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First Republic was a San Francisco bank that catered to wealthy clients with jumbo mortgages and personal service, and it collapsed in 2023 after a run on deposits.
First Republic was a bank for people who don't like thinking of themselves as bank customers. It built its business on wealthy households and their businesses, mostly in coastal cities like San Francisco, New York, Boston, and Los Angeles, and it sold itself on old-fashioned personal service: a real banker who answered the phone, a relationship manager who knew your family, and mortgage rates and loan terms that felt like a favor from a friend.
The money machine worked like this. First Republic took in deposits, often from rich clients who kept large balances there, and lent that money out mostly as jumbo mortgages — home loans too big for standard government-backed programs, the kind used to buy expensive houses. It also made loans to businesses and offered wealth management and other private-banking services. The bank earned the gap between what it paid depositors and what it collected from borrowers, and because its customers were wealthy and its loans were conservative, it lost very little money on defaults for decades. That reliability made it a Wall Street favorite; its stock traded at a premium because it seemed to grow steadily without taking big risks. Then the cracks showed. A large share of its deposits were uninsured — above the $250,000 federal insurance limit — because its clients were wealthy. When interest rates rose sharply in 2022, the bank was sitting on a portfolio of long-term loans and securities that had lost value on paper, and its cost of funding crept up. In March 2023, after the failures of SVB Financial and Signature Bank spooked depositors, First Republic's wealthy clients did what wealthy clients do: they moved their money. Deposits fled by the tens of billions in days, and the bank was forced to borrow heavily from the Federal Reserve and a consortium of big banks. It never recovered.
In May 2023, regulators seized the bank and sold most of it to JPMorgan Chase, which took over the branches and deposits. First Republic's shareholders were wiped out, and its stock — now trading over the counter under the ticker FRCB — became a shell of a memory, worth pennies. The story is a clean lesson in how a bank can look sturdy for years and still be fragile in a single week: when depositors decide to run, the quality of your loan book doesn't matter much, because you can't sell a house fast enough to pay them back.
Saved answer · last researched 7 Nov 2026