First-Citizens Bank officially buys Silicon Valley Bank, according to the FDIC

(CNN) — First-Citizens Bank & Trust Company officially purchased Silicon Valley Bridge Bank and all of its deposits and loans, according to a Federal Deposit Insurance Corporation (FDIC) press release on Sunday.

Starting this Monday, March 27, the 17 former branches of Silicon Valley Bridge Bank will open as First-Citizens Bank & Trust Company, according to the press release.

The Silicon Valley Bridge Bank, National Association was created by the FDIC after the SVB’s closure to “stabilize the institution and market the franchise,” according to the press release. All deposits, assets and qualifying financial contracts of the SVB were transferred to the bridge bank.

“Depositors of Silicon Valley Bridge Bank, National Association will automatically become depositors of First-Citizens Bank & Trust Company. All deposits assumed by First-Citizens Bank & Trust Company will continue to be FDIC-insured up to the insurance limit.” says the press release.

SVB had about $167 billion in total assets and about $119 billion in total deposits as of March 10, 2023, according to the statement.

“Today’s transaction included the purchase of approximately $72 billion of the assets of Silicon Valley Bridge Bank, National Association at a discount of $16.5 billion. Approximately $90 billion of securities and other assets will remain in receivership for its disposition by the FDIC. In addition, the FDIC has received appreciation rights to common stock of First Citizens BancShares, Inc., Raleigh, North Carolina, with a potential value of up to $500 million,” the news release reads. .

The FDIC and First-Citizens Bank & Trust Company have entered into a loss-sharing transaction on the commercial loans that were purchased, according to the news release. This means that the FDIC and First-Citizens “will share losses and potential recoveries on loans covered by the loss-sharing agreement.”

“The loss-sharing transaction is expected to maximize recoveries on assets by keeping them in the private sector. The transaction is also expected to minimize disruptions to loan customers. In addition, First-Citizens Bank & Trust Company will assume all of the Contracts Qualified Financiers Related to Loans,” the press release reads.

The FDIC also estimates the cost of the SVB’s collapse to its Deposit Insurance Fund (DIF) at $20 billion, and “the exact cost will be determined when the FDIC terminates the receivership,” according to the press release.