New York March 16 2023: First Republic Bank shares are slumping in premarket trading on Thursday following a Bloomberg News report that the company is weighing options that include a sale.
The stock plunged as much as 39%, extending a slide that had already erased more than $17 billion off its market capitalization this month as the failure of three US lenders, including Silicon Valley Bank, rattled confidence in the sector.
The San Francisco-based bank is exploring strategic options that include a sale, according to a Wednesday evening Bloomberg News report citing people familiar with the matter. On Wednesday, First Republic shares sank 21% as its credit rating was cut to junk by S&P Global Ratings and Fitch Ratings.
“Any potential sale would likely be a tough outcome for existing shareholders, given mark-to-market accounting on loans,” Christopher McGratty, an analyst at Keefe, Bruyette and Woods, wrote in a report.
“Normally, a headline of a potential sale would support the stock,” he wrote. “However, the potentially significant deposit outflows post SIVB failure likely leave FRC in a tough spot, especially given heightened market volatility and mark-to-market accounting headwinds from its low-yielding loan portfolio (interest rate mark).”
Several regional bank peers are following First Republic lower in premarket trading. PacWest Bancorp is down 14% and Western Alliance Bancorp tumbled about 7%.