Raleigh's First Citizens is the new owner of failed Silicon Valley Bank
After a very public collapse earlier this month, Silicon Valley Bank will now be owned by First Citizens Bank.
The Raleigh-based bank bought SVB in a deal negotiated by the Federal Deposit Insurance Corporation — an independent U.S. government agency designed to help financial institutions.
First Citizens has a history of turning around troubled banks.
The bank declined comment until the deal was finalized early Monday morning. First Citizens CEO Frank Holding made the announcement on a conference call with investors.
"We've known about SVB for a long time, and have a lot of admiration and respect for the passion and commitment they have for their customers and their relationship based approach to banking that mirrors our own values and strategy," he said.
Holding is the fourth generation in his family to lead First Citizens, which began in Smithfield 125 years ago. It's a family-controlled bank, with hundreds of branches in 22 states.
While not a household name, Holding says the combined banks will be ready to serve tech entrepreneurs in Raleigh and California.
"This acquisition positions First Citizens to support that growth, both in Silicon Valley's markets and right here in our own backyard in the Research Triangle Park by combining persistence, traditional relationship banking, creativity and stability, with the strengths, relationships, and expertise of legacy SVB," he said.
Connel Fullenkamp — an economist at Duke University — said that is a regional bank known for being "fairly quiet."
"They've had a history of purchasing banks from the FDIC in similar situations," he said. "So this is actually something that's fairly familiar to them."
First Citizens isn't buying all of SVB. About $90 billion in assets will stay with the FDIC. Fullenkamp says the deal is structured to protect First Citizens from potential losses in SVB's loan portfolio.
"The losses are actually going to be shared between the FDIC and First Citizens," Fullenkamp said. "So that kind of that kind of a sweetener, if you will, has been necessary in many of these banking takeovers."
Fullenkamp says First Citizens customers in North Carolina shouldn't notice any changes. Meanwhile, SVB's 17 branches are now operating under the First Citizens Name.