First Republic Bank’s stock slides amid continuing jitters about regional banks
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First Republic Bank stock losses grew steeper in premarket trades as fears persisted of another run on the bank after the failure of SVB Financial and Silvergate last week.
First Republic Bank stock
FRC,
dropped 70% in premarket trades after big losses late last week.
The stock reaction for First Republic came after First Republic Bank said Sunday it received additional liquidity from the Federal Reserve and JPMorgan Chase & Co.
JPM,
The San Francisco-based bank said the new funding gives it more than $70 billion in unused liquidity.
The drop came amid quick developments by banking regulators seeking to secure deposits from the demise of SVB Financial
SIVB,
and Silvergate Capital Corp.
SI,
on Friday.
The Federal Deposit Insurance Corp. (FDIC) said Monday it has transferred all deposits, both insured and uninsured, of the former Silicon Valley Bank to a newly created, full-service FDIC-operated “bridge bank” in an action that seeks to protect all depositors of the bank.
Separately, MarketWatch columnist Phil Van Doorn included First Republic on a list of 10 banks showing contracting margins over the past year, or the smallest expansions of margins.
UBS analyst Erika Najarian on Friday said First Republic Bank does not have the same exposures as ailing technology sector lender SVB Financial Group.
SIVB,
“We believe FRC is no SIVB,” Najarian said. A recent meeting that UBS had with First Republic CEO Mike Roffler suggests that venture capital and private equity deposits were just 8% of bank’s total.
By comparison deposits from funds and early stage companies comprised 52% of Silicon Valley Bank’s balance sheet, Najarian said.
First Republic’s available for sale securities (AFS) portfolio is 1.7% of earning assets, versus 14% for SIVB before liquidation.
“FRC has historically thrived in periods of disruption, given its well-earned reputation as a ‘quality’ bank,” Najarian said. “While the bank has grown much since, one of FRC’s most banner origination years was during the depths of the Global Financial Crisis.”
First Republic stock fell 14.8% on Friday.
The troubles at the banks have weighed on regional bank stocks, with the KBW Nasdaq Bank Index
BKX,
down 3.9% on Friday. The index has lost about 16% of its value in the past five days of trading, prior to Monday’s action.
Also Read: SVB’s rescue means the Fed won’t hike rates in March, says Goldman Sachs
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