27 Mar, 2023

First Citizens Bank acquires Silicon Valley Bridge Bank

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By Arpita Banerjee


Raleigh, NC-based First-Citizens Bank & Trust Co. Inc., a subsidiary of First Citizens BancShares Inc., has signed an agreement with the Federal Deposit Insurance Corp. to purchase out of FDIC receivership substantially all loans and certain other assets as well as assume all customer deposits and certain other liabilities of Silicon Valley Bridge Bank NA.

The acquisition was consummated on March 27, First Citizens disclosed in a Form 8-K.

The transaction is structured as a whole bank purchase with loss share coverage. First Citizens was selected through a bidding process to complete the transaction.

Silicon Valley Bridge Bank had approximately $167 billion in total assets and about $119 billion in total deposits as of March 10, according to a release by the FDIC.

First Citizens has assumed Silicon Valley Bridge Bank assets of $110.1 billion, deposits of $56.5 billion and loans of $72.1 billion. As part of the deal, First Citizens has acquired the deposits without a premium and the assets were acquired at a discount of approximately $16.45 billion, First Citizens disclosed in its regulatory filing.

First Citizens will additionally receive an available line of credit from the FDIC for contingent liquidity purposes. The bank has entered into a loss-share agreement with the FDIC to provide further downside protection against potential credit losses.

The FDIC said about $90 billion in securities and other assets will remain in the receivership for its disposition. 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 will not acquire any of the assets, common stock, preferred stock or debt or assume any other obligations of SVB Financial Group, the former holding company of Silicon Valley Bank.

Depositors of Silicon Valley Bridge Bank will automatically become depositors of First Citizens. All deposits assumed by the acquiring bank will continue to be insured by the FDIC up to the insurance limit.

On March 27, the 17 legacy Silicon Valley Bridge Bank branches will begin operating as Silicon Valley Bank, a division of First Citizens Bank.

There will be no immediate change to customers' current accounts. They will be able to continue to access their accounts and use their checks and cards. First Citizens said loan customers should continue making loan payments as usual.

The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund to be approximately $20 billion, according to the FDIC release. The exact cost will be determined when the FDIC terminates the receivership.

BofA Securities Inc. is exclusive financial adviser to First Citizens, and Smith Anderson Blount Dorsett Mitchell & Jernigan LLP acted as legal adviser.

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