New York Community Bancorp's delayed acquisition of Flagstar Bancorp is one step closer to being finalized now that the Office of the Comptroller of the Currency has approved the deal.
But the deadline for closing the $2.6 billion proposed transaction — which has already been
The OCC's approval, which was announced by the two banks Friday, is subject to a 15-day waiting period, which means the deal can't be completed until at least Nov. 11.
And it leaves one crucial thumbs-up left to obtain — that of the Federal Reserve. With the latest transaction timeline
The companies said they don't expect Fed approval to include any sort of waiting period.
New York Community, a $63 billion-asset company headquartered on Long Island, has been trying to buy Troy, Michigan-based Flagstar for the past 18 months as part of CEO Thomas Cangemi's plan to accelerate growth.
Cangemi, who was just four months into his
Flagstar is one of the largest mortgage warehouse lenders in the country. For New York Community, part of the appeal of Flagstar is the opportunity to cross-sell products and services, in part by encouraging Flagstar's warehouse customers to take out commercial loans and keep their lower-cost deposits at New York Community.
But it's taking longer than expected to get regulatory approval. Under the original structure of the acquisition, state-chartered New York Community needed the go-ahead from three agencies: the Fed, the Federal Deposit Insurance Corp. and the New York State Department of Financial Services.
The state Department of Financial Services has said it approved the deal on April 26, two days after the original transaction deadline of April 24. On April 27, still lacking Fed and FDIC approvals, New York Community and Flagstar announced they were changing their regulatory strategy so that the combined entity would be a national, not a state-chartered, bank.
Under the new plan, Flagstar Bank, the federally chartered state savings bank subsidiary of Flagstar Bancorp, would convert into a national banking association. After the charter conversion, New York Community Bank, the New York state-chartered savings bank arm of New York Community, would merge into the new national bank, which would be the surviving bank.
The revamped structure meant the companies needed approval from the Fed and the OCC, not the FDIC or the state Department of Financial Services as originally planned. The OCC is currently the primary regulator of Flagstar, while for now the FDIC is the primary federal regulator of New York Community.
Executives at New York Community and Flagstar have not publicly commented on whether there was a holdup at the FDIC that led to the banks' decision to change their regulatory strategy.
When the new plan was announced, one analyst
But Capitol Forum reported on Oct. 18 that the FDIC wasn't going to approve the acquisition because the agency was concerned about alleged fair lending issues at Flagstar. The report, which cited unnamed sources, came just 12 days after Capitol Forum reported that the Department of Justice is considering bringing a racial discrimination case against Flagstar for allegedly charging Black customers more for home loans than other borrowers.
Neither bank has commented on the reports.
If the Flagstar acquisition reaches the finish line, it will be New York Community's first whole-bank acquisition since 2007. The company tried to buy Astoria Financial in 2015, but the deal was
