By Pam Martens and Russ Martens: September 14, 2023 ~

There may be a lesson here: don’t put the word “Republic” in the name of your bank; don’t hold a lot of uninsured deposits; and don’t have wads of unrealized losses on your investment securities.

If those lessons sound familiar, it’s because they played out in stunning fashion earlier this year when the second, third and fourth largest bank failures in U.S. history occurred.

One of those banks that blew up was First Republic Bank, which was put into FDIC receivership on May 1 and later sold, under much controversy, to the already behemoth JPMorgan Chase, the largest bank in the U.S. (JPMorgan Chase can’t seem to stay away from criminal charges. It thus far has notched five felony counts in its belt and is currently being sued by the U.S. Virgin Islands for “actively participating” in Jeffrey Epstein’s sex-trafficking of minors by providing him with more than $5 million in hard cash over a decade.)

Now, another bank with the word “Republic” in its name is in deep distress. The holding company of the current problem bank is Republic First Bancorp (trading ticker FRBK), whose federally-insured banking unit is Republic Bank.

As of June 30, according to regulatory filings, Republic Bank held $6 billion in assets and had 35 branches in Pennsylvania and New Jersey. More than half of its deposits were uninsured. Its SEC filings are not up-to-date but in its 10-Q (quarterly report) for the period ending September 30, 2022, it had this to say about those uninsured deposits:

“As of September 30, 2022, our 100 largest bank depositors accounted for, in the aggregate, 16% of our total deposits. The majority of these deposits are not insured by the FDIC and could present a heightened risk of withdrawal, if such depositors materially decreased the volume of those deposits, it could reduce our liquidity. As a result, it could become necessary for us to replace those deposits with higher-cost deposits or FHLB borrowings, which would adversely affect our net interest income and, therefore, our results of operations.”

Republic First Bancorp’s stock price has declined by 96 percent in the past 12 months as of yesterday’s closing price. Its stock was delisted from Nasdaq last month and it closed at a stunning 27-1/2 cents in over-the-counter trading yesterday.

Republic First Bancorp is far from the only bank holding company that has suffered huge share price losses over the past 12 months. HomeStreet (ticker HMST) has lost almost 75 percent of its market value. It’s a West Coast bank with 60 branch offices in Washington state, Oregon, California and Hawaii. As of June 30, it had assets of $9.5 billion.

PacWest Bancorp, parent of Pacific Western Bank, has also suffered steep share price losses, losing over 70 percent in the past year. Pacific Western Bank has 77 branches and $38 billion in assets as of June 30.

A much smaller bank holding company, Carver Bancorp, is the parent of Carver Federal Savings Bank, which has 7 branch offices in New York and $713 million in assets as of June 30, according to the FDIC. Its stock has lost 56 percent of its value over the past 12 months.

This is just a tiny sampling of the ongoing wreckage to equity values in the banking sector – raising the very serious question as to how this is all going to shake out before year’s end.