Another Major Bank Chain Is Closing A Ton Of Branches

Financial conditions have been tightening in recent years. Rising inflation and economic uncertainty have been quite the burden for not only consumers, but businesses as well. However, it's entirely another issue when popular bank chains start closing branches across the country. After all, if the entities that handle the flow of money in this country aren't able to handle their own finances — to the point that they have to start closing down — it doesn't bode well for the economy. At the very least, it's not a reassuring occasion for consumers.

It seems like every other day there is news that yet another major bank is closing bank accounts or closing locations, all in an effort to save money. The most recent of these is Flagstar Financial. In January 2025, the company announced that it would be shutting down at least 60 locations throughout the country by the end of the year. This is no small bank either. In fact, according to data from the Federal Reserve, it is the 29th largest commercial bank in the U.S., with over $100 billion dollars in assets under management. However, Flagstar is ultimately not immune to financial strain, and closing locations allows them to cut costs.

Flagstar Financial has locations in 9 different states, with the majority of their operations taking place in New York. The main reason for the bank's concentration in the Empire State can likely be attributed to the fact that the bank, which used to go by Flagstar Bank, was bought out by New York Community Bank (NYCB) at the end of 2022, with the merger — and company rebrand to Flagstar Financial — finalizing in October 2024.

It appears the reason for cost-cutting branch closures in 2025 is actually tied to the company's significant financial losses — mainly from their commercial real estate portfolio — in the last few years. According to a Flagstar Financial's Q4 2024 earnings report, the bank reported losses of $160 million dollars. While this is an improvement from the bank's losses reported in Q4 of 2023 — which totaled over $250 million — it's apparent that measures still need to be taken in order to prevent future financial mishaps. During an earnings call in January 2025, Flagstar's CFO, Lee Smith, laid out the bank's goal to cut $600 million from operating expenses. Part of that strategy clearly involves closing branches.

Flagstar is not alone when it comes to widespread location closures in recent years. As consumer behaviors change, businesses have struggled to keep up. One of the most notable of these changes in the banking sector is the increase in digital and online banking options. For example, many people simply do not want or need to visit an in-person banking location anymore. Thanks to the advancement of smartphone and app technology, more consumers than ever are able to do things like deposit checks or check their account balances right from the comfort of their home.

This being the case, outside of certain financial factors, many U.S. banks are closing down physical locations in order to transition more into the online banking sector. Regardless, according to a report from Self Financial, if the current rate of physical bank closures continues, in-person banking is likely to go entirely extinct by 2041.