The California philanthropist and her Wall Street husband called First Republic Bank nothing less than a life partner. A New York real estate billionaire said it's always there for him. The fast-food mogul in a wood-paneled room said he and the lender agree: success comes from trust.
Then the bank teetered.
First Republic's stock plunge in the wake of other failures has left the millionaires, billionaires and up-and-comers who've sung its praises in public testimonials over the years trying to square their loyalty with their pragmatism. (Its stock has fallen 88% in March; it closed up 5.6% Wednesday at $14.26 a share.)
The lender has featured hundreds of clients in annual reports, radio spots, print ads and online.
The fast and viral first chapter of this crisis — when Silicon Valley Bank and Signature failed before Credit Suisse Group AG was sold in a fire sale — has given way to something relatively slower.
Things have leveled out since deposit outflows reached what Jefferies Financial Group Inc. said could be $89 billion, thanks especially to big lenders parking $30 billion with First Republic.
That gave acolytes time to chew over what to do.
Bankers have been getting on the phone, several customers said, walking them through their options. Some clients are making backup plans for accounts and loans, while others are signing up at big banks just in case. Many are still holding tight.
'Sophie's Choice'
It's "the banking equivalent of Sophie's Choice," said Bruce Percelay, a real estate investor who's been a First Republic client since 2007. He withdrew some money a few months back, but only because Treasury bills were yielding so much that banks couldn't compete: "It was a purely practical economic decision."
He said he doesn't blame friends for making more recent moves and erring on the side of caution.
"Everyone I know was tortured by this," said Greg Flynn, a client whose companies' holdings include about 2,400 chain restaurants. "There's no upside and some downside."
"Our bankers and wealth managers are busy opening accounts, making loans and executing transactions, and our clients and communities are supportive," said Greg Berardi, a spokesperson for the bank. It's "well-positioned to manage short-term deposit activity," and its commitment to clients hasn't changed, he added.
'Backstop' Accounts at Rivals
Susan Mason, who helps run venture capital firm Aligned Partners, has been feeling good enough about the bank that she recently bought some of its stock, which is down 86% since March 8.
