First Republic Continues Downward Journey, Regional Banks Still Sink

Shares of First Republic (NYSE:FRC) and several other regional banks were under pressure again on Thursday, as the Swiss National Bank’s move to shore up Credit Suisse (NYSE:CS) did little to calm fears about more mid-sized bank failures in the U.S.

The collapse of Silicon Valley Bank last Friday has left investors scrambling to identify other regional banks that have similar balance sheet issues, namely a high rate of uninsured deposits and bonds or loans with a long time to maturity.

First Republic had the third highest rate of uninsured deposits among U.S. banks, behind SVB and Signature Bank, which was closed by regulators over the weekend, according to a note from Raymond James. First Republic’s stock was down nearly 75% in March as of Wednesday’s close, and the bank’s debt has been downgraded by S&P Global Ratings and Fitch Ratings.

Thursday’s drop for First Republic came even as Bloomberg News reported that the bank was weighing its options to stabilize itself, including a potential sale. But a sale under pressure may not end up being a great deal for shareholders, according to KBW analyst Christopher McGratty.

“Following the sharp decline in the stock post SIVB failure (deposit outflows/liquidity concerns), FRC is admittedly in a challenging position. Any potential sale would likely be a tough outcome for existing shareholders,” McGratty said in a note to clients.

First Republic fell $9.77, or 31.4% in early Thursday trading, to $21.39.