Flagstar Bancorp (FBC) 8-K Flagstar Announces Revision to Fair Value Analysis of DOJ Agreement

1

Fourth Quarter 2011 Highlights

Net loss to common stockholders of $(78.2) million

•

$98.3 million in pre-tax, pre-credit-cost income

•

Credit related costs of $173.2, compared to $111.7 in prior quarter

•

Gain on loan sale income increased to $106.9 million, or 102 bps

•

Net loan fees and charges increased by 55.6% from prior quarter to $28.6 million

•

Net servicing revenue increased by 71.3% from prior quarter to $29.0 million

•

Bank net interest margin improved by 13 basis points from prior quarter to 2.43%

Maintained strong capital and liquidity levels

•

Tier 1 capital ratio of 8.95%

•

Cash

and

cash

equivalents

of

$731.1

million,

in

addition

to

$244

million

in

unencumbered

marketable securities and over $550 million in unused capacity at FHLB

Continued emphasis on credit risk management, primarily associated with loans originated prior to 2009

•

Fortified balance sheet, adding $71.0 million in total reserves

•

Converted to nationally recognized residential mortgage loan servicing system and made significant investments and

enhancements in  loss mitigation and default servicing

Completed previously announced divestitures of Indiana and Georgia bank franchises, resulting in net gain

of $21.4 million

Grew interest earning assets, improved retail deposit mix and reduced overall cost of funds

Exhibit 99.2

2

Summary Financial Results

[1] Net servicing revenue includes net loan administration income and net gain (loss) on trading securities.

($ in millions, except per share data)

Q4 2011

Q3 2011

Q4 2010

Net Interest Income

$75.9

$65.6

$66.1

Provision

$63.5

$36.7

$225.4

Gain on Loan Sale

$106.9

$103.9

$76.9

Net Servicing Revenue [1]

$29.0

$16.9

$28.1

Net Loss Applicable to Common Shareholders

($78.2)

($14.2)

($192.1)

Diluted Earnings / (Loss) per Share

($0.14)

($0.03)

($0.64)

Total Assets

$13,637.5

$13,734.0

$13,643.5

Total Stockholders' Equity

$1,079.7

$1,159.3

$1,259.7

Book Value per Common Share

$1.48

$1.63

$1.83

NPLs / Gross Loans HFI

6.94%

6.52%

5.05%

NPAs / Total Assets (Bank)

4.43%

4.09%

4.35%

ALLL / NPLs

65.11%

63.39%

86.05%

ALLL / Gross Loans HFI

4.52%

4.13%

4.35%

NPAs / Tier 1 Capital + Allowance for Loan Losses [2]

39.34%

35.88%

31.52%

Tier 1 Capital Ratio

8.95%

9.31%

9.61%

Total Risk Based Capital Ratio

16.64%

17.64%

18.55%

Total Equity / Total Assets

7.92%

8.44%

9.23%

[2]:  See Non-GAAP reconciliation on pages 39 - 41.

3

Pre-tax, Pre-credit-cost Income

--

Pre-tax, pre-credit-cost income continues to be strong…

Totals may not foot due to rounding

$ in millions

Q4 2011

Q3 2011

Q2 2011

Q1 2011

Q4 2010

Loss before tax provision and dividends

($74.9)

($9.2)

($69.9)

($26.7)

($185.3)

Add back:

   Provision for loan losses

63.5

36.7

48.4

28.3

225.4

   Asset resolution

32.4

34.5

23.3

38.1

41.8

   Other than temporary impairment on investments AFS

7.1

1.3

15.6

0.0

1.3

   Representation and warranty reserve

69.3

39.0

21.4

20.4

10.3

   Write down of residual interests

0.8

0.2

2.3

2.4

(3.8)

          Total credit related costs:

173.2

111.7

110.9

89.2

275.0

Pre-tax, pre credit-cost income

$98.3

$102.5

$41.0

$62.5

$89.7

Note:  See Non-GAAP reconciliation on pages 39 - 41.

4

Growth in Pre-tax, Pre-credit-cost Income

--

Pre-tax pre-credit-cost income increased to $304.3 million for 2011…

$53.2

$70.8

$346.1

$290.8

$304.3

$-

$50

$100

$150

$200

$250

$300

$350

$400

2007

2008

2009

2010

2011

Pre-tax, pre-credit-cost income

Note:  See Non-GAAP reconciliation on pages 39 - 41.

5

Regulatory Capital Ratios

--

Regulatory capital ratios remains strong…

7.19%

6.39%

6.19%

9.39%

9.24%

9.12%

9.61%

9.87%

10.07%

9.31%

8.95%

13.67%

12.06%

11.68%

17.98%

17.20%

16.87%

18.55%

20.51%

19.73%

17.64%

16.64%

0.00%

5.00%

10.00%

15.00%

20.00%

Jun-09

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Tier 1 (Core) Capital Ratio

Total Risk Based Capital Ratio

6

Full Income Statement

Totals may not foot due to rounding

($ in millions, except per share data)

Q4 2011

Q3 2011

Q4 2010

Net Interest Income

$75.9

$65.6

$66.1

Provision for Loan Losses

63.5

36.7

225.4

Net Interest Income after Provision

12.3

28.9

(159.2)

Non-interest Income

118.6

112.6

136.5

Non-interest Expense

205.8

150.7

162.5

Net Earnings (before tax provision)

(74.9)

(9.2)

(185.3)

Provision for Income Taxes

0.3

0.3

2.1

Net Earnings (before preferred dividends)

(75.1)

(9.5)

(187.4)

Preferred Dividends

(3.0)

(4.7)

(4.7)

Net Earnings

($78.2)

($14.2)

($192.1)

Weighted average common shares outstanding

$555.6

$554.8

$361.0

Diluted Loss per Share

($0.14)

($0.03)

($0.64)

7

Select Balance Sheet Items

Totals may not foot due to rounding

($ in millions)

Q4 2011

Q3 2011

Q4 2010

Total assets

$13,637.5

$13,734.0

$13,643.5

Cash and interest earning deposits

$731.1

$902.8

$953.5

First mortgage and construction loans

3,749.8

3,828.1

3,792.7

Second mortgage loans

138.9

146.5

174.8

Commercial real estate loans

1,243.0

1,268.9

1,250.3

Warehouse loans

1,173.9

995.7

720.8

Consumer lending (including HELOC and other)

289.6

305.9

358.0

Commercial and Industrial

330.1

234.1

8.9

Commercial lease financing

113.3

42.5

-

Investment loan portfolio

$7,038.6

$6,821.7

$6,305.5

Loans held for sale

$1,800.9

$2,080.9

$2,585.2

Loans repurchased with government guarantees

1,899.3

1,746.0

1,674.8

Securities classified as trading

313.4

312.8

160.8

Securities classified as available for sale

481.4

521.3

475.2

Mortgage servicing rights

510.5

437.3

580.3

8

Non-GAAP Reconciliation

Totals may not foot due to rounding

$ in millions

Three Months Ended

Q4 2011

Q3 2011

Q2 2011

Q1 2011

Q4 2010

Loss before tax provision and dividends

($74.9)

($9.2)

($69.9)

($26.7)

($185.3)

Add back:

   Provision for loan losses

63.5

36.7

48.4

28.3

225.4

   Asset resolution

32.4

34.5

23.3

38.1

41.8

   Other than temporary impairment on investments AFS

7.1

1.3

15.6

0.0

1.3

   Representation and warranty reserve

69.3

39.0

21.4

20.4

10.3

   Write down of residual interests

0.8

0.2

2.3

2.4

(3.8)

          Total credit related costs:

173.2

111.7

110.9

89.2

275.0

Pre-tax, pre credit-cost income

$98.3

$102.5

$41.0

$62.5

$89.7

$ in millions

For the Years Ended

2007

2008

2009

2010

2011

Loss before tax provision and dividends

($58.8)

($423.4)

($441.7)

($372.7)

($180.7)

Add back:

   Provision for loan losses

88.3

344.0

504.4

426.4

176.9

   Asset resolution

10.5

46.2

104.1

161.3

128.3

   Other than temporary impairment on investments AFS

2.8

62.4

20.7

5.0

24.0

   Representation and warranty reserve

3.7

17.0

75.6

61.5

150.1

   Write down of residual interests

6.8

24.6

82.9

9.3

5.7

          Total credit related costs:

112.1

494.2

787.7

663.5

485.0

Pre-tax, pre credit-cost income

$53.2

$70.8

$346.1

$290.8

$304.3

Non-GAAP Reconciliation

(Dollars in millions)

9

Non-GAAP Reconciliation

Totals may not foot due to rounding

$ in millions

12/31/2011

9/30/2011

12/31/2010

Non performing assets

603.1

$             

558.3

$             

498.0

$             

Tier One Capital

1,215.2

$         

1,273.9

$         

1,306.1

$         

Allowance for Loan Losses

318.0

$             

282.0

$             

274.0

$             

Tier One Capital + Allowance for Loan Losses

1,533.2

$         

1,555.9

$         

1,580.1

$         

Nonperforming assets / Tier One Capital + Allowance for

Loan Losses

39.34%

35.88%

31.52%

Non-GAAP Reconciliation

(Dollars in millions)