When Rhode Island native Steven Issa was tapped in 2011 to lead Mich.-based Flagstar Bancorp Inc.’s move into New England, his local ties made the Ocean State a natural launching point.
But aside from renovations to a sixth-floor office in the Textron Building in Providence, it’s hard to gauge what kind of physical presence the company has has managed locally. Now it may be exiting the region entirely.
Flagstar earlier this month announced it is selling for an estimated $779 million its Northeast-based commercial loan portfolio to CIT Bank.
“This transaction is another step in renewing Flagstar’s focus on our community banking operation in Michigan and our national mortgage business,” Flagstar CEO Michael Tierney said in the release.
Senior analyst Christine Pratt of the Aite Group in Boston, which does research on technologies for the banking industry, last week said Flagstar’s direction looks pretty clear.
“My take on it is they opened a commercial loan office and now they sold their commercial loans for the region, so I think they’re moving out of the Rhode Island operation,” said Pratt. “They gathered commercial real estate and equipment leasing loans and both of those types of loans are tied to construction, which we know is not flourishing.”
Flagstar has declined to comment on what the sale means for its New England operation, or on what that business entails.
As of last week, the only Flagstar employee that could be confirmed in Rhode Island by Providence Business News was Issa, president of Flagstar’s New England market. Issa told PBN on Jan. 9 that the Flagstar office in the Textron Building “is open and it’s business as usual. It’s our corporate commercial lending office and we have lending teams and support teams, as before.”
Issa, however, would not comment on how many employees are in the Providence office or on the status of the bank’s New England plans. Issa said he also serves as managing director for all commercial lending for Flagstar.
“Rhode Island has had … challenges on the budgetary side, but we still like the underlying stability of employment, the business values,” Campanelli said in 2011.
But Campanelli left Flagstar last fall. And now the bank is looking to return to its Michigan roots.
“It looks like they’re coming back to their roots as a community bank,” Pratt said. “It sounds to me like the program in Rhode Island didn’t work out so well for them.”
Pratt thinks Flagstar will likely handle any remaining Rhode Island business from its Michigan offices.
Flagstar began its commercial operation in Providence in April 2011. In April 2012, the Providence Downtown Design Review Committee approved the bank’s plans for alterations at its location at the Textron Building, including widening the entrance and work on Flagstar Bank signage on the Westminster Street façade, according to city planner Chris Ise.
In a June 7, 2012 email to PBN, Flagstar spokeswoman Susan E. Cherry-Bergesen said the bank had “increased our presence in the New England markets by opening up four commercial banking offices over the last year or so. We intend to grow our presence in that market.” •
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