First Republic Bank (NYSE:FRC) stock jumped Tuesday after closing down 61.8% on Monday. First Republic shares rose amid a broader rebound in regional bank stocks.
Investors have been keenly watching First Republic following the stunning collapse last week of Silicon Valley Bank. One said he was rushing in to buy on the back of an intense shroud of fear that has spread across the financial markets.
“In times of chaos,” the investor writes, “rare opportunities to create alpha often materialize for a short period of time and I think First Republic has become a victim of fears that if not contained could become a self-fulfilling prophecy. There are legitimate concerns about the health of the U.S. financial system following the sudden collapse of Silicon Valley. This came in a week that also saw another FDIC-insured bank Silvergate liquidate. Hence, the music might be about to stop and the specter of cascading bank runs now haunts us all.”
“Bank runs are hard to stop,” the news release reads, “and First Republic’s sudden 80% move from $122 per share to $25 per share in three trading days reflects near-visceral market angst around the potential contagion effects from the liquidation of Silicon Valley Bank. Silicon Valley Bank was the 16th largest bank in the US and its collapse was catalyzed by factors that are not reflected by First Republic. Silicon Valley Bank’s deposits were majority constituted from VC-funded technology firms against just 4% of total deposits coming from technology-related companies for First Republic. No single sector formed more than 9% of First Republic’s total deposits.”
FRC opened Tuesday up $15.63, or 50.1%, to $46.84.