Photo by Ryan Sun, Deseret News

While it’s been almost a year since Silicon Valley Bank (SVB) was shuttered by the California Department of Financial Protection and Innovation, the impact of the bank’s collapse is still far-reaching. Silicon Valley Bank collapsed at the height of pre-recession panic and was the largest bank to close its doors since Washington Mutual during the 2008 financial crisis. 

Perhaps the most potent side effect of SVB’s failure was its impact on the tech industry. The bank was a niche staple for venture capitalists and startup founders, and its collapse dealt a brutal blow to the sector. For Utah—and the Silicon Slopes in particular—that meant the state’s vibrant tech ecosystem and innovation economy were in for a reckoning.

However, after its acquisition by North Carolina-based First Citizens BancShares in late March, SVB is working to gain new ground in Utah. 

Silicon Valley Bank collapse 101

At the time of its collapse, SVB was the 16th largest bank in the United States. While the bank had a significant amount of deposits and assets, the majority of the excess deposits were used to buy Treasury bonds—assets with low risks and low returns. However, as the Federal Reserve increased interest rates to counter inflation, SVB’s bonds grew in terms of risk. Investors could buy bonds at higher interest rates, which meant that SVB’s bonds declined in value. 

On top of that, many of SVB’s customers—especially those who worked in the tech industry—started withdrawing funds from their accounts when they encountered financial instability. To accommodate these large withdrawals, SVB began to sell a portion of its investments, but these sales came at a loss: a whopping $1.8 billion in total. 

There were other contributing factors to SVB’s initial collapse, including the rollback of the Dodd-Frank Act, which meant the bank was no longer beholden to stringent oversights and rules. On top of this, the Federal Reserve linked the bank’s failure to SVB’s senior management team for not properly managing the investment risk of their balance sheet and to the bank’s board of directors for failure to intervene.

SVB’s second act

Today, Silicon Valley Bank Senior Vice President Flavia Rydin sees an opportunity for the company to move forward with its particular emphasis on serving customers in the tech sector and those at the forefront of creating revolutionary products and services.

“The future is bright for SVB,” she says. “My team and I have a great opportunity to continue to build upon SVB’s 40-year history in serving the innovation economy. Our new parent company, First Citizens, recognizes SVB’s critical role in the innovation economy and is backing and investing in the business so that we can continue to support [this sector]. Clients have expressed genuine relief that SVB is here and still committed to the innovation economy’s unique needs, recognizing that our platform is extremely difficult to replicate elsewhere.”The SVB team isn’t just talking the talk—the bank announced in September that it put more than $1 billion in new loan commitments to technology and health care companies in Q2 2023 alone. In late October, Bloomberg reported that First Citizens deposits surpassed analyst estimates by over $20 billion following the SVB rescue deal. And to those who question how SVB is showing up for its customers under a new owner, Rydin affirms there will be little to no differentiators on the front end.

“Not much has changed for our clients after the acquisition,” Rydin explains. “We are still focused on serving the innovation economy. Our doors are open for business, and we are still working with companies at every life stage. First Citizens Bank has been supportive of that strategy, which has provided great comfort to our clients. Our team is still originating and evaluating new deals as early as the seed stage, and we don’t see our business model changing in any way.”

Post-acquisition and people-first

“Utah is, and will continue to be, an important market for SVB,” Rydin says. “We’ve had employees cover this market for over 20 years. We have over 100 employees in our Cottonwood Heights office [who] support our clients in many capacities. Our approach in Utah will continue to be the same: increasing the probability of success for the companies we serve. We already have the foundation in place to support our existing and potential clients. Now, we will continue to build upon our success in this market. Companies in Utah can feel confident knowing our balance sheet is much stronger than it was prior to March, and our focus has not changed. I’m personally committed to helping the companies we serve in this market succeed, and I take a great deal of responsibility in that statement.”

Rydin began her career in banking with JPMorgan Chase & Co. and joined SVB about a year ago. She says she was particularly attracted to the bank’s “unmatched value [that it offered] to the startup community.” After the First Citizens acquisition, Rydin decided to stay at SVB, given the bank’s unwavering commitment to serving the innovation economy.

Rydin’s choice to stay was also largely informed by her colleagues and the sense of community she experienced at SVB—something rarely highlighted in the financial industry. “The way my team supports each of our clients is truly unique and different from what I’ve experienced throughout my career,” she says. “Each individual on my team cares about doing what’s right by our clients and their investors, ensuring we can contribute to their success in any way.”

Charting the future of SVB

Rydin is particularly adamant about encouraging companies who may have left SVB to return to the bank as it continues to rebuild under First Citizens. She emphasizes that SVB is a safe place dedicated to supporting each of its clients through every imaginable economic cycle.

“SVB is open for business and serving our clients as we always have,” she says. “What our clients in every sector and stage need is still here—specialized teams, comprehensive products and services, exceptional service and a deep understanding of their unique businesses. Our clients have access to the same products, solutions [and] lending capacity, and we continue to have the largest team of dedicated bankers serving the innovation economy.”

When asked about the future of SVB, Rydin is particularly optimistic about how the bank will impact startups and other endeavors in the tech sector.

“We look forward to continuing to do what we do best: serving our clients from across all life stages, sectors and markets. We have more experience with startups, tech, life science and health care companies and their investors than any other company,” she says. “We remain committed to providing our clients with the level of service, specialization and expertise that only SVB can.”