EXHIBIT 99.1
NEWS RELEASE
For more information, contact:
David L. Urban
david.urban@flagstar.com
(248) 312-5970
Flagstar Reports Fourth Quarter 2015 Net Income of $33 million, or $0.44 per Diluted Share
Company makes continued progress in successfully executing business plan
Key Q4 Highlights
| |
| • | Net interest income grew 4 percent from third quarter 2015, driven by a 5 percent increase in earning assets |
| |
| • | Gain on loan sales fell $22 million, or 32 percent, from prior quarter due to seasonal factors and TILA-RESPA Integrated Disclosure ("TRID") |
| |
| • | Net charge-offs and consumer delinquencies improved on solid credit performance |
| |
| • | Tier 1 leverage ratio remained strong at 11.5 percent |
TROY, Mich. January 26, 2016 - Flagstar Bancorp, Inc. (NYSE:FBC), the holding company for Flagstar Bank, FSB, today reported fourth quarter 2015 net income of $33 million, or $0.44 per diluted share, as compared to $47 million in the third quarter 2015, or $0.69 per diluted share, and net income of $11 million in the fourth quarter 2014, or $0.07 per diluted share. The full year 2015 net income was $158 million, or $2.24 per diluted share, as compared to a full year 2014 net loss of $70 million, or $1.72 loss per diluted share.
"Flagstar had a very good year in 2015, posting the highest level of pre-tax income since 2003," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "We made continued progress in the fourth quarter, generating higher net interest income through solid growth in earning assets and maintaining a clean credit profile."
"As we expected, our mortgage revenues were seasonally lower. We were also impacted by TRID. The Company took a careful approach with the implementation of TRID, taking greater control in creating and delivering disclosure documents. Given our predominantly third party business model, we experienced more of an impact than other bank originators. We are taking steps to address this issue while building market share in our distributed and direct-to-consumer retail channels."
"We look forward to 2016. Despite the economic uncertainties created by Fed tightening and the regulatory challenges the industry faces, we like our position. We have a solid business plan, a strong balance sheet, a
more profitable and diversified business mix and the team we want. We continue to grow our businesses, our regulatory relationships are strong and we remain confident we will move toward optimizing our capital structure in 2016 with the expected redemption of our TARP preferred and the restoration of interest payments on our Trust Preferred securities."
Fourth Quarter 2015 Highlights:
|
| | | | | | | | | | | | | | | |
| Income Statement Highlights | | | | |
| | Three Months Ended |
| | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | December 31,
2014 |
| | (Dollars in millions) |
| Consolidated Statements of Income | | |
| |
|
| Net interest income | $ | 76 |
| $ | 73 |
| $ | 73 |
| $ | 65 |
| $ | 61 |
|
| (Benefit) provision for loan losses | (1 | ) | (1 | ) | (13 | ) | (4 | ) | 5 |
|
| Noninterest income | 97 |
| 128 |
| 126 |
| 119 |
| 98 |
|
| Noninterest expense | 129 |
| 131 |
| 138 |
| 138 |
| 139 |
|
| Income before income taxes | 45 |
| 71 |
| 74 |
| 50 |
| 15 |
|
| Provision for income taxes | 12 |
| 24 |
| 28 |
| 18 |
| 4 |
|
| Net income | $ | 33 |
| $ | 47 |
| $ | 46 |
| $ | 32 |
| $ | 11 |
|
| | | | | | |
| Income per share: | | | | | |
| Basic | $ | 0.45 |
| $ | 0.70 |
| $ | 0.69 |
| $ | 0.43 |
| $ | 0.07 |
|
| Diluted | $ | 0.44 |
| $ | 0.69 |
| $ | 0.68 |
| $ | 0.43 |
| $ | 0.07 |
|
|
| | | | | | | | | | | | |
| Key Ratios | | | | | | |
| | Three Months Ended | Change (bps) |
| | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | December 31,
2014 | Seq | Yr/Yr |
| Net interest margin | 2.69 | % | 2.75 | % | 2.79 | % | 2.75 | % | 2.80 | % | (6) | (11) |
| Return on average assets | 1.0 | % | 1.5 | % | 1.6 | % | 1.2 | % | 0.4 | % | (50) | 60 |
| Return on average equity | 8.6 | % | 12.4 | % | 12.7 | % | 8.9 | % | 3.2 | % | (380) | 540 |
|
| | | | | | | | | | | | | | | | | | | |
| Balance Sheet Highlights | | | | | | |
| | Three Months Ended | % Change |
| | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | December 31,
2014 | Seq | Yr/Yr |
| | (Dollars in millions) | | |
| Average Balance Sheet | | | | | |
|
|
| Average interest-earning assets | $ | 11,240 |
| $ | 10,693 |
| $ | 10,367 |
| $ | 9,422 |
| $ | 8,725 |
| 5 | % | 29 | % |
| Average loans held-for-sale | 2,484 |
| 2,200 |
| 2,218 |
| 1,842 |
| 1,687 |
| 13 | % | 47 | % |
| Average loans held-for-investment | 5,642 |
| 5,412 |
| 4,938 |
| 4,293 |
| 4,031 |
| 4 | % | 40 | % |
| Average total deposits | 8,132 |
| 8,260 |
| 7,736 |
| 7,368 |
| 7,146 |
| (2 | )% | 14 | % |
Net Interest Income
Fourth quarter 2015 net interest income increased $3 million, or 4 percent, to $76 million, compared to $73 million for the third quarter 2015. The results were led by earning asset growth of 5 percent, partially offset by a slight drop in net interest margin.
Net interest margin decreased 6 basis points to 2.69 percent for the fourth quarter 2015, as compared to 2.75 percent for the third quarter 2015. The decrease from the prior quarter was primarily driven by a lower yield on mortgage loans and loans repurchased with government guarantees, partially offset by lower funding costs on FHLB advances. The net interest margin was also negatively impacted by a seasonal decline in company-controlled deposits due to tax payments.
Average loans held-for-investment totaled $5.6 billion for the fourth quarter 2015, increasing $230 million, or 4 percent, compared to the third quarter 2015. The increase was driven by higher commercial real estate and mortgage loans. Average commercial real estate loans grew $115 million, or 17 percent, and average residential mortgage loans rose $77 million, or 3 percent.
Average total deposits were $8.1 billion in the fourth quarter 2015, decreasing $128 million, or 2 percent, from the prior quarter. The decline was led by a seasonal drop in company-controlled deposits, partially offset by an increase in government and retail deposits. Average company-controlled deposits decreased $244 million, or 16 percent, due to tax payments. Average government deposits rose $49 million, or 5 percent, due to seasonal increases. Average retail deposits increased $67 million, or 1 percent, led by a 4 percent increase in demand deposits.
Provision for Loan Losses
The Company experienced a provision benefit in the fourth quarter 2015, resulting primarily from the full payoff of a commercial loan. The benefit for loan losses totaled $1 million for the fourth quarter 2015, unchanged from a benefit of $1 million for the third quarter 2015.
Net charge-offs in the fourth quarter 2015 were $9 million, or 0.62 percent of applicable loans, compared to $24 million, or 1.84 percent of applicable loans in the prior quarter. The fourth quarter 2015 amount included $2 million of net charge-offs associated with the sale of $11 million (unpaid principal balance) of nonperforming loans. The third quarter 2015 amount included $16 million of net charge-offs associated with the sale of $233 million (unpaid principal balance) of interest-only and lower performing loans. Excluding loan sales or transfers in both quarters, net charge-offs in the fourth quarter 2015 were $7 million, or 0.51 percent of applicable loans, compared to $8 million, or 0.61 percent of applicable loans in the prior quarter.
Noninterest Income
Fourth quarter 2015 noninterest income decreased $31 million, or 24 percent, to $97 million, as compared to $128 million for the third quarter 2015. The fourth quarter 2015 results were led by lower net gain on loan sales, a decline in loan fees and charges and a reduced net return on the mortgage servicing asset.
Fourth quarter 2015 net gain on loan sales decreased $22 million, or 32 percent, to $46 million, as compared to $68 million for the third quarter 2015, due to seasonal factors and the impact of TRID. In the fourth quarter 2015, fallout-adjusted locks decreased 23 percent to $5.0 billion. The Company took a careful approach with TRID implementation, taking greater control in creating and delivering disclosure documents. It experienced more of an impact than other bank originators due to its third party business model. The net gain on loan sale margin fell 13 basis points to 0.92 percent for the fourth quarter 2015, as compared to 1.05 percent for the third quarter 2015, led by price competition. The Company has initiated a plan to address its volume levels and continues to build a stronger distributed and direct-to-consumer retail business.
|
| | | | | | | | | | | | | | | | | | | |
| Mortgage Metrics | | | | | | |
| | Three Months Ended | Change (% / bps) |
| | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | December 31,
2014 | Seq | Yr/Yr |
| | (Dollars in millions) | | |
GOS margin (change in bps) (1) | 0.92 | % | 1.05 | % | 1.21 | % | 1.27 | % | 0.87 | % | (13) | 5 |
| Gain on loan sales | $ | 46 |
| $ | 68 |
| $ | 83 |
| $ | 91 |
| $ | 53 |
| (32 | )% | (13 | )% |
Mortgage rate lock commitments (fallout-adjusted) (2) | $ | 5,027 |
| $ | 6,495 |
| $ | 6,804 |
| $ | 7,185 |
| $ | 6,156 |
| (23 | )% | (18 | )% |
Residential loans serviced (number of accounts - 000's) (3) | 361 |
| 369 |
| 378 |
| 385 |
| 383 |
| (2 | )% | (6 | )% |
| Capitalized value of mortgage servicing rights | 1.13 | % | 1.12 | % | 1.15 | % | 1.03 | % | 1.01 | % | 1 | 12 |
| (1) Gain on sale margin is based on net gain on loan sales to fallout-adjusted mortgage rate lock commitments. |
| (2) 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. |
| (3) Includes serviced for own loan portfolio, serviced for others and subserviced for others loans. |
Loan fees and charges fell to $14 million for the fourth quarter 2015, as compared to $17 million in the third quarter 2015. The decrease primarily reflected lower mortgage closings.
Net return on the mortgage servicing asset (including the impact of economic hedges) fell to $9 million for the fourth quarter 2015, as compared to $12 million for the third quarter 2015. The decrease from the prior quarter primarily reflected a smaller impact from the collection of contingencies held back by the purchaser relating to MSR sales in prior periods. Excluding the impact of net transaction costs, the return on the mortgage servicing asset was 11 percent, which was consistent with the prior quarter. The return in the fourth quarter 2015 was better than the Company's long-term return target as it benefited from slower prepayments and positive economic hedging results.
Noninterest Expense
Noninterest expense decreased $2 million, or 2 percent, to $129 million for the fourth quarter 2015, as compared to $131 million for the third quarter 2015. The fourth quarter 2015 results were driven by lower commissions and loan processing expense related to decreased business activity and lower federal insurance premiums, partially offset by higher asset resolution expense.
Commissions were $8 million for the fourth quarter 2015, as compared to $10 million for the third quarter 2015. The $2 million decrease in the fourth quarter 2015 was primarily attributable to lower mortgage closings.
Fourth quarter 2015 asset resolution expense was $2 million higher than third quarter 2015. The prior quarter reflected a benefit for reimbursements. The low level of asset resolution expense in the fourth quarter 2015 reflected the Company's success in de-risking the balance sheet.
Federal insurance premiums were $5 million for the fourth quarter 2015, as compared to $6 million for the third quarter 2015, reflecting the Company's improved risk profile.
Loan processing expense was $12 million for the fourth quarter 2015, as compared to $14 million for the third quarter 2015. The $2 million decline in the current quarter was primarily attributable to lower mortgage closings.
Income Taxes
The fourth quarter 2015 provision for income taxes totaled $12 million, as compared to $24 million in the third quarter 2015. The effective tax rate in the fourth quarter 2015 was 27 percent, as compared to 34 percent in the third quarter 2015. The decline in the marginal tax rate in the fourth quarter 2015 resulted primarily from benefits associated with state income taxes.
Asset Quality
|
| | | | | | | | | | | | | | | | | | | |
| Credit Quality Ratios | | | | | | |
| | Three Months Ended | Change (% / bps) |
| | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | December 31,
2014 | Seq | Yr/Yr |
| | (Dollars in millions) | | |
| Allowance for loan loss to LHFI | 3.0 | % | 3.7 | % | 4.3 | % | 5.7 | % | 7.0 | % | (70) | (400) |
| Charge-offs, net of recoveries | $ | 9 |
| $ | 24 |
| $ | 18 |
| $ | 41 |
| $ | 9 |
| (63 | )% | — | % |
Charge-offs, net of recoveries, adjusted (1) | $ | 7 |
| $ | 8 |
| $ | 3 |
| $ | 5 |
| $ | 6 |
| (13 | )% | 17 | % |
| Total nonperforming loans held-for-investment | $ | 66 |
| $ | 63 |
| $ | 65 |
| $ | 84 |
| $ | 120 |
| 5 | % | (45 | )% |
| Net charge-off ratio (annualized) | 0.62 | % | 1.84 | % | 1.49 | % | 3.97 | % | 0.91 | % | (122) | (29) |
Net charge-off ratio, adjusted (annualized) (1) | 0.51 | % | 0.61 | % | 0.26 | % | 0.45 | % | 0.60 | % | (10) | (9) |
| Nonperforming loans to LHFI | 1.05 | % | 1.15 | % | 1.22 | % | 1.81 | % | 2.71 | % | (10) | (166) |
| (1) Excludes charge-offs of $2 million, $16 million, $15 million, $36 million and $3 million related to the sale or transfer of nonperforming loans and TDRs during the three months ended December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, and December 31, 2014, respectively. |
The allowance for loan losses was $187 million at December 31, 2015, covering 3.0 percent of loans held-for-investment. The allowance for loan losses was $197 million at September 30, 2015, covering 3.7 percent of loans held-for-investment. The decrease in the allowance for loan losses in the fourth quarter 2015 was largely due to charge-offs of residential mortgages, the sale of nonperforming loans and the addition of higher credit quality loans to the portfolio.
Fourth quarter 2015 net charge-offs were $9 million, representing 0.62 percent of applicable loans. This represented a decrease of $15 million from the third quarter 2015 net charge-offs of $24 million, or 1.84 percent of applicable loans. Excluding loan sales or transfers in both quarters, net charge-offs in the fourth quarter 2015 were $7 million, or 0.51 percent, compared to $8 million, or 0.61 percent in the prior quarter. Fourth quarter 2015 net charge-offs included $3 million of loans with government guarantees. The remaining $4 million of charge-offs accounted for 0.29 percent of applicable loans.
Nonperforming loans increased to $66 million at December 31, 2015 from $63 million at September 30, 2015. The ratio of nonperforming loans to loans held-for-investment decreased to 1.05 percent at December 31, 2015 from 1.15 percent at September 30, 2015. At December 31, 2015, consumer loan delinquencies (30-89 days past due) totaled $14 million, or 38 basis points, a decrease of 25 basis points from September 30, 2015 and a decrease of 129 basis points from the same period last year. There were no commercial loan delinquencies (30-89 days past due) at December 31, 2015.
Capital
|
| | | | | | | | | | | | | | | | | | | |
Capital Ratios (Bancorp) (1) | Three Months Ended | Change (% / bps) |
| | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | December 31,
2014 | Seq | Yr/Yr |
| Total capital | 20.28 | % | 21.64 | % | 21.30 | % | 22.61 | % | 24.12 | % | (136 | ) | (384 | ) |
| Tier 1 capital | 18.98 | % | 20.32 | % | 19.97 | % | 21.26 | % | 22.81 | % | (134 | ) | (383 | ) |
| Tier 1 leverage | 11.51 | % | 11.65 | % | 11.47 | % | 12.02 | % | 12.59 | % | (14 | ) | (108 | ) |
| Mortgage servicing rights to Tier 1 capital | 20.63 | % | 21.12 | % | 24.20 | % | 22.20 | % | 21.80 | % | (49 | ) | (117 | ) |
| Book value per common share (change in percent) | $ | 22.33 |
| $ | 21.91 |
| $ | 20.98 |
| $ | 20.43 |
| $ | 19.64 |
| 2 | % | 14 | % |
| (1) On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior. |
The Company's regulatory capital ratios remain well above current regulatory quantitative guidelines for "well-capitalized" institutions. At December 31, 2015, the Company had a Tier 1 leverage ratio of 11.51 percent, as compared to 11.65 percent at September 30, 2015. The decrease in the ratio resulted from the deployment of capital for balance sheet growth. At December 31, 2015, the Company had a common equity-to-assets ratio of 9.20 percent.
Earnings Conference Call
As previously announced, the Company's fourth quarter 2015 earnings call will be held Tuesday, January 26, 2016 at 11 a.m. (ET).
To join the call, please dial (877) 780-3381 toll free or (719) 457-2621, and use passcode 4668782. Please call at least 10 minutes before the conference is scheduled to begin. A replay will be available for five business days by calling (888) 203-1112 toll free or (719) 457-0820, using passcode 4668782.
The conference call will also be available as a live audiocast on the Investor Relations section of flagstar.com.
It will be archived on that site and will be available for replay and download. The slide presentation accompanying the conference call will be posted on the site.
About Flagstar
Flagstar Bancorp, Inc. (NYSE: FBC) is a $13.7 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, the largest bank headquartered in Michigan, provides commercial, small business, and consumer banking services through 99 branches in the state. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as through 10 retail centers in nine states. Flagstar is the 10th largest national originator of mortgage loans and a top 20 mortgage servicer, handling payments and record keeping for over $72.5 billion home loans for over 360,000 borrowers. For more information, please visit flagstar.com.
Use of Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release includes non-GAAP financial measures such as the ratio of total nonperforming assets to Tier 1 capital (to adjusted total assets) and estimated Basel III ratios. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the underlying performance and trends of Flagstar.
Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To mitigate these limitations, there are practices in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that the Company's performance is properly reflected to facilitate consistent period-to-period comparisons. Although the Company believes the non-GAAP financial measures disclosed in this report enhance investors' understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for those financial measures prepared in accordance with GAAP.
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 earnings release, conference call slides, or the Form 8-K related to this press release. Additional discussion of the use of non-GAAP measures can also be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission. These documents can all be found on the Company’s website at flagstar.com.
Forward-Looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Flagstar Bancorp, Inc.’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements can be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.
Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(Dollars in millions) |
| | | | | | | | | | | |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 |
| | (Unaudited) | | (Unaudited) | | |
| Assets | | | | | |
| Cash and cash equivalents | | | | | |
| Cash | $ | 54 |
| | $ | 65 |
| | $ | 47 |
|
| Interest-earning deposits | 154 |
| | 130 |
| | 89 |
|
| Total cash and cash equivalents | 208 |
| | 195 |
| | 136 |
|
| Investment securities available-for-sale | 1,294 |
| | 1,150 |
| | 1,672 |
|
| Investment securities held-to-maturity | 1,268 |
| | 1,108 |
| | — |
|
| Loans held-for-sale | 2,576 |
| | 2,408 |
| | 1,244 |
|
| Loans with government guarantees | 485 |
| | 509 |
| | 1,128 |
|
| Loans held-for-investment, net | | | | | |
| Loans held-for-investment | 6,352 |
| | 5,514 |
| | 4,448 |
|
| Less: allowance for loan losses | (187 | ) | | (197 | ) | | (297 | ) |
| Total loans held-for-investment, net | 6,165 |
| | 5,317 |
| | 4,151 |
|
| Mortgage servicing rights | 296 |
| | 294 |
| | 258 |
|
| Federal Home Loan Bank stock | 170 |
| | 113 |
| | 155 |
|
| Premises and equipment, net | 250 |
| | 243 |
| | 238 |
|
| Net deferred tax asset | 362 |
| | 372 |
| | 442 |
|
| Other assets | 641 |
| | 810 |
| | 416 |
|
| Total assets | $ | 13,715 |
| | $ | 12,519 |
| | $ | 9,840 |
|
| Liabilities and Stockholders' Equity | | | | | |
| Deposits | | | | | |
| Noninterest-bearing | $ | 1,574 |
| | $ | 1,749 |
| | $ | 1,209 |
|
| Interest-bearing | 6,361 |
| | 6,388 |
| | 5,860 |
|
| Total deposits | 7,935 |
| | 8,137 |
| | 7,069 |
|
| Federal Home Loan Bank advances | 3,541 |
| | 2,024 |
| | 514 |
|
| Long-term debt | 247 |
| | 279 |
| | 331 |
|
| Representation and warranty reserve | 40 |
| | 45 |
| | 53 |
|
| Other liabilities | 423 |
| | 530 |
| | 500 |
|
| Total liabilities | 12,186 |
| | 11,015 |
| | 8,467 |
|
| Stockholders' Equity | | | | | |
| Preferred stock | 267 |
| | 267 |
| | 267 |
|
| Common stock | 1 |
| | 1 |
| | 1 |
|
| Additional paid in capital | 1,486 |
| | 1,484 |
| | 1,482 |
|
| Accumulated other comprehensive income | 2 |
| | 12 |
| | 8 |
|
| Accumulated deficit | (227 | ) | | (260 | ) | | (385 | ) |
| Total stockholders' equity | 1,529 |
| | 1,504 |
| | 1,373 |
|
| Total liabilities and stockholders' equity | $ | 13,715 |
| | $ | 12,519 |
| | $ | 9,840 |
|
Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) (Unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Fourth Quarter 2015 Compared to: |
| | Three Months Ended | | Third Quarter 2015 | Fourth Quarter 2014 |
| | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | December 31,
2014 | | Amount | Percent | Amount | Percent |
| | | | | | | | | | | |
| Interest Income | | | | | | | | | | |
| Total interest income | $ | 95 |
| $ | 91 |
| $ | 90 |
| $ | 79 |
| $ | 72 |
| | $ | 4 |
| 4 | % | $ | 23 |
| 32 | % |
| Total interest expense | 19 |
| 18 |
| 17 |
| 14 |
| 11 |
| | 1 |
| 6 | % | 8 |
| 73 | % |
| Net interest income | 76 |
| 73 |
| 73 |
| 65 |
| 61 |
| | 3 |
| 4 | % | 15 |
| 25 | % |
| (Benefit) provision for loan losses | (1 | ) | (1 | ) | (13 | ) | (4 | ) | 5 |
| | — |
| — | % | (6 | ) | N/M |
|
| Net interest income after provision for loan losses | 77 |
| 74 |
| 86 |
| 69 |
| 56 |
| | 3 |
| 4 | % | 21 |
| 38 | % |
| Noninterest Income | | | | | | |
|
|
|
|
|
|
|
|
| Net gain on loan sales | 46 |
| 68 |
| 83 |
| 91 |
| 53 |
| | (22 | ) | (32 | )% | (7 | ) | (13 | )% |
| Loan fees and charges | 14 |
| 17 |
| 19 |
| 17 |
| 17 |
| | (3 | ) | (18 | )% | (3 | ) | (18 | )% |
| Deposit fees and charges | 6 |
| 7 |
| 6 |
| 6 |
| 6 |
| | (1 | ) | (14 | )% | — |
| — | % |
| Loan administration income | 7 |
| 8 |
| 7 |
| 4 |
| 5 |
| | (1 | ) | (13 | )% | 2 |
| 40 | % |
| Net return (loss) on the mortgage servicing asset | 9 |
| 12 |
| 9 |
| (2 | ) | 2 |
| | (3 | ) | (25 | )% | 7 |
| N/M |
|
| Net gain (loss) on sale of assets | — |
| 1 |
| (2 | ) | — |
| 2 |
| | (1 | ) | (100 | )% | (2 | ) | (100 | )% |
| Representation and warranty benefit | 6 |
| 6 |
| 5 |
| 2 |
| 6 |
| | — |
| — | % | — |
| — | % |
| Other noninterest income (loss) | 9 |
| 9 |
| (1 | ) | 1 |
| 7 |
| | — |
| — | % | 2 |
| 29 | % |
| Total noninterest income | 97 |
| 128 |
| 126 |
| 119 |
| 98 |
| | (31 | ) | (24 | )% | (1 | ) | (1 | )% |
| Noninterest Expense | | | | | | |
|
|
|
|
|
|
|
|
| Compensation and benefits | 59 |
| 58 |
| 59 |
| 61 |
| 59 |
| | 1 |
| 2 | % | — |
| — | % |
| Commissions | 8 |
| 10 |
| 11 |
| 10 |
| 9 |
| | (2 | ) | (20 | )% | (1 | ) | (11 | )% |
| Occupancy and equipment | 21 |
| 20 |
| 20 |
| 20 |
| 20 |
| | 1 |
| 5 | % | 1 |
| 5 | % |
| Asset resolution | 2 |
| — |
| 5 |
| 8 |
| 13 |
| | 2 |
| N/M |
| (11 | ) | (85 | )% |
| Federal insurance premiums | 5 |
| 6 |
| 6 |
| 6 |
| 5 |
| | (1 | ) | (17 | )% | — |
| — | % |
| Loan processing expense | 12 |
| 14 |
| 14 |
| 12 |
| 11 |
| | (2 | ) | (14 | )% | 1 |
| 9 | % |
| Legal and professional expense | 9 |
| 10 |
| 8 |
| 9 |
| 11 |
| | (1 | ) | (10 | )% | (2 | ) | (18 | )% |
| Other noninterest expense | 13 |
| 13 |
| 15 |
| 12 |
| 11 |
| | — |
| — | % | 2 |
| 18 | % |
| Total noninterest expense | 129 |
| 131 |
| 138 |
| 138 |
| 139 |
| | (2 | ) | (2 | )% | (10 | ) | (7 | )% |
| Income before income taxes | 45 |
| 71 |
| 74 |
| 50 |
| 15 |
| | (26 | ) | (37 | )% | 30 |
| N/M |
|
| Provision for income taxes | 12 |
| 24 |
| 28 |
| 18 |
| 4 |
| | (12 | ) | (50 | )% | 8 |
| N/M |
|
| Net income | $ | 33 |
| $ | 47 |
| $ | 46 |
| $ | 32 |
| $ | 11 |
| | $ | (14 | ) | (30 | )% | $ | 22 |
| N/M |
|
| Income per share | | | | | | |
|
|
|
|
|
|
|
|
| Basic | $ | 0.45 |
| $ | 0.70 |
| $ | 0.69 |
| $ | 0.43 |
| $ | 0.07 |
| | $ | (0.25 | ) | (36 | )% | $ | 0.38 |
| N/M |
|
| Diluted | $ | 0.44 |
| $ | 0.69 |
| $ | 0.68 |
| $ | 0.43 |
| $ | 0.07 |
| | $ | (0.25 | ) | (36 | )% | $ | 0.37 |
| N/M |
|
N/M - Not meaningful
Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) |
| | | | | | | | | | | | |
| | | | |
| | Year Ended | | Year Ended December 31, 2015 Compared to Year Ended December 31, 2014 |
| | December 31,
2015 | December 31,
2014 | | Amount | Percent |
| | (Unaudited) | | | | |
| Total interest income | $ | 355 |
| $ | 286 |
| | $ | 69 |
| 24 | % |
| Total interest expense | 68 |
| 39 |
| | 29 |
| 74 | % |
| Net interest income | 287 |
| 247 |
| | 40 |
| 16 | % |
| (Benefit) provision for loan losses | (19 | ) | 132 |
| | (151 | ) | N/M |
|
| Net interest income after provision for loan losses | 306 |
| 115 |
| | 191 |
| N/M |
|
| Noninterest Income | | | | | |
| Net gain on loan sales | 288 |
| 206 |
| | 82 |
| 40 | % |
| Loan fees and charges | 67 |
| 73 |
| | (6 | ) | (8 | )% |
| Deposit fees and charges | 25 |
| 22 |
| | 3 |
| 14 | % |
| Loan administration income | 26 |
| 24 |
| | 2 |
| 8 | % |
| Net return on the mortgage servicing asset | 28 |
| 24 |
| | 4 |
| 17 | % |
| Net (loss) gain on sale of assets | (1 | ) | 12 |
| | (13 | ) | N/M |
|
| Representation and warranty benefit (provision) | 19 |
| (10 | ) | | 29 |
| N/M |
|
| Other noninterest income | 18 |
| 10 |
| | 8 |
| 80 | % |
| Total noninterest income | 470 |
| 361 |
| | 109 |
| 30 | % |
| Noninterest Expense | | | | | |
| Compensation and benefits | 237 |
| 233 |
| | 4 |
| 2 | % |
| Commissions | 39 |
| 35 |
| | 4 |
| 11 | % |
| Occupancy and equipment | 81 |
| 80 |
| | 1 |
| 1 | % |
| Asset resolution | 15 |
| 57 |
| | (42 | ) | (74 | )% |
| Federal insurance premiums | 23 |
| 23 |
| | — |
| — | % |
| Loan processing expense | 52 |
| 37 |
| | 15 |
| 41 | % |
| Legal and professional expense | 36 |
| 51 |
| | (15 | ) | (29 | )% |
| Other noninterest expense | 53 |
| 63 |
| | (10 | ) | (16 | )% |
| Total noninterest expense | 536 |
| 579 |
| | (43 | ) | (7 | )% |
| Income (loss) before income taxes | 240 |
| (103 | ) | | 343 |
| N/M |
|
| Provision (benefit) for income taxes | 82 |
| (34 | ) | | 116 |
| N/M |
|
| Net income (loss) | 158 |
| (69 | ) | | 227 |
| N/M |
|
| Preferred stock accretion | — |
| (1 | ) | | 1 |
| (100 | )% |
| Net income (loss) | $ | 158 |
| $ | (70 | ) | | $ | 228 |
| N/M |
|
| Income (loss) per share | | | | | |
| Basic | $ | 2.27 |
| $ | (1.72 | ) | | $ | 3.99 |
| N/M |
|
| Diluted | $ | 2.24 |
| $ | (1.72 | ) | | $ | 3.96 |
| N/M |
|
N/M - Not meaningful
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in millions, except share data)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 | | December 31,
2015 | | December 31,
2014 |
| Mortgage loans originated (1) | $ | 5,824 |
| | $ | 7,876 |
| | $ | 6,603 |
| | $ | 29,402 |
| | $ | 24,608 |
|
| Mortgage loans sold and securitized | $ | 5,164 |
| | $ | 7,318 |
| | $ | 6,831 |
| | $ | 26,306 |
| | $ | 24,407 |
|
| Interest rate spread (2) | 2.54 | % | | 2.56 | % | | 2.67 | % | | 2.58 | % | | 2.80 | % |
| Net interest margin | 2.69 | % | | 2.75 | % | | 2.80 | % | | 2.74 | % | | 2.91 | % |
| Average common shares outstanding | 56,449,596 |
| | 56,436,026 |
| | 56,310,858 |
| | 56,426,977 |
| | 56,246,528 |
|
| Average fully diluted shares outstanding | 57,502,017 |
| | 57,207,503 |
| | 56,792,751 |
| | 57,164,523 |
| | 56,246,528 |
|
| Average interest-earning assets | $ | 11,240 |
| | $ | 10,693 |
| | $ | 8,725 |
| | $ | 10,436 |
| | $ | 8,440 |
|
| Average interest-paying liabilities | $ | 9,078 |
| | $ | 8,354 |
| | $ | 6,918 |
| | $ | 8,305 |
| | $ | 6,780 |
|
| Average stockholders' equity | $ | 1,547 |
| | $ | 1,510 |
| | $ | 1,395 |
| | $ | 1,486 |
| | $ | 1,406 |
|
| Return (loss) on average assets | 1.03 | % | | 1.52 | % | | 0.44 | % | | 1.32 | % | | (0.71 | )% |
| Return (loss) on average equity | 8.56 | % | | 12.41 | % | | 3.18 | % | | 10.63 | % | | (4.97 | )% |
| Efficiency ratio | 75.15 | % | | 65.00 | % | | 87.20 | % | | 70.89 | % | | 95.40 | % |
| Equity-to-assets ratio (average for the period) | 12.07 | % | | 12.27 | % | | 13.74 | % | | 12.43 | % | | 14.22 | % |
| Charge-offs to average LHFI (3) | 0.62 | % | | 1.84 | % | | 0.91 | % | | 1.85 | % | | 1.07 | % |
|
| | | | | | | | | | | |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 |
| Book value per common share | $ | 22.33 |
| | $ | 21.91 |
| | $ | 19.64 |
|
| Number of common shares outstanding | 56,483,258 |
| | 56,436,026 |
| | 56,332,307 |
|
| Mortgage loans subserviced for others | $ | 40,244 |
| | $ | 42,282 |
| | $ | 46,724 |
|
| Mortgage loans serviced for others | $ | 26,145 |
| | $ | 26,306 |
| | $ | 25,427 |
|
| Weighted average service fee (basis points) | 27.7 |
| | 28.3 |
| | 27.2 |
|
| Capitalized value of mortgage servicing rights | 1.13 | % | | 1.12 | % | | 1.01 | % |
| Mortgage servicing rights to Tier 1 capital | 20.63 | % | | 21.12 | % | | 21.80 | % |
| Ratio of allowance for loan losses to LHFI (3) | 3.00 | % | | 3.66 | % | | 7.01 | % |
| Ratio of nonperforming assets to total assets | 0.61 | % | | 0.64 | % | | 1.41 | % |
| Equity-to-assets ratio | 11.14 | % | | 12.01 | % | | 13.95 | % |
| Common equity-to-assets ratio | 9.20 | % | | 9.88 | % | | 11.24 | % |
| Number of bank branches | 99 |
| | 99 |
| | 107 |
|
| Number of FTE employees | 2,713 |
| | 2,677 |
| | 2,739 |
|
| |
| (1) | Includes residential first mortgage and second mortgage loans. |
| |
| (2) | Interest rate spread is the difference between the annualized yield earned on average interest-earning assets for the period and the annualized rate of interest paid on average interest-bearing liabilities for the period. |
| |
| (3) | Excludes loans carried under the fair value option. |
Flagstar Bancorp, Inc.
Earnings Per Share
(Dollars in millions, except share data)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 | | December 31,
2015 | | December 31,
2014 |
| Net income (loss) | $ | 33 |
| | $ | 47 |
| | $ | 11 |
| | $ | 158 |
| | $ | (69 | ) |
| Less: preferred stock accretion | — |
| | — |
| | — |
| | — |
| | (1 | ) |
| Net income (loss) from continuing operations | 33 |
| | 47 |
| | 11 |
| | 158 |
| | (70 | ) |
| Deferred cumulative preferred stock dividends | (8 | ) | | (8 | ) | | (7 | ) | | (30 | ) | | (26 | ) |
| Net income (loss) applicable to Common Stockholders | $ | 25 |
| | $ | 39 |
| | $ | 4 |
| | $ | 128 |
| | $ | (96 | ) |
| Weighted Average Shares | | | | | | | | | |
| Weighted average common shares outstanding | 56,449,596 |
| | 56,436,026 |
| | 56,310,858 |
| | 56,426,977 |
| | 56,246,528 |
|
| Effect of dilutive securities | | | | | | | | | |
| Warrants | 348,939 |
| | 339,478 |
| | 248,202 |
| | 305,484 |
| | — |
|
| Stock-based awards | 703,482 |
| | 431,999 |
| | 233,691 |
| | 432,062 |
| | — |
|
| Weighted average diluted common shares | 57,502,017 |
| | 57,207,503 |
| | 56,792,751 |
| | 57,164,523 |
| | 56,246,528 |
|
| Earnings (loss) per common share | | | | | | | | | |
| Net income (loss) applicable to Common Stockholders | $ | 0.45 |
| | $ | 0.70 |
| | $ | 0.07 |
| | $ | 2.27 |
| | $ | (1.72 | ) |
| Effect of dilutive securities | | | | | | | | | |
| Warrants | — |
| | — |
| | — |
| | (0.01 | ) | | — |
|
| Stock-based awards | (0.01 | ) | | (0.01 | ) | | — |
| | (0.02 | ) | | — |
|
| Diluted earnings (loss) per share | $ | 0.44 |
| | $ | 0.69 |
| | $ | 0.07 |
| | $ | 2.24 |
| | $ | (1.72 | ) |
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | December 31, 2015 | | September 30, 2015 | | December 31, 2014 |
| | 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 | $ | 2,484 |
| $ | 24 |
| 3.88 | % | | $ | 2,200 |
| $ | 22 |
| 3.94 | % | | $ | 1,687 |
| $ | 18 |
| 4.20 | % |
| Loans with government guarantees | 496 |
| 4 |
| 2.84 | % | | 547 |
| 5 |
| 3.37 | % | | 1,141 |
| 6 |
| 1.96 | % |
| Loans held-for-investment | | | | | | | | | | | |
Consumer loans (1) | 3,423 |
| 30 |
| 3.52 | % | | 3,367 |
| 30 |
| 3.67 | % | | 2,510 |
| 23 |
| 3.81 | % |
Commercial loans (1) | 2,219 |
| 21 |
| 3.77 | % | | 2,045 |
| 20 |
| 3.80 | % | | 1,521 |
| 14 |
| 3.62 | % |
| Total loans held-for-investment | 5,642 |
| 51 |
| 3.62 | % | | 5,412 |
| 50 |
| 3.72 | % | | 4,031 |
| 37 |
| 3.74 | % |
| Investment securities | 2,441 |
| 16 |
| 2.55 | % | | 2,313 |
| 14 |
| 2.50 | % | | 1,621 |
| 11 |
| 2.66 | % |
| Interest-earning deposits | 177 |
| — |
| 0.49 | % | | 221 |
| — |
| 0.53 | % | | 245 |
| — |
| 0.23 | % |
| Total interest-earning assets | 11,240 |
| $ | 95 |
| 3.36 | % | | 10,693 |
| $ | 91 |
| 3.42 | % | | 8,725 |
| $ | 72 |
| 3.30 | % |
| Other assets | 1,585 |
| | | | 1,612 |
| | | | 1,429 |
| | |
| Total assets | $ | 12,825 |
| | | | $ | 12,305 |
| | | | $ | 10,154 |
| | |
| Interest-Bearing Liabilities | | | | | | | | | | | |
| Retail deposits | | | | | | | | | | | |
| Demand deposits | $ | 431 |
| $ | — |
| 0.13 | % | | $ | 429 |
| $ | — |
| 0.14 | % | | $ | 421 |
| $ | — |
| 0.14 | % |
| Savings deposits | 3,725 |
| 8 |
| 0.84 | % | | 3,732 |
| 8 |
| 0.84 | % | | 3,394 |
| 6 |
| 0.68 | % |
| Money market deposits | 272 |
| — |
| 0.39 | % | | 262 |
| — |
| 0.33 | % | | 257 |
| — |
| 0.22 | % |
| Certificates of deposit | 813 |
| 2 |
| 0.88 | % | | 785 |
| 2 |
| 0.80 | % | | 837 |
| 1 |
| 0.68 | % |
| Total retail deposits | 5,241 |
| 10 |
| 0.76 | % | | 5,208 |
| 10 |
| 0.75 | % | | 4,909 |
| 7 |
| 0.61 | % |
| Government deposits | | | | | | | | | | | |
| Demand deposits | 304 |
| — |
| 0.40 | % | | 286 |
| — |
| 0.39 | % | | 230 |
| — |
| 0.39 | % |
| Savings deposits | 401 |
| 1 |
| 0.52 | % | | 445 |
| 1 |
| 0.52 | % | | 386 |
| 1 |
| 0.52 | % |
| Certificates of deposit | 410 |
| 1 |
| 0.45 | % | | 335 |
| — |
| 0.40 | % | | 373 |
| — |
| 0.36 | % |
| Total government deposits | 1,115 |
| 2 |
| 0.46 | % | | 1,066 |
| 1 |
| 0.45 | % | | 989 |
| 1 |
| 0.43 | % |
| Total interest-bearing deposits | 6,356 |
| 12 |
| 0.71 | % | | 6,274 |
| 11 |
| 0.70 | % | | 5,898 |
| 8 |
| 0.58 | % |
| Federal Home Loan Bank advances | 2,445 |
| 5 |
| 0.92 | % | | 1,795 |
| 5 |
| 1.17 | % | | 773 |
| 1 |
| 0.24 | % |
| Other | 277 |
| 2 |
| 2.66 | % | | 285 |
| 2 |
| 2.51 | % | | 247 |
| 2 |
| 2.84 | % |
| Total interest-bearing liabilities | 9,078 |
| 19 |
| 0.83 | % | | 8,354 |
| 18 |
| 0.86 | % | | 6,918 |
| 11 |
| 0.62 | % |
Noninterest-bearing deposits (2) | 1,776 |
| | | | 1,986 |
| | | | 1,247 |
| | |
| Other liabilities | 424 |
| | | | 455 |
| | | | 594 |
| | |
| Stockholders' equity | 1,547 |
| | | | 1,510 |
| | | | 1,395 |
| | |
| Total liabilities and stockholder's equity | $ | 12,825 |
| | | | $ | 12,305 |
| | | | $ | 10,154 |
| | |
| Net interest-earning assets | $ | 2,162 |
| | | | $ | 2,339 |
| | | | $ | 1,807 |
| | |
| Net interest income | | $ | 76 |
| | | | $ | 73 |
| | | | $ | 61 |
| |
Interest rate spread (3) | | | 2.54 | % | | | | 2.56 | % | | | | 2.67 | % |
Net interest margin (4) | | | 2.69 | % | | | | 2.75 | % | | | | 2.80 | % |
| Ratio of average interest-earning assets to interest-bearing liabilities | | | 123.8 | % | | | | 128.0 | % | | | | 126.1 | % |
| Total average deposits | $ | 8,132 |
| | | | $ | 8,260 |
| | | | $ | 7,146 |
| | |
| |
| (1) | Consumer loans include: residential first mortgage, second mortgage, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and warehouse lending 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 rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities. |
| |
| (4) | Net interest margin is net interest income divided by average interest-earning assets. |
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | |
| | Year Ended |
| | December 31, 2015 | | December 31, 2014 |
| | Average Balance | Interest | Annualized Yield/Rate | | Average Balance | Interest | Annualized Yield/Rate |
| | |
| Interest-Earning Assets | | | | | | | |
| Loans held-for-sale | $ | 2,188 |
| $ | 85 |
| 3.90 | % | | $ | 1,534 |
| $ | 65 |
| 4.24 | % |
| Loans with government guarantees | 633 |
| 18 |
| 2.86 | % | | 1,216 |
| 29 |
| 2.39 | % |
| Loans held-for-investment | | | | | | | |
Consumer loans (1) | 3,083 |
| 114 |
| 3.68 | % | | 2,681 |
| 103 |
| 3.85 | % |
Commercial loans (1) | 1,993 |
| 78 |
| 3.88 | % | | 1,294 |
| 49 |
| 3.70 | % |
| Total loans held-for-investment | 5,076 |
| 192 |
| 3.76 | % | | 3,975 |
| 152 |
| 3.80 | % |
| Investment securities | 2,305 |
| 59 |
| 2.55 | % | | 1,496 |
| 39 |
| 2.61 | % |
| Interest-earning deposits | 234 |
| 1 |
| 0.50 | % | | 219 |
| 1 |
| 0.25 | % |
| Total interest-earning assets | 10,436 |
| $ | 355 |
| 3.39 | % | | 8,440 |
| $ | 286 |
| 3.38 | % |
| Other assets | 1,520 |
| | | | 1,446 |
| | |
| Total assets | $ | 11,956 |
| | | | $ | 9,886 |
| | |
| Interest-Bearing Liabilities | | | | | | | |
| Retail deposits | | | | | | | |
| Demand deposits | $ | 429 |
| $ | 1 |
| 0.14 | % | | $ | 422 |
| $ | 1 |
| 0.14 | % |
| Savings deposits | 3,693 |
| 30 |
| 0.82 | % | | 3,139 |
| 18 |
| 0.61 | % |
| Money market deposits | 258 |
| 1 |
| 0.31 | % | | 266 |
| 1 |
| 0.20 | % |
| Certificates of deposit | 787 |
| 6 |
| 0.77 | % | | 915 |
| 6 |
| 0.73 | % |
| Total retail deposits | 5,167 |
| 38 |
| 0.73 | % | | 4,742 |
| 26 |
| 0.57 | % |
| Government deposits | | | | | | | |
| Demand deposits | 257 |
| 1 |
| 0.39 | % | | 182 |
| 1 |
| 0.38 | % |
| Savings deposits | 405 |
| 2 |
| 0.52 | % | | 320 |
| 2 |
| 0.51 | % |
| Certificates of deposit | 358 |
| 1 |
| 0.39 | % | | 349 |
| 1 |
| 0.33 | % |
| Total government deposits | 1,020 |
| 4 |
| 0.44 | % | | 851 |
| 4 |
| 0.41 | % |
| Total interest-bearing deposits | 6,187 |
| 42 |
| 0.68 | % | | 5,593 |
| 30 |
| 0.54 | % |
| Federal Home Loan Bank advances | 1,811 |
| 19 |
| 1.00 | % | | 939 |
| 2 |
| 0.23 | % |
| Other | 307 |
| 7 |
| 2.42 | % | | 248 |
| 7 |
| 2.72 | % |
| Total interest-bearing liabilities | 8,305 |
| 68 |
| 0.82 | % | | 6,780 |
| 39 |
| 0.58 | % |
Noninterest-bearing deposits (2) | 1,690 |
| | | | 1,141 |
| | |
| Other liabilities | 475 |
| | | | 559 |
| | |
| Stockholders' equity | 1,486 |
| | | | 1,406 |
| | |
| Total liabilities and stockholder's equity | $ | 11,956 |
| | | | $ | 9,886 |
| | |
| Net interest-earning assets | $ | 2,131 |
| | | | $ | 1,660 |
| | |
| Net interest income | | $ | 287 |
| | | | $ | 247 |
| |
Interest rate spread (3) | | | 2.58 | % | | | | 2.80 | % |
Net interest margin (4) | | | 2.74 | % | | | | 2.91 | % |
| Ratio of average interest-earning assets to interest-bearing liabilities | | | 125.7 | % | | | | 124.5 | % |
| Total average deposits | $ | 7,877 |
| | | | $ | 6,734 |
| | |
| | | | | | | | |
| |
| (1) | Consumer loans include: residential first mortgage, second mortgage, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and warehouse lending 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 rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities. |
| |
| (4) | Net interest margin is net interest income divided by average interest-earning assets. |
Gain on Loan Sales
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | December 31,
2015 | | September 30,
2015 | | June 30,
2015 | | March 31,
2015 | | December 31,
2014 |
| | (Dollars in millions) |
| Net gain on loan sales | $ | 46 |
| | $ | 68 |
| | $ | 83 |
| | $ | 91 |
| | $ | 53 |
|
| Mortgage rate lock commitments (gross) | $ | 6,258 |
| | $ | 8,025 |
| | $ | 8,400 |
| | $ | 9,035 |
| | $ | 7,605 |
|
| Loans sold and securitized | $ | 5,164 |
| | $ | 7,318 |
| | $ | 7,571 |
| | $ | 6,254 |
| | $ | 6,831 |
|
Mortgage rate lock commitments (fallout-adjusted) (1) | $ | 5,027 |
| | $ | 6,495 |
| | $ | 6,804 |
| | $ | 7,185 |
| | $ | 6,156 |
|
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) | 0.92 | % | | 1.05 | % | | 1.21 | % | | 1.27 | % | | 0.87 | % |
|
| | | | | | | |
| | Year Ended |
| | December 31,
2015 | | December 31,
2014 |
| | (Dollars in millions) |
| Net gain on loan sales | $ | 288 |
| | $ | 206 |
|
| Mortgage rate lock commitments (gross) | $ | 31,718 |
| | $ | 29,546 |
|
| Loans sold and securitized | $ | 26,306 |
| | $ | 24,407 |
|
Mortgage rate lock commitments (fallout-adjusted) (1) | $ | 25,512 |
| | $ | 24,007 |
|
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) | 1.13 | % | | 0.86 | % |
| |
| (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. |
Regulatory Capital - Bancorp
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31,
2015 | | September 30,
2015 | | June 30,
2015 | | March 31,
2015 | | December 31,
2014 |
| | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio |
| Tier 1 leverage (to adjusted tangible assets) (1) | $ | 1,435 |
| 11.51 | % | | $ | 1,393 |
| 11.65 | % | | $ | 1,309 |
| 11.47 | % | | $ | 1,257 |
| 12.02 | % | | $ | 1,184 |
| 12.59 | % |
| Total adjusted tangible asset base | $ | 12,474 |
| | | $ | 11,957 |
| | | $ | 11,406 |
| | | $ | 10,453 |
| | | $ | 9,403 |
| |
| Tier 1 common equity (to risk weighted assets) (1) | $ | 1,065 |
| 14.09 | % | | $ | 1,024 |
| 14.93 | % | | $ | 954 |
| 14.56 | % | | $ | 909 |
| 15.38 | % | | N/A | N/A |
| Tier 1 capital (to risk weighted assets) (1) | $ | 1,435 |
| 18.98 | % | | $ | 1,393 |
| 20.32 | % | | $ | 1,309 |
| 19.97 | % | | $ | 1,257 |
| 21.26 | % | | $ | 1,184 |
| 22.81 | % |
| Total capital (to risk weighted assets) | $ | 1,534 |
| 20.28 | % | | $ | 1,483 |
| 21.64 | % | | $ | 1,396 |
| 21.30 | % | | $ | 1,336 |
| 22.61 | % | | $ | 1,252 |
| 24.12 | % |
| Risk weighted asset base | $ | 7,561 |
| | | $ | 6,857 |
| | | $ | 6,553 |
| | | $ | 5,909 |
| | | $ | 5,190 |
| |
| |
| (1) | On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior. |
N/A - Not applicable.
Regulatory Capital - Bank
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31,
2015 | | September 30,
2015 | | June 30,
2015 | | March 31,
2015 | | December 31,
2014 |
| | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio |
| Tier 1 leverage (to adjusted tangible assets) (1) | $ | 1,472 |
| 11.79 | % | | $ | 1,426 |
| 11.91 | % | | $ | 1,337 |
| 11.70 | % | | $ | 1,278 |
| 12.21 | % | | $ | 1,167 |
| 12.43 | % |
| Total adjusted tangible asset base | $ | 12,491 |
| | | $ | 11,975 |
| | | $ | 11,424 |
| | | $ | 10,471 |
| | | $ | 9,392 |
| |
| Tier 1 common equity (to risk weighted assets) (1) | $ | 1,472 |
| 19.42 | % | | $ | 1,426 |
| 20.75 | % | | $ | 1,337 |
| 20.35 | % | | $ | 1,278 |
| 21.58 | % | | N/A | N/A |
| Tier 1 capital (to risk weighted assets) (1) | $ | 1,472 |
| 19.42 | % | | $ | 1,426 |
| 20.75 | % | | $ | 1,337 |
| 20.35 | % | | $ | 1,278 |
| 21.58 | % | | $ | 1,167 |
| 22.54 | % |
| Total capital (to risk weighted assets) | $ | 1,570 |
| 20.71 | % | | $ | 1,516 |
| 22.05 | % | | $ | 1,423 |
| 21.66 | % | | $ | 1,357 |
| 22.91 | % | | $ | 1,235 |
| 23.85 | % |
| Risk weighted asset base | $ | 7,582 |
| | | $ | 6,874 |
| | | $ | 6,570 |
| | | $ | 5,925 |
| | | $ | 5,179 |
| |
| |
| (1) | On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior. |
N/A - Not applicable.
|
| | | | | | | | | | | | | | | | | |
Loan Originations (Dollars in millions) (Unaudited) |
| | Three Months Ended |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 |
| Consumer loans | | | | | | | | |
Mortgage (1) | $ | 5,824 |
| 96.0 | % | | $ | 7,876 |
| 97.9 | % | | $ | 6,603 |
| 98.5 | % |
Other consumer (2) | 39 |
| 0.6 | % | | 39 |
| 0.5 | % | | 27 |
| 0.4 | % |
| Total consumer loans | 5,863 |
| 96.6 | % | | 7,915 |
| 98.4 | % | | 6,630 |
| 98.9 | % |
Commercial loans (3) | 205 |
| 3.4 | % | | 131 |
| 1.6 | % | | 76 |
| 1.1 | % |
| Total loan originations | $ | 6,068 |
| 100.0 | % | | $ | 8,046 |
| 100.0 | % | | $ | 6,706 |
| 100.0 | % |
|
| | | | | | | | | | | |
| | Year Ended |
| | December 31,
2015 | | December 31,
2014 |
Mortgage (1) | $ | 29,402 |
| 98.2 | % | | $ | 24,607 |
| 98.0 | % |
Other consumer (2) | 132 |
| 0.4 | % | | 93 |
| 0.4 | % |
| Total consumer loans | 29,534 |
| 98.6 | % | | 24,700 |
| 98.4 | % |
Commercial loans (3) | 415 |
| 1.4 | % | | 398 |
| 1.6 | % |
| Total loan originations | $ | 29,949 |
| 100.0 | % | | $ | 25,098 |
| 100.0 | % |
| |
| (1) | Includes residential first mortgage and second mortgage loans. |
| |
| (2) | Other consumer loans include: HELOC and other consumer loans. |
| |
| (3) | Commercial loans include: commercial real estate and commercial and industrial loans. |
Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 |
| Consumer loans | | | | | | | | |
| Residential first mortgage | $ | 3,100 |
| 48.8 | % | | $ | 2,726 |
| 49.5 | % | | $ | 2,193 |
| 49.2 | % |
| Second mortgage | 135 |
| 2.1 | % | | 140 |
| 2.5 | % | | 149 |
| 3.4 | % |
| HELOC | 384 |
| 6.0 | % | | 405 |
| 7.3 | % | | 257 |
| 5.8 | % |
| Other | 31 |
| 0.5 | % | | 32 |
| 0.6 | % | | 31 |
| 0.7 | % |
| Total consumer loans | 3,650 |
| 57.5 | % | | 3,303 |
| 59.9 | % | | 2,630 |
| 59.1 | % |
| Commercial loans | | | | | | | | |
| Commercial real estate | 814 |
| 12.8 | % | | 707 |
| 12.8 | % | | 620 |
| 13.9 | % |
| Commercial and industrial | 552 |
| 8.7 | % | | 493 |
| 8.9 | % | | 429 |
| 9.7 | % |
| Warehouse lending | 1,336 |
| 21.0 | % | | 1,011 |
| 18.4 | % | | 769 |
| 17.3 | % |
| Total commercial loans | 2,702 |
| 42.5 | % | | 2,211 |
| 40.1 | % | | 1,818 |
| 40.9 | % |
| Total loans held-for-investment | $ | 6,352 |
| 100.0 | % | | $ | 5,514 |
| 100.0 | % | | $ | 4,448 |
| 100.0 | % |
Residential Loans Serviced
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 |
| | Unpaid Principal Balance | Number of accounts | | Unpaid Principal Balance | Number of accounts | | Unpaid Principal Balance | Number of accounts |
Serviced for own loan portfolio (1) | $ | 6,088 |
| 30,683 |
| | $ | 5,707 |
| 29,764 |
| | $ | 4,521 |
| 26,268 |
|
| Serviced for others | 26,145 |
| 118,662 |
| | 26,306 |
| 118,702 |
| | 25,427 |
| 117,881 |
|
Subserviced for others (2) | 40,244 |
| 211,740 |
| | 42,282 |
| 220,648 |
| | 46,724 |
| 238,498 |
|
| Total residential loans serviced | $ | 72,477 |
| 361,085 |
| | $ | 74,295 |
| 369,114 |
| | $ | 76,672 |
| 382,647 |
|
| |
| (1) | Includes loans held-for-investment (residential first mortgage, second mortgage and HELOC), loans-held-for-sale (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets. |
| |
| (2) | Does not include temporary short-term subservicing performed as a result of sales of servicing-released mortgage servicing rights. Includes repossessed assets. |
Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 | | December 31,
2015 | | December 31,
2014 |
| Beginning balance | $ | 197 |
| | $ | 222 |
| | $ | 301 |
| | $ | 297 |
| | $ | 207 |
|
| Provision (benefit) for loan losses | (1 | ) | | (1 | ) | | 5 |
| | (19 | ) | | 132 |
|
| Charge-offs | | | | | | | | | |
| Consumer loans | | | | | | | | | |
| Residential first mortgage | (7 | ) | | (21 | ) | | (9 | ) | | (87 | ) | | (38 | ) |
| Second mortgage | (2 | ) | | (1 | ) | | — |
| | (4 | ) | | (3 | ) |
| HELOC | (1 | ) | | (1 | ) | | (1 | ) | | (3 | ) | | (6 | ) |
| Other | (1 | ) | | (1 | ) | | — |
| | (4 | ) | | (2 | ) |
| Total consumer loans | (11 | ) | | (24 | ) | | (10 | ) | | (98 | ) | | (49 | ) |
| Commercial loans | | | | | | | | | |
| Commercial real estate | — |
| | — |
| | — |
| | — |
| | (3 | ) |
| Commercial and industrial | — |
| | (3 | ) | | — |
| | (3 | ) | | — |
|
| Total commercial loans | — |
| | (3 | ) | | — |
| | (3 | ) | | (3 | ) |
| Total charge-offs | (11 | ) | | (27 | ) | | (10 | ) | | (101 | ) | | (52 | ) |
| Recoveries | | | | | | | | | |
| Consumer loans | | | | | | | | | |
| Residential first mortgage | — |
| | 1 |
| | — |
| | 3 |
| | 3 |
|
| Second mortgage | 1 |
| | 1 |
| | — |
| | 2 |
| | 1 |
|
| Other | 1 |
| | 1 |
| | 1 |
| | 3 |
| | 3 |
|
| Total consumer loans | 2 |
| | 3 |
| | 1 |
| | 8 |
| | 7 |
|
| Commercial loans | | | | | | | | | |
| Commercial real estate | — |
| | — |
| | — |
| | 2 |
| | 3 |
|
| Total commercial loans | — |
| | — |
| | — |
| | 2 |
| | 3 |
|
| Total recoveries | 2 |
| | 3 |
| | 1 |
| | 10 |
| | 10 |
|
| Charge-offs, net of recoveries | (9 | ) | | (24 | ) | | (9 | ) | | (91 | ) | | (42 | ) |
| Ending balance | $ | 187 |
| | $ | 197 |
| | $ | 297 |
| | $ | 187 |
| | $ | 297 |
|
Net charge-off ratio (annualized) (1) | 0.62 | % | | 1.84 | % | | 0.91 | % | | 1.85 | % | | 1.07 | % |
Net charge-off ratio, adjusted (annualized) (1)(2) | 0.51 | % | | 0.61 | % | | 0.60 | % | | 0.45 | % | | 0.77 | % |
Net charge-off ratio (annualized) by loan type (1) | | | | | | | | | |
| Residential first mortgage | 1.03 | % | | 2.88 | % | | 1.58 | % | | 3.34 | % | | 1.47 | % |
| Second mortgage | 1.89 | % | | 1.04 | % | | 1.07 | % | | 1.72 | % | | 2.73 | % |
| HELOC and consumer | 0.86 | % | | 1.35 | % | | 0.78 | % | | 1.18 | % | | 3.39 | % |
| Commercial real estate | — | % | | (0.03 | )% | | (0.08 | )% | | (0.29 | )% | | (0.16 | )% |
| Commercial and industrial | (0.01 | )% | | 2.69 | % | | (0.03 | )% | | 0.71 | % | | (0.05 | )% |
| |
| (1) | Excludes loans carried under the fair value option. |
| |
| (2) | Excludes charge-offs of $2 million, $16 million and $3 million, related to the sale of nonperforming loans and TDRs during the three months ended December 31, 2015, September 30, 2015 and December 31, 2014, respectively, and $69 million and $11 million during the years ended December 31, 2015 and 2014, respectively. |
Representation and Warranty Reserve
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Year Ended |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 | | December 31,
2015 | | December 31,
2014 |
| Balance, beginning of period | $ | 45 |
| | $ | 48 |
| | $ | 57 |
| | $ | 53 |
| | $ | 54 |
|
| Provision (release) | | | | | | | | | |
| | Charged to gain on sale for current loan sales | 1 |
| | 2 |
| | 2 |
| | 7 |
| | 7 |
|
| | Charged to representation and warranty (benefit) provision | (6 | ) | | (6 | ) | | (6 | ) | | (19 | ) | | 10 |
|
| | Total | (5 | ) | | (4 | ) | | (4 | ) | | (12 | ) | | 17 |
|
| Charge-offs, net | — |
| | 1 |
| | — |
| | (1 | ) | | (18 | ) |
| Balance, end of period | $ | 40 |
| | $ | 45 |
|
| $ | 53 |
| | $ | 40 |
| | $ | 53 |
|
Composition of Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | |
| December 31, 2015 | Collectively Evaluated Reserves | | Individually Evaluated Reserves | | Total |
| Consumer loans | | | | | |
| Residential first mortgage | $ | 93 |
| | $ | 22 |
| | $ | 115 |
|
| Second mortgage | 5 |
| | 6 |
| | 11 |
|
| HELOC | 20 |
| | 1 |
| | 21 |
|
| Other | 2 |
| | 1 |
| | 3 |
|
| Total consumer loans | 120 |
| | 30 |
| | 150 |
|
| Commercial loans | | | | | |
| Commercial real estate | 18 |
| | — |
| | 18 |
|
| Commercial and industrial | 13 |
| | — |
| | 13 |
|
| Warehouse lending | 6 |
| | — |
| | 6 |
|
| Total commercial loans | 37 |
| | — |
| | 37 |
|
| Total allowance for loan losses | $ | 157 |
| | $ | 30 |
| | $ | 187 |
|
|
| | | | | | | | | | | |
| September 30, 2015 | Collectively Evaluated Reserves | | Individually Evaluated Reserves | | Total |
| Consumer loans | | | | | |
| Residential first mortgage | $ | 108 |
| | $ | 21 |
| | $ | 129 |
|
| Second mortgage | 6 |
| | 7 |
| | 13 |
|
| HELOC | 22 |
| | 1 |
| | 23 |
|
| Other | 1 |
| | — |
| | 1 |
|
| Total consumer loans | 137 |
| | 29 |
| | 166 |
|
| Commercial loans | | | | | |
| Commercial real estate | 13 |
| | — |
| | 13 |
|
| Commercial and industrial | 14 |
| | — |
| | 14 |
|
| Warehouse lending | 4 |
| | — |
| | 4 |
|
| Total commercial loans | 31 |
| | — |
| | 31 |
|
| Total allowance for loan losses | $ | 168 |
| | $ | 29 |
| | $ | 197 |
|
Nonperforming Loans and Assets
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 |
| Nonperforming loans | $ | 31 |
| | $ | 37 |
| | $ | 74 |
|
| Nonperforming TDRs | 7 |
| | 6 |
| | 29 |
|
| Nonperforming TDRs at inception but performing for less than six months | 28 |
| | 20 |
| | 17 |
|
| Total nonperforming loans held-for-investment | 66 |
| | 63 |
| | 120 |
|
| Real estate and other nonperforming assets, net | 17 |
| | 17 |
| | 19 |
|
Nonperforming assets held-for-investment, net (1) | $ | 83 |
| | $ | 80 |
| | $ | 139 |
|
| | | | | | |
| Ratio of nonperforming assets to total assets | 0.61 | % | | 0.64 | % | | 1.41 | % |
| Ratio of nonperforming loans held-for-investment to loans held-for-investment | 1.05 | % | | 1.15 | % | | 2.71 | % |
| Ratio of nonperforming assets to loans held-for-investment and repossessed assets | 1.32 | % | | 1.45 | % | | 3.12 | % |
| |
| (1) | Does not include nonperforming loans held-for-sale of $12 million, $14 million and $15 million at December 31, 2015, September 30, 2015, December 31, 2014, respectively. |
Asset Quality - Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | 30-59 Days Past Due | 60-89 Days Past Due | Greater than 90 days (1) | Total Past Due | Total Investment Loans |
| December 31, 2015 | | | | | |
| Consumer loans | $ | 10 |
| $ | 4 |
| $ | 64 |
| $ | 78 |
| $ | 3,650 |
|
| Commercial loans | — |
| — |
| 2 |
| 2 |
| 2,702 |
|
| Total loans | $ | 10 |
| $ | 4 |
| $ | 66 |
| $ | 80 |
| $ | 6,352 |
|
| September 30, 2015 | | | | | |
| Consumer loans | $ | 13 |
| $ | 8 |
| $ | 60 |
| $ | 81 |
| $ | 3,303 |
|
| Commercial loans | — |
| — |
| 3 |
| 3 |
| 2,211 |
|
| Total loans | $ | 13 |
| $ | 8 |
| $ | 63 |
| $ | 84 |
| $ | 5,514 |
|
| December 31, 2014 | | | | | |
| Consumer loans | $ | 34 |
| $ | 10 |
| $ | 120 |
| $ | 164 |
| $ | 2,630 |
|
| Commercial loans | — |
| — |
| — |
| — |
| 1,818 |
|
| Total loans | $ | 34 |
| $ | 10 |
| $ | 120 |
| $ | 164 |
| $ | 4,448 |
|
| |
| (1) | Includes performing nonaccrual loans that are less than 90 days delinquent and for which interest cannot be accrued. |
Troubled Debt Restructurings
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | TDRs |
| | Performing | | Nonperforming | | Nonperforming TDRs at inception but performing for less than six months | | Total |
| December 31, 2015 | |
| Consumer loans | $ | 101 |
| | $ | 7 |
| | $ | 28 |
| | $ | 136 |
|
| Commercial loans | — |
| | — |
| | — |
| | — |
|
| Total TDR loans | $ | 101 |
| | $ | 7 |
| | $ | 28 |
| | $ | 136 |
|
| September 30, 2015 | | | | | | | |
| Consumer loans | $ | 97 |
| | $ | 6 |
| | $ | 20 |
| | $ | 123 |
|
| Commercial loans | — |
| | — |
| | — |
| | — |
|
| Total TDR loans | $ | 97 |
| | $ | 6 |
| | $ | 20 |
| | $ | 123 |
|
| December 31, 2014 | | | | | | | |
| Consumer loans | $ | 361 |
| | $ | 29 |
| | $ | 17 |
| | $ | 407 |
|
| Commercial loans | 1 |
| | — |
| | — |
| | 1 |
|
| Total TDR loans | $ | 362 |
| | $ | 29 |
| | $ | 17 |
| | $ | 408 |
|
Non-GAAP Reconciliation
(Dollars in millions)
(Unaudited)
Nonperforming assets / Tier 1 + Allowance for Loan Losses. The ratio of nonperforming assets to Tier 1 capital and allowance for loan losses divides the total level of nonperforming assets held for investment by Tier 1 capital (to adjusted total assets), as defined by bank regulations, plus allowance for loan losses. We believe these measurements are meaningful measures of capital adequacy used by investors, regulators, management, and others to evaluate the adequacy of capital in comparison to other companies within the industry.
|
| | | | | | | | | | | |
| | December 31,
2015 | | September 30,
2015 | | December 31,
2014 |
| Nonperforming assets / Tier 1 capital + allowance for loan losses | (Dollars in millions) (Unaudited) |
| Nonperforming assets | $ | 83 |
| | $ | 80 |
| | $ | 139 |
|
| Tier 1 capital | 1,435 |
| | 1,393 |
| | 1,184 |
|
| Allowance for loan losses | (187 | ) | | (197 | ) | | (297 | ) |
| Tier 1 capital + allowance for loan losses | $ | 1,622 |
| | $ | 1,590 |
| | $ | 1,481 |
|
| Nonperforming assets / Tier 1 capital + allowance for loan losses | 5.1 | % | | 5.0 | % | | 9.4 | % |
| | | | | | |
Basel III (transitional) to Basel III (fully phased-in) reconciliation. On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior. 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. We have transitioned to the Basel III framework beginning in January 2015 and are subject to a phase-in period extending through 2018. Accordingly, the calculations provided below are estimates. These measures are considered to be non-GAAP financial measures because they are not formally defined by GAAP and the Basel III implementation regulations will not be fully phased-in until January 1, 2019. The regulations are subject to change as clarifying guidance becomes available and the calculations currently include our interpretations of the requirements including informal feedback received through the regulatory process. Other entities may calculate the Basel III ratios differently from our calculations based on their interpretation of the guidelines. Since analysts and banking regulators may assess our capital adequacy using the Basel III framework, we believe that it is useful to provide investors information enabling them to assess our capital adequacy on the same basis.
|
| | | | | | | | | | | | | | | |
| December 31, 2015 | Common Equity Tier 1 (to Risk Weighted Assets) | | Tier 1 Leverage (to Adjusted Tangible Assets) | | Tier 1 Capital (to Risk Weighted Assets) | | Total Risk-Based Capital (to Risk Weighted Assets) |
| | (Dollars in millions) (Unaudited) |
| Flagstar Bancorp (the Company) | | | | | | | |
Regulatory capital – Basel III (transitional) to Basel III (fully phased-in) (1) | | | | | | | |
| Basel III (transitional) | $ | 1,065 |
| | $ | 1,435 |
| | $ | 1,435 |
| | $ | 1,534 |
|
| Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components | (360 | ) | | (209 | ) | | (209 | ) | | (209 | ) |
Basel III (fully phased-in) capital (1) | $ | 705 |
| | $ | 1,226 |
| | $ | 1,226 |
| | $ | 1,325 |
|
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1) | | | | | | | |
| Basel III assets (transitional) | $ | 7,561 |
| | $ | 12,474 |
| | $ | 7,561 |
| | $ | 7,561 |
|
| Net change in assets | (60 | ) | | (224 | ) | | (60 | ) | | (60 | ) |
Basel III (fully phased-in) assets (1) | $ | 7,501 |
| | $ | 12,250 |
| | $ | 7,501 |
| | $ | 7,501 |
|
| Capital ratios | | | | | | | |
| Basel III (transitional) | 14.09 | % | | 11.51 | % | | 18.98 | % | | 20.28 | % |
Basel III (fully phased-in) (1) | 9.40 | % | | 10.01 | % | | 16.35 | % | | 17.67 | % |
| | | | | | | | |
| |
| (1) | On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014. |
|
| | | | | | | | | | | | | | | |
| December 31, 2015 | Common Equity Tier 1 (to Risk Weighted Assets) | | Tier 1 Leverage (to Adjusted Tangible Assets) | | Tier 1 Capital (to Risk Weighted Assets) | | Total Risk-Based Capital (to Risk Weighted Assets) |
| Flagstar Bank (the Bank) | (Dollars in millions) (Unaudited) |
Regulatory capital – Basel III (transitional) to Basel III (fully phased-in) (1) | | | | | | | |
| Basel III (transitional) | $ | 1,472 |
| | $ | 1,472 |
| | $ | 1,472 |
| | $ | 1,570 |
|
| Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components | (160 | ) | | (160 | ) | | (160 | ) | | (159 | ) |
Basel III (fully phased-in) capital (1) | $ | 1,312 |
| | $ | 1,312 |
| | $ | 1,312 |
| | $ | 1,411 |
|
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1) | | | | | | | |
| Basel III assets (transitional) | $ | 7,582 |
| | $ | 12,491 |
| | $ | 7,582 |
| | $ | 7,582 |
|
| Net change in assets | 148 |
| | (160 | ) | | 148 |
| | 148 |
|
Basel III (fully phased-in) assets (1) | $ | 7,730 |
| | $ | 12,331 |
| | $ | 7,730 |
| | $ | 7,730 |
|
| Capital ratios | | | | | | | |
| Basel III (transitional) | 19.42 | % | | 11.79 | % | | 19.42 | % | | 20.71 | % |
Basel III (fully phased-in) (1) | 16.98 | % | | 10.64 | % | | 16.98 | % | | 18.25 | % |
| | | | | | | | |
| |
| (1) | On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014. |
