Last Update: April 25, 2023, 03:32 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 the Silicon Valley bank failed on March 9. (Image: Reuters)
Even during this crisis, the bank’s loan book of more than 90 days outstanding was nil
Customers of First Republic Bank pulled more than $100 billion in deposits from the bank during last month’s crisis amid fears it could be the third bank to fail after the collapses of Silicon Valley Bank and Signature Bank.
San Francisco-based First Republic said Monday it was able to stop the bank bleeding only after a group of big banks stepped in to save it by piling in $30 billion in uninsured deposits.
The bank said it now plans to sell off assets and restructure its balance sheet, and added that it also expects to lay off a quarter of its workforce, totaling 7,200 employees at the end of 2022. Were.
First Republic reported first-quarter results on Monday that showed it had $173.5 billion in deposits at the beginning of March before the Silicon Valley bank failed on March 9. As of April 21, it had deposits of $102.7 billion, including $30 billion deposited by large banks. It said its deposits have remained relatively stable since late March.
“We continue to take steps to strengthen our business,” the bank’s Executive Chairman Jim Herbert and the bank’s CEO Mike Roffler said in a joint statement.
Before the failure of Silicon Valley Bank, First Republic had a banking franchise that was the envy of most of the industry. Its customers, mostly the rich and powerful, rarely default on their loans. The bank made most of its money by making low-cost loans to the wealthy, which reportedly included Mark Zuckerberg, CEO of Meta Platforms.
Even during this crisis, the bank’s loan books of more than 90 days outstanding were nil.
But its franchise became a liability when the bank’s customers and analysts began to focus on the fact that the vast majority of deposits at Silicon Valley and Signature Banks like First Republic were uninsured—that is, the $250,000 limit set by the FDIC. above – meaning that if First Republic fails, its depositors may not get all their money back.
The bank’s profit fell 33% from a year earlier, according to its earnings release, and revenue was down 13%.
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)
