Flagstar Reports Second Quarter 2013 Net Income of $65.8 million or $1.10 per Diluted Share Strengthened regulatory capital ratios and significantly reduced balance sheet risk through bulk loan sales

Non-performing loans declined by 30 percent, troubled debt restructurings declined by 26 percent and allowance coverage increased to 94 percent

Successfully resolved key legacy litigation

New CEO Sandro DiNello committed to transparency and shareholder value

TROY, Mich., July 23, 2013 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC) ("the Company"), the holding company for Flagstar Bank, FSB (the "Bank"), today reported second quarter 2013 net income applicable to common stockholders of $65.8 million, or $1.10 per share (diluted), as compared to $22.2 million, or $0.33 per share (diluted), in the first quarter 2013 and $86.0 million, or $1.47 per share (diluted), in the second quarter 2012. Book value per common share increased to $17.66 at June 30, 2013, as compared to $16.46 at March 31, 2013.

"Our second quarter results represent the successful continuation of Flagstar's efforts to reduce risk, address legacy issues and build strong capital levels," said Sandro DiNello, the Company's President and Chief Executive Officer. "We believe that these efforts, along with new initiatives to reduce expenses and maximize efficiency across the organization, collectively position Flagstar for long-term growth and shareholder value creation.

"During the quarter, we were opportunistic in the resolution of our remaining legacy litigation, entering into settlement agreements with both MBIA and Assured, resulting in a net gain of $44 million. In addition, we took advantage of an improving market for loan demand, selling a substantial amount of non-performing loans and troubled debt restructurings virtually at book, which significantly improved our asset quality ratios. This month, we also made the decision to outsource our non-core default servicing business, which we believe will generate significant cost savings and better position the company to focus on growing the core performing servicing business."

Mr. DiNello continued, "Gain on loan sale income grew from the prior quarter, reflecting an increase in base margin and a flat level of mortgage locks. Despite this improvement, it is important to convey that we believe the recent uptick in mortgage rates will significantly decrease overall refinance volumes in the coming quarters. We believe we can offset some of the expected decrease in refinance production by leveraging our product offerings, overall market position and reputation for speed of closing, and certainty of execution, to continue to grow our share of the purchase market. We also plan to focus on efficiency optimization and disciplined expense management throughout the organization, while developing strategies to improve cross-sells and to utilize excess cash to grow interest-earning assets. As we drive towards Flagstar's next phase of growth and development, we remain committed to improved disclosure and transparency to ensure that our strategy and improved performance is better communicated among the investment community."

Second Quarter 2013 Highlights (as Compared to First Quarter 2013)

  • Net income applicable to common stockholders increased to $65.8 million, as compared to $22.2 million:
    • Income of $49.1 million related to the previously announced settlement with Assured Guaranty Municipal Corp., formerly known as Financial Security Assurance Inc. ("Assured").
    • Loss of $(4.9) million related to the settlement with MBIA Insurance Corporation ("MBIA").
    • Decrease in net interest income to $47.1 million, as compared to $55.7 million.
    • Increase in gain on loan sales to $144.8 million, as compared to $137.5 million.
      • Fallout-adjusted mortgage rate lock commitments of $9.8 billion, relatively flat.
      • Gain on loan sale margin (based on fallout-adjusted locks) of 1.47 percent, as compared to 1.40 percent.
    • Increase in net loan administration income to $36.2 million, as compared to $20.4 million.

  • Strengthened regulatory capital ratios, maintained liquidity and sold mortgage servicing rights:
    • Tier 1 leverage ratio increased by 86 basis points to 11.00 percent
    • Cash and cash equivalents increased by $0.5 billion to $2.7 billion.
    • Completed bulk sales of mortgage servicing rights related to $12.7 billion in underlying mortgage loans.

  • Significantly improved credit quality:
    • Sold $341.1 million in unpaid principal balance of residential first mortgage non-performing loans and total troubled debt restructurings ("TDRs"), with a carrying value of $277.9 million, for 99.5 percent of carrying value, resulting in a net loss (before broker fees) of $1.4 million.
    • Total non-performing loans decreased by 30.2 percent to $257.9 million and total TDRs decreased by 26.4 percent to $547.3 million, of which $451.1 million are performing TDRs.
    • Ratio of allowance for loan losses to non-performing loans increased to 94.2 percent.
    • Total pipeline of active loan repurchase demands (the "repurchase pipeline") decreased by 38.5 percent to $115.0 million, while the representation and warranty reserve remained at $185.0 million.

Litigation Settlements

On May 2, 2013 the Bank entered into an agreement (the "MBIA Settlement Agreement") to settle the previously announced lawsuit which was filed by MBIA on January 11, 2013. The lawsuit involved approximately $1.1 billion of non-agency securitization transactions in 2006 and 2007 involving fixed and adjustable rate second mortgage loans that MBIA insured. Under the terms of the Settlement Agreement, MBIA terminated its pending lawsuit and in exchange, among other consideration and transaction provisions, the Company paid MBIA $110.0 million. As a result of the MBIA Settlement Agreement, the Company recognized a loss of $(4.9) million. This includes a $7.2 million loss (recorded in other non-interest income) arising from the fair value of the assets in the mortgage securitizations and an $8.8 million other-than-temporary impairment, partially offset by $5.0 million in income recognition resulting from the reversal of related reserves for pending and threatened litigation and a $6.1 million tax benefit resulting from the deferred tax asset associated with the mortgage securitization.

On June 21, 2013 the Bank entered into an agreement (the "Assured Settlement Agreement") to settle the previously announced lawsuit filed by Assured. The litigation pertained to $902.2 million of non-agency securitization transactions in 2005 and 2006 involving home equity line of credit ("HELOC") loans which were insured by Assured. Under the terms of the Assured Settlement Agreement, Assured terminated its pending lawsuit and will not pursue any related claims at any time in the future. In exchange, the Company paid Assured $105.0 million and will assume responsibility for future claims associated with the two HELOC securitization trusts, including the right to receive from Assured all future reimbursements for claims paid to which Assured would have been entitled. As a result of the Assured Settlement Agreement, the Company recognized $49.1 million of income, which includes $44.1 million in income arising from the excess of the fair value of the net assets and liabilities in the two HELOC securitizations and $5.0 million in income recognition from the reversal of related reserves for pending and threatened litigation.

Net Interest Income

Second quarter 2013 net interest income decreased to $47.1 million, as compared to $55.7 million for the first quarter 2013 and $75.5 million for the second quarter 2012. The decrease from the prior quarter was driven primarily by lower average balances of interest-earning assets and a decrease in the yield paid on those assets, plus a slight increase in the cost of funds. Net interest margin for the Bank decreased to 1.72 percent, as compared to 1.89 percent for the first quarter 2013 and 2.37 percent for the second quarter 2012. The decrease from the prior quarter reflects the decline in net interest income, which more than offset the decline in the average balances of higher-yielding assets, primarily mortgage loans held-for-sale and warehouse loans.

The average cost of funds for the second quarter 2013 was 1.58 percent, an increase from 1.54 percent for the first quarter 2013 and a decrease from 1.72 percent for the second quarter 2012. The increase from the prior quarter was driven by the use of lower costing short-term FHLB advances during the first quarter which were paid-off during the second quarter 2013 as a result of the availability of increased liquidity. Average cost of total deposits decreased to 0.75 percent for the second quarter 2013, as compared to 0.78 percent for the first quarter 2013 and 1.07 percent for the second quarter 2012. The decrease from the prior quarter was consistent with the Company's improvement in funding mix, as higher-cost retail certificates of deposit were replaced with lower-cost demand and savings deposits.

Non-interest Income

Second quarter 2013 non-interest income increased to $220.0 million, as compared to $184.9 million for the first quarter 2013 and decreased from $240.3 million for the second quarter 2012. The increase from the prior quarter was driven by increased gain on loan sales, net servicing revenue and other non-interest income.

Second quarter 2013 net gain on loan sales increased to $144.8 million, as compared to $137.5 million for the first quarter 2013 and decreased from $212.7 million for the second quarter 2012. The increase from the prior quarter was primarily due to an increase in the gain on sale margin, combined with a flat level of mortgage rate lock commitments. Gain on loan sale margin (based on the amount of rate lock commitments net of estimated cancellations, or "fallout-adjusted locks") increased to 1.47 percent for the second quarter 2013, as compared to 1.40 percent for the first quarter 2013 and decreased from 1.59 percent for the second quarter 2012. Fallout-adjusted locks were $9.8 billion in the second quarter 2013, flat from the level in the prior quarter.

Mortgage originations decreased to $10.9 billion for the second quarter 2013, as compared to $12.4 billion for the prior quarter and $12.5 billion for the second quarter 2012. Purchase originations comprised 28.9 percent of overall mortgage originations in the second quarter, as compared to 18.8 percent in the prior quarter, reflecting the shift to a more purchase-driven market as a result of the recent and sustained increase in mortgage interest rate levels.

Loan fees and charges decreased to $29.9 million for the second quarter 2013, as compared to $33.4 million for the first quarter 2013 and $34.8 million for the second quarter 2012. Loan fees and charges are driven by mortgage loan originations, which decreased to $10.9 billion for the second quarter 2013, as compared to $12.4 billion for the first quarter 2013 to $12.5 billion for the second quarter 2012.

Net servicing revenue, which is the combination of loan administration income (including the off-balance sheet hedges of mortgage servicing rights) and the gain (loss) on trading securities (i.e., the on-balance sheet hedges of mortgage servicing rights), increased to $36.2 million for the second quarter 2013, as compared to $20.4 million for the first quarter 2013 and $28.7 million for the second quarter 2012. The increase from the prior quarter was primarily attributable to a gain associated with bulk sales of mortgage servicing rights related to $12.7 billion in underlying mortgage loans, partially offset by a decrease in hedge performance from the prior quarter.

The Company's second quarter 2013 results included $44.1 million related to the Assured Settlement Agreement and a loss of $7.2 million related to the MBIA Settlement Agreement, which in total, increased other non-interest income by $36.8 million from the prior quarter.

The Company also recorded a second quarter 2013 net impairment loss on its investment securities available-for-sale of $8.8 million (recognized in earnings), as compared to no impairment in the prior quarter, as a result of the MBIA Settlement Agreement.

Non-interest Expense

Non-interest expense was $174.4 million for the second quarter 2013, as compared to $196.6 million for the first quarter 2013 and $169.5 million for the second quarter 2012. Excluding asset resolution expense (discussed in Credit-Related Costs and Asset Quality, below), non-interest expense would have totaled $158.5 million for the second quarter 2013, as compared to $180.1 million for the first quarter 2013 and $148.6 million for the second quarter 2012. The decrease from the prior quarter primarily reflects decreases in legal and professional expense and compensation and benefits.

Second quarter 2013 legal and professional expense decreased to $16.4 million, as compared to $28.8 million for the first quarter 2013. The decrease from the prior quarter was primarily driven by a $10.0 million release of reserves for pending and threatened litigation associated the Assured Settlement Agreement and the MBIA Settlement Agreement. As a result of the settlement agreements, the Company's reserves for pending and threatened litigation decreased by $221.2 million from the prior quarter to a balance of $26.8 million at June 30, 2013, which primarily includes the U.S. Department of Justice ("DOJ") litigation.

Compensation and benefits decreased to $70.9 million for the second quarter 2013, as compared to $77.2 million for the first quarter 2013 but increased from $65.4 million for the second quarter 2012. The decrease from the prior quarter was primarily related to the timing of payroll taxes. Commission expense decreased to $15.4 million for the second quarter 2013, as compared to $17.5 million for the first quarter 2013 and $17.8 million for the second quarter 2012. The decrease from the prior quarter was consistent with the 12.4 percent decrease in mortgage loan originations during the quarter.

Credit-Related Costs and Asset Quality

For the second quarter 2013, total credit-related costs (see non-GAAP reconciliation) increased to $85.2 million, as compared to $54.4 million for the first quarter 2013 and $127.6 million for the second quarter 2012. The increase from the prior quarter was primarily due to increases in the provision for loan losses, representation and warranty reserve - change in estimate and other than temporary impairment on available-for-sale investment securities (discussed in Non-interest Income, above).

During the quarter, the Company sold $341.1 million in unpaid principal balance of residential first mortgage non-performing and TDRs, with a carrying value of $277.9 million. The Company recorded a total loss on the sales of $3.0 million, which included $1.6 million in fees paid to the broker.

At June 30, 2013, the allowance for loan losses decreased to $243.0 million, as compared to $290.0 million at March 31, 2013, primarily driven by the charge-off of $38.3 million in reserves associated with the non-performing loan and TDR sales, partially offset by an increase in the allowance for loan losses related to emerging risks associated with loans expected to convert from interest-only to full-pay. At June 30, 2013, the ratio of the allowance for loan losses to non-performing loans held-for-investment increased to 94.2 percent, as compared to 78.5 percent at March 31, 2013.

Provision for loan losses increased to $31.6 million for the second quarter 2013, as compared to $20.4 million for the prior quarter, driven primarily by the increased allowance for loan losses related to emerging risks associated with loans expected to convert from interest-only to full-pay. Second quarter 2013 net charge-offs increased to $78.6 million, as compared to $35.4 million for the prior quarter, driven primarily by the $38.3 million in charge-offs associated with the non-performing loan and TDR sales.

The Company maintains a representation and warranty reserve on the balance sheet, which reflects an estimate of losses that may occur on both loans that have been sold or securitized into the secondary market and those currently in the repurchase pipeline, primarily to the GSEs. At June 30, 2013, the representation and warranty reserve was $185.0 million, which remained flat as compared to March 31, 2013. During the second quarter 2013, the model was enhanced to reflect a change in estimate of loss period as a result of increased requests by the GSEs for loan files for loans originated in earlier vintages. As a result, provisions related to the representation and warranty reserve - change in estimate increased to $28.9 million for the second quarter 2013, as compared to $17.4 million for the first quarter 2013.

At June 30, 2013, the total repurchase pipeline decreased to $115.0 million, as compared to $187.0 million at March 31, 2013, as the Company continued to aggressively work through its existing population of repurchase requests. New audit file review requests increased by 33.5 percent in the second quarter 2013 from the first quarter 2013, while new repurchase demands decreased by 35.4 percent from the prior quarter.

Total non-performing loans held-for-investment were $257.9 million at June 30, 2013, a decrease as compared to $369.3 million at March 31, 2013 and $431.6 million at June 30, 2012. The ratio of non-performing loans held-for-investment to loans held-for-investment also decreased to 5.74 percent at June 30, 2013, from 7.79 percent at March 31, 2013, as a result of the decrease in non-performing loans. These decreases from the prior quarter were primarily due to a decrease in consumer non-performing loans as a result of the sale of residential first mortgage non-performing loans completed during the second quarter 2013.

Commercial non-performing loans decreased to $63.8 million at June 30, 2013, as compared to $66.1 million at March 31, 2013 and $138.1 million at June 30, 2012, primarily driven by normal dispositions of commercial real estate loans.

Real estate-owned and other non-performing assets also decreased to $86.4 million at June 30, 2013, as compared to $114.4 million at March 31, 2013. The decrease was driven primarily by the sale of residential first mortgage non-performing loans, a portion of which were considered in-substance foreclosures for accounting purposes and therefore classified as real-estate owned.

Asset resolution expense, which includes expenses associated with foreclosed properties (including the foreclosure claims in process with respect to government insured loans for which the Bank files claims with HUD) was $15.9 million for the second quarter 2013, relatively flat as compared to $16.4 million for the first quarter 2013, but decreased from $20.9 million for the second quarter 2012.

Balance Sheet and Funding

Total assets at June 30, 2013 were $12.7 billion, as compared to $13.1 billion at March 31, 2013, driven primarily by a decrease in loans held-for-sale reflecting the decrease in mortgage loan originations during the second quarter 2013. This decrease was partially offset by an increase in cash on hand and interest-earning deposits from the proceeds of the non-performing loan and TDR sales completed during the second quarter 2013.

Long-term debt increased to $367.4 million at June 30, 2013, as compared to $247.4 million at March 30, 2013, driven by the on balance-sheet recognition of debt, which is recorded at fair value, associated with the Company's re-consolidation of the two HELOC securitization trusts as a result of the Assured Settlement Agreement.

Total deposits were $7.5 billion at June 30, 2013, a decrease of $0.3 billion as compared to $7.8 billion at March 31, 2013. The decrease from the prior quarter was primarily attributable to a decrease in retail certificates of deposits, which were replaced, in part, by retail demand and savings deposits. The Company's average balances of retail demand and savings deposits increased by 2.1 percent and 7.0 percent, respectively, from the prior quarter.

At June 30, 2013, the Company had approximately $2.7 billion of cash on hand and interest-earning deposits, as compared to $2.2 billion at March 31, 2013. The Bank maintains a line of credit with the FHLB under which borrowings are collateralized by residential first mortgage loans and other assets of the Bank. At June 30, 2013, the Bank had medium-term outstanding borrowings from the FHLB of $2.9 billion and an additional $0.5 billion of collateralized borrowing capacity available at the FHLB.

Capital

The Bank's regulatory capital ratios remain above current regulatory quantitative guidelines for "well-capitalized" institutions. At June 30, 2013, the Bank had a Tier 1 leverage ratio of 11.00 percent, as compared to 10.14 percent at March 31, 2013. At June 30, 2013, the Company had an equity-to-assets ratio of 9.84 percent.

Earnings Conference Call

As previously announced, the Company's quarterly earnings conference call will be held on Wednesday, July 24, 2013 from 11 a.m. until Noon (Eastern).

It is preferred that questions are emailed in advance to investors@flagstar.com, or they may be asked during the conference call.

To join the call, please dial (888) 726-2423 toll free or (913) 312-1480, and use passcode: 7813813. Please call at least 10 minutes before the call 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: 7813813.

The conference call will also be available as a live audio cast on the Investor Relations section of flagstar.com. It will be archived on that site and will be available for replay and download. A slide presentation to accompany the conference call will also be posted on the site.

About Flagstar

Flagstar Bancorp, Inc. is the holding company for Flagstar Bank, FSB, a full-service financial institution offering a range of products and services to consumers, businesses, and homeowners. With $12.7 billion in total assets at June 30, 2013, Flagstar is the largest publicly held savings bank headquartered in the Midwest. Flagstar operates 111 banking centers, all of which are located in Michigan and 40 home lending centers located in 17 states, which primarily originate one-to-four family residential first mortgage loans. Originating loans nationwide, Flagstar is one of the leading originators of residential first mortgage loans. For more information, please visit flagstar.com.

Non-GAAP

This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding the Company's results of operations or financial position. 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 press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that are difficult to predict and could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement. Forward-looking statements contained in this press release and any information related to expectations about future events or results are based upon information available to the Company as of the date hereof. Forward-looking statements can be identified by such words as "anticipates," "intends," "plans," "seeks," "believes," "expects", "estimates," and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements made regarding the Company's current expectations, plans or forecasts of its core business drivers, credit related costs, asset quality, capital adequacy and liquidity, the implementation of the Company's business plan and growth strategies, the suspension of dividend payments on preferred stock, the deferral of interest payment on trust preferred securities, the result of improvements to the Company's servicing processes, the Company's strategy for outsourcing its non-core default servicing business and other similar matters. Although we believe that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, contingencies, and other factors. Accordingly, we cannot give you any assurance that our expectations will in fact occur or that actual results will not differ materially from those expressed or implied by such forward-looking statements. We caution you not to place undue reliance on any forward-looking statement and to consider all of the following uncertainties and risks, as well as those more fully discussed in the Company's filings with the Securities and Exchange Commission ("SEC"), including, but not limited to, our Form 10-K and Forms 10-Q: volatile interest rates that impact, among other things, the mortgage banking business, our ability to originate loans and sell assets at a profit, prepayment speeds and our cost of funds; changes in regulatory capital requirements or an inability to achieve or maintain desired capital ratios; actions of mortgage loan purchasers, guarantors and insurers regarding repurchases and indemnity demands and uncertainty related to foreclosure procedures; uncertainty regarding pending and threatened litigation; our ability to control credit related costs and forecast the adequacy of reserves; the imposition of regulatory enforcement actions against us; our compliance with the Supervisory Agreement with the Board of Governors of the Federal Reserve System and the Consent Order with the Office of the Comptroller of the Currency. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the SEC, the Company undertakes no obligation to update any such statement to reflect events or circumstances after the date on which it is made.

 

Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(Dollars in thousands)



June 30, 2013


March 31, 2013


December 31, 2012


June 30, 2012

Assets

(Unaudited)


(Unaudited)




(Unaudited)

Cash and cash equivalents








Cash and cash items

$

51,252



$

50,840



$

38,070



$

71,184


Interest-earning deposits

2,653,191



2,179,846



914,723



1,199,205


Total cash and cash equivalents

2,704,443



2,230,686



952,793



1,270,389


Trading securities

50,039



170,139



170,086



169,834


Investment securities available-for-sale

92,930



169,827



184,445



424,765


Loans held-for-sale

2,331,458



2,677,239



3,939,720



2,459,482


Loans repurchased with government guarantees

1,509,365



1,604,906



1,841,342



1,999,110


Loans, net








Loans held-for-investment

4,491,153



4,743,266



5,438,101



6,550,257


Less: allowance for loan losses

(243,000)



(290,000)



(305,000)



(287,000)


Total loans held-for-investment, net

4,248,153



4,453,266



5,133,101



6,263,257


Mortgage servicing rights

729,019



727,207



710,791



638,865


Repossessed assets, net

86,382



114,356



120,732



107,235


Federal Home Loan Bank stock

301,737



301,737



301,737



301,737


Premises and equipment, net

227,771



223,276



219,059



209,126


Other assets

453,720



421,511



508,206



524,646


Total assets

$

12,735,017



$

13,094,150



$

14,082,012



$

14,368,446


Liabilities and Stockholders' Equity








Deposits








Non-interest bearing

$

1,181,226



$

1,112,313



$

1,308,317



$

2,079,456


Interest bearing

6,288,841



6,734,978



6,985,978



6,843,391


Total deposits

7,470,067



7,847,291



8,294,295



8,922,847


Federal Home Loan Bank advances

2,900,000



2,900,000



3,180,000



3,400,000


Long-term debt

367,415



247,435



247,435



248,585


Representation and warranty reserve

185,000



185,000



193,000



161,000


Other liabilities

558,800



730,396



1,007,920



457,665


Total liabilities

11,481,282



11,910,122



12,922,650



13,190,097


Stockholders' Equity








Preferred stock

263,277



261,828



260,390



257,556


Common stock

561



561



559



558


Additional paid in capital

1,477,484



1,476,624



1,476,569



1,473,924


Accumulated other comprehensive (loss) income

988



(656)



(1,658)



8,274


Accumulated deficit

(488,575)



(554,329)



(576,498)



(561,963)


Total stockholders' equity

1,253,735



1,184,028



1,159,362



1,178,349


Total liabilities and stockholders' equity

$

12,735,017



$

13,094,150



$

14,082,012



$

14,368,446


 

Flagstar Bancorp, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data)


Three Months Ended


Six Months Ended


June 30, 2013


March 31, 2013


June 30, 2012


June 30, 2013


June 30, 2012


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Interest Income










Loans

$

81,731



$

91,950



$

115,611



$

173,680



$

229,519


Investment securities available-for-sale or
  trading

1,838



2,094



6,850



3,932



15,421


Interest-earning deposits and other

1,489



946



462



2,435



874


Total interest income

85,058



94,990



122,923



180,047



245,814


Interest Expense










Deposits

12,148



13,508



18,321



25,656



37,307


Federal Home Loan Bank advances

24,171



24,161



27,386



48,332



54,779


Other

1,643



1,652



1,738



3,295



3,517


Total interest expense

37,962



39,321



47,445



77,283



95,603


Net interest income

47,096



55,669



75,478



102,764



150,211


Provision for loan losses

31,563



20,415



58,428



51,978



173,101


Net interest income (expense) after provision 
for loan losses

15,533



35,254



17,050



50,786



(22,890)


Non-Interest Income










Loan fees and charges

29,916



33,360



34,783



63,276



64,757


Deposit fees and charges

5,193



5,146



5,039



10,339



9,961


Loan administration

36,157



20,356



25,012



56,513



63,898


Gain (loss) on trading securities

21



51



3,711



72



(2,260)


Net gain on loan sales

144,791



137,540



212,666



282,331



417,518


Net transactions costs on sales of mortgage
servicing rights

(4,264)



(4,219)



(983)



(8,483)



(3,299)


Net gain on investment securities available-for-sale





20





330


Net gain (loss) on sale of assets

1,064



958



(26)



2,022




Total other-than-temporary impairment (loss)
gain

(8,789)





(1,707)



(8,789)



2,810


Gain (loss) recognized in other
    comprehensive income before taxes





690





(5,002)


Net impairment losses recognized in earnings

(8,789)





(1,017)



(8,789)



(2,192)


Representation and warranty reserve - change
in estimate

(28,940)



(17,395)



(46,028)



(46,336)



(106,566)


Other non-interest income

44,810



9,146



7,157



53,957



19,563


Total non-interest income

219,959



184,943



240,334



404,902



461,710


Non-Interest Expense










Compensation and benefits

70,935



77,208



65,402



148,144



131,390


Commissions

15,402



17,462



17,838



32,863



33,305


Occupancy and equipment

22,198



19,375



18,706



41,574



35,656


Asset resolution

15,921



16,445



20,851



32,366



57,621


Federal deposit insurance premiums

7,791



11,240



12,104



19,031



24,428


Loan processing expense

15,389



17,111



11,132



32,500



21,818


Legal and professional expense

16,390



28,839



13,084



45,229



29,901


Other non-interest expense

10,371



8,910



10,380



19,279



24,124


Total non-interest expense

174,397



196,590



169,497



370,986



358,243


Income before federal income taxes

61,095



23,607



87,887



84,702



80,577


(Benefit) provision for federal income taxes

(6,108)





500



(6,108)



500


Net income

67,203



23,607



87,387



90,810



80,077


Preferred stock dividend/accretion

(1,449)



(1,438)



(1,417)



(2,887)



(2,824)


Net income applicable to common stockholders

$

65,754



$

22,169



$

85,970



$

87,923



$

77,253


Income per share










     Basic

$

1.11



$

0.33



$

1.48



$

1.44



$

1.26


     Diluted

$

1.10



$

0.33



$

1.47



$

1.43



$

1.26


 

Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in thousands, except per share data)
(Unaudited)



Three Months Ended


Six Months Ended


June 30, 2013


March 31, 2013


June 30, 2012


June 30, 2013


June 30, 2012

Return on average assets

2.03

%


0.65

%


2.37

%


1.32

%


1.08

%

Return on average equity

21.23

%


7.55

%


31.09

%


14.57

%


13.78

%

Efficiency ratio

65.3

%


81.7

%


53.7

%


73.1

%


58.5

%

Efficiency ratio (credit-adjusted) (1)

53.5

%


69.8

%


41.1

%


61.1

%


41.8

%

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

9.56

%


8.57

%


7.62

%


9.06

%


7.81

%

Mortgage loans originated (2)

$

10,882,129



$

12,423,364



$

12,547,017



$

23,305,492



$

23,716,426


Other loans originated

$

67,763



$

74,739



$

203,584



$

142,503



$

475,029


Mortgage loans sold and securitized

$

11,123,821



$

12,822,879



$

12,777,311



$

23,946,700



$

23,607,109


Interest rate spread - bank only (3)

1.46

%


1.64

%


2.10

%


1.55

%


2.12

%

Net interest margin - bank only (4)

1.72

%


1.89

%


2.37

%


1.81

%


2.39

%

Interest rate spread - consolidated (3)

1.43

%


1.61

%


2.08

%


1.52

%


2.10

%

Net interest margin - consolidated (4)

1.66

%


1.83

%


2.32

%


1.75

%


2.34

%

Average common shares outstanding

56,053,922



55,973,888



55,740,558



56,014,126



55,701,431


Average fully diluted shares outstanding

56,419,163



56,415,057



56,182,130



56,417,122



56,008,232


Average interest-earning assets

$

11,311,945



$

12,075,212



$

12,943,237



$

11,691,470



$

12,791,952


Average interest paying liabilities

$

9,642,543



$

10,338,644



$

11,100,307



$

9,988,671



$

11,047,283


Average stockholder's equity

$

1,238,787



$

1,173,982



$

1,106,224



$

1,206,563



$

1,121,421


Charge-offs to average investment loans
(annualized) (5)

6.96

%


2.93

%


3.24

%


4.88

%


6.18

%

Charge-offs, excluding one-time charge-off, to
average investment loans (annualized) (5)(6)

3.56

%


2.93

%


3.24

%


3.24

%


6.18

%



June 30, 2013


March 31, 2013


December 31, 2012


June 30, 2012

Equity-to-assets ratio

9.84

%


9.04

%


8.23

%


8.20

%

Book value per common share

$

17.66



$

16.46



$

16.12



$

16.50


Number of common shares outstanding

56,077,528



56,033,204



55,863,053



55,772,262


Mortgage loans serviced for others

$

68,320,534



$

73,933,296



$

76,821,222



$

76,192,099


Weighted average service fee (basis points)

29.5



29.3



29.2



30.4


Capitalized value of mortgage servicing rights

1.07

%


0.98

%


0.93

%


0.84

%

Ratio of allowance for loan losses to non-performing loans
held-for-investment (7)

94.2

%


78.5

%


76.3

%


66.5

%

Ratio of allowance for loan losses to loans held-for-investment
(5) (7)

5.75

%


6.11

%


5.61

%


4.38

%

Ratio of non-performing assets to total assets (bank only)

2.71

%


3.70

%


3.70

%


3.75

%

Number of bank branches

111



111



111



111


Number of loan origination centers

40



41



31



30


Number of FTE employees (excluding loan officers and
account executives)

3,418



3,456



3,328



3,184


Number of loan officers and account executives

341



322



334



336


































(1) See Non-GAAP reconciliation.
(2) Includes residential first mortgage and second mortgage loans. 
(3) Interest rate spread is the difference between the annualized average yield earned on average interest-earning assets for the period and the annualized average rate of interest paid on average interest-bearing liabilities for the period.
(4) Net interest margin is the annualized effect of the net interest income divided by that period's average interest-earning assets.
(5) Excludes loans carried under the fair value option.
(6) Excludes charge-offs of $38.3 million related to the sale of non-performing loans and TDRs, during both the three and six months ended June 30, 2013, respectively.
(7) Only includes non-performing loans held-for-investment.

 

Regulatory Capital
(Dollars in thousands)
(Unaudited)



June 30, 2013



March 31, 2013



December 31, 2012



June 30, 2012



Amount

Ratio


Amount

Ratio


Amount

Ratio


Amount

Ratio

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

$

1,390,582


11.00

%


$

1,318,770


10.14

%


$

1,295,841


9.26

%


$

1,295,962


9.07

%

Total adjusted tangible
asset base

$

12,646,776




$

13,007,694




$

13,999,636




$

14,282,922



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

$

1,390,582


23.73

%


$

1,318,770


21.24

%


$

1,295,841


15.90

%


$

1,295,962


15.76

%

Total capital (to risk
weighted assets) (1)

1,465,860


25.01

%


1,398,914


22.53

%


1,400,126


17.18

%


1,400,975


17.03

%

Risk weighted asset base

$

5,861,221




$

6,208,327




$

8,146,771




$

8,224,348




(1) Based on adjusted total assets for purposes of core capital and risk-weighted assets for purposes of total risk-based capital. These ratios are applicable to the Bank only.

 

Loan Originations

(Dollars in thousands)

(Unaudited)



Three Months Ended



June 30, 2013



March 31, 2013



June 30, 2012


Consumer loans









Mortgage (1)

$

10,882,129


99.4

%


$

12,423,364


99.4

%


$

12,547,017


98.4

%

Other consumer (2)

11,659


0.1

%


8,553


0.1

%


6,501


0.1

%

Total consumer loans

10,893,788


99.5

%


12,431,917


99.5

%


12,553,518


98.5

%

Commercial loans (3)

56,104


0.5

%


66,186


0.5

%


197,083


1.5

%

Total loan originations

$

10,949,892


100.0

%


$

12,498,103


100.0

%


$

12,750,601


100.0

%



Six Months Ended



June 30, 2013



June 30, 2012


Consumer loans






Mortgage (1)

$

23,305,492


99.4

%


$

23,716,426


98.1

%

Other consumer (2)

20,212


0.1

%


10,980


%

Total consumer loans

23,325,704


99.5

%


23,727,406


98.1

%

Commercial loans (3)

122,291


0.5

%


464,049


1.9

%

Total loan originations

$

23,447,995


100.0

%


$

24,191,455


100.0

%























(1) Includes residential first mortgage and second mortgage loans.

(2) Other consumer loans include: warehouse lending, HELOC and other consumer loans.

(3) Commercial loans include: commercial real estate, commercial and industrial and commercial lease financing loans.

 

Loans Held-for-Investment
(Dollars in thousands)
(Unaudited)



June 30, 2013



March 31, 2013



December 31, 2012



June 30, 2012


Consumer loans












Residential first mortgage

$

2,627,979


58.5

%


$

2,991,394


63.1

%


$

3,009,251


55.3

%


$

3,102,137


47.4

%

Second mortgage

180,802


4.0

%


112,385


2.4

%


114,885


2.1

%


127,434


1.9

%

Warehouse lending

676,454


15.1

%


750,765


15.8

%


1,347,727


24.8

%


1,261,442


19.3

%

HELOC

321,576


7.2

%


167,815


3.5

%


179,447


3.3

%


198,228


3.0

%

Other

42,293


0.9

%


44,488


0.9

%


49,611


0.9

%


57,605


0.9

%

Total consumer loans

3,849,104


85.7

%


4,066,847


85.7

%


4,700,921


86.4

%


4,746,846


72.5

%

Commercial loans












Commercial real estate

476,500


10.6

%


562,916


11.9

%


640,315


11.8

%


1,075,015


16.4

%

Commercial and industrial

160,259


3.6

%


107,688


2.3

%


90,565


1.7

%


569,288


8.7

%

Commercial lease financing

5,290


0.1

%


5,815


0.1

%


6,300


0.1

%


159,108


2.4

%

Total commercial loans

642,049


14.3

%


676,419


14.3

%


737,180


13.6

%


1,803,411


27.5

%

Total loans held-for-
        investment

$

4,491,153


100.0

%


$

4,743,266


100.0

%


$

5,438,101


100.0

%


$

6,550,257


100.0

%

 

Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)



Three Months Ended


Six Months Ended


June 30, 2013


March 31, 2013


June 30, 2012


June 30, 2013


June 30, 2012

Beginning balance

$

290,000



$

305,000



$

281,000



$

305,000



$

318,000


Provision for loan losses

31,563



20,415



58,428



51,978



173,101


Charge-offs










Consumer loans










Residential first mortgage

(63,099)



(25,692)



(22,570)



(88,791)



(118,002)


Second mortgage

(2,033)



(1,955)



(4,057)



(3,988)



(9,340)


HELOC

(812)



(2,061)



(4,257)



(2,873)



(10,676)


Other

(587)



(699)



(728)



(1,286)



(1,918)


Total consumer loans

(66,531)



(30,407)



(31,612)



(96,938)



(139,936)


Commercial loans










Commercial real estate

(21,350)



(13,162)



(31,277)



(34,512)



(76,310)


Commercial and industrial





(23)





(1,604)


Total commercial loans

(21,350)



(13,162)



(31,300)



(34,512)



(77,914)


Total charge-offs

(87,881)



(43,569)



(62,912)



(131,450)



(217,850)


Recoveries










Consumer loans










Residential first mortgage

6,687



5,353



6,582



12,040



7,132


Second mortgage

87



390



1,039



477



1,288


HELOC

457



105



93



562



350


Other

(80)



454



395



374



607


Total consumer loans

7,151



6,302



8,109



13,453



9,377


Commercial loans










Commercial real estate

2,159



1,843



2,344



4,002



4,336


Commercial and industrial

8



9



31



17



36


Total commercial loans

2,167



1,852



2,375



4,019



4,372


Total recoveries

9,318



8,154



10,484



17,472



13,749


Charge-offs, net of recoveries

(78,563)



(35,415)



(52,428)



(113,978)



(204,101)


Ending balance

$

243,000



$

290,000



$

287,000



$

243,000



$

287,000


Net charge-off ratio (annualized) (1)

6.96

%


2.93

%


3.24

%


4.88

%


6.18

%

Net charge-off ratio, excluding one-
time charge-off (annualized) (1)(2)

3.56

%


2.93

%


3.24

%


3.24

%


6.18

%


(1) Excludes loans carried under the fair value option.
(2) Excludes charge-offs of $38.3 million related to the sale of non-performing loans and TDRs, during both the three and six months ended June 30, 2013, respectively.

 

Representation and Warranty Reserve
(Dollars in thousands)
(Unaudited)




Three Months Ended


Six Months Ended


June 30, 2013


March 31, 2013


June 30, 2012


June 30, 2013


June 30, 2012

Balance, beginning of period

$

185,000



$

193,000



$

142,000



$

193,000



$

120,000


Provision











Charged to gain on sale for current loan
sales

5,052



5,817



5,643



10,870



10,694



Charged to representation and warranty
reserve - change in estimate

28,941



17,396



46,028



46,336



106,566



Total

33,993



23,213



51,671



57,206



117,260


Charge-offs, net

(33,993)



(31,213)



(32,671)



(65,206)



(76,260)


Balance, end of period

$

185,000



$

185,000



$

161,000



$

185,000



$

161,000
























 

Composition of Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)


June 30, 2013

Collectively Evaluated
Reserves


Individually Evaluated
Reserves


Total

Consumer loans






Residential first mortgage

$

67,264



$

110,070



$

177,334


Second mortgage

10,870



7,969



18,839


Warehouse lending

721





721


HELOC

11,735



3,133



14,868


Other

1,780





1,780


Total consumer loans

92,370



121,172



213,542


Commercial loans






Commercial real estate

27,253



69



27,322


Commercial and industrial

2,052



84



2,136


Commercial lease financing






Total commercial loans

29,305



153



29,458


Total allowance for loan losses

$

121,675



$

121,325



$

243,000



March 31, 2013

Collectively Evaluated
Reserves


Individually Evaluated
Reserves


Total

Consumer loans






Residential first mortgage

$

63,144



$

150,932



$

214,076


Second mortgage

12,839



7,844



20,683


Warehouse lending

532





532


HELOC

14,835



3,283



18,118


Other

2,215





2,215


Total consumer loans

93,565



162,059



255,624


Commercial loans






Commercial real estate

32,521



199



32,720


Commercial and industrial

1,562



10



1,572


Commercial lease financing

84





84


Total commercial loans

34,167



209



34,376


Total allowance for loan losses

$

127,732



$

162,268



$

290,000























 

Non-Performing Loans and Assets
(Dollars in thousands)
(Unaudited)



June 30, 2013


March 31, 2013


December 31, 2012


June 30, 2012

Non-performing loans

$

161,725



$

223,388



$

254,581



$

298,511


Non-performing TDRs

24,025



56,498



60,516



58,240


Non-performing TDRs at inception but performing for less than
six months

72,186



89,417



84,728



74,848


Total non-performing loans held-for-investment

257,936



369,303



399,825



431,599










Real estate and other non-performing assets, net

86,382



114,356



120,732



107,235


Non-performing assets held-for-investment, net

344,318



483,659



520,557



538,834


Non-performing loans held-for-sale

3,351



394



1,835



2,430


Total non-performing assets including loans held-for-sale

$

347,669



$

484,053



$

522,392



$

541,264










Ratio of non-performing assets to total assets (Bank only)

2.71

%


3.70

%


3.72

%


3.77

%

Ratio of non-performing loans held-for-investment to loans
held-for-investment

5.74

%


7.79

%


7.35

%


6.59

%

Ratio of non-performing assets to loans held-for-investment
and repossessed assets

7.52

%


9.96

%


9.36

%


8.09

%

 

Asset Quality - Loans Held-for-Investment
(Dollars in thousands)
(Unaudited)



30-59 Days Past Due

60-89 Days Past Due

Greater than 90 days

Total Past Due

Total Investment Loans

June 30, 2013






Consumer loans

$

60,872


$

13,421


$

194,151


$

268,444


$

3,849,104


Commercial loans

188


22,736


63,785


86,709


642,049


Total loans

$

61,060


$

36,157


$

257,936


$

355,153


$

4,491,153


March 31, 2013






      Consumer loans

$

58,368


$

20,481


$

303,168


$

382,017


$

4,066,847


    Commercial loans

1,465


6,400


66,135


74,000


676,419


Total loans

$

59,833


$

26,881


$

369,303


$

456,017


$

4,743,266


December 31, 2012






Consumer loans

$

66,687


$

18,578


$

313,418


$

398,683


$

4,700,921


Commercial loans

6,979


6,990


86,408


100,377


737,180


Total loans

$

73,666


$

25,568


$

399,826


$

499,060


$

5,438,101


June 30, 2012






Consumer loans

$

62,123


$

24,762


$

293,474


$

380,359


$

4,746,846


Commercial loans

1,719


2,345


138,125


142,189


1,803,411


Total loans

$

63,842


$

27,107


$

431,599


$

522,548


$

6,550,257


 

Troubled Debt Restructurings
(Dollars in thousands)
(Unaudited)



TDRs


Performing


Non-performing


Non-performing TDRs
at inception but
performing for less
than six months


Total

June 30, 2013


Consumer loans

$

451,097



$

24,025



$

71,951



$

547,073


Commercial loans





235



235


Total TDRs

$

451,097



$

24,025



$

72,186



$

547,308


March 31, 2013








Consumer loans

$

598,041



$

56,498



$

87,971



$

742,510


Commercial loans





1,446



1,446


Total TDRs

$

598,041



$

56,498



$

89,417



$

743,956


December 31, 2012








Consumer loans

$

588,475



$

60,493



$

82,695



$

731,663


Commercial loans

1,287



23



2,033



3,343


Total TDRs

$

589,762



$

60,516



$

84,728



$

735,006


June 30, 2012








Consumer loans

$

574,359



$

57,914



$

68,398



$

700,671


Commercial loans

1,738



326



6,450



8,514


Total TDRs

$

576,097



$

58,240



$

74,848



$

709,185


 

Gain on Loan Sales and Securitizations
(Dollars in thousands)
(Unaudited)



Three Months Ended



June 30, 2013



March 31, 2013



June 30, 2012


Description









Valuation gain (loss)









Value of interest rate locks

$

(75,040)


(0.68)%



$

(35,327)


(0.28)%



$

64,123


0.50

%

Value of forward sales

166,941


1.51

%


(4,339)


(0.03)%



(47,126)


(0.37)%


Fair value of loans held-for-sale

(19,336)


(0.17)%



87,644


0.68

%


176,741


1.38

%

LOCOM adjustments on loans held-for-
    investment


%


(1,797)


(0.01)%




%

Total valuation gains

72,565


0.66

%


46,181


0.36

%


193,738


1.51

%










Sales gains (losses)









Marketing gains, net of adjustments

28,753


0.25

%


25,859


0.21

%


180,691


1.41

%

Pair-off (losses) gains

48,525


0.44

%


71,317


0.55

%


(156,120)


(1.22)%


Provision for representation and warranty reserve

(5,052)


(0.05)%



(5,817)


(0.05)%



(5,643)


(0.04)%


Total sales gains

72,226


0.64

%


91,359


0.71

%


18,928


0.15

%

Total gain on loan sales and securitizations

$

144,791




$

137,540




$

212,666



Total mortgage rate lock commitments (gross)

$

12,359,000




$

12,142,000




$

17,534,000



Total loan sales and securitizations

$

11,123,821


1.30

%


$

12,822,879


1.07

%


$

12,777,311


1.66

%

Total mortgage rate lock commitments (fallout
adjusted) (1)

$

9,837,573


1.47

%


$

9,848,417


1.40

%


$

13,346,568


1.59

%



Six Months Ended



June 30, 2013



June 30, 2012


Description






Valuation gain (loss)






Value of interest rate locks

$

(110,367)


(0.46)%



$

61,423


0.26

%

Value of forward sales

162,602


0.68

%


(3,316)


(0.01)%


Fair value of loans held-for-sale

68,307


0.29

%


297,805


1.26

%

LOCOM adjustments on loans held-for-investment

(1,797)


(0.01)%



(21)


%

Total valuation gains

118,745


0.5

%


355,891


1.51

%







Sales gains (losses)






Marketing gains, net of adjustments

54,612


0.23

%


312,203


1.33

%

Pair-off gains (losses)

119,842


0.5

%


(239,883)


(1.02)%


Provision for representation and warranty reserve

(10,869)


(0.05)%



(10,693)


(0.05)%


Total sales gains

163,585


0.68

%


61,627


0.26

%

Total gain on loan sales and securitizations

$

282,330




$

417,518



Total mortgage rate lock commitments volume

$

24,501,000




$

32,401,000



Total loan sales and securitizations

$

23,946,700


1.18

%


$

23,607,109


1.77

%

Total mortgage rate lock commitments (fallout adjusted) (1)

$

19,685,990


1.43

%


$

24,072,186


1.73

%


























(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.

 

Average Balances, Yields and Rates
(Dollars in thousands)
(Unaudited)


Three Months Ended



June 30, 2013



March 31, 2013



June 30, 2012



Average Balance

Annualized

Yield/Rate


Average Balance

Annualized

Yield/Rate


Average Balance

Annualized

Yield/Rate

Interest-Earning Assets



Loans held-for-sale

$

2,630,309


3.38

%


$

3,616,195


2.97

%


$

2,977,233


3.91

%

Loans repurchased with government
guarantees

1,540,798


3.43

%


1,774,235


3.38

%


2,067,022


3.36

%

Loans held-for-investment









Consumer loans (1) (2)

3,845,503


4.08

%


4,136,420


4.15

%


4,635,259


4.38

%

Commercial loans (1)

669,253


4.18

%


698,269


4.27

%


1,835,897


3.97

%

Total loans held-for-investment

4,514,756


4.10

%


4,834,689


4.16

%


6,471,156


4.27

%

Investment securities available-for-sale
or trading

240,296


3.06

%


348,525


2.41

%


642,389


4.27

%

Interest-earning deposits and other

2,385,786


0.25

%


1,501,568


0.26

%


785,437


0.24

%

Total interest-earning assets

11,311,945


3.01

%


12,075,212


3.15

%


12,943,237


3.80

%

Other assets

1,649,000




1,617,359




1,571,239



Total assets

$

12,960,945




$

13,692,571




$

14,514,476



Interest-Bearing Liabilities









Retail deposits









Demand deposits

$

395,137


0.21

%


$

388,466


0.25

%


$

361,916


0.24

%

Savings deposits

2,627,166


0.73

%


2,316,859


0.75

%


1,829,592


0.75

%

Money market deposits

345,694


0.26

%


387,699


0.35

%


482,296


0.49

%

Certificate of deposits

2,353,775


0.91

%


2,931,558


0.90

%


3,113,134


1.27

%

Total retail deposits

5,721,772


0.74

%


6,024,582


0.76

%


5,786,938


0.98

%

Government deposits









Demand deposits

114,707


0.40

%


98,442


0.44

%


95,805


0.49

%

Savings deposits

169,122


0.29

%


308,811


0.47

%


272,119


0.56

%

Certificate of deposits

413,177


0.44

%


471,842


0.60

%


361,315


0.66

%

Total government deposits

697,006


0.40

%


879,095


0.53

%


729,239


0.60

%

Wholesale deposits

73,910


5.07

%


81,976


4.92

%


339,018


3.78

%

Total deposits

6,492,688


0.75

%


6,985,653


0.78

%


6,855,195


1.07

%

Federal Home Loan Bank advances

2,901,102


3.34

%


3,105,556


3.16

%


3,996,527


2.76

%

Other

248,753


2.65

%


247,435


2.71

%


248,585


2.81

%

Total interest-bearing liabilities

9,642,543


1.58

%


10,338,644


1.54

%


11,100,307


1.72

%

Other liabilities (3)

2,079,615




2,179,945




2,307,945



Stockholder's equity

1,238,787




1,173,982




1,106,224



Total liabilities and stockholder's equity

$

12,960,945




$

13,692,571




$

14,514,476




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

(2) Excludes loans that are consolidated variable interest entities (VIEs) and carried at fair value.

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

 

Average Balances, Yields and Rates
(Dollars in thousands)
(Unaudited)



Six Months Ended



June 30, 2013



June 30, 2012



Average Balance

Annualized

Yield/Rate


Average Balance

Annualized

Yield/Rate




Interest-Earning Assets






Loans held-for-sale

$

3,120,529


3.14

%


$

2,685,479


3.97

%

Loans repurchased with government guarantees

1,656,872


3.41

%


2,044,680


3.37

%

Loans held-for-investment






Consumer loans (1) (2)

3,990,157


4.12

%


4,813,043


4.36

%

Commercial loans (1)

683,681


4.23

%


1,795,907


4.09

%

Total loans held-for-investment

4,673,838


4.13

%


6,608,950


4.28

%

Investment securities available-for-sale or trading

294,112


2.67

%


714,332


4.32

%

Interest-earning deposits and other

1,946,119


0.25

%


738,511


0.24

%

Total interest-earning assets

11,691,470


3.08

%


12,791,952


3.84

%

Other assets

1,633,267




1,568,874



Total assets

$

13,324,737




$

14,360,826



Interest-Bearing Liabilities






Retail deposits






Demand deposits

$

391,820


0.23

%


$

354,229


0.25

%

Savings deposits

2,472,870


0.74

%


1,719,894


0.79

%

Money market deposits

366,581


0.30

%


484,602


0.51

%

Certificate of deposits

2,641,070


0.90

%


3,099,009


1.31

%

Total retail deposits

5,872,341


0.75

%


5,657,734


1.01

%

Government deposits






Demand deposits

106,619


0.42

%


97,265


0.49

%

Savings deposits

238,581


0.40

%


271,360


0.57

%

Certificate of deposits

442,347


0.52

%


376,985


0.66

%

Total government deposits

787,547


0.47

%


745,610


0.61

%

Wholesale deposits

77,921


4.99

%


348,275


3.76

%

Total deposits

6,737,809


0.77

%


6,751,619


1.11

%

FHLB advances

3,002,764


3.25

%


4,047,079


2.72

%

Other

248,098


2.68

%


248,585


2.84

%

Total interest-bearing liabilities

9,988,671


1.56

%


11,047,283


1.74

%

Other liabilities (3)

2,129,503




2,192,122



Stockholder's equity

1,206,563




1,121,421



Total liabilities and stockholder's equity

$

13,324,737




$

14,360,826




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

(2) Excludes loans that are consolidated variable interest entities (VIEs) and carried at fair value.

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

 

Non-GAAP Reconciliation
(Dollars in thousands)
(Unaudited)



Three Months Ended


Six Months Ended


June 30, 2013


March 31, 2013


June 30, 2012


June 30, 2013


June 30, 2012

Pre-tax, pre-credit-cost revenue










Income before tax provision

$

61,095



$

23,607



$

87,887



$

84,702



$

80,577


Add back










Provision for loan losses

31,563



20,415



58,428



51,978



173,101


Asset resolution

15,921



16,445



20,851



32,366



57,621


Other than temporary impairment on AFS
    investments

8,789





1,017



8,789



2,192


Representation and warranty reserve
     - change in estimate

28,940



17,395



46,028



46,336



106,566


Write down of residual interest



174



1,244



174



1,653


Total credit-related costs

85,213



54,429



127,568



139,643



341,133


Pre-tax, pre-credit-cost net revenue

$

146,308



$

78,036



$

215,455



$

224,345



$

421,710












Efficiency ratio (credit-adjusted)










Net interest income (a)

$

47,096



$

55,669



$

75,478



$

102,764



$

150,211


Non-interest income (b)

219,959



184,943



240,334



404,902



461,710


Add: Representation and warranty reserve
    - change in estimate (d)

28,940



17,395



46,028



46,336



106,566


Adjusted income

295,995



258,007



361,840



554,002



718,487


Non-interest expense (c)

174,397



196,590



169,497



370,986



358,243


Less: Asset resolution expense (e)

(15,921)



(16,445)



(20,851)



(32,366)



(57,621)


Adjusted non-interest expense

$

158,476



$

180,145



$

148,646



$

338,620



$

300,622


Efficiency ratio (c/(a+b))

65.3

%


81.7

%


53.7

%


73.1

%


58.5

%

Efficiency ratio (credit-adjusted)
((c-e)/((a+b)+d)))

53.5

%


69.8

%


41.1

%


61.1

%


41.8

%



June 30, 2013


March 31, 2013


December 31, 2012


June 30, 2012

Non-performing assets / Tier 1 capital + allowance for
loan losses








Non-performing assets

$

344,318



$

483,659



$

520,557



$

538,834


Tier 1 capital (1)

1,390,582



1,318,770



1,295,841



1,295,962


Allowance for loan losses

243,000



290,000



305,000



287,000


Tier 1 capital + allowance for loan losses

$

1,633,582



$

1,608,770



$

1,600,841



$

1,582,962


Non-performing assets / Tier 1 capital + allowance for
loan losses

21.1

%


30.1

%


32.5

%


34.0

%

































(1) Represents Tier 1 capital for Bank.








 

SOURCE Flagstar Bancorp, Inc.



RELATED LINKS
http://www.flagstar.com

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