First Republic Bank is likely headed for FDIC receivership after its shares plunged 50% Friday morning.
The company’s stock has plummeted more than 90% this year.
Shares of First Republic dropped sharply on Friday as hopes dimmed for a rescue deal that could keep the bank afloat.
Sources told CNBC’s David Faber that the most likely outcome for the troubled bank is for the Federal Deposit Insurance Corporation to take it into receivership. The stock slid 30% and was halted for volatility multiple times.
The stock has fallen more than 90% this year as investors have lost confidence in the bank after two regional lenders failed in March.
Other banks are being asked by the FDIC for potential bids on First Republic if the bank was seized by seized by the regulator, sources told Faber. There is still hope for a solution that doesn’t include receivership, according to those sources.
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.”
Trading of First Republic Bank stock halted for the second time on Wednesday after its share price plunged more than 50%.
Earlier this week First Republic Bank said customer deposits tumbled 40% in Q1 – worse than Wall Street expected.
Deposits fell to $104.5 billion in the first quarter but the bank says deposits have since stabilized.
According to CNBC, First Republic Bank will cut its work force by 25% and reduce its office space.
Last month First Republic was downgraded to junk by S&P.
Customers were lined up at a First Republic Bank in Los Angeles last month to withdraw their money after Silicon Valley Bank failed.
I’ve never seen a bank run in Brentwood Los Angeles in over 40 years — this is at first republic bank branch. People standing in rain pic.twitter.com/k31PqqpyO3
— pjb.eth (@Dr_PhillipB) March 11, 2023
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