First Citizens to Buy Silicon Valley Bank Loans and Deposits

First Citizens BancShares has agreed to buy the loans and deposits of failed Silicon Valley Bank (SVB) from the Federal Deposit Insurance Corp (FDIC). The 17 branches once belonging to Silicon Valley Bank will now open as First Citizen Bank branches beginning today.

According to the FDIC, the purchase includes $72 billion of Silicon Valley Bank assets at a $16.5 billion discount. About $90 billion in stressed securities and other assets will remain in FDIC receivership. The FDIC has obtained equity appreciation rights of up to $500 million in First Citizens Bank common stock.

“This has been a remarkable transaction in partnership with the FDIC that should instill confidence in the banking system,” said Frank Holding Jr., chief executive officer of First Citizens.

The FDIC took control of SVB on March 10, following a run on deposits, and moved them into a “bridge bank” to protect depositors. At the time, the lender had an estimated $167 billion in assets and $119 billion in deposits. The regulators have since been seeking to auction off the failed bank, which will cost the FDIC an estimated $20 billion.

The North Carolina-based First Citizens Bank has an estimated $109 billion in assets and $89.4 billion in deposits and was the 30th largest bank in the US as of December 2022.

The SVB purchase deal nearly doubles the size of First Citizens’ current assets, totaling $181 billion and making it one of the top 25 banks in the US, while its deposits will total an estimated $145 billion.