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The news of Signature Bank’s failure Sunday sent alarm bells throughout the Broadway industry, as general managers, producers and accountants worked to make sure that shows could make their weekly payroll.
“Broadway owes the federal government another thank you note, because I think had they not come in and taken control of it, today would have been a nightmare,” a general manager on Broadway told The Hollywood Reporter on Monday.
(The first thank you note went to Sen. Chuck Schumer and other members of Congress who helped pass Shuttered Venue Operators Grant legislation, which gave Broadway productions up to $10 million to reopen.)
State regulators seized the Signature, a New York-based bank, on Sunday evening, in the wake of the Silicon Valley Bank collapse on Friday. The Silicon Valley Bank failure spooked clients at Signature Bank and led to a run on deposits Friday, The New York Times reported. Signature Bank, one of few banks to accept crypto deposits, was also still reeling from its outsized exposure to the sector after it imploded last year.
It’s also one of the two main banks that works with Broadway productions, and so its closure was cause for alarm in the industry.
As of Dec. 31, 2022, the bank had total assets of about $110.36 billion and total deposits of about $88.59 billion, making this the third-largest bank failure in history.
The panic happened over the weekend, as members of Broadway shows saw the news of Signature Bank failing and were concerned about how it would impact their ability to meet the weekly cast and crew payroll, as well as pay other operational expenses, all of which total in the hundreds of thousands of dollars. Broadway vendors were also checking in with productions to ensure they would be able to meet their payment obligations.
The fear subsided somewhat throughout the day Monday, as the bank continued to be largely operational and as Broadway productions were able to send wires. Greater reassurance came from the fact that in taking over the bank Sunday evening, regulators promised that “all depositors of this institution will be made whole.” The Federal Deposit Insurance Corporation transferred all deposits and almost all assets to the newly named Signature Bridge Bank operated by the agency.
However, one payroll company, Checks and Balances, which works with many Broadway shows, was choosing to issue hard checks this week, rather than issue direct deposits through Signature, because of the temporary “likelihood of delays in the transfer and availability of funds” as regulators take over operations, according to a note sent to clients.
Despite the reassurances, many Broadway productions were still planning to take at least some of their business to another bank, given the uncertainty looming about Signature Bank and whether it will ultimately be bought or not.
“Things are operating, but I’d say that people are still being prudent and moving money out,” said Robert Fried, a partner at accounting practice Withum, who leads the firm’s theater and entertainment group. “It’s just not as a mad of a dash, because, as some would say, it’s actually the safest place to have your money right now since the government’s insuring 100 percent of your deposit.”
Many Broadway productions were moving or considering moving their day-to-day banking accounts to City National Bank, the other main bank that works with Broadway productions and a subsidiary of Royal Bank of Canada, a connection that many view as shielding it from further fallout in the U.S. banking industry. (City National Bank is a mainstay for the entertainment industry beyond Broadway, carving out close ties with Hollywood film and TV producers as well.)
While larger banks are under consideration for longer-term investments, City National’s connection to Broadway is one that many in the industry view as crucial, given the needs of the specialized sector.
“The only bank right now that could be palatable for us to work with is City National because the rest of them do not understand our industry and do not have an ability to front face with us,” another general manager told THR.
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