What Ended Up Happening to SVB's Wine Division?

 

Photo by Maksym Kaharlytskyi on Unsplash

During the SVB meltdown last month, I wrote each of the first three weeks regarding the ordeal we were experiencing to keep interested parties apprised. There was a lot going on, and an infinite number of possible outcomes for the Wine Division. There was no assurance that the thought leadership we provide the industry would continue.

When the FDIC owns you, they don't ask what you want. We could have been sold to one of the largest banks, in which case we would have been absorbed and lost our flexibility and identity. It was possible we could have been split up and sold by divisions, or if there was insufficient interest, they could have sold off loans one at a time. None of those possibilities took place. What ended up happening to SVBs Wine Division?

I wrote the last post a month ago, right after the bank was purchased by First Citizens Bank where I said: 

"From everything we are seeing at this early stage, we're starting to believe we've somehow landed in the best outcome imaginable for our clients, employees and our community." 

After a month under new ownership, I can confirm we did end up with the best possible outcome. We weren't purchased by a behemoth bank. The bank was left intact and not split up. There is no cross-over in business segments, and our new benefactor First Citizens Bank is running Silicon Valley Bank as a division of First Citizens. They are pragmatic and know that we are the experts in what we do and have told us to keep doing that. But since my last post, the situation has solidified and improved. There is more.

I'm sure it's unprecedented in these types of circumstances, but the Wine Division of Silicon Valley Bank has retained 100% of our employees, as well as all of our borrowing clients. In fact, we've added a half-dozen significant clients over the past 6 weeks and today are at record client counts, and record loan volumes. 

Since we don't have to change process or the way we approve things and are fully staffed without need to train new staff, we are completely operational and doing what we do. But we continue to hear wild rumors. Let me correct some:

    Rumors & Reality

• One rumor is that SVB failed and is gone. Silicon Valley Bank, of which the wine division is a part, was purchased by First Citizens Bank (FCB) and is now operating as a division of First Citizens Bank - but under the name "Silicon Valley Bank." My business cards haven't changed and I've had two paychecks, so we must be in business!

• 
  Another rumor is that Silicon Valley Bank is in Bankruptcy. That's false. SVB Financial Group (SVBFG) was the holding company for Silicon Valley Bank. The holding company  did file for bankruptcy, but Silicon Valley Bank where the wine division resides, is completely separate from the former holding company and entirely uninvolved in the Bankruptcy.

• Rob McMillan left SVB. That was a surprising one to me since I'm here. Once SVB was purchased by First Citizens Bank and it was clear First Citizens Bank wanted us to continue doing what we've always done, the easy choice I made was to stay where I've been for the last 32 years.

• I'm always amused by rumors phrased as possibilities. It pulls an unlikely rumor across the line of potential truth. That's something news companies are particularly adept at to create a stirr. The rumor a client passed to me was:"Someone told me that it's possible the SVB Wine Division will have to tighten their lending standards." 

The bank's collapse wasn't due to bad loans. The division and bank were operating well. The issue was a run on the deposits of the bank. We don't have to clean up a mess or tighten our lending standards.Since we have full staffing, there is no reason for us to slow up or alter what we do. We are actively kicking the hedgerows for new clients and having success!

• The new owner of SVB isn't going to allow the thought leadership SVB is known for to continue. That was one of the questions that needed to be answered prior to our sale to First Citizens Bank. But FCB has encouraged us to continue with our industry support efforts. 

It's strange that in the past several weeks we've gone from out of business, taken over by the FDIC, sold to a new owner, and after all that - we are all in our same desks doing the same jobs and called Silicon Valley Bank. While I don't recommend this experience, there are always good things to come out from failure and I'm sure I'll be sharing some of those thoughts over the next few months on this blog and in speaking engagements.