First Republic Bank shares plunge nearly 50% after large deposit outflows

First Republic Bank (FRC) shares plummeted almost 50% on Tuesday after announcing that it suffered the withdrawal of more than $100 billion in deposits during the past quarter.

The bank's share price had to be suspended several times during the day after FRC published its quarterly report stating that deposits fell from the end of 2022 until the end of March 2023 by more than 100 billion dollars.

"With the closure of several banks in March, we experienced unprecedented deposit outflows," said Neal Holland, First Republic's finance chief.

FRC announces measures

Following the bank's large loss in deposits, the bank announced that it would take measures to strengthen the business. One of the decisions involves reducing its balance sheet and cutting expenses by reducing executive compensation and office space. It was also reported that will lay off 20 to 25% of its employees during the second quarter of the year.

"Though we faced challenges and uncertainties with the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business," Roffler said.

Analysts are not optimistic

After the collapse of Silicon Valley Bank and Signature Bank, many people have withdrawn their deposits to larger banks for fear that the same could happen, and analysts are not optimistic about the challenges that may lie ahead for the rest of the year.

"The options are very challenging and probably very costly, especially for shareholders. Who’s going to bear the cost?" commented analyst Christopher Wolfe on First Republic Bank's options.

According to analyst David Chiaverini, the bank could even continue with operating losses for the next two years.