The New York State Department of Financial Services closed Signature Bank over the weekend and appointed the Federal Deposit Insurance Corporation as receiver. To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, a bank that will be operated by the FDIC as it markets the institution to potential bidders. Signature Bridge Bank officially opened its doors on March 13.

Signature Bank had 40 branches across the country in New York, California, Connecticut, North Carolina and Nevada. As banking activities resumed on Monday, Signature Bank depositors and borrowers automatically became customers of Signature Bridge Bank and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards and written checks in the same manner as before. Signature Bank’s official checks will continue to clear. Loan customers should continue making loan payments as usual.

The transfer of all the deposits was completed under the systemic risk exception the FDIC approved over the weekend in connection with the resolution of Silicon Valley Bank and Signature Bank. The FDIC said all depositors of Signature Bank will be made whole and no losses will be borne by taxpayers. However, shareholders and certain unsecured debt holders will not be protected and the bank’s senior management was removed. Any losses to the Deposit Insurance Fund (DIF) to support uninsured depositors will be recovered by a special assessment on banks, as required by law.

The FDIC, as receiver for Signature Bank, also transferred all Qualified Financial Contracts (as defined in 12 USC 1821(e)) of the failed bank to the bridge bank. The FDIC said these actions will protect depositors and preserve the value of the assets and operations of Signature Bank, which may improve recoveries for creditors and the DIF.

Signature Bank had total assets of $110.4 billion and total deposits of $88.6 billion as of Dec. 31, 2022. As receiver, the FDIC will operate Signature Bridge Bank 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.

The FDIC named Greg D. Carmichael CEO of Signature Bridge Bank. Carmichael recently served as president and CEO of Fifth Third Bancorp.