Thursday, April 18, 2024

Bank with a similar name to troubled First Republic is livid that its shares have tumbled too and insists ‘there are significant differences’

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A case of mistaken identity is sparking a selloff in Republic First Bancorp, which had fallen by more than 40% this month because investors have it confused with embattled First Republic Bank.

“We are NOT First Republic Bank,” Republic First Chief Executive Officer Thomas Geisel wrote in a letter on the company’s website. “It’s important to fully understand there are significant differences between these banks, other ‘Start-up’ or ‘Crypto-focused’ banks versus Republic Bank and the thousands of other community banks.”

The confusion isn’t new. The companies first butted heads over naming rights 20 years ago, and traders are still having trouble distinguishing between the two. But now it’s become a serious problem. 

On March 17, shares of Philadelphia-based Republic First plummeted as much as 28%, the most intraday since 1994. The company had no news to report that would trigger the selloff. But San Francisco-based First Republic did — it received a rescue package that Wall Street took as a warning, sending its shares down as much as 35%.  

While the names and ticker symbols may be similar, the two banks couldn’t be more different. Republic First is a regional bank focused on commercial and retail customers. First Republic, on the other hand, specializes in private banking for wealthy clients.

Republic First actually initially called itself First Republic following a 1996 merger between Republic Bank and First Executive. But that set off a dispute with the other First Republic, which was founded in 1985. Republic First resolved this by transposing its name, but left its FRBK ticker unchanged. First Republic goes by the symbol FRC. 

“In any other sort of time frame it would seem like the selloff is overdone, but it is hard to say for sure with the turmoil we’ve seen in banks overall,” Piper Sandler analyst Frank Schiraldi said.

Shares in Republic First jumped 14% on Friday, their biggest gain since Sept. 15, but finished the month of March down 32%. 

Mixups Happen

Republic First has a heavier concentration of retail investors than its peers, Schiraldi added, a class of traders who are more prone to confusing company names. Over 16 million of the bank’s shares changed hands in March, their highest monthly volume since their debut in 1998.

A spokesman for Republic First declined to comment. A First Republic representative did not respond to a request seeking comment. 

Of course, this isn’t the first time the market has seemed confused about the identities of similarly named companies.

In 2021, Elon Musk sparked a 5,100% rally in Signal Advance Inc. after he touted the unrelated messaging service Signal in a tweet. Later that year, Zevia PBC and Zenvia Inc. went public on the same day after pricing initial public offerings of the same exact size, the pair tumbled on its debut. A few months later, Meta Materials Inc., a retail trader favorite, rallied as the parent of Facebook changed its name to Meta Platforms Inc. 

During the pandemic in 2020, Fangdd Network Group Ltd. jumped 395% in a single day during a hot session for the real FANG stocks. Traders also bid up shares of marketing firm ClubHouse Media Group Inc. by more than 1,000% after confusing it with a similarly named app.

Also in 2020, Beijing-based Zoom Technologies Inc. more than doubled as investors tried to increase bets on video-conferencing platform Zoom Video Communications Inc. 

“The challenging part is we’re just running out of names that are distinctive,” A.J. Ericksen, then a corporate partner at Baker Botts, said at the time. “The retail investors start typing in ‘Zoom’ and get that.”

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