EXHIBIT 99.1
NEWS RELEASE
For more information, contact:
David L. Urban
david.urban@flagstar.com
(248) 312-5970
Flagstar Reports First Quarter 2016 Net Income of $39 million, or $0.54 per Diluted Share
Company posts fifth consecutive quarter of strong, consistent earnings
Key Highlights - First Quarter 2016
| |
| • | Net income increased $6 million, or $0.10 per diluted share, from fourth quarter 2015. |
| |
| • | Net interest income rose 4 percent from last quarter, driven by 6 percent increase in average earning assets; average loans held-for-sale rose 17 percent on strong business activity. |
| |
| • | Fallout-adjusted locks increased 37 percent to $6.9 billion on higher refinance activity, overcoming normal seasonality of mortgage business. |
| |
| • | Credit quality remained solid with lower consumer delinquencies and nonperforming loans. |
| |
| • | Tier 1 leverage ratio remained strong at 11.0 percent. |
TROY, Mich., April 26, 2016 - Flagstar Bancorp, Inc. (NYSE:FBC), the holding company for Flagstar Bank, FSB, today reported first quarter 2016 net income of $39 million, or $0.54 per diluted share, as compared to $33 million in the fourth quarter 2015, or $0.44 per diluted share, and net income of $32 million in the first quarter 2015, or $0.43 per diluted share.
"We had another solid quarter, further validating our business plan and continuing our now five-quarter run of consistent earnings," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "Earnings improved 18 percent from last quarter, and we earned a 1.2 percent return on assets while capital, liquidity, and credit quality all remained strong. It was a good start to the year.
"Mortgage originations rebounded from a tough fourth quarter 2015. We feel good about where we stand as it relates to TRID, and we saw the first signs of traction from initiatives aimed at growing our retail production channels.
"We are inching closer to TARP refinance and subject to market conditions, regulatory approval, and other conditions, we believe that we will be able to complete the transaction within the next 90 days.
"While we are very pleased with the progress we are making, we are actively looking for opportunities to expand our banking relationships, strengthen our mortgage origination capabilities across all channels, and grow our subservicing business."
First Quarter 2016 Highlights:
|
| | | | | | | | | | | | | | | |
| Income Statement Highlights | | | | |
| | Three Months Ended |
| | March 31,
2016 | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 |
| | (Dollars in millions) |
| Consolidated Statements of Income | | |
| |
|
| Net interest income | $ | 79 |
| $ | 76 |
| $ | 73 |
| $ | 73 |
| $ | 65 |
|
| Provision (benefit) for loan losses | (13 | ) | (1 | ) | (1 | ) | (13 | ) | (4 | ) |
| Noninterest income | 105 |
| 97 |
| 128 |
| 126 |
| 119 |
|
| Noninterest expense | 137 |
| 129 |
| 131 |
| 138 |
| 138 |
|
| Income before income taxes | 60 |
| 45 |
| 71 |
| 74 |
| 50 |
|
| Provision for income taxes | 21 |
| 12 |
| 24 |
| 28 |
| 18 |
|
| Net income | $ | 39 |
| $ | 33 |
| $ | 47 |
| $ | 46 |
| $ | 32 |
|
| | | | | | |
| Income per share: | | | | | |
| Basic | $ | 0.56 |
| $ | 0.45 |
| $ | 0.70 |
| $ | 0.69 |
| $ | 0.43 |
|
| Diluted | $ | 0.54 |
| $ | 0.44 |
| $ | 0.69 |
| $ | 0.68 |
| $ | 0.43 |
|
|
| | | | | | | | | | | | |
| Key Ratios | | | | | | |
| | Three Months Ended | Change (bps) |
| | March 31,
2016 | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | Seq | Yr/Yr |
| Net interest margin | 2.66 | % | 2.69 | % | 2.75 | % | 2.79 | % | 2.75 | % | (3) | (9) |
| Return on average assets | 1.2 | % | 1.0 | % | 1.5 | % | 1.6 | % | 1.2 | % | 20 | 0 |
| Return on average equity | 10.1 | % | 8.6 | % | 12.4 | % | 12.7 | % | 8.9 | % | 150 | 120 |
| Return on average common equity | 12.2 | % | 10.4 | % | 15.1 | % | 15.6 | % | 10.9 | % | 180 | 130 |
|
| | | | | | | | | | | | | | | | | | | |
| Balance Sheet Highlights | | | | | | |
| | Three Months Ended | % Change |
| | March 31,
2016 | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | Seq | Yr/Yr |
| | (Dollars in millions) | | |
| Average Balance Sheet | | | | | |
|
|
| Average interest-earning assets | $ | 11,871 |
| $ | 11,240 |
| $ | 10,693 |
| $ | 10,367 |
| $ | 9,422 |
| 6 | % | 26 | % |
| Average loans held-for-sale | 2,909 |
| 2,484 |
| 2,200 |
| 2,218 |
| 1,842 |
| 17 | % | 58 | % |
| Average loans held-for-investment | 5,668 |
| 5,642 |
| 5,412 |
| 4,938 |
| 4,293 |
| — | % | 32 | % |
| Average total deposits | 8,050 |
| 8,132 |
| 8,260 |
| 7,736 |
| 7,368 |
| (1 | )% | 9 | % |
Net Interest Income
First quarter 2016 net interest income increased $3 million, or 4 percent, to $79 million, compared to $76 million for the fourth quarter 2015. The results were led by average earning asset growth of 6 percent, partially offset by a slight drop in the net interest margin.
Net interest margin decreased 3 basis points to 2.66 percent for the first quarter 2016, as compared to 2.69 percent for the fourth quarter 2015. The decrease from the prior quarter was driven primarily by higher cost funding in support of loan growth at the end of the prior quarter, partially offset by increased interest income on loans held-for-investment (mainly commercial loans).
Average loans held-for-sale were $2.9 billion in the first quarter 2016, increasing $425 million, or 17 percent, from the prior quarter. The increase was due to higher levels of mortgage originations.
Average loans held-for-investment totaled $5.7 billion for the first quarter 2016, largely unchanged from the fourth quarter 2015. During the first quarter 2016, relationship-based commercial loans increased while consumer loans declined. Average commercial loans increased $135 million, or 6 percent. Average consumer loans fell $109 million, or 3 percent, due to the sale of $787 million (UPB) of performing mortgage loans, and $96 million (UPB) of nonperforming, TDR, and other higher risk loans.
Average total deposits were $8.1 billion in the first quarter 2016, decreasing $82 million from the prior quarter. The decline was led by a drop in company-controlled and government deposits, partially offset by a gain in retail deposits. Average company-controlled deposits fell $89 million, or 7 percent, due to seasonality and a drop in subserviced loans. Average retail deposits rose $35 million, or 1 percent, led by a 3 percent increase in demand deposits.
Provision for Loan Losses
The Company experienced a provision benefit in the first quarter 2016, resulting primarily from a decrease in residential first mortgage loans and the sale of $96 million (UPB) nonperforming, TDR, and other higher risk loans. The provision benefit for loan losses totaled $13 million for the first quarter 2016, an increase from a benefit of $1 million for the fourth quarter 2015.
Net charge-offs in the first quarter 2016 were $12 million, or 0.86 percent of applicable loans, compared to $9 million, or 0.62 percent of applicable loans in the prior quarter. The first quarter 2016 amount included $6 million of net charge-offs associated with the sale of $96 million (UPB) of nonperforming, TDR, and other higher risk loans. The fourth quarter 2015 amount included $2 million of net charge-offs associated with the sale of $11 million (UPB) of nonperforming loans. Excluding loan sales in both quarters, net charge-offs in the first quarter 2016 were $6 million, or 0.40 percent of applicable loans, compared to $7 million, or 0.51 percent of applicable loans in the prior quarter.
Noninterest Income
First quarter 2016 noninterest income increased $8 million, or 8 percent, to $105 million, as compared to $97 million for the fourth quarter 2015. The first quarter 2016 results were led by higher net gain on loan sales, partially offset by a drop in the net return on the mortgage servicing asset and a reduced representation and warranty benefit.
First quarter 2016 net gain on loan sales increased to $75 million, as compared to $46 million for the fourth quarter 2015. The increase from the prior quarter reflected higher fallout-adjusted locks, an improved gain on sale margin, and a $9 million gain from the sale of $787 million (UPB) mortgage loans transferred from HFI, which were originated in 2015. Excluding the HFI loan transfer, net gain on loan sales was $66 million, up $20 million, or 43 percent, from the fourth quarter 2015. In the first quarter 2016, fallout-adjusted locks increased 37 percent to $6.9 billion, led by an increase in refinance activity. The net gain on loan sale margin was 1.09 percent for the first
quarter 2016. Excluding the HFI loan sale, the net gain on loan sale margin was 0.96 percent, as compared to 0.92 percent for the fourth quarter 2015.
|
| | | | | | | | | | | | | | | | | | | |
| Mortgage Metrics | | | | | | |
| | Three Months Ended | Change (% / bps) |
| | March 31,
2016 | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | Seq | Yr/Yr |
| | (Dollars in millions) | | |
Mortgage rate lock commitments (fallout-adjusted) (1) | $ | 6,863 |
| $ | 5,027 |
| $ | 6,495 |
| $ | 6,804 |
| $ | 7,185 |
| 37 | % | (4 | )% |
GOS margin (change in bps) (2) | 1.09 | % | 0.92 | % | 1.05 | % | 1.21 | % | 1.27 | % | 17 | (18) |
| Gain on loan sales | $ | 75 |
| $ | 46 |
| $ | 68 |
| $ | 83 |
| $ | 91 |
| 63 | % | (18 | )% |
| Net (loss) return on the mortgage servicing asset ("MSA") | $ | (6 | ) | $ | 9 |
| $ | 12 |
| $ | 9 |
| $ | (2 | ) | N/M |
| N/M |
|
| Gain on loan sales + net (loss) return on the MSA | $ | 69 |
| $ | 55 |
| $ | 80 |
| $ | 92 |
| $ | 89 |
| 25 | % | (22 | )% |
Residential loans serviced (number of accounts - 000's) (3) | 340 |
| 361 |
| 369 |
| 378 |
| 385 |
| (6 | )% | (12 | )% |
| Capitalized value of mortgage servicing rights | 1.06 | % | 1.13 | % | 1.12 | % | 1.15 | % | 1.03 | % | (7) | 3 |
| N/M - Not meaningful | | | | | | | |
| (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. |
| (2) Gain on sale margin is based on net gain on loan sales to fallout-adjusted mortgage rate lock commitments. |
| (3) Includes serviced for own loan portfolio, serviced for others and subserviced for others loans. |
Net return on the mortgage servicing asset (including the impact of economic hedges) was a net loss of $6 million for the first quarter 2016, as compared to income of $9 million for the fourth quarter 2015. The return on the mortgage servicing asset decreased from the fourth quarter 2015, primarily due to an increase in anticipated and actual prepayments as well as a smaller benefit from the collection of contingencies held back by the purchaser relating to MSR sales in prior periods.
The representation and warranty benefit was $2 million for the first quarter 2016, as compared to a $6 million benefit in the fourth quarter 2015. The representation and warranty reserve remained unchanged at March 31, 2016 at $40 million.
Noninterest Expense
Noninterest expense increased $8 million, or 6 percent, to $137 million for the first quarter 2016, as compared to $129 million for the fourth quarter 2015. The first quarter 2016 increase was led by higher compensation and benefits expense and commissions in part driven by investment in new strategic initiatives, partially offset by lower other noninterest expense.
Compensation and benefits increased to $68 million for the first quarter 2016, as compared to $59 million in the prior quarter, primarily due to higher seasonal payroll taxes, a planned increase in headcount for growth initiatives, and a full quarter's expense related to the ExLTIP plan.
Commissions were $10 million for the first quarter 2016, as compared to $8 million for the fourth quarter 2015. The $2 million increase in the first quarter 2016 was primarily attributable to higher mortgage closings.
Other noninterest expense for the first quarter 2016 totaled $10 million, as compared to $13 million for the fourth quarter 2015. The decrease from the prior quarter was led by lower warrant expense from a decrease in the Company's stock price and a drop in the FDIC assessment expense.
Income Taxes
The first quarter 2016 provision for income taxes totaled $21 million, as compared to $12 million in the fourth quarter 2015. The effective tax rate in the first quarter 2016 was 34 percent, as compared to 25 percent in the fourth quarter 2015. The increase in the marginal tax rate in the first quarter 2016 was largely due to a benefit recorded in the prior quarter for state income taxes.
Asset Quality
|
| | | | | | | | | | | | | | | | | | | |
| Credit Quality Ratios | | | | | | |
| | Three Months Ended | Change (% / bps) |
| | March 31,
2016 | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | Seq | Yr/Yr |
| | (Dollars in millions) | | |
| Allowance for loan loss to LHFI | 2.9 | % | 3.0 | % | 3.7 | % | 4.3 | % | 5.7 | % | (10) | (280) |
| Charge-offs, net of recoveries | $ | 12 |
| $ | 9 |
| $ | 24 |
| $ | 18 |
| $ | 41 |
| 33 | % | (71 | )% |
Charge-offs, net of recoveries, adjusted (1) | $ | 6 |
| $ | 7 |
| $ | 8 |
| $ | 3 |
| $ | 5 |
| (14 | )% | 20 | % |
| Total nonperforming loans held-for-investment | $ | 53 |
| $ | 66 |
| $ | 63 |
| $ | 65 |
| $ | 84 |
| (20 | )% | (37 | )% |
| Net charge-off ratio (annualized) | 0.86 | % | 0.62 | % | 1.84 | % | 1.49 | % | 3.97 | % | 24 | (311) |
Net charge-off ratio, adjusted (annualized) (1) | 0.40 | % | 0.51 | % | 0.61 | % | 0.26 | % | 0.45 | % | (11) | (5) |
| Nonperforming loans to LHFI | 0.95 | % | 1.05 | % | 1.15 | % | 1.22 | % | 1.81 | % | (10) | (86) |
(1) Excludes charge-offs of $6 million, $2 million, $16 million, $15 million and $36 million related to the sale or transfer of nonperforming loans and TDRs during the three months ended March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. |
The allowance for loan losses was $162 million at March 31, 2016, covering 2.9 percent of loans held-for-investment. The allowance for loan losses was $187 million at December 31, 2015, covering 3.0 percent of loans held-for-investment. The decrease in the allowance for loan losses resulted primarily from the sale of residential first mortgage loans and charge-offs from the sale of $96 million (UPB) nonperforming, TDR, and other higher risk loans.
First quarter 2016 net charge-offs were $12 million, representing 0.86 percent of applicable loans. This represented an increase of $3 million from the fourth quarter 2015 net charge-offs of $9 million, or 0.62 percent of applicable loans. Excluding loan sales in both quarters, net charge-offs in the first quarter 2016 were $6 million, or 0.40 percent, compared to $7 million, or 0.51 percent in the prior quarter. First quarter 2016 net charge-offs included $3 million of loans with government guarantees. The remaining $3 million of charge-offs was 0.20 percent of applicable loans.
Nonperforming loans decreased to $53 million at March 31, 2016 from $66 million at December 31, 2015. The ratio of nonperforming loans to loans held-for-investment decreased to 0.95 percent at March 31, 2016 from 1.05 percent at December 31, 2015. At March 31, 2016, consumer loan delinquencies (30-89 days past due) totaled $11 million, down $3 million from December 31, 2015. There were no commercial loan delinquencies (30-89 days past due) at March 31, 2016.
Capital
|
| | | | | | | | | | | | | | | | | | | |
| Capital Ratios (Bancorp) | Three Months Ended | Change (% / bps) |
| | March 31,
2016 | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | Seq | Yr/Yr |
| Total capital | 20.97 | % | 20.28 | % | 21.64 | % | 21.30 | % | 22.61 | % | 69 |
| (164 | ) |
| Tier 1 capital | 19.67 | % | 18.98 | % | 20.32 | % | 19.97 | % | 21.26 | % | 69 |
| (159 | ) |
| Tier 1 leverage | 11.04 | % | 11.51 | % | 11.65 | % | 11.47 | % | 12.02 | % | (47 | ) | (98 | ) |
| Mortgage servicing rights to Tier 1 capital | 19.30 | % | 20.63 | % | 21.11 | % | 24.22 | % | 22.20 | % | (133 | ) | (290 | ) |
| Book value per common share | $ | 22.82 |
| $ | 22.33 |
| $ | 21.91 |
| $ | 20.98 |
| $ | 20.43 |
| 2 | % | 12 | % |
The Company's regulatory capital ratios remain well above current regulatory quantitative guidelines for "well-capitalized" institutions. At March 31, 2016, the Company had a Tier 1 leverage ratio of 11.04 percent, as compared to 11.51 percent at December 31, 2015. The decrease in the ratio resulted from an increase in average assets and a higher phase-in requirement under Basel III, partially offset by earnings retention. At March 31, 2016, the Company had a common equity-to-assets ratio of 9.40 percent.
Earnings Conference Call
As previously announced, the Company's first quarter 2016 earnings call will be held Tuesday, April 26, 2016 at 11 a.m. (ET).
To join the call, please dial (800) 946-0744 toll free or (719) 325-2236, and use passcode 7324222. 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 7324222.
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 26 retail locations in 19 states. Flagstar is the 10th largest national originator of mortgage loans and a top 25 mortgage servicer, handling payments and record keeping for nearly $70 billion of home loans for over 340,000 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 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) |
| | | | | | | | | | | |
| | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| | (Unaudited) | | | | (Unaudited) |
| Assets | | | | | |
| Cash and cash equivalents | | | | | |
| Cash | $ | 54 |
| | $ | 54 |
| | $ | 43 |
|
| Interest-earning deposits | 670 |
| | 154 |
| | 198 |
|
| Total cash and cash equivalents | 724 |
| | 208 |
| | 241 |
|
| Investment securities available-for-sale | 1,314 |
| | 1,294 |
| | 2,295 |
|
| Investment securities held-to-maturity | 1,253 |
| | 1,268 |
| | — |
|
| Loans held-for-sale | 2,591 |
| | 2,576 |
| | 2,097 |
|
| Loans with government guarantees | 462 |
| | 485 |
| | 704 |
|
| Loans held-for-investment, net | | | | | |
| Loans held-for-investment | 5,640 |
| | 6,352 |
| | 4,631 |
|
| Less: allowance for loan losses | (162 | ) | | (187 | ) | | (253 | ) |
| Total loans held-for-investment, net | 5,478 |
| | 6,165 |
| | 4,378 |
|
| Mortgage servicing rights | 281 |
| | 296 |
| | 279 |
|
| Federal Home Loan Bank stock | 172 |
| | 170 |
| | 155 |
|
| Premises and equipment, net | 256 |
| | 250 |
| | 241 |
|
| Net deferred tax asset | 352 |
| | 364 |
| | 416 |
|
| Other assets | 854 |
| | 639 |
| | 765 |
|
| Total assets | $ | 13,737 |
| | $ | 13,715 |
| | $ | 11,571 |
|
| Liabilities and Stockholders' Equity | | | | | |
| Deposits | | | | | |
| Noninterest-bearing | $ | 1,984 |
| | $ | 1,574 |
| | $ | 1,468 |
|
| Interest-bearing | 6,485 |
| | 6,361 |
| | 6,081 |
|
| Total deposits | 8,469 |
| | 7,935 |
| | 7,549 |
|
| Short-term Federal Home Loan Bank advances | 1,250 |
| | 2,116 |
| | — |
|
| Long-term Federal Home Loan Bank advances | 1,625 |
| | 1,425 |
| | 1,625 |
|
| Other long-term debt | 247 |
| | 247 |
| | 317 |
|
| Representation and warranty reserve | 40 |
| | 40 |
| | 53 |
|
| Other liabilities | 548 |
| | 423 |
| | 607 |
|
| Total liabilities | 12,179 |
| | 12,186 |
| | 10,151 |
|
| Stockholders' Equity | | | | | |
| Preferred stock | 267 |
| | 267 |
| | 267 |
|
| Common stock | 1 |
| | 1 |
| | 1 |
|
| Additional paid in capital | 1,489 |
| | 1,486 |
| | 1,483 |
|
| Accumulated other comprehensive (loss) income | (11 | ) | | 2 |
| | 23 |
|
| Accumulated deficit | (188 | ) | | (227 | ) | | (354 | ) |
| Total stockholders' equity | 1,558 |
| | 1,529 |
| | 1,420 |
|
| Total liabilities and stockholders' equity | $ | 13,737 |
| | $ | 13,715 |
| | $ | 11,571 |
|
Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) (Unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | First Quarter 2016 Compared to: |
| | Three Months Ended | | Fourth Quarter 2015 | First Quarter 2015 |
| | March 31,
2016 | December 31,
2015 | September 30,
2015 | June 30,
2015 | March 31,
2015 | | Amount | Percent | Amount | Percent |
| | | | | | | | | | | |
| Interest Income | | | | | | | | | | |
| Total interest income | $ | 101 |
| $ | 95 |
| $ | 91 |
| $ | 90 |
| $ | 79 |
| | $ | 6 |
| 6 | % | $ | 22 |
| 28 | % |
| Total interest expense | 22 |
| 19 |
| 18 |
| 17 |
| 14 |
| | 3 |
| 16 | % | 8 |
| 57 | % |
| Net interest income | 79 |
| 76 |
| 73 |
| 73 |
| 65 |
| | 3 |
| 4 | % | 14 |
| 22 | % |
| Benefit for loan losses | (13 | ) | (1 | ) | (1 | ) | (13 | ) | (4 | ) | | (12 | ) | N/M |
| (9 | ) | N/M |
|
| Net interest income after provision for loan losses | 92 |
| 77 |
| 74 |
| 86 |
| 69 |
| | 15 |
| 19 | % | 23 |
| 33 | % |
| Noninterest Income | | | | | | |
|
|
|
|
|
|
|
|
| Net gain on loan sales | 75 |
| 46 |
| 68 |
| 83 |
| 91 |
| | 29 |
| 63 | % | (16 | ) | (18 | )% |
| Loan fees and charges | 15 |
| 14 |
| 17 |
| 19 |
| 17 |
| | 1 |
| 7 | % | (2 | ) | (12 | )% |
| Deposit fees and charges | 6 |
| 6 |
| 7 |
| 6 |
| 6 |
| | — |
| — | % | — |
| — | % |
| Loan administration income | 6 |
| 7 |
| 8 |
| 7 |
| 4 |
| | (1 | ) | (14 | )% | 2 |
| 50 | % |
| Net (loss) return on the mortgage servicing asset | (6 | ) | 9 |
| 12 |
| 9 |
| (2 | ) | | (15 | ) | N/M |
| (4 | ) | N/M |
|
| Net (loss) gain on sale of assets | (2 | ) | — |
| 1 |
| (2 | ) | — |
| | (2 | ) | N/M |
| (2 | ) | N/M |
|
| Representation and warranty benefit | 2 |
| 6 |
| 6 |
| 5 |
| 2 |
| | (4 | ) | (67 | )% | — |
| — | % |
| Other noninterest income (loss) | 9 |
| 9 |
| 9 |
| (1 | ) | 1 |
| | — |
| — | % | 8 |
| N/M |
|
| Total noninterest income | 105 |
| 97 |
| 128 |
| 126 |
| 119 |
| | 8 |
| 8 | % | (14 | ) | (12 | )% |
| Noninterest Expense | | | | | | |
|
|
|
|
|
|
|
|
| Compensation and benefits | 68 |
| 59 |
| 58 |
| 59 |
| 61 |
| | 9 |
| 15 | % | 7 |
| 11 | % |
| Commissions | 10 |
| 8 |
| 10 |
| 11 |
| 10 |
| | 2 |
| 25 | % | — |
| — | % |
| Occupancy and equipment | 22 |
| 21 |
| 20 |
| 20 |
| 20 |
| | 1 |
| 5 | % | 2 |
| 10 | % |
| Asset resolution | 3 |
| 2 |
| — |
| 5 |
| 8 |
| | 1 |
| 50 | % | (5 | ) | (63 | )% |
| Federal insurance premiums | 3 |
| 5 |
| 6 |
| 6 |
| 6 |
| | (2 | ) | (40 | )% | (3 | ) | (50 | )% |
| Loan processing expense | 12 |
| 12 |
| 14 |
| 14 |
| 12 |
| | — |
| — | % | — |
| — | % |
| Legal and professional expense | 9 |
| 9 |
| 10 |
| 8 |
| 9 |
| | — |
| — | % | — |
| — | % |
| Other noninterest expense | 10 |
| 13 |
| 13 |
| 15 |
| 12 |
| | (3 | ) | (23 | )% | (2 | ) | (17 | )% |
| Total noninterest expense | 137 |
| 129 |
| 131 |
| 138 |
| 138 |
| | 8 |
| 6 | % | (1 | ) | (1 | )% |
| Income before income taxes | 60 |
| 45 |
| 71 |
| 74 |
| 50 |
| | 15 |
| 33 | % | 10 |
| 20 | % |
| Provision for income taxes | 21 |
| 12 |
| 24 |
| 28 |
| 18 |
| | 9 |
| 75 | % | 3 |
| 17 | % |
| Net income | $ | 39 |
| $ | 33 |
| $ | 47 |
| $ | 46 |
| $ | 32 |
| | $ | 6 |
| 18 | % | $ | 7 |
| 22 | % |
| Income per share | | | | | | |
|
|
|
|
|
|
|
|
| Basic | $ | 0.56 |
| $ | 0.45 |
| $ | 0.70 |
| $ | 0.69 |
| $ | 0.43 |
| | $ | 0.11 |
| 24 | % | $ | 0.13 |
| 30 | % |
| Diluted | $ | 0.54 |
| $ | 0.44 |
| $ | 0.69 |
| $ | 0.68 |
| $ | 0.43 |
| | $ | 0.10 |
| 23 | % | $ | 0.11 |
| 26 | % |
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 |
| | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| Mortgage loans originated (1) | $ | 6,352 |
| | $ | 5,824 |
| | $ | 7,254 |
|
| Mortgage loans sold and securitized | $ | 6,948 |
| | $ | 5,164 |
| | $ | 6,254 |
|
| Interest rate spread (2) | 2.50 | % | | 2.54 | % | | 2.60 | % |
| Net interest margin | 2.66 | % | | 2.69 | % | | 2.75 | % |
| Average common shares outstanding | 56,513,715 |
| | 56,449,596 |
| | 56,385,454 |
|
| Average fully diluted shares outstanding | 57,600,984 |
| | 57,502,017 |
| | 56,775,039 |
|
| Average interest-earning assets | $ | 11,871 |
| | $ | 11,240 |
| | $ | 9,422 |
|
| Average interest-paying liabilities | $ | 9,823 |
| | $ | 9,078 |
| | $ | 7,505 |
|
| Average stockholders' equity | $ | 1,561 |
| | $ | 1,547 |
| | $ | 1,423 |
|
| Return on average assets | 1.16 | % | | 1.03 | % | | 1.16 | % |
| Return on average equity | 10.08 | % | | 8.56 | % | | 8.85 | % |
| Return on average common equity | 12.15 | % | | 10.35 | % | | 10.89 | % |
| Efficiency ratio | 74.5 | % | | 75.2 | % | | 74.8 | % |
| Equity-to-assets ratio (average for the period) | 11.52 | % | | 12.07 | % | | 13.11 | % |
| Charge-offs to average LHFI (3) | 0.86 | % | | 0.62 | % | | 3.97 | % |
|
| | | | | | | | | | | |
| | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| Book value per common share | $ | 22.82 |
| | $ | 22.33 |
| | $ | 20.43 |
|
| Number of common shares outstanding | 56,557,895 |
| | 56,483,258 |
| | 56,436,026 |
|
| Mortgage loans subserviced for others | $ | 37,714 |
| | $ | 40,244 |
| | $ | 44,708 |
|
| Mortgage loans serviced for others | $ | 26,613 |
| | $ | 26,145 |
| | $ | 27,046 |
|
| Weighted average service fee (basis points) | 28.2 |
| | 27.7 |
| | 27.7 |
|
| Capitalized value of mortgage servicing rights | 1.06 | % | | 1.13 | % | | 1.03 | % |
| Mortgage servicing rights to Tier 1 capital | 19.3 | % | | 20.6 | % | | 22.2 | % |
| Ratio of allowance for loan losses to LHFI (3) | 2.93 | % | | 3.00 | % | | 5.69 | % |
| Ratio of nonperforming assets to total assets | 0.49 | % | | 0.61 | % | | 0.87 | % |
| Equity-to-assets ratio | 11.34 | % | | 11.14 | % | | 12.27 | % |
| Common equity-to-assets ratio | 9.40 | % | | 9.20 | % | | 9.96 | % |
| Number of bank branches | 99 |
| | 99 |
| | 107 |
|
| Number of FTE employees | 2,771 |
| | 2,713 |
| | 2,680 |
|
| |
| (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 |
| | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| Net income | $ | 39 |
| | $ | 33 |
| | $ | 32 |
|
| Deferred cumulative preferred stock dividends | (8 | ) | | (8 | ) | | (7 | ) |
| Net income applicable to Common Stockholders | $ | 31 |
| | $ | 25 |
| | $ | 25 |
|
| Weighted Average Shares | | | | | |
| Weighted average common shares outstanding | 56,513,715 |
| | 56,449,596 |
| | 56,385,454 |
|
| Effect of dilutive securities | | | | | |
| Warrants | 305,219 |
| | 348,939 |
| | 232,474 |
|
| Stock-based awards | 782,050 |
| | 703,482 |
| | 157,111 |
|
| Weighted average diluted common shares | 57,600,984 |
| | 57,502,017 |
| | 56,775,039 |
|
| Earnings per common share | | | | | |
| Net income applicable to Common Stockholders | $ | 0.56 |
| | $ | 0.45 |
| | $ | 0.43 |
|
| Effect of dilutive securities | | | | | |
| Warrants | — |
| | — |
| | — |
|
| Stock-based awards | (0.02 | ) | | (0.01 | ) | | — |
|
| Diluted earnings per share | $ | 0.54 |
| | $ | 0.44 |
| | $ | 0.43 |
|
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| | 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 | $ | 2,909 |
| $ | 28 |
| 3.81 | % | | $ | 2,484 |
| $ | 24 |
| 3.88 | % | | $ | 1,842 |
| $ | 19 |
| 4.01 | % |
| Loans with government guarantees | 475 |
| 4 |
| 3.05 | % | | 496 |
| 4 |
| 2.84 | % | | 865 |
| 5 |
| 2.45 | % |
| Loans held-for-investment | | | | | | | | | | | |
Consumer loans (1) | 3,314 |
| 29 |
| 3.52 | % | | 3,423 |
| 30 |
| 3.52 | % | | 2,615 |
| 25 |
| 3.85 | % |
Commercial loans (1) | 2,354 |
| 23 |
| 3.91 | % | | 2,219 |
| 21 |
| 3.77 | % | | 1,678 |
| 16 |
| 3.95 | % |
| Total loans held-for-investment | 5,668 |
| 52 |
| 3.68 | % | | 5,642 |
| 51 |
| 3.62 | % | | 4,293 |
| 41 |
| 3.89 | % |
| Investment securities | 2,692 |
| 17 |
| 2.51 | % | | 2,441 |
| 16 |
| 2.55 | % | | 2,113 |
| 14 |
| 2.58 | % |
| Interest-earning deposits | 127 |
| — |
| 0.52 | % | | 177 |
| — |
| 0.49 | % | | 309 |
| — |
| 0.44 | % |
| Total interest-earning assets | 11,871 |
| $ | 101 |
| 3.39 | % | | 11,240 |
| $ | 95 |
| 3.36 | % | | 9,422 |
| $ | 79 |
| 3.37 | % |
| Other assets | 1,672 |
| | | | 1,585 |
| | | | 1,434 |
| | |
| Total assets | $ | 13,543 |
| | | | $ | 12,825 |
| | | | $ | 10,856 |
| | |
| Interest-Bearing Liabilities | | | | | | | | | | | |
| Retail deposits | | | | | | | | | | | |
| Demand deposits | $ | 445 |
| $ | — |
| 0.13 | % | | $ | 431 |
| $ | — |
| 0.13 | % | | $ | 424 |
| $ | — |
| 0.14 | % |
| Savings deposits | 3,722 |
| 7 |
| 0.79 | % | | 3,725 |
| 8 |
| 0.84 | % | | 3,561 |
| 7 |
| 0.77 | % |
| Money market deposits | 243 |
| — |
| 0.36 | % | | 272 |
| — |
| 0.39 | % | | 257 |
| — |
| 0.25 | % |
| Certificates of deposit | 856 |
| 2 |
| 0.92 | % | | 813 |
| 2 |
| 0.88 | % | | 787 |
| 1 |
| 0.67 | % |
| Total retail deposits | 5,266 |
| 9 |
| 0.74 | % | | 5,241 |
| 10 |
| 0.76 | % | | 5,029 |
| 8 |
| 0.67 | % |
| Government deposits | | | | | | | | | | | |
| Demand deposits | 256 |
| — |
| 0.39 | % | | 304 |
| — |
| 0.40 | % | | 225 |
| — |
| 0.39 | % |
| Savings deposits | 419 |
| 1 |
| 0.52 | % | | 401 |
| 1 |
| 0.52 | % | | 374 |
| 1 |
| 0.52 | % |
| Certificates of deposit | 412 |
| 1 |
| 0.47 | % | | 410 |
| 1 |
| 0.45 | % | | 357 |
| — |
| 0.35 | % |
| Total government deposits | 1,087 |
| 2 |
| 0.47 | % | | 1,115 |
| 2 |
| 0.46 | % | | 956 |
| 1 |
| 0.43 | % |
| Total interest-bearing deposits | 6,353 |
| 11 |
| 0.69 | % | | 6,356 |
| 12 |
| 0.71 | % | | 5,985 |
| 9 |
| 0.63 | % |
| Short-term debt | 1,662 |
| 2 |
| 0.38 | % | | 1,226 |
| 1 |
| 0.25 | % | | — |
| — |
| — | % |
| Long-term debt | 1,560 |
| 7 |
| 1.86 | % | | 1,219 |
| 4 |
| 1.60 | % | | 1,161 |
| 3 |
| 1.08 | % |
| Other | 248 |
| 2 |
| 3.22 | % | | 277 |
| 2 |
| 2.66 | % | | 359 |
| 2 |
| 2.39 | % |
| Total interest-bearing liabilities | 9,823 |
| 22 |
| 0.89 | % | | 9,078 |
| 19 |
| 0.83 | % | | 7,505 |
| 14 |
| 0.78 | % |
Noninterest-bearing deposits (2) | 1,697 |
| | | | 1,776 |
| | | | 1,383 |
| | |
| Other liabilities | 462 |
| | | | 424 |
| | | | 545 |
| | |
| Stockholders' equity | 1,561 |
| | | | 1,547 |
| | | | 1,423 |
| | |
| Total liabilities and stockholder's equity | $ | 13,543 |
| | | | $ | 12,825 |
| | | | $ | 10,856 |
| | |
| Net interest-earning assets | $ | 2,048 |
| | | | $ | 2,162 |
| | | | $ | 1,917 |
| | |
| Net interest income | | $ | 79 |
| | | | $ | 76 |
| | | | $ | 65 |
| |
Interest rate spread (3) | | | 2.50 | % | | | | 2.54 | % | | | | 2.60 | % |
Net interest margin (4) | | | 2.66 | % | | | | 2.69 | % | | | | 2.75 | % |
| Ratio of average interest-earning assets to interest-bearing liabilities | | | 120.9 | % | | | | 123.8 | % | | | | 125.5 | % |
| Total average deposits | $ | 8,050 |
| | | | $ | 8,132 |
| | | | $ | 7,368 |
| | |
| |
| (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 noninterest-bearing company-controlled deposits that arise due to the servicing of loans for others. |
| |
| (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 |
| | March 31, 2016 | | December 31, 2015 | | September 30, 2015 | | June 30, 2015 | | March 31, 2015 |
| | (Dollars in millions) |
| Net gain on loan sales | $ | 75 |
| | $ | 46 |
| | $ | 68 |
| | $ | 83 |
| | $ | 91 |
|
| Mortgage rate lock commitments (gross) | $ | 8,762 |
| | $ | 6,258 |
| | $ | 8,025 |
| | $ | 8,400 |
| | $ | 9,035 |
|
| Loans sold and securitized | $ | 6,948 |
| | $ | 5,164 |
| | $ | 7,318 |
| | $ | 7,571 |
| | $ | 6,254 |
|
Mortgage rate lock commitments (fallout-adjusted) (1) | $ | 6,863 |
| | $ | 5,027 |
| | $ | 6,495 |
| | $ | 6,804 |
| | $ | 7,185 |
|
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) | 1.09 | % | | 0.92 | % | | 1.05 | % | | 1.21 | % | | 1.27 | % |
| |
| (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)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2016 | | December 31, 2015 | | September 30, 2015 | | June 30, 2015 | | March 31, 2015 |
| | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio |
| Tier 1 leverage (to adjusted tangible assets) | $ | 1,453 |
| 11.04 | % | | $ | 1,435 |
| 11.51 | % | | $ | 1,393 |
| 11.65 | % | | $ | 1,309 |
| 11.47 | % | | $ | 1,257 |
| 12.02 | % |
| Total adjusted tangible asset base | $ | 13,167 |
| | | $ | 12,474 |
| | | $ | 11,957 |
| | | $ | 11,406 |
| | | $ | 10,453 |
| |
| Tier 1 common equity (to risk weighted assets) | $ | 1,032 |
| 13.96 | % | | $ | 1,065 |
| 14.09 | % | | $ | 1,024 |
| 14.93 | % | | $ | 954 |
| 14.56 | % | | $ | 909 |
| 15.38 | % |
| Tier 1 capital (to risk weighted assets) | $ | 1,453 |
| 19.67 | % | | $ | 1,435 |
| 18.98 | % | | $ | 1,393 |
| 20.32 | % | | $ | 1,309 |
| 19.97 | % | | $ | 1,257 |
| 21.26 | % |
| Total capital (to risk weighted assets) | $ | 1,549 |
| 20.97 | % | | $ | 1,534 |
| 20.28 | % | | $ | 1,483 |
| 21.64 | % | | $ | 1,396 |
| 21.30 | % | | $ | 1,336 |
| 22.61 | % |
| Risk weighted asset base | $ | 7,387 |
| | | $ | 7,561 |
| | | $ | 6,857 |
| | | $ | 6,553 |
| | | $ | 5,909 |
| |
Regulatory Capital - Bank
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2016 | | December 31, 2015 | | September 30, 2015 | | June 30, 2015 | | March 31, 2015 |
| | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio |
| Tier 1 leverage (to adjusted tangible assets) (1) | $ | 1,509 |
| 11.43 | % | | $ | 1,472 |
| 11.79 | % | | $ | 1,426 |
| 11.91 | % | | $ | 1,337 |
| 11.70 | % | | $ | 1,278 |
| 12.21 | % |
| Total adjusted tangible asset base | $ | 13,200 |
| | | $ | 12,491 |
| | | $ | 11,975 |
| | | $ | 11,424 |
| | | $ | 10,471 |
| |
| Tier 1 common equity (to risk weighted assets) (1) | $ | 1,509 |
| 20.34 | % | | $ | 1,472 |
| 19.42 | % | | $ | 1,426 |
| 20.75 | % | | $ | 1,337 |
| 20.35 | % | | $ | 1,278 |
| 21.58 | % |
| Tier 1 capital (to risk weighted assets) (1) | $ | 1,509 |
| 20.34 | % | | $ | 1,472 |
| 19.42 | % | | $ | 1,426 |
| 20.75 | % | | $ | 1,337 |
| 20.35 | % | | $ | 1,278 |
| 21.58 | % |
| Total capital (to risk weighted assets) | $ | 1,605 |
| 21.63 | % | | $ | 1,570 |
| 20.71 | % | | $ | 1,516 |
| 22.05 | % | | $ | 1,423 |
| 21.66 | % | | $ | 1,357 |
| 22.91 | % |
| Risk weighted asset base | $ | 7,421 |
| | | $ | 7,582 |
| | | $ | 6,874 |
| | | $ | 6,570 |
| | | $ | 5,925 |
| |
|
| | | | | | | | | | | | | | | | | |
Loan Originations (Dollars in millions) (Unaudited) |
| | Three Months Ended March 31, 2016 |
| | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| Consumer loans | | | | | | | | |
Mortgage (1) | $ | 6,352 |
| 98.3 | % | | $ | 5,824 |
| 96.0 | % | | $ | 7,254 |
| 99.2 | % |
Other consumer (2) | 27 |
| 0.4 | % | | 39 |
| 0.6 | % | | 21 |
| 0.3 | % |
| Total consumer loans | 6,379 |
| 98.7 | % | | 5,863 |
| 96.6 | % | | 7,275 |
| 99.5 | % |
Commercial loans (3) | 84 |
| 1.3 | % | | 205 |
| 3.4 | % | | 38 |
| 0.5 | % |
| Total loan originations | $ | 6,463 |
| 100.0 | % | | $ | 6,068 |
| 100.0 | % | | $ | 7,313 |
| 100.0 | % |
| |
| (1) | Includes residential first mortgage and second mortgage loans. |
| |
| (2) | Includes HELOC and other consumer loans. |
| |
| (3) | Includes commercial real estate and commercial and industrial loans. |
Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | |
| | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| Consumer loans | | | | | | | | |
| Residential first mortgage | $ | 2,410 |
| 42.7 | % | | $ | 3,100 |
| 48.9 | % | | $ | 2,013 |
| 43.4 | % |
| Second mortgage | 129 |
| 2.3 | % | | 135 |
| 2.1 | % | | 146 |
| 3.2 | % |
| HELOC | 366 |
| 6.5 | % | | 384 |
| 6.0 | % | | 316 |
| 6.8 | % |
| Other | 31 |
| 0.5 | % | | 31 |
| 0.5 | % | | 30 |
| 0.7 | % |
| Total consumer loans | 2,936 |
| 52.1 | % | | 3,650 |
| 57.5 | % | | 2,505 |
| 54.1 | % |
| Commercial loans | | | | | | | | |
| Commercial real estate | 851 |
| 15.1 | % | | 814 |
| 12.8 | % | | 635 |
| 13.7 | % |
| Commercial and industrial | 571 |
| 10.1 | % | | 552 |
| 8.7 | % | | 408 |
| 8.8 | % |
| Warehouse lending | 1,282 |
| 22.7 | % | | 1,336 |
| 21.0 | % | | 1,083 |
| 23.4 | % |
| Total commercial loans | 2,704 |
| 47.9 | % | | 2,702 |
| 42.5 | % | | 2,126 |
| 45.9 | % |
| Total loans held-for-investment | $ | 5,640 |
| 100.0 | % | | $ | 6,352 |
| 100.0 | % | | $ | 4,631 |
| 100.0 | % |
Residential Loans Serviced
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | |
| | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| | Unpaid Principal Balance | Number of accounts | | Unpaid Principal Balance | Number of accounts | | Unpaid Principal Balance | Number of accounts |
Serviced for own loan portfolio (1) | $ | 5,293 |
| 29,078 |
| | $ | 6,088 |
| 30,683 |
| | $ | 4,933 |
| 27,235 |
|
| Serviced for others | 26,613 |
| 118,768 |
| | 26,145 |
| 118,662 |
| | 27,046 |
| 126,393 |
|
Subserviced for others (2) | 37,714 |
| 192,423 |
| | 40,244 |
| 211,740 |
| | 44,708 |
| 231,223 |
|
| Total residential loans serviced | $ | 69,620 |
| 340,269 |
| | $ | 72,477 |
| 361,085 |
| | $ | 76,687 |
| 384,851 |
|
| |
| (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 |
| | March 31,
2016 | | December 31,
2015 | | March 31,
2015 |
| Beginning balance | $ | 187 |
| | $ | 197 |
| | $ | 297 |
|
| Benefit for loan losses | (13 | ) | | (1 | ) | | (4 | ) |
| Charge-offs | | | | | |
| Consumer loans | | | | | |
| Residential first mortgage | (11 | ) | | (7 | ) | | (40 | ) |
| Second mortgage | (1 | ) | | (2 | ) | | (1 | ) |
| HELOC | (1 | ) | | (1 | ) | | (1 | ) |
| Other | (1 | ) | | (1 | ) | | (1 | ) |
| Total consumer loans | (14 | ) | | (11 | ) | | (43 | ) |
| Total charge-offs | (14 | ) | | (11 | ) | | (43 | ) |
| Recoveries | | | | | |
| Consumer loans | | | | | |
| Second mortgage | — |
| | 1 |
| | — |
|
| HELOC | 1 |
| | — |
| | — |
|
| Other | 1 |
| | 1 |
| | 1 |
|
| Total consumer loans | 2 |
| | 2 |
| | 1 |
|
| Commercial loans | | | | | |
| Commercial real estate | — |
| | — |
| | 2 |
|
| Total commercial loans | — |
| | — |
| | 2 |
|
| Total recoveries | 2 |
| | 2 |
| | 3 |
|
| Charge-offs, net of recoveries | (12 | ) | | (9 | ) | | (40 | ) |
| Ending balance | $ | 162 |
| | $ | 187 |
| | $ | 253 |
|
Net charge-off ratio (annualized) (1) | 0.86 | % | | 0.62 | % | | 3.97 | % |
Net charge-off ratio, adjusted (annualized) (1)(2) | 0.40 | % | | 0.51 | % | | 0.45 | % |
Net charge-off ratio (annualized) by loan type (1) | | | | | |
| Residential first mortgage | 1.50 | % | | 1.03 | % | | 7.49 | % |
| Second mortgage | 4.72 | % | | 1.89 | % | | 2.92 | % |
| HELOC and consumer | 0.69 | % | | 0.86 | % | | 2.81 | % |
| Commercial real estate | (0.02 | )% | | — | % | | (1.06 | )% |
| Commercial and industrial | (0.01 | )% | | (0.01 | )% | | — | % |
| |
| (1) | Excludes loans carried under the fair value option. |
| |
| (2) | Excludes charge-offs of $6 million, $2 million and $36 million, related to the sale of nonperforming loans, TDRs and non-agency loans during the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively. |
Representation and Warranty Reserve
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | |
| | | Three Months Ended |
| | March 31, 2016 | | December 31, 2015 | | March 31, 2015 |
| Balance, beginning of period | $ | 40 |
| | $ | 45 |
| | $ | 53 |
|
| Provision (release) | | | | | |
| | Charged to gain on sale for current loan sales | 2 |
| | 1 |
| | 2 |
|
| | Charged to representation and warranty benefit | (2 | ) | | (6 | ) | | (2 | ) |
| | Total | — |
| | (5 | ) | | — |
|
| Charge-offs, net | — |
| | — |
| | — |
|
| Balance, end of period | $ | 40 |
| | $ | 40 |
|
| $ | 53 |
|
Composition of Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | |
| March 31, 2016 | Collectively Evaluated Reserves | | Individually Evaluated Reserves | | Total |
| Consumer loans | | | | | |
| Residential first mortgage | $ | 86 |
| | $ | 9 |
| | $ | 95 |
|
| Second mortgage | 5 |
| | 5 |
| | 10 |
|
| HELOC | 18 |
| | 2 |
| | 20 |
|
| Other | 2 |
| | — |
| | 2 |
|
| Total consumer loans | 111 |
| | 16 |
| | 127 |
|
| Commercial loans | | | | | |
| Commercial real estate | 19 |
| | — |
| | 19 |
|
| Commercial and industrial | 10 |
| | — |
| | 10 |
|
| Warehouse lending | 6 |
| | — |
| | 6 |
|
| Total commercial loans | 35 |
| | — |
| | 35 |
|
| Total allowance for loan losses | $ | 146 |
| | $ | 16 |
| | $ | 162 |
|
|
| | | | | | | | | | | |
| December 31, 2015 | Collectively Evaluated Reserves | | Individually Evaluated Reserves | | Total |
| Consumer loans | | | | | |
| Residential first mortgage | $ | 104 |
| | $ | 12 |
| | $ | 116 |
|
| Second mortgage | 5 |
| | 6 |
| | 11 |
|
| HELOC | 20 |
| | 1 |
| | 21 |
|
| Other | 1 |
| | 1 |
| | 2 |
|
| Total consumer loans | 130 |
| | 20 |
| | 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 | $ | 167 |
| | $ | 20 |
| | $ | 187 |
|
Nonperforming Loans and Assets
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | |
| | March 31,
2016 | | December 31, 2015 | | March 31,
2015 |
| Nonperforming loans | $ | 27 |
| | $ | 31 |
| | $ | 56 |
|
| Nonperforming TDRs | 6 |
| | 7 |
| | 18 |
|
| Nonperforming TDRs at inception but performing for less than six months | 20 |
| | 28 |
| | 10 |
|
| Total nonperforming loans held-for-investment | 53 |
| | 66 |
| | 84 |
|
| Real estate and other nonperforming assets, net | 14 |
| | 17 |
| | 16 |
|
Nonperforming assets held-for-investment, net (1) | $ | 67 |
| | $ | 83 |
| | $ | 100 |
|
| | | | | | |
| Ratio of nonperforming assets to total assets | 0.49 | % | | 0.61 | % | | 0.87 | % |
| Ratio of nonperforming loans held-for-investment to loans held-for-investment | 0.95 | % | | 1.05 | % | | 1.81 | % |
| Ratio of nonperforming assets to loans held-for-investment and repossessed assets | 1.20 | % | | 1.32 | % | | 2.15 | % |
| Ratio of nonperforming assets to Tier 1 capital + allowance for loan losses | 4.15 | % | | 5.12 | % | | 6.62 | % |
| |
| (1) | Does not include nonperforming loans held-for-sale of $6 million, $12 million and $19 million at March 31, 2016, December 31, 2015, March 31, 2015, 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 |
| March 31, 2016 | | | | | |
| Consumer loans | $ | 8 |
| $ | 3 |
| $ | 52 |
| $ | 63 |
| $ | 2,936 |
|
| Commercial loans | — |
| — |
| 1 |
| 1 |
| 2,704 |
|
| Total loans | $ | 8 |
| $ | 3 |
| $ | 53 |
| $ | 64 |
| $ | 5,640 |
|
| 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 |
|
| March 31, 2015 | | | | | |
| Consumer loans | $ | 22 |
| $ | 8 |
| $ | 84 |
| $ | 114 |
| $ | 2,505 |
|
| Commercial loans | — |
| — |
| — |
| — |
| 2,126 |
|
| Total loans | $ | 22 |
| $ | 8 |
| $ | 84 |
| $ | 114 |
| $ | 4,631 |
|
| |
| (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 |
| March 31, 2016 | |
| Consumer loans | $ | 75 |
| | $ | 6 |
| | $ | 19 |
| | $ | 100 |
|
| Commercial loans | — |
| | — |
| | 1 |
| | 1 |
|
| Total TDR loans | $ | 75 |
| | $ | 6 |
| | $ | 20 |
| | $ | 101 |
|
| December 31, 2015 | | | | | | | |
| Consumer loans | $ | 101 |
| | $ | 7 |
| | $ | 28 |
| | $ | 136 |
|
| Commercial loans | — |
| | — |
| | — |
| | — |
|
| Total TDR loans | $ | 101 |
| | $ | 7 |
| | $ | 28 |
| | $ | 136 |
|
| March 31, 2015 | | | | | | | |
| Consumer loans | $ | 111 |
| | $ | 18 |
| | $ | 10 |
| | $ | 139 |
|
| Commercial loans | — |
| | — |
| | — |
| | — |
|
| Total TDR loans | $ | 111 |
| | $ | 18 |
| | $ | 10 |
| | $ | 139 |
|
Non-GAAP Reconciliation
(Dollars in millions)
(Unaudited)
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.
|
| | | | | | | | | | | | | | | |
| March 31, 2016 | 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) | $ | 1,032 |
| | $ | 1,453 |
| | $ | 1,453 |
| | $ | 1,549 |
|
| Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components | (237 | ) | | (152 | ) | | (152 | ) | | (151 | ) |
| Basel III (fully phased-in) capital | $ | 795 |
| | $ | 1,301 |
| | $ | 1,301 |
| | $ | 1,398 |
|
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1) | | | | | | | |
| Basel III assets (transitional) | $ | 7,387 |
| | $ | 13,167 |
| | $ | 7,387 |
| | $ | 7,387 |
|
| Net change in assets | 26 |
| | (152 | ) | | 26 |
| | 26 |
|
| Basel III (fully phased-in) assets | $ | 7,413 |
| | $ | 13,015 |
| | $ | 7,413 |
| | $ | 7,413 |
|
| Capital ratios | | | | | | | |
| Basel III (transitional) | 13.96 | % | | 11.04 | % | | 19.67 | % | | 20.97 | % |
| Basel III (fully phased-in) | 10.72 | % | | 10.00 | % | | 17.55 | % | | 18.86 | % |
| | | | | | | | |
|
| | | | | | | | | | | | | | | |
| March 31, 2016 | 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) | $ | 1,509 |
| | $ | 1,509 |
| | $ | 1,509 |
| | $ | 1,605 |
|
| Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components | (104 | ) | | (104 | ) | | (104 | ) | | (104 | ) |
| Basel III (fully phased-in) capital | $ | 1,405 |
| | $ | 1,405 |
| | $ | 1,405 |
| | $ | 1,501 |
|
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1) | | | | | | | |
| Basel III assets (transitional) | $ | 7,421 |
| | $ | 13,200 |
| | $ | 7,421 |
| | $ | 7,421 |
|
| Net change in assets | 213 |
| | (104 | ) | | 213 |
| | 213 |
|
| Basel III (fully phased-in) assets | $ | 7,634 |
| | $ | 13,096 |
| | $ | 7,634 |
| | $ | 7,634 |
|
| Capital ratios | | | | | | | |
| Basel III (transitional) | 20.34 | % | | 11.43 | % | | 20.34 | % | | 21.63 | % |
| Basel III (fully phased-in) | 18.41 | % | | 10.73 | % | | 18.41 | % | | 19.66 | % |
| | | | | | | | |
