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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."