A First Republic bank branch in Manhattan on April 24, 2023 in New York City.
Spencer Platt | beautiful pictures
Regional banks in trouble First Republic said on Monday that its deposits fell 40.8% to $104.5 billion in the first quarter, which saw the collapse of two other mid-sized banks and sparked fear from customers about the bank’s collapse on a large scale.
The deposit flight at First Republic was worse than Wall Street expected with analysts estimating the quarter-end figure at around $145 billion, according to consensus estimates from FactSet’s StreetAccount. Analyst deposit estimates range from $100 billion to $206 billion, according to FactSet.
The deposit figure at the end of March including $30 billion in term deposits from 11 larger banks was announced on March 16 in an attempt to stabilize the broader banking system. If those deposits were excluded, the First Republic’s deposits would be reduced by more than 50%.
First Republic said Monday that deposit flows have stabilized.
“Deposit activity started to stabilize starting the week of March 27, 2023, and remained steady through Friday, April 21, 2023. Total deposits were $102.7 billion as of March 21. April 2023, down only 1.7% from March 31, 2023, primarily reflecting seasonal customer tax payments that occur each April,” the release said.
As part of the earnings announcement, First Republic announced that it is cutting costs through cutting executive compensation, downsizing office space and cutting headcount by 20-25%. in the second quarter.
The First Republic also said in the release that it is “pursuing strategic options to accelerate progress while strengthening its capital position.” The shares were up 12% during regular trading, down about 6% in after-hours trading.
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