Signature Bank, which collapsed last week in the wake of Silicon Valley Bank’s failure, will be taken over by New York Community Bancorp, the Federal Deposit Insurance Corporation (FDIC) announced Sunday. With deposits of $88.6 billion and more than $110 billion in assets at the end of 2022, Signature Bank’s collapse is considered the third-largest bank failure in U.S. history.
“The (FDIC) entered into a purchase and assumption agreement for substantially all deposits and certain loan portfolios of Signature Bridge Bank, National Association, by Flagstar Bank, National Association, Hicksville, New York, a wholly owned subsidiary of New York Community Bancorp, Inc., Westbury, New York,” the FDIC said in a statement. Signature Bridge Bank was created by the FDIC to take over Signature Bank’s operations it was closed by New York state regulators last week.
New York Community Bancorp will operate the 40 former Signature Bank branches under the name Flagstar Bank — one of the company’s subsidiaries — beginning Monday, and the FDIC has assured depositors that the banks will be operating like normal.
“Customers of Signature Bridge Bank, N.A., should continue to use their current branch until they receive notice from the assuming institution that full-service banking is available at branches of Flagstar Bank, N.A.,” the FDIC said.
“Today’s transaction included the purchase of about $38.4 billion of Signature Bridge Bank, N.A.’s assets, including loans of $12.9 billion purchased at a discount of $2.7 billion,” continued the FDIC. “Approximately $60 billion in loans will remain in the receivership for later disposition by the FDIC.”
New York Community Bancorp acquired Flagstar in December of last year, making it the 24th largest regional bank in the country at the time of acquisition according to a press release.
The back-to-back failures of both Signature Bank and Silicon Valley Bank sparked nationwide fears of a domino effect bank collapse, but the federal government has stepped in to attempt to pay back depositors and broker sales of the failed institutions to functional banks.
The FDIC has estimated that the overall cost of Signature Bank’s failure to its Deposit Insurance Fund will be around $2.5 billion, with the exact cost to be determined when the FDIC’s receivership is officially terminated.