Bank stocks rallied Monday after the FDIC announced First Citizens BancShares will buy SVB Financial's Silicon Valley Bank. Meanwhile, U.S. authorities reportedly are mulling whether to expand an emergency lending facility for banks.
Silicon Valley Bank Sale
North Carolina-based First Citizens purchased all the deposits and loans for Silicon Valley Bank, the FDIC announced early Monday. The FDIC received equity appreciation rights of FCNCA stock worth up to $500 million as part of the deal.
The transaction included $72 billion of Silicon Valley deposits at a discount of $16.5 billion, according to the release. And the FDIC will retain roughly $90 billion in assets and securities in receivership for deposition. The regulator estimates the Silicon Valley Bank failure will cost the Deposit Insurance Fund $20 billion.
First Citizens stock catapulted 53.7% Monday to 895.61 following the news.
Officials Mull Additional Bank Aid
Meanwhile, First Republic stock spiked Monday as U.S. officials consider expanding an emergency lending facility that would give the San Francisco-based bank more time to shore up its balance sheet, Bloomberg reported over the weekend.
Officials are weighing various options. Sources said expansions to the Fed's liquidity offerings would be "broadly based" in accordance with banking laws. But alterations may be made to ensure First Republic Bank benefits, according to reports.
Officials noted First Republic's "deposits are stabilizing." And it's not at risk for a severe run that shut down Silicon Valley Bank.
Last week, First Republic brought on consultants to help it explore strategic options, including a potential sale, capital infusion, asset cut or downsize. On March 16, First Republic received a $30 billion rescue deposit from America's 11 largest banks.
FRC stock leapt nearly 12% Monday after rocketing 23% in early trading. Shares collapsed 88.7% so far in March as of Monday's close.
KeyCorp Upgrade
KeyCorp, the parent of Cleveland-based s KeyBank was upgraded to Buy from Neutral at Citi early Monday. The firm stress-tested superregional bank models for a "very unlikely" 50% decline in uninsured deposits and found KEY stock pricing in a slightly worse scenario. Citi noted the "risk-reward" for KeyCorp looks very attractive. And Citi says the KeyCorp should benefit from repricing of fixed rate assets, which should boost 2024 and 2025 earnings. Citi maintained its 20 price target for KEY shares.
Just before SVB Financial and Signature Bank failure, KeyCorp had warned in early March of weaker net interest income
KEY stock rose 5.4% during trading.
The SPDR S&P Regional Banking ETF, which includes First Republic and KEY stock edged 0.9% higher. The Financial Select SPDR ETF climbed 1.45%.
Silvergate Spikes
Silvergate Capital agreed to the prepayment of a $205 million secured term loan to MicroStrategy subsidiary MacroStrategy, as it winds down and liquidates Silvergate Bank, the company announced Monday. The bank issued the loan as part of its Silvergate Exchange Network (SEN) Leverage program for its cryptocurrency transaction platform last March.
MacroStrategy collateralized the loan with its portions of its bitcoin holdings and had $5 million in cash reserves stored at the bank. Silvergate agreed to accept $161 million as full repayment, waived the prepayment charge and released MacroStrategy's collateral following the deal.
On Monday, MicroStrategy announced it purchased 6,455 bitcoin for roughly $150 million between Feb. 16 and March 23 for an average price of $23,238 per coin. As of March 23, MicroStrategy and its subsidiaries held an aggregate 138,995 bitcoin with a total purchase price of $4.14 billion, averaging out to $29,817 per coin.
SI stock jumped 14.2% Monday. MSTR stock retreated 6.9% on the day.
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