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First Republic Bank | FRCFirst Republic stock plummets after revealing deposit exodus in March The stock of First Republic FRC dropped more than 43% Tuesday after the bank surprised investors and analysts by revealing an outflow of more than $100 billion in deposits in March. The disclosure made during the release of its first-quarter results on Monday afternoon raised new questions about the fate of a San Francisco lender that was at the center of last month's banking turmoil.the company outlined its survival strategy Monday. It said it plans to increase its insured deposits, trim the borrowings it used to cover customer withdrawals, shrink its balance sheet and reduce its workforce by 20-25% to cut expenses. It is also pursuing other “strategic” options, including a sale or raising more capital.the bank is considering divesting HKEX:50 billion to $100 billion of long-dated securities and mortgages to make an eventual capital raise easier. Its stock, which was already down more than 85% this year, was briefly halted for volatility on Tuesday. Other bank stocks also dropped, including some of First Republic's regional rivals. PacWest (PACW), a lender based in Beverly Hills that reports earnings after the market close, was down more than 6%. HomeStreet (HMST), a lender in Seattle that reported earnings Monday, sank more than 36%. analysts said First Republic faces a lot of uncertainty as it tries to recover from last month's chaos. “First Republic appears to be in a holding pattern and burning fuel,” Evercore analysts said in a new research note. Wells Fargo analysts said in a separate note that First Republic's existence "very much hangs in the balance." "The future of this company is very uncertain," added CI Roosevelt Associate Partner Jason Benowitz in an interview with Yahoo Finance. First Republic, he added, "lost so much in deposits, they have to replace that funding somehow, so they’re doing it with borrowing.” The borrowing will “really weigh on their profitability both in the reported quarter and going forward.” Wedbush lowered its earnings estimates for that very reason, noting that the heavy deposit losses would weigh on profits. “Where does First Republic go from here?” Wedbush said in its note. “Our base case is that First Republic continues to move forward as a standalone company,” referencing an earlier note in April that argued First Republic faces a "Hobson's choice." Even a sale of First Republic at $0 a share is unlikely, Wedbush said in that earlier note, because any buyer would still essentially have to pay billions to absorb the unrealized losses on its balance sheet. Carlyle Group co-founder David Rubenstein told Yahoo Finance earlier this month that the federal government will need to provide some help for First Republic to find a buyer due to this “hole” on the lender’s balance sheet. “I think First Republic Bank is clearly on a watchlist, and probably somebody at some point will buy it. But the challenge there is that it needs government assistance,” Rubenstein said earlier this month A lot of money is riding on its fate. Everyday investors have bet HKEX:245 million on First Republic stock since the fall of Silicon Valley Bank, according to Vanda Research, the third highest inflow to a specific bank stock behind Bank of America (BAC) and Charles Schwab (SCHW). It also has one of the highest levels of interest among so-called short sellers betting on the stock to decline, according to analytics firm S3 Partners, accounting for HKEX:480 million in such bets over the last 30 days. Its stock is now down more than 85% since the beginning of the year. First Republic "will be a bellwether of sentiment for the sector," Vanda said in a note last week. The new hand wringing about First Republic following the release of its first-quarter results Monday. Its first-quarter earnings of HKEX:269 million were down by 30% from the fourth quarter and 33% from the year earlier period. What surprised most observers is how many deposits it lost in March. As of March 9, the day before regulators seized Silicon Valley Bank, its deposits were $173.5 billion, down just slightly from the year end. On March 10, it began experiencing "unprecedented deposit outflows." The net total outflow by the end of March was HKEX:72 billion, but the actual number was above $100 million after stripping out a temporary infusion of HKEX:30 billion in uninsured deposits from 11 of the country’s largest banks. Those deposits have to stay at First Republic for 120 days, according to a person familiar with the rescue plan. The bank said Monday that outflows began to stabilize the week of March 27 and deposit activity "has remained stable" through April 21. Its balance as of Friday was $102.7 billion, a drop of 1.7% since the end of the quarter that the bank attributed to seasonal client tax payments. "Despite the uncertainty of the past two months, and while average account sizes have decreased, we have retained over 97% of client relationships that banked with us at the start of the first quarter," First Republic CEO Michael Roffler said on a conference call following the release of results. The company didn't take questions from analysts.
NYSE:FRCShort
by moonypto
Western Alliance | WALWestern Alliance shares pulled back from their session lows after the Arizona-based bank denied it was exploring a potential sale The Arizona bank described a report in the Financial Times that it was considering a potential sale of all or part of its business as “categorically false in all respects”, adding: “Western Alliance is not exploring a sale, nor has it hired an advisor to explore strategic options.” Two people briefed on internal discussions had told the FT that the bank, which has a FWB:2BN market capitalisation, was exploring strategic options including a potential sale of all or part of its business. The Arizona-based bank, which has $65bn of assets, fell by as much as 45 per cent after the FT report, before recovering to trade 39 per cent lower. Earlier on Thursday, PacWest, another bank that has unnerved investors, announced that it was exploring its options. Shares of US regional banks have come under heavy selling pressure this week after the regulator-brokered takeover of First Republic by JPMorgan Chase failed to restore confidence in the sector. In a press conference on Wednesday, US Federal Reserve chair Jay Powell tried to soothe concerns about the bank turmoil, saying conditions across the sector had “broadly improved” since the period of “severe stress” in early March and that the system as a whole was “sound”. US officials are watching deposit flows more closely than share prices, which Powell said on Wednesday had stabilised, given the view that they are a better indicator of the health of a bank. “The resolution and sale of First Republic is an important step toward drawing a line under that period of severe stress,” he said before PacWest announced plans to explore a potential sale. Western Alliance said on Wednesday that total deposits had risen to $48.8bn from $47.6bn at the end of March. It said it had “not experienced unusual deposit flows following the sale of First Republic”. It said 74 per cent of deposits were covered by Federal Deposit Insurance Corporation guarantees. Western Alliance for much of the past two decades was run by Robert Sarver, the former owner of the Phoenix Suns NBA basketball franchise. Earlier this year, Sarver was forced to sell the Suns after an investigation found evidence that under his leadership the team had created a hostile environment both for black people and women. Sarver was fined $10mn and suspended from the NBA and the WNBA for a year. Sarver, who had held the top role at Western Alliance since 2003, stepped down as chair of the bank last year as the NBA controversy unfolded.
NYSE:WALShort
by moonypto
2
PacWest Bancorp | PACWPacWest Bancorp sinks 56% in after hours following news the bank is exploring a sale but Powell said the US banking sector is strong! PacWest Bank, confirmed Thursday that it is exploring “all strategic options” after its share price was cut in half in after-hours trading following a Bloomberg report that it was considering a sale. “Exploring strategic options” is Wall Street lingo for “please help.” The last bank to announce it was exploring strategic options was First Republic Bank. That regional bank failed Monday, and JPMorgan purchased most of its assets. “In accordance with normal practices the company and its board of directors continuously review strategic options,” PacWest said in a statement. “Recently, the company has been approached by several potential partners and investors, discussions are ongoing. The company will continue to evaluate all options to maximize shareholder value.” The regional bank is assessing options, including a possible sale, and bringing in advisors to evaluate longer-term plans for the business,Piper Sandler and Stephens are the two firms advising PacWest, the person said. The shares of many West Coast regional banks have been hit particularly hard since the collapse of Silicon Valley Bank in March, in part because of concerns that their customer bases are similar. This week, First Republic Bank was seized by regulators and sold to JPMorgan Chase. The Los Angeles based PacWest has a roughly $750 million market cap, and is down by 72% this year. On Wednesday, PacWest shares declined nearly 2% during the regular session, and notched their fifth straight losing day. Other regional banks declined in extended trading following the report, with the SPDR S&P Regional Banking ETF shedding 5.3%. Shares of Western Alliance Bancorp dropped 27%, while Comerica slid 10%. KeyCorp shares fell 7%. PacWest reported that total deposits declined more than $5 billion in the first quarter to $28.2 billion as of March 31. However, the company said that it saw a net gain of $1.1 billion in deposits from March 20 until quarter end. PacWest also said that deposits grew by another $700 million from March 31 through April 24. As with many other US regional banks, the value of PacWest’s loans and bond holdings has crumbled as interest rates have surged. Customers yanked their deposits in March out of fear that the bank could fail and they’d be left holding the bag. Although the Federal Deposit Insurance Corporation insures accounts holding up to $250,000, many businesses have a lot more money in their accounts, much of which is uninsured. that left the bank and its competitors with a potential problem: If customers kept drawing down their accounts, the bank may run out of cash to pay them.that made investors nervous Michael Burry : Lawrence, I found something really interesting Lawrence Fields : Great, Michael. Whenever you find something interesting, we all tend to make money. What stock are you valuing? Burry : I want to SHORT the whole Banking system ! Whos ready for the BIG SHORT 2 ?
PShort
by moonypto
4
FRC: Buy 9 Green SetupOne of the most plugged-in high financiers thinks troubled regional bank First Republic Bank will need more than a few bucks from stronger rivals to stay afloat and prevent the return of the banking turmoil that dominated March's headlines. “I think First Republic Bank is clearly on a watchlist, and probably somebody at some point will buy it. But the challenge there is that it needs government assistance,” The Carlyle Group co-founder David Rubenstein said in a lengthy chat on Yahoo Finance Live. ‌Rubenstein believes First Republic Bank’s finances are in such rough shape the government will have no choice but to step in.
NYSE:FRCLong
by sequentialvzion
FRC - High Risk vs High RewardsHello Everyone, A huge oversold situation could be in the making. FRC is Extremely oversold on fears of bancruptcy or being bought out by JPM soon. While such case is highly likely, the bank can still rise on any good news as all the bad ones are already baked in the current price. JPM's CEO is already in the talk with other banks on possible solution for FRC , so this could lead to some good news about the bank and have the price rise. This can make a margin-call for many shorts and lead to a nice retracement back above $20. Still, it is extremely risky trade, but this is where the highest rewards can be made, so trade at your own risk. Good luck to everyone.
NYSE:FRCLong
by donaitelo
7
FRC First Republic Bank Price TargetFRC First Republic Bank received uninsured deposits of $30 billion on Mar 16, 2023, from 11 banks of the country: Bank of America Corporation BAC, Citigroup Inc. C, JPMorgan Chase & Co. JPM, PNC Bank, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, State Street, Truist, and U.S. Bank. I know it`s a risky trade, but i believe this recue package puts it in a lot better situation that CS Credit Suisse Group. My price target for FRC First Republic Bank is at least $30.30 and maybe $52.20. Looking forward to read your opinion about it.
NYSE:FRCLong
by TopgOptions
14
An unfolding banking crisis - or not - potential market reactionIt could get pretty crazy in the markets this week, and it may start on the futures open at 9am AEDT – headlines have been rolling in today and everyone is on edge for answers – it's complex, but I’ll try and explain what we’re looking out for. Let us first focus on the US banks – they are a central focus and really the big issue at hand. EU banks are quite different, they didn’t see the same sort of rapid deposit growth as US banks post-pandemic and had a greater propensity to put depositors' cash on the ECB’s balance sheet – unlike US banks who bought a load of high-quality assets for the coupon income. But they did so at near-zero yields and as the Fed hiked rates these assets fell dramatically in value and by far more than the banks were getting from the interest (i.e., the fixed coupon payment). Credit Suisse is the key issue in Europe, but that is a very different story – more on that below. Back in the US - The major concern I see here is the FDIC (www.fdic.gov) stipulated last week that they will cover non-insured deposits held with a bank over $250k ($250k was always the limit deposits would be insured up to in case of a failed bank). SVB Bank’s full deposit base was told they would be made whole, but the market quickly understood that it wasn’t a banking-wide blanket guarantee – it was an implicit guarantee, and each future bank that failed will be considered on a case-by-case basis. To have a wholesale guarantee covering EVERY BANK DEPOSIT needs congressional sign-off and that is very unlikely - this is key to market sentiment. We also heard last week that the Fed had set up a new credit/liquidity facility and enhanced existing ones for banks that needed liquidity – the idea here was that banks could get capital from the Fed and pledge assets they hold on their balance sheet (USTs, mortgages etc) as collateral and to get capital for a predefined period at the ‘par’ value (rather than the more distressed price they are trading now – let’s say 80c in the $1. Given we’ve seen the Fed’s balance sheet increase by $300b last week as mid & smaller banks took them up on these loans, this shows how much they needed the capital (bad) but some see this as a form of QE (Quantitative Easing) and hence we’ve seen gold rally strongly and eyeing all-time highs Essentially, it’s not QE, but it is positive for risk assets because it means if we do see further deposit outflows banks won’t now need to sell assets for a what would be a loss – which was one of the major issues with SVB Bank. As said, gold rallied hard (+3.6%) and the USD fell…. gold printed new ATHs in AUD, GBP, and JPY terms – Equity markets, however, were sold…The US2000 (which has a decent representation of US mid-sized banks) fell 2.6%. Gold futures are above $2k and but in spot gold we eye an all-time high (ATH) of $2075 in USD terms. There was talk on Friday that “dozens” of other banks may fail soon as depositors take their cash and run. In fact, the WSJ said 186 banks are facing the same issues/pressure as SVB bank - this has the market on edge, and they crave an even bigger response. We’re hearing today that a group of 110 US banks is requesting full FDIC insurance for all deposits regardless of the amount – this would give depositors absolute peace of mind not to pull capital from the bank and place the funds in ultra-safe money market funds. These funds flow are opaque but incredibly important. For perspective, if any bank fails from here and the FDIC does not make all depositors whole the market will take this as a systematic event, regardless of the bank – it will rock the markets in a massive way – which is why it won’t happen at this point. Case in point, and this is very important - Late last week we heard First Republic Bank (FRC) had been given a $30b injection of deposits from 11 of the biggest US banks. A private market response is old school and shows the banking industry is working together. The globally systemic banks looking after the smaller banks is 100% designed this liquidity to show their faith in the FDICs deposit insurance. Why? These banks are all non-secured creditors for FRC and, in theory, could lose it all if First Republic go under and the FDIC doesn’t pay out. Unfortunately, on Friday shareholders didn’t take heart on this incredible action and sold FRC’s equity down 33% and the share price now eyes new lows – clearly, not a great look and this resonated through US equity markets. Deposit holders may get it all back, but equity holders’ wont…the KRE ETF (S&P regional bank ETF) closed -6%. There were/are worries that SVB financial will not get a buyer – talk is First Citizen Bank are looking at this acquisition – if true, that would be a risk positive. Warren Buffett held talks with a number of regional bank CEOs in the last 2 days – Buffett did this well in 2008 by taking a stake in Goldman and in 2011 in BoA – he is a vulture, but the kingmaker in times like this – he has an incredible war chest of cash and will pick up distressed assets all day. Buffett won’t buy the float of these banks obviously but taking stakes could send a message of confidence to equity investors and maybe depositors – we listen for news flow and headlines on this tonight and Monday. It could move markets. In Europe, it's all about Credit Suisse – Unlike many US banks, CS are fine from a liquidity perspective – they had a huge capital injection from the Swiss Nat Bank late last week to buy them time, but its capital levels are pretty good. Their issue is the confidence equity investors have in its business model, notably around the investment bank (IB) division. They lost their biggest shareholder – Harris Associates - recently who had held size for 20 years but liquidated on frustrations about how on the IB business performing and its strategic direction. They also had a bunch of ‘bad luck’ with Greensill and Archegos insolvencies. All the talk in UBS will buy its wealth management and asset management business and divest its IB business. Clearly the big moves from the SNB show CS are ‘too big to fail’ but will UBS pull it off by the Monday futures open? Depositors are ok as they are backed by the SNB, but if there is no deal by Monday markets could ask ‘what if’…CS will absolutely drive EU equity markets and the EUR. Scenarios: So, a lot to play for – we could get Buffett doing his thing, married with UBS buying parts of CS – risk assets will fly – unclear how the USD trades as this is good news for both the US and EU, but I suspect if UBS buy CS this will dominate and EURUSD rallies hard and gold rallies too. It will increase the prospect of the Fed hiking this week. Conversely, we don’t get clear headlines by equity futures open on UBS/CS and risk takes a bath as traders pay up for risk-off hedges….pricing risk here is difficult.
PEPPERSTONE:USDX
by Pepperstone
1
PACW PacWest Bancorp Breaking Out With VolumeWhile Bank Regulators are trying to put together a package to save FRC First Republic Bank with JPM and Morgan Stanley, other hammered regional banks are looking like a bottom. PACW has a book value of 29.50 and a cash per share value of 17 dollars per share. FDIC Insured deposits account for 40 percent of total deposits, making a run less likely than FRC which has a 20 percent of depositors . These are compared to SVIB and SBNY which had a total of 3% and 6% insured by FDIC.
PLong
by loves2spooge
Robert Kiyosaki and now Larry Fink on Credit Suisse's demiseThis 2 charts reminds me of a James Bond movie, Skyfall. There is a claim by many that, these companies are too big to fail. Oh yeah? 7th largest investment bank in the world is get steamrolled. Yesterday about 6pm Malaysia time, Credit Suisse ($CSGN) got halted due to excessive selling. Robert Kiyosaki predicts this bank will be next. Today, Larry Fink of Blackrock is echoing Rich Dad Poor Dad author. 2nd largest Swiss bank is going under real soon and this will rock Eurozone badly. On to US banks, Moody's have place 5-6 banks under watch for downgrading due to contagion following SVB, Silvergate and Signature bank's catastrophe. The pack leader is First Republic Bank ($FRC). Since last week Thurs, already down 80%. Holy moly! Others will be Western Alliance Bancorp ($WAL), Intrust Financial Corp, UMB Financial Corp ($UMBF), Zion Bancorp ($ZION) and Comerica Inc ($CMA). This year will be crazy. Will Jerome Powell finally pivot? He got 2 options, raise rates and crush the economy OR pivot and deal with rising inflation again. What I think is, you will keep printing money. Like you always do and that's all you can do, dear central banks. Stop covering up simple stuff with euphemism such as Bank Term Funding Program (BTFP) to cover up for money printing. As if Quantitative Easing is not euphemistic enough. By Sifu Steve @ XeroAcademy
C
by XeroAcademy
Regional Bank Fears Continue... 😮‍💨Saturday night i decided to take a look at all major bank charts. I called 3 potential 'dangerous ones' and ended up guessing 2 of them right. One of them was First Republic. (you can ask me for proof if you are interested to confirm this). “First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” Jim Herbert, First Republic’s founder and executive chairman, and CEO Mike Roffler said in a statement. First Republic lists $213 billion in assets. The lender reached out to customers over the weekend in a bid to reassure them. “In light of recent industry events, the last few days have caused uncertainty in the financial markets,” First Republic senior executives said in an email to clients viewed by CNN. “We want to take a moment to reinforce the safety and stability of First Republic, reflected in the continued strength of our capital, liquidity and operations.” The federal bank rescue announced Sunday should help ease some of the pressure on the banking system, Isaac Boltansky, director of policy research at BTIG, told CNN. “But this is not a permanent solution and this will not be the final chapter in this story,” he said. What's next? Uncertainty.. I hope all goes well but in the meantime remember to look at Bitcoin . Just my humble opinion, perhaps I am right. One Love, The FXPROFESSOR
NYSE:FRCShort
by FX_Professor
3