First Citizens’ SVB acquisition includes real estate loans

First Citizens Bank will assume Silicon Valley Bank’s mortgages and commercial real estate loans as part of its $16.5 billion discounted acquisition of the failed bank from the Federal Deposit Insurance Corporation. 

The deal includes SVB’s private bank — which issued mortgages — and its other loans, First Citizens said in a filing with the U.S. Securities & Exchange Commission on Monday. According to the bank’s 2022 annual report, SVB’s other loans include debt on commercial real estate and wineries. 

The FDIC announced late Sunday night that First Citizens would assume $72 billion in loans and $56 billion in deposits, but would leave $90 billion with the FDIC. 

First Citizens did not acquire any cryptocurrency or crypto-backed assets from SVB, nor did it acquire SVB’s joint venture operations in China or a branch in the Cayman Islands, according to the SEC filing. 

The bank will have the option to purchase any bank locations owned by SVB and the option to lease any of its leased real estate, the filing added.

With the acquisition, First Citizens is expected to reduce its exposure to real estate to 4 percent from 9 percent, according to an investor presentation. 

Though SVB primarily focused on lending to startups, venture capital firms and private equity companies, the firm held about $11 billion in residential mortgages and commercial real estate loans on its books by the end of 2022, an annual report shows. 

At the end of last year, SVB held about $8.3 billion worth of loans secured by personal residence mortgages, another $138 million linked to home equity credit lines and about $2.6 billion in commercial loans. About 35 percent of those commercial real estate loans were on multifamily properties, while 21 percent was for office buildings.