From Barron's via MSN, April 24:
“It’s probably the most important earnings report in the history of the bank,” says Morningstar analyst Eric Compton.
Investors will be looking to see how far the regional bank’s deposit base has fallen, and whether it is even still profitable. Compton will be gauging the long-term health of the bank. Shares of First Republic (ticker: FRC) are down 88% so far this year.
“There are a lot of questions if the bank will be profitable after Q1,” he says. “If they are not, what is the plan? What will they do about it? Is there a way out of it?”
It is an astounding change in fortune for First Republic (ticker: FRC), a regional bank that found success by focusing on offering private banking and wealth management services to wealthy clients in coastal urban areas.
First Republic, founded in 1985 and based in San Francisco, “is one of the more unusual banks under our coverage,” Compton wrote March 16. “The bank was exclusively led by its founder, Jim Herbert, until mid-2021, and has been able to churn out remarkably high organic growth year after year, resulting in compounded asset growth of roughly 20% over the past 10 years compared with an industry growth rate of closer to 5%,” Compton wrote.
Maelstrom. The company’s fortunes, however, changed in March following the collapse of Silicon Valley Bank, which sparked a rout in regional bank stocks and prompted bank customers to pull deposits. First Republic was something of an innocent bystander, says Compton. Nonetheless, it got caught up in the maelstrom and the company’s stock hasn’t recovered. Shares of First Republic closed above $14 on Friday, far below their 52-week high of $171.
The company, which had $176 billion in total deposits at the end of the fourth quarter, has tried to shore up its business—and gotten help from competitors. A consortium of big banks threw First Republic a lifeline March 16, moving uninsured deposits totaling $30 billion to the beleaguered bank. At the time, First Republic said it had a cash position of approximately $34 billion. When deposit outflows exceed cash on hand, First Republic can access other liquidity sources such as Federal Home Loan Bank loans. But it is a costly solution....
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"Liquor Sales Will Be Brisk on Wall Street Ahead of First Republic Bank’s Earnings Report on Monday"
