UNITED STATES NEWS

First Republic up in air as regulators juggle bank’s fate

Apr 30, 2023, 3:09 PM

Regulators continued their search for a solution to First Republic Bank’s woes over the weekend before stock markets were set to open Monday.

San Francisco-based First Republic has struggled since the collapse of Silicon Valley Bank and Signature Bank in early March, as investors and depositors have grown increasingly worried that the bank may not survive as an independent entity for much longer. The bank’s stock closed at $3.51 on Friday, a fraction of the roughly $170 a share it traded for a year ago.

Gary Cohn, a former Goldman Sachs president who served as President Donald Trump’s top economic adviser, told CBS News’ “Face the Nation” on Sunday that the Federal Deposit Insurance Corporation “would prefer to sell the bank in its entirety than in pieces.”

“What will most likely happen is the FDIC will seize control and then simultaneously resell the asset to the successful bidder,” Cohn said.

Cohn said he believed it will be a “much faster process” than what happened with Silicon Valley Bank.

First Republic reported total assets of $233 billion as of March 31. At the end of last year, the Federal Reserve ranked First Republic 14th in size among U.S. commercial banks.

Before Silicon Valley Bank failed, First Republic had a banking franchise that was the envy of most of the industry. Its clients — mostly the rich and powerful — rarely defaulted on their loans. The 72-branch bank has made much of its money making low-cost loans to the rich, which reportedly included Meta Platforms CEO Mark Zuckerberg.

Flush with deposits from the well-heeled, First Republic saw total assets more than double from $102 billion at the end of 2019’s first quarter, when its full-time workforce was 4,600.

But the vast majority of First Republic’s deposits, like those in Silicon Valley and Signature Bank, were uninsured — that is, above the $250,000 limit set by the FDIC. And that began to fuel worries about the franchise among analysts and investors. If First Republic were to fail, its depositors would be at risk of not getting all their money back.

Those fears were crystalized in the bank’s recent quarterly results. The bank said stepped in to save it with $30 billion in uninsured deposits.

Since the crisis, First Republic has been looking for a way to quickly turn itself around. The bank planned to sell off unprofitable assets, including the low interest mortgages that it provided to wealthy clients. It also announced plans to lay off up to a quarter of its workforce, which totaled about 7,200 employees at the end of 2022.

But investors have remained skeptical. The bank’s executives have taken no questions from investors or analysts since the bank reported its results, causing the stock to sink further.

And it’s hard to profitably restructure a balance sheet when a firm has to sell off assets quickly and has fewer bankers to find opportunities for the bank to invest in. It took years for banks like Citigroup and Bank of America to return to profitability after the global financial crisis 15 years ago, and those banks had the benefit of a government-aided backstop to keep them going.

United States News

Associated Press

A New York collector pleads guilty to smuggling rare birdwing butterflies

NEW YORK (AP) — A Long Island man has pleaded guilty to illegally trafficking birdwing butterflies and other rare insects, according to a plea deal filed in Brooklyn federal court Tuesday. Charles Limmer, 75, of Commack, pleaded guilty to a charge of conspiracy to smuggle wildlife into the country and agreed to pay a $30,215 […]

5 minutes ago

Associated Press

A pregnant Amish woman is killed in her rural Pennsylvania home, and police have no suspects

SPARTANSBURG, Pa. (AP) — Investigators have no suspects in the killing of a pregnant 23-year-old Amish woman inside her home in rural northwestern Pennsylvania, and are appealing for tips from the public to help solve the crime, a state police spokeswoman said Wednesday. Rebekah A. Byler was the victim of a criminal homicide inside her […]

28 minutes ago

Associated Press

Police in suburban Chicago are sued over a fatal shooting of a man in his home

CHICAGO (AP) — The sisters of a man fatally shot in his home this month by suburban Chicago police filed a federal lawsuit Wednesday against the officers and their department, alleging wrongful death and other counts. Kyenna McConico and Kennetha Barnes, sisters of Isaac Goodlow III, filed the lawsuit in U.S. District Court in Chicago […]

2 hours ago

Workers drive among shipping containers and trailers at a BNSF intermodal terminal, Jan. 3, 2024, i...

Associated Press

US economy grew solid 3.2% in fourth quarter, a slight downgrade from government’s initial estimate

WASHINGTON (AP) — The U.S. economy grew at a robust 3.2% annual pace from October through December, propelled by healthy consumer spending, the Commerce Department reported Wednesday in a slight downgrade from its initial estimate. The expansion in the nation’s gross domestic product — the economy’s total output of goods and services — slipped from […]

2 hours ago

FILE - Activists mark the first anniversary of the Supreme Court's decision in Dobbs v. Jackson Wom...

Associated Press

About as many abortions are happening in the US monthly as before Roe was overturned, report finds

The number of abortions performed each month is about the same as before the U.S. Supreme Court overturned Roe v. Wade and the nationwide right to abortion more than a year and a half ago, a new report finds. The latest edition of the #WeCount report conducted for the Society of Family Planning, a nonprofit […]

2 hours ago

This undated photo shows oral historian Francine D. Spang-Willis, who is leading a project to creat...

Associated Press

Laurene Powell Jobs’ philanthropy seeks to strengthen communities with grants for local leaders

Francine Spang-Willis wishes the landscape of the Crazy Mountains near Livingston, Montana, could speak for itself. But absent that, the oral historian will launch a new project talking to people with a connection to the land. Spang-Willis is one of a dozen new fellows announced Wednesday by the Emerson Collective, Laurene Powell Jobs’ philanthropy. In […]

3 hours ago

Sponsored Articles

(KTAR News Graphic)...

Boys & Girls Clubs

KTAR launches online holiday auction benefitting Boys & Girls Clubs of the Valley

KTAR is teaming up with The Boys & Girls Clubs of the Valley for a holiday auction benefitting thousands of Valley kids.

...

Sanderson Ford

The best ways to honor our heroes on Veterans Day and give back to the community

Veterans Day is fast approaching and there's no better way to support our veterans than to donate to the Military Assistance Mission.

...

Canvas Annuity

Interest rates may have peaked. Should you buy a CD, high-yield savings account, or a fixed annuity?

Interest rates are the highest they’ve been in decades, and it looks like the Fed has paused hikes. This may be the best time to lock in rates for long-term, low-risk financial products like fixed annuities.

First Republic up in air as regulators juggle bank’s fate