By Jorge Mercado Monday, May 1st, 2023

First Republic Bank branches across the country, including the only one in the tri-county region located on Santa Barbara’s State Street, were fully open and operational on May 1 after regulators seized and promptly sold the bank to JPMorgan Chase the same day to avoid any further fallout.

The First Republic Bank failure is the second largest in United States history, being surpassed only by Washington Mutual’s collapse in 2008. The bank has been struggling since March, after the turmoil set off by Silicon Valley Bank.

Originally, First Republic received $30 million in deposits from 11 of the country’s largest banks back in March. But the bank was never able to regain its footing and its condition continued to deteriorate.

In the company’s latest — and ultimately last — earnings report, bank officials stated “with the closure of several banks in March, we experienced unprecedented deposit outflows.” As a result, the bank had been heavily relying on the Federal Reserve and government-backed lending groups.

The company’s shares fell as much as 75% last week after the April 24 earnings.

Ultimately, the Federal Deposit Insurance Corporation decided the bank could no longer function viably on its own.

JPMorgan Chase emerged victorious over other interested banks such as Bank of America and PNC Financial Services, according to the New York Times.

JPMorgan Chase took over all of First Republic’s 84 branches across eight states as of May 1 — allowing them to open early in the morning almost as if nothing had happened — and assets, including $173 billion in loans and $30 billion in securities, as well as $92 billion in deposits.

As a result, JPMorgan will now be responsible to cover all uninsured deposits.

First Republic’s stock has been delisted after the seizure and shareholders were wiped out meaning they will not receive anything. JPMorgan said it would not assume First Republic’s corporate debt or preferred stock.