Flagstar Bancorp, Inc. (FBC)

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Flagstar Bancorp, Inc. (FBC)

Q1 2010 Earnings Call Transcript

April 28, 2010 11:00 am ET

Executives

Paul Borja – EVP and CFO

Joseph Campanelli – Chairman and CEO

Matt Kerin – EVP, Consumer Lending and Specialty Groups

Sandro DiNello – President, Retail Banking

Analysts

Bose George – KBW

Byf Levin [ph]

Jessica Halenda – FBR Capital

Brad Milsaps – Sandler O'Neill

Presentation

Operator

Good afternoon. My name is Kayla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Flagstar Bank first quarter investor relations conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions).

Thank you. Mr. Borja, you may begin your conference.

Paul Borja

Thank you. Good morning. I would like to welcome you to our first quarter 2010 earnings call. My name is Paul Borja and I am the Chief Financial Officer at Flagstar Bancorp. Before we begin our comments, let me remind you about a few things, that presentation does contain some forward-looking statements regarding both our financial condition and our financial results, and that these statements involve certain risks that may cause actual results in the future to be different from our current expectations. These factors include, among other things, changes in economic conditions, changes in interest rates, competitive pressures within the financial services industry, and legislative or regulatory requirements that may affect our businesses.

For additional factors, we urge you to please see our press release and SEC documents as well as a legal disclaimer on page two of our slide that we have posted our Investor Relations website for this speech.

I would like to now turn the call over to Joseph Campanelli, our Chairman and Chief Executive Officer.

Joseph Campanelli

Thank you, Paul; and welcome everyone to Flagstar's first quarter conference call. I would like to begin by taking a few moments to update you on where we stand overall. Our transformation to the new Flagstar is well underway. Our new leadership team has been in place for several quarters now, and we believe there has already been a positive impact on operations, company culture, and overall sense of urgency throughout the company. Today, we believe we have a strong and stable capital position. We have created a dynamic business plan, anchored by our platform of 162 community banking offices in three states, and 28 home lending centers strategically located throughout the country, which provide Flagstar with a significant opportunity to diversify our revenue streams.

We continue to improve efficiency and identify significant cost savings, in that regard, a culture of finding ways to do things better, faster, and cheaper is taking hold throughout the company. Our investment in state of the art technologies is already having a positive impact on our customer experience. Initiatives are also underway to improve the depth and breadth of our products and services. Flagstar is on the move to position for growth and moving in the right direction. Our leadership team and all Flagstar team members are working hard to execute this transformation that will return Flagstar to profitability. Management accountability and a cultured discipline and our core values and share it throughout our company.

We have begun to spend more time getting out on the road to meet with investors, and tell our story, and anticipate seeing more of you and other investors over the coming quarters. Today, we will announce that we are presenting at the Oppenheimer conference in New York City on May 5. We also continue to provide greater transparency to our investors. Our recently completed 10-K has an expanded emphasis on balance sheet components and business strategy. In a relatively short period of time, some very positive and important things have been accomplished. We had two successful capital raises in the first quarter of 2010, a rights offering to close in January of just over $300 million and a recently completed common stock offering in March of approximately $275 million.

We have completed an enterprise-wide conversion to a new state of the art bank platform, built around open architecture software, which will further enhance our strong customer experience. This now gives us a complete view of the customer relationship, and at time with an accurate picture, where and when it is needed most, at the time of customer interaction, whether it be at the teller line, our community banking platform or call center, our service team is equipped with the tools necessary to deliver an enhanced experience.

And just this past week, we are very happy to announce that Flagstar ranked the highest in customer satisfaction in the North Central region, which includes Michigan, Indiana, Ohio, Kentucky, and West Virginia in the JD Power & Associates 2010 Retail Banking Satisfaction Survey. This shows that the hard work our team members put into providing premier customer service is paying off. And that is a key relationship that builds an opportunity to cross sell. These are already important in executing our overall strategy.

We also welcome a new member to our Board of Directors, Jim Ovenden. Jim brings a depth of financial and managerial expertise to our overall Board governance process.

Our focus and direction is very clear. We are working hard to become a top tier super community bank, leveraging a state of the art bank platform and help the customer relationships we build, and are being recognized throughout. Flagstar's existing footprint alone provides access to an attractive market, with more than 3.3 million households and over half a million small businesses to grow retail and commercial banking. The infrastructure and foundation we have established is scalable, and will support efficient growth in all business and market segments. We are confident that the execution of our strategy results in a more balanced and higher quality revenue mix over the coming years. We are focused on growing core deposits, as we implement new initiatives, including new lending products to accelerate account growth and household penetration.

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