Document

EXHIBIT 99.1

NEWS RELEASE

For more information, contact:

Kenneth Schellenberg

FBCInvestorRelations@flagstar.com

(248) 312-5741

Flagstar Bancorp Reports Fourth Quarter 2019 Net Income of $58 Million, or $1.00 Per Diluted Share

Key Highlights - Fourth Quarter 2019


•	Net interest income increased $6 million from last quarter, led by higher earning assets


•	Mortgage revenues totaled $98 million, driven by margin expansion of 3 basis points


•	Total serviced accounts increased 10 percent from last quarter to nearly 1.1 million loans


•	Return on equity was 12.7 percent for the quarter, compared to adjusted full year return on equity of 11.7%

TROY, Mich., Jan. 28, 2020 - Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, FSB, today reported fourth quarter 2019 net income of $58 million, or $1.00 per diluted share, compared to third quarter 2019 net income of $63 million, or $1.11 per diluted share and fourth quarter 2018 net income of $54 million, or $0.93 per diluted share. On an adjusted basis, Flagstar reported net income of $42 million, or $0.72 per diluted share, for the fourth quarter 2018.

“We are very pleased to have earned net income of $1.00 per diluted share and a return on equity of 12.7 percent,” said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. “I am particularly pleased with the consistency of our earnings and our success in taking much of the volatility associated with the mortgage business out of the equation.

"Both our banking and servicing businesses produced solid results for the quarter. Net interest income grew $6 million, or 4 percent, on an increase in earning assets of $1.7 billion, or 9 percent, compared to the third quarter 2019. This strong growth in earning assets reflected higher loans held-for-sale and warehouse loans as we continued to be opportunistic in a mortgage market that remained persistently strong. We ended the quarter servicing or subservicing 1.1 million loans -- a number that validates our investment in a high-quality servicing platform, and demonstrates the strong relationships we have fostered with our subservicing partners.

“Our mortgage team had another strong quarter, with mortgage revenues of $98 million, as our gain on sale margin expanded to 123 basis points resulting from optimizing production by focusing on profitable business versus volume.

"Overall, 2019 was a year where the results clearly demonstrated the earnings power of our company as our banking, mortgage and servicing businesses all delivered earnings growth that exceeded the prior year. For 2019, our net income per diluted share was $3.80 and our adjusted net income per diluted share was $3.46, up

15 percent from 2018. Our shareholders were rewarded for this performance with a 45 percent increase in our share price for the year, which was the best performance in 2019 of any bank with $10 billion to $100 billion in assets. That’s on top of our announcement early in the year that we were initiating a quarterly dividend of $0.04 per share, which just today we raised to $0.05. This proves our commitment to driving long-term performance and generating significant value for our shareholders. With the momentum of a strong year behind us and the power of a diversified franchise carrying us forward, we believe we are well positioned for continued success in 2020."



Income Statement Highlights
	Three Months Ended
	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
	(Dollars in millions)
Net interest income	$	152	$	146	$	138	$	126	$	152
Provision (benefit) for loan losses	—		1		17		—		(5		)
Noninterest income	162		171		168		109		98
Noninterest expense	245		238		214		191		189
Income before income taxes	69		78		75		44		66
Provision for income taxes	11		15		14		8		12
Net income	$	58	$	63	$	61	$	36	$	54
Income per share:
Basic	$	1.01	$	1.12	$	1.08	$	0.64	$	0.94
Diluted	$	1.00	$	1.11	$	1.06	$	0.63	$	0.93



Adjusted Income Statement Highlights (Non-GAAP) (1)
	Three Months Ended
	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
	(Dollars in millions)
Net interest income	$	152	$	146	$	138	$	126	$	123
Provision (benefit) for loan losses	—		1		17		—		(5		)
Noninterest income	162		171		143		109		98
Noninterest expense	245		238		214		190		175
Income before income taxes	69		78		50		45		51
Provision for income taxes	11		15		9		8		9
Net income	$	58	$	63	$	41	$	37	$	42

Income per share:
Basic	$	1.01	$	1.12	$	0.72	$	0.65	$	0.73
Diluted	$	1.00	$	1.11	$	0.71	$	0.64	$	0.72


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



Key Ratios
	Three Months Ended
	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
Net interest margin	2.91	%	3.05	%	3.08	%	3.09	%	3.70	%
Adjusted net interest margin (1)	2.91	%	3.05	%	3.08	%	3.09	%	2.99	%
Return on average assets	1.0	%	1.2	%	1.2	%	0.8	%	1.2	%
Return on average common equity	12.7	%	14.7	%	14.6	%	9.2	%	14.3	%
Efficiency ratio	78.2	%	75.2	%	69.8	%	81.3	%	75.7	%
HFI loan-to-deposit ratio	76.5	%	74.2	%	75.0	%	71.0	%	74.7	%
Adjusted HFI loan-to-deposit ratio (2)	84.6	%	82.0	%	80.6	%	77.0	%	77.2	%


(1)	The three months ended December 31, 2018, excludes $29 million of hedging gains reclassified from AOCI to net interest income in conjunction with the payment of long-term FHLB advances. See Non-GAAP Reconciliation for further information.


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



Average Balance Sheet Highlights
	Three Months Ended										% Change
	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018		Seq		Yr/Yr
	(Dollars in millions)
Average interest-earning assets	$	20,708	$	18,997	$	17,759	$	16,294	$	16,391	9	%	26	%
Average loans held-for-sale (LHFS)	5,199		3,786		3,539		3,266		3,991		37	%	30	%
Average loans held-for-investment (LHFI)	12,168		11,743		10,613		9,164		8,916		4	%	36	%
Average total deposits	15,904		15,817		14,159		12,906		11,942		1	%	33	%

Net Interest Income

Net interest income increased $6 million, or 4 percent, to $152 million for the fourth quarter 2019 as compared to the third quarter 2019. The results reflect a 9 percent increase in average earning assets, fueled by growth in loans held-for-sale, warehouse and commercial real estate loans. Net interest margin decreased 14 basis points, to 2.91 percent for the fourth quarter 2019 as compared to the third quarter 2019, as a result of the impact of rate cuts and balance sheet mix.

Loans held-for-investment averaged $12.2 billion for the fourth quarter 2019, increasing $425 million from the prior quarter. Average warehouse loans increased $239 million, or 10 percent, benefiting from the overall mortgage market. The Company also had solid growth in our commercial real estate and non-auto indirect portfolios as average balances increased $169 million, or 7 percent, and $84 million, or 18 percent, respectively.

Average total deposits were $15.9 billion in the fourth quarter 2019, increasing $87 million, or 1 percent, from the third quarter 2019. The increase primarily reflects $222 million higher custodial deposits driven by an increase in loans serviced, more than offsetting the $138 million decrease in government and wholesale deposits resulting from seasonal decreases and maturities.

Provision for Loan Losses

The Company had no provision for loan losses for the fourth quarter 2019, as compared to $1 million for the third quarter 2019, reflecting strong asset quality, low delinquencies and no nonperforming commercial loans.

Noninterest Income

Noninterest income decreased $9 million, or 5 percent, to $162 million in the fourth quarter 2019, as compared to $171 million for the third quarter 2019, primarily due to lower mortgage revenues.

Fourth quarter 2019 net gain on loan sales decreased $9 million, or 8 percent, to $101 million, versus $110 million in the third quarter 2019. The net gain on loan sale margin expanded 3 basis points to 1.23 percent for the fourth quarter 2019, as compared to 1.20 percent for the third quarter 2019. Fallout-adjusted locks decreased 11 percent to $8.2 billion, reflecting seasonal factors which were partially offset by the continued strength of the mortgage environment due to lower rates.

Lower rates drove continued refinance activity, creating a net loss on mortgage servicing rights (including hedging) of $3 million for the fourth quarter 2019, compared to a $2 million net loss for the third quarter 2019.



Mortgage Metrics
	As of/Three months ended															Change (% / bps)
	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			Seq		Yr/Yr
	(Dollars in millions)
Mortgage rate lock commitments (fallout-adjusted) (1)	$	8,179		$	9,197		$	8,344		$	6,602		$	5,284		(11	)%	55	%
Mortgage loans closed	$	9,303		$	9,262		$	8,642		$	5,513		$	6,340		0.44	%	47	%
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) (2)	1.23		%	1.20		%	0.89		%	0.72		%	0.60		%	3		63
Net gain on loan sales	$	101		$	110		$	75		$	49		$	34		(8	)%	N/M
Net return on mortgage servicing rights (MSR)	$	(3	)	$	(2	)	$	5		$	6		$	10		50	%	N/M
Gain on loan sales + net return on the MSR	$	98		$	108		$	80		$	55		$	44		(9	)%	N/M
Loans serviced (number of accounts - 000's) (3)	1,091			994			983			962			851			10	%	28	%
Capitalized value of MSRs	1.21		%	1.14		%	1.23		%	1.27		%	1.35		%	7		(14	)
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 both the three months ended March 31, 2019 and December 31, 2018) 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 increased to $245 million for the fourth quarter 2019, as compared to $238 million for the third quarter 2019, primarily reflecting $5 million of higher balance sheet clean-up and discretionary expenses, such as fixed asset write downs, costs related to the secondary offering and a donation to the Flagstar Foundation.

The Company's efficiency ratio was 78 percent for the fourth quarter 2019, as compared to 75 percent for the third quarter 2019.

Income Taxes

The fourth quarter 2019 provision for income taxes totaled $11 million, compared to $15 million for the third quarter 2019. The effective tax rate was 16.7 percent for the fourth quarter 2019, compared to 18.4 percent for the third quarter 2019. During 2019 the Company fully utilized its non-limited federal net operating losses and now expects to utilize most of the state net operating losses. Accordingly, the Company continues to make investments in areas which are expected to provide future tax benefits. The Company expects the effective tax rate in 2020 to be consistent with fourth quarter 2019 levels as benefits from these investments are recognized and expects to continue to make, and in certain cases increase, investments in a tax efficient manner. The Company will also continue to monitor its business structure and maintain appropriate tax planning measures to reduce the tax liability from on-going operations.

Asset Quality



Credit Quality Ratios
	As of/Three Months Ended															Change (% / bps)
	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			Seq	Yr/Yr
	(Dollars in millions)
Allowance for loan loss to LHFI	0.9		%	0.9		%	0.9		%	1.3		%	1.4		%	0	(50)
Charge-offs, net of recoveries	$	3		$	1		$	34		$	1		$	1		N/M	N/M
Total nonperforming LHFI and TDRs	$	26		$	26		$	63		$	24		$	22		0	18	%
Net charge-offs to LHFI ratio (annualized)	0.10		%	0.02		%	1.29		%	0.05		%	0.04		%	8	6
Ratio of nonperforming LHFI and TDRs to LHFI	0.21		%	0.21		%	0.54		%	0.24		%	0.24		%	0	(3)

N/M - Not meaningful

The allowance for loan losses was $107 million and covered 0.9 percent of loans held-for-investment at December 31, 2019, consistent with our coverage ratio as of September 30, 2019.

Net charge-offs in the fourth quarter 2019 were $3 million, or 10 basis points of LHFI, compared to $1 million, or 2 basis points in the prior quarter. Delinquencies in these portfolios remain low and consistent with the prior quarter.

Nonperforming loans were $26 million and our ratio of nonperforming loans to loans held-for-investment was 0.21 percent at December 31, 2019, flat compared to September 30, 2019. At December 31, 2019, early stage loan delinquencies totaled $14 million, or 0.12 percent, of total loans, compared to $12 million, or 0.10 percent, at September 30, 2019.

Capital



Capital Ratios (Bancorp)																Change (% / bps)
	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			Seq		Yr/Yr
Tier 1 leverage (to adj. avg. total assets)	7.57		%	7.98		%	7.86		%	8.37		%	8.29		%	(41)		(72)
Tier 1 common equity (to RWA)	9.32		%	9.25		%	9.08		%	9.69		%	10.54		%	7		N/M
Tier 1 capital (to RWA)	10.83		%	10.81		%	10.73		%	11.51		%	12.54		%	2		N/M
Total capital (to RWA)	11.52		%	11.54		%	11.51		%	12.49		%	13.63		%	(2)		N/M
Tangible common equity to asset ratio (1)	6.95		%	7.08		%	7.31		%	7.16		%	7.45		%	(13)		(50)
Tangible book value per share (1)	$	28.57		$	27.62		$	26.16		$	24.65		$	23.90		3	%	20	%
N/M - Not meaningful


(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 December 31, 2019, the Company had a total risk-based capital ratio of 11.52 percent, as compared to 11.54 percent at September 30, 2019.

Under the terms of the previously approved, and now in effect, regulatory capital requirements, the Company's Tier 1 leverage ratio would have increased approximately 43 basis points and risk-based capital ratios would have increased by approximately 20 to 30 basis points at December 31, 2019 (pro forma basis).

Earnings Conference Call

As previously announced, the Company's fourth quarter 2019 earnings call will be held Tuesday, January 28, 2020 at 11 a.m. (ET).

To join the call, please dial (800) 353-6461 toll free or (334) 323-0501 and use passcode 2146234. 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 2146234.

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 $23.3 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 88 retail locations in 27 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 $228 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 net interest income, 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, adjusted net interest margin, and adjusted efficiency ratio. 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). 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)



	December 31, 2019			September 30, 2019			December 31, 2018
Assets
Cash	$	220		$	234		$	260
Interest-earning deposits	206			119			148
Total cash and cash equivalents	426			353			408
Investment securities available-for-sale	2,116			1,697			2,142
Investment securities held-to-maturity	598			635			703
Loans held-for-sale	5,258			4,196			3,869
Loans held-for-investment	12,129			12,548			9,088
Loans with government guarantees	736			607			392
Less: allowance for loan losses	(107		)	(110		)	(128		)
Total loans held-for-investment and loans with government guarantees, net	12,758			13,045			9,352
Mortgage servicing rights	291			285			290
Federal Home Loan Bank stock	303			303			303
Premises and equipment, net	416			417			390
Goodwill and intangible assets	170			174			190
Other assets	930			943			884
Total assets	$	23,266		$	22,048		$	18,531
Liabilities and Stockholders' Equity
Noninterest bearing deposits	$	5,467		$	5,649		$	2,989
Interest bearing deposits	9,679			10,096			9,391
Total deposits	15,146			15,745			12,380
Short-term Federal Home Loan Bank advances and other	4,165			2,329			3,244
Long-term Federal Home Loan Bank advances	650			650			150
Other long-term debt	496			496			495
Other liabilities	1,021			1,094			692
Total liabilities	21,478			20,314			16,961
Stockholders' Equity
Common stock	1			1			1
Additional paid in capital	1,483			1,481			1,522
Accumulated other comprehensive income (loss)	1			5			(47		)
Retained earnings	303			247			94
Total stockholders' equity	1,788			1,734			1,570
Total liabilities and stockholders' equity	$	23,266		$	22,048		$	18,531

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

														Fourth Quarter 2019 Compared to:
	Three Months Ended													Third Quarter 2019					Fourth Quarter 2018
	December 31, 2019			September 30, 2019			June 30, 2019		March 31, 2019		December 31, 2018			Amount			Percent		Amount			Percent
Interest Income
Total interest income	$	213		$	203		$	198	$	180	$	181		$	10		5	%	$	32		18	%
Total interest expense	61			57			60		54		29			4			7	%	32			N/M
Net interest income	152			146			138		126		152			6			4	%	—			—	%
Provision (benefit) for loan losses	—			1			17		—		(5		)	(1		)	N/M		5			N/M
Net interest income after provision (benefit) for loan losses	152			145			121		126		157			7			5	%	(5		)	(3	)%
Noninterest Income
Net gain on loan sales	101			110			75		49		34			(9		)	(8	)%	67			N/M
Loan fees and charges	30			29			24		17		20			1			3	%	10			50	%
Net return on the mortgage servicing rights	(3		)	(2		)	5		6		10			(1		)	50	%	(13		)	N/M
Loan administration income	8			5			6		11		8			3			60	%	—			—	%
Deposit fees and charges	10			10			10		8		6			—			—	%	4			67	%
Other noninterest income	16			19			48		18		20			(3		)	(16	)%	(4		)	(20	)%
Total noninterest income	162			171			168		109		98			(9		)	(5	)%	64			65	%
Noninterest Expense
Compensation and benefits	102			98			90		87		82			4			4	%	20			24	%
Occupancy and equipment	43			40			40		38		36			3			8	%	7			19	%
Commissions	35			38			25		13		16			(3		)	(8	)%	19			N/M
Loan processing expense	20			22			21		17		16			(2		)	(9	)%	4			25	%
Legal and professional expense	9			6			6		6		9			3			50	%	—			—	%
Federal insurance premiums	6			5			5		4		4			1			20	%	2			50	%
Intangible asset amortization	4			3			4		4		3			1			33	%	1			N/M
Other noninterest expense	26			26			23		22		23			—			—	%	3			13	%
Total noninterest expense	245			238			214		191		189			7			3	%	56			30	%
Income before income taxes	69			78			75		44		66			(9		)	(12	)%	3			5	%
Provision for income taxes	11			15			14		8		12			(4		)	(27	)%	(1		)	(8	)%
Net income	$	58		$	63		$	61	$	36	$	54		$	(5	)	(8	)%	$	4		7	%
Income per share
Basic	$	1.01		$	1.12		$	1.08	$	0.64	$	0.94		$	(0.11	)	(10	)%	$	0.07		7	%
Diluted	$	1.00		$	1.11		$	1.06	$	0.63	$	0.93		$	(0.11	)	(10	)%	$	0.07		8	%

Cash dividends declared	$	0.04		$	0.04		$	0.04	$	0.04	$	—		$	—		—	%	$	0.04		100	%
N/M - Not meaningful

Flagstar Bancorp, Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share data)

(Unaudited)




	Twelve Months Ended					Compared to: Year Ended December 31, 2018
	December 31, 2019		December 31, 2018			Amount			Percent
Interest Income
Total interest income	$	794	$	683		$	111		16	%
Total interest expense	232		186			46			25	%
Net interest income	562		497			65			13	%
Provision (benefit) for loan losses	18		(8		)	26			N/M
Net interest income after provision (benefit) for loan losses	544		505			39			8	%
Noninterest Income
Net gain on loan sales	335		200			135			68	%
Loan fees and charges	100		87			13			15	%
Net return on the mortgage servicing rights	6		36			(30		)	(83	)%
Loan administration income	30		23			7			30	%
Deposit fees and charges	38		21			17			81	%
Other noninterest income	101		72			29			40	%
Total noninterest income	610		439			171			39	%
Noninterest Expense
Compensation and benefits	377		318			59			19	%
Occupancy and equipment	161		127			34			27	%
Commissions	111		80			31			39	%
Loan processing expense	80		59			21			36	%
Legal and professional expense	27		28			(1		)	(4	)%
Federal insurance premiums	20		22			(2		)	(9	)%
Intangible asset amortization	15		5			10			N/M
Other noninterest expense	97		73			24			33	%
Total noninterest expense	888		712			176			25	%
Income before income taxes	266		232			34			15	%
Provision for income taxes	48		45			3			7	%
Net income (loss)	$	218	$	187		$	31		17	%
Income per share
Basic	$	3.85	$	3.26		$	0.59		18	%
Diluted	$	3.80	$	3.21		$	0.59		18	%

Cash dividends declared	$	0.16	$	—		$	0.16		N/M
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									Twelve Months Ended
	December 31, 2019			September 30, 2019			December 31, 2018			December 31, 2019			December 31, 2018
Selected Mortgage Statistics:
Mortgage rate lock commitments (fallout-adjusted) (1)	$	8,179		$	9,197		$	5,284		$	32,322		$	30,308
Mortgage loans closed	$	9,303		$	9,262		$	6,340		$	32,720		$	32,465
Mortgage loans sold and securitized	$	8,135		$	8,186		$	7,146		$	30,330		$	32,076
Selected Ratios:
Interest rate spread	2.39		%	2.48		%	3.52		%	2.52		%	2.81		%
Adjusted interest rate spread (2)(3)	2.39		%	2.48		%	2.63		%	2.52		%	2.58		%
Net interest margin	2.91		%	3.05		%	3.70		%	3.05		%	3.07		%
Adjusted net interest margin (3)	2.91		%	3.05		%	2.99		%	3.05		%	2.89		%
Net margin on loans sold and securitized	1.24		%	1.34		%	0.44		%	1.10		%	0.62		%
Return on average assets	0.99		%	1.20		%	1.17		%	1.05		%	1.04		%
Adjusted return on average assets (3) (4)	0.99		%	1.20		%	0.91		%	0.96		%	0.98		%
Return on average common equity	12.69		%	14.72		%	14.29		%	12.84		%	12.58		%
Return on average tangible common equity (4)	14.76		%	17.12		%	15.96		%	15.15		%	13.61		%
Adjusted return on average tangible common equity (3) (4)	14.76		%	17.12		%	12.44		%	13.87		%	12.67		%
Efficiency ratio	78.2		%	75.2		%	75.7		%	75.8		%	76.0		%
Common equity-to-assets ratio (average for the period)	7.83		%	8.12		%	8.41		%	8.20		%	8.28		%
Average Balances:
Average interest-earning assets	$	20,708		$	18,997		$	16,391		$	18,453		$	16,136
Average interest-bearing liabilities	$	14,208		$	12,893		$	13,046		$	13,130		$	13,124
Average stockholders' equity	$	1,803		$	1,722		$	1,548		$	1,695		$	1,488


(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.



	December 31, 2019			September 30, 2019			December 31, 2018
Selected Statistics:
Book value per common share	$	31.57		$	30.69		$	27.19
Tangible book value per share (1)	$	28.57		$	27.62		$	23.90
Number of common shares outstanding	56,631,236			56,510,341			57,749,464
Number of FTE employees	4,453			4,171			3,938
Number of bank branches	160			160			160
Ratio of nonperforming assets to total assets (2)	0.15		%	0.16		%	0.16		%
Common equity-to-assets ratio	7.68		%	7.88		%	8.47		%
MSR Key Statistics and Ratios:
Weighted average service fee (basis points)	39.7			39.9			35.8
Capitalized value of mortgage servicing rights	1.21		%	1.14		%	1.35		%


(1)	Excludes goodwill and intangibles of $170 million, $174 million and $190 million at December 31,2019, September 30, 2019, and December 31, 2018, respectively. See Non-GAAP Reconciliation for further information.


(2)	Ratio excludes LHFS.

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)



	Three Months Ended
	December 31, 2019						September 30, 2019						December 31, 2018
	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	$	5,199	$	51	3.92	%	$	3,786	$	40	4.22	%	$	3,991	$	48		4.78	%
Loans held-for-investment
Residential first mortgage	3,215		30		3.60	%	3,282		29		3.58	%	3,115		29			3.68	%
Home equity	989		12		4.86	%	934		13		5.37	%	717		10			5.43	%
Other	728		11		5.97	%	658		10		5.99	%	231		3			6.06	%
Total Consumer loans	4,932		53		4.20	%	4,874		52		4.24	%	4,063		42			4.12	%
Commercial Real Estate	2,763		34		4.91	%	2,594		35		5.39	%	2,171		31			5.52	%
Commercial and Industrial	1,726		21		4.80	%	1,767		22		4.97	%	1,345		19			5.48	%
Warehouse Lending	2,747		33		4.61	%	2,508		32		5.00	%	1,337		18			5.29	%
Total Commercial loans	7,236		88		4.77	%	6,869		89		5.14	%	4,853		68			5.45	%
Total loans held-for-investment	12,168		141		4.54	%	11,743		141		4.77	%	8,916		110			4.84	%
Loans with government guarantees	678		4		2.16	%	574		4		2.78	%	350		2			2.72	%
Investment securities	2,511		16		2.49	%	2,713		17		2.63	%	2,996		21			2.84	%
Interest-earning deposits	152		1		2.26	%	181		1		2.22	%	138		—			1.55	%
Total interest-earning assets	20,708		$	213	4.04	%	18,997		$	203	4.27	%	16,391		$	181		4.39	%
Other assets	2,328						2,200						2,022
Total assets	$	23,036					$	21,197					$	18,413
Interest-Bearing Liabilities
Retail deposits
Demand deposits	$	1,448	$	3	0.70	%	$	1,388	$	3	0.88	%	$	1,072	$	3		1.02	%
Savings deposits	3,335		10		1.19	%	3,262		10		1.20	%	3,075		7			0.91	%
Money market deposits	700		—		0.35	%	722		1		0.34	%	446		—			0.41	%
Certificates of deposit	2,459		15		2.37	%	2,583		15		2.40	%	2,274		11			1.88	%
Total retail deposits	7,942		28		1.39	%	7,955		29		1.45	%	6,867		21			1.22	%
Government deposits	1,192		4		1.39	%	1,253		4		1.45	%	1,184		5			1.48	%
Wholesale deposits and other	666		4		2.36	%	744		5		2.42	%	625		3			2.08	%
Total interest-bearing deposits	9,800		36		1.46	%	9,952		38		1.52	%	8,676		29			1.31	%
Short-term FHLB advances and other	3,262		15		1.74	%	1,910		10		2.24	%	2,954		18			2.39	%
Long-term FHLB advances	650		3		1.43	%	536		2		1.72	%	921		(25		)	(10.65	)%
Less: Swap gain reclassified out of OCI (4)			—						—						29
Adjusted long-term FHLB advances (4)			3		1.43	%			2		1.72	%	921		4			1.97	%
Other long-term debt	496		7		5.45	%	495		7		5.60	%	495		7			5.65	%
Adjusted total interest-bearing liabilities (4)	14,208		61		1.65	%	12,893		57		1.79	%	13,046		58			1.76	%
Noninterest-bearing deposits
Retail deposits and other	1,332						1,315						1,136
Custodial deposits (1)	4,772						4,550						2,130
Total Noninterest-bearing deposits	6,104						5,865						3,266
Other liabilities	921						717						553
Stockholders' equity	1,803						1,722						1,548
Total liabilities and stockholders' equity	$	23,036					$	21,197					$	18,413
Net interest-earning assets	$	6,500					$	6,104					$	3,345
Adjusted net interest income (4)			$	152					$	146					$	123
Adjusted interest rate spread (2)(4)					2.39	%					2.48	%						2.63	%
Adjusted net interest margin (3)(4)					2.91	%					3.05	%						2.99	%
Ratio of average interest-earning assets to interest-bearing liabilities					145.8	%					147.3	%						125.6	%
Total average deposits	$	15,904					$	15,817					$	11,942


(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.


(4)	The three months ended December 31, 2018, excludes $29 million of hedging gains reclassified from AOCI in conjunction with the payment of long-term FHLB advances.

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)



	Twelve Months Ended
	December 31, 2019						December 31, 2018
	Average Balance		Interest		Annualized Yield/Rate		Average Balance		Interest			Annualized Yield/Rate
Interest-Earning Assets
Loans held-for-sale	$	3,952	$	170	4.30	%	$	4,196	$	190		4.52	%
Loans held-for-investment
Residential first mortgage	3,173		115		3.61	%	2,949		105			3.56	%
Home equity	871		46		5.31	%	690		36			5.21	%
Other	566		36		6.33	%	111		6			5.73	%
Total Consumer loans	4,610		197		4.26	%	3,750		147			3.93	%
Commercial Real Estate	2,502		136		5.38	%	2,063		109			5.23	%
Commercial and Industrial	1,708		88		5.10	%	1,288		69			5.32	%
Warehouse Lending	2,112		107		4.99	%	1,318		69			5.14	%
Total Commercial loans	6,322		331		5.17	%	4,669		247			5.23	%
Total loans held-for-investment	10,932		528		4.79	%	8,419		394			4.65	%
Loans with government guarantees	553		15		2.66	%	303		11			3.53	%
Investment securities	2,845		77		2.71	%	3,094		86			2.76	%
Interest-earning deposits	171		4		2.35	%	124		2			1.83	%
Total interest-earning assets	18,453		$	794	4.28	%	16,136		$	683		4.21	%
Other assets	2,221						1,844
Total assets	$	20,674					$	17,980
Interest-Bearing Liabilities
Retail deposits
Demand deposits	$	1,345	$	11	0.77	%	$	764	$	7		0.93	%
Savings deposits	3,220		36		1.13	%	3,300		29			0.87	%
Money market deposits	736		2		0.32	%	288		2			0.49	%
Certificates of deposit	2,536		59		2.31	%	2,015		34			1.70	%
Total retail deposits	7,837		108		1.37	%	6,367		72			1.12	%
Government deposits	1,186		17		1.46	%	1,149		14			1.23	%
Wholesale deposits and other	554		13		2.36	%	401		8			2.02	%
Total interest-bearing deposits	9,577		138		1.44	%	7,917		94			1.18	%
Short-term FHLB advances and other	2,633		59		2.23	%	3,521		68			1.93	%
Long-term FHLB advances	425		7		1.59	%	1,192		(4		)	(0.32	)%
Less: Swap gain reclassified out of OCI (4)			—						29
Adjusted long-term FHLB advances (4)	425		7		1.59	%	1,192		25			2.12	%
Other long-term debt	495		28		5.65	%	494		28			5.56	%
Adjusted total interest-bearing liabilities (4)	13,130		232		1.76	%	13,124		215			1.63	%
Noninterest-bearing deposits
Retail deposits and other	1,291						1,066
Custodial deposits (1)	3,839						1,792
Total Noninterest-bearing deposits	5,130						2,858
Other liabilities	719						510
Stockholders' equity	1,695						1,488
Total liabilities and stockholders' equity	$	20,674					$	17,980
Net interest-earning assets	$	5,323					$	3,012
Adjusted net interest income (4)			$	562					$	468
Adjusted interest rate spread (2)(4)					2.52	%						2.58	%
Adjusted net interest margin (3)(4)					3.05	%						2.89	%
Ratio of average interest-earning assets to interest-bearing liabilities					140.5	%						122.9	%
Total average deposits	$	14,708					$	10,775


(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.


(4)	The twelve months ended December 31, 2018, excludes $29 million of hedging gains reclassified from AOCI in conjunction with thepayment of long-term FHLB advances

Earnings Per Share

(Dollars in millions, except share data)

(Unaudited)



	Three Months Ended									Twelve Months Ended
	December 31, 2019			September 30, 2019			December 31, 2018			December 31, 2019			December 31, 2018
Net income	$	58		$	63		$	54		$	218		$	187
Weighted average common shares outstanding	56,513,890			56,484,499			57,628,561			56,584,238			57,520,289
Stock-based awards	684,844			626,297			756,793			654,740			802,661
Weighted average diluted common shares	57,198,734			57,110,796			58,385,354			57,238,978			58,322,950
Basic earnings per common share	$	1.01		$	1.12		$	0.94		$	3.85		$	3.26
Stock-based awards	(0.01		)	(0.01		)	(0.01		)	(0.05		)	(0.05		)
Diluted earnings per common share	$	1.00		$	1.11		$	0.93		$	3.80		$	3.21

Regulatory Capital - Bancorp

(Dollars in millions)

(Unaudited)



	December 31, 2019				September 30, 2019				December 31, 2018
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted avg. total assets)	$	1,720	7.57	%	$	1,668	7.98	%	$	1,505	8.29	%
Total adjusted avg. total asset base	$	22,724			$	20,901			$	18,158
Tier 1 common equity (to risk weighted assets)	$	1,480	9.32	%	$	1,428	9.25	%	$	1,265	10.54	%
Tier 1 capital (to risk weighted assets)	$	1,720	10.83	%	$	1,668	10.81	%	$	1,505	12.54	%
Total capital (to risk weighted assets)	$	1,830	11.52	%	$	1,781	11.54	%	$	1,637	13.63	%
Risk-weighted asset base	$	15,886			$	15,432			$	12,006

Regulatory Capital - Bank

(Dollars in millions)

(Unaudited)



	December 31, 2019				September 30, 2019				December 31, 2018
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted avg. total assets)	$	1,752	7.71	%	$	1,747	8.35	%	$	1,574	8.67	%
Total adjusted avg. total asset base	$	22,727			$	20,914			$	18,151
Tier 1 common equity (to risk weighted assets)	$	1,752	11.04	%	$	1,747	11.33	%	$	1,574	13.12	%
Tier 1 capital (to risk weighted assets)	$	1,752	11.04	%	$	1,747	11.33	%	$	1,574	13.12	%
Total capital (to risk weighted assets)	$	1,862	11.73	%	$	1,860	12.06	%	$	1,705	14.21	%
Risk-weighted asset base	$	15,873			$	15,418			$	11,997

Loans Serviced

(Dollars in millions)

(Unaudited)



	December 31, 2019			September 30, 2019			December 31, 2018
	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)	$	194,638	918,662	$	171,145	826,472	$	146,040	705,149
Serviced for others	24,003		105,469	25,039		106,992	21,592		88,434
Serviced for own loan portfolio (3)	9,536		66,526	8,058		60,088	7,438		57,401
Total loans serviced	$	228,177	1,090,657	$	204,242	993,552	$	175,070	850,984


(1)	UPB, 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 loans held-for-investment (residential first mortgage, home equity and other consumer), loans-held-for-sale (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



	December 31, 2019				September 30, 2019				December 31, 2018
Consumer loans
Residential first mortgage	$	3,154	26.0	%	$	3,258	26.0	%	$	2,999	33.0	%
Home equity	1,024		8.4	%	985		7.8	%	731		8.0	%
Other	729		6.0	%	693		5.5	%	314		3.5	%
Total consumer loans	4,907		40.4	%	$	4,936	39.3	%	$	4,044	44.5	%
Commercial loans
Commercial real estate	2,828		23.3	%	2,697		21.5	%	2,152		23.7	%
Commercial and industrial	1,634		13.5	%	1,700		13.6	%	1,433		15.8	%
Warehouse lending	2,760		22.8	%	3,215		25.6	%	1,459		16.0	%
Total commercial loans	7,222		59.6	%	7,612		60.7	%	5,044		55.5	%
Total loans held-for-investment	$	12,129	100.0	%	$	12,548	100.0	%	$	9,088	100.0	%

Other Consumer Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



	December 31, 2019				September 30, 2019				December 31, 2018
Indirect Lending	$	578	79.3	%	$	519	74.9	%	$	153	48.7	%
Point of Sale	63		8.6	%	58		8.4	%	28		8.9	%
Other	88		12.1	%	116		16.7	%	133		42.4	%
Total other consumer loans	$	729	100.0	%	$	693	100.0	%	$	314	100.0	%

Allowance for Loan Losses

(Dollars in millions)

(Unaudited)



	As of/For the Three Months Ended
	December 31, 2019		September 30, 2019		December 31, 2018
Allowance for loan losses
Residential first mortgage	$	22	$	28	$	38
Home equity	13		16		15
Other	7		6		3
Total consumer loans	42		50		56
Commercial real estate	38		33		48
Commercial and industrial	22		22		18
Warehouse lending	5		5		6
Total commercial loans	65		60		72
Total allowance for loan losses	$	107	$	110	$	128

Allowance for Loan Losses

(Dollars in millions)

(Unaudited)



	Three Months Ended									Twelve Months Ended
	December 31, 2019			September 30, 2019			December 31, 2018			December 31, 2019			December 31, 2018
Beginning balance	$	110		$	110		$	134		$	128		$	140
Provision (benefit) for loan losses	—			1			(5		)	18			(8		)
Charge-offs
Total consumer loans	(4		)	(4		)	(2		)	(12		)	(8		)
Total commercial loans	—			—			—			(31		)	—
Total charge-offs	$	(4	)	$	(4	)	$	(2	)	$	(43	)	$	(8	)
Recoveries
Total consumer loans	1			2			1			3			4
Total commercial loans	—			1			—			1			—
Total recoveries	1			3			1			4			4
Charge-offs, net of recoveries	(3		)	(1		)	(1		)	(39		)	(4		)
Ending balance	$	107		$	110		$	128		$	107		$	128
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (1):
Residential first mortgage	0.08		%	0.07		%	0.05		%	0.80		%	0.08		%
Home equity and other consumer	0.49		%	0.27		%	0.23		%	1.72		%	0.21		%
Commercial real estate	—		%	—		%	(0.02		)%	—		%	(0.01		)%
Commercial and industrial	0.07		%	(0.22		)%	—		%	1.78		%	(0.01		)%


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

Nonperforming Loans and Assets

(Dollars in millions)

(Unaudited)



	December 31, 2019			September 30, 2019			December 31, 2018
Nonperforming LHFI	$	16		$	16		$	12
Nonperforming TDRs	3			3			3
Nonperforming TDRs at inception but performing for less than six months	7			7			7
Total nonperforming LHFI and TDRs (1)	26			26			22
Other nonperforming assets, net	10			9			7
LHFS	5			17			10
Total nonperforming assets	$	41		$	52		$	39

Ratio of nonperforming assets to total assets (2)	0.15		%	0.16		%	0.16		%
Ratio of nonperforming LHFI and TDRs to LHFI	0.21		%	0.21		%	0.24		%
Ratio of nonperforming assets to LHFI and repossessed assets (2)	0.30		%	0.29		%	0.32		%


(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 Loans Held-for-Investment
December 31, 2019
Consumer loans	$	9	$	5	$	26	$	40	$	4,907
Commercial loans	—		—		—		—		7,222
Total loans	$	9	$	5	$	26	$	40	$	12,129
September 30, 2019
Consumer loans	$	9	$	3	$	26	$	38	4,936
Commercial loans	—		—		—		—		7,612
Total loans	$	9	$	3	$	26	$	38	$	12,548
December 31, 2018
Consumer loans	$	5	$	2	$	22	$	29	$	4,044
Commercial loans	—		—		—		—		5,044
Total loans	$	5	$	2	$	22	$	29	$	9,088


(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
December 31, 2019
Consumer loans	$	38	$	10	$	48
Total TDR loans	$	38	$	10	$	48
September 30, 2019
Consumer loans	$	39	$	10	$	49
Total TDR loans	$	39	$	10	$	49
December 31, 2018
Consumer loans	$	44	$	10	$	54
Total TDR loans	$	44	$	10	$	54

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 and hedging gains 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 equity, adjusted return on average tangible equity, adjusted return on average assets, adjusted HFI loan-to-deposit ratio, adjusted net income, adjusted basic and diluted earnings per share, adjusted noninterest expense, adjusted net interest income, adjusted net interest margin, adjusted income before taxes, and adjusted provision for income taxes 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.



	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018
	(Dollars in millions, except share data)
Total stockholders' equity	$	1,788		$	1,734		$	1,656		$	1,574		$	1,570
Less: Goodwill and intangible assets	170			174			178			182			190
Tangible book value	$	1,618		$	1,560		$	1,478		$	1,392		$	1,380

Number of common shares outstanding	56,631,236			56,510,341			56,483,937			56,480,086			57,749,464
Tangible book value per share	$	28.57		$	27.62		$	26.16		$	24.65		$	23.90

Total assets	$	23,266		$	22,048		$	20,206		$	19,445		$	18,531
Tangible common equity to assets ratio	6.95		%	7.08		%	7.31		%	7.16		%	7.45		%

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



	Three Months Ended									Twelve Months Ended
	December 31, 2019			September 30, 2019			December 31, 2018			December 31, 2019			December 31, 2018
	(Dollars in millions)
Net income	$	58		$	63		$	54		$	218		$	187
Add: Intangible asset amortization, net of tax	3			2			2			12			2
Tangible net income	$	61		$	65		$	56		$	230		$	189

Total average equity	$	1,803		$	1,722		$	1,548		$	1,695		$	1,488
Less: Average goodwill and intangible assets	172			176			129			179			77
Total tangible average equity	$	1,631		$	1,546		$	1,419		$	1,516		$	1,411

Return on average common equity	12.69		%	14.72		%	13.98		%	12.84		%	12.58		%
Adjustment to remove hedging gains										—		%	(1.61		)%
Adjustment to remove DOJ adjustment										(1.20		)%	—		%
Adjustment to remove Wells Fargo acquisition costs										0.06		%	0.86		%
Adjusted return on average common equity										11.70		%	11.83		%

Return on average tangible common equity	14.76		%	17.12		%	15.88		%	15.15		%	13.46		%
Adjustment to remove hedging gains	—		%	—		%	(6.76		)%	—		%	(1.70		)%
Adjustment to remove DOJ adjustment	—		%	—		%	—		%	(1.34		)%	—		%
Adjustment to remove Wells Fargo acquisition costs	—		%	—		%	3.32		%	0.06		%	0.91		%
Adjusted return on average tangible common equity	14.76		%	17.12		%	12.44		%	13.87		%	12.67		%

Return on average assets	0.99		%	1.20		%	1.17		%	1.05		%	1.04		%
Adjustment to remove hedging gains	—		%	—		%	(0.52		)%	—		%	(0.13		)%
Adjustment to remove DOJ adjustment	—		%	—		%	—		%	(0.09		)%	—		%
Adjustment to remove Wells Fargo acquisition costs	—		%	—		%	0.26		%	—		%	0.07		%
Adjusted return on average assets	0.99		%	1.20		%	0.91		%	0.96		%	0.98		%

Adjusted HFI loan-to-deposit ratio.



	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018
	(Dollars in millions, except share data)
Average LHFI	$	12,168		$	11,743		$	10,613		$	9,164		$	8,916
Less: Average warehouse loans	2,747			2,508			1,997			1,175			1,337
Adjusted average LHFI	$	9,421		$	9,235		$	8,616		$	7,989		$	7,579

Average deposits	$	15,904		15,817			$	14,159		$	12,906		$	11,942
Less: Average custodial deposits	4,772			4,550			3,469			2,532			2,130
Adjusted average deposits	$	11,132		$	11,267		$	10,690		$	10,374		$	9,812

HFI loan-to-deposit ratio	76.5		%	74.2		%	75.0		%	71.0		%	74.7		%
Adjusted HFI loan-to-deposit ratio	84.6		%	82.0		%	80.6		%	77.0		%	77.2		%

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



	Three Months Ended
	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018
	(Dollars in millions)
Net interest income	$	152		$	146		$	138		$	126		$	152
Hedging gains	—			—			—			—			(29		)
Adjusted net interest income	$	152		$	146		$	138		$	126		$	123

Noninterest income	$	162		$	171		$	168		$	109		$	98
DOJ benefit	—			—			(25		)	—			—
Adjusted noninterest income	$	162		$	171		$	143		$	109		$	98

Noninterest expense	$	245		$	238		$	214		$	191		$	189
Wells Fargo acquisition costs	—			—			—			1			14
Adjusted noninterest expense	$	245		$	238		$	214		$	190		$	175

Income before income taxes	$	69		$	78		$	75		$	44		$	66
Adjustment for hedging gains	—			—			—			—			(29		)
Adjustment for DOJ benefit	—			—			(25		)	—			—
Adjustment for Wells Fargo acquisition costs	—			—			—			1			14
Adjusted income before income taxes	$	69		$	78		$	50		$	45		$	51

Provision for income taxes	$	11		$	15		$	14		$	8		$	12
Tax impact on adjustment for hedging gains	—			—			—			—			(5		)
Tax impact on adjustment for DOJ benefit	—			—			(5		)	—			—
Tax impact on adjustment for Wells Fargo acquisition costs	—			—			—			—			2
Adjusted provision for income taxes	$	11		$	15		$	9		$	8		$	9

Net income	$	58		$	63		$	61		$	36		$	54
Adjusted net income	$	58		$	63		$	41		$	37		$	42

Weighted average common shares outstanding	56,513,890			56,484,499			56,446,077			56,897,799			57,628,561
Weighted average diluted common shares	57,198,734			57,110,796			57,061,822			57,590,272			58,385,354
Adjusted basic earnings per share	$	1.01		$	1.12		$	0.72		$	0.65		$	0.73
Adjusted diluted earnings per share	$	1.00		$	1.11		$	0.71		$	0.64		$	0.72

Average interest earning assets	$	20,708		$	18,997		$	17,759		$	16,294		$	16,391
Net interest margin	2.91		%	3.05		%	3.08		%	3.09		%	3.70		%
Adjusted net interest margin	2.91		%	3.05		%	3.08		%	3.09		%	2.99		%

4th Quarter 2019 Flagstar Bancorp, Inc. (NYSE: FBC) Earnings Presentation 4th Quarter 2019 January 28, 2020

Cautionary statements 4th Quarter 2019 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 4th Quarter 2019 Sandro DiNello, CEO

Strategic highlights 4th Quarter 2019 Unique • Diverse revenue streams and flexible balance sheet produced strong results in declining interest rate environment by relationship-based capitalizing on the resulting beneficial mortgage market business model Grow community • Grew loan portfolio by $3.0bn since end of 2018 with 70% of that growth from higher-returning commercial loans, banking and balanced by broad-based consumer loan growth servicing • Grew servicing portfolio to 1.1 million loans, 28% increase from 2018, and successfully integrated default servicing • Maintained a disciplined approach to take advantage of the beneficial mortgage market resulting in a 38 basis point Strengthen margin expansion and $105mm, or 44% increase in mortgage revenue compared to 2018. mortgage • Invested in people and technology, expanding retail and generating more business in the most profitable channels. • Built on momentum of 2018 by successfully executing on our growth strategy; producing strong revenue growth in Highly profitable each segment while maintaining expense discipline operations • Grew adjusted diluted EPS(1) by $0.44, or 15%, on adjusted revenue growth of 26%(1) as compared to 2018 • Durable business model positioned us to deliver consistent ROE and ROA results year over year and build Positioned to thrive shareholder value, in any interest rate environment in any market − FBC was the #1 performing mid-sized bank stock in 2019(2) − Increased our quarterly dividend in January 2020 after restarting dividend program in 2019. 1) Non-GAAP number. Please see reconciliations on page 43 - 45. 2) Source: SNL Financial - mid-sized defined as banks with assets between $10 and $100 billion - market data as of 12/31/2019 4

Financial Overview 4th Quarter 2019 Jim Ciroli, CFO

Financial highlights 4th Quarter 2019 Solid earnings • Net income of $58mm, or $1.00 per diluted share, in 4Q19, representing a return on equity of 12.7% - Net income per diluted share increased 39% vs. adjusted 4Q18 net income per share • Average loans held-for-investment increased $0.4bn vs 3Q19; 5% growth in commercial loans, primarily driven by higher average warehouse loans up $239mm, benefitting from higher refinance volumes and higher average CRE loans higher by Growth in $169mm, led by strong home builder results community banking • Net interest margin at 2.91%, down 14 basis points to prior quarter, reflecting impact of recent rate cuts and servicing • Grew servicing pre-tax earnings to $49mm for 2019 from increase in total loans serviced and sub-serviced to approximately 1.1 million • Mortgage revenue(2) of $98mm; down $10mm, or 9%, vs. 3Q19 - Gain on sale margin expanded 3 basis points from price discipline and better execution Mortgage revenue - Fall-out adjusted lock volume declined seasonally by 11%; refinance volume 56% of FOALs - Net loss on MSRs of $3mm; refinance activity continued to drive prepayments • Asset quality strong as net charge-offs were only 10 basis points and nonperforming loan ratio remained low Strong asset - ALLL covered 0.9% of loans HFI, or 1.1% excluding warehouse loans quality • Early stage loan delinquencies remain low at $14mm, or 12 basis points • Total risk based capital ratio at 11.5% (11.7%(1) under Capital Simplification) Robust capital - $1.2 billion period end asset growth, with $1.1 billion coming from loans held-for-sale position • Tier 1 leverage ratio at 7.6% (8.0%(1) under Capital Simplification) 1) Non-GAAP number. Please see reconciliations on page 43 - 45. 2) Mortgage revenue is defined as net gain on loan sales HFS plus the net return on the MSRs. 6

Quarterly income comparison 4th Quarter 2019 $mm Observations 4Q19 3Q19 $ Variance % Variance A Net interest income Net interest income A $152 $146 $6 4% • Net interest income up $6mm, or 4% Provision (benefit) for loan losses ("PLL") - 1 (1) N/M Net interest income after PLL 152 145 7 5% - Average earning assets increased 9% led by $1.4 billion of loans held for sale and 5% growth in Net gain on loan sales 101 110 (9) (8%) commercial loans Loan fees and charges 30 29 1 3% - Net interest margin 2.91%, down 14 basis points Loan administration income 8 5 3 60% due to rate cuts and increase in loans HFS Net return on mortgage servicing rights (3) (2) (1) N/M balances. Other noninterest income 26 29 (3) (10%) B Total noninterest income 162 171 (9) (5%) B Noninterest income Compensation and benefits 102 98 4 4% Commissions and loan processing expense 55 60 (5) (8%) • Noninterest income down $9mm, or 5% Other noninterest expenses 88 80 8 10% C - Net gain on loan sales declined seasonally by Total noninterest expense 245 238 7 3% $9mm, or 8%, due to 3 basis points increase in Income before income taxes 69 78 (9) (12%) GOS margin and an 11% decrease in FOAL volume Provision for income taxes 11 15 (4) (27%) Net income $58 $63 ($5) (8%) Diluted income per share $1.00 $1.11 -$0.11 (10%) C Noninterest expense Profitability Net interest margin 2.91% 3.05% (14 bps) • Noninterest expense up $7mm, or 3% Total revenues $314 $317 ($3) (1%) - Year-end/discretionary charges totaled $5 million Net gain on loan sales / total revenue 32% 35% (300 bps) Mortgage rate lock commitments, fallout adjusted $8,179 $9,197 ($1,018) (11%) - Volume-driven mortgage expenses increased Mortgage closings $9,303 $9,262 $41 0% $2mm; mortgage rate flat at 112 basis points of Net gain on loan sale margin, HFS 1.23% 1.20% 3 bps volume. 7

Average balance sheet highlights 4th Quarter 2019 Incr (Decr) 4Q19 ($mm) Observations Average Balance Sheet Interest-earning assets (1) $$% • Average loans HFI grew $0.4bn, or 4% Loans held-for-sale $5,199 $1,413 37% - Average warehouse loans increased $239mm primarily driven by refinance activity (2) 4,932 58 1% Consumer loans (2) 7,236 367 5% - Average CRE loans increased $169mm, or 7%, Commercial loans led by solid growth in the home builder finance Total loans held-for-investment 12,168 425 4% portfolio (3) 3,341 (127) (4%) Other earning assets Interest-earning assets $20,708 $1,711 9% Interest-bearing liabilities Other assets 2,328 128 6% Total assets $23,036 $1,839 9% • Average deposits increased $0.1bn, or 1%, • Average custodial deposits rose $0.2bn on higher subservicing volumes Deposits $15,904 $87 1% Short-term FHLB advances & other 3,262 1,352 71% Long-term FHLB advances 650 114 21% Equity(4) Other long-term debt 496 1 - % • Tangible common equity to asset ratio of 6.95% Other liabilities 921 204 28% • FBC closing share price of $37.05 on January 27, Total liabilities $21,233 $1,758 9% 2020 was 130% of tangible book value per share Stockholders' equity(4) $28.57 1,803 $0.95 81 3% 5% Total liabilities and stockholders' equity $23,036 $1,839 9% 1) Measured vs. the prior quarter 2) Consumer Tangible loans include book first value and second per common mortgages, share 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 4) References a non-GAAP number. Please see reconciliations on page 43 - 45. 8

Asset quality 4th Quarter 2019 Delinquencies ($mm) NPLs and performing TDRs ($mm) Performing TDRs NPLs $104 (1) $71 (1) 37 $66 $67 $65 $64 $34 $38 $40 $33 22 24 26 26 $29 26 44 43 41 39 38 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 Allowance coverage(2) (% of loans HFI) Nonperforming loan and asset ratios (3) (3) Total Consumer Commercial NPA/LHFI & OREOs NPL & TDRs/LHFI NPA/Total Assets 0.62% 1.4% 1.4% 0.54% 1.3% 0.32% 0.33% 0.29% 0.30% 1.4% 1.0% 1.0% 1.3% 0.36% 0.9% 0.9% 0.9% 0.9% 0.24% 0.24% 0.21% 0.21% 0.9% 0.9% 0.16% 0.17% 0.16% 0.8% 0.15% 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 1) Includes $37 million Live Well loan which was fully liquidated in the third quarter 2019. 3) Excludes loans held-for-sale 2) Excludes loans carried under the fair value option and loans with government guarantees. 9

Current Expected Credit Loss (“CECL”) 4th Quarter 2019 Estimated Day-1 cumulative impact of CECL implementation: CECL methodology and key variables • Net increase to allowance for credit losses of 25-35% Macroeconomic • Weight Moody’s economic • Net increase from longer duration residential mortgage and forecast scenarios [base, growth, consumer loans and unfunded commitments, partially offset by a adverse] decrease from commercial loans • Capital impact phased in at 25% per year through 1/1/2023 Reasonable & supportable • 2-year forecast period Estimated Day-2 post-implementation impact of CECL: • 1-year Reversion period • Straight-line • Q1 2020 provision expense: $3 - $5 million, inclusive of net charge-offs & approach • Revert to 30-year historical macro economic factors • Factors that could cause volatility to provision estimates under CECL include: • Ability to accurately predict macroeconomic conditions Key • Unemployment rate macroeconomic • Changes in rate, mix and credit profile of loan growth • Case-Schiller Home Price variables Index • Reasonable & supportable forecasts expected to be complex and involve a combination of leading and lagging indicators combined with management Estimates subject to change based on continuing judgment which may increase variability of quarterly and annual results review of models and assumptions, portfolio performance, changes in forecasted macroeconomic conditions and loan mix 10

Capital 4th Quarter 2019 Flagstar Bancorp Total Risk Based Capital Ratio Observations 4Q19 Balance sheet impact Net operating earnings contribution Tier 1 CET-1 Tier 1 Total RBC Proforma ratio under Capital Simplification(1) Leverage to RWA to RWA to RWA 4Q19 (1) 8.0% 9.6% 11.1% 11.7% 4Q19 7.6% 9.3% 10.8% 11.5% 3Q19 8.0% 9.2% 10.8% 11.5% • Total risk based capital ratio of 11.5% (11.7% under Capital 11.8% 11.7% Simplification) (1) o Capital relief added 22 basis points to this ratio on 1/1/20 11.5% 11.5% o 456 basis points of Total risk based capital attributed to -33 bps +31 bps warehouse loans and loans held for sale • Tier 1 leverage ratio ended quarter at 7.6% (8.0% under Capital Simplification) (1) o Capital relief added 43 basis points to this ratio on 1/1/20 o 456 basis points of Total risk based capital attributed to warehouse loans and loans held for sale Well Capitalized 10.0% • Supporting value creation strategy, company has sufficient capital to grow and hold additional interest earning assets 9/30/2019 12/31/2019 1) Non-GAAP number. Presented under capital simplification rules. Please see reconciliations on page 43 - 45. 11

Business Segment Overview 4th Quarter 2019 Lee Smith, COO

Community banking 4th Quarter 2019 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 $12.1 $12.2 $6.9 $11.2 $6.1 $10.3 $9.5 2.7 4.8 4.7 $4.8 $5.0 2.5 4.2 2.0 3.9 3.8 1.3 1.2 2.6 2.8 4.1 4.8 2.2 2.4 3.8 4.2 2.2 3.4 1.3 1.6 1.7 1.8 1.7 2.3 2.6 2.8 3.2 2.7 4Q18 1Q19 2Q19 3Q19 4Q19 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 Average consumer loans ($bn) Average deposit funding(1) ($bn) Residential First Mortgages Other Consumer Loans Retail Government Custodial deposits Brokered deposits $4.9 $4.9 $15.8 $15.9 $4.5 $4.2 $14.2 $4.1 $12.9 1.6 1.7 $11.9 4.6 4.8 1.1 1.4 3.5 1.0 2.5 2.1 1.2 1.1 1.2 1.2 1.2 3.1 3.1 3.1 3.3 3.2 8.0 8.8 9.2 9.3 9.3 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 1) Includes custodial deposits which are included as part of mortgage servicing. 13

Mortgage originations 4th Quarter 2019 Closings by purpose ($bn) Fallout-adjusted locks ($bn) Purchase originations Refinance originations $9.2 $8.3 $9.3 $9.3 $8.2 $8.6 $6.6 $6.3 3.2 4.8 $5.3 $5.5 5.7 2.0 1.9 5.4 4.5 4.3 3.6 3.6 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 71% 58% 63% 59% 44% Purchase Mix % Closings by mortgage type ($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 $101 1.8 1.8 1.6 $6.3 $75 $5.5 1.9 2.0 1.2 2.0 0.9 $49 1.20% 1.23% 1.9 1.3 $34 0.89% 5.0 5.6 5.5 0.72% 3.2 3.3 0.60% 4Q18 1Q18 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 14

Mortgage servicing 4th Quarter 2019 Quarter-end loans serviced (000’s) $ UPB of MSRs sold ($bn) Serviced for Others Subserviced for Others Flagstar Loans HFI Bulk Sales Flow Transactions 1,091 962 983 994 851 $5.9 $5.4 $4.9 919 1.3 814 817 827 $3.6 705 0.7 $2.5 4.4 4.6 2.9 88 91 106 107 105 1.0 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 4Q18 1Q19 2Q19 3Q19 4Q19 Average custodial deposits ($bn) MSR / CET1 (Bancorp) $4.8 $4.5 $3.5 24% 23% 22% 20% $2.5 20% $2.1 4Q18 1Q19 2Q19 3Q19 4Q19 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 15

Noninterest expense and efficiency ratio 4th Quarter 2019 Quarterly noninterest expense ($mm) and efficiency ratio Adjusted noninterest expense (1)Adjusted efficiency ratio (1)(2) $245 $238 $214 $190 $175 81% 79% 78% 76% 75% 4Q18 1Q19 2Q19 3Q19 4Q19 1) References non-GAAP number for 1Q19, 4Q18 and 3Q18; excludes acquisition costs of $1 million, $14 million and $1 million for 1Q19, 4Q18 and 3Q18, respectively, related to Wells Fargo branch acquisition. In addition, 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 43 - 45. 2) References non-GAAP number for 2Q19; excludes DOJ benefit of $25 million for 2Q19. Please see reconciliations on page 43 - 45. 16

Quarterly results 4th Quarter 2019 Quarterly adjusted revenue ($mm) (1) Quarterly adjusted noninterest expense ($mm) (2) (5) (5) (3) Non‐Mortgage Revenue Mortgage Revenue(3) Non‐Mortgage NIE Mortgage NIE Mortgage expense(4) 1.09% 1.11% 1.12% $317 $314 0.93% $281 0.86% (7) $235 $238 $240 $221 160 153 $214 126 $190 $175 94 102 104 89 80 60 55 155 157 161 132 142 121 130 133 136 136 4Q18(6) 1Q19 2Q19 3Q19 4Q19 4Q18(6) 1Q19 2Q19 3Q19 4Q19 • Looking at adjusted revenue and expenses, removing the seasonal and volume-driven mortgage expenses, expenses increased due to the full-year impact of the 2018 branch acquisitions. • At our core, the company continued to scale nicely. Non-mortgage noninterest expense increased $15 million or 12% YoY (Q4 vs. Q4) predominantly because of a full quarter impact of the 2018 branch acquisitions. However non-mortgage revenues increased $29 million or 22% YoY for a positive operating leverage of 10%. Furthermore, non-mortgage noninterest expenses remained flat quarter over quarter (Q4 vs. Q3) while revenues increased $4 million during the same time period. • Mortgage expenses increased $49 million YoY (Q4 vs. Q4) while mortgage revenues increased $64 million YoY for an efficiency rate of 77% as we took advantage of the lower interest rate environment by expanding our retail channels. Our retail channels accounted for 22.7% of closings in Q4 ’19, up from 14.3% in Q4 ’18. 1) References non-GAAP number for 4Q18 and 2Q19. Please see reconciliations on page 43 - 45. 2) References non-GAAP number for 4Q18 and 1Q19. Please see reconciliations on page 43 - 45. 3) Includes direct allocations. 4) As a percentage of that period’s close volume 5) Includes Servicing segment 17 6) 12/1/2018 closed on acquisition of 52 branches 7) References non-GAAP number for 4Q19. Excludes $5 million of balance sheet clean-up and discretionary expenses

Closing Remarks / Q&A 4th Quarter 2019 Sandro DiNello, CEO

Earnings guidance(1) 4th Quarter 2019 1st Quarter 2020 Outlook • Net interest income down 5 to 10 percent Net interest income - Interest earning assets down due to seasonality - Net interest margin declines 5 to 10 basis points due to full quarter of Q4 rate cut Provision for loan loss • Loan loss provision to range between $3 and $5 million, inclusive of net charge-offs • Mortgage Revenue, including gain on sale and net return on MSR, down 10-15% due to seasonality of mortgage market Noninterest income • Loan fees decline due to seasonally lower mortgage closing volume • Loan administration income stronger on a full quarter of Q4 2019 growth in accounts serviced • Noninterest expense to decrease to between $228-$233 million, primarily reflecting a decrease in mortgage closings Noninterest expense of 15-20% Tax rate • Effective tax rate in-line with Q4 2019 rate 19 1) See cautionary statements on slide 2.

Appendix 4th Quarter 2019 Company overview 21 Financial performance 25 Community banking 27 Mortgage originations 36 Mortgage servicing 38 Capital and liquidity 40 Non-GAAP reconciliation 43

COMPANY OVERVIEW Flagstar at a glance 4th Quarter 2019 Corporate Overview • Traded on the NYSE (FBC) 160 88 Flagstar Retail home • Headquartered in Troy, MI Bank lending Branches Offices(1) • Market capitalization $2.2bn • Member of the Russell 2000 Index Community banking • Leading Michigan-based bank with a balanced, diversified lending platform • $23.3bn of assets and $15.1bn of deposits • Nearly 220k household & over 26k business relationships Mortgage origination • 5th largest bank originator of residential mortgages ($32.7bn during twelve months ended December 31, 2019) • Scalable platform originating business in all channels and all 50 states including 88 retail home lending offices • More than 1,100 correspondent and nearly Operations center 1,000 broker relationships Mortgage servicing • 6th largest sub-servicer of mortgage loans nationwide • Servicing 1.1 million loans as of December 31, 2019 1) Includes seven home lending offices located in banking branches. • Efficiently priced deposits from escrow balances 21

COMPANY OVERVIEW Flagstar has a strong executive team 4th Quarter 2019 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 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 22

Risk management COMPANY OVERVIEW Best-in-class risk management platform with 245 FTEs(1) 4th Quarter 2019 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 72 3 48 12 7 8 52 14 27 1) Does not include 30 FTEs in internal audit as of 12/31/2019. 23

COMPANY OVERVIEW Strong growth opportunities 4th Quarter 2019 Grow community banking • Lift out teams opportunistically • Grow national lending platforms(1) • Cultivate middle-market and business banking - Expand warehouse lending (275bp spread) relationships, especially in acquired deposit footprint • Add specialty lending disciplines and teams - Grow home builder finance (400bp spread) - Build MSR lending (300bp spread; LTVs<60%) - Grow consumer lending business (home equity and non-auto indirect) Build mortgage subservicing business Strengthen mortgage business • Grow subservicing operations • Leverage diversified, scalable platform to drive efficiencies and lower cost per loan - Retain subservicing on MSR sales and onboard non-Flagstar originated loans • Solidify technology enhancements to improve customer experience and ease of use - Acquire new 3rd party subservicing relationships • Recruit experienced talent - Provide funding source for balance sheet • Maximize execution options (whole loan sales vs. securitizations) - Cross-sell additional revenue capabilities 1) Indicated spreads are targets and may not be reflective of actual spreads. 24

FINANCIAL PERFORMANCE Financial performance 4th Quarter 2019 ● 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) FY18 FY19 of Revenue Increase Community Banking$ 342 $ 478 42% 40% Mortgage Servicing 101 172 15% 70% Subtotal 443 650 57% 47% Mortgage Origination 441 533 46% 21% Other(1) 23 (36) (3%) N/M Total$ 907 $ 1,147 100% 26% Diluted Earnings per Share(2) $ 3.02 $ 3.46 15% (2) Return on Average Assets 1.0% 1.0% (2) Return on Average Tangible Common Equity 12.7% 13.9% N/M Not Meaningful 1) Non-GAAP number for 2018 and 2019. 2018 number shown excludes $29 million of hedging gains reclassified from AOCI to net interest income and 2019 number shown excludes $25 million DOJ benefit. Please see reconciliations on page 43 - 45. 2) Non-GAAP number for 2018 and 2019. Number shown excludes $25 million DOJ benefit (net of tax) from 2Q19 and acquisition costs of $1 million (net of tax) related to Wells Fargo branch acquisition from December 1, 2018. Please see reconciliations on page 43 - 45. 25

FINANCIAL PERFORMANCE Higher net interest income is stabilizing earnings 4th Quarter 2019 ● 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) CAGR 16% Net interest income ($mm) Average earning assets ($bn) $20.7 $19.0 $17.8 $152 CAGR 19% $16.8 $146 $16.0 $16.4 $16.3 $15.4 $15.4 $138 $14.7 $14.0 $124 $123 $126 $12.8 $115 $12.3 $12.3 $11.9 $107 $106 $11.2 $11.6 $103 $97 $87 $80 $83 $76 $79 $77 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 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 43 - 45. 26

COMMUNITY BANKING Strong market position 4th Quarter 2019 ● 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 Deposits as of 9/30/2019 2019 Rank Market $mm % of total mkt share HHI growth(4) (4) Overall MI-based Institution Branches Total($mm) Share Change Flagstar Deposits growth 1Chase217 $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% 9Citizens88 5,770 3%San 2% 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% Source: S&P Global Market Intelligence; Note: Deposit data as of June 30, 2019 and projections based on 2019 estimates; MI-based banks highlighted. 1) 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. 2) Reflects the acquisition of 14 wells Fargo branches located in Michigan. 3) Oakland County data excludes $1.7bn of custodial deposits held at company headquarters. 4) 2019–2024 CAGR. 5) Key Midwest Markets Median HHI, projected HHI growth and projected population growth are deposit weighted based on Flagstar’s portfolio. 6) Deposit data is based on High Desert Region of San Bernardino County, CA. 27

Deposits COMMUNITY BANKING Portfolio and strategy overview 4th Quarter 2019 Total average deposits ($bn) (2) Retail deposits Other deposits $15.8 $15.9 • Flagstar gathers deposits from consumers, $14.2 $12.9 businesses and select governmental entities $11.9 6.5 6.6 5.0 4.1 – Traditionally, CDs and savings accounts 3.9 represented the bulk of our branch-based retail 9.3 9.3 depository relationships 8.0 8.8 9.2 – Today, we are focused on growing DDA 4Q18 1Q19 2Q19 3Q19 4Q19 balances with consumer, business banking and commercial relationships 4Q19 total average deposits – We additionally maintain depository Savings 21% relationships in connection with our mortgage DDA MMDA origination and servicing businesses, and with 18% 4% governmental entities CD (1) – Cost of total deposits equal to 0.90%, down 6 Government 15% basis points from 0.96% in 3Q19 8% Brokered 4% Custodial 30% Total: $15.9 bn 0.90% cost of total deposits(1) 1) Total deposits include noninterest bearing deposits. 2) Includes deposits from commercial and business banking customers. 28

COMMUNITY BANKING Deposit growth opportunities 4th Quarter 2019 Core Deposits(1) Other Deposits Retail Government • Average balance of $7.2bn during 4Q19 of which 59% are • Average balance of $1.2bn during 4Q19 demand & savings accounts • Michigan and Indiana deposits are not required to be • Average core deposits(1) of $59mm per branch collateralized • Flagstar’s branding is helping grow core deposits • Strong, long-term relationships across the state • Branch acquisitions significantly enhance core deposit base Commercial(2) Custodial • Average balance of $2bn during 4Q19 • Average balance of $4.8bn during 4Q19 on 1.1million loans serviced and subserviced • Increasing balances with growing lines of business, including home builder finance • Deposit balances increase along with the number of loans serviced and subserviced • Offer complete line of treasury management services • Provides risk-based capital by reducing risk-weighting on qualified loans to same borrowers 1) Core deposits = total deposits excluding government, custodial, and brokered deposits. 2) Includes deposits from commercial and business banking customers. 29

Lending COMMUNITY BANKING Portfolio and strategy overview 4th Quarter 2019 Total average loans ($bn) Loans HFS Loans HFI Loans with government guarantees $18.1 $16.1 • Flagstar’s largest category of earning assets consists $14.6 of loans held-for-investment which averaged $12.2bn $13.3 $12.9 during 4Q19 12.2 11.7 – Loans to consumers consist of residential first and 10.6 8.9 9.2 second mortgage loans, HELOC and other – C&I / CRE lending is an important growth strategy, 5.2 offering risk diversification and asset sensitivity 4.0 3.3 3.5 3.8 – Warehouse lending to both originators that sell to 4Q18 1Q19 2Q19 3Q19 4Q19 Flagstar and those who sell to other investors 4Q19 average loans • Flagstar maintains a balance of mortgage loans held- 1st Mortgage for-sale which averaged $5.2bn during 4Q19 1st Mortgage HFI HFS 18% 29% – Essentially all of our mortgage loans originated are 2nds, HELOC sold into the secondary market & other 9% – Flagstar has the option to direct a portion of the Loans with mortgage loans it originates to its own balance sheet government guarantees Warehouse 4% 15% CRE and C&I 25% 30

COMMUNITY BANKING Community banking growth model 4th Quarter 2019 Relationship-based growth platform New banker additions (past 2 years) • Primary focus is to build relationships # of Avg Years Line of Service Additions Experience - Recruit experienced bankers from larger regional banks Business Banking 8 18 - Retain seasoned bankers within our organization CRE Lending 1 29 • Leverage deep industry experience and client relationships Commercial & Industrial 8 23 - Focus on moving relationships and credit facilities Homebuilder Finance 4 23 to Flagstar • Low incremental efficiency ratio Indirect Lending 5 36 - Marginal cost of 15-30% that varies with type of Warehouse Lending 4 28 loans underwritten Grand Total 30 25 31

Commercial lending COMMUNITY BANKING Diversified relationship-based approach 4th Quarter 2019 Overview Warehouse - $2.8bn (12/31/19) • Warehouse lines with approximately 321 active % Advances sold to Flagstar relationships nationwide, of which approximately 81% Warehouse sell a portion of their loans to Flagstar • Collateralized by mortgage loans being funded which are paid off once the loan is sold ~84 • Diversified property types which are primarily income- ~170 borrowers Commercial producing in the normal course of business borrowers sell >75% Real Estate sell <25% • Focused on experienced top-tier developers with ~63 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 - $2.8bn (12/31/19) Commercial & Industrial - $1.6bn (12/31/19) Property type Industry Home Building Manufacturing 31% 18% Hospitality 7% Healthcare Multi Family Services 5% 18% 22% Office Distribution 10% 9% Financial, insurance & Other Government & Retail real estate 8% education 12% 40% Other 5% Owner Occupied 4% 15% 32

COMMUNITY BANKING Warehouse lending 4th Quarter 2019 ● National relationship-based lending platform ● Attractive asset class with good spreads and low credit risk ● Strong growth potential and scalable platform ● Flagstar is well positioned to gain market share, leveraging relationships in complementary lines of business, including home builder finance and mortgage originations Warehouse lenders ranked by commitments ($mm) FBC warehouse loan commitments ($bn) YOY 3Q19 Outstandings Unfunded Commitments Rank Institution Growth Total Share 1 JPMorgan Chase 42% $18,500 19% $4.8 $4.7 2 Texas Capital 45% 7,951 8% $4.2 $3.9 3 First Tennessee 34% 7,900 8% $3.8 1.6 4 TIAA FSB (Everbank) 91% 6,500 7% 1.9 1.6 5 Wells Fargo 7% 6,000 6% 2.3 6 Comerica 43% 5,042 5% 2.3 7 Merchants Bank 56% 5,000 5% 8 Flagstar Bancorp 20% 4,806 5% 3.2 2.6 2.8 9 Truist 17% 4,300 4% 1.5 1.6 10 U.S. Bancorp 45% 3,800 4% Top 10 38% $69,799 72% 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 Source: Inside Mortgage Finance as of December 20, 2019. 33

Warehouse lending COMMUNITY BANKING Low historical loss rate 4th Quarter 2019 ● No net chargeoff since Q3 2014 ● Total net chargeoffs of $4.6 million since Q4 2006 while experiencing 22% CAGR in UPB Historical average warehouse UPB ($mm) and net chargeoffs ($mm) 2,500 Annual NCO Rate Warehouse ‐ UPB 5.00% 22% CAGR from Q4 2006 2,000 4.00% 1,500 3.00% 1,000 2.00% 7 bps annual loss rate since 2006 500 1.00% 0.29% 0.22% 0.17% 0.17% ‐ 0.00% 0.01% 0.00% ‐‐‐‐‐ 0 0.00% Net Chargeoff (NCO) per Quarter (in millions) Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 NCO - 1.0 1.1 1.2 1.1 0.1 0.0 0.0 - - - - - 34

COMMUNITY BANKING Home builder finance 4th Quarter 2019 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 (~400 bps) 8 12 - Meaningful cross-sell opportunities including warehouse loans, 7 commercial deposits and purchase originations 10 6 ● Flagstar is well positioned to gain market share given builder and 8 mortgage relationships 5 4 6 - Focused on markets with strong housing fundamentals and 3 higher growth potential 4 - We have direct relationships with 7 of the top 10 and do 2 2 business with 56 of the top 100 builders nationwide through 1 September. 0 0 - We are well positioned to take advantage of supply/demand imbalance in housing market 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1) Source: Bloomberg (through 5/31/19) Home builder finance footprint Home builder loan commitments(1) ($mm) Unpaid principal balance Unused $2,175 $2,015 $1,591 $1,364 $1,422 $1,186 $1,106 $1,001 $646 $643 $909 $989 $718 $779 $797 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 1) Commitments are for loans classified as commercial real estate and commercial & industrial. 35

MORTGAGE ORIGINATIONS National distribution through multiple channels 4th Quarter 2019 Residential mortgage originations by channel ($bn) Correspondent Broker Retail Other Bulk $5.9 $5.8 $6.0 $4.7 $4.2 2.5 2.0 2.1 2.0 2.1 $2.2 $2.1 $1.6 3.9 $1.1 $1.3 $1.2 3.4 3.8 $0.7 $0.9 $0.8 2.7 2.1 $0.5 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 (1) • 3.3% market share with #7 national ranking(1) • 1.2% market share with #12 national ranking • 88 retail locations in 27 states • More than 1,100 correspondent partners • Nearly 1,000 brokerage 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 9M19 published November 29, 2019. 36

Flagstar has restructured its operations to be profitable MORTGAGE ORIGINATIONS even at historical lows for the mortgage origination market 4th Quarter 2019 U.S. residential mortgage origination market (historical and projected volumes) 5.8 $ in trillions 4.5 4.2 4.1 3.7 3.6 3.1 3.0 2.5 2.4 2.3 2.2 2.2 2.1 2.1 2.0 2.0 2.0 1.9 1.9 1.9 1.8 1.8 1.7 1.6 1.6 1.5 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 2019F 2020F 2021F Nominal ($) 0.6 0.9 1.0 0.8 0.6 0.8 0.8 1.7 1.4 1.1 2.2 2.9 3.8 2.8 3.0 2.7 2.4 1.5 2.0 1.7 1.4 2.0 1.8 1.3 1.7 2.1 1.8 1.6 2.0 1.8 1.8 (1) Real ($) 1.0 1.6 1.8 1.3 1.0 1.2 1.3 2.5 2.1 1.6 3.2 4.0 5.2 3.7 3.9 3.4 2.9 1.8 2.3 1.9 1.6 2.2 2.0 1.3 1.8 2.1 1.8 1.6 2.0 1.8 1.8 (2) Adjusted ($) 1.3 2.0 2.2 1.6 1.3 1.5 1.5 3.0 2.4 1.9 3.6 4.5 5.8 4.1 4.2 3.7 3.1 1.9 2.5 2.1 1.7 2.3 2.0 1.4 1.8 2.2 1.8 1.6 2.0 1.8 1.8 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 (2018 = 100). 2. Adjusted for population growth as reported by the U.S. Census Bureau (2017 = 100). 37

MORTGAGE SERVICING Servicing 4th Quarter 2019 Servicing Profitability Servicing Earnings before Tax ($mm) 4Q18 1Q19 2Q19 3Q19 4Q19 Net interest income Interest income (FTP) $ 14 $ 18 $ 24 $ 30 $ 27 Interest expense on custodial deposits(1) (12) (15) (21) (25) (22) Total net interest income 2 3 3 5 5 Noninterest income (2) Service fee income 20 25 26 27 28 Ancillary fee income 6 6 7 8 10 Late fee income 3 4 5 5 5 Total noninterest income 29 35 38 40 43 Noninterest expense(3) (27) (31) (30) (31) (31) Earnings before Tax$ 4 $ 7 $ 11 $ 14 $ 17 Average Custodial Deposits ($bn) $ 2.1 $ 2.5 $ 3.5 $ 4.6 $ 4.8 Average Loans Serviced for Others (000's) 739 906 972 988 1,042 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. 38

MORTGAGE SERVICING MSR portfolio 4th Quarter 2019 MSR portfolio statistics MSR portfolio characteristics (% UPB) Measure ($mm) 9/30/2019 12/31/2019 Difference 2013 & byBy VintageVintage Unpaid principal balance $25,038 $24,002 ($1,036) prior; 5% Fair value of MSR $285 $291 $6 2014; Capitalized rate (% of UPB) 1.14% 1.21% 6 bps 4% Multiple 2.794 3.000 0.206 Note rate 4.451% 4.419% (3) bps 2015; 2018 2017 Service fee 0.403% 0.400% 0 bps 12% 39% 20% 2016 & Average Measure ($000) prior 2016 & UPB per loan $234 $228 ($6) 5% FICO 692 693 1 2019later; 79% Loan to value 85.92% 85.24% 68 bps 36% Net (loss) return on mortgage servicing rights ($mm) By Investor $ Return 4Q18 1Q19 2Q19 3Q19 4Q19 Net hedged profit (loss) $0 ($1) ($1) $2 $0 Carry on asset 11 13 21 25 23 Run-off (4) (7) (15) (30) (27) GNMA Gross return on the $7 $5 $5 ($3) ($4) 63% mortgage servicing rights Private Sale transaction & P/L 1 - (1) 1 1 3% Model changes 2 1 - - - Freddie Net return on the $10 $6 $4 ($2) ($3) mortgage servicing rights ($) 16% Fannie Average mortgage $336 $291 $321 $292 $287 18% servicing rights ($) Net return on the 12.4% 9.1% 5.5% -2.7% -4.1% mortgage servicing rights (%) 39

CAPITAL AND LIQUIDITY Balance sheet composition 4th Quarter 2019 4Q19 average balance sheet (%) 1% Cash 11% Agency MBS ~64% of assets are in 17% lower risk-content Mortgage loans assets: cash, marketable held-for-investment 48% securities, warehouse Deposits excluding custodial deposits loans, loans held-for-sale and freshly-originated, 23% high-FICO conforming Loans held-for-sale mortgages underwritten by Flagstar 12% Warehouse loans 21% Custodial deposits Efficiently funds loans held-for-sale and warehouse loans Attractive relationship 27% lending with very low Commercial loans 17% (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. 40

CAPITAL AND LIQUIDITY Liquidity and funding 4th Quarter 2019 HFI loan-to-deposit ratio(1) Commentary 85% ■ Flagstar has invested 82% 81% significantly in building its 77% 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 4Q18 1Q19 2Q19 3Q19 4Q19 ■ 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) 25% 24% 13% 11% 12% 13% 9/30/2019 12/31/2019 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. 41

CAPITAL AND LIQUIDITY Interest rate risk 4th Quarter 2019 • Flagstar remains asset sensitive to parallel rate shocks Earnings at risk Economic value of equity bps % Change % Change Scenario Q4 2019 Q3 2019 Q2 2019 Q1 2019Scenario Q4 2018 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 +300 Shock 15.2% 15.4% 13.9% 8.1%+300 Shock 9.1% 5.0% 1.1% 2.3% (4.7%) (12.1%) +200 Shock 10.2% 10.3% 9.3% 5.5%+200 Shock 6.1% 5.2% 2.7% 3.5% (1.1%) (6.5%) +100 Shock 5.2% 5.2% 4.7% 2.8%+100 Shock 3.1% 3.5% 2.6% 2.9% 0.7% (2.5%) Base ‐ ‐ ‐ ‐ Base ‐ ‐ ‐ ‐ ‐ ‐ ‐100 Shock (6.1%) (5.9%) (4.9%) (3.1%) ‐100 Shock (3.2%) (5.5%) (4.7%) (4.3%) (3.4%) 0.5% 42

NON-GAAP RECONCILIATION Non-GAAP reconciliation 4th Quarter 2019 $mm Adjusted Net Interest Income, Other Noninterest Income, Noninterest Income, Total Revenues, Other Noninterest Expense, Noninterest Expense, Income before Income Taxes, Provision for Income Taxes, and Net Income 3 months ended 3 months ended 3 months ended Year ended Year ended December 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Net Interest Income $ 152 $ 146 $ 152 $ 562 $ 497 Adjustment to remove hedging gains - - (29) - (29) Adjusted Net Interest Income$ 152 $ 146 $ 123 $ 562 $ 468 Noninterest Income$ 162 $ 171 $ 98 $ 610 $ 439 Adjustment to remove DOJ benefit - - - (25) - Noninterest Income$ 162 $ 171 $ 98 $ 585 $ 439 Total Revenues $ 314 $ 317 $ 250 $ 1,172 $ 936 Adjustment to remove hedging gains - - (29) - (29) Adjustment to remove DOJ benefit - - - (25) - Adjusted Total Revenues$ 314 $ 317 $ 279 $ 1,197 $ 965 Noninterest Expense$ 245 $ 238 $ 189 $ 888 $ 712 Adjustment to remove Wells Fargo acquisition costs - - 14 1 16 Adjusted Noninterest Expense$ 245 $ 238 $ 175 $ 887 $ 696 Provision for Loan Losses$ - $ 1 $ (5) $ 18 $ (8) (29) Adjustment to remove DOJ benefit - - - (25) - Income beforeAdjustment Income Taxes to remove Wells Fargo acquisition costs$ 69 $ - 78 $ - 66 $ 14 266 $ 1 232 16 AdjustmentAdjusted to remove Income hedging before gains Income Taxes $ - 69 $ - 78 $ (29) 51 $ - 242 $ 219 Provision for Income Taxes$ 11 $ 15 $ 12 $ 48 $ 45 Adjustment to remove hedging gains - - (5) - (5) Adjustment to remove DOJ benefit - - - (5) - Adjustment to remove Wells Fargo acquisition costs - - 2 - 3 Adjusted Provision for Income Taxes $ 11 $ 15 $ 9 $ 43 $ 43 Net Income $ 58 $ 63 $ 54 $ 218 $ 187 Adjustment to remove hedging gains (net of tax) - - (24) - (24) Adjustment to remove DOJ benefit (net of tax) - - - (20) - Adjustment to remove Wells Fargo acquisition costs (net of tax) - - 12 1 13 Adjusted Net Income $ 58 $ 63 $ 42 $ 199 $ 176 3 months ended 3 months ended 3 months ended Year ended Year ended December 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018 0.22 Adjusted Diluted EPSDiluted Earnings per Share$ 1.00 $ 1.11 $ 0.93 $ 3.80 $ 3.21 AdjustedAdjustment Diluted to remove Earnings hedging per gains Share (net of tax)$ 1.00 - $ 1.11 - $ (0.41) 0.72 $ 3.46 - $ (0.41) 3.02 Adjustment to remove DOJ benefit (net of tax) - - - (0.36) - Adjustment to remove Wells Fargo acquisition costs (net of tax) - - 0.20 0.02 43

NON-GAAP RECONCILIATION Non-GAAP reconciliation (continued) 4th Quarter 2019 $mm Adjuste d R O A, R O E and R O T C E 3 months ended 3 months ended 3 months ended Year ended Year ended December 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Return on Average Assets 1.0% 1.2% 1.2% 1.1% 1.0% Adjustment to remove hedging gains 0.0% 0.0% -0.5% 0.0% -0.1% Adjustment to remove acquisition costs (net of tax) 0.0% 0.0% 0.3% 0.0% 0.1% Adjustment to remove DOJ benefit (net of tax) 0.0% 0.0% 0.0% -0.1% 0.0% Adjusted Return on Average Assets 1.0% 1.2% 0.9% 1.0% 1.0% Return on average common equity 12.8% 12.6% Adjustment to remove acquisition costs (net of tax) 0.1% 0.9% Adjustment to remove DOJ benefit (net of tax) -1.2% 0.0% Adjustment to remove heding gains/OCI Swap Reclass 0.0% -1.6% Adjusted return on average common equity 11.7% 11.8% Return on average tangible common equity 14.8% 17.1% 15.9% 15.2% 13.5% Adjustment to remove acquisition costs (net of tax) 0.0% 0.0% 3.3% 0.1% 0.9% Adjustment to remove DOJ benefit (net of tax) 0.0% 0.0% 0.0% -1.3% 0.0% Adjustment to remove heding gains/OCI Swap Reclass 0.0% 0.0% -6.8% 0.0% -1.7% Adjusted return on tangible Commmon Equity 14.8% 17.1% 12.4% 13.9% 12.7% Adjusted Efficiency Ratio 3 months ended 3 months ended 3 months ended Year ended Year ended December 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Efficiency Ratio 78% 75% 76% 76% 76% Adjustement to remove DOJ benefit 0% 0% 0% 2% 0% Adjustment to remove Wells Fargo acquisition costs 0% 0% -6% 0% -1% Adjustment to remove hedging gains/OCI Swap Reclass 0% 0% 9% 0% 2% Adjusted Efficiency Ratio 78% 75% 79% 77% 77% 44

NON-GAAP RECONCILIATION Non-GAAP reconciliation (continued) 4th Quarter 2019 Tangible Book Value per Share and Tangible Common Equity to Assets Ratio $mm As of December 31, 2019 As of September 30, 2019 Total stockholders' equity$ 1,788 $ 1,734 Goodwill and intangible assets 170 174 Tangible book value $ 1,618 $ 1,560 Number of common shares outstanding 56,631,236 56,510,341 Tangible book value per share$ 28.57 $ 27.62 Regulatory TotalCapital Assets under Capital Simplification $ 23,266 $ 22,048 Tangible common equity to assets ratioAs of December 6.95% 31, 2019 7.08% Total Risk-Based Capital Ratio Tier 1 Leverage Ratio Regulatory capital - Basel III to capital simplification Basel III $ 1,830 $ 1,720 Base l III asseNetts change in deductions to DTAs, MSRs and other capital components $ 10615 , 886 $ 106 22 ,724 Basel III withNet capital change simplification in assets $ 1,936 607 $ 1,826 106 Basel III with capital simplification $ 16,493 $ 22,830 C ap ital ra tiosRisk-weighted assets – Basel III to capital simplification Basel III 11.5% 7.6% Basel III with capital simplification 11.7% 8.0% 45



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)



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



Exhibits

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

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




		FLAGSTAR BANCORP, INC.

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



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))



Exhibit No.		Description

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

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