NEWPORT BEACH, Calif., July 19 /PRNewswire-FirstCall/ -- Downey Financial
Corp. (NYSE: DSL) reported that net income for the second quarter of 2005
totaled a record $64.1 million or $2.29 per share on a diluted basis, up from
$27.8 million or $0.99 per share in the year-ago second quarter.
The increase in net income between second quarters reflected:
-- A $33.2 million increase in net gains on sales of loans and mortgage-
backed securities due to a higher volume and gain per dollar of loan
sold;
-- A $21.3 million favorable change associated with securities
gains/losses, as the year-ago quarter included a loss associated with
a partial economic hedge against value changes in mortgage servicing
rights;
-- A $17.4 million or 22.6% increase in net interest income reflecting a
higher level of interest-earning assets; and
-- A $11.2 million increase in loan and deposit related fees primarily
reflecting higher loan prepayment fees.
Those favorable items were partially offset by:
-- A $16.3 million unfavorable change in loan servicing activities, as
the year-ago quarter included a $14.3 million recapture from the
valuation allowance for mortgage servicing rights compared to a
$2.6 million provision in the current quarter; and
-- A $5.3 million decline in income from real estate held for investment
due primarily to lower gains from sales.
For the first six months of 2005, net income totaled $115.8 million or
$4.15 per share on a diluted basis, more than triple the $36.7 million or
$1.31 for the first six months of 2004.
Daniel D. Rosenthal, President and Chief Executive Officer, commented, "We
are very pleased with our results so far this year. Our earnings, compared to
a year ago, continue to benefit from strong secondary marketing activities,
growth in net interest income and improved operating efficiency. Our improved
gains on sales of loans reflected a strong appetite in the secondary markets
for adjustable rate mortgages, which we sold at healthy spreads."
NET INTEREST INCOME
Net interest income totaled $94.0 million in the second quarter of 2005,
up $17.4 million or 22.6% from a year ago. The increase primarily reflected
an increase of 27.6% in average interest-earning assets to $16.540 billion in
the current quarter. The effective interest rate spread averaged 2.27% in the
current quarter, down from 2.36% a year ago and 2.38% in the first quarter of
2005. The decline in the effective interest rate spread was due to a higher
level of deferred loan origination costs being written-off in the current
quarter related to loan repayments. Those write-offs were, in part, offset by
higher loan prepayment fees recognized in other income.
For the first six months of 2005, net interest income totaled
$188.1 million, up $42.1 million from a year ago.
PROVISION FOR LOAN LOSSES
During the current quarter, provision for loan losses totaled
$0.6 million, down $0.9 million from the year-ago second quarter. At quarter
end, the allowance for loan losses was $36 million, compared to $35 million at
year-end 2004 and $33 million at June 30, 2004. Net charge-offs totaled
$0.9 million in the current quarter, compared to $0.1 million a year ago.
For the first six months of 2005, provision for loan losses totaled
$2.6 million and net charge-offs were $1.0 million. That compares to a
$3.3 million provision for loan losses and net charge-offs of $0.1 million in
the year-ago period.
OTHER INCOME
Other income totaled $75.8 million in the second quarter of 2005, up
$45.6 million from a year ago. Contributing to the increase between second
quarters was:
-- A $33.2 million increase in net gains from sales of loans and
mortgage-backed securities. Net gains in the current quarter totaled
$48.8 million, including a $1.3 million gain due to the SFAS 133
impact of valuing derivatives associated with the sale of loans.
Excluding the impact of SFAS 133, a gain equal to 1.54% on secondary
market sales of $3.093 billion was realized, compared to the year-ago
gain of 1.08% on secondary market sales of $1.139 billion.
-- A $21.3 million favorable change in securities gains/losses, as the
year-ago quarter included losses from the sale of investment
securities that were acquired as a partial economic hedge against the
value of mortgage servicing rights.
-- A $11.2 million increase in loan and deposit related fees due
primarily to an increase of $10.7 million in loan prepayment fees.
Deposit related fees were up $0.7 million or 10.2%.
Those favorable items were partially offset by:
-- A $16.3 million unfavorable change in loan servicing activities. A
loss of $2.5 million was recognized in the current quarter, compared
to income of $13.8 million a year ago. The current quarter result
included a $2.6 million provision to the valuation allowance for
mortgage servicing rights, whereas the year-ago quarter included a
recapture of $14.3 million. At June 30, 2005, mortgage servicing
rights, net of a $4 million valuation allowance, totaled $17 million
or 0.75% of the $2.249 billion of associated loans serviced for others
(this excludes the $8.014 billion of loans sub-serviced for others on
a fixed fee basis per loan).
-- A $5.3 million decline in income from real estate held for investment
due primarily to lower gains from sales. The current quarter included
gains of $1.1 million, compared to $6.2 million a year ago.
For the first six months of 2005, other income totaled $131.5 million, up
$98.4 million from the same period a year ago.
OPERATING EXPENSE
Operating expense totaled $58.3 million in the current quarter, up
$1.0 million from a year ago due to a 1.5% increase in general and
administrative expense. The increase was primarily in salaries and related
costs, up $1.5 million or 3.9%.
For the first six months of 2005, operating expense totaled
$116.5 million, up $4.3 million from the same period a year ago.
ASSETS, LOAN ORIGINATIONS AND DEPOSITS
At June 30, 2005, assets totaled $16.612 billion, up 16.8% from a year ago
and up $963 million or 6.2% from year-end 2004. During the current quarter,
assets declined $281 million due primarily to a $341 million decline in loans
held for sale.
Loan originations (including purchases) totaled $4.133 billion in the
current quarter, up 6.8% from $3.869 billion a year ago. Loans originated for
sale increased $1.487 billion to $2.766 billion, while single family loans
originated for portfolio declined by $1.117 billion to $1.272 billion. Of the
current quarter total originated for portfolio, $133 million represented
subprime credits. At quarter end, the subprime portfolio totaled
$1.3 billion, with an average loan-to-value ratio at origination of 71% and,
of the total, 96% represented "Alt. A and A-" credits. In addition to single
family loans, $94 million of other loans were originated in the current
quarter.
Deposits totaled $11.042 billion at quarter end, up 23.4% from the
year-ago level and $1.384 billion or 14.3% since the end of 2004. During the
quarter, three new traditional branches were opened. This brings the total
number of branches to 172 (168 in California and four in Arizona). At quarter
end, the average deposit size of our 80 traditional branches was $110 million,
while the average deposit size of our 92 in-store branches was $24 million.
Since the end of 2004, borrowings have declined by $557 million, as deposit
growth exceeded the growth in assets.
NON-PERFORMING ASSETS
Non-performing assets declined $4 million during the quarter to
$25 million or 0.15% of total assets, compared to 0.22% at year-end 2004.
REGULATORY CAPITAL RATIOS
At June 30, 2005, Downey Financial Corp.'s primary subsidiary, Downey
Savings and Loan Association, F.A., had core and tangible capital ratios of
7.31% and a risk-based capital ratio of 14.11%. These capital levels were
well above the "well capitalized" standards of 5% and 10%, respectively, as
defined by regulation.
Certain statements in this release may constitute "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995, which
involve risks and uncertainties. Forward-looking statements do not relate
strictly to historical information or current facts. Some forward-looking
statements may be identified by use of terms such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates," or words of similar
meaning, or future or conditional verbs such as "will," "would," "should,"
"could" or "may." Downey's actual results may differ significantly from the
results discussed in such forward-looking statements. Factors that might
cause such a difference include, but are not limited to, economic conditions,
competition in the geographic and business areas in which Downey conducts its
operations, fluctuations in interest rates, credit quality and government
regulation. Downey does not update forward-looking statements to reflect the
impact of circumstances or events that arise after the date the
forward-looking statements were made.
DOWNEY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)
Jun. 30, Dec. 31, Jun. 30,
2005 2004 2004
ASSETS
Cash $ 128,670 $ 119,502 $ 126,361
Federal funds 30,001 -- --
Cash and cash equivalents 158,671 119,502 126,361
U.S. Treasury securities,
agency obligations and other
investment securities
available for sale, at fair
value 504,965 497,009 630,785
Loans held for sale, at lower
of cost or fair value 914,277 1,118,475 661,481
Mortgage-backed securities
available for sale, at fair
value 292 304 321
Loans receivable held for
investment, net 14,492,386 13,423,999 12,309,935
Investments in real estate and
joint ventures 58,941 55,411 31,517
Real estate acquired in
settlement of loans 2,201 2,555 2,424
Premises and equipment 105,230 106,238 107,277
Federal Home Loan Bank stock,
at cost 265,849 243,613 167,797
Investment in Downey Financial
Capital Trust I -- -- 3,711
Mortgage servicing rights, net 16,833 17,964 92,049
Other assets 92,482 63,738 88,689
$16,612,127 $15,648,808 $14,222,347
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Deposits $11,042,072 $ 9,657,978 $ 8,948,238
Securities sold under
agreements to repurchase -- -- 239,688
Federal Home Loan Bank
advances 4,002,757 4,559,622 3,556,087
Senior notes 198,004 197,924 198,179
Junior subordinated debentures -- -- 123,711
Accounts payable and accrued
liabilities 126,521 108,217 88,608
Deferred income taxes 126,628 117,416 125,384
Total liabilities 15,495,982 14,641,157 13,279,895
STOCKHOLDERS' EQUITY
Preferred stock, par value of
$0.01 per share; authorized
5,000,000 shares; outstanding
none -- -- --
Common stock, par value of
$0.01 per share; authorized
50,000,000 shares; issued
28,235,022 shares at
Jun. 30, 2005, Dec. 31, 2004
and Jun. 30, 2004;
outstanding 27,853,783 shares
at both Jun. 30, 2005 and
Dec. 31, 2004 and 27,968,283
shares at Jun. 30, 2004 282 282 282
Additional paid-in capital 93,792 93,792 93,792
Accumulated other
comprehensive income (loss) (1,427) 318 (5,745)
Retained earnings 1,040,290 930,051 864,704
Treasury stock, at cost,
381,239 shares at both
Jun. 30, 2005 and
Dec. 31, 2004 and 266,739
shares at Jun. 30, 2004 (16,792) (16,792) (10,581)
Total stockholders' equity 1,116,145 1,007,651 942,452
$16,612,127 $15,648,808 $14,222,347
=========== =========== ===========
DOWNEY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
Jun. 30, Jun. 30,
2005 2004 2005 2004
INTEREST INCOME
Loans receivable $189,641 $123,313 $362,648 $238,843
U.S. Treasury securities
and agency obligations 5,029 6,332 9,867 10,396
Mortgage-backed securities 3 3 6 6
Other investments 3,120 1,594 5,658 2,792
Total interest income 197,793 131,242 378,179 252,037
INTEREST EXPENSE
Deposits 60,962 34,662 109,985 67,262
Federal Home Loan Bank
advances and other
borrowings 39,572 16,543 73,552 32,248
Senior notes 3,296 292 6,591 292
Junior subordinated
debentures -- 3,134 -- 6,268
Total interest expense 103,830 54,631 190,128 106,070
NET INTEREST INCOME 93,963 76,611 188,051 145,967
PROVISION FOR LOAN LOSSES 583 1,458 2,621 3,262
Net interest income after
provision for loan
losses 93,380 75,153 185,430 142,705
OTHER INCOME, NET
Loan and deposit related
fees 25,645 14,419 45,152 26,875
Real estate and joint
ventures held for
investment, net 1,728 7,048 4,308 7,974
Secondary marketing
activities:
Loan servicing income
(loss), net (2,529) 13,786 (1,045) (459)
Net gains on sales of
loans and mortgage-
backed securities 48,848 15,675 79,463 17,047
Net gains on sales of
mortgage servicing
rights -- -- 981 --
Net gains (losses) on
sales of investment
securities 1 (21,271) 28 (19,159)
Litigation award 1,767 -- 1,767 --
Other 339 523 859 855
Total other income, net 75,799 30,180 131,513 33,133
OPERATING EXPENSE
Salaries and related costs 39,042 37,575 78,197 73,144
Premises and equipment
costs 7,891 8,200 15,891 16,408
Advertising expense 1,551 1,165 2,901 2,873
SAIF insurance premiums
and regulatory
assessments 927 744 1,854 1,501
Professional fees 345 356 681 724
Other general and
administrative expense 8,605 9,432 16,997 17,914
Total general and
administrative expense 58,361 57,472 116,521 112,564
Net operation of real
estate acquired in
settlement of loans (79) (237) (15) (309)
Total operating expense 58,282 57,235 116,506 112,255
INCOME BEFORE INCOME TAXES 110,897 48,098 200,437 63,583
Income taxes 46,827 20,277 84,628 26,850
NET INCOME $ 64,070 $ 27,821 $115,809 $ 36,733
======== ======== ======== ========
PER SHARE INFORMATION
BASIC $ 2.30 $ 0.99 $ 4.16 $ 1.31
DILUTED $ 2.29 $ 0.99 $ 4.15 $ 1.31
CASH DIVIDENDS DECLARED
AND PAID $ 0.10 $ 0.10 $ 0.20 $ 0.20
Weighted average diluted
shares outstanding 27,884,276 27,990,588 27,883,058 27,985,565
DOWNEY FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(Dollars in Thousands)
Three Months Ended Six Months Ended
Jun. 30, Jun. 30,
2005 2004 2005 2004
NET INCOME BY
BUSINESS SEGMENT
Banking $ 62,932 $ 23,726 $113,142 $ 32,113
Real estate
investment 1,138 4,095 2,667 4,620
Total net income $ 64,070 $ 27,821 $115,809 $ 36,733
======== ======== ======== ========
SELECTED FINANCIAL
RATIOS
Effective interest
rate spread 2.27% 2.36% 2.32% 2.39%
Efficiency ratio (a) 35.10 57.62 37.17 65.78
Return on average
assets 1.51 0.83 1.40 0.58
Return on average
equity 23.62 11.95 21.90 7.94
ASSET ACTIVITY
Loans for investment
portfolio:
Originations: (b)
Residential
one-to-four units $1,139,743 $2,185,061 $2,882,750 $3,915,531
Residential
one-to-four units-
subprime 132,636 204,688 305,960 377,233
All other 94,100 200,017 246,184 325,408
Repayments (1,385,603) (1,294,340) (2,429,252) (2,358,633)
Loans originated for
sale portfolio (b) 2,766,047 1,279,208 4,947,439 2,206,985
Loans and mortgage-
backed securities
sold (3,092,773) (1,139,029) (5,122,560) (1,817,775)
Increase (decrease)
in loans (including
mortgage-backed
securities) (321,553) 1,377,639 864,177 2,575,227
Increase (decrease)
in assets (281,210) 697,218 963,319 2,576,367
Increase in deposits 732,995 131,065 1,384,094 654,480
Increase (decrease)
in borrowings (1,091,077) 1,058,553 (556,785) 1,864,643
Jun. 30, Dec. 31, Jun. 30,
2005 2004 2004
CAPITAL RATIOS (BANK ONLY)
Tangible and core 7.31% 7.09% 6.68%
Risk-based 14.11 13.71 13.13
BOOK VALUE PER SHARE $ 40.07 $ 36.18 $ 33.70
NUMBER OF BRANCHES INCLUDING
IN-STORE LOCATIONS 172 169 167
(a) The amount of general and administrative expense expressed as a
percentage of net interest income plus other income, excluding
income associated with real estate held for investment and
litigation award.
(b) Includes loans purchased.
DOWNEY FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA - (Continued)
(Dollars in Thousands)
AVERAGE BALANCE SHEET DATA
Three Months Ended Jun. 30,
2005
Average
Average Yield/
Balance Interest Rate
Interest-earning assets:
Loans $15,761,341 $189,641 4.81%
Mortgage-backed securities 294 3 4.08
Investment securities (a) 778,672 8,149 4.20
Total interest-earning assets 16,540,307 197,793 4.78
Non-interest-earning assets 412,604
Total assets $16,952,911
===========
Transaction accounts:
Non-interest-bearing checking $ 699,998 $ -- -%
Interest-bearing checking (b) 537,003 480 0.36
Money market 157,761 411 1.04
Regular passbook 2,289,652 6,129 1.07
Total transaction accounts 3,684,414 7,020 0.76
Certificates of deposit 6,921,807 53,942 3.13
Total deposits 10,606,221 60,962 2.31
FHLB advances and other
borrowings (c) 4,827,696 39,572 3.29
Senior notes and junior subordinated
debentures (d) 197,988 3,296 6.66
Total deposits and borrowings 15,631,905 103,830 2.66
Other liabilities 236,109
Stockholders' equity 1,084,897
Total liabilities and stockholders'
equity $16,952,911
===========
Net interest income/interest rate
spread $ 93,963 2.12%
Excess of interest-earning assets
over deposits and borrowings $ 908,402
Effective interest rate spread 2.27
Three Months Ended Jun. 30,
2004
Average
Average Yield/
Balance Interest Rate
Interest-earning assets:
Loans $12,120,003 $123,313 4.07%
Mortgage-backed securities 325 3 3.69
Investment securities (a) 842,703 7,926 3.78
Total interest-earning assets 12,963,031 131,242 4.05
Non-interest-earning assets 415,503
Total assets $13,378,534
===========
Transaction accounts:
Non-interest-bearing checking $ 496,445 $ -- -%
Interest-bearing checking (b) 550,258 536 0.39
Money market 144,344 376 1.05
Regular passbook 3,844,436 10,283 1.08
Total transaction accounts 5,035,483 11,195 0.89
Certificates of deposit 3,851,486 23,467 2.45
Total deposits 8,886,969 34,662 1.57
FHLB advances and other
borrowings (c) 3,251,957 16,543 2.05
Senior notes and junior subordinated
debentures (d) 141,419 3,426 9.69
Total deposits and borrowings 12,280,345 54,631 1.79
Other liabilities 166,886
Stockholders' equity 931,303
Total liabilities and stockholders'
equity $13,378,534
===========
Net interest income/interest rate
spread $ 76,611 2.26%
Excess of interest-earning assets
over deposits and borrowings $ 682,686
Effective interest rate spread 2.36
Six Months Ended Jun. 30,
2005
Average
Average Yield/
Balance Interest Rate
Interest-earning assets:
Loans $15,421,287 $362,648 4.70%
Mortgage-backed securities 298 6 4.03
Investment securities (a) 759,588 15,525 4.12
Total interest-earning assets 16,181,173 378,179 4.67
Non-interest-earning assets 398,562
Total assets $16,579,735
===========
Transaction accounts:
Non-interest-bearing checking $ 656,971 $ -- -%
Interest-bearing checking (b) 534,710 956 0.36
Money market 158,126 821 1.05
Regular passbook 2,462,755 13,295 1.09
Total transaction accounts 3,812,562 15,072 0.80
Certificates of deposit 6,469,258 94,913 2.96
Total deposits 10,281,820 109,985 2.16
FHLB advances and other
borrowings (c) 4,809,754 73,552 3.08
Senior notes and junior subordinated
debentures (d) 197,969 6,591 6.66
Total deposits and borrowings 15,289,543 190,128 2.51
Other liabilities 232,652
Stockholders' equity 1,057,540
Total liabilities and stockholders'
equity $16,579,735
===========
Net interest income/interest rate
spread $188,051 2.16%
Excess of interest-earning assets
over deposits and borrowings $ 891,630
Effective interest rate spread 2.32
Six Months Ended Jun. 30,
2004
Average
Average Yield/
Balance Interest Rate
Interest-earning assets:
Loans $11,472,856 $238,843 4.16%
Mortgage-backed securities 328 6 3.66
Investment securities (a) 751,726 13,188 3.53
Total interest-earning assets 12,224,910 252,037 4.12
Non-interest-earning assets 410,796
Total assets $12,635,706
===========
Transaction accounts:
Non-interest-bearing checking $ 471,031 $ -- -%
Interest-bearing checking (b) 534,915 996 0.37
Money market 142,199 740 1.05
Regular passbook 3,880,975 21,145 1.10
Total transaction accounts 5,029,120 22,881 0.91
Certificates of deposit 3,655,960 44,381 2.44
Total deposits 8,685,080 67,262 1.56
FHLB advances and other
borrowings (c) 2,729,433 32,248 2.38
Senior notes and junior subordinated
debentures (d) 132,565 6,560 9.90
Total deposits and borrowings 11,547,078 106,070 1.85
Other liabilities 163,118
Stockholders' equity 925,510
Total liabilities and stockholders'
equity $12,635,706
===========
Net interest income/interest rate
spread $145,967 2.27%
Excess of interest-earning assets
over deposits and borrowings $ 677,832
Effective interest rate spread 2.39
(a) Yields for securities available for sale are calculated using
historical cost balances and do not give effect to changes in
fair value that are reflected as a component of stockholders'
equity.
(b) Included amounts swept into money market deposit accounts.
(c) Starting in the first quarter of 2004, the impact of swap
contracts was included, with notional amounts totaling
$430 million of receive-fixed, pay-3-month LIBOR variable
interest, which contracts serve as a permitted hedge against a
portion of our FHLB advances.
(d) In June 2004, we issued $200 million of 6.5% 10-year senior
notes. In July 2004, we redeemed our junior subordinated
debentures before their maturity.
DOWNEY FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA - (Continued)
(Dollars in Thousands)
Three Months Ended Six Months Ended
Jun. 30, Jun. 30,
2005 2004 2005 2004
LOAN AND DEPOSIT RELATED
FEES
Loan related fees:
Prepayment fees $ 15,743 $ 5,090 $ 25,998 $ 8,889
Other fees 2,061 2,215 3,949 4,215
Deposit related fees:
Automated teller machine
fees 2,784 2,455 5,365 4,698
Other fees 5,057 4,659 9,840 9,073
Total loan and deposit
related fees $ 25,645 $ 14,419 $ 45,152 $ 26,875
======== ======== ======== ========
LOAN SERVICING INCOME
(LOSS), NET
Net cash servicing fees $ 1,753 $ 5,615 $ 3,380 $ 11,319
Payoff and curtailment
interest cost (a) (288) (2,083) (482) (3,610)
Amortization of mortgage
servicing rights (1,398) (4,082) (2,558) (9,601)
(Provision for) reduction
of impairment of
mortgage servicing rights (2,596) 14,336 (1,385) 1,433
Total loan servicing
income (loss), net $ (2,529) $ 13,786 $ (1,045) $ (459)
======== ======== ========= =========
NET GAINS (LOSSES) ON
SALES OF LOANS AND
MORTGAGE-BACKED
SECURITIES
Mortgage servicing rights $ 1,217 $ 12,074 $ 2,826 $ 18,042
All other components
excluding SFAS 133 46,373 249 72,466 (1,065)
SFAS 133 1,258 3,352 4,171 70
Total net gains on sales
of loans and mortgage-
backed securities $ 48,848 $ 15,675 $ 79,463 $ 17,047
======== ======== ======== ========
Secondary marketing gain
excluding SFAS 133 as a
percentage of associated
sales 1.54% 1.08% 1.47% 0.93%
MORTGAGE SERVICING RIGHTS
ACTIVITY
Gross balance at beginning
of period $ 20,834 $ 91,766 $ 20,502 $ 95,183
Additions 1,217 12,074 2,826 18,042
Amortization (1,398) (4,082) (2,558) (9,601)
Sales -- -- (14) --
Impairment write-down (27) (3,945) (130) (7,811)
Gross balance at end of
period 20,626 95,813 20,626 95,813
Allowance balance at
beginning of period 1,224 22,045 2,538 13,008
Provision for (reduction
of) impairment 2,596 (14,336) 1,385 (1,433)
Impairment write-down (27) (3,945) (130) (7,811)
Allowance balance at end
of period 3,793 3,764 3,793 3,764
Total mortgage servicing
rights, net $ 16,833 $ 92,049 $ 16,833 $ 92,049
======== ======== ======== ========
As a percentage of
associated mortgage loans 0.75% 1.00% 0.75% 1.00%
Estimated fair value (b) $ 16,863 $ 92,483 $ 16,863 $ 92,483
Weighted average expected
life (in months) 40 67 40 67
Custodial account earnings
rate 3.45% 2.10% 3.45% 2.10%
Weighted average discount
rate 9.12 8.97 9.12 8.97
Jun. 30, Dec. 31, Jun. 30,
2005 2004 2004
MORTGAGE LOANS SERVICED FOR
OTHERS
Total $10,287,991 $6,672,984 $9,279,359
With capitalized mortgage
servicing rights: (b)
Amount 2,249,030 2,100,452 9,242,641
Weighted average interest
rate 5.57% 5.59% 5.61%
Total loans sub-serviced
without mortgage servicing
rights: (c)
Term-less than six months $ 315,448 $ 610,263 $ --
Term-indefinite 7,698,176 3,931,483 --
Custodial account balances $ 232,722 $ 143,765 $ 238,914
(a) Represents the difference between the contractual obligation to
pay interest to the investor for an entire month and the actual
interest received when a loan prepays prior to the end of the
month. This does not include the benefit of the use of repaid
loan funds to increase net interest income.
(b) The estimated fair value may exceed book value for certain asset
strata and excluded loans sold or securitized prior to 1996
and loans sub-serviced without capitalized mortgage servicing
rights.
(c) Servicing is performed for a fixed fee per loan each month.
DOWNEY FINANCIAL CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA - (Continued)
(Dollars in Thousands)
Jun. 30, Dec. 31, Jun. 30,
2005 2004 2004
LOANS HELD FOR INVESTMENT
Loans secured by real estate:
Residential one-to-four
units $12,480,601 $11,509,067 $10,721,816
Residential one-to-four
units - subprime 1,261,674 1,254,452 1,076,523
Total residential
one-to-four units 13,742,275 12,763,519 11,798,339
Residential five or more
units 90,616 96,587 104,016
Commercial real estate 29,249 32,678 42,540
Construction 93,016 67,519 80,608
Land 65,377 25,569 26,770
Non-mortgage:
Commercial 4,496 4,997 5,083
Automobile 320 858 1,911
Other consumer 325,096 283,798 179,793
Total loans held for
investment 14,350,445 13,275,525 12,239,060
Increase (decrease) for:
Undisbursed loan funds and
net deferred costs and
premiums 178,321 183,188 104,325
Allowance for losses (36,380) (34,714) (33,450)
Total loans held for
investment, net $14,492,386 $13,423,999 $12,309,935
=========== =========== ===========
LOANS HELD FOR SALE
Residential one-to-four
units $ 914,164 $ 1,122,534 $ 662,321
Other consumer -- -- 64
Capitalized basis
adjustment (a) 113 (4,059) (904)
Total loans held for sale,
net $ 914,277 $ 1,118,475 $ 661,481
=========== =========== ===========
NON-PERFORMING ASSETS
Non-accrual loans:
Residential one-to-four
units $ 12,004 $ 20,470 $ 24,445
Residential one-to-four
units - subprime 10,599 10,696 12,615
Other 456 468 475
Total non-accrual loans 23,059 31,634 37,535
Real estate acquired in
settlement of loans 2,201 2,555 2,424
Repossessed automobiles -- -- 9
Total non-performing
assets $ 25,260 $ 34,189 $ 39,968
=========== =========== ===========
Non-performing assets as a
percentage of total assets 0.15% 0.22% 0.28%
DELINQUENT LOANS
30-59 days $ 17,820 $ 17,255 $ 16,088
60-89 days 6,674 6,278 8,784
90+ days (b) 17,166 23,415 26,333
Total delinquent loans $ 41,660 $ 46,948 $ 51,205
=========== =========== ===========
Delinquencies as a
percentage of total loans 0.27% 0.33% 0.40%
(a) Reflected the change in fair value of the rate lock derivative
from the date of commitment to the date of funding.
(b) All 90 day or greater delinquencies are on non-accrual status
and reported as part of non-performing assets.
Note: Certain prior period amounts have been reclassified to conform
to the current presentation.
SOURCE Downey Financial Corporation
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Related links:
http://www.downeysavings.com
CONTACT:
Thomas E. Prince, COO & CFO of Downey
Financial Corp., +1-949-509-4440
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