Flagstar Bank, a subsidiary of New York Community Bancorp, has agreed to purchase substantially all deposits and certain loan portfolios of Signature Bridge Bank, after the New York-based bank failed nearly a week ago and was taken over by the Federal Deposit Insurance Corporation (FDIC).
Signature Bank was taken over by the FDIC along with Silicon Valley Bank of California after both financial institutions failed, which led to concerns of greater economic fallout. Government officials and bankers have said that the banking sector remains strong, saying that the two financial institutions faced a unique set of problems that do not appear to be widespread.
"The 40 former branches of Signature Bank will operate under New York Community Bancorp's Flagstar Bank, N.A., on Monday, March 20, 2023. The branches will open during their normal business hours. 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 in a media release published on its website Saturday evening.
Newsweek reached out to Flagstar Bank via email for comment.
The FDIC said that as of the end of last year, the now-defunct Signature Bank held total deposits of $88.6 billion and total assets of $110.4 billion. The Saturday agreement with Flagstar Bank "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."
Flagstar Bank itself was just acquired by New York Community Bancorp late last year. A press release dated December 1, 2022 announced that the acquisition had been completed, and the bank—which has its regional headquarters in Michigan—is now a wholly owned subsidiary of the New York bank, which is listed as one of the largest in the U.S.
Those who had deposits at Signature Bank, with the exception of clients of its digital banking business, will automatically become clients of Flagstar Bank, according to the FDIC.
"Flagstar Bank's bid did not include approximately $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 government corporation said.
Silicon Valley Bank, which had about $209 billion of assets when it was taken over by the FDIC, has not yet been sold. Reuters reported on Sunday that the FDIC will relaunch an auction of the bank after failing to find a buyer last week to take over the whole bank.
President Joe Biden said last Monday after the two banks failed that "Americans can have confidence that the banking system is safe."
"Your deposits will be there when you need them," he said.
Treasury Secretary Janet Yellen similarly attempted to assuage concerns during testimony before a Senate committee on Thursday. She said that the nation's bank system "remains sound."
Correction, 3/21/2023 at 10:54 a.m. ET: A previous version of this article misstated that Flagstar Bank is based in Michigan. It was corrected to reflect the fact that Michigan is just the location of its regional headquarters.