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Banking & Finance

FDIC Taps First Citizens Bank To Acquire Most Holdings Of Failed Silicon Valley Bank

By Jenny Callison, posted Mar 27, 2023
The assets and some liabilities of Silicon Valley Bank, which failed March 10, now belong to Raleigh-based First Citizens Bank. Late Sunday, First Citizens emerged as the winner in the FDIC’s competitive bidding process and entered into an agreement with the FDIC.

On Monday morning, all 17 branches of Silicon Valley Bridge Bank opened as branches of First Citizens Bank & Trust Co. Systems conversions are underway. The SVB branches join nearly 1,120 existing First Citizens branches in 21 states, including 121 in California. Of the bank’s 479 branches in North Carolina, 13 are in the Wilmington market.

The choice of First Citizens to acquire the assets and deposits of the former SVB is a win for the former bank’s customers, Scott Custer said Monday.

“Depositors at banks seldom lose out. Shareholders may lose out, but the FDIC almost always finds a home for a failed bank,” said Custer, executive chairman of Raleigh-based Dogwood State Bank and a veteran of several bank mergers in the state. “So SVB customers went from being depositors in a failed bank to being part of one of the safest banks in the country.”
 
A news release from First Citizens spelled out the acquisition specifics.

“As part of the agreement, First Citizens Bank will assume Silicon Valley Bridge Bank, N.A. assets of $110 billion, deposits of $56 billion and loans of $72 billion, based on latest information provided by the FDIC,” it stated. “First Citizens Bank will additionally receive an available line of credit from the FDIC for contingent liquidity purposes. In addition, First Citizens Bank has entered into a loss share agreement with the FDIC to provide further downside protection against potential credit losses.”

The Raleigh-based bank will not take on any assets, stock, debt or other obligations of SVB Financial Group, SVB’s former holding company, the release stated. Approximately $90 billion in securities and other assets from SVB will remain in the bridge bank receivership for disposition by the FDIC.

This is not First Citizens’ first rodeo, said Peter Gwaltney, president and CEO of the N.C. Bankers Association.
 
“First Citizens Bank has an established record of successful acquisitions, including purchases of failed banks in the aftermath of the 2008 financial crisis,” he said Monday. “The bank already has a substantial presence in California, so SVB is not unfamiliar territory. “This is an excellent transaction for First Citizens Bank, its shareholders and customers, which is naturally good for North Carolina.”  
 
First Citizens’ chairman and CEO Frank Holding Jr. emphasized that point as well in the bank’s announcement.
 
“First Citizens has a reputation for financial strength, exceptional customer service and prudent lending that spans 125 years,” he said in the release. “We have partnered with the FDIC to successfully complete more FDIC-assisted transactions since 2009 than any other bank, and we appreciate the confidence the FDIC has placed in us once again.”
 
First Citizens sought to assure its existing customers that the bank remained in a strong financial position.

“First Citizens has a proud history of growing organically and through strategic acquisitions that build our core capabilities in a careful and deliberate manner,” Holding said in the release. “This transaction leverages our solid foundation to add significant scale, geographic diversity, compelling digital capabilities and most importantly, meaningful solutions for customers throughout their lifecycle.”
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