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First Republic Bank stock climbed 20% in premarket trading on Tuesday, amid reports that JPMorgan Chase & Co. was working to help bolster the bank.
Investors are also mulling reports that the U.S. Treasury is considering unlimited deposit guarantees if the current crisis hitting the banking sector continues.
First Republic Bank
FRC,
shares fell to an all-time low of $12.18, a drop of 47%, on Monday as investors questioned its balance sheet and financial health.
The slide came despite a report in The Wall Street Journal on Monday that JPMorgan CEO Jamie Dimon was working to raise more support for the bank. That’s after he helped orchestrate a $30 billion-deposit infusion last week.
After Monday’s close, CNBC reported JPMorgan was advising First Republic on strategic alternatives that included a capital raise or sale.
Investors were mulling reports that the U.S. Treasury is considering unlimited deposit guarantees if the current crisis hitting the banking sector continues.
Janney Montgomery Scott analyst Tim Coffey said First Republic stock is falling so sharply partly because investors don’t know what a potential second capital raise will look like, or how the bank’s balance sheet is faring after a steep run in deposits. Another unknown is the company’s Tier One leverage ratio, which is the amount of capital it keeps on hand for riskier investments.
“We don’t know where they are now,” Coffey said. “We don’t know what current deposit balances are or where they’re at with their Tier 1 ratio, or where their balance sheet is. That’s why there’s so much concern.”
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