First Citizens Reaches Agreement With FDIC to Acquire SVB

 

First-Citizens Bank & Trust Company, a subsidiary of Raleigh, North Carolina-based First-Citizens BancShares Inc., has announced it has entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to purchase out of FDIC receivership all loans and certain other assets of Silicon Valley Bridge Bank. First-Citizens was selected to complete this transaction through a competitive bidding process.

Depositors of Silicon Valley Bridge Bank will automatically become depositors of First-Citizens Bank & Trust Company, and all deposits assumed by First-Citizens will continue to be insured by the FDIC up to the insurance limit. Seventeen legacy Silicon Valley Bridge Bank branches will begin operating as Silicon Valley Bank, a division of First Citizens Bank.

On March 10, 2023, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation and the FDIC was appointed receiver. The FDIC then named named former Fannie Mae head Tim Mayopoulos as CEO of Silicon Valley Bank.

The FDIC created Silicon Valley Bridge Bank following the closure of Silicon Valley Bank by the California Department of Financial Protection and Innovation. All of the deposits—both insured and uninsured—and substantially all assets and all Qualified Financial Contracts of Silicon Valley Bank were transferred to the bridge bank. The purpose of establishing Silicon Valley Bridge Bank was to allow time for the FDIC to stabilize the institution and market the franchise.

The acquisition by First-Citizens comes just days after New York Community Bank (NYCB) subsidiary Flagstar Bank acquired certain assets and assumed certain liabilities of Signature Bridge Bank from the FDIC. Signature Bank was closed earlier by the New York State Department of Financial Services, which also appointed the FDIC as receiver.

"First Citizens has a reputation for financial strength, exceptional customer service and prudent lending that spans 125 years,” said Frank B. Holding Jr., Chairman and CEO of First Citizens. “We have partnered wDIC 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. We look forward to building relationships with our new customers and positioning our company for continued success as we affirm our commitment to support the integrity of our nation's banking system."

As of March 10, 2023, Silicon Valley Bridge Bank had approximately $167 billion in total assets, and nearly $119 billion in total deposits. Today's transaction included the purchase of approximately $72 billion of Silicon Valley Bridge Bank's assets at a discount of $16.5 billion. Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens BancShares common stock with a potential value of up to $500 million.

"First Citizens has a proud history of growing organically and through strategic acquisitions that build our core capabilities in a careful and deliberate manner," added Holding. "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. Specifically, we are committed to building on and preserving the strong relationships that legacy SVB's Global Fund Banking business has with private equity and venture capital firms. This transaction also will accelerate our expansion in California and introduce wealth capabilities in the Northeast. SVB's Private Wealth business is a natural fit for our high-touch and sophisticated level of high-net-worth customer service and approach.”