In an effort to bolster growth and tackle impending regulatory hurdles, First Citizens BancShares is in search of acquisition opportunities that will elevate its asset base beyond $250 billion. As banks approach this asset threshold, they often encounter a surge in regulatory demands, prompting many, including First Citizens, to look towards mergers and acquisitions as a pathway to increased revenue and profitability. With a history of strategic expansions, the bank aims to enhance its financial standing and operational capacity through calculated acquisitions.
Recently, First Citizens BancShares has focused on securing transactions that not only expand its branch network but also augment its financial strength. Its purchase of select branches from BMO Bank and the acquisition of Silicon Valley Bank (SVB) assets in 2023 underscore its drive for growth. Historically, First Citizens has been successful in such endeavors, effectively managing multiple acquisitions over the years that have significantly expanded its asset portfolio. With the merger with CIT Group in 2020, First Citizens consolidated its position as one of the largest banks in the U.S.
Why is First Citizens Expanding?
The pursuit of acquisitions comes as a strategic maneuver to preemptively address the regulatory challenges associated with surpassing the $250 billion asset mark—a threshold that heightens regulatory scrutiny. As of December, the bank’s assets were recorded at $230 billion. By seeking new acquisitions, First Citizens aims to mitigate the impact of these additional regulations through increased profitability and revenue. This approach is seen as a proactive measure to sustain growth momentum and ensure compliance with regulatory standards.
How Does Historical Performance Inform Current Strategy?
First Citizens has a strong track record of successful partnerships and acquisitions that have significantly expanded its operational footprint. Over the past two decades, the bank completed numerous transactions, often capitalizing on the absorptions of failed institutions. The acquisition of SVB’s assets in 2023 exemplifies its ability to navigate complex transactions efficiently. Furthermore, the integration with CIT Group in 2020 provided substantial asset increases and shareholder value, reinforcing its current strategy to cross new regulatory thresholds through further acquisitions.
The bank’s leadership emphasizes the importance of strategic growth to maintain competitive advantage.
“This deposit franchise is solid, and we look forward to serving individuals and business clients in these areas,”
stated Frank B. Holding, Jr., Chairman and CEO of First Citizens. The acquisition of SVB significantly impacted the bank’s earnings, reflecting a notable jump in net income.
“We have partnered with the FDIC to successfully complete more FDIC-assisted transactions since 2009,”
stated Holding in March 2023, highlighting the bank’s adeptness at leveraging opportunities within challenging contexts.
Analyzing the bank’s recent activities and historical patterns, First Citizens remains strategically poised to expand its asset base. The corresponding increase in assets provides a buffer against regulatory pressures while simultaneously enhancing financial performance. By leveraging its prior experiences, the bank seeks to capitalize on new acquisitions that will fortify its market position and ensure regulatory compliance.
Acquisition-driven growth not only positions First Citizens to handle regulatory challenges but also bolsters its overall market stature. This strategy underscores the bank’s commitment to methodical expansion, aiming to enhance its services and capabilities for a more robust financial future.
