First Citizens Bank today announced plans to up its tech focus by leveraging capabilities acquired from its March purchase of the failed Silicon Valley Bank.   

The $214 billion First Citizens Bank (FCB) will integrate Silicon Valley Bank’s (SVB) technology with its own processes, with further integration plans to be detailed later, FCB Chairman and Chief Executive Frank Holding Jr. said during today’s earnings call. 

“SVB Private has enormous potential to accelerate the growth of our wealth business, adding new digital capabilities, talent and solutions to our already growing franchise,” Holding said. “While we are clearly in the early days of SVB acquisition, we already have begun to integrate our teams and we continue to actively prioritize our efforts to support SVB and its clients.” 

An opportunity for FCB

The integration of FCB and SVB is like that of JPMorgan Chase’s purchase of First Republic Bank, with the main difference being the technology focus for FCB that JPMorgan Chase had already embraced, Gartner senior analyst Wellington Holbrook told Bank Automation News.

“It’s a real opportunity for [First Citizens] to pick up their socks and get sort of the best of breed in whatever categories they’re looking at between the two institutions,” Holbrook said, noting that the costs of integration will affect how much of SVB’s tech FCB uses. 

“If the timeline is really short, and the dollar sign isn’t very big, [First Citizens is] not doing much,” Holbrook added. 

THE BIG PICTURE: The Raleigh, N.C.-based First Citizens aims to use SVB’s client base and fintech experience to maintain its tech and innovation customer focus, according to the FCB earnings presentation. 

“To successfully integrate SVB, we are focused on running SVB as SVB to maintain the competitive advantage it has in the innovation economy, while at the same time using the cost discipline and risk management that has defined Citizens for 125 years,” Holding said. 

In addition, First Citizens outlined plans to retain tech talent from SVB to help run its new subsidiary with $390 million budgeted for personnel, Peter Bristow, president of First Citizens said during the call. 

“One of the most important priorities has been the retention of key SVB talent. We have provided a budget for [a] meaningful amount of retention to retain this key talent,” Bristow said. “We have had some attrition since the acquisition date. However, we’ve been pleased that our succession plans, internal talent pool and external recruiting resources have allowed us to backfill key positions.” 

BY THE NUMBERS: First Citizens reported for Q1: 

• Noninterest income was up 1,106% year over year to $10.2 billion as result of a $9.8 billion gain on acquisition; 
• Noninterest expense increased 5% YoY to $855 million; and 
• Equipment expenses, including software expenses, rose 11% YoY to $58 million. 

FLASHBACK: The poor risk management practices and subsequent withdrawal run at SVB precipitated additional bank failures, including Signature Bank and First Republic Bank. Because of those failures, several others, including Pacific Western Bank and Western Alliance Bank, have taken significant losses on the stock market as result of market turbulence. 

MARKET REACTION: First Citizens Bank’s stock increased by 5% at market open today, to $1,225 per share. Since the acquisition of SVB, the bank’s stock price has nearly doubled, up 98% since March 24, three days before First Citizens’ announced purchase. 

FORWARD LOOK: As integration plans between the two banks are being finalized, First Citizens plans to continue offering the same services and support that made SVB attractive to clients initially, FCB’s Holding said during the call. 

“We’re committed to maintaining and growing SVB’s market by leveraging this deep-seated talent and strength as we move forward,” he said. “Importantly, the combined organization is very well positioned financially and is operating from a position of strength.” 

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