First Republic Bank Raises $125 Million to Strengthen Balance Sheet Amidst Silicon Valley Bank Collapse
Amidst the chaos of Silicon Valley Bank’s collapse, First Republic Bank and PacWest Bancorp have seen their share prices plunge as much as 61% and 53%, respectively.[0] In response, Republic First Bancorp, Inc. has entered into a private fundraising agreement to raise $125 million, which is expected to close in May of this year.[1] The agreement is led by Castle Creek Capital, which has committed $60.725 million, and Cohen Private Ventures, which has committed $30 million.[2]
Thomas Geisel, CEO of Republic First, commented on the capital raise, saying “This Capital Raise, which is a testament to the strength and potential of Republic First’s brand and business, positions us to accelerate execution of a strategic plan that targets profitability and enhanced value for stakeholders. We appreciate the confidence that Castle Creek has shown in our reconstituted leadership team and new vision. Partnering with an experienced bank investor allows us to not only improve our balance sheet, but also draw on Castle Creek’s extensive community banking acumen and success.”[3]
First Republic Bank is a full-service, state-chartered commercial bank, offering free checking, coin counting, ATM/debit cards issued on the spot, and access to more than 55,000 surcharge free ATMs worldwide.[4] The bank provides a wide range of residential mortgage products through its mortgage division, Oak Mortgage Company.[4] It also offers private banking, business banking, real estate lending, and wealth management, including trust and custody services.[5]
In comparison to Silicon Valley Bank, First Republic’s financial statements show marked differences in financial metrics. While Silicon Valley Bank’s debt was in securities, First Republic’s was in loans. Additionally, Silicon Valley Bank was sitting on heavy unrealized losses on its bond investments, while First Republic’s difference was in loans.[6]
The capital raise is conditioned on accredited investors committing to purchase an additional $34.275 million on the same terms.[3] Investors will come from a pool identified by the bank and its advisors.[4]
As the banking industry continues to grapple with the upheaval of Silicon Valley Bank’s collapse, investors are keeping a close eye on First Republic Bank and its efforts to shore up its balance sheet.
0. “First Republic, PacWest Plunge Amid Wider Bank-Stock Selloff” Yahoo Canada Finance, 10 Mar. 2023, https://ca.finance.yahoo.com/news/first-republic-pacwest-plunge-amid-145524735.html
1. “Republic First to receive $125 million capital bump from investors” American Banker, 10 Mar. 2023, https://www.americanbanker.com/news/republic-first-to-receive-125-million-capital-bump-from-investors
2. “Republic First Bancorp Raises $125 Million in Private Fundraising to Drive Profitability and Enhance Shareholder Value” Biz Report, 12 Mar. 2023, https://www.bizreport.com/banking/republic-first-bancorp-raises-125-million-in-private-fundraising-to-drive-profitability-and-enhance-shareholder-value
3. “Republic First Bank announces $125M capital raise” NJBIZ, 10 Mar. 2023, https://njbiz.com/republic-first-bank-announces-125m-capital-raise
4. “Republic First Announces $125 Million Equity Capital Raise to Support Execution of Strategic Plan to Drive Profitability and Enhance Shareholder Value” Yahoo Life, 10 Mar. 2023, https://www.yahoo.com/lifestyle/republic-first-announces-125-million-110000844.html
5. “First Republic Bank (NYSE:FRC) Given Consensus Recommendation of “Moderate Buy” by Analysts” MarketBeat, 6 Mar. 2023, https://www.marketbeat.com/instant-alerts/nyse-frc-consensus-analyst-rating-2023-03-06/
6. “First Republic, Regional Peers Try to Boost Confidence After SVB” BNN Bloomberg, 11 Mar. 2023, https://www.bnnbloomberg.ca/first-republic-regional-peers-try-to-boost-confidence-after-svb-1.1894060
