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): January 29, 2008

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))

Item 2.02 Results of Operations and Financial Condition

     On January 29, 2008, Flagstar Bancorp, Inc. issued a press release regarding its results of operations and financial condition for the three months and year ended December 31, 2007. 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 year ended December 31, 2007 as part of its 2007 Annual Report on Form 10-K.

     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 January 29, 2008.

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: January 30, 2008	By:	/s/ Paul D. Borja
		Paul D. Borja
		Executive Vice-President and Chief Financial Officer

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 2007 FULL YEAR AND FOURTH QUARTER RESULTS

TROY, Mich. (January 29, 2008) — Flagstar Bancorp, Inc. (NYSE: FBC), today reported a net loss for 2007 of $39.2 million, or $(0.64) per share (diluted) and a 2007 fourth quarter net loss of $30.1 million, or $(0.50) per share (diluted). Full year 2006 earnings were $75.2 million, or $1.17 per share (diluted) and 2006 fourth quarter net earnings were $6.9 million, or $0.11 per share (diluted). On a linked-quarter basis, the results compared to a net loss of $32.1 million, or $(0.53) per share (diluted) in third quarter 2007. Return on average equity for 2007 and the fourth quarter 2007 were (5.14%) and (16.67%), respectively, as compared to 9.42% and 3.41% for the same periods in 2006.

The fourth quarter 2007 results as compared to the same period in 2006 were negatively impacted by a decrease in gain on sales of mortgage servicing rights (“MSRs”), an increase in credit costs and an impairment in the value of securities in the available for sale and the trading portfolios. These were partially offset by an improvement in net interest income and an increase in gains on sales of securities available for sale.

Full year 2007 results as compared to 2006 reflect an increase in gain on loan sales, offset by a decrease in gain on sales of mortgage servicing rights (“MSRs”), an increase in credit costs and an impairment in the value of securities available for sale portfolio and the trading portfolio.

Consolidated assets decreased $0.8 billion, or 4.8%, from $16.6 billion at September 30, 2007 to $15.8 billion at December 31, 2007 but increased $0.3 billion or 1.9% from $15.5 billion at December 31, 2006.

“We will continue to focus on managing through a period of possible further real estate declines and a weakening economy,” said Mark Hammond, president and chief executive officer of Flagstar. “At the same time, we believe there are a number of positive trends and underlying fundamentals that are currently occurring or are on the horizon. These include our increasing market share for mortgage originations, increased residential loan production, improving gain on sale spreads, the potential for higher Fannie Mae, Freddie Mac and FHA loan limits, and increased credit spreads and lower funding costs, which should result in an improving net interest margin.”

Liquidity

Flagstar’s primary sources of funds are deposits, loan repayments and sales, advances from the Federal Home Loan Bank, security repurchase agreements, cash generated from operations and customer escrow accounts. Retail deposits increased to $5.1 billion at December 31, 2007, as compared to $4.9 billion at December 31, 2006. At December 31, 2007, we had a $7.5 billion line of credit with the FHLB as to which collateral at the FHLB was sufficient to access $7.0 billion of the line and of which $0.7 billion was still available. Also at December 31, 2007, we had $1.6 billion of agency securities and $0.7 billion of non-agency securities available for use as collateral in security repurchase agreements. We also had a $0.8 billion undrawn line of credit at the Federal Reserve discount window at December 31, 2007.

Capital

At December 31, 2007, Flagstar Bank, our wholly owned subsidiary, was considered “well-capitalized” for regulatory purposes, with regulatory capital ratios of 5.78% for core capital and 10.66% for total risk-based capital.

Net Interest Margin

The net interest margin of Flagstar Bank increased to 1.62%, as compared to 1.52% for the third quarter 2007 and 1.58% for the fourth quarter 2006. For the year ended December 31, 2007 its net interest margin was 1.50% as compared to 1.63% for the year ended December 31, 2006.

Retail Banking Operations

Flagstar Bank had 164 retail banking branches at December 31, 2007, as compared to 158 branches as of September 30, 2007 and 151 branches as of December 31, 2006. During 2007, the total number of retail accounts increased 5.5% to 293,200 in its current retail banking footprint as compared to approximately 277,900 at December 31, 2006.

Mortgage Banking Operations

Fourth quarter 2007 loan production was $6.7 billion, including $6.5 billion of residential loans, as compared to $6.8 billion, including $6.6 billion of residential loans, during third quarter 2007, and $5.4 billion, including $5.1 billion of residential loans, during fourth quarter 2006.

For the year ended December 31, 2007 loan production increased 32.2% to $26.7 billion, including $25.7 billion of residential loans, as compared to $20.2 billion, including $19.0 billion of residential loans, for the year ended December 31, 2006. At December 31, 2007, subprime loans comprised approximately 1.0% of total assets.

Flagstar’s net gain on loan sale spread was 32 basis points for the quarter ended December 31, 2007, as compared to a net loss on loan sale spread of (29) basis points for the third quarter 2007 and a net gain on loan sale spread of 53 basis points for the quarter ended December 31, 2006. Our calculation of net gain on loan sales reflects hedging costs, lower of cost or market adjustments on loan transfers, provisions to our secondary market reserve and other transaction costs and expenses. Gain on loan sale spreads, before certain adjustments for costs, increased in the fourth quarter 2007 to 117 basis points from 71 basis points for the third quarter 2007 and 96 basis points for the fourth quarter 2006. These amounts were offset by hedging costs which amounted to 32 basis points during the fourth quarter 2007, 54 basis points during the third quarter 2007 and 19 basis points for the fourth quarter 2006. Lower of cost or market adjustments on loan transfers reduced the gain (loss) by 3 basis points for the fourth quarter 2007 and did not affect either the third quarter 2007 or the fourth quarter 2006. Provisions to our secondary market reserve reduced the gain (loss) by 3 basis points during the fourth quarter 2007, 5 basis points for the third quarter 2007, and 4 basis points for the fourth quarter 2006. Loan level pricing adjustments negatively affected the gain (loss) by 45 basis points during the fourth quarter 2007, 40 basis points during the third quarter 2007 and 19 basis points during the fourth quarter 2006. Credit losses associated with available for sale portfolio reduced the gain (loss) by 3 basis points for the fourth quarter 2007 and 1 basis point in both the third quarter 2007 and the fourth quarter 2006.

For the year ended December 31, 2007 the net gain on loan sale spread decreased 2 basis points to 24 basis points as compared to 26 basis points for the same period in 2006. Our calculation of net gain on loan sales reflects hedging costs, lower of cost or market adjustments on loan transfers, provisions to our secondary market reserve and other transaction costs and expenses. Gain on loan sale spreads, before certain adjustments for costs, increased for the year ended December 31, 2007 to 80 basis points from 60 basis points for the same period in 2006. These amounts were negatively impacted by hedging costs which amounted to 13 basis points for 2007 and 3 basis points for 2006. Lower of cost or market adjustments on loan transfers reduced the gain by 1 basis point for both 2007 and 2006. Provisions to our secondary market reserve reduced the gain by 4 basis points for both 2007 and 2006. Loan level pricing adjustments negatively

affected the gain by 37 basis points for 2007 and 25 basis points for 2006. Credit losses associated with available for sale portfolio reduced the gain by 1 basis point for both 2007 and 2006.

At December 31, 2007, Flagstar’s mortgage servicing portfolio totaled $32.5 billion with a weighted average service fee of 36 basis points. This is an increase from $26.7 billion at September 30, 2007 with a weighted average servicing fee of 36.4 basis points and an increase from $15.0 billion at December 31, 2006 with a weighted average servicing fee of 37.1 basis points. The capitalized value of Flagstar’s servicing portfolio at December 31, 2007 was $414.0 million, or 1.27% of the outstanding balance of loans serviced for others, with an estimated market value of $457.9 million. This compares to the capitalized value at September 30, 2007 of $340.8 million, or 1.28% with an estimated market value of $385.6 million and a capitalized value at December 31, 2006 of $173.3 million, or 1.15% with an estimated market value of $197.6 million.

Asset Quality

During the fourth quarter 2007, Flagstar increased its allowance for loan losses to $104.0 million, or 1.28% of loans held for investment at December 31, 2007, from $77.8 million, or 1.11% of loans held for investment, at September 30, 2007 and from $45.8 million, or 0.51% of loans held for investment, at December 31, 2006. Single-family residential first mortgage loans held for investment at December 31, 2007 had an average FICO credit score of 719 and an average original loan-to-value ratio of 73.4%.

Net charge-offs of loans during the fourth quarter 2007 increased to $12.2 million from $5.8 million during the third quarter 2007 and from $5.2 million during the fourth quarter 2006. Net charge-offs for the full year 2007 increased to $30.1 million as compared to $18.8 million for 2006. Total non-performing assets increased to $316.2 million at December 31, 2007, from $221.0 million at September 30, 2007 and $160.2 million at December 31, 2006.

Non-performing loans, which are loans 90 days or more past due and matured loans, increased to $197.1 million at December 31, 2007 as compared to $127.5 million at September 30, 2007 and $57.1 million at December 31, 2006. Non-performing loans were 2.42% of loans held for investment at December 31, 2007 as compared to 1.81% at September 30, 2007 and 0.64% at December 31, 2006. Loans past due 60 days or less increased 10.5% to $130.3 million at December 31, 2007 from $117.9 million at September 30, 2007. At December 31, 2007, 70.5% of non-performing loans were secured by first or second mortgages on single-family homes as compared to 76.0% at September 30, 2007 and 90.7% at December 31, 2006.

Of non-performing assets, real estate owned increased to $109.3 million at December 31, 2007 from $84.2 million at September 30, 2007 and from $81.0 million at December 31, 2006. Repurchased and non-performing assets were $9.8 million at December 31, 2007 as compared to $9.3 million at September 30, 2007 and $22.1 million at December 31, 2006.

As Previously Announced

The Company’s quarterly earnings conference call will be held on Wednesday, January 30, 2008 from 11 a.m. until noon (Eastern).

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

The conference call and accompanying slide presentation will be webcast live on the Investor Relations section of the Company’s Web site, www.flagstar.com, with replays available at that site for at least 10 days.

To listen by telephone, please call at least 10 minutes prior to the start of the conference call at (913) 312-4375 or toll free at (800) 801-6497, passcode: 8845732.

Flagstar Bancorp, with $15.8 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. At December 31, 2007, Flagstar operated 164 banking centers in Michigan, Indiana and Georgia and 143 home loan centers in 27 states. Flagstar Bank originates loans nationwide and is one of the leading originators of conforming single-family 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
(Dollars in thousands, except per share data)
(Unaudited)

	For the Three Months Ended									For the Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
Summary of Consolidated	2007			2007			2006			2007			2006
Statements of Operations
Interest income	$	225,324		$	237,151		$	211,363		$	905,509		$	800,866
Interest expense		(171,271	)		(183,215	)		(159,457	)		(695,631	)		(585,919	)
Net interest income		54,053			53,936			51,906			209,878			214,947
Provision for loan losses		(38,356	)		(30,195	)		(8,237	)		(88,297	)		(25,450	)
Net interest income after provision		15,697			23,741			43,669			121,581			189,497
Non-interest income
Loan fees and charges, net		240			(218	)		2,444			1,497			7,440
Deposit fees and charges		6,502			5,808			5,310			22,999			20,893
Loan servicing fees, net		2,618			4,333			603			12,715			13,032
Net gain (loss) on securities available for sale		3,129			668			(462	)		4,526			(6,163	)
Gain on loan sales, net		23,189			(17,457	)		23,843			59,030			42,381
Gain on MSR sales, net		(283	)		456			3,901			5,898			92,621
Impairment — residuals		(14,799	)		(3,612	)		—			(18,412	)		—
Impairment — securities available for sale		(2,793	)		—			—			(2,793	)		—
Unrealized gain on trading securities		(8,699	)		1,914			—			(6,785	)		—
Other income		9,401			9,376			7,991			38,440			31,957
Total non-interest income		18,505			1,268			43,630			117,115			202,161
Non-interest expenses
Compensation and benefits		(49,492	)		(44,653	)		(37,405	)		(179,417	)		(157,751	)
Commissions		(30,088	)		(18,136	)		(17,925	)		(83,047	)		(74,208	)
Occupancy and equipment		(17,772	)		(17,622	)		(18,914	)		(69,218	)		(70,319	)
General and administrative		(7,655	)		(10,658	)		(19,754	)		(41,497	)		(49,824	)
Other		(4,949	)		(5,431	)		(5,556	)		(19,249	)		(17,018	)
Total non-interest expense		(109,956	)		(96,500	)		(99,554	)		(392,428	)		(369,120	)
Capitalized direct cost of loan closing		29,337			23,240			23,193			94,918			93,483
Total non-interest expense after capitalized direct cost of loan closing		(80,619	)		(73,260	)		(76,361	)		(297,510	)		(275,637	)
(Loss) Earnings before federal income tax		(46,417	)		(48,251	)		10,938			(58,814	)		116,021
(Benefit) Provision for federal income taxes		(16,356	)		(16,196	)		4,039			(19,589	)		(40,819	)
Net (loss) earnings	$	(30,061	)	$	(32,055	)	$	6,899		$	(39,225	)	$	75,202
Basic (loss) earnings per share	$	(0.50	)	$	(0.53	)	$	0.11		$	(0.64	)	$	1.18
Diluted (loss) earnings per share	$	(0.50	)	$	(0.53	)	$	0.11		$	(0.64	)	$	1.17
Dividends paid per common share	$	0.05		$	0.10		$	0.15		$	0.35		$	0.60
Dividend payout ratio		(10.0	%)		(18.8	%)		136.4	%		(54.7	%)		51.3	%
Net interest spread — Consolidated		1.48	%		1.27	%		1.38	%		1.33	%		1.42	%
Net interest margin — Consolidated		1.50	%		1.36	%		1.47	%		1.40	%		1.54	%
Interest rate spread — Bank only		1.54	%		1.35	%		1.32	%		1.39	%		1.41	%
Net interest margin — Bank only		1.62	%		1.52	%		1.58	%		1.50	%		1.63	%
Return on average assets		(0.75	)%		(0.77	)%		0.18	%		(0.24	)%		0.49	%
Return on average equity		(16.67	)%		(17.08	)%		3.41	%		(5.14	)%		9.42	%
Efficiency ratio		111.11	%		133.45	%		79.93	%		90.98	%		66.08	%
Average interest earning assets	$	14,665,289		$	15,694,934		$	14,168,117		$	14,964,042		$	13,951,393
Average interest paying liabilities	$	14,595,558		$	15,233,024		$	13,784,942		$	14,745,383		$	13,562,001
Average stockholders’ equity	$	721,322		$	750,570		$	809,655		$	762,958		$	798,492
Equity/assets ratio (average for the period)		4.48	%		4.51	%		5.29	%		4.71	%		5.22	%
Ratio of charge-offs to average loans held for investment		0.58	%		0.33	%		0.23	%		0.35	%		0.20	%

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
(Unaudited)

	December 31,			September 30,			December 31,
Summary of the Consolidated	2007			2007			2006
Statements of Financial Condition:
Total assets	$	15,792,736		$	16,564,999		$	15,497,205
Mortgage backed securities held to maturity		1,255,431			1,343,778			1,565,420
Investment securities available for sale		1,321,310			1,238,587			617,451
Loans held for sale		3,511,310			5,604,041			3,188,795
Loans held for investment, net		8,030,397			6,956,932			8,893,906
Allowance for loan losses		104,000			77,800			45,779
Servicing rights		413,986			340,814			173,288
Deposits		8,236,744			8,485,556			7,623,488
FHLB advances		6,301,000			6,392,000			5,407,000
Repurchase agreements		108,000			468,668			990,806
Stockholders’ equity		692,978			728,906			812,234
Other Financial and Statistical Data:
Equity/assets ratio		4.39	%		4.40	%		5.24	%
Core capital ratio		5.78	%		5.78	%		6.37	%
Total risk-based capital ratio		10.66	%		10.65	%		11.55	%
Book value per share	$	11.50		$	12.09		$	12.77
Shares outstanding		60,271			60,271			63,605
Average shares outstanding		61,152			61,450			63,588
Average diluted shares outstanding		61,509			61,874			64,328
Loans serviced for others	$	32,487,337		$	26,665,052		$	15,032,504
Weighted average service fee (bps)		36.0			36.4			37.1
Value of servicing rights		1.27	%		1.28	%		1.15	%
Allowance for loan losses to non performing loans		52.8	%		61.0	%		80.2	%
Allowance for loan losses to loans held for investment		1.28	%		1.11	%		0.51	%
Non performing assets to total assets		2.00	%		1.34	%		1.03	%
Number of bank branches		164			158			151
Number of loan origination centers		143			151			76
Number of employees (excluding loan officers & account executives)		3,083			2,939			2,510
Number of loan officers and account executives		877			852			444

Loan Originations
(Dollars in millions)
(unaudited)

	For the Three Months Ended												For the Years Ended
	December 31,				September 30,				December 31,				December 31,				December 31,
Loan type	2007				2007				2006				2007				2006
Residential mortgage loans	$	6,493	97.1	%	$	6,566	96.1	%	$	5,083	93.4	%	$	25,711	96.3	%	$	18,966	93.9	%
Consumer loans		42	0.6			87	1.3			85	1.6			342	1.3			571	2.8
Commercial loans		155	2.3			176	2.6			272	5.0			640	2.4			672	3.3
Total loan production	$	6,690	100.0	%	$	6,829	100.0	%	$	5,440	100.0	%	$	26,693	100.0	%	$	20,209	100.0	%

Gain on Loan Sales
(Dollars in millions)
(unaudited)

	For the Three Months Ended									For the Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
Description	2007			2007			2006			2007			2006
Net gain (loss) on loan sales	$	23,188		$	(17,457	)	$	23,843		$	59,030		$	42,381
Loans sold	$	7,279,469		$	5,955,396		$	4,466,314		$	24,255,114		$	16,370,925
Sales spread		0.32	%		(0.29	%)		0.53	%		0.24	%		0.26	%

Loans Held for Investment
(Dollars in thousands)
(unaudited)

	December 31,				September 30,				December 31,
Description	2007				2007				2006
First mortgage loans	$	5,823,952	71.6	%	$	4,938,083	70.2	%	$	6,211,765	69.5	%
Second mortgage loans		56,516	0.7			58,224	0.8			715,154	8.0
Commercial real estate loans		1,542,104	19.0			1,463,222	20.8			1,301,819	14.5
Construction loans		90,401	1.1			88,018	1.3			64,528	0.7
Warehouse lending		316,719	3.9			175,496	2.5			291,656	3.3
Consumer loans		281,746	3.4			291,889	4.1			340,156	3.8
Non-real estate commercial		22,959	0.3			19,800	0.3			14,607	0.2
Total loans held for investment	$	8,134,397	100.0	%	$	7,034,732	100.0	%	$	8,939,685	100.0	%

Deposit Portfolio
(Dollars in thousands)
(unaudited)

	December 31, 2007					September 30, 2007					December 31, 2006
Description	Balance		Rate			Balance		Rate			Balance		Rate
Demand deposits	$	436,239		1.60	%	$	392,872		1.59	%	$	380,162		1.28	%
Savings deposits		237,762		2.90			171,381		2.30			144,460		1.55
Money market deposits		531,587		3.86			562,039		4.04			608,282		4.05
Certificates of deposits		3,870,828		4.99			3,863,249		5.07			3,763,781		4.86
Total retail deposits		5,076,416		4.48			4,989,541		4.59			4,896,685		4.38
Company controlled custodial deposits		473,384		—			357,207		—			244,193		—
Municipal deposits / CDARS		1,545,395		5.04			1,930,679		5.42			1,419,964		5.33
Wholesale deposits		1,141,549		4.64			1,208,129		4.51			1,062,646		3.66
Total deposits	$	8,236,744		4.35	%	$	8,485,556		4.57	%	$	7,623,488		4.32	%

Asset Quality
(Dollars in thousands)
(unaudited)

	December 31, 2007					September 30, 2007					December 31, 2006
			% of					% of					% of
Days delinquent	Balance		Total			Balance		Total			Balance		Total
30	$	59,811		18.3	%	$	73,382		29.9	%	$	40,140		33.6	%
60		70,450		21.5			44,481		18.1			22,163		18.6
90 + and Matured Delinquent		197,149		60.2			127,506		52.0			57,071		47.8
Total		327,410		100.0	%	$	245,369		100.0	%	$	119,374		100.0	%
Investment loans	$	8,134,397				$	7,034,732				$	8,939,685

	Non-Performing Loans and Assets at
	December 31,			September 30,			December 31,
	2007			2007			2006
Non-Performing Loans	$	197,149		$	127,506		$	57,071
Real Estate Owned		109,274			84,248			80,995
Repurchased Assets/Non-Performing Assets		9,776			9,261			22,096
Non-Performing Assets	$	316,199		$	221,015		$	160,162
Non-Performing Loans as a Percentage of Investment Loans		2.42	%		1.81	%		0.64	%
Non-Performing Assets as a Percentage of Total Assets		2.00	%		1.34	%		1.03	%