First Republic Bank’s customers withdrew $102 billion from the bank during the quarter ending March 31, as last month’s failures of Silicon Valley Bank and Signature Bank stoked fears that the San Francisco-based lender could face a similar fate.
According to the bank’s first quarter earnings release on Monday, total deposits fell 41% to $104.5 billion during the quarter ending March 31.
The $104.5 billion figure includes the $30 billion that nearly a dozen of the nation’s largest banks deposited into the ailing First Republic on March 16 in an attempt to stabilize the lender’s balance sheet amid its liquidity crunch.
The regional bank said it lost a net total of $72 billion in deposits during the quarter. Without the cash infusion from 11 of the nation’s largest firms, First Republic’s net outflow would have totaled $102 billion over the period.
“I would like to reiterate our appreciation for the group of America’s largest banks who placed $30 billion in uninsured deposits with us, as well as for our state and federal regulators who have continued to provide us with expert support,” First Republic Bank CEO Michael Roffler said on Monday’s earnings call, which marked the firm’s first investor update since its stock dropped nearly 90% in the wake of last month’s bank failures.
Amid the unprecedented deposit outflows, First Republic said it sought additional liquidity by borrowing from the Federal Reserve Bank, the Federal Home Loan Bank and JPMorgan Chase.
The bank said deposit activity began to stabilize the week of March 27 and remained stable through April 21.
First Republic said total deposits were $102.7 billion as of April 21, down 1.7% from March 31, a decline the bank attributed primarily to clients’ seasonal tax payments.
Roffler added that while average account sizes at the bank have decreased, the firm retained over 97% of its client relationships during the quarter.
Like SVB and Signature, which were taken over by regulators last month, First Republic held a high number of uninsured deposits.
On Monday, First Republic said it was taking steps to increase its amount of insured deposits and reduce borrowings from the Federal Reserve Bank. The firm also plans to decrease loan balances to correspond with the reduced reliance on uninsured deposits.
The bank reported first quarter net income of $269 million, down 33% from last year’s comparable quarter.
In an effort to rein in expenses, First Republic Bank said it plans to reduce its workforce by as much as 25%.
“This will be an incredibly difficult decision to make,” Roffler said during the firm’s earnings call, in which executives did not take questions. “And we are committed to doing so with respect and care for our colleagues.”
Roffler said First Republic is also planning “significant reductions” to executive officer compensation.
The firm will also condense corporate office space and reduce non-essential projects and activities, he said.
