FLAGSTAR BANCORP, INC. TROY, Mich., Oct. 21, 2014 /PRNewswire/ --Flagstar Bancorp, Inc. (NYSE:FBC) ("the Company"), the holding company for Flagstar Bank, FSB (the "Bank"), today reported a third quarter 2014 net loss applicable to common stockholders of $27.6 million, or $0.61 per diluted share, as compared to net income applicable to common stockholders of
$25.5 million in the second quarter 2014, or $0.33 per diluted share, and net income applicable to common stockholders of $12.8 million in the third quarter 2013, or $0.16 per diluted share.
Alessandro P. DiNello, president and chief executive officer, commented, "We remain intensely focused on improving the operations of the Bank. At the same time, we continue to improve our compliance and risk management, while also prudently managing expenses and continuing to grow in a measured fashion."
Mr. DiNello continued, "We took significant action during the quarter to reduce risk. First, we settled with the Consumer Financial Protection Bureau ("CFPB") for claims arising out of loss mitigation practices and default servicing operations dating back to 2011. We also recognized additional expense related to certain government insured loans. Adjusting for these items, we would have achieved a modest profit in a difficult mortgage market, reflecting our sustained commitment to both growing operations and controlling noninterest expenses."
Both the third and second quarters of 2014 included various significant items which are as follows:
Third Quarter 2014 Increase
(decrease)
to Pre-tax
earnings
-----------
(Dollars in millions)
- CFPB settlement and CID-related
expenses $(38.6)
- Government loan indemnification
expenses (10.4)
Second Quarter Increase
2014 (decrease)
to Pre-tax
earnings
----------
(Dollars in millions)
- CFPB CID-related expenses $(2.9)
- Contract renegotiation benefit 10.0
- DOJ fair value adjustment 10.0
Excluding these significant items, core operating net income for the third quarter 2014 was $7.7 million, or $0.01 per diluted share, (after a deduction for preferred dividends), as compared to core operating net income for the second quarter 2014 of $14.4 million, or $0.13 per diluted share.
Net Interest Income
Third quarter 2014 net interest income increased to $64.4 million, as compared to $62.4 million for the second quarter 2014. The increase in net interest income was attributable to growth in earning assets of 5% to $8.8 billion from $8.4 billion in the second quarter 2014, partially offset by a 7 basis point contraction of the net interest margin to 2.91% in the current quarter. The higher level of average earning assets in the third quarter 2014 was attributable to balanced growth in both commercial and consumer loans, coupled with growth in investment securities. The growth in consumer loans was primarily attributable to higher levels of warehouse loans. Commercial loan growth of 10%, resulting from our core Michigan franchise, continued to be well-balanced among industries, products, and collateral types. Funding for this growth came from a 6% increase in average interest-bearing deposits, driven by an increase in government and retail savings deposits.
Provision for Loan Losses
Provision for loan losses totaled $8.1 million for the third quarter 2014, as compared to $6.2 million for the second quarter 2014. The $1.9 million increase from the prior quarter was primarily attributable to higher levels of charge-offs in the current quarter as a result of the sales of $48.9 million of performing jumbo residential mortgage loans and $25.2 million of underperforming residential mortgage loans during the third quarter 2014.
Noninterest Income
Third quarter 2014 core operating noninterest income was $95.6 million, as compared to core operating noninterest income of $92.5 million for the second quarter 2014.
Significant Noninterest Income Items
(in thousands)
Financial Third quarter Second quarter Change Change
Statement Line 2014 2014 Amount Percent
Item
----
Reported noninterest income $85,188 $102,484 $(17,296) (17)%
Adjustments for significant items:
Government loan indemnification provision Representation 10,375
and Warranty
Contract renegotiation benefit Loan Fees and (10,000)
Charges
Core operating noninterest income $95,563 $92,484 $3,079 3%
======= =======
Core operating loan fees and charges increased to $18.7 million for the third quarter 2014, as compared to $15.3 million reported for the second quarter 2014. The increase of $3.4 million, or 22%, primarily related to an increase in loan originations of 20% for the third quarter 2014, as compared to the second quarter 2014.
Third quarter 2014 net gain on loan sales decreased to $52.2 million, as compared to $54.8 million for the second quarter 2014. The decrease from the prior quarter reflects the impact of a 6% decline in fallout-adjusted mortgage rate lock commitments. Fallout-adjusted locks were $6.3 billion for the third quarter 2014, as compared to $6.7 billion for the second quarter 2014. The net gain on loan sale margin increased to 83 basis points for the third quarter 2014, as compared to 82 basis points for the second quarter 2014.
Net return on the mortgage servicing asset (including off-balance sheet hedges of mortgage servicing rights) decreased to $1.3 million for the third quarter 2014, as compared to $5.0 million for the second quarter 2014. The decrease from the prior quarter resulted from a negative fair value adjustment which was driven by increased prepayments and from reduced hedge performance.
Third quarter 2014 net gain on sales of assets was $4.9 million, as compared to $3.5 million for the second quarter 2014. The increase from the prior quarter resulted from the net gain recorded on the sales of performing jumbo residential mortgage loans and underperforming residential mortgage loans.
Core operating representation and warranty provision, which is a contra noninterest income item, decreased to $2.2 million for the third quarter 2014, as compared to $5.2 million reported for the second quarter 2014. The decline was the result of a lower open pipeline of repurchase demands which declined 43% from the second quarter 2014 to $30.8 million, the lowest level since the first quarter of 2008. This does not include the $10.4 million representation and warranty provision related to indemnifications on government loans.
The third quarter 2014 other noninterest income was $9.5 million, as compared to $7.6 million for the second quarter 2014. The increase from the prior quarter resulted from the gain on sale of securities, in the normal course of business, of $1.9 million.
Noninterest Expense
Core operating noninterest expense was $140.8 million for the third quarter 2014, as compared core operating noninterest expense of $128.5 million for the second quarter 2014.
Significant Noninterest Expense Items
(in thousands)
Financial Third quarter Second quarter Change Change
Statement Line 2014 2014 Amount Percent
Item
----
Reported noninterest expense $179,389 $121,353 $58,036 48%
Adjustments for significant items:
CFPB settlement Other (37,500)
noninterest
expense
CFPB CID-related costs Legal and (1,116) (2,879)
professional
expense
DOJ fair value adjustment Other 10,000
noninterest
expense
Core operating noninterest expense $140,773 $128,474 $12,299 10%
======== ========
Third quarter 2014 asset resolution expense decreased to $13.7 million, as compared to $17.9 million for the second quarter 2014.
Core operating legal and professional expenses were $13.9 million for the third quarter 2014, as compared to $10.6 million reported for the second quarter 2014. The $3.3 million increase was attributable to higher consulting expenses.
Core operating other noninterest expenses for the third quarter 2014 totaled $12.8 million, as compared to $1.8 million reported for the second quarter 2014. The increase of $11.0 million, from the prior quarter, represented increases in the fair value of the DOJ liability, litigation reserves and the establishment of a reserve for unfunded loan commitments.
Income Taxes
The third quarter 2014 benefit for income taxes totaled $10.3 million, as compared to a tax provision of $11.9 million in the second quarter 2014. The effective tax rate in the third quarter 2014 was 27.2%, as compared to 31.8% in the second quarter 2014.
Asset Quality
Nonperforming loans decreased by $13.2 million to $106.9 million at September 30, 2014, the lowest level of nonperforming loans since the third quarter of 2006. The decrease was driven by sales of nonperforming loans during the quarter. The ratio of nonperforming loans to loans held for investment decreased to 2.56% at September 30, 2014 from 2.76% at June 30, 2014.
Third quarter 2014 net charge-offs were $13.1 million, representing 1.36% of associated loans, excluding loans carried under a fair value option. This increased $5.9 million from the second quarter 2014 net charge-offs of $7.2 million, or 0.78%, of associated loans. The increase in the current quarter was the result of $6.3 million of charge-offs related to loans sold.
The allowance for loan losses was $301.0 million at September 30, 2014, covering 7.6% of total loans held for investment, excluding loans carried under a fair value option. The allowance for loan losses was $306.0 million at June 30, 2014, covering 7.4% of total loans held for investment. The increase in the coverage ratio during the third quarter 2014 was primarily due to a slight increase in the average loss rate as a result of loan sales during the quarter.
Earnings Conference Call
As previously announced, the Company's quarterly earnings conference call will be held on Wednesday, October 22, 2014 from 11 a.m. until noon (Eastern).
It is preferred that questions are emailed in advance to investors@flagstar.com, or they may be asked during the conference call.
To join the call, please dial (866) 454-4209 toll free or (913) 312-0643, and use passcode: 7089877. Please call at least 10 minutes before the call is scheduled to begin. A replay will be available for five business days by calling (888) 203-1112 toll free or (719) 457-0820, using passcode: 7089877.
The conference call will also be available as a live audio cast on the Investor Relations section of www.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. ("Flagstar") is the holding company for Flagstar Bank, FSB, a full-service financial institution offering a range of products and services to consumers, businesses, and homeowners. With $9.6 billion in total assets and $7.2 billion in total deposits, at September 30, 2014, Flagstar is the largest bank headquartered in Michigan. Flagstar operates 106 banking centers, all of which are located in Michigan and 32 home lending centers in 18 states, which primarily originate one-to-four family residential first mortgage loans. Originating loans nationwide, Flagstar is one of the leading originators of residential first mortgage loans. For more information, please visit www.flagstar.com.
Use of Non-GAAP Financial Measures
The Company prepares its Consolidated Financial Statements using accounting principles generally accepted in the U.S. ("U.S. GAAP"). That presentation, which is referred to as "reported" basis, provides the reader with an understanding of the Company's results that can be tracked consistently from period-to-period and enables a comparison of the Company's performance with other companies' U.S. GAAP financial statements.
This press release contains U.S. GAAP financial measures as well as non-GAAP financial measures where management believes it to be helpful in understanding the Company's results of operations or financial position.
In addition to analyzing the Company's results on a reported basis, management reviews the Company's results and the results of its lines of business on a "core operating" basis. These non-GAAP measures reflect the adjustment of the reported U.S. GAAP results for significant items. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the Company's results on a run-rate basis. These and other non-GAAP financial measures used by the Company may not be comparable to similarly named non-GAAP financial measures used by other companies.
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, 2013, and Quarterly Report on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014. All of which can be found on the Company's website at www.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 Flagstar Bancorp, Inc.'s actual results to differ materially from those described in the forward-looking statements can be found in Flagstar Bancorp, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013, and Quarterly Report on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014, which have been filed with the Securities and Exchange Commission and are available on Flagstar Bancorp, Inc.'s website (www.flagstar.com) and on the Securities and Exchange Commission's website (www.sec.gov). Flagstar Bancorp, Inc. 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 thousands)
September 30, 2014 June 30, 2014 December 31, 2013 September 30, 2013
------------------ ------------- ----------------- ------------------
Assets (Unaudited) (Unaudited) (Unaudited)
Cash and cash equivalents
Cash and cash items $44,374 $67,924 $55,913 $68,228
Interest-earning deposits 62,466 134,611 224,592 2,482,882
------ ------- ------- ---------
Total cash and cash equivalents 106,840 202,535 280,505 2,551,110
Investment securities available-for-sale or trading 1,378,093 1,605,805 1,045,548 545,476
Loans held-for-sale 1,468,668 1,342,611 1,480,418 1,879,290
Loans repurchased with government guarantees 1,191,826 1,217,721 1,273,690 1,231,765
Loans held-for-investment, net
Loans held-for-investment 4,184,624 4,359,293 4,055,756 4,013,507
Less: allowance for loan losses (301,000) (306,000) (207,000) (207,000)
-------- -------- -------- --------
Total loans held-for-investment, net 3,883,624 4,053,293 3,848,756 3,806,507
Mortgage servicing rights 285,386 289,185 284,678 797,029
Repossessed assets, net 27,149 31,579 36,636 66,530
Federal Home Loan Bank stock 209,737 209,737 209,737 301,737
Premises and equipment, net 238,261 235,202 231,350 229,117
Net deferred tax asset 449,575 435,217 414,681 -
Other assets 386,251 310,229 301,302 399,254
Total assets $9,625,410 $9,933,114 $9,407,301 $11,807,815
========== ========== ========== ===========
Liabilities and Stockholders' Equity
Deposits
Noninterest bearing $1,299,405 $1,081,026 $930,060 $1,002,472
Interest bearing 5,934,991 5,562,883 5,210,266 5,646,813
--------- --------- --------- ---------
Total deposits 7,234,396 6,643,909 6,140,326 6,649,285
Federal Home Loan Bank advances 150,000 1,031,705 988,000 2,907,598
Long-term debt 339,575 345,157 353,248 360,389
Representation and warranty reserve 57,000 50,000 54,000 174,000
Other liabilities 492,834 476,669 445,853 444,188
------- ------- ------- -------
Total liabilities 8,273,805 8,547,440 7,981,427 10,535,460
--------- --------- --------- ----------
Stockholders' Equity
Preferred stock 266,657 266,657 266,174 264,726
Common stock 563 562 561 561
Additional paid in capital 1,480,955 1,480,321 1,479,265 1,478,391
Accumulated other comprehensive income (loss) (250) 6,821 (4,831) 4,429
Accumulated deficit (396,320) (368,687) (315,295) (475,752)
-------- -------- -------- --------
Total stockholders' equity 1,351,605 1,385,674 1,425,874 1,272,355
Total liabilities and stockholders' equity $9,625,410 $9,933,114 $9,407,301 $11,807,815
========== ========== ========== ===========
Flagstar Bancorp, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Total interest income $75,094 $71,913 $78,807 $213,358 $258,854
Total interest expense 10,731 9,488 36,122 28,370 113,406
------ ----- ------ ------ -------
Net interest income 64,363 62,425 42,685 184,988 145,448
Provision for loan losses 8,097 6,150 4,053 126,567 56,030
----- ----- ----- ------
Net interest income after provision for loan
losses 56,266 56,275 38,632 58,421 89,418
------ ------ ------ ------ ------
Noninterest Income
Loan fees and charges 18,661 25,301 20,876 56,272 84,152
Deposit fees and charges 5,618 5,279 5,410 15,660 15,749
Net gain on loan sales 52,175 54,756 75,073 152,275 357,404
Loan administration income 5,599 6,195 1,454 18,826 2,752
Net return on the mortgage servicing asset 1,346 4,994 27,217 22,475 73,949
Net gain on sale of assets 4,874 3,537 98 10,626 2,120
Total other-than-temporary impairment (loss)
gain - - - - (8,789)
Loss recognized in other comprehensive income
before taxes - - - - -
--- --- --- --- ---
Net impairment losses recognized in earnings - - - - (8,789)
Representation and warranty reserve -change in
estimate (12,538) (5,226) (5,205) (16,092) (51,541)
Other noninterest income 9,453 7,648 9,373 2,583 63,402
Total noninterest income 85,188 102,484 134,296 262,625 539,198
------ ------- ------- -------
Noninterest Expense
Compensation and benefits 53,503 55,218 61,552 174,291 209,696
Commissions 10,346 8,532 12,099 26,098 44,962
Occupancy and equipment 20,471 19,383 18,644 60,265 60,218
Asset resolution 13,666 17,934 16,295 43,108 48,661
Federal insurance premiums 5,633 6,758 7,910 17,402 26,941
Other taxes - - - - -
Warrant expense (income) - - - - -
Loss on extinguishment of debt - - - -
Loan processing expense 10,472 8,199 10,890 26,406 43,390
Legal and professional expense 15,044 13,524 19,593 39,826 64,822
Other noninterest expense 50,254 (8,195) 11,453 52,598 30,732
------ ------ ------ ------ ------
Total noninterest expense 179,389 121,353 158,436 439,994 529,422
------- ------- ------- ------- -------
(Loss) income before income taxes (37,935) 37,406 14,492 (118,948) 99,194
(Benefit) provision for income taxes (10,303) 11,892 220 (38,407) (5,888)
------- ------ --- ------- ------
Net (loss) income (27,632) 25,514 14,272 (80,541) 105,082
Preferred stock dividend/accretion - - (1,449) (483) (4,336)
--- --- ------ ---- ------
Net (loss) income applicable to common
stockholders $(27,632) $25,514 $12,823 $(81,024) $100,746
======== ======= ======= ======== ========
(Loss) income per share
Basic $(0.61) $0.33 $0.16 $(1.79) $1.61
====== ===== ===== ====== =====
Diluted $(0.61) $0.33 $0.16 $(1.79) $1.59
====== ===== ===== ====== =====
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Mortgage loans originated (1) $7,186,856 $5,950,650 $7,737,143 $18,004,136 $31,042,635
Other loans originated 84,084 131,602 93,347 387,992 235,850
Mortgage loans sold and securitized 7,072,398 6,029,817 8,344,737 17,576,502 32,291,437
Interest rate spread - consolidated (2) 2.79% 2.87% 1.39% 2.84% 1.48%
Net interest margin - consolidated (3) 2.91 2.98 1.62 2.95 1.71
Average common shares outstanding 56,249,300 56,230,458 56,096,376 56,224,850 56,041,844
Average fully diluted shares outstanding 56,249,300 56,822,102 56,541,089 56,224,850 56,458,898
Average interest-earning assets $8,814,713 $8,366,703 $10,564,417 $8,344,833 $11,311,033
Average interest paying liabilities 7,034,094 6,795,144 9,054,952 6,734,056 9,673,571
Average stockholders' equity 1,402,165 1,381,948 1,266,267 1,409,641 1,226,683
(Loss) return on average assets (1.08)% 1.04% 0.42% (1.10)% 1.03%
(Loss) return on average equity (7.88) 7.38 4.05 (7.66) 10.95
Efficiency ratio 120.0 73.6 89.5 98.3 77.3
Efficiency ratio (adjusted) (4) 86.8 80.2 87.0 90.0 76.2
Equity-to-assets ratio (average for the period) 13.68 14.12 10.26 14.39 9.44
Charge-offs to average LHFI (5) 1.36 0.78 3.96 1.17 4.60
September 30, 2014 June 30, 2014 December 31, 2013 September 30, 2013
------------------ ------------- ----------------- ------------------
Book value per common share $19.28 $19.90 $20.66 $17.96
Number of common shares outstanding 56,261,652 56,238,925 56,138,074 56,114,572
Mortgage loans subserviced for others $46,695,465 $43,103,393 $40,431,865 $ -
Mortgage loans serviced for others 26,377,572 25,342,335 25,743,396 74,200,317
Weighted average service fee (basis points) 26.8 29.2 28.7 29.3
Capitalized value of mortgage servicing rights 1.08% 1.14% 1.11% 1.07%
Mortgage servicing rights to Tier 1 capital (4) 25.2 24.3 22.6 56.8
Ratio of allowance for loan losses to non-performing LHFI (5) 295.4 263.1 145.9 152.6
Ratio of allowance for loan losses to LHFI (5) 7.60 7.41 5.42 5.50
Ratio of non-performing assets to total assets (bank only) 1.40 1.54 1.95 1.74
Equity-to-assets ratio 14.04 13.95 15.16 10.78
Number of bank branches 106 106 111 111
Number of loan origination centers 32 32 39 45
Number of FTE employees (excluding loan officers and account executives) 2,492 2,481 2,894 3,069
Number of loan officers and account executives 233 260 359 359
(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) Net interest margin is the
annualized effect of the net
interest income divided by that
period's average interest-
earning assets.
(4) See Non-GAAP
reconciliation.
(5) Excludes loans carried
under the fair value option.
Average Balances, Yields and Rates
(Dollars in thousands)
(Unaudited)
Three Months Ended
------------------
September 30, 2014 June 30, 2014 September 30, 2013
------------------ ------------- ------------------
Average Interest Annualized Average Interest Annualized Average Interest Annualized
Balance Yield/Rate Balance Balance
Yield/Rate Yield/Rate
--- --- ----------
Interest-Earning Assets
Loans held-for-sale $1,628,874 $17,949 4.41% $1,516,813 $15,783 4.16% $2,156,966 $22,348 4.14%
Loans repurchased with government guarantees 1,215,357 7,589 2.50% 1,237,491 7,970 2.58% 1,364,949 12,307 3.61%
Loans held-for-investment
Consumer loans (1) 3,185,208 30,725 3.84% 3,084,197 30,829 3.99% 3,412,909 34,711 4.06%
Commercial loans (1) 902,654 7,797 3.38% 818,674 7,328 3.54% 637,711 6,267 3.85%
------- ----- ------- ----- ------- -----
Total loans held-for-investment 4,087,862 38,522 3.74% 3,902,871 38,157 3.90% 4,050,620 40,978 4.03%
Investment securities available-for-sale or trading 1,642,071 10,880 2.65% 1,541,215 9,885 2.57% 295,923 1,465 1.98%
Interest-earning deposits and other 240,550 154 0.25% 168,313 118 0.28% 2,695,959 1,709 0.25%
------- --- ------- --- --------- -----
Total interest-earning assets 8,814,714 $75,094 3.39% 8,366,703 $71,913 3.43% 10,564,417 $78,807 2.98%
Other assets 1,437,898 1,417,105 1,775,102
--------- --------- ---------
Total assets $10,252,612 $9,783,808 $12,339,519
=========== ========== ===========
Interest-Bearing Liabilities
Retail deposits
Demand deposits $421,062 $147 0.14% $426,458 $147 0.14% $394,418 $183 0.18%
Savings deposits 3,274,268 5,482 0.66% 3,010,108 4,396 0.59% 2,815,893 4,268 0.60%
Money market deposits 261,740 134 0.20% 265,250 123 0.19% 314,459 144 0.18%
Certificate of deposits 891,308 1,682 0.75% 945,622 1,747 0.74% 1,787,318 4,068 0.90%
------- ----- ------- ----- --------- -----
Total retail deposits 4,848,378 7,445 0.61% 4,647,438 6,413 0.55% 5,312,088 8,663 0.65%
Government deposits
Demand deposits 217,862 213 0.39% 155,286 153 0.39% 55,571 106 0.76%
Savings deposits 378,013 504 0.53% 301,243 397 0.53% 163,869 113 0.27%
Certificate of deposits 344,135 299 0.35% 341,767 276 0.32% 303,329 221 0.29%
------- --- ------- --- ------- ---
Total government deposits 940,010 1,016 0.43% 798,296 826 0.41% 522,769 440 0.33%
Wholesale deposits - - - % - - - % 72,141 920 5.06%
--- --- --- --- ------ ---
Total deposits 5,788,388 8,461 0.58% 5,445,734 7,239 0.53% 5,906,998 10,023 0.67%
Federal Home Loan Bank advances 998,272 591 0.23% 1,100,437 600 0.22% 2,900,519 24,434 3.34%
Other 247,435 1,679 2.69% 248,973 1,649 2.66% 247,435 1,665 2.67%
------- ----- ------- ----- ------- -----
Total interest-bearing liabilities 7,034,095 10,731 0.60% 6,795,144 9,488 0.56% 9,054,952 36,122 1.58%
Noninterest-bearing deposits 1,258,864 1,073,674 1,263,435
Other liabilities (2) 557,488 533,042 754,865
Stockholders' equity 1,402,165 1,381,948 1,266,267
--------- --------- ---------
Total liabilities and stockholder's equity $10,252,612 $9,783,808 $12,339,519
=========== ========== ===========
Net interest-earning assets $1,780,619 $1,571,559 $1,509,465
========== ========== ==========
Net interest income $64,363 $62,425 $42,685
======= ======= =======
Interest rate spread (3) 2.79% 2.87% 1.39%
==== ==== ====
Net interest margin (4) 2.91% 2.98% 1.62%
==== ==== ====
Ratio of average interest-earning assets to interest-bearing
liabilities 125.3% 123.1% 116.7%
===== ===== =====
Total average deposits $7,047,252 $6,521,509 $7,170,433
========== ========== ==========
(1) Consumer loans
include: residential first
mortgage, second mortgage,
warehouse lending, HELOC and
other consumer loans.
Commercial loans include:
commercial real estate,
commercial and industrial,
and commercial lease
financing loans.
(2) 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 thousands)
(Unaudited)
Nine Months Ended
-----------------
September 30, 2014 September 30, 2013
------------------ ------------------
Average Interest Annualized Average Interest Annualized
Balance Balance
Yield/Rate Yield/Rate
--- --- ----------
Interest-Earning Assets
Loans held-for-sale $1,482,150 $47,385 4.26% $2,795,812 $71,357 3.40%
Loans repurchased with government guarantees 1,240,677 23,503 2.53% 1,558,495 40,532 3.47%
Loans held-for-investment
Consumer loans (1) 3,153,021 92,431 3.90% 3,795,003 116,625 4.10%
Commercial loans (1) 803,576 21,320 3.50% 668,189 20,798 4.10%
------- ------ ------- ------
Total loans held-for-investment 3,956,597 113,751 3.82% 4,463,192 137,423 4.10%
Investment securities available-for-sale or
trading 1,453,914 28,302 2.60% 294,722 5,397 2.44%
Interest-earning deposits and other 211,495 417 0.26% 2,198,812 4,145 0.25%
------- --- --------- -----
Total interest-earning assets 8,344,833 $213,358 3.40% 11,311,033 $258,854 3.05%
Other assets 1,451,384 1,681,689
--------- ---------
Total assets $9,796,217 $12,992,722
========== ===========
Interest-Bearing Liabilities
Retail deposits
Demand deposits $422,165 $438 0.14% $392,695 $627 0.21%
Savings deposits 3,053,225 13,210 0.58% 2,588,468 13,302 0.69%
Money market deposits 268,957 383 0.19% 349,016 697 0.27%
Certificate of deposits 941,036 5,240 0.74% 2,353,359 15,914 0.90%
------- ----- --------- ------
Total retail deposits 4,685,383 19,271 0.55% 5,683,538 30,540 0.72%
Government deposits
Demand deposits 165,644 468 0.38% 89,416 327 0.49%
Savings deposits 297,587 1,111 0.50% 213,403 591 0.37%
Certificate of deposits 341,111 807 0.32% 395,499 1,372 0.46%
------- --- ------- -----
Total government deposits 804,342 2,386 0.40% 698,318 2,290 0.44%
Wholesale deposits 1,112 31 3.76% 75,973 2,850 5.01%
----- --- ------ -----
Total deposits 5,490,837 21,688 0.53% 6,457,829 35,680 0.74%
FHLB advances 995,271 1,725 0.23% 2,968,308 72,766 3.28%
Other 247,948 4,957 2.68% 247,435 4,960 2.68%
------- ----- ------- -----
Total interest-bearing liabilities 6,734,056 28,370 0.56% 9,673,572 113,406 1.57%
Noninterest-bearing deposits 1,104,799 1,241,599
Other liabilities (2) 547,721 850,868
Stockholders' equity 1,409,641 1,226,683
Total liabilities and stockholder's equity $9,796,217 $12,992,722
========== ===========
Net interest-earning assets $1,610,777 $1,637,461
========== ==========
Net interest income $184,988 $145,448
======== ========
Interest rate spread (3) 2.84% 1.48%
==== ====
Net interest margin (4) 2.95% 1.71%
==== ====
Ratio of average interest-earning assets to interest-
bearing liabilities 123.9% 116.9%
===== =====
Total average deposits $6,595,636 $7,699,427
========== ==========
(1) Consumer loans
include: residential first
mortgage, second mortgage,
warehouse lending, HELOC and
other consumer loans.
Commercial loans include:
commercial real estate,
commercial and industrial,
and commercial lease
financing loans.
(2) 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 and Securitizations
(Dollars in thousands)
(Unaudited)
Three Months Ended
------------------
September 30, 2014 June 30, 2014 September 30, 2013
------------------ ------------- ------------------
Description
Valuation gain (loss)
Value of interest rate locks $(24,294) (0.34)% $29,698 0.49% $87,961 1.05%
Value of forward sales 23,145 0.33% (31,534) (0.52)% (217,987) (2.61)%
Fair value of loans held-for-sale 79,868 1.13% 126,399 2.10% 63,394 0.76%
------ ---- ------- ---- ------ ----
Total valuation gains (losses) 78,719 1.12% 124,563 2.07% (66,632) (0.80)%
Sales (losses) gains
Marketing losses, net of adjustments (2,392) (0.04)% (15,365) (0.26)% (52,120) (0.63)%
Pair-off (losses) gains (22,190) (0.31)% (52,708) (0.87)% 197,544 2.37%
Provision for representation and warranty reserve (1,961) (0.03)% (1,734) (0.03)% (3,719) (0.04)%
------ ------ ------ ------ ------ ------
Total sales (losses) gains (26,543) (0.38)% (69,807) (1.16)% 141,705 1.70%
------- ------ ------- ------ ------- ----
Total gain on loan sales and securitizations $52,176 $54,756 $75,073
======= ======= =======
Total mortgage rate lock commitments (gross) $7,713,074 $8,187,881 $8,340,000
========== ========== ==========
Total loan sales and securitizations $7,072,398 0.74% $6,029,817 0.91% $8,344,737 0.90%
========== ========== ==========
Total mortgage rate lock commitments (fallout-
adjusted) (1) $6,304,425 0.83% $6,693,366 0.82% $6,605,432 1.14%
========== ========== ==========
Nine Months Ended
-----------------
September 30, 2014 September 30, 2013
------------------ ------------------
Description
Valuation gain (loss)
Value of interest rate locks $16,428 0.09% $(22,406) (0.07)%
Value of forward sales (25,015) (0.14)% (55,385) (0.17)%
Fair value of loans held-for-sale 269,269 1.53% 129,905 0.40%
------- ---- ------- ----
Total valuation gains 260,682 1.48% 52,114 0.16%
Sales (losses) gains
Marketing gains, net of adjustments 3,882 0.03% 2,491 0.02%
Pair-off gains (losses) (107,364) (0.61)% 317,387 0.98%
Provision for representation and warranty reserve (4,925) (0.03)% (14,588) (0.05)%
------ ------ ------- ------
Total sales gains (108,407) (0.61)% 305,290 0.95%
-------- ------ ------- ----
Total gain on loan sales and securitizations $152,275 $357,404
======== ========
Total mortgage rate lock commitments volume $21,940,826 $32,835,000
=========== ===========
Total loan sales and securitizations $17,576,502 0.87% $32,291,437 1.11%
=========== ===========
Total mortgage rate lock commitments (fallout-
adjusted) (1) $17,851,428 0.85% $26,291,422 1.36%
=========== ===========
(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 thousands)
(Unaudited)
September 30, 2014 June 30, 2014 December 31, 2013 September 30, 2013
------------------ ------------- ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ ----- ------ -----
Tier 1 leverage (to adjusted tangible
assets) (1) $1,134,429 12.38% $1,188,936 12.52% $1,257,608 13.97% $1,402,423 11.98%
Total adjusted tangible asset base $9,162,342 $9,493,531 $9,004,904 $11,708,635
========== ========== ========== ===========
Tier 1 capital (to risk weighted assets)
(1) $1,134,429 22.84% $1,188,936 23.75% $1,257,608 26.82% $1,402,423 26.57%
Total capital (to risk weighted assets) (1) 1,199,410 24.14% 1,254,445 25.05% 1,317,964 28.11% 1,470,060 27.85%
Risk weighted asset base $4,967,755 $5,006,897 $4,688,545 $5,275,254
========== ========== ========== ==========
(1) Based on adjusted
total assets for purposes
of core capital and risk-
weighted assets for
purposes of total risk-
based capital. These
ratios are applicable to
the Bank only.
Regulatory Capital - Bancorp
(Dollars in thousands)
(Unaudited)
September 30, 2014 June 30, 2014 December 31, 2013 September 30, 2013
------------------ ------------- ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ ----- ------ -----
Tier 1 leverage (to adjusted tangible
assets) (1) $1,146,187 12.50% $1,195,494 12.59% $1,280,532 14.21% $1,435,658 12.25%
Total adjusted tangible asset base $9,172,557 $9,495,500 $9,014,524 $11,723,683
========== ========== ========== ===========
Tier 1 capital (to risk weighted assets)
(1) $1,146,187 23.03% $1,195,494 23.87% $1,280,532 27.25% $1,435,658 27.12%
Total capital (to risk weighted assets) (1) 1,211,976 24.35% 1,261,799 25.19% 1,341,616 28.55% 1,503,483 28.40%
Risk weighted asset base $4,977,969 $5,008,866 $4,698,580 $5,293,302
========== ========== ========== ==========
(1) Based on adjusted
total assets for
purposes of core capital
and risk-weighted
assets for purposes of
total risk-based
capital.
Loan Originations
(Dollars in thousands)
(Unaudited)
Three Months Ended
------------------
September 30, 2014 June 30, 2014 September 30, 2013
------------------ ------------- ------------------
Consumer loans
Mortgage (1) $7,186,856 98.8% $5,950,650 97.8% $7,737,142 98.8%
Other consumer (2) 28,678 0.4% 20,262 0.3% 24,811 0.3%
------ --- ------ --- ------ ---
Total consumer loans 7,215,534 99.2% 5,970,912 98.2% 7,761,953 99.1%
Commercial loans (3) 55,406 0.8% 111,340 1.8% 68,537 0.9%
Total loan originations $7,270,940 100.0% $6,082,252 100.0% $7,830,490 100.0%
========== ===== ========== ===== ========== =====
Nine Months Ended
September 30, 2014 September 30, 2013
------------------ ------------------
Consumer loans
Mortgage (1) $18,004,136 97.9% $31,042,635 99.3%
Other consumer (2) 66,540 0.4% 45,023 0.1%
------ ------ ---
Total consumer loans 18,070,676 98.3% 31,087,658 99.4%
Commercial loans (3) 321,452 1.7% 190,827 0.6%
Total loan
originations $18,392,128 100.0% $31,278,485 100.0%
=========== ===== =========== =====
(1) Includes residential
first mortgage and second
mortgage loans.
(2) Other consumer loans
include: Warehouse lending,
HELOC and other consumer
loans.
(3) Commercial loans
include: commercial real
estate, commercial and
industrial and commercial
lease financing loans.
Loans Held-for-Investment
(Dollars in thousands)
(Unaudited)
September 30, 2014 June 30, 2014 December 31, 2013 September 30, 2013
------------------ ------------- ----------------- ------------------
Consumer loans
Residential first mortgage $2,224,734 53.1% $2,352,965 53.9% $2,508,968 61.9% $2,478,599 61.8%
Second mortgage 153,891 3.7% 157,772 3.6% 169,525 4.2% 174,383 4.3%
Warehouse lending 594,526 14.2% 683,258 15.7% 423,517 10.4% 390,348 9.7%
HELOC 261,826 6.3% 268,655 6.2% 289,880 7.1% 307,552 7.7%
Other 31,612 0.8% 33,364 0.8% 37,468 0.9% 39,043 1.0%
------ --- ------ --- ------ --- ------ ---
Total consumer loans 3,266,589 78.1% 3,496,014 80.2% 3,429,358 84.5% 3,389,925 84.5%
--------- ---- --------- ---- --------- ---- --------- ----
Commercial loans
Commercial real estate 566,870 13.5% 523,006 12.0% 408,870 10.1% 420,879 10.4%
Commercial and industrial 341,312 8.2% 330,256 7.6% 207,187 5.1% 187,639 4.7%
Commercial lease financing 9,853 0.2% 10,017 0.2% 10,341 0.3% 15,064 0.4%
----- --- ------ --- ------ --- ------ ---
Total commercial loans 918,035 21.9% 863,279 19.8% 626,398 15.5% 623,582 15.5%
Total loans held-for-investment $4,184,624 100.0% $4,359,293 100.0% $4,055,756 100.0% $4,013,507 100.0%
========== ===== ========== ===== ========== ===== ========== =====
Residential Loans Serviced
(Dollars in thousands)
(Unaudited)
September 30, 2014 June 30, 2014 December 31, 2013 September 30, 2013
------------------ ------------- ----------------- ------------------
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 $3,870,117 21,617 $4,068,682 26,614 $4,375,009 $28,069 $4,727,135 30,971
portfolio (1)
Serviced for others 26,377,572 122,788 25,342,335 127,409 25,743,396 131,413 74,200,317 369,368
Subserviced for others (2) 46,695,465 238,425 43,103,393 212,927 40,431,867 198,256 - -
---------- ------- ---------- ------- ---------- ------- --- ---
Total residential $76,943,154 382,830 $72,514,410 366,950 $70,550,272 357,738 $78,927,452 400,339
loans serviced (2)
(1) Includes both loans
held-for-investment
(residential first mortgage,
second mortgage and HELOC) and
loans-held-for-sale
(residential first mortgage).
(2) Does not include
temporary short-term
subservicing performed as a
result of sales of servicing-
released mortgage servicing
rights.
Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Beginning balance $306,000 $307,000 $243,000 $207,000 $305,000
Provision for loan losses 8,097 6,150 4,053 126,567 56,030
Charge-offs
Consumer loans
Residential first mortgage (12,320) (5,603) (34,666) (28,785) (123,456)
Second mortgage (645) (1,145) (1,534) (2,858) (5,522)
Warehouse lending (74) - (45) (74) (45)
HELOC (1,355) (1,055) (872) (5,099) (3,745)
Other (565) (479) (1,341) (1,505) (2,627)
---- ---- ------ ------ ------
Total consumer loans (14,959) (8,282) (38,458) (38,321) (135,395)
Commercial loans
Commercial real estate (672) (1,789) (8,419) (2,461) (42,931)
Commercial and industrial - - (302) - (302)
Total commercial loans (672) (1,789) (8,721) (2,461) (43,233)
---- ------ ------ ------ -------
Total charge-offs (15,631) (10,071) (47,179) (40,782) (178,628)
Recoveries
Consumer loans
Residential first mortgage 1,267 458 2,256 2,841 14,296
Second mortgage 204 95 348 383 825
Warehouse lending 58 - - 58 -
HELOC 45 62 143 156 705
Other 768 370 470 1,458 844
--- --- --- ----- ---
Total consumer loans 2,342 985 3,217 4,896 16,670
Commercial loans
Commercial real estate 183 1,896 3,860 3,194 7,862
Commercial and industrial 9 40 49 78 66
Commercial lease financing - - - 47 -
Total commercial loans 192 1,936 3,909 3,319 7,928
--- ----- ----- ----- -----
Total recoveries 2,534 2,921 7,126 8,215 24,598
----- ----- ----- ----- ------
Charge-offs, net of recoveries (13,097) (7,150) (40,053) (32,567) (154,030)
Ending balance $301,000 $306,000 $207,000 $301,000 $207,000
======== ======== ======== ======== ========
Net charge-off ratio (annualized) (1) 1.36% 0.78% 3.96% 1.17% 4.60%
Net charge-off ratio (annualized) also by loan type (1)
Residential first mortgage 1.92% 0.88% 4.99% 1.44% 5.14%
Second mortgage 1.78 4.08 2.67 3.24 4.67
HELOC and consumer 47.03 60.21 3.40 70.59 3.15
Warehouse 0.01 - 0.04 0.01 0.01
Commercial real estate 0.36 (0.08) 3.94 (0.19) 8.79
Commercial and industrial (0.01) (0.05) 0.58 (0.06) 0.23
(1) Excludes loans
carried under the fair
value option.
Representation and Warranty Reserve
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Balance, beginning of period $50,000 $48,000 $185,000 $54,000 $193,000
Provision
Charged to gain on sale for current loan sales 1,981 1,734 3,719 5,149 14,588
Charged to representation and warranty reserve
-change in estimate 12,538 5,226 5,205 16,092 51,541
-------------
Total 14,519 6,960 8,924 21,241 66,129
Charge-offs, net (7,519) (4,960) (19,924) (18,241) (85,129)
------ ------ ------- ------- -------
Balance, end of period $57,000 $50,000 $174,000 $57,000 $174,000
======= ======= ======== ======= ========
Composition of Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)
---
September 30, 2014 Collectively Individually
Evaluated Evaluated
Reserves Reserves Total
------------------ ------------- ------------- -----
Consumer loans
Residential first mortgage $157,198 $82,858 $240,056
Second mortgage 7,089 5,514 12,603
Warehouse lending 2,234 - 2,234
HELOC 17,453 1,179 18,632
Other 1,545 - 1,545
----- --- -----
Total consumer loans 185,519 89,551 275,070
Commercial loans
Commercial real estate 20,584 - 20,584
Commercial and industrial 5,202 - 5,202
Commercial lease financing 144 - 144
--- --- ---
Total commercial loans 25,930 - 25,930
------ --- ------
Total allowance for loan losses $211,449 $89,551 $301,000
======== ======= ========
June 30, 2014 Collectively Individually
Evaluated Evaluated
Reserves Reserves Total
------------- ------------- ------------- -----
Consumer loans
Residential first mortgage $162,272 $86,918 $249,190
Second mortgage 7,561 6,094 13,655
Warehouse lending 2,557 - 2,557
HELOC 12,313 1,753 14,066
Other 2,030 - 2,030
----- --- -----
Total consumer loans 186,733 94,765 281,498
Commercial loans
Commercial real estate 19,266 - 19,266
Commercial and industrial 5,096 - 5,096
Commercial lease financing 140 - 140
--- --- ---
Total commercial loans 24,502 - 24,502
------ --- ------
Total allowance for loan losses $211,235 $94,765 $306,000
======== ======= ========
Non-Performing Loans and Assets
(Dollars in thousands)
(Unaudited)
September 30, 2014 June 30, 2014 December 31, 2013 September 30, 2013
------------------ ------------- ----------------- ------------------
Non-performing loans $72,361 $86,373 $98,976 $94,062
Non-performing TDRs 17,507 17,596 25,808 21,104
Non-performing TDRs at inception
but performing for less than six
months 17,076 16,193 20,901 23,638
------ ------ ------ ------
Total non-performing loans held-
for-investment 106,944 120,162 145,685 138,804
Real estate and other non-
performing assets, net 27,149 31,579 36,636 66,530
Non-performing assets held-for-
investment, net (1) $134,093 $151,741 $182,321 $205,334
======== ======== ======== ========
Ratio of non-performing assets to
total assets (Bank only) 1.40% 1.54% 1.95% 1.74%
Ratio of non-performing loans
held-for-investment to loans
held-for-investment 2.56% 2.76% 3.59% 3.46%
Ratio of non-performing assets to
loans held-for-investment and
repossessed assets 3.18% 3.46% 4.46% 5.03%
(1) Does not include non-
performing loans held-for-
sale of $18.0 million, $6.0
million, $0.8 million and $3.1
million at September 30, 2014,
June 30, 2014, December 31,
2013 and September 30, 2013,
respectively.
Asset Quality - Loans Held-for-Investment
(Dollars in thousands)
(Unaudited)
30-59 Days Past 60-89 Days Past Greater than 90 Total Past Due Total Investment
Due Due days Loans
--------------- --------------- --------------- -------------- ----------------
September 30, 2014
Consumer loans $40,188 $12,139 $106,944 $159,271 $3,266,589
Commercial loans 5,489 - - 5,489 918,035
----- --- --- ----- -------
Total loans $45,677 $12,139 $106,944 $164,760 $4,184,624
======= ======= ======== ======== ==========
June 30, 2014
Consumer loans $42,840 $8,978 $120,162 $171,980 $3,496,014
Commercial loans - - - - 863,279
Total loans $42,840 $8,978 $120,162 $171,980 $4,359,293
======= ====== ======== ======== ==========
December 31, 2013
Consumer loans $41,013 $20,732 $144,185 $205,930 $3,429,358
Commercial loans - - 1,500 1,500 626,398
--- --- ----- ----- -------
Total loans $41,013 $20,732 $145,685 $207,430 $4,055,756
======= ======= ======== ======== ==========
September 30, 2013
Consumer loans $51,176 $18,244 $123,289 $192,709 $3,389,925
Commercial loans - 208 15,515 15,723 623,582
--- --- ------ ------ -------
Total loans $51,176 $18,452 $138,804 $208,432 $4,013,507
======= ======= ======== ======== ==========
Troubled Debt Restructurings
(Dollars in thousands)
(Unaudited)
TDRs
----
Performing Non-performing Non-performing TDRs Total
at inception but
performing for less
than six months
---
September 30, 2014
Consumer loans $365,553 $17,507 $17,076 $400,136
Commercial loans 418 - - 418
Total TDRs $365,971 $17,507 $17,076 $400,554
======== ======= ======= ========
June 30, 2014
Consumer loans $371,562 $17,596 $16,193 $405,351
Commercial loans 432 - - 432
Total TDRs $371,994 $17,596 $16,193 $405,783
======== ======= ======= ========
December 31, 2013
Consumer loans $382,529 $25,808 $20,901 $429,238
Commercial loans 456 - - 456
Total TDRs $382,985 $25,808 $20,901 $429,694
======== ======= ======= ========
September 30, 2013
Consumer loans $387,671 $21,104 $21,353 $430,128
Commercial loans 268 - 2,284 2,552
Total TDRs $387,939 $21,104 $23,637 $432,680
======== ======= ======= ========
Non-GAAP Reconciliation
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2014 2014 2013 2014 2013
---- ---- ---- ---- ----
Efficiency ratio (adjusted)
Net interest income (a) $64,363 $62,425 $42,685 $184,988 $145,448
Noninterest income (b) 85,188 102,484 134,296 262,625 539,198
Less provisions:
Representation and warranty reserve -
change in estimate 12,538 5,226 5,205 16,092 51,541
Significant items:
Net impairment loss recognized through
earnings - - - - 8,789
Other noninterest income - (10,000) - (10,000) (36,854)
--- ------- --- ------- -------
Adjusted income (c) $162,089 $160,135 $182,186 $453,705 $708,122
Noninterest expense (d) $179,389 $121,353 $158,436 $439,994 $529,422
Significant items:
Other noninterest expense (38,616) 7,121 - (31,495) 10,000
------- ----- --- ------- ------
Adjusted noninterest expense (e) $140,773 $128,474 $158,436 $408,499 $539,422
-------- -------- -------- -------- --------
Efficiency ratio (d/(a+b)) 120.0% 73.6% 89.5% 98.3% 77.3%
===== ==== ==== ==== ====
Efficiency ratio (adjusted) (e/c) 86.8% 80.2% 87.0% 90.0% 76.2%
==== ==== ==== ==== ====
September 30, June 30, December 31, September 30,
2014 2014 2013 2013
---- ---- ---- ----
Non-performing assets /Tier 1
capital + allowance for loan losses
Non-performing assets $134,093 $151,741 $182,321 $205,334
Tier 1 capital (1) 1,134,429 1,188,936 1,257,608 1,402,423
Allowance for loan losses 301,000 306,000 207,000 207,000
------- ------- ------- -------
Tier 1 capital + allowance for loan
losses $1,435,429 $1,494,936 $1,464,608 $1,609,423
---------- ---------- ---------- ----------
Non-performing assets /Tier 1
capital + allowance for loan losses 9.3% 10.2% 12.4% 12.8%
=== ==== ==== ====
Mortgage servicing rights to Tier 1
capital ratio September 30, June 30, December 31, September 30,
2014 2014 2013 2013
---- ---- ---- ----
Mortgage servicing rights $285,386 $289,185 $284,678 $797,029
Tier 1 capital (to adjusted total assets)
(1) 1,134,429 1,188,936 1,257,608 1,402,423
Mortgage servicing rights to Tier 1
capital ratio 25.2% 24.3% 22.6% 56.8%
==== ==== ==== ====
(1) Represents Tier 1
capital for Bank.
Quarter ended September 30, 2014 Quarter ended June 30, 2014
-------------------------------- ---------------------------
Operating Income / Expense As Reported Significant
Items Operating As Reported Significant Items Operating
----------- ----------- --------- ----------- ----------------- ---------
Net interest income after provision for loan losses $56,266 $ - $56,266 $56,275 $ - $56,275
------- --- --- ------- ------- --- --- -------
Noninterest Income
Loan fees and charges (1) 18,661 18,661 25,301 (10,000) 15,301
Representation and warranty reserve - change in estimate (2) (12,538) 10,375 (2,163) (5,226) (5,226)
All other noninterest income 79,065 79,065 82,409 82,409
Total noninterest income 85,188 10,375 95,563 102,484 (10,000) 92,484
------ ------ ------ ------- ------- ------
Noninterest Expense
Legal and professional expense (3) 15,044 (1,116) 13,928 13,524 (2,879) 10,645
Other noninterest expense (4) 50,254 (37,500) 12,754 (8,195) 10,000 1,805
All other noninterest expense 114,091 114,091 116,024 116,024
------- -------
Total noninterest expense 179,389 (38,616) 140,773 121,353 7,121 128,474
------- ------- ------- ------- ----- -------
(Loss) income before income taxes (37,935) 48,991 11,056 37,406 (17,121) 20,285
(Benefit) provision for income taxes (10,303) 13,646 3,343 11,892 (5,992) 5,900
------- ------ ----- ------ ------ -----
Net (loss) income (27,632) 35,345 7,713 25,514 (11,129) 14,385
Preferred stock dividend/accretion - - - - - -
Net (loss) income applicable to common stockholders $(27,632) $35,345 $7,713 $25,514 $(11,129) $14,385
======== ======= ====== ======= ======== =======
(Loss) income per share
Basic $(0.61) $0.60 $(0.01) $0.33 $(0.19) $0.14
====== ===== ====== ===== ====== =====
Diluted $(0.61) $0.60 $(0.01) $0.33 $(0.20) $0.13
====== ===== ====== ===== ====== =====
(1) Significant item for benefit
for contract renegotiation for the
second quarter 2014 located in loan
fees and charges.
(2) Significant item for charge
for government loan indemnification
for the third quarter 2014 located
in representation and warranty
reserve-change in estimate.
(3) Significant item for charge
for CFPB CID -related costs for
the third and second quarter of
2014 located in legal and
professional expense.
(4) Significant item for charge
for CFPB settlement for the third
quarter 2014 located in other
noninterest expense.
The Bank currently calculates risk-based capital ratios under guidelines adopted by the OCC based on the 1988 Capital Accord ("Basel I") of the Basel Committee on Banking Supervision (the "Basel Committee"). In December 2010, the Basel Committee released its final framework for Basel III, which will strengthen international capital and liquidity regulations. 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. The Company will begin transitioning to the Basel III framework in January 2015 subject to a phase-in period extending through January 2019. The Company is currently evaluating the impact of the final Basel III rules. Accordingly, the calculations provided below are estimates.
September 30,
2014 Common Equity Tier 1 Tier 1 Leverage (to
(to Risk Weighted Adjusted Tangible
Assets) Assets) (1)
------ ----------
Flagstar Bank
(the Bank)
Regulatory
capital - Basel
I to Basel III
(fully phased-
in) (2)
Basel I capital $1,134,429 $1,134,429
Increased
deductions
related to
deferred tax
assets, mortgage
servicing
assets, and
other capital
components (136,389) (136,389)
-------- --------
Basel III (fully
phased-in)
capital (2) $998,040 $998,040
-------- --------
Risk-weighted
assets - Basel I
to Basel III
(fully phased-
in) (2)
Basel I assets $4,967,755 $9,162,342
Net change in
assets 94,479 491,646
------ -------
Basel III (fully
phased-in)
assets (2) $5,062,234 $9,653,988
---------- ----------
Capital ratios
Basel I (3) 22.84% 12.38%
Basel III (fully
phased-in) (2) 19.72% 10.34%
(1) The definition of total
assets used in the calculation
of the Tier 1 Leverage ratio
changed from ending total
assets under Basel I to
quarterly average total assets
under Basel III.
(2) Basel III information is
considered estimated and not
final at this time as the Basel
III rules continue to be
subject to interpretation by
U.S. Banking Regulators.
(3) The Bank is currently
subject to the requirements of
Basel I.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/flagstar-reports-third-quarter-2014-results-817987874.html
SOURCE Flagstar Bancorp, Inc.
