Flagstar Bancorp (FBC) 8-K Flagstar Reports 2006 First Quarter Results

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 FIRST QUARTER RESULTS

TROY, Mich. (April 27, 2006) — Flagstar Bancorp, Inc. (NYSE:FBC), today reported first quarter 2006 net earnings of $18.9 million, or $0.29 per share — diluted.

For the first quarter ended March 31, 2005, net earnings were $19.8 million, or $0.31 per share — diluted.

Highlights from the quarter include:

• Annualized return on average equity of 9.7%

• Deposit growth of 3%, or 12% annualized

• The opening of our 141^st banking center

• Loan production of $4.7 billion, including $4.3 billion in residential mortgage loans

• Decline in loan delinquency rate to 1.01% from 1.10% at December 31, 2005

• Gain from loan sales of 33 basis points on sales of $3.9 billion in loans, as compared to a gain of 14 basis points on sale of $5.4 billion in loans in Q1 2005

• Loans serviced for others of $29.2 billion

• Servicing portfolio sales of $2.4 billion as compared to $4.8 billion in Q4 2005 and $2.5 billion in Q1 2005

Balance Sheet and Capital Adequacy

Consolidated asset balance was $15.1 billion at March 31, 2006 as compared to $15.1 billion at December 31, 2005 and $14.3 billion at March 31, 2005. With a core capital ratio of 6.3% and risk-based capital ratio of 11.2%, Flagstar Bank, our wholly-owned subsidiary, was considered “well-capitalized” for regulatory purposes.

Net Interest Margin

The net interest margin for the first quarter of 2006 was 1.72%, as compared to 1.73% for the fourth quarter of 2005 and 2.07% for the first quarter of 2005. “We have worked hard to keep our net interest margin relatively stable in the first quarter of 2006 as compared to the fourth quarter of 2005 despite a flat yield curve environment and increasing deposit rates,” commented Mark Hammond, President and CEO of Flagstar Bancorp.

Retail Banking Operations

Flagstar Bank had 141 branches in operation at March 31, 2006 and expects to open approximately 11 more branches by the end of 2006. Banking operations contributed

approximately $22.6 million of before-tax earnings during the quarter. These results were up by 18.3% from the fourth quarter of 2005, and down by 25.4% from the first quarter of 2005

Mortgage Banking Operations

Flagstar’s gain on sale spread decreased to 33 basis points during the quarter ended March 31, 2006 as compared to 48 basis points recorded during fourth quarter last year. However, it increased 19 basis points as compared to 14 basis points gain on sale for the quarter ended March 31, 2005.

At March 31, 2006, Flagstar’s mortgage servicing portfolio totaled $29.2 billion with a weighted average service fee of 34.8 basis points, a slight decrease from $29.6 billion at December 31, 2005 with a weighted average servicing fee of 34.7 basis points. During the first quarter of 2006, Flagstar sold $2.4 billion of servicing as compared to $4.8 billion during the fourth quarter of 2005 and $2.5 billion during the first quarter of 2005.

The capitalized value of Flagstar’s servicing portfolio was $321 million, or 1.10% of the outstanding balance of loans serviced for others, at March 31, 2006 as compared to $316 million, or 1.06%, at December 31, 2005. The estimated market value of the portfolio was $442.6 million at March 31, 2006 and $421.1 million December 31, 2005.

Net income was affected by a $3.6 million net loss on securities available for sale resulting from an impairment in the fair value of the residual interest recorded as part of the Company’s $600 million HELOC securitization in December 2005. The impairment arose because of the increase in prepayment speed in the first quarter of 2006 when compared to the prepayment speed observed at the end of 2005.

Asset Quality

Non-performing loans totaled $58.0 million at March 31, 2006, a decrease of $6.5 million as compared to $64.5 million recorded at March 31, 2005. Delinquencies as a percent of loans held for investment also decreased to 1.01% at March 31, 2006, from 1.10% at December 31, 2005. At March 31, 2006, 91.9% 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 March 31, 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, April 28, 2006 from 11 a.m. until noon (Eastern).

Questions for discussion at the conference call may only be submitted in advance by email toinvestors@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 (913) 981-4904 or toll free at (800) 811-8830, passcode: 9299734.

Flagstar Bancorp, which has $15.1 billion in total assets, is the largest publicly held savings bank headquartered in the Midwest. Flagstar currently operates 143 banking centers located throughout southern Michigan, Indiana and Georgia and operates 97 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)

Summary of the Consolidated Statements of Earnings

	At or for the three months ended
	March 31,			December 31,			March 31,
	2006			2005			2005
Interest income	$	191,299		$	194,035		$	163,125
Interest expense		132,624			132,191			97,916
Net interest income		58,675			61,844			65,209
Provision for losses		4,063			6,036			6,246
Net interest income after provision		54,612			55,808			58,963
Loan fees and charges, net		1,611			3,180			2,622
Deposit fees and charges		4,811			4,585			3,577
Loan servicing fees, net		4,355			3,061			5,945
Gain on loan sales, net		17,084			14,644			9,577
Gain on MSR sales, net		8,586			11,155			4,248
Net loss on securities available for sale		(3,557	)		—			—
Other income		9,731			11,625			9,593
Operating expenses
Compensation and benefits		39,873			37,475			37,556
Commissions		16,967			17,912			21,080
Occupancy and equipment		16,908			17,737			16,650
General and administrative		9,871			11,714			11,440
Other		5,886			7,220			6,042
Capitalized direct cost of loan closing		(21,435	)		(23,196	)		(29,045	)
Earnings before federal income tax		29,163			35,196			30,802
Provision for federal income taxes		10,253			12,369			11,024
Net earnings	$	18,910		$	22,827		$	19,778
Basic earnings per share	$	0.30		$	0.36		$	0.32
Diluted earnings per share	$	0.29		$	0.36		$	0.31
Dividends paid per common share	$	0.15		$	0.15		$	0.25
Interest rate spread		1.57	%		1.72	%		1.90	%
Net interest margin		1.72	%		1.73	%		2.07	%
Return on average assets		0.50	%		0.59	%		0.57	%
Return on average equity		9.73	%		12.06	%		10.69	%
Efficiency ratio		67.20	%		62.55	%		63.24	%
Average interest earning assets	$	13,845,517		$	14,270,646		$	12,748,125
Average interest paying liabilities	$	13,591,084		$	14,106,712		$	12,333,303
Average stockholders’ equity	$	777,620		$	757,235		$	739,784
Equity/assets ratio (average for the period)		5.14	%		4.86	%		5.36	%
Ratio of charge-offs to average loans held for investment		0.15	%		0.10	%		0.17	%

Summary of the Consolidated Statements

	March 31,			December 31,			March 31,
	2006			2005			2005
Total assets	$	15,051,458		$	15,075,430		$	14,285,343
Loans held for sale		2,442,616			1,773,394			1,980,854
Loans held for investment, net		9,794,612			10,537,331			11,158,390
Allowance for loan losses		39,520			39,140			39,272
Servicing rights		321,167			315,678			215,043
Deposits		8,208,435			7,979,000			7,744,681
FHLB advances		3,844,000			4,225,000			4,738,000
Repurchase agreements		1,103,536			1,060,097			—
Stockholders’ equity		783,084			771,883			737,315
Other Financial and Statistical Data:
Equity/assets ratio		5.20	%		5.12	%		5.16	%
Core capital ratio		6.33	%		6.26	%		6.24	%
Total risk-based capital ratio		11.20	%		11.09	%		10.99	%
Book value per share	$	12.33		$	12.21		$	11.89
Shares outstanding		63,488			63,208			62,006
Loans serviced for others	$	29,242,906		$	29,648,088		$	22,518,180
Weighted average service fee (bps)		34.8			34.7			34.4
Value of servicing rights		1.10	%		1.06	%		0.95	%
Allowance for loan losses to non performing loans		68.2	%		60.7	%		68.5	%
Allowance for loan losses to loans held for investment		0.40	%		0.37	%		0.35	%
Non performing assets to total assets		1.00	%		0.98	%		0.92	%
Number of bank branches		141			137			123
Number of loan origination centers		97			101			109
Number of employees (excluding loan officers & account executives		2,421			2,405			2,404
Number of loan officers and account executives		594			689			838

Flagstar Bancorp, Inc.

Loans Held for Investment
(in thousands)
(unaudited)

	March 31, 2006		%		December 31, 2005		%		March 31, 2005		%
First mortgage loans	$	7,309,685		74.3	$	8,248,897		78.0	$	9,155,588		81.8
Second mortgage loans		762,918		7.8		700,492		6.6		234,549		2.1
Commercial real estate loans		1,091,179		11.1		995,411		9.4		815,780		7.3
Construction loans		63,998		0.7		65,646		0.6		64,926		0.6
Warehouse lending		187,610		1.9		146,694		1.4		182,541		1.6
Consumer loans		406,267		4.1		410,920		3.9		735,627		6.5
Non-real estate commercial
loans		12,475		0.1		8,411		0.1		8,650		0.1
Total loans held for investment	$	9,834,132		100.0	$	10,576,471		100.0	$	11,197,661		100.0

Deposit Portfolio
(in thousands)
(unaudited)

	March 31, 2006				December 31, 2005				March 31, 2005
	Balance		Rate		Balance		Rate		Balance		Rate
	($ '000)		(%)		($ '000)		(%)		($ '000)		(%)
Demand deposits	$	355,487		0.64	$	374,816		0.60	$	339,168		0.73
Savings deposits		207,131		1.41		239,215		1.52		561,562		1.96
Money market deposits		661,067		3.24		781,087		2.98		989,591		2.61
Certificates of deposits		3,687,232		4.25		3,450,450		3.94		2,450,618		3.54
Total retail deposits		4,910,917		3.74		4,845,568		3.41		4,340,939		2.91
Municipal deposits		1,688,691		4.75		1,353,633		4.30		1,647,247		2.95
Wholesale deposits		1,608,827		3.48		1,779,799		3.42		1,796,495		3.18
Total deposits	$	8,208,435		3.89	$	7,979,000		3.56	$	7,784,681		2.98

Gain on Loan Sales
(in thousands)
(unaudited)

	For the quarter ended
	March 31, 2006			December 31, 2005			March 31, 2005
Net gain on loan sales	$	17,084		$	14,644		$	9,577
Plus: FASB 133 adjustment		(5,381	)		4,976			(3,135	)
Plus: secondary market reserve		1,006			4,932			1,181
Gain on loan sales	$	12,709		$	24,552		$	7,623
Loans sold	$	3,894,070		$	5,138,506		$	5,438,047
Sales spread		0.33	%		0.48	%		0.14	%

Asset Quality & Reserves
(in thousands)
(unaudited)

	Delinquencies at
	March 31,					December 31,					March 31,
Days delinquent	2006			%		2005			%		2005			%
30	$	24,462			24.5	$	30,972			26.7	$	36,727			33.6
60		17,244			17.3		20,456			17.7		15,125			13.9
90		56,469			56.7		61,816			53.3		52,320			47.9
matured — delinquent		1,501			1.5		2,650			2.3		5,029			4.6
Total	$	99,676			100.0	$	115,894			100.0	$	109,201			100.0
Investment loans	$	9,834,132				$	10,576,471				$	11,195,408
Delinquency %		1.01	%				1.10	%				0.98	%

	Non-Performing Loans and Assets at
	March 31,			December 31,			March 31,
	2006			2005			2005
Non-performing loans	$	57,970		$	64,466		$	57,349
As a percent of investment loans		0.59	%		0.62	%		0.51	%
Non-performing assets	$	150,975		$	146,967		$	130,926
As a percent of total assets		1.00	%		0.98	%		0.92	%

Loan Originations
(in millions)
(unaudited)

					For the quarter ended
Loan type	March 31, 2006		%		December 31, 2005		%		March 31, 2005		%
Residential mortgage loans	$	4,348		93.0	$	5,621		92.9	$	7,213		95.3
Consumer loans		180		3.8		230		3.8		248		3.3
Commercial loans		146		3.2		202		3.3		110		1.4
Total loan production	$	4,674		100.0	$	6,053		100.0	$	7,571		100.0