Franklin to Restructure $580 Million of Loan Portfolio
As a means of improving its interest margins, Franklin Bank Corp. is planning the restructuring of approximately $580 million, or 20%, of its single-family loan portfolio from held for investment to held for sale, according to its earnings statement. The company expects that this restructuring will be completed by the end of the first quarter of 2007.
Anthony J. Nocella, president and CEO of Franklin Bank Corp., the parent company of Franklin Bank SSB, said in a statement, "Earnings for the year and fourth quarter were lower than our expectations as a result of the inverted yield curve, weakened mortgage market and our unwillingness to compromise our credit standards by participating in the higher-risk nontraditional mortgages that were the dominant product in the market."
For the full year of 2006, Franklin saw a net loss of $4 million, or $0.17 per diluted share, compared to net income of $4.7 million, or $0.19 per diluted share, for 2005. The loss is primarily the result of the restructuring of the single-family loan portfolio.
Assuming the yield curve will remain relatively flat and will not worsen, Franklin expects 2007 GAAP diluted earnings per share to be $1.34 to $1.44, up from its previous guidance of $1.32 to $1.40. The increase includes the acquisition of First National Bank of Bryan, the restructuring effect of the sale of the single-family loans and the reduction of wholesale funding, as well as raising additional capital during the year. The guidance excludes any merger-related costs associated with the FNB acquisition.
Snapshot: Frankliin's Single Family Restructuring
SF Portfolio affected $580 Million
Change Moved to Held for Sale
Goal Improve Interest Margins
Source: Franklin Bank Corp. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com