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):January 24, 2017

(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 January 24, 2017, Flagstar Bancorp, Inc. (the "Company") issued a press release regarding its preliminary results of operations and financial condition for the three months ended December 31, 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 twelve months ended December 31, 2016 as part of its Quarterly Report on Form 10-Q.

On January 24, 2017, the Company will hold a conference call to review fourth 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.

In certain places in our prepared remarks when comparing 2016 EPS with 2015 EPS, we have noted a $0.20 per diluted share impact on 2016 from the seven months for which we still had our TARP securities outstanding. This amount is the result of adjusting for an add back of $18 million of preferred dividends that were accrued during the first seven months of 2016, and a reduction of $6 million of net interest income (after-tax) that would have been incurred during that period had the redemption already occurred.

Item 9.01 Financial Statements and Exhibits

Exhibits
99.1	Press release of Flagstar Bancorp, Inc. dated January 24, 2017
99.2	Flagstar Bancorp, Inc. Conference Call Presentation Slides - Earnings Presentation Fourth 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: January 24, 2017		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 January 24, 2017
99.2	Flagstar Bancorp, Inc. Conference Call Presentation Slides - Earnings Presentation Fourth 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 Fourth Quarter 2016 Net Income of $28 million, or $0.49 per Diluted Share

Company continues solid banking growth and successful execution of business plan

Key Highlights - Fourth Quarter 2016

• Net interest income grew $7 million, or 9 percent, from third quarter 2016, led by higher earning assets and a higher net interest margin.

• Net gain on loan sales fell to $57 million, versus $94 million in prior quarter, due to anticipated seasonal factors and lower refinance activity from significantly higher interest rates.

• Solid credit performance with low levels of delinquencies, nonperforming loans and net charge-offs.

• Strong capital position with Tier 1 leverage at 8.9 percent.

• Lifting of OCC Consent Order reflects success in building strong business model.

TROY, Mich., January 24, 2017 - Flagstar Bancorp, Inc. (NYSE:FBC), the holding company for Flagstar Bank, FSB, today reported fourth quarter 2016 net income of $28 million, or $0.49 per diluted share, as compared to $57 million, or $0.96 per diluted share, in the third quarter 2016 and $33 million, or $0.44 per diluted share, in the fourth quarter 2015.

Full year 2016 net income was $171 million, or $2.66 per diluted share, as compared to full year 2015 net income of $158 million, or $2.24 per diluted share. Third quarter 2016 results included a $24 million benefit related to a decrease in the fair value of the Department of Justice ("DOJ") settlement liability. Excluding this benefit, the Company had adjusted non-GAAP 2016 net income of $155 million, or $2.38 per diluted share, an increase in diluted earnings per share of 6 percent from the full year 2015.

"We are pleased to turn in another profitable quarter, capping a year of solid earnings growth for our Company,” said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "During the quarter, we saw growth in earning assets combined with net interest margin expansion. Asset quality remained rock solid, as it has all year, and expenses were well controlled. Mortgage originations declined seasonally, as expected, and coupled with rising interest rates made mortgage production challenging."

"We reached an important milestone during the quarter with the lifting of the Consent Order in December with the Office of the Comptroller of the Currency. We believe this represented a validation of the quality of our

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risk management organization, the strength of our balance sheet and our improved performance, and also reflected our success in building a broader, more stable and less risky business model."

"With the positive momentum from our 2016 performance, we are looking forward to 2017. We believe the economy will be a bit stronger and the interest rate curve a little steeper. Our business model is poised to continue to be successful."

Fourth Quarter 2016 Highlights:

Income Statement Highlights
	Three Months Ended
	December 31, 2016		September 30, 2016		June 30, 2016			March 31, 2016			December 31, 2015
	(Dollars in millions)
Net interest income	$	87	$	80	$	77		$	79		$	76
Provision (benefit) for loan losses	1		7		(3		)	(13		)	(1		)
Noninterest income	98		156		128			105			97
Noninterest expense	142		142		139			137			129
Income before income taxes	42		87		69			60			45
Provision for income taxes	14		30		22			21			12
Net income	$	28	$	57	$	47		$	39		$	33
Income per share:
Basic	$	0.50	$	0.98	$	0.67		$	0.56		$	0.45
Diluted	$	0.49	$	0.96	$	0.66		$	0.54		$	0.44

Key Ratios
	Three Months Ended										Change (bps)
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015		Seq	Yr/Yr
Net interest margin	2.67	%	2.58	%	2.63	%	2.66	%	2.69	%	9	(2)
Return on average assets	0.8	%	1.6	%	1.4	%	1.2	%	1.0	%	(83)	(25)
Return on average equity	8.6	%	16.5	%	11.5	%	10.1	%	8.6	%	(793)	4
Return on average common equity	8.6	%	17.5	%	13.8	%	12.2	%	10.4	%	(885)	(180)
Efficiency ratio	76.7	%	59.9	%	68.2	%	74.5	%	75.2	%	1680	150

Balance Sheet Highlights
	Three Months Ended										% Change
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015		Seq		Yr/Yr
	(Dollars in millions)
Average Balance Sheet Data
Average interest-earning assets	$	12,817	$	12,318	$	11,639	$	11,871	$	11,240	4	%	14	%
Average loans held-for-sale (LHFS)	3,321		3,416		2,884		2,909		2,484		(3	)%	34	%
Average loans held-for-investment (LHFI)	6,163		5,848		5,569		5,668		5,642		5	%	9	%
Average total deposits	9,233		9,126		8,631		8,050		8,132		1	%	14	%

Note: Please refer to the financial tables at the end of this news release for a reconciliation of adjusted non-GAAP financial measures

to the most directly comparable measure prepared in accordance with GAAP.

Net Interest Income

The Company continued to realize growth in its community banking business in the fourth quarter 2016. Net interest income increased to $87 million, compared to $80 million for the third quarter 2016. The results reflected a 4 percent increase in average earning assets, led by growth in investment securities, commercial loans and mortgage loans, and net interest margin expansion of 9 basis points.

Loans held-for-investment averaged $6.2 billion for the fourth quarter 2016, increasing $315 million, or 5 percent, from the prior quarter. During the fourth quarter 2016, average commercial real estate loans increased $127 million, or 12 percent. Average consumer loans rose $111 million, or 4 percent, driven by an increase in mortgage loans (primarily jumbos). Average commercial and industrial loans also registered solid gains, increasing $88 million, or 14 percent.

Average total deposits were $9.2 billion in the fourth quarter 2016, increasing $107 million, or 1 percent, from the third quarter 2016. The increase was led by higher retail deposits, partially offset by lower government deposits. Average retail deposits rose $132 million, or 2 percent, due to an $89 million increase in savings deposits and a $28 million rise in demand deposits.

Net interest margin increased 9 basis points to 2.67 percent for the fourth quarter 2016, as compared to 2.58 percent for the third quarter 2016. During the quarter, the Company terminated certain fixed rate FHLB advances which resulted in a $2 million benefit to interest expense, accounting for 6 basis points of the increase.

Provision for Loan Losses

The provision for loan losses totaled $1 million for the fourth quarter 2016, as compared to $7 million for the third quarter 2016. The lower level of provision expense reflected strong asset quality and largely matched net charge-offs in the quarter.

Noninterest Income

Noninterest income decreased $58 million, or 37 percent, to $98 million, as compared to $156 million for the third quarter 2016. The decline was driven by a $37 million drop in net gain on loan sales and a $24 million benefit that was recognized in the third quarter 2016 from the reduction in fair value on the DOJ settlement liability.

Fourth quarter 2016 net gain on loan sales fell to $57 million, versus $94 million in the third quarter and $46 million in the same period last year. The decrease from the prior quarter reflected lower fallout-adjusted locks and a drop in the gain on sale margin. In the fourth quarter 2016, fallout-adjusted locks decreased 27 percent to $6.1

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billion, primarily due to anticipated seasonal factors and lower refinance activity from significantly higher interest rates. The net gain on loan sale margin fell 20 basis points to 0.93 percent for the fourth quarter 2016, as compared to 1.13 percent for the third quarter 2016, driven by price competition.

Mortgage Metrics
	Three Months Ended															Change (% / bps)
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			Seq		Yr/Yr
	(Dollars in millions)
Mortgage rate lock commitments (fallout-adjusted) (1)	$	6,091		$	8,291		$	8,127		$	6,863		$	5,027		(27	)%	21	%
Gain on sale margin (change in bps) (1)(2)	0.93		%	1.13		%	1.04		%	0.96		%	0.92		%	(20)		1
Net gain on loan sales on HFS	$	57		94			$	85		$	66		$	46		(39	)%	24	%
Net (loss) return on the mortgage servicing rights ("MSR")	$	(5	)	$	(11	)	$	(4	)	$	(6	)	$	9		N/M		N/M
Gain on loan sales HFS + net (loss) return on the MSR	$	52		$	83		$	81		$	60		$	55		(37	)%	(5	)%
Residential loans serviced (number of accounts - 000's) (3)	383			375			358			354			361			2	%	6	%
Capitalized value of mortgage servicing rights (change in bps)	1.07		%	0.96		%	0.99		%	1.06		%	1.13		%	11		(6)
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 loans serviced for own loan portfolio, serviced for others, and subserviced for others.

Loan fees and charges fell to $20 million for the fourth quarter 2016, as compared to $22 million for the third quarter 2016. The decrease primarily reflected lower mortgage loan closings.

Net return on the mortgage servicing asset (including the impact of hedges) was a net loss of $5 million for the fourth quarter 2016, as compared to a net loss of $11 million for the third quarter 2016. The net return on the mortgage servicing asset increased from the third quarter 2016. This was primarily due to lower prepayments and a $7 million charge recognized in the third quarter 2016 related to MSR sales with a fair value of $50 million that closed in the fourth quarter 2016, partially offset by unfavorable changes in fair value driven by an increase in market implied interest rate volatility experienced in the fourth quarter 2016.

The representation and warranty benefit was $7 million for the fourth quarter 2016, as compared to a $6 million benefit in the third quarter 2016. The representation and warranty reserve was reduced to $27 million at December 31, 2016, from $32 million at September 30, 2016, reflecting a continued improvement in risk trends and a repurchase demand pipeline that was only $6 million at December 31, 2016.

Total other noninterest income for the fourth quarter 2016 was $10 million, as compared to $36 million for the third quarter 2016. The decrease was almost entirely due to a $24 million reduction in the fair value of the Company's DOJ settlement liability recognized in the prior quarter.

Noninterest Expense

Noninterest expense was unchanged at $142 million for the fourth quarter 2016, as compared to the third quarter 2016. Legal and professional expense rose $4 million, while compensation and benefits expense fell $3 million.

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The Company's efficiency ratio was 77 percent for the fourth quarter 2016, compared to an adjusted non-GAAP efficiency ratio of 67 percent in the prior quarter, excluding the $24 million benefit from the drop in fair value on the DOJ settlement liability in the third quarter 2016.

Income Taxes

The fourth quarter 2016 provision for income taxes totaled $14 million, as compared to $30 million in the third quarter 2016. The effective tax rate in the fourth quarter 2016 declined slightly to 33 percent, as compared to 34 percent in the third quarter 2016 and the full year 2016.

Asset Quality

Credit Quality Ratios
	Three Months Ended															Change (% / bps)
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			Seq		Yr/Yr
	(Dollars in millions)
Allowance for loan loss to LHFI	2.4		%	2.3		%	2.6		%	2.9		%	3.0		%	10		(60)
Allowance for loan loss to LHFI and loans with government guarantees	2.2		%	2.2		%	2.4		%	2.7		%	2.8		%	0		(60)
Charge-offs, net of recoveries	$	2		$	7		$	9		$	12		$	9		(71	)%	(78	)%
Charge-offs associated with loans with government guarantees	1			5			4			3			3			(80	)%	(67	)%
Charge-offs associated with the sale or transfer of nonperforming loans and TDRs	—			—			2			6			2			N/M		N/M
Charge-offs, net of recoveries, adjusted (1)	$	1		$	2		$	3		$	3		$	4		(50	)%	(75	)%
Total nonperforming loans held-for-investment	$	40		$	40		$	44		$	53		$	66		—	%	(39	)%
Net charge-offs to LHFI ratio (annualized)	0.13		%	0.51		%	0.62		%	0.86		%	0.62		%	(38)		(49)
Net charge-off ratio, adjusted (annualized)	0.07		%	0.15		%	0.18		%	0.20		%	0.29		%	(8)		(22)
Ratio of nonperforming LHFI to LHFI	0.67		%	0.63		%	0.76		%	0.95		%	1.05		%	4		(38)
N/M - Not meaningful

(1) Excludes charge-offs associated with loans with government guarantees and charge-offs associated with the sale or transfer of nonperforming loans and TDRs.

The Company continued to experience solid credit performance in the fourth quarter 2016. The allowance for loan losses was $142 million at December 31, 2016, covering 2.4 percent of loans held-for-investment, as compared to an allowance for loan losses of $143 million at September 30, 2016, covering 2.3 percent of loans held-for-investment.

Net charge-offs in the fourth quarter 2016 were $2 million, or 0.13 percent of applicable loans, compared to $7 million, or 0.51 percent of applicable loans in the prior quarter. The fourth quarter 2016 amount included $1 million of net charge-offs associated with loans with government guarantees compared to $5 million in the third quarter of 2016.

Nonperforming loans held-for-investment were $40 million at December 31, 2016, unchanged from September 30, 2016. As in the prior quarter, there were no nonperforming commercial loans at December 31, 2016. The ratio of nonperforming loans to loans held-for-investment increased to 0.67 percent at December 31, 2016 from 0.63 percent at September 30, 2016. At December 31, 2016, consumer loan delinquencies totaled $10 million, up slightly from September 30, 2016. As in the prior quarter, there were no commercial loans more than 30 days delinquent at December 31, 2016.

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Capital

Capital Ratios (Bancorp)	Three Months Ended															Change (% / bps)
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			Seq		Yr/Yr
Total capital	16.42		%	15.26		%	20.19		%	20.97		%	20.28		%	116		(386	)
Tier 1 capital	15.14		%	13.98		%	18.89		%	19.67		%	18.98		%	116		(384	)
Tier 1 leverage	8.88		%	8.88		%	11.59		%	11.04		%	11.51		%	—		(263	)
Mortgage servicing rights to Tier 1 capital	26.7		%	24.6		%	19.9		%	19.3		%	20.6		%	210		610
Book value per common share	$	23.50		$	22.72		$	23.54		$	22.82		$	22.33		3	%	5	%

The Company maintained a robust capital position with regulatory ratios well above current regulatory quantitative guidelines for "well capitalized" institutions. At December 31, 2016, the Company had a Tier 1 leverage ratio of 8.88 percent, unchanged from September 30, 2016.

At December 31, 2016, the Company had a common equity-to-assets ratio of 9.50 percent.

Earnings Conference Call

As previously announced, the Company's fourth quarter 2016 earnings call will be held Tuesday, January 24, 2017 at 11 a.m. (ET).

To join the call, please dial (800) 474-8920 toll free or (719) 457-2640 and use passcode 1910792. Please call at least 10 minutes before the conference is scheduled to begin. A replay will be available for five business days by calling (866) 375-1919 toll free or (719) 457-0820, using passcode 1910792.

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

About Flagstar

Flagstar Bancorp, Inc. (NYSE: FBC) is a $14.1 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, 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 41 retail locations in 21 states. Flagstar is a leading national originator and servicer of mortgage loans, handling payments and record keeping for $80 billion of home loans representing 383,000 borrowers. For more information, please visit flagstar.com.

Use of Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this news release includes non-GAAP financial measures, such as adjusted net income, adjusted return on average assets, adjusted return on average equity, adjusted return on common equity, adjusted noninterest income, adjusted efficiency ratio and estimated fully implemented Basel III capital levels and ratios. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar.

Non-GAAP financial measures have inherent limitations. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. Flagstar’s method of calculating these non-GAAP measures may differ from

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methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements.

Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in this news release. Additional discussion of the use of non-GAAP measures can also be found in conference call slides, the Form 8-K Current Report related to this news release and in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission. These documents can all be found on the Company’s website at flagstar.com.

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Flagstar Bancorp, Inc.’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. 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.

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Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition

(Dollars in millions)

(Unaudited)

	December 31, 2016			September 30, 2016			December 31, 2015
Assets
Cash	$	84		$	76		$	54
Interest-earning deposits	74			98			154
Total cash and cash equivalents	158			174			208
Investment securities available-for-sale	1,480			1,115			1,294
Investment securities held-to-maturity	1,093			1,156			1,268
Loans held-for-sale	3,177			3,393			2,576
Loans held-for-investment	6,065			6,290			6,352
Loans with government guarantees	365			404			485
Less: allowance for loan losses	(142		)	(143		)	(187		)
Total loans held-for-investment and loans with government guarantees, net	6,288			6,551			6,650
Mortgage servicing rights	335			302			296
Federal Home Loan Bank stock	180			172			170
Premises and equipment, net	275			271			250
Net deferred tax asset	286			305			364
Other assets	781			834			639
Total assets	$	14,053		$	14,273		$	13,715
Liabilities and Stockholders' Equity
Noninterest-bearing	$	2,077		$	2,544		$	1,574
Interest-bearing	6,723			6,827			6,361
Total deposits	8,800			9,371			7,935
Short-term Federal Home Loan Bank advances and other	1,780			905			2,116
Long-term Federal Home Loan Bank advances	1,200			1,577			1,425
Other long-term debt	493			493			247
Representation and warranty reserve	27			32			40
Other liabilities	417			609			423
Total liabilities	12,717			12,987			12,186
Stockholders' Equity
Preferred stock	—			—			267
Common stock	1			1			1
Additional paid in capital	1,502			1,494			1,486
Accumulated other comprehensive (loss) income	(7		)	(20		)	2
Accumulated deficit	(160		)	(189		)	(227		)
Total stockholders' equity	1,336			1,286			1,529
Total liabilities and stockholders' equity	$	14,053		$	14,273		$	13,715

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Flagstar Bancorp, Inc.  Condensed Consolidated Statements of Operations  (Dollars in millions, except per share data) (Unaudited)
																Fourth Quarter 2016 Compared to:
	Three Months Ended															Third Quarter 2016					Fourth Quarter 2015
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			Amount			Percent		Amount			Percent
Interest Income
Total interest income	$	111		$	106		$	99		$	101		$	95		$	5		5	%	$	16		17	%
Total interest expense	24			26			22			22			19			(2		)	(8	)%	5			26	%
Net interest income	87			80			77			79			76			7			9	%	11			14	%
Provision (benefit) for loan losses	1			7			(3		)	(13		)	(1		)	(6		)	(86	)%	$	2		N/M
Net interest income after provision (benefit) for loan losses	86			73			80			92			77			13			18	%	9			12	%
Noninterest Income
Net gain on loan sales	57			94			90			75			46			(37		)	(39	)%	$	11		24	%
Loan fees and charges	20			22			19			15			14			(2		)	(9	)%	6			43	%
Deposit fees and charges	5			5			6			6			6			—			—	%	(1		)	(17	)%
Loan administration income	4			4			4			6			7			—			—	%	(3		)	(43	)%
Net (loss) return on the mortgage servicing rights	(5		)	(11		)	(4		)	(6		)	9			6			(55	)%	(14		)	N/M
Representation and warranty benefit	7			6			4			2			6			1			17	%	1			17	%
Other noninterest income	10			36			9			7			9			(26		)	(72	)%	1			11	%
Total noninterest income	98			156			128			105			97			(58		)	(37	)%	1			1	%
Noninterest Expense
Compensation and benefits	66			69			66			68			59			(3		)	(4	)%	$	7		12	%
Commissions	15			16			14			10			8			(1		)	(6	)%	$	7		88	%
Occupancy and equipment	21			21			21			22			21			—			—	%	$	—		—	%
Asset resolution	1			2			1			3			2			(1		)	(50	)%	$	(1	)	(50	)%
Federal insurance premiums	2			3			3			3			5			(1		)	(33	)%	$	(3	)	(60	)%
Loan processing expense	15			13			15			12			12			2			15	%	$	3		25	%
Legal and professional expense	9			5			6			9			9			4			80	%	$	—		—	%
Other noninterest expense	13			13			13			10			13			—			—	%	$	—		—	%
Total noninterest expense	142			142			139			137			129			—			—	%	13			10	%
Income before income taxes	42			87			69			60			45			(45		)	(52	)%	(3		)	(7	)%
Provision for income taxes	14			30			22			21			12			(16		)	(53	)%	$	2		17	%
Net income	$	28		$	57		$	47		$	39		$	33		$	(29	)	(51	)%	$	(5	)	(15	)%
Income per share
Basic	$	0.50		$	0.98		$	0.67		$	0.56		$	0.45		$	(0.48	)	(49	)%	$	0.05		11	%
Diluted	$	0.49		$	0.96		$	0.66		$	0.54		$	0.44		$	(0.47	)	(49	)%	$	0.05		11	%

N/M - Not meaningful

8

Flagstar Bancorp, Inc.  Condensed Consolidated Statements of Operations  (Dollars in millions, except per share data) (Unaudited)
							Year Ended December 31, 2016
	Year Ended						Compared to: Year Ended December 31, 2015
	December 31, 2016			December 31, 2015			Amount			Percent
Interest Income
Total interest income	$	417		$	355		$	62		17	%
Total interest expense	94			68			26			38	%
Net interest income	323			287			36			13	%
Provision (benefit) for loan losses	(8		)	(19		)	11			(58	)%
Net interest income after provision (benefit) for loan losses	331			306			25			8	%
Noninterest Income
Net gain on loan sales	316			288			28			10	%
Loan fees and charges	76			67			9			13	%
Deposit fees and charges	22			25			(3		)	(12	)%
Loan administration income	18			26			(8		)	(31	)%
Net (loss) return on the mortgage servicing rights	(26		)	28			(54		)	N/M
Representation and warranty benefit	19			19			—			—	%
Other noninterest income	62			17			45			N/M
Total noninterest income	487			470			17			4	%
Noninterest Expense
Compensation and benefits	269			237			32			14	%
Commissions	55			39			16			41	%
Occupancy and equipment	85			81			4			5	%
Asset resolution	7			15			(8		)	(53	)%
Federal insurance premiums	11			23			(12		)	(52	)%
Loan processing expense	55			52			3			6	%
Legal and professional expense	29			36			(7		)	(19	)%
Other noninterest expense	49			53			(4		)	(8	)%
Total noninterest expense	560			536			24			4	%
Income before income taxes	258			240			18			8	%
Provision for income taxes	87			82			5			6	%
Net income	$	171		$	158		$	13		8	%
Income per share
Basic	$	2.71		$	2.27		$	0.44		19	%
Diluted	$	2.66		$	2.24		$	0.42		19	%

N/M - Not meaningful

9

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial and Statistical Data

(Dollars in millions, except share data)

(Unaudited)

	Three Months Ended									Year Ended
	December 31, 2016			September 30, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Mortgage loans originated (1)	$	8,573		$	9,198		$	5,824		$	32,453		$	29,402
Mortgage loans sold and securitized	$	8,422		$	8,723		$	5,164		$	32,033		$	26,307
Interest rate spread (2)	2.49		%	2.36		%	2.54		%	2.45		%	2.58		%
Net interest margin	2.67		%	2.58		%	2.69		%	2.64		%	2.74		%
Average common shares outstanding	56,607,933			56,580,238			56,449,596			56,569,307			56,426,977
Average fully diluted shares outstanding	57,824,854			57,933,806			57,502,017			57,597,667			57,164,523
Average interest-earning assets	$	12,817		$	12,318		$	11,240		$	12,164		$	10,436
Average interest-paying liabilities	$	10,222		$	9,773		$	9,078		$	9,757		$	8,305
Average stockholders' equity	$	1,312		$	1,379		$	1,547		$	1,464		$	1,486
Return on average assets (4)	0.78		%	1.61		%	1.03		%	1.23		%	1.32		%
Return on average equity (4)	8.60		%	16.53		%	8.56		%	11.69		%	10.63		%
Return on average common equity (4)	8.60		%	17.45		%	10.35		%	13.03		%	10.49		%
Efficiency ratio (4)	76.7		%	59.9		%	75.2		%	69.2		%	70.9		%
Equity-to-assets ratio (average for the period)	9.05		%	9.75		%	12.07		%	10.52		%	12.43		%

	December 31, 2016			September 30, 2016			December 31, 2015
Book value per common share	$	23.50		$	22.72		$	22.33
Number of common shares outstanding	56,824,802			56,597,271			56,483,258
Mortgage loans subserviced for others	$	43,127		$	41,017		$	40,287
Mortgage loans serviced for others	$	31,207		$	31,372		$	26,145
Weighted average service fee (basis points)	26.7			28.1			27.7
Capitalized value of mortgage servicing rights	1.07		%	0.96		%	1.13		%
Mortgage servicing rights to Tier 1 capital	26.7		%	24.6		%	20.6		%
Ratio of allowance for loan losses to LHFI (3)	2.37		%	2.30		%	3.00		%
Ratio of allowance for loan losses to LHFI and loans with government guarantees (3)	2.23		%	2.16		%	2.78		%
Ratio of nonperforming assets to total assets	0.39		%	0.39		%	0.61		%
Equity-to-assets ratio	9.50		%	9.01		%	11.14		%
Common equity-to-assets ratio	9.50		%	9.01		%	9.20		%
Number of bank branches	99			99			99
Number of FTE employees	2,886			2,881			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.

(4) See Non-GAAP Reconciliation in which applicable periods, three months ended September 30, 2016 and full year ended December 31, 2016, have been adjusted.

10

Flagstar Bancorp, Inc.

Earnings Per Share

(Dollars in millions, except share data)

(Unaudited)

	Three Months Ended									Year Ended
	December 31, 2016			September 30, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Net income	28			57			33			171			158
Cumulative preferred stock dividends (1)	—			(2		)	(8		)	(18		)	(30		)
Net income applicable to Common Stockholders	$	28		$	55		$	25		$	153		$	128
Weighted Average Shares
Weighted average common shares outstanding	56,607,933			56,580,238			56,449,596			56,569,307			56,426,977
Effect of dilutive securities
Warrants	151,560			364,791			348,939			138,314			305,484
Stock-based awards	1,065,361			988,777			703,482			890,046			432,062
Weighted average diluted common shares	57,824,854			57,933,806			57,502,017			57,597,667			57,164,523
Earnings per common share
Net income applicable to Common Stockholders	$	0.50		$	0.98		$	0.45		$	2.71		$	2.27
Effect of dilutive securities
Warrants	—			—			—			(0.01		)	(0.01		)
Stock-based awards	(0.01		)	(0.02		)	(0.01		)	(0.04		)	(0.02		)
Diluted earnings per share	$	0.49		$	0.96		$	0.44		$	2.66		$	2.24

(1) Under the terms of the Series C Preferred Stock, we elected to defer dividends beginning with the February 2012 dividend. In July 2016, we ended the deferral and brought current our previously deferred dividends.

11

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)

	Three Months Ended
	December 31, 2016						September 30, 2016						December 31, 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	$	3,321	$	29	3.55	%	$	3,416	$	30	3.51	%	$	2,484	$	24	3.88	%
Loans held-for-investment
Consumer loans (1)	2,691		24		3.55	%	2,580		23		3.52	%	3,423		30		3.52	%
Commercial loans (1)	3,472		35		4.06	%	3,268		33		3.96	%	2,219		21		3.77	%
Total loans held-for-investment	6,163		59		3.84	%	5,848		56		3.77	%	5,642		51		3.62	%
Loans with government guarantees	389		4		4.23	%	432		4		3.88	%	496		4		2.84	%
Investment securities	2,845		18		2.53	%	2,516		16		2.55	%	2,441		16		2.55	%
Interest-earning deposits	99		1		0.51	%	106		—		0.48	%	177		—		0.49	%
Total interest-earning assets	12,817		$	111	3.46	%	12,318		$	106	3.42	%	11,240		$	95	3.36	%
Other assets	1,672						1,830						1,585
Total assets	$	14,489					$	14,148					$	12,825
Interest-Bearing Liabilities
Retail deposits
Demand deposits	$	521	$	—	0.21	%	$	509	$	—	0.20	%	$	431	$	—	0.13	%
Savings deposits	3,840		7		0.77	%	3,751		8		0.77	%	3,725		8		0.84	%
Money market deposits	256		—		0.43	%	250		—		0.41	%	272		—		0.39	%
Certificates of deposit	1,079		3		1.05	%	1,071		3		1.05	%	813		2		0.88	%
Total retail deposits	5,696		10		0.75	%	5,581		11		0.75	%	5,241		10		0.76	%
Government deposits
Demand deposits	211		—		0.39	%	243		—		0.39	%	304		—		0.40	%
Savings deposits	470		1		0.52	%	478		1		0.52	%	401		1		0.52	%
Certificates of deposit	352		1		0.60	%	355		—		0.52	%	410		1		0.45	%
Total government deposits	1,033		2		0.52	%	1,076		1		0.49	%	1,115		2		0.46	%
Total interest-bearing deposits	6,729		12		0.72	%	6,657		12		0.71	%	6,356		12		0.71	%
Short-term Federal Home Loan Bank advances and other	1,427		1		0.50	%	1,073		1		0.44	%	1,226		1		0.25	%
Long-term Federal Home Loan Bank advances	1,573		5		1.24	%	1,576		7		1.81	%	1,219		4		1.60	%
Other long-term debt	493		6		4.89	%	467		6		4.86	%	277		2		2.66	%
Total interest-bearing liabilities	10,222		24		0.97	%	9,773		26		1.06	%	9,078		19		0.83	%
Noninterest-bearing deposits (2)	2,504						2,469						1,776
Other liabilities	451						527						424
Stockholders' equity	1,312						1,379						1,547
Total liabilities and stockholders' equity	$	14,489					$	14,148					$	12,825
Net interest-earning assets	$	2,595					$	2,545					$	2,162
Net interest income			$	87					$	80					$	76
Interest rate spread (3)					2.49	%					2.36	%					2.54	%
Net interest margin(4)					2.67	%					2.58	%					2.69	%
Ratio of average interest-earning assets to interest-bearing liabilities					125.4	%					126.0	%					123.8	%
Total average deposits	$	9,233					$	9,126					$	8,132

(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.

12

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)

	Year Ended
	December 31, 2016						December 31, 2015
	Average Balance		Interest		Annualized Yield/Rate		Average Balance		Interest		Annualized Yield/Rate
Interest-Earning Assets
Loans held-for-sale	$	3,134	$	113	3.62	%	$	2,188	$	85	3.90	%
Loans held-for-investment
Consumer loans (1)	2,832		99		3.52	%	3,083		114		3.68	%
Commercial loans (1)	2,981		120		3.97	%	1,993		78		3.88	%
Total loans held-for-investment	5,813		219		3.75	%	5,076		192		3.76	%
Loans with government guarantees	435		16		3.59	%	633		18		2.86	%
Investment securities	2,653		68		2.56	%	2,305		59		2.55	%
Interest-earning deposits	129		1		0.50	%	234		1		0.50	%
Total interest-earning assets	12,164		$	417	3.42	%	10,436		$	355	3.39	%
Other assets	1,743						1,520
Total assets	$	13,907					$	11,956
Interest-Bearing Liabilities
Retail deposits
Demand deposits	$	489	$	1	0.18	%	$	429	$	1	0.14	%
Savings deposits	3,751		29		0.78	%	3,693		30		0.82	%
Money market deposits	278		1		0.44	%	258		1		0.31	%
Certificates of deposit	990		10		1.05	%	787		6		0.77	%
Total retail deposits	5,508		41		0.76	%	5,167		38		0.73	%
Government deposits
Demand deposits	228		1		0.39	%	257		1		0.39	%
Savings deposits	442		2		0.52	%	405		2		0.52	%
Certificates of deposit	382		2		0.40	%	358		1		0.39	%
Total government deposits	1,052		5		0.45	%	1,020		4		0.44	%
Total interest-bearing deposits	6,560		46		0.71	%	6,187		42		0.68	%
Short-term Federal Home Loan Bank advances and other	1,249		5		0.44	%	311		1		0.30	%
Long-term Federal Home Loan Bank advances	1,584		27		1.72	%	1,500		18		1.17	%
Other long-term debt	364		16		4.34	%	307		7		2.42	%
Total interest-bearing liabilities	9,757		94		0.97	%	8,305		68		0.82	%
Noninterest-bearing deposits (2)	2,202						1,690
Other liabilities	484						475
Stockholders' equity	1,464						1,486
Total liabilities and stockholders' equity	$	13,907					$	11,956
Net interest-earning assets	$	2,407					$	2,131
Net interest income			$	323					$	287
Interest rate spread (3)					2.45	%					2.58	%
Net interest margin(4)					2.64	%					2.74	%
Ratio of average interest-earning assets to interest-bearing liabilities					124.7	%					125.7	%
Total average deposits	$	8,762					$	7,877

(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

Gain on Loan Sales on Loans Held-for-Sale

(Dollars in millions)

(Unaudited)

	Three Months Ended
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
	(Dollars in millions)
Mortgage rate lock commitments (fallout-adjusted)(1)	$	6,091		$	8,291		$	8,127		$	6,863		$	5,027
Gain on sale margin (change in bps) (1)	0.93		%	1.13		%	1.04		%	0.96		%	0.92		%
Net gain on loan sales on HFS	$	57		$	94		$	85		$	66		$	46
Net (loss) return on the mortgage servicing rights	$	(5	)	$	(11	)	$	(4	)	$	(6	)	$	9
Gain on loan sales HFS + net (loss) return on the MSR	$	52		$	83		$	81		$	60		$	55
Residential loans serviced (number of accounts - 000's) (2)	383			375			358			354			361
Capitalized value of mortgage servicing rights	1.07		%	0.96		%	0.99		%	1.06		%	1.13		%
Mortgage rate lock commitments (gross)	$	7,611		$	10,328		$	10,168		$	8,762		$	6,258
Mortgage loans sold and securitized	$	8,422		$	8,723		$	7,940		$	6,948		$	5,164
Net margin on loan sales	0.68		%	1.08		%	1.07		%	0.94		%	0.90		%

(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.

	Year Ended
	December 31, 2016			December 31, 2015
Mortgage rate lock commitments (fallout-adjusted)(1)	$	29,372		$	25,511
Gain on sale margin (change in bps) (1)	1.03		%	1.13		%
Net gain on loan sales on HFS	$	301		$	288
Net (loss) return on the mortgage servicing rights	$	(26	)	$	28
Gain on loan sales HFS + net (loss) return on the MSR	$	275		$	316
Residential loans serviced (number of accounts - 000's) (2)	383			361
Capitalized value of mortgage servicing rights	1.07		%	1.13		%
Mortgage rate lock commitments (gross)	$	36,869		$	31,718
Mortgage loans sold and securitized	$	32,033		$	26,307
Net margin on loan sales	0.94		%	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.

14

Regulatory Capital - Bancorp

(Dollars in millions)

(Unaudited)

	December 31, 2016				September 30, 2016				June 30, 2016				March 31, 2016				December 31, 2015
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted tangible assets)	$	1,256	8.88	%	$	1,225	8.88	%	$	1,514	11.59	%	$	1,453	11.04	%	$	1,435	11.51	%
Total adjusted tangible asset base	$	14,149			$	13,798			$	13,068			$	13,167			$	12,474
Tier 1 common equity (to risk weighted assets)	$	1,084	13.07	%	$	1,056	12.04	%	$	1,086	13.55	%	$	1,032	13.96	%	$	1,065	14.09	%
Tier 1 capital (to risk weighted assets)	$	1,256	15.14	%	$	1,225	13.98	%	$	1,514	18.89	%	$	1,453	19.67	%	$	1,435	18.98	%
Total capital (to risk weighted assets)	$	1,363	16.42	%	$	1,338	15.26	%	$	1,618	20.19	%	$	1,549	20.97	%	$	1,534	20.28	%
Risk weighted asset base	$	8,298			$	8,767			$	8,014			$	7,387			$	7,561

Regulatory Capital - Bank

(Dollars in millions)

(Unaudited)

	December 31, 2016				September 30, 2016				June 30, 2016				March 31, 2016				December 31, 2015
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted tangible assets)	$	1,491	10.52	%	$	1,459	10.55	%	$	1,576	12.03	%	$	1,509	11.43	%	$	1,472	11.79	%
Total adjusted tangible asset base	$	14,177			$	13,824			$	13,102			$	13,200			$	12,491
Tier 1 common equity (to risk weighted assets)	$	1,491	17.91	%	$	1,459	16.59	%	$	1,576	19.58	%	$	1,509	20.34	%	$	1,472	19.42	%
Tier 1 capital (to risk weighted assets)	$	1,491	17.91	%	$	1,459	16.59	%	$	1,576	19.58	%	$	1,509	20.34	%	$	1,472	19.42	%
Total capital (to risk weighted assets)	$	1,597	19.19	%	$	1,571	17.87	%	$	1,679	20.86	%	$	1,605	21.63	%	$	1,570	20.71	%
Risk weighted asset base	$	8,325			$	8,794			$	8,048			$	7,421			$	7,582

Loan Originations (Dollars in millions) (Unaudited)
	Three Months Ended
	December 31, 2016				September 30, 2016				December 31, 2015
Consumer loans
Mortgage (1)	$	8,573	97.3	%	$	9,198	96.9	%	$	5,824	96.0	%
Other consumer (2)	46		0.5	%	44		0.5	%	39		0.6	%
Total consumer loans	8,619		97.8	%	9,242		97.4	%	5,863		96.6	%
Commercial loans (3)	191		2.2	%	248		2.6	%	205		3.4	%
Total loan originations	$	8,810	100.0	%	$	9,490	100.0	%	$	6,068	100.0	%

	Year Ended
	December 31, 2016				December 31, 2015
Mortgage (1)	$	32,453	97.5	%	$	29,402	98.2	%
Other consumer (2)	159		0.5	%	132		0.4	%
Total consumer loans	32,612		97.9	%	29,534		98.6	%
Commercial loans (3)	687		2.1	%	415		1.4	%
Total loan originations	$	33,299	100.0	%	$	29,949	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.

15

Loans Held-for-Investment

(Dollars in millions)

(Unaudited)

	December 31, 2016				September 30, 2016				December 31, 2015
Consumer loans
Residential first mortgage	$	2,327	38.3	%	$	2,136	33.9	%	$	3,100	48.9	%
Second mortgage	126		2.1	%	127		2.0	%	135		2.1	%
HELOC	317		5.2	%	326		5.2	%	384		6.0	%
Other	28		0.5	%	30		0.5	%	31		0.5	%
Total consumer loans	2,798		46.1	%	2,619		41.6	%	3,650		57.5	%
Commercial loans
Commercial real estate	1,261		20.8	%	1,168		18.6	%	814		12.8	%
Commercial and industrial	769		12.7	%	708		11.3	%	552		8.7	%
Warehouse lending	1,237		20.4	%	1,795		28.5	%	1,336		21.0	%
Total commercial loans	3,267		53.9	%	3,671		58.4	%	2,702		42.5	%
Total loans held-for-investment	$	6,065	100.0	%	$	6,290	100.0	%	$	6,352	100.0	%

Residential Loans Serviced

(Dollars in millions)

(Unaudited)

	December 31, 2016			September 30, 2016			December 31, 2015
	Unpaid Principal Balance		Number of accounts	Unpaid Principal Balance		Number of accounts	Unpaid Principal Balance		Number of accounts
Serviced for own loan portfolio (1)	$	5,816	29,244	$	5,645	29,052	$	6,088	30,683
Serviced for others	31,207		133,270	31,372		138,771	26,145		118,662
Subserviced for others (2)	43,127		220,075	41,017		207,039	40,287		211,937
Total residential loans serviced	$	80,150	382,589	$	78,034	374,862	$	72,520	361,282

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

16

Allowance for Loan Losses

(Dollars in millions)

(Unaudited)

	Three Months Ended									Year Ended
	December 31, 2016			September 30, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Allowance for loan losses	$	142		$	143		$	187		$	142		$	187
Charge-offs
Consumer loans
Residential first mortgage	(3		)	(7		)	(7		)	(29		)	(87		)
Second mortgage	—			—			(2		)	(2		)	(4		)
HELOC	—			(1		)	(1		)	(2		)	(3		)
Other	(1		)	(1		)	(1		)	(3		)	(4		)
Total consumer loans	(4		)	(9		)	(11		)	(36		)	(98		)
Commercial loans
Commercial and industrial	—			—			—			—			(3		)
Total commercial loans	—			—			—			—			(3		)
Total charge-offs	$	(4	)	$	(9	)	$	(11	)	$	(36	)	$	(101	)
Recoveries
Consumer loans
Residential first mortgage	1			—			—			2			3
Second mortgage	—			—			1			—			2
HELOC	—			1			—			—			—
Other	—			1			1			3			3
Total consumer loans	1			2			2			5			8
Commercial loans
Commercial real estate	1			—			—			1			2
Total commercial loans	1			—			—			1			2
Total recoveries	2			2			2			6			10
Charge-offs, net of recoveries	$	(2	)	$	(7	)	$	(9	)	$	(30	)	$	(91	)
Net charge-offs to LHFI ratio (annualized) (1)	0.13		%	0.51		%	0.62		%	0.52		%	1.85		%
Net charge-offs ratio, adjusted (annualized) (1)(2)	0.07		%	0.15		%	0.29		%	0.15		%	0.40		%
Net charge-offs to LHFI ratio (annualized) by loan type (1)
Residential first mortgage	0.38		%	1.33		%	1.03		%	1.18		%	3.34		%
Second mortgage	(0.92		)%	1.03		%	1.89		%	1.34		%	1.72		%
HELOC and consumer	0.50		%	0.23		%	0.86		%	0.53		%	1.18		%
Commercial real estate	(0.05		)%	—%			—%			(0.02		)%	(0.29		)%
Commercial and industrial	(0.12		)%	(0.01		)%	(0.01		)%	(0.04		)%	0.71		%

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

(2) Excludes charge-offs of zero, zero, and $2 million related to the sale of nonperforming loans, TDRs and non-agency loans during the three months ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively and $8 million and $69 million during the years ended December 31, 2016 and 2015, respectively. Also excludes charge-offs related to loans with government guarantees of $1 million, $5 million, and $3 million during the three months ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively, and $13 million and $3 million during the years ended December 31, 2016 and December 31, 2015, respectively.

17

Representation and Warranty Reserve

(Dollars in millions)

(Unaudited)

		Three Months Ended									Year Ended
		December 31, 2016			September 30, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Balance, beginning of period		$	32		$	36		$	45		$	40		$	53
Provision (release)
	Charged to gain on sale for current loan sales	1			1			1			5			7
	Charged to representation and warranty benefit	(7		)	(6		)	(6		)	(19		)	(19		)
	Total	(6		)	(5		)	(5		)	(14		)	(12		)
Charge-offs, net		1			1			—			1			(1		)
Balance, end of period		$	27		$	32		$	40		$	27		$	40

Composition of Allowance for Loan Losses

(Dollars in millions)

(Unaudited)

December 31, 2016	Collectively Evaluated Reserves		Individually Evaluated Reserves		Total
Consumer loans
Residential first mortgage	$	60	$	5	$	65
Second mortgage	2		6		8
HELOC	14		2		16
Other	1		—		1
Total consumer loans	77		13		90
Commercial loans
Commercial real estate	28		—		28
Commercial and industrial	17		—		17
Warehouse lending	7		—		7
Total commercial loans	52		—		52
Total allowance for loan losses	$	129	$	13	$	142

September 30, 2016	Collectively Evaluated Reserves		Individually Evaluated Reserves		Total
Consumer loans
Residential first mortgage	$	63	$	7	$	70
Second mortgage	3		6		9
HELOC	15		1		16
Other	1		—		1
Total consumer loans	82		14		96
Commercial loans
Commercial real estate	25		—		25
Commercial and industrial	14		—		14
Warehouse lending	8		—		8
Total commercial loans	47		—		47
Total allowance for loan losses	$	129	$	14	$	143

18

Nonperforming Loans and Assets

(Dollars in millions)

(Unaudited)

	December 31, 2016			September 30, 2016			December 31, 2015
Nonperforming loans	$	22		$	23		$	31
Nonperforming TDRs	8			8			7
Nonperforming TDRs at inception but performing for less than six months	10			9			28
Total nonperforming loans held-for-investment	40			40			66
Real estate and other nonperforming assets, net	14			15			17
Nonperforming assets held-for-investment, net (1)	$	54		$	55		$	83
Ratio of nonperforming assets to total assets	0.39		%	0.39		%	0.61		%
Ratio of nonperforming loans held-for-investment to loans held-for-investment	0.67		%	0.63		%	1.05		%
Ratio of nonperforming assets to loans held-for-investment and repossessed assets	0.90		%	0.87		%	1.32		%
Ratio of nonperforming assets to Tier 1 capital + allowance for loan losses	3.93		%	4.03		%	5.12		%

(1) Does not include nonperforming loans held-for-sale of $6 million, $5 million, and $12 million at December 31, 2016, September 30, 2016, and December 31, 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
December 31, 2016
Consumer loans	$	8	$	2	$	40	$	50	$	2,798
Commercial loans	—		—		—		—		3,267
Total loans	$	8	$	2	$	40	$	50	$	6,065
September 30, 2016
Consumer loans	$	6	$	2	$	40	$	48	$	2,619
Commercial loans	—		—		—		—		3,671
Total loans	$	6	$	2	$	40	$	48	$	6,290
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

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

19

Troubled Debt Restructurings

(Dollars in millions)

(Unaudited)

	TDRs
	Performing		Nonperforming		Nonperforming TDRs at inception but performing for less than six months		Total
December 31, 2016
Consumer loans	$	67	$	8	$	10	$	85
Total TDR loans	$	67	$	8	$	10	$	85
September 30, 2016
Consumer loans	$	70	$	8	$	9	$	87
Commercial loans	1		—		—		1
Total TDR loans	$	71	$	8	$	9	$	88
December 31, 2015
Consumer loans	$	101	$	7	$	28	$	136
Total TDR loans	$	101	$	7	$	28	$	136

20

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 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 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 ours 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.

December 31, 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)
Basel III (transitional)	$	1,084		$	1,256		$	1,256		$	1,363
Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components	(230		)	(162		)	(162		)	(160		)
Basel III (fully phased-in) capital	$	854		$	1,094		$	1,094		$	1,203
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in)
Basel III assets (transitional)	$	8,298		$	14,149		$	8,298		$	8,298
Net change in assets	35			(161		)	35			35
Basel III (fully phased-in) assets	$	8,333		$	13,988		$	8,333		$	8,333
Capital ratios
Basel III (transitional)	13.07		%	8.88		%	15.14		%	16.42		%
Basel III (fully phased-in)	10.25		%	7.82		%	13.13		%	14.44		%

December 31, 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)
Basel III (transitional)	$	1,491		$	1,491		$	1,491		$	1,597
Increased deductions related to deferred tax assets, mortgage servicing assets and other capital components	(119		)	(119		)	(119		)	(116		)
Basel III (fully phased-in) capital	$	1,372		$	1,372		$	1,372		$	1,481
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in)
Basel III assets (transitional)	$	8,325		$	14,177		$	8,325		$	8,325
Net change in assets	196			(120		)	196			196
Basel III (fully phased-in) assets	$	8,521		$	14,057		$	8,521		$	8,521
Capital ratios
Basel III (transitional)	17.91		%	10.52		%	17.91		%	19.19		%
Basel III (fully phased-in)	16.10		%	9.76		%	16.10		%	17.39		%

21

Adjusted Net Income and Adjusted Income per Share. In addition to analyzing the Company's results on a reported basis, management reviews the Company's results and the results on an adjusted basis. These non-GAAP measures reflect the adjustment of the reported U.S.GAAP results for significant items that management does not believe are reflective of the Company's current and ongoing operations. The Company believes that adjusted net income and adjusted non-interest income and ratios based on these non-GAAP measures provide a meaningful representation of its operating performance on an ongoing basis. These are measures that management uses to assess performance of the Company against its peers and evaluate overall performance. The Company believes these non-GAAP financial measures provide useful information for investors, securities analysts and others because they provide a tool to evaluate the Company’s performance on an ongoing basis and compared to its peers.

The following table provides a reconciliation of non-GAAP financial measures.

	Three Months Ended			Year Ended
	September 30, 2016			December 31, 2016
	(Dollars in millions) (Unaudited)
Net income	$	57		$	171
Adjustment to remove DOJ adjustment	(24		)	(24		)
Tax impact of adjusting item	8			8
Adjusted net income	$	41		$	155
Diluted income per share	$	0.96		$	2.66
Adjustment to remove DOJ adjustment	(0.41		)	(0.42		)
Tax impact of adjusting item	0.14			0.14
Diluted adjusted income per share	$	0.69		$	2.38
Return on average assets	1.61		%	1.23		%
Adjustment to remove DOJ adjustment including tax impact	(0.45		)%	(0.12		)%
Adjusted return on average assets	1.16		%	1.11		%
Return on average equity	16.53		%	11.69		%
Adjustment to remove DOJ adjustment including tax impact	(4.64		)%	(1.10		)%
Adjusted return on average equity	11.89		%	10.59		%
Return on average common equity	17.45		%	13.03		%
Adjustment to remove DOJ adjustment including tax impact	(4.89		)%	(1.22		)%
Adjusted return on average common equity	12.56		%	11.81		%
Total noninterest expense	$	142		$	560
Net interest income	$	80		$	323
Total noninterest income	$	156		$	487
Adjustment to remove DOJ adjustment	(24		)	(24		)
Adjusted total noninterest income	$	132		$	463
Efficiency Ratio	59.9		%	69.2		%
Adjustment to remove DOJ adjustment	7.1		%	2.0		%
Adjusted Efficiency Ratio	67.0		%	71.2		%

22

EX-99.2

4th Quarter 2016 Flagstar Bancorp, Inc. (NYSE: FBC) Earnings Presentation 4th Quarter 2016 January 24, 2017

4th Quarter 2016 Cautionary statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on management’s current expectations and assumptions regarding the Company’s business and performance, the economy and other future conditions, and forecasts of future events, circumstances and results. However, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, contingencies and other factors. Generally, forward-looking statements are not based on historical facts but instead represent our management’s beliefs regarding future events. Such statements may be identified by words such as believe, expect, anticipate, intend, plan, estimate, may increase, may fluctuate, and similar expressions or future or conditional verbs such as will, should, would and could. Such statements are based on management’s current expectations and are subject to risks, uncertainties and changes in circumstances. Actual results and capital and other financial conditions may differ materially from those included in these statements due to a variety of factors, including without limitation those found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Any forward-looking statements made by or on behalf of us speak only as to the date they are made, and we do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made, except as required under United States securities laws. In addition to results presented in accordance with GAAP, this presentation includes non-GAAP financial measures. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar. Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. Flagstar’s method of calculating these non-GAAP measures may differ from methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements. Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in these conference call slides. Additional discussion of the use of non-GAAP measures can also be found in the Form 8-K Current Report related to this presentation and in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission. These documents can all be found on the Company’s website at flagstar.com. 2

4th Quarter 2016 Executive Overview Sandro DiNello, CEO

4th Quarter 2016 4Q16 Strategic highlights 4 Unique relationship-based business model • Continue to make progress on long-term financial targets (ROA of 1.2 – 1.6% and ROCE of 13 – 18%): - 4Q16 ROA of 0.8% and ROCE of 8.6% - FY16 adjusted ROA 1.1%(1) and adjusted ROCE of 11.8%(1) Expand mortgage revenues Grow community banking Highly profitable operations • Solid, consistent financial results (EPS $0.49 per diluted share) • Net interest income rose $7 million (or 9%) vs. 3Q16; highest level in the Company’s history Positioned to thrive in any market • Strong credit metrics: NPLs at 0.67%, consumer delinquencies at 0.36% and ALLL coverage at 2.4% of LHFI • Relatively neutral interest rate risk position; strong liquidity • Tier 1 leverage ratio remained strong at 8.9 percent • Continued robust risk management infrastructure and culture 1) References non-GAAP number for 3Q16 and GAAP number for 4Q16. 3Q16 number shown excludes DOJ benefit during that period. Please see reconciliation on slide 44. • Banking growth better-than-expected: - Average total commercial loans up 6% vs. 3Q16 and up 56% vs. 4Q15 - Average retail deposits up 2% vs. 3Q16 and up 10% vs. 4Q15 • Net gain on loan sales fell to $57 million due to: - Anticipated seasonal factors - Lower refinance activity from significantly higher interest rates

4th Quarter 2016 Financial Overview Jim Ciroli, CFO

4th Quarter 2016 4Q16 Financial highlights Profitable results Solid banking growth • Net interest income increased $7 million to $87, up 9% from 3Q16 - Average earning assets up 4% vs 3Q16 and up 14% vs 4Q15 - Net interest margin up 9 bps Good expense control • Noninterest expense unchanged at $142 million - Legal and professional expense increased $4 million - Partially offset by $3 million drop in compensation and benefits expense Strong credit performance • Net charge-offs of $2 million, or 0.13%, versus $7 million, or 0.51%, during 3Q16 • Nonperforming loans HFI were flat at $40 million with no delinquencies in commercial portfolio • Allowance for loan losses covered 2.4% of loans HFI Robust capital position • Tier 1 leverage remained strong at 8.9% • Capital ratios are consistent or higher than peers before considering low risk content of business 1) References non-GAAP number for 3Q16 and GAAP number for 4Q16. 3Q16 number shown excludes DOJ benefit during that period. Please see reconciliation on slide 44. • Net income of $28 million, or $0.49 per diluted share, in 4Q16 - Net interest income increased 9% - Adjusted noninterest income down 26%(1) - Noninterest expense unchanged 6

4th Quarter 2016 4Q16 3Q16 $ Variance % Variance Net interest income $87 $80 $7 9% Provision (benefit) for loan losses ("PLL") 1 7 (6) (86%) Net interest income after PLL 86 73 13 18% Net gain on loan sales 57 94 (37) (39%) Loan fees and charges 20 22 (2) (9%) Loan administration income 4 4 - 0% Net return on the mortgage servicing asset (5) (11) 6 (55%) Representation and warranty benefit 7 6 1 17% Adjusted other noninterest income 15 17 (1) (2) (12%) Total noninterest income 98 132 (1) (34) (26%) Net gain on loan sales / total revenue 31% 44% (1) (14%) Compensation and benefits 66 69 (3) (4%) Commissions and loan processing expense 30 29 1 3% Other noninterest expenses 46 44 2 5% Total noninterest expense 142 142 - 2% Income before income taxes 42 63 (1) (21) (33%) Provision for income taxes 14 22 (1) (8) 36% Adjusted net income $28 $41 (1) ($13) (32%) Adjusted diluted earnings per share $0.49 $0.69 (1) ($0.20) (29%) Profitability Net interest margin 2.67% 2.58% 9 bps Mortgage rate lock commitments, fallout adjusted $6,091 $8,291 ($2,200) (27%) Mortgage closings $8,573 $9,198 ($625) (7%) Gain on loan sale margin, HFS 0.93% 1.13% -20 bps Adjusted efficiency ratio 76.7% 67.0% (1) 970 bps Provision (benefit) for loan losses • Lower provision expense reflected strong asset quality and lower level of net charge-offs • NPLs flat at $40mm, or 0.67%, of loans HFI B Quarterly income comparison $mm Observations Noninterest income • Adjusted noninterest income decreased 26%(1) - Net gain on loan sales fell to $57mm on anticipated seasonal factors, lower refinance from significantly higher interest rates and price competition - Loan fees and charges decreased $2mm on lower mortgage closings - Net MSR return improved $6mm on lower prepayments and lower fair value charges on MSR sales, partially offset by unfavorable changes in fair value from volatile interest rates C Net interest income • Net interest income increased 9% - Average earning assets rose 4%, led by growth in loans HFI (up 5%) - Net interest margin increased 9 bps to 2.67%, led by a $2mm (6bps) benefit on the termination of certain fixed rate FHLB advances A 1) References non-GAAP number for 3Q16 and GAAP number for 4Q16. 3Q16 number shown excludes DOJ benefit during that period. Please see reconciliation on slide 44. Noninterest expense • Noninterest expense was unchanged - Legal and professional expense increased $4mm - Compensation & benefits decreased $3mm D A B C2 D C1 C3 7

4th Quarter 2016 Equity(4) • Common equity to asset ratio of 9.5% • Price to book ratio of 110% based on closing price as of January 23, 2017 Average balance sheet highlights $ $ % Loans held-for-sale $3,321 ($95) (3%) Consumer loans (2) 2,691 111 4% Commercial loans (2) 3,472 204 6% Total loans held-for-investment 6,163 315 5% Other earning assets (3) 3,333 279 9% Interest-earning assets 12,817 $499 4% Other assets 1,672 (158) (9%) Total assets 14,489 $341 2% Deposits $9,233 $107 1% Short-term FHLB advances & other 1,427 354 33% Long-term FHLB advances 1,573 (3) (0%) Other long-term debt 493 26 6% Other liabilities 451 (76) (14%) Total liabilities 13,177 $408 3% Preferred Equity - (72) (100%) Common Equity 1,312 5 0% Total liabilities and equity 14,489 $341 2% Book value per c mmo share (12/31/16) (4) $23.50 $0.78 3% Incr (Decr) (1) Average Balance Sheet 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) Common equity and book value ratios are calculated on ending period balances. Interest-bearing liabilities • Average deposits increased 1% - Average retail deposits rose $132 or 2% on increased savings and demand deposits 4Q16 ($mm) Observations Interest-earning assets • Average earning assets rose 4%, led by growth in loans HFI (up 5%) - Commercial real estate loans up $127mm or 12% - Commercial & industrial loans up $88mm or 14% - Warehouse loans down $11mm or 1% • Improved net interest margin, excluding benefit from terminating certain fixed rate FHLB advances 8

4th Quarter 2016 Asset quality Performing TDRs and NPLs ($mm) 101 75 73 71 67 66 53 44 40 40 $167 $128 $117 $111 $107 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 Peforming TDRs NPLs 1) Excludes loans carried under the fair value option and loans with government guarantees. Allowance coverage(1) (% of loans HFI) 3.0% 2.9% 2.6% 2.3% 2.4% 4.2% 4.5% 4.5% 3.8% 3.3% 1.4% 1.3% 1.2% 1.3% 1.6% 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 Total Consumer Commercial Net charge-offs ($mm) Representation & warranty reserve(2) ($mm) $40 $40 $36 $32 $27 $20 $16 $11 $11 $6 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 Reserve Repurchase pipeline 4 3 3 2 1 2 6 2 3 3 4 5 1 $9 $12 $9 $7 $2 4Q15 1Q16 2Q16 3Q16 4Q16 Adj. charge-offs Loan sales Govt. guaranteed loans 9 2) Please see slide 43 in the appendix for further details on the representation and warranty reserve.

4th Quarter 2016 Robust capital 8.6% 8.2% 8.6% 2.9% -49bps +42bps 2.8% +8bps +47bps 3.0% -41bps +63bps -21bps +21bps -40bps -293bps 11.5% 11.0% 11.6% 8.9% 8.9% 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 • Flagstar continues to have strong capital levels after its TARP redemption - 4Q16 earnings generated 21bps 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: - $171mm of NOL-related DTAs (121bps of Tier 1 leverage) - $156mm of MSRs (110bps of Tier 1 leverage) • Robust capital generation will support future growth Observations 4Q16 Flagstar Bancorp Tier 1 leverage Well Capitalized 5.0% Tier 1 CET-1 Tier 1 Total RBC Leverage to RWA to RWA to RWA 4Q16 Actual 8.9% 13.1% 15.1% 16.4% 3 16 ctual 8.9 12.0 14.0 15.3 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 TARP redemption 10

4th Quarter 2016 Business Segment Overview Lee Smith, COO

4th Quarter 2016 Community banking Average commercial loans ($bn) Commercial loan total commitments ($bn) Average consumer loans ($bn) Average deposit funding(1) ($bn) 0.4 0.6 0.6 0.6 0.7 0.8 0.8 0.9 1.1 1.2 1.0 1.0 1.3 1.6 1.5 $2.2 $2.4 $2.8 $3.3 $3.5 4Q15 1Q16 2Q16 3Q16 4Q16 Commercial and Industrial Commercial Real Estate Warehouse 0.9 0.9 1.0 1.1 [VALUE] 1.1 1.3 1.5 1.8 [VALUE] 2.2 2.3 2.4 2.9 [VALUE] $4.2 $4.5 $4.9 $5.8 [VALUE] 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 Commercial and Industrial Commercial Real Estate Warehouse 2.9 2.8 2.2 2.1 2.2 0.5 0.5 0.5 0.5 0.5 $3.4 $3.3 $2.7 $2.6 $2.7 4Q15 1Q16 2Q16 3Q16 4Q16 Residential First Mortgages Other Consumer Loans 5.8 5.8 6.1 6.2 6.3 1.1 1.1 1.0 1.1 1.0 1.2 1.2 1.6 1.9 1.9 $8.1 $8.1 $8.6 $9.1 $9.2 4Q15 1Q16 2Q16 3Q16 4Q16 Retail Government Company-controlled deposits 1) Includes company-controlled deposits which are included as part of mortgage servicing. 12

4th Quarter 2016 $61 $65 $73 $73 $76 $79 $77 $80 $87 $8,725 $9,422 $10,367 $10,693 $11,240 $11,871 $11,639 $12,318 $12,817 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Net Interest income Average earning assets ● Sold lower performing assets and re-deployed capital into higher spread commercial loans ● Transition to more stable net interest income Average earning assets and net interest income ($mm) CAGR 21% CAGR 19% 13 Higher net interest income is stabilizing earnings

4th Quarter 2016 3.4 3.8 4.7 5.1 4.5 1.4 1.5 2.1 2.3 1.9 1.0 1.0 1.5 1.8 2.1 $5.8 $6.3 $8.3 $9.2 $8.6 4Q15 1Q16 2Q16 3Q16 4Q16 Conventional Government Jumbo Mortgage originations Closings by purpose ($bn) 2.9 2.7 3.8 3.9 3.2 2.9 3.7 4.5 5.3 5.3 $5.8 $6.3 $8.3 $9.2 $8.6 4Q15 1Q16 2Q16 3Q16 4Q16 Purchase originations Refinance originations Closings by mortgage type ($bn) Net gain on loan sales – revenue and margin Fallout-adjusted locks ($bn) $5.0 $6.9 $8.1 $8.3 $6.1 4Q15 1Q16 2Q16 3Q16 4Q16 $66 $85 $46 $75 $90 $94 $57 0.92% 0.96% 1.04% 1.13% 0.93% 4Q15 1Q16 2Q16 3Q16 4Q16 Gain on loan sale (HFS) Gain on HFI transfer Gain on sale margin (HFS) 14

4th Quarter 2016 MSR / regulatory capital (Bancorp) Loans serviced (‘000) $ UPB of MSRs sold ($bn) 2.5 2.6 2.1 4.2 1.7 2.5 3.2 2.5 $4.2 $5.1 $2.2 $5.3 $6.7 4Q15 1Q16 2Q16 3Q16 4Q16 Bulk Sales Flow Transactions 119 119 134 139 133 212 206 194 207 221 31 29 30 29 29 362 354 358 375 383 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 Serviced for Others Subserviced for Others Flagstar Loans HFI 28% 27% 28% 29% 31% 21% 19% 20% 25% 27% 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 MSR to Tier 1 Common MSR to Tier 1 Capital Mortgage servicing Average company-controlled deposits ($bn) $1.2 $1.2 $1.6 $1.9 $1.9 4Q15 1Q16 2Q16 3Q16 4Q16 15

4th Quarter 2016 71% 71% FY15 FY16 Noninterest expense and efficiency ratio Adjusted efficiency ratio(1) 75% 75% 68% 67% 77% 4Q15 1Q16 2Q16 3Q16 4Q16 Quarterly noninterest expense ($mm) $129 $137 $139 $142 $142 4Q15 1Q16 2Q16 3Q16 4Q16 • Flagstar‘s long-term objective is to achieve an efficiency ratio in the mid-60’s 1) References non-GAAP number for 3Q16 and GAAP number for 4Q16. 3Q16 number shown excludes DOJ benefit during that period. Please see reconciliation on slide 44. 16

4th Quarter 2016 Closing Remarks / Q&A Sandro DiNello, CEO

4th Quarter 2016 Guidance(1) 18 1) See cautionary statements on slide 2. Net interest income • Average earning assets up slightly from year-end, led by growth in C&I, CRE and jumbo mortgage loans, partially offset by decline in warehouse loans from lower mortgage market volume • Net interest margin stable to up slightly Gain on loan sale income • Gain on loan sale income down approximately 5% - Gain on loan sale margin down moderately on continued price competition - Fallout-adjusted lock volumes up approximately 6% on seasonality Net MSR return • Net return on the mortgage servicing asset approximates 4-6% • Mortgage servicing asset relatively flat Provision for loan losses • Provision for loan losses to replace net charge-offs, consistent with FY16 run rate Noninterest expenses • Noninterest expenses to remain fairly stable between $142 - $147 million 2017 1st quarter outlook

4th Quarter 2016 Appendix Company overview 20 Financial performance 25 Community banking 28 Mortgage origination 36 Mortgage servicing 38 Capital and liquidity 40 Asset quality 43 Non-GAAP reconciliation 44

4th Quarter 2016 Flagstar at a glance COMPANY OVERVIEW 41 Retail home lending offices in 21 states(1) 99 Branches in Michigan Bank branches Retail home lending Community banking • Leading Michigan-based bank with a balanced, diversified lending platform • $14.1bn of assets and $8.8bn of deposits • 99 branches • 105k household & 14k business relationships Mortgage origination • Leading national originator • Originated $32.5bn of residential mortgage loans during 2016 • More than 1,350 TPO relationships • Retail lending network included 41 locations in 21 states Mortgage servicing • 8th largest sub-servicer of mortgage loans nationwide • Currently servicing approximately 383k 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 20 1) Includes eight home lending offices located in banking branches.

4th 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 21

4th Quarter 2016 Flagstar has a strong executive team 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 22

4th 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 5 8 53 48 11 8 5 31 FTEs Regulatory Affairs Modeling & Analytics ERM Chief Credit Officer QC / Appraisal Review MFIU Fraud Investigations Loan Review Operational Risk AML / BSA Compliance 20 ¹ Excludes 24 FTEs in internal audit and 3 FTEs in Sarbanes-Oxley compliance Risk management Best-in-class risk management platform with 189 FTEs(1) COMPANY OVERVIEW 23

4th Quarter 2016 Strong growth opportunities Grow community banking • Team lift outs • Grow housing finance related relationships(1) - Expand warehouse lending (400bps spreads) - Grow builder finance lending (350bps spreads) - Build 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 and direct-to-consumer 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 COMPANY OVERVIEW 1) Indicated spreads are targets and may not be reflective of actual spreads. 24

4th Quarter 2016 Long-term targets • Long-term target of 1.2 - 1.6% - Add incremental revenue with low incremental cost - Improved risk management will deliver long-run savings - FY16 adjusted return on average assets of 1.1%(1) (top 30% of banks $10bn - $50bn of assets(2)) • Long-term target of 13 - 18% - Add / increase high ROE businesses - Adjusted return on average equity of 11.8%(1) (top 15% of banks $10bn - $50bn of assets(2)) 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 $5mm - $7mm of incremental pre-tax profits Revenues Mortgage Banking FINANCIAL PERFORMANCE 1) References non-GAAP number for 3Q16 and GAAP number for 4Q16. 3Q16 number shown excludes DOJ benefit during that period. Please see reconciliation on slide 44. 2) Data for top ROA and ROE is as of December 31, 2016 (September 30, 2016 if not available) for all major exchange U.S. Banks with assets between $10bn and $50bn, excluding Puerto Rican banks. 25

4th Quarter 2016 Proposed corporate tax reform FBC considerations regarding potential tax reform • A reduction of the U.S. corporate tax rate would impact FBC’s earnings by: - Reducing deferred tax asset upon the enactment date of the law • Reduction in tangible book value • Limited reduction to regulatory capital - Decreasing effective tax rate, which will increase net income and EPS upon effective date of the law • Focus on implementing strategies to maximize economic benefit of DTA Pro-forma impact of potential tax reform ($mm) Date Federal NOL Other (2) Total 12/31/16 (actual) $168 $118 $286 FY17 tax expense (1) (70) - (70) 12/31/17 (pro-forma) $98 $118 $216 FY2018 Pro forma Tier 1 corporate tax rate NOL Other Total Capital(4) 35% $0 $0 $0 0 bps 30% ($14) ($17) ($31) (4 bps) 25% ($28) ($34) ($62) (7 bps) 20% ($42) ($51) ($92) (15 bps) Notes: (1) Represents consensus estimate from analysts covering FBC. (2) Other includes DTAs related to state NOLs and reserves for ALLL, R&W and DOJ. (3) Represents write-down in value of DTA at new tax rate. (4) Represents reduction in Tier 1 Capital at new tax rate. Deferred tax asset, net Income Statement(3) FINANCIAL PERFORMANCE 26

4th Quarter 2016 1 /3 1 /2 0 1 6 2 /2 9 /2 0 1 6 3 /3 1 /2 0 1 6 4 /3 0 /2 0 1 6 5 /3 1 /2 0 1 6 6 /3 0 /2 0 1 6 7 /3 1 /2 0 1 6 8 /3 1 /2 0 1 6 9 /3 0 /2 0 1 6 1 0 /3 1 /2 0 1 6 1 1 /3 0 /2 0 1 6 1 2 /3 1 /2 0 1 6 1 /3 1 /2 0 1 6 2 /2 9 /2 0 1 6 3 /3 1 /2 0 1 6 4 /3 0 /2 0 1 6 5 /3 1 /2 0 1 6 6 /3 0 /2 0 1 6 7 /3 1 /2 0 1 6 8 /3 1 /2 0 1 6 9 /3 0 /2 0 1 6 1 0 /3 1 /2 0 1 6 1 1 /3 0 /2 0 1 6 1 2 /3 1 /2 0 1 6 Valuation metrics Observation: Flagstar has a valuation discount to its banking peers. The Company closed the valuation gap through October, but has underperformed since the election. Market / tangible book Price / LTM earnings . FBC valuation vs. SNL U.S. Bank and Thrift Index Market value gap: ~$0.9B Market value gap: ~$0.8B . FBC valuation vs. SNL U.S. Bank and Thrift Index 62% 57% 67% 67% 77% 85% FINANCIAL PERFORMANCE 27

4th Quarter 2016 Deposit Median Proj HHI Proj pop Market $mm % of total mkt share HHI(2) growth(2)(3) growth(2)(3) Oakland County 3,456 47.5% 7.0% 72,183 10.7% 2.7% Grand Rapids MSA 402 5.5% 2.0% 58,024 10.3% 4.3% Ann Arbor MSA 296 4.1% 3.6% 65,958 9.2% 3.3% Key Flagstar markets 4,154 57.1% 5.3% 70,369 10.6% 2.9% National aggregate 57,462 8.7% 3.8% Flagstar Deposits 154 7 35 Strong market position as leading Michigan-based community bank COMMUNITY BANKING Source: SNL Financial; Note: Deposit data as of June 30, 2016; MI-based banks highlighted; Pro forma for pending mergers and acquisitions. 1) Oakland County data excludes $1.5bn of company-controlled deposits held at company headquarters. 2) Flagstar Median HHI, projected HHI growth and projected population growth are deposit weighted. 3) 2017–2022 CAGR. Flagstar’s branch network Market share Attractive markets Leading position among independent banks Overall MI-based Institution (pro forma) Branches Total Share 1 Chase 246 $42,006 21% 2 Comerica 214 26,963 13% 3 PNC 206 17,326 9% 4 Bank of America 127 16,564 8% 5 Fifth Third 215 16,073 8% 6 Huntington (pro forma) 362 15,212 8% 7 1 Chemical (pro forma) 224 11,281 6% 8 2 Flagstar 99 8,773 4% 9 Citizens 98 5,138 3% 10 TCF 54 2,908 1% Top 10 1,845 $162,244 81% Rank Deposits ($mm) 28

4th Quarter 2016 Deposits Portfolio and strategy overview 5.8 5.8 6.1 6.2 6.3 2.3 2.3 2.6 2.9 2.9 $8.1 $8.1 $8.6 $9.1 $9.2 4Q15 1Q16 2Q16 3Q16 4Q16 Retail deposits Other deposits Total average deposits ($bn) +13.6% 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 0.52%(1) DDA 12% Savings 42% MMDA 3% CD 12% Company- controlled 20% Government & other 11% 69% retail Total : $9.2bn 0.52% cost of total deposits(1) 4Q16 total average deposits COMMUNITY BANKING 1. Total deposits include noninterest bearing deposits. 29

4th Quarter 2016 Deposit growth opportunities • Average balance of $1.0bn during 4Q16 • Cost of total government deposits: 0.52%(2) during 4Q16 • Michigan deposits are not collateralized • Strong relationships across the state • Average balance of $0.4bn during 4Q16 • Flagstar has realized year-over-year growth in treasury management services of: - Deposits 27% • Average balance of $1.9bn during 4Q16 on 383k loans serviced and sub-serviced • Low cost of deposits • Deposit balances increase along with the number of loans serviced & sub-serviced • Average balance of $5.9bn during 4Q16 of which 77% are customer demand & savings accounts • Cost of total core deposits(1): 0.68%(2) during 4Q16 • Average core deposits of $64mm per branch • Flagstar’s brand campaign and targeted acquisition offers are helping grow its core deposit base Core Deposits Retail Commercial Other Deposits Government Company controlled COMMUNITY BANKING 1) Core deposits equal total deposits less government deposits and company-controlled deposits. 2) Total deposits include noninterest bearing deposits. 30

4th Quarter 2016 2.5 2.9 2.9 3.4 3.3 5.6 5.7 5.6 5.8 6.2 0.5 0.5 0.4 0.4 0.4 $8.6 $9.1 $8.9 $9.7 $9.9 4Q15 1Q16 2Q16 3Q16 4Q16 Loans HFS Loans HFI Loans with government guarantees 1st Mortgage HFI; 22% 2nds, HELOC & other; 5% [CATEGORY NAME] [PERCENTA GE] [CATEGORY NAME] [PERCENTAG E] Loans with government guarantees; 4% 1st Mortgage HFS; 34% 4Q16 average loans Lending Portfolio and strategy overview Total average loans ($bn) • Flagstar’s largest category of earning assets consists of loans held-for-investment which averaged $6.2bn during 4Q16 – 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 $3.3bn during 4Q16 – 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 COMMUNITY BANKING 31

4th Quarter 2016 Commercial lending Diversified relationship-based commercial lending capabilities COMMUNITY BANKING Commercial Real Estate - $1.3bn (12/31/16) 74% Michigan Retail 20% Owner- occupied 19% Multi-family 18% Home builder finance [PERCENTAG E] Office 15% Special purpose 9% Industrial 3% Commercial & Industrial - $0.8bn (12/31/16) Services 37% Financial, Insurance & Real Estate (FIRE) 26% Manufacturing 19% Servicing Advances 8% Distribution 6% Govt & Educ. 4% Warehouse - $1.2bn (12/31/16) Overview • Warehouse lines with approximately 260 relationships nationwide, of which slightly 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 [CATEGORY NAME]; ~150 borrowers [CATEGORY NAME]; ~50 Borrowers [CATEGORY NAME]; ~60 borrowers Average 39% advances sold to Flagstar 49% Michigan; 20% national finance Industry % Advances sold to Flagstar Property type 32

4th 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. COMMUNITY BANKING 33

4th Quarter 2016 Warehouse lenders ranked by commitments ($mm) YOY Rank Institution Growth Total Share 1 JPMorgan Chase 48% $8,000 14% 2 Wells Fargo 8% 5,300 9% 3 Texas Capital 15% 4,961 9% 4 Comerica -5% 3,800 7% 5 BB&T 25% 3,700 6% 6 Customers Bank 15% 3,320 6% 7 First Tennessee 42% 3,035 5% 8 U.S. Bancorp 43% 2,800 5% 9 Flagstar Bancorp 42% 2,705 5% 10 Santander Bank 26% 2,450 4% Top 10 24% $40,071 69% 3Q16 Source: Inside Mortgage Finance as of December 2, 2016. FBC average warehouse loans ($mm) 62% 57% Warehouse lending ● National relationship based lending platform ● Attractive asset class with good spreads (approximately 400bps) and low credit risk ● Strong demonstrated growth potential (Top 10 commitments up 24% year-over-year) ● Flagstar is well positioned to gain market share, leveraging relationships in complementary lines of business, including home builder finance and mortgage originations COMMUNITY BANKING 34 $975 $966 $1,317 $1,553 $1,542 4Q15 1Q16 2Q16 3Q16 4Q16

4th Quarter 2016 Home builder finance ● National relationship based lending platform ● Attractive asset class with good spreads (approximately 350bps) ● Focused on markets with strong housing fundamentals and higher growth potential - High level of housing starts / purchase originations - Attractive cross-sell opportunities including warehouse loans, commercial deposits and purchase originations ● Flagstar is well positioned to gain market share given builder and mortgage relationships COMMUNITY BANKING Home builder loan commitments ($mm) $92 $155 $181 $131 $168 $220 $0 $223 $323 $401 3/31/2016 6/30/2016 9/30/2016 12/31/2016 Outstanding Unused Home builder finance footprint Primary markets Secondary markets 35

4th Quarter 2016 Originates mortgages in multiple channels on a national scale MORTGAGE ORIGINATIONS 36 Residential mortgage originations by channel ($bn) Broker Correspondent Retail $4.1 $4.8 $6.2 $7.0 $6.5 4Q15 1Q16 2Q16 3Q16 4Q16 $1.4 $1.3 $1.6 $1.6 $1.4 4Q15 1Q16 2Q16 3Q16 4Q16 $0.3 $0.3 $0.5 $0.6 $0.6 4Q15 1Q16 2Q16 3Q16 4Q16 • 3.0% market share with #9 national ranking(1) • More than 600 brokerage relationships in 50 states in 4Q16 • Targeted gain on sale margin of ~90bps • Top 10 relationships account for 23% of overall brokerage volume 1) Data source: As reported by Inside Mortgage Finance for 3Q16 published November 25, 2016. • 3.9% market share with #6 national ranking(1) • More than 700 correspondent partners in 50 states in 4Q16 • Targeted gain on sale margin of ~60bps • Top 10 relationships account for 18% of overall correspondent volume • Warehouse lines with approximately 250 correspondent relationships • Loan officer additions have expanded our retail footprint to 42 locations in 21 states • Targeted gain on sale margin of ~340bps • Direct-to-consumer is 37% of retail volume

4th Quarter 2016 U.S. residential mortgage origination market (historical and projected volumes) 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 $1.9 $1.6 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 $1.9 $1.6 $ 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 .9 $ 1 .6 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 1 .2 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 $ in t rill io n s $ 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 .9 $ 1 .6 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 E 2 0 1 7 F $ in t rill io n s Flagstar has restructured its operations to be profitable even at historical lows for the mortgage origination market 37 MORTGAGE ORIGINATIONS

4th Quarter 2016 154 7 35 MSR portfolio as of 12/31/16 MSR portfolio characteristics (% UPB) MSR portfolio statistics Measure ($mm) 9/30/2016 12/31/2016 Difference Unpaid principal balance $31,372 $31,207 ($165) Fair value of MSR $302 $335 $33 Capitalized rate (% of UPB) 0.96% 1.07% 0.11% Multiple 3.443 4.010 0.567 N te rate 3.926% 3.878% -0.048% Service fee 0.279% 0.267% -0.012% Average Measure ($000) UPB per loan $226 $234 $8 FICO 738 745 7 Loan to value 73.00% 69.81% -3.19% $ return – MSR asset $ Return 4Q15 1Q16 2Q16 3Q16 4Q16 Net hedged profit (loss) $1 $1 $1 $4 ($5) Carry on asset 16 6 9 13 17 Run-off (8) (11) (15) (19) (17) Gr ss r turn on the mortgage servicing asset $9 ($4) ($5) ($2) ($5) Sale transaction & P/L - (2) 1 (9) 1 Model Changes - - - - (1) Net return on the mortgage servicing asset $9 ($6) ($4) ($11) ($5) Average mortgage servicing rights $304 $285 $307 $316 $327 2016; 56% 2015; 31% 2014; 9% 2013 & prior; 4% by Vintage Fannie 68% Freddie 28% [CATEGOR Y NAME](1) [PERCENT AGE] Private 2% by Investor MORTGAGE SERVICING 38 1) MSR sales closed during 4Q16 represented nearly all of the Company’s remaining GNMA MSRs.

4th Quarter 2016 Mortgage servicing rights Increase in Mortgage Servicing Rights • Surprising U.S. election results raised expectations for a pro-growth agenda, causing a jump in mortgage rates and volatility during 4Q16 [see chart at right] • FBC realized a $33mm increase (up 11%) in the value of its mortgage servicing rights Net Loss on the Mortgage Servicing Asset • The Company experienced a $5mm net loss on the mortgage servicing asset in 4Q16 • The increase from the prior quarter was primarily due to: - $7 million charge recognized in 3Q16 related to MSR sales that closed in 4Q16 - Lower prepayments - Partially offset by unfavorable changes in fair value from increase in market implied interest rate volatility in 4Q16 MSR Hedging Strategy • Goal is to protect yield • Duration and mortgage basis hedged using swaps, MBS and TBA • Yield curve, convexity and implied volatility hedged using swaptions Strategy and results Market implied volatility (Vega) • During 4Q16, vega increased from 75 bps to 91 bps, reaching its highest level of the year • Vega is still low by historical standards versus highs of: - 115 bps in 2011 - 150 bps in 2009 MORTGAGE SERVICING 39

4th Quarter 2016 3% Other liabilitie s 3% Other long- term debt Liabilities & Equity 154 7 35 Balance sheet composition 4Q16 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.) ~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 9% Other assets 2% MSR 11% Warehouse loans Loans held-for-sale 23% Mortgage loans held-for-investment 21% Agency MBS 20% 1% Cash 13% Commercial loans CAPITAL AND LIQUIDITY Efficiently funds loans held-for-sale and warehouse loans 40 51% Deposits excluding company- controlled deposits (“CCD”) 21% FHLB borrowings 9% Common equity 13% Company-controlled deposits (“CCD”)

4th Quarter 2016 Liquidity and funding 94% 81% 76% 78% 82% 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 1) Total loans (excluding loans held-for-sale & warehouse loans); Core deposits equal total deposits less government deposits and company-controlled deposits Loans / core deposits(1) 154 7 35 Core deposits¹ / deposits (%) 74% 70% 71% 67% 72% 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 41

4th Quarter 2016 Change in Economic Value Policy Limit Rates (bps) of Equity ($bn) ($bn) (%) (%) +300 $1.927 ($0.173) (8.2%) (22.5%) +200 $2.005 ($0.095) (4.5%) (15.0%) +100 $2.073 ($0.028) (1.3%) (7.5%) Market Implied $2.100 $0.000 0.0% 0.0% -100 $2.067 ($0.033) (1.6%) (7.5%) Change 0bps 50bps 100bps 150bps 200bps 250bps 300bps 350bps 400bps 450bps 1 month 3 months 6 months 1 year 2 years 3 years 5 years 7 years 10 years 20 years 30 years up 100 bps Bear Flattener 12/31/16 Interest rate risk management • The shorter term measure of the interest rate risk “Earnings at Risk” position is asset sensitive due to the immediate repricing of the variable rate assets including the mortgage banking pipeline, warehouse loans, commercial loans and consumer loans while liabilities reprice more slowly. • The longer term measure of the interest rate position “Economic Value of Equity” is relatively balanced based on market exposures for +/-100 bps. • Flagstar also performs a Net Income Simulation that includes the effect of changes in interest rates on the mortgage business. Net income increase due to a parallel 100bps increase in rate. Conversely, net income fall under a bear flattener scenario. Net interest margin – 12 month horizon instantaneous shocks ($mm) ($ in mm) Parallel Shift Bear Flattener Net interest income $10 ($25) Noninterest Income ($10) to $0 $0 to $25 Up 100bps Low interest rate risk Economic value of equity CAPITAL AND LIQUIDITY 42

4th Quarter 2016 778 540 457 508 447 337 350 238 238 273 1,115 60 890 49 695 28 746 24 720 34 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 Fannie Mae Freddie Mac Fannie Mae Freddie Mac Audit file pulls Repurchase demands Representation & Warranty reserve details (in millions) 12/31/15 3/31/16 6/30/16 9/30/16 12/31/16 Beginning balance $45) $40) $40) $36 $32 Additions (release) (5) 0) (3) (5) (6) Net (charge-offs) / recoveries (0) 0) (1) (1) 1) Ending Balance $40) $40) $36) $32 $27 Repurchase pipeline ($mm) Repurchase reserve ($mm) Repurchase activity with Fannie and Freddie Repurchase demands / file pulls 6% 4% 3% 5% 5% ASSET QUALITY $20 $16 $11 $11 $6 12/31/2015 3/31/16 6/30/16 9/30/16 12/31/16 43

4th Quarter 2016 Non-GAAP reconciliation NON-GAAP RECONCILIATION $mm (except per share amounts) 1) Reflects the exclusion of the 3Q16 Department of Justice (“DOJ”) benefit. 2) Effective tax rate of 34% applied to the Department of Justice (“DOJ”) benefit. 44 3 Months Ended 12 Months Ended 9/30/16 12/31/16 Net interest income (a) $80 $323 Noninterest income (b) $156 $487 Adjustment to remove DOJ benefit(1) (24) (24) Adjusted noninterest income (c) $132 $463 Noninterest expense (d) $142 $560 Efficiency ratio (d/(a+b)) 59.9% 69.2% Adjustment to remove DOJ benefit(1) 7.1% 2.0% Adjusted efficiency ratio (d/(a+c)) 67.0% 71.2% Net income applicable to common stockholders (e) $57 $171 Adjustment to remove DOJ benefit(1) (24) (24) Tax impact of DOJ benefit(2) 8 8 Adjusted net income applicable to common stockholders (f) $41 $155 Weighted average diluted shares outstanding (g) 57,933,806 57,597,667 Diluted income per share (e/g) $0.96 $2.66 Adjustment to remove DOJ benefit(1) (0.41) (0.42) Tax impact of DOJ benefit(2) 0.14 0.14 Adjusted diluted income per share (f/g) $0.69 $2.38 Average total assets (h) $14,148 $13,907 Return on average assets ((e/h) x annualization factor) 1.6% 1.2% Adjustment to remove DOJ benefit(1) (0.4%) (0.1%) Adjusted return on average assets ((f/h) x 4) 1.2% 1.1% Average equity (i) $1,379 $1,464 Return on average equi y ((e/i) x annualization factor) 16.5% 11.7% Adjustment to remove DOJ benefit(1) (4.6%) (1.1%) Adjusted return on average equity ((f/i) x 4) 11.9% 10.6% Average common equity (j) $1,307 $1,313 Return on average common equity ((e/j) x annualization factor) 17.5% 13.0% Adjustment to remove DOJ benefit(1) (4.9%) (1.2%) Adjusted return on average common equity ((f/j) x 4) 12.6% 11.8%