First Citizens BancShares in Raleigh, N.C., and the Federal Deposit Insurance Corp. have ended their shared-loss agreement tied to the 2023 failure of Silicon Valley Bank.
First Citizens took over much of Silicon Valley Bank’s operations when it failed.
The five-year shared-loss agreement covered an estimated $60 billion of loans. Under the agreement’s terms, the FDIC agreed to reimburse First Citizens for half of any losses if they amounted to more than $5 billion. In return, First Citizens agreed to reimburse the FDIC for half of the recoveries tied to those covered assets.
First Citizens said the decision to end the agreement was motivated by its determination that it is unlikely to have more than $5 billion of losses. The reporting responsibilities tied to the shared-loss agreement have ended.
The termination agreement includes transition provisions for the benefit of First Citizens’ related debt agreements with the FDIC, all of which survive the end of the shared-loss agreement. That includes a purchase money note payable by the bank, which had an outstanding principal amount of nearly $36 billion on Dec. 31, and bears interest at a fixed rate of 3.5% per annum until its maturity in March 2028.