5 Reasons To Add Flagstar Bancorp (FBC) To Your Portfolio
Zacks Investment Research | Nov 27, 2017 09:10PM ET
A strong balance sheet position and improving credit quality make Flagstar Bancorp (NYSE:FBC) an attractive pick now. Further, the bank’s cost-control initiatives are impressive.
Given the strong fundamentals, shares of Flagstar Bancorp have gained 35.3% year to date, as against the industry ’s decline of 1.9%.
The Zacks Consensus Estimate for its current-year earnings has remained stable, over the last 60 days. Currently, the stock carries a Zacks Rank #2 (Buy).
Factors That Make Flagstar Bancorp an Attractive Pick
Impressive Balance Sheet Growth: The company’s loans and deposits have witnessed a compounded annual growth rate (CAGR) of 12.6% and 12.7%, respectively, over a four-year period (ended 2016). This makes the company well poised for opportunistic acquisitions in the future.
Prudent Expense Management: The Troy, MI-based lender has reduced its expenses at a CAGR of 15.2% over the last four years (ended 2016). Such cost management initiatives are likely to continue supporting its bottom-line growth.
Improving Credit Quality: Flagstar Bancorp’s credit quality has improved significantly over the years. In 2016, its non-performing assets declined nearly 70% from the 2013 level. Also, it recorded benefit for loan losses of $15 million in 2016 against an expense of $70 million in 2013.
Superior Return on Equity: The company has a return on equity of 9.77% compared with the industry average of 7.02%. This reflects the company’s superiority in utilizing shareholders’ funds.
Improved Efficiency: Flagstar Bancorp reported efficiency ratio of 69.2% in 2016 compared with 109.4% in 2013. It should be noted that a decline in this ratio indicates improvement in profitability.
Other Stocks to Consider
Some other banks worth considering are First Internet Bancorp (NASDAQ:INBK) , First Commonwealth Financial Corporation (NYSE:FCF) and Eagle Bancorp (NASDAQ:EGBN) . All these stocks carry a Zacks Rank of 2. You can see .
First Internet Bancorp’s Zacks Consensus Estimate for current-year earnings has been revised slightly upward in the last 60 days. The company’s share price has risen almost 43%, over the past six months.
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First Commonwealth Financial’s current-year earnings estimates have been revised 2.5% upward over the last 60 days. Also, its shares have gained 15% over the past six months.
Eagle Bancorp’s Zacks Consensus Estimate for current-year earnings has moved 2.5% up over the last 60 days. Over the past six months, its share price has rallied 13.9%.
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