MJP –
A popular US bank is now cutting nearly 2,000 roles after initiating the sale of its mortgage servicing and third-party origination business.
New York Community Bank’s Flagstar has announced plans to reduce its workforce by 1,900 positions, as revealed on Thursday.
Approximately 700 employees, representing 8% of the bank’s total staff, will be laid off in alignment with a strategy previously outlined by NYCB.
The remaining 1,200 employees are being affected as NYCB prepares to finalize the sale of its mortgage servicing and third-party origination business to mortgage firm Mr. Cooper, which is expected to close this quarter.
In a statement, NYCB CEO Joseph Otting expressed empathy for those impacted and thanked employees for their contributions.
He noted that most of the 1,200 employees will have the option to transfer to Mr. Cooper to ensure a smooth transition.
Regarding the 700 layoffs, the bank stated that these cuts would not affect its service or progress, as many of the roles were similar or redundant.
Buffalo Woman, 54, Arrested After Alleged Bank Robbery in Cheektowaga
NYCB emphasized that it is integrating operations across Flagstar, Signature, and NYCB.
“By right-sizing our team after merging three banks, we are optimizing our operations to move forward with strength and clarity,” Otting explained.
He acknowledged the difficulty of these decisions but emphasized their necessity for strengthening the bank’s financial foundation and enhancing its competitiveness.
The Office of the Comptroller of the Currency (OCC) and the Federal Reserve approved NYCB’s acquisition of Flagstar in late 2022.
Shortly after, the bank also took on assets from the failed Signature Bank, pushing it beyond the $100 billion asset threshold, which subjects it to stricter regulatory scrutiny.
NYCB faced unexpected challenges, including a $252 million loss in January tied to its exposure to commercial real estate, which led to a 70% cut in its quarterly dividend.
Big Crash! TD Bank Hit with $2.6 Billion Penalty, Impacting Bottom Line
This news caused a significant drop in the bank’s share price, which worsened when it took a $2.4 billion impairment charge and replaced its CEO.
A turnaround began with a $1.05 billion capital investment in March from a group of investors led by former Treasury Secretary Steven Mnuchin, who subsequently appointed Otting as CEO.
In his recent statement, Otting highlighted the “significant progress” made this year, including improvements in management, operational efficiency, and credit oversight.
Looking ahead, NYCB is set to announce its third-quarter earnings on October 25, the same day it will officially adopt Flagstar Financial as its new brand name and change its ticker symbol to FLG, effective October 28.
However, not all observers are optimistic about the bank’s trajectory.
Senators Elizabeth Warren and Richard Blumenthal criticized the OCC in April for approving the NYCB-Flagstar merger, claiming the agency failed to conduct adequate oversight.
The merger, first proposed in April 2021, faced challenges, particularly from the Federal Deposit Insurance Corporation (FDIC).
A year later, the banks shifted their strategy, seeking to transition Flagstar’s federally chartered state savings bank into a national banking association, bypassing FDIC approval.
In Thursday’s announcement, NYCB suggested that further reductions may be on the horizon, stating it would continue to seek opportunities to enhance efficiency and create a more resilient future, according to Otting.
