Flagstar and Independent year-end results back in black


Troy-based Flagstar Bank operates about 100 branches throughout Michigan. Photo via fb.com

Flagstar Bancorp (NYSE: FBC) in Troy and Independent Bank (Nasdaq: IBCP) in Ionia both have much better news for their stockholders in the new year: They made money in 2012, unlike the prior year.

Flagstar has reported net year-end income of $223.7 million applicable to common stockholders, or $3.74 per diluted share, while Independent, a smaller organization, reported net income of $21.9 million, or 80 cents per diluted share.

In the fourth quarter of 2012, Flagstar had net income of $66.8 million, and Independent made $10.8 million. Both had lost money in the fourth quarter of 2011.

Independent’s Brad Kessel, president/CEO, said the bank’s officers “are very pleased to report our fourth consecutive quarter of profitability in 2012, as well as further progress in improving asset quality, as evidenced by a reduction in our non-performing loans, loan net charge-offs and the provision for loan losses as compared to the year-ago quarter.”

Michael Tierney, president/CEO of Flagstar, said the fourth quarter and the full year were marked by “financial results that demonstrate continued performance improvement and sustainable profitability.”

“During the fourth quarter, we significantly reduced credit costs, further strengthened and de-risked the balance sheet and improved the Tier 1 leverage capital ratio by over 100 basis points from the previous quarter,” Tierney added.

Flagstar recently announced the sale of a substantial part of its Northeast based commercial loan portfolio and is “re-focusing” on its national mortgage business. It is the largest bank headquartered in Michigan.

Kessel noted that Independent recently completed the sale of 21 branch offices to Chemical Financial Corp. in Midland, and with "the resulting increase in our regulatory capital ratios, our capital initiatives are now centered on strategies to convert the preferred stock owned by the U.S. Treasury into common stock and exit TARP."

"We are also focused on preserving the potential future use of our net deferred tax asset, which totaled approximately $65.1 million at Dec. 31, 2012, and on which we have established a full valuation allowance," he said. "The potential future recovery of this valuation allowance represents a source of capital that would be of substantial value to our shareholders.” 

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