Why First Republic Shares Are Skyrocketing Premarket Monday

First Republic Bank shares took off in the premarket on Monday, encouraged by the now-defunct Silicon Valley Bank finding a buyer in First Citizens Bancshares Inc. (NYSE: FCNC).

What Happened: In premarket trading, First Republic shares jumped 31.07% to $16.20, according to Benzinga Pro data. First Citizens also rallied in the premarket, gaining close to 25%.

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Raleigh, North Carolina-based regional bank First Citizens announced early Monday that it has entered into an agreement with the Federal Deposit Insurance Corporation, or FDIC, to purchase out of its receivership, all loans and certain other assets and assume all customer deposits and certain other liabilities of SVB.

The transaction is structured as a whole bank purchase with loss share coverage. The sale was done through a competitive bidding process.

SVB’s proposed sale to one of its peers should infuse confidence in the strength of regional banks.

This could also be good news for the First Republic, which averted a collapse due to support from some of the largest private banks.

Reacting to the news, CNBC host Jim Cramer said, “First Citizens will give a blueprint for any bank to buy First Republic. At last FDIC is up to speed.”

“First Citizens will be an interesting match with the folks in the Valley. I think that this shows there is real value in the carcass.”

First Republic shares have plunged about 90% since March 8 when the banking crisis started with the disclosure from SVB that it needs to raise financing.