8-K/AAcquisitions & DispositionsExhibits & Filings

FIRST CITIZENS BANCSHARES INC /DE/ 8-K/A Report, Acquisition Completed (Jan 26, 2024)

Filed January 26, 2024For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens Bancshares Inc. (FCBC) has officially completed its acquisition of substantially all assets and liabilities of Silicon Valley Bridge Bank (SVBB) from the FDIC, as detailed in this Form 8-K filing. This significant transaction involved the acquisition of $107.54 billion in assets, including $68.47 billion in loans and $35.31 billion in cash and deposits, while assuming approximately $61.42 billion in liabilities, primarily customer deposits totaling $56.01 billion. Notably, the assets were acquired at a discount of $16.45 billion, and deposits were assumed without a premium, leading to a preliminary after-tax gain on acquisition of $9.81 billion. The acquisition was financed through a $36.07 billion amended Purchase Money Note with the FDIC and an up to $70 billion Advance Facility Agreement with the FDIC for liquidity purposes. Furthermore, FCBC entered into a Commercial Shared-Loss Agreement with the FDIC, covering approximately $60.5 billion of loans. Under this agreement, the FDIC will cover 0% of losses up to $5 billion and 50% of losses exceeding $5 billion, while FCBC will reimburse the FDIC for 50% of recoveries on these assets. This filing provides a detailed breakdown of the fair value purchase price allocation, the acquired loan portfolio characteristics, and the deposit structure assumed, offering investors transparency into the integration of SVBB's operations.

Key Highlights

  • 1Completion of the acquisition of Silicon Valley Bridge Bank (SVBB) from the FDIC.
  • 2Acquisition of $107.54 billion in assets, including $68.47 billion in loans and $35.31 billion in cash/deposits.
  • 3Assumption of $61.42 billion in liabilities, with $56.01 billion in customer deposits.
  • 4Assets acquired at a discount of approximately $16.45 billion; deposits assumed without a premium.
  • 5Preliminary after-tax gain on acquisition of $9.81 billion.
  • 6Financing includes a $36.07 billion amended Purchase Money Note and a $70 billion FDIC Advance Facility Agreement for liquidity.
  • 7A Commercial Shared-Loss Agreement with the FDIC covers $60.5 billion in loans, with loss-sharing provisions.

Frequently Asked Questions

The acquisition resulted in a preliminary after-tax gain of $9.81 billion, reflecting that the fair value of net assets acquired exceeded the purchase price. The acquired operations are expected to enhance net interest income and cash flows for FCBC.

The acquisition was financed through an amended Purchase Money Note of approximately $36.07 billion with the FDIC and an up to $70 billion Advance Facility Agreement with the FDIC to provide liquidity. The FDIC also received a $500 million payment related to a Value Appreciation Instrument.

The Shared-Loss Agreement covers approximately $60.5 billion of loans. The FDIC will reimburse FCBC for 0% of losses up to $5 billion and 50% of losses exceeding $5 billion. FCBC will reimburse the FDIC for 50% of recoveries on these assets over five and eight years, respectively. FCBC may also have to pay up to $1.5 billion to the FDIC under certain conditions by 2031.

FCBC assumed $56.01 billion in deposits at acquisition. Deposits decreased to $49.26 billion by March 31, 2023, likely due to industry uncertainty, but began to stabilize in the second quarter. By December 31, 2023, deposits for the acquired segment were $38.48 billion.