The banking world, still reeling from the shockwaves of Silicon Valley Bank's collapse, watched with bated breath as First Citizens stepped in to acquire the fallen giant. Many saw it as a risky move, a legacy bank venturing into the unpredictable waters of the innovation economy. But a year on, First Citizens has not only stabilized the SVB franchise, but quietly started laying the groundwork for something far more ambitious: a potential resurgence of the SVB brand, driven by a surge in Global Fund Banking.

This isn't just about weathering the storm. This is about capitalizing on it. While other banks pulled back from the turbulent tech market, First Citizens saw an opportunity. Their capital markets business reached record highs in Q4 2023, seizing deals abandoned by risk-averse competitors. This aggressive approach continued in Q1 2024, with First Citizens closing over $5 billion in Global Fund Banking deals.

The pipeline is overflowing. It expanded by 40% from Q3 to Q4 2023 and shows no signs of slowing down. This is a strategic land grab, positioning First Citizens to become the dominant force in financing venture capital and private equity.

But the numbers tell a deeper story. While VC investment in Q1 2024 remained weak, First Citizens reported *increased* investment inflows into SVB accounts. Cash burn decreased, suggesting companies are finding ways to navigate the downturn. This is the first time since the acquisition that the SVB cash position has remained neutral.

This stabilization is crucial. It suggests that First Citizens is successfully rebuilding trust with SVB's client base. And with a record backlog of IPO-ready companies waiting for the market to fully reopen, First Citizens is primed to ride the wave of a potential VC investment rebound in 2024.

Hypothesis: The Long Game

First Citizens is playing the long game. They are leveraging their strong capital position (a pro forma CET1 ratio of roughly 12% after adjusting for the loss share agreement) and conservative credit culture to weather the current tech downturn, all while strategically building their Global Fund Banking dominance. They're anticipating a rebound in VC investment and IPO activity, and when that happens, they'll be perfectly positioned to capture the influx of deposits and loan demand.

Consider this:

First Citizens is actively pursuing a share buyback plan, likely to commence in the second half of 2024. This indicates a high level of confidence in their capital position and future earnings potential. They are also planning a programmatic issuance of long-term debt, partly driven by regulatory requirements, but also strategically aimed at replacing a portion of the FDIC purchase money note. This suggests a long-term commitment to the SVB franchise.

Global Fund Banking Deal Volume

The following chart illustrates the significant growth in First Citizens' Global Fund Banking deal volume, based on data from their Q4 2023 and Q1 2024 earnings calls.

Is this a guaranteed success? Of course not. The tech market is volatile, and the macroeconomic environment remains uncertain. But First Citizens is playing a different game than other banks. They are not retreating from the innovation economy; they are doubling down. They are not just acquiring a fallen giant; they are rebuilding a tech empire. And if their hypothesis is correct, they could be on the cusp of dominating a sector that many thought was out of their reach.

Remember, First Citizens has a history of calculated acquisitions. They have grown into a banking powerhouse through strategic expansion, often taking advantage of industry turbulence to acquire valuable assets at attractive prices.

Could this be the next chapter in their success story? The next few quarters will be crucial in determining whether First Citizens' quiet moves in the innovation economy are the beginnings of a tech empire in the making.

"Fun Fact: First Citizens Bank is known for its unusual approach to acquisitions. Unlike many banks that rebrand acquired institutions, First Citizens often keeps the acquired bank's name and branding, creating a diverse portfolio of recognizable local and regional banks under the First Citizens umbrella."