Flagstar Bank

Flagstar Bank is an American commercial bank headquartered in Troy, Michigan. A wholly owned subsidiary of New York Community Bank, Flagstar is one of the largest residential mortgage servicers in the United States, and was among the largest banks in the United States prior to its acquisition in 2022.

Flagstar Bancorp, Inc.
IndustryFinancial services
Founded
  • Flagstar Bancorp, Inc. - 1993 (1993)
  • (as FSSB Holding Corporation)
  • Flagstar Bank, FSB - 1987 (1987)
  • (as First Security Savings Bank, FSB)
Headquarters
Troy, Michigan
,
United States
Key people
  • John D. Lewis (Chairman)
  • Alessandro DiNello (President and CEO)
RevenueIncrease US$1.680 billion[1] (2020)
Increase US$704 million[1] (2020)
Increase US$538 million[1] (2020)
Total assetsIncrease US$31.038 billion[1] (2020)
Total equityIncrease US$2.201 billion[1] (2020)
Number of employees
3,938 (2018)
ParentNYCB (2022–present)
Websitewww.flagstar.com
Footnotes / references
[2]

History

First Security Savings Bank was founded as a federal savings bank in 1987. The chairman of the bank was Thomas J. Hammond. The initial branch focused on funding regional retail and wholesale mortgage operations.[3] A bank holding company, FSSB Holding Corporation was established in 1993. The following year, the company acquired Security Savings Bank, based in Jackson, Michigan. Two years later in 1996, the company adopted its current name, Flagstar Bank.[3]

In 1997, the company became a public company via an initial public offering.[4] It moved its stock listing from the NASDAQ to the New York Stock Exchange in 2001.[5]

During the financial crisis of 2007-2008, the company raised $1.6 billion in new capital with investments from MP Thrift Investments L.P., the Troubled Asset Relief Program (TARP), and public offerings.[6] The bank repaid all of the funds it received under TARP in August 2016.[7]

Flagstar effected 1:10 reverse stock splits in 2010 and 2012 to maintain its New York Stock Exchange listing.[8]

The U.S. Department of Treasury sold its preferred stock of Flagstar to private investors in 2013.[9]

In May 2013, Flagstar paid a $110 million settlement to MBIA.[10][11]

In June 2013, Flagstar reached a $105 million settlement with Assured Guaranty related to its RMBS.[12][13][14] Flagstar paid a $93.5-million settlement to Fannie Mae in November 2011,[15][16] and $8.9 million to Freddie Mac regarding its RMBS mortgage repurchase obligations in December 2013.[17][18][19] In September 2014, Flagstar agreed to pay $37.5 million to the Consumer Financial Protection Bureau.[20][21]

In 2013, the company sold a $1.3 billion commercial loan portfolio to CIT Group.[22]

Flagstar Bank was the jersey sponsor of the Detroit Pistons of the National Basketball Association for the 2017-18 NBA Season.[23]

In March 2018, the bank acquired 8 branches in San Bernardino County, California from Desert Community Bank.[24] The company also acquired a mortgage warehouse loan portfolio from Santander Bank.[25]

In December 2018, Flagstar acquired all 52 branches of Wells Fargo in Indiana, Michigan, and Ohio as well as four in Wisconsin.[26] However, numerous issues plagued Flagstar during the transfer, several of which were caused by its main website experiencing technical glitches.[27] Flagstar waived fees, added staff and published an email address where customers could send concerns to alleviate issues.[28] The bank said most issues were resolved by the end of the week.[29]

In January 2019, the company initiated a dividend.[30]

Merger

On April 26, 2021, New York Community Bancorp, Inc. (NYCB) announced the acquisition of Flagstar in an all stock strategic merger.[31][32] The acquisition was completed on December 1, 2022.[33]

On March 19, 2023, New York Community Bancorp's Flagstar Bank took on nearly all of Signature Bridge bank's deposits. Signature Bank was closed by regulators on March 12, 2023. Signature Bank's closure became the third largest bank failure in U.S. history. The agreement did not include about $4 billion linked to Signature's crypto business, which the FDIC said it intended to deal with directly. The 40 former branches of Signature Bank operated under Flagstar Bank as of Monday, March 20, 2023. "Depositors of Signature Bridge Bank, N.A., other than depositors related to the digital banking business, will automatically become depositors of the assuming institution," the FDIC said in a statement. The FDIC said Flagstar would also buy some of Signature's loan portfolios.[34]

Community

In September 2016, Flagstar Bank announced plans for a $10 million, 5-year economic development program for Pontiac, Michigan. The initiative is aimed at helping revitalize the Oakland County city. The program includes $5 million for home mortgages including a customized home loan product for Pontiac residents, $2.5 million for small businesses and start-ups, $1.5 million for the previously announced naming rights of the Flagstar Strand Theatre for the Performing Arts along with an investment of $1 million for financial literacy in the community.[35]

Management

Thomas J. Hammond, founder of Flagstar, served as chairman of Flagstar Bank and Flagstar Bancorp. Mark Hammond became president of the bank in 1995 and CEO in 2002.

In 2009, former CEO of Sovereign Bancorp Joseph P. Campanelli was named chairman, president, and CEO of Flagstar Bank and Flagstar Bancorp.[5][36]

In 2012, Michael J. Tierney, previously executive vice president and managing director of personal financial services at Flagstar, became president and CEO of the organizations.[37] John D. Lewis, former vice chairman and director of Comerica, was named chairman.[38] Alessandro P. DiNello became president, CEO and director of the organizations in 2013.[39]

Controversy

On February 24, 2012, the United States Department of Justice filed a complaint in the United States District Court for the Southern District of New York against the bank, alleging that it had improperly approved thousands of residential home mortgage loans for government insurance. In February 2013, a U.S. District court in Manhattan found that the bank had materially breached contracts specifying the quality and characteristics of loans to be packaged into the securities.[40]

References
  1. "Flagstar BanCorp, Inc. 2020 Annual Report Results" (PDF). 31 December 2020. Retrieved 2021-06-09.
  2. "Flagstar Bancorp, Inc. 2018 Form 10-K Annual Report". U.S. Securities and Exchange Commission.
  3. "Flagstar Bank: Troy Home To Largest bank Headquartered in Michigan". Troy Historic Village. February 10, 2015.
  4. "Flagstar Bancorp, Inc". NASDAQ.
  5. Szczesny, Joseph (October 24, 2009). "Head of Flagstar steps down". The Oakland Press.
  6. Henderson, Tom (February 27, 2011). "More biz lending for Flagstar: President for local region hired". Crain Communications.
  7. "Flagstar completes repayment of TARP funds" (Press release). PR Newswire. August 1, 2016.
  8. Henderson, Tom (February 10, 2014). "Retrenched bank putting legacy issues behind". Crain Communications.
  9. Cumming, Chris (March 11, 2013). "Treasury to Auction Stakes in Flagstar, Six Other Banks". American Banker.
  10. Henderson, Tom (May 6, 2013). "Flagstar Bank agrees to pay $110 million to settle lawsuit". Crain Communications.
  11. Henderson, Tom (February 11, 2013). "Judgement puts Flagstar earnings in the red". Crain Communications.
  12. Browdie, Brian (June 24, 2013). "Flagstar Settles RMBS Lawsuit for $105 Million". American Banker.
  13. Raymond, Nate (June 21, 2013). "Flagstar Bancorp to pay Assured Guaranty $105 mln settlement". Reuters.
  14. "Flagstar To Pay $105M To End Assured's MBS Suit". Law360. June 21, 2013.
  15. Todd, Sarah (November 7, 2013). "Flagstar Settles Fannie Mae Claims for $94 Million". American Banker.
  16. Henderson, Tom (November 7, 2013). "Flagstar OKs $121.5 million settlement with Fannie Mae for defaulted loans". Crain Communications.
  17. "Flagstar Reaches Settlement with Freddie Mac over Mortgage Repurchase Obligations" (Press release). PR Newswire. December 30, 2013.
  18. "Flagstar to pay Freddie Mac $8.9 million for mortgage repurchase obligations". Crain Communications. December 30, 2013.
  19. Todd, Sarah (December 30, 2013). "Flagstar to Pay Freddie Mac $8.9 Million". American Banker.
  20. "CFPB Takes Action Against Flagstar Bank for Violating New Mortgage Servicing Rules" (Press release). Consumer Financial Protection Bureau. September 29, 2014.
  21. Silver-Greenberg, Jessica (September 29, 2014). "Consumer Agency Penalizes Flagstar Bank Over Mortgage Servicing". The New York Times.
  22. Brown, Matthew L. (January 3, 2013). "Flagstar to sell $1.3B commercial loan portfolio to CIT Group". American City Business Journals.
  23. "Detroit Pistons and Flagstar Bank Announce Historic Jersey Partnership" (Press release). National Basketball Association. July 26, 2017.
  24. "Flagstar Closes on Acquisition of Desert Community Bank Branches from East West Bank" (Press release). PR Newswire. March 19, 2018.
  25. "Flagstar Closes on Acquisition of Mortgage Warehouse Portfolio from Santander Bank" (Press release). PR Newswire. March 12, 2018.
  26. "Flagstar Closes on Acquisition of 52 Midwest Branches from Wells Fargo Bank" (Press release). PR Newswire. August 1, 2016.
  27. Smith, Kelly Anne (December 3, 2018). "Flagstar customers angry after issues with switch from Wells Fargo". Bankrate.
  28. Smith, Kelly Anne (December 5, 2018). "Flagstar details Wells Fargo account transition snafu, will add staff, waive fees". Bankrate.
  29. "Flagstar Bank says last weekend's problems fixed". WANE-TV. December 4, 2018.
  30. "Flagstar Initiates Dividend and $50 Million Share Repurchase" (Press release). PR Newswire. January 30, 2019.
  31. "New York Community Bancorp, Inc. To Acquire Flagstar Bancorp, Inc. In An All Stock Strategic Merger". ir.mynycb.com. Retrieved 2021-04-28.
  32. "New York Community Bancorp, Inc. To Acquire Flagstar Bancorp, Inc. In An All Stock Strategic Merger". investors.flagstar.com. Retrieved 2021-04-28.
  33. "New York Community Bancorp, Inc. completes acquisition of Flagstar Bancorp, Inc". PR Newswire. Retrieved 2022-12-26.
  34. "Flagstar Bank to Assume Signature Bridge Bank Deposits, FDIC Says". The Wall Street Journal. March 19, 2023.
  35. Henderson, Tom (September 20, 2016). "Flagstar plans $10 economic development program for Pontiac". Crain Communications.
  36. Szczesny, Joseph (October 3, 2009). "Flagstar names new CEO". The Oakland Press.
  37. Henderson, Tom (October 2, 2012). "Flagstar exec Tierney succeeds Campanelli as president, CEO". Crain Communications.
  38. "Flagstar Appoints Michael J. Tierney as President" (Press release). PR Newswire. October 1, 2012.
  39. Henderson, Tom (May 17, 2013). "DiNello appointed CEO at Flagstar". Crain Communications.
  40. Raymond, Nate (February 5, 2013). "NY judge finds Flagstar liable for $90 mln in mortgage case". Reuters.

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