First Republic stock has nearly doubled in four hours: here’s why

By:
on Mar 16, 2023
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  • Big banks are reportedly in talks to grant aid to First Republic Bank.
  • Cerity Partners' Jim Lebenthal bought the regional bank stock this week.
  • First Republic stock is still down close to 75% versus its YTD high.

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Shares of First Republic Bank (NYSE: FRC) have almost doubled in recent hours following reports that a group of big banks are in talks to grant aid to their regional peer.

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First Republic could soon see a boost to liquidity

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On Thursday, anonymous sources told CNBC’s David Faber that Morgan Stanley, Goldman Sachs, Citigroup, JPMorgan, and others may deposit between $20 billion and $30 billion in First Republic to deliver it from the ongoing turmoil.

The deposits will significantly add to the liquidity of the full-service bank that reported nearly $1.7 billion in net income last year. The said deal, though, is not done just yet.

Sources also confirmed that the aid does not signal a potential acquisition. Versus its year-to-date high, First Republic stock is still down close to 75%.

What spurred the crash in First Republic stock?

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The sell-off followed the recent collapse of Silicon Valley Bank and Signature Bank (source). Since First Republic has a lot of uninsured deposits much like those two, investors feared that its outflows could also grow sharply in the coming weeks.

To that end, the regional bank confirmed over the weekend that it had over $70 billion in liquidity, excluding additional funds it could tap into from the U.S. Federal Reserve. But that wasn’t sufficient for the shareholders to not dump this bank stock.

The wealth management company started the year with more than $212 billion of assets. Earlier this week, Cerity Partners’ Jim Lebenthal dubbed it a good bank as he revealed to have bought First Republic stock on CNBC’s “Halftime Report”.  

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