Federal Reserve may have to give First Republic more time to ramp up balance sheet

U.S. authorities plan to give First Republic Bank FRC more time to ramp up its balance sheet and have yet to decide what support it will provide to the troubled lender, according to Bloomberg.

The publication reported that an expansion of the Federal Reserve's offering is one of several options that are being weighed at this early stage, citing people familiar with the situation.

The adjustments could be designed to make First Republic benefits from the changes, although the Federal Reserve's liquidity offerings would apply to all eligible users.

Analysts and watchdogs believe that First Republic is stable enough to operate without immediate intervention, but the company and its advisers are trying to work out a deal to shore up its balance sheet.

Even though First Republic has problems with its balance sheet, it has the cash to meet client needs as it explores solutions, sources told Bloomberg.

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In 2021, the bank paid Herbert $17.8 million, more than that of most CEOs at similarly sized banks, according to the Wall Street Journal. That year, the CEO of Bank of New York Mellon Corp BK received $9.3 million and the CEO of Silicon Valley Bank $9.9 million. In fact, Herbert's salary was closer to the salaries of the CEO of US Bancorp USB, who was paid $19.1 million, and the CEO of Citigroup Inc C, who was paid $20.5 million.

In 2021, Herbert's brother-in- law earned $2.3 million for advisory work at the bank, according to the Wall Street Journal. According to the public disclosures the bank made during its annual filings, First Republic paid Herbert's son $3.5 million to oversee a lending unit at the bank.

A spokesman for the Wall Street Journal said executive compensation in 2021 showed the company outperformed industry peers and the S&P 500 from 2016 to 2021 and delivered strong shareholder returns when asked about the payments to family members. Herbert was the chief executive of First Republic before stepping into the executive chairman position in 2022.