Silicon Valley Bank resumed mortgage originations on Tuesday via its newly established “bridge bank” — just four days after California state regulators took possession of the financial institution and appointed the Federal Deposit Insurance Company (FDIC) as receivers, bank officials said.
“We are still open for business and my team is still working together moving the mortgage loans through our pipeline,” Suzie Porter, director of mortgage operations at SVB, said in a social media post on Tuesday.
On Friday, the 40-year-old commercial bank that was enmeshed in the tech community collapsed amid a deposit run that provoked a liquidity crisis, which triggered the regulators’ interference.
Over the weekend, the FDIC transferred all deposits and assets of the former SVB to a “bridge bank” called Silicon Valley Bridge Bank, N.A. The new entity stated that depositors have full access to their money and that new and existing deposits are protected.
On Tuesday, its newly appointed CEO, Tim Mayopoulos, said in a statement that Silicon Valley Bridge Bank, N.A. was open for business.
“We are making new loans and fully honoring existing credit facilities,” he said.
Mayopoulos, a former Fannie Mae CEO and Blend president, is a veteran of crisis management and mortgage. He joined Fannie Mae in the wake of the financial crisis in 2008-2009 and served as CEO from 2012 to 2018.
Mayopoulos resigned to join mortgage software startup Blend in 2019. In January, he announced he was stepping down from his role as president of Blend, which has struggled financially in a down mortgage market.
Mayopoulos, an FDIC systemic resolution advisory committee member for over two years, will lead SVB, an institution with $209 billion in assets.
SVB operated as a portfolio lender in the residential mortgage space, holding loans on its balance sheet and not selling them on the secondary market. This structure allows the bank to offer clients “common sense underwriting and provide more nimble prequalifications, approvals and closings,” the bank wrote on its website.
SVB focuses on jumbo loans (greater than $726,200), which have lower rates, for primary and secondary homes. Mortgage News Daily showed the average 30-year jumbo mortgage rates at 6.15% on Wednesday afternoon, compared to 6.55% for conventional loans.
SVB’s mortgage origination volume reached $2.4 billion in 12 months, through 30 active loan officers and 20 branches, according to mortgage tech platform Modex. In total, 76.6% of the production was conventional loans and 49% consisted of purchase loans. The company’s average mortgage loan was about $1.45 million, and the vast majority of its origination volume is in California.
One of Mayopoulos’ first missions is to restore customers’ confidence in SVB after the turbulence over the last few days. The bank’s former executive team – which was fired during the government takeover – failed to sell its assets to ensure customers’ withdrawals. They took a $1.8 billion loss from selling a $21 billion portfolio of available-for-sale securities that triggered massive deposit outflows.
SVB had a securities-investment portfolio of $120.1 billion as of Dec. 31, 2022, including more than $16 billion in Treasury securities and some $64 billion in agency-issued mortgage-backed securities, according to Securities and Exchange Commission filings. Much of that MBS portfolio involved lower mortgage rates and was marked as being “held to maturity.”
SVB specializes in banking for tech startups, financing almost half of U.S. venture-backed technology and healthcare companies.
“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days,” Mayopoulos said in a statement.