First Citizens Bancshares’ deposits jumped 57% in Q1 from $89 billion to $140 billion following its purchase of collapsed Silicon Valley Bank, catapulting the lender into the ranks of the top 20 US banks by assets.
The lender’s acquisition of SVB doubled its total assets to $200 billion and brought about a $9.8 billion gain. Its Q1 profit of $9.5 billion was second among US banks, trailing J. P. Morgan Chase‘s $12.6 billion profit.
First Citizens is vying for market share of clients among VCs, venture-backed growth companies and startups, and it faces the significant challenge of holding onto legacy clients of SVB—at the same time as some of its top talent is being poached by competitors like HSBC and Stifel Bank.
After experiencing “significant outflows” in the immediate days and weeks following its acquisition, First Citizens is now “seeing some signs of stabilization,” president Peter Bristow said during an earnings call on Wednesday.
“First Citizens just got exposure to a brand-new market,” said Bardia Moayedi, a lawyer at Snell & Wilmer who works with several clients who still bank with SVB. Moayedi predicted that the SVB acquisition will generate good returns for First Citizens’ shareholders: “They just bought one of the best brands in venture lending.”
First Citizens is well-positioned to capture a significant share of the $34 billion venture debt industry, as it acquired SVB’s venture loan facilities in its portfolio and many startups want to keep the favorable terms on their SVB loans for as long as possible.
The lender’s acquisition was a “home run financially,” CEO Frank Holding told shareholders, and it positions First Citizens to serve high-growth markets in venture, technology and life sciences.
Still in what Bristow described as the “early days” of the acquisition, customers of the SVB division of First Citizens say they have experienced little change since before the collapse.
“It’s almost like nothing ever happened,” said Jason Peretz, chief business officer at restaurant tech startup Galley. Galley, an SVB customer, had moved funds temporarily during the bank run, but it returned to First Citizens to honor the terms of its venture lending facility.
Under First Citizens, SVB has resumed its syndicated loans offerings for venture-backed companies. On Tuesday, solar power provider Pivot Energy closed a $203 million financing facility led by SVB, the bank’s first since the collapse. SVB had a strong reputation in climate tech as a lender, having pledged to commit $5 billion by 2027 in climate financing before its collapse—another helm that First Citizens may aim to take over.
“The weekend it all went down was very scary for us,” Peretz said. But now, “it’s just like business as usual.”
Featured image by JHVEPhoto/Shutterstock
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