Flagstar Bancorp, Inc. Announces Pricing of Subordiated Notes Offering

Rhea-AI Summary

Flagstar Bancorp (NYSE: FBC) announced the pricing of a $150 million offering of 4.125% Fixed-to-Floating Rate Subordinated Notes due 2030. The Notes will have a fixed interest rate until November 1, 2025, after which it will transition to a floating rate. The net proceeds are intended for a $150 million share repurchase from MP Thrift Investments, reducing their stake to approximately 15.95% of the company's common stock. The offering is set to close on October 28, 2020.

Positive

• Successful pricing of $150 million subordinated notes offering can enhance capital position.
• Share repurchase initiative may support stock price stability.

Negative

• Repurchase may limit available liquidity for other growth opportunities.

TROY, Mich., Oct. 26, 2020 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC) (the "Company") today announced the pricing of its previously announced underwritten registered offering of $150 million aggregate principal amount of its 4.125% Fixed-to-Floating Rate Subordinated Notes due 2030 (the "Notes"). The price to the public for the Notes was 100% of the principal amount of the Notes.  Interest on the Notes will accrue at a rate equal to (i) 4.125% per annum from the original issue date to, but excluding, November 1, 2025, payable semiannually in arrears, and (ii) a floating rate per annum equal to a benchmark rate, which is expected to be Three-Month Term SOFR (as defined in the Notes), plus a spread of 391 basis points from, and including, November 1, 2025, payable quarterly in arrears. The Notes are intended to qualify as Tier 2 capital for regulatory purposes. The offering is expected to close on October 28, 2020, subject to market and customary conditions.

The Company intends to use the net proceeds from the offering to repurchase (the "Share Repurchase") $150 million of common stock held by MP Thrift Investments L.P. ("MP Thrift"), at a price of $32.6965 per share, which is the volume-weighted average price of the Company's common stock for the three trading days up to and including October 22, 2020.  Following the Share Repurchase, MP Thrift will beneficially own approximately 15.95% of the Company's outstanding common stock.

Raymond James and BofA Securities are acting as underwriters for the proposed offering.

The offering will be made only by means of an effective registration statement and a prospectus.  Copies of the preliminary prospectus supplement and the accompanying prospectus relating to the proposed offering may be obtained from: Raymond James & Associates, Inc. at 880 Carillon Parkway, St. Petersburg, Florida 33716, Attention: Syndicate Department and BofA Securities, Inc. at NC1-004-03-43, 200 North College Street, 3rd Floor, Charlotte, North Carolina 28255-0001, Attention: Prospectus Department.  Copies of the preliminary prospectus supplement and the related prospectus may also be obtained free of charge from the website of the U.S. Securities and Exchange Commission (the "SEC") at http://www.sec.gov.

The Company has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates.  Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering.  Copies of the registration statement can be accessed through the SEC's website at www.sec.gov.  This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About Flagstar

Flagstar Bancorp, Inc. (NYSE: FBC) is a $29.5 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 160 branches in Michigan, Indiana, California, Wisconsin and Ohio. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 87 retail locations in 29 states, representing the combined retail branches of Flagstar and its Opes Advisors mortgage division. Flagstar is a leading national originator and servicer of mortgage and other consumer loans, handling payments and record keeping for $227.4 billion of loans representing slightly over 1.1 million borrowers.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance.  These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature.  These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control.  Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict.  Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.  For a discussion of some of the risks and important factors that could affect our future results and financial condition, see our SEC filings, including, but not limited to, the prospectus described in this press release.

Contact information

Analyst Contact:
Kenneth M. Schellenberg
(248) 312-5741
FBCInvestorRelations@flagstar.com

Media: 
Susan Bergesen
(248) 312-6237
susan.bergesen@flagstar.com

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SOURCE Flagstar Bancorp, Inc.

FAQ

What is the purpose of Flagstar Bancorp's $150 million subordinated notes offering?

The offering is aimed at raising capital to finance a share repurchase of $150 million from MP Thrift Investments.

What are the interest rates for Flagstar Bancorp's subordinated notes?

The Notes will accrue interest at 4.125% until November 1, 2025, after which it will switch to a floating rate based on the Three-Month Term SOFR plus 391 basis points.

When is the closing date for Flagstar Bancorp's subordinated notes offering?

The offering is expected to close on October 28, 2020.

How will Flagstar Bancorp use the proceeds from the subordinated notes?

The net proceeds will be used for a share repurchase of $150 million of common stock from MP Thrift Investments.

How much will MP Thrift Investments own after the share repurchase?

After the repurchase, MP Thrift will own approximately 15.95% of Flagstar Bancorp's outstanding common stock.