Regulators continued their search for a solution to First Republic Bank's woes over the weekend before stock markets were set to open Monday.
San Francisco-based First Republic has struggled since the collapse of Silicon Valley Bank and Signature Bank in early March, as investors and depositors have grown increasingly worried that the bank may not survive as an independent entity for much longer. The bank's stock closed at $3.51 on Friday, a fraction of the roughly $170 a share it traded for a year ago.
"What will most likely happen is the FDIC will seize control and then simultaneously resell the asset to the successful bidder," Cohn said.First Republic reported total assets of $233 billion as of March 31. At the end of last year, the Federal Reserve ranked First Republic 14th in size among U.S. commercial banks.
But the vast majority of First Republic's deposits, like those in Silicon Valley and Signature Bank, were uninsured — that is, above the $250,000 limit set by the FDIC. And that began to fuel worries about the franchise among analysts and investors. If First Republic were to fail, its depositors would be at risk of not getting all their money back.
"A successful absorption into a big bank would provide a proper, stable home for the firm to continue to provide its value proposition to the economy," Kelly said.
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