Flagstar Reports Second Quarter 2016 Net Income of $47 million, or $0.66 per Diluted Share
Company posts solid earnings gain with significant operating leverage
Key Highlights - Second Quarter 2016
- Net income per diluted share increased $0.12, or 22 percent, from first quarter 2016.
- Positive operating leverage, led by 11 percent rise in revenue versus 2 percent increase in expenses against prior quarter.
- Net gain on loan sales rose $15 million, or 20 percent, on higher fallout-adjusted locks and wider gain on sale margin.
- Lower nonperforming loans and consumer delinquencies on continuing strong credit performance.
- Tier 1 leverage was 11.6 percent and remains strong at 8.6 percent when adjusted for TARP redemption.
TROY, Mich., July 26, 2016 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, FSB, today reported second quarter 2016 net income of $47 million, or $0.66 per diluted share, as compared to $39 million in the first quarter 2016, or $0.54 per diluted share, and net income of $46 million in the second quarter 2015, or $0.68 per diluted share.
"We're happy to report another solid quarter," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "Net income rose as mortgage volume increased 18 percent and net interest income remained relatively stable. We continued to rotate our lower spread consumer assets into relationship-focused commercial loans and this quarter marks the first time that our average commercial loans held for investment exceeded our consumer loans held for investment. Asset quality improved again, with nonperforming loans declining 17 percent to $44 million. Yet, while total revenue increased 11 percent, expenses increased only 2 percent, reflecting the franchise's operating leverage. As a result, our efficiency ratio improved to 68 percent and our return on assets was 1.4 percent.
"As we previously announced, we received regulatory approval to redeem our TARP preferred shares on June 23, 2016. Given the notice requirement prior to redemption, we will be redeeming these shares in full by the end of July. We've replaced this high-cost funding with senior notes and other bank-level sources of funds that cost, on average, only one-third of the TARP preferred on an after-tax basis. After this redemption, our regulatory capital remains strong on an adjusted basis as of June 30, 2016, with Tier 1 leverage at 8.59 percent and Common Equity Tier 1 at 12.17 percent.
"Our business model has been tested over the past few quarters, and it has generated strong earnings despite volatility in the interest rate, regulatory and mortgage environment. More recently, low rates have created an opportunity for us to demonstrate the power and profitability of our mortgage business. We believe we have built a solid business model that will continue to be successful."
Second Quarter 2016 Highlights: |
|||||||||||||||
Income Statement Highlights |
|||||||||||||||
Three Months Ended |
|||||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
|||||||||||
(Dollars in millions) |
|||||||||||||||
Consolidated Statements of Income |
|||||||||||||||
Net interest income |
$ |
77 |
$ |
79 |
$ |
76 |
$ |
73 |
$ |
73 |
|||||
Provision (benefit) for loan losses |
(3) |
(13) |
(1) |
(1) |
(13) |
||||||||||
Noninterest income |
128 |
105 |
97 |
128 |
126 |
||||||||||
Noninterest expense |
139 |
137 |
129 |
131 |
138 |
||||||||||
Income before income taxes |
69 |
60 |
45 |
71 |
74 |
||||||||||
Provision for income taxes |
22 |
21 |
12 |
24 |
28 |
||||||||||
Net income |
$ |
47 |
$ |
39 |
$ |
33 |
$ |
47 |
$ |
46 |
|||||
Income per share: |
|||||||||||||||
Basic |
$ |
0.67 |
$ |
0.56 |
$ |
0.45 |
$ |
0.70 |
$ |
0.69 |
|||||
Diluted |
$ |
0.66 |
$ |
0.54 |
$ |
0.44 |
$ |
0.69 |
$ |
0.68 |
Key Ratios |
||||||||||||
Three Months Ended |
Change (bps) |
|||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
Seq |
Yr/Yr |
||||||
Net interest margin |
2.63 |
% |
2.66 |
% |
2.69 |
% |
2.75 |
% |
2.79 |
% |
(3) |
(16) |
Return on average assets |
1.4 |
% |
1.2 |
% |
1.0 |
% |
1.5 |
% |
1.6 |
% |
20 |
(20) |
Return on average equity |
11.5 |
% |
10.1 |
% |
8.6 |
% |
12.4 |
% |
12.7 |
% |
140 |
(120) |
Return on average common |
13.8 |
% |
12.2 |
% |
10.4 |
% |
15.1 |
% |
15.6 |
% |
160 |
(180) |
Balance Sheet Highlights |
|||||||||||||||||||
Three Months Ended |
% Change |
||||||||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
Seq |
Yr/Yr |
|||||||||||||
(Dollars in millions) |
|||||||||||||||||||
Average Balance Sheet Data |
|||||||||||||||||||
Average interest-earning assets |
$ |
11,639 |
$ |
11,871 |
$ |
11,240 |
$ |
10,693 |
$ |
10,367 |
(2)% |
12 |
% |
||||||
Average loans held-for-sale |
2,884 |
2,909 |
2,484 |
2,200 |
2,218 |
(1)% |
30 |
% |
|||||||||||
Average loans held-for- |
5,569 |
5,668 |
5,642 |
5,412 |
4,938 |
(2)% |
13 |
% |
|||||||||||
Average total deposits |
8,631 |
8,050 |
8,132 |
8,260 |
7,736 |
7 |
% |
12 |
% |
Net Interest Income
Second quarter 2016 net interest income remained relatively stable at $77 million, compared to $79 million for the first quarter 2016. The results reflected a 2 percent decline in average earning assets, primarily due to loan sales, and a slight drop in the net interest margin.
Net interest margin decreased 3 basis points to 2.63 percent for the second quarter 2016, as compared to 2.66 percent for the first quarter 2016. The decrease from the prior quarter was driven by lower interest income on loans held-for-sale due to a drop in market interest rates, partially offset by increased interest income from a rotation of lower spread residential mortgages into higher spread commercial loans.
Average loans held-for-investment totaled $5.6 billion for the second quarter 2016, largely unchanged from the first quarter 2016. During the second quarter 2016, relationship-based commercial loans increased while consumer loans declined. Average commercial loans increased $469 million, or 20 percent, led by a $351 million, or 36 percent increase in warehouse loans. Commercial & industrial and commercial real estate loans also registered solid gains. Average consumer loans fell $568 million, or 17 percent, due to the sale of $408 million (UPB) of performing residential mortgage loans and $14 million (UPB) of nonperforming, TDR, and other higher risk loans.
Average total deposits were $8.6 billion in the second quarter 2016, increasing $581 million, or 7 percent from the prior quarter. The increase was led by higher company-controlled and retail deposits, partially offset by a drop in government deposits. Average company-controlled deposits rose $403 million, or 35 percent, due to seasonal factors, higher refinance volume and an increase in loans serviced. Average retail deposits increased $253 million, or 4 percent, providing core deposits to support balance sheet growth.
Provision (Benefit) for Loan Losses
The Company experienced a provision benefit in the second quarter 2016, resulting primarily from the sale of $408 million (UPB) performing residential first mortgage loans. The provision benefit for loan losses totaled $3 million for the second quarter 2016, a decrease from a benefit of $13 million for the first quarter 2016.
Net charge-offs in the second quarter 2016 were $9 million, or 0.62 percent of applicable loans, compared to $12 million, or 0.86 percent of applicable loans in the prior quarter. The second quarter 2016 amount included $2 million of net charge-offs associated with the sale of $14 million (UPB) of nonperforming, TDR, and other higher risk loans and $4 million of net charge-offs associated with loans with government guarantees. The first quarter 2016 amount included $6 million of net charge-offs associated with the sale of $96 million (UPB) of nonperforming, TDR, and other higher risk loans and $3 million of net charge-offs associated with loans with government guarantees. Excluding the charge-offs associated with loan sales and loans with government guarantees in both quarters, net charge-offs in the second quarter 2016 were $3 million, or 0.18 percent of applicable loans, compared to $3 million, or 0.20 percent of applicable loans in the prior quarter.
Noninterest Income
Noninterest income increased $23 million, or 22 percent, to $128 million, as compared to $105 million for the first quarter 2016. The second quarter 2016 results were led primarily by higher net gain on loan sales and loan fees and charges.
Second quarter 2016 net gain on loan sales increased to $90 million, as compared to $75 million for the first quarter 2016. The increase from the prior quarter reflected higher fallout-adjusted locks and an improved gain on sale margin. Excluding gains from the sale of mortgage loans transferred from HFI, net gain on loan sales was $85 million, up $19 million, or 29 percent, from the first quarter 2016. In the second quarter 2016, fallout-adjusted locks increased 18 percent to $8.1 billion, led by higher purchase volumes. Excluding HFI loan sales, the net gain on loan sale margin was 1.04 percent, as compared to 0.96 percent for the first quarter 2016.
Mortgage Metrics |
|||||||||||||||||||
Three Months Ended |
Change (% / bps) |
||||||||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
Seq |
Yr/Yr |
|||||||||||||
(Dollars in millions) |
|||||||||||||||||||
Mortgage rate lock commitments |
$ |
8,127 |
$ |
6,863 |
$ |
5,027 |
$ |
6,495 |
$ |
6,804 |
18 |
% |
19 |
% |
|||||
GOS on HFS margin (change in |
1.04 |
% |
0.96 |
% |
0.92 |
% |
1.05 |
% |
1.22 |
% |
8 |
(18) |
|||||||
Gain on loan sales on HFS |
$ |
85 |
66 |
$ |
46 |
$ |
68 |
$ |
83 |
29 |
% |
2 |
% |
||||||
Net (loss) return on the mortgage |
$ |
(4) |
$ |
(6) |
$ |
9 |
$ |
12 |
$ |
9 |
(33) |
% |
N/M |
||||||
Gain on loan sales + net (loss) |
$ |
81 |
$ |
60 |
$ |
55 |
$ |
80 |
$ |
92 |
35 |
% |
(12) |
% |
|||||
Residential loans serviced (number |
358 |
340 |
361 |
369 |
378 |
5 |
% |
(5) |
% |
||||||||||
Capitalized value of mortgage |
0.99 |
% |
1.06 |
% |
1.13 |
% |
1.12 |
% |
1.15 |
% |
(7) |
(16) |
|||||||
N/M - Not meaningful |
|||||||||||||||||||
(1) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates. |
|||||||||||||||||||
(2) Gain on sale margin is based on net gain on loan sales (excluding gains from loans transferred from HFI) to fallout-adjusted mortgage rate lock commitments. |
|||||||||||||||||||
(3) Includes serviced for own loan portfolio, serviced for others, and subserviced for others loans. |
Loan fees and charges rose to $19 million for the second quarter 2016, as compared to $15 million in the first quarter 2016. The increase primarily reflected higher mortgage loan closings.
Net return on the mortgage servicing asset (including the impact of economic hedges) was a net loss of $4 million for the second quarter 2016, as compared to a net loss of $6 million for the first quarter 2016. The return on the mortgage servicing asset improved from the first quarter 2016, primarily due to higher service fee income and lower disposition costs from fewer bulk MSR sales, partially offset by an increase in anticipated and actual prepayments.
The representation and warranty benefit was $4 million for the second quarter 2016, as compared to a $2 million benefit in the first quarter 2016. The representation and warranty reserve fell to $36 million at June 30, 2016, from $40 million at March 31, 2016, based on a continued improvement in risk trends in the repurchase pipeline.
Noninterest Expense
The Company experienced modest expense growth in the second quarter 2016. Noninterest expense increased $2 million, or 2 percent, to $139 million for the second quarter 2016, as compared to $137 million for the first quarter 2016. The second quarter 2016 results were driven by higher commissions and loan processing expense related to increased business activity, and higher warrant expense, partially offset by lower compensation and benefits, asset resolution, and legal and professional expense. The Company's efficiency ratio improved to 68.2 percent for the second quarter 2016 as revenues grew without the addition of significant incremental expenses.
Overall, expenses related to higher mortgage volumes drove the quarter's increase in noninterest expense. Commissions increased $4 million and loan processing expense rose $3 million. Warrant expense, driven by a higher stock price, also increased $3 million. These increases were partially offset by decreased levels of expense in a number of other categories, including legal and professional expense, asset resolution expense, and compensation and benefits, which were seasonally lower.
Income Taxes
The second quarter 2016 provision for income taxes totaled $22 million, as compared to $21 million in the first quarter 2016. The effective tax rate in the second quarter 2016 was 33 percent, as compared to 34 percent in the first quarter 2016. The decrease in the marginal tax rate in the second quarter 2016 was largely due to a benefit for state tax settlements in the quarter.
Asset Quality |
|||||||||||||||||||
Credit Quality Ratios |
|||||||||||||||||||
Three Months Ended |
Change (% / bps) |
||||||||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
Seq |
Yr/Yr |
|||||||||||||
(Dollars in millions) |
|||||||||||||||||||
Allowance for loan loss to LHFI |
2.6 |
% |
2.9 |
% |
3.0 |
% |
3.7 |
% |
4.3 |
% |
(30) |
(170) |
|||||||
Allowance for loan loss to LHFI and |
2.4 |
% |
2.7 |
% |
2.8 |
% |
3.3 |
% |
3.9 |
% |
(30) |
(150) |
|||||||
Charge-offs, net of recoveries |
$ |
9 |
$ |
12 |
$ |
9 |
$ |
24 |
$ |
18 |
(25) |
% |
(50) |
% |
|||||
Charge-offs, net of recoveries, adjusted (1) |
$ |
3 |
$ |
3 |
$ |
4 |
$ |
8 |
$ |
3 |
— |
% |
— |
% |
|||||
Total nonperforming loans held-for- |
$ |
44 |
$ |
53 |
$ |
66 |
$ |
63 |
$ |
65 |
(17) |
% |
(32) |
% |
|||||
Net charge-off ratio (annualized) |
0.62 |
% |
0.86 |
% |
0.62 |
% |
1.84 |
% |
1.49 |
% |
(24) |
(87) |
|||||||
Net charge-off ratio, adjusted |
0.18 |
% |
0.20 |
% |
0.29 |
% |
0.61 |
% |
0.26 |
% |
(2) |
(8) |
|||||||
Nonperforming loans to LHFI |
0.76 |
% |
0.95 |
% |
1.05 |
% |
1.15 |
% |
1.22 |
% |
(19) |
(46) |
|||||||
(1) Excludes charge-offs of $2 million, $6 million, $2 million, $16 million and $15 million related to the sale or transfer of nonperforming loans and TDRs during the three months ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively. Also excludes charge-offs related to loans with government guarantees of $4 million, $3 million and $3 million during the three months ended June 30, 2016, March 31, 2016 and December 31, 2015, respectively. |
The Company maintained strong reserve coverage and solid credit quality in the second quarter 2016. The allowance for loan losses was $150 million at June 30, 2016, covering 2.6 percent of loans held-for-investment, as compared to an allowance for loan losses of $162 million at March 31, 2016, covering 2.9 percent of loans held-for-investment. The decrease in the allowance for loan losses resulted primarily from the provision benefit of selling residential first mortgage loans and charge-offs from the sale of $14 million (UPB) of lower quality loans.
Second quarter 2016 net charge-offs were $9 million, representing 0.62 percent of loans held-for-investment. This represented a decrease of $3 million from the first quarter 2016 net charge-offs of $12 million, or 0.86 percent of loans held-for-investment. Excluding the charge-offs associated with loan sales and loans with government guarantees in both quarters, net charge-offs in the second quarter 2016 were $3 million, or 0.18 percent of loans held-for-investment, compared to $3 million, or 0.20 percent of loans held-for-investment in the prior quarter.
Nonperforming loans held-for-investment decreased to $44 million at June 30, 2016 from $53 million at March 31, 2016. There were no nonperforming commercial loans at June 30, 2016. The ratio of nonperforming loans to loans held-for-investment decreased to 0.76 percent at June 30, 2016 from 0.95 percent at March 31, 2016. At June 30, 2016, consumer loan delinquencies (30-89 days past due) totaled $7 million, down $4 million from March 31, 2016. As in the prior quarter, there were no commercial loan delinquencies (30-89 days past due) at June 30, 2016.
Capital |
|||||||||||||||||||
Capital Ratios (Bancorp) |
Three Months Ended |
Change (% / bps) |
|||||||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
Seq |
Yr/Yr |
|||||||||||||
Total capital |
20.19 |
% |
20.97 |
% |
20.28 |
% |
21.64 |
% |
21.30 |
% |
(78) |
(111) |
|||||||
Tier 1 capital |
18.89 |
% |
19.67 |
% |
18.98 |
% |
20.32 |
% |
19.97 |
% |
(78) |
(108) |
|||||||
Tier 1 leverage |
11.59 |
% |
11.04 |
% |
11.51 |
% |
11.65 |
% |
11.47 |
% |
55 |
12 |
|||||||
Mortgage servicing rights to Tier 1 |
19.9 |
% |
19.3 |
% |
20.6 |
% |
21.1 |
% |
24.2 |
% |
60 |
(430) |
|||||||
Book value per common share |
$ |
23.48 |
$ |
22.82 |
$ |
22.33 |
$ |
21.91 |
$ |
20.98 |
3 |
% |
12 |
% |
|||||
The Company maintained a robust capital position with regulatory capital ratios well above current regulatory quantitative guidelines for "well-capitalized" institutions. At June 30, 2016, the Company had a Tier 1 leverage ratio of 11.59 percent, as compared to 11.04 percent at March 31, 2016. The increase in the ratio resulted from earnings retention and a decrease in average assets. Adjusting for the expected TARP redemption in July, the Tier 1 leverage ratio was 8.59 percent at June 30, 2016.
At June 30, 2016, the Company had a common equity-to-assets ratio of 9.68 percent.
Earnings Conference Call
As previously announced, the Company's second quarter 2016 earnings call will be held Tuesday, July 26, 2016 at 11 a.m. (ET).
To join the call, please dial (800) 723-6604 toll free or (785) 830-7977, and use passcode 1789408. 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 1789408.
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 29 retail locations in 21 states. Flagstar is a leading national originator and servicer of mortgage loans, handling payments and record keeping for nearly $75 billion of home loans for nearly 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 estimated Basel III ratios and ratios adjusted for TARP redemption. 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. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. Flagstar's method of calculating these non-GAAP measures may differ from methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP.
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.
For more information, contact:
David L. Urban
[email protected]
(248) 312-5970
Flagstar Bancorp, Inc. |
|||||||||||||||
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
June 30, 2015 |
||||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||||||
Assets |
|||||||||||||||
Cash |
$ |
64 |
$ |
54 |
$ |
54 |
52 |
||||||||
Interest-earning deposits |
120 |
670 |
154 |
194 |
|||||||||||
Total cash and cash equivalents |
184 |
724 |
208 |
246 |
|||||||||||
Investment securities available-for-sale |
1,145 |
1,314 |
1,294 |
2,272 |
|||||||||||
Investment securities held-to-maturity |
1,211 |
1,253 |
1,268 |
— |
|||||||||||
Loans held-for-sale |
3,091 |
2,591 |
2,576 |
2,038 |
|||||||||||
Loans held-for-investment |
5,822 |
5,640 |
6,352 |
5,335 |
|||||||||||
Loans with government guarantees |
435 |
462 |
485 |
592 |
|||||||||||
Less: allowance for loan losses |
(150) |
(162) |
(187) |
(222) |
|||||||||||
Total loans held-for-investment and loans with government guarantees, net |
6,107 |
5,940 |
6,650 |
5,705 |
|||||||||||
Mortgage servicing rights |
301 |
281 |
296 |
317 |
|||||||||||
Federal Home Loan Bank stock |
172 |
172 |
170 |
113 |
|||||||||||
Premises and equipment, net |
259 |
256 |
250 |
240 |
|||||||||||
Net deferred tax asset |
335 |
352 |
364 |
400 |
|||||||||||
Other assets |
920 |
854 |
639 |
808 |
|||||||||||
Total assets |
$ |
13,725 |
$ |
13,737 |
$ |
13,715 |
$ |
12,139 |
|||||||
Liabilities and Stockholders' Equity |
|||||||||||||||
Noninterest-bearing |
$ |
2,109 |
$ |
1,984 |
$ |
1,574 |
$ |
1,417 |
|||||||
Interest-bearing |
6,462 |
6,485 |
6,361 |
6,231 |
|||||||||||
Total deposits |
8,571 |
8,469 |
7,935 |
7,648 |
|||||||||||
Short-term Federal Home Loan Bank advances |
1,069 |
1,250 |
2,116 |
1,323 |
|||||||||||
Long-term Federal Home Loan Bank advances |
1,577 |
1,625 |
1,425 |
875 |
|||||||||||
Other long-term debt |
247 |
247 |
247 |
283 |
|||||||||||
Representation and warranty reserve |
36 |
40 |
40 |
48 |
|||||||||||
Other liabilities |
629 |
548 |
423 |
511 |
|||||||||||
Total liabilities |
12,129 |
12,179 |
12,186 |
10,688 |
|||||||||||
Stockholders' Equity |
|||||||||||||||
Preferred stock |
267 |
267 |
267 |
267 |
|||||||||||
Common stock |
1 |
1 |
1 |
1 |
|||||||||||
Additional paid in capital |
1,491 |
1,489 |
1,486 |
1,482 |
|||||||||||
Accumulated other comprehensive (loss) income |
(22) |
(11) |
2 |
8 |
|||||||||||
Accumulated deficit |
(141) |
(188) |
(227) |
(307) |
|||||||||||
Total stockholders' equity |
1,596 |
1,558 |
1,529 |
1,451 |
|||||||||||
Total liabilities and stockholders' equity |
$ |
13,725 |
$ |
13,737 |
$ |
13,715 |
$ |
12,139 |
Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) (Unaudited) |
||||||||||||||||||||||||||
Second Quarter 2016 Compared to: |
||||||||||||||||||||||||||
Three Months Ended |
First Quarter 2016 |
Second Quarter 2015 |
||||||||||||||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
Amount |
Percent |
Amount |
Percent |
||||||||||||||||||
Interest Income |
||||||||||||||||||||||||||
Total interest income |
$ |
99 |
$ |
101 |
$ |
95 |
$ |
91 |
$ |
90 |
$ |
(2) |
(2) |
% |
$ |
9 |
10 |
% |
||||||||
Total interest expense |
22 |
22 |
19 |
18 |
17 |
— |
— |
% |
5 |
29 |
% |
|||||||||||||||
Net interest income |
77 |
79 |
76 |
73 |
73 |
(2) |
(3) |
% |
4 |
5 |
% |
|||||||||||||||
Provision (benefit) for loan losses |
(3) |
(13) |
(1) |
(1) |
(13) |
10 |
(77) |
% |
$ |
10 |
(77) |
% |
||||||||||||||
Net interest income after provision for loan losses |
80 |
92 |
77 |
74 |
86 |
(12) |
(13) |
% |
(6) |
(7) |
% |
|||||||||||||||
Noninterest Income |
||||||||||||||||||||||||||
Net gain on loan sales |
90 |
75 |
46 |
68 |
83 |
15 |
20 |
% |
$ |
7 |
8 |
% |
||||||||||||||
Loan fees and charges |
19 |
15 |
14 |
17 |
19 |
4 |
27 |
% |
$ |
— |
— |
% |
||||||||||||||
Deposit fees and charges |
6 |
6 |
6 |
7 |
6 |
— |
— |
% |
$ |
— |
— |
% |
||||||||||||||
Loan administration income |
4 |
6 |
7 |
8 |
7 |
(2) |
(33) |
% |
$ |
(3) |
(43) |
% |
||||||||||||||
Net (loss) return on the mortgage servicing asset |
(4) |
(6) |
9 |
12 |
9 |
2 |
(33) |
% |
$ |
(13) |
N/M |
|||||||||||||||
Net (loss) gain on sale of assets |
— |
(2) |
— |
1 |
(2) |
2 |
(100) |
% |
2 |
(100) |
% |
|||||||||||||||
Representation and warranty benefit |
4 |
2 |
6 |
6 |
5 |
2 |
100 |
% |
$ |
(1) |
(20) |
% |
||||||||||||||
Other noninterest income (loss) |
9 |
9 |
9 |
9 |
(1) |
— |
— |
% |
$ |
10 |
N/M |
|||||||||||||||
Total noninterest income |
128 |
105 |
97 |
128 |
126 |
23 |
22 |
% |
2 |
2 |
% |
|||||||||||||||
Noninterest Expense |
||||||||||||||||||||||||||
Compensation and benefits |
66 |
68 |
59 |
58 |
59 |
(2) |
(3) |
% |
$ |
7 |
12 |
% |
||||||||||||||
Commissions |
14 |
10 |
8 |
10 |
11 |
4 |
40 |
% |
$ |
3 |
27 |
% |
||||||||||||||
Occupancy and equipment |
21 |
22 |
21 |
20 |
20 |
(1) |
(5) |
% |
$ |
1 |
5 |
% |
||||||||||||||
Asset resolution |
1 |
3 |
2 |
— |
5 |
(2) |
(67) |
% |
$ |
(4) |
(80) |
% |
||||||||||||||
Federal insurance premiums |
3 |
3 |
5 |
6 |
6 |
— |
— |
% |
$ |
(3) |
(50) |
% |
||||||||||||||
Loan processing expense |
15 |
12 |
12 |
14 |
14 |
3 |
25 |
% |
$ |
1 |
7 |
% |
||||||||||||||
Legal and professional expense |
6 |
9 |
9 |
10 |
8 |
(3) |
(33) |
% |
$ |
(2) |
(25) |
% |
||||||||||||||
Other noninterest expense |
13 |
10 |
13 |
13 |
15 |
3 |
30 |
% |
$ |
(2) |
(13) |
% |
||||||||||||||
Total noninterest expense |
139 |
137 |
129 |
131 |
138 |
2 |
2 |
% |
1 |
1 |
% |
|||||||||||||||
Income before income taxes |
69 |
60 |
45 |
71 |
74 |
9 |
15 |
% |
(5) |
(7) |
% |
|||||||||||||||
Provision for income taxes |
22 |
21 |
12 |
24 |
28 |
1 |
5 |
% |
$ |
(6) |
(21) |
% |
||||||||||||||
Net income |
$ |
47 |
$ |
39 |
$ |
33 |
$ |
47 |
$ |
46 |
$ |
8 |
21 |
% |
$ |
1 |
2 |
% |
||||||||
Income per share |
||||||||||||||||||||||||||
Basic |
$ |
0.67 |
$ |
0.56 |
$ |
0.45 |
$ |
0.70 |
$ |
0.69 |
$ |
0.11 |
20 |
% |
$ |
(0.02) |
(3) |
% |
||||||||
Diluted |
$ |
0.66 |
$ |
0.54 |
$ |
0.44 |
$ |
0.69 |
$ |
0.68 |
$ |
0.12 |
22 |
% |
$ |
(0.02) |
(3) |
% |
||||||||
N/M - Not meaningful |
Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) (Unaudited)
|
||||||||||||
Six Months Ended June 30, 2016 |
||||||||||||
Six Months Ended |
Compared to: Six Months Ended June 30, 2015 |
|||||||||||
June 30, |
June 30, |
Amount |
Percent |
|||||||||
Interest Income |
||||||||||||
Total interest income |
$ |
200 |
$ |
169 |
$ |
31 |
18 |
% |
||||
Total interest expense |
44 |
31 |
13 |
42 |
% |
|||||||
Net interest income |
156 |
138 |
18 |
13 |
% |
|||||||
Provision (benefit) for loan losses |
(16) |
(17) |
1 |
(6) |
% |
|||||||
Net interest income after provision for loan losses |
172 |
155 |
17 |
11 |
% |
|||||||
Noninterest Income |
||||||||||||
Net gain on loan sales |
165 |
174 |
(9) |
(5) |
% |
|||||||
Loan fees and charges |
34 |
36 |
(2) |
(6) |
% |
|||||||
Deposit fees and charges |
12 |
12 |
— |
— |
% |
|||||||
Loan administration income |
10 |
11 |
(1) |
(9) |
% |
|||||||
Net (loss) return on the mortgage servicing asset |
(10) |
7 |
(17) |
N/M |
||||||||
Net loss on sale of assets |
(2) |
(2) |
— |
— |
% |
|||||||
Representation and warranty benefit |
6 |
7 |
(1) |
(14) |
% |
|||||||
Other noninterest income |
18 |
— |
18 |
N/M |
||||||||
Total noninterest income |
233 |
245 |
(12) |
(5) |
% |
|||||||
Noninterest Expense |
||||||||||||
Compensation and benefits |
134 |
120 |
14 |
12 |
% |
|||||||
Commissions |
24 |
21 |
3 |
14 |
% |
|||||||
Occupancy and equipment |
43 |
40 |
3 |
8 |
% |
|||||||
Asset resolution |
4 |
13 |
(9) |
(69) |
% |
|||||||
Federal insurance premiums |
6 |
12 |
(6) |
(50) |
% |
|||||||
Loan processing expense |
27 |
26 |
1 |
4 |
% |
|||||||
Legal and professional expense |
15 |
17 |
(2) |
(12) |
% |
|||||||
Other noninterest expense |
23 |
27 |
(4) |
(15) |
% |
|||||||
Total noninterest expense |
276 |
276 |
— |
— |
% |
|||||||
Income before income taxes |
129 |
124 |
5 |
4 |
% |
|||||||
Provision for income taxes |
43 |
46 |
(3) |
(7) |
% |
|||||||
Net income |
$ |
86 |
$ |
78 |
$ |
8 |
10 |
% |
||||
Income per share |
||||||||||||
Basic |
$ |
1.23 |
$ |
1.12 |
$ |
0.11 |
10 |
% |
||||
Diluted |
$ |
1.21 |
$ |
1.11 |
$ |
0.10 |
9 |
% |
||||
N/M - Not meaningful |
Flagstar Bancorp, Inc. |
|||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|||||||||||||||
Mortgage loans originated (1) |
$ |
8,330 |
$ |
6,352 |
$ |
8,448 |
$ |
14,682 |
$ |
15,702 |
|||||||||
Mortgage loans sold and securitized |
$ |
7,940 |
$ |
6,948 |
$ |
7,571 |
$ |
14,888 |
$ |
13,825 |
|||||||||
Interest rate spread (2) |
2.43 |
% |
2.50 |
% |
2.63 |
% |
2.46 |
% |
2.61 |
% |
|||||||||
Net interest margin |
2.63 |
% |
2.66 |
% |
2.79 |
% |
2.64 |
% |
2.77 |
% |
|||||||||
Average common shares outstanding |
56,574,796 |
56,513,715 |
56,436,026 |
56,544,256 |
56,410,880 |
||||||||||||||
Average fully diluted shares outstanding |
57,751,230 |
57,600,984 |
57,165,072 |
57,623,081 |
56,971,133 |
||||||||||||||
Average interest-earning assets |
$ |
11,639 |
$ |
11,871 |
$ |
10,367 |
$ |
11,755 |
$ |
9,897 |
|||||||||
Average interest-paying liabilities |
$ |
9,205 |
$ |
9,823 |
$ |
8,265 |
$ |
9,514 |
$ |
7,887 |
|||||||||
Average stockholders' equity |
$ |
1,606 |
$ |
1,561 |
$ |
1,462 |
$ |
1,583 |
$ |
1,443 |
|||||||||
Return on average assets |
1.38 |
% |
1.16 |
% |
1.57 |
% |
1.27 |
% |
1.38 |
% |
|||||||||
Return on average equity |
11.53 |
% |
10.08 |
% |
12.71 |
% |
10.81 |
% |
10.81 |
% |
|||||||||
Return on average common equity |
13.83 |
% |
12.15 |
% |
15.55 |
% |
13.00 |
% |
13.26 |
% |
|||||||||
Efficiency ratio |
68.2 |
% |
74.5 |
% |
69.6 |
% |
71.2 |
% |
72.1 |
% |
|||||||||
Equity-to-assets ratio (average for the period) |
11.95 |
% |
11.52 |
% |
12.37 |
% |
11.73 |
% |
12.73 |
% |
June 30, |
March 31, |
December 31, 2015 |
June 30, |
||||||||||||
Book value per common share |
$ |
23.48 |
$ |
22.82 |
$ |
22.33 |
$ |
20.98 |
|||||||
Number of common shares outstanding |
56,575,779 |
56,557,895 |
56,483,258 |
56,436,026 |
|||||||||||
Mortgage loans subserviced for others |
$ |
38,000 |
$ |
37,714 |
$ |
40,244 |
$ |
43,292 |
|||||||
Mortgage loans serviced for others |
$ |
30,443 |
$ |
26,613 |
$ |
26,145 |
$ |
27,679 |
|||||||
Weighted average service fee (basis points) |
28.2 |
28.2 |
27.7 |
27.4 |
|||||||||||
Capitalized value of mortgage servicing rights |
0.99 |
% |
1.06 |
% |
1.13 |
% |
1.15 |
% |
|||||||
Mortgage servicing rights to Tier 1 capital |
19.9 |
% |
19.3 |
% |
20.6 |
% |
24.2 |
% |
|||||||
Ratio of allowance for loan losses to LHFI (3) |
2.62 |
% |
2.93 |
% |
3.00 |
% |
4.31 |
% |
|||||||
Ratio of allowance for loan losses to LHFI and loans with government guarantees (3) |
2.43 |
% |
2.70 |
% |
2.78 |
% |
3.86 |
% |
|||||||
Ratio of nonperforming assets to total assets |
0.46 |
% |
0.49 |
% |
0.61 |
% |
0.69 |
% |
|||||||
Equity-to-assets ratio |
11.62 |
% |
11.34 |
% |
11.14 |
% |
11.95 |
% |
|||||||
Common equity-to-assets ratio |
9.68 |
% |
9.40 |
% |
9.20 |
% |
9.76 |
% |
|||||||
Number of bank branches |
99 |
99 |
99 |
100 |
|||||||||||
Number of FTE employees |
2,894 |
2,771 |
2,713 |
2,713 |
|||||||||||
(1) Includes residential first mortgage and second mortgage loans. |
Flagstar Bancorp, Inc. |
|||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, 2016 |
March 31, 2016 |
June 30, 2015 |
June 30, 2016 |
June 30, 2015 |
|||||||||||||||
Net income |
47 |
39 |
46 |
86 |
78 |
||||||||||||||
Deferred cumulative preferred stock dividends |
(8) |
(8) |
(7) |
(16) |
(15) |
||||||||||||||
Net income applicable to Common Stockholders |
$ |
39 |
$ |
31 |
$ |
39 |
$ |
70 |
$ |
63 |
|||||||||
Weighted Average Shares |
|||||||||||||||||||
Weighted average common shares outstanding |
56,574,796 |
56,513,715 |
56,436,026 |
56,544,256 |
56,410,880 |
||||||||||||||
Effect of dilutive securities |
|||||||||||||||||||
Warrants |
349,539 |
305,219 |
299,391 |
327,307 |
266,118 |
||||||||||||||
Stock-based awards |
826,895 |
782,050 |
429,655 |
751,518 |
294,135 |
||||||||||||||
Weighted average diluted common shares |
57,751,230 |
57,600,984 |
57,165,072 |
57,623,081 |
56,971,133 |
||||||||||||||
Earnings per common share |
|||||||||||||||||||
Net income applicable to Common Stockholders |
$ |
0.67 |
$ |
0.56 |
$ |
0.69 |
$ |
1.23 |
$ |
1.12 |
|||||||||
Effect of dilutive securities |
|||||||||||||||||||
Warrants |
— |
— |
— |
— |
— |
||||||||||||||
Stock-based awards |
(0.01) |
(0.02) |
(0.01) |
(0.02) |
(0.01) |
||||||||||||||
Diluted earnings per share |
$ |
0.66 |
$ |
0.54 |
$ |
0.68 |
$ |
1.21 |
$ |
1.11 |
Average Balances, Yields and Rates |
||||||||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||||||||
June 30, 2016 |
March 31, 2016 |
June 30, 2015 |
||||||||||||||||||||||||
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 |
$ |
2,884 |
$ |
26 |
3.64 |
% |
$ |
2,909 |
$ |
28 |
3.81 |
% |
$ |
2,218 |
$ |
21 |
3.80 |
% |
||||||||
Loans held-for-investment |
||||||||||||||||||||||||||
Consumer loans (1) |
2,746 |
24 |
3.48 |
% |
3,314 |
29 |
3.52 |
% |
2,913 |
27 |
3.74 |
% |
||||||||||||||
Commercial loans (1) |
2,823 |
28 |
3.94 |
% |
2,354 |
23 |
3.91 |
% |
2,025 |
21 |
4.03 |
% |
||||||||||||||
Total loans held-for-investment |
5,569 |
52 |
3.71 |
% |
5,668 |
52 |
3.68 |
% |
4,938 |
48 |
3.86 |
% |
||||||||||||||
Loans with government guarantees |
444 |
4 |
3.33 |
% |
475 |
4 |
3.05 |
% |
630 |
5 |
2.97 |
% |
||||||||||||||
Investment securities |
2,558 |
17 |
2.66 |
% |
2,692 |
17 |
2.51 |
% |
2,350 |
15 |
2.55 |
% |
||||||||||||||
Interest-earning deposits |
184 |
— |
0.50 |
% |
127 |
— |
0.52 |
% |
231 |
1 |
0.55 |
% |
||||||||||||||
Total interest-earning assets |
11,639 |
$ |
99 |
3.40 |
% |
11,871 |
$ |
101 |
3.39 |
% |
10,367 |
$ |
90 |
3.42 |
% |
|||||||||||
Other assets |
1,799 |
1,672 |
1,444 |
|||||||||||||||||||||||
Total assets |
$ |
13,438 |
$ |
13,543 |
$ |
11,811 |
||||||||||||||||||||
Interest-Bearing Liabilities |
||||||||||||||||||||||||||
Retail deposits |
||||||||||||||||||||||||||
Demand deposits |
$ |
482 |
$ |
— |
0.17 |
% |
$ |
445 |
$ |
— |
0.13 |
% |
$ |
431 |
$ |
— |
0.14 |
% |
||||||||
Savings deposits |
3,691 |
7 |
0.79 |
% |
3,722 |
7 |
0.79 |
% |
3,752 |
8 |
0.83 |
% |
||||||||||||||
Money market deposits |
363 |
1 |
0.52 |
% |
243 |
— |
0.36 |
% |
242 |
— |
0.26 |
% |
||||||||||||||
Certificates of deposit |
951 |
2 |
1.00 |
% |
856 |
2 |
0.92 |
% |
763 |
2 |
0.71 |
% |
||||||||||||||
Total retail deposits |
5,487 |
10 |
0.75 |
% |
5,266 |
9 |
0.74 |
% |
5,188 |
10 |
0.73 |
% |
||||||||||||||
Government deposits |
||||||||||||||||||||||||||
Demand deposits |
203 |
— |
0.39 |
% |
256 |
— |
0.39 |
% |
210 |
— |
0.40 |
% |
||||||||||||||
Savings deposits |
398 |
— |
0.52 |
% |
419 |
1 |
0.52 |
% |
401 |
1 |
0.52 |
% |
||||||||||||||
Certificates of deposit |
410 |
1 |
0.50 |
% |
412 |
1 |
0.47 |
% |
331 |
— |
0.34 |
% |
||||||||||||||
Total government deposits |
1,011 |
1 |
0.49 |
% |
1,087 |
2 |
0.47 |
% |
942 |
1 |
0.43 |
% |
||||||||||||||
Total interest-bearing deposits |
6,498 |
11 |
0.71 |
% |
6,353 |
11 |
0.69 |
% |
6,130 |
11 |
0.68 |
% |
||||||||||||||
Short-term debt |
835 |
1 |
0.41 |
% |
1,662 |
2 |
0.38 |
% |
— |
— |
— |
% |
||||||||||||||
Long-term debt |
1,625 |
8 |
1.93 |
% |
1,560 |
7 |
1.86 |
% |
1,828 |
4 |
0.90 |
% |
||||||||||||||
Other |
247 |
2 |
3.31 |
% |
248 |
2 |
3.22 |
% |
307 |
2 |
2.38 |
% |
||||||||||||||
Total interest-bearing liabilities |
9,205 |
22 |
0.97 |
% |
9,823 |
22 |
0.89 |
% |
8,265 |
17 |
0.79 |
% |
||||||||||||||
Noninterest-bearing deposits (2) |
2,133 |
1,697 |
1,606 |
|||||||||||||||||||||||
Other liabilities |
494 |
462 |
478 |
|||||||||||||||||||||||
Stockholders' equity |
1,606 |
1,561 |
1,462 |
|||||||||||||||||||||||
Total liabilities and stockholders' equity |
$ |
13,438 |
$ |
13,543 |
$ |
11,811 |
||||||||||||||||||||
Net interest-earning assets |
$ |
2,434 |
$ |
2,048 |
$ |
2,102 |
||||||||||||||||||||
Net interest income |
$ |
77 |
$ |
79 |
$ |
73 |
||||||||||||||||||||
Interest rate spread (3) |
2.43 |
% |
2.50 |
% |
2.63 |
% |
||||||||||||||||||||
Net interest margin (4) |
2.63 |
% |
2.66 |
% |
2.79 |
% |
||||||||||||||||||||
Ratio of average interest-earning assets to interest-bearing liabilities |
126.4 |
% |
120.9 |
% |
125.4 |
% |
||||||||||||||||||||
Total average deposits |
$ |
8,631 |
$ |
8,050 |
$ |
7,736 |
||||||||||||||||||||
(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. |
Average Balances, Yields and Rates |
|||||||||||||||||
Six Months Ended |
|||||||||||||||||
June 30, 2016 |
June 30, 2015 |
||||||||||||||||
Average Balance |
Interest |
Annualized Yield/Rate |
Average Balance |
Interest |
Annualized Yield/Rate |
||||||||||||
Interest-Earning Assets |
|||||||||||||||||
Loans held-for-sale |
$ |
2,897 |
$ |
54 |
3.72 |
% |
$ |
2,031 |
$ |
40 |
3.89 |
% |
|||||
Loans held-for-investment |
|||||||||||||||||
Consumer loans (1) |
3,030 |
53 |
3.50 |
% |
2,765 |
52 |
3.79 |
% |
|||||||||
Commercial loans (1) |
2,588 |
52 |
3.93 |
% |
1,852 |
37 |
3.99 |
% |
|||||||||
Total loans held-for-investment |
5,618 |
105 |
3.70 |
% |
4,617 |
89 |
3.87 |
% |
|||||||||
Loans with government guarantees |
460 |
7 |
3.18 |
% |
747 |
10 |
2.67 |
% |
|||||||||
Investment securities |
2,625 |
34 |
2.59 |
% |
2,232 |
29 |
2.56 |
% |
|||||||||
Interest-earning deposits |
155 |
— |
0.50 |
% |
270 |
1 |
0.49 |
% |
|||||||||
Total interest-earning assets |
11,755 |
$ |
200 |
3.39 |
% |
9,897 |
$ |
169 |
3.40 |
% |
|||||||
Other assets |
1,736 |
1,439 |
|||||||||||||||
Total assets |
$ |
13,491 |
$ |
11,336 |
|||||||||||||
Interest-Bearing Liabilities |
|||||||||||||||||
Retail deposits |
|||||||||||||||||
Demand deposits |
$ |
463 |
$ |
— |
0.15 |
% |
$ |
428 |
$ |
— |
0.14 |
% |
|||||
Savings deposits |
3,706 |
15 |
0.79 |
% |
3,657 |
15 |
0.80 |
% |
|||||||||
Money market deposits |
303 |
1 |
0.45 |
% |
249 |
— |
0.26 |
% |
|||||||||
Certificates of deposit |
904 |
4 |
0.96 |
% |
775 |
3 |
0.69 |
% |
|||||||||
Total retail deposits |
5,376 |
20 |
0.74 |
% |
5,109 |
18 |
0.70 |
% |
|||||||||
Government deposits |
|||||||||||||||||
Demand deposits |
230 |
— |
0.39 |
% |
218 |
— |
0.39 |
% |
|||||||||
Savings deposits |
409 |
1 |
0.52 |
% |
387 |
1 |
0.52 |
% |
|||||||||
Certificates of deposit |
411 |
1 |
0.71 |
% |
344 |
1 |
0.35 |
% |
|||||||||
Total government deposits |
1,050 |
2 |
0.57 |
% |
949 |
2 |
0.43 |
% |
|||||||||
Total interest-bearing deposits |
6,426 |
22 |
0.70 |
% |
6,058 |
20 |
0.66 |
% |
|||||||||
Short-term debt |
1,249 |
3 |
0.40 |
% |
— |
— |
— |
% |
|||||||||
Long-term debt |
1,592 |
15 |
1.91 |
% |
1,497 |
7 |
0.97 |
% |
|||||||||
Other |
247 |
4 |
3.27 |
% |
332 |
4 |
2.28 |
% |
|||||||||
Total interest-bearing liabilities |
9,514 |
44 |
0.93 |
% |
7,887 |
31 |
0.79 |
% |
|||||||||
Noninterest-bearing deposits (2) |
1,915 |
1,495 |
|||||||||||||||
Other liabilities |
479 |
511 |
|||||||||||||||
Stockholders' equity |
1,583 |
1,443 |
|||||||||||||||
Total liabilities and stockholders' equity |
$ |
13,491 |
$ |
11,336 |
|||||||||||||
Net interest-earning assets |
$ |
2,241 |
$ |
2,010 |
|||||||||||||
Net interest income |
$ |
156 |
$ |
138 |
|||||||||||||
Interest rate spread (3) |
2.46 |
% |
2.61 |
% |
|||||||||||||
Net interest margin (4) |
2.64 |
% |
2.77 |
% |
|||||||||||||
Ratio of average interest-earning assets to interest-bearing liabilities |
123.6 |
% |
125.5 |
% |
|||||||||||||
Total average deposits |
$ |
8,341 |
$ |
7,553 |
|||||||||||||
(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. |
Gain on Loan Sales on Loans Held-for-Sale |
|||||||||||||||||||
Three Months Ended |
|||||||||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
|||||||||||||||
(Dollars in millions) |
|||||||||||||||||||
Mortgage rate lock commitments (fallout-adjusted) (1) |
$ |
8,127 |
$ |
6,863 |
$ |
5,027 |
$ |
6,495 |
$ |
6,804 |
|||||||||
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) |
1.04 |
% |
0.96 |
% |
0.92 |
% |
1.05 |
% |
1.22 |
% |
|||||||||
Net gain on loan sales on HFS |
$ |
85 |
$ |
66 |
$ |
46 |
$ |
68 |
$ |
83 |
|||||||||
Net (loss) return on the mortgage servicing rights |
$ |
(4) |
$ |
(6) |
$ |
9 |
$ |
12 |
$ |
9 |
|||||||||
Gain on loan sales HFS + net (loss) return on the MSR |
$ |
81 |
$ |
60 |
$ |
55 |
$ |
80 |
$ |
92 |
|||||||||
Residential loans serviced (number of accounts - 000's) (2) |
358 |
340 |
361 |
369 |
378 |
||||||||||||||
Capitalized value of mortgage servicing rights |
0.99 |
% |
1.06 |
% |
1.13 |
% |
1.12 |
% |
1.15 |
% |
|||||||||
Mortgage rate lock commitments (gross) |
$ |
10,168 |
$ |
8,762 |
$ |
6,258 |
$ |
8,025 |
$ |
8,400 |
|||||||||
Loans sold and securitized |
$ |
7,940 |
$ |
6,948 |
$ |
5,164 |
$ |
7,318 |
$ |
7,571 |
|||||||||
Net margin on loan sales |
1.07 |
% |
0.94 |
% |
0.90 |
% |
0.93 |
% |
1.09 |
% |
|||||||||
(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. |
Six Months Ended |
|||||||
June 30, |
June 30, |
||||||
Mortgage rate lock commitments (fallout-adjusted) (1) |
$ |
14,990 |
$ |
13,989 |
|||
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) |
1.00 |
% |
1.24 |
% |
|||
Net gain on loan sales on HFS |
$ |
151 |
$ |
174 |
|||
Net (loss) return on the mortgage servicing rights |
$ |
(10) |
$ |
7 |
|||
Gain on loan sales HFS + net (loss) return on the MSR |
$ |
141 |
$ |
181 |
|||
Residential loans serviced (number of accounts - 000's) (2) |
358 |
378 |
|||||
Capitalized value of mortgage servicing rights |
0.99 |
% |
1.15 |
% |
|||
Mortgage rate lock commitments (gross) |
$ |
18,930 |
$ |
17,435 |
|||
Loans sold and securitized |
$ |
14,888 |
$ |
13,825 |
|||
Net margin on loan sales |
1.01 |
% |
1.26 |
% |
|||
(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 |
|||||||||||||||||||||||||||||
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
|||||||||||||||||||||||||
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||||
Tier 1 leverage (to adjusted tangible assets) |
$ |
1,514 |
11.59 |
% |
$ |
1,453 |
11.04 |
% |
$ |
1,435 |
11.51 |
% |
$ |
1,393 |
11.65 |
% |
$ |
1,309 |
11.47 |
% |
|||||||||
Total adjusted tangible asset base |
$ |
13,068 |
$ |
13,167 |
$ |
12,474 |
$ |
11,957 |
$ |
11,406 |
|||||||||||||||||||
Tier 1 common equity (to risk weighted assets) |
$ |
1,086 |
13.55 |
% |
$ |
1,032 |
13.96 |
% |
$ |
1,065 |
14.09 |
% |
$ |
1,024 |
14.93 |
% |
$ |
954 |
14.56 |
% |
|||||||||
Tier 1 capital (to risk weighted assets) |
$ |
1,514 |
18.89 |
% |
$ |
1,453 |
19.67 |
% |
$ |
1,435 |
18.98 |
% |
$ |
1,393 |
20.32 |
% |
$ |
1,309 |
19.97 |
% |
|||||||||
Total capital (to risk weighted assets) |
$ |
1,618 |
20.19 |
% |
$ |
1,549 |
20.97 |
% |
$ |
1,534 |
20.28 |
% |
$ |
1,483 |
21.64 |
% |
$ |
1,396 |
21.30 |
% |
|||||||||
Risk weighted asset base |
$ |
8,014 |
$ |
7,387 |
$ |
7,561 |
$ |
6,857 |
$ |
6,553 |
Regulatory Capital - Bank |
|||||||||||||||||||||||||||||
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
|||||||||||||||||||||||||
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||||
Tier 1 leverage (to adjusted tangible assets) |
$ |
1,576 |
12.03 |
% |
$ |
1,509 |
11.43 |
% |
$ |
1,472 |
11.79 |
% |
$ |
1,426 |
11.91 |
% |
$ |
1,337 |
11.70 |
% |
|||||||||
Total adjusted tangible asset base |
$ |
13,102 |
$ |
13,200 |
$ |
12,491 |
$ |
11,975 |
$ |
11,424 |
|||||||||||||||||||
Tier 1 common equity (to risk weighted assets) |
$ |
1,576 |
19.58 |
% |
$ |
1,509 |
20.34 |
% |
$ |
1,472 |
19.42 |
% |
$ |
1,426 |
20.75 |
% |
$ |
1,337 |
20.35 |
% |
|||||||||
Tier 1 capital (to risk weighted assets) |
$ |
1,576 |
19.58 |
% |
$ |
1,509 |
20.34 |
% |
$ |
1,472 |
19.42 |
% |
$ |
1,426 |
20.75 |
% |
$ |
1,337 |
20.35 |
% |
|||||||||
Total capital (to risk weighted assets) |
$ |
1,679 |
20.86 |
% |
$ |
1,605 |
21.63 |
% |
$ |
1,570 |
20.71 |
% |
$ |
1,516 |
22.05 |
% |
$ |
1,423 |
21.66 |
% |
|||||||||
Risk weighted asset base |
$ |
8,048 |
$ |
7,421 |
$ |
7,582 |
$ |
6,874 |
$ |
6,570 |
Loan Originations (Dollars in millions) (Unaudited) |
|||||||||||||||||
Three Months Ended |
|||||||||||||||||
June 30, 2016 |
March 31, 2016 |
June 30, 2015 |
|||||||||||||||
Consumer loans |
|||||||||||||||||
Mortgage (1) |
$ |
8,330 |
97.6 |
% |
$ |
6,352 |
98.3 |
% |
$ |
8,448 |
99.1 |
% |
|||||
Other consumer (2) |
42 |
0.5 |
% |
27 |
0.4 |
% |
33 |
0.4 |
% |
||||||||
Total consumer loans |
8,372 |
98.1 |
% |
6,379 |
98.7 |
% |
8,481 |
99.5 |
% |
||||||||
Commercial loans (3) |
164 |
1.9 |
% |
84 |
1.3 |
% |
40 |
0.5 |
% |
||||||||
Total loan originations |
$ |
8,536 |
100.0 |
% |
$ |
6,463 |
100.0 |
% |
$ |
8,521 |
100.0 |
% |
Six Months Ended |
|||||||||||
June 30, 2016 |
June 30, 2015 |
||||||||||
Mortgage (1) |
$ |
14,682 |
97.8 |
% |
$ |
15,702 |
99.2 |
% |
|||
Other consumer (2) |
69 |
0.5 |
% |
54 |
0.3 |
% |
|||||
Total consumer loans |
14,751 |
98.3 |
% |
15,756 |
99.5 |
% |
|||||
Commercial loans (3) |
248 |
1.7 |
% |
79 |
0.5 |
% |
|||||
Total loan originations |
$ |
14,999 |
100.0 |
% |
$ |
15,835 |
100.0 |
% |
|||
(1) Includes residential first mortgage and second mortgage loans. |
Loans Held-for-Investment |
|||||||||||||||||||||||
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
June 30, 2015 |
||||||||||||||||||||
Consumer loans |
|||||||||||||||||||||||
Residential first mortgage |
$ |
2,075 |
35.6 |
% |
$ |
2,410 |
42.8 |
% |
$ |
3,100 |
48.9 |
% |
$ |
2,495 |
46.7 |
% |
|||||||
Second mortgage |
127 |
2.2 |
% |
129 |
2.3 |
% |
135 |
2.1 |
% |
143 |
2.7 |
% |
|||||||||||
HELOC |
346 |
5.9 |
% |
366 |
6.5 |
% |
384 |
6.0 |
% |
422 |
7.9 |
% |
|||||||||||
Other |
32 |
0.5 |
% |
31 |
0.5 |
% |
31 |
0.5 |
% |
31 |
0.6 |
% |
|||||||||||
Total consumer loans |
2,580 |
44.2 |
% |
2,936 |
52.1 |
% |
3,650 |
57.5 |
% |
3,091 |
57.9 |
% |
|||||||||||
Commercial loans |
|||||||||||||||||||||||
Commercial real estate |
976 |
16.8 |
% |
851 |
15.1 |
% |
814 |
12.8 |
% |
629 |
11.8 |
% |
|||||||||||
Commercial and industrial |
615 |
10.6 |
% |
571 |
10.1 |
% |
552 |
8.7 |
% |
412 |
7.7 |
% |
|||||||||||
Warehouse lending |
1,651 |
28.4 |
% |
1,282 |
22.7 |
% |
1,336 |
21.0 |
% |
1,203 |
22.6 |
% |
|||||||||||
Total commercial loans |
3,242 |
55.8 |
% |
2,704 |
47.9 |
% |
2,702 |
42.5 |
% |
2,244 |
42.1 |
% |
|||||||||||
Total loans held-for-investment |
$ |
5,822 |
100.0 |
% |
$ |
5,640 |
100.0 |
% |
$ |
6,352 |
100.0 |
% |
$ |
5,335 |
100.0 |
% |
Residential Loans Serviced |
|||||||||||||||||||||||
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
June 30, 2015 |
||||||||||||||||||||
Unpaid Principal Balance |
Number of accounts |
Unpaid Principal Balance |
Number of accounts |
Unpaid Principal Balance |
Number of accounts |
Unpaid Principal Balance |
Number of accounts |
||||||||||||||||
Serviced for own loan portfolio (1) |
$ |
5,379 |
29,520 |
$ |
5,293 |
29,078 |
$ |
6,088 |
30,683 |
$ |
5,211 |
28,106 |
|||||||||||
Serviced for others |
30,443 |
134,266 |
26,613 |
118,768 |
26,145 |
118,662 |
27,679 |
124,299 |
|||||||||||||||
Subserviced for others (2) |
38,000 |
194,209 |
37,714 |
192,423 |
40,244 |
211,740 |
43,292 |
225,268 |
|||||||||||||||
Total residential loans serviced |
$ |
73,822 |
357,995 |
$ |
69,620 |
340,269 |
$ |
72,477 |
361,085 |
$ |
76,182 |
377,673 |
|||||||||||
(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. |
Allowance for Loan Losses |
|||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
|||||||||||||||
Beginning balance |
$ |
162 |
$ |
187 |
$ |
253 |
$ |
187 |
$ |
297 |
|||||||||
Provision (benefit) for loan losses |
(3) |
(13) |
(13) |
(16) |
(17) |
||||||||||||||
Charge-offs |
|||||||||||||||||||
Consumer loans |
|||||||||||||||||||
Residential first mortgage |
(8) |
(11) |
(19) |
(19) |
(60) |
||||||||||||||
Second mortgage |
(1) |
(1) |
(1) |
(2) |
(2) |
||||||||||||||
HELOC |
— |
(1) |
— |
(1) |
(1) |
||||||||||||||
Other |
(1) |
(1) |
(1) |
(2) |
(1) |
||||||||||||||
Total charge-offs |
(10) |
(14) |
(21) |
(24) |
(64) |
||||||||||||||
Recoveries |
|||||||||||||||||||
Consumer loans |
|||||||||||||||||||
Residential first mortgage |
1 |
— |
1 |
1 |
2 |
||||||||||||||
Second mortgage |
1 |
— |
1 |
1 |
1 |
||||||||||||||
HELOC |
(1) |
1 |
— |
— |
— |
||||||||||||||
Other |
— |
1 |
1 |
1 |
1 |
||||||||||||||
Total consumer loans |
1 |
2 |
3 |
3 |
4 |
||||||||||||||
Commercial loans |
|||||||||||||||||||
Commercial real estate |
— |
— |
— |
— |
2 |
||||||||||||||
Total recoveries |
1 |
2 |
3 |
3 |
6 |
||||||||||||||
Charge-offs, net of recoveries |
(9) |
(12) |
(18) |
(21) |
(58) |
||||||||||||||
Ending balance |
$ |
150 |
$ |
162 |
$ |
222 |
$ |
150 |
$ |
222 |
|||||||||
Net charge-offs to LHFI ratio (annualized) (1) |
0.62 |
% |
0.86 |
% |
1.49 |
% |
0.74 |
% |
2.63 |
% |
|||||||||
Net charge-offs ratio, adjusted (annualized) (1)(2) |
0.18 |
% |
0.20 |
% |
0.26 |
% |
0.44 |
% |
0.34 |
% |
|||||||||
Net charge-offs to LHFI ratio (annualized) by loan type (1) |
|||||||||||||||||||
Residential first mortgage |
1.42 |
% |
1.50 |
% |
2.91 |
% |
1.46 |
% |
5.09 |
% |
|||||||||
Second mortgage |
0.32 |
% |
4.72 |
% |
1.02 |
% |
2.55 |
% |
1.97 |
% |
|||||||||
HELOC and consumer |
0.69 |
% |
0.69 |
% |
0.41 |
% |
0.69 |
% |
1.32 |
% |
|||||||||
Commercial real estate |
— |
% |
(0.02) |
% |
(0.16) |
% |
(0.01) |
% |
(0.61) |
% |
|||||||||
Commercial and industrial |
(0.02) |
% |
(0.01) |
% |
0.15 |
% |
(0.02) |
% |
0.07 |
% |
|||||||||
(1) Excludes loans carried under the fair value option. |
Representation and Warranty Reserve |
|||||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||||
June 30, 2016 |
March 31, 2016 |
June 30, 2015 |
June 30, 2016 |
June 30, 2015 |
|||||||||||||||||
Balance, beginning of period |
$ |
40 |
$ |
40 |
$ |
53 |
$ |
40 |
$ |
53 |
|||||||||||
Provision (release) |
|||||||||||||||||||||
Charged to gain on sale for current loan sales |
1 |
2 |
2 |
3 |
4 |
||||||||||||||||
Charged to representation and warranty benefit |
(4) |
(2) |
(5) |
(6) |
(7) |
||||||||||||||||
Total |
(3) |
— |
(3) |
(3) |
(3) |
||||||||||||||||
Charge-offs, net |
(1) |
— |
(2) |
(1) |
(2) |
||||||||||||||||
Balance, end of period |
$ |
36 |
$ |
40 |
$ |
48 |
$ |
36 |
$ |
48 |
|||||||||||
Composition of Allowance for Loan Losses |
|||||||||||
June 30, 2016 |
Collectively Evaluated Reserves |
Individually Evaluated Reserves |
Total |
||||||||
Consumer loans |
|||||||||||
Residential first mortgage |
$ |
74 |
$ |
7 |
$ |
81 |
|||||
Second mortgage |
4 |
6 |
10 |
||||||||
HELOC |
17 |
3 |
20 |
||||||||
Other |
1 |
— |
1 |
||||||||
Total consumer loans |
96 |
16 |
112 |
||||||||
Commercial loans |
|||||||||||
Commercial real estate |
19 |
— |
19 |
||||||||
Commercial and industrial |
11 |
— |
11 |
||||||||
Warehouse lending |
8 |
— |
8 |
||||||||
Total commercial loans |
38 |
— |
38 |
||||||||
Total allowance for loan losses |
$ |
134 |
$ |
16 |
$ |
150 |
March 31, 2016 |
Collectively Evaluated Reserves |
Individually Evaluated Reserves |
Total |
||||||||
Consumer loans |
|||||||||||
Residential first mortgage |
$ |
86 |
$ |
9 |
$ |
95 |
|||||
Second mortgage |
5 |
5 |
10 |
||||||||
HELOC |
18 |
2 |
20 |
||||||||
Other |
2 |
— |
2 |
||||||||
Total consumer loans |
111 |
16 |
127 |
||||||||
Commercial loans |
|||||||||||
Commercial real estate |
19 |
— |
19 |
||||||||
Commercial and industrial |
10 |
— |
10 |
||||||||
Warehouse lending |
6 |
— |
6 |
||||||||
Total commercial loans |
35 |
— |
35 |
||||||||
Total allowance for loan losses |
$ |
146 |
$ |
16 |
$ |
162 |
Nonperforming Loans and Assets |
|||||||||||||||
June 30, |
March 31, |
December 31, 2015 |
June 30, |
||||||||||||
Nonperforming loans |
$ |
23 |
$ |
27 |
$ |
31 |
$ |
41 |
|||||||
Nonperforming TDRs |
6 |
6 |
7 |
11 |
|||||||||||
Nonperforming TDRs at inception but performing for less than six months |
15 |
20 |
28 |
13 |
|||||||||||
Total nonperforming loans held-for-investment |
44 |
53 |
66 |
65 |
|||||||||||
Real estate and other nonperforming assets, net |
19 |
14 |
17 |
18 |
|||||||||||
Nonperforming assets held-for-investment, net (1) |
$ |
63 |
$ |
67 |
$ |
83 |
$ |
83 |
|||||||
Ratio of nonperforming assets to total assets |
0.46 |
% |
0.49 |
% |
0.61 |
% |
0.69 |
% |
|||||||
Ratio of nonperforming loans held-for-investment to loans held-for-investment |
0.76 |
% |
0.95 |
% |
1.05 |
% |
1.22 |
% |
|||||||
Ratio of nonperforming assets to loans held-for-investment and repossessed assets |
1.09 |
% |
1.20 |
% |
1.32 |
% |
1.55 |
% |
|||||||
Ratio of nonperforming assets to Tier 1 capital + allowance for loan losses |
3.79 |
% |
4.15 |
% |
5.12 |
% |
5.42 |
% |
|||||||
(1) Does not include nonperforming loans held-for-sale of $5 million, $6 million, $12 million and $14 million at June 30, 2016, March 31, 2016, December 31, 2015 and June 30, 2015, respectively. |
Asset Quality - Loans Held-for-Investment |
|||||||||||||||
30-59 Days Past Due |
60-89 Days Past Due |
Greater than 90 days (1) |
Total Past Due |
Total Investment Loans |
|||||||||||
June 30, 2016 |
|||||||||||||||
Consumer loans |
$ |
5 |
$ |
2 |
$ |
44 |
$ |
51 |
$ |
2,580 |
|||||
Commercial loans |
— |
— |
— |
— |
3,242 |
||||||||||
Total loans |
$ |
5 |
$ |
2 |
$ |
44 |
$ |
51 |
$ |
5,822 |
|||||
March 31, 2016 |
|||||||||||||||
Consumer loans |
$ |
8 |
$ |
3 |
$ |
52 |
$ |
63 |
$ |
2,936 |
|||||
Commercial loans |
— |
— |
1 |
1 |
2,704 |
||||||||||
Total loans |
$ |
8 |
$ |
3 |
$ |
53 |
$ |
64 |
$ |
5,640 |
|||||
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 |
|||||
June 30, 2015 |
|||||||||||||||
Consumer loans |
10 |
6 |
65 |
$ |
81 |
$ |
3,091 |
||||||||
Commercial loans |
— |
— |
— |
— |
2,244 |
||||||||||
Total loans |
$ |
10 |
$ |
6 |
$ |
65 |
$ |
81 |
$ |
5,335 |
|||||
(1) Includes performing nonaccrual loans that are less than 90 days delinquent and for which interest cannot be accrued. |
Troubled Debt Restructurings |
|||||||||||||||
TDRs |
|||||||||||||||
Performing |
Nonperforming |
Nonperforming TDRs at inception but performing for less than six months |
Total |
||||||||||||
June 30, 2016 |
|||||||||||||||
Consumer loans |
$ |
72 |
$ |
6 |
$ |
15 |
$ |
93 |
|||||||
Commercial loans |
1 |
— |
— |
1 |
|||||||||||
Total TDR loans |
$ |
73 |
$ |
6 |
$ |
15 |
$ |
94 |
|||||||
March 31, 2016 |
|||||||||||||||
Consumer loans |
$ |
75 |
$ |
6 |
$ |
19 |
$ |
100 |
|||||||
Commercial loans |
— |
— |
1 |
1 |
|||||||||||
Total TDR loans |
$ |
75 |
$ |
6 |
$ |
20 |
$ |
101 |
|||||||
December 31, 2015 |
|||||||||||||||
Consumer loans |
$ |
101 |
$ |
7 |
$ |
28 |
$ |
136 |
|||||||
Total TDR loans |
$ |
101 |
$ |
7 |
$ |
28 |
$ |
136 |
|||||||
June 30, 2015 |
|||||||||||||||
Consumer loans |
$ |
108 |
$ |
11 |
$ |
13 |
$ |
132 |
|||||||
Total TDR loans |
$ |
108 |
$ |
11 |
$ |
13 |
$ |
132 |
Non-GAAP Reconciliation |
|||||||||||||||
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. The Common Equity Tier 1, Tier 1, Total Capital and Leverage ratios, will not be fully phased-in until January 1, 2018 and the Capital Conservation buffer 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. |
|||||||||||||||
June 30, 2016 |
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) |
$ |
1,086 |
$ |
1,514 |
$ |
1,514 |
$ |
1,618 |
|||||||
Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components |
(233) |
(154) |
(154) |
(153) |
|||||||||||
Basel III (fully phased-in) capital |
$ |
853 |
$ |
1,360 |
$ |
1,360 |
$ |
1,465 |
|||||||
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1) |
|||||||||||||||
Basel III assets (transitional) |
$ |
8,014 |
$ |
13,068 |
$ |
8,014 |
$ |
8,014 |
|||||||
Net change in assets |
40 |
(155) |
40 |
40 |
|||||||||||
Basel III (fully phased-in) assets |
$ |
8,054 |
$ |
12,913 |
$ |
8,054 |
$ |
8,054 |
|||||||
Capital ratios |
|||||||||||||||
Basel III (transitional) |
13.55 |
% |
11.59 |
% |
18.89 |
% |
20.19 |
% |
|||||||
Basel III (fully phased-in) |
10.59 |
% |
10.53 |
% |
16.88 |
% |
18.19 |
% |
|||||||
June 30, 2016 |
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) |
$ |
1,576 |
$ |
1,576 |
$ |
1,576 |
$ |
1,679 |
|||||||
Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components |
(105) |
(105) |
(105) |
(102) |
|||||||||||
Basel III (fully phased-in) capital |
$ |
1,471 |
$ |
1,471 |
$ |
1,471 |
$ |
1,577 |
|||||||
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1) |
|||||||||||||||
Basel III assets (transitional) |
$ |
8,048 |
$ |
13,102 |
$ |
8,048 |
$ |
8,048 |
|||||||
Net change in assets |
230 |
(105) |
230 |
230 |
|||||||||||
Basel III (fully phased-in) assets |
$ |
8,278 |
$ |
12,997 |
$ |
8,278 |
$ |
8,278 |
|||||||
Capital ratios |
|||||||||||||||
Basel III (transitional) |
19.58 |
% |
12.03 |
% |
19.58 |
% |
20.86 |
% |
|||||||
Basel III (fully phased-in) |
17.76 |
% |
11.31 |
% |
17.76 |
% |
19.05 |
% |
|||||||
TARP Redemption. As announced on June 29, 2016, we plan to redeem $267 million of our Fixed Rate Cumulative Perpetual Preferred Stock, Series C (the "TARP Preferred") plus accrued and unpaid dividends of $104 million by July 29, 2016 which will have a material impact on our capital ratios presented below. These measures are considered to be non-GAAP financial measures because they are not formally defined by GAAP. Since analysts and banking regulators may assess our capital adequacy based on this redemption, we believe that it is useful to provide investors information enabling them to assess our capital adequacy on the same basis. |
|||||||
June 30, 2016 |
Common Equity Tier 1 (to Risk Weighted Assets) |
Tier 1 Leverage (to Adjusted Tangible Assets) |
|||||
Flagstar Bancorp (the Company) |
(Dollars in millions) (Unaudited) |
||||||
Regulatory capital |
$ |
1,086 |
$ |
1,514 |
|||
TARP redemption |
(112) |
(378) |
|||||
Adjusted regulatory capital |
$ |
974 |
$ |
1,136 |
|||
Risk-weighted assets |
$ |
8,014 |
$ |
13,068 |
|||
TARP redemption |
(9) |
150 |
|||||
Adjusted risk-weighted assets |
$ |
8,005 |
$ |
13,218 |
|||
Regulatory capital ratio |
13.55 |
% |
11.59 |
% |
|||
Adjusted regulatory capital ratio for TARP Redemption |
12.17 |
% |
8.59 |
% |
SOURCE Flagstar Bancorp, Inc.
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