Sluggish Flagstar, NYCB merger deal clears major hurdle
More than 18 months after the planned merger was announced, Flagstar Bank and New York Community Bank on Friday received approval by the Office of the Comptroller of the Currency.
The depository banks, which first announced plans 19 months ago, extended their agreement to merge from Oct. 31 to Dec. 31, but still require the approval of the Federal Reserve.
Michigan-based Flagstar ranks among the biggest mortgage lenders in America, originating $23 billion in mortgages over the first nine months of the year, according to figures by Inside Mortgage Finance.
Like its competitors, Flagstar had a challenging third quarter production-wise. Mortgage rate volumes of $4.8 billion were down 32% from the second quarter and missed Wall Street’s estimates. The company’s mortgage gain-on-sale figures, however, improved to 67 basis points in the third quarter, up 29 basis points from the second quarter. The company said its secondary marketing performance improved.
If approved, the combination of NYCB and Flagstar would create one of the largest regional banks in the country, operating 395 branches across a nine-state territory, including the Northeast and the Midwest with exposure to high-growth markets in the Southeast and West Coast.
In a statement, Flagstar said that through its mortgage division, the combined company would operate nationally through 81 retail lending offices in 26 states and a wholesale network of approximately 3,000 third-party originators.
How to stay competitive with specialty mortgage products heading into 2023
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Presented by: Flagstar
The deal struck with New York Community Bank in spring of 2021 in a deal that called for an all-stock merger valued at the time at $2.6 billion. New York Community Bank is one of New York City’s largest multifamily lenders.
NYCB’s Thomas Cangemi will be president and CEO of the combined company and Sandro DiNello, currently the president and CEO of Flagstar, will become non-executive chairman. Lee Smith will continue to lead the mortgage division as senior executive vice president and president of mortgage. The Board of Directors will be comprised of 12 directors – eight from New York Community and four from Flagstar.