First Republic Bank Rescue includes the largest US banks

People said the deal could be revealed as early as today.

The situation is fluid and whether or not a deal will come together and what it might look like remains highly uncertain. Any deal would need to be approved by regulators and would be driven at least in part by the bank’s highly volatile stock. First Republic stock has been under pressure for several days and fell another 31% Thursday morning on concerns about the bank’s health in the wake of the collapse of Silicon Valley Bank.

And people said that if there is an agreement, they can meet in the coming days.

First Republic has been in the spotlight after the collapse of Silicon Valley Bank last week raised concerns about other regional banks holding large pools of uninsured deposits. Customers pulled out billions in deposits from First Republic and the bank over the weekend sought to stem the tide with a deal, announced Sunday, that includes additional funding from the Federal Reserve and JPMorgan that gave the bank a total of $70 billion in available liquidity.

People familiar with the matter said the bank has maintained its stability and deposit losses are not large.

But on Wednesday, credit ratings agency Standard & Poor’s downgraded the bank’s bond rating to junk status and investors continued to sell, adding to the uncertainty.

The bank’s stock is down about three-quarters this week. Its market capitalization has fallen from $21 billion on March 8, when the SVB crisis began, to less than $5 billion.

The fast-moving situation is reminiscent of the drama in the banking system in the 2008 financial crisis, when JPMorgan and its CEO, Jamie Dimon, played the white knight, buying Bear Stearns and then Washington Mutual. Litigation, losses and political pressure followed. Mr. Dimon said he would never do a government-led bailout again.

First Republic’s stock market valuation has long been the envy of the banking industry. Its clients are wealthy individuals and companies, especially on the coasts. Its lending business revolves around providing massive mortgage loans to clients like Mark Zuckerberg. Few of these loans ever went bad. The bank had about $213 billion in assets as of the end of 2022.

The bank’s profits rose in 2022, but large interest rate increases imposed by the Federal Reserve had a negative impact. Wealthy First Republic customers were no longer content to leave huge sums of money in bank accounts that did not earn any interest.

— Lauren Cooper, Lauren Thomas, and Rebecca Ballhaus contributed to this article.

Write to David Benoit at [email protected] and AnnaMaria Andriotis at [email protected]