• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Editor's Pick First Republic’s stock sinks as analysts monitor banking sector stress, despite some improvements
Editor's Pick

First Republic’s stock sinks as analysts monitor banking sector stress, despite some improvements

by April 26, 2023
by April 26, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

First Republic Bank’s stock nearly halved in value Tuesday, a day after it reported an exodus of deposits in the first quarter.

Trading of First Republic shares was halted several times on the New York Stock Exchange on Tuesday. They ended the session at $8.10, down roughly 49%.

First Republic, based in San Francisco, reported Monday that it lost almost $72 billion in deposits from Dec. 31 to March 31. The drop of more than 40% drop despite a $30 billion infusion from 11 rival lenders on March 16 as the government and the private sector sought to head off a broader banking crisis.

While analysts say the exodus of deposits from regional and midsize banks has largely stopped, the latest troubles at First Republic show that broader industry concerns haven’t dissipated.

“Anecdotally, we hear that the volatility with deposits is not nearly the same as what it was” immediately after Silicon Valley Bank and Signature Bank imploded in March, said Mark Hamrick, a senior economic analyst at Bankrate, a consumer-finance data provider.

But some industry experts say signs of relative stability in recent bank earnings belie other concerns, particularly for commercial lending. Last week, Moody’s downgraded 11 regional banks, including U.S. Bank and Western Alliance, asking “whether some banks’ assumed high stability of deposits, and their operational nature, should be reevaluated.”

On First Republic’s earnings call Monday evening, CEO Mike Roffler sought to reassure investors that the worst bleeding was over. “Beginning the week of March 27, our deposits stabilized, and they have remained stable since that time,” he said.

First Republic’s deposit travails remain an outlier so far, with most banks reporting only modest outflows in recent weeks. Earnings reports for the latest quarter showed U.S. banks’ losing roughly 5% in deposits on average this year, according to a Goldman Sachs Research note Sunday.

“Most are now less concerned about future outflows,” Goldman said, although some banks warned that their industry isn’t completely out of the woods.

Some banks expect more deposits to come into their doors in the next few quarters, while others are signaling that funds could continue to go out. KeyCorp, one of the 20 largest U.S. banks, said it expects deposits to be flat or down by 2% over the course of 2023.

Expectations for further interest rate increases from the Federal Reserve, which is set to announce its next rate decision on May 3, continue to add to jitters on Wall Street.

A March 23 working paper from analysts affiliated with the National Bureau of Economic Research warned that smaller banks with uninsured deposits were more vulnerable to insolvency in a high-interest rate environment.

While some depositors who pulled money out of their banks may have done so amid fears linked to the SVB collapse, some regional lenders have said deposit outflows may also reflect consumers’ shopping for higher interest rates. That trend is increasingly pushing banks to pay more to hold on to their customers’ deposits and attract new ones.

Meanwhile, economists are monitoring the lending environment for small and midsize businesses for signs of a potential credit crunch. Small and regional banks are responsible for at least 70% of all commercial and industrial loans made to small firms, said Joe Brusuelas, the chief economist at the consulting firm RSM.

As access to credit among Main Street businesses contracts, he said, he worries that the flurry of layoffs announced by name-brand companies — cuts that so far have been tilted toward higher-paid workers in tech and finance — could creep further into other industries, such as leisure and hospitality.

“Tighter credit tends to cause the economy to slow and unemployment to rise,” Brusuelas said.

This post appeared first on NBC NEWS
You Might Also Like
  • Treasury Secretary Yellen announces $100M affordable housing fund as shelter costs weigh on Biden
  • People are losing more money to scammers than ever before. Here’s how to keep yourself safe.
  • Presidential debate drew 51.3 million viewers, down from recent events
  • ‘NEETS’ and ‘new unemployables’: Why some young adults aren’t working
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Minnesota lawmakers considering ‘red flag’ law, background check expansion
next post
Thousands of SVB staffers to receive $25 million in payroll stuck in stock purchase program

You may also like

Cryptocurrency ‘pig butchering’ scam wrecks Kansas bank, sends ex-CEO to...

August 22, 2024

Capital One outage drags into Friday afternoon, leaving some customers...

January 18, 2025

Top liquor distributor favored Costco and Kroger over small businesses,...

December 13, 2024

Tentative deal reached to get UPS drivers air-conditioned trucks ahead...

June 15, 2023

Quectel and Skylo Announce the World’s First Non Terrestrial Network...

January 6, 2023

The U.S. economy added 339,000 jobs in May, once again...

June 3, 2023

Tesla cuts U.S. prices on its Model Y, S and...

April 21, 2024

U.S. airlines cool hiring after adding 194,000 employees in post-Covid...

September 9, 2024

Social Security Administration to expand access to certain benefits through...

May 13, 2024

Here’s why the PGA Tour just merged with LIV Golf

June 8, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,631 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Fed raises interest rates by a...

    March 24, 2023

    Google employees pressure costumed execs at...

    November 1, 2024

    Trump Media tells shareholders how to...

    April 20, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here