Is First Citizens BancShares ($FCNCA) Quietly Engineering a Banking Empire No One Saw Coming?
In March 2023, SVB was valued at $16 billion.
The following diagram shows SVB’s balance sheet before the collapse and what FCNCA acquired:
They acquired $72 billon in SVB loans at a $16.5 billion discount paying only $55.5 billion which is 23% less. These are very high-quality, short-duration loans, mostly maturing in less than a 1 year. This is basically trying to sweeten the deal so this deal can minimize impact to the depositors and financial markets. The FDIC agreed to absorb a large portion of future losses on the loan portfolio for 5-8 years. This protected FCNCA from downside risk.
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