How NYCB Will Benefit from Signature Acquisition

The bulk of the now-defunct Signature Bank’s depository customers are now part of Flagstar Bank, after its parent company New York Community Bancorp (NYCB) swooped in over the weekend.

NYCB has swelled its balance sheet with $34 billion in deposits, predominantly from private clients, $25 billion in cash, and $13 billion in loans. It has also bought Signature’s wealth management and broker-dealer business, and acquired the entire 40-strong Signature branch network.

The company declined to take on any crypto-related deposits, with this estimated $4 billion remaining with Signature Bridge Bank, the entity set up by the Federal Deposit Insurance Corporation to take over Signature’s operations earlier this month.

However, NYCB said it was “working on an agreement to sub-service” legacy Signature loans including multi-family and commercial real estate loans.

The bridge bank has also retained control of approximately $60 billion in loans “for later disposition by the FDIC”, according to the corporation.

According to the Financial Times, Flagstar and NYCB paid approximately $10 billion for the $13 billion loan book. In addition, NYCB has given the FDIC the option to buy bank shares worth up to $300 million.

NYCB said the deal would strengthen its balance sheet, diversify its business model, and significantly progress its growth plans.

The group’s president and CEO Thomas Cangemi added that NYCB and Flagstar “were well positioned prior to the recent market turmoil, with strong capital, a stable retail deposit franchise, and ample liquidity”.

“After this transaction, we will be even better positioned to deal with any residual market issues, including by now operating with a significantly lower loan-to-deposit ratio,” he said. “Overall, we are happy that our conservative business model and balance sheet put us in a position to quickly consummate this important transaction.”

In other merger and acquisition news, Illinois-based First Mid Bancshares is to acquire Wisconsin’s Blackhawk Bancorp in a transaction worth approximately $90 million. The deal will add $1.3 billion in assets to First Mid’s balance sheet, based on data from December 31, 2022.

Separately, Massachusetts-based 1831 Bancorp and South Shore Bancorp are to merge. The combined company will continue to operate as 1831 Bancorp, with the subsidiary banking businesses — Dedham Institution for Savings and South Shore Bank — retaining their separate brands.

The transaction is subject to regulatory approval. The combined company will have more than $4 billion in assets.

Meanwhile, Kentucky’s Republic Bank has completed its $51 million acquisition of CBank, growing its asset base to more than $6 billion.