First Republic Bank said customer deposits tumbled 40% in Q1 – worse than Wall Street expected.
Deposits fell to $104.5 billion in the first quarter but the bank says deposits have since stabilized.
Troubled regional bank First Republic said 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 widespread bank failures.
The deposit flight at First Republic was worse than Wall Street expected, with analysts estimating the quarter-end figure to be about $145 billion, according to the consensus estimate from FactSet’s StreetAccount. Analysts’ deposit estimates ranged from $100 billion to $206 billion, according to FactSet.
First Republic said Monday that deposit flows have since stabilized.
“Deposit activity began to stabilize beginning the week of March 27, 2023, and has remained stable through Friday, April 21, 2023. Total deposits were $102.7 billion as of April 21, 2023, down only 1.7% from March 31, 2023, primarily reflecting seasonal client tax payments that occur each April,” the release said.
The deposit figure for the end of March included $30 billion in time deposits from 11 larger banks that was announced on March 16 in an attempt to stabilize the broader banking system. If those deposits were excluded, First Republic’s deposits would have fallen by more than 50%.
Last month First Republic was downgraded to junk by S&P.
“We believe the risk of deposit outflows is elevated at First Republic Bank despite the actions of federal banking regulators and the bank actively increasing its borrowing availability to mitigate risk associated with the bank failures over the last week,” S&P said in a statement.
“Still, if deposit outflows continue, we expect First Republic would need to rely on its more costly wholesale borrowings. This would encumber its balance sheet and hurt its modest profitability,” said S&P, according to Market Watch.
Top Executives at First Republic Bank sold $12 million in company stock before shares plummeted last month, according to the Wall Street Journal.
Customers were lined up at a First Republic Bank in Los Angeles last month to withdraw their money after Silicon Valley Bank failed.
I’ve never seen a bank run in Brentwood Los Angeles in over 40 years — this is at first republic bank branch. People standing in rain pic.twitter.com/k31PqqpyO3
— pjb.eth (@Dr_PhillipB) March 11, 2023