Who owns Signature Bank? The banks rapid rise and fall

Signature Bank

Signature Bank was the latest bank to fall following the domino effect started by the liquidation of Silvergate Bank. Panic gripped investors and founders with uninsured deposits in Signature Bank, who funneled their money into bigger banks like Citigroup and JPMorgan Chase, CNBC reports. 

By 12th March 2022, Signature Bank executives believed they had weathered the storm. Hours later, state regulators shut down the bank, which board member and former congressman Barney Frank described as unnecessary. 

“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Frank told CNBC. “We became the poster boy because there was no insolvency based on the fundamentals.”

Signature Bank was founded and owned by Joseph DePaolo, John Tamberlane, and Scott Shay

Joseph DePaolo and John Tamberlane, formerly of Republic National Bank of New York, collaborated with Scott Shay to open Signature Bank on 1st May 2001. Signature Bank’s target was small business owners with about $250,000 in assets and wealthy clients. 

“We’re not going after the Rockefeller family business,” DePaolo told The New York Times. “Our customer is the person who’s built up his business over the years.”

Armed with over $60 million from Bank Hapoalim of Israel, Signature Bank opened six branches in New York City. It employed 65 former employees from Republic Bank who’d exited en masse following HSBC’s acquisition of the bank. 

Joseph DePaolo and Scott Shay

With DePaolo serving as CEO and President, Shay serving as board chairman, and Tamberlane working as vice chairman, Signature Bank grew exponentially. Twenty months after its launch, Signature Bank had nearly $1 billion in assets. 

“He [DePaolo] managed the growth of Signature Bank from a start-up entity with $50 million in assets to an institution exceeding $100 billion in assets. Signature Bank, at the time of its founding, ranked somewhere around the 7,900th largest U.S.-based commercial bank, based on deposits,” Shay said in mid-February 2023. “It has since grown to become a top 25 largest U.S.-based commercial banks ranked by deposits, today,” he continued

DePaolo reportedly stepped down as CEO following the revelation of Signature Bank’s crypto ties

Signature Bank’s move to allow crypto investments in 2018 was seen as a masterstroke – it accelerated the bank’s already rapid growth. 

Following FTX’s spectacular collapse, Signature Bank attempted to distance itself from the digital assets world. The fall of many crypto companies sparked questions from investors and depositors about Signature Bank’s survival.

“We are not just a crypto bank and we want that to come across loud and clear,” executive Eric Howell said during an industry conference in December. Howell said Signature Bank would ‘exit about $8 billion worth of deposits in that space, which we can easily cover through cash and borrowings’. 

Rumors claimed that crypto problems sparked the bank’s early 2023 executive reshuffle. DePaolo stepped down as president and CEO of the bank, taking on a new senior advisor position. Eric Howell, the former COO, would succeed DePaolo. 

Signature Bank insisted that the transition was planned years ago. “For the past several years, the Board has been deeply involved in guiding this transition and has been working to make it as seamless as possible,” Shay said, per BusinessWire

A month after the announcement of the reshuffle, Signature Bank fell. Whether the bank’s crypto troubles inspired the leadership change remains unclear; however, Signature bank’s cryptocurrency ties undoubtedly contributed to its collapse. 

According to Forbes, by February 2023, 30% of Signature Bank’s deposits came from the crypto world.

State regulators have appointed Greg D. Carmichael as CEO of Signature Bridge Bank

Following the seizure by state regulators, Signature Bank is now Signature Bridge Bank. The Federal Deposit Insurance Corporation, the bank’s receiver, appointed Greg D. Carmichael as CEO. Carmichael served as chairman, president, and CEO of Fifth Third Bank. A statement by the FDIC about Signature Bridge Bank reads:

“All depositors of the institution will be made whole. No losses will be borne by the taxpayers. Shareholders and certain unsecured debt holders will not be protected. Senior management has also been removed.”

“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.”

Signature Bridge Bank will run Signature Bank operations until the receiver can ‘stabilize the institution and implement an orderly resolution’. 

With Signature Bank stock at $0, the bank’s collapse has hurt investors. The allure of investing with small banks like Signature Bank is that the stock price can skyrocket – in early 2022, Signature Bank stock hit a high of $366 – potentially benefiting investors. 

On the flip side, the stock price can dip dramatically, as it has now. Reuters reports that shareholders have sued the bank’s former executives for claiming it was financially secure days before its seizure by a state regulator.