Current:Home > ScamsFirst Republic Bank shares plummet, reigniting fears about U.S. banking sector -Excel Money Vision
First Republic Bank shares plummet, reigniting fears about U.S. banking sector
View
Date:2025-04-16 20:47:14
It was a brutal day on Wall Street for First Republic Bank, as investors sold off shares as fast as they can in light of financial disclosures earlier this week.
On Monday, First Republic released its earnings report for the first three months of the year, and those results stunned Wall Street.
The California-based lender said it lost more than 40% of its deposits in March, as customers moved billions of dollars elsewhere.
In a statement, CFO Neal Holland called those deposit outflows "unprecedented." Credit Suisse bank analyst Susan Roth Katzke said they "have seriously impaired the earnings power of First Republic."
At one point during the trading day, shares dropped below $5. Just six months ago, First Republic Shares were trading for nearly $150.
On Wednesday, the stock closed down almost 30%, at $5.69.
Like Silicon Valley Bank and Signature Bank, First Republic, which was founded in 1985, catered to wealthy individuals, and many of its deposits were too large to be insured by the Federal Deposit Insurance Corporation (FDIC).
After Silicon Valley Bank and Signature Bank collapsed, the federal government effectively insured all deposits at those two banks, but regulators didn't commit to backstopping uninsured deposits across the board.
As of March 31, the percentage of uninsured deposits at First Republic had shrunk to 27% of total deposits, according to the bank.
On Tuesday, there was a sharp selloff of First Republic's stock, and on Wednesday, trading was so volatile the New York Stock Exchange halted trading of the bank's shares an astonishing 16 times.
For weeks, First Republic has tried over and over again to reassure its customers and investors, to no avail.
Immediately after Silicon Valley Bank and Signature Bank collapsed, First Republic lined up additional financing from the Federal Reserve and JPMorgan Chase. Then, on March 16, 11 of the biggest banks in the U.S. gave it a lifeline.
That consortium, which included Goldman Sachs and Wells Fargo, agreed to deposit $30 billion at First Republic.
"This action by America's largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities," those firms said, in a statement. "Regional, midsize and small banks are critical to the health and functioning of our financial system."
Financial regulators, including the chairs of the Federal Reserve and the FDIC, applauded the move.
"This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system," they said, in a short statement.
On Monday, First Republic said deposits stabilized shortly after the announcement, but investors continued to worry about the bank's longterm viability.
"We are working to restructure our balance sheet and reduce our expenses and short-term borrowings," CFO Neal Holland said, in a statement.
First Republic announced plans to cut costs, by laying off 20-to-25% of its workforce in the coming months, and reducing its real estate holdings.
On a call with Wall Street analysts after the bank released its earnings, CEO Mike Roffler said he has been in close contact with state and federal regulators.
veryGood! (76371)
Related
- Newly elected West Virginia lawmaker arrested and accused of making terroristic threats
- United Steelworkers union endorses Biden, giving him more labor support in presidential race
- 'Little rascals,' a trio of boys, charged in connection to Texas bank robbery, feds says
- Coroner identifies man and woman shot to death at Denver hotel shelter
- Residents worried after ceiling cracks appear following reroofing works at Jalan Tenaga HDB blocks
- Next Mega Millions drawing features jackpot of nearly $1 billion: Here's what to know
- Mercedes-Benz recalls 116,000 vehicles for fire risk: Here's which models are affected
- Tom Izzo: Automatic bids for mid-major programs in NCAA Tournament 'got to be looked at'
- Tarte Shape Tape Concealer Sells Once Every 4 Seconds: Get 50% Off Before It's Gone
- Deion Sanders responds to story about his unique recruiting style: 'I'm Coach Prime'
Ranking
- Are Instagram, Facebook and WhatsApp down? Meta says most issues resolved after outages
- Getty Images reverses flag that Prince Archie christening photo was 'digitally enhanced'
- Their WWII mission was secret for decades. Now the Ghost Army will get the Congressional Gold Medal
- M. Emmet Walsh, character actor from 'Blade Runner' and 'Knives Out,' dies at 88
- Military service academies see drop in reported sexual assaults after alarming surge
- Brother of airport director shot by ATF agents speaks out about shooting
- The elusive Cougar's Shadow only emerges twice a year – and now is your last chance to see it until fall
- The UN will vote on its first resolution on artificial intelligence, aimed at ensuring its safety
Recommendation
Retirement planning: 3 crucial moves everyone should make before 2025
International Day of Happiness: How the holiday got its start plus the happiest US cities
Detroit Lions’ defensive back Cameron Sutton sought in Florida domestic violence warrant
Jeopardy!'s Mike Richards Speaks Out More Than 2 Years After Being Fired From Hosting Gig
How to watch new prequel series 'Dexter: Original Sin': Premiere date, cast, streaming
Christine Quinn's Husband Christian Dumontet Arrested for Assault With Deadly Weapon
Chevron agrees to pay more than $13 million in fines for California oil spills
FBI: ‘Little rascals’ trio, ages 11, 12 and 16, arrested for robbing a Houston bank