Explainer: The largest bank failures throughout US history

CHICAGO (NewsNation) — Bank failures aren’t uncommon amid times of economic stress. Most of the time, the losses associated with bank failures aren’t a threat to individuals and businesses that secure adequate FDIC coverage.

However, following the coronavirus pandemic, inflation has risen to rates that haven’t been seen since the early 1980s. As a result, these rates have taken a toll on some businesses and regional banks.

In the wake of the March collapses of Silicon Valley Bank and Signature Bank, First Republic Bank on Monday became the third midsize bank to fail so far this year and the second-largest lender to collapse in U.S. history.

The three banks combined held a total of more than $500 billion in assets.

The only larger bank failure in U.S. history was Washington Mutual, which collapsed at the height of the 2008 financial crisis and was also taken over by JPMorgan in a similar government-orchestrated deal.

The San Francisco-based First Republic catered to wealthy clients who rarely defaulted on their loans. But the vast majority of deposits were above the $250,000 limit set by the FDIC, meaning they were uninsured.

Silicone Valley and Signature Bank, which catered mostly to the tech and start-up industry clients, both collapsed under similar circumstances. Many of their accounts also held more than $250,000.

First Republic Bank

First Republic Bank has struggled since the collapse of Silicon Valley Bank and Signature Bank. The bank had $229 billion in total assets and $104 billion in deposits, according to FDIC data and NewsNation Research.

In April, 11 of the biggest U.S. banks put together a $30 billion rescue package for First Republic. For a while, it seemed to stanch the bleeding out of the bank. Yet, concerned they might not get all their money back, customers withdrew more than $100 billion in deposits over the first quarter of the year, according to the bank’s quarterly earnings report filed on Monday.

JPMorgan will assume $92 billion of First Republic’s insured and uninsured deposits. Over the last year, First Republic’s stock value plummeted from $170 a share to over $3.50 a share by the close of trading on Friday.

Silicon Valley Bank

Silicone Valley Bank collapsed on March 12, 2023. It had $167 billion in assets and $119 billion in deposits. The nation’s 16th-largest bank opened its doors to entrepreneurs offering opportunities to form crucial relationships in the technology and financial communities.

As the SVB grew rapidly beginning in 2018, banking supervisors were slow to recognize problems that eventually contributed to the bank’s downfall, including an increasing amount of uninsured deposits and inadequate safeguards against a sudden change in interest rates.

The Federal Reserve blamed SVB’s on poor management, watered-down regulations and lax oversight by its own staffers, and said the industry needs stricter policing on multiple fronts to prevent future bank failures.

Signature Bank

Signature Bank, the nation’s 29th largest bank, was the first largest bank to collapse this year. The bank failed two days after the FDIC took control of Silicon Valley Bank.

The bank, which provided lending services for law firms and real estate companies, had $100 billion in assets and $89 billion in deposits.

A separate report from the Federal Deposit Insurance Corp. said the failure of Signature Bank was likely fallout from the collapse of Silicon Valley Bank. The FDIC also found its own regulatory deficiencies, notably insufficient staffing to adequately supervise Signature Bank, which was based in New York. The agency also took a light-handed approach to regulation, the report found.

Washington Mutual

Washington Mutual was heavily involved in risky mortgages and became the largest bank to fail in U.S. history on September 28, 2008. At the time, the bank had $307 billion in assets and $188 billion in deposits. The banking institute was sold by JP Morgan Chase.

IndyMac

IndyMac, which was once part of Countrywide Financial, failed on July 11, 2008. It was the first major bank to close amid the 2008 mortgage crisis. At the time, the bank had $32 billion in assets and 19 billion in deposits.

The Fed was been highly critical of its own role in the failure of Silicon Valley Bank in a report compiled by Michael Barr, the Fed’s chief regulator, that was released last month.

NewsNation Research Producer Steven Joachim contributed to this story.