First Republic Bank: JPMorgan, PNC Reportedly Bidding On Assets Amid Rumored FDIC Seizure
The US banking sector is not yet out of the woods when it comes to the failure of regional banks it seems. On Friday, Reuters reported that the US Federal Deposit Insurance Corporation, or FDIC, was preparing to place First Republic Bank (NYSE: FRC) into receivership imminently.
Reported after hours on a day where First Republic had declined a substantial 43.3%, the news sent the stock tumbling even further, hitting a low of $1.76, before recovering slightly to close the extended session at $2.33, a decline of a further 33.6%.
The Wall Street Journal meanwhile reported late last night that JPMorgan Chase & Co (NYSE: JPM) and PNC Financial Services (NYSE: PNC) are currently bidding to buy the lender in a transaction that would reportedly follow a government seizure of First Republic. This follows after the two firms were involved in a $30 billion capital infusion for First Republic that occurred in mid March, with funds coming from a total of 11 banks.
Notably, a seizure and sale of the bank would result in equity holders being wiped out entirely. It would also likely result in the FDIC being left holding on to any “bad assets” held by First Republic, while the acquirer would simply take the good assets.
JPMorgan and PNC reportedly have a Sunday deadline to submit bids for the bank, according to Bloomberg. The request for bidding was reportedly issued late Thursday.
The resumption of the fall in First Republic follows the firm reporting its earnings on Monday. The company was hammered by the markets after it was revealed that its deposits had fallen over $100 billion, excluding the recent $30 billion infusion by a consortium of banks.
The company is said to be cutting executive salaries, reducing office space, and laying off up to 25% of its workforce in an effort to cut expenses following its recent struggles.
Deposits at the end of the quarter sat at $104.47 billion, down from $176.43 billion at the start of the year.
If it is indeed seized by the FDIC, it would be the third bank failure in two months, following the failures of Silicon Valley Bank and Signature Bank in March.
Information for this briefing was found via Reuters, Bloomberg, Wall Street Journal, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
