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First Republic gets $30 billion rescue from JPMorgan Chase, Goldman Sachs, Wells Fargo, and others

A First Republic Bank branch at Montgomery and Sutter Streets in Downtown San Francisco on March 13, 2023 | Morgan Ellis/The Standard
A First Republic Bank branch at Montgomery and Sutter Streets in Downtown San Francisco on March 13, 2023 | Morgan Ellis/The Standard

First Republic is set to receive $30 billion from a nationwide coalition of banks to shore up its finances. The San Francisco-based bank has been hammered by a stock sell-off and fears about its deposit base following the closure of Silicon Valley Bank (SVB) last week.

Eleven banks are participating in the rescue deal, according to a press release issued jointly by the banks on Thursday.

Bank of America, Citigroup, JPMorgan Chase and Wells Fargo are each making a $5 billion uninsured deposit into First Republic. Goldman Sachs and Morgan Stanley are both making deposits of $2.5 billion, while BNY Mellon, PNC Bank, State Street, Truist and U.S. Bank are making deposits of $1 billion.

The collective deal "reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities," the banks said. "Regional, midsize and small banks are critical to the health and functioning of our financial system."

Along with other regional banks, shares of First Republic have been hit hard amid anxiety over weakness in the banking sector, plummeting as much as 75% following SVB's sudden closure by regulators. Shares later rose on reports of the rescue deal.

"[The banks'] collective support strengthens our liquidity position, reflects the ongoing quality of our business, and is a vote of confidence for First Republic and the entire U.S. banking system," said First Republic Executive Chairman Jim Herbert and CEO Mike Roffler in a statement on Thursday. "In addition, we want to share our sincerest thanks to our colleagues, clients, and communities for their continued and overwhelming support during this period.”

First Republic was subject to concerns that customers with uninsured deposits would pull their funds in favor of larger banks viewed as safer.

On Sunday, First Republic announced a capital infusion from JPMorgan that brought its total available liquidity to $70 billion, in addition to funds available from the Federal Reserve.

That same day, the U.S. Treasury, Federal Reserve and Federal Deposit Insurance Corporation jointly announced a financial package that guaranteed uninsured depositors at both Silicon Valley Bank and Signature Bank—a New York institution that regulators also closed on Sunday—would recoup all of their funds. The Federal Reserve Board also announced it would make additional loans available to eligible banks.

On Wednesday, First Republic suffered two credit downgrades from Fitch and S&P Global, both of which cited potential issues with deposits.

First Republic is the 14th largest bank in the country, with about $213 billion in total assets and $176 billion in deposits as of December.

The bank caters largely to high-net-worth clients on the coasts, though much of its business is concentrated in the Bay Area.

Forty percent of its deposits are from the San Francisco Bay Area, according to its most recent annual filing. Sixty-three percent of its total deposits were from business clients, and 37% were consumer clients. Roughly half of First Republic's total loans are secured by real estate located in California, and its loan portfolio includes roughly $36 billion in Bay Area real estate, according to the filing.

Founded in 1985 by Herbert, First Republic has been continuously headquartered in San Francisco since its inception and has about 7,200 employees.