EXHIBIT 99.1
NEWS RELEASE
For more information, contact:
David L. Urban
david.urban@flagstar.com
(248) 312-5970
Flagstar Reports Second Quarter 2018 Net Income of $50 million, or $0.85 per Diluted Share
Company posts solid earnings with positive operating leverage
Key Highlights - Second Quarter 2018
| |
| • | Net interest income rose $9 million, or 8 percent from first quarter 2018, driven by earning asset growth and net interest margin expansion. |
| |
| • | Mortgage revenues increased $8 million, or 13 percent from the prior quarter, led by a seasonal increase in mortgage originations and higher net return on MSR. |
| |
| • | Total revenue increased $21 million, or 10 percent, while noninterest expense rose a modest $4 million, or 2 percent from last quarter, benefiting from expense discipline and variable cost model. |
| |
| • | Strong asset quality with minimal net charge-offs and no commercial delinquencies. |
| |
| • | Pending acquisition of 52 Wells Fargo branches accelerates banking transformation. |
TROY, Mich., July 24, 2018 - Flagstar Bancorp, Inc. (NYSE:FBC), the holding company for Flagstar Bank, FSB, today reported second quarter 2018 net income of $50 million, or $0.85 per diluted share, compared to first quarter 2018 net income of $35 million, or $0.60 per diluted share. For the second quarter 2017, the Company reported net income of $41 million, or $0.71 per diluted share.
“I’m pleased with our financial results this quarter," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. “We produced solid earnings with positive operating leverage, despite a challenging mortgage environment. Earnings rose on both a sequential and year-over-year basis, achieving a level we haven't seen since the third quarter 2012 when we had $334 million of net gain on loan sales as compared to only $63 million in the second quarter 2018.
“Our banking business performed well, boosted by the acquisitions of the Desert Community Bank (DCB) branches and a warehouse business at the end of the first quarter 2018. Net interest income for the second quarter 2018 rose 8 percent to $115 million, led by a 4 percent rise in average earning assets and a 10 basis point increase in net interest margin. The core banking business delivered consistent growth with average commercial loans (excluding the impact of the DCB branch and warehouse business acquisitions) increasing 8 percent.
"We continued to build scale and profitability within our servicing business -- a segment that brings fee income, as well as ancillary benefits like deposits that fuel our loan growth. During the second quarter, we sold $6.4 billion of mortgage servicing rights with 100 percent of the servicing retained. Since the beginning of 2018, we've increased the number of loans serviced by 93,000 or 21 percent and are well positioned to add more scale later this year.
“Our mortgage business was softer than expected with fallout-adjusted locks and gain on sale margin coming in below our expectations. Locks rose 17 percent to $9 billion while the GOS margin fell 6 basis points to 0.71 percent due to the impact of wider spreads on the outcome of a securitization late in the quarter.
“A key highlight of the second quarter was our announcement of the pending acquisition of 52 Wells Fargo branches in Indiana, Michigan, Wisconsin and Ohio. This transaction will significantly expand our banking business, enhance our franchise value and provide compelling financial benefits -- all without the need to raise capital. Bringing these branches on board later this year will accelerate our banking transformation. Meanwhile, we will continue to leverage our strong asset generation capability, abundant liquidity and strong capital for the benefit of our shareholders.”
Second Quarter 2018 Highlights:
|
| | | | | | | | | | | | | | | |
| Income Statement Highlights | | | | |
| | Three Months Ended |
| | June 30,
2018 | March 31,
2018 | December 31,
2017 | September 30,
2017 | June 30,
2017 |
| | (Dollars in millions) |
| Net interest income | $ | 115 |
| $ | 106 |
| $ | 107 |
| $ | 103 |
| $ | 97 |
|
| Provision (benefit) for loan losses | (1 | ) | — |
| 2 |
| 2 |
| (1 | ) |
| Noninterest income | 123 |
| 111 |
| 124 |
| 130 |
| 116 |
|
| Noninterest expense | 177 |
| 173 |
| 178 |
| 171 |
| 154 |
|
| Income before income taxes | 62 |
| 44 |
| 51 |
| 60 |
| 60 |
|
Provision for income taxes (1) | 12 |
| 9 |
| 96 |
| 20 |
| 19 |
|
| Net income (loss) | $ | 50 |
| $ | 35 |
| $ | (45 | ) | $ | 40 |
| $ | 41 |
|
| | | | | | |
| Income (loss) per share: | | | | | |
| Basic | $ | 0.86 |
| $ | 0.61 |
| $ | (0.79 | ) | $ | 0.71 |
| $ | 0.72 |
|
| Diluted | $ | 0.85 |
| $ | 0.60 |
| $ | (0.79 | ) | $ | 0.70 |
| $ | 0.71 |
|
| |
| (1) | The three months ended December 31, 2017 included an $80 million, or $1.37 per diluted share, non-cash charge to the provision for income taxes, resulting from the revaluation of the Company's net deferred tax asset at a lower statutory rate as a result of the Tax Cuts and Jobs Act. |
|
| | | | | | | | | | | | |
| Key Ratios | | | | | | |
| | Three Months Ended | Change (bps) |
| | June 30,
2018 | March 31,
2018 | December 31,
2017 | September 30,
2017 | June 30,
2017 | Seq | Yr/Yr |
| Net interest margin | 2.86 | % | 2.76 | % | 2.76 | % | 2.78 | % | 2.77 | % | 10 | 9 |
| Return on average assets | 1.1 | % | 0.8 | % | (1.1 | )% | 1.0 | % | 1.0 | % | 30 | 10 |
| Return on average equity | 13.5 | % | 9.9 | % | (12.1 | )% | 11.1 | % | 11.6 | % | 360 | 190 |
| Efficiency ratio | 74.4 | % | 79.7 | % | 77.1 | % | 73.5 | % | 72.0 | % | (530) | 240 |
|
| | | | | | | | | | | | | | | | | | | |
| Balance Sheet Highlights | | | | | | |
| | Three Months Ended | % Change |
| | June 30,
2018 | March 31,
2018 | December 31,
2017 | September 30,
2017 | June 30,
2017 | Seq | Yr/Yr |
| | (Dollars in millions) | | |
| Average Balance Sheet Data | | | | | |
|
|
| Average interest-earning assets | $ | 15,993 |
| $ | 15,354 |
| $ | 15,379 |
| $ | 14,737 |
| $ | 14,020 |
| 4 | % | 14 | % |
| Average loans held-for-sale (LHFS) | 4,170 |
| 4,231 |
| 4,537 |
| 4,476 |
| 4,269 |
| (1 | )% | (2 | )% |
| Average loans held-for-investment (LHFI) | 8,380 |
| 7,487 |
| 7,295 |
| 6,803 |
| 6,224 |
| 12 | % | 35 | % |
| Average total deposits | 10,414 |
| 9,371 |
| 9,084 |
| 9,005 |
| 8,739 |
| 11 | % | 19 | % |
Net Interest Income
Net interest income rose $9 million to $115 million for the second quarter 2018, as compared to the first quarter 2018. The results reflected a 4 percent increase in average earning assets, led by continued solid growth in commercial loans. The net interest margin rose 10 basis points to 2.86 percent for the second quarter 2018 as higher yields on earning assets more than offset a modest increase in deposit costs.
Loans held-for-investment averaged $8.4 billion for the second quarter 2018, increasing $893 million, or 12 percent, from the prior quarter. Excluding the impact of the DCB branch and warehouse business acquisitions, average loans HFI rose 6 percent in the quarter. During the second quarter 2018, average commercial loans rose 19 percent with average warehouse loans increasing $647 million, or 76 percent, average commercial real estate loans rising $63 million, or 3 percent and average commercial and industrial loans increasing $40 million, or 3 percent. Average consumer loans rose $143 million, or 4 percent, driven by an increase in mortgage loans.
Average total deposits were $10.4 billion in the second quarter 2018, increasing $1 billion, or 11 percent from the first quarter 2018. Excluding the impact of the DCB branch acquisition, average deposits rose 6 percent in the quarter. Average retail deposits increased $780 million, or 12 percent, as higher demand deposits and certificates of deposit were partially offset by a drop in savings deposits. Average custodial deposits rose $149 million, or 10 percent, while average government deposits rose $21 million, or 2 percent.
Provision for Loan Losses
The Company experienced a provision benefit in the second quarter 2018, resulting primarily from a continued decline in loss rates in the held-for-investment portfolio. The provision benefit for loan losses totaled $1 million for the second quarter 2018, as compared to no provision expense for the first quarter 2018.
Noninterest Income
Noninterest income rose $12 million, or 11 percent, to $123 million in the second quarter of 2018, as compared to $111 million for the first quarter 2018. The increase was primarily due to an increase in net gain on loan sales, loan fees and charges and the net return on the mortgage servicing rights.
Second quarter 2018 net gain on loan sales increased $3 million, or 5 percent, to $63 million, versus $60 million in the first quarter 2018. Fallout-adjusted locks rose 17 percent to $9 billion primarily due to a seasonal increase in mortgage originations. The net gain on loan sale margin fell 6 basis points to 0.71 percent for the second quarter 2018, as compared to 0.77 percent for the first quarter 2018.
|
| | | | | | | | | | | | | | | | | | | |
| Mortgage Metrics | | | | | | |
| | | Change (% / bps) |
| | June 30,
2018 | March 31,
2018 | December 31,
2017 | September 30,
2017 | June 30,
2017 | Seq | Yr/Yr |
| | (Dollars in millions) | | |
| For the three months ended: | | | | | | | |
Mortgage rate lock commitments (fallout-adjusted) (1) | $ | 9,011 |
| $ | 7,722 |
| $ | 8,631 |
| $ | 8,898 |
| $ | 9,002 |
| 17 | % | — | % |
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) (2) | 0.71 | % | 0.77 | % | 0.91 | % | 0.84 | % | 0.73 | % | (6) | (2) |
| Net gain on loan sales | $ | 63 |
| $ | 60 |
| $ | 79 |
| $ | 75 |
| $ | 66 |
| 5 | % | (5 | )% |
| Net (loss) return on the mortgage servicing rights (MSR) | $ | 9 |
| $ | 4 |
| $ | (4 | ) | $ | 6 |
| $ | 6 |
| 125 | % | 50 | % |
| Gain on loan sales + net (loss) return on the MSR | $ | 72 |
| $ | 64 |
| $ | 75 |
| $ | 81 |
| $ | 72 |
| 13 | % | — | % |
| At the end of the period: | | | | | | | |
Residential loans serviced (number of accounts - 000's) (3) | 535 |
| 470 |
| 442 |
| 415 |
| 402 |
| 14 | % | 33 | % |
| Capitalized value of MSRs | 1.34 | % | 1.27 | % | 1.16 | % | 1.15 | % | 1.14 | % | 7 | 20 |
| 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 (excludes net gain on loan sales of $1 million from loans transferred from HFI in the three months ended December 31, 2017) to fallout-adjusted mortgage rate lock commitments. |
| (3) Includes loans serviced for own loan portfolio, serviced for others, and subserviced for others. |
Loan fees and charges rose to $24 million for the second quarter 2018, as compared to $20 million for the first quarter 2018. The increase primarily reflected higher mortgage loan closings.
Net return on mortgage servicing rights (including the impact of hedges) increased $5 million, resulting in a net gain of $9 million for the second quarter 2018, as compared to a net gain of $4 million for the first quarter 2018. The increase from the prior quarter largely reflected lower sale-related costs, reduced runoff due to increasing interest rates and higher service fee income.
Noninterest Expense
Noninterest expense increased to $177 million for the second quarter 2018, as compared to $173 million for the first quarter 2018, primarily due to an increase in mortgage-related expense from higher mortgage closings. During the second quarter 2018, commissions increased $7 million and loan processing expense rose $1 million.
The Company's total efficiency ratio improved to 74 percent for the second quarter 2018, as compared to 80 percent for the first quarter 2018, led by strong, positive operating leverage. Revenue increased 10 percent while expenses rose a modest 2 percent in the second quarter 2018.
Income Taxes
The second quarter 2018 provision for income taxes totaled $12 million, as compared to $9 million in the first quarter 2018. The Company's effective tax rate was 20 percent for the second quarter 2018, unchanged from the prior quarter.
Asset Quality
|
| | | | | | | | | | | | | | | | | | | |
| Credit Quality Ratios | | | | | | |
| | Three Months Ended | Change (% / bps) |
| | June 30,
2018 | March 31,
2018 | December 31,
2017 | September 30,
2017 | June 30,
2017 | Seq | Yr/Yr |
| | (Dollars in millions) | | |
| Allowance for loan loss to LHFI | 1.5 | % | 1.7 | % | 1.8 | % | 2.0 | % | 2.1 | % | (20) | (60) |
| Charge-offs, net of recoveries | $ | 1 |
| $ | 1 |
| $ | 2 |
| $ | 2 |
| $ | — |
| — | % | N/M |
|
| Total nonperforming loans held-for-investment | $ | 27 |
| $ | 29 |
| $ | 29 |
| $ | 31 |
| $ | 30 |
| (7 | )% | (10 | )% |
| Net charge-offs to LHFI ratio (annualized) | 0.02 | % | 0.06 | % | 0.12 | % | 0.08 | % | 0.04 | % | (4) | (2) |
| Ratio of nonperforming LHFI and TDRs to LHFI | 0.30 | % | 0.35 | % | 0.38 | % | 0.44 | % | 0.44 | % | (5) | (14) |
N/M - Not meaningful
The allowance for loan losses was $137 million at June 30, 2018, compared to $139 million at March 31, 2018. The allowance for loan losses covered 1.5 percent of loans held-for-investment at June 30, 2018, as compared to 1.7 percent of loans held-for-investment at March 31, 2018.
Net charge-offs in the second quarter 2018 were $1 million, or 2 basis points of HFI loans, compared to $1 million, or 6 basis points in the prior quarter.
Nonperforming loans held-for-investment were $27 million at June 30, 2018, compared to $29 million at March 31, 2018. The ratio of nonperforming loans to loans held-for-investment was 0.30 percent at June 30, 2018, compared to 0.35 percent at March 31, 2018. At June 30, 2018, early stage consumer loan delinquencies totaled $3 million, or 0.08 percent of consumer loans, compared to $5 million, or 0.14 percent at March 31, 2018. There were no commercial loan delinquencies greater than 30 days at June 30, 2018.
Capital
|
| | | | | | | | | | | | | | | | | | | |
| Capital Ratios (Bancorp) | Three Months Ended | Change (% / bps) |
| | June 30,
2018 | March 31,
2018 | December 31,
2017 | September 30,
2017 | June 30,
2017 | Seq | Yr/Yr |
Tangible common equity to assets ratio (1) | 7.74 | % | 7.65 | % | 8.15 | % | 8.47 | % | 8.70 | % | 9 | (96) |
| Tier 1 leverage (to adj. avg. total assets) | 8.65 | % | 8.72 | % | 8.51 | % | 8.80 | % | 9.10 | % | (7) | (45) |
| Tier 1 common equity (to RWA) | 10.84 | % | 10.80 | % | 11.50 | % | 11.65 | % | 12.45 | % | 4 | (161) |
| Tier 1 capital (to RWA) | 12.86 | % | 12.90 | % | 13.63 | % | 13.72 | % | 14.65 | % | (4) | (179) |
| Total capital (to RWA) | 14.04 | % | 14.14 | % | 14.90 | % | 14.99 | % | 15.92 | % | (10) | (188) |
| MSRs to Tier 1 capital | 16.9 | % | 16.2 | % | 20.1 | % | 17.3 | % | 13.1 | % | 70 | N/M |
Tangible book value per share (1) | $ | 24.37 |
| $ | 23.62 |
| $ | 24.04 |
| $ | 25.01 |
| $ | 24.29 |
| 3 | % | — | % |
| |
| (1) | See Non-GAAP Reconciliation for further information. |
N/M - Not meaningful
The Company maintained a robust capital position with regulatory ratios well above current regulatory quantitative guidelines for "well capitalized" institutions. At June 30, 2018, the Company had a Tier 1 leverage ratio of 8.65 percent, as compared to 8.72 percent at March 31, 2018. The decrease in the ratio resulted primarily from balance sheet growth driven by the impact of the DCB branch and warehouse business acquisitions, largely offset by earnings retention.
Under the terms of recently proposed changes to regulatory capital requirements, the Company's Tier 1 leverage ratio would have increased approximately 50 basis points and risk-based capital ratios by approximately 15-25 basis points at June 30, 2018 (pro forma basis).
Earnings Conference Call
As previously announced, the Company's second quarter 2018 earnings call will be held Tuesday, July 24, 2018 at 11 a.m. (ET).
To join the call, please dial (800) 667-5617 toll free or (334) 323-0505 and use passcode 2373953. 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 and using passcode 2373953.
The conference call will also be available as a live audiocast on the Investor Relations section of flagstar.com, where it will be archived and 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 an $18.1 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 107 branches in Michigan and California. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 88 retail locations in 31 states, representing the combined retail branches of Flagstar and its Opes Advisors mortgage division. Flagstar is a leading national originator and servicer of mortgage loans, handling payments and record keeping for $120 billion of home loans representing over 535,000 borrowers. For more information, please visit flagstar.com.
Use of Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this news release includes non-GAAP financial measures, such as tangible book value per share and tangible common equity to assets ratio. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar.
Non-GAAP financial measures have inherent limitations. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. Flagstar’s method of calculating these non-GAAP measures may differ from methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements.
Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in this news release. Additional discussion of the use of non-GAAP measures can also be found in conference call slides, the Form 8-K Current Report related to this news release and 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. The Company's actual results could differ materially from those described in the forward-looking statements depending upon various factors as described 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)
(Unaudited) |
| | | | | | | | | | | | | | | |
| | June 30, 2018 | | March 31,
2018 | | December 31,
2017 | | June 30,
2017 |
| Assets | | | | | | | |
| Cash | $ | 139 |
| | $ | 121 |
| | $ | 122 |
| | $ | 80 |
|
| Interest-earning deposits | 220 |
| | 122 |
| | 82 |
| | 103 |
|
| Total cash and cash equivalents | 359 |
| | 243 |
| | 204 |
| | 183 |
|
| Investment securities available-for-sale | 1,871 |
| | 1,918 |
| | 1,853 |
| | 1,614 |
|
| Investment securities held-to-maturity | 748 |
| | 771 |
| | 939 |
| | 1,014 |
|
| Loans held-for-sale | 4,291 |
| | 4,743 |
| | 4,321 |
| | 4,506 |
|
| Loans held-for-investment | 8,904 |
| | 8,134 |
| | 7,713 |
| | 6,776 |
|
| Loans with government guarantees | 278 |
| | 286 |
| | 271 |
| | 278 |
|
| Less: allowance for loan losses | (137 | ) | | (139 | ) | | (140 | ) | | (140 | ) |
| Total loans held-for-investment and loans with government guarantees, net | 9,045 |
| | 8,281 |
| | 7,844 |
| | 6,914 |
|
| Mortgage servicing rights | 257 |
| | 239 |
| | 291 |
| | 184 |
|
| Federal Home Loan Bank stock | 303 |
| | 303 |
| | 303 |
| | 260 |
|
| Premises and equipment, net | 355 |
| | 348 |
| | 330 |
| | 299 |
|
| Net deferred tax asset | 119 |
| | 130 |
| | 136 |
| | 266 |
|
| Goodwill and intangible assets | 71 |
| | 72 |
| | 21 |
| | 20 |
|
| Other assets | 711 |
| | 688 |
| | 670 |
| | 705 |
|
| Total assets | $ | 18,130 |
| | $ | 17,736 |
| | $ | 16,912 |
| | $ | 15,965 |
|
| Liabilities and Stockholders' Equity | | | | | | | |
| Noninterest-bearing | $ | 2,781 |
| | $ | 2,391 |
| | $ | 2,049 |
| | $ | 2,012 |
|
| Interest-bearing | 7,807 |
| | 7,595 |
| | 6,885 |
| | 6,683 |
|
| Total deposits | 10,588 |
| | 9,986 |
| | 8,934 |
| | 8,695 |
|
| Short-term Federal Home Loan Bank advances | 3,840 |
| | 4,153 |
| | 4,260 |
| | 3,670 |
|
| Long-term Federal Home Loan Bank advances | 1,280 |
| | 1,280 |
| | 1,405 |
| | 1,200 |
|
| Other long-term debt | 494 |
| | 494 |
| | 494 |
| | 493 |
|
| Other liabilities | 453 |
| | 396 |
| | 420 |
| | 499 |
|
| Total liabilities | 16,655 |
| | 16,309 |
| | 15,513 |
| | 14,557 |
|
| Stockholders' Equity | | | | | | | |
| Common stock | 1 |
| | 1 |
| | 1 |
| | 1 |
|
| Additional paid in capital | 1,514 |
| | 1,514 |
| | 1,512 |
| | 1,509 |
|
| Accumulated other comprehensive loss | (32 | ) | | (30 | ) | | (16 | ) | | (9 | ) |
| Accumulated deficit | (8 | ) | | (58 | ) | | (98 | ) | | (93 | ) |
| Total stockholders' equity | 1,475 |
| | 1,427 |
| | 1,399 |
| | 1,408 |
|
| Total liabilities and stockholders' equity | $ | 18,130 |
| | $ | 17,736 |
| | $ | 16,912 |
| | $ | 15,965 |
|
Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) (Unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Second Quarter 2018 Compared to: |
| | Three Months Ended | | First Quarter 2018 | | Second Quarter 2017 |
| | June 30,
2018 | March 31,
2018 | December 31,
2017 | September 30,
2017 | June 30,
2017 | | Amount | Percent | | Amount | Percent |
| Interest Income | | | | | | | | | | | |
| Total interest income | $ | 167 |
| $ | 152 |
| $ | 148 |
| $ | 140 |
| $ | 129 |
| | $ | 15 |
| 10 | % | | $ | 38 |
| 29 | % |
| Total interest expense | 52 |
| 46 |
| 41 |
| 37 |
| 32 |
| | 6 |
| 13 | % | | 20 |
| 63 | % |
| Net interest income | 115 |
| 106 |
| 107 |
| 103 |
| 97 |
| | 9 |
| 8 | % | | 18 |
| 19 | % |
| Provision (benefit) for loan losses | (1 | ) | — |
| 2 |
| 2 |
| (1 | ) | | (1 | ) | N/M |
| | — |
| — | % |
| Net interest income after provision (benefit) for loan losses | 116 |
| 106 |
| 105 |
| 101 |
| 98 |
| | 10 |
| 9 | % | | 18 |
| 18 | % |
| Noninterest Income | | | | | | |
|
|
|
| |
|
|
|
|
| Net gain on loan sales | 63 |
| 60 |
| 79 |
| 75 |
| 66 |
| | 3 |
| 5 | % | | (3 | ) | (5 | )% |
| Loan fees and charges | 24 |
| 20 |
| 24 |
| 23 |
| 20 |
| | 4 |
| 20 | % | | 4 |
| 20 | % |
| Deposit fees and charges | 5 |
| 5 |
| 4 |
| 5 |
| 5 |
| | — |
| — | % | | — |
| — | % |
| Loan administration income | 5 |
| 5 |
| 5 |
| 5 |
| 6 |
| | — |
| — | % | | (1 | ) | (17 | )% |
| Net (loss) return on the mortgage servicing rights | 9 |
| 4 |
| (4 | ) | 6 |
| 6 |
| | 5 |
| 125 | % | | 3 |
| 50 | % |
| Other noninterest income | 17 |
| 17 |
| 16 |
| 16 |
| 13 |
| | — |
| — | % | | 4 |
| 31 | % |
| Total noninterest income | 123 |
| 111 |
| 124 |
| 130 |
| 116 |
| | 12 |
| 11 | % | | 7 |
| 6 | % |
| Noninterest Expense | | | | | | |
|
|
|
| |
|
|
|
|
| Compensation and benefits | 80 |
| 80 |
| 80 |
| 76 |
| 71 |
| | — |
| — | % | | 9 |
| 13 | % |
| Commissions | 25 |
| 18 |
| 23 |
| 23 |
| 16 |
| | 7 |
| 39 | % | | 9 |
| 56 | % |
| Occupancy and equipment | 30 |
| 30 |
| 28 |
| 28 |
| 25 |
| | — |
| — | % | | 5 |
| 20 | % |
| Federal insurance premiums | 6 |
| 6 |
| 5 |
| 5 |
| 4 |
| | — |
| — | % | | 2 |
| 50 | % |
| Loan processing expense | 15 |
| 14 |
| 16 |
| 15 |
| 14 |
| | 1 |
| 7 | % | | 1 |
| 7 | % |
| Legal and professional expense | 6 |
| 6 |
| 8 |
| 7 |
| 8 |
| | — |
| — | % | | (2 | ) | (25 | )% |
| Other noninterest expense | 15 |
| 19 |
| 18 |
| 17 |
| 16 |
| | (4 | ) | (21 | )% | | (1 | ) | (6 | )% |
| Total noninterest expense | 177 |
| 173 |
| 178 |
| 171 |
| 154 |
| | 4 |
| 2 | % | | 23 |
| 15 | % |
| Income before income taxes | 62 |
| 44 |
| 51 |
| 60 |
| 60 |
| | 18 |
| 41 | % | | 2 |
| 3 | % |
| Provision for income taxes | 12 |
| 9 |
| 96 |
| 20 |
| 19 |
| | 3 |
| 33 | % | | (7 | ) | (37 | )% |
| Net income (loss) | $ | 50 |
| $ | 35 |
| $ | (45 | ) | $ | 40 |
| $ | 41 |
| | $ | 15 |
| 43 | % | | $ | 9 |
| 22 | % |
| Income (loss) per share | | | | | | |
|
|
|
| |
|
|
|
|
| Basic | $ | 0.86 |
| $ | 0.61 |
| $ | (0.79 | ) | $ | 0.71 |
| $ | 0.72 |
| | $ | 0.25 |
| 41 | % | | $ | 0.14 |
| 19 | % |
| Diluted | $ | 0.85 |
| $ | 0.60 |
| $ | (0.79 | ) | $ | 0.70 |
| $ | 0.71 |
| | $ | 0.25 |
| 42 | % | | $ | 0.14 |
| 20 | % |
N/M - Not meaningful
Flagstar Bancorp, Inc. Consolidated Statements of Operations (Dollars in millions, except per data share) (Unaudited) |
| | | | | | | | | | | | |
| | | | Six Months Ended June 30, 2018 |
| | Six Months Ended | | Compared to: Six Months Ended June 30, 2017 |
| | June 30, 2018 | June 30, 2017 | | Amount | Percent |
| Total interest income | $ | 319 |
| $ | 239 |
| | $ | 80 |
| 33 | % |
| Total interest expense | 98 |
| 59 |
| | 39 |
| 66 | % |
| Net interest income | 221 |
| 180 |
| | 41 |
| 23 | % |
| Provision (benefit) for loan losses | (1 | ) | 2 |
| | (3 | ) | N/M |
|
| Net interest income after provision (benefit) for loan losses | 222 |
| 178 |
| | 44 |
| 25 | % |
| Noninterest Income | | | | | |
| Net gain on loan sales | 123 |
| 114 |
| | 9 |
| 8 | % |
| Loan fees and charges | 44 |
| 35 |
| | 9 |
| 26 | % |
| Deposit fees and charges | 10 |
| 9 |
| | 1 |
| 11 | % |
| Loan administration income | 10 |
| 11 |
| | (1 | ) | (9 | )% |
| Net (loss) return on the mortgage servicing rights | 13 |
| 20 |
| | (7 | ) | (35 | )% |
| Other noninterest income | 34 |
| 27 |
| | 7 |
| 26 | % |
| Total noninterest income | 234 |
| 216 |
| | 18 |
| 8 | % |
| Noninterest Expense | | | | | |
| Compensation and benefits | 160 |
| 143 |
| | 17 |
| 12 | % |
| Commissions | 43 |
| 26 |
| | 17 |
| 65 | % |
| Occupancy and equipment | 60 |
| 47 |
| | 13 |
| 28 | % |
| Federal insurance premiums | 12 |
| 7 |
| | 5 |
| 71 | % |
| Loan processing expense | 29 |
| 26 |
| | 3 |
| 12 | % |
| Legal and professional expense | 12 |
| 15 |
| | (3 | ) | (20 | )% |
| Other noninterest expense | 34 |
| 30 |
| | 4 |
| 13 | % |
| Total noninterest expense | 350 |
| 294 |
| | 56 |
| 19 | % |
| Income before income taxes | 106 |
| 100 |
| | 6 |
| 6 | % |
| Provision for income taxes | 21 |
| 32 |
| | (11 | ) | (34 | )% |
| Net income | $ | 85 |
| $ | 68 |
| | $ | 17 |
| 25 | % |
| Income per share | | | | | |
| Basic | $ | 1.47 |
| $ | 1.18 |
| | $ | 0.29 |
| 25 | % |
| Diluted | $ | 1.45 |
| $ | 1.16 |
| | $ | 0.29 |
| 25 | % |
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in millions, except share data)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, 2018 | | March 31, 2018 | | June 30, 2017 | | June 30, 2018 | | June 30, 2017 |
| Selected Mortgage Statistics: | | | | | | | | | |
Mortgage rate lock commitments (fallout-adjusted) (1) | $ | 9,011 |
| | $ | 7,722 |
| | $ | 9,002 |
| | $ | 16,734 |
| | $ | 14,998 |
|
Mortgage loans originated (2) | $ | 9,040 |
| | $ | 7,886 |
| | $ | 9,184 |
| | $ | 16,926 |
| | $ | 15,087 |
|
| Mortgage loans sold and securitized | $ | 9,260 |
| | $ | 7,247 |
| | $ | 8,989 |
| | $ | 16,506 |
| | $ | 13,473 |
|
| Selected Ratios: | | | | | | | | | |
Interest rate spread (3) | 2.58 | % | | 2.54 | % | | 2.59 | % | | 2.56 | % | | 2.55 | % |
| Net interest margin | 2.86 | % | | 2.76 | % | | 2.77 | % | | 2.81 | % | | 2.72 | % |
| Net margin on loans sold and securitized | 0.69 | % | | 0.82 | % | | 0.73 | % | | 0.75 | % | | 0.84 | % |
| Return on average assets | 1.12 | % | | 0.82 | % | | 1.04 | % | | 0.97 | % | | 0.91 | % |
| Return on average equity | 13.45 | % | | 9.94 | % | | 11.57 | % | | 11.73 | % | | 9.77 | % |
| Efficiency ratio | 74.4 | % | | 79.7 | % | | 72.0 | % | | 76.9 | % | | 74.2 | % |
| Equity-to-assets ratio (average for the period) | 8.29 | % | | 8.27 | % | | 9.02 | % | | 8.28 | % | | 9.29 | % |
| Average Balances: | | | | | | | | | |
| Average common shares outstanding | 57,491,714 |
| | 57,356,654 |
| | 57,101,816 |
| | 57,424,557 |
| | 57,012,208 |
|
| Average fully diluted shares outstanding | 58,258,577 |
| | 58,314,385 |
| | 58,138,938 |
| | 58,286,327 |
| | 58,106,070 |
|
| Average interest-earning assets | $ | 15,993 |
| | $ | 15,354 |
| | $ | 14,020 |
| | $ | 15,675 |
| | $ | 13,187 |
|
| Average interest-paying liabilities | $ | 13,164 |
| | $ | 12,974 |
| | $ | 11,804 |
| | $ | 13,069 |
| | $ | 11,066 |
|
| Average stockholders' equity | $ | 1,475 |
| | $ | 1,414 |
| | $ | 1,418 |
| | $ | 1,445 |
| | $ | 1,382 |
|
| |
| (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) | Includes residential first mortgage. |
| |
| (3) | 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. |
|
| | | | | | | | | | | | | | | |
| | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | | June 30, 2017 |
| Selected Statistics: | | | | | | | |
| Book value per common share | $ | 25.61 |
| | $ | 24.87 |
| | $ | 24.40 |
| | $ | 24.64 |
|
Tangible book value per share (1) | 24.37 |
| | 23.62 |
| | 24.04 |
| | 24.29 |
|
| Number of common shares outstanding | 57,598,406 |
| | 57,399,993 |
| | 57,321,228 |
| | 57,161,431 |
|
| Number of FTE employees | 3,682 |
| | 3,659 |
| | 3,525 |
| | 3,432 |
|
| Number of bank branches | 107 |
| | 107 |
| | 99 |
| | 99 |
|
| Ratio of nonperforming assets to total assets | 0.19 | % | | 0.19 | % | | 0.22 | % | | 0.24 | % |
| Common equity-to-assets ratio | 8.14 | % | | 8.05 | % | | 8.27 | % | | 8.82 | % |
| MSR Key Statistics and Ratios: | | | | | | | |
| Weighted average service fee (basis points) | 32.4 |
| | 30.4 |
| | 28.9 |
| | 27.8 |
|
| Capitalized value of mortgage servicing rights | 1.34 | % | | 1.27 | % | | 1.16 | % | | 1.14 | % |
| Mortgage servicing rights to Tier 1 capital | 16.9 | % | | 16.2 | % | | 20.1 | % | | 13.1 | % |
| |
| (1) | Excludes goodwill and intangibles of $71 million, $72 million, $21 million, and $20 million at June 30, 2018, March 31, 2018, December 31, 2017, and June 30, 2017, respectively. See Non-GAAP Reconciliation for further information. |
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | June 30, 2018 | | March 31, 2018 | | June 30, 2017 |
| | 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 | $ | 4,170 |
| $ | 47 |
| 4.50 | % | | $ | 4,231 |
| $ | 44 |
| 4.12 | % | | $ | 4,269 |
| $ | 42 |
| 4.00 | % |
| Loans held-for-investment | | | | | | | | | | | |
| Residential first mortgage | 2,875 |
| 25 |
| 3.53 | % | | 2,773 |
| 23 |
| 3.41 | % | | 2,495 |
| 21 |
| 3.38 | % |
| Home equity | 679 |
| 8 |
| 5.05 | % | | 668 |
| 9 |
| 5.21 | % | | 439 |
| 6 |
| 4.91 | % |
| Other | 57 |
| 1 |
| 5.39 | % | | 27 |
| — |
| 4.56 | % | | 27 |
| — |
| 4.54 | % |
| Total Consumer loans | 3,611 |
| 34 |
| 3.85 | % | | 3,468 |
| 32 |
| 3.76 | % | | 2,961 |
| 27 |
| 3.61 | % |
| Commercial Real Estate | 2,017 |
| 26 |
| 5.09 | % | | 1,954 |
| 24 |
| 4.87 | % | | 1,477 |
| 16 |
| 4.16 | % |
| Commercial and Industrial | 1,257 |
| 17 |
| 5.30 | % | | 1,217 |
| 16 |
| 5.21 | % | | 936 |
| 11 |
| 4.77 | % |
| Warehouse Lending | 1,495 |
| 19 |
| 5.03 | % | | 848 |
| 11 |
| 5.14 | % | | 850 |
| 10 |
| 4.71 | % |
| Total Commercial loans | 4,769 |
| 62 |
| 5.13 | % | | 4,019 |
| 51 |
| 5.03 | % | | 3,263 |
| 37 |
| 4.48 | % |
| Total loans held-for-investment | 8,380 |
| 96 |
| 4.58 | % | | 7,487 |
| 83 |
| 4.44 | % | | 6,224 |
| 64 |
| 4.07 | % |
| Loans with government guarantees | 280 |
| 2 |
| 3.66 | % | | 291 |
| 3 |
| 3.72 | % | | 295 |
| 3 |
| 4.02 | % |
| Investment securities | 3,049 |
| 21 |
| 2.72 | % | | 3,233 |
| 22 |
| 2.69 | % | | 3,166 |
| 20 |
| 2.57 | % |
| Interest-earning deposits | 114 |
| 1 |
| 1.72 | % | | 112 |
| — |
| 1.67 | % | | 66 |
| — |
| 1.07 | % |
| Total interest-earning assets | 15,993 |
| $ | 167 |
| 4.17 | % | | 15,354 |
| $ | 152 |
| 3.95 | % | | 14,020 |
| $ | 129 |
| 3.69 | % |
| Other assets | 1,791 |
| | | | 1,736 |
| | | | 1,690 |
| | |
| Total assets | $ | 17,784 |
| | | | $ | 17,090 |
| | | | $ | 15,710 |
| | |
| Interest-Bearing Liabilities | | | | | | | | | | | |
| Retail deposits | | | | | | | | | | | |
| Demand deposits | $ | 704 |
| $ | 1 |
| 0.60 | % | | $ | 548 |
| $ | — |
| 0.26 | % | | $ | 510 |
| $ | — |
| 0.15 | % |
| Savings deposits | 3,412 |
| 8 |
| 0.86 | % | | 3,490 |
| 7 |
| 0.81 | % | | 3,933 |
| 8 |
| 0.75 | % |
| Money market deposits | 247 |
| — |
| 0.54 | % | | 205 |
| — |
| 0.44 | % | | 239 |
| — |
| 0.42 | % |
| Certificates of deposit | 2,006 |
| 8 |
| 1.63 | % | | 1,619 |
| 6 |
| 1.45 | % | | 1,094 |
| 3 |
| 1.08 | % |
| Total retail deposits | 6,369 |
| 17 |
| 1.06 | % | | 5,862 |
| 13 |
| 0.92 | % | | 5,776 |
| 11 |
| 0.75 | % |
| Government deposits | | | | | | | | | | | |
| Demand deposits | 243 |
| — |
| 0.47 | % | | 241 |
| — |
| 0.55 | % | | 200 |
| — |
| 0.39 | % |
| Savings deposits | 488 |
| 2 |
| 1.26 | % | | 483 |
| 2 |
| 1.11 | % | | 411 |
| 1 |
| 0.56 | % |
| Certificates of deposit | 380 |
| 1 |
| 1.35 | % | | 401 |
| 1 |
| 1.19 | % | | 291 |
| — |
| 0.68 | % |
| Total government deposits | 1,111 |
| 3 |
| 1.12 | % | | 1,125 |
| 3 |
| 1.02 | % | | 902 |
| 1 |
| 0.56 | % |
| Wholesale deposits and other | 264 |
| 1 |
| 1.96 | % | | 171 |
| 1 |
| 1.91 | % | | 4 |
| — |
| 0.48 | % |
| Total interest-bearing deposits | 7,744 |
| 21 |
| 1.10 | % | | 7,158 |
| 17 |
| 0.96 | % | | 6,682 |
| 12 |
| 0.72 | % |
| Short-term Federal Home Loan Bank advances and other | 3,646 |
| 17 |
| 1.85 | % | | 4,032 |
| 15 |
| 1.53 | % | | 3,429 |
| 8 |
| 0.98 | % |
| Long-term Federal Home Loan Bank advances | 1,280 |
| 7 |
| 2.25 | % | | 1,290 |
| 7 |
| 2.10 | % | | 1,200 |
| 6 |
| 1.91 | % |
| Other long-term debt | 494 |
| 7 |
| 5.60 | % | | 494 |
| 7 |
| 5.37 | % | | 493 |
| 6 |
| 5.06 | % |
| Total interest-bearing liabilities | 13,164 |
| 52 |
| 1.58 | % | | 12,974 |
| 46 |
| 1.41 | % | | 11,804 |
| 32 |
| 1.10 | % |
| Noninterest-bearing deposits (1) | 2,670 |
| | | | 2,213 |
| | | | 2,057 |
| | |
| Other liabilities | 475 |
| | | | 489 |
| | | | 431 |
| | |
| Stockholders' equity | 1,475 |
| | | | 1,414 |
| | | | 1,418 |
| | |
| Total liabilities and stockholders' equity | $ | 17,784 |
| | | | $ | 17,090 |
| | | | $ | 15,710 |
| | |
| Net interest-earning assets | $ | 2,829 |
| | | | $ | 2,380 |
| | | | $ | 2,216 |
| | |
| Net interest income | | $ | 115 |
| | | | $ | 106 |
| | | | $ | 97 |
| |
| Interest rate spread (2) | | | 2.58 | % | | | | 2.54 | % | | | | 2.59 | % |
| Net interest margin (3) | | | 2.86 | % | | | | 2.76 | % | | | | 2.77 | % |
| Ratio of average interest-earning assets to interest-bearing liabilities | | | 121.5 | % | | | | 118.3 | % | | | | 118.8 | % |
| Total average deposits | $ | 10,414 |
| | | | $ | 9,371 |
| | | | $ | 8,739 |
| | |
| |
| (1) | Includes noninterest-bearing custodial deposits that arise due to the servicing of loans for others. |
| |
| (2) | Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities. |
| |
| (3) | Net interest margin is net interest income divided by average interest-earning assets. |
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | |
| | Six Months Ended |
| | June 30, 2018 | | June 30, 2017 |
| | Average Balance | Interest | Annualized Yield/Rate | | Average Balance | Interest | Annualized Yield/Rate |
| Interest-Earning Assets | | | | | | | |
| Loans held-for-sale | $ | 4,201 |
| $ | 90 |
| 4.31 | % | | $ | 3,780 |
| $ | 74 |
| 3.94 | % |
| Loans held-for-investment | | | | | | | |
| Residential first mortgage | 2,824 |
| 49 |
| 3.47 | % | | 2,447 |
| 41 |
| 3.35 | % |
| Home equity | 674 |
| 17 |
| 5.13 | % | | 436 |
| 11 |
| 5.01 | % |
| Other | 42 |
| 1 |
| 5.12 | % | | 26 |
| — |
| 4.52 | % |
| Total Consumer loans | 3,540 |
| 67 |
| 3.80 | % | | 2,909 |
| 52 |
| 3.61 | % |
| Commercial Real Estate | 1,986 |
| 50 |
| 4.98 | % | | 1,399 |
| 28 |
| 3.99 | % |
| Commercial and Industrial | 1,237 |
| 33 |
| 5.25 | % | | 855 |
| 20 |
| 4.67 | % |
| Warehouse Lending | 1,173 |
| 30 |
| 5.07 | % | | 770 |
| 18 |
| 4.62 | % |
| Total Commercial loans | 4,396 |
| 113 |
| 5.08 | % | | 3,024 |
| 66 |
| 4.34 | % |
| Total loans held-for-investment | 7,936 |
| 180 |
| 4.51 | % | | 5,933 |
| 118 |
| 3.98 | % |
| Loans with government guarantees | 285 |
| 5 |
| 3.69 | % | | 318 |
| 7 |
| 4.34 | % |
| Investment securities | 3,140 |
| 43 |
| 2.71 | % | | 3,090 |
| 39 |
| 2.54 | % |
| Interest-earning deposits | 113 |
| 1 |
| 1.69 | % | | 66 |
| 1 |
| 0.97 | % |
| Total interest-earning assets | 15,675 |
| $ | 319 |
| 4.06 | % | | 13,187 |
| $ | 239 |
| 3.63 | % |
| Other assets | 1,764 |
| | | | 1,694 |
| | |
| Total assets | $ | 17,439 |
| | | | $ | 14,881 |
| | |
| Interest-Bearing Liabilities | | | | | | | |
| Retail deposits | | | | | | | |
| Demand deposits | $ | 626 |
| $ | 1 |
| 0.46 | % | | $ | 509 |
| $ | — |
| 0.17 | % |
| Savings deposits | 3,451 |
| 14 |
| 0.83 | % | | 3,930 |
| 15 |
| 0.76 | % |
| Money market deposits | 226 |
| 1 |
| 0.49 | % | | 258 |
| 1 |
| 0.44 | % |
| Certificates of deposit | 1,814 |
| 14 |
| 1.55 | % | | 1,083 |
| 6 |
| 1.07 | % |
| Total retail deposits | 6,117 |
| 30 |
| 0.99 | % | | 5,780 |
| 22 |
| 0.75 | % |
| Government deposits | | | | | | | |
| Demand deposits | 242 |
| 1 |
| 0.51 | % | | 217 |
| — |
| 0.39 | % |
| Savings deposits | 485 |
| 3 |
| 1.18 | % | | 435 |
| 1 |
| 0.54 | % |
| Certificates of deposit | 391 |
| 2 |
| 1.27 | % | | 305 |
| 1 |
| 0.65 | % |
| Total government deposits | 1,118 |
| 6 |
| 1.07 | % | | 957 |
| 2 |
| 0.54 | % |
| Wholesale deposits and other | 217 |
| 2 |
| 1.94 | % | | 6 |
| — |
| 0.42 | % |
| Total interest-bearing deposits | 7,452 |
| 38 |
| 1.03 | % | | 6,743 |
| 24 |
| 0.72 | % |
| Short-term Federal Home Loan Bank advances and other | 3,838 |
| 32 |
| 1.68 | % | | 2,630 |
| 12 |
| 0.89 | % |
| Long-term Federal Home Loan Bank advances | 1,285 |
| 14 |
| 2.17 | % | | 1,200 |
| 11 |
| 1.89 | % |
| Other long-term debt | 494 |
| 14 |
| 5.49 | % | | 493 |
| 12 |
| 5.05 | % |
| Total interest-bearing liabilities | 13,069 |
| 98 |
| 1.50 | % | | 11,066 |
| 59 |
| 1.08 | % |
| Noninterest-bearing deposits (1) | 2,443 |
| | | | 2,024 |
| | |
| Other liabilities | 482 |
| | | | 409 |
| | |
| Stockholders' equity | 1,445 |
| | | | 1,382 |
| | |
| Total liabilities and stockholders' equity | $ | 17,439 |
| | | | $ | 14,881 |
| | |
| Net interest-earning assets | $ | 2,606 |
| | | | $ | 2,121 |
| | |
| Net interest income | | $ | 221 |
| | | | $ | 180 |
| |
| Interest rate spread (2) | | | 2.56 | % | | | | 2.55 | % |
| Net interest margin (3) | | | 2.81 | % | | | | 2.72 | % |
| Ratio of average interest-earning assets to interest-bearing liabilities | | | 119.9 | % | | | | 119.2 | % |
| Total average deposits | $ | 9,895 |
| | | | $ | 8,767 |
| | |
| |
| (1) | Includes noninterest-bearing custodial deposits that arise due to the servicing of loans for others. |
| |
| (2) | Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities. |
| |
| (3) | Net interest margin is net interest income divided by average interest-earning assets. |
Flagstar Bancorp, Inc.
Earnings Per Share
(Dollars in millions, except share data)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, 2018 | | March 31, 2018 | | June 30, 2017 | | June 30, 2018 | | June 30, 2017 |
| Net income | 50 |
| | 35 |
| | 41 |
| | 85 |
| | 68 |
|
| Weighted average shares | | | | | | | | | |
| Weighted average common shares outstanding | 57,491,714 |
| | 57,356,654 |
| | 57,101,816 |
| | 57,424,557 |
| | 57,012,208 |
|
| Effect of dilutive securities | | | | | | | | | |
| May Investor warrants | — |
| | — |
| | — |
| | — |
| | 24,575 |
|
| Stock-based awards | 766,863 |
| | 957,731 |
| | 1,037,122 |
| | 861,770 |
| | 1,069,287 |
|
| Weighted average diluted common shares | 58,258,577 |
| | 58,314,385 |
| | 58,138,938 |
| | 58,286,327 |
| | 58,106,070 |
|
| Earnings per common share | | | | | | | | | |
| Basic earnings per common share | $ | 0.86 |
| | $ | 0.61 |
| | $ | 0.72 |
| | $ | 1.47 |
| | $ | 1.18 |
|
| Effect of dilutive securities | | | | | | | | | |
| May Investor warrants | — |
| | — |
| | — |
| | — |
| | — |
|
| Stock-based awards | (0.01 | ) | | (0.01 | ) | | (0.01 | ) | | (0.02 | ) | | (0.02 | ) |
| Diluted earnings per common share | $ | 0.85 |
| | $ | 0.60 |
| | $ | 0.71 |
| | $ | 1.45 |
| | $ | 1.16 |
|
Regulatory Capital - Bancorp
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | | June 30, 2017 |
| | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio |
| Tier 1 leverage (to adjusted avg. total assets) | $ | 1,525 |
| 8.65 | % | | $ | 1,475 |
| 8.72 | % | | $ | 1,442 |
| 8.51 | % | | $ | 1,408 |
| 9.10 | % |
| Total adjusted avg. total asset base | $ | 17630 |
| | | $ | 16,918 |
| | | $ | 16,951 |
| | | $ | 15,468 |
| |
| Tier 1 common equity (to risk weighted assets) | $ | 1,285 |
| 10.84 | % | | $ | 1,235 |
| 10.80 | % | | $ | 1,216 |
| 11.50 | % | | $ | 1,196 |
| 12.45 | % |
| Tier 1 capital (to risk weighted assets) | $ | 1,525 |
| 12.86 | % | | $ | 1,475 |
| 12.90 | % | | $ | 1,442 |
| 13.63 | % | | $ | 1,408 |
| 14.65 | % |
| Total capital (to risk weighted assets) | $ | 1,665 |
| 14.04 | % | | $ | 1,617 |
| 14.14 | % | | $ | 1,576 |
| 14.90 | % | | $ | 1,530 |
| 15.92 | % |
| Risk-weighted asset base | $ | 11,855 |
| | | $ | 11,440 |
| | | $ | 10,579 |
| | | $ | 9,610 |
| |
Regulatory Capital - Bank
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | | June 30, 2017 |
| | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio |
| Tier 1 leverage (to adjusted avg. total assets) | $ | 1,594 |
| 9.04 | % | | $ | 1,537 |
| 9.08 | % | | $ | 1,531 |
| 9.04 | % | | $ | 1,590 |
| 10.26 | % |
| Total adjusted avg. total asset base | $ | 17,637 |
| | | $ | 16,926 |
| | | $ | 16,934 |
| | | $ | 15,504 |
| |
| Tier 1 common equity (to risk weighted assets) | $ | 1,594 |
| 13.44 | % | | $ | 1,537 |
| 13.42 | % | | $ | 1,531 |
| 14.46 | % | | $ | 1,590 |
| 16.49 | % |
| Tier 1 capital (to risk weighted assets) | $ | 1,594 |
| 13.44 | % | | $ | 1,537 |
| 13.42 | % | | $ | 1,531 |
| 14.46 | % | | $ | 1,590 |
| 16.49 | % |
| Total capital (to risk weighted assets) | $ | 1,734 |
| 14.62 | % | | $ | 1,679 |
| 14.66 | % | | $ | 1,664 |
| 15.72 | % | | $ | 1,712 |
| 17.75 | % |
| Risk-weighted asset base | $ | 11,863 |
| | | $ | 11,449 |
| | | $ | 10,589 |
| | | $ | 9,645 |
| |
|
| | | | | | | | | | | | | | | | | |
Loan Originations
(Dollars in millions)
(Unaudited) |
| | Three Months Ended |
| | June 30, 2018 | | March 31, 2018 | | June 30, 2017 |
| Residential first mortgage | $ | 9,040 |
| 95.2 | % | | $ | 7,886 |
| 97.1 | % | | $ | 9,184 |
| 95.0 | % |
Home equity (1) | 141 |
| 1.5 | % | | 65 |
| 0.8 | % | | 75 |
| 0.8 | % |
| Total consumer loans | 9,181 |
| 96.7 | % | | 7,951 |
| 97.9 | % | | 9,259 |
| 95.8 | % |
Commercial loans (2) | 317 |
| 3.3 | % | | 169 |
| 2.1 | % | | 400 |
| 4.2 | % |
| Total loan originations | $ | 9,498 |
| 100.0 | % | | $ | 8,120 |
| 100.0 | % | | $ | 9,659 |
| 100.0 | % |
| |
| (1) | Includes second mortgage loans, HELOC loans, and other consumer loans. |
| |
| (2) | Includes CRE and C&I loans that were net funded within the period. |
|
| | | | | | | | | | | |
Loan Originations (Dollars in millions) (Unaudited) |
| | Six Months Ended |
| | June 30, 2018 | | June 30, 2017 |
| Residential first mortgage | $ | 16,926 |
| 96.0 | % | | $ | 15,087 |
| 95.0 | % |
Home equity (1) | 206 |
| 1.2 | % | | 131 |
| 0.8 | % |
| Total consumer loans | 17,132 |
| 97.2 | % | | 15,218 |
| 95.8 | % |
Commercial loans (2) | 486 |
| 2.8 | % | | 671 |
| 4.2 | % |
| Total loan originations | $ | 17,618 |
| 100.0 | % | | $ | 15,889 |
| 100.0 | % |
| |
| (1) | Includes second mortgage loans, HELOC loans, and other consumer loans. |
| |
| (2) | Includes CRE and C&I loans that were net funded within the period. |
Residential Loans Serviced
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | | June 30, 2017 |
| | Unpaid Principal Balance (1) | Number of accounts | | Unpaid Principal Balance (1) | Number of accounts | | Unpaid Principal Balance (1) | Number of accounts | | Unpaid Principal Balance (1) | Number of accounts |
Serviced for own loan portfolio (2) | $ | 7,303 |
| 32,012 |
| | $ | 7,629 |
| 32,185 |
| | $ | 7,013 |
| 29,493 |
| | $ | 7,156 |
| 30,875 |
|
| Serviced for others | 19,249 |
| 78,898 |
| | 18,767 |
| 77,426 |
| | 25,073 |
| 103,137 |
| | 16,144 |
| 66,106 |
|
Subserviced for others (3) | 93,761 |
| 424,331 |
| | 77,748 |
| 360,396 |
| | 65,864 |
| 309,814 |
| | 63,991 |
| 304,830 |
|
| Total residential loans serviced | $ | 120,313 |
| 535,241 |
| | $ | 104,144 |
| 470,007 |
| | $ | 97,950 |
| 442,444 |
| | $ | 87,291 |
| 401,811 |
|
| |
| (1) | UPB, net of write downs, does not include premiums or discounts. |
| |
| (2) | Includes loans held-for-investment (residential first mortgage and home equity), loans-held-for-sale (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets. |
| |
| (3) | Includes temporary short-term subservicing performed as a result of sales of servicing-released mortgage servicing rights. Includes repossessed assets. |
Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | | June 30, 2017 |
| Consumer loans | | | | | | | | | | | |
| Residential first mortgage | $ | 2,986 |
| 33.5 | % | | $ | 2,818 |
| 34.6 | % | | $ | 2,754 |
| 35.7 | % | | $ | 2,538 |
| 37.5 | % |
| Home equity | 685 |
| 7.7 | % | | 671 |
| 8.3 | % | | 664 |
| 8.6 | % | | 459 |
| 6.7 | % |
| Other | 88 |
| 1.0 | % | | 25 |
| 0.3 | % | | 25 |
| 0.3 | % | | 27 |
| 0.4 | % |
| Total consumer loans | 3,759 |
| 42.2 | % | | 3,514 |
| 43.2 | % | | 3,443 |
| 44.6 | % | | 3,024 |
| 44.6 | % |
| Commercial loans | | | | | | | | | | | |
| Commercial real estate | 2,020 |
| 22.7 | % | | 1,985 |
| 24.4 | % | | 1,932 |
| 25.1 | % | | 1,557 |
| 23.1 | % |
| Commercial and industrial | 1,324 |
| 14.9 | % | | 1,228 |
| 15.1 | % | | 1,196 |
| 15.5 | % | | 1,040 |
| 15.3 | % |
| Warehouse lending | 1,801 |
| 20.2 | % | | 1,407 |
| 17.3 | % | | 1,142 |
| 14.8 | % | | 1,155 |
| 17.0 | % |
| Total commercial loans | 5,145 |
| 57.8 | % | | 4,620 |
| 56.8 | % | | 4,270 |
| 55.4 | % | | 3,752 |
| 55.4 | % |
| Total loans held-for-investment | $ | 8,904 |
| 100.0 | % | | $ | 8,134 |
| 100.0 | % | | $ | 7,713 |
| 100.0 | % | | $ | 6,776 |
| 100.0 | % |
Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | |
| | As of/For the Three Months Ended |
| | June 30,
2018 | | March 31,
2018 | | June 30,
2017 |
| Allowance for loan losses | | | | | |
| Residential first mortgage | $ | 45 |
| | $ | 47 |
| | $ | 56 |
|
| Home equity | 19 |
| | 21 |
| | 19 |
|
| Other | 1 |
| | 1 |
| | 1 |
|
| Total consumer loans | 65 |
| | 69 |
| | 76 |
|
| Commercial real estate | 45 |
| | 44 |
| | 37 |
|
| Commercial and industrial | 21 |
| | 20 |
| | 21 |
|
| Warehouse lending | 6 |
| | 6 |
| | 6 |
|
| Total commercial loans | 72 |
| | 70 |
| | 64 |
|
| Total allowance for loan losses | $ | 137 |
| | $ | 139 |
| | $ | 140 |
|
| Charge-offs | | | | | |
| Total consumer loans | (2 | ) | | (2 | ) | | (2 | ) |
| Total commercial loans | — |
| | — |
| | — |
|
| Total charge-offs | $ | (2 | ) | | $ | (2 | ) | | $ | (2 | ) |
| Recoveries | | | | | |
| Total consumer loans | 1 |
| | 1 |
| | 2 |
|
| Total commercial loans | — |
| | — |
| | — |
|
| Total recoveries | 1 |
| | 1 |
| | 2 |
|
| Charge-offs, net of recoveries | $ | (1 | ) | | $ | (1 | ) | | $ | — |
|
Net charge-offs to LHFI ratio (annualized) (1) | 0.02 | % | | 0.06 | % | | 0.04 | % |
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (1): | | |
| Residential first mortgage | 0.04 | % | | 0.11 | % | | 0.09 | % |
| Home equity and other consumer | 0.10 | % | | 0.28 | % | | 0.02 | % |
| Commercial real estate | — | % | | (0.01 | )% | | — | % |
| Commercial and industrial | (0.01 | )% | | (0.01 | )% | | (0.01 | )% |
| |
| (1) | Excludes loans carried under the fair value option. |
Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
|
| | | | | | | |
| | As of/For the Six Months Ended |
| | June 30,
2018 | | June 30,
2017 |
| Total allowance for loan losses | $ | 137 |
| | $ | 140 |
|
| Charge-offs | | | |
| Total consumer loans | (4 | ) | | (7 | ) |
| Total commercial loans | — |
| | — |
|
| Total charge-offs | $ | (4 | ) | | $ | (7 | ) |
| Recoveries | | | |
| Total consumer loans | 2 |
| | 3 |
|
| Total commercial loans | — |
| | — |
|
| Total recoveries | 2 |
| | 3 |
|
| Charge-offs, net of recoveries | $ | (2 | ) | | $ | (4 | ) |
Net charge-offs to LHFI ratio (annualized) (1) | 0.04 | % | | 0.15 | % |
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (1): | | | |
| Residential first mortgage | 0.08 | % | | 0.34 | % |
| Home equity and other consumer | 0.19 | % | | 0.15 | % |
| Commercial real estate | (0.01 | )% | | (0.01 | )% |
| Commercial and industrial | (0.01 | )% | | (0.01 | )% |
| |
| (1) | Excludes loans carried under the fair value option. |
Nonperforming Loans and Assets
(Dollars in millions)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | June 30,
2018 | | March 31,
2018 | | December 31,
2017 | | June 30,
2017 |
| Nonperforming LHFI | $ | 13 |
| | $ | 14 |
| | $ | 13 |
| | $ | 18 |
|
| Nonperforming TDRs | 4 |
| | 5 |
| | 5 |
| | 5 |
|
| Nonperforming TDRs at inception but performing for less than six months | 10 |
| | 10 |
| | 11 |
| | 7 |
|
Total nonperforming LHFI and TDRs (1) | 27 |
| | 29 |
| | 29 |
| | 30 |
|
| Real estate and other nonperforming assets, net | 7 |
| | 5 |
| | 8 |
| | 9 |
|
| LHFS | $ | 7 |
| | $ | 11 |
| | $ | 9 |
| | $ | 7 |
|
| Total nonperforming assets | $ | 41 |
| | $ | 45 |
| | $ | 46 |
| | $ | 46 |
|
| | | | | | | | |
Ratio of nonperforming assets to total assets (2) | 0.19 | % | | 0.19 | % | | 0.22 | % | | 0.24 | % |
| Ratio of nonperforming LHFI and TDRs to LHFI | 0.30 | % | | 0.35 | % | | 0.38 | % | | 0.44 | % |
Ratio of nonperforming assets to LHFI and repossessed assets (2) | 0.38 | % | | 0.42 | % | | 0.48 | % | | 0.57 | % |
| |
| (1) | Includes less than 90 day past due performing loans placed on nonaccrual. Interest is not being accrued on these loans. |
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 Loans Held-for-Investment |
| June 30, 2018 | | | | | | | | | |
| Consumer loans | $ | 3 |
| | $ | — |
| | $ | 27 |
| | $ | 30 |
| | $ | 3,759 |
|
| Commercial loans | — |
| | — |
| | — |
| | — |
| | 5,145 |
|
| Total loans | $ | 3 |
| | $ | — |
| | $ | 27 |
| | $ | 30 |
| | $ | 8,904 |
|
| March 31, 2018 | | | | | | | | | |
| Consumer loans | $ | 4 |
| | $ | 1 |
| | $ | 29 |
| | $ | 34 |
| | $ | 3,514 |
|
| Commercial loans | — |
| | — |
| | — |
| | — |
| | 4,620 |
|
| Total loans | $ | 4 |
| | $ | 1 |
| | $ | 29 |
| | $ | 34 |
| | $ | 8,134 |
|
| December 31, 2017 | | | | | | | | | |
| Consumer loans | $ | 3 |
| | $ | 2 |
| | $ | 29 |
| | $ | 34 |
| | $ | 3,443 |
|
| Commercial loans | — |
| | — |
| | — |
| | — |
| | 4,270 |
|
| Total loans | $ | 3 |
| | $ | 2 |
| | $ | 29 |
| | $ | 34 |
| | $ | 7,713 |
|
| June 30, 2017 | | | | | | | | | |
| Consumer loans | 2 |
| | 3 |
| | 30 |
| | $ | 35 |
| | $ | 3,024 |
|
| Commercial loans | 1 |
| | — |
| | — |
| | 1 |
| | 3,752 |
|
| Total loans | $ | 3 |
| | $ | 3 |
| | $ | 30 |
| | $ | 36 |
| | $ | 6,776 |
|
| |
| (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 | | Total |
| June 30, 2018 | |
| Consumer loans | $ | 43 |
| | $ | 14 |
| | $ | 57 |
|
| Total TDR loans | $ | 43 |
| | $ | 14 |
| | $ | 57 |
|
| March 31, 2018 | | | | | |
| Consumer loans | $ | 44 |
| | $ | 15 |
| | $ | 59 |
|
| Commercial loans | 5 |
| | — |
| | 5 |
|
| Total TDR loans | $ | 49 |
| | $ | 15 |
| | $ | 64 |
|
| December 31, 2017 | | | | | |
| Consumer loans | $ | 43 |
| | $ | 16 |
| | $ | 59 |
|
| Total TDR loans | $ | 43 |
| | $ | 16 |
| | $ | 59 |
|
| June 30, 2017 | | | | | |
| Consumer loans | $ | 46 |
| | $ | 12 |
| | $ | 58 |
|
| Total TDR loans | $ | 46 |
| | $ | 12 |
| | $ | 58 |
|
Non-GAAP Reconciliation
(Dollars in millions)
(Unaudited)
Tangible book value per share and tangible common equity to assets ratio. In addition to analyzing the Company's results on a reported basis, management reviews the Company's results and the results on an adjusted basis. This non-GAAP measure reflects the adjustments of the reported U.S.GAAP results for significant items that management does not believe are reflective of the Company's current and ongoing operations. The Company believes that tangible book value per share and tangible common equity to assets provide a meaningful representation of its operating performance on an ongoing basis. Management uses these measures to assess performance of the Company against its peers and evaluate overall performance. The Company believes these non-GAAP financial measures provide useful information for investors, securities analysts and others because it provides a tool to evaluate the Company’s performance on an ongoing basis and compared to its peers.
The following tables provide a reconciliation of non-GAAP financial measures.
Tangible book value per share and tangible common equity to assets ratio
|
| | | | | | | | | | | | | | | | | | | |
| | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | | September 30, 2017 | | June 30, 2017 |
| | (Dollars in millions, except share data) |
| Total stockholders' equity | $ | 1,475 |
| | $ | 1,427 |
| | $ | 1,399 |
| | $ | 1,451 |
| | $ | 1,408 |
|
| Goodwill and intangibles | 71 |
| | 72 |
| | 21 |
| | 21 |
| | 20 |
|
| Tangible book value | $ | 1,404 |
| | $ | 1,355 |
| | $ | 1,378 |
| | $ | 1,430 |
| | $ | 1,388 |
|
| |
| | | | | | | | |
| Number of common shares outstanding | 57,598,406 |
| | 57,399,993 |
| | 57,321,228 |
| | 57,181,536 |
| | 57,161,431 |
|
| Tangible book value per share | $ | 24.37 |
| | $ | 23.62 |
| | $ | 24.04 |
| | $ | 25.01 |
| | $ | 24.29 |
|
| | | | | | | |
| |
|
| Total Assets | $ | 18,130 |
| | $ | 17,736 |
| | $ | 16,912 |
| | $ | 16,880 |
| | $ | 15,965 |
|
| Tangible common equity to assets ratio | 7.74 | % | | 7.65 | % | | 8.15 | % | | 8.47 | % | | 8.70 | % |
