Jim Herbert didn’t just build a bank. He built a clubhouse for the ultra-wealthy that happened to have a vault. For almost four decades, First Republic was the unicorn of the banking world—a place where you could actually get a human on the phone and where a mortgage felt more like a handshake between friends than a pile of paperwork.
But then, everything changed.
The collapse of Jim Herbert’s First Republic in early 2023 wasn’t just another bank failure. It was the end of an era for a specific kind of high-touch, relationship-based finance. Honestly, it was a bit of a shocker for the industry. One minute, they’re the darling of Wall Street with a stock price that seemed bulletproof; the next, they’re being folded into JPMorgan Chase in a weekend fire sale.
The Man Behind the $200 Billion Empire
Jim Herbert (James H. Herbert II) founded First Republic in 1985. Before that, he’d already cut his teeth at San Francisco Bancorp. He had this vision that wealthy people were being underserved by the big, robotic commercial banks. He was right.
The business model was simple but brilliant:
- Target high-net-worth individuals in "coastal" cities (SF, NYC, Boston).
- Offer them incredibly low-interest mortgages to get them in the door.
- Once they're in, manage their wealth, their business accounts, and their kids' trust funds.
It worked. For 36 years, Herbert served as CEO, eventually stepping into the Executive Chairman role in 2022. He wasn't just a suit; he was the culture. He promoted "extraordinary service," which often meant things like free cookies in the lobby and bankers who knew your dog's name. It sounds cheesy, but it built a fiercely loyal customer base that most banks would kill for.
When the "Safe" Bet Turned Sour
You’ve probably heard people say the bank failed because it was "risky." That’s actually a bit of a misconception. First Republic’s loans were incredibly high quality. These were rich people with high credit scores. They didn't default.
The problem was the interest rate trap.
When the Fed started hiking rates in 2022 and 2023, First Republic was sitting on a mountain of those "relationship-building" mortgages. They had lent out billions at 2.5% or 3% for 30 years. Suddenly, the bank had to pay 4% or 5% to keep depositors from moving their money to high-yield savings accounts or money market funds.
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They were paying out more in interest than they were taking in. The math just stopped working.
The 2023 Panic
When Silicon Valley Bank (SVB) went down in March 2023, the world looked for the "next domino." First Republic was the obvious candidate. Why? Because like SVB, a huge chunk of their deposits was uninsured—meaning over the $250,000 FDIC limit.
Panic is a contagion. In a single day, March 10, 2023, depositors yanked $25 billion out of the bank. Think about that for a second. That's a staggering amount of liquidity to lose in 24 hours. Jim Herbert and the new CEO, Michael Roffler, tried to project calm, but the market wasn't buying it.
The Controversies Nobody Likes to Talk About
While Herbert is often viewed as a tragic figure who saw his life’s work crumble, there are some sharper edges to the story. Senator Elizabeth Warren and others pointed out that while the bank was teetering, top executives—including Herbert—were selling off shares.
Reports show Herbert sold about $4.5 million worth of stock in the months leading up to the collapse. To be fair, most of these sales were part of pre-planned programs, but the optics were terrible. There were also questions about the bank paying millions of dollars to Herbert’s family members for consulting services and other roles. It’s that kind of "family business" feel that worked during the boom years but looked like cronyism once the ship started sinking.
A federal judge eventually dismissed a class-action lawsuit against Herbert and other execs in June 2025, mostly on jurisdictional grounds, but the reputational hit remained.
What Really Happened During the Final Weekend?
By late April 2023, the "lifeline" wasn't working. Eleven of the biggest banks in the country, led by Jamie Dimon at JPMorgan, had pumped $30 billion into First Republic to stabilize it. It didn't work. The bank's Q1 earnings call was a disaster—they refused to take questions and admitted they’d lost over $100 billion in deposits.
On May 1, 2023, the FDIC seized the bank. JPMorgan Chase swooped in and bought the "substantial majority" of assets.
The result?
- Depositors were fine. If you had money there, you woke up a Chase customer.
- Stockholders were wiped out. If you owned First Republic stock, it went to zero.
- The Brand Vanished. Chase began the process of rebranding those boutique offices.
Where is Jim Herbert Now?
After the bank's seizure, Herbert mostly retreated from the financial spotlight. He’s 81 now and has focused a lot of his energy on his philanthropic work, specifically The BASIC Fund. This is a non-profit he helped start that provides scholarships for low-income students in the Bay Area.
In rare public appearances, like at the fund's 25th-anniversary luncheon in San Francisco, he’s appeared in good spirits but has been very tight-lipped about the bank's downfall. He told reporters he’s "not doing anything professionally right now" and has spent more time at his home in Wyoming.
It’s a quiet end to a career that once defined the San Francisco financial skyline.
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Actionable Insights: Lessons from the Fall
If you’re an investor or just someone interested in how the financial world works, the Jim Herbert First Republic story offers some pretty concrete takeaways:
- Watch the "Concentration Risk": Even "safe" customers are a risk if they all behave the same way at the same time. First Republic's reliance on a small, wealthy circle meant that when one person got scared, everyone got scared.
- Duration Matters: You can’t lend long and borrow short forever. If your assets are locked in at low rates for 30 years and your liabilities (deposits) can leave in 30 seconds, you’re in trouble when rates rise.
- The "Vibes" Economy is Real: First Republic was a "vibe" bank. Once the image of stability and exclusivity was cracked, the actual financial health of the loans didn't matter—the trust was gone.
- Diversify Your Cash: If you have more than $250,000 in a single bank, use a "sweep" account or multiple institutions. The FDIC limit exists for a reason, and as we saw with First Republic, even the most "prestigious" banks can vanish over a long weekend.
To get a better sense of your own bank's stability, you might want to look up their Tier 1 Capital Ratio and their unrealized losses on their balance sheet—these were the red flags that signaled the end for First Republic long before the doors actually closed.