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Business

First Republic Bank stock plunges 49% after customers yank $100B in deposits

By
Ariel Zilber
Published April 25, 2023
Updated April 25, 2023, 4:22 p.m. ET

Shares of First Republic Bank slumped 49% on Wall Street on Tuesday after the lender reported that its deposits shrank by $100 billion in the first quarter of this year.

Analysts at Wells Fargo said First Republic’s reported deposit outflows were much worse than Wall Street estimates and at a “level that could prove very hard to come back from.”

The San Francisco-based regional lender saw depositors pull their funds en masse during the first three months of the year which saw two other banks — Silicon Valley Bank and Signature Bank of New York — implode within days of each other.

The Post has sought comment from First Republic.

Other bank stocks were down Tuesday. JPMorgan Chase shares slipped 2.2% while Zions Bancorporation stock fell 5.5%.

The collapse of SVB and Signature fueled fears that other smaller lenders would be the next dominoes to fall — prompting larger banks such as JPMorgan Chase to pool together a $30 billion dollar rescue package to prop up First Republic.

Wall Street analysts continue to see gray skies ahead for the bank, expecting challenges to extend through the year after the two bank failures last month created a liquidity crunch at a slew of regional lenders.

Shares of First Republican Bank were down some 29% in early morning trading on Wall Street on Tuesday.
Shares of First Republican Bank were down some 29% in early morning trading on Wall Street on Tuesday. Getty Images

First Republic reported first-quarter results on Monday that showed it had $173.5 billion in deposits before Silicon Valley Bank failed on March 9.

On April 21, it had deposits of $102.7 billion, including the $30 billion the big banks, led by JPMorgan Chase, deposited.

It said since late March, its deposits have been relatively stable.

“We continue to take steps to strengthen our business,” Jim Herbert, the bank’s executive chairman and Mike Roffler, the bank’s CEO, said in a joint statement.

First Republic reported that its deposits shrank by $100 billion in the first quarter of this year.
First Republic reported that its deposits shrank by $100 billion in the first quarter of this year. AFP via Getty Images

Bank executives did not take questions from industry analysts during a call Monday about the quarterly results.

Before the failure of Silicon Valley Bank, First Republic had a banking franchise that was the envy of most of the industry.

Its clients, mostly the rich and powerful, rarely defaulted on their loans.

The bank made much of its money-making low-cost loans to the rich, which reportedly included Meta Platforms CEO Mark Zuckerberg.

Even through the crisis triggered by the collapse of the two banks, First Republic’s book of loans more than 90 days past due was zero.

Concerns over the stability of the banking sector have abounded since the collapse last month of Silicon Valley Bank and Signature Bank of New York.
Concerns over the banking sector’s stability have abounded since the collapse last month of Silicon Valley Bank and Signature Bank of New York. BACKGRID

But its franchise became a liability when bank customers and analysts noted that the vast majority of First Republic’s deposits, like those in Silicon Valley and Signature Bank, were uninsured — that is, above the $250,000 limit set by the FDIC — which meant that if First Republic were to fail, its depositors would be at risk of not getting all their money back.

The bank said its profits fell 33% in the three-month period that ended March 31 from a year earlier, and revenues were down 13%.

With Post Wires