8-KMaterial AgreementsFinancial EventsExhibits & Filings

FIRST CITIZENS BANCSHARES INC /DE/ 8-K Report, Material Agreement (Nov 27, 2023)

Filed November 27, 2023For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) filed an 8-K detailing new financing agreements related to its acquisition of Silicon Valley Bridge Bank, N.A. (SVBB) from the FDIC. These agreements, effective November 20, 2023, supersede initial arrangements and formalize the terms for a $36.07 billion Amended and Restated Purchase Money Note and a $70 billion Advance Facility Agreement. The primary purpose of these agreements is to manage liquidity and financial obligations arising from the SVBB acquisition. The Advance Facility provides liquidity to offset deposit withdrawals and fund acquired commercial lending commitments. Investors should note that the purchase money note bears interest at 3.5% annually, while the advance facility has a variable rate tied to SOFR plus 25 basis points. The agreements also outline collateral arrangements and operational procedures through custodial and paying agency agreements.

Key Highlights

  • 1Formalization of SVBB Acquisition Financing: New financing agreements, effective November 20, 2023, restructure and supersede prior arrangements for the acquisition of Silicon Valley Bridge Bank.
  • 2Amended and Restated Purchase Money Note: A note payable to the FDIC for approximately $36.07 billion, maturing on March 27, 2028, with a fixed interest rate of 3.5% per annum.
  • 3Up to $70 Billion Advance Facility: An agreement providing up to $70 billion in liquidity to First Citizens Bank & Trust Company (FCB) through March 27, 2025, specifically for managing SVBB deposit outflows and funding acquired commitments.
  • 4Variable Interest Rate on Advance Facility: Borrowings under the advance facility accrue interest at a variable rate of 3-month SOFR plus 25 basis points, with a floor of 0.00%.
  • 5Collateral and Custodial Arrangements: The agreements include a Security Agreement pledging specified assets as collateral and a Custodial and Paying Agency Agreement to govern the management of funds and payments related to the financing.
  • 6No Scheduled Principal Payments: Both the Purchase Money Note and the Advance Facility have no scheduled principal payments, allowing for voluntary prepayments twice per month without penalty.
  • 7Subordinated Obligations: FCB's obligations under the Advance Facility Agreement are subordinated to its obligations under the Amended and Restated Purchase Money Note.

Frequently Asked Questions

These new financing agreements, effective November 20, 2023, formally establish the terms for the financial obligations and liquidity support related to First Citizens Bank's acquisition of Silicon Valley Bridge Bank (SVBB) from the FDIC. They supersede the initial arrangements and provide a clearer framework for a substantial note payable and a significant line of credit.

The key components include an Amended and Restated Purchase Money Note for approximately $36.07 billion due in March 2028, bearing a 3.5% interest rate, and an Advance Facility Agreement that can provide up to $70 billion in liquidity through March 2025. These are further governed by custodial and security agreements that outline collateral and operational procedures.

The advance facility has a variable interest rate equal to the three-month weighted average of the Daily Simple Secured Overnight Financing Rate (SOFR) plus 25 basis points, with a minimum rate of 0.00%. This facility is exclusively for providing liquidity to manage deposit withdrawals from former Silicon Valley Bridge Bank accounts and to fund outstanding commercial lending commitments assumed in the acquisition.

No, there are no scheduled principal payments under the New Financing Agreements. First Citizens Bank & Trust Company has the flexibility to make voluntary prepayments of principal twice per month without incurring any penalties or premiums.