Struggling New York Community Bancorp said Friday that it was cutting 700 jobs at its Flagstar subsidiary as it tries to return to profitability after being rescued by investors earlier this year.
The bank said the cuts amount to 8% of its head count and that another 1,200 cuts would be implemented after it finalizes the sale of other parts of its business later in 2024.
Shares of Hicksville, New York-based NYCB fell less than 1% in afternoon trading Friday, to $12.30 each.
NYCB got a lifeline of more than $1 billion from a group of investors in March of this year its stock plunge by more than 80%.
The bank has been hammered by weakness in commercial real estate and growing pains resulting from its buyout of a distressed bank.
That cash infusion brought four new directors to NYCB’s board, including Steven Mnuchin, who served as U.S. Treasury secretary under President Donald Trump. Joseph Otting, a former comptroller of the currency, became the bank’s CEO.
Under the deal, NYCB was to get investments of $450 million from Mnuchin’s Liberty Strategic Capital, $250 million from Hudson Bay Capital and $200 million from Reverence Capital Partners. Cash from other institutional investors and some of the bank’s management took the total over $1 billion, the bank said in March.
NYCB was a relatively unknown bank until last year, when it bought the assets of Signature Bank at auction on March 19 for $2.7 billion. Signature was one of the banks that crumbled in last year’s mini-crisis for the industry, where a bank run also sped the collapse of Silicon Valley Bank.
The sudden increase in size for NYCB meant it had to face increased regulatory scrutiny. That’s been one of the challenges for the bank, which is trying to reassure depositors and investors that it can digest the purchase of Signature Bank while dealing with a struggling real-estate portfolio. Losses in loans tied to commercial real estate forced it to report a surprise loss for its latest quarter, which raised investors’ concern about the bank.
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