HICKSVILLE, N.Y. - Flagstar Bank, N.A., a subsidiary of Flagstar Financial, Inc. (NYSE: FLG), has finalized the sale of its mortgage servicing and third-party origination business to Mr. Cooper Group Inc. for $1.3 billion in cash. This transaction, which was completed today, is set to bolster the bank's Common Equity Tier 1 (CET1) capital ratio by about 60 basis points, based on a proforma calculation as of September 30, 2024.
Joseph M. Otting, Chairman, President, and CEO of Flagstar, remarked on the closure of the deal, highlighting the bank's ongoing strategy to streamline its business model. Otting emphasized the bank's intent to focus on its core areas of Retail Banking, Commercial and Private Banking, and Commercial Real Estate lending. Despite the sale, Flagstar Bank will continue to offer residential mortgage products through its retail origination channels and the Private Bank, catering specifically to branch and private banking clientele.
Flagstar Financial, Inc., headquartered in Hicksville, New York, stands as one of the largest regional banks in the country, boasting assets of $114.4 billion and a robust network of over 400 branches as of September 30, 2024. The bank has a significant presence across the Northeast and Midwest, with strategic locations in burgeoning markets on the Southeast and West Coast. Additionally, it operates around 90 private banking teams serving high-net-worth individuals and their businesses in major cities across the metropolitan New York City area and the West Coast.
The completion of this sale marks a significant step in Flagstar's evolution towards becoming a focused regional bank. The deal is part of a broader strategic plan that has seen the company undergo significant changes, including the merger with Flagstar Bancorp (NYSE:FBC), Inc. on December 1, 2022, and the acquisition of substantial parts of the former Signature Bank (OTC:SBNY) in an FDIC-assisted transaction.
This press release statement contains forward-looking statements, which involve certain risks and uncertainties that could cause actual results to differ materially from those projected. These statements are based on the company's current expectations and are not guarantees of future performance. Investors are cautioned to consider these risks and uncertainties when making decisions.
The information provided here is based on a press release statement from Flagstar Financial, Inc.
In other recent news, Flagstar Bank, a subsidiary of Flagstar Financial, has announced significant strategic changes. The bank has appointed Christopher Higgins as its Chief Information Officer and Rich Martin as the Head of Credit Review. These appointments are part of the bank's ongoing efforts to enhance its technology innovation and risk management oversight.
In parallel, New York Community Bancorp (NYSE:FLG), which is rebranding to Flagstar Financial, reported key developments in its third quarter 2024 earnings call. The bank revealed a strategic shift towards becoming a diversified regional bank, with a substantial increase in retail and private banking deposits. Despite a net loss for the quarter, the bank's management remains confident in their strategy to rebalance the portfolio and achieve growth in future years.
The bank is also preparing for challenges, including increased loan loss provisions, estimated to rise to $1.1 billion to $1.2 billion for 2024. Furthermore, the bank is implementing a significant expense reduction initiative expected to save $200 million annually. These developments are part of the bank's recent strategic changes as it moves towards becoming a diversified regional bank under its new name, Flagstar Financial.
InvestingPro Insights
As Flagstar Bank completes the sale of its mortgage servicing and third-party origination business, investors should consider some key financial metrics and insights from InvestingPro that shed light on the company's current position and future outlook.
According to InvestingPro data, Flagstar Financial's market capitalization stands at $4.3 billion, reflecting the market's valuation of the company following its strategic moves. The company's revenue for the last twelve months as of Q3 2024 was $1.427 billion, with a significant revenue decline of 48.45% over the same period. This decline aligns with the company's strategic shift and divestment of certain business segments.
An InvestingPro Tip notes that 9 analysts have revised their earnings downwards for the upcoming period, which may be a reflection of the anticipated impact of the recent sale and the company's ongoing transformation. Additionally, another InvestingPro Tip indicates that Flagstar has maintained dividend payments for 31 consecutive years, showcasing a commitment to shareholder returns despite the current challenges.
It's worth noting that InvestingPro offers 7 additional tips for Flagstar Financial, providing investors with a more comprehensive analysis of the company's financial health and prospects. These insights can be particularly valuable as the company refocuses on its core banking operations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.