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Flagstar Bancorp Reports First Quarter 2019 Net Income of $36 million, or $0.63 Per Diluted Share

Key Highlights - First Quarter 2019

-Adjusted net income of $37 million, or $0.64 per diluted share, excluding costs related to the Wells Fargo branch acquisition.

-Successfully completed the integration of the 52 Wells Fargo branches acquired in December while experiencing only 4.9 percent deposit attrition.

-Adjusted net interest income grew $3 million to $126 million, reflecting full quarter benefit from acquired deposits and continued growth in LHFI portfolio.

-Mortgage revenues increased $11 million from prior quarter, led by an increase in fallout-adjusted locks and margin expansion of 12 basis points, partially offset by lower net return on MSRs.

-Total serviced accounts increased 13 percent from last quarter to 962,000.

-Exceptional asset quality with minimal net charge-offs, low delinquencies, no nonperforming commercial loans and strong allowance for loan loss coverage.

TROY, Mich., April 23, 2019 /PRNewswire/ -- Flagstar Bancorp, Inc. (FBC), the holding company for Flagstar Bank, FSB, today reported first quarter 2019 net income of $36 million, or $0.63 per diluted share, compared to fourth quarter 2018 net income of $54 million, or $0.93 per diluted share. On an adjusted basis, Flagstar reported net income of 37 million, or $0.64 per diluted share, for the first quarter 2019, compared to net income of $42 million, or $0.72 per diluted share, for the fourth quarter 2018. For the first quarter 2018, Flagstar reported net income of $35 million, or $0.60 per diluted share.

First Quarter 2019 Highlights:

"In the first quarter, we took another step in the continued transformation of our company. Thanks to our success in executing our business plan, we were pleased to initiate a quarterly dividend and a $50 million share buyback to return value to our shareholders," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "These actions, coupled with our strong first quarter results, demonstrate the progress we have made to diversify our franchise and deliver strong results.

"Our banking and mortgage servicing businesses had another solid quarter. Deposit costs were 3 basis points lower, reflecting a full quarter of lower cost deposits from the Wells Fargo branch acquisition. We are also pleased that four months after conversion, we have experienced deposit attrition of only 4.9 percent, substantially better than our 10 percent target and the 17 percent we modeled. Net interest margin expanded 10 basis points to 3.09 percent compared to an adjusted fourth quarter net interest margin of 2.99 percent. Total serviced accounts increased 13 percent to 962,000, continuing growth in a segment that provides both a stable source of fee income and liquidity.

"Our mortgage team delivered for the quarter, maintaining pricing and expense discipline in a very competitive mortgage environment, and then when the market turned favorable late in the quarter, our team was well positioned to take advantage of the opportunity. Fallout-adjusted locks increased 25 percent to $6.6 billion and gain on sale margin expanded for the second consecutive quarter. The improvement in net gain on loan sales more than offset lower net return on MSRs.

"Overall, I am pleased with our first quarter results and feel we are well positioned to continue to produce value for our shareholders."

Income Statement Highlights






Three Months Ended


March 31,
2019

December 31,
2018

September 30,
2018

June 30,
2018

March 31,
2018


(Dollars in millions)

Net interest income

$

126


$

152


$

124


$

115


$

106


Provision (benefit) for loan losses


(5)


(2)


(1)



Noninterest income

109


98


107


123


111


Noninterest expense

191


189


173


177


173


Income before income taxes

44


66


60


62


44


Provision for income taxes

8


12


12


12


9


Net income

$

36


$

54


$

48


$

50


$

35








Income per share:






Basic

$

0.64


$

0.94


$

0.84


$

0.86


$

0.61


Diluted

$

0.63


$

0.93


$

0.83


$

0.85


$

0.60


 

Adjusted Income Statement Highlights (Non-GAAP) (1)






Three Months Ended


March 31,
2019

December 31,
2018

September 30,
2018

June 30,
2018

March 31,
2018


(Dollars in millions)

Net interest income

$

126


$

123


$

124


$

115


$

106


Provision (benefit) for loan losses


(5)


(2)


(1)



Noninterest income

109


98


107


123


111


Noninterest expense

190


175


172


177


173


Income before income taxes

45


51


61


62


44


Provision for income taxes

8


9


12


12


9


Net income

$

37


$

42


$

49


$

50


$

35








Income per share:






Basic

$

0.65


$

0.73


$

0.86


$

0.86


$

0.61


Diluted

$

0.64


$

0.72


$

0.85


$

0.85


$

0.60




(1)

See Non-GAAP Reconciliation for further information.

 

Key Ratios








Three Months Ended

 Change (bps)


March 31,
2019

December 31,
2018

September 30,
2018

June 30,
2018

March 31,
2018

Seq

Yr/Yr

Net interest margin

3.09

%

3.70

%

2.93

%

2.86

%

2.76

%

(61)

33

Adjusted net interest margin (1)

3.09

%

2.99

%

2.93

%

2.86

%

2.76

%

10

33

Return on average assets

0.8

%

1.2

%

1.0

%

1.1

%

0.8

%

(40)

Return on average common equity

9.2

%

14.0

%

12.8

%

13.5

%

9.9

%

(480)

(70)

Efficiency ratio

81.3

%

75.7

%

74.6

%

74.4

%

79.7

%

560

160

HFI loan-to-deposit ratio

71.0

%

74.7

%

78.3

%

80.5

%

79.9

%

(370)

(890)

Adjusted HFI loan-to-deposit ratio (2)

77.0

%

77.3

%

77.8

%

78.1

%

83.9

%

(30)

(690)


(1)

The three months ended December 31, 2018, excludes $29 million of hedging gains reclassified from AOCI to net interest income in conjunction with the payment of long-term FHLB advances. See Non-GAAP Reconciliation for further information.

(2)

Excludes warehouse loans and custodial deposits.

 

Average Balance Sheet Highlights








Three Months Ended

% Change


March 31,
2019

December 31,
2018

September 30,
2018

June 30,
2018

March 31,
2018

Seq

Yr/Yr


(Dollars in millions)



Average interest-earning assets

$

16,294


$

16,391


$

16,786


$

15,993


$

15,354


(1)

%

6

%

Average loans held-for-sale
(LHFS)

3,266


3,991


4,393


4,170


4,231


(18)

%

(23)

%

Average loans held-for-
investment (LHFI)

9,164


8,916


8,872


8,380


7,487


3

%

22

%

Average total deposits

12,906


11,942


11,336


10,414


9,371


8

%

38

%


 

Net Interest Income

Net interest income decreased $26 million to $126 million for the first quarter 2019, as compared to the fourth quarter 2018. However, the fourth quarter included the recognition of $29 million of hedging gains in conjunction with the Wells Fargo branch acquisition. Excluding hedging gains, the Company's net interest income rose $3 million. This reflected the full quarter benefit of using lower cost deposits from the acquisition to reduce Federal Home Loan Bank advances. This action was partially offset by seasonal declines in loans held-for-sale and warehouse loans. Net interest margin rose 10 basis points to 3.09 percent for the first quarter 2019 as compared to adjusted net interest margin for the fourth quarter 2018.

Loans held-for-investment averaged $9.2 billion for the first quarter 2019, increasing $248 million from the prior quarter. During the first quarter 2019, average commercial real estate and commercial and industrial loans rose $328 million, or 9 percent. This increase was partially offset by a $162 million drop in warehouse loans due to anticipated seasonal factors. Average consumer loans rose $82 million, or 2 percent, driven primarily by growth in non-auto indirect loans and the full quarter impact from consumer loans acquired as part of the Wells Fargo branch acquisition.

Average total deposits were $12.9 billion in the first quarter 2019, increasing $964 million, or 8 percent from the fourth quarter 2018, driven by the full quarter impact of Wells Fargo branch deposits and higher custodial deposits, which rose $402 million, or 19 percent, driven by a 13 percent increase in serviced accounts.

Provision for Loan Losses

The Company had no provision for loan losses for first quarter 2019, as compared to a benefit of $5 million for the fourth quarter 2018. The lack of provision expense reflected strong asset quality and a low level of net charge-offs in the quarter.

Noninterest Income

Noninterest income increased $11 million, or 11 percent, to $109 million in the first quarter 2019, as compared to $98 million for the fourth quarter 2018. The increase was primarily driven by higher net gain on loan sales, net loan administration income and deposit fee income, partially offset by lower net return on MSRs and seasonally lower fee income.

First quarter 2019 net gain on loan sales increased $15 million, or 44 percent, to $49 million, versus $34 million in the fourth quarter 2018. The results reflected improvement in the mortgage environment late in the quarter which drove fallout-adjusted locks higher and an expansion of gain on sale margin. Fallout-adjusted locks increased 25 percent to $6.6 billion. The net gain on loan sale margin increased 12 basis points to 0.72 percent for the first quarter 2019, as compared to 0.60 percent for the fourth quarter 2018.

 

Mortgage Metrics









Change (% / bps)


March 31,
2019

December 31,
2018

September 30,
2018

June 30,
2018

March 31,
2018

Seq

Yr/Yr


(Dollars in millions)



For the three months ended:








Mortgage rate lock commitments (fallout-
adjusted) (1)

$

6,602


$

5,284


$

8,290


$

9,011


$

7,722


25

%

(15)

%

Net margin on mortgage rate lock
commitments (fallout-adjusted) (1) (2)

0.72

%

0.60

%

0.51

%

0.71

%

0.77

%

12

(5)

Net gain on loan sales

$

49


$

34


$

43


$

63


$

60


44

%

(18)

%

Net return on the mortgage servicing rights
(MSR)

$

6


$

10


$

13


$

9


$

4


(40)

%

50

%

Gain on loan sales + net return on the MSR

$

55


$

44


$

56


$

72


$

64


25

%

(14)

%

At the end of the period:








Loans serviced (number of accounts - 000's) (3)

962


851


627


543


476


13

%

102

%

Capitalized value of MSRs

1.27

%

1.35

%

1.43

%

1.34

%

1.27

%

(8)



(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)

Gain on sale margin is based on net gain on loan sales (excludes net gain on loan sales of $2 million from loans transferred from LHFI during both the three months ended March 31, 2019 and December 31, 2018) to fallout-adjusted mortgage rate lock commitments.

(3)

Includes loans serviced for own loan portfolio, serviced for others, and subserviced for others.

Net return on mortgage servicing rights decreased $4 million, resulting in a net gain of $6 million for the first quarter 2019, as compared to a net gain of $10 million for the fourth quarter 2018. The decrease from the prior quarter reflected an increase in runoff due to lower interest rates and smaller benefit from the collection of contingencies related to MSR sales in prior periods.

Deposit fee income increased to $8 million for the first quarter 2019, as compared to $6 million for the fourth quarter 2018. The increase was driven by the full quarter benefit from the acquired Wells Fargo branches, despite continued fee waivers to assist customers during the Wells Fargo branch transition.

Noninterest Expense

Noninterest expense increased to $191 million for the first quarter 2019, as compared to $189 million for the fourth quarter 2018. Excluding acquisition costs of $1 million in the first quarter 2019 and $14 million in the fourth quarter 2018, adjusted noninterest expense in the first quarter 2019 was $190 million or $15 million higher than fourth quarter 2018. The increase is attributable to seasonally higher payroll taxes, employee benefits and a full quarter of expenses related to the 52 Wells Fargo branches acquired in December 2018.

The Company's efficiency ratio was 81 percent for the first quarter 2019, as compared to 76 percent for the fourth quarter 2018. Excluding hedging gains and expenses related to the acquisition of Wells Fargo branches, the adjusted efficiency ratio was 79 percent in the fourth quarter 2018.

Income Taxes

The first quarter 2019 provision for income taxes totaled $8 million, compared to $12 million for the fourth quarter 2018. The Company's effective tax rate was 18 percent for the first quarter 2019, consistent with our effective tax rate for the fourth quarter 2018.

Asset Quality

Credit Quality Ratios








As of/Three Months Ended

Change (% / bps)


March 31,
2019

December 31,
2018

September 30,
2018

June 30,
2018

March 31,
2018

Seq

Yr/Yr


(Dollars in millions)



Allowance for loan loss to LHFI

1.3

%

1.4

%

1.5

%

1.5

%

1.7

%

(10)

(40)

Charge-offs, net of recoveries

$

1


$

1


$

1


$

1


$

1


%

%

Total nonperforming LHFI and TDRs

$

24


$

22


$

25


$

27


$

29


9

%

(17)

%

Net charge-offs to LHFI ratio (annualized)

0.05

%

0.04

%

0.05

%

0.02

%

0.06

%

1

(1)

Ratio of nonperforming LHFI and TDRs to LHFI

0.24

%

0.24

%

0.28

%

0.30

%

0.35

%

0

(11)

 

The allowance for loan losses was $127 million at March 31, 2019, compared to $128 million at December 31, 2018. The allowance for loan losses covered 1.3 percent of loans held-for-investment at March 31, 2019, as compared to 1.4 percent of loans held-for-investment at December 31, 2018.

Net charge-offs in the first quarter 2019 were $1 million, or 5 basis points of LHFI, compared to $1 million, or 4 basis points in the prior quarter.

Nonperforming loans were $24 million at March 31, 2019, compared to $22 million at December 31, 2018. The ratio of nonperforming loans to loans held-for-investment was 0.24 percent at March 31, 2019, consistent with the ratio at December 31, 2018. At March 31, 2019, early stage loan delinquencies totaled $9 million, or 0.09 percent of total loans, compared to $7 million, or 0.08 percent at December 31, 2018. There were no commercial loan delinquencies greater than 90 days at March 31, 2019.

Capital

Capital Ratios (Bancorp)


Change (% / bps)


March 31,
2019

December 31,
2018

September 30,
2018

June 30,
2018

March 31,
2018

Seq

Yr/Yr

Tangible common equity to assets ratio (1)

7.16

%

7.45

%

7.74

%

7.74

%

7.65

%

(29)

(49)

Tier 1 leverage (to adj. avg. total assets)

8.37

%

8.29

%

8.36

%

8.65

%

8.72

%

8

(35)

Tier 1 common equity (to RWA)

9.69

%

10.54

%

11.01

%

10.84

%

10.80

%

(85)

(111)

Tier 1 capital (to RWA)

11.51

%

12.54

%

13.04

%

12.86

%

12.90

%

(103)

(139)

Total capital (to RWA)

12.49

%

13.63

%

14.20

%

14.04

%

14.14

%

(114)

(165)

MSRs to Tier 1 capital

18.3

%

19.3

%

20.3

%

16.9

%

16.2

%

(100)

210

Tangible book value per share (1)

$

24.65


$

23.90


$

25.13


$

24.37


$

23.62


3

%

4

%



(1)

See Non-GAAP Reconciliation for further information.

 

The Company maintained a robust capital position with regulatory ratios well above current regulatory quantitative guidelines for "well capitalized" institutions. At March 31, 2019, the Company had a total risk-based capital ratio of 12.49 percent, as compared to 13.63 percent at December 31, 2018. The decrease in the ratio resulted primarily from balance sheet growth and share buyback, partially offset by earnings retention.

Under the terms of recently proposed changes to regulatory capital requirements, the Company's Tier 1 leverage ratio would have increased approximately 55 basis points and risk-based capital ratios by approximately 25-40 basis points at March 31, 2019 (pro forma basis).

Earnings Conference Call

As previously announced, the Company's first quarter 2019 earnings call will be held Tuesday, April 23, 2019 at 11 a.m. (ET).

To join the call, please dial (800) 289-0438 toll free or (786) 789-4783 and use passcode 9789633. Please call at least 10 minutes before the conference is scheduled to begin. A replay will be available for five business days by calling (888) 203-1112 toll free or (719) 457-0820 and using passcode 9789633.

The conference call will also be available as a live audiocast on the Investor Relations section of flagstar.com, where it will be archived and available for replay and download. The slide presentation accompanying the conference call will be posted on the site.

About Flagstar

Flagstar Bancorp, Inc. (FBC) is an $19.4 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 160 branches in Michigan, Indiana, California, Wisconsin and Ohio. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 72 retail locations in 22 states, representing the combined retail branches of Flagstar and its Opes Advisors mortgage division. Flagstar is a leading national originator and servicer of mortgage and other consumer loans, handling payments and record keeping for $200 billion of loans representing 962,000 borrowers. For more information, please visit flagstar.com.

Use of Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this news release includes non-GAAP financial measures, such as tangible book value per share, tangible common equity to assets ratio, return on average tangible equity, adjusted return on average tangible equity, adjusted return on average assets, adjusted net income, adjusted basic and diluted earnings per share, adjusted noninterest expense, adjusted net interest income, adjusted net interest margin, adjusted income before taxes, adjusted provision for income taxes, adjusted efficiency ratio and adjusted HFI loan-to-deposit ratio. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar.

Non-GAAP financial measures have inherent limitations. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. Flagstar's method of calculating these non-GAAP measures may differ from methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements.

Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in this news release. Additional discussion of the use of non-GAAP measures can also be found in conference call slides, the Form 8-K Current Report related to this news release and in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission. These documents can all be found on the Company's website at flagstar.com.

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Flagstar Bancorp, Inc.'s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The Company's actual results could differ materially from those described in the forward-looking statements depending upon various factors as described in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company's website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

 

Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition

(Dollars in millions)

(Unaudited)



March 31,
2019


December 31,
2018


March 31,
2018

Assets






Cash

$

268



$

260



$

121


Interest-earning deposits

122



148



122


Total cash and cash equivalents

390



408



243


Investment securities available-for-sale

2,142



2,142



1,918


Investment securities held-to-maturity

683



703



771


Loans held-for-sale

3,874



3,869



4,743


Loans held-for-investment

9,936



9,088



8,134


Loans with government guarantees

470



392



286


Less: allowance for loan losses

(127)



(128)



(139)


Total loans held-for-investment and loans with government guarantees, net

10,279



9,352



8,281


Mortgage servicing rights

278



290



239


Net deferred tax asset

90



103



130


Federal Home Loan Bank stock

303



303



303


Premises and equipment, net

414



390



348


Goodwill and intangible assets

182



190



72


Other assets

810



781



688


Total assets

$

19,445



$

18,531



$

17,736


Liabilities and Stockholders' Equity






Noninterest bearing deposits

$

4,016



$

2,989



$

2,391


Interest bearing deposits

9,437



9,391



7,595


Total deposits

13,453



12,380



9,986


Short-term Federal Home Loan Bank advances and other

3,101



3,244



4,153


Long-term Federal Home Loan Bank advances

250



150



1,280


Other long-term debt

495



495



494


Other liabilities

572



692



396


Total liabilities

17,871



16,961



16,309


Stockholders' Equity






Common stock

1



1



1


Additional paid in capital

1,476



1,522



1,514


Accumulated other comprehensive loss

(31)



(47)



(30)


Retained earnings/(accumulated deficit)

128



94



(58)


Total stockholders' equity

1,574



1,570



1,427


Total liabilities and stockholders' equity

$

19,445



$

18,531



$

17,736


 


Flagstar Bancorp, Inc.

 Condensed Consolidated Statements of Operations

 (Dollars in millions, except per share data)

(Unaudited)




First Quarter 2019 Compared to:


Three Months Ended


Fourth Quarter

2018


First Quarter

2018


March 31,
2019

December 31,
2018

September 30,
2018

June 30,
2018

March 31,
2018


Amount

Percent


Amount

Percent

Interest Income












Total interest income

$

180


$

181


$

183


$

167


$

152



$

(1)


(1)

%


$

28


18

%

Total interest expense

54


29


59


52


46



25


86

%


8


17

%

Net interest income

126


152


124


115


106



(26)


(17)

%


20


19

%

Provision (benefit) for loan losses


(5)


(2)


(1)




5


(100)

%



N/M

Net interest income after provision
(benefit) for loan losses

126


157


126


116


106



(31)


(20)

%


20


19

%

Noninterest Income












Net gain on loan sales

49


34


43


63


60



15


44

%


(11)


(18)

%

Loan fees and charges

17


20


23


24


20



(3)


(15)

%


(3)


(15)

%

Net return on the mortgage servicing
rights

6


10


13


9


4



(4)


(40)

%


2


50

%

Loan administration income

11


8


5


5


5



3


38

%


6


120

%

Deposit fees and charges

8


6


5


5


5



2


33

%


3


60

%

Other noninterest income

18


20


18


17


17



(2)


(10)

%


1


6

%

Total noninterest income

109


98


107


123


111



11


11

%


(2)


(2)

%

Noninterest Expense












Compensation and benefits

87


82


76


80


80



5


6

%


7


9

%

Occupancy and equipment

38


36


31


30


30



2


6

%


8


27

%

Commissions

13


16


21


25


18



(3)


(19)

%


(5)


(28)

%

Loan processing expense

17


16


14


15


14



1


6

%


3


21

%

Legal and professional expense

6


9


7


6


6



(3)


(33)

%



%

Federal insurance premiums

4


4


6


6


6




%


(2)


(33)

%

Intangible asset amortization

4


3


1


1




1


33

%


4


N/M

Other noninterest expense

22


23


17


14


19



(1)


(4)

%


3


16

%

Total noninterest expense

191


189


173


177


173



2


1

%


18


10

%

Income before income taxes

44


66


60


62


44



(22)


(33)

%



%

Provision for income taxes

8


12


12


12


9



(4)


(33)

%


(1)


(11)

%

Net income

$

36


$

54


$

48


$

50


$

35



$

(18)


(33)

%


$

1


3

%

Income per share












Basic

$

0.64


$

0.94


$

0.84


$

0.86


$

0.61



$

(0.30)


(32)

%


$

0.03


5

%

Diluted

$

0.63


$

0.93


$

0.83


$

0.85


$

0.60



$

(0.30)


(32)

%


$

0.03


5

%













Cash dividends declared

$

0.04


$


$


$


$



$

0.04


100

%


$

0.04


100

%





























N/M - Not meaningful




























 

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial and Statistical Data

(Dollars in millions, except share data)

(Unaudited)



Three Months Ended


March 31, 2019


December 31, 2018


March 31, 2018

Selected Mortgage Statistics:






Mortgage rate lock commitments (fallout-adjusted) (1)

$

6,602



$

5,284



$

7,722


Mortgage loans originated (2)

$

5,513



$

6,340



$

7,886


Mortgage loans sold and securitized

$

5,170



$

7,146



$

7,247


Selected Ratios:






Interest rate spread

2.69

%


3.52

%


2.54

%

Adjusted interest rate spread (3) (4)

2.69

%


2.63

%


2.54

%

Net interest margin

3.09

%


3.70

%


2.76

%

Adjusted net interest margin (4)

3.09

%


2.99

%


2.76

%

Net margin on loans sold and securitized

0.92

%


0.44

%


0.82

%

Return on average assets

0.79

%


1.17

%


0.82

%

Adjusted return on average assets (4)(5)

0.80

%


0.91

%


0.82

%

Return on average common equity

9.16

%


13.98

%


9.94

%

Return on average tangible common equity (6)

11.55

%


15.88

%


10.21

%

Adjusted return on average tangible common equity (4) (5) (6)

11.78

%


12.44

%


10.21

%

Efficiency ratio

81.3

%


75.7

%


79.7

%

Common equity-to-assets ratio (average for the period)

8.59

%


8.41

%


8.27

%

Average Balances:






Average common shares outstanding

56,897,799



57,628,561



57,356,654


Average fully diluted shares outstanding

57,586,100



58,385,354



58,314,385


Average interest-earning assets

$

16,294



$

16,391



$

15,354


Average interest-bearing liabilities

$

12,505



$

13,046



$

12,974


Average stockholders' equity

$

1,583



$

1,548



$

1,414



(1)

Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates.

(2)

Includes residential first mortgage. 

(3)

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.

(4)

The three months ended December 31, 2018 excludes $29 million of hedging gains reclassified from AOCI to net interest income in conjunction with the payment of long-term FHLB advances.

(5)

Excludes acquisition-related expenses attributable to the Wells Fargo branch acquisition of $1 million and $14 million for the three months ended March 31, 2019 and December 31, 2018, respectively.

(6)

Excludes goodwill, intangible assets and the associated amortization.

 


March 31, 2019


December 31, 2018


March 31, 2018

Selected Statistics:






Book value per common share

$

27.86



$

27.19



$

24.87


Tangible book value per share (1)

$

24.65



$

23.90



$

23.62


Number of common shares outstanding

56,480,086



57,749,464



57,399,993


Number of FTE employees

3,996



3,938



3,659


Number of bank branches

160



160



107


Ratio of nonperforming assets to total assets (2)

0.17

%


0.16

%


0.19

%

Common equity-to-assets ratio

8.09

%


8.47

%


8.05

%

MSR Key Statistics and Ratios:






Weighted average service fee (basis points)

38.0



35.8



30.4


Capitalized value of mortgage servicing rights

1.27

%


1.35

%


1.27

%

Mortgage servicing rights to Tier 1 capital

18.3

%


19.3

%


16.2

%


(1)

Excludes goodwill and intangibles of $182 million, $190 million, and $72 million at March 31, 2019, December 31, 2018, March 31, 2018, respectively. See Non-GAAP Reconciliation for further information.

(2)

Ratio excludes LHFS.


 

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)



Three Months Ended


March 31, 2019


December 31, 2018


March 31, 2018


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

$

3,266


$

38


4.72

%


$

3,991


$

48


4.78

%


$

4,231


$

44


4.12

%

Loans held-for-investment












Residential first mortgage

3,044


28


3.64

%


3,115


29


3.68

%


2,773


23


3.41

%

Home equity

745


10


5.63

%


717


10


5.43

%


668


9


5.21

%

Other

356


6


7.11

%


231


3


6.06

%


27



4.56

%

Total Consumer loans

4,145


44


4.30

%


4,063


42


4.12

%


3,468


32


3.76

%

Commercial Real Estate

2,250


33


5.66

%


2,171


31


5.52

%


1,954


24


4.87

%

Commercial and Industrial

1,594


21


5.39

%


1,345


19


5.48

%


1,217


16


5.21

%

Warehouse Lending

1,175


16


5.47

%


1,337


18


5.29

%


848


11


5.14

%

Total Commercial loans

5,019


70


5.53

%


4,853


68


5.45

%


4,019


51


5.03

%

Total loans held-for-investment

9,164


114


4.97

%


8,916


110


4.84

%


7,487


83


4.44

%

Loans with government guarantees

455


3


2.96

%


350


2


2.72

%


null