NYCB shares soar after acquisition of Signature assets
Former branches of Signature Bank, including this one in Woodmere, will become part of NYCB under the Flagstar Bank brand. Credit: Howard Schnapp
Branches of failed Signature Bank opened nationwide Monday under a New York Community Bancorp Inc. brand after an asset acquisition that propelled shares of the Long Island company higher.
Shares of NYCB rocketed 31.7% to close Monday at $8.71, leading a wide rebound in regional bank stocks.
On Sunday, the Flagstar Bank unit of Hicksville-based NYCB agreed to acquire about $38 billion in assets from Signature Bridge Bank, including its 40 offices, as well as about $25 billion in cash from the Federal Deposit Insurance Corporation to pay down debt and about $13 billion in loans. NYCB eventually plans to unite all its brands under the Flagstar banner.
Manhattan-based Signature was shuttered on March 12 and its operations were taken over by regulators to avert cascading bank failures following a run on deposits at Silicon Valley Bank.
In a conference call, Thomas R. Cangemi, NYCB chief executive, said the deal boosts the company's asset-ranking among regional banks and that it will implement risk-management tools appropriate for its scale.
"We're now a $100 billion bank," he said.
As of Dec. 31, the Federal Reserve ranked NYCB as the 35th largest domestic U.S. bank with $90 billion in consolidated assets and Signature as the 29th largest with $110.4 billion.
The NYCB deal did not include about $4 billion of deposits in the cryptocurrency unit of the former Signature Bank. The Federal Deposit Insurance Corporation will return those deposits directly to customers, the agency said.
Signature was a lender to cryptocurrency companies and partnered with Circle, which developed the USD Coin, a digital asset designed to be pegged to the U.S. dollar.
The asset acquisition follows on the heels of NYCB's December merger with Troy, Michigan-based Flagstar Bank. NYCB, an investor in another "stablecoin" venture, the USDF Consortium LLC, exited the digital asset business when federal regulators imposed curbs as a condition for approval of the Flagstar merger.
When that deal closed, the company disclosed plans to rebrand its disparate subsidiaries under the Flagstar name while retaining its headquarters on Long Island.
Signature Bank had branches in New York, Connecticut, California, North Carolina and Nevada.
All of Signature's offices, including Long Island branches in Melville, Hauppauge, Jericho, Woodmere, Great Neck, Rockville Centre and Garden City, now will operate under the Flagstar Bank brand of NYCB.
In addition to Flagstar, NYCB operates under 10 brands — New York Community Bank, Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, Roosevelt Savings Bank and Atlantic Bank in New York; Garden State Community Bank in New Jersey; AmTrust Bank in Florida and Arizona; and Ohio Savings Bank in Ohio.
About half of NYCB's loan portfolio is devoted to rent-controlled multi-family properties.
Business will continue as usual for customers of the NYCB banks, whose branches total 435 after the Signature and Flagstar transactions.
In exchange for taking over the Signature assets, NYCB agreed to a deal in which the FDIC will profit should NYCB's stock price exceed $6.54 — the closing price on Friday — on or before March 31. The FDIC, which said it expects the Signature Bank failure to cost its deposit insurance fund $2.5 billion, could gain up to $300 million NYCB stock.
In a conference call, Cangemi said the bank panic shrank Signature's deposit base from about $89 billion to the mid-$30 billion range.
To staunch the outflow, executives at the former Signature bank "are mobilizing the relationship managers," he said.
Cangemi said that NYCB limited any legal exposure in buying the Signature Bank assets.
"We didn't buy the stock. We didn't buy the company," he said.
What former Signature Bank customers need to know
- If you had a Signature Bank deposit account:
Depositors of the bridge bank created when the Federal Deposit Insurance Corporation took over Signature Bank will automatically become depositors of Flagstar Bank, a unit of New York Community Bancorp.
That does not include depositors related to Signature's "digital banking business" centered on cryptocurrency. Those deposits will be returned to customers by the FDIC.
All deposits assumed by Flagstar Bank will be insured by the FDIC up to $250,000.
Depositors can continue to use their checks and ATM/debit cards. Direct deposits will continue as usual.
- If you had a loan issued by Signature Bank:
You should continue to make payments on your loan, including escrow payments, as usual. If you are making escrow payments and are notified that your taxes or insurance was not paid, contact your loan officer.
The FDIC has further information at: bit.ly/3JS7cLH
Source: FDIC
Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.
