How Loans for the Rich Hurt First Republic

What type of loans did First Republic primarily offer to its wealthy clients?

• Fixed-rate mortgages

• Interest-only loans

• Balloon payment loans

• Adjustable-rate mortgages

Why have the unrealized losses on banks' balance sheets become a concern?

• Due to a decrease in loan demand

• Because of rising interest rates

• Owing to increased credit risk

• As a result of regulatory changes

What makes it difficult for First Republic to find a partner or capital infusion?

• Regulatory restrictions on mergers

• High credit risk of borrowers

• Need to recognize losses on interest-only loans

• Lack of interest from potential buyers

What is the primary issue with First Republic's mortgage book?

• Interest rate risk

• Overvaluation of properties

• High default rates

• Lack of diversification

What could potentially facilitate a deal for First Republic without immediate loss recognition?

• A change in management

• A deal without a change in control

• A government bailout

• A merger with a larger bank