The Federal Deposit Insurance Corp. (FDIC) announced the selection of Raleigh, N.C.-based First-Citizens Bank & Trust Co. to acquire the deposits and loans of Silicon Valley Bridge Bank (SVBB), the FDIC-managed bank which assumed all assets and obligations of the failed Silicon Valley Bank (SVB).
As of March 10, SVBB held approximately $167 billion in total assets and $119 billion in total deposits. The transaction with First-Citizens included the purchase of about $72 billion in SVBB assets at a discount of $16.5 billion. Approximately $90 billion in securities and other assets remain in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens common stock with a potential value of up to $500 million.
The FDIC and First-Citizens also entered into a loss-share transaction which will see the regulator and bank share in losses and potential recoveries on the loans covered in the loss-share agreement.
“The loss-share transaction is projected to maximize recoveries on the assets by keeping them in the private sector,” the FDIC said in its press release announcing the deal. “The transaction is also expected to minimize disruptions for loan customers.”
The 17 former branches of SVB reopened March 27 as full-service branches of First-Citizens. Depositors of SVB have been automatically converted to depositors of First-Citizens and all assumed deposits will continue to be insured by FDIC up to the $250,000 limit.
The FDIC estimated the cost of the failure of SVB to its deposit insurance fund to be approximately $20 billion, though an exact cost will not be determined until the FDIC terminates the receivership.