Stay away.

 

Thousand of deals out there. First Republic Bank is not one of them.

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WSJ

First Republic Bank Shares Sink More Than 40% After Earnings Report. Trading is halted several times after the stock tumbles

First Republic Bank FRC -49.38% decrease; red down pointing triangle shares sank more than 40% Tuesday afternoon, a day after it reported first-quarter results that showed a deposit hemorrhage in March worse than expected.

The stock was recently at $9.34, on track for a new low. Trading in First Republic shares was halted several times Tuesday afternoon after the stock tumbled.

The bank was the worst performer in the S&P 500, and the most actively traded stock in the index, according to Dow Jones Market Data.

Though regional banks in general have suffered since the collapse of several small or midsize lenders last month, First Republic has been the focus of market anxiety following a surge in deposit outflows last month. The firm said Monday it was exploring “strategic options” following its disclosure that it lost around $100 billion in deposits, though analysts and investors question how much room for maneuver the firm actually has at this point.

In short, investors are worried about the grim math behind First Republic’s operations.

The bank is paying more to borrow money. But many of the loans it made to customers carry long-term, fixed interest rates, putting a continued squeeze on the bank.

First Republic said Monday that while its average account sizes decreased, it retained 97% of client relationships from the start of the first quarter. It also announced a number of changes, including job cuts, meant to right the ship.

Still, the results put First Republic, regulators and its big-bank peers at loggerheads. While First Republic’s basic business model is broken, the bank is determined to find some way to salvage what is left.

Those who could aid the bank may be wary of coming to the rescue.