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Flagstar Repays Final TARP Funds

NationalMortgageProfessional.com
Aug 03, 2016
Flagstar Bank has hired mortgage industry veteran Don Klein to expand the reach of its comprehensive subservicing offering, joinng the company as senior vice president of business development

Flagstar Bancorp has announced that it has completed its repayment of funds initially received under the Troubled Asset Relief Program (TARP) through redemption of all $267 million of the company's Fixed Rate Cumulative Perpetual Preferred Stock, Series C, originally issued to the U.S. Department of the Treasury as part of TARP, plus payment of $104 million in accrued and unpaid dividends. Flagstar funded the total redemption cost of $371 million through a combination of internal liquidity, including a $200 million dividend from its wholly-owned subsidiary, Flagstar Bank, and $250 million from the proceeds of the issuance of its 6.125percent  Senior Notes due 2021.

"The resolution of TARP affirms the progress we have made in de-risking the balance sheet, building a strong management team, and creating a solid risk management organization," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp. "We've boosted return on equity by replacing this high-cost funding with senior notes and other sources that cost, on average, only one-third of the TARP preferred on an after-tax basis. Even after the redemption, our regulatory capital remains strong, providing the necessary resources to continue to execute on our long-term business plans."

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