NEW YORK COMMUNITY BANCORP, INC. REPORTS FIRST QUARTER 2024 RESULTS AND PROVIDES UPDATE ON ITS STRATEGIC PATH TO PROFITABILITY
COMPANY TARGETS PEER LEVEL PROFITABILITY BY FOURTH QUARTER 2026 INCLUDING ROAA OF 1%, ROATCE OF 11% - 12%, AND A CET1 CAPITAL RATIO OF 11% - 12%
SUCCESSFULLY RAISED OVER
STRENGTHENED BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT TEAM
INCREASED ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES TO 1.48% COMPARED TO 1.17% LAST QUARTER
DEPOSITS REMAIN RESILIENT POST CAPITAL RAISE ALONG WITH AMPLE LIQUIDITY
WELL CAPITALIZED WITH CET1 RATIO OF 9.45%, OR 10.14% FULLY CONVERTED
First Quarter 2024 Summary |
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Financial Results: The Company reported a net loss of |
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Asset Quality |
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Deposits |
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ACL on loans and leases totaled • Office ACL coverage, excluding owner-occupied, increased to 10.33% • Multi-family ACL coverage increased to 1.27% • Non-office CRE ACL coverage increased to 1.52% • Nonperforming loans were 97 basis points of LHFI |
•
Total deposits of
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83% of insured or collateralized deposits (
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Available reciprocal capacity of |
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Capital |
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Liquidity |
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At – CET1 ratio of 9.45% – CET1 ratio, fully converted of 10.14%
•
Tangible book value per share of |
•
Total liquidity of
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Cash held on balance sheet of
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•
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CEO COMMENTARY
"During the first quarter, we took a number of decisive actions designed to establish a strong foundation for future growth and sustainable profitability," commented
"Finally, I would like to personally thank all of our teammates. I know the past several months have been tumultuous and you have endured multiple challenges along the way. Your dedication has been nothing short of amazing. My sincere thanks to each and every one of you."
NET INCOME (LOSS) | NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS
The Company reported a first quarter 2024 net loss of
The prior quarter net income and diluted EPS included goodwill impairment of
EARNINGS SUMMARY FOR THE THREE MONTHS ENDED
Net Interest Income, Net Interest Margin, and Average Balance Sheet
Net Interest Income and Net Interest Margin Summary |
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For the Three Months Ended |
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compared to (%): |
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(dollars in millions) |
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Net interest income |
$ 624 |
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$ 740 |
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$ 555 |
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-16 % |
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12 % |
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For the Three Months Ended |
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compared to (bp): |
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Yield/Cost |
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Mortgage and other loans, net |
5.68 % |
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5.72 % |
|
4.92 % |
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-4 |
|
76 |
Securities |
4.30 % |
|
4.39 % |
|
3.86 % |
|
-9 |
|
44 |
Interest-earning cash and cash equivalents |
5.52 % |
|
5.28 % |
|
4.96 % |
|
24 |
|
56 |
Total interest-earning assets |
5.51 % |
|
5.55 % |
|
4.80 % |
|
-4 |
|
71 |
Total interest-bearing deposits |
3.85 % |
|
3.62 % |
|
2.40 % |
|
23 |
|
145 |
Borrowed funds |
4.99 % |
|
4.14 % |
|
3.56 % |
|
85 |
|
143 |
Total interest-bearing liabilities |
4.19 % |
|
3.73 % |
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2.77 % |
|
46 |
|
142 |
Net interest margin |
2.28 % |
|
2.82 % |
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2.60 % |
|
-54 |
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-32 |
Net Interest Income
Net interest income totaled $624 million in first quarter 2024, down $116 million, or 16%, compared to fourth quarter 2023, and an increase of
Net Interest Margin
The net interest margin for the first quarter 2024 was 2.28%, down 54 basis points compared to fourth quarter 2023 and down 32 basis points compared to first quarter 2023. The 54 basis points reduction compared to fourth quarter 2023 was primarily driven by a higher cost of funds with the average rate on borrowing costs increasing 85 basis points and the impact from a deposit mix shift from lower cost interest-bearing checking and MMA to higher cost certificates of deposits. The 32 basis points reduction compared to first quarter 2023 was primarily due to the impact from higher interest rates on the cost of funds with average cost of borrowed funds increasing 143 basis points and average cost of interest-bearing deposits increasing 145 basis points, partially offset by higher earning asset yields which increased 71 basis points.
Average Balance Sheet
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For the Three Months Ended |
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compared to: |
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(dollars in billions) |
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Mortgage and other loans, net |
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-2 % |
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19 % |
Securities |
12 |
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11 |
|
11 |
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1 % |
|
7 % |
Interest-earning cash and cash equivalents |
14 |
|
7 |
|
4 |
|
112 % |
|
237 % |
Other interest-earning assets |
0 |
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0 |
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1 |
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NM |
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NM |
Total interest-earning assets |
110 |
|
104 |
|
87 |
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6 % |
|
27 % |
Total interest-bearing deposits |
60 |
|
60 |
|
48 |
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— % |
|
24 % |
Borrowed funds |
26 |
|
16 |
|
22 |
|
64 % |
|
15 % |
Total interest-bearing liabilities |
85 |
|
75 |
|
70 |
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13 % |
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21 % |
Non-interest-bearing deposits |
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-15 % |
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47 % |
Average loan balances decreased
Average interest-bearing liabilities increased
Provision for Credit Losses
For the three months ended
Net charge-offs totaled
Pre-Provision Net Revenue
The tables below detail the Company's PPNR and related measures, which are non-GAAP measures, for the periods noted:
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For the Three Months Ended |
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compared to: |
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(dollars in millions) |
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Net interest income |
$ 624 |
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$ 740 |
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$ 555 |
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-16 % |
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12 % |
Non-interest income |
9 |
|
127 |
|
2,098 |
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-93 % |
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NM |
Total revenues |
$ 633 |
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$ 867 |
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$ 2,653 |
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-27 % |
|
-76 % |
Total non-interest expense |
699 |
|
3,132 |
|
476 |
|
-78 % |
|
47 % |
Pre - provision net revenue (non-GAAP) |
$ (66) |
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$ (2,265) |
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$ 2,177 |
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NM |
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NM |
Bargain purchase gain |
121 |
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11 |
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(2,001) |
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NM |
|
NM |
Provision for bond related credit losses |
— |
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— |
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20 |
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NM |
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NM |
Merger-related and restructuring expenses |
43 |
|
63 |
|
67 |
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-32 % |
|
-36 % |
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— |
|
2,426 |
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— |
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NM |
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NM |
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— |
|
49 |
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— |
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NM |
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NM |
Pre - provision net revenue excluding merger-related and restructuring expenses and bargain purchase gain, as adjusted (non-GAAP) |
$ 98 |
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$ 284 |
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$ 263 |
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-66 % |
|
-63 % |
For the three months ended
Non-Interest Income
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For the Three Months Ended |
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compared to: |
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(dollars in millions) |
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Fee income |
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-13 % |
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26 % |
Bank-owned life insurance |
10 |
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11 |
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10 |
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-9 % |
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— % |
Net return on mortgage servicing rights |
21 |
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33 |
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22 |
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-36 % |
|
-5 % |
Net gain on loan sales and securitizations |
20 |
|
16 |
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20 |
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25 % |
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— % |
Net loan administration income |
16 |
|
17 |
|
7 |
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-6 % |
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129 % |
Bargain purchase gain |
(121) |
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(11) |
|
2,001 |
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NM |
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NM |
Other income |
29 |
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22 |
|
11 |
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32 % |
|
164 % |
Total non-interest income |
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NM |
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NM |
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Impact of Notable Item: |
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Bargain purchase gain |
(121) |
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(11) |
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2,001 |
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NM |
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NM |
Adjusted noninterest income (non-GAAP) |
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-6 % |
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34 % |
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Net mortgage gain on sale margin |
0.48 % |
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0.32 % |
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0.76 % |
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16 |
|
-28 |
Loans subserviced for others (accounts) |
987,228 |
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1,044,009 |
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1,094,869 |
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-5 % |
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-10 % |
For the three months ended
The $8 million decrease compared to the fourth quarter 2023 was primarily driven by a lower net return on MSR and lower fee income from commercial and retail banking fees, partially offset by higher other income. Net gain on loan sales increased to
The $33 million increase compared to the first quarter 2023 was primarily driven by
Non-Interest Expense
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For the Three Months Ended |
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compared to: |
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(dollars in millions) |
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Operating expenses: |
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Compensation and benefits |
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13 % |
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52 % |
Other |
288 |
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312 |
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173 |
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-8 % |
|
66 % |
Total operating expenses |
621 |
|
607 |
|
392 |
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2 % |
|
58 % |
Intangible asset amortization |
35 |
|
36 |
|
17 |
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-3 % |
|
106 % |
Merger-related and restructuring expenses |
43 |
|
63 |
|
67 |
|
-32 % |
|
-36 % |
|
— |
|
2,426 |
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— |
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NM |
|
NM |
Total non-interest expense |
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-78 % |
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47 % |
For the three months ended
Excluding merger-related and restructuring expenses, intangible amortization expense, goodwill impairment and the
Excluding merger-related and restructuring expenses, intangible amortization expense, adjusted noninterest expense was
Income Taxes
For the three months ended
ASSET QUALITY
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For the Three Months Ended |
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compared to: |
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(dollars in millions) |
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Total non-performing loans ("NPLs") |
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86 % |
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395 % |
Total non-performing assets ("NPAs") |
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83 % |
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365 % |
NPLs to total loans held for investment |
0.97 % |
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0.51 % |
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0.20 % |
|
46 |
|
77 |
NPAs to total assets |
0.72 % |
|
0.39 % |
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0.14 % |
|
33 |
|
58 |
Net charge-offs (recoveries) |
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|
-56 % |
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NM |
Net charge-offs (recoveries) to average loans (1) |
0.10 % |
|
0.22 % |
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— % |
|
-12 |
|
10 |
Allowance for credit losses on loans and leases |
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22 % |
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121 % |
ACL % of total loans held for investment |
1.48 % |
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1.17 % |
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0.67 % |
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30 |
|
81 |
ACL % of NPLs |
152 % |
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232 % |
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341 % |
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(1) Three months ended presented on a non-annualized basis. |
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Non-Performing Assets
Total NPLs increased
Allowance for Credit Losses on Loans and Leases
At
CAPITAL POSITION
The Company's regulatory capital ratios continue to exceed regulatory minimums to be classified as "Well Capitalized," the highest regulatory classification. The table below depicts the Company's and the Bank's regulatory capital ratios at those respective periods.
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REGULATORY CAPITAL RATIOS: (1) |
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Common equity tier 1 ratio |
9.45 % |
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9.05 % |
Tier 1 risk-based capital ratio |
10.73 % |
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9.62 % |
Total risk-based capital ratio |
13.09 % |
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11.77 % |
Leverage capital ratio |
7.90 % |
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7.75 % |
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Common equity tier 1 ratio |
11.08 % |
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10.52 % |
Tier 1 risk-based capital ratio |
11.08 % |
|
10.52 % |
Total risk-based capital ratio |
12.33 % |
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11.61 % |
Leverage capital ratio |
8.16 % |
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8.48 % |
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(1) |
The minimum regulatory requirements for classification as a well-capitalized institution are a common equity tier 1 capital ratio of 6.5%; a tier one risk-based capital ratio of 8.00%; a total risk-based capital ratio of 10.00%; and a leverage capital ratio of 5.00%. |
About
Post-Earnings Release Conference Call
The Company will host a conference call on
A replay will be available approximately two hours following completion of the call through
Investor Contact: Salvatore J. DiMartino (516) 683-4286
Media Contact: Steven Bodakowski (248) 312-5872
Cautionary Statements Regarding Forward-Looking Information
This earnings release and the associated conference call may include forward‐looking statements by the Company and our authorized officers pertaining to such matters as our goals, beliefs, intentions, and expectations regarding (a) revenues, earnings, loan production, asset quality, liquidity position, capital levels, risk analysis, divestitures, acquisitions, and other material transactions, among other matters; (b) the future costs and benefits of the actions we may take; (c) our assessments of credit risk and probable losses on loans and associated allowances and reserves; (d) our assessments of interest rate and other market risks; (e) our ability to execute on our strategic plan, including the sufficiency of our internal resources, procedures and systems; (f) our ability to attract and retain key personnel; and (g) our ability to achieve our financial and other strategic goals, including those related to our merger with
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. Additionally, forward‐looking statements speak only as of the date they are made; the Company does not assume any duty, and does not undertake, to update our 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 anticipated in our statements, and our future performance could differ materially from our historical results.
Our forward‐looking statements are subject to, among others, the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities, credit and financial markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of our loan or investment portfolios, including associated allowances and reserves; changes in future allowance for credit losses requirements under relevant accounting and regulatory requirements; the ability to pay future dividends; changes in our capital management and balance sheet strategies and our ability to successfully implement such strategies; changes in our strategic plan, including changes in our internal resources, procedures and systems, and our ability to successfully implement such plan; changes in competitive pressures among financial institutions or from non‐financial institutions; changes in legislation, regulations, and policies; the success of our blockchain and fintech activities, investments and strategic partnerships; the restructuring of our mortgage business; the impact of failures or disruptions in or breaches of the Company's operational or security systems, data or infrastructure, or those of third parties, including as a result of cyberattacks or campaigns; the impact of natural disasters, extreme weather events, military conflict (including the
More information regarding some of these factors is provided in the Risk Factors section of our Annual Report on Form 10‐K for the year ended
- Financial Statements and Highlights Follow -
CONSOLIDATED STATEMENTS OF CONDITION |
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compared to |
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(dollars in millions) |
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Assets |
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Cash and cash equivalents |
$ 12,890 |
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$ 11,475 |
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$ 22,250 |
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12 % |
|
-42 % |
Securities: |
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Available-for-sale |
9,336 |
|
9,145 |
|
7,599 |
|
2 % |
|
23 % |
Equity investments with readily determinable fair values, at fair value |
14 |
|
14 |
|
14 |
|
— % |
|
— % |
Total securities net of allowance for credit losses |
9,350 |
|
9,159 |
|
7,613 |
|
2 % |
|
23 % |
Loans held for sale |
981 |
|
1,182 |
|
1,305 |
|
-17 % |
|
-25 % |
Loans and leases held for investment: |
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Multi-family |
36,859 |
|
37,265 |
|
38,004 |
|
-1 % |
|
-3 % |
Commercial real estate and acquisition, development, and construction |
13,530 |
|
13,382 |
|
12,667 |
|
1 % |
|
7 % |
One-to-four family first mortgage |
5,807 |
|
6,061 |
|
5,934 |
|
-4 % |
|
-2 % |
Commercial and industrial |
24,418 |
|
25,254 |
|
23,357 |
|
-3 % |
|
5 % |
Other loans |
1,713 |
|
2,657 |
|
2,585 |
|
-36 % |
|
-34 % |
Total loans and leases held for investment |
82,327 |
|
84,619 |
|
82,547 |
|
-3 % |
|
— % |
Less: Allowance for credit losses on loans and leases |
(1,215) |
|
(992) |
|
(550) |
|
22 % |
|
121 % |
Total loans and leases held for investment, net |
81,112 |
|
83,627 |
|
81,997 |
|
-3 % |
|
-1 % |
|
1,550 |
|
1,392 |
|
1,356 |
|
11 % |
|
14 % |
Premises and equipment, net |
679 |
|
652 |
|
628 |
|
4 % |
|
8 % |
Core deposit and other intangibles |
590 |
|
625 |
|
734 |
|
-6 % |
|
-20 % |
|
— |
|
— |
|
2,426 |
|
NM |
|
NM |
Mortgage servicing rights |
1,092 |
|
1,111 |
|
1,034 |
|
-2 % |
|
6 % |
Bank-owned life insurance |
1,586 |
|
1,580 |
|
1,564 |
|
— % |
|
1 % |
Other assets |
3,070 |
|
3,254 |
|
2,799 |
|
-6 % |
|
10 % |
Total assets |
$ 112,900 |
|
$ 114,057 |
|
$ 123,706 |
|
-1 % |
|
-9 % |
Liabilities and Stockholders' Equity |
|
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|
|
|
|
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|
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Deposits: |
|
|
|
|
|
|
|
|
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Interest-bearing checking and money market accounts |
$ 22,172 |
|
$ 30,700 |
|
$ 32,146 |
|
-28 % |
|
-31 % |
Savings accounts |
8,171 |
|
8,773 |
|
10,302 |
|
-7 % |
|
-21 % |
Certificates of deposit |
26,763 |
|
21,554 |
|
19,355 |
|
24 % |
|
38 % |
Non-interest-bearing accounts |
17,752 |
|
20,499 |
|
22,997 |
|
-13 % |
|
-23 % |
Total deposits |
74,858 |
|
81,526 |
|
84,800 |
|
-8 % |
|
-12 % |
Borrowed funds: |
|
|
|
|
|
|
|
|
|
Wholesale borrowings |
25,708 |
|
20,250 |
|
20,350 |
|
27 % |
|
26 % |
Junior subordinated debentures |
580 |
|
579 |
|
576 |
|
— % |
|
1 % |
Subordinated notes |
439 |
|
438 |
|
434 |
|
— % |
|
1 % |
Total borrowed funds |
26,727 |
|
21,267 |
|
21,360 |
|
26 % |
|
25 % |
Other liabilities |
2,330 |
|
2,897 |
|
6,764 |
|
-20 % |
|
-66 % |
Total liabilities |
103,915 |
|
105,690 |
|
112,924 |
|
-2 % |
|
-8 % |
Mezzanine equity: |
|
|
|
|
|
|
|
|
|
Preferred stock - Series B and C |
595 |
|
— |
|
— |
|
NM |
|
NM |
Stockholders' equity: |
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|
|
|
|
|
|
|
Preferred stock - Series A |
503 |
|
503 |
|
503 |
|
— % |
|
— % |
Common stock |
8 |
|
7 |
|
7 |
|
14 % |
|
14 % |
Paid-in capital in excess of par |
8,648 |
|
8,231 |
|
8,197 |
|
5 % |
|
6 % |
Retained earnings |
73 |
|
443 |
|
2,923 |
|
-84 % |
|
-98 % |
|
(225) |
|
(218) |
|
(219) |
|
3 % |
|
3 % |
Accumulated other comprehensive loss, net of tax: |
|
|
|
|
|
|
|
|
|
Net unrealized loss on securities available for sale, net of tax |
(651) |
|
(581) |
|
(566) |
|
12 % |
|
15 % |
Pension and post-retirement obligations, net of tax |
(27) |
|
(28) |
|
(44) |
|
-4 % |
|
-39 % |
Net unrealized gain (loss) on cash flow hedges, net of tax |
61 |
|
10 |
|
(19) |
|
510 % |
|
-421 % |
Total accumulated other comprehensive loss, net of tax |
(617) |
|
(599) |
|
(629) |
|
3 % |
|
-2 % |
Total stockholders' equity |
8,390 |
|
8,367 |
|
10,782 |
|
— % |
|
-22 % |
Total liabilities, Mezzanine and Stockholders' Equity |
$ 112,900 |
|
$ 114,057 |
|
$ 123,706 |
|
-1 % |
|
-9 % |
CONSOLIDATED STATEMENTS OF (LOSS) INCOME |
|||||||||
|
|||||||||
|
|
|
|
|
|
|
|
||
|
For the Three Months Ended |
|
compared to |
||||||
|
|
|
|
|
|
|
|
|
|
(dollars in millions, except per share data) |
|
|
|
|
|
|
|
|
|
Interest Income: |
|
|
|
|
|
|
|
|
|
Loans and leases |
$ 1,193 |
|
$ 1,230 |
|
$ 867 |
|
-3 % |
|
38 % |
Securities and money market investments |
320 |
|
217 |
|
167 |
|
47 % |
|
92 % |
Total interest income |
1,513 |
|
1,447 |
|
1,034 |
|
5 % |
|
46 % |
|
|
|
|
|
|
|
|
|
|
Interest Expense: |
|
|
|
|
|
|
|
|
|
Interest-bearing checking and money market accounts |
232 |
|
286 |
|
157 |
|
-19 % |
|
48 % |
Savings accounts |
47 |
|
47 |
|
39 |
|
— % |
|
21 % |
Certificates of deposit |
291 |
|
210 |
|
87 |
|
39 % |
|
234 % |
Borrowed funds |
319 |
|
164 |
|
196 |
|
95 % |
|
63 % |
Total interest expense |
889 |
|
707 |
|
479 |
|
26 % |
|
86 % |
Net interest income |
624 |
|
740 |
|
555 |
|
-16 % |
|
12 % |
Provision for credit losses |
315 |
|
552 |
|
170 |
|
-43 % |
|
85 % |
Net interest income after provision for credit losses |
309 |
|
188 |
|
385 |
|
64 % |
|
-20 % |
|
|
|
|
|
|
|
|
|
|
Non-Interest Income: |
|
|
|
|
|
|
|
|
|
Fee income |
34 |
|
39 |
|
27 |
|
-13 % |
|
26 % |
Bank-owned life insurance |
10 |
|
11 |
|
10 |
|
-9 % |
|
— % |
Net losses on securities |
— |
|
— |
|
— |
|
NM |
|
NM |
Net return on mortgage servicing rights |
21 |
|
33 |
|
22 |
|
-36 % |
|
-5 % |
Net gain on loan sales and securitizations |
20 |
|
16 |
|
20 |
|
25 % |
|
— % |
Net loan administration income |
16 |
|
17 |
|
7 |
|
-6 % |
|
129 % |
Bargain purchase gain |
(121) |
|
(11) |
|
2,001 |
|
NM |
|
NM |
Other income |
29 |
|
22 |
|
11 |
|
32 % |
|
164 % |
Total non-interest income |
9 |
|
127 |
|
2,098 |
|
-93 % |
|
-100 % |
|
|
|
|
|
|
|
|
|
|
Non-Interest Expense: |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Compensation and benefits |
333 |
|
295 |
|
219 |
|
13 % |
|
52 % |
Other |
288 |
|
312 |
|
173 |
|
-8 % |
|
66 % |
Total operating expenses |
621 |
|
607 |
|
392 |
|
2 % |
|
58 % |
Intangible asset amortization |
35 |
|
36 |
|
17 |
|
-3 % |
|
106 % |
Merger-related and restructuring expenses |
43 |
|
63 |
|
67 |
|
-32 % |
|
-36 % |
|
— |
|
2,426 |
|
— |
|
|
|
|
Total non-interest expense |
699 |
|
3,132 |
|
476 |
|
-78 % |
|
47 % |
(Loss) income before income taxes |
(381) |
|
(2,817) |
|
2,007 |
|
-86 % |
|
-119 % |
Income tax (benefit) expense |
(54) |
|
(112) |
|
1 |
|
-52 % |
|
NM |
Net (loss) income |
(327) |
|
(2,705) |
|
2,006 |
|
-88 % |
|
-116 % |
Preferred stock dividends |
8 |
|
8 |
|
8 |
|
— % |
|
— % |
Net (loss) income available to common stockholders |
$ (335) |
|
$ (2,713) |
|
$ 1,998 |
|
-88 % |
|
-117 % |
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per common share |
$ (0.45) |
|
$ (3.76) |
|
$ 2.88 |
|
NM |
|
NM |
Diluted (loss) earnings per common share |
$ (0.45) |
|
$ (3.76) |
|
$ 2.87 |
|
NM |
|
NM |
Dividends per common share |
$ 0.05 |
|
$ 0.17 |
|
$ 0.17 |
|
-71 % |
|
-71 % |
RECONCILIATIONS OF CERTAIN GAAP AND NON-GAAP FINANCIAL MEASURES
(dollars in millions)
While stockholders' equity, total assets, and book value per share are financial measures that are recorded in accordance with
- Tangible stockholders' equity is an important indication of the Company's ability to grow organically and through business combinations, as well as its ability to pay dividends and to engage in various capital management strategies.
- Returns on average tangible assets and average tangible stockholders' equity are among the profitability measures considered by current and prospective investors, both independent of, and in comparison with, the Company's peers.
- Tangible book value per share and the ratio of tangible stockholders' equity to tangible assets are among the capital measures considered by current and prospective investors, both independent of, and in comparison with, its peers.
Tangible stockholders' equity, tangible assets, and the related non-GAAP profitability and capital measures should not be considered in isolation or as a substitute for stockholders' equity, total assets, or any other profitability or capital measure calculated in accordance with GAAP. Moreover, the manner in which we calculate these non-GAAP measures may differ from that of other companies reporting non-GAAP measures with similar names.
The following table presents reconciliations of our common stockholders' equity and tangible common stockholders' equity, our total assets and tangible assets, and the related GAAP and non-GAAP profitability and capital measures at or for the periods indicated:
|
At or for the |
|
|
|
|
||||
|
Three Months Ended, |
|
|
|
|
||||
(dollars in millions) |
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity |
$ 8,390 |
|
$ 8,367 |
|
$ 10,782 |
|
|
|
|
Less: |
(590) |
|
(625) |
|
(3,160) |
|
|
|
|
Less: Preferred stock |
(503) |
|
(503) |
|
(503) |
|
|
|
|
Tangible common stockholders' equity |
$ 7,297 |
|
$ 7,239 |
|
$ 7,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
$ 112,900 |
|
$ 114,057 |
|
$ 123,706 |
|
|
|
|
Less: |
(590) |
|
(625) |
|
(3,160) |
|
|
|
|
Tangible Assets |
$ 112,310 |
|
$ 113,432 |
|
$ 120,546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common stockholders' equity |
$ 7,900 |
|
$ 10,533 |
|
$ 8,670 |
|
|
|
|
Less: Average goodwill and other intangible assets |
(613) |
|
(3,048) |
|
(2,698) |
|
|
|
|
Average tangible common stockholders' equity |
$ 7,287 |
|
$ 7,485 |
|
$ 5,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Assets |
$ 115,726 |
|
$ 111,683 |
|
$ 94,530 |
|
|
|
|
Less: Average goodwill and other intangible assets |
(613) |
|
(3,048) |
|
(2,698) |
|
|
|
|
Average tangible assets |
$ 115,113 |
|
$ 108,635 |
|
$ 91,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP MEASURES: |
|
|
|
|
|
|
|
|
|
(Loss) return on average assets (1) |
(1.13) % |
|
(9.69) % |
|
8.49 % |
|
|
|
|
(Loss) return on average common stockholders' equity (2) |
(16.97) |
|
(103.01) |
|
92.18 |
|
|
|
|
Book value per common share |
$ 9.81 |
|
$ 10.88 |
|
$ 14.23 |
|
|
|
|
Common stockholders' equity to total assets |
6.99 % |
|
6.90 % |
|
8.31 % |
|
|
|
|
NON-GAAP MEASURES: |
|
|
|
|
|
|
|
|
|
(Loss) return on average tangible assets (1) |
(0.61) % |
|
(0.68) % |
|
0.73 % |
|
|
|
|
(Loss) return on average tangible common stockholders' equity (2) |
(10.02) % |
|
(10.27) |
|
10.63 |
|
|
|
|
Tangible book value per common share |
$ 9.07 |
|
$ 10.03 |
|
$ 9.86 |
|
|
|
|
Tangible common stockholders' equity to tangible assets |
6.50 % |
|
6.38 % |
|
5.91 % |
|
|
|
|
|
|
(1) |
To calculate return on average assets for a period, we divide net income, or non-GAAP net income, generated during that period by average assets recorded during that period. To calculate return on average tangible assets for a period, we divide net income by average tangible assets recorded during that period. |
(2) |
To calculate return on average common stockholders' equity for a period, we divide net income available to common stockholders, or non-GAAP net income available to common stockholders, generated during that period by average common stockholders' equity recorded during that period. To calculate return on average tangible common stockholders' equity for a period, we divide net income available to common stockholders generated during that period by average tangible common stockholders' equity recorded during that period. |
While diluted earnings per common share, net income, net income available to common stockholders, and total non-interest income are financial measures that are recorded in accordance with GAAP, financial measures that adjust these GAAP measures to exclude expenses and the bargain purchase gains related to our merger with Flagstar and the Signature transaction, and initial provision for credit losses are not. Nevertheless, it is management's belief that these non-GAAP measures should be disclosed in our earnings release and other investor communications because they are not considered part of recurring operations and are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.
|
For the Three Months Ended |
||||
(dollars in millions, except per share data) |
|
|
|
|
|
Net (loss) income - GAAP |
$ (327) |
|
$ (2,704) |
|
$ 2,006 |
Merger-related and restructuring expenses, net of tax (1) |
32 |
|
46 |
|
50 |
|
— |
|
2,426 |
|
— |
|
— |
|
36 |
|
— |
Bargain purchase gain |
121 |
|
11 |
|
(2,001) |
Initial provision for credit losses, net of tax |
— |
|
— |
|
97 |
Provision for bond related credit losses, net of tax |
— |
|
— |
|
15 |
Net (loss) income, as adjusted - non-GAAP |
$ (174) |
|
$ (185) |
|
$ 167 |
Preferred stock dividends |
8 |
|
8 |
|
8 |
Net (loss) income available to common stockholders, as adjusted - non-GAAP |
$ (182) |
|
$ (193) |
|
$ 159 |
|
|
|
|
|
|
Diluted (loss) earnings per common share - GAAP |
$ (0.45) |
|
$ (3.76) |
|
$ 2.87 |
Diluted (loss) earnings per common share, as adjusted - non-GAAP |
$ (0.25) |
|
$ (0.27) |
|
$ 0.23 |
(1) |
Certain merger-related items are not taxable or deductible. |
While net income is a financial measure that is calculated in accordance with GAAP, PPNR and PPNR excluding bargain purchase gains,
|
|
|
|
|
|
|
|
||
|
For the Three Months Ended |
|
compared to: |
||||||
|
|
|
|
|
|
|
|
|
|
(dollars in millions) |
|
||||||||
Net interest income |
$ 624 |
|
$ 740 |
|
$ 555 |
|
-16 % |
|
12 % |
Non-interest income |
9 |
|
127 |
|
2,098 |
|
-93 % |
|
NM |
Total revenues |
$ 633 |
|
$ 867 |
|
$ 2,653 |
|
-27 % |
|
-76 % |
Total non-interest expense |
699 |
|
3,132 |
|
476 |
|
NM |
|
47 % |
Pre - provision net revenue (non-GAAP) |
$ (66) |
|
$ (2,265) |
|
$ 2,177 |
|
NM |
|
NM |
Bargain purchase gain |
121 |
|
11 |
|
(2,001) |
|
NM |
|
NM |
Provision for bond related credit losses |
— |
|
— |
|
20 |
|
NM |
|
NM |
Merger-related and restructuring expenses |
43 |
|
63 |
|
67 |
|
-32 % |
|
-36 % |
|
— |
|
2,426 |
|
— |
|
|
|
|
|
— |
|
49 |
|
— |
|
NM |
|
NM |
Pre - provision net revenue excluding merger-related and restructuring expenses and bargain purchase gain, as adjusted (non-GAAP) |
$ 98 |
|
$ 284 |
|
$ 263 |
|
-66 % |
|
-63 % |
Provision for credit losses |
315 |
|
552 |
|
170 |
|
-43 % |
|
85 % |
Bargain purchase gain |
(121) |
|
(11) |
|
2,001 |
|
NM |
|
NM |
Provision for bond related credit losses |
— |
|
— |
|
(20) |
|
NM |
|
NM |
Merger-related and restructuring expenses |
(43) |
|
(63) |
|
(67) |
|
-32 % |
|
-36 % |
|
— |
|
(2,426) |
|
— |
|
NM |
|
NM |
|
— |
|
(49) |
|
— |
|
NM |
|
NM |
(Loss) income before taxes |
$ (381) |
|
$ (2,817) |
|
$ 2,007 |
|
-86 % |
|
NM |
Income tax (benefit) expense |
(54) |
|
(112) |
|
1 |
|
-52 % |
|
NM |
Net (Loss) Income (GAAP) |
$ (327) |
|
$ (2,705) |
|
$ 2,006 |
|
-88 % |
|
-116 % |
NET INTEREST INCOME ANALYSIS LINKED-QUARTER AND YEAR-OVER-YEAR COMPARISONS (dollars in millions) |
|||||||||||
|
|||||||||||
|
For the Three Months Ended |
||||||||||
|
|
|
|
|
|
||||||
(dollars in millions) |
Average Balance |
Interest |
Average Yield/Cost |
|
Average Balance |
Interest |
Average Yield/Cost |
|
Average Balance |
Interest |
Average Yield/Cost |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
Mortgage and other loans, net |
$ 84,123 |
$ 1,193 |
5.68 % |
|
$ 85,671 |
$ 1,230 |
5.72 % |
|
$ 70,774 |
$ 867 |
4.92 % |
Securities |
11,576 |
123 |
4.30 |
|
11,493 |
126 |
4.39 |
|
10,850 |
104 |
3.86 |
Reverse repurchase agreements |
— |
— |
— |
|
46 |
1 |
6.91 |
|
785 |
11 |
5.53 |
Interest-earning cash and cash equivalents |
14,345 |
197 |
5.52 |
|
6,753 |
90 |
5.28 |
|
4,257 |
52 |
4.96 |
Total interest-earning assets |
110,044 |
$ 1,513 |
5.51 |
|
103,963 |
$ 1,447 |
5.55 |
|
86,666 |
$ 1,034 |
4.80 |
Non-interest-earning assets |
5,682 |
|
|
|
7,719 |
|
|
|
7,864 |
|
|
Total assets |
$ 115,726 |
|
|
|
$ 111,683 |
|
|
|
$ 94,530 |
|
|
Liabilities and Stockholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking and money market accounts |
$ 26,428 |
$ 232 |
3.54 % |
|
$ 31,958 |
$ 286 |
3.55 % |
|
$ 23,098 |
$ 157 |
2.76 % |
Savings accounts |
8,400 |
47 |
2.24 |
|
9,055 |
47 |
2.03 |
|
11,093 |
39 |
1.44 |
Certificates of deposit |
24,711 |
291 |
4.74 |
|
18,491 |
210 |
4.52 |
|
13,712 |
87 |
2.57 |
Total interest-bearing deposits |
59,539 |
570 |
3.85 |
|
59,504 |
543 |
3.62 |
|
47,903 |
283 |
2.40 |
Borrowed funds |
25,728 |
319 |
4.99 |
|
15,714 |
164 |
4.14 |
|
22,326 |
196 |
3.56 |
Total interest-bearing liabilities |
85,267 |
$ 889 |
4.19 |
|
75,218 |
$ 707 |
3.73 |
|
70,229 |
$ 479 |
2.77 |
Non-interest-bearing deposits |
19,355 |
|
|
|
22,676 |
|
|
|
13,189 |
|
|
Other liabilities |
2,563 |
|
|
|
2,753 |
|
|
|
1,939 |
|
|
Total liabilities |
107,185 |
|
|
|
100,647 |
|
|
|
85,357 |
|
|
Stockholders' equity |
8,541 |
|
|
|
11,036 |
|
|
|
9,173 |
|
|
Total liabilities and stockholders' equity |
$ 115,726 |
|
|
|
$ 111,683 |
|
|
|
$ 94,530 |
|
|
Net interest income/interest rate spread |
|
$ 624 |
1.32 % |
|
|
$ 740 |
1.82 % |
|
|
$ 555 |
2.03 % |
Net interest margin |
|
|
2.28 % |
|
|
|
2.82 % |
|
|
|
2.60 % |
Ratio of interest-earning assets to interest-bearing liabilities |
|
|
1.29 x |
|
|
|
1.38 x |
|
|
|
1.23 x |
CONSOLIDATED FINANCIAL HIGHLIGHTS (dollars in millions) |
|||||
|
|||||
|
For the Three Months Ended |
||||
(dollars in millions, except share and per share data) |
|
|
|
|
|
PROFITABILITY MEASURES: |
|
|
|
|
|
Net (loss) income |
$ (327) |
|
$ (2,705) |
|
$ 2,006 |
Net (loss) income available to common stockholders |
(335) |
|
(2,713) |
|
1,998 |
Basic earnings per common share |
(0.45) |
|
(3.76) |
|
2.88 |
Diluted earnings per common share |
(0.45) |
|
(3.76) |
|
2.87 |
(Loss) return on average assets |
(1.13) % |
|
(9.69) % |
|
8.49 % |
(Loss) return on average tangible assets (1) |
(0.61) |
|
(0.68) |
|
0.73 |
(Loss) return on average common stockholders' equity |
(16.97) |
|
(103.01) |
|
92.18 |
(Loss) return on average tangible common stockholders' equity (1) |
(10.02) |
|
(10.27) |
|
10.63 |
Efficiency ratio (2) |
82.47 |
|
68.99 |
|
60.21 |
Operating expenses to average assets |
2.15 |
|
2.17 |
|
1.66 |
Interest rate spread |
1.32 |
|
1.82 |
|
2.03 |
Net interest margin |
2.28 |
|
2.82 |
|
2.60 |
Effective tax rate |
14.32 |
|
3.96 |
|
0.03 |
Shares used for basic common EPS computation |
740,047,777 |
|
722,424,143 |
|
686,911,555 |
Shares used for diluted common EPS computation |
740,047,777 |
|
722,424,143 |
|
688,271,611 |
Common shares outstanding at the respective period-ends |
804,285,598 |
|
722,066,370 |
|
722,150,297 |
|
|
(1) |
See the reconciliations of these non-GAAP measures with the comparable GAAP measures on page 13 of this release. |
(2) |
We calculate our efficiency ratio by dividing our operating expenses by the sum of our net interest income and non-interest income, excluding the bargain purchase gain. |
|
|
|
|
|
|
CAPITAL MEASURES: |
|
|
|
|
|
Book value per common share |
$ 9.81 |
|
$ 10.88 |
|
$ 14.23 |
Tangible book value per common share - as reported (1) |
9.07 |
|
10.03 |
|
9.86 |
Tangible book value per common share - as converted (1) |
6.33 |
|
N/A |
|
N/A |
Common stockholders' equity to total assets |
6.99 % |
|
6.90 % |
|
8.31 % |
Tangible common stockholders' equity to tangible assets (1) |
6.50 |
|
6.38 |
|
5.91 |
|
|
(1) |
See the reconciliations of these non-GAAP measures with the comparable GAAP measures on page 13 of this release. |
CONSOLIDATED FINANCIAL HIGHLIGHTS
ASSET QUALITY SUMMARY
The following table presents the Company's asset quality measures at the respective dates:
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
compared to |
||
(dollars in millions) |
|
|
|
|
|
|
|
|
|
Non-Performing Loans: |
|
|
|
|
|
|
|
|
|
Non-accrual mortgage loans: |
|
|
|
|
|
|
|
|
|
Multi-family |
$ 339 |
|
$ 138 |
|
$ 13 |
|
146 % |
|
NM |
Commercial real estate |
264 |
|
128 |
|
21 |
|
106 % |
|
NM |
One-to-four family first mortgage |
98 |
|
95 |
|
84 |
|
3 % |
|
17 % |
Acquisition, development, and construction |
3 |
|
2 |
|
— |
|
50 % |
|
NM |
Total non-accrual mortgage loans |
704 |
|
363 |
|
118 |
|
94 % |
|
497 % |
Commercial and industrial |
73 |
|
43 |
|
15 |
|
70 % |
|
387 % |
Other non-accrual loans |
21 |
|
22 |
|
15 |
|
-5 % |
|
40 % |
Total non-accrual loans |
798 |
|
428 |
|
148 |
|
86 % |
|
439 % |
Loans 90 days or more past due and still accruing |
— |
|
— |
|
13 |
|
NM |
|
-100 % |
Total non-performing loans |
798 |
|
428 |
|
161 |
|
86 % |
|
396 % |
Repossessed assets |
13 |
|
14 |
|
13 |
|
-7 % |
|
— % |
Total non-performing assets |
811 |
|
442 |
|
174 |
|
83 % |
|
366 % |
|
|
|
|
|
|
|
|
|
|
The following table presents the Company's asset quality measures at the respective dates:
|
|
|
|
|
|
Non-performing loans to total loans held for investment |
0.97 % |
|
0.51 % |
|
0.20 % |
Non-performing assets to total assets |
0.72 |
|
0.39 |
|
0.14 |
Allowance for credit losses on loans to non-performing loans |
152.11 |
|
231.51 |
|
340.60 |
Allowance for credit losses on loans to total loans held for investment |
1.48 |
|
1.17 |
|
0.67 |
SUPPLEMENTAL FINANCIAL INFORMATION
The following table presents the Company's loans 30 to 89 days past due at the respective dates:
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
compared to |
||
(dollars in millions) |
|
|
|
|
|
|
|
|
|
Loans 30 to 89 Days Past Due: |
|
|
|
|
|
|
|
|
|
Multi-family |
$ 103 |
|
$ 121 |
|
$ 72 |
|
-15 % |
|
43 % |
Commercial real estate |
9 |
|
28 |
|
15 |
|
-68 % |
|
-40 % |
One-to-four family first mortgage |
26 |
|
40 |
|
20 |
|
-35 % |
|
30 % |
Acquisition, development, and construction |
6 |
|
2 |
|
— |
|
200 % |
|
NM |
Commercial and industrial |
60 |
|
37 |
|
57 |
|
62 % |
|
5 % |
Other loans |
8 |
|
22 |
|
11 |
|
-64 % |
|
-27 % |
Total loans 30 to 89 days past due |
$ 212 |
|
$ 250 |
|
$ 175 |
|
-15 % |
|
21 % |
The following table summarizes the Company's net charge-offs (recoveries) for the respective periods:
|
For the Three Months Ended |
||||
|
|
|
|
|
|
(dollars in millions) |
|
|
|
|
|
Charge-offs: |
|
|
|
|
|
Multi-family |
$ 11 |
|
$ 117 |
|
$ — |
Commercial real estate |
64 |
|
42 |
|
— |
One-to-four family residential |
— |
|
1 |
|
2 |
Acquisition, development and construction |
— |
|
— |
|
— |
Commercial and industrial |
11 |
|
24 |
|
— |
Other |
5 |
|
5 |
|
3 |
Total charge-offs |
$ 91 |
|
$ 189 |
|
$ 5 |
|
|
|
|
|
|
Recoveries: |
|
|
|
|
|
Multi-family |
$ (1) |
|
$ — |
|
$ — |
Commercial real estate |
— |
|
— |
|
— |
One-to-four family residential |
— |
|
— |
|
— |
Acquisition, development and construction |
— |
|
— |
|
— |
Commercial and industrial |
(7) |
|
(3) |
|
(4) |
Other |
(2) |
|
(1) |
|
(1) |
Total recoveries |
$ (10) |
|
$ (4) |
|
$ (5) |
|
|
|
|
|
|
Net charge-offs (recoveries) |
$ 81 |
|
$ 185 |
|
$ — |
|
|
|
|
|
|
Net charge-offs (recoveries) to average loans (1) |
0.10 % |
|
0.22 % |
|
— % |
|
|
(1) |
Three months ended presented on a non-annualized basis. |
|
|||||
SUPPLEMENTAL FINANCIAL INFORMATION |
|||||
|
|||||
LOANS SERVICED AND SUBSERVICED |
|||||
|
|||||
|
|
|
|
||
(dollars in millions) |
Unpaid Principal Balance (1) |
Number of accounts |
|
Unpaid Principal Balance (1) |
Number of accounts |
Subserviced for others (2) |
$ 282,399 |
987,228 |
|
$ 294,947 |
1,044,009 |
Serviced for others (3) |
76,890 |
319,890 |
|
78,336 |
307,479 |
Serviced for own loan portfolio (4) |
8,034 |
50,447 |
|
8,941 |
70,486 |
Total loans serviced |
$ 367,323 |
1,357,565 |
|
$ 382,224 |
1,421,974 |
|
|
(1) |
UPB, net of write downs, does not include premiums or discounts. |
(2) |
Loans subserviced for a fee for non-Company owned loans or MSRs. Includes temporary short-term subservicing performed as a result of sales of servicing-released MSRs. |
(3) |
Loans for which the Company 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. |
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