US Banking Crisis Deepens With First Republic Bank in Freefall

First Republic Bank stock (FRC) lost half its value on Tuesday, April 25, following a disappointing quarterly earnings report.

The embattled bank was the worst performer on the S&P 500 for the day as investors dumped its shares. Since the beginning of the year, First Republic stock has dumped 93%.

The bank has become the latest victim of a deepening crisis that includes collapses or seizures of a number of midsized lenders this year. So far in 2023, Silicon Valley Bank, Silvergate, and Signature Bank have been shuttered or have imploded.

First Republic has been the focus of market anxiety following a surge in deposit outflows, reported the WSJ.

First Republic $FRC 😵‍💫

Down *another* 40% today and now -93% YTD. pic.twitter.com/SxJPjTz7m2

— TradingView (@tradingview) April 25, 2023

Banking Bunkum

On April 24, the bank said it was exploring strategic options following its disclosure that it lost around $100 billion in deposits. However, analysts and investors appear to have already lost confidence in it.

Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell urged investors not to panic, stating they will support the banking system.

In the first quarter, First Republic borrowed $92 billion, mostly from the Federal Reserve and government-backed lending groups. It has effectively replaced lost deposits with loans.

First Republic also received a temporary $30 billion lifeline in March from big banks like JP Morgan Chase.

Furthermore, bank executives did little to establish confidence during a conference call this week. Finance professor at New York University, Aswath Damodaran, commented, “This is a trust issue, as it is for any bank, and when trust is lost, money will flee.”

The contagion appears to have spread to other American banks as concerns over another bank-induced financial crisis are raised. PacWest Bancorp shares have fallen about 60% since early March, and Northern Trust has seen stocks slide.

Bitcoin Buoyed by Banking News

Bad news in the banking sector is good news for Bitcoin, which was spawned from the last banking crisis in 2008.

BTC gained around 4% over the past 12 hours and is currently trading at $28,368 at the time of writing.

However, the move may be short-lived as Bitcoin remains down 6.5% over the past week as crypto markets correct. The $28,000 price zone has now flipped from support to resistance.