First Citizens Shares Soar After Announcing Deal to Buy Failed Silicon Valley Bank

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The share price of First Citizens Bank has soared this week following news that it would buy much of the failed Silicon Valley Bank (SVB) in the wake of its collapse.

The bank, one of the nation’s largest regional financial institutions, saw its shares reach a record high on March 28, rising by as much as 7.2 percent and briefly hitting an all-time peak of $959.99, before paring gains.

As of March 29, shares are up more than 20 percent, extending gains for a third day.

The Raleigh, North Carolina-based bank announced Monday that it is buying the loans and deposits of failed SVB after entering into a purchase and assumption agreement.

SVB was the sixteenth largest bank in the United States, with $209 billion in assets as of Dec. 31, 2022, according to the Federal Reserve. Its collapse subsequently put pressure on other small and regional banks in the United States, including Signature Bank and First Republic.

According to a statement issued by First Citizens Bank, the institution will assume SVB assets of $110 billion, deposits of $56 billion, and loans of $72 billion.

In addition, First Citizens Bank will receive a line of credit from the Federal Deposit Insurance Corporation (FDIC) for contingent liquidity purposes and will have an agreement with the regulator to share some losses on commercial loans to provide further downside protection against potential credit losses.

SVB’s Expensive Failure

First Citizens Bank will not acquire any of the assets, common stock, preferred stock, or debt, or assume any other obligations of SVB Financial Group, according to the statement.

According to a separate statement by the FDIC, around $90 billion in SVB assets will remain in receivership with the FDIC, which received around $500 million in First Citizens stock. The 17 former branches of SVB opened as First Citizens Bank & Trust Company on March 27.

The FDIC said the deal will cost the independent agency around $20 billion, although the exact cost will be determined once the FDIC terminates the receivership.

By Katabella Roberts

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