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25.07.2017 12:30:00
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Flagstar Reports Second Quarter 2017 Net Income of $41 million, or $0.71 per Diluted Share
TROY, Mich., July 25, 2017 /PRNewswire/ --
Key Highlights - Second Quarter 2017
- Net income per diluted share increased $0.25, or 54 percent, from first quarter 2017.
- Strong loan growth with average commercial loans up 17 percent from last quarter.
- Net interest income rose $14 million, or 17 percent, from prior quarter, driven by strong earning asset growth and a higher net interest margin.
- Mortgage revenues, including gain on sale and return on MSR, up $10 million, or 16 percent, from last quarter led by seasonal increase in mortgage originations and recent acquisitions which successfully mitigated impact of softer mortgage market.
- Asset quality strong with minimal net charge-offs and low delinquencies across all loan portfolios.
Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, FSB, today reported second quarter 2017 net income of $41 million, or $0.71 per diluted share, as compared to $27 million, or $0.46 per diluted share, in the first quarter 2017, and $47 million, or $0.66 per diluted share, in the second quarter 2016.
"We are pleased to report another solid quarter," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "Our community bank results continued to be outstanding and we're right where we expected. Average warehouse loans rebounded nicely, growing 23 percent, and we saw a 15 percent increase in average commercial and industrial and commercial real estate loans. We also posted a 10 basis point increase in net interest margin, maintaining a stable deposit cost despite recent Fed rate hikes. The maturation of our community bank has generated a more balanced, more sustainable earnings stream for our Company."
"Additionally, we closed on the previously reported bulk sales of $191 million of mortgage servicing rights (MSRs), successfully executing our MSR reduction strategy and releasing capital to support balance sheet growth. We are the subservicer on approximately 85 percent of the MSRs we sold, providing a boost to our subservicing business and helping us to exceed over 400,000 accounts serviced or subserviced. Our MSRs now stand at 13 percent of our Tier 1 capital, positioning us well for the full phase-in of Basel III."
"Our mortgage business also had an outstanding quarter. Fallout-adjusted locks rose 50 percent to $9.0 billion, driven primarily by the impact of the acquisitions of Opes Advisors (Opes) this quarter, as well as the delegated correspondent business from Stearns Lending (Stearns) last quarter. The integration of Opes is going smoothly, and the division is helping us maintain revenue in a softer mortgage origination market. Opes brings us more than double our pre-acquisition distributed retail origination volume and puts us now in a strong position for the move to a purchase mortgage market."
"We have a formidable banking business, an industry-leading mortgage origination platform and a blossoming subservicing business--supported by strong capital and liquidity. It's a powerful combination that positions us to grow our balance sheet with higher quality, relationship-focused assets and continues to create value for our shareholders."
Second Quarter 2017 Highlights:
Income Statement Highlights | |||||||||||||||
Three Months Ended | |||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
(Dollars in millions) | |||||||||||||||
Net interest income | $ | 97 | $ | 83 | $ | 87 | $ | 80 | $ | 77 | |||||
Provision (benefit) for loan losses | (1) | 3 | 1 | 7 | (3) | ||||||||||
Noninterest income | 116 | 100 | 98 | 156 | 128 | ||||||||||
Noninterest expense | 154 | 140 | 142 | 142 | 139 | ||||||||||
Income before income taxes | 60 | 40 | 42 | 87 | 69 | ||||||||||
Provision for income taxes | 19 | 13 | 14 | 30 | 22 | ||||||||||
Net income | $ | 41 | $ | 27 | $ | 28 | $ | 57 | $ | 47 | |||||
Income per share: | |||||||||||||||
Basic | $ | 0.72 | $ | 0.47 | $ | 0.50 | $ | 0.98 | $ | 0.67 | |||||
Diluted | $ | 0.71 | $ | 0.46 | $ | 0.49 | $ | 0.96 | $ | 0.66 | |||||
(1) | Third quarter 2016 results include a $24 million benefit ($16 million after tax benefit or $0.27 per diluted income per share) | ||||||||||||||
Key Ratios | ||||||||||||
Three Months Ended | Change (bps) | |||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | Seq | Yr/Yr | ||||||
Net interest margin | 2.77 | % | 2.67 | % | 2.67 | % | 2.58 | % | 2.63 | % | 10 | 14 |
Return on average assets | 1.0 | % | 0.8 | % | 0.8 | % | 1.6 | % | 1.4 | % | 28 | (34) |
Return on average equity | 11.6 | % | 7.9 | % | 8.6 | % | 16.5 | % | 11.5 | % | 369 | 4 |
Return on average common equity | 11.6 | % | 7.9 | % | 8.6 | % | 17.5 | % | 13.8 | % | 369 | (220) |
Efficiency ratio | 72.0 | % | 76.8 | % | 76.7 | % | 59.9 | % | 68.2 | % | (480) | 380 |
Balance Sheet Highlights | |||||||||||||||||||
Three Months Ended | % Change | ||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | Seq | Yr/Yr | |||||||||||||
(Dollars in millions) | |||||||||||||||||||
Average Balance Sheet Data | |||||||||||||||||||
Average interest-earning assets | $ | 14,020 | $ | 12,343 | $ | 12,817 | $ | 12,318 | $ | 11,639 | 14 | % | 20 | % | |||||
Average loans held-for-sale (LHFS) | 4,269 | 3,286 | 3,321 | 3,416 | 2,884 | 30 | % | 48 | % | ||||||||||
Average loans held-for-investment (LHFI) | 6,224 | 5,639 | 6,163 | 5,848 | 5,569 | 10 | % | 12 | % | ||||||||||
Average total deposits | 8,739 | 8,795 | 9,233 | 9,126 | 8,631 | (1) | % | 1 | % | ||||||||||
Net Interest Income
Net interest income rose $14 million, or 17 percent, to $97 million, as compared to $83 million for the first quarter 2017. The results reflected a 14 percent increase in average earning assets, led by growth in commercial loans and loans held-for-sale, and net interest margin expansion of 10 basis points.
Average loans held-for-sale were $4.3 billion in the second quarter 2017, increasing $1 billion, or 30 percent, from the first quarter 2017, on higher mortgage activity.
Loans held-for-investment averaged $6.2 billion for the second quarter 2017, increasing $585 million, or 10 percent, from the prior quarter. During the second quarter 2017, average commercial loans rose 17 percent with average commercial and industrial loans rising $162 million, or 21 percent, average warehouse loans increasing $160 million, or 23 percent and average commercial real estate loans increasing $159 million, or 12 percent. Average consumer loans rose 4 percent, driven by an increase in mortgage loans (primarily jumbos).
Average total deposits were $8.7 billion in the second quarter 2017, unchanged from the first quarter 2017. Higher company-controlled and retail deposits largely offset lower government deposits. Average retail deposits increased $32 million, led by a 4 percent increase in demand deposits. Excluding warehouse loans and company-controlled deposits, the Company's held-for-investment (HFI) loan-to-deposit ratio was 73 percent in the second quarter 2017, as compared to 66 percent in the first quarter 2017.
Net interest margin increased 10 basis points to 2.77 percent for the second quarter 2017, as compared to the first quarter 2017. The increase from the prior quarter was driven by increased interest income on loans held-for-sale and commercial loans, partially offset by higher interest expense on short-term Federal Home Loan Bank advances due to recent Federal Reserve rate hikes. Total deposit costs remained relatively unchanged.
Provision (Benefit) for Loan Losses
The Company experienced a provision benefit in the second quarter 2017, 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 2017, as compared to a $3 million provision expense for the first quarter 2017.
Noninterest Income
Noninterest income rose $16 million, or 16 percent, to $116 million in the second quarter of 2017, as compared to $100 million for the first quarter 2017. The increase was primarily due to an increase in mortgage revenues and loan fees and charges, partially offset by a decrease in the net return on the mortgage servicing rights.
Second quarter 2017 net gain on loan sales increased to $66 million, as compared to $48 million in the first quarter 2017. Fallout-adjusted locks rose 50 percent to $9.0 billion, led by a seasonal increase in the mortgage market and the impact of recent acquisitions (Stearns and Opes). Excluding recent acquisitions, fallout-adjusted locks increased 23 percent to $7.0 billion. The net gain on loan sale margin fell 7 basis points to 0.73 percent for the second quarter 2017, as compared to 0.80 percent for the first quarter 2017.
Mortgage Metrics | |||||||||||||||||||
Three Months Ended | Change (% / bps) | ||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | Seq | Yr/Yr | |||||||||||||
2017 | 2017 | 2016 | 2016 | 2016 | |||||||||||||||
(Dollars in millions) | |||||||||||||||||||
Mortgage rate lock commitments (fallout-adjusted) (1) | $ | 9,002 | $ | 5,996 | $ | 6,091 | $ | 8,291 | $ | 8,127 | 50 | % | 11 | % | |||||
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) (2) | 0.73 | % | 0.80 | % | 0.93 | % | 1.13 | % | 1.04 | % | (7) | (31) | |||||||
Net gain on loan sales on HFS | $ | 66 | 48 | $ | 57 | $ | 94 | $ | 85 | 38 | % | (22) | % | ||||||
Net (loss) return on the mortgage servicing rights (MSR) | $ | 6 | $ | 14 | $ | (5) | $ | (11) | $ | (4) | N/M | N/M | |||||||
Gain on loan sales HFS + net (loss) return on the MSR | $ | 72 | $ | 62 | $ | 52 | $ | 83 | $ | 81 | 16 | % | (11) | % | |||||
Residential loans serviced (number of accounts - 000's) (3) | 402 | 393 | 383 | 375 | 358 | 2 | % | 12 | % | ||||||||||
Capitalized value of mortgage servicing rights | 1.14 | % | 1.10 | % | 1.07 | % | 0.96 | % | 0.99 | % | 4 | 15 | |||||||
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 (excluding gains from loans transferred from HFI) 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 $20 million for the second quarter 2017, as compared to $15 million for the first quarter 2017. The increase primarily reflected higher mortgage loan closings with a greater mix of delegated correspondent loans.
Net return on the mortgage servicing rights (including the impact of hedges) was a net gain of $6 million for the second quarter 2017, as compared to a net gain of $14 million for the first quarter 2017. The drop in the net return on the mortgage servicing rights largely reflected lower service fee income due to MSR bulk sales with a fair value of $191 million that closed in the second quarter 2017.
The representation and warranty benefit was $3 million for the second quarter 2017, as compared to a $4 million benefit in the first quarter 2017. The representation and warranty reserve was reduced to $20 million at June 30, 2017, from $23 million at March 31, 2017, reflecting a continued improvement in risk trends and a repurchase pipeline that was only $4 million at June 30, 2017.
Noninterest Expense
Noninterest expense rose to $154 million for the second quarter 2017, as compared to $140 million for the first quarter 2017. The increase from the prior quarter was primarily due to operating expenses and transaction costs associated with the recent acquisitions of Stearns and Opes, and an increase in commissions and loan processing expense from higher mortgage closings. Excluding $11 million of operating expenses and $1 million of transaction costs from the acquisitions, our adjusted non-GAAP noninterest expense was $142 million.
The Company's efficiency ratio improved to 72 percent for the second quarter 2017, as compared to 77 percent for the first quarter 2017.
Income Taxes
The second quarter 2017 provision for income taxes totaled $19 million, as compared to $13 million in the first quarter 2017. The effective tax rate was 32 percent for the second quarter 2017, as compared to 33 percent for the first quarter 2017.
Asset Quality
Credit Quality Ratios | |||||||||||||||||||
Three Months Ended | Change (% / bps) | ||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | Seq | Yr/Yr | |||||||||||||
(Dollars in millions) | |||||||||||||||||||
Allowance for loan loss to LHFI | 2.1 | % | 2.4 | % | 2.4 | % | 2.3 | % | 2.6 | % | (30) | (50) | |||||||
Allowance for loan loss to LHFI and loans with government guarantees | 2.0 | % | 2.3 | % | 2.2 | % | 2.2 | % | 2.4 | % | (30) | (40) | |||||||
Charge-offs, net of recoveries | $ | — | $ | 4 | $ | 2 | $ | 7 | $ | 9 | (100) | % | (100) | % | |||||
Charge-offs associated with loans with government guarantees | — | 2 | 1 | 5 | 4 | (100) | % | (100) | % | ||||||||||
Charge-offs associated with the sale or transfer of nonperforming loans and TDRs | — | 1 | — | — | 2 | (100) | % | (100) | % | ||||||||||
Charge-offs, net of recoveries, adjusted (1) | $ | — | $ | 1 | $ | 1 | $ | 2 | $ | 3 | (100) | % | (100) | % | |||||
Total nonperforming loans held-for-investment | $ | 30 | $ | 28 | $ | 40 | $ | 40 | $ | 44 | 7 | % | (32) | % | |||||
Net charge-offs to LHFI ratio (annualized) | 0.04 | % | 0.27 | % | 0.13 | % | 0.51 | % | 0.62 | % | (23) | (58) | |||||||
Net charge-off ratio, adjusted (annualized) | 0.02 | % | 0.07 | % | 0.07 | % | 0.15 | % | 0.18 | % | (5) | (16) | |||||||
Ratio of nonperforming LHFI to LHFI | 0.44 | % | 0.47 | % | 0.67 | % | 0.63 | % | 0.76 | % | (3) | (32) | |||||||
N/M - Not meaningful | |||||||||||||||||||
(1) | Excludes charge-offs associated with loans with government guarantees and charge-offs associated with the sale or transfer of nonperforming loans and TDRs. |
The allowance for loan losses was $140 million at June 30, 2017, covering 2.1 percent of loans held-for-investment, as compared to an allowance for loan losses of $141 million at March 31, 2017, covering 2.4 percent of loans held-for-investment.
Net charge-offs in the second quarter 2017 were less than $1 million, or 0.04 percent of HFI loans, compared to $4 million, or 0.27 percent of such loans in the prior quarter.
Nonperforming loans held-for-investment were $30 million at June 30, 2017, compared to $28 million at March 31, 2017. As in the prior quarter, there were no nonperforming commercial loans at June 30, 2017. The ratio of nonperforming loans to loans held-for-investment decreased to 0.44 percent at June 30, 2017 from 0.47 percent at March 31, 2017. At June 30, 2017, consumer loan delinquencies totaled $5 million, unchanged from March 31, 2017.
Capital
Capital Ratios (Bancorp) | Three Months Ended | Change (% /$) | |||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | Seq | Yr/Yr | |||||||||||||
Total capital | 15.92 | % | 15.98 | % | 16.41 | % | 15.26 | % | 20.19 | % | (0.06) | % | (4.27) | % | |||||
Tier 1 capital | 14.65 | % | 14.70 | % | 15.12 | % | 13.98 | % | 18.89 | % | (0.05) | % | (4.24) | % | |||||
Tier 1 leverage | 9.10 | % | 9.31 | % | 8.88 | % | 8.88 | % | 11.59 | % | (0.21) | % | (2.49) | % | |||||
Mortgage servicing rights to Tier 1 capital | 13.1 | % | 23.1 | % | 26.7 | % | 24.6 | % | 19.9 | % | (10.0) | % | (6.8) | % | |||||
Tangible book value per share
| $ | 24.29 | $ | 23.96 | $ | 23.50 | $ | 22.72 | $ | 23.54 | 0.33 | 0.75 | |||||||
The Company maintained a robust capital position with regulatory ratios well above current regulatory quantitative guidelines for "well capitalized" institutions. At June 30, 2017, the Company had a Tier 1 leverage ratio of 9.10 percent, as compared to 9.31 percent at March 31, 2017.
At June 30, 2017, the Company had a common equity-to-assets ratio of 8.82 percent.
Earnings Conference Call
As previously announced, the Company's second quarter 2017 earnings call will be held Tuesday, July 25, 2017 at 11 a.m. (ET).
To join the call, please dial (888) 394-8218 toll free or (719) 325-2226 and use passcode 2137097. 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 2137097.
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 a $16.0 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 99 branches in the state. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 85 retail locations in 26 states, representing the combined retail branches of Flagstar and Opes Advisors mortgage division. Flagstar is a leading national originator and servicer of mortgage loans, handling payments and record keeping for $87 billion of home loans representing 402,000 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 estimated fully implemented Basel III capital levels and ratios. 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. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements can be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company's website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.
For more information, contact:
David L. Urban
david.urban@flagstar.com
(248) 312-5970
Flagstar Bancorp, Inc. Consolidated Statements of Financial Condition (Dollars in millions) (Unaudited) | |||||||||||||||
June 30, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | ||||||||||||
Assets | |||||||||||||||
Cash | $ | 80 | $ | 72 | $ | 84 | $ | 64 | |||||||
Interest-earning deposits | 103 | 89 | 74 | 120 | |||||||||||
Total cash and cash equivalents | 183 | 161 | 158 | 184 | |||||||||||
Investment securities available-for-sale | 1,614 | 1,650 | 1,480 | 1,145 | |||||||||||
Investment securities held-to-maturity | 1,014 | 1,048 | 1,093 | 1,211 | |||||||||||
Loans held-for-sale | 4,506 | 4,543 | 3,177 | 3,091 | |||||||||||
Loans held-for-investment | 6,776 | 5,959 | 6,065 | 5,822 | |||||||||||
Loans with government guarantees | 278 | 322 | 365 | 435 | |||||||||||
Less: allowance for loan losses | (140) | (141) | (142) | (150) | |||||||||||
Total loans held-for-investment and loans with government guarantees, net | 6,914 | 6,140 | 6,288 | 6,107 | |||||||||||
Mortgage servicing rights | 184 | 295 | 335 | 301 | |||||||||||
Federal Home Loan Bank stock | 260 | 201 | 180 | 172 | |||||||||||
Premises and equipment, net | 299 | 277 | 275 | 259 | |||||||||||
Net deferred tax asset | 266 | 273 | 286 | 333 | |||||||||||
Other assets | 725 | 773 | 781 | 920 | |||||||||||
Total assets | $ | 15,965 | $ | 15,361 | $ | 14,053 | $ | 13,723 | |||||||
Liabilities and Stockholders' Equity | |||||||||||||||
Noninterest-bearing | $ | 2,012 | $ | 1,831 | $ | 2,077 | $ | 2,109 | |||||||
Interest-bearing | 6,683 | 6,814 | 6,723 | 6,462 | |||||||||||
Total deposits | 8,695 | 8,645 | 8,800 | 8,571 | |||||||||||
Short-term Federal Home Loan Bank advances and other | 3,670 | 3,186 | 1,780 | 1,069 | |||||||||||
Long-term Federal Home Loan Bank advances | 1,200 | 1,200 | 1,200 | 1,577 | |||||||||||
Other long-term debt | 493 | 493 | 493 | 247 | |||||||||||
Representation and warranty reserve | 20 | 23 | 27 | 36 | |||||||||||
Other liabilities | 479 | 443 | 417 | 624 | |||||||||||
Total liabilities | 14,557 | 13,990 | 12,717 | 12,124 | |||||||||||
Stockholders' Equity | |||||||||||||||
Preferred stock | — | — | — | 267 | |||||||||||
Common stock | 1 | 1 | 1 | 1 | |||||||||||
Additional paid in capital | 1,509 | 1,510 | 1,503 | 1,491 | |||||||||||
Accumulated other comprehensive (loss) income | (9) | (6) | (7) | (19) | |||||||||||
Accumulated deficit | (93) | (134) | (161) | (141) | |||||||||||
Total stockholders' equity | 1,408 | 1,371 | 1,336 | 1,599 | |||||||||||
Total liabilities and stockholders' equity | $ | 15,965 | $ | 15,361 | $ | 14,053 | $ | 13,723 | |||||||
Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) (Unaudited) | |||||||||||||||||||||||||||
Second Quarter 2017 Compared to: | |||||||||||||||||||||||||||
Three Months Ended | First Quarter 2017 | Second Quarter 2016 | |||||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | Amount | Percent | Amount | Percent | |||||||||||||||||||
Interest Income | |||||||||||||||||||||||||||
Total interest income | $ | 129 | $ | 110 | $ | 111 | $ | 106 | $ | 99 | $ | 19 | 17 | % | $ | 30 | 30 | % | |||||||||
Total interest expense | 32 | 27 | 24 | 26 | 22 | 5 | 19 | % | 10 | 45 | % | ||||||||||||||||
Net interest income | 97 | 83 | 87 | 80 | 77 | 14 | 17 | % | 20 | 26 | % | ||||||||||||||||
Provision (benefit) for loan losses | (1) | 3 | 1 | 7 | (3) | (4) | N/M | $ | 2 | (67) | % | ||||||||||||||||
Net interest income after provision (benefit) for loan losses | 98 | 80 | 86 | 73 | 80 | 18 | 23 | % | 18 | 23 | % | ||||||||||||||||
Noninterest Income | |||||||||||||||||||||||||||
Net gain on loan sales | 66 | 48 | 57 | 94 | 90 | 18 | 38 | % | $ | (24) | (27) | % | |||||||||||||||
Loan fees and charges | 20 | 15 | 20 | 22 | 19 | 5 | 33 | % | 1 | 5 | % | ||||||||||||||||
Deposit fees and charges | 5 | 4 | 5 | 5 | 6 | 1 | 25 | % | (1) | (17) | % | ||||||||||||||||
Loan administration income | 6 | 5 | 4 | 4 | 4 | 1 | 20 | % | 2 | 50 | % | ||||||||||||||||
Net (loss) return on the mortgage servicing rights | 6 | 14 | (5) | (11) | (4) | (8) | (57) | % | 10 | N/M | |||||||||||||||||
Representation and warranty benefit | 3 | 4 | 7 | 6 | 4 | (1) | (25) | % | (1) | (25) | % | ||||||||||||||||
Other noninterest income | 10 | 10 | 10 | 36 | 9 | — | — | % | 1 | 11 | % | ||||||||||||||||
Total noninterest income | 116 | 100 | 98 | 156 | 128 | 16 | 16 | % | (12) | (9) | % | ||||||||||||||||
Noninterest Expense | |||||||||||||||||||||||||||
Compensation and benefits | 71 | 72 | 66 | 69 | 66 | (1) | (1) | % | 5 | 8 | % | ||||||||||||||||
Commissions | 16 | 10 | 15 | 16 | 14 | 6 | 60 | % | 2 | 14 | % | ||||||||||||||||
Occupancy and equipment | 25 | 22 | 21 | 21 | 21 | 3 | 14 | % | 4 | 19 | % | ||||||||||||||||
Loan processing expense | 14 | 12 | 15 | 13 | 15 | 2 | 17 | % | (1) | (7) | % | ||||||||||||||||
Legal and professional expense | 8 | 7 | 9 | 5 | 6 | 1 | 14 | % | 2 | 33 | % | ||||||||||||||||
Other noninterest expense | 20 | 17 | 16 | 18 | 17 | 3 | 18 | % | 3 | 18 | % | ||||||||||||||||
Total noninterest expense | 154 | 140 | 142 | 142 | 139 | 14 | 10 | % | 15 | 11 | % | ||||||||||||||||
Income before income taxes | 60 | 40 | 42 | 87 | 69 | 20 | 50 | % | (9) | (13) | % | ||||||||||||||||
Provision for income taxes | 19 | 13 | 14 | 30 | 22 | 6 | 46 | % | (3) | (14) | % | ||||||||||||||||
Net income | $ | 41 | $ | 27 | $ | 28 | $ | 57 | $ | 47 | $ | 14 | 52 | % | $ | (6) | (13) | % | |||||||||
Income per share | |||||||||||||||||||||||||||
Basic | $ | 0.72 | $ | 0.47 | $ | 0.50 | $ | 0.98 | $ | 0.67 | $ | 0.25 | 53 | % | $ | 0.05 | 7 | % | |||||||||
Diluted | $ | 0.71 | $ | 0.46 | $ | 0.49 | $ | 0.96 | $ | 0.66 | $ | 0.25 | 54 | % | $ | 0.05 | 8 | % | |||||||||
N/M - Not meaningful | |||||||||||||||||||||||||||
Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) (Unaudited) | ||||||||||||
Six Months Ended June 30, 2017 | ||||||||||||
Six Months Ended | Compared to: Six Months Ended June 30, 2016 | |||||||||||
June 30, 2017 | June 30, 2016 | Amount | Percent | |||||||||
Total interest income | $ | 239 | $ | 200 | $ | 39 | 20 | % | ||||
Total interest expense | 59 | 44 | 15 | 34 | % | |||||||
Net interest income | 180 | 156 | 24 | 15 | % | |||||||
Provision (benefit) for loan losses | 2 | (16) | 18 | N/M | ||||||||
Net interest income after provision (benefit) for loan losses | 178 | 172 | 6 | 3 | % | |||||||
Noninterest Income | ||||||||||||
Net gain on loan sales | 114 | 165 | (51) | (31) | % | |||||||
Loan fees and charges | 35 | 34 | 1 | 3 | % | |||||||
Deposit fees and charges | 9 | 12 | (3) | (25) | % | |||||||
Loan administration income | 11 | 10 | 1 | 10 | % | |||||||
Net (loss) return on the mortgage servicing rights | 20 | (10) | 30 | N/M | ||||||||
Representation and warranty benefit | 7 | 6 | 1 | 17 | % | |||||||
Other noninterest income | 20 | 16 | 4 | 25 | % | |||||||
Total noninterest income | 216 | 233 | (17) | (7) | % | |||||||
Noninterest Expense | ||||||||||||
Compensation and benefits | 143 | 134 | 9 | 7 | % | |||||||
Commissions | 26 | 24 | 2 | 8 | % | |||||||
Occupancy and equipment | 47 | 43 | 4 | 9 | % | |||||||
Loan processing expense | 26 | 27 | (1) | (4) | % | |||||||
Legal and professional expense | 15 | 15 | — | — | % | |||||||
Other noninterest expense | 37 | 33 | 4 | 12 | % | |||||||
Total noninterest expense | 294 | 276 | 18 | 7 | % | |||||||
Income before income taxes | 100 | 129 | (29) | (22) | % | |||||||
Provision for income taxes | 32 | 43 | (11) | (26) | % | |||||||
Net income | $ | 68 | $ | 86 | $ | (18) | (21) | % | ||||
Income per share | ||||||||||||
Basic | $ | 1.18 | $ | 1.23 | $ | (0.05) | (4) | % | ||||
Diluted | $ | 1.16 | $ | 1.21 | $ | (0.05) | (4) | % | ||||
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, 2017 | March 31, 2017 | June 30, 2016 | June 30, | June 30, | |||||||||||||||
Selected Mortgage Statistics: | |||||||||||||||||||
Mortgage loans originated (1) | $ | 9,198 | $ | 5,912 | $ | 8,330 | $ | 15,110 | $ | 14,682 | |||||||||
Mortgage loans sold and securitized | $ | 8,989 | $ | 4,484 | $ | 7,940 | $ | 13,473 | $ | 14,888 | |||||||||
Mortgage rate lock commitments (gross) | $ | 10,813 | $ | 7,377 | $ | 10,168 | 18,190 | 18,930 | |||||||||||
Selected Ratios: | |||||||||||||||||||
Interest rate spread (2) | 2.59 | % | 2.49 | % | 2.43 | % | 2.55 | % | 2.46 | % | |||||||||
Net interest margin | 2.77 | % | 2.67 | % | 2.63 | % | 2.72 | % | 2.64 | % | |||||||||
Net margin on loans sold and securitized | 0.73 | % | 1.06 | % | 1.07 | % | 0.84 | % | 1.01 | % | |||||||||
Return on average assets | 1.04 | % | 0.76 | % | 1.38 | % | 0.91 | % | 1.27 | % | |||||||||
Return on average equity | 11.57 | % | 7.88 | % | 11.53 | % | 9.77 | % | 10.81 | % | |||||||||
Return on average common equity | 11.57 | % | 7.88 | % | 13.83 | % | 9.77 | % | 13.00 | % | |||||||||
Efficiency ratio | 72.0 | % | 76.8 | % | 68.2 | % | 74.2 | % | 71.2 | % | |||||||||
Equity-to-assets ratio (average for the period) | 9.02 | % | 9.59 | % | 11.95 | % | 9.29 | % | 11.73 | % | |||||||||
Average Balances: | |||||||||||||||||||
Average common shares outstanding | 57,101,816 | 56,921,605 | 56,574,796 | 57,012,208 | 56,544,256 | ||||||||||||||
Average fully diluted shares outstanding | 58,138,938 | 58,072,563 | 57,751,230 | 58,106,070 | 57,623,081 | ||||||||||||||
Average interest-earning assets | $ | 14,020 | $ | 12,343 | $ | 11,639 | $ | 13,187 | $ | 11,755 | |||||||||
Average interest-paying liabilities | $ | 11,804 | $ | 10,319 | $ | 9,205 | $ | 11,066 | $ | 9,514 | |||||||||
Average stockholders' equity | $ | 1,418 | $ | 1,346 | $ | 1,606 | $ | 1,382 | $ | 1,583 | |||||||||
June 30, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | ||||||||||||
Selected Statistics: | |||||||||||||||
Book value per common share | $ | 24.64 | $ | 24.03 | $ | 23.50 | $ | 23.54 | |||||||
Tangible book value per share | 24.29 | 23.96 | 23.50 | 23.54 | |||||||||||
Number of common shares outstanding | 57,161,431 | 57,043,565 | 56,824,802 | 56,575,779 | |||||||||||
Number of FTE employees | 3,432 | 2,948 | 2,886 | 2,894 | |||||||||||
Number of bank branches | 99 | 99 | 99 | 99 | |||||||||||
Ratio of allowance for loan losses to LHFI (3) | 2.07 | % | 2.37 | % | 2.37 | % | 2.62 | % | |||||||
Ratio of allowance for loan losses to LHFI and loans with government guarantees (3) | 1.99 | % | 2.25 | % | 2.23 | % | 2.43 | % | |||||||
Ratio of nonperforming assets to total assets | 0.24 | % | 0.27 | % | 0.39 | % | 0.46 | % | |||||||
Equity-to-assets ratio | 8.82 | % | 8.92 | % | 9.50 | % | 11.65 | % | |||||||
Common equity-to-assets ratio | 8.82 | % | 8.92 | % | 9.50 | % | 9.70 | % | |||||||
MSR Key Statistics and Ratios: | |||||||||||||||
Weighted average service fee (basis points) | 27.8 | 26.7 | 26.7 | 28.2 | |||||||||||
Capitalized value of mortgage servicing rights | 1.14 | % | 1.10 | % | 1.07 | % | 0.99 | % | |||||||
Mortgage servicing rights to Tier 1 capital | 13.1 | % | 23.1 | % | 26.7 | % | 19.9 | % | |||||||
(1) | Includes residential first mortgage and home equity loans. |
(2) | Interest rate spread is the difference between the annualized yield earned on average interest-earning assets for the period and the annualized rate of interest paid on average interest-bearing liabilities for the period. |
(3) | Excludes loans carried under the fair value option. |
Average Balances, Yields and Rates (Dollars in millions) (Unaudited) | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||||||||||||||||||
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 | $ | 4,269 | $ | 42 | 4.00 | % | $ | 3,286 | $ | 32 | 3.87 | % | $ | 2,884 | $ | 26 | 3.64 | % | ||||||||
Loans held-for-investment | ||||||||||||||||||||||||||
Residential first mortgage | 2,495 | 21 | 3.38 | % | 2,399 | 20 | 3.33 | % | 2,232 | 18 | 3.15 | % | ||||||||||||||
Home equity | 439 | 6 | 4.91 | % | 431 | 5 | 5.11 | % | 485 | 6 | 4.91 | % | ||||||||||||||
Other | 27 | — | 4.54 | % | 27 | 1 | 4.50 | % | 29 | — | 4.92 | % | ||||||||||||||
Total Consumer loans | 2,961 | 27 | 3.61 | % | 2,857 | 26 | 3.60 | % | 2,746 | 24 | 3.48 | % | ||||||||||||||
Commercial Real Estate | 1,477 | 16 | 4.16 | % | 1,318 | 12 | 3.80 | % | 899 | 8 | 3.41 | % | ||||||||||||||
Commercial and Industrial | 936 | 11 | 4.77 | % | 774 | 9 | 4.56 | % | 607 | 6 | 3.97 | % | ||||||||||||||
Warehouse Lending | 850 | 10 | 4.71 | % | 690 | 8 | 4.51 | % | 1,317 | 14 | 4.28 | % | ||||||||||||||
Total Commercial loans | 3,263 | 37 | 4.48 | % | 2,782 | 29 | 4.19 | % | 2,823 | 28 | 3.94 | % | ||||||||||||||
Total loans held-for-investment | 6,224 | 64 | 4.07 | % | 5,639 | 55 | 3.89 | % | 5,569 | 52 | 3.71 | % | ||||||||||||||
Loans with government guarantees | 295 | 3 | 4.02 | % | 342 | 4 | 4.61 | % | 444 | 4 | 3.33 | % | ||||||||||||||
Investment securities | 3,166 | 20 | 2.57 | % | 3,012 | 19 | 2.51 | % | 2,558 | 17 | 2.66 | % | ||||||||||||||
Interest-earning deposits | 66 | — | 1.07 | % | 64 | — | 0.86 | % | 184 | — | 0.50 | % | ||||||||||||||
Total interest-earning assets | 14,020 | $ | 129 | 3.69 | % | 12,343 | $ | 110 | 3.55 | % | 11,639 | $ | 99 | 3.40 | % | |||||||||||
Other assets | 1,690 | 1,700 | 1,799 | |||||||||||||||||||||||
Total assets | $ | 15,710 | $ | 14,043 | $ | 13,438 | ||||||||||||||||||||
Interest-Bearing Liabilities | ||||||||||||||||||||||||||
Retail deposits | ||||||||||||||||||||||||||
Demand deposits | $ | 510 | $ | — | 0.15 | % | $ | 507 | $ | — | 0.18 | % | $ | 482 | $ | — | 0.17 | % | ||||||||
Savings deposits | 3,933 | 8 | 0.75 | % | 3,928 | 7 | 0.76 | % | 3,691 | 7 | 0.79 | % | ||||||||||||||
Money market deposits | 239 | — | 0.42 | % | 276 | 1 | 0.46 | % | 363 | 1 | 0.52 | % | ||||||||||||||
Certificates of deposit | 1,094 | 3 | 1.08 | % | 1,073 | 3 | 1.06 | % | 951 | 2 | 1.00 | % | ||||||||||||||
Total retail deposits | 5,776 | 11 | 0.75 | % | 5,784 | 11 | 0.75 | % | 5,487 | 10 | 0.75 | % | ||||||||||||||
Government deposits | ||||||||||||||||||||||||||
Demand deposits | 200 | — | 0.39 | % | 235 | — | 0.39 | % | 203 | — | 0.39 | % | ||||||||||||||
Savings deposits | 411 | 1 | 0.56 | % | 459 | 1 | 0.52 | % | 398 | — | 0.52 | % | ||||||||||||||
Certificates of deposit | 291 | — | 0.68 | % | 318 | — | 0.63 | % | 410 | 1 | 0.50 | % | ||||||||||||||
Total government deposits | 902 | 1 | 0.56 | % | 1,012 | 1 | 0.52 | % | 1,011 | 1 | 0.49 | % | ||||||||||||||
Wholesale deposits and other | 4 | — | 0.48 | % | 8 | — | 0.39 | % | — | — | — | % | ||||||||||||||
Total interest-bearing deposits | 6,682 | 12 | 0.72 | % | 6,804 | 12 | 0.72 | % | 6,498 | 11 | 0.71 | % | ||||||||||||||
Short-term Federal Home Loan Bank advances and other | 3,429 | 8 | 0.98 | % | 1,822 | 3 | 0.73 | % | 835 | 1 | 0.41 | % | ||||||||||||||
Long-term Federal Home Loan Bank advances | 1,200 | 6 | 1.91 | % | 1,200 | 6 | 1.87 | % | 1,625 | 8 | 1.93 | % | ||||||||||||||
Other long-term debt | 493 | 6 | 5.06 | % | 493 | 6 | 5.04 | % | 247 | 2 | 3.31 | % | ||||||||||||||
Total interest-bearing liabilities | 11,804 | 32 | 1.10 | % | 10,319 | 27 | 1.06 | % | 9,205 | 22 | 0.97 | % | ||||||||||||||
Noninterest-bearing deposits (1) | 2,057 | 1,991 | 2,133 | |||||||||||||||||||||||
Other liabilities | 431 | 387 | 494 | |||||||||||||||||||||||
Stockholders' equity | 1,418 | 1,346 | 1,606 | |||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 15,710 | $ | 14,043 | $ | 13,438 | ||||||||||||||||||||
Net interest-earning assets | $ | 2,216 | $ | 2,024 | $ | 2,434 | ||||||||||||||||||||
Net interest income | $ | 97 | $ | 83 | $ | 77 | ||||||||||||||||||||
Interest rate spread (2) | 2.59 | % | 2.49 | % | 2.43 | % | ||||||||||||||||||||
Net interest margin (3) | 2.77 | % | 2.67 | % | 2.63 | % | ||||||||||||||||||||
Ratio of average interest-earning assets to interest-bearing liabilities | 118.8 | % | 119.6 | % | 126.4 | % | ||||||||||||||||||||
Total average deposits | $ | 8,739 | $ | 8,795 | $ | 8,631 | ||||||||||||||||||||
(1) | Includes noninterest-bearing company-controlled 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, 2017 | June 30, 2016 | ||||||||||||||||
Average | Interest | Annualized Yield/Rate | Average | Interest | Annualized Yield/Rate | ||||||||||||
Interest-Earning Assets | |||||||||||||||||
Loans held-for-sale | $ | 3,780 | $ | 74 | 3.94 | % | $ | 2,897 | $ | 54 | 3.72 | % | |||||
Loans held-for-investment | |||||||||||||||||
Residential first mortgage | 2,447 | 41 | 3.35 | % | 2,504 | 39 | 3.12 | % | |||||||||
Home equity | 436 | 11 | 5.01 | % | 497 | 13 | 5.36 | % | |||||||||
Other | 26 | — | 4.52 | % | 29 | 1 | 4.94 | % | |||||||||
Total Consumer loans | 2,909 | 52 | 3.61 | % | 3,030 | 53 | 3.50 | % | |||||||||
Commercial Real Estate | 1,399 | 28 | 3.99 | % | 862 | 15 | 3.38 | % | |||||||||
Commercial and Industrial | 855 | 20 | 4.67 | % | 585 | 12 | 4.03 | % | |||||||||
Warehouse Lending | 770 | 18 | 4.62 | % | 1,141 | 25 | 4.29 | % | |||||||||
Total Commercial loans | 3,024 | 66 | 4.34 | % | 2,588 | 52 | 3.93 | % | |||||||||
Total loans held-for-investment | 5,933 | 118 | 3.98 | % | 5,618 | 105 | 3.70 | % | |||||||||
Loans with government guarantees | 318 | 7 | 4.34 | % | 460 | 7 | 3.18 | % | |||||||||
Investment securities | 3,090 | 39 | 2.54 | % | 2,625 | 34 | 2.59 | % | |||||||||
Interest-earning deposits | 66 | 1 | 0.97 | % | 155 | — | 0.50 | % | |||||||||
Total interest-earning assets | 13,187 | $ | 239 | 3.63 | % | 11,755 | $ | 200 | 3.39 | % | |||||||
Other assets | 1,694 | 1,736 | |||||||||||||||
Total assets | $ | 14,881 | $ | 13,491 | |||||||||||||
Interest-Bearing Liabilities | |||||||||||||||||
Retail deposits | |||||||||||||||||
Demand deposits | $ | 509 | $ | — | 0.17 | % | $ | 463 | $ | — | 0.15 | % | |||||
Savings deposits | 3,930 | 15 | 0.76 | % | 3,706 | 15 | 0.79 | % | |||||||||
Money market deposits | 258 | 1 | 0.44 | % | 303 | 1 | 0.45 | % | |||||||||
Certificates of deposit | 1,083 | 6 | 1.07 | % | 904 | 4 | 0.96 | % | |||||||||
Total retail deposits | 5,780 | 22 | 0.75 | % | 5,376 | 20 | 0.74 | % | |||||||||
Government deposits | |||||||||||||||||
Demand deposits | 217 | — | 0.39 | % | 230 | — | 0.39 | % | |||||||||
Savings deposits | 435 | 1 | 0.54 | % | 409 | 1 | 0.52 | % | |||||||||
Certificates of deposit | 305 | 1 | 0.65 | % | 411 | 1 | 0.71 | % | |||||||||
Total government deposits | 957 | 2 | 0.54 | % | 1,050 | 2 | 0.57 | % | |||||||||
Wholesale deposits and other | 6 | — | 0.42 | % | — | — | — | % | |||||||||
Total interest-bearing deposits | 6,743 | 24 | 0.72 | % | 6,426 | 22 | 0.70 | % | |||||||||
Short-term Federal Home Loan Bank advances and other | 2,630 | 12 | 0.89 | % | 1,249 | 3 | 0.40 | % | |||||||||
Long-term Federal Home Loan Bank advances | 1,200 | 11 | 1.89 | % | 1,592 | 15 | 1.91 | % | |||||||||
Other long-term debt | 493 | 12 | 5.05 | % | 247 | 4 | 3.27 | % | |||||||||
Total interest-bearing liabilities | 11,066 | 59 | 1.08 | % | 9,514 | 44 | 0.93 | % | |||||||||
Noninterest-bearing deposits (1) | 2,024 | 1,915 | |||||||||||||||
Other liabilities | 409 | 479 | |||||||||||||||
Stockholders' equity | 1,382 | 1,583 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 14,881 | $ | 13,491 | |||||||||||||
Net interest-earning assets | $ | 2,121 | $ | 2,241 | |||||||||||||
Net interest income | $ | 180 | $ | 156 | |||||||||||||
Interest rate spread (2) | 2.55 | % | 2.46 | % | |||||||||||||
Net interest margin (3) | 2.72 | % | 2.64 | % | |||||||||||||
Ratio of average interest-earning assets to interest-bearing liabilities | 119.2 | % | 123.6 | % | |||||||||||||
Total average deposits | $ | 8,767 | $ | 8,341 | |||||||||||||
(1) | Includes noninterest-bearing company-controlled 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, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
Net income | 41 | 27 | 47 | 68 | 86 | ||||||||||||||
Deferred cumulative preferred stock dividends (1) | — | — | (8) | — | (16) | ||||||||||||||
Net income applicable to common stockholders | $ | 41 | $ | 27 | $ | 39 | $ | 68 | $ | 70 | |||||||||
Weighted average shares | |||||||||||||||||||
Weighted average common shares outstanding | 57,101,816 | 56,921,605 | 56,574,796 | 57,012,208 | 56,544,256 | ||||||||||||||
Effect of dilutive securities | |||||||||||||||||||
May Investor warrants | — | 49,149 | 349,539 | 24,575 | 327,307 | ||||||||||||||
Stock-based awards | 1,037,122 | 1,101,809 | 826,895 | 1,069,287 | 751,518 | ||||||||||||||
Weighted average diluted common shares | 58,138,938 | 58,072,563 | 57,751,230 | 58,106,070 | 57,623,081 | ||||||||||||||
Earnings per common share | |||||||||||||||||||
Basic earnings per common share | $ | 0.72 | $ | 0.47 | $ | 0.67 | $ | 1.18 | $ | 1.23 | |||||||||
Effect of dilutive securities | |||||||||||||||||||
Stock-based awards | (0.01) | (0.01) | (0.01) | (0.02) | (0.02) | ||||||||||||||
Diluted earnings per common share | $ | 0.71 | $ | 0.46 | $ | 0.66 | $ | 1.16 | $ | 1.21 | |||||||||
(1) | Under the terms of the Series C Preferred Stock, we elected to defer dividends beginning with the February 2012 dividend. In July 2016, we ended the deferral and brought current our previously deferred dividends and redeemed the stock. |
Regulatory Capital - Bancorp (Dollars in millions) (Unaudited) | |||||||||||||||||||||||
June 30, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | ||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||
Tier 1 leverage (to adjusted tangible assets) | $ | 1,408 | 9.10 | % | $ | 1,277 | 9.31 | % | $ | 1,256 | 8.88 | % | $ | 1,514 | 11.59 | % | |||||||
Total adjusted tangible asset base | $ | 15,468 | $ | 13,716 | $ | 14,149 | $ | 13,068 | |||||||||||||||
Tier 1 common equity (to risk weighted assets) | $ | 1,196 | 12.45 | % | $ | 1,071 | 12.32 | % | $ | 1,084 | 13.06 | % | $ | 1,086 | 13.55 | % | |||||||
Tier 1 capital (to risk weighted assets) | $ | 1,408 | 14.65 | % | $ | 1,277 | 14.70 | % | $ | 1,256 | 15.12 | % | $ | 1,514 | 18.89 | % | |||||||
Total capital (to risk weighted assets) | $ | 1,530 | 15.92 | % | $ | 1,389 | 15.98 | % | $ | 1,363 | 16.41 | % | $ | 1,618 | 20.19 | % | |||||||
Risk weighted asset base | $ | 9,610 | $ | 8,689 | $ | 8,305 | $ | 8,014 | |||||||||||||||
Regulatory Capital - Bank (Dollars in millions) (Unaudited) | |||||||||||||||||||||||
June 30, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | ||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||
Tier 1 leverage (to adjusted tangible assets) | $ | 1,590 | 10.26 | % | $ | 1,477 | 10.74 | % | $ | 1,491 | 10.52 | % | $ | 1,576 | 12.03 | % | |||||||
Total adjusted tangible asset base | $ | 15,504 | $ | 13,754 | $ | 14,177 | $ | 13,102 | |||||||||||||||
Tier 1 common equity (to risk weighted assets) | $ | 1,590 | 16.49 | % | $ | 1,477 | 16.93 | % | $ | 1,491 | 17.90 | % | $ | 1,576 | 19.58 | % | |||||||
Tier 1 capital (to risk weighted assets) | $ | 1,590 | 16.49 | % | $ | 1,477 | 16.93 | % | $ | 1,491 | 17.90 | % | $ | 1,576 | 19.58 | % | |||||||
Total capital (to risk weighted assets) | $ | 1,712 | 17.75 | % | $ | 1,588 | 18.20 | % | $ | 1,598 | 19.18 | % | $ | 1,679 | 20.86 | % | |||||||
Risk weighted asset base | $ | 9,645 | $ | 8,726 | $ | 8,332 | $ | 8,048 | |||||||||||||||
Loan Originations (Dollars in millions) (Unaudited) | |||||||||||||||||
Three Months Ended | |||||||||||||||||
June 30, 2017 | March 31, 2017 | June 30, 2016 | |||||||||||||||
Consumer loans | |||||||||||||||||
Mortgage (1) | $ | 9,198 | 95.1 | % | $ | 5,912 | 95.1 | % | $ | 8,330 | 97.6 | % | |||||
Other consumer (2) | 61 | 0.6 | % | 47 | 0.8 | % | 42 | 0.5 | % | ||||||||
Total consumer loans | 9,259 | 95.7 | % | 5,959 | 95.9 | % | 8,372 | 98.1 | % | ||||||||
Commercial loans (3) | 410 | 4.3 | % | 257 | 4.1 | % | 164 | 1.9 | % | ||||||||
Total loan originations | $ | 9,669 | 100.0 | % | $ | 6,216 | 100.0 | % | $ | 8,536 | 100.0 | % | |||||
Six Months Ended | |||||||||||||||||
June 30, 2017 | June 30, 2016 | ||||||||||||||||
Mortgage (1) | $ | 15,110 | 95.1 | % | $ | 14,682 | 97.8 | % | |||||||||
Other consumer (2) | 108 | 0.7 | % | 69 | 0.5 | % | |||||||||||
Total consumer loans | 15,218 | 95.8 | % | 14,751 | 98.3 | % | |||||||||||
Commercial loans (3) | 667 | 4.2 | % | 248 | 1.7 | % | |||||||||||
Total loan originations | $ | 15,885 | 100.0 | % | $ | 14,999 | 100.0 | % | |||||||||
(1) | Includes residential first mortgage and second mortgage loans. |
(2) | Includes HELOC and other consumer loans. |
(3) | Includes commercial real estate and commercial and industrial loans. |
Residential Loans Serviced (Dollars in millions) (Unaudited) | |||||||||||||||||||||||
June 30, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | ||||||||||||||||||||
Unpaid | Number of | Unpaid | Number of | Unpaid | Number of accounts | Unpaid | Number of accounts | ||||||||||||||||
Serviced for own loan portfolio (1) | $ | 7,156 | 30,875 | $ | 7,369 | 33,766 | $ | 5,816 | 29,244 | $ | 5,379 | 29,520 | |||||||||||
Serviced for others | 16,144 | 66,106 | 26,763 | 116,965 | 31,207 | 133,270 | 30,443 | 134,266 | |||||||||||||||
Subserviced for others (2) | 63,991 | 304,830 | 48,940 | 242,445 | 43,127 | 220,075 | 38,185 | 194,528 | |||||||||||||||
Total residential loans serviced | $ | 87,291 | 401,811 | $ | 83,072 | 393,176 | $ | 80,150 | 382,589 | $ | 74,007 | 358,314 | |||||||||||
(1) | 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. |
(2) | 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, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | ||||||||||||||||||||
Consumer loans | |||||||||||||||||||||||
Residential first mortgage | $ | 2,538 | 37.5 | % | $ | 2,463 | 41.3 | % | $ | 2,327 | 38.3 | % | $ | 2,075 | 35.6 | % | |||||||
Home equity | 459 | 6.7 | % | 376 | 6.3 | % | 443 | 7.3 | % | 473 | 8.1 | % | |||||||||||
Other | 27 | 0.4 | % | 27 | 0.5 | % | 28 | 0.5 | % | 32 | 0.5 | % | |||||||||||
Total consumer loans | 3,024 | 44.6 | % | 2,866 | 48.1 | % | 2,798 | 46.1 | % | 2,580 | 44.2 | % | |||||||||||
Commercial loans | |||||||||||||||||||||||
Commercial real estate | 1,557 | 23.1 | % | 1,399 | 23.5 | % | 1,261 | 20.8 | % | 976 | 16.8 | % | |||||||||||
Commercial and industrial | 1,040 | 15.3 | % | 854 | 14.3 | % | 769 | 12.7 | % | 615 | 10.6 | % | |||||||||||
Warehouse lending | 1,155 | 17.0 | % | 840 | 14.1 | % | 1,237 | 20.4 | % | 1,651 | 28.4 | % | |||||||||||
Total commercial loans | 3,752 | 55.4 | % | 3,093 | 51.9 | % | 3,267 | 53.9 | % | 3,242 | 55.8 | % | |||||||||||
Total loans held-for-investment | $ | 6,776 | 100.0 | % | $ | 5,959 | 100.0 | % | $ | 6,065 | 100.0 | % | $ | 5,822 | 100.0 | % | |||||||
Allowance for Loan Losses (Dollars in millions) (Unaudited) | |||||||||||
As of/For the Three Months Ended | |||||||||||
June 30, | March 31, | June 30, | |||||||||
Allowance for loan losses | |||||||||||
Residential first mortgage | $ | 56 | $ | 61 | $ | 81 | |||||
Home equity | 19 | 21 | 30 | ||||||||
Other | 1 | 1 | 1 | ||||||||
Total consumer loans | 76 | 83 | 112 | ||||||||
Commercial real estate | 37 | 32 | 19 | ||||||||
Commercial and industrial | 21 | 20 | 11 | ||||||||
Warehouse lending | 6 | 6 | 8 | ||||||||
Total commercial loans | 64 | 58 | 38 | ||||||||
Total allowance for loan losses | $ | 140 | $ | 141 | $ | 150 | |||||
Charge-offs | |||||||||||
Total consumer loans | (2) | (5) | (10) | ||||||||
Total commercial loans | — | — | — | ||||||||
Total charge-offs | $ | (2) | $ | (5) | $ | (10) | |||||
Recoveries | |||||||||||
Total consumer loans | 2 | 1 | 1 | ||||||||
Total commercial loans | — | — | — | ||||||||
Total recoveries | 2 | 1 | 1 | ||||||||
Charge-offs, net of recoveries | $ | — | $ | (4) | $ | (9) | |||||
Net charge-offs to LHFI ratio (annualized) (1) | 0.04 | % | 0.27 | % | 0.62 | % | |||||
Net charge-offs ratio, adjusted (annualized) (1)(2) | 0.02 | % | 0.07 | % | 0.18 | % | |||||
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (1): | |||||||||||
Residential first mortgage | 0.09 | % | 0.60 | % | 1.42 | % | |||||
Home equity and other consumer | 0.02 | % | 0.29 | % | 0.61 | % | |||||
Commercial real estate | — | % | (0.02) | % | — | % | |||||
Commercial and industrial | (0.01) | % | (0.01) | % | (0.02) | % | |||||
(1) | Excludes loans carried under the fair value option. |
(2) | Excludes charge-offs of zero, $1 million, and $2 million related to the sale of nonperforming loans, TDRs and non-agency loans during the three months ended June 30, 2017, March 31, 2017, and June 30, 2016. Also excludes charge-offs related to loans with government guarantees of zero, $2 million, and $4 million during the three months ended June 30, 2017, March 31, 2017, and June 30, 2016, respectively. |
Allowance for Loan Losses (continued) (Dollars in millions) (Unaudited) | ||||||||
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
Total allowance for loan losses | $ | 140 | $ | 150 | ||||
Charge-offs | ||||||||
Total consumer loans | (7) | (24) | ||||||
Total commercial loans | — | — | ||||||
Total charge-offs | $ | (7) | $ | (24) | ||||
Recoveries | ||||||||
Total consumer loans | 3 | 3 | ||||||
Total commercial loans | — | — | ||||||
Total recoveries | 3 | 3 | ||||||
Charge-offs, net of recoveries | $ | (4) | $ | (21) | ||||
Net charge-offs to LHFI ratio (annualized) (1) | 0.15 | % | 0.74 | % | ||||
Net charge-offs ratio, adjusted (annualized) (1)(2) | 0.02 | % | 0.44 | % | ||||
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (1): | ||||||||
Residential first mortgage | 0.34 | % | 1.46 | % | ||||
Home equity and other consumer | 0.29 | % | 2.16 | % | ||||
Commercial real estate | (0.01) | % | (0.01) | % | ||||
Commercial and industrial | (0.01) | % | (0.02) | % | ||||
(1) | Excludes loans carried under the fair value option. |
(2) | Excludes charge-offs of $1 million and $8 million during the six months ended June 30, 2017 and 2016, related to the sale of nonperforming loans, TDRs and non-agency loans. Also excludes charge-offs related to loans with government guarantees of $2 million and $7 million during the six months ended June 30, 2017 and 2016, respectively. |
Nonperforming Loans and Assets (Dollars in millions) (Unaudited) | |||||||||||||||
June 30, | March 31, | December 31, | June 30, | ||||||||||||
Nonperforming loans | $ | 18 | $ | 17 | $ | 22 | $ | 23 | |||||||
Nonperforming TDRs | 5 | 5 | 8 | 6 | |||||||||||
Nonperforming TDRs at inception but performing for less than six months | 7 | 6 | 10 | 15 | |||||||||||
Total nonperforming loans held-for-investment | 30 | 28 | 40 | 44 | |||||||||||
Real estate and other nonperforming assets, net | 9 | 13 | 14 | 19 | |||||||||||
Nonperforming assets held-for-investment, net (1) | $ | 39 | $ | 41 | $ | 54 | $ | 63 | |||||||
Ratio of nonperforming assets to total assets | 0.24 | % | 0.27 | % | 0.39 | % | 0.46 | % | |||||||
Ratio of nonperforming loans held-for-investment to loans held-for-investment | 0.44 | % | 0.47 | % | 0.67 | % | 0.76 | % | |||||||
Ratio of nonperforming assets to loans held-for-investment and repossessed assets | 0.57 | % | 0.69 | % | 0.90 | % | 1.09 | % | |||||||
Ratio of nonperforming assets to Tier 1 capital + allowance for loan losses | 2.51 | % | 2.90 | % | 3.93 | % | 3.79 | % | |||||||
(1) | Does not include nonperforming loans held-for-sale of $7 million, $21 million, $6 million, and $5 million at June 30, 2017, March 31, 2017, December 31, 2016, and June 30, 2016, respectively. |
Asset Quality - Loans Held-for-Investment (Dollars in millions) (Unaudited) | |||||||||||||||||||
30-59 Days | 60-89 Days | Greater than | Total Past | Total Loans | |||||||||||||||
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 | |||||||||
March 31, 2017 | |||||||||||||||||||
Consumer loans | $ | 4 | $ | 1 | $ | 28 | $ | 33 | $ | 2,866 | |||||||||
Commercial loans | — | — | — | — | 3,093 | ||||||||||||||
Total loans | $ | 4 | $ | 1 | $ | 28 | $ | 33 | $ | 5,959 | |||||||||
December 31, 2016 | |||||||||||||||||||
Consumer loans | $ | 8 | $ | 2 | $ | 40 | $ | 50 | $ | 2,798 | |||||||||
Commercial loans | — | — | — | — | 3,267 | ||||||||||||||
Total loans | $ | 8 | $ | 2 | $ | 40 | $ | 50 | $ | 6,065 | |||||||||
June 30, 2016 | |||||||||||||||||||
Consumer loans | 5 | 2 | 44 | $ | 51 | $ | 2,580 | ||||||||||||
Commercial loans | — | — | — | — | 3,242 | ||||||||||||||
Total loans | $ | 5 | $ | 2 | $ | 44 | $ | 51 | $ | 5,822 | |||||||||
(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, 2017 | |||||||||||
Consumer loans | $ | 46 | $ | 12 | $ | 58 | |||||
Commercial loans | — | — | — | ||||||||
Total TDR loans | $ | 46 | $ | 12 | $ | 58 | |||||
March 31, 2017 | |||||||||||
Consumer loans | $ | 48 | $ | 11 | $ | — | |||||
Commercial loans | — | — | — | ||||||||
Total TDR loans | $ | 48 | $ | 11 | $ | 59 | |||||
December 31, 2016 | |||||||||||
Consumer loans | $ | 67 | $ | 18 | $ | 85 | |||||
Commercial loans | — | — | — | ||||||||
Total TDR loans | $ | 67 | $ | 18 | $ | 85 | |||||
June 30, 2016 | |||||||||||
Consumer loans | $ | 72 | $ | 21 | $ | 93 | |||||
Commercial loans | 1 | — | 1 | ||||||||
Total TDR loans | $ | 73 | $ | 21 | $ | 94 | |||||
Representation and Warranty Reserve (Dollars in millions) (Unaudited) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||
Balance at beginning of period | $ | 23 | $ | 27 | $ | 40 | $ | 27 | $ | 40 | |||||||||
Provision (benefit) | |||||||||||||||||||
Gain on sale reduction for representation and warranty liability | 1 | — | 1 | 2 | 3 | ||||||||||||||
Representation and warranty provision (benefit) | (3) | (4) | (4) | (7) | (6) | ||||||||||||||
Total | (2) | (4) | (3) | (5) | (3) | ||||||||||||||
(Charge-offs) recoveries, net | (1) | — | (1) | (2) | (1) | ||||||||||||||
Balance at end of period | $ | 20 | $ | 23 | $ | 36 | $ | 20 | $ | 36 | |||||||||
Non-GAAP Reconciliation
(Dollars in millions)
(Unaudited)
Basel III (transitional) to Basel III (fully phased-in) reconciliation.On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We have transitioned to the Basel III framework beginning in January 2015 and are subject to a phase-in period extending through 2018. Accordingly, the calculations provided below are estimates. These measures are considered to be non-GAAP financial measures because they are not formally defined by GAAP and the Basel III implementation regulations will not be fully phased-in until January 1, 2019. The regulations are subject to change as clarifying guidance becomes available and the calculations currently include our interpretations of the requirements including informal feedback received through the regulatory process. Other entities may calculate the Basel III ratios differently from ours based on their interpretation of the guidelines. Since analysts and banking regulators may assess our capital adequacy using the Basel III framework, we believe that it is useful to provide investors information enabling them to assess our capital adequacy on the same basis.
June 30, 2017 | Common Equity | Tier 1 Leverage (to Adjusted Tangible | Tier 1 Capital (to Risk Weighted | Total Risk-Based | |||||||||||
(Dollars in millions) (Unaudited) | |||||||||||||||
Flagstar Bancorp (the Company) | |||||||||||||||
Regulatory capital – Basel III (transitional) to Basel III (fully phased-in) | |||||||||||||||
Basel III (transitional) | $ | 1,196 | $ | 1,408 | $ | 1,408 | $ | 1,530 | |||||||
Increased deductions related to deferred tax assets, mortgage servicing rights and other capital components | (75) | (47) | (47) | (44) | |||||||||||
Basel III (fully phased-in) capital | $ | 1,121 | $ | 1,361 | $ | 1,361 | $ | 1,486 | |||||||
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) | |||||||||||||||
Basel III assets (transitional) | $ | 9,610 | $ | 15,468 | $ | 9,610 | $ | 9,610 | |||||||
Net change in assets | 206 | (46) | 206 | 206 | |||||||||||
Basel III (fully phased-in) assets | $ | 9,816 | $ | 15,422 | $ | 9,816 | $ | 9,816 | |||||||
Capital ratios | |||||||||||||||
Basel III (transitional) | 12.45 | % | 9.10 | % | 14.65 | % | 15.92 | % | |||||||
Basel III (fully phased-in) | 11.42 | % | 8.83 | % | 13.87 | % | 15.14 | % | |||||||
June 30, 2017 | Common Equity | Tier 1 Leverage (to Adjusted Tangible | Tier 1 Capital (to Risk Weighted | Total Risk-Based | |||||||||||
Flagstar Bank (the Bank) | (Dollars in millions) (Unaudited) | ||||||||||||||
Regulatory capital – Basel III (transitional) to Basel III (fully phased-in) | |||||||||||||||
Basel III (transitional) | $ | 1,590 | $ | 1,590 | $ | 1,590 | $ | 1,712 | |||||||
Increased deductions related to deferred tax assets, mortgage servicing rights and other capital components | (22) | (22) | (22) | (19) | |||||||||||
Basel III (fully phased-in) capital | $ | 1,568 | $ | 1,568 | $ | 1,568 | $ | 1,693 | |||||||
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) | |||||||||||||||
Basel III assets (transitional) | $ | 9,645 | $ | 15,504 | $ | 9,645 | $ | 9,645 | |||||||
Net change in assets | 331 | (23) | 331 | 331 | |||||||||||
Basel III (fully phased-in) assets | $ | 9,976 | $ | 15,481 | $ | 9,976 | $ | 9,976 | |||||||
Capital ratios | |||||||||||||||
Basel III (transitional) | 16.49 | % | 10.26 | % | 16.49 | % | 17.75 | % | |||||||
Basel III (fully phased-in) | 15.71 | % | 10.13 | % | 15.71 | % | 16.97 | % | |||||||
Tangible book value per share. 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 adjustment 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 provides a meaningful representation of its operating performance on an ongoing basis. Management uses this measure to assess performance of the Company against its peers and evaluate overall performance. The Company believes this non-GAAP financial measure provides 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 table provides a reconciliation of non-GAAP financial measures.
June 30, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | ||||||||
(Dollars in millions, except share data) | |||||||||||
Total stock holders' equity | 1,408 | 1,371 | 1,336 | 1,599 | |||||||
Preferred stock | — | — | — | 267 | |||||||
Goodwill and intangibles | 20 | 4 | — | — | |||||||
Tangible book value | 1,388 | 1,367 | 1,336 | 1,332 | |||||||
Number of common shares outstanding | 57,161,431 | 57,043,565 | 56,824,802 | 56,575,779 | |||||||
Tangible book value per share | 24.29 | 23.96 | 23.50 | 23.54 | |||||||
View original content:http://www.prnewswire.com/news-releases/flagstar-reports-second-quarter-2017-net-income-of-41-million-or-071-per-diluted-share-300493212.html
SOURCE Flagstar Bancorp, Inc.
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