First Republic Bank, a San Francisco-based lender, is experiencing a significant downturn as it struggles to turn around its business. The bank’s shares fell by almost 10% in pre-market trading on Wednesday, following a 27% plunge the previous day, and are currently trading at $7.34. This marks a record low for the bank for the second day in a row.
First Republic Bank has been hit by an outflow of over $100 billion in deposits during the first quarter, leading to analysts' concerns that it may not be able to recover from its financial woes. The bank is reportedly considering several options to address its situation, such as selling assets or creating a "bad bank." However, analysts have highlighted several obstacles that could hinder its recovery efforts.
Despite the bank's advisers already lining up potential purchasers of new stock in the lender, CNBC reports, the road ahead for the bank is paved with uncertainties. David Wagner, portfolio manager at Aptus Capital Advisors, believes that the bank's assets may take some time to be sold and could be sold at a significant discount to par.
While First Republic Bank's problems may be idiosyncratic, they have had a significant impact on the banking sector, leading to a renewed pressure on it following the bank's results. At least three brokerages have cut their price targets on First Republic's shares since it reported first-quarter earnings on Monday. The KBW Regional Banking index has also lost 4.4% so far this week.
