Flagstar Bancorp Reports Third Quarter 2022 Net Income of $73 Million, or $1.35 Per Diluted Share
Key Highlights - Third Quarter 2022
- Generated adjusted net income of $75 million, or $1.41 per diluted share, excluding merger-related costs.
- Expanded net interest margin by 29 basis points to 3.98 percent for the quarter and 4.07 percent for September.
- Grew average commercial loans, excluding warehouse loans, by 15 percent compared to the second quarter.
- Yielded an annualized 12 percent return on our mortgage servicing rights asset.
- Produced a 1.2 percent return on assets.
- Reduced noninterest expense by $20 million and improved the efficiency ratio by 8 percent.
- Maintained strong asset quality with no nonperforming commercial loans.
TROY, Mich., Oct. 26, 2022 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC) today reported third quarter 2022 adjusted net income of $75 million, or $1.41 per diluted share, compared to second quarter 2022 adjusted net income of $63 million, or $1.17 per diluted share.
"Once again, our results for the quarter demonstrate the business model we built is working just as it was designed to work," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp.
"Overall, all lines of business contributed to earnings growth of 22 percent compared to the second quarter, leading to a strong 1.2 percent return on assets. Our Community bank grew non-warehouse commercial loans by 15 percent and drove new all-time highs for net interest income and net interest margin. Servicing exceeded 1.4 million in serviced and subserviced accounts. Mortgage remained profitable despite unrelenting challenges as our team responded well by managing costs.
"Most noteworthy—and where we continued to shine—is the growth in our net interest margin, which increased 29 basis points for the third quarter to 3.98 percent — a new record for our highest core net interest margin ever, and to 4.07 percent for September – another record. As a result, net interest income grew $26 million, or 13 percent.
"Credit quality continues to hold up well with no nonperforming commercial loans and low levels of delinquency. We also continued to see improvements in forbearance-related delinquencies.
"I couldn't be prouder of how our team has performed. Our results this quarter again showed our ability to find ways to deliver profitability in any economic environment, as all elements of our team came together to deliver their very best."
Income Statement Highlights | |||||
Three Months Ended | |||||
September 30, | June 30, | March 31, | December 31, | September 30, | |
(Dollars in millions, except per share data) | |||||
Net interest income | $ 219 | $ 193 | $ 165 | $ 181 | $ 195 |
Provision (benefit) for credit losses | 5 | (9) | (4) | (17) | (23) |
Noninterest income | 114 | 131 | 160 | 202 | 266 |
Noninterest expense | 236 | 256 | 261 | 291 | 286 |
Income before income taxes | 92 | 77 | 68 | 109 | 198 |
Provision for income taxes | 19 | 17 | 15 | 24 | 46 |
Net income | $ 73 | $ 60 | $ 53 | $ 85 | $ 152 |
Income per share: | |||||
Basic | $ 1.36 | $ 1.13 | $ 0.99 | $ 1.62 | $ 2.87 |
Diluted | $ 1.35 | $ 1.12 | $ 0.99 | $ 1.60 | $ 2.83 |
Adjusted Income Statement Highlights (Non-GAAP)(1) | |||||
Three Months Ended | |||||
September 30, | June 30, | March 31, | December 31, | September 30, | |
(Dollars in millions, except per share data) | |||||
Net interest income | $ 219 | $ 193 | $ 165 | $ 181 | $ 195 |
Provision (benefit) for credit losses | 5 | (9) | (4) | (17) | (23) |
Noninterest income | 114 | 131 | 160 | 202 | 266 |
Noninterest expense | 233 | 253 | 258 | 285 | 281 |
Income before income taxes | 95 | 80 | 71 | 115 | 203 |
Provision for income taxes | 20 | 17 | 16 | 25 | 47 |
Net income | $ 75 | $ 63 | $ 55 | $ 90 | $ 156 |
Income per share: | |||||
Basic | $ 1.42 | $ 1.18 | $ 1.03 | $ 1.71 | $ 2.94 |
Diluted | $ 1.41 | $ 1.17 | $ 1.02 | $ 1.69 | $ 2.90 |
(1) See Non-GAAP Reconciliation for further information. |
Key Ratios | |||||
Three Months Ended | |||||
September 30, | June 30, | March 31, | December 31, | September 30, | |
Net interest margin | 3.98 % | 3.69 % | 3.11 % | 2.96 % | 3.00 % |
Return on average assets | 1.2 % | 1.0 % | 0.9 % | 1.3 % | 2.2 % |
Return on average common equity | 10.4 % | 8.7 % | 7.9 % | 12.7 % | 23.4 % |
Efficiency ratio | 70.9 % | 79.1 % | 80.4 % | 75.9 % | 62.2 % |
HFI loan-to-deposit ratio | 85.0 % | 76.3 % | 68.5 % | 67.2 % | 68.8 % |
Adjusted HFI loan-to-deposit ratio (1) | 88.5 % | 71.9 % | 64.1 % | 60.5 % | 60.3 % |
(1) Excludes warehouse loans and custodial deposits. See Non-GAAP Reconciliation for further information. |
Average Balance Sheet Highlights | |||||||
Three Months Ended | % Change | ||||||
September 30, | June 30, | March 31, | June 30, | September 30, | Seq | Yr/Yr | |
(Dollars in millions) | |||||||
Average interest-earning assets | $ 21,905 | $ 20,958 | $ 21,569 | $ 24,291 | $ 25,656 | 5 % | (15) % |
Average loans held-for-sale (LHFS) | 2,976 | 3,571 | 4,833 | 6,384 | 7,839 | (17) % | (62) % |
Average loans held-for-investment (LHFI) | 14,640 | 13,339 | 12,384 | 13,314 | 13,540 | 10 % | 8 % |
Average total deposits | 17,216 | 17,488 | 18,089 | 19,816 | 19,686 | (2) % | (13) % |
Net Interest Income
Net interest income in the third quarter was $219 million, an increase of $26 million, or 13 percent, as compared to the second quarter 2022. The results primarily reflect a $0.9 billion, or 5 percent, increase in average earning assets along with an increase in net interest margin. We grew our loans held for investment by $1.3 billion, led by our residential mortgage and commercial portfolios. This growth was partially offset by a $0.6 billion decrease in our mortgage loans held-for-sale as a result of lower mortgage volume.
Net interest margin in the third quarter was 3.98 percent, a 29 basis points increase compared to 3.69 percent in the prior quarter. The net interest margin rose every month in the quarter with a September net interest income of 4.07 percent which is largely attributable to our asset sensitivity and our management of deposit costs.
Average total deposits were $17.2 billion in the third quarter, down $0.3 billion, or 2 percent, from the second quarter 2022, largely due to a decrease of $0.3 billion, or 4 percent, in average retail deposits. Total interest-bearing deposit costs increased only 15 basis points compared to short term market rates increasing 135 basis points.
Provision for Credit Losses
The provision for credit losses was $5 million for the third quarter, as compared to a $9 million benefit for the second quarter 2022. The third quarter net provision was driven by an increase to the reserve due to HFI loan growth which was focused in well collateralized portfolios. The strong performance of our portfolio continued with a low number of consumer non-accrual loans and no commercial non-accrual loans at September 30, 2022.
Noninterest Income
Noninterest income decreased to $114 million in the third quarter, as compared to $131 million for the second quarter 2022, primarily due to lower loan administration and fee income.
Third quarter net gain on loan sales increased $5 million, to $32 million, as compared to $27 million in the second quarter 2022. Gain on sale margins increased 27 basis points to 66 basis points for the third quarter 2022, compared to 39 basis points for the second quarter 2022. The improved result was driven by improved secondary marketing performance which was partially offset by a 32 percent decline in fallout-adjusted locks.
Our mortgage servicing rights portfolio yielded an annualized 12 percent return for the quarter. The net return on mortgage servicing rights increased $4 million to $26 million for the third quarter 2022, compared to a $22 million net return for the second quarter 2022. We grew the MSR asset by $213 million and our return benefited from our partial hedge position, which we transitioned to a fully hedged position as rates rose during the quarter.
Loan administration income was $18 million for the third quarter 2022, as compared to $33 million for the second quarter 2022. The decline in income was driven primarily by higher LIBOR-based fee credits paid on custodial deposits that are subserviced.
Loan fees and charges decreased $9 million to $20 million for the third quarter, compared to $29 million for the second quarter 2022, primarily due to lower originations and lower ancillary fee income driven by lower loss mitigation fees associated with loans coming out of forbearance.
Mortgage Metrics | |||||||
As of/Three Months Ended | Change (% / bps) | ||||||
September 30, | June 30, | March 31, | December 31, | September 30, | Seq | Yr/Yr | |
(Dollars in millions) | |||||||
Mortgage rate lock commitments (fallout-adjusted) (1) (2) | $ 4,800 | $ 7,100 | $ 7,700 | $ 8,900 | $ 11,300 | (32) % | (58) % |
Mortgage loans closed (1) | $ 6,900 | $ 7,700 | $ 8,200 | $ 10,700 | $ 12,500 | (11) % | (45) % |
Net margin on mortgage rate lock commitments (fallout-adjusted) (2) | 0.66 % | 0.39 % | 0.58 % | 1.02 % | 1.50 % | 27 | (84) |
Net gain on loan sales | $ 32 | $ 27 | $ 45 | $ 91 | $ 169 | 19 % | (81) % |
Net return on mortgage servicing rights (MSR) | $ 26 | $ 22 | $ 29 | $ 19 | $ 9 | N/M | N/M |
Gain on loan sales + net return on the MSR | $ 58 | $ 49 | $ 74 | $ 110 | $ 178 | 18 % | (67) % |
Loans serviced (number of accounts - 000's) (3) | 1,421 | 1,383 | 1,256 | 1,234 | 1,203 | 3 % | 18 % |
Capitalized value of MSRs | 1.51 % | 1.50 % | 1.31 % | 1.12 % | 1.08 % | 1 | 43 |
N/M - Not meaningful | |||||||
(1) Rounded to the nearest hundred million | |||||||
(2) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based | |||||||
(3) Includes loans serviced for Flagstar's own loan portfolio, serviced for others, and subserviced for others. | |||||||
Noninterest Expense
Noninterest expense decreased to $236 million for the third quarter, compared to $256 million for the second quarter 2022. Excluding $3 million of merger costs in the second and third quarter of 2022, noninterest expense decreased $20 million, or 8 percent, primarily driven by our actions taken to reduce scale in the mortgage business.
Mortgage expenses were $80 million for the third quarter, a decrease of $10 million compared to the prior quarter. The ratio of mortgage expenses to closings—our mortgage expense ratio— was 1.12 percent, a decrease of 2 basis points from the second quarter 2022. The reduction in expense was primarily driven by the actions we have taken to reduce mortgage costs. Additionally, we have taken a significant cost cutting measure at the end of the quarter to reduce our mortgage workforce by another 7 percent.
The efficiency ratio was 71 percent for the third quarter, as compared to 79 percent for the second quarter 2022. Excluding $3 million of merger expenses in the third quarter of 2022, the adjusted efficiency ratio was 70 percent and 78 percent, respectively.
Income Taxes
The third quarter provision for income taxes totaled $19 million, with an effective tax rate of 21.3 percent, compared to an effective tax rate of 21.7 percent for the second quarter 2022.
Asset Quality
Credit Quality Ratios | |||||||
As of/Three Months Ended | Change (% / bps) | ||||||
September 30, | June 30, | March 31, | December 31, | September 30, | Seq | Yr/Yr | |
(Dollars in millions) | |||||||
Allowance for credit losses (1) | $ 140 | $ 135 | $ 145 | $ 170 | $ 190 | 4 % | (26) % |
Credit reserves to LHFI | 0.89 % | 0.92 % | 1.10 % | 1.27 % | 1.33 % | (3) | -44 |
Credit reserves to LHFI excluding warehouse | 1.14 % | 1.27 % | 1.64 % | 1.96 % | 2.29 % | (13) | (115) |
Net charge-offs | $ — | $ 1 | $ 21 | $ 3 | $ 6 | (100) % | (100) % |
Total nonperforming LHFI and TDRs | $ 94 | $ 99 | $ 107 | $ 94 | $ 96 | (5) % | (2) % |
Net charge-offs to LHFI ratio (annualized) | — % | 0.03 % | 0.69 % | 0.08 % | 0.19 % | (3) | (19) |
Ratio of nonperforming LHFI and TDRs to LHFI | 0.59 % | 0.68 % | 0.80 % | 0.70 % | 0.66 % | (9) | (7) |
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (2): | |||||||
Residential first mortgage | 0.06 % | 0.12 % | 0.31 % | 0.04 % | — % | (6) | 6 |
Home equity and other consumer | 0.24 % | 0.09 % | 0.07 % | 0.14 % | 0.01 % | 15 | 23 |
Commercial real estate | — % | — % | — % | — % | 0.03 % | — | (3) |
Commercial and industrial | (0.24) % | 0.02 % | 4.31 % | 0.53 % | 1.87 % | (26) | (211) |
N/M - Not meaningful | |||||||
(1) | Includes the allowance for loan losses and the reserve on unfunded commitments. | |
(2) | Excludes loans carried under the fair value option. |
Our portfolio continues to exhibit strong credit quality that resulted in a small net recovery in the third quarter 2022. This compares to net charge-offs of $1 million, or 3 basis points, in the prior quarter.
Nonperforming loans held-for-investment and troubled debt restructurings (TDRs) were $94 million at the end of the third quarter, a decrease of $5 million as compared to the second quarter 2022. Our ratio of nonperforming loans held-for-investment and TDRs to loans held-for-investment was 0.59% basis points at September 30, 2022, a 9 basis point decrease compared to June 30, 2022. At September 30, 2022, early stage loan delinquencies totaled $34 million, or 22 basis points of total loans, compared to $22 million, or 15 basis points, at June 30, 2022.
The allowance for credit losses was $140 million and covered 0.89 percent of loans held-for-investment at September 30, 2022, a 3 basis point decrease from June 30, 2022. Excluding warehouse loans, the allowance coverage ratio was 1.14 percent, a 13 basis point decrease from June 30, 2022. The increase in the allowance for credit losses reflects growth in our HFI loan portfolio. Loan growth occurred in well-collateralized portfolios, including $944 million in residential first mortgage and $340 million in MSR loans (included in our C&I portfolio) which have lower reserve levels. The impact of this loan growth was partially offset by reductions in our reserves related to residential first mortgages, consumer loans and our loans with government guarantees as a result of pay-offs and improvements in the delinquency trends of expired forbearance loans. Overall, our portfolio quality remains solid with low levels of nonperforming loans and low delinquency levels, including no commercial nonperforming loans.
Capital
Capital Ratios (Bancorp) | Change (% / bps) | ||||||
September 30, | June 30, | March 31, | December 31, | September 30, | Seq | Yr/Yr | |
Tier 1 leverage (to adj. avg. total assets) | 11.06 % | 12.17 % | 11.83 % | 10.54 % | 9.72 % | (111) | 134 |
Tier 1 common equity (to RWA) | 11.97 % | 13.22 % | 13.89 % | 13.19 % | 11.95 % | (125) | 2 |
Tier 1 capital (to RWA) | 13.11 % | 14.41 % | 15.17 % | 14.43 % | 13.11 % | (130) | — |
Total capital (to RWA) | 14.32 % | 15.68 % | 16.59 % | 15.88 % | 14.55 % | (136) | (23) |
Tangible common equity to asset ratio (1) | 9.73 % | 10.25 % | 11.13 % | 10.09 % | 9.23 % | (52) | 50 |
Tangible book value per share (1) | $ 46.42 | $ 47.83 | $ 48.61 | $ 48.33 | $ 47.21 | (3) % | (2) % |
(1) See Non-GAAP Reconciliation for further information. |
We maintained a strong capital position with regulatory ratios above current regulatory quantitative guidelines for "well capitalized" institutions. Further demonstrating our capital strength, the capital ratios are impacted by a 100 percent risk-weighting of the warehouse loan portfolio—the largest component of the held-for-investment portfolio. Adjusting the risk-weighting of warehouse loans to 50 percent because of historically low levels of losses from this portfolio, coupled with the fact that the portfolio is fully collateralized with assets that would receive a 50 percent risk weighting, we would have had a Tier 1 common equity ratio of 12.97 percent and a total risk-based capital ratio of 15.52 percent at September 30, 2022.
Tangible book value per share declined to $46.42, down $1.41, or 3 percent from last quarter due to a $150 million decline in other comprehensive income primarily driven by the impact of higher interest rates on our investment securities portfolio.
About Flagstar
Flagstar Bancorp, Inc. (NYSE: FBC) is a $25.4 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 158 branches in Michigan, Indiana, California, Wisconsin and Ohio. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 81 retail locations in 26 states. Flagstar is a leading national originator and servicer of mortgage and other consumer loans, handling payments and record keeping for $360 billion of loans representing more than 1.4 million borrowers. For more information, please visit flagstar.com.
Use of Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this news release includes certain non-GAAP financial measures. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar.
Non-GAAP financial measures have inherent limitations. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. Flagstar's method of calculating these non-GAAP measures may differ from methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements.
Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in this news release. Additional discussion of the use of non-GAAP measures can also be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company's website at flagstar.com.
Cautionary Statements Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward‐looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Flagstar's beliefs, goals, intentions, and expectations regarding revenues, earnings, loan production, asset quality, capital levels, and acquisitions, among other matters; Flagstar's estimates of future costs and benefits of the actions each company may take; Flagstar's assessments of probable losses on loans; Flagstar's assessments of interest rate and other market risks; and Flagstar's ability to achieve its respective financial and other strategic goals. Forward‐looking statements are typically identified by such words as "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "should," and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. Forward‐looking statements speak only as of the date they are made; Flagstar does not assume any duty, and does not undertake, to update such forward‐looking statements. Furthermore, because forward‐looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements depending upon various factors as described in the "Risk Factors" section in Flagstar's Annual Report on Form 10-K for the year ended December 31, 2021 and in Flagstar's other filings with SEC, which are available at http://www.sec.gov and in the "Documents" section of Flagstar's website, https://investors.flagstar.com.
Flagstar Bancorp, Inc. | |||||||
September 30, | June 30, | December 31, | September 30, | ||||
Assets | |||||||
Cash | $ 313 | $ 198 | $ 277 | $ 103 | |||
Interest-earning deposits | 105 | 237 | 774 | 46 | |||
Total cash and cash equivalents | 418 | 435 | 1,051 | 149 | |||
Investment securities available-for-sale | 2,627 | 2,346 | 1,804 | 1,802 | |||
Investment securities held-to-maturity | 159 | 173 | 205 | 236 | |||
Loans held-for-sale | 1,830 | 3,482 | 5,054 | 6,378 | |||
Loans held-for-investment | 15,793 | 14,655 | 13,408 | 14,268 | |||
Loans with government guarantees | 1,370 | 1,144 | 1,650 | 1,945 | |||
Less: allowance for loan losses | (126) | (122) | (154) | (171) | |||
Total loans held-for-investment and loans with government guarantees, net | 17,037 | 15,677 | 14,904 | 16,042 | |||
Mortgage servicing rights | 1,026 | 622 | 392 | 340 | |||
Federal Home Loan Bank stock | 329 | 329 | 377 | 377 | |||
Premises and equipment, net | 354 | 354 | 360 | 370 | |||
Goodwill and intangible assets | 140 | 142 | 147 | 149 | |||
Bank-owned life insurance | 372 | 370 | 365 | 363 | |||
Other assets | 1,151 | 969 | 824 | 836 | |||
Total assets | $ 25,443 | $ 24,899 | $ 25,483 | $ 27,042 | |||
Liabilities and Stockholders' Equity | |||||||
Noninterest-bearing deposits | $ 6,802 | $ 6,664 | $ 7,088 | $ 8,108 | |||
Interest-bearing deposits | 9,789 | 9,984 | 10,921 | 11,228 | |||
Total deposits | 16,591 | 16,648 | 18,009 | 19,336 | |||
Short-term Federal Home Loan Bank advances and other | 3,450 | 3,301 | 1,880 | 1,870 | |||
Long-term Federal Home Loan Bank advances | 1,000 | 700 | 1,400 | 1,400 | |||
Other long-term debt | 390 | 394 | 396 | 396 | |||
Loan with government guarantees repurchase liability | 156 | 101 | 200 | 163 | |||
Other liabilities | 1,240 | 1,062 | 880 | 1,232 | |||
Total liabilities | 22,827 | 22,206 | 22,765 | 24,397 | |||
Stockholders' Equity | |||||||
Common stock | 1 | 1 | 1 | 1 | |||
Additional paid in capital | 1,361 | 1,358 | 1,355 | 1,362 | |||
Accumulated other comprehensive income | (249) | (99) | 35 | 38 | |||
Retained earnings | 1,503 | 1,433 | 1,327 | 1,244 | |||
Total stockholders' equity | 2,616 | 2,693 | 2,718 | 2,645 | |||
Total liabilities and stockholders' equity | $ 25,443 | $ 24,899 | $ 25,483 | $ 27,042 | |||
Flagstar Bancorp, Inc. | |||||||||||
Change compared to: | |||||||||||
Three Months Ended | 2Q22 | 3Q21 | |||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | Amount | Percent | Amount | Percent | |||
Interest Income | |||||||||||
Total interest income | $ 254 | $ 209 | $ 177 | $ 196 | $ 209 | $ 45 | 22 % | $ 45 | 22 % | ||
Total interest expense | 35 | 16 | 12 | 15 | 14 | 19 | 119 % | 21 | 150 % | ||
Net interest income | 219 | 193 | 165 | 181 | 195 | 26 | 13 % | 24 | 12 % | ||
Provision (benefit) for credit losses | 5 | (9) | (4) | (17) | (23) | 14 | N/M | 28 | (122) % | ||
Net interest income after | 214 | 202 | 169 | 198 | 218 | 12 | 6 % | (4) | (2) % | ||
Noninterest Income | |||||||||||
Net gain on loan sales | 32 | 27 | 45 | 91 | 169 | 5 | 19 % | (137) | (81) % | ||
Loan fees and charges | 20 | 29 | 27 | 29 | 33 | (9) | (31) % | (13) | (39) % | ||
Net return on the mortgage | 26 | 22 | 29 | 19 | 9 | 4 | 18 % | 17 | N/M | ||
Loan administration income | 18 | 33 | 33 | 36 | 31 | (15) | (45) % | (13) | (42) % | ||
Deposit fees and charges | 8 | 9 | 9 | 8 | 9 | (1) | (11) % | (1) | (11) % | ||
Other noninterest income | 10 | 11 | 17 | 19 | 15 | (1) | (9) % | (5) | (33) % | ||
Total noninterest income | 114 | 131 | 160 | 202 | 266 | (17) | (13) % | (152) | (57) % | ||
Noninterest Expense | |||||||||||
Compensation and benefits | 113 | 122 | 127 | 137 | 130 | (9) | (7) % | (17) | (13) % | ||
Occupancy and equipment | 45 | 46 | 45 | 47 | 46 | (1) | (2) % | (1) | (2) % | ||
Commissions | 15 | 22 | 26 | 38 | 44 | (7) | (32) % | (29) | (66) % | ||
Loan processing expense | 21 | 23 | 21 | 21 | 22 | (2) | (9) % | (1) | (5) % | ||
Legal and professional | 11 | 10 | 11 | 13 | 12 | 1 | 10 % | (1) | (8) % | ||
Federal insurance premiums | 4 | 4 | 4 | 4 | 6 | — | — % | (2) | (33) % | ||
Intangible asset | 2 | 3 | 2 | 3 | 3 | (1) | (33) % | (1) | (33) % | ||
Other noninterest expense | 25 | 26 | 25 | 28 | 23 | (1) | (4) % | 2 | 9 % | ||
Total noninterest expense | 236 | 256 | 261 | 291 | 286 | (20) | (8) % | (50) | (17) % | ||
Income before income taxes | 92 | 77 | 68 | 109 | 198 | 15 | 19 % | (106) | (54) % | ||
Provision for income taxes | 19 | 17 | 15 | 24 | 46 | 2 | 12 % | (27) | (59) % | ||
Net income | $ 73 | $ 60 | $ 53 | $ 85 | $ 152 | $ 13 | 22 % | $ (79) | (52) % | ||
Income per share | |||||||||||
Basic | $ 1.36 | $ 1.13 | $ 0.99 | $ 1.62 | $ 2.87 | $ 0.23 | 20 % | $ (1.51) | (53) % | ||
Diluted | $ 1.35 | $ 1.12 | $ 0.99 | $ 1.60 | $ 2.83 | $ 0.23 | 21 % | $ (1.48) | (52) % | ||
Cash dividends declared | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.06 | $ — | — % | $ — | — % | ||
N/M - Not meaningful | |||||||||||
Flagstar Bancorp, Inc. | |||||||
Nine Months Ended | Change | ||||||
September 30, | September 30, | Amount | Percent | ||||
Interest Income | |||||||
Total interest income | $ 640 | $ 614 | $ 26 | 4 % | |||
Total interest expense | 63 | 48 | 15 | 31 % | |||
Net interest income | 577 | 566 | 11 | 2 % | |||
(Benefit) provision for credit losses | (8) | (95) | 87 | N/M | |||
Net interest income after provision for credit losses | 585 | 661 | (76) | (11) % | |||
Noninterest Income | |||||||
Net gain on loan sales | 104 | 564 | (460) | (82) % | |||
Loan fees and charges | 76 | 112 | (36) | (32) % | |||
Net return (loss) on the mortgage servicing rights | 77 | 4 | 73 | 1,825 % | |||
Loan administration income | 84 | 85 | (1) | (1) % | |||
Deposit fees and charges | 26 | 26 | — | — % | |||
Other noninterest income | 38 | 51 | (13) | (25) % | |||
Total noninterest income | 405 | 842 | (437) | (52) % | |||
Noninterest Expense | |||||||
Compensation and benefits | 362 | 396 | (34) | (9) % | |||
Occupancy and equipment | 136 | 141 | (5) | (4) % | |||
Commissions | 63 | 156 | (93) | (60) % | |||
Loan processing expense | 65 | 65 | — | — % | |||
Legal and professional expense | 32 | 32 | — | — % | |||
Federal insurance premiums | 12 | 16 | (4) | (25) % | |||
Intangible asset amortization | 7 | 8 | (1) | (13) % | |||
Other noninterest expense | 76 | 108 | (32) | (30) % | |||
Total noninterest expense | 753 | 922 | (169) | (18) % | |||
Income before income taxes | 237 | 581 | (344) | (59) % | |||
Provision for income taxes | 51 | 133 | (82) | (62) % | |||
Net income | $ 186 | $ 448 | $ (262) | (58) % | |||
Income per share | |||||||
Basic | $ 3.49 | $ 8.48 | $ (4.99) | (59) % | |||
Diluted | $ 3.47 | $ 8.37 | $ (4.90) | (59) % | |||
Cash dividends declared | $ 0.18 | $ 0.18 | $ — | — % | |||
N/M - Not meaningful | |||||||
Flagstar Bancorp, Inc. | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | |||||
Selected Mortgage Statistics (1): | |||||||||
Mortgage rate lock commitments (fallout-adjusted) (2) | $ 4,800 | $ 7,100 | $ 11,300 | $ 11,800 | $ 36,000 | ||||
Mortgage loans closed | $ 6,900 | $ 7,700 | $ 12,500 | $ 14,600 | $ 39,100 | ||||
Mortgage loans sold and securitized | $ 7,200 | $ 6,900 | $ 12,400 | $ 14,100 | $ 40,100 | ||||
Selected Ratios: | |||||||||
Interest rate spread (3) | 3.62 % | 3.47 % | 2.84 % | 3.33 % | 2.70 % | ||||
Net interest margin | 3.98 % | 3.69 % | 3.00 % | 3.60 % | 2.90 % | ||||
Net margin on loans sold and securitized | 0.4 % | 0.4 % | 1.4 % | 0.7 % | 1.4 % | ||||
Return on average assets | 1.2 % | 1.0 % | 2.2 % | 1.0 % | 2.1 % | ||||
Adjusted return on average assets (4) | 1.2 % | 1.1 % | 2.2 % | 1.1 % | 2.2 % | ||||
Return on average common equity | 10.4 % | 8.7 % | 23.4 % | 9.0 % | 24.3 % | ||||
Return on average tangible common equity (5) | 11.2 % | 9.5 % | 25.2 % | 9.8 % | 24.7 % | ||||
Adjusted return on average tangible common equity (4) (5) | 11.9 % | 10.1 % | 26.2 % | 10.4 % | 27.2 % | ||||
Efficiency ratio | 70.9 % | 79.1 % | 62.2 % | 76.7 % | 65.5 % | ||||
Adjusted efficiency ratio (4) | 69.8 % | 78.1 % | 61.1 % | 75.8 % | 62.8 % | ||||
Common equity-to-assets ratio (average for the period) | 11.1 % | 11.5 % | 9.2 % | 11.2 % | 8.6 % | ||||
Average Balances: | |||||||||
Average interest-earning assets | $ 21,905 | $ 20,958 | $ 25,656 | $ 21,479 | $ 26,029 | ||||
Average interest-bearing liabilities | $ 14,075 | $ 12,889 | $ 15,590 | $ 13,313 | $ 15,083 | ||||
Average stockholders' equity | $ 2,785 | $ 2,754 | $ 2,592 | $ 2,742 | $ 2,454 | ||||
(1) | Rounded to nearest hundred million. | |
(2) | Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates. | |
(3) | Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities. | |
(4) | See Non-GAAP Reconciliation for further information. | |
(5) | Excludes goodwill, intangible assets and the associated amortization. See Non-GAAP Reconciliation for further information. |
September 30, | June 30, | December 31, | September 30, | ||||
Selected Statistics: | |||||||
Book value per common share | $ 49.05 | $ 50.50 | $ 51.09 | $ 50.04 | |||
Tangible book value per share (1) | $ 46.42 | $ 47.83 | $ 48.33 | $ 47.21 | |||
Number of common shares outstanding | 53,330,827 | 53,329,993 | 53,197,650 | 52,862,383 | |||
Number of FTE employees | 4,911 | 5,036 | 5,395 | 5,461 | |||
Number of bank branches | 158 | 158 | 158 | 158 | |||
Ratio of nonperforming assets to total assets (2) | 0.39 % | 0.42 % | 0.39 % | 0.37 % | |||
Common equity-to-assets ratio | 10.3 % | 10.8 % | 10.7 % | 9.8 % | |||
MSR Key Statistics and Ratios: | |||||||
Weighted average service fee (basis points) | 30.8 | 31.7 | 31.5 | 32.1 | |||
Capitalized value of mortgage servicing rights | 1.51 % | 1.50 % | 1.12 % | 1.08 % |
(1) | Excludes goodwill and intangibles. See Non-GAAP Reconciliation for further information. | |
(2) | Ratio excludes LHFS. |
Average Balances, Yields and Rates | |||||||||||
Three Months Ended | |||||||||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | |||||||||
Average | Interest | Annualized | Average Balance | Interest | Annualized | Average | Interest | Annualized | |||
Interest-Earning Assets | |||||||||||
Loans held-for-sale | $ 2,976 | $ 34 | 4.58 % | $ 3,571 | $ 36 | 4.10 % | $ 7,839 | $ 63 | 3.22 % | ||
Loans held-for-investment | |||||||||||
Residential first mortgage | 2,633 | 26 | 3.97 % | 1,789 | 16 | 3.68 % | 1,706 | 14 | 3.14 % | ||
Home equity | 699 | 11 | 6.29 % | 614 | 7 | 4.74 % | 686 | 6 | 3.64 % | ||
Other | 1,381 | 17 | 4.99 % | 1,302 | 16 | 4.80 % | 1,177 | 14 | 4.76 % | ||
Total consumer loans | 4,713 | 54 | 4.61 % | 3,705 | 39 | 4.25 % | 3,569 | 34 | 3.77 % | ||
Commercial real estate | 3,542 | 49 | 5.40 % | 3,366 | 41 | 4.78 % | 3,238 | 28 | 3.43 % | ||
Commercial and industrial | 2,844 | 37 | 5.06 % | 2,169 | 26 | 4.65 % | 1,341 | 12 | 3.56 % | ||
Warehouse lending | 3,541 | 42 | 4.63 % | 4,099 | 34 | 3.27 % | 5,392 | 52 | 3.76 % | ||
Total commercial loans | 9,927 | 128 | 5.03 % | 9,634 | 101 | 4.11 % | 9,971 | 92 | 3.62 % | ||
Total loans held-for-investment | 14,640 | 182 | 4.90 % | 13,339 | 140 | 4.15 % | 13,540 | 126 | 3.66 % | ||
Loans with government guarantees | 1,275 | 14 | 4.39 % | 1,161 | 15 | 5.13 % | 2,046 | 8 | 1.61 % | ||
Investment securities | 2,723 | 22 | 3.32 % | 2,310 | 17 | 2.89 % | 2,058 | 12 | 2.15 % | ||
Interest-earning deposits | 291 | 2 | 1.83 % | 577 | 1 | 0.64 % | 173 | — | 0.18 % | ||
Total interest-earning assets | 21,905 | $ 254 | 4.59 % | 20,958 | $ 209 | 3.96 % | 25,656 | $ 209 | 3.22 % | ||
Other assets | 3,243 | 2,909 | 2,391 | ||||||||
Total assets | $ 25,148 | $ 23,867 | $ 28,047 | ||||||||
Interest-Bearing Liabilities | |||||||||||
Retail deposits | |||||||||||
Demand deposits | $ 1,640 | $ 1 | 0.34 % | $ 1,725 | $ 1 | 0.10 % | $ 1,603 | $ — | 0.05 % | ||
Savings deposits | 4,082 | 3 | 0.27 % | 4,251 | 2 | 0.16 % | 4,144 | 2 | 0.14 % | ||
Money market deposits | 854 | 1 | 0.28 % | 926 | — | 0.16 % | 840 | — | 0.08 % | ||
Certificates of deposit | 848 | 1 | 0.58 % | 851 | 1 | 0.35 % | 1,038 | 1 | 0.50 % | ||
Total retail deposits | 7,424 | 6 | 0.32 % | 7,753 | 4 | 0.17 % | 7,625 | 3 | 0.16 % | ||
Government deposits | 1,731 | 4 | 0.93 % | 1,699 | 1 | 0.32 % | 2,148 | 1 | 0.17 % | ||
Wholesale deposits and other | 830 | 1 | 0.73 % | 935 | 2 | 0.98 % | 1,342 | 3 | 0.99 % | ||
Total interest-bearing deposits | 9,985 | 11 | 0.46 % | 10,387 | 7 | 0.26 % | 11,115 | 7 | 0.26 % | ||
Short-term FHLB advances and other | 2,653 | 15 | 2.23 % | 1,124 | 3 | 1.05 % | 2,736 | 1 | 0.18 % | ||
Long-term FHLB advances | 1,041 | 4 | 1.35 % | 982 | 3 | 1.15 % | 1,343 | 3 | 0.92 % | ||
Other long-term debt | 396 | 5 | 4.40 % | 396 | 3 | 3.07 % | 396 | 3 | 3.16 % | ||
Total interest-bearing liabilities | 14,075 | $ 35 | 0.96 % | 12,889 | $ 16 | 0.48 % | 15,590 | 14 | 0.38 % | ||
Noninterest-bearing deposits | |||||||||||
Retail deposits and other | 2,550 | 2,460 | 2,391 | ||||||||
Custodial deposits (1) | 4,681 | 4,641 | 6,180 | ||||||||
Total noninterest-bearing deposits | 7,231 | 7,101 | 8,571 | ||||||||
Other liabilities | 1,057 | 1,123 | 1,294 | ||||||||
Stockholders' equity | 2,785 | 2,754 | 2,592 | ||||||||
Total liabilities and stockholders' | $ 25,148 | $ 23,867 | $ 28,047 | ||||||||
Net interest-earning assets | $ 7,830 | $ 8,069 | $ 10,066 | ||||||||
Net interest income | $ 219 | $ 193 | $ 195 | ||||||||
Interest rate spread (2) | 3.62 % | 3.47 % | 2.84 % | ||||||||
Net interest margin (3) | 3.98 % | 3.69 % | 3.00 % | ||||||||
Ratio of average interest-earning assets to | 155.6 % | 162.6 % | 164.6 % | ||||||||
Total average deposits | $ 17,216 | $ 17,488 | $ 19,686 | ||||||||
(1) | Approximately 70 percent of custodial deposits from loans subserviced for which LIBOR based fees are recognized as an offset in net loan administration income. |
(2) | Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities. |
(3) | Net interest margin is net interest income divided by average interest-earning assets. |
Average Balances, Yields and Rates | |||||||
Nine Months Ended | |||||||
September 30, 2022 | September 30, 2021 | ||||||
Average | Interest | Annualized | Average | Interest | Annualized | ||
Interest-Earning Assets | |||||||
Loans held-for-sale | $ 3,787 | $ 111 | 3.89 % | $ 7,403 | $ 169 | 3.04 % | |
Loans held-for-investment | |||||||
Residential first mortgage | 1,978 | 55 | 3.72 % | 1,907 | 46 | 3.21 % | |
Home equity | 637 | 24 | 5.10 % | 751 | 20 | 3.59 % | |
Other | 1,313 | 48 | 4.88 % | 1,106 | 40 | 4.78 % | |
Total consumer loans | 3,928 | 127 | 4.33 % | 3,764 | 106 | 3.75 % | |
Commercial real estate | 3,379 | 119 | 4.63 % | 3,125 | 80 | 3.38 % | |
Commercial and industrial | 2,286 | 78 | 4.52 % | 1,425 | 39 | 3.60 % | |
Warehouse lending | 3,869 | 108 | 3.68 % | 5,729 | 170 | 3.91 % | |
Total commercial loans | 9,534 | 305 | 4.22 % | 10,279 | 289 | 3.71 % | |
Total loans held-for-investment | 13,462 | 432 | 4.25 % | 14,043 | 395 | 3.72 % | |
Loans with government guarantees | 1,279 | 44 | 4.62 % | 2,295 | 15 | 0.95 % | |
Investment securities | 2,354 | 50 | 2.85 % | 2,130 | 35 | 2.19 % | |
Interest-earning deposits | 597 | 3 | 0.59 % | 158 | — | 0.15 % | |
Total interest-earning assets | 21,479 | $ 640 | 3.96 % | 26,029 | $ 614 | 3.13 % | |
Other assets | 2,918 | 2,672 | |||||
Total assets | $ 24,397 | $ 28,701 | |||||
Interest-Bearing Liabilities | |||||||
Retail deposits | |||||||
Demand deposits | $ 1,664 | $ 2 | 0.18 % | $ 1,713 | $ 1 | 0.06 % | |
Savings deposits | 4,195 | 6 | 0.19 % | 4,058 | 4 | 0.14 % | |
Money market deposits | 889 | 1 | 0.18 % | 763 | — | 0.07 % | |
Certificates of deposit | 876 | 3 | 0.43 % | 1,152 | 6 | 0.71 % | |
Total retail deposits | 7,624 | 12 | 0.21 % | 7,686 | 11 | 0.20 % | |
Government deposits | 1,769 | 6 | 0.47 % | 1,907 | 3 | 0.19 % | |
Wholesale deposits and other | 944 | 6 | 0.87 % | 1,182 | 11 | 1.27 % | |
Total interest-bearing deposits | 10,337 | 24 | 0.32 % | 10,775 | 25 | 0.32 % | |
Short-term FHLB advances and other | 1,486 | 18 | 1.64 % | 2,646 | 3 | 0.17 % | |
Long-term FHLB advances | 1,094 | 10 | 1.15 % | 1,248 | 9 | 0.99 % | |
Other long-term debt | 396 | 11 | 3.54 % | 414 | 11 | 3.50 % | |
Total interest-bearing liabilities | 13,313 | $ 63 | 0.63 % | 15,083 | $ 48 | 0.43 % | |
Noninterest-bearing deposits | |||||||
Retail deposits and other | 2,495 | 2,307 | |||||
Custodial deposits (1) | 4,763 | 6,517 | |||||
Total noninterest-bearing deposits | 7,258 | 8,824 | |||||
Other liabilities | 1,084 | 2,340 | |||||
Stockholders' equity | 2,742 | 2,454 | |||||
Total liabilities and stockholders' equity | $ 24,397 | $ 28,701 | |||||
Net interest-earning assets | $ 8,166 | $ 10,946 | |||||
Net interest income | $ 577 | $ 566 | |||||
Interest rate spread (2) | 3.33 % | 2.70 % | |||||
Net interest margin (3) | 3.60 % | 2.90 % | |||||
Ratio of average interest-earning assets to interest-bearing liabilities | 161.3 % | 172.6 % | |||||
Total average deposits | $ 17,595 | $ 19,598 | |||||
(1) | Approximately 70 percent of custodial deposits from loans subserviced for which LIBOR based fees are recognized as an offset in net loan administration income. |
(2) | Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities. |
(3) | Net interest margin is net interest income divided by average interest-earning assets. |
Earnings Per Share | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | |||||
Net income | $ 73 | $ 60 | $ 152 | $ 186 | $ 448 | ||||
Weighted average common shares outstanding | 53,330,518 | 53,269,631 | 52,862,288 | 53,273,743 | 52,767,923 | ||||
Stock-based awards | 279,748 | 265,817 | 797,134 | 300,947 | 731,366 | ||||
Weighted average diluted common shares | 53,610,266 | 53,535,448 | 53,659,422 | 53,574,690 | 53,499,289 | ||||
Basic earnings per common share | $ 1.36 | $ 1.13 | $ 2.87 | $ 3.49 | $ 8.48 | ||||
Stock-based awards | (0.01) | (0.01) | (0.04) | (0.02) | (0.11) | ||||
Diluted earnings per common share | $ 1.35 | $ 1.12 | $ 2.83 | $ 3.47 | $ 8.37 | ||||
Regulatory Capital - Bancorp | |||||||||||
September 30, 2022 | June 30, 2022 | December 31, 2021 | September 30, 2021 | ||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||
Tier 1 leverage (to adjusted avg. total assets) | $ 2,759 | 11.06 % | $ 2,900 | 12.17 % | $ 2,798 | 10.54 % | $ 2,709 | 9.72 % | |||
Total adjusted avg. total asset base | $ 24,939 | $ 23,835 | $ 26,545 | $ 27,863 | |||||||
Tier 1 common equity (to risk weighted assets) | $ 2,519 | 11.97 % | $ 2,660 | 13.22 % | $ 2,558 | 13.19 % | $ 2,469 | 11.95 % | |||
Tier 1 capital (to risk weighted assets) | $ 2,759 | 13.11 % | $ 2,900 | 14.41 % | $ 2,798 | 14.43 % | $ 2,709 | 13.11 % | |||
Total capital (to risk weighted assets) | $ 3,015 | 14.32 % | $ 3,155 | 15.68 % | $ 3,080 | 15.88 % | $ 3,006 | 14.55 % | |||
Risk-weighted asset base | $ 21,047 | $ 20,130 | $ 19,397 | $ 20,664 | |||||||
Regulatory Capital - Bank | |||||||||||
September 30, 2022 | June 30, 2022 | December 31, 2021 | September 30, 2021 | ||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||
Tier 1 leverage (to adjusted avg. total assets) | $ 2,741 | 10.99 % | $ 2,824 | 11.87 % | $ 2,706 | 10.21 % | $ 2,619 | 9.40 % | |||
Total adjusted avg. total asset base | $ 24,938 | $ 23,786 | $ 26,502 | $ 27,851 | |||||||
Tier 1 common equity (to risk weighted assets) | $ 2,741 | 12.96 % | $ 2,824 | 14.04 % | $ 2,706 | 13.96 % | $ 2,619 | 12.71 % | |||
Tier 1 capital (to risk weighted assets) | $ 2,741 | 12.96 % | $ 2,824 | 14.04 % | $ 2,706 | 13.96 % | $ 2,619 | 12.71 % | |||
Total capital (to risk weighted assets) | $ 2,853 | 13.49 % | $ 2,931 | 14.57 % | $ 2,839 | 14.65 % | $ 2,766 | 13.42 % | |||
Risk-weighted asset base | $ 21,144 | $ 20,113 | $ 19,383 | $ 20,609 | |||||||
Loans Serviced and Subserviced | |||||||||||
September 30, 2022 | June 30, 2022 | December 31, 2021 | September 30, 2021 | ||||||||
Unpaid | Number of | Unpaid | Number of | Unpaid | Number of | Unpaid | Number of | ||||
Subserviced for others (2) | $ 284,120 | 1,090,130 | $ 293,808 | 1,160,087 | $ 246,858 | 1,032,923 | $ 230,045 | 1,007,557 | |||
Serviced for others (3) | 67,918 | 267,416 | 41,557 | 160,387 | 35,074 | 137,243 | 31,354 | 124,665 | |||
Serviced for own loan portfolio (4) | 7,801 | 63,461 | 7,959 | 62,217 | 8,793 | 63,426 | 10,410 | 70,738 | |||
Total loans serviced and subserviced | $ 359,839 | 1,421,007 | $ 343,324 | 1,382,691 | $ 290,725 | 1,233,592 | $ 271,809 | 1,202,960 | |||
(1) | UPB, net of write downs, does not include premiums or discounts. |
(2) | Loans subserviced for a fee for non-Flagstar owned loans or MSRs. Includes temporary short-term subservicing performed as a result of sales of servicing-released MSRs. |
(3) | Loans for which Flagstar owns the MSR. |
(4) | Includes LHFI (residential first mortgage, home equity and other consumer), LHFS (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets. |
Loans Held-for-Investment | |||||||||||
September 30, 2022 | June 30, 2022 | December 31, 2021 | September 30, 2021 | ||||||||
Consumer loans | |||||||||||
Residential first mortgage | $ 3,147 | 19.9 % | $ 2,205 | 15.0 % | $ 1,536 | 11.5 % | $ 1,626 | 11.5 % | |||
Home equity | 769 | 4.9 % | 645 | 4.4 % | 613 | 4.6 % | 657 | 4.6 % | |||
Other | 1,411 | 8.9 % | 1,331 | 9.1 % | 1,236 | 9.2 % | 1,203 | 8.3 % | |||
Total consumer loans | 5,327 | 33.7 % | 4,181 | 28.5 % | 3,385 | 25.3 % | 3,486 | 24.4 % | |||
Commercial loans | |||||||||||
Commercial real estate | 3,721 | 23.6 % | 3,387 | 23.1 % | 3,223 | 24.0 % | 3,216 | 22.6 % | |||
Commercial and industrial | 3,188 | 20.2 % | 2,653 | 18.1 % | 1,826 | 13.6 % | 1,387 | 9.7 % | |||
Warehouse lending | 3,557 | 22.5 % | 4,434 | 30.3 % | 4,974 | 37.1 % | 6,179 | 43.3 % | |||
Total commercial loans | 10,466 | 66.3 % | 10,474 | 71.5 % | 10,023 | 74.7 % | 10,782 | 75.6 % | |||
Total loans held-for-investment | $ 15,793 | 100.0 % | $ 14,655 | 100.0 % | $ 13,408 | 100.0 % | $ 14,268 | 100.0 % | |||
Other Consumer Loans Held-for-Investment | |||||||||||
September 30, 2022 | June 30, 2022 | December 31, 2021 | September 30, 2021 | ||||||||
Indirect lending | $ 1,071 | 75.9 % | $ 972 | 73.0 % | $ 926 | 74.8 % | $ 916 | 76.2 % | |||
Point of sale | 283 | 20.1 % | 300 | 22.6 % | 272 | 22.0 % | 248 | 20.6 % | |||
Other | 57 | 4.0 % | 59 | 4.4 % | 38 | 3.2 % | 39 | 3.2 % | |||
Total other consumer loans | $ 1,411 | 100.0 % | $ 1,331 | 100.0 % | $ 1,236 | 100.0 % | $ 1,203 | 100.0 % | |||
Allowance for Credit Losses | |||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | |||
Residential first mortgage | $ 32 | $ 33 | $ 43 | ||
Home equity | 23 | 21 | 15 | ||
Other | 29 | 31 | 32 | ||
Total consumer loans | 84 | 85 | 90 | ||
Commercial real estate | 26 | 22 | 35 | ||
Commercial and industrial | 16 | 11 | 43 | ||
Warehouse lending | 1 | 4 | 3 | ||
Total commercial loans | 43 | 37 | 81 | ||
Allowance for loan losses | 127 | 122 | 171 | ||
Reserve for unfunded commitments | 13 | 13 | 19 | ||
Allowance for credit losses | $ 140 | $ 135 | $ 190 | ||
Allowance for Credit Losses | ||||||||
Three Months Ended September 30, 2022 | ||||||||
Residential | Home | Other | Commercial | Commercial | Warehouse | Total LHFI | Unfunded | |
Beginning balance | $ 33 | $ 21 | $ 31 | $ 22 | $ 11 | $ 4 | $ 122 | $ 13 |
Provision (benefit) for credit losses: | ||||||||
Loan volume | 10 | 2 | 2 | 2 | 4 | — | 20 | — |
Economic forecast (2) | — | — | — | 1 | (1) | — | — | — |
Credit (3) | (10) | — | (3) | 2 | (1) | — | (12) | — |
Qualitative factor adjustments | — | — | — | (1) | 1 | (3) | (3) | — |
Charge-offs | (1) | — | (2) | — | — | — | (3) | — |
Recoveries | — | — | 1 | — | 2 | — | 3 | — |
Ending allowance balance | $ 32 | $ 23 | $ 29 | $ 26 | $ 16 | $ 1 | $ 127 | $ 13 |
(1) | Excludes loans carried under the fair value option. |
(2) | Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter. |
(3) | Includes changes in the probability of default and severity of default based on current borrower and guarantor characteristics, changes in duration, as well as individually evaluated reserves. |
Allowance for Credit Losses | ||||||||
Nine Months Ended September 30, 2022 | ||||||||
Residential | Home | Other | Commercial | Commercial | Warehouse | Total LHFI | Unfunded | |
Beginning balance | $ 40 | $ 14 | $ 36 | $ 28 | $ 32 | $ 4 | $ 154 | $ 16 |
Provision (benefit) for credit losses: | ||||||||
Loan volume | 14 | 3 | 5 | 3 | 11 | — | 36 | (3) |
Economic forecast (2) | 3 | 3 | (4) | 2 | (4) | — | — | — |
Credit (3) | (23) | 2 | (5) | (5) | (2) | — | (33) | — |
Qualitative factor adjustments | — | — | — | (2) | (3) | (3) | (8) | — |
Charge-offs | (2) | — | (7) | — | (20) | — | (29) | — |
Recoveries | — | 1 | 4 | — | 2 | — | 7 | — |
Ending allowance balance | $ 32 | $ 23 | $ 29 | $ 26 | $ 16 | $ 1 | $ 127 | $ 13 |
(1) | Excludes loans carried under the fair value option. |
(2) | Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter. |
(3) | Includes changes in the probability of default and severity of default based on current borrower and guarantor characteristics, changes in duration, as well as individually evaluated reserves. |
Nonperforming Loans and Assets | |||||||
September 30, | June 30, | December 31, | September 30, | ||||
Nonperforming LHFI | $ 64 | $ 79 | $ 81 | $ 82 | |||
Nonperforming TDRs | 6 | 6 | 8 | 5 | |||
Nonperforming TDRs at inception but performing for less than six months | 24 | 14 | 5 | 9 | |||
Total nonperforming LHFI and TDRs (1) | 94 | 99 | 94 | 96 | |||
Other nonperforming assets, net | 6 | 5 | 6 | 6 | |||
LHFS | 17 | 20 | 17 | 10 | |||
Total nonperforming assets | $ 117 | $ 124 | $ 117 | $ 112 | |||
Ratio of nonperforming assets to total assets (2) | 0.39 % | 0.42 % | 0.39 % | 0.37 % | |||
Ratio of nonperforming LHFI and TDRs to LHFI | 0.59 % | 0.68 % | 0.70 % | 0.66 % | |||
Ratio of nonperforming assets to LHFI and repossessed assets (2) | 0.63 % | 0.71 % | 0.74 % | 0.70 % | |||
(1) | Includes $44 million of first residential mortgage loans that are current in accordance with their forbearance exit plan and not yet returned to accrual status as of September 30, 2022. |
(2) | Ratio excludes nonperforming LHFS. |
Asset Quality - Loans Held-for-Investment | |||||||||
30-59 Days | 60-89 Days | Greater than | Total Past | Total LHFI | |||||
September 30, 2022 | |||||||||
Consumer loans | $ 16 | $ 7 | $ 94 | $ 117 | $ 5,327 | ||||
Commercial loans | 2 | 9 | 2 | 13 | 10,466 | ||||
Total loans | $ 18 | $ 16 | $ 96 | $ 130 | $ 15,793 | ||||
June 30, 2022 | |||||||||
Consumer loans (1) | $ 15 | $ 7 | $ 99 | $ 121 | $ 4,181 | ||||
Commercial loans | — | — | — | — | 10,474 | ||||
Total loans | $ 15 | $ 7 | $ 99 | $ 121 | $ 14,655 | ||||
December 31, 2021 | |||||||||
Consumer loans | $ 26 | $ 36 | $ 62 | $ 124 | $ 3,385 | ||||
Commercial loans | — | — | 32 | 32 | 10,023 | ||||
Total loans | $ 26 | $ 36 | $ 94 | $ 156 | $ 13,408 | ||||
September 30, 2021 | |||||||||
Consumer loans | $ 12 | $ 2 | $ 58 | $ 72 | $ 3,486 | ||||
Commercial loans | — | — | 35 | 35 | 10,782 | ||||
Total loans | $ 12 | $ 2 | $ 93 | $ 107 | $ 14,268 | ||||
(1) | Includes $44 million of first residential mortgage loans that are current in accordance with their forbearance exit plan and not yet returned to accrual status as of September 30, 2022. |
Troubled Debt Restructurings | |||||
TDRs | |||||
Performing | Nonperforming | Total | |||
September 30, 2022 | |||||
Consumer loans | $ 25 | $ 30 | $ 55 | ||
Commercial loans | — | — | — | ||
Total TDR loans | $ 25 | $ 30 | $ 55 | ||
June 30, 2022 | |||||
Consumer loans | $ 22 | $ 20 | $ 42 | ||
Commercial loans | — | — | — | ||
Total TDR loans | $ 22 | $ 20 | $ 42 | ||
December 31, 2021 | |||||
Consumer loans | $ 22 | $ 13 | $ 35 | ||
Commercial loans | 2 | — | 2 | ||
Total TDR loans | $ 24 | $ 13 | $ 37 | ||
September 30, 2021 | |||||
Consumer loans | $ 34 | $ 12 | $ 46 | ||
Commercial loans | — | 2 | 2 | ||
Total TDR loans | $ 34 | $ 14 | $ 48 | ||
Non-GAAP Reconciliation | |||||||||
In addition to analyzing the Company's results on a reported basis, management reviews the Company's results on an | |||||||||
The following tables provide a reconciliation of non-GAAP financial measures. | |||||||||
Tangible book value per share and tangible common equity to assets ratio. | |||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||
(Dollars in millions, except share data) | |||||||||
Total stockholders' equity | $ 2,616 | $ 2,693 | $ 2,733 | $ 2,718 | $ 2,645 | ||||
Less: Goodwill and intangible assets | 140 | 142 | 145 | 147 | 149 | ||||
Tangible book value | $ 2,476 | $ 2,551 | $ 2,588 | $ 2,571 | $ 2,496 | ||||
Number of common shares outstanding | 53,330,827 | 53,329,993 | 53,236,067 | 53,197,650 | 52,862,383 | ||||
Tangible book value per share | $ 46.42 | $ 47.83 | $ 48.61 | $ 48.33 | $ 47.21 | ||||
Total assets | $ 25,443 | $ 24,899 | $ 23,244 | $ 25,483 | $ 27,042 | ||||
Tangible common equity to assets ratio | 9.7 % | 10.2 % | 11.1 % | 10.1 % | 9.2 % | ||||
Return on average tangible common equity, adjusted return on average tangible common equity and adjusted return on average assets. | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | |||||
(Dollars in millions) | |||||||||
Net income | $ 73 | $ 60 | $ 152 | $ 186 | $ 448 | ||||
Add: Intangible asset amortization, net of tax | 2 | 3 | 2 | 5 | 6 | ||||
Tangible net income | $ 75 | $ 63 | $ 154 | $ 191 | $ 454 | ||||
Total average equity | $ 2,785 | $ 2,754 | $ 2,592 | $ 2,742 | $ 2,454 | ||||
Less: Average goodwill and intangible assets | 141 | 144 | 151 | 144 | — | ||||
Total tangible average equity | $ 2,644 | $ 2,610 | $ 2,441 | $ 2,598 | $ 2,454 | ||||
Return on average tangible common equity | 11.2 % | 9.5 % | 25.2 % | 9.8 % | 24.7 % | ||||
Adjustment to remove DOJ settlement expense | — % | — % | — % | — % | 2.3 % | ||||
Adjustment for former CEO SERP agreement | — % | — % | — % | — % | (0.7) % | ||||
Adjustment for merger costs | 0.7 % | 0.6 % | 1.0 % | 0.6 % | 0.9 % | ||||
Adjusted return on average tangible common equity | 11.9 % | 10.1 % | 26.2 % | 10.4 % | 27.2 % | ||||
Return on average assets | 1.2 % | 1.0 % | 2.2 % | 1.0 % | 2.1 % | ||||
Adjustment to remove DOJ settlement expense | — % | — % | — % | — % | 0.1 % | ||||
Adjustment for former CEO SERP settlement agreement | — % | — % | — % | — % | — % | ||||
Adjustment for merger costs | — % | — % | 0.1 % | — % | — % | ||||
Adjusted return on average assets | 1.2 % | 1.0 % | 2.3 % | 1.0 % | 2.2 % | ||||
Adjusted HFI loan-to-deposit ratio. | |||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||
(Dollars in millions) | |||||||||
Average LHFI | $ 14,640 | $ 13,339 | $ 12,384 | $ 13,314 | $ 13,540 | ||||
Less: Average warehouse loans | 3,541 | 4,099 | 3,973 | 5,148 | 5,392 | ||||
Adjusted average LHFI | $ 11,099 | $ 9,240 | $ 8,411 | $ 8,166 | $ 8,148 | ||||
Average deposits | $ 17,216 | $ 17,488 | $ 18,089 | $ 19,816 | $ 19,686 | ||||
Less: Average custodial deposits | 4,681 | 4,641 | 4,970 | 6,309 | 6,180 | ||||
Adjusted average deposits | $ 12,535 | $ 12,847 | $ 13,119 | $ 13,507 | $ 13,506 | ||||
HFI loan-to-deposit ratio | 85.0 % | 76.3 % | 68.5 % | 67.2 % | 68.8 % | ||||
Adjusted HFI loan-to-deposit ratio | 88.5 % | 71.9 % | 64.1 % | 60.5 % | 60.3 % | ||||
Adjusted noninterest expense, income before income taxes, provision for income taxes, net income, basic earnings per share, diluted earnings per share, and efficiency ratio. | |||||||||
Three Months Ended | |||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||
(Dollar in millions) | |||||||||
Noninterest expense | $ 236 | $ 256 | $ 261 | $ 291 | $ 286 | ||||
Adjustment for merger costs | 3 | 3 | 3 | 6 | 5 | ||||
Adjusted noninterest expense | $ 233 | $ 253 | $ 258 | $ 285 | $ 281 | ||||
Income before income taxes | $ 92 | $ 77 | $ 68 | $ 109 | $ 198 | ||||
Adjustment for merger costs | 3 | 3 | 3 | 6 | 5 | ||||
Adjusted income before income taxes | $ 95 | $ 80 | $ 71 | $ 115 | $ 203 | ||||
Provision for income taxes | $ 19 | $ 17 | $ 15 | $ 24 | $ 46 | ||||
Adjustment for merger costs | (1) | — | (1) | (1) | (1) | ||||
Adjusted provision for income taxes | $ 20 | $ 17 | $ 16 | $ 25 | $ 47 | ||||
Net income | $ 73 | $ 60 | $ 53 | $ 85 | $ 152 | ||||
Adjusted net income | $ 75 | $ 63 | $ 55 | $ 90 | $ 156 | ||||
Weighted average common shares outstanding | 53,330,518 | 53,269,631 | 53,219,866 | 52,867,138 | 52,862,288 | ||||
Weighted average diluted common shares | 53,610,266 | 53,535,448 | 53,578,001 | 53,577,832 | 53,659,422 | ||||
Adjusted basic earnings per share | $ 1.42 | $ 1.18 | $ 1.03 | $ 1.71 | $ 2.94 | ||||
Adjusted diluted earnings per share | $ 1.41 | $ 1.17 | $ 1.02 | $ 1.69 | $ 2.90 | ||||
Efficiency ratio | 70.9 % | 79.1 % | 80.4 % | 75.9 % | 62.2 % | ||||
Adjustment for merger costs | (1.1) % | (1.0) % | (0.8) % | (1.5) % | (1.1) % | ||||
Adjusted efficiency ratio | 69.8 % | 78.1 % | 79.6 % | 74.4 % | 61.1 % | ||||
Nine Months Ended | ||||
September 30, | September 30, | |||
Efficiency ratio | 76.7 % | 65.5 % | ||
Adjustment to remove DOJ settlement expense | — % | (2.5) % | ||
Adjustment for former CEO SERP agreement | — % | 0.7 % | ||
Adjustment for merger costs | (1.0) % | (1.0) % | ||
Adjusted efficiency ratio | 75.7 % | 62.7 % | ||
For more information, contact:
Bryan Marx
[email protected]
(248) 312-5699
SOURCE Flagstar Bancorp, Inc.
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