Silicon Valley Bank Failure, Receivership and Sale
On March 10, 2023, the California Department of Financial Protection and Innovation closed Silicon Valley Bank, Santa Clara, CA (SVB) and appointed the Federal Deposit Insurance Corporation (FDIC) receiver of SVB. To protect depositors, the FDIC transferred all the deposits and substantially all assets of SVB to Silicon Valley Bridge Bank, National Association (SVBB), a full-service bank operated by the FDIC. On March 26, 2023, the FDIC entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, Raleigh, NC (FCBT) for the purchase of about $72 billion of SVBB assets at a discount of $16.5 billion. The transaction (i) excludes Cede & Co. deposits and SVBB loans, and (ii) places approximately $90 billion in securities and other assets in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., common stock with a potential value of up to $500 million.
The FDIC and FCBT also entered into a loss-share transaction on the commercial loans it purchased from SVBB. The FDIC, as receiver, and FCBT will share in the losses and potential recoveries on the loans covered by the loss-share agreement. The loss-share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers. In addition, FCBT will assume all loan-related Qualified Financial Contracts (as defined in 12 CFR § 360.5).
The FDIC estimates the cost of the failure of SVB to its Deposit Insurance Fund to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership. On March 27, 2023, the former 17 branches of SVBB opened as First-Citizens Bank & Trust Company.
Signature Bank Failure, Receivership and Sale
On March 12, 2023, the New York State Department of Financial Services closed Signature Bank, New York, NY and appointed the FDIC as receiver. To protect depositors, the FDIC transferred all the deposits and substantially all assets of Signature Bank to Signature Bridge Bank, National Association (N.A) (SigBB), a full-service bank operated by the FDIC. On March 20, 2023, the FDIC entered into a purchase and assumption agreement for substantially all deposits and certain loan portfolios of SigBB by Flagstar Bank, National Association (N.A.), Hicksville, NY, a wholly owned subsidiary of New York Community Bancorp, Inc., Westbury, NY. As part of this transaction SigBB was placed into receivership.
As of March 20, 2023, the 40 former branches of SigBB began operating under New York Community Bancorp’s Flagstar Bank, N.A. The branches will open during their normal business hours. Customers of SigBB should continue to use their current branch until they receive notice from the assuming institution that full-service banking is available at branches of Flagstar Bank, N.A. Depositors of SigBB, other than cash depositors related to the digital-asset banking businesses, will automatically become depositors of the assuming institution. The FDIC will continue insure all deposits Flagstar Bank, N.A. assumed up to the insurance limit. Flagstar Bank’s bid did not include approximately $4 billion of deposits related to the former Signature Bank’s digital-assets banking business. The FDIC will provide these deposits directly to customers whose accounts are associated with the digital-asset banking businesses. Questions may be directed to (866) 744-5463.
As of Dec. 31, 2022, the former Signature Bank had total deposits of $88.6 billion and total assets of $110.4 billion. The March 20 transaction included the purchase of about $38.4 billion of SigBB assets, including loans of $12.9 billion purchased at a discount of $2.7 billion. Approximately $60 billion in loans will remain in the receivership for later disposition by the FDIC. In addition, the FDIC received equity appreciation rights in New York Community Bancorp, Inc., common stock with a potential value of up to $300 million.
The FDIC estimates the cost of the failure of Signature Bank to its Deposit Insurance Fund to be approximately $2.5 billion. The exact cost will be determined when the FDIC terminates the receivership.
THESE FAQS WERE LAST UPDATED MARCH 30, 2023.