First Republic Bank Crumbles as Stock Plummets 55% in Pre-Market Trading

Shares of San Francisco-based First Republic Bank ($FRC) were hit hard in pre-market trading on Monday, dropping 55% following declines of 33% last week, leading to a sharp decline in bank shares.

Regulators Are Cracking Down on U.S. Banks

Regulators’ efforts on Sunday to backstop all depositors in failed Silicon Valley Bank and Signature Bank and offer additional funding to other troubled institutions didn’t seem to help much. PacWest Bancorp dropped 37%, and Western Alliance Bancorp lost 29% in the premarket. Zions Bancorporation shed 11%, while KeyCorp fell 10%. Bank of America lost 6% in premarket trading, while Charles Schwab tumbled 20% early Monday.

The Federal Reserve announced a new Bank Term Funding Program that will offer loans for up to a year to banks in return for high-quality collateral such as Treasurys. The central bank also eased conditions at its discount window.

First Republic Bank’s additional liquidity

First Republic Bank announced on Sunday that it had received $70 billion in additional liquidity from the Federal Reserve and JPMorgan Chase, prior to any funding it could get from the new Fed facility. This will further enhance and diversify the bank’s financial position.

“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” said founder Jim Herbert and CEO Mike Roffler in a statement.

The bank also revealed that it has access to additional financing through JPMorgan Chase & Co., which further strengthens First Republic’s existing liquidity profile. The total available, unused liquidity to fund operations is now more than $70 billion.

First Republic Bank’s emphasis on safety and stability

Jim Herbert and Mike Roffler emphasized in their statement that the bank operates with an emphasis on safety and stability at all times while maintaining a well-diversified deposit base. The bank has been operating with these principles since 1985 and will continue to fund loans, process transactions, and fully serve the needs of clients by delivering exceptional service.

Despite the market volatility and challenges facing the banking industry, First Republic Bank is confident in its strong capital and liquidity positions, along with its well-diversified deposit base. The bank remains committed to delivering exceptional service to its clients and navigating the current economic landscape with an emphasis on safety and stability.