Shares of First Republic Bank rose sharply in premarket trades on fears of another run on the bank following the failure of SVB Financial and Silvergate last week.
First Republic Bank Stock FRC,
The stock plunged 70% in premarket trades after heavy losses at the end of last week.
The stock reaction for First Republic came after First Republic Bank said on Sunday that it had received additional liquidity from the Federal Reserve and JPMorgan Chase & Co. JPM.
The San Francisco-based bank said the new fund provides more than $70 billion in untapped liquidity.
SVB Financial SIVB’s demise came amid accelerated developments by banking regulators seeking safe deposits.
and Silvergate Capital Corporation SI,
The Federal Deposit Insurance Corp. (FDIC) said Monday that it has transferred all insured and uninsured deposits of the former Silicon Valley bank to a newly created, full-service FDIC-operated “bridge bank” that seeks to protect is in All depositors of the bank.
Separately, MarketWatch columnist Phil Van Doorn included First Republic on a list of 10 banks showing contracted margins, or the smallest expansion of margins, over the past year.
UBS analyst Erika Najarian said Friday that First Republic Bank does not have the same risk exposure as ailing technology sector lender SVB Financial Group. SIVB,
“We believe that the FRC is not a SIVB,” said Najarian. A recent UBS meeting with First Republic CEO Mike Roffler revealed that venture capital and private equity deposits were just 8% of the bank’s total.
Najarian said comparable deposits from funds and early-stage companies comprise 52% of Silicon Valley Bank’s balance sheet.
First Republic’s available-for-sale securities (AFS) portfolio is 1.7% of income assets, versus 14% for SIVB prior to liquidation.
“Given its well-earned reputation as a ‘quality’ bank, FRC has historically flourished in periods of disinflation,” said Najrin. “While the bank has gone far ahead, one of FRC’s most banner genesis years was during the depths of the global financial crisis.”
First Republic stock fell 14.8% on Friday.
Bank troubles have weighed on regional bank stocks, along with the KBW Nasdaq Bank Index BKX.
down 3.9% on Friday. The index has lost about 16% of its value in the last five days of trading ahead of Monday’s action.
Read also: Goldman Sachs says SVB’s rescue means Fed won’t raise rates in March