Amid turmoil, LI company lands smoothly with a new bank

David Antar, chief executive of Bay Shore-based Advance Convergence Group, was in the final stages of moving his company to a new bank when a seeming disaster struck.

On March 12, Signature Bank, which was about to take over the company's credit lines and banking relationship, imploded after a run on deposits following the collapse days earlier of Silicon Valley Bank.

"We were in the middle of closing on our paperwork," said Antar, who recalled thinking: "We survived through a pandemic. We survived through supply chain [issues]. What else can you throw at us? A bank failure!"

But two days after Signature's implosion, the Flagstar unit of New York Community Bancorp acquired many of Signature's assets and Antar decided to go forward with the deal.

Antar praised the Signature relationship managers who stayed in contact throughout the turbulence.

"It seems we'll still be dealing with the people we have a high level of comfort with," he said.

The Signature collapse was caused, in part, by its role as a lender to the high-risk cryptocurrency industry. Many Long Island businesses are discovering that staid, no-nonsense banks can offer comfort in chaotic times.

“Boring is good,” said Paul Trapani, co-founder of PassTech Development LLC, a Plainview-based developer of workforce software.

Trapani, who also serves as chief executive of the Long Island Software & Technology Network trade association, said there is “general nervousness in the business community” amid the failures of Silicon Valley Bank, Signature Bank and efforts to bail out First Republic Bank.

Though Silicon Valley Bank was “glamorous,” many Long Island startups skirted the crisis by sticking with banking giants such as JPMorgan Chase and Citibank, he said.

An analysis by S&P Global Market Intelligence found that Signature Bank and Silicon Valley Bank were among the top five nationwide with the highest proportions of uninsured deposits among banks with more than $50 billion in assets.

The study found that uninsured deposits grew amid the economic stimulus measures instituted during the COVID-19 pandemic.

Though Federal Deposit Insurance Corporation policy caps insurance on individual accounts at $250,000, officials gave depositors of Silicon Valley Bank and Signature Bank access to the full balances in their accounts, including those that exceeded the limit, in an effort to avoid cascading bank failures.  

Trapani said that aside from concerns about the vulnerability of their bank deposits, Long Island businesses are facing higher standards to get a loan or a line of credit from banks.

“There’s a concern about a lack of access to capital,” he said.

Despite the turmoil, Antar quipped that the rapid intervention of government regulators, followed by the asset sale to NYCB, proved that the remains of the former Signature Bank are solid.

"Our conclusion is that Signature is the safest bank in America," he said.

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.