Flagstar Reports Fourth Quarter 2015 Net Income of $33 million, or $0.44 per Diluted Share

Company makes continued progress in successfully executing business plan

Key Q4 Highlights

- Net interest income grew 4 percent from third quarter 2015, driven by a 5 percent increase in earning assets

- Gain on loan sales fell $22 million, or 32 percent, from prior quarter due to seasonal factors and TILA-RESPA Integrated Disclosure ("TRID")

- Net charge-offs and consumer delinquencies improved on solid credit performance

- Tier 1 leverage ratio remained strong at 11.5 percent

Jan 26, 2016, 06:30 ET from Flagstar Bancorp, Inc.

TROY, Mich., Jan. 26, 2016 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, FSB, today reported fourth quarter 2015 net income of $33 million, or $0.44 per diluted share, as compared to $47 million in the third quarter 2015, or $0.69 per diluted share, and net income of $11 million in the fourth quarter 2014, or $0.07 per diluted share. The full year 2015 net income was $158 million, or $2.24 per diluted share, as compared to a full year 2014 net loss of $70 million, or $1.72 loss per diluted share.

"Flagstar had a very good year in 2015, posting the highest level of pre-tax income since 2003," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "We made continued progress in the fourth quarter, generating higher net interest income through solid growth in earning assets and maintaining a clean credit profile."

"As we expected, our mortgage revenues were seasonally lower. We were also impacted by TRID. The Company took a careful approach with the implementation of TRID, taking greater control in creating and delivering disclosure documents. Given our predominantly third party business model, we experienced more of an impact than other bank originators. We are taking steps to address this issue while building market share in our distributed and direct-to-consumer retail channels."

"We look forward to 2016. Despite the economic uncertainties created by Fed tightening and the regulatory challenges the industry faces, we like our position. We have a solid business plan, a strong balance sheet, a more profitable and diversified business mix and the team we want. We continue to grow our businesses, our regulatory relationships are strong and we remain confident we will move toward optimizing our capital structure in 2016 with the expected redemption of our TARP preferred and the restoration of interest payments on our Trust Preferred securities."

Fourth Quarter 2015 Highlights:

Income Statement Highlights

Three Months Ended

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

(Dollars in millions)

Consolidated Statements of Income

Net interest income

$

76

$

73

$

73

$

65

$

61

(Benefit) provision for loan losses

(1)

(1)

(13)

(4)

5

Noninterest income

97

128

126

119

98

Noninterest expense

129

131

138

138

139

Income before income taxes

45

71

74

50

15

Provision for income taxes

12

24

28

18

4

Net income

$

33

$

47

$

46

$

32

$

11

Income per share:

Basic

$

0.45

$

0.70

$

0.69

$

0.43

$

0.07

Diluted

$

0.44

$

0.69

$

0.68

$

0.43

$

0.07

 

 

Key Ratios

Three Months Ended

Change (bps)

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

Seq

Yr/Yr

Net interest margin

2.69

%

2.75

%

2.79

%

2.75

%

2.80

%

(6)

(11)

Return on average assets

1.0

%

1.5

%

1.6

%

1.2

%

0.4

%

(50)

60

Return on average equity

8.6

%

12.4

%

12.7

%

8.9

%

3.2

%

(380)

540

 

 

Balance Sheet Highlights

Three Months Ended

% Change

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

Seq

Yr/Yr

(Dollars in millions)

Average Balance Sheet

Average interest-earning assets

$

11,240

$

10,693

$

10,367

$

9,422

$

8,725

5

%

29

%

Average loans held-for-sale

2,484

2,200

2,218

1,842

1,687

13

%

47

%

Average loans held-for-investment

5,642

5,412

4,938

4,293

4,031

4

%

40

%

Average total deposits

8,132

8,260

7,736

7,368

7,146

(2)

%

14

%

 

Net Interest Income

Fourth quarter 2015 net interest income increased $3 million, or 4 percent, to $76 million, compared to $73 million for the third quarter 2015. The results were led by earning asset growth of 5 percent, partially offset by a slight drop in net interest margin.

Net interest margin decreased 6 basis points to 2.69 percent for the fourth quarter 2015, as compared to 2.75 percent for the third quarter 2015. The decrease from the prior quarter was primarily driven by a lower yield on mortgage loans and loans repurchased with government guarantees, partially offset by lower funding costs on FHLB advances. The net interest margin was also negatively impacted by a seasonal decline in company-controlled deposits due to tax payments.

Average loans held-for-investment totaled $5.6 billion for the fourth quarter 2015, increasing $230 million, or 4 percent, compared to the third quarter 2015. The increase was driven by higher commercial real estate and mortgage loans. Average commercial real estate loans grew $115 million, or 17 percent, and average residential mortgage loans rose $77 million, or 3 percent.

Average total deposits were $8.1 billion in the fourth quarter 2015, decreasing $128 million, or 2 percent, from the prior quarter. The decline was led by a seasonal drop in company-controlled deposits, partially offset by an increase in government and retail deposits. Average company-controlled deposits decreased $244 million, or 16 percent, due to tax payments. Average government deposits rose $49 million, or 5 percent, due to seasonal increases. Average retail deposits increased $67 million, or 1 percent, led by a 4 percent increase in demand deposits.

Provision for Loan Losses

The Company experienced a provision benefit in the fourth quarter 2015, resulting primarily from the full payoff of a commercial loan. The benefit for loan losses totaled $1 million for the fourth quarter 2015, unchanged from a benefit of $1 million for the third quarter 2015.

Net charge-offs in the fourth quarter 2015 were $9 million, or 0.62 percent of applicable loans, compared to $24 million, or 1.84 percent of applicable loans in the prior quarter. The fourth quarter 2015 amount included $2 million of net charge-offs associated with the sale of $11 million (unpaid principal balance) of nonperforming loans. The third quarter 2015 amount included $16 million of net charge-offs associated with the sale of $233 million (unpaid principal balance) of interest-only and lower performing loans. Excluding loan sales or transfers in both quarters, net charge-offs in the fourth quarter 2015 were $7 million, or 0.51 percent of applicable loans, compared to $8 million, or 0.61 percent of applicable loans in the prior quarter.

Noninterest Income

Fourth quarter 2015 noninterest income decreased $31 million, or 24 percent, to $97 million, as compared to $128 million for the third quarter 2015. The fourth quarter 2015 results were led by lower net gain on loan sales, a decline in loan fees and charges and a reduced net return on the mortgage servicing asset.

Fourth quarter 2015 net gain on loan sales decreased $22 million, or 32 percent, to $46 million, as compared to $68 million for the third quarter 2015, due to seasonal factors and the impact of TRID. In the fourth quarter 2015, fallout-adjusted locks decreased 23 percent to $5.0 billion. The Company took a careful approach with TRID implementation, taking greater control in creating and delivering disclosure documents. It experienced more of an impact than other bank originators due to its third party business model. The net gain on loan sale margin fell 13 basis points to 0.92 percent for the fourth quarter 2015, as compared to 1.05 percent for the third quarter 2015, led by price competition. The Company has initiated a plan to address its volume levels and continues to build a stronger distributed and direct-to-consumer retail business.

 

Mortgage Metrics

Three Months Ended

Change (% / bps)

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

Seq

Yr/Yr

(Dollars in millions)

GOS margin (change in bps) (1)

0.92

%

1.05

%

1.21

%

1.27

%

0.87

%

(13)

5

Gain on loan sales

$

46

$

68

$

83

$

91

$

53

(32)

%

(13)

%

Mortgage rate lock commitments (fallout-adjusted) (2)

$

5,027

$

6,495

$

6,804

$

7,185

$

6,156

(23)

%

(18)

%

Residential loans serviced (number of accounts - 000's) (3)

361

369

378

385

383

(2)

%

(6)

%

Capitalized value of mortgage servicing rights

1.13

%

1.12

%

1.15

%

1.03

%

1.01

%

1

12

(1)

Gain on sale margin is based on net gain on loan sales to fallout-adjusted mortgage rate lock commitments.

(2)

Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates.

(3)

 Includes serviced for own loan portfolio, serviced for others and subserviced for others loans.

 

Loan fees and charges fell to $14 million for the fourth quarter 2015, as compared to $17 million in the third quarter 2015. The decrease primarily reflected lower mortgage closings.

Net return on the mortgage servicing asset (including the impact of economic hedges) fell to $9 million for the fourth quarter 2015, as compared to $12 million for the third quarter 2015. The decrease from the prior quarter primarily reflected a smaller impact from the collection of contingencies held back by the purchaser relating to MSR sales in prior periods. Excluding the impact of net transaction costs, the return on the mortgage servicing asset was 11 percent, which was consistent with the prior quarter. The return in the fourth quarter 2015 was better than the Company's long-term return target as it benefited from slower prepayments and positive economic hedging results.

Noninterest Expense

Noninterest expense decreased $2 million, or 2 percent, to $129 million for the fourth quarter 2015, as compared to $131 million for the third quarter 2015. The fourth quarter 2015 results were driven by lower commissions and loan processing expense related to decreased business activity and lower federal insurance premiums, partially offset by higher asset resolution expense.

Commissions were $8 million for the fourth quarter 2015, as compared to $10 million for the third quarter 2015. The $2 million decrease in the fourth quarter 2015 was primarily attributable to lower mortgage closings.

Fourth quarter 2015 asset resolution expense was $2 million higher than third quarter 2015. The prior quarter reflected a benefit for reimbursements. The low level of asset resolution expense in the fourth quarter 2015 reflected the Company's success in de-risking the balance sheet.

Federal insurance premiums were $5 million for the fourth quarter 2015, as compared to $6 million for the third quarter 2015, reflecting the Company's improved risk profile.

Loan processing expense was $12 million for the fourth quarter 2015, as compared to $14 million for the third quarter 2015. The $2 million decline in the current quarter was primarily attributable to lower mortgage closings.

Income Taxes

The fourth quarter 2015 provision for income taxes totaled $12 million, as compared to $24 million in the third quarter 2015. The effective tax rate in the fourth quarter 2015 was 27 percent, as compared to 34 percent in the third quarter 2015. The decline in the marginal tax rate in the fourth quarter 2015 resulted primarily from benefits associated with state income taxes.

Asset Quality

Credit Quality Ratios

Three Months Ended

Change (% / bps)

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

Seq

Yr/Yr

(Dollars in millions)

Allowance for loan loss to LHFI

3.0

%

3.7

%

4.3

%

5.7

%

7.0

%

(70)

(400)

Charge-offs, net of recoveries

$

9

$

24

$

18

$

41

$

9

(63)

%

%

Charge-offs, net of recoveries,

adjusted (1)

$

7

$

8

$

3

$

5

$

6

(13)

%

17

%

Total nonperforming loans held-for- investment

$

66

$

63

$

65

$

84

$

120

5

%

(45)

%

Net charge-off ratio (annualized)

0.62

%

1.84

%

1.49

%

3.97

%

0.91

%

(122)

(29)

Net charge-off ratio, adjusted (annualized) (1)

0.51

%

0.61

%

0.26

%

0.45

%

0.60

%

(10)

(9)

Nonperforming loans to LHFI

1.05

%

1.15

%

1.22

%

1.81

%

2.71

%

(10)

(166)

(1)

Excludes charge-offs of $2 million, $16 million, $15 million, $36 million and $3 million related to the sale or transfer of nonperforming loans and    TDRs during the three months ended December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, and December 31, 2014, respectively.

 

The allowance for loan losses was $187 million at December 31, 2015, covering 3.0 percent of loans held-for-investment. The allowance for loan losses was $197 million at September 30, 2015, covering 3.7 percent of loans held-for-investment. The decrease in the allowance for loan losses in the fourth quarter 2015 was largely due to charge-offs of residential mortgages, the sale of nonperforming loans and the addition of higher credit quality loans to the portfolio.

Fourth quarter 2015 net charge-offs were $9 million, representing 0.62 percent of applicable loans. This represented a decrease of $15 million from the third quarter 2015 net charge-offs of $24 million, or 1.84 percent of applicable loans. Excluding loan sales or transfers in both quarters, net charge-offs in the fourth quarter 2015 were $7 million, or 0.51 percent, compared to $8 million, or 0.61 percent in the prior quarter. Fourth quarter 2015 net charge-offs included $3 million of loans with government guarantees. The remaining $4 million of charge-offs accounted for 0.29 percent of applicable loans.

Nonperforming loans increased to $66 million at December 31, 2015 from $63 million at September 30, 2015. The ratio of nonperforming loans to loans held-for-investment decreased to 1.05 percent at December 31, 2015 from 1.15 percent at September 30, 2015. At December 31, 2015, consumer loan delinquencies (30-89 days past due) totaled $14 million, or 38 basis points, a decrease of 25 basis points from September 30, 2015 and a decrease of 129 basis points from the same period last year. There were no commercial loan delinquencies (30-89 days past due) at December 31, 2015.

Capital

Capital Ratios (Bancorp) (1)

Three Months Ended

Change (% / bps)

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

Seq

Yr/Yr

Total capital

20.28

%

21.64

%

21.30

%

22.61

%

24.12

%

(136)

(384)

Tier 1 capital

18.98

%

20.32

%

19.97

%

21.26

%

22.81

%

(134)

(383)

Tier 1 leverage

11.51

%

11.65

%

11.47

%

12.02

%

12.59

%

(14)

(108)

Mortgage servicing rights to Tier 1 capital

20.63

%

21.12

%

24.20

%

22.20

%

21.80

%

(49)

(117)

Book value per common share (change in percent)

$

22.33

$

21.91

$

20.98

$

20.43

$

19.64

2

%

14

%

(1)

On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior.

 

The Company's regulatory capital ratios remain well above current regulatory quantitative guidelines for "well-capitalized" institutions. At December 31, 2015, the Company had a Tier 1 leverage ratio of 11.51 percent, as compared to 11.65 percent at September 30, 2015. The decrease in the ratio resulted from the deployment of capital for balance sheet growth. At December 31, 2015, the Company had a common equity-to-assets ratio of 9.20 percent.

Earnings Conference Call

As previously announced, the Company's fourth quarter 2015 earnings call will be held Tuesday, January 26, 2016 at 11 a.m. (ET).

To join the call, please dial (877) 780-3381 toll free or (719) 457-2621, and use passcode 4668782. Please call at least 10 minutes before the conference is scheduled to begin. A replay will be available for five business days by calling (888) 203-1112 toll free or (719) 457-0820, using passcode 4668782.

The conference call will also be available as a live audiocast on the Investor Relations section of flagstar.com.

It will be archived on that site and will be available for replay and download. The slide presentation accompanying the conference call will be posted on the site.

About Flagstar

Flagstar Bancorp, Inc. (NYSE: FBC) is a $13.7 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, the largest bank headquartered in Michigan, provides commercial, small business, and consumer banking services through 99 branches in the state. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as through 10 retail centers in nine states. Flagstar is the 10th largest national originator of mortgage loans and a top 20 mortgage servicer, handling payments and record keeping for over $72.5 billion home loans for over 360,000 borrowers. For more information, please visit flagstar.com.

Use of Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this press release includes non-GAAP financial measures such as the ratio of total nonperforming assets to Tier 1 capital (to adjusted total assets) and estimated Basel III ratios. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the underlying performance and trends of Flagstar.

Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To mitigate these limitations, there are practices in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that the Company's performance is properly reflected to facilitate consistent period-to-period comparisons. Although the Company believes the non-GAAP financial measures disclosed in this report enhance investors' understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for those financial measures prepared in accordance with GAAP.

Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this earnings release, conference call slides, or the Form 8-K related to this press release. Additional discussion of the use of non-GAAP measures can also be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission. These documents can all be found on the Company's website at flagstar.com.

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Flagstar Bancorp, Inc.'s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements can be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company's website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

 

 

Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition

(Dollars in millions)

December 31,  2015

September 30,  2015

December 31,  2014

(Unaudited)

(Unaudited)

Assets

Cash and cash equivalents

Cash

$

54

$

65

$

47

Interest-earning deposits

154

130

89

Total cash and cash equivalents

208

195

136

    Investment securities available-for-sale

1,294

1,150

1,672

    Investment securities held-to-maturity

1,268

1,108

Loans held-for-sale

2,576

2,408

1,244

Loans with government guarantees

485

509

1,128

Loans held-for-investment, net

Loans held-for-investment

6,352

5,514

4,448

Less: allowance for loan losses

(187)

(197)

(297)

Total loans held-for-investment, net

6,165

5,317

4,151

    Mortgage servicing rights

296

294

258

    Federal Home Loan Bank stock

170

113

155

    Premises and equipment, net

250

243

238

    Net deferred tax asset

362

372

442

    Other assets

641

810

416

Total assets

$

13,715

$

12,519

$

9,840

Liabilities and Stockholders' Equity

Deposits

Noninterest-bearing

$

1,574

$

1,749

$

1,209

Interest-bearing

6,361

6,388

5,860

Total deposits

7,935

8,137

7,069

    Federal Home Loan Bank advances

3,541

2,024

514

    Long-term debt

247

279

331

    Representation and warranty reserve

40

45

53

Other liabilities

423

530

500

            Total liabilities

12,186

11,015

8,467

    Stockholders' Equity

Preferred stock

267

267

267

Common stock

1

1

1

    Additional paid in capital

1,486

1,484

1,482

    Accumulated other comprehensive income

2

12

8

    Accumulated deficit

(227)

(260)

(385)

Total stockholders' equity

1,529

1,504

1,373

Total liabilities and stockholders' equity

$

13,715

$

12,519

$

9,840

 

 

 

Flagstar Bancorp, Inc.

 Condensed Consolidated Statements of Operations

 (Dollars in millions, except per share data)

(Unaudited)

Fourth Quarter 2015 Compared to:

Three Months Ended

Third Quarter

2015

Fourth Quarter

2014

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

Amount

Percent

Amount

Percent

Interest Income

Total interest income

$

95

$

91

$

90

$

79

$

72

$

4

4

%

$

23

32

%

Total interest expense

19

18

17

14

11

1

6

%

8

73

%

Net interest income

76

73

73

65

61

3

4

%

15

25

%

(Benefit) provision for loan losses

(1)

(1)

(13)

(4)

5

%

(6)

N/M

Net interest income after provision for loan losses

77

74

86

69

56

3

4

%

21

38

%

Noninterest Income

Net gain on loan sales

46

68

83

91

53

(22)

(32)

%

(7)

(13)

%

Loan fees and charges

14

17

19

17

17

(3)

(18)

%

(3)

(18)

%

Deposit fees and charges

6

7

6

6

6

(1)

(14)

%

%

Loan administration income

7

8

7

4

5

(1)

(13)

%

2

40

%

Net return (loss) on the mortgage servicing asset

9

12

9

(2)

2

(3)

(25)

%

7

N/M

Net gain (loss) on sale of assets

1

(2)

2

(1)

(100)

%

(2)

(100)

%

Representation and warranty benefit

6

6

5

2

6

%

%

Other noninterest income (loss)

9

9

(1)

1

7

%

2

29

%

Total noninterest income

97

128

126

119

98

(31)

(24)

%

(1)

(1)

%

Noninterest Expense

Compensation and benefits

59

58

59

61

59

1

2

%

%

Commissions

8

10

11

10

9

(2)

(20)

%

(1)

(11)

%

Occupancy and equipment

21

20

20

20

20

1

5

%

1

5

%

Asset resolution

2

5

8

13

2

N/M

(11)

(85)

%

Federal insurance premiums

5

6

6

6

5

(1)

(17)

%

%

Loan processing expense

12

14

14

12

11

(2)

(14)

%

1

9

%

Legal and professional expense

9

10

8

9

11

(1)

(10)

%

(2)

(18)

%

Other noninterest expense

13

13

15

12

11

%

2

18

%

Total noninterest expense

129

131

138

138

139

(2)

(2)

%

(10)

(7)

%

Income before income taxes

45

71

74

50

15

(26)

(37)

%

30

N/M

Provision for income taxes

12

24

28

18

4

(12)

(50)

%

8

N/M

Net income

$

33

$

47

$

46

$

32

$

11

$

(14)

(30)

%

$

22

N/M

Income per share

Basic

$

0.45

$

0.70

$

0.69

$

0.43

$

0.07

$

(0.25)

(36)

%

$

0.38

N/M

Diluted

$

0.44

$

0.69

$

0.68

$

0.43

$

0.07

$

(0.25)

(36)

%

$

0.37

N/M

N/M - Not meaningful

 

 

 

Flagstar Bancorp, Inc.

 Condensed Consolidated Statements of Operations

(Dollars in millions, except per share data)

Year Ended

Year Ended December 31, 2015

Compared to

Year Ended December 31, 2014

December 31,  2015

December 31,  2014

Amount

Percent

(Unaudited)

Total interest income

$

355

$

286

$

69

24

%

Total interest expense

68

39

29

74

%

Net interest income

287

247

40

16

%

(Benefit) provision for loan losses

(19)

132

(151)

N/M

Net interest income after provision for loan losses

306

115

191

N/M

Noninterest Income

Net gain on loan sales

288

206

82

40

%

Loan fees and charges

67

73

(6)

(8)

%

Deposit fees and charges

25

22

3

14

%

Loan administration income

26

24

2

8

%

Net return on the mortgage servicing asset

28

24

4

17

%

Net (loss) gain on sale of assets

(1)

12

(13)

N/M

Representation and warranty benefit (provision)

19

(10)

29

N/M

Other noninterest income

18

10

8

80

%

Total noninterest income

470

361

109

30

%

Noninterest Expense

Compensation and benefits

237

233

4

2

%

Commissions

39

35

4

11

%

Occupancy and equipment

81

80

1

1

%

Asset resolution

15

57

(42)

(74)

%

Federal insurance premiums

23

23

%

Loan processing expense

52

37

15

41

%

Legal and professional expense

36

51

(15)

(29)

%

Other noninterest expense

53

63

(10)

(16)

%

Total noninterest expense

536

579

(43)

(7)

%

Income (loss) before income taxes

240

(103)

343

N/M

Provision (benefit) for income taxes

82

(34)

116

N/M

Net income (loss)

158

(69)

227

N/M

Preferred stock accretion

(1)

1

(100)

%

Net income (loss)

$

158

$

(70)

$

228

N/M

Income (loss) per share

Basic

$

2.27

$

(1.72)

$

3.99

N/M

Diluted

$

2.24

$

(1.72)

$

3.96

N/M

N/M - Not meaningful

 

 

 

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial and Statistical Data

(Dollars in millions, except share data)

(Unaudited)

Three Months Ended

Year Ended

December 31,  2015

September 30,  2015

December 31,  2014

December 31,  2015

December 31,  2014

Mortgage loans originated (1)

$

5,824

$

7,876

$

6,603

$

29,402

$

24,608

Mortgage loans sold and securitized

$

5,164

$

7,318

$

6,831

$

26,306

$

24,407

Interest rate spread (2)

2.54

%

2.56

%

2.67

%

2.58

%

2.80

%

Net interest margin

2.69

%

2.75

%

2.80

%

2.74

%

2.91

%

Average common shares outstanding

56,449,596

56,436,026

56,310,858

56,426,977

56,246,528

Average fully diluted shares outstanding

57,502,017

57,207,503

56,792,751

57,164,523

56,246,528

Average interest-earning assets

$

11,240

$

10,693

$

8,725

$

10,436

$

8,440

Average interest-paying liabilities

$

9,078

$

8,354

$

6,918

$

8,305

$

6,780

Average stockholders' equity

$

1,547

$

1,510

$

1,395

$

1,486

$

1,406

Return (loss) on average assets

1.03

%

1.52

%

0.44

%

1.32

%

(0.71)

%

Return (loss) on average equity

8.56

%

12.41

%

3.18

%

10.63

%

(4.97)

%

Efficiency ratio

75.15

%

65.00

%

87.20

%

70.89

%

95.40

%

Equity-to-assets ratio (average for the period)

12.07

%

12.27

%

13.74

%

12.43

%

14.22

%

Charge-offs to average LHFI (3)

0.62

%

1.84

%

0.91

%

1.85

%

1.07

%

 

 

December 31,  2015

September 30,  2015

December 31,  2014

Book value per common share

$

22.33

$

21.91

$

19.64

Number of common shares outstanding

56,483,258

56,436,026

56,332,307

Mortgage loans subserviced for others

$

40,244

$

42,282

$

46,724

Mortgage loans serviced for others

$

26,145

$

26,306

$

25,427

Weighted average service fee (basis points)

27.7

28.3

27.2

Capitalized value of mortgage servicing rights

1.13

%

1.12

%

1.01

%

Mortgage servicing rights to Tier 1 capital

20.63

%

21.12

%

21.80

%

Ratio of allowance for loan losses to LHFI (3)

3.00

%

3.66

%

7.01

%

Ratio of nonperforming assets to total assets

0.61

%

0.64

%

1.41

%

Equity-to-assets ratio

11.14

%

12.01

%

13.95

%

Common equity-to-assets ratio

9.20

%

9.88

%

11.24

%

Number of bank branches

99

99

107

Number of FTE employees

2,713

2,677

2,739

(1)

Includes residential first mortgage and second mortgage loans. 

(2)

Interest rate spread is the difference between the annualized yield earned on average interest-earning assets for the period and the annualized rate of interest paid on average interest-bearing liabilities for the period.

(3)

Excludes loans carried under the fair value option.

 

 

 

Flagstar Bancorp, Inc.

Earnings Per Share

(Dollars in millions, except share data)

(Unaudited)

Three Months Ended

Year Ended

December 31,  2015

September 30,  2015

December 31,  2014

December 31,  2015

December 31,  2014

Net income (loss)

$

33

$

47

$

11

$

158

$

(69)

Less: preferred stock accretion

(1)

Net income (loss) from continuing operations

33

47

11

158

(70)

Deferred cumulative preferred stock dividends

(8)

(8)

(7)

(30)

(26)

Net income (loss) applicable to Common Stockholders

$

25

$

39

$

4

$

128

$

(96)

Weighted Average Shares

Weighted average common shares outstanding

56,449,596

56,436,026

56,310,858

56,426,977

56,246,528

Effect of dilutive securities

Warrants

348,939

339,478

248,202

305,484

Stock-based awards

703,482

431,999

233,691

432,062

Weighted average diluted common shares

57,502,017

57,207,503

56,792,751

57,164,523

56,246,528

Earnings (loss) per common share

Net income (loss) applicable to Common Stockholders

$

0.45

$

0.70

$

0.07

$

2.27

$

(1.72)

Effect of dilutive securities

Warrants

(0.01)

Stock-based awards

(0.01)

(0.01)

(0.02)

Diluted earnings (loss) per share

$

0.44

$

0.69

$

0.07

$

2.24

$

(1.72)

 

 

 

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)

Three Months Ended

December 31, 2015

September 30, 2015

December 31, 2014

Average Balance

Interest

Annualized

Yield/Rate

Average Balance

Interest

Annualized

Yield/Rate

Average Balance

Interest

Annualized

Yield/Rate

Interest-Earning Assets

Loans held-for-sale

$

2,484

$

24

3.88

%

$

2,200

$

22

3.94

%

$

1,687

$

18

4.20

%

Loans with government guarantees

496

4

2.84

%

547

5

3.37

%

1,141

6

1.96

%

Loans held-for-investment

Consumer loans (1)

3,423

30

3.52

%

3,367

30

3.67

%

2,510

23

3.81

%

Commercial loans (1)

2,219

21

3.77

%

2,045

20

3.80

%

1,521

14

3.62

%

Total loans held-for-investment

5,642

51

3.62

%

5,412

50

3.72

%

4,031

37

3.74

%

Investment securities

2,441

16

2.55

%

2,313

14

2.50

%

1,621

11

2.66

%

Interest-earning deposits

177

0.49

%

221

0.53

%

245

0.23

%

Total interest-earning assets

11,240

$

95

3.36

%

10,693

$

91

3.42

%

8,725

$

72

3.30

%

Other assets

1,585

1,612

1,429

Total assets

$

12,825

$

12,305

$

10,154

Interest-Bearing Liabilities

Retail deposits

Demand deposits

$

431

$

0.13

%

$

429

$

0.14

%

$

421

$

0.14

%

Savings deposits

3,725

8

0.84

%

3,732

8

0.84

%

3,394

6

0.68

%

Money market deposits

272

0.39

%

262

0.33

%

257

0.22

%

Certificates of deposit

813

2

0.88

%

785

2

0.80

%

837

1

0.68

%

Total retail deposits

5,241

10

0.76

%

5,208

10

0.75

%

4,909

7

0.61

%

Government deposits

Demand deposits

304

0.40

%

286

0.39

%

230

0.39

%

Savings deposits

401

1

0.52

%

445

1

0.52

%

386

1

0.52

%

Certificates of deposit

410

1

0.45

%

335

0.40

%

373

0.36

%

Total government deposits

1,115

2

0.46

%

1,066

1

0.45

%

989

1

0.43

%

Total interest-bearing deposits

6,356

12

0.71

%

6,274

11

0.70

%

5,898

8

0.58

%

Federal Home Loan Bank advances

2,445

5

0.92

%

1,795

5

1.17

%

773

1

0.24

%

Other

277

2

2.66

%

285

2

2.51

%

247

2

2.84

%

Total interest-bearing liabilities

9,078

19

0.83

%

8,354

18

0.86

%

6,918

11

0.62

%

Noninterest-bearing deposits (2)

1,776

1,986

1,247

Other liabilities

424

455

594

Stockholders' equity

1,547

1,510

1,395

Total liabilities and stockholder's equity

$

12,825

$

12,305

$

10,154

Net interest-earning assets

$

2,162

$

2,339

$

1,807

Net interest income

$

76

$

73

$

61

Interest rate spread (3)

2.54

%

2.56

%

2.67

%

Net interest margin (4)

2.69

%

2.75

%

2.80

%

Ratio of average interest-earning assets to interest-bearing liabilities

123.8

%

128.0

%

126.1

%

Total average deposits

$

8,132

$

8,260

$

7,146

(1)

Consumer loans include: residential first mortgage, second mortgage, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and warehouse lending loans.

(2)

Includes company-controlled deposits that arise due to the servicing of loans for others, which do not bear interest.

(3)

Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.

(4)

Net interest margin is net interest income divided by average interest-earning assets.

 

 

 

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)

Year Ended

December 31, 2015

December 31, 2014

Average Balance

Interest

Annualized

Yield/Rate

Average Balance

Interest

Annualized

Yield/Rate

Interest-Earning Assets

Loans held-for-sale

$

2,188

$

85

3.90

%

$

1,534

$

65

4.24

%

Loans with government guarantees

633

18

2.86

%

1,216

29

2.39

%

Loans held-for-investment

Consumer loans (1)

3,083

114

3.68

%

2,681

103

3.85

%

Commercial loans (1)

1,993

78

3.88

%

1,294

49

3.70

%

Total loans held-for-investment

5,076

192

3.76

%

3,975

152

3.80

%

Investment securities

2,305

59

2.55

%

1,496

39

2.61

%

Interest-earning deposits

234

1

0.50

%

219

1

0.25

%

Total interest-earning assets

10,436

$

355

3.39

%

8,440

$

286

3.38

%

Other assets

1,520

1,446

Total assets

$

11,956

$

9,886

Interest-Bearing Liabilities

Retail deposits

Demand deposits

$

429

$

1

0.14

%

$

422

$

1

0.14

%

Savings deposits

3,693

30

0.82

%

3,139

18

0.61

%

Money market deposits

258

1

0.31

%

266

1

0.20

%

Certificates of deposit

787

6

0.77

%

915

6

0.73

%

Total retail deposits

5,167

38

0.73

%

4,742

26

0.57

%

Government deposits

Demand deposits

257

1

0.39

%

182

1

0.38

%

Savings deposits

405

2

0.52

%

320

2

0.51

%

Certificates of deposit

358

1

0.39

%

349

1

0.33

%

Total government deposits

1,020

4

0.44

%

851

4

0.41

%

Total interest-bearing deposits

6,187

42

0.68

%

5,593

30

0.54

%

Federal Home Loan Bank advances

1,811

19

1.00

%

939

2

0.23

%

Other

307

7

2.42

%

248

7

2.72

%

Total interest-bearing liabilities

8,305

68

0.82

%

6,780

39

0.58

%

Noninterest-bearing deposits (2)

1,690

1,141

Other liabilities

475

559

Stockholders' equity

1,486

1,406

Total liabilities and stockholder's equity

$

11,956

$

9,886

Net interest-earning assets

$

2,131

$

1,660

Net interest income

$

287

$

247

Interest rate spread (3)

2.58

%

2.80

%

Net interest margin (4)

2.74

%

2.91

%

Ratio of average interest-earning assets to interest-bearing liabilities

125.7

%

124.5

%

Total average deposits

$

7,877

$

6,734

(1)

Consumer loans include: residential first mortgage, second mortgage, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and warehouse lending loans.

(2)

Includes company-controlled deposits that arise due to the servicing of loans for others, which do not bear interest.

(3)

Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.

(4)

Net interest margin is net interest income divided by average interest-earning assets.

 

 

 

Gain on Loan Sales

(Dollars in millions)

(Unaudited)

Three Months Ended

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

(Dollars in millions)

Net gain on loan sales

$

46

$

68

$

83

$

91

$

53

Mortgage rate lock commitments (gross)

$

6,258

$

8,025

$

8,400

$

9,035

$

7,605

Loans sold and securitized

$

5,164

$

7,318

$

7,571

$

6,254

$

6,831

Mortgage rate lock commitments (fallout-adjusted) (1)

$

5,027

$

6,495

$

6,804

$

7,185

$

6,156

Net margin on mortgage rate lock commitments (fallout-adjusted) (1)

0.92

%

1.05

%

1.21

%

1.27

%

0.87

%

Year Ended

December 31,  2015

December 31,  2014

(Dollars in millions)

Net gain on loan sales

$

288

$

206

Mortgage rate lock commitments (gross)

$

31,718

$

29,546

Loans sold and securitized

$

26,306

$

24,407

Mortgage rate lock commitments (fallout-adjusted) (1)

$

25,512

$

24,007

Net margin on mortgage rate lock commitments (fallout-adjusted) (1)

1.13

%

0.86

%

(1)

Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates. The net margin is based on net gain on loan sales to fallout-adjusted mortgage rate lock commitments.

 

 

 

Regulatory Capital - Bancorp

(Dollars in millions)

(Unaudited)

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Tier 1 leverage (to adjusted tangible assets) (1)

$

1,435

11.51

%

$

1,393

11.65

%

$

1,309

11.47

%

$

1,257

12.02

%

$

1,184

12.59

%

Total adjusted tangible asset base

$

12,474

$

11,957

$

11,406

$

10,453

$

9,403

Tier 1 common equity (to risk weighted assets) (1)

$

1,065

14.09

%

$

1,024

14.93

%

$

954

14.56

%

$

909

15.38

%

N/A

N/A

Tier 1 capital (to risk weighted assets) (1)

$

1,435

18.98

%

$

1,393

20.32

%

$

1,309

19.97

%

$

1,257

21.26

%

$

1,184

22.81

%

Total capital (to risk weighted assets)

$

1,534

20.28

%

$

1,483

21.64

%

$

1,396

21.30

%

$

1,336

22.61

%

$

1,252

24.12

%

Risk weighted asset base

$

7,561

$

6,857

$

6,553

$

5,909

$

5,190

(1)

On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior.

N/A - Not applicable.

 

 

 

Regulatory Capital - Bank

(Dollars in millions)

(Unaudited)

December 31,  2015

September 30,  2015

June 30,  2015

March 31,  2015

December 31,  2014

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Tier 1 leverage (to adjusted tangible assets) (1)

$

1,472

11.79

%

$

1,426

11.91

%

$

1,337

11.70

%

$

1,278

12.21

%

$

1,167

12.43

%

Total adjusted tangible asset base

$

12,491

$

11,975

$

11,424

$

10,471

$

9,392

Tier 1 common equity (to risk weighted assets) (1)

$

1,472

19.42

%

$

1,426

20.75

%

$

1,337

20.35

%

$

1,278

21.58

%

N/A

N/A

Tier 1 capital (to risk weighted assets) (1)

$

1,472

19.42

%

$

1,426

20.75

%

$

1,337

20.35

%

$

1,278

21.58

%

$

1,167

22.54

%

Total capital (to risk weighted assets)

$

1,570

20.71

%

$

1,516

22.05

%

$

1,423

21.66

%

$

1,357

22.91

%

$

1,235

23.85

%

Risk weighted asset base

$

7,582

$

6,874

$

6,570

$

5,925

$

5,179

(1)

On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior.

N/A - Not applicable.

 

 

 

Loan Originations

(Dollars in millions)

(Unaudited)

Three Months Ended

December 31,  2015

September 30,  2015

December 31,  2014

Consumer loans

    Mortgage (1)

$

5,824

96.0

%

$

7,876

97.9

%

$

6,603

98.5

%

    Other consumer (2)

39

0.6

%

39

0.5

%

27

0.4

%

Total consumer loans

5,863

96.6

%

7,915

98.4

%

6,630

98.9

%

Commercial loans (3)

205

3.4

%

131

1.6

%

76

1.1

%

Total loan originations

$

6,068

100.0

%

$

8,046

100.0

%

$

6,706

100.0

%

Year Ended

December 31,  2015

December 31,  2014

    Mortgage (1)

$

29,402

98.2

%

$

24,607

98.0

%

    Other consumer (2)

132

0.4

%

93

0.4

%

Total consumer loans

29,534

98.6

%

24,700

98.4

%

Commercial loans (3)

415

1.4

%

398

1.6

%

Total loan originations

$

29,949

100.0

%

$

25,098

100.0

%

(1)

Includes residential first mortgage and second mortgage loans. 

(2)

Other consumer loans include: HELOC and other consumer loans.

(3)

Commercial loans include: commercial real estate and commercial and industrial loans.

 

 

 

Loans Held-for-Investment

(Dollars in millions)

(Unaudited)

December 31,  2015

September 30,  2015

December 31,  2014

Consumer loans

Residential first mortgage

$

3,100

48.8

%

$

2,726

49.5

%

$

2,193

49.2

%

Second mortgage

135

2.1

%

140

2.5

%

149

3.4

%

HELOC

384

6.0

%

405

7.3

%

257

5.8

%

Other

31

0.5

%

32

0.6

%

31

0.7

%

    Total consumer loans

3,650

57.5

%

3,303

59.9

%

2,630

59.1

%

Commercial loans

Commercial real estate

814

12.8

%

707

12.8

%

620

13.9

%

Commercial and industrial

552

8.7

%

493

8.9

%

429

9.7

%

Warehouse lending

1,336

21.0

%

1,011

18.4

%

769

17.3

%

    Total commercial loans

2,702

42.5

%

2,211

40.1

%

1,818

40.9

%

Total loans held-for-investment

$

6,352

100.0

%

$

5,514

100.0

%

$

4,448

100.0

%

 

 

 

Residential Loans Serviced

(Dollars in millions)

(Unaudited)

December 31,  2015

September 30,  2015

December 31,  2014

Unpaid Principal Balance

Number of accounts

Unpaid Principal Balance

Number of accounts

Unpaid Principal Balance

Number of accounts

Serviced for own loan portfolio (1)

$

6,088

30,683

$

5,707

29,764

$

4,521

26,268

Serviced for others

26,145

118,662

26,306

118,702

25,427

117,881

Subserviced for others (2)

40,244

211,740

42,282

220,648

46,724

238,498

Total residential loans serviced

$

72,477

361,085

$

74,295

369,114

$

76,672

382,647

(1)

Includes loans held-for-investment (residential first mortgage, second mortgage and HELOC), loans-held-for-sale (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

(2)

Does not include temporary short-term subservicing performed as a result of sales of servicing-released mortgage servicing rights. Includes repossessed assets.

 

 

Allowance for Loan Losses

(Dollars in millions)

(Unaudited)

Three Months Ended

Year Ended

December 31,  2015

September 30,  2015

December 31,  2014

December 31,  2015

December 31,  2014

Beginning balance

$

197

$

222

$

301

$

297

$

207

Provision (benefit) for loan losses

(1)

(1)

5

(19)

132

Charge-offs

Consumer loans

     Residential first mortgage

(7)

(21)

(9)

(87)

(38)

     Second mortgage

(2)

(1)

(4)

(3)

     HELOC

(1)

(1)

(1)

(3)

(6)

     Other

(1)

(1)

(4)

(2)

 Total consumer loans

(11)

(24)

(10)

(98)

(49)

Commercial loans

     Commercial real estate

(3)

     Commercial and industrial

(3)

(3)

 Total commercial loans

(3)

(3)

(3)

Total charge-offs

(11)

(27)

(10)

(101)

(52)

Recoveries

Consumer loans

     Residential first mortgage

1

3

3

     Second mortgage

1

1

2

1

     Other

1

1

1

3

3

Total consumer loans

2

3

1

8

7

Commercial loans

     Commercial real estate

2

3

Total commercial loans

2

3

Total recoveries

2

3

1

10

10

Charge-offs, net of recoveries

(9)

(24)

(9)

(91)

(42)

Ending balance

$

187

$

197

$

297

$

187

$

297

Net charge-off ratio (annualized) (1)

0.62

%

1.84

%

0.91

%

1.85

%

1.07

%

Net charge-off ratio, adjusted (annualized) (1)(2)

0.51

%

0.61

%

0.60

%

0.45

%

0.77

%

Net charge-off ratio (annualized) by loan type (1)

Residential first mortgage

1.03

%

2.88

%

1.58

%

3.34

%

1.47

%

Second mortgage

1.89

%

1.04

%

1.07

%

1.72

%

2.73

%

HELOC and consumer

0.86

%

1.35

%

0.78

%

1.18

%

3.39

%

Commercial real estate

%

(0.03)

%

(0.08)

%

(0.29)

%

(0.16)

%

Commercial and industrial

(0.01)

%

2.69

%

(0.03)

%

0.71

%

(0.05)

%

(1)

Excludes loans carried under the fair value option.

(2)

Excludes charge-offs of $2 million, $16 million and $3 million, related to the sale of nonperforming loans and TDRs during the three months ended December 31, 2015, September 30, 2015 and December 31, 2014, respectively, and $69 million and $11 million during the years ended December 31, 2015 and 2014, respectively.

 

 

 

Representation and Warranty Reserve

(Dollars in millions)

(Unaudited)

Three Months Ended

Year Ended

December 31,  2015

September 30,  2015

December 31,  2014

December 31,  2015

December 31,  2014

 Balance, beginning of period

$

45

$

48

$

57

$

53

$

54

 Provision (release)

Charged to gain on sale for current loan sales

1

2

2

7

7

Charged to representation and warranty (benefit) provision

(6)

(6)

(6)

(19)

10

Total

(5)

(4)

(4)

(12)

17

 Charge-offs, net

1

(1)

(18)

 Balance, end of period

$

40

$

45

$

53

$

40

$

53

 

 

 

Composition of Allowance for Loan Losses

(Dollars in millions)

(Unaudited)

December 31, 2015

Collectively Evaluated Reserves

Individually Evaluated Reserves

Total

Consumer loans

   Residential first mortgage

$

93

$

22

$

115

   Second mortgage

5

6

11

   HELOC

20

1

21

   Other

2

1

3

Total consumer loans

120

30

150

Commercial loans

   Commercial real estate

18

18

   Commercial and industrial

13

13

   Warehouse lending

6

6

Total commercial loans

37

37

Total allowance for loan losses

$

157

$

30

$

187

 

 

September 30, 2015

Collectively Evaluated Reserves

Individually Evaluated Reserves

Total

Consumer loans

   Residential first mortgage

$

108

$

21

$

129

   Second mortgage

6

7

13

   HELOC

22

1

23

   Other

1

1

Total consumer loans

137

29

166

Commercial loans

   Commercial real estate

13

13

   Commercial and industrial

14

14

   Warehouse lending

4

4

Total commercial loans

31

31

Total allowance for loan losses

$

168

$

29

$

197

 

 

 

Nonperforming Loans and Assets

(Dollars in millions)

(Unaudited)

December 31,  2015

September 30,  2015

December 31,  2014

Nonperforming loans

$

31

$

37

$

74

Nonperforming TDRs

7

6

29

Nonperforming TDRs at inception but performing for less than six months

28

20

17

Total nonperforming loans held-for-investment

66

63

120

Real estate and other nonperforming assets, net

17

17

19

Nonperforming assets held-for-investment, net (1)

$

83

$

80

$

139

Ratio of nonperforming assets to total assets

0.61

%

0.64

%

1.41

%

Ratio of nonperforming loans held-for-investment to loans held-for-investment

1.05

%

1.15

%

2.71

%

Ratio of nonperforming assets to loans held-for-investment and repossessed assets

1.32

%

1.45

%

3.12

%

(1)

Does not include nonperforming loans held-for-sale of $12 million, $14 million and $15 million at December 31, 2015, September 30, 2015, December 31, 2014, respectively.

 

 

 

Asset Quality - Loans Held-for-Investment

(Dollars in millions)

(Unaudited)

30-59 Days Past Due

60-89 Days Past Due

Greater than 90 days (1)

Total Past Due

Total Investment Loans

December 31, 2015

Consumer loans

$

10

$

4

$

64

$

78

$

3,650

Commercial loans

2

2

2,702

     Total loans

$

10

$

4

$

66

$

80

$

6,352

September 30, 2015

Consumer loans

$

13

$

8

$

60

$

81

$

3,303

Commercial loans

3

3

2,211

     Total loans

$

13

$

8

$

63

$

84

$

5,514

December 31, 2014

Consumer loans

$

34

$

10

$

120

$

164

$

2,630

Commercial loans

1,818

     Total loans

$

34

$

10

$

120

$

164

$

4,448

(1)

Includes performing nonaccrual loans that are less than 90 days delinquent and for which interest cannot be accrued.

 

 

 

Troubled Debt Restructurings

(Dollars in millions)

(Unaudited)

TDRs

Performing

Nonperforming

Nonperforming TDRs at inception but performing for less than six months

Total

December 31, 2015

Consumer loans

$

101

$

7

$

28

$

136

Commercial loans

     Total TDR loans

$

101

$

7

$

28

$

136

September 30, 2015

Consumer loans

$

97

$

6

$

20

$

123

Commercial loans

     Total TDR loans

$

97

$

6

$

20

$

123

December 31, 2014

Consumer loans

$

361

$

29

$

17

$

407

Commercial loans

1

1

     Total TDR loans

$

362

$

29

$

17

$

408

 

 

Non-GAAP Reconciliation

(Dollars in millions)

(Unaudited)

Nonperforming assets / Tier 1 + Allowance for Loan Losses. The ratio of nonperforming assets to Tier 1 capital and allowance for loan losses divides the total level of nonperforming assets held for investment by Tier 1 capital (to adjusted total assets), as defined by bank regulations, plus allowance for loan losses. We believe these measurements are meaningful measures of capital adequacy used by investors, regulators, management, and others to evaluate the adequacy of capital in comparison to other companies within the industry.

December 31,  2015

September 30,  2015

December 31,  2014

Nonperforming assets / Tier 1 capital + allowance for loan losses

(Dollars in millions)

(Unaudited)

Nonperforming assets

$

83

$

80

$

139

Tier 1 capital

1,435

1,393

1,184

Allowance for loan losses

(187)

(197)

(297)

Tier 1 capital + allowance for loan losses

$

1,622

$

1,590

$

1,481

Nonperforming assets / Tier 1 capital + allowance for loan losses

5.1

%

5.0

%

9.4

%

Basel III (transitional) to Basel III (fully phased-in) reconciliation. On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior. When fully phased-in, Basel III will increase capital requirements through higher minimum capital levels as well as through increases in risk-weights for certain exposures. Additionally, the final Basel III rules place greater emphasis on common equity. In October 2013, the OCC and Federal Reserve released final rules detailing the U.S. implementation of Basel III and the application of the risk-based and leverage capital rules to top-tier savings and loan holding companies. We have transitioned to the Basel III framework beginning in January 2015 and are subject to a phase-in period extending through 2018. Accordingly, the calculations provided below are estimates. These measures are considered to be non-GAAP financial measures because they are not formally defined by GAAP and the Basel III implementation regulations will not be fully phased-in until January 1, 2019. The regulations are subject to change as clarifying guidance becomes available and the calculations currently include our interpretations of the requirements including informal feedback received through the regulatory process. Other entities may calculate the Basel III ratios differently from our calculations based on their interpretation of the guidelines. Since analysts and banking regulators may assess our capital adequacy using the Basel III framework, we believe that it is useful to provide investors information enabling them to assess our capital adequacy on the same basis.

 

 

 

December 31, 2015

Common Equity Tier 1 (to Risk Weighted Assets)

Tier 1 Leverage (to Adjusted Tangible Assets)

Tier 1 Capital (to Risk Weighted Assets)

Total Risk-Based Capital (to Risk Weighted Assets)

(Dollars in millions)

(Unaudited)

Flagstar Bancorp (the Company)

Regulatory capital – Basel III (transitional) to Basel III (fully phased-in) (1)

Basel III (transitional)

$

1,065

$

1,435

$

1,435

$

1,534

Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components

(360)

(209)

(209)

(209)

Basel III (fully phased-in) capital (1)

$

705

$

1,226

$

1,226

$

1,325

Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1)

Basel III assets (transitional)

$

7,561

$

12,474

$

7,561

$

7,561

Net change in assets

(60)

(224)

(60)

(60)

Basel III (fully phased-in) assets (1)

$

7,501

$

12,250

$

7,501

$

7,501

Capital ratios

Basel III (transitional)

14.09

%

11.51

%

18.98

%

20.28

%

Basel III (fully phased-in) (1)

9.40

%

10.01

%

16.35

%

17.67

%

(1)

On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014.

 

 

 

December 31, 2015

Common Equity Tier 1 (to Risk Weighted Assets)

Tier 1 Leverage (to Adjusted Tangible Assets)

Tier 1 Capital (to Risk Weighted Assets)

Total Risk-Based Capital (to Risk Weighted Assets)

Flagstar Bank (the Bank)

(Dollars in millions)

(Unaudited)

Regulatory capital – Basel III (transitional) to Basel III (fully phased-in) (1)

Basel III (transitional)

$

1,472

$

1,472

$

1,472

$

1,570

Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components

(160)

(160)

(160)

(159)

Basel III (fully phased-in) capital (1)

$

1,312

$

1,312

$

1,312

$

1,411

Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1)

Basel III assets (transitional)

$

7,582

$

12,491

$

7,582

$

7,582

Net change in assets

148

(160)

148

148

Basel III (fully phased-in) assets (1)

$

7,730

$

12,331

$

7,730

$

7,730

Capital ratios

Basel III (transitional)

19.42

%

11.79

%

19.42

%

20.71

%

Basel III (fully phased-in) (1)

16.98

%

10.64

%

16.98

%

18.25

%

(1)

On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014.

 

For more information, contact:                    

David L. Urban david.urban@flagstar.com (248) 312-5970

SOURCE Flagstar Bancorp, Inc.



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