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 30, 2009

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	48098
(Address of Principal Executive Offices)	(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 30, 2009, Flagstar Bancorp, Inc. (the “Company”) issued a press release regarding its results of operations and financial condition for the three months and year ended December 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 year ended December 31, 2008 as part of its 2008 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 30, 2009.

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, 2009	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 FINANCIAL RESULTS AND ANTICIPATED CLOSING OF $523 MILLION INVESTMENT

TROY, Mich. (January 30, 2009) — Flagstar Bancorp, Inc. (NYSE:FBC), the holding company for Flagstar Bank FSB, today reported its fourth quarter and annual results for 2008 and also announced that it expects to receive on January 30, 2009 a total of $523 million in capital from three sources pursuant to previously announced transactions: $266.6 million from the U.S. Treasury’s TARP Capital Purchase Program, $250 million from MP Thrift Investments L.P. (“MatlinPatterson”), an entity formed by MP (Thrift) Global Partners III LLC, an affiliate of MatlinPatterson Global Advisers LLC, and $5.32 million from management.

Flagstar also announced that it has entered an agreement with MatlinPatterson to raise an additional $100 million in equity during the first quarter 2009.

Flagstar reported a 2008 fourth quarter net loss of $200.3 million, or $(2.40) per share (diluted) as compared to a third quarter 2008 net loss of $62.1 million, or $(0.79) per share (diluted) and a fourth quarter 2007 net loss of $30.1 million, or $(0.50) per share (diluted). For the year ended December 31, 2008, Flagstar’s net loss was $257.3 million, or $(3.57) per share (diluted), as compared to a 2007 net loss of $39.2 million, or $(0.64) per share (diluted).

Flagstar also announced that five of its current directors will be stepping down from the Board of Directors today and that three new directors appointed by MatlinPatterson, will be joining the Board of Directors effective immediately. The directors stepping down are Kirstin Hammond, Robert Rondeau, Richard Elsea, Charles Bazzy and Frank D’Angelo. Kirstin Hammond will remain an executive officer of Flagstar and the President of Flagstar Capital Markets Corporation.

At December 31, 2008, Flagstar had total assets of $14.2 billion as compared to $14.2 billion at September 30, 2008 and $15.8 billion at December 31, 2007.

Operations

     Year ended December 31, 2008

For the year ended December 31, 2008, net interest income before provision for loan losses increased to $222.5 million as compared to $209.9 million for the same period in 2007, despite a smaller base of interest earning assets.

Gain on loan sales increased to $146.1 million as compared to $62.8 million for the same 2007 period.

The benefit of these increases was offset by an increase in the provision for loan losses to $344.0 million as compared to $88.3 million for the same period in 2007, which contributed to a $272.0 million net increase in the allowance for loan losses in 2008 as compared to $58.2 million during the same period in 2007, an other than temporary impairment of investment securities available for sale of $43.6 million as compared to $2.8 million for the same 2007 period, and an increase in non-interest expense to $422.8 million as compared to $297.5 million for the same period in 2007.

Three Months Ended December 31, 2008

For the fourth quarter 2008, our net loss of $200.2 million reflects $292.0 million in significant credit and asset disposition charges, as follows:

• An increase in provision for loan losses to $176.3 million, comprised of $24 million in charge-offs and a $152 million increase in the allowance for loan losses, as compared to a provision of $89.6 million for the third quarter of 2008.

• A $270 million write down of the value of mortgage servicing rights that, although mostly offset by hedging gains, contributed to a decrease in loan administration income to $(46.2) million as compared to $25.7 million for the third quarter 2008.

• Credit and mortgage related costs of $26.2 million flowing through non interest expense and comprised of a $16.4 million valuation adjustment related to our real estate owned portfolio and a $9.8 million reserve for anticipated mortgage insurance losses in our reinsurance subsidiary.

• An other than temporary impairment of $43.6 million related to investment securities available for sale in the fourth quarter 2008 as compared to none in the third quarter 2008.

Gain on loan sales declined to $16.7 million as compared to $22.2 million for the third quarter 2008, due in large part to a $1.1 billion decline in loan sales.

Overhead expenses, before FAS 91 and credit costs which are reflected as non interest expense, were lower by $9.8 million as compared to the third quarter 2008. Total non-interest expense increased to $120.8 million during the fourth quarter 2008, including a markdown in real estate owned of $16.4 million and a $9.8 million addition to loss reserves in Flagstar Reinsurance, a wholly-owned subsidiary, as compared to $119.2 million during the third quarter of 2008.

Funding Sources

Flagstar’s primary sources of funds are deposits, loan repayments and sales, advances from the Federal Home Loan Bank of Indianapolis (FHLB), cash generated from operations, customer escrow accounts and security repurchase agreements. Retail deposits increased to $5.4 billion at December 31, 2008, from $4.9 billion at September 30, 2008 and $5.1 billion at December 31, 2007. At December 31, 2008, Flagstar had a $7.0 billion line of credit with the FHLB, which was collateralized to $6.0 billion and had $5.3 billion drawn, and an $800 million undrawn line of credit at the Federal Reserve discount window.

Capital

At December 31, 2008, Flagstar Bank had regulatory capital ratios of 5.01% for Tier 1 capital and 9.31% for total risk-based capital. Upon receipt of the $523 million investment, $474 million will be immediately invested into Flagstar Bank to improve capital levels and fund lending activity. On a pro forma basis, at December 31, 2008, Flagstar Bank’s regulatory capital ratios would have been 8.32% for Tier 1 capital and 14.78% for total risk-based capital.

As part of a Closing Agreement between Flagstar and MatlinPatterson, Flagstar has agreed to issue an additional $50 million of convertible preferred stock (“Additional Preferred Stock”) on substantially the same terms as the previously announced $250 million investment by MatlinPatterson. Further, Flagstar will

be issuing $50 million of trust preferred securities with a 10% coupon to MatlinPatterson (“Trust Preferred” and, together with Additional Preferred Stock, “Additional Capital”). The Trust Preferred will be convertible into common stock of Flagstar at MatlinPatterson’s option on April 1, 2010, at a conversion price equal to 90% of the volume-weighted average price of the common stock from February 1, 2000 through April 1, 2010, subject to a minimum conversion price of $0.80 and a maximum conversion price of $2.00. If MatlinPatterson does not convert the Trust Preferred at that time, it will remain outstanding perpetually unless redeemed by Flagstar at any time after January 30, 2011. The Additional Capital is expected to fund during the first quarter of 2009.

Net Interest Margin

For the year ended December 31, 2008, Flagstar Bank’s net interest margin increased to 1.78% as compared to 1.50% for the year ended December 31, 2007. For the 2008 fourth quarter, Flagstar Bank’s net interest margin was 1.61% as compared to 1.93% for the third quarter 2008 and 1.62% for the fourth quarter 2007.

Retail Banking Operations

Flagstar Bank had 175 retail banking branches at December 31, 2008 as compared to 173 branches at September 30, 2008 and 164 branches at December 31, 2007.

Mortgage Banking Operations

Loan production for the year ended December 31, 2008, increased 6.0% to $28.3 billion, including $28.0 billion of residential loans, as compared to $26.7 billion, including $25.7 billion of residential loans, for the year ended December 31, 2007. For fourth quarter 2008, loan production decreased to $5.4 billion, substantially all of which were residential loans, as compared to third quarter 2008 loan originations of $6.7 billion, substantially all of which were residential loans, and as compared to loan originations of $6.7 billion, including $6.5 billion of residential loans, in fourth quarter 2007.

For the year ended December 31, 2008, the gain on loan sales and securitization margin increased to 53 basis points as compared to 26 basis points for the same period in 2007. The gain on loan sales and securitization margin was 29 basis points for the quarter ended December 31, 2008, as compared to 33 basis points for the third quarter 2008 and 37 basis points for the fourth quarter 2007.

At December 31, 2008, the unpaid principal balances of loans associated with Flagstar’s mortgage servicing rights portfolio totaled $55.9 billion and had a weighted average service fee of 33.3 basis points. This was an increase from $51.8 billion at September 30, 2008 with a weighted average servicing fee of 33.6 basis points and $32.8 billion at December 31, 2007 with an average weighted servicing fee of 36.0 basis points.

Asset Quality

Non-performing assets, net of any FHA-insured assets, which include non-performing loans (loans 90 days or more past due, and matured loans), real estate owned and repurchased assets, increased to $755.2 million at December 31, 2008, from $548.3 million at September 30, 2008 and $300.3 million at December 31, 2007. Total non-performing loans, net of any FHA-insured assets, increased to $629.5 million (6.93% of loans held for investment) at December 31, 2008 as compared to $413.7 million (4.53% of loans held for investment) at September 30, 2008 and $197.1 million (1.91% of loans held for investment) at December 31, 2007.

Of the non-performing assets, non-performing residential first mortgage loans increased to $432.6 million, net of any FHA-insured assets, at December 31, 2008, as compared to $304.8 million at September 30, 2008 and $134.5 million at December 31, 2007. Single-family residential first mortgage loans held for investment at December 31, 2008 had an average original FICO credit score of 710 and an average original loan-to-value ratio of 82.7%. Non-performing commercial real estate mortgages increased to $164.4 million at December 31, 2008 as compared to $82.7 million at September 30, 2008 and $57.8 million at December 31, 2007. Non-performing commercial real estate loans are individually evaluated for impairment and may not require a specific loan loss reserve depending upon the sufficiency of collateral or cash flows.

Real estate owned, net of any FHA-insured assets, decreased to $109.3 million at December 31, 2008 from $119.2 million at September 30, 2008 and increased from $95.1 million at December 31, 2007. Repurchased assets were $16.5 million at December 31, 2008 as compared to $15.4 million at September 30, 2008 and $9.8 million at December 31, 2007.

Net charge-offs of loans were $24.3 million for the fourth quarter 2008 as compared to $19.6 million for the third quarter 2008 and $12.2 million for the fourth quarter 2007. The provision for loan losses was $176.3 million for the fourth quarter 2008 as compared to $89.6 million for the third quarter 2008 and $38.4 million for the fourth quarter 2007. As a result, the allowance for loan losses increased to $376.0 million (4.14% of loans held for investment) at December 31, 2008 as compared to $224.0 million (2.45% of loans held for investment) at September 30, 2008 and $104.0 million (1.28% of loans held for investment) at December 31, 2007.

As Previously Announced

The Company’s quarterly earnings conference call will be held on Friday, 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 $14.2 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. At December 31, 2008, Flagstar operated 175 banking centers in Michigan, Indiana and Georgia and 104 home loan centers in 21 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									For the Years Ended
Summary of Consolidated	December 31,			September 30,			December 31,			December 31,			December 31,
Statements of Operations	2008			2008			2007			2008			2007
Interest income	$	178,043		$	188,537		$	225,324		$	777,997		$	905,509
Interest expense		(131,556	)		(128,696	)		(171,271	)		(555,472	)		(695,631	)
Net interest income		46,487			59,841			54,053			222,525			209,878
Provision for loan losses		(176,255	)		(89,612	)		(38,357	)		(343,962	)		(88,297	)
Net interest (loss) income after provision		(129,768	)		(29,771	)		15,696			(121,437	)		121,581
Non-interest income
Loan fees and charges, net		410			777			240			2,688			1,497
Deposit fees and charges		7,395			7,183			6,501			27,424			22,999
Loan servicing fees, net		(46,231	)		25,655			2,618			(252	)		12,715
Gain on loan sales, net		16,657			22,152			26,318			146,060			62,827
Gain on MSR sales, net		1,449			896			(283	)		1,798			5,898
Impairment — securities available for sale		(43,692	)		149			(17,592	)		(38,674	)		(20,476	)
Gain (loss) on trading securities		16,302			(12,899	)		(8,699	)		(10,183	)		(6,785	)
Other income		(9,828	)		9,475			9,402			19,940			38,440
Total non-interest income		(57,538	)		53,388			18,505			148,801			117,115
Non-interest expenses
Compensation and benefits		(53,726	)		(54,487	)		(49,492	)		(219,250	)		(179,417	)
Commissions		(23,063	)		(26,298	)		(30,088	)		(109,465	)		(83,047	)
Occupancy and equipment		(19,437	)		(19,492	)		(17,772	)		(79,253	)		(69,218	)
General and administrative		(29,989	)		(30,519	)		(7,655	)		(85,953	)		(50,267	)
Other		(16,433	)		(18,019	)		(4,949	)		(46,232	)		(10,479	)
Total non-interest expense		(142,648	)		(148,815	)		(109,956	)		(540,153	)		(392,428	)
Capitalized direct cost of loan closing		21,894			29,651			29,337			117,332			94,918
Total non-interest expense after capitalized direct cost of loan closing		(120,753	)		(119,164	)		(80,619	)		(422,821	)		(297,510	)
Loss before federal income tax		(308,059	)		(95,547	)		(46,417	)		(395,457	)		(58,814	)
Benefit for federal income taxes		107,735			33,456			16,356			138,189			19,589
Net loss	$	(200,324	)	$	(62,091	)	$	(30,061	)	$	(257,268	)	$	(39,225	)
Basic loss per share	$	(2.40	)	$	(0.79	)	$	(0.50	)	$	(3.57	)	$	(0.64	)
Diluted loss per share	$	(2.40	)	$	(0.79	)	$	(0.50	)	$	(3.57	)	$	(0.64	)
Dividends paid per common share		N/A			N/A		$	0.05			N/A		$	0.35
Dividend payout ratio		N/A			N/A			(10.0	%)		N/A			(54.7	%)
Net interest spread — Consolidated		1.74	%		1.74	%		1.48	%		1.71	%		1.33	%
Net interest margin — Consolidated		1.49	%		1.82	%		1.50	%		1.67	%		1.40	%
Interest rate spread — Bank only		1.79	%		1.78	%		1.54	%		1.76	%		1.39	%
Net interest margin — Bank only		1.61	%		1.93	%		1.62	%		1.78	%		1.50	%
Return on average assets		(5.44	)%		(1.72	)%		(0.75	)%		(1.71	)%		(0.24	)%
Return on average equity		(112.7	)%		(32.15	)%		(16.67	)%		(35.18	)%		(5.14	)%
Efficiency ratio		(1092.7	)%		105.24	%		111.11	%		113.9	%		90.98	%
Average interest earning assets	$	12,435,053		$	12,870,503		$	14,665,289		$	13,316,390		$	14,964,042
Average interest paying liabilities	$	13,158,369		$	12,794,464		$	14,595,558		$	13,439,660		$	14,745,383
Average stockholders’ equity	$	710,658		$	772,661		$	721,322		$	731,231		$	762,958
Equity/assets ratio (average for the period)		4.83	%		5.34	%		4.48	%		4.87	%		4.71	%
Ratio of charge-offs to average loans held for investment		1.08	%		0.83	%		0.58	%		0.79	%		0.35	%

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

Summary of the Consolidated	December 31,			September 30,			December 31,
Statements of Financial Condition:	2008			2008			2007
Total assets	$	14,209,655		$	14,159,369		$	15,792,736
Mortgage backed securities held to maturity		—			—			1,255,431
Investment securities available for sale		1,118,453			1,041,446			1,308,608
Loans held for sale		1,484,680			1,961,352			3,511,310
Loans held for investment, net		8,706,121			8,910,884			8,030,397
Allowance for loan losses		376,000			224,000			104,000
Servicing rights		511,294			732,151			413,986
Deposits		7,841,005			7,420,804			8,236,744
FHLB advances		5,200,000			5,438,000			6,301,000
Repurchase agreements		108,000			108,000			108,000
Stockholders’ equity		478,291			676,471			692,978
Other Financial and Statistical Data:
Equity/assets ratio		3.37	%		4.78	%		4.39	%
Core capital ratio		5.01	%		6.29	%		5.78	%
Total risk-based capital ratio		9.31	%		11.10	%		10.66	%
Book value per share	$	5.72		$	8.09		$	11.50
Shares outstanding		83,627			83,627			60,271
Average shares outstanding		72,153			68,301			61,152
Average diluted shares outstanding		72,153			68,301			61,509
Loans serviced for others	$	55,870,207		$	51,830,707		$	32,487,337
Weighted average service fee (bps)		33.3			33.6			36.0
Value of servicing rights		0.93	%		1.41	%		1.27	%
Allowance for loan losses to non performing loans		59.7	%		54.1	%		52.8	%
Allowance for loan losses to loans held for investment		4.14	%		2.45	%		1.28	%
Non performing assets to total assets		5.33	%		3.87	%		1.90	%
Number of bank branches		175			173			164
Number of loan origination centers		104			111			143
Number of employees (excluding loan officers & account executives)		3,246			3,291			3,083
Number of loan officers and account executives		674			736			877

Loan Originations
(Dollars in millions)
(unaudited)

	For the Three Months Ended
	December 31,				September 30,				December 31,
Loan type	2008				2008				2007
Residential mortgage loans	$	5,390	100.0	%	$	6,681	99.5	%	$	6,493	97.1	%
Consumer loans		4	—			11	0.2			42	0.6
Commercial loans		11	—			23	0.3			155	2.3
Total loan production	$	5,405	100.0	%	$	6,715	100.0	%	$	6,690	100.0	%

	For the Year Ended
	December 31,				December 31,
Loan type	2008				2007
Residential mortgage loans	$	27,990	99.0	%	$	25,711	96.3	%
Consumer loans		110	0.3			342	1.3
Commercial loans		206	0.7			640	2.4
Total loan production	$	28,306	100.0	%	$	26,693	100.0	%

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

Description	December 31, 2008				September 30, 2008				December 31, 2007
First mortgage loans	$	5,958,748	65.6	%	$	6,134,305	67.2	%	$	5,823,952	71.6	%
Second mortgage loans		287,350	3.2			291,523	3.2			56,516	0.7
Commercial real estate loans		1,779,364	19.6			1,737,152	19.0			1,542,104	19.0
Construction loans		54,749	0.6			65,814	0.7			90,401	1.1
Warehouse lending		434,140	4.8			344,731	3.8			316,719	3.9
Consumer loans		543,102	6.0			536,759	5.9			281,746	3.4
Non-real estate commercial		24,668	0.2			24,600	0.2			22,959	0.3
Total loans held for investment	$	9,082,121	100.0	%	$	9,134,884	100.0	%	$	8,134,397	100.0	%

Allowance for Loan Losses
(Dollars in thousands)
(unaudited)

	For the Three Months Ended									For the Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2008			2008			2007			2008			2007
	(000’s)			(000’s)			(000’s)			(000’s)			(000’s)
Beginning Balance	$	(224,000	)	$	(154,000	)	$	(77,800	)	$	(104,000	)	$	(45,779	)
Provision for losses		(176,255	)		(89,612	)		(38,357	)		(343,963	)		(88,297	)
Charge offs, net of recoveries
First mortgage loans		16,595			12,853			3,216			44,349			10,847
Second mortgage loans		1,681			330			1,647			2,980			5,934
Commercial R/E loans
Development		—			—			—			—
Other		2,451			4,050			4,213			14,736			4,591
Construction loans		1,703			84			—			1,872			—
Warehouse		169			121			—			1,001			—
Consumer
HELOC		790			1,566			2,227			4,140			6,035
Other consumer loans		420			205			508			1,390			1,533
Other		446			403			344			1,495			1,136
Charge-offs, net of recoveries		24,255			19,612			12,157			71,963			30,076
Ending Balance	$	(376,000	)	$	(224,000	)	$	(104,000	)	$	(376,000	)	$	(104,000	)

Composition of Allowance for Loan Losses
As of December 31, 2008
(In thousands)

Description	General Reserves		Specific Reserves		Total
First mortgage loans	$	142,026	$	14,776	$	156,802
Second mortgage loans		16,674		—		16,674
Commercial real estate loans		74,143		99,061		173,204
Construction loans		1,735		1,617		3,352
Warehouse lending		3,432		—		3,432
Consumer loans		14,449		817		15,266
Non-real estate commercial		290		746		1,036
Other and unallocated		6,234		—		6,234
Total allowance for loan losses	$	258,983	$	117,017	$	376,000

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

	For the Three Months Ended
	December 31,						September 30,						December 31,
	2008						2008						2007
	(000’s)			bps			(000’s)			bps			(000’s)			bps
Gain on loan sales	$	68,663			122		$	98,806			147		$	86,117			118
Hedging costs		(23,795	)		(42	)		(11,295	)		(17	)		(23,172	)		(32	)
LOCOM adjustments		551			1			(12,032	)		(18	)		(2,510	)		(3	)
Provision to SMR		(2,193	)		(4	)		(2,376	)		(3	)		(2,288	)		(3	)
Credit losses		4			—			19			—			(2,238	)		(3	)
Loan level pricing adjustments		(30,314	)		(54	)		(50,505	)		(75	)		(32,401	)		(45	)
Other transaction costs		(419	)		(1	)		(482	)		(1	)		(364	)		—
Net gain (loss) on loan sales		12,497			22			22,135			33		$	23,144			32
Net gain (loss) on securitizations		4,160			7			17			—			3,129			5
Net gain (loss) on loan sales and securitizations	$	16,657			29		$	22,152			33		$	26,318			37
Total loan sales and securitizations	$	5,711,405					$	6,809,608					$	5,955,396

	For the Year Ended
	December 31,						December 31,
	2008						2007
	(000’s)			bps			(000’s)			bps
Gain on loan sales	$	371,634			135		$	195,368			80
Hedging costs		(19,946	)		(7	)		(32,435	)		(13	)
LOCOM adjustments		(34,179	)		(12	)		(2,726	)		(1	)
Provision to SMR		(10,381	)		(4	)		(9,527	)		(4	)
Credit losses		(6,694	)		(2	)		(3,582	)		(1	)
Loan level pricing adjustments		(158,364	)		(58	)		(83,938	)		(35	)
Other transaction costs		(1,839	)		(1	)		(3,840	)		(2	)
Net gain on loan sales		140,231			51			59,320			24
Net gain (loss) on securitizations		5,829			2			3,537			2
Net gain on loan sales and securitizations	$	146,060			53		$	62,827			26
Total loan sales and securitizations	$	27,787,884					$	16,975,645

Asset Quality
(Dollars in thousands)
(unaudited)

	December 31, 2008					September 30, 2008					December 31, 2007
			% of					% of					% of
Days delinquent	Balance		Total			Balance		Total			Balance		Total
30	$	157,683		1.7	%	$	107,313		1.2	%	$	59,811		0.7	%
60		134,685		1.5			110,943		1.2			70,450		0.9
90 + and Matured Delinquent		629,457		6.9			413,717		4.5			197,149		2.4
Total	$	921,825		10.1	%	$	631,973		6.9	%	$	327,410		4.0	%
Investment loans	$	9,082,121				$	9,134,884				$	8,134,397

	Non-Performing Loans and Assets at
	December 31,			September 30,			December 31,
	2008			2008			2007
Non-Performing Loans	$	629,457		$	413,717		$	197,149
Real Estate Owned		109,297			119,205			95,074
Repurchased Assets/Non-Performing Assets		16,454			15,377			8,079
Non-Performing Assets	$	755,208		$	548,299		$	300,302
Non-Performing Loans as a Percentage of Investment Loans		6.93	%		4.53	%		2.42	%
Non-Performing Assets as a Percentage of Total Assets		5.33	%		3.87	%		1.90	%

Deposit Portfolio
(Dollars in thousands)
(unaudited)

	December 31, 2008					September 30, 2008					December 31, 2007
Description	Balance		Rate			Balance		Rate			Balance		Rate
Demand deposits	$	416,920		0.47	%	$	419,109		0.63	%	$	436,239		1.60	%
Savings deposits		407,501		2.24			410,069		2.50			237,762		2.90
Money market deposits		561,909		2.61			520,664		2.68			531,587		3.86
Certificates of deposits		3,967,985		3.93			3,530,829		4.03			3,870,828		4.99
Total retail deposits / CDARS		5,354,315		3.40			4,880,671		3.48			5,076,416		4.48
Company controlled custodial deposits		535,494		—			468,715		—			473,384		—
Municipal deposits / CDARS		597,638		2.84			1,101,161		3.12			1,534,467		5.04
Wholesale deposits		1,353,558		4.41			970,257		4.59			1,141,549		4.64
Total deposits	$	7,841,005		3.30	%	$	7,420,804		3.35	%	$	8,236,744		4.35	%