It's pretty fair to say that 2023 has not been a great year for the banking industry. The failures of Silicon Valley Bank and Signature Bank sent shockwaves through the sector earlier in the year, causing many investors to unload their bank stock positions in their brokerage accounts.
But I did something different. Back in mid-March, I decided to buy shares of First Republic Bank when the price started to fall due to the company's increasing financial woes. The way I saw it, if I could scoop those shares up at a bargain, it was worth doing so, because what was the likelihood of yet another bank failing?
But lo and behold, First Republic has joined the list of shuttered banks in 2023. And now I'm sitting on a big loss in my brokerage account.
An impulsive move I now regret
Although I believe in researching stocks before buying them, purchasing shares of First Republic was something I did on a whim. I knew the bank was not in good shape when I bought those shares, and I knew the banking industry overall was iffy. But I figured I'd take a chance on First Republic given that its stock price had recently plunged so much, thinking things had to get better from there.
Well, that gamble didn't work out well for me. I wound up buying shares of First Republic at about $30 apiece. Now that the bank has failed, those shares are pretty much worth $0.
See, what actually happened with First Republic is that the federal government seized its assets and sold them to JPMorgan Chase. JPMorgan will take in all of the assets, like savings accounts, that were being housed at First Republic.
And because First Republic was FDIC-insured and JPMorgan is covering its deposits, consumers with savings at First Republic should be made whole. But JPMorgan will not be taking on First Republic's corporate debt or stock. So shareholders like myself are looking at losses.
Lesson learned
Thankfully, when I bought shares of First Republic on a whim, I didn't go too heavy on them. So as of now, I'm only sitting on a $265 loss.
It's a sum of money I'm hardly thrilled to say goodbye to. But it's also not a catastrophic amount. Plus, I intend to try to make the best of it by using that loss to my advantage from a tax perspective.
I can use that loss to offset other capital gains I end up liable for in my brokerage account this year. And if I don't have capital gains to offset, I can use that loss to offset $265 of regular income. So either way, there's a silver lining.
Still, one thing I'm taking away from this experience is that when a stock's price utterly plunges overnight, there's a reason for it. And what might look like a buying opportunity is often anything but.
In this case, I took a chance and it didn't work out, but the financial damage was minimal. I'll be sure to remind myself of this incident, though, the next time I'm tempted to scoop up what looks like a bargain stock.
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FAQs
Since First Republic was incapable of covering the deposits of all its customers, the bank was closed by the FDIC and its stock delisted from the NYSE.
What will happen to my FRC shares? ›
The shareholders are most likely wiped out. The stock has stopped trading as of Monday, and shareholders won't receive stock in JPMorgan, according to a JPMorgan spokesman. The New York Stock Exchange said on Tuesday that it is delisting First Republic's shares.
Will First Republic shareholders get anything? ›
What about First Republic's stock? The stock will be delisted. When a bank is seized by the government, its common shareholders are wiped out. In this case, First Republic shareholders, along with its debt holders, will not receive anything.
Should you buy First Republic Bank stock now? ›
Is FRCB Stock a Buy, According to Analysts? Turning to Wall Street, FRCB stock is a Hold based on two Buys, 10 Holds, and two Sell ratings. The average First Republic Bank price target is $50.88, but this target is likely to come down at some point.
Is FRC stock worthless? ›
First Republic customers will keep all of their money. But the company's stock is worth zero in its current form.
Will FRC be delisted? ›
Republic First Bancorp in Philadelphia is being delisted from the Nasdaq stock market due to its failure to file a 10-K annual report for 2022 with the Securities and Exchange Commission.
Can I still sell my FRC stock? ›
If you held FRC shares before delisting, you will still own those shares after delisting. However, because the stock is no longer listed on an exchange, you may find it more difficult to sell your shares, and the price of your shares may be subject to greater volatility.
What happens to my shares in an acquisition? ›
If the transaction is being paid in all cash, the shares should disappear from your account on the date of closing, and be replaced with cash. If the transaction is cash and stock, you'll see the cash and the new shares show up in your account. It's pretty much that simple.
What happens to my delisted shares? ›
Though delisting does not affect your ownership, shares may not hold any value post-delisting. Thus, if any of the stocks that you own get delisted, it is better to sell your shares. You can either exit the market or sell it to the company when it announces buyback.
What is the future of FRC stock? ›
FRC Stock 12 Month Forecast
Based on 16 Wall Street analysts offering 12 month price targets for First Republic Bank in the last 3 months. The average price target is $56.50 with a high forecast of $150.00 and a low forecast of $8.00.
Shares of First Republic Bank were halted following news early Monday that regulators seized the bank and sold the bulk of its operations to JPMorgan.
Is anybody buying First Republic Bank? ›
First Republic is now part of JPMorgan Chase.
We remain committed to our clients. Learn more. We remain committed to our clients. Learn more.
What happens to my money if First Republic fails? ›
First Republic's failure was due to a run on deposits following the collapses of Silicon Valley Bank and Signature Bank. JPMorgan Chase acquired First Republic Bank on May 1, 2023. If you had insured or uninsured money in First Republic accounts, your funds are safe and now managed by JPMorgan Chase.
Which funds are taking big losses on First Republic Bank stock? ›
Which Funds Are Taking Big Losses on First Republic Bank Stock?
- Marsico Midcap Growth Focus Fund. (MXXIX)
- Morgan Stanley Instl US Core R6. (MUOSX)
- Harding Loevner Global Equity Advisor. (HLMGX)
- SPDR® S&P Regional Banking ETF. (KRE)
- ClearBridge Mid Cap. ()
First Republic stock plunged by nearly 50% at the close of trading on Tuesday, hitting a new record low after the embattled lender reported late Monday that its total deposits fell 41% in the first quarter, to $104.5 billion, even after a consortium of banks stepped in with $30 billion to prevent the regional lender ...
What is the future of FRCB stock? ›
The 34 analysts offering price forecasts for First Republic Bank have a median target of 117.71, with a high estimate of 200.00 and a low estimate of 8.00. The median estimate represents a 0.03 difference from the last price of 0.03.
What is the outlook for First Republic Bank stock? ›
FRC Stock 12 Month Forecast
Based on 16 Wall Street analysts offering 12 month price targets for First Republic Bank in the last 3 months. The average price target is $56.50 with a high forecast of $150.00 and a low forecast of $8.00. The average price target represents a 1509.69% change from the last price of $3.51.
What is the symbol for First Republic Bank preferred stock? ›
FRCKL - First Republic Bank - Preferred Stock (OTCPK) - Share Price and News.
