Finance · Profile from Finance Research Companion
First Republic Bank
The San Francisco private bank that won the coastal wealthy (doctors, lawyers, founders, families and the businesses they owned) with old-fashioned service, low-rate jumbo mortgages and a single point of contact, grew from a 1985 start-up to ~$213bn of assets at end-2022 without ever having a serious credit problem, and then failed on May 1, 2023 because its clients' deposits were mostly uninsured and its loan book, written at the bottom of the rate cycle, was worth far less than its face value once rates rose. It lost more than $100bn of deposits in the first quarter of 2023 despite a $30bn deposit from eleven large banks, and was seized and sold to JPMorgan Chase. At ~$229bn of assets it was the second-largest bank failure in US history, behind Washington Mutual by assets at failure, and larger than Silicon Valley Bank.
At a glance
- Founded
- 1985, San Francisco (opened as a thrift and loan, reported)
- Founders
- James H. ("Jim") Herbert II and Roger O. Walther; Katherine August-deWilde joined early and became president and chief operating officer (reported)
- Headquarters
- 111 Pine Street, San Francisco, California
- Ownership / structure
- Publicly listed bank with no holding company: First Republic Bank itself traded on the NYSE (ticker FRC) from December 2010 to May 2023; state-chartered (California DFPI), FDIC-supervised non-member bank. Owned by Merrill Lynch (2007–2009) and then Bank of America (2009–2010) before a management-led buyout
- Leadership at failure
- Mike Roffler, CEO (from March 2022); Jim Herbert, founder and executive chairman; Olga Tsokova, chief financial officer (reported, verify)
- Segment and clients
- Private banking and wealth management for high-net-worth households and their businesses, nonprofits and schools, concentrated in San Francisco, New York, Boston, Los Angeles, Palm Beach and a few other affluent markets
- Scale at peak
- Total assets ~$212.6bn at December 31, 2022 (company); deposits ~$176.4bn; loans ~$166.9bn, of which more than half single-family residential mortgages (reported); ~$232.9bn of assets at March 31, 2023 (Q1 balance sheet, swollen by emergency borrowing) and ~$229.1bn as of April 13, 2023, the figure the FDIC used at failure on May 1 (FDIC); wealth management assets ~$270bn+ (2021–22, reported, verify)
- Profit
- Net income ~$1.5bn (2021) and ~$1.7bn (2022) (reported, verify); net charge-offs of a few basis points a year throughout its history
- Market value
- Peaked above ~$40bn in late 2021 (shares above ~$220, reported, verify); equity and preferred stock wiped out in 2023
- Signature moves (incl. failures)
- Founding a service-led private bank (1985); sale to Merrill Lynch (2007); buyback from Bank of America and NYSE relisting (2010); Luminous and the wealth buildout (2012); Gradifi and the next-generation client strategy (2016); the low-rate jumbo mortgage boom (2020–21); the March 2023 run and $30bn rescue; failure and sale to JPMorgan (May 2023)
8 strategic moves analysed
Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.
1985
Founding Service Led Private Bank
Founding
2007
Sale to Merrill Lynch
Acquisition (First Republic as target)
2010
Buyback from Bank of America and IPO
Management buyout (from Bank of America) followed by IPO
2012
Luminous and Wealth Management Buildout
Acquisition and business build (wealth management)
2016
Gradifi and Next Generation Clients
Acquisition (Gradifi) and product strategy (professional loans for younger clients)
2020
Low Rate Jumbo Mortgage Boom
Balance-sheet strategy (growth in long-dated fixed and hybrid mortgages funded by deposits) / precursor to failure
2023
Failure and Sale to JPMorgan
Failure; FDIC purchase-and-assumption sale with loss-share
2023
March Run and 30bn Rescue
Rescue (industry deposit) in the course of a failure