FLAGSTAR BANCORP, INC. 
By TROY, Mich., Jan. 23, 2013 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC) (the "Company"), the holding company for Flagstar Bank, FSB (the "Bank"), today reported fourth quarter 2012 net income applicable to common stockholders of $66.8 million, or $1.12 per share (diluted), as compared to third quarter 2012 net income of $79.7 million, or $1.36 per share (diluted), and a fourth quarter 2011 net loss of $(78.2) million, or $(1.41) per share (diluted). The full year 2012 net income applicable to common stockholders was $223.7 million, or $3.74 per share (diluted), compared to a full year 2011 net loss of $(198.9) million, or $(3.62) per share (diluted).
"We are pleased to report fourth quarter and full year financial results that demonstrate continued performance improvement and sustainable profitability," said Michael Tierney, President and Chief Executive Officer of the Company. "During the fourth quarter we significantly reduced credit costs, further strengthened and de-risked the balance sheet, and improved the Tier 1 leverage capital ratio by over 100 basis points from the previous quarter. We remain dedicated to building a strong culture of compliance, and we believe that the initiatives we completed during the fourth quarter demonstrate our continued emphasis on quality, risk management and sound governance. Our sustained profitability is a testament to the hard work of Flagstar's talented employees, and I thank them for their continued dedication."
Mr. Tierney continued, "With the recently announced sale of a substantial portion of Flagstar's Northeast-based commercial loan portfolio, we are refocusing our business strategy on our national mortgage presence and our Michigan-based community banking model. We remain committed to being the largest bank headquartered in Michigan, through our 111 branches and our commercial banking team, and we look forward to continuing to meet and exceed the needs of our clients and communities. At the same time, we will continually strive to improve our risk management systems and processes, and deliver enhanced value to all of our stakeholders."
Highlights
-- Delivered strong financial performance:
-- Net income applicable to common stockholders of $66.8 million, or
$1.12 per diluted share.
-- Gain on loan sale income remained strong, at $239.0 million,
reflecting a margin of 1.53 percent.
-- Net interest income increased slightly from the prior quarter to
$73.9 million.
-- Total provisions related to the representation and warranty reserve
decreased by 75.2 percent from the prior quarter to $32.5 million.
-- Strengthened and de-risked the balance sheet:
-- Total repurchase pipeline decreased by $201.4 million from the prior
quarter to $224.2 million, as the Company continued to work through
the existing population of repurchase requests.
-- Continued to add reserves for pending and threatened litigation.
-- Entered into a definitive agreement to sell a substantial portion of
Northeast-based commercial loan portfolio, which is expected to be
capital accretive (discussed in Commercial Loan Sale below).
-- Improved capital ratios, liquidity remained strong:
-- Tier 1 capital ratio (to adjusted total assets) increased by 110
basis points to 10.41 percent.
-- Cash on hand and interest-earning deposits of approximately $1.0
billion.
-- Non-performing loans were flat from prior quarter, but declined
significantly from December 31, 2011:
-- Consumer non-performing loans increased by 13.4 percent from the
prior quarter, driven primarily by an increase in performing
nonaccrual TDRs, but declined by 19.1 percent from December 31,
2011.
-- Commercial non-performing loans declined by 29.5 percent from the
prior quarter and 14.5 percent from December 31, 2011.
Commercial Loan Sale
As previously announced, effective December 31, 2012 the Bank entered into a definitive Transaction Purchase and Sale Agreement (the "Agreement") with CIT Bank, the wholly-owned U.S. commercial bank subsidiary of CIT Group Inc. (NYSE: CIT) ("CIT"). Under the terms of the Agreement, CIT will acquire $1.3 billion in commercial loan commitments, $785.0 million of which is currently outstanding. The Company expects that the total purchase price for the portfolio will be approximately $779.0 million and that a vast majority of the assets will be sold during the first quarter of 2013.
Net Interest Income
Fourth quarter 2012 net interest income increased slightly to $73.9 million, as compared to $73.1 million for the third quarter 2012. Net interest margin for the Bank also increased to 2.26 percent, as compared to 2.21 percent for the third quarter 2012, driven primarily by an improvement in our funding costs.
Interest income decreased by $4.3 million from the prior quarter, driven primarily by a lower average balance of investment securities available-for-sale primarily resulting from the sale of non-agency collateralized mortgage obligation securities during the third quarter 2012 and lower average balances of loans held-for-investment. Fourth quarter 2012 average yield on interest-earnings assets was 3.44 percent, as compared to 3.54 percent for the third quarter 2012.
Interest expense decreased by $5.2 million during the fourth quarter 2012 from the third quarter 2012, more than offsetting the decline in interest income. The decrease in interest expense from prior quarter was primarily due to an improvement in the funding mix and a lower average cost of deposits.
The Company's average cost of funds for the fourth quarter 2012 was 1.60 percent, a decrease from the third quarter 2012 of 1.73 percent, driven primarily by a decrease in the average rate paid on retail certificates of deposits. During the fourth quarter 2012, the Company reduced higher cost retail deposits. The average cost of total deposits decreased during the fourth quarter 2012 to 0.86 percent, as compared to 1.02 percent during the third quarter 2012.
Non-interest Income
Fourth quarter 2012 non-interest income increased to $285.8 million, as compared to $273.7 million for the third quarter 2012. Excluding the provision related to the representation and warranty reserve - change in estimate, which decreased by $99.3 million (discussed in Credit-Related Costs and Asset Quality below), non-interest income would have totaled $311.0 million for the fourth quarter 2012, as compared to $398.2 million for the third quarter 2012. This decrease from the prior quarter was primarily due to lower net gain on loan sales.
Fourth quarter 2012 net gain on loan sales decreased to $239.0 million, as compared to $334.4 million for the third quarter 2012, but increased as compared to $106.9 million for the fourth quarter 2011. The decrease from the prior quarter was reflective of both a decrease in mortgage rate lock commitments and a decrease in margin on rate lock commitments. Mortgage rate lock commitments decreased to $16.2 billion for the fourth quarter 2012, as compared to $18.1 billion for the third quarter 2012, driven by seasonal and competitive mortgage patterns, as well as actions to manage volume levels.
As compared to the fourth quarter 2011, net gain on loan sales increased by $132.1 million, primarily driven by increases in mortgage rate lock commitments and increased margin on rate lock commitments.
Gain on loan sale margin is calculated based on residential first mortgage rate lock commitments and actual sales of residential first mortgage loans, and is net of sales expenses, hedging costs and provisions related to the representation and warranty reserve (i.e., the portion of the reserve established at the time of sale). Gain on loan sale margin decreased to 1.53 percent for the fourth quarter 2012, as compared to 2.42 percent for the third quarter 2012, but increased from 1.02 percent for the fourth quarter 2011. The decrease from the prior quarter was largely attributable to a decrease in gross gain on sale margin, as well as a 12.5 percent increase in mortgage loan sales (which serves as the denominator in computing the reported margin) as compared to the prior quarter. As compared to the fourth quarter 2011, gain on loan sale margin increased by 51 basis points, reflective of strong consumer demand for the refinancing of residential mortgage loans in a declining interest rate environment and fewer competitors in the marketplace.
Loan fees and charges increased to $40.8 million for the fourth quarter 2012, as compared to $37.4 million for the third quarter 2012. Loan fees are driven by mortgage loan originations, which increased to $15.4 billion for the fourth quarter 2012, as compared to $14.5 billion for the third quarter 2012.
Net servicing revenue, which is the combination of net loan administration income (including the off-balance sheet hedges of mortgage servicing rights) and the gain (loss) on trading securities (i.e., the on-balance sheet hedges of mortgage servicing rights), increased to $25.0 million for the fourth quarter 2012, as compared to $11.3 million for the third quarter 2012. This increase from the prior quarter was primarily attributable to effective hedge positioning, despite significant rate volatility intra-quarter and the absence of uncertainty from the central banks with respect to quantitative easing.
The Company also recorded a net loss on sales of mortgage servicing rights of $7.7 million during the fourth quarter 2012, due to bulk sales of mortgage servicing rights related to $13.8 billion in underlying mortgage loans. The Company intends to continue to look for opportunistic ways to reduce its concentration of mortgage servicing rights.
Credit-Related Costs and Asset Quality
For the fourth quarter 2012, total credit-related costs (see non-GAAP reconciliation) decreased to $97.6 million, as compared to $189.7 million for the third quarter 2012 and $173.2 million for the fourth quarter 2011. The declines from the prior quarter, and the same quarter in 2011, were driven primarily by a decrease in representation and warranty reserve - change in estimate provisions (exclusive of provisions for representation and warranty reserve which are taken through gain on loan sale income).
The Company maintains a representation and warranty reserve on the balance sheet, which reflects an estimate of losses that may occur on both loans that have been sold or securitized into the secondary market and those currently in the repurchase pipeline, primarily to the GSEs. At December 31, 2012, the representation and warranty reserve was $193.0 million, a decrease as compared to $202.0 million at September 30, 2012, but an increase of $73.0 million as compared to $120.0 million at December 31, 2011. The decrease from the prior quarter includes an $11.0 million reclassification of reserves associated with loans insured by the MBIA Insurance Corporation ("MBIA"). This reclassification reflects the nature of the reserves following the filing by MBIA of its lawsuit against the Bank (discussed in Non-interest Expense below).
Representation and warranty reserve - change in estimate provision was $25.2 million for the fourth quarter 2012, as compared to $124.5 million for the third quarter 2012 and $69.3 million for the fourth quarter 2011. The declines from the prior quarter, and the same quarter in 2011, primarily reflect decreases in net charge-offs of loan repurchases.
At December 31, 2012, the total repurchase pipeline decreased to $224.2 million, as compared to $425.6 million at September 30, 2012, as the Company continued to work through the existing population of repurchase requests. New audit file review requests increased by 12.7 percent from the prior quarter, which management believes is a reflection of the GSEs continuing their reviews as they transition to a new review process.
The provision for loan losses in the fourth quarter 2012 decreased to $50.4 million, as compared to $52.6 million for the third quarter 2012 and $63.5 million for the fourth quarter 2011. At December 31, 2012, the allowance for loan losses remained unchanged at $305.0 million, as compared to September 30, 2012, and decreased as compared to $318.0 million at December 31, 2011. At December 31, 2012, the ratio of the allowance for loan losses to non-performing loans held-for-investment was 76.3 percent, relatively unchanged as compared to 76.5 percent at September 30, 2012, but increased as compared to 65.1 percent at December 31, 2011.
The consumer allowance for loan losses increased to $260.7 million at December 31, 2012, as compared to $244.6 million at September 30, 2012, which reflects management's view of potentially higher losses from re-defaults within the portfolio of troubled debt restructurings ("TDRs"), as well as an increase in the level of TDRs. The total commercial allowance for loan losses decreased to $44.3 million at December 31, 2012, as compared to $60.4 million at September 30, 2012, reflecting the continued run-off in the commercial loan portfolio and reversal of $12.6 million in reserves associated with the December sale of commercial loans under the Agreement with CIT.
Total non-performing loans were $399.8 million as of December 31, 2012, essentially unchanged as compared to $398.9 million at September 30, 2012, but decreased by 18.1 percent from December 31, 2011. Consumer non-performing loans increased to $313.4 million at December 31, 2012, as compared to $276.3 million at September 30, 2012, but decreased by 19.1 percent from December 31, 2011. The increase from the prior quarter was driven primarily by an increase in TDRs, virtually all of which were performing as agreed, as a result of the implementation of the Office of the Comptroller of the Currency guidance on bankruptcies. Commercial non-performing loans decreased to $86.4 million at December 31, 2012, as compared to $122.6 million at September 30, 2012 and $101.0 million at December 31, 2011. The decrease from the prior quarter was primarily driven by continued work-outs and individual note sales within the portfolio.
Asset resolution expense, which includes expenses associated with foreclosed properties (including the foreclosure claims in process with respect to government insured loans for which the Bank files claims with HUD) increased to $21.2 million for the fourth quarter 2012, as compared to $12.5 million for the third quarter 2012, but decreased as compared to $32.4 million for the fourth quarter 2011. The increase from the prior quarter was driven primarily by the recognition of a $7.8 million benefit applied against asset resolution expense in the third quarter 2012, as a result of the Company's participation in a HUD-coordinated market auction of loans repurchased with government guarantees.
Non-interest Expense
Non-interest expense was $237.0 million for the fourth quarter 2012, as compared to $233.5 million for the third quarter 2012 and $205.8 million for the fourth quarter 2011. Excluding asset resolution expense (discussed in Credit-Related Costs and Asset Quality above), non-interest expense would have totaled $215.7 million for the fourth quarter 2012, as compared to $221.0 million for the third quarter 2012 and $173.4 for the fourth quarter 2011. The decrease in non-interest expense (excluding asset resolution expense) from the prior quarter is primarily due to a $15.2 million decrease in loss on extinguishment of debt resulting from the Company's prepayment of FHLB advances during the third quarter 2012.
As compared to the fourth quarter 2011, the increase in non-interest expense was driven by an increase in compensation and benefits related to significant staffing increases in the default servicing and loss mitigation areas, an increase in commissions driven by increased mortgage loan originations, and an increase in general and administrative expense from additional legal reserves for pending and threatened litigation.
Compensation and benefits increased to $72.1 million for the fourth quarter 2012, as compared to $67.4 million for the third quarter 2012, reflecting incentive compensation and retention expenses. Commission expense also increased to $22.2 million for the fourth quarter 2012, as compared to $19.9 million for the third quarter 2012. This increase from the prior quarter was consistent with an increase in mortgage loan originations during the quarter.
The fourth quarter 2012 general and administrative expense includes approximately $27.0 million with respect to the Company's assessment of exposure from pending and threatened litigation. This includes the reclassification of $11.0 million previously recorded in the representation and warranty reserve. The total amount reserved by the Company for pending and threatened litigation, including amounts paid in anticipation of a future settlement, was approximately $82.7 million at December 31, 2012. Included in this reserve are amounts for the previously disclosed lawsuit filed by Assured Guaranty Municipal Corp., formerly known as Financial Security Assurance Inc. ("Assured"), and for the lawsuit that MBIA filed against the Bank on January 11, 2013. The MBIA claims relate to approximately $1.1 billion of non-agency securitization transactions in 2006 and 2007 involving fixed and adjustable rate second mortgage loans that Flagstar held at the time in its investment portfolio. MBIA guaranteed the offered securities. The Assured and MBIA cases are pending in the United States District Court for the Southern District of New York. The bench trial in the Assured case concluded on November 13, 2012, and the Company expects a decision in late January. Although there can be no assurance as to the ultimate outcome of the Assured and MBIA lawsuits, the Company believes that the Bank has meritorious defenses and intends to continue to defend itself vigorously. The actual costs of resolving the Assured and MBIA claims, and the other pending and threatened litigation, may be materially higher or lower than the amounts reserved.
Capital
The Bank was considered "well-capitalized" for regulatory purposes at December 31, 2012, and had regulatory capital ratios of 10.41 percent for the Tier 1 capital ratio (to adjusted total assets) and 19.16 percent for the total risk-based capital ratio (to risk-weighted assets).
At December 31, 2012, the Company had an equity-to-assets ratio of 9.38 percent.
Balance Sheet and Funding
Total assets at December 31, 2012 were $14.1 billion, as compared to $14.9 billion at September 30, 2012. The decrease from the prior quarter was primarily driven by a decrease in held-for-sale residential first mortgage loans resulting from an excess of residential first mortgage loan sales over residential first mortgage loan originations, and a decrease in commercial real estate loans held-for-investment driven by the Company's continued emphasis on reducing the balances of loans originated prior to 2009. During the quarter, commercial loans related to the Agreement with CIT were transferred from the loans held-for-investment portfolio to the loans held-for-sale portfolio.
Loans are primarily funded with deposits obtained through branches in Michigan and from public entities. Funds are also obtained through loan repayments and sales of loans and securities in the ordinary course of business, advances from the FHLB in varying maturities depending on current needs, customer escrow accounts and security repurchase agreements. Several of these sources are relied upon at different times to address daily and forecasted liquidity needs for operational requirements and policy levels while managing overall net interest costs and interest rate risk.
Total deposits were $8.3 billion at December 31, 2012, a decrease of $1.2 billion as compared to September 30, 2012. The decrease from the prior quarter was primarily attributable to a $1.2 billion transfer of principal and interest custodian accounts serviced for GSEs to a third party. Retail checking and savings balances increased, more than offsetting a decrease in retail and wholesale certificates of deposit, as the Company continued to replace higher costing funding with core deposits.
At December 31, 2012 and September 30, 2012, the Bank had approximately $1.0 billion of cash on hand and interest-earning deposits. The Bank also maintains a line of credit with the FHLB under which borrowings are collateralized by residential first mortgage loans and other assets of the Bank. At December 31, 2012, the Bank had outstanding borrowings from the FHLB of $3.2 billion, as compared to $3.1 billion at September 30, 2012. At December 31, 2012, the Bank had an additional $1.1 billion of collateralized borrowing capacity available at the FHLB.
Earnings Conference Call
As previously announced, the Company's quarterly earnings conference call will be held on Thursday, January 24, 2013 from 11 a.m. until Noon (Eastern).
Questions may be asked during the conference call or by emailing questions in advance to investors@flagstar.com
To join the call, please dial (800) 684-1259 toll free or (913) 312-1503, and use passcode: 3359641. 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: 3359641.
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. A slide presentation to accompany the conference call will also be posted on the site.
About Flagstar
Flagstar Bancorp, Inc. (NYSE: FBC) is the holding company for Flagstar Bank, a full-service financial institution offering a range of products and services to consumers, businesses, and homeowners. With $14.1 billion in total assets at December 31, 2012, Flagstar is the largest publicly held savings bank headquartered in the Midwest. Flagstar originates loans nationwide and is one of the leading originators of residential first mortgage loans. For more information, please visit flagstar.com.
Non-GAAP
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding the Company's results of operations or financial position. 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 press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that are difficult to predict and could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement. Forward-looking statements contained in this press release and any information related to expectations about future events or results are based upon information available to the Company as of the date hereof. Forward-looking statements can be identified by such words as "anticipates," "intends," "plans," "seeks," "believes," "expects", "estimates," and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements made regarding the Company's results of operations, current expectations, plans or forecasts of core business drivers, credit related costs, asset quality, capital adequacy and liquidity, the implementation of the Company's business plan and growth strategies, the impact, timing and consummation of the commercial loan sale and other similar matters. Although we believe that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, contingencies, and other factors. Accordingly, we cannot give you any assurance that our expectations will in fact occur or that actual results will not differ materially from those expressed or implied by such forward-looking statements. We caution you not to place undue reliance on any forward-looking statement and to consider all of the following uncertainties and risks, as well as those more fully discussed in the Company's filings with the Securities and Exchange Commission ("SEC"), including, but not limited to, our Forms 10-K and 10-Q: volatile interest rates that impact, among other things, the mortgage banking business, our ability to originate loans and sell assets at a profit, prepayment speeds and our cost of funds; changes in regulatory capital requirements or an inability to achieve or maintain desired capital ratios; actions of mortgage loan purchasers, guarantors and insurers regarding repurchases and indemnity demands and uncertainty related to foreclosure procedures; uncertainty regarding pending and threatened litigation; our ability to control credit related costs and forecast the adequacy of reserves; the imposition of regulatory enforcement actions against us; our compliance with the Consent Order with the Office of the Comptroller of the Currency, which was disclosed on October 23, 2012; and the commercial loan sale may not have the projected impact or be consummated in a timely manner. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the SEC, the Company undertakes no obligation to update any such statement to reflect events or circumstances after the date on which it is made.
Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(In thousands, except share data)
December 31, 2012 September 30, 2012 December 31, 2011
----------------- ------------------ -----------------
Assets (Unaudited) (Unaudited)
Cash and cash items $38,070 $53,883 $49,715
Interest-earning deposits 914,723 949,514 681,343
------- ------- -------
Cash and cash equivalents 952,793 1,003,397 731,058
Securities classified as trading 170,086 170,073 313,383
Securities classified as available-for-sale 184,445 198,861 481,352
Loans held-for-sale 3,791,188 3,251,936 1,800,885
Loans repurchased with government guarantees 1,841,342 1,931,163 1,899,267
Loans held-for-investment 5,586,633 6,552,399 7,038,587
Less: allowance for loan losses (305,000) (305,000) (318,000)
-------- -------- --------
Loans held-for-investment, net 5,281,633 6,247,399 6,720,587
--------- --------- ---------
Total interest-earning assets 12,183,417 12,748,946 11,896,817
Accrued interest receivable 91,992 106,458 105,200
Repossessed assets, net 120,732 119,468 114,715
Federal Home Loan Bank stock 301,737 301,737 301,737
Premises and equipment, net 219,059 211,981 203,578
Mortgage servicing rights 710,791 686,799 510,475
Other assets 416,214 669,950 455,236
------- ------- -------
Total assets $14,082,012 $14,899,222 $13,637,473
=========== =========== ===========
Liabilities and Stockholders' Equity
Deposits $8,294,295 $9,489,169 $7,689,988
Federal Home Loan Bank advances 3,180,000 3,088,000 3,953,000
Long-term debt 247,435 248,560 248,585
------- ------- -------
Total interest-bearing liabilities 11,721,730 12,825,729 11,891,573
Accrued interest payable 13,420 12,522 8,723
Representation and warranty reserve 193,000 202,000 120,000
Other liabilities 833,500 608,372 537,461
------- ------- -------
Total liabilities 12,761,650 13,648,623 12,557,757
---------- ---------- ----------
Stockholders' Equity
Preferred stock 260,390 258,973 254,732
Common stock 559 558 556
Additional paid in capital 1,476,569 1,475,380 1,471,463
Accumulated other comprehensive loss (1,658) (2,042) (7,819)
Accumulated deficit (415,498) (482,270) (639,216)
-------- -------- --------
Total stockholders' equity 1,320,362 1,250,599 1,079,716
--------- --------- ---------
Total liabilities and stockholders' equity $14,082,012 $14,899,222 $13,637,473
=========== =========== ===========
Flagstar Bancorp, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
For the Three Months Ended For the Year Ended
-------------------------- ------------------
December 31, September 30, December 31, December 31, December 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest Income
Loans $112,464 $114,158 $116,790 $456,141 $427,022
Securities classified as available-for-sale 2,277 4,912 8,929 22,609 35,602
or trading
Interest-earning deposits and other 674 672 426 2,220 2,785
--- ----- -----
Total interest income 115,415 119,742 126,145 480,970 465,409
------- ------- ------- -------
Interest Expense
Deposits 15,017 17,819 20,944 70,143 95,546
FHLB advances 24,756 27,091 27,646 106,625 117,963
Other 1,701 1,753 1,692 6,971 6,527
----- ----- ----- ----- -----
Total interest expense 41,474 46,663 50,282 183,739 220,036
------ ------ ------ ------- -------
Net interest income 73,941 73,079 75,863 297,231 245,373
Provision for loan losses 50,351 52,595 63,548 276,047 176,931
------ ------ ------ ------- -------
Net interest income after provision for loan losses 23,590 20,484 12,315 21,184 68,442
------ ------ ------ ------ ------
Non-Interest Income
Loan fees and charges 40,793 37,359 28,610 142,908 77,843
Deposit fees and charges 5,154 5,255 6,332 20,370 29,629
Loan administration 25,010 11,099 28,295 100,007 94,604
Gain on trading securities 12 237 674 (2,011) 21,088
Loss on transferors' interest (780) (118) (847) (2,552) (5,673)
Net gain on loan sales 238,953 334,427 106,919 990,898 300,789
Net loss on sales of mortgage servicing rights (7,687) (1,332) (2,823) (12,319) (7,903)
Net (loss) gain on securities available-for-sale (310) 2,616 - 2,636 -
Net gain on sale of assets - - 21,379 - 22,676
Total other-than-temporary impairment - - (11,569) 2,810 (30,456)
(loss) gain
Gain (loss) recognized in other comprehensive income before taxes - - 4,437 (5,002) 6,417
--- --- ----- ------ -----
Net impairment losses recognized in - - (7,132) (2,192) (24,039)
earnings
Representation and warranty reserve - (25,231) (124,492) (69,279) (256,289) (150,055)
change in estimate
Other fees and charges, net 9,881 8,686 6,493 39,786 26,557
----- ----- ----- ------ ------
Total non-interest income 285,795 273,737 118,621 1,021,242 385,516
------- ------- ------- --------- -------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Non-Interest Expense
Compensation and benefits 72,081 67,386 60,011 270,859 224,711
Commissions 22,154 19,888 14,151 75,345 39,345
Occupancy and equipment 19,184 18,833 19,448 73,674 70,117
Asset resolution 21,241 12,487 32,408 91,349 128,313
Federal insurance premiums 12,202 12,643 11,401 49,273 41,581
Other taxes 856 2,036 606 4,219 2,784
Warrant expense (income) 5,422 1,516 138 8,935 (6,889)
Loss on extinguishment of debt - 15,246 - 15,246 -
General and administrative 83,822 83,456 67,674 239,795 134,718
------ ------ ------ ------- -------
Total non-interest expense 236,962 233,491 205,837 828,695 634,680
------- ------- ------- ------- -------
Income (loss) before federal income taxes 72,423 60,730 (74,901) 213,731 (180,722)
Provision (benefit) for federal income taxes 4,235 (20,380) 264 (15,645) 1,056
----- ------- --- ------- -----
Net income (loss) 68,188 81,110 (75,165) 229,376 (181,778)
Preferred stock dividend/accretion (1) (1,417) (1,417) (3,016) (5,658) (17,165)
------ ------ ------ ------ -------
Net income (loss) applicable to common $66,771 $79,693 $(78,181) $223,718 $(198,943)
stockholders
Income (loss) per share
Basic (2) $1.13 $1.37 $(1.41) $3.77 $(3.62)
===== ====== ===== ======
Diluted (2) $1.12 $1.36 $(1.41) $3.74 $(3.62)
===== ===== ====== ===== ======
(1) The preferred stock dividend/accretion for
the three months ended December 31, 2012
and September 30, 2012 and the year ended
December 31, 2012, respectively,
represents only the accretion. On January
27, 2012, the Company elected to defer
payment of dividends and interest on the
preferred stock.
(2) The three months and year ended December
31, 2011 have been restated for a one-
for-ten reverse stock split announced
September 27, 2012 and began trading on
October 11, 2012.
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in thousands, except per share data)
(Unaudited)
For the Three Months Ended For the Year Ended
-------------------------- ------------------
December 31, 2012 September 30, December 31, 2011 December 31, 2012 December 31, 2011
2012
----
Return on average assets 1.78% 2.10% (2.21)% 1.52% (1.49)%
Return on average equity 20.70% 25.78% (27.56)% 18.76% (16.78)%
Efficiency ratio 65.9% 67.3% 105.8% 62.9% 100.6%
Efficiency ratio (credit-adjusted) (1) 56.0% 46.9% 65.8% 46.8% 64.8%
Equity-to-assets ratio (average for the period) 8.59% 8.16% 8.02% 8.10% 8.88%
Mortgage loans originated (2) $15,356,795 $14,513,635 $10,187,100 $53,586,856 $26,612,800
Other loans originated $113,458 $165,668 $199,529 $754,155 $700,969
Mortgage loans sold and securitized $15,610,590 $13,876,626 $10,476,542 $53,094,326 $27,451,362
Interest rate spread - bank only (3) 1.87% 1.84% 2.15% 1.98% 1.86%
Net interest margin - bank only (4) 2.26% 2.21% 2.43% 2.31% 2.13%
Interest rate spread - consolidated (3) 1.84% 1.81% 2.13% 1.96% 1.85%
Net interest margin - consolidated (4) 2.21% 2.16% 2.37% 2.26% 2.07%
Average common shares outstanding (5) 55,842,910 55,801,692 55,535,992 55,762,196 55,434,296
Average fully diluted shares outstanding (5) 56,520,403 56,233,165 55,535,992 56,193,515 55,434,296
Average interest-earning assets $13,349,991 $13,476,917 $12,752,968 $13,104,401 $11,803,670
Average interest paying liabilities $10,318,385 $10,737,734 $11,018,201 $10,786,253 $10,530,369
Average stockholder's equity $1,290,082 $1,236,411 $1,134,716 $1,192,721 $1,185,731
Charge-offs to average investment loans (annualized) 3.18% 2.12% 1.60% 4.43% 2.14%
December 31, 2012 September 30, 2012 December 31, 2011
----------------- ------------------ -----------------
Equity-to-assets ratio 9.38% 8.39% 7.92%
Tier 1 capital ratio (to adjusted total assets) (6) 10.41% 9.31% 8.95%
Total risk-based capital ratio (to risk-weighted assets) (6) 19.16% 17.58% 16.64%
Book value per common share (5) $18.97 $17.76 $14.80
Number of common shares outstanding (5) 55,863,053 55,828,470 55,577,564
Mortgage loans serviced for others $76,821,222 $82,414,799 $63,770,676
Weighted average service fee (basis points) 29.2 30.1 30.8
Capitalized value of mortgage servicing rights 0.93% 0.83% 0.80%
Ratio of allowance for loan losses to non-performing loans held-for-investment (7) 76.3% 76.5% 65.1%
Ratio of allowance for loan losses to loans held-for-investment (7) 5.46% 4.65% 4.52%
Ratio of non-performing assets to total assets (bank only) 3.70% 3.48% 4.43%
Number of bank branches 111 111 113
Number of loan origination centers 31 31 27
Number of employees (excluding loan officers and account executives) 3,328 3,240 2,839
Number of loan officers and account executives 334 336 297
(1) See Non-GAAP reconciliation.
(2) Includes residential first mortgage
and second mortgage loans.
(3) Interest rate spread is the
difference between the annualized
average yield earned on average
interest-earning assets for the
period and the annualized average
rate of interest paid on average
interest-bearing liabilities for
the period.
(4) Net interest margin is the
annualized effect of the net
interest income divided by that
period's average interest-earning
assets.
(5) Restated for a 1-for-10 reverse
stock split announced September
27, 2012 and began trading on
October 11, 2012.
(6) 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.
(7) Bank only and does not include non-
performing loans held-for-sale.
Loan Originations
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
--------------------------
December 31, 2012 September 30, 2012 December 31, 2011
----------------- ------------------ -----------------
Consumer loans
Mortgage (1) $15,356,795 99.3% $14,513,635 98.8% $10,187,100 98.1%
Other consumer (2) 7,589 - 8,489 0.1% 3,033 -
----- --- ----- --- ----- ---
Total consumer loans 15,364,384 99.3% 14,522,124 98.9% 10,190,133 98.1%
Commercial loans (3) 105,869 0.7% 157,179 1.1% 196,496 1.9%
Total loan originations $15,470,253 100.0% $14,679,303 100.0% $10,386,629 100.0%
=========== ===== =========== ===== =========== =====
For the Year Ended
December 31, 2012 December 31, 2011
----------------- -----------------
Consumer
loans
Mortgage
(1) $53,586,856 98.6% $26,612,800 97.4%
Other
consumer
(2) 27,058 0.1% 11,024 0.1%
------ ------ ---
Total
consumer
loans 53,613,914 98.7% 26,623,824 97.5%
Commercial
loans
(3) 727,097 1.3% 689,945 2.5%
Total
loan
originations $54,341,011 100.0% $27,313,769 100.0%
=========== ===== =========== =====
(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)
December 31, 2012 September 30, 2012 December 31, 2011
----------------- ------------------ -----------------
Consumer loans
Residential first mortgage $3,009,251 53.9% $3,086,096 47.1% $3,749,821 53.1%
Second mortgage 114,885 2.1% 122,286 1.9% 138,912 2.0%
Warehouse lending 1,347,727 24.1% 1,307,292 20.0% 1,173,898 16.7%
HELOC 179,447 3.2% 192,117 2.9% 221,986 3.2%
Other 49,611 0.9% 53,188 0.8% 67,613 1.0%
------ --- ------ --- ------ ---
Total consumer loans 4,700,921 84.2% 4,760,979 72.7% 5,352,230 76.0%
--------- ---- --------- ---- --------- ----
Commercial loans
Commercial real estate 689,424 12.3% 1,005,498 15.3% 1,242,969 17.7%
Commercial and industrial 189,988 3.4% 597,273 9.1% 328,879 4.7%
Commercial lease financing 6,300 0.1% 188,649 2.9% 114,509 1.6%
----- --- ------- --- ------- ---
Total commercial loans 885,712 15.8% 1,791,420 27.3% 1,686,357 24.0%
Total loans held-for-investment $5,586,633 100.0% $6,552,399 100.0% $7,038,587 100.0%
========== ===== ========== ===== ========== =====
Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)
For the Three Months Ended For the Year Ended
-------------------------- ------------------
December 31, 2012 September 30, 2012 December 31, 2011 December 31, 2012 December 31, 2011
----------------- ------------------ ----------------- ----------------- -----------------
Beginning balance $305,000 $287,000 $282,000 $318,000 $274,000
Provision for loan losses 50,351 52,595 63,548 276,047 176,931
Charge-offs
Consumer loans
Residential first mortgage (33,802) (23,999) (19,042) (175,803) (41,559)
Second mortgage (5,423) (3,990) (2,672) (18,753) (19,217)
Warehouse lending - - (562) - (1,122)
HELOC (5,000) (1,483) (3,515) (17,159) (16,980)
Other (1,613) (892) (916) (4,423) (4,729)
------ ---- ---- ------ ------
Total consumer loans (45,838) (30,364) (26,707) (216,138) (83,607)
Commercial loans
Commercial real estate (13,443) (15,532) (2,527) (105,285) (57,626)
Commercial and industrial (3,011) (12) - (4,627) (644)
Commercial lease financing (1,191) - - (1,191) -
------ --- --- ------ ---
Total commercial loans (17,645) (15,544) (2,527) (111,103) (58,270)
------- ------- ------ -------- -------
Total charge-offs (63,483) (45,908) (29,234) (327,241) (141,877)
------- ------- ------- -------- --------
Recoveries
Consumer loans
Residential first mortgage 5,530 5,899 401 18,561 1,656
Second mortgage 196 428 65 1,912 1,642
Warehouse lending - - - - 5
HELOC 67 44 57 461 1,510
Other 731 448 319 1,786 1,603
--- --- --- ----- -----
Total consumer loans 6,524 6,819 842 22,720 6,416
Commercial loans
Commercial real estate 6,600 4,461 844 15,397 2,408
Commercial and industrial 8 33 - 77 122
--- --- --- --- ---
Total commercial loans 6,608 4,494 844 15,474 2,530
----- ----- --- ------ -----
Total recoveries 13,132 11,313 1,686 38,194 8,946
------ ------ ----- ------ -----
Charge-offs, net of recoveries (50,351) (34,595) (27,548) (289,047) (132,931)
-------- --------
Ending balance $305,000 $305,000 $318,000 $305,000 $318,000
======== ======== ======== ======== ========
Net charge-off ratio (annualized) 3.18% 2.12% 1.60% 4.43% 2.14%
==== === ==== ==== ==== ====
Representation and Warranty Reserve
(Dollars in thousands)
(Unaudited)
For the Three Months Ended For the Year Ended
-------------------------- ------------------
December 31, 2012 September 30,
2012 December 31, 2011 December 31, 2012 December 31, 2011
----------------- -------------- ----------------- ----------------- -----------------
(Dollars in thousands)
Balance, beginning of period $202,000 $161,000 $85,000 $120,000 $79,400
Provision
Charged to gain on sale for current 7,285 6,432 3,481 24,410 8,993
loan sales
Charged to representation and 25,231 124,492 69,280 256,289 150,055
warranty reserve - change in estimate
--------------
Total 32,516 130,924 72,761 280,699 159,048
Charge-offs, net (41,516) (89,924) (37,761) (207,699) (118,448)
------- ------- ------- -------- --------
Balance, end of period $193,000 $202,000 $120,000 $193,000 $120,000
======== ======== ======== ======== ========
Composition of Allowance for Loan Losses
(In thousands)
(Unaudited)
----------
December 31, 2012 Collectively Individually
Evaluated Evaluated
Reserves (1) Reserves (2) Total
----------------- ------------ ------------ -----
Consumer loans
Residential first mortgage $68,685 $150,545 $219,230
Second mortgage 13,173 7,028 20,201
Warehouse lending 899 - 899
HELOC 15,274 3,074 18,348
Other 2,040 - 2,040
----- --- -----
Total consumer loans 100,071 160,647 260,718
Commercial loans
Commercial real estate 38,772 2,538 41,310
Commercial and industrial 2,868 10 2,878
Commercial lease financing 94 - 94
--- --- ---
Total commercial loans 41,734 2,548 44,282
------ ----- ------
Total allowance for loan losses $141,805 $163,195 $305,000
======== ======== ========
September 30, 2012
------------------
Consumer loans
Residential first mortgage $74,950 $129,902 $204,852
Second mortgage 12,478 6,410 18,888
Warehouse lending 1,038 - 1,038
HELOC 15,216 2,340 17,556
Other 2,229 - 2,229
----- --- -----
Total consumer loans 105,911 138,652 244,563
Commercial loans
Commercial real estate 47,113 1,722 48,835
Commercial and industrial 8,857 20 8,877
Commercial lease financing 2,725 - 2,725
----- --- -----
Total commercial loans 58,695 1,742 60,437
------ ----- ------
Total allowance for loan losses $164,606 $140,394 $305,000
======== ======== ========
(1) Represents loans collectively
evaluated for impairment in
accordance with ASC 450-20, Loss
Contingencies (formerly FAS 5), and
pursuant to amendments by ASU
2010-20 regarding allowance for
unimpaired loans.
(2) Represents loans individually
evaluated for impairment in
accordance with ASC 310-10,
Receivables (formerly FAS 114), and
pursuant to amendments by ASU
2010-20 regarding allowance for
impaired loans.
Non-Performing Loans and Assets
(Dollars in thousands)
(Unaudited)
December 31, 2012 September 30, 2012 December 31, 2011
----------------- ------------------ -----------------
Non-performing loans held-for-investment $399,825 $398,948 $488,367
Real estate and other non-performing assets, net 120,732 119,468 114,715
------- ------- -------
Non?performing assets held-for-investment, net 520,557 518,416 603,082
------- ------- -------
Non-performing loans held-for-sale 1,835 2,086 4,573
----- ----- -----
Total non-performing assets including loans held-for-sale $522,392 $520,502 $607,655
======== ======== ========
Ratio of non-performing assets to total assets (Bank only) 3.70% 3.48% 4.43%
Ratio of non-performing loans held-for-investment to loans held-for-investment 7.16% 6.09% 6.94%
Ratio of non-performing assets to loans held for investment and repossessed assets 9.12% 7.77% 8.43%
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
--------------- --------------- --------------- -------------- ----------------
December 31, 2012
Consumer loans (1) $66,687 $18,578 $313,418 $398,683 $4,700,921
Commercial loans (1) 6,979 6,990 86,408 100,377 885,712
----- ----- ------ ------- -------
Total loans $73,666 $25,568 $399,826 $499,060 $5,586,633
======= ======= ======== ======== ==========
September 30, 2012
Consumer loans (1) $53,919 $26,697 $276,319 $356,935 $4,760,979
Commercial loans (1) 9,563 432 122,629 132,624 1,791,420
Total loans $63,482 $27,129 $398,948 $489,559 $6,552,399
======= ======= ======== ======== ==========
December 31, 2011
Consumer loans (1) $83,670 $41,602 $387,362 $512,634 $5,352,230
Commercial loans (1) 7,464 12,385 101,005 120,854 1,686,357
----- ------ ------- ------- ---------
Total loans $91,134 $53,987 $488,367 $633,488 $7,038,587
======= ======= ======== ======== ==========
(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.
Troubled Debt Restructurings
(Dollars in thousands)
(Unaudited)
TDRs
----
Performing Non-performing Total
---------- -------------- -----
December
31, 2012 (Dollars in thousands)
Consumer
loans $588,475 $143,188 $731,663
Commercial
loans 1,287 2,056 3,343
Total TDRs $589,762 $145,244 $735,006
======== ======== ========
September
30, 2012
Consumer
loans $612,956 $106,250 $719,206
Commercial
loans 1,329 3,230 4,559
Total TDRs $614,285 $109,480 $723,765
======== ======== ========
December
31, 2011
Consumer
loans $499,438 $167,076 $666,514
Commercial
loans 17,737 29,509 47,246
Total TDRs $517,175 $196,585 $713,760
======== ======== ========
Gain on Loan Sales and Securitizations
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
--------------------------
December 31, 2012 September 30, 2012 December 31, 2011
----------------- ------------------ -----------------
Description (000's) bps (000's) bps (000's) bps
------ --- ------ --- ------ ---
Valuation gain (loss)
Value of interest rate locks $(143,364) (94) $97,176 73 $(19,033) (18)
Value of forward sales 123,602 82 (91,329) (68) 17,793 17
Fair value of loans held-for-sale 213,512 138 273,270 198 96,911 92
LOCOM adjustments on loans held-for-investment (1,103) (1) - - - -
------ --- --- --- --- ---
Total valuation gains 192,647 125 279,117 203 95,671 91
Sales gains (losses)
Marketing gains, net of adjustments 161,163 103 218,262 157 73,560 70
Pair-off (losses) gains (107,572) (70) (156,520) (113) (58,831) (56)
Provision for representation and warranty reserve (7,285) (5) (6,432) (5) (3,481) (3)
------ --- ------ --- ------ ---
Total sales gains 46,306 28 55,310 39 11,248 11
------ --- ------ --- ------ ---
Total gain on loan sales and securitizations $238,953 153 $334,427 242 $106,919 102
======== ======== ========
Total mortgage rate lock commitments volume $16,242,000 $18,089,000 $11,230,000
=== =========== =========== ===========
Total loan sales and securitizations $15,610,590 $13,876,626 $10,476,542
=========== =========== ===========
For the Year Ended
------------------
December 31, 2012 December 31, 2011
----------------- -----------------
Description (000's) bps (000's) bps
------ --- ------ ---
Valuation gain (loss)
Value of interest rate
locks $15,235 3 $56,569 21
Value of forward sales 28,957 5 (78,798) (29)
Fair value of loans held-
for-sale 784,587 148 356,278 130
LOCOM adjustments on loans
held-for-investment (1,124) - 16 -
------ --- --- ---
Total valuation gains 827,655 156 334,065 122
Sales gains (losses)
Marketing gains, net of
adjustments 731,648 138 191,118 69
Pair-off (losses) gains (543,995) (102) (215,402) (78)
Provision for
representation and
warranty reserve (24,410) (5) (8,993) (3)
------- --- ------ ---
Total sales gains 163,243 31 (33,277) (12)
------- --- ------- ---
Total gain on loan sales
and securitizations $990,898 187 $300,788 110
======== ========
Total mortgage rate lock
commitments volume $66,732,000 $36,281,000
=== =========== ===========
Total loan sales and
securitizations $53,094,326 $27,451,362
=========== ===========
Average Balances, Yields and Rates
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
--------------------------
December 31, 2012 September 30, 2012 December 31, 2011
----------------- ------------------ -----------------
Average Balance Annualized Average Balance Annualized Average Balance Annualized
Yield/Rate Yield/Rate Yield/Rate
---------- ---------- ----------
Interest-Earning Assets
Loans held-for-sale $3,631,780 3.47% $3,301,860 3.70% $2,468,813 3.94%
Loans repurchased with government guarantees 1,912,722 3.13% 2,070,813 2.98% 1,849,827 3.44%
Loans held-for-investment
Consumer loans (1) 4,608,093 4.28% 4,717,672 4.32% 5,288,088 4.37%
Commercial loans (1) 1,724,223 3.78% 1,815,897 3.67% 1,620,132 4.53%
--------- --------- ---------
Loans held-for-investment 6,332,316 4.14% 6,533,569 4.14% 6,908,220 4.40%
Securities classified as available-for-sale or trading 362,819 2.51% 505,361 3.89% 813,865 4.39%
Interest-earning deposits and other 1,110,354 0.24% 1,065,314 0.25% 712,242 0.24%
--------- --------- -------
Total interest-earning assets 13,349,991 3.44% 13,476,917 3.54% 12,752,967 3.94%
Other assets 1,670,359 1,680,208 1,401,566
--------- --------- ---------
Total assets $15,020,350 $15,157,125 $14,154,533
=========== =========== ===========
Interest-Bearing Liabilities
Retail deposits
Demand deposits $379,721 0.28% $364,612 0.27% $382,419 0.29%
Savings deposits 1,891,901 0.68% 1,768,897 0.65% 1,432,094 0.81%
Money market deposits 427,792 0.43% 457,425 0.46% 531,981 0.61%
Certificate of deposits 3,253,647 1.02% 3,227,201 1.21% 3,010,919 1.52%
--------- --------- ---------
Total retail deposits 5,953,061 0.82% 5,818,135 0.92% 5,357,413 1.15%
Government deposits
Demand deposits 81,555 0.44% 107,944 0.48% 82,278 0.52%
Savings deposits 287,289 0.51% 291,046 0.55% 379,959 0.60%
Certificate of deposits 444,668 0.62% 375,922 0.64% 407,386 0.60%
------- ------- -------
Total government deposits 813,512 0.56% 774,912 0.58% 869,623 0.60%
Wholesale deposits 157,960 4.04% 334,595 3.77% 464,104 3.47%
------- ------- -------
Total deposits 6,924,533 0.86% 6,927,642 1.02% 6,691,140 1.24%
FHLB advances 3,145,341 3.13% 3,561,532 3.03% 4,078,476 2.69%
Other 248,511 2.72% 248,560 2.81% 248,585 2.70%
------- ------- -------
Total interest-bearing liabilities 10,318,385 1.60% 10,737,734 1.73% 11,018,201 1.81%
Other liabilities (2) 3,411,883 3,182,980 2,001,616
Stockholder's equity 1,290,082 1,236,411 1,134,716
--------- --------- ---------
Total liabilities and stockholder's equity $15,020,350 $15,157,125 $14,154,533
=========== =========== ===========
(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.
Average Balances, Yields and Rates
(Dollars in thousands)
(Unaudited)
For the Year Ended
------------------
December 31, 2012 December 31, 2011
----------------- -----------------
Average Balance Annualized Average Balance Annualized
Yield/Rate Yield/Rate
---------- ----------
Interest-Earning Assets
Loans held-for-sale $3,078,284 3.75% $1,928,339 4.31%
Loans repurchased with government guarantees 2,018,079 3.22% 1,784,927 3.19%
Loans held-for-investment
Consumer loans (1) 4,737,553 4.33% 4,830,127 4.58%
Commercial loans (1) 1,782,913 3.91% 1,373,566 4.74%
--------- ---------
Loans held-for-investment 6,520,466 4.21% 6,203,693 4.61%
Securities classified as available-for-sale or trading 573,445 3.94% 752,871 4.73%
Interest-earning deposits and other 914,127 0.24% 1,133,840 0.25%
------- ---------
Total interest-earning assets 13,104,401 3.66% 11,803,670 3.94%
Other assets 1,622,369 1,544,924
--------- ---------
Total assets $14,726,770 $13,348,594
=========== ===========
Interest-Bearing Liabilities
Retail deposits
Demand deposits $363,247 0.26% $397,988 0.33%
Savings deposits 1,775,449 0.72% 1,236,105 0.81%
Money market deposits 463,490 0.48% 561,943 0.69%
Certificate of deposits 3,170,103 1.21% 3,001,586 1.75%
--------- ---------
Total retail deposits 5,772,289 0.94% 5,197,622 1.30%
Government deposits
Demand deposits 96,000 0.48% 77,702 0.54%
Savings deposits 280,313 0.55% 414,394 0.64%
Certificate of deposits 393,731 0.64% 296,830 0.62%
------- -------
Total government deposits 770,044 0.59% 788,926 0.62%
Wholesale deposits 296,997 3.80% 674,856 3.41%
------- -------
Total deposits 6,839,330 1.03% 6,661,404 1.43%
FHLB advances 3,698,362 2.88% 3,620,368 3.26%
Other 248,561 2.80% 248,597 2.63%
------- -------
Total interest-bearing liabilities 10,786,253 1.70% 10,530,369 2.09%
Other liabilities (2) 2,747,796 1,632,494
Stockholder's equity 1,192,721 1,185,731
--------- ---------
Total liabilities and stockholder's equity $14,726,770 $13,348,594
=========== ===========
(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.
Non-GAAP Reconciliation
(Dollars in thousands)
(Unaudited)
For the Three Months Ended For the Year Ended
-------------------------- ------------------
December 31, 2012 September 30, 2012 December 31, 2011 December 31, 2012 December 31, 2011
----------------- ------------------ ----------------- ----------------- -----------------
Pre-tax, pre-credit-cost revenue
Income (loss) before tax provision $72,423 $60,730 $(74,901) $213,731 $(180,722)
Add back
Provision for loan losses 50,351 52,595 63,548 276,047 176,931
Asset resolution 21,241 12,487 32,408 91,349 128,313
Other than temporary impairment on AFS investments - - 7,132 2,192 24,039
Representation and warranty reserve - change in estimate 25,231 124,492 69,279 256,289 150,055
Write down of residual interest 780 118 847 2,552 5,673
--- --- --- ----- -----
Total credit-related costs 97,603 189,692 173,214 628,429 485,011
------ ------- ------- ------- -------
Pre-tax, pre-credit-cost net revenue $170,026 $250,422 $98,313 $842,160 $304,289
======== ======== ======= ======== ========
Efficiency ratio (credit-adjusted)
Net interest income (a) $73,941 $73,079 $75,863 $297,231 $245,373
Non-interest income (b) 285,795 273,737 118,621 1,021,242 385,516
Add: Representation and warranty reserve - change in estimate (d) 25,231 124,492 69,279 256,289 150,055
------ ------- ------ ------- -------
Adjusted income 384,967 471,308 263,763 1,574,762 780,944
------- ------- ------- --------- -------
Non-interest expense (c) 236,962 233,491 205,837 828,695 634,680
Less: Asset resolution expense (e) (21,241) (12,487) (32,408) (91,349) (128,313)
------- ------- ------- ------- --------
Adjusted non-interest expense $215,721 $221,004 $173,429 $737,346 $506,367
-------- -------- -------- -------- --------
Efficiency ratio (c/(a+b)) 65.9% 67.3% 105.8% 62.9% 100.6%
==== === ==== ===== ==== =====
Efficiency ratio (credit-adjusted) ((c- 56.0% 46.9% 65.8% 46.8% 64.8%
e)/((a+b)+d)))
December 31, 2012 September 30, 2012 December 31, 2011
----------------- ------------------ -----------------
Non-performing assets / Tier 1 capital + allowance for loan losses
Non-performing assets $520,557 $518,416 $603,082
Tier 1 capital (1) $1,456,841 $1,379,701 $1,215,220
Allowance for loan losses 305,000 305,000 318,000
------- ------- -------
Tier 1 capital + allowance for loan losses $1,761,841 $1,684,701 $1,533,220
---------- ---------- ----------
Non-performing assets / Tier 1 capital + allowance for loan losses 29.5% 30.8% 39.3%
==== === ==== ====
(1) Represents Tier 1
capital for Bank.
SOURCE Flagstar Bancorp
