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Flagstar Reports Third Quarter 2018 Net Income of $48 million, or $0.83 per Diluted Share

- Strong growth in earning assets and a widening of the net interest margin result in record net interest income levels

TROY, Mich., Oct. 23, 2018 /PRNewswire/ --

Key Highlights - Third Quarter 2018

  • Adjusted net income of $49 million, or $0.85 per diluted share, excluding costs for pending Wells Fargo branch acquisition.
  • Net interest income grew $9 million, or 8 percent from second quarter 2018, led by earning asset growth and net interest margin expansion.
  • Average loans held-for-investment rose 6 percent while average total deposits increased 9 percent from prior quarter.
  • Total serviced accounts increased 16 percent from last quarter to nearly 620,000 accounts.
  • Noninterest expense dropped $4 million, or 2 percent from prior quarter, driven by prudent expense management and lower mortgage expenses.
  • Pristine asset quality - minimal net charge-offs, very low delinquencies and strong allowance for loan loss coverage.

Flagstar Bancorp, Inc. (FBC), the holding company for Flagstar Bank, FSB, today reported third quarter 2018 net income of $48 million, or $0.83 per diluted share, and adjusted net income of $49 million, or $0.85 per diluted share, excluding $1.2 million of pre-tax expenses related to the pending acquisition of Wells Fargo branches. The Company reported net income of $50 million, or $0.85 per diluted share, in the second quarter 2018, and $40 million, or $0.70 per diluted share, in the third quarter 2017.

"Our third quarter results once again demonstrated the strength of our banking business," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "Solid growth in banking along with disciplined cost control, helped us deliver an adjusted ROA of 1.1 percent.

"Our banking business provided a stable and growing source of income. Net interest income grew 8 percent from last quarter, as average earning assets increased 5 percent and the net interest margin expanded 7 basis points. Also, we saw total serviced accounts increase 16 percent in the quarter and we now service nearly 620,000 accounts. We expect this total to exceed 800,000 by year-end.

"Earnings were also helped by our expense discipline. In the third quarter 2018, total noninterest expense fell 2 percent to $173 million, despite strong growth in the balance sheet and increased mortgage originations, as we continued to scale businesses with a lower level of incremental expense, along with aggressively managing our mortgage expenses.

"Mortgage revenues declined in the quarter as fallout-adjusted locks decreased 8 percent to $8.3 billion and the net gain on loan sale margin fell 20 basis points to 0.51 percent. This decline was partially offset by a stronger MSR return.

"Looking ahead, we believe we are well positioned for continued success. Our pending acquisition of 52 Midwest branches of Wells Fargo, which we expect to close at the beginning of December 2018, will bring us low cost and low beta deposits. Additionally, with the lifting of our Federal Reserve Supervisory Agreement this quarter, we now have more flexibility in managing our capital to maximize risk-adjusted returns for our shareholders."

Third Quarter 2018 Highlights:

Income Statement Highlights






Three Months Ended


September 30,
2018

June 30,
2018

March 31,
2018

December 31,
2017

September 30,
2017


(Dollars in millions)

Net interest income

$

124


$

115


$

106


$

107


$

103


Provision (benefit) for loan losses

(2)


(1)



2


2


Noninterest income

107


123


111


124


130


Noninterest expense

173


177


173


178


171


Income before income taxes

60


62


44


51


60


Provision for income taxes (1)

12


12


9


96


20


Net income (loss)

$

48


$

50


$

35


$

(45)


$

40








Income (loss) per share:






Basic

$

0.84


$

0.86


$

0.61


$

(0.79)


$

0.71


Diluted

$

0.83


$

0.85


$

0.60


$

(0.79)


$

0.70





















(1)

The three months ended December 31, 2017 included an $80 million, or $1.37 per diluted share, non-cash charge to the provision for income taxes, resulting from the revaluation of the Company's net deferred tax asset at a lower statutory rate as a result of the Tax Cuts and Jobs Act. 

     

Key Ratios

















Three Months Ended


 Change (bps)


September 30,
2018


June 30,
2018


March 31,
2018


December 31,
2017


September 30,
2017


Seq


Yr/Yr

Net interest margin

2.93

%


2.86

%


2.76

%


2.76

%


2.78

%


7


15

Return on average assets

1.0

%


1.1

%


0.8

%


(1.1)

%


1.0

%


(10)


Return on average equity

12.8

%


13.5

%


9.9

%


(12.1)

%


11.1

%


(70)


170

Efficiency ratio

74.6

%


74.4

%


79.7

%


77.1

%


73.5

%


20


110

 

Balance Sheet Highlights








Three Months Ended

% Change


September 30,
2018

June 30,
2018

March 31,
2018

December 31,
2017

September 30,
2017

Seq

Yr/Yr


(Dollars in millions)



Average Balance Sheet Data








Average interest-earning assets

$

16,786


$

15,993


$

15,354


$

15,379


$

14,737


5

%

14

%

Average loans held-for-sale (LHFS)

4,393


4,170


4,231


4,537


4,476


5

%

(2)

%

Average loans held-for-investment (LHFI)

8,872


8,380


7,487


7,295


6,803


6

%

30

%

Average total deposits

11,336


10,414


9,371


9,084


9,005


9

%

26

%


Net Interest Income

Net interest income rose $9 million to $124 million for the third quarter 2018, as compared to the second quarter 2018. The results reflected a 5 percent increase in average earning assets, led by balanced growth in loans held-for-sale, commercial and consumer loans. The net interest margin expanded 7 basis points to 2.93 percent for the third quarter 2018 as higher yields on interest-earning assets more than offset higher deposit costs.

Loans held-for-investment averaged $8.9 billion for the third quarter 2018, increasing $492 million, or 6 percent, from the prior quarter. During the third quarter 2018, average commercial loans rose $253 million, or 5 percent, with average warehouse loans increasing $91 million, average commercial real estate loans rising $89 million and average commercial and industrial loans increasing $73 million. Average consumer loans rose $239 million, or 7 percent, driven by an increase in mortgage loans (primarily jumbo).

Average total deposits were $11.3 billion in the third quarter 2018, increasing $922 million, or 9 percent from the second quarter 2018, led primarily by higher custodial and retail deposits. Average custodial deposits rose $366 million, or 23 percent, led by a 16 percent increase in serviced accounts. Average retail deposits increased $211 million, or 3 percent, as higher demand deposits and certificates of deposit were partially offset by a drop in savings deposits.

Provision for Loan Losses

The Company experienced a provision benefit in the third quarter 2018, resulting primarily from a continued decline in loss rates in the held-for-investment portfolio. The provision benefit totaled $2 million for the third quarter 2018, as compared to $1 million for the second quarter 2018.

Noninterest Income

Noninterest income fell $16 million, or 13 percent, to $107 million in the third quarter of 2018, as compared to $123 million for the second quarter 2018. The decrease was primarily due to lower net gain on loan sales, partially offset by an increase in the net return on mortgage servicing rights.

Third quarter 2018 net gain on loan sales fell $20 million, or 32 percent, to $43 million, versus $63 million in the second quarter 2018. Fallout-adjusted locks decreased 8 percent to $8.3 billion, due to softer mortgage volume. The net gain on loan sale margin fell 20 basis points to 0.51 percent for the third quarter 2018, as compared to 0.71 percent for the second quarter 2018. The lower margin was primarily due to secondary margin compression and a mix shift toward lower margin, but lower cost delegated correspondent business. Excluding the secondary performance, the net gain on loan sale margin was 66 basis points.

Mortgage Metrics


Change (% / bps)


September 30,
2018

June 30,
2018

March 31,
2018

December 31,
2017

September 30,
2017

Seq

Yr/Yr


(Dollars in millions)



For the three months ended:








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

$

8,290


$

9,011


$

7,722


$

8,631


$

8,898


(8)

%

(7)

%

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

0.51

%

0.71

%

0.77

%

0.91

%

0.84

%

(20)


(33)

Net gain on loan sales

$

43


$

63


$

60


$

79


$

75


(32)

%

(43)

%

Net (loss) return on the mortgage servicing rights (MSR)

$

13


$

9


$

4


$

(4)


$

6


44

%

117

%

Gain on loan sales + net (loss) return on the MSR

$

56


$

72


$

64


$

75


$

81


(22)

%

(31)

%

At the end of the period:








Residential loans serviced (number of accounts - 000's) (3)

619


535


470


442


415


16

%

49

%

Capitalized value of MSRs

1.43

%

1.34

%

1.27

%

1.16

%

1.15

%

9


28





















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)    Gain on sale margin is based on net gain on loan sales (excludes net gain on loan sales of $1 million from loans transferred from HFI in the three months ended December 31, 2017) 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 (including the impact of hedges) increased $4 million, resulting in a net gain of $13 million for the third quarter 2018, as compared to a net gain of $9 million for the second quarter 2018. The increase from the prior quarter largely reflected higher service fee income due to a larger MSR portfolio and a $1.9 million fair value gain associated with a pending MSR sale of $4.7 billion UPB expected to close in the fourth quarter 2018.

Noninterest Expense

Noninterest expense fell to $173 million for the third quarter 2018, as compared to $177 million for the second quarter 2018, primarily due to lower compensation and benefits and commissions, partially offset by acquisition costs related to the Company's pending acquisition of Wells Fargo branches. Excluding $1.2 million of transaction costs from pending acquisitions, the Company's adjusted noninterest expense was $172 million.

During the third quarter 2018, compensation and benefits declined $4 million, primarily due to cost reduction initiatives and lower incentive compensation, while commissions decreased $4 million, reflecting lower mortgage expenses.

The Company's total efficiency ratio rose slightly to 75 percent for the third quarter 2018, as compared to 74 percent for the second quarter 2018, resulting from the decline in mortgage revenue. Revenue decreased 3 percent while expenses fell 2 percent in the third quarter 2018.

Income Taxes

The third quarter 2018 provision for income taxes totaled $12 million, unchanged from the second quarter 2018. The Company's effective tax rate was 20 percent for the third quarter 2018, unchanged from the prior quarter.

Asset Quality

Credit Quality Ratios








Three Months Ended

Change (% / bps)


September 30,
2018

June 30,
2018

March 31,
2018

December 31,
2017

September 30,
2017

Seq

Yr/Yr


(Dollars in millions)



Allowance for loan loss to LHFI


1.5

%


1.5

%


1.7

%


1.8

%


2.0

%

0


(50)


Charge-offs, net of recoveries

$

1


$

1


$

1


$

2


$

2


%

(50)

%

Total nonperforming loans held-for-investment

$

25


$

27


$

29


$

29


$

31


(7)

%

(19)

%

Net charge-offs to LHFI ratio (annualized)


0.05

%


0.02

%


0.06

%


0.12

%


0.08

%

3


(3)


Ratio of nonperforming LHFI and TDRs to LHFI


0.28

%


0.30

%


0.35

%


0.38

%


0.44

%

(2)


(16)






















N/M - Not meaningful




















The allowance for loan losses was $134 million at September 30, 2018, compared to $137 million at June 30, 2018. The allowance for loan losses covered 1.5 percent of loans held-for-investment at September 30, 2018, unchanged from June 30, 2018.

Net charge-offs in the third quarter 2018 were $1 million, or 5 basis points of HFI loans, compared to $1 million, or 2 basis points in the prior quarter.

Nonperforming loans held-for-investment were $25 million at September 30, 2018, compared to $27 million at June 30, 2018. The ratio of nonperforming loans to loans held-for-investment was 0.28 percent at September 30, 2018, compared to 0.30 percent at June 30, 2018. At September 30, 2018, early stage consumer loan delinquencies totaled $3 million, or 0.08 percent of consumer loans, unchanged from June 30, 2018.

Capital

Capital Ratios (Bancorp)

Three Months Ended

Change (% / bps)


September 30,
2018

June 30,
2018

March 31,
2018

December 31,
2017

September 30,
2017

Seq

Yr/Yr

Tangible common equity to assets ratio (1)

7.74

%

7.74

%

7.65

%

8.15

%

8.47

%


(73)


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

8.36

%

8.65

%

8.72

%

8.51

%

8.80

%

(29)


(44)


Tier 1 common equity (to RWA)

11.01

%

10.84

%

10.80

%

11.50

%

11.65

%

17


(64)


Tier 1 capital (to RWA)

13.04

%

12.86

%

12.90

%

13.63

%

13.72

%

18


(68)


Total capital (to RWA)

14.20

%

14.04

%

14.14

%

14.90

%

14.99

%

16


(79)


MSRs to Tier 1 capital

20.3

%

16.9

%

16.2

%

20.1

%

17.3

%

340


300


Tangible book value per share (1)

$

25.13


$

24.37


$

23.62


$

24.04


$

25.01


3

%

%





















(1)      See Non-GAAP Reconciliation for further information.

N/M - Not meaningful

The Company maintained a robust capital position with regulatory ratios well above current regulatory quantitative guidelines for "well capitalized" institutions. At September 30, 2018, the Company had a Tier 1 leverage ratio of 8.36 percent, as compared to 8.65 percent at June 30, 2018. The decrease in the ratio resulted primarily from balance sheet growth and higher MSRs, 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 67 basis points and risk-based capital ratios by approximately 30-50 basis points at September 30, 2018 (pro forma basis).

Earnings Conference Call

As previously announced, the Company's third quarter 2018 earnings call will be held Tuesday, October 23, 2018 at 11 a.m. (ET).

To join the call, please dial (877) 260-1479 toll free or (334) 323-0522 and use passcode 9173210. 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 9173210.

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 $18.7 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 108 branches in Michigan and California. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 81 retail locations in 27 states, representing the combined retail branches of Flagstar and its Opes Advisors mortgage division. Flagstar is a leading national originator and servicer of mortgage loans, handling payments and record keeping for $136 billion of home loans representing nearly 620,000 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, adjusted net income, adjusted diluted earnings per share, adjusted noninterest expense and adjusted return on average assets. 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.

For more information, contact: 

David L. Urban
david.urban@flagstar.com  
(248) 312-5970

 

 

Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition

(Dollars in millions)

(Unaudited)



September 30,
2018


June 30,
2018


December 31,
2017


September 30,
2017

Assets








Cash

$

150



$

139



$

122



$

88


Interest-earning deposits

114



220



82



145


Total cash and cash equivalents

264



359



204



233


Investment securities available-for-sale

1,857



1,871



1,853



1,637


Investment securities held-to-maturity

724



748



939



977


Loans held-for-sale

4,835



4,291



4,321



4,939


Loans held-for-investment

8,966



8,904



7,713



7,203


Loans with government guarantees

305



278



271



253


Less: allowance for loan losses

(134)



(137)



(140)



(140)


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

9,137



9,045



7,844



7,316


Mortgage servicing rights

313



257



291



246


Federal Home Loan Bank stock

303



303



303



264


Premises and equipment, net

360



355



330



314


Net deferred tax asset

111



119



136



248


Goodwill and intangible assets

70



71



21



21


Other assets

723



711



670



685


Total assets

$

18,697



$

18,130



$

16,912



$

16,880


Liabilities and Stockholders' Equity








Noninterest-bearing

$

3,096



$

2,781



$

2,049



$

2,272


Interest-bearing

8,493



7,807



6,885



6,889


Total deposits

11,589



10,588



8,934



9,161


Short-term Federal Home Loan Bank advances

3,199



3,840



4,260



4,065


Long-term Federal Home Loan Bank advances

1,280



1,280



1,405



1,300


Other long-term debt

495



494



494



493


Other liabilities

616



453



420



410


Total liabilities

17,179



16,655



15,513



15,429


Stockholders' Equity








Common stock

1



1



1



1


Additional paid in capital

1,519



1,514



1,512



1,511


Accumulated other comprehensive loss

(42)



(32)



(16)



(8)


Retained earnings/(accumulated deficit)

40



(8)



(98)



(53)


Total stockholders' equity

1,518



1,475



1,399



1,451


Total liabilities and stockholders' equity

$

18,697



$

18,130



$

16,912



$

16,880


 

 

Flagstar Bancorp, Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share data)

(Unaudited)




Third Quarter 2018 Compared to:


Three Months Ended


Second Quarter

2018


Third Quarter

2017


September 30,
2018

June 30,
2018

March 31,
2018

December 31,
2017

September 30,
2017


Amount

Percent


Amount

Percent

Interest Income












Total interest income

$

183


$

167


$

152


$

148


$

140



$

16


10

%


$

43


31

%

Total interest expense

59


52


46


41


37



7


13

%


22


59

%

Net interest income

124


115


106


107


103



9


8

%


21


20

%

Provision (benefit) for loan losses

(2)


(1)



2


2



(1)


100

%


(4)


N/M


Net interest income after provision
(benefit) for loan losses

126


116


106


105


101



10


9

%


25


25

%

Noninterest Income












Net gain on loan sales

43


63


60


79


75



(20)


(32)

%


(32)


(43)

%

Loan fees and charges

23


24


20


24


23



(1)


(4)

%



%

Deposit fees and charges

5


5


5


4


5




%



%

Loan administration income

5


5


5


5


5




%



%

Net return (loss) on the mortgage
servicing rights

13


9


4


(4)


6



4


44

%


7


117

%

Other noninterest income

18


17


17


16


16



1


6

%


2


13

%

Total noninterest income

107


123


111


124


130



(16)


(13)

%


(23)


(18)

%

Noninterest Expense












Compensation and benefits

76


80


80


80


76



(4)


(5)

%



%

Commissions

21


25


18


23


23



(4)


(16)

%


(2)


(9)

%

Occupancy and equipment

31


30


30


28


28



1


3

%


3


11

%

Federal insurance premiums

6


6


6


5


5




%


1


20

%

Loan processing expense

14


15


14


16


15



(1)


(7)

%


(1)


(7)

%

Legal and professional expense

7


6


6


8


7



1


17

%



%

Other noninterest expense

18


15


19


18


17



3


20

%


1


6

%

Total noninterest expense

173


177


173


178


171



(4)


(2)

%


2


1

%

Income before income taxes

60


62


44


51


60



(2)


(3)

%



%

Provision for income taxes

12


12


9


96


20




%


(8)


(40)

%

Net income (loss)

$

48


$

50


$

35


$

(45)


$

40



$

(2)


(4)

%


$

8


20

%

Income (loss) per share












Basic

$

0.84


$

0.86


$

0.61


$

(0.79)


$

0.71



$

(0.02)


(2)

%


$

0.13


18

%

Diluted

$

0.83


$

0.85


$

0.60


$

(0.79)


$

0.70



$

(0.02)


(2)

%


$

0.13


19

%


N/M - Not meaningful

 

 

Flagstar Bancorp, Inc.

Consolidated Statements of Operations

(Dollars in millions, except per data share)

(Unaudited)




Nine Months Ended September 30, 2018


Nine Months Ended


Compared to:

Nine Months Ended September 30, 2017


September 30,
2018

September 30,
2017


Amount

Percent

Total interest income

$

502


$

379



$

123


32

%

Total interest expense

157


96



61


64

%

Net interest income

345


283



62


22

%

Provision (benefit) for loan losses

(3)


4



(7)


N/M


Net interest income after provision (benefit) for loan losses

348


279



69


25

%

Noninterest Income






Net gain on loan sales

166


189



(23)


(12)

%

Loan fees and charges

67


58



9


16

%

Deposit fees and charges

15


14



1


7

%

Loan administration income

15


16



(1)


(6)

%

Net return on the mortgage servicing rights

26


26




%

Other noninterest income

52


43



9


21

%

Total noninterest income

341


346



(5)


(1)

%

Noninterest Expense






Compensation and benefits

236


219



17


8

%

Commissions

64


49



15


31

%

Occupancy and equipment

91


75



16


21

%

Federal insurance premiums

18


12



6


50

%

Loan processing expense

43


41



2


5

%

Legal and professional expense

19


22



(3)


(14)

%

Other noninterest expense

52


47



5


11

%

Total noninterest expense

523


465



58


12

%

Income before income taxes

166


160



6


4

%

Provision for income taxes

33


52



(19)


(37)

%

Net income

$

133


$

108



$

25


23

%

Income per share






Basic

$

2.32


$

1.90



$

0.42


22

%

Diluted

$

2.28


$

1.86



$

0.42


23

%

N/M - Not meaningful


 

 

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial and Statistical Data

(Dollars in millions, except share data)

(Unaudited)



Three Months Ended


Nine Months Ended


September 30,
2018


June 30,
2018


September 30,
2017


September 30,
2018


September 30,
2017

Selected Mortgage Statistics:










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

$

8,290



$

9,011



$

8,898



$

25,024



$

23,896


Mortgage loans originated (2)

$

9,199



$

9,040



$

9,572



$

26,125



$

24,659


Mortgage loans sold and securitized

$

8,423



$

9,260



$

8,924



$

24,930



$

22,397


Selected Ratios:










Interest rate spread (3)

2.57

%


2.58

%


2.58

%


2.57

%


2.56

%

Net interest margin

2.93

%


2.86

%


2.78

%


2.85

%


2.74

%

Net margin on loans sold and securitized

0.51

%


0.69

%


0.84

%


0.66

%


0.84

%

Return on average assets

1.04

%


1.12

%


0.99

%


1.00

%


0.94

%

Return on average equity

12.80

%


13.45

%


11.10

%


12.10

%


10.23

%

Efficiency ratio

74.6

%


74.4

%


73.5

%


76.2

%


73.9

%

Equity-to-assets ratio (average for the period)

8.13

%


8.29

%


8.95

%


8.23

%


9.16

%

Average Balances:










Average common shares outstanding

57,600,360



57,491,714



57,162,025



57,483,802



57,062,696


Average fully diluted shares outstanding

58,332,598



58,258,577



58,186,593



58,301,920



58,133,296


Average interest-earning assets

$

16,786



$

15,993



$

14,737



$

16,050



$

13,709


Average interest-paying liabilities

$

13,308



$

13,164



$

12,297



$

13,150



$

11,481


Average stockholders' equity

$

1,514



$

1,475



$

1,471



$

1,468



$

1,412


(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.  

 

 


September 30, 2018


June 30, 2018


December 31, 2017


September 30, 2017

Selected Statistics:








Book value per common share

$

26.34



$

25.61



$

24.40



$

25.38


Tangible book value per share (1)

25.13



24.37



24.04



25.01


Number of common shares outstanding

57,625,439



57,598,406



57,321,228



57,181,536


Number of FTE employees

3,496



3,682



3,525



3,495


Number of bank branches

108



107



99



99


Ratio of nonperforming assets to total assets (2)

0.17

%


0.19

%


0.22

%


0.24

%

Common equity-to-assets ratio

8.12

%


8.14

%


8.27

%


8.60

%

MSR Key Statistics and Ratios:








Weighted average service fee (basis points)

34.3



32.4



28.9



28.2


Capitalized value of mortgage servicing rights

1.43

%


1.34

%


1.16

%


1.15

%

Mortgage servicing rights to Tier 1 capital

20.3

%


16.9

%


20.1

%


17.3

%














(1)

Excludes goodwill and intangibles of $70 million, $71 million, $21 million, and $21 million at September 30, 2018, June 30, 2018, December 31, 2017, and September 30, 2017, respectively. See Non-GAAP Reconciliation for further information.

(2)

Ratio excludes LHFS.

 

 

...

Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)



Three Months Ended


September 30, 2018


June 30, 2018


September 30, 2017


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

$

4,393


$

52


4.69

%


$

4,170


$

47


4.50

%


$

4,476


$

45


3.99

%

Loans held-for-investment












Residential first mortgage

3,027


27


3.63

%


2,875


25


3.53

%


2,594


22


3.32

%

Home equity

695


9


5.12

%


679


8


5.05

%


486


6


5.11

%

Other

128


2


5.54

%


57


1


5.39

%


26



4.52

%

Total Consumer loans

3,850


38


3.96

%


3,611


34


3.85

%


3,106


28


3.61

%

Commercial Real Estate

2,106


29


5.37

%


2,017


26


5.09

%


1,646


19


4.43

%

Commercial and Industrial

1,330


18


5.28

%


1,257


17


5.30

%


1,073


13


4.77

%

Warehouse Lending

1,586


21


5.10

%


1,495


19


5.03

%


978


12


4.82

%

Total Commercial loans

5,022


68


5.26

%


4,769


62


5.13

%


3,697


44


4.63

%

Total loans held-for-investment

8,872


106


4.70

%


8,380


96


4.58

%


6,803


72


4.16

%

Loans with government guarantees

292


3


4.20

%


280


2


3.66

%


264


3


4.58

%

Investment securities

3,100


21


2.81

%


3,049


21


2.72

%


3,101


20


2.58

%

Interest-earning deposits

129


1


2.38

%


114


1


1.72

%


93



1.23

%

Total interest-earning assets

16,786


$

183


4.32

%


15,993


$

167


4.17

%


14,737


$

140


3.77

%

Other assets

1,825





1,791





1,702




Total assets

$

18,611





$

17,784





$

16,439




Interest-Bearing Liabilities












Retail deposits












Demand deposits

$

727


$

3


1.62

%


$

704


$

1


0.60

%


$

489


$


0.14

%

Savings deposits

3,229


7


0.90

%


3,412


8


0.86

%


3,838


7


0.76

%

Money market deposits

252



0.62

%


247



0.54

%


276



0.57

%

Certificates of deposit

2,150


10


1.78

%


2,006


8


1.63

%


1,182


4


1.19

%

Total retail deposits

6,358


20


1.27

%


6,369


17


1.06

%


5,785


11


0.78

%

Government deposits












Demand deposits

283


1


0.59

%


243



0.47

%


250



0.43

%

Savings deposits

564


2


1.48

%


488


2


1.26

%


362


1


0.71

%

Certificates of deposit

327


1


1.52

%


380


1


1.35

%


329