FDIC Sells Signature Bridge Bank, OCC Approves with Conditions

The FDIC entered into a purchase and assumption agreement with Flagstar Bank, N.A. to sell most deposits and certain loan portfolios of Signature Bridge Bank, N.A.

The FDIC created Signature Bridge Bank on March 12, 2023 after NYDFS closed Signature Bank and appointed the FDIC as receiver (see previous coverage). Effective March 20, 2023 the 40 former branches of Signature Bank began operating under Flagstar Bank, a wholly-owned subsidiary of New York Community Bancorp, Inc.

According to the FDIC, depositors of Signature Bridge Bank automatically became depositors of Flagstar, with the exception of cash depositors connected to the digital asset banking business. Flagstar’s bid did not cover approximately $4 billion of deposits in connection with the digital assets banking business. As a result, the FDIC stated it will "provide these deposits directly to customers whose accounts are associated with the digital-asset banking businesses." The FDIC also stated that around $60 billion in loans will stay in the receivership for later disposition.

The OCC approved Flagstar’s purchase, conditioned upon (i) Flagstar "allocat[ing] appropriate resources" to the acquired assets and liabilities and (ii) requiring a "supervisory non-objection" before paying dividends to shareholders.

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