Flagstar Issues Revised 2012 Results Based on Analysis of Assured Decision

  Flagstar Issues Revised 2012 Results Based on Analysis of Assured Decision

Revised Tier 1 capital ratio of 9.26 percent at December 31, 2012

PR Newswire

TROY, Mich., Feb. 8, 2013

TROY, Mich., Feb. 8, 2013 /PRNewswire/ --Flagstar Bancorp, Inc. (NYSE: FBC)
("Flagstar"), the holding company for Flagstar Bank, FSB (the "Bank"),
announced today that it has completed an analysis of the financial impact
arising from the decision of the United States District Court for the Southern
District of New York (the "Court") in the previously disclosed lawsuit filed
by Assured Guaranty Municipal Corp., formerly known as Financial Security
Assurance Inc. ("Assured"). This decision was described in a press release
issued by Flagstar on February 5, 2013. Flagstar disagrees with the Court's
decision and intends to contest the outcome on appeal.

Following the Court's decision in the Assured case, Flagstar increased,
effective as of December 31, 2012, its reserve for pending and threatened
litigation, which resulted in a decrease in net income of $161.0 million, or
$2.87 per share (diluted), for the fourth quarter 2012. The total amount
reserved for pending and threatened litigation, including amounts paid in
anticipation of future settlements, was increased to approximately $244.6
million at December 31, 2012. Included in this reserve are amounts for the
Court's decision regarding Assured and for the lawsuit that the MBIA Insurance
Corporation filed against the Bank on January 11, 2013, along with other
pending litigation.

As a result, for the three months ended December 31, 2012, net income
applicable to common shareholders decreased to a net loss of $(94.2) million,
or $(1.75) per share (diluted), as compared to previously reported net income
of $66.8 million, or $1.12  per share (diluted). For the year ended December
31, 2012, net income applicable to common shareholders decreased to $62.7
million, or $0.87 per share (diluted), as compared to previously reported net
income of $223.7 million, or $3.74 per share (diluted). At December 31, 2012
the Bank's revised Tier 1 capital ratio was 9.26 percent, as compared to a
previously reported ratio of 10.41 percent. Flagstar's deferred tax asset,
which is currently fully offset by a valuation allowance, correspondingly
increased to approximately $342 million at December 31, 2012.

The revised financial results will be reflected in Flagstar's Annual Report on
Form 10-K, and are included in the financial highlights below.



Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(In thousands, except share data)
                                     As Reported        As Revised

                                     December31, 2012  December31, 2012
 Other liabilities               $   833,500        $   994,500
 Total liabilities                     12,761,650         12,922,650
 Accumulated deficit                   (415,498)          (576,498)
 Total stockholders' equity       1,320,362          1,159,362



Flagstar Bancorp, Inc.
Consolidated Statements of Operations
(In thousands, except share data)
                        For the Three Months Ended  For the Year Ended
                        As Reported   As Revised    As Reported   As Revised

                        December 31,  December 31,  December 31,  December 31,
                        2012          2012          2012          2012
General and             $  83,822     $  224,822    $  239,795    $  400,795
administrative
Total non-interest      236,962       397,962       828,695       989,695
expense
Income (loss) before    72,423        (88,577)      213,731       52,731
federal income taxes
Net Income (Loss)       68,188        (92,812)      229,376       68,376
Net income (loss)
applicable to common    66,771        (94,229)      223,718       62,718

stockholders
Income (loss) per share $  1.13       $  (1.75)     $  3.77       $  0.88
- basic
Income (loss) per share 1.12          (1.75)        3.74          0.87
- diluted



Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(In thousands, except share data)
                    For the Three Months Ended    For the Year Ended
                    As Reported    As Revised     As Reported    As Revised
                    December 31,                  December 31,
                    2012           December 31,   2012           December 31,
                                   2012                          2012
Return on average                    
assets                1.78      %              %    1.52      %    0.43      %
                                     (2.51)
Return on average     20.70     %    (29.26)   %    18.76     %    5.26      %
equity
Efficiency ratio      65.9      %    110.6     %    62.9      %    75.1      %
(1)
Efficiency ratio
(credit-adjusted)     56.0      %    97.9      %    46.8      %    57.0      %
(1)
Equity/assets ratio
(average for the      8.59      %    8.58      %    8.10      %    8.10      %
period)
Average
stockholders'       $ 1,290,082    $ 1,288,332    $ 1,192,721    $ 1,192,280
equity



                                          As Reported        As Revised

                                          December31, 2012  December31, 2012
Equity/assets ratio                       9.38          %    8.23          %
Tier 1 capital ratio (to adjusted total
assets)                                   10.41         %    9.26          %


Total risk-based capital ratio (to        19.16         %    17.18         %
risk-weighted assets)
Book value per common share               $    18.97         $    16.12
(1) See Non-GAAP reconciliation.



Flagstar Bancorp, Inc.
Average Balances, Yields and Rates
(Dollars in thousands)
                        For the Three Months Ended  For the Year Ended
                        As Reported   As Revised    As Reported   As Revised

                        December 31,  December 31,  December 31,  December 31,
                        2012          2012          2012          2012
Average other           $ 3,411,883   $ 3,413,633   $ 2,747,796   $ 2,748,237
liabilities
Average stockholders'   1,290,082     1,288,332     1,192,721     1,192,280
equity



Flagstar Bancorp, Inc.
Non-GAAP Reconciliation
(Dollars in thousands)
                     For the Three Months Ended       For the Year Ended
                     As Reported       As Revised     As Reported  As Revised

                     December 31,      December 31,   December     December
                     2012              2012           31, 2012     31, 2012
Pre-tax,
pre-credit-cost
income
Loss before tax      $   72,423        $  (88,577)    $ 213,731    $ 52,731
provision
Pre-tax,
pre-credit-cost      170,026           9,026          842,160      681,160
income
Efficiency ratio
(credit-adjusted)
Non-interest expense $   236,962       $  397,962     $ 828,695    $ 989,695
Adjusted             215,721           376,721        737,346      898,346
non-interest expense
Efficiency ratio (1) 65.9         %    110.6       %  62.9      %  75.1      %
Efficiency ratio
(credit-adjusted)    56.0         %    97.9        %  46.8      %  57.0      %
(1)
(1) Ratios include expenses related to the legal reserves for pending and
threatened litigation, including amounts paid in anticipation of a future
settlement, of $188.5 million and $229.9 million during the three months and
year ended December 31, 2012, respectively.



                                          As Reported        As Revised

                                          December31, 2012  December31, 2012
Non-performing assets / Tier 1 capital +
allowance for loan losses
Tier 1 capital                            $   1,456,841      $   1,295,841
Tier 1 capital + allowance for loan       1,761,841          1,600,841
losses
Non-performing assets / Tier 1 capital +  29.5           %   32.5           %
allowance for loan losses

About Flagstar

Flagstar is a full-service financial institution offering a range of products
and services to consumers, businesses, and homeowners. With $14.1 billion in
total assets at December 31, 2012, Flagstar is the largest publicly held
savings bank headquartered in Michigan. Flagstar originates loans nationwide
and is one of the leading originators of residential first mortgage loans.
For more information, please visit flagstar.com.

Non-GAAP

This press release contains both financial measures based on accounting
principles generally accepted in the United States (GAAP) and non-GAAP based
financial measures, which are used where management believes it to be helpful
in understanding the Company's results of operations or financial position.
Where non-GAAP financial measures are used, the comparable GAAP financial
measure, as well as the reconciliation to the comparable GAAP financial
measure, can be found in this press release. These disclosures should not be
viewed as a substitute for operating results determined in accordance with
GAAP, nor are they necessarily comparable to non-GAAP performance measures
that may be presented by other companies.

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995, as amended.
Forward-looking statements, by their nature, involve estimates, projections,
goals, forecasts, assumptions, risks and uncertainties that are difficult to
predict and could cause actual results or outcomes to differ materially from
those expressed in a forward-looking statement. Forward-looking statements
contained in this press release and any information related to expectations
about future events or results are based upon information available to the
Company as of the date hereof. Forward-looking statements can be identified
by such words as "anticipates," "intends," "plans," "seeks," "believes,"
"expects", "estimates," and similar references to future periods. Examples of
forward-looking statements include, but are not limited to, statements made
regarding the Company's current expectations, plans or forecasts of its core
business drivers, credit related costs, asset quality, capital adequacy and
liquidity, the implementation of the Company's business plan and growth
strategies, the suspension of dividend payments on preferred stock, the
deferral of interest payment on trust preferred securities, the result of
improvements to the Company's servicing processes, and other similar matters.
Although we believe that these forward-looking statements are based on
reasonable estimates and assumptions, they are not guarantees of future
performance and are subject to known and unknown risks, uncertainties,
contingencies, and other factors. Accordingly, we cannot give you any
assurance that our expectations will in fact occur or that actual results will
not differ materially from those expressed or implied by such forward-looking
statements. We caution you not to place undue reliance on any forward-looking
statement and to consider all of the following uncertainties and risks, as
well as those more fully discussed in the Company's filings with the
Securities and Exchange Commission ("SEC"), including, but not limited to, our
Forms 10-K and 10-Q: volatile interest rates that impact, among other things,
the mortgage banking business, our ability to originate loans and sell assets
at a profit, prepayment speeds and our cost of funds; changes in regulatory
capital requirements or an inability to achieve or maintain desired capital
ratios; actions of mortgage loan purchasers, guarantors and insurers regarding
repurchases and indemnity demands and uncertainty related to foreclosure
procedures; uncertainty regarding pending and threatened litigation; our
ability to control credit related costs and forecast the adequacy of reserves;
the imposition of regulatory enforcement actions against us; our compliance
with the Consent Order with the Office of the Comptroller of the Currency,
which was disclosed on October 23, 2012; and the commercial loan sale may not
have the projected impact or be consummated in a timely manner. Except to the
extent required under the federal securities laws and the rules and
regulations promulgated by the SEC, the Company undertakes no obligation to
update any such statement to reflect events or circumstances after the date on
which it is made.





SOURCE Flagstar Bancorp, Inc.

Contact: Bradley T. Howes, Investor Relations Officer, +1-248-312-2000