Raleigh-based First Citizens Bank reportedly considering a bid for Silicon Valley Bank

The federal government is seeking a buyer for the collapsed Silicon Valley Bank, and a Triangle bank is reportedly interested.

First Citizens Bank, which is headquartered in Raleigh, “is evaluating an offer” to purchase Silicon Valley Bank, according to Bloomberg, which cited unnamed sources “familiar with the matter.”

News of a final sale could come within a week. On Monday, the Federal Deposit Insurance Corporation (FDIC) announced it was extending the bidding period for Silicon Valley Bridge Bank until Wednesday.

“There has been substantial interest from multiple parties,” the FDIC said in a statement. “The FDIC and the bidders need more time to explore all options in order to maximize value and achieve an optimal outcome.”

The government is also marketing Silicon Valley’s private wealth management division as a separate entity with a deadline of Friday.

First Citizens has not responded to questions from The News & Observer regarding its interest in purchasing Silicon Valley Bank.

The Raleigh bank has shown an appetite for acquiring other financial institutions in recent years. In January 2022, its parent company First Citizens BancShares purchased New York-based CIT Group for approximately $2.2 billion.

Founded in 1898, First Citizens is today one of the 20 largest banks in the United States, with total assets above $100 billion, according to its latest annual report to federal regulators. At the end of last year, the bank had 582 branches and offices nationwide, 60% of which were in North Carolina or South Carolina. It is the Carolinas’ fourth largest bank, behind Bank of America, Truist, and Wells Fargo, and has more than 2,000 employees in the Triangle area.

Its corporate tower is in Raleigh’s North Hills neighborhood.

“They’re a fairly traditional bank,” said Richard Warr, a finance professor at North Carolina State University. “They’re not like Silicon Valley Bank, which was specialized in the tech industry. They’re not like the Signature Bank in New York, which had deposits from the crypto industry. My understanding of First Citizens is, and I don’t want to denigrate them, but they’re a fairly boring bank.”

So, what would Raleigh’s boring bank want with what remains of the now-infamous Silicon Valley Bank?

Until recently, Silicon Valley was the 16th largest bank in the country, with a reputation for catering to technology startups. But as interest rates rose, depositors grew anxious over the company’s holdings of long-term bonds. This sparked a bank run earlier this month, which prompted the federal government to step in and take control of the California-based financial institution.

Buyers can still find value in fallen banks’ remains, Warr said, especially buyers concentrated in tech-rich areas.

“(Silicon Valley) had one fatal flaw which caused it to fail, but its actual business model — which was targeting startups, venture capitals, new firms, tech enterprises, and so on — was pretty profitable for many years,” he said. “If I was running a Raleigh-based bank in the Research Triangle Park, which is basically seeing a massive growth in tech and biopharma industries, building connections with a bank that specializes in that might make some sense.”

Next to the Carolinas, the state where First Citizens has the most branches is California. And while Silicon Valley Bank may have lost many of its depositors, the loans the bank issued remain active.

“(First Citizens) might be hoping to get some pretty interesting portfolio of loans, maybe some depositors, who are quite different from a lot of its existing portfolio,” Warr said.

Yet, some question whether Silicon Valley’s prominence with startups can be passed on to a new institution.

“SVB was a relationship bank, and the interesting thing will be how much of that can be meaningfully transferred,” said Peter Goldstein, co-founder of the San Francisco-based software firm Valimail, who now lives in Raleigh.

Both Goldstein and Warr pointed out the price for Silicon Valley could be agreeable given that the U.S. government lacks leverage.

“The FDIC does not want to run a bank for any period of time,” Goldstein said. “That’s not their business. So, they want it to sell.”

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.

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