![]() In conversations with industry and government officials, First Republic’s advisers have proposed various restructuring solutions that would involve the government, in one form or another, according to people familiar with the matter. Of First Republic’s remaining deposits, roughly half, or nearly $50 billion, were over the insured threshold as of March 31, including the $30 billion deposited by big banks in March. ![]() by its own rules guarantees that deposit accounts only up to $250,000 will be made whole, though in practice - and in the case of SVB and Signature - it can make accounts of all sizes whole if several top government officials invoke a special legal provision. That outcome would likely wipe out shareholders and put the bank’s fate in the hands of the Federal Deposit Insurance Corporation. The bank is more likely to fall into the hands of the government. Of course, any company that buys First Republic would be taking on multibillion-dollar losses on its loan portfolio and assets. Still, First Republic’s stock slide means that its branches and $103 billion in deposits could be bought for, theoretically, an amount less than the market capitalization of Portillo’s, the Chicago-area hot dog purveyor. Stock prices are always an imperfect measure of a lender’s health, and there are strict rules about what types of entities can acquire a bank. The company is now worth a little more than $1 billion, or about one-twentieth its valuation before the banking turmoil began in March. On Tuesday, the stock plummeted 49 percent. Herbert nor the bank’s representatives would comment Wednesday, as First Republic’s stock continued a harrowing slide, dropping about 30 percent to close the day at just $5.69 - down from about $150 a year earlier. That was belied by the bank’s earnings report this week, which stated that “First Republic began experiencing unprecedented deposit outflows” on March 10. ![]() Herbert had told him that the bank was doing “business as usual,” and that there were “not any sizable number of people wanting their money.” ![]() On March 13, Jim Cramer, the CNBC host, said on the air that Mr. The bank’s founder and executive chairman, Jim Herbert, until recently one of the more admired figures in the industry, has disappeared from public view. Every attempt by the bank’s executives and advisers to project confidence appears to have had the opposite effect. It has withstood a deposit flight and a cratering stock price. Yet while SVB and Signature survived just days under pressure, First Republic has neither fallen nor thrived. Like Silicon Valley Bank, it catered to the well-off - a group of customers able to pull their money en masse - and amassed a hoard of loans and assets whose value has suffered in an era of rising interest rates. While the bank, with 88 branches focused mostly on the coasts, is still open for business, no one connected to it, including its executives and some board members, would say how much longer it could exist in its current form.įirst Republic, based in San Francisco, has been widely seen as the most in-danger bank since Silicon Valley Bank and Signature Bank collapsed last month. The likeliest outcome for the bank, people close to the situation said, would need to involve the federal government, alone or in some combination with a private investor. Hardly a household name until a few weeks ago, First Republic is now a top concern for investors and bankers on Wall Street and officials in Washington. First Republic Bank is sliding dangerously into a financial maelstrom, one from which an exit appears increasingly difficult.
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