First Republic Bank

First Republic Bank (NYSE: FRC) is a commercial bank and trust company. The Bank specializes in providing services, including private banking, private business banking, real estate lending and wealth management services, including trust and custody services, to clients in selected metropolitan areas in the United States. It operates through two segments: Commercial Banking and Wealth Management.

Recent Business Updates:

• Reported First Quarter 2023 Results: Revenues were down 13.4% year over year to USD 1.2 billion, while net interest income fell 19.4% to USD 923 million. Diluted profits per share were USD 1.23, down 38.5%, while net income was USD 269 million, down 32.9%. The book value per share increased 10.4% to USD 76.97. The efficiency ratio was 70.4%, up from 63.9% for the preceding quarter, while Net interest margin was 1.77%, down from 2.45%. Tier 1 leverage ratio was 8.25%, while the Tier 1 ratio for common equity was 9.32%.
• Reinforcing Confidence in First Republic Bank: On March 16, 2023, Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, PNC Bank, State Street, Truist, and U.S. Bank would deliver uninsured deposits totalling USD 30 billion to First Republic Bank, according to the bank's announcement. The fact that the biggest banks in America are backing First Republic shows that they have faith in the company's capacity to continue offering unwaveringly great service to its customers and communities.
• First Republic Bank Strengthened and Diversified Liquidity: First Republic Bank said that by gaining access to more liquidity from the Federal Reserve Bank and JPMorgan Chase & Co., it had further improved and diversified its financial situation. First Republic's current liquidity profile is increased, diversified, and further strengthened by the extra borrowing capacity from the Federal Reserve, continuous access to funding through the Federal Home Loan Bank, and capability to obtain further financing through JPMorgan Chase & Co. Over USD 70 billion in total, unused liquidity is now available to fund operations. This does not include any extra liquidity that First Republic may be eligible for under the new bank term funding program that the Federal Reserve announced.

Technical Observation (on the daily chart)

With a past year correction of almost -95.91%, the price has been in a persistent downward trend over the long run. The price has corrected further by 61.31% since its Q1FY23 results announcement on April 24, 2023. Also, the momentum indicator RSI (14 period) displays an oversold value of 21.45, suggesting a further consolidation or a short-term relief rally. Price is also below the 200-day EMA, 100-day EMA, 50-day EMA and 20-day EMA trend-following indicators, which can serve as dynamic short-term resistances.

As per the above-mentioned price action, recent business updates, Q1FY23 results, and technical indicators analysis, a ‘Watch’ rating has been given to First Republic Bank at the closing price of USD 6.19 as of April 27, 2023, with further analysis once price will show some signs of recovery.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is April 27, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.