New York Community Bancorp Inc. (NYCB) and Flagstar Bancorp have entered into a merger agreement under which the two companies will combine in an all stock merger. The implied total transaction value based on closing prices as of April 23, 2021 is approximately $2.6 billion. The transaction is expected to close by the end of 2021.
The new company will have in excess of $87 billion in assets, and operate nearly 400 traditional branches in nine states, and 87 loan production offices across 28 states. The company’s headquarters will be based on Long Island, N.Y., with regional headquarters in Troy, Michigan, which will house Flagstar's mortgage operations. The combined company will maintain the Flagstar Bank brand in the Midwest, as Flagstar's mortgage division will also maintain the Flagstar brand. Other states will retain their current branding.
Thomas R. Cangemi will serve as President and CEO of the combined company, and Alessandro (Sandro) P. DiNello, Flagstar's current President and CEO, will become Non-Executive Chairman, with John Pinto serving as Senior EVP and CFO of the combined company. Lee M. Smith will continue to lead the mortgage division as Senior EVP and President of Mortgage, and Reginald Davis will head up consumer and commercial banking, and serve as Senior EVP and President of Banking. The remaining key roles will combine the best talent from both companies. The Board of Directors will be comprised of 12 directors–eight from NYCB, and four from Flagstar.
“The combination of our two companies will allow each of us to continue our transformation to a full-service commercial bank by broadening our product offerings while expanding our geographic reach with no branch overlap,” said Cangemi. “Over the past several months, I have gotten to know the board and management team of Flagstar, and found that we share the same values and commitment to our employees, customers, and the communities which we serve.”
Flagstar produced mortgage revenue of $227 million in the first quarter of 2021, as fallout adjusted locks remained strong.
"Our mortgage team delivered another strong quarter, posting mortgage revenues of $227 million,” said DiNello. “The team leveraged our multi-channel mortgage platform to grow fallout adjusted locks by 3%. We were pleased with how well our margins held up, averaging 1.84% for the quarter. Our results demonstrate the team's ability to remain opportunistic and execute skillfully in an operating environment that is ever-changing."
Flagstar closed Q1 servicing and subservicing more than 1.1 million loans, up 6% from the prior quarter.
"Tom is a young, dynamic CEO who shares my vision,” said DiNello. “Together, his team and the Flagstar team will grow our combined businesses smartly and safely. I'm immensely proud of what we have achieved at Flagstar and can't wait to see all we will accomplish as we supercharge our respective businesses through this transaction."