If Joseph Campanelli's job at Flagstar Bancorp (FBC) was to keep the Troy, Mich., company alive, Michael Tierney's task is to make it thrive.

Earlier this week, the $14.4 billion-asset company said that Campanelli would step down as its president and chief executive at the end of October. Tierney, who joined Flagstar in early 2011 to help the mortgage-heavy lender grow in traditional banking, was named president, effective immediately. He will become the chief executive on Nov. 1.

The new CEO's job is to make sure that the company's newfound profitability under Campanelli, which ended more than four years of losses, is more than a fluke, Tierney said in an interview Thursday.

"Joe has gotten us to a point where there are no longer concerns over our survival," Tierney said. "My task is to shape up the bank so we are earning attractive returns."

Flagstar was among the first banking companies to tap into private equity. In early 2009, MatlinPatterson Global Advisors in New York used a special purpose vehicle to invest $250 million in Flagstar, helping it to secure $266.6 million from the Treasury Department's Troubled Asset Relief Program. As Flagstar's credit problems swelled, MatlinPatterson's investment grew to more than $1 billion as it led additional capital infusions to stabilize the company.

Private equity is getting antsy with the banking industry, overall. A few private-equity-backed banks have announced plans to sell themselves. For now, representatives for MatlinPatterson say they are not eyeing an exit.

"We are confident that Flagstar is taking the right steps and is on a path towards achieving long-term sustainable profitability," MatlinPatterson said in an emailed statement. "Given MatlinPatterson's long-term perspective and time horizon, this investment is still in a relatively early stage, and we believe it will ultimately be successful."

Tierney said he is acutely aware, though, that the firm could eventually look to cash out. In fact, he addressed that possibility on the day his new posts were announced, sharing a quote from Eugene Miller, the former chairman of Comerica, during the first management meeting. Tierney began his career at Comerica in the 1970s; he was at that company for 28 years.

"Any entity can make an offer at any time," Tierney said he told his colleagues. "Gene Miller always told us you have to earn the right to be independent. If someone else can do a better job of managing it, someone else should take the keys."

Tierney said the company's biggest hurdle — mortgages — remains the same despite the change in management. Flagstar's nonperforming assets once topped $1.1 billion. A bulk sale in late 2010 nearly halved those assets, but the company has not reduced its NPA totals much more since then. At June 30, Flagstar has $541 million in nonperforming assets.

The company is also set stand trial over allegations that it breached contracts for guarantees on roughly $1 billion in resident mortgage-backed securities in the years prior to the financial crisis.

Tierney said that his management team has developed an "effective plan" to deal with lingering problems, but he declined to provide any specifics. He said that the performance of the remaining mortgages in Flagstar's loan portfolio is dependent on an overall rebound in the economy.

While the company continues to tackle its mortgage problems, it has made significant progress growing its traditional banking business. In mid-2008, commercial loans made up a mere $23.7 million, or just 0.2%, of Flagstar's total loans. Two-thirds of its $9 billion loan book at that time consisted of mortgages.

At June 30 of this year, Flagstar had grown the commercial business to $1.8 billion, or 28% of its $6.6 billion in loans outstanding. Residential first mortgages now comprise 47% of total loans.

Nearly 30% of Flagstar's commercial loans are in Michigan, where Tierney said there is still ample room to grow. "We feel very good about our prospects in Michigan," he said.

Michigan "is a much better growth market than it has been for the last decade," he added. "Our auto industry is back and really strong, and the economy overall is pretty vibrant across the whole state. We can grow all we need to on the deposit side and commercial lending side in Michigan."

Tierney also cautioned that Flagstar's growth in New England might be tempered going forward. "We are modifying our strategy a little bit" in the Northeast, he said.

"We are going to move away from some of the really high-end lending" in New England, Tierney said. "We've built a good, solid book of business, but we want to focus more on the markets that we are in" physically.

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