FRC - Why Shares of First Republic Bank Are Falling Today
2023-03-09 12:20:59 ET
Shares of First Republic (NYSE: FRC) have fallen more than 13% as of 12:02 p.m. ET today for no obvious reason, although I'm guessing it's related to the massive sell-off at SVB Financial (NASDAQ: SIVB) , the parent company of Silicon Valley Bank.
Shares of SVB Financial have tanked more than 41%, as of this writing, since the bank announced that it had sold its entire available-for-sale bond book, taking a $1.8 billion loss. SVB also announced its plans to raise $2.25 billion of fresh capital through common stock, a private placement, and preferred stock.
SVB had to take these actions because it's dealing with heavy deposit runoff that looks to have intensified in recent months. Management had put too many of its excess deposits early in the pandemic into bonds that ended up being too long in duration. The Federal Reserve's rapid interest rate hikes and quantitative tightening, which is pulling liquidity out of the economy, has caught many bankers by surprise.
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Why Shares of First Republic Bank Are Falling Today