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First Republic Down Over 40% Today After Massive Drop in Assets
”Shares of First Republic fell sharply and hit a record low Tuesday, as investors questioned how the bank would stabilize itself after losing about 40% of its deposits during the first quarter. First Republic's stock fell more than 40% on Tuesday, extending its year-to-date losses beyond 90%.”
For those who invest in mid- and small cap funds, take a look at the top 10 holdings, especially banks. Many regional banks are have hard time holding on their depositors since they pay too little for too long. Many money market funds pay 4.5%!
Last week large banks earnings reported were mostly ok. JP Morgan did well. This week smaller regional banks are reporting. First Republic Bank was in trouble in March and this is no surprise. Is this problem more wide spread among all regional banks? Also this could impact the housing market where they to local mortgages.
Oh yes, the Bynars- they sure put together one hell of a holodeck program for Riker... what was her name... something like Minuete, as I recall. Jean-Luc Picard took quite a liking to her also.
Been following the First Republic situation closely, as we keep a checking account there. Their stock was $147 on Feb 2, and closed at $8.10 today. Front page in this morning's WSJ... their future sure doesn't look very good.
Some Monday Morning quarterbacking - FRC should have been closed in the 1st round of bank failures (closed SVB, Signature; voluntary wound down of Silvergate). Then it got a temporary private bailout - that didn't work in hindsight. Or, it should have been closed LAST week when its earnings details were known to all who should know. So, here we are AGAIN in a situation where the speculation is whether FRC would last through Friday, or it may have to be unusually shut AGAIN during midweek. It has been left to be a roadkill by the market. Why has the FDIC been hesitating? Are there too many cooks at the FSOC who need to clear this sort of stuff now? A look at the charts of FRC and regional bank KRE tell the story. https://stockcharts.com/h-perf/ui?s=FRC&compare=KRE&id=p49376481730 FSOC https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/financial-stability-oversight-council/about-fsoc/council-members
You probably know that a government bailout may wipeout all equity, while a private bailout or wind down may retain some value for equity (for example, Silvergate/SI is still trading as a zombie). In situations like this, debt may be better and may have equity-like kick.
Suspect it will get bought out by a healthier institution at above $5.00 / Or might be saved by an infusion of cash from some government related entity. Far from my expertise. Not a very big gamble. Play money.
Have a FDIC insured CD at First Republic. Anything to worry about if the bank goes belly up, other than perhaps a delay in redeeming my funds at the maturity date until the FDIC finds a buyer for the bank? Fred
@fred495, the FDIC insurance should cover it. But if high rate CD, it may be redeemed and replaced by a new, lower rate CD - that is a part of the fine print.
If the CD is replaced, the rest of the fine print says that you can exit without penalty. And you'll get the high(er) rate of interest that accrued up to then.
By law, the acquiring bank can lower the interest rate on your deposit account, but you also have the right to withdraw the money without penalty. ... If your bank fails and the deposits are acquired by another institution, the accrued interest on your account through the date of the closing will be paid at your same rate. However, after that date, your new bank has the right to reduce interest rates, subject to certain restrictions.
In particular, for CDs and other non-transaction accounts, the assuming institution cannot pay a lower interest rate than what it offers to its existing depositors for similar accounts. The assuming institution also must notify you of any changes it intends to make in the interest rate or other terms of your account.
Note: After talking to a rep at Fido to make sure I was in compliance, I sold all 200 shares (FRC) at $6.25 today for a 23% overnight gain. The gyrations have been unreal. It actually got up to $6.80 at one point yesterday before falling back to $5.69 at day’s end. I used the proceeds to initiate a small position in a favorite (mid-cap) consumers staples company I’ve been wanting to buy for a long time but was having trouble justifying. Don’t normally post trades, but FRC is in the news quite a lot, so made an exception here.
Footnote: It might be of interest that the sell order (200 / FRC) remained “partially filled” at around 175 shares for several minutes before the remainder went through. I suspect this must relate to thin trading in the stock …..
Keep in mind it was a very small wager / $1016 that “paid out” $1250. But, every dime helps. And thanks for noting.
The press reports aren’t real positive re FRC. The Federal Reserve is threatening to cut them off from the reserve lending pool that was created to help struggling banks. This threat they feel will compel FRC to negotiate a deal with some larger banks or private equity. But some of the larger banks have already helped bail them out with a cash infusion earlier in the year and are balking at any additional support. The FDIC likes to move in on a weekend if / when they close a bank. If that should happen, depositors would be made whole but shareholders would be wiped out (as Yogi pointed out yesterday).
FRC closed at $6.18 today (7-cents below where I sold).
@hank: let us know when SCHW or another gored bank is a speculative buy! You keep on making money like that and you’ll be visiting another tax bracket. Best of luck.
Banks, including JPMorgan Chase & Co (JPM.NaE) and PNC Financial Services Group Inc (PNC.NaE), are vying to buy First Republic Bank (FRC.NaE) in a deal following a government seizure of the lender, Wall Street Journal reported on Friday.
Banks, including JPMorgan Chase & Co (JPM.NaE) and PNC Financial Services Group Inc (PNC.NaE), are vying to buy First Republic Bank (FRC.NaE) in a deal following a government seizure of the lender, Wall Street Journal reported on Friday.
Certainly didn’t help FRC’s stock price much late in the day. Closed down 43% to $3.51 in Friday’s regular trading. Than fell 34% more during after market trading to end the week at $2.32. It’s interesting to note the huge impact CNBC and other reporting had on the stock Friday. If someone wanted to play naughty and manipulate the price for personal gain with unsubstantiated reports, there was plenty of opportunitiy.
There were 11 banks in the attempted private rescue of $FRC via deposit infusions (that didn't work): Gr 1, $5 billion: $BAC, $C, $JPM, $WFC Gr 2, $2.5 billion: $GS, $MS Gr 3, $1 billion: $BK, $PNC, $STT, $TFC, $USB From this list, serious contenders now seem JPM (Gr 1), PNC (Gr 3), BAC (Gr 1), USB (Gr 3). We should know by Sunday Noon/PM.
Comments
Anybody feeling brave?
"To Boldly Go Where No Man Has Gone Before..." ?
https://finance.yahoo.com/quotes/^VIX1D,^VIX/view/v1
@Hank- OK, that's it- overt and blatant sexism. You're FIRED !!!
Remember the Bynars.
https://memory-alpha.fandom.com/wiki/Bynar
Been following the First Republic situation closely, as we keep a checking account there. Their stock was $147 on Feb 2, and closed at $8.10 today. Front page in this morning's WSJ... their future sure doesn't look very good.
A look at the charts of FRC and regional bank KRE tell the story.
https://stockcharts.com/h-perf/ui?s=FRC&compare=KRE&id=p49376481730
FSOC https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/financial-stability-oversight-council/about-fsoc/council-members
- Just bought 200 shares at $5.08 / Awaiting bailout.
Suspect it will get bought out by a healthier institution at above $5.00 / Or might be saved by an infusion of cash from some government related entity. Far from my expertise. Not a very big gamble. Play money.
Fred
Fred
Footnote: It might be of interest that the sell order (200 / FRC) remained “partially filled” at around 175 shares for several minutes before the remainder went through. I suspect this must relate to thin trading in the stock …..
The press reports aren’t real positive re FRC. The Federal Reserve is threatening to cut them off from the reserve lending pool that was created to help struggling banks. This threat they feel will compel FRC to negotiate a deal with some larger banks or private equity. But some of the larger banks have already helped bail them out with a cash infusion earlier in the year and are balking at any additional support. The FDIC likes to move in on a weekend if / when they close a bank. If that should happen, depositors would be made whole but shareholders would be wiped out (as Yogi pointed out yesterday).
FRC closed at $6.18 today (7-cents below where I sold).
FRC 3.51
USD▼ -2.68 (-43.30%) today
2.32▼ 1.19 (33.90%)After Hours · April 28, 7:59 PM EDT · Market Closed
(Above excerpted from Google)
Sunday noon deadline for rescue.
https://finance.yahoo.com/news/jpm-bank-of-america-consider-first-republic-bids-as-fdic-sets-sunday-noon-deadline-183757831.html
Gr 1, $5 billion: $BAC, $C, $JPM, $WFC
Gr 2, $2.5 billion: $GS, $MS
Gr 3, $1 billion: $BK, $PNC, $STT, $TFC, $USB
From this list, serious contenders now seem JPM (Gr 1), PNC (Gr 3), BAC (Gr 1), USB (Gr 3). We should know by Sunday Noon/PM.