As we reported earlier in our article about Silicon Valley Bank, First Republic allegedly had a much higher loan to deposit ratio (95%) than SVB (43%).
First Republic Bank issued a press release on 03/12/23 announcing their liquidity infusion from JP Morgan Chase and the Federal Reserve:
The additional borrowing capacity from the Federal Reserve, continued access to funding through the Federal Home Loan Bank, and ability to access additional financing through JPMorgan Chase & Co. increases, diversifies, and further strengthens First Republic’s existing liquidity profile. The total available, unused liquidity to fund operations is now more than $70 billion. This excludes additional liquidity First Republic is eligible to receive under the new Bank Term Funding Program announced by the Federal Reserve today.
– Source: Official Press Release from First Republic Bank
First Republic stock nevertheless fell from its close on 03/08/23 of $115.00 to a low of $17.53 per share on 03/13/23, which resulted in the stock being halted to keep it from sliding down further (eventually closing at $31.21 per share).
While First Republic Founder, and former CEO Jim Herbert told Jim Cramer on CNBC that he hasn’t seen large-scale withdrawals from deposit holders, he avoided provided the actual percentage or total amount that has been withdrawn.
If First Republic can handle its current liquidity crisis, it begs the question whether similar steps could have been done to keep Silicon Valley Bank from becoming insolvent. Had the state and federal regulators, U.S. Treasury Department, and the Federal Reserve been afforded more time to react, it is worth speculating whether Silicon Valley Bank could have been provided with the cash it needed to operate, and lessen the panic leading to its collapse.
More info:
First Republic Bank press release: click here or here (for PDF)
Banking Cat article: The Silicon Valley Bank Run: who made it to the finish line? click here
