First Republic Bank has become the latest U.S. regional bank to come into intense focus following the second- and third-largest bank failures in U.S. history. The bank's shares have shed 95 precent of their value since the regional banking crisis started on March 8, and more than $100 billion in deposits were pulled out of the bank in the first quarter, according to its earnings report published last week.

The California Department of Financial Protection and Innovation (DFPI) said on Monday that regulators had seized First Republic Bank, in what is the third major U.S. bank to fail in two months, after the collapse of Silicon Valley Bank and Signature Bank.

DFPI appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of First Republic Bank and said it accepted a bid from J.P. Morgan Chase Bank, National Association, Columbus, Ohio, to assume all deposits.

Analysts anticipate that the U.S. banking tumult will continue to spread with more banks likely to go under, which they warn could drag down economic growth in the U.S.  

Wang Tianyang, associate professor in the Department of Finance and Real Estate at Colorado State University, said that the U.S. banking turmoil is not yet over.

He anticipates a large-scale restructuring in the U.S. banking sector in the near future, with many more medium- and small-sized banks being unable to survive the loss of deposits acquired by large banks at low prices.

The pullback in bank lending resulting from stress in the banking sector, coupled with raised lending standard, would further tighten monetary supply in the U.S., adding to the risk of a hard landing of the U.S. economy, Wang said.

In a similar vein, Wang Jinbin, vice-president of the School of Economics at Renmin University of China, believes that aggressive rate hikes by the Fed have significantly increased the fragility of the U.S. banking system, with more banks could be facing the risk of failure as a result.

The view was echoed by the findings of a study conducted by several U.S. economists in March. The Social Science Research Network study found that a further 186 U.S. banks remain vulnerable to a run on deposits that doomed Silicon Valley Bank and Signature Bank.

Wang Jinbin further pointed out that bank credit remains to be an important pillar of U.S. economic growth. Panic in the banking sector could lead to a credit crunch that would significantly reduce the capital liquidity of institutions that used to lend from banks, he added.

It is clear that major changes have taken place in the financing structure and condition in the U.S. economy. Such changes are bound to deliver a crushing blow to future U.S. growth, and eventually generate an economic downturn, said Wang Jinbin.