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New York City Banks to Reduce Employee Count by 1,900

Bank reduces workforce by approximately 700 employees, representing 8%, and plans to lay off an additional 1,200 workers upon the sale of its mortgage servicing and third-party origination business.

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New York City Banks to Reduce Employee Count by 1,900
New York City Banks to Reduce Employee Count by 1,900

New York City Banks to Reduce Employee Count by 1,900

New York Community Bank Announces Major Changes and Rebranding

New York Community Bank (NYCB) has announced a series of significant changes, including a rebranding, the sale of its mortgage servicing and third-party origination business, and a workforce reduction. The changes are set to take effect on October 25, 2024.

The bank, which will adopt Flagstar Financial as its new brand name, received a $1.05 billion capital infusion in March from investors led by former Treasury Secretary Steven Mnuchin. This infusion led to the installation of Otting, a former OCC chief, as CEO of the bank.

In a move aimed at streamlining its operations, NYCB will sell its mortgage servicing and third-party origination business to Mr. Cooper. As a result, 1,200 employees will leave the bank, but most of them will be offered the opportunity to transfer to Mr. Cooper. The remaining 700 employees will be cut, with the bank stating that these roles were similar or duplicative, and that the cuts will not impact NYCB's service or progress.

On the same day, the bank's ticker symbol will change to FLG as of the open of business Oct. 28, 2024. The bank will also further integrate Flagstar, Signature, and NYCB operations.

The proposed changes come after a challenging period for the bank. In January, an unexpected $252 million loss was incurred due to the bank's exposure to commercial real estate. This loss forced NYCB to cut its quarterly dividend by 70%. The bank's CEO was also replaced.

In response to these challenges, NYCB has hinted at potential future optimizations of its operations. The bank is likely to consider collaborations with institutional investors, strategic financial partners, or regional banks with complementary strengths. The focus would be on collaborations that enhance resilience, operational efficiency, and sustainable growth.

The Office of the Comptroller of the Currency and the Federal Reserve approved NYCB's acquisition of Flagstar in late 2022. The OCC approved the tie-up in October 2022, calling the charter change a "business decision." However, Senators Elizabeth Warren and Richard Blumenthal criticized the OCC in April for approving the NYCB-Flagstar merger.

The transaction is expected to close this quarter. NYCB also announced a reduction of 1,900 roles at its Flagstar subsidiary. The bank "will continue to pursue opportunities to optimize [its] operations and enhance efficiency, paving the way for a more resilient and successful future," as stated by CEO Otting.

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