Trading in First Republic and Western Alliance shares suspended due to ongoing volatility

Trading in shares of First Republic Bank and Western Alliance Bancorp was suspended after sharp initial losses on Monday, as concerns persisted on Monday about the solvency of banks following the bankruptcies of SVB Financial and Silvergate last week.

FRC of the First Republican Bank,
-76.61%
the stock initially fell 65% in morning trading after a big loss late last week.

WAL Western Alliance Bancorp,
-82.10%
stocks also plummeted, dropping 75%. The bank’s sell-off in Arizona was to surpass the record one-day drop of 39.4% that occurred on September 19, 2008 at the height of the financial crisis.

Banking index KBW Nasdaq BKX,
-11.83%
fell 12% on Monday morning.

On Friday, Western Alliance tried to reassure investors by saying “deposits remain high” and “liquidity remains strong,” with $61.5 billion in deposits as of March 9 and $2.5 billion in cash on the balance sheet.

The stock reaction came after First Republic Bank said on Sunday that it had received additional liquidity from the Federal Reserve and JPMorgan Chase & Co. JPM,
-0.62%.

The San Francisco-based bank said the new funding gives it more than $70 billion of unused liquidity.

The drop comes amid fast action over the weekend from banking regulators trying to protect deposits following the failures of SVB Financial Group SIVB.
,
Silvergate Capital Corp. S.I.
-5.56%
and Signature Bank SBNY,
-22.87%.

Also read: Cryptocurrency Signature Bank shut down by regulators after SVB and Silvergate crash

Raymond James analyst David J. Long downgraded his rating on First Republic Bank’s stock two notches on Monday on market results due to heavy buying on fears of a deposit outflow that would impact earnings per share.

“Despite additional sources of liquidity, we believe deposit balances will remain under pressure in the near term,” Long said. “While we believe the bank received some influx of deposits on Thursday during the bank run at SVB Financial (SIVB), additional panic among large depositors may have led to lower deposit balances since Thursday.”

Long withdrew his $150 price target for First Republic and said the stock would face “some immediate short-term price risk until the bank deposit panic subsides.”

He said the bank could be rated higher in the future given its “impeccable customer service and impeccable credit record.”

Meanwhile, the Federal Deposit Insurance Corporation said on Monday it has moved all deposits, both insured and uninsured, from a former Silicon Valley bank to a newly created, FDIC-managed, full-service intermediate bank, as part of an action to protect all depositors. jar. bank.

Last week, MarketWatch columnist Philip Van Dorn included First Republic in a list of the 10 banks with margin declines over the past year or the smallest margin increases.

UBS analyst Erika Najarian said on Friday that First Republic Bank does not have the same risks as SVB Financial Group, a technology sector lender. SIVB,
.

“We believe [First Republic Bank] No [SVB]Najarian said, adding that a recent meeting between UBS and First Republic CEO Mike Roffler suggests that venture capital and private equity deposits account for just 8% of the bank’s total.

By comparison, deposits from early-stage funds and companies make up 52% ​​of Silicon Valley Bank’s balance sheet, Najarian said.

First Republic’s available-for-sale (AFS) portfolio comprises 1.7% of earning assets compared to SVB’s 14% pre-liquidation.

“[First Republic Bank] has historically thrived during periods of disruption given its well-deserved reputation as a “quality” bank,” Najarian said. “Although the bank has grown significantly since then, one of the [First Republic’s] most of the years of the banner’s creation took place in the midst of the global financial crisis.

First Republic shares fell 14.8% on Friday.

Banking troubles weighed on regional bank stocks, with the KBW Nasdaq Bank index falling 3.9% on Friday. The index lost about 16% of its value in the last five days of trading prior to Monday’s action.

Also read: SVB rescue means Fed won’t raise rates in March, says Goldman Sachs

Tomi Kilgore contributed to this report.

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