First Republic Bank saw deposits plummet $72 billion in the first three months of the year as the California lender was engulfed in the regional-banking crisis that led to the collapse of three of its peers.
Deposits sank to $104.5 billion as of March 31, down 41% from the end of 2022, even after the countrys largest lenders parked $30 billion of their own cash with the San Francisco-based bank in an effort to shore up its finances. That compares with the $137 billion analysts in a Bloomberg survey had forecast.
The company said it plans to reduce the size of its balance sheet and cut its workforce by as much as 25% as part of its efforts to stabilize the company and in response to the unprecedented deposit outflows. Also, the bank is pursuing strategic options to expedite its progress while reinforcing its capital position.
The results are the first fulsome update from First Republic since investors pulled back from the stock in the midst of a crisis that engulfed regional lenders nationwide last month.
The turmoil started with the collapse of SVB Financial Groups Silicon Valley Bank, which fell into government receivership after a sale of available-for-sale securities spooked depositors in the venture capital community. The move put a spotlight on banks sitting on large piles of unrealized losses on their balance sheets that might have to take similar action if faced with excessive withdrawals.
Indeed, First Republic ended last year with almost $27 billion in markdowns on loans and a bevy of unrealized losses on Treasuries and other long-dated bonds on the companys balance sheet. That was far greater than the roughly $13 billion in tangible common equity it had at the time.
At the height of the crisis in March, 11 of the countrys largest banks banded together to deposit $30 billion of their own cash into First Republic. The move was meant to shore up confidence in the beleaguered lender.
