First Citizens Bank Acquires Silicon Valley Bank in New Deal

FDIC Announces Purchase Agreement for Silicon Valley Bridge Bank

The Federal Deposit Insurance Corporation (FDIC) revealed on Sunday that First-Citizens Bank & Trust Company, based in Raleigh, North Carolina, has entered a purchase agreement for all deposits and loans of Silicon Valley Bridge Bank, National Association.

Former Branches to Open as First-Citizens Bank & Trust Company

Starting Monday, March 27, 2023, the 17 Silicon Valley Bridge Bank branches will open as First-Citizens Bank & Trust Company. The FDIC instructed customers to continue using their current units until they are notified of completed systems conversions for full-service banking at all other locations.

First-Citizens Bank Assumes Deposits and Insurance

Depositors at the Santa Clara-based bank will automatically become First-Citizens Bank & Trust Company depositors. The acquiring bank will assume and insure all deposits up to the insurance limit.

Assets and Deposits Involved in the Transaction

As of March 10, 2023, Silicon Valley Bridge Bank held approximately $167 billion in total assets and around $119 billion in total deposits. The transaction included purchasing about $72 billion of the bank's assets at a discount of $16.5 billion. Approximately $90 billion in securities and other assets will remain under FDIC receivership.

Loss-Share Transaction on Commercial Loans

The FDIC and First-Citizens Bank & Trust Company have entered a loss-share transaction on all commercial loans purchased from Silicon Valley Bank (SVB). Both parties will share in the losses and potential recoveries on the loans covered by the agreement. The loss-share transaction aims to maximize asset recoveries by keeping them in the private sector, minimize disruptions for loan customers, and have First-Citizens Bank & Trust Company assume all loan-related Qualified Financial Contracts.

Estimated Cost of SVB's Failure

The FDIC estimates that SVB's failure cost approximately $20 billion. However, a more accurate cost will be determined once the FDIC terminates the receivership.

Creation of Silicon Valley Bridge Bank

The California Department of Financial Protection & Innovation closed Silicon Valley Bank on Friday, March 10. Consequently, the FDIC created Silicon Valley Bridge Bank and transferred all insured and uninsured deposits to the bridge bank.