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Yes, something may be up.. Just looking to cut my losses here but will take a profit if I must.
Steady gainer here!! Someone is buying it up!
I hope patience pays off on all mine!!
Got a few here today!
Keep a close eye on DSL and BKUNA. Probbably next
Your guess is as good as mine.
You are right. Looks like FRANKLIN BANK not only fell in the toilet, but got flushed down immediately. There is nothing left. Trading this stock looks like a disaster now. Will be anxious to see how, or if this stock will trade next week. What is left of this bank and it's assets??? CHAPTER 7 is always the end of the road. Wish those well, who still hold shares.Indian
This bank does not qualify for the TARP bailout. It is Chapter 7 bankruptcy. Why would anyone buy a Chapter 7 stock.
Franklin Bank Corp OTC:FBTX.PK. The company said it has less than $500,000 of assets, and between $100 million and $500 million of liabilities, including some convertible notes and preferred securities.
FBTX.PK assets not even enough to pay half of its debts, of course, the company had to file Chapter 7,liquidtion to discharge its debts then close the business,disappear in the wall street. How could shareholders expecting to receive anything? but this stock is excellent for shortsalers to short if it is still allowed to be traded on market.
WaMu is completely different than FBTX.Pk. Wamu filed chapter 11,reorganization and it has almost 5 times more assets than its debts. shareholders will share the assets after debts.
DOC,,,, WHERE DO YOU THINK THIS GOES MONDAY BASED ON FRIDAY'S TRADING..?? THX..
Yeah, I'm here. But I wouldn't hold this thing too long if I were you. Anything could happen.
DONT WORRY..BIG RUNUP THIS WEEK...
DOC,,,YOU HANGING AROUND???
IM IN...
FBTX must read NEWS
Thursday, November 13 2008 12:24 PM, EST
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Banking crises hits home - Franklin first bank to close in Texas this year [Cedar Creek Pilot, Gun Barrel City, Texas]
Knight Ridder/Tribune "Business News "
Nov. 11--Dan Rollins, president of Prosperity Bank, S.S.B. of Houston, attempted to reassure Franklin Bank customers and employees in the lake area that nothing is changing as far as they are concerned, following the bank's failure last Friday. That's not to say things didn't change in a big way over the weekend. Franklin Bank did fail, and Prosperity Bank did acquire all of the deposits of Franklin. The bank was closed Friday by the Texas Department of Savings and Mortgage Lending, and the Federal Deposit Insurance Corporation (FDIC) was named receiver. But, when referring to the banks around Cedar Creek Lake and other East Texas communities, Rollins was quick to say, "Our team is in place. "We want the Franklin people to be there and go right on taking care of the customers." Rollins said Prosperity will have one person located in each Franklin Bank branch during the transition. "Then, they want to go home to their families," Rollins said, further stressing how things will stay the same in spite of the multi-million dollar deal. "Obviously, this creates a lot of stress," Rollins admitted, "and just as many (stresses) for our team, because its happening to them, too." Rollins said local employees and management have been informed that not only are all deposits covered, even those not completely covered by the FDIC. "Of the uninsured money, that which was above the insured limit," he said, "We paid an extra price to protect that, and the cost was in the millions of dollars." Customer services will remain the same. The current credits cards and debit cards will still be in place, and the same checks will be honored, not to mention the same interest rates, etc. The doors will open and close at the same time, too. When employees answer the phones, they'll still say, "Franklin Bank," Rollins said. "We want to be community bankers and we want these same people in the field. ;"Nobody in the local market had anything to do with the Franklin failure," he said. "It's why we were selected as the ones to partner up with these folks, because we do business the same way. "We want the same people in the field because they have the relationships they've built for years with the 4H, the Rotary Club and the Kiwanis Clubs, etc." Local bankers either didn't return phone calls asking for comment, or referred reporters to personnel in Houston for comment Monday. Rollins said Prosperity hopes "to expand our footprint across the state, and this acquisition will help the corporation do so. "Changing the brand takes time. That could all take as much as two years," he said. So Franklin customers shouldn't expect to see changes for some time. "Their Internet, electronic banking will work the same now as it did last week," he said. Here are some facts included in a press release from Prosperity Bank concerning the transaction:
--As of Sept. 30, Franklin Bank had total assets of $5.1 billion and total deposits of $3.7 billion. Prosperity Bank agreed to assume all the deposits, including the brokered deposits, for a premium of 1.7 percent. In addition to assuming all of the failed bank's deposits, Prosperity Bank will purchase approximately $850 million of assets. --The FDIC will retain the remaining assets for later disposition.
--Customers who have questions should call FDIC toll fee at 1-800-591-2845.
--Also, interested parties can visit the FDIC's web site at http://www.fdic.gov/gbank/individual/failed/franklinbank.html.
--Neither the FDIC or Prosperity Bank will e-mail customers of Franklin Bank asking them to validate their deposits or to request personal, confidential information, such as account numbers, Social Security number, driver's license number, etc.
--If customers receive e-mails asking for such personal information, they should be considered fraudulent in nature and should not respond.
--The FDIC estimates that the cost of the transaction to its Deposit Insurance Fund will be between $1.4 billion and $1.6 billion.
--Franklin is the 18th bank to fail in the nation this year, and the first in Texas since the Bank of Sierra Blanca on Jan. 18, 2002.
To see more of the Cedar Creek Pilot, or to subscribe to the newspaper, go to http://cedarcreekpilot.com.
Copyright (c) 2008, Cedar Creek Pilot, Gun Barrel City, Texas
Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
I'm begining to wonder who's running the FDIC. These take over tactics just don't seem to fit into the American way. I thought the FDIC was insurance and the bail out money was to prevent these take overs. Why does something seem wrong here ?
I'm shocked and relieved. I pulled my bid back to .20 and didn't get filled. Bailed out by luck !
WOW, I'm sure glad I missed my buy. Stroke of luck.
Was this PR a bit mis-leading ?
http://www.marketwatch.com/news/story/franklin-bank-corp-receives-non-binding/story.aspx?guid=%7B0C9673D4%2D7F4A%2D4126%2D800F%2D69B355A10AF8%7D&newsid=942502484&&dist=bigchartssymb=FBTX&sid=1616712
1 day negotiating some capital . Few days later siezed. Go Figure.
Guess that prediction didn't work out. Yikes...
With the institutions dumping like they have been I'm not counting news moving a financial stock upwards. I've made a prediction based on my own analysis that FBTX will bounce from .30 to .40, then .20 to .30 b4 it becomes stable. I may have to wait awhile for it happens, but I know it will make me a good profit, so I'm going to stick with it. I almost always make a profit when I make a plan and stick with it, News or no news.
Ok, looks good. It went to .59 after I left and AH looks even better. Good luck.
I'm in it and still playing on AH. With all the good plays I got going, I haven't had the time for posting. Still playing others also, LEA/STEM/MEMY/ASTM. Most likely be right on them during pre trade also.
I think that the bailout will help here - and that is why the share price is beginning to go up.
Franklin Bank Corp. on Tuesday said it had been notified by the NASDAQ stock market on July 23 that it no longer met listing requirements because its share price had been below the required minimum price of $1 for 30 consecutive days.
Houston-based Franklin has until Jan. 20, 2009, to regain compliance. In the meantime the company’s shares will continue to be listed on the NASDAQ under the ticker symbol FBTX.
In May, Franklin chief executive Anthony Nocella resigned in the wake of an internal investigation that uncovered numerous accounting errors related to the bank’s residential mortgages and construction lending.
Lewis Ranieri, Franklin chairman, filled in as CEO until the appointment in late June of Andy Black, president and chief operating officer of the Houston bank holding company’s Franklin Bank operating subsidiary, as interim chief executive.
Franklin Bank Corp. shares closed up 6 cents Tuesday at 62 cents.
Form 8-K/A for FRANKLIN BANK CORP
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6-Aug-2008
Change in Directors or Principal Officers, Financial Statements and Exhibits
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) On July 31, 2008, Franklin and its wholly-owned subsidiary, Franklin Bank, S.S.B. (the "Bank"), entered into a Retirement Agreement with Mr. Nocella. The Retirement Agreement confirms Mr. Nocella's resignation and retirement from his employment with and services as a director of the Bank, and from all positions with Franklin other than as a member of the Board of Directors of Franklin, effective as of July 31, 2008 (the "Effective Date"). In accordance with Mr. Nocella's employment letter dated December 23, 2003, the Retirement Agreement provides that Mr. Nocella will receive a severance payment in an amount equal to his base salary of $434,700 for the year ended December 31, 2008, which amount will be paid in equal installments over a period of 12 months beginning six months after the Effective Date. The Retirement Agreement also provides that Mr. Nocella will receive a payment for accrued and unused vacation through the Effective Date and will be entitled to reimbursement of reasonable attorney's fees associated with negotiation of the Retirement Agreement. Mr. Nocella will also be reimbursed for the premiums paid by him and all amounts paid by him related to deductibles, co-payment limits or applicable out-of-pocket maximums for health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. In accordance with the provisions of Franklin's incentive compensation plans, Mr. Nocella's equity incentive awards (stock options and stock awards) that are not already vested will vest as of the Effective Date and remain exercisable for the remainder of their respective terms. Similarly, performance units proportionally vest at retirement in accordance with the terms of the plan, with all other conditions to payout remaining in place. Mr. Nocella will cease to be eligible to participate in or receive any amounts payable under the 2007 Franklin Bank Incentive Plan or any other cash bonus or incentive plan of the Company. The Retirement Agreement also confirms that, in accordance with the terms of the Company's Amended and Restated Certificate of Incorporation and the Bank's Articles of Incorporation, Mr. Nocella is entitled to indemnification and advancement of legal expenses in connection with ongoing legal proceedings in which Mr. Nocella is a party, subject to his undertaking to repay all amounts advanced if it is ultimately determined that he is not entitled to indemnification. In the Retirement Agreement, Mr. Nocella agrees, to the extent requested by Franklin, to assist Franklin in negotiating any strategic transaction involving Franklin or the Bank. If Franklin or the Bank enters into a definitive agreement with respect to a recapitalization transaction within 120 days following the Effective Date, Mr. Nocella will receive as
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consideration for his services in assisting the Company in negotiating such a transaction $20,000 per month for each month (or portion thereof) following the Effective Date that he provides such assistance, not to exceed $80,000. Such amount will be payable in a lump sum six months after completion and funding of such a recapitalization transaction.
The Retirement Agreement contains confidentiality, non-disparagement, and cooperation provisions, as well as a mutual release of claims. The Retirement Agreement provides for arbitration of claims that may arise under it.
The foregoing description of the Retirement Agreement does not purport to be complete and is qualified in its entirety by reference to the Retirement Agreement which is filed as Exhibit 10.1 to this Form 8-K and incorporated into this Item 5.02 by reference.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
10.1 Retirement Agreement by and among Franklin Bank Corp., Franklin Bank, S.S.B., and Anthony J. Nocella dated July 31, 2008.
It looks as though Franklin is on the path of getting delisted. I don't know how it can avoid it considering the losses, the value of its stock, and the risk of it going much lower, the loss of interest from buyers, and the continual notices of them late filing. There seems to be just to many things that have gone wrong, and with so many of these small banks facing the same crisis and Franklins are even more compounded in many respects. Its gonna take a long time before any real interest in buying these bank stocks, and who got themselves into these kind of financial difficulties due to management, and many brought alot of this on themselves. This looks to be like a long drawn out process and soon it will be a year, and it doesn't look like things are getting any better or a recovery from its dramatic decline is possible.
Franklins best chance of survival imo would be if a larger bank bought them out, but considering the housing market, and commercial realestate facing alot of the same issues with their loans and not having the abitlity to pay them back puts these banks in a precarious position having to cover themselves for the loan losses, plus getting stuck with all these properties they never wanted. I guess the next challenge they will face is how they will eventually unload them?
"Bubbles are Good For You !"
Franklin Bank Corp - Current report filing (8-K)
Date : 08/06/2008 @ 4:41PM
Source : Edgar (US Regulatory)
Stock : Franklin Bank Corp (FBTX)
Quote : 0.67 0.01 (1.52%) @ 8:00PM
Franklin Bank Corp - Current report filing (8-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 31, 2008
FRANKLIN BANK CORP.
(Exact name of registrant as specified in its charter)
Delaware 000-32859 11-3626383
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
9800 Richmond Avenue, Suite 680 Houston, Texas 77042
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code ( 713) 339-8900
Not applicable.
(Former name or former address, if changed since last report.)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2 below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Special Note — Franklin Bank Corp. (“Franklin”) has not filed its Annual Report on Form 10-K containing audited financial statements for 2007 or any Quarterly Reports on Form 10-Q containing financial statements for subsequent interim periods. The financial and other information contained in this Current Report on Form 8-K remain subject to revision based on the audit of Franklin’s financial statements for 2007. Additionally, this Current Report on Form 8-K contains forward-looking statements that are based on Franklin’s current expectations. See “Forward-Looking Statements” below.
Section 4 — Matters Related to Accountants and Financial Statements
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
(a)
Background and Overview
In its Current Report on Form 8-K filed on May 2, 2008, Franklin disclosed that it had determined that the accounting for (i) certain delinquent single family loans serviced by third parties (“Delinquent Loan Accounting”), (ii) other real estate owned (“REO Accounting”) and (iii) the newly created single family loan modification programs to mitigate foreclosure losses (“Loan Modification Accounting”) should be revised. That report also disclosed Franklin’s determination that the foregoing accounting issues required the restatement of the financial statements contained in Franklin’s Quarterly Report on Form 10-Q for the period ended September 30, 2007 (the “September 2007 Form 10-Q”), and such financial statements should no longer be relied upon.
Subsequently, Franklin has undertaken a review of its financial information for the first two quarters of 2007 and for the years 2006, 2005 and 2004 in order to determine whether the impact of the foregoing accounting issues was limited to the third quarter of 2007. In addition to its internal review, Franklin has engaged an accounting firm to serve as a Special Accounting Master to assist in the review of Franklin’s financial information for such periods and accounting matters generally.
As a result of this review, Franklin has discovered that the revisions necessitated by Delinquent Loan Accounting, REO Accounting and Loan Modification Accounting are not limited to the three months ended September 30, 2007. Additionally, Franklin has discovered that the accounting for certain investment securities (“Investment Securities Accounting”) and the accounting for monthly increases in the cash surrender value of certain bank-owned life insurance (“BOLI Accounting”) should also be revised. The Delinquent Loan Accounting, REO Accounting, Loan Modification Accounting, Investment Securities Accounting and BOLI Accounting issues are referred to in this report as the “Accounting Issues.”
In light of the revisions necessary to address the Accounting Issues and the expected impact thereof, on July 31, 2008, the Board of Directors of Franklin (the “Board”), after discussions with management, the Special Accounting Master and other special accounting advisors, concluded that Franklin’s financial statements as of and for the three months ended June 30, 2007 and March 31, 2007 and the year ended December 31, 2006, contained in Franklin’s Quarterly Reports on Form 10-Q for the periods ended June 30, 2007 (the “June 2007 Form 10-Q”) and March 31, 2007 (the “March 2007 Form 10-Q”) and Annual Report on Form 10-K for the year ended December 31, 2006 (the “2006 Form 10-K”), respectively, are required to be restated and such financial statements and the corresponding report of Franklin’s independent registered public accounting firm, Deloitte & Touche LLP, included in the 2006 Form 10-K should no longer be relied upon.
Franklin intends to restate the financial statements as of and for the year ended December 31, 2006 on a prospective basis in its Annual Report on Form 10-K for the year ended December 31, 2007 (the “2007 Form 10-K”). Franklin intends to restate the financial statements as of and for the
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periods ended September 30, 2007, June 30, 2007 and March 31, 2007 on a prospective basis within Franklin’s respective Quarterly Reports on Form 10-Q for 2008. See “Item 8.01 Other Events — Estimated Dates for SEC filings” for a list of target dates for these filings.
The independent audit of Franklin’s financial statements for 2007 is ongoing. The 2007 audit and the restatement process may result in additional adjustments, and Franklin will make such additional adjustments as they may be identified. Franklin is also evaluating the impact of the Accounting Issues on its internal control over financial reporting and disclosure controls and procedures.
On July 30, 2008, Franklin Bank, S. S. B. (the “Bank”), a subsidiary of Franklin Bank Corp., submitted to the Federal Deposit Insurance Corporation a call report as of and for the six months ended June 30, 2008 (the “June Call Report”). The effect of the Accounting Issues was reflected in the June Call Report. According to the June Call Report, as of June 30, 2008 the Bank was well capitalized.
Accounting Issues
Delinquent Loan Accounting . Most of Franklin’s contracts with third party servicers require the servicer to remit scheduled principal and interest payments on a monthly basis whether or not the borrower has actually made payment to the servicer. In the historical financial statements, Franklin continued to recognize interest income on certain single family loans serviced by third parties that were delinquent for more than 90 days, on which the payments were made by the servicer to Franklin even though the borrower had not made payments to the servicer, rather than placing these loans on non-accrual status. Under United States generally accepted accounting principles (“GAAP”), interest should not be accrued on loans for which payment in full of principal or interest is not expected, or, generally, upon which payment of principal or interest has been in default for a period of 90 days or more. Accordingly, Franklin has determined that its method of accounting for delinquent single family loans serviced by third parties should be revised.
In the historical financial statements, adjustments will be made to place single family loans serviced by others that were delinquent more than 90 days on non-accrual status. In the financial statements for the three months ended September 30, 2007, June 30, 2007 and March 31, 2007 and the year ended December 31, 2006 these adjustments are expected to reduce interest income by $562,000, $410,000, $301,000 and $1.1 million, respectively, and increase the provision for credit losses by $1.9 million, $509,000, $326,000 and $0, respectively. These adjustments are also expected to increase non-accrual loans by $61.0 million, $36.3 million, $28.6 million and $20.5 million, respectively, while reducing amounts previously reported as past due more than 90 days and still accruing by the same amounts.
The impact of Delinquent Loan Accounting is expected to be limited to the financial statements for the periods ended September 30, 2007, June 30, 2007 and March 31, 2007 and the year ended December 31, 2006.
REO Accounting . Under Franklin’s servicing agreements, servicers are required to report the status of each individual loan in the serviced portfolio on a monthly basis. These reports include the loan’s current principal balance, collections, delinquency status and foreclosure proceedings status as necessary. Franklin maintains data processing records for each loan in its portfolio that is serviced by others, and these records are updated monthly using information from the servicers’ reports in order to track and report portfolio information. The servicers’ reports for a particular month are generally received late in the subsequent month.
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Before 2008, Franklin’s process for identifying foreclosures or real-estate owned (“REO”) within its serviced by others portfolio was based on a reconciliation of cash receipts reflected on the servicers’ reports. Based on this reconciliation, Franklin did not record or write-down foreclosures in its single family mortgage portfolio serviced by others on a timely basis.
Adjustments will be made in the historical financial statements to record REO as a result of foreclosures of single family loans serviced by third parties. In the financial statements for the three months ended September 30, 2007, June 30, 2007 and March 31, 2007 and the year ended December 31, 2006, these adjustments are expected to increase REO by $7.1 million, $9.7 million, $7.7 million and $2.1 million, respectively. The adjustments to be made to the financial statements for the three months ended September 30, 2007, June 30, 2007 and March 31, 2007 and the year ended December 31, 2006 are expected to reduce pre-tax income related to these foreclosures by $3.6 million, $723,000, $245,000 and $678,000, respectively.
Additionally, Franklin did not timely record a write down in the value of a particular commercial REO property on a timely basis. An appraisal obtained in January 2008 showed impairment of the carrying value of this property totaling $1.6 million as of June 30, 2007. Adjustments will be made in the historical financial statements to record the impairment in the financial statements for the three months ended June 30, 2007. This adjustment will reduce pre-tax income for this write down by $1.6 million for the three months ended June 30, 2007.
The impact of REO Accounting is expected to be limited to the financial statements for the periods ended September 30, 2007, June 30, 2007 and March 31, 2007.
Loan Modification Accounting .
On September 5, 2007, the federal banking agencies issued a statement encouraging regulated institutions and state-supervised entities to pursue strategies to mitigate losses while preserving homeownership to the extent possible and appropriate. The guidance encouraged proactive steps to preserve homeownership in situations where there are heightened risks of homeowners losing their homes to foreclosures. Franklin promptly initiated loan modification programs in response to this federal statement.
Under GAAP, many of these modified loans are considered troubled debt restructurings (“TDRs”) and must be placed on non-accrual status. While on non-accrual status, interest income is recognized only when paid by borrowers on a cash basis. If borrowers perform pursuant to the terms of their modified loans for six consecutive months, the loans may be placed back on accrual status and no longer classified as non-performing assets because the borrowers will have demonstrated an ability to perform.
Franklin has determined that it did not account for certain single family mortgage loan modification programs developed and implemented in the third and fourth quarters of 2007 as TDRs, and did not place these loans on non-accrual status.
Franklin identified modified loans totaling $62.1 million through September 30, 2007, of which $26.3 million were identified as TDRs. Adjustments will be made in the historical financial statements to reduce previously recognized interest income and record additional provision for credit losses for modifications accounted for as TDRs. Adjustments to the financial statements for the periods ended September 30, 2007 and June 30, 2007 are expected to reduce interest income for modifications accounted for as TDRs by $172,000 and $1,000, respectively, and increase provision for credit losses by $2.9 million and $24,000, respectively.
The impact of Loan Modification Accounting is expected to be limited to the financial statements for the periods ended September 30, 2007 and June 30, 2007.
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Investment Securities Accounting . During the quarter ended September 30, 2007, Franklin transferred certain available for sale securities with a carrying value of $91.7 million to trading securities and recognized a gain of $1.7 million. Additionally, during the third quarter, Franklin transferred trading securities with a carrying value of $75.9 million to held to maturity securities. These transfers were made at that time in order to rebalance the securities held as an economic hedge against Franklin’s mortgage servicing rights portfolio. Management believed these transfers were appropriate under GAAP at that time but subsequently learned that these transfers were inconsistent with GAAP.
Adjustments will be made in the historical financial statements to reverse the securities transfers in whole as of September 30, 2007. Adjustments to the financial statements for the period ended September 30, 2007 are expected to reduce non-interest income by $1.7 million as a result of reversing the gain recognized upon the initial transfer from available for sale securities to trading securities.
The impact of Investment Securities Accounting is expected to be limited to the financial statements for the period ended September 30, 2007.
BOLI Accounting . In December 2006, Franklin purchased bank-owned life insurance having a cash surrender value (“CSV”) at inception of $75.0 million. Under GAAP, monthly increases in the CSV should be recorded as non-interest income. Franklin did not properly record all of the monthly increase in CSV thereby understating income by $223,000, $230,000 and $156,000 for the three months ended September 30, 2007, June 30, 2007 and March 31, 2007, respectively.
The impact of the BOLI Accounting is expected to be limited to financial statements for the periods ended September 30, 2007, June 30, 2007 and March 31, 2007.
Tax Impact of the Accounting Issues . The revisions related to Delinquent Loan Accounting, REO Accounting, Loan Modification Accounting and Investment Securities Accounting will necessitate adjustments to income tax expense in the financial statements for the periods ended September 30, 2007, June 30, 2007 and March 31, 2007 and the year ended December 31, 2006. Revisions related to BOLI Accounting did not necessitate revisions to income tax expense because the non-interest income attributable to increases in CSV is not taxable.
Expected Impact of the Restatements
Set forth below is the expected impact of the restatements on Franklin’s previously issued financial statements, all of which figures are unaudited and, as stated elsewhere in this report, remain subject to revision.
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The following table sets forth the effects of the Accounting Issues on the consolidated balance sheet (unaudited) as of September 30, June 30 and March 31, 2007 (dollars in thousands):
September 30, 2007 June 30, 2007 March 31, 2007
As As As
Previously As Previously As Previously As
Reported Adjustment Restated Reported Adjustment Restated Reported Adjustment Restated
Assets
Trading Securities $ 93,382 $ (17,446 ) $ 75,936 * * * * * *
Securities held to maturity 384,563 (64,176 ) 320,387 * * * * * *
Securities available for sale 227,005 81,623 308,628 * * * * * *
Loans, net:
Single family 1,937,408 (9,363 ) 1,928,045 $ 2,068,470 $ (12,904 ) $ 2,055,566 $ 2,143,984 $ (8,592 ) $ 2,135,392
Commercial 1,984,962 (5,333 ) 1,979,629 * * * * * *
Consumer 332,199 1,094 333,293 * * * * * *
Allowance for credit losses (16,825 ) (7,667 ) (24,492 ) (15,640 ) (533 ) (16,173 ) (11,958 ) (326 ) (12,284 )
Loans, net 4,237,744 (21,269 ) 4,216,475 4,232,510 (13,437 ) 4,219,073 4,020,638 (8,918 ) 4,011,720
Premises and equipment, net 38,072 (1 ) 38,071 * * * * * *
Real estate owned 39,032 5,526 44,558 31,199 9,671 40,870 24,431 7,669 32,100
Other assets 148,414 7,375 155,789 136,197 385 136,582 112,778 156 112,934
Total assets 5,746,641 (8,368 ) 5,738,273 5,545,765 (3,381 ) 5,542,384 4,852,800 (1,093 ) 4,851,707
Liabilities
Other liabilities 71,755 2,663 74,418 94,483 (242 ) 94,241 60,006 439 60,445
Total liabilities 5,268,477 2,663 5,271,140 5,076,230 (242 ) 5,075,988 4,412,488 439 4,412,927
Stockholders’ equity
Paid-in Capital 306,217 (1 ) 306,216 * * * * * *
Retained earnings 86,614 (12,085 ) 74,529 79,066 (3,139 ) 75,927 71,965 (1,532 ) 70,433
Unrealized gains (losses) on securities available for sale (1,171 ) 1,055 (116 ) * * * * * *
Total stockholders’ equity 478,164 (11,031 ) 467,133 469,535 (3,139 ) 466,396 440,312 (1,532 ) 438,780
Total liabilities and stockholders’ equity $ 5,746,641 $ (8,368 ) $ 5,738,273 $ 5,545,765 $ (3,381 ) $ 5,542,384 $ 4,852,800 $ (1,093 ) $ 4,851,707
* previously reported amount is not affected.
Note: totals do not summate because unaffected line items have been omitted.
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The following tables set forth the effects of the Accounting Issues on the consolidated balance sheet (unaudited) as of December 31, 2006 (dollars in thousands):
As Previously As
Reported Adjustment Restated
Assets
Loans, net:
Single family $ 2,823,395 $ (2,819 ) $ 2,820,576
Loans, net 4,676,062 (2,819 ) 4,673,243
Real estate owned 22,031 2,141 24,172
Total assets 5,537,367 (678 ) 5,536,689
Liabilities
Other liabilities 54,839 444 55,283
Total liabilities 5,104,641 444 5,105,085
Stockholders’ equity
Retained earnings 67,380 (1,122 ) 66,258
Total stockholders’ equity 432,726 (1,122 ) 431,604
Total liabilities and stockholders’ equity $ 5,537,367 $ (678 ) $ 5,536,689
Note: totals do not summate because unaffected line items have been omitted.
The following tables set forth the effects on the consolidated income statement (unaudited) of Accounting Issues for each of the three month periods ending March 31, June 30 and September 30, 2007 (dollars in thousands except per share amounts):
September 30, 2007 June 30, 2007 March 31, 2007
As As As
Previously As Previously As Previously As
Reported Adjustment Restated Reported Adjustment Restated Reported Adjustment Restated
Interest income
Trading securities $ 1,527 $ 44 $ 1,571 * * * * * *
Mortgage-backed securities 7,592 (44 ) 7,548 * * * * * *
Loans 74,294 (1,868 ) 72,426 $ 72,785 $ (1,054 ) $ 71,731 $ 70,134 $ (777 ) $ 69,357
Total interest income 86,231 (1,868 ) 84,363 81,433 (1,054 ) 80,379 77,986 (777 ) 77,209
Interest expense
Deposits 28,766 (1 ) 28,765 * * * * * *
Subordinated notes * * * * * * 2,002 (36 ) 1,966
Total interest expense 58,853 (1 ) 58,852 * * * 55,840 (36 ) 55,804
Net interest income 27,378 (1,867 ) 25,511 25,671 (1,054 ) 24,617 22,146 (741 ) 21,405
Provision for credit losses 2,539 7,731 10,270 907 424 1,331 615 309 924
Net interest income after provision for credit losses 24,839 (9,598 ) 15,241 24,764 (1,478 ) 23,286 21,531 (1,050 ) 20,481
Non-interest income
Gain (loss) on sale of single family loans and MSRs 947 (2,448 ) (1,501 ) * * * * * *
Bank owned life insurance 1,003 224 1,227 1,035 230 1,265 1,088 156 1,244
Other 654 (1 ) 653 * * * * * *
Total non-interest income 10,231 (2,225 ) 8,006 7,901 230 8,131 6,547 156 6,703
Non-interest expense
Data processing 2,049 (1 ) 2,048 * * * * * *
Occupancy * * * * * * 1,800 66 1,866
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September 30, 2007 June 30, 2007 March 31, 2007
As As As
Previously As Previously As Previously As
Reported Adjustment Restated Reported Adjustment Restated Reported Adjustment Restated
Professional fees 1,077 (1 ) 1,076 * * * * * *
Loan expenses 784 34 818 382 33 415 510 27 537
Real estate owned 540 2,306 2,846 406 1,572 1,978 521 (241 ) 280
Other * * * 2,948 (155 ) 2,793 * * *
Total non-interest expenses 21,390 2,338 23,728 19,538 1,450 20,988 16,525 (148 ) 16,377
Income before taxes 13,680 (14,161 ) (481 ) 13,127 (2,698 ) 10,429 11,553 (746 ) 10,807
Income tax expense 4,514 (5,215 ) (701 ) 4,409 (1,091 ) 3,318 3,736 (336 ) 3,400
Net income 9,166 (8,946 ) 220 8,718 (1,607 ) 7,111 7,817 (410 ) 7,407
Net income available to common stockholders 7,549 (8,946 ) (1,397 ) 7,101 (1,607 ) 5,494 6,200 (410 ) 5,790
Basic earnings per common share $ 0.30 $ (0.36 ) $ (0.06 ) $ 0.30 $ (0.07 ) $ 0.23 $ 0.26 $ (0.01 ) $ 0.25
Diluted earnings per common share $ 0.30 $ (0.36 ) $ (0.06 ) $ 0.30 $ (0.07 ) $ 0.23 $ 0.26 $ (0.02 ) $ 0.24
* previously reported amount is not affected.
Note: totals do not summate because unaffected line items have been omitted.
The following table sets forth the effects of the Accounting Issues on the consolidated income statement (unaudited) for the year ended December 31, 2006 (dollars in thousands except per share amounts):
As Previously
Reported Adjustment As Restated
Interest income
Loans $ 264,948 $ (1,325 ) $ 263,623
Total interest income 291,059 (1,325 ) 289,734
Interest expense
Subordinated notes 7,491 36 7,527
Total interest expense 198,341 36 198,377
Net interest income 92,718 (1,361 ) 91,357
Provision for credit losses 3,804 225 4,029
Net interest income after provision for credit losses 88,914 (1,586 ) 87,328
Non-interest expense
Occupancy 7,464 (66 ) 7,398
Loan expenses 2,317 11 2,328
Real estate owned 1,526 257 1,783
Total non-interest expenses 67,011 202 67,213
Income before taxes 30,576 (1,788 ) 28,788
Income tax expense 11,196 (666 ) 10,530
Net income 19,380 (1,122 ) 18,258
Net income available to common stockholders 15,517 (1,122 ) 14,395
Basic earnings per common share $ 0.66 $ (0.04 ) $ 0.62
Diluted earnings per common share $ 0.65 $ (0.05 ) $ 0.60
Note: totals do not summate because unaffected line items have been omitted.
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The following table sets forth the effects of the Accounting Issues on asset quality information and ratios as of September 30, June 30 and March 31, 2007 (dollars in thousands):
September 30, 2007 June 30, 2007 March 31, 2007
As As As
Previously As Previously As Previously As
Reported Adjustment Restated Reported Adjustment Restated Reported Adjustment Restated
Asset Quality
Nonperforming Loans (“NPLs”) $ 30,166 $ 60,987 $ 91,153 $ 16,324 $ 36,316 $ 52,640 $ 17,929 $ 28,612 $ 46,541
REO 38,739 5,819 44,558 30,870 9,671 40,541 23,886 7,669 31,555
Nonperforming Assets (“NPAs”) 68,905 66,806 135,711 47,194 45,987 93,181 41,815 36,281 78,096
NPLs as % of loans 0.71 % 1.44 % 2.15 % 0.38 % 0.86 % 1.24 % 0.44 % 0.72 % 1.16 %
NPAs as % of assets 1.20 % 1.17 % 2.37 % 0.85 % 0.83 % 1.68 % 0.86 % 0.75 % 1.61 %
Allowance to period end balance 0.40 % 0.19 % 0.59 % 0.38 % 0.01 % 0.39 % 0.30 % 0.01 % 0.31 %
90+ days and still accruing $ 57,437 $ (57,437 ) $ — $ 47,730 $ (47,730 ) $ — $ 40,115 $ (30,179 ) $ 9,936
The following table sets forth the effects of the Accounting Issues on asset quality information and ratios as of December 31, 2006 (dollars in thousands):
As Previously
Reported Adjustment As Restated
Asset Quality
Nonperforming Loans (“NPLs”) $ 13,260 $ 20,501 $ 33,761
REO 21,263 2,141 23,404
Nonperforming Assets (“NPAs”) 34,523 22,642 57,165
NPLs as % of loans 0.31 % 0.49 % 0.80 %
NPAs as % of assets 0.62 % 0.41 % 1.03 %
Allowance to period end loan balance * * *
90+ days and still accruing $ 22,614 $ (22,373 ) $ 241
* previously reported amount is not affected.
In addition to the Accounting Issues, Franklin has identified other smaller non-cash adjustments to its prior period financials which are reflected in the tables above.
The disclosures set forth in this Current Report on Form 8-K are subject to completion of the audit of Franklin’s financial statements for 2007. It is possible that additional revisions could be identified
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before the financial statements for the periods ended September 30, 2007, June 30, 2007 and March 31, 2007 and the year ended December 31, 2006 are restated.
The Board of Directors of Franklin has discussed the matters disclosed in this Item 4.02(a) with Deloitte & Touche LLP, Franklin’s independent registered public accountants.
Section 8 — Other Events
Item 8.01 Other Events.
Permitted Deferral of Interest and Dividend Payments on Junior Subordinated Debt and Preferred Stock
Franklin is a holding company with no significant assets other than the Bank. Franklin depends upon dividends from the Bank to pay Franklin’s expenses, to pay interest on its 4% Contingent Convertible Senior Notes Due 2027 (the “Notes”), to pay interest on its four series of junior subordinated notes (“Junior Subordinated Notes”) issued by Franklin to its wholly-owned subsidiaries Franklin Bank Capital Trust I, Franklin Capital Trust II, Franklin Capital Trust III and Franklin Capital Trust IV (each a “Trust” and collectively the “Trusts”) and to pay dividends on its Series A Non-Cumulative Perpetual Preferred Stock (the “Preferred Stock”).
Capital distributions by the Bank to Franklin are subject to the requirements of the Texas Department of Savings and Mortgage Lending (the “TDSML”), the Office of Thrift Supervision (the “OTS”) and the Federal Deposit Insurance Corporation (the “FDIC”). The Bank is required to provide 30 days’ prior notice to the OTS before it can issue a dividend to Franklin, and the OTS may object on safety and soundness grounds. The FDIC has the authority to prohibit the Bank from engaging in unsafe or unsound practices and could impose restrictions on dividends by the Bank. The TDSML also has power to restrict dividends by the Bank.
The TDSML recently advised the Bank that it must first obtain approval from the TDSML before paying a dividend to Franklin. After informal discussions with the TDSML and the OTS, the Bank determined not to make a formal request for the dividend necessary to fund interest payments aggregating $1,320,347 due on Franklin’s Junior Subordinated Notes payable to the Trusts in August 2008 and September 2008, or to fund the $1,617,188 in dividend payments payable to the holders of the Preferred Stock in September 2008 if declared. The election by Franklin not to make the scheduled interest and dividend payments on the Junior Subordinated Notes and the Preferred Stock is permitted by the terms of these instruments and will not result in a default under them.
The indentures governing the Junior Subordinated Notes provide that Franklin may defer interest on the Subordinated Notes without penalty for up to 20 consecutive quarters; provided, however, that interest will accrue on the interest so deferred and such accrued interest is compounded quarterly. If Franklin defers interest on a series of Junior Subordinated Notes, the interest payments on the trust preferred securities issued by the Trust to which such Junior Subordinated Notes relates is automatically deferred. Additionally, if payments on the Junior Subordinated Notes have been deferred, their terms preclude Franklin from paying dividends on any equity security of Franklin, including the Preferred Stock, during the period of such deferral.
Dividends on the Preferred Stock are non-cumulative. To the extent that any dividends payable on the Preferred Stock are not declared and paid, in full or otherwise, such unpaid dividends do not cumulate and are not payable. Franklin has no obligation to declare dividends on the Preferred Stock or to pay interest or any sum in lieu of interest with respect to undeclared dividends.
However, if Franklin fails
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to pay dividends on the Preferred Stock for six quarterly dividend periods (whether or not consecutive), the size of Franklin’s board of directors will be increased by two and the holders of the Preferred Stock will have the right to vote to fill the two vacancies created thereby until Franklin pays dividends for four consecutive dividend periods.
On July 31, 2008, the Board resolved to defer the scheduled interest payments on the Junior Subordinated Notes due August 15 and August 23 and the two payments due September 15. The Board also resolved not to declare or pay the dividend on the Preferred Stock scheduled for September 15.
Franklin has provided or will provide to the trustees of the indentures under the Junior Subordinated Notes the notice necessary to defer such interest payments. As a result of this action, Franklin is prohibited from paying dividends on the Preferred Stock until all amounts deferred on the Subordinated Notes have been paid in full.
Estimated Dates for SEC Filings
Franklin is working diligently to complete and file with the Securities and Exchange Commission (the “SEC”) the 2007 Form 10-K and the Quarterly Reports on Form 10-Q for the periods ended March 31, 2008 (the “March 2008 Form 10-Q”) and June 30, 2008 (the “June 2008 Form 10-Q”). Filing the 2007 Form 10-K requires completion of the audit of Franklin’s financial statements for 2007. The March 2008 Form 10-Q and June 2008 Form 10-Q can only be filed after the 2007 Form 10-K is filed.
Although it is not possible to predict when the audit of the 2007 financial statements or the filing of the 2007 Form 10-K or the March 2008 Form 10-Q and June 2008 Form 10-Q will be completed, Franklin has established the following target dates for filing these reports:
• By September 15, 2008 — file the (i) 2007 Form 10-K, including restatement of the financial statements for the year ended December 31, 2006, and (ii) March 2008 Form 10-Q, including restatement of financial statements contained in the March 2007 Form 10-Q;
• By October 31, 2008 — file the June 2008 Form 10-Q, including restatement of financial statements contained in the June 2007 Form 10-Q; and
• By November 27, 2008 — file Franklin’s Quarterly Report on Form 10-Q for the period ended September 30, 2008, including restatement of financial statements contained in the September 2007 Form 10-Q.
The timing of these filings remains uncertain. No assurance may be given that these target dates will be achieved.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding the outcome of Franklin’s internal review of its financial statements, the estimated amounts to be restated, the estimated effect of restatement, and Franklin’s target dates for filing certain periodic reports. These statements involve risks and uncertainties which may cause actual results to differ materially from those discussed herein. These forward-looking statements are made as of the date of this report, and Franklin does not undertake, and expressly disclaims, any obligation to update them. Please refer to the risks and uncertainties detailed from time to time by Franklin in its filings with the SEC made from time to time. You are strongly urged to review all such filings for a more detailed discussion of such risks and uncertainties. Franklin’s SEC filings are readily obtainable at no charge at www.sec.gov.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 6, 2008 FRANKLIN BANK CORP.
By: /s/ Lewis S. Ranieri
Lewis S. Ranieri
"Bubbles are Good For You !"
8 Lawfirms pursuing class actions.
07/15/2008 6:02PM MWUS Shalov Stone Bonner & Rocco LLP Reminds Franklin Bank Corp. Investors That the Lead Plaintiff Deadline Is August 5, 2008, and Th
07/15/2008 4:45PM BW Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Announces Class Action Lawsuit on Behalf of Investors in Franklin Bank Corp
07/11/2008 8:30PM PRNUS Law Offices of Howard G. Smith Announces Update to the Shareholder Lawsuit Against Franklin Bank Corp.
07/07/2008 5:01PM EDGAR (8-K) Current report filing
06/18/2008 3:43PM MWUS Brower Piven Announces the Expansion of Class Period and Encourages Investors Who Have Losses in Excess of $100,000 From Investm
06/13/2008 3:59PM MWUS Sarraf Gentile LLP Files Class Action Lawsuit Against Franklin Bank Corp.
06/10/2008 5:00PM PRNUS Law Offices of Howard G. Smith Announces Class Action Lawsuit Against Franklin Bank Corp.
06/09/2008 4:16PM MWUS Brower Piven Encourages Investors Who Have Losses in Excess of $100,000 From Investment in Franklin Bank Corp. to Inquire About
06/09/2008 3:55PM BW Coughlin Stoia Geller Rudman & Robbins LLP Files Class Action Suit against Franklin Bank Corp.
06/09/2008 10:52AM MWUS Shalov Stone Bonner & Rocco LLP Reminds Investors That the Franklin Bank Corp. Securities Fraud Class Action Was Brought on Beha
06/09/2008 12:53AM MWUS INVESTOR ALERT: KGS Notifies Franklin Bank Corp. Shareholders That They Have Until August 5, 2008 to File Lead Plaintiff Applica
06/07/2008 8:28PM MWUS Shalov Stone Bonner & Rocco LLP Is the Only Law Firm That Has Filed a Securities Fraud Class Action Against Franklin Bank Corp.
06/07/2008 1:05PM MWUS The Rosen Law Firm Announces the Filing of Shareholder Class Action Charging Franklin Bank Corp. With Violations of the Federal
Franklin Bank Corp - Current report filing (8-K)
Date : 07/07/2008 @ 5:01PM
Source : Edgar (US Regulatory)
Stock : Franklin Bank Corp (FBTX)
Quote : 0.52 -0.03 (-5.45%) @ 10:45AM
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Franklin Bank Corp - Current report filing (8-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 7, 2008 (July 7, 2008)
FRANKLIN BANK CORP.
(Exact name of registrant as specified in its charter)
Delaware 000-32859 11-3626383
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
9800 Richmond Avenue, Suite 680 Houston, Texas 77042
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (713) 339-8900
Not applicable.
(Former name or former address, if changed since last report.)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2 below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Section 7 Regulation FD
Item 7.01 Regulation FD Disclosure
Franklin Bank, S. S. B. (the “Bank”), a subsidiary of Franklin Bank Corp. (“Franklin”), is required quarterly to submit call reports to the Federal Deposit Insurance Corporation (the “FDIC”). On July 7, 2008, Franklin issued a press release disclosing that the Bank had submitted to the FDIC an amended call report for the three months ended March 31, 2008. In addition, the Bank also submitted to the FDIC second amended call reports for the nine months ended September 30, 2007 and the twelve months December 31, 2007.
A copy of the press release is furnished with this report as Exhibit 99.1, and the information contained therein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Pursuant to general instruction B.2. of Form 8-K, the following exhibit shall be deemed to be furnished, rather than filed, with this report.
99.1 Press Release of Franklin Bank Corp., dated July 7, 2008.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FRANKLIN BANK CORP.
Dated: July 7, 2008 By: /s/ Alan E. Master
Alan E. Master
President
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EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release of Franklin Bank Corp., dated July 7, 2008
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Looks like 7 at present filed a class A. The Bank was negligible with their filings, this was expected, and the banks losses far exceeded what I thought these might be, but many of these small regional banks look equally as bad with the total of money losses and the properties they'll have to assume and sell due to the defaulted loans, residential, and commercial.
I knew this would be forthcoming:
Sarraf Gentile LLP Files Class Action Lawsuit Against Franklin Bank Corp.
Date : 06/13/2008 @ 3:59PM
Source : MarketWire
Stock : Sarraf Gentile LLP (FBTX)
Quote : 0.6701 -0.0799 (-10.65%) @ 11:24AM
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Sarraf Gentile LLP Files Class Action Lawsuit Against Franklin Bank Corp.
NEW YORK, NY (AMEX: FBK-P) ("Franklin" or the "Company"), between April 26, 2007, and May 1, 2008, inclusive (the "Class Period"). The action is pending in the United States District Court for the Southern District of Texas.
According to the complaint, the defendants violated the Securities Exchange Act of 1934 by engaging in a variety of accounting improprieties, including their admitted failure to charge off uncollectible loans and to mark Franklin's loans to market. As a result of the misconduct alleged, the complaint alleges that defendants understated the Company's delinquent, nonperforming, and uncollectible loans and thereby misrepresented Franklin's financial condition and results, including its overall and per-share profits and the fair market value of its residential mortgage loan portfolio.
If you purchased Franklin stock during the Class Period, you may, no later than August 5, 2008, request that the Court appoint you as lead plaintiff of the class. A lead plaintiff is a class member that acts on behalf of other class members in directing the litigation. Although your ability to share in any recovery is not affected by the decision whether or not to seek appointment as a lead plaintiff, lead plaintiffs make important decisions which could affect the overall recovery for class members.
For more information about the case, the claims, and your rights, please contact Sarraf Gentile LLP who will, without obligation or cost to you, attempt to answer your questions. Sarraf Gentile LLP is active in major class action litigations pending across the nation. You may contact Sarraf Gentile LLP at 11 Hanover Square, New York, New York 10005 (telephone: 212-868-3610; e-mail: joseph@sarrafgentile.com).
ATTORNEY ADVERTISING. Prior results do not guarantee a similar outcome.
Contact:
Joseph Gentile
Email Contact
SARRAF GENTILE LLP
11 Hanover Square
New York, NY 10005
T 212.868.3610
F 212.918.7967
www.sarrafgentile.com
Anthony Nocella has relinquished his job as chief executive officer of Franklin Bank Corp. in the wake of a 10-week internal investigation that the bank holding company said uncovered numerous accounting errors related to residential mortgage loans.
Houston-based Franklin (NASDAQ: FBTX) also said in a release issued after markets closed on May 19 that the U.S. Securities and Exchange Commission is conducting an investigation into accounting errors and other matters.
While many Texas banks have weathered the credit crunch storm in the wake of the subprime mortgage market meltdown of 2007, Franklin's stock has been pounded in the past six months because of its high loan exposure through its banking subsidiary, Franklin Bank ssb, in depressed markets such as Florida and Nevada.
Lewis Ranieri, the company's chairman, is now interim CEO. Nocella, a founder of the bank, will remain as a director and chairman of the bank subsidiary and will retire by the end of the year.
Alan Master is Franklin's interim president and will retain the title until a new CEO is chosen.
The SEC inquiry 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.
The company has been unable to file its first-quarter 10-Q report because of the internal audit investigation and is also in the process of restating third- and fourth-quarter 2007 results.
Shares of Franklin dipped below $1 when the stock market opened Tuesday after closing at $1.01 on May 19. The shares have lost almost all of their value since trading near $20 as recently as February 2007.
Internal Franklin Probe Finds Accounting Errors
By Kevin Kingsbury
Word Count: 333 | Companies Featured in This Article: Franklin Bank
A board probe at Franklin Bank Corp. found accounting errors involving its single-family home-loan business and will result in Chief Executive Anthony J. Nocella retiring sooner than planned.
Chairman Lewis Ranieri will be interim CEO of the Houston bank until a replacement is hired. Mr. Ranieri, former chairman of Salomon Brothers, helped pioneer the bundling of mortgages into marketable securities, a key element of the continuing credit ...
May 20 (Reuters) - Franklin Bank Corp (FBTX.O: Quote, Profile, Research), a Texas bank overseen by mortgage bond pioneer Lewis Ranieri, said it faces a U.S. Securities and Exchange Commission probe related to its lending practices, and that it has replaced its chief executive.
Ranieri, the bank's chairman and a former Salomon Brothers Inc vice chairman, will become interim chief executive, the Houston-based bank said late Monday.
He replaces Anthony Nocella, whom the bank said "will accelerate his personal plans to retire" by year end. Nocella, the chief executive since July 2002, will remain a director and chairman of the company's banking unit, the bank said.
The SEC inquiry 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.
Franklin said it has also been in communication with the Federal Deposit Insurance Corp and the Texas Department of Savings and Mortgage Lending, and plans to cooperate with those agencies and the SEC.
The company has been unable to file its first-quarter report because of the internal probe, and this month said investors should not rely on its reported fourth-quarter results, which included a $66.1 million loss.
It also said it working to restate its third-quarter report and complete its 2007 annual report, but does not know when it will complete either.
Shares of Franklin closed Monday at $1.01 on the Nasdaq. They have lost more than 90 percent of their value in the last year, after trading as high as $21.88 in October 2006.
Once a Wall Street mail clerk, Ranieri is often credited popularizing mortgage-backed securities in the 1980s while at Salomon. Franklin's 2007 proxy statement said Ranieri "is generally considered to be the 'father' of the securitized mortgage market."
Ranieri was also a key figure in Michael Lewis' 1989 best-seller "Liar's Poker." Since leaving Salomon, he has started several ventures, including Ranieri & Co, a private investment firm.
According to its Web site, Franklin was founded in August 2001, bought its first community bank in April 2002, and later acquired several other small banks. (Reporting by Jonathan Stempel in Bangalore; Editing by )
Franklin Bank Corp. Announces Completion of Audit Committee Investigation
Monday May 19, 6:26 pm ET
HOUSTON, May 19, 2008 (PRIME NEWSWIRE) -- Franklin Bank Corp. (NasdaqGS:FBTX - News) (AMEX:FBK-P) (``Franklin'') announced that the Audit Committee of its Board of Directors has completed its previously announced independent investigation into certain accounting, disclosure and other issues related to single-family residential mortgages and residential real estate owned that had been brought to the Board's attention in mid-February 2008. The Audit Committee was assisted in its investigation by Baker Botts L.L.P., independent legal counsel. Baker Botts L.L.P. retained an independent accounting firm to advise on accounting matters.
During the course of its 10-week investigation, which was limited to a review of specified areas of Franklin's single family residential business, the Audit Committee conducted numerous interviews, reviewed email records for selected periods, and analyzed other documents and information provided by Franklin. The Audit Committee identified, among other things, a number of accounting errors in the areas described below:
(1) Franklin did not properly account for certain single family
mortgage loan modification programs developed and implemented as
part of an effort to reduce delinquencies and mitigate foreclosure
losses.
(2) Franklin did not charge off certain uncollectable single family
second lien loans.
(3) Franklin did not record, and in some instances did not write-down,
certain Real Estate Owned (REO) and in-substance foreclosures in
connection with foreclosures in its single family mortgage
portfolio.
(4) Franklin did not properly record certain mark-to-market
writedowns on loans transferred from "Held for Sale" to "Held for
Investment."
Franklin is in the process of completing the adjustments necessary to correct any of the above accounting errors that were not previously corrected in the call reports submitted by its subsidiary Franklin Bank, S.S.B. on April 30, 2008 as reported by Franklin on May 1, 2008.
Recommendations of the Audit Committee
The Audit Committee made various recommendations to the Board of Directors regarding Franklin's leadership, finance and accounting functions, public disclosure process, and policies, procedures and controls. The Board of Directors has accepted the findings of the Audit Committee and is beginning to implement the Audit Committee's recommendations.
Implementation of the Recommendations
``Franklin's Board of Directors fully accepts the findings of the independent review,'' said Lewis Ranieri, Chairman of the Board of Franklin Bank Corp. ``Completion of the investigation is an important milestone for all shareholders as we take the necessary steps to implement the recommendations of the Audit Committee.'' To begin the implementation of the recommendations, Franklin announced the following steps, effective immediately:
* Lewis S. Ranieri will continue in his role as Chairman of the Board
of Directors of Franklin and will assume the role of Chief
Executive Officer of Franklin until a new chief executive officer
is identified and retained.
* Anthony J. Nocella, Franklin's current Chief Executive Officer,
will accelerate his personal plans to retire. Mr. Nocella, a
founder and director of Franklin since 2002, will continue as a
director of Franklin and will continue to serve as Chairman of the
Bank. Through his membership on the Executive Committee of the
Bank, as described below, Mr. Nocella will continue in a
consultative capacity to assist Franklin until his retirement by
December 31, 2008.
* Alan E. Master, a director of Franklin since 2002 and with more
than 40 years experience in banking, will assume the role as
President of Franklin until a new chief executive officer is
identified and retained. Mr. Master will resign his memberships
on the Board's Audit, Compensation and Nominating and Corporate
Governance committees.
* The Bank will establish an Executive Committee consisting of Alan
E. Master, Robert A. Perro, Andy Black and Anthony J. Nocella (the
"Executive Committee") to oversee the Bank's day to day business
activities and exercise the powers of the chief executive. Mr.
Perro, a director of Franklin since 2002 who is Vice Chairman of
CardWorks, Inc., will serve as Chair of the Executive Committee.
* Franklin's Nominating and Corporate Governance Committee will
oversee a search for a new chief executive officer for Franklin
and the Bank, and at least one additional independent director for
Franklin's Board of Directors.
* With the assistance of the Audit Committee, Franklin will
establish a formal disclosure committee to review and approve
all public statements of Franklin. In connection with
establishing the disclosure committee, the Board will conduct a
review of the charters of its standing committees, to determine if
any revisions are warranted to strengthen its internal governance
processes.
* The Executive Committee, in cooperation with the Audit Committee,
will commence a thorough review of the operations, processes and
systems of Franklin and the Bank, including data intake, personnel
qualifications and staffing levels, technology, internal procedures
for the verification of policy compliance and internal procedures
governing the interaction of management with independent
accountants, internal auditors and regulatory bodies with a view
to fostering a culture of cooperation and open communication within
the organization and externally with regulatory agencies and others.
The purpose of this review, to be completed within 60 days, will be
to identify those areas, if any, in which internal controls over
financial reporting, and disclosure controls and procedures, should
be further strengthened.
ADVERTISEMENT
Cooperation with Regulatory Inquiries
Franklin has been in communication with the FDIC and the Texas Department of Savings and Mortgage Lending (``TDSML'') regarding the investigation and related matters. Franklin will continue to cooperate with the FDIC, the TDSML and other agencies.
Franklin reported the commencement of the Audit Committee investigation to the Enforcement Division of the U.S. Securities and Exchange Commission (``SEC''), which has commenced an informal inquiry into the disclosure, accounting and other issues that were investigated. Franklin intends to cooperate fully with the SEC. The SEC's inquiry is ongoing, and there can be no assurance that there will not be additional issues or matters arising from that inquiry.
Form 10-K and Form 10-Qs
Franklin is working diligently to complete and file its Form 10-K for the fiscal year ended December 31, 2007 and to amend and restate its Form 10-Q for the quarterly period ended September 30, 2007. The timing of these filings is uncertain.
Subject to review of a written plan for the execution of the steps described above to be prepared by Franklin's Board of Directors, Deloitte & Touche, Franklin's independent accountant, is expected to resume the audit of Franklin's financial statements for 2007 so that Franklin's Form 10-K for that year may be completed and filed with the SEC. Preparation of the Form 10-Q for the three months ended March 31, 2008 is expected to begin following completion of the audit of Franklin's financial statements for 2007. No prediction can be made at this time as to the completion date for such reports.
More regional banks likely to raise new capital
Monday May 19, 2:29 pm ET
Analyst: 10 regional banks likely to have to raise new capital or cut dividend
NEW YORK (AP) -- At least 10 regional banks are likely to need to raise new capital or cut their dividends in the coming year, a JPMorgan Chase & Co. research analyst wrote Monday in a client note.
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Nine banks likely will join the many that have already raised cash to shore up their capital base amid a weakening lending market, JPMorgan analyst Steven Alexopoulos wrote in a research note.
The banks named are Amcore Financial Inc., BankAtlantic Bancorp Inc., BankUnited Financial Corp., Boston Private Financial Holdings, Citizens Republic Bancorp Inc., Colonial Bancgroup Inc., Franklin Bank Corp., Private Bancorp Inc. and Windtrust Financial Corp.
A 10th, Comerica Inc., will likely have to slash its dividend from the present quarterly dividend of 66 cents, Alexopoulos wrote in the note.
Alexopoulos based his projection of a dividend cut for Comerica on his expected earnings for the bank over the next 12 months. He estimates Comerica, based on its current dividend, would pay out more than 90 percent of its earnings as dividends.
Shares of Comerica rose 56 cents to $38.90 in afternoon trading.
Banks of all sizes have faced increasing earnings pressure in recent quarters because of a rise in delinquencies and defaults among many types of loans, including mortgages and commercial loans. Rising defaults have forced the banks to reserve more cash to cover the losses.
A bank's reserve levels, along with its credit quality in its portfolios and its capital ratios, were all taken into consideration when determining which regional banks might need to raise new cash, Alexopoulos wrote in the note.
Nearly all the problems bank face stem from a rise in nonperforming assets and how it affects those reserve levels and capital ratios, Alexopoulos added.
Comerica is unlikely to need to raise capital, because its current levels are sufficient, Alexopoulos added.
The backlog of regulatory paperwork for embattled Franklin Bank Corp. is piling up.
Houston-based Franklin (NASDAQ: FBTX), which already has delayed filing its 2007 year-end 10-K report, will be unable to file its first-quarter 10-Q on time according to a May 12 notification to the U.S. Securities and Exchange Commission.
The bank holding company delayed its 10-K filing while its audit committee investigates possible accounting issues related to residential mortgages and other issues.
Franklin reported a net loss of $64.5 million, or $2.64 per share, on total interest income of $85.9 million, for the three months ended Dec. 31, 2007. Part of the losses were attributed to a $23 million loan-loss allowance increase.
Form 8-K for FRANKLIN BANK CORP
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9-May-2008
Triggering Events That Accelerate or Increase a Direct Financial Obligation or
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
On May 5, 2008 (the " Notice Date "), Franklin Bank Corp. (" Franklin ") received notice of default dated May 1, 2008 (" Notice of Default ") from The Bank of New York Trust Company, N.A., as trustee (the " Trustee "), under the indentures related to Franklin's 4% Contingent Convertible Senior Notes Due 2027 (the " Notes "). The Notes are governed by the Senior Indenture dated as of April 9, 2007 by and between Franklin and the Trustee (the " Base Indenture "), as supplemented by the First Supplemental Indenture dated as of April 18, 2007 (the " Supplemental Indenture " and, together with the Base Indenture, the " Indentures ").
Under the Indentures, Franklin must file all reports and other information that it is required to file with the Securities and Exchange Commission (the " Commission ") within the time required by the Commission's rules. As previously disclosed, Franklin did not timely file with the Commission its Annual Report on Form 10-K for the year ended December 31, 2007, and has failed to comply with such covenant. Under the Indentures, the failure of Franklin to comply with this covenant, if it continues for a period of 90 days after the Notice Date (until August 3, 2008) (the " Grace Period "), will constitute an Event of Default, as that term is defined in the Indentures.
If Franklin fails to cure the default during the Grace Period, then the Trustee or the holders of not less than 25% in aggregate principal amount of the Notes may declare the principal of and accrued and unpaid interest on all the Notes to be due and payable immediately (" Acceleration "), subject to Franklin's right to defer Acceleration by the payment of Special Interest (as defined below). As of the Notice Date, there was $82 million in aggregate principal amount of Notes outstanding.
The Supplemental Indenture provides that Franklin, in its sole discretion, may elect to delay Acceleration by accruing additional interest on the Notes equal to an annual rate of 0.50% (the " Special Interest ") for up to 120 days after the Grace Period ends, thereby deferring Acceleration for such 120-day period.
If Franklin files the Form 10-K and files all reports and other information that it is required to file with the Commission prior to expiration of the Grace Period, Acceleration will not occur. If the default has not been remedied prior to the expiration of the Grace Period, Franklin may elect to accrue Special Interest on the Notes and defer Acceleration for up to an additional 120 days (until December 1, 2008). If Franklin makes this election and files the Form 10-K and files all reports and other information that it is required to file with the Commission prior to the expiration of the 120-day period, Acceleration will not occur. If necessary to avoid Acceleration, Franklin intends to make this election prior to the end of the Grace Period.
-2-
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S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FRANKLIN BANK CORP.
Dated: May 9, 2008 By: /s/ Russell McCann Russell McCann Chief Financial Officer and Treasurer
Hey buddy, how ya been..?? Got your PM and thanks..
I went all cash a while back and did not renew at IHUB...
Been into other things I guess..
Hope all is well...
Jerry/Peoria
'The Worst Is Behind Us': Paulson Joins Street Luminaries, Declares Victory
Posted May 07, 2008 11:28am EDT by Aaron Task in Newsmakers, Recession, Banking
Related: UBS, FNM, LM, LAZ, MER, CFC, BSC
With Treasury Secretary Hank Paulson and Merrill's John Thain chiming in, there's now near unanimity of opinion on Wall Street: The worst of the credit crisis is over.
Such comments seem outrageous given the latest batch of scary headlines from UBS, Fannie Mae, Legg Mason, Lazard, et al. But hope springs eternal on Wall Street, and the reality is the crisis in the debt markets has eased since JPMorgan's Fed-engineered purchase of Bear Stearns, which Paulson called "an inflection point." (Critics have used similar terms, but with a far different meaning.)
Meanwhile, even Henry "Mr. Sunshine" Blodget is starting to come around to the idea that the housing market may be hitting bottom, thanks to an op-ed by Cyril Moulle-Berteaux, managing partner of Traxis Partners, in The Wall Street Journal.
In making the case for a housing-market bottom, Moulle-Berteaux notes house price affordability has improved dramatically and the inventory of new homes is falling. (The piece appeared prior to Wednesday's weak report on pending sales of existing homes for March.)
The fund manager makes a compelling case, but omits the key element of financing. While demand for housing remains fairly stable and mortgage rates are still historically low, even buyers with high credit scores and large down payments are reportedly struggling to secure as lenders like Countrywide and WaMu grapple with the bubble's aftermath.
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Wednesday, May 14, 2008 - 10:52 AM CDT
Franklin Bank to delay first-quarter filing Houston Business Journal - by Greg Barr Reporter
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The backlog of regulatory paperwork for embattled Franklin Bank Corp. is piling up.
Houston-based Franklin (NASDAQ: FBTX), which already has delayed filing its 2007 year-end 10-K report, will be unable to file its first-quarter 10-Q on time according to a May 12 notification to the U.S. Securities and Exchange Commission.
The bank holding company delayed its 10-K filing while its audit committee investigates possible accounting issues related to residential mortgages and other issues.
Franklin reported a net loss of $64.5 million, or $2.64 per share, on total interest income of $85.9 million, for the three months ended Dec. 31, 2007. Part of the losses were attributed to a $23 million loan-loss allowance increase.
Franklin Bank Corp - Notification that Quarterly Report will be submitted late (NT 10-Q)
Date : 05/12/2008 @ 4:44PM
Source : Edgar (US Regulatory)
Stock : Franklin Bank Corp (FBTX)
Quote : 1.09 0.0 (0.00%) @ 10:19AM
Subject to completion of the Audit Committee’s investigation referred to in Part III, Franklin expects to report a net loss for the quarter ended March 31, 2008, as compared to net income of $7.8 million for the quarter ended March 31, 2007.
9800 Richmond Avenue
Suite 680
Houston, TX 77042
United States - Map
Phone: 713-339-8900
Web Site: http://www.bankfranklin.com
DETAILS
Index Membership: N/A
Sector: Financial
Industry: Savings & Loans
Full Time Employees: 754
BUSINESS SUMMARY
Franklin Bank Corp. operates as the bank holding company for Franklin Bank, S.S.B., a savings bank that provides community banking products and services, and commercial banking services to corporations and other business clients, and originates single family residential mortgage loans primarily in Texas.
The bank, through its community banking offices, offers various consumer banking products, including checking, money market, and savings accounts, certificates of deposit, auto loans, home improvement loans, home equity loans, and mortgage loans, as well as investment services.
It also provides commercial banking services, such as financing for single family builders and commercial real estate, including retail, industrial, office buildings, and multi-family properties; and mortgage banking warehouse lines.
In addition, the bank involves in mortgage banking activities and originates mortgage loans through retail and wholesale channels.
As of December 31, 2006, it operated 38 community banking offices in Texas; 7 regional commercial lending offices in Florida, Arizona, Michigan, Pennsylvania, Colorado, California, and Washington D.C.; and 37 retail mortgage origination offices in 19 states in the United States. The company, formerly known as BK2, Inc., was founded in 1993 and is based in Houston
KEY EXECUTIVES
Lewis Ranieri ,
Interim Chief Exec. Officer, Director, Chairman
Alan Master
Interim President
Mr. Russell McCann , 51
Chief Financial Officer, Principal Accounting Officer, Exec. VP, Treasurer
Mr. Daniel E. Cooper , 51
Exec. VP and Managing Director of Lending & Mortgage Banking - Franklin Bank
Mr. Michael Davitt , 59
Exec. VP and Managing Director of Commercial Lending - Franklin Bank
Mr. Glenn Mealey , 45
Exec. VP and Managing Director of Credit & Admin. - Franklin Bank
Primary SIC — Industry Classification
6036 - Savings institutions, except federal
State Of Incorporation
DE
Jurisdiction Of Incorporation
USA
SEC Reporting Status
SEC Reporting Company
CIK
0001207070
Fiscal Year End
12/31
Estimated Market Cap
72,814,586 as of Mar 14, 2008
Outstanding Shares
25,370,936 as of Nov 8, 2007
Float 22.9 mil
Transfer Agent
Bank of New York Mellon Corp.
101 Barclay St.
New York, NY 10286
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