Signature Bank
| Company type | Public |
|---|---|
| Industry | Banking, Financial services |
| Founded | May 1, 2001 in New York City, United States |
| Founder | Joseph J. DePaolo, Scott A. Shay, John Tamberlane |
| Defunct | March 12, 2023 |
| Fate | Shut down by New York State banking authorities; bridge bank and deposits acquired by New York Community Bancorp |
| Headquarters | New York City , United States |
Area served | New York, Connecticut, California, Nevada, North Carolina |
Key people | Joseph J. DePaolo (CEO until March 1, 2023), Eric Howell (CEO from March 1, 2023), Scott A. Shay (Chairman), John Tamberlane (Vice Chairman) |
| Products | Commercial banking, private client banking, equipment financing, investment advisory services, venture banking, mortgage servicing |
Number of employees | Not specified |
| Parent | None |
Signature Bank was a New York City-based American full-service commercial bank that operated 40 private client offices spanning New York, Connecticut, California, Nevada, and North Carolina. Its business model encompassed a range of banking products and specialized services tailored to sectors such as commercial real estate, private equity, mortgage servicing, and venture banking. The bank’s subsidiaries provided equipment financing and investment-related offerings. By the end of 2022, Signature reported total assets amounting to US$110.4 billion and deposits totaling $82.6 billion; as of 2021, its loan portfolio was valued at $65.25 billion.
Established in 2001 by former executives and staff from Republic National Bank of New York following its acquisition by HSBC, Signature Bank focused on high-net-worth clientele with an emphasis on personalized service. Initially concentrated within the New York City area, the bank broadened its geographical footprint and diversified its services during the late 2010s. A notable development was Signature’s entry into the cryptocurrency sector in 2018, with crypto-related businesses comprising 30% of its deposits by 2021.
On March 12, 2023, amidst a wider banking crisis triggered by the collapse of Silicon Valley Bank, New York State banking authorities shut down Signature Bank. The closure followed a swift withdrawal of over $10 billion in deposits amid growing concerns fueled by recent failures of cryptocurrency-friendly banks like Silvergate Bank. This incident represented the third-largest bank failure in U.S. history. Following the shutdown, the bank became subject to an investigation by the United States Department of Justice concerning inadequate anti-money laundering controls. At the time of closure, Signature ranked fourth nationwide in terms of uninsured deposits—89.3% of its deposits were not insured—and regulatory assessments criticized its risk management practices and governance during a period of rapid deposit growth.
One week after the closure, on March 19, the Federal Deposit Insurance Corporation (FDIC) arranged for Signature’s bridge bank, most deposits, and all 40 branches to be acquired by New York Community Bancorp, which planned to merge these operations into its Flagstar Bank subsidiary. Approximately $4 billion in digital asset banking deposits and $60 billion in loans were excluded from this transaction. Meanwhile, Signature’s venture banking portfolio and key personnel from that division were acquired by Customers Bancorp.
Establishment and expansion
Signature Bank commenced operations on May 1, 2001, founded by CEO Joseph J. DePaolo, Chairman Scott A. Shay, and Vice Chairman John Tamberlane. DePaolo and Tamberlane had left Republic National Bank of New York following its acquisition by HSBC. The bank launched six branches throughout New York City targeting affluent clients and middle-market business managers with assets starting at $250,000. Supported by over $60 million in initial capital from Israel’s Bank Hapoalim, Signature recruited 65 former Republic Bank employees prior to opening. By February 2003, it had grown to $950 million in assets, placing it within the top five percent of U.S. commercial banks while achieving early profitability. The bank pursued a conservative asset strategy with a net interest margin of 2.8%, which was lower than many competitors.
In March 2004, Signature completed its initial public offering (IPO), listing on NASDAQ under the ticker SBNY. Maintaining a focus on the New York metropolitan area, it became one of the fastest-growing public banks in terms of loan growth. The bank’s strategy prioritized close personal relationships; it eschewed advertising campaigns and refrained from using street signage at branches. CEO DePaolo’s pragmatic leadership style emphasized relationship-building. Following the 2008 financial crisis, this approach supported double-digit increases in both loans and deposits. From 2004 through 2014, Signature’s stock price surged by 650%—outperforming the S&P 500 by tenfold—and earned recognition as "New York's most successful bank."
Beginning in 2007, Signature diversified into multifamily lending and expanded into equipment financing through Signature Financial in 2012. It carved out a strong niche serving law firms in the New York area and increased lending activity that offset dependence on mortgage-backed securities. The bank maintained substantial capital reserves to safeguard depositors with balances exceeding FDIC insurance limits. Although Signature Financial’s taxi medallion loan portfolio faced challenges due to competition from ride-sharing services, overall profitability was maintained. By 2017, total assets neared $50 billion.
In 2018, Signature extended beyond New York by opening a private client banking office in San Francisco—marking a strategic shift from its previously regional concentration. Subsequent growth included additional offices in Newport Beach, Woodland Hills, Ontario (California), Reno (Nevada), and establishing a West Coast operations center in City of Industry, California by 2022.
The bank also entered North Carolina’s market through recruiting bankers from Square 1 Bank in 2019; by 2021 it had become the fourth-largest bank by deposit volume within the Durham–Chapel Hill metropolitan area.
Signature’s emphasis on commercial clients resulted in a high proportion of uninsured deposits—rising from 63% in 2018 to over 89% at the time of closure—indicating significant exposure to large depositors holding funds beyond FDIC coverage limits.
General services
Signature Bank concentrated on serving both business and personal banking needs, with a particular focus on lending and deposit services. It employed a team-based structure, rewarding bankers through an "eat-what-you-kill" compensation model akin to that used in brokerage firms. By 2015, nearly 150 senior bankers reported directly to CEO DePaolo, with some earning incomes surpassing his own. The institution cultivated strong client loyalty, fostering deeper and broader business engagements. A notable example includes Irv Gotti, who remained a steadfast client after Signature provided support during his federal money laundering allegations when other banks declined service.
By 2022, Signature operated nine national business divisions encompassing commercial real estate lending, fund banking tailored for private equity investors, venture banking targeting technology enterprises, specialized mortgage banking, and corporate mortgage finance. The fund banking segment emerged as a major growth area, representing the largest asset category—accounting for 41% of the loan portfolio by 2021.
Two subsidiaries broadened Signature's service portfolio: Signature Securities Group Corporation offered investment advisory services, while Signature Financial LLC specialized in equipment financing and leasing.
On February 20, 2023, DePaolo declared his intention to step down effective March 1 after nearly 22 years as CEO; Chief Operating Officer Eric Howell was appointed as his replacement. An analysis by The Wall Street Journal uncovered that DePaolo, Howell, and CFO Shay sold substantial amounts of Signature stock amid the cryptocurrency-driven price surge in 2021. This insider trading activity largely escaped public attention because Signature submitted reports to the FDIC rather than the SEC—a rare practice for a bank of its scale—and some filings were inaccurately categorized.
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 0.311 | 0.351 | 0.421 | 0.509 | 0.623 | 0.697 | 0.787 | 0.959 | 1.144 | 1.360 | 1.506 | 1.732 | 1.973 | 2.007 | 2.311 | 3.711 |
| Net income | 0.027 | 0.043 | 0.063 | 0.102 | 0.150 | 0.185 | 0.229 | 0.297 | 0.373 | 0.396 | 0.387 | 0.505 | 0.586 | 0.528 | 0.918 | 1.337 |
| Assets | 5.845 | 7.192 | 9.146 | 11.67 | 14.67 | 17.46 | 22.38 | 27.32 | 33.45 | 39.05 | 43.12 | 47.36 | 50.59 | 73.89 | 118.4 | 110.4 |
| Total equity | 0.426 | 0.698 | 0.804 | 0.945 | 1.408 | 1.650 | 1.800 | 2.496 | 2.892 | 3.612 | 4.032 | 4.407 | 4.745 | 5.827 | 7.841 | 8.013 |
Cryptocurrency
The bank made cryptocurrency a strategic priority beginning in 2018 by onboarding clients from the digital asset industry, thereby lending credibility and legitimacy to this sector within traditional finance circles. By the year 2021, deposits from cryptocurrency-related companies accounted for more than sixteen percent of total deposits, increasing to thirty percent by February of 2023. Additionally, Signature maintained reserves in USDC stablecoins managed by Circle.
The excitement surrounding cryptocurrency contributed to a dramatic rise in the bank’s stock price—from $75 to $375 per share within one year—but this heavy concentration introduced risks and led to the bank being labeled as a "crypto bank," a characterization founder DePaolo aimed to counteract in early 2022.
Following consistent deposit growth, the bank encountered outflows that were evenly divided between crypto clients—due to its decision to reduce digital asset lending—and private banking customers who sought higher returns amid rising interest rates elsewhere in the market. Concerns about liquidity arose among investors because of Signature’s exposure to major cryptocurrency brokers; in response, the bank scaled back its crypto exposure by offloading approximately $1.5 billion in related deposits.
After Signature’s collapse, investigations were launched by the U.S Department of Justice and Securities and Exchange Commission into whether the bank had adequately monitored cryptocurrency transactions for potential money laundering risks. Notably, short seller Marc Cohodes had alerted regulators early in 2023 about insufficient controls that may have allowed illegal crypto activity facilitated through Signature.
Signature’s crypto operations revolved around Signet, a blockchain-based payment platform introduced in 2019 exclusively for approved clients that enabled instantaneous gross settlement without intermediaries or fees—functionally similar to Ripple’s system technology. By the conclusion of 2020, Signet had attracted around seven hundred forty clients spanning payroll processing, logistics services, and digital asset banking sectors.
The FDIC’s failure report emphasized management’s unawareness of how cryptocurrency activities could jeopardize traditional customer relationships and highlighted deficiencies in risk management related to the bank’s expanding involvement with crypto operations.
Controversies
On July 13, 2018, The New York Times identified Signature Bank as a principal lender to Donald Trump and his family, including funding for Trump’s golf course in Florida. Ivanka Trump, Donald Trump’s daughter, was a member of Signature’s board between 2011 and 2013. During the 2010s, the bank extended loans to entities affiliated with the Trump Organization while Ivanka held her board position. In the aftermath of the January 6 United States Capitol attack, on January 11, 2021, Signature Bank terminated two of Trump’s personal accounts containing $5.3 million and called for his resignation, citing concerns related to national security.
Signature Bank backed U.S. senators advocating for the Economic Growth, Regulatory Relief, and Consumer Protection Act, which relaxed financial regulations introduced after the 2008 crisis by increasing the "too big to fail" asset threshold from $50 billion to $250 billion. This change exempted Signature from certain regulatory constraints. Chairman Scott Shay expressed opposition to additional regulatory requirements should the bank’s assets surpass $50 billion. Former congressman Barney Frank, who also served on Signature’s board, voted in favor of raising this limit and maintained his stance after joining the institution.
In 2019, Signature encountered protests concerning tenant treatment linked to landlords financed through its lending activities. As one of the largest providers of multifamily loans in the New York metropolitan region with $16 billion in outstanding loans—second only to New York Community Bank—the bank faced scrutiny over its lending practices. Nevertheless, the Association for Neighborhood & Housing Development (ANHD) commended Signature for its dedication to responsible lending toward low- and moderate-income tenants following revisions to its underwriting standards that shifted from market-rate assessments to current rent figures under external advocacy.
Collapse
On March 12, 2023, the New York State Department of Financial Services (DFS) shuttered Signature Bank after it failed to find a buyer or stabilize its financial position amid substantial deposit withdrawals. Customers rapidly transferred funds to larger banks, compelling Signature to seek emergency advances twice within 90 minutes from the Federal Home Loan Bank of New York. The FDIC classified the failure as posing systemic risk, allowing exceptional measures to safeguard deposits exceeding the standard $250,000 insurance cap.
Appointed as receiver, the FDIC established a bridge bank managed by Greg D. Carmichael, former CEO of Fifth Third Bancorp. At closure, approximately 90% of Signature’s $89 billion in deposits were uninsured. The FDIC, Federal Reserve, and Treasury Department guaranteed full protection for all depositors; however, shareholders and bondholders incurred total losses.
Signature’s downfall followed shortly after the collapses of Silicon Valley Bank and Silvergate Bank—both prominent in cryptocurrency markets. With assets totaling $110 billion at shutdown, Signature represented the third-largest bank failure in U.S. history. Despite significant deposit withdrawals on the Friday preceding closure, management believed the bank remained well-capitalized. Former Congressman Barney Frank attributed the swift collapse to panic originating from Silicon Valley Bank’s failure that intensified concerns over Signature’s exposure to cryptocurrencies, triggering over $10 billion in withdrawals within a single day. Analysts and ex-board members criticized Signature’s crypto-related strategy as a critical error that diverted attention from its core focus on small business clients.
The failure had wide-reaching effects across several sectors: Circle suspended minting and redemption of its USDC stablecoin via Signature’s Signet platform; Coinbase restricted customer access to Signet during banking hours; and concerns arose regarding financing interruptions for New York real estate projects—particularly rent-stabilized properties—where Signature was a major lender. Additionally, many Broadway productions depended heavily on Signature for payroll processing.
On April 28, internal examinations by both the FDIC and DFS revealed that Signature’s rapid expansion outpaced its capacity for effective risk management. Regulators downgraded its liquidity rating in 2019 and cited deficiencies in corporate governance and risk oversight amid growth. Both agencies noted that understaffing impeded proper supervision. While these reports minimized cryptocurrency clients’ direct influence on the collapse, they highlighted Signature’s large proportion of uninsured deposits and crypto-related reputation as contributing factors.
The FDIC projected a $2.5 billion cost to its Deposit Insurance Fund resulting from Signature Bank’s failure.
Disposition of assets
On March 19, 2023, the FDIC revealed that New York Community Bancorp, the parent company of New York Community Bank, would assume certain deposits and loans from Signature Bridge Bank. Its 40 branches were integrated into the Flagstar Bank subsidiary starting March 20.
Excluded from the transaction were roughly $60 billion in loans retained in receivership, including $11 billion connected to rent-controlled apartment properties impacted by a 2019 regulation capping rent increases. Additionally, about $4 billion in deposits associated with the digital asset sector were not included and were designated for reimbursement to depositors. The FDIC advised these account holders to either close their accounts by April 5 or expect to receive repayment checks by mail.
In June, Customers Bancorp purchased Signature’s venture banking portfolio valued at $631 million from the FDIC at a 15% markdown and onboarded 30 former Signature venture bankers.
By July 2023, the FDIC commenced a sales process for an $18.5 billion portfolio consisting of private equity-linked loans previously held by Signature. In November, Blackstone Inc. appeared as the frontrunner to acquire approximately $17 billion in commercial real estate loans from Signature, facing competition from firms such as Starwood and Brookfield.