First Citizens Sees Income Jump After SVB Purchase

First Citizens Bank’s income surged following its purchase of failed Silicon Valley Bank.

First Citizens, a North Carolina lender with a long history of buying up struggling banks, announced in a Wednesday (May 10) press release that its first-quarter net income came to $9.5 billion, up from $243 million in the previous quarter.

The jump was made possible by First Citizens’ purchase of SVB in late March, two weeks after the California lender was taken over by federal regulators.

“Building on the considerable strengths Silicon Valley Bank brings to the business, including exceptional talent and expertise, significant scale, geographic diversity and meaningful solutions for customers, we are confident we will continue to deliver long-term value for our shareholders,” Chairman and CEO Frank B. Holding Jr. said in the release. “In an environment of macroeconomic challenges and uncertainties, we continue to operate with solid capital and liquidity positions.”

According to the earnings release, deposits for the quarter totaled $140 billion, an increase of $50.6 billion “primarily due to SVB segment deposits of $49.26 billion.” A report by Bloomberg said the $140 billion figure exceeded analyst projections of $119 billion.

The aftereffects of SVB’s collapse — and the subsequent failures of Signature and First Republic banks — are still being felt.

While meeting customer preferences remains critical to business growth for regional banks, the idea of visiting a bank branch, meeting the manager and spending time developing a personalized financial product seems to have vanished “as interactions become digital-first and classical bank runs make a comeback,” PYMNTS reported this week.

The banking crisis has demonstrated to corporate treasurers and CFOs that the argument that midsize banks pose no systemic threat has lost its weight.

Although many observers argue the turmoil with the regional banking landscape will lead to a rush to “too-big-to-fail megabanks,” others contend that the situation could usher in a fundamental shift in how the American financial system operates.

“That shift, referred to by economists as ‘narrow banking” or the ‘Chicago Plan,’ would see a separation of deposit-taking and lending functions between distinct providers rather than as the bundled model they presently exist under,” PYMNTS wrote.