Flagstar Bancorp Inc. of Troy, Mich., said it will not pay a shareholder dividend for the first quarter to preserve capital.
"It is prudent to preserve capital by suspending the dividend until the capital markets normalize and residential real estate shows signs of improvement," Mark Hammond, Flagstar's chief executive and vice chairman, said in a press release late Tuesday. "The board will reassess the dividend in the second quarter based upon first-quarter results and the state of the capital and residential real estate markets."
Last month the $15.8 billion-asset Flagstar reported a fourth-quarter loss of $30.1 million, or 50 cents a share, compared with earnings of $6.9 million, or 11 cents a share, a year earlier. For the full year, it lost $39.2 million, or 64 cents a share.
The losses were attributed to a decrease in gain on sales of mortgage servicing rights, an increase in credit costs, and an impairment in the value of securities.
During a conference call last month, Mr. Hammond had mentioned the likelihood of not paying a first-quarter dividend. In February of last year Flagstar lowered its quarterly dividend by 5 cents, to 10 cents a share. In November the dividend dropped to 5 cents.
By late Wednesday, Flagstar's shares had dropped 4.1% from Tuesday's close, to $7.67. The shares have dropped roughly 46% in the last year.
