EX-99.1 2 pressrelease-q42021.htm EX-99.1 Document



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EXHIBIT 99.1
NEWS RELEASE
For more information, contact:        
Kenneth Schellenberg
FBCInvestorRelations@flagstar.com
(248) 312-5741
                                
                                        
Flagstar Bancorp Reports Fourth Quarter 2021 Net Income of $85 Million, or $1.60 Per Diluted Share

Key Highlights - Fourth Quarter 2021

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

TROY, Mich., Jan. 26, 2022 – Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, today reported fourth quarter 2021 net income of $85 million, or $1.60 per diluted share, compared to third quarter 2021 net income of $152 million, or $2.83 per diluted share. Flagstar reported 2021 net income of $533 million, or $9.96 per diluted share for the full year 2021, compared to 2020 net income of $538 million, or $9.52 per diluted share.

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

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

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

"We closed the quarter and the year with lots of positives. We have robust capital, ample liquidity and excellent asset quality. Our charge-offs were minimal, our delinquencies low, and our coverage ratio remains strong at 2 percent, excluding warehouse loans. Total risk-based capital reached 15.9 percent at year end, and we continue to generate plenty of excess capital. Along with our strong liquidity, this gives us the flexibility to fund the balance sheet and support investments in our infrastructure and business segments. In all, historically, this is our best balance sheet ever.
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"As we prepare for the close of our previously announced merger with New York Community Bank, we will continue to execute on the business plan that has served our shareholders so well and brought us to this pivotal point in the history of our company."

Income Statement Highlights
Three Months Ended
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020
(Dollars in millions, except per share data)
Net interest income $181 $195 $183 $189 $189 
(Benefit) provision for credit losses (17)(23)(44)(28)2 
Noninterest income 202 266 252 324 332 
Noninterest expense 291 286 289 347 314 
Income before income taxes 109 198 190 194 205 
Provision for income taxes 24 46 43 45 51 
Net income$85 $152 $147 $149 $154 
Income per share:
Basic$1.62 $2.87 $2.78 $2.83 $2.86 
Diluted$1.60 $2.83 $2.74 $2.80 $2.83 

Adjusted Income Statement Highlights (Non-GAAP)(1)
Three Months Ended
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020
(Dollars in millions, except per share data)
Net interest income $181 $195 $183 $189 $189 
(Benefit) provision for credit losses (17)(23)(44)(28)2 
Noninterest income 202 266 252 324 332 
Noninterest expense 285 281 290 312 314 
Income before income taxes 115 203 189 229 205 
Provision for income taxes 25 47 43 53 51 
Net income$90 $156 $146 $176 $154 
Income per share:
Basic$1.71 $2.94 $2.78 $3.34 $2.86 
Diluted$1.69 $2.90 $2.74 $3.31 $2.83 
(1)See Non-GAAP Reconciliation for further information.


Key Ratios
Three Months Ended
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020
Net interest margin 2.96 %3.00 %2.90 %2.82 %2.78 %
Adjusted net interest margin (1)2.98 %3.04 %3.06 %3.02 %2.98 %
Return on average assets1.3 %2.2 %2.1 %2.0 %2.1 %
Return on average common equity 12.7 %23.4 %24.0 %25.7 %27.6 %
Efficiency ratio75.9 %62.2 %66.6 %67.7 %60.4 %
HFI loan-to-deposit ratio67.2 %68.8 %71.8 %74.4 %74.5 %
Adjusted HFI loan-to-deposit ratio (2)60.5 %60.3 %64.3 %66.3 %69.8 %
(1)Excludes loans with government guarantees available for repurchase. See Non-GAAP Reconciliation for further information.
(2)Excludes warehouse loans and custodial deposits. See Non-GAAP Reconciliation for further information.
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Average Balance Sheet Highlights
Three Months Ended% Change
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020		SeqYr/Yr
(Dollars in millions)
Average interest-earning assets $24,291 $25,656 $25,269 $27,178 $27,100 (5)%(10)%
Average loans held-for-sale (LHFS)6,384 7,839 6,902 7,464 5,672 (19)%13 %
Average loans held-for-investment (LHFI)13,314 13,540 13,688 14,915 15,703 (2)%(15)%
Average total deposits 19,816 19,686 19,070 20,043 21,068 1 %(6)%

Net Interest Income

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

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

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

Provision for Credit Losses

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

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

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

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

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

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

Mortgage Metrics
As of/Three Months EndedChange (% / bps)
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020		SeqYr/Yr
(Dollars in millions)
Mortgage rate lock commitments (fallout-adjusted) (1) (2)$8,900 $11,300 $12,400 $12,300 $12,000 (21)%(26)%
Mortgage loans closed (1)$10,700 $12,500 $12,800 $13,800 $13,100 (15)%(19)%
Net margin on mortgage rate lock commitments (fallout-adjusted) (2) 1.02 %1.50 %1.35 %1.84 %1.93 %(48)(91)
Net gain on loan sales$91 $169 $168 $227 $232 (46)%(61)%
Net return (loss) on mortgage servicing rights (MSR)$19 $9 $(5)$— $— N/MN/M
Gain on loan sales + net return on the MSR$110 $178 $163 $227 $232 (38)%(53)%
Loans serviced (number of accounts - 000's) (3)1,234 1,203 1,182 1,148 1,085 3%14%
Capitalized value of MSRs1.12 %1.08 %1.00 %1.06 %0.86 %426
N/M - Not meaningful
(1) Rounded to the nearest hundred million
(2) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates.
(3) Includes loans serviced for Flagstar's own loan portfolio, serviced for others, and subserviced for others.

Noninterest Expense

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

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

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

Income Taxes

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

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Asset Quality
Credit Quality Ratios
As of/Three Months EndedChange (% / bps)
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020		SeqYr/Yr
(Dollars in millions)
Allowance for credit losses (1)$170 $190 $220 $265 $280 (11)%(39)%
Credit reserves to LHFI1.27 %1.33 %1.57 %1.78 %1.73 %(6)-46
Credit reserves to LHFI excluding warehouse1.96 %2.29 %2.63 %3.11 %3.20 %(33)(124)
Net (recoveries) charge-offs$3 $6 $1 $(13)$2 (50)%50%
Total nonperforming LHFI and TDRs$94 $96 $75 $60 $56 (2)%68%
Net (recoveries) charge-offs to LHFI ratio (annualized)0.08 %0.19 %0.01 %(0.35)%0.04 %(11)4
Ratio of nonperforming LHFI and TDRs to LHFI0.70 %0.66 %0.53 %0.40 %0.34 %436
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (2):
Residential first mortgage 0.04 %— %0.16 %0.31 %0.11 %4(7)
Home equity and other consumer0.14 %0.01 %0.15 %0.16 %0.06 %138
Commercial real estate— %0.03 %— %(0.01)%— %(3)—
Commercial and industrial 0.53 %1.87 %0.04 %(4.12)%0.21 %(134)32
N/M - Not meaningful
(1) Includes the allowance for loan losses and the reserve on unfunded commitments.
(2) Excludes loans carried under the fair value option.

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

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

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

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Capital
Capital Ratios (Bancorp)Change (% / bps)
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020		SeqYr/Yr
Tier 1 leverage (to adj. avg. total assets)10.54 %9.72 %9.21 %8.11 %7.71 %82283
Tier 1 common equity (to RWA)13.19 %11.95 %11.38 %10.31 %9.15 %124404
Tier 1 capital (to RWA)14.43 %13.11 %12.56 %11.45 %10.23 %132420
Total capital (to RWA)15.88 %14.55 %14.13 %13.18 %11.89 %133399
Tangible common equity to asset ratio (1)10.09 %9.23 %8.67 %7.48 %6.58 %86351
Tangible book value per share (1) $48.33 $47.21 $44.38 $41.77 $38.80 2%25%
(1)See Non-GAAP Reconciliation for further information.

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

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

About Flagstar

Flagstar Bancorp, Inc. (NYSE: FBC) is a $25.5 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 158 branches in Michigan, Indiana, California, Wisconsin and Ohio. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 83 retail locations in 28 states. Flagstar is a leading national originator and servicer of mortgage and other consumer loans, handling payments and record keeping for $291 billion of loans representing over 1.2 million borrowers. For more information, please visit flagstar.com.

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Use of Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this news release includes certain non-GAAP financial measures. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar.

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

Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in this news release. Additional discussion of the use of non-GAAP measures can also be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website at flagstar.com.

Cautionary Statements Regarding Forward-Looking Statements

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

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

Additionally, forward‐looking statements speak only as of the date they are made; NYCB and Flagstar do not assume any duty, and do not undertake, to update such forward‐looking statements. Furthermore, because forward‐looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of NYCB and Flagstar. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement among NYCB, 615 Corp. and Flagstar; the outcome of any legal proceedings that may be instituted against NYCB or Flagstar; the possibility that the proposed transaction will not close when expected or at all because required regulatory, or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated; the ability of NYCB and Flagstar to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of NYCB or Flagstar; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of
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the strength of the economy and competitive factors in the areas where NYCB and Flagstar do business certain restrictions during the pendency of the proposed transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions; the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the proposed transaction within the expected timeframes or at all and to successfully integrate Flagstar’s operations and those of NYCB; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; NYCB’s and Flagstar’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by NYCB’s issuance of additional shares of its capital stock in connection with the proposed transaction; and other factors that may affect future results of NYCB and Flagstar; and the other factors discussed in the “Risk Factors” section NYCB’s Annual Report on Form 10‐K for the year ended December 31, 2021 and in other reports NYCB files with the U.S. Securities and Exchange Commission (the “SEC”), which are available at http://www.sec.gov and in the “SEC Filings” section of NYCB’s website, https://ir.mynycb.com, under the heading “Financial Information,” and in Flagstar’s Annual Report on Form 10-K for the year ended December 31, 2021 and in Flagstar’s other filings with SEC, which are available at http://www.sec.gov and in the “Documents” section of Flagstar’s website, https://investors.flagstar.com.
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Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(Dollars in millions)
(Unaudited)
December 31,
2021		September 30, 2021December 31,
2020
Assets
Cash$277 $103 $251 
Interest-earning deposits774 46 372 
Total cash and cash equivalents1,051 149 623 
Investment securities available-for-sale1,804 1,802 1,944 
Investment securities held-to-maturity205 236 377 
Loans held-for-sale5,054 6,378 7,098 
Loans held-for-investment13,408 14,268 16,227 
Loans with government guarantees1,650 1,945 2,516 
Less: allowance for loan losses(154)(171)(252)
Total loans held-for-investment and loans with government guarantees, net14,904 16,042 18,491 
Mortgage servicing rights392 340 329 
Federal Home Loan Bank stock377 377 377 
Premises and equipment, net360 370 392 
Goodwill and intangible assets147 149 157 
Other assets1,189 1,199 1,250 
Total assets$25,483 $27,042 $31,038 
Liabilities and Stockholders’ Equity
Noninterest-bearing deposits$7,088 $8,108 $9,458 
Interest-bearing deposits10,921 11,228 10,515 
Total deposits18,009 19,336 19,973 
Short-term Federal Home Loan Bank advances and other1,880 1,870 3,900 
Long-term Federal Home Loan Bank advances1,400 1,400 1,200 
Other long-term debt396 396 641 
Loan with government guarantee repurchase options200 163 1,851 
Other liabilities880 1,232 1,272 
Total liabilities22,765 24,397 28,837 
Stockholders’ Equity
Common stock1 1 1 
Additional paid in capital1,355 1,362 1,346 
Accumulated other comprehensive income35 38 47 
Retained earnings1,327 1,244 807 
Total stockholders’ equity2,718 2,645 2,201 
Total liabilities and stockholders’ equity$25,483 $27,042 $31,038 

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Flagstar Bancorp, Inc.
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share data)
(Unaudited)
Change compared to:
Three Months Ended3Q214Q20
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020		AmountPercentAmountPercent
Interest Income
Total interest income$196 $209 $198 $208 $212 $(13)(6)%$(16)(8)%
Total interest expense15 14 15 19 23 1 7 %(8)(35)%
Net interest income181 195 183 189 189 (14)(7)%(8)(4)%
(Benefit) provision for credit losses(17)(23)(44)(28)2 6 (26)%(19)N/M
Net interest income after provision for credit losses198 218 227 217 187 (20)(9)%11 6 %
Noninterest Income
Net gain on loan sales91 169 168 227 232 (78)(46)%(141)(61)%
Loan fees and charges29 33 37 42 48 (4)(12)%(19)(40)%
Net return (loss) on the mortgage servicing rights19 9 (5)— — 10 N/M19 N/M
Loan administration income36 31 28 27 25 5 16 %11 44 %
Deposit fees and charges8 9 8 8 8 (1)(11)%— — %
Other noninterest income19 15 16 20 19 4 27 %— — %
Total noninterest income202 266 252 324 332 (64)(24)%(130)(39)%
Noninterest Expense
Compensation and benefits137 130 122 144 125 7 5 %12 10 %
Occupancy and equipment47 46 50 46 44 1 2 %3 7 %
Commissions38 44 51 62 70 (6)(14)%(32)(46)%
Loan processing expense21 22 22 21 24 (1)(5)%(3)(13)%
Legal and professional expense13 12 11 8 11 1 8 %2 18 %
Federal insurance premiums4 6 4 6 5 (2)(33)%(1)(20)%
Intangible asset amortization3 3 3 3 3 — — %— — %
Other noninterest expense28 23 26 57 32 5 22 %(4)(13)%
Total noninterest expense291 286 289 347 314 5 2 %(23)(7)%
Income before income taxes109 198 190 194 205 (89)(45)%(96)(47)%
Provision for income taxes24 46 43 45 51 (22)(48)%(27)(53)%
Net income$85 $152 $147 $149 $154 $(67)(44)%$(69)(45)%
Income per share
Basic$1.62 $2.87 $2.78 $2.83 $2.86 $(1.25)(44)%$(1.24)(43)%
Diluted$1.60 $2.83 $2.74 $2.80 $2.83 $(1.23)(43)%$(1.23)(43)%
Cash dividends declared$0.06 $0.06 $0.06 $0.06 $0.05 $— — %$0.01 20 %
N/M - Not meaningful

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Flagstar Bancorp, Inc.
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share data)
(Unaudited)

Twelve Months Ended Change
December 31,
2021		December 31,
2020		AmountPercent
Interest Income
Total interest income$810 $819 $(9)(1)%
Total interest expense63 134 (71)(53)%
Net interest income747 685 62 9 %
(Benefit) provision for credit losses(112)149 (261)N/M
Net interest income after provision for credit losses859 536 323 60 %
Noninterest Income
Net gain on loan sales655 971 (316)(33)%
Loan fees and charges141 150 (9)(6)%
Net return on the mortgage servicing rights23 10 13 N/M
Loan administration income121 84 37 44 %
Deposit fees and charges34 32 2 6 %
Other noninterest income70 63 7 11 %
Total noninterest income1,044 1,310 (266)(20)%
Noninterest Expense
Compensation and benefits533 466 67 14 %
Occupancy and equipment188 176 12 7 %
Commissions194 232 (38)(16)%
Loan processing expense86 83 3 4 %
Legal and professional expense45 31 14 45 %
Federal insurance premiums20 24 (4)(17)%
Intangible asset amortization11 13 (2)(15)%
Other noninterest expense136 117 19 16 %
Total noninterest expense1,213 1,142 71 6 %
Income before income taxes690 704 (14)(2)%
Provision for income taxes157 166 (9)(5)%
Net income$533 $538 $(5)(1)%
Income per share
Basic$10.10 $9.59 $0.51 5 %
Diluted$9.96 $9.52 $0.44 5 %
Cash dividends declared$0.24 $0.20 $0.04 20 %
N/M - Not meaningful
11

Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in millions, except share data)
(Unaudited)
Three Months EndedTwelve Months Ended
December 31,
2021		September 30, 2021December 31,
2020		December 31,
2021		December 31,
2020
Selected Mortgage Statistics (1):
Mortgage rate lock commitments (fallout-adjusted) (2) $8,900 $11,300 $12,000 $44,900 $52,000 
Mortgage loans closed$10,700 $12,500 $13,100 $49,800 $48,300 
Mortgage loans sold and securitized$12,100 $12,400 $12,000 $52,100 $46,900 
Selected Ratios:
Interest rate spread (3)2.79 %2.84 %2.44 %2.72 %2.40 %
Net interest margin2.96 %3.00 %2.78 %2.92 %2.80 %
Net margin on loans sold and securitized0.75 %1.36 %1.92 %1.26 %2.06 %
Return on average assets1.28 %2.16 %2.08 %1.89 %2.00 %
Adjusted return on average assets (4)1.35 %2.21 %2.08 %2.01 %2.00 %
Return on average common equity12.74 %23.40 %27.58 %21.21 %26.21 %
Return on average tangible common equity (5)13.79 %25.18 %30.13 %22.94 %29.00 %
Adjusted return on average tangible common equity (4) (5)14.90 %26.16 %30.13 %25.25 %29.00 %
Efficiency ratio75.9 %62.2 %60.4 %67.7 %57.2 %
Adjusted efficiency ratio (4)74.4 %61.1 %59.1 %65.8 %56.9 %
Common equity-to-assets ratio (average for the period)10.08 %9.24 %7.54 %8.92 %7.63 %
Average Balances:
Average interest-earning assets$24,291 $25,656 $27,100 $25,591 $24,431 
Average interest-bearing liabilities $14,093 $15,590 $13,782 $14,834 $14,413 
Average stockholders' equity$2,692 $2,592 $2,235 $2,514 $2,052 
(1)Rounded to nearest hundred million.
(2)Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates.
(3)Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.
(4)See Non-GAAP Reconciliation for further information.
(5)Excludes goodwill, intangible assets and the associated amortization. See Non-GAAP Reconciliation for further information.
December 31,
2021		September 30, 2021December 31,
2020
Selected Statistics:
Book value per common share $51.09 $50.04 $41.79 
Tangible book value per share (1)
$48.33 $47.21 $38.80 
Number of common shares outstanding 53,197,650 52,862,383 52,656,067 
Number of FTE employees 5,395 5,461 5,214 
Number of bank branches158 158 158 
Ratio of nonperforming assets to total assets (2)
0.39 %0.37 %0.21 %
Common equity-to-assets ratio10.67 %9.78 %7.09 %
MSR Key Statistics and Ratios:
Weighted average service fee (basis points)31.5 32.1 34.3 
Capitalized value of mortgage servicing rights1.12 %1.08 %0.86 %
(1)Excludes goodwill and intangibles. See Non-GAAP Reconciliation for further information.
(2)Ratio excludes LHFS.
12

Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
Three Months Ended
December 31, 2021September 30, 2021December 31, 2020
Average BalanceInterestAnnualized
Yield/Rate		Average BalanceInterestAnnualized
Yield/Rate		Average BalanceInterestAnnualized
Yield/Rate
Interest-Earning Assets
Loans held-for-sale$6,384 $49 3.10%$7,839 $63 3.22%$5,672 $42 2.99%
Loans held-for-investment
Residential first mortgage1,569 13 3.22%1,706 14 3.14%2,353 19 3.23%
Home equity635 6 3.93%686 6 3.64%890 8 3.69%
Other1,229 16 4.80%1,177 14 4.76%1,001 13 5.15%
Total consumer loans 3,433 35 3.92%3,569 34 3.77%4,244 40 3.78%
Commercial real estate3,260 29 3.45%3,238 28 3.43%3,064 27 3.40%
Commercial and industrial1,473 14 3.69%1,341 12 3.56%1,447 13 3.55%
Warehouse lending5,148 47 3.54%5,392 52 3.76%6,948 71 3.99%
Total commercial loans9,881 90 3.53%9,971 92 3.62%11,459 111 3.78%
Total loans held-for-investment13,314 125 3.63%13,540 126 3.66%15,703 151 3.78%
Loans with government guarantees1,742 11 2.62%2,046 8 1.61%2,478 5 0.73%
Investment securities 2,104 11 2.09%2,058 12 2.15%2,493 14 2.27%
Interest-earning deposits747 — 0.15%173 — 0.18%754 — 0.11%
Total interest-earning assets24,291 $196 3.18%25,656 $209 3.22%27,100 $212 3.09%
Other assets2,408 2,391 2,537 
Total assets$26,699 $28,047 $29,637 
Interest-Bearing Liabilities
Retail deposits
Demand deposits$1,692 $— 0.05%$1,603 $— 0.05%$1,842 $— 0.07%
Savings deposits4,211 2 0.14%4,144 2 0.14%3,847 2 0.20%
Money market deposits927 — 0.09%840 — 0.08%693 — 0.07%
Certificates of deposit973 1 0.44%1,038 1 0.50%1,415 5 1.18%
Total retail deposits7,803 3 0.15%7,625 3 0.16%7,797 7 0.33%
Government deposits1,998 1 0.17%2,148 1 0.17%1,579 1 0.26%
Wholesale deposits and other1,238 3 0.93%1,342 3 0.99%1,010 4 1.69%
Total interest-bearing deposits11,039 7 0.25%11,115 7 0.26%10,386 12 0.46%
Short-term FHLB advances and other1,258 1 0.19%2,736 1 0.18%1,598 1 0.20%
Long-term FHLB advances1,400 4 0.88%1,343 3 0.92%1,200 3 1.03%
Other long-term debt396 3 3.16%396 3 3.16%598 7 4.47%
Total interest-bearing liabilities14,093 15 0.39%15,590 14 0.38%13,782 23 0.65%
Noninterest-bearing deposits
Retail deposits and other2,468 2,391 2,155 
Custodial deposits (1)6,309 6,180 8,527 
Total noninterest-bearing deposits8,777 8,571 10,682 
Other liabilities 1,137 1,294 2,938 
Stockholders' equity2,692 2,592 2,235 
Total liabilities and stockholders' equity$26,699 $28,047 $29,637 
Net interest-earning assets$10,198 $10,066 $13,318 
Net interest income$181 $195 $189 
Interest rate spread (2)2.79%2.84%2.44%
Net interest margin (3)2.96%3.00%2.78%
Ratio of average interest-earning assets to interest-bearing liabilities172.4 %164.6 %196.6 %
Total average deposits$19,816 $19,686 $21,068 
(1)Approximately 80 percent of custodial deposits from loans subserviced for which LIBOR based fees are recognized as an offset in net loan administration income.
(2)Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.
(3)Net interest margin is net interest income divided by average interest-earning assets.
13

Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
Twelve Months Ended
December 31, 2021December 31, 2020
Average BalanceInterestAnnualized
Yield/Rate		Average BalanceInterestAnnualized
Yield/Rate
Interest-Earning Assets
Loans held-for-sale$7,146 $218 3.05%$5,542 $184 3.33%
Loans held-for-investment
Residential first mortgage1,822 59 3.21%2,704 92 3.36%
Home equity722 26 3.66%965 39 4.01%
Other1,137 55 4.79%912 49 5.38%
Total consumer loans 3,681 140 3.79%4,581 180 3.90%
Commercial real estate3,159 109 3.40%3,030 116 3.77%
Commercial and industrial1,437 53 3.63%1,692 63 3.65%
Warehouse lending5,583 216 3.82%4,694 190 3.98%
Total commercial loans10,179 378 3.66%9,416 369 3.86%
Total loans held-for-investment13,860 518 3.70%13,997 549 3.87%
Loans with government guarantees2,156 28 1.29%1,571 15 1.04%
Investment securities 2,123 46 2.16%2,943 70 2.37%
Interest-earning deposits306 — 0.15%378 1 0.33%
Total interest-earning assets25,591 $810 3.14%24,431 $819 3.33%
Other assets2,605 2,477 
Total assets$28,196 $26,908 
Interest-Bearing Liabilities
Retail deposits
Demand deposits$1,707 $1 0.06%$1,763 $6 0.27%
Savings deposits4,097 6 0.14%3,597 19 0.52%
Money market deposits804 1 0.08%707 1 0.15%
Certificates of deposit1,107 6 0.65%1,831 32 1.83%
Total retail deposits7,715 14 0.19%7,898 58 0.73%
Government deposits1,930 4 0.19%1,301 7 0.56%
Wholesale deposits and other1,196 14 1.18%821 16 1.94%
Total interest-bearing deposits10,841 32 0.30%10,020 81 0.81%
Short-term FHLB advances and other2,296 4 0.18%2,807 16 0.58%
Long-term FHLB advances1,287 13 0.96%1,066 12 1.10%
Other long-term debt410 14 3.41%520 25 4.80%
Total interest-bearing liabilities14,834 63 0.42%14,413 134 0.93%
Noninterest-bearing deposits
Retail deposits and other2,347 1,799 
Custodial deposits (1)6,465 6,725 
Total noninterest-bearing deposits8,812 8,524 
Other liabilities 2,036 1,919 
Stockholders' equity2,514 2,052 
Total liabilities and stockholders' equity$28,196 $26,908 
Net interest-earning assets$10,757 $10,018 
Net interest income$747 $685 
Interest rate spread (2)2.72%2.40%
Net interest margin (3)2.92%2.80%
Ratio of average interest-earning assets to interest-bearing liabilities172.5 %169.5 %
Total average deposits$19,653 $18,544 
a.Approximately 80 percent of custodial deposits are from subserviced loans for which LIBOR based fees are recognized as an offset in net loan administration income.
b.Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.
c.Net interest margin is net interest income divided by average interest-earning assets.
14

Earnings Per Share
(Dollars in millions, except share data)
(Unaudited)
Three Months EndedTwelve Months Ended
December 31,
2021		September 30, 2021December 31,
2020		December 31,
2021		December 31,
2020
Net income $85 $152 $154 $533 $538 
Weighted average common shares outstanding 52,867,138 52,862,288 53,912,584 52,792,931 56,094,542 
Stock-based awards710,694797,134431,382 726,155 411,271 
Weighted average diluted common shares53,577,832 53,659,422 54,343,966 53,519,086 56,505,813 
Basic earnings per common share$1.62 $2.87 $2.86 $10.10 $9.59 
Stock-based awards(0.02)(0.04)(0.03)(0.14)(0.07)
Diluted earnings per common share$1.60 $2.83 $2.83 $9.96 $9.52 

Regulatory Capital - Bancorp
(Dollars in millions)
(Unaudited)
December 31, 2021September 30, 2021December 31, 2020
AmountRatioAmountRatioAmountRatio
Tier 1 leverage (to adjusted avg. total assets)$2,798 10.54 %$2,709 9.72 %$2,270 7.71 %
Total adjusted avg. total asset base$26,545 $27,863 $29,444 
Tier 1 common equity (to risk weighted assets)$2,558 13.19 %$2,469 11.95 %$2,030 9.15 %
Tier 1 capital (to risk weighted assets)$2,798 14.43 %$2,709 13.11 %$2,270 10.23 %
Total capital (to risk weighted assets)$3,080 15.88 %$3,006 14.55 %$2,638 11.89 %
Risk-weighted asset base$19,397 $20,664 $22,190 

Regulatory Capital - Bank
(Dollars in millions)
(Unaudited)
December 31, 2021September 30, 2021December 31, 2020
AmountRatioAmountRatioAmountRatio
Tier 1 leverage (to adjusted avg. total assets)$2,706 10.21 %$2,619 9.40 %$2,390 8.12 %
Total adjusted avg. total asset base$26,502 $27,851 $29,437 
Tier 1 common equity (to risk weighted assets)$2,706 13.96 %$2,619 12.71 %$2,390 10.77 %
Tier 1 capital (to risk weighted assets)$2,706 13.96 %$2,619 12.71 %$2,390 10.77 %
Total capital (to risk weighted assets)$2,839 14.65 %$2,766 13.42 %$2,608 11.75 %
Risk-weighted asset base$19,383 $20,609 $22,194 

Loans Serviced
(Dollars in millions)
(Unaudited)
December 31, 2021September 30, 2021December 31, 2020
Unpaid Principal Balance (1)Number of accountsUnpaid Principal Balance (1)Number of accountsUnpaid Principal Balance (1)Number of accounts
Subserviced for others (2)$246,858 1,032,923 $230,045 1,007,557 $178,606 867,799 
Serviced for others (3)35,074 137,243 31,354 124,665 38,026 151,081 
Serviced for own loan portfolio (4)8,793 63,426 10,410 70,738 10,079 66,519 
Total loans serviced$290,725 1,233,592 $271,809 1,202,960 $226,711 1,085,399 
(1)UPB, net of write downs, does not include premiums or discounts.
(2)Loans subserviced for a fee for non-Flagstar owned loans or MSRs. Includes temporary short-term subservicing performed as a result of sales of servicing-released MSRs.
(3)Loans for which Flagstar owns the MSR.
(4)Includes LHFI (residential first mortgage, home equity and other consumer), LHFS (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

15

Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
December 31, 2021September 30, 2021December 31, 2020
Consumer loans
Residential first mortgage$1,536 11.5 %$1,626 11.5 %$2,266 14.0 %
Home equity613 4.6 %657 4.6 %856 5.3 %
Other1,236 9.2 %1,203 8.3 %1,004 6.1 %
Total consumer loans3,385 25.3 %3,486 24.4 %4,126 25.4 %
Commercial loans
Commercial real estate3,223 24.0 %3,216 22.6 %3,061 18.9 %
Commercial and industrial1,826 13.6 %1,387 9.7 %1,382 8.5 %
Warehouse lending4,974 37.1 %6,179 43.3 %7,658 47.2 %
Total commercial loans10,023 74.7 %10,782 75.6 %12,101 74.6 %
Total loans held-for-investment$13,408 100.0 %$14,268 100.0 %$16,227 100.0 %

Other Consumer Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
December 31, 2021September 30, 2021December 31, 2020
Indirect lending$925 74.8 %$916 76.1 %$713 71.0 %
Point of sale271 22.0 %248 20.6 %211 21.0 %
Other40 3.2 %39 3.2 %80 8.0 %
Total other consumer loans$1,236 100.0 %$1,203 100.0 %$1,004 100.0 %

Allowance for Credit Losses
(Dollars in millions)
(Unaudited)
December 31, 2021September 30, 2021December 31, 2020
Residential first mortgage$40 $43 $49 
Home equity14 15 25 
Other36 32 39 
Total consumer loans90 90 113 
Commercial real estate28 35 84 
Commercial and industrial32 43 51 
Warehouse lending 4 3 4 
Total commercial loans64 81 139 
Allowance for loan losses154 171 252 
Reserve for unfunded commitments16 19 28 
Allowance for credit losses$170 $190 $280 

16

Allowance for Credit Losses
(Dollars in millions)
(Unaudited)
Three Months Ended December 31, 2021
Residential First MortgageHome EquityOther ConsumerCommercial Real EstateCommercial and IndustrialWarehouse LendingTotal LHFI Portfolio (1)Unfunded Commitments
Beginning balance$43 $15 $32 $35 $43 $3 $171 $19 
Provision (benefit) for credit losses:
Loan volume(1)— 1 — 3 — 3 (3)
Economic forecast (2)(1)(1)4 (4)(4)— (6)— 
Credit (3)1 1 — (2)(2)1 (1)— 
Qualitative factor adjustments(2)(1)(1)(1)(8)— (13)— 
Charge-offs(1)— (1)— (2)— (4)— 
Recoveries— 1 — — — — 1 — 
Provision for net charge-offs1 (1)1 — 2 — 3 — 
Ending allowance balance$40 $14 $36 $28 $32 $4 $154 $16 
(1) Excludes loans carried under the fair value option.
(2) Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter.
(3) Includes changes in the probability of default and severity of default based on current borrower and guarantor characteristics, as well as individually evaluated reserves.

Allowance for Credit Losses
(Dollars in millions)
(Unaudited)

Twelve Months Ended December 31, 2021
Residential First MortgageHome EquityOther ConsumerCommercial Real EstateCommercial and IndustrialWarehouse LendingTotal LHFI Portfolio (1)Unfunded Commitments
Beginning balance$49 $25 $39 $84 $51 $4 $252 $28 
Provision (benefit) for credit losses:
Loan volume1 (3)6 4 4 (1)11 (12)
Economic forecast (2)(7)(5)3 (9)(17)— (35)— 
Credit (3)6 4 1 (35)14 1 (9)— 
Qualitative factor adjustments(9)(7)(13)(16)(20)— (65)— 
Charge-offs(5)(1)(4)— (9)— (19)— 
Recoveries2 2 2 — 16 — 22 — 
Provision for net charge-offs3 (1)2 — (7)— (3)— 
Ending allowance balance$40 $14 $36 $28 $32 $4 $154 $16 
(1) Excludes loans carried under the fair value option.
(2) Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter.
(3) Includes changes in the probability of default and severity of default based on current borrower and guarantor characteristics, as well as individually evaluated reserves.
17


Nonperforming Loans and Assets
(Dollars in millions)
(Unaudited)
December 31,
2021		September 30, 2021December 31,
2020
Nonperforming LHFI$81 $82 $46 
Nonperforming TDRs8 5 4 
Nonperforming TDRs at inception but performing for less than six months5 9 6 
Total nonperforming LHFI and TDRs (1)94 96 56 
Other nonperforming assets, net6 6 8 
LHFS17 10 9 
Total nonperforming assets$117 $112 $73 
Ratio of nonperforming assets to total assets (2)0.39 %0.37 %0.21 %
Ratio of nonperforming LHFI and TDRs to LHFI0.70 %0.66 %0.34 %
Ratio of nonperforming assets to LHFI and repossessed assets (2)0.74 %0.70 %0.40 %
(1)Includes less than 90 day past due performing loans placed on nonaccrual. Interest is not being accrued on these loans.
(2)Ratio excludes nonperforming LHFS.

Asset Quality - Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
30-59 Days Past Due60-89 Days Past DueGreater than 90 days (1)Total Past DueTotal LHFI
December 31, 2021
Consumer loans (2)$26 $36 $62 $124 $3,385 
Commercial loans — — 32 32 10,023 
Total loans$26 $36 $94 $156 $13,408 
September 30, 2021
Consumer loans $12 $2 $58 $72 $3,486 
Commercial loans — — 35 35 10,782 
     Total loans$12 $2 $93 $107 $14,268 
December 31, 2020
Consumer loans $9 $6 $38 $53 $4,126 
Commercial loans 21 — 18 39 12,101 
     Total loans$30 $6 $56 $92 $16,227 
(1)Includes performing nonaccrual loans that are less than 90 days delinquent and for which interest cannot be accrued.
(2)Includes $43 million in first residential mortgage loans, or 69 percent of consumer loans in the 30-89 days past due categories, that have recently exited forbearance. These borrowers have not yet selected a forbearance exit plan. The average LTV of these loans is approximately 75 percent.
18

Troubled Debt Restructurings
(Dollars in millions)
(Unaudited)
 TDRs
 PerformingNonperformingTotal
December 31, 2021
Consumer loans$22 $12 $34 
Commercial loans— — — 
Total TDR loans$22 $12 $34 
September 30, 2021
Consumer loans$34 $12 $46 
Commercial loans— 2 2 
Total TDR loans$34 $14 $48 
December 31, 2020
Consumer loans$31 $10 $41 
Commercial loans5 — 5 
Total TDR loans$36 $10 $46 


Non-GAAP Reconciliation
(Unaudited)

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

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

Tangible book value per share and tangible common equity to assets ratio.
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020
(Dollars in millions, except share data)
Total stockholders' equity$2,718 $2,645 $2,498 $2,358 $2,201 
Less: Goodwill and intangible assets147 149 152 155 157 
Tangible book value$2,571 $2,496 $2,346 $2,203 $2,044 
Number of common shares outstanding 53,197,650 52,862,383 52,862,264 52,752,600 52,656,067 
Tangible book value per share$48.33 $47.21 $44.38 $41.77 $38.80 
Total assets$25,483 $27,042 $27,065 $29,449 $31,038 
Tangible common equity to assets ratio10.09 %9.23 %8.67 %7.48 %6.58 %

19

Adjusted return on average tangible common equity and adjusted return on average assets.
Three Months EndedTwelve Months Ended
December 31,
2021		September 30, 2021December 31,
2020		December 31,
2021		December 31,
2020
(Dollars in millions)
Net income$85 $152 $154 $533 $538 
Add: Intangible asset amortization, net of tax2 2 2 8 10 
Tangible net income$87 $154 $156 $541 $548 
Total average equity$2,692 $2,592 $2,235 $2,514 $2,052 
Less: Average goodwill and intangible assets148 151 159 152 164 
Total tangible average equity$2,544 $2,441 $2,076 $2,362 $1,888 
Return on average tangible common equity13.79 %25.18 %30.13 %22.94 %29.00 %
Adjustment to remove DOJ settlement expense— %— %— %1.82 %— %
Adjustment for former CEO SERP agreement— %— %— %(0.52)%— %
Adjustment for merger costs1.11 %0.98 %— %1.01 %— %
Adjusted return on average tangible common equity14.90 %26.16 %30.13 %25.25 %29.00 %
Return on average assets1.28 %2.16 %2.08 %1.89 %2.00 %
Adjustment to remove DOJ— %— %— %0.10 %— %
Adjustment for former CEO SERP settlement agreement— %— %— %(0.03)%— %
Adjustment for merger costs0.07 %0.05 %— %0.05 %— %
Adjusted return on average assets 1.35 %2.21 %2.08 %2.01 %2.00 %

Adjusted HFI loan-to-deposit ratio.
December 31,
2021		September 30, 2021June 30,
2021		March 31, 2021December 31,
2020
(Dollars in millions)
Average LHFI$13,314 $13,540 $13,688 $14,915 $15,703 
Less: Average warehouse loans5,148 5,392 5,410 6,395 6,948 
Adjusted average LHFI$8,166 $8,148 $8,278 $8,520 $8,755 
Average deposits$19,816 $19,686 $19,070 $20,043 $21,068 
Less: Average custodial deposits6,309 6,180 6,188 7,194 8,527 
Adjusted average deposits$13,507 $13,506 $12,882 $12,849 $12,541 
HFI loan-to-deposit ratio67.2 %68.8 %71.8 %74.4 %74.5 %
Adjusted HFI loan-to-deposit ratio60.5 %60.3 %64.3 %66.3 %69.8 %

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Adjusted noninterest expense, income before income taxes, provision for income taxes, net income, basic earnings per share, diluted earnings per share, and efficiency ratio.
Three Months EndedTwelve Months Ended
December 31, 2021September 30, 2021June 30, 2021December 31, 2021
(Dollar in millions)
Noninterest expense$291 $286 $289 $1,213 
Adjustment to remove DOJ settlement expense— — — 35 
Adjustment for former CEO SERP agreement— — (10)(10)
Adjustment for merger costs6 5 9 20 
Adjusted noninterest expense$285 $281 $290 $1,168 
Income before income taxes$109 $198 $190 $690 
Adjustment to remove DOJ settlement expense— — — 35 
Adjustment for former CEO SERP agreement— — (10)(10)
Adjustment for merger costs6 5 9 20 
Adjusted income before income taxes$115 $203 $189 $735 
Provision for income taxes$24 $46 $43 $157 
Adjustment to remove DOJ settlement expense— — — (8)
Adjustment for former CEO SERP agreement— — 2 2 
Adjustment for merger costs(1)(1)(2)(4)
Adjusted provision for income taxes$25 $47 $43 $167 
Net income$85 $152 $147 $533 
Adjusted net income$90 $156 $146 $568 
Weighted average common shares outstanding52,867,138 52,862,288 52,763,868 52,792,931 
Weighted average diluted common shares53,577,832 53,659,422 53,536,669 53,519,086 
Adjusted basic earnings per share$1.71 $2.94 $2.78 $10.75 
Adjusted diluted earnings per share$1.69 $2.90 $2.74 $10.60 
Efficiency ratio75.9 %62.2 %66.6 %67.7 %
Adjustment to remove DOJ settlement expense— %— %— %(1.4)%
Adjustment for former CEO SERP agreement— %— %1.6 %0.6 %
Adjustment for merger costs(1.5)%(1.1)%(1.4)%(1.1)%
Adjusted efficiency ratio74.4 %61.1 %66.8 %65.8 %


Adjusted net interest margin
Three Months Ended
December 31, 2021September 30, 2021June 30,
2021		March 31, 2021December 31,
2020
Average interest earning assets$24,291 $25,656 $25,269 $27,178 $27,100 
Net interest margin2.96 %3.00 %2.90 %2.82 %2.78 %
Adjustment to LGG loans available for repurchase0.02 %0.04 %0.16 %0.20 %0.20 %
Adjusted net interest margin2.98 %3.04 %3.06 %3.02 %2.98 %
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