Michigan | 1-16577 | 38-3150651 | ||
(State or Other Jurisdiction of Incorporation | (Commission File Number) | (IRS Employer Identification No.) |
5151 Corporate Drive, Troy, Michigan | 48098 | |
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company o |
Title of each class | Trading symbol | Name of each exchange on which registered | ||
Common stock | FBC | New York Stock Exchange |
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits |
Exhibits | ||||
99.1 | Press release of Flagstar Bancorp, Inc. dated April 28, 2020 | |||
99.2 | Flagstar Bancorp, Inc. Conference Call Presentation Slides - Earnings Presentation First Quarter |
FLAGSTAR BANCORP, INC. | |||||||
Dated: | April 28, 2020 | By: | /s/ James K. Ciroli | ||||
James K. Ciroli | |||||||
Executive Vice President and Chief Financial Officer |
• | Transitioned smoothly to remote operations to protect the health of employees and ensure business continuity |
• | Achieved mortgage revenues of $96 million, driven by strong refinance volume and higher return on MSRs |
• | Effectively managed NIM compression through the challenging rate environment |
• | Adopted CECL, increasing credit reserves to $152 million at March 31st |
• | Ended the quarter in a solid financial position--ample capital and liquidity |
Income Statement Highlights | |||||||||||||||
Three Months Ended | |||||||||||||||
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||||||||
(Dollars in millions) | |||||||||||||||
Net interest income | $ | 148 | $ | 152 | $ | 146 | $ | 138 | $ | 126 | |||||
Provision for credit losses | 14 | — | 1 | 17 | — | ||||||||||
Noninterest income | 157 | 162 | 171 | 168 | 109 | ||||||||||
Noninterest expense | 235 | 245 | 238 | 214 | 191 | ||||||||||
Income before income taxes | 56 | 69 | 78 | 75 | 44 | ||||||||||
Provision for income taxes | 10 | 11 | 15 | 14 | 8 | ||||||||||
Net income | $ | 46 | $ | 58 | $ | 63 | $ | 61 | $ | 36 | |||||
Income per share: | |||||||||||||||
Basic | $ | 0.80 | $ | 1.01 | $ | 1.12 | $ | 1.08 | $ | 0.64 | |||||
Diluted | $ | 0.80 | $ | 1.00 | $ | 1.11 | $ | 1.06 | $ | 0.63 |
Adjusted Income Statement Highlights (Non-GAAP) (1) | |||||||||||||||
Three Months Ended | |||||||||||||||
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||||||||
(Dollars in millions) | |||||||||||||||
Net interest income | $ | 148 | $ | 152 | $ | 146 | $ | 138 | $ | 126 | |||||
Provision for credit losses | 14 | — | 1 | 17 | — | ||||||||||
Noninterest income | 157 | 162 | 171 | 143 | 109 | ||||||||||
Noninterest expense | 235 | 245 | 238 | 214 | 190 | ||||||||||
Income before income taxes | 56 | 69 | 78 | 50 | 45 | ||||||||||
Provision for income taxes | 10 | 11 | 15 | 9 | 8 | ||||||||||
Net income | $ | 46 | $ | 58 | $ | 63 | $ | 41 | $ | 37 | |||||
Income per share: | |||||||||||||||
Basic | $ | 0.80 | $ | 1.01 | $ | 1.12 | $ | 0.72 | $ | 0.65 | |||||
Diluted | $ | 0.80 | $ | 1.00 | $ | 1.11 | $ | 0.71 | $ | 0.64 |
(1) | See Non-GAAP Reconciliation for further information. |
Key Ratios | ||||||||||
Three Months Ended | ||||||||||
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | ||||||
Net interest margin | 2.81 | % | 2.91 | % | 3.05 | % | 3.08 | % | 3.09 | % |
Return on average assets | 0.8 | % | 1.0 | % | 1.2 | % | 1.2 | % | 0.8 | % |
Return on average common equity | 9.8 | % | 12.7 | % | 14.7 | % | 14.6 | % | 9.2 | % |
Efficiency ratio | 77.1 | % | 78.2 | % | 75.2 | % | 69.8 | % | 81.3 | % |
HFI loan-to-deposit ratio | 74.9 | % | 76.5 | % | 74.2 | % | 75.0 | % | 71.0 | % |
Adjusted HFI loan-to-deposit ratio (1) | 86.3 | % | 84.6 | % | 82.0 | % | 80.6 | % | 77.0 | % |
(1) | Excludes warehouse loans and custodial deposits. See Non-GAAP Reconciliation for further information. |
Average Balance Sheet Highlights | |||||||||||||||||||
Three Months Ended | % Change | ||||||||||||||||||
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | Seq | Yr/Yr | |||||||||||||
(Dollars in millions) | |||||||||||||||||||
Average interest-earning assets | $ | 21,150 | $ | 20,708 | $ | 18,997 | $ | 17,759 | $ | 16,294 | 2 | % | 30 | % | |||||
Average loans held-for-sale (LHFS) | 5,248 | 5,199 | 3,786 | 3,539 | 3,266 | 1 | % | 61 | % | ||||||||||
Average loans held-for-investment (LHFI) | 11,823 | 12,168 | 11,743 | 10,613 | 9,164 | (3 | )% | 29 | % | ||||||||||
Average total deposits | 15,795 | 15,904 | 15,817 | 14,159 | 12,906 | (1 | )% | 22 | % |
Mortgage Metrics | |||||||||||||||||||
As of/Three months ended | Change (% / bps) | ||||||||||||||||||
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | Seq | Yr/Yr | |||||||||||||
(Dollars in millions) | |||||||||||||||||||
Mortgage rate lock commitments (fallout-adjusted) (1) | $ | 11,154 | $ | 8,179 | $ | 9,197 | $ | 8,344 | $ | 6,602 | 36 | % | 69 | % | |||||
Mortgage loans closed | $ | 8,591 | $ | 9,303 | $ | 9,262 | $ | 8,642 | $ | 5,513 | (8 | )% | 56 | % | |||||
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) (2) | 0.80 | % | 1.23 | % | 1.20 | % | 0.89 | % | 0.72 | % | (43) | 8 | |||||||
Net gain on loan sales | $ | 90 | $ | 101 | $ | 110 | $ | 75 | $ | 49 | (11 | )% | 84 | % | |||||
Net return on mortgage servicing rights (MSR) | $ | 6 | $ | (3 | ) | $ | (2 | ) | $ | 5 | $ | 6 | N/M | — | % | ||||
Gain on loan sales + net return on the MSR | $ | 96 | $ | 98 | $ | 108 | $ | 80 | $ | 55 | (2 | )% | 75 | % | |||||
Loans serviced (number of accounts - 000's) (3) | 1,082 | 1,091 | 994 | 983 | 962 | (1 | )% | 12 | % | ||||||||||
Capitalized value of MSRs | 0.95 | % | 1.21 | % | 1.14 | % | 1.23 | % | 1.27 | % | (26) | (32 | ) | ||||||
N/M - Not meaningful | |||||||||||||||||||
(1) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates. | |||||||||||||||||||
(2) Based on net gain on loan sales (excludes net gain on loan sales of $2 million from loans transferred from LHFI during the three months ended March 31, 2019 to fallout-adjusted mortgage rate lock commitments). | |||||||||||||||||||
(3) Includes loans serviced for Flagstar's own loan portfolio, serviced for others, and subserviced for others. |
Credit Quality Ratios | |||||||||||||||||||
As of/Three Months Ended | Change (% / bps) | ||||||||||||||||||
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | Seq | Yr/Yr | |||||||||||||
(Dollars in millions) | |||||||||||||||||||
Allowance for credit losses and reserve for unfunded commitments | $ | 152 | $ | 110 | $ | 113 | $ | 113 | $ | 130 | 38 | % | 17 | % | |||||
Credit reserves to LHFI | 1.1 | % | 0.9 | % | 0.9 | % | 1.0 | % | 1.3 | % | 20 | (20) | |||||||
Charge-offs, net of recoveries | $ | 2 | $ | 3 | $ | 1 | $ | 34 | $ | 1 | (33 | )% | N/M | ||||||
Total nonperforming LHFI and TDRs | $ | 29 | $ | 26 | $ | 26 | $ | 63 | $ | 24 | 12 | % | 21 | % | |||||
Net charge-offs to LHFI ratio (annualized) | 0.08 | % | 0.10 | % | 0.02 | % | 1.29 | % | 0.05 | % | (2) | 3 | |||||||
Ratio of nonperforming LHFI and TDRs to LHFI | 0.21 | % | 0.21 | % | 0.21 | % | 0.54 | % | 0.24 | % | 0 | (3) | |||||||
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (1): | |||||||||||||||||||
Residential first mortgage | 0.08 | % | 0.08 | % | 0.07 | % | 0.11 | % | 0.05 | % | — | 60 | |||||||
Home equity and other consumer | 0.28 | % | 0.49 | % | 0.27 | % | 0.71 | % | 0.23 | % | (43 | ) | 22 | ||||||
Commercial real estate | (0.01 | )% | — | % | — | % | — | % | — | % | (1 | ) | (1 | ) | |||||
Commercial and industrial | 0.09 | % | 0.07 | % | (0.22 | )% | 7.11 | % | 0.02 | % | 29 | N/M | |||||||
N/M - Not meaningful |
Capital Ratios (Bancorp) | Change (% / bps) | ||||||||||||||||||
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | Seq | Yr/Yr | |||||||||||||
Tier 1 leverage (to adj. avg. total assets) | 8.09 | % | 7.57 | % | 7.98 | % | 7.86 | % | 8.37 | % | 52 | (28) | |||||||
Tier 1 common equity (to RWA) | 9.16 | % | 9.32 | % | 9.25 | % | 9.08 | % | 9.69 | % | (16) | (53) | |||||||
Tier 1 capital (to RWA) | 10.51 | % | 10.83 | % | 10.81 | % | 10.73 | % | 11.51 | % | (32) | (100) | |||||||
Total capital (to RWA) | 11.21 | % | 11.52 | % | 11.54 | % | 11.51 | % | 12.49 | % | (31) | (128) | |||||||
Tangible common equity to asset ratio (1) | 6.25 | % | 6.95 | % | 7.08 | % | 7.31 | % | 7.16 | % | (70) | (91) | |||||||
Tangible book value per share (1) | $ | 29.52 | $ | 28.57 | $ | 27.62 | $ | 26.16 | $ | 24.65 | 3 | % | 20 | % |
(1) | See Non-GAAP Reconciliation for further information. |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||
Assets | |||||||||
Cash | $ | 216 | $ | 220 | $ | 268 | |||
Interest-earning deposits | 126 | 206 | 122 | ||||||
Total cash and cash equivalents | 342 | 426 | 390 | ||||||
Trading securities | 2,058 | — | — | ||||||
Investment securities available-for-sale | 2,446 | 2,116 | 2,142 | ||||||
Investment securities held-to-maturity | 554 | 598 | 683 | ||||||
Loans held-for-sale | 4,389 | 5,258 | 3,874 | ||||||
Loans held-for-investment | 13,795 | 12,129 | 9,936 | ||||||
Loans with government guarantees | 814 | 736 | 470 | ||||||
Less: allowance for credit losses | (132 | ) | (107 | ) | (127 | ) | |||
Total loans held-for-investment and loans with government guarantees, net | 14,477 | 12,758 | 10,279 | ||||||
Mortgage servicing rights | 223 | 291 | 278 | ||||||
Federal Home Loan Bank stock | 306 | 303 | 303 | ||||||
Premises and equipment, net | 413 | 416 | 414 | ||||||
Goodwill and intangible assets | 167 | 170 | 182 | ||||||
Other assets | 1,430 | 930 | 900 | ||||||
Total assets | $ | 26,805 | $ | 23,266 | $ | 19,445 | |||
Liabilities and Stockholders’ Equity | |||||||||
Noninterest-bearing deposits | $ | 6,551 | $ | 5,467 | $ | 4,016 | |||
Interest-bearing deposits | 9,501 | 9,679 | 9,437 | ||||||
Total deposits | 16,052 | 15,146 | 13,453 | ||||||
Short-term Federal Home Loan Bank advances and other | 5,841 | 4,165 | 3,101 | ||||||
Long-term Federal Home Loan Bank advances | 1,000 | 650 | 250 | ||||||
Other long-term debt | 493 | 496 | 495 | ||||||
Other liabilities | 1,577 | 1,021 | 572 | ||||||
Total liabilities | 24,963 | 21,478 | 17,871 | ||||||
Stockholders’ Equity | |||||||||
Common stock | 1 | 1 | 1 | ||||||
Additional paid in capital | 1,487 | 1,483 | 1,476 | ||||||
Accumulated other comprehensive income (loss) | 31 | 1 | (31 | ) | |||||
Retained earnings | 323 | 303 | 128 | ||||||
Total stockholders’ equity | 1,842 | 1,788 | 1,574 | ||||||
Total liabilities and stockholders’ equity | $ | 26,805 | $ | 23,266 | $ | 19,445 |
Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) (Unaudited) | |||||||||||||||||||||||||
First Quarter 2020 Compared to: | |||||||||||||||||||||||||
Three Months Ended | Fourth Quarter 2019 | First Quarter 2019 | |||||||||||||||||||||||
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | Amount | Percent | Amount | Percent | |||||||||||||||||
Interest Income | |||||||||||||||||||||||||
Total interest income | $ | 201 | $ | 213 | $ | 203 | $ | 198 | $ | 180 | $ | (12 | ) | (6 | )% | $ | 21 | 12 | % | ||||||
Total interest expense | 53 | 61 | 57 | 60 | 54 | (8 | ) | (13 | )% | (1 | ) | (2 | )% | ||||||||||||
Net interest income | 148 | 152 | 146 | 138 | 126 | (4 | ) | (3 | )% | 22 | 17 | % | |||||||||||||
Provision for credit losses | 14 | — | 1 | 17 | — | 14 | N/M | 14 | N/M | ||||||||||||||||
Net interest income after provision for credit losses | 134 | 152 | 145 | 121 | 126 | (18 | ) | (12 | )% | 8 | 6 | % | |||||||||||||
Noninterest Income | |||||||||||||||||||||||||
Net gain on loan sales | 90 | 101 | 110 | 75 | 49 | (11 | ) | (11 | )% | 41 | N/M | ||||||||||||||
Loan fees and charges | 26 | 30 | 29 | 24 | 17 | (4 | ) | (13 | )% | 9 | 53 | % | |||||||||||||
Net return (loss) on the mortgage servicing rights | 6 | (3 | ) | (2 | ) | 5 | 6 | 9 | N/M | — | — | % | |||||||||||||
Loan administration income | 12 | 8 | 5 | 6 | 11 | 4 | 50 | % | 1 | 9 | % | ||||||||||||||
Deposit fees and charges | 9 | 10 | 10 | 10 | 8 | (1 | ) | (10 | )% | 1 | 13 | % | |||||||||||||
Other noninterest income | 14 | 16 | 19 | 48 | 18 | (2 | ) | (13 | )% | (4 | ) | (22 | )% | ||||||||||||
Total noninterest income | 157 | 162 | 171 | 168 | 109 | (5 | ) | (3 | )% | 48 | 44 | % | |||||||||||||
Noninterest Expense | |||||||||||||||||||||||||
Compensation and benefits | 102 | 102 | 98 | 90 | 87 | — | — | % | 15 | 17 | % | ||||||||||||||
Occupancy and equipment | 41 | 43 | 40 | 40 | 38 | (2 | ) | (5 | )% | 3 | 8 | % | |||||||||||||
Commissions | 29 | 35 | 38 | 25 | 13 | (6 | ) | (17 | )% | 16 | N/M | ||||||||||||||
Loan processing expense | 20 | 20 | 22 | 21 | 17 | — | — | % | 3 | 18 | % | ||||||||||||||
Legal and professional expense | 6 | 9 | 6 | 6 | 6 | (3 | ) | (33 | )% | — | — | % | |||||||||||||
Federal insurance premiums | 6 | 6 | 5 | 5 | 4 | — | — | % | 2 | 50 | % | ||||||||||||||
Intangible asset amortization | 3 | 4 | 3 | 4 | 4 | (1 | ) | (25 | )% | (1 | ) | (25 | )% | ||||||||||||
Other noninterest expense | 28 | 26 | 26 | 23 | 22 | 2 | 8 | % | 6 | 27 | % | ||||||||||||||
Total noninterest expense | 235 | 245 | 238 | 214 | 191 | (10 | ) | (4 | )% | 44 | 23 | % | |||||||||||||
Income before income taxes | 56 | 69 | 78 | 75 | 44 | (13 | ) | (19 | )% | 12 | 27 | % | |||||||||||||
Provision for income taxes | 10 | 11 | 15 | 14 | 8 | (1 | ) | (9 | )% | 2 | 25 | % | |||||||||||||
Net income | $ | 46 | $ | 58 | $ | 63 | $ | 61 | $ | 36 | $ | (12 | ) | (21 | )% | $ | 10 | 28 | % | ||||||
Income per share | |||||||||||||||||||||||||
Basic | $ | 0.80 | $ | 1.01 | $ | 1.12 | $ | 1.08 | $ | 0.64 | $ | (0.21 | ) | (21 | )% | $ | 0.16 | 25 | % | ||||||
Diluted | $ | 0.80 | $ | 1.00 | $ | 1.11 | $ | 1.06 | $ | 0.63 | $ | (0.20 | ) | (20 | )% | $ | 0.17 | 27 | % | ||||||
Cash dividends declared | $ | 0.05 | $ | 0.04 | $ | 0.04 | $ | 0.04 | $ | 0.04 | $ | 0.01 | 25 | % | $ | 0.01 | 25 | % | |||||||
N/M - Not meaningful |
Three Months Ended | |||||||||
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||
Selected Mortgage Statistics: | |||||||||
Mortgage rate lock commitments (fallout-adjusted) (1) | $ | 11,154 | $ | 8,179 | $ | 6,602 | |||
Mortgage loans closed | $ | 8,591 | $ | 9,303 | $ | 5,513 | |||
Mortgage loans sold and securitized | $ | 7,487 | $ | 8,135 | $ | 5,170 | |||
Selected Ratios: | |||||||||
Interest rate spread (2) | 2.31 | % | 2.39 | % | 2.69 | % | |||
Net interest margin | 2.81 | % | 2.91 | % | 3.09 | % | |||
Net margin on loans sold and securitized | 1.19 | % | 1.24 | % | 0.92 | % | |||
Return on average assets | 0.78 | % | 0.99 | % | 0.79 | % | |||
Adjusted return on average assets (3) (4) | 0.78 | % | 0.99 | % | 0.80 | % | |||
Return on average common equity | 9.82 | % | 12.69 | % | 9.16 | % | |||
Return on average tangible common equity (4) | 11.46 | % | 14.76 | % | 11.33 | % | |||
Adjusted return on average tangible common equity (3) (4) | 11.46 | % | 14.76 | % | 11.56 | % | |||
Efficiency ratio | 77.1 | % | 78.2 | % | 81.3 | % | |||
Common equity-to-assets ratio (average for the period) | 7.92 | % | 7.83 | % | 8.59 | % | |||
Average Balances: | |||||||||
Average interest-earning assets | $ | 21,150 | $ | 20,708 | $ | 16,294 | |||
Average interest-bearing liabilities | $ | 14,480 | $ | 14,208 | $ | 12,505 | |||
Average stockholders' equity | $ | 1,854 | $ | 1,803 | $ | 1,583 |
(1) | Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates. |
(2) | Interest rate spread is the difference between the annualized yield earned on average interest-earning assets for the period and the annualized rate of interest paid on average interest-bearing liabilities for the period. |
(3) | See Non-GAAP Reconciliation for further information. |
(4) | Excludes goodwill, intangible assets and the associated amortization. See Non-GAAP Reconciliation for further information. |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||
Selected Statistics: | |||||||||
Book value per common share | $ | 32.46 | $ | 31.57 | $ | 27.86 | |||
Tangible book value per share (1) | $ | 29.52 | $ | 28.57 | $ | 24.65 | |||
Number of common shares outstanding | 56,729,789 | 56,631,236 | 56,480,086 | ||||||
Number of FTE employees | 4,415 | 4,453 | 3,996 | ||||||
Number of bank branches | 160 | 160 | 160 | ||||||
Ratio of nonperforming assets to total assets (2) | 0.14 | % | 0.15 | % | 0.17 | % | |||
Common equity-to-assets ratio | 6.87 | % | 7.68 | % | 8.09 | % | |||
MSR Key Statistics and Ratios: | |||||||||
Weighted average service fee (basis points) | 38.8 | 39.7 | 38.0 | ||||||
Capitalized value of mortgage servicing rights | 0.95 | % | 1.21 | % | 1.27 | % |
(1) | Excludes goodwill and intangibles of $167 million, $170 million and $182 million at March 31, 2020, December 31, 2019, and March 31, 2019, respectively. See Non-GAAP Reconciliation for further information. |
(2) | Ratio excludes LHFS. |
Three Months Ended | ||||||||||||||||||||||||
March 31, 2020 | December 31, 2019 | March 31, 2019 | ||||||||||||||||||||||
Average Balance | Interest | Annualized Yield/Rate | Average Balance | Interest | Annualized Yield/Rate | Average Balance | Interest | Annualized Yield/Rate | ||||||||||||||||
Interest-Earning Assets | ||||||||||||||||||||||||
Loans held-for-sale | $ | 5,248 | $ | 49 | 3.72 | % | $ | 5,199 | $ | 51 | 3.92 | % | $ | 3,266 | $ | 38 | 4.72 | % | ||||||
Loans held-for-investment | ||||||||||||||||||||||||
Residential first mortgage | 3,062 | 27 | 3.51 | % | 3,215 | 30 | 3.60 | % | 3,044 | 28 | 3.64 | % | ||||||||||||
Home equity | 1,019 | 12 | 4.73 | % | 989 | 12 | 4.86 | % | 745 | 10 | 5.63 | % | ||||||||||||
Other | 816 | 12 | 5.77 | % | 728 | 11 | 5.97 | % | 356 | 6 | 7.11 | % | ||||||||||||
Total consumer loans | 4,897 | 51 | 4.14 | % | 4,932 | 53 | 4.20 | % | 4,145 | 44 | 4.30 | % | ||||||||||||
Commercial real estate | 2,949 | 34 | 4.61 | % | 2,763 | 34 | 4.91 | % | 2,250 | 33 | 5.66 | % | ||||||||||||
Commercial and industrial | 1,667 | 19 | 4.52 | % | 1,726 | 21 | 4.80 | % | 1,594 | 21 | 5.39 | % | ||||||||||||
Warehouse lending | 2,310 | 25 | 4.30 | % | 2,747 | 33 | 4.61 | % | 1,175 | 16 | 5.47 | % | ||||||||||||
Total commercial loans | 6,926 | 78 | 4.48 | % | 7,236 | 88 | 4.77 | % | 5,019 | 70 | 5.53 | % | ||||||||||||
Total loans held-for-investment | 11,823 | 129 | 4.34 | % | 12,168 | 141 | 4.54 | % | 9,164 | 114 | 4.97 | % | ||||||||||||
Loans with government guarantees | 811 | 3 | 1.38 | % | 678 | 4 | 2.16 | % | 455 | 3 | 2.96 | % | ||||||||||||
Investment securities | 3,060 | 19 | 2.47 | % | 2,511 | 16 | 2.49 | % | 3,258 | 24 | 2.91 | % | ||||||||||||
Interest-earning deposits | 208 | 1 | 1.75 | % | 152 | 1 | 2.26 | % | 151 | 1 | 2.77 | % | ||||||||||||
Total interest-earning assets | 21,150 | $ | 201 | 3.78 | % | 20,708 | $ | 213 | 4.04 | % | 16,294 | $ | 180 | 4.43 | % | |||||||||
Other assets | 2,263 | 2,328 | 2,144 | |||||||||||||||||||||
Total assets | $ | 23,413 | $ | 23,036 | $ | 18,438 | ||||||||||||||||||
Interest-Bearing Liabilities | ||||||||||||||||||||||||
Retail deposits | ||||||||||||||||||||||||
Demand deposits | $ | 1,587 | $ | 3 | 0.75 | % | $ | 1,448 | $ | 3 | 0.70 | % | $ | 1,220 | $ | 2 | 0.68 | % | ||||||
Savings deposits | 3,384 | 9 | 1.07 | % | 3,335 | 10 | 1.19 | % | 3,089 | 7 | 0.95 | % | ||||||||||||
Money market deposits | 687 | 1 | 0.32 | % | 700 | — | 0.35 | % | 778 | 1 | 0.27 | % | ||||||||||||
Certificates of deposit | 2,254 | 12 | 2.24 | % | 2,459 | 15 | 2.37 | % | 2,488 | 13 | 2.13 | % | ||||||||||||
Total retail deposits | 7,912 | 25 | 1.28 | % | 7,942 | 28 | 1.39 | % | 7,575 | 23 | 1.22 | % | ||||||||||||
Government deposits | 1,131 | 3 | 1.15 | % | 1,192 | 4 | 1.39 | % | 1,170 | 4 | 1.51 | % | ||||||||||||
Wholesale deposits and other | 581 | 4 | 2.39 | % | 666 | 4 | 2.36 | % | 387 | 2 | 2.23 | % | ||||||||||||
Total interest-bearing deposits | 9,624 | 32 | 1.33 | % | 9,800 | 36 | 1.46 | % | 9,132 | 29 | 1.30 | % | ||||||||||||
Short-term FHLB advances and other | 3,566 | 12 | 1.35 | % | 3,262 | 15 | 1.74 | % | 2,725 | 17 | 2.54 | % | ||||||||||||
Long-term FHLB advances | 794 | 3 | 1.29 | % | 650 | 3 | 1.43 | % | 153 | 1 | 1.54 | % | ||||||||||||
Other long-term debt | 496 | 6 | 5.33 | % | 496 | 7 | 5.45 | % | 495 | 7 | 5.90 | % | ||||||||||||
Total interest-bearing liabilities | 14,480 | 53 | 1.46 | % | 14,208 | 61 | 1.65 | % | 12,505 | 54 | 1.75 | % | ||||||||||||
Noninterest-bearing deposits | ||||||||||||||||||||||||
Retail deposits and other | 1,395 | 1,332 | 1,242 | |||||||||||||||||||||
Custodial deposits (1) | 4,776 | 4,772 | 2,532 | |||||||||||||||||||||
Total noninterest-bearing deposits | 6,171 | 6,104 | 3,774 | |||||||||||||||||||||
Other liabilities | 908 | 921 | 576 | |||||||||||||||||||||
Stockholders' equity | 1,854 | 1,803 | 1,583 | |||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 23,413 | $ | 23,036 | $ | 18,438 | ||||||||||||||||||
Net interest-earning assets | $ | 6,671 | $ | 6,500 | $ | 3,789 | ||||||||||||||||||
Net interest income | $ | 148 | $ | 152 | $ | 126 | ||||||||||||||||||
Interest rate spread (2) | 2.31 | % | 2.39 | % | 2.69 | % | ||||||||||||||||||
Net interest margin (3) | 2.81 | % | 2.91 | % | 3.09 | % | ||||||||||||||||||
Ratio of average interest-earning assets to interest-bearing liabilities | 146.1 | % | 145.8 | % | 130.3 | % | ||||||||||||||||||
Total average deposits | $ | 15,795 | $ | 15,904 | $ | 12,906 |
(1) | Approximately 80 percent of custodial deposits from loans subserviced which pay interest that is recognized as an offset in net loan administration income. |
(2) | Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities. |
(3) | Net interest margin is net interest income divided by average interest-earning assets. |
Three Months Ended | |||||||||
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||
Net Income | $ | 46 | $ | 58 | $ | 36 | |||
Weighted average common shares outstanding | 56,655,865 | 56,513,890 | 56,897,799 | ||||||
Stock-based awards | 534,058 | 684,844 | 692,473 | ||||||
Weighted average diluted common shares | 57,189,923 | 57,198,734 | 57,590,272 | ||||||
Basic earnings per common share | $ | 0.80 | $ | 1.01 | $ | 0.64 | |||
Stock-based awards | — | (0.01 | ) | (0.01 | ) | ||||
Diluted earnings per common share | $ | 0.80 | $ | 1.00 | $ | 0.63 |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||
Tier 1 leverage (to adjusted avg. total assets) | $ | 1,879 | 8.09 | % | $ | 1,720 | 7.57 | % | $ | 1,520 | 8.37 | % | |||
Total adjusted avg. total asset base | $ | 23,212 | $ | 22,724 | $ | 18,171 | |||||||||
Tier 1 common equity (to risk weighted assets) | $ | 1,639 | 9.16 | % | $ | 1,480 | 9.32 | % | $ | 1,280 | 9.69 | % | |||
Tier 1 capital (to risk weighted assets) | $ | 1,879 | 10.51 | % | $ | 1,720 | 10.83 | % | $ | 1,520 | 11.51 | % | |||
Total capital (to risk weighted assets) | $ | 2,005 | 11.21 | % | $ | 1,830 | 11.52 | % | $ | 1,650 | 12.49 | % | |||
Risk-weighted asset base | $ | 17,881 | $ | 15,886 | $ | 13,209 |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||
Tier 1 leverage (to adjusted avg. total assets) | $ | 1,900 | 8.19 | % | $ | 1,752 | 7.71 | % | $ | 1,641 | 9.04 | % | |||
Total adjusted avg. total asset base | $ | 23,194 | $ | 22,727 | $ | 18,155 | |||||||||
Tier 1 common equity (to risk weighted assets) | $ | 1,900 | 10.63 | % | $ | 1,752 | 11.04 | % | $ | 1,641 | 12.44 | % | |||
Tier 1 capital (to risk weighted assets) | $ | 1,900 | 10.63 | % | $ | 1,752 | 11.04 | % | $ | 1,641 | 12.44 | % | |||
Total capital (to risk weighted assets) | $ | 2,026 | 11.33 | % | $ | 1,862 | 11.73 | % | $ | 1,771 | 13.42 | % | |||
Risk-weighted asset base | $ | 17,876 | $ | 15,873 | $ | 13,193 |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||||||||
Unpaid Principal Balance (1) | Number of accounts | Unpaid Principal Balance (1) | Number of accounts | Unpaid Principal Balance (1) | Number of accounts | ||||||||||
Subserviced for others (2) | $ | 193,037 | 916,989 | $ | 194,638 | 918,662 | $ | 170,476 | 814,248 | ||||||
Serviced for others | 23,439 | 102,338 | 24,003 | 105,469 | 21,925 | 90,622 | |||||||||
Serviced for own loan portfolio (3) | 8,539 | 63,085 | 9,536 | 66,526 | 7,631 | 56,687 | |||||||||
Total loans serviced | $ | 225,015 | 1,082,412 | $ | 228,177 | 1,090,657 | $ | 200,032 | 961,557 |
(1) | Unpaid principal balance, net of write downs, does not include premiums or discounts. |
(2) | Includes temporary short-term subservicing performed as a result of sales of servicing-released mortgage servicing rights. Includes repossessed assets. |
(3) | Includes LHFI (residential first mortgage, home equity and other consumer), LHFS (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets. |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||||||||
Consumer loans | |||||||||||||||
Residential first mortgage | $ | 2,964 | 21.5 | % | $ | 3,154 | 26.0 | % | $ | 3,100 | 31.2 | % | |||
Home equity | 1,028 | 7.5 | % | 1,024 | 8.4 | % | 796 | 8.0 | % | ||||||
Other | 858 | 6.2 | % | 729 | 6.0 | % | 433 | 4.4 | % | ||||||
Total consumer loans | 4,850 | 35.2 | % | 4,907 | 40.4 | % | 4,329 | 43.6 | % | ||||||
Commercial loans | |||||||||||||||
Commercial real estate | 3,092 | 22.4 | % | 2,828 | 23.3 | % | 2,324 | 23.4 | % | ||||||
Commercial and industrial | 1,880 | 13.6 | % | 1,634 | 13.5 | % | 1,651 | 16.6 | % | ||||||
Warehouse lending | 3,973 | 28.8 | % | 2,760 | 22.8 | % | 1,632 | 16.4 | % | ||||||
Total commercial loans | 8,945 | 64.8 | % | 7,222 | 59.6 | % | 5,607 | 56.4 | % | ||||||
Total loans held-for-investment | $ | 13,795 | 100.0 | % | $ | 12,129 | 100.0 | % | $ | 9,936 | 100.0 | % |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||||||||
Indirect Lending | $ | 620 | 72.3 | % | $ | 578 | 79.3 | % | $ | 270 | 62.4 | % | |||
Point of Sale | 159 | 18.5 | % | 63 | 8.6 | % | 41 | 9.5 | % | ||||||
Other | 79 | 9.2 | % | 88 | 12.1 | % | 122 | 28.2 | % | ||||||
Total other consumer loans | $ | 858 | 100.0 | % | $ | 729 | 100.0 | % | $ | 433 | 100.1 | % |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||
Residential first mortgage | $ | 46 | $ | 22 | $ | 35 | |||
Home equity | 23 | 14 | 16 | ||||||
Other | 16 | 6 | 4 | ||||||
Total consumer loans | 85 | 42 | 55 | ||||||
Commercial real estate | 28 | 38 | 36 | ||||||
Commercial and industrial | 18 | 22 | 30 | ||||||
Warehouse lending | 1 | 5 | 6 | ||||||
Total commercial loans | 47 | 65 | 72 | ||||||
Allowance for credit losses | 132 | 107 | 127 | ||||||
Reserve for unfunded commitments | 20 | 3 | 3 | ||||||
Total allowance for credit losses | $ | 152 | $ | 110 | $ | 130 |
Three Months Ended March 31, 2020 | ||||||||||||||||||||||||
Residential First Mortgage | Home Equity (3) | Other Consumer | Commercial Real Estate | Commercial and Industrial | Warehouse Lending | Total LHFI Portfolio (2) | Unfunded Commitments | |||||||||||||||||
Balance as of December 31, 2019 | $ | 22 | $ | 14 | $ | 6 | $ | 38 | $ | 22 | $ | 5 | $ | 107 | $ | 3 | ||||||||
Impact of adopting ASC 326 | 25 | 12 | 10 | (14 | ) | (6 | ) | (4 | ) | 23 | 7 | |||||||||||||
Adjusted balance at January 1, 2020 | 47 | 26 | 16 | 24 | 16 | 1 | 130 | 10 | ||||||||||||||||
Provision (benefit) for credit losses: | ||||||||||||||||||||||||
Loan volume | (2 | ) | — | 1 | 2 | 2 | — | 3 | — | |||||||||||||||
Economic forecast and credit | 4 | 2 | — | 2 | — | — | 8 | 10 | ||||||||||||||||
Other (1) | (2 | ) | (4 | ) | (1 | ) | — | — | — | (7 | ) | — | ||||||||||||
Charge-offs | (1 | ) | (1 | ) | (1 | ) | — | — | — | (3 | ) | — | ||||||||||||
Recoveries | — | — | 1 | — | — | — | 1 | — | ||||||||||||||||
Ending allowance balance | $ | 46 | $ | 23 | $ | 16 | $ | 28 | $ | 18 | $ | 1 | $ | 132 | $ | 20 | ||||||||
(1) Includes changes in the individually evaluated reserve | ||||||||||||||||||||||||
(2) Excludes loans carried under the fair value option | ||||||||||||||||||||||||
(3) December 31, 2019 and January 1, 2020 balances include $4 million of individually evaluated reserves that were no longer needed as of March 31, 2020 |
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||
Nonperforming LHFI | $ | 19 | $ | 16 | $ | 14 | |||
Nonperforming TDRs | 4 | 3 | 3 | ||||||
Nonperforming TDRs at inception but performing for less than six months | 6 | 7 | 7 | ||||||
Total nonperforming LHFI and TDRs (1) | 29 | 26 | 24 | ||||||
Other nonperforming assets, net | 10 | 10 | 8 | ||||||
LHFS | 5 | 5 | 13 | ||||||
Total nonperforming assets | $ | 44 | $ | 41 | $ | 45 | |||
Ratio of nonperforming assets to total assets (2) | 0.14 | % | 0.15 | % | 0.17 | % | |||
Ratio of nonperforming LHFI and TDRs to LHFI | 0.21 | % | 0.21 | % | 0.24 | % | |||
Ratio of nonperforming assets to LHFI and repossessed assets (2) | 0.28 | % | 0.30 | % | 0.33 | % |
(1) | Includes less than 90 day past due performing loans placed on nonaccrual. Interest is not being accrued on these loans. |
(2) | Ratio excludes LHFS. |
30-59 Days Past Due | 60-89 Days Past Due | Greater than 90 days (1) | Total Past Due | Total LHFI | |||||||||||
March 31, 2020 | |||||||||||||||
Consumer loans | $ | 14 | $ | 5 | $ | 29 | $ | 48 | $ | 4,850 | |||||
Commercial loans | 7 | — | — | 7 | 8,945 | ||||||||||
Total loans | $ | 21 | $ | 5 | $ | 29 | $ | 55 | $ | 13,795 | |||||
December 31, 2019 | |||||||||||||||
Consumer loans | $ | 9 | $ | 5 | $ | 26 | $ | 40 | $ | 4,907 | |||||
Commercial loans | — | — | — | — | 7,222 | ||||||||||
Total loans | $ | 9 | $ | 5 | $ | 26 | $ | 40 | $ | 12,129 | |||||
March 31, 2019 | |||||||||||||||
Consumer loans | $ | 6 | $ | 2 | $ | 24 | $ | 32 | $ | 4,329 | |||||
Commercial loans | — | 1 | — | 1 | 5,607 | ||||||||||
Total loans | $ | 6 | $ | 3 | $ | 24 | $ | 33 | $ | 9,936 |
(1) | Includes performing nonaccrual loans that are less than 90 days delinquent and for which interest cannot be accrued. |
TDRs | |||||||||
Performing | Nonperforming | Total | |||||||
March 31, 2020 | |||||||||
Consumer loans | $ | 37 | $ | 10 | $ | 47 | |||
Total TDR loans | $ | 37 | $ | 10 | $ | 47 | |||
December 31, 2019 | |||||||||
Consumer loans | $ | 38 | $ | 10 | $ | 48 | |||
Total TDR loans | $ | 38 | $ | 10 | $ | 48 | |||
March 31, 2019 | |||||||||
Consumer loans | $ | 43 | $ | 10 | $ | 53 | |||
Total TDR loans | $ | 43 | $ | 10 | $ | 53 |
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||||||||
(Dollars in millions, except share data) | |||||||||||||||
Total stockholders' equity | $ | 1,842 | $ | 1,788 | $ | 1,734 | $ | 1,656 | $ | 1,574 | |||||
Less: Goodwill and intangible assets | 167 | 170 | 174 | 178 | 182 | ||||||||||
Tangible book value | $ | 1,675 | $ | 1,618 | $ | 1,560 | $ | 1,478 | $ | 1,392 | |||||
Number of common shares outstanding | 56,729,789 | 56,631,236 | 56,510,341 | 56,483,937 | 56,480,086 | ||||||||||
Tangible book value per share | $ | 29.52 | $ | 28.57 | $ | 27.62 | $ | 26.16 | $ | 24.65 | |||||
Total assets | $ | 26,805 | $ | 23,266 | $ | 22,048 | $ | 20,206 | $ | 19,445 | |||||
Tangible common equity to assets ratio | 6.25 | % | 6.95 | % | 7.08 | % | 7.31 | % | 7.16 | % |
Three Months Ended | |||||||||
March 31, 2020 | December 31, 2019 | March 31, 2019 | |||||||
(Dollars in millions) | |||||||||
Net income | $ | 46 | $ | 58 | $ | 36 | |||
Add: Intangible asset amortization, net of tax | 3 | 3 | 3 | ||||||
Tangible net income | $ | 48 | $ | 61 | $ | 39 | |||
Total average equity | $ | 1,854 | $ | 1,803 | $ | 1,583 | |||
Less: Average goodwill and intangible assets | 169 | 172 | 187 | ||||||
Total tangible average equity | $ | 1,685 | $ | 1,631 | $ | 1,396 | |||
Return on average common equity | 9.82 | % | 12.69 | % | 9.16 | % | |||
Adjustment to remove Wells Fargo acquisition costs | — | % | — | % | 0.06 | % | |||
Adjusted return on average common equity | 9.82 | % | 12.69 | % | 9.22 | % | |||
Return on average tangible common equity | 11.46 | % | 14.76 | % | 11.33 | % | |||
Adjustment to remove Wells Fargo acquisition costs | — | % | — | % | 0.23 | % | |||
Adjusted return on average tangible common equity | 11.46 | % | 14.76 | % | 11.56 | % | |||
Return on average assets | 0.78 | % | 0.99 | % | 0.79 | % | |||
Adjustment to remove Wells Fargo acquisition costs | — | % | — | % | 0.01 | % | |||
Adjusted return on average assets | 0.78 | % | 0.99 | % | 0.80 | % |
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||||||||
(Dollars in millions, except share data) | |||||||||||||||
Average LHFI | $ | 11,823 | $ | 12,168 | $ | 11,743 | $ | 10,613 | $ | 9,164 | |||||
Less: Average warehouse loans | 2,310 | 2,747 | 2,508 | 1,997 | 1,175 | ||||||||||
Adjusted average LHFI | $ | 9,513 | $ | 9,421 | $ | 9,235 | $ | 8,616 | $ | 7,989 | |||||
Average deposits | $ | 15,795 | $ | 15,904 | $ | 15,817 | $ | 14,159 | $ | 12,906 | |||||
Less: Average custodial deposits | 4,776 | 4,772 | 4,550 | 3,469 | 2,532 | ||||||||||
Adjusted average deposits | $ | 11,019 | $ | 11,132 | $ | 11,267 | $ | 10,690 | $ | 10,374 | |||||
HFI loan-to-deposit ratio | 74.9 | % | 76.5 | % | 74.2 | % | 75.0 | % | 71.0 | % | |||||
Adjusted HFI loan-to-deposit ratio | 86.3 | % | 84.6 | % | 82.0 | % | 80.6 | % | 77.0 | % |
Three Months Ended | |||||||||||||||
March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||||||||
(Dollars in millions) | |||||||||||||||
Noninterest income | $ | 157 | $ | 162 | $ | 171 | $ | 168 | $ | 109 | |||||
DOJ benefit | — | — | — | (25 | ) | — | |||||||||
Adjusted noninterest income | $ | 157 | $ | 162 | $ | 171 | $ | 143 | $ | 109 | |||||
Noninterest expense | $ | 235 | $ | 245 | $ | 238 | $ | 214 | $ | 191 | |||||
Wells Fargo acquisition costs | — | — | — | — | 1 | ||||||||||
Adjusted noninterest expense | $ | 235 | $ | 245 | $ | 238 | $ | 214 | $ | 190 | |||||
Income before income taxes | $ | 56 | $ | 69 | $ | 78 | $ | 75 | $ | 44 | |||||
Adjustment for DOJ benefit | — | — | — | (25 | ) | — | |||||||||
Adjustment for Wells Fargo acquisition costs | — | — | — | — | 1 | ||||||||||
Adjusted income before income taxes | $ | 56 | $ | 69 | $ | 78 | $ | 50 | $ | 45 | |||||
Provision for income taxes | $ | 10 | $ | 11 | $ | 15 | $ | 14 | $ | 8 | |||||
Tax impact on adjustment for DOJ benefit | — | — | (5 | ) | — | ||||||||||
Adjusted provision for income taxes | $ | 10 | $ | 11 | $ | 15 | $ | 9 | $ | 8 | |||||
Net income | $ | 46 | $ | 58 | $ | 63 | $ | 61 | $ | 36 | |||||
Adjusted net income | $ | 46 | $ | 58 | $ | 63 | $ | 41 | $ | 37 | |||||
Weighted average common shares outstanding | 56,655,865 | 56,513,890 | 56,484,499 | 56,446,077 | 56,897,799 | ||||||||||
Weighted average diluted common shares | 57,189,923 | 57,198,734 | 57,110,796 | 57,061,822 | 57,590,272 | ||||||||||
Adjusted basic earnings per share | $ | 0.80 | $ | 1.01 | $ | 1.12 | $ | 0.72 | $ | 0.65 | |||||
Adjusted diluted earnings per share | $ | 0.80 | $ | 1.00 | $ | 1.11 | $ | 0.71 | $ | 0.64 |
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