First Republic eclipsed Silicon Valley Bank as the second-largest U.S. lender to collapse after Washington Mutual in 2008.

Together with Signature Bank, three of the top four commercial lenders to fail in the country’s history all occurred over the past eight weeks. 

“We’re all very pleased to get the major source of uncertainty that was remaining from the recent bank turmoil addressed, and that is a good thing,” Jane Fraser told Bloomberg Television in one of the first public comments made by a CEO of a major bank since the Federal Deposit Insurance Corporation (FDIC) sold First Republic to JPMorgan.

“This is a case of a small handful of banks that were poorly managed,” she added, speaking on the sidelines of the Milken Conference in California on Monday. 

Fraser, who leads the third-largest U.S. bank by assets, reaffirmed recent comments that failed institutions like SVB merely represented outliers in an otherwise fundamentally sound financial system. 

Citi expects more banks to disappear over time

Nevertheless, the Citigroup CEO believes more competitors will disappear as banks bulk up to remain competitive and some peers struggle to maintain enough assets to meet liabilities amid a higher-for-longer interest rate environment.

Yet any further tremors should not be a cause for broader concern, even if Fraser anticipates the U.S. will briefly slip into recession at the back end of the year as lending conditions tighten.

“We do have over four-and-a-half-thousand banks,” she said. “But I don’t think that [further industry consolidation] brings into question a system that is the envy of the world.”

Fraser is not the only major financial sector CEO to remain optimistic amid the spate of failed banks. Her confidence was recently echoed by JPMorgan Chase CEO Jamie Dimon, who shares her belief that the ongoing turmoil involved only a handful of poorly managed banks.

“This is not 2008; this is much more limited,” he told CNN in early April. “People should take a deep breath.”

First Republic’s abnormally high number of uninsured deposits

Spun off and sold by Bank of America, First Republic catered to well-heeled clients.

As a result, two-thirds of its deposit base exceeded the individual ceiling of $250,000 needed to qualify for U.S. government insurance under the FDIC.

This proved a major red flag for any financially savvy customers looking to protect their money and served as motivation to withdraw their funds in the event of a potential bank run. 

Ever since regulators seized control of SVB on March 10 after depositors pulled out $42 billion in the space of one Thursday afternoon, investors put First Republic on death watch.

Shares in the California-based lender immediately plunged more than 60% on the first trading day after SVB’s collapse. 

First Republic’s demise was ultimately sealed after Q1 results on April 24 showed customers had withdrawn $102 billion in the first three months of the year.

The bank was seized on Monday by the FDIC, the U.S. agency tasked with supervising state-chartered lenders, at an estimated cost of $13 billion to the Deposit Insurance Fund.

This comes on top of the previous $22.5 billion bill from the failure of SVB and Signature Bank that other FDIC member banks will eventually have to pay via a special levy.  

Citi had joined 10 other major U.S. banks to pump a combined $30 billion in deposits into First Republic in a bid to bolster flagging confidence in the banking system and quash fears over a systemic problem in the industry. These liabilities will now be assumed by JPMorgan Chase Bank as part of the acquisition.

Fraser however argued their joint demonstration of solidarity was not in vain, helping buy valuable breathing room for the sector. 

“That was our intention,” the Citigroup CEO explained on Monday. “It was to give the time for confidence to get restored and our regulators to do their job.”