Flagstar, Hit Hard By Mortgage Losses, Suspends Dividend
In a brief statement to the press after markets closed on Tuesday, Flagstar Bancorp, Inc. said that it had suspended its quarterly dividend as the Michigan-based bank reels from mortgage losses. Flagstar reported a $30.1 million loss for the fourth quarter on January 30th, driven primarily by quick increases in non-performing assets. NPAs rose 43 percent between the third and fourth quarter of last year, leading Moody's to downgrade the bank's long-term deposit rating. The rating agency warned that continued losses would likely lead to a "junk" rating. "Although we are seeing strong loan production, increasing gain on sale margins and improved net interest margins, the Board believes that it is prudent to preserve capital by suspending the dividend until the capital markets normalize and residential real estate shows signs of improvement," said Mark Hammond, Flagstar's CEO. Hammond added that "the Board will reassess the dividend in the second quarter based upon first quarter results and the state of the capital and residential real estate markets." Flagstar Bancorp, with $15.8 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. Disclosure: The author held no positions in FBC when this story was originally published.