FRC - Why First Republic Bank Could Be In Real Trouble Right Now
2023-03-23 14:58:00 ET
Since the collapse of SVB Financial and Signature Bank , as well as the forced acquisition of Credit Suisse , there have been some signs that the banking sector is stabilizing, although it is still too early to tell. However, one bank that continues to struggle is First Republic (NYSE: FRC) , which saw its shares whip up and down as the market tries to get a handle on the rapidly evolving situation. First Republic experienced elevated deposit outflows and credit downgrades from the rating agencies.
While the bank has made several attempts to try to shore up confidence -- and received a massive deposit injection from some large U.S. banks -- I think First Republic could be in real trouble right now. Here's why.
Like SVB, First Republic had a lot of uninsured deposits. It was also serving high-net-worth individuals and businesses that could pull deposits at a greater rate than most other more traditional regional banks. First Republic also had about $4.8 billion of unrealized losses in its held-to-maturity (HTM) bond portfolio, which have not been subtracted from the bank's equity yet. The bank had about $12.8 billion of tangible common equity at the end of 2022.
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Why First Republic Bank Could Be In Real Trouble Right Now