First Citizens: How a rural, family-owned bank ended up buying a Silicon Valley tech lender

The Holdings (a surname that is not bad for a banker) have been in charge of First Citizens for three generations. Founded in 1898 in North Carolina, this traditional, rural, family-owned bank founded to serve Johnston County farmers has just purchased what is left of the shipwreck of Silicon Valley Bank (SVB), a lender accustomed to financing tech companies and venture capital firms, and whose own customers tend to be sophisticated urbanites.

When R. P. Holding, the patriarch, died in 1957, his three children, then under the age of 32, took over the entity. Since 2009, Frank B. Holding Jr., 61, has served as chairman and CEO, while his sister Hope Holding Bryant, 60, has been the vice-chair. Their brother-in-law, Peter Bristow, 57, is the president. Between the three of them, they control more than 22% of the voting rights, a figure that rises to around 50% if the rest of the relatives are taken into account. The Holding family became much wealthier on Monday thanks to the fact that shares of First Citizens shot up 53% on the stock market following their purchase of SVB.

Investors have rewarded the Holdings’ courage in stepping up in the middle of a financial storm to buy the bank that caused it. Aware that many financial institutions had a bad digestion after absorbing their troubled rivals during the financial crisis of 2008, First Citizens has negotiated with the Federal Deposit Insurance Corporation (FDIC) all kinds of coverage against lawsuits, litigation or unforeseen losses in the loan portfolio. To avoid risks, it has left cryptocurrencies and the branch in the Cayman Islands out of the operation. And for the numbers to work out, First Citizens has kept SVB’s assets at a discount of $16.5 billion and will be receiving generous public financing.

It looks like a winning bet for a bank that has grown robustly through acquisitions, and had already evolved from its rural origins into a financial institution serving the innovative hub of Raleigh, where its headquarters are located. First Citizens bought some 30 lenders in North Carolina in the last decades of the 20th century, but it did not leave its home state until the mid-1990s, when it acquired a bank in neighboring West Virginia.

The institution withstood the financial crisis of 2008 and took advantage of the Great Recession to expand throughout the country by acquiring troubled banks, such as Temecula Valley Bank (California) and Venture Bank of Lacey (Washington) in 2009; Sun American Bank of Boca Raton (Florida) and First Regional Bank of Los Angeles (California) in 2010, and United Western Bank of Denver and Colorado Capital Bank of Castle Rock, both in Colorado, in 2011.

Growth continued with small and medium-sized purchases until First Citizens made its first big leap by absorbing CIT Group, an operation closed in early 2022 that practically doubled its size. Now, by acquiring the remains of Silicon Valley Bank, its assets are jumping from $109 billion to $219 billion, doubling its size again. Thus, an institution that had $41.6 billion in assets in March 2020 has multiplied its size by more than five in just three years, becoming one of the 15 largest banks in the United States.

Before this operation, First Citizens was a small bank with a market value of $8.4 billion (close to $13 billion after the share rise on Monday). The lender had net income of $1.05 billion in 2022, double that of the previous year.

As of December 31, the group had 582 branch offices, of which 219 were in North Carolina, 126 in South Carolina and 68 in California. It also has a presence in the states where it has been buying other banks. In the presentation of Monday’s operation to analysts, First Citizens listed its current number of branches at 550, to which now must be added 17 from SVB. First Citizens ended 2022 with 10,375 full-time and 309 part-time employees, of whom 61% were women and 33% “ethnically diverse,” according to its annual report.

In its presentation, First Citizens assured not only that the operation is financially attractive, but that it would like to venture into the sectors that SVB was working with, and maintain the latter’s extensive network of relationships. SVB also happened to be one of the favorite banks of California wineries, so with the purchase, First Citizens is also returning in a way to its origins as an agricultural bank.

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