(Bloomberg) -- Signature Bank was seized by the government Sunday after regulators lost faith in management and depositors fled, according to New York officials.

“The bank failed to provide reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership,” the state’s Department of Financial Services said in an emailed statement Tuesday. “The decision to take possession of the bank and hand it over to the FDIC was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”

After the DFS put Signature into receivership, the Federal Deposit Insurance Corp. took over the institution and set up a bridge bank to serve clients. The collapse — the third-largest bank failure in US history — followed a surge in customer withdrawals on Friday that totaled about 20% of the company’s deposits, according to a person familiar with the matter.

Former Chief Executive Officer Joseph DePaolo didn’t immediately respond to a request for comment, nor did a representative for the bridge bank.

Barney Frank, the former US congressman who was on Signature’s board of directors, said he had a different perspective on how events unfolded.

“I’m surprised,” Frank said in an interview. “That was not my understanding of where we were.” 

Frank said data regarding the bank’s balance sheet was volatile as management dealt with outflows, but executives eventually managed to get a grasp on the situation. He said he wasn’t involved directly in the talks with regulators, but that he and other members were being briefed by executives.

“By Sunday morning, the executives of the bank believed they had satisfied the need for the data and had secured the capital from the discount window and elsewhere,” Frank said. He reiterated his belief that the bank would have been able to open on Monday, and said that he still suspected the bank’s willingness to engage with crypto companies led to its closure.

The regulators “wanted to send a message to get people away from crypto,” Frank said in a Bloomberg radio interview Monday. “We were singled out to be the poster child for that message.”

The DFS said the decision “had nothing to do with crypto,” adding that the agency “has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space.”

The former congressman said it was his understanding that deposit outflows had stabilized as of Sunday morning. But the DFS described “significant withdrawal requests still pending and mounting” through the weekend.

Signature lost 20% of its deposits on Friday, as clients spooked by the collapse of SVB Financial Group’s banking unit fled to larger competitors, the person familiar with the matter said.

The person, who asked not to be identified discussing a private matter, didn’t provide exact figures for how much left the bank. But Signature said in a statement Thursday that it held roughly $89.2 billion in deposits as of March 8. That would suggest approximately $17.8 billion was pulled in a single day. By comparison, investors and depositors demanded $42 billion in withdrawals from SVB’s Silicon Valley Bank on Thursday, according to a regulatory filing.

Signature held $4.54 billion in cash on its balance sheet and $26.4 billion in “marketable liquid securities,” it said in last week’s statement.

The outflows — which haven’t been previously reported — provide a sense of the challenges regulators and bank executives grappled with into the weekend as federal authorities worked to line up liquidity solutions and reassure depositors.

The DFS was considering closing down Signature Bank last week, according to New York State Senator James Sanders, who chairs the Senate Banking Committee. “By Saturday, after they saw a run on the bank, they knew they had to take some movement,” Sanders said in an interview.

The DFS said in a statement that “the decision to take possession of the bank and hand it over to the FDIC was only made when it was clear the bank would be unable to do business in a safe and sound manner on Monday.” Governor Kathy Hochul said Monday that officials started monitoring the bank Friday and worked through the weekend on a solution.

Ran Eliasaf said he was one of the depositors who withdrew money from New York-based Signature. He’s the managing partner of Northwind Group, a New York commercial real estate private equity firm that provides short-term and construction financing for multifamily residences, condos, senior-housing facilities and nursing homes. 

On Friday at about 10:30 a.m. New York time, Eliasaf was watching the fallout from SVB’s collapse when he sent a message to his team: “It’s better to be safe than sorry.” He told them to pull “tens of millions of dollars” of deposits out of Signature, moving money to JPMorgan Chase & Co., Bank of America Corp. and a few smaller banks. 

--With assistance from Max Abelson and Laura Nahmias.

(Updates with DFS, Hochul comments in 17th paragraph. A previous version of this story corrected date in eighth paragraph.)

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