Stocks of banks with Palm Beach County branches are recovering
First Republic Bank is the exception.
Happy Bank-Stock Bounceback Day to all who celebrate.
Well. Small celebration.
Bruised but standing, 11 banks with local branches lost an average 22.3 percent in share price between Wednesday the 8th, the day before Silicon Valley Bank collapsed, and Monday the 13th. They are recovering.
Except this one. San Francisco-based First Republic Bank expanded by catering to the wealthy, establishing branches in Jupiter, Palm Beach Gardens and Palm Beach.
It financed seven-figure second homes in Palm Beach. And it famously provided a 1.02 percent mortgage to Facebook’s Mark Zuckerberg.
Hours after being labeled junk by Fitch Ratings and Standard & Poor’s last week, its once-lofty $174 share price was in freefall, scraping the floor at $12.14 at yesterday’s closing bell.
Even the pledge of $30 billion in rescue cash from a consortium of major banks hasn’t stabilized Republic.
One lesson: Wealth can hurt. On a day last week when trading in Republic shares had to be halted because of volatility, Treasury Secretary Janet Yellen pointed out that depositors with $250,000 or less in their accounts are less likely to panic. Their money is insured by the FDIC.
People with much more money have much more incentive to pull out their cash.
First Republic’s lucrative niche catered to high-income clients who had no federal safety net. According to CBS News, 68 percent of Republic’s deposits are not FDIC-insured.
What’s next: Heading into Monday evening, JPMorgan CEO Jamie Dimon was leading another round of talks with banks trying to keep Republic from going under.
A short list of villains, near-villains and not-villains triggering the SVB bank run, here.
This story was updated to correct the first name of Mark Zuckerberg. Thank you to Stet reader Eric W. for pointing out our error.
You’re reading a story from Stet Media Group. Support Palm Beach County journalism in the public interest with a free or paid subscription.