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First Republic's marginal gains keep stock close to record-low levels

Published 03/23/2023, 10:53 AM
Updated 03/23/2023, 01:18 PM
© Reuters. A trader works at the post where First Republic Bank stock is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 16, 2023.  REUTERS/Brendan McDermid

(Reuters) - Shares of First Republic Bank (NYSE:FRC) rose 5% on Thursday as they drew the attention of bargain-hunting retail investors, but still hovered near record-low levels on lingering fears about the future of the U.S. regional lender.

The stock was the second most traded by retail punters in Wednesday's session and the fifth most popular trade by 10:00 a.m. ET on Thursday, according to J.P.Morgan data.

San Francisco-based First Republic is in talks with its peers and investment firms about capital infusions following the shutdown of Silicon Valley Bank and Signature Bank (NASDAQ:SBNY) due to bank runs.

First Republic's shares have lost nearly 90% of their value this month, the worst performing stock among the members of S&P 1500 regional banks index, which has fallen 30.2% during the same period.

Treasury Secretary Janet Yellen on Wednesday dashed all hopes that U.S. regulators would insure all consumer deposits through the end of the banking crisis, sending First Republic's stock down 15% on the day.

After the rapid rise in interest rates led to a crisis in the U.S. and European financial sector, the Federal Reserve on Wednesday indicated it was on the verge of pausing further increases in borrowing costs.

© Reuters. A trader works at the post where First Republic Bank stock is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 16, 2023.  REUTERS/Brendan McDermid

"While the situation remains highly uncertain, our assessment is that these stresses should subside through the spring," said Citi Research economist Nathan Sheets in a note on Wednesday.

"Over the next few months, pressures on U.S. midsize banks may occasionally flare up, and some additional institutions may require interventions from the Fed and other regulators."

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