Stock at record high, First Citizens reports $9B gain from Silicon Valley Bank deal

RALEIGH – First Citizens BancShares – corporate parent of FirstCitizens Bank – says its March purchase of the failed Silicon Valley Bank is already paying off in big ways. The company reported a first quarter net income of $9.52 billion, smashing Wall Street expectations with much of that tied to gains from the purchase made after SVB was seized by federal regulators and then sold to First Citizens in a auction.

Investors appear to love the news, which beat Wall Street expectations for earnings ($20.09) by more than $7.50 a share. And the one-time boost from the SVB deal produced revenues of more than $1.1 billion, far beyond expectations.

How big was the quarter? In its financial presentation for investors, First Citizens declared: “A Momentous First Quarter”

The bank’s stock hit a record high of $1,107.64 on Tuesday (data from 1996 forward) before closing at $1,074.o6. And after the earnings news hit the wires Wednesday morning shares immediately climbed more than $3. First Citizens shares soared$400 on the day after the SVB deal was announced and have traded at $954 or better since.

‘A Powerful Combination’

In its earning presentation First Citizens broke down the SVB deal “A Powerful Combination) in this chart:

First Citizens Bank chart highlighting the SVB deal

First Citizens, celebrating its 125th year i business, also is now one of the nation’s largest banks with more than $200 billion in assets, the bank says. SVB had ranked 18th before it failed. First Citizens ranked 35th.

The SVB deal not only boosted First Citizens in size of asset and physical reach with multiple banks added from California to New York but is also seen by leaders in the Triangle tech sector as a boost to companies’ access to investment capital.

Although the sale occurred on March 27, First Citizens (stock symbol FCNA) included data from the deal in its quarter ending March 31.

Frank B. Holding Jr., Chairman and CEO, First Citizens Bank (First Citizens photo)

The news elated Chairman and CEO Frank Holding, Jr. who also provided an update on the SVB merger.

“We are pleased with our solid financial performance in the first quarter, marked by continued momentum across all our lines of business,” Holding said in a statement. “Since the completion of our acquisition of certain assets and liabilities of Silicon Valley Bridge Bank, N.A. on March 27, 2023, we have made strides to integrate our two companies, including meaningful engagement with key Silicon Valley Bank leaders and clients. Building on the considerable strengths Silicon Valley Bank brings to the business, including exceptional talent and expertise, significant scale, geographic diversity, and meaningful solutions for customers, we are confident we will continue to deliver long-term value for our shareholders. In an environment of macroeconomic challenges and uncertainties, we continue to operate with solid capital and liquidity positions. We remain encouraged by the resiliency of our clients in the face of elevated inflation and rising interest rates and we look forward to continuing to support them.”

In spelling out costs and benefits of the SVB deal, First Citizens noted:

“The Acquisition included total assets with estimated fair values of approximately $106.60 billion and total loans with estimated fair values of approximately $68.50 billion, including Global Fund Banking, Private Bank, and the Technology & Life Science and Healthcare loan portfolios and $35.28 billion in cash and interest-earning deposits at banks.
“BancShares also assumed approximately $55.96 billion in customer deposits and entered into a five-year note payable to the FDIC (the “Purchase Money Note”) of approximately $35.15 billion, bearing an interest rate of 3.50%. The deposits were acquired without a premium and the assets were acquired at a discount of $16.45 billion.”

First Citizens has already paid the FDIC $500 million as part of the acquisition.

Read the full earnings report online.