First Citizens BancShares: Transforming Acquisition and Growth

Overview

First Citizens BancShares, a North Carolina-based bank, made a groundbreaking purchase this spring when it acquired the assets of the failed Silicon Valley Bank. This acquisition, orchestrated by CEO Frank Holding Jr., proved to be a transformative move for the company.

A Significant Expansion

With this purchase, First Citizens gained $110 billion of assets and $56 billion of deposits. As a result, the bank's total assets skyrocketed to $215 billion, securing its position as the No. 16 bank in the United States. It is worth noting that back in 2008, when Holding assumed the role of CEO, the bank's assets were a mere $17 billion.

Proven Acquisition Expertise

Under Holding's leadership, First Citizens has executed around twenty-four acquisitions, many of which involved failed banks receiving assistance from the Federal Deposit Insurance Corp (FDIC). Holding emphasizes the bank's competency in collaborating with the FDIC to restore stability to the banking system.

Impressive Performance

While the SPDR S&P Regional Banking exchange-traded fund (KRE) experienced a significant decline of 33% since March 1, First Citizens' stock witnessed an impressive 69% surge. This achievement pushed the bank's market capitalization to approximately $18 billion. Analysts predict that earnings will double by 2023.

A Legacy of Leadership

Frank Holding Jr., age 61, comes from a family that has been at the forefront of leading First Citizens since its establishment in 1898. The Holding family collectively owns 21% of the A shares and holds a majority of the supervoting B shares. Holding attributes the family's control to the consistency in culture and its long-term perspective, which greatly benefits the bank.

Building Diverse Ecosystems

Holding highlights that First Citizens has distinct "ecosystems" within its portfolio. The acquisition of Silicon Valley Bank adds an ecosystem dedicated to serving the innovation economy. Additionally, the bank's merger with CIT Bank in the previous year significantly contributed to doubling its assets and brought in another ecosystem focused on railcar leasing, accounts-receivable financing, and other specialized areas.