PR Newswire | Oct 21, 2020 06:31AM EDT

$3.88 Per Diluted Share

10/21 05:30 CDT

Flagstar Bancorp Reports Third Quarter 2020 Net Income of $222 million, or $3.88 Per Diluted Share TROY, Mich., Oct. 21, 2020

TROY, Mich., Oct. 21, 2020 /PRNewswire/ --

Key Highlights - Third Quarter 2020

* Surpassed record results from second quarter 2020 as all segments posted strong earnings * Grew net interest income by $12 million to $180 million * Achieved mortgage revenue of $358 million on strong gain on sale margin and volume growth * Increased the allowance for credit losses by $30 million, raising the coverage ratio to 1.7 percent, or 3.1 percent excluding warehouse loans * Generated tangible book value growth of 25 percent through the first nine months of 2020

Flagstar Bancorp, Inc. (NYSE: FBC), the holding company for Flagstar Bank, today reported third quarter 2020 net income of $222 million, or $3.88 per diluted share, compared to second quarter 2020 net income of $116 million, or $2.03 per diluted share and third quarter 2019 net income of $63 million, or $1.11 per diluted share.

"It was another quarter for the record books as we surpassed the high-water mark for earnings we set last quarter," said Alessandro DiNello, president and chief executive officer of Flagstar Bancorp, Inc. "We once again demonstrated the power of our business model as strong results across all of our primary business segments combined to produce record earnings of $3.88 per share. And while our performance in mortgage is a headline, it shares the space with outstanding results from our banking and servicing teams."

"Banking performed remarkably well during the quarter, growing net interest income $12 million to $180 million. Our warehouse business-and our success in safely growing low-risk balances without sacrificing yield-was a big contributor to our performance. Our solid performance in warehouse, combined with a concerted effort to reduce deposit funding costs, resulted in a 6-basis-point increase in net interest margin, excluding loans with government guarantees that have not been repurchased.

"We also were pleased to see commercial loan deferrals end the quarter at just $47 million. That's less than 1 percent of our commercial loan portfolio, down significantly from their peak in the second quarter. Still, we felt it was prudent to increase our credit reserves to $280 million to reflect the continued uncertainty of COVID-19 and its ongoing economic impact. We believe our conservative approach to fortify the bank's balance sheet positions us well in an unpredictable economy. Our coverage ratio is now 3.1 percent, excluding warehouse loans, which places it among the strongest in the industry.

"In Servicing, we closed the quarter with a 6 percent increase over the second quarter in loans serviced and subserviced, bringing our servicing book to a little more than 1.1 million loans. This growth is especially strong considering the headwinds from the continued pressure of elevated prepayments, and it's a testament to our business model and the strength of the relationships we have developed with our subservicing partners.

"Our mortgage team was absolutely stellar, producing revenue of $358 million on a 12-basis-point expansion of gain on sale margin and an 9 percent increase in fallout adjusted locks over the prior quarter. While a robust mortgage market fueled our revenue growth in the business, it is our diverse, multi-channel mortgage platform that allowed us to maximize mortgage profitability by optimizing product and channel mix.

"Like prior quarters, our results in the third quarter show the power of our business model. Mortgage was once again a standout, but it shares the stage with our unique and diversified businesses that deliver solid net interest income and margin in banking-led by contributions from warehouse lending-and predictable fee income from Servicing. Combined, they generated the capital that produced a tangible book value of $35.60 per share at quarter end."

Income Statement Highlights

Three Months Ended

September 30,June March December 31,September 30, 30, 31, 2020 2019 2019 2020 2020

(Dollars in millions)

Net interest income $ 180 $168 $148 $ 152 $ 146

Provision for credit losses32 102 14 - 1

Noninterest income 452 378 157 162 171

Noninterest expense 305 296 235 245 238

Income before income taxes 295 148 56 69 78

Provision for income taxes 73 32 10 11 15

Net income $ 222 $116 $46 $ 58 $ 63

Income per share:

Basic $ 3.90 $2.04$0.80$ 1.01 $ 1.12

Diluted $ 3.88 $2.03$0.80$ 1.00 $ 1.11

Key Ratios

Three Months Ended

June March 31,December 31,September 30, September 30,30, 2020 2020 2019 2019 2020

Net interest margin 2.78 % 2.86%2.81 %2.91 % 3.05 %

Adjusted net interest margin (2) 2.94 % 2.88%2.81 %2.91 % 3.05 %

Return on average assets 3.1 % 1.8 %0.8 %1.0 % 1.2 %

Return on average common equity 41.5 % 23.5%9.8 %12.7 % 14.7 %

Efficiency ratio 48.3 % 54.3%77.1 %78.2 % 75.2 %

HFI loan-to-deposit ratio 75.9 % 76.7%74.9 %76.5 % 74.2 %

Adjusted HFI loan-to-deposit ratio (1)74.8 % 85.4%86.3 %84.6 % 82.0 %



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

(2)Excludes LGG loans available for repurchase. See Non-GAAP Reconciliation for further information.

Average Balance Sheet Highlights

Three Months Ended % Change

September December September 30, June 30, March 31,31, 30, Seq Yr/ 2020 2020 2019 2019 Yr 2020

(Dollars in millions)

Average interest-earning assets $25,738 $23,692$21,150$20,708$18,997 9 %35%

Average loans held-for-sale (LHFS) 5,602 5,645 5,248 5,199 3,786 (1)%48%

Average loans held-for-investment (LHFI)14,839 13,596 11,823 12,168 11,743 9 %26%

Average total deposits 19,561 17,715 15,795 15,904 15,817 10 %24%

Net Interest Income

Net interest income in the third quarter 2020 was $180 million, an increase of $12 million (7 percent) compared to the second quarter 2020. The increase was primarily driven by warehouse loan growth and the impact of lower rates on deposit and borrowing costs, which was partially offset by lower yields on earning assets. Average earning assets increased $2.0 billion, reflecting increases of $2.5 billion in average total loans partially offset by a $0.6 billion decrease in average investment securities.

The net interest margin in the third quarter 2020 was 2.78 percent, an 8 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 expanded 6 basis points to 2.94 percent in the third quarter, compared to adjusted net interest margin of 2.88 percent in the prior quarter. The increase in the adjusted net interest margin was primarily driven by a shift to higher yielding warehouse loans and lower rates on deposit and borrowing costs. Retail banking deposit rates decreased 22 basis points driven by the expiration of promotional rates on some of our savings deposits and the maturity of higher cost time deposits and a higher balance of noninterest bearing deposits. This improvement more than offset the impact of declining interest rates on the loans held-for-investment portfolio.

Loans held-for-investment averaged $14.8 billion for the third quarter 2020, increasing $1.2 billion (9 percent) from the prior quarter. The increase was primarily driven by $1.9 billion (51 percent) higher average warehouse loan balances as we grew this business and took advantage of the strong mortgage market. The result was partially offset by $0.5 billion (9 percent) lower average commercial loans, excluding warehouse, primarily due to a decrease in our home builder finance portfolio and the completion of the sale of the Paycheck Protection Program loans during the third quarter.

Average total deposits were $19.6 billion in the third quarter 2020, increasing $1.8 billion (10 percent) from the second quarter 2020. Average custodial deposits increased $1.1 billion (18 percent) due to higher prepayments from refinancing, average government deposits increased $0.3 billion (29 percent) and retail deposits increased $0.2 billion (2 percent) primarily due to the continued impact of COVID-19 on consumer behavior and spending patterns and higher cash balances being carried by commercial depositors.

Provision for Credit Losses

The provision for credit losses was $32 million for the third quarter 2020, as compared to $102 million for the second quarter 2020. We have continued to add to our reserve balance as we believe the economic recovery will continue to be challenged due to the COVID-19 pandemic for an extended period of time, especially as it relates to consumer loan forbearance and the commercial real estate sector.

Noninterest Income

Noninterest income increased $74 million to $452 million in the third quarter 2020, as compared to $378 million for the second quarter 2020, primarily due to higher mortgage revenues.

Third quarter 2020 net gain on loan sales increased $43 million, to $346 million, as compared to $303 million in the second quarter 2020. The net gain on loan sale margin increased 12 basis points, to 2.31 percent for the third quarter 2020, as compared to 2.19 percent for the second quarter 2020. The increase was primarily driven by improved execution in secondary marketing and the gain associated with the residential mortgage-backed securitization transaction we executed during the quarter. Fallout -adjusted locks increased $1.2 billion, or 9 percent, to $15.0 billion, as historically low interest rates continued to fuel a strong refinance market.

Net return on mortgage servicing rights increased $20 million, to a $12 million net return for the third quarter 2020, compared to an $8 million net loss for the second quarter 2020. The third quarter 2020 MSR return normalized following the MSR valuation decrease caused by rising prepayment speeds in the second quarter 2020 which did not reoccur.

Loan administration income increased $5 million, to $26 million for the third quarter 2020, compared to $21 million for the second quarter 2020, largely driven by an increase in the average number of loans being subserviced and higher level of fees for loans in forbearance.

Loan fees and charges increased $4 million, to $45 million for the third quarter 2020, compared to $41 million for the second quarter 2020, resulting from a 19 percent increase in mortgage closings.

Mortgage Metrics

As of/Three months ended Change (% / bps)

September June 30, March 31, December September 30, 30, 31, Seq Yr/Yr 2020 2020 2019 2020 2019

(Dollars in millions)

Mortgage rate lock commitments (fallout-adjusted) (1) (2) $15,000 $13,800 $11,200 $ 8,200 $ 9,200 9 % 63 %

Mortgage loans closed (1) $14,400 $12,200 $8,600 $ 9,300 $ 9,300 19 % 56 %

Net margin on mortgage rate lock commitments (fallout-adjusted) (2) 2.31 % 2.19 %0.80 %1.23 %1.20 % 12 111

Net gain on loan sales $346 $303 $90 $ 101 $ 110 14 % N/M

Net return (loss) on mortgage servicing rights (MSR) $12 $(8) $6 $ (3) $ (2) N/M N/M

Gain on loan sales + net return on the MSR $358 $295 $96 $ 98 $ 108 21 % N/M

Loans serviced (number of accounts - 000's) (3) 1,105 1,042 1,082 1,091 994 6 % 11 %

Capitalized value of MSRs 0.85 % 0.87 %0.95 %1.21 %1.14 % (2) (29)

N/M - Not meaningful

(1)Rounded to the nearest hundred million

Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of (2)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 $305 million for the third quarter 2020, compared to $296 million for the second quarter 2020. This increase was primarily due to the capitalization of origination costs in the second quarter for the PPP loans and the accelerated vesting of certain components of executive compensation that resulted from the most recent secondary share offering. Despite increased volume, mortgage expenses were flat quarter over quarter as the ratio of mortgage noninterest expense to closings - our mortgage expense ratio - declined. This improvement was due to certain expenses in the second quarter that did not reoccur this quarter and are not expected to reoccur in the future, including certain performance-related incentives related to our Opes Advisors division.

The Company's efficiency ratio was 48 percent for the third quarter 2020, as compared to 54 percent for the second quarter 2020, primarily driven lower by extraordinary levels of gain on sale margin.

Income Taxes

The third quarter 2020 provision for income taxes totaled $73 million, with an effective tax rate of 24.7 percent, compared to $32 million and an effective tax rate of 21.5 percent for the second quarter 2020. Our effective tax rate increased due to the higher level of income, which is taxed at higher marginal tax rates. Additionally, we delayed certain tax planning strategies.

Asset Quality

Credit Quality Ratios

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

SeptemberJune March DecemberSeptember 30, 30, 31, 31, 30, Seq Yr/Yr 2020 2020 2020 2019 2019

(Dollars in millions)

Allowance for credit losses $280 $250 $ 152 $110 $113 12 % N/M

Credit reserves to LHFI 1.70 %1.69 %1.10 %0.91 %0.90 % 1 80

Credit reserves to LHFI excluding warehouse 3.07 %2.60 %1.54 %1.12 %1.16 % 47 191

Charge-offs, net of recoveries $2 $3 $ 2 $3 $1 (33)% 100 %

Total nonperforming LHFI and TDRs $45 $33 $ 29 $26 $26 36 % 73 %

Net charge-offs to LHFI ratio (annualized) 0.05 %0.11 %0.08 %0.10 %0.02 % (6) 3

Ratio of nonperforming LHFI and TDRs to LHFI0.28 %0.22 %0.21 %0.21 %0.21 % 6 7



Net charge-offs/(recoveries) to LHFI ratio (annualized) by loan type (1):

Residential first mortgage 0.07 %0.26 %0.08 %0.08 %0.07 % (19) -

Home equity and other consumer 0.23 %0.28 %0.28 %0.49 %0.27 % (5) (4)

Commercial real estate (0.01) %0.01 %(0.01)%- %- % (2) (1)

Commercial and industrial 0.06 %0.08 %0.09 %0.07 %(0.22)% (2) 28

N/M - Not meaningful



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

The allowance for credit losses was $280 million and covered 1.70 percent of loans held-for-investment at September 30, 2020, flat compared to June 30, 2020. Excluding warehouse loans, the allowance coverage ratio was 3.07 percent, a 47 basis point increase from June 30, 2020. The increase in the allowance coverage reflects our forecast of economic conditions and our view that the economy will continue to be challenged for an extended period of time as a result of the COVID-19 pandemic.

Net charge-offs in the third quarter 2020 were negligible at $2 million, or 5 basis points of LHFI, compared to $3 million, or 11 basis points in the prior quarter.

Nonperforming loans were $45 million and our ratio of nonperforming loans to loans held-for-investment was 28 basis points at September 30, 2020, a 6 basis point increase compared to June 30, 2020. The increase was due to one commercial loan that was placed on nonaccrual during the quarter. At September 30, 2020, early stage loan delinquencies totaled $13 million, or 8 basis points, of total loans, compared to $15 million, or 10 basis points, at June 30, 2020.

Capital

Capital Ratios (Bancorp) Change (% / bps)

September June 30, March 31,December September 30, 31, 30, Seq Yr/Yr 2020 2020 2020 2019 2019

Tier 1 leverage (to adj. avg. total assets)8.04 %7.76 %8.09 %7.57 %7.98 %28 6

Tier 1 common equity (to RWA) 9.21 %9.11 %9.17 %9.32 %9.25 %10 (4)

Tier 1 capital (to RWA) 10.31 %10.33 %10.52 %10.83 %10.81 %(2) (50)

Total capital (to RWA) 11.29 %11.32 %11.18 %11.52 %11.54 %(3) (25)

Tangible common equity to asset ratio (1) 6.90 %6.58 %6.25 %6.95 %7.08 %32 (18)

Tangible book value per share (1) $35.60 $31.74 $29.52 $28.57 $27.62 12 % 29 %



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

The Company maintained a solid capital position with regulatory ratios well above current regulatory quantitative guidelines for "well capitalized" institutions. The capital ratios are impacted by a 100 percent risk-weighting of the warehouse loan portfolio - the largest component of the Company's held for sale portfolio. Adjusting the risk-weighting of warehouse loans to 50 percent, because of the historically low level of losses from this loan portfolio and the fact that the portfolio is fully collateralized with assets that would receive a 50 percent risk weighting, the Company would have had a Tier 1 common equity ratio of 10.9 percent and a total risk-based capital ratio of 13.4 percent at September 30, 2020.

Importantly, tangible book value per share grew to $35.60, up $3.86 from last quarter and $7.98 higher than the same quarter last year, an increase of 29 percent.

Earnings Conference Call

As previously announced, the Company's third quarter 2020 earnings call will be held Wednesday, October 21, 2020 at 11 a.m. (ET).

To join the call, please dial (800) 353-6461 toll free or (334) 323-0501 and use passcode 9179222. 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 9179222.

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 $29.5 billion savings and loan holding company headquartered in Troy, Mich. Flagstar Bank, FSB, provides commercial, small business, and consumer banking services through 160 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 87 retail locations in 29 states, representing the combined retail branches of Flagstar and its Opes Advisors mortgage division. Flagstar is a leading national originator and servicer of mortgage and other consumer loans, handling payments and record keeping for $227 billion of loans representing slightly over 1.1 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 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 various 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). The COVID-19 pandemic is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. 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.

Flagstar Bancorp, Inc. Consolidated Statements of Financial Condition (Dollars in millions) (Unaudited)



September June 30, December September 30, 31, 30, 2020 2019 2019 2020

Assets

Cash $194 $204 $220 $234

Interest-earning deposits 86 23 206 119

Total cash and cash equivalents 280 227 426 353

Investment securities available-for-sale 2,165 2,348 2,116 1,697

Investment securities held-to-maturity 440 496 598 635

Loans held-for-sale 5,372 5,615 5,258 4,196

Loans held-for-investment 16,476 14,808 12,129 12,548

Loans with government guarantees 2,500 1,791 736 607

Less: allowance for loan losses (255) (229) (107) (110)

Total loans held-for-investment and loans with government18,721 16,370 12,758 13,045 guarantees, net

Mortgage servicing rights 323 261 291 285

Federal Home Loan Bank stock 377 377 303 303

Premises and equipment, net 410 410 416 417

Goodwill and intangible assets 160 164 170 174

Other assets 1,228 1,200 930 943

Total assets $29,476 $27,468$23,266$22,048

Liabilities and Stockholders' Equity

Noninterest-bearing deposits $9,429 $7,921 $5,467 $5,649

Interest-bearing deposits 10,516 9,977 9,679 10,096

Total deposits 19,945 17,898 15,146 15,745

Short-term Federal Home Loan Bank advances and other 2,226 3,354 4,165 2,329

Long-term Federal Home Loan Bank advances 1,200 1,200 650 650

Other long-term debt 493 493 496 496

Other liabilities 3,417 2,552 1,021 1,094

Total liabilities 27,281 25,497 21,478 20,314

Stockholders' Equity

Common stock 1 1 1 1

Additional paid in capital 1,493 1,488 1,483 1,481

Accumulated other comprehensive income 46 46 1 5

Retained earnings 655 436 303 247

Total stockholders' equity 2,195 1,971 1,788 1,734

Total liabilities and stockholders' equity $29,476 $27,468$23,266$22,048

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



Change compared to:

Three Months Ended 2Q20 3Q19

September 30,June March December 31,September 30, 2020 30, 31, 2019 2019 Amount PercentAmount Percent 2020 2020

Interest Income

Total interest income $206 $201 $201 $213 $ 203 $5 2 %$3 1 %

Total interest expense 26 33 53 61 57 (7) (21)%(31) (54)%

Net interest income 180 168 148 152 146 12 7 %34 23 %

Provision for credit losses 32 102 14 - 1 (70) (69)%31 N/M

Net interest income after provision for credit losses148 66 134 152 145 82 124 %3 2 %

Noninterest Income

Net gain on loan sales 346 303 90 101 110 43 14 %236 N/M

Loan fees and charges 45 41 26 30 29 4 10 %16 55 %

Net return (loss) on the mortgage servicing rights 12 (8) 6 (3) (2) 20 N/M 14 N/M

Loan administration income 26 21 12 8 5 5 24 %21 N/M

Deposit fees and charges 8 7 9 10 10 1 14 %(2) (20)%

Other noninterest income 15 14 14 16 19 1 7 %(4) (21)%

Total noninterest income 452 378 157 162 171 74 20 %281 164 %

Noninterest Expense

Compensation and benefits 123 116 102 102 98 7 6 %25 26 %

Occupancy and equipment 47 44 41 43 40 3 7 %7 18 %

Commissions 72 61 29 35 38 11 18 %34 89 %

Loan processing expense 24 25 20 20 22 (1) (4) %2 9 %

Legal and professional expense 9 5 6 9 6 4 80 %3 50 %

Federal insurance premiums 6 7 6 6 5 (1) (14)%1 20 %

Intangible asset amortization 3 4 3 4 3 (1) (25)%- - %

Other noninterest expense 21 34 28 26 26 (13) (38)%(5) (19)%

Total noninterest expense 305 296 235 245 238 9 3 %67 28 %

Income before income taxes 295 148 56 69 78 147 99 %217 278 %

Provision for income taxes 73 32 10 11 15 41 128 %58 N/M

Net income $222 $116 $46 $58 $ 63 $106 91 %$159 252 %

Income per share

Basic $3.90 $2.04$0.80 $1.01 $ 1.12 $1.8691 %$2.78248 %

Diluted $3.88 $2.03$0.80 $1.00 $ 1.11 $1.8591 %$2.77250 %



Cash dividends declared $0.05 $0.05$0.05 $0.04 $ 0.04 $- - %$0.0125 %

N/M - Not meaningful

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



Nine Months Ended Change

September 30,September 30, Amount Percent 2020 2019

Interest Income

Total interest income $608 $581 $27 5 %

Total interest expense 112 171 (59) (35)%

Net interest income 496 410 86 21 %

Provision for credit losses 148 18 130 N/M

Net interest income after provision for credit losses 348 392 (44) (11)%

Noninterest Income

Net gain on loan sales 739 234 505 N/M

Loan fees and charges 112 70 42 60 %

Net return (loss) on the mortgage servicing rights 10 9 1 11 %

Loan administration income 59 22 37 168 %

Deposit fees and charges 24 28 (4) (14)%

Other noninterest income 44 85 (41) (48)%

Total noninterest income 988 448 540 121 %

Noninterest Expense

Compensation and benefits 341 275 66 24 %

Occupancy and equipment 132 118 14 12 %

Commissions 162 76 86 N/M

Loan processing expense 69 60 9 15 %

Legal and professional expense 20 18 2 11 %

Federal insurance premiums 19 14 5 36 %

Intangible asset amortization 10 11 (1) (9) %

Other noninterest expense 84 71 13 18 %

Total noninterest expense 837 643 194 30 %

Income before income taxes 499 197 302 153 %

Provision for income taxes 115 37 78 N/M

Net income $384 $160 $224 140 %

Income per share

Basic $6.76 $2.83 $3.93139 %

Diluted $6.71 $2.80 $3.91140 %



Cash dividends declared $0.15 $0.12 $0.0325 %

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 Nine Months Ended

September June 30, September September September 30, 30, 30, 30, 2020 2020 2019 2020 2019

Selected Mortgage Statistics (1):

Mortgage rate lock commitments (fallout-adjusted) (2) $15,000 $13,800 $9,200 $40,000 $24,100

Mortgage loans closed $14,400 $12,200 $9,300 $35,200 $23,400

Mortgage loans sold and securitized $14,500 $12,900 $8,200 $34,900 $22,200

Selected Ratios:

Interest rate spread (3) 2.44 %2.52 %2.48 %2.41 %2.57 %

Net interest margin 2.78 %2.86 %3.05 %2.81 %3.07 %

Net margin on loans sold and securitized 2.39 %2.35 %1.34 %2.12 %1.05 %

Return on average assets 3.15 %1.77 %1.20 %1.97 %1.08 %

Adjusted return on average assets (4) (5) 3.15 %1.77 %1.20 %1.97 %0.98 %

Return on average common equity 41.54 %23.47 %14.72 %25.71 %12.90 %

Return on average tangible common equity (5) 45.42 %26.16 %17.12 %28.58 %15.30 %

Adjusted return on average tangible common equity (4) (5)45.42 %26.16 %17.12 %28.58 %13.99 %

Efficiency ratio 48.3 %54.3 %75.2 %56.4 %75.0 %

Common equity-to-assets ratio (average for the period) 7.57 %7.53 %8.12 %7.66 %8.34 %

Average Balances:

Average interest-earning assets $25,738 $23,692 $18,997 $23,535 $17,693

Average interest-bearing liabilities $14,281 $15,119 $12,893 $14,625 $12,767

Average stockholders' equity $2,141 $1,977 $1,722 $1,991 $1,658



(1)Rounded to nearest hundred million.

Fallout-adjusted mortgage rate lock commitments are adjusted by a percentage of (2)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.

September June 30, December 31,September 30, 30, 2020 2019 2020 2019

Selected Statistics:

Book value per common share $ 38.41 $ 34.62 $ 31.57 $ 30.69

Tangible book value per share (1) $ 35.60 $ 31.74 $ 28.57 $ 27.62

Number of common shares outstanding 57,150,470 56,943,979 56,631,236 56,510,341

Number of FTE employees 4,871 4,641 4,453 4,171

Number of bank branches 160 160 160 160

Ratio of nonperforming assets to total assets (2)0.17 %0.14 %0.15 %0.16 %

Common equity-to-assets ratio 7.45 %7.18 %7.68 %7.88 %

MSR Key Statistics and Ratios:

Weighted average service fee (basis points) 35.0 37.0 39.7 39.9

Capitalized value of mortgage servicing rights 0.85 %0.87 %1.21 %1.14 %



(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

September 30, 2020 June 30, 2020 September 30, 2019

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

Interest-Earning Assets

Loans held-for-sale $5,602 $ 45 3.21% $5,645 $ 48 3.42% $3,786 $ 40 4.22%

Loans held-for-investment

Residential first mortgage 2,584 21 3.24% 2,822 24 3.41% 3,282 29 3.58%

Home equity 951 9 3.77% 1,001 9 3.78% 934 13 5.37%

Other 950 13 5.28% 881 12 5.42% 658 10 5.99%

Total consumer loans 4,485 43 3.78% 4,704 45 3.87% 4,874 52 4.24%

Commercial real estate 3,007 27 3.47% 3,101 28 3.64% 2,594 35 5.39%

Commercial and industrial 1,650 14 3.25% 2,006 17 3.34% 1,767 22 4.97%

Warehouse lending 5,697 56 3.92% 3,785 38 3.88% 2,508 32 5.00%

Total commercial loans 10,354 97 3.68% 8,892 83 3.67% 6,869 89 5.14%

Total loans held-for-investment 14,839 140 3.71% 13,596 128 3.74% 11,743 141 4.77%

Loans with government guarantees 2,122 5 0.89% 858 4 1.97% 574 4 2.78%

Investment securities 2,807 16 2.29% 3,417 21 2.42% 2,713 17 2.63%

Interest-earning deposits 368 - 0.11% 176 - 0.11% 181 1 2.22%

Total interest-earning assets 25,738 $ 206 3.16% 23,692 $ 201 3.38% 18,997 $ 203 4.27%

Other assets 2,539 2,569 2,207

Total assets $28,277 $26,261 $21,204

Interest-Bearing Liabilities

Retail deposits

Demand deposits $1,824 $ - 0.09% $1,800 $ 1 0.22% $1,388 $ 3 0.88%

Savings deposits 3,675 3 0.34% 3,476 4 0.52% 3,262 10 1.20%

Money market deposits 733 - 0.09% 716 - 0.12% 722 1 0.34%

Certificates of deposit 1,672 8 1.62% 1,987 10 2.00% 2,583 15 2.40%

Total retail deposits 7,904 11 0.53% 7,979 15 0.78% 7,955 29 1.42%

Government deposits 1,403 1 0.35% 1,088 2 0.63% 1,253 4 1.45%

Wholesale deposits and other 953 4 1.77% 738 4 2.07% 744 5 2.42%

Total interest-bearing deposits 10,260 16 0.62% 9,805 21 0.86% 9,952 38 1.52%

Short-term FHLB advances and other 2,328 2 0.20% 3,753 2 0.26% 1,910 10 2.24%

Long-term FHLB advances 1,200 3 1.03% 1,068 3 1.13% 536 2 1.72%

Other long-term debt 493 5 4.52% 493 7 4.99% 495 7 5.60%

Total interest-bearing liabilities 14,281 26 0.72% 15,119 33 0.86% 12,893 57 1.79%

Noninterest-bearing deposits

Retail deposits and other 1,954 1,687 1,315

Custodial deposits (1) 7,347 6,223 4,550

Total noninterest-bearing deposits 9,301 7,910 5,865

Other liabilities 2,554 1,255 717

Stockholders' equity 2,141 1,977 1,722

Total liabilities and stockholders' equity $28,277 $26,261 $21,197

Net interest-earning assets $11,457 $8,573 $6,104

Net interest income $ 180 $ 168 $ 146

Interest rate spread (2) 2.44% 2.52% 2.48%

Net interest margin (3) 2.78% 2.86% 3.05%

Ratio of average interest-earning assets to 180.2% 156.7% 147.3% interest-bearing liabilities

Total average deposits $19,561 $17,715 $15,817



(1)Approximately 80 percent of custodial deposits from loans subserviced which pay interest is 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)



Nine Months Ended,

September 30, 2020 September 30, 2019

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

Interest-Earning Assets

Loans held-for-sale $5,499 $142 3.44 % $3,532 $119 4.48 %

Loans held-for-investment

Residential first mortgage 2,822 72 3.40 % 3,158 85 3.61 %

Home equity 990 30 4.10 % 832 34 5.50 %

Other 882 36 5.47 % 512 25 6.51 %

Total consumer loans 4,694 138 3.94 % 4,502 144 4.29 %

Commercial real estate 3,019 90 3.90 % 2,414 102 5.56 %

Commercial and industrial 1,774 50 3.68 % 1,702 67 5.20 %

Warehouse lending 3,937 119 3.98 % 1,898 74 5.17 %

Total commercial loans 8,730 259 3.89 % 6,014 243 5.34 %

Total loans held-for-investment 13,424 397 3.91 % 10,516 387 4.89 %

Loans with government guarantees 1,267 12 1.23 % 511 11 2.88 %

Investment securities 3,094 56 2.40 % 2,957 61 2.77 %

Interest-earning deposits 251 1 0.56 % 177 3 2.38 %

Total interest-earning assets 23,535 608 3.42 % 17,693 581 4.37 %

Other assets 2,457 2,184

Total assets $25,992 $19,877

Interest-Bearing Liabilities

Retail deposits

Demand deposits $1,737 $4 0.33 % $1,311 $8 0.80 %

Savings deposits 3,513 17 0.63 % 3,181 26 1.10 %

Money market deposits 712 1 0.17 % 748 2 0.31 %

Certificates of deposit 1,970 29 1.98 % 2,561 44 2.29 %

Total retail deposits 7,932 51 0.86 % 7,801 80 1.37 %

Government deposits 1,208 6 0.68 % 1,184 13 1.49 %

Wholesale deposits and other 758 12 2.03 % 518 9 2.35 %

Total interest-bearing deposits 9,898 69 0.93 % 9,503 102 1.44 %

Short-term FHLB advances and other 3,212 16 0.65 % 2,420 44 2.45 %

Long-term FHLB advances 1,021 9 1.13 % 349 4 1.71 %

Other long-term debt 494 18 4.94 % 495 21 5.84 %

Total interest-bearing liabilities 14,625 112 1.01 % 12,767 171 1.80 %

Noninterest-bearing deposits

Retail deposits and other 1,680 1,278

Custodial deposits (1) 6,120 3,524

Total noninterest-bearing deposits 7,800 4,802

Other liabilities 1,576 650

Stockholders' equity 1,991 1,658

Total liabilities and stockholders' equity $25,992 $19,877

Net interest-earning assets $8,910 $4,926

Net interest income $496 $410

Interest rate spread (2) 2.41 % 2.57 %

Net interest margin (3) 2.81 % 3.07 %

Ratio of average interest-earning assets to interest-bearing 160.9 % 138.6 % liabilities

Total average deposits 17,698 14,305

(1)Approximately 80 percent of custodial deposits from loans subserviced which pay interest is 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.

Earnings Per Share (Dollars in millions, except share data) (Unaudited)



Three Months Ended Nine Months Ended

September June 30 September September September 30, 30, 30, 30, 2020 2019 2019 2020 2020

Net Income $222 $116 $63 $384 $160

Weighted average common shares outstanding57,032,746 56,790,64256,484,499 56,827,17156,607,944

Stock-based awards 347,063 333,064 626,297 404,518 644,596

Weighted average diluted common shares 57,379,809 57,123,70657,110,796 57,231,68957,252,540

Basic earnings per common share $3.90 $2.04 $1.12 $6.76 $2.83

Stock-based awards (0.02) (0.01) (0.01) (0.05) (0.03)

Diluted earnings per common share $3.88 $2.03 $1.11 $6.71 $2.80

Regulatory Capital - Bancorp (Dollars in millions) (Unaudited)



September 30, June 30, 2020 December 31, 2019September 30, 2020 2019

Amount Ratio Amount Ratio Amount Ratio Amount Ratio

Tier 1 leverage (to adjusted avg. total assets)$2,256 8.04 %$2,021 7.76 %$1,826 8.00 %$1,668 7.98 %

Total adjusted avg. total asset base $28,069 $26,040 $22,830 $20,901

Tier 1 common equity (to risk weighted assets) $2,016 9.21 %$1,781 9.11 %$1,586 9.62 %$1,428 9.25 %

Tier 1 capital (to risk weighted assets) $2,256 10.31%$2,021 10.33%$1,826 11.07%$1,668 10.81%

Total capital (to risk weighted assets) $2,471 11.29%$2,214 11.32%$1,936 11.74%$1,781 11.54%

Risk-weighted asset base $21,882 $19,562 $16,493 $15,432

Regulatory Capital - Bank (Dollars in millions) (Unaudited)



September 30, June 30, 2020 December 31, 2019September 30, 2020 2019

Amount Ratio Amount Ratio Amount Ratio Amount Ratio

Tier 1 leverage (to adjusted avg. total assets)$2,2127.89 % $1,969 7.57 %$1,752 7.71 %$1,747 8.35 %

Total adjusted avg. total asset base 28,051 $26,020 22,727 $19,614

Tier 1 common equity (to risk weighted assets) $2,21210.11% $1,969 10.07%$1,752 11.04%$1,747 11.33%

Tier 1 capital (to risk weighted assets) $2,21210.11% $1,969 10.07%$1,752 11.04%$1,747 11.33%

Total capital (to risk weighted assets) $2,42711.09% $2,161 11.05%$1,862 11.73%$1,860 12.06%

Risk-weighted asset base 21,882 $19,559 $15,873 $14,538

Loans Serviced (Dollars in millions) (Unaudited)



September 30, 2020 June 30, 2020 December 31, 2019 September 30, 2019

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

Subserviced for others (2) $180,981 893,559 $174,517 854,693 $194,638 918,662 $171,145 826,472

Serviced for others 37,908 148,868 29,846 122,779 24,003 105,469 25,039 106,992

Serviced for own loan portfolio (3)8,469 62,486 9,211 64,142 9,536 66,526 8,058 60,088

Total loans serviced $227,358 1,104,913$213,574 1,041,614$228,177 1,090,657$204,242 993,552



(1)Unpaid principal balance, net of write downs, does not include premiums or discounts.

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

Includes LHFI (residential first mortgage, home equity and other consumer), (3)LHFS (residential first mortgage), loans with government guarantees (residential first mortgage), and repossessed assets.

Loans Held-for-Investment (Dollars in millions) (Unaudited)



September 30, June 30, 2020 December 31, 2019September 30, 2020 2019

Consumer loans

Residential first mortgage $2,472 15.0 %$2,716 18.3 %$3,154 26.0 %$3,258 26.0 %

Home equity 924 5.6 %978 6.6 %1,024 8.4 %985 7.8 %

Other 973 5.9 %898 6.1 %729 6.0 %693 5.5 %

Total consumer loans 4,369 26.5 %4,592 31.0 %4,907 40.4 %4,936 39.3 %

Commercial loans

Commercial real estate 2,996 18.2 %3,016 20.4 %2,828 23.3 %2,697 21.5 %

Commercial and industrial 1,520 9.2 %1,968 13.3 %1,634 13.5 %1,700 13.6 %

Warehouse lending 7,591 46.1 %5,232 35.3 %2,760 22.8 %3,215 25.6 %

Total commercial loans 12,107 73.5 %10,216 69.0 %7,222 59.6 %7,612 60.7 %

Total loans held-for-investment$16,476100.0%$14,808100.0%$12,129100.0%$12,548100.0%

Other Consumer Loans Held-for-Investment (Dollars in millions) (Unaudited)



September 30, June 30, 2020 December 31, September 30, 2020 2019 2019

Indirect Lending $71073.0 %$64772.0 %$57879.3 %$51974.9 %

Point of Sale 202 20.8 %181 20.2 %63 8.6 %58 8.4 %

Other 61 6.3 %70 7.8 %88 12.1 %116 16.7 %

Total other consumer loans$973100.0%$898100.0%$729100.0%$693100.0%

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



September 30, June 30, September 30, 2020 2020 2019

Residential first mortgage $ 52 $ 60 $ 28

Home equity 29 28 16

Other 38 34 6

Total consumer loans 119 122 50

Commercial real estate 89 83 33

Commercial and industrial 42 23 22

Warehouse lending 5 1 5

Total commercial loans 136 107 60

Allowance for loan losses 255 229 110

Reserve for unfunded 25 21 3 commitments

Allowance for credit losses $ 280 $ 250 $ 113

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



Three Months Ended September 30, 2020

ResidentialHome Other Commercial CommercialWarehouseTotal LHFI Unfunded First and Portfolio (1)Commitments Mortgage EquityConsumerReal EstateIndustrialLending

Beginning balance $ 60 $28 $ 34 $ 83 $ 23 $ 1 $ 229 $ 21

Provision (benefit) for credit losses:

Loan volume (4) (1) 3 - (4) 1 (5) 4

Economic forecast (2) (3) (3) (1) - - - (7) -

Credit (3) (7) 1 (4) 13 12 - 15 -

Qualitative factor adjustments (4) 6 3 5 (7) 11 3 21 -

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

Provision for charge-offs 2 1 1 - - - 4 -

Recoveries - 1 1 - - - 2 -

Ending allowance balance $ 52 $29 $ 38 $ 89 $ 42 $ 5 $ 255 $ 25



(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 based on (3)current borrower and guarantor characteristics, as well as individually evaluated reserves.

(4)Includes $10 million of unallocated reserves attributed to various portfolios for presentation purposes.

Nonperforming Loans and Assets (Dollars in millions) (Unaudited)



September 30,June December 31,September 30, 30, 2020 2019 2019 2020

Nonperforming LHFI $ 36 $23 $ 16 $ 16

Nonperforming TDRs 4 4 3 3

Nonperforming TDRs at inception but performing 5 6 7 7 for less than six months

Total nonperforming LHFI 45 33 26 26 and TDRs (1)

Other nonperforming 6 7 10 9 assets, net

LHFS 6 7 5 17

Total nonperforming assets$ 57 $47 $ 41 $ 52



Ratio of nonperforming 0.17 % 0.14%0.15 % 0.16 % assets to total assets (2)

Ratio of nonperforming 0.28 % 0.22%0.21 % 0.21 % LHFI and TDRs to LHFI

Ratio of nonperforming assets to LHFI and 0.31 % 0.27%0.30 % 0.29 % repossessed assets (2)



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

(2)Ratio excludes LHFS.

Asset Quality - Loans Held-for-Investment (Dollars in millions) (Unaudited)



30-59 Days 60-89 Days Greater thanTotal PastTotal Past Due Past Due LHFI 90 days (1) Due

September 30, 2020

Consumer loans $ 9 $6$ 4 $48$36 $ 49 $4,369

Commercial loans - - 10 10 12,107

Total loans $ 9 $ 4 $46 $ 59 $16,476

June 30, 2020

Consumer loans $ 9 $ 6 $33 $ 48 $4,592

Commercial loans - - - - 10,216

Total loans$ 9 $ 6 $33 $ 48 $14,808

December 31, 2019

Consumer loans $ 9 $ 5 $26 $ 40 $4,907

Commercial loans - - - - 7,222

Total loans $ 9 $ 5 $26 $ 40 $12,129

September 30, 2019

Consumer loans $ 9 $ 3 $26 $ 38 $4,936

Commercial loans - - - - 7,612

Total loans $ 9 $ 3 $26 $ 38 $12,548



(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

PerformingNonperformingTotal

September 30, 2020

Consumer loans $34 $9 $43

Commercial loans 5 - 5

Total TDR loans $39 $9 $48

June 30, 2020

Consumer loans $35 $10 $45

Commercial loans 5 - 5

Total TDR loans $40 $10 $50

December 31, 2019

Consumer loans $38 $10 $48

Total TDR loans $38 $10 $48

September 30, 2019

Consumer loans $39 $10 $49

Total TDR loans $39 $10 $49

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, return on average tangible common equity, adjusted return on average tangible common equity, adjusted return on average assets, adjusted HFI loan-to-deposit ratio and adjusted net interest margin 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.



September 30,June 30, March 31, December 31,September 30, 2020 2020 2020 2019 2019

(Dollars in millions, except share data)

Total stockholders' equity $2,195 $1,971 $1,842 $1,788 $1,734

Less: Goodwill and intangible assets 160 164 167 170 174

Tangible book value $2,035 $1,807 $1,675 $1,618 $1,560



Number of common shares outstanding 57,150,470 56,943,979 56,729,789 56,631,236 56,510,341

Tangible book value per share $35.60 $31.74 $29.52 $28.57 $27.62



Total assets $29,476 $27,468 $26,805 $23,266 $22,048

Tangible common equity to assets ratio6.90 %6.58 %6.25 %6.95 %7.08 %

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



Three Months Ended Nine Months Ended

September 30,December 31,September 30,September 30,September 30, 2020 2019 2020 2019 2019

(Dollars in millions)

Net income $ 222 $ 58 $ 63 $ 384 $ 160

Add: Intangible asset amortization, net of tax 3 3 2 7 10

Tangible net income $ 225 $ 61 $ 65 $ 391 $ 170



Total average equity $ 2,141 $ 1,803 $ 1,722 $ 1,991 $ 1,658

Less: Average goodwill and intangible assets 162 172 176 165 184

Total tangible average equity $ 1,979 $ 1,631 $ 1,546 $ 1,826 $ 1,474



Return on average tangible common equity 45.42 % 14.76 % 17.12 % 28.58 % 15.30 %

Adjustment to remove DOJ adjustment - % - % - % - % (1.31) %

Adjusted return on average tangible common 45.42 % 14.76 % 17.12 % 28.58 % 13.99 % equity



Return on average assets 3.15 % 0.99 % 1.20 % 1.97 % 1.08 %

Adjustment to remove DOJ adjustment - % - % - % - % (0.10) %

Adjusted return on average assets 3.15 % 0.99 % 1.20 % 1.97 % 0.98 %

Adjusted HFI loan-to-deposit ratio.



September 30, June 30, March 31, September December 31, 30, 2020 2020 2020 2019 2019

(Dollars in millions)

Average LHFI $ 14,839 $13,596 $11,823 $ 12,168 $11,743

Less: Average warehouse loans 5,697 3,785 2,310 2,747 2,508

Adjusted average LHFI $ 9,142 $9,811 $9,513 $ 9,421 $9,235



Average deposits $ 19,561 $17,715 $15,795 $ 15,904 $15,817

Less: Average custodial deposits 7,347 6,223 4,776 4,772 4,550

Adjusted average deposits $ 12,214 $11,492 $11,019 $ 11,132 $11,267



HFI loan-to-deposit ratio 75.9 % 76.7 %74.9 %76.5 % 74.2 %

Adjusted HFI loan-to-deposit ratio74.8 % 85.4 %86.3 %84.6 % 82.0 %

Adjusted net interest margin.



Three Months Ended

SeptemberJune March 31,DecemberSeptember 30, 30, 31, 30, 2020 2019 2019 2020 2020



Net interest margin 2.78 %2.86%2.81% 2.91 %3.05 %

Adjustment to LGG loans available for repurchase0.16 %0.02%- % - %- %

Adjusted net interest margin 2.94 %2.88%2.81% 2.91 %3.05 %

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

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SOURCE Flagstar Bancorp, Inc.