8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):July 26, 2016

(Exact name of registrant as specified in its charter)

Michigan	1-16577	38-3150651
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
5151 Corporate Drive, Troy, Michigan 48098
(Address of principal executive offices) (Zip Code)

(248) 312-2000

(Registrant's telephone number, including area code)

 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On July 26, 2016, Flagstar Bancorp, Inc. (the "Company") issued a press release regarding its preliminary results of operations and financial condition for the three months ended June 30, 2016. The text of the press release is furnished as Exhibit 99.1 to this report. The Company will include final financial statements and additional analysis for the three and six months ended June 30, 2016 as part of its Quarterly Report on Form 10-Q.

On July 26, 2016, the Company will hold a conference call to review second quarter 2016 earnings. A copy of the slide presentation to be used by the Company on the conference call is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits

Exhibits
99.1	Press release of Flagstar Bancorp, Inc. dated July 26, 2016
99.2	Flagstar Bancorp, Inc. Conference Call Presentation Slides - Earnings Presentation Second Quarter 2016

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	FLAGSTAR BANCORP, INC.
Dated: July 26, 2016		By:	/s/    James K. Ciroli
			James K. Ciroli
			Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	Press release of Flagstar Bancorp, Inc. dated July 26, 2016
99.2	Flagstar Bancorp, Inc. Conference Call Presentation Slides - Earnings Presentation Second Quarter 2016

EX-99.1

EXHIBIT 99.1

NEWS RELEASE

For more information, contact:

David L. Urban

david.urban@flagstar.com

(248) 312-5970

Flagstar Reports Second Quarter 2016 Net Income of $47 million, or $0.66 per Diluted Share

Company posts solid earnings gain with significant operating leverage

Key Highlights - Second Quarter 2016

• Net income per diluted share increased $0.12, or 22 percent, from first quarter 2016.

• Positive operating leverage, led by 11 percent rise in revenue versus 2 percent increase in expenses against prior quarter.

• Net gain on loan sales rose $15 million, or 20 percent, on higher fallout-adjusted locks and wider gain on sale margin.

• Lower nonperforming loans and consumer delinquencies on continuing strong credit performance.

• Tier 1 leverage was 11.6 percent and remains strong at 8.6 percent when adjusted for TARP redemption.

TROY, Mich., July 26, 2016 - Flagstar Bancorp, Inc. (NYSE:FBC), the holding company for Flagstar Bank, FSB, today reported second quarter 2016 net income of $47 million, or $0.66 per diluted share, as compared to $39 million in the first quarter 2016, or $0.54 per diluted share, and net income of $46 million in the second quarter 2015, or $0.68 per diluted share.

"We’re happy to report another solid quarter," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "Net income rose as mortgage volume increased 18 percent and net interest income remained relatively stable. We continued to rotate our lower spread consumer assets into relationship-focused commercial loans and this quarter marks the first time that our average commercial loans held for investment exceeded our consumer loans held for investment. Asset quality improved again, with nonperforming loans declining 17 percent to $44 million. Yet, while total revenue increased 11 percent, expenses increased only 2 percent, reflecting the franchise's operating leverage. As a result, our efficiency ratio improved to 68 percent and our return on assets was 1.4 percent.

"As we previously announced, we received regulatory approval to redeem our TARP preferred shares on June 23, 2016. Given the notice requirement prior to redemption, we will be redeeming these shares in full by the

1

end of July. We’ve replaced this high-cost funding with senior notes and other bank-level sources of funds that cost, on average, only one-third of the TARP preferred on an after-tax basis. After this redemption, our regulatory capital remains strong on an adjusted basis as of June 30, 2016, with Tier 1 leverage at 8.59 percent and Common Equity Tier 1 at 12.17 percent.

"Our business model has been tested over the past few quarters, and it has generated strong earnings despite volatility in the interest rate, regulatory and mortgage environment. More recently, low rates have created an opportunity for us to demonstrate the power and profitability of our mortgage business. We believe we have built a solid business model that will continue to be successful."

Second Quarter 2016 Highlights:

Income Statement Highlights
	Three Months Ended
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
	(Dollars in millions)
Consolidated Statements of Income
Net interest income	$	77		$	79		$	76		$	73		$	73
Provision (benefit) for loan losses	(3		)	(13		)	(1		)	(1		)	(13		)
Noninterest income	128			105			97			128			126
Noninterest expense	139			137			129			131			138
Income before income taxes	69			60			45			71			74
Provision for income taxes	22			21			12			24			28
Net income	$	47		$	39		$	33		$	47		$	46
Income per share:
Basic	$	0.67		$	0.56		$	0.45		$	0.70		$	0.69
Diluted	$	0.66		$	0.54		$	0.44		$	0.69		$	0.68

Key Ratios
	Three Months Ended										Change (bps)
	June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015		June 30, 2015		Seq	Yr/Yr
Net interest margin	2.63	%	2.66	%	2.69	%	2.75	%	2.79	%	(3)	(16)
Return on average assets	1.4	%	1.2	%	1.0	%	1.5	%	1.6	%	20	(20)
Return on average equity	11.5	%	10.1	%	8.6	%	12.4	%	12.7	%	140	(120)
Return on average common equity	13.8	%	12.2	%	10.4	%	15.1	%	15.6	%	160	(180)

Balance Sheet Highlights
	Three Months Ended										% Change
	June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015		June 30, 2015		Seq		Yr/Yr
	(Dollars in millions)
Average Balance Sheet Data
Average interest-earning assets	$	11,639	$	11,871	$	11,240	$	10,693	$	10,367	(2	)%	12	%
Average loans held-for-sale	2,884		2,909		2,484		2,200		2,218		(1	)%	30	%
Average loans held-for-investment	5,569		5,668		5,642		5,412		4,938		(2	)%	13	%
Average total deposits	8,631		8,050		8,132		8,260		7,736		7	%	12	%

2

Net Interest Income

Second quarter 2016 net interest income remained relatively stable at $77 million, compared to $79 million for the first quarter 2016. The results reflected a 2 percent decline in average earning assets, primarily due to loan sales, and a slight drop in the net interest margin.

Net interest margin decreased 3 basis points to 2.63 percent for the second quarter 2016, as compared to 2.66 percent for the first quarter 2016. The decrease from the prior quarter was driven by lower interest income on loans held-for-sale due to a drop in market interest rates, partially offset by increased interest income from a rotation of lower spread residential mortgages into higher spread commercial loans.

Average loans held-for-investment totaled $5.6 billion for the second quarter 2016, largely unchanged from the first quarter 2016. During the second quarter 2016, relationship-based commercial loans increased while consumer loans declined. Average commercial loans increased $469 million, or 20 percent, led by a $351 million, or 36 percent increase in warehouse loans. Commercial & industrial and commercial real estate loans also registered solid gains. Average consumer loans fell $568 million, or 17 percent, due to the sale of $408 million (UPB) of performing residential mortgage loans and $14 million (UPB) of nonperforming, TDR, and other higher risk loans.

Average total deposits were $8.6 billion in the second quarter 2016, increasing $581 million, or 7 percent from the prior quarter. The increase was led by higher company-controlled and retail deposits, partially offset by a drop in government deposits. Average company-controlled deposits rose $403 million, or 35 percent, due to seasonal factors, higher refinance volume and an increase in loans serviced. Average retail deposits increased $253 million, or 4 percent, providing core deposits to support balance sheet growth.

Provision (Benefit) for Loan Losses

The Company experienced a provision benefit in the second quarter 2016, resulting primarily from the sale of $408 million (UPB) performing residential first mortgage loans. The provision benefit for loan losses totaled $3 million for the second quarter 2016, a decrease from a benefit of $13 million for the first quarter 2016.

Net charge-offs in the second quarter 2016 were $9 million, or 0.62 percent of applicable loans, compared to $12 million, or 0.86 percent of applicable loans in the prior quarter. The second quarter 2016 amount included $2 million of net charge-offs associated with the sale of $14 million (UPB) of nonperforming, TDR, and other higher risk loans and $4 million of net charge-offs associated with loans with government guarantees. The first quarter 2016 amount included $6 million of net charge-offs associated with the sale of $96 million (UPB) of nonperforming, TDR, and other higher risk loans and $3 million of net charge-offs associated with loans with government guarantees. Excluding the charge-offs associated with loan sales and loans with government guarantees in both quarters, net charge-offs in the second quarter 2016 were $3 million, or 0.18 percent of applicable loans, compared to $3 million, or 0.20 percent of applicable loans in the prior quarter.

Noninterest Income

Noninterest income increased $23 million, or 22 percent, to $128 million, as compared to $105 million for the first quarter 2016. The second quarter 2016 results were led primarily by higher net gain on loan sales and loan fees and charges.

Second quarter 2016 net gain on loan sales increased to $90 million, as compared to $75 million for the first quarter 2016. The increase from the prior quarter reflected higher fallout-adjusted locks and an improved gain on sale margin. Excluding gains from the sale of mortgage loans transferred from HFI, net gain on loan sales was $85 million, up $19 million, or 29 percent, from the first quarter 2016. In the second quarter 2016, fallout-adjusted locks increased 18 percent to $8.1 billion, led by higher purchase volumes. Excluding HFI loan sales, the net gain on loan sale margin was 1.04 percent, as compared to 0.96 percent for the first quarter 2016.

3

Mortgage Metrics
	Three Months Ended															Change (% / bps)
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			Seq		Yr/Yr
	(Dollars in millions)
Mortgage rate lock commitments (fallout-adjusted) (1)	$	8,127		$	6,863		$	5,027		$	6,495		$	6,804		18	%	19	%
GOS on HFS margin (change in bps) (2)	1.04		%	0.96		%	0.92		%	1.05		%	1.22		%	8		(18)
Gain on loan sales on HFS	$	85		66			$	46		$	68		$	83		29	%	2	%
Net (loss) return on the mortgage servicing asset ("MSA")	$	(4	)	$	(6	)	$	9		$	12		$	9		(33	)%	N/M
Gain on loan sales + net (loss) return on the MSA	$	81		$	60		$	55		$	80		$	92		35	%	(12	)%
Residential loans serviced (number of accounts - 000's) (3)	358			340			361			369			378			5	%	(5	)%
Capitalized value of mortgage servicing rights (change in bps)	0.99		%	1.06		%	1.13		%	1.12		%	1.15		%	(7)		(16)
N/M - Not meaningful
(1) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates.
(2) Gain on sale margin is based on net gain on loan sales (excluding gains from loans transferred from HFI) to fallout-adjusted mortgage rate lock commitments.
(3) Includes serviced for own loan portfolio, serviced for others, and subserviced for others loans.

Loan fees and charges rose to $19 million for the second quarter 2016, as compared to $15 million in the first quarter 2016. The increase primarily reflected higher mortgage loan closings.

Net return on the mortgage servicing asset (including the impact of economic hedges) was a net loss of $4 million for the second quarter 2016, as compared to a net loss of $6 million for the first quarter 2016. The return on the mortgage servicing asset improved from the first quarter 2016, primarily due to higher service fee income and lower disposition costs from fewer bulk MSR sales, partially offset by an increase in anticipated and actual prepayments.

The representation and warranty benefit was $4 million for the second quarter 2016, as compared to a $2 million benefit in the first quarter 2016. The representation and warranty reserve fell to $36 million at June 30, 2016, from $40 million at March 31, 2016, based on a continued improvement in risk trends in the repurchase pipeline.

Noninterest Expense

The Company experienced modest expense growth in the second quarter 2016. Noninterest expense increased $2 million, or 2 percent, to $139 million for the second quarter 2016, as compared to $137 million for the first quarter 2016. The second quarter 2016 results were driven by higher commissions and loan processing expense related to increased business activity, and higher warrant expense, partially offset by lower compensation and benefits, asset resolution, and legal and professional expense. The Company's efficiency ratio improved to 68.2 percent for the second quarter 2016 as revenues grew without the addition of significant incremental expenses.

Overall, expenses related to higher mortgage volumes drove the quarter’s increase in noninterest expense. Commissions increased $4 million and loan processing expense rose $3 million. Warrant expense, driven by a higher stock price, also increased $3 million. These increases were partially offset by decreased levels of expense in a number of other categories, including legal and professional expense, asset resolution expense, and compensation and benefits, which were seasonally lower.

4

Income Taxes

The second quarter 2016 provision for income taxes totaled $22 million, as compared to $21 million in the first quarter 2016. The effective tax rate in the second quarter 2016 was 33 percent, as compared to 34 percent in the first quarter 2016. The decrease in the marginal tax rate in the second quarter 2016 was largely due to a benefit for state tax settlements in the quarter.

Asset Quality

Credit Quality Ratios
	Three Months Ended															Change (% / bps)
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			Seq		Yr/Yr
	(Dollars in millions)
Allowance for loan loss to LHFI	2.6		%	2.9		%	3.0		%	3.7		%	4.3		%	(30)		(170)
Allowance for loan loss to LHFI and loans with government guarantees	2.4		%	2.7		%	2.8		%	3.3		%	3.9		%	(30)		(150)
Charge-offs, net of recoveries	$	9		$	12		$	9		$	24		$	18		(25	)%	(50	)%
Charge-offs, net of recoveries, adjusted (1)	$	3		$	3		$	4		$	8		$	3		—	%	—	%
Total nonperforming loans held-for-investment	$	44		$	53		$	66		$	63		$	65		(17	)%	(32	)%
Net charge-off ratio (annualized)	0.62		%	0.86		%	0.62		%	1.84		%	1.49		%	(24)		(87)
Net charge-off ratio, adjusted (annualized) (1)	0.18		%	0.20		%	0.29		%	0.61		%	0.26		%	(2)		(8)
Nonperforming loans to LHFI	0.76		%	0.95		%	1.05		%	1.15		%	1.22		%	(19)		(46)
(1) Excludes charge-offs of $2 million, $6 million, $2 million, $16 million and $15 million related to the sale or transfer of nonperforming loans and         TDRs during the three months ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively. Also         excludes charge-offs related to loans with government guarantees of $4 million, $3 million and $3 million during the three months ended June 30, 2016,         March 31, 2016 and December 31, 2015, respectively.

The Company maintained strong reserve coverage and solid credit quality in the second quarter 2016. The allowance for loan losses was $150 million at June 30, 2016, covering 2.6 percent of loans held-for-investment, as compared to an allowance for loan losses of $162 million at March 31, 2016, covering 2.9 percent of loans held-for-investment. The decrease in the allowance for loan losses resulted primarily from the provision benefit of selling residential first mortgage loans and charge-offs from the sale of $14 million (UPB) of lower quality loans.

Second quarter 2016 net charge-offs were $9 million, representing 0.62 percent of loans held-for-investment. This represented a decrease of $3 million from the first quarter 2016 net charge-offs of $12 million, or 0.86 percent of loans held-for-investment. Excluding the charge-offs associated with loan sales and loans with government guarantees in both quarters, net charge-offs in the second quarter 2016 were $3 million, or 0.18 percent of loans held-for-investment, compared to $3 million, or 0.20 percent of loans held-for-investment in the prior quarter.

Nonperforming loans held-for-investment decreased to $44 million at June 30, 2016 from $53 million at March 31, 2016. There were no nonperforming commercial loans at June 30, 2016. The ratio of nonperforming loans to loans held-for-investment decreased to 0.76 percent at June 30, 2016 from 0.95 percent at March 31, 2016. At June 30, 2016, consumer loan delinquencies (30-89 days past due) totaled $7 million, down $4 million from March 31, 2016. As in the prior quarter, there were no commercial loan delinquencies (30-89 days past due) at June 30, 2016.

5

Capital

Capital Ratios (Bancorp)	Three Months Ended															Change (% / bps)
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			Seq		Yr/Yr
Total capital	20.19		%	20.97		%	20.28		%	21.64		%	21.30		%	(78	)	(111	)
Tier 1 capital	18.89		%	19.67		%	18.98		%	20.32		%	19.97		%	(78	)	(108	)
Tier 1 leverage	11.59		%	11.04		%	11.51		%	11.65		%	11.47		%	55		12
Mortgage servicing rights to Tier 1 capital	19.9		%	19.3		%	20.6		%	21.1		%	24.2		%	60		(430	)
Book value per common share	$	23.48		$	22.82		$	22.33		$	21.91		$	20.98		3	%	12	%

The Company maintained a robust capital position with regulatory capital ratios well above current regulatory quantitative guidelines for "well-capitalized" institutions. At June 30, 2016, the Company had a Tier 1 leverage ratio of 11.59 percent, as compared to 11.04 percent at March 31, 2016. The increase in the ratio resulted from earnings retention and a decrease in average assets. Adjusting for the expected TARP redemption in July, the Tier 1 leverage ratio was 8.59 percent at June 30, 2016.

At June 30, 2016, the Company had a common equity-to-assets ratio of 9.68 percent.

Earnings Conference Call

As previously announced, the Company's second quarter 2016 earnings call will be held Tuesday, July 26, 2016 at 11 a.m. (ET).

To join the call, please dial (800) 723-6604 toll free or (785) 830-7977, and use passcode 1789408. Please call at least 10 minutes before the conference is scheduled to begin. A replay will be available for five business days by calling (888) 203-1112 toll free or (719) 457-0820, using passcode 1789408.

The conference call will also be available as a live audiocast on the Investor Relations section of flagstar.com.

It will be archived on that site and will be available for replay and download. The slide presentation accompanying the conference call will be posted on the site.

About Flagstar

Flagstar Bancorp, Inc. (NYSE: FBC) is a $13.7 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, the largest bank headquartered in Michigan, provides commercial, small business, and consumer banking services through 99 branches in the state. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as through 29 retail locations in 21 states. Flagstar is a leading national originator and servicer of mortgage loans, handling payments and record keeping for nearly $75 billion of home loans for nearly 360,000 borrowers. For more information, please visit flagstar.com.

Use of Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this press release includes non-GAAP financial measures such as the estimated Basel III ratios and ratios adjusted for TARP redemption. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the 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

6

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.

Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this earnings release, conference call slides, or the Form 8-K related to this press 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. These documents can all be found on the Company’s website at flagstar.com.

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Flagstar Bancorp, Inc.’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements can be 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). Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

7

Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition

(Dollars in millions)

	June 30, 2016			March 31, 2016			December 31, 2015			June 30, 2015
	(Unaudited)			(Unaudited)						(Unaudited)
Assets
Cash	$	64		$	54		$	54		$	52
Interest-earning deposits	120			670			154			194
Total cash and cash equivalents	184			724			208			246
Investment securities available-for-sale	1,145			1,314			1,294			2,272
Investment securities held-to-maturity	1,211			1,253			1,268			—
Loans held-for-sale	3,091			2,591			2,576			2,038
Loans held-for-investment	5,822			5,640			6,352			5,335
Loans with government guarantees	435			462			485			592
Less: allowance for loan losses	(150		)	(162		)	(187		)	(222		)
Total loans held-for-investment and loans with government guarantees, net	6,107			5,940			6,650			5,705
Mortgage servicing rights	301			281			296			317
Federal Home Loan Bank stock	172			172			170			113
Premises and equipment, net	259			256			250			240
Net deferred tax asset	335			352			364			400
Other assets	920			854			639			808
Total assets	$	13,725		$	13,737		$	13,715		$	12,139
Liabilities and Stockholders' Equity
Noninterest-bearing	$	2,109		$	1,984		$	1,574		$	1,417
Interest-bearing	6,462			6,485			6,361			6,231
Total deposits	8,571			8,469			7,935			7,648
Short-term Federal Home Loan Bank advances	1,069			1,250			2,116			1,323
Long-term Federal Home Loan Bank advances	1,577			1,625			1,425			875
Other long-term debt	247			247			247			283
Representation and warranty reserve	36			40			40			48
Other liabilities	629			548			423			511
Total liabilities	12,129			12,179			12,186			10,688
Stockholders' Equity
Preferred stock	267			267			267			267
Common stock	1			1			1			1
Additional paid in capital	1,491			1,489			1,486			1,482
Accumulated other comprehensive (loss) income	(22		)	(11		)	2			8
Accumulated deficit	(141		)	(188		)	(227		)	(307		)
Total stockholders' equity	1,596			1,558			1,529			1,451
Total liabilities and stockholders' equity	$	13,725		$	13,737		$	13,715		$	12,139

8

Flagstar Bancorp, Inc.  Condensed Consolidated Statements of Operations  (Dollars in millions, except per share data) (Unaudited)
																Second Quarter 2016 Compared to:
	Three Months Ended															First Quarter 2016					Second Quarter 2015
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			Amount			Percent		Amount			Percent
Interest Income
Total interest income	$	99		$	101		$	95		$	91		$	90		$	(2	)	(2	)%	$	9		10	%
Total interest expense	22			22			19			18			17			—			—	%	5			29	%
Net interest income	77			79			76			73			73			(2		)	(3	)%	4			5	%
Provision (benefit) for loan losses	(3		)	(13		)	(1		)	(1		)	(13		)	10			(77	)%	$	10		(77	)%
Net interest income after provision for loan losses	80			92			77			74			86			(12		)	(13	)%	(6		)	(7	)%
Noninterest Income
Net gain on loan sales	90			75			46			68			83			15			20	%	$	7		8	%
Loan fees and charges	19			15			14			17			19			4			27	%	$	—		—	%
Deposit fees and charges	6			6			6			7			6			—			—	%	$	—		—	%
Loan administration income	4			6			7			8			7			(2		)	(33	)%	$	(3	)	(43	)%
Net (loss) return on the mortgage servicing asset	(4		)	(6		)	9			12			9			2			(33	)%	$	(13	)	N/M
Net (loss) gain on sale of assets	—			(2		)	—			1			(2		)	2			(100	)%	2			(100	)%
Representation and warranty benefit	4			2			6			6			5			2			100	%	$	(1	)	(20	)%
Other noninterest income (loss)	9			9			9			9			(1		)	—			—	%	$	10		N/M
Total noninterest income	128			105			97			128			126			23			22	%	2			2	%
Noninterest Expense
Compensation and benefits	66			68			59			58			59			(2		)	(3	)%	$	7		12	%
Commissions	14			10			8			10			11			4			40	%	$	3		27	%
Occupancy and equipment	21			22			21			20			20			(1		)	(5	)%	$	1		5	%
Asset resolution	1			3			2			—			5			(2		)	(67	)%	$	(4	)	(80	)%
Federal insurance premiums	3			3			5			6			6			—			—	%	$	(3	)	(50	)%
Loan processing expense	15			12			12			14			14			3			25	%	$	1		7	%
Legal and professional expense	6			9			9			10			8			(3		)	(33	)%	$	(2	)	(25	)%
Other noninterest expense	13			10			13			13			15			3			30	%	$	(2	)	(13	)%
Total noninterest expense	139			137			129			131			138			2			2	%	1			1	%
Income before income taxes	69			60			45			71			74			9			15	%	(5		)	(7	)%
Provision for income taxes	22			21			12			24			28			1			5	%	$	(6	)	(21	)%
Net income	$	47		$	39		$	33		$	47		$	46		$	8		21	%	$	1		2	%
Income per share
Basic	$	0.67		$	0.56		$	0.45		$	0.70		$	0.69		$	0.11		20	%	$	(0.02	)	(3	)%
Diluted	$	0.66		$	0.54		$	0.44		$	0.69		$	0.68		$	0.12		22	%	$	(0.02	)	(3	)%

N/M - Not meaningful

9

Flagstar Bancorp, Inc.  Condensed Consolidated Statements of Operations  (Dollars in millions, except per share data) (Unaudited)
							Six Months Ended June 30, 2016
	Six Months Ended						Compared to: Six Months Ended June 30, 2015
	June 30, 2016			June 30, 2015			Amount			Percent
Interest Income
Total interest income	$	200		$	169		$	31		18	%
Total interest expense	44			31			13			42	%
Net interest income	156			138			18			13	%
Provision (benefit) for loan losses	(16		)	(17		)	1			(6	)%
Net interest income after provision for loan losses	172			155			17			11	%
Noninterest Income
Net gain on loan sales	165			174			(9		)	(5	)%
Loan fees and charges	34			36			(2		)	(6	)%
Deposit fees and charges	12			12			—			—	%
Loan administration income	10			11			(1		)	(9	)%
Net (loss) return on the mortgage servicing asset	(10		)	7			(17		)	N/M
Net loss on sale of assets	(2		)	(2		)	—			—	%
Representation and warranty benefit	6			7			(1		)	(14	)%
Other noninterest income	18			—			18			N/M
Total noninterest income	233			245			(12		)	(5	)%
Noninterest Expense
Compensation and benefits	134			120			14			12	%
Commissions	24			21			3			14	%
Occupancy and equipment	43			40			3			8	%
Asset resolution	4			13			(9		)	(69	)%
Federal insurance premiums	6			12			(6		)	(50	)%
Loan processing expense	27			26			1			4	%
Legal and professional expense	15			17			(2		)	(12	)%
Other noninterest expense	23			27			(4		)	(15	)%
Total noninterest expense	276			276			—			—	%
Income before income taxes	129			124			5			4	%
Provision for income taxes	43			46			(3		)	(7	)%
Net income	$	86		$	78		$	8		10	%
Income per share
Basic	$	1.23		$	1.12		$	0.11		10	%
Diluted	$	1.21		$	1.11		$	0.10		9	%

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 Ended									Six Months Ended
	June 30, 2016			March 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Mortgage loans originated (1)	$	8,330		$	6,352		$	8,448		$	14,682		$	15,702
Mortgage loans sold and securitized	$	7,940		$	6,948		$	7,571		$	14,888		$	13,825
Interest rate spread (2)	2.43		%	2.50		%	2.63		%	2.46		%	2.61		%
Net interest margin	2.63		%	2.66		%	2.79		%	2.64		%	2.77		%
Average common shares outstanding	56,574,796			56,513,715			56,436,026			56,544,256			56,410,880
Average fully diluted shares outstanding	57,751,230			57,600,984			57,165,072			57,623,081			56,971,133
Average interest-earning assets	$	11,639		$	11,871		$	10,367		$	11,755		$	9,897
Average interest-paying liabilities	$	9,205		$	9,823		$	8,265		$	9,514		$	7,887
Average stockholders' equity	$	1,606		$	1,561		$	1,462		$	1,583		$	1,443
Return on average assets	1.38		%	1.16		%	1.57		%	1.27		%	1.38		%
Return on average equity	11.53		%	10.08		%	12.71		%	10.81		%	10.81		%
Return on average common equity	13.83		%	12.15		%	15.55		%	13.00		%	13.26		%
Efficiency ratio	68.2		%	74.5		%	69.6		%	71.2		%	72.1		%
Equity-to-assets ratio (average for the period)	11.95		%	11.52		%	12.37		%	11.73		%	12.73		%

	June 30, 2016			March 31, 2016			December 31, 2015			June 30, 2015
Book value per common share	$	23.48		$	22.82		$	22.33		$	20.98
Number of common shares outstanding	56,575,779			56,557,895			56,483,258			56,436,026
Mortgage loans subserviced for others	$	38,000		$	37,714		$	40,244		$	43,292
Mortgage loans serviced for others	$	30,443		$	26,613		$	26,145		$	27,679
Weighted average service fee (basis points)	28.2			28.2			27.7			27.4
Capitalized value of mortgage servicing rights	0.99		%	1.06		%	1.13		%	1.15		%
Mortgage servicing rights to Tier 1 capital	19.9		%	19.3		%	20.6		%	24.2		%
Ratio of allowance for loan losses to LHFI (3)	2.62		%	2.93		%	3.00		%	4.31		%
Ratio of allowance for loan losses to LHFI and loans with government guarantees (3)	2.43		%	2.70		%	2.78		%	3.86		%
Ratio of nonperforming assets to total assets	0.46		%	0.49		%	0.61		%	0.69		%
Equity-to-assets ratio	11.62		%	11.34		%	11.14		%	11.95		%
Common equity-to-assets ratio	9.68		%	9.40		%	9.20		%	9.76		%
Number of bank branches	99			99			99			100
Number of FTE employees	2,894			2,771			2,713			2,713

(1) Includes residential first mortgage and second mortgage loans.

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

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

11

Flagstar Bancorp, Inc.

Earnings Per Share

(Dollars in millions, except share data)

(Unaudited)

	Three Months Ended									Six Months Ended
	June 30, 2016			March 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Net income	47			39			46			86			78
Deferred cumulative preferred stock dividends	(8		)	(8		)	(7		)	(16		)	(15		)
Net income applicable to Common Stockholders	$	39		$	31		$	39		$	70		$	63
Weighted Average Shares
Weighted average common shares outstanding	56,574,796			56,513,715			56,436,026			56,544,256			56,410,880
Effect of dilutive securities
Warrants	349,539			305,219			299,391			327,307			266,118
Stock-based awards	826,895			782,050			429,655			751,518			294,135
Weighted average diluted common shares	57,751,230			57,600,984			57,165,072			57,623,081			56,971,133
Earnings per common share
Net income applicable to Common Stockholders	$	0.67		$	0.56		$	0.69		$	1.23		$	1.12
Effect of dilutive securities
Warrants	—			—			—			—			—
Stock-based awards	(0.01		)	(0.02		)	(0.01		)	(0.02		)	(0.01		)
Diluted earnings per share	$	0.66		$	0.54		$	0.68		$	1.21		$	1.11

12

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)

	Three Months Ended
	June 30, 2016						March 31, 2016						June 30, 2015
	Average Balance		Interest		Annualized Yield/Rate		Average Balance		Interest		Annualized Yield/Rate		Average Balance		Interest		Annualized Yield/Rate
Interest-Earning Assets
Loans held-for-sale	$	2,884	$	26	3.64	%	$	2,909	$	28	3.81	%	$	2,218	$	21	3.80	%
Loans held-for-investment
Consumer loans (1)	2,746		24		3.48	%	3,314		29		3.52	%	2,913		27		3.74	%
Commercial loans (1)	2,823		28		3.94	%	2,354		23		3.91	%	2,025		21		4.03	%
Total loans held-for-investment	5,569		52		3.71	%	5,668		52		3.68	%	4,938		48		3.86	%
Loans with government guarantees	444		4		3.33	%	475		4		3.05	%	630		5		2.97	%
Investment securities	2,558		17		2.66	%	2,692		17		2.51	%	2,350		15		2.55	%
Interest-earning deposits	184		—		0.50	%	127		—		0.52	%	231		1		0.55	%
Total interest-earning assets	11,639		$	99	3.40	%	11,871		$	101	3.39	%	10,367		$	90	3.42	%
Other assets	1,799						1,672						1,444
Total assets	$	13,438					$	13,543					$	11,811
Interest-Bearing Liabilities
Retail deposits
Demand deposits	$	482	$	—	0.17	%	$	445	$	—	0.13	%	$	431	$	—	0.14	%
Savings deposits	3,691		7		0.79	%	3,722		7		0.79	%	3,752		8		0.83	%
Money market deposits	363		1		0.52	%	243		—		0.36	%	242		—		0.26	%
Certificates of deposit	951		2		1.00	%	856		2		0.92	%	763		2		0.71	%
Total retail deposits	5,487		10		0.75	%	5,266		9		0.74	%	5,188		10		0.73	%
Government deposits
Demand deposits	203		—		0.39	%	256		—		0.39	%	210		—		0.40	%
Savings deposits	398		—		0.52	%	419		1		0.52	%	401		1		0.52	%
Certificates of deposit	410		1		0.50	%	412		1		0.47	%	331		—		0.34	%
Total government deposits	1,011		1		0.49	%	1,087		2		0.47	%	942		1		0.43	%
Total interest-bearing deposits	6,498		11		0.71	%	6,353		11		0.69	%	6,130		11		0.68	%
Short-term debt	835		1		0.41	%	1,662		2		0.38	%	—		—		—	%
Long-term debt	1,625		8		1.93	%	1,560		7		1.86	%	1,828		4		0.90	%
Other	247		2		3.31	%	248		2		3.22	%	307		2		2.38	%
Total interest-bearing liabilities	9,205		22		0.97	%	9,823		22		0.89	%	8,265		17		0.79	%
Noninterest-bearing deposits (2)	2,133						1,697						1,606
Other liabilities	494						462						478
Stockholders' equity	1,606						1,561						1,462
Total liabilities and stockholders' equity	$	13,438					$	13,543					$	11,811
Net interest-earning assets	$	2,434					$	2,048					$	2,102
Net interest income			$	77					$	79					$	73
Interest rate spread (3)					2.43	%					2.50	%					2.63	%
Net interest margin(4)					2.63	%					2.66	%					2.79	%
Ratio of average interest-earning assets to interest-bearing liabilities					126.4	%					120.9	%					125.4	%
Total average deposits	$	8,631					$	8,050					$	7,736

(1) Consumer loans include: residential first mortgage, second mortgage, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and warehouse lending loans.

(2) Includes noninterest-bearing company-controlled deposits that arise due to the servicing of loans for others.

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

13

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)

	Six Months Ended
	June 30, 2016						June 30, 2015
	Average Balance		Interest		Annualized Yield/Rate		Average Balance		Interest		Annualized Yield/Rate
Interest-Earning Assets
Loans held-for-sale	$	2,897	$	54	3.72	%	$	2,031	$	40	3.89	%
Loans held-for-investment
Consumer loans (1)	3,030		53		3.50	%	2,765		52		3.79	%
Commercial loans (1)	2,588		52		3.93	%	1,852		37		3.99	%
Total loans held-for-investment	5,618		105		3.70	%	4,617		89		3.87	%
Loans with government guarantees	460		7		3.18	%	747		10		2.67	%
Investment securities	2,625		34		2.59	%	2,232		29		2.56	%
Interest-earning deposits	155		—		0.50	%	270		1		0.49	%
Total interest-earning assets	11,755		$	200	3.39	%	9,897		$	169	3.40	%
Other assets	1,736						1,439
Total assets	$	13,491					$	11,336
Interest-Bearing Liabilities
Retail deposits
Demand deposits	$	463	$	—	0.15	%	$	428	$	—	0.14	%
Savings deposits	3,706		15		0.79	%	3,657		15		0.80	%
Money market deposits	303		1		0.45	%	249		—		0.26	%
Certificates of deposit	904		4		0.96	%	775		3		0.69	%
Total retail deposits	5,376		20		0.74	%	5,109		18		0.70	%
Government deposits
Demand deposits	230		—		0.39	%	218		—		0.39	%
Savings deposits	409		1		0.52	%	387		1		0.52	%
Certificates of deposit	411		1		0.71	%	344		1		0.35	%
Total government deposits	1,050		2		0.57	%	949		2		0.43	%
Total interest-bearing deposits	6,426		22		0.70	%	6,058		20		0.66	%
Short-term debt	1,249		3		0.40	%	—		—		—	%
Long-term debt	1,592		15		1.91	%	1,497		7		0.97	%
Other	247		4		3.27	%	332		4		2.28	%
Total interest-bearing liabilities	9,514		44		0.93	%	7,887		31		0.79	%
Noninterest-bearing deposits (2)	1,915						1,495
Other liabilities	479						511
Stockholders' equity	1,583						1,443
Total liabilities and stockholders' equity	$	13,491					$	11,336
Net interest-earning assets	$	2,241					$	2,010
Net interest income			$	156					$	138
Interest rate spread (3)					2.46	%					2.61	%
Net interest margin(4)					2.64	%					2.77	%
Ratio of average interest-earning assets to interest-bearing liabilities					123.6	%					125.5	%
Total average deposits	$	8,341					$	7,553

(1) Consumer loans include: residential first mortgage, second mortgage, HELOC and other consumer loans. Commercial loans include: commercial real estate, commercial and industrial, and warehouse lending loans.

(2) Includes noninterest-bearing company-controlled deposits that arise due to the servicing of loans for others.

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

14

Gain on Loan Sales on Loans Held-for-Sale

(Dollars in millions)

(Unaudited)

	Three Months Ended
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
	(Dollars in millions)
Mortgage rate lock commitments (fallout-adjusted)(1)	$	8,127		$	6,863		$	5,027		$	6,495		$	6,804
Net margin on mortgage rate lock commitments (fallout-adjusted)(1)	1.04		%	0.96		%	0.92		%	1.05		%	1.22		%
Net gain on loan sales on HFS	$	85		$	66		$	46		$	68		$	83
Net (loss) return on the mortgage servicing rights	$	(4	)	$	(6	)	$	9		$	12		$	9
Gain on loan sales HFS + net (loss) return on the MSR	$	81		$	60		$	55		$	80		$	92
Residential loans serviced (number of accounts - 000's) (2)	358			340			361			369			378
Capitalized value of mortgage servicing rights	0.99		%	1.06		%	1.13		%	1.12		%	1.15		%
Mortgage rate lock commitments (gross)	$	10,168		$	8,762		$	6,258		$	8,025		$	8,400
Loans sold and securitized	$	7,940		$	6,948		$	5,164		$	7,318		$	7,571
Net margin on loan sales	1.07		%	0.94		%	0.90		%	0.93		%	1.09		%

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

(2) Includes serviced for own loan portfolio, serviced for others and subserviced for others loans.

	Six Months Ended
	June 30, 2016			June 30, 2015
Mortgage rate lock commitments (fallout-adjusted)(1)	$	14,990		$	13,989
Net margin on mortgage rate lock commitments (fallout-adjusted)(1)	1.00		%	1.24		%
Net gain on loan sales on HFS	$	151		$	174
Net (loss) return on the mortgage servicing rights	$	(10	)	$	7
Gain on loan sales HFS + net (loss) return on the MSR	$	141		$	181
Residential loans serviced (number of accounts - 000's) (2)	358			378
Capitalized value of mortgage servicing rights	0.99		%	1.15		%
Mortgage rate lock commitments (gross)	$	18,930		$	17,435
Loans sold and securitized	$	14,888		$	13,825
Net margin on loan sales	1.01		%	1.26		%

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

(2) Includes serviced for own loan portfolio, serviced for others and subserviced for others loans.

15

Regulatory Capital - Bancorp

(Dollars in millions)

(Unaudited)

	June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted tangible assets)	$	1,514	11.59	%	$	1,453	11.04	%	$	1,435	11.51	%	$	1,393	11.65	%	$	1,309	11.47	%
Total adjusted tangible asset base	$	13,068			$	13,167			$	12,474			$	11,957			$	11,406
Tier 1 common equity (to risk weighted assets)	$	1,086	13.55	%	$	1,032	13.96	%	$	1,065	14.09	%	$	1,024	14.93	%	$	954	14.56	%
Tier 1 capital (to risk weighted assets)	$	1,514	18.89	%	$	1,453	19.67	%	$	1,435	18.98	%	$	1,393	20.32	%	$	1,309	19.97	%
Total capital (to risk weighted assets)	$	1,618	20.19	%	$	1,549	20.97	%	$	1,534	20.28	%	$	1,483	21.64	%	$	1,396	21.30	%
Risk weighted asset base	$	8,014			$	7,387			$	7,561			$	6,857			$	6,553

Regulatory Capital - Bank

(Dollars in millions)

(Unaudited)

	June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted tangible assets)	$	1,576	12.03	%	$	1,509	11.43	%	$	1,472	11.79	%	$	1,426	11.91	%	$	1,337	11.70	%
Total adjusted tangible asset base	$	13,102			$	13,200			$	12,491			$	11,975			$	11,424
Tier 1 common equity (to risk weighted assets)	$	1,576	19.58	%	$	1,509	20.34	%	$	1,472	19.42	%	$	1,426	20.75	%	$	1,337	20.35	%
Tier 1 capital (to risk weighted assets)	$	1,576	19.58	%	$	1,509	20.34	%	$	1,472	19.42	%	$	1,426	20.75	%	$	1,337	20.35	%
Total capital (to risk weighted assets)	$	1,679	20.86	%	$	1,605	21.63	%	$	1,570	20.71	%	$	1,516	22.05	%	$	1,423	21.66	%
Risk weighted asset base	$	8,048			$	7,421			$	7,582			$	6,874			$	6,570

Loan Originations (Dollars in millions) (Unaudited)
	Three Months Ended
	June 30, 2016				March 31, 2016				June 30, 2015
Consumer loans
Mortgage (1)	$	8,330	97.6	%	$	6,352	98.3	%	$	8,448	99.1	%
Other consumer (2)	42		0.5	%	27		0.4	%	33		0.4	%
Total consumer loans	8,372		98.1	%	6,379		98.7	%	8,481		99.5	%
Commercial loans (3)	164		1.9	%	84		1.3	%	40		0.5	%
Total loan originations	$	8,536	100.0	%	$	6,463	100.0	%	$	8,521	100.0	%

	Six Months Ended
	June 30, 2016				June 30, 2015
Mortgage (1)	$	14,682	97.8	%	$	15,702	99.2	%
Other consumer (2)	69		0.5	%	54		0.3	%
Total consumer loans	14,751		98.3	%	15,756		99.5	%
Commercial loans (3)	248		1.7	%	79		0.5	%
Total loan originations	$	14,999	100.0	%	$	15,835	100.0	%

(1) Includes residential first mortgage and second mortgage loans.

(2) Includes HELOC and other consumer loans.

(3) Includes commercial real estate and commercial and industrial loans.

16

Loans Held-for-Investment

(Dollars in millions)

(Unaudited)

	June 30, 2016				March 31, 2016				December 31, 2015				June 30, 2015
Consumer loans
Residential first mortgage	$	2,075	35.6	%	$	2,410	42.8	%	$	3,100	48.9	%	$	2,495	46.7	%
Second mortgage	127		2.2	%	129		2.3	%	135		2.1	%	143		2.7	%
HELOC	346		5.9	%	366		6.5	%	384		6.0	%	422		7.9	%
Other	32		0.5	%	31		0.5	%	31		0.5	%	31		0.6	%
Total consumer loans	2,580		44.2	%	2,936		52.1	%	3,650		57.5	%	3,091		57.9	%
Commercial loans
Commercial real estate	976		16.8	%	851		15.1	%	814		12.8	%	629		11.8	%
Commercial and industrial	615		10.6	%	571		10.1	%	552		8.7	%	412		7.7	%
Warehouse lending	1,651		28.4	%	1,282		22.7	%	1,336		21.0	%	1,203		22.6	%
Total commercial loans	3,242		55.8	%	2,704		47.9	%	2,702		42.5	%	2,244		42.1	%
Total loans held-for-investment	$	5,822	100.0	%	$	5,640	100.0	%	$	6,352	100.0	%	$	5,335	100.0	%

Residential Loans Serviced

(Dollars in millions)

(Unaudited)

	June 30, 2016			March 31, 2016			December 31, 2015			June 30, 2015
	Unpaid Principal Balance		Number of accounts	Unpaid Principal Balance		Number of accounts	Unpaid Principal Balance		Number of accounts	Unpaid Principal Balance		Number of accounts
Serviced for own loan portfolio (1)	$	5,379	29,520	$	5,293	29,078	$	6,088	30,683	$	5,211	28,106
Serviced for others	30,443		134,266	26,613		118,768	26,145		118,662	27,679		124,299
Subserviced for others (2)	38,000		194,209	37,714		192,423	40,244		211,740	43,292		225,268
Total residential loans serviced	$	73,822	357,995	$	69,620	340,269	$	72,477	361,085	$	76,182	377,673

(1) Includes loans held-for-investment (residential first mortgage, second mortgage and HELOC), loans-held-for-sale (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

(2) Does not include temporary short-term subservicing performed as a result of sales of servicing-released mortgage servicing rights. Includes repossessed assets.

17

Allowance for Loan Losses

(Dollars in millions)

(Unaudited)

	Three Months Ended									Six Months Ended
	June 30, 2016			March 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Beginning balance	$	162		$	187		$	253		$	187		$	297
Provision (benefit) for loan losses	(3		)	(13		)	(13		)	(16		)	(17		)
Charge-offs
Consumer loans
Residential first mortgage	(8		)	(11		)	(19		)	(19		)	(60		)
Second mortgage	(1		)	(1		)	(1		)	(2		)	(2		)
HELOC	—			(1		)	—			(1		)	(1		)
Other	(1		)	(1		)	(1		)	(2		)	(1		)
Total charge-offs	(10		)	(14		)	(21		)	(24		)	(64		)
Recoveries
Consumer loans
Residential first mortgage	1			—			1			1			2
Second mortgage	1			—			1			1			1
HELOC	(1		)	1			—			—			—
Other	—			1			1			1			1
Total consumer loans	1			2			3			3			4
Commercial loans
Commercial real estate	—			—			—			—			2
Total recoveries	1			2			3			3			6
Charge-offs, net of recoveries	(9		)	(12		)	(18		)	(21		)	(58		)
Ending balance	$	150		$	162		$	222		$	150		$	222
Net charge-offs to LHFI ratio (annualized) (1)	0.62		%	0.86		%	1.49		%	0.74		%	2.63		%
Net charge-offs ratio, adjusted (annualized) (1)(2)	0.18		%	0.20		%	0.26		%	0.44		%	0.34		%
Net charge-offs to LHFI ratio (annualized) by loan type (1)
Residential first mortgage	1.42		%	1.50		%	2.91		%	1.46		%	5.09		%
Second mortgage	0.32		%	4.72		%	1.02		%	2.55		%	1.97		%
HELOC and consumer	0.69		%	0.69		%	0.41		%	0.69		%	1.32		%
Commercial real estate	—		%	(0.02		)%	(0.16		)%	(0.01		)%	(0.61		)%
Commercial and industrial	(0.02		)%	(0.01		)%	0.15		%	(0.02		)%	0.07		%

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

(2) Excludes charge-offs of $2 million, $6 million, and $15 million related to the sale of nonperforming loans, TDRs and non-agency loans during the three months ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively and $8 million and $51 million during the six months ended June 30, 2016 and 2015, respectively. Also excludes charge-offs related to loans with government guarantees of $4 million and $3 million during the three months ended June 30, 2016 and March 31, 2016, respectively, and $7 million during the six months ended June 30, 2016.

18

Representation and Warranty Reserve

(Dollars in millions)

(Unaudited)

		Three Months Ended									Six Months Ended
		June 30, 2016			March 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Balance, beginning of period		$	40		$	40		$	53		$	40		$	53
Provision (release)
	Charged to gain on sale for current loan sales	1			2			2			3			4
	Charged to representation and warranty benefit	(4		)	(2		)	(5		)	(6		)	(7		)
	Total	(3		)	—			(3		)	(3		)	(3		)
Charge-offs, net		(1		)	—			(2		)	(1		)	(2		)
Balance, end of period		$	36		$	40		$	48		$	36		$	48

Composition of Allowance for Loan Losses

(Dollars in millions)

(Unaudited)

June 30, 2016	Collectively Evaluated Reserves		Individually Evaluated Reserves		Total
Consumer loans
Residential first mortgage	$	74	$	7	$	81
Second mortgage	4		6		10
HELOC	17		3		20
Other	1		—		1
Total consumer loans	96		16		112
Commercial loans
Commercial real estate	19		—		19
Commercial and industrial	11		—		11
Warehouse lending	8		—		8
Total commercial loans	38		—		38
Total allowance for loan losses	$	134	$	16	$	150

March 31, 2016	Collectively Evaluated Reserves		Individually Evaluated Reserves		Total
Consumer loans
Residential first mortgage	$	86	$	9	$	95
Second mortgage	5		5		10
HELOC	18		2		20
Other	2		—		2
Total consumer loans	111		16		127
Commercial loans
Commercial real estate	19		—		19
Commercial and industrial	10		—		10
Warehouse lending	6		—		6
Total commercial loans	35		—		35
Total allowance for loan losses	$	146	$	16	$	162

19

Nonperforming Loans and Assets

(Dollars in millions)

(Unaudited)

	June 30, 2016			March 31, 2016			December 31, 2015			June 30, 2015
Nonperforming loans	$	23		$	27		$	31		$	41
Nonperforming TDRs	6			6			7			11
Nonperforming TDRs at inception but performing for less than six months	15			20			28			13
Total nonperforming loans held-for-investment	44			53			66			65
Real estate and other nonperforming assets, net	19			14			17			18
Nonperforming assets held-for-investment, net (1)	$	63		$	67		$	83		$	83
Ratio of nonperforming assets to total assets	0.46		%	0.49		%	0.61		%	0.69		%
Ratio of nonperforming loans held-for-investment to loans held-for-investment	0.76		%	0.95		%	1.05		%	1.22		%
Ratio of nonperforming assets to loans held-for-investment and repossessed assets	1.09		%	1.20		%	1.32		%	1.55		%
Ratio of nonperforming assets to Tier 1 capital + allowance for loan losses	3.79		%	4.15		%	5.12		%	5.42		%

(1) Does not include nonperforming loans held-for-sale of $5 million, $6 million, $12 million and $14 million at June 30, 2016, March 31, 2016, December 31, 2015 and June 30, 2015, respectively.

Asset Quality - Loans Held-for-Investment

(Dollars in millions)

(Unaudited)

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 days (1)		Total Past Due		Total Investment Loans
June 30, 2016
Consumer loans	$	5	$	2	$	44	$	51	$	2,580
Commercial loans	—		—		—		—		3,242
Total loans	$	5	$	2	$	44	$	51	$	5,822
March 31, 2016
Consumer loans	$	8	$	3	$	52	$	63	$	2,936
Commercial loans	—		—		1		1		2,704
Total loans	$	8	$	3	$	53	$	64	$	5,640
December 31, 2015
Consumer loans	$	10	$	4	$	64	$	78	$	3,650
Commercial loans	—		—		2		2		2,702
Total loans	$	10	$	4	$	66	$	80	$	6,352
June 30, 2015
Consumer loans	10		6		65		$	81	$	3,091
Commercial loans	—		—		—		—		2,244
Total loans	$	10	$	6	$	65	$	81	$	5,335

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

20

Troubled Debt Restructurings

(Dollars in millions)

(Unaudited)

	TDRs
	Performing		Nonperforming		Nonperforming TDRs at inception but performing for less than six months		Total
June 30, 2016
Consumer loans	$	72	$	6	$	15	$	93
Commercial loans	1		—		—		1
Total TDR loans	$	73	$	6	$	15	$	94
March 31, 2016
Consumer loans	$	75	$	6	$	19	$	100
Commercial loans	—		—		1		1
Total TDR loans	$	75	$	6	$	20	$	101
December 31, 2015
Consumer loans	$	101	$	7	$	28	$	136
Total TDR loans	$	101	$	7	$	28	$	136
June 30, 2015
Consumer loans	$	108	$	11	$	13	$	132
Total TDR loans	$	108	$	11	$	13	$	132

Non-GAAP Reconciliation

(Dollars in millions)

(Unaudited)

Basel III (transitional) to Basel III (fully phased-in) reconciliation.On January 1, 2015, the Basel III rules became effective, subject to transition provisions primarily related to regulatory deductions and adjustments impacting common equity Tier 1 capital and Tier 1 capital. We reported under Basel I (which included the Market Risk Final Rules) at December 31, 2014 and prior. When fully phased-in, Basel III will increase capital requirements through higher minimum capital levels as well as through increases in risk-weights for certain exposures. Additionally, the final Basel III rules place greater emphasis on common equity. In October 2013, the OCC and Federal Reserve released final rules detailing the U.S. implementation of Basel III and the application of the risk-based and leverage capital rules to top-tier savings and loan holding companies. We have transitioned to the Basel III framework beginning in January 2015 and are subject to a phase-in period extending through 2018. Accordingly, the calculations provided below are estimates. These measures are considered to be non-GAAP financial measures because they are not formally defined by GAAP and the Basel III implementation regulations. The Common Equity Tier 1, Tier 1, Total Capital and Leverage ratios, will not be fully phased-in until January 1, 2018 and the Capital Conservation buffer will not be fully phased-in until January 1, 2019. The regulations are subject to change as clarifying guidance becomes available and the calculations currently include our interpretations of the requirements including informal feedback received through the regulatory process. Other entities may calculate the Basel III ratios differently from our calculations based on their interpretation of the guidelines. Since analysts and banking regulators may assess our capital adequacy using the Basel III framework, we believe that it is useful to provide investors information enabling them to assess our capital adequacy on the same basis.

21

June 30, 2016	Common Equity Tier 1 (to Risk Weighted Assets)			Tier 1 Leverage (to Adjusted Tangible Assets)			Tier 1 Capital (to Risk Weighted Assets)			Total Risk-Based Capital (to Risk Weighted Assets)
	(Dollars in millions) (Unaudited)
Flagstar Bancorp (the Company)
Regulatory capital – Basel III (transitional) to Basel III (fully phased-in) (1)
Basel III (transitional)	$	1,086		$	1,514		$	1,514		$	1,618
Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components	(233		)	(154		)	(154		)	(153		)
Basel III (fully phased-in) capital	$	853		$	1,360		$	1,360		$	1,465
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1)
Basel III assets (transitional)	$	8,014		$	13,068		$	8,014		$	8,014
Net change in assets	40			(155		)	40			40
Basel III (fully phased-in) assets	$	8,054		$	12,913		$	8,054		$	8,054
Capital ratios
Basel III (transitional)	13.55		%	11.59		%	18.89		%	20.19		%
Basel III (fully phased-in)	10.59		%	10.53		%	16.88		%	18.19		%

June 30, 2016	Common Equity Tier 1 (to Risk Weighted Assets)			Tier 1 Leverage (to Adjusted Tangible Assets)			Tier 1 Capital (to Risk Weighted Assets)			Total Risk-Based Capital (to Risk Weighted Assets)
Flagstar Bank (the Bank)	(Dollars in millions) (Unaudited)
Regulatory capital – Basel III (transitional) to Basel III (fully phased-in) (1)
Basel III (transitional)	$	1,576		$	1,576		$	1,576		$	1,679
Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components	(105		)	(105		)	(105		)	(102		)
Basel III (fully phased-in) capital	$	1,471		$	1,471		$	1,471		$	1,577
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in) (1)
Basel III assets (transitional)	$	8,048		$	13,102		$	8,048		$	8,048
Net change in assets	230			(105		)	230			230
Basel III (fully phased-in) assets	$	8,278		$	12,997		$	8,278		$	8,278
Capital ratios
Basel III (transitional)	19.58		%	12.03		%	19.58		%	20.86		%
Basel III (fully phased-in)	17.76		%	11.31		%	17.76		%	19.05		%

22

TARP Redemption.As announced on June 29, 2016, we plan to redeem $267 million of our Fixed Rate Cumulative Perpetual Preferred Stock, Series C (the "TARP Preferred") plus accrued and unpaid dividends of $104 million by July 29, 2016 which will have a material impact on our capital ratios presented below.  These measures are considered to be non-GAAP financial measures because they are not formally defined by GAAP. Since analysts and banking regulators may assess our capital adequacy based on this redemption, we believe that it is useful to provide investors information enabling them to assess our capital adequacy on the same basis.

June 30, 2016	Common Equity Tier 1 (to Risk Weighted Assets)			Tier 1 Leverage (to Adjusted Tangible Assets)
Flagstar Bancorp (the Company)	(Dollars in millions) (Unaudited)
Regulatory capital	$	1,086		$	1,514
TARP redemption	(112		)	(378		)
Adjusted regulatory capital	$	974		$	1,136
Risk-weighted assets	$	8,014		$	13,068
TARP redemption	(9		)	150
Adjusted risk-weighted assets	$	8,005		$	13,218
Regulatory capital ratio	13.55		%	11.59		%
Adjusted regulatory capital ratio for TARP Redemption	12.17		%	8.59		%

23

EX-99.2

2nd Quarter 2016 Flagstar Bancorp, Inc. (NYSE: FBC) Earnings Presentation 2nd Quarter 2016 July 26, 2016

2nd Quarter 2016 Cautionary statement 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. 2

2nd Quarter 2016 Executive Overview Sandro DiNello, CEO

2nd Quarter 2016 Strategic highlights 4 Unique relationship-based business model • Continue to make progress on long-term financial targets: - Return on average assets of 1.4% vs. target of 1.2 – 1.6% - Return on average common equity of 13.8 % vs. target of 13 – 18% Expand mortgage originations • Fallout-adjusted lock volumes increased 18% and gain on loan sale margin (HFS) increased 8bps - Correspondent volumes increased 20% during 2Q16 - Retail volumes increased 41% to 7% of total fallout-adjusted lock volumes during 2Q16 Grow community banking • Average commercial loans grew 20%, and exceeded average consumer loans for first time • Core deposits increased 4%, increasing our stable funding base for balance sheet expansion Highly profitable operations • Positive operating leverage (revenue up 11% vs. expenses up 2%) • Solid, consistent financial results with no surprises (EPS $0.66 2Q16 vs. $0.54 1Q16) • Efficiency ratio improved to 68% from 74% in 1Q16 Positioned to thrive in any market • Strong credit metrics: NPLs at 0.76%, consumer delinquencies at 0.27% and ALLL coverage at 2.6% • Relatively neutral interest rate risk position; strong liquidity • Tier 1 leverage was 11.6 percent and remains strong at 8.6 percent when adjusted for TARP redemption(1) • Continued strong risk management infrastructure and culture 1) Please see non-GAAP reconciliation in the appendix.

2nd Quarter 2016 Financial Overview Jim Ciroli, CFO

2nd Quarter 2016 2nd quarter key highlights 6 Strong profitability Positive operating leverage • Revenue up 11% vs. expenses up 2% - Strong revenue growth, led by increased net gain on loan sales and loan fees and charges - Low level of incremental expense reflects the scalability of our platform Increased noninterest income • Noninterest income increased $23 million to $128 million, up 22% from 1Q16 - Adjusted net gain on loan sales(1) increased 29% on higher fallout-adjusted lock volumes (+18%) and margin (+8bps) - Loan fees and charges rose $4mm on higher mortgage loan closings Improved asset quality • Nonperforming loans and consumer delinquencies improved on solid credit performance - Nonperforming loans fell $9mm to $44mm or 0.76% of loans held-for-investment - Consumer loan delinquencies (30-89 days past due) fell $4mm to $7mm - No nonperforming loans or delinquencies in our commercial loan portfolio Robust capital • Tier 1 leverage was 11.6 percent and remains strong at 8.6 percent when adjusted for TARP redemption(2) • On-balance sheet liquidity equal to 15.8% of total assets(3) 1) Net gain on loan sales has been adjusted to exclude the $5mm gain on HFI loans sold during the quarter. 2) Please see non-GAAP reconciliation in the appendix. 3) Liquid assets include cash, interest earning deposits, investment securities exclude pledged securities less a 7% haircut applied to investment securities to estimate liquidation costs. • Net income of $47 million, or $0.66 per diluted share, in 2Q16 - Up $0.12 per diluted share, or 22% vs. 1Q16 on higher noninterest income - Returns on assets and equity up vs. 1Q16

2nd Quarter 2016 2Q16 1Q16 $ Variance % Variance Net interest income $77 $79 ($2) (3%) (Benefit) provision for loan losses ("PLL") (3) (13) 10 (77%) Net interest income after PLL 80 92 (12) (13%) Net gain on loan sales 90 75 15 20% Loan fees and charges 19 15 4 27% Loan administration income 4 6 (2) (33%) Net return on the mortgage servicing asset (4) (6) 2 (33%) Representation and warranty benefit 4 2 2 100% Other noninterest income 15 13 2 15% Total noninterest income 128 105 23 22% Net gain on loan sales / total revenue 44% 41% 3% Compensation and benefits 66 68 (2) (3%) Commissions and loan processing expense 29 22 7 32% Other noninterest expenses 44 47 (3) (6%) Total noninterest expense 139 137 2 2% Income before income taxes 69 60 9 15% Provision for income taxes 22 21 1 (5%) Net income $47 $39 $8 21% Diluted earnings per share $0.66 $0.54 $0.12 22% Profitability Net interest margin 2.63% 2.66% -3 bps Mortgage rate lock commitments, fallout adjusted $8,127 $6,863 $1,264 18% Mortgage closings $8,330 $6,352 $1,978 31% Gain on loan sale margin, adjusted(1) 1.04% 0.96% 8 bps Efficiency ratio 68.2% 74.5% N/M (Benefit) provision for loan losses • $3 million provision benefit from performing mortgage loan sales and continued strong credit metrics • NPLs fell $9 million to $44 million or 0.76% of loans held-for-investment B Quarterly income comparison $mm Observations 7 Noninterest income • Noninterest income increased 22% - Net gain on loan sales (HFS) rose 29% on higher volumes (+18%) and margin (+8bps) - Loan fees and charges increased $4mm on higher mortgage closings - Net MSR return improved due to higher service fee income and lower disposition costs, partially offset by anticipated and actual prepayments C Net interest income • Net interest income remained relatively stable - Earning assets declined 2%, primarily due to loan sales - Net interest margin dropped slightly to 2.63% A 1. Expressed as a percent of fallout-adjusted locks and excludes gain on HFI loans during the quarters. N/M – not meaningful Noninterest expense • Noninterest expenses were up 2% - Commissions and loan processing increased $7mm due to higher mortgage closings - Other expense categories were flat to down D A B C2 D C1 C3

2nd Quarter 2016 Average balance sheet highlights 8 $ $ % Loans held-for-sale $2,884 ($25) (1%) Consumer loans (2) 2,746 (568) (17%) Commercial loans (2) 2,823 469 20% Total loans held-for-investment 5,569 (99) (2%) Other earning assets (3) 3,186 (108) (3%) Interest-earning assets $11,639 (232) (2%) Other assets 1,799 127 8% Total assets $13,438 ($105) (1%) Deposits $8,631 581 7% Short-term debt 835 (827) (50%) Long-term debt 1,625 65 4% Other liabilities 741 31 4% Total liabilities $11,832 (150) (1%) Preferred Equity 267 - 0% Common Equity 1,339 45 3% Total liabilities and equity $13,438 ($105) (1%) Book value per common share (6/30/16) (4)(6) $23.48 $0.66 3% Incr (Decr) (1) Average Balance Sheet Equity(6) • Common equity / assets of 9.7% • Book value per share increased at an annualized rate of 12% during 2Q16 1) Measured vs. the prior quarter. 2) Consumer loans include first and second mortgages, HELOC and other loans; commercial loans include commercial real estate, commercial & industrial and warehouse loans. 3) Other earning assets include interest earning deposits, investment securities and loans with government guarantees. 4) Book value per share has not been reduced for $102 million of unpaid dividends on our perpetual preferred stock, which have been deferred. If these dividends were paid, book value per share would be $21.67/share. 5) Core deposits is defined as consumer and commercial accounts including demand, savings, money market and CD deposits. 6) Common equity and book value ratios are calculated on ending period balances. Interest-bearing liabilities • Average deposits increased 7% - Core deposits up 4%(5) - Company controlled deposits up 35% due to seasonal factors and higher refinance volume and loans serviced 2Q16 ($mm) Observations Interest-earning assets • Average earning assets fell 2% primarily due to loan sales at the end of 1Q16 and in 2Q16 • Rotated into higher spread commercial loans from lower spread consumer loans - Commercial loans up 20% on organic growth; warehouse lending - Consumer loans down 17% on loan sales and prepayments

2nd Quarter 2016 9 Asset quality Performing TDRs and NPLs ($mm) 108 97 101 75 73 65 63 66 53 44 $173 $160 $167 $128 $117 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 Peforming TDRs NPLs 1) Excludes loans carried under the fair value option and loans with government guarantees. Allowance coverage¹ (% of loans HFI) 4.3% 3.7% 3.0% 2.9% 2.6% 6.5% 5.2% 4.2% 4.5% 4.5% 1.4% 1.4% 1.4% 1.3% 1.2% 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 Total Consumer Commercial Net charge-offs(1) ($mm) 1) Excludes charge-offs of $15mm, $16mm, $2mm, $6mm and $2mm related to the sale or transfer of nonperforming loans and TDRs during 2Q15 – 2Q16, respectively. Also excludes charge-offs related to loans with government guarantees of $3mm, $3mm and $4mm during 4Q15 – 2Q16, respectively. Representation & warranty reserve ($mm) $48 $45 $40 $40 $36 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 3 8 4 3 3 $18.0 $24.0 $9.0 $12.0 $9.0 0.26% 0.61% 0.29% 0.20% [VALUE] 2Q15 3Q15 4Q15 1Q16 2Q16 Adjusted charge-offs Adjustments(1) Adjusted NCO % LHFI

2nd Quarter 2016 8.5% 8.8% 8.6% 8.2% 8.6% 3.0% -43bps +61bps 2.9% -41bps +25bps 2.9% -49bps +42bps 2.8% +8bps . +47bps 3.0% -40bps 11.5% 11.7% 11.5% 11.0% 11.6% 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 Robust capital 10 • Flagstar expects to have strong capital levels after its TARP redemption - 2Q16 earnings generated 47bps of Tier 1 leverage - Capital ratios are consistent or higher than peers before considering the low risk content of our business • Flagstar has used excess capital to support balance sheet growth • Flagstar grows regulatory capital at a greater pace as it utilizes its NOL-related DTAs and reduces its MSRs • The balance sheet has trapped capital of: - $196mm of NOL-related DTAs (150bps of Tier 1 leverage) - $144mm of MSRs (110bps of Tier 1 leverage) • Robust capital generation will support future growth Observations 2Q16 Flagstar Bancorp Tier 1 leverage Well Capitalized 5.0% Tier 1 CET-1 Tier 1 Total RBC Leverage to RWA to RWA to RWA 2Q16 Actual 11.6% 13.6% 18.9% 20.2% 2Q16 Adjusted(1) 8.6 12.2 14.2 15.5 1Q16 Actual 11.0% 14.0% 19.7% 21.0% Higher rate capital generation (near-term) Tier 1 equity less TARP incl. deferred dividends TARP incl. deferred dividends Balance sheet impact Net earnings contribution 2016 phase-in under Basel III 1) Reflect ratios adjusted for TARP redemption; please see non-GAAP reconciliation in the appendix.

2nd Quarter 2016 Business Segment Overview Lee Smith, COO

2nd Quarter 2016 Community banking 12 Average commercial loans ($bn) Commercial loan total commitments ($bn) Average consumer loans ($bn) Average deposit funding(1) ($bn) 0.4 0.4 0.4 0.6 0.6 0.6 0.7 0.8 0.8 0.9 1.0 0.9 1.0 1.0 1.3 $2.0 $2.0 $2.2 $2.4 $2.8 2Q15 3Q15 4Q15 1Q16 2Q16 Commercial and Industrial Commercial Real Estate Warehouse 0.6 0.8 0.7 0.7 [VALUE] 1.0 1.2 1.3 1.5 [VALUE] 2.0 2.1 2.2 2.3 [VALUE] $3.6 $4.0 $4.2 $4.5 [VALUE] 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 Commercial and Industrial Commercial Real Estate Warehouse 2.4 2.8 2.9 2.8 2.2 0.5 0.6 0.5 0.5 0.5 $2.9 $3.4 $3.4 $3.3 $2.7 2Q15 3Q15 4Q15 1Q16 2Q16 Residential First Mortgages Other Consumer Loans 5.7 5.7 5.8 5.8 6.1 0.9 1.1 1.1 1.1 1.0 1.1 1.5 1.2 1.2 1.6 $7.7 $8.3 $8.1 $8.1 $8.6 2Q15 3Q15 4Q15 1Q16 2Q16 Retail Government Company-controlled deposits 1) Includes company controlled deposits which are included as part of mortgage servicing.

2nd Quarter 2016 5.2 4.5 3.4 3.8 4.7 1.7 1.9 1.4 1.5 2.1 1.5 1.5 1.0 1.0 1.5 $8.4 $7.9 $5.8 $6.3 $8.3 2Q15 3Q15 4Q15 1Q16 2Q16 Conventional Government Jumbo Mortgage originations 13 Closings by purpose ($bn) 3.8 4.4 2.9 2.7 3.8 4.6 3.5 2.9 3.7 4.5 $8.4 $7.9 $5.8 $6.3 $8.3 2Q15 3Q15 4Q15 1Q16 2Q16 Purchase originations Refinance originations Closings by mortgage type ($bn) Net gain on loan sales – revenue and margin Fallout-adjusted locks ($bn) $6.8 $6.5 $5.0 $6.9 $8.1 2Q15 3Q15 4Q15 1Q16 2Q16 $66 $85 $83 $68 $46 $75 $90 1.21% 1.05% 0.92% [VALUE] [VALUE] 2Q15 3Q15 4Q15 1Q16 2Q16 Gain on loan sale (HFS) Gain on HFI transfer Gain on loan sale % (HFS)

2nd Quarter 2016 14 MSR / regulatory capital (Bancorp) Loans serviced (‘000) $ UPB of MSRs sold ($bn) 4.6 6.7 2.5 2.6 0.7 0.8 1.7 2.5 2.2 $5.3 $7.5 $4.2 $5.1 $2.2 2Q15 3Q15 4Q15 1Q16 2Q16 Bulk Sales Flow Transactions 124 119 119 119 134 225 221 212 192 194 28 30 31 29 30 377 370 362 340 358 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 Serviced for Others Subserviced for Others Flagstar Loans HFI 33% 29% 28% 27% 28% 24% 21% 21% 19% 20% 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 MSR to Tier 1 Common MSR to Tier 1 Capital Mortgage servicing Average company-controlled deposits ($bn) $1.1 $1.5 $1.2 $1.2 $1.6 2Q15 3Q15 4Q15 1Q16 2Q16

2nd Quarter 2016 Noninterest expenses and efficiency ratio Efficiency ratio 70% 65% 75% 75% 68% 2Q15 3Q15 4Q15 1Q16 2Q16 Quarterly noninterest expenses ($mm) $138 $131 $129 $137 $139 2Q15 3Q15 4Q15 1Q16 2Q16 15 • Flagstar‘s long-term objective is to achieve an efficiency ratio in the mid-60’s

2nd Quarter 2016 Closing Remarks / Q&A Sandro DiNello, CEO

2nd Quarter 2016 Guidance(1) 17 1) See cautionary statements on slide 2. Net interest income • Average earning assets up 5 - 8 percent, led by increases in loans HFS and commercial loans, driven by higher mortgage market and continued C&I, CRE growth • Net interest margin contracts slightly due to new Senior Notes (TARP redemption) Mortgage originations • Fallout-adjusted locks up approximately 5 percent on a slightly stronger mortgage market Gain on loan sales • Gain on loan sale margin improves moderately from Q2, adjusted for HFI gains Net servicing revenue • Net return on the mortgage servicing asset negatively impacted by continued prepayments • Mortgage servicing asset relatively flat Provision for loan losses • Provision for loan losses to match Q2 net charge-offs (excluding loan sales and loans with government guarantees) Noninterest expenses • Noninterest expenses to rise to $142 - $147 million due to higher mortgage originations and increases from Q2 in asset resolution and other noninterest expense 2016 3rd quarter outlook

2nd Quarter 2016 Appendix Company overview 19 Financial performance 25 Community banking segment 26 Mortgage origination segment 31 Mortgage servicing segment 33 Capital and liquidity 34 Asset quality 38 Non-GAAP reconciliation 39

2nd Quarter 2016 Flagstar at a glance Community banking • Leading Michigan-based bank with a balanced, diversified lending platform • $13.7bn of assets and $8.6bn of deposits • 99 branches • 104k household & 14k business relationships Mortgage origination • Leading national originator • Originated $28.4bn of residential mortgage loans during the last 12 months • Approximately 1,200 TPO relationships • Retail lending network included 29 locations in 21 states Mortgage servicing • 7th largest sub-servicer of mortgage loans nationwide • Currently servicing approximately 360k loans • Scalable platform with capacity to service 1mm loans • Low cost deposits from escrow balances Corporate Overview • Traded on the NYSE (FBC) • Headquartered in Troy, MI • Market capitalization $1.5bn • Member of the Russell 2000 Index 19 COMPANY OVERVIEW 29 Retail home lending Offices in 21 states 99 Branches in Michigan Bank branches Retail home lending

2nd Quarter 2016 Flagstar’s one-of-a-kind business model … Originates mortgages in multiple channels on a national scale, which … … Deploy excess funding into lending opportunities where we are a lender of choice, which … … Cross-sell our banking products to deepen our B2B relationships, which … … Leverages our scalable sub-servicing platform, which … … Builds enduring net interest margin driven revenue, allowing us to … … Generates stable, lower cost, long-term funding, which we are able to ... … Expands our key B2B relationships to develop greater mortgage origination referrals, improving our ability to … … Generates capital with high ROE fee-based activity and servicing relationships, which … COMPANY OVERVIEW 20

2nd Quarter 2016 Flagstar has a strong executive team 21 COMPANY OVERVIEW Board of Directors John Lewis Chairman Community Banking • Currently serving as Director Chief Financial Officer • CFO since 8/14 • Nearly 30 years of banking and financial services experience with First Niagara, Huntington and KeyCorp Chief Operating Officer • COO since 5/13 • Formerly a partner of MatlinPatterson Global Advisors and a Senior Director at Zolfo Cooper • Extensive expe- rience in financial management and operations • Chartered Accoun- tant in England and Wales 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 • President of Mortgage Banking since 6/15 • 30 years of mortgage industry experience with Mission Hills Mortgage, IndyMac and CitiMortgage General Counsel • General Counsel since 6/15 • 20 years of legal experience with the FDIC and Sidley Austin LLP • CEO since 5/13 • Over 35 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 Patrick McGuirk Steve Figliuolo Sandro DiNello Len Israel Jim Ciroli Lee Smith Drew Ottaway • Managing Director of Lending since 11/15 • Has over 25 years of commercial lending experience in southeast Michigan with Comerica and NBD Chief Audit Officer Sandro DiNello President & CEO David Colajezzi

2nd Quarter 2016 Sandro DiNello President & CEO Drew Ottaway Managing Director of Lending Warehouse Lending Commercial Real Estate Comprised of lending officers who average experience of 21 years in banking (3+ with Flagstar). Prior banking experience includes Fifth Third, Wells Fargo and Bank of America. Homebuilder Finance Commercial & Industrial Newly recruited team of lending officers who have extensive experience of more than 20 years in banking. Prior banking experience includes Texas Capital and Royal Bank of Canada. Comprised of lending officers who average experience of 26 years in banking (13 with Flagstar). Prior banking experience includes Citizens Bank, Bank of America and Texas Capital. Comprised of lending officers who average experience of 25 years in banking (2+ with Flagstar). Prior banking experience includes Fifth Third, PNC, Bank of America and JPM Chase. Flagstar has deep commercial lending experience Supported by a team of credit officers with more than 15 years average banking experience. Supported by a team of credit officers with more than 20 years average banking experience. Supported by a team of credit officers with nearly 15 years average banking experience. Supported by a team of credit officers with more than 15 years average banking experience. COMPANY OVERVIEW 22

2nd Quarter 2016 Karen Sabatowski Chief Compliance Officer Sandro DiNello President & CEO Board of Directors Steve Figliuolo Chief Risk Officer Risk Committee Enterprise Risk Committee • Capital planning / stress test modeling • Mortgage • Warehouse • Commercial • Consumer • TPO’s • Counterparty • Model risk management • Risk assessment/ deficiency mgmt • R&W reserve • Market risk • Effective challenge 6 9 60 44 12 9 7 28 FTEs Regulatory Affairs Modeling & Analytics ERM Chief Credit Officer QC / Appraisal Review MFIU Fraud Investigations Loan Review Operational Risk AML / BSA Compliance 19 ¹ Excludes 24 FTEs in internal audit and 4 FTEs in Sarbanes-Oxley compliance Risk management Best-in-class risk management platform with 194 FTEs¹ COMPANY OVERVIEW 23

2nd Quarter 2016 Strong growth opportunities Grow community banking • Team lift outs • Grow housing-related relationships(1) - Expand warehouse lending (400bps spreads) - Launch builder finance lending (350bps spreads) - Initiate MSR lending (500bps spreads; LTVs<60%) • Cultivate middle-market commercial relationships in foot-print Expand mortgage business • Recruit experienced talent to increase share of origination market - Distributed retail - TPO account executives • Grow servicing operations - Acquire new sub-servicing relationships - Cross-sell additional revenue capabilities 24 B u il d B u y • Buyers of size in Michigan are engaged on other projects for the foreseeable future • Michigan is a highly fragmented banking market • Focused on our share in metro markets • Acquiring deposit oriented franchises that lag in profitability because of lack of asset generation • No strategic buyers of size • Highly fragmented industry with aging individual ownership • Regulatory and interest rate environment is accelerating exits • Will consider accretive transactions that add incrementally to annual origination volume 24 COMPANY OVERVIEW 1. Indicated spreads are targets and may not be reflective of actual spreads.

2nd Quarter 2016 Long-term targets • Long-term target of 1.2 - 1.6% - Add incremental revenue with a low incremental cost - Improved risk management will deliver long-run savings - Return on average assets of 1.38% is amongst the top quintile of banks $10bn - $50bn of assets(1) • Long-term target of 13 - 18% - Add / increase high ROE businesses - Return on average common equity of 13.8% is amongst the top quintile of banks $10bn - $50bn of assets(1) Financial Performance Return on assets Return on equity • Lender of choice in key markets (Michigan, national housing finance) • Long-term target of 50% of revenue • Growth trajectory 10 - 15% - Every additional $1bn of earning assets increases pre-tax profits ~$20mm – $25mm - Rotate lower spread assets to higher spread assets while minimizing capital costs • Nationally recognized leader the quick brown fox d • Long-term target of 50% of revenue • Growth trajectory 5 - 10% - Expand retail originations (distributed, DTC) - Every 100k in new loans sub-serviced generates $5- 7mm of incremental pre-tax profits Revenues Mortgage Banking 25 FINANCIAL PERFORMANCE 1. Data for top ROA and ROCE is as of March 31, 2016 for all major exchange U.S. Banks with assets between $10bn and $50bn, excluding Puerto Rican banks.

2nd Quarter 2016 154 7 35 Strong market position as leading Michigan-based community bank 26 COMMUNITY BANKING Source: SNL Financial; Note: Deposit data as of June 30, 2015, per branch data capped at $500mm per branch; MI-based banks highlighted in grey; Pro forma for pending mergers and acquisitions; 1. Oakland County data excludes $1.4bn of company-controlled deposits held at company headquarters; 2. 2016–2021 CAGR; 3. Flagstar Median HHI, projected HHI growth and projected population growth are deposit weighted Flagstar’s branch network Rank Deposits ($mm) Overall MI-based Institution Branches Total Share 1 Chase 249 $20,654 14% 2 Comerica 215 18,991 13% 3 Huntington 319 12,910 9% 4 Fifth Third 240 12,461 9% 5 PNC 210 11,651 8% 6 Bank of America 127 11,444 8% 7 1 Chemical (pro forma) 227 9,802 7% 8 2 Flagstar 99 5,530 4% 9 Citizens 98 4,951 3% 10 TCF 53 2,600 2% Top 10 1,837 $110,996 77% Market share Attractive markets Deposit Median Proj. HHI Proj. pop Market $mm % of total mkt. share HHI grow th² grow th³ Oakland County¹ $2,765 43% 5.9% $70,892 10.6% 2.6% Grand Rapids MSA 385 6% 2.0% 56,710 10.4% 3.6% Ann Arbor MSA 288 4% 3.9% 62,584 7.8% 2.9% Key Flagstar markets $3,437 54% 4.6% $68,609 10.4% 2.7% National aggregate 55,551 7.8% 3.7% Flagstar deposits Leading position among independent banks (pro forma)

2nd Quarter 2016 Deposits Portfolio and strategy overview 5.7 5.7 5.8 5.8 6.1 $7.7 $8.3 $8.1 $8.1 $8.6 2Q15 3Q15 4Q15 1Q16 2Q16 Retail deposits Other deposits Total average deposits ($bn) +12% YOY • Flagstar gathers deposits from consumers, small 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 relationships with small business and consumers – We additionally maintain depository relationships in connection with our mortgage origination and servicing businesses, and with Michigan governmental entities – Cost of total deposits equal to 0.53%(1) DDA 12% Savings 43% MMDA 4% CD 11% Company- controlled 18% Government & other 12% 70% retail Total : $8.6bn 0.53% cost of total deposits(1) 2Q16 total average deposits 27 COMMUNITY BANKING 1. Total deposits include noninterest bearing deposits.

2nd Quarter 2016 Deposit growth opportunities • Average balance of $1.0bn during 2Q16 • Cost of total government deposits: 0.49% during 2Q16(2) • Michigan deposits are not collateralized • Strong relationships across the state • Average balance of $0.6bn during 2Q16 • Flagstar has realized year-over-year growth in treasury management services of: - Deposits 129% - Fee income 4% • Average balance of $1.6bn during 2Q16 on 358k loans serviced and sub-serviced • Low cost of deposits • Deposit balances increase along with the number of loans serviced & sub-serviced • Average balance of $5.5bn during 2Q16 of which 79% are customer demand & savings accounts • Cost of total core deposits(1): 0.68% during 2Q16(2) • Average core deposits equal $61mm per branch • Flagstar has launched a brand campaign to build awareness to grow its core deposit base Core Deposits Retail Commercial Other Deposits Government Company controlled 28 COMMUNITY BANKING 1. Core deposits equal total deposits less government deposits and company-controlled deposits. 2. Total deposits include noninterest bearing deposits.

2nd Quarter 2016 2.2 2.2 2.5 2.9 2.9 4.9 5.4 5.6 5.7 5.6 0.6 0.5 0.5 0.5 0.4 $7.7 $8.1 $8.6 $9.1 $8.9 2Q15 3Q15 4Q15 1Q16 2Q16 Loans HFS Loans HFI Loans with government guarantees 1st Mortgage HFI; 25% 2nds, HELOC & other; 6% Warehouse; 15% CRE and C&I; 17% GNMA buyouts; 5% 1st Mortgage HFS; 32% 2Q16 average loans Lending Portfolio and strategy overview Total average loans ($bn) • Flagstar’s largest category of earning assets consists of loans held-for-investment which averaged $5.6bn during 2Q16 – 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 • Flagstar maintains a balance of mortgage loans held- for-sale which averaged $2.9bn during 2Q16 – Essentially all of our mortgage loans originated are sold into the secondary market – Flagstar has the option to direct a portion of the mortgage loans it originates to its own balance sheet 29 COMMUNITY BANKING

2nd Quarter 2016 2Q16 Commercial Real Estate 81% Michigan Retail 22% Owner- Occupied 22% Multi-family 21% Office 15% Home builder finance 10% Special Purpose 6% Industrial 4% 2Q16 Commercial & Industrial 61% Michigan; 16% national finance Services 44% Financial, Insurance & Real Estate (FIRE) 33% Manufacturing, 11% Distribution 4% Govt & Educ. 1% 2Q16 Warehouse - % advances sold to Flagstar Overview • Warehouse lines with approximately 260 relationships nationwide, of which more than 90% 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 Commercial lending Diversified relationship-based commercial lending capabilities COMMUNITY BANKING Average 42% advances sold to Flagstar [CATEGORY NAME]; ~150 borrowers [CATEGORY NAME]; ~60 Borrowers [CATEGORY NAME]; ~50 borrowers 30

2nd Quarter 2016 Residential mortgage originations by channel ($bn) Broker • 3.3% market share with #8 national ranking(1) • Approximately 500 brokerage relationships in 50 states in 2Q16 • Targeted gain on sale margin of ~90bps • Top 10 relationships account for 21% of overall brokerage volume 1) Data source: As reported by Inside Mortgage Finance for 1Q16 published May 27, 2016. Correspondent • 3.9% market share with #6 national ranking(1) • Approximately 700 correspondent partners in 50 states in 2Q16 • Targeted gain on sale margin of ~60bps • Top 10 relationships account for 16% of overall correspondent volume • Warehouse lines with approximately 240 correspondent relationships Retail • Loan officer additions have expanded our retail footprint to 29 locations in 21 states • Targeted gain on sale margin of ~340bps • Direct-to-consumer is 34% of retail volume Originates mortgages in multiple channels on a national scale 31 $5.8 $5.6 $4.1 $4.8 $6.2 2Q15 3Q15 4Q15 1Q16 2Q16 $2.2 $1.9 $1.4 $1.3 $1.6 2Q15 3Q15 4Q15 1Q16 2Q16 $0.5 $0.4 $0.3 $0.3 $0.5 2Q15 3Q15 4Q15 1Q16 2Q16 MORTGAGE ORIGINATIONS

2nd Quarter 2016 32 MORTGAGE ORIGINATIONS US mortgage origination market Historical and projected volumes Residential mortgage originations (adjusted for inflation and population growth) - $ in trillions $ 1 .2 $ 1 .9 $ 2 .1 $ 1 .5 $ 1 .2 $ 1 .4 $ 1 .5 $ 2 .5 $ 2 .2 $ 1 .6 $ 3 .3 $ 4 .3 $ 5 .6 $ 4 .0 $ 4 .1 $ 3 .8 $ 3 .0 $ 1 .7 $ 2 .1 $ 1 .8 $ 1 .6 $ 2 .2 $ 2 .0 $ 1 .3 $ 1 .7 $ 1 .7 $ 1 .5 1 9 9 1 A 1 9 9 2 A 1 9 9 3 A 1 9 9 4 A 1 9 9 5 A 1 9 9 6 A 1 9 9 7 A 1 9 9 8 A 1 9 9 9 A 2 0 0 0 A 2 0 0 1 A 2 0 0 2 A 2 0 0 3 A 2 0 0 4 A 2 0 0 5 A 2 0 0 6 A 2 0 0 7 A 2 0 0 8 A 2 0 0 9 A 2 0 1 0 A 2 0 1 1 A 2 0 1 2 A 2 0 1 3 A 2 0 1 4 A 2 0 1 5 A 2 0 1 6 F 2 0 1 7 F Source: Inside Mortgage Finance for actual periods and a blended average of forecast by Fannie Mae, Freddie Mac and Mortgage Bankers Association. 1. Adjusted for historical inflation as reported by Bloomberg (2015 = 100). 2. Adjusted for population growth as reported by the US Census Bureau (2015 = 100). 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Nominal $ $0.6 $0.9 $1.0 $0.8 $0.6 $0.8 $0.9 $1.5 $1.3 $1.0 $2.2 $2.9 $3.9 $2.9 $3.1 $3.0 $2.4 $1.5 $1.8 $1.6 $1.5 $2.1 $1.9 $1.2 $1.7 $1.7 $1.5 Real(1) $ 1.0 1.5 .7 1.2 1.0 1.2 1.3 2.1 .9 .4 3.0 3.8 5.1 3.7 .8 .5 .8 .7 2.0 .8 .6 .2 . . . . . Adjusted(2) $ $ .2 $ .9 $2.1 $ .5 $ .2 $ .4 $ .5 $ .5 $2.2 $1.6 $ .3 $4.3 $ .6 $4.0 $4.1 $3.8 $3.0 $1. $ .1 $1. $1. $2. $2.0 $1.3 $1.7 $1.7 $1.5

2nd Quarter 2016 154 7 35 33 MSR portfolio as of 6/30/16 MSR portfolio characteristics (% UPB) MSR portfolio statistics Measure ($mm) 6/30/2016 3/31/2016 Difference Unpaid principal balance $30,443 $26,613 $3,830 Fair value of MSR $301 $281 $20 Capitalized rate (% of UPB) 0.99% 1.06% -0.07% Multiple 3.534 3.766 (0.232) N te rate 4.034% 4.092% -0.058% Service fee 0.282% 0.282% 0.000% Average Measure ($000) UPB per loan $227 $224 $3 FICO 735 731 4 Loan to value 74.05% 75.13% -1.08% $ return – MSR asset $ Return 2Q15 3Q15 4Q15 1Q16 2Q16 Net hedged profit (loss) $4 $1 $1 $1 $1 Carry on asset 22 19 16 6 9 Run-off (12) (8) (8) (11) (15) Gr ss r turn on the mortgage servicing asset $14 $12 $9 ($4) ($5) Sale transaction & P/L (5) 3 - (2) 1 Model Changes - (3) - - - Net return on the mortgage servicing asset $9 $12 $9 ($6) ($4) Average mortgage servicing rights $271 $317 $304 $285 $307 2016; 26% 2015; 46% 2014; 22% 2013 & prior; 6% by Vintage Fannie; 63% Freddie; 20% GNMA; 15% Private; 2% by Investor MORTGAGE SERVICING

2nd Quarter 2016 11.6% 8.6% Actual 6/30/16 Adjusted 6/30/16 Tier 1 leverage ratio Select capital ratios (adjusted for TARP redemption)(2) 13.6% 12.2% Actual 6/30/16 Adjusted 6/30/16 CET-1 ratio Capital adjusted for TARP redemption 34 3) Reflects ratios adjusted for TARP redemption; please see non-GAAP reconciliation in the appendix. Capitalization ($mm) Illustrative transaction(2) ($mm) Raised $250mm of 6.125% Senior Notes Due 2021 Flagstar Bancorp, Inc. Flagstar Bank, FSB $245mm proceeds $250mm notes $200mm dividend TARP securities $267mm redemption $102mm dividend Trust preferred securities $31mm interest CAPITAL AND LIQUIDITY Actual Adjusted Short-term FHLB advances $1,069 $1,069 Long-term FHLB advances 1,577 1,577 6.125% Senior Notes due 2021 - 250 Trust preferred securities 247 247 Total debt 2,893 3,143 Preferred stock 267 - Common Equity 1,329 1,227 Total stockholders' equity 1,596 1,227 Total capitalization $4,489 $4,370 Total assets 13,739 13,789 Common equity-to-assets ra io 9.7% 8.9% As of 6/30/16 (1) 1. Reflects non-GAAP adjustments to Flagstar’s capitalization for the TARP redemption completed July, 2016. 2) Illustrative transaction reflects estimates for a transaction as of 6/30/16, with actual costs expected to be slightly higher for final transaction which will close during July, 2016.

2nd Quarter 2016 154 7 35 Balance sheet composition Liabilities and Equity 2Q16 average balance sheet (%) Assets Attractive relationship lending with no loans >30 days delinquent Primarily low risk, stable assets (FHLB stock, BOLI, premises & equipment, deferred tax asset, etc.) 10% Common equity 24% FHLB borrowings 51% Deposits excluding company- controlled deposits (“CCD”) 3% Other liabilities ~75% 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 2% TruPS 2% Series C Preferred 11% Other assets 2% MSR 10% Warehouse loans Loans held-for-sale 21% Mortgage loans held-for-investment 24% Agency MBS 19% 2% Cash 11% Commercial loans 8% CCD Efficiently funds loans held-for-sale and warehouse loans 35 CAPITAL AND LIQUIDITY

2nd Quarter 2016 Liquidity and funding 82% 89% 94% 81% 76% 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 1 Total loans (excluding loans held-for-sale & warehouse loans); Core deposits equal total deposits less government deposits and company-controlled deposits Loans / core deposits1 154 7 35 Core deposits¹ / deposits (%) 75% 70% 74% 70% 71% 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 Company- controlled 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) CAPITAL AND LIQUIDITY 36

2nd Quarter 2016 Interest rate risk management • The shorter term measure of the “Earnings at Risk” interest rate risk position is asset sensitive due to the immediate repricing of the variable rate assets including the mortgage banking pipeline, warehouse loans and commercial loans while liabilities reprice more slowly. • The longer term measure of the “Economic Value of Equity” interest rate position is expected to decrease largely due to the convexity of mortgage related assets. • Flagstar also performs a Net Income Simulation that includes the effect of changes in interest rates on the mortgage business. Net income is projected to increase significantly in a decreasing rate environment due to increased mortgage originations. Net interest margin – 12 month horizon instantaneous shocks ($mm) ($ in mm) Parallel Shift Bear Flattener Net interest income $20 ($14) Noninterest Income ($20) to $0 $0 to $14 Up 100bps Low interest rate risk Economic value of equity Change in Economic Value Policy Limit Rates (bps) of Equity ($bn) ($bn) (%) (%) +300 $1.83 ($0.22) (10.7%) (22.5%) +200 $1.93 ($0.12) (5.7 ) (15.0 ) +100 $2.02 ($0.03) (1.4%) (7.5%) Market Implied $2.05 $0.00 0.0 0.0 -100 $1.95 ($0.10) (5.0%) (7.5%) Change 37 CAPITAL AND LIQUIDITY 0bps 50bps 100bps 150bps 200bps 250bps 300bps 350bps 1 month 3 months 6 months 1 year 2 year 3 year 5 year 7 year 10 year 20 year 30 year up 100bps Bear Flattener 6/30/2016

2nd Quarter 2016 788 778 540 540 457 402 337 350 350 238 1,190 56 1,115 60 890 49 890 49 695 28 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 Fannie Mae Freddie Mac Fannie Mae Freddie Mac Audit file pulls Repurchase demands Representation & Warranty reserve details (in millions) 6/30/15 9/30/15 12/31/15 3/31/16 6/30/16 Beginning balance $53) $48) $45) $40) $40) Additions (3) (4) (5) 0) (3) Net (charge-offs) / recoveries (2) 1) (0) 0) (1) Ending Balance $48) $45) $40) $40) $36) Repurchase pipeline ($mm) Repurchase reserve ($mm) Repurchase activity with Fannie and Freddie Repurchase demands / file pulls 5% 6% 6% 5% 38 4% ASSET QUALITY $46 $30 $20 $16 $11 6/30/2015 9/30/2015 12/31/2015 3/31/16 6/30/16

2nd Quarter 2016 Supplemental capital ratios 39 NON-GAAP RECONCILIATION 6/30/16 Flagstar Bancorp regulatory ratios adjusted for TARP redemption ($mm) Flagstar Bancorp Common Equity Tier 1 (to Risk Weighted Assets) Tier 1 Leverage (to Adjusted Tangible Assets) Tier 1 Capital (to Risk Weighted Assets) Total Risk-Based Capital (to Risk Weighted Assets) Regulatory capital $1,086 $1,514 $1,514 $1,618 TARP redemption(1) ($112) ($378) ($378) ($378) Adjusted regulatory capital $974 $1,136 $1,136 $1,240 Risk-weighted assets $8,014 $13,068 $8,014 $8,014 TARP redemption ($9) $150 ($9) ($9) Adjusted risk-weighted assets $8,005 $13,218 $8,005 $8,005 Regulatory capital ratio 13.6% 11.6% 18.9% 20.2% Adjusted regulatory capital ratio for TARP Redemption 12.2% 8.6% 14.2% 15.5% 1 Includes the impact of lower Tier 1 equity for assets such as deferred tax assets and mortgage servicing rights.