FLAGSTAR BANCORP INC 
By TROY, Mich., Jan. 24, 2012 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC) (the "Company"), the holding company for Flagstar Bank, FSB (the "Bank"), today reported a fourth quarter 2011 net loss applicable to common stockholders of $(44.9) million, as compared to a third quarter 2011 net loss of $(14.2) million and a fourth quarter 2010 net loss of $(192.1) million. The full year 2011 net loss applicable to common stockholders was $(165.6) million, compared to a full year 2010 net loss of $(393.6) million.
"Our results for the fourth quarter and full year 2011 reflect near-record revenues from our mortgage banking business, significant growth in net interest margin, de-risking of our balance sheet through building of reserves, and the benefits of our continuing transition to a full-service commercial bank. While our 2011 results were negatively impacted by a challenging operating environment, we remain well capitalized with significant liquidity and look forward to delivering improved results in 2012," commented Joseph P. Campanelli, Chairman of the Board, President and CEO.
Campanelli continued, "I am proud of all that we have been able to accomplish this year. During the fourth quarter, we transitioned to a new regulatory agency, made significant enhancements and investments in our mortgage loan servicing area, and successfully completed the divestitures of our retail branches in the Indiana and Georgia markets."
Fourth Quarter and Full Year 2011 Highlights:
-- Fourth quarter 2011 pre-tax, pre-credit cost income of $131.6 million
increased 28.4 percent sequentially (see non-GAAP reconciliation).
-- Credit-related costs of $173.2 million in the fourth quarter 2011, as
compared to $111.7 million in the third quarter 2011 (see non-GAAP
reconciliation).
-- Increased allowance for loan losses by $36.0 million in the fourth
quarter 2011 from prior quarter and representation and warranty
reserve by $35.0 million from prior quarter, for a total increase in
reserves of $71.0 million.
-- Maintained strong capital and liquidity levels at December 31, 2011:
-- Tier 1 capital ratio of 9.19 percent.
-- Cash and cash equivalents of $731.1 million, in addition to
approximately $244.0 million in liquidity in the form of
unencumbered marketable securities and over $550 million in unused
borrowing capacity at the Federal Home Loan Bank.
-- Generated strong revenues from mortgage banking operations in the fourth
quarter 2011:
-- Gain on loan sale income increased from the prior quarter to $106.9
million (margin of 102 basis points).
-- Net servicing revenue (includes loan administration and gain (loss)
on trading securities) increased 71.3 percent from the prior quarter
to $29.0 million.
-- Net loan fees and charges increased 55.6 percent from the prior
quarter to $28.6 million.
-- Residential first mortgage loan originations of $10.2 billion in
fourth quarter 2011, increased by $3.3 billion, or 47.1 percent,
from prior quarter.
-- Net interest margin continued to improve in the fourth quarter 2011:
-- Bank net interest margin of 2.43 percent, improved from 2.30 percent
in prior quarter.
-- Bank average cost of funds declined from the prior quarter to 1.79
percent.
-- Continued growth in average interest-earning assets and average
retail core deposits (includes demand, savings and money market
deposit accounts).
-- Continued emphasis on credit risk management, primarily associated with
loans originated prior to 2009:
-- Converted residential first mortgage servicing system to a
nationally recognized loan servicing platform in fourth quarter
2011.
-- Made significant investments and enhancements in residential first
mortgage loan default servicing and loss mitigation in the fourth
quarter 2011.
-- Completed previously announced sales of 27-branch retail bank franchise
in Georgia and 22-branch retail bank franchise in Indiana, resulting in
an aggregate net gain of $21.4 million (reported in net gain on sale of
assets) in the fourth quarter 2011.
-- Full year 2011 net loss applicable to common stockholders improved by
57.9 percent from prior year.
-- Pre-tax, pre-credit cost income improved by $46.8 million, or 16.1
percent, from prior year (see non-GAAP reconciliation).
-- Total credit-related-costs decreased by $178.5 million from prior
year (see non-GAAP reconciliation).
-- Bank net interest margin increased by 38 basis points from prior
year.
-- Net servicing revenue (includes loan administration and gain (loss)
on trading securities) increased by $26.5 million from prior year.
Fourth quarter 2011 net loss was $(0.08) per share (diluted) based on average shares outstanding of 555,360,000, as compared to a third quarter 2011 loss of $(0.03) per share (diluted) based on average shares outstanding of 554,489,000 and $(0.74) per share (diluted) based on average shares outstanding of 259,946,000 in the fourth quarter 2010.
For the full year 2011, net loss applicable to common stockholders was $(165.6) million, or $(0.30) per share (diluted) based on average shares outstanding of 554,343,000, a 57.9 percent improvement as compared to the full year 2010 loss of $(393.6) million, or $(2.44) per share (diluted) based on average shares of 161,565,000.
Georgia and Indiana Branch Sales
During the fourth quarter, the Company consummated the previously announced sales of the retail bank branch franchises in Indiana and Georgia to separate purchasers. On December 2, 2011, the Company announced the completion of the sale of the 22-branch Indiana retail bank franchise to First Financial Bank, N.A., a wholly owned subsidiary of First Financial Bancorp. On December 9, 2011, the Company announced the completion of the sale of the 27-branch Georgia retail bank franchise to PNC Bank, N.A., part of The PNC Financial Services Group, Inc. The two transactions resulted in an aggregate net gain of $21.4 million.
Deferral of Dividend and Interest Payments
The Company intends to provide notice to the U.S. Department of the Treasury exercising its contractual rights to defer its regularly scheduled quarterly payments of dividends, beginning with February 2012 payments, on preferred stock issued and outstanding in connection with the Company's participation in the TARP Capital Purchase Program. Under the terms of the preferred stock, the Company may defer payments of dividends for up to six quarters in total without default or penalty.
Concurrently, the Company intends to exercise its contractual rights to defer interest payments with respect to its trust preferred securities. Under the terms of the related indentures, the Company may defer interest payments for up to 20 consecutive quarters without default or penalty.
At December 31, 2011, the Bank remained well capitalized. However, the Company believes it is prudent capital stewardship to refrain from making further payments until the Company's financial condition improves. These payments will be periodically evaluated and reinstated when appropriate, subject to provisions of the supervisory agreement currently in place with the Company.
Net Interest Income
Fourth quarter 2011 net interest income was $75.9 million, as compared to $65.6 million during the third quarter 2011. The increase in net interest income from prior quarter was driven primarily by growth in average interest-earning assets and an improvement in funding costs on deposits and FHLB advances.
Net interest margin for the Bank was 2.43 percent for the fourth quarter 2011, as compared to 2.30 percent for the third quarter 2011.
Average interest-earning assets increased by 9.2 percent to $12.8 billion in the fourth quarter 2011, as compared to $11.7 billion in the third quarter 2011. The increase from the prior quarter was reflective of growth in the average balances of the Company's targeted growth portfolios, primarily warehouse loans made to other mortgage-related entities, available-for-sale residential first mortgage loans and commercial loans. This growth offset the 15 basis point decline in average yield on interest-earning assets, primarily due to the decline in mortgage yields that arose from the U.S. Treasury 10-year rate declines during the fourth quarter 2011.
The average cost of funds for the fourth quarter 2011 was 1.81 percent, a 28 basis point improvement from the prior quarter and a 50 basis point improvement from fourth quarter 2010. The improvement was driven by a lower cost of deposits and a lower cost on FHLB advances from a full quarter's impact of the refinance of $1.0 billion of long-term FHLB advances that occurred at the end of the third quarter 2011.
The average cost of deposits declined in the fourth quarter 2011 to 1.24 percent, compared to 1.37 percent in the third quarter 2011. The decrease in the cost of deposits from prior quarter was primarily attributable to a more favorable mix of deposits and reduced reliance on wholesale borrowings, as well as to the sale of the associated deposits of the Georgia and Indiana branch sales, which had a higher average funding cost than the remaining deposits. The funding outflow associated with the sale of the deposits was offset by growth in retail and government deposits and short term FHLB advances, both of which provided lower funding costs.
Non-interest Income
Fourth quarter 2011 non-interest income was $118.6 million, as compared to $112.6 million for the third quarter 2011. Excluding the representation and warranty reserve - change in estimate, non-interest income was $187.9 million in the fourth quarter 2011, compared to $151.5 million in the third quarter 2011. The increase in non-interest income from the prior quarter was attributable to increases in gain on loan sale income, loan fees and charges, and net servicing revenues, and an aggregate net gain from the sale of the Indiana and Georgia retail bank franchises.
Fourth quarter 2011 gain on loan sales totaled $106.9 million, compared to $103.9 million for the third quarter 2011. The increase from the prior quarter was a result of increased residential first mortgage originations and continued strong margin on the sales of those originations, as well as a reduction in overall hedging costs. Residential first mortgage originations, which are principally comprised of agency-eligible residential first mortgages, increased to $10.2 billion during the fourth quarter 2011, from $6.9 billion in the third quarter 2011. Loan sales also increased for the fourth quarter 2011 to $10.5 billion, as compared to $6.8 billion for the third quarter 2011.
Gain on loan sale margin, which is calculated based on mortgage rate lock commitments and actual loan sales, net of sales expenses and hedging costs, decreased to 1.02 percent for the fourth quarter 2011, as compared to 1.53 percent for the third quarter 2011. Mortgage rate lock commitments decreased to $11.2 billion during the fourth quarter 2011, as compared to $13.1 billion during the third quarter 2011.
Loan fees and charges increased to $28.6 million in the fourth quarter 2011, compared to $18.4 million in the third quarter 2011, based on increased originations during the quarter.
Net servicing revenue, which is the combination of net loan administration income (including the off-balance hedges of mortgage servicing rights) and the gain (loss) on trading securities (the on-balance sheet hedges of mortgage servicing rights), increased to $29.0 million during fourth quarter 2011, as compared to $16.9 million during third quarter 2011. The increase from the prior quarter was primarily attributable to hedge positioning, along with reduced rate volatility, and an increase in servicing fee income associated with a larger servicing portfolio that arose from the increased loan sales activity during the quarter.
Non-interest Expense
Fourth quarter non-interest expense was $172.5 million, compared to $150.7 million in the third quarter 2011. Excluding asset resolution expense, non-interest expense was $140.1 million in the fourth quarter 2011, compared to $116.2 million in the third quarter 2011. The increase from the prior quarter was primarily driven by increased compensation and commissions related to the growth in the mortgage banking business, including mortgage servicing operations, and an increase in consulting fees related to improvements in mortgage servicing and other banking operations. The efficiency ratio, as adjusted to exclude credit related costs, improved to 53.1 percent during the fourth quarter 2011, as compared to 53.5 percent during the third quarter 2011 (see Non-GAAP reconciliation).
Compensation, benefits and commission expense increased to $74.2 million for the fourth quarter 2011, as compared to $65.4 million in third quarter 2011. The increase in compensation, benefits and commission from prior quarter was driven primarily by a 47.1 percent increase in residential first mortgage loan origination volume as compared to the prior quarter.
General and administrative expense increased to $34.4 million in the fourth quarter 2011, compared to $26.6 million in the third quarter 2011. The increase from the prior quarter was primarily due to increased consulting fees associated with the enhancements made in the residential first mortgage loan default servicing and loss mitigation areas.
Warrant expense was $0.1 million for the fourth quarter 2011, as compared to income of $(4.2) million in the third quarter 2011, reflecting the increase in the quarterly valuation of the outstanding warrant liability primarily due to the increase in the market price of the Company's common stock since the end of third quarter 2011.
Balance Sheet and Funding
Total assets at December 31, 2011 were $13.6 billion, as compared to $13.7 billion at September 30, 2011. The decrease from prior quarter is the result of a decline in residential first mortgage loans held available-for-sale, as loan sales exceeded originations, partially offset by the growth in the mortgage servicing rights portfolio due to the loan sale activity. The decline was also partially offset by growth in warehouse lending, which funds correspondents that also originate residential first mortgage loans, and growth in the commercial and industrial loan portfolio. At the same time, interest-bearing deposits declined, as a result of the sale of deposits in the Georgia and Indiana branches, but such outflow was primarily offset by increases in lower-costing retail deposits from the Bank's branch network and by increases in low-cost short-term FHLB advances.
The Company funds its loans primarily with deposits obtained through its community banking branches and its internet banking platform, as well as deposits obtained from municipalities and investment banking firms. Funds are also obtained from time to time through loan repayments and sales of loans and securities in the ordinary course of business, advances from the FHLB in varying maturities depending upon current needs, community banking operations, customer escrow accounts and security repurchase agreements. The Company relies upon several of these sources at different times to address daily and forecasted liquidity needs for operational requirements and policy levels while managing overall net interest costs and interest-rate risk.
At December 31, 2011, the Bank had a collateralized $4.6 billion line of credit with the FHLB, of which $4.0 billion was advanced or borrowed, and $555.2 million remained as borrowing capacity. The Company also had $731.1 million in cash on hand and interest-earning deposits (excluding other marketable securities).
Credit Related Costs and Asset Quality
Credit related costs consist primarily of loan loss provision expense, representation and warranty reserve - change in estimate, asset resolution expense and impairment on investment securities available-for-sale. Fourth quarter 2011 credit related costs totaled $173.2 million, as compared to $111.7 million for the third quarter 2011 (see Non-GAAP reconciliation). The increase from the prior quarter includes $71.0 million in increases to the allowance for loan losses and representation and warranty reserve, and is reflective of the Company's emphasis on improving credit risk management through continued loan modifications and meaningful loss mitigation activities associated with loans originated prior to 2009. In addition, the increase in the representation and warranty reserve - change in estimate reflects the continued but abating level of loan repurchase requests received from government-sponsored enterprises (GSEs), such as Fannie Mae and Freddie Mac, and the response to matters prolonged by negative influences on housing values and mortgage finance.
Fourth quarter 2011 loan loss provision expense was $63.5 million, as compared to $36.7 million in third quarter 2011. The increase from the prior quarter reflects a $36.0 million increase in the allowance for loan losses, due to increased loss rates arising from loan modification activity and updating of historical loss rates.
Allowance for loan losses at December 31, 2011 was $318.0 million, or 4.5 percent of loans held-for-investment and 65.1 percent of non-performing loans held-for-investment, as compared to $282.0 million, or 4.1 percent of loans held-for-investment and 63.4 percent of non-performing loans held-for-investment at September 30, 2011.
Total non-performing loans (i.e., loans 90 days or more past due and matured loans) increased to $488.4 million at December 31, 2011, compared to $444.9 million at September 30, 2011. The increase from the prior quarter was primarily due to a $31.9 million increase in residential first mortgage performing troubled debt restructurings ("TDRs"), which are loan modifications that must be classified as non-performing during the first six months following the modification date, and an $8.5 million increase in commercial real estate non-performing loans. Excluding performing TDRs, residential first mortgage non-performing loans remained relatively flat from the prior quarter. The Company classifies residential first mortgage performing TDRs as non-performing loans until the loans have performed for six consecutive months following the modification date. The increase in the level of performing TDRs from prior quarter is consistent with the Company's enhanced loan modification efforts.
Non-performing commercial loans increased by $8.5 million to $101.0 million in the fourth quarter 2011, as compared to the $92.5 million in the third quarter 2011. The increase from the prior quarter was primarily driven by four new delinquent commercial real estate loans with an average size of $2.2 million. Loan loss provision expense related to the commercial real estate portfolio increased to $13.4 million in the fourth quarter 2011, compared to $11.4 million in the third quarter 2011.
The Company maintains a representation and warranty reserve on the balance sheet, which reflects the estimate of probable losses it may incur on loans which have been sold or securitized into the secondary market, primarily to the GSEs. In the fourth quarter 2011, provisions related to that representation and warranty reserve were $69.3 million, as compared to $39.0 million in the third quarter 2011.
During the fourth quarter, the Company made refinements to the process for estimating the representation and warranty reserve, due primarily to changes in counterparty activity and our ability to estimate forecasted repurchase demands over the expected period of repurchase exposure.
Prior repurchase requests from the GSEs were largely concentrated in foreclosed loans. Recent repurchase requests have been more heavily weighted towards loans that are currently delinquent but for which the foreclosure sale has yet to occur, which the Company believes is an indication of acceleration of repurchase demands on a relatively static population by the GSEs.
As a result of these refinements, we recorded a $35.0 million increase in our representation and warranty reserve in the fourth quarter. As of December 31, 2011, the representation and warranty reserve was $120.0 million, as compared to $85.0 million as of September 30, 2011.
Asset resolution expense, which includes expenses associated with foreclosed properties (including the foreclosure claims in process with Ginnie Mae), decreased slightly to $32.4 million in the fourth quarter 2011, as compared to $34.5 million in the third quarter of 2011.
During the fourth quarter 2011, the Company recorded an impairment on investment securities available-for-sale of $(7.1) million, as compared to $(1.3) million during the third quarter 2011. The impairment losses during the fourth quarter 2011 relate to expected future credit losses in securities backed by prime mortgage collateral. Management believes the deterioration in performance of the collateral underlying the securities is a result of continued macroeconomic weakness and continued declines in home prices.
Capital
The Bank remained "well-capitalized" for regulatory purposes at December 31, 2011, with regulatory capital ratios of 9.19 percent for Tier 1 capital and 17.07 percent for total risk-based capital. During the fourth quarter 2011, the Company invested $18.0 million in the Bank as capital, thereby providing cushion to ensure sufficient capital to effectively manage on-going business opportunities. At December 31, 2011, the Company had an equity-to-assets ratio of 8.16 percent.
Earnings Conference Call
As previously announced, the Company's quarterly earnings conference call will be held on Wednesday, January 25, 2012 from 11:00 a.m. until 12:00 noon (Eastern).
Questions for discussion at the conference call may be submitted in advance by e-mail to investors@flagstar.com or asked live during the conference call.
The conference call and accompanying slide presentation will be webcast live on the Investor Relations section of the Company's Web site, www.flagstar.com, with replays available at that site for at least 10 days.
To listen by telephone, please call at least 10 minutes prior to the start of the conference call at (866) 294-1212 toll free or (702) 696-4911 and use passcode: 40653036.
About Flagstar
Flagstar Bancorp, Inc. is a full-service financial services company, offering a range of products and services to consumers, businesses, and homeowners. With $13.6 billion in total assets at December 31, 2011, Flagstar is the largest publicly held savings bank headquartered in the Midwest. As of December 31, 2011, Flagstar operated 113 branches in Michigan, 27 home loan centers in 13 states, and a total of four commercial banking offices in Massachusetts, Connecticut, and Rhode Island. Flagstar originates loans nationwide and is one of the leading originators of residential first mortgage loans. For more information, please visit www.flagstar.com.
Non-GAAP
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding the Company's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconcilement to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that are difficult to predict and could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement. Forward-looking statements contained in this press release and any information related to expectations about future events or results are based upon information available to the Company as of the date hereof. Forward-looking statements can be identified by such words as "anticipates," "intends," "plans," "seeks," "believes," "expects", "estimates," and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements made regarding the Company's results of operations, current expectations, plans or forecasts of core business drivers, credit related costs, asset quality, capital adequacy and liquidity, the implementation of the Company's business plan and growth strategies, the result of improvements to the Company's servicing processes, the suspension of dividend payments on preferred stock, the deferral of interest payments on trust preferred securities, and other similar matters. For a further discussion of the factors that may cause actual results to differ materially from current expectations, please review the Company's filings with the Securities and Exchange Commission ("SEC"), including but not limited to, our Forms 10-K and 10-Q. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the SEC, the Company undertakes no obligation to update any such statement to reflect events or circumstances after the date on which it is made.
Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(In thousands, except share data)
December 31, September 30, December 31,
------------ ------------- ------------
2011 2011 2010
---- ---- ----
Assets
Cash and cash items $49,715 $63,288 $60,039
Interest-earning deposits 681,343 839,510 893,495
------- ------- -------
Cash and cash equivalents 731,058 902,798 953,534
Securities classified as
trading 313,383 312,766 160,775
Securities classified as
available-for-sale 481,352 521,259 475,225
Loans available-for-sale 1,800,885 2,080,926 2,585,200
($1,629,618, $1,939,780, and
$2,343,638 at fair value at
December 31, 2011, September
30, 2011, and December 31,
2010,
respectively)
Loans repurchased with
government guarantees 1,899,267 1,745,974 1,674,752
Loans held-for-investment
($22,651, $22,787, and
$19,011 at fair value 7,038,587 6,821,737 6,305,483
at December 31, 2011,
September 30, 2011, and
December 31, 2010,
respectively)
Less: allowance for loan
losses (318,000) (282,000) (274,000)
-------- -------- --------
Loans held-for-investment,
net 6,720,587 6,539,737 6,031,483
--------- --------- ---------
Total interest-earning
assets 11,896,817 12,040,172 11,820,930
Accrued interest receivable 105,200 100,442 83,893
Repossessed assets, net 114,715 113,365 151,085
Federal Home Loan Bank stock 301,737 301,737 337,190
Premises and equipment, net 203,578 250,674 232,203
Mortgage servicing rights at
fair value 510,475 437,338 580,299
Other assets 455,236 427,013 377,865
------- ------- -------
Total assets $13,637,473 $13,734,029 $13,643,504
=========== =========== ===========
Liabilities and
Stockholders' Equity
Deposits $7,689,988 $8,128,258 $7,998,099
Federal Home Loan Bank
advances 3,953,000 3,615,000 3,725,083
Long-term debt 248,585 248,585 248,610
------- ------- -------
Total interest-bearing
liabilities 11,891,573 11,991,843 11,971,792
Accrued interest payable 8,723 8,452 12,965
Representation and warranty
reserve 120,000 85,000 79,400
Other liabilities 504,161 489,395 319,684
------- ------- -------
Total liabilities 12,524,457 12,574,690 12,383,841
---------- ---------- ----------
Stockholders' Equity
Preferred stock $0.01 par
value, liquidation value
$1,000 per share, 254,732 253,344 249,196
25,000,000 shares
authorized; 266,657 issued
and outstanding and
outstanding at December 31,
2011, September 30, 2011,
and
December 31, 2010,
respectively
Common stock $0.01 par
value, 700,000,000 shares
authorized; 5,558 5,550 5,533
555,775,639, 555,015,011,
and 553,313,113 shares
issued and
outstanding at December 31,
2011, September 30, 2011,
and
December 31, 2010,
respectively
Additional paid in capital 1,466,461 1,465,554 1,461,373
Accumulated other
comprehensive loss (7,819) (4,074) (16,165)
Retained earnings
(accumulated deficit) (605,916) (561,035) (440,274)
-------- -------- --------
Total stockholders' equity 1,113,016 1,159,339 1,259,663
--------- --------- ---------
Total liabilities and
stockholders' equity $13,637,473 $13,734,029 $13,643,504
=========== =========== ===========
Flagstar Bancorp, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended For the Years Ended
September December
December 31, 30, December 31, 31, December 31,
------------ ---------- ------------ --------- ------------
2011 2011 2010 2011 2010
---- ---- ---- ---- ----
Interest Income
Loans $116,790 $109,966 $120,700 $427,022 $474,769
Securities
classified
as
available-
for-sale or
trading 8,929 9,626 8,763 35,602 55,832
Interest-
earning
deposits and
other 426 433 549 2,785 2,180
Total
interest
income 126,145 120,025 130,012 465,409 532,781
------- ------- ------- ------- -------
Interest Expense
Deposits 20,944 22,679 31,015 95,546 154,692
FHLB advances 27,646 30,121 31,209 117,963 154,964
Security
repurchase
agreements - - - - 2,750
Other 1,692 1,611 1,652 6,527 9,712
----- ----- ----- ----- -----
Total
interest
expense 50,282 54,411 63,876 220,036 322,118
------ ------ ------ ------- -------
Net interest
income 75,863 65,614 66,136 245,373 210,663
Provision for
loan losses 63,548 36,690 225,375 176,931 426,353
------ ------ ------- ------- -------
Net interest
income
(expense)
after
provision 12,315 28,924 (159,239) 68,442 (215,690)
for loan
losses ------ ------ -------- ------ --------
Non-Interest Income
Loan fees and
charges 28,610 18,383 28,605 77,843 89,535
Deposit fees
and charges 6,332 7,953 7,385 29,629 32,181
Loan
administration 28,295 (3,478) 28,269 94,604 12,679
Gain (loss)
on trading
securities 674 20,385 (173) 21,088 76,529
(Loss) gain
on trading
securities
residuals (847) (186) 3,812 (5,673) (7,847)
Net gain on
loan sales 106,919 103,858 76,931 300,789 296,965
Net loss on
sales of
mortgage
servicing
rights (2,823) (2,587) (2,303) (7,903) (6,977)
Net gain on
securities
available-
for-sale - - - - 6,689
Net gain on
sale of
assets 21,379 1,041 - 22,676 -
Total other-
than-
temporary
impairment
(loss) gain (11,569) 51,003 12,801 (30,456) 43,600
Gain (loss)
recognized
in other
comprehensive 4,437 (52,325) (14,114) 6,417 (48,591)
income before
taxes ----- ------- ------- ----- -------
Net
impairment
losses
recognized
in earnings (7,132) (1,322) (1,313) (24,039) (4,991)
Representation
and warranty
reserve - (69,279) (38,985) (10,349) (150,055) (61,523)
change in estimate
Other fees
and charges,
net 6,493 7,489 5,599 26,557 20,440
----- ----- ----- ------ ------
Total non-
interest
income 118,621 112,551 136,463 385,516 453,680
------- ------- ------- ------- -------
Non-Interest Expense
Compensation,
commissions
and benefits 74,162 65,426 66,009 264,056 237,955
Occupancy and
equipment 19,448 17,083 17,614 70,117 65,284
Asset
resolution 32,408 34,515 41,757 128,313 161,326
Federal
insurance
premiums 11,401 10,665 8,179 41,581 37,389
Other taxes 606 647 (481) 2,784 3,178
Warrant
expense
(income) 138 (4,202) 7,854 (6,889) 4,189
Loss on
extinguishment
of debt - - - - 20,826
General and
administrative 34,374 26,557 21,568 101,418 80,552
------ ------ ------ ------- ------
Total non-
interest
expense 172,537 150,691 162,500 601,380 610,699
------- ------- ------- ------- -------
Loss before
federal
income taxes (41,601) (9,216) (185,276) (147,422) (372,709)
Provision for
federal
income taxes 264 264 2,104 1,056 2,104
--- --- ----- ----- -----
Net Loss (41,865) (9,480) (187,380) (148,478) (374,813)
Preferred
stock
dividend/
accretion (3,016) (4,719) (4,689) (17,165) (18,748)
------ ------ ------ ------- -------
Net loss
applicable
to common
stockholders $(44,881) $(14,199) $(192,070) $(165,643) $(393,561)
======== ======== ========= ========= =========
Loss per share
Basic $(0.08) $(0.03) $(0.74) $(0.30) $(2.44)
====== ====== ====== ====== ======
Diluted $(0.08) $(0.03) $(0.74) $(0.30) $(2.44)
====== ====== ====== ====== ======
Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in thousands, except per share data)
(Unaudited)
For the Three Months Ended For the Years Ended
-------------------------- -------------------
Summary of December September December December December
Consolidated 31, 30, 2011 31, 2010 31, 31,
Statements of
Operations --------- ---------- --------- --------- ---------
2011 2011 2010
---- ---- ----
Return on
average
assets (1.27)% (0.43)% (1.37)% (1.24)% (2.81)%
Return on
average
equity (15.82)% (4.90)% (14.84)% (13.97)% (36.63)%
Efficiency
ratio (1) 88.7% 84.6% 80.2% 95.3% 91.9%
Efficiency
ratio
(credit-
adjusted)
(1) 53.1% 53.5% 56.7% 60.6% 61.9%
Equity/
assets ratio
(average for
the period) 8.02% 8.80% 9.20% 8.88% 7.66%
Residential
first
mortgage
loans
originated $10,187,100 $6,926,451 $9,164,615 $26,612,800 $26,560,810
Other loans
originated $199,529 $322,732 $13,642 $700,969 $40,420
Mortgage
loans sold
and
securitized $10,476,542 $6,782,795 $8,612,997 $27,451,362 $26,506,672
Interest rate
spread -
Bank only
(2) 2.15% 2.02% 1.86% 1.86% 1.45%
Net interest
margin -
Bank only
(3) 2.43% 2.30% 2.18% 2.13% 1.75%
Interest rate
spread -
Consolidated
(2) 2.13% 2.01% 1.85% 1.85% 1.43%
Net interest
margin -
Consolidated
(3) 2.37% 2.25% 2.12% 2.07% 1.67%
Average
common
shares
outstanding 555,359,916 554,489,448 259,945,773 554,342,958 161,565,164
Average fully
diluted
shares
outstanding 555,359,916 554,489,448 259,945,773 554,342,958 161,565,164
Average
interest
earning
assets $12,752,968 $11,677,994 $12,437,610 $11,803,669 $12,522,640
Average
interest
paying
liabilities $11,018,201 $10,337,645 $10,960,772 $10,530,370 $11,437,410
Average
stockholder's
equity $1,135,078 $1,159,825 $1,293,937 $1,185,822 $1,074,571
Charge-offs
to average
investment
loans 1.60% 1.83% 25.06% 2.14% 9.34%
(annualized)
December September December
31, 30, 31,
--------- ---------- ---------
2011 2011 2010
---- ---- ----
Equity/assets ratio 8.16% 8.44% 9.23%
Core capital ratio (4) 9.19% 9.31% 9.61%
Total risk-based capital
ratio (4) 17.07% 17.64% 18.55%
Book value per common share $1.54 $1.63 $1.83
Number of common shares
outstanding 555,775,639 555,015,011 553,313,113
Mortgage loans serviced for
others $63,770,676 $56,772,598 $56,040,063
Weighted average service
fee (bps) 30.8 30.5 30.8
Capitalized value of
mortgage servicing rights 0.80% 0.77% 1.04%
Ratio of allowance for loan
losses to non- 65.1% 63.4% 86.1%
performing loans held-for-
investment (5)
Ratio of allowance for loan
losses to loans 4.52% 4.13% 4.35%
held-for-investment (5)
Ratio of non-performing
assets to total assets 4.43% 4.09% 4.35%
(bank only)
Number of bank branches 113 162 162
Number of loan origination
centers 27 29 27
Number of employees
(excluding loan officers 2,839 2,993 3,001
and account executives)
Number of loan officers and
account executives 297 306 278
(1) See Non-GAAP reconciliation.
(2) Interest rate spread is the difference between the
annualized average yield earned on average interest-earning
assets for the period and the annualized average rate of
interest paid on average interest-bearing liabilities for the
period.
(3) Net interest margin is the annualized effect of the net
interest income divided by that period's average interest-
earning assets.
(4) Based on adjusted total assets for purposes of core capital
and risk-weighted assets for purposes of total risk-based
capital. These ratios are applicable to the Bank only.
(5) Bank only and does not include non-performing loans
available-for-sale
Loan Originations
-----------------
(Dollars in thousands)
----------------------
(Unaudited)
-----------
For the Three Months Ended
--------------------------
December 31, September 30, December 31,
------------ ------------- ------------
2011 2011 2010
---- ---- ----
Consumer loans:
Residential first
mortgage $10,187,100 98.1% $6,926,451 97.6% $9,164,615 99.9%
Other consumer (1) 3,033 - 4,338 0.1 1,022 -
----- --- ----- --- ----- ---
Total consumer
loans 10,190,133 98.1 6,930,789 97.7 9,165,637 99.9
Commercial loans
(2) 196,496 1.9 318,394 2.3 12,440 0.1
------- --- ------- --- ------ ---
Total loan
originations $10,386,629 100.0% $7,249,183 100.0% $9,178,077 100.0%
=========== ===== ========== ===== ========== =====
For the Years Ended
-------------------
December 31, December 31,
------------ ------------
2011 2010
---- ----
Consumer loans:
Residential first
mortgage $26,612,800 97.4% $26,560,810 99.9%
Other consumer (1) 11,024 0.1 3,068 -
------ --- ----- ---
Total consumer
loans 26,623,824 97.5 26,563,878 99.9
Commercial loans
(2) 689,945 2.5 37,352 0.1
------- --- ------ ---
Total loan
originations $27,313,769 100.0% $26,601,230 100.0%
=========== ===== =========== =====
(1) Other consumer loans include: second mortgage,
construction, warehouse lending, HELOC and other
consumer loans.
(2) Commercial loans include: commercial real estate,
commercial and industrial and commercial lease
financing loans.
Loans Held-for-Investment
(Dollars in thousands)
(Unaudited)
December 31, September 30, December 31,
------------ ------------- ------------
2011 2011 2010
---- ---- ----
Consumer
loans:
Residential
first
mortgage
and
construction $3,749,821 53.1% $3,828,114 56.2% $3,792,712 60.2%
Second
mortgage 138,912 2.0 146,501 2.1 174,789 2.8
Warehouse
lending 1,173,898 16.7 995,663 14.6 720,770 11.4
HELOC 221,845 3.2 232,796 3.4 271,326 4.3
Other 67,754 1.0 73,127 1.1 86,710 1.4
------ --- ------ --- ------ ---
Total
consumer
loans 5,352,230 76.0 5,276,201 77.4 5,046,307 80.1
--------- ---- --------- ---- --------- ----
Commercial
loans:
Commercial
real
estate 1,242,969 17.7 1,268,878 18.6 1,250,301 19.8
Commercial
and
industrial 330,099 4.7 234,148 3.4 8,875 0.1
Commercial
lease
financing 113,289 1.6 42,510 0.6 - -
------- --- ------ --- --- ---
Total
commercial
loans 1,686,357 24.0 1,545,536 22.6 1,259,176 19.9
$7,038,587 100.0% $6,821,737 100.0% $6,305,483 100.0%
Total
loans
held-
for-
investment ========== ===== ========== ===== ========== =====
Composition of Mortgage Loans Held-for-Investment
(In thousands)
(Unaudited)
December 31, 2011 September 30, 2011
----------------- ------------------
Portfolio Portfolio Allowance
Balance (1) Allowance (1) Balance (1) (1)
------------ ------------- ------------ ----------
Performing
modified
(TDR) $496,187 $40,760 $488,981 $41,381
Performing
and
not
delinquent
within 1,996,563 27,788 2,160,067 25,752
last
36
months
Performing
with
government 99,142 - 104,240 -
insurance
Other
performing 844,490 30,276 801,269 37,287
Non-
performing
-
90+
day
delinquent 323,926 92,082 291,826 64,722
Non-
performing
with
government 67,938 1,160 64,932 1,095
insurance
30
day
and
60
day
delinquent 60,487 3,818 63,301 4,030
------ ----- ------ -----
Total $3,888,733 $195,884 $3,974,616 $174,267
========== ======== ========
December 31, 2010
-----------------
Portfolio
Balance (1) Allowance (1)
------------ -------------
Performing modified
(TDR) $576,594 $46,857
Performing and not
delinquent within 2,084,578 27,700
last 36 months
Performing with
government 122,677 -
insurance
Other performing 987,975 46,499
Non-performing - 90+
day delinquent 76,572 19,786
Non-performing with
government 56,587 1,915
insurance
30 day and 60 day
delinquent 62,518 4,866
------ -----
Total $3,967,501 $147,623
========== ========
(1) Includes residential first mortgage, second
mortgage and construction loans.
Composition of Commercial Loans Held-for-Investment
(In thousands)
(Unaudited)
December 31, 2011 September 30, 2011
----------------- ------------------
Portfolio Portfolio
Balance (1) Allowance (1) Balance (1) Allowance (1)
------------ ------------- ------------ -------------
Performing
-
not
impaired $1,308,000 $32,970 $1,197,714 $33,523
Special
mention
-
not
impaired 153,795 12,016 145,524 10,322
Impaired 125,650 32,944 107,477 27,712
Non-
performing
-
not
impaired 2,928 97 173 4
Non-
performing 95,984 25,560 94,648 17,683
------ ------ ------ ------
Total $1,686,357 $103,587 $1,545,536 $89,244
========== ======== ========== =======
December 31, 2010
-----------------
Portfolio
Balance (1) Allowance (1)
------------ -------------
Performing - not
impaired $933,557 $33,699
Special mention - not
impaired 85,103 5,907
Impaired 73,631 17,181
Non-performing - not
impaired 6,485 752
Non-performing 160,400 39,847
------- ------
Total $1,259,176 $97,386
========== =======
(1) Includes commercial real estate, commercial
and industrial, and commercial lease financing
loans.
Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)
For the Three Months Ended For the Years Ended
-------------------------- -------------------
December September December December
31, 30, 2011 31, 2010 December 31, 31,
--------- ---------- --------- ------------ ---------
2011 2011 2010
---- ---- ----
Beginning
balance $282,000 $274,000 $474,000 $274,000 $524,000
Provision
for
loan
losses 63,548 36,690 225,375 176,931 426,353
Charge-
offs
Consumer
loans:
Residential
first
mortgage (19,042) (11,233) (359,720) (41,140) (473,614)
Second
mortgage (2,672) (4,629) (5,907) (19,217) (27,846)
Construction - - (81) (419) (581)
Warehouse
lending (562) (272) (254) (1,122) (2,154)
HELOC (3,515) (3,477) (4,551) (16,980) (21,495)
Other (916) (1,208) (1,283) (4,729) (5,583)
---- ------ ------ ------ ------
Total
consumer
loans (26,707) (20,819) (371,796) (83,607) (531,273)
Commercial
loans:
Commercial
real
estate (2,527) (9,853) (56,003) (57,626) (153,020)
Commercial
and
industrial - (587) (189) (644) (1,181)
--- ---- ---- ---- ------
Total
commercial
loans (2,527) (10,440) (56,192) (58,270) (154,201)
Total
charge-
offs (29,234) (31,259) (427,988) (141,877) (685,474)
------- ------- -------- -------- --------
Recoveries
Consumer
loans:
Residential
first
mortgage 400 756 652 1,650 2,506
Second
mortgage 65 371 612 1,646 1,806
Construction 1 - - 2 7
Warehouse
lending - - 72 5 516
HELOC 57 524 489 1,510 1,531
Other 319 423 430 1,603 1,615
--- --- --- ----- -----
Total
consumer
loans 842 2,074 2,255 6,416 7,981
Commercial
loans:
Commercial
real
estate 844 373 358 2,408 1,123
Commercial
and
industrial - 122 - 122 17
--- --- --- --- ---
Total
commercial
loans 844 495 358 2,530 1,140
Total
recoveries 1,686 2,569 2,613 8,946 9,121
----- ----- ----- ----- -----
Charge-
offs,
net
of
recoveries (27,548) (28,690) (425,375) (132,931) (676,353)
------- ------- -------- -------- --------
Ending
balance $318,000 $282,000 $274,000 $318,000 $274,000
======== ======== ======== ======== ========
Net
charge-
off
ratio 1.60% 1.83% 25.06% 2.14% 9.34%
==== ==== ===== ==== ====
Composition of Allowance for Loan Losses
As of December 31, 2011
(In thousands)
(Unaudited)
Collectively Individually
Evaluated Evaluated Total
Reserves (1) Reserves (2) -----
------------ ------------
Consumer loans:
Residential first
mortgage $66,073 $112,938 $179,011
Second mortgage 11,928 4,738 16,666
Construction 129 78 207
Warehouse lending 1,250 - 1,250
HELOC 13,070 1,775 14,845
Other 2,432 2 2,434
----- --- -----
Total consumer loans 94,882 119,531 214,413
Commercial loans:
Commercial real
estate 43,839 53,145 96,984
Commercial and
industrial 1,178 - 1,178
Commercial lease
financing 3,837 1,588 5,425
----- ----- -----
Total commercial
loans 48,854 54,733 103,587
Total allowance for
loan losses $143,736 $174,264 $318,000
======== ======== ========
(1) Represents loans collectively evaluated for impairment in
accordance with ASC 450-20, Loss Contingencies (formerly FAS 5), and
pursuant to amendments by ASU 2010-20 regarding allowance for
unimpaired loans.
(2) Represents loans individually evaluated for impairment in
accordance with ASC 310-10, Receivables (formerly FAS 114), and
pursuant to amendments by ASU 2010-20 regarding allowance for
impaired loans.
Non-Performing Loans and Assets
(Dollars in thousands)
(Unaudited)
December September December
31, 30, 31,
--------- ---------- 2010
2011 2011
---- ----
Non-performing loans held-
for-investment $488,367 $444,887 $318,416
Real estate and other non-
performing assets, net 114,715 113,365 179,557
------- ------- -------
Non-performing assets held-
for-investment, net 603,082 558,252 497,973
------- ------- -------
Non-performing loans
available-for-sale 4,573 3,331 94,889
----- ----- ------
Total non-performing assets
including loans available-
for-sale $607,655 $561,583 $592,862
======== ======== ========
Ratio of non-performing
loans held-for- 6.94% 6.52% 5.05%
investment to loans held-
for-investment
Ratio of non-performing
assets to total assets
(bank) 4.43% 4.09% 4.35%
Asset Quality - Loans Held-for-Investment
(Dollars in thousands)
(Unaudited)
Total
30-59 Days 60-89 Days Past Greater than Total Past Investment
Past Due Due 90 days Due Loans
----------- ---------------- ------------- ----------- -----------
December
31,
2011
Consumer loans
(1) $83,670 $41,602 $387,362 $512,634 $5,352,230
Commercial
loans (1) 7,464 12,385 101,005 120,854 1,686,357
----- ------ ------- ------- ---------
Total loans $91,134 $53,987 $488,367 $633,488 $7,038,587
======= ======= ======== ======== ==========
September
30,
2011
Consumer loans
(1) $91,318 $46,023 $352,429 $489,770 $5,276,201
Commercial
loans (1) 13,699 10,454 92,458 116,611 1,545,536
------ ------ ------ ------- ---------
Total loans $105,017 $56,477 $444,887 $606,381 $6,821,737
======== ======= ======== ======== ==========
December
31,
2010
Consumer loans
(1) $105,029 $46,907 $137,939 $289,875 $5,046,307
Commercial
loans (1) 28,420 6,838 180,477 215,735 1,259,176
------ ----- ------- ------- ---------
Total loans $133,449 $53,745 $318,416 $505,610 $6,305,483
======== ======= ======== ======== ==========
(1) Consumer loans include: residential first mortgage,
second mortgage, construction, warehouse lending, HELOC,
and other consumer loans. Commercial loans include:
commercial real estate, commercial and industrial, and
commercial lease financing loans.
Gain on Loan Sales and Securitizations
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
--------------------------
December 31, September 30,
2011 2011 December 31, 2010
------------- -------------- -----------------
Description (000's) bps (000's) bps (000's) bps
------- --- ------- --- ------- ---
Valuation
gain
(loss):
Value
of
interest
rate
locks $(19,033) (18) $79,078 117 $(36,144) (42)
Value
of
forward
sales 17,793 17 (52,573) (78) 54,938 64
Fair
value
of
loans
available-
for-
sale 96,911 92 132,285 195 37,099 43
LOCOM
adjustments
on
loans
held-
for- - - - - 248 -
investment --- --- --- --- --- ---
Total
valuation
gains 95,671 91 158,790 234 56,141 65
Sales
gains
(losses):
Marketing
gains,
net
of
adjustments 73,560 70 94,942 140 26,748 31
Pair-
off
gains
(losses) (58,831) (56) (148,078) (218) 5,998 7
Provision
for
representation
and
warranty (3,481) (3) (1,796) (3) (11,956) (14)
reserve ------ --- ------ --- ------- ---
Total
sales
gains 11,248 11 (54,932) (81) 20,790 24
------ --- ------- --- ------ ---
Total
gain
on
loan
sales
and
securitizations $106,919 102 $103,858 153 $76,931 89
======== ======== =======
Total
loan
sales
and
securitizations $10,476,542 $6,782,795 $8,612,997
=========== ========== ==========
For the Years Ended
-------------------
December 31,
2011 December 31, 2010
------------- -----------------
Description (000's) bps (000's) bps
------- --- ------- ---
Valuation gain
(loss):
Value of interest
rate locks $56,569 21 $4,335 2
Value of forward
sales (78,798) (29) 8,056 3
Fair value of loans
available-for-
sale 356,278 130 340,812 129
LOCOM adjustments
on loans held-
for- 16 - 286 -
investment --- --- --- ---
Total valuation
gains 334,065 122 353,489 134
Sales gains
(losses):
Marketing gains,
net of adjustments 191,118 69 106,760 39
Pair-off gains
(losses) (215,402) (78) (114,778) (43)
Provision for
representation and
warranty (8,993) (3) (35,200) (13)
reserve ------ --- ------- ---
Total sales gains (33,277) (12) (56,524) (22)
------- --- ------- ---
Total gain on loan
sales and
securitizations $300,788 110 $296,965 112
======== ========
Total loan sales
and
securitizations $27,451,362 $26,506,672
=========== ===========
Average Balances, Yields and Rates
(Dollars in thousands)
(Unaudited)
For the Three Months Ended
--------------------------
December 31, 2011 September 30, 2011 December 31, 2010
----------------- ------------------ -----------------
Average Annualized Average Annualized Average Annualized
------- ---------- ------- ---------- ------- ----------
Yield/ Yield/ Yield/
Balance Rate Balance Rate Balance Rate
------- ------- ------- ------- ------- -------
Interest-Earning Assets:
Loans
available-
for-
sale $2,468,813 3.94% $2,041,173 4.35% $2,408,275 4.39%
Loans
repurchased
with 1,849,827 3.44 1,790,464 3.34 1,664,049 2.82
government
guarantees
Loans held-for-
investment:
Consumer
loans
(1) 5,288,088 4.37 4,857,771 4.54 5,477,833 4.84
Commercial
loans
(1) 1,620,132 4.53 1,429,449 4.82 1,312,254 4.86
--------- --------- ---------
Loans
held-
for-
investment 6,908,220 4.40 6,287,220 4.60 6,790,087 4.83
Securities
classified
as
available-
for-
sale 813,865 4.39 840,490 4.58 659,650 5.28
or trading
Interest-
earning
deposits
and other 712,242 0.24 718,647 0.24 915,549 0.24
------- ------- -------
Total
interest-
earning
assets 12,752,967 3.94 11,677,994 4.09 12,437,610 4.17
Other
assets 1,401,566 1,503,828 1,620,474
--------- --------- ---------
Total
assets $14,154,533 $13,181,822 $14,058,084
=========== =========== ===========
Interest-Bearing
Liabilities:
Demand
deposits $382,419 0.29% $401,647 0.31% $391,972 0.42%
Savings
deposits 1,432,094 0.81 1,250,844 0.73 918,289 0.96
Money
market
deposits 531,981 0.61 580,508 0.65 554,803 0.88
Certificate
of
deposits 3,010,919 1.52 2,811,458 1.72 3,314,286 2.17
--------- --------- ---------
Total
retail
deposits 5,357,413 1.15 5,044,457 1.24 5,179,350 1.68
Demand
deposits 82,278 0.52 84,114 0.54 161,056 0.28
Savings
deposits 379,959 0.60 485,815 0.65 313,394 0.65
Certificate
of
deposits 407,386 0.60 289,063 0.54 274,820 0.80
------- ------- -------
Total
government
deposits 869,623 0.60 858,992 0.60 749,270 0.63
Wholesale
deposits 464,104 3.47 657,557 3.41 987,189 3.15
------- ------- -------
Total
deposits 6,691,140 1.24 6,561,006 1.37 6,915,809 1.78
FHLB
advances 4,078,476 2.69 3,528,054 3.39 3,796,353 3.26
Other 248,585 2.70 248,585 2.57 248,610 2.64
------- ------- -------
Total
interest-
bearing
liabilities 11,018,201 1.81 10,337,645 2.09 10,960,772 2.31
Other
liabilities 2,001,254 1,684,352 1,803,375
Stockholder's
equity 1,135,078 1,159,825 1,293,937
--------- --------- ---------
Total
liabilities
and
stockholder's
equity $14,154,533 $13,181,822 $14,058,084
=========== =========== ===========
(1) Consumer loans include: residential first mortgage, second
mortgage, construction, warehouse lending, HELOC and other consumer
loans. Commercial loans include: commercial real estate, commercial and
industrial, and commercial lease financing loans.
Average Balances, Yields and Rates
(Dollars in thousands)
(Unaudited)
For the Years Ended
-------------------
December 31, 2011 December 31, 2010
----------------- -----------------
Average Annualized Average Annualized
------- ---------- ------- ----------
Yield/ Yield/
Balance Rate Balance Rate
------- ------- ------- -------
Interest-Earning Assets:
Loans
available-
for-
sale $1,928,339 4.31% $1,945,913 4.69%
Loans
repurchased
with 1,784,927 3.19 1,307,070 2.68
government
guarantees
Loans held-
for-
investment:
Consumer
loans
(1) 4,830,127 4.58 5,776,292 4.84
Commercial
loans
(1) 1,373,566 4.74 1,466,241 4.64
--------- ---------
Loans
held-
for-
investment 6,203,693 4.61 7,242,533 4.80
Securities
classified
as
available-
for-
sale 752,871 4.73 1,076,610 5.19
or trading
Interest-
earning
deposits
and
other 1,133,840 0.25 950,513 0.23
--------- -------
Total
interest-
earning
assets 11,803,670 3.94 12,522,639 4.25
Other
assets 1,544,924 1,507,533
--------- ---------
Total
assets $13,348,594 $14,030,172
=========== ===========
Interest-
Bearing
Liabilities:
Demand
deposits $397,988 0.33% $382,195 0.50%
Savings
deposits 1,236,105 0.81 761,416 0.92
Money
market
deposits 561,943 0.69 560,237 0.92
Certificate
of
deposits 3,001,587 1.75 3,355,041 2.71
--------- ---------
Total
retail
deposits 5,197,623 1.30 5,058,889 2.08
Demand
deposits 77,702 0.54 264,473 0.38
Savings
deposits 414,394 0.64 158,493 0.65
Certificate
of
deposits 296,830 0.62 309,051 0.84
------- -------
Total
government
deposits 788,926 0.62 732,017 0.63
Wholesale
deposits 674,856 3.41 1,456,221 3.09
------- ---------
Total
deposits 6,661,405 1.43 7,247,127 2.13
FHLB
advances 3,620,368 3.26 3,849,897 4.03
Security
repurchase
agreements - - 79,053 3.48
Other 248,597 2.63 261,333 3.72
------- -------
Total
interest-
bearing
liabilities 10,530,370 2.09 11,437,410 2.82
Other
liabilities 1,632,402 1,518,191
Stockholder's
equity 1,185,822 1,074,571
--------- ---------
Total
liabilities
and
stockholder's
equity $13,348,594 $14,030,172
=========== ===========
(1) Consumer loans include: residential
first mortgage, second mortgage,
construction, warehouse lending, HELOC and
other consumer loans. Commercial loans
include: commercial real estate, commercial
and industrial, and commercial lease
financing loans.
Non-GAAP Reconciliation
(Dollars in thousands)
(Unaudited)
For the Three Months Ended For the Years Ended
-------------------------- -------------------
December December December December
31, September 31, 31, 31,
--------- --------- --------- --------- ---------
2011 30, 2011 2010 2011 2010
---- -------- ---- ---- ----
Pre-
tax,
pre-
credit-
cost
income
Loss
before
tax
provision $(41,601) $(9,216) $(185,276) $(147,422) $(372,709)
Add
back:
Provision
for
loan
losses 63,548 36,690 225,375 176,931 426,353
Asset
resolution 32,408 34,515 41,757 128,313 161,326
Other
than
temporary
impairment 7,132 1,322 1,313 24,039 4,991
on
AFS
investments
Representation
and
warranty 69,279 38,985 10,349 150,055 61,523
repurchase
reserve
-
change
in
estimate
Write
down
of
residual
interest 847 186 (3,812) 5,673 7,847
Reserve
increase
for
reinsurance - - - - 1,432
--- --- --- --- -----
Total
credit-
related-
costs: 173,214 111,698 274,982 485,011 663,472
------- ------- ------- ------- -------
Pre-
tax,
pre-
credit-
cost
income $131,613 $102,482 $89,706 $337,589 $290,763
======== ======== ======= ======== ========
Efficiency
ratio
(credit-
adjusted)
Net
interest
income
(a) $75,863 $65,614 $66,136 $245,373 $210,663
Non-
interest
income
(b) 118,621 112,551 136,463 385,516 453,680
Less:
Representation
and
warranty 69,279 38,985 10,349 150,055 61,523
repurchase
reserve
-
change
in ------ ------ ------ ------- ------
estimate
reserve
(d)
Adjusted
revenue 263,763 217,150 212,948 780,944 725,866
Non-
interest
expense
(c) 172,537 150,691 162,500 601,380 610,699
Less:
Asset
resolution
expense
(e) (32,408) (34,515) (41,757) (128,313) (161,326)
------- ------- ------- -------- --------
Adjusted
non-
interest
expense $140,129 $116,176 $120,743 $473,067 $449,373
-------- -------- -------- -------- --------
Efficiency
ratio
(c/
(a+b)) 88.7% 84.6% 80.2% 95.3% 91.9%
==== ==== ==== ==== ====
Efficiency
ratio
(credit-
adjusted) 53.1% 53.5% 56.7% 60.6% 61.9%
((c-
e)/((a+b)-
d))) ==== ==== ==== ==== ====
SOURCE Flagstar Bancorp, Inc.
