First Citizens acquires Silicon Valley Bridge Bank

By VICTOR SKINNER THE CENTER SQUARE CONTRIBUTOR

(The Center Square) — The purchase of assets and loans of the collapsed Silicon Valley Bridge Bank will nearly double the size of First Citizens Bank, a deal North Carolina officials said reflects well on that state.

Frank Holding, CEO of First Citizens, said the move will help the family-owned bank expand its western U.S. operations while providing new benefits to its existing customers.

“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,” Mr. Holding said. “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 highnet-worth customer service and approach.”

The Federal Deposit Insurance Corp. created Silicon Valley Bridge Bank, National Association following the recent closure of Silicon Valley Bank by the California Department of Financial Protection and Innovation. The move was intended to stabilize the bank and allow time to market the franchise after a run on Silicon Valley Bank forced the FDIC to take over the lender earlier this month.

The FDIC received 27 bids from 18 bidders for the bridge bank before settling on the deal announced Sunday with First Citizens, which involves the purchase of about $72 billion in assets at a discount of $16.5 billion. Another approximately $90 billion in securities and other assets will remain in receivership with the FDIC. The FDIC and First Citizens agreed to a loss-share transaction for SVB’s commercial loans.

North Carolina Treasurer Dale Folwell applauded the deal, which he said “is a positive reflection of the conservative regulatory environment that we have established in North Carolina.”

“I believe this cements our place as the second-leading banking center in the United States behind New York,” Folwell said. “I am proud of North Carolina Commissioner of Banks Katherine Bosken and her staff for all of the efforts that they have put forth in analyzing this transaction and solidifying confidence in our North Carolina state-chartered banks.”

The estimated cost of Silicon Valley Bank’s failure for the

FDIC’s Deposit Insurance Fund, used to cover federally insured deposits, is expected to be about $20 billion, though a full total will not be available until the FDIC terminates its receivership.

First Citizens has purchased more than 20 collapsed banks since 2009. The SVB deal will nearly double its current estimated assets of $109 billion to $181 billion, making it one of top 25 banks in the country, according to Federal Reserve data.