Net earnings for the second quarter 2008 reflected an increase in net interest income before provision for loan losses to $61. Net earnings for the six months ended June 30, 2008 reflected an increase in net interest income before provision for loan losses to $116. Flagstar Bank had 170 retail banking branches at June 30, 2008 as compared to 167 branches at March 31, 2008 and 156 branches at June 30, 2007. The gain on loan sales and securitization margin was 54 basis points for the quarter ended June 30, 2008, as compared to 89 basis points for the first quarter 2008 and 49 basis points for the second quarter 2007. Summary of Selected Consolidated Financial Data (Dollars in thousands, except per share data) (Unaudited) For the Three Months Ended Summary of Consolidated June 30, March 31, June 30, Statements of Operations 2008 2008 2007 Interest income $200,564 $210,853 $ 222,464 Interest expense (139,165) (156,055) (172,547) Net interest income 61,399 54,798 49,917 Provision for loan losses (43,833) (34,262) (11,452) Net interest income after provision 17,566 20,536 38,465 Non-interest income Loan fees and charges, net 617 884 837 Deposit fees and charges 6,815 6,031 5,710 Loan administration 37,370 (17,046) 3,149 Net gain on loan sales and securitizations 43,826 63,425 28,144 Net gain on investments available for sale 4,869 - (Loss) gain on MSR sales, net (834) 287 5,610 Unrealized loss on trading securities-residuals (4,104) (9,482) - Unrealized gain (loss) on interest rate swaps 984 (1,611) - Other income 10,734 10,186 13,994 Total non-interest income 100,277 52,674 57,444 Non-interest expenses Compensation and benefits (54,411) (56,626) (42,847) Commissions (30,788) (29,316) (19,517) Occupancy and equipment (20,471) (19,853) (17,038) General and administrative (14,879) (8,827) (11,178) Other (6,670) (6,850) (5,366) Total non-interest expense (127,219) (121,472) (95,946) Capitalized direct cost of loan closing 33,483 32,304 23,712 Total non-interest expense after capitalized direct cost of loan closing (93,736) (89,168) (72,234) Earnings (loss) before federal income tax 24,107 (15,958) 23,675 Provision (benefit) for federal income taxes (8,361) (5,359) (8,544) Net earnings (loss) $15,746 $(10,599) $15,131 Basic earnings (loss) per share $0. Summary of Selected Consolidated Financial Data (Dollars in thousands, except per share data) (Unaudited) For the Six Months Ended Summary of Consolidated June 30, June 30, Statements of Operations 2008 2007 Interest income $411,417 $443,033 Interest expense (295,220) (339,141) Net interest income 116,197 103,892 Provision for loan losses (78,096) (19,745) Net interest income after provision 38,101 84,147 Non-interest income Loan fees and charges, net 1,501 2,644 Deposit fees and charges 12,846 10,688 Loan administration 20,324 4,168 Net gain on loan sales and securitizations 107,252 53,298 Net gain on investments available for sale 4,869 - (Loss) gain on MSR sales, net (547) 5,725 Impairment - securities available for sale - 729 Unrealized loss on trading securities - residential (13,586) - Unrealized loss on swaps (627) - Other income 20,920 18,494 Total non-interest income 152,952 95,746 Non-interest expenses Compensation and benefits (111,037) (85,496) Commissions (60,103) (34,822) Occupancy and equipment (40,324) (33,824) General and administrative (23,707) (23,366) Other (13,520) (8,872) Total non-interest expense (248,691) (186,380) Capitalized direct cost of loan closing 65,786 42,340 Total non-interest expense after capitalized direct cost of loan closing (182,905) (144,040) Earnings before federal income tax 8,148 35,853 Provision for federal income taxes (3,002) (12,963) Net earnings $ 5,146 $22,890 Basic earnings per share $0. read more

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