First Republic Bank shares plunge as rescue hopes falter

Shares of First Republic Bank cratered on Friday following a report that it is likely to be seized by federal financial regulators, putting it in jeopardy of being the third bank to collapse since.

The Federal Deposit Insurance Corporation is likely to take over the ailing regional bank, CNBC reported, noting that hopes are fading that other lenders could step in to rescue First Republic. 

In late-afternoon trading First Republic Bank’s stock price, which topped $200 in 2001, was down 43% on the day to $3.54. The shares have fallen 97% this year. First Republic had roughly $233 billion in assets under management as of March 31. 

Investors were spooked earlier this week by the San Francisco bank’s disclosure that depositors withdrew more than $100 billion during last month’s crisis, raising concerns about First Republic’s stability. The fund outflows were “unprecedented,” bank executives said on an earnings call Monday.

The troubled bank said it now plans to sell off assets and restructure its balance sheet, as well as lay off as much as a quarter of its workforce, which totaled about 7,200 employees at the end of 2022. The bank will also shrink its corporate office footprint, cut executives’ compensation by a “significant” amount and eliminate “nonessential” projects, executives said Monday.

In a rare move, 11 of the nation’s largest financial institutions gave First Republic $30 billion in deposits last month to prop up the troubled bank. 

San Francisco-based Silicon Valley Bank, at the time the 16th-largest U.S. bank with $210 billion in assets, was taken over by state regulators in March after concerns about potential losses spurred many depositors to withdraw their funds. New York’s Signature Bank failed only days later after a similar bank run.

In a report on Friday, the Federal Reserve on Friday attributed SVB’s startling collapse to a combination of extremely poor bank management, weakened regulations and lax government supervision.