Relevant Documents:2022 10-KQ1 Business UpdateJoint Statement
, in a joint statement released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell and FDIC Chairman Martin J. Gruenberg, regulators announced that Signature Bank was closed by the New York State Department of Financial Services, which appointed the Federal Deposit Insurance Corporation, or FDIC, as receiver. The closing and response followed similar actions
taken by the California financial regulator, the Department of Financial Protection and Innovation on Friday, March 10, to close and take under possession Silicon Valley Bank.
According to the Sunday release, all depositors of Signature Bank “will be made whole.” However, “Shareholders and certain unsecured debtholders will not be protected
” (emphasis added). Additionally, senior management has been removed and any losses to the deposit insurance fund to support uninsured depositors will be recovered by a special assessment on banks. The FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders
According to a joint statement by the FDIC, the Federal Reserve and the Department of Treasury, banking activities will resume tomorrow, Monday, March 13, including online banking. Depositors and borrowers will automatically become customers of Signature Bridge Bank, N.A.
The transfer of all the deposits was completed under the systemic risk exception that, according to the statement, was approved earlier today.
According to the statement, Signature Bank had total assets of $110.4 billion and total deposits of $82.6 billion as of Dec. 31, 2022. According to Signature Bank’s 10-K for the period ended Dec. 31, 2022, 89.7% of the bank’s $88.6 billion in deposits were not FDIC-insured.
As receiver, the FDIC will operate Signature Bridge Bank, N.A. “to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by Signature Bank.”
“A bridge bank is a chartered national bank that operates under a board appointed by the FDIC. It assumes the deposits and certain other liabilities and purchases certain assets of a failed bank. The bridge bank structure is designed to “bridge” the gap between the failure of a bank and the time when the FDIC can stabilize the institution and implement an orderly resolution,” according to the statement.
The FDIC named Greg D. Carmichael as CEO of Signature Bridge Bank NA. Carmichael recently served as CEO of Fifth Third Bancorp.Company Background
Signature Bank is a New York-based full-service commercial bank with 40 private client offices located throughout the metropolitan New York area, as well as those in Connecticut, California, Nevada and North Carolina. The company operates a number of subsidiaries including:
- Signature Financial which is a specialty finance company based in Melville, Long Island offering a variety of financing and leasing products, including equipment, transportation, commercial marine, sustainable energy and national franchise financing and/or leasing.
- Signature Securities provides brokerage, asset management and insurance products and services.
- Signature Public Funding based in Towson, Maryland, provides a range of municipal finance and tax-exempt lending and leasing products to government entities throughout the country, including state and local governments, school districts, fire and police and other municipal entities. Through a representative office of the bank in Houston, Texas, Signature purchases, securitizes and sells guaranteed portions of U.S. Small Business Administration loans.
In 2019, Signature launched its proprietary block-chain based payment solution, Signet, to allow for real-time payments. The bank began its digital asset banking initiative with the onboarding of a private client group in the first quarter of 2018. Signature says that it does not lend to the cryptocurrency industry, nor does it have any loans backed by cryptocurrency.
The bank’s relationships with clients in the digital asset ecosystem are limited to US dollar-denominated deposits.
During the fourth quarter of 2022, the bank announced a plan to purposely decrease deposits of its digital asset banking team by reducing the size of individual client relationships. As of Dec. 31, 2022, the bank's digital asset deposits totaled $17.79 billion, or 20% of total deposits.Capitalization
Signature Bank’s capitalization as of Dec. 31, 2022 is below. Obligations include FHLB advances and repurchase agreements, deposits and other repurchase agreements within senior debt. The bank’s capitalization also includes subordinated debt and preferred stock.
According to the 10-K, at Dec. 31, 2022, securities with a fair value of $168.8 million and a carrying value of $170.3 million were pledged to meet collateral requirements of $162 million on repurchase agreements with brokers.
Collateral consists of government agency and government-sponsored enterprise securities. As of December 31, 2022, all repurchase agreements were collateralized with government-sponsored enterprise securities.FHLB Advances
As of Dec. 31, 2022 the Federal Home Loan Bank of New York held $10.21 billion of commercial real estate loans and $18.45 billion of securities, a portion of which were used to collateralize advances and repurchase agreements.Subordinated Notes
The company’s subordinated notes are fixed to floating rate securities, meaning the notes initially pay coupons in a fixed amount and later convert to floating rate interest. The 2029 notes accrue interest at a fixed rate of 4.125% for the first five years until November 2024 and then the remaining five years of the notes’ term, interest will accrue at a floating rate of LIBOR plus 255.9 basis points. The 2039 notes accrue interest at a fixed rate of 4% per annum for the first five years until October 2025 and then will accrue at a floating rate of three-month AMERIBOR plus 389 basis points.Preferred Stock
On Dec. 17, 2020, the Bank issued 5% noncumulative perpetual Series A preferred stock. Net proceeds, after underwriting discounts and expenses, were approximately $708 million. The public offering consisted of 29.2 million depository share at a public offering price of $25 per depository share. On Jan. 13, the bank declared a cash dividend of $12.50 per share on or after March 30 to preferred stockholders of record at the close of business on March 17.Deposits
Signature provided a mid-quarter update
on March 1, disclosing its average deposit balance was $88.79 billion on March 1, higher than the Dec. 31, 2022 ending balance of $88.59 billion, but lower than the fourth quarter 2022 quarter-to-date average balance of $98.6 billion. The quarter to date average decline in deposits, according to the update, was driven by the “deliberate decline in digital asset client related deposits of $1.51 billion.”Assets
The company’s security portfolio as of Dec. 31, 2022 is below:
The company’s loan portfolio as of Dec. 31, 2022 is below: