In a ‘Momentous Transaction,’ Smith Anderson Client First Citizens Buys Silicon Valley Bridge Bank

The New York Times, Forbes, Bloomberg Law, Law360, The Deal

First-Citizens Bank & Trust Company, a subsidiary of Raleigh-headquartered First Citizens BancShares, Inc. (Nasdaq: FCNCA) and a Smith Anderson client, has entered into an agreement to purchase certain deposits and certain loans of Silicon Valley Bridge Bank from the Federal Deposit Insurance Corporation (FDIC), in a transaction structured as a whole bank purchase with loss share coverage.

The deal marks the culmination of a financial firestorm sparked by the sudden takeover of Silicon Valley Bank by the FDIC, news that stunned the banking world and attracted attention from national media such as Bloomberg Law, New York Times and Forbes.

According to the press release, the acquisition allows First Citizens to build on its experience with innovation hubs by leveraging Silicon Valley Bank's strength in serving the private equity, venture capital and technology sectors, and brings together complementary strengths of both banks' middle market commercial banking and private banking capabilities, while leveraging common platforms, vendor partners and technologies.

First Citizens will assume Silicon Valley Bridge Bank’s assets of $110 billion, deposits of $56 billion and loans of $72 billion. The 17 legacy Silicon Valley Bridge Bank branches will begin operating as Silicon Valley Bank, a division of First Citizens Bank, and customers will see no immediate change to their current accounts and will be able to continue to access their accounts as usual.

"Momentous" is how Frank B. Holding, Jr., chairman and CEO of First Citizens, described the transaction in a Monday conference call with investors and reporters.

"This transaction leverages our solid foundation to add significant scale, geographic diversity, compelling digital capabilities and most importantly, meaningful solutions for customers throughout their lifecycle," Holding said, and added that the transaction also will accelerate First Citizens’ expansion in California and introduce wealth capabilities in the Northeast. "The acquisition reflects the bank’s history of growing organically and through strategic acquisitions that build its core capabilities in a careful and deliberate manner.”

As part of the transaction, First Citizens will receive an available line of credit from the FDIC for contingent liquidity purposes and has entered into a loss share agreement with the FDIC to provide further downside protection against potential credit losses. First Citizens will not acquire any of the assets, common stock, preferred stock, debt or assume any other obligations of SVB Financial Group, the former holding company of Silicon Valley Bank.

The Smith Anderson team advising First Citizens in the acquisition was led by Gerald Roach, Jason Martinez, Mark Griffith and Armand Perry, with support from several team members within the firm’s Corporate and Syndicated Finance, Employee Benefits and Executive Compensation, Financial Institutions, Securities and M&A practice groups: Alex Bowling, Chris Capel, Tyler Cook, Grace Collins, Eric Fisher, Davis Fussell, Tim Goettel, Samuel Hipps and Dawson Kirkland.

Smith Anderson regularly serves as outside legal counsel to First Citizens, advising the financial institution on its transformational merger in 2022 with CIT Group, making it a top 20 U.S. financial institution based on assets, and advising the bank in a public offering of subordinated notes for aggregate proceeds of $350 million and a public offering of depositary shares representing interests in preferred stock for aggregate proceeds of $345 million. In 2019, Smith Anderson advised First Citizens in its $219.8 million acquisition of Entegra Financial Corp. following First Citizens’ superior offer to Entegra’s merger agreement with SmartFinancial. The firm also counseled the Special Committee of First Citizens in its merger with First Citizens Bancorporation in what was, at the time, the largest bank holding company merger in the southeast and the third largest nationally.

About First Citizens

First Citizens Bank helps personal, business, commercial and wealth clients build financial strength that lasts. Founded in 1898 and headquartered in Raleigh, N.C., First Citizens provides a unique legacy of strength, stability and long-term thinking that has spanned generations. First Citizens offers an array of general banking services including a network of more than 550 branches and offices in 23 states; commercial banking expertise delivering best-in-class lending, leasing and other financial services coast to coast; and a nationwide direct bank. Parent company First Citizens BancShares, Inc. (NASDAQ: FCNCA) is a top 20 U.S. financial institution with more than $219 billion in assets. In 2023, the bank is celebrating the 125th anniversary of its founding.


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