Silicon Valley Bank's assets and liabilities have been bought by First Citizens Bank & Trust, a North Carolina–based bank that has been quietly growing over the last decade, now one of the 20 largest banks in the United States. First Citizens is taking on $110 billion in assets, $56 billion in deposits and $72 billion in loans from SVB, which failed this month after questions arose over the security of its deposits and a flood of account holders began withdrawing all their money in the span of just a few hours.
The deal includes SVB's wine division, which has been providing financial advice and services to West Coast wineries in recent decades. More than 400 wineries are SVB clients, and the bank currently holds almost $1.2 billion in loans to wine clients.
What does the deal mean for SVB clients?
For starters, their money is secure. First Citizens executives say all SVB branches will be open and that account holders can use their existing debit and credit cards. When the Federal Deposit Insurance Corporation (FDIC) took control of SVB on March 10, the federal government guaranteed the security of all accounts within a few days. But the long-term picture for the bank was cloudy. The FDIC invited large banks to explore purchasing SVB's assets. Several looked at the financials before First Citizens made the deal.
First Citizens paid nothing up front. Instead, it gave the FDIC equity appreciation rights in First Citizens stock, which could be worth up to $500 million when cashed out. With roughly $209 billion in assets today, First Citizens has grown rapidly since 2009, in large part by scooping up troubled banks such as SVB. Many of its assets are in North Carolina and South Carolina, but the bank has expanded dramatically on the West Coast.
What about the wine division?
Anyone buying SVB could have decided to take or leave the wine division; the bank is primarily known for its work with the tech industry. Rob McMillan, founder and head of SVB’s wine division, said some banks inquired about buying the wine division separately. But he's just happy it has a new home. "We don't have many details, but we know that [the wine division] is included," McMillan told Wine Spectator about the deal.
McMillan believes that First Citizens could be a good fit for the wine division. First Citizens already has a large agricultural portfolio, with farming clients on both the East and West coasts. "Likely it's a lot of family farms, which gives them an appreciation for what [SVB does] in the wine industry,” he said.
"The other thing that's encouraging is this company has a track record of making acquisitions of banks that have different business lines,” McMillan added. “It's a good indicator that integration will work more toward keeping the businesses as they are versus coming in and making wholesale changes."
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