How did the first republic become such a hot mess

New York (CNN) It may seem surprising that First Republic, a medium-sized bank that caters to wealthy clients in coastal states, became such a big risk to the American banking system that the government had to prod the industry into stepping in.

The reason has a lot to do with the rich people who bank there.

A source close to the 48-hour broadcast deal said First Republic with $30 billion in cash.

San Francisco-based First Republic, the nation’s 14th-largest bank, has received cash infusions from 11 competitors, including America’s largest lender.

When JPMorgan Chase CEO Jamie Dimon reached out Thursday to Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell, “the conversation quickly turned to the First Republic,” the source told CNN.

The government-organised bailout is not a bailout – its goal is to give the bank enough cash to meet customer withdrawals and reassure investors that it can handle it. The upheavals that shook the industry during the past week.

So far, it does not have the desired effect.

First Republic shares fell 25% on Friday. Rescuers also struggle with c. B. Morgan Chase (JPM) down 3% and American bank (Buck) decreases 4%.

“The market is saying this is still not enough. We need more,” Ed Mills, Washington-based policy analyst at Raymond James, told CNN on Friday.

Why did the First Republic have a target on its back?

Investors saw similarities between First Republic and the failed Silicon Valley Bank – another mid-sized Bay Area bank with a huge customer base.

“These depositors are particularly vulnerable to the trigger,” said Patricia McCoy, a professor of law at Boston College. “They’re sophisticated, they know they have other options, and they have mechanisms to move money quickly.”

McCoy, who helped set up the Consumer Financial Protection Bureau, said the “particularly volatile” depositor base presented a risk to investors.

Big banks like JPMorgan Chase have diversified their depositor bases to include more of what McCoy calls “fixed deposits.” In other words, the average person with less than the $250,000 FDIC insurance limit in the bank.

About two-thirds of First Republic’s deposits were uninsured. That’s far less than the 94% uninsured ratio that a Silicon Valley bank has, but First Republic also had an unusually large loan-to-deposit ratio of 111% at the end of last year, according to S&P Global — meaning it lent more money than have in deposit.

CNN’s Matt Egan and Christine Roman contributed to this report.