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The lender that made nearly $10 billion from Silicon Valley Bank's failure

David Hollerith
·Senior Reporter
Updated ·2 min read

First Citizens (FCNCA) got a discount from US regulators when it agreed to acquire loans and assume deposits from the failed Silicon Valley Bank. On Wednesday it disclosed just how profitable that deal was.

The agreement provided the North Carolina lender with a one-time gain of $9.8 billion net of tax, contributing to an overall first-quarter profit of $9.5 billion.

The gain made the Raleigh, N.C.-based institution the second-most profitable US bank for the first three months of the year, behind only the $12.6 billion earned by industry colossus JPMorgan Chase (JPM).

It bested several other giants, making more than Wells Fargo (WFC), Citigroup (C), Goldman Sachs (GS) or Morgan Stanley (MS).

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The stock of First Citizens rose more than 9% following the announcement, offering a reminder that not all regional banks are suffering from a crisis of confidence following the failures of three sizable lenders in two months.

Since the beginning of January, First Citizens is up 54%. PacWest (PACW) and Western Alliance (WAL), two regional lenders under more scrutiny from investors, have lost 74% and 55% during the same period.

Silicon Valley Bank was seized by regulators on March 10 and it took weeks for regulators to find a buyer for parts of the bank.

The First Citizens deal, announced on March 27, included $69 billion in loans and $56 billion in deposits. The Federal Deposit Insurance Corporation also agreed to share losses on loans if those assets turn sour in the future.

The deal helped boost deposits at First Citizens by 56% for the quarter and increase its assets to $214 billion, making it one of the country's top 20 banks.

It didn't completely avoid the chaos triggered by Silicon Valley Bank's fall. It disclosed Wednesday that some depositors assumed from Silicon Valley Bank did pull their money after First Citizens took over.

Those deposits fell by $15 billion between March 27 and April 30, it said, but largely stabilized following the first two weeks of April.

"We find this stability extremely encouraging, not only for FC, but for the industry as a whole given the heightened (and we believe misplaced) fears around industry outflows," Piper Sandler said in a Wednesday note.

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