Troy-based Flagstar Bancorp, Inc. announced in late May that it has done a reverse split of its stock on a one-for-ten basis. The stock will continue to trade on the New York Stock Exchange under the symbol FBC, and has been assigned a new CUSIP number: 337930 507.
The reverse split will reduce the number of shares of outstanding common stock from approximately 1.53 billion to approximately 153 million. The number of authorized shares of common stock will be reduced from 3 billion to 300 million. Proportional adjustments will be made to Flagstar’s outstanding options, warrants and other securities entitling their holders to purchase or receive shares of Flagstar common stock. In lieu of fractional shares, stockholders will receive cash.
When a stock price falls below a dollar on some exchanges, it is in danger of being delisted. Flagstar’s action protects its listing on the NYSE.
Dirk Racette, CEO/portfolio manager at Calder Investment Advisors in Grand Rapids, noted that Flagstar was trading at approximately 50 cents a share on May 27. The reverse split raised the price to slightly over $5 on May 28.
One year ago it was hovering around 90 cents a share; in early June 2008, it was more than $4.
“I wouldn’t say their problems are unique in the banking industry across the United States,” said Racette. He said that most of the smaller banks like Flagstar — “particularly in Michigan” — have experienced trouble in the recession.
According to its news release, Flagstar Bancorp Inc. has $14.3 billion in total assets and is “the largest publicly held savings bank headquartered in the Midwest.” In late March, it had 162 banking centers in Michigan, Indiana and Georgia and 23 home loan centers in 14 states. Flagstar Bank originates loans nationwide “and is one of the leading originators of residential mortgage loans,” according to the company.