Bank stocks rose. First Citizens Buy Silicon Valley Bank; Officials consider more support

Bank stocks rallied early Monday after FDIC announcement First Citizen BancShares (FCCNA) will buy SVB Financial’s Silicon Valley Bank. Meanwhile, US authorities are said to be weighing whether to expand the emergency lending facility for banks.


Sell ​​Silicon Valley Bank

North Carolina-based First Citizen purchased all deposits and loans to Silicon Valley Bank, the FDIC announced early Monday. The FDIC received the right to increase the share price of FCCNA shares by up to $500 million as part of the settlement.

The transaction includes $72 billion in deposits in Silicon Valley at a discount of $16.5 billion, according to the press release. And the FDIC will keep about $90 billion in assets and securities as reception for deposit. The regulator estimated the failure of the Silicon Valley Bank would cost the Deposit Insurance Fund $20 billion.

Shares of First Citizens jumped 46% early Monday following the news.

Officials mulling additional bank aid

Meanwhile, First Republic (FRC) stocks jumped on Monday as U.S. officials considered expanding an emergency lending facility would give the San Francisco-based bank more time to strengthen its balance sheet, Bloomberg reported. believe in the weekend.

Officials are weighing different options. The sources said the Fed’s expansion of liquidity services would be “wide-ranging” under banking law. But changes could be made to protect First Republic Bank’s interests, according to the reports.

Officials noted that “the deposit of the First Republic is stabilizing.” And it doesn’t run the risk of a major run-off that shuts down Silicon Valley Bank.

Last week, First Republic hired consultants to help them explore strategic options, including potential sales, capital infusion, downsizing or downsizing. On March 16, the First Republic received a $30 billion bailout deposit from 11 biggest US banks.

FRC stock spiked 23% after the opening bell on Monday. Shares are down 89% so far in March, based on Friday’s closing price of 12.36.

Upgrade KeyCorp

KeyCorp (KEY), Cleveland-based parent company KeyBank was upgraded to Buy from Neutral for city (OLD) early Monday. The company stress-tested hyper-regional banking models for a “very unlikely” 50% drop in uninsured deposits and found KEY stock prices in a slightly worse scenario. . Citi notes that the “risk-reward” for KeyCorp looks very appealing. And Citi says KeyCorp will benefit from a revaluation of fixed-rate assets, which should boost earnings in 2024 and 2025. Citi maintains a 20 price target for KEY stocks.

Just before SVB Financial and Signature Bank failed, KeyCorp warned in early March of weaker net interest income

KEY stock is up 7.5% in early trading.

SPDR S&P Regional Bank ETF (KRE), which includes First Republic and KEY shares, rose 2.5%. Financial Options SPDR ETF (XLF) increased by 1.45%.

silver spikes

Silvergate Capital (SI) has agreed to prepay a guaranteed term loan of $205 million for micro strategy (MSTR) subsidiary MacroStrategy, as it ceases operations and liquidates Silvergate Bank, the company announced Monday. The bank issued the loan as part of the Silvergate Exchange Network (SEN) Leverage program for its crypto trading platform last March.

MacroStrategy collateralized the loan with a portion of its bitcoin holdings and had $5 million in cash reserves stored at the bank. Silvergate has agreed to accept a full refund of $161 million, no upfront fees, and the release of MacroStrategy’s collateral following the deal.

SI stock jumped 4% early Monday after the stock spiked 14% pre-market. MSTR shares fell slightly.

You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison


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