- The Office of the Comptroller of the Currency (OCC) has approved the merger between New York Community Bank (NYCB) and Flagstar Bank, NYCB announced Friday, leaving the Federal Reserve as the final regulatory hurdle the deal has to clear.
- The banks Friday also pushed the deadline for the deal’s closing from Oct. 31 to Dec. 31. The OCC stipulated that the merger can’t be consummated until Nov. 11, the banks said. Approval by the Fed does not come with a similar waiting period.
- NYCB CEO Thomas Cangemi was tight-lipped Wednesday on the status of the merger during his bank’s quarterly earnings call. "Let me be clear. … We're not going to speak specifically about the pending merger," he said. "However … we're very comfortable that this business combination is a powerful opportunity for these two companies to come together and build a new [company] that has good diversity, a tremendous [and] unique opportunity on the deposit side on funding and gives us an opportunity to transition from a thrift into a commercial banking enterprise.”
The OCC’s approval marks a successful transition of the surviving entity to a national bank charter from a state one. That also means the tie-up won’t need the approval of the Federal Deposit Insurance Corp. (FDIC).
The $2.6 billion merger, if approved by the Fed, would create an $88.4 billion-asset bank with 395 branches across nine states and a mortgage division composed of 81 retail lending offices in 26 states.
The timeline extension — to Dec. 31 — wouldn’t be the first associated with the deal. NYCB proposed acquiring Flagstar in April 2021, and originally expected the tie-up to close by the end of that year. However, the lengthy wait for regulatory approval pushed the expected close to April 2022 and October 2022.
With OCC approval in their pocket, NYCB and Flagstar now must wait for a green light from the Fed, which is notorious for its unhurried approval timeline. NYCB and Astoria Financial, which proposed a $2 billion tie-up in 2016, scrapped that deal over the central bank’s sluggish pace.
The Flagstar deal, then, would mark NYCB’s first acquisition since 2010.
Both NYCB and Flagstar put forth good-faith actions while awaiting a go-ahead from regulators, each dropping nonsufficient fund and overdraft fees in June. NYCB in January agreed to provide $28 billion in loans, investments and other financial support to communities of color, low- to moderate-income customers and small businesses, thus boosting its Community Reinvestment Act profile and smoothing the path toward approval.
Regulators, however, will also have taken note of Flagstar’s December data breach that resulted in the exposure of more than 1.5 million customers’ Social Security numbers. It took the bank six months to notify customers — not a good look, considering it marked the bank’s second data incident in less than two years, according to TechCrunch. Flagstar was one of many banks affected by the January 2021 Accellion file-sharing hack.