The Federal Deposit Insurance Corporation (FDIC) statement conveyed on Sunday, March 19, places 40 branches previously owned by Signature Bank under the Flagstar Bank NA. The New York’s Bancorp bank is set to assume and exercise operations control over the branches’ digital banking deposits. Customers of the 40 branches would receive services whose execution now falls under Flagstar Bancorp.
Formation of Signature Bridge Bank
The New York’s Community Bancorp subsidiary is acquiring the embattled bank’s branch operations, now Signature Bridge Bank. The statement reveals that customers can access the non-crypto-related deposits starting Monday, 20, in compliance with the acquisition and assumption agreement. The press release indicates that the agreement places the Signature Bridge Bank customers alongside the Flagstar depositors.
The regulator assured it would retain the deposit insurance relative to the stipulated limit. However, the FDIC statement revealed the exclusion of $4 billion deposits in the Flagstar bid being related to digital-related banking operations. The update indicated that FDIC would instead avail the deposits linked to digital-related operations.
Details of Acquisition and Assumption Agreement
The FDIC statement echoes previous disclosure that the regulator would enter into an acquisition and assumption agreement with Flagstar Bank. The agreement greenlighted New York’s autonomous subsidiary of the Westbury-based Community Bancorp. The deal would only feature all non-crypto deposits and loan portfolios the Signature Bridge Bank carries.
The FDIC press release indicated that the branches would continue operating on Monday 20. The regulatory agent suggested that all 40 branches placed under Flagstar Bank would retain the regular business operating schedule. Besides, the former Signature Bridge Bank clients would only receive services within their respective branches.
Nonetheless, FDIC promised customers that they would receive updates from the institution assuming the branches. The notice would notify the clients when Flagstar Bank would absorb them within its infrastructure to receive full-service banking.
Assets Base and Loan Acquisition Details Revealed
The FDIC statement invited individuals and parties to convey their queries to (866) 744-5463. The update revealed the closure of Signature Bank in by the New York’s State Department of Financial Services (NYDFS). The closure allowed the creation of Signature Bridge Bank, earlier disclosed on March 12, 2023. Its creation identified FDIC as the sole appointed receiver.
FDIC presser estimated the deposits held by Signature Bank approximated $88.6 billion as of December 31, 2022. The update revealed that the embattled bank accumulated $110.4 billion in assets. FDIC illustrated that the acquisition involved $38.4 billion in assets alongside $12.9 billion in loans discounted at $2.7 billion.
FDIC confirmed it would retain an estimated $60 billion of loans within its receivership program. Nevertheless, the regulator would later dispose of the retained amount. The acquisition deal is set to earn FDIC equity appreciation rights within the New York Community Bancorp Inc. Also, FDIC would benefit from $3000 million in common stock.
The statement illustrates that FDIC would incur a failure cost estimated at $2.5 billion that would be settled from its Deposit Insurance Fund. However, the regulator was noncommittal on the cost it would incur until it concluded the receivership process. Lastly, the FDIC invited customers seeking detailed communication to visit the official regulator’s website and air grievances about the bank’s failure resolution center.
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