FDIC sells assets of Silicon Valley Bridge bank to First Citizens Bank

The Federal Deposit Insurance Corporation (FDIC) will sell all deposits and loans of Silicon Valley Bridge Bank N.A. to First–Citizens Bank & Trust Company, based in Raleigh, N.C.

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The Silicon Valley Bridge Bank is the compiled assets of the former Silicon Valley Bank, which collapsed on March 10 after a run on deposits. It was subsequently taken over by the FDIC. As of March 10, Silicon Valley Bridge Bank had approximately $167 billion in total assets and about $119 billion in total deposits.

This transaction includes the purchase of about $72 billion of Silicon Valley Bridge Bank’s assets at a discount of $16.5 billion. Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens BancShares, the holding company for the bank. This is common stock with a potential value of up to $500 million.

The 17 former branches of Silicon Valley Bridge Bank will open as First–Citizens Bank & Trust Company on Monday, March 27. Silicon Valley Bridge Bank customers should continue to use their current branch until they receive notice from First–Citizens Bank & Trust that systems conversions have been completed to allow full–service banking at all of its other branch locations.

Depositors of Silicon Valley Bridge Bank will automatically become depositors of First–Citizens Bank & Trust. All deposits assumed by First–Citizens Bank & Trust will continue to be insured by the FDIC up to the insurance limit.

The FDIC and First–Citizens Bank & Trust entered into a loss–share transaction on the commercial loans it purchased of the former Silicon Valley Bridge Bank. The FDIC and First–Citizens Bank & Trust will share in the losses and potential recoveries on the loans covered by the loss–share agreement. The loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers. Further, First–Citizens Bank & Trust will assume all loan–related Qualified Financial Contracts.

The FDIC estimates the cost of the failure of Silicon Valley Bank to its deposit insurance fund (DIF) to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership.

The FDIC created Silicon Valley Bridge Bank following the closure of Silicon Valley Bank by the California Department of Financial Protection and Innovation. All of the deposits, assets, and contracts of Silicon Valley Bank were transferred to the bridge bank. The purpose of establishing Silicon Valley Bridge Bank was to allow time for the FDIC to stabilize the institution and market the franchise.