Flagstar Bancorp's staggering $200.3 million fourth-quarter loss might have seemed as bad as it could get.
But apparently not.
The Troy, Mich., company — which is getting a $600 million capital boost from the government and a private-equity firm — revised its previously reported results, increasing the quarterly loss to $218.4 million, according to a Securities and Exchange Commission filing Friday.
It attributed the extra $18.1 million hit to an other-than-temporary impairment charge on a collateralized mortgage obligation and a writedown on the value of its deferred tax asset.
Terry McEvoy, an analyst at Oppenheimer & Co., said the $14.2 billion-asset Flagstar might have opted to pile on the additional charges in the hope of a better start for this year.
"Why not take as much of the loss at the end of 2008 and wipe your hands clean?" he asked. "With the new private-equity ownership, they were probably just looking to start the year as clean as possible."
Flagstar has received $300 million in capital from MatlinPatterson Global Advisors LLC, which now owns a stake of more than 70%. An additional $50 million is expected from the private-equity firm through the purchase of trust-preferred securities.
Flagstar also has received $266.6 million through the Treasury Department's Troubled Asset Relief Program.
As a result the company would remain well capitalized, even though the loss wiped out more than a third of the cash infusion.
The adjustment brought Flagstar's loss for the full year to $275.4 million, compared with a loss of $39.2 million in 2007. The previously reported 2008 loss was $257.2 million.
McEvoy said "extreme volatility" is prompting many banking companies to revise fourth-quarter results.
Impairment charges on investments have been a common theme in the revisions, as have lower appraisal prices coming in on properties that serve as loan collateral, he said. "When a company is gathering the annual report, they make sure to cross every 't.' "
Flagstar's loss was driven mainly by its $176.3 million loan-loss provision in the fourth quarter. That brought the provision for the year to $344 million.
The company said in filing its results that nonperforming assets had increased to 5.33% of the total, from 1.91% a year earlier. It said 10.15% of its loans were 30 days or more past due, up from 4.03%.