Flagstar Bank has announced the layoff of some 700 staffers, with another 1,200 workforce cuts on the horizon after the embattled bank completes the sale of its mortgage servicing and third-party origination (TPO) business lines to Mr. Cooper.
New York Community Bancorp (NYCB), the parent company of Flagstar after acquiring the latter in 2021 for $2.6 billion, announced the reduction as part of a “strategic transformation plan,” aimed at integrating Flagstar and two other banks it acquired into its business model.
The initial cut of 700 workers represents roughly 8% of Flagstar’s personnel. A statement from the bank said that Mr. Cooper’s purchase of its servicing and TPO operations is slated to close sometime in the fourth quarter, whereupon the second reduction will take place. The majority of those employees, according to Flagstar, will be offered the opportunity to transfer to Mr. Cooper.
“While these strategic actions involve difficult decisions, including impacts on jobs, we believe they are essential for strengthening our financial foundation and building a more agile, competitive company. This will enable us to focus on strategic investments in other areas and better serve our clients and shareholders, ensuring long-term sustainability and profitability,” said CEO Joseph Otting.
“These reductions will not impact our service or progress; in many cases, roles were similar or duplicative. By right-sizing our team after bringing three banks together, we are optimizing our operations to move forward with strength and clarity,” he added.
NYCB also announced a rebrand earlier this week, officially changing the entire company’s name to Flagstar Financial. The bank had already completed a rebrand to Flagstar for its systems and retail branch network in February; now, the company will also trade under the Flagstar moniker, eschewing its previous NYCB ticker symbol on the New York Stock Exchange for a new one, FLG, effective Oct. 28.
The cuts are the latest development during a turbulent 2024 for Flagstar and NYCB. NYCB had been perceived as having a position of strength just last year by investors and observers, having acquired $38 billion in assets (and assumed $36 billion in liabilities) from Signature Bank after the regional depository failed during the regional banking crisis. But NYCB announced a dividend cut and an unexpected loss in January, with Moody’s downgrading its long-term issuer rating just a month later. Some $5 million in warehouse loans were offloaded to Chase in May, and the asset sale to Mr. Cooper was announced in July.
