First Republic hits record low as report says FDIC receivership likely By Reuters

(Reuters) – Shares First Republic Bank (NYSE:) fell to a record low on Friday, losing nearly half of its value after a CNBC report said the distressed lender was likely headed for receivership under the US Federal Deposit Insurance Corporation (FDIC).

The stock fell 46% to $3.33, giving it a market capitalization of $620 million. Trading in the bank’s shares was halted several times.

A Reuters report on a government-brokered bailout of First Republic sent its shares up 6.6% earlier in the session.

First Republic Stock Performance YTD https://www.reuters.com/graphics/GLOBAL-BANKS/zjvqjdkyrpx/chart.png

According to the report, the FDIC, the Treasury Department, and the Federal Reserve are among government agencies that have begun organizing meetings with financial firms around the bank’s lifeline.

One of the report’s sources told Reuters that the government’s participation helps bring more parties, including banks and private equity firms, to the negotiating table.

However, there are still concerns that the deterioration of deposits at the First Republic could worsen and lead to a new collapse in the US banking industry even as it recovers from the collapse of two regional lenders last month.

The First Republic said earlier this week that its deposits fell by more than $100 billion in the first quarter.

“The potential worst-case scenario resulting from a Silicon Valley bank collapse appears to have been averted,” Mark Hefell, chief investment officer at UBS Global Wealth Management, said in a note.

“But the problems in the First Republic are a reminder that more problems are still possible.”

The San Francisco-based lender’s stock has fallen by more than half so far this week. Since the beginning of the year, it has lost nearly 97% in value, making it the worst-performing stock.