Once more unto the breach, dear Fools, as we look at another bank stock today.

Not that Michigan's Flagstar Bancorp (NYSE:FBC) is just another bank -- it's actually a fair bit different from the banks we've covered here before. Flagstar can best be thought of as two companies in one -- a retail bank (akin to the companies we most often write about) and a mortgage business.

While the fourth quarter was a challenging one relative to the year-ago period, the company still produced results that exceeded the average estimate. Net earnings came in down about 10% relative to last year, because net interest income after provisions for losses fell 2%, non-interest income rose 23%, and non-interest expenses climbed 21%.

That's not an especially favorable mix. Consequently, the efficiency ratio rose to 62.6 from 59.1 (higher is bad), while the return on equity and return on assets fell. In fact, I believe this is Flagstar's worst return on equity in its history as a public company.

On the interest income side, the margin further compressed to 1.73%, a very low level in absolute terms. Part of the problem here is the high cost of the bank's funds -- average deposit costs rose to 3.56% (from 2.71%), and Flagstar has a relatively low percentage of low-cost demand deposits (like checking accounts and the like).

On the mortgage side, there was a better spread on loan sales, but Flagstar actually sold about one-third fewer loans than in the year-ago quarter. Overall, though, the bank's gain on loan sales nearly tripled from the year-ago period.

I'm fine with buying unusual banks, but this one worries me. More than one- third of the bank's loan portfolio is made up of residential interest-only loans, and while the delinquency rates on those loans are fine for now, we haven't even come close to hitting a rough spot in the economy or job market yet.

So although this bank is quite cheap on a historical basis (trading at less than 1.25 times book value vs. a historical average of about 1.7) and pays a generous dividend, I'll be sticking with turnaround candidates like Fifth Third (NASDAQ:FITB), regional banks like BB&T (NYSE:BBT), other Midwesterners like U.S. Bancorp (NYSE:USB) and TCF Financial (NYSE:TCB), or maybe a large player like Wachovia (NYSE:WB).

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U.S. Bancorp is a Motley Fool Income Investor recommendation. Mathew Emmert offers readers advice on stocks that pay you to invest in them. Click here to see more, and if you subscribe to any newsletter for one year, you'll get a free copy of Stocks 2006 , our analysts' top picks for the year ahead.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).