loanDepot Withdraws $225M from Signature Bank

This week, loanDepot moved quickly to withdraw $225 million from Signature Bank. The bank was shut down by New York State officials on Sunday due to concerns about its leadership and problems with cryptocurrency.

In a filing Wednesday, loanDepot, which is based in Irvine, Calif., said in an 8-k Security and Exchange Commission filing, “In relation to the recent closures of certain regional banks, loanDepot.com LLC, an indirect subsidiary of loanDepot Inc. (the “company”), transferred $225 million of corporate cash balances held at Signature Bridge Bank, N.A., operated by the FDIC (“Signature”), to a large money center bank on March 13, 2023. All of the company’s cash and cash equivalents are now distributed across large money center banks. The company still maintains fully insured custodial deposit accounts at Signature.”

What loanDepot can’t do is get out its servicing rights contract and warehouse line with Signature. In the same filing, it reported, “The company is also a party to a $300 million warehouse facility, in which Signature is a 50% participant, and has a $300 million mortgage servicing rights facility with Signature. Both of the facilities expire in December 2023. There are no acceleration rights under these facilities for a defaulting lender; therefore, we continue to have full access to these facilities under the terms and conditions set forth in the respective credit agreements.

“We expect to have full access to the deposits held at Signature and do not expect any material adverse effect on our financial condition or operations, as a result of these events,” loanDepot said.

Signature Bank is currently under the control of the Federal Deposit Insurance Corporation (FDIC) as receiver, and the FDIC has transferred all of the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders.