EXHIBIT 99.1
NEWS RELEASE
For more information, contact:
Paul D. Borja
Chief Financial Officer
(248) 312-2000
Flagstar Reports Second Quarter 2014 Results
Net income of $25.5 million, or $0.33 per diluted share
Improved net interest income and gain on loan sales
Increased mortgage rate lock commitments and loan origination volume
Continued focus on expense management
TROY, Mich. (July 22, 2014) - Flagstar Bancorp, Inc. (NYSE:FBC) ("the Company"), the holding company for Flagstar Bank, FSB (the "Bank"), today reported a second quarter 2014 net income applicable to common stockholders of $25.5 million, or $0.33 per (diluted) share, as compared to net loss of $78.9 million in the first quarter 2014, or $1.51 loss per share, and net income of $65.8 million in the second quarter 2013, or $1.10 earnings per (diluted) share. Book value per common share increased to $19.90 at June 30, 2014, as compared to $19.29 at March 31, 2014 and $17.66 at June 30, 2013.
"Our second quarter results reflect the continued enhancements, that we began in 2013, to put the bank in a position to be profitable," said Sandro DiNello, the Company’s President and Chief Executive Officer. "During the second quarter, net interest income increased to $62.4 million and net gain on loan sales increased to $54.8 million, while noninterest income increased to $102.5 million and noninterest expense decreased to $121.4 million."
Mr. DiNello continued, "We continue to focus on controlling our noninterest expense in the current mortgage environment and are managing expenses in order to be profitable in any origination environment. While we are pleased with these results, this quarter brought two changes that impacted pretax income by approximately $20 million, albeit favorably. Overall, we are encouraged by our progress, especially as it relates to our growth in net interest income and net gain on sale income, as well as our continued expense discipline."
Net Interest Income
Second quarter 2014 net interest income increased to $62.4 million, as compared to $58.2 million for the first quarter 2014 and $47.1 million for the second quarter 2013. Of the $4.2 million net increase from the prior quarter,
$4.6 million was attributable to an increase in volume of average net interest earning assets. This increase was partially offset by higher funding costs. Net interest margin for the Bank increased to 3.06 percent for second quarter 2014, as compared to 3.05 percent for the first quarter 2014 and 1.72 percent for the second quarter 2013.
Interest income increased by $5.6 million from the first quarter 2014, primarily driven by loan growth. The average yield on interest-earnings assets increased slightly to 3.43 percent for the second quarter 2014, as compared to 3.39 percent for the first quarter 2014 and 3.01 percent for the second quarter 2013.
Interest expense increased slightly from the first quarter 2014, primarily from deposit growth. The average cost of funds for the second quarter 2014 was 0.56 percent, as compared 0.52 percent for the first quarter 2014 and 1.58 percent for the second quarter 2013. The average cost of total deposits increased to 0.53 percent for the second quarter 2014, as compared to 0.46 percent for the first quarter 2014 and decreased from 0.75 percent for the second quarter 2013. This increase in cost was primarily attributable to a slightly more aggressive deposit pricing strategy.
Noninterest Income
Second quarter 2014 noninterest income increased to $102.5 million, as compared to $75.0 million for the first quarter 2014 and $220.0 million for the second quarter 2013.
Other noninterest income increased to $7.6 million for the second quarter 2014, as compared to a loss of $14.5 million for the first quarter 2014 and decreased from income of $44.8 million for the second quarter 2013. The increase from the prior quarter was primarily due to negative fair value adjustments in the first quarter 2014.
Loan fees and charges increased to $25.3 million for the second quarter 2014, as compared to $12.3 million for the first quarter 2014 and decreased from $29.9 million for the second quarter 2013. The increase from the prior quarter was primarily due to an unanticipated $10.0 million benefit from a contract renegotiation.
Second quarter 2014 net gain on loan sales increased to $54.8 million, as compared to $45.3 million for the first quarter 2014 and decreased from $144.8 million for the second quarter 2013. The increase from the prior quarter primarily reflects an increase in fallout-adjusted mortgage rate lock commitments. The benefit from the increase in fallout adjusted mortgage rate lock commitments was partially offset by a margin decrease. The net gain on loan sale margin (based on the amount of fallout-adjusted locks) decreased to 0.82 percent for the second quarter 2014, as compared to 0.93 percent for the first quarter 2014 and 1.47 percent for the second quarter 2013, due to a reduction in production base margin and hedge costs.
Gain on loan sale income is driven by rate lock commitments net of estimated cancellations, or "fallout-adjusted locks," as the Company uses fair value accounting to account for the majority of its mortgage business. Fallout-adjusted locks were $6.7 billion for the second quarter 2014, a 37.9 percent increase from the first quarter 2014.
Net transaction costs on sales of mortgage servicing rights ("MSRs") decreased to an expense of $2.7 million for the second quarter 2014, as compared to income of $3.6 million for the first quarter 2014 and an expense of $4.3 million for the second quarter 2013. The decrease from the prior quarter was primarily due to the first quarter 2014 release of holdback reserves on sales completed in prior periods.
Loan administration income (including off-balance sheet hedges of mortgage servicing rights) decreased to $13.9 million for the second quarter 2014, as compared to $19.6 million for the first quarter 2014 and $36.2 million for the second quarter 2013. The decrease was due to negative mortgage servicing rights fair value adjustments.
Noninterest Expense
Noninterest expense was $121.4 million for the second quarter 2014, as compared to $139.3 million for the first quarter 2014 and $174.4 million for the second quarter 2013.
Compensation and benefits decreased to $55.2 million for the second quarter 2014, as compared to $65.6 million for the first quarter 2014 and $70.9 million for the second quarter 2013. The decrease from the prior quarter was primarily due to the effect of previously announced staff reductions that occurred during the first quarter 2014.
Second quarter 2014 legal and professional expenses decreased to income of $2.1 million, as compared to an expense of $13.9 million for the first quarter 2014 and an expense of $16.4 million for the second quarter 2013. The decrease from the prior quarter was primarily driven by a $10.0 million change due to the estimated timing of payments impacting the fair value of the liability associated with the Department of Justice settlement.
Credit-Related Costs and Asset Quality
At June 30, 2014, the Company's allowance for loan losses declined to $306.0 million, as compared to $307.0 million at March 31, 2014 and increased from $243.0 million at June 30, 2013. At June 30, 2014, the ratio of the allowance for loan losses to non-performing loans held-for-investment was 263.1 percent, as compared to 286.9 percent at March 31, 2014 and increased from 94.2 percent at June 30, 2013.
Provision for loan losses decreased to $6.2 million for the second quarter 2014, as compared to $112.3 million for the first quarter 2014 and $31.6 million for the second quarter 2013. The reduction was due in part to an increase during the first quarter 2014 related to increases in the loss emergence period on its residential loan portfolio and losses incurred due to reset risk on interest-only loans.
Net charge-offs for the second quarter 2014 decreased to $7.2 million, as compared to $12.3 million for the first quarter 2014 and $78.6 million for the second quarter 2013. The decrease from the prior quarter was primarily driven by a decrease in residential first mortgage loan charge-offs.
Total non-performing loans held-for-investment were $120.2 million at June 30, 2014, an increase as compared to $110.7 million at March 31, 2014 and a decrease from $257.9 million at June 30, 2013. The increase from the prior quarter was primarily driven by an increase in non-performing residential first mortgage loans. The ratio of non-performing loans held-for-investment to loans held-for-investment remained at 2.76 percent for both June 30, 2014 and March 31, 2014, as compared to 5.74 percent at June 30, 2013.
Real estate-owned and other non-performing assets increased slightly to $31.6 million at June 30, 2014, as compared to $31.1 million at March 31, 2014 and decreased from $86.4 million at June 30, 2013.
The Company maintains a representation and warranty reserve on the balance sheet, which reflects an estimate of losses that may occur both on loans that have been sold or securitized into the secondary market and those currently in the repurchase pipeline, primarily with Fannie Mae and Freddie Mac. At June 30, 2014, the representation and warranty reserve was $50.0 million, as compared to $48.0 million at March 31, 2014 and $185.0 million at June 30, 2013. The provisions related to the representation and warranty reserve - change in estimate was $5.2 million for the second quarter 2014, as compared to a benefit of $1.7 million for the first quarter 2014 and a provision of $28.9 million for the second quarter 2013. Representation and warranty reserve - change in estimate increased $6.9 million from the first quarter 2014, which reflects the estimated impact of changes in the fair value of repurchased loans at time of repurchase.
Asset resolution expense, which includes expenses associated with foreclosed properties (including the foreclosure claims in process with respect to government insured loans for which the Bank files claims with the Department of Housing and Urban Development ("HUD")) was $17.9 million for the second quarter 2014, as compared to $11.5 million for the first quarter 2014 and $15.9 million for the second quarter 2013. The increase from the prior quarter primarily resulted from higher expenses related to repurchased government insured loans.
Balance Sheet and Funding
Total assets increased to $9.9 billion at June 30, 2014, as compared to $9.6 billion at March 31, 2014. The increase from the prior quarter was due to an 8.4 percent increase in loans held-for-investment, primarily from warehouse and commercial and industrial loans. Investment securities available-for-sale also increased as cash was invested from the sale of residential first mortgage jumbo loans.
Total deposits increased to $6.6 billion at June 30, 2014, as compared to $6.3 billion at March 31, 2014. The increase from the prior quarter was primarily due to an increase in branch retail savings accounts, which increased $186.4 million.
At June 30, 2014, the Company had $202.5 million of cash on hand and interest-earning deposits, as compared to $219.2 million at March 31, 2014. The Bank maintains a line of credit with the Federal Home Loan Bank of Indianapolis ("FHLBI") under which borrowings are collateralized by residential first mortgage loans and other assets of the Bank. At June 30, 2014, the Bank had borrowings outstanding from the FHLBI of $1.0 billion and an additional $1.8 billion of collateralized borrowing capacity available at the FHLBI. The Company also had $1.6 billion of investment securities available-for-sale at June 30, 2014, which could serve as a further source of liquidity.
Capital
The Bank's regulatory capital ratios remain above current regulatory quantitative guidelines for "well-capitalized" institutions. At June 30, 2014, the Bank had a Tier 1 leverage ratio of 12.52 percent, as compared to 12.44 percent at March 31, 2014. At June 30, 2014, the Company had an equity-to-assets ratio of 13.95 percent.
Beginning January 2015, the Company and the Bank each becomes subject, on a phased-in basis, to the Basel III regulatory capital requirements that replace the current capital requirements. Assuming that the Basel III requirements were fully applicable at June 30, 2014, the Bank’s pro forma Basel III Tier 1 leverage ratio would be 11.44 percent at June 30, 2014 (see Non-GAAP reconciliation).
Senior Management Addition
The Company is pleased to announce that Stephen Figliuolo recently joined the Bank and will serve as Chief Risk Officer, subject to regulatory approval. Mr. Figliuolo will be responsible for managing the office of Enterprise Risk Management, which oversees credit risk, operations risk, modeling and analytics, mortgage risk and loan review operations.
Earnings Conference Call
As previously announced, the Company's quarterly earnings conference call will be held on Wednesday, July 23, 2014 from 11 a.m. until noon (Eastern).
It is preferred that questions are emailed in advance to investors@flagstar.com, or they may be asked during the conference call.
To join the call, please dial (866) 952-1908 toll free or (785) 424-1827, and use passcode: 222687. Please call at least 10 minutes before the call is scheduled to begin. A replay will be available for five business days by calling (888) 348-4629 toll free or (719) 884-8882, using passcode: 222687.
The conference call will also be available as a live audio cast on the Investor Relations section of flagstar.com. It will be archived on that site and will be available for replay and download. A slide presentation accompanying the conference call will also be posted on the site.
About Flagstar
Flagstar Bancorp, Inc. ("Flagstar") is the holding company for Flagstar Bank, FSB, a full-service financial institution offering a range of products and services to consumers, businesses, and homeowners. With $9.9 billion in total assets at June 30, 2014, Flagstar is the largest bank headquartered in Michigan. Flagstar operates 106 banking centers, all of which are located in Michigan and 32 home lending centers in 18 states, which primarily originate one-to-four family residential first mortgage loans. Originating loans nationwide, Flagstar is one of the leading originators of residential first mortgage loans. For more information, please visit flagstar.com.
Non-GAAP
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding the Company's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that are difficult to predict and could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement. Forward-looking statements contained in this press release and any information related to expectations about future events or results are based upon information available to the Company as of the date hereof. Forward-looking statements can be identified by such words as "anticipates," "intends," "plans," "seeks," "believes," "expects", "estimates," and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements made regarding the Company's current expectations, plans or forecasts of its core business drivers, credit related costs, asset quality, capital adequacy and liquidity, the implementation of the Company's business plan and growth strategies, the suspension of dividend payments on preferred stock, the deferral of interest payment on trust preferred securities, the result of improvements to the Company's servicing processes, the Company's strategy for its servicing business and other similar matters. Although we believe that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, contingencies, and other factors. Accordingly, we cannot give you any assurance that our expectations will in fact occur or that actual results will not differ materially from those expressed or implied by such forward-looking statements. We caution you not to place undue reliance on any forward-looking statement and to consider all of the following uncertainties and risks, as well as those more fully discussed in the Company's filings with the Securities and Exchange Commission ("SEC"), including, but not limited to, our Form 10-K and Forms 10-Q: volatile interest rates that impact, among other things, the mortgage banking business, our ability to originate loans and sell assets at a profit, prepayment speeds and our cost of funds; changes in regulatory capital requirements or an inability to achieve or maintain desired capital ratios; actions of mortgage loan purchasers, guarantors and insurers regarding repurchases and indemnity demands and uncertainty related to foreclosure procedures; uncertainty regarding pending and threatened litigation; our ability to control credit related costs and forecast the adequacy of reserves; the imposition of regulatory enforcement actions against us; our compliance with the Supervisory Agreement with the Board of Governors of the Federal Reserve System and the Consent Order with the Office of the Comptroller of the Currency. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the SEC, the Company undertakes no obligation to update any such statement to reflect events or circumstances after the date on which it is made.
Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(Dollars in thousands) |
| | | | | | | | | | | | | | | |
| | June 30, 2014 | | March 31, 2014 | | December 31, 2013 | | June 30, 2013 |
| Assets | (Unaudited) | | (Unaudited) | | | | (Unaudited) |
| Cash and cash equivalents | | | | | | | |
| Cash and cash items | $ | 67,924 |
| | $ | 56,968 |
| | $ | 55,913 |
| | $ | 51,252 |
|
| Interest-earning deposits | 134,611 |
| | 162,229 |
| | 224,592 |
| | 2,653,191 |
|
| Total cash and cash equivalents | 202,535 |
| | 219,197 |
| | 280,505 |
| | 2,704,443 |
|
| Investment securities available-for-sale or trading | 1,605,805 |
| | 1,207,430 |
| | 1,045,548 |
| | 142,969 |
|
| Loans held-for-sale | 1,342,611 |
| | 1,673,763 |
| | 1,480,418 |
| | 2,331,458 |
|
| Loans repurchased with government guarantees | 1,217,721 |
| | 1,266,702 |
| | 1,273,690 |
| | 1,509,365 |
|
| Loans held-for-investment, net | | | | | | | |
| Loans held-for-investment | 4,359,293 |
| | 4,019,871 |
| | 4,055,756 |
| | 4,491,153 |
|
| Less: allowance for loan losses | (306,000 | ) | | (307,000 | ) | | (207,000 | ) | | (243,000 | ) |
| Total loans held-for-investment, net | 4,053,293 |
| | 3,712,871 |
| | 3,848,756 |
| | 4,248,153 |
|
| Mortgage servicing rights | 289,185 |
| | 320,231 |
| | 284,678 |
| | 729,019 |
|
| Repossessed assets, net | 31,579 |
| | 31,076 |
| | 36,636 |
| | 86,382 |
|
| Federal Home Loan Bank stock | 209,737 |
| | 209,737 |
| | 209,737 |
| | 301,737 |
|
| Premises and equipment, net | 235,202 |
| | 233,195 |
| | 231,350 |
| | 227,771 |
|
| Net deferred tax asset | 435,217 |
| | 451,392 |
| | 414,681 |
| | — |
|
| Other assets | 310,229 |
| | 285,759 |
| | 301,302 |
| | 453,720 |
|
| Total assets | $ | 9,933,114 |
| | $ | 9,611,353 |
| | $ | 9,407,301 |
| | $ | 12,735,017 |
|
| Liabilities and Stockholders' Equity | | | | | | | |
| Deposits | | | | | | | |
| Noninterest bearing | $ | 1,081,026 |
| | $ | 983,348 |
| | $ | 930,060 |
| | $ | 1,181,226 |
|
| Interest bearing | 5,562,883 |
| | 5,326,953 |
| | 5,210,266 |
| | 6,288,841 |
|
| Total deposits | 6,643,909 |
| | 6,310,301 |
| | 6,140,326 |
| | 7,470,067 |
|
| Federal Home Loan Bank advances | 1,031,705 |
| | 1,125,000 |
| | 988,000 |
| | 2,900,000 |
|
| Long-term debt | 345,157 |
| | 349,145 |
| | 353,248 |
| | 367,415 |
|
| Representation and warranty reserve | 50,000 |
| | 48,000 |
| | 54,000 |
| | 185,000 |
|
| Other liabilities | 476,669 |
| | 427,627 |
| | 445,853 |
| | 558,800 |
|
| Total liabilities | 8,547,440 |
| | 8,260,073 |
| | 7,981,427 |
| | 11,481,282 |
|
| Stockholders' Equity | | | | | | | |
| Preferred stock | 266,657 |
| | 266,657 |
| | 266,174 |
| | 263,277 |
|
| Common stock | 562 |
| | 562 |
| | 561 |
| | 561 |
|
| Additional paid in capital | 1,480,321 |
| | 1,479,459 |
| | 1,479,265 |
| | 1,477,484 |
|
| Accumulated other comprehensive income (loss) | 6,821 |
| | (1,197 | ) | | (4,831 | ) | | 988 |
|
| Accumulated deficit | (368,687 | ) | | (394,201 | ) | | (315,295 | ) | | (488,575 | ) |
| Total stockholders' equity | 1,385,674 |
| | 1,351,280 |
| | 1,425,874 |
| | 1,253,735 |
|
| Total liabilities and stockholders' equity | $ | 9,933,114 |
| | $ | 9,611,353 |
| | $ | 9,407,301 |
| | $ | 12,735,017 |
|
Flagstar Bancorp, Inc. Consolidated Statements of Operations (Dollars in thousands, except per share data) (Unaudited) |
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30,
2014 | | March 31,
2014 | | June 30,
2013 | | June 30,
2014 | | June 30,
2013 |
| Interest Income | | | | | | | | | |
| Loans | $ | 61,910 |
| | $ | 58,668 |
| | $ | 81,731 |
| | $ | 120,579 |
| | $ | 173,680 |
|
| Investment securities available-for-sale or trading | 9,885 |
| | 7,538 |
| | 1,838 |
| | 17,423 |
| | 3,932 |
|
| Interest-earning deposits and other | 118 |
| | 145 |
| | 1,489 |
| | 262 |
| | 2,435 |
|
| Total interest income | 71,913 |
| | 66,351 |
| | 85,058 |
| | 138,264 |
| | 180,047 |
|
| Interest Expense | | | | | | | | | |
| Deposits | 7,239 |
| | 5,988 |
| | 12,148 |
| | 13,227 |
| | 25,656 |
|
| Federal Home Loan Bank advances | 600 |
| | 534 |
| | 24,171 |
| | 1,134 |
| | 48,332 |
|
| Other | 1,649 |
| | 1,628 |
| | 1,643 |
| | 3,277 |
| | 3,295 |
|
| Total interest expense | 9,488 |
| | 8,150 |
| | 37,962 |
| | 17,638 |
| | 77,283 |
|
| Net interest income | 62,425 |
| | 58,201 |
| | 47,096 |
| | 120,626 |
| | 102,764 |
|
| Provision for loan losses | 6,150 |
| | 112,321 |
| | 31,563 |
| | 118,471 |
| | 51,978 |
|
| Net interest income (loss) after provision for loan losses | 56,275 |
| | (54,120 | ) | | 15,533 |
| | 2,155 |
| | 50,786 |
|
| Noninterest Income | | | | | | |
| | |
| Loan fees and charges | 25,301 |
| | 12,311 |
| | 29,916 |
| | 37,611 |
| | 63,276 |
|
| Deposit fees and charges | 5,279 |
| | 4,764 |
| | 5,193 |
| | 10,042 |
| | 10,339 |
|
| Net gain on loan sales | 54,756 |
| | 45,342 |
| | 144,791 |
| | 100,100 |
| | 282,331 |
|
| Loan administration | 13,915 |
| | 19,584 |
| | 36,157 |
| | 33,499 |
| | 56,513 |
|
| Net transactions costs on sales of mortgage servicing rights | (2,726 | ) | | 3,583 |
| | (4,264 | ) | | 857 |
| | (8,483 | ) |
| Net gain on sale of assets | 3,537 |
| | 2,216 |
| | 1,064 |
| | 5,752 |
| | 2,022 |
|
| Total other-than-temporary impairment (loss) gain | — |
| | — |
| | (8,789 | ) | | — |
| | (8,789 | ) |
| Loss recognized in other comprehensive income before taxes | — |
| | — |
| | — |
| | — |
| | — |
|
| Net impairment losses recognized in earnings | — |
| | — |
| | (8,789 | ) | | — |
| | (8,789 | ) |
| Representation and warranty reserve - change in estimate | (5,226 | ) | | 1,672 |
| | (28,940 | ) | | (3,554 | ) | | (46,336 | ) |
| Other noninterest income (loss) | 7,648 |
| | (14,519 | ) | | 44,831 |
| | (6,871 | ) | | 54,029 |
|
| Total noninterest income | 102,484 |
| | 74,953 |
| | 219,959 |
| | 177,436 |
| | 404,902 |
|
| Noninterest Expense | | | | | | |
|
| | |
| Compensation and benefits | 55,218 |
| | 65,572 |
| | 70,935 |
| | 120,788 |
| | 148,144 |
|
| Commissions | 8,532 |
| | 7,220 |
| | 15,402 |
| | 15,752 |
| | 32,863 |
|
| Occupancy and equipment | 19,383 |
| | 20,410 |
| | 22,198 |
| | 39,793 |
| | 41,574 |
|
| Asset resolution | 17,934 |
| | 11,508 |
| | 15,921 |
| | 29,442 |
| | 32,366 |
|
| Federal insurance premiums | 6,758 |
| | 5,010 |
| | 7,791 |
| | 11,769 |
| | 19,031 |
|
| Loan processing expense | 8,199 |
| | 7,735 |
| | 15,389 |
| | 15,934 |
| | 32,500 |
|
| Legal and professional expense | (2,062 | ) | | 13,902 |
| | 16,390 |
| | 11,840 |
| | 45,229 |
|
| Other noninterest expense | 7,391 |
| | 7,895 |
| | 10,371 |
| | 15,286 |
| | 19,279 |
|
| Total noninterest expense | 121,353 |
| | 139,252 |
| | 174,397 |
| | 260,604 |
| | 370,986 |
|
Flagstar Bancorp, Inc. Consolidated Statements of Operations (Dollars in thousands, except per share data) (Unaudited) |
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30,
2014 | | March 31,
2014 | | June 30,
2013 | | June 30,
2014 | | June 30,
2013 |
| Income (loss) before income taxes | 37,406 |
| | (118,419 | ) | | 61,095 |
| | (81,013 | ) | | 84,702 |
|
| Provision (benefit) for income taxes | 11,892 |
| | (39,996 | ) | | (6,108 | ) | | (28,104 | ) | | (6,108 | ) |
| Net income (loss) | 25,514 |
| | (78,423 | ) | | 67,203 |
| | (52,909 | ) | | 90,810 |
|
| Preferred stock dividend/accretion | — |
| | (483 | ) | | (1,449 | ) | | (483 | ) | | (2,887 | ) |
| Net income (loss) applicable to common stockholders | $ | 25,514 |
| | $ | (78,906 | ) | | $ | 65,754 |
| | $ | (53,392 | ) | | $ | 87,923 |
|
| Income (loss) per share | | | | | | | | | |
| Basic | $ | 0.33 |
| | $ | (1.51 | ) | | $ | 1.11 |
| | $ | (1.17 | ) | | $ | 1.44 |
|
| Diluted | $ | 0.33 |
| | $ | (1.51 | ) | | $ | 1.10 |
| | $ | (1.17 | ) | | $ | 1.43 |
|
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in thousands, except per share data)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, 2014 | | March 31, 2014 | | June 30, 2013 | | June 30,
2014 | | June 30,
2013 |
Mortgage loans originated (1) | $ | 5,950,650 |
| | $ | 4,866,631 |
| | $ | 10,882,129 |
| | $ | 10,817,280 |
| | $ | 23,305,492 |
|
| Other loans originated | $ | 131,602 |
| | $ | 172,305 |
| | $ | 67,763 |
| | $ | 303,908 |
| | $ | 142,503 |
|
| Mortgage loans sold and securitized | $ | 6,029,817 |
| | $ | 4,474,287 |
| | $ | 11,123,821 |
| | $ | 10,504,104 |
| | $ | 23,946,700 |
|
Interest rate spread - bank only (2) | 2.95 | % | | 2.96 | % | | 1.46 | % | | 2.96 | % | | 1.55 | % |
Net interest margin - bank only (3) | 3.06 | % | | 3.05 | % | | 1.72 | % | | 3.05 | % | | 1.81 | % |
Interest rate spread - consolidated (2) | 2.87 | % | | 2.87 | % | | 1.43 | % | | 2.87 | % | | 1.52 | % |
Net interest margin - consolidated (3) | 2.98 | % | | 2.97 | % | | 1.66 | % | | 2.97 | % | | 1.75 | % |
| Average common shares outstanding | 56,230,458 |
| | 56,194,184 |
| | 56,053,922 |
| | 56,212,422 |
| | 56,014,126 |
|
| Average fully diluted shares outstanding | 56,822,102 |
| | 56,194,184 |
| | 56,419,163 |
| | 56,212,422 |
| | 56,417,122 |
|
| Average interest-earning assets | $ | 8,366,703 |
| | $ | 7,829,814 |
| | $ | 11,311,945 |
| | $ | 8,099,742 |
| | $ | 11,691,470 |
|
| Average interest paying liabilities | $ | 6,795,144 |
| | $ | 6,363,459 |
| | $ | 9,642,543 |
| | $ | 6,580,494 |
| | $ | 9,988,671 |
|
| Average stockholders' equity | $ | 1,381,948 |
| | $ | 1,444,741 |
| | $ | 1,238,787 |
| | $ | 1,413,192 |
| | $ | 1,206,563 |
|
| Return on average assets | 1.04 | % | | (3.39 | )% | | 2.03 | % | | (1.12 | )% | | 1.32 | % |
| Return on average equity | 7.38 | % | | (21.85 | )% | | 21.23 | % | | (7.56 | )% | | 14.57 | % |
| Efficiency ratio | 73.6 | % | | 104.6 | % | | 65.3 | % | | 87.4 | % | | 73.1 | % |
Efficiency ratio (adjusted) (4) | 71.3 | % | | 91.3 | % | | 68.8 | % | | 80.8 | % | | 72.4 | % |
| Equity-to-assets ratio (average for the period) | 14.12 | % | | 15.52 | % | | 9.56 | % | | 14.80 | % | | 9.06 | % |
Charge-offs to average LHFI (5) | 0.78 | % | | 1.36 | % | | 6.96 | % | | 1.07 | % | | 4.88 | % |
Charge-offs, to average LHFI adjusted (5)(6) | 0.78 | % | | 1.11 | % | | 3.56 | % | | 0.94 | % | | 3.24 | % |
|
| | | | | | | | | | | | | | | |
| | June 30, 2014 | | March 31, 2014 | | December 31, 2013 | | June 30, 2013 |
| Book value per common share | $ | 19.90 |
| | $ | 19.29 |
| | $ | 20.66 |
| | $ | 17.66 |
|
| Number of common shares outstanding | 56,238,925 |
| | 56,221,056 |
| | 56,138,074 |
| | 56,077,528 |
|
| Mortgage loans subserviced for others | $ | 43,103,393 |
| | $ | 39,554,373 |
| | $ | 40,431,865 |
| | $ | — |
|
| Mortgage loans serviced for others | $ | 25,342,335 |
| | $ | 28,998,897 |
| | $ | 25,743,396 |
| | $ | 68,320,534 |
|
| Weighted average service fee (basis points) | 29.2 |
| | 28.5 |
| | 28.7 |
| | 29.5 |
|
| Capitalized value of mortgage servicing rights | 1.14 | % | | 1.10 | % | | 1.11 | % | | 1.07 | % |
Mortgage servicing rights to Tier 1 capital (4) | 24.3 | % | | 28.1 | % | | 22.6 | % | | 52.4 | % |
Ratio of allowance for loan losses to non-performing LHFI (5) | 263.1 | % | | 286.9 | % | | 145.9 | % | | 94.2 | % |
Ratio of allowance for loan losses to LHFI (5) | 7.41 | % | | 8.11 | % | | 5.42 | % | | 5.75 | % |
| Ratio of non-performing assets to total assets (bank only) | 1.54 | % | | 1.49 | % | | 1.95 | % | | 2.71 | % |
| Equity-to-assets ratio | 13.95 | % | | 14.06 | % | | 15.16 | % | | 9.84 | % |
| Number of bank branches | 106 |
| | 106 |
| | 111 |
| | 111 |
|
| Number of loan origination centers | 32 |
| | 33 |
| | 39 |
| | 40 |
|
| Number of FTE employees (excluding loan officers and account executives) | 2,481 |
| | 2,483 |
| | 2,894 |
| | 3,418 |
|
| Number of loan officers and account executives | 260 |
| | 315 |
| | 359 |
| | 341 |
|
| |
| (1) | Includes residential first mortgage and second mortgage loans. |
| |
| (2) | Interest rate spread is the difference between the annualized average yield earned on average interest-earning assets for the period and the annualized average rate of interest paid on average interest-bearing liabilities for the period. |
| |
| (3) | Net interest margin is the annualized effect of the net interest income divided by that period's average interest-earning assets. |
| |
| (4) | See Non-GAAP reconciliation. |
| |
| (5) | Excludes loans carried under the fair value option. |
| |
| (6) | Excludes charge-offs of $2.3 million related to the sale of non-performing loans and TDR, during both the three months ended March 31, 2014 and the six months ended June 30, 2014, and $38.3 million of charge-offs related to the sale of non-performing and TDR loans during both the three and six months ended June 30, 2013, respectively. |
Regulatory Capital
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | | March 31, 2014 | | December 31, 2013 | | June 30, 2013 |
| | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio |
Tier 1 leverage (to adjusted tangible assets) (1) | $ | 1,188,936 |
| 12.52 | % | | $ | 1,139,810 |
| 12.44 | % | | $ | 1,257,608 |
| 13.97 | % | | $ | 1,390,582 |
| 11.00 | % |
| Total adjusted tangible asset base | $ | 9,493,531 |
| | | $ | 9,160,924 |
| | | $ | 9,004,904 |
| | | $ | 12,646,776 |
| |
Tier 1 capital (to risk weighted assets) (1) | $ | 1,188,936 |
| 23.75 | % | | $ | 1,139,810 |
| 23.62 | % | | $ | 1,257,608 |
| 26.82 | % | | $ | 1,390,582 |
| 23.73 | % |
Total capital (to risk weighted assets) (1) | 1,254,445 |
| 25.05 | % | | 1,203,098 |
| 24.93 | % | | 1,317,964 |
| 28.11 | % | | 1,465,860 |
| 25.01 | % |
| Risk weighted asset base | $ | 5,006,897 |
| | | $ | 4,826,024 |
| | | $ | 4,688,545 |
| | | $ | 5,861,221 |
| |
| |
| (1) | Based on adjusted total assets for purposes of core capital and risk-weighted assets for purposes of total risk-based capital. These ratios are applicable to the Bank only. |
|
| | | | | | | | | | | | | | | | | |
Loan Originations (Dollars in thousands) (Unaudited) |
| | Three Months Ended |
| | June 30, 2014 | | March 31, 2014 | | June 30, 2013 |
| Consumer loans | | | | | | | | |
Mortgage (1) | $ | 5,950,650 |
| 97.8 | % | | $ | 4,866,631 |
| 96.6 | % | | $ | 10,882,129 |
| 99.4 | % |
Other consumer (2) | 20,262 |
| 0.3 | % | | 17,600 |
| 0.3 | % | | 11,659 |
| 0.1 | % |
| Total consumer loans | 5,970,912 |
| 98.2 | % | | 4,884,231 |
| 96.9 | % | | 10,893,788 |
| 99.5 | % |
Commercial loans (3) | 111,340 |
| 1.8 | % | | 154,705 |
| 3.1 | % | | 56,104 |
| 0.5 | % |
| Total loan originations | $ | 6,082,252 |
| 100.0 | % | | $ | 5,038,936 |
| 100.0 | % | | $ | 10,949,892 |
| 100.0 | % |
|
| | | | | | | | | | | |
| | Six Months Ended |
| | June 30, 2014 | | June 30, 2013 |
| Consumer loans | | | | | |
Mortgage (1) | $ | 10,817,280 |
| 97.3 | % | | $ | 23,305,492 |
| 99.4 | % |
Other consumer (2) | 37,862 |
| 0.3 | % | | 20,212 |
| 0.1 | % |
| Total consumer loans | 10,855,142 |
| 97.6 | % | | 23,325,704 |
| 99.5 | % |
Commercial loans (3) | 266,046 |
| 2.4 | % | | 122,291 |
| 0.5 | % |
| Total loan originations | $ | 11,121,188 |
| 100.0 | % | | $ | 23,447,995 |
| 100.0 | % |
| |
| (1) | Includes residential first mortgage and second mortgage loans. |
| |
| (2) | Other consumer loans include: Warehouse lending, HELOC and other consumer loans. |
| |
| (3) | Commercial loans include: commercial real estate, commercial and industrial and commercial lease financing loans. |
Loans Held-for-Investment
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | | March 31, 2014 | | December 31, 2013 | | June 30, 2013 |
| Consumer loans | | | | | | | | | | | |
| Residential first mortgage | $ | 2,352,965 |
| 53.9 | % | | $ | 2,348,691 |
| 58.4 | % | | $ | 2,508,968 |
| 61.9 | % | | $ | 2,627,979 |
| 58.5 | % |
| Second mortgage | 157,772 |
| 3.6 | % | | 164,627 |
| 4.1 | % | | 169,525 |
| 4.2 | % | | 180,802 |
| 4.0 | % |
| Warehouse lending | 683,258 |
| 15.7 | % | | 408,874 |
| 10.2 | % | | 423,517 |
| 10.4 | % | | 676,454 |
| 15.1 | % |
| HELOC | 268,655 |
| 6.2 | % | | 273,454 |
| 6.8 | % | | 289,880 |
| 7.1 | % | | 321,576 |
| 7.2 | % |
| Other | 33,364 |
| 0.8 | % | | 34,875 |
| 0.9 | % | | 37,468 |
| 0.9 | % | | 42,293 |
| 0.9 | % |
| Total consumer loans | 3,496,014 |
| 80.2 | % | | 3,230,521 |
| 80.4 | % | | 3,429,358 |
| 84.5 | % | | 3,849,104 |
| 85.7 | % |
| Commercial loans | | | | | | | | | | | |
| Commercial real estate | 523,006 |
| 12.0 | % | | 512,994 |
| 12.7 | % | | 408,870 |
| 10.1 | % | | 476,500 |
| 10.6 | % |
| Commercial and industrial | 330,256 |
| 7.6 | % | | 266,176 |
| 6.6 | % | | 207,187 |
| 5.1 | % | | 160,259 |
| 3.6 | % |
| Commercial lease financing | 10,017 |
| 0.2 | % | | 10,180 |
| 0.3 | % | | 10,341 |
| 0.3 | % | | 5,290 |
| 0.1 | % |
| Total commercial loans | 863,279 |
| 19.8 | % | | 789,350 |
| 19.6 | % | | 626,398 |
| 15.5 | % | | 642,049 |
| 14.3 | % |
| Total loans held-for-investment | $ | 4,359,293 |
| 100.0 | % | | $ | 4,019,871 |
| 100.0 | % | | $ | 4,055,756 |
| 100.0 | % | | $ | 4,491,153 |
| 100.0 | % |
Residential Loans Serviced
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | | March 31, 2014 | | December 31, 2013 | | June 30, 2013 |
| | Unpaid Principal Balance | Number of accounts | | Unpaid Principal Balance | Number of accounts | | Unpaid Principal Balance | Number of accounts | | Unpaid Principal Balance | Number of accounts |
Serviced for own loan portfolio (1) | $ | 4,068,682 |
| 26,614 |
| | $ | 4,481,592 |
| 28,072 |
| | $ | 4,375,009 |
| $ | 28,069 |
| | $ | 5,389,033 |
| 32,505 |
|
| Serviced for others | 25,342,335 |
| 127,409 |
| | 28,998,897 |
| 146,339 |
| | 25,743,396 |
| 131,413 |
| | 68,320,534 |
| 342,971 |
|
Subserviced for others (2) | 43,103,393 |
| 212,927 |
| | 39,554,373 |
| 195,448 |
| | 40,431,867 |
| 198,256 |
| | — |
| — |
|
Total residential loans serviced (2) | $ | 72,514,410 |
| 366,950 |
| | $ | 73,034,862 |
| 369,859 |
| | $ | 70,550,272 |
| 357,738 |
| | $ | 73,709,567 |
| 375,476 |
|
| |
| (1) | Includes both loans held-for-investment (residential first mortgage, second mortgage and HELOC) and loans-held-for-sale (residential first mortgage). |
| |
| (2) | Does not include temporary short-term subservicing performed as a result of sales of servicing-released mortgage servicing rights. |
Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30,
2014 | | March 31,
2014 | | June 30,
2013 | | June 30,
2014 | | June 30,
2013 |
| Beginning balance | $ | 307,000 |
| | $ | 207,000 |
| | $ | 290,000 |
| | $ | 207,000 |
| | $ | 305,000 |
|
| Provision for loan losses | 6,150 |
| | 112,321 |
| | 31,563 |
| | 118,471 |
| | 51,978 |
|
| Charge-offs | | | | | | | | | |
| Consumer loans | | | | | | | | | |
| Residential first mortgage | (5,603 | ) | | (10,863 | ) | | (63,099 | ) | | (16,466 | ) | | (88,791 | ) |
| Second mortgage | (1,145 | ) | | (1,068 | ) | | (2,033 | ) | | (2,213 | ) | | (3,988 | ) |
| HELOC | (1,055 | ) | | (2,689 | ) | | (812 | ) | | (3,744 | ) | | (2,873 | ) |
| Other | (479 | ) | | (461 | ) | | (587 | ) | | (940 | ) | | (1,286 | ) |
| Total consumer loans | (8,282 | ) | | (15,081 | ) | | (66,531 | ) | | (23,363 | ) | | (96,938 | ) |
| Commercial loans | | | | | | | | | |
| Commercial real estate | (1,789 | ) | | — |
| | (21,350 | ) | | (1,789 | ) | | (34,512 | ) |
| Total charge-offs | (10,071 | ) | | (15,081 | ) | | (87,881 | ) | | (25,152 | ) | | (131,450 | ) |
| Recoveries | | | | | | | | | |
| Consumer loans | | | | | | | | | |
| Residential first mortgage | 458 |
| | 1,116 |
| | 6,687 |
| | 1,574 |
| | 12,040 |
|
| Second mortgage | 95 |
| | 84 |
| | 87 |
| | 179 |
| | 477 |
|
| HELOC | 62 |
| | 49 |
| | 457 |
| | 111 |
| | 562 |
|
| Other | 370 |
| | 320 |
| | (80 | ) | | 690 |
| | 374 |
|
| Total consumer loans | 985 |
| | 1,569 |
| | 7,151 |
| | 2,554 |
| | 13,453 |
|
| Commercial loans | | | | | | | | | |
| Commercial real estate | 1,896 |
| | 1,115 |
| | 2,159 |
| | 3,011 |
| | 4,002 |
|
| Commercial and industrial | 40 |
| | 29 |
| | 8 |
| | 69 |
| | 17 |
|
| Commercial lease financing | — |
| | 47 |
| | — |
| | 47 |
| | — |
|
| Total commercial loans | 1,936 |
| | 1,191 |
| | 2,167 |
| | 3,127 |
| | 4,019 |
|
| Total recoveries | 2,921 |
| | 2,760 |
| | 9,318 |
| | 5,681 |
| | 17,472 |
|
| Charge-offs, net of recoveries | (7,150 | ) | | (12,321 | ) | | (78,563 | ) | | (19,471 | ) | | (113,978 | ) |
| Ending balance | $ | 306,000 |
| | $ | 307,000 |
| | $ | 243,000 |
| | $ | 306,000 |
| | $ | 243,000 |
|
Net charge-off ratio (annualized) (1) | 0.78 | % | | 1.36 | % | | 6.96 | % | | 1.07 | % | | 4.88 | % |
Net charge-off ratio, adjusted (annualized) (1)(2) | 0.78 | % | | 1.11 | % | | 3.56 | % | | 0.94 | % | | 3.24 | % |
| |
| (1) | Excludes loans carried under the fair value option. |
| |
| (2) | Excludes charge-offs of $2.3 million related to the sale of non-performing loans and TDR during both the three months ended March 31, 2014 and six months ended June 30, 2014, and $38.3 million during both the three and six months ended June 30, 2013, respectively. |
Representation and Warranty Reserve
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | June 30, 2014 | | March 31, 2014 | | June 30, 2013 | | June 30, 2014 | | June 30, 2013 |
| Balance, beginning of period | $ | 48,000 |
| | $ | 54,000 |
| | $ | 185,000 |
| | $ | 54,000 |
| | $ | 193,000 |
|
| Provision | | | | | | | | | |
| | Charged to gain on sale for current loan sales | 1,734 |
| | 1,229 |
| | 5,052 |
| | 2,963 |
| | 10,870 |
|
| | Charged to representation and warranty reserve - change in estimate | 5,226 |
| | (1,672 | ) | | 28,940 |
| | 3,554 |
| | 46,336 |
|
| | Total | 6,960 |
| | (443 | ) | | 33,992 |
| | 6,517 |
| | 57,206 |
|
| Charge-offs, net | (4,960 | ) | | (5,557 | ) | | (33,992 | ) | | (10,517 | ) | | (65,206 | ) |
| Balance, end of period | $ | 50,000 |
| | $ | 48,000 |
| | $ | 185,000 |
| | $ | 50,000 |
| | $ | 185,000 |
|
Composition of Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | |
| June 30, 2014 | Collectively Evaluated Reserves | | Individually Evaluated Reserves | | Total |
| Consumer loans | | | | | |
| Residential first mortgage | $ | 162,272 |
| | $ | 86,918 |
| | $ | 249,190 |
|
| Second mortgage | 7,561 |
| | 6,094 |
| | 13,655 |
|
| Warehouse lending | 2,557 |
| | — |
| | 2,557 |
|
| HELOC | 12,313 |
| | 1,753 |
| | 14,066 |
|
| Other | 2,030 |
| | — |
| | 2,030 |
|
| Total consumer loans | 186,733 |
| | 94,765 |
| | 281,498 |
|
| Commercial loans | | | | | |
| Commercial real estate | 19,266 |
| | — |
| | 19,266 |
|
| Commercial and industrial | 5,096 |
| | — |
| | 5,096 |
|
| Commercial lease financing | 140 |
| | — |
| | 140 |
|
| Total commercial loans | 24,502 |
| | — |
| | 24,502 |
|
| Total allowance for loan losses | $ | 211,235 |
| | $ | 94,765 |
| | $ | 306,000 |
|
|
| | | | | | | | | | | |
| March 31, 2014 | Collectively Evaluated Reserves | | Individually Evaluated Reserves | | Total |
| Consumer loans | | | | | |
| Residential first mortgage | $ | 175,082 |
| | $ | 81,209 |
| | $ | 256,291 |
|
| Second mortgage | 8,830 |
| | 4,625 |
| | 13,455 |
|
| Warehouse lending | 1,465 |
| | — |
| | 1,465 |
|
| HELOC | 11,331 |
| | 262 |
| | 11,593 |
|
| Other | 1,438 |
| | — |
| | 1,438 |
|
| Total consumer loans | 198,146 |
| | 86,096 |
| | 284,242 |
|
| Commercial loans | | | | | |
| Commercial real estate | 18,029 |
| | 102 |
| | 18,131 |
|
| Commercial and industrial | 4,477 |
| | — |
| | 4,477 |
|
| Commercial lease financing | 150 |
| | — |
| | 150 |
|
| Total commercial loans | 22,656 |
| | 102 |
| | 22,758 |
|
| Total allowance for loan losses | $ | 220,802 |
| | $ | 86,198 |
| | $ | 307,000 |
|
Non-Performing Loans and Assets
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | June 30, 2014 | | March 31, 2014 | | December 31, 2013 | | June 30, 2013 |
| Non-performing loans | $ | 86,373 |
| | $ | 84,387 |
| | $ | 98,976 |
| | $ | 161,725 |
|
| Non-performing TDRs | 17,596 |
| | 11,645 |
| | 25,808 |
| | 24,025 |
|
| Non-performing TDRs at inception but performing for less than six months | 16,193 |
| | 14,717 |
| | 20,901 |
| | 72,186 |
|
| Total non-performing loans held-for-investment | 120,162 |
| | 110,749 |
| | 145,685 |
| | 257,936 |
|
| Real estate and other non-performing assets, net | 31,579 |
| | 31,076 |
| | 36,636 |
| | 86,382 |
|
Non-performing assets held-for-investment, net (1) | $ | 151,741 |
| | $ | 141,825 |
| | $ | 182,321 |
| | $ | 344,318 |
|
| | | | | | | | |
| Ratio of non-performing assets to total assets (Bank only) | 1.54 | % | | 1.49 | % | | 1.95 | % | | 2.71 | % |
| Ratio of non-performing loans held-for-investment to loans held-for-investment | 2.76 | % | | 2.76 | % | | 3.59 | % | | 5.74 | % |
| Ratio of non-performing assets to loans held-for-investment and repossessed assets | 3.46 | % | | 3.50 | % | | 4.46 | % | | 7.52 | % |
| |
| (1) | Does not include non-performing loans held-for-sale of $6.0 million, $6.9 million, $0.8 million and $3.4 million at June 30, 2014, March 31, 2014, December 31, 2013 and June 30, 2013, respectively. |
Asset Quality - Loans Held-for-Investment
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | 30-59 Days Past Due | 60-89 Days Past Due | Greater than 90 days | Total Past Due | Total Investment Loans |
| June 30, 2014 | | | | | |
| Consumer loans | $ | 42,840 |
| $ | 8,978 |
| $ | 120,162 |
| $ | 171,980 |
| $ | 3,496,014 |
|
| Commercial loans | — |
| — |
| — |
| — |
| 863,279 |
|
| Total loans | $ | 42,840 |
| $ | 8,978 |
| $ | 120,162 |
| $ | 171,980 |
| $ | 4,359,293 |
|
| March 31, 2014 | | | | | |
| Consumer loans | $ | 49,301 |
| $ | 15,497 |
| $ | 108,983 |
| $ | 173,781 |
| $ | 3,230,521 |
|
| Commercial loans | 2,130 |
| — |
| 1,766 |
| 3,896 |
| 789,350 |
|
| Total loans | $ | 51,431 |
| $ | 15,497 |
| $ | 110,749 |
| $ | 177,677 |
| $ | 4,019,871 |
|
| December 31, 2013 | | | | | |
| Consumer loans | $ | 41,013 |
| $ | 20,732 |
| $ | 144,185 |
| $ | 205,930 |
| $ | 3,429,358 |
|
| Commercial loans | — |
| — |
| 1,500 |
| 1,500 |
| 626,398 |
|
| Total loans | $ | 41,013 |
| $ | 20,732 |
| $ | 145,685 |
| $ | 207,430 |
| $ | 4,055,756 |
|
| June 30, 2013 | | | | | |
| Consumer loans | $ | 60,872 |
| $ | 13,421 |
| $ | 194,151 |
| $ | 268,444 |
| $ | 3,849,104 |
|
| Commercial loans | 188 |
| 22,736 |
| 63,785 |
| 86,709 |
| 642,049 |
|
| Total loans | $ | 61,060 |
| $ | 36,157 |
| $ | 257,936 |
| $ | 355,153 |
| $ | 4,491,153 |
|
Troubled Debt Restructurings
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | TDRs |
| | Performing | | Non-performing | | Non-performing TDRs at inception but performing for less than six months | | Total |
| June 30, 2014 | |
| Consumer loans | $ | 371,562 |
| | $ | 17,596 |
| | $ | 16,193 |
| | $ | 405,351 |
|
| Commercial loans | 432 |
| | — |
| | — |
| | 432 |
|
| Total TDRs | $ | 371,994 |
| | $ | 17,596 |
| | $ | 16,193 |
| | $ | 405,783 |
|
| March 31, 2014 | | | | | | | |
| Consumer loans | $ | 374,277 |
| | $ | 11,645 |
| | $ | 14,717 |
| | $ | 400,639 |
|
| Commercial loans | 446 |
| | — |
| | — |
| | 446 |
|
| Total TDRs | $ | 374,723 |
| | $ | 11,645 |
| | $ | 14,717 |
| | $ | 401,085 |
|
| December 31, 2013 | | | | | | | |
| Consumer loans | $ | 382,529 |
| | $ | 25,808 |
| | $ | 20,901 |
| | $ | 429,238 |
|
| Commercial loans | 456 |
| | — |
| | — |
| | 456 |
|
| Total TDRs | $ | 382,985 |
| | $ | 25,808 |
| | $ | 20,901 |
| | $ | 429,694 |
|
| June 30, 2013 | | | | | | | |
| Consumer loans | $ | 451,097 |
| | $ | 24,025 |
| | $ | 71,951 |
| | $ | 547,073 |
|
| Commercial loans | — |
| | — |
| | 235 |
| | 235 |
|
| Total TDRs | $ | 451,097 |
| | $ | 24,025 |
| | $ | 72,186 |
| | $ | 547,308 |
|
Gain on Loan Sales and Securitizations
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | June 30, 2014 | | March 31, 2014 | | June 30, 2013 |
| Description | | | | | | | | |
| Valuation gain (loss) | | | | | | | | |
| Value of interest rate locks | $ | 29,698 |
| 0.49 | % | | $ | 11,024 |
| 0.25 | % | | $ | (75,040 | ) | (0.68 | )% |
| Value of forward sales | (31,534 | ) | (0.52 | )% | | (16,626 | ) | (0.38 | )% | | 166,941 |
| 1.51 | % |
| Fair value of loans held-for-sale | 126,399 |
| 2.10 | % | | 63,002 |
| 1.41 | % | | (19,336 | ) | (0.17 | )% |
| Total valuation gains (losses) | 124,563 |
| 2.07 | % | | 57,400 |
| 1.28 | % | | 72,565 |
| 0.66 | % |
| | | | | | | | | |
| Sales (losses) gains | | | | | | | | |
| Marketing (losses) gains, net of adjustments | (15,365 | ) | (0.26 | )% | | 21,637 |
| 0.48 | % | | 28,753 |
| 0.25 | % |
| Pair-off (losses) gains | (52,708 | ) | (0.87 | )% | | (32,466 | ) | (0.72 | )% | | 48,525 |
| 0.44 | % |
| Provision for representation and warranty reserve | (1,734 | ) | (0.03 | )% | | (1,229 | ) | (0.03 | )% | | (5,052 | ) | (0.05 | )% |
| Total sales (losses) gains | (69,807 | ) | (1.16 | )% | | (12,058 | ) | (0.27 | )% | | 72,226 |
| 0.64 | % |
| Total gain on loan sales and securitizations | $ | 54,756 |
| | | $ | 45,342 |
| | | $ | 144,791 |
| |
| Total mortgage rate lock commitments (gross) | $ | 8,187,881 |
| | | $ | 6,039,871 |
| | | $ | 12,353,000 |
| |
| Total loan sales and securitizations | $ | 6,029,817 |
| 0.91 | % | | $ | 4,474,287 |
| 1.01 | % | | $ | 11,123,821 |
| 1.30 | % |
Total mortgage rate lock commitments (fallout adjusted) (1) | $ | 6,693,366 |
| 0.82 | % | | $ | 4,853,637 |
| 0.93 | % | | $ | 9,837,573 |
| 1.47 | % |
|
| | | | | | | | | | | |
| | | | | | |
| | Six Months Ended |
| | June 30, 2014 | | June 30, 2013 |
| Description | | | | | |
| Valuation gain (loss) | | | | | |
| Value of interest rate locks | $ | 40,722 |
| 0.39 | % | | $ | (110,367 | ) | (0.46 | )% |
| Value of forward sales | (48,160 | ) | (0.46 | )% | | 162,602 |
| 0.68 | % |
| Fair value of loans held-for-sale | 189,402 |
| 1.80 | % | | 66,510 |
| 0.28 | % |
| Total valuation gains | 181,964 |
| 1.73 | % | | 118,745 |
| 0.50 | % |
| | | | | | |
| Sales (losses) gains | | | | | |
| Marketing gains, net of adjustments | 6,273 |
| 0.06 | % | | 54,612 |
| 0.23 | % |
| Pair-off gains (losses) | (85,174 | ) | (0.81 | )% | | 119,843 |
| 0.50 | % |
| Provision for representation and warranty reserve | (2,963 | ) | (0.03 | )% | | (10,870 | ) | (0.05 | )% |
| Total sales gains | (81,864 | ) | (0.78 | )% | | 163,585 |
| 0.68 | % |
| Total gain on loan sales and securitizations | $ | 100,100 |
| | | $ | 282,330 |
| |
| Total mortgage rate lock commitments volume | $ | 14,227,752 |
| | | $ | 24,495,000 |
| |
| Total loan sales and securitizations | $ | 10,504,104 |
| 0.95 | % | | $ | 23,946,700 |
| 1.18 | % |
| Total mortgage rate lock commitments (fallout adjusted) (1) | $ | 11,547,003 |
| 0.87 | % | | $ | 19,685,990 |
| 1.43 | % |
| |
| (1) | Fallout adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates. The net margin is based on net gain on loan sales to fallout adjusted mortgage rate lock commitments. |
Average Balances, Yields and Rates
(Dollars in thousands)
(Unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | June 30, 2014 | | March 31, 2014 | | June 30, 2013 |
| | Average Balance | Interest | Annualized Yield/Rate | | Average Balance | Interest | Annualized Yield/Rate | | Average Balance | Interest | Annualized Yield/Rate |
| Interest-Earning Assets | |
| Loans held-for-sale | $ | 1,516,813 |
| $ | 15,783 |
| 4.16 | % | | $ | 1,297,118 |
| $ | 13,652 |
| 4.21 | % | | $ | 2,630,309 |
| $ | 22,202 |
| 3.38 | % |
| Loans repurchased with government guarantees | 1,237,491 |
| 7,970 |
| 2.58 | % | | 1,269,781 |
| 7,943 |
| 2.50 | % | | 1,540,798 |
| 13,220 |
| 3.43 | % |
| Loans held-for-investment | | | | | | | | | | | |
Consumer loans (1) | 3,084,197 |
| 30,829 |
| 3.99 | % | | 3,180,487 |
| 30,878 |
| 3.89 | % | | 3,845,503 |
| 39,230 |
| 4.08 | % |
Commercial loans (1) | 818,674 |
| 7,328 |
| 3.54 | % | | 683,623 |
| 6,195 |
| 3.62 | % | | 669,253 |
| 7,079 |
| 4.18 | % |
| Total loans held-for-investment | 3,902,871 |
| 38,157 |
| 3.90 | % | | 3,864,110 |
| 37,073 |
| 3.84 | % | | 4,514,756 |
| 46,309 |
| 4.10 | % |
| Investment securities available-for-sale or trading | 1,541,215 |
| 9,885 |
| 2.57 | % | | 1,173,304 |
| 7,538 |
| 2.57 | % | | 240,296 |
| 1,838 |
| 3.06 | % |
| Interest-earning deposits and other | 168,313 |
| 118 |
| 0.28 | % | | 225,501 |
| 145 |
| 0.26 | % | | 2,385,786 |
| 1,489 |
| 0.25 | % |
| Total interest-earning assets | 8,366,703 |
| $ | 71,913 |
| 3.43 | % | | 7,829,814 |
| $ | 66,351 |
| 3.39 | % | | 11,311,945 |
| $ | 85,058 |
| 3.01 | % |
| Other assets | 1,417,105 |
| | | | 1,478,014 |
| | | | 1,649,000 |
| | |
| Total assets | $ | 9,783,808 |
| | | | $ | 9,307,828 |
| | | | $ | 12,960,945 |
| | |
| Interest-Bearing Liabilities | | | | | | | | | | | |
| Retail deposits | | | | | | | | | | | |
| Demand deposits | $ | 426,458 |
| $ | 147 |
| 0.14 | % | | $ | 419,677 |
| $ | 144 |
| 0.14 | % | | $ | 395,137 |
| $ | 205 |
| 0.21 | % |
| Savings deposits | 3,010,108 |
| 4,396 |
| 0.59 | % | | 2,871,553 |
| 3,331 |
| 0.47 | % | | 2,627,166 |
| 4,753 |
| 0.73 | % |
| Money market deposits | 265,250 |
| 123 |
| 0.19 | % | | 280,221 |
| 126 |
| 0.18 | % | | 345,694 |
| 223 |
| 0.26 | % |
| Certificate of deposits | 945,622 |
| 1,747 |
| 0.74 | % | | 986,968 |
| 1,812 |
| 0.74 | % | | 2,353,775 |
| 5,338 |
| 0.91 | % |
| Total retail deposits | 4,647,438 |
| 6,413 |
| 0.55 | % | | 4,558,419 |
| 5,413 |
| 0.48 | % | | 5,721,772 |
| 10,519 |
| 0.74 | % |
| Government deposits | | | | | | | | | | | |
| Demand deposits | 155,286 |
| 153 |
| 0.39 | % | | 122,121 |
| 102 |
| 0.34 | % | | 114,707 |
| 115 |
| 0.40 | % |
| Savings deposits | 301,243 |
| 397 |
| 0.53 | % | | 209,226 |
| 210 |
| 0.41 | % | | 169,122 |
| 122 |
| 0.29 | % |
| Certificate of deposits | 341,767 |
| 276 |
| 0.32 | % | | 337,016 |
| 232 |
| 0.28 | % | | 413,177 |
| 457 |
| 0.44 | % |
| Total government deposits | 798,296 |
| 826 |
| 0.41 | % | | 668,363 |
| 544 |
| 0.33 | % | | 697,006 |
| 694 |
| 0.40 | % |
| Wholesale deposits | — |
| — |
| — | % | | 3,372 |
| 31 |
| 3.76 | % | | 73,910 |
| 935 |
| 5.07 | % |
| Total deposits | 5,445,734 |
| 7,239 |
| 0.53 | % | | 5,230,154 |
| 5,988 |
| 0.46 | % | | 6,492,688 |
| 12,148 |
| 0.75 | % |
| Federal Home Loan Bank advances | 1,100,437 |
| 600 |
| 0.22 | % | | 885,870 |
| 534 |
| 0.24 | % | | 2,901,102 |
| 24,171 |
| 3.34 | % |
| Other | 248,973 |
| 1,649 |
| 2.66 | % | | 247,435 |
| 1,628 |
| 2.67 | % | | 248,753 |
| 1,643 |
| 2.65 | % |
| Total interest-bearing liabilities | 6,795,144 |
| 9,488 |
| 0.56 | % | | 6,363,459 |
| 8,150 |
| 0.52 | % | | 9,642,543 |
| 37,962 |
| 1.58 | % |
Other liabilities (2) | 1,606,716 |
| | | | 1,499,628 |
| | | | 2,079,615 |
| | |
| Stockholders' equity | 1,381,948 |
| | | | 1,444,741 |
| | | | 1,238,787 |
| | |
| Total liabilities and stockholder's equity | $ | 9,783,808 |
| | | | $ | 9,307,828 |
| | | | $ | 12,960,945 |
| | |
| Net interest-earning assets | $ | 1,571,559 |
| | | | $ | 1,466,355 |
| | | | $ | 1,669,402 |
| | |
| Net interest income | | $ | 62,425 |
| | | | $ | 58,201 |
| | | | $ | 47,096 |
| |
Interest rate spread (3) | | | 2.87 | % | | | | 2.87 | % | | | | 1.43 | % |
Net interest margin (4) | | | 2.98 | % | | | | 2.97 | % | | | | 1.66 | % |
| Ratio of average interest-earning assets to interest-bearing liabilities | | | 123.1 | % | | | | 123.1 | % | | | | 117.3 | % |
| |
| (1) | Consumer loans include: residential first mortgage, second mortgage, warehouse lending, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and commercial lease financing loans. |
| |
| (2) | Includes company controlled deposits that arise due to the servicing of loans for others, which do not bear interest. |
| |
| (3) | Interest rate spread is the difference between rates of interest earned on interest-earning assets and rates of interest paid on interest-bearing liabilities. |
| |
| (4) | Net interest margin is net interest income divided by average interest-earning assets. |
|
| | | | | | | | | | | | | | | | | |
| | Six Months Ended |
| | June 30, 2014 | | June 30, 2013 |
| | Average Balance | Interest | Annualized Yield/Rate | | Average Balance | Interest | Annualized Yield/Rate |
| | |
| Interest-Earning Assets | | | | | | | |
| Loans held-for-sale | $ | 1,407,572 |
| $ | 29,435 |
| 4.18 | % | | $ | 3,120,529 |
| $ | 49,010 |
| 3.14 | % |
| Loans repurchased with government guarantees | 1,253,547 |
| 15,914 |
| 2.54 | % | | 1,656,872 |
| 28,225 |
| 3.41 | % |
| Loans held-for-investment | | | | | | | |
Consumer loans (1) | 3,132,076 |
| 61,707 |
| 3.94 | % | | 3,990,157 |
| 81,914 |
| 4.12 | % |
Commercial loans (1) | 751,522 |
| 13,523 |
| 3.58 | % | | 683,681 |
| 14,531 |
| 4.23 | % |
| Total loans held-for-investment | 3,883,598 |
| 75,230 |
| 3.87 | % | | 4,673,838 |
| 96,445 |
| 4.13 | % |
| Investment securities available-for-sale or trading | 1,358,276 |
| 17,423 |
| 2.57 | % | | 294,112 |
| 3,932 |
| 2.67 | % |
| Interest-earning deposits and other | 196,749 |
| 262 |
| 0.27 | % | | 1,946,119 |
| 2,435 |
| 0.25 | % |
| Total interest-earning assets | 8,099,742 |
| $ | 138,264 |
| 3.41 | % | | 11,691,470 |
| $ | 180,047 |
| 3.08 | % |
| Other assets | 1,447,412 |
| | | | 1,633,267 |
| | |
| Total assets | $ | 9,547,154 |
| | | | $ | 13,324,737 |
| | |
| Interest-Bearing Liabilities | | | | | | | |
| Retail deposits | | | | | | | |
| Demand deposits | $ | 423,086 |
| $ | 291 |
| 0.14 | % | | $ | 391,820 |
| $ | 444 |
| 0.23 | % |
| Savings deposits | 2,941,213 |
| 7,727 |
| 0.53 | % | | 2,472,870 |
| 9,033 |
| 0.74 | % |
| Money market deposits | 272,694 |
| 249 |
| 0.18 | % | | 366,581 |
| 553 |
| 0.30 | % |
| Certificate of deposits | 966,181 |
| 3,558 |
| 0.74 | % | | 2,641,070 |
| 11,846 |
| 0.90 | % |
| Total retail deposits | 4,603,174 |
| 11,825 |
| 0.52 | % | | 5,872,341 |
| 21,876 |
| 0.75 | % |
| Government deposits | | | | | | | |
| Demand deposits | 138,795 |
| 254 |
| 0.37 | % | | 106,619 |
| 220 |
| 0.42 | % |
| Savings deposits | 255,489 |
| 609 |
| 0.48 | % | | 238,581 |
| 479 |
| 0.40 | % |
| Certificate of deposits | 339,405 |
| 508 |
| 0.30 | % | | 442,347 |
| 1,151 |
| 0.52 | % |
| Total government deposits | 733,689 |
| 1,371 |
| 0.38 | % | | 787,547 |
| 1,850 |
| 0.47 | % |
| Wholesale deposits | 1,677 |
| 31 |
| 3.76 | % | | 77,921 |
| 1,930 |
| 4.99 | % |
| Total deposits | 5,338,540 |
| 13,227 |
| 0.50 | % | | 6,737,809 |
| 25,656 |
| 0.77 | % |
| FHLB advances | 993,746 |
| 1,134 |
| 0.23 | % | | 3,002,764 |
| 48,332 |
| 3.25 | % |
| Other | 248,208 |
| 3,277 |
| 2.66 | % | | 248,098 |
| 3,295 |
| 2.68 | % |
| Total interest-bearing liabilities | 6,580,494 |
| 17,638 |
| 0.54 | % | | 9,988,671 |
| 77,283 |
| 1.56 | % |
Other liabilities (2) | 1,553,468 |
| | | | 2,129,503 |
| | |
| Stockholders' equity | 1,413,192 |
| | | | 1,206,563 |
| | |
| Total liabilities and stockholder's equity | $ | 9,547,154 |
| | | | $ | 13,324,737 |
| | |
| Net interest-earning assets | $ | 1,519,248 |
| | | | $ | 1,702,799 |
| | |
| Net interest income | | $ | 120,626 |
| | | | $ | 102,764 |
| |
Interest rate spread (3) | | | 2.87 | % | | | | 1.52 | % |
Net interest margin (4) | | | 2.97 | % | | | | 1.75 | % |
| Ratio of average interest-earning assets to interest-bearing liabilities | | | 123.1 | % | | | | 117.0 | % |
| | | | | | | | |
| |
| (1) | Consumer loans include: residential first mortgage, second mortgage, warehouse lending, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and commercial lease financing loans. |
| |
| (2) | Includes company controlled deposits that arise due to the servicing of loans for others, which do not bear interest. |
| |
| (3) | Interest rate spread is the difference between rates of interest earned on interest-earning assets and rates of interest paid on interest-bearing liabilities. |
| |
| (4) | Net interest margin is net interest income divided by average interest-earning assets. |
Non-GAAP Reconciliation
(Dollars in thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30,
2014 | | March 31,
2014 | | June 30,
2013 | | June 30,
2014 | | June 30,
2013 |
| Efficiency ratio (adjusted) | | | | | | | | | |
| Net interest income (a) | $ | 62,425 |
| | $ | 58,201 |
| | $ | 47,096 |
| | $ | 120,626 |
| | $ | 102,764 |
|
| Noninterest income (b) | 102,484 |
| | 74,953 |
| | 219,959 |
| | 177,436 |
| | 404,902 |
|
| Less provisions: | | | | | | | | | |
| Representation and warranty reserve - change in estimate | 5,226 |
| | (1,672 | ) | | 28,940 |
| | 3,554 |
| | 46,336 |
|
| Significant one-time items: | | | | | | | | | |
| Net impairment loss recognized through earnings | — |
| | — |
| | 8,789 |
| | — |
| | 8,789 |
|
| Other noninterest income | — |
| | 21,056 |
| | (36,854 | ) | | 21,056 |
| | (36,854 | ) |
| Adjusted income (c) | $ | 170,135 |
| | $ | 152,538 |
| | $ | 267,930 |
| | $ | 322,672 |
| | $ | 525,937 |
|
| Noninterest expense (d) | $ | 121,353 |
| | $ | 139,252 |
| | $ | 174,397 |
| | $ | 260,605 |
| | $ | 370,986 |
|
| Significant one-time items: | | | | | | | | | |
| Legal and professional expense | — |
| | — |
| | 10,000 |
| | — |
| | 10,000 |
|
| Adjusted noninterest expense (e) | $ | 121,353 |
| | $ | 139,252 |
| | $ | 184,397 |
| | $ | 260,605 |
| | $ | 380,986 |
|
| Efficiency ratio (d/(a+b)) | 73.6 | % | | 104.6 | % | | 65.3 | % | | 87.4 | % | | 73.1 | % |
| Efficiency ratio (adjusted) (e/c) | 71.3 | % | | 91.3 | % | | 68.8 | % | | 80.8 | % | | 72.4 | % |
|
| | | | | | | | | | | | | | | |
| | June 30,
2014 | | March 31,
2014 | | December 31,
2013 | | June 30,
2013 |
| Non-performing assets / Tier 1 capital + allowance for loan losses | | | | | | | |
| Non-performing assets | $ | 151,741 |
| | $ | 141,825 |
| | $ | 182,321 |
| | $ | 344,318 |
|
Tier 1 capital (1) | 1,188,936 |
| | 1,139,810 |
| | 1,257,608 |
| | 1,390,582 |
|
| Allowance for loan losses | 306,000 |
| | 307,000 |
| | 207,000 |
| | 243,000 |
|
| Tier 1 capital + allowance for loan losses | $ | 1,494,936 |
| | $ | 1,446,810 |
| | $ | 1,464,608 |
| | $ | 1,633,582 |
|
| Non-performing assets / Tier 1 capital + allowance for loan losses | 10.2 | % | | 9.8 | % | | 12.4 | % | | 21.1 | % |
| | | | | | | | |
|
| | | | | | | | | | | | | | | |
| Mortgage servicing rights to Tier 1 capital ratio | June 30,
2014 | | March 31,
2014 | | December 31,
2013 | | June 30,
2013 |
| Mortgage servicing rights | $ | 289,185 |
| | $ | 320,231 |
| | $ | 284,678 |
| | $ | 729,019 |
|
Tier 1 capital (to adjusted total assets) (1) | 1,188,936 |
| | 1,139,810 |
| | 1,257,608 |
| | 1,390,582 |
|
| Mortgage servicing rights to Tier 1 capital ratio | 24.3 | % | | 28.1 | % |
| 22.6 | % | | 52.4 | % |
| | | | | | | | |
| |
| (1) | Represents Tier 1 capital for Bank. |
The Bank currently calculates risk-based capital ratios under guidelines adopted by the OCC based on the 1988 Capital Accord ("Basel I") of the Basel Committee on Banking Supervision (the "Basel Committee"). In December 2010, the Basel Committee released its final framework for Basel III, which will strengthen international capital and liquidity regulations. When fully phased-in, Basel III will increase capital requirements through higher minimum capital levels as well as through increases in risk-weights for certain exposures. Additionally, the final Basel III rules place greater emphasis on common equity. In October 2013, the OCC and Federal Reserve released final rules detailing the U.S. implementation of Basel III and the application of the risk-based and leverage capital rules to top-tier savings and loan holding companies. The Company will begin transitioning to the Basel III framework in January 2015 subject to a phase-in period extending through January 2019. The Company is currently evaluating the impact of the final Basel III rules. Accordingly, the calculations provided below are estimates.
|
| | | | | | | |
| June 30, 2014 | Common Equity Tier 1 (to Risk Weighted Assets) | | Tier 1 Leverage (to Adjusted Tangible Assets) (1) |
| Flagstar Bank (the Bank) | | | |
Regulatory capital – Basel I to Basel III (fully phased-in) (2) | | | |
| Basel I capital | $ | 1,188,936 |
| | $ | 1,188,936 |
|
| Increased deductions related to deferred tax assets, mortgage servicing assets, and other capital components | (154,900 | ) | | (154,900 | ) |
Basel III (fully phased-in) capital (2) | $ | 1,034,036 |
| | $ | 1,034,036 |
|
Risk-weighted assets – Basel I to Basel III (fully phased-in) (2) | | | |
| Basel I assets | $ | 5,006,897 |
| | $ | 9,493,531 |
|
| Net change in assets | 83,669 |
| | (453,242 | ) |
Basel III (fully phased-in) assets (2) | $ | 5,090,566 |
| | $ | 9,040,289 |
|
| Capital ratios | | | |
Basel I (3) | 23.75 | % | | 12.52 | % |
Basel III (fully phased-in) (2) | 20.31 | % | | 11.44 | % |
| | | | |
| |
| (1) | The definition of total assets used in the calculation of the Tier 1 Leverage ratio changed from ending total assets under Basel I to quarterly average total assets under Basel III. |
| |
| (2) | Basel III information is considered estimated and not final at this time as the Basel III rules continue to be subject to interpretation by U.S. Banking Regulators. |
| |
| (3) | The Bank is currently subject to the requirements of Basel I. |
