Topline
Stock prices at a group of major U.S. regional banks have plummeted Monday morning just hours after First Republic Bank’s sudden collapse and takeover by JPMorgan Chase, as fears persist that a series of catastrophic regional bank failures could spark system-wide contagion.
Multiple regional bank stocks are down Monday following First Republic Bank’s failure.
Key Facts
Stocks of Citizen Financial Group, the parent company of Citizens Bank, dropped by more than 6% Monday morning, to $29.05, hours after California regulators shut down First Republic Bank after multiple efforts to rescue the San Francisco-based regional bank fell flat.
Pittsburgh-based PNC Bank’s stocks have also fallen nearly 6%, to $122.82, following First Republic’s failure—the second largest in U.S. history and the third bank failure in just two months, following Silicon Valley Bank and Signature Bank.
Minneapolis-based U.S. Bancorp’s stocks have also fallen by more than 2.5%% to $33.41, while Truist Financial Corp stocks have dropped by more than 2.5%%, to $31.72 and UMB Financial Corp stocks have decreased by more than 4%, to $60.96.
News Peg
JPMorgan’s stocks had their second-best day so far this year, jumping nearly 3% to $141.89 Monday morning, after the country’s biggest bank assumed all of First Republic’s deposits and most of its assets, the FDIC announced, meaning all of First Republic’s customers will be protected, including those with deposits over the FDIC’s $250,000 threshold. Customers with deposits at First Republic will now be able to access their money through JPMorgan.
Big Number
$92 billion. That’s how much JPMorgan is assuming in deposits at First Republic, including $30 billion in large deposits, JPMorgan said in a statement Monday morning, while 84 First Republic branches in eight states will reopen later on Monday as JPMorgan Chase Bank branches.
Key Background
First Republic’s failure comes nearly two months after Silicon Valley Bank—another San Francisco Bay area regional bank—collapsed in what had been the biggest bank failure in the U.S. since the Great Recession, after SVB announced it lost roughly $1.8 billion off the sale of $21 billion in securities as it desperately attempted to raise money and stave off failure. Analysts attribute SVB’s collapse to both poor decisions by executives, and multiple rounds of interest-rate hikes by the Federal Reserve to combat rising inflation, sinking the value of SVB’s investments. Just days later, New York-based Signature Bank was suddenly shuttered by state regulators, after customers quickly withdrew their deposits in a massive bank run, and as economists feared other regional banks could bear the brunt of a system-wide problem called contagion.
Further Reading
First Republic Taken Over By JP Morgan After Regulators Shut It Down (Forbes)
JPMorgan Stock Set For Second-Best Day This Year After First Republic Takeover (Forbes)
First Republic Bank Reportedly On Verge Of Collapse (Forbes)
Source: https://www.forbes.com/sites/brianbushard/2023/05/01/citizens-pnc-umb-stock-plummet-after-first-republics-epic-failure-here-are-the-bank-stocks-that-are-plunging/