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EverBank Financial Corp Announces Full Year And Fourth Quarter 2013 Financial Results

EverBank Financial Corp (NYSE: EVER) announced today its financial results for the fourth quarter and the year ended December 31, 2013.

“2013 was a successful year for EverBank as we generated a solid return on equity, grew tangible book value per share by 12%, and executed on key strategic initiatives designed to enhance operating efficiency, simplify our earnings profile and focus on our core banking and lending activities,” said Robert M. Clements, chairman and chief executive officer. “The Company's fundamentals are strong, which we believe positions us to generate robust asset and earnings growth from our diverse nationwide lending businesses in 2014.”

Adjusted net income was $32 million for the fourth quarter of 2013 1, compared to $34 million for the third quarter 2013 and $44 million for the fourth quarter of 2012. For the year, adjusted net income was $148 million, an increase of 3% over 2012. GAAP net income was $18 million for the fourth quarter of 2013, compared to $33 million for the third quarter of 2013 and $29 million for the fourth quarter of 2012. For the year, GAAP net income was $137 million, an increase of 85% over 2012.

Adjusted diluted earnings per share was $0.24 in the fourth quarter 2013, an 8% decrease from $0.26 in the third quarter 2013 and a 29% decrease from $0.34 in the fourth quarter 2012. GAAP diluted earnings per share was $0.13, a 48% decrease from $0.25 in the third quarter 2013 and a 41% decrease from $0.22 in the fourth quarter 2012. For the full year 2013, adjusted diluted earnings per share was $1.11, a 13% decrease from $1.27 in 2012. GAAP diluted earnings per share was $1.02, a 70% increase from $0.60 in 2012.

Fourth Quarter and Full Year 2013 Key Highlights

  • Tangible common equity per common share was $11.57 at December 31, 2013, an increase of 12% compared to year end 2012.
  • Adjusted return on equity (ROE) was 10% and GAAP ROE was 9% for the full year 2013.
  • Retained asset generation of $1.6 billion for the fourth quarter, including commercial origination volume of $701 million, an increase of 45% and 99%, respectively, compared to the prior quarter.
  • Deployed excess liquidity to grow portfolio loans held for investment to $13.3 billion, an increase of 5% compared to the prior quarter, or 22% annualized.
  • Core net interest margin was 3.30% for the quarter, an increase of 13 basis points from 3.17% in the prior quarter.
  • Adjusted non-performing assets were 0.65% of total assets at December 31, 2013, a 36% decline compared to the prior quarter. Annualized net charge-offs to average loans and leases held for investment were 0.20% for the quarter.

Strategic Business Activities Update

During the fourth quarter, we continued to execute on our strategic plan of exiting non-core business activities and adjusting capacity in our mortgage banking and corporate services segments.

  • We remain on track to close the sale of our default servicing platform to Green Tree Servicing LLC and expect the transfer date, in addition to the servicing sale date, to occur during the first quarter 2014. In anticipation of closing and transfer, we recognized $14 million of non-recurring costs in the quarter related to the transaction.
  • Due to the normalization of industry refinance volumes and the expected first quarter 2014 default servicing platform transfer, we adjusted our residential lending, servicing and corporate administrative capacity, resulting in severance charges of $4 million and lease termination expense of $3 million.
  • We closed on the sale of non-core commercial loans and REO for approximately $98 million. We recognized a $4 million loss on the sale during the quarter, however we expect to benefit from reduced noninterest expense associated with this portfolio in future periods.

"We experienced strong portfolio loan growth in the quarter as retained origination volumes gained momentum across our core strategic business channels,” said W. Blake Wilson, president and chief operating officer. “We look forward to closing our servicing transaction with Green Tree in the first quarter and remain focused on driving efficiency throughout our organization while leveraging the investments we have made in recent years."

   
1   A reconciliation of Non-GAAP financial measures can be found in the financial tables attached hereto.

Balance Sheet

Strong Loan Portfolio Growth

Total assets were $17.6 billion at December 31, 2013, flat compared to $17.6 billion at September 30, 2013. Consistent with our strategy to retain loans for our portfolio, total loans held for investment (HFI) increased $0.7 billion, or 5%, compared to the prior quarter, to $13.3 billion. Loans HFI for the fourth quarter were comprised of:

($ in millions)  

Dec 31, 2013

 

Sep 30, 2013

 

Dec 31, 2012

 

% Change (Q/Q)

 

% Change (Y/Y)

Residential loans $ 5,153 $ 4,624 $ 3,949 11 % 30 %
Mortgage pool buyouts 1,892   2,075   2,760   (9 )% (31 )%
Total residential mortgages 7,045 6,699 6,709 5 % 5 %
 
Commercial real estate 3,190 3,243 3,390 (2 )% (6 )%
Commercial finance 1,917   1,607   1,248   19 % 54 %
Total commercial finance & CRE 5,107 4,850 4,638 5 % 10 %
 
Warehouse finance 944 851 970 11 % (3 )%
Other 157   163   188   (4 )% (16 )%
Total HFI $ 13,253   $ 12,563   $ 12,505   5 % 6 %

During the fourth quarter, residential loans HFI increased by 11% compared to the prior quarter to $5.2 billion, driven by continued growth in our high quality prime jumbo hybrid ARM portfolio. Mortgage pool buyouts declined 9% to $1.9 billion compared to the prior quarter. Total commercial finance and CRE balances increased 5% compared to the prior quarter to $5.1 billion, driven by continued strength in our EverBank Commercial Finance platform. At December 31, 2013 our commercial platforms represented approximately 46% of loans HFI.

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