After racking up an $845 million loss in 2024, Flagstar Financial (FLG) is in cost-cutting mode, but the recent wave of branch closures isn't as much of a crisis as pundits make it out to be.
The bank, formed from last year’s merger between New York Community Bank and Flagstar Bank, is shutting down roughly 15% of its physical locations in 2025.
The move is part of a broader three-phase restructuring plan aimed at reversing losses and adapting to declining foot traffic.
According to filings with the Office of the Comptroller of the Currency (OCC), Flagstar has already closed or plans to close 28 branches between March and April. Eight more Midwest locations were added to the list this week.
While branch closures often spark concern, Flagstar’s cost-cutting is far from unusual.
In just one week — March 16 through 22 — 32 bank branches shut down across the U.S., including locations from Wells Fargo, JPMorgan, PNC, and Bank of America, OCC data shows.
New branch openings are also slowing. Research from S&P Global found the number of new U.S. banks declined again last year — underscoring the long-term shift away from brick-and-mortar banking.
Put another way, Flagstar’s spree of branch closures look more like a reflection of industry-wide shifts than a red flag unique to the company.
FLG stock defies the noise
Despite headlines painting a gloomy picture, Wall Street appears to be on board with Flagstar’s reset.
FLG shares are up more than 12% year-to-date, outpacing both the S&P 500, down over 10%, and the S&P 500 Financials Sector, which has slipped nearly 4%.
Analysts at D.A. Davidson see the stock as undervalued. “We are more confident management has gotten their arms around the credit issues,” wrote senior analyst Peter J. Winter, pointing to improving metrics.
In its latest quarter, Flagstar grew deposits by 3%, cut wholesale borrowings, and raised its tier-one capital ratio — a yardstick measure of financial health in banking — to 11.9%.
It’s too early to call it a full turnaround, but 2025 is shaping up to be a steadier year for Flagstar, which may explain why Wall Street hasn’t flinched at the closure news and is instead betting on a rebound.
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