Moody’s Investors Service has been working overtime the last 24 hours. Last night, after having downgraded Signature Bank deep down into junk territory, it put six US banks on review for similar downgrades. Next in line, according to their watch list, is First Republic Bank, Zions, Western Alliance, Comerica, UMB Financial and Intrust Financial. Moody’s cited the “extremely volatile funding conditions for some US banks exposed to the risk of uninsured deposit outflows.”
Perhaps the most notable of the six, San Francisco-based First Republic, was described by Moody’s as having a “high reliance on more confidence-sensitive uninsured deposit funding,” high unrealized losses in its bond holdings and a “low level of capitalization” relative to its peers. Further, First Republic has a high percentage of their total deposits above the FDIC’s insurance limit; hence, the bank’s funding profile is “more sensitive to rapid and large withdrawals from deposits.”
