Regions Bank investment executive weighs in on First Republic situation
The collapse of First Republic Bank is a sign of things to come in the banking industry, according to a Regions Bank expert.
First Republic Bank, based in San Francisco, was taken over by federal regulators. It was then sold to JP Morgan Chase. This is the biggest bank failure this year. The sale ended a seven week decline of the almost 40-year old homegrown bank, and was added to this year's list of bank failures.
Alan McKnight is chief investment officer at Regions Bank. He compared First Republic Bank’s recent failure with that of Silicon Valley Bank, Signature Bank and other banks.
He said that the failures of the institutions were a result of the asset-liability mismatches, whether they be Silicon Valley Bank or Signature, and the latest, First Republic.
McKnight noted that a large part of First Republic's deposit was uninsured and that the bank had held on to assets whose value declined as interest rates increased.
McKnight suggested that high-net-worth people who have more than $250,000 in one account or are uninsured may want to conduct more research on the accounts they keep their money in.
He said: 'I believe there is a need to do a deeper dive for these individuals or families about the institution's financial statement, their capitalization, and what kinds of environments would cause an issue for them.
McKnight stated that Regions Bank is in a very different position than First Republic Bank. McKnight believes it is a positive that JPMorgan Chase acquired First Republic so quickly.
He said: 'But that doesn't mean people won't be skeptical or concerned.' I think we will see more volatility in the next few weeks.