A North Carolina bank that will assume all deposits and loans from the bridge bank that took over for the closed Silicon Valley Bank (SVB) entered a “loss-share transaction” on the commercial loans it purchased from the bridge bank, the board chairman of the federal bank deposit insurance agency said Monday.
In testimony before the Senate Banking Committee, Federal Deposit Insurance Corp. (FDIC) Chairman Martin Gruenberg said his agency, as receiver for SVB, and First-Citizens Bank & Trust Co. of Raleigh will share in the losses and potential recoveries on the loans covered by the loss-share agreement.
“The loss-share transaction is projected to maximize recoveries on the assets by keeping them in the private sector,” Gruenberg said. “The transaction is also expected to minimize disruptions for loan customers.”
Late Sunday, the FDIC announced that the North Carolina bank would assume the deposits and loans of the bridge bank for SVB, which was closed by California state banking regulators on March 10.
All 17 former branches of Silicon Valley Bridge Bank, N.A., opened as First-Citizens Bank & Trust Co. Monday, the FDIC said.