Under the deal, Flagstar Bank will acquire 33 branches in Indiana, 14 branches in Michigan, four branches in Wisconsin and one branch in Ohio.
Wells Fargo’s 490 team members from the divested branches will also join Flagstar, as per terms of the agreement.
The deal includes the acquisition of $2.3bn worth deposits and $130m worth loans, as well as certain related assets.
Flagstar has agreed to pay an effective deposit premium of about 7% based on balances, as of 31 December 2017.
Wells Fargo community banking and consumer lending head Mary Mack said: “We are very pleased to reach this agreement with Flagstar, as they are committed to providing excellent service to our customers and providing a great workplace for our team members.
“As we continue to reduce our branch network, we believe this sale to Flagstar will result in the best outcome for customers, team members and other stakeholders in these markets.”
Earlier, Wells Fargo announced its plans to decrease retail bank branches to around 5,000 branches by the end of 2020, via consolidations and divestitures.
Subject to customary regulatory approvals, the deal is expected to complete in the fourth quarter of this year.
Flagstar Bancorp president and CEO Alessandro DiNello said: “Wells Fargo’s primary goal throughout the negotiation of this transaction has been to make sure its customers and employees experience a seamless transition to Flagstar, and we will ensure that happens.”
Based in San Francisco, Wells Fargo offers banking, investments, mortgage, and consumer and commercial finance services to its customers.
Flagstar Bank, FSB, offers commercial, small business, and consumer banking services, and manages 99 branches in Michigan and 8 branches in California through its Desert Community Bank division.
