Shares of First Citizens BankShares (FCNCA) are skyrocketing after the regional bank purchased a large portion of collapsed Silicon Valley Bank.
First Citizens said it struck an agreement with the Federal Deposit Insurance Corporation (FDIC) to buy out of receivership “substantially all loans and certain other assets, and assume all customer deposits and certain liabilities” of the former bank, which was taken over by the FDIC on March 10.
First Citizens noted that as part of the deal, it will assume assets of $110 billion, deposits of $56 billion, and loans of $72 billion. It will also receive a line of credit from the FDIC for “contingent liquidity purposes,” and struck an agreement with the FDIC to protect the bank against potential credit losses. First Citizens added it will not acquire any of the assets, common stock, preferred stock, debt, or assume any other obligations of Silicon Valley Bank’s former parent, SVB Financial Group.
Bank Branches Open
The FDIC mentioned that approximately $90 billion in securities and other assets of Silicon Valley Bank will remain in the receivership for disposition by regulators. It indicated that as of today, the 17 former branches of the bank will open as First-Citizens Bank & Trust Company branches. The FDIC reported that the cost of the Silicon Valley Bank failure to its Deposit Insurance Fund will be approximately $20 billion.
“The bank has successfully completed more FDIC-assisted transactions since 2009 than any other bank,” explained First Citizens CEO Frank Holding, Jr. He said First Citizens looks forward to “building relationships with our new customers and positioning our company for continued success.”
Shares of First Citizens BankShares are soaring 47% as of 11 am E.T., and are helping to lift shares of other banks. In addition, today’s gains have put shares of First Citizens in positive territory for the year.