First Citizens Bank, the US lender that acquired much of Silicon Valley Bank after its collapse, reported a more than 30x increase in profits for the first three months of 2023, benefiting from the purchase of the bankrupt institution credit institution based in California.
For the first quarter, First Citizens said Wednesday that net income was $9.5 billion, or $653.64 per share, compared with $264 million, or $16.70 per share, for the same period in Q1. last year, owing a $9.8 billion gain from its SVB deal.
Windfall made First Citizens second profitable bank in the US during the quarter, just behind JPMorgan Chase which earned $12.6 billion.
Adjusted for this gain, First Citizens’ net income was $306 million, unchanged from a year earlier and higher than forecasts of $292.8 million, according to data compiled by Bloomberg.
In March, First Citizens acquired the bankrupt bank’s $72 billion loan portfolio at about a 20% discount and took on $56 billion in deposits. It also entered into a loss sharing agreement with the Federal Deposit Insurance Corporation for commercial loans made by the SVB.
The deal doubled First Citizens’ assets to more than $200 billion, taking it from the 30th largest bank in the United States to the top 20.
Profits in the US banking sector reached a documentation by about $80 billion in the first quarter, up 33% from a year ago, driven largely by the banking turmoil and rising rates. About half of the increase in aggregate industry profits came from one-time earnings recorded by First Citizens and Flagstar, which bought Signature Bank.
One of challenges for North Carolina-based First Citizens was to convince SVB’s list of clients that an East Coast bank will be able to provide the same kind of support to the technology and life sciences industries.
Chief Executive Officer Frank Holding said in a statement that the bank has “made great strides to integrate our two companies, including significant engagement with Silicon Valley Bank’s key leaders and clients” since closing the deal in March.
Shares of First Citizens, which are up 44% year-to-date, were up 4% in premarket trading.
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