Flagstar Bank

Flagstar Bancorp, Inc.
Public
Traded as NYSE: FBC
Russell 2000 Component
Industry Financial services
Founded Flagstar Bancorp, Inc. - 1993 (as FSSB Holding Corporation); Flagstar Bank, FSB - 1987 (as First Security Savings Bank, FSB)
Headquarters Troy, Michigan, United States
Key people
 John D. Lewis, Chairman
Alessandro DiNello, President and CEO
Products Community banking, wholesale and retail home lending, mortgage loan servicing
Number of employees
 2894 (2016)
Website www.flagstar.com
Flagstar Bank Headquarters, Troy, Michigan

Flagstar Bancorp, Inc. operates as the holding company for Flagstar Bank, a federally chartered stock savings bank. It is the largest publicly traded savings bank in Michigan with assets of over $16 billion in 2016. Flagstar is also a leading mortgage lender and a national leader in the wholesale mortgage business.

History

Flagstar was founded as a federal savings bank in 1987 under the name First Security Savings Bank. The bank's chairman was Thomas J. Hammond. The initial branch focused on funding regional retail and wholesale mortgage operations.[1] In 1993, FSSB Holding Corporation was established. Security Savings Bank, based in Jackson, Michigan, was purchased in 1994. The company changed its name to Flagstar Bank in 1996.[1] Flagstar Bancorp went public in 1997.[2] In 2001, it moved its stock listing from the NASDAQ to the New York Stock Exchange.[3] By 2009, the bank had 179 branches.[4] Flagstar was affected by the housing-led recession of 2007, and the bank recorded losses from 2008 until the second quarter of 2012.[4] The company raised $1.6 billion in new capital with investments from MP Thrift Investments L.P., the Treasury Department's Troubled Asset Relief Program (TARP), and public offerings.[5] Flagstar effected 1:10 reverse stock splits in 2010 and 2012 to maintain its New York Stock Exchange listing.[4] The U.S. Department of Treasury sold its preferred stock of Flagstar to private investors in 2013.[6]

Flagstar reached settlements in several cases to move past the legacy issues that arose through its mortgage operations. In May 2013, Flagstar paid a $110 million settlement to MBIA.[7][8] In June 2013, Flagstar reached a $105-million settlement with Assured Guaranty.[9] Flagstar paid a $93.5-million settlement to Fannie Mae in November 2011,[10][11] and $8.9 million to Freddie Mac in December 2013.[12] In September 2014, Flagstar agreed to pay $37.5 million to the Consumer Financial Protection Bureau.[13]

In August 2016, it was announced that Flagstar had repaid all of the funds it received under the Troubled Asset Relief Program (TARP).[14]

The Detroit Pistons of the National Basketball Association announced that Flagstar Bank will be their jersey sponsor for the 2017-18 NBA Season.

In June 2018, Flagstar agreed to purchase all branches of Wells Fargo in Indiana, Michigan, and Ohio as well as four in Wisconsin. The purchase of the 52 branches will more than double the number of Flagstar customers.

Operations

Flagstar ranked number 13 on Inside Mortgage Finance's list of Top 50 Mortgage Lenders in 2016.[15] Flagstar Bank services and sub-services loans on a fee basis for others, and services residential mortgages held-for-investment in their own portfolio. In 2016, Flagstar was given the Servicer Total Achievement and Rewards (STAR Award) from Fannie Mae in the General Servicing category.[16]

Community

In September 2016, Flagstar Bank announced its plans for a $10 million economic development program for Pontiac, Michigan. The five-year initiative is aimed at helping revitalize the Oakland County, MI city. The program includes $5 million for home mortgages including a customized home loan product for Pontiac residents, $2.5 million for small businesses and start-ups, $1.5 million for the previously announced naming rights of the Flagstar Strand Theatre for the Performing Arts along with an investment of $1 million for financial literacy in the community.[17]

Management

Thomas J. Hammond, founder of Flagstar, served as chairman of Flagstar Bank and Flagstar Bancorp. Mark Hammond became president of the bank in 1995 and CEO in 2002. In 2009, former CEO of Sovereign Bancorp Joseph P. Campanelli was named chairman, president, and CEO of Flagstar Bank and Flagstar Bancorp.[3][18] In 2012, Michael J. Tierney, previously executive vice president and managing director of personal financial services at Flagstar, became president and CEO of the organizations.[19] At that time, former vice chairman and director of Comerica Bank and Comerica Incorporated, John D. Lewis was named chairman and director of the organizations.[20] Alessandro P. DiNello became president, CEO and director of the organizations in 2013.[21]

Financials

2015 Net income $158 million
Earnings per share $2.24
Total assets $13.7 billion
Shares outstanding at year-end 56.483 million
2014 Net loss $70 million
Earnings per share -$1.72
Total assets $9.8 billion
Shares outstanding at year-end 56.332 million
2013 Net income $261 million
Earnings per share $4.37
Total assets $9.4 billion
Shares outstanding at year-end 56.138 million
2012 Net income $63 million
Earnings per share $0.87
Total assets $14.1 billion
Shares outstanding at year-end 55.863 million
2011 Net loss $199 million
Earnings per share -$3.62
Total assets $13.6 billion
Shares outstanding at year-end 55.578 million

Controversy

On February 24, 2012, the U.S. Department of Justice ("DOJ") filed a complaint in the United States District Court for the Southern District of New York against Flagstar, alleging that it had been improperly approving thousands of residential home mortgage loans for government insurance. On March 13, 2012 it was announced that shareholder rights firm Robbins Umeda LLP was investigating possible breaches of fiduciary duty and other violations of the law by certain officers and directors at Flagstar Bancorp, Inc.

References

  1. 1 2 "Flagstar Bank: Troy Home To Largest bank Headquartered in Michigan". Troy Historic Village. February 10, 2015.
  2. ↑ "Flagstar Bancorp, Inc". Securities and Exchange Commission. April 24, 1997.
  3. 1 2 Joseph Szczesny (October 24, 2009). "Head of Flagstar steps down". Oakland Press. Retrieved December 3, 2016.
  4. 1 2 3 Henderson, Tom (February 10, 2014). "Retrenched bank putting legacy issues behind". Crain's Detroit Business.
  5. ↑ Henderson, Tom (February 27, 2011). "More biz lending for Flagstar: President for local region hired". Crain's Detroit Business.
  6. ↑ Cumming, Chris (March 11, 2013). "Treasury to Auction Stakes in Flagstar, Six Other Banks". 178 (37). American Banker.
  7. ↑ Henderson, Tom (May 6, 2013). "Flagstar Bank agrees to pay $110 million to settle lawsuit". Crain's Detroit Business. 20 (18).
  8. ↑ Henderson, Tom (February 11, 2013). "Judgement puts Flagstar earnings in the red". Crain's Detroit Business.
  9. ↑ Browdie, Brian (June 24, 2013). "Flagstar Settles RMBS Lawsuit for $105 Million". American Banker. 178 (96).
  10. ↑ Todd, Sarah (November 7, 2013). "Flagstar Settles Fannie Mae Claims for $94 Million". American Banker. 178 (172).
  11. ↑ Henderson, Tom (November 7, 2013). "Flagstar OKs $121.5 million settlement with Fannie Mae for defaulted loans". Crain's Detroit Business.
  12. ↑ "Flagstar to pay Freddie Mac $8.9 million for mortgage repurchase obligations". Crain's Detroit Business. December 30, 2013.
  13. ↑ "CFPB Takes Action Against Flagstar Bank for Violating New Mortgage Servicing Rules". Consumer Financial Protection Bureau. September 29, 2014.
  14. ↑ "Flagstar completes repayment of TARP funds". EquityBites. August 2, 2016.
  15. ↑ "Top 50 Mortgage Lenders: 6M2016". Inside Mortgage Finance. July 29, 2016.
  16. ↑ "Fannie Mae Star Reference Guide" (PDF). FannieMae.com. Fannie Mae. December 1, 2015. Retrieved December 3, 2016.
  17. ↑ "Crain's Detroit Business". Crain's Business. 2016-09-20. Retrieved 2016-09-20.
  18. ↑ Joseph Szczesny (October 3, 2009). "Flagstar names new CEO". Oakland Press. Retrieved December 3, 2016.
  19. ↑ Tom Henderson (October 2, 2012). "Flagstar exec Tierney succeeds Campanelli as president, CEO". Crain’s Detroit Business. Retrieved December 3, 2016.
  20. ↑ "Flagstar Appoints Michael J. Tierney as President". PR Newswire. October 1, 2012. Retrieved December 3, 2016.
  21. ↑ Tom Henderson (May 17, 2013). "DiNello appointed CEO at Flagstar". Crain's Detroit Business. Retrieved December 3, 2016.
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