Flagstar Bank Acquires $38B of New York’s Signature Bridge Bank from FDIC

Flagstar Bank, which has its regional headquarters in Troy, has acquired certain assets and assumed certain liabilities of New York-based Signature Bridge Bank from the Federal Deposit Insurance Corp. (FDIC).
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exterior photo of a Flagstaff Bank and its sign, which reads "Flagstar Bank."
Flagstar Bank has acquired certain assets and assumed certain liabilities of New York-based Signature Bridge Bank from the FDIC. // Photo courtesy of Flagstar Bank

Flagstar Bank, which has its regional headquarters in Troy, has acquired certain assets and assumed certain liabilities of New York-based Signature Bridge Bank from the Federal Deposit Insurance Corp. (FDIC).

Details of the transaction, which has been granted all regulatory approvals, were not disclosed.

Signature Bank, New York, N.Y., was closed on March 12 by the New York State Department of Financial Services, which appointed the FDIC as receiver. The closing followed the collapse of Silicon Valley Bank, the second largest bank failure in U.S. history (Signature is the third largest bank failure).

To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders.

Flagstar Bank acquired only certain financially and strategically complementary parts of Signature that are intended to enhance Flagstar’s future growth. Under terms of the agreement with the FDIC, the bank:

  • Purchased assets of approximately $38 billion, including cash totaling approximately $25 billion and approximately $13 billion in loans. Included in the $25 billion of cash is $2.7 billion arising from a discounted bid to net asset value.
  • Assumed liabilities approximating $36 billion, including deposits of approximately $34 billion and other liabilities of approximately $2 billion.

The company says it is working on an agreement to sub-service the legacy Signature multi-family, commercial real estate, and other loans it did not acquire.

Also included in the transaction is Signature’s wealth-management and broker-dealer business.

The deal includes all of legacy Signature’s core bank deposit relationships, including both the New York and the West Coast Private Client teams, as well as the wealth management and broker-dealer business. The private client teams account for the majority of deposits assumed.

Flagstar says it plans to use its significant liquidity position to pay down a substantial amount of its wholesale borrowings, leaving the balance sheet in an even stronger cash position.

The purchased loans consist exclusively of commercial and industrial loans. The company did not acquire any digital asset banking or crypto-related assets or deposits, nor did it acquire loans or deposits related to the fund banking business.

The FDIC confirmed the agreement does not include about $4 billion linked to Signature’s crypto business, which the FDIC said it will deal with directly.

In connection with the transaction, Flagstar will take over all of Signature’s 40 branches. This includes 30 branches in the New York City metro area and several branches on the West Coast.  These branches will operate under the Flagstar Bank brand.

On the lending side, the bank added several new verticals, including middle market specialty finance, health care lending, and SBA lending, while adding to its existing verticals in mortgage warehouse lending, as well as traditional C&I lending.

“This transaction continues our transformation from a predominantly multi-family lender to a diversified full-service commercial bank,” says Thomas R. Cangemi, president and CEO of New York Community Bancorp Inc., which owns Flagstar. “It builds upon and accelerates the transformation set in motion by the merger of New York Community and Flagstar, and we believe the financial metrics are extremely attractive.

“The deal is expected to significantly strengthen our deposit base, lower the loan-to-deposit ratio, provide the opportunity to pay down a substantial amount of our wholesale funding, and further diversify our loan portfolio away from CRE loans and more toward commercial loans.  Financially, the deal is expected to be significantly accretive to both earnings per share and to tangible book value per share.  The net interest margin expands due to lower funding costs, the additional deposits reduce the loan-to-deposit ratio to less than 90 percent, improves our profitability ratios, adds liquidity, and we maintain strong pro-forma capital ratios.”