Flagstar Financial, one of the largest banks in the U.S., has officially entered the third phase of its branch closure plan, as it prepares to permanently shut 60 locations in 2025. This move comes after a merger with New York Community Bank and a subsequent name change to Flagstar Financial. The bank is restructuring its operations to reduce costs and streamline its business. This will affect Americans across nine states where Flagstar operates.
The Three-Phase Closure Plan
In 2025, Flagstar will close 60 branches in total as part of its ongoing restructuring plan. This closure effort began earlier in the year and is now entering its final phase.
The first wave, which took place in March and April, saw 28 branches close. The second wave, on May 30, added another 24 closures. The final group of branches is set to shut by the end of 2025, although no exact timeline has been provided for these last locations.
Impact on Flagstar’s Operations and the U.S. Banking Industry
Flagstar Financial operates in Arizona, California, Florida, Indiana, Michigan, New Jersey, New York, Ohio, and Wisconsin. The bank, with assets around $100 billion, has been a significant player in the U.S. banking sector. However, the closures, which affect customers across these nine states, reflect a broader trend in the banking industry, where several banks are following similar cost-cutting measures.
In April 2025, Flagstar topped a list of bank closures, with 16 of the total 42 closures recorded in the first part of the month. This trend of branch closures has been seen across the industry, as banks adjust to changing consumer behavior and the rise of digital banking.
The Reason Behind the Closures: Cost Cutting and Financial Losses
The main reason for the branch closures is to reduce operational costs, particularly rent, maintenance, and utilities. Flagstar’s decision to close 60 branches is part of an effort to recover from financial losses, as the bank reported a net loss of $845 million in 2024.
Joseph Otting, CEO of Flagstar Financial, stated that the bank expects to return to profitability by the end of 2025. The CEO is optimistic that these cost-cutting measures, including the branch closures, will help the company reach its goal of consistent profitability. Flagstar’s stock price has already seen a positive rise since the closure announcement, with shares increasing from $9 in January to nearly $12 by the end of the month.
Flagstar’s Path to Recovery
Flagstar Financial’s decision to close 60 branches across nine states is a clear indication of its ongoing efforts to streamline operations and reduce costs. While this move will certainly impact many customers, it’s part of a larger strategy aimed at helping the bank recover from significant financial losses. With expectations of profitability in the near future, Flagstar is determined to turn around its financial performance, as evidenced by the increase in its stock price following the closure announcement.
