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First Republic Bank was bargain-hunting by investors, and analysts said they still had not learned the lesson
Can First Republic Bank still trade on the stock market? Yes, but the stock of First Republic Bank is very risky, and now it is a low-priced stock. In general, I am bearish on First Republic Bank, but I think it is suitable for short-term investors.

Follow $SIVB Silicon Valley Bank and $SBNY After Signature Bank went bankrupt one after another, Warren Buffett, CEO of Berkshire Hathaway, said that more banks may fail. As expected,$FRC First Republic Bank became the next domino of American regional banking.

Even today, some investors may be tempted to take a bargain-hunting risk on the shares of First Republic Bank. However, it is irrational to buy a stock just because it looks cheap, not because it provides good value.


After the serious financial problems of First Republic Bank were exposed in March this year, its founder Jim Herbert and CEO (Mike Rooffler) assured the company's depositors and investors that "the capital and liquidity situation of First Republic Bank is very strong." In hindsight, the capital position of First Republic Bank is obviously not so "strong", and investors still have not learned their lessons.

In my opinion, investors must conduct due diligence on the target enterprises and draw their own conclusions. After all, executives will not admit that their companies are going downhill. For better or worse, part of the job of company executives is to give positive meaning to any development and reassure shareholders.

Although the management of First Republic Bank is very optimistic, the market still smells dangerous signals. Many advisers of First Republic Bank have left their jobs and experienced a rapid outflow of deposits.

Now, the First Republic Bank can no longer completely control its own destiny. The bank entered the Federal Deposit Insurance Corporation (FDIC) takeover process and was acquired by JP Morgan Chase in a short time.

OTC trading

The shares of First Republic Bank can no longer be traded on the New York Stock Exchange. The company has been delisted from the New York Stock Exchange and is currently trading in FRCB shares on the over-the-counter market (OTC).

Investors who held shares in First Republic Bank before March this year now have to accept investment losses. But nonetheless, there are some speculators hoping to try their luck in FRCB stock, which looks cheap at around $0.45 a share.

But when investors buy stocks, they are actually buying part of the enterprise. Therefore, considering the fundamentals of First Republic Bank, I think we should stay away from this stock.

Some assets of First Republic Bank are over-leveraged and hold a large number of uninsured deposits. JPMorgan Chase may force First Republic Bank to rectify, but there are many other listed banks with better reputation than First Republic Bank.

In addition, First Republic Bank will undoubtedly be scrutinized by regulators this year. The company is not completely out of trouble yet.

Analyst's opinion

Let's look at Wall Street again. Based on the ratings of 2 buy, 10 hold and 2 sell, the shares of First Republic Bank received a consistent rating of "hold". First Republic Bank's average target price is $50.88, but this target price is likely to be lowered at some point.


Whether the First Republic Bank is valuable to JP Morgan Chase is still unknown. I think the First Republic Bank will end up with a lot of burdens and problems, including reputational damage and regulatory scrutiny.

As for the bank's stock, it is likely to remain volatile for the foreseeable future because of its very low price and its over-the-counter trading. This is no problem for short-term investors, but long-term investors should be cautious. On the whole, I don't think there is any need to buy the shares of First Republic Bank in a hurry.

Nathan Worden's avatar
Thanks for the analysis, I’m am in agreement with you— First Republic Bank is very risky right now for long term investors.
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