Federal officials are preparing to put ailing First Republic Bank into RECEIVERSHIP, sources claim 

First Republic Bank could be placed under receivership by federal authorities, Reuters reported on Friday, sending shares of the lender down more than 40% in extended trading.

If the San Francisco-based lender falls into receivership, it would be the third U.S. bank to collapse since March. 

First Republic said earlier this week its deposits had slumped by more than $100 billion in the first quarter.

First Republic Bank had to be propped up by other banks on March 16, amid concerns about its stability, but the move has failed to reassure the markets. 

The bank had sought to sell itself, but on Friday, sources told Reuters the Federal Deposit Insurance Corporation (FDIC) decided the troubled regional lender's position has deteriorated and there is no more time to pursue a rescue through the private sector.

People are seen walking past First Republic Bank in Manhattan on Friday. The bank is facing being placed under receivership

Shares in the bank fell 43 percent on Friday

Shares of the bank closed down 43 percent, worsening a stock rout that has wiped out 75 percent of its value this week. 

The stock lost more than half of its value on Friday and touched a record low of $2.99.

At its lowest, the bank had a market capitalization of nearly $557 million, a far cry from its peak valuation of more than $40 billion in November 2021.

Shares of some other regional banks also fell with PacWest Bancorp down 2 percent after the bell, while Western Alliance was down 0.7 percent.

Reuters earlier reported a government-brokered rescue deal was in the works for First Republic. It was not immediately clear why that effort failed.

According to the report, the FDIC, the Treasury Department and the Federal Reserve were among the government bodies orchestrated meetings with financial companies about a lifeline for the bank.

Last month First Republic received $30 billion in deposits from 11 banks after it was seen to be teetering, and at risk of bringing others down with it.

'This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,' said a group of U.S. regulators led by Treasury Secretary Janet Yellen, in a statement issued at the time.

The bank was seen as vulnerable following the collapse of Silicon Valley Bank, with both SVB and First Republic having similar compositions in key areas.

When Silicon Valley Bank went into freefall on March 9, analysts thought First Republic would not be far behind.

Struggling First Republic Bank has received $30 billion in deposits from a consortium of major US banks as part of a rescue package for the regional lender, yet is still struggling. A San Francisco branch is seen on Friday

A gallery of photos on the bank's homepage shows clients at swanky gatherings and events with champagne, spreads of food and live music

Clients receive free swag from First Republic Bank at an Oktoberfest event

Both banks courted a high-net-worth clientele. 

SVB, founded in 1983 in Santa Clara, California, catered in particular to tech investors and wineries in the Bay Area, but also had a strong East Coast presence.

First Republic, launched in 1985 in San Francisco, enticed wealthy people on both coasts. 

First Republic's clients included Mark Zuckerberg, who was offered a 1.05 percent mortgage rate on a $5.95 million loan for his five-bedroom Palo Alto home in 2011. 

At the time, the average 30-year rate was 4.45 percent.

About three-quarters of the bank's mortgage approvals are 'jumbo' loans, or loans above $417,000, the WSJ reported. 

And the average mortgage at First Republic is more than $1.2 million.

Many clients are on a first-name basis with their branch manager and cite personal attention as their reason for banking with the lender.

SVB's clients included billionaire venture capitalist Peter Thiel.

Mark Zuckerberg was among First Republic's clients and received a mortgage on extremely favorable terms

First Republic bankers flocked to San Francisco for a no-expense-spared Wonka-themed Christmas party

First Republic Bank is known for being the bank for the super rich, with oyster-fueled events for clients and glitzy Christmas parties for staff. Pictured: Facebook post by Robert Callan Jr. of Sothebys from inside a Willy Wonka inspired First Republic Bank Holiday Event

At First Republic, customers with a median net worth of $3.3 million were enticed by lavish perks including cocktail parties at its 69 branches, stretching from Manhattan to Palm Beach.

Photos and videos posted to social media in December show a glitzy Willy Wonka-themed holiday party, complete with dancers and an orchestra, at the luxury Palace Hotel in San Francisco.

The bank's clients also include cultural institutions - among them Lincoln Center and the San Francisco Ballet.

The bank, like Silicon Valley Bank, was caught out when interest rates began to rise.

Their wealthy clientele found they suddenly had a flurry of appealing offers for where to park their cash and earn a good return, and no longer needed to remain loyal to First Republic.

First Republic was also deemed to be at risk due to its high level of uninsured deposits.

A bank where most clients have less than $250,000 in their accounts - the limit which is insured by the federal government - is deemed to be almost immune from a bank run, as depositors know their cash is safe.

The higher the percentage of clients with uninsured deposits, the more likely a bank is to see its customers panic and try and withdraw all their money - which may not be possible, given the nature of banking.

SVB had a dangerously high percentage of uninsured deposits - 94 percent of its total. 

First Republic has a sizable 68 percent, according to S&P Global.

At most banks, roughly half of all deposits are uninsured.

After Americans digested the drama of the SVB collapse, shares in First Republic nosedived 67 percent, and panicked customers raced to branches to empty their accounts of their huge savings. 

Jamie Dimon, the CEO of JPMorgan Chase - the nation's largest bank - held a conversation with Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen to discuss their concerns about First Republic.

The following day, according to Yahoo Finance, Dimon attended a Bank Policy Institute event and spoke to other banking executives, including Citigroup CEO Jane Fraser, about a possible plan to shore up First Republic.

Then the deal was done: JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley were among the 11 banks involved in the rescue deal.