8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 20, 2006

Flagstar Bancorp, Inc.

(Exact Name of Registrant as Specified in Charter)

Michigan	1-16577	38-3150651
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

5151 Corporate Drive, Troy, Michigan
(Address of Principal Executive Offices) 48098
(Zip Code)

Registrant’s telephone number, including area code: (248) 312-2000

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02 Results of Operations and Financial Condition
	Item 9.01 Financial Statements and Exhibits
SIGNATURE
EXHIBIT INDEX
Press Release dated July 20, 2006

Item 2.02 Results of Operations and Financial Condition

     On July 20, 2006, Flagstar Bancorp, Inc. issued a press release regarding its results of operations and financial condition for the three and six months ended June 30, 2006. The text of the press release is included as Exhibit 99.1 to this report. The Company will include final financial statements and additional analyses for the three and six months ended June 30, 2006 as part of its Form 10-Q covering that period.

     The information in this Item 2.02, including the exhibit attached hereto, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for any other purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Item 2.02 of this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits

     (d) The following exhibit is being furnished herewith:

Exhibit No.	Exhibit Description
99.1	Press release of Flagstar Bancorp, Inc. dated July 20, 2006.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FLAGSTAR BANCORP, INC.
Date: July 21, 2006	By:	/s/ Paul D. Borja
		Paul D. Borja
		Executive Vice-President, Chief Financial Officer, and Treasurer

EXHIBIT INDEX

Exhibit No.	Exhibit Description
99.1	Press release of Flagstar Bancorp, Inc. dated July 20, 2006.

EX-99.1

EXHIBIT 99.1

NEWS RELEASE
FOR MORE INFORMATION, CONTACT:
Paul D. Borja
Executive Vice President / CFO
(248) 312-2000

FOR IMMEDIATE RELEASE

FLAGSTAR REPORTS 2006 SECOND QUARTER RESULTS

TROY, Mich. (July 20, 2006) — Flagstar Bancorp, Inc. (NYSE:FBC), today reported 2006 second quarter net earnings of $28.6 million, or $0.44 per share — diluted. For the six months ended June 30, 2006 net earnings totaled $47.6 million, or $0.74 — diluted.

For the 2005 second quarter, net earnings were $27.8 million, or $0.43 per share — diluted. For the six months ended June 30, 2005, net earnings were $47.6 million, or $0.74 per share — diluted.

“We performed as we expected in a challenging environment,” said Mark Hammond, President and Chief Executive Officer. “Competitive price pressures on deposits and loans, as well as the flat yield curve, continued to strain net interest margins and loan sale margins. Nevertheless, we are actively engaged in managing the short-term challenges, while also continuing to implement our long-term strategic initiatives.

“In particular,” noted Mr. Hammond, “ we are continuing to expand our bank branch network and build our core deposit accounts. We have also been introducing new products to improve our loan origination volume and provide opportunities for non-agency securitization, while maintaining high credit standards in our held for investment portfolio. Additionally, we have been diligent in reducing overhead and making investments in systems to improve processes and workflow. Lastly, as long-term yields have risen, we have resumed our historic practice of strategically selling mortgage servicing rights as opportunities arise.”

Highlights for the 2006 second quarter include the following:

• A return on average equity of 14.5%

• Opening of the 145^th banking center

• Loan production of $5.3 billion, including residential mortgages of $4.9 billion

• Loans serviced for others of $22.4 billion

• Sale of mortgage servicing rights related to $9.9 billion in underlying loans

Balance Sheet and Capital Adequacy

Consolidated assets were $15.2 billion at June 30, 2006 as compared to $15.1 billion at December 31, 2005 and $14.9 billion at June 30, 2005. With a core capital ratio of 6.4% and a risk-based capital ratio of 11.2%, at June 30, 2006, Flagstar Bank, our wholly-owned subsidiary, was considered “well-capitalized” for regulatory purposes.

Net Interest Margin

The net interest margin for the second quarter of 2006 was 1.49%, as compared to 1.72% for the first quarter of 2006 and 1.79% for the second quarter of 2005. For the six months ended June 30, 2006 the net interest margin was 1.60% as compared to 1.90% reported for the six months ended June 30, 2005.

Retail Banking Operations

Flagstar Bank had 145 branches in operation at June 30, 2006 and expects to open approximately seven more branches by the end of 2006. During the second quarter, Flagstar completed its bank wide implementation of its Loyalty Pricing Program to build its core deposit base. This program enhanced the Company’s cross-sell ratio. The households in this program had an average of 4.8 accounts versus 1.8 accounts for other households.

Mortgage Banking Operations

Flagstar’s gain on sale spread decreased to 20 basis points during the quarter ended June 30, 2006 as compared to 33 basis points recorded during first quarter of 2006. During the 2005 second quarter, the gain decreased 27 basis points as compared to 47 basis points gain on sale. For the six months ended June 30, 2006 gain on sale decreased 6 basis points to 26 basis points as compared to 32 basis points recorded for the six months ended June 30, 2005.

During the second quarter of 2006, Flagstar sold servicing rights related to underlying loans of $9.9 billion of servicing as compared to $2.4 billion during the first quarter of 2006 and none during the second quarter of 2005. Sales of servicing rights totaled $12.2 billion for the six months ended June 30, 2006 and $2.5 billion during the same period in 2005.

At June 30, 2006, Flagstar’s mortgage servicing portfolio totaled $22.4 billion with a weighted average service fee of 35.6 basis points, a decrease from $29.2 billion at March 31, 2006 with a weighted average servicing fee of 34.8 basis points. The decrease is the result of the bulk sale that occurred in the second quarter. The capitalized value of Flagstar’s servicing portfolio was $231 million, or 1.03% of the outstanding balance of loans serviced for others, at June 30, 2006 as compared to $321 million, or 1.10%, at March 31, 2006. The estimated market value of the portfolio was $328.7 million at June 30, 2006 and $442.6 million March 31, 2006.

Asset Quality

Non-performing loans totaled $50.0 million at June 30, 2006, a decrease of $8.0 million as compared to $58.0 million recorded at March 31, 2006. Delinquencies (30 day +) as a percent of loans held for investment also decreased slightly to 0.53% at June 30, 2006, from 0.59% at March 31, 2006. At June 30, 2006, 89.9% of non-performing loans were secured by first or second mortgages on single-family homes. Single-family residential first mortgage loans held by Flagstar for investment at June 30, 2006 had an average FICO credit score of 720 and an average loan-to-value ratio of 71%.

As Previously Announced

The Company’s quarterly earnings conference call will be held on Friday, July 21, 2006 from 11 a.m. until noon (Eastern).

Questions for discussion at the conference call may only be submitted in advance by email to investors@flagstar.com.

The conference call and accompanying slide presentation will be webcast live on the Investor Relations section of the Company’s website, www.flagstar.com.

To listen by telephone, please call at least 10 minutes prior to the start of the conference call at (719) 457-2638 or toll free at (800) 946-0706, passcode: 7944706.

Flagstar Bancorp, which has $15.2 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. Flagstar currently operates 145 banking centers located throughout southern

Michigan, Indiana and Georgia and operates 87 loan centers in 26 states. Flagstar Bank originates loans nationwide and is one of the nation’s top 30 originators of residential mortgage loans.

The information contained in this release is not intended as a solicitation to buy Flagstar Bancorp, Inc. stock and is provided for general information. This release contains certain statements that may constitute “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements include statements about the Company’s beliefs, plans, objectives, goals, expectations, anticipations, estimates, and intentions, that are subject to significant risks and uncertainties, and are subject to change based upon various factors (some of which may be beyond the Company’s control). The words “may,” “could,” “should,” “would,” “believe,” and similar expressions are intended to identify forward-looking statements.

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial Data
(in thousands, except share data)
(unaudited)

	At or for the three months ended									At or for the six months ended
Summary of the Consolidated	June 30,			March 31,			June 30,			June 30,			June 30,
Statements of Earnings	2006			2006			2005			2006			2005
Interest income	$	192,648		$	191,299		$	166,111		$	383,947		$	329,237
Interest expense		(141,910	)		(132,624	)		(107,670	)		(274,534	)		(205,586	)
Net interest income		50,738			58,675			58,441			109,413			123,651
Provision for losses		(5,859	)		(4,063	)		(2,903	)		(9,923	)		(9,150	)
Net interest income after provision		44,879			54,612			55,538			99,490			114,501
Non-interest income
Loan fees and charges, net		1,239			1,611			3,213			2,850			5,835
Deposit fees and charges		5,692			4,812			4,400			10,503			7,977
Loan servicing fees, net		309			4,355			1,669			4,664			7,614
Gain on loan sales, net		9,650			17,085			32,347			26,735			41,924
Gain on MSR sales, net		34,932			8,586			2,262			43,518			6,510
Net loss on securities available for sale		—			(3,557	)		—			(3,557	)		—
Other income		9,750			9,731			10,978			19,481			20,570
Non-interest expenses
Compensation and benefits		(38,758	)		(39,873	)		(38,477	)		(78,631	)		(76,032	)
Commissions		(20,911	)		(16,967	)		(22,887	)		(37,878	)		(43,967	)
Occupancy and equipment		(16,748	)		(16,908	)		(18,302	)		(33,656	)		(34,953	)
General and administrative		(10,957	)		(9,871	)		(11,860	)		(20,828	)		(23,300	)
Other		(749	)		(5,886	)		(6,421	)		(6,635	)		(12,462	)
Capitalized direct cost of loan closing		25,770			21,434			30,873			47,204			59,918
Earnings before federal income tax		44,099			29,163			43,333			73,260			74,135
Provision for federal income taxes		(15,457	)		(10,253	)		(15,533	)		(25,710	)		(26,557	)
Net earnings		28,640		$	18,910		$	27,800		$	47,550		$	47,578
Basic earnings per share	$	0.45		$	0.30		$	0.45		$	0.75		$	0.77
Diluted earnings per share	$	0.44		$	0.29		$	0.43		$	0.74		$	0.74
Dividends paid per common share	$	0.15		$	0.15		$	0.25		$	0.30		$	0.50
Interest rate spread		1.41	%		1.57	%		1.71	%		1.48	%		1.71	%
Net interest margin		1.49	%		1.72	%		1.79	%		1.60	%		1.90	%
Return on average assets		0.76	%		0.50	%		0.77	%		0.63	%		0.67	%
Return on average equity		14.46	%		9.73	%		14.88	%		12.12	%		12.80	%
Efficiency ratio		55.52	%		67.20	%		59.20	%		61.06	%		61.10	%
Average interest earning assets	$	13,650,019		$	13,845,517		$	13,061,681		$	13,747,768		$	13,108,399
Average interest paying liabilities	$	13,427,419		$	13,591,084		$	12,795,846		$	13,509,251		$	12,576,554
Average stockholders’ equity	$	791,998		$	777,620		$	747,452		$	784,828		$	743,618
Equity/assets ratio (average for the period)		5.22	%		5.14	%		5.15	%		5.18	%		5.25	%
Ratio of charge-offs to average loans held for investment		0.23	%		0.15	%		0.19	%		0.20	%		0.19	%

Summary of the Consolidated	June 30,			March 31,			December 31,			June 30,
Statements of Financial Condition:	2006			2006			2005			2005
Total assets	$	15,225,864		$	15,051,458		$	15,075,430		$	14,926,516
Loans held for sale		2,817,428			2,442,616			1,773,394			1,961,977
Loans held for investment, net		9,387,460			9,794,612			10,537,331			11,751,110
Allowance for loan losses		39,606			39,520			39,140			36,944
Servicing rights		230,984			321,167			315,678			284,331
Deposits		7,843,249			8,208,435			7,979,000			7,887,028
FHLB advances		4,290,000			3,844,000			4,225,000			5,161,035
Repurchase agreements		1,145,578			1,103,537			1,060,097			—
Stockholders’ equity		803,944			783,084			771,883			749,395
Other Financial and Statistical Data:
Equity/assets ratio		5.28	%		5.20	%		5.12	%		5.02	%
Core capital ratio		6.39	%		6.33	%		6.26	%		6.07	%
Total risk-based capital ratio		11.15	%		11.20	%		11.09	%		10.50	%
Book value per share	$	12.65		$	12.33		$	12.21		$	12.04
Shares outstanding		63,529			63,488			63,208			62,244
Loans serviced for others	$	22,379,937		$	29,242,906		$	29,648,088		$	26,646,532
Weighted average service fee (bps)		35.6			34.8			34.7			34.8
Value of servicing rights		1.03	%		1.10	%		1.06	%		1.07	%
Allowance for loan losses to non performing loans		79.2	%		68.2	%		60.7	%		56.7	%
Allowance for loan losses to loans held for investment		0.42	%		0.40	%		0.37	%		0.31	%
Non performing assets to total assets		0.99	%		1.00	%		0.98	%		0.93	%
Number of bank branches		145			141			137			128
Number of loan origination centers		87			97			101			114
Number of employees (excluding loan officers & account executives)		2,548			2,421			2,405			2,431
Number of loan officers and account executives		530			594			689			800

Flagstar Bancorp, Inc.

Loan Originations

(in millions)
(unaudited)

	For the three months ended												For the six months ended
Loan type	June 30, 2006		%		March 31, 2006		%		June 30, 2005		%		June 30, 2006		%		June 30, 2005		%
Residential mortgage loans	$	4,901		93.2	$	4,348		93.0	$	7,104		94.3	$	9,249		93.1	$	14,317		94.8
Consumer loans		194		3.7		180		3.8		323		4.3		374		3.8		571		3.8
Commercial loans		165		3.1		146		3.2		104		1.4		311		3.1		214		1.4
Total loan production	$	5,260		100.0	$	4,674		100.0	$	7,531		100.0	$	9,934		100.0	$	15,102		100.0

Gain on Loan Sales

(in thousands)
(unaudited)

	For the three months ended									For the six months ended
Description	June 30, 2006			March 31, 2006			June 30, 2005			June 30, 2006			June 30, 2005
Net gain on loan sales	$	9,651		$	17,084		$	32,347		$	26,735		$	41,924
Plus: FASB 133 adjustment		(3,337	)		(5,381	)		(5,866	)		(8,718	)		(9,001	)
Plus: secondary market reserve		1,420			1,006			1,282			2,426			2,463
Gain on loan sales	$	7,734		$	12,709		$	27,763		$	20,443		$	35,386
Loans sold	$	3,964,625		$	3,894,070		$	5,891,492		$	7,858,695		$	11,329,539
Sales spread		0.20	%		0.33	%		0.47	%		0.26	%		0.32	%

Loans Held for Investment

(in thousands)
(unaudited)

Description	June 30, 2006				March 31, 2006				Dec. 31, 2005				June 30, 2005
First mortgage loans	$	7,091,818	75.2	%	$	7,309,685	74.3	%	$	8,248,897	78.0	%	$	9,371,300	79.5	%
Second mortgage loans		470,885	5.0	%		762,918	7.8	%		700,492	6.6	%		293,582	2.5	%
Commercial real estate loans		1,210,212	12.8	%		1,091,179	11.1	%		995,410	9.4	%		850,260	7.2	%
Construction loans		62,847	0.7	%		63,998	0.7	%		65,646	0.6	%		67,749	0.6	%
Warehouse lending		190,466	2.0	%		187,610	1.9	%		146,694	1.4	%		289,244	2.5	%
Consumer loans		389,167	4.1	%		406,267	4.1	%		410,920	3.9	%		908,185	7.7	%
Non-real estate commercial loans		11,670	0.1	%		12,475	0.1	%		8,411	0.1	%		7,732	0.1	%
Total loans held for investment	$	9,427,065	100.0	%	$	9,834,132	100.0	%	$	10,576,470	100.0	%	$	11,788,052	100.0	%

Deposit Portfolio

(in thousands)
(unaudited)

Description	June 30, 2006				March 31, 2006				Dec. 31, 2005				June 30, 2005
	Balance		Rate		Balance		Rate		Balance		Rate		Balance		Rate
	($ '000)		(%)		($ '000)		(%)		($ '000)		(%)		($ '000)		(%)
Demand deposits	$	340,843		0.75	$	355,487		0.64	$	374,816		0.60	$	331,842		0.69
Savings deposits		184,103		1.65		207,131		1.41		239,215		1.52		388,363		1.78
Money market deposits		656,902		3.89		661,067		3.24		781,087		2.98		1,027,099		2.77
Certificates of deposits		3,723,086		4.50		3,687,232		4.25		3,450,450		3.94		2,819,086		3.67
Total retail deposits		4,904,934		4.06		4,910,917		3.74		4,845,568		3.41		4,566,390		3.09
Municipal deposits		1,448,077		5.16		1,688,691		4.75		1,353,633		4.30		1,463,333		3.41
Wholesale deposits		1,490,238		3.53		1,608,827		3.48		1,779,799		3.42		1,857,305		3.28
Total deposits	$	7,843,249		4.17	$	8,208,435		3.89	$	7,979,000		3.56	$	7,887,028		3.19

Asset Quality & Reserves

(in thousands)
(unaudited)

	Delinquencies at
	June 30, 2006					March 31, 2006					Dec. 31, 2005						June 30, 2005
Days delinquent	June 30, 2006			%		$			%		$			%			$			%
30	$	28,703			30.5	$	24,462			24.5	$	30,972			26.7	%	$	28,728			24.3	%
60		15,253			16.2		17,244			17.3		20,456			17.7	%		24,155			20.5	%
90		49,530			52.7		56,469			56.7		61,816			53.3	%		65,003			55.1	%
Matured — Delinquent		497			0.5		1,501			1.5		2,650			2.3	%		165			0.1	%
Total	$	93,983			100.0	$	99,676			100.0	$	115,894			100.0	%	$	118,051			100.0	%
Investment loans	$	9,427,065				$	9,834,132				$	10,576,471					$	11,784,482
Delinquency % (90+ Days and Matured)		0.53	%				0.59	%				0.61	%					0.55	%

	Non-Performing Loans and Assets at
	June 30, 2006			March 31, 2006			Dec. 31, 2005			June 30, 2005
Non-Performing Loans	$	50,027		$	57,970		$	64,466		$	65,168
As a Percentage of Investment Loans		0.53	%		0.59	%		0.61	%		0.55	%
Non-Performing Assets	$	150,369		$	150,975		$	146,967		$	137,922
As a Percentage of Total Assets		0.99	%		1.00	%		0.98	%		0.93	%