First Republic Bank has collapsed, marking the third significant implosion in under two months.
The Federal Deposit Insurance Corporation (FDIC) has placed First Republic Bank under receivership.
The bank, one of the largest in America, is the biggest financial institution to fail so far this year.
As Slay News had previously reported, First Republic has been on the verge of collapse since Silicon Valley Bank’s (SVB) failure in early March.
First Republic Bank, headquartered in San Francisco, California, caters mainly to wealthy clients with account balances above the $250,000 deposit threshold backed by the FDIC.
The company witnessed many customers withdraw their funds in recent weeks as the recent implosions of Silicon Valley Bank and Signature Bank rattled trust in the financial system.
FDIC officials had moved to secure both insured and uninsured deposits at the two failed companies to decrease the risk of bank runs at other financial institutions.
One unnamed source told Reuters on Friday that regulators determined that the unstable position of First Republic Bank necessitates the imminent takeover of the company by the FDIC.
The source reportedly added that no time remains for executives to pursue a bailout through a private deal.
Shares for First Republic Bank plummeted by another 43% on Friday.
The price reached a low of $3.51 before markets closed.
The company’s stock was priced at $121.54 at the beginning of the year, marking a 97% loss for investors over the past four months.
News of the FDIC takeover comes days after the first quarter earnings report for First Republic Bank.
The report shows that deposits at the company had decreased from $176 billion on December 31 to $104 billion on March 31.
The total amount of deposits reported at the end of last month included a $30 billion loan provided by large financial institutions such as Wells Fargo, JPMorgan Chase, Bank of America, and Citigroup, a deal that the federal government enabled to maintain the solvency of First Republic Bank.
Executives had vowed in the earnings report that the company was “taking actions to strengthen its business and restructure its balance sheet.”
Those actions included increasing insured deposits, decreasing borrowed funds from the Federal Reserve, and reducing loan balances to “correspond with the reduced reliance on uninsured deposits.”
The firm was planning to reduce employee headcount between 20% and 25% in the second quarter, decrease executive compensation, and consolidate corporate office space.
“With the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business,” First Republic Bank Chairman Jim Herbert and CEO Mike Roffler had insisted in the report.
“We remain fully committed to serving our communities, and we are grateful for the ongoing support of our clients and colleagues.”
Silicon Valley Bank was acquired by First Citizens Bank at the end of last month; the company purchased $72 billion of Silicon Valley Bank’s assets at a discount of $16.5 billion.
Meanwhile, $90 billion remained with the FDIC.
New York Community Bancorp meanwhile acquired Signature Bank for more than $38 billion.
Officials at the Federal Reserve concluded earlier on Friday that Silicon Valley Bank failed because of a “textbook case of mismanagement” in which executives failed to properly assess macroeconomic risk and volatility within the technology sector, upon which the firm was heavily reliant.
Monetary policymakers forecasted in a meeting last month that the turmoil in the financial system which started with Silicon Valley Bank warrants a recession forecast for the end of the year, according to minutes released by the Federal Open Market Committee and the Federal Reserve Board of Governors.