FBC - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Flagstar Bank First Quarter 2020 Earnings Call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Ken Schellenberg, VP, Investor Relations. Please go ahead, sir.

Kenneth Schellenberg

Thank you, Michelle, and good morning. first earnings Flagstar the to quarter call. XXXX Welcome

our like to our are forward-looking first we would on begin, to earnings statements that like I’d also I call and flagstar.com. risks and described materially presentation our Before made Slide quarter during reports X number that could release are on with presentation mention release press current the in XX-K website at our uncertainty. change remind today’s to you Factors XXXX and file on in of subsequent that our are forward-looking subject any available Form today’s SEC. and assumptions

this We financial release earnings measures, are our non-GAAP presentation earnings GAAP and in also and which in are for we call. discussing described the available made

You part to should call. as these this documents of refer also

the like that, Dinello, President and I’d With Executive now our to over Sandro Officer. Chief to call turn

Alessandro DiNello

in. in with unfortunately, Thank everyone don’t to us you, for listening difficulties. do some has call today. think remote. And being apologies of And going I it delay anything good Ken. our is having this to My all the company conference morning getting

calls hopefully, thus rest has smoother far. So than the it much are this of

all our Chief who Lee and I stay that morning Officer; our President Jim and hope Officer; I I’m remotely Mortgage; spirit distancing, able joined Financial in the safe of Ciroli, Operating Steve Chief Figliuolo, Smith, ones this of Risk by you, And the Kristy loved have and your our said, healthy. of our as to been Chief And Fercho, proper Officer. social

for some time today much our commentary to except provision. going results, not spend I’m on our on

of think operations of how adjusted you COVID-XX how it’s length forward uncertainty this think to I more going the pandemic. face I operate the the our given in of and we’ve important we’ll tell

and from With revenue. per was remarks. at will pre-provision come Lee stronger with our $X.XX net our results, a Details you share, of to if in it Jim their quarter earnings strong still look respect

me Admittedly, start life option some use about And with in immature We was add our endeavor. the totaled impact estimate but mix, programs daunting you comments loan to provision quarter. position, the perhaps the the estimate. economic let history. of quarter our to which of for no an to it the So for had to losses was $XX time million when government uncertain unknown most model assistance in the a difficult

exists our That loan our this Frankly, life I think current that is on the don’t at a that said, we’re accurately loss based data, comfortable that game. the of of there predict with model can stage analysis.

We have had nonperforming portfolio commercial strong loans. quarter, end that, the the no a at of

we’ve weakness. more far, thus seen And

any As you exposure diversified know, or industry outsized auto little exposure geography is the with no our industry. portfolio to to including

to conservatively granular structured, recession. and is Our loan to policy be concentration a highly resilient built

anyone that we eleventh Flagstar ourselves for in the a Now And lend is bank operators. has months. perhaps to the linger proven find shall has deep XX bank to of a away not hallmark thou a recession, next our only been commandment may one philosophy lending that’s from of obligation. walked that A

fact the with will that going concerns coupled all our principles, mitigate help These borrowers credit are recession-hardened forward. virtually

concern. is while date, commercial you remind And they billion. I’ll we’re positive $XX bank working a of Thus all less warehouse our us. that $X to are the ability loans, storm terms in far, to and than growing with about a their Finally, net billion assets, total remain credits, borrower weather of every

to in representing just payment good borrowers XXX unpaid request. million our of far, in standing all Thus XX% commercial their prior and deferrals commercial requested book $XXX were balances, have

clients thus no C&I for worth received noting deferral $XXX and our million respectively. million, account requests Business banking that far. million, homebuilder CRE $XXX we and with It’s $XX requests representing from

top are work. credits, one every our of monitoring We actively for and on slightest the both of managing

assisting will many we of through customers loan, even PPP Street assisted have a and with these We the more program. Main be Lending

our commercial being in wherever and warehouse prudent business, on We’re requests of with back presents and commitments we outside careful are pulling connection it’s new itself. the loan opportunity

Even more loans approach. rates lower non-QM collateral lending, government we warehouse higher risk. or are credit that requiring loans accepting Essentially inside no-jumbo we’ve as loans a and taken and for tighter a at believe advance conservative box for

and HELOCs. consumer material weakness portfolio, far, our we we’ve Thus high-FICO seen those high low-LTV, loan loans largely in loans. of to consist As of mortgage no FICO

at XX I think those weaker it’s will a given than economic forecast June XX. be at March that the

our fully QX, expect but is a just impossible much how for will significant predict. suggest model ACL that I So allowance adjustment to

much that is perhaps as opinion in as GDP will QX. contract XX% My

as as growth much an annualized slow on followed basis, by XX% ensuing the quarters. So in a

might GDP XX% QX, Unemployment in reach gradually declining then as improves.

thinking, doing. recovery. quite the the realize on the of to it not So I call what prudent we’re and but and for the most it’s is view exactly is prepare the of my that’s I would that universe hope this pessimistic side for what worst opinion probably best,

how pandemic much possible I’d start could more continuity plan. proud be I the and for company Next, We we’ve not adjusted. our our how of to to not have in better. saying speak our responded by a business to like We could team gone I’ll pandemic, prepared and

moved years As part laptops. our a plan ago, we’ve to of of majority people vast X that

have move secured VPN we Additionally, quickly. and licenses enough to bandwidth

And so interestingly, working our productivity Today, XX% really dropped. went employees remotely. of the transition And over are not has well.

remotely. overnight, managed applications and to the up million and hours launch processed released. billion, all mortgage million with it forbearance, every the of over built and accepted were over in processed a We for Program Protection requests over - month, seeking balances thousands loans. running platform, last weeks we $X.X Remarkably, $XXX guidelines the $X were X,XXX technology literally got the of loans, customer a mortgage after new deferral, arrangements and Paycheck commercial processes for fact, In out XX in and of these by billion warehouse performed worked two took $X increased

Additionally, only by access in-branch on reached eliminated at appointment branches, to one desk. days and and service not then XX, has lobby few select bank with my a we customer drive-up complaint later, moved March service

In We the Fed has And about over of fact, million our and saw growth during increase move balances from been following customers. $XXX still million in encouraging. aggressively seen increased a this April reduced we’ve deposit quarter. deposits deposit rates in further $XXX banking

we need there’s return get to facilities. And in we smoothly our know it given flattening I a to clear very normal I That’s team. will look thing will conservative what of While don’t the you moving curve. be for tell people can how ahead our when back right like, the will of no are operating, or

country for to donated always, communities. including we’ve As the we’ve $XXX,XXX across hospitals. are contributed a date, masks always our to been that $XXX,XXX cotton markets cause, manufacturing company being COVID-XX in support To that to silk to there almost shifted the

our on either of best recovery. employees recovered have X,XXX to road the XX or COVID-XX, for appeared Only Flagstar tested and they all be positive contractors and to have of all,

customer-related XX% responded in believe we tell effectively part, distancing We you to emlpoyee we Also and that early Flagstar please team large our XX. that’s, because that concerns. on and felt very started surveyed social March both to our

the As of we difficult I do business as retain model have think our the last resilience weeks been, action. in X

why. Here’s

month-to-date First, of billion. of balances back currently balance a which think our has approximately warehouse income outstanding billion, business, can of I we the with over sustain $X.X interest average on net $X

expect We’ve Warehouse flows. by XX% and interest provides been loans products. portfolio rate returns agency outside these to had without no lines credit government entirely and now new net almost with loans are income. secured grow of The booking commercial we conforming warehouse, virtually strong of risk,

Second, to be the mortgage continues business strong.

Our conforming sale agency of over no shows loans. and lots representing on of month-to-date million weakening $XX gain with the is over XX% signs

to the While power this will performance I this demonstrates opine on want I environment. it think current continue, in long of business how the

interest chest our businesses net credit recent will While Mae’s pin true, originations we’re holds and in XX% it thrive, for warehouse the mortgage capital needed. of compared lock-switching should as a will one, Sallie war and projection to not in position most income XXXX be a without to in build be or guiding increase into a XXXX we on

guidance is desperate. To right put mildly, giving it now much too

and Flagstar other side. to storm is stronger I out on well positioned the However, weather the believe come

strong, strong, and model Our it. our is liquidity business is working allowance capital is our strong strong, our we designed profitability our as is was precisely

unlike it to that we’re anything not comments have don’t we like my change posture I’d in at clear today make Obviously, to dividend term, been we near because are unprecedented times. before Finally, this buybacks time. our contemplating expect and the in stock

my protections. guidance so see how has on future in and context to doing of to we performing perspective goal harbor and communities. the My of understanding on the deep give Flagstar of drawing and more a and been In near the the doing SEC’s Flagstar recent you in thing at safe and employees, our company experience our for of committed quality the its customers employees, caliber years XX right than the and are I

Protecting secure will their Flagstar’s health health.

on focus If the produce firmly them. we for environment I manage dwell we will us, best and gives not the continue results we risks our shareholders. that, opportunities possible we face conservatively, this the will will though to believe on We will do we

it turn With to that, over Jim. I’ll

James Ciroli

Thanks, Sandro.

to Slide Turning X.

linked-quarter million share quarter. per the Our million million share. to basis quarter. $X.XX last the per to had We The adjusted this share compares $X.XX provision $X $XX million $XX quarter this due net largely or of last quarter performance income per or a or in on $XX the same income $XX year. credit was This was net decline

deeper this quarter’s Diving performance. into

earnings margin cuts was $XX million only million. over $X XXX quarter Average points unexpected. that March earning interest basis of income Our were Net or our decreased the the expectations, with pre-provision down were last net line $XX $XXX to grew compared assets by this basis quarter. quarter. despite XX prior In rate pretax interest in points million million X%

composition variable of review by franchise, our This and next deposit and core that has strong of of well-diversified rate portfolio We’ll the was well-positioned, loan both loans. customers by many numbers these large driven assets rate performance retail floors a a its further slide. granular on fixed consisting on

a prior million were quarter. to of $X the decrease revenues Mortgage or compared X% $XX million,

quarter, to the we saw to primary, widened historic margins work lenders secondary During capacity. as spreads significantly manage and gain-on-sale levels increased

I’ll half moment. and million occurred, and experienced volatility of of further March, in in dislocation second market However, extreme which we the hedge a losses, discuss $XX

basis flat and relatively X were charge-offs year-end. points, Net strong. nonperforming remained to were loans quality Asset

Our $XXX at which loan quarter at million reserve from allowance ACL, the up or $XXX includes for year-end. end, commitments, unfunded for credit losses, million was

our levels, to take At the a This we million HFI, asset deeper more provide was these $XX is the when of get details credit We’ll coverage our and of dive quarter. and adoption X.X%. into slide provision result this X CECL January quality loans, the CECL.

at billion remained Capital also our that all ending the stress Despite sheet capital based risk-based XX. capital the balance DFAST at $XX ratios $XX solid. established at buffers March was Total billion, we’ve on from year-end, quarter our remained models. up XX.X% above

and Tier to into Our on so go dive CETX the was was statement. let’s X.X%. and X We’ll X X.X%, leverage capital ratio ratio income turn into more later, deeper our details Slide

$X income reflect one this to estate lower Net loans led than million for assets Nearly commercial million loans. from this resulted decreased less in investment held real and by half The interest results increase sale day quarter. in of securities, was having which $XXX the last X% average-earning decline quarter, quarter. X% the

the rate relatively down X dive interest basis a interest net decline deeper risk slide. broker balances addition into were flat deposit came We’ll and while excluding income in deposits. on costs our average Deposit next quarter-over-quarter, points,

Noninterest to $X due X% mortgage or income revenues. decreased lower $XXX million to million

a revenue XX% gain-on-sale million, from $XX prior decrease was Our or million of quarter. $XX representing the

margin our LOCs in gain-on-sale were the increased to billion. to $XX.X margins strong, delegated decreased And basis XX% Channel especially points. bulk XX channel. Fallout-adjusted

on short of sell Fed’s that and The This prices much to our held securities of March mortgage-backed MBS the securities values change TBA price the pipeline hedge impacts pushed on closed buying loans mortgage-backed beginning higher. XX, sale. for we

the position more pipeline As long increasing million loans not closed creating short position losses. than value did the of value, in hedge level of the experience same in $XX the declined price appreciation,

our to appendix this to took quickly month we provide position industry hedge were added and by details reacting and on changes, pricing Slide what experienced. profile, made We We’ve end. to rebalance more the in improved XX the which our actions phenomenon,

Through their April, on million actions gain-on-sale our of Fed stabilized recorded sale. the $XX we our In April. Friday, for modified gain revenue and which hold, over took last purchases

this be, While indicates quarter won’t the forecast partial on will not we issues hedging second persisted. gain what have revenue that result month sale the

and million control. We $X we due sub-servicing administration this to average MSR also the had LIBOR-based a $X customers improvement deposits of in the serviced custodial a that to result for return. loans that higher million decline they hedging in quarter. improved The credit income Loan provide our the gains

million balance was and the from Noninterest recur. down $XX was quarter prior that quarter. not related $XXX The million, primarily sheet place of $X in expense cleanup and expenses did the took million fourth to decrease discretionary

Overall, on Expenses were provide were the closings expenses closings later. declined also quarters. mortgage percentage Lee loan down expenses prior of as X%. more color as mortgage two will consistent a with

We’ve position rate the the details risk our added on interest of Slide X to more end quarter. provide at

While we won’t we guidance income, good a position. we’re on interest that provide feel net in

are Looking portfolio, variable. loan at loans commercial of our XX% the

As as of Sandro mentioned, in them. have out, floors our warehouse parse that variable XX% we percent loans over

LIBOR see that level. in balance sheet at don’t floors coming asset the allow We either also reset C&I a compression risk-to-spread we zero with loans, higher lot from a the or below floors LIBOR CRE don’t side floors our to have of Consequently, many of of and

Looking to reset remaining down pricing the on drive to interest $X.X our taken reaction actions we months the CD that book, At of year billion X the mature this the in in of Fed rates. lower short-term end, we and had deposits, in retail to CDs have rates. aggressive by portfolio moved at quarter

market had end. and also million $XXX money We of savings at accounts quarter

So we’re and an which average rate, part level the year. that promotional will this promotional come of X.X% of off under of has also cost in rate lower repriced latter that some

summary, remainder down we and are are the XX% as year. our a deposit the Approximately for In on be the deposits tailwind naturally by that based our LIBOR. of custodial could sub-servicing of believe rates those controlled priced rates clients

basis rate out $X.X this cost executed funding long-term between lathering average below securing FHLB the years. executed entered Also interest of and of lower of we’ve funding, our We’ve into advances billion and X side, liability well on an swaps funds points, QX. rate now XX lock at those X long-term cost to strategy, in in

place, be difficult of our for that where predict good we feel position income net interest the might considering We liability-sensitive in this that And the especially rates interest to environment. is to should in for it’s feel protect While can the rate nature risk year, a we and relatively margin interest business. mortgage margin quarter. believe first net interest this that our net remainder be our flat

loans. effectiveness while originated under the of the on net positioned margin This PPP loans was would we that that the To it’s perspective the income. X.XX%, I the contemplates of we’ve actions first also net FDIC interest impact us, deferral was have taken interest quarter to those showing X.XX%, illustrate how of interest the share margin March’s net protect

Slide decrease the Average declined mortgages highlights turn in billion, mortgages. held result and residential investment loan average warehouse of sheet which this Most residential of and the seasonal first average quarter. our was warehouse a to $X.X average for XX, Let’s loans prepayments. decline was in the loans in decrease driven by balance

finance loans the higher to levels warehouse for and of loans customers we more loans continue mortgage the warehouse sale. held non-QM and end, and actions resulted business, a jumbo conservative support warehouse from of that our on our even will loans box tighten loans, levels to support we the took in approach higher with quarter lines. At and we credit saw government The as

delivered due prices saw the at loan created bonds TBAs not in For could these Ultimately, of we sale, newly market. elevated our to mortgage-backed reasonable that securities be in imbalances held April. sold levels for into supply we

execution. and our bit, without these this were to compressed we While assets our spreads inflated balance a able hold sheet sacrificing

mortgage by that expect CD lower the our $X.X higher partially sale balances portfolios balances. and offset deposit runoff. loans deposits this deposits we’ll for quarter. Higher demand driven in decreased continue relatively and held billion, Average wholesale have in second We to warehouse

sources strong We undrawn continue facilities. on to our deposit a portfolio off-balance driven liquidity, have of with with strength sheet FHLB securities base liquidity our multiple high-quality our and position, by the both balance to access sheet and of

our and fund the ample discount borrow access to We PPP PPP also Fed’s plan window. the loans to at using have facility

of continue quarter tangible at up year-end. capabilities in per our capital $XX.XX share $X.XX book we end, with to value Finally, demonstrate generation significant growth from

portfolio turn year-end. Delinquencies asset strong. the XX Slide up Only days quality XX Let’s be were loan basis quality to basis XX. over Credit remained continue low. points total X of points delinquent, to on relatively loans in from

of covered Our credit HFI X.X% now our losses allowance commitments. This includes loan total unfunded for for loans. coverage reserve

substantially and see collateralized Excluding with loans, are at warehouse X.X%, under loans as given consistent all the clean denominator, of for CECL. we and considering coverage loss that agency other what would ratio history relatively government-backed our banks these their having credit stand

we’re doing significant COVID, sectors in relationships portfolio Considering borrowers. and communication the and within with analyses uncertainties close related to certain our loan monitoring economic entire additional staying our

to industries more total, believe of just are loan only we you On most In Slide that outstanding impacted. X% to those exposure billion XX, in have portfolio. share to wanted be of this our representing likely we category, with our $X we loans under

this totaled loan million. exposures restaurants. automotive, entertainment commercial includes and which group, focused we’re businesses, portfolio, leisure on to the these balances and Within In $XXX our hospitals

You the here relatively exposure can that is see low.

have and We no oil gas exposure.

including commercial our $XXX XX%, million portfolio, properties hotels, estate in service the the was to retail our X.X average outstanding loans be most times. and our average and we Of senior In by in secured areas LTV debt real is housing. this likely loans coverage with category, impacted COVID, have

our relationships of all quarter. analyzing this be We’ll borrower

industries of the this people, loan we debt and of know a that ratios, service and challenging will to well-diversified we level exposure discipline. many of coverage portfolio low the for is LTV result our these our strong be believe While our time credit result the

we’ll implemented the of the light to the at got right how in wanted uncertain thinking We about end to CECL we the be walk outlook quarter you CECL, have XX. Slide how to economic balance how that we of turn now. we let’s CECL and So through

for loan liabilities million in ended sheet. included and commitments. of in we for $XXX in $XX Both with available million portfolio. losses The unfunded $XXX the consisting Overall, the loan balance the losses other is unfunded losses, for commitments credit quarter million credit loan loan allowance to our allowance reserve of on for reserve are cover

XX% allowance end what CECL, These at distress. average at period. day XX-day three In credit we’ve forecasts XXXX. long-term next losses of adoption of reverted our our severe increase X in a use adoption. a we model the that end different quarter total, weighted the that reported We represents forecasts In X-year for of economic - a years, XX% which reflected then projection adverse included to an one over over our

year. Our quarter-end baseline, the estimates, in COVID by recovering recession, mitigate that the the some caused assumes forecast distress that which we and stress. partially elected March and contemplates are we sharp in sudden a reflects actions the Moody’s economic to taken also The use XX to the later only impact government severe

In and end GDP and HPI contracted year end year. this decreases spikes to the the in XX% scenario, moderates and of the of X% X% to by the unemployment QX by X%

judgmentally that We in reserves additional and CRE, thought we forecast. C&I coverage the to stressful for homebuilder customers portfolios more industries provide conditions and in also increased our to exposed our could be

portfolio-by-portfolio resulting breakdown coverage a appendix. in provided our ACL We’ve ratios of the

measured are impacted loans to by reserves with specifically We the not also amounts CECL and change. for continue maintain guarantees methodology our loans whose government

of after adopting will as CECL be which until impact phased per expect, end you’d the year. elected capital the it XXXX, XX% in defer of regulatory Finally, at we’ve to

sheet our March of down relatively our while risk-based tremendous buffers. above XX growth, capital our ratio at basis was CETX XX, remained and points, solid Despite unchanged. X.X% XX. only was ratios Total XX.X% balance Slide to Turning capital stress nicely

pro balances lower increased expect and is X Our ratio the the basis I’d growth at simplification actually with as the Tier held same end based warehouse toward quarter. X ratio X.X% next happened leverage ratio X Tier for capital average of quarter. and forma loans and to sheet points on be leverage sale loans balance this ratio our of the

these risk-based and portfolio, sale capital content. loan asset two of Tier points warehouse dedicated our for basis book leverage points low-risk capital loan XXX that total categories approximately have very to over we Between have XXX X and basis

for In that and categories. which and consisted you for our under we quarter approach on last product had while I’d loans. we conservative government-backed warehouse hold are during we’ve $X certain collateral risk the lines, rate, cumulative has almost remind the loans, for lending, more of also XXX% losses XX they agency years, those the that took entirely and collateral million a of

these or held balances Loans for trading Freddie little content were risk portfolio. were our at reflected and very over also end quarter securities had of sale and Ginnie $X Fannie, in billion

we low-risk in quarter operating capital composition as warehouse our given sale, believe with and low-risk more for very and guarantees we’re categories cash. securities, end that loans levels, securities held strong That at our summary, have is half at balance of were that sheet In loans, assets investment than government loans trading content.

businesses. turn now I’ll insight each in more for our Lee to of

Lee Smith

everyone. good Jim, Thanks, and morning,

We’re pleased how to the our tangible diluted pandemic. more with of which proud to increased very as value the responded quarter, net $X.XX I book first income couldn’t COVID-XX organization more share be per an importantly, we’ve $XX.XX, of for but

critical Nothing by and from vast of majority and Flagstar were the family. And our is than more March to pivot we Monday, safety working of employees the XX. home able were ensure the quickly health

X,XXX remote in the connection March to by in employee and XX days expanded just capacity Friday, didn’t orders being stay-at-home a conducted put remote leading our happen. which users. test increased on work network We place, capacity up This our XX,XXX

moved needing an work from to regimen we necessary For implement on and to distancing as they those site. still as employees possible safe equipment Flagstar felt cleaning protective while facilities, provide enhanced ensure to standards,

our serve of come It’s they’ve the and and the a us. morale standards during spirit same miss and testament didn’t we exceptional continued to expect Flagstar beat the with team partners from customers this to that to transition,

forbearance have their and customers of mortgages. to applications out, As took and X,XXX over moved can our rolled benefit. efficiently on ensure Program We with we’ve and government worked Protection participate requesting relief programs for borrowers the relief have quickly thousands been Paycheck

X times And material but period. we’ve there center Furthermore, us believe at capacity us layoffs team seen the this or the and at for lot or furloughs Flagstar. last hold have the multiple call including has journey the I the no weeks, has over has on our been helped been over been this few not wait years, A has throughout thrown moment. last acquisitions, stood tall. increased We’ve prepare

business ever, natural refinance than how believe I more performed talked as originations, our environment, this exceptionally our interest model shine. lending. has warehouse increased rate in our previously lines will Now We about business because hedge. And a of volume, act low different mortgage well, so as

supported strong these or quarter deliberate sub-servicing mix And non-interest XX% two our businesses been move the business, operation. ensure in from believe and have and our income will by we forward. well of revenues continued were first performance well-balanced I as fee this

There margin effectively increased average net actions included: thoughtful the X%, $XXX we investment XX other securities, to as developments sheet. basis assets a the result decreased of while and which on interest-earning interest of or an were notable points manage liability during increase balance net quarter, through the in compression interest X.XX% million primarily several margin timely our side

significant We which quality loan a exposure no and potential adopted portfolio industry. $XX on maintain of of at $XXX diversified the impact credits future. COVID-XX the the credit to one end million quarter, increasing CECL, in and the any with in portfolio its reserves million was result lending our our We of

million $XX decreased as Mortgage to advantage million of refinance strong or million market. to the we X% versus in $X fourth banking quarter quarter the only take first in continue revenues $XX the

million at relatively servicing terms remained we the for sub-serviced. of in bank. flat consistent business which March, non-interest X.X serviced were end sub-servicing of income the loans, fee approximately Our And sub-servicing or loans or generates

which STAR Fannie Award year, Performer exceptional and to the call commitment servicing, consecutive teams. testament and were awarded general center work fifth servicing, the our For the we Mae in of collections is

customers which deposit solid, to who our funding, access strong capital are given liquidity, only our to partners Home particularly not also Finally, our maintained broad business so we means we’re our Federal pandemic, not base positioned Loan this support and position weather well but and and remained fortunate. Bank

of as been but rallied an undoubtedly robust exceptionally a team-oriented well thrilling a our It’s employees, organization time, result and model. as approach fantastic business we’ve

major the will some metrics segments outline our during quarter. of now of each business I key the from first operating

average Slide group. Community operating the growth being turn million Please the industrial or segment $XXX lending to and Banking Quarterly commercial real with commercial include driven X%, by loans and highlights for increased CRE XX. estate the

actively managing advent customers our relationship-based commercial our working COVID-XX portfolio of with and been given closely loan the since approach. We’ve our

of credit or Line between and XX increased from usage $XXX XX% XX. XX% April to March million

from pandemic facilities continue policies We in to as strength believe will strong portfolio our terms credit be be diversified more the and of a thoughtful new and fallout this becomes apparent.

balance Average held the consumer ended our with loans loans quarter XX% $XX consumer we residential sheet, of $X.X lien X% of for as investment HELOCs. on or million approximately decreased being with billion first mortgages and

loan outstanding first million balances. shortly. received portfolio, of deferrals our will on to $XXX or I which all forbearance on throughout the have levels mortgages lien HELOCs talk on for have approximately April about Utilization flat amounts we requests fairly XX, non-mortgage period. consumer pandemic Through X,XXX remained X.X% activity

mortgage quarter due the to or seasonal slowdown fewer from lending warehouse decreased in XX% billion particularly $XXX in the January resulting online days activity, February. and $X.X loans to Average million in

of changes in made our we market. volatility to result the warehouse box credit However, mortgage as the at the end of quarter a the

market to our the announcing, around going loans. and loans other all to products honored protect financing we response several to that uncertainty and line position. we the limits FICO were tightened non-QM of We own Furthermore, our at the in time stop were jumbo on

a its the environment And a correlation I acts it low given that add to positive during activity thriving. to see average been nice we of in the when as would warehouse encouraged April, have month lending. continued is balances hedge rate business, in mortgage high refinance interest outstanding

X% held net approximately quarter applications, investment this million million, received approximately order to $XXX we the the in interest customers, or our X,XXX which In decrease $XXX help protection quarter-over-quarter. after ended average for program in participated means million. the Overall, drove and totaling income just decreased Paycheck loans administering $X SBA’s

Flagstar benefit. the team did This program and standing and to job up ensuring quickly, very this an able customers were participate of and was introduced our outstanding

bank another XXX of so in XX proximity remain are open. to that XXX protect branch, have driver employees. not branches our a our we further close and The close are do to them to located closed chose

rate which operational. the custodial but non-interest-bearing ATMs $XXX moved interest-bearing accounts to as quarter our the reduce environment. retail and points lower XX approximately remain of for of we did we deposits, all the quickly interest basis All million, and compensate deposits include interest-bearing decreased during cost Average

the We we will strong customers throughout portfolio to approach continue with credit work have continue community closely with feel to bank. We maintain this pandemic. and and our a our within relationship-based loan qualities, disciplined we’ll

turn highlights increased fallout-adjusted XX% for loan business XX Please points. include, sale net decreased to the mortgage origination Slide billion Quarterly while basis margin gain to XX to on volume XX. quarter-over-quarter, points $XX.X the operating basis lock

As on a $XX of $XX result, quarter. interest in million the robust refinance lock during rates, the fallout-adjusted to in by gain due The volume sale month increase decreased the to March. driven was particularly million market low

seasonal quarter the during market. closings of the accounted for XX% lock our Refinance were fourth $X.X purchase quarter. first an to quarter, the Mortgage X% due anticipated in in slowdown from the volume activity billion decrease

Jim after settled incurred end quarter hedge we our reasons where short-term of and margin a quarter phenomenon the on described. end it April. right story the and but the volatility has of the down the loss big towards materially month pipeline The previously the reduced during been for stable our a hedge happened for was substantial quarter, has This

losses. in end, what protect and the future write-downs moved warehouse minimize to our to did around and certain tighten the quarter or to any on side, we higher-risk credit stop Similar originating box position we products areas right

work-from-home our environment, excel and volume. mortgage the continues to Despite keep operations additional up moving with a to team

this levels, underwriting have productivity the prior our in unfamiliar. shift seen and any We not remote large degradation I due part in environment work COVID-XX. This believe being means is in to wasn’t XX% to staff

offshore not the have are of in almost U.S. we our as here been by operations Furthermore, shutdowns affected all

efficient continue We compliant operation of to and run scale. a

seen during by the are encouraged our with pleased earnings, protect of to at end future we’ve quickly both We’re very quarter now we how of month and the April. the the mortgage and in reacted what

We April gain-on-sale have over revenue booked already through XX. million $XX of

model a and and a been hedge in non-interest environment. to component of key rate always for other interest income some our generates significant businesses natural of bank has a the It fee declining strategy. business our Mortgage is

Slide million for servicing we other for highlights the over operating servicing sub-servicing XX owners. sub-service ended segment the Quarterly or servicing. approximately MSR X.X which on XX% mortgage of or to quarter include, XXX,XXX of Moving loans,

quarter Of Mae. serviced to despite Mac backed or sub-serviced Freddie high loans are Mae, number the our are the XX% we business. flat of to loans sub-serviced, in by levels Ginnie refinance serviced as replace X.X loans relatively origination from remained or able activity the million with mortgage The of new Fannie we’ve runoff

as or recapture to such financing solutions provide million sub-service this to owners. capacity loans, are X Today, and services as the have to beneficial we in MSR environment. service well offerings proving offerings ancillary as current be Those very

profit to before million If $X The right Slide XX, our activity add loans for and of at $X for liquidity. are to XXX,XXX operating million forbearance are every you now look major tax we servicing issues platform. guidance see will we the achieving you that

XX% This XXX,XXX April right that half means COVID-XX. or April in borrowers sub-service advantage now, XX, forbearance either of representing relief effectively Interestingly, loan XX.X% we we of the sub-service is Thursday, have of forbearance. service of or option. payment those made borrowers the Through the actually or of that X.X% forbearance not portfolio because book and their taken have requested service

be there fees, and of certain reporting period, the bureaus. to part negative forbearance As credit also no waiving the we’re will

As in the better to because acquired leverage order in oversight our Operationally, in-house. been spike prepared we in may Jacksonville industry-leading to operation we and couldn’t core bring have recall, of back monitoring and servicing September default pandemic. volume default servicing handle you in a XXXX this

We been spikes have we times speed-to-answer have closely service monitoring within operate ensure minute wait to the our one been to average call level quick react requirement. to and

and and task to set get the ahead things our proactively loss-mitigation solution normal these they we’ve loans work hardship through force Furthermore, just This in letting to operation out process. forbearance reach up an within appropriate run to the allow forbearance. after borrowers a relief servicing exit will us streamline default rather out than of team

sales. we these billion flow MSRs, billion sales billion and on $X.X $X.X the quarter, bulk of via XX% via the $X.X of During retained sub-servicing and sold

there uncertainty for the right market However, volatility advances. surrounding given now, on MSRs, liquidity is market no and the recent

for the we’re market the retaining near create believe the on we back do through come future. in meantime, MSRs will our MSRs comfortable the in We But business very origination our sheet. balance

to MSR necessary. year, Our use before of CETX have we we end start MSR the the created runway intend through to of to we room the CETX and the XX.X%, ratio so to capital level is currently XX% if plenty approach

are owns. Of bank. Flagstar position only a small the as or on the need we MSRs X% service liquidity loans percentage X.X on strong is immaterial, a It’s liquidity given overall the our advances million sub-service,

which get in Finally, quarter, additional our sheet. sub-servicing was custodial quarter. as it prior one compared the we first Again, liquidity is from helps to just flat this provides fund business deposits that balance $X.X billion benefit averaged our

is a Now more the capitalized see ever, well will strength bank liquidity of the plenty I in you and stands sub-servicing than of industry, to continue in future. thrive the within our that has alone it expect business and

Moving Slide on XX. expenses on to

Our or of of decreased was million Generating total operating million. closings. million also positive total decrease million in The quarter-over-quarter, leverage decreased expenses revenues expenses to X% and $XX driver the lower main $XXX non-interest the in to quarter. $XX X.X% mortgage by $XXX

write-off last Slide this million, is quarter. $X sale, rate a onetime at million legacy look a million you the Within slight meaning were non-interest XXXX If in which expenses of $X core $XXX amount to of XX, non-mortgage relates $XXX million, run is our a from increase QX.

down mortgage were $X a of X%. versus drive the closings QX, were directly mortgage tied million decrease $XX mortgage origination to business million, expenses, given which Expenses

on percentage mortgage as a see of X very have for last been closings, Slide the you can As consistent expenses quarters, mortgage XX.

Our efficiency an prior the was from ratio quarter the was which for of I’ve reasons outlined. just for first XX% quarter, X% the improvement

will this non-interest and expense the time. we at around COVID-XX market the providing Given uncertainty QX mortgage not be guidance expenses,

of The stride partners, team the priority. communities environment one safety time health and this without stakeholders adapted has on breaking way has and It’s to an our new is unprecedented the exceptional. the been customers, Flagstar family, number our employees,

to and help the through stronger will logic customers the other business come relentlessly out situation, I it. work of this strategy and side this our for will to of in strength environment. prevail uncertain we continue believe difficult will model our business our We

This our our from prepared concludes to the questions remarks, and we listeners. open will now call

Operator

Instructions] Please first from Thank you hear Scott [Operator with Piper go ahead. Seifers And we’ll Sandler.

Scott Seifers

morning. Good

Alessandro DiNello

morning, Scott. Good

Scott Seifers

you my question. you? for are How Thank taking

Alessandro DiNello

Sure.

Scott Seifers

securities what $X.X I increase that the question is on about long-term short billion, just on first to and advances. increase a guess ask the term trading in is guess, strategy FHLB the $X I wanted Maybe more of related I color presumably billion there. little and

the securities then a kind warehouse, between the billion-plus course, trading they really then, the in jump in follow-up of $X and billion And as the TCE dinged $X of ratio.

your comparatively between what thinking curious is the ratio? a balance just on but strong regulatory So thin TCE ratios

Alessandro DiNello

Let me it. address billion capital piece billion, and I’ll and the then in chime Jim the $X the let $X on of

XX in XX, the action off weren’t hedge around they’re So was did balance on, the now. of that sheet in is going that I kind get think, sheet time trapped the of we there - securities the Their the Fed at deliver them were were into the XX, off April month. able and them end mid-April, $X so where We balance billion period to hedges. of

So that’s that was. what

providers our fairly our we’ve as position And business I more. been to other because ability concentration on on historically. the warehouse kept And haven’t that’s mean, a then the warehouse limit commitments low warehouse, grow increase to we’ve in take warehouse a just seen

and certain reduce our levels advanced And that collateral. in collateral warehouse there lines. we then the the And opportunity so on the given accepted that market we narrow fact the on is then even the

balances, very associated in risk our that, So very, even though we’re we comfortable with. with at a the feel warehouse higher level

you in slide the warehouse virtually look think it’s at page it’s that In see I history XX, page nothing. on the business, can our if loss you that’s and and fact, there,

even million X So the year you if there financial a go it was $X for crisis, back into years.

level comfortable given the So business exposure and taking spreads we’re of the the really in that credit low up risk. warehouse

a but very, think bit, is to assets very a I helpful it does So impact little us. trade-off

that piece So capital the I’ll let opine on of Jim then

James Ciroli

Sandro. Thanks, Yes.

back going quickly, Just Scott.

at to the mortgage-backed going of lot there end going you, Just margin entities of calls like needed dumping the especially with Emirates and because liquidity. on of quarter, the those there remind securities were on, was a

Fannie, to trade our at is securities Freddie sheet with we That created what off the dealers get. that helped that imbalance, in their aggressive some when saw bids newly and expected that’s our line securities, lot able more that of Ginnie we bids. that space I and MBS the think, supply weren’t balance we And get sell comprises to a prices for

just We a balloon levels month. we and be those go to the have look, securities down TBAs and deliver into off to - had always to balance the had to We get do so those sheet the than a quarter sacrifice TBAs We able bit, option had liquidity. to bit. rather let our the capital execution capital sheet. we into didn’t deliver had and mid that the our those We - at balance our end

emphasize the warehouse more it. Flagstar’s you’ve this and securities. you My strengthened when we and the held think balance I So I remarks portfolios, quarter, on of at strong loss got credit sale. seen part historically end, pretty loans, even those that that think at look Sandro content we’ve big XX% past are elaborated that’s some between a it securities loans to continue there, mention, and so categories. our to we’ve portfolio for of Between two Ginnie sheet Not

risk no there’s in portfolio. implicitly So credit that

sheet some that little than our on no sheet, or roughly in is have just More categories of other either And have our very, balance categories half at really credit look credit risk you have the balance content. balance half our we very then loss sheet. –

I a at it’s the end, [ph] the think TCE ratio low. X.XX So little

because end average back of And at also warehouse the had aware, on month, at the quarter. an you basis If at of it the that you’re the of quarter the as end look on securities. spikes up our trading end we

X.XX is as ratio points if aware, so of an on quarter, spike at [ph] XXX those But it up higher the the the average basis, if you balances you’re you end at look look - basis at

Scott Seifers

Okay. good That’s color. Perfect.

was particularly a points think, I or just those think on loan, I estimated of XX securities basis so. had billion I that $X because

James Ciroli

not if you related. that so things just are of all kind And Yes. I the could, mentioned

position it’s I of trying of walked rate sheet a of different that advances, now looming due from terms in X to low from these and the we balance just for the low of to balance year what right are loan that the think And backup the these given the sheet you is thing the time. FHLB we’re period attractive on a do we lock levels. perspective, rates our think do So deposit through in long-term X rates securities to at is, trading the the which to to

Scott Seifers

agree. I No, Yes.

be think can I it interesting, though.

almost Just match. looking color, the dollar-for-dollar the a at the outside -- without that outside from

So it up that of more of looks things end some decision like exclusive. mutually being for conscious a sort

So helpful. tremendously I that color is it. And appreciate

And then on the to ask sale revenue. separately, I hoping was just on gain

sounds stuff like on color impact. $XX transitory so million not hedge the the certainly I So and will appreciate far, it that

back I of So can be. into on what core sale margin would sort gain a

what market on given sort now, of minds? might and the in the any impacting your fluidity in mortgage sale right margins maybe gain ongoing factors big all sense just like the for look But

Alessandro DiNello

be Scott. I’m I’ll not remarks, just can’t have going what I crystal in emphasize. said the the reiterate don’t and But to my going what going ball. there, I you are forward. prepared I margins tell

warehouse Fannie not Freddie going if on likelihood forward year, knows. the we And gain happen, to have - I gain strong my continued to business is on well. comments, in sale by does of But sale, as this and the the not thinks. If maybe that it’s - for opportunity gain way, then strong. just numbers, then they have at of think levels, for is market or the our great who much that these picked I sale, is strength happens thinks have what Fannie going on prepared mortgage what things than kind that similarly, different NDA

now And $XX million. It’s it million. over over say we actually was did $XX

your is it now, where just And looks honestly, not very speculate go. right we’re going - to but it mine. as on this guess good, might So as good

Scott Seifers

enough. Fair Yeah.

luck. good very guys much. Thank So you

Operator

you. Thank

we’ll to George Next, move with Bose KBW.

Bose George

business the does by how that? loan of impacted work guys that I the contract the in loans, hands terms what loan the you X% delinquent said morning. to increase Good approach. How for requires more you sub-servicing about want ask have in and on compensated how gets

Alessandro DiNello

Yes.

answer you’re Lee difference obviously different versus that you. that highlight for So a servicer, But That’s a will that and saying I’ll deal. by the one. when it’s just will sub-servicer know start Lee I

one? this Lee, you So take why don’t

Lee Smith

Yes. Yes.

just pick me and in Let up the on point remarks. last I you my prepared made, this made

we of First the of service, are sub-service only loans Flagstar. all, or all X% owned by

point a a very And to as position that’s just small of from percentage. it’s immaterial, liquidity be view, So a have. we and given going available our bank the liquidity

that on. contracts, couple of going there’s In a our terms things sub-servicing of so are

for fees requests do But first that on forbearances loans get side obviously, that of activity, of the increase. the we’ve and all, collection the increase given business. the higher had to more capacity, As delinquent than become obviously we

further we’re the have increasing loss coming in is activity terms mitigation that now capacity And because of know and we line. down been

increase also So cost activity in an there’s while the base the revenue an way levels. just given there higher increase contracts will be are structured, the our in

Alessandro DiNello

different it’s And look the not loans Scott, the noted total add service, no, than I’m if sorry. typical Bose, servicing they of your other I portfolio, that you would it’s and at thing our bank. is, of under XX% much

own that’s So would servicing, dynamic. you bank a have. comparable the to our very that’s the our what we any number. It’s is And different look servicing, big articulated, when as sub-servicing it very at

Bose George

those also then you to Just and retail exposures scenario? CLE positioning detail go you. guys the think exposures, a particularly within stress was just sort and senior what on more your provision the a give little can the credit levels housing? And of you do hotel for Thank in

James Ciroli

Yes.

XX. can’t I to comments, you I XX the is going June March where - I at provision go. of just I compared can’t like going my looking that are I different economics that we’re worse forecasts feel, and So to gain at know be said - to in sale, like kind just on tell much, much

and on estate you go categories, any detail of lending and commercial and at to the But if XX, and real in category. you C&I. look the see see detail the just and look mean, big number and XX, portfolios, XX, XX, on one Page those our so especially XX commercial you don’t at each I look at then any

million, homebuilder at from what haven’t to we is well And $XXX our one home and diversification deferral far. we number had thus talk in biggest request concentrations. about that’s as relative The clients as builder

that. in look think And this in less and sheet I balance pretty billion when $X low. this portfolio, bank So $XX that’s that is a again, billion has than in as that any at don’t commercial my can say billion comments, there’s other country said $XX exposure. the I I

then - look and you the it’s XX-plus diversification and that credits, that’s here, over syndicated portfolio, number from. So even in at the comes

our balance manageable. the on ratios And each at portfolio, average they’re relatively And so is low. CRE when loan-to-value you look the in

into So if detail these I detail, pages. on really we a lot you dig mean, of the you provided

when posture today. of to change very you’ll that end conservative always we’re the - allowance, think been the risk see I we’re and not the that is we’ve to content it comes our on going scale. low And

a June. have do crystal be just don’t the ball, the I I by very in of the and what feel based could the come I about don’t QX. you allowance, tell economic We on good the March, scenarios the to we’ll right at it know. end of thing provision end man, think But

Bose George

Okay. Appreciate you. your comment. Thank

James Ciroli

You’re welcome.

Operator

move And next, with to James. Raymond Tamayo Daniel we’ll

Alessandro DiNello

Hi, Dan,

Daniel Tamayo

then PPP Hi. and the Hi, Just the NIM that. how on program you? are how guys, impacts

think including heard PPP is benefit. in flatten you’d that, relatively quarter, in? that that the benefit from I much be flat should in assumed NIM the PPP mentioned second I in the How right, that if

Alessandro DiNello

benefit I Jim? don’t I’ll PPP answer, there’s real think Jim the from let NIM. to Yes, a but

James Ciroli

No, That’s going would also we say not to correct. I be expect, it’s Danny. that the NIM it’s would But dilutive to material

Daniel Tamayo

niche. the It’s in

then the you that at percentage quarter? in from warehouse benefit some how All what much or kind how immaterial could floors Okay. - did how in the there this I was that’s you at fees much but much an many assuming fine. business, in of And it’s are was there, - then first you the disclose the would point? all - – recapture of then if in those money however right. And number,

Alessandro DiNello

I the I we just the, floors. money bumped to you don’t that I to want I se. It’s don’t don’t how per know in know head. have the lot top not to a answer know information. I does? of if many Jim Okay, of give But Jim? know off that the are it my that into the

James Ciroli

X% those look something of zero. at warehouse have Danny, Slide if probably than at you higher LIBOR floored X, loans

funds. safely with it just between where continues I the think spread And tighten Fed can LIBOR you is and down LIBOR LIBOR difference to today. assume on come test where is to it So X-month the

zero. north comes down, that So floor at as more of of that XX% LIBOR north a LIBOR something have A even of zero. But that floor if look you those. of portfolio, -

Daniel Tamayo

question. just then And you. last one Thank Okay.

the you - is that On have portfolio, of disclosed CRE construction? do you much how

Alessandro DiNello

the Did we on you level be is if the it, $X.X we piece XX, go the disclose you how X.X. would to see check that go the is take and me of to construction? book Page but total Well, if of homebuilder is commitment XX, out billion, you X.X. value commitment much Jim, Page If this,

million. if something And So know, you know don’t is. that I what less be $XXX than it Jim, would

James Ciroli

be our have at call reports answers when look Danny. specifically, those you look when December I and you at our don’t filed if you to -- But soon

break March RCC, for section, amounts out it’ll break you. call it will out reports, in the loan those

Daniel Tamayo

All guys. right, my for answering perfect. questions, Thanks

James Ciroli

welcome. You’re

Operator

Henry And next, Wedbush. to we’ll move with Coffey

Henry Coffey

good probably as its very my one, Yes. And Hello, editorial I but would as time. much an say for it’s Three taking call. questions. to question. Number well a launch thank like morning, you

that diesel CECL reserve Given the for lending and doesn’t Moody’s COVID the reliance I related. everyone countercyclical risk portfolio obviously, has becomes starts any your add, affecting there all your it’s decisions? their particularly on adjustments, that, forecast mean, is reflect

April. It behavior? affect that May you’re we know it affect negative your worse the your that more so in the with as stuck models, probably but and gets - is lending reserving does does could Moody’s And June. in that And forecast

Alessandro DiNello

said, CRE. affects think is now, whether it don’t mean, looked our I a business C&I I it’s commercial I right I if or sign loan right are remember impact Better Chief mean now. time the remember commercial for down three process myself an I in I and approval. directly to new one I And lending the on has like have that to we’ve weaken, behavior. that of areas, at the the or such economy our Officer I And decisions off then tightened our last signed off on commercial continuing approval I last Chief loan can’t banking, Officer on. every - don’t indirectly, us Commercial

have a underwriting back commercial on, time quite to That’s so and business as businesses As we’ll with decisions get bit. drawn us right most feel we’ve in allows now. things cash to confidence. confidence revenue difficult that to we has It’s a just goes very where problem the loans like confidence have better, make make flows therefore,

don’t of come lending, sense, I activities lending Moody’s when So a think more analytics direct but start terms I the be when correlation. think that of opportunities about makes there’s our probably ahead will we in

Henry Coffey

then June play gain one the for May pipeline into and get enough And Thank $XX in Great. you Do on how quite month out? to million you. is insight feeling Obviously, sale have revenue a two more a questions. spectacular.

were higher? flow big any are seeing you expect where - on aberrant would is business much a gain that? would obviously, are you changed margins there just of outcomes to sale any Or you a Can they in return there which on of really that sort - and be, April

Alessandro DiNello

The wrong think continues much in very different there’s I’m have business hedging be on other anything but than I April in than correct April. Kristy, me, to if March didn’t the challenges we don’t strong. anything,

And think the at But that looks The let continue, pretty don’t the the of that whether don’t me can levels volume on margins the at they’re the was for anything margins was I to know. Henry, I question I question, earlier couple months today? but good, know. continue she’d that is because like that. I’ll of next I punted the asked Kristy add

Kristy Fercho

which value I our customers. share and deployed mean, thing evaluating how our over you mix. only look I’ll those do through I channel we’ve bring could strategy to year, really on last And Yes, is through one that is, really to opportunities at we through just focus product, continue Henry. returns the volume where really we have the to optimize mean, then

has that advantage taking last we’ve strategy seen. dislocated April been continued to as plus so the that and really in the over two that we’ve the And months of market $XX benefit really million

So same, there’s won’t channel continue continue will that the to into mix. no be that get and that, our expect months, optimizing strategy reason we future to the as

Henry Coffey

March, kind the So as what guidepost as expect. a given probably that And while. Is to to seen we secondary fair can at up primary the doesn’t come for of looking go back to a in that spreads volatility conclusion?

Kristy Fercho

over of that historic at these we’ve points up And look the because Yes. basis And X of that it’s a March. spreads, basis the about points. secondary high actually actually, if XXX great primary, point bring at that weeks, you XX end the seen tighten you last

well a in the that’s the competitive as market dynamic measure capacity. So as good of, obviously,

And so absolutely you’re right.

that’s that every terms watch a certainly to the our power thing and pick think I of good in We in watch. market what pricing is day.

Henry Coffey

on, Great. the servicing Thank moving on side. you. And then

it’s you, For not question. a

service have don’t advances. You to or worry about

are as small of a You’ve call, book. MSRs owned liquidity. out And your servicing got pointed plenty you the on of part

us uptick look provide how are with to kind your them I advance the on - from your the you clients? or that a to maybe on liquidity you going business and this given - sitting April they this, what Freddie what Are in your But Fannie what’s line with wondering some of clients. perspective give on into are with And an working requirements? you was with service seeing insight could they of sub-servicing work Are them their are does help hands? like that them? doing of growing to

Alessandro DiNello

advance announced with But just customer, of on them, with you Lee commercial like give I’ll to relief think, going with comment you I’ll to only detail, our we’re lot a to months we’re big but maximum every the obviously, is, that I the give Lee yes, X Yes. work a FHFA going detail was, the make let that. can partners. work and some

Lee Smith

Yes.

announcement advances on gave of lot Sandro. it I or the think effectively time hit I you’ve would owners make FHFA it our week, nail of Sub-service the who for. capped sub-service have they the we the that last the to MSR a head, mean for certainty because amount

think That’s may into need. And PTAP place. understand helpful a I And obviously for so got Ginnie that to, that has or need, able what program you’ve in Mae all Mae they then on Ginnie would them want from plug in what put being they it liquidity the very helpful. the their of models side, and was

partners with have financing we and our work we be lines some out will And are can, that. do course, helpful of do can if that we in we we there. partners, where with And any way

the that fortunate position well in we’re capitalized. we’re said, bank, a I As

We we it do will to so, can if to that. and And liquidity. look makes have sense we partners, our help do of lot a

with that the announcement. think X that people around there weeks X given I the ago, have ago, FHFA think, I the But ease now it’s certainty was liquidity weeks uncertainty maybe

Henry Coffey

you. Thank

I X to have perspective press you technology, and walk a that a there’s from or people, away pick the business. and even that We’ve may end the we up? capacity heard think in major from up market great a that you’re Do more X share, least correspondent from at where if position. a lenders lending that’s

Lee Smith

Yes. I here’s say. mean, look, what I’d

X You benefit a And million the struggling. loans. right others loans sub-service my mentioned capacity or from adversity over servicing prepared I service or like in now. we have to or little sub-servicing if million we’re X to are remarks, never

doing we’ve just very do growing of to done successful terms been will always we’ve now. we what in look, that that continue And And portfolio. in up to

of talk if And so others going to they arise, and as from benefiting about them at sort sense. down make opportunities falling evaluate see this moment. will not we certainly I’m

Henry Coffey

much. very you Thank Great.

Lee Smith

what Sandro, I you. say? Thank did you want you sorry, to cut off. I’m

Alessandro DiNello

This isn’t going in look Yes. significant just Lee servicing I to business. what the our growth at was time to said. emphasize

think strong to we’ve opportunities same file the this and business take continue and the may worked we’re of that going well, easy really building has has that take very been - But thoughtful it and path. themselves. over way slow I really we been present advantage to just time

Henry Coffey

Thank extremely very much. well. the helpful was responded has well. This you and call Very stock

Alessandro DiNello

Henry. Thanks,

Operator

move we’ll Steve Riley. to with And Moss next, B.

Steve Moss

Good morning.

for questions two me. Just

You if deposit for detail the missed one guys the just provided apologize but a lot I here, it. quarter. growth on of I non-interest

color Just wondered give if some there. could you

Alessandro DiNello

sorry. I’m

me You cut please. out on Hit me. I hear your question. couldn’t again,

Steve Moss

Yes, sorry.

the On growth quarter. the deposit interest-bearing for non

would helpful. the Just be the - Any there color there? wondering drivers what what were

Alessandro DiNello

Yes.

custodial I deposits. primarily think it’s

Steve Moss

and here. around of lending the And the shared national leverage in Okay. portfolios the then terms disclosures credit

if wondering guys Any Just would specific any helpful. be color you there those have portfolios. for reserves

Alessandro DiNello

Well, you And XX, that’s is where Page give model. within it we CECL Jim? breakdown. that the

James Ciroli

reserves specific on portfolios. Zero of either those

Steve Moss

Okay.

James Ciroli

I’m sorry.

Alessandro DiNello

and Okay. you clarify, has portfolio. just model, There part each all okay? be industry at CECL obviously, aren’t but reserves And syndicated let - reserves, in me the But which terminology. reserves the of leverage GAAP when there aren’t look specific specific the the would both

Steve Moss

just Okay. That’s quarter-over-quarter? the wondering just million about in that substandard increased of terms are then - dynamics there? Has quarter Or is helpful. special - any mention, And that relatively $XX that end. in at were loans

Alessandro DiNello

to - Those had COVID. flat. had those nothing do nothing relatively it’s do with yes, Yes, to

Steve Moss

I Okay. Thank very appreciate that. much. you

Alessandro DiNello

Steve. welcome, You’re

Operator

And that Sandro would any over turn session. I call time, back this the At today’s for to closing will remarks. additional conclude question-and-answer DiNello like to or

Alessandro DiNello

COVID in Facebook to workstations. the Michelle. have crushing forget, into like hour, at I’d like that Thank close just Yes. showing they not way you, photo and met daunting and the spirit. deadlines, has the the in they they a talking about the together shoulder. company-wide virtual the contest in brought way and group, home company by But things Flagstar Flagstar a have their fun This never I’ll happy workloads come

though office an building. be we’ve do to as to doing people in to due have home, Plus, to continue work we at have we a safe the not employees rewarded work X, and days, over moved support heard branches, who to are million we week $X we’re virus. them in have bonuses. all comments, and to do that branch for put some some for changed over folks and Lee’s while we in can the paying in environment our them you them to working pay X,XXX And employees And are with X bank

up COVID-XX-related were our in We hardships. experiencing employee to And addition to to earlier, previous help foundation through customers. support also noted an not Program Protection employees financial community opened Flagstar I Paycheck the that assistance also our set nonprofits we program

lives, people we’ve of set of COVID-XX and expressions T-shirts given program Flagstar we dollar sentiment the loan moderate-income special Additionally, that with know the by every our in We for that small to versus impacted for COVID-XX fight we’re a live up low- in areas. that employee.

are We tough, we prevail. will and

to to healthy. thank all all and Flagstar best than entire do my I much to safe you can as can, stay everyone you stay as more of I I and words that the express listening. appreciate the Finally, you family, you pray home urge and else and

Operator

We that your participation. today’s And for thank you call. conclude will

Flagstar Bancorp (FBC) 28 Apr 202020 Q1 Earnings call transcript