And the two sides of their balance sheet are such a mismatch that it looks impossible for them to be profitable in the current quarter.
The stock had closed the day session up $1.74 at $16.00. It gave that all back and more, settling in late trade at $12.46, fully 22% below the regular session close.
First up Barron's via MSN:
First Republic Deposits Plunge 41% in First Quarter
The first quarter was a maelstrom for First Republic Bank. It’s not over.
Deposits plunged by nearly $72 billion, or 41%, during a brutal first quarter that saw its customers yank money from the bank amid a crisis that felled three other lenders.
First Republic (ticker: FRC) said it had deposits of $104.5 billion at the end of the first quarter, a figure that included $30 billion of deposits received from large U.S. banks last month as a lifeline for First Republic, according to a company press release.
“They lost probably $100 billion in deposits when you exclude that $30 billion they received from those large banks,” said Morningstar analyst Eric Compton. That’s huge.”
Deposit outflows were “unprecedented,” Neal Holland, the bank’s chief financial officer, said.
The company said the outflows have slowed and that it is taking steps to right the ship, including “significant reductions” to executive compensation, cutting back on corporate office space, and layoffs. First Republic said it expects to reduce its workforce by approximately 20-25% in the secondquarter.
It is an astounding change in fortune for First Republic, a regional bank that found success by focusing on offering private banking and wealth management services to wealthy clients in coastal urban areas.
Things changed in March following the collapse of Silicon Valley Bank, which sparked a rout in regional bank stocks and prompted customers at other banks to pull deposits. First Republic was something of an innocent bystander, Morningstar’s Compton said. Nonetheless, it got caught in the crisis, and its stock is far from recovering. As of Monday’s close, shares were down 87% so far this year.
Before the bank reported results, its shares soared 12% during Monday’s regular session to close at $16, but they plunged during after-hours trading and were recently down18%.
On Monday, First Republic reported diluted earnings per share of $1.23, down 38.5%. Analysts had expected EPS of $0.95, according to Factset.
The San Francisco-based bank had $176.4 billion in total deposits at the end of the fourth quarter, which at the time made it the 12th largest bank in the U.S., according to the company’s annual report.....
....MUCH MORE
And from Bloomberg:
First Republic Bank, Auditor KPMG Targeted in Investor Suit
- Bank officials accused of overstating safety of business model
- Lawsuit ties First Republic’s fate to SVB collapse in March First
Republic Bank and its auditor KPMG were sued by shareholders over alleged misstatements ahead of last month’s regional-banking crisis.
The lawsuit, filed Monday in San Francisco federal court by a Florida-based public pension fund, appears to be first targeting the bank since it was crushed in early March by unprecedented outflows. First Republic, its executives and its auditor are accused of repeatedly overstating the safety of its business model even as rising interest rates undermined the value of the bank’s loan and securities portfolios.
First Republic is slashing its workforce, shrinking its balance sheet and pursuing strategic options after deposits plummeted even more than analysts expected amid the crisis. The bank has been drawn into the turmoil escalated by the collapse of SVB Financial Group’s Silicon Valley Bank, which fell into government receivership in early March after asset sales spooked depositors in the venture capital community....
....MUCH MORE
Earlier today on First Republic:- Fed Whisperer: "Why the Banking Mess Isn’t Over"
- Bank Earnings: First Republic Was Rescued By Jamie Dimon et al; How Bad Off Was It? (FRC)
And April 21: "Liquor Sales Will Be Brisk on Wall Street Ahead of First Republic Bank’s Earnings Report on Monday"
And previously on KPMG:
Auditor KPMG Defends Self On Silicon Valley Bank; Signature Bank
KPMG also audits Citicorp and Wells Fargo. Now if you will excuse me I have to make enquiries about a couple other banks.
