Commercial Federal Reports Second Quarter Net Income of $18.7 Million.OMAHA Omaha, city, United States Omaha (ō`məhä, –hô), city (1990 pop. 335,795), seat of Douglas co., E Nebr., on the west bank of the Missouri River; inc. 1857. , Neb. -- Commercial Federal Corporation (NYSE NYSE See: New York Stock Exchange :CFB CFB Canadian Forces Base ), today announced net income of $18.7 million, or $0.45 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the quarter ended June June: see month. 30, 2004. "During the quarter, the Company experienced solid growth in its commercial operating, construction and home equity loan portfolios. Our retail and commercial checking account portfolios grew and contributed to a 16% increase in fees for the quarter," stated William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack A. Fitzgerald, chairman of the board and chief executive officer. "Overall operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. continued to be driven down during the quarter and decreased 5% from the same period last year. The Company also had significant improvement in overall credit quality with a decline in total nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. . This decline in nonperforming assets will have a meaningful, positive impact on bottom-line bot·tom-line adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. results going forward," Mr. Fitzgerald concluded. During the quarter ended June 30, 2004, Commercial Federal recorded net growth in the following targeted core business drivers: --Average core deposit balances, excluding custodial escrows, were up $179 million or 5% year-over-year evidencing the strong growth in checking and money market savings deposits Savings deposits Accounts that pay interest, typically at below-market interest rates, that do not have a specific maturity, and that usually can be withdrawn upon demand. . --Commercial operating average outstanding loan balances increased 5% for the quarter and 35% year-over-year. --Home equity average outstanding balances were up 8% for the quarter, and 17% year-over-year. --Retail checking account growth for the quarter was 4% annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. . --Commercial checking accounts were up 36% annualized. Results for the Quarter Net Interest Income Net interest income totaled $71.6 million for the second quarter, compared with $71.1 million for the quarter ended March 31, 2004. The net interest rate spread for the quarter increased three basis points to 2.79% for the quarter, compared with 2.76% for the previous quarter. The weighted average yield on interest-earnings assets increased to 5.46% compared with 5.45% for the previous quarter. The weighted average rate on deposits and interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid liabilities declined slightly for the quarter to 2.67%, compared with 2.69% for the previous quarter. Noninterest Income The Company's commercial banking unit also continued to generate solid gains in its loan portfolio as well as commercial and small business deposits. Average outstanding commercial operating and small business loan balances increased 5% for the quarter and 35% year-over-year. Commercial and small business checking accounts grew 9% for the quarter. Growth in these higher-margin products will continue to enhance revenues and margin going forward. Retail banking fees grew significantly in the second quarter. Retail fees and charges totaled $16.9 million, compared with $14.5 million for the previous quarter and $15.0 million for the same period a year ago. This 16% increase in fees compared to the previous quarter was primarily due to higher nonsufficient fund charges and overdraft A check that is drawn on an account containing less money than the amount stated on the check. The term overdraft is also used in reference to the condition that exists when vouchers fees resulting from an increase in the Company's customer base and a change in policy relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc paying more overdraft transactions presented by the Bank's customers. The mortgage banking operations include activities associated with the Company's mortgage servicing Mortgage servicing The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan. and secondary marketing operations. Revenues from these operations are impacted by the amortization of and valuation adjustments related to its mortgage servicing rights asset. During the second quarter 2004, the Company recorded loan servicing Loan servicing is the process by which a mortgage bank or subservicing firm collects the timely payment of interest and principal from borrowers. The level of service varies depending on the type loan and the terms negotiated between the firm and the investor seeking their services. fees of $10.7 million, amortization expense of $14.9 million, and a valuation adjustment recovery of $38.9 million related to its mortgage servicing rights asset. Offsetting the valuation adjustment recovery were losses on the sales of securities and changes in the fair value of derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. totaling $39.0 million. For the quarter, gains on the sale of loans totaled $2.5 million, compared with $198,000 in the previous quarter. Credit Risk Management During the second quarter, total nonperforming assets declined $57.5 million to $48.8 million from $106.3 million for the quarter ended March 31, 2004. Total nonperforming assets represented 0.42% of total assets at June 30, 2004, compared with 0.87% for the previous quarter and 0.85% for the quarter ended June 30, 2003. The substantial improvement in nonperforming assets for the quarter was due primarily to the sale of a foreclosed commercial property in Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). totaling $30 million. This was a residential master planned community Noun 1. planned community - a residential district that is planned for a certain class of residents residential area, residential district, community - a district where people live; occupied primarily by private residences development which was foreclosed on in the first quarter of 2001. Also contributing to the improvement in nonperforming assets for the quarter was a change in estimate regarding when the collection of residential first-mortgage loans becomes doubtful and therefore, when these loans are placed on a nonaccrual status. This change is consistent with the accounting practices and reporting applied by industry peers for nonperforming residential first-mortgage loans. The impact of this change for the quarter was a reduction of $20.4 million in nonperforming residential real estate loans. Net loan charge-offs for the second quarter declined significantly to $3.8 million, compared with $15.2 million for the previous quarter. The allowance for losses on loans totaled $97.1 million at June 30, 2004, compared with $97.8 million at March 31, 2004. Balance Sheet and Capital Ratios Total assets as of June 30, 2004 were $11.7 billion, compared to $12.3 billion and $12.9 billion as of March 31, 2004 and June 30, 2003, respectively. The size of the balance sheet has been managed downward over the year primarily as the size of the mortgage pipeline has declined and because of our continuing strategy to reduce the size of our lower-yielding investment and mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. portfolios. For the second quarter, core deposits, including checking, money market and savings accounts Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: (excluding custodial escrows) remained at $3.6 billion at June 30, 2004, and were up $106 million from the year ago period. This represents a 3% increase in core deposits year over year. During the second quarter 2004, the Company repurchased 1,077,500 shares of common stock under its buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may program. As of June 30, 2004, the Company had 2,413,800 shares remaining in repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. authorizations. As of June 30, 2004, shares outstanding totaled 39,870,919. As of June 30, 2004, stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was $751.3 million, compared with $757.0 million at March 31, 2004 and $740.3 million at June 30, 2003. The capital ratios of the Company's banking subsidiary continued to exceed regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. for classification as "well-capitalized," the highest regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. standard. Commercial Federal Corporation (NYSE:CFB) is the parent company of Commercial Federal Bank, a $11.7 billion federal savings bank Noun 1. federal savings bank - a federally chartered savings bank FSB savings bank - a thrift institution in the northeastern United States; since deregulation in the 1980s they offer services competitive with many commercial banks with branches located in Nebraska Nebraska (nəbrăs`kə), Great Plains state of the central United States. It is bordered by Iowa and Missouri, across the Missouri R. (E), Kansas (S), Colorado (SW), Wyoming (NW), and South Dakota (N). , Iowa, Colorado Colorado, state, United States Colorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. , Kansas, Oklahoma Kansas is a town in Delaware County, Oklahoma, United States. The population was 685 at the 2000 census. Geography Kansas is located at (36.202423, -94.795122)GR1. , Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. and Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). . Commercial Federal operations include consumer and
commercial banking services including mortgage origination OriginationThe process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real and servicing, commercial and industrial lending, small business banking, construction lending, cash management, insurance and investment services, and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the banking. Commercial Federal's Web site, http://www.comfedbank.com, will host a live webcast of the investor conference call to discuss second quarter results on Thursday Thursday: see week. , July July: see month. 22, 2004 at 10:00 a.m. Central Time. The site also includes access to company news releases, annual reports, quarterly financial statements, and SEC filings. Certain statements contained in this release are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. in nature. These statements are subject to risks and uncertainties that could cause Commercial Federal's actual results or financial condition to differ materially from those expressed in or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such statements. Factors of particular importance to Commercial Federal include, but are not limited to, changes in general economic conditions, changes in interest rates, changes in regulations or accounting methods, and price levels and conditions in the public securities markets generally.
COMMERCIAL FEDERAL CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(Dollars in Thousands)
----------------------------------------------------------------------
June 30, March 31, June 30,
ASSETS 2004 2004 2003
----------------------------------------------------------------------
Cash (including short-term
investments of $1,841, $18,552
and $1,067) $156,229 $179,028 $248,500
Investment securities available
for sale, at fair value 1,031,111 1,063,558 1,288,081
Mortgage-backed securities
available for sale, at fair value 1,133,434 1,267,483 1,317,756
Loans held for sale, net 444,774 449,830 1,084,784
Loans receivable, net of
allowances of $97,082, $97,765
and $108,706 7,691,306 7,810,613 7,748,521
Federal Home Loan Bank stock 247,580 245,447 247,817
Foreclosed real estate 15,548 44,800 43,000
Premises and equipment, net 153,137 150,504 143,088
Bank owned life insurance 245,157 242,142 228,209
Other assets 418,451 625,954 413,284
Core value of deposits, net of
accumulated amortization of
$66,652, $65,434 and $64,365 14,397 15,615 19,268
Goodwill 162,717 162,717 162,717
----------------------------------------------------------------------
Total Assets $11,713,841 $12,257,691 $12,945,025
----------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS'
EQUITY
----------------------------------------------------------------------
Liabilities:
Deposits $6,242,747 $6,479,634 $6,768,368
Advances from Federal Home Loan
Bank 4,061,840 4,290,100 4,436,264
Other borrowings 419,848 288,356 591,825
Other liabilities 238,084 442,592 408,233
----------------------------------------------------------------------
Total Liabilities 10,962,519 11,500,682 12,204,690
----------------------------------------------------------------------
Commitments and Contingencies - - -
----------------------------------------------------------------------
Stockholders' Equity:
Preferred stock, $.01 par
value; 10,000,000 shares
authorized; none issued - - -
Common stock, $.01 par value;
120,000,000 shares authorized;
39,870,919, 40,870,272 and
43,940,224 shares issued and
outstanding 399 409 439
Additional paid-in capital - - 33,469
Retained earnings 816,138 829,182 827,889
Accumulated other comprehensive
loss, net (65,215) (72,582) (121,462)
----------------------------------------------------------------------
Total Stockholders' Equity 751,322 757,009 740,335
----------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $11,713,841 $12,257,691 $12,945,025
----------------------------------------------------------------------
COMMERCIAL FEDERAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands Except Per Share Data)
----------------------------------------------------------------------
Three Months Ended
June 30, March 31, June 30,
---------------------------------
2004 2004 2003
----------------------------------------------------------------------
Interest Income:
Investment securities $13,616 $14,299 $16,846
Mortgage-backed securities 11,651 12,362 12,638
Loans receivable 119,750 120,111 140,401
----------------------------------------------------------------------
Total interest income 145,017 146,772 169,885
Interest Expense:
Deposits 26,901 29,783 38,974
Advances from Federal Home Loan
Bank 43,384 44,241 54,772
Other borrowings 3,142 1,652 5,037
----------------------------------------------------------------------
Total interest expense 73,427 75,676 98,783
Net Interest Income 71,590 71,096 71,102
Provision for Loan Losses (3,106) (4,853) (4,273)
----------------------------------------------------------------------
Net Interest Income After Provision
for Loan Losses 68,484 66,243 66,829
Other Income (Loss):
Retail fees and charges 16,881 14,497 15,009
Loan servicing fees 10,726 11,208 11,958
Amortization of mortgage servicing
rights (14,900) (12,385) (18,454)
Mortgage servicing rights
valuation adjustment 38,866 (18,893) (29,793)
Gain (loss) on sales of securities
and changes in fair values of
derivatives, net (38,990) 18,382 39,131
Gain on sales of loans 2,516 198 8,506
Bank owned life insurance 3,015 8,031 2,800
Other operating income 7,145 6,619 7,627
----------------------------------------------------------------------
Total other income 25,259 27,657 36,784
Other Expense (Gain):
General and administrative
expenses -
Compensation and benefits 31,537 32,886 31,841
Occupancy and equipment 9,994 10,164 10,495
Data processing 4,643 4,621 4,604
Advertising 3,940 3,555 5,606
Communication 3,332 3,146 3,432
Item processing 3,156 3,030 3,837
Outside services 3,872 3,872 3,226
Loan expenses 2,445 1,505 2,667
Foreclosed real estate, net (1,217) 1,925 1,004
Other operating expenses 5,671 4,080 4,349
----------------------------------------------------------------------
Total general and
administrative expenses 67,373 68,784 71,061
Amortization of core value of
deposits 1,218 1,217 1,548
----------------------------------------------------------------------
Total other expense 68,591 70,001 72,609
----------------------------------------------------------------------
Income Before Income Taxes 25,152 23,899 31,004
Provision for Income Taxes 6,450 5,981 8,744
----------------------------------------------------------------------
Net Income $18,702 $17,918 $22,260
----------------------------------------------------------------------
Net Income Per Basic Share $.46 $.44 $.50
Net Income Per Diluted Share $.45 $.43 $.50
----------------------------------------------------------------------
Dividends Declared Per Common Share $.135 $.125 $.10
----------------------------------------------------------------------
Weighted Average Shares Outstanding
Used in Basic EPS 40,527,096 40,974,071 44,302,234
Weighted Average Shares Outstanding
Used in Diluted EPS 41,199,954 41,756,072 44,582,227
----------------------------------------------------------------------
COMMERCIAL FEDERAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands Except Per Share Data)
----------------------------------------------------------------------
Six Months Ended
June 30,
-----------------------
2004 2003
----------------------------------------------------------------------
Interest Income:
Investment securities $27,915 $34,422
Mortgage-backed securities 24,013 29,085
Loans receivable 239,861 282,752
----------------------------------------------------------------------
Total interest income 291,789 346,259
Interest Expense:
Deposits 56,684 78,588
Advances from Federal Home Loan Bank 87,625 111,692
Other borrowings 4,794 10,049
----------------------------------------------------------------------
Total interest expense 149,103 200,329
Net Interest Income 142,686 145,930
Provision for Loan Losses (7,959) (11,419)
----------------------------------------------------------------------
Net Interest Income After Provision for Loan
Losses 134,727 134,511
Other Income (Loss):
Retail fees and charges 31,378 28,512
Loan servicing fees 21,934 22,995
Amortization of mortgage servicing rights (27,285) (30,516)
Mortgage servicing rights valuation
adjustment 19,973 (43,321)
Gain (loss) on sales of securities and
changes in fair values of derivatives, net (20,608) 58,131
Gain on sales of loans 2,714 13,986
Bank owned life insurance 11,046 5,672
Other operating income 13,764 13,283
----------------------------------------------------------------------
Total other income 52,916 68,742
Other Expense:
General and administrative expenses -
Compensation and benefits 64,423 62,654
Occupancy and equipment 20,158 20,931
Data processing 9,264 9,279
Advertising 7,495 9,736
Communication 6,478 6,846
Item processing 6,186 7,306
Outside services 7,744 5,617
Loan expenses 3,950 5,093
Foreclosed real estate, net 708 2,385
Other operating expenses 9,751 7,846
----------------------------------------------------------------------
Total general and administrative
expenses 136,157 137,693
Amortization of core value of deposits 2,435 3,097
----------------------------------------------------------------------
Total other expense 138,592 140,790
----------------------------------------------------------------------
Income Before Income Taxes 49,051 62,463
Provision for Income Taxes 12,431 17,504
----------------------------------------------------------------------
Net Income $36,620 $44,959
----------------------------------------------------------------------
Net Income Per Basic Share $.90 $1.01
Net Income Per Diluted Share $.88 $1.00
----------------------------------------------------------------------
Dividends Declared Per Common Share $.26 $.19
----------------------------------------------------------------------
Weighted Average Shares Outstanding Used in
Basic EPS 40,750,584 44,697,474
Weighted Average Shares Outstanding Used in
Diluted EPS 41,478,014 45,001,794
----------------------------------------------------------------------
COMMERCIAL FEDERAL CORPORATION
MORTGAGE SERVICING RIGHTS AND MORTGAGE BANKING OPERATIONS
(Dollars in Thousands)
----------------------------------------------------------------------
Three Months Ended
June 30, March 31, June 30,
--------------------------------------
2004 2004 2003
----------------------------------------------------------------------
Mortgage Servicing Rights:
Beginning balance before
valuation allowance $178,850 $185,233 $179,860
Mortgage servicing rights
retained through loan sales 11,316 6,002 20,378
Bulk purchases of mortgage
servicing rights - - 8,015
Sale of mortgage servicing
rights - - (9,904)
Amortization expense (14,900) (12,385) (18,454)
Other items, net - - 10,503
------------ ------------ ------------
Ending balance before
valuation allowance 175,266 178,850 190,398
------------ ------------ ------------
Valuation allowance,
beginning balance 68,232 49,339 93,586
Amounts charged (credited) to
operations (38,866) 18,893 29,793
Sale of mortgage servicing
rights - - (1,914)
------------ ------------ ------------
Valuation allowance, ending
balance 29,366 68,232 121,465
------------ ------------ ------------
Mortgage servicing rights,
net of valuation allowance $145,900 $110,618 $68,933
============ ============ ============
Fair value at the periods
ended $157,955 $112,232 $68,933
============ ============ ============
Mortgage servicing rights as a
percentage of servicing
portfolio 1.32% 0.99% 0.61%
============ ============ ============
Mortgage servicing rights as a 3.88x 2.91x 1.82x
multiple of servicing fees
============ ============ ============
----------------------------------------------------------------------
Loans Serviced for Other
Institutions:
Beginning balance $11,166,995 $11,439,187 $11,848,058
Additions to portfolio 870,423 507,839 1,498,788
Purchases - - 515,173
Loan payments (976,213) (775,537) (1,995,558)
Sales of loans serviced - - (509,946)
Other items, net (11,446) (4,494) (2,350)
------------ ------------ ------------
Ending balance excluding sub
servicing 11,049,759 11,166,995 11,354,165
Sub servicing retained on
sale of loans serviced - - 509,946
------------ ------------ ------------
Ending balance including sub
servicing $11,049,759 $11,166,995 $11,864,111
============ ============ ============
Weighted average servicing
fee 0.34% 0.34% 0.32%
============ ============ ============
Weighted average coupon note
rate 5.94% 6.04% 6.47%
============ ============ ============
----------------------------------------------------------------------
Certain Components of Mortgage
Banking and Treasury
Activities:
Loan servicing fees $10,726 $11,208 $11,958
Amortization of mortgage
servicing rights (14,900) (12,385) (18,454)
------------ ------------ ------------
Loan servicing fees, net (4,174) (1,177) (6,496)
Mortgage servicing rights
valuation adjustment 38,866 (18,893) (29,793)
Gain (loss) on sales of
securities and changes in
fair values of derivatives,
net (38,990) 18,382 39,131
Gain on sales of loans 2,516 198 8,506
------------ ------------ ------------
Total of certain components
of mortgage banking and
treasury activities $(1,782) $(1,490) $11,348
============ ============ ============
----------------------------------------------------------------------
COMMERCIAL FEDERAL CORPORATION
DEPOSITS AND LOANS
(In Thousands)
----------------------------------------------------------------------
June 30, March 31, June 30,
2004 2004 2003
----------------------------------------------------------------------
Deposits by State:
Colorado $2,015,803 $2,053,666 $2,033,740
Nebraska 1,487,175 1,584,158 1,919,919
Iowa 1,043,580 1,099,947 1,072,456
Kansas 610,981 631,692 659,112
Oklahoma 548,469 557,084 552,556
Missouri 305,925 318,421 311,178
Arizona 230,814 234,666 219,407
----------- ----------- -----------
Total deposits $6,242,747 $6,479,634 $6,768,368
=========== =========== ===========
Deposits by Type:
Checking accounts -
Interest bearing $551,571 $556,461 $515,322
Noninterest bearing 637,790 666,014 633,291
----------- ----------- -----------
Total checking excluding
escrow accounts 1,189,361 1,222,475 1,148,613
Money market accounts 1,203,268 1,184,435 958,303
Savings accounts 1,211,344 1,214,358 1,390,740
----------- ----------- -----------
Total core deposits 3,603,973 3,621,268 3,497,656
Custodial escrow accounts 285,667 348,814 564,871
Certificates of deposit 2,353,107 2,509,552 2,705,841
----------- ----------- -----------
Total deposits $6,242,747 $6,479,634 $6,768,368
=========== =========== ===========
----------------------------------------------------------------------
Loans Receivable, before allowance
for losses:
Residential real estate $2,978,082 $3,244,563 $3,494,661
Commercial real estate 1,976,705 1,971,927 1,895,194
Construction, net of loans-in-
process 614,017 525,950 508,573
Commercial operating and other 543,719 521,814 421,879
Consumer home equity 914,967 881,135 812,218
Consumer other 760,898 762,989 724,702
----------- ----------- -----------
Total loans receivable, before
allowance for losses $7,788,388 $7,908,378 $7,857,227
=========== =========== ===========
----------------------------------------------------------------------
COMMERCIAL FEDERAL CORPORATION
ALLOWANCE FOR LOSSES ON LOANS
(In Thousands)
----------------------------------------------------------------------
June 30, March 31, June 30,
2004 2004 2003
----------------------------------------------------------------------
THREE MONTHS ENDED:
-------------------
Beginning balance $97,765 $108,154 $108,920
Provision charged to operations 3,106 4,853 4,273
Charge-offs (5,711) (16,812) (6,003)
Recoveries 1,922 1,570 1,582
Other - - (32)
----------------------------------------------------------------------
Ending balance $97,082 $97,765 $108,740
----------------------------------------------------------------------
SIX MONTHS ENDED:
-----------------
Beginning balance $108,154 n/a $106,291
Provision charged to operations 7,959 n/a 11,419
Charge-offs (22,523) n/a (13,298)
Recoveries 3,492 n/a 4,392
Other - n/a (64)
----------------------------------------------------------------------
Ending balance $97,082 n/a $108,740
----------------------------------------------------------------------
Summary of charge-offs, net of recoveries:
------------------------------------------
Three months ended $3,789 $15,242 $4,421
========= ========= =========
Six months ended $19,031 n/a $8,906
========= =========
----------------------------------------------------------------------
Allocation of allowance:
------------------------
Specific $4,613 $4,126 $6,025
Special problem 23,413 25,443 34,613
Nonspecific 69,056 68,196 68,102
--------- --------- ---------
$97,082 $97,765 $108,740
========= ========= =========
----------------------------------------------------------------------
COMMERCIAL FEDERAL CORPORATION
ASSET QUALITY
(Dollars in Thousands)
----------------------------------------------------------------------
June 30, March 31, June 30,
2004 2004 2003
----------------------------------------------------------------------
Nonperforming Assets:
Nonperforming loans (1):
Residential real estate (1) $7,381 $29,656 $34,338
Residential construction 3,020 2,542 7,784
Commercial real estate 9,922 16,462 8,381
Commercial construction 842 1,077 4,371
All other 7,411 7,042 7,034
------------ ------------ ------------
Total nonperforming loans 28,576 56,779 61,908
------------ ------------ ------------
Foreclosed real estate:
Residential 12,315 13,700 12,251
Residential construction 1,009 638 338
Commercial 448 1,365 5,078
Commercial construction 1,776 29,097 25,333
------------ ------------ ------------
Total foreclosed real
estate 15,548 44,800 43,000
------------ ------------ ------------
Troubled debt restructurings
- commercial 4,690 4,700 4,961
------------ ------------ ------------
Total nonperforming assets $48,814 $106,279 $109,869
============ ============ ============
Total assets $11,713,841 $12,257,691 $12,945,025
============ ============ ============
Nonperforming assets to total
assets .42% .87% .85%
============ ============ ============
Summary of Nonperforming
Assets:
Residential $23,725 $46,536 $54,711
Nonresidential 25,089 59,743 55,158
------------ ------------ ------------
$48,814 $106,279 $109,869
============ ============ ============
----------------------------------------------------------------------
Nonperforming loans to loans
receivable (1)(2) .37% .72% .79%
Nonperforming assets to total
assets (1) .42% .87% .85%
Allowance for loan losses to:
Loans receivable (2) 1.25% 1.24% 1.38%
Total nonperforming loans (1) 339.73% 172.19% 175.65%
----------------------------------------------------------------------
Accruing loans 90 days or more
past due (1):
Residential real estate $20,443 $- $-
============ ============ ============
----------------------------------------------------------------------
(1) Effective June 30, 2004, management of the Corporation changed its
estimate of determining when the collection of residential first
mortgage loans becomes doubtful and when the loans are therefore
placed on nonaccrual status.
(2) Ratios are calculated based on the net book value of loans
receivable before deducting allowance for loan losses.
COMMERCIAL FEDERAL CORPORATION
SUMMARY OF CONSOLIDATED FINANCIAL HIGHLIGHTS AND RATIOS
(Dollars in Thousands Except Per Share Data)
----------------------------------------------------------------------
June 30, March 31, June 30,
2004 2004 2003
----------------------------------------------------------------------
Cash, investment securities and
FHLB stock $1,434,920 $1,488,033 $1,784,398
Mortgage-backed securities 1,133,434 1,267,483 1,317,756
Loans held for sale, net 444,774 449,830 1,084,784
Loans receivable, net 7,691,306 7,810,613 7,748,521
Core value of deposits, net 14,397 15,615 19,268
Goodwill 162,717 162,717 162,717
Other assets 832,293 1,063,400 827,581
Total assets 11,713,841 12,257,691 12,945,025
----------------------------------------------------------------------
Deposits 6,242,747 6,479,634 6,768,368
Advances from Federal Home Loan
Bank 4,061,840 4,290,100 4,436,264
Other borrowings 419,848 288,356 591,825
Other liabilities 238,084 442,592 408,233
Stockholders' equity 751,322 757,009 740,335
Total liabilities and
stockholders' equity 11,713,841 12,257,691 12,945,025
----------------------------------------------------------------------
Book value per common share $18.84 $18.52 $16.85
Stock price $27.10 $27.60 $21.20
Common shares outstanding 39,870,919 40,870,272 43,940,224
Weighted average shares
outstanding per basic EPS 40,527,096 40,974,071 44,302,234
Weighted average shares
outstanding per diluted EPS 41,199,954 41,756,072 44,582,227
----------------------------------------------------------------------
Nonperforming assets $48,814 $106,279 $109,869
Nonperforming assets to total
assets .42% .87% .85%
Weighted average interest rates
taxable-equivalent basis
(durings)(1):
Yield on interest-earning
assets 5.46% 5.45% 5.70%
Rate on deposits and interest-
bearing liabilities 2.67% 2.69% 3.26%
Net interest rate spread 2.79% 2.76% 2.44%
Net annualized yield on
interest-earning assets 2.74% 2.67% 2.39%
Loans serviced for other
institutions $11,049,759 $11,166,995 $11,864,111
----------------------------------------------------------------------
Three months ended:
-------------------
Return on average assets .63% .59% .67%
Return on average equity 10.16% 9.48% 11.66%
Average equity to average assets 6.20% 6.22% 5.78%
G & A expenses to average assets 2.27% 2.26% 2.15%
Operating efficiency ratio 69.56% 69.65% 65.87%
----------------------------------------------------------------------
Six months ended:
-----------------
Return on average assets .61% n/a .68%
Return on average equity 9.82% n/a 11.76%
Average equity to average assets 6.21% n/a 5.80%
G & A expenses to average assets 2.27% n/a 2.09%
Operating efficiency ratio 69.61% n/a 64.14%
----------------------------------------------------------------------
(1) The quarter ended June 30, 2003, is not on a taxable-equivalent
basis.
COMMERCIAL FEDERAL CORPORATION
AVERAGE BALANCES AND REGULATORY CAPITAL
(Dollars in Thousands)
----------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2004 2004 2003 2003 2003
----------------------------------------------------------------------
Three Months
Ended:
------------
Average
Balances:
Total
assets $11,878,729 $12,158,982 $12,164,033 $12,811,205 $13,201,894
Total
loans,
net 8,256,840 8,292,320 8,410,129 8,847,035 8,949,160
Total loans,
before
allowances
for loan
losses 8,354,536 8,400,194 8,518,224 8,955,643 9,057,838
Total
mortgage-
backed
securi-
ties 1,181,297 1,278,179 1,293,949 1,160,610 1,414,739
Total
deposits 6,409,826 6,571,111 6,496,315 6,821,942 6,730,636
Total
stock-
holders'
equity 736,133 755,722 729,062 708,267 763,666
Total
interest-
earning
assets 10,726,414 10,878,284 10,999,591 11,553,340 11,915,975
Total
deposits
and
interest-
bearing
liabil-
ities 10,932,101 11,187,969 11,187,875 11,770,123 12,049,811
----------------------------------------------------------------------
June 30, Dec. 31, Dec. 31,
2004 2003 2002
----------------------------------------------------------------------
Year to Date:
-------------
Average Balances:
Total assets $12,018,856 $12,805,574 $13,175,562
Total loans, net 8,274,580 8,704,321 8,681,401
Total loans,
before allowances
for loan losses 8,377,365 8,812,133 8,786,551
Total mortgage-
backed securities 1,229,738 1,362,145 1,799,174
Total deposits 6,490,468 6,629,299 6,258,302
Total stockholders'
equity 745,928 741,337 758,659
Total interest-
earning assets 10,802,349 11,557,322 11,974,586
Total deposits and
interest-bearing
liabilities 11,060,035 11,697,711 12,044,641
----------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2004 2004 2003 2003 2003
----------------------------------------------------------------------
Regulatory
Capital:
----------
Tangible $727,684 $721,410 $710,670 $741,185 $777,031
Core 727,684 721,535 704,350 730,186 770,638
Total
risk-based 855,225 852,638 838,437 866,764 905,468
Tier 1
risk-based 725,279 721,535 704,350 730,186 770,638
Tangible % 6.31% 6.00% 5.93% 6.03% 6.11%
Core % 6.31% 6.00% 5.88% 5.95% 6.06%
Total risk-
based % 11.25% 11.02% 10.87% 10.81% 11.49%
Tier 1 risk-
based % 9.54% 9.31% 9.13% 9.10% 9.78%
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