Flagstar Bancorp, Inc. (FBC)

Banks

Flagstar continues to beat our earnings estimates as it reduces its risk profile through the disposition of higher-risk assets. Robust growth across its core residential and commercial loan portfolios positions the Company with a greater earning asset base going into 2016. We are increasing our 2016 EPS estimates by $0.59 to $1.66. We continue to estimate that the Company redeems its TARP preferred stock in 2H16. Proforma for the redemption, we estimate 2016 EPS of $2.24, which at current banking industry P/E multiples supports our $30.00 Stock Price target, 31% above the recent close.