First Republic Shares Plunge After Earnings Report

First Republic Bank shares plummeted to record lows on Tuesday, on the heels of the company’s recently released earnings report. That report confirmed that the bank’s deposits declined by more than 40% in the first quarter of 2023. Tens of billions of dollars in deposits were pulled by customers in the aftermath of Silicon Valley Bank’s high-profile collapse.

In a press release on Monday, First Republic tried to reassure investors by announcing that the bank is currently evaluating “strategic options” designed to address its deposit concerns. According to reports, the total loss of deposits at First Republic would have exceeded $100 billion in the first three months of the year had the bank not received $30 billion in stabilization capital from 11 larger banks.

Investors reaction

Despite earnings reports that showed the company exceeding Wall Street expectations, investors were clearly rattled by the deposit news. Though share prices initially rose slightly during regular trading Monday, those prices declined sharply on Tuesday. By the afternoon, share prices had dropped to roughly $8.22 a share.

First Republic’s stabilization plans

According to reports from Reuters, the bank’s strategic planning includes a focus on cutting costs. That effort will include layoffs that could reach as high as 25% of the company’s employees over the second quarter of this year. Other cost-cutting measures include reductions in compensation for bank executives and office space expenses.

The company is also reportedly considering a sale of loans and securities to aid in its balance sheet restructuring. That asset sale could potentially raise as much as $100 billion.

First Republic CEO Mike Roffler highlighted his company’s commitment to address its current issues, promising that the bank is taking steps to meaningfully reduce our expenses to align with our focus on reducing the size of the balance sheet.”

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