First Citizens Bank has acquired the deposits and loans of Silicon Valley Bank, which was deemed a failed bank. The Federal Deposit Insurance Corp. (FDIC) announced that the deal has been finalized late Sunday in the US, and that all depositors of Silicon Valley Bridge Bank will automatically become depositors of First Citizens Bank & Trust Company. Deposits assumed by the First Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit.
According to reports, Silicon Valley Bridge Bank had around $167 billion in assets and nearly $119 billion in deposits. First Citizens Bank acquired $110.1 billion in total assets, which included $72.1 billion in loans, and $56.5 billion in deposits and $34.6 billion in other borrowings assumed by the bank. The FDIC has stated that securities and other assets worth around $90 billion will remain in the receivership, waiting to be disposed of by the agency.
The FDIC has also acquired equity appreciation rights in First Citizens BancShares common stock, the parent company of First Citizens Bank, which could be worth up to $500 million, depending on market conditions.
The failure of Silicon Valley Bank is estimated to have cost its Deposit Insurance Fund around $20 billion, according to initial estimates from the FDIC. However, the exact cost will be established once the FDIC concludes the receivership.
It remains unclear how many former clients of Silicon Valley Bank will remain with First Citizens as of Monday, as many established banks, such as Citi and First Republic, as well as fintech neobanks, poached Silicon Valley Bank’s clients during the chaotic days after the bank run.
The acquisition marks a significant move for First Citizens Bank, which has been expanding in recent years through acquisitions. In 2020, it acquired Franklin Financial Network in Tennessee and was also involved in a merger with Entegra Financial Corp in 2019. The bank also made an unsuccessful bid for CIT Group in 2017.
This acquisition provides First Citizens with a substantial platform to establish its presence in California and expand its national footprint. The move also enables the bank to scale up its loan portfolio and deposits, which could translate into higher revenues for the company.
The acquisition of Silicon Valley Bank is expected to help First Citizens compete more effectively with larger banks and provide the bank with a significant advantage over other mid-sized banks. First Citizens Bank is known for its strength in the Carolinas, where it has a strong regional presence. However, with this acquisition, the bank is now poised to become a major player in the West Coast market as well.
