By Niket Nishant and Manya Saini

Oct 3 (Reuters) - Flagstar Bank FLG.N is looking to build out its investment office and will begin hiring soon, a top executive told Reuters, as the lender looks to reduce its reliance on distressed commercial real estate lending.

The plan, which is in an early stage, underscores the lender's effort to tap into wealth management for a steady source of revenue, which could prove to be crucial in its effort to cut exposure to CRE loans that had hurt results last year.

"I'm looking to hire a couple of people this year. And then next year, I'm going to follow that on with double or triple that amount," said Brett Mitstifer, chief investment officer of private banking and wealth management, in an interview.

The lender will soon begin distributing market views internally, with external client communications to follow, said Mitstifer, an HSBC veteran who took up the new role in September.

Flagstar is a unit of Flagstar Financial FLG.N, which was known as New York Community Bancorp until it was rebranded last year.

The bank had last year come under pressure when elevated interest rates and weak demand for office-space strained CRE borrowers, prompting a $1 billion capital infusion and a leadership shake-up, including the appointment of a new CEO.

Mitstifer said the bank's clients are now confident in the safety of their funds at Flagstar. "People understand what happened. And they get comfortable very quickly when they meet the management team," he said.

The bank's shares have gained about 25% this year in a sign of investor support to the turnaround efforts, outpacing the benchmark S&P 500's 14.2% rise in the same period.

The wealth management industry, however, is an ultra-competitive field dominated by Wall Street heavyweights such as Morgan Stanley MS.N, JPMorgan Chase JPM.N and Goldman Sachs GS.N, which oversee trillions in assets and command a big share of the market.

Mitstifer said smaller banks such as Flagstar can carve out a niche by offering more personalized service and quicker responses, something that is often lacking at bigger institutions.

"There's a bit of a void out there after the regional banking crisis," he said.

(Reporting by Niket Nishant and Manya Saini in Bengaluru; Editing by Arun Koyyur)

((Manya.Saini@thomsonreuters.com; X: manya__saini;))