Over the weekend, we learned that First Citizens Bank had agreed to acquire the assets of northern California-based Silicon Valley Bank from the Federal Deposit Insurance Corp.
As part of the deal, First Citizens agreed to buy Silicon Valley deposits at a discount with the FDIC keeping troubled assets and selling them off at a loss that will reportedly run $20 billion. The FDiC’s insurance fund, which assesses member banks, will recoup the loss.
Silicon Valley Bank’s failure rocked the nation and even the global financial system, with the FDIC unable to immediately find a buyer for a bank where the bulk of deposits were above the federal agency’s quarter-of-a-million dollar insurance limit.
First Citizens, based in Raleigh, NC, is not to be confused with Rhode Island-based Citizens Bank, which operates offices in Delaware.
It turns out this isn’t the first rodeo regarding First Citizens snapping up assets of troubled banks.
Across the river in Salem County, NJ, First Citizens in 2017 acquired assets and offices of First Harvest Bank after New Jersey regulators shut down the financial institution.
| First Citizens has made several similar deals and last year acquired banking and leasing company CiT. It has stitched together a banking system that operates on both coasts with more than 500 branches. First Citizens has made several similar deals and last year acquired banking and leasing company CiT. It has stitched together a banking system that operates on both coasts with more than 500 branches. |
| The First Citizens deal is good news for regional banks like Wilmington-based WSFS, which saw their stock prices slide during the crisis. Despite loosening regulations a few years back, most banks are reportedly in good shape. |
| The failure of Silicon Valley remains troubling and puzzling. ProPublica, in a story on this site, offers one analysis that points to a regulatory failure. Others point to the effects of stimulus programs pumping money into the economy and contributing to a high inflation rate. There is also a mention of “woke capitalism,” whatever that is. |
| Whatever the case, the overhang of uninsured deposits, coupled with rising interest rates should have been flagged by regulators at the state and federal level. – Doug Rainey, chief content officer. |
