FLAGSTAR BANCORP, INC. TROY, Mich., Oct. 27, 2015 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE:FBC), the holding company for Flagstar Bank, FSB, today reported third quarter 2015 net income of $47 million, or $0.69 per diluted share, as compared to $46 million in the second quarter 2015, or $0.68 per diluted share, and a net loss of $28 million in the third quarter 2014, or a loss of $0.61 per diluted share.
"We are pleased with the solid results we were able to post again this quarter. Despite lower revenue from mortgage originations, we grew total revenue and reduced expenses, resulting in positive operating leverage," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp. "We've now posted four straight quarters of positive net income and operating leverage, a testament to the execution of our business plan."
"Additionally, on October 15, 2015, we sold $214 million of interest-only loans, after previously moving these loans to our held-for-sale portfolio in anticipation of this transaction. We've now sold $600 million of these assets this year. Despite these sales, we've been able to grow the earnings power of our balance sheet, reinvesting the proceeds from these sales into higher quality assets. Additionally, our level of nonperforming loans remains below pre-crisis levels."
"Our success has only strengthened our resolve in our business plan of growing our community bank, increasing the profitability of our mortgage originations, and building our mortgage sub-servicing business. We continue to make progress on the regulatory front and believe that we are on track for lifting the OCC consent order and redeeming our TARP preferred securities."
Third Quarter 2015 Highlights:
Income Statement Highlights
Three Months Ended
------------------
September 30, June 30, March 31, December 31, September 30,
2015 2015 2015 2014 2014
---- ---- ---- ---- ----
(Dollars in millions)
Consolidated
Statements of
Operations
Net interest income $73 $73 $65 $61 $64
(Benefiit) provision
for loan losses (1) (13) (4) 5 8
Noninterest income 128 126 119 98 85
Noninterest expense 131 138 138 139 179
--- --- --- --- ---
Income (loss) before
income taxes 71 74 50 15 (38)
Provision (benefit)
for income taxes 24 28 18 4 (10)
--- --- --- --- ---
Net income (loss) $47 $46 $32 $11 $(28)
=== === === === ====
Income (loss) per
share:
Basic $0.70 $0.69 $0.43 $0.07 $(0.61)
Diluted $0.69 $0.68 $0.43 $0.07 $(0.61)
Key Ratios
Three Months Ended Change (bps)
------------------ -----------
September 30, June 30, March 31, December 31, September 30, Seq Yr/Yr
2015 2015 2015 2014 2014
---- ---- ---- ---- ----
Net interest margin 2.75% 2.79% 2.75% 2.80% 2.91% (4) (16)
Return (loss) on average
assets 1.52% 1.57% 1.16% 0.44% (1.08)% (5) 260
Return (loss) on average
equity 12.41% 12.71% 8.85% 3.18% (7.88)% (30) 2029
Balance Sheet Highlights
Three Months Ended % Change
------------------ --------
September 30, June 30, March 31, December 31, September 30, Seq Yr/Yr
2015 2015 2015 2014 2014
---- ---- ---- ---- ----
(Dollars in millions)
Average Balance Sheet
Average interest-earning assets $10,693 $10,367 $9,422 $8,725 $8,815 3% 21%
Average loans held-for-sale 2,200 2,218 1,842 1,687 1,629 (1)% 35%
Average loans held-for-investment 5,412 4,938 4,293 4,031 4,088 10% 32%
Average total deposits 8,260 7,736 7,368 7,146 7,047 7% 17%
Net Interest Income
Third quarter 2015 net interest income was unchanged at $73 million. The results were led by modest earning asset growth offset by a slight drop in net interest margin.
Net interest margin decreased 4 basis points to 2.75 percent for the third quarter 2015, as compared to 2.79 percent for the second quarter 2015. The decrease from the prior quarter was primarily driven by a lower yield on commercial loans held-for-investment (including warehouse loans) and higher interest on FHLB debt to match-fund long-term assets.
Average loans held-for-investment totaled $5.4 billion for the third quarter 2015, increasing $474 million, or 10 percent, compared to the second quarter 2015. Residential first mortgage loans grew $374 million, or 16 percent, as the Company retained more loan production on the balance sheet. Home equity lines of credit increased $83 million, or 25 percent, reflecting the acquisition of a loan portfolio in the second quarter 2015.
Average total deposits were $8.3 billion in the third quarter 2015, increasing $524 million, or 7 percent, from the prior quarter. Company-controlled deposits increased $380 million, or 24 percent, driven by the return of mortgage escrow deposits. Government deposits rose $124 million, or 13 percent, led by higher demand and savings deposits.
Provision for Loan Losses
The Company experienced a provision benefit in the third quarter 2015 from the transfer of interest-only and sale of lower performing loans. The benefit for loan losses totaled $1 million for the third quarter 2015, as compared to a benefit of $13 million for the second quarter 2015. During the third quarter 2015, the Company realized a $9 million net allowance release primarily related to loan sales.
Net charge-offs in the third quarter 2015 were $24 million, or 1.84 percent of applicable loans, compared to $18 million, or 1.49 percent of applicable loans in the prior quarter. The third quarter 2015 amount included $16 million of net charge-offs associated with the sale of $233 million unpaid principal balance of interest-only and lower performing loans. The second quarter 2015 amount included $15 million of net charge-offs associated with the sale of $456 million unpaid principal balance of interest-only and lower performing loans. Excluding loan sales in both quarters, net charge-offs in the third quarter 2015 were $8 million, or 0.61 percent of applicable loans, compared to $3 million, or 0.26 percent of applicable loans in the prior quarter.
Noninterest Income
Third quarter 2015 noninterest income increased $2 million, or 2 percent, to $128 million, as compared to $126 million for the second quarter 2015. The third quarter 2015 results were led by an increase in the net return on the mortgage servicing asset, the net gain on sale of assets and other noninterest income, partially offset by lower net gain on loan sales.
Third quarter 2015 net gain on loan sales decreased $15 million, or 18 percent, to $68 million, as compared to $83 million for the second quarter 2015. The decrease from the prior quarter reflected a drop in the gain on sale margin and lower fallout-adjusted locks. The net gain on loan sale margin fell 16 basis points to 1.05 percent for the third quarter 2015, as compared to 1.21 percent for the second quarter 2015, led by lower margins on government and refinance business. In the third quarter 2015, fallout-adjusted locks decreased 5 percent to $6.5 billion. The Company increased government and jumbo production to partially offset a drop in conventional volumes.
Mortgage Metrics
Three Months Ended Change (% / bps)
------------------ ----------------
September 30, June 30, March 31, December 31, September 30, Seq Yr/Yr
2015 2015 2015 2014 2014
---- ---- ---- ---- ----
(Dollars in millions)
GOS margin (change in bps) (1) 1.05% 1.21% 1.27% 0.87% 0.83% (16) 22
Gain on loan sales $68 $83 $91 $53 $52 (18.1)% 30.8%
Mortgage rate lock commitments (fallout-adjusted) (2) $6,495 $6,804 $7,185 $6,156 $6,304 (4.5)% 3.0%
Residential loans serviced (number of accounts -000's)
(3) 369 378 385 383 388 (2.4)% (4.9)%
Capitalized value of mortgage servicing rights 1.12% 1.15% 1.03% 1.01% 1.08% (3) 4
(1) Gain on sale margin is based on net gain on loan sales to fallout-adjusted mortgage rate lock commitments.
(2) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not
expected to close based on previous historical experience and the level of interest rates.
(3) Includes serviced for own loan portfolio, serviced for others and subserviced for others loans.
Net return on the mortgage servicing asset (including the impact of economic hedges of mortgage servicing rights) rose to $12 million for the third quarter 2015, as compared to $9 million for the second quarter 2015. The net return on the mortgage servicing asset improved $3 million from the prior quarter largely as the prior quarter had $5 million of elevated costs associated with sales in that quarter and the current quarter benefited $3 million from collections of contingencies held back by the purchaser relating to MSR sales in prior periods. These benefits were partially offset in the current quarter by the net impact of market-driven changes in the position.
Other noninterest income for the third quarter 2015 totaled $9 million, as compared to a loss of $1 million for the second quarter 2015. The $10 million improvement was the result of three main factors. First, the change in the fair value of the Company's commitments to purchase HFI residential first mortgage loans improved $5 million due to a drop in interest rates at the end of the third quarter 2015, compared to an increase in rates at the end of the second quarter 2015; second, the change in fair value for HFI residential first mortgage loans carried under a fair value election was $3 million better due to the impact of the same change in interest rates; and finally, the fair value of HELOCs improved $2 million due to a $2 million charge in the prior quarter while certain of these loans were serviced by an outside servicer. At the end of the second quarter 2015, we exercised our clean-up call on part of this portfolio and its performance in the third quarter 2015 has been consistent with our expectations.
Noninterest Expense
Noninterest expense decreased $7 million, or 5 percent, to $131 million for the third quarter 2015, as compared to $138 million for the second quarter 2015. The third quarter 2015 results were led by a decrease in asset resolution expense and other noninterest expense, partially offset by higher legal and professional expense. The Company's efficiency ratio improved to 65.0 percent for the third quarter 2015 through careful expense management.
Compensation and benefits decreased $1 million, or 2 percent, to $58 million for the third quarter 2015, as compared to $59 million in the prior quarter.
Third quarter 2015 asset resolution expense declined $5 million, as compared to the second quarter 2015. The decrease largely reflected the positive impact of building a stronger balance sheet.
Legal and professional expenses were $10 million for the third quarter 2015, as compared to $8 million for the second quarter 2015. The $2 million increase was due to higher legal expense related to the execution of various non-agency loan sales and consulting fees on various projects to improve operational efficiency and risk management.
Other noninterest expenses for the third quarter 2015 totaled $13 million, as compared to $15 million for the second quarter 2015. The $2 million decrease from the prior quarter was related to lower advertising costs and regulatory-related expense.
Income Taxes
The third quarter 2015 provision for income taxes totaled $24 million, as compared to $28 million in the second quarter 2015. The effective tax rate in the third quarter 2015 was 34.4 percent, as compared to 37.2 percent in the second quarter 2015. The decline in the marginal tax rate in the third quarter 2015 resulted from the recognition of R&D tax credits and higher tax exempt income.
Asset Quality
Credit Quality Ratios
Three Months Ended Change (% / bps)
------------------ ----------------
September 30, June 30, March 31, December 31, September 30, Seq Yr/Yr
2015 2015 2015 2014 2014
---- ---- ---- ---- ----
(Dollars in millions)
Allowance for loan loss to LHFI 3.7% 4.3% 5.7% 7.0% 7.6% (60) (390)
Charge-offs, net of recoveries $24 $18 $41 $9 $13 33% 85%
Charge-offs, net of recoveries, $8 $3 $5 $6 $7 167% 14%
adjusted (1)
Total nonperforming loans held-for-investment $63 $65 $84 $120 $107 (3)% (41)%
Net charge-off ratio (annualized) 1.84% 1.49% 3.97% 0.91% 1.36% 35 48
Net charge-off ratio, adjusted (annualized) (1) 0.61% 0.26% 0.45% 0.60% 0.70% 35 (9)
Nonperforming loans to LHFI 1.15% 1.22% 1.81% 2.71% 2.56% (7) (141)
(1) Excludes charge-offs of $16 million, $15 million, $36 million, $3 million and $6 million related to the sale of
nonperforming loans and TDRs during the three months ended September 30, 2015, June 30, 2015, March 31, 2015,
December 31, 2014, and September 30, 2014, respectively.
The allowance for loan losses was $197 million at September 30, 2015, covering 3.7 percent of loans held-for-investment. The allowance for loan losses was $222 million at June 30, 2015, covering 4.3 percent of loans held-for-investment. The decrease in the allowance for loan losses in the third quarter 2015 was largely due to charge-offs and the allowance release related to the transfer of interest-only and sale of lower performing loans.
Third quarter 2015 net charge-offs were $24 million, representing 1.84 percent of applicable loans. This represented an increase of $6 million from the second quarter 2015 net charge-offs of $18 million, or 1.49 percent of applicable loans. Excluding loan sales in both quarters, net charge-offs in the third quarter 2015 were $8 million, or 0.61 percent, compared to $3 million, or 0.26 percent in the prior quarter. The increase was primarily due to $3 million of commercial loan charge-offs and $1 million of consumer charge-offs related to an operational change to partially charge-off loans when they are 180 days past the loan's maturity date, regardless of the delinquency status of the loan. The remaining $4 million of charge-offs accounted for 0.30 percent of applicable loans.
Nonperforming loans decreased to $63 million at September 30, 2015 from $65 million at June 30, 2015. The ratio of nonperforming loans to loans held-for-investment decreased to 1.15 percent at September 30, 2015 from 1.22 percent at June 30, 2015. At September 30, 2015, consumer loan delinquencies (30-89 days past due) totaled $21 million, or 64 basis points, an increase of 12 basis points from June 30, 2015 and a decrease of 131 basis points from the same period last year. There were no commercial loan delinquencies (30-89 days past due) at September 30, 2015.
Capital
Capital Ratios (Bancorp) (1) Three Months Ended Change (% / bps)
------------------ ----------------
September 30, June 30, March 31, December 31, September 30, Seq Yr/Yr
2015 2015 2015 2014 2014
---- ---- ---- ----
Total capital 21.64% 21.30% 22.61% 24.12% 24.35% 34 (271)
Tier 1 capital 20.32% 19.97% 21.26% 22.81% 23.03% 35 (271)
Tier 1 leverage 11.65% 11.47% 12.02% 12.59% 12.50% 18 (85)
Mortgage servicing rights to Tier 1 capital 21.1% 24.2% 22.2% 21.8% 24.9% (310) (380)
Book value per common share (change in percent) $21.91 $20.98 $20.43 $19.64 $19.28 4.4% 13.6%
(1) On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory
deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which
included the Market Risk Final Rules) at December 31, 2014 and prior.
The Company's regulatory capital ratios remain well above current regulatory quantitative guidelines for "well-capitalized" institutions. At September 30, 2015, the Company had a Tier 1 leverage ratio of 11.65 percent, as compared to 11.47 percent at June 30, 2015. The increase in the ratio resulted from earnings retention and a lower deduction for net operating loss-related deferred tax assets. At September 30, 2015, the Company had a common equity-to-assets ratio of 9.88 percent.
Earnings Conference Call
As previously announced, the Company's third quarter 2015 earnings call will be held Tuesday, October 27, 2015 at 11 a.m. (ET).
To join the call, please dial (877) 719-9795 toll free or (719) 325-4751, and use passcode 908089. 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 908089.
The conference call will also be available as a live audiocast on the Investor Relations section of flagstar.com.
It will be archived on that site and will be available for replay and download. The slide presentation accompanying the conference call will be posted on the site.
About Flagstar
Flagstar Bancorp, Inc. (NYSE: FBC) is a $12.5 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, the largest bank headquartered in Michigan, provides commercial, small business, and consumer banking services through 99 branches in the state. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as through 14 retail centers in 10 states. Flagstar is the 10th largest national originator of mortgage loans and a top 20 mortgage servicer, handling payments and record keeping for over $74.3 billion home loans for nearly 370,000 borrowers. For more information, please visit flagstar.com.
Use of Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release includes non-GAAP financial measures such as the ratio of total nonperforming assets to Tier 1 capital (to adjusted total assets) and estimated Basel III ratios. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the underlying performance and trends of Flagstar.
Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To mitigate these limitations, there are practices in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that the Company's performance is properly reflected to facilitate consistent period-to-period comparisons. Although the Company believes the non-GAAP financial measures disclosed in this report enhance investors' understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for those financial measures prepared in accordance with GAAP.
Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this earnings release, conference call slides, or the Form 8-K related to this press release. Additional discussion of the use of non-GAAP measures can also be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission. These documents can all be found on the Company's website at flagstar.com.
Forward-Looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Flagstar Bancorp, Inc.'s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements can be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company's website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.
Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(Dollars in millions)
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
Assets
Cash and cash equivalents
Cash $65 $52 $47 $44
Interest-earning deposits 130 194 89 63
--- --- --- ---
Total cash and cash equivalents 195 246 136 107
Investment securities available-for-sale 1,150 2,272 1,672 1,378
Investment securities held-to-maturity 1,108 - - -
Loans held-for-sale 2,408 2,038 1,244 1,469
Loans with government guarantees 509 592 1,128 1,192
Loans held-for-investment, net
Loans held-for-investment 5,514 5,335 4,448 4,185
Less: allowance for loan losses (197) (222) (297) (301)
---- ---- ---- ----
Total loans held-for-investment, net 5,317 5,113 4,151 3,884
Mortgage servicing rights 294 317 258 285
Federal Home Loan Bank stock 113 113 155 210
Premises and equipment, net 243 240 238 238
Net deferred tax asset 372 400 442 450
Other assets 810 808 416 412
--- --- --- ---
Total assets $12,519 $12,139 $9,840 $9,625
======= ======= ====== ======
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $1,749 $1,417 $1,209 $1,299
Interest-bearing 6,388 6,231 5,860 5,935
----- ----- ----- -----
Total deposits 8,137 7,648 7,069 7,234
Federal Home Loan Bank advances 2,024 2,198 514 150
Long-term debt 279 283 331 340
Representation and warranty reserve 45 48 53 57
Other liabilities 530 511 500 492
--- --- --- ---
Total liabilities 11,015 10,688 8,467 8,273
------ ------ ----- -----
Stockholders' Equity
Preferred stock 267 267 267 267
Common stock 1 1 1 1
Additional paid in capital 1,484 1,482 1,482 1,481
Accumulated other comprehensive income 12 8 8 (1)
Accumulated deficit (260) (307) (385) (396)
---- ---- ---- ----
Total stockholders' equity 1,504 1,451 1,373 1,352
Total liabilities and stockholders' equity $12,519 $12,139 $9,840 $9,625
======= ======= ====== ======
Flagstar Bancorp, Inc.
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share data)
(Unaudited)
Third Quarter 2015 Compared to:
-------------------------------
Three Months Ended Second Quarter Third Quarter
2015 2014
---- ----
September 30, June 30, March 31, December 31, September 30, Amount Percent Amount Percent
2015 2015 2015 2014 2014
---- ---- ---- ---- ----
Interest Income
Total interest income $91 $90 $79 $72 $75 $1 1.1% $16 21.3%
Total interest expense 18 17 14 11 11 1 5.9% 7 63.6%
--- --- --- --- --- --- --- --- ----
Net interest income 73 73 65 61 64 - - % 9 14.1%
(Benefit) provision for (1) (13) (4) 5 8 12 (92.3)% (9) N//M
loan losses
Net interest income after 74 86 69 56 56 (12) (14.0)% 18 32.1%
provision for loan losses
---
Noninterest Income
Net gain on loan sales 68 83 91 53 52 (15) (18.1)% 16 30.8%
Loan fees and charges 17 19 17 17 19 (2) (10.5)% (2) (10.5)%
Deposit fees and charges 7 6 6 6 6 1 16.7% 1 16.7%
Loan administration 8 7 4 5 6 1 14.3% 2 33.3%
income
Net return (loss) on the 12 9 (2) 2 1 3 33.3% 11 N/M
mortgage servicing asset
Net gain (loss) on sale 1 (2) - 2 5 3 N/M (4) (80.0)%
of assets
Representation and warranty benefit (provision) 6 5 2 6 (13) 1 20.0% 19 N/M
Other noninterest income 9 (1) 1 7 9 10 N/M - - %
(loss)
Total noninterest income 128 126 119 98 85 2 1.6% 43 50.6%
--- --- --- --- --- --- --- --- ----
Noninterest Expense
Compensation and benefits 58 59 61 59 54 (1) (1.7)% 4 7.4%
Commissions 10 11 10 9 10 (1) (9.1)% - - %
Occupancy and equipment 20 20 20 20 20 - - % - - %
Asset resolution - 5 8 13 14 (5) N/M (14) N/M
Federal insurance premiums 6 6 6 5 6 - - % - - %
Loan processing expense 14 14 12 11 10 - - % 4 40.0%
Legal and professional 10 8 9 11 15 2 25.0% (5) (33.3)%
expense
Other noninterest expense 13 15 12 11 50 (2) (13.3)% (37) (74.0)%
--- --- --- --- ---
Total noninterest expense 131 138 138 139 179 (7) (5.1)% (48) (26.8)%
--- --- --- --- --- --- ----- --- ------
Income (loss) before income 71 74 50 15 (38) (3) (4.1)% 109 N/M
taxes
Provision (benefit) for income taxes 24 28 18 4 (10) (4) (14.3)% 34 N/M
--- --- --- --- --- --- ------ ---
Net income (loss) from continuing operations $47 $46 $32 $11 $(28) $1 2.2% $75 N/M
=== === === === ==== === === === ===
Income (loss) per share
Basic $0.70 $0.69 $0.43 $0.07 $(0.61) $0.01 1.4% $1.31 N/M
===== ===== ===== ===== ====== ===== === ===== ===
Diluted $0.69 $0.68 $0.43 $0.07 $(0.61) $0.01 1.5% $1.30 N/M
===== ===== ===== ===== ====== ===== === ===== ===
N/M - Not meaningful
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in millions, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Mortgage loans originated (1) $7,876 $8,448 $7,187 $23,578 $18,004
Mortgage loans sold and securitized $7,318 $7,571 $7,072 $21,143 $17,577
Interest rate spread (2) 2.56% 2.63% 2.79% 2.59% 2.84%
Net interest margin 2.75% 2.79% 2.91% 2.76% 2.95%
Average common shares outstanding 56,436,026 56,436,026 56,249,300 56,419,354 56,224,850
Average fully diluted shares outstanding 57,207,503 57,165,072 56,249,300 57,050,789 56,224,850
Average interest-earning assets $10,693 $10,367 $8,815 $10,165 $8,345
Average interest-paying liabilities $8,354 $8,265 $7,034 $8,044 $6,734
Average stockholders' equity $1,510 $1,462 $1,402 $1,466 $1,410
Return (loss) on average assets 1.52% 1.57% (1.08)% 1.43% (1.10)%
Return (loss) on average equity 12.41% 12.71% (7.88)% 11.36% (7.66)%
Efficiency ratio 65.00% 69.62% 120.00% 69.63% 98.30%
Equity-to-assets ratio (average for the period) 12.27% 12.37% 13.68% 12.56% 14.39%
Charge-offs to average LHFI (3) 1.84% 1.49% 1.36% 2.34% 1.17%
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
---- ---- ---- ----
Book value per common share $21.91 $20.98 $19.64 $19.28
Number of common shares outstanding 56,436,026 56,436,026 56,332,307 56,261,652
Mortgage loans subserviced for others $42,282 $43,292 $46,724 $46,695
Mortgage loans serviced for others $26,306 $27,679 $25,427 $26,378
Weighted average service fee (basis points) 28.3 27.4 27.2 26.8
Capitalized value of mortgage servicing rights 1.12% 1.15% 1.01% 1.08%
Mortgage servicing rights to Tier 1 capital 21.12% 24.20% 21.80% 24.90%
Ratio of allowance for loan losses to LHFI (3) 3.66% 4.31% 7.01% 7.60%
Ratio of nonperforming assets to total assets 0.64% 0.69% 1.41% 1.39%
Equity-to-assets ratio 12.01% 11.95% 13.95% 14.04%
Common equity-to-assets ratio 9.88% 9.76% 11.24% 11.27%
Number of bank branches 99 100 107 106
Number of FTE employees 2,677 2,713 2,739 2,725
(1) Includes residential first mortgage and second mortgage loans.
(2) Interest rate spread is the difference between the annualized yield earned on average interest-earning assets for the period and the
annualized rate of interest paid on average interest-bearing liabilities for the period.
(3) Excludes loans carried under the fair value option
Flagstar Bancorp, Inc.
Earnings Per Share
(Dollars in millions, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Net income (loss) $47 $46 $(28) $125 $(80)
Less: preferred stock accretion - - - - (1)
--- --- --- --- ---
Net income (loss) from continuing operations 47 46 (28) 125 (81)
Deferred cumulative preferred stock dividends (8) (7) (7) (22) (19)
--- --- --- --- ---
Net income (loss) applicable to Common Stockholders $39 $39 $(35) $103 $(100)
=== === ==== ==== =====
Weighted Average Shares
Weighted average common shares outstanding 56,436,026 56,436,026 56,249,300 56,419,354 56,224,850
Effect of dilutive securities
Warrants 339,478 299,391 - 290,840 -
Stock-based awards 431,999 429,655 - 340,595 -
------- ------- --- ------- ---
Weighted average diluted common shares 57,207,503 57,165,072 56,249,300 57,050,789 56,224,850
========== ========== ========== ========== ==========
Earnings (loss) per common share
Net income (loss) applicable to Common Stockholders $0.70 $0.69 $(0.61) $1.82 $(1.79)
Effect of dilutive securities
Warrants - - - (0.01) -
Stock-based awards (0.01) (0.01) - (0.01) -
----- ----- --- ----- ---
Diluted earnings (loss) per share $0.69 $0.68 $(0.61) $1.80 $(1.79)
===== ===== ====== ===== ======
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
Three Months Ended
------------------
September 30, 2015 June 30, 2015 September 30, 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 $2,200 $22 3.94% $2,218 $21 3.80% $1,629 $18 4.41%
Loans with government guarantees 547 5 3.37% 630 5 2.97% 1,215 8 2.50%
Loans held-for-investment
Consumer loans (1) 3,367 30 3.67% 2,913 27 3.74% 2,635 25 3.77%
Commercial loans (1) 2,045 20 3.80% 2,025 21 4.03% 1,453 14 3.69%
----- --- ----- --- ----- ---
Total loans held-for-investment 5,412 50 3.72% 4,938 48 3.86% 4,088 39 3.74%
Investment securities 2,313 14 2.50% 2,350 15 2.55% 1,642 10 2.64%
Interest-earning deposits 221 - 0.53% 231 1 0.55% 241 - 0.25%
--- --- --- --- --- ---
Total interest-earning assets 10,693 $91 3.42% 10,367 $90 3.42% 8,815 $75 3.39%
Other assets 1,612 1,444 1,438
----- ----- -----
Total assets $12,305 $11,811 $10,253
======= ======= =======
Interest-Bearing Liabilities
Retail deposits
Demand deposits $429 $ - 0.14% $431 $ - 0.14% $421 $ - 0.14%
Savings deposits 3,732 8 0.84% 3,752 8 0.83% 3,274 5 0.66%
Money market deposits 262 - 0.33% 242 - 0.26% 262 - 0.20%
Certificates of deposit 785 2 0.80% 763 2 0.71% 891 2 0.75%
--- --- --- --- --- ---
Total retail deposits 5,208 10 0.75% 5,188 10 0.73% 4,848 7 0.61%
Government deposits
Demand deposits 286 - 0.39% 210 - 0.40% 218 - 0.39%
Savings deposits 445 1 0.52% 401 1 0.52% 378 1 0.53%
Certificates of deposit 335 - 0.40% 331 - 0.34% 344 - 0.35%
--- --- --- --- --- ---
Total government deposits 1,066 1 0.45% 942 1 0.43% 940 1 0.43%
Total deposits 6,274 11 0.70% 6,130 11 0.68% 5,788 8 0.58%
Federal Home Loan Bank advances 1,795 5 1.17% 1,828 4 0.90% 998 1 0.23%
Other 285 2 2.51% 307 2 2.38% 248 2 2.69%
--- --- --- --- --- ---
Total interest-bearing liabilities 8,354 18 0.86% 8,265 17 0.79% 7,034 11 0.60%
Noninterest-bearing deposits (2) 1,986 1,606 1,259
Other liabilities 455 478 558
Stockholders' equity 1,510 1,462 1,402
----- ----- -----
Total liabilities and stockholder's equity $12,305 $11,811 $10,253
======= ======= =======
Net interest-earning assets $2,339 $2,102 $1,781
====== ====== ======
Net interest income $73 $73 $64
=== === ===
Interest rate spread (3) 2.56% 2.63% 2.79%
==== ==== ====
Net interest margin (4) 2.75% 2.79% 2.91%
==== ==== ====
Ratio of average interest-earning assets to interest-bearing liabilities 128.0% 125.4% 125.3%
===== ===== =====
Total average deposits $8,260 $7,736 $7,047
====== ====== ======
(1) Consumer loans include: residential first mortgage, second mortgage, HELOC and other consumer loans. Commercial loans include: commercial real estate,
commercial and industrial, and warehouse lending loans.
(2) Includes company controlled deposits that arise due to the servicing of loans for others, which do not bear interest.
(3) Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.
(4) Net interest margin is net interest income divided by average interest-earning assets.
Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
Nine Months Ended
-----------------
September 30, 2015 September 30, 2014
------------------ ------------------
Average Interest Annualized Average Interest Annualized
Balance Balance
Yield/Rate Yield/Rate
--- --- ----------
Interest-Earning Assets
Loans held-for-sale $2,088 $61 3.91% $1,482 $47 4.26%
Loans with government guarantees 679 15 2.86% 1,241 24 2.53%
Loans held-for-investment
Consumer loans (1) 2,968 83 3.75% 2,739 79 3.86%
Commercial loans (1) 1,917 57 3.92% 1,217 35 3.74%
----- --- ----- ---
Total loans held-for-investment 4,885 140 3.82% 3,956 114 3.82%
Investment securities 2,260 43 2.54% 1,454 28 2.60%
Interest-earning deposits 253 1 0.50% 212 - 0.26%
--- --- --- ---
Total interest-earning assets 10,165 $260 3.41% 8,345 $213 3.40%
Other assets 1,498 1,451
----- -----
Total assets $11,663 $9,796
======= ======
Interest-Bearing Liabilities
Retail deposits
Demand deposits $428 $ - 0.14% $422 $1 0.14%
Savings deposits 3,683 22 0.81% 3,054 13 0.58%
Money market deposits 253 1 0.28% 269 - 0.19%
Certificates of deposit 778 4 0.73% 941 5 0.74%
--- --- --- ---
Total retail deposits 5,142 27 0.72% 4,686 19 0.55%
Government deposits
Demand deposits 241 1 0.39% 166 - 0.38%
Savings deposits 406 1 0.52% 298 1 0.50%
Certificates of deposit 341 1 0.36% 341 1 0.32%
--- --- --- ---
Total government deposits 988 3 0.44% 805 2 0.40%
--- --- --- ---
Total deposits 6,130 30 0.67% 5,491 21 0.53%
Federal Home Loan Bank advances 1,597 13 1.05% 995 2 0.23%
Other 317 6 2.35% 248 5 2.68%
--- --- --- ---
Total interest-bearing liabilities 8,044 49 0.81% 6,734 28 0.56%
Noninterest-bearing deposits (2) 1,661 1,105
Other liabilities 492 547
Stockholders' equity 1,466 1,410
Total liabilities and stockholder's equity $11,663 $9,796
======= ======
Net interest-earning assets $2,121 $1,611
====== ======
Net interest income $211 $185
==== ====
Interest rate spread (3) 2.59% 2.84%
==== ====
Net interest margin (4) 2.76% 2.95%
==== ====
Ratio of average interest-earning assets to interest-bearing liabilities 126.4% 123.9%
===== =====
Total average deposits $7,791 $6,596
====== ======
(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
------------------
September 30, June 30, March 31, December 31, September 30,
2015 2015 2015 2014 2014
---- ---- ---- ---- ----
(Dollars in millions)
Net gain on loan sales $68 $83 $91 $53 $52
Mortgage rate lock commitments (gross) $8,025 $8,400 $9,035 $7,605 $7,713
Loans sold and securitized $7,318 $7,571 $6,254 $6,831 $7,072
Net margin on loan sales 0.93% 1.09% 1.46% 0.78% 0.74%
Mortgage rate lock commitments (fallout-
adjusted) (1) $6,495 $6,804 $7,185 $6,156 $6,304
Net margin on mortgage rate lock commitments
(fallout-adjusted) (1) 1.05% 1.21% 1.27% 0.87% 0.83%
Nine Months Ended
-----------------
September 30, September 30,
2015 2014
---- ----
(Dollars in millions)
Net gain on loan sales $242 $152
Mortgage rate lock commitments (gross) $25,460 $21,941
Loans sold and securitized $21,143 $17,577
Net margin on loan sales 1.14% 0.87%
Mortgage rate lock commitments (fallout-adjusted) (1) $20,484 $17,851
Net margin on mortgage rate lock commitments (fallout-
adjusted) (1) 1.18% 0.85%
(1) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that
are not expected to close based on previous historical experience and the level of interest rates. The net margin is
based on net gain on loan sales to fallout-adjusted mortgage rate lock commitments.
Regulatory Capital - Bancorp
(Dollars in millions)
(Unaudited)
September 30, June 30, March 31, December 31, September 30,
2015 2015 2015 2014 2014
---- ---- ---- ---- ----
Amount Ratio Amount Ratio Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Tier 1 leverage (to adjusted $1,393 11.65% $1,309 11.47% $1,257 12.02% $1,184 12.59% $1,146 12.50%
tangible assets) (1)
Total adjusted tangible asset base $11,957 $11,406 $10,453 $9,403 $9,173
======= ======= ======= ====== ======
Tier 1 common equity (to risk $1,024 14.93% $954 14.56% $909 15.38% N/A N/A N/A N/A
weighted assets) (1)
Tier 1 capital (to risk weighted assets) (1) $1,393 20.32% $1,309 19.97% $1,257 21.26% $1,184 22.81% $1,146 23.03%
Total capital (to risk weighted assets) 1,483 21.64% 1,396 21.30% 1,336 22.61% 1,252 24.12% 1,212 24.35%
----- ----- ----- ----- -----
Risk weighted asset base $6,857 $6,553 $5,909 $5,190 $4,978
====== ====== ====== ====== ======
(1) On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1
capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior.
N/A - Not applicable.
Regulatory Capital - Bank
(Dollars in millions)
(Unaudited)
September 30, June 30, March 31, December 31, September 30,
2015 2015 2015 2014 2014
---- ---- ---- ---- ----
Amount Ratio Amount Ratio Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Tier 1 leverage (to adjusted $1,426 11.91% $1,337 11.70% $1,278 12.21% $1,167 12.43% $1,134 12.38%
tangible assets) (1)
Total adjusted tangible asset $11,975 $11,424 $10,471 $9,392 $9,162
base
Tier 1 common equity (to risk $1,426 20.75% $1,337 20.35% $1,278 21.58% N/A N/A N/A N/A
weighted assets) (1)
Tier 1 capital (to risk weighted assets) (1) $1,426 20.75% $1,337 20.35% $1,278 21.58% $1,167 22.54% $1,134 22.84%
Total capital (to risk weighted assets) 1,516 22.05% 1,423 21.66% 1,357 22.91% 1,235 23.85% 1,199 24.14%
----- ----- ----- ----- -----
Risk weighted asset base $6,874 $6,570 $5,925 $5,179 $4,968
====== ====== ====== ====== ======
(1) On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity
Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior.
N/A - Not applicable.
Loan Originations
(Dollars in millions)
(Unaudited)
Three Months Ended
------------------
September 30, June 30, September 30,
2015 2015 2014
---- ---- ----
Consumer loans
Mortgage (1) $7,876 97.9% $8,448 99.1% $7,187 98.8%
Other consumer (2) 39 0.5% 33 0.4% 29 0.4%
--- --- --- --- --- ---
Total consumer loans 7,915 98.4% 8,481 99.5% 7,216 99.2%
Commercial loans (3) 131 1.6% 40 0.5% 55 0.8%
--- --- --- --- --- ---
Total loan originations $8,046 100.0% $8,521 100.0% $7,271 100.0%
====== ===== ====== ===== ====== =====
Nine Months Ended
-----------------
September 30, September 30,
2015 2014
---- ----
Mortgage (1) $23,578 98.7% $18,004 97.9%
Other consumer (2) 93 0.4% 67 0.4%
--- --- --- ---
Total consumer loans 23,671 99.1% 18,071 98.3%
Commercial loans (3) 209 0.9% 321 1.7%
--- --- --- ---
Total loan originations $23,880 100.0% $18,392 100.0%
======= ===== ======= =====
(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)
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
---- ---- ---- ----
Consumer loans
Residential first
mortgage $2,726 49.5% $2,495 46.7% $2,193 49.2% $2,224 53.1%
Second mortgage 140 2.5% 143 2.7% 149 3.4% 154 3.7%
HELOC 405 7.3% 422 7.9% 257 5.8% 262 6.3%
Other 32 0.6% 31 0.6% 31 0.7% 32 0.8%
--- --- --- --- --- --- ---
Total consumer loans 3,303 59.9% 3,091 57.9% 2,630 59.1% 2,672 63.9%
----- ---- ----- ---- ----- ---- ----- ----
Commercial loans
Commercial real estate 707 12.8% 629 11.8% 620 13.9% 567 13.5%
Commercial and
industrial 493 8.9% 412 7.7% 429 9.7% 351 8.4%
Warehouse lending 1,011 18.4% 1,203 22.6% 769 17.3% 595 14.2%
----- ---- ----- ---- --- --- ----
Total commercial loans 2,211 40.1% 2,244 42.1% 1,818 40.9% 1,513 36.1%
----- ---- ----- ---- ----- ---- ----- ----
Total loans held-for-
investment $5,514 100.0% $5,335 100.0% $4,448 100.0% $4,185 100.0%
====== ===== ====== ===== ====== ===== ====== =====
Residential Loans Serviced
(Dollars in millions)
(Unaudited)
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
---- ---- ---- ----
Unpaid Principal Number of Unpaid Principal Number of Unpaid Principal Number of Unpaid Principal Number of
Balance accounts Balance accounts Balance accounts Balance accounts
---------------- ---------- ---------------- ---------- ---------------- ---------- ---------------- ----------
Serviced for own loan $5,707 29,764 $5,211 28,106 $4,521 26,268 $5,062 26,671
portfolio (1)
Serviced for others 26,306 118,702 27,679 124,299 25,427 117,881 26,378 122,788
Subserviced for others (2) 42,282 220,648 43,292 225,268 46,724 238,498 46,695 238,425
------ ------- ------ ------- ------ ------- ------ -------
Total residential $74,295 369,114 $76,182 377,673 $76,672 382,647 $78,135 387,884
loans serviced
(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 Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Beginning balance $222 $253 $306 $297 $207
Provision (release) for loan losses (1) (13) 8 (18) 127
Charge-offs
Consumer loans
Residential first mortgage (21) (19) (12) (80) (29)
Second mortgage (1) (1) (1) (2) (3)
HELOC (1) - (1) (2) (5)
Other (1) (1) (1) (3) (2)
---
Total consumer loans (24) (21) (15) (87) (39)
Commercial loans
Commercial real estate - - - (2)
-
Commercial and industrial (3) - - (3) -
Total commercial loans (3) - (3) (2)
-
---
Total charge-offs (27) (21) (15) (90) (41)
Recoveries
Consumer loans
Residential first mortgage 1 1 1 3 3
Second mortgage 1 1 - 1 -
Other 1 1 1 2 2
--- ---
Total consumer loans 3 3 2 6 5
Commercial loans
Commercial real estate - - 2 3
-
Total recoveries 3 3 2 8 8
--- --- --- --- ---
Charge-offs, net of recoveries (24) (18) (13) (82) (33)
--- --- --- --- ---
Ending balance $197 $222 $301 $197 $301
==== ==== ==== ==== ====
Net charge-off ratio (annualized) (1) 1.84% 1.49% 1.36% 2.34% 1.17%
Net charge-off ratio, adjusted (annualized) 0.61% 0.26% 0.70% 0.43% 0.87%
(1)(2)
Net charge-off ratio (annualized) by loan
type (1)
Residential first mortgage 2.9% 2.9% 1.9% 4.3% 1.4%
Second mortgage 1.0% 1.0% 1.8% 1.7% 3.3%
HELOC and consumer 1.4% 0.4% 2.9% 1.3% 4.2%
Commercial real estate - % (0.2)% 0.4% (0.4)% (0.2)%
Commercial and industrial 2.7% 0.2% - % 1.0% (0.1)%
(1) Excludes loans carried under the fair value option.
(2) Excludes charge-offs of $16 million, $15 million and $6 million, related to the sale of nonperforming loans and TDRs during the
three months ended September 30, 2015, June 30, 2015, and September 30, 2014, respectively, and $67 million and $8 million during
the nine months ended September 30, 2015 and 2014, respectively.
Representation and Warranty Reserve
(Dollars in millions)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2015 2015 2014 2015 2014
---- ---- ---- ---- ----
Balance, beginning of period $48 $53 $50 $53 $54
Provision (release)
Charged to gain on sale for 2 2 2 6 5
current loan sales
Charged to representation (6) (5) 13 (13) 16
and warranty (benefit)
provision
---------
Total (4) (3) 15 (7) 21
Charge-offs, net 1 (2) (8) (1) (18)
--- --- --- --- ---
Balance, end of period $45 $48 $57 $45 $57
=== === === === ===
Composition of Allowance for Loan Losses
(Dollars in millions)
(Unaudited)
September 30, 2015 Collectively Individually
Evaluated Evaluated Total
Reserves Reserves
--- -------- --------
Consumer loans
Residential first
mortgage $108 $21 $129
Second mortgage 6 7 13
HELOC 22 1 23
Other 1 - 1
--- ---
Total consumer loans 137 29 166
Commercial loans
Commercial real estate 13 - 13
Commercial and
industrial 14 - 14
Warehouse lending 4 - 4
--- --- ---
Total commercial loans 31 - 31
--- --- ---
Total allowance for loan
losses $168 $29 $197
==== === ====
June 30, 2015 Collectively Individually
Evaluated Evaluated Total
Reserves Reserves
--- -------- --------
Consumer loans
Residential first
mortgage $137 $14 $151
Second mortgage 6 8 14
HELOC 24 1 25
Other 1 - 1
--- ---
Total consumer
loans 168 23 191
Commercial loans
Commercial real
estate 15 - 15
Commercial and
industrial 12 - 12
Warehouse lending 4 - 4
--- --- ---
Total commercial
loans 31 - 31
--- --- ---
Total allowance for
loan losses $199 $23 $222
==== === ====
Nonperforming Loans and Assets
(Dollars in millions)
(Unaudited)
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
---- ---- ---- ----
Nonperforming loans $37 $41 $74 $72
Nonperforming TDRs 6 11 29 18
Nonperforming TDRs at inception
but performing for 20 13 17 17
less than six months
Total nonperforming loans held-
for-investment 63 65 120 107
Real estate and other
nonperforming assets, net 17 18 19 27
--- --- --- ---
Nonperforming assets held-for-
investment, net (1) $80 $83 $139 $134
=== === ==== ====
Ratio of nonperforming assets to
total assets 0.64% 0.69% 1.41% 1.39%
Ratio of nonperforming loans held-
for-investment to 1.15% 1.22% 2.71% 2.56%
loans held-for-investment
Ratio of nonperforming assets to
loans held-for 1.45% 1.55% 3.12% 3.18%
-investment and repossessed assets
(1) Does not include nonperforming loans held-for-sale of $14 million, $14 million, $15
million and $15 million at September 30, 2015, June 30, 2015, December 31, 2014 and
September 30, 2014, respectively.
Asset Quality - Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
30-59 Days 60-89 Days Greater than Total Past Total
Past Due Past Due 90 days Due Investment
Loans
--- -----
September 30, 2015
Consumer loans $13 $8 $60 $81 $3,303
Commercial loans - - 3 3 2,211
--- --- --- --- -----
Total loans $13 $8 $63 $84 $5,514
=== === === === ======
June 30, 2015
Consumer loans $10 $6 $65 $81 $3,091
Commercial loans - - - - 2,244
--- --- --- --- -----
Total loans $10 $6 $65 $81 $5,335
=== === === === ======
December 31, 2014
Consumer loans $34 $10 $120 $164 $2,630
Commercial loans - - - - 1,818
--- --- --- --- -----
Total loans $34 $10 $120 $164 $4,448
=== === ==== ==== ======
September 30, 2014
Consumer loans 40 12 107 $159 $2,672
Commercial loans 6 - - 6 1,513
--- --- --- --- -----
Total loans $46 $12 $107 $165 $4,185
=== === ==== ==== ======
Troubled Debt Restructurings
(Dollars in millions)
(Unaudited)
TDRs
----
Performing Nonperforming Nonperforming Total
TDRs at inception
but performing
for less than six months
---
September 30, 2015
Consumer loans $97 $6 $20 $123
Commercial loans - - - -
Total TDR loans $97 $6 $20 $123
=== === === ====
June 30, 2015
Consumer loans $108 $11 $13 $132
Commercial loans - - - -
Total TDR loans $108 $11 $13 $132
==== === === ====
December 31, 2014
Consumer loans $361 $29 $17 $407
Commercial loans 1 - - 1
Total TDR loans $362 $29 $17 $408
==== === === ====
September 30, 2014
Consumer loans $365 $18 $17 $400
Commercial loans 1 - - 1
Total TDR loans $366 $18 $17 $401
==== === === ====
Non-GAAP Reconciliation
(Dollars in millions)
(Unaudited)
Nonperforming assets /Tier 1 + Allowance for Loan Losses. The ratio of nonperforming assets to Tier 1 capital and allowance for loan losses divides the total level of nonperforming assets held for investment by Tier 1 capital (to adjusted total assets), as defined by bank regulations, plus allowance for loan losses. We believe
these measurements are meaningful measures of capital adequacy used by investors, regulators, management, and others to evaluate the adequacy of capital in comparison to other companies within the industry.
September 30, June 30, December 31, September 30,
2015 2015 2014 2014
---- ---- ---- ----
Nonperforming assets / Tier 1 capital + allowance for loan losses (Dollars in millions)
(Unaudited)
Nonperforming assets $80 $83 $139 $134
Tier 1 capital 1,393 1,309 1,184 1,146
Allowance for loan losses (197) (222) (297) (301)
---- ---- ----
Tier 1 capital + allowance for loan losses $1,590 $1,531 $1,481 $1,447
------ ------ ------ ------
Nonperforming assets / Tier 1 capital + allowance for loan losses 5.0% 5.4% 9.4% 9.3%
=== === === ===
Basel III (transitional) to Basel III (fully phased-in) reconciliation. On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the
Market Risk Final Rules) at December 31, 2014 and prior. When fully phased-in, Basel III will increase capital requirements through higher minimum capital levels as well as through increases in risk-weights for certain exposures. Additionally, the final Basel III rules place greater emphasis on common equity. In October 2013,
the OCC and Federal Reserve released final rules detailing the U.S. implementation of Basel III and the application of the risk-based and leverage capital rules to top-tier savings and loan holding companies. We have transitioned to the Basel III framework beginning in January 2015 and are subject to a phase-in period
extending through 2018. Accordingly, the calculations provided below are estimates. These measures are considered to be non-GAAP financial measures because they are not formally defined by GAAP and the Basel III implementation regulations will not be fully phased-in until January 1, 2019. The regulations are subject to change
as clarifying guidance becomes available and the calculations currently include our interpretations of the requirements including informal feedback received through the regulatory process. Other entities may calculate the Basel III ratios differently from 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.
September 30, 2015 Common Equity Tier 1 Leverage (to Tier 1 Capital (to Total Risk-Based
Tier 1 (to Risk Adjusted Tangible Risk Weighted Assets) Capital (to Risk
Weighted Assets) Assets) Weighted Assets)
--------------- ------ ---------------
(Dollars in millions)
(Unaudited)
Flagstar Bancorp (the Company)
Regulatory capital - Basel III (transitional) to Basel III (fully
phased-in) (1)
Basel III (transitional) $1,024 $1,393 $1,393 $1,483
Increased deductions related to deferred tax assets, mortgage (373) (237) (237) (236)
servicing assets, and other capital components
Basel III (fully phased-in) capital (1) $651 $1,156 $1,156 $1,247
---- ------ ------ ------
Risk-weighted assets - Basel III (transitional) to Basel III (fully phased-in) (1)
Basel III assets (transitional) $6,857 $11,957 $6,857 $6,857
Net change in assets (94) (237) (94) (94)
--- ---- --- ---
Basel III (fully phased-in) assets (1) $6,763 $11,720 $6,763 $6,763
------ ------- ------ ------
Capital ratios
Basel III (transitional) 14.93% 11.65% 20.32% 21.64%
Basel III (fully phased-in) (1) 9.61% 9.87% 17.11% 18.44%
(1) On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and
adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final
Rules) at December 31, 2014.
September 30, 2015 Common Equity Tier 1 Leverage (to Tier 1 Capital (to Total Risk-Based
Tier 1 (to Risk Adjusted Tangible Risk Weighted Assets) Capital (to Risk
Weighted Assets) Assets) Weighted Assets)
--------------- ------ ---------------
Flagstar Bank (the Bank) (Dollars in millions)
(Unaudited)
Regulatory capital - Basel III (transitional) to Basel III (fully
phased-in) (1)
Basel III (transitional) $1,426 $1,426 $1,426 $1,516
Increased deductions related to deferred tax assets, mortgage (173) (173) (173) (173)
servicing assets, and other capital components
Basel III (fully phased-in) capital (1) $1,253 $1,253 $1,253 $1,343
------ ------ ------ ------
Risk-weighted assets - Basel III (transitional) to Basel III (fully phased-in) (1)
Basel III assets (transitional) $6,874 $11,975 $6,874 $6,874
Net change in assets 107 (173) 107 107
--- ---- --- ---
Basel III (fully phased-in) assets (1) $6,981 $11,802 $6,981 $6,981
------ ------- ------ ------
Capital ratios
Basel III (transitional) 20.75% 11.91% 20.75% 22.05%
Basel III (fully phased-in) (1) 17.95% 10.62% 17.95% 19.23%
(1) On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and
adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final
Rules) at December 31, 2014.
For more information, contact:
David L. Urban
david.urban@flagstar.com
(248) 312-5970
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/flagstar-reports-third-quarter-2015-net-income-of-47-million-or-069-per-diluted-share-300166149.html
SOURCE Flagstar Bancorp, Inc.
