(Dmytro “Henry” Aleksandrov, Headline USA) First Republic Bank collapsed and the Federal Deposit Insurance Corporation [FDIC] will imminently place the bank under receivership, marking the third collapse of a medium-sized American bank in less than two months.
The Daily Wire reported that First Republic Bank which is headquartered in San Francisco, Calif., caters mainly to wealthy clients with account balances above the $250,000 deposit threshold backed by the FDIC.
In recent weeks, the company witnessed many customers withdraw their funds because said customers lost trust in the financial system after the recent implosions of Silicon Valley Bank and Signature Bank. To decrease the risk of bank runs at other financial institutions, FDIC, officials had moved to secure both insured and uninsured deposits at the two failed companies.
According to the Daily Wire, the unstable position of First Republic Bank necessitates the imminent takeover of the company by the FDIC. The news source also added that the executives don’t have any time to pursue a bailout through a private deal.
On Friday, the bank shares plummeted more than 43%, reaching a low of $3.51 before markets closed. At the beginning of the year, the company’s stock was priced at $121.54, marking a 97% loss for investors over the past four months.
The deposits at the company had decreased from $176 billion on Dec. 31 to $104 billion on March 31, as was shown in the first quarter earnings report for First Republic Bank. The Daily Wire reported that the total amount of deposits reported at the end of last month included a $30 billion loan provided by other large banks, like Wells Fargo, JPMorgan Chase and Bank of America, a deal that the federal government enabled to maintain the solvency of First Republic Bank.
“With the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business,” First Republic Bank Chairman Jim Herbert and First Republic Bank CEO Mike Roffler said.
“We remain fully committed to serving our communities, and we are grateful for the ongoing support of our clients and colleagues.”
