New York Community Bancorp is making significant cuts as part of its efforts to regain financial stability. On Friday, the bank announced it will be laying off 700 employees at its Flagstar unit, representing 8% of its workforce. This move comes as the firm looks to navigate the challenges it has faced since receiving a substantial capital injection from investors earlier this year. Following these layoffs, the bank plans to implement an additional reduction of 1,200 jobs once it completes the sale of certain business segments in 2024.
In Friday afternoon trading, shares of NYCB, based in Hicksville, New York, saw a minor decline of less than 1%, settling at $12.30 each. Earlier this year, the bank experienced a dramatic decline in its stock value, with shares plunging over 80%. In March, it secured more than $1 billion in funding from a group of investors as part of its recovery efforts.
The financial turmoil at NYCB has been attributed to weaknesses in the commercial real estate sector and challenges stemming from its acquisition of a troubled bank. The rescued bank brought in four new members to its board of directors, including Steven Mnuchin, who was previously the U.S. Treasury Secretary under Donald Trump, and Joseph Otting, named the bank’s new CEO.
The deal provided NYCB with significant investment commitments, including $450 million from Mnuchin’s Liberty Strategic Capital, $250 million from Hudson Bay Capital, and $200 million from Reverence Capital Partners. Additional funding from other institutional investors and NYCB’s management brought the total raised to over $1 billion.
NYCB made headlines last year when it acquired the assets of Signature Bank for $2.7 billion in an auction held on March 19, a bank that collapsed amid a broader crisis in the financial sector, which also saw Silicon Valley Bank fail due to a bank run. The rapid expansion following this acquisition placed NYCB under closer regulatory scrutiny, posing further challenges for the bank as it works to rebuild trust with both depositors and investors. The firm has indicated it is taking steps to manage the integration of Signature Bank’s assets while addressing the difficulties linked to its commercial real estate loans, which resulted in an unexpected loss for the recent quarter and raised alarms among stakeholders.