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First Republic Bank Collapses, Is Sold to JPMorgan Chase

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‘The banking system remains sound and resilient,’ a U.S. Treasury Department spokesperson told the media Monday.

First Republic Bank has become the latest bank to fail under the pressure of liquidity and other challenges that have been affecting certain financial institutions since mid-March. Upon being closed by the California Department of Financial Protection and Innovation and taken into receivership by the FDIC, nearly all of its assets were sold to JPMorgan Chase, the FDIC announced early Monday.

The FDIC said all First Republic depositors will become depositors of JPMorgan Chase and have full access to all their deposits, which will continue to be insured by the FDIC. San Francisco-based First Republic had about $229 billion in total assets and $104 billion in total deposits as of April 13, the FDIC said. Its collapse—the second largest in U.S. history by asset size—will cost the Deposit Insurance Fund about $13 billion.   

“The banking system remains sound and resilient,” a U.S. Treasury Department spokesperson told the media Monday, “and Americans should feel confident in the safety of their deposits and the ability of the banking system to fulfill its essential function of providing credit to businesses and families.”

Monday’s events followed a week of earnings reports in which many banks said they had met expectations despite widespread drops in deposits. Many said net interest margins would likely fall as this quarter progresses, considering the need to boost deposit interest rates to remain competitive and other factors. 

The liquidity crisis has put banks on alert about the implications of bank runs supercharged by social media and digital transactions—including their connection to reputation risk—and has heightened the focus on the traditional challenges of concentration and interest rate risk management.  

In keeping with its nearly 110-year history of serving the financial industry, RMA is communicating with members and offering resources to help them meet the current economic distress. RMA will continue to follow and respond to these important developments.