Flagstar’s board of directors approved a one-year extension for CEO Joseph Otting, putting the former comptroller of the currency at the helm of the bank until March 2028, the lender said Monday.

Flagstar also unveiled what could be a roadmap to succession, naming CFO Lee Smith and Richard Raffetto, previously president of commercial and private banking, as co-presidents and co-chief operating officers of the bank, effective immediately.

Raffetto will also become chief banking officer and lead Flagstar’s commercial lending and relationship banking verticals, including commercial real estate, consumer banking and private banking, the bank said.

Smith, meanwhile, will gain oversight of the bank’s human resources, information technology and operations. He’ll remain CFO, overseeing accounting and finance, treasury, investor relations, mortgage banking, corporate real estate and vendor management, the bank said.

"This transition is a natural next step in the long-term maturity of Flagstar and capitalizes on the depth of talent we have built across our organization," said Otting, who relinquishes his role as the bank’s president but remains executive chair, in addition to CEO.

But Otting will receive a compensation boost. His base salary will increase to $1.4 million in March 2027, the bank said in a Securities and Exchange Commission filing Monday. That’s up from $1.25 million in 2025, according to Flagstar’s April proxy statement. He’ll also have a target cash bonus of up to $2.25 million for 2026 and $2.5 million for 2027, the bank said.

Otting on Monday also received a $10 million restricted stock award, set to vest in equal quarterly installments between March 2027 and March 2028. And he’ll be entitled to receive an amount equal to his base salary and bonus if he agrees to post-employment restrictions, Flagstar said.

The bank announced other executive moves Monday, too.

Bao Nguyen, Flagstar’s general counsel, will become chief legal officer, the bank said. He’ll remain chief of staff, a responsibility he’d previously held. Nguyen will also become chief operating officer for consumer and retail banking, though Reggie Davis will continue to lead Flagstar’s consumer and retail banking business.

Peter Sullivan will succeed Nguyen as general counsel and assume day-to-day management of Flagstar’s legal department, the bank said. Sullivan, an alum of the Office of the Comptroller of the Currency and PNC, joined Flagstar in 2024 and had been serving as the bank’s chief regulatory counsel, according to an executive bio from the bank.

Sydney Menefee, Flagstar’s senior director for strategic capital and financial management, will become chief audit executive by the end of June, the bank said. Like Otting and Sullivan, she is a veteran of the OCC, according to her LinkedIn profile.

The executive moves come after Flagstar last month posted its second consecutive profitable quarter. The bank reported $21 million in net income between January and March. Flagstar, by comparison, notched a $100 million loss in the same quarter a year earlier.

Flagstar’s profitability marks a contrast to its two years in the red. A surprise $252 million loss in January 2024 sent the bank’s stock spiraling. It shed 84% of its value in little over a month, until investors led by former Treasury Secretary Steven Mnuchin rescued Flagstar – then known primarily as New York Community Bank – with a $1.05 billion cash infusion and installed Otting as CEO.

Otting’s extension “reflects the Board's confidence in his leadership, the Bank's return to profitability, and its commitment to ensuring stability and continuity,” Flagstar said Monday.

Otting told American Banker last year he expected to stay with the bank for five years in all. 

"I think by the end of 2027, we'll be a really strong-performing bank and then the board at that point will have to make a determination … what kind of skills, talents and experience would they like to have run the bank going forward," he told the publication.

The bank counted $87.1 billion in assets as of March and intends to re-cross the $100 billion threshold sometime in 2027, Smith said in January.