What Happened to First Republic Bank?

A sign in front of a First Republic Bank office in Oakland, Calif. on March 16, 2023. Justin Sullivan/Getty Images

On May 1, First Republic Bank became the second-largest bank failure in U.S. history. Its failure is second to Washington Mutual (2008) and just ahead of Silicon Valley Bank recently. The result was another disruption in the banking industry.

Trouble was on the rise in February 2023 when First Republic’s shares had a 98 percent drop. They went from $147 per share to $3.50. But how did this happen? What contributed to the demise of First Republic Bank?

First Republic’s Emphasis on Service

The business model for First Republic was simple: give wealthy customers high-touch service. The thinking was that these customers wanted service over a few dollars of interest on their deposits.