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First Citizens Bank scoops SVB, FDIC to take $20B hit on failure

Mar 28, 2023

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Silicon Valley Bank deposits are no longer under federal control . On Sunday, March 26, the Federal Deposit Insurance Corporation announced that North Carolina-based First Citizens BancShares has acquired $56.5 billion in deposits and $72 billion in loans from Silicon Valley Bank.

The regulatory agency estimates the collapse will cost its deposit insurance fund roughly $20 billion. The fund relies on fees from member banks and does not use U.S. taxpayer dollars.

First Citizens purchased the failed bank at a $16.5 billion discount and is hoping to leverage Silicon Valley Bank’s specialty in technology companies.

“Silicon Valley Bank overlaps our strengths in private banking, wealth management and small business banking,” First Citizens Chairman and CEO Frank Holding Jr. said in an interview with CNBC Monday morning. “What we look forward to learning and listening to is their market expertise in serving the tech and venture market and we’ll be adding a lot of associates with that capability.”

First Citizens has acquired more than 20 FDIC insured institutions since 2009, the bank said in a statement Monday, March 27. And the latest deal moves it into the top 15 banks in the nation, according to Bloomberg Intelligence. Silicon Valley Bank’s 17 locations in California and Massachusetts opened under its new parent company Monday morning.

The new bank will have to meet the expectations of a niche clientele that went to Silicon Valley Bank for very specific reasons. Eric Foster, co-founder of Woop Insurance, which turned to SVB after facing issues with East Coast regional banks.

“Every time I had to wire something it came up as fraudulent,” Foster told Straight Arrow News. “Because we had huge sums of money come in with basically no real reason for it outside of, yes, we are venture-capital backed and that is what the industry is, and then huge sums of money outflow in a really short period of time.”

“Commercial banking was the bane of my existence, because I would spend days just doing normal business transactions, and it had to actually be me, physically had to be the CEO of the company,” he explained.

Foster said Silicon Valley Bank’s reputation and ease of doing business there convinced him to make the switch. In the wake of First Citizens’ acquisition, Foster said it’s, “business as usual at this point.”

Straight Arrow News has been covering the collapse of Silicon Valley Bank and the crisis in the sector.


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SIMONE DEL ROSARIO: THE FDIC’S DEPOSIT INSURANCE FUND IS TAKING A $20 BILLION DOLLAR HIT OVER SVB’S FAILURE.

AND NOW, SVB HAS A NEW NAME. REGIONAL NORTH CAROLINA-BASED FIRST CITIZENS IS TAKING OVER – GETTING $56.5 BILLION IN SVB’S DEPOSITS AND $72 BILLION IN LOANS AT A $16.5 BILLION DOLLAR DISCOUNT. 

ACCORDING TO A SPOKESPERSON, FIRST CITIZENS IS NOT NEW TO THIS. THEY’VE ACQUIRED MORE THAN 20 FDIC-INSURED BANKS SINCE 2009. AND ITS LATEST SNAG MOVES IT INTO ONE OF THE TOP 15 U-S BANKS, ACCORDING TO BLOOMBERG INTELLIGENCE

BUT WILL IT BE ABLE TO MEET THE NEEDS OF TECH STARTUPS LIKE WOOP INSURANCE THAT BANKED WITH SVB? COMPANY CO-FOUNDER ERIC FOSTER TOLD US ABOUT TROUBLES WITH REGIONAL EAST COAST BANKS THAT DROVE HIM TO S-V-B IN THE FIRST PLACE.

ERIC FOSTER | CO-FOUNDER, WOOP INSURANCE: Every time I had to wire something it came up as fraudulent. Because we had huge sums of money come in, come into us with basically no real reason for it outside of yes, we are venture capital backed that is what the industry is, and then huge sums of money outflow in a really short period of time. My literal line before, is commercial banking was the bane of my existence, because I would spend days just doing normal business transactions, and it had to actually be me to get physically had to be the CEO of the company. So the reason why I went there is because, hey, we knew we had the money, there is a reputation of being easy. And frankly, when I got there, I was like, wow, this is a lot easier than everyone else.

SIMONE DEL ROSARIO: AND NOW BILLIONS ARE AT STAKE IN HOW FIRST CITIZENS ADAPTS TO ITS NEW, HUGE TECH BASE. FOR NOW, FOSTER TELLS US – HE’S STICKING WITH THEM.

FRANK HOLDING JR., CHAIRMAN AND CEO, FIRST CITIZENS BANK: Silicon Valley Bank brings to us, overlaps our strengths in private banking, wealth management, and small business banking. What we look forward to learning and listening to is their market expertise in serving the tech and venture market and we’ll be adding a lot of associates with that capability.