Summary:
- The Fed’s liquidity measures have so far worked to prevent further deposit runs.
- A serious of 8K disclosures lately were meant to calm investors, but investors remain on edge.
- According to a WSJ report, First Republic Bank may have lost $70B in deposits lately.
- FRC remains a high-risk, high-potential community bank stock, and I am reaffirming my speculative buy rating.
A couple of things have happened to First Republic Bank (NYSE:FRC) since I submitted a contrarian call to buy the community bank’s shares about two weeks ago. FRC stock has whiplashed ever since and the bank has seen significant deposit outflows in the days following the bank failure of Silicon Valley Bank. A series of 8K disclosures were meant to reassure investors that First Republic Bank has sufficient liquidity to manage a heightened level of deposit outflows, but investors have chosen to bet against the bank and they clearly expect the worst to happen. I continue to believe that First Republic Bank is not at risk of going out of business and that the common stock potentially offers very risk-tolerant investors triple-digit return potential!
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