Flagstar Bancorp – Momentum

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Earnings momentum for Flagstar Bancorp Inc. (FBC) has advanced since this savings bank posted impressive third quarter results in late October, which included an earnings surprise of more than 20%. FBC has now surpassed the Zacks Consensus Estimate for three straight quarters. This Zacks #1 Rank (Strong Buy) hit a new 52-week high on November 14 and has jumped 190.7% year-to-date.

Impressive Third Quarter Results

On October 23, Flagstar Bancorp reported third quarter earnings per share of $1.36, topping the Zacks Consensus Estimate by 23.6% and soaring over last year’s loss of 26 cents. The improvement was due mainly to growth in net interest and non-interest income, partially offset by elevated non-interest expenses.

Net interest income climbed 11.4% year over year to $73.1 million, aided by lower interest expenses. Non-interest income more than doubled to $273.7 million, compared with $112.6 million. However, net interest margin contracted 9 basis points (bps) to 2.21%. Non-interest expenses were $233.5 million, up 54.9% year over year.

The capital position continued to improve at Flagstar Bancorp. Total assets were $14.9 billion, up 9.6% year over year. Total deposits rose 23.4% to $9.5 billion. Moreover, the company reported a Tier 1 common capital ratio of 10.32% and an equity-to-assets ratio of 8.39%.

Earnings Momentum on the Rise

There’s only 1 estimate for 2012 on Flagstar Bancorp, but it has been revised higher in the past 30 days. The Zacks Consensus Estimate is, therefore, up by 21.6% to $3.71 in that time, reflecting year-over-year growth of about 203.1%. There are 2 estimates for 2013, and they have both moved forward in the past month as well. The Zacks Consensus Estimate has increased 253.0% to $3.53.

Chart Shows Strength

Flagstar Bancorp has witnessed strong price momentum since the third quarter earnings release. Moreover, the company has been continuously outperforming its 200-day and 50-day moving averages since October 23. The year-to-date return for the stock is 190.7%, compared with the S&P 500’s return of 10.3%.

Headquartered in Troy, Michigan, Flagstar Bancorp, Inc., the holding company for Flagstar Bank, FSB, provides various financial products and services. The company was founded in 1987 and serves consumers, businesses and homeowners. It operates through a regional office in Jackson, Michigan; 111 banking centers in Michigan, 31 home lending centers in 14 states and 4 commercial banking offices in Massachusetts, Connecticut, and Rhode Island. With a market cap of about $925.7 million, Flagstar Bancorp competes with Provident Financial Holdings, Inc. (PROV), among others.


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