SBNY - NY Community Bancorp unit agrees to buy Signature Bank deposits some loans

2023-03-19 21:00:26 ET

New York Community Bancorp.'s Flagstar Bank agreed to buy now shuttered Signature Bank's ( NASDAQ: SBNY ) deposits and some of its loans.

The 40 former branches of Signature Bank will operate under New York Community Bancorp's Flagstar Bank starting on Monday, the Federal Deposit Insurance Corp. said in a statement on Sunday night.

New York state's Department of Financial Services took possession of Signature Bank ( SBNY ) last Sunday to protect depositors. The Flagstar Bank purchase comes after a Financial Times report on Friday indicated that the FDIC is open to discussing shouldering losses at failed lenders Silicon Valley Bank ( SIVB ) and Signature Bank ( SBNY ).

The deal included the purchase of about $38.4 billion of Signature Bridge Bank North American assets, including loans of $12.9 billion purchased at a discount of $2.7 billion. Approximately $60 billion in loans will remain in the receivership for later disposition by the FDIC. In addition, the FDIC received equity appreciation rights in New York Community Bancorp, Inc., common stock with a potential value of up to $300 million.

Flagstar Bank's bid didn't include about $4 billion of deposits related to the former Signature Bank's digital banking business. The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business.

The FDIC estimates the cost of the failure of Signature Bank to its Deposit Insurance Fund to be approximately $2.5 billion. The exact cost will be determined when the FDIC terminates the receivership.

Bloomberg reported news of the potential Flagstar Bank purchase of Signature Bank deposits earlier Sunday.

The New York Community Bank ( NYSE: NYCB ) report also comes after Bloomberg reported Sunday that Federal Deposit Insurance Corp. is moving toward a breakup of Silicon Valley Bank after it was unable to find a suitor for the entire company.

Bloomberg reported Saturday that billionaire investor Warren Buffett has been in contact with senior officials in the Biden administration in recent days regarding the regional banking crisis.

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