First Republic Becomes Second-Largest Ever US Bank Failure (2024)

FAQs

What is the second largest bank failure in US history? ›

SVB's collapse marked the second largest bank failure in U.S. history after Washington Mutual's in 2008. While bank failures aren't uncommon, it's rare to see banks of SVB's size become insolvent.

As of March 31, 2023, First Republic had total deposits of $104.5 billion and total assets of $232.9 billion. First Republic was the fourteenth largest bank in the country, and its failure constituted the second largest bank failure in United States history.

First Republic Bank was a San Francisco-based regional bank focused on high-net-worth clients. It closed in 2023 and was acquired by JPMorgan Chase. Part of the reason why it failed was because a large proportion of its deposits exceeded the limit for coverage by the Federal Deposit Insurance Corp. (FDIC).

2024 in Brief

There are no bank failures in 2024. See detailed descriptions below.

The largest bank failure ever occurred when Washington Mutual Bank went under in 2008. At the time, it had about $307 billion in assets. During the uncertainty of the banking crisis, however, Washington Mutual experienced a bank run where customers withdrew almost $17 billion in assets in less than 10 days.

First Republic is now part of JPMorgan Chase.

On May 1, 2023, JPMorgan Chase acquired the substantial majority of assets and assumed the deposits and certain other liabilities of First Republic from the Federal Deposit Insurance Corporation (FDIC).

JPMorgan Chase & Co

First Republic Bank / Parent organization

The second-biggest bank to fail in American history has now been acquired by the nation's largest bank, JPMorgan Chase.

The collapse of Silicon Valley Bank and First Republic also vividly demonstrates the vulnerability of banks to bank runs. Uninsured depositors, or those who have over $250,000 in a bank, can get nervous at the first sign of trouble and set off a sudden tsunami of withdrawals.

Why is First Republic Bank in danger? ›

Like many other banks, First Republic had tied up its reserves in long-term assets when interest rates were low. That meant trouble in 2023, when the Fed funds rate shot up 5% to quell inflationary pressures because the value of these long-term securities decreased significantly.

Eyebrows may have been raised at the time, but a post-mortem report released by the Federal Deposit Insurance Corporation (FDIC) last week backs up Roffler's claim. As with those other banks, the primary cause of First Republic's failure was the loss of market and depositor confidence leading to a bank run.

Still, the FDIC itself doesn't have unlimited money. If enough banks flounder at once, it could deplete the fund that backstops deposits. However, experts say even in that event, bank patrons shouldn't worry about losing their FDIC-insured money.

While the latter two were small regional banks, First Republic Bank was another major bank based in California's Bay Area, and its failure overtook SVB's to become the second-largest bank failure in U.S. history.

Earlier last year Silicon Valley Bank failed March 10, 2023, and then Signature Bank failed two days later, ending the unusual streak of more than 800 days without a bank failure.

Two regional US banks, California-based Silicon Valley Bank (SVB) and New York's Signature Bank, have collapsed under the weight of heavy losses on their bond portfolios and a massive run on deposits.

The collapses in March of Silicon Valley Bank (SVB) and Signature Bank – two of the largest U.S. banks to fail since the Great Depression of the 1930s – have led some to wonder if the nation may be headed for a new widespread banking crisis.