26.01.2022 12:30:00

Flagstar Bancorp Reports Fourth Quarter 2021 Net Income of $85 Million, or $1.60 Per Diluted Share

TROY, Mich., Jan. 26, 2022 /PRNewswire/ --

Key Highlights - Fourth Quarter 2021

  • Posted adjusted net income of $90 million, or $1.69 per diluted share, excluding merger related costs.
  • Returned 1.3 percent on average assets and 13.8 percent on average tangible common equity.
  • Maintained low levels of nonperforming loans; reduced allowance for credit losses by $20 million.
  • Grew capital with total risk-based capital ratio increasing 133 basis points to 15.9 percent.
  • Achieved $48.33 in tangible book value per share—$9.53 increase compared to December 31, 2020.

Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, today reported fourth quarter 2021 net income of $85 million, or $1.60 per diluted share, compared to third quarter 2021 net income of $152 million, or $2.83 per diluted share. Flagstar reported 2021 net income of $533 million, or $9.96 per diluted share for the full year 2021, compared to 2020 net income of $538 million, or $9.52 per diluted share.

On an adjusted basis, excluding merger costs and other items, Flagstar reported net income of $90 million, or $1.69 per diluted share, for the fourth quarter 2021, compared to $156 million, or $2.90 per diluted share, for the third quarter 2021. Flagstar reported adjusted year to date 2021 net income of $568 million, or $10.60 per diluted share.

"Once again we delivered strong results for the quarter, capping off another exceptionally successful year for Flagstar," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp. "Our banking and servicing businesses delivered solid results and asset quality remained clean. Despite a decline in mortgage revenue, we still produced $90 million of adjusted net income—resulting in a 1.4 percent adjusted return on assets and a 14.9 percent adjusted return on tangible common equity.

"What you see now in Flagstar—as in past cycles—is a company that has exhibited the consistent ability to produce strong returns without the benefit of outsized mortgage revenue. In 2020 and the first three quarters of 2021, when the mortgage business took off, our performance significantly exceeded benchmark results. It's that kind of performance that fueled our ability to grow tangible book value 25 percent in 2021.

"We closed the quarter and the year with lots of positives. We have robust capital, ample liquidity and excellent asset quality. Our charge-offs were minimal, our delinquencies low, and our coverage ratio remains strong at 2 percent, excluding warehouse loans. Total risk-based capital reached 15.9 percent at year end, and we continue to generate plenty of excess capital. Along with our strong liquidity, this gives us the flexibility to fund the balance sheet and support investments in our infrastructure and business segments. In all, historically, this is our best balance sheet ever.

"As we prepare for the close of our previously announced merger with New York Community Bank, we will continue to execute on the business plan that has served our shareholders so well and brought us to this pivotal point in the history of our company."

Income Statement Highlights






Three Months Ended


December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020


(Dollars in millions, except per share data)

Net interest income

$                 181

$                 195

$                 183

$               189

$                 189

(Benefit) provision for credit losses

(17)

(23)

(44)

(28)

2

Noninterest income

202

266

252

324

332

Noninterest expense

291

286

289

347

314

Income before income taxes

109

198

190

194

205

Provision for income taxes

24

46

43

45

51

Net income

$                   85

$                 152

$                 147

$               149

$                 154







Income per share:






Basic

$                1.62

$                2.87

$                2.78

$              2.83

$                2.86

Diluted

$                1.60

$                2.83

$                2.74

$              2.80

$                2.83

 

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






Three Months Ended


December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020


(Dollars in millions, except per share data)

Net interest income

$                 181

$                 195

$                 183

$               189

$                 189

(Benefit) provision for credit losses

(17)

(23)

(44)

(28)

2

Noninterest income

202

266

252

324

332

Noninterest expense

285

281

290

312

314

Income before income taxes

115

203

189

229

205

Provision for income taxes

25

47

43

53

51

Net income

$                   90

$                 156

$                 146

$               176

$                 154







Income per share:






Basic

$                1.71

$                2.94

$                2.78

$              3.34

$                2.86

Diluted

$                1.69

$                2.90

$                2.74

$              3.31

$                2.83

(1)

See Non-GAAP Reconciliation for further information.

 

Key Ratios






Three Months Ended


December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31,  2020

Net interest margin

2.96  %

3.00  %

2.90  %

2.82  %

2.78  %

Adjusted net interest margin (1)

2.98  %

3.04  %

3.06  %

3.02  %

2.98  %

Return on average assets

1.3    %

2.2    %

2.1    %

2.0    %

2.1    %

Return on average common equity

12.7  %

23.4  %

24.0  %

25.7  %

27.6  %

Efficiency ratio

75.9  %

62.2  %

66.6  %

67.7  %

60.4  %

HFI loan-to-deposit ratio

67.2  %

68.8  %

71.8  %

74.4  %

74.5  %

Adjusted HFI loan-to-deposit ratio (2)

60.5  %

60.3  %

64.3  %

66.3  %

69.8  %



(1)

Excludes loans with government guarantees available for repurchase. See Non-GAAP Reconciliation for further information.

(2)

Excludes warehouse loans and custodial deposits. See Non-GAAP Reconciliation for further information.

 

Average Balance Sheet Highlights








Three Months Ended

% Change


December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31,2020

Seq

Yr/Yr


(Dollars in millions)



Average interest-earning assets

$          24,291

$          25,656

$          25,269

$          27,178

$          27,100

(5)    %

(10)      %

Average loans held-for-sale (LHFS)

6,384

7,839

6,902

7,464

5,672

(19)      %

13     %

Average loans held-for-investment (LHFI)

13,314

13,540

13,688

14,915

15,703

(2)    %

(15)      %

Average total deposits

19,816

19,686

19,070

20,043

21,068

1   %

(6)    %

Net Interest Income

Net interest income in the fourth quarter was $181 million, a decrease of $14 million, or 7 percent, as compared to the third quarter 2021. The results primarily reflect a $1.4 billion, or 5 percent, decrease in average earning assets driven primarily by seasonal declines in loans held-for-sale and warehouse loans.

Net interest margin in the fourth quarter was 2.96 percent, a 4 basis point decrease from the prior quarter. Excluding the impact from the loans with government guarantees that have not been repurchased and do not accrue interest, adjusted net interest margin decreased 6 basis points to 2.98 percent in the fourth quarter, compared to adjusted net interest margin of 3.04 percent in the prior quarter. This compression was largely attributable to lower yields on our warehouse loans portfolio.

Average total deposits were $19.8 billion in the fourth quarter, up $0.1 billion, or 1 percent, from the third quarter 2021, largely due to an increase of 3 percent in average retail deposits and an increase of 2 percent in average custodial deposits.

Provision for Credit Losses

The benefit for credit losses was $17 million for the fourth quarter, as compared to a $23 million benefit for the third quarter 2021, reflecting the clean performance of our portfolio, the low number of non-accrual loans which are specifically reserved and no commercial delinquencies.

Noninterest Income

Noninterest income decreased $64 million to $202 million in the fourth quarter, as compared to $266 million for the third quarter 2021, primarily due to lower gain on sale, partially offset by higher net return on mortgage servicing rights and loan administration income.

Fourth quarter net gain on loan sales decreased $78 million, to $91 million, as compared to $169 million in the third quarter 2021. Gain on sale margins decreased 48 basis points to 102 basis points for the fourth quarter 2021, compared to 150 basis points for the third quarter 2021, driven by competitive factors. Fallout adjusted lock volume declined to $8.9 billion from $11.3 billion for the third quarter 2021, reflecting the continued normalization of the mortgage origination market and seasonal factors.

Net return on mortgage servicing rights increased $10 million, to $19 million for the fourth quarter 2021, compared to a $9 million net return for the third quarter 2021. The improvement is primarily driven by improved valuations and favorable hedge results. The full year return was 6.4 percent, in the middle of the target range we have disclosed previously. 

Loan administration income increased $5 million, to $36 million for the fourth quarter 2021, compared to $31 million for the third quarter 2021, driven by an increase in subserviced loans and higher levels of modification and loss mitigation fees.

Loan fees and charges decreased $4 million, to $29 million for the fourth quarter, compared to $33 million for the third quarter 2021, primarily due to a 15 percent decrease in mortgage loans closed.  

Mortgage Metrics








As of/Three Months Ended

Change (% / bps)


December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Seq

Yr/Yr


(Dollars in millions)



Mortgage rate lock commitments (fallout-adjusted) (1) (2)

$         8,900

$       11,300

$       12,400

$       12,300

$       12,000

(21)%

(26)%

Mortgage loans closed (1)

$       10,700

$       12,500

$       12,800

$       13,800

$       13,100

(15)%

(19)%

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

1.02  %

1.50  %

1.35  %

1.84  %

1.93  %

(48)

(91)

Net gain on loan sales

$             91

$           169

$           168

$           227

$           232

(46)%

(61)%

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

$             19

$               9

$              (5)

$             —

$             —

N/M

N/M

Gain on loan sales + net return on the MSR

$           110

$           178

$           163

$           227

$           232

(38)%

(53)%

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

1,234

1,203

1,182

1,148

1,085

3%

14%

Capitalized value of MSRs

1.12  %

1.08  %

1.00  %

1.06  %

0.86  %

4

26

N/M - Not meaningful








(1)    Rounded to the nearest hundred million

(2)    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.

(3)    Includes loans serviced for Flagstar's own loan portfolio, serviced for others, and subserviced for others.

Noninterest Expense

Noninterest expense increased to $291 million for the fourth quarter, compared to $286 million for the third quarter 2021. Excluding $6 million of merger costs in the fourth quarter 2021 and $5 million of merger expenses in the third quarter 2021, noninterest expense increased $4 million, or 1 percent. The increase in noninterest expense primarily reflects an increase of $7 million in salaries and benefits as we experienced higher year-end medical claims and paid a seasonal bonus to team members not covered by the management incentive plan, partially offset by lower commissions as mortgage loan closings decreased 15 percent compared to the prior quarter.

Mortgage expenses were $121 million for the fourth quarter, a decrease of $4 million compared to the prior quarter. The ratio of mortgage noninterest expense to closings—our mortgage expense ratio— was 1.14 percent, an increase of 14 basis points from the third quarter 2021, but consistent with the fourth quarter 2020.

The efficiency ratio was 76 percent for the fourth quarter, as compared to 62 percent for the third quarter 2021. Excluding $6 million of merger expenses in the fourth quarter 2021 and $5 million of merger expenses in the third quarter 2021, the adjusted efficiency ratio was 74 percent and 61 percent, respectively. The higher efficiency ratio was primarily driven by lower gain on sale revenue and net interest income in the fourth quarter.

Income Taxes

The fourth quarter provision for income taxes totaled $24 million, with an effective tax rate of 22.0 percent, compared to $46 million and an effective tax rate of 23.2 percent for the third quarter 2021. The current quarter benefited from certain favorable items in state income tax cost.

Asset Quality

Credit Quality Ratios








As of/Three Months Ended

Change (% / bps)


December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Seq

Yr/Yr


(Dollars in millions)



Allowance for credit losses (1)

$           170

$           190

$           220

$           265

$           280

(11)%

(39)%

Credit reserves to LHFI

1.27  %

1.33  %

1.57  %

1.78  %

1.73  %

(6)

-46

Credit reserves to LHFI excluding warehouse

1.96  %

2.29  %

2.63  %

3.11  %

3.20  %

(33)

(124)

Net (recoveries) charge-offs

$               3

$               6

$               1

$            (13)

$               2

(50)%

50%

Total nonperforming LHFI and TDRs

$             94

$             96

$             75

$             60

$             56

(2)%

68%

Net (recoveries) charge-offs to LHFI ratio (annualized)

0.08  %

0.19  %

0.01  %

(0.35)  %

0.04  %

(11)

4

Ratio of nonperforming LHFI and TDRs to LHFI

0.70  %

0.66  %

0.53  %

0.40  %

0.34  %

4

36









Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (2):



Residential first mortgage

0.04  %

—        %

0.16  %

0.31  %

0.11  %

4

(7)

Home equity and other consumer

0.14  %

0.01  %

0.15  %

0.16  %

0.06  %

13

8

Commercial real estate

—        %

0.03  %

—        %

(0.01)  %

—        %

(3)

Commercial and industrial

0.53  %

1.87  %

0.04  %

(4.12)  %

0.21  %

(134)

32

N/M - Not meaningful










(1)

Includes the allowance for loan losses and the reserve on unfunded commitments.

(2)

Excludes loans carried under the fair value option.

Our portfolio has held up well following the economic stress posed by the pandemic, resulting in net charge-offs of $3 million, or 8 basis points of LHFI in the fourth quarter 2021, primarily from one commercial borrower, compared to net charge-offs of $6 million, or 19 basis point in the prior quarter.

Nonperforming loans held-for-investment and troubled debt restructurings (TDRs) were $94 million and our ratio of nonperforming loans held-for-investment and TDRs to loans held-for-investment was 70 basis points at December 31, 2021, a 4 basis point increase compared to September 30, 2021. At December 31, 2021, early stage loan delinquencies totaled $62 million, or 46 basis points of total loans, compared to $14 million, or 10 basis points, at September 30, 2021.

The allowance for credit losses was $170 million and covered 1.27 percent of loans held-for-investment at December 31, 2021, a 6 basis point decrease from September 30, 2021. Excluding warehouse loans, the allowance coverage ratio was 1.96 percent, a 33 basis point decrease from September 30, 2021. The lower allowance for credit losses primarily reflects improvements in our economic forecasts and our evaluation of the performance of the LHFI portfolio as borrowers continue to recover from the economic stress caused by the pandemic. Overall, the portfolio quality has remained solid as shown by the relatively low levels of charge-offs, TDRs, nonperforming loans and early stage delinquencies.

Capital

Capital Ratios (Bancorp)


Change (% / bps)


December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Seq

Yr/Yr

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

10.54         %

9.72         %

9.21         %

8.11         %

7.71         %

82

283

Tier 1 common equity (to RWA)

13.19         %

11.95         %

11.38         %

10.31         %

9.15         %

124

404

Tier 1 capital (to RWA)

14.43         %

13.11         %

12.56         %

11.45         %

10.23         %

132

420

Total capital (to RWA)

15.88         %

14.55         %

14.13         %

13.18         %

11.89         %

133

399

Tangible common equity to asset ratio (1)

10.09         %

9.23         %

8.67         %

7.48         %

6.58         %

86

351

Tangible book value per share (1)

$         48.33

$         47.21

$         44.38

$         41.77

$         38.80

2%

25%



(1)

See Non-GAAP Reconciliation for further information.

We maintained a strong capital position with regulatory ratios above current regulatory quantitative guidelines for "well capitalized" institutions. The risk-based capital ratios all increased more than 100 basis points compared to the prior quarter end. Further demonstrating our capital strength, the capital ratios are impacted by a 100 percent risk-weighting of the warehouse loan portfolio—the largest component of the held-for-investment portfolio. Adjusting the risk-weighting of warehouse loans to 50 percent because of historically low levels of losses from this portfolio, coupled with the fact that the portfolio is fully collateralized with assets that would receive a 50 percent risk weighting, we would have had a tier 1 common equity ratio of 14.97 percent and a total risk-based capital ratio of 18.02 percent at December 31, 2021.

Importantly, tangible book value per share grew to $48.33, up $1.12, or 2 percent from last quarter.

About Flagstar

Flagstar Bancorp, Inc. (NYSE: FBC) is a $25.5 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 158 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 83 retail locations in 28 states. Flagstar is a leading national originator and servicer of mortgage and other consumer loans, handling payments and record keeping for $291 billion of loans representing over 1.2 million 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 certain non-GAAP financial measures. 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 periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company's website at flagstar.com.

Cautionary Statements Regarding Forward-Looking Statements

Certain statements in this press release may constitute "forward–looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to New York Community Banks ("NYCB") and Flagstar's beliefs, goals, intentions, and expectations regarding revenues, earnings, loan production, asset quality, capital levels, and acquisitions, among other matters; NYCB's and Flagstar's estimates of future costs and benefits of the actions each company may take; NYCB's and Flagstar's assessments of probable losses on loans; NYCB's and Flagstar's assessments of interest rate and other market risks; and NYCB's and Flagstar's ability to achieve their respective financial and other strategic goals.

Forward–looking statements are typically identified by such words as "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "should," and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. These forward-looking statements include, without limitation, those relating to the terms, timing and closing of the proposed transaction.

Additionally, forward–looking statements speak only as of the date they are made; NYCB and Flagstar do not assume any duty, and do not undertake, to update such forward–looking statements. Furthermore, because forward–looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of NYCB and Flagstar. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement among NYCB, 615 Corp. and Flagstar; the outcome of any legal proceedings that may be instituted against NYCB or Flagstar; the possibility that the proposed transaction will not close when expected or at all because required regulatory, or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated; the ability of NYCB and Flagstar to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of NYCB or Flagstar; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where NYCB and Flagstar do business certain restrictions during the pendency of the proposed transaction that may impact the parties' ability to pursue certain business opportunities or strategic transactions; the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the proposed transaction within the expected timeframes or at all and to successfully integrate Flagstar's operations and those of NYCB; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; NYCB's and Flagstar's success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by NYCB's issuance of additional shares of its capital stock in connection with the proposed transaction; and other factors that may affect future results of NYCB and Flagstar; and the other factors discussed in the "Risk Factors" section NYCB's Annual Report on Form 10–K for the year ended December 31, 2021 and in other reports NYCB files with the U.S. Securities and Exchange Commission (the "SEC"), which are available at https://www.sec.gov and in the "SEC Filings" section of NYCB's website, https://ir.mynycb.com, under the heading "Financial Information," and in Flagstar's Annual Report on Form 10-K for the year ended December 31, 2021 and in Flagstar's other filings with SEC, which are available at https://www.sec.gov and in the "Documents" section of Flagstar's website, https://investors.flagstar.com.

Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition 

(Dollars in millions)

(Unaudited)



December 31, 2021


September 30, 2021


December 31, 2020

Assets






Cash

$                   277


$                   103


$                   251

Interest-earning deposits

774


46


372

Total cash and cash equivalents

1,051


149


623

Investment securities available-for-sale

1,804


1,802


1,944

Investment securities held-to-maturity

205


236


377

Loans held-for-sale

5,054


6,378


7,098

Loans held-for-investment

13,408


14,268


16,227

Loans with government guarantees

1,650


1,945


2,516

Less: allowance for loan losses

(154)


(171)


(252)

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

14,904


16,042


18,491

Mortgage servicing rights

392


340


329

Federal Home Loan Bank stock

377


377


377

Premises and equipment, net

360


370


392

Goodwill and intangible assets

147


149


157

Other assets

1,189


1,199


1,250

Total assets

$              25,483


$              27,042


$              31,038

Liabilities and Stockholders' Equity






Noninterest-bearing deposits

$                7,088


$                8,108


$                9,458

Interest-bearing deposits

10,921


11,228


10,515

Total deposits

18,009


19,336


19,973

Short-term Federal Home Loan Bank advances and other

1,880


1,870


3,900

Long-term Federal Home Loan Bank advances

1,400


1,400


1,200

Other long-term debt

396


396


641

Loan with government guarantee repurchase options

200


163


1,851

Other liabilities

880


1,232


1,272

Total liabilities

22,765


24,397


28,837

Stockholders' Equity






Common stock

1


1


1

Additional paid in capital

1,355


1,362


1,346

Accumulated other comprehensive income

35


38


47

Retained earnings

1,327


1,244


807

Total stockholders' equity

2,718


2,645


2,201

Total liabilities and stockholders' equity

$              25,483


$              27,042


$              31,038

 

Flagstar Bancorp, Inc.

Condensed Consolidated Statements of Operations

 (Dollars in millions, except per share data)

(Unaudited)


Interest Income












Total interest income

$              196

$              209

$              198

$              208

$              212


$     (13)

(6)    %


$     (16)

(8)    %

Total interest expense

15

14

15

19

23


1

7   %


(8)

(35)      %

Net interest income

181

195

183

189

189


(14)

(7)    %


(8)

(4)    %

(Benefit) provision for credit losses

(17)

(23)

(44)

(28)

2


6

(26)      %


(19)

N/M

Net interest income after provision for credit losses

198

218

227

217

187


(20)

(9)    %


11

6   %

Noninterest Income












Net gain on loan sales

91

169

168

227

232


(78)

(46)      %


(141)

(61)      %

Loan fees and charges

29

33

37

42

48


(4)

(12)      %


(19)

(40)      %

Net return (loss) on the mortgage servicing rights

19

9

(5)


10

N/M


19

N/M

Loan administration income

36

31

28

27

25


5

16     %


11

44     %

Deposit fees and charges

8

9

8

8

8


(1)

(11)      %


—     %

Other noninterest income

19

15

16

20

19


4

27     %


—     %

Total noninterest income

202

266

252

324

332


(64)

(24)      %


(130)

(39)      %

Noninterest Expense












Compensation and benefits

137

130

122

144

125


7

5   %


12

10     %

Occupancy and equipment

47

46

50

46

44


1

2   %


3

7   %

Commissions

38

44

51

62

70


(6)

(14)      %


(32)

(46)      %

Loan processing expense

21

22

22

21

24


(1)

(5)    %


(3)

(13)      %

Legal and professional expense

13

12

11

8

11


1

8   %


2

18     %

Federal insurance premiums

4

6

4

6

5


(2)

(33)      %


(1)

(20)      %

Intangible asset amortization

3

3

3

3

3


—     %


—     %

Other noninterest expense

28

23

26

57

32


5

22     %


(4)

(13)      %

Total noninterest expense

291

286

289

347

314


5

2   %


(23)

(7)    %

Income before income taxes

109

198

190

194

205


(89)

(45)      %


(96)

(47)      %

Provision for income taxes

24

46

43

45

51


(22)

(48)      %


(27)

(53)      %

Net income

$                85

$              152

$              147

$              149

$              154


$     (67)

(44)      %


$     (69)

(45)      %

Income per share












Basic

$             1.62

$             2.87

$             2.78

$             2.83

$             2.86


$   (1.25)

(44)      %


$  (1.24)

(43)      %

Diluted

$             1.60

$             2.83

$             2.74

$             2.80

$             2.83


$   (1.23)

(43)      %


$  (1.23)

(43)      %













Cash dividends declared

$             0.06

$             0.06

$             0.06

$             0.06

$             0.05


$      —

—     %


$   0.01

20     %

N/M - Not meaningful












 

Flagstar Bancorp, Inc.

 Condensed Consolidated Statements of Operations

 (Dollars in millions, except per share data)

(Unaudited)



Twelve Months Ended


Change


December 31, 2021


December 31, 2020


Amount

Percent

Interest Income







Total interest income

$                     810


$                     819


$                       (9)

(1)   %

Total interest expense

63


134


(71)

(53)   %

Net interest income

747


685


62

9    %

(Benefit) provision for credit losses

(112)


149


(261)

N/M

Net interest income after provision for credit losses

859


536


323

60   %

Noninterest Income







Net gain on loan sales

655


971


(316)

(33)   %

Loan fees and charges

141


150


(9)

(6)   %

Net return on the mortgage servicing rights

23


10


13

N/M

Loan administration income

121


84


37

44   %

Deposit fees and charges

34


32


2

6    %

Other noninterest income

70


63


7

11   %

Total noninterest income

1,044


1,310


(266)

(20)   %

Noninterest Expense







Compensation and benefits

533


466


67

14   %

Occupancy and equipment

188


176


12

7   %

Commissions

194


232


(38)

(16)   %

Loan processing expense

86


83


3

4   %

Legal and professional expense

45


31


14

45   %

Federal insurance premiums

20


24


(4)

(17)   %

Intangible asset amortization

11


13


(2)

(15)   %

Other noninterest expense

136


117


19

16   %

Total noninterest expense

1,213


1,142


71

6   %

Income before income taxes

690


704


(14)

(2)   %

Provision for income taxes

157


166


(9)

(5)   %

Net income

$                     533


$                     538


$                       (5)

(1)   %

Income per share







Basic

$                  10.10


$                    9.59


$                   0.51

5   %

Diluted

$                    9.96


$                    9.52


$                   0.44

5   %








Cash dividends declared

$                    0.24


$                    0.20


$                   0.04

20  %

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


Twelve Months Ended


December 31, 2021


September 30, 2021


December 31, 2020


December 31, 2021


December 31, 2020

Selected Mortgage Statistics (1):










Mortgage rate lock commitments (fallout-adjusted) (2)

$       8,900


$     11,300


$     12,000


$     44,900


$     52,000

Mortgage loans closed

$     10,700


$     12,500


$     13,100


$     49,800


$     48,300

Mortgage loans sold and securitized

$     12,100


$     12,400


$     12,000


$     52,100


$     46,900

Selected Ratios:










Interest rate spread (3)

2.79 %


2.84 %


2.44 %


2.72 %


2.40 %

Net interest margin

2.96 %


3.00 %


2.78 %


2.92 %


2.80 %

Net margin on loans sold and securitized

0.75 %


1.36 %


1.92 %


1.26 %


2.06 %

Return on average assets

1.28 %


2.16 %


2.08 %


1.89 %


2.00 %

Adjusted return on average assets (4)

1.35 %


2.21 %


2.08 %


2.01 %


2.00 %

Return on average common equity

12.74 %


23.40 %


27.58 %


21.21 %


26.21 %

Return on average tangible common equity (5)

13.79 %


25.18 %


30.13 %


22.94 %


29.00 %

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

14.90 %


26.16 %


30.13 %


25.25 %


29.00 %

Efficiency ratio

75.9 %


62.2 %


60.4 %


67.7 %


57.2 %

Adjusted efficiency ratio (4)

74.4 %


61.1 %


59.1 %


65.8 %


56.9 %

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

10.08 %


9.24 %


7.54 %


8.92 %


7.63 %

Average Balances:










Average interest-earning assets

$     24,291


$     25,656


$     27,100


$     25,591


$     24,431

Average interest-bearing liabilities

$     14,093


$     15,590


$     13,782


$     14,834


$     14,413

Average stockholders' equity

$       2,692


$       2,592


$       2,235


$       2,514


$       2,052



(1)

Rounded to nearest hundred million.

(2)

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. 

(3)

Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.

(4)

See Non-GAAP Reconciliation for further information.

(5)

Excludes goodwill, intangible assets and the associated amortization. See Non-GAAP Reconciliation for further information. 

 

 


December 31, 2021


September 30, 2021


December 31, 2020

Selected Statistics:






Book value per common share

$              51.09


$              50.04


$              41.79

Tangible book value per share (1)

$              48.33


$              47.21


$              38.80

Number of common shares outstanding

53,197,650


52,862,383


52,656,067

Number of FTE employees

5,395


5,461


5,214

Number of bank branches

158


158


158

Ratio of nonperforming assets to total assets (2)

0.39 %


0.37 %


0.21 %

Common equity-to-assets ratio

10.67 %


9.78 %


7.09 %

MSR Key Statistics and Ratios:






Weighted average service fee (basis points)

31.5


32.1


34.3

Capitalized value of mortgage servicing rights

1.12 %


1.08 %


0.86 %



(1)

Excludes goodwill and intangibles. See Non-GAAP Reconciliation for further information.

(2)

Ratio excludes LHFS.

 

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)



Three Months Ended


December 31, 2021


September 30, 2021


December 31, 2020


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

$       6,384

$           49

3.10      %


$      7,839

$          63

3.22      %


$      5,672

$          42

2.99      %

Loans held-for-investment












Residential first mortgage

1,569

13

3.22      %


1,706

14

3.14      %


2,353

19

3.23      %

Home equity

635

6

3.93      %


686

6

3.64      %


890

8

3.69      %

Other

1,229

16

4.80      %


1,177

14

4.76      %


1,001

13

5.15      %

Total consumer loans

3,433

35

3.92      %


3,569

34

3.77      %


4,244

40

3.78      %

Commercial real estate

3,260

29

3.45      %


3,238

28

3.43      %


3,064

27

3.40      %

Commercial and industrial

1,473

14

3.69      %


1,341

12

3.56      %


1,447

13

3.55      %

Warehouse lending

5,148

47

3.54      %


5,392

52

3.76      %


6,948

71

3.99      %

Total commercial loans

9,881

90

3.53      %


9,971

92

3.62      %


11,459

111

3.78      %

Total loans held-for-investment

13,314

125

3.63      %


13,540

126

3.66      %


15,703

151

3.78      %

Loans with government guarantees

1,742

11

2.62      %


2,046

8

1.61      %


2,478

5

0.73      %

Investment securities

2,104

11

2.09      %


2,058

12

2.15      %


2,493

14

2.27      %

Interest-earning deposits

747

0.15      %


173

0.18      %


754

0.11      %

Total interest-earning assets

24,291

$          196

3.18      %


25,656

$        209

3.22      %


27,100

$        212

3.09      %

Other assets

2,408




2,391




2,537



Total assets

$     26,699




$    28,047




$    29,637



Interest-Bearing Liabilities












Retail deposits












Demand deposits

$       1,692

$           —

0.05      %


$      1,603

$          —

0.05      %


$      1,842

$          —

0.07      %

Savings deposits

4,211

2

0.14      %


4,144

2

0.14      %


3,847

2

0.20      %

Money market deposits

927

0.09      %


840

0.08      %


693

0.07      %

Certificates of deposit

973

1

0.44      %


1,038

1

0.50      %


1,415

5

1.18      %

Total retail deposits

7,803

3

0.15      %


7,625

3

0.16      %


7,797

7

0.33      %

Government deposits

1,998

1

0.17      %


2,148

1

0.17      %


1,579

1

0.26      %

Wholesale deposits and other

1,238

3

0.93      %


1,342

3

0.99      %


1,010

4

1.69      %

Total interest-bearing deposits

11,039

7

0.25      %


11,115

7

0.26      %


10,386

12

0.46      %

Short-term FHLB advances and other

1,258

1

0.19      %


2,736

1

0.18      %


1,598

1

0.20      %

Long-term FHLB advances

1,400

4

0.88      %


1,343

3

0.92      %


1,200

3

1.03      %

Other long-term debt

396

3

3.16      %


396

3

3.16      %


598

7

4.47      %

Total interest-bearing liabilities

14,093

15

0.39      %


15,590

14

0.38      %


13,782

23

0.65      %

Noninterest-bearing deposits












Retail deposits and other

2,468




2,391




2,155



Custodial deposits (1)

6,309




6,180




8,527



Total noninterest-bearing deposits

8,777




8,571




10,682



Other liabilities

1,137




1,294




2,938



Stockholders' equity

2,692




2,592




2,235



Total liabilities and stockholders' equity

$     26,699




$    28,047




$    29,637



Net interest-earning assets

$     10,198




$    10,066




$    13,318



Net interest income


$          181




$        195




$        189


Interest rate spread (2)



2.79      %




2.84      %




2.44      %

Net interest margin (3)



2.96      %




3.00      %




2.78      %

Ratio of average interest-earning assets to interest-bearing liabilities



172.4      %




164.6      %




196.6      %

Total average deposits

$     19,816




$    19,686




$    21,068





(1)

Approximately 80 percent of custodial deposits from loans subserviced for which LIBOR based fees are 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.

 

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)



Twelve Months Ended


December 31, 2021


December 31, 2020


Average Balance

Interest

Annualized

Yield/Rate


Average Balance

Interest

Annualized

Yield/Rate

Interest-Earning Assets


Loans held-for-sale

$           7,146

$              218

3.05   %


$           5,542

$              184

3.33   %

Loans held-for-investment








Residential first mortgage

1,822

59

3.21   %


2,704

92

3.36   %

Home equity

722

26

3.66   %


965

39

4.01   %

Other

1,137

55

4.79   %


912

49

5.38   %

Total consumer loans

3,681

140

3.79   %


4,581

180

3.90   %

Commercial real estate

3,159

109

3.40   %


3,030

116

3.77   %

Commercial and industrial

1,437

53

3.63   %


1,692

63

3.65   %

Warehouse lending

5,583

216

3.82   %


4,694

190

3.98   %

Total commercial loans

10,179

378

3.66   %


9,416

369

3.86   %

Total loans held-for-investment

13,860

518

3.70   %


13,997

549

3.87   %

Loans with government guarantees

2,156

28

1.29   %


1,571

15

1.04   %

Investment securities

2,123

46

2.16   %


2,943

70

2.37   %

Interest-earning deposits

306

0.15   %


378

1

0.33   %

Total interest-earning assets

25,591

$              810

3.14   %


24,431

$              819

3.33   %

Other assets

2,605




2,477



Total assets

$         28,196




$         26,908



Interest-Bearing Liabilities








Retail deposits








Demand deposits

$           1,707

$                 1

0.06   %


$           1,763

$                 6

0.27   %

Savings deposits

4,097

6

0.14   %


3,597

19

0.52   %

Money market deposits

804

1

0.08   %


707

1

0.15   %

Certificates of deposit

1,107

6

0.65   %


1,831

32

1.83   %

Total retail deposits

7,715

14

0.19   %


7,898

58

0.73   %

Government deposits

1,930

4

0.19   %


1,301

7

0.56   %

Wholesale deposits and other

1,196

14

1.18   %


821

16

1.94   %

Total interest-bearing deposits

10,841

32

0.30   %


10,020

81

0.81   %

Short-term FHLB advances and other

2,296

4

0.18   %


2,807

16

0.58   %

Long-term FHLB advances

1,287

13

0.96   %


1,066

12

1.10   %

Other long-term debt

410

14

3.41   %


520

25

4.80   %

Total interest-bearing liabilities

14,834

63

0.42   %


14,413

134

0.93   %

Noninterest-bearing deposits








Retail deposits and other

2,347




1,799



Custodial deposits (1)

6,465




6,725



Total noninterest-bearing deposits

8,812




8,524



Other liabilities

2,036




1,919



Stockholders' equity

2,514




2,052



Total liabilities and stockholders' equity

$         28,196




$         26,908



Net interest-earning assets

$         10,757




$         10,018



Net interest income


$              747




$              685


Interest rate spread (2)



2.72   %




2.40   %

Net interest margin (3)



2.92   %




2.80   %

Ratio of average interest-earning assets to interest-bearing liabilities



172.5   %




169.5   %

Total average deposits

$         19,653




$         18,544





a.

Approximately 80 percent of custodial deposits are from subserviced loans for which LIBOR based fees are recognized as an offset in net loan administration income.  

b.

Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.

c.

Net interest margin is net interest income divided by average interest-earning assets.

 

Earnings Per Share

(Dollars in millions, except share data)

(Unaudited)



Three Months Ended


Twelve Months Ended


December 31, 2021


September 30, 2021


December 31, 2020


December 31, 2021


December 31, 2020

Net income

$                     85


$                  152


$                154


$                533


$                538

Weighted average common shares outstanding

52,867,138


52,862,288


53,912,584


52,792,931


56,094,542

Stock-based awards

710,694


797,134


431,382


726,155


411,271

Weighted average diluted common shares

53,577,832


53,659,422


54,343,966


53,519,086


56,505,813

Basic earnings per common share

$                   1.62


$                 2.87


$               2.86


$              10.10


$               9.59

Stock-based awards

(0.02)


(0.04)


(0.03)


(0.14)


(0.07)

Diluted earnings per common share

$                   1.60


$                 2.83


$               2.83


$               9.96


$               9.52

 

Regulatory Capital - Bancorp

(Dollars in millions)

(Unaudited)



December 31, 2021


September 30, 2021


December 31, 2020


Amount

Ratio


Amount

Ratio


Amount

Ratio

Tier 1 leverage (to adjusted avg. total assets)

$          2,798

10.54         %


$          2,709

9.72         %


$          2,270

7.71         %

Total adjusted avg. total asset base

$         26,545



$         27,863



$         29,444


Tier 1 common equity (to risk weighted assets)

$          2,558

13.19         %


$          2,469

11.95         %


$          2,030

9.15         %

Tier 1 capital (to risk weighted assets)

$          2,798

14.43         %


$          2,709

13.11         %


$          2,270

10.23         %

Total capital (to risk weighted assets)

$          3,080

15.88         %


$          3,006

14.55         %


$          2,638

11.89         %

Risk-weighted asset base

$         19,397



$         20,664



$         22,190


 

Regulatory Capital - Bank

(Dollars in millions)

(Unaudited)



December 31, 2021


September 30, 2021


December 31, 2020


Amount

Ratio


Amount

Ratio


Amount

Ratio

Tier 1 leverage (to adjusted avg. total assets)

$          2,706

10.21         %


$          2,619

9.40         %


$          2,390

8.12         %

Total adjusted avg. total asset base

$         26,502



$         27,851



$         29,437


Tier 1 common equity (to risk weighted assets)

$          2,706

13.96         %


$          2,619

12.71         %


$          2,390

10.77         %

Tier 1 capital (to risk weighted assets)

$          2,706

13.96         %


$          2,619

12.71         %


$          2,390

10.77         %

Total capital (to risk weighted assets)

$          2,839

14.65         %


$          2,766

13.42         %


$          2,608

11.75         %

Risk-weighted asset base

$         19,383



$         20,609



$         22,194


 

Loans Serviced

(Dollars in millions)

(Unaudited)



December 31, 2021


September 30, 2021


December 31, 2020


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)

$     246,858

1,032,923


$     230,045

1,007,557


$     178,606

867,799

Serviced for others (3)

35,074

137,243


31,354

124,665


38,026

151,081

Serviced for own loan portfolio (4)

8,793

63,426


10,410

70,738


10,079

66,519

Total loans serviced

$     290,725

1,233,592


$     271,809

1,202,960


$     226,711

1,085,399



(1)

UPB, net of write downs, does not include premiums or discounts.

(2)

Loans subserviced for a fee for non-Flagstar owned loans or MSRs. Includes temporary short-term subservicing performed as a result of sales of servicing-released MSRs.

(3)

Loans for which Flagstar owns the MSR.

(4)

Includes LHFI (residential first mortgage, home equity and other consumer), LHFS (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

 

Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



December 31, 2021


September 30, 2021


December 31, 2020

Consumer loans









Residential first mortgage

$         1,536

11.5 %


$         1,626

11.5 %


$         2,266

14.0 %

Home equity

613

4.6  %


657

4.6  %


856

5.3  %

Other

1,236

9.2  %


1,203

8.3  %


1,004

6.1  %

Total consumer loans

3,385

25.3 %


3,486

24.4 %


4,126

25.4 %

Commercial loans









Commercial real estate

3,223

24.0 %


3,216

22.6 %


3,061

18.9 %

Commercial and industrial

1,826

13.6 %


1,387

9.7     %


1,382

8.5  %

Warehouse lending

4,974

37.1 %


6,179

43.3 %


7,658

47.2 %

Total commercial loans

10,023

74.7 %


10,782

75.6 %


12,101

74.6 %

Total loans held-for-investment

$       13,408

100.0  %


$       14,268

100.0  %


$       16,227

100.0  %

 

Other Consumer Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



December 31, 2021


September 30, 2021


December 31, 2020

Indirect lending

$            925

74.8 %


$            916

76.1 %


$            713

71.0 %

Point of sale

271

22.0 %


248

20.6 %


211

21.0 %

Other

40

3.2 %


39

3.2 %


80

8.0 %

Total other consumer loans

$         1,236

100.0 %


$         1,203

100.0 %


$         1,004

100.0 %

 

Allowance for Credit Losses

(Dollars in millions)

(Unaudited)



December 31, 2021


September 30, 2021


December 31, 2020

Residential first mortgage

$                               40


$                               43


$                               49

Home equity

14


15


25

Other

36


32


39

Total consumer loans

90


90


113

Commercial real estate

28


35


84

Commercial and industrial

32


43


51

Warehouse lending 

4


3


4

Total commercial loans

64


81


139

Allowance for loan losses

154


171


252

Reserve for unfunded commitments

16


19


28

Allowance for credit losses

$                             170


$                             190


$                             280

 

Allowance for Credit Losses

(Dollars in millions)

(Unaudited)



Three Months Ended December 31, 2021


Residential First Mortgage

Home Equity

Other Consumer

Commercial Real Estate

Commercial and Industrial

Warehouse Lending

Total LHFI Portfolio (1)

Unfunded Commitments

Beginning balance

$            43

$          15

$            32

$            35

$            43

$              3

$          171

$                19

Provision (benefit) for credit losses:









Loan volume

(1)

1

3

3

(3)

Economic forecast (2)

(1)

(1)

4

(4)

(4)

(6)

Credit (3)

1

1

(2)

(2)

1

(1)

Qualitative factor adjustments

(2)

(1)

(1)

(1)

(8)

(13)

Charge-offs

(1)

(1)

(2)

(4)

Recoveries

1

1

Provision for net charge-offs

1

(1)

1

2

3

Ending allowance balance

$            40

$          14

$            36

$            28

$            32

$              4

$          154

$                16



(1)

Excludes loans carried under the fair value option.

(2)

Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter.

(3)

Includes changes in the probability of default and severity of default based on current borrower and guarantor characteristics, as well as individually evaluated reserves.

 

Allowance for Credit Losses

(Dollars in millions)

(Unaudited)



Twelve Months Ended December 31, 2021


Residential First Mortgage

Home Equity

Other Consumer

Commercial Real Estate

Commercial and Industrial

Warehouse Lending

Total LHFI Portfolio (1)

Unfunded Commitments

Beginning balance

$            49

$          25

$            39

$            84

$            51

$              4

$          252

$                28

Provision (benefit) for credit losses:









Loan volume

1

(3)

6

4

4

(1)

11

(12)

Economic forecast (2)

(7)

(5)

3

(9)

(17)

(35)

Credit (3)

6

4

1

(35)

14

1

(9)

Qualitative factor adjustments

(9)

(7)

(13)

(16)

(20)

(65)

Charge-offs

(5)

(1)

(4)

(9)

(19)

Recoveries

2

2

2

16

22

Provision for net charge-offs

3

(1)

2

(7)

(3)

Ending allowance balance

$            40

$          14

$            36

$            28

$            32

$              4

$          154

$                16



(1)

Excludes loans carried under the fair value option.

(2)

Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter.

(3)

Includes changes in the probability of default and severity of default based on current borrower and guarantor characteristics, as well as individually evaluated reserves.

 

Nonperforming Loans and Assets

(Dollars in millions)

(Unaudited)



December 31, 2021


September 30, 2021


December 31, 2020

Nonperforming LHFI

$                   81


$                   82


$                   46

Nonperforming TDRs

8


5


4

Nonperforming TDRs at inception but performing for less than six months

5


9


6

Total nonperforming LHFI and TDRs (1)

94


96


56

Other nonperforming assets, net

6


6


8

LHFS

17


10


9

Total nonperforming assets

$                 117


$                 112


$                   73







Ratio of nonperforming assets to total assets (2)

0.39 %


0.37 %


0.21 %

Ratio of nonperforming LHFI and TDRs to LHFI

0.70 %


0.66 %


0.34 %

Ratio of nonperforming assets to LHFI and repossessed assets (2)

0.74 %


0.70 %


0.40 %

(1)

Includes less than 90 day past due performing loans placed on nonaccrual. Interest is not being accrued on these loans.

(2)

Ratio excludes nonperforming LHFS.

 

Asset Quality - Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



30-59 Days Past Due


60-89 Days Past Due


Greater than 90 days (1)


Total Past Due


Total LHFI

December 31, 2021










Consumer loans (2)

$               26


$               36


$               62


$             124


$          3,385

Commercial loans



32


32


10,023

Total loans

$               26


$               36


$               94


$             156


$        13,408

September 30, 2021










Consumer loans

$               12


$                 2


$               58


$               72


$          3,486

Commercial loans



35


35


10,782

     Total loans

$               12


$                 2


$               93


$             107


$        14,268

December 31, 2020










Consumer loans

$                 9


$                 6


$               38


$               53


$          4,126

Commercial loans

21



18


39


12,101

     Total loans

$               30


$                 6


$               56


$               92


$        16,227



(1)

Includes performing nonaccrual loans that are less than 90 days delinquent and for which interest cannot be accrued.

(2)

Includes $43 million in first residential mortgage loans, or 69 percent of consumer loans in the 30-89 days past due categories, that have recently exited forbearance. These borrowers have not yet selected a forbearance exit plan. The average LTV of these loans is approximately 75 percent.

 

Troubled Debt Restructurings

(Dollars in millions)

(Unaudited)



TDRs


Performing


Nonperforming


Total

December 31, 2021


Consumer loans

$                             22


$                             12


$                             34

Commercial loans



Total TDR loans

$                             22


$                             12


$                             34

September 30, 2021






Consumer loans

$                             34


$                             12


$                             46

Commercial loans


2


2

Total TDR loans

$                             34


$                             14


$                             48

December 31, 2020






Consumer loans

$                             31


$                             10


$                             41

Commercial loans

5



5

Total TDR loans

$                             36


$                             10


$                             46

 

Non-GAAP Reconciliation

(Unaudited)


In addition to analyzing the Company's results on a reported basis, management reviews the Company's results and the results on an adjusted basis. The non-GAAP measures presented in the tables below reflect the adjustments of the reported U.S.GAAP results for significant items that management does not believe are reflective of the Company's current and ongoing operations. The DOJ benefit and loans with government guarantees that have not been repurchased and don't accrue interest are not reflective of our ongoing operations and, therefore, have been excluded from our U.S. GAAP results. The Company believes that tangible book value per share, tangible common equity to assets ratio, adjusted return on average tangible common equity, adjusted return on average assets, adjusted HFI loan-to-deposit ratio, adjusted noninterest expense, adjusted income before income taxes, adjusted provision for income taxes, adjusted net income, adjusted basic earnings per share, adjusted diluted earnings per share, adjusted net interest margin and adjusted efficiency ratio provide a meaningful representation of its operating performance on an ongoing basis.


The following tables provide a reconciliation of non-GAAP financial measures.


Tangible book value per share and tangible common equity to assets ratio.



December 31,2021


September 30, 2021


June 30,2021


March 31, 2021


December 31,2020


(Dollars in millions, except share data)

Total stockholders' equity

$           2,718


$           2,645


$           2,498


$        2,358


$           2,201

Less: Goodwill and intangible assets

147


149


152


155


157

Tangible book value

$           2,571


$           2,496


$           2,346


$        2,203


$           2,044











Number of common shares outstanding

53,197,650


52,862,383


52,862,264


52,752,600


52,656,067

Tangible book value per share

$           48.33


$           47.21


$           44.38


$        41.77


$           38.80











Total assets

$         25,483


$         27,042


$         27,065


$      29,449


$         31,038

Tangible common equity to assets ratio

10.09  %


9.23 %


8.67 %


7.48 %


6.58 %


Adjusted return on average tangible common equity and adjusted return on average assets.

 


Three Months Ended


Twelve Months Ended


December 31, 2021


September 30, 2021


December 31, 2020


December 31, 2021


December 31, 2020


(Dollars in millions)

Net income

$              85


$            152


$            154


$            533


$            538

Add: Intangible asset amortization, net of tax

2


2


2


8


10

Tangible net income

$              87


$            154


$            156


$            541


$            548











Total average equity

$         2,692


$         2,592


$         2,235


$         2,514


$         2,052

Less: Average goodwill and intangible assets

148


151


159


152


164

Total tangible average equity

$         2,544


$         2,441


$         2,076


$         2,362


$         1,888











Return on average tangible common equity

13.79  %


25.18 %


30.13 %


22.94 %


29.00 %

Adjustment to remove DOJ settlement expense

—       %


—       %


—       %


1.82 %


—       %

Adjustment for former CEO SERP agreement

—       %


—       %


—       %


(0.52) %


—       %

Adjustment for merger costs

1.11 %


0.98 %


—       %


1.01 %


—       %

Adjusted return on average tangible common equity

14.90 %


26.16 %


30.13 %


25.25 %


29.00 %











Return on average assets

1.28 %


2.16 %


2.08 %


1.89 %


2.00 %

Adjustment to remove DOJ

—       %


—       %


—       %


0.10 %


—       %

Adjustment for former CEO SERP settlement agreement

—       %


—       %


—       %


(0.03) %


—       %

Adjustment for merger costs

0.07 %


0.05 %


—       %


0.05 %


—       %

Adjusted return on average assets

1.35 %


2.21 %


2.08 %


2.01 %


2.00 %


Adjusted HFI loan-to-deposit ratio.

 


December 31, 2021


September 30, 2021


June 30, 2021


March 31, 2021


December 31,2020


(Dollars in millions)

Average LHFI

$       13,314


$       13,540


$       13,688


$       14,915


$       15,703

Less: Average warehouse loans

5,148


5,392


5,410


6,395


6,948

Adjusted average LHFI

$         8,166


$         8,148


$         8,278


$         8,520


$         8,755











Average deposits

$       19,816


$       19,686


$       19,070


$       20,043


$       21,068

Less: Average custodial deposits

6,309


6,180


6,188


7,194


8,527

Adjusted average deposits

$       13,507


$       13,506


$       12,882


$       12,849


$       12,541











HFI loan-to-deposit ratio

67.2 %


68.8 %


71.8 %


74.4 %


74.5 %

Adjusted HFI loan-to-deposit ratio

60.5 %


60.3 %


64.3 %


66.3 %


69.8 %


Adjusted noninterest expense, income before income taxes, provision for income taxes, net income, basic earnings per share, diluted earnings per share, and efficiency ratio.

 


Three Months Ended

Twelve Months Ended


December 31, 2021


September 30, 2021


June 30, 2021


December 31, 2021


(Dollar in millions)

Noninterest expense

$                   291


$                   286


$                   289


$                     1,213

Adjustment to remove DOJ settlement expense




35

Adjustment for former CEO SERP agreement



(10)


(10)

Adjustment for merger costs

6


5


9


20

Adjusted noninterest expense

$                   285


$                   281


$                   290


$                     1,168









Income before income taxes

$                   109


$                   198


$                   190


$                        690

Adjustment to remove DOJ settlement expense




35

Adjustment for former CEO SERP agreement



(10)


(10)

Adjustment for merger costs

6


5


9


20

Adjusted income before income taxes

$                   115


$                   203


$                   189


$                        735









Provision for income taxes

$                     24


$                     46


$                     43


$                        157

Adjustment to remove DOJ settlement expense




(8)

Adjustment for former CEO SERP agreement



2


2

Adjustment for merger costs

(1)


(1)


(2)


(4)

Adjusted provision for income taxes

$                     25


$                     47


$                     43


$                        167









Net income

$                     85


$                   152


$                   147


$                        533

Adjusted net income

$                     90


$                   156


$                   146


$                        568









Weighted average common shares outstanding

52,867,138


52,862,288


52,763,868


52,792,931

Weighted average diluted common shares

53,577,832


53,659,422


53,536,669


53,519,086

Adjusted basic earnings per share

$                  1.71


$                  2.94


$                  2.78


$                     10.75

Adjusted diluted earnings per share

$                  1.69


$                  2.90


$                  2.74


$                     10.60









Efficiency ratio

75.9 %


62.2 %


66.6 %


67.7 %

Adjustment to remove DOJ settlement expense

—       %


—       %


—       %


(1.4) %

Adjustment for former CEO SERP agreement

—       %


—       %


1.6     %


0.6     %

Adjustment for merger costs

(1.5) %


(1.1) %


(1.4) %


(1.1) %

Adjusted efficiency ratio

74.4 %


61.1 %


66.8 %


65.8 %


Adjusted net interest margin

 


Three Months Ended


December 31, 2021


September 30, 2021


June 30, 2021


March 31, 2021


December 31, 2020

Average interest earning assets

$       24,291


$       25,656


$       25,269


$       27,178


$       27,100

Net interest margin

2.96 %


3.00 %


2.90 %


2.82 %


2.78 %

Adjustment to LGG loans available for repurchase

0.02 %


0.04 %


0.16 %


0.20 %


0.20 %

Adjusted net interest margin

2.98 %


3.04 %


3.06 %


3.02 %


2.98 %

 

For more information, contact:
Kenneth Schellenberg
FBCInvestorRelations@flagstar.com
(248) 312-5741

 

Cision View original content:https://www.prnewswire.com/news-releases/flagstar-bancorp-reports-fourth-quarter-2021-net-income-of-85-million-or-1-60-per-diluted-share-301468342.html

SOURCE Flagstar Bancorp, Inc.

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