Franklin Bank, SSB – Agency, FHA/VA
May 22, 2008 – 9:25 pm2008-05-22
stories: bizjournals.com, reuters.com
According to Reuters, CEO Anthony Nocella “will accelerate his personal plans to retire” and has stepped down, and the bank’s holding company faces an SEC probe that “comes on the heels of a 10-week internal investigation that the bank said uncovered a variety of accounting errors, largely related to residential mortgage loans.”
This in from a tipster:
“I heard from one insider that they are not announcing that they have closed down wholesale because they don’t want it posted on the implode-o-meter website. The reasons they are so against this is because of their already low common stock price. Today it is up about $.14 to $1.56! They are in jeopardy of being de-listed by NASDAQ and they feel their stock would further plummet if listed on the implode-o-meter. Furthermore… a higher up in the operations made the decision to buy a bulk of loans a few months ago that have almost all gone bad. They opened a separate division who’s focus is to get these loans refinanced off the books.
They had about 650 employees and with wholesale gone they are down to about 500. They would typically fund anywhere from $30 million – $60 million in good times. Now that wholesale is out of the picture they are really not funding anything.”
From a page on their web site about Retail Mortgage Loan Production Offices: “In just over three years, Franklin Bank has grown total assets to over $4 billion and has over 600 employees in 60 locations in 34 states.” Allmortgagedetail.com reports average monthly origination volume across all channels in 2006 was $53.8 million, a drop from 2005’s average of $67.2 million.
Franklin had 38 retail mortgage banking offices per their 2006-12-31 Annual Report. Twelve offices were closed in the quarter ending 2007-09-30 according to their 2007-12-20 10Q filing:
“Non-interest expense for the three and nine months ended September 30, 2007 increased $332,000, or 6%, and decreased $672,000, or 4%, respectively, compared to the same periods in 2006. The increase for the three months ended September 30, 2007 primarily related to charges associated with closing twelve retail mortgage offices during the third quarter as well as an increase in real estate owned expenses due to an increase in the number of foreclosed real estate properties. The decrease for the nine months ended September 30, 2007 was primarily due to decreases in salaries and benefits and loan expenses partly offset by an increase in real estate owned expenses. Salaries and benefits decreased $1.3 million, or 13%. This decrease was primarily the result of lower commissions due to the volume of originations. Loan expenses decreased $573,000, or 34%. This decrease was primarily due to the lower volume of originations. The increase in real estate owned expenses was due to an increase in the number of foreclosed real estate properties.”
“Franklin’s single family portfolio is also geographically diversified over 49 states.” On closer look, it seems a full-third is in hard-set California, with the balance of more than half in Texas and Florida. From their latest Earnings Release dated 2007-12-31:
The largest concentration of this portfolio is in California and Texas. The following table is the geographic location of the single family mortgage loan portfolio for states that exceed 3% of the total portfolio as of December 31, 2007 (in thousands):
State Amount % California $598,369 33 % Texas 243,929 13 % Florida 137,445 7 % New York 75,721 4 % Virginia 64.480 4 % Massachusetts 64,360 4 % Maryland 55,850 3 % New Jersey 54,112 3 % Illinois 50,038 3 % Washington 46,582 3 % Other 444,407 23 % Total $1,835,292
The Houston Business Chronicle reports Franklin “will appear before the NASDAQ listing qualifications panel May 22 [today] to argue for continued listing of its shares, pending the filing of outstanding financial statements.”
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