Bank lays off 600 employees
A statewide bank said Thursday that it has laid off approximately 600 employees — many of them tied to the mortgage industry.
The layoffs at Flagstar Bank are occurring across the organization, mostly at its Troy headquarters, and layoffs in West Michigan have been extremely minimal, said Susan Cherry-Bergesen, a Flagstar Bank spokesperson.
Cherry-Bergesen said that 40-50 percent of those affected are related to the bank’s mortgage origination business and the rest are due to operational efficiencies.
Flagstar Bank, the largest Michigan-based bank, does plan to provide employees with the maximum amount of severance pay as permitted, according to Cherry-Bergesen.
It is also providing everyone affected with outplacement services and anything else it can do to help ease the transition.
The bank said the layoffs are part of an effort to reduce expenses in light of the current operating environment and consistent with its previously communicated strategy of optimizing its cost structure across all business lines.
Flagstar Bank expects the reduction in staff to impact the company by generating annualized cost savings of approximately $40 million, when fully implemented by the end of the first quarter of 2014.
The company also expects to incur a pre-tax charge of approximately $5.2 million related to the restructuring.
"In 2013, we made important progress in resolving certain legacy issues, and we are now focused on further strengthening our financial and operational foundation," said Alessandro DiNello, Flagstar Bank president and CEO. "We are committed to being a highly efficient and best-in-class operator in each of our businesses, and this restructuring will align our infrastructure with today's business environment, including the significantly reduced mortgage origination market.
“The decision to downsize our workforce was not made lightly, but is a necessary step on the path to achieving the company's long-term goals. We appreciate the many contributions of our dedicated employees, and we remain committed to community banking in Michigan and mortgage origination and servicing nationally. These organizational changes will have no impact on our clients."
Flagstar Bank operates more than 100 banks in the state and reported $11.8 billion in total assets, as of Sept. 30, 2013.