NEW: Regulators seize troubled First Republic Bank and sell all of its deposits and most of its assets to JPMorgan Chase Bank in a bid to head off further banking turmoil in the U.S.
, 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 bank has made much of its money making low-cost loans to the wealthy, which reportedly includedFlush 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.
Those fears were crystalized in the bank’s recent quarterly results. The bank said depositors pulled more than $100 billion out of the bank during April’s crisis. San Francisco-based First Republic said that it was only able to stanch the bleeding after a group of large banks 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 in late 2022.
Investors remained skeptical. The bank’s executives have taken no questions from investors or analysts since the bank reported its results, causing First Republic's 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.Associated Press Staff Writer Matt O'Brien in Providence, Rhode Island, contributed to this report.
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