FLAGSTAR BANCORP, INC. TROY, Mich., April 28, 2015 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC) ("the Company"), the holding company for Flagstar Bank, FSB (the "Bank"), today reported first quarter 2015 net income of $31.5 million, or $0.43 per diluted share, as compared to $11.1 million in the fourth quarter 2014, or $0.07 per diluted share and a net loss of $78.9 million in the first quarter 2014, or $1.51 loss per share.
"Our first quarter results reflect our significant efforts to strengthen our core business and improve financial performance," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp. "Mortgage volumes increased during the first quarter, providing a favorable tailwind, but most of our revenue growth was due to improved gain on sale margins in part from fundamental changes to optimize our mortgage originations business. In addition to improving our top- and bottom-line results, we also grew our balance sheet and executed on our strategic priority to reduce risk by continuing to sell lower quality loans. Nonperforming loans are now well below $100 million, a level Flagstar has not seen since 2006.
"We are encouraged by our progress, especially in controlling expenses given this quarter's higher business levels. We remain focused on continuing our strong results by growing our community banking franchise in Michigan and expanding our national warehouse lending business, which led our loan growth this quarter.
"Last quarter, we pointed to the work done the previous two years to position the Company for going-forward success. We believe this quarter delivers on our promise to continue to build on this foundation."
First Quarter 2015 Highlights:
Income Statement Highlights
Three Months Ended % Change
------------------ --------
March 31, December 31, September 30, June 30, March 31, Seq Yr/Yr
2015 2014 2014 2014
2014
--- ---
(Dollars in millions)
Consolidated Statements of Operations
Net interest income $64.9 $61.3 $64.4 $62.4 $58.2 5.9% 11.5%
Provision for loan losses (3.5) 5.0 8.1 6.2 112.3 N/M N/M
Noninterest income 118.3 98.4 85.2 102.5 75.0 20.2% 57.7%
Noninterest expense 137.0 139.3 179.4 121.4 139.3 (1.7)% (1.7)%
----- ----- ----- ----- -----
Income (loss) before income
taxes 49.7 15.5 (37.9) 37.4 (118.4) N/M N/M
Provision (benefit) for income
taxes 18.2 4.4 (10.3) 11.9 (40.0) N/M N/M
---- --- ----- ---- -----
Net income (loss) $31.5 $11.1 $(27.6) $25.5 $(78.4) N/M N/M
===== ===== ====== ===== ======
Earnings (Loss) Per Share (1) $0.43 $0.07 $(0.61) $0.33 $(1.51) N/M N/M
N/M - Not meaningful
(1) Fully diluted earnings (loss) per share, except where securities would be anti-dilutive. Includes deferred unpaid dividends.
Key Ratios
Three Months Ended Change (bps)
------------------ -----------
March 31, December 31, September 30, June 30, March 31, Seq Yr/Yr
2015 2014 2014 2014
2014
--- ---
Net interest margin 2.75% 2.80% 2.91% 2.98% 2.97% (5) (22)
Efficiency ratio (adjusted)
(1) 75.4% 90.6% 86.8% 71.3% 91.3% (152) (159)
Return (loss) on average
assets 1.16% 0.44% (1.08)% 1.04% (3.39)% 72 N/M
Return (loss) on average
equity 8.85% 3.18% (7.88)% 7.38% (21.85)% N/M N/M
N/M - Not meaningful
(1) See non-GAAP reconciliation.
Balance Sheet Highlights
Three Months Ended % Change
------------------ --------
March 31, December 31, September 30, June 30, March 31, Seq Yr/Yr
2015 2014 2014 2014
2014
----
(Dollars in millions)
Average Balance Sheet
Average interest-earning assets $9,423 $8,725 $8,815 $8,367 $7,830 8.0% 20.3%
Average loans held-for-investment 4,294 4,031 4,088 3,903 3,864 6.5% 11.1%
Average interest-bearing deposits 5,985 5,898 5,788 5,446 5,230 1.5% 14.4%
Net Interest Income
First quarter 2015 net interest income increased to $64.9 million, as compared to $61.3 million for the fourth quarter 2014. The increase from the prior quarter was led by interest-earning asset growth, partially offset by net interest margin reduction.
Net interest margin decreased to 2.75 percent for the first quarter 2015, as compared to 2.80 percent for the fourth quarter 2014. The decrease from the prior quarter was driven primarily by increased Federal Home Loan Bank advances that provided more stable funding for planned loan growth, partially offset by increased interest income.
Average loans held-for-investment totaled $4.3 billion for the first quarter 2015, increasing $263 million or 7 percent compared to the fourth quarter 2014. The Company realized solid growth in warehouse, commercial real estate, and commercial loans. Warehouse loans rose $79 million, or 15 percent, led by market share gains.
Average interest-bearing deposits were $6.0 billion in first quarter 2015, increasing $88 million or 1 percent versus the prior quarter. Retail deposits rose $121 million or 3 percent, led by growth in savings deposits, partially offset by a decline in certificates of deposits.
Average Federal Home Loan Bank advances totaled $1.2 billion for the first quarter 2015, up $388 million compared to the fourth quarter 2014. During the quarter, the Company entered into longer-term fixed rate advances to provide more stable funding for planned loan growth.
Provision for Loan Losses
Provision for loan losses totaled $(3.5) million for the first quarter 2015, as compared to $5.0 million for the fourth quarter 2014. The improvement from the prior quarter was primarily attributable to the reduction of reserves relating to troubled debt restructuring loans which were subsequently sold. The reduction of reserves was partially offset by an increase in provision related to growth in the loan portfolio.
Net charge-offs in the first quarter 2015 were $40.5 million, or 3.97 percent of applicable loans, compared to $9.0 million, or 0.91 percent of applicable loans in the prior quarter. The first quarter 2015 amount included $36.0 million of net charge-offs associated with the sale of $331 million of lower performing loans during the quarter. Excluding loan sales in both quarters, net charge-offs in the first quarter of 2015 were $4.6 million, or 0.45 percent of applicable loans, compared to $6.0 million, or 0.60 percent of applicable loans in the prior quarter.
Noninterest Income
First quarter 2015 noninterest income was $118.3 million, as compared to noninterest income of $98.4 million for the fourth quarter 2014. The first quarter 2015 results were led by higher net gain on loan sales, partially offset by a decrease in the net return on the mortgage servicing asset and a reduction in the fair value of securitized home equity lines of credit ("HELOCs").
Adjustments to Noninterest Income
Three Months Ended
------------------
March 31, December 31, September 30, June 30, March 31,
2015 2014 2014 2014
2014
----
(Dollars in millions)
Noninterest income $118.3 $98.4 $85.2 $102.5 $75.0
Adjusting items
Loan fees and charges (1) - - - (10.0) -
Representation and warranty
provision (2) - - 10.3 - -
Other noninterest income
(3) - - - - 21.1
--- ---
Adjusted noninterest income
(4) $118.3 $98.4 $95.5 $92.5 $96.1
====== ===== ===== ===== =====
(1) Reverse benefit for contract
renegotiation.
(2) Add back reserve increase related to
indemnifications claims on government
insured loans.
(3) Adjust for a negative fair value
adjustment related to repurchased
performing loans.
(4) Non-GAAP number.
First quarter 2015 net gain on loan sales increased to $91.3 million, as compared to $53.5 million for the fourth quarter 2014. The increase from the prior quarter reflected higher fall-out adjusted locks and improved gain on sales margins. In the first quarter of 2015, fall-out adjusted locks rose 17 percent to $7.2 billion, led by an increase in refinance activity due to lower mortgage interest rates. The net gain on loan sale margin increased 40 basis points to 1.27 percent for the first quarter 2015, as compared to 0.87 percent for the fourth quarter 2014, driven by stronger market pricing power and improved business performance. In recent months, the Company made fundamental changes in its mortgage origination business to enhance customer service and profitability.
Mortgage Metrics
Three Months Ended Change (% / bps)
------------------ ----------------
March 31, December 31, September 30, June 30, March 31, Seq Yr/Yr
2015 2014 2014 2014
2014
----
(Dollars in millions)
GOS margin
(change in bps)
(3) 1.27% 0.87% 0.83% 0.82% 0.93% 40 34
Gain on loans
sales $91.3 $53.5 $52.2 $54.8 $45.3 70.7% 101.5%
Mortgage rate
lock commitments
(fall-out
adjusted) (1) 7,185 6,156 6,304 6,693 4,854 16.7% 48.0%
Residential loans
serviced (2) 76,687 76,672 76,943 72,514 73,035 - % 5.0%
(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) Includes serviced and subserviced
loans.
(3) Gain on sale margin is based on
net gain on loan sales to fall-
out adjusted mortgage rate lock
commitments.
Loan administration income decreased to $4.3 million for the first quarter 2015, as compared to $5.5 million in the fourth quarter 2014.The decrease was primarily due to charges attributable to pool payoffs arising from higher prepayments in the Company's mortgage servicing portfolio during the first quarter 2015.
Net return on the mortgage servicing asset (including off-balance sheet hedges of mortgage servicing rights) decreased to $(2.4) million for the first quarter 2015, as compared to income of $1.6 million for the fourth quarter 2014. The gross return on the mortgage servicing rights asset was (1.2) percent in the first quarter 2015, a decrease from the fourth quarter 2014, primarily as a result of an increase in anticipated run-off speeds related to elevated mortgage refinance volumes and a net hedge loss related to an increase in market implied volatility.
Net gain on sales of assets decreased to a loss of $0.4 million in the first quarter 2015, compared to a gain of $1.7 million in the prior quarter. The Company sold $24 million of lower performing mortgage loans during the fourth quarter 2014, resulting in a net gain of $1.7 million.
Representation and warranty provision was $1.5 million for the first quarter 2015, as compared to $6.1 million reported for the fourth quarter 2014. The change from the prior quarter was primarily due to a benefit in the prior quarter related to a downward adjustment in the anticipated level of loss rates on claims from Fannie Mae and Freddie Mac and the recovery of expenses. The overall level of the representation and warranty reserve remained at $53.0 million for both March 31, 2015 and December 31, 2014.
The first quarter 2015 other noninterest income was $0.9 million, as compared to $7.2 million for the fourth quarter 2014. The decrease from the prior quarter primarily resulted from a $5.5 million reduction in the fair value of securitized HELOCs.
Noninterest Expense
Noninterest expense was $137.0 million for the first quarter 2015, as compared to $139.2 million for the fourth quarter 2014. The first quarter 2015 results were led by lower asset resolution expense, partially offset by higher variable expense related to increased business activity.
Adjustments to Noninterest expense
Three Months Ended
------------------
March 31, December 31, September 30, June 30, March 31,
2015 2014 2014 2014
2014
----
(Dollars in millions)
Noninterest expense $137.0 $139.2 $179.4 $121.4 $139.3
Adjusting items
Legal and
professional expense
(1) - - (1.1) (2.9) -
Other noninterest
expense (2) - - (37.5) 10.0 -
--- --- ----- ---- ---
Adjusted noninterest
expense (3) $137.0 $139.2 $140.8 $128.5 $139.3
====== ====== ====== ====== ======
(1) Adjust for legal expenses
related to CFPB litigation
settlements during the
respective periods.
(2) Adjust CFPB litigation
settlement expense and an
additional accrual for the DOJ
litigation, respectively.
(3) Non-GAAP number.
Compensation and benefits increased to $60.8 million for the first quarter 2015, as compared to $59.0 million in the prior quarter, primarily due to higher mortgage origination activity. Commissions rose to $10.4 million for the first quarter 2015, versus $9.3 million in the prior quarter.
First quarter 2015 asset resolution expense decreased to $7.8 million, as compared to $13.4 million for the fourth quarter 2014. The decrease reflects the Company's on-going efforts to improve asset quality and de-risk the balance sheet.
Legal and professional expenses were $9.0 million for the first quarter 2015, as compared to $10.8 million for the fourth quarter 2014. The $1.8 million decrease in the first quarter was primarily attributable to a reduced volume of foreclosure actions and the completion of various consulting projects.
Other noninterest expenses for the first quarter 2015 totaled $11.9 million, as compared to $10.7 million for the fourth quarter 2014. The increase from the prior quarter was related to loan processing fees tied to higher mortgage origination activity.
Income Taxes
The first quarter 2015 provision for income taxes totaled $18.2 million, as compared to $4.4 million in the fourth quarter 2014. The effective tax rate in the first quarter 2015 was 36.6 percent, as compared to 28.4 percent in the fourth quarter 2014. The lower marginal tax rate in fourth quarter 2014 resulted from year end state tax true-ups and a lower level of pre-tax income.
Asset Quality
Credit Quality Ratios
Three Months Ended Change (% / bps)
------------------ ----------------
March 31, December 31, September 30, June 30, March 31, Seq Yr/Yr
2015 2014 2014 2014
2014
--- ---
(Dollars in millions)
Charge-offs,
net of
recoveries $40.5 $9.0 $13.1 $7.2 $12.3 N/M N/M
Total non-
performing
loans held-
for-investment $84 $120 $107 $120 $111 (30.0)% (24.3)%
Net charge-off
ratio
(annualized) 3.97% 0.91% 1.36% 0.78% 1.36% 306 261
Non-performing
loans to LHFI 1.81% 2.71% 2.56% 2.76% 2.76% (90) (95)
Allowance for
loan loss to
LHFI 5.69% 7.01% 7.60% 7.41% 8.11% (132) (242)
N/M - Not meaningful
First quarter 2015 net charge-offs were $40.5 million, representing 3.97 percent of applicable loans. This represented an increase of $31.5 million from the fourth quarter 2014 net charge-offs of $9.0 million, or 0.91 percent of applicable loans. Excluding loan sales in both quarters, net charge-offs in the first quarter were $4.5 million, or 0.45 percent, compared to $6.0 million, or 0.60 percent in the prior quarter.
Nonperforming loans decreased to $84 million at March 31, 2015 from $120 million at December 31, 2014. The improved asset quality was primarily driven by the sale of lower performing loans in the first quarter 2015. The ratio of nonperforming loans to loans held-for-investment decreased to 1.81 percent at March 31, 2015 from 2.71 percent at December 31, 2014.
The allowance for loan losses was $253 million at March 31, 2015, covering 5.69 percent of loans held-for-investment. The allowance for loan losses was $297 million at December 31, 2014, covering 7.01 percent of loans held-for-investment. The drop in the allowance for loan losses in the first quarter of 2015 was largely due to charge-offs related to the sale of lower performing loans.
Capital
Capital Ratios (Bancorp) (1) Three Months Ended Change (% / bps)
------------------ ----------------
March 31, December 31, September 30, June 30, March 31, Seq Yr/Yr
2015 2014 2014 2014
2014
----
Total capital 22.6% 24.1% 24.4% 25.2% 25.3% (150) (270)
Tier 1 capital 21.3% 22.8% 23.0% 23.9% 24.0% (150) (270)
Tier 1 leverage 12.0% 12.6% 12.5% 12.6% 12.6% (60) (60)
Mortgage servicing rights to Tier 1 capital 22.2% 21.8% 24.9% 24.2% 27.6% 40 (540)
Book value per common share (change in percent) $20.43 $19.64 $19.28 $19.90 $19.29 4.0% 5.9%
(1) On January 1, 2015, the Basel
III rules became effective,
subject to transitions
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.
The Company's regulatory capital ratios remain well above current regulatory quantitative guidelines for "well-capitalized" institutions. At March 31, 2015, the Company had a Tier 1 leverage ratio of 12.0 percent, as compared to 12.6 percent at December 31, 2014. The drop in the regulatory capital ratio resulted from balance sheet growth and a 7 basis point impact from the partial phase-in of Basel III. At March 31, 2015, the Company had a common equity-to-assets ratio of 9.96 percent.
Earnings Conference Call
As previously announced, the Company's first quarter 2015 earnings call will be held on Tuesday, April 28, 2015 at 11 a.m. (Eastern).
To join the call, please dial (888) 812-8589 toll free or (913) 312-1276, and use passcode: 2728522. 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: 2728522.
The conference call will also be available as a live audio cast on the Investor Relations section of flagstar.com. It will be archived on that site and will be available for replay and download. A slide presentation accompanying the conference call will also be posted on the site.
About Flagstar
Flagstar Bancorp, Inc. (NYSE: FBC) is a $11.6 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 107 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 16 retail centers in 11 states. Flagstar is the ninth largest national originator of mortgage loans and a top 20 mortgage servicer, handling payments and recordkeeping for over $75 billion of home loans for nearly 385,000 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 an adjusted efficiency ratio, adjusted earnings, the ratio of total nonperforming assets to Tier 1 capital (to adjusted total assets) and estimated Basel III ratios. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the underlying performance and trends of Flagstar.
Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To mitigate these limitations, there are practices in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that the Company's performance is properly reflected to facilitate consistent period-to-period comparisons. Although the Company believes the non-GAAP financial measures disclosed in this report enhance investors' understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for those financial measures prepared in accordance with GAAP.
Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this earnings release, conference call slides, or the Form 8-K related to this press release. Additional discussion of the use of non-GAAP measures can also be found in Flagstar Bancorp, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2014. These documents can 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 Flagstar Bancorp Annual Report on Form 10-K for the year ended December 31, 2014, which has been or will be filed with the Securities and Exchange Commission and is available on the Company's website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.
Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(Dollars in millions)
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
(Unaudited) (Unaudited)
Assets
Cash and cash equivalents $241 $136 $219
Investment securities 2,295 1,672 1,207
Loans held-for-sale 2,097 1,244 1,674
Loans with government guarantees 704 1,128 1,267
Loans held-for-investment, net
Loans held-for-investment 4,631 4,448 4,020
Less: allowance for loan losses (253) (297) (307)
---- ---- ----
Total loans held-for-investment, net 4,378 4,151 3,713
Mortgage servicing rights 279 258 320
Federal Home Loan Bank stock 155 155 210
Premises and equipment, net 241 238 233
Net deferred tax asset 416 442 451
Other assets 765 416 317
Total assets $11,571 $9,840 $9,611
======= ====== ======
Liabilities and Stockholders' Equity
Deposits
Noninterest bearing $1,468 $1,209 $983
Interest bearing 6,081 5,860 5,327
----- ----- -----
Total deposits 7,549 7,069 6,310
Federal Home Loan Bank advances 1,625 514 1,125
Long-term debt 317 331 349
Representation and warranty reserve 53 53 48
Other liabilities 607 500 427
--- --- ---
Total liabilities 10,151 8,467 8,259
------ ----- -----
Stockholders' Equity
Preferred stock 267 267 267
Common stock 1 1 1
Additional paid in capital 1,483 1,482 1,479
Accumulated other comprehensive income
(loss) 23 8 (1)
Accumulated deficit (354) (385) (394)
---- ---- ----
Total stockholders' equity 1,420 1,373 1,352
Total liabilities and stockholders'
equity $11,571 $9,840 $9,611
======= ====== ======
Flagstar Bancorp, Inc.
Consolidated Statements of Operations
(Dollars in millions, except per share data)
(Unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2015 2014 2014
---- ---- ----
Total
interest
income $79.3 $72.2 $66.4
Total
interest
expense 14.4 10.9 8.2
---- ---- ---
Net
interest
income 64.9 61.3 58.2
(Benefit)
provision
for loan
losses (3.5) 5.0 112.3
---- --- -----
Net
interest
income
after
provision
for loan
losses 68.4 56.3 (54.1)
---- ---- -----
Noninterest Income
Net gain
on loan
sales 91.3 53.5 45.3
Loan fees
and
charges 17.0 16.8 12.3
Deposit
fees and
charges 6.1 6.0 4.8
Loan
administration
income 4.3 5.5 7.0
Net
(loss)
return
on the
mortgage
servicing
asset (2.4) 1.6 16.1
Net
(loss)
gain on
sale of
assets (0.4) 1.7 2.2
Representation
and
warranty
provision 1.5 6.1 1.7
Other
noninterest
income 0.9 7.2 (14.4)
Total
noninterest
income 118.3 98.4 75.0
----- ---- ----
Noninterest Expense
Compensation
and
benefits 60.8 59.0 65.6
Commissions 10.4 9.3 7.2
Occupancy
and
equipment 19.9 20.1 20.4
Asset
resolution 7.8 13.4 11.5
Federal
insurance
premiums 5.5 5.3 5.0
Loan
processing
expense 11.7 10.6 7.7
Legal and
professional
expense 9.0 10.8 11.3
Other
noninterest
expense 11.9 10.7 10.6
---- ---- ----
Total
noninterest
expense 137.0 139.2 139.3
----- ----- -----
Income
(loss)
before
income
taxes 49.7 15.5 (118.4)
Provision
(benefit)
for
income
taxes 18.2 4.4 (40.0)
---- --- -----
Net
income
(loss) 31.5 11.1 (78.4)
Preferred
stock
dividend/
accretion - - (0.5)
--- --- ----
Net
income
(loss)
applicable
to
common
stockholders $31.5 $11.1 $(78.9)
===== ===== ======
Earnings (loss) per
share
Basic $0.43 $0.07 $(1.51)
===== ===== ======
Diluted $0.43 $0.07 $(1.51)
===== ===== ======
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in millions, except share data)
(Unaudited)
Three Months Ended
------------------
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
Mortgage loans
originated (1) $7,254 $6,603 $4,867
Other loans
originated 59 103 172
Mortgage loans
sold and
securitized 6,254 6,831 4,474
Interest rate
spread (2) 2.60% 2.67% 2.87%
Net interest
margin 2.75% 2.80% 2.97%
Average common
shares
outstanding 56,385,454 56,310,858 56,194,184
Average fully
diluted shares
outstanding 56,775,039 56,792,751 56,194,184
Average interest-
earning assets $9,422 $8,725 $7,830
Average interest
paying
liabilities 7,505 6,918 6,363
Average
stockholders'
equity 1,423 1,395 1,445
Return (loss) on
average assets 1.16% 0.44% (3.39)%
Return (loss) on
average equity 8.85% 3.18% (21.85)%
Efficiency ratio 74.8% 87.2% 104.6%
Efficiency ratio
(adjusted) (3) 75.4% 90.6% 91.3%
Equity-to-assets
ratio (average
for the period) 13.11% 13.74% 15.52%
Charge-offs to
average LHFI (4) 3.97% 0.91% 1.36%
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
Book value per
common share $20.43 $19.64 $19.29
Number of common
shares
outstanding 56,436,026 56,332,307 56,221,056
Mortgage loans
subserviced for
others $44,708 $46,724 $39,554
Mortgage loans
serviced for
others 27,046 25,427 28,999
Weighted average
service fee
(basis points) 27.7 27.2 28.5
Capitalized value
of mortgage
servicing rights 1.03% 1.01% 1.10%
Mortgage servicing
rights to Tier 1
capital 22.2% 21.8% 27.6%
Ratio of allowance
for loan losses
to LHFI (4) 5.69% 7.01% 8.11%
Ratio of non-
performing assets
to total assets 0.87% 1.42% 1.48%
Equity-to-assets
ratio 12.27% 13.95% 14.06%
Common equity-to-
assets ratio 9.96% 11.24% 11.28%
Number of bank
branches 107 107 106
Number of FTE
employees 2,680 2,739 2,798
(1) Includes residential first
mortgage and second mortgage
loans.
(2) Interest rate spread is the
difference between the annualized
yield earned on average interest-
earning assets for the period and
the annualized rate of interest
paid on average interest-bearing
liabilities for the period.
(3) See Non-GAAP reconciliation.
(4) Excludes loans carried under the
fair value option.
Flagstar Bancorp, Inc.
Earnings Per Share
(Dollars in millions, except share data)
(Unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2015 2014 2014
---- ---- ----
Net income (loss) $31.5 $11.1 $(78.4)
Less: preferred stock
dividend/accretion - - (0.5)
--- --- ----
Net income (loss) from
continuing operations 31.5 11.1 (78.9)
Deferred cumulative
preferred stock dividends (7.3) (7.1) (5.7)
Net income (loss) applicable
to Common Stockholders $24.2 $4.0 $(84.6)
===== ==== ======
Weighted Average Shares
Weighted average common
shares outstanding 56,385,454 56,310,858 56,194,184
Effect of dilutive securities
Warrants 232,474 248,202 -
Stock-based awards 157,111 233,691 -
Weighted average diluted
common shares 56,775,039 56,792,751 56,194,184
========== ========== ==========
Earnings (loss) per common share
Net income (loss) applicable
to Common Stockholders $0.43 $0.07 $(1.51)
Effect of dilutive securities
Warrants - - -
Stock-based awards - - -
Diluted earnings (loss) per
share $0.43 $0.07 $(1.51)
===== ===== ======
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
Three Months Ended
------------------
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
Average Balance Interest Annualized Average Balance Interest Annualized Average
Balance Interest Annualized
Yield/Rate Yield/Rate Yield/Rate
--- --- --- ----------
Interest-Earning Assets
Loans held-for-sale $1,842 $18.5 4.01% $1,687 $17.7 4.20% $1,297 $13.7 4.21%
Loans with government
guarantees 865 5.3 2.45% 1,141 5.6 1.96% 1,270 7.9 2.50%
Loans held-for-investment
Consumer loans (1) 2,615 25.1 3.85% 2,510 23.9 3.81% 2,914 28.0 3.84%
Commercial loans (1) 1,678 16.6 3.95% 1,521 14.1 3.62% 950 9.1 3.83%
----- ---- ----- ---- --- ---
Total loans held-for-
investment 4,293 41.7 3.89% 4,031 38.0 3.74% 3,864 37.1 3.84%
Investment securities 2,113 13.6 2.58% 1,621 10.8 2.66% 1,173 7.5 2.57%
Interest-earning deposits 309 0.2 0.44% 245 0.1 0.23% 226 0.2 0.26%
--- --- --- --- --- ---
Total interest-earning
assets 9,422 $79.3 3.37% 8,725 $72.2 3.30% 7,830 $66.4 3.39%
Other assets 1,434 1,429 1,478
----- ----- -----
Total assets $10,856 $10,154 $9,308
======= ======= ======
Interest-Bearing Liabilities
Retail deposits
Demand deposits $424 $0.1 0.14% $421 $0.1 0.14% $420 $0.1 0.14%
Savings deposits 3,561 6.8 0.77% 3,394 6.0 0.68% 2,875 3.4 0.47%
Money market deposits 257 0.2 0.25% 257 0.1 0.22% 280 0.1 0.18%
Certificate of deposits 787 1.3 0.67% 837 1.4 0.68% 987 1.8 0.74%
--- --- --- --- --- ---
Total retail deposits 5,029 8.4 0.67% 4,909 7.6 0.61% 4,562 5.4 0.48%
Government deposits
Demand deposits 225 0.2 0.39% 230 0.2 0.39% 122 0.1 0.34%
Savings deposits 374 0.5 0.52% 386 0.6 0.52% 209 0.2 0.41%
Certificate of deposits 357 0.3 0.35% 373 0.3 0.36% 337 0.3 0.28%
--- --- --- --- --- ---
Total government deposits 956 1.0 0.43% 989 1.1 0.43% 668 0.6 0.33%
Total deposits 5,985 9.4 0.63% 5,898 8.7 0.58% 5,230 6.0 0.46%
Federal Home Loan Bank
advances 1,161 3.2 1.08% 773 0.5 0.24% 886 0.5 0.24%
Other 359 1.8 2.39% 247 1.7 2.84% 247 1.7 2.67%
--- --- --- --- --- ---
Total interest-bearing
liabilities 7,505 14.4 0.78% 6,918 10.9 0.62% 6,363 8.2 0.52%
Noninterest-bearing
deposits (2) 1,383 1,247 979
Other liabilities 545 594 521
Stockholders' equity 1,423 1,395 1,445
----- ----- -----
Total liabilities and
stockholder's equity $10,856 $10,154 $9,308
======= ======= ======
Net interest-earning
assets $1,917 $1,807 $1,467
====== ====== ======
Net interest income $64.9 $61.3 $58.2
===== ===== =====
Interest rate spread (3) 2.60% 2.67% 2.87%
==== ==== ====
Net interest margin (4) 2.75% 2.80% 2.97%
==== ==== ====
Ratio of average interest-earning
assets to interest-bearing liabilities 125.5% 126.1% 123.1%
===== ===== =====
Total average deposits $7,368 $7,145 $6,209
====== ====== ======
(1) Consumer loans include:
residential first mortgage,
second mortgage, HELOC and
other consumer loans.
Commercial loans include:
commercial real estate,
commercial and industrial and
warehouse lending loans.
(2) Includes company controlled
deposits that arise due to
the servicing of loans for
others, which do not bear
interest.
(3) Interest rate spread is the
difference between rate of
interest earned on interest-
earning assets and rate of
interest paid on interest-
bearing liabilities.
(4) Net interest margin is net
interest income divided by
average interest-earning
assets.
Gain on Loan Sales
(Dollars in millions)
(Unaudited)
Three Months Ended
------------------
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
Description
Valuation gain (loss)
Value of interest rate locks $23.0 0.37% $4.0 0.06% $11.0 0.25%
Value of forward sales (12.4) (0.20)% (7.7) (0.11)% (16.6) (0.38)%
Fair value of loans held-for-
sale 105.7 1.66% 132.1 1.93% 63.0 1.41%
Total valuation gains 116.3 1.86% 128.4 1.88% 57.4 1.28%
Sales losses
Marketing losses, net of
adjustments 3.7 0.06% (10.9) (0.16)% 21.6 0.48%
Pair-off losses (26.8) (0.43)% (62.1) (0.91)% (32.5) (0.72)%%
Provision for representation and
warranty reserve (1.9) (0.03)% (1.9) (0.03)% (1.2) (0.03)%
---- ------ ---- ------ ---- ------
Total sales losses (25.0) (0.40)% (74.9) (1.10)% (12.1) (0.27)%
----- ------ ----- ------ ----- ------
Total gain on loan sales $91.3 $53.5 $45.3
===== ===== =====
Total mortgage rate lock
commitments (gross) $9,035 $7,605 $6,040
====== ====== ======
Total loan sales and
securitizations $6,254 1.46% $6,831 0.78% $4,474 1.01%
====== ====== ======
Total mortgage rate lock
commitments (fallout-adjusted)
(1) $7,185 1.27% $6,156 0.87% $4,854 0.93%
====== ====== ======
(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 - Bank
(Dollars in millions)
(Unaudited)
March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014
-------------- ----------------- ------------------ ------------- --------------
Amount Ratio Amount Ratio Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Tier 1 leverage (to adjusted tangible assets) (1) $1,278 12.21% $1,167 12.43% $1,134 12.38% $1,189 12.52% $1,140 12.44%
Total adjusted tangible asset base $10,471 $9,392 $9,162 $9,494 $9,161
======= ====== ====== ====== ======
Tier 1 common equity (to risk weighted assets) (1) $1,278 21.58% N/A N/A N/A N/A N/A N/A N/A N/A
Tier 1 capital (to risk weighted assets) (1) $1,278 21.58% $1,167 22.54% $1,134 22.84% $1,189 23.75% $1,140 23.62%
Total capital (to risk weighted assets) 1,357 22.91% 1,235 23.85% 1,199 24.14% 1,254 25.05% 1,203 24.93%
Risk weighted asset base $5,925 $5,179 $4,968 $5,007 $4,826
====== ====== ====== ====== ======
(1) On January 1, 2015, the Basel
III rules became effective,
subject to transitions
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.
N/A Not applicable.
Regulatory Capital - Bancorp
(Dollars in millions)
(Unaudited)
March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014
-------------- ----------------- ------------------ ------------- --------------
Amount Ratio Amount Ratio Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Tier 1 leverage (to adjusted tangible assets) (1) $1,257 12.02% $1,184 12.59% $1,146 12.50% $1,195 12.59% $1,159 12.63%
Total adjusted tangible asset base $10,453 $9,403 $9,173 $9,496 $9,171
======= ====== ====== ====== ======
Tier 1 common equity (to risk weighted assets) (1) $908 15.38% N/A N/A N/A N/A N/A N/A N/A N/A
Tier 1 capital (to risk weighted assets) (1) $1,257 21.26% $1,184 22.81% $1,146 23.03% $1,195 23.87% $1,159 23.96%
Total capital (to risk weighted assets) 1,336 22.61% 1,252 24.12% 1,212 24.35% 1,262 25.19% 1,223 25.28%
Risk weighted asset base $5,909 $5,190 $4,978 $5,009 $4,836
====== ====== ====== ====== ======
(1) On January 1, 2015, the Basel
III rules became effective,
subject to transitions
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.
N/A Not applicable.
Loan Originations
(Dollars in millions)
(Unaudited)
Three Months Ended
------------------
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
Consumer loans
Mortgage (1) $7,254 99.2% $6,603 98.5% $4,867 96.6%
Other consumer (2) 21 0.3% 27 0.4% 18 0.3%
--- --- --- --- --- ---
Total consumer loans 7,275 99.5% 6,630 98.9% 4,885 96.9%
Commercial loans (3) 38 0.5% 76 1.1% 155 3.1%
Total loan
originations $7,313 100.0% $6,706 100.0% $5,040 100.0%
====== ===== ====== ===== ====== =====
(1) Includes residential first
mortgage and second mortgage
loans.
(2) Other consumer loans include:
HELOC and other consumer
loans.
(3) Commercial loans include:
commercial real estate and
commercial and industrial
loans.
Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
Consumer loans
Residential first
mortgage $2,013 43.4% $2,194 49.3% $2,349 58.4%
Second mortgage 146 3.2% 149 3.4% 165 4.1%
HELOC 316 6.8% 256 5.8% 273 6.8%
Other 30 0.7% 31 0.7% 35 0.9%
--- --- --- --- --- ---
Total consumer loans 2,505 54.1% 2,630 59.2% 2,822 70.2%
----- ---- ----- ---- ----- ----
Commercial loans
Commercial real estate 635 13.7% 620 13.9% 513 12.7%
Commercial and
industrial 408 8.8% 429 9.6% 276 6.9%
Warehouse lending 1,083 23.4% 769 17.3% 409 10.2%
Total commercial loans 2,126 45.9% 1,818 40.8% 1,198 29.8%
----- ---- ----- ---- ----- ----
Total loans held-for-
investment $4,631 100.0% $4,448 100.0% $4,020 100.0%
====== ===== ====== ===== ====== =====
Residential Loans Serviced
(Dollars in millions)
(Unaudited)
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
Unpaid Number of Unpaid Number of Unpaid Number of
Principal accounts Principal accounts Principal accounts
Balance Balance Balance
Serviced for own loan
portfolio (1) $4,933 27,235 $4,521 26,268 $4,482 $28,072
Serviced for others 27,046 126,393 25,427 117,881 28,999 146,339
Subserviced for others
(2) 44,708 231,223 46,724 238,498 39,554 195,448
------ ------- ------ ------- ------ -------
Total residential
loans serviced $76,687 384,851 $76,672 382,647 $73,035 369,859
======= ======= ======= ======= ======= =======
(1) Includes loans held-for-
investment (residential first
mortgage, second mortgage and
HELOC), loans-held-for-sale
(residential first mortgage),
loans with government guarantees
(residential first mortgage) and
repossessed assets.
(2) Does not include temporary short-
term subservicing performed as a
result of sales of servicing-
released mortgage servicing
rights. Includes repossessed
assets.
Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2015 2014 2014
---- ---- ----
Beginning balance $297.0 $301.0 $207.0
Provision for loan
losses (3.5) 5.0 112.3
Charge-offs
Consumer loans
Residential first
mortgage (40.8) (8.7) (10.8)
Second mortgage (0.8) (0.4) (1.1)
HELOC (0.9) (0.8) (2.7)
Other (0.7) (0.4) (0.5)
---- ---- ----
Total consumer loans (43.2) (10.3) (15.1)
Total charge-offs (43.2) (10.3) (15.1)
Recoveries
Consumer loans
Residential first
mortgage 0.3 0.2 1.2
Second mortgage 0.1 0.1 0.1
HELOC 0.1 - -
Other 0.5 0.9 0.3
--- --- ---
Total consumer loans 1.0 1.2 1.6
Commercial loans
Commercial real estate 1.7 0.1 1.1
Total recoveries 2.7 1.3 2.8
--- --- ---
Charge-offs, net of
recoveries (40.5) (9.0) (12.3)
----- -----
Ending balance $253.0 $297.0 $307.0
====== ====== ======
Net charge-off ratio
(annualized) (1) 3.97% 0.91% 1.36%
Net charge-off ratio,
adjusted (annualized)
(1)(2) 0.45% 0.60% 1.11%
Net charge-off ratio (annualized)
also by loan type (1)
Residential first
mortgage 7.49% 1.58% 1.52%
Second mortgage 2.92 1.05 3.74
HELOC and consumer 2.81 0.75 6.69
Commercial real estate (1.06) (0.08) (1.00)
Commercial and
industrial - (0.03) (0.13)
(1) Excludes loans carried under the
fair value option.
(2) Excludes charge-offs of $36.0
million, $3.0 million and $2.3
million related to the sale
loans during the three months
ended March 31, 2015, December
31, 2014 and March 31, 2014,
respectively.
Representation and Warranty Reserve
(Dollars in thousands)
(Unaudited)
Three Months Ended
------------------
March 31, December 31, March 31,
2015 2014 2014
---------- ------------ ----------
Balance, beginning of period $53.0 $57.0 $54.0
Provision
Charged to gain on sale for current
loan sales 1.9 1.9 1.2
Charged to representation and
warranty provision (1.5) (6.1) (1.7)
-----------
Total 0.4 (4.2) (0.5)
Charge-offs, net (0.4) 0.2 (5.5)
---- --- ----
Balance, end of period $53.0 $53.0 $48.0
===== ===== =====
Composition of Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
March 31, 2015 Collectively Individually
Evaluated Evaluated Total
Reserves Reserves
--- -------- --------
Consumer loans
Residential
first mortgage $171 $16 $187
Second mortgage 7 6 13
HELOC 20 1 21
Other - - -
--- --- ---
Total consumer
loans 198 23 221
Commercial loans
Commercial real
estate 16 - 16
Commercial and
industrial 12 - 12
Warehouse
lending 4 - 4
Total
commercial
loans 32 - 32
--- --- ---
Total allowance
for loan
losses $230 $23 $253
==== === ====
December 31, Collectively Individually
2014 Evaluated Evaluated Total
Reserves Reserves
--- -------- --------
Consumer loans
Residential
first mortgage $152 $82 $234
Second mortgage 6 6 12
HELOC 18 1 19
Other 1 - 1
--- --- ---
Total consumer
loans 177 89 266
Commercial loans
Commercial real
estate 17 - 17
Commercial and
industrial 11 - 11
Warehouse
lending 3 - 3
--- --- ---
Total
commercial
loans 31 - 31
--- --- ---
Total allowance
for loan
losses $208 $89 $297
==== === ====
Non-Performing Loans and Assets
(Dollars in millions)
(Unaudited)
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
Non-performing
loans $56 $74 $84
Non-performing
TDRs 18 29 12
Non-performing
TDRs at inception
but performing
for less than six
months 10 17 15
--- --- ---
Total non-
performing loans
held-for-
investment 84 120 111
Real estate and
other non-
performing
assets, net 16 19 31
Non-performing
assets held-for-
investment, net
(1) $100 $139 $142
==== ==== ====
Ratio of non-
performing assets
to total assets 0.87% 1.42% 1.48%
Ratio of non-
performing loans
held-for-
investment to
loans held-for-
investment 1.81% 2.71% 2.76%
Ratio of non-
performing assets
to loans held-
for-investment
and repossessed
assets 2.15% 3.12% 3.50%
(1) Does not include non-performing
loans held-for-sale of $19.0
million, $14.8 million and $6.9
million at March 31, 2015,
December 31, 2014 and March 31,
2014, respectively.
Asset Quality - Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
30-59 Days Past Due 60-89 Days Past Due Greater than 90 days Total Past Due Total Investment
Loans
----- -----
March 31, 2015
Consumer loans $22 $8 $84 $114 $2,505
Commercial loans - - - - 2,126
--- --- --- --- -----
Total loans $22 $8 $84 $114 $4,631
=== === === ==== ======
December 31, 2014
Consumer loans $34 $10 $120 $164 $2,630
Commercial loans - - - - 1,818
Total loans $34 $10 $120 $164 $4,448
=== === ==== ==== ======
March 31, 2014
Consumer loans $49 $15 $109 $174 $2,822
Commercial loans 2 - 2 4 1,198
--- --- --- --- -----
Total loans $51 $15 $111 $178 $4,020
=== === ==== ==== ======
Troubled Debt Restructurings
(Dollars in millions)
(Unaudited)
TDRs
----
Performing Non- Non-
performing performing Total
TDRs at
inception
but
performing
for less than
six months
---
March 31, 2015
Consumer
loans $111 $18 $10 $139
Commercial
loans - - - -
Total
TDRs $111 $18 $10 $139
==== === === ====
December 31, 2014
Consumer
loans $362 $29 $17 $408
Commercial
loans - - - -
Total
TDRs $362 $29 $17 $408
==== === === ====
March 31, 2014
Consumer
loans $374 $12 $15 $401
Commercial
loans - - - -
Total
TDRs $374 $12 $15 $401
==== === === ====
Efficiency ratio and efficiency ratio (adjusted). The efficiency ratio, which generally measures the productivity of a bank, is calculated as noninterest expense divided by total operating income. Total operating income includes net interest income and total noninterest income. Management utilizes the efficiency ratio to monitor its own productivity and believes the ratio provides investors with a meaningful tool to monitor period-to-period productivity trends. The efficiency ratio (adjusted), excludes from noninterest expense and noninterest income (GAAP) certain adjusting items, that are described in the table below. As the provision for loan losses is already excluded by the ratio's own definition, we believe that the exclusion of representation and warranty provision provides investors with a more complete picture of our productivity and ability to generate operating income. The efficiency ratio (adjusted) provides investors with a meaningful base for period to period comparisons, which management believes will assist investors in analyzing our operating results and predicting future performance. These non-GAAP financial measures are also utilized internally by management to assess the performance of our own business.
Our calculations of the efficiency ratio may differ from the calculation of similar measures used by other banks and should be used to determine and evaluate period to period trends in our performance, rather than in comparison to other similar non-GAAP measurements utilized by other companies. In addition, investors should keep in mind that certain items excluded from income and expenses in the efficiency ratio (adjusted) are recurring and integral expenses to our operations, and that these expenses will still accrue under similar GAAP measures.
Adjusted Income from Operations and Adjusted Earnings Per Share. In addition to analyzing the Company's results on a reported basis, management reviews the Company's results and the results on an adjusted basis. These non-GAAP measures reflect the adjustment of the reported U.S. GAAP results for significant items that management does not believe are reflective of the Company's current and ongoing operations.
The following table provides a reconciliation of non-GAAP financial measures utilized in the adjusted efficiency ratio and adjusted earnings per share.
Non-GAAP Reconciliation
(Dollars in millions, except share data)
(Unaudited)
Three Months Ended
------------------
March 31, December 31, September 30, June 30, March 31,
2015 2014 2014 2014 2014
---- ---- ---- ---- ----
Net interest income (a) $64.9 $61.3 $64.4 $62.4 $58.2
Noninterest income (b) 118.3 98.4 85.2 102.5 75.0
Less provisions:
Representation and warranty
provision (1.5) (6.1) 2.2 5.2 (1.7)
Adjusting items:
Loan fees and charges (1) - - - (10.0) -
Representation and warranty
provision (2) - - 10.3 - -
Other noninterest income (3) - - - - 21.1
Adjusted noninterest income $118.3 $98.4 $95.5 $92.5 $96.1
------ ----- ----- ----- -----
Adjusted income (c) $181.7 $153.6 $162.1 $160.1 $152.6
Noninterest expense (d) $137.0 $139.2 $179.4 $121.4 $139.3
Adjusting items:
Legal and professional expense
(4) - - (1.1) (2.9) -
Other noninterest expense (5) - - (37.5) 10.0 -
--- --- ----- ---- ---
Adjusted noninterest expense (e) $137.0 $139.2 $140.8 $128.5 $139.3
------ ------ ------ ------ ------
Efficiency ratio (d/(a+b)) 74.8% 87.2% 120.0% 73.6% 104.6%
==== ==== ===== ==== =====
Efficiency ratio (adjusted) (e/
c) 75.4% 90.6% 86.8% 80.2% 91.3%
==== ==== ==== ==== ====
Net (loss) income applicable to
common stockholders $31.5 $11.1 $(27.6) $25.5 $(78.9)
Adjustment to remove adjusting
items (1-5 above), net of tax - - 48.9 (17.1) 21.1
Tax impact of adjusting items - - (13.6) 6.0 (7.4)
Adjusting tax item - - - - -
Adjusted net (loss) income
applicable to common
stockholders $31.5 $11.1 $7.7 $14.4 $(65.2)
===== ===== ==== ===== ======
Diluted (loss) earnings per
share $0.43 $0.07 $(0.61) $0.33 $(1.51)
Adjustment to remove adjusting
items - - 0.86 (0.31) 0.38
Tax impact of adjusting items - - (0.24) 0.11 (0.13)
Adjusting tax item - - - - -
--- --- --- --- ---
Diluted adjusted (loss) earnings
per share $0.43 $0.07 $0.01 $0.13 $(1.26)
===== ===== ===== ===== ======
Weighted average shares outstanding
Basic 56,385,454 56,310,858 56,249,300 56,230,458 56,194,184
========== ========== ========== ========== ==========
Diluted 56,775,039 56,792,751 56,249,300 56,822,102 56,194,184
========== ========== ========== ========== ==========
(1) Reverse benefit for contract
renegotiation.
(2) Add back reserve increase related to
indemnifications claims on government
insured loans.
(3) Negative fair value adjustment on
repurchased performing loans and a
benefit for contract renegotiation.
(4) Adjust for legal expenses related to
the litigation settlements during the
respective periods.
(5) Adjust for CFPB litigation settlement
expense.
Nonperforming assets / Tier 1 + Allowance for Loan Losses. The ratio of nonperforming assets to Tier 1 and allowance for loan losses divides the total level of nonperforming assets held for investment by Tier 1 capital (to adjusted total assets), as defined by bank regulations, plus allowance for loan losses. We believe these measurements are meaningful measures of capital adequacy used by investors, regulators, management and others to evaluate the adequacy of capital in comparison to other companies within the industry.
March 31, December 31, March 31,
2015 2014 2014
---- ---- ----
Non-performing
assets /Tier 1
capital +
allowance for
loan losses (Dollars in millions)
Non-performing
assets $100 $139 $142
Tier 1 capital
(1) 1,278 1,167 1,140
Allowance for
loan losses 253 297 307
--- --- ---
Tier 1 capital +
allowance for
loan losses $1,531 $1,464 $1,447
------ ------ ------
Non-performing
assets /Tier 1
capital +
allowance for
loan losses 6.5% 9.5% 9.8%
=== === ===
(1) Represents Tier 1 capital for
the Company.
Basel III (transitional) to Basel III (fully phased-in) reconciliation. On January 1, 2015, the Basel III rules became effective, subject to transitions 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. 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 January 2019. Accordingly, the calculations provided below are estimates. These measures are considered to be non-GAAP financial measures because they are not formally defined by GAAP and the Basel III implementation regulations will not be fully phased-in until 2019. The regulations are subject to change as clarifying guidance becomes available and the calculations currently include our interpretations of the requirements including informal feedback received through the regulatory process. Other entities may calculate the Basel III ratios differently from ours based on their interpretation of the guidelines. Since analysts and banking regulators may assess our capital adequacy using the Basel III framework, we believe that it is useful to provide investors information enabling them to assess our capital adequacy on the same basis.
March 31, 2015 Common Equity Tier 1 Leverage (to Tier 1 Capital
(to Total Risk-Based
Tier 1 (to Risk Adjusted Tangible Risk Weighted Capital (to Risk
Weighted Assets) Assets) Assets) Weighted Assets)
--------------- ------ ------ ---------------
Flagstar Bank (the Bank)
Regulatory capital - Basel III (transitional)
to Basel III (fully phased-in) (1)
Basel III (transitional) $1,278 $1,278 $1,278 $1,357
Increased deductions related to deferred tax
assets, mortgage servicing assets, and other
capital components (148) (148) (148) (146)
---- ---- ---- ----
Basel III (fully phased-in) capital (1) $1,130 $1,130 $1,130 $1,211
------ ------ ------ ------
Risk-weighted assets - Basel III
(transitional) to Basel III (fully phased-in)
(1)
Basel III assets (transitional) $5,925 $10,470 $5,925 $5,925
Net change in assets 165 (148) 165 165
--- ---- --- ---
Basel III (fully phased-in) assets (1) $6,090 $10,322 $6,090 $6,090
------ ------- ------ ------
Capital ratios
Basel III (transitional) 21.58% 12.21% 21.58% 22.91%
Basel III (fully phased-in) (1) 18.56% 10.95% 18.56% 19.89%
(1) On January 1, 2015, the Basel
III rules became effective,
subject to transitions
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.
March 31, 2015 Common Equity Tier 1 Leverage (to Tier 1 Capital
(to Total Risk-Based
Tier 1 (to Risk Adjusted Tangible Risk Weighted Capital (to Risk
Weighted Assets) Assets) Assets) Weighted Assets)
--------------- ------ ------ ---------------
Flagstar Bank (the Company)
Regulatory capital - Basel III (transitional) to Basel
III (fully phased-in) (1)
Basel III (transitional) $909 $1,257 $1,257 $1,336
Increased deductions related to deferred tax assets,
mortgage servicing assets, and other capital components (356) (197) (197) (196)
---- ---- ---- ----
Basel III (fully phased-in) capital (1) $553 $1,060 $1,060 $1,140
---- ------ ------ ------
Risk-weighted assets - Basel III (transitional) to Basel
III (fully phased-in) (1)
Basel III assets (transitional) $5,909 $10,454 $5,909 $5,909
Net change in assets 3 (197) 3 3
--- ---- --- ---
Basel III (fully phased-in) assets (1) $5,912 $10,257 $5,912 $5,912
------ ------- ------ ------
Capital ratios
Basel III (transitional) 15.38% 12.02% 21.26% 22.61%
Basel III (fully phased-in) (1) 9.36% 10.34% 17.93% 19.28%
(1) On January 1, 2015, the Basel
III rules became effective,
subject to transitions
provisions primarily related
to regulatory deductions and
adjustments impacting common
equity Tier 1 capital and
Tier 1 capital. We reported
under Basel I (which included
the Market Risk Final Rules)
at December 31, 2014.
For more information, contact:
David L. Urban
david.urban@flagstar.com
(248) 312-5970
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/flagstar-reports-first-quarter-2015-net-income-of-315-million-or-043-per-diluted-share-300072963.html
SOURCE Flagstar Bancorp, Inc.
