Flagstar Bank takes over Signature's digital banking-related deposits
After a week of negotiations and bidding, the Federal Deposit Insurance Corporation (FDIC) and Flagstar Bank have signed an agreement with New York Community Bancorp's subsidiary bank, Signature Bridge Bank. Flagstar Bank will purchase and assume the deposits of Signature Bridge Bank's digital banking operations, as well as certain loan portfolios.
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New York Community Bancorp
New York Community Bancorp is a bank headquartered in New York State, with multiple banking brands under its umbrella including Community Bank, Ohio Savings Bank, Flagstar Bank, among others, totaling 225 branches.
Flagstar Bank is also one of the deposit banks for stablecoin issuer Circle.
Commencing Operations Immediately on Monday
40 former branches of Signature Bank will commence operations under the management of Flagstar Bank on Monday, March 20. Existing depositors, excluding those related to digital banking services, will automatically become depositors of Flagstar Bank, with deposits below the insurance limit continuing to be FDIC-insured. The $4 billion in deposits related to digital banking services will be covered by the FDIC.
As of December 31, 2022, Signature Bank had total deposits of $88.6 billion and total assets of $110.4 billion. The transaction includes the acquisition of approximately $38.4 billion in assets of Signature Bridge Bank, including $12.9 billion in loans acquired at a discount of $2.7 billion. The remaining $60 billion in loans will be retained in receivership for later disposition by the FDIC. Additionally, the FDIC has acquired warrants for common stock in New York Community Bancorp with a potential value of up to $300 million.
The FDIC estimates a loss of approximately $2.5 billion to its deposit insurance fund from the failure of Signature Bank. The exact cost will be determined when the FDIC terminates receivership.