Silicon Valley Bank’s U.S. stock plunged over 97% in pre-market trading upon resuming trade; Signature Bank’s U.S. stock plunged over 99% in pre-market trading upon resuming trade—what information is worth paying attention to?

It feels like more than just these two banks are about to collapse. The acquirer of Silicon Valley Bank isn’t Goldman Sachs or JPMorgan—it’s First Citizens Bank. I looked it up: founded in 1898, it has 125 years of history and is a seasoned bank acquirer—since 2009, it has acquired over 20 failed banks. Yet despite its experience, it’s not particularly strong financially. First Citizens Bank currently holds approximately $109 billion in assets and $89.4 billion in deposits—while the failed Silicon Valley Bank held roughly $110 billion in assets and $56 billion in deposits. By scale alone, First Citizens Bank would have to call Silicon Valley Bank ‘Big Brother.’ Rumors circulate that the U.S. government contacted Goldman Sachs and JPMorgan regarding the Silicon Valley Bank crisis—but nothing came of it. There are even reports that the Biden administration approached Warren Buffett to step in and rescue America’s rapidly crumbling credit market. But the image of an 80-year-old president pleading with a 92-year-old billionaire for help sounds absurd—after all, he’s not asking for an elixir of immortality. Although President Biden continues declaring on television that “our banking system is safe,” the U.S. has witnessed two historic bank failures within a single month—and the Federal Reserve remains committed to hiking interest rates to combat inflation.

News on the Silicon Valley Bank acquisition follow-up has arrived—acquired at a rock-bottom price…

Recent details on the Silicon Valley Bank acquisition have finally emerged: First Citizens Bank acquired $72 billion worth of SVB’s transitional banking assets for just $16.5 billion. I can only describe this as selling a cabbage at a vegetable-market price—and a rotten one at that… What exactly are ‘transitional banking assets’? In plain terms, they’re assets temporarily held on behalf of another party, slated for quick disposal—essentially SVB’s deposits, loans, etc. First Citizens Bank took over precisely this portion. Additionally, it acquired SVB’s 17 branches—an extra ‘gift’ asset (though queues of retail depositors rushing to withdraw funds now stretch outside every branch). So why was the sale priced at just 20% of face value? Because that $72 billion figure doesn’t represent net assets—it must be reduced by substantial liabilities (e.g., deposits owed to customers). Thus, if SVB’s bad debt burden proves heavy, First Citizens may end up earning little—or even losing money—explaining why JPMorgan Chase and Bank of America declined to take on this mess. So why did First Citizens bite? Partly as a bold ‘snake swallowing an elephant’ gamble. First Citizens’ total managed assets stand at $109 billion; absorbing $72 billion in assets will catapult its size by 70%. Secondly, it specializes in exactly this kind of deal—akin to professional bargain-hunting in foreclosure auctions. For instance, acquiring failed banks at low cost allows it to absorb their customer base, expand its business footprint, and acquire quality assets for profit. Since 2009, First Citizens has acquired 20 failed banks—truly a professional ‘rescue specialist.’ Having handled so many such deals, it naturally seized the chance to swallow this big fish. Even so, First Citizens explicitly refused to assume SVB’s other ~$90 billion in securities and miscellaneous assets—mainly bonds and equities. These were clearly priced, yet offered no upside, so nobody wanted them. Overall, markets have responded favorably to First Citizens’ move, viewing it as a savvy bargain—its stock surged 54%. …… That said, the FDIC—the U.S. Deposit Insurance Corporation—has bled the most from this episode, with estimated losses reaching roughly $20 billion from the SVB crisis. In return, the FDIC secured equity appreciation rights on First Citizens’ common stock, valued potentially at $500 million… Effectively, the FDIC covered $19.5 billion of SVB’s shortfall. That amounts to about $60 per American citizen—across the nation’s 330 million people. But this isn’t a pure loss: how much the FDIC ultimately recoups from SVB’s remaining assets remains to be seen. Still, I’m curious: this time, authorities allowed SVB to fail outright without intervention—ostensibly to uphold market fairness.

First Citizens Bank Acquires 3,483 Shares of The Sherwin-Williams Company ($SHW)

14 hours ago

First Citizens Bank significantly increased its stake in Sherwin-Williams by 421.7% in Q3, purchasing 3,483 additional shares. The company also reported earnings beating consensus estimates and announced a quarterly dividend.

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