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EverBank Financial selectively growing balance sheet with low rate outlook for '16

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EverBank Financial selectively growing balance sheet with low rate outlook for '16

Jacksonville, Fla.-based EverBank Financial Corp executives continue to expect alow and flat interest rate environment throughout 2016, they said on afirst-quarter earnings call.

EverBank plans to continue growing its balance sheet on a"more selective basis" by retaining fewer of the high-quality loansand leases it originates and optimizing risk-adjusted returns through assetsales, they said.

During the call, they noted that the company intentionallyslowed jumbo originations during the first quarter, invested $969 million inGinnie Mae pool buyouts, and selectively sold longer-duration assets —including $278 million in commercial loans and $981 million in jumboresidential loans.

The executives also plan to keep evaluating the company'sdeposit-pricing strategy, which has remained unchanged for the past 2.5 years,at a base of 61 basis points for core checking and money market accounts.

"Given the shape of the yield curve and how flat thingsare, we're really fortunate we have this remix strategy to invest inhigh-yielding, government-backed Ginnie Mae buyouts at a short duration, andremix with selling longer-duration assets, and be more selective relative tohow we're pricing some of those assets as well," said William Wilson,president and COO.

EverBank Financial reported GAAP efficiency ratio of 73% forthe current quarter, compared to 66% for the linked quarter and 83% for thefirst quarter of 2015.

Adjusting for mortgage servicing rights valuation allowance recoveryor impairment, and transaction-related and other nonrecurring expenses, thecompany's efficiency ratio was 66% for the quarter ended March 31, compared to65% in the linked quarter and 66% in the year-ago quarter.

"While the environment could present further potentialheadwinds from a revenue perspective, we believe there are meaningfulopportunities to enhance efficiency over the near and intermediate term anddeliver an attractive earnings and return profile for our shareholders,"Chairman and CEO Robert Clements said.

He added that the company has invested "a tremendousamount of time, energy, and resources in adapting to the changing regulatoryenvironment and meeting the current requirements and expectations," andnow plans to invest a lot more time and energy looking into operationalefficiency initiatives.

The company reported first-quarter GAAP net income availableto common shareholders of $25.4 million, or 20 cents per share, compared to$11.7 million, or 9 cents per share, for the first quarter of 2015. EverBank'sadjusted net income available to common shareholders was $39.8 million, or 32cents per share, for the first quarter, compared to $39.1 million, or 31 centsper share, for the first quarter of 2015.