First Republic: Be Weary Of People Bearing Gifts
- First Republic continues volatile trading due to uncertainty regarding the bank's funding sources despite multiple deals.
- The bank was highly dependent on business accounts with an average deposit balance of $490,000 leading to these uninsured accounts likely fleeing the regional bank.
- Any rescue package would be highly dilutive with the market cap down to $3 billion.
- Investors should be wary that all of the recent bank deals have wiped out or diluted shareholders.
First Republic Bank (NYSE:FRC) shareholders have been on a roller coaster ride since the regional bank was first hit by worries of a run on deposits. Federal bank regulators and large domestic banks have all offered solutions to help resolve the deposit run on First Republic, but investors should be weary of these gifts considering other bank resolutions in this crisis. My investment thesis is Neutral on the bank stock with binary outcomes leading to unacceptable risk.
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