- On May 1, 2023, the California Department of Financial Protection and Innovation announced that it took possession of First Republic Bank and appointed the FDIC as receiver.
- JPMorgan Chase & Co. subsequently purchased the deposits and substantially all the assets of First Republic from the FDIC, without assuming any of First Republic's corporate debt or preferred stock and assuming only a portion of First Republic's secured borrowings.
- Since JPMorgan assumed the substantial majority of First Republic's assets, we view it as a virtual certainty that First Republic will default on any remaining senior financial obligations given what we assume would be an insufficient remaining asset base.
- We lowered our issuer credit rating on First Republic Bank to 'CC' and preferred stock and subordinated debt issue-level ratings to 'D' and subsequently withdrew them.
- At the time of the withdrawal, the issuer credit rating remained on CreditWatch with negative implications since we expect default to be a virtual certainty.
On May 2, 2023, S&P Global Ratings lowered its issuer credit rating on First Republic Bank to 'CC' from 'B+'. In addition, we lowered our issue credit ratings on First Republic Bank's subordinated debt to 'D' from 'B-' and outstanding issues of preferred stock to 'D' from 'C'. The issuer credit rating remains on CreditWatch with negative implications.
Subsequent to the downgrades, we withdrew the issuer credit rating on First Republic Bank and issue ratings on its subordinated debt and its outstanding preferred stock. At the same time, we withdrew legacy issue ratings on previously redeemed preferred stock.
We lowered our issuer credit rating on First Republic Bank to 'CC' following the California Department of Financial Protection and Innovation's May 1 announcement that it took possession of the bank and appointed the Federal Deposit Insurance Corp. (FDIC) as receiver. Following the closing of the bank, the FDIC sold substantially all of First Republic's assets and deposits to JPMorgan Chase & Co. JPMorgan did not assume any of First Republic's corporate debt or preferred stock and assumed only a portion of its secured borrowings. Given that First Republic is in receivership and JPMorgan has assumed the vast majority of its assets, we think it's a virtual certainty that First Republic will default on any remaining senior financial obligations given what we assume would be an insufficient remaining asset base.
We also lowered our issue credit ratings on First Republic's subordinated debt and preferred stock to 'D'.
Environmental, Social, And Governance
ESG credit indicators: To N/A, N/A, N/A; From: E-2, S-2, G-4
- General Criteria: Hybrid Capital: Methodology And Assumptions , March 2, 2022
- Criteria | Financial Institutions | General: Financial Institutions Rating Methodology , Dec. 9, 2021
- Criteria | Financial Institutions | Banks: Banking Industry Country Risk Assessment Methodology And Assumptions , Dec. 9, 2021
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings , Oct. 10, 2021
- General Criteria: Group Rating Methodology , July 1, 2019
- Criteria | Financial Institutions | General: Risk-Adjusted Capital Framework Methodology , July 20, 2017
- General Criteria: Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings , Oct. 1, 2012
- General Criteria: Principles Of Credit Ratings , Feb. 16, 2011
- First Republic Bank Downgraded To 'B+' Despite Support Received; Rating Remains On CreditWatch Negative, March 19, 2023
- First Republic Bank Downgraded To 'BB+' From 'A-' On Funding Profile Risk; Ratings On CreditWatch Negative, March 15, 2023
- First Republic Bank ‘A-‘ Rating Placed On CreditWatch Negative On Funding Profile Risk, March 14, 2023
First Republic Bank
|Preferred Stock||D||C/Watch Neg|
First Republic Bank
|Issuer Credit Rating||CC/Watch Neg/NR||B+/Watch Neg/NR|
First Republic Bank
|Preferred Stock||NR||CCC/Watch Neg|
|Issuer Credit Rating||NR/NR||CC/Watch Neg/NR|
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.
|Primary Credit Analyst:||Nicholas J Wetzel, CFA, Englewood + 303-721-4448;|
|Secondary Contact:||Rian M Pressman, CFA, New York + 1 (212) 438 2574;|
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.