The Federal Deposit Insurance Corporation (FDIC) has come to a purchase and assumption agreement with the wholly owned subsidiary of New York Community Bancorp, Inc., Westbury NY, for nearly all deposits and loan portfolios. Portfolios that would be affected by this include Signature Bridge Bank and National Association.
From Monday, March 20, 2023, Flagstar Bank, N.A., a subsidiary of New York Community Bancorp, will manage the 40 former branches of Signature Bank. Throughout their regular business hours, the branches will be open. Until the assuming institution notifies customers that Flagstar Bank, N.A. branches offer full-service banking, Signature Bridge Bank, N.A. customers would continue to use their current location.
Depositors of the assuming institution who are not affected by the digital banking division will automatically become depositors of the Signature Bridge Bank, N.A., as per the FDIC-issued press release. Flagstar Bank, N.A. will also continue to enjoy FDIC’s full insurance coverage for all deposits it accepts.
In the bid, Flagstar Bank will not foot the $4 billion in deposits intertwined with Signature Bank’s digital banking business. Customers whose accounts are connected to the digital banking industry will receive these deposits directly from the FDIC.
The current situation of Signature Bank
On March 12, 2023, the FDIC established Signature Bridge Bank, N.A. to take over the management of Signature Bank, after the New York State Department of Financial Services closed the bank and designated the FDIC as the receiver.
The former Signature Bank had a total of $110.4 billion in assets and $88.6 billion in deposits. The deal included purchasing assets worth around $38.4 billion, including loans worth $12.9 billion that were acquired at a $2.7 billion discount. The FDIC will keep about $60 billion in loans in receivership, which will subsequently be sold. The New York Community Bank, Inc. common stock also came with equity appreciation rights that may be worth up to $300 million, which were given to the FDIC.
The FDIC estimates that the collapse of Signature Bank will cost its Deposit Insurance Fund about $2.5 billion. The exact cost will be clear once the FDIC ends the receivership.
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