PR Newswire | Jan 26, 2022 06:31AM EST

$1.60 Per Diluted Share

01/26 05:30 CST

Flagstar Bancorp Reports Fourth Quarter 2021 Net Income of $85 Million, or $1.60 Per Diluted Share TROY, Mich., Jan. 26, 2022

TROY, Mich., Jan. 26, 2022 /PRNewswire/ --

Key Highlights - Fourth Quarter 2021

* Posted adjusted net income of $90 million, or $1.69 per diluted share, excluding merger related costs. * Returned 1.3 percent on average assets and 13.8 percent on average tangible common equity. * Maintained low levels of nonperforming loans; reduced allowance for credit losses by $20 million. * Grew capital with total risk-based capital ratio increasing 133 basis points to 15.9 percent. * Achieved $48.33 in tangible book value per share-$9.53 increase compared to December 31, 2020.

Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, today reported fourth quarter 2021 net income of $85 million, or $1.60 per diluted share, compared to third quarter 2021 net income of $152 million, or $2.83 per diluted share. Flagstar reported 2021 net income of $533 million, or $9.96 per diluted share for the full year 2021, compared to 2020 net income of $538 million, or $9.52 per diluted share.

On an adjusted basis, excluding merger costs and other items, Flagstar reported net income of $90 million, or $1.69 per diluted share, for the fourth quarter 2021, compared to $156 million, or $2.90 per diluted share, for the third quarter 2021. Flagstar reported adjusted year to date 2021 net income of $568 million, or $10.60 per diluted share.

"Once again we delivered strong results for the quarter, capping off another exceptionally successful year for Flagstar," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp. "Our banking and servicing businesses delivered solid results and asset quality remained clean. Despite a decline in mortgage revenue, we still produced $90 million of adjusted net income-resulting in a 1.4 percent adjusted return on assets and a 14.9 percent adjusted return on tangible common equity.

"What you see now in Flagstar-as in past cycles-is a company that has exhibited the consistent ability to produce strong returns without the benefit of outsized mortgage revenue. In 2020 and the first three quarters of 2021, when the mortgage business took off, our performance significantly exceeded benchmark results. It's that kind of performance that fueled our ability to grow tangible book value 25 percent in 2021.

"We closed the quarter and the year with lots of positives. We have robust capital, ample liquidity and excellent asset quality. Our charge-offs were minimal, our delinquencies low, and our coverage ratio remains strong at 2 percent, excluding warehouse loans. Total risk-based capital reached 15.9 percent at year end, and we continue to generate plenty of excess capital. Along with our strong liquidity, this gives us the flexibility to fund the balance sheet and support investments in our infrastructure and business segments. In all, historically, this is our best balance sheet ever.

"As we prepare for the close of our previously announced merger with New York Community Bank, we will continue to execute on the business plan that has served our shareholders so well and brought us to this pivotal point in the history of our company."

Income Statement Highlights

Three Months Ended

December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020

(Dollars in millions, except per share data)

Net interest income $ 181 $ 195$ 183$ 189$ 189

(Benefit) provision for credit losses(17) (23) (44) (28) 2

Noninterest income 202 266 252 324 332

Noninterest expense 291 286 289 347 314

Income before income taxes 109 198 190 194 205

Provision for income taxes 24 46 43 45 51

Net income $ 85$ 152$ 147$ 149$ 154



Income per share:

Basic $ 1.62 $ 2.87$ 2.78$ 2.83$ 2.86

Diluted $ 1.60 $ 2.83$ 2.74$ 2.80$ 2.83

Adjusted Income Statement Highlights (Non-GAAP)^(1)

Three Months Ended

December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020

(Dollars in millions, except per share data)

Net interest income $ 181 $ 195$ 183$ 189$ 189

(Benefit) provision for credit losses(17) (23) (44) (28) 2

Noninterest income 202 266 252 324 332

Noninterest expense 285 281 290 312 314

Income before income taxes 115 203 189 229 205

Provision for income taxes 25 47 43 53 51

Net income $ 90$ 156$ 146$ 176$ 154



Income per share:

Basic $ 1.71 $ 2.94$ 2.78$ 3.34$ 2.86

Diluted $ 1.69 $ 2.90$ 2.74$ 3.31$ 2.83

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

Key Ratios

Three Months Ended

DecemberSeptemberJune 30,March December 31, 202130, 2021 2021 31, 202131, 2020

Net interest margin 2.96 % 3.00 % 2.90 % 2.82 % 2.78 %

Adjusted net interest margin (1) 2.98 % 3.04 % 3.06 % 3.02 % 2.98 %

Return on average assets 1.3 %2.2 % 2.1 %2.0 %2.1 %

Return on average common equity 12.7 % 23.4 % 24.0 % 25.7 % 27.6 %

Efficiency ratio 75.9 % 62.2 % 66.6 % 67.7 % 60.4 %

HFI loan-to-deposit ratio 67.2 % 68.8 % 71.8 % 74.4 % 74.5 %

Adjusted HFI loan-to-deposit ratio (2)60.5 % 60.3 % 64.3 % 66.3 % 69.8 %

(1) Excludes loans with government guarantees available for repurchase. See Non-GAAP Reconciliation for further information.

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

Average Balance Sheet Highlights

Three Months Ended % Change

December 31, 2021September 30, June 30, 2021 March 31, 2021 December 31, 2020Seq Yr/Yr 2021

(Dollars in millions)

Average interest-earning assets $ 24,291$ 25,656$ 25,269$ 27,178$ 27,100(5) % (10) %

Average loans held-for-sale (LHFS) 6,384 7,839 6,902 7,464 5,672 (19) %13 %

Average loans held-for-investment (LHFI)13,314 13,540 13,688 14,915 15,703 (2) % (15) %

Average total deposits 19,816 19,686 19,070 20,043 21,068 1 % (6) %

Net Interest Income

Net interest income in the fourth quarter was $181 million, a decrease of $14 million, or 7 percent, as compared to the third quarter 2021. The results primarily reflect a $1.4 billion, or 5 percent, decrease in average earning assets driven primarily by seasonal declines in loans held-for-sale and warehouse loans.

Net interest margin in the fourth quarter was 2.96 percent, a 4 basis point decrease from the prior quarter. Excluding the impact from the loans with government guarantees that have not been repurchased and do not accrue interest, adjusted net interest margin decreased 6 basis points to 2.98 percent in the fourth quarter, compared to adjusted net interest margin of 3.04 percent in the prior quarter. This compression was largely attributable to lower yields on our warehouse loans portfolio.

Average total deposits were $19.8 billion in the fourth quarter, up $0.1 billion, or 1 percent, from the third quarter 2021, largely due to an increase of 3 percent in average retail deposits and an increase of 2 percent in average custodial deposits.

Provision for Credit Losses

The benefit for credit losses was $17 million for the fourth quarter, as compared to a $23 million benefit for the third quarter 2021, reflecting the clean performance of our portfolio, the low number of non-accrual loans which are specifically reserved and no commercial delinquencies.

Noninterest Income

Noninterest income decreased $64 million to $202 million in the fourth quarter, as compared to $266 million for the third quarter 2021, primarily due to lower gain on sale, partially offset by higher net return on mortgage servicing rights and loan administration income.

Fourth quarter net gain on loan sales decreased $78 million, to $91 million, as compared to $169 million in the third quarter 2021. Gain on sale margins decreased 48 basis points to 102 basis points for the fourth quarter 2021, compared to 150 basis points for the third quarter 2021, driven by competitive factors. Fallout adjusted lock volume declined to $8.9 billion from $11.3 billion for the third quarter 2021, reflecting the continued normalization of the mortgage origination market and seasonal factors.

Net return on mortgage servicing rights increased $10 million, to $19 million for the fourth quarter 2021, compared to a $9 million net return for the third quarter 2021. The improvement is primarily driven by improved valuations and favorable hedge results. The full year return was 6.4 percent, in the middle of the target range we have disclosed previously.

Loan administration income increased $5 million, to $36 million for the fourth quarter 2021, compared to $31 million for the third quarter 2021, driven by an increase in subserviced loans and higher levels of modification and loss mitigation fees.

Loan fees and charges decreased $4 million, to $29 million for the fourth quarter, compared to $33 million for the third quarter 2021, primarily due to a 15 percent decrease in mortgage loans closed.

Mortgage Metrics

As of/Three Months Ended Change (% / bps)

December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 Seq Yr/Yr

(Dollars in millions)

Mortgage rate lock commitments (fallout-adjusted) (1) (2) $ 8,900 $ 11,300 $ 12,400 $ 12,300 $ 12,000 (21)% (26)%

Mortgage loans closed (1) $ 10,700 $ 12,500 $ 12,800 $ 13,800 $ 13,100 (15)% (19)%

Net margin on mortgage rate lock commitments (fallout-adjusted) (2) 1.02 % 1.50 % 1.35 % 1.84 % 1.93 % (48) (91)

Net gain on loan sales $ 91 $ 169 $ 168 $ 227 $ 232 (46)% (61)%

Net return (loss) on mortgage servicing rights (MSR) $ 19 $ 9 $ (5) $ - $ - N/M N/M

Gain on loan sales + net return on the MSR $ 110 $ 178 $ 163 $ 227 $ 232 (38)% (53)%

Loans serviced (number of accounts - 000's) (3) 1,234 1,203 1,182 1,148 1,085 3% 14%

Capitalized value of MSRs 1.12 % 1.08 % 1.00 % 1.06 % 0.86 % 4 26

N/M - Not meaningful

(1) Rounded to the nearest hundred million

(2) Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates.

(3) Includes loans serviced for Flagstar's own loan portfolio, serviced for others, and subserviced for others.

Noninterest Expense

Noninterest expense increased to $291 million for the fourth quarter, compared to $286 million for the third quarter 2021. Excluding $6 million of merger costs in the fourth quarter 2021 and $5 million of merger expenses in the third quarter 2021, noninterest expense increased $4 million, or 1 percent. The increase in noninterest expense primarily reflects an increase of $7 million in salaries and benefits as we experienced higher year-end medical claims and paid a seasonal bonus to team members not covered by the management incentive plan, partially offset by lower commissions as mortgage loan closings decreased 15 percent compared to the prior quarter.

Mortgage expenses were $121 million for the fourth quarter, a decrease of $4 million compared to the prior quarter. The ratio of mortgage noninterest expense to closings-our mortgage expense ratio- was 1.14 percent, an increase of 14 basis points from the third quarter 2021, but consistent with the fourth quarter 2020.

The efficiency ratio was 76 percent for the fourth quarter, as compared to 62 percent for the third quarter 2021. Excluding $6 million of merger expenses in the fourth quarter 2021 and $5 million of merger expenses in the third quarter 2021, the adjusted efficiency ratio was 74 percent and 61 percent, respectively. The higher efficiency ratio was primarily driven by lower gain on sale revenue and net interest income in the fourth quarter.

Income Taxes

The fourth quarter provision for income taxes totaled $24 million, with an effective tax rate of 22.0 percent, compared to $46 million and an effective tax rate of 23.2 percent for the third quarter 2021. The current quarter benefited from certain favorable items in state income tax cost.

Asset Quality

Credit Quality Ratios

As of/Three Months Ended Change (% / bps)

December 31, 2021September 30, June 30, 2021 March 31, 2021 December 31, 2020Seq Yr/Yr 2021

(Dollars in millions)

Allowance for credit losses (1) $ 170 $ 190 $ 220 $ 265 $ 280 (11)% (39)%

Credit reserves to LHFI 1.27 % 1.33 % 1.57 % 1.78 % 1.73 % (6) -46

Credit reserves to LHFI excluding warehouse 1.96 % 2.29 % 2.63 % 3.11 % 3.20 % (33) (124)

Net (recoveries) charge-offs $ 3$ 6$ 1$ (13)$ 2(50)% 50%

Total nonperforming LHFI and TDRs $ 94 $ 96 $ 75 $ 60 $ 56 (2)% 68%

Net (recoveries) charge-offs to LHFI ratio (annualized)0.08 % 0.19 % 0.01 % (0.35) % 0.04 % (11) 4

Ratio of nonperforming LHFI and TDRs to LHFI 0.70 % 0.66 % 0.53 % 0.40 % 0.34 % 4 36



Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (2):

Residential first mortgage 0.04 % - % 0.16 % 0.31 % 0.11 % 4 (7)

Home equity and other consumer 0.14 % 0.01 % 0.15 % 0.16 % 0.06 % 13 8

Commercial real estate - % 0.03 % - % (0.01) % - % (3) -

Commercial and industrial 0.53 % 1.87 % 0.04 % (4.12) % 0.21 % (134) 32

N/M - Not meaningful

(1) Includes the allowance for loan losses and the reserve on unfunded commitments.

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

Our portfolio has held up well following the economic stress posed by the pandemic, resulting in net charge-offs of $3 million, or 8 basis points of LHFI in the fourth quarter 2021, primarily from one commercial borrower, compared to net charge-offs of $6 million, or 19 basis point in the prior quarter.

Nonperforming loans held-for-investment and troubled debt restructurings (TDRs) were $94 million and our ratio of nonperforming loans held-for-investment and TDRs to loans held-for-investment was 70 basis points at December 31, 2021, a 4 basis point increase compared to September 30, 2021. At December 31, 2021, early stage loan delinquencies totaled $62 million, or 46 basis points of total loans, compared to $14 million, or 10 basis points, at September 30, 2021.

The allowance for credit losses was $170 million and covered 1.27 percent of loans held-for-investment at December 31, 2021, a 6 basis point decrease from September 30, 2021. Excluding warehouse loans, the allowance coverage ratio was 1.96 percent, a 33 basis point decrease from September 30, 2021. The lower allowance for credit losses primarily reflects improvements in our economic forecasts and our evaluation of the performance of the LHFI portfolio as borrowers continue to recover from the economic stress caused by the pandemic. Overall, the portfolio quality has remained solid as shown by the relatively low levels of charge-offs, TDRs, nonperforming loans and early stage delinquencies.

Capital

Capital Ratios (Bancorp) Change (% / bps)

December 31, September 30, June 30, 2021 March 31, 2021 December 31, Seq Yr/Yr 2021 2021 2020

Tier 1 leverage (to adj. avg. total assets)10.54 %9.72 % 9.21 % 8.11 % 7.71 % 82 283

Tier 1 common equity (to RWA) 13.19 %11.95 %11.38 %10.31 %9.15 % 124 404

Tier 1 capital (to RWA) 14.43 %13.11 %12.56 %11.45 %10.23 %132 420

Total capital (to RWA) 15.88 %14.55 %14.13 %13.18 %11.89 %133 399

Tangible common equity to asset ratio (1) 10.09 %9.23 % 8.67 % 7.48 % 6.58 % 86 351

Tangible book value per share (1) $ 48.33$ 47.21$ 44.38$ 41.77$ 38.802% 25%

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

We maintained a strong capital position with regulatory ratios above current regulatory quantitative guidelines for "well capitalized" institutions. The risk-based capital ratios all increased more than 100 basis points compared to the prior quarter end. Further demonstrating our capital strength, the capital ratios are impacted by a 100 percent risk-weighting of the warehouse loan portfolio-the largest component of the held-for-investment portfolio. Adjusting the risk-weighting of warehouse loans to 50 percent because of historically low levels of losses from this portfolio, coupled with the fact that the portfolio is fully collateralized with assets that would receive a 50 percent risk weighting, we would have had a tier 1 common equity ratio of 14.97 percent and a total risk-based capital ratio of 18.02 percent at December 31, 2021.

Importantly, tangible book value per share grew to $48.33, up $1.12, or 2 percent from last quarter.

About Flagstar

Flagstar Bancorp, Inc. (NYSE: FBC) is a $25.5 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 158 branches in Michigan, Indiana, California, Wisconsin and Ohio. It also provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as 83 retail locations in 28 states. Flagstar is a leading national originator and servicer of mortgage and other consumer loans, handling payments and record keeping for $291 billion of loans representing over 1.2 million borrowers. For more information, please visit flagstar.com.

Use of Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this news release includes certain non-GAAP financial measures. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the capital requirements Flagstar will face in the future and underlying performance and trends of Flagstar.

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

Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in this news release. Additional discussion of the use of non-GAAP measures can also be found in periodic Flagstar reports filed with the U.S. Securities and Exchange Commission, which are available on the Company's website at flagstar.com.

Cautionary Statements Regarding Forward-Looking Statements

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

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

Additionally, forward-looking statements speak only as of the date they are made; NYCB and Flagstar do not assume any duty, and do not undertake, to update such forward-looking statements. Furthermore, because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of NYCB and Flagstar. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement among NYCB, 615 Corp. and Flagstar; the outcome of any legal proceedings that may be instituted against NYCB or Flagstar; the possibility that the proposed transaction will not close when expected or at all because required regulatory, or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated; the ability of NYCB and Flagstar to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of NYCB or Flagstar; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where NYCB and Flagstar do business certain restrictions during the pendency of the proposed transaction that may impact the parties' ability to pursue certain business opportunities or strategic transactions; the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events? diversion of management's attention from ongoing business operations and opportunities? the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the proposed transaction within the expected timeframes or at all and to successfully integrate Flagstar's operations and those of NYCB; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction? NYCB's and Flagstar's success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by NYCB's issuance of additional shares of its capital stock in connection with the proposed transaction; and other factors that may affect future results of NYCB and Flagstar; and the other factors discussed in the "Risk Factors" section NYCB's Annual Report on Form 10-K for the year ended December 31, 2021 and in other reports NYCB files with the U.S. Securities and Exchange Commission (the "SEC"), which are available at http://www.sec.gov and in the "SEC Filings" section of NYCB's website, https://ir.mynycb.com, under the heading "Financial Information," and in Flagstar's Annual Report on Form 10-K for the year ended December 31, 2021 and in Flagstar's other filings with SEC, which are available at http://www.sec.gov and in the "Documents" section of Flagstar's website, https://investors.flagstar.com.

Flagstar Bancorp, Inc.

Consolidated Statements of Financial Condition

(Dollars in millions)

(Unaudited)



December 31, 2021 September 30, 2021 December 31, 2020

Assets

Cash $ 277$ 103$ 251

Interest-earning deposits 774 46 372

Total cash and cash equivalents 1,051 149 623

Investment securities available-for-sale 1,804 1,802 1,944

Investment securities held-to-maturity 205 236 377

Loans held-for-sale 5,054 6,378 7,098

Loans held-for-investment 13,408 14,268 16,227

Loans with government guarantees 1,650 1,945 2,516

Less: allowance for loan losses (154) (171) (252)

Total loans held-for-investment and loans with government guarantees, net14,904 16,042 18,491

Mortgage servicing rights 392 340 329

Federal Home Loan Bank stock 377 377 377

Premises and equipment, net 360 370 392

Goodwill and intangible assets 147 149 157

Other assets 1,189 1,199 1,250

Total assets $ 25,483 $ 27,042 $ 31,038

Liabilities and Stockholders' Equity

Noninterest-bearing deposits $ 7,088 $ 8,108 $ 9,458

Interest-bearing deposits 10,921 11,228 10,515

Total deposits 18,009 19,336 19,973

Short-term Federal Home Loan Bank advances and other 1,880 1,870 3,900

Long-term Federal Home Loan Bank advances 1,400 1,400 1,200

Other long-term debt 396 396 641

Loan with government guarantee repurchase options 200 163 1,851

Other liabilities 880 1,232 1,272

Total liabilities 22,765 24,397 28,837

Stockholders' Equity

Common stock 1 1 1

Additional paid in capital 1,355 1,362 1,346

Accumulated other comprehensive income 35 38 47

Retained earnings 1,327 1,244 807

Total stockholders' equity 2,718 2,645 2,201

Total liabilities and stockholders' equity $ 25,483 $ 27,042 $ 31,038

Flagstar Bancorp, Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share data)

(Unaudited)



Interest Income

Total interest income $ 196 $ 209$ 198$ 208$ 212$ (13)(6) % $ (16)(8) %

Total interest expense 15 14 15 19 23 1 7 % (8) (35) %

Net interest income 181 195 183 189 189 (14) (7) % (8) (4) %

(Benefit) provision for credit losses (17) (23) (44) (28) 2 6 (26) %(19) N/M

Net interest income after provision for credit losses198 218 227 217 187 (20) (9) % 11 6 %

Noninterest Income

Net gain on loan sales 91 169 168 227 232 (78) (46) %(141) (61) %

Loan fees and charges 29 33 37 42 48 (4) (12) %(19) (40) %

Net return (loss) on the mortgage servicing rights 19 9 (5) - - 10 N/M 19 N/M

Loan administration income 36 31 28 27 25 5 16 % 11 44 %

Deposit fees and charges 8 9 8 8 8 (1) (11) %- - %

Other noninterest income 19 15 16 20 19 4 27 % - - %

Total noninterest income 202 266 252 324 332 (64) (24) %(130) (39) %

Noninterest Expense

Compensation and benefits 137 130 122 144 125 7 5 % 12 10 %

Occupancy and equipment 47 46 50 46 44 1 2 % 3 7 %

Commissions 38 44 51 62 70 (6) (14) %(32) (46) %

Loan processing expense 21 22 22 21 24 (1) (5) % (3) (13) %

Legal and professional expense 13 12 11 8 11 1 8 % 2 18 %

Federal insurance premiums 4 6 4 6 5 (2) (33) %(1) (20) %

Intangible asset amortization 3 3 3 3 3 - - % - - %

Other noninterest expense 28 23 26 57 32 5 22 % (4) (13) %

Total noninterest expense 291 286 289 347 314 5 2 % (23) (7) %

Income before income taxes 109 198 190 194 205 (89) (45) %(96) (47) %

Provision for income taxes 24 46 43 45 51 (22) (48) %(27) (53) %

Net income $ 85$ 152$ 147$ 149$ 154$ (67)(44) %$ (69)(45) %

Income per share

Basic $ 1.62 $ 2.87$ 2.78$ 2.83$ 2.86$ (1.25)(44) %$ (1.24) (43) %

Diluted $ 1.60 $ 2.83$ 2.74$ 2.80$ 2.83$ (1.23)(43) %$ (1.23) (43) %



Cash dividends declared $ 0.06 $ 0.06$ 0.06$ 0.06$ 0.05$ - - % $ 0.01 20 %

N/M - Not meaningful

Flagstar Bancorp, Inc.

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share data)

(Unaudited)



Twelve Months Ended Change

December 31, 2021 December 31, 2020 Amount Percent

Interest Income

Total interest income $ 810$ 819$ (9)(1) %

Total interest expense 63 134 (71) (53) %

Net interest income 747 685 62 9 %

(Benefit) provision for credit losses (112) 149 (261) N/M

Net interest income after provision for credit losses859 536 323 60 %

Noninterest Income

Net gain on loan sales 655 971 (316) (33) %

Loan fees and charges 141 150 (9) (6) %

Net return on the mortgage servicing rights 23 10 13 N/M

Loan administration income 121 84 37 44 %

Deposit fees and charges 34 32 2 6 %

Other noninterest income 70 63 7 11 %

Total noninterest income 1,044 1,310 (266) (20) %

Noninterest Expense

Compensation and benefits 533 466 67 14 %

Occupancy and equipment 188 176 12 7 %

Commissions 194 232 (38) (16) %

Loan processing expense 86 83 3 4 %

Legal and professional expense 45 31 14 45 %

Federal insurance premiums 20 24 (4) (17) %

Intangible asset amortization 11 13 (2) (15) %

Other noninterest expense 136 117 19 16 %

Total noninterest expense 1,213 1,142 71 6 %

Income before income taxes 690 704 (14) (2) %

Provision for income taxes 157 166 (9) (5) %

Net income $ 533$ 538$ (5)(1) %

Income per share

Basic $ 10.10 $ 9.59$ 0.51 5 %

Diluted $ 9.96$ 9.52$ 0.44 5 %



Cash dividends declared $ 0.24$ 0.20$ 0.04 20 %

N/M - Not meaningful

Flagstar Bancorp, Inc.

Summary of Selected Consolidated Financial and Statistical Data

(Dollars in millions, except share data)

(Unaudited)



Three Months Ended Twelve Months Ended

December 31, 2021September 30, 2021December 31, 2020December 31, 2021December 31, 2020

Selected Mortgage Statistics (1):

Mortgage rate lock commitments (fallout-adjusted) (2) $ 8,900 $ 11,300 $ 12,000 $ 44,900 $ 52,000

Mortgage loans closed $ 10,700 $ 12,500 $ 13,100 $ 49,800 $ 48,300

Mortgage loans sold and securitized $ 12,100 $ 12,400 $ 12,000 $ 52,100 $ 46,900

Selected Ratios:

Interest rate spread (3) 2.79 % 2.84 % 2.44 % 2.72 % 2.40 %

Net interest margin 2.96 % 3.00 % 2.78 % 2.92 % 2.80 %

Net margin on loans sold and securitized 0.75 % 1.36 % 1.92 % 1.26 % 2.06 %

Return on average assets 1.28 % 2.16 % 2.08 % 1.89 % 2.00 %

Adjusted return on average assets (4) 1.35 % 2.21 % 2.08 % 2.01 % 2.00 %

Return on average common equity 12.74 % 23.40 % 27.58 % 21.21 % 26.21 %

Return on average tangible common equity (5) 13.79 % 25.18 % 30.13 % 22.94 % 29.00 %

Adjusted return on average tangible common equity (4) (5)14.90 % 26.16 % 30.13 % 25.25 % 29.00 %

Efficiency ratio 75.9 % 62.2 % 60.4 % 67.7 % 57.2 %

Adjusted efficiency ratio (4) 74.4 % 61.1 % 59.1 % 65.8 % 56.9 %

Common equity-to-assets ratio (average for the period) 10.08 % 9.24 % 7.54 % 8.92 % 7.63 %

Average Balances:

Average interest-earning assets $ 24,291 $ 25,656 $ 27,100 $ 25,591 $ 24,431

Average interest-bearing liabilities $ 14,093 $ 15,590 $ 13,782 $ 14,834 $ 14,413

Average stockholders' equity $ 2,692 $ 2,592 $ 2,235 $ 2,514 $ 2,052

(1) Rounded to nearest hundred million.

Fallout-adjusted mortgage rate lock commitments are adjusted by a(2) percentage of mortgage loans in the pipeline that are not expected to close based on previous historical experience and the level of interest rates.

Interest rate spread is the difference between rate of interest earned on(3) interest-earning assets and rate of interest paid on interest-bearing liabilities.

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

(5) Excludes goodwill, intangible assets and the associated amortization. See Non-GAAP Reconciliation for further information.

December 31, 2021 September 30, 2021 December 31, 2020

Selected Statistics:

Book value per common share $ 51.09$ 50.04$ 41.79

Tangible book value per share (1) $ 48.33$ 47.21$ 38.80

Number of common shares outstanding 53,197,650 52,862,383 52,656,067

Number of FTE employees 5,395 5,461 5,214

Number of bank branches 158 158 158

Ratio of nonperforming assets to total assets (2)0.39 % 0.37 % 0.21 %

Common equity-to-assets ratio 10.67 % 9.78 % 7.09 %

MSR Key Statistics and Ratios:

Weighted average service fee (basis points) 31.5 32.1 34.3

Capitalized value of mortgage servicing rights 1.12 % 1.08 % 0.86 %

(1) Excludes goodwill and intangibles. See Non-GAAP Reconciliation for further information.

(2) Ratio excludes LHFS.

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)



Three Months Ended

December 31, 2021 September 30, 2021 December 31, 2020

Average Annualized Average Annualized Average Annualized Balance Interest Balance Interest Balance Interest Yield/Rate Yield/Rate Yield/Rate

Interest-Earning Assets

Loans held-for-sale $ 6,384$ 493.10 % $ 7,839$ 633.22 % $ 5,672$ 422.99 %

Loans held-for-investment

Residential first mortgage 1,569 13 3.22 % 1,706 14 3.14 % 2,353 19 3.23 %

Home equity 635 6 3.93 % 686 6 3.64 % 890 8 3.69 %

Other 1,229 16 4.80 % 1,177 14 4.76 % 1,001 13 5.15 %

Total consumer loans 3,433 35 3.92 % 3,569 34 3.77 % 4,244 40 3.78 %

Commercial real estate 3,260 29 3.45 % 3,238 28 3.43 % 3,064 27 3.40 %

Commercial and industrial 1,473 14 3.69 % 1,341 12 3.56 % 1,447 13 3.55 %

Warehouse lending 5,148 47 3.54 % 5,392 52 3.76 % 6,948 71 3.99 %

Total commercial loans 9,881 90 3.53 % 9,971 92 3.62 % 11,459 111 3.78 %

Total loans held-for-investment 13,314 125 3.63 % 13,540 126 3.66 % 15,703 151 3.78 %

Loans with government guarantees 1,742 11 2.62 % 2,046 8 1.61 % 2,478 5 0.73 %

Investment securities 2,104 11 2.09 % 2,058 12 2.15 % 2,493 14 2.27 %

Interest-earning deposits 747 - 0.15 % 173 - 0.18 % 754 - 0.11 %

Total interest-earning assets 24,291 $ 1963.18 % 25,656 $ 209 3.22 % 27,100 $ 212 3.09 %

Other assets 2,408 2,391 2,537

Total assets $ 26,699 $ 28,047 $ 29,637

Interest-Bearing Liabilities

Retail deposits

Demand deposits $ 1,692$ - 0.05 % $ 1,603$ - 0.05 % $ 1,842$ - 0.07 %

Savings deposits 4,211 2 0.14 % 4,144 2 0.14 % 3,847 2 0.20 %

Money market deposits 927 - 0.09 % 840 - 0.08 % 693 - 0.07 %

Certificates of deposit 973 1 0.44 % 1,038 1 0.50 % 1,415 5 1.18 %

Total retail deposits 7,803 3 0.15 % 7,625 3 0.16 % 7,797 7 0.33 %

Government deposits 1,998 1 0.17 % 2,148 1 0.17 % 1,579 1 0.26 %

Wholesale deposits and other 1,238 3 0.93 % 1,342 3 0.99 % 1,010 4 1.69 %

Total interest-bearing deposits 11,039 7 0.25 % 11,115 7 0.26 % 10,386 12 0.46 %

Short-term FHLB advances and other 1,258 1 0.19 % 2,736 1 0.18 % 1,598 1 0.20 %

Long-term FHLB advances 1,400 4 0.88 % 1,343 3 0.92 % 1,200 3 1.03 %

Other long-term debt 396 3 3.16 % 396 3 3.16 % 598 7 4.47 %

Total interest-bearing liabilities 14,093 15 0.39 % 15,590 14 0.38 % 13,782 23 0.65 %

Noninterest-bearing deposits

Retail deposits and other 2,468 2,391 2,155

Custodial deposits (1) 6,309 6,180 8,527

Total noninterest-bearing deposits 8,777 8,571 10,682

Other liabilities 1,137 1,294 2,938

Stockholders' equity 2,692 2,592 2,235

Total liabilities and stockholders' equity $ 26,699 $ 28,047 $ 29,637

Net interest-earning assets $ 10,198 $ 10,066 $ 13,318

Net interest income $ 181 $ 195 $ 189

Interest rate spread (2) 2.79 % 2.84 % 2.44 %

Net interest margin (3) 2.96 % 3.00 % 2.78 %

Ratio of average interest-earning assets to interest-bearing liabilities 172.4 % 164.6 % 196.6 %

Total average deposits $ 19,816 $ 19,686 $ 21,068

Approximately 80 percent of custodial deposits from loans subserviced for(1) which LIBOR based fees are recognized as an offset in net loan administration income.

Interest rate spread is the difference between rate of interest earned on(2) 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.

Average Balances, Yields and Rates

(Dollars in millions)

(Unaudited)



Twelve Months Ended

December 31, 2021 December 31, 2020

Annualized Annualized Average Balance Interest Average Balance Interest Yield/Rate Yield/Rate

Interest-Earning Assets

Loans held-for-sale $ 7,146$ 218 3.05 % $ 5,542$ 184 3.33 %

Loans held-for-investment

Residential first mortgage 1,822 59 3.21 % 2,704 92 3.36 %

Home equity 722 26 3.66 % 965 39 4.01 %

Other 1,137 55 4.79 % 912 49 5.38 %

Total consumer loans 3,681 140 3.79 % 4,581 180 3.90 %

Commercial real estate 3,159 109 3.40 % 3,030 116 3.77 %

Commercial and industrial 1,437 53 3.63 % 1,692 63 3.65 %

Warehouse lending 5,583 216 3.82 % 4,694 190 3.98 %

Total commercial loans 10,179 378 3.66 % 9,416 369 3.86 %

Total loans held-for-investment 13,860 518 3.70 % 13,997 549 3.87 %

Loans with government guarantees 2,156 28 1.29 % 1,571 15 1.04 %

Investment securities 2,123 46 2.16 % 2,943 70 2.37 %

Interest-earning deposits 306 - 0.15 % 378 1 0.33 %

Total interest-earning assets 25,591 $ 810 3.14 % 24,431 $ 819 3.33 %

Other assets 2,605 2,477

Total assets $ 28,196 $ 26,908

Interest-Bearing Liabilities

Retail deposits

Demand deposits $ 1,707$ 10.06 % $ 1,763$ 60.27 %

Savings deposits 4,097 6 0.14 % 3,597 19 0.52 %

Money market deposits 804 1 0.08 % 707 1 0.15 %

Certificates of deposit 1,107 6 0.65 % 1,831 32 1.83 %

Total retail deposits 7,715 14 0.19 % 7,898 58 0.73 %

Government deposits 1,930 4 0.19 % 1,301 7 0.56 %

Wholesale deposits and other 1,196 14 1.18 % 821 16 1.94 %

Total interest-bearing deposits 10,841 32 0.30 % 10,020 81 0.81 %

Short-term FHLB advances and other 2,296 4 0.18 % 2,807 16 0.58 %

Long-term FHLB advances 1,287 13 0.96 % 1,066 12 1.10 %

Other long-term debt 410 14 3.41 % 520 25 4.80 %

Total interest-bearing liabilities 14,834 63 0.42 % 14,413 134 0.93 %

Noninterest-bearing deposits

Retail deposits and other 2,347 1,799

Custodial deposits (1) 6,465 6,725

Total noninterest-bearing deposits 8,812 8,524

Other liabilities 2,036 1,919

Stockholders' equity 2,514 2,052

Total liabilities and stockholders' equity $ 28,196 $ 26,908

Net interest-earning assets $ 10,757 $ 10,018

Net interest income $ 747 $ 685

Interest rate spread (2) 2.72 % 2.40 %

Net interest margin (3) 2.92 % 2.80 %

Ratio of average interest-earning assets to interest-bearing liabilities 172.5 % 169.5 %

Total average deposits $ 19,653 $ 18,544

Approximately 80 percent of custodial deposits are from subserviced loansa. for which LIBOR based fees are recognized as an offset in net loan administration income.

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

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

Earnings Per Share

(Dollars in millions, except share data)

(Unaudited)



Three Months Ended Twelve Months Ended

December 31, 2021 September 30, 2021 December 31, 2020 December 31, 2021 December 31, 2020

Net income $ 85$ 152$ 154$ 533$ 538

Weighted average common shares outstanding52,867,138 52,862,288 53,912,584 52,792,931 56,094,542

Stock-based awards 710,694 797,134 431,382 726,155 411,271

Weighted average diluted common shares 53,577,832 53,659,422 54,343,966 53,519,086 56,505,813

Basic earnings per common share $ 1.62$ 2.87$ 2.86$ 10.10$ 9.59

Stock-based awards (0.02) (0.04) (0.03) (0.14) (0.07)

Diluted earnings per common share $ 1.60$ 2.83$ 2.83$ 9.96$ 9.52

Regulatory Capital - Bancorp

(Dollars in millions)

(Unaudited)



December 31, 2021 September 30, 2021 December 31, 2020

Amount Ratio Amount Ratio Amount Ratio

Tier 1 leverage (to adjusted avg. total assets)$ 2,79810.54 %$ 2,7099.72 % $ 2,2707.71 %

Total adjusted avg. total asset base $ 26,545 $ 27,863 $ 29,444

Tier 1 common equity (to risk weighted assets) $ 2,55813.19 %$ 2,46911.95 %$ 2,0309.15 %

Tier 1 capital (to risk weighted assets) $ 2,79814.43 %$ 2,70913.11 %$ 2,27010.23 %

Total capital (to risk weighted assets) $ 3,08015.88 %$ 3,00614.55 %$ 2,63811.89 %

Risk-weighted asset base $ 19,397 $ 20,664 $ 22,190

Regulatory Capital - Bank

(Dollars in millions)

(Unaudited)



December 31, 2021 September 30, 2021 December 31, 2020

Amount Ratio Amount Ratio Amount Ratio

Tier 1 leverage (to adjusted avg. total assets)$ 2,70610.21 %$ 2,6199.40 % $ 2,3908.12 %

Total adjusted avg. total asset base $ 26,502 $ 27,851 $ 29,437

Tier 1 common equity (to risk weighted assets) $ 2,70613.96 %$ 2,61912.71 %$ 2,39010.77 %

Tier 1 capital (to risk weighted assets) $ 2,70613.96 %$ 2,61912.71 %$ 2,39010.77 %

Total capital (to risk weighted assets) $ 2,83914.65 %$ 2,76613.42 %$ 2,60811.75 %

Risk-weighted asset base $ 19,383 $ 20,609 $ 22,194

Loans Serviced

(Dollars in millions)

(Unaudited)



December 31, 2021 September 30, 2021 December 31, 2020

Unpaid Number ofUnpaid Number ofUnpaid Number of Principal accounts Principal accounts Principal accounts Balance (1) Balance (1) Balance (1)

Subserviced for others (2) $ 246,8581,032,923$ 230,0451,007,557$ 178,606867,799

Serviced for others (3) 35,074 137,243 31,354 124,665 38,026 151,081

Serviced for own loan portfolio (4)8,793 63,426 10,410 70,738 10,079 66,519

Total loans serviced $ 290,7251,233,592$ 271,8091,202,960$ 226,7111,085,399

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

Loans subserviced for a fee for non-Flagstar owned loans or MSRs. Includes(2) temporary short-term subservicing performed as a result of sales of servicing-released MSRs.

(3) Loans for which Flagstar owns the MSR.

Includes LHFI (residential first mortgage, home equity and other consumer),(4) LHFS (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



December 31, 2021 September 30, 2021 December 31, 2020

Consumer loans

Residential first mortgage $ 1,53611.5 % $ 1,62611.5 % $ 2,26614.0 %

Home equity 613 4.6 % 657 4.6 % 856 5.3 %

Other 1,236 9.2 % 1,203 8.3 % 1,004 6.1 %

Total consumer loans 3,385 25.3 % 3,486 24.4 % 4,126 25.4 %

Commercial loans

Commercial real estate 3,223 24.0 % 3,216 22.6 % 3,061 18.9 %

Commercial and industrial 1,826 13.6 % 1,387 9.7 %1,382 8.5 %

Warehouse lending 4,974 37.1 % 6,179 43.3 % 7,658 47.2 %

Total commercial loans 10,023 74.7 % 10,782 75.6 % 12,101 74.6 %

Total loans held-for-investment$ 13,408 100.0 %$ 14,268 100.0 % $ 16,227 100.0 %

Other Consumer Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



December 31, 2021 September 30, 2021 December 31, 2020

Indirect lending $ 92574.8 % $ 91676.1 % $ 71371.0 %

Point of sale 271 22.0 % 248 20.6 % 211 21.0 %

Other 40 3.2 % 39 3.2 % 80 8.0 %

Total other consumer loans$ 1,236 100.0 %$ 1,203 100.0 %$ 1,004 100.0 %

Allowance for Credit Losses

(Dollars in millions)

(Unaudited)



December 31, 2021 September 30, 2021 December 31, 2020

Residential first mortgage $ 40$ 43$ 49

Home equity 14 15 25

Other 36 32 39

Total consumer loans 90 90 113

Commercial real estate 28 35 84

Commercial and industrial 32 43 51

Warehouse lending 4 3 4

Total commercial loans 64 81 139

Allowance for loan losses 154 171 252

Reserve for unfunded commitments16 19 28

Allowance for credit losses $ 170 $ 190 $ 280

Allowance for Credit Losses

(Dollars in millions)

(Unaudited)



Three Months Ended December 31, 2021

Residential Home Equity Other Consumer Commercial RealCommercial and Warehouse Total LHFI Unfunded First Mortgage Estate Industrial Lending Portfolio (1) Commitments

Beginning balance $ 43$ 15$ 32$ 35$ 43$ 3$ 171$ 19

Provision (benefit) for credit losses:

Loan volume (1) - 1 - 3 - 3 (3)

Economic forecast (2) (1) (1) 4 (4) (4) - (6) -

Credit (3) 1 1 - (2) (2) 1 (1) -

Qualitative factor adjustments (2) (1) (1) (1) (8) - (13) -

Charge-offs (1) - (1) - (2) - (4) -

Recoveries - 1 - - - - 1 -

Provision for net charge-offs 1 (1) 1 - 2 - 3 -

Ending allowance balance $ 40$ 14$ 36$ 28$ 32$ 4$ 154$ 16

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

(2) Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter.

Includes changes in the probability of default and severity of default(3) based on current borrower and guarantor characteristics, as well as individually evaluated reserves.

Allowance for Credit Losses

(Dollars in millions)

(Unaudited)



Twelve Months Ended December 31, 2021

Residential Home Equity Other Consumer Commercial RealCommercial and Warehouse Total LHFI Unfunded First Mortgage Estate Industrial Lending Portfolio (1) Commitments

Beginning balance $ 49$ 25$ 39$ 84$ 51$ 4$ 252$ 28

Provision (benefit) for credit losses:

Loan volume 1 (3) 6 4 4 (1) 11 (12)

Economic forecast (2) (7) (5) 3 (9) (17) - (35) -

Credit (3) 6 4 1 (35) 14 1 (9) -

Qualitative factor adjustments (9) (7) (13) (16) (20) - (65) -

Charge-offs (5) (1) (4) - (9) - (19) -

Recoveries 2 2 2 - 16 - 22 -

Provision for net charge-offs 3 (1) 2 - (7) - (3) -

Ending allowance balance $ 40$ 14$ 36$ 28$ 32$ 4$ 154$ 16

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

(2) Includes changes in the lifetime loss rate based on current economic forecasts as compared to forecasts used in the prior quarter.

Includes changes in the probability of default and severity of default(3) based on current borrower and guarantor characteristics, as well as individually evaluated reserves.

Nonperforming Loans and Assets

(Dollars in millions)

(Unaudited)



December 31, 2021 September 30, 2021 December 31, 2020

Nonperforming LHFI $ 81$ 82$ 46

Nonperforming TDRs 8 5 4

Nonperforming TDRs at inception but performing for less than six months5 9 6

Total nonperforming LHFI and TDRs (1) 94 96 56

Other nonperforming assets, net 6 6 8

LHFS 17 10 9

Total nonperforming assets $ 117 $ 112 $ 73



Ratio of nonperforming assets to total assets (2) 0.39 % 0.37 % 0.21 %

Ratio of nonperforming LHFI and TDRs to LHFI 0.70 % 0.66 % 0.34 %

Ratio of nonperforming assets to LHFI and repossessed assets (2) 0.74 % 0.70 % 0.40 %

(1) Includes less than 90 day past due performing loans placed on nonaccrual. Interest is not being accrued on these loans.

(2) Ratio excludes nonperforming LHFS.

Asset Quality - Loans Held-for-Investment

(Dollars in millions)

(Unaudited)



30-59 Days Past Due60-89 Days Past DueGreater than 90 Total Past Due Total LHFI days (1)

December 31, 2021

Consumer loans (2)$ 26 $ 36 $ 62$ 124 $ 3,385

Commercial loans - - 32 32 10,023

Total loans $ 26 $ 36 $ 94$ 156 $ 13,408

September 30, 2021

Consumer loans $ 12 $ 2$ 58$ 72$ 3,486

Commercial loans - - 35 35 10,782

Total loans $ 12 $ 2$ 93$ 107 $ 14,268

December 31, 2020

Consumer loans $ 9$ 6$ 38$ 53$ 4,126

Commercial loans 21 - 18 39 12,101

Total loans $ 30 $ 6$ 56$ 92$ 16,227

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

Includes $43 million in first residential mortgage loans, or 69 percent of(2) consumer loans in the 30-89 days past due categories, that have recently exited forbearance. These borrowers have not yet selected a forbearance exit plan. The average LTV of these loans is approximately 75 percent.

Troubled Debt Restructurings

(Dollars in millions)

(Unaudited)



TDRs

Performing Nonperforming Total

December 31, 2021

Consumer loans $ 22$ 12$ 34

Commercial loans - - -

Total TDR loans $ 22$ 12$ 34

September 30, 2021

Consumer loans $ 34$ 12$ 46

Commercial loans - 2 2

Total TDR loans $ 34$ 14$ 48

December 31, 2020

Consumer loans $ 31$ 10$ 41

Commercial loans 5 - 5

Total TDR loans $ 36$ 10$ 46

Non-GAAP Reconciliation

(Unaudited)



In addition to analyzing the Company's results on a reported basis, management reviews the Company's results and the results on an adjusted basis. The non-GAAP measures presented in the tables below reflect the adjustments of the reported U.S.GAAP results for significant items that management does not believe are reflective of the Company's current and ongoing operations. The DOJ benefit and loans with government guarantees that have not been repurchased and don't accrue interest are not reflective of our ongoing operations and, therefore, have been excluded from our U.S. GAAP results. The Company believes that tangible book value per share, tangible common equity to assets ratio, adjusted return on average tangible common equity, adjusted return on average assets, adjusted HFI loan-to-deposit ratio, adjusted noninterest expense, adjusted income before income taxes, adjusted provision for income taxes, adjusted net income, adjusted basic earnings per share, adjusted diluted earnings per share, adjusted net interest margin and adjusted efficiency ratio provide a meaningful representation of its operating performance on an ongoing basis.



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



Tangible book value per share and tangible common equity to assets ratio.



December 31, 2021September 30, 2021 June 30, 2021 March 31, 2021December 31, 2020

(Dollars in millions, except share data)

Total stockholders' equity $ 2,718$ 2,645 $ 2,498$ 2,358$ 2,201

Less: Goodwill and intangible assets 147 149 152 155 157

Tangible book value $ 2,571$ 2,496 $ 2,346$ 2,203$ 2,044



Number of common shares outstanding 53,197,650 52,862,383 52,862,264 52,752,600 52,656,067

Tangible book value per share $ 48.33$ 47.21 $ 44.38$ 41.77$ 38.80



Total assets $ 25,483 $ 27,042 $ 27,065 $ 29,449 $ 31,038

Tangible common equity to assets ratio10.09 % 9.23 % 8.67 % 7.48 % 6.58 %

Adjusted return on average tangible common equity and adjusted return onaverage assets.

Three Months Ended Twelve Months Ended

December 31, 2021September 30, December 31, December 31, December 31, 2021 2020 2021 2020

(Dollars in millions)

Net income $ 85$ 152$ 154$ 533$ 538

Add: Intangible asset amortization, net of tax 2 2 2 8 10

Tangible net income $ 87$ 154$ 156$ 541$ 548



Total average equity $ 2,692 $ 2,592 $ 2,235 $ 2,514 $ 2,052

Less: Average goodwill and intangible assets 148 151 159 152 164

Total tangible average equity $ 2,544 $ 2,441 $ 2,076 $ 2,362 $ 1,888



Return on average tangible common equity 13.79 % 25.18 % 30.13 % 22.94 % 29.00 %

Adjustment to remove DOJ settlement expense - % - % - % 1.82 % - %

Adjustment for former CEO SERP agreement - % - % - % (0.52) % - %

Adjustment for merger costs 1.11 % 0.98 % - % 1.01 % - %

Adjusted return on average tangible common equity 14.90 % 26.16 % 30.13 % 25.25 % 29.00 %



Return on average assets 1.28 % 2.16 % 2.08 % 1.89 % 2.00 %

Adjustment to remove DOJ - % - % - % 0.10 % - %

Adjustment for former CEO SERP settlement agreement- % - % - % (0.03) % - %

Adjustment for merger costs 0.07 % 0.05 % - % 0.05 % - %

Adjusted return on average assets 1.35 % 2.21 % 2.08 % 2.01 % 2.00 %

Adjusted HFI loan-to-deposit ratio.

December 31, 2021September 30, June 30, 2021 March 31, 2021 December 31, 2020 2021

(Dollars in millions)

Average LHFI $ 13,314 $ 13,540 $ 13,688 $ 14,915 $ 15,703

Less: Average warehouse loans 5,148 5,392 5,410 6,395 6,948

Adjusted average LHFI $ 8,166 $ 8,148 $ 8,278$ 8,520$ 8,755



Average deposits $ 19,816 $ 19,686 $ 19,070 $ 20,043 $ 21,068

Less: Average custodial deposits 6,309 6,180 6,188 7,194 8,527

Adjusted average deposits $ 13,507 $ 13,506 $ 12,882 $ 12,849 $ 12,541



HFI loan-to-deposit ratio 67.2 % 68.8 % 71.8 % 74.4 % 74.5 %

Adjusted HFI loan-to-deposit ratio60.5 % 60.3 % 64.3 % 66.3 % 69.8 %

Adjusted noninterest expense, income before income taxes, provision for incometaxes, net income, basic earnings per share, diluted earnings per share, andefficiency ratio.

Three Months Ended Twelve Months Ended

December 31, 2021 September 30, 2021 June 30, 2021 December 31, 2021

(Dollar in millions)

Noninterest expense $ 291 $ 286 $ 289 $ 1,213

Adjustment to remove DOJ settlement expense- - - 35

Adjustment for former CEO SERP agreement - - (10) (10)

Adjustment for merger costs 6 5 9 20

Adjusted noninterest expense $ 285 $ 281 $ 290 $ 1,168



Income before income taxes $ 109 $ 198 $ 190 $ 690

Adjustment to remove DOJ settlement expense- - - 35

Adjustment for former CEO SERP agreement - - (10) (10)

Adjustment for merger costs 6 5 9 20

Adjusted income before income taxes $ 115 $ 203 $ 189 $ 735



Provision for income taxes $ 24$ 46$ 43$ 157

Adjustment to remove DOJ settlement expense- - - (8)

Adjustment for former CEO SERP agreement - - 2 2

Adjustment for merger costs (1) (1) (2) (4)

Adjusted provision for income taxes $ 25$ 47$ 43$ 167



Net income $ 85$ 152 $ 147 $ 533

Adjusted net income $ 90$ 156 $ 146 $ 568



Weighted average common shares outstanding 52,867,138 52,862,288 52,763,868 52,792,931

Weighted average diluted common shares 53,577,832 53,659,422 53,536,669 53,519,086

Adjusted basic earnings per share $ 1.71 $ 2.94 $ 2.78 $ 10.75

Adjusted diluted earnings per share $ 1.69 $ 2.90 $ 2.74 $ 10.60



Efficiency ratio 75.9 % 62.2 % 66.6 % 67.7 %

Adjustment to remove DOJ settlement expense- % - % - % (1.4) %

Adjustment for former CEO SERP agreement - % - % 1.6 % 0.6 %

Adjustment for merger costs (1.5) % (1.1) % (1.4) % (1.1) %

Adjusted efficiency ratio 74.4 % 61.1 % 66.8 % 65.8 %

Adjusted net interest margin

Three Months Ended

December 31, September 30, June 30, 2021 March 31, 2021December 31, 2021 2021 2020

Average interest earning assets $ 24,291$ 25,656 $ 25,269$ 27,178$ 27,100

Net interest margin 2.96 % 3.00 % 2.90 % 2.82 % 2.78 %

Adjustment to LGG loans available for repurchase0.02 % 0.04 % 0.16 % 0.20 % 0.20 %

Adjusted net interest margin 2.98 % 3.04 % 3.06 % 3.02 % 2.98 %

For more information, contact: Kenneth SchellenbergFBCInvestorRelations@flagstar.com(248) 312-5741

View original content: https://www.prnewswire.com/news-releases/flagstar-bancorp-reports-fourth-quarter-2021-net-income-of-85-million-or-1-60-per-diluted-share-301468342.html

SOURCE Flagstar Bancorp, Inc.