EDITOR’S NOTE: On Sunday, March 26, North Carolina-based First Citizens Bank announced that it reached an agreement to purchase SVB from the Federal Deposit Insurance Corporation, which took control of SVB after its collapse. Under the agreement, First Citizens will obtain SVB’s loans and some other assets, including 17 bank branches.
As its name suggests, Silicon Valley Bank’s bread and butter was the tech sector.
However, the rapidly-growing bank, which collapsed in dramatic fashion in early March, also served North Bay wineries and affordable housing developers.
At the end of 2022, SVB had $74.3 billion in outstanding loans, including almost $1.2 billion loaned to over 400 winery clients. The bank’s St. Helena-based Premium Wine Banking branch published a widely-read annual report on the state of the wine industry.
Between 2002 and 2021, SVB reportedly invested and loaned over $2 billion to affordable housing developers, helping to build or fix up around 10,000 affordable housing units throughout the Bay Area.
After its clients became uncertain en masse, the federal government took over SVB, protecting customers’ assets. However, new loans to affordable housing developers and other clients are halted, and the future remains somewhat uncertain.
According to the Bay Area News Group, as many as 1,000 units of affordable housing slated for construction are facing uncertainty or construction delays due to SVB’s collapse. Public records show that at least two North Bay nonprofit developers have used financing from SVB.
Burbank Housing, one of the North Bay’s largest affordable housing developers, did business with SVB several times over the past decade. Two completed projects, one in Santa Rosa and another in Calistoga, were financed by SVB.
In December 2021, Burbank received financing from SVB for a portion of Caritas Village, the new affordable housing complex in downtown Santa Rosa, public records show.
And, Burbank recently approached SVB for a loan to finance Petaluma River Place, a 50-unit project planned for 1601 Petaluma Blvd. S. Burbank’s request was turned down, but the developer remains “extremely confident” they will be able to secure financing for the project, spokesperson Patrick Montgomery told the Bohemian.
“By all accounts, exposure for Burbank Housing appears to be very manageable, and our Burbank team is of course monitoring the situation very closely,” Montgomery stated.
Public records show that Petaluma-based PEP Housing also used financing from SVB. In 2020, the nonprofit developer received a $20 million construction loan for its 54-unit River City Senior Apartments complex. The project was completed last year. PEP’s media representative was not available for comment before the Bohemian’s deadline.
A few weeks after SVB’s collapse, the future remains hazy. Other banks, including San Francisco’s First Republic Bank, have shown signs of weakness. Meanwhile, the Federal Reserve’s “discount window” has been handing out money to banks at a scale not seen since 2008.
Despite the government’s efforts to stifle more panic, an Associated Press-NORC Center for Public Affairs Research poll conducted between March 16-20 found that just 10% of respondents had “high confidence” in the nation’s banks and financial institutions, down from 22% in 2020.
Local banks have reassured customers about their stability. Of note, customers with less than $250,000 in their accounts are protected by the Federal Deposit Insurance Corporation.