dot gov risk free is a perception, live in your mind rent free. if you were not a us person, even a canadian, you wouldn’t bet gov bond risk free. there is also a time value of money.
%% EXACTLY+ I did not mean it was risk free \thus the 10% gov bond loss part of SVB noted . Time value of money= right [aka opportunity loss].Amazing how much money even a ''good'' bond fund can lose some years. For a real shocker, a gov bond fund has some real shocker risks disclosed I assume but dont know\ SVB\ may have been a better than average bond trader??
Stock at record high, First Citizens reports $9B gain from Silicon Valley Bank deal https://wraltechwire.com/2023/05/10...eports-9b-gain-from-silicon-valley-bank-deal/ RALEIGH – First Citizens BancShares – corporate parent of FirstCitizens Bank – says its March purchase of the failed Silicon Valley Bank is already paying off in big ways. The company reported a first quarter net income of $9.52 billion, smashing Wall Street expectations with much of that tied to gains from the purchase made after SVB was seized by federal regulators and then sold to First Citizens in a auction. Investors appear to love the news, which beat Wall Street expectations for earnings ($20.09) by more than $7.50 a share. And the one-time boost from the SVB deal produced revenues of more than $1.1 billion, far beyond expectations. How big was the quarter? In its financial presentation for investors, First Citizens declared: “A Momentous First Quarter” The bank’s stock hit a record high of $1,107.64 on Tuesday (data from 1996 forward) before closing at $1,074.o6. And after the earnings news hit the wires Wednesday morning shares immediately climbed more than $3. First Citizens shares soared$400 on the day after the SVB deal was announced and have traded at $954 or better since. ‘A Powerful Combination’ In its earning presentation First Citizens broke down the SVB deal “A Powerful Combination) in this chart: First Citizens, celebrating its 125th year i business, also is now one of the nation’s largest banks with more than $200 billion in assets, the bank says. SVB had ranked 18th before it failed. First Citizens ranked 35th. The SVB deal not only boosted First Citizens in size of asset and physical reach with multiple banks added from California to New York but is also seen by leaders in the Triangle tech sector as a boost to companies’ access to investment capital. Although the sale occurred on March 27, First Citizens (stock symbol FCNA) included data from the deal in its quarter ending March 31. The news elated Chairman and CEO Frank Holding, Jr. who also provided an update on the SVB merger. “We are pleased with our solid financial performance in the first quarter, marked by continued momentum across all our lines of business,” Holding said in a statement. “Since the completion of our acquisition of certain assets and liabilities of Silicon Valley Bridge Bank, N.A. on March 27, 2023, we have made strides to integrate our two companies, including meaningful engagement with key Silicon Valley Bank leaders and clients. Building on the considerable strengths Silicon Valley Bank brings to the business, including exceptional talent and expertise, significant scale, geographic diversity, and meaningful solutions for customers, we are confident we will continue to deliver long-term value for our shareholders. In an environment of macroeconomic challenges and uncertainties, we continue to operate with solid capital and liquidity positions. We remain encouraged by the resiliency of our clients in the face of elevated inflation and rising interest rates and we look forward to continuing to support them.” In spelling out costs and benefits of the SVB deal, First Citizens noted: “The Acquisition included total assets with estimated fair values of approximately $106.60 billion and total loans with estimated fair values of approximately $68.50 billion, including Global Fund Banking, Private Bank, and the Technology & Life Science and Healthcare loan portfolios and $35.28 billion in cash and interest-earning deposits at banks. “BancShares also assumed approximately $55.96 billion in customer deposits and entered into a five-year note payable to the FDIC (the “Purchase Money Note”) of approximately $35.15 billion, bearing an interest rate of 3.50%. The deposits were acquired without a premium and the assets were acquired at a discount of $16.45 billion.” First Citizens has already paid the FDIC $500 million as part of the acquisition. Read the full earnings report online.
First Citizens lays off hundreds of workers at recently acquired Silicon Valley Bank https://wraltechwire.com/2023/05/24...ers-at-recently-acquired-silicon-valley-bank/
Silicon Valley Bank To Sell $9.8 Billion Venture Capital Arm For $340 Million, A Year After $1.8 Billion Collapse https://finance.yahoo.com/news/silicon-valley-bank-sell-9-172906491.html After the collapse of Silicon Valley Bank (SVB), the parent company, SVB Financial Group, is nearing the sale of its venture capital arm, SVB Capital. SVB Capital, which was not included in the sale of SVB’s lending and wealth management units to North Carolina-based First Citizens Bank, has continued to manage approximately $9.8 billion in assets for its limited partners under its parent company. Now, it is in the final stages of being purchased by a new entity backed by Brookfield and Sequoia Heritage. This deal, however, is still subject to bankruptcy court approval. Court documents filed on May 2 indicate that the sale will be executed for an upfront cash price of $340 million and a termination fee of $15 million. The transaction marks a significant step in the aftermath of SVB’s collapse, potentially providing a stable future for SVB Capital and its stakeholders. Earlier in January of this year, the company announced that retaining the SVB Capital business as a part of SVB Financial Group would result in superior value-creation opportunities. "We believe that retaining SVB Capital under a reorganized company is the best path forward to maximize its value in the current environment," said William Kosturos, Chief Restructuring Officer of SVB Financial Group. "SVB Financial Group and its creditors recognize the strong foundation on which SVB Capital has been built, thanks largely to Aaron, Sulu and Beau’s outstanding leadership and partnership, with the significant support and contributions of the entire SVB Capital team. Aaron, Sulu and Beau’s vision for the future of this business is closely aligned with our creditor group, and all parties are focused on preserving the value of the business, meeting obligations to partners and positioning the platform to capitalize on future opportunities." However, it is now evident that the company believes that selling the fund is a better way forward. SVB Capital invests in fund managers and private technology and life science companies throughout the innovation economy worldwide. The successful sale of SVB Capital will ensure a more secure and prosperous future for its investment operations and the broader financial community. SVB’s downfall a year ago sent shock waves through the financial community, highlighting the vulnerabilities in the banking sector’s exposure to interest rate risks. Since its acquisition, the company has recovered and continues working with startups to regain its trust.
The FDIC wants to claw back some money from the bank's executives and directors for their oversight failures. FDIC sues 17 former Silicon Valley Bank executives, directors over collapse https://finance.yahoo.com/news/fdic-sues-17-former-silicon-235424964.html (Reuters) - The FDIC on Thursday sued 17 former executives and directors of Silicon Valley Bank, seeking to recover billions of dollars for alleged gross negligence and breaches of fiduciary duty that caused the bank's March 2023 collapse, one of the largest U.S. banking failures. In a complaint filed in San Francisco federal court, the FDIC, in its capacity the bank's receiver, said the defendants ignored fundamental standards of prudent banking and the bank's own risk policies in letting the bank take on excessive risks to boost short-term profit and its stock price. The FDIC faulted the bank's overreliance on unhedged, interest rate-sensitive long-term government bonds such as U.S. Treasuries and mortgage-backed securities, as rates looked set to - and eventually did - rise. It also objected to the payment of a "grossly imprudent" $294 million dividend to its parent that drained needed capital "at a time of financial distress and management weakness" in Dec. 2022, less than three months before its demise. "SVB represents a case of egregious mismanagement of interest-rate and liquidity risks by the bank's former officers and directors," the complaint said. The defendants include former Chief Executive Gregory Becker, former Chief Financial Officer Daniel Beck, four other former executives, and 11 former directors. Becker's lawyer was traveling on Thursday and unable to comment, a spokesperson said. Lawyers for former Chief Risk Officer Laura Izurieta called it "outrageous" to make her a defendant, saying she provided sound risk management advice before stepping down in April 2022, well before the bank's collapse. "Their actions are reflective of outgoing FDIC leadership that is not interested in the truth," Izurieta's lawyers said. Lawyers for the other defendants did not immediately respond to requests for comment. Silicon Valley Bank's March 10, 2023 collapse and seizure by the FDIC shocked financial markets. It disrupted many technology startups whose deposits it held, and upset many customers because an unusually large percentage of its deposits was uninsured. The collapse presaged the demise of two other banks, Signature Bank and First Republic Bank, and prompted fears of a replay of the 2008 banking crisis. First Citizens BancShares, a North Carolina lender, acquired Silicon Valley Bank's deposits and tens of billions of dollars of loans in an FDIC-arranged sale. Silicon Valley Bank had about $209 billion of assets when it failed. Larger U.S. bank failures include Lehman Brothers in 2008, Washington Mutual including its banking unit in 2008, and First Republic in 2023. The case is FDIC as receiver v Becker et al, U.S. District Court, Northern District of California, No. 25-00569.
When there is a hole in the bucket, get a bigger bucket. Setting up the next financial debacle. Long Gold, Akuma
Hilarious. What risk management was she talking about? By November 2021 Powell already signaled pain was coming and that rates were going to skyrocket but she didn't hedge any of the bonds SVB had on their balance sheet. Just another clueless executive like the crazy CFO from Lehman who claimed, on CNBC 2 days before it went bankrupt, that they had the proper bridge financing. How do these idiots get cushy jobs in these banks? At least the Biden admin finally sued someone for malfeasance. I don't know why they waited 20 months for this to happen. They should sue those criminals running Boeing next.