Glancy Prongay & Murray LLP (“GPM”), announces that it has filed a class action lawsuit in the United States District Court for the Northern District of California, Case No. 3:23-cv-03096, on behalf of persons and entities that purchased or otherwise acquired First Republic Bank (“First Republic” or the “Company”) (OTC: FRCB) securities, or sold put options, between January 14, 2021 and April 27, 2023, inclusive (the “Class Period”). Plaintiff pursues claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).
Investors are hereby notified that they have until June 23, 2023 to move the Court to serve as lead plaintiff in this action.
If you suffered a loss on your First Republic investments or would like to inquire about potentially pursuing claims to recover your loss under the federal securities laws, you can submit your contact information at www.glancylaw.com/cases/First-Republic-Bank/. You can also contact Charles H. Linehan, of GPM at 310-201-9150, Toll-Free at 888-773-9224, or via email at shareholders@glancylaw.com or visit our website at www.glancylaw.com to learn more about your rights.
On October 14, 2022, the Company announced disappointing third quarter 2022 financial results, reporting that First Republic’s NII growth had slowed to 20.6% year-over-year (down from 24.1% year-over-year growth the prior quarter) and its NIM had plummeted to 2.71% (down from 2.80% the prior quarter). First Republic attributed the decrease in the Company’s NIM to “average funding costs increasing more rapidly than the offsetting increase in the average yields on interest-earning assets.” On this news, First Republic’s stock price fell $22.14 per share, or more than 16%, to close at $112.59 per share on October 14, 2022.
Then, on March 8, 2023, SVB Financial Group (“SVB”), the parent company of Silicon Valley Bank announced that it was seeking to raise approximately $2.25 billion in capital due to continued higher interest rates, pressured public and private markets, and elevated levels of deposit attrition. SVB also disclosed that it had sold “substantially all of its available for sale securities portfolio,” incurring a loss of approximately $1.8 billion on the sale. In response, SVB’s depositors rushed to withdraw their funds out of fear over SVB’s solvency. On March 10, 2023, SVB collapsed, and regulators seized control of the bank, placing SVB in FDIC receivership. Investors immediately began to question First Republic’s ability to withstand the interest rate environment and remain solvent. On this news, First Republic’s stock price fell $83.79 per share, or more than 72% over three consecutive trading sessions, to close at $31.21 per share on March 13, 2023.
Then, on March 15, 2023, S&P Global Ratings (“S&P”) downgraded its long-term issuer credit rating and preferred stock issue rating for First Republic due to the risks of deposit outflows leading to increased funding costs. That same day, Fitch Ratings (“Fitch”) announced that it had also downgraded First Republic’s credit rating, observing that “FRC’s funding and liquidity profile has changed and represents a ‘weakest link.’” On this news, First Republic’s stock price fell $8.47 per share, or more than 21%, to close at $31.16 per share on March 15, 2023.
Then, on April 24, 2023, after the market closed, First Republic released its first quarter 2023 financial results and announced that, in response to “unprecedented deposit outflows, the bank enhanced its financial position through access to additional liquidity from the Federal Reserve Bank, the Federal Home Loan Bank, and JP Morgan Chase & Co.” Additionally, the Company disclosed that it was “taking steps to reduce expenses, including significant reductions to executive officer compensation, condensing corporate office space, and reducing non-essential projects and activities. The Bank also expects to reduce its workforce by approximately 20-25% in the second quarter.” On this news, First Republic’s stock price fell $7.90, or 49.4%, to close at $8.10 per share on April 25, 2023.
On April 28, 2023, various media outlets reported that the FDIC was in talks with several banks for bids on First Republic in the event it went into receivership. On this news, the price of First Republic common stock fell $2.68 per share, or more than 43%, to close at $3.51 per share on April 28, 2023.
On May 1, 2023, California’s Department of Financial Protection and Innovation (“DFPI”) announced that it had taken over First Republic and appointed FDIC as receiver. FDIC officials then accepted a bid from JPMorgan “to assume all deposits, including all uninsured deposits, and substantially all assets of First Republic Bank,” the DFPI stated. On this news, the price of First Republic common stock declined $3.19 per share, or more than 91%, to close at $0.32 per share on May 4, 2023.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants misrepresented the strength of the Company’s balance sheet and liquidity position, while also understating the significant pressure rising interest rates posed to First Republic’s business model. Defendants also misrepresented the strength of the Company’s ability to deliver consistent results across different interest rate environments, the diversity of the Company’s deposit funding base, and the Company’s ability to generate NII growth and maintain stable NIM, and as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
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If you purchased or otherwise acquired First Republic securities, or sold put options, during the Class Period, you may move the Court no later than June 23, 2023 to ask the Court to appoint you as lead plaintiff. To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class. If you wish to learn more about this action, or if you have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Charles Linehan, Esquire, of GPM, 1925 Century Park East, Suite 2100, Los Angeles California 90067 at 310-201-9150, Toll-Free at 888-773-9224, by email to shareholders@glancylaw.com, or visit our website at www.glancylaw.com. If you inquire by email please include your mailing address, telephone number and number of shares purchased.
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