||||||||||||||
Total non-investment grade residual securities
|
$ | 259,872 | ||||||||||||||||||||||||||||||||||||||
(1) | As a percentage of the original pool balance, the actual loss rate to date totaled 1.33%, 2.80%, 0.83% and 0.01% for HELOC, closed-end seconds, subprime, and lot loans, respectively, at September 30, 2007. |
70
September 30, 2007 | September 30, 2006 | December 31, 2006 | ||||||||||||||||||||||
% of |
% of |
% of |
||||||||||||||||||||||
Total |
Total |
Total |
||||||||||||||||||||||
Amount | Deposits | Amount | Deposits | Amount | Deposits | |||||||||||||||||||
Deposit Channel
|
||||||||||||||||||||||||
Branch | $ | 6,750,823 | 40 | % | $ | 4,729,699 | 47 | % | $ | 5,211,365 | 48 | % | ||||||||||||
Internet
|
1,460,766 | 9 | % | 1,121,653 | 11 | % | 1,185,423 | 11 | % | |||||||||||||||
Telebanking
|
1,820,054 | 11 | % | 1,249,974 | 12 | % | 1,290,595 | 12 | % | |||||||||||||||
Money desk
|
5,976,053 | 35 | % | 2,358,272 | 23 | % | 2,593,719 | 24 | % | |||||||||||||||
Custodial
|
766,942 | 5 | % | 651,421 | 7 | % | 616,904 | 5 | % | |||||||||||||||
Total deposits
|
$ | 16,744,638 | 100 | % | $ | 10,111,019 | 100 | % | $ | 10,898,006 | 100 | % | ||||||||||||
September 30, 2007 | September 30, 2006 | December 31, 2006 | ||||||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||||
Deposit Product
|
||||||||||||||||||||||||
Non-interest-bearing checking
|
$ | 78,599 | 0.0 | % | $ | 71,013 | 0.0 | % | $ | 72,081 | 0.0 | % | ||||||||||||
Interest-bearing checking
|
56,579 | 1.7 | % | 51,333 | 1.2 | % | 54,844 | 1.2 | % | |||||||||||||||
Savings
|
2,498,170 | 4.8 | % | 1,696,859 | 4.9 | % | 1,915,333 | 5.0 | % | |||||||||||||||
Custodial accounts
|
766,942 | 0.0 | % | 651,421 | 0.0 | % | 616,904 | 0.0 | % | |||||||||||||||
Total core deposits
|
3,400,290 | 3.6 | % | 2,470,626 | 3.4 | % | 2,659,162 | 3.6 | % | |||||||||||||||
Certificates of deposit
|
13,374,348 | 5.2 | % | 7,640,393 | 5.0 | % | 8,238,844 | 5.2 | % | |||||||||||||||
Total deposits
|
$ | 16,774,638 | 4.9 | % | $ | 10,111,019 | 4.6 | % | $ | 10,898,006 | 4.8 | % | ||||||||||||
71
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
72
ITEM 1. | FINANCIAL STATEMENTS |
September 30, |
December 31, |
|||||||
2007 | 2006 | |||||||
(Unaudited) | ||||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 784,987 | $ | 541,725 | ||||
Securities classified as trading
|
1,407,644 | 542,731 | ||||||
Securities classified as available for sale
|
4,324,400 | 4,900,514 | ||||||
Loans held for sale
|
14,022,234 | 9,467,843 | ||||||
Loans held for investment, net of allowance for loan losses of
$161,768 and $62,386 at September 30, 2007 and
December 31, 2006, respectively
|
8,390,861 | 10,114,823 | ||||||
Mortgage servicing rights
|
2,489,611 | 1,822,455 | ||||||
Other assets
|
2,312,973 | 2,105,225 | ||||||
Total assets
|
$ | 33,732,710 | $ | 29,495,316 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities
|
||||||||
Deposits
|
$ | 16,774,638 | $ | 10,898,006 | ||||
Advances from Federal Home Loan Bank
|
11,094,800 | 10,412,800 | ||||||
Other borrowings
|
2,189,681 | 4,637,000 | ||||||
Other liabilities
|
1,311,948 | 1,519,242 | ||||||
Total liabilities
|
31,371,067 | 27,467,048 | ||||||
Perpetual preferred stock in subsidiary
|
491,000 | — | ||||||
Shareholders’ Equity
|
||||||||
Preferred stock — authorized, 10,000,000 shares
of $0.01 par value; none issued
|
— | — | ||||||
Common stock — authorized, 200,000,000 shares of
$0.01 par value; issued 104,901,301 shares and
102,258,939 shares at September 30, 2007 and
December 31, 2006, respectively
|
1,049 | 1,023 | ||||||
Additional
paid-in-capital,
common stock
|
1,674,788 | 1,597,814 | ||||||
Accumulated other comprehensive loss
|
(66,117 | ) | (31,439 | ) | ||||
Retained earnings
|
767,883 | 983,348 | ||||||
Treasury stock
|
(506,960 | ) | (522,478 | ) | ||||
Total shareholders’ equity
|
1,870,643 | 2,028,268 | ||||||
Total liabilities and shareholders’ equity
|
$ | 33,732,710 | $ | 29,495,316 | ||||
73
For the Three Months |
For the Nine Months |
|||||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Interest income
|
||||||||||||||||
Mortgage-backed and other securities
|
$ | 101,901 | $ | 86,212 | $ | 289,717 | $ | 233,693 | ||||||||
Loans held for sale
|
283,882 | 196,924 | 825,301 | 551,564 | ||||||||||||
Loans held for investment
|
152,049 | 151,488 | 477,792 | 418,845 | ||||||||||||
Other
|
20,019 | 12,127 | 52,195 | 32,706 | ||||||||||||
Total interest income
|
557,851 | 446,751 | 1,645,005 | 1,236,808 | ||||||||||||
Interest expense
|
||||||||||||||||
Deposits
|
170,540 | 113,758 | 441,225 | 280,841 | ||||||||||||
Advances from Federal Home Loan Bank
|
183,192 | 115,769 | 541,896 | 329,846 | ||||||||||||
Other borrowings
|
61,941 | 80,513 | 235,392 | 232,046 | ||||||||||||
Total interest expense
|
415,673 | 310,040 | 1,218,513 | 842,733 | ||||||||||||
Net interest income
|
142,178 | 136,711 | 426,492 | 394,075 | ||||||||||||
Provision for loan losses
|
98,279 | 4,988 | 126,170 | 11,040 | ||||||||||||
Net interest income after provision for loan losses
|
43,899 | 131,723 | 300,322 | 383,035 | ||||||||||||
Non-interest income (loss)
|
||||||||||||||||
Gain (loss) on sale of loans
|
(251,119 | ) | 160,225 | (32,545 | ) | 503,083 | ||||||||||
Service fee income
|
212,929 | 21,058 | 347,733 | 79,194 | ||||||||||||
Gain (loss) on mortgage-backed securities
|
(93,669 | ) | 18,968 | (145,362 | ) | 24,611 | ||||||||||
Fee and other income
|
45,574 | 13,600 | 87,302 | 37,276 | ||||||||||||
Total non-interest income (loss)
|
(86,285 | ) | 213,851 | 257,128 | 644,164 | |||||||||||
Net revenues
|
(42,386 | ) | 345,574 | 557,450 | 1,027,199 | |||||||||||
Non-interest expense
|
270,128 | 203,128 | 710,763 | 578,842 | ||||||||||||
Earnings (loss) before provision (benefit) for income taxes and
minority interests
|
(312,514 | ) | 142,446 | (153,313 | ) | 448,357 | ||||||||||
Provision (benefit) for income taxes
|
(122,193 | ) | 56,266 | (60,013 | ) | 176,545 | ||||||||||
Net earnings (loss) before minority interests
|
(190,321 | ) | 86,180 | (93,300 | ) | 271,812 | ||||||||||
Minority interests
|
12,396 | — | 12,396 | 1,124 | ||||||||||||
Net earnings (loss)
|
$ | (202,717 | ) | $ | 86,180 | $ | (105,696 | ) | $ | 270,688 | ||||||
Earnings (loss) per share:
|
||||||||||||||||
Basic
|
$ | (2.77 | ) | $ | 1.25 | $ | (1.46 | ) | $ | 4.07 | ||||||
Diluted(1)
|
$ | (2.77 | ) | $ | 1.19 | $ | (1.46 | ) | $ | 3.87 | ||||||
Weighted-average shares outstanding:
|
||||||||||||||||
Basic
|
73,134 | 68,866 | 72,617 | 66,570 | ||||||||||||
Diluted(1)
|
73,134 | 72,286 | 72,617 | 70,009 | ||||||||||||
Dividends declared per share
|
$ | 0.50 | $ | 0.48 | $ | 1.50 | $ | 1.38 |
(1) | To avoid the antidilutive impact from diluted shares due to the Company’s net loss for the three and nine months ended September 30, 2007, the diluted loss per share and weighted-average diluted shares outstanding are the same as basic loss per share and weighted-average shares outstanding. |
74
Accumulated |
||||||||||||||||||||||||||||
Additional |
Other |
Total |
||||||||||||||||||||||||||
Shares |
Common |
Paid-In- |
Comprehensive |
Retained |
Treasury |
Shareholders’ |
||||||||||||||||||||||
Outstanding | Stock | Capital | Loss | Earnings | Stock | Equity | ||||||||||||||||||||||
Balance at December 31, 2005
|
64,246,767 | $ | 934 | $ | 1,318,751 | $ | (15,157 | ) | $ | 759,330 | $ | (520,417 | ) | $ | 1,543,441 | |||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net earnings
|
— | — | — | — | 270,688 | — | 270,688 | |||||||||||||||||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||||||||||||||||||
Net unrealized gain on mortgage-backed securities available for
sale
|
— | — | — | 7,816 | — | — | 7,816 | |||||||||||||||||||||
Net unrealized loss on derivatives used in cash flow hedges
|
— | — | — | (14,036 | ) | — | — | (14,036 | ) | |||||||||||||||||||
Total comprehensive income
|
— | — | — | — | — | — | 264,468 | |||||||||||||||||||||
Cumulative-effect adjustment due to change in accounting for MSRs
|
— | — | — | — | 10,624 | — | 10,624 | |||||||||||||||||||||
Issuance of common stock
|
2,969,165 | 30 | 123,696 | — | — | — | 123,726 | |||||||||||||||||||||
Exercises of common stock options
|
800,993 | 8 | 21,807 | — | — | — | 21,815 | |||||||||||||||||||||
Exercises of warrants
|
2,466,974 | 25 | 54,125 | — | — | — | 54,150 | |||||||||||||||||||||
Compensation expense for common stock options
|
— | — | 7,386 | — | — | — | 7,386 | |||||||||||||||||||||
Net officers’ notes receivable payments
|
— | — | 100 | — | — | — | 100 | |||||||||||||||||||||
Deferred compensation and restricted stock amortization, net of
forfeitures
|
426,489 | 4 | 7,663 | — | — | — | 7,667 | |||||||||||||||||||||
Purchases of common stock
|
(51,728 | ) | — | — | — | — | (2,061 | ) | (2,061 | ) | ||||||||||||||||||
Cash dividends
|
— | — | — | — | (93,484 | ) | — | (93,484 | ) | |||||||||||||||||||
Balance at September 30, 2006
|
70,858,660 | $ | 1,001 | $ | 1,533,528 | $ | (21,377 | ) | $ | 947,158 | $ | (522,478 | ) | $ | 1,937,832 | |||||||||||||
Balance at December 31, 2006
|
73,017,356 | $ | 1,023 | $ | 1,597,814 | $ | (31,439 | ) | $ | 983,348 | $ | (522,478 | ) | $ | 2,028,268 | |||||||||||||
Comprehensive income (loss):
|
||||||||||||||||||||||||||||
Net loss
|
— | — | — | — | (105,696 | ) | — | (105,696 | ) | |||||||||||||||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||||||||||||||||||
Net unrealized loss on mortgage-backed securities available for
sale
|
— | — | — | (34,800 | ) | — | — | (34,800 | ) | |||||||||||||||||||
Net unrealized loss on derivatives used in cash flow hedges
|
— | — | — | (4,787 | ) | — | — | (4,787 | ) | |||||||||||||||||||
Change in post retirement benefit plan
|
— | — | — | 4,909 | — | — | 4,909 | |||||||||||||||||||||
Total comprehensive loss
|
— | — | — | — | — | — | (140,374 | ) | ||||||||||||||||||||
Issuance of common stock
|
3,467,493 | 35 | 74,196 | — | — | — | 74,231 | |||||||||||||||||||||
Exercises of common stock options
|
144,212 | — | 6 | — | — | 2,577 | 2,583 | |||||||||||||||||||||
Exercises of warrants
|
63,888 | 1 | 1,405 | — | — | — | 1,406 | |||||||||||||||||||||
Compensation expense for common stock options
|
— | — | 6,108 | — | — | — | 6,108 | |||||||||||||||||||||
Net officers’ notes receivable payments
|
— | — | 320 | — | — | — | 320 | |||||||||||||||||||||
Deferred compensation and restricted stock amortization, net of
forfeitures
|
296,459 | (10 | ) | (5,061 | ) | — | — | 14,444 | 9,373 | |||||||||||||||||||
Purchases of common stock
|
(39,971 | ) | — | — | — | — | (1,503 | ) | (1,503 | ) | ||||||||||||||||||
Cash dividends
|
— | — | — | — | (109,769 | ) | — | (109,769 | ) | |||||||||||||||||||
Balance at September 30, 2007
|
76,949,437 | $ | 1,049 | $ | 1,674,788 | $ | (66,117 | ) | $ | 767,883 | $ | (506,960 | ) | $ | 1,870,643 | |||||||||||||
75
For the Nine Months |
||||||||
Ended September 30, | ||||||||
2007 | 2006 | |||||||
Cash flows from operating activities:
|
||||||||
Net earnings (loss)
|
$ | (105,696 | ) | $ | 270,688 | |||
Adjustments to reconcile net earnings (loss) to net cash used in
operating activities:
|
||||||||
(Gain) loss on sale of loans
|
32,545 | (503,083 | ) | |||||
Compensation expense related to stock options and restricted
stocks
|
15,481 | 15,053 | ||||||
Other amortization and depreciation
|
104,264 | 54,240 | ||||||
Change in valuation of mortgage servicing rights, including
amortization
|
(1,514 | ) | 243,339 | |||||
(Gain) loss on mortgage-backed securities, net
|
145,362 | (24,611 | ) | |||||
Provision for loan losses
|
126,170 | 11,040 | ||||||
Provision (benefit) for deferred income taxes
|
(60,013 | ) | 186,127 | |||||
Net (increase) decrease in other assets and liabilities
|
(133,416 | ) | 38,742 | |||||
Net cash provided by operating activities before activity for
trading securities and loans held for sale
|
123,183 | 291,535 | ||||||
Net sales (purchases) of trading securities
|
(399,334 | ) | 245,560 | |||||
Net purchases and originations of loans held for sale
|
(6,293,995 | ) | (5,933,894 | ) | ||||
Net cash used in operating activities
|
(6,570,146 | ) | (5,396,799 | ) | ||||
Cash flows from investing activities:
|
||||||||
Payments on loans held for investment, net
|
985,214 | 454,547 | ||||||
Proceeds from sales of loans held for investment
|
510,253 | 9,185 | ||||||
Purchases of mortgage-backed securities available for sale
|
(430,519 | ) | (570,884 | ) | ||||
Proceeds from sales of and principal payments from
mortgage-backed securities available for sale
|
1,270,610 | 652,610 | ||||||
Net increase in investment in Federal Home Loan Bank stock, at
cost
|
(66,925 | ) | (80,388 | ) | ||||
Net decrease in real estate investment
|
1,740 | 7,483 | ||||||
Net sale (purchases) of property, plant and equipment
|
49,799 | (74,465 | ) | |||||
Purchase of Financial Freedom minority interest
|
— | (40,000 | ) | |||||
Net cash provided by investing activities
|
2,320,172 | 358,088 | ||||||
Cash flows from financing activities:
|
||||||||
Net increase in deposits
|
5,874,312 | 2,436,235 | ||||||
Net increase in advances from Federal Home Loan Bank
|
682,000 | 2,379,800 | ||||||
Net increase (decrease) in borrowings
|
(2,503,076 | ) | 97,920 | |||||
Net proceeds from issuance of common stock
|
74,231 | 123,726 | ||||||
Net proceeds from issuance of trust preferred securities
|
30,000 | 128,000 | ||||||
Redemption of trust preferred securities
|
(48,268 | ) | (28,587 | ) | ||||
Net proceeds from stock options, warrants and notes receivable
|
4,309 | 76,065 | ||||||
Proceeds from issuance of preferred stock by subsidiary
|
491,000 | — | ||||||
Cash dividends paid
|
(109,769 | ) | (93,484 | ) | ||||
Purchases of common stock
|
(1,503 | ) | (2,061 | ) | ||||
Net cash provided by financing activities
|
4,493,236 | 5,117,614 | ||||||
Net increase in cash and cash equivalents
|
243,262 | 78,903 | ||||||
Cash and cash equivalents at beginning of period
|
541,725 | 442,525 | ||||||
Cash and cash equivalents at end of period
|
$ | 784,987 | $ | 521,428 | ||||
Supplemental cash flow information:
|
||||||||
Cash paid for interest
|
$ | 1,109,796 | $ | 779,203 | ||||
Cash paid (received) for income taxes
|
$ | 4,751 | $ | (48,685 | ) | |||
Supplemental disclosure of non-cash investing and financing
activities:
|
||||||||
Net transfer of loans held for sale to loans held for investment
|
$ | 1,059,363 | $ | 2,258,617 | ||||
Net transfer of loans held for investment to loans held for sale
|
$ | 1,066,503 | $ | — | ||||
Net transfer of mortgage servicing rights to trading securities
|
$ | 54,993 | $ | 2,601 | ||||
76
NOTE 1 — | BASIS OF PRESENTATION |
NOTE 2 — | NEWLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS |
77
NOTE 3 — | SEGMENT REPORTING |
78
Mortgage Banking Segment | ||||||||||||||||||||
Mortgage |
Mortgage |
|||||||||||||||||||
Production |
Servicing |
Thrift |
Total |
|||||||||||||||||
Divisions | Division | Segment | Other | Company | ||||||||||||||||
Three months ended September 30, 2007
|
||||||||||||||||||||
Net interest income (expense)
|
$ | 50,572 | $ | (12,080 | ) | $ | 73,829 | $ | 29,857 | $ | 142,178 | |||||||||
Net revenues (expense)
|
(90,478 | ) | 162,428 | (141,544 | ) | 27,208 | (42,386 | ) | ||||||||||||
Net earnings (loss)
|
(123,579 | ) | 85,275 | (104,411 | ) | (60,002 | ) | (202,717 | ) | |||||||||||
Allocated average capital
|
735,561 | 399,237 | 914,473 | 5,110 | 2,054,381 | |||||||||||||||
Assets as of September 30, 2007
|
$ | 11,408,294 | $ | 4,351,220 | $ | 16,695,380 | $ | 1,277,816 | $ | 33,732,710 | ||||||||||
Return on average equity
|
(67 | )% | 85 | % | (45 | )% | N/A | (39 | )% | |||||||||||
Three months ended September 30, 2006
|
||||||||||||||||||||
Net interest income (expense)
|
$ | 41,218 | $ | (3,323 | ) | $ | 79,043 | $ | 19,773 | $ | 136,711 | |||||||||
Net revenues (expense)
|
204,391 | 47,672 | 102,823 | (9,312 | ) | 345,574 | ||||||||||||||
Net earnings (loss)
|
68,981 | 20,056 | 46,016 | (48,873 | ) | 86,180 | ||||||||||||||
Allocated average capital
|
509,136 | 269,464 | 820,043 | 272,736 | 1,871,379 | |||||||||||||||
Assets as of September 30, 2006
|
$ | 7,687,438 | $ | 2,431,620 | $ | 16,318,328 | $ | 948,097 | $ | 27,385,483 | ||||||||||
Return on average equity
|
54 | % | 30 | % | 22 | % | N/A | 18 | % | |||||||||||
Nine months ended September 30, 2007
|
||||||||||||||||||||
Net interest income (expense)
|
$ | 161,681 | $ | (24,546 | ) | $ | 215,348 | $ | 74,009 | $ | 426,492 | |||||||||
Net revenues (expense)
|
253,180 | 295,225 | (13,363 | ) | 22,408 | 557,450 | ||||||||||||||
Net earnings (loss)
|
(41,236 | ) | 142,088 | (58,971 | ) | (147,577 | ) | (105,696 | ) | |||||||||||
Allocated average capital
|
717,083 | 360,140 | 888,219 | 89,588 | 2,055,030 | |||||||||||||||
Assets as of September 30, 2007
|
$ | 11,408,294 | $ | 4,351,220 | $ | 16,695,380 | $ | 1,277,816 | $ | 33,732,710 | ||||||||||
Return on average equity
|
(8 | )% | 53 | % | (9 | )% | N/A | (7 | )% | |||||||||||
Nine months ended September 30, 2006
|
||||||||||||||||||||
Net interest income (expense)
|
$ | 122,119 | $ | (6,840 | ) | $ | 231,485 | $ | 47,311 | $ | 394,075 | |||||||||
Net revenues (expense)
|
621,018 | 120,775 | 301,133 | (15,727 | ) | 1,027,199 | ||||||||||||||
Net earnings (loss)
|
219,174 | 51,329 | 134,710 | (134,525 | ) | 270,688 | ||||||||||||||
Allocated average capital
|
513,941 | 240,426 | 774,884 | 208,934 | 1,738,185 | |||||||||||||||
Assets as of September 30, 2006
|
$ | 7,687,438 | $ | 2,431,620 | $ | 16,318,328 | $ | 948,097 | $ | 27,385,483 | ||||||||||
Return on average equity
|
57 | % | 29 | % | 23 | % | N/A | 21 | % |
NOTE 4 — | STOCK-BASED COMPENSATION |
79
Nine Months Ended September 30, | ||||||||
2007 | 2006 | |||||||
Expected volatility
|
28.68 - 30.20 | % | 28.11 - 28.44 | % | ||||
Expected dividends
|
5.08 - 6.76 | % | 4.00 - 4.60 | % | ||||
Weighted average expected term (in years)
|
5.20 - 5.50 | 6.89 - 7.34 | ||||||
Risk-free rate
|
4.58 - 4.82 | % | 4.54 - 4.73 | % |
For the Nine |
||||||||||||||||
For the Three Months Ended September 30, | Months Ended September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Stock option compensation cost, before tax
|
$ | 1,723 | $ | 2,422 | $ | 6,108 | $ | 7,386 | ||||||||
Stock option compensation cost, after tax
|
1,181 | 1,611 | 3,975 | 4,530 | ||||||||||||
Effect on basic earnings per share
|
0.02 | 0.02 | 0.05 | 0.07 | ||||||||||||
Effect on dilutive earnings per share
|
0.02 | 0.02 | 0.05 | 0.06 |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, 2007 | September 30, 2007 | |||||||||||||||
Weighted- |
Weighted- |
|||||||||||||||
Average |
Average |
|||||||||||||||
Grant-Date |
Grant-Date |
|||||||||||||||
Shares | Fair Value | Shares | Fair Value | |||||||||||||
Nonvested, beginning of period
|
1,226,371 | $ | 35.69 | 889,117 | $ | 39.14 | ||||||||||
Granted
|
46,493 | 18.68 | 585,300 | 29.74 | ||||||||||||
Vested
|
(2,519 | ) | 34.49 | (144,724 | ) | 37.42 | ||||||||||
Canceled and forfeited
|
(229,591 | ) | 36.96 | (288,939 | ) | 37.11 | ||||||||||
Nonvested, end of period
|
1,040,754 | 34.65 | 1,040,754 | 34.65 | ||||||||||||
80
NOTE 5 — | DEFINED BENEFIT PENSION PLAN |
NOTE 6 — | OTHER ASSETS HELD FOR SALE |
NOTE 7 — | SUBSEQUENT EVENTS |
81
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
82
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Total Number of |
Maximum Approximate |
|||||||||||||||
Total |
Shares Purchased |
Dollar Value (In Million) of |
||||||||||||||
Number of |
Weighted |
as Part of Publicly |
Shares that may yet be |
|||||||||||||
Shares |
Average Price |
Announced Plans or |
Purchased Under the |
|||||||||||||
Purchased(1) | Paid per Share | Programs | Plans or Programs(2) | |||||||||||||
Calendar Month:
|
||||||||||||||||
July 2007
|
— | $ | — | — | $ | 300 | ||||||||||
August 2007
|
248 | 20.71 | — | 300 | ||||||||||||
September 2007
|
150 | 23.12 | — | 300 | ||||||||||||
Total
|
398 | $ | 21.62 | — | 300 | |||||||||||
(1) | All shares purchased during the periods indicated represent withholding of a portion of shares to cover taxes in connection with vesting of restricted stocks or exercise of stock options. | |
(2) | Our Board of Directors previously approved a $500 million share repurchase program. Since its inception in 1999, we have repurchased a total of 28.0 million shares through this program. In January 2007, we obtained an authorization from the Board of Directors to repurchase an additional $236.4 million of common stock for a total current authorization of up to $300 million. |
ITEM 6. | EXHIBITS |
4 | .1 | 2000 Stock Incentive Plan, as amended. | ||
4 | .2 | 2002 Incentive Plan, as Amended and Restated. | ||
10 | .1 | Amended and Restated Employment Agreement entered into September 17, 2007 between IndyMac Bancorp, Inc. and Michael W. Perry. | ||
10 | .2 | IndyMac Bank, F.S.B. Deferred Compensation Plan, Amended and Restated Effective as of January 1, 2008. | ||
10 | .3 | IndyMac Bancorp, Inc. Senior Manager Deferred Compensation Plan Amended and Restated Effective as of September 17, 2007. | ||
31 | .1 | Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31 | .2 | Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32 | .1 | Chief Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
32 | .2 | Chief Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
83
By: |
/s/ MICHAEL
W. PERRY
|
By: |
/s/ A.
SCOTT KEYS
|
84
This ‘10-Q’ Filing | Date | Other Filings | ||
---|---|---|---|---|
1/1/08 | ||||
12/31/07 | 10-K, 11-K | |||
12/17/07 | ||||
12/6/07 | 8-K | |||
12/3/07 | ||||
11/15/07 | 4 | |||
Filed on: | 11/6/07 | 8-K | ||
10/31/07 | ||||
10/17/07 | ||||
For Period End: | 9/30/07 | |||
9/17/07 | 8-K | |||
7/11/07 | 8-K | |||
6/30/07 | 10-Q | |||
5/31/07 | ||||
4/1/07 | 3 | |||
1/1/07 | 3 | |||
12/31/06 | 10-K, 11-K, 5 | |||
12/15/06 | ||||
11/14/06 | 4 | |||
9/30/06 | 10-Q | |||
4/25/06 | 10-Q, 8-K, DEF 14A | |||
12/31/05 | 10-K, 11-K, 5 | |||
1/1/03 | ||||
12/31/02 | 10-K, 11-K | |||
11/14/01 | ||||
List all Filings |