Form 8-K FLAGSTAR BANCORP INC For: Apr 28

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April 28, 2020 6:34 AM EDT

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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 28, 2020

(Exact Name of Registrant as Specified in Charter)



Michigan	1-16577	38-3150651
(State or Other Jurisdiction of Incorporation	(Commission File Number)	(IRS Employer Identification No.)



5151 Corporate Drive, Troy, Michigan		48098
(Address of Principal Executive Offices)		(Zip Code)

(248) 312-2000

(Registrant's telephone number, including area code)

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. o

Securities registered pursuant to Section 12(b) of the Exchange Act:



Title of each class	Trading symbol	Name of each exchange on which registered
Common stock	FBC	New York Stock Exchange



Item 2.02	Results of Operations and Financial Condition

On April 28, 2020, Flagstar Bancorp, Inc. (the "Company") issued a press release regarding its preliminary results of operations and financial condition for the three months ended March 31, 2020. The text of the press release is furnished as Exhibit 99.1 to this report. The Company will include final financial statements and additional analyses for the year ended March 31, 2020 as part of its Annual Report on Form 10-Q.

On April 28, 2020, the Company will hold a conference call to review first quarter 2020 earnings. A copy of the slide presentation to be used by the Company on the conference call is furnished as Exhibit 99.2 to this Current Report on Form 8-K.



Item 9.01	Financial Statements and Exhibits



Exhibits

99.1		Press release of Flagstar Bancorp, Inc. dated April 28, 2020

99.2		Flagstar Bancorp, Inc. Conference Call Presentation Slides - Earnings Presentation First Quarter

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.

Dated:	April 28, 2020		By:	/s/ James K. Ciroli
				James K. Ciroli
				Executive Vice President and Chief Financial Officer

Exhibit Index



Exhibit No.		Description

99.1		Press release of Flagstar Bancorp, Inc. dated April 28, 2020

99.2		Flagstar Bancorp, Inc. Conference Call Presentation Slides - Earnings Presentation First Quarter

EXHIBIT 99.1

NEWS RELEASE

For more information, contact:

Kenneth Schellenberg

[email protected]

(248) 312-5741

Flagstar Bancorp Reports First Quarter 2020 Net Income of $46 Million, or $0.80 Per Diluted Share

Key Highlights - First Quarter 2020


•	Transitioned smoothly to remote operations to protect the health of employees and ensure business continuity


•	Achieved mortgage revenues of $96 million, driven by strong refinance volume and higher return on MSRs


•	Effectively managed NIM compression through the challenging rate environment


•	Adopted CECL, increasing credit reserves to $152 million at March 31st


•	Ended the quarter in a solid financial position--ample capital and liquidity

TROY, Mich., April 28, 2020 - Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, FSB, today reported first quarter 2020 net income of $46 million, or $0.80 per diluted share, compared to fourth quarter 2019 net income of $58 million, or $1.00 per diluted share and first quarter 2019 net income of $36 million, or $0.63 per diluted share.

“We posted strong results in the quarter,” said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. “but the real story of the quarter was the last two weeks as our way of doing business changed and the health and safety of our employees and financial well-being of our customers took center stage. I couldn’t be more proud of the way our company has responded to the COVID-19 crisis. We executed on our business continuity plan, virtually overnight, without a hitch. Today, we are operating differently, but smoothly.

“On the business side, we’re supporting our customers by providing needed payment relief as we partner with them through this health crisis. On the community side, we have adjusted our giving priorities to support the fight against COVID-19, including nearly $1 million in financial support from the Flagstar Foundation. We are also participating in the SBA’s Paycheck Protection Program to support small business and nonprofit partners.

“Turning to our financial performance, we demonstrated the underlying strength of our diversified business model as our mortgage business was a standout, servicing was solid and banking held its own against headwinds. Compared to the fourth quarter 2019, net interest income fell $4 million, or 3 percent, reflecting only a 10 basis point decrease in net interest margin, despite a full quarter's impact from prior rate cuts and the partial impact of March rate cuts. Margin compression was partially cushioned by growth in interest earnings assets. We also adopted CECL during the quarter, which increased our credit reserves by almost 40% to $152 million.

“We closed the quarter servicing or subservicing nearly 1.1 million loans, consistent with the prior quarter. Despite the high prepayment activity driven by lower interest rates, we held our ground in servicing which is a testament to our capability to leverage our mortgage origination business to replace loans that prepaid.

“Our mortgage team had a strong quarter, with mortgage revenues of $96 million, driven by a 36 percent increase in fallout adjusted locks and a $9 million increase in return on our mortgage servicing rights. Our gain on sale margin was 80 basis points, a strong first quarter performance despite the impact that the unprecedented Federal Reserve purchases of agency mortgage-backed securities had on our hedge effectiveness.

“Our results this quarter show the power of our business model and the reason we remain so committed to it. Thanks to our mortgage and warehouse businesses, we are uniquely positioned among banks to take advantage of the strong refinance market to carry us through what is likely to be a challenging credit and rate cycle. We understand that the rest of the year, and possibly beyond, may be like nothing we’ve ever experienced before. We are a strong company, with great people, a resilient business strategy, and an unerring commitment to do what is right, which will serve us well as we head into uncharted territory.”



Income Statement Highlights
	Three Months Ended
	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
	(Dollars in millions)
Net interest income	$	148	$	152	$	146	$	138	$	126
Provision for credit losses	14		—		1		17		—
Noninterest income	157		162		171		168		109
Noninterest expense	235		245		238		214		191
Income before income taxes	56		69		78		75		44
Provision for income taxes	10		11		15		14		8
Net income	$	46	$	58	$	63	$	61	$	36
Income per share:
Basic	$	0.80	$	1.01	$	1.12	$	1.08	$	0.64
Diluted	$	0.80	$	1.00	$	1.11	$	1.06	$	0.63



Adjusted Income Statement Highlights (Non-GAAP) (1)
	Three Months Ended
	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
	(Dollars in millions)
Net interest income	$	148	$	152	$	146	$	138	$	126
Provision for credit losses	14		—		1		17		—
Noninterest income	157		162		171		143		109
Noninterest expense	235		245		238		214		190
Income before income taxes	56		69		78		50		45
Provision for income taxes	10		11		15		9		8
Net income	$	46	$	58	$	63	$	41	$	37

Income per share:
Basic	$	0.80	$	1.01	$	1.12	$	0.72	$	0.65
Diluted	$	0.80	$	1.00	$	1.11	$	0.71	$	0.64


(1)	See Non-GAAP Reconciliation for further information.



Key Ratios
	Three Months Ended
	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019
Net interest margin	2.81	%	2.91	%	3.05	%	3.08	%	3.09	%
Return on average assets	0.8	%	1.0	%	1.2	%	1.2	%	0.8	%
Return on average common equity	9.8	%	12.7	%	14.7	%	14.6	%	9.2	%
Efficiency ratio	77.1	%	78.2	%	75.2	%	69.8	%	81.3	%
HFI loan-to-deposit ratio	74.9	%	76.5	%	74.2	%	75.0	%	71.0	%
Adjusted HFI loan-to-deposit ratio (1)	86.3	%	84.6	%	82.0	%	80.6	%	77.0	%


(1)	Excludes warehouse loans and custodial deposits. See Non-GAAP Reconciliation for further information.



Average Balance Sheet Highlights
	Three Months Ended										% Change
	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		Seq		Yr/Yr
	(Dollars in millions)
Average interest-earning assets	$	21,150	$	20,708	$	18,997	$	17,759	$	16,294	2	%	30	%
Average loans held-for-sale (LHFS)	5,248		5,199		3,786		3,539		3,266		1	%	61	%
Average loans held-for-investment (LHFI)	11,823		12,168		11,743		10,613		9,164		(3	)%	29	%
Average total deposits	15,795		15,904		15,817		14,159		12,906		(1	)%	22	%

Net Interest Income

Net interest income decreased $4 million, or 3 percent, to $148 million for the first quarter 2020 as compared to the fourth quarter 2019. The results reflect a 2 percent increase in average earning assets, primarily fueled by the acquisition of investment securities. Net interest margin decreased only 10 basis points, to 2.81 percent for the first quarter 2020 as compared to the fourth quarter 2019, as we effectively managed net interest margin compression through the full impact of the prior quarter rate cut and the partial impact of the March rate cuts.

Loans held-for-investment averaged $11.8 billion for the first quarter 2020, decreasing $345 million from the prior quarter. Average warehouse loans decreased $437 million, or 16 percent, consistent with the volume decline in the overall mortgage market and average residential mortgages decreased $153 million, or 5 percent, due to loan repayments.

Average total deposits were $15.8 billion in the first quarter 2020, decreasing $109 million, or 1 percent, from the fourth quarter 2019. Average time and brokered deposits decreased $282 million, or 10 percent, as these higher costs deposits matured and were replaced with less expensive funding.

Provision for Credit Losses

The Company had provision for credit losses and unfunded commitments of $14 million for the three months ended March 31, 2020. The provision was driven by our economic forecast, which included our estimate of the impact related to COVID-19 as of March 31st, partially offset by strong asset quality and low delinquencies.

Noninterest Income

Noninterest income decreased $5 million to $157 million in the first quarter 2020, as compared to $162 million for the fourth quarter 2019, primarily due to lower mortgage revenues.

First quarter 2020 net gain on loan sales decreased $11 million, or 11 percent, to $90 million, as compared to $101 million in the fourth quarter 2019. Fallout-adjusted locks increased $3.0 billion, or 36 percent, to $11.2 billion, primarily driven by the robust refinance market. The net gain on loan sale margin decreased 43 basis points, to 0.80 percent for the first quarter 2020, as compared to 1.23 percent for the fourth quarter 2019 reflecting the negative impact the Federal Reserve’s purchases of agency mortgage-backed securities in the first quarter 2020 had on our hedge effectiveness.

Net return on mortgage servicing rights increased $9 million, to $6 million for the first quarter of 2020, compared to a $3 million net loss for the fourth quarter 2019 reflecting favorable hedge performance.



Mortgage Metrics
	As of/Three months ended															Change (% / bps)
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			Seq		Yr/Yr
	(Dollars in millions)
Mortgage rate lock commitments (fallout-adjusted) (1)	$	11,154		$	8,179		$	9,197		$	8,344		$	6,602		36	%	69	%
Mortgage loans closed	$	8,591		$	9,303		$	9,262		$	8,642		$	5,513		(8	)%	56	%
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) (2)	0.80		%	1.23		%	1.20		%	0.89		%	0.72		%	(43)		8
Net gain on loan sales	$	90		$	101		$	110		$	75		$	49		(11	)%	84	%
Net return on mortgage servicing rights (MSR)	$	6		$	(3	)	$	(2	)	$	5		$	6		N/M		—	%
Gain on loan sales + net return on the MSR	$	96		$	98		$	108		$	80		$	55		(2	)%	75	%
Loans serviced (number of accounts - 000's) (3)	1,082			1,091			994			983			962			(1	)%	12	%
Capitalized value of MSRs	0.95		%	1.21		%	1.14		%	1.23		%	1.27		%	(26)		(32	)
N/M - Not meaningful
(1) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates.
(2) Based on net gain on loan sales (excludes net gain on loan sales of $2 million from loans transferred from LHFI during the three months ended March 31, 2019 to fallout-adjusted mortgage rate lock commitments).
(3) Includes loans serviced for Flagstar's own loan portfolio, serviced for others, and subserviced for others.

Noninterest Expense

Noninterest expense decreased to $235 million for the first quarter 2020, as compared to $245 million for the fourth quarter 2019, primarily reflecting $9 million decrease in mortgage-related expenses--commissions and loan processing--due to lower closings.

The Company's efficiency ratio was 77 percent for the first quarter 2020, as compared to 78 percent for the fourth quarter 2019.

Income Taxes

The first quarter 2020 provision for income taxes totaled $10 million, compared to $11 million for the fourth quarter 2019. The effective tax rate was 18.4 percent for the first quarter 2020, compared to 16.7 percent for the fourth quarter 2019. The current economic environment has resulted in uncertainty about the timing of receiving tax benefits related to certain investments, causing the tax rate to increase.

Asset Quality



Credit Quality Ratios
	As of/Three Months Ended															Change (% / bps)
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			Seq		Yr/Yr
	(Dollars in millions)
Allowance for credit losses and reserve for unfunded commitments	$	152		$	110		$	113		$	113		$	130		38	%	17	%
Credit reserves to LHFI	1.1		%	0.9		%	0.9		%	1.0		%	1.3		%	20		(20)
Charge-offs, net of recoveries	$	2		$	3		$	1		$	34		$	1		(33	)%	N/M
Total nonperforming LHFI and TDRs	$	29		$	26		$	26		$	63		$	24		12	%	21	%
Net charge-offs to LHFI ratio (annualized)	0.08		%	0.10		%	0.02		%	1.29		%	0.05		%	(2)		3
Ratio of nonperforming LHFI and TDRs to LHFI	0.21		%	0.21		%	0.21		%	0.54		%	0.24		%	0		(3)

Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (1):
Residential first mortgage	0.08		%	0.08		%	0.07		%	0.11		%	0.05		%	—		60
Home equity and other consumer	0.28		%	0.49		%	0.27		%	0.71		%	0.23		%	(43	)	22
Commercial real estate	(0.01		)%	—		%	—		%	—		%	—		%	(1	)	(1	)
Commercial and industrial	0.09		%	0.07		%	(0.22		)%	7.11		%	0.02		%	29		N/M
N/M - Not meaningful

(1) Excludes loans carried under the fair value option.

The allowance coverage for credit losses was $152 million and covered 1.1 percent of loans held-for-investment at March 31, 2020, a 20 basis point increase from December 31, 2019. The increase in the allowance coverage reflects the forecasted impact of the COVID-19 pandemic as of March 31st. Excluding warehouse loans, the allowance coverage ratio was 1.5 percent.

Net charge-offs in the first quarter 2020 were $2 million, or 8 basis points of LHFI, compared to $3 million, or 10 basis points in the prior quarter, reflecting continued strength in the credit quality of the loan portfolio.

Nonperforming loans were $29 million and our ratio of nonperforming loans to loans held-for-investment was 21 basis points at March 31, 2020, flat compared to December 31, 2019. At March 31, 2020, early stage loan delinquencies totaled $26 million, or 0.19 percent, of total loans, compared to $14 million, or 0.12 percent, at December 31, 2019.

Capital



Capital Ratios (Bancorp)																Change (% / bps)
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			Seq		Yr/Yr
Tier 1 leverage (to adj. avg. total assets)	8.09		%	7.57		%	7.98		%	7.86		%	8.37		%	52		(28)
Tier 1 common equity (to RWA)	9.16		%	9.32		%	9.25		%	9.08		%	9.69		%	(16)		(53)
Tier 1 capital (to RWA)	10.51		%	10.83		%	10.81		%	10.73		%	11.51		%	(32)		(100)
Total capital (to RWA)	11.21		%	11.52		%	11.54		%	11.51		%	12.49		%	(31)		(128)
Tangible common equity to asset ratio (1)	6.25		%	6.95		%	7.08		%	7.31		%	7.16		%	(70)		(91)
Tangible book value per share (1)	$	29.52		$	28.57		$	27.62		$	26.16		$	24.65		3	%	20	%


(1)	See Non-GAAP Reconciliation for further information.

The Company maintained a solid capital position with regulatory ratios well above current regulatory quantitative guidelines for "well capitalized" institutions. At March 31, 2020, the Company had a total risk-based capital ratio of 11.2 percent, as compared to 11.5 percent at December 31, 2019.

Earnings Conference Call

As previously announced, the Company's first quarter 2020 earnings call will be held Tuesday, April 28, 2020 at 11 a.m. (ET).

To join the call, please dial (866) 575-6539 toll free or (323) 794-2551 and use passcode 2135884. Please call at least 10 minutes before the conference is scheduled to begin. A replay will be available for five business days by calling (888) 203-1112 toll free or (719) 457-0820 and using passcode 2135884.

The conference call will also be available as a live audiocast on the Investor Relations section of flagstar.com, where it will be archived and available for replay and download. The slide presentation accompanying the conference call will be posted on the site.

About Flagstar

Flagstar Bancorp, Inc. (NYSE: FBC) is a $26.8 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 160 branches in Michigan, Indiana, California, Wisconsin and Ohio. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 87 retail locations in 28 states, representing the combined retail branches of Flagstar and its Opes Advisors mortgage division. Flagstar is a leading national originator and servicer of mortgage and other consumer loans, handling payments and record keeping for $225 billion of loans representing nearly 1.1 million borrowers. For more information, please visit flagstar.com.

Use of Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this news release includes non-GAAP financial measures, such as tangible book value per share, tangible common equity to assets ratio, return on average tangible equity, adjusted return on average tangible equity, adjusted return on average assets, adjusted HFI loan-to-deposit ratio, adjusted noninterest income, adjusted noninterest expense, adjusted income before income taxes, adjusted provision for income taxes, adjusted net income, adjusted basic and diluted earnings per share, and adjusted net interest margin. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar.

Non-GAAP financial measures have inherent limitations. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. Flagstar’s method of calculating these non-GAAP measures may differ from methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements.

Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in this news release. Additional discussion of the use of non-GAAP measures can also be found in conference call slides, the Form 8-K Current Report related to this news release and in periodic Flagstar reports

filed with the U.S. Securities and Exchange Commission. These documents can all be found on the Company’s website at flagstar.com.

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Flagstar Bancorp, Inc.’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The Company's actual results could differ materially from those described in the forward-looking statements depending upon various factors as described in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). The COVID-19 pandemic is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition

(Dollars in millions)

(Unaudited)



	March 31, 2020			December 31, 2019			March 31, 2019
Assets
Cash	$	216		$	220		$	268
Interest-earning deposits	126			206			122
Total cash and cash equivalents	342			426			390
Trading securities	2,058			—			—
Investment securities available-for-sale	2,446			2,116			2,142
Investment securities held-to-maturity	554			598			683
Loans held-for-sale	4,389			5,258			3,874
Loans held-for-investment	13,795			12,129			9,936
Loans with government guarantees	814			736			470
Less: allowance for credit losses	(132		)	(107		)	(127		)
Total loans held-for-investment and loans with government guarantees, net	14,477			12,758			10,279
Mortgage servicing rights	223			291			278
Federal Home Loan Bank stock	306			303			303
Premises and equipment, net	413			416			414
Goodwill and intangible assets	167			170			182
Other assets	1,430			930			900
Total assets	$	26,805		$	23,266		$	19,445
Liabilities and Stockholders’ Equity
Noninterest-bearing deposits	$	6,551		$	5,467		$	4,016
Interest-bearing deposits	9,501			9,679			9,437
Total deposits	16,052			15,146			13,453
Short-term Federal Home Loan Bank advances and other	5,841			4,165			3,101
Long-term Federal Home Loan Bank advances	1,000			650			250
Other long-term debt	493			496			495
Other liabilities	1,577			1,021			572
Total liabilities	24,963			21,478			17,871
Stockholders’ Equity
Common stock	1			1			1
Additional paid in capital	1,487			1,483			1,476
Accumulated other comprehensive income (loss)	31			1			(31		)
Retained earnings	323			303			128
Total stockholders’ equity	1,842			1,788			1,574
Total liabilities and stockholders’ equity	$	26,805		$	23,266		$	19,445

Flagstar Bancorp, Inc. Condensed Consolidated Statements of Operations (Dollars in millions, except per share data) (Unaudited)

													First Quarter 2020 Compared to:
	Three Months Ended												Fourth Quarter 2019					First Quarter 2019
	March 31, 2020		December 31, 2019			September 30, 2019			June 30, 2019		March 31, 2019		Amount			Percent		Amount			Percent
Interest Income
Total interest income	$	201	$	213		$	203		$	198	$	180	$	(12	)	(6	)%	$	21		12	%
Total interest expense	53		61			57			60		54		(8		)	(13	)%	(1		)	(2	)%
Net interest income	148		152			146			138		126		(4		)	(3	)%	22			17	%
Provision for credit losses	14		—			1			17		—		14			N/M		14			N/M
Net interest income after provision for credit losses	134		152			145			121		126		(18		)	(12	)%	8			6	%
Noninterest Income
Net gain on loan sales	90		101			110			75		49		(11		)	(11	)%	41			N/M
Loan fees and charges	26		30			29			24		17		(4		)	(13	)%	9			53	%
Net return (loss) on the mortgage servicing rights	6		(3		)	(2		)	5		6		9			N/M		—			—	%
Loan administration income	12		8			5			6		11		4			50	%	1			9	%
Deposit fees and charges	9		10			10			10		8		(1		)	(10	)%	1			13	%
Other noninterest income	14		16			19			48		18		(2		)	(13	)%	(4		)	(22	)%
Total noninterest income	157		162			171			168		109		(5		)	(3	)%	48			44	%
Noninterest Expense
Compensation and benefits	102		102			98			90		87		—			—	%	15			17	%
Occupancy and equipment	41		43			40			40		38		(2		)	(5	)%	3			8	%
Commissions	29		35			38			25		13		(6		)	(17	)%	16			N/M
Loan processing expense	20		20			22			21		17		—			—	%	3			18	%
Legal and professional expense	6		9			6			6		6		(3		)	(33	)%	—			—	%
Federal insurance premiums	6		6			5			5		4		—			—	%	2			50	%
Intangible asset amortization	3		4			3			4		4		(1		)	(25	)%	(1		)	(25	)%
Other noninterest expense	28		26			26			23		22		2			8	%	6			27	%
Total noninterest expense	235		245			238			214		191		(10		)	(4	)%	44			23	%
Income before income taxes	56		69			78			75		44		(13		)	(19	)%	12			27	%
Provision for income taxes	10		11			15			14		8		(1		)	(9	)%	2			25	%
Net income	$	46	$	58		$	63		$	61	$	36	$	(12	)	(21	)%	$	10		28	%
Income per share
Basic	$	0.80	$	1.01		$	1.12		$	1.08	$	0.64	$	(0.21	)	(21	)%	$	0.16		25	%
Diluted	$	0.80	$	1.00		$	1.11		$	1.06	$	0.63	$	(0.20	)	(20	)%	$	0.17		27	%

Cash dividends declared	$	0.05	$	0.04		$	0.04		$	0.04	$	0.04	$	0.01		25	%	$	0.01		25	%
N/M - Not meaningful

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial and Statistical Data

(Dollars in millions, except share data)

(Unaudited)



	Three Months Ended
	March 31, 2020			December 31, 2019			March 31, 2019
Selected Mortgage Statistics:
Mortgage rate lock commitments (fallout-adjusted) (1)	$	11,154		$	8,179		$	6,602
Mortgage loans closed	$	8,591		$	9,303		$	5,513
Mortgage loans sold and securitized	$	7,487		$	8,135		$	5,170
Selected Ratios:
Interest rate spread (2)	2.31		%	2.39		%	2.69		%
Net interest margin	2.81		%	2.91		%	3.09		%
Net margin on loans sold and securitized	1.19		%	1.24		%	0.92		%
Return on average assets	0.78		%	0.99		%	0.79		%
Adjusted return on average assets (3) (4)	0.78		%	0.99		%	0.80		%
Return on average common equity	9.82		%	12.69		%	9.16		%
Return on average tangible common equity (4)	11.46		%	14.76		%	11.33		%
Adjusted return on average tangible common equity (3) (4)	11.46		%	14.76		%	11.56		%
Efficiency ratio	77.1		%	78.2		%	81.3		%
Common equity-to-assets ratio (average for the period)	7.92		%	7.83		%	8.59		%
Average Balances:
Average interest-earning assets	$	21,150		$	20,708		$	16,294
Average interest-bearing liabilities	$	14,480		$	14,208		$	12,505
Average stockholders' equity	$	1,854		$	1,803		$	1,583


(1)	Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates.


(2)	Interest rate spread is the difference between the annualized yield earned on average interest-earning assets for the period and the annualized rate of interest paid on average interest-bearing liabilities for the period.


(3)	See Non-GAAP Reconciliation for further information.


(4)	Excludes goodwill, intangible assets and the associated amortization. See Non-GAAP Reconciliation for further information.



	March 31, 2020			December 31, 2019			March 31, 2019
Selected Statistics:
Book value per common share	$	32.46		$	31.57		$	27.86
Tangible book value per share (1)	$	29.52		$	28.57		$	24.65
Number of common shares outstanding	56,729,789			56,631,236			56,480,086
Number of FTE employees	4,415			4,453			3,996
Number of bank branches	160			160			160
Ratio of nonperforming assets to total assets (2)	0.14		%	0.15		%	0.17		%
Common equity-to-assets ratio	6.87		%	7.68		%	8.09		%
MSR Key Statistics and Ratios:
Weighted average service fee (basis points)	38.8			39.7			38.0
Capitalized value of mortgage servicing rights	0.95		%	1.21		%	1.27		%


(1)	Excludes goodwill and intangibles of $167 million, $170 million and $182 million at March 31, 2020, December 31, 2019, and March 31, 2019, respectively. See Non-GAAP Reconciliation for further information.


(2)	Ratio excludes LHFS.

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)



	Three Months Ended
	March 31, 2020						December 31, 2019						March 31, 2019
	Average Balance		Interest		Annualized Yield/Rate		Average Balance		Interest		Annualized Yield/Rate		Average Balance		Interest		Annualized Yield/Rate
Interest-Earning Assets
Loans held-for-sale	$	5,248	$	49	3.72	%	$	5,199	$	51	3.92	%	$	3,266	$	38	4.72	%
Loans held-for-investment
Residential first mortgage	3,062		27		3.51	%	3,215		30		3.60	%	3,044		28		3.64	%
Home equity	1,019		12		4.73	%	989		12		4.86	%	745		10		5.63	%
Other	816		12		5.77	%	728		11		5.97	%	356		6		7.11	%
Total consumer loans	4,897		51		4.14	%	4,932		53		4.20	%	4,145		44		4.30	%
Commercial real estate	2,949		34		4.61	%	2,763		34		4.91	%	2,250		33		5.66	%
Commercial and industrial	1,667		19		4.52	%	1,726		21		4.80	%	1,594		21		5.39	%
Warehouse lending	2,310		25		4.30	%	2,747		33		4.61	%	1,175		16		5.47	%
Total commercial loans	6,926		78		4.48	%	7,236		88		4.77	%	5,019		70		5.53	%
Total loans held-for-investment	11,823		129		4.34	%	12,168		141		4.54	%	9,164		114		4.97	%
Loans with government guarantees	811		3		1.38	%	678		4		2.16	%	455		3		2.96	%
Investment securities	3,060		19		2.47	%	2,511		16		2.49	%	3,258		24		2.91	%
Interest-earning deposits	208		1		1.75	%	152		1		2.26	%	151		1		2.77	%
Total interest-earning assets	21,150		$	201	3.78	%	20,708		$	213	4.04	%	16,294		$	180	4.43	%
Other assets	2,263						2,328						2,144
Total assets	$	23,413					$	23,036					$	18,438
Interest-Bearing Liabilities
Retail deposits
Demand deposits	$	1,587	$	3	0.75	%	$	1,448	$	3	0.70	%	$	1,220	$	2	0.68	%
Savings deposits	3,384		9		1.07	%	3,335		10		1.19	%	3,089		7		0.95	%
Money market deposits	687		1		0.32	%	700		—		0.35	%	778		1		0.27	%
Certificates of deposit	2,254		12		2.24	%	2,459		15		2.37	%	2,488		13		2.13	%
Total retail deposits	7,912		25		1.28	%	7,942		28		1.39	%	7,575		23		1.22	%
Government deposits	1,131		3		1.15	%	1,192		4		1.39	%	1,170		4		1.51	%
Wholesale deposits and other	581		4		2.39	%	666		4		2.36	%	387		2		2.23	%
Total interest-bearing deposits	9,624		32		1.33	%	9,800		36		1.46	%	9,132		29		1.30	%
Short-term FHLB advances and other	3,566		12		1.35	%	3,262		15		1.74	%	2,725		17		2.54	%
Long-term FHLB advances	794		3		1.29	%	650		3		1.43	%	153		1		1.54	%
Other long-term debt	496		6		5.33	%	496		7		5.45	%	495		7		5.90	%
Total interest-bearing liabilities	14,480		53		1.46	%	14,208		61		1.65	%	12,505		54		1.75	%
Noninterest-bearing deposits
Retail deposits and other	1,395						1,332						1,242
Custodial deposits (1)	4,776						4,772						2,532
Total noninterest-bearing deposits	6,171						6,104						3,774
Other liabilities	908						921						576
Stockholders' equity	1,854						1,803						1,583
Total liabilities and stockholders' equity	$	23,413					$	23,036					$	18,438
Net interest-earning assets	$	6,671					$	6,500					$	3,789
Net interest income			$	148					$	152					$	126
Interest rate spread (2)					2.31	%					2.39	%					2.69	%
Net interest margin (3)					2.81	%					2.91	%					3.09	%
Ratio of average interest-earning assets to interest-bearing liabilities					146.1	%					145.8	%					130.3	%
Total average deposits	$	15,795					$	15,904					$	12,906


(1)	Approximately 80 percent of custodial deposits from loans subserviced which pay interest that is recognized as an offset in net loan administration income.


(2)	Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.


(3)	Net interest margin is net interest income divided by average interest-earning assets.

Earnings Per Share

(Dollars in millions, except share data)

(Unaudited)



	Three Months Ended
	March 31, 2020		December 31, 2019			March 31, 2019
Net Income	$	46	$	58		$	36
Weighted average common shares outstanding	56,655,865		56,513,890			56,897,799
Stock-based awards	534,058		684,844			692,473
Weighted average diluted common shares	57,189,923		57,198,734			57,590,272
Basic earnings per common share	$	0.80	$	1.01		$	0.64
Stock-based awards	—		(0.01		)	(0.01		)
Diluted earnings per common share	$	0.80	$	1.00		$	0.63

Regulatory Capital - Bancorp

(Dollars in millions)

(Unaudited)



	March 31, 2020				December 31, 2019				March 31, 2019
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted avg. total assets)	$	1,879	8.09	%	$	1,720	7.57	%	$	1,520	8.37	%
Total adjusted avg. total asset base	$	23,212			$	22,724			$	18,171
Tier 1 common equity (to risk weighted assets)	$	1,639	9.16	%	$	1,480	9.32	%	$	1,280	9.69	%
Tier 1 capital (to risk weighted assets)	$	1,879	10.51	%	$	1,720	10.83	%	$	1,520	11.51	%
Total capital (to risk weighted assets)	$	2,005	11.21	%	$	1,830	11.52	%	$	1,650	12.49	%
Risk-weighted asset base	$	17,881			$	15,886			$	13,209

Regulatory Capital - Bank

(Dollars in millions)

(Unaudited)



	March 31, 2020				December 31, 2019				March 31, 2019
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted avg. total assets)	$	1,900	8.19	%	$	1,752	7.71	%	$	1,641	9.04	%
Total adjusted avg. total asset base	$	23,194			$	22,727			$	18,155
Tier 1 common equity (to risk weighted assets)	$	1,900	10.63	%	$	1,752	11.04	%	$	1,641	12.44	%
Tier 1 capital (to risk weighted assets)	$	1,900	10.63	%	$	1,752	11.04	%	$	1,641	12.44	%
Total capital (to risk weighted assets)	$	2,026	11.33	%	$	1,862	11.73	%	$	1,771	13.42	%
Risk-weighted asset base	$	17,876			$	15,873			$	13,193

Loans Serviced

(Dollars in millions)

(Unaudited)



	March 31, 2020			December 31, 2019			March 31, 2019
	Unpaid Principal Balance (1)		Number of accounts	Unpaid Principal Balance (1)		Number of accounts	Unpaid Principal Balance (1)		Number of accounts
Subserviced for others (2)	$	193,037	916,989	$	194,638	918,662	$	170,476	814,248
Serviced for others	23,439		102,338	24,003		105,469	21,925		90,622
Serviced for own loan portfolio (3)	8,539		63,085	9,536		66,526	7,631		56,687
Total loans serviced	$	225,015	1,082,412	$	228,177	1,090,657	$	200,032	961,557


(1)	Unpaid principal balance, net of write downs, does not include premiums or discounts.


(2)	Includes temporary short-term subservicing performed as a result of sales of servicing-released mortgage servicing rights. Includes repossessed assets.


(3)	Includes LHFI (residential first mortgage, home equity and other consumer), LHFS (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



	March 31, 2020				December 31, 2019				March 31, 2019
Consumer loans
Residential first mortgage	$	2,964	21.5	%	$	3,154	26.0	%	$	3,100	31.2	%
Home equity	1,028		7.5	%	1,024		8.4	%	796		8.0	%
Other	858		6.2	%	729		6.0	%	433		4.4	%
Total consumer loans	4,850		35.2	%	4,907		40.4	%	4,329		43.6	%
Commercial loans
Commercial real estate	3,092		22.4	%	2,828		23.3	%	2,324		23.4	%
Commercial and industrial	1,880		13.6	%	1,634		13.5	%	1,651		16.6	%
Warehouse lending	3,973		28.8	%	2,760		22.8	%	1,632		16.4	%
Total commercial loans	8,945		64.8	%	7,222		59.6	%	5,607		56.4	%
Total loans held-for-investment	$	13,795	100.0	%	$	12,129	100.0	%	$	9,936	100.0	%

Other Consumer Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



	March 31, 2020				December 31, 2019				March 31, 2019
Indirect Lending	$	620	72.3	%	$	578	79.3	%	$	270	62.4	%
Point of Sale	159		18.5	%	63		8.6	%	41		9.5	%
Other	79		9.2	%	88		12.1	%	122		28.2	%
Total other consumer loans	$	858	100.0	%	$	729	100.0	%	$	433	100.1	%

Allowance for Credit Losses

(Dollars in millions)

(Unaudited)



	March 31, 2020		December 31, 2019		March 31, 2019
Residential first mortgage	$	46	$	22	$	35
Home equity	23		14		16
Other	16		6		4
Total consumer loans	85		42		55
Commercial real estate	28		38		36
Commercial and industrial	18		22		30
Warehouse lending	1		5		6
Total commercial loans	47		65		72
Allowance for credit losses	132		107		127
Reserve for unfunded commitments	20		3		3
Total allowance for credit losses	$	152	$	110	$	130

Allowance for Credit Losses

(Dollars in millions)

(Unaudited)



	Three Months Ended March 31, 2020
	Residential First Mortgage			Home Equity (3)			Other Consumer			Commercial Real Estate			Commercial and Industrial			Warehouse Lending			Total LHFI Portfolio (2)			Unfunded Commitments
Balance as of December 31, 2019	$	22		$	14		$	6		$	38		$	22		$	5		$	107		$	3
Impact of adopting ASC 326	25			12			10			(14		)	(6		)	(4		)	23			7
Adjusted balance at January 1, 2020	47			26			16			24			16			1			130			10
Provision (benefit) for credit losses:
Loan volume	(2		)	—			1			2			2			—			3			—
Economic forecast and credit	4			2			—			2			—			—			8			10
Other (1)	(2		)	(4		)	(1		)	—			—			—			(7		)	—
Charge-offs	(1		)	(1		)	(1		)	—			—			—			(3		)	—
Recoveries	—			—			1			—			—			—			1			—
Ending allowance balance	$	46		$	23		$	16		$	28		$	18		$	1		$	132		$	20

(1) Includes changes in the individually evaluated reserve
(2) Excludes loans carried under the fair value option
(3) December 31, 2019 and January 1, 2020 balances include $4 million of individually evaluated reserves that were no longer needed as of March 31, 2020

Nonperforming Loans and Assets

(Dollars in millions)

(Unaudited)



	March 31, 2020			December 31, 2019			March 31, 2019
Nonperforming LHFI	$	19		$	16		$	14
Nonperforming TDRs	4			3			3
Nonperforming TDRs at inception but performing for less than six months	6			7			7
Total nonperforming LHFI and TDRs (1)	29			26			24
Other nonperforming assets, net	10			10			8
LHFS	5			5			13
Total nonperforming assets	$	44		$	41		$	45

Ratio of nonperforming assets to total assets (2)	0.14		%	0.15		%	0.17		%
Ratio of nonperforming LHFI and TDRs to LHFI	0.21		%	0.21		%	0.24		%
Ratio of nonperforming assets to LHFI and repossessed assets (2)	0.28		%	0.30		%	0.33		%


(1)	Includes less than 90 day past due performing loans placed on nonaccrual. Interest is not being accrued on these loans.


(2)	Ratio excludes LHFS.

Asset Quality - Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 days (1)		Total Past Due		Total LHFI
March 31, 2020
Consumer loans	$	14	$	5	$	29	$	48	$	4,850
Commercial loans	7		—		—		7		8,945
Total loans	$	21	$	5	$	29	$	55	$	13,795
December 31, 2019
Consumer loans	$	9	$	5	$	26	$	40	$	4,907
Commercial loans	—		—		—		—		7,222
Total loans	$	9	$	5	$	26	$	40	$	12,129
March 31, 2019
Consumer loans	$	6	$	2	$	24	$	32	$	4,329
Commercial loans	—		1		—		1		5,607
Total loans	$	6	$	3	$	24	$	33	$	9,936


(1)	Includes performing nonaccrual loans that are less than 90 days delinquent and for which interest cannot be accrued.

Troubled Debt Restructurings

(Dollars in millions)

(Unaudited)



	TDRs
	Performing		Nonperforming		Total
March 31, 2020
Consumer loans	$	37	$	10	$	47
Total TDR loans	$	37	$	10	$	47
December 31, 2019
Consumer loans	$	38	$	10	$	48
Total TDR loans	$	38	$	10	$	48
March 31, 2019
Consumer loans	$	43	$	10	$	53
Total TDR loans	$	43	$	10	$	53

Non-GAAP Reconciliation

(Dollars in millions)

(Unaudited)

In addition to analyzing the Company's results on a reported basis, management reviews the Company's results and the results on an adjusted basis. The non-GAAP measures presented in the tables below reflect the adjustments of the reported U.S.GAAP results for significant items that management does not believe are reflective of the Company's current and ongoing operations. The DOJ benefit and acquisition related expenses recognized in conjunction with the Well Fargo branch acquisition from 2018 are not reflective of our ongoing operations and, therefore, have been excluded from our U.S. GAAP results. The Company believes that tangible book value per share, tangible common equity to assets ratio, return on average tangible common equity, adjusted return on average tangible common equity, adjusted return on average assets, adjusted HFI loan-to-deposit ratio, adjusted noninterest income, adjusted noninterest expense, adjusted income before income taxes, adjusted provision for income taxes, adjusted net income, and adjusted basic and diluted earnings per share and provide a meaningful representation of its operating performance on an ongoing basis.

The following tables provide a reconciliation of non-GAAP financial measures.

Tangible book value per share and tangible common equity to assets ratio.



	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
	(Dollars in millions, except share data)
Total stockholders' equity	$	1,842		$	1,788		$	1,734		$	1,656		$	1,574
Less: Goodwill and intangible assets	167			170			174			178			182
Tangible book value	$	1,675		$	1,618		$	1,560		$	1,478		$	1,392

Number of common shares outstanding	56,729,789			56,631,236			56,510,341			56,483,937			56,480,086
Tangible book value per share	$	29.52		$	28.57		$	27.62		$	26.16		$	24.65

Total assets	$	26,805		$	23,266		$	22,048		$	20,206		$	19,445
Tangible common equity to assets ratio	6.25		%	6.95		%	7.08		%	7.31		%	7.16		%

Return on average tangible equity, adjusted return on average tangible equity and adjusted return on average assets.



	Three Months Ended
	March 31, 2020			December 31, 2019			March 31, 2019
	(Dollars in millions)
Net income	$	46		$	58		$	36
Add: Intangible asset amortization, net of tax	3			3			3
Tangible net income	$	48		$	61		$	39

Total average equity	$	1,854		$	1,803		$	1,583
Less: Average goodwill and intangible assets	169			172			187
Total tangible average equity	$	1,685		$	1,631		$	1,396

Return on average common equity	9.82		%	12.69		%	9.16		%
Adjustment to remove Wells Fargo acquisition costs	—		%	—		%	0.06		%
Adjusted return on average common equity	9.82		%	12.69		%	9.22		%

Return on average tangible common equity	11.46		%	14.76		%	11.33		%
Adjustment to remove Wells Fargo acquisition costs	—		%	—		%	0.23		%
Adjusted return on average tangible common equity	11.46		%	14.76		%	11.56		%

Return on average assets	0.78		%	0.99		%	0.79		%
Adjustment to remove Wells Fargo acquisition costs	—		%	—		%	0.01		%
Adjusted return on average assets	0.78		%	0.99		%	0.80		%

Adjusted HFI loan-to-deposit ratio.



	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
	(Dollars in millions, except share data)
Average LHFI	$	11,823		$	12,168		$	11,743		$	10,613		$	9,164
Less: Average warehouse loans	2,310			2,747			2,508			1,997			1,175
Adjusted average LHFI	$	9,513		$	9,421		$	9,235		$	8,616		$	7,989

Average deposits	$	15,795		$	15,904		$	15,817		$	14,159		$	12,906
Less: Average custodial deposits	4,776			4,772			4,550			3,469			2,532
Adjusted average deposits	$	11,019		$	11,132		$	11,267		$	10,690		$	10,374

HFI loan-to-deposit ratio	74.9		%	76.5		%	74.2		%	75.0		%	71.0		%
Adjusted HFI loan-to-deposit ratio	86.3		%	84.6		%	82.0		%	80.6		%	77.0		%

Adjusted noninterest income, noninterest expense, income before income taxes, provision for income taxes, net income, basic earnings per share, diluted earnings per share, and net interest margin.



	Three Months Ended
	March 31, 2020		December 31, 2019		September 30, 2019		June 30, 2019			March 31, 2019
	(Dollars in millions)
Noninterest income	$	157	$	162	$	171	$	168		$	109
DOJ benefit	—		—		—		(25		)	—
Adjusted noninterest income	$	157	$	162	$	171	$	143		$	109

Noninterest expense	$	235	$	245	$	238	$	214		$	191
Wells Fargo acquisition costs	—		—		—		—			1
Adjusted noninterest expense	$	235	$	245	$	238	$	214		$	190

Income before income taxes	$	56	$	69	$	78	$	75		$	44
Adjustment for DOJ benefit	—		—		—		(25		)	—
Adjustment for Wells Fargo acquisition costs	—		—		—		—			1
Adjusted income before income taxes	$	56	$	69	$	78	$	50		$	45

Provision for income taxes	$	10	$	11	$	15	$	14		$	8
Tax impact on adjustment for DOJ benefit			—		—		(5		)	—
Adjusted provision for income taxes	$	10	$	11	$	15	$	9		$	8

Net income	$	46	$	58	$	63	$	61		$	36
Adjusted net income	$	46	$	58	$	63	$	41		$	37

Weighted average common shares outstanding	56,655,865		56,513,890		56,484,499		56,446,077			56,897,799
Weighted average diluted common shares	57,189,923		57,198,734		57,110,796		57,061,822			57,590,272
Adjusted basic earnings per share	$	0.80	$	1.01	$	1.12	$	0.72		$	0.65
Adjusted diluted earnings per share	$	0.80	$	1.00	$	1.11	$	0.71		$	0.64

1st Quarter 2020 Flagstar Bancorp, Inc. (NYSE: FBC) Earnings Presentation 1st Quarter 2020 April 28, 2020 1

Cautionary statements 1st Quarter 2020 This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on management’s current expectations and assumptions regarding the Company’s business and performance, the economy and other future conditions, and forecasts of future events, circumstances and results. However, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, contingencies and other factors. Generally, forward-looking statements are not based on historical facts but instead represent our management’s beliefs regarding future events. Such statements may be identified by words such as believe, expect, anticipate, intend, plan, estimate, may increase, may fluctuate, and similar expressions or future or conditional verbs such as will, should, would and could. Such statements are based on management’s current expectations and are subject to risks, uncertainties and changes in circumstances. Actual results and capital and other financial conditions may differ materially from those included in these statements due to a variety of factors, including without limitation those found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Any forward-looking statements made by or on behalf of us speak only as to the date they are made, and we do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made, except as required under United States securities laws. In addition to results presented in accordance with GAAP, this presentation includes non-GAAP financial measures. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar. Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. Flagstar’s method of calculating these non-GAAP measures may differ from methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements. Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in these conference call slides. Additional discussion of the use of non-GAAP measures can also be found in the Form 8-K Current Report related to this presentation and in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission. These documents can all be found on the Company’s website at flagstar.com. 2

Executive Overview 1st Quarter 2020 Sandro DiNello, CEO

Strategic highlights 1st Quarter 2020 • Supporting employees, communities and customers during the pandemic, with focus on their health, safety and Unique financial well-being relationship-based business model • Diverse revenue streams and flexible balance sheet produced strong results in declining interest rate environment by capitalizing on the resulting beneficial mortgage market • Well diversified loan portfolio, with no outsized exposure to any geography or industry reflects our disciplined Grow community approach to growing the Community Bank banking and servicing • Servicing business produced consistent results for the quarter, while also highlighting our competitive advantage as the subservicing business is housed within a well capitalized Bank with ample liquidity • Leveraged multi-channel origination platform to generate solid fallout adjusted lock growth, even with most of our staff Strengthen working remotely at the end of the quarter mortgage • Invested in people and technology, expanding retail and generating more business in the most profitable channels Highly profitable • Delivered strong pre-provision net revenue despite the volatility in the market that was caused from the COVID-19 operations pandemic • Durable business model well-positioned to weather the storm--profitability is strong--capital is strong--allowance is Positioned to thrive strong--and liquidity is strong in any market • Maintaining quarterly dividend--demonstrating a commitment to return capital to our shareholders while still being prudent in managing our balance sheet in these uncertain times 4

COVID-19 Pandemic Response 1st Quarter 2020 Our People Our Customers Employee health and well-being our top priority Customer support through challenging times • Implemented a work-from-home strategy for employees whose jobs Consumer can be performed remotely—80 percent of our employees are working remotely • Clients can request refunds for various fees including overdraft fees, • Adjusted branch hours and temporarily closed some locations— non-sufficient funds fees and monthly maintenance fees branches still open operate as drive-thru only mode, with lobby access being limited to appointment only • Paused foreclosure sales, evictions and repossessions • Established employee assistance program to help employees • Clients can request to defer mortgage and home equity payments experiencing COVID-19-related financial hardships with payments added to the end of the loan • Special compensation incentives for on-site teammates serving clients at headquarters, branches, call centers and operational • 150 of our 160 bank branches remain open (the ten that are closed centers do not have a drive-thru and are located in close proximity to another branch) • No layoffs or furloughs to date • All of our ATMs remain operational Our Communities Commercial Lending a helping hand to the communities we serve • Commercial clients can request to defer loans and to be refunded certain late fees • Contributed nearly $1 million primarily toward basic needs and hardship relief programs across our footprint to support the COVID- • Providing support to small business owners through the Paycheck 19 cause Protection Program • $300,000 contributed to a cut-and-sew company that shifted to o We received over 3,000 applications totaling approximately manufacturing masks that are being donated to hospitals $400 million • Opened our Paycheck Protection Program to nonprofits that were • Continuing to provide liquidity to commercial clients not previously Flagstar customers • Established a special small dollar-program for people impacted by COVID-19 in low- to moderate-income areas 5

Financial Overview 1st Quarter 2020 Jim Ciroli, CFO

Financial highlights 1st Quarter 2020 • Net income of $46mm, or $0.80 per diluted share, in 1Q20, representing a return on equity of 9.8% compared to $58mm, or $1.00 per share, in 4Q19 Solid earnings • Pre-provision net revenue of $70mm in 1Q20, an increase of $1mm vs. 4Q19, demonstrating ability to generate consistent earnings despite a volatile market • Net interest margin at 2.81%, down 10 basis points, vs. 4Q19 Growth in - Performance driven by strong deposit franchise and well-positioned, well-diversified loan portfolio composed of fixed rate assets community banking and floors on many of its rate loans and servicing • Consistent servicing results as total loans serviced were flat at approximately 1.1 million, despite the robust refinance market • Mortgage revenue(1) of $96mm, down $2mm, or 2%, vs. 4Q19 - Fall-out adjusted lock volume increased by 36% driven by strong refinance volume Mortgage revenue - Gain on sale margin of 0.80%, down 43 basis points vs. 4Q19; solid channel margin was more than offset by hedge ineffectiveness - $9mm improvement in the return on mortgage servicing asset • Asset quality strong as net charge-offs were only 8 basis points and nonperforming loan ratio remained low Strong asset • Adopted CECL, increasing credit reserves to $152mm at 3/31/20 quality - Credit reserves covered 1.1% of loans HFI, or 1.5% excluding warehouse loans at 3/31/20 • Total risk based capital ratio at 11.2% - 541 basis points of total risk based capital attributed to warehouse loans and loan held for sale Robust capital - $217 million of excess total risk-based capital over the minimum level needed to be considered well-capitalized. Operating at position strong capital levels given low-risk balance sheet composition. • Tier 1 leverage ratio at 8.1% and CET1 ratio remained strong at 9.2% • Operating at strong capital levels given low-risk balance sheet composition 1. Mortgage revenue is defined as net gain on loan sales HFS plus the net return on the MSRs. 7

Quarterly income comparison 1st Quarter 2020 $mm Observations 1Q20 4Q19 $ Variance % Variance A Net interest income Net interest income A $148 $152 ($4) (3%) Net gain on loan sales 90 101 (11) (11%) • Net interest income decreased $4mm, or 3% Loan fees and charges 26 30 (4) (13%) - Average earning assets increased 2% led by Loan administration income 12 8 4 50% investment securities, loans held for sale and commercial real estate loans. Net return on mortgage servicing rights 6 (3) 9 N/M Other noninterest income 23 26 (3) (12%) - Net interest margin was 2.81%, down 10 basis B Total noninterest income 157 162 (5) (3%) points due to full impact of prior quarter rate cuts and 2 March rate cuts. Pre-provision total revenue 305 314 (9) (3%) Compensation and benefits 102 102 - 0% B Noninterest income Commissions and loan processing expense 49 55 (6) (11%) Other noninterest expenses C 84 88 (4) (5%) • Noninterest income down $5mm, or 3% Total noninterest expense 235 245 (10) (4%) - Mortgage revenue decreased $2mm, or 2%, driven Pretax, pre-provision net revenue 70 69 1 1% by $11mm lower net gain on loan sales (36% increase in FOALs and 43 basis point decrease in Provision for credit losses 14 - 14 N/M margin), partially offset by $9mm higher net return Income before income taxes 56 69 (13) (19%) on MSR Provision for income taxes 10 11 (1) (9%) - Loan administration income favorable due to a Net income $46 $58 ($12) (21%) decline in LIBOR-based credit paid to sub-servicers Diluted income per share $0.80 $1.00 -$0.20 (20%) C Noninterest expense Profitability Net interest margin 2.81% 2.91% (10 bps) • Noninterest expense down $10mm, or 4% Net gain on loan sales / total revenue 30% 32% (200 bps) Mortgage rate lock commitments, fallout adjusted $11,154 $8,179 $2,975 36% - Lower due to last quarter including $5mm of year- Mortgage closings $8,591 $9,303 ($712) (8%) end discretionary charges that did not reoccur, and Net gain on loan sale margin, HFS 0.80% 1.23% (43 bps) - Volume-driven mortgage expenses decreased driven by lower closings N/M = not meaningful 8

Interest rate risk position 1st Quarter 2020 Warehouse- $4.0bn (03/31/2020) CRE - $3.1bn (03/31/2020) C&I - $1.9bn (03/31/2020) 3% 6% 2% 9% 11% 17% 71% 76% 20% 3% 74% 7% 1% Fixed Rate LIBOR w/Floor > 0 Fixed Rate LIBOR w/Floor > 0 LIBOR w/Floor > 0 LIBOR w/Floor = 0 LIBOR w/Floor = 0 Prime w/Floor > 0 LIBOR w/Floor = 0 Prime w/Floor = 0 Prime w/Floor > 0 Prime w/Floor = 0 Prime no Floor CDs and Savings $6.2bn (03/31/2020) Rate Risk Commentary Average Rates CDs Average Rates Matures in 2020 – 2.1% Promo – 1.9% Matures After 2020 – 1.8% Non-promo – 0.25% • Floors in over 90% of our commercial loans that don’t allow Prime of $3.8 LIBOR to reset below zero or at a higher level providing downside protection against spread compression $2.4 Matures Market • Deposit resets should be a tail wind for net interest income as our $0.6 Thereafter $2.9 Rates deposits season into the lower interest rate curve Matures in Promo 2020 Rates • Locked low funding rates using $1.5 billion of interest rate swaps with $1.8 terms from 3 to 7 years $0.9 3/31/2020 3/31/2020 9

Average balance sheet highlights 1st Quarter 2020 1Q2020 ($mm) Observations Incr (Decr) Average Balance Sheet Interest-earning assets (1) $$%• Average loans HFI decreased $0.3bn, or 3% Loans held-for-sale $5,248 $49 1% - Average commercial loans decreased $0.3bn, or 4% primarily driven by lower warehouse balances (2) 4,897 (35) (1%) Consumer loans impacted by seasonal factors Commercial loans(2) 6,926 (310) (4%) Total loans held-for-investment 11,823 (345) (3%) (3) Other earning assets 4,079 738 22% Interest-earning assets $21,150 $442 2% Other assets 2,263 (65) (3%) Interest-bearing liabilities Total assets $23,413 $377 2% • Average deposits decreased $0.1bn, or 1%, driven by CD and wholesale deposit run-off, partially offset by Deposits $15,795 ($109) (1%) higher average custodial deposits. Short-term FHLB advances & other 3,566 304 9% Long-term FHLB advances 794 144 22% Other long-term debt 496 - - % Other liabilities 908 (13) (1%) Equity(4) Total liabilities $21,559 $326 2% • Tangible common equity to asset ratio of 6.25% Stockholders' equity 1,854 51 3% • FBC closing share price of $22.75 on April 27, 2020 Total liabilities and stockholders' equity $23,413 $377 2% was 77% of tangible book value per share (4) $29.52 $0.95 3% Tangible book value per common share 1. Measured vs. the prior quarter 2. Consumer loans include first and second mortgages, HELOC and other loans; commercial loans include commercial real estate, commercial & industrial and warehouse loans 3. Other earning assets include interest earning deposits, investment securities and loans with government guarantees 10 4. References a non-GAAP number. Please see reconciliations on page 47 - 49.

Asset quality 1st Quarter 2020 Delinquencies(1) (% of loans HFI) NPLs and performing TDRs ($mm) NPLs (2) (2) $104 0.61% Performing TDRs 37 $67 $65 $64 $66 0.40% 24 26 0.33% 0.30% 0.33% 26 26 29 43 41 39 38 37 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 Allowance coverage(3) (% of loans HFI) Nonperforming loan and asset ratios (4) (4) NPA/LHFI & OREOs NPL & TDRs/LHFI NPA/Total Assets Total Total excl. Warehouse 0.62% 1.5% 1.5% 1.2% 1.2% 0.54% 1.1% 0.33% 1.3% 0.29% 0.30% 0.28% 1.1% 0.36% 1.0% 0.9% 0.9% 0.24% 0.21% 0.21% 0.21% 0.17% 0.16% 0.15% 0.14% 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 1. Includes early stage delinquencies, defined as 30 to 89 days past due and nonaccrual loans 2. Includes $37 million Live Well loan which was fully liquidated in the third quarter 2019. 2. Excludes loans carried under the fair value option and loans with government guarantees. 11 3. Excludes loans held-for-sale

COVID-19 Impacted Industry Exposure 1st Quarter 2020 Commercial Exposure - $1.0 billion, 7% of LHFI Commercial & Industrial Loans $161 million UPB / 1.2% of loans Automotive Manufacturing, automotive suppliers $51 million in requested deferrals to date $119 million / 0.9% of loans Leisure & Entertainment Includes restaurants, churches, theatres, etc. $15 million in requested deferrals to date $48 million / 0.3% of loans Healthcare Hospitals, HMO Medical Centers No requested deferrals to date Commercial Real Estate Loans $302 million / 2.2% of loans (60 loans) Retail ~ 80% in footprint $64 million in requested deferrals to date Marriott, Hilton, IHG and 2 local boutique $209 million / 1.5% of loans (21 loans) Hotel hotels comprise 85% of portfolio $82 million in requested deferrals to date Geographically diverse; facilities in 13 different $136 million / 1.0% of loans (18 loans) Senior Housing metro areas. All but one have recourse to No requested deferrals to date strong borrowers 12

Current Expected Credit Loss (“CECL”) 1st Quarter 2020 Allowance for credit losses and unfunded commitments CECL methodology and key variables Economic Inputs •GDP • Unemployment rate • Home Price Index Portfolio Credit Characteristics Key Model Inputs • Commercial risk ratings • FICO and credit history • Collateral values • Delinquency • Life of loan • Loan to value • Used a single, 2-year forecast as of March 27 reflecting the economic distress caused by COVID • Forecast contemplates 2Q20 GDP contraction of ~18% with peak unemployment of 9% (adjusted for estimated impact of government stimulus) followed by a slight (2) (3) Forecast recovery in second half of 2020 (1) • HPI decreases 3% by the end of the year 1. CECL Day 1 transition adjustment, includes $7 million increase related • Qualitative adjustments reflect best estimate to unfunded commitment reserve of COVID-19 impact on portfolios including 2. New loans, aging of existing portfolio, charge-offs, and recoveries estimated impact of government stimulus, forbearance/payment holidays and Fed 3. Changes to macro-economic variables, forecast scenario and programs underlying credit conditions 13

Capital 1st Quarter 2020 Flagstar Bancorp Total Risk Based Capital Ratio Observations 1Q20 Tier 1 CET-1 Tier 1 Total RBC Balance sheet impact Net operating earnings contribution Leverage to RWA to RWA to RWA 1Q20 8.1% 9.2% 10.5% 11.2% 4Q19 7.6% 9.3% 10.8% 11.5% • Total risk based capital ratio of 11.2% o 541 basis points of total risk based capital attributed to 11.5% warehouse loans, loans held for sale and trading 11.2% securities o Warehouse lending—100% risk weight– has had under +31bps $5 million of losses, cumulatively, over the last 12 -71bps years --------------------------- • Tier 1 leverage ratio ended quarter at 8.1% Well o 406 basis points of tier 1 leverage attributed to Capitalized warehouse loans, loans held for sale and trading 10.0% securities 12/31/2019 3/31/2020 14

Business Segment Overview 1st Quarter 2020 Lee Smith, COO

Community banking 1st Quarter 2020 Average commercial loans ($bn) Quarter-end commercial loan commitments ($bn) Commercial and Industrial Commercial Real Estate Warehouse Commercial and Industrial Commercial Real Estate Warehouse $7.2 $6.9 $6.9 $13.6 $12.1 $12.2 $6.1 $11.2 2.7 $10.3 $5.0 2.5 2.3 6.2 2.0 4.8 4.7 4.2 1.2 3.9 2.6 2.8 2.9 2.2 2.4 4.1 4.8 3.8 4.2 4.8 1.6 1.7 1.8 1.7 1.7 2.6 2.8 3.2 2.7 2.6 1Q19 2Q19 3Q19 4Q19 1Q20 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 Average consumer loans ($bn) Average deposit funding(1) ($bn) Residential First Mortgages Other Consumer Loans Retail Government Custodial deposits Brokered deposits $4.9 $4.9 $4.9 $15.8 $15.9 $15.8 $4.5 $4.2 $14.2 $12.9 1.6 1.7 1.8 4.6 4.8 4.8 1.1 1.4 3.5 2.5 1.2 1.1 1.2 1.2 1.1 3.1 3.1 3.3 3.2 3.1 8.8 9.2 9.3 9.3 9.3 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 1. Includes custodial deposits which are included as part of mortgage servicing. 16

Mortgage originations 1st Quarter 2020 Closings by purpose ($bn) Fallout-adjusted locks ($bn) Purchase originations Refinance originations $11.2 $9.3 $9.3 $9.2 $8.6 $8.6 $8.3 $8.2 $6.6 3.2 4.8 $5.5 5.7 5.5 1.9 5.4 4.5 3.6 3.6 3.1 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 63% 59% 44% 41% 36% Purchase Mix % Closings by mortgage type ($bn) Net gain on loan sales – revenue and margin Conventional Government Jumbo Gain on loan sale ($mm) Gain on sale margin (HFS) $9.3 $9.3 $110 $8.6 $8.6 $101 1.8 1.8 $90 1.6 1.6 $75 1.9 2.0 $5.5 2.0 1.8 0.9 $49 1.20% 1.23% 1.3 0.89% 0.80% 5.0 5.6 5.5 5.2 0.72% 3.3 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 17

Mortgage servicing 1st Quarter 2020 Quarter-end loans serviced (000’s) $ UPB of MSRs sold ($bn) Serviced for Others Subserviced for Others Flagstar Loans HFI Bulk Sales Flow Transactions 1,091 1,082 962 983 994 $6.6 $5.4 $4.9 919 917 814 817 827 $3.6 4.4 0.7 $2.5 4.4 2.9 2.2 91 106 107 105 102 1.0 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 1Q19 2Q19 3Q19 4Q19 1Q20 Average custodial deposits ($bn) MSR / CET1 (Bancorp) $4.8 $4.8 $4.5 $3.5 24% 22% $2.5 20% 20% 13% 1Q19 2Q19 3Q19 4Q19 1Q20 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 18

Supporting client relief 1st Quarter 2020 Over 3,000 Applications Received Totaling Approximately $400 Million Paycheck Protection • Built solution in 36 hours following release of the PPP guidelines Program “PPP” • Began receiving PPP applications on 4/4/20 • Opened PPP to nonprofits that were not previously Flagstar customers Customer Support through Deferral/Forbearance • Received approximately 2,000 requests for deferrals on our non-mortgage consumer loan portfolio, which amounts to $119 million or 5.8% of all outstanding balances (as of April 24th) • Offering assistance to Consumers and Consumer • Approximately 110,000 loans, or 10%, that we service or subservice Commercial clients in response to the requested forbearance relief because of COVID-19. Almost half of unprecedented challenges of COVID-19; Forbearance borrowers have made their April payment (as of 4/23/20) allowing clients to request extensions, deferrals and forbearance • Established hardship relief task force within default servicing team to proactively work with borrowers in forbearance • No negative credit bureau reporting for previously up-to-date clients • Approximately 250 commercial borrowers representing $548 million in • Paused foreclosure sales, evictions, unpaid balances -- or 11% of our commercial portfolio – have requested repossessions and bankruptcy deferrals (all were in good standing prior to their request) collections activities Commercial • Business banking requests account for $71 million, with C&I and CRE • Certain fee waivers for those impacted Deferrals representing $287 and $190 million, respectively • No deferral requests from our home builder clients as of 4/22 19

Noninterest expense and efficiency ratio 1st Quarter 2020 Quarterly noninterest expense ($mm) and efficiency ratio (1) (1)(2) Adjusted noninterest expense Adjusted efficiency ratio $245 $238 $235 $214 $190 81% 78% 77% 76% 75% 1Q19 2Q19 3Q19 4Q19 1Q20 1. References non-GAAP number for 1Q19, which excludes acquisition costs of $1 million related to Wells Fargo branch acquisition. Please see reconciliations on page 47 - 49. 2. References non-GAAP number for 2Q19; excludes DOJ benefit of $25 million for 2Q19. Please see reconciliations on page 47 - 49. 20

Quarterly results 1st Quarter 2020 Quarterly adjusted revenue ($mm) (1) Quarterly adjusted noninterest expense ($mm) (2) (5)(5) (3) (5) (3) (4) Non-Mortgage Revenue Mortgage Revenue(3) Non-Mortgage NIE Mortgage NIE Mortgage expense 1.09% 1.11% 1.12% 1.12% $317 $314 $305 0.93% $281 $235 $238 $240 $235 160 153 144 $214 126 $190 94 102 104 96 80 60 155 157 161 161 142 130 133 136 136 139 (6) 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 • Noninterest expense decreased $5 million to $235 million for the first quarter 2020, compared to adjusted noninterest expense of $240 million in the fourth quarter 2019. • Mortgage-related expense decreased $8 million, or 7.7 percent, to $96 million, or 1.12% of total originations, consistent with the prior two quarters. This decrease was primarily driven by lower commissions and loan processing as closings decreased $700 million, or 7.6 percent during this same time period. 1. References non-GAAP number for 2Q19. Please see reconciliations on page 47 - 49. 2. References non-GAAP number for 1Q19 and 4Q19. Please see reconciliations on page 47 - 49. 3. Includes direct allocations. 4. As a percentage of that period’s close volume 21 5. Includes Servicing segment

Closing Remarks / Q&A 1st Quarter 2020 Sandro DiNello, CEO

Appendix 1st Quarter 2020 Company overview 24 Community banking 27 Mortgage servicing 38 Mortgage originations 40 Financial performance 43 Capital and liquidity 44 Non-GAAP reconciliation 47

COMPANY OVERVIEW Flagstar at a glance 1st Quarter 2020 Corporate Overview • Traded on the NYSE (FBC) 160 87 Flagstar Retail home • Headquartered in Troy, MI Bank lending Branches Offices(1) • Market capitalization $1.3bn • Member of the Russell 2000 Index Community banking • Leading Michigan-based bank with a balanced, diversified lending platform • $26.8bn of assets and $16.1bn of deposits • 215k household & over 26k business relationships Mortgage origination • 5th largest bank originator of residential mortgages ($35.7bn during twelve months ended March 31 2020) • Scalable platform originating business in all channels and all 50 states including 87 retail home lending offices • More than 1,100 correspondent and more than Operations center 1,200 broker relationships Mortgage servicing • 6th largest sub-servicer of mortgage loans nationwide • Servicing 1.1 million loans as of March 31, 2020 • Efficiently priced deposits from escrow balances 1. Includes seven home lending offices located in banking branches. 24

COMPANY OVERVIEW Flagstar has a strong executive team 1st Quarter 2020 Board of Directors John Lewis Chairman Chief Audit Officer Sandro DiNello Meagan Belfinger President & CEO • CEO since 5/13 • Over 40 years of banking experience with Flagstar and its predecessors with a strong emphasis on community banking, including the management of retail operations and product strategy Chief Chief Mortgage Community Chief Risk General Corporate Operating Officer Financial Officer Banking Banking Officer Counsel Responsibility Lee Smith Jim Ciroli Kristy Fercho Sandro DiNello Steve Figliuolo Patrick McGuirk Beth Correa • COO since 5/13 • CFO since 8/14 • Appointed • Interim Director of • CRO since 6/14 • General Counsel • Started as Director • Formerly a partner • More than 30 years President of Community Banking • Over 35 years of since 6/15 of Corporate of MatlinPatterson of banking and Mortgage effective financial services • Over 20 years of Responsibility in Global Advisors and financial services 9/17 experience with financial services 3/19 a Senior Director at experience with • Has over 15 years Citizens Republic, legal experience • With Flagstar since Zolfo Cooper First Niagara, experience with Fleet Boston with the FDIC and 2011 and has more • Extensive expe- Huntington and Fannie Mae in Financial, First Sidley Austin LLP than 30 years of rience in financial KeyCorp various executive Union and Chase banking experience management and and leadership Manhattan with NBD, Chase, operations roles focused on and Comerica building banking • Chartered Accoun- relationships and tant in England and growth initiatives Wales 25

Risk management COMPANY OVERVIEW Best-in-class risk management platform with 250 FTEs(1) 1st Quarter 2020 Board of Directors Risk Committee Enterprise Sandro DiNello Risk Committee President & CEO Karen Sabatowski Steve Figliuolo Chief Compliance Chief Risk Officer Officer Chief QC / Financial Regulatory Modeling & Loan Operational Vendor Credit Appraisal MFIU Fraud Crimes Compliance Affairs Analytics Investigations Review Risk Management Officer Review (BSA/AML) FTEs 4 73 4 48 12 7 8 54 13 27 1. Does not include 30 FTEs in internal audit as of 03/31/2020. 26

COMMUNITY BANKING Higher net interest income is stabilizing earnings 1st Quarter 2020 ● Achieving earning asset growth while continuing to grow net interest income - Strong net interest margin management ● Transition to more stable net interest income Average earning assets and net interest income (1) $20.7 $21.2 CAGR 16% Net interest income ($mm) Average earning assets ($bn) $19.0 $17.8 $152 $16.8 $148 CAGR 17% $16.0 $16.4 $16.3 $146 $15.4 $15.4 $138 $14.7 $14.0 $124 $123 $126 $12.8 $115 $12.3 $12.3 $107 $106 $11.2 $11.6 $103 $97 $87 $83 $79 $77 $80 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q191Q20 1. References non-GAAP number for 4Q18; excludes $29 million of hedging gains reclassified from AOCI to net interest income in conjunction with the payment of long-term FHLB advances. Please see reconciliations on page 47 - 49. 27

COMMUNITY BANKING Strong market position 1st Quarter 2020 ● Leading deposit share in Michigan, Fort Wayne, IN(1), and San Bernardino County, CA (High Desert Region) ● Provides access to markets with attractive demographics and low-cost, stable liquidity for continued balance sheet growth Michigan deposit share Key Markets Deposit Median Proj HHI Proj pop % YoY 2019 Rank Deposits as of 9/30/2019 ($mm) Market $mm % of total mkt share HHI growth(4) (4) Overall MI-based Institution Branches Total Share Change Flagstar Deposits growth 1 Chase 217 $44,432 20% 2% (3) Oakland County, MI 4,569 42.0% 8.0% 85,757 13.6% 2.6% 2 Comerica 194 28,995 13% -4% 3 Bank of America 96 22,820 10% 19%Grand Rapids, MI MSA 436 4.0% 1.9% 67,365 11.9% 3.2% 4PNC174 16,999 8% -1% Ann Arbor, MI MSA 282 2.6% 2.9% 75,938 13.8% 3.0% 5 Huntington 287 16,851 7% 7% 6 Fifth Third 199 16,640 7% 1%Fort Wayne, IN (1) 7 1 TCF Financial 233 16,404 7% 1% 716 6.6% 8.8% 58,513 10.1% 2.6% 82Flagstar Key Midwest Markets (5) 6,003 55.2% 6.1% 80,711 13.1% 2.7% (2) 114 13,026 6% 18% 9 Citizens 88 5,770 3% 2% San Bernardino County, CA (6) 608 5.6% 1.1% 69,132 14.7% 4.27% 10 Independent 69 3,011 1% 7% Top 10 1,671 $184,948 82%National 4% aggregate 66,010 9.9% 3.4% 1. Source: S&P Global Market Intelligence; Note: Deposit data as of June 30, 2019 and projections based on 2019 estimates; MI-based banks highlighted. 2. Fort Wayne, IN deposit data is based on Fort Wayne, IN Fed District. Fort Wayne, IN demographic data is based on counties within Fort Wayne, IN Fed District, deposit weighted based on Flagstar’s portfolio. 3. Reflects the acquisition of 14 wells Fargo branches located in Michigan. 4. Oakland County data excludes $1.7bn of custodial deposits held at company headquarters. 5. 2019–2024 CAGR. 6. Key Midwest Markets Median HHI, projected HHI growth and projected population growth are deposit weighted based on Flagstar’s portfolio. 28 7. Deposit data is based on High Desert Region of San Bernardino County, CA.

Deposits COMMUNITY BANKING Portfolio and strategy overview 1st Quarter 2020 Total average deposits ($bn) (2) Retail deposits Other deposits $15.8 $15.9 $15.8 • Flagstar gathers deposits from consumers, $14.2 $12.9 businesses and select governmental entities 6.5 6.6 6.5 5.0 4.1 – Traditionally, CDs and savings accounts represented the bulk of our branch-based retail 9.3 9.3 9.3 depository relationships 8.8 9.2 – Today, we are focused on growing DDA 1Q19 2Q19 3Q19 4Q19 1Q20 balances with consumer, business banking and commercial relationships 1Q20 total average deposits – We additionally maintain depository Savings 22% relationships in connection with our mortgage DDA 19% MMDA origination and servicing businesses, and with 4% governmental entities – Cost of total deposits(1) equal to 0.81%, down 9 CD Government 14% basis points from 0.90% in 4Q19 7% Brokered 4% Custodial 30% Total: $15.8 bn 0.81% cost of total deposits(1) 1. Total deposits include noninterest bearing deposits. 2. Includes deposits from commercial and business banking customers. 29

Lending COMMUNITY BANKING Portfolio and strategy overview 1st Quarter 2020 Total average loans ($bn) Loans HFS Loans HFI Loans with government guarantees $18.1 $17.9 $16.1 • Flagstar’s largest category of earning assets consists $14.6 of loans held-for-investment which averaged $11.9bn $12.9 during 1Q20 12.2 11.9 11.7 – Loans to consumers consist of residential first and 10.6 9.2 second mortgage loans, HELOC and other – C&I / CRE lending is an important growth strategy, 5.2 5.2 offering risk diversification and asset sensitivity 3.3 3.5 3.8 – Warehouse lending to both originators that sell to 1Q19 2Q19 3Q19 4Q19 1Q20 Flagstar and those who sell to other investors 1Q20 average loans • Flagstar maintains a balance of mortgage loans held- 1st Mortgage for-sale which averaged $5.2bn during 1Q20 1st Mortgage HFI HFS 17% – Essentially all of our mortgage loans originated are 29% 2nds, HELOC sold into the secondary market & other 10% – Flagstar has the option to direct a portion of the Loans with mortgage loans it originates to its own balance sheet government Warehouse guarantees 13% 5% CRE and C&I 26% 30

Commercial lending COMMUNITY BANKING Diversified relationship-based approach 1st Quarter 2020 Overview Warehouse - $4.0bn (03/31/20) • Warehouse lines with approximately 321 active % Advances sold to Flagstar relationships nationwide, of which approximately 77% Warehouse sell a portion of their loans to Flagstar • Collateralized by mortgage loans being funded which are paid off once the loan is sold ~74 borrowers • Diversified property types which are primarily income- ~191 sell >75% Commercial producing in the normal course of business borrowers Real Estate • Focused on experienced top-tier developers with sell <25% ~56 significant deposit and non-credit product opportunities borrowers sell 25% - 75% • Lines of credit and term loans for working capital Commercial needs, equipment purchases, and expansion projects & Industrial • Primarily Michigan based relationships or relationships with national finance companies Commercial Real Estate - $3.1bn (03/31/20) Commercial & Industrial - $1.9bn (03/31/20) Property type Industry Hotel/motel 6% Home Building Manufacturing 31% Services 16% Office 22% 9% Healthcare 4% Financial, Distribution Owner Occupied insurance & 7% 15% Multi Family real estate 18% 49% Government & Other education Retail Other 4% 4% 11% 10% 31

COMMUNITY BANKING Commercial real estate portfolio detail 1st Quarter 2020 Commercial Real Estate ($bn) Portfolio Characteristics NBV Commitment % Utilization Home Builder $ 0.9 $ 1.8 51.3% • Average LTV ~51% and DSC ~2.4% Owner Occupied 0.4 0.5 97.6% Multi family 0.4 0.8 51.7% Retail (1) 0.3 0.3 94.7% • 82.5% LIBOR / 14.2% Prime Rate / 3.3% Fixed Rate Office 0.3 0.3 78.2% Hotel/motel 0.2 0.3 62.9% • Over 96% of portfolio has Prime and LIBOR rate floors at or greater Senior Living facility 0.1 0.2 57.8% than 0% Industrial 0.1 0.2 53.4% Parking garage/Lot 0.1 0.1 99.8% All Other 0.2 0.3 74.8% • Shared National Credits ~8% of portfolio Total CRE$ 3.1 $ 4.8 63.8% State Breakdown Michigan, 38.9% Texas, 14.0% Other, 26.3% California, 9.5% Colarado, Florida, 5.8% 5.5% 1. Includes multipurpose retail space, neighborhood centers, strip centers and single-use retail space. 32

COMMUNITY BANKING Commercial and industrial portfolio detail 1st Quarter 2020 Commercial & Industrial ($bn) Portfolio Characteristics NBV Commitment % Utlization • 75.4% LIBOR / 17.4% Fixed Rate / 7.2% Prime Rate Financial & Insurance$ 0.5 $ 0.8 65.9% Services 0.4 0.5 72.3% • Approximately 81% of portfolio has Prime and LIBOR rate floors at or Manufacturing 0.3 0.4 77.7% greater than 0% Home Builder Finance 0.2 0.3 79.3% • Shared national credits ~52% of portfolio Rental & Leasing 0.2 0.2 69.6% All other 0.3 0.4 81.8% Total Commercial$ 1.9 $ 2.6 73.1% State Breakdown MI, 29.3% CA, 7.2% OH, 3.9% OTHER, 24.8% IN, 2.6% TX, 11.5% WI, 2.4% NY, 3.8% SC, 5.3% CO, 3.9% FL, 5.2% 33

COMMUNITY BANKING Warehouse lending 1st Quarter 2020 ● National relationship-based lending platform FBC warehouse loan commitments ($bn) ● Attractive asset class with good spreads and Outstandings Unfunded Commitments low credit risk $6.2 ● Scalable platform supports current total $4.8 $4.7 2.2 $4.2 commitments of $6.2 billion $3.9 1.6 1.9 ● Flagstar is well positioned to hold market 1.6 2.3 share, leveraging relationships in 4.0 3.2 complementary lines of business, including 2.6 2.8 home builder finance and mortgage 1.6 originations 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 Warehouse lenders ranked by commitments ($mm) Net chargeoffs YOY 4Q19 Rank Institution Growth Total Share NCO ($mm) NCO Rate (bps) 1 JPMorgan Chase 46% $19,000 19% 2 First Tennessee 44% 8,700 9% 29 6 bps annual loss rate since 2006 3 Texas Capital 39% 8,169 8% 22 4 Wells Fargo 21% 6,400 6% 17 17 5 TIAA FSB (Everbank) 74% 6,250 6% $1.1 $1.2 6 Comerica 67% 5,600 6% $1.0 7 Merchants Bank 88% 5,276 5% $1.1 1 8 Flagstar Bancorp 23% 4,704 5% 9 Truist 21% 4,392 4% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 10 U.S. Bancorp 50% 3,700 4% 1Q 2020 Source: InsideTop Mortgage 10 Finance as of December 20, 45%2019. $72,191 72% 34

COMMUNITY BANKING Allowance for credit losses 1st Quarter 2020 December 31, 2019 January 1, 2020 March 31, 2020 Incurred Loss Model CECL Transition CECL Model ($mm) Amount(1) % of Portfolio Amount(1) % of Portfolio Amount(1) % of Portfolio Consumer: Residential First Mortgage$ 22 0.70%$ 47 1.49%$ 46 1.55% Home Equity (2) 14 1.37% 26 2.54% 23 2.24% Other Consumer 6 0.82% 17 2.33% 17 1.98% Total Consumer 42 0.86% 90 1.83% 86 1.77% Commercial: Commercial Real Estate 40 1.41% 30 1.06% 43 1.39% Commercial and Industrial 23 1.41% 19 1.16% 22 1.17% Warehouse Lending 5 0.18% 1 0.04% 1 0.03% Total Commercial 68 0.94% 50 0.69% 66 0.74% Total Credit Reserve 110 0.91% 140 1.15% 152 1.10% Total Credit Reserve excl. Warehouse$ 105 1.12%$ 139 1.48%$ 151 1.54% 1. Includes reserve for unfunded commitment of $3 million, $10 million, and $20 million at 12/31/19, 1/1/20 and 3/31/20, respectively 2. 12/31/19 and 1/1/20 balances include $4 million of specific reserves that are no longer needed as of 3/31/20 35

COMMUNITY BANKING Home builder finance 1st Quarter 2020 Overview Tightening housing supply ● National relationship-based lending platform launched in 1Q16 Existing home sales (mm) Months supply of existing homes for sale (left axis) (right axis) - Attractive asset class with good spreads (~375 bps) 8 12 - Meaningful cross-sell opportunities including warehouse loans, 7 commercial deposits and purchase originations 10 6 ● Flagstar is well positioned 8 5 - Focused on markets with strong housing fundamentals and 4 6 higher growth potential 3 - We have direct relationships with 7 of the top 10 and do 4 business with 56 of the top 100 builders nationwide through 2 2 March. 1 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Bloomberg (through 5/31/19) Home builder finance footprint Home builder loan commitments(1) ($mm) Unpaid principal balance Unused $2,175 $2,015 $2,101 $1,798 $1,422 $1,186 $1,106 $1,154 $1,001 $643 $989 $779 $797 $909 $947 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 1. Commitments are for loans classified as commercial real estate and commercial & industrial. 36

COMMUNITY BANKING Leverage lending and SNCs 1st Quarter 2020 Leverage lending commentary Shared national credits “SNCs” commentary • Covenant Lite & Term Loan B exposure represents 25% of total • 90 borrowers, average UPB of $14 million and average commitment leveraged UPB of $19 million • Average UPB of ~$14 million per loan • Total SNC breakdown: C&I ~77% / CRE ~19% / Warehouse ~4% • No nonperforming loans as of 3/31/20 • We are the lead bank in 12% of these deals and this percentage continues to grow • Loans totaling $35 million of UPB are rated as special mention or substandard • No nonperforming loans as of 3/31/20 • SNCs comprised ~$255 million of total leveraged loan UPB • No borrowers with current draws are rated as special mention or substandard Portfolio Composition - $0.4bn UPB (3/31/20) Portfolio Composition - $1.3bn UPB (3/31/20) Financials and Rental & Insurance Leasing 22% Services 16% 18% Services 40% Distribution Manufacturing 5% 14% Manufacturing 52% Financial & Healthcare Healthcare Insurance 3% 2% 26% Distribution 2% 37

MORTGAGE SERVICING MSR portfolio 1st Quarter 2020 MSR portfolio statistics MSR portfolio characteristics (% UPB) Measure ($mm) 12/31/2019 3/31/2020 Difference 2013 & byBy VintageVintage Unpaid principal balance $24,003 $23,439 ($564) prior; 5% Fair value of MSR $291 $223 ($68) Capitalized rate (% of UPB) 1.21% 0.95% (26) bps 2014; Multiple 3.000 2.414 (0.586) 4% 2017 & prior Note rate 4.419% 4.336% (8) bps 2018 23% 2015; Service fee 0.400% 0.389% (1) bps 33% 12% Average Measure ($000) 2016 & UPB per loan $228 $239 $11 2020 2019later; 79%9% FICO 693 691 (2) 35% Loan to value 85.24% 84.84% (4) bps Net return (loss) return on mortgage servicing rights ($mm) By Investor $ Return 1Q19 2Q19 3Q19 4Q19 1Q20 Net hedged profit (loss) ($1) ($1) $2 $0 $10 Carry on asset 13 21 25 23 17 Run-off (7) (15) (30) (27) (20) GNMA 63% Gross return on the $5 $5 ($3) ($4) $7 Private mortgage servicing rights 3% Sale transaction & P/L - (1) 1 1 (1) Freddie Model changes 1 - - - - 16% Net return on the Fannie $6 $4 ($2) ($3) $6 mortgage servicing rights ($) 18% Average mortgage $291 $321 $292 $287 $252 servicing rights ($) Net return on the 9.1% 5.5% -2.7% -4.1% 2.4% mortgage servicing rights (%) 38

MORTGAGE SERVICING Servicing 1st Quarter 2020 Servicing Profitability ($mm) 1Q19 2Q19 3Q19 4Q19 1Q20 Net interest income Interest income (FTP) $ 18 $ 24 $ 30 $ 27 $ 23 Interest expense on custodial deposits(1) (15) (21) (25) (22) (19) Total net interest income 3 3 5 5 4 Noninterest income (2) Service fee income 25 26 27 28 30 Ancillary fee income 6 7 8 10 9 Late fee income 4 5 5 5 6 Total noninterest income 35 38 40 43 45 Noninterest expense (3) (31) (30) (31) (31) (36) Earnings before Tax$ 7 $ 11 $ 14 $ 17 $ 13 Average Custodial Deposits ($bn) $ 2.5 $ 3.5 $ 4.6 $ 4.8 $ 4.8 Average Loans Serviced for Others (000's) 906 972 988 1,042 1,086 1. Expense on custodial deposits from loans subserviced which is included in net loan administration income for GAAP purposes. Includes intersegment allocation. 2. Service fee income and late fee income are included in net loan administration income for GAAP purposes; ancillary fee income is included in loan fees and charges for GAAP purposes. 3. Includes direct allocations. 39

Mortgage market disruption 1st Quarter 2020 • The size of QE4 actions overwhelmed the MBS market, pushing • The disconnection of MBS TBA prices from the fundamental value MBS – and therefore TBAs – to abnormal levels. of loans drove an unprecedented level of hedge ineffectiveness. • The higher prices of the TBAs drove the margin calls in the industry. Flagstar had $314 million of margin calls, all of which were met. • Flagstar sustained $45 million of hedging ineffectiveness • Our MSR hedge position outperformed as we were able to use • With the uncertainties introduced by the economic impact of the other instruments to protect the position. pandemic and due to an over-supply of mortgage assets, non- conforming mortgages are not trading and the usual buyers of Net Hedge P/L MSR Asset Change Hedge Change such assets have dried up. $21.6 • Flagstar originated such loans for its RMBS program. As of March $19.2 $17.6 31, 2020, a total of $556 million of prime jumbo loans remained in $10.1 loans held for sale. There were no non-QM loans at quarter-end. $7.5 $0.9 $1.6 • On March 20, 2020, we made changes to effectively stop buying non-conforming loans. • We have taken similar actions in our Mortgage Warehouse $(11.7) $(16.0) business to stop funding non-conforming loans where the Change in FV ($mm) Change $(20.7) borrower’s ability to take such loans off their lines is in doubt. Jan 2020 Feb 2020 Mar 2020 Q1 2020 40

MORTGAGE ORIGINATIONS National distribution through multiple channels 1st Quarter 2020 Residential mortgage originations by channel ($bn) Correspondent Broker Retail Other Bulk $5.9 $5.8 $6.0 $5.5 $4.2 $2.2 $2.1 $2.0 2.5 2.0 2.1 2.0 $1.6 $1.3 $1.2 2.1 $1.1 $1.1 $0.8 $0.5 3.4 3.8 3.9 3.5 2.1 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 (1) • 3.1% market share with #9 national ranking(1) • 1.2% market share with #11 national ranking • 87 retail locations in 28 states • More than 1,100 correspondent partners • More than 1,200 broker relationships • Direct Lending is 23% of retail volume • Top 10 relationships account for 13% of overall correspondent volume • Top 10 relationships account for 13% of overall • Warehouse lines with over 288 correspondent brokerage volume relationships 1. Data source: As reported by Inside Mortgage Finance for 12M20 published February 14, 2020. 41

Flagstar has a scalable origination platform that drives MORTGAGE ORIGINATIONS profitability in almost any mortgage origination market 1st Quarter 2020 U.S. residential mortgage origination market (historical and projected volumes) 5.9 $ in trillions 4.6 4.3 4.1 3.8 3.7 3.2 3.1 2.5 2.4 2.4 2.3 2.3 2.2 2.2 2.2 2.1 2.1 2.0 2.0 1.9 1.8 1.8 1.7 1.7 1.6 1.6 1.5 1.4 1.3 1.3 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F Nominal ($) 0.6 0.9 1.0 0.8 0.6 0.8 0.8 1.7 1.4 1.1 2.2 2.9 3.8 2.8 3.0 2.7 2.4 1.5 2.0 1.7 1.4 2.0 1.8 1.3 1.7 2.1 1.8 1.6 2.2 2.6 2.1 Real(1) ($) 1.0 1.6 1.8 1.3 1.1 1.3 1.3 2.6 2.1 1.7 3.2 4.0 5.3 3.7 3.9 3.5 2.9 1.8 2.4 2.0 1.6 2.3 2.0 1.4 1.8 2.2 1.8 1.7 2.2 2.6 2.1 Adjusted(2) ($) 1.3 2.0 2.2 1.6 1.3 1.5 1.6 3.1 2.4 1.9 3.7 4.6 5.9 4.1 4.3 3.8 3.2 2.0 2.5 2.1 1.7 2.3 2.1 1.4 1.8 2.2 1.8 1.7 2.2 2.6 2.1 Source: Mortgage Bankers Association for actual periods and a blended average of forecast by Fannie Mae Freddie Mac and Mortgage Bankers Association. 1. Adjusted for historical inflation as reported by Bureau of Labor Statistics (2019 = 100). 42 2. Adjusted for population growth as reported by the U.S. Census Bureau (2018 = 100).

FINANCIAL PERFORMANCE Financial performance 1st Quarter 2020 ● Solid growth in banking and subservicing has created more stable earnings ● Heightened focus on efficiency and expense management Revenue Composition and Earnings Metrics Percentage Percentage Revenue (millions) 3/31/2019 3/31/2020 of Revenue Increase Community Banking$ 109 $ 118 39% 8% Mortgage Servicing 38 49 17% 29% Subtotal 147 167 55% 14% Mortgage Origination 94 144 47% 53% (1) Other (6) (6) -2% --% Total$ 235 $ 305 100% 30% Diluted Earnings per Share(2) $ 0.64 $ 0.80 25% Return on Average Assets(2) 0.8% 0.8% Return on Average Tangible Common Equity(2) 11.6% 11.5% 1. Non-GAAP number for 1Q19. Number shown excludes acquisition costs of $1 million related to Wells Fargo acquisition. Please see reconciliations on page 47 - 49. 43

CAPITAL AND LIQUIDITY Balance sheet composition 1st Quarter 2020 1Q20 average balance sheet (%) 1% Cash 13% Agency MBS ~63% of assets are in 17% lower risk-content Mortgage loans assets: cash, marketable held-for-investment 47% securities, warehouse Deposits excluding custodial deposits loans, loans held-for-sale and freshly-originated, 22% high-FICO conforming Loans held-for-sale mortgages underwritten by Flagstar 10% Warehouse loans 20% Custodial deposits Efficiently funds loans held-for-sale and warehouse loans Attractive relationship 28% lending with very low Commercial loans 19% (1) delinquencies and Other LHFI FHLB borrowings 2% Other long-term debt Primarily low risk, stable 1% MSR 4% Other liabilities assets (FHLB stock, BOLI, 8% premises & equipment, Other assets 8% Equity deferred tax asset, etc.) Assets Liabilities & Equity 1) Other LHFI includes home equity and other consumer loans. 44

CAPITAL AND LIQUIDITY Liquidity and funding 1st Quarter 2020 HFI loan-to-deposit ratio(1) Commentary 86% 85% • Flagstar has invested 82% 81% significantly in building its 77% Community Bank, which provides attractive core deposit funding for its balance sheet • These retail deposits are supplemented by custodial deposits from the servicing business 1Q19 2Q19 3Q19 4Q19 1Q20 • Much of the remainder of Flagstar’s balance sheet is self- (2) Liquidity ratio funding given it is eligible collateral for FHLB advances Cash & investment securities FHLB borrowing capacity (which provides significant liquidity capacity) • Over $700 million of additional 24% borrowing capacity through the 19% 11% discount window 7% 13% 12% 12/31/2019 3/31/2020 1. HFI loan-to-deposit ratio is total average loans HFI (excluding warehouse loans) expressed as a percentage of total average deposits (excluding custodial deposits). 2. Cash, investment securities and FHLB borrowing capacity expressed as a percentage of total assets. 45

CAPITAL AND LIQUIDITY Interest rate risk 1st Quarter 2020 • Asset sensitivity increased in Q1, largely driven by the aforementioned pay fixed interest rate swaps Earnings at Risk Economic Value of Equity 46

NON-GAAP RECONCILIATION Non-GAAP reconciliation 1st Quarter 2020 $mm Adjusted Net Interest Income, Noninterest Income, Total Revenues, Noninterest Expense, Income before Income Taxes, Provision for Income Taxes, and Net Income 3 months ended 3 months ended 3 months ended 3 months ended December 31, 2019 June 30, 2019 March 31, 2019 December 31, 2018 Total Revenues $ 306 Adjustment to remove hedging gains 25 Adjusted Total Revenues $ 281 Net Interest Income $ 152 Adjustment to remove hedging gains 29 Adjusted Net Interest Income $ 123 Noninterest Income $ 168 Adjustment to remove DOJ benefit 25 Noninterest Income $ 143 Noninterest Expense$ 245 $ 191 Adjustment to remove Wells Fargo acquisition costs - 1 Discrerionary items 5 - Adjusted Noninterest Expense$ 240 $ 190 Income before Income Taxes $ 44 Adjustment to remove Wells Fargo acquisition costs 1 Adjusted Income before Income Taxes $ 45 Provision for Income Taxes $ 8 Adjustment to remove DOJ benefit - Adjusted Provision for Income Taxes $ 8 Net Income $ 36 Adjustment to remove Wells Fargo acquisition costs (net of tax) 1 Adjusted Net Income $ 37 Adjusted Diluted EPS 3 months ended March 31, 2019 Diluted Earnings per Share $ 0.63 Adjustment to remove Wells Fargo acquisition costs (net of tax) 0.01 Adjusted Diluted Earnings per Share $ 0.64 47

NON-GAAP RECONCILIATION Non-GAAP reconciliation (continued) 1st Quarter 2020 $mm Adjusted ROA, ROE and ROTCE 3 Months ended March 31, 2019 Return on Average Assets 0.8% Adjustment to remove acquisition costs (net of tax) 0.0% Adjusted Return on Average Assets 0.8% Return on average tangible common equity 11.3% Adjustment to remove acquisition costs (net of tax) 0.2% Adjustment to remove DOJ benefit (net of tax) 0.0% Adjusted return on tangible Commmon Equity 11.6% Adjusted Efficiency Ratio 3 months ended 3 months ended June 30, 2019 March 31, 2019 Efficiency Ratio 70% 81% Adjustement to remove DOJ benefit 6% 0% Adjustment to remove Wells Fargo acquisition costs 0% 0% Adjusted Efficiency Ratio 76% 81% 48

NON-GAAP RECONCILIATION Non-GAAP reconciliation (continued) 1st Quarter 2020 $mm Tangible Book Value per Share and Tangible Common Equity to Assets Ratio As of March 31, 2020 As of December 31, 2019 Total stockholders' equity$ 1,842 $ 1,788 Goodwill and intangible assets 167 170 Tangible book value $ 1,675 $ 1,618 Number of common shares outstanding 56,729,789 56,631,236 Tangible book value per share$ 29.52 $ 28.57 Total Assets $ 26,805 $ 23,266 Tangible common equity to assets ratio 6.25% 6.95% 49

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