What does First Republic's collapse mean to the bank's customers and stockholders?
San Francisco-based First Republic Bank, the 14th-largest bank in America, was seized by regulators and sold to JPMorgan Chase, according to Monday announcements by the Federal Deposit Insurance Corporation (FDIC) and JPMorgan. The bank became the second-largest bank to fail in U.S. history after weeks of turmoil and a March bank run that saw it lose roughly $100 billion in just a few days.
The First Republic failure follows the failure of Silicon Valley Bank and Signature Bank in March, at the time the second and third largest bank failures in U.S. history. This year’s three leading bank failures are now surpassed only by Washington Mutual’s 2008 collapse.
JPMorgan will assume all of First Republic’s $92 billion in deposits and most of its assets, according to JPMorgan. The megabank — which is by far the largest in America — now owns both First Republic and Washington Mutual.
How will this affect banking customers?
If you’re an average banking customer, probably not much — at least not directly.
First Republic caters primarily to elite clients like businesses and wealthy individuals. It has only one Coachella Valley location off El Paseo in Palm Desert. Even if you’re in the very small subset of locals who bank with the institution, you should be able to access your money as usual. All of First Republic’s 84 locations reopened Monday for normal business hours as part of JPMorgan and customers have full access to their deposits, according to the FDIC.
How will this affect stockholders?
If you own stock in the company, that’s a different story. Trading was halted on First Republic shares Monday and shareholders at Silicon Valley Bank and Signature Bank were generally left with nothing.
If you have stock investments more generally, the situation is less dire. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite are all up from the late-March lows they hit amid the banking crisis following kicked off by Silicon Valley Bank’s collapse. Each of the indices were up slightly Monday morning, suggesting investor concerns about the impact of the First Republic situation are limited for the time being.
Is my money safe?
As far as the basic safety of your money held in a bank account, the vast majority of readers have nothing to worry about. Deposits held at FDIC-insured institutions — which includes most mainstream banks — are insured up to at least $250,000. This means that in the unlikely event your bank collapsed, you would still be able to get your money.
First Republic, Silicon Valley Bank and Signature Bank all depended heavily on uninsured deposits, which is commonly cited as a key factor in their collapse. Despite this, even First Republic’s uninsured depositors will have their deposits protected and accessible by JPMorgan, according to the bank.
James B. Cutchin covers business in the Coachella Valley. Reach him at james.cutchin@desertsun.com.
This article originally appeared on Palm Springs Desert Sun: What does First Republic's collapse mean to the bank's customers and stockholders?
