Back from Near-Collapse, Flagstar Now Eyes Profitability (1)

Atop Flagstar Financial Inc., Chief Executive Officer Joseph Otting has moved beyond salvaging the lender from the brink of collapse and entered a new phase of his turnaround: playing catch-up.

In the year since investors led by former Treasury Secretary Steven Mnuchin plowed more than $1 billion into rescuing the firm — then known as New York Community Bancorp — and installed new leadership, Otting has whittled it into a smaller bank less beholden to the ups and downs of New York City real estate.

The capital injection, acquiring shares at just $2 apiece, has already turned a handsome ...