Is First Republic Bank (NYSE:FRC) stock a bargain just because is has cratered in 2023? Don’t be too eager to invest in First Republic Bank now. As the company struggles to deal with financial issues, its shares could actually be cheap for good reasons.

As always, investors must understand the difference between price and value. Ask yourself: What value does First Republic Bank offer to its shareholders now? What words describe the company’s reputation among its depositors, not to mention the shareholders who are deep underwater?

Sure, there are still perma-bulls out there who believe a miracle could happen and First Republic Bank could be spared from financial and reputation damage. However, sensible investors need to be realistic and objectively assess First Republic’s future prospects, which are far from ideal.

Banking Sector Shock Destroys FRC Stock

By now, you’ve probably caught wind of the disasters that befell regional banks like SVB Financial Group (OTCMKTS:SIVBQ) subsidiary Silicon Valley Bank and Signature Bank (OTCMKTS:SBNY). Chances are, many long-term investors of those banks will never get back to breakeven.

First Republic Bank’s loyal investors are also in bad shape now. FRC stock once traded at $219 per share, believe it or not. This year, it has fallen below $15.

It’s up to you to decide whether the magnitude of the share-price drawdown is justified. Consider this, though: Around two-thirds of First Republic’s deposits were in uninsured accounts, according to The Wall Street Journal.

First Republic Bank had too many uninsured deposits. It’s also likely that First Republic over-leveraged itself on bonds, much like Silicon Valley Bank and Signature Bank did. So now, First Republic Bank’s investors are sitting on deep share-price losses and are probably not happy that the company suspended its dividend.

First Republic Bank Rescue Package Isn’t Free Money

You may have learned that a group of 11 big banks pledged $30 billion worth of deposits to First Republic Bank. At first glace, this sounds like terrific news that solves First Republic’s problems.

Let’s not jump to conclusions, though. These are deposits, not free gifts to First Republic Bank. The depositors aren’t charities, and undoubtedly expect to get their money back with interest.

First Republic Bank’s financial issues won’t just go away anytime soon. First Republic’s paper losses are probably between $9.4 billion and $13.5 billion. And, don’t count on a takeover saving First Republic Bank soon, as the company reportedly isn’t seeking a buyer.

Don’t be surprised if First Republic Bank resorts to a large-scale share sale to shore up its capital position. Indeed, the WSJ reported that, according to “three people with knowledge of the process,” First Republic is considering deals that would involve “selling new shares.” Most likely, a massive share sale would have a dilutive effect, thereby putting negative pressure on the FRC stock price.

FRC Stock Is Definitely Not a Bargain

First Republic Bank’s shareholders may just have to accept their losses and move on. The company’s financial issues and reputational damage will probably persist for a long time.

Don’t expect the aforementioned $30 billion worth of deposits to keep First Republic Bank afloat over the long term. Finally, even at its drastically reduced price, FRC stock is definitely not a bargain. Prospective investors can avoid potential problems by choosing not to invest in First Republic Bank.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.