First Republic Bank's Shares Drops 50% Triggering Multiple Trading Halts

First Republic Bank, a regional bank that has witnessed a significant decline in its share price, with the stock falling by 50% on Friday.

According to sources familiar with the matter, the Federal Deposit Insurance Corporation (FDIC) is likely to take control of the bank as a means of resolution. As a result, the stock plummeted by around 40%, experiencing multiple halts due to high volatility. This year, the bank's stock has plummeted by over 90%, following the collapse of two regional lenders in March, which has led to a loss of investor confidence in the bank.

According to reports, the FDIC is asking other banks for potential offers on First Republic in the event that the bank is taken over by the regulator and there is yet a chance for an alternative to receivership.

First Republic told Faber on Friday that "we are engaged in discussions with multiple parties about our strategic options while continuing to serve our clients."

According to a Reuters report, representatives from the Federal Reserve, Treasury Department, and FDIC are working together to arrange meetings with various banks to establish a rescue plan for the First Republic. Prior to releasing its first-quarter results, which revealed a deposit decline of approximately 40%, First Republic's shares ended at $16 on Monday. However, over the following two days, the stock plummeted over 60%, reaching an unprecedented nadir.

First Republic is a regional bank that serves high-net-worth individuals and their businesses, notably by providing low-interest mortgages to those clients.

Since the Fed started raising rates last year, the market value of these mortgages and other long-term assets on the bank's balance sheet have decreased, which has caused investors to worry that the bank would have to report a sizable loss if required to sell these assets to raise cash.

Following the failures of Silicon Valley Bank and Signature Bank in March, the bank experienced a massive outflow of deposits. Since then, First Republic has received assistance from the biggest banks in the country, including JPMorgan Chase, in the form of $30 billion in time deposits.