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 23, 2018

(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 23, 2018, 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, 2017 and announced regulatory approval to acquire eight branches of Desert Community Bank. The text of the press release is furnished as Exhibit 99.1 to this report. The Company will include final financial statements and additional analyses for the year ended December 31, 2017 as part of its Annual Report on Form 10-K.

On January 23, 2018, the Company will hold a conference call to review fourth quarter 2017 earnings. A copy of the slide presentation to be used by the Company on the conference call is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits

Exhibits
99.1	Press release of Flagstar Bancorp, Inc. dated January 23, 2018
99.2	Flagstar Bancorp, Inc. Conference Call Presentation Slides - Earnings Presentation Fourth Quarter 2017

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 23, 2018		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 23, 2018
99.2	Flagstar Bancorp, Inc. Conference Call Presentation Slides - Earnings Presentation Fourth Quarter 2017

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 2017 Financial Results and Announces Regulatory Approval to Acquire Eight Branches in Southern California

Company posts solid, consistent operating earnings

Previously announced branch acquisition scheduled to close in the first quarter of 2018

Key Highlights - Fourth Quarter 2017

• Net loss of $45 million, or $0.79 per diluted share, on non-cash charge from new tax legislation.

• Adjusted net income of $35 million, or $0.60 per diluted share.

• Net interest income grew $4 million, or 4 percent, from third quarter 2017, led by higher earning assets.

• Average commercial loans up $344 million, or 9 percent, from last quarter.

• Net gain on loan sales rose to $79 million, driven by an improved gain on sale margin.

• Asset quality strong with a high allowance coverage ratio.

• Strong capital position with Tier 1 leverage at 8.51 percent.

TROY, Mich., Jan. 23, 2018 - Flagstar Bancorp, Inc. (NYSE:FBC), the holding company for Flagstar Bank, FSB, today reported a fourth quarter 2017 net loss of $45 million, or $0.79 per diluted share, and adjusted net income of $35 million, or $0.60 per diluted share, after adjusting for a non-cash charge to the provision for income taxes of $80 million, or $1.37 per diluted share. As previously announced, the charge resulted from the revaluation of the Company's net deferred tax asset under the new Tax Cuts and Jobs Act. The Company reported net income of $40 million, or $0.70 per diluted share, in the third quarter 2017, and $28 million, or $0.49 per diluted share, in the fourth quarter 2016.

"A key take-away from the quarter was the durability of our earnings,” said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "The continued growth of our banking and servicing businesses has reduced the impact of the swings in the origination business on our earnings, thus producing more predictable and consistent results.

"All three of our business lines strengthened during the quarter. Our community bank drove a 9 percent increase in commercial loans, which helped fuel earning asset growth of $642 million -- a 4 percent gain. Our mortgage acquisitions earlier in 2017 continued to pay dividends, producing a 14 percent increase in closings and a 42 percent increase in locks over the same quarter last year in the face of a smaller market. And our third

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key business line, servicing, continued to gain scale and now has a book of business that exceeds 440,000 accounts."

"Finally, I am pleased to announce that we have received approval from the Office of the Comptroller of the Currency to acquire eight Desert Community Bank branches from East West Bank. With this franchise, we acquire $600 million in deposits and $70 million in loan relationships. We are looking forward to welcoming the Desert Community Bank branch team to Flagstar by the end of the quarter."

Full year 2017 net income was $63 million, or $1.09 per diluted share, as compared to full year 2016 net income of $171 million, or $2.66 per diluted share. Excluding the tax charge in the fourth quarter 2017, the Company had adjusted 2017 net income of $143 million, or $2.47 per diluted share, as compared to adjusted 2016 net income of $155 million, or $2.38 per diluted share. On an adjusted basis, the Company realized a 4 percent increase in diluted earnings per share for the full year 2017.

Fourth Quarter 2017 Highlights:

Income Statement Highlights
	Three Months Ended
	December 31, 2017			September 30, 2017		June 30, 2017			March 31, 2017		December 31, 2016
	(Dollars in millions)
Net interest income	$	107		$	103	$	97		$	83	$	87
Provision (benefit) for loan losses	2			2		(1		)	3		1
Noninterest income	124			130		116			100		98
Noninterest expense	178			171		154			140		142
Income before income taxes	51			60		60			40		42
Provision for income taxes (1)	96			20		19			13		14
Net income (loss)	$	(45	)	$	40	$	41		$	27	$	28
Income (loss) per share:
Basic	$	(0.79	)	$	0.71	$	0.72		$	0.47	$	0.50
Diluted	$	(0.79	)	$	0.70	$	0.71		$	0.46	$	0.49

(1) For the three months ended December 31, 2017 includes an $80 million non-cash charge to the provision for income taxes resulting from the revaluation of the Company's net deferred tax asset (DTA) at a lower statutory rate as a result of the Tax Cuts and Jobs Act.

Key Ratios
	Three Months Ended										Change (bps)
	December 31, 2017		September 30, 2017		June 30, 2017		March 31, 2017		December 31, 2016		Seq	Yr/Yr
Net interest margin	2.76	%	2.78	%	2.77	%	2.67	%	2.67	%	(2)	9
Return on average assets	(1.1	)%	1.0	%	1.0	%	0.8	%	0.8	%	N/M	N/M
Return on average equity	(12.1	)%	11.1	%	11.6	%	7.9	%	8.6	%	N/M	N/M
Return on average common equity	(12.1	)%	11.1	%	11.6	%	7.9	%	8.6	%	N/M	N/M
Efficiency ratio	77.1	%	73.5	%	72.0	%	76.8	%	76.7	%	360	40

N/M - Not meaningful

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Balance Sheet Highlights
	Three Months Ended										% Change
	December 31, 2017		September 30, 2017		June 30, 2017		March 31, 2017		December 31, 2016		Seq		Yr/Yr
	(Dollars in millions)
Average Balance Sheet Data
Average interest-earning assets	$	15,379	$	14,737	$	14,020	$	12,343	$	12,817	4	%	20	%
Average loans held-for-sale (LHFS)	4,537		4,476		4,269		3,286		3,321		1	%	37	%
Average loans held-for-investment (LHFI)	7,295		6,803		6,224		5,639		6,163		7	%	18	%
Average total deposits	9,084		9,005		8,739		8,795		9,233		1	%	(2	)%

Net Interest Income

Net interest income rose $4 million, or 4 percent, to $107 million for the fourth quarter 2017, as compared to $103 million for the third quarter 2017. The results reflected a 4 percent increase in average earning assets, led by continued solid growth in commercial loans. The net interest margin decreased 2 basis points to 2.76 percent for the fourth quarter 2017, as compared to the third quarter 2017, on continued deposit price discipline.

Loans held-for-investment averaged $7.3 billion for the fourth quarter 2017, an increase of $492 million, or 7 percent, from the prior quarter. During the fourth quarter 2017, average commercial loans rose 9 percent with average commercial real estate loans increasing $220 million, or 13 percent, average commercial and industrial loans increasing $63 million, or 6 percent, and average warehouse loans increasing $61 million, or 6 percent.

Average total deposits were $9.1 billion in the fourth quarter 2017, increasing $79 million, or 1 percent from the third quarter 2017. The increase was led by higher company-controlled and government deposits. Average retail deposits were unchanged at $6.5 billion as higher retail certificates of deposit (up $215 million, or 18 percent) offset a decline in retail savings deposits (down $217 million, or 6 percent).

Provision (Benefit) for Loan Losses

The provision for loan losses totaled $2 million for the fourth quarter 2017, unchanged from the third quarter 2017. The low level of provision expense reflected continued strong asset quality and largely matched net charge-offs in the quarter.

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Noninterest Income

Noninterest income fell $6 million, or 5 percent, to $124 million in the fourth quarter of 2017, as compared to $130 million for the third quarter 2017. The decrease was primarily due to a net loss on the mortgage servicing rights, partially offset by an increase in net gain on loan sales.

Fourth quarter 2017 net gain on loan sales increased to $79 million, as compared to $75 million in the third quarter 2017. The increase from the prior quarter reflected an improved gain on sale margin. The net gain on loan sale margin increased 7 basis points to 0.91 percent for the fourth quarter 2017, as compared to 0.84 percent for the third quarter 2017. Fallout-adjusted locks fell 3 percent to $8.6 billion primarily due to anticipated seasonal factors, partially offset by stronger correspondent volume. Full year 2017 fallout-adjusted locks rose a strong 42 percent, boosted by the acquisition of Opes and Stearns.

Mortgage Metrics
	Three Months Ended															Change (% / bps)
	December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			Seq		Yr/Yr
	(Dollars in millions)
Mortgage rate lock commitments (fallout-adjusted) (1)	$	8,631		$	8,898		$	9,002		$	5,996		$	6,091		(3	)%	42	%
Net margin on mortgage rate lock commitments (fallout-adjusted) (1) (2)	0.91		%	0.84		%	0.73		%	0.80		%	0.93		%	7		(2)
Net gain on loan sales	$	79		75			$	66		$	48		$	57		5	%	39	%
Net (loss) return on the mortgage servicing rights (MSR)	$	(4	)	$	6		$	6		$	14		$	(5	)	N/M		(20	)%
Gain on loan sales + net (loss) return on the MSR	$	75		$	81		$	72		$	62		$	52		(7	)%	44	%
Residential loans serviced (number of accounts - 000's) (3)	442			415			402			393			383			7	%	15	%
Capitalized value of mortgage servicing rights	1.16		%	1.15		%	1.14		%	1.10		%	1.07		%	1		9
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 (excludes net gain on loan sales of $1 million from loans transferred from HFI in three months ended December 31, 2017) to fallout-adjusted mortgage rate lock commitments.
(3) Includes loans serviced for own loan portfolio, serviced for others, and subserviced for others.

Net return on the mortgage servicing rights (including the impact of hedges) was a net loss of $4 million for the fourth quarter 2017, as compared to a net gain of $6 million for the third quarter 2017. The decrease from the prior quarter largely reflected a $4 million decrease in fair value driven by model changes as well as a $3 million charge associated with pending MSR sales with a fair value of $98 million expected to close in the first quarter 2018. Assuming the Capital Simplification NPR is finalized as proposed, taking this action gives the Company significant flexibility in managing the MSR asset in 2018.

The representation and warranty benefit was $2 million for the fourth quarter 2017, as compared to a $4 million benefit in the third quarter 2017. The representation and warranty reserve was reduced to $15 million at December 31, 2017, from $16 million at September 30, 2017, reflecting continued improvement in risk trends and a repurchase pipeline that was only $3 million at December 31, 2017.

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Noninterest Expense

Noninterest expense rose to $178 million for the fourth quarter 2017, as compared to $171 million for the third quarter 2017. During the fourth quarter 2017, compensation and benefits increased $3 million due to incentive compensation. The Company also experienced a $2 million increase in expenses to support the investment in growth initiatives, included in compensation and benefits and other noninterest expense. The Company's efficiency ratio was 77 percent for the fourth quarter 2017, as compared to 74 percent for the third quarter 2017.

Income Taxes

The fourth quarter 2017 provision for income taxes totaled $96 million, including a one-time, non-cash charge of $80 million resulting from new tax legislation, as compared to $20 million in the third quarter 2017. Excluding this charge, the Company's adjusted effective tax rate was 32 percent for the fourth quarter 2017, unchanged from the third quarter 2017.

Asset Quality

Credit Quality Ratios
	Three Months Ended															Change (% / bps)
	December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			Seq			Yr/Yr
	(Dollars in millions)
Allowance for loan loss to LHFI	1.8		%	2.0		%	2.1		%	2.4		%	2.4		%	(20)			(60)
Allowance for loan loss to LHFI and loans with government guarantees	1.8		%	1.9		%	2.0		%	2.3		%	2.2		%	(10)			(40)
Charge-offs, net of recoveries	$	2		$	2		$	—		$	4		$	2		—			—	%
Charge-offs associated with loans with government guarantees	1			1			—			2			1			—			—	%
Charge-offs associated with the sale or transfer of nonperforming loans and TDRs	—			—			—			1			—			—			—
Charge-offs, net of recoveries, adjusted (1)	$	1		$	1		$	—		$	1		$	1		$	—		—	%
Total nonperforming loans held-for-investment	$	29		$	31		$	30		$	28		$	40		(6		)%	(28	)%
Net charge-offs to LHFI ratio (annualized)	0.11		%	0.08		%	0.04		%	0.27		%	0.13		%	3			(2)
Net charge-off ratio, adjusted (annualized)	0.06		%	0.06		%	0.02		%	0.07		%	0.07		%	—			(1)
Ratio of nonperforming LHFI to LHFI	0.38		%	0.44		%	0.44		%	0.47		%	0.67		%	(6)			(29)
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 allowance for loan losses was $140 million at December 31, 2017, unchanged from September 30, 2017. The allowance for loan losses covered 1.8 percent of loans held-for-investment at December 31, 2017, as compared to 2.0 percent of loans held-for-investment at September 30, 2017.

Net charge-offs in the fourth quarter 2017 were $2 million, or 0.11 percent of HFI loans, compared to $2 million, or 0.08 percent of such loans in the prior quarter.

Nonperforming loans held-for-investment were $29 million at December 31, 2017, compared to $31 million at September 30, 2017. The ratio of nonperforming loans to loans held-for-investment was 0.38 percent at December 31, 2017, compared to 0.44 percent at September 30, 2017. At December 31, 2017, consumer loan delinquencies totaled $5 million, or 0.15 percent of consumer loans, unchanged from September 30, 2017.

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Capital

Capital Ratios (Bancorp)	Three Months Ended															Change (% / bps)
	December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			Seq		Yr/Yr
Total capital (to RWA)	14.90		%	14.99		%	15.92		%	15.98		%	16.41		%	(9)		(151)
Tier 1 capital (to RWA)	13.63		%	13.72		%	14.65		%	14.70		%	15.12		%	(9)		(149)
Tier 1 leverage (to adjusted avg. total assets)	8.51		%	8.80		%	9.10		%	9.31		%	8.88		%	(29)		(37)
Mortgage servicing rights to Tier 1 capital	20.1		%	17.3		%	13.1		%	23.1		%	26.7		%	280		(660)
Tangible book value per share	$	24.04		$	25.01		$	24.29		$	23.96		$	23.50		(4	)%	2	%

The Company grew the average balance sheet $712 million in the fourth quarter 2017 while maintaining a robust capital position with regulatory ratios well above current regulatory quantitative guidelines for "well capitalized" institutions. At December 31, 2017, the Company had a Tier 1 leverage ratio of 8.51 percent, as compared to 8.80 percent at September 30, 2017. The decrease in the ratio resulted primarily from balance sheet growth.

On September 27, 2017, the federal banking agencies issued a notice of proposed rulemaking (“NPR”) regarding several proposed simplifications of the Basel III capital rules issued in 2013. This Capital Simplification NPR would accelerate capital formation for balance sheet growth. On a pro-forma basis at December 31, 2017, the proposal would have increased the Company's Tier 1 leverage ratio by approximately 70 bps and risk-based capital ratios by approximately 30-35 basis points.

At December 31, 2017, the Company had a common equity-to-assets ratio of 8.27 percent.

Earnings Conference Call

As previously announced, the Company's fourth quarter 2017 earnings call will be held Tuesday, January 23, 2018 at 11 a.m. (ET).

To join the call, please dial (800) 289-0517 toll free or (323) 794-2423 and use passcode 8848543. Please call at least 10 minutes before the conference is scheduled to begin. A replay will be available for five business days by calling (888) 203-1112 toll free or (719) 457-0820 and using passcode 8848543.

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 $16.9 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 89 retail locations in 29 states, representing the combined retail branches of Flagstar and Opes Advisors mortgage division. Flagstar is a leading national originator and servicer of mortgage loans, handling payments and record keeping for $98 billion of home loans representing over 442,000 borrowers. For more information, please visit flagstar.com.

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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 estimated fully implemented Basel III capital levels and ratios, tangible book value per share, adjusted net income, and adjusted earnings per share. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar.

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

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

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of Flagstar Bancorp, Inc.’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The Company's actual results could differ materially from those described in the forward-looking statements depending upon the impact of judicial and regulatory interpretations of the just-enacted tax legislation, as well as various other factors as described in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (flagstar.com) and on the Securities and Exchange Commission's website (sec.gov). Other than as required under United States securities laws, Flagstar Bancorp does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

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Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition

(Dollars in millions)

(Unaudited)

	December 31, 2017			September 30, 2017			December 31, 2016
Assets
Cash	$	122		$	88		$	84
Interest-earning deposits	82			145			74
Total cash and cash equivalents	204			233			158
Investment securities available-for-sale	1,853			1,637			1,480
Investment securities held-to-maturity	939			977			1,093
Loans held-for-sale	4,321			4,939			3,177
Loans held-for-investment	7,713			7,203			6,065
Loans with government guarantees	271			253			365
Less: allowance for loan losses	(140		)	(140		)	(142		)
Total loans held-for-investment and loans with government guarantees, net	7,844			7,316			6,288
Mortgage servicing rights	291			246			335
Federal Home Loan Bank stock	303			264			180
Premises and equipment, net	330			314			275
Net deferred tax asset	136			248			286
Other assets	691			706			781
Total assets	$	16,912		$	16,880		$	14,053
Liabilities and Stockholders' Equity
Noninterest-bearing	$	2,049		$	2,272		$	2,077
Interest-bearing	6,885			6,889			6,723
Total deposits	8,934			9,161			8,800
Short-term Federal Home Loan Bank advances	4,260			4,065			1,780
Long-term Federal Home Loan Bank advances	1,405			1,300			1,200
Other long-term debt	494			493			493
Representation and warranty reserve	15			16			27
Other liabilities	405			394			417
Total liabilities	15,513			15,429			12,717
Stockholders' Equity
Common stock	1			1			1
Additional paid in capital	1,512			1,511			1,503
Accumulated other comprehensive loss	(16		)	(8		)	(7		)
Accumulated deficit	(98		)	(53		)	(161		)
Total stockholders' equity	1,399			1,451			1,336
Total liabilities and stockholders' equity	$	16,912		$	16,880		$	14,053

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Flagstar Bancorp, Inc.  Condensed Consolidated Statements of Operations  (Dollars in millions, except per share data) (Unaudited)
														Fourth Quarter 2017 Compared to:
	Three Months Ended													Third Quarter 2017					Fourth Quarter 2016
	December 31, 2017			September 30, 2017		June 30, 2017			March 31, 2017		December 31, 2016			Amount			Percent		Amount			Percent
Interest Income
Total interest income	$	148		$	140	$	129		$	110	$	111		$	8		6	%	$	37		33	%
Total interest expense	41			37		32			27		24			4			11	%	17			71	%
Net interest income	107			103		97			83		87			4			4	%	20			23	%
Provision (benefit) for loan losses	2			2		(1		)	3		1			—			—	%	1			100	%
Net interest income after provision (benefit) for loan losses	105			101		98			80		86			4			4	%	19			22	%
Noninterest Income
Net gain on loan sales	79			75		66			48		57			4			5	%	22			39	%
Loan fees and charges	24			23		20			15		20			1			4	%	4			20	%
Deposit fees and charges	4			5		5			4		5			(1		)	(20	)%	(1		)	(20	)%
Loan administration income	5			5		6			5		4			—			—	%	1			25	%
Net (loss) return on the mortgage servicing rights	(4		)	6		6			14		(5		)	(10		)	N/M		1			(20	)%
Representation and warranty benefit	2			4		3			4		7			(2		)	(50	)%	(5		)	(71	)%
Other noninterest income	14			12		10			10		10			2			17	%	4			40	%
Total noninterest income	124			130		116			100		98			(6		)	(5	)%	26			27	%
Noninterest Expense
Compensation and benefits	80			76		71			72		66			4			5	%	14			21	%
Commissions	23			23		16			10		15			—			—	%	8			53	%
Occupancy and equipment	28			28		25			22		21			—			—	%	7			33	%
Loan processing expense	16			15		14			12		15			1			7	%	1			7	%
Legal and professional expense	8			7		8			7		9			1			14	%	(1		)	(11	)%
Other noninterest expense	23			22		20			17		16			1			5	%	7			44	%
Total noninterest expense	178			171		154			140		142			7			4	%	36			25	%
Income before income taxes	51			60		60			40		42			(9		)	(15	)%	9			21	%
Provision for income taxes	96			20		19			13		14			76			N/M		82			N/M
Net income (loss)	$	(45	)	$	40	$	41		$	27	$	28		$	(85	)	N/M		$	(73	)	N/M
Income (loss) per share
Basic	$	(0.79	)	$	0.71	$	0.72		$	0.47	$	0.50		$	(1.50	)	N/M		$	(1.29	)	N/M
Diluted	$	(0.79	)	$	0.70	$	0.71		$	0.46	$	0.49		$	(1.49	)	N/M		$	(1.28	)	N/M

N/M - Not meaningful

9

Flagstar Bancorp, Inc.  Condensed Consolidated Statements of Operations  (Dollars in millions, except per share data) (Unaudited)
	For the Year Ended					Compared to: Year Ended December 31, 2016
	December 31, 2017		December 31, 2016			Amount			Percent
Total interest income	$	527	$	417		$	110		26	%
Total interest expense	137		94			43			46	%
Net interest income	390		323			67			21	%
Provision (benefit) for loan losses	6		(8		)	14			N/M
Net interest income after provision (benefit) for loan losses	384		331			53			16	%
Noninterest Income
Net gain on loan sales	268		316			(48		)	(15	)%
Loan fees and charges	82		76			6			8	%
Deposit fees and charges	18		22			(4		)	(18	)%
Loan administration income	21		18			3			17	%
Net (loss) return on the mortgage servicing rights	22		(26		)	48			N/M
Representation and warranty benefit	13		19			(6		)	(32	)%
Other noninterest income	46		62			(16		)	(26	)%
Total noninterest income	470		487			(17		)	(3	)%
Noninterest Expense
Compensation and benefits	299		269			30			11	%
Commissions	72		55			17			31	%
Occupancy and equipment	103		85			18			21	%
Loan processing expense	57		55			2			4	%
Legal and professional expense	30		29			1			3	%
Other noninterest expense	82		67			15			22	%
Total noninterest expense	643		560			83			15	%
Income before income taxes	211		258			(47		)	(18	)%
Provision for income taxes	148		87			61			70	%
Net income	$	63	$	171		$	(108	)	(63	)%
Income per share
Basic	$	1.11	$	2.71		$	(1.60	)	(59	)%
Diluted	$	1.09	$	2.66		$	(1.57	)	(59	)%

N/M - Not meaningful

10

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial and Statistical Data

(Dollars in millions, except share data)

(Unaudited)

	Three Months Ended									For the Year Ended
	December 31, 2017			September 30, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Selected Mortgage Statistics:
Mortgage loans originated (1)	$	9,749		$	9,572		$	8,561		$	34,408		$	32,417
Mortgage loans sold and securitized	$	10,096		$	8,924		$	8,422		$	32,493		$	32,033
Mortgage rate lock commitments (gross)	$	9,476		$	9,878		$	7,611		$	37,544		$	36,869
Selected Ratios:
Interest rate spread (2)	2.56		%	2.58		%	2.49		%	2.56		%	2.45		%
Net interest margin	2.76		%	2.78		%	2.67		%	2.75		%	2.64		%
Net margin on loans sold and securitized	0.78		%	0.84		%	0.68		%	0.82		%	1.03		%
Return on average assets	(1.05		)%	0.99		%	0.78		%	0.40		%	1.23		%
Return on average equity	(12.07		)%	11.10		%	8.60		%	4.41		%	11.69		%
Return on average common equity	(12.07		)%	11.10		%	8.60		%	4.41		%	13.03		%
Efficiency ratio	77.1		%	73.5		%	76.7		%	74.8		%	69.2		%
Equity-to-assets ratio (average for the period)	8.73		%	8.95		%	9.05		%	9.05		%	10.52		%
Average Balances:
Average common shares outstanding	57,186,367			57,162,025			56,607,933			57,093,868			56,569,307
Average fully diluted shares outstanding	57,186,367			58,186,593			57,824,854			58,178,343			57,597,667
Average interest-earning assets	$	15,379		$	14,737		$	12,817		$	14,130		$	12,164
Average interest-paying liabilities	$	12,939		$	12,297		$	10,222		$	11,848		$	9,757
Average stockholders' equity	$	1,497		$	1,471		$	1,312		$	1,433		$	1,464

	December 31, 2017			September 30, 2017			December 31, 2016
Selected Statistics:
Book value per common share	$	24.40		$	25.38		$	23.50
Tangible book value per share	24.04			25.01			23.50
Number of common shares outstanding	57,321,228			57,181,536			56,824,802
Number of FTE employees	3,525			3,495			2,886
Number of bank branches	99			99			99
Ratio of nonperforming assets to total assets	0.22		%	0.24		%	0.39		%
Common equity-to-assets ratio	8.27		%	8.60		%	9.50		%
MSR Key Statistics and Ratios:
Weighted average service fee (basis points)	28.9			28.2			26.7
Capitalized value of mortgage servicing rights	1.16		%	1.15		%	1.07		%
Mortgage servicing rights to Tier 1 capital	20.1		%	17.3		%	26.7		%

(1) Includes residential first mortgage.

(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.

11

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)

	Three Months Ended
	December 31, 2017						September 30, 2017						December 31, 2016
	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	$	4,537	$	46	4.07	%	$	4,476	$	45	3.99	%	$	3,321	$	29	3.55	%
Loans held-for-investment
Residential first mortgage	2,704		23		3.37	%	2,594		22		3.32	%	2,215		18		3.25	%
Home equity	524		7		5.11	%	486		6		5.11	%	447		6		4.95	%
Other	26		—		4.49	%	26		—		4.52	%	29		—		4.47	%
Total Consumer loans	3,254		30		3.66	%	3,106		28		3.61	%	2,691		24		3.55	%
Commercial Real Estate	1,866		21		4.48	%	1,646		19		4.43	%	1,209		11		3.60	%
Commercial and Industrial	1,136		14		4.76	%	1,073		13		4.77	%	721		8		4.49	%
Warehouse Lending	1,039		13		4.82	%	978		12		4.82	%	1,542		16		4.12	%
Total Commercial loans	4,041		48		4.65	%	3,697		44		4.63	%	3,472		35		4.06	%
Total loans held-for-investment	7,295		78		4.21	%	6,803		72		4.16	%	6,163		59		3.84	%
Loans with government guarantees	260		3		3.90	%	264		3		4.58	%	389		4		4.23	%
Investment securities	3,204		21		2.61	%	3,101		20		2.58	%	2,845		18		2.53	%
Interest-earning deposits	83		—		1.33	%	93		—		1.23	%	99		1		0.51	%
Total interest-earning assets	15,379		$	148	3.81	%	14,737		$	140	3.77	%	12,817		$	111	3.46	%
Other assets	1,772						1,702						1,672
Total assets	$	17,151					$	16,439					$	14,489
Interest-Bearing Liabilities
Retail deposits
Demand deposits	$	547	$	—	0.26	%	$	489	$	—	0.14	%	$	521	$	—	0.21	%
Savings deposits	3,621		8		0.77	%	3,838		7		0.76	%	3,840		7		0.77	%
Money market deposits	231		—		0.52	%	276		—		0.57	%	256		—		0.43	%
Certificates of deposit	1,397		5		1.32	%	1,182		4		1.19	%	1,079		3		1.05	%
Total retail deposits	5,796		13		0.84	%	5,785		11		0.78	%	5,696		10		0.75	%
Government deposits
Demand deposits	204		—		0.59	%	250		—		0.43	%	211		—		0.39	%
Savings deposits	394		1		0.94	%	362		1		0.71	%	470		1		0.52	%
Certificates of deposit	376		1		1.05	%	329		1		0.89	%	352		1		0.60	%
Total government deposits	974		2		0.91	%	941		2		0.70	%	1,033		2		0.52	%
Wholesale deposits and other	45		—		1.50	%	35		—		1.49	%	—		—		—	%
Total interest-bearing deposits	6,815		15		0.86	%	6,761		13		0.78	%	6,729		12		0.72	%
Short-term Federal Home Loan Bank advances and other	4,329		14		1.25	%	3,809		11		1.17	%	1,427		1		0.50	%
Long-term Federal Home Loan Bank advances	1,301		6		1.93	%	1,234		6		1.99	%	1,573		5		1.24	%
Other long-term debt	494		6		5.12	%	493		7		5.09	%	493		6		4.89	%
Total interest-bearing liabilities	12,939		41		1.25	%	12,297		37		1.19	%	10,222		24		0.97	%
Noninterest-bearing deposits (1)	2,269						2,244						2,504
Other liabilities	446						427						451
Stockholders' equity	1,497						1,471						1,312
Total liabilities and stockholders' equity	$	17,151					$	16,439					$	14,489
Net interest-earning assets	$	2,440					$	2,440					$	2,595
Net interest income			$	107					$	103					$	87
Interest rate spread (2)					2.56	%					2.58	%					2.49	%
Net interest margin (3)					2.76	%					2.78	%					2.67	%
Ratio of average interest-earning assets to interest-bearing liabilities					118.9	%					119.9	%					125.4	%
Total average deposits	$	9,084					$	9,005					$	9,233

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

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

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

12

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)

	For the Year Ended
	December 31, 2017						December 31, 2016
	Average Balance		Interest		Annualized Yield/Rate		Average Balance		Interest		Annualized Yield/Rate
Interest-Earning Assets
Loans held-for-sale	$	4,146	$	165	3.99	%	$	3,134	$	113	3.62	%
Loans held-for-investment
Residential first mortgage	2,549		85		3.35	%	2,328		74		3.16	%
Home equity	471		24		5.06	%	475		24		5.17	%
Other	26		1		4.51	%	29		1		4.73	%
Total Consumer loans	3,046		110		3.62	%	2,832		99		3.52	%
Commercial Real Estate	1,579		68		4.25	%	1,004		35		3.46	%
Commercial and Industrial	981		47		4.73	%	631		27		4.22	%
Warehouse Lending	890		43		4.73	%	1,346		58		4.22	%
Total Commercial loans	3,450		158		4.51	%	2,981		120		3.97	%
Total loans held-for-investment	6,496		268		4.09	%	5,813		219		3.75	%
Loans with government guarantees	290		13		4.30	%	435		16		3.59	%
Investment securities	3,121		80		2.57	%	2,653		68		2.56	%
Interest-earning deposits	77		1		1.15	%	129		1		0.50	%
Total interest-earning assets	14,130		$	527	3.71	%	12,164		$	417	3.42	%
Other assets	1,716						1,743
Total assets	$	15,846					$	13,907
Interest-Bearing Liabilities
Retail deposits
Demand deposits	$	514	$	1	0.19	%	$	489	$	1	0.18	%
Savings deposits	3,829		29		0.76	%	3,751		29		0.78	%
Money market deposits	255		1		0.50	%	278		1		0.44	%
Certificates of deposit	1,187		14		1.18	%	990		10		1.05	%
Total retail deposits	5,785		45		0.78	%	5,508		41		0.76	%
Government deposits
Demand deposits	222		1		0.45	%	228		1		0.39	%
Savings deposits	406		3		0.68	%	442		2		0.52	%
Certificates of deposit	329		2		0.82	%	382		2		0.40	%
Total government deposits	957		6		0.67	%	1,052		5		0.45	%
Wholesale deposits and other	23		—		1.35	%	—		—		—	%
Total interest-bearing deposits	6,765		51		0.77	%	6,560		46		0.71	%
Short-term Federal Home Loan Bank advances and other	3,356		37		1.09	%	1,249		5		0.44	%
Long-term Federal Home Loan Bank advances	1,234		24		1.92	%	1,584		27		1.72	%
Other long-term debt	493		25		5.08	%	364		16		4.34	%
Total interest-bearing liabilities	11,848		137		1.15	%	9,757		94		0.97	%
Noninterest-bearing deposits (1)	2,142						2,202
Other liabilities	423						484
Stockholders' equity	1,433						1,464
Total liabilities and stockholders' equity	$	15,846					$	13,907
Net interest-earning assets	$	2,282					$	2,407
Net interest income			$	390					$	323
Interest rate spread (2)					2.56	%					2.45	%
Net interest margin (3)					2.75	%					2.64	%
Ratio of average interest-earning assets to interest-bearing liabilities					119.3	%					124.7	%
Total average deposits	$	8,907					$	8,762

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

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

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

13

Flagstar Bancorp, Inc.

Earnings Per Share

(Dollars in millions, except share data)

(Unaudited)

	Three Months Ended									For the Year Ended
	December 31, 2017			September 30, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Net income (loss)	(45		)	40			28			63			171
Deferred cumulative preferred stock dividends (1)	—			—			—			—			(18		)
Net income (loss) applicable to common stockholders	$	(45	)	$	40		$	28		$	63		$	153
Weighted average shares
Weighted average common shares outstanding	57,186,367			57,162,025			56,607,933			57,093,868			56,569,307
Effect of dilutive securities
May Investor warrants	—			—			151,560			12,287			138,314
Stock-based awards (2)	—			1,024,568			1,065,361			1,072,188			890,046
Weighted average diluted common shares	57,186,367			58,186,593			57,824,854			58,178,343			57,597,667
Earnings (loss) per common share
Basic earnings (loss) per common share	$	(0.79	)	$	0.71		$	0.50		$	1.11		$	2.71
Effect of dilutive securities
May Investor warrants	—			—			—			—			(0.01		)
Stock-based awards (2)	—			(0.01		)	(0.01		)	(0.02		)	(0.04		)
Diluted earnings (loss) per common share	$	(0.79	)	$	0.70		$	0.49		$	1.09		$	2.66

(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 and redeemed the stock.

(2) Three months ended December 31, 2017, excludes 1.2 million shares, or 2 cents per share, of unvested stock-based awards that are anti-dilutive due to net loss position.

Regulatory Capital - Bancorp

(Dollars in millions)

(Unaudited)

	December 31, 2017				September 30, 2017				June 30, 2017				December 31, 2016
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted avg. total assets)	$	1,442	8.51	%	$	1,423	8.80	%	$	1,408	9.10	%	$	1,256	8.88	%
Total adjusted avg. total asset base	$	16,951			$	16,165			$	15,468			$	14,149
Tier 1 common equity (to risk weighted assets)	$	1,216	11.50	%	$	1,208	11.65	%	$	1,196	12.45	%	$	1,084	13.06	%
Tier 1 capital (to risk weighted assets)	$	1,442	13.63	%	$	1,423	13.72	%	$	1,408	14.65	%	$	1,256	15.12	%
Total capital (to risk weighted assets)	$	1,576	14.90	%	$	1,554	14.99	%	$	1,530	15.92	%	$	1,363	16.41	%
Risk-weighted asset base	$	10,579			$	10,371			$	9,610			$	8,305

Regulatory Capital - Bank

(Dollars in millions)

(Unaudited)

	December 31, 2017				September 30, 2017				June 30, 2017				December 31, 2016
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 leverage (to adjusted avg. total assets)	$	1,531	9.04	%	$	1,519	9.38	%	$	1,590	10.26	%	$	1,491	10.52	%
Total adjusted avg. total asset base	$	16,934			$	16,191			$	15,504			$	14,177
Tier 1 common equity (to risk weighted assets)	$	1,531	14.46	%	$	1,519	14.61	%	$	1,590	16.49	%	$	1,491	17.90	%
Tier 1 capital (to risk weighted assets)	$	1,531	14.46	%	$	1,519	14.61	%	$	1,590	16.49	%	$	1,491	17.90	%
Total capital (to risk weighted assets)	$	1,664	15.72	%	$	1,651	15.88	%	$	1,712	17.75	%	$	1,598	19.18	%
Risk-weighted asset base	$	10,589			$	10,396			$	9,645			$	8,332

14

Loan Originations (Dollars in millions) (Unaudited)
	Three Months Ended
	December 31, 2017				September 30, 2017				December 31, 2016
Residential first mortgage	$	9,749	96.1	%	$	9,572	96.4	%	$	8,561	97.2	%
Home equity (1)	111		1.1	%	94		0.9	%	58		0.6	%
Total consumer loans	9,860		97.2	%	9,666		97.3	%	8,619		97.8	%
Commercial loans (2)	283		2.8	%	265		2.7	%	191		2.2	%
Total loan originations	$	10,143	100.0	%	$	9,931	100.0	%	$	8,810	100.0	%

	For the Year Ended
	December 31, 2017				December 31, 2016
Residential first mortgage	$	34,408	95.7	%	$	32,417	97.4	%
Home equity (1)	336		0.9	%	195		0.6	%
Total consumer loans	34,744		96.6	%	32,612		98.0	%
Commercial loans (2)	1,215		3.4	%	687		2.0	%
Total loan originations	$	35,959	100.0	%	$	33,299	100.0	%

(1) Includes second mortgage loans, HELOC loans, and other consumer loans.

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

Residential Loans Serviced

(Dollars in millions)

(Unaudited)

	December 31, 2017			September 30, 2017			December 31, 2016
	Unpaid Principal Balance (1)		Number of accounts	Unpaid Principal Balance (1)		Number of accounts	Unpaid Principal Balance (1)		Number of accounts
Serviced for own loan portfolio (2)	$	7,013	29,493	$	7,376	31,135	$	5,816	29,244
Serviced for others	25,073		103,137	21,342		87,215	31,207		133,270
Subserviced for others (3)	65,864		309,814	62,351		296,913	43,127		220,075
Total residential loans serviced	$	97,950	442,444	$	91,069	415,263	$	80,150	382,589

(1) UPB, net of write downs, does not include premiums or discounts.

(2) Includes loans held-for-investment (residential first mortgage and home equity), loans-held-for-sale (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

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

Loans Held-for-Investment

(Dollars in millions)

(Unaudited)

	December 31, 2017				September 30, 2017				December 31, 2016
Consumer loans
Residential first mortgage	$	2,754	35.7	%	$	2,665	37.0	%	$	2,327	38.3	%
Home equity	664		8.6	%	496		6.9	%	443		7.3	%
Other	25		0.3	%	26		0.4	%	28		0.5	%
Total consumer loans	3,443		44.6	%	3,187		44.3	%	2,798		46.1	%
Commercial loans
Commercial real estate	1,932		25.1	%	1,760		24.4	%	1,261		20.8	%
Commercial and industrial	1,196		15.5	%	1,097		15.2	%	769		12.7	%
Warehouse lending	1,142		14.8	%	1,159		16.1	%	1,237		20.4	%
Total commercial loans	4,270		55.4	%	4,016		55.7	%	3,267		53.9	%
Total loans held-for-investment	$	7,713	100.0	%	$	7,203	100.0	%	$	6,065	100.0	%

15

Allowance for Loan Losses

(Dollars in millions)

(Unaudited)

	As of/For the Three Months Ended
	December 31, 2017			September 30, 2017			December 31, 2016
Allowance for loan losses
Residential first mortgage	$	47		$	52		$	65
Home equity	22			20			24
Other	1			1			1
Total consumer loans	70			73			90
Commercial real estate	45			42			28
Commercial and industrial	19			19			17
Warehouse lending	6			6			7
Total commercial loans	70			67			52
Total allowance for loan losses	$	140		$	140		$	142
Charge-offs
Total consumer loans	(3		)	(3		)	(4		)
Total commercial loans	(1		)	—			—
Total charge-offs	$	(4	)	$	(3	)	$	(4	)
Recoveries
Total consumer loans	—			1			1
Total commercial loans	2			—			1
Total recoveries	2			1			2
Charge-offs, net of recoveries	$	(2	)	$	(2	)	$	(2	)
Net charge-offs to LHFI ratio (annualized) (1)	0.11		%	0.08		%	0.13		%
Net charge-offs ratio, adjusted (annualized) (1)(2)	0.06		%	0.06		%	0.07		%
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type(1):
Residential first mortgage	0.26		%	0.12		%	0.38		%
Home equity and other consumer	0.39		%	0.52		%	0.20		%
Commercial real estate	0.03		%	—		%	(0.05		)%
Commercial and industrial	(0.15		)%	(0.01		)%	(0.12		)%

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

(2) There were no charge offs relating to the sale of nonperforming loans, TDRs and non-agency loans during the three months ended December 31, 2017, September 30, 2017, and December 31, 2016. Excludes charge-offs related to loans with government guarantees of $1 million, $1 million, and $1 million during the three months ended December 31, 2017, September 30, 2017, and December 31, 2016, respectively.

16

Allowance for Loan Losses (continued)

(Dollars in millions)

(Unaudited)

	For the Year Ended
	December 31, 2017			December 31, 2016
Total allowance for loan losses	$	140		$	142
Charge-offs
Total consumer loans	(13		)	(36		)
Total commercial loans	(1		)	—
Total charge-offs	$	(14	)	$	(36	)
Recoveries
Total consumer loans	4			5
Total commercial loans	2			1
Total recoveries	6			6
Charge-offs, net of recoveries	$	(8	)	$	(30	)
Net charge-offs to LHFI ratio (annualized) (1)	0.12		%	0.52		%
Net charge-offs ratio, adjusted (annualized) (1)(2)	0.05		%	0.15		%
Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type(1):
Residential first mortgage	0.26		%	1.18		%
Home equity and other consumer	0.31		%	0.70		%
Commercial real estate	—		%	(0.02		)%
Commercial and industrial	(0.05		)%	(0.04		)%

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

(2) Excludes charge-offs of $1 million and $8 million during the year ended December 31, 2017 and 2016, related to the sale of nonperforming loans, TDRs and non-agency loans. Also excludes charge-offs related to loans with government guarantees of $4 million and $13 million during the three months ended December 31, 2017 and 2016, respectively.

Nonperforming Loans and Assets

(Dollars in millions)

(Unaudited)

	December 31, 2017			September 30, 2017			December 31, 2016
Nonperforming loans	$	13		$	16		$	22
Nonperforming TDRs	5			4			8
Nonperforming TDRs at inception but performing for less than six months	11			11			10
Total nonperforming loans held-for-investment	29			31			40
Real estate and other nonperforming assets, net	8			9			14
Nonperforming assets held-for-investment, net (1)	$	37		$	40		$	54
Ratio of nonperforming assets to total assets	0.22		%	0.24		%	0.39		%
Ratio of nonperforming loans held-for-investment to loans held-for-investment	0.38		%	0.44		%	0.67		%
Ratio of nonperforming assets to loans held-for-investment and repossessed assets	0.48		%	0.58		%	0.90		%
Ratio of nonperforming assets to Tier 1 capital + allowance for loan losses	2.36		%	2.57		%	3.93		%

(1) Does not include nonperforming loans held-for-sale of $9 million, $8 million, and $6 million at December 31, 2017, September 30, 2017, and December 31, 2016, respectively.

17

Asset Quality - Loans Held-for-Investment

(Dollars in millions)

(Unaudited)

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 days (1)		Total Past Due		Total Loans Held-for-Investment
December 31, 2017
Consumer loans	$	3	$	2	$	29	$	34	$	3,443
Commercial loans	—		—		—		—		4,270
Total loans	$	3	$	2	$	29	$	34	$	7,713
September 30, 2017
Consumer loans	$	4	$	1	$	30	$	35	$	3,187
Commercial loans	—		—		1		1		4,016
Total loans	$	4	$	1	$	31	$	36	$	7,203
December 31, 2016
Consumer loans	$	8	$	2	$	40	$	50	$	2,798
Commercial loans	—		—		—		—		3,267
Total loans	$	8	$	2	$	40	$	50	$	6,065

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

Troubled Debt Restructurings

(Dollars in millions)

(Unaudited)

	TDRs
	Performing		Nonperforming		Total
December 31, 2017
Consumer loans	$	43	$	16	$	59
Commercial loans	—		—		—
Total TDR loans	$	43	$	16	$	59
September 30, 2017
Consumer loans	$	46	$	15	$	61
Commercial loans	—		—		—
Total TDR loans	$	46	$	15	$	61
December 31, 2016
Consumer loans	$	67	$	18	$	85
Commercial loans	—		—		—
Total TDR loans	$	67	$	18	$	85

18

Representation and Warranty Reserve

(Dollars in millions)

(Unaudited)

	Three Months Ended									For the Year Ended
	December 31, 2017			September 30, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Balance at beginning of period	$	16		$	20		$	32		$	27		$	40
Provision (benefit)
Gain on sale reduction for representation and warranty liability	1			1			1			4			5
Representation and warranty provision (benefit)	(2		)	(4		)	(7		)	(13		)	(19		)
Total	(1		)	(3		)	(6		)	(9		)	(14		)
(Charge-offs) recoveries, net	—			(1		)	1			(3		)	1
Balance at end of period	$	15		$	16		$	27		$	15		$	27

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 federal banking regulators have issued a series of new proposals regarding regulatory capital which may freeze or eliminate most of the transitional rules. 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, 2017	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)	$	1,216		$	1,442		$	1,442		$	1,576
Increased deductions related to deferred tax assets, mortgage servicing rights and other capital components	(16		)	(1		)	(1		)	(2		)
Basel III (fully phased-in) capital	$	1,200		$	1,441		$	1,441		$	1,574
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in)
Basel III assets (transitional)	$	10,579		$	16,951		$	10,579		$	10,579
Net change in assets	(2		)	(1		)	(2		)	(2		)
Basel III (fully phased-in) assets	$	10,577		$	16,950		$	10,577		$	10,577
Capital ratios
Basel III (transitional)	11.50		%	8.51		%	13.63		%	14.90		%
Basel III (fully phased-in adjusted for transition freeze)	11.35		%	8.50		%	13.62		%	14.88		%

19

December 31, 2017	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)	$	1,531		$	1,531		$	1,531		$	1,664
Increased deductions related to deferred tax assets, mortgage servicing rights and other capital components	(1		)	(1		)	(1		)	—
Basel III (fully phased-in) capital	$	1,530		$	1,530		$	1,530		$	1,664
Risk-weighted assets – Basel III (transitional) to Basel III (fully phased-in)
Basel III assets (transitional)	$	10,589		$	16,934		$	10,589		$	10,589
Net change in assets	(1		)	(1		)	(1		)	(1		)
Basel III (fully phased-in) assets	$	10,588		$	16,933		$	10,588		$	10,588
Capital ratios
Basel III (transitional)	14.46		%	9.04		%	14.46		%	15.72		%
Basel III (fully phased-in adjusted for transition freeze)	14.45		%	9.04		%	14.45		%	15.71		%

Tangible book value per share, adjusted net income and adjusted earnings 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 adjustments of the reported U.S.GAAP results for significant items that management does not believe are reflective of the Company's current and ongoing operations. The Company believes that tangible book value per share, adjusted net income and adjusted earnings per share provide a meaningful representation of its operating performance on an ongoing basis. Management uses these measures 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 it provides a tool to evaluate the Company’s performance on an ongoing basis and compared to its peers.    

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

Tangible book value per share

	December 31, 2017		September 30, 2017		June 30, 2017		March 31, 2017		December 31, 2016
	(Dollars in millions, except share data)
Total stock holders' equity	$	1,399	$	1,451	$	1,408	$	1,371	$	1,336
Goodwill and intangibles	21		21		20		4		—
Tangible book value	$	1,378	$	1,430	$	1,388	$	1,367	$	1,336
Number of common shares outstanding	57,321,228		57,181,536		57,161,431		57,043,565		56,824,802
Tangible book value per share	$	24.04	$	25.01	$	24.29	$	23.96	$	23.50

20

Adjusted Net Income and Adjusted Earnings per Share

	Three Months Ended					Year Ended
	December 31, 2017			December 31, 2016		December 31, 2017		December 31, 2016
	(Dollars in millions) (Unaudited)
Net income (loss)	$	(45	)	$	28	$	63	$	171
Adjustment to remove DOJ adjustment	—			—		—		(24		)
Tax impact of DOJ adjustment	—			—		—		8
Adjustment to remove tax reform impact	80			—		80		—
Adjusted net income	$	35		$	28	$	143	$	155
Deferred cumulative preferred stock dividends (1)	—			—		—		(18		)
Adjusted net income applicable to common stockholders	$	35		$	28	$	143	$	137
Weighted average diluted common shares	58,311,881			57,824,854		58,178,343		57,597,667
Adjusted diluted earnings per share	$	0.60		$	0.49	$	2.47	$	2.38

(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 and redeemed the stock.

21

EX-99.2

4th Quarter 2017 Flagstar Bancorp, Inc. (NYSE: FBC) Earnings Presentation 4th Quarter 2017 January 23, 2018

4th Quarter 2017 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 2017 Executive Overview Sandro DiNello, CEO

4th Quarter 2017 Strategic highlights 4 Unique relationship-based business model • Durable and balanced earnings stream - Continued growth of banking and servicing businesses has reduced impact of swings in origination business, producing more predictable and consistent results Strengthen mortgage revenues Grow community banking Highly profitable operations • Solid, consistent financial results - Adjusted net income of $35 million(1) or $0.60(1) per diluted share; up 25% vs. 4Q16 Positioned to thrive in any market • Strong credit metrics and low delinquency levels supported by 1.8 percent allowance coverage ratio • Relatively neutral interest rate risk position • Tier 1 leverage ratio of 8.5 percent, Capital Simplification proposal would improve Tier 1 leverage ratio to 9.2 percent • Continued transformation into strong commercial bank - Average commercial loans up $344 million, or 9 percent vs. prior quarter - $1.1 billion of high quality C&I and CRE loans added to balance sheet in 2017 • Received regulatory approval to acquire eight Desert Community Bank branches • Mortgage acquisitions strengthened distribution channels and added flexibility to take advantage of market conditions - Mortgage closings totaled $9.7 billion, up 14 percent vs. 3Q17 - Fallout-adjusted locks increased 42% vs. 4Q16 1) Non-GAAP number. Number shown excludes non-cash charge of $80 million, or $1.37 per diluted share, resulting from Tax Cuts and Jobs Act. Please see reconciliation on page 48.

4th Quarter 2017 Financial Overview Jim Ciroli, CFO

4th Quarter 2017 Financial highlights 6 1) Non-GAAP number. Number shown excludes non-cash charge of $80 million, or $1.37 per diluted share, resulting from Tax Cuts and Jobs Act. Please see reconciliation on page 48. 2) Mortgage revenue is defined as net gain on loan sales HFS plus the net (loss) return on the MSR. Durable earnings Strong banking contribution • Net interest income rose $4 million, or 4 percent, led by growth of high-quality, relationship-based commercial loans - Average earning assets rose on strength of 9 percent increase in average commercial loans - Net interest margin remained stable at 2.76 percent on continued deposit price discipline Good mortgage performance Strong asset quality • Net charge-offs negligible at 0.11 percent of HFI loans • Nonperforming loan ratio fell to 0.38 percent; early stage delinquencies low and stable • Allowance for loan losses covered 1.8 percent of loans HFI Robust capital position • Capital remained hallmark with regulatory capital ratios well above current “well capitalized” guidelines - Tier 1 leverage at 8.5 percent with nearly 120 basis points of trapped capital in MSRs and DTAs - Tier 1 leverage has approximately 350 basis point buffer to “well-capitalized” minimums that would grow to approximately 420 basis points under the proposed Capital Simplification • Adjusted net income of $35 million(1), or $0.60(1) per diluted share, in 4Q17 - Average earning assets grew 4 percent, and net interest margin remained steady; deposits grew 1 percent - GOS margin strengthened to 91 basis points, while volumes dropped only 3 percent - Mortgage Servicing gained scale with book of business that exceeds 440,000 accounts • Mortgage revenue(2) down $7 million; stronger net gain on loan sales partially offset net loss on MSR - Net gain on loan sales rose $3 million, reflecting 7 basis point increase in GOS margin - Net loss on MSR was $4 million, led by drop in fair value from model changes and charge on pending MSR sales

4th Quarter 2017 4Q17 3Q17 $ Variance % Variance Net interest income $107 $103 $4 4% Provision for loan losses ("PLL") 2 2 - 0% Net interest income after PLL 105 101 4 4% Net gain on loan sales 79 75 4 5% Loan fees and charges 24 23 1 4% Loan administration income 5 5 - 0% Net return on mortgage servicing rights (4) 6 (10) N/M Representation and warranty benefit 2 4 (2) (50%) Other noninterest income 18 17 1 6% Total noninterest income 124 130 (6) (5%) Net gain on loan sales / total revenue 34% 32% 2% Compensation and benefits 80 76 4 5% Commissions and loan processing expense 39 38 1 3% Other noninterest expenses 59 57 2 4% Total noninterest expense 178 171 7 4% Income before income taxes 51 60 (9) (15%) Provision for income taxes 16 (1) 20 (4) (20%) Net income $35 (1) $40 ($5) (13%) Diluted income per share $0.60 (1) $0.70 ($0.10) (14%) Profitability Net interest margin 2.76% 2.78% (2 bps) Total revenues $231 $233 ($2) (1%) Mortgage rate lock commitments, fallout adjusted $8,631 $8,898 ($267) (3%) Mortgage closings $9,749 $9,572 $177. 2% Net gain on loan sale margin, HFS 0.91% 0.84% 7 bps. Quarterly income comparison $mm Observations Noninterest income • Noninterest income decreased $6mm or 5% - Higher GOS revenues largely reflected higher GOS margin; FOAL fell only 3 percent, reflecting strengthening of bulk and retail channels - Net return on MSR declined $10 million on model changes and MSR sales that extends flexibility for holding MSRs on-balance sheet B Net interest income • Net interest income increased $4mm or 4% - Average earning assets increased 4%, led by commercial loans (up 9%) - Net interest margin stable at 2.76%, reflecting continued deposit price discipline Noninterest expense • Noninterest expense increased $7mm or 4% - Compensation and benefits rose $4mm, led primarily by incentive compensation - $2 million higher expense supported growth initiatives - Commissions and loan processing expense rose $1mm on higher loan originations A B2 C B1 7 1) Non-GAAP number. Number shown excludes non-cash charge of $80 million, or $1.37 per diluted share, resulting from Tax Cuts and Jobs Act. Please see reconciliation on page 48. N/M – not meaningful C A

4th Quarter 2017 Equity(4) • Common equity to asset ratio of 8.3% • FBC closing share price of $38.98 on January 22, 2018 is 162% of tangible book value Average balance sheet highlights 8 Interest-bearing liabilities • Average deposits grew $79 million, or 1%, led by higher company-controlled and government deposits • Retail deposits unchanged with mix shift from retail savings to retail CDs - Deposit costs managed despite slight duration extension from higher CD mix Observations Interest-earning assets • Average loans held-for-investment rose $492 million, or 7%, most of which came from commercial loans - Commercial loan growth was broad-based with a solid gain in CRE, C&I and warehouse loans 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) Tangible book value per common share references a non-GAAP number. Please see reconciliation on page 48. $ $ % Loans held-for-sale $4,537 $61 1% Consumer loans(2) 3,254 148 5% Commercial loans(2) 4,041 344 9% Total loans held-for-investment 7,295 492 7% Other earning assets(3) 3,547 89 3% Interest-earning assets $15,379 $642 4% Other assets 1,772 70 4% Total assets $17,151 $712 4% Deposits $9,084 $79 1% Short-term FHLB advances & other 4,329 520 14% Long-term FHLB advances 1,301 67 5% Other long-term debt 494 1 0% Other liabilities 446 19 4% Total liabilities $15,654 $686 5% Stockholders' equity 1,497 26 2% Total liabilities a d stockholders' equity $17,151 $712 4% Tangible book value per common share (12/31/17) (4) $24.04 ($0.97) (4%) Incr (Decr)(1) Average Balance Sheet 4Q17 ($mm)

4th Quarter 2017 Asset quality 9 Performing TDRs and NPLs ($mm) 67 48 46 46 43 40 28 30 31 29 $107 $76 $76 $77 $72 12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017 Peforming TDRs NPLs 1) Excludes loans carried under the fair value option and loans with government guarantees. Allowance coverage(1) (% of loans HFI) 2.4% 2.4% 2.1% 2.0% 1.8% 3.3% 2.9% 2.5% 2.3% 2.0% 1.6% 1.9% 1.7% 1.7% 1.6% 12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017 Total Consumer Commercial Net charge-offs ($mm) Representation & warranty reserve(2) ($mm) $27 $23 $20 $16 $15 $6 $6 $4 $5 $3 12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017 Reserve Repurchase pipeline 1 1 0 1 1 1 2 1 1 1 $2 $4 $0 $2 $2 4Q16 1Q17 2Q17 3Q17 4Q17 Adj. charge-offs Govt. guaranteed loans Loan sales 2) Please see slide 47 in the appendix for further details on the representation and warranty reserve.

4th Quarter 2017 8.9% -33bps +54bps +22bps 9.3% -130bps +44bps +65bps 9.1% -38bps -24bps +32bps 8.8% -40bps -21bps +32bps 8.5% 9.5% 9.2% 12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017 Robust capital Observations 4Q17 Tier 1 CET-1 Tier 1 Total RBC Leverage to RWA to RWA to RWA 4Q17 Actual 8.5% 11.5% 13.6% 14.9% 3 17 ctual 8.8 11.7 13.7 15.0 10 Flagstar Bancorp Tier 1 Leverage Well Capitalized 5.0% Balance sheet impact Net earnings contribution 2017 phase-in under Basel III Capital impact of MSR • Tier 1 leverage ended the quarter at 8.5% - Balance sheet growth of more than $700mm consumed 40bps of capital excluding MSR impact - Planned MSR growth utilized 21bps of capital given positive signals of Capital Simplification - Net earnings contributed 32bps of capital • Flagstar will generate capital at pre-tax rate as it utilizes its NOL-related DTAs - $72mm of NOL-related DTAs (43bps of Tier 1 leverage) • Capital Simplification proposal would unleash trapped capital and increase Tier 1 leverage ~70 bps(1) and risk-based capital ratios ~30-35 bps(1) to support balance sheet growth - $125mm of MSRs (74bps of Tier 1 leverage) will be released upon increasing CET-1 threshold to 25% 1) Non-GAAP number. Please see reconciliation on page 48. Proforma ratio under Capital Simplification proposal(1)

4th Quarter 2017 Business Segment Overview Lee Smith, COO

4th Quarter 2017 Community banking 12 Quarter-end commercial loan commitments ($bn) Average deposit funding(1) ($bn) 6.3 6.4 6.5 6.6 6.5 1.0 1.0 0.9 0.9 1.0 1.9 1.4 1.4 1.5 1.6 $9.2 $8.8 $8.7 $9.0 $9.1 4Q16 1Q17 2Q17 3Q17 4Q17 Retail Government Company-controlled deposits 1) Includes company-controlled deposits which are included as part of mortgage servicing. 1.2 1.4 1.7 1.8 1.9 1.9 2.2 2.3 2.7 2.9 2.9 2.4 2.6 2.7 2.8 $6.0 $6.0 $6.6 $7.2 $7.6 12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017 Commercial and Industrial Commercial Real Estate Warehouse Average commercial loans ($bn) Average consumer loans ($bn) 0.7 0.8 0.9 1.1 1.1 1.2 1.3 1.5 1.6 1.9 1.5 0.7 0.9 1.0 1.0 $3.5 $2.8 $3.3 $3.7 $4.0 4Q16 1Q17 2Q17 3Q17 4Q17 Commercial and Industrial Commercial Real Estate Warehouse 2.2 2.4 2.5 2.6 2.7 0.5 0.5 0.5 0.5 0.6 $2.7 $2.9 $3.0 $3.1 $3.3 4Q16 1Q17 2Q17 3Q17 4Q17 Residential First Mortgages Other Consumer Loans

4th Quarter 2017 $6.1 $6.0 $9.0 $8.9 $8.6 4Q16 1Q17 2Q17 3Q17 4Q17 3.2 3.1 5.5 5.5 5.3 5.3 2.8 3.7 4.1 4.4 $8.6 $5.9 $9.2 $9.6 $9.7 4Q16 1Q17 2Q17 3Q17 4Q17 Purchase originations Refinance originations Purchase Mix % Mortgage originations 13 43% 54% 58% 55% 54% 4.5 3.0 4.6 4.5 4.9 1.9 1.7 2.4 2.2 2.3 2.1 1.2 2.2 2.9 2.5 $8.6 $5.9 $9.2 $9.6 $9.7 4Q16 1Q17 2Q17 3Q17 4Q17 Conventional Government Jumbo Closings by purpose ($bn) Closings by mortgage type ($bn) Net gain on loan sales – revenue and margin Fallout-adjusted locks ($bn) $57 $48 $66 $75 $79 0.93% 0.80% 0.73% 0.84% 0.91% 4Q16 1Q17 2Q17 3Q17 4Q17 Gain on loan sale Gain on sale margin (HFS)

4th Quarter 2017 Mortgage servicing 14 MSR / regulatory capital (Bancorp) Quarter-end loans serviced (000’s) $ UPB of MSRs sold ($bn) 4.2 5.8 17.1 4.3 2.5 2.2 1.9 1.6 $6.7 $8.0 $19.0 $2.0 $4.3 4Q16 1Q17 2Q17 3Q17 4Q17 Bulk Sales Flow Transactions 133 117 66 87 103 221 242 305 297 310 29 34 31 31 29 383 393 402 415 442 12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017 Serviced for Others Subserviced for Others Flagstar Loans HFI 31% 28% 15% 20% 24% 27% 23% 13% 17% 21% 12/31/2016 3/31/2017 6/30/17 9/30/17 12/31/17 MSR to Tier 1 Common MSR to Tier 1 Capital Average company-controlled deposits ($bn) $1.9 $1.4 $1.4 $1.5 $1.6 4Q16 1Q17 2Q17 3Q17 4Q17

4th Quarter 2017 Noninterest expense and efficiency ratio 15 Quarterly noninterest expense ($mm) and efficiency ratio 77% 77% 72% 74% 77% $142 $140 $154 $171 $178 4Q16 1Q17 2Q17 3Q17 4Q17 Efficiency ratio Noninterest expense ● Higher expenses led by incentive compensation and investment in growth initiatives with stable efficiency ratio

4th Quarter 2017 Closing Remarks / Q&A Sandro DiNello, CEO

4th Quarter 2017 Earnings guidance(1) 17 1) See cautionary statements on slide 2. Net interest income • Net interest income fairly steady - Average earning assets relatively unchanged; Higher home builder and consumer loans largely offset by decline in loans held-for-sale and warehouse loans from fewer mortgage closings - Net interest margin fairly stable Net gain on loan sales • Net gain on loan sales relatively steady - Consumer direct mortgage team from Capital One provides no meaningful impact in 1Q18 Mortgage servicing rights (MSRs) • Net return on MSRs approximates 5-7% before transaction costs from closing 1Q18 MSR sales Other noninterest income • Loan fees and charges down moderately on lower mortgage loan closings • All other noninterest income fairly steady with Q4 levels Noninterest expense • Noninterest expense to rise to between $183-$188 million, due to seasonally higher payroll taxes and benefit costs and continued investment in revenue growth initiatives 1st Quarter 2018 Outlook

4th Quarter 2017 Appendix Company overview 19 Financial performance 26 Community banking 30 Mortgage origination 41 Mortgage servicing 43 Capital and liquidity 44 Asset quality 47 Non-GAAP reconciliation 48

4th Quarter 2017 Flagstar at a glance COMPANY OVERVIEW 99 Branches in Michigan Community banking • Leading Michigan-based bank with a balanced, diversified lending platform • $16.9bn of assets and $8.9bn of deposits • 99 branches • 108k household & 15k business relationships Mortgage origination • Leading national originator of residential mortgages ($34.4bn during 2017) • Recent acquisitions originated approximately $10bn of residential mortgages during 2016 • More than 1,000 correspondent and more than 700 broker relationships Mortgage servicing • 8th largest sub-servicer of mortgage loans nationwide • Currently servicing approximately 442k loans • Scalable platform with capacity to service 1mm loans • Lower cost deposits from escrow balances Corporate Overview • Traded on the NYSE (FBC) • Headquartered in Troy, MI • Market capitalization $2.2bn • Member of the Russell 2000 Index 19 1) Pending Desert Community Bank branch acquisition expected to close during 1Q18. 2) Includes seven home lending offices located in banking branches. 3) Opes has one retail lending office in Honolulu, HI that is not pictured on this map. 42 Opes retail home lending offices(3) 47 Flagstar retail home lending offices(2) 99 Flagstar Bank branches 8 Desert Community Bank Branches(1) Operations center

4th Quarter 2017 Flagstar’s one-of-a-kind business model … Originates mortgages in multiple channels on a national scale, which … … Deploy excess funding into lending opportunities where we are a lender of choice, which … … Cross-sell our banking products to deepen our B2B relationships, which … … Leverages our scalable sub-servicing platform, which … … Builds enduring net interest margin driven revenue, allowing us to … … Generates stable, lower cost, long-term funding, which we are able to ... … Expands our key B2B relationships to develop greater mortgage origination referrals, improving our ability to … … Generates capital with high ROE fee-based activity and servicing relationships, which … COMPANY OVERVIEW 20

4th Quarter 2017 ● Illustrative case studies detailed below: 21 Flagstar’s integrated business model Initial relationship • Established correspondent lending relationship (2017) - Purchased more than $225mm of mortgages year-to-date Expanded relationship • Warehouse line of credit (2017) - Commitments of $50mm • Initiated subservicing agreement (2017) - Entire portfolio of newly originated mortgage loans are on-boarded with Flagstar Residential MBS Investor Initial relationship • Bulk sale of MSRs with subservicing retained (2013 - 2014) Expanded relationship • Provided MSR lending facility (2016) - Commitments of $50mm collateralized by FNMA MSRs - Subservice non-Flagstar mortgage accounts providing fee income • Portfolio recapture services provided with direct-to-consumer refinancings of more than $200mm since inception (2016) • Additional bulk and flow sales of MSRs with subservicing retained (2017 completed and 2018 pending) Home Builder Initial relationship • Provided home builder line of credit (2016) - Unsecured non-real estate commitments of $30mm - Average commercial deposits of more than $15mm Expanded relationship • Participated in syndicated warehouse facility to captive mortgage operation (2016) - Commitments of $36mm - 1 of 3 participants in the syndication Wholesale Originator COMPANY OVERVIEW

4th Quarter 2017 Pistons sponsorship improves brand awareness Local and national exposure Key elements support community banking, mortgage origination and mortgage servicing: • First-ever jersey patch sponsor for the Pistons • Exclusive title as official banking and mortgage sponsor • Three 30 second TV and radio spots per game • In-arena signage including courtside, baskets, LED rings • Affinity debit and credit cards • Digital banner ads on Pistons.com and Pistons mobile app Value proposition 22 Exclusive banking and mortgage sponsorship • Sponsorship agreement benefits: - Creates national brand exposure that supports all business lines - Our target customers are NBA viewers - Increased exposure in Michigan banking market • Strong value proposition relative to other announced NBA sponsorship deals - Multi-year agreement with an option to extend Meaningful geographic overlap COMPANY OVERVIEW Bank branches Flagstar retail home lending Opes retail home lending NBA franchise

4th Quarter 2017 Flagstar has a strong executive team COMPANY OVERVIEW 23 Board of Directors John Lewis Chairman Community Banking Chief Financial Officer • CFO since 8/14 • More than 30 years of banking and financial services experience with First Niagara, Huntington and KeyCorp Chief 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 • Appointed President of Mortgage effective 9/17 • Has 15 years experience with Fannie Mae in various executive and leadership roles focused on building banking relationships and growth initiatives 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 Drew Ottaway Kristy Fercho Jim Ciroli Lee Smith • Executive Vice President, Michigan Market President and Managing Director, Lending • With Flagstar since 12/15 and has 30 years of banking and commercial lending experience in southeast Michigan with Comerica and NBD Chief Audit Officer Sandro DiNello President & CEO Brian Dunn

4th Quarter 2017 1) Excludes 25 FTEs in internal audit and 4 FTEs in Sarbanes-Oxley compliance. Risk management Best-in-class risk management platform with 206 FTEs(1) COMPANY OVERVIEW 24 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 5 63 50 12 7 6 32 FTEs Regulatory Affairs Modeling & Analytics ERM Chief Credit Officer QC / Appraisal Review MFIU Fraud Investigations Loan Review Operational Risk AML / BSA Compliance 26

4th Quarter 2017 Strong growth opportunities COMPANY OVERVIEW 25 Grow community banking 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 25 B u il d B u y • Pairing a deposit franchise where we currently have mortgage origination offices could enhance synergies between them • Acquiring deposit oriented franchises that lag in support growing asset generation • Leverage relationship banking models and community banking approach • Opportunistically; no strategic bank buyers of size • Highly fragmented industry with aging individual ownership • Regulatory and interest rate environment is accelerating exits • Can produce compelling returns with reliance only on funding synergies • Opportunistic team lift outs • Grow national lending platforms(1) - Expand warehouse lending (375bp spread) - Grow home builder finance (475bp spread) - Build MSR lending (425bp spread; LTVs<60%) • Cultivate middle-market and business banking relationships • Add specialty lending disciplines and teams 1) Indicated spreads are targets and may not be reflective of actual spreads.

4th Quarter 2017 Long-term targets • Long-term target of 1.1 - 1.7% - Add incremental revenue with low incremental cost - Improved risk management will deliver long-run savings • Long-term target of 12 - 17% - Add / increase high ROE businesses Financial Performance Return on assets Return on equity • Lender of choice in key markets (Michigan, national lending platforms) • 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 - Scalable platforms with balance sheet growth at low incremental cost • Nationally recognized leader the quick brown fox d • Growth trajectory 5 - 10% - Expand retail originations • Every 100k in new loans sub-serviced generates $4mm - $6mm of incremental pre-tax profits Revenues Mortgage Banking FINANCIAL PERFORMANCE 26

4th Quarter 2017 $61 $65 $73 $73 $76 $79 $77 $80 $87 $83 $97 $103 $107 $8.7 $9.4 $10.4 $10.7 $11.2 $11.9 $11.6 $12.3 $12.8 $12.3 $14.0 $14.7 $15.4 1Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Net interest income ($mm) Average earning assets ($bn) ● 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 CAGR 21% CAGR 21% 27 Higher net interest income is stabilizing earnings FINANCIAL PERFORMANCE

4th Quarter 2017 0% 25% 50% 75% 100% $22 $26 $30 $34 $38 $42 12/16 1/17 2/17 3/17 4/17 5/17 6/17 7/17 8/17 9/17 10/17 11/17 12/17 Buy Hold Actual Price Target Price Actual Price +39% Target Price +37% Price target has increased on improved prospects 28 Analyst rating history FINANCIAL PERFORMANCE Source: Analyst ratings and target price (consensus estimate) as reported by First Call.

4th Quarter 2017 . FBC valuation vs. SNL U.S. Bank and Thrift Index 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 7 2 /2 8 /2 0 1 7 3 /3 1 /2 0 1 7 4 /3 0 /2 0 1 7 5 /3 1 /2 0 1 7 6 /3 0 /2 0 1 7 7 /3 1 /2 0 1 7 8 /3 1 /2 0 1 7 9 /3 0 /2 0 1 7 1 0 /3 1 /2 0 1 7 1 1 /3 0 /2 0 1 7 1 2 /3 1 /2 0 1 7 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 7 2 /2 8 /2 0 1 7 3 /3 1 /2 0 1 7 4 /3 0 /2 0 1 7 5 /3 1 /2 0 1 7 6 /3 0 /2 0 1 7 7 /3 1 /2 0 1 7 8 /3 1 /2 0 1 7 9 /3 0 /2 0 1 7 1 0 /3 1 /2 0 1 7 1 1 /3 0 /2 0 1 7 1 2 /3 1 /2 0 1 7 Valuation metrics Observation: Flagstar continues to narrow its valuation discount to its banking peers. FINANCIAL PERFORMANCE 29 U .S . p re s iden ti a l e le c ti o n Market / tangible book Price / LTM earnings Market value gap: ~$0.3B . FBC valuation vs. SNL U.S. Bank and Thrift Index 87% 67% 85% U .S . p re s iden ti a l e le c ti o n 77% 57% Market value gap: ~$0.7B 75%

4th Quarter 2017 % YoY Overall MI-based Institution Branches Total Share Change 1 Chase 234 $43,668 21% 5% 2 Comerica 197 29,481 14% 14% 3 PNC 117 17,796 8% 11% 4 Bank of America 190 17,425 8% 5% 5 Fifth Third 211 16,954 8% 7% 6 Huntington 316 14,756 7% 8% 7 1 Chemical 206 11,565 6% 6% 8 2 Flagstar 99 9,024 4% 3% 9 Citizens 95 5,538 3% 9% 10 TCF 52 3,010 1% 13% Top 10 1,717 $169,218 81% 8% 2017 Rank Deposits ($mm) 154 7 35 Strong market position as leading MI-based bank COMMUNITY BANKING 30 Deposit Median Proj HHI Proj pop Market $mm % of total mkt share HHI(2) growth(2)(3) growth(2)(3) Oakland County(1) 3,497 46.4% 6.7% 76,705 11.7% 4.1% Grand Rapids MSA 415 5.5% 2.0% 61,391 10.9% 3.3% Ann Arbor MSA 351 4.7% 4.0% 69,221 8.9% 3.3% Key Flagstar markets 4,262 56.6% 5.3% 74,599 11.4% 3.9% National aggregate 61,045 8.9% 3.5% Flagstar Deposits Source: SNL Financial; Note: Deposit data as of June 30, 2017; MI-based banks highlighted. 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) 2018–2023 CAGR. Flagstar’s branch network Market share Attractive markets Leading position among independent banks

4th Quarter 2017 Deposits Portfolio and strategy overview COMMUNITY BANKING 31 6.3 6.4 6.5 6.5 6.5 2.9 2.4 2.2 2.5 2.6 $9.2 $8.8 $8.7 $9.0 $9.1 4Q16 1Q17 2Q17 3Q17 4Q17 Retail deposits Other deposits Total average deposits ($bn) • Flagstar gathers deposits from consumers, businesses and select governmental entities – Traditionally, CDs and savings accounts represented the bulk of our branch-based retail depository relationships – Today, we are focused on growing DDA balances with consumer, business banking and commercial relationships – We additionally maintain depository relationships in connection with our mortgage origination and servicing businesses, and with Michigan governmental entities – Cost of total deposits equal to 0.64%(1) [CATEGORY NAME], [VALUE] Savings, 40% [CATEGORY NAME], [VALUE] [CATEGORY NAME], [VALUE] [CATEGORY NAME], 17% Government & other, 11% 72% retail Total : $9.1bn 0.64% cost of total deposits(1) 4Q17 total average deposits 1) Total deposits include noninterest bearing deposits.

4th Quarter 2017 Deposit growth opportunities • Average balance of $1.0bn during 4Q17 • Cost of total government deposits: 0.90%(2) during 4Q17 • Michigan deposits are not required to be collateralized • Strong, long-term relationships across the state • Average balance of $0.5bn during 4Q17 • Flagstar realized 11% year-over-year increase in commercial deposits - Increasing balances with growing lines of business, including home builder finance • Offer complete line of treasury management services • Average balance of $1.6bn during 4Q17 on 442k loans serviced and sub-serviced • Low cost of deposits • Deposit balances increase along with the number of loans serviced and sub-serviced • Average balance of $6.0bn during 4Q17 of which 75% are demand & savings accounts • Cost of total core deposits(1): 0.75%(2) during 4Q17 • Average core deposits of $66mm per branch • Flagstar’s brand campaign is helping grow its core deposit base Core Deposits Retail Commercial Other Deposits Government Company-controlled COMMUNITY BANKING 1) Core deposits = total deposits excluding government deposits and company-controlled deposits. 2) Total deposits include noninterest bearing deposits. 32

4th Quarter 2017 154 7 35 Desert Community Bank branches 33 San Bernardino County, CA (High Desert region) Acquired deposits ($mm) – 9/30/17(3) • San Bernardino is the fifth largest county in California with 2.1mm residents and a median household income of $60k - Strong projected population growth of 4% and household income growth of 10% • Desert Community Bank has the #2 market share position in the High Desert region of San Bernardino County, CA - San Bernardino County has realized deposit growth of nearly 7% since 2012 (5 year CAGR); potential to grow low-cost deposits Demographics(1)(2) Rank Branch Location Deposits ($mm) 1 Apple Valley $121 2 Victorville (Main Branch) 104 3 Hesperia 88 4 Victorville (North Branch) 83 5 Adelanto 67 6 Barstow 57 7 Wrightwood 38 8 Phelan 36 $594 Average deposits / branch $74 Acquired branch list Market rank ($mm)(1) – 6/30/17 Noninterest bearing 43% Savings & money market 42% Certificates of deposit 15% 0.25% cost of deposits As of 1-Year Rank Bank 6/30/17 % Incr 1 Bank of m rica $626 11% 2 Desert Community Bank $585 9% 3 JPMorgan Chas $479 14% 4 Wells Fargo $478 9% 5 Mitsubishi UFJ $338 7% 6 US Bank $307 5% 7 Citizens Business Bank $112 5% (1) Source: 6/30/17 FDIC Summary of Deposits as reported by SNL Financial. (2) As estimated at July 1, 2015 by the U.S. Census Bureau. (3) Pending acquisition expected to close 1Q18. COMMUNITY BANKING

4th Quarter 2017 Desert Community Bank branches 34 Transaction summary • Flagstar is acquiring the branches of Desert Community Bank, a division of East West Bank(1) - 8 branches in High Desert region of San Bernardino County, California - Approximately $600mm of deposits at average cost of 0.25% (82% retail deposits)(2) - Approximately $70mm of loans that yield 4.8% (85% commercial) (2) • Expected to have only a 20-25 basis point impact to Tier 1 leverage Strategic rationale • Fits strategic goal of acquiring deposit-oriented franchises - Provides low-cost, stable funding to continue growing balance sheet • Combines a successful deposit franchise with a significant Flagstar presence already on the West Coast - Largest mortgage origination state (30+% of all Flagstar production) - Market with significant commercial lending activities, including warehouse lending and home builder financing Other considerations • Conducted comprehensive due diligence consistent with a full enterprise acquisition • Closing is subject to satisfaction of customary closing conditions and is expected during first quarter of 2018 • Regulatory approval has been received • Operate as a division of Flagstar and will retain: - Existing branding - Employees (currently 65 full-time and 6 part-time) as of November 13, 2017 (1) Pending acquisition expected to close 1Q18. (2) As of September 30, 2017 COMMUNITY BANKING

4th Quarter 2017 Lending Portfolio and strategy overview COMMUNITY BANKING 35 3.3 3.3 4.3 4.5 4.5 6.2 5.6 6.2 6.8 7.3 $9.9 $9.2 $10.8 $11.6 $12.1 4Q16 1Q17 2Q17 3Q17 4Q17 Loans HFS Loans HFI Loans with government guarantees 1st Mortgage HFI, 22% 2nds, HELOC & other, 5% Warehouse, 9% CRE and C&I, 25% Loans with government guarantees, 2% [CATEGORY NAME], 37% 4Q17 average loans Total average loans ($bn) • Flagstar’s largest category of earning assets consists of loans held-for-investment which averaged $7.3bn during 4Q17 – 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 $4.5bn during 4Q17 – 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

4th Quarter 2017 Flagstar has deep lending experience COMMUNITY BANKING 36 Sandro DiNello President & CEO Drew Ottaway Managing Director of Lending & Michigan Market President Commercial Real Estate Comprised of commercial and homebuilder lending officers who average experience of 21 years in banking. Prior banking experience includes Fifth Third, Wells Fargo, Bank of America, Texas Capital, and Royal Bank of Canada. Supported by a team of credit officers with more than 15 years average banking experience. Commercial & Industrial Comprised of lending officers who average experience of 25 years in banking. Prior banking experience includes Fifth Third, PNC, Bank of America and JP Morgan Chase. Supported by a team of credit officers with more than 20 years average banking experience. Warehouse Lending Comprised of lending officers who average experience of 26 years in banking. Prior banking experience includes Citizens Bank, Bank of America and Texas Capital. Supported by a team of credit officers with nearly 15 years average banking experience. Capital Markets Primarily focused on syndications and secondary markets. Supports relationship based lending platforms. Recent additions from Comerica support growth in line of business Supported by a team of credit officers with more than 20 years average banking experience. Business Banking Comprised of lending officers with average experience of over 25 years in banking. Prior banking experience includes Comerica, Huntington, PNC, and Fifth Third. Supported by a team of credit officers with more than 20 years average banking experience. Consumer Finance Consumer Finance supports consumer lending products, including processing and underwriting of loan applications received from the Retail Branch, Direct to Consumer lending channels and Indirect originations platform. Supported by a management team with an average of 25+ years of consumer lending experience

4th Quarter 2017 Community banking growth model • Primary focus is to build relationships - Recruit experienced bankers from larger regional banks - Retain seasoned bankers within our organization • Leverage deep industry experience and client relationships - Focus on moving relationships and credit facilities to Flagstar • Low incremental efficiency ratio - Marginal cost of 15-30% that varies with type of loans underwritten • Estimated pre-tax contribution of $5bn loan growth could contribute ~$1.00 earnings per share New banker additions (past 2 years) 37 Relationship based growth platform (1) We focus on recruitment of bankers with larger, regional bank lending experience. # of Avg Years Line of Service Additions Experience(1) Business Banking 7 24 Commercial Lending 10 25 Consumer Finance 3 20 CRE Lending 5 20 Equip Financing 6 27 Home Builder Finance 15 20 Indirect Lending 3 22 Warehouse Lending 2 18 Grand Total 51 22 COMMUNITY BANKING

4th Quarter 2017 Commercial lending Diversified relationship-based commercial lending capabilities COMMUNITY BANKING Commercial Real Estate - $1.9bn (12/31/17) Home builder finance 30% Multi- family 18% Retail 14% Office 0 Industrial 11% Hospitality 6% Other 11% Commercial & Industrial - $1.2bn (12/31/17) Financial, insurance & real estate 34% Services 25% Manufacturing 16% Healthcare 9% Distribution 7% Servicing advances 7% Other 2% Warehouse - $1.1bn (12/31/17) Overview • Warehouse lines with approximately 280 active relationships nationwide, of which approximately 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 ~140 borrowers sell >75% ~60 borrowers sell 25% - 75% ~80 borrowers sell <25% Average 34% advances sold to Flagstar Industry % Advances sold to Flagstar Property type 38 16% owner occupied 46% Michigan relationships; 18% National finance; 9% Home builder finance

4th Quarter 2017 1.2 1.2 1.2 1.2 1.1 1.7 1.2 1.4 1.5 1.7 $2.9 $2.4 $2.6 $2.7 $2.8 12/31/16 3/31/17 6/30/17 9/30/17 12/31/2017 Outstandings Unfunded Commitments FBC warehouse loan commitments ($mm) Warehouse lending COMMUNITY BANKING 39 Warehouse lenders ranked by commitments ($mm) Source: Inside Mortgage Finance as of December 1, 2017. ● National relationship based lending platform ● Attractive asset class with good spreads and low credit risk ● Strong growth potential and scalable platform ● Flagstar is well positioned to gain market share, leveraging relationships in complementary lines of business, including home builder finance and mortgage originations YOY Rank Institution Growth Total Share 1 JPMorgan Chase 38% $11,000 16% 2 Wells Fargo 13% 6,000 9% 3 Texas Capital 14% 5,642 8% 4 Comerica 4% 3,942 6% 5 BB&T 5% 3,880 6% 6 TIAA FSB (Everbank) -5% 3,800 6% 7 Customers Bank 6% 3,450 5% 8 First Tennessee 4% 3,167 5% 9 Flagstar Bancorp 2% 2,756 4% 10 Santander Bank 10% 2,700 4% Top 10 % $46,337 69% 3Q17

4th Quarter 2017 Home builder finance COMMUNITY BANKING 40 Home builder loan commitments(2) ($mm) ● National relationship based lending platform launched in 1Q16 - Attractive asset class with good spreads (~475bps) - Meaningful cross-sell opportunities including warehouse loans, commercial deposits and purchase originations ● Flagstar is well positioned to gain market share given builder and mortgage relationships - Focused on markets with strong housing fundamentals and higher growth potential - We currently have relationships with 6 of the top 10 and 42 of the top 100 builders nationwide - We are well positioned to take advantage of supply demand imbalance in housing market Home builder finance footprint Primary markets Secondary markets Overview $264 $365 $494 $619 $699 $297 $403 $484 $559 $567 $561 $768 $978 $1,178 $1,266 12/31/16 3/31/17 6/30/17 9/30/17 12/31/2017 Unpaid principal balance Unused Tightening housing supply(1) 0 2 4 6 8 10 12 0 1 2 3 4 5 6 7 8 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 2 0 1 7 2 0 1 8 Existing home sales (mm) Months supply of existing homes for sale 1) Source: Bloomberg (through 11/30/17) 2) Commitments are for loans classified as commercial real estate and commercial & industrial.

4th Quarter 2017 National distribution through multiple channels MORTGAGE ORIGINATIONS 41 Residential mortgage originations by channel ($bn) Broker Correspondent Retail $6.5 $4.5 $7.0 $7.0 $7.3 4Q16 1Q17 2Q17 3Q17 4Q17 $1.4 $1.0 $1.4 $1.3 $1.2 4Q16 1Q17 2Q17 3Q17 4Q17 $0.6 $0.4 $0.8 $1.3 $1.2 4Q16 1Q17 2Q17 3Q17 4Q17 • 2.7% market share with #8 national ranking(1) • Approximately 700 brokerage relationships in 50 states in 4Q17 • Targeted gain on sale margin of ~90bps • Top 10 relationships account for 17% of overall brokerage volume 1) Data source: As reported by Inside Mortgage Finance for 3Q17 published November 24, 2017. • 4.2% market share with #6 national ranking(1) • More than 1,000 correspondent partners in 50 states in 4Q17 • Targeted gain on sale margin of ~60bps • Top 10 relationships account for 12% of overall correspondent volume • Warehouse lines with approximately 250 correspondent relationships • Retail distribution share of 12% in 4Q17 vs. 7% in 4Q16 • Opes acquisition and organic growth has expanded our retail footprint to 95 locations in 27 states • Targeted gain on sale margin of ~300bps • Direct-to-consumer is 13% of retail volume

4th Quarter 2017 1 .3 1 .9 2 .1 1 .5 1 .2 1 .4 1 .5 2 .9 2 .3 1 .8 3 .5 4 .3 5 .6 3 .9 4 .1 3 .5 3 .0 1 .9 2 .4 2 .0 1 .6 2 .2 2 .0 1 .3 1 .7 2 .1 1 .8 1 .7 1 .7 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 2 0 1 7 E 2 0 1 8 F 2 0 1 9 F $ in t rill io n s Flagstar has restructured its operations to be profitable even at historical lows for the mortgage origination market 42 MORTGAGE ORIGINATIONS Source: Mortgage Bankers Association for actual periods and a blended average of forecast by Fannie Mae, Freddie Mac and Mortgage Bankers Association. 1. Adjusted for historical inflation as reported by Bureau of Labor Statistics (2017 = 100). 2. Adjusted for population growth as reported by the U.S. Census Bureau (2016 = 100). U.S. residential mortgage origination market (historical and projected volumes) Nominal ($) 0.6 0.9 1.0 0.8 0.6 0.8 0.8 1.7 1.4 1.1 2.2 2.9 3.8 2.8 3.0 2.7 2.4 1.5 2.0 1.7 1.4 2.0 1.8 1.3 1.7 2.1 1.8 1.7 1.7 Real(1) ($) 1.0 1.6 .7 1.3 1.0 1.2 1.3 2.5 2.0 .6 3.1 3. 5.1 3.6 .8 3.3 .8 .8 .3 .9 .6 .2 2.0 . . . . . . Adjusted(2) ($) .3 .9 2.1 .5 .2 .4 .5 .9 .3 1.8 .5 4.3 .6 .9 4.1 .5 3.0 1.9 2.4 2.0 1. 2. . 1.3 1.7 2.1 1.8 1.7 1.7

4th Quarter 2017 Freddie 35% Fannie 37% GNMA 25% Private 3% by Investor 154 7 35 MSR portfolio as of 12/31/17 MSR portfolio characteristics (% UPB) MSR portfolio statistics Measure ($mm) 9/30/2017 12/31/2017 Difference Unpaid principal balance $21,342 $25,073 $3,731 Fair value of MSR $246 $291 $45 Capitalized rate (% of UPB) 1.15% 1.16% 0.01% Multiple 4.092 4.015 (0.077) Note rate 4.026% 4.054% 0.028% Service fee 0.281% 0.289% 0.008% Average Measure ($000) UPB per loan $245 $243 ($2) FICO 728 722 (6) Loan to value 74.09% 76.61% 2.52% Net (loss) return on mortgage servicing rights ($mm) $ Return 4Q16 1Q 7 2Q17 3Q17 4Q17 Net hedged profit (l ss) ($5) $2 $0 $ ($1) Carry on asset 17 14 9 9 11 Run-off (17) (6) (4) (4) (7) Gross return on the mortgage servicing rights ($5) $10 $5 $5 $3 Sale transaction & P/L 1 (1) 1 1 (3) Model changes (1) 5 0 0 (4) Net r turn on the mortgage servicing rights ($5) $14 $6 $6 ($4) Average mortgage servicing rights $327 $344 $205 $212 $269 2016 & later; 79% 2015; 12% 2014; 4% 2013 & prior; 5% by Vintage MORTGAGE SERVICING 43 2017 82% 2016 6% 2015 7% 2014 & prior 5% By intage

4th Quarter 2017 154 7 35 Balance sheet composition CAPITAL AND LIQUIDITY 44 2% Other liabilitie s 3% Other long- term debt Liabilities & Equity 4Q17 average balance sheet (%) Assets Attractive relationship lending with no loans >30 days delinquent and still accruing Primarily low risk, stable assets (FHLB stock, BOLI, premises & equipment, deferred tax asset, etc.) ~72% 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 10% Other assets 6% Warehouse loans 26% Loans held-for-sale 20% Mortgage loans held-for-investment 19% Agency MBS 1% Cash 18% Commercial loans Efficiently funds loans held-for-sale and warehouse loans 44% Deposits excluding company- controlled deposits (“CCD”) 33% FHLB borrowings 9% Common equity 9% Company-controlled deposits (“CCD”)

4th Quarter 2017 Liquidity and funding 154 7 35 CAPITAL AND LIQUIDITY 45 63% 66% 73% 78% 83% 4Q16 1Q17 2Q17 3Q17 4Q17 1) HFI loan-to-deposit ratio is total average loans HFI (excluding warehouse loans) expressed as a percentage of total average deposits (excluding company-controlled deposits). HFI loan-to-deposit ratio(1) Commentary ■ Flagstar has invested significantly in building its Community Bank, which provides attractive core deposit funding for its balance sheet ■ These retail deposits are supplemented by 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)

4th Quarter 2017 Low interest rate risk CAPITAL AND LIQUIDITY 46 -7.5% -8% -6% -4% -2% 0% 2% 4% 6% 9/30/2016 12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017 down 100bps up 100bps +/-100bps limit 0bps 50bps 100bps 150bps 200bps 250bps 300bps 350bps 400bps 450bps 500bps 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 12/31/2017 Net interest margin – 12 month horizon instantaneous shocks ($mm) Economic value of equity, trend (9/30/16 - 12/31/17) ($ in mm) +100bps Bear Flattener Net interest income $8 ($40) Noninterest Income ($8) to $0 $0 to $40 Scenario

4th Quarter 2017 761 503 135 91 FY14 FY15 FY16 FY17 Repurchase demands Representation & Warranty reserve details (in millions) 12/31/16 3/31/17 6/30/17 9/30/17 12/31/17 Beginning balance $32 $27 $23 $20 $16 Additions (release) (6) (4) (2) (3) (1) Net (charge-offs) / recoveries 1) 0) (1) (1) (0) Ending Balance $27 $23 $20 $16 $15 Repurchase pipeline ($mm) Repurchase reserve ($mm) ASSET QUALITY $6 $6 $4 $5 $3 12/31/16 3/31/2017 6/30/2017 9/30/2017 12/31/2017 47 Repurchase rate(1)(2) 1) As reported, where available, by Inside Mortgage Finance and Inside Mortgage Trends for the top 25 mortgage originators for 2Q17 and 3Q17. 2) Repurchase rate is defined as mortgages repurchased / mortgages originated. 2 0.031% 0.029% 0.011% Average Median Flagstar

4th Quarter 2017 Non-GAAP reconciliation NON-GAAP RECONCILIATION 48 $mm 1) Reflects the exclusion of the 3Q16 Department of Justice (“DOJ”) benefit. 2) Reflects the 4Q17 non-cash charge resulting from Tax Cuts and Jobs Act. A djust ed N et Income and D ilut ed Earnings per Share 12 / 3 1/ 2 0 17 12 / 3 1/ 2 0 17 12 / 3 1/ 2 0 16 Net Income (45)$ 63$ 171$ Adjustment to remove DOJ benefit (1) - - (16) Adjustment to remove tax reform charge (2) 80 80 - A djust ed N et Income 3 5$ 14 3$ 155$ Deferred cumulat ive preferred stock divdends - - (18) Adjusted net income applicable to common shareholders 35$ 143$ 137$ Weighted average diluted common shares 58,311,881 58,178,343 57,597,667 A djust ed D ilut ed Earnings per Share 0 .6 0$ 2 .4 7$ 2 .3 8$ 3 M ont hs Y ear Ended Tangible Book Va lue per Share as of 12 /31/2017 Total stockholders' equity 1,399$ Goodwill and intangibles 21 Tangible book value 1,378$ Number of common shares oustanding 57,321,228 Tangible book va lue per ha re 24 .04$ D ecember 3 1, 2 0 17 C ommon Equit y T ier 1 ( t o R isk W eight ed A sset s) T ier 1 Leverage ( t o A d just ed Tang ib le A sset s) T ier 1 C ap it al ( t o R isk W eight ed A sset s) To t al R isk- B ased C ap it al ( t o R isk W eight ed A sset s) R egulat ory ap it l - B asel I I I t o cap it al simp lif icat ion Basel III $ 1,216 $ 1,442 $ 1,442 $ 1,576 Net change in deductions to DTAs, M SRs and other capital components 111 125 125 13 B sel III with capital simplif icat ion $ 1,327 $ 1,567 $ 1,567 $ 1,707 Risk-w ight ed ss t s – Bas l I I I t o cap it al simp lif icat ion Basel III assets $ 10,579 $ 16,951 $ 10,579 $ 10,579 Net change in assets 655 125 655 655 Basel III with capital simplif icat ion $ 11,234 $ 17,076 $ 11,234 $ 11,234 C apit al rat ios Basel III (t ransit ional) 11.5% 8.5% 13.6% 14.9% B asel I I I wit h cap it al simp lif icat ion 11.8 % 9 .2 % 13 .9 % 15.2 %