Flagstar Bancorp Inc (FBC): A Long-Term Buy

Flagstar Bancorp Inc (NYSE:FBC) has come out of the recession incredibly strong. It seems as though investors who were once scared of the bank during the height of the recession are beginning to climb back in and buy shares. Also, important is the fact that the bank’s own customers seem to be coming back towards the bank, as the bank has increased core deposits 13% quarter-over-quarter. Even more importantly, hinting at consumer confidence in the bank is that Flagstar Bancorp Inc (NYSE:FBC) finished second in the JD Power and Associates annual survey for the North Central Region. This speaks to customers being able to trust the bank and the services that the bank is providing.  Now, let’s dive into the financials and see why this company is truly a buy.

A better financial position

While revenue dropped the most recent quarter, net income increased quarter over quarter. Net income is in many ways much more important than revenue,as net income is the income that the bank makes after all of its expenses are paid. So the bank actually made a profit on decreased revenues. What is significant about the most recent quarter is the comment made during the conference call: “while we have clearly come down from the peak of 2012, we believe that we are now back to a level that’s not far away from the longer term run rate.” This would suggest that Flagstar Bancorp Inc (NYSE:FBC) seems to have its costs in check, which would be important for any stock that is being considered for a long term investment.

Also of note is the fact that Free Cash flow jumped substantially quarter over quarter. This will help to ease any concerns that remained about Flagstar Bancorp Inc (NYSE:FBC)’s liquidity situation. Flagstar Bancorp Inc (NYSE:FBC)’s main focus can now be to increase its market share and its loan distribution in a way that is not as risky for shareholders. Flagstar Bancorp Inc (NYSE:FBC)has a plan to grow in a sustainable way long term. Shareholders should continue to buy into Flagstar’s growth plan.