Attachment: 8-K

Document



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EXHIBIT 99.1
NEWS RELEASE
For more information, contact:        
Kenneth Schellenberg
FBCInvestorRelations@flagstar.com
(248) 312-5741
                                
                                        
Flagstar Bancorp Reports Second Quarter 2021 Net Income of $147 million, or $2.74 Per Diluted Share

Key Highlights - Second Quarter 2021

•Generated net interest income of $183 million, with net interest margin increasing 8 basis points.
•Produced mortgage revenue of $163 million as fallout adjusted locks remained strong at $12.4 billion.
•Maintained solid asset quality with low levels of nonperforming loans; reduced allowance for credit loss reserve by $45 million.
•Generated significant capital with total risk-based capital ratio increasing 95 basis points to 14.1 percent.
•Produced exceptional return on average tangible common equity of 25.9 percent and return on average assets of 2.1 percent.

TROY, Mich., July 28, 2021 – Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, today reported second quarter 2021 net income of $147 million, or $2.74 per diluted share, compared to first quarter 2021 net income of $149 million, or $2.80 per diluted share, which on an adjusted basis was $176 million, or $3.31 per diluted share. Second quarter 2020 net income was $116 million, or $2.03 per diluted share.

"We posted another solid quarter – our fifth consecutive quarter where diluted earnings exceeded $2.00 per share,” said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp. "Highlights included net interest margin expansion, strong asset quality, steady growth in our servicing portfolio, and excellent mortgage results that remain above historical averages. Of special note was our execution of four private label securitizations during the quarter, further demonstrating the versatility of our mortgage business and the optionality it provides – truly a differentiator for Flagstar in the industry. These positives combined to produce a 6 percent growth in tangible book value and continued a trend of achieving return on assets in excess of 2 percent. Our return on average tangible common equity in the last 12 months has been a remarkable 31 percent, and in the 12 months prior to that, an impressive 18 percent.

"Credit quality remained strong, and we continue to be encouraged by the low levels of nonperforming loans and net charge-offs. And I'm pleased to say that we have no commercial loans currently in deferral. This performance, along with an improved forecast for the macroeconomic environment, enabled us to release $45 million of our allowance for credit losses. Even with this release, excluding warehouse loans, our coverage ratio was 2.6 percent – among the strongest in the industry."

"As we move closer to completing our previously announced partnership with New York Community Bank, we are well positioned with strong fundamentals and a demonstrated power to generate capital. Until then, we are focusing
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on ensuring a smooth transition and continuing to execute on the business plan that has served our shareholders so well and brought us to this pivotal point in the history of our company."


Income Statement Highlights
Three Months Ended
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020
(Dollars in millions, except per share data)
Net interest income $183 $189 $189 $180 $168 
(Benefit) provision for credit losses (44)(28)2 32 102 
Noninterest income 252 324 332 448 375 
Noninterest expense 289 347 314 301 293 
Income before income taxes 190 194 205 295 148 
Provision for income taxes 43 45 51 73 32 
Net income$147 $149 $154 $222 $116 
Income per share:
Basic$2.78 $2.83 $2.86 $3.90 $2.04 
Diluted$2.74 $2.80 $2.83 $3.88 $2.03 


Adjusted Income Statement Highlights (Non-GAAP)(1)
Three Months Ended
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020
(Dollars in millions, except per share data)
Net interest income $183 $189 $189 $180 $168 
(Benefit) provision for credit losses (44)(28)2 32 102 
Noninterest income 252 324 332 448 375 
Noninterest expense 290 312 314 301 293 
Income before income taxes 189 229 205 295 148 
Provision for income taxes 43 53 51 73 32 
Net income$146 $176 $154 $222 $116 
Income per share:
Basic$2.78 $3.34 $2.86 $3.90 $2.04 
Diluted$2.73 $3.31 $2.83 $3.88 $2.03 
(1)See Non-GAAP Reconciliation for further information.


Key Ratios
Three Months Ended
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020
Net interest margin 2.90 %2.82 %2.78 %2.78 %2.86 %
Adjusted net interest margin (1)3.06 %3.02 %2.98 %2.94 %2.88 %
Return on average assets2.1 %2.0 %2.1 %3.1 %1.8 %
Return on average common equity 24.0 %25.7 %27.6 %41.5 %23.5 %
Efficiency ratio66.6 %67.7 %60.4 %47.9 %54.1 %
HFI loan-to-deposit ratio71.8 %74.4 %74.5 %75.9 %76.7 %
Adjusted HFI loan-to-deposit ratio (2)64.3 %66.3 %69.8 %74.8 %85.4 %
(1)Excludes loans with government guarantees available for repurchase. See Non-GAAP Reconciliation for further information.
(2)Excludes warehouse loans and custodial deposits. See Non-GAAP Reconciliation for further information.
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Average Balance Sheet Highlights
Three Months Ended% Change
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020		SeqYr/Yr
(Dollars in millions)
Average interest-earning assets $25,269 $27,178 $27,100 $25,738 $23,692 (7)%7 %
Average loans held-for-sale (LHFS)6,902 7,464 5,672 5,602 5,645 (8)%22 %
Average loans held-for-investment (LHFI)13,688 14,915 15,703 14,839 13,596 (8)%1 %
Average total deposits 19,070 20,043 21,068 19,561 17,715 (5)%8 %

Net Interest Income

Net interest income in the second quarter was $183 million, a decrease of $6 million, or 3 percent as compared to the first quarter 2021. The results primarily reflect lower earning assets, the result of lower warehouse and loans held-for-sale (LHFS) balances during the quarter. Average earning assets declined $1.9 billion, or 7 percent, as warehouse balances were $1.0 billion, or 15 percent lower and LHFS declined $0.6 billion. These declines were, partially offset by a favorable decrease in funding costs and broad-based increases in loan yields.

The net interest margin in the second quarter was 2.90 percent, an 8 basis point increase from the prior quarter. Excluding the impact from the loans with government guarantees that have not been repurchased and do not accrue interest, adjusted net interest margin expanded 4 basis points to 3.06 percent in the second quarter, compared to adjusted net interest margin of 3.02 percent in the prior quarter. The expansion in net interest margin was largely attributable to an increase in LHFS yields due to a mix shift to higher yielding products supporting our residential mortgage-backed securities program, higher LHFI yields and lower deposit costs. Retail banking deposit rates decreased 4 basis points primarily driven by the maturity of higher cost time deposits.

Average total deposits were $19.1 billion in the second quarter, decreasing $1.0 billion, or 5 percent from the first quarter 2021. Average custodial deposits decreased $1.0 billion, or 14 percent primarily driven by decreasing mortgage payoff rates and actions taken to manage internal liquidity measures.

Provision for Credit Losses

The benefit for credit losses was $44 million for the second quarter, as compared to a $28 million benefit for credit losses for the first quarter 2021, reflecting the performance of our portfolio and improved economic forecasts. Additionally, net charge-offs remained low at $1 million for the quarter, or 1 basis point of LHFI.
Noninterest Income

Noninterest income decreased $72 million to $252 million in the second quarter, as compared to $324 million for the first quarter 2021, primarily due to lower mortgage revenues and loan fees and charges.

Second quarter net gain on loan sales decreased $59 million, to $168 million, as compared to $227 million in the first quarter 2021. Gain on sale margins decreased 49 basis points, to 1.35 percent for the second quarter 2021, as compared to 1.84 percent for the first quarter 2021. The decrease was primarily driven by competitive factors and channel-mix based margin compression.

Net loss on mortgage servicing rights was $5 million in the second quarter 2021, reflecting an $8 million write off of mortgage servicing right fair value for those loans with government guarantees that were repurchased during the quarter. In addition, mortgage refinance activity continued to be elevated compared to historical norms which impacted prepayment speeds and overall net return on mortgage servicing rights.

Loan fees and charges decreased $5 million, to $37 million for the second quarter, compared to $42 million for the first quarter 2021, primarily due to a 7 percent decrease in mortgage loans closed.
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Mortgage Metrics
As of/Three Months EndedChange (% / bps)
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020		SeqYr/Yr
(Dollars in millions)
Mortgage rate lock commitments (fallout-adjusted) (1) (2)$12,400 $12,300 $12,000 $15,000 $13,800 1%(10)%
Mortgage loans closed (1)$12,800 $13,800 $13,100 $14,400 $12,200 (7)%5%
Net margin on mortgage rate lock commitments (fallout-adjusted) (2) 1.35 %1.84 %1.93 %2.31 %2.19 %(49)(84)
Net gain on loan sales$168 $227 $232 $346 $303 (26)%(45)%
Net return (loss) on mortgage servicing rights (MSR)$(5)$— $— $12 $(8)N/M(38)%
Gain on loan sales + net return on the MSR$163 $227 $232 $358 $295 (28)%(45)%
Loans serviced (number of accounts - 000's) (3)1,182 1,148 1,085 1,105 1,042 3%13%
Capitalized value of MSRs1.00 %1.06 %0.86 %0.85 %0.87 %(6)13
N/M - Not meaningful
(1) Rounded to the nearest hundred million
(2) 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.
(3) Includes loans serviced for Flagstar's own loan portfolio, serviced for others, and subserviced for others.

Noninterest Expense

Noninterest expense decreased to $289 million for the second quarter, compared to $347 million for the first quarter 2021. Excluding the $35 million expense related to the DOJ settlement liability in the first quarter 2021 and $9 million of merger expenses in the second quarter 2021, noninterest expense decreased $32 million, or 10 percent. The decrease in noninterest expense primarily reflects lower commissions as mortgage loan closings decreased 7 percent compared to the prior quarter and the prior quarter included expenses associated with seasonally higher payroll taxes which did not reoccur. The second quarter included a $10 million benefit from an agreement to reduce the 2009 former CEO supplemental executive retirement plan liability.

Mortgage expenses were $131 million for the second quarter, a decrease of $17 million compared to the prior quarter. The ratio of mortgage noninterest expense to closings – our mortgage expense ratio – was 1.03 percent, a decrease of 5 basis points quarter over quarter, primarily driven by lower commissions.

The efficiency ratio was 67 percent for the second quarter, as compared to 68 percent for the first quarter 2021. Excluding the $35 million expense related to the DOJ settlement liability, the adjusted efficiency ratio was 61 percent for the first quarter, primarily driven by the strength of mortgage revenue in the first quarter.

Income Taxes

The second quarter provision for income taxes totaled $43 million, with an effective tax rate of 22.5 percent, compared to $45 million and an effective tax rate of 23.0 percent for the first quarter 2021.

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Asset Quality
Credit Quality Ratios
As of/Three Months EndedChange (% / bps)
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020		SeqYr/Yr
(Dollars in millions)
Allowance for credit losses (1)$220 $265 $280 $280 $250 (17)%(12)%
Credit reserves to LHFI1.57 %1.78 %1.73 %1.70 %1.69 %(21)-12
Credit reserves to LHFI excluding warehouse2.63 %3.11 %3.20 %3.07 %2.60 %(48)3
Net (recoveries) charge-offs$1 $(13)$2 $2 $3 N/M(67)%
Total nonperforming LHFI and TDRs$74 $60 $56 $45 $33 23%N/M
Net (recoveries) charge-offs to LHFI ratio (annualized)0.01 %(0.35)%0.04 %0.05 %0.11 %36(10)
Ratio of nonperforming LHFI and TDRs to LHFI0.53 %0.40 %0.34 %0.28 %0.22 %1331
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (2):
Residential first mortgage 0.16 %0.31 %0.11 %0.07 %0.26 %(15)(10)
Home equity and other consumer0.15 %0.16 %0.06 %0.23 %0.28 %(1)(13)
Commercial real estate— %(0.01)%— %(0.01)%0.01 %1(1)
Commercial and industrial 0.04 %(4.12)%0.21 %0.06 %0.08 %416(4)
N/M - Not meaningful
(1) Includes the allowance for loan losses and the reserve on unfunded commitments.
(2) Excludes loans carried under the fair value option.

The allowance for credit losses was $220 million and covered 1.57 percent of loans held-for-investment at June 30, 2021, a 21 basis point decrease from March 31, 2021. Excluding warehouse loans, the allowance coverage ratio was 2.63 percent, a 48 basis point decrease from March 31, 2021. The lower allowance for credit losses primarily reflects improvements in our economic forecasts and the performance of the LHFI portfolio throughout the pandemic.

Net charge-offs in the second quarter 2021 were $1 million, compared to $13 million of net recoveries in the prior quarter. Net charge-offs for the second quarter were 1 basis point of LHFI, compared to 8 basis points in the prior quarter when excluding the $16 million commercial loan recovery obtained in the quarter.

Nonperforming loans and troubled debt restructurings (TDRs) were $74 million and our ratio of nonperforming loans and TDRs to loans held-for-investment was 53 basis points at June 30, 2021, a 13 basis point increase compared to March 31, 2021 as nonperforming loans remained low and LHFI balances decreased $0.8 billion. At June 30, 2021, early stage loan delinquencies totaled $12 million, or 9 basis points of total loans, compared to $15 million, or 10 basis points, at March 31, 2021.

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Capital
Capital Ratios (Bancorp)Change (% / bps)
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020		SeqYr/Yr
Tier 1 leverage (to adj. avg. total assets)9.21 %8.11 %7.71 %8.04 %7.76 %110145
Tier 1 common equity (to RWA)11.38 %10.31 %9.15 %9.21 %9.11 %107227
Tier 1 capital (to RWA)12.56 %11.45 %10.23 %10.31 %10.33 %111223
Total capital (to RWA)14.13 %13.18 %11.89 %11.29 %11.32 %95281
Tangible common equity to asset ratio (1)8.67 %7.48 %6.58 %6.90 %6.58 %119209
Tangible book value per share (1) $44.38 $41.77 $38.80 $35.60 $31.74 6%40%
(1)See Non-GAAP Reconciliation for further information.

The Company maintained a solid capital position with regulatory ratios above current regulatory quantitative guidelines for "well capitalized" institutions. The capital ratios are impacted by a 100 percent risk-weighting of the warehouse loan portfolio – the largest component of the Company’s held-for-investment portfolio. Adjusting the risk-weighting of warehouse loans to 50 percent, because of the historically low level of losses from this loan portfolio and the fact that the portfolio is fully collateralized with assets that would receive a 50 percent risk weighting, the Company would have had a Tier 1 common equity ratio of 13.13 percent and a total risk-based capital ratio of 16.30 percent at June 30, 2021.

Importantly, tangible book value per share grew to $44.38, up $2.61, or 6 percent from last quarter.

About Flagstar

Flagstar Bancorp, Inc. (NYSE: FBC) is a $27.1 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 158 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 86 retail locations in 28 states. Flagstar is a leading national originator and servicer of mortgage and other consumer loans, handling payments and record keeping for $255.7 billion of loans representing almost 1.2 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 certain 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. 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 periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website at flagstar.com.

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Cautionary Statements Regarding Forward-Looking Statements

Certain statements in this press release may constitute “forward‐looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to New York Community Banks ("NYCB") and Flagstar’s beliefs, goals, intentions, and expectations regarding revenues, earnings, loan production, asset quality, capital levels, and acquisitions, among other matters; NYCB’s and Flagstar’s estimates of future costs and benefits of the actions each company may take; NYCB’s and Flagstar’s assessments of probable losses on loans; NYCB’s and Flagstar’s assessments of interest rate and other market risks; and NYCB’s and Flagstar’s ability to achieve their respective financial and other strategic goals.

Forward‐looking statements are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “should,” and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. These forward-looking statements include, without limitation, those relating to the terms, timing and closing of the proposed transaction.

Additionally, forward‐looking statements speak only as of the date they are made; NYCB and Flagstar do not assume any duty, and do not undertake, to update such forward‐looking statements. Furthermore, because forward‐looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of NYCB and Flagstar. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement among NYCB, 615 Corp. and Flagstar; the outcome of any legal proceedings that may be instituted against NYCB or Flagstar; the possibility that the proposed transaction will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated; the ability of NYCB and Flagstar to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of NYCB or Flagstar; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where NYCB and Flagstar do business; certain restrictions during the pendency of the proposed transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions; the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the proposed transaction within the expected timeframes or at all and to successfully integrate Flagstar’s operations and those of NYCB; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; NYCB’s and Flagstar’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by NYCB’s issuance of additional shares of its capital stock in connection with the proposed transaction; and other factors that may affect future results of NYCB and Flagstar; and the other factors discussed in the “Risk Factors” section NYCB’s Annual Report on Form 10‐K for the year ended December 31, 2020 and in other reports NYCB files with the U.S. Securities and Exchange Commission (the “SEC”), which are available at http://www.sec.gov and in the “SEC Filings” section of NYCB’s website, https://ir.mynycb.com, under the heading “Financial Information,” and in Flagstar’s Annual Report on Form 10-K for the year ended December 31, 2020 and in Flagstar’s other filings with SEC, which are available at http://www.sec.gov and in the “Documents” section of Flagstar’s website, https://investors.flagstar.com.
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Flagstar Bancorp, Inc.
Consolidated Statements of Financial Condition
(Dollars in millions)
(Unaudited)
June 30,
2021		March 31,
2021		December 31,
2020		June 30,
2020
Assets
Cash$168 $106 $251 $204 
Interest-earning deposits177 343 372 23 
Total cash and cash equivalents345 449 623 227 
Securitized HFS loans not sold— — — — 
Investment securities available-for-sale1,823 1,764 1,944 2,348 
Investment securities held-to-maturity270 319 377 496 
Loans held-for-sale6,138 7,087 7,098 5,615 
Loans held-for-investment14,052 14,887 16,227 14,808 
Loans with government guarantees2,226 2,457 2,516 1,791 
Less: allowance for loan losses(202)(241)(252)(229)
Total loans held-for-investment and loans with government guarantees, net16,076 17,103 18,491 16,370 
Mortgage servicing rights342 428 329 261 
Federal Home Loan Bank stock377 377 377 377 
Premises and equipment, net374 393 392 410 
Goodwill and intangible assets152 155 157 164 
Other assets1,168 1,374 1,250 1,200 
Total assets$27,065 $29,449 $31,038 $27,468 
Liabilities and Stockholders’ Equity
Noninterest-bearing deposits$10,675 $10,798 $9,458 $7,921 
Interest-bearing deposits7,986 8,622 10,515 9,977 
Total deposits18,661 19,420 19,973 17,898 
Short-term Federal Home Loan Bank advances and other2,095 2,745 3,900 3,354 
Long-term Federal Home Loan Bank advances1,200 1,200 1,200 1,200 
Other long-term debt396 396 641 493 
Loan with government guarantee repurchase options989 1,780 1,851 1,067 
Other liabilities1,226 1,550 1,272 1,485 
Total liabilities24,567 27,091 28,837 25,497 
Stockholders’ Equity
Common stock1 1 1 1 
Additional paid in capital1,356 1,350 1,346 1,488 
Accumulated other comprehensive income45 54 47 46 
Retained earnings1,096 953 807 436 
Total stockholders’ equity2,498 2,358 2,201 1,971 
Total liabilities and stockholders’ equity$27,065 $29,449 $31,038 $27,468 










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Flagstar Bancorp, Inc.
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share data)
(Unaudited)
Change compared to:
Three Months Ended1Q212Q20
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020		AmountPercentAmountPercent
Interest Income
Total interest income$198 $208 $212 $206 $201 $(10)(5)%$(3)(1)%
Total interest expense15 19 23 26 33 (4)(21)%(18)(55)%
Net interest income183 189 189 180 168 (6)(3)%15 9 %
(Benefit) provision for credit losses(44)(28)2 32 102 (16)57 %N/MN/M
Net interest income after provision for credit losses227 217 187 148 66 10 5 %161 244 %
Noninterest Income
Net gain on loan sales168 227 232 346 303 (59)(26)%(135)(45)%
Loan fees and charges37 42 48 41 38 (5)(12)%(1)(3)%
Net return (loss) on the mortgage servicing rights(5)— — 12 (8)(5)N/M3 (38)%
Loan administration income28 27 25 26 21 1 4 %7 33 %
Deposit fees and charges8 8 8 8 7 — — %1 14 %
Other noninterest income16 20 19 15 14 (4)(20)%2 14 %
Total noninterest income252 324 332 448 375 (72)(22)%N/MN/M
Noninterest Expense
Compensation and benefits122 144 125 123 116 (22)(15)%6 5 %
Occupancy and equipment50 46 44 47 44 4 9 %6 14 %
Commissions51 62 70 72 61 (11)(18)%(10)(16)%
Loan processing expense22 21 24 20 22 1 5 %— — %
Legal and professional expense11 8 11 9 5 3 38 %6 N/M
Federal insurance premiums4 6 5 6 7 (2)(33)%(3)(43)%
Intangible asset amortization3 3 3 3 4 — — %(1)(25)%
Other noninterest expense26 57 32 21 34 (31)(54)%(8)(24)%
Total noninterest expense289 347 314 301 293 (58)(17)%(4)(1)%
Income before income taxes190 194 205 295 148 (4)(2)%42 28 %
Provision for income taxes43 45 51 73 32 (2)(4)%11 34 %
Net income$147 $149 $154 $222 $116 $(2)(1)%$31 27 %
Income per share
Basic$2.78 $2.83 $2.86 $3.90 $2.04 $(0.05)(2)%$0.74 36 %
Diluted$2.74 $2.80 $2.83 $3.88 $2.03 $(0.06)(2)%$0.71 35 %
Cash dividends declared$0.06 $0.06 $0.05 $0.05 $0.05 $— — %$0.01 20 %
N/M - Not meaningful

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

Six Months Ended Change
June 30,
2021		June 30,
2020		AmountPercent
Interest Income
Total interest income$405 $402 $3 1 %
Total interest expense34 86 (52)(60)%
Net interest income371 316 55 17 %
(Benefit) provision for credit losses(72)116 (188)N/M
Net interest income after provision for credit losses443 200 243 N/M
Noninterest Income
Net gain on loan sales395 393 2 1 %
Loan fees and charges79 61 18 30 %
Net return (loss) on the mortgage servicing rights(5)(2)(3)N/M
Loan administration income54 33 21 64 %
Deposit fees and charges17 16 1 6 %
Other noninterest income36 28 8 29 %
Total noninterest income576 529 47 9 %
Noninterest Expense
Compensation and benefits266 218 48 22 %
Occupancy and equipment95 85 10 12 %
Commissions112 90 22 24 %
Loan processing expense43 39 4 10 %
Legal and professional expense20 11 9 82 %
Federal insurance premiums10 13 (3)(23)%
Intangible asset amortization5 7 (2)(29)%
Other noninterest expense85 63 22 35 %
Total noninterest expense636 526 110 21 %
Income before income taxes383 203 180 89 %
Provision for income taxes87 42 45 107 %
Net income$296 $161 $135 84 %
Income per share
Basic$5.61 $2.85 $2.76 97 %
Diluted$5.54 $2.83 $2.71 96 %
Cash dividends declared$0.12 $0.10 $0.02 20 %
N/M - Not meaningful
10

Flagstar Bancorp, Inc.
Summary of Selected Consolidated Financial and Statistical Data
(Dollars in millions, except share data)
(Unaudited)
Three Months EndedSix Months Ended
June 30,
2021		March 31,
2021		June 30,
2020		June 30,
2021		June 30,
2020
Selected Mortgage Statistics (1):
Mortgage rate lock commitments (fallout-adjusted) (2) $12,400 $12,300 $13,800 $24,800 $25,000 
Mortgage loans closed$12,800 $13,800 $12,200 $26,600 $20,700 
Mortgage loans sold and securitized$14,100 $13,700 $12,900 $27,800 $20,400 
Selected Ratios:
Interest rate spread (3)2.70 %2.55 %2.52 %2.62 %2.41 %
Net interest margin2.90 %2.82 %2.86 %2.86 %2.83 %
Net margin on loans sold and securitized1.20 %1.65 %2.35 %1.42 %1.93 %
Return on average assets2.09 %1.98 %1.77 %2.04 %1.30 %
Adjusted return on average assets (4) (5)2.09 %2.34 %1.77 %2.19 %1.30 %
Return on average common equity23.97 %25.73 %23.47 %12.41 %16.86 %
Return on average tangible common equity (5)25.92 %27.99 %26.16 %13.46 %19.07 %
Adjusted return on average tangible common equity (4) (5)25.68 %32.97 %26.16 %30.63 %19.07 %
Efficiency ratio66.6 %67.7 %54.1 %67.2 %62.2 %
Adjusted efficiency ratio (4)66.8 %60.8 %54.1 %70.7 %62.2 %
Common equity-to-assets ratio (average for the period)8.74 %7.71 %7.53 %8.21 %15.42 %
Average Balances:
Average interest-earning assets$25,269 $27,178 $23,692 $26,218 $22,421 
Average interest-bearing liabilities $14,641 $15,011 $15,119 $14,825 $14,800 
Average stockholders' equity$2,448 $2,319 $1,977 $2,384 $1,915 
(1)Rounded to nearest hundred million.
(2)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.
(3)Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.
(4)See Non-GAAP Reconciliation for further information.
(5)Excludes goodwill, intangible assets and the associated amortization. See Non-GAAP Reconciliation for further information.
June 30,
2021		March 31,
2021		December 31,
2020		June 30,
2020
Selected Statistics:
Book value per common share $47.26 $44.71 $41.79 $34.62 
Tangible book value per share (1)
$44.38 $41.77 $38.80 $31.74 
Number of common shares outstanding 52,862,264 52,752,600 52,656,067 56,943,979 
Number of FTE employees 5,503 5,418 5,214 4,641 
Number of bank branches158 158 158 160 
Ratio of nonperforming assets to total assets (2)
0.30 %0.23 %0.21 %0.14 %
Common equity-to-assets ratio9.23 %8.01 %7.09 %7.18 %
MSR Key Statistics and Ratios:
Weighted average service fee (basis points)32.6 33.2 34.3 37.0 
Capitalized value of mortgage servicing rights1.00 %1.06 %0.86 %0.87 %
(1)Excludes goodwill and intangibles. See Non-GAAP Reconciliation for further information.
(2)Ratio excludes LHFS.
11

Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
Three Months Ended
June 30, 2021March 31, 2021June 30, 2020
Average BalanceInterestAnnualized
Yield/Rate		Average BalanceInterestAnnualized
Yield/Rate		Average BalanceInterestAnnualized
Yield/Rate
Interest-Earning Assets
Loans held-for-sale$6,902 $53 3.05%$7,464 $53 2.83%$5,645 $48 3.42%
Loans held-for-investment
Residential first mortgage1,887 15 3.27%2,132 17 3.20%2,822 24 3.41%
Home equity748 7 3.64%820 7 3.50%1,001 9 3.78%
Other1,101 13 4.80%1,040 12 4.79%881 12 5.42%
Total consumer loans 3,736 35 3.79%3,992 36 3.68%4,704 45 3.87%
Commercial real estate3,093 26 3.37%3,042 26 3.36%3,101 28 3.64%
Commercial and industrial1,449 14 3.72%1,486 13 3.53%2,006 17 3.34%
Warehouse lending5,410 54 3.95%6,395 64 4.00%3,785 38 3.88%
Total commercial loans9,952 94 3.74%10,923 103 3.76%8,892 83 3.67%
Total loans held-for-investment13,688 129 3.75%14,915 139 3.73%13,596 128 3.74%
Loans with government guarantees2,344 5 0.79%2,502 4 0.56%858 4 1.97%
Investment securities 2,123 12 2.19%2,210 12 2.21%3,417 21 2.42%
Interest-earning deposits212 — 0.13%87 — 0.14%176 — 0.11%
Total interest-earning assets25,269 $199 3.12%27,178 $208 3.06%23,692 $201 3.38%
Other assets2,742 2,887 2,569 
Total assets$28,011 $30,065 $26,261 
Interest-Bearing Liabilities
Retail deposits
Demand deposits$1,686 $— 0.06%$1,852 $— 0.07%$1,800 $1 0.22%
Savings deposits4,084 1 0.14%3,945 1 0.14%3,476 4 0.52%
Money market deposits762 — 0.07%685 — 0.06%716 — 0.12%
Certificates of deposit1,126 3 0.62%1,293 4 0.96%1,987 10 2.00%
Total retail deposits7,658 4 0.18%7,775 5 0.25%7,979 15 0.78%
Government deposits1,795 1 0.19%1,773 1 0.22%1,088 2 0.63%
Wholesale deposits and other1,170 4 1.33%1,031 4 1.59%738 4 2.07%
Total interest-bearing deposits10,623 9 0.31%10,579 10 0.38%9,805 21 0.86%
Short-term FHLB advances and other2,422 1 0.17%2,779 1 0.17%3,753 2 0.26%
Long-term FHLB advances1,200 3 1.03%1,200 3 1.03%1,068 3 1.13%
Other long-term debt396 3 3.19%453 5 4.11%493 7 4.99%
Total interest-bearing liabilities14,641 16 0.43%15,011 19 0.51%15,119 33 0.86%
Noninterest-bearing deposits
Retail deposits and other2,259 2,270 1,687 
Custodial deposits (1)6,188 7,194 6,223 
Total noninterest-bearing deposits8,447 9,464 7,910 
Other liabilities 2,476 3,271 1,255 
Stockholders' equity2,448 2,319 1,977 
Total liabilities and stockholders' equity$28,012 $30,065 $26,261 
Net interest-earning assets$10,628 $12,167 $8,573 
Net interest income$183 $189 $168 
Interest rate spread (2)2.70%2.55%2.52%
Net interest margin (3)2.90%2.82%2.86%
Ratio of average interest-earning assets to interest-bearing liabilities172.6 %181.1 %156.7 %
Total average deposits$19,070 $20,043 $17,715 
(1)Approximately 80 percent of custodial deposits from loans subserviced which pay interest 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.
12

Average Balances, Yields and Rates
(Dollars in millions)
(Unaudited)
Six Months Ended
June 30, 2021June 30, 2020
Average BalanceInterestAnnualized
Yield/Rate		Average BalanceInterestAnnualized
Yield/Rate
Interest-Earning Assets
Loans held-for-sale$7,181 $105 2.94%$5,447 $97 3.56%
Loans held-for-investment
Residential first mortgage2,009 33 3.23%2,942 51 3.46%
Home equity784 14 3.56%1,010 21 4.26%
Other1,071 25 4.80%848 24 5.59%
Total consumer loans 3,864 72 3.73%4,800 96 4.01%
Commercial real estate3,068 52 3.36%3,025 63 4.11%
Commercial and industrial1,467 27 3.62%1,836 36 3.88%
Warehouse lending5,900 118 3.98%3,048 62 4.04%
Total commercial loans10,435 197 3.75%7,909 161 4.03%
Total loans held-for-investment14,299 269 3.74%12,709 257 4.02%
Loans with government guarantees2,422 8 0.67%834 7 1.68%
Investment securities 2,166 24 2.20%3,239 40 2.45%
Interest-earning deposits150 — 0.14%192 1 1.00%
Total interest-earning assets26,218 $406 3.09%22,421 $402 3.57%
Other assets2,814 2,416 
Total assets$29,032 $24,837 
Interest-Bearing Liabilities
Retail deposits
Demand deposits$1,768 $— 0.07%$1,693 $4 0.47%
Savings deposits4,015 3 0.14%3,433 14 0.79%
Money market deposits724 — 0.06%701 1 0.22%
Certificates of deposit1,209 5 0.80%2,120 22 2.13%
Total retail deposits7,716 8 0.22%7,947 41 1.03%
Government deposits1,784 2 0.21%1,110 5 0.89%
Wholesale deposits and other1,101 8 1.47%659 7 2.21%
Total interest-bearing deposits10,601 18 0.35%9,716 53 1.09%
Short-term FHLB advances and other2,600 2 0.17%3,659 14 0.79%
Long-term FHLB advances1,200 6 1.03%931 6 1.20%
Other long-term debt424 8 3.68%494 13 5.16%
Total interest-bearing liabilities14,825 34 0.47%14,800 86 1.16%
Noninterest-bearing deposits
Retail deposits and other2,264 1,541 
Custodial deposits (1)6,688 5,499 
Total noninterest-bearing deposits8,952 7,040 
Other liabilities 2,871 1,082 
Stockholders' equity2,384 1,915 
Total liabilities and stockholders' equity$29,032 $24,837 
Net interest-earning assets$11,393 $7,621 
Net interest income$372 $316 
Interest rate spread (2)2.62%2.41%
Net interest margin (3)2.86%2.83%
Ratio of average interest-earning assets to interest-bearing liabilities176.9 %145.9 %
Total average deposits$19,554 $16,755 
a.Approximately 80 percent of custodial deposits from loans subserviced which pay interest is recognized as an offset in net loan administration income.
b.Interest rate spread is the difference between rate of interest earned on interest-earning assets and rate of interest paid on interest-bearing liabilities.
c.Net interest margin is net interest income divided by average interest-earning assets.
13

Earnings Per Share
(Dollars in millions, except share data)
(Unaudited)
Three Months EndedSix Months Ended
June 30,
2021		March 31
2021		June 30,
2020		June 30,
2021		June 30,
2020
Net income $147 $149 $116 $296 $161 
Weighted average common shares outstanding 52,763,868 52,675,562 56,790,642 52,719,959 56,723,254 
Stock-based awards772,801622,241333,064 697,937 433,561 
Weighted average diluted common shares53,536,669 53,297,803 57,123,706 53,417,896 57,156,815 
Basic earnings per common share$2.78 $2.83 $2.04 $5.61 $2.85 
Stock-based awards(0.04)(0.03)(0.01)(0.07)(0.02)
Diluted earnings per common share$2.74 $2.80 $2.03 $5.54 $2.83 

Regulatory Capital - Bancorp
(Dollars in millions)
(Unaudited)
June 30, 2021March 31, 2021December 31, 2020June 30, 2020
AmountRatioAmountRatioAmountRatioAmountRatio
Tier 1 leverage (to adjusted avg. total assets)$2,562 9.21 %$2,423 8.11 %$2,270 7.71 %$2,021 7.76 %
Total adjusted avg. total asset base$27,828 $29,881 $29,444 $26,040 
Tier 1 common equity (to risk weighted assets)$2,322 11.38 %$2,183 10.31 %$2,030 9.15 %$1,781 9.11 %
Tier 1 capital (to risk weighted assets)$2,562 12.56 %$2,423 11.45 %$2,270 10.23 %$2,021 10.33 %
Total capital (to risk weighted assets)$2,882 14.13 %$2,790 13.18 %$2,638 11.89 %$2,214 11.32 %
Risk-weighted asset base$20,399 $21,164 $22,190 $19,562 

Regulatory Capital - Bank
(Dollars in millions)
(Unaudited)
June 30, 2021March 31, 2021December 31, 2020June 30, 2020
AmountRatioAmountRatioAmountRatioAmountRatio
Tier 1 leverage (to adjusted avg. total assets)$2,464 8.88 %$2,523 8.45 %$2,390 8.12 %$1,969 7.57 %
Total adjusted avg. total asset base$27,767 $29,866 $29,437 $26,020 
Tier 1 common equity (to risk weighted assets)$2,464 12.08 %$2,523 11.93 %$2,390 10.77 %$1,969 10.07 %
Tier 1 capital (to risk weighted assets)$2,464 12.08 %$2,523 11.93 %$2,390 10.77 %$1,969 10.07 %
Total capital (to risk weighted assets)$2,634 12.92 %$2,740 12.96 %$2,608 11.75 %$2,161 11.05 %
Risk-weighted asset base$20,395 $21,141 $22,194 $19,559 

Loans Serviced
(Dollars in millions)
(Unaudited)
June 30, 2021March 31, 2021December 31, 2020June 30, 2020
Unpaid Principal Balance (1)Number of accountsUnpaid Principal Balance (1)Number of accountsUnpaid Principal Balance (1)Number of accountsUnpaid Principal Balance (1)Number of accounts
Subserviced for others (2)$211,775 975,467 $197,053 921,126 $178,606 867,799 $174,517 854,693 
Serviced for others (3)34,263 139,029 40,402 160,511 38,026 151,081 29,846 122,779 
Serviced for own loan portfolio (4)9,685 67,988 9,965 66,363 10,079 66,519 9,211 64,142 
Total loans serviced$255,723 1,182,484 $247,420 1,148,000 $226,711 1,085,399 $213,574 1,041,614 
(1)UPB, net of write downs, does not include premiums or discounts.
(2)Loans subserviced for a fee for non-Flagstar owned loans or MSRs. Includes temporary short-term subservicing performed as a result of sales of servicing-released MSRs.
(3)Loans for which Flagstar owns the MSR.
(4)Includes LHFI (residential first mortgage, home equity and other consumer), LHFS (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

14

Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
June 30, 2021March 31, 2021December 31, 2020June 30, 2020
Consumer loans
Residential first mortgage$1,794 12.8 %$1,998 13.4 %$2,266 14.0 %$2,716 18.3 %
Home equity717 5.1 %781 5.2 %856 5.3 %978 6.6 %
Other1,133 8.0 %1,049 7.0 %1,004 6.1 %898 6.1 %
Total consumer loans3,644 25.9 %3,828 25.6 %4,126 25.4 %4,592 31.0 %
Commercial loans
Commercial real estate3,169 22.6 %3,084 20.7 %3,061 18.9 %3,016 20.4 %
Commercial and industrial1,376 9.8 %1,424 9.6 %1,382 8.5 %1,968 13.3 %
Warehouse lending5,863 41.7 %6,551 44.1 %7,658 47.2 %5,232 35.3 %
Total commercial loans10,408 74.1 %11,059 74.4 %12,101 74.6 %10,216 69.0 %
Total loans held-for-investment$14,052 100.0 %$14,887 100.0 %$16,227 100.0 %$14,808 100.0 %

Other Consumer Loans Held-for-Investment
(Dollars in millions)
(Unaudited)
June 30, 2021March 31, 2021December 31, 2020June 30, 2020
Indirect lending$866 76.4 %$791 75.4 %$713 71.0 %$647 72.0 %
Point of sale225 19.9 %214 20.4 %211 21.0 %181 20.2 %
Other42 3.7 %44 4.2 %80 8.0 %70 7.8 %
Total other consumer loans$1,133 100.0 %$1,049 100.0 %$1,004 100.0 %$898 100.0 %

Allowance for Credit Losses
(Dollars in millions)
(Unaudited)
June 30, 2021March 31, 2021June 30, 2020
Residential first mortgage$48 $45 $60 
Home equity17 20 28 
Other38 33 34 
Total consumer loans103 98 122 
Commercial real estate58 84 83 
Commercial and industrial38 55 23 
Warehouse lending 3 4 1 
Total commercial loans99 143 107 
Allowance for loan losses202 241 229 
Reserve for unfunded commitments18 24 21 
Allowance for credit losses$220 $265 $250 

15

Allowance for Credit Losses
(Dollars in millions)
(Unaudited)
Three Months Ended June 30, 2021
Residential First MortgageHome EquityOther ConsumerCommercial Real EstateCommercial and IndustrialWarehouse LendingTotal LHFI Portfolio (1)Unfunded Commitments
Adjusted beginning balance$45 $20 $33 $84 $55 $4 $241 $24 
Provision (benefit) for credit losses:
Loan volume6 (1)2 2 — (1)8 (6)
Economic forecast (2)(1)(1)2 (13)(4)— (17)— 
Credit (3)3 1 1 (14)— — (9)— 
Qualitative factor adjustments (4)(5)(2)— (1)(13)— (21)— 
Charge-offs(1)— (1)— — — (2)— 
Recoveries— 1 — — — — 1 — 
Provision for net charge-offs1 (1)1 — — — 1 — 
Ending allowance balance$48 $17 $38 $58 $38 $3 $202 $18 
(1) Excludes loans carried under the fair value option.
(2) Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter.
(3) Includes changes in the probability of default and severity of default based on current borrower and guarantor characteristics, as well as individually evaluated reserves.
(4) Includes $9 million of unallocated reserves attributed to various portfolios for presentation purposes.

Allowance for Credit Losses
(Dollars in millions)
(Unaudited)

Six Months Ended June 30, 2021
Residential First MortgageHome EquityOther ConsumerCommercial Real EstateCommercial and IndustrialWarehouse LendingTotal LHFI Portfolio (1)Unfunded Commitments
Adjusted beginning balance$49 $25 $39 $84 $51 $4 $252 $28 
Provision (benefit) for credit losses:
Loan volume3 (2)3 3 1 (1)7 (10)
Economic forecast (2)(4)(3)(1)(2)(9)— (19)— 
Credit (3)6 2 1 (22)(1)— (14)— 
Qualitative factor adjustments (4)(6)(5)(4)(5)(4)— (24)— 
Charge-offs(3)— (2)— (1)— (6)— 
Recoveries1 (1)2 — 16 — 18 — 
Provision for net charge-offs2 1 — — (15)— (12)— 
Ending allowance balance$48 $17 $38 $58 $38 $3 $202 $18 
(1) Excludes loans carried under the fair value option.
(2) Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter.
(3) Includes changes in the probability of default and severity of default based on current borrower and guarantor characteristics, as well as individually evaluated reserves.
(4) Includes $9 million of unallocated reserves attributed to various portfolios for presentation purposes.
16


Nonperforming Loans and Assets
(Dollars in millions)
(Unaudited)
June 30,
2021		March 31,
2021		December 31,
2020		June 30,
2021
Nonperforming LHFI$63 $49 $46 $23 
Nonperforming TDRs6 5 4 4 
Nonperforming TDRs at inception but performing for less than six months5 6 6 6 
Total nonperforming LHFI and TDRs (1)74 60 56 33 
Other nonperforming assets, net6 7 8 7 
LHFS9 9 9 7 
Total nonperforming assets$89 $76 $73 $47 
Ratio of nonperforming assets to total assets (2)0.30 %0.23 %0.21 %0.14 %
Ratio of nonperforming LHFI and TDRs to LHFI0.53 %0.40 %0.34 %0.22 %
Ratio of nonperforming assets to LHFI and repossessed assets (2)0.57 %0.45 %0.40 %0.27 %
(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 Due60-89 Days Past DueGreater than 90 days (1)Total Past DueTotal LHFI
June 30, 2021
Consumer loans $8 $4 $55 $67 $3,644 
Commercial loans — — 20 20 10,408 
Total loans$8 $4 $75 $87 $14,052 
March 31, 2021
Consumer loans $10 $5 $42 $57 $3,828 
Commercial loans — — 18 18 11,059 
     Total loans$10 $5 $60 $75 $14,887 
December 31, 2020
Consumer loans $9 $6 $38 $53 $4,126 
Commercial loans 21 — 18 39 12,101 
     Total loans$30 $6 $56 $92 $16,227 
June 30, 2020
Consumer loans$9 $6 $33 $48 $4,592 
Commercial loans— — — — 10,216 
Total loans$9 $6 $33 $48 $14,808 
(1)Includes performing nonaccrual loans that are less than 90 days delinquent and for which interest cannot be accrued.

17

Troubled Debt Restructurings
(Dollars in millions)
(Unaudited)
 TDRs
 PerformingNonperformingTotal
June 30, 2021
Consumer loans$31 $11 $42 
Commercial loans2 — 2 
Total TDR loans$33 $11 $44 
March 31, 2021
Consumer loans$31 $11 $42 
Commercial loans5 — 5 
Total TDR loans$36 $11 $47 
December 31, 2020
Consumer loans$31 $10 $41 
Commercial loans5 — 5 
Total TDR loans$36 $10 $46 
June 30, 2020
Consumer loans$35 $10 $45 
Commercial loans5 — 5 
Total TDR loans$40 $10 $50 


Non-GAAP Reconciliation
(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 loans with government guarantees that have not been repurchased and don't accrue interest 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, adjusted return on average tangible common equity, adjusted return on average tangible common equity, adjusted return on average assets, adjusted HFI loan-to-deposit ratio, adjusted noninterest expense, adjusted income before income taxes, adjusted provision for income taxes, adjusted net income, adjusted basic earnings per share, adjusted diluted earnings per share, adjusted net interest margin and adjusted efficiency ratio 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.
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020
(Dollars in millions, except share data)
Total stockholders' equity$2,498 $2,358 $2,201 $2,195 $1,971 
Less: Goodwill and intangible assets152 155 157 160 164 
Tangible book value$2,346 $2,203 $2,044 $2,035 $1,807 
Number of common shares outstanding 52,862,264 52,752,600 52,656,067 57,150,470 56,943,979 
Tangible book value per share$44.38 $41.77 $38.80 $35.60 $31.74 
Total assets$27,065 $29,449 $31,038 $29,476 $27,468 
Tangible common equity to assets ratio8.67 %7.48 %6.58 %6.90 %6.58 %

18

Adjusted return on average common equity, adjusted return on average tangible common equity and adjusted return on average assets.
Three Months EndedSix Months Ended
June 30,
2021		March 31,
2021		June 30,
2020		June 30,
2021		June 30,
2020
(Dollars in millions)
Net income$147 $149 $116 $296 $161 
Add: Intangible asset amortization, net of tax2 2 3 2 6 
Tangible net income$149 $151 $119 $298 $167 
Total average equity$2,448 $2,319 $1,977 $2,384 $1,915 
Less: Average goodwill and intangible assets153 156 165 155 167 
Total tangible average equity$2,295 $2,163 $1,812 $2,229 $1,748 
Return on average tangible common equity25.92 %27.99 %26.16 %26.89 %19.07 %
Adjustment to remove DOJ settlement expense— %4.98 %— %3.86 %— %
Adjustment for former CEO SERP agreement(2.14)%— %— %(1.10)%— %
Adjustment for merger costs1.89 %— %— %0.97 %— %
Adjusted return on average tangible common equity25.67 %32.97 %26.16 %30.62 %19.07 %
Return on average assets2.09 %1.98 %1.77 %2.04 %1.30 %
Adjustment to remove DOJ— %0.36 %— %0.16 %— %
Adjustment for former CEO SERP settlement agreement(0.11)%— %— %(0.05)%— %
Adjustment for merger costs0.10 %— %— %0.04 %— %
Adjusted return on average assets 2.08 %2.34 %1.77 %2.19 %1.30 %

Adjusted HFI loan-to-deposit ratio.
June 30,
2021		March 31,
2021		December 31,
2020		September 30, 2020June 30,
2020
(Dollars in millions)
Average LHFI$13,688 $14,915 $15,703 $14,839 $13,596 
Less: Average warehouse loans5,410 6,395 6,948 5,697 3,785 
Adjusted average LHFI$8,278 $8,520 $8,755 $9,142 $9,811 
Average deposits$19,070 $20,043 $21,068 $19,561 $17,715 
Less: Average custodial deposits6,188 7,194 8,527 7,347 6,223 
Adjusted average deposits$12,882 $12,849 $12,541 $12,214 $11,492 
HFI loan-to-deposit ratio71.8 %74.4 %74.5 %75.9 %76.7 %
Adjusted HFI loan-to-deposit ratio64.3 %66.3 %69.8 %74.8 %85.4 %

19

Adjusted 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
June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020
(Dollar in millions)
Noninterest expense$289 $347 $314 $301 $293 
Adjustment to remove DOJ settlement expense— 35 — — — 
Adjustment for former CEO SERP agreement(10)— — — — 
Adjustment for merger costs9 — — — — 
Adjusted noninterest expense$290 $312 $314 $301 $293 
Income before income taxes$190 $194 $205 $295 $148 
Adjustment to remove DOJ settlement expense$— $35 $— $— $— 
Adjustment for former CEO SERP agreement(10)— — — — 
Adjustment for merger costs9 — — — — 
Adjusted income before income taxes$189 $229 $205 $295 $148 
Provision for income taxes$43 $45 $51 $73 $32 
Adjustment to remove DOJ settlement expense— (8)— — — 
Adjustment for former CEO SERP agreement2 — — — — 
Adjustment for merger costs(2)— — — — 
Adjusted provision for income taxes$43 $53 $51 $73 $32 
Net income$147 $149 $154 $222 $116 
Adjusted net income$146 $176 $154 $222 $116 
Weighted average common shares outstanding52,763,868 52,675,562 53,912,584 57,032,746 56,790,642 
Weighted average diluted common shares53,536,669 53,297,803 54,343,966 57,379,809 57,123,706 
Adjusted basic earnings per share$2.78 $3.34 $2.86 $3.90 $2.04 
Adjusted diluted earnings per share$2.73 $3.31 $2.83 $3.88 $2.03 
Average interest earning assets$25,269 $27,178 $27,100 $25,738 $23,692 
Net interest margin2.90 %2.82 %2.78 %2.78 %2.86 %
Adjustment to LGG loans available for repurchase0.16 %0.20 %0.20 %0.16 %0.02 %
Adjusted net interest margin3.06 %3.02 %2.98 %2.94 %2.88 %
Efficiency ratio66.6 %67.7 %60.4 %47.9 %54.1 %
Adjustment to remove DOJ settlement expense— %(6.8)%— %— %0.1 %
Adjustment for former CEO SERP agreement1.6 %— %— %— %— %
Adjustment for merger costs(1.4)%— %— %— %— %
Adjusted efficiency ratio66.8 %60.9 %60.4 %47.9 %54.2 %

Twelve Months Ended
June 30,
2021		June 30,
2020
(Dollar in millions)
Average Equity2,285,768,506 1,838,956,372 
Average GW/Intangible156,156,714 168,585,196 
Adjusted Average Equity2,129,611,792 1,670,371,176 
Tangible Net Income681,175,736 293,106,675 
Adjustments for DOJ, CEO SERP, and merger costs (net of tax effect)26,048,207 — 
Adjusted Tangible Net Income655,127,529 293,106,675 
Adjusted return on average common equity31 %18 %
20
fbc_2q21xearningsxpresen
1 2nd Quarter 2021 Flagstar Bancorp, Inc. (NYSE: FBC) Earnings Presentation 2nd Quarter 2021 July 28, 2021

 
2 2nd Quarter 2021Cautionary statements 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.

 
3 2nd Quarter 2021 Unique relationship-based business model • Well diversified loan portfolio, with no outsized exposure to any geography or industry, reflects our disciplined approach to growing the Community Bank while maintaining prudent underwriting standards • Our balance sheet continues to demonstrate it's high credit quality and lower risk-content which provides flexibility to leverage our relationship-based lending strategy to enter new markets and expand current product offerings Strengthen mortgage Grow community banking Highly profitable operations • Delivered strong pre-provision net revenue with all three segments contributing to the results for the quarter which resulted in a continued trend of above average returns on assets and tangible common equity Positioned to thrive in any market • Durable business model well-positioned to succeed--profitability is strong--capital is strong--allowance is strong--and liquidity is strong • Fortress balance sheet and unique capital generation capabilities provides strategic flexibility in prudently managing the growth of the bank • Diverse revenue streams and flexible balance sheet produced strong dependable results in a volatile interest rate environment and we continued to capitalize on the beneficial mortgage market as a result of our multi-channel mortgage business. • Mortgage results demonstrate our ability to deploy our multi-channel origination platform to produce strong returns in a volatile interest rate environment and shrinking mortgage market. • Leveraged our unique capabilities as an RMBS issuer, becoming the 3rd largest issuer in the market during the quarter • Invested in people and technology, expanding retail and generating more business in the most profitable channels Strategic highlights • Servicing business produced consistent results for the quarter, while also continuing to grow the subservicing business • The results highlight our competitive advantage as the subservicing business is housed within a well capitalized Bank with ample liquidity Award winning servicing business

 
4 2nd Quarter 2021 1. References non-GAAP number. Please see reconciliations on pages 43 - 44. 2. Mortgage revenue is defined as net gain on loan sales HFS plus the net return on the MSRs. Solid earnings Growth in community banking and servicing • Net interest margin, excluding the impact from loans with government guarantees that have not been repurchased, was 3.06% for the quarter, up 4 basis points, vs. 1Q21 - Performance driven by the impact of an increase in LHFS yields due to a mix shift to higher yielding products supporting our residential mortgage-backed securities program, higher LHFI yields and lower deposit costs. • Servicing results solid as total loans serviced were approximately 1.2 million loans at period end Mortgage revenue Strong asset quality Robust capital position • Total risk based capital ratio at 14.1%, or 16.3% if the risk-weighting of warehouse loans were adjusted to 50% to reflect the risk weightings of the assets that fully collateralized the loans • Tier 1 leverage ratio at 9.2% and CET1 ratio at 11.4% reflecting strong capital generation coupled with the balance sheet contraction from our warehouse business • Over $840mm, a $190mm increase compared to the prior quarter, of excess total risk-based capital over the minimum level needed to be considered well-capitalized further strengthening the bank • Adjusted net income of $146mm, or $2.73 per diluted share, in 2Q21, and adjusted pre-tax, pre-provision net revenue of $145mm in 2Q21, a decrease of $56mm vs. 1Q21 • Grew TBV per share $2.61, or 6%, to $44.38(1) per share at 06/30/21, compared to $41.77(1) per share at 03/31/21 • Trailing 12 months (TTM) adjusted return on average tangible common equity of 31%, 13% higher compared to the prior TTM • Mortgage revenue(2) of $163mm, down $64mm vs. 1Q21 as margin contracted 49 basis points, and FOALs remained flat - Gain on sale margin of 1.35%, down 49 basis points from 1Q21 levels - Net loss on MSR of $5 million, reflecting an $8 million write off of MSR fair value for those loans with government guarantees that were repurchased during the quarter. Impact of MSR FV write off will be more than offset when the repurchased loans are cured and re-securitized (refer to slide 34 for more details) • Asset quality strong as net charge-offs were only 1 basis point, nonperforming loan ratio remained low, and no commercial loans currently in deferral • Credit reserves of $220mm at 06/30/21, a $45mm decrease from 1Q21, with a coverage ratio of 1.6% of loans HFI, or 2.6% excluding warehouse loans Financial highlights

 
5 2nd Quarter 2021 $mm Observations • Noninterest income decreased $72mm, or 22% - Net gain on loan sale margin decreased 49 basis points, to 1.35%, with FOALs flat. - Net loss on MSR was $5 million, primarily reflecting an $8 million write off of MSR fair value for those LGGs that were repurchased during the quarter. A future gain on sale benefit will be recognized on these repurchased loans as they cure and are re-securitized. Refer to slide 34 for more details. Noninterest income • Net interest income decreased $6mm - Net interest margin, excluding LGG that have not been repurchased, expanded 4 basis points to 3.06%. - Average earning assets declined $1.9 billion, or 7 percent, as warehouse balances were $1.0 billion (15 percent) lower and LHFS declined $0.6 billion. - Average deposits decreased 5%, due to a $1.0bn billion decrease in custodial deposits. Net interest income • Noninterest expense decreased $91mm, or 29%, refer to slide 7 for more details Noninterest expense Quarterly income comparison 2Q21 1Q21 $ Variance % Variance Net interest income $183 $189 ($6) (3%) Net gain on loan sales 168 227 (59) (26%) Loan fees and charges 37 42 (5) (12%) Loan administration income 28 27 1 4% Net return on mortgage servicing rights (5) - (5) (100%) Other noninterest income 24 28 (4) (14%) Total noninterest income 252 324 (72) (22%) Pre-provision total revenue 435 513 (78) (15%) Compensation and benefits 122 144 (22) (15%) Commissions and loan processing expense 73 83 (10) (12%) Other noninterest expenses 95 (1) 85 (1) 10 12% Total noninterest expense 290 (1) 312 (1) (22) (7%) Pretax, pre-provision net revenue 145 201 (56) (28%) (Benefit) provision for credit losses (44) (28) (16) 57% Income before income taxes 189 229 (40) (17%) Provision for income taxes 43 (1) 53 (1) (10) (19%) Net income $146 (1) $176 (1) ($30) (17%) Diluted income per share $2.73 (1) $3.31 (1) -$0.58 (18%) Profitability Net interest margin 2.90% 2.82% 8 bps Net interest margin, excl. LGG repurchase obligation(2) 3.06% 3.02% 4 bps Net gain on loan sales / total revenue 32.7% 44.2% -11.5% Mortgage rate lock commitments, fallout adjusted (3) $12,400 $12,300 $100 1% Mortgage closings (3) $12,800 $13,800 ($1,000) (7%) Net gain on loan sale margin, HFS 1.35% 1.84% (49) bps 1. Non-GAAP number, please see reconciliations on pages 43 and 44. 2. References non-GAAP number as it excludes the impact of $1.8 billion (1Q21) and $1.3 billion (2Q21) of average balance of loans with government guarantees that have not been repurchased and do not accrue interest. Please see reconciliations on pages 43 - 44. 3. Rounded to the nearest hundred million N/M = not meaningful

 
6 2nd Quarter 2021 3.38% 3.16% 3.09% 3.06% 3.12% 5.6 5.6 5.7 7.5 6.9 4.7 4.5 4.2 4.0 3.7 5.1 4.7 4.5 4.5 4.5 3.8 5.7 6.9 6.9 5.4 4.5 5.2 5.8 4.8 4.8 $23.7 $25.7 $27.1 $27.2 $25.3 2Q20 3Q20 4Q20 1Q21 2Q21 LHFS Consumer LHFI CRE and C&I Warehouse Other Total Average interest-earning assets & yields ($bn) 0.57% 0.44% 0.37% 0.31% 0.28% Average liabilities and rate ($bn) Warehouse- $5.9bn (EOP-06/30/21) CRE - $3.2bn (EOP-06/30/21) C&I - $1.4bn (EOP-06/30/21) Net interest income 10.8 11.3 11.5 11.8 11.7 7.0 8.3 9.5 8.2 7.4 4.8 3.5 2.8 4.0 3.6 0.5 0.5 0.6 0.5 0.4 $23.0 $23.6 $24.5 $24.5 $23.1 2Q20 3Q20 4Q20 1Q21 2Q21 Retail Deposits Other Deposits FHLB Borrowings LT Debt 42% 20% 22% 11% 5% LIBOR w/Floor = 0 LIBOR w/Floor > 0 Prime w/Floor = 0 Prime w/Floor > 0 Fixed Rate LIBOR no Floor 47% 8% 33% 10% 1% LIBOR w/Floor = 0 Fixed Rate LIBOR w/Floor > 0 Prime w/Floor = 0 Prime No Floor Prime w/Floor > 0 84% 15% 1% LIBOR w/Floor > 0 Prime w/Floor > 0 Prime No Floor

 
7 2nd Quarter 2021 295 358 232 227 163 38 41 48 42 37 21 26 25 27 28 21 23 27 28 24 $375 $448 $332 $324 $252 2Q20 3Q20 4Q20 1Q21 2Q21 Mortgage Revenue Loan Fees Loan Admin Other Noninterest income ($mm) 116 123 125 144 122 61 72 70 62 51 22 20 24 21 22 94 86 95 85 95 $293 $301 $314 $312 $290 2Q20 3Q20 4Q20 1Q21 2Q21 Comp & Benefits Commissions Loan Processing Other (1) Noninterest expense ($mm) • Noninterest income down $72mm, or 22% - Mortgage revenue decreased $64mm to $163mm, compared to prior quarter. Gain on sale margins decreased 49 basis points, to 1.35 percent for the second quarter 2021, as compared to 1.84 percent for the first quarter 2021. The decrease was primarily driven by competitive factors and channel mix-based margin compression. Net return on MSR was lower primarily due to the $8mm write off of MSR fair value for LGG that were repurchased during the quarter. - Loan fees and charges decreased $5mm primarily due to a 7 percent decrease in mortgage loans closed. Noninterest income • Noninterest expense down $22mm, or 7% - Mortgage expenses decreased $17mm to $131mm for the quarter. The ratio of mortgage noninterest expense to closings – our mortgage expense ratio – was 1.03 percent, a decrease of 4 basis points quarter over quarter, reflecting lower commissions from a decrease in mortgage loan closings. - Non-mortgage expense decreased $6mm reflecting seasonally higher payroll taxes in the prior quarter that did not reoccur. Noninterest expense Noninterest income and expense 1. Non-GAAP number for Q1 2021. Number shown excludes $35 million DOJ benefit. Please see reconciliations on pages 43 - 44.

 
8 2nd Quarter 2021 NPLs and performing TDRs ($mm) 1. Includes early stage delinquencies, defined as 30 to 89 days past due and nonaccrual loans 2. Excludes loans held-for-sale Allowance coverage (% of loans HFI) 1.7% 1.7% 1.7% 1.8% 1.6% 2.6% 3.1% 3.2% 3.1% 2.6% 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 Total Total excl. Warehouse Delinquencies(1) (% of loans HFI) Nonperforming loan and asset ratios Asset quality 0.32% 0.36% 0.56% 0.50% 0.67% 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 0.27% 0.31% 0.40% 0.45% 0.57% 0.22% 0.28% 0.34% 0.40% 0.53% 0.14% 0.17% 0.21% 0.23% 0.30% 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 NPA/LHFI & OREOs (2) NPL & TDRs/LHFI NPA/Total Assets (2) 40 39 36 36 33 33 35 38 42 55 10 18 18 19 $73 $84 $92 $96 $107 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 Performing TDRs Consumer NPLs Commercial NPL

 
9 2nd Quarter 2021 CECL methodology - Forecast • Used 2-year forecasts as of June reflecting current economic conditions continuing to be impacted by COVID weighted 40% base, 30% adverse and 30% growth. • Composite forecast contemplates unemployment ending 2021 at 6% and will continue to recover in 2022. • GDP continues to recover throughout 2021 and returns to pre-COVID levels in 2024. • HPI stays flat throughout 2021. • Qualitative adjustments reflect best estimate of COVID-19 impact on portfolios including estimated impact of government stimulus, forbearance/payment holidays and Fed programs. • CECL day 1 reserve was $140 million, with a coverage ratio of 1.2% of loans HFI, or 1.5% when excluding warehouse loans. Allowance for credit losses ($mm) Current Expected Credit Loss (“CECL”) 1. New loans and aging of existing portfolio 2. COVID impact sectors 3. Changes to macro-economic variables and forecast scenarios 4. Changes to underlying credit conditions

 
10 2nd Quarter 2021 Observations 2Q21 Tier 1 CET-1 Tier 1 Total RBC Leverage to RWA to RWA to RWA 2Q21 9.2% 11.4% 12.6% 14.1% 1Q21 8.1% 10.3% 11.5% 13.2% Flagstar Bancorp Total Risk Based Capital Ratio • Total risk based capital ratio of 14.1% o Total risk based capital ratio would have been 16.3% if the risk-weighting of warehouse loans were adjusted to 50% o Warehouse lending—100% risk weight– has had under $5mm of losses, cumulatively, over the last 12 years o Over 1,000 basis points of total risk based capital attributed to warehouse loans, loans held for sale and loans with government guarantees that have not yet been repurchased • Tier 1 leverage ratio ended the quarter at 9.2% o Almost 900 basis points of tier 1 leverage attributed to warehouse loans, loans held for sale and loans with government guarantees that have not yet been repurchased Capital 11.2% 11.3%

 
11 2nd Quarter 2021 DDA 20% Savings 20% MMDA 3% CD 7% Custodial 36% Government 9% Brokered 5% Deposits and Lending Portfolio and strategy overview • Flagstar gathers deposits from consumers, businesses and select governmental entities – Traditionally, CDs and savings accounts represented the bulk of our branch-based retail depository relationships – Today, we are focused on growing DDA balances with consumer, business banking and commercial relationships – We additionally maintain depository relationships in connection with our mortgage origination and servicing businesses, and with governmental entities – Cost of total deposits(1) equal to 0.18%, down 3 basis points from 0.21% in 1Q21 Total average deposits $19.1bn 1. Total deposits include noninterest bearing deposits. Total average LHFI $13.7bn Total: $19.1 bn 0.18% cost of total deposits(1) • Flagstar’s largest category of earning assets consists of loans held-for-investment which averaged $13.7bn during 2Q21 – Loans to consumers consist of residential first and second mortgage loans, HELOC and other – C&I / CRE lending is an important growth strategy, offering risk diversification and asset sensitivity – Warehouse lending to both originators that sell to Flagstar and those who sell to other investors 1st Mortgage 14% 2nds, HELOC & other 13% Warehouse 39% CRE 23% C&I 11% Total: $13.7 bn 3.75% LHFI yield

 
12 2nd Quarter 2021 Commercial lending Diversified relationship-based approach Commercial Real Estate - $3.2bn (06/30/2021) Commercial & Industrial - $1.4bn (06/30/2021) Financial, insurance & real estate 53% Services 19% Manufacturing 20% Healthcare 1% Distribution 5% Government & education 1% Warehouse - $5.9bn (06/30/2021)Overview • Warehouse lines with approximately 530 active relationships nationwide, of which approximately 56% sell a portion of their loans to Flagstar • Collateralized by mortgage loans being funded which are paid off once the loan is sold • Diversified property types which are primarily income- producing in the normal course of business • Focused on experienced top-tier developers with significant deposit and non-credit product opportunities • Lines of credit and term loans for working capital needs, equipment purchases, and expansion projects • Primarily Michigan based relationships or relationships with national finance companies Warehouse Commercial Real Estate Commercial & Industrial Industry % Advances sold to Flagstar Property type ~41 borrowers sell >75% ~52 borrowers sell 25% - 75% ~440 borrowers sell <25% Other 1% Home Building, 22% Multi Family, 19% Owner Occupied, 11% Retail, 10% Hotel/Motel, 10% Office, 8% Other, 20%

 
13 2nd Quarter 2021Flagstar’s one-stop-shop mortgage model MORTGAGE BANKING & SERVICING Teamwork Customer Satisfaction Risk & Compliance Optimize Results Mortgage Originations Mortgage Servicing Mortgage Operations • Warehouse Lending • MSR and Servicing Advance Lending • Custodial Deposits – fund balance sheet • HELOCs Bank Synergies Sales – multi channel • TPO • Distributed Retail • Direct Lending • People • Products • CRA Secondary & Cap Markets • Pricing & Hedging • Outlets o Sales o Securitizations o Retain on B/S Performing • Growth & Scale • Customer Feedback • Risk and Compliance • Other Revenue Opportunities Default • Risk and compliance • Delinquency Mgt • Forbearance Mgt • Claims process • Minimize losses MSR Creation • Sale and retain subservicing • Retain MSR o Agency o GNMA • Protect asset Mortgage Ops • Service • Multi skilled operators • Risk and Compliance • Variable cost model • Support

 
14 2nd Quarter 2021 35% 33% 36% 34% 49% 5.1 5.8 4.7 4.0 4.7 2.4 2.3 1.8 2.7 2.9 2.0 2.2 1.6 1.4 1.0 3.0 3.7 2.7 2.7 2.1 1.2 1.0 1.2 1.5 1.7 $13.8 $15.0 $12.0 $12.3 $12.4 2Q20 3Q20 4Q20 1Q21 2Q21 Correspondent Bulk Broker Distributed Retail Direct Lending 4.4 5.4 4.6 4.0 5.6 7.8 9.0 8.5 9.8 7.2 $12.2 $14.4 $13.1 $13.8 $12.8 1.20% 0.99% 1.14% 1.07% 1.03% 2Q20 3Q20 4Q20 1Q21 2Q21 Purchase originations Refinance originations Mortgage expense 10.1 12.5 10.2 10.2 9.1 1.2 1.6 2.4 2.5 2.4 0.9 0.3 0.5 1.1 1.3 $12.2 $14.4 $13.1 $13.8 $12.8 2Q20 3Q20 4Q20 1Q21 2Q21 Conventional Jumbo Government Closings by mortgage type ($bn) Net gain on loan sales – revenue and margin Fallout-adjusted locks by channel ($bn) $303 $346 $232 $227 $168 2.19% 2.31% 1.93% 1.84% 1.35% 2Q20 3Q20 4Q20 1Q21 2Q21 Gain on loan sale ($mm) Gain on sale margin (HFS) Closings by purpose and expense ratio ($bn) 30% 31% 33% 34% 34% Retail Mix % Mortgage originations Purchase Mix %

 
15 2nd Quarter 2021 MSR / CET1 (Bancorp) Quarter-end loans serviced (000’s) $ UPB of MSRs sold ($bn) 123 149 151 161 139 855 894 868 921 975 1,043 1,105 1,085 1,148 1,182 2Q20 3Q20 4Q20 1Q21 2Q21 Serviced for Others Subserviced for Others Flagstar Loans HFI 2.6 8.92.6 6.6 $1.0 $0.8 $5.2 $4.0 $15.5 2Q20 3Q20 4Q20 1Q21 2Q21 Bulk Sales Flow Transactions 15% 16% 16% 20% 15% 2Q20 3Q20 4Q20 1Q21 2Q21 Average custodial deposits ($bn) $7.2 $6.2 $7.3 $8.5 $6.2 2Q20 3Q20 4Q20 1Q21 2Q21 Mortgage servicing

 
16 2nd Quarter 2021 Consumer Forbearance as of 06/30/2021 (UPB in $mm) • Significant decrease in new forbearance requests since middle of April 2020 • 12% of residential first lien borrowers who have requested forbearance have made their April, May, and June payments and have not taken advantage of the forbearance option. • Proactive customer outreach to evaluate readiness to return to payment or need for further assistance • Stable early-stage delinquency trends for loans not in forbearance • Approximately $840 million, or 81 percent, of the $1.0 billion of total loans in forbearance within the serviced for own loan portfolio relate to loans with government guarantees in forbearance that were repurchased and carry little credit risk • Excluding the loans with government guarantees, the total loans in forbearance within the serviced for own loan portfolio was only 2.1 percent as a percent of UPB 1. Includes temporary short-term subservicing performed as a result of sales of servicing-released mortgage servicing rights. Includes repossessed assets. 2. Includes LHFI (residential first mortgage, home equity and other consumer), LHFS (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets. Supporting consumer needs UPB Number of  Accounts UPB Number of  Accounts UPB Number of  Accounts % of UPB % of  Accounts % of UPB % of  Accounts Subserviced for others  (1) 211,775 975,467 1,150 6,025 10,617 49,255 5.6% 5.7% 5.0% 5.0% Serviced for others 34,263 139,029 222 1,057 1,782 7,131 5.8% 5.9% 5.2% 5.1% Subtota l 246,038 1,114,496 1,372 7,082 12,399 56,386 5.6% 5.7% 5.0% 5.1% Serviced for own loan portfol io (2) 9,685 67,988 57 369 982 4,244 10.7% 6.8% 10.1% 6.2% Total loans serviced 255,723 1,182,484 1,429 7,451 13,381 60,630 5.8% 5.8% 5.2% 5.1% Loans in Forbearance  not paying  Forbearance Requested Total Population Borrowers making April,  May and June Payments Remaining Borrowers Total Loans in  Forbearance 

 
17 2nd Quarter 2021Appendix Company overview 18 Community banking 21 Mortgage servicing 32 Mortgage originations 35 Financial performance 37 Capital and liquidity 39 Guidance 42 Non-GAAP reconciliation 43

 
18 2nd Quarter 2021 Community banking • Leading Michigan-based bank with a balanced, diversified lending platform • $27.1bn of assets and $18.7bn of deposits • 209k household & over 28k business relationships Mortgage origination • 5th largest bank originator of residential mortgages ($51.7bn during twelve months ended June 30, 2021) • Scalable platform originating business in all channels and all 50 states including 87 retail home lending offices • More than 1,070 correspondent and more than 1,200 broker relationships Corporate Overview • Traded on the NYSE (FBC) • Headquartered in Troy, MI • Market capitalization $2.3bn • Member of the Russell 2000 Index 1. Includes eight home lending offices located in banking branches. 86 Retail home lending Offices(1) 158 Flagstar Bank Branches Mortgage servicing • 6th largest sub-servicer of mortgage loans nationwide • Servicing almost 1.2 million loans as of June 30, 2021 • Efficiently priced deposits from escrow balances Flagstar at a glance COMPANY OVERVIEW

 
19 2nd Quarter 2021Flagstar has a strong executive team Board of Directors John Lewis Chairman Community Banking Chief Financial Officer • CFO since 8/14 • More than 30 years of banking and financial services experience with First Niagara, Huntington and KeyCorp Chief Risk Officer • CRO since 6/14 • Over 35 years of financial services experience with Citizens Republic, Fleet Boston Financial, First Union and Chase Manhattan Mortgage Banking and Servicing • Effective since September 2020 • Previously COO for 7 years May 2013 – Aug 2020 • Formerly a partner of MatlinPatterson Global Advisors and a Senior Director at Zolfo Cooper • Extensive expe- rience in financial management and operations Operations • Joined Flagstar in 1/21 • Over 30 years of experience in the financial services industry, most recently with TD Bank • 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 Karen BuckSteve FigliuoloReggie DavisLee SmithJim Ciroli • More than 35 years of banking experience with Suntrust, Royal Bank of Canada, and Wachovia Chief Audit Officer Meagan Belfinger Sandro DiNello President & CEO Chief Information Officer Jennifer Charters • CIO since 6/18 • Over 25 years of IT and financial services experience with Ally Financial and Accenture COMPANY OVERVIEW Chief Human Resources Officer David Hollis Corporate Responsibility Beth Correa Chief Marketing Officer Matt Allen

 
20 2nd Quarter 2021 Risk management Best-in-class risk management platform with 292 FTEs(1) 1. Does not include 28 FTEs in internal audit as of 06/30/2021. Kristina Janssens Chief Compliance Officer Sandro DiNello President & CEO Board of Directors Steve Figliuolo Chief Risk Officer Risk Committee Enterprise Risk Committee 72 53 13 4 19 58FTEs Regulatory Affairs Chief Credit Officer QC / Appraisal Review MFIU Fraud Investigations Operational Risk Financial Crimes (BSA/AML) Compliance 13 Vendor Management 35 Information Security 25 COMPANY OVERVIEW

 
21 2nd Quarter 2021 $97 $103 $107 $106 $115 $124 $123 $126 $138 $146 $152 $148 $168 $180 $189 $189 $183 $14.0 $14.7 $15.4 $15.4 $16.0 $16.8 $16.4 $16.3 $17.8 $19.0 $20.7 $21.2 $23.6 $24.3 $25.3 $25.4 $23.9 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 Net interest income ($mm) Average earning assets ($bn) 2.77% 2.78% 2.76% 2.76% 2.86% 2.93% 2.99% 3.09% 3.08% 3.05% 2.93% 2.81% 2.88% 2.94% 2.98% 3.02% 3.06% ● 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 Higher net interest income is stabilizing earnings 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 pages 43 - 44. 2. References non-GAAP number as it excludes impact of $0.1 billion(2Q20), $1.4 billion (3Q20), $1.8 billion (4Q20), $1.8 billion (1Q21) and $1.3 billion (2Q21) of average balance of loans with government guarantees that have not been repurchased and do not accrue interest. Please see reconciliations on pages 43 - 44. COMMUNITY BANKING CAGR 31% CAGR 37% Adjusted NIM: (1) (2)(2) (1) (2) (2)(2) (2)

 
22 2nd Quarter 2021Strong market position Source: S&P Global Market Intelligence; Note: Deposit data as of June 30, 2020 and projections based on 2020 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. Key Midwest Markets Median HHI, based on Flagstar’s portfolio. 3. Deposit data is based on High Desert Region of San Bernardino County, CA. projected HHI growth and projected population growth are deposit weighted 4. 2021–2026 CAGR. Key Markets COMMUNITY BANKING Michigan deposit share ● 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 % YoY Overall MI-based Institution Branches Total Share Change 1 Chase 208 $63,501 22% 43% 2 TCF/Huntington 513 39,743 14% 20% 3 Comerica 194 35,492 12% 22% 4 Bank of America 92 29,285 10% 28% 5 Fifth Third 191 21,632 8% 30% 6 PNC 164 21,220 7% 25% 7 1 Flagstar 114 17,184 6% 32% 8 Citizens 82 6,372 2% 10% 9 Independent 66 3,561 1% 18% 10 Mercantile Bank Corp. 43 3,272 1% 25% Top 10 1,667 $241,262 83% 29% 2020 Rank Deposits as of 06/30/2020 ($mm) Deposit Median Proj HHI Proj pop Market $mm % of total mkt share HHI growth (4) growth (4) Oakland County, MI 5,922$ 50.1% 8.1% 86,562$ 10.7% 1.4% Grand Rapids, MI MSA 392 3.3% 1.4% 68,835 10.2% 2.7% Ann Arbor, MI MSA 265 2.2% 2.3% 78,844 12.5% 1.7% Fort Wayne, IN(1) 808 6.8% 6.7% 60,699 9.4% 2.9% Key Midwest Markets(2) 7,387 62.4% 6.0% 82,516 10.6% 1.6% San Bernardino County, CA (3) 658 5.6% 1.0% 71,365 12.8% 3.6% National aggregate 67,761$ 9.0% 2.9% Flagstar Deposits

 
23 2nd Quarter 2021Community banking Quarter-end commercial loan commitments ($bn) Average deposit funding(1) ($bn) 9.7 9.9 10.0 10.0 9.9 1.1 1.4 1.6 1.8 1.8 6.2 7.3 8.5 7.2 6.2 $17.7 $19.6 $21.1 $20.0 $19.1 2Q20 3Q20 4Q20 1Q21 2Q21 Retail Government Custodial deposits Brokered deposits 1. Includes custodial deposits which are included as part of mortgage servicing. 2.9 2.7 2.6 2.7 2.8 4.7 4.6 4.7 4.7 5.0 7.9 9.8 10.4 10.7 10.7 $15.5 $17.1 $17.7 $18.1 $18.5 2Q20 3Q20 4Q20 1Q21 2Q21 Commercial and Industrial Commercial Real Estate Warehouse Average commercial loans ($bn) Average consumer loans ($bn) 2.0 1.7 1.5 1.5 1.5 3.1 3.0 3.1 3.0 3.1 3.8 5.7 6.9 6.4 5.4 $8.9 $10.4 $11.5 $10.9 $10.0 2Q20 3Q20 4Q20 1Q21 2Q21 Commercial and Industrial Commercial Real Estate Warehouse 2.8 2.6 2.3 2.1 1.9 1.9 1.9 1.9 1.9 1.8 $4.7 $4.5 $4.2 $4.0 $3.7 2Q20 3Q20 4Q20 1Q21 2Q21 Residential First Mortgages Other Consumer Loans COMMUNITY BANKING

 
24 2nd Quarter 2021 • Average LTV ~53% and DSC ~2.3% • 61% LIBOR / 34% Prime Rate / 5% Fixed Rate • 97% of portfolio has Prime and LIBOR rate floors at or greater than 0% • Shared National Credits ~6% of portfolio Commercial Real Estate ($bn) Commercial real estate portfolio detail Portfolio Characteristics State Breakdown (by collateral location) COMMUNITY BANKING Property Breakdown Michigan 41% Texas 12% California 10% Ohio 6% Florida 4% Other 27% Home Building 22% Multi Family 19% Owner Occupied 11% Retail 10% Hotel/Motel 10% Office 8% Other 20% NBV Commitment %Utilization Home Builder 0.7$                           1.8$                           39.4% Owner Occupied 0.3                              0.4                              97.3% Multi Family 0.6                              0.9                              62.8% Retail 0.3                              0.3                              87.8% Office 0.2                              0.3                              87.4% Hotel/Motel 0.3                              0.3                              93.9% Senior Living Facility 0.2                              0.3                              73.2% Industrial 0.1                              0.2                              64.3% Parking Garage/Lot 0.1                              0.1                              99.9% All Other 0.2                              0.3                              75.8% Total CRE 3.2$                           4.9$                           64.3%

 
25 2nd Quarter 2021 Commercial & Industrial ($bn) Commercial and industrial portfolio detail Portfolio Characteristics State Breakdown COMMUNITY BANKING MI 35% CA 5% OH 4% IN 2% WI 2% FL 11% MN 7% NY 6% TX 6%SC 5% Other 19% • 80% LIBOR / 8% Fixed Rate / 12% Prime Rate • Approximately 91% of portfolio has Prime and LIBOR rate floors at or greater than 0% • Shared national credits ~46% of portfolio Industry Breakdown Financial, insurance & real estate 53% Services 22% Manufacturing 20% Healthcare 1% Distribution 5% Government & education 1% Other 2% NBV Commitment % Utilization Financial & Insurance 0.5$             1.0$             51.1% Services 0.3               0.4               59.5% Manufacturing 0.3               0.4               66.5% Home Builder Finance 0.1               0.5               28.7% Rental & Leasing 0.1               0.3               33.6% All Other 0.1               0.2               45.4% Total C&I 1.4$             2.8$             48.6%

 
26 2nd Quarter 2021Allowance for credit losses COMMUNITY BANKING 1. Includes reserve for unfunded commitment of $24 million and $18 million at 03/31/21 and 06/30/21, respectively. March 31, 2021 June 30, 2021 Amount(1) % of LHFI Amount(1) % of LHFI ($ in millions) Consumer: Residential First Mortgage $ 45 2.3% $ 48 2.7% Home Equity 20 2.6% 17 2.4% Other Consumer 34 3.2% 39 3.4% Total Consumer 99 2.6% 104 2.9% Commercial: Commercial Real Estate 100 3.2% 69 2.2% Commercial and Industrial 60 4.2% 42 3.1% Warehouse Lending 6 0.1% 5 0.1% Total Commercial 166 1.5% 116 1.1% Total Credit Reserve $ 265 1.8% $ 220 1.6% Total Credit Reserve Excluding Warehouse $ 259 3.1% $ 215 2.6%

 
27 2nd Quarter 2021 $1.0 $1.1 $1.2 $1.1 29 22 17 17 1 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21  NCO  ($mm)  NCO Rate  (bps) 5.2 7.6 7.7 6.6 5.9 2.7 2.2 2.8 4.2 4.5 $7.9 $9.8 $10.5 $10.7 $10.4 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 Outstandings Unfunded Commitments FBC warehouse loan commitments ($bn) Warehouse lending COMMUNITY BANKING Lenders ranked by commitments ($mm) Source: Inside Mortgage Finance as of June 2021 ● National relationship-based lending platform ● Attractive asset class with good spreads and low credit risk ● Flagstar is well positioned to hold market share, leveraging relationships in complementary lines of business, including home builder finance and mortgage originations ● Collateral Breakdown: Agency & Conventional 65.2% Government 16.1% / Jumbo 17.0% / Non-QM 1.7% YOY Rank Institution Growth Total Share 1 JPMorgan Chase 8% $20,500 15% 2 Flagstar Bancorp(1) 72% 10,724 8% 3 TIAA FSB 70% 10,700 8% 4 First Horizon 0% 9,403 7% 5 Truist Bank 65% 9,400 7% 6 Texas Capital 19% 9,009 7% 7 Merchants Bank 5% 6,831 5% 8 Wells Fargo 12% 6,700 5% 9 Customers Bank 46% 5,700 4% 10 U.S. Bancorp 58% 5,600 4% Top 10 27% $94,567 70% 1Q21 Net charge-offs 6 bps annual loss rate since 2006

 
28 2nd Quarter 2021Home builder finance COMMUNITY BANKING Home builder loan commitments(1) ($mm) ● National relationship-based lending platform launched in 1Q16 - Attractive asset class with good spreads (~375 bps) - Meaningful cross-sell opportunities including warehouse loans, commercial deposits and purchase originations ● Flagstar is well positioned - Focused on markets with strong housing fundamentals and higher growth potential - We have direct relationships with 10 of the top 10 and do business with 64 of the top 100 builders nationwide (85 of the top 200) through June. Home builder finance footprint Overview $957 $852 $786 $771 $843 $1,065 $1,161 $1,206 $1,231 $1,415 $2,022 $2,013 $1,992 $2,002 $2,258 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 Unpaid principal balance Unused Tightening housing supply - 2 4 6 8 10 12 0 1 2 3 4 5 6 7 8 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 Existing home sales (mm) Months supply of existing homes for sale Source: Bloomberg (through 9/30/20) 1. Commitments are for loans classified as commercial real estate and commercial & industrial. (left axis) (right axis)

 
29 2nd Quarter 2021 • 78 borrowers, average UPB of $10 million and average commitment of $20 million • Total SNC breakdown: C&I ~73% / CRE ~21% / Warehouse ~6% • We are the lead bank in 16% of these deals and this percentage continues to grow • No nonperforming loans as of 06/30/21 • Loans totaling $34 million are rated as special mention or substandard • Average UPB of ~$12 million per loan • Loans totaling $17 million of commitments classified as nonperforming • Loans totaling $79 million of commitments are rated as special mention or substandard • SNCs comprised $140 million of total leveraged loan UPB Leverage lending commentary Leverage lending and SNCs Shared national credits “SNCs” commentary Portfolio Composition - $0.3bn UPB (06/30/21) COMMUNITY BANKING Portfolio Composition - $0.8bn UPB (06/30/21) Manufacturing 53% Financials & Insurance 21% Services 22% Distribution 4% Distribution 3% Financial & Insurance 34% Healthcare 1% Manufacturing 11% Rental & Leasing 17% Services 29% Warehouse 5%

 
30 2nd Quarter 2021 Commercial Exposure - $1.0 billion, 7.0% of LHFI $120 million / 0.9% of loans No loans in deferral $10 million in nonperforming loans Leisure & Entertainment Includes restaurants, churches, theatres, etc. $305 million / 2.2% of loans (22 loans) No loans in deferral or classified as nonperforming Hotel Marriott, Hilton, IHG and Hyatt flagship hotels comprise 70% of portfolio $177 million / 1.3% of loans (19 loans) No loans in deferral or classified as nonperforming Senior Housing Geographically diverse; facilities in 8 different metro areas. All have recourse to strong borrowers $82 million UPB / 0.6% of loans No loans in deferral or classified as nonperforming Automotive Manufacturing, automotive suppliers $9 million / 0.1% of loans No loans in deferral or classified as nonperforming Healthcare Hospitals, HMO Medical Centers $296 million / 2.1% of loans (48 loans) No loans in deferral or classified as nonperforming Retail ~ 90% in footprint; 75% are neighborhood centers or single-tenant properties Commercial & Industrial Loans Commercial Real Estate Loans COVID-19 impacted industry exposure

 
31 2nd Quarter 2021COVID Impacted Sectors – CRE 59% 16% 16% 9% Neighborhood Centers Single Tenant Shopping Centers Other $296M as of June 30, 2021 ($mm) Hotel UPB(5) (as of June 30, 2021) ($mm) 13% 20% 18% 49% Luxury Upper Upscale Upper Midscale Upscale 5. Classifications as determined by STR Chain Scales Retail Descriptions 1. Retail centers < 100,000 sq. ft. – generally anchored by grocery stores 2. Single Tenant – Hardware stores 56% / Pharmacies 40% 3. Power centers 4. Other – includes one regional mall with $16mm in UPB ~70% of balances are from Marriott, Hilton, IHG, and Hyatt flagged franchises Retail UPB (as of June 30, 2021) ($mm) $305M(1) (2) (3) (4) COMMUNITY BANKING ($mm) UPB % of LHFI Median Loan Size Top 10 Borrowers Total Borrowers SNCs Footprint Exposure Construction $ Deferred $ Past Due $ NPLs Watch DSC LTV Occ Hotel 305$ 2.2% 9.5$ 75% 22 18$ 64% 38% -$ -$ -$ 27% 1.4 60% 61% Retail 296 2.1% 1.6 80% 48 14 90% 2% - - - 0% 1.7 48% 95% Senior Housing 177 1.3% 8.5 71% 19 - 21% 45% - - - 0% 1.7 62% 84% Total 779$ 5.5% 6.3$ 89 31$ -$ -$ -$ 11% Portfolio Characteristics Credit Quality Credit Metrics (Pre-COVID)

 
32 2nd Quarter 2021 Freddie 39% Fannie 34% GNMA 25% Private 2% By Investor MSR portfolio MSR portfolio characteristics (% UPB)MSR portfolio statistics Measure ($mm) 3/31/2021 6/30/2021 Difference Unpaid principal balance $40,401 $34,263 ($6,138) Fair value of MSR $428 $342 ($86) Capitalized rate (% of UPB) 1.06% 1.00% (6) bps Multiple 3.272 3.141 (0.131) Note rate 3.51% 3.45% (6) bps Service fee 0.32% 0.32% 0 bps Average Measure ($000) UPB per loan $252 $246 ($6) FICO 731 730 (1) Loan to value 74.84% 74.06% (0) Net return (loss) on mortgage servicing rights ($mm) $ Return 2Q20 3Q20 4Q20 1Q21 2Q21 Net hedged profit (loss) $1 $2 $3 $2 $4 Carry on asset 18 30 30 34 27 Run-off (20) (23) (34) (39) (28) EBO MSR Write-off - - - (2) (8) Gross return on the MSR ($) ($0) $9 ($1) ($5) ($5) Sale transaction & P/L (3) 3 1 5 0 Model changes (5) - - - - Net return on the MSR ($) ($8) $12 ($0) ($0) ($5) Average MSR ($) $242 $292 $347 $369 $396 Net return on the MSR (%) 9.6% 16.5% -0.2% 0.0% -4.9% MORTGAGE SERVICING 2021 29% 2020 41% 2019 11% 2018 & prior 19% By Vintage

 
33 2nd Quarter 2021 ($mm) 2Q20 3Q20 4Q20 1Q21 2Q21 Net interest income Interest income (FTP) 12$ 7$ 8$ 6$ 5$ Interest expense on custodial deposits (1) (8) (2) (3) (2) (2) Total net interest income 4 5 5 4 3 Noninterest income(2) Service fee income 35 39 37 36 36 Ancillary fee income 18 15 23 18 19 Late fee income 2 2 2 4 4 Total noninterest income 55 56 62 57 59 Noninterest expense(3) (38) (41) (47) (46) (45) Earnings before Tax 21$ 20$ 20$ 16$ 17$ Average Custodial Deposits ($bn) 6.2$ 7.3$ 8.5$ 7.2$ 6.2$ Average Loans Serviced for Others (000's) 1,062 1,074 1,095 1,117 1,165 Servicing Servicing Profitability MORTGAGE SERVICING 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.

 
34 2nd Quarter 2021 LGG end of period balance ($mm) General Overview • GNMA Loans are eligible to be repurchased, at our option, after no payment has been made for 90 days (whether due to delinquency or forbearance). When eligible to be repurchased, accounting rules require us to record a loan and a related liability. • Loans eligible to be repurchased are limited to GNMA loans for which we own the MSR; not eligible to repurchase loans we are subservicing • Prior to repurchasing the loan, no interest is earned, we continue to make advances and there is limited credit risk • All LGG loans, including loans eligible to be repurchased, are a 20% risk-weighted asset • Drag on capital ratios and NIM due to inflated balances created by loans eligible for repurchase; no actual income risk Impact/Opportunity • $1.3 billion GNMA loans (15%) are in forbearance as of 06/30/2021, of which $1.0 billion are recognized on the balance sheet • Repurchased approximately $864 million of eligible GNMA forbearance loans during Q2 which resulted in an $8.3 million write off (loss) of the associated MSR ($1.8 million impact in 1Q21) • We anticipate the loans on our balance that have been repurchased, or will be in the future, will be re-securitized for expected gains of approximately $100+ million over the course of future quarters. LGG Overview Loans with government guarantees (LGG) 724 717 666 677 1,237 1,067 1,783 1,850 1,780 989 $1,791 $2,500 $2,516 $2,457 $2,226 6/30/2020 9/30/2020 12/31/2020 03/31/2021 06/30/2021 Repurchased Loans Loans Eligible for Repurchase $14,971 $13,768 $12,162 $10,592 $8,724 6/30/2020 9/30/2020 12/31/2020 03/31/2021 06/30/2021 GNMA MSR UPB end of period ($mm) MORTGAGE SERVICING

 
35 2nd Quarter 2021 • 2.6% market share with #11 national ranking(1) • More than 1,050 correspondent partners • Top 10 relationships account for 11% of overall correspondent volume • Warehouse lines with 306 correspondent relationships MORTGAGE ORIGINATIONS Residential mortgage originations by channel ($bn) BrokerCorrespondent Retail 3.9 5.9 5.0 4.9 4.3 2.7 2.4 1.6 2.5 3.1 2Q20 3Q20 4Q20 1Q21 2Q21 Other Bulk $8.3 $6.6 $7.4 $1.9 $1.8 $2.2 $1.7 $1.1 2Q20 3Q20 4Q20 1Q21 2Q21 Broker • 0.9% market share with #16 national ranking(1) • 1,240 broker relationships • Top 10 relationships account for 17% of overall brokerage volume 1. Data source: As reported by Inside Mortgage Finance for published 6/30/2021. • 86 retail locations in 28 states • Direct Lending is 41% of retail volume $6.6 National distribution through multiple channels $7.4 2.7 3.2 3.2 3.0 2.4 1.0 1.1 1.1 1.6 1.9 $3.7 $4.3 $4.3 $4.6 $4.3 2Q20 3Q20 4Q20 1Q21 2Q21 Distributed Retail Direct Lending

 
36 2nd Quarter 2021 1. 4 2. 1 2. 3 1. 7 1. 4 1. 6 1. 6 3. 2 2. 5 2. 0 3. 9 4. 7 6. 2 4. 3 4. 5 3. 9 3. 3 2. 0 2. 6 2. 2 1. 8 2. 5 2. 2 1. 5 1. 9 2. 3 1. 9 1. 8 2. 3 4. 2 3. 9 2. 7 2. 4 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 F 20 22 F 20 23 F $ in tr ill io ns Flagstar has a scalable origination platform that drives profitability in almost any mortgage origination market MORTGAGE ORIGINATIONS Source: Mortgage Bankers Association (MBA) for actual periods and a blended average of forecast by Fannie Mae (7/19/2021), Freddie Mac (7/15/2021) and MBA (7/21/2021). 1. Adjusted for historical inflation as reported by Bureau of Labor Statistics (2020 = 100). 2. Adjusted for population growth as reported by the U.S. Census Bureau (2020 = 100). U.S. residential mortgage origination market (historical and projected volumes) Nominal ($) Real(1)($) Adjusted(2)($) 0.6 0.9 1.0 0.8 0.6 0.8 0.8 1.7 1.4 1.1 2.2 2.9 3.9 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 1.7 2.3 4.1 3.6 2.6 2.3 1.1 1.6 1.8 1.3 1.1 1.3 1.3 2.6 2.1 1.7 3.3 4.1 5.4 3.8 4.0 3.5 3.0 1.9 2.4 2.0 1.7 2.3 2.1 1.4 1.8 2.2 1.9 1.7 2.3 4.1 3.6 2.6 2.3 1.4 2.1 2.3 1.7 1.4 1.6 1.6 3.2 2.5 2.0 3.9 4.7 6.2 4.3 4.5 3.9 3.3 2.0 2.6 2.2 1.8 2.5 2.2 1.5 1.9 2.3 1.9 1.8 2.3 4.1 3.6 2.6 2.3

 
37 2nd Quarter 2021 ● Solid growth in banking and subservicing has created more stable earnings ● Focus on efficiency and expense management Financial performance Revenue Composition and Earnings Metrics Revenue (millions) 6/30/2020 6/30/2021 Percentage  of Revenue Percentage  Increase Community Banking 263$            353$            35% 34% Mortgage Servicing 108               124               12% 15% Subtotal 371               477               47% 29% Mortgage Origination 515               534               52% 4% Other(1) (35)                8                    1% N/M Total 851$             1,019$         100% 20% Financial Metrics Adjusted Diluted Earnings per Share(1) 2.83$            6.04$            113% Adjusted Return on Average Assets(1) 1.3% 2.2% 89 bps Adjusted ROATCE(1) 19.1% 30.7% 1,152 bps FINANCIAL PERFORMANCE 1. Non-GAAP number for 2020 and 2021. Please see reconciliations on pages 43 - 44.

 
38 2nd Quarter 2021 Quarterly noninterest expense ($mm) and efficiency ratio $293 $301 $314 $312 $289 54% 48% 60% 61% 67% 2Q20 3Q20 4Q20 1Q21 2Q21 Noninterest expense Efficiency ratio (4) (5) Quarterly results Quarterly revenue ($mm) Quarterly adjusted noninterest expense ($mm) (5) (6) (3) 185 210 236 216 208 360 422 290 296 226 $546 $632 $526 $513 $434 2Q20 3Q20 4Q20 1Q21 2Q21 Non-Mortgage Revenue Mortgage Revenue (1) (2) (3)(1) (2) 1. Includes Servicing segment 2. Includes direct allocations. 3. As a percentage of that period’s close volume 4. Non-GAAP number for 1Q21 and 2Q21. Please see reconciliations on pages 43 and 44. 5. Adjusted Efficiency Ratio for 1Q21 and 2Q21. Please see reconciliations on pages 43 and 44. FINANCIAL PERFORMANCE 148 158 165 164 159 145 143 149 148 131 $293 $301 $314 $312 $290 1.20% 0.99% 1.14% 1.07% 1.03% 2Q20 3Q20 4Q20 1Q21 2Q21 Non-Mortgage NIE Mortgage NIE Mortgage expense (1) (2) ( )

 
39 2nd Quarter 2021Balance sheet composition CAPITAL AND LIQUIDITY 9% Other liabilities 1% Other long-term debt Liabilities & Equity 2Q21 average balance sheet (%) Assets Attractive relationship lending with very low delinquencies Primarily low risk, stable assets (FHLB stock, BOLI, premises & equipment, deferred tax asset, etc.) ~68% of assets are in lower risk-content assets: cash, marketable securities, warehouse loans, loans held-for-sale and freshly-originated, high-FICO conforming mortgages underwritten by Flagstar 8% Other assets 19% Warehouse loans 25% Loans held-for-sale 23% Commercial loans and Other LHFI (1) Efficiently funds loans held-for-sale and warehouse loans 46% Deposits excluding custodial deposits 13% FHLB borrowings 9% Equity 22% Custodial deposits 15% Mortgage loans held-for-investment 8% Agency MBS 1% Cash 1% MSR 1) Other LHFI includes home equity and other consumer loans.

 
40 2nd Quarter 2021Liquidity and funding 85% 75% 70% 66% 64% 2Q20 3Q20 4Q20 1Q21 2Q21 1. Adjusted HFI loan-to-deposit ratio is total average loans HFI (excluding warehouse loans) expressed as a percentage of total average deposits (excluding custodial deposits). Please see non-GAAP reconciliations on pages 43 - 44. 2. Cash, investment securities and FHLB borrowing capacity expressed as a percentage of total assets. Adjusted HFI loan-to-deposit ratio(1) Commentary • Flagstar has invested significantly in building its Community Bank, which provides attractive core deposit funding for its balance sheet • These retail deposits are supplemented by custodial deposits from the servicing business • Much of the remainder of Flagstar’s balance sheet is self- funding given it is eligible collateral for FHLB advances (which provides significant liquidity capacity) • Over $1.6 billion of additional borrowing capacity through the discount window Liquidity ratio(2) 7% 8% 11% 14% 18% 23% 1Q21 2Q21 Cash & investment securities FHLB borrowing capacity CAPITAL AND LIQUIDITY

 
41 2nd Quarter 2021 • Flagstar’s net interest income remains asset sensitive and stable Interest rate risk CAPITAL AND LIQUIDITY Earnings at Risk* * All shocks are parallel and instantaneous

 
42 2nd Quarter 2021Earnings guidance(1) 1) See cautionary statements on slide 2. Net interest income • Net interest income and net interest margin will be flat Noninterest income • Gain on sale revenue between $160 million and $180 million, includes estimated impact from the elimination of the FHFA adverse market refinance fee • Net return on MSR estimated to break even as normal returns will be offset by the write-off of MSR fair value as we continue to repurchase eligible loans with government guarantees. Noninterest expense • Noninterest expense of $285 million to $295 million for the third quarter of 2021 3rd Quarter 2021 Outlook

 
43 2nd Quarter 2021 Adjusted ROA, ROE and ROTCE 6 Months ended June 30, 2021 6 Months ended June 30, 2020 Return on Average Assets 2.0% 1.3% Adjustment to remove DOJ benefit (net of tax) 0.2% 0.0% Adjustment for CEO SERP -0.1% 0.0% Adjustment for merger costs 0.0% 0.0% Adjusted return on average assets 2.2% 1.3% Return on average tangible common equity 26.9% 19.1% Adjustment to remove DOJ benefit (net of tax) 3.9% 0.0% Adjustment for CEO SERP -1.1% 0.0% Adjustment for merger costs 1.0% 0.0% Adjusted return on tangible commmon equity 30.7% 19.1% As of June 30, 2021 As of March 31, 2021 Total stockholders' equity 2,498$ 2,358$ Goodwill and intangible assets 152 155 Tangible book value 2,346$ 2,203$ Number of common shares outstanding 52,862,264 52,752,600 Tangible book value per share 44.38$ 41.77$ As of June 30, 2021 As of March 31, 2021 As of December 31, 2020 As of September 30, 2020 As of June 30, 2020 Average LHFI 13,688$ 14,915$ 15,703$ 14,839$ 13,596$ Less: Average warehouse loans 5,410 6,395 6,948 5,697 3,785 Adjusted average LHFI 8,278$ 8,520$ 8,755$ 9,142$ 9,811$ Average deposits 19,070$ 20,043$ 21,068$ 19,561$ 17,715$ Less: Average custodial deposits 6,188 7,194 8,527 7,347 6,223 Adjusted average deposits 12,882$ 12,849$ 12,541$ 12,214$ 11,492$ HFI loan-to-deposit ratio 71.8% 74.4% 74.5% 75.9% 76.7% Adjusted HFI loan-to-deposit ratio 64.3% 66.3% 69.8% 74.8% 85.4% Tangible Book Value Per Share and Tangible Common Equity to Assets Ratio Adjusted HFI Loan-to-Deposit Ratio Non-GAAP reconciliation NON-GAAP RECONCILIATION $mm

 
44 2nd Quarter 2021Non-GAAP reconciliation (continued) NON-GAAP RECONCILIATION $mm 6 Months ended June 30, 2021 3 Months ended June 30, 2021 3 Months ended March 31, 2021 3 Months ended December 31, 2018 Net interest income 152$ Adjustment to remove hedging gains (29) Adjusted net interest income 123$ Noninterest expense 636$ 289$ 347$ Adjustment to remove DOJ settlement expense 35 - 35 Adjustment for former CEO SERP agreement (10) (10) - Adjustment for merger costs 9 9 - Adjusted noninterest expense 602$ 290$ 312$ Income before income taxes 384$ 190$ 194$ Adjustment to remove DOJ settlement expense 35 - 35 Adjustment for former CEO SERP agreement (10) (10) - Adjustment for merger costs 9 9 - Adjusted income before income taxes 418$ 189$ 229$ Provision for income taxes 88$ 43$ 45$ Adjustment to remove DOJ settlement expense (8) - (8) Adjustment for former CEO SERP agreement 2 2 - Adjustment for merger costs (2) (2) - Adjusted provision for income taxes 96$ 43$ 53$ Net Income 296$ 147$ 149$ Adjusted net income 322$ 146$ 176$ Weighted average common shares outstanding 52,719,959 52,763,868 52,675,562 Weighted average diluted common shares 53,417,896 53,536,669 53,297,803 Adjusted basic earnings per share 6.12$ 2.78$ 3.34$ Adjusted diluted earnings per share 6.04$ 2.73$ 3.31$ Adjusted Total Revenues and Noninterest Expense 3 Months ended June 30, 2021 3 Months ended March 31, 2021 3 Months ended December 31, 2020 3 Months ended September 30, 2020 Net interest margin 2.90% 2.82% 2.78% 2.78% Adjustment to LGG loans available for repurchase 0.16% 0.20% 0.20% 0.16% Adjusted net interest margin 3.06% 3.02% 2.98% 2.94% Adjusted Net Interest Margin

 
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