First Republic Bank shares fell again on Friday, adding to a string of losses this week amid growing doubts about the region’s bank’s future.
The company’s stock fell about 40% to $3.79 a share by mid-afternoon and is on track to drop more than 70% since Monday.
First Republic has never been able to fully stabilize since being engulfed in the crisis that led to the collapse of Silicon Valley Bank in California and Signature Bank in New York in March. These banks were seized by regulators after depositors, concerned about their long-term viability, rushed to withdraw their money in just a few days.
The First Republic was also considered a troubled bank, but got a temporary reprieve when the 11 largest US banks came together to inject $30 billion in deposits into lenders. But when the company reported earnings this week, telling investors it had lost more than $100 billion in deposits since mid-March, the volatility of the situation was highlighted again.
Now, a mix of doubts and speculation is clouding the outlook and making investors uneasy. The bank has spent weeks discussing a remedy with regulators, policymakers and industry peers, but has been unable to come up with a long-term solution.
The stock fell nearly 50% on Tuesday following an uncertain profit update from the company on Monday. It fell again on Wednesday before recovering slightly on Thursday. Friday’s drop took the stock down from his $120-plus a share in early March. This is his drop of more than 95%, wiping out about $22 billion from First Republic’s market valuation.
But unlike March, when investors feared the cascading effects of bank failures, First Republic’s troubles appear to be contained. This is because other lenders are also reporting earnings, which indicates they are relatively healthy.
The S&P 500 edged higher on Friday, with all banks rising except First Republic, outperforming the broadest index. Even the KBW Regional Banks Index, a measure of smaller US regional financial institutions, rose 1.5% on Friday and he was expected to rise 0.3% this week.
“The market has a fairly short window of attention,” said Ron Temple, chief market strategist at Lazard. “Most investors seem to have moved on.”
Instead, the focus has shifted to a number of strong profit updates from companies across the country. The S&P 500 was set to end the week higher 0.7%, he rose 1.3% for the month.
