Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of savings and loan holding company Flagstar Bancorp (NYSE: FBC) were absolutely clobbered as investors reacted to a massive new share offering.

So what: Flagstar announced third-quarter earnings late yesterday, and there were some glimmers of hope in it -- particularly some credit trends moving in the right direction. But we can very safely ignore that earnings report when it comes to today's action because it is all about the bank's massive share offering. This morning, the bank announced the pricing of a $380 million stock offering at a price per share of $1 per share.

Now what: This is the kind of thing that should absolutely scare the pants off of any bank investor right now as banks scramble to ensure that they have a future. Flagstar, which is majority-owned by private equity firm MatlinPatterson, finished the quarter with 8.25% of its assets classified as nonperforming and has racked up a string of quarterly losses that stretches back nearly unbroken to late 2007. The capital raise is no doubt a calculated move to bolster the bank's balance sheet, but the move is disastrous for current shareholders. Flagstar had 153 million shares outstanding as of August, and the offering will add 110 million new common shares and another 13.5 million preferred shares which each convert to 20 shares of common.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.