Flagstar Issues Revised 2012 Results Based on Analysis of Assured Decision -- TROY, Mich., Feb. 8, 2013 /PRNewswire/ -- TROY, Mich., Feb. 8, 2013 /PRNewswire/ -- Flagstar Bancorp, Inc. (NYSE: FBC) ("Flagstar"), the holding company for Flagstar Bank, FSB (the "Bank"), announced today that it has completed an analysis of the financial impact arising from the decision of the United States District Court for the Southern District of New York (the "Court") in the previously disclosed lawsuit filed by Assured Guaranty Municipal Corp., formerly known as Financial Security Assurance Inc. This decision was described in a press release issued by Flagstar on February 5, 2013. Flagstar disagrees with the Court's decision and intends to contest the outcome on appeal. Following the Court's decision in the Assured case, Flagstar increased, effective as of December 31, 2012, its reserve for pending and threatened litigation, which resulted in a decrease in net income of $161.0 million, or $2.87 per share (diluted), for the fourth quarter 2012. The total amount reserved for pending and threatened litigation, including amounts paid in anticipation of future settlements, was increased to approximately $244.6 million at December 31, 2012. Included in this reserve are amounts for the Court's decision regarding Assured and for the lawsuit that the MBIA Insurance Corporation filed against the Bank on January 11, 2013, along with other pending litigation. As a result, for the three months ended December 31, 2012, net income applicable to common shareholders decreased to a net loss of $ (94.2) million, or $ (1.75) per share (diluted), as compared to previously reported net income of $66.8 million, or $1.12 per share (diluted). For the year ended December 31, 2012, net income applicable to common shareholders decreased to $62.7 million, or $0.87 per share (diluted), as compared to previously reported net income of $223.7 million, or $3.74 per share (diluted). At December 31, 2012 the Bank's revised Tier 1 capital ratio was 9.26 percent, as compared to a previously reported ratio of 10.41 percent. Flagstar's deferred tax asset, which is currently fully offset by a valuation allowance, correspondingly increased to approximately $342 million at December 31, 2012. The revised financial results will be reflected in Flagstar's Annual Report on Form 10-K, and are included in the financial highlights below. Flagstar Bancorp, Inc. Consolidated Statements of Financial Condition (In thousands, except share data) As Reported As Revised Consolidated Statements of Operations (In thousands, except share data) For the Year Ended Total non-interest expense Income (loss) before federal income taxes Net Income (Loss) Net income (loss) applicable to common stockholders Income (loss) per share - basic Income (loss) per share - diluted Summary of Selected Consolidated Financial and Statistical Data (In thousands, except share data) As Reported December 31, 2012 Efficiency ratio (credit-adjusted) (1) Equity/assets ratio (average for the period) Equity/assets ratio Tier 1 capital ratio (to adjusted total assets) Total risk-based capital ratio (to risk-weighted assets) (1) See Non-GAAP reconciliation. Average Balances, Yields and Rates (Dollars in thousands) Average other liabilities Non-GAAP Reconciliation (Dollars in thousands) Pre-tax, pre-credit-cost income Loss before tax provision Efficiency ratio (credit-adjusted) Adjusted non-interest expense (1) Ratios include expenses related to the legal reserves for pending and threatened litigation, including amounts paid in anticipation of a future settlement, of $188.5 million and $229.9 million during the three months and year ended December 31, 2012, respectively. Non-performing assets / Tier 1 capital + allowance for loan losses Tier 1 capital Tier 1 capital + allowance for loan losses About Flagstar Flagstar is a full-service financial institution offering a range of products and services to consumers, businesses, and homeowners. This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding the Company's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended.