On Wednesday, shares of First Republic Bank reached an all-time low, pushing the bank's market capitalization below $1 billion. The stock rebounded slightly on Thursday but suffered a 64% decline over two preceding sessions after the troubled lender's earnings report revealed plummeting deposits and raised concerns about its survival prospects.
To be considered for inclusion in the S&P 500 Index, companies must have a market cap of at least $12.7 billion - an index that has more than $15 trillion worth of investment assets tracking it. If First Republic Bank were to lose its place in the S&P 500, it would likely exacerbate the stock's downward spiral due to various funds being forced to sell their shares.
First Republic Bank's share prices have risen following reports of 'rescue' talks between the bank and the Federal Deposit Insurance Corporation (FDIC). US officials are coordinating urgent discussions aimed at saving this beleaguered regional bank since private-sector efforts haven't yet produced results. However, these conversations remain contentious as banks hesitate to risk shareholders without government involvement.
The US government is reportedly working alongside officials from both Federal Reserve and FDIC to provide a lifeline for First Republic Bank by arranging meetings with other financial institutions.
In Friday Digest: "Shares of First Republic Bank plummeted 43 percent while federal regulators attempted to devise a strategy preventing collapse," stated John Adams from Treasury Department at one meeting where representatives from several banks gathered together with members from Federal Reserve Board and FDIC in order discuss potential rescue packages that could help save struggling institution which might otherwise face federal receivership takeover by itself under supervision if no viable solution emerges soon enough out current negotiations ongoing among key stakeholders involved during this critical moment facing increased pressures since banking crisis started back earlier year around March period when company saw dramatic decrease value down just barely above three dollars per share after announcing quarterly earnings results far worse than market analysts had anticipated.