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More than three dozen retail branch offices formerly operated by Signature Bank in four states opened for business Monday as Flagstar Bank offices, after Flagstar reached a deal with federal bank regulators to acquire substantially all of the failed bank’s deposits and some of its loans for $2.7 billion.
Flagstar Bank’s bid did not include about $4 billion of crypto-related deposits held by the former Signature Bank’s digital-assets banking business, the Federal Deposit Insurance Corp. (FDIC) said in announcing the deal.
“The FDIC will provide these deposits directly to customers whose accounts are associated with the digital-asset banking businesses,” bank regulators said in an announcement.
The FDIC expects about $2.5 billion in losses to its Deposit Insurance Fund.
“The exact cost will be determined when the FDIC terminates the receivership,” regulators said.
In taking control of Signature Bank and Silicon Valley Bank (SVB) on March 12, federal banking regulators announced a “systemic risk exception” providing full protection to depositors at both banks beyond the FDIC’s $250,000 maximum.
Flagstar said it acquired $38 billion in assets, including $25 billion in cash and $13 billion in loans, while assuming liabilities totaling $36 billion, including $34 billion in deposits.
The FDIC said it’s keeping about $60 billion in loans for later disposition and that it received equity appreciation rights in Flagstar’s parent company, New York Community Bancorp Inc., with a potential value of up to $300 million.
“Over the past 20 years, Signature and New York Community have operated in the same markets and we have great respect and admiration for the employee base,” New York Community Bank CEO Thomas Cangemi said in a statement. “I would like to welcome our new customers and assure them that they are supported by an organization that has been a mainstay in its communities since 1859.”
Before it was shut down by regulators March 12, Signature Bank operated 40 branches in the New York metro area, Connecticut, North Carolina and California. The FDIC took over the operation of those branches as the receiver for Signature Bank for about a week before turning them over to Flagstar on Monday. Flagstar also acquired Signature’s wealth-management and broker-dealer business.
Flagstar operated 395 branches in nine states when it was acquired by New York Community in December. Those branches continue to operate under the Flagstar brand.
In announcing its plans to acquire Flagstar in 2021, New York Community said the $2.6 billion deal would allow the companies to broaden their product offerings while expanding their geographic reach with no branch overlap.
Cangemi said the deal to acquire much of Signature Bank’s business “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 [commercial real estate] loans and more toward commercial loans.”
Flagstar’s mortgage division operates nationally through 81 retail home lending offices and a wholesale network of approximately 3,000 third-party mortgage originators. Flagstar says that during the year ending Sept. 30, 2022, it ranked seventh among banks that originate residential mortgages and was the nation’s second-largest warehouse lender.
Rival mortgage lender loanDepot reassured investors Wednesday that it has moved $225 million in cash it held at Signature Bridge Bank to another institution and continues to have “full access” to $600 million in credit lines that Signature is a party to.
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