FDIC sells most of failed Signature Bank to Flagstar

New York (CNN) A week after Signature Bank failed, the Federal Deposit Insurance Corporation said it has sold most of its deposits to Flagstar Bank, a subsidiary of New York Community Bank.

On Monday, Signature Bank’s 40 branches will begin operating as Flagstar Bank. Signature customers do not need to make any changes to bank on Monday.

New York Community Bank purchased substantially all of Signature’s deposits and a total of $38.4 billion of the company̵[ads1]7;s assets. That includes $12.9 billion of Signature’s loans, which New York Community Bank bought at a steep discount — it paid just $2.7 billion for them. New York Community Bank also paid the FDIC stake that could be worth up to $300 million.

At the end of last year, Signature had assets worth over $110 billion, including $88.6 billion in deposits, showing how the run on the bank two weeks ago led to a massive drop in deposits.

Not included in the transaction are about $60 billion in other assets, which will remain in FDIC receivership. It also does not include $4 billion in deposits from Signature’s digital banking business.

As the banking crisis spreads, banks have become increasingly cautious about taking risks. That’s probably why New York Community Bank wasn’t willing to take on all of Signature’s assets.

“We are not surprised that the FDIC kept loans, as we expect banks to be wary of quickly buying loans without liability and loss protection,” said TD Cowan analyst Jaret Seiberg. “More generally, we see it as positive for consumer confidence that the branches will open on Monday as NYCB branches.”

The FDIC said Sunday it expects to sell those assets over time, and the total cost to the government will ultimately be about $2.5 billion.