U.S. flag

An official website of the United States government

Dot gov

Official websites use .gov
A .gov website belongs to an official government organization in the United States.


Secure .gov websites use HTTPS
A lock () or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.


Material Loss Review of Signature Bank of New York

The Office of Inspector General (OIG) of the Federal Deposit Insurance Corporation (FDIC) has issued a Material Loss Review of Signature Bank of New York. 

On March 12, 2023, the New York State Department of Financial Services (NYSDFS) closed Signature Bank of New York (SBNY) and appointed the FDIC as receiver.  On April 28, 2023 the FDIC estimated the loss to the Deposit Insurance Fund to be approximately $2.4 billion.

Under a contract overseen by the OIG, Cotton & Company Assurance and Advisory, LLC (Cotton) performed the Material Loss Review.  The objectives of the engagement were to (1) determine why the bank’s problems resulted in a material loss to the Deposit Insurance Fund, and (2) evaluate the FDIC’s supervision of the bank, including the FDIC’s implementation of the Prompt Corrective Action (PCA) requirements of section 38 of the Federal Deposit Insurance Act, and make recommendations for preventing any such loss in the future. 

SBNY’s failure was caused by insufficient liquidity and contingency funding mechanisms, which impeded the bank’s ability to withstand a run on deposits.  In addition, SBNY management prioritized aggressive growth over the implementation of sound risk management practices needed to counterbalance the liquidity risk associated with concentrations in uninsured deposits.

Cotton found that the FDIC:

  • Missed opportunities to downgrade SBNY’s Management component rating and further escalate supervisory concerns;
  • Did not consistently perform supervisory activities in a timely manner and was repeatedly delayed in issuing supervisory products;
  • Appropriately downgraded SBNY’s Liquidity component rating, but changing market conditions warrant the FDIC’s review and potential revision of examination guidance; and
  • Determined that SBNY was well capitalized throughout each examination cycle prior to its failure based on defined capital measures. 

Cotton made six recommendations intended to improve the FDIC’s supervision processes and its ability to apply effective forward-looking supervision in a changing banking environment.  The FDIC concurred with all of the recommendations and plans to complete corrective actions by March 31, 2024.