Last updated: April 25, 2023, 3:32 AM IST
First Republic reported first-quarter results on Monday that showed it had $173.5 billion in deposits at the beginning of March before Silicon Valley Bank filed for bankruptcy on March 9. (Image: Reuters)
Even during this crisis, the bank’s loan base with payment arrears of more than 90 days was zero
First Republic Bank clients pulled more than $100 billion in deposits from the bank during last month’s crisis as fears circulated that it could be the third bank to fail following the collapses of Silicon Valley Bank and Signature Bank .
The San Francisco-based First Republic said Monday it was only after a group of big banks stepped in to bail it out by depositing $30 billion in uninsured deposits that the bank was able to stem the bleeding.
The bank said it now plans to sell assets and restructure its balance sheet, and also expects to lay off a quarter of its workforce, which totaled about 7,200 employees by the end of 2022.
First Republic reported first-quarter results on Monday that showed it had $173.5 billion in deposits at the beginning of March before Silicon Valley Bank filed for bankruptcy on March 9. As of April 21, it had deposits of $102.7 billion, including the $30 billion deposited by the major banks. It said deposits have been relatively stable since late March.
“We continue to take steps to strengthen our business,” Jim Herbert, the bank’s executive chairman, and Mike Roffler, the bank’s CEO, said in a joint statement.
Before the bankruptcy of Silicon Valley Bank, First Republic had a banking franchise that was the envy of most of the industry. Its clients, mainly the rich and powerful, rarely defaulted on their loans. The bank made much of its money by providing cheap loans to the wealthy, reportedly including Meta Platforms CEO Mark Zuckerberg.
Even during this crisis, the bank’s book of loans more than 90 days past due was zero.
But the franchise became a drawback as banking clients and analysts began to focus on the fact that the vast majority of First Republic’s deposits, such as Silicon Valley and Signature Bank, were uninsured — that is, above the $250,000 limit set by the FDIC – meaning if First Republic were to fail, the depositors may not get all of their money back.
The bank’s profits fell 33% from a year earlier, according to earnings, and revenues fell 13%.
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(This story has not been edited by News18 staff and was published from a syndicated news agency feed)
