Since Silicon Valley Bank’s (SVB) failure last month, First Republic’s stock is down roughly 97%.
Federal regulators are reportedly trying to figure out ways to prevent First Republic, which is headquartered in San Francisco, from failing — including asking other banks to step in and make bids.
The regional bank may ultimately be taken over by the Federal Deposit Insurance Corporation (FDIC), like SVB and New York's Signature Bank.
The selloff was triggered by a terrible earnings report revealing that First Republic lost more than US$100 billion in deposits following the SVB collapse. The outflow came even as a group of megabanks attempted to rescue First Republic by depositing US$30 billion.
First Republic’s depositors were concerned that the bank would get hit with a similar bank run. The bank also had large unrealized losses on its balance sheet that raised the risk of a collapse.
The extended banking crisis has ramifications for the US economy.
Regional banks such as First Republic are key lenders for area businesses. Even banks that aren’t struggling are pulling back their lending to reduce risk, hurting employers’ ability to hire and grow.
