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): April 22, 2008

Flagstar Bancorp, Inc.

(Exact Name of Registrant as Specified in Charter)

Michigan
(State or other jurisdiction
of incorporation) 1-16577
(Commission
File Number) 38-3150651
(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 April 22, 2008, Flagstar Bancorp, Inc. issued a press release regarding its results of operations and financial condition for the three months ended March 31, 2008. 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 months ended March 31, 2008 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 April 22, 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: April 23, 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 2008 FIRST QUARTER RESULTS

TROY, Mich. (April 22, 2008) — Flagstar Bancorp, Inc. (NYSE:FBC), today reported a 2008 first quarter net loss of $10.6 million, or $(0.17) per share (diluted). On a linked-quarter basis, fourth quarter 2007 net loss was $30.1 million, or $(0.50) per share (diluted). On a prior year basis, first quarter 2007 net earnings were $7.8 million, or $0.12 per share (diluted). Return on equity and return on average assets for the first quarter 2008 were (5.93%) and (0.27%), respectively, as compared to (16.67%) and (0.75%) for the 2007 fourth quarter and 3.85% and 0.19% for the 2007 first quarter.

“Although we are disappointed with these results,” said Mark T. Hammond, president and CEO, “we are pleased that our key operating metrics were at or above expectations, including our net interest margin, loan production and gain on loan sale margin. These positive developments were overshadowed by the charges we incurred from a change in our accounting for mortgage servicing rights and from increased credit costs and asset mark-downs.”

Earnings for first quarter 2008 were adversely affected by the effect of Flagstar’s election of fair value accounting for the vast majority of its mortgage servicing rights (“MSR”) portfolio, which contributed to a loss on loan administration activities of $17.0 million. Prior to 2008, Flagstar had accounted for the MSRs using the amortization method. Had the amortization method been used, first quarter 2008 net earnings would have been $617,663, or $0.01 per share (diluted).

Earnings were also adversely affected by increased credit costs of a $34.3 million provision for loan losses in the first quarter 2008, as compared to $8.3 million for the same quarter in 2007. Further, earnings were impacted by asset mark-downs of a $9.5 million impairment of residuals related to asset securitizations and a $1.6 million decline in the fair value of interest rate swaps resulting from derecognition of cash flow hedges.

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 $5.2 billion at March 31, 2008, as compared to $ 5.1 billion at December 31, 2007 and $4.9 billion at March 31, 2007. At March 31, 2008, Flagstar had a $7.5 billion line of credit with the FHLB, as to which $1.3 billion remained available, and a $0.9 billion undrawn line of credit at the Federal Reserve discount window.

Capital

At March 31, 2008, Flagstar’s wholly-owned subsidiary, Flagstar Bank, remained “well-capitalized” for bank regulatory purposes, with capital ratios of 5.64% for core capital and 10.47% for total risk-based capital.

“Our regulatory capital ratios are consistent with our historical norms and we believe they are appropriate given the composition of our balance sheet. Although we remain comfortable operating at these capital levels, we expect to pursue opportunities to increase both the core capital ratio and the total risk-based capital ratio until such time as the capital markets normalize and the residential real estate market shows signs of improvement,” said Mr. Hammond.

Net Interest Margin

The net interest margin of Flagstar Bank increased to 1.66% for the 2008 first quarter, as compared to 1.62% for the fourth quarter 2007 and 1.43% for the first quarter 2007.

Retail Banking Operations

Flagstar Bank had 167 retail banking branches at March 31, 2008 as compared to 164 branches at December 31, 2007 and 155 branches at March 31, 2007. During the first quarter of 2008, the total number of retail accounts increased to approximately 299,700, representing an increase of 8.8% on an annualized basis as compared to December 31, 2007 and 15.4% on annualized basis, as compared to March 31, 2007.

Mortgage Banking Operations

Loan production for first quarter 2008 increased 19.4% to $8.0 billion, including $7.9 billion of residential loans, as compared to loan originations of $6.7 billion, including $6.5 billion in residential loans, in the fourth quarter 2007. Loan production increased 37.9%, as compared to loan originations of $5.8 billion, including $5.5 billion of residential loans, for first quarter of 2007.

Gain on loan sale or securitization spread increased to 89 basis points for the quarter ended March 31, 2008, its highest quarterly level since second quarter 2003, as compared to 42 basis points for the 2007 fourth quarter and 48 basis points for the first quarter 2007.

At March 31, 2008, the loans associated with Flagstar’s MSR portfolio totaled $38.4 billion and had a weighted average service fee of 35.0 basis points. This was an increase from $32.5 billion at December 31, 2007 with a weighted average servicing fee of 36.0 basis points and an increase from $19.1 billion at March 31, 2007 with an average weighted servicing fee of 37.0 basis points.

Assets

Consolidated assets were $15.9 billion at March 31, 2008, as compared to $15.8 billion at December 31, 2007 and $15.4 billion at March 31, 2007.

The provision for loan losses was $34.3 million for the first quarter 2008 as compared to $38.4 million for the fourth quarter 2007 and $8.3 million for the first quarter 2007. Net charge-offs of loans during the first quarter 2008 increased to $16.9 million from $12.2 million during the fourth quarter 2007 and from $5.5 million during the first quarter 2007. As a result, the allowance for loan losses increased 16.7% to $121.4 million, or 1.42% of loans held for investment at March 31, 2008, from $104.0 million, or 1.28% of loans held for investment, at December 31, 2007 and from $48.5 million, or 0.61% of loans held for investment, at March 31, 2007.

Non-performing assets, which include non-performing loans, real estate owned and repurchased assets, increased to $399.5 million at March 31, 2008, from $314.5 million at December 31, 2007 and $159.0 million at March 31, 2007. Non-performing loans, which are loans 90 days or more past due and matured loans, increased to $253.4 million (2.96% of loans held for investment) at March 31, 2008 as compared to $197.1 million (2.42%) at December 31, 2007 and $74.6 million (0.93%) at March 31, 2007.

Non-performing residential first mortgage loans increased to $172.6 million at March 31, 2008, as compared to $134.6 million at December 31, 2007 and $61.1 million at March 31, 2007. Single-family residential first mortgage loans held for investment at March 31, 2008 had an average original FICO credit score of 719 and an average original loan-to-value ratio of 73.7%. Non-performing commercial real estate mortgages increased to $72.7 million at March 31, 2008 from $57.8 million at December 31, 2007 and $9.0 million at March 31, 2007. Non-performing commercial real estate loans are individually evaluated for impairment and may not require a specific reserve depending upon the sufficiency of collateral or cash flows.

Real estate owned increased to $136.5 million at March 31, 2008 from $109.3 million at December 31, 2007 and from $76.8 million at March 31, 2007. Repurchased assets were $9.6 million at March 31, 2008 as compared to $8.1 million at December 31, 2007 and $7.7 million at March 31, 2007.

As Previously Announced

The Company’s quarterly earnings conference call will be held on Wednesday, April 23, 2008 from 11 a.m. until 12 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) 312-1375 or toll free at (800) 431-4190, passcode: 7485216.

Flagstar Bancorp, with $15.9 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. At March 31, 2008, Flagstar operated 167 banking centers in Michigan, Indiana and Georgia and 138 home loan centers in 26 states. Flagstar Bank originates loans nationwide and is one of the leading 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
(Dollars in thousands, except per share data)
(Unaudited)

	For the Three Months Ended
Summary of Consolidated	March 31,			December 31,			March 31,
Statements of Operations	2008			2007			2007
Interest income	$	210,853		$	225,324		$	220,570
Interest expense		(156,055	)		(171,271	)		(167,719	)
Net interest income		54,798			54,053			52,851
Provision for loan losses		(34,262	)		(38,356	)		(8,293	)
Net interest income after provision		20,536			15,697			44,558
Non-interest income
Loan fees and charges, net		884			240			1,229
Deposit fees and charges		6,031			6,502			4,978
Loan administration		(17,046	)		2,618			2,183
Net gain (loss) on loan sales and securitizations		63,425			26,318			25,154
Net gain on investments available for sale		—			—			729
Gain (loss) on MSR sales, net		287			(283	)		115
Impairment — residuals		—			(14,799	)		—
Impairment — securities available for sale		—			(2,793	)		—
Unrealized loss on trading securities — residuals		(9,482	)		(8,699	)		—
Unrealized loss on interest rate swaps		(1,611	)		—			—
Other income		10,186			9,401			5,078
Total non-interest income		52,674			18,505			39,466
Non-interest expenses
Compensation and benefits		(56,626	)		(49,492	)		(42,499	)
Commissions		(29,316	)		(30,088	)		(15,306	)
Occupancy and equipment		(19,853	)		(17,772	)		(16,786	)
General and administrative		(8,827	)		(7,655	)		(12,378	)
Other		(6,850	)		(4,949	)		(3,506	)
Total non-interest expense		(121,472	)		(109,956	)		(90,475	)
Capitalized direct cost of loan closing		32,304			29,337			18,629
Total non-interest expense after capitalized direct cost of loan closing		(89,168	)		(80,619	)		(71,846	)
(Loss) earnings before federal income tax		(15,958	)		(46,417	)		12,179
(Benefit) provision for federal income taxes		(5,359	)		(16,356	)		4,420
Net (loss) earnings	$	(10,599	)	$	(30,061	)	$	7,759
Basic (loss) earnings per share	$	(0.18	)	$	(0.50	)	$	0.12
Diluted (loss) earnings per share	$	(0.17	)	$	(0.50	)	$	0.12
Dividends paid per common share		N/A		$	0.05		$	0.10
Dividend payout ratio		N/A			(10.0	%)		81.5	%
Net interest spread — Consolidated		1.48	%		1.48	%		1.33	%
Net interest margin — Consolidated		1.55	%		1.50	%		1.42	%
Interest rate spread — Bank only		1.61	%		1.54	%		1.34	%
Net interest margin — Bank only		1.66	%		1.62	%		1.43	%
Return on average assets		(0.27	)%		(0.75	)%		0.19	%
Return on average equity		(5.93	)%		(16.67	)%		3.85	%
Efficiency ratio		82.97	%		111.11	%		77.72	%
Average interest earning assets	$	14,183,297		$	14,665,289		$	14,792,298
Average interest paying liabilities	$	14,007,106		$	14,595,558		$	14,702,275
Average stockholders’ equity	$	715,262		$	721,322		$	806,110
Equity/assets ratio (average for the period)		4.48	%		4.48	%		5.06	%
Ratio of charge-offs to average loans held for investment		0.80	%		0.58	%		0.26	%

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

Summary of the Consolidated	March 31,			December 31,			March 31,
Statements of Financial Condition:	2008			2007			2007
Total assets	$	15,923,312		$	15,791,095		$	15,446,557
Mortgage backed securities held to maturity		—			1,255,431			1,156,805
Investment securities available for sale		2,364,007			1,275,275			—
Loans held for sale		3,137,410			3,511,425			3,791,142
Loans held for investment, net		8,452,624			8,030,282			7,933,445
Allowance for loan losses		121,400			104,000			48,500
Mortgage servicing rights		497,875			413,986			226,794
Deposits		8,427,804			8,236,744			7,975,531
FHLB advances		6,207,000			6,301,000			5,604,000
Repurchase agreements		108,000			108,000			625,426
Stockholders’ equity		703,654			692,978			797,658
Other Financial and Statistical Data:
Equity/assets ratio		4.42	%		4.39	%		5.17	%
Core capital ratio		5.64	%		5.78	%		6.29	%
Total risk-based capital ratio		10.47	%		10.66	%		11.42	%
Book value per share	$	11.66		$	11.50		$	12.79
Shares outstanding		60,325			60,271			62,360
Average shares outstanding		60,312			61,152			63,427
Average diluted shares outstanding		60,753			61,509			64,041
Loans serviced for others	$	38,378,056		$	32,487,337		$	19,124,378
Weighted average service fee (bps)		35.0			36.0			37.0
Value of mortgage servicing rights		1.30	%		1.27	%		1.19	%
Allowance for loan losses to non performing loans		47.9	%		52.8	%		65.0	%
Allowance for loan losses to loans held for investment		1.42	%		1.28	%		0.61	%
Non performing assets to total assets		2.51	%		1.99	%		1.03	%
Number of bank branches		167			164			155
Number of loan origination centers		138			143			72
Number of employees (excluding loan officers & account executives)		3,170			3,083			2,522
Number of loan officers and account executives		839			877			448

Loan Originations
(Dollars in millions)
(unaudited)

	For the Three Months Ended
	March 31,				December 31,				March 31,
Loan type	2008				2007				2007
Residential mortgage loans	$	7,860	98.1	%	$	6,493	97.1	%	$	5,489	95.4	%
Consumer loans		49	0.6			42	0.6			104	1.8
Commercial loans		101	1.3			155	2.3			160	2.8
Total loan production	$	8,010	100.0	%	$	6,690	100.0	%	$	5,753	100.0	%

Gain (Loss) on Loan Sales and Securitizations
(Dollars in millions)
(unaudited)

	For the Three Months Ended
	March 31,						December 31,						March 31,
	2008						2007						2007
Description	(000’s)			bps			(000’s)			bps			(000’s)			bps
Gain on loan sales	$	96,936			155		$	85,532			117		$	39,601			75
Hedging costs		9,099			13			(22,902	)		(32	)		1,760			3
LOCOM adjustments		(225	)		—			(2,510	)		(3	)		(27	)		—
Provision to SMR		(2,999	)		(4	)		(2,288	)		(3	)		(2,163	)		(4	)
Credit losses		(4,438	)		(6	)		(2,238	)		(3	)		(467	)		(1	)
Loan level pricing adjustments		(31,519	)		(44	)		(32,043	)		(44	)		(11,965	)		(23	)
Other transaction costs		(566	)		(1	)		(366	)		—			(1,585	)		(2	)
Net gain (loss) on loan sales		66,288			113			23,189			32			25,154			48
Net gain on securitizations		(2,863	)		(24	)		3,129			10			—			—
Net gain on loan sales and securitizations	$	63,425			89		$	26,318			42		$	25,154			48
Total loan sales and securitizations	$	7,160,328					$	7,279,469					$	5,289,617

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

	March 31,				December 31,				March 31,
Description	2008				2007				2007
First mortgage loans	$	6,103,777	71.2	%	$	5,823,952	71.6	%	$	5,909,807	74.0	%
Second mortgage loans		60,917	0.7			56,516	0.7			65,601	0.8
Commercial real estate loans		1,641,686	19.1			1,542,104	19.0			1,325,057	16.6
Construction loans		77,035	0.9			90,401	1.1			75,178	0.9
Warehouse lending		347,908	4.1			316,719	3.9			271,493	3.4
Consumer loans		318,694	3.7			281,631	3.4			315,267	4.0
Non-real estate commercial		24,007	0.3			22,959	0.3			19,542	0.3
Total loans held for investment	$	8,574,024	100.0	%	$	8,134,282	100.0	%	$	7,981,945	100.0	%

Deposit Portfolio
(Dollars in thousands)
(unaudited)

	March 31, 2008					December 31, 2007					March 31, 2007
Description	Balance		Rate			Balance		Rate			Balance		Rate
Demand deposits	$	415,411		0.76	%	$	436,239		1.60	%	$	392,476		1.52	%
Savings deposits		329,983		2.32			237,762		2.90			140,349		1.50
Money market deposits		541,374		2.57			531,587		3.86			609,754		4.13
Certificates of deposits		3,908,398		4.77			3,870,828		4.99			3,775,816		4.97
Total retail deposits		5,195,166		4.06			5,076,416		4.48			4,918,395		4.49
Company controlled custodial deposits		698,344		—			473,384		—			305,528		—
Municipal deposits / CDARS		1,508,644		3.75			1,545,395		5.04			1,772,324		5.36
Wholesale deposits		1,025,650		4.76			1,141,549		4.64			979,284		3.70
Total deposits	$	8,427,804		3.75	%	$	8,236,744		4.35	%	$	7,975,531		4.42	%

Asset Quality
(Dollars in thousands)
(unaudited)

	March 31, 2008					December 31, 2007					March 31, 2007
			% of					% of					% of
Days delinquent	Balance		Total			Balance		Total			Balance		Total
30	$	81,343		21.2	%	$	59,811		18.3	%	$	32,251		24.7	%
60		48,823		12.7			70,450		21.5			23,863		18.3
90 + and Matured Delinquent		253,423		66.1			197,149		60.2			74,570		57.0
Total	$	383,589		100.0	%	$	327,410		100.0	%	$	130,684		100.0	%
Investment loans	$	8,574,024				$	8,134,282				$	7,981,945

	Non-Performing Loans and Assets at
	March 31,			December 31,			March 31,
	2008			2007			2007
Non-Performing Loans	$	253,423		$	197,149		$	74,570
Real Estate Owned		136,490			109,274			76,765
Repurchased Assets/Non-Performing Assets		9,633			8,079			7,693
Non-Performing Assets	$	399,546		$	314,502		$	159,028
Non-Performing Loans as a Percentage of Investment Loans		2.96	%		2.42	%		0.93	%
Non-Performing Assets as a Percentage of Total Assets		2.51	%		1.99	%		1.03	%