First Republic handed out billions in ultra-low-rate mortgages to the wealthy

The loans don’t have a negative net worth. That would imply they need to pay loan holders. The loans are worth less than they were before, so they are net negative profit. But they have a positive worth as they will likely be paid back in full. The challenge they have is they face a liquidity problem unrelated to the loan value. Since they’re leveraged into their loans if someone tries to withdraw money they don’t have they can’t raise it by selling the loans. Granted, they are also potentially underwater from the loan value decreases, but I’ve not seen anything that indicates that. Mostly I think no one sees a reason to park their assets at a regional bank right now- although a lot of smaller banks are offering extremely high returns on deposits to simply keep depositors from leaving, even if their loan and asset portfolio can’t support it indefinitely.