FRC Stock Alert: Why Is First Republic (FRC) Stock Up 20% Today?

  • First Republic (FRC) stock jumped on news the Federal Reserve may supply additional support.
  • The bank was also cheered by the sale of SVB’s assets to First Citizens (FCNCA) of North Carolina.
  • If the crisis is indeed over, banks like First Republic look dirt cheap.
FRC stock - FRC Stock Alert: Why Is First Republic (FRC) Stock Up 20% Today?

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First Republic Bank (NYSE:FRC) stock rose over 20% in pre-market trading on hopes the current banking crisis may be easing.

The Federal Reserve’s Bank Term Funding Program, created early this month, may also be expanded to give the troubled San Francisco bank time to improve its financial position.

First Republic stock had been trading at over $120 per share at the start of the month but closed on March 24 at $12.36, a market capitalization of just $2.3 billion. It was trading at about $15.60 early March 27, adding nearly $700 million to its market cap.

Save That Rich Man’s Bank

First Republic became a haven for winners’ fortunes during the tech boom. Many of its assets are in real estate loans given to technology billionaires.

The bank became wobbly after SVB collapsed, leading to withdrawals on fears the contagion would spread. In response, money center banks deposited $30 billion with First Republic at the Fed’s urging.

First Republic founder James Herbert didn’t help his cause when it was revealed he was overpaying himself and paying family members millions for services to the bank. Herbert became executive chairman of First Republic last year.

If the Federal Reserve supports the bank, its stock could be a bargain. The bank had $212 billion in assets last year and a net income of $1.7 billion on revenue of $5.9 billion. Drawing a line under First Republic would also let other regional banks trade closer to their book values.

First Republic is also cheering the apparent sale of SVB’s assets to First Citizens (NASDAQ:FCNCA) of North Carolina, which jumped by nearly 50% on the news. About 17 of the SVB branches will reopen today as First Citizens. The deal will cost the Federal Deposit Insurance Fund about $20 billion.

FRC Stock: What Happens Next?

Expect a melt-up in bank stocks as fears ease. But don’t go running to one for a loan, as most have lost billions in deposits recently to money market funds, which pay higher interest.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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