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WASHINGTON – The Federal Deposit Insurance Corporation (FDIC) has entered into an agreement to purchase and assume all deposits and loans for Silicon Valley Bridge Bank, National Association, by First-Citizens Bank & Trust Company, Raleigh, North Carolina.
The former 17 branches of Silicon Valley Bridge Bank, National Association, as First-Citizens Bank & Trust Company will open Monday, March 27, 2023. Customers of Silicon Valley Bridge Bank, National Association, must continue to use their existing branch until receiving notice from First Citizens Bank & Trust Company that systems conversions have been completed to allow full banking services at all other branch locations.
Depositors of Silicon Valley Bridge Bank, National League, will automatically become depositors of First-Citizens Bank & Trust Company. All deposits assumed by First-Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit.
As of March 10, 2023, Silicon Valley Bridge Bank, the National League, had approximately $167 billion in total assets and approximately $119 billion in total deposits. Today’s deal included the approximately $72 billion purchase of Silicon Valley Bridge Bank, the National League’s assets at a $16.5 billion discount. Approximately $90 billion in securities and other assets will remain in receivership for disposal by the FDIC. In addition, the FDIC has received stock appreciation rights in First Citizens BancShares, Inc. Raleigh, North Carolina, common stock with a potential value of up to $500 million.
The FDIC and First-Citizens Bank & Trust Company entered into a share-loss deal on the commercial loans it purchased from the former Silicon Valley Bridge bank, National League. The FDIC as the recipient and First-Citizens Bank & Trust Company will share the losses and potential recoveries on loans covered by the Loss Participation Agreement. A loss-equity transaction is expected to maximize recoveries on assets by keeping them in the private sector. The deal is also expected to reduce disruptions for loan customers. In addition, the First-Citizens Bank & Trust Company will handle all qualifying financial contracts related to the loans.
The FDIC estimates the cost of the Silicon Valley bank’s Deposit Insurance Fund (DIF) failure at nearly $20 billion. The exact cost will be determined when the FDIC ends the receivership.
The FDIC created the Silicon Valley Bridge Bank, National Association, after the closure of the Silicon Valley Bank by the California Department of Financial Protection and Innovation. All deposits – both insured and uninsured – and all assets and all eligible financial contracts of Silicon Valley Bank were transferred to the bridge bank. The purpose of creating Silicon Valley Bridge Bank, the national association, was to allow the FDIC time to stabilize the organization and commercialize the franchise.
Customers who would like more information about today’s transaction can visit the FDIC website at: https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/silicon-valley.html.