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In addition to a $10 billion windfall that came with its acquisition of the failed Silicon Valley Bank in March, First Citizens Bank’s first-quarter earnings call Wednesday morning offered an even more important sign the deal will pay off.
Executives at the Raleigh, North Carolina bank said deposits at SVB – still a separate unit with the bank – said the major deposit outflows that continued even after the March 27 acquisition have stabilized at around $41 billion over the last four weeks.
SVB lost around $7 billion in deposits as the former bank’s various tech and biotech clients moved money to other banks from March 27 to March 31, and another $5 billion from April 7 to April 14 as deposits were moved to off-balance-sheet repurchase agreements.
“I believe that legacy SVB customers will move their deposits back to us as they realize their deposits are safe with First Citizens,” bank President Peter Bristow told analysts.
The acquisition brought First Citizens’ total deposits to $140.05 billion as the bank’s own deposits, separate from SVB’s, increased slightly during the quarter.
CEO Frank Holding Jr. made clear First Citizens aims to preserve as much of SVB’s position as the banker of choice for startups as it can, saying its strategy to integrate the two institutions starts with “[running] run SVB as SVB to maintain the competitive advantage it has in the innovation economy while at the same time infusing the cost discipline and risk management that has defined First Citizens for 125 years.”
In addition, Bristow said, First Citizens will look to SVB to help it grow and capture new clients in California and the Northeast, particularly in the innovation sector.
Some of that will likely rest on the bank’s ability to retain talent, as well as deposits. Integration plans are still in development and would be revealed at a future date, Bristow said, but that the bank was committing “meaningful” resources to retain former SVB staffers who hadn’t already left for other institutions.
“We have had some attrition since this acquisition date however we have been pleased with our retention plan, internal talent pools and external recruiting resources to help us backfill these positions,” he said.
Financially, Wednesday’s earnings call showed the merger was a significant boon to First Citizens’ parent company. Its share of non-interest-bearing deposits shot up from 27 percent to 39 percent, and it gained total assets with estimated fair values of approximately $106.60 billion and total loans with estimated fair values of approximately $68.50 billion and a $9.82 billion increase in net non-interest income for the quarter. Net interest margin went up 5 basis points to 3.41 percent.
