First Republic Bank, the most troubled U.S. lender since last month’s banking crisis, on Monday revealed the grim details of just how troubled its business is — and nothing else.
In the bank’s much-anticipated first update to investors since entering free fall over the past month and a half, its leaders did not say much. In a conference call with Wall Street analysts to discuss its first-quarter results, the bank’s executives gave just 10 minutes of prepared remarks and declined to take questions, giving investors and the public few answers about how to get out of its doldrums.
One thing’s for sure: the bank, which caters to well-heeled clients along the coast, is hanging on by a thread. In the first quarter, it lost a dramatic $102 billion in customer deposits — more than half of the $176 billion it held at the end of last year — not including the temporary $30 billion lifeline it received from the nation’s biggest banks last month.
First Republic reported quarterly profit of $269 million, down a third from a year earlier. Its shares fell 15 percent in extended trading following the release of its results.
The bank said deposit outflows had largely stopped in the last week of March. Between March 31 and April 21, the bank said it lost only 1.7 percent of its deposits, most of which was related to tax payments by its customers.
The bank’s slide began nearly six weeks ago, when mid-sized lenders Silicon Valley Bank and Signature Bank were taken over by federal regulators after customers pulled large chunks of their deposits. San Francisco-based First Republic was widely seen as the next lender likely to collapse because it had as many customers as Silicon Valley Bank — and many of its accounts held more than the $250,000, limit. For federal deposit insurance.
Shares of First Republic rose more than 10 percent on Monday ahead of its earnings report, but have fallen more than 85 percent since mid-March.
First Republic has been negotiating with financial advisers and government officials to come up with a plan to save itself that could involve selling the bank or parts of it or raising new capital.
Much remains to be done. The bank said on Monday it would cut a quarter of its workforce and reduce executive compensation by an unspecified amount.