First Republic Stock Plunges As Deposit Flight Mars Q1 Earnings Beat

First Republic, the lender at the epicenter of last month's banking crisis, saw deposits fall by nearly $72 billion over a challenging first quarter.

Updated at 4:52 pm EST

First Republic  (FRC) - Get Free Report posted stronger-than-expected first quarter earnings Monday, but noted a more than 40% decline in its overall deposit base while unveiling a fresh round of job cuts at the lender and wealth manager.

First Republic said earnings for the three months ending in March fell 57.5% from last year to $1.23 per share, but firmly topped analysts' estimates of 85 cents per share. Group revenues, the bank said, fell 13.6% to $1.209 billion, again beating forecasts of a $1.15 billion tally. 

Overall deposits, however, were down $71.9 billion from end-December levels, or 41% to $104.5 billion, well below Street forecasts of around $145 billion. The $104.5 billion total, as well, includes the collective $30 billion that was added to the bank's deposit base by a collection of Wall Street lenders, lead by JPMorgan JPM, following the collapse of Silicon Valley Bank last month.

“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," said CEO Mike Roffler and chairman Jim Herbert said in a joint statement. "We remain fully committed to serving our communities, and we are grateful for the ongoing support of our clients and colleagues.” 

First Republic shares were marked 21.7% lower in after-hours trading immediately following the earnings release to indicate an opening bell price of $12.53 each.

The bank added that it is "pursuing strategic options to expedite its progress while reinforcing its capital position" while planning job cuts that would eliminate around 20% to 25% of its overall workforce.

The Wall Street Journal reported that JPMorgan CEO Jamie Dimon had lead a fresh round of talks with other big U.S. banks in an effort to provide further support, including potentially converting their $30 billion in deposits into a capital injection. 

Standard & Poor's, which had lowered First Republic's credit rating into 'junk' status in the days following SVB's collapse, cut it by a further three notches to B+ on March 19, saying the bank continues to face "high liquidity stress with substantial outflows".

The ratings company also said the recent move by a consortium of 11 banks, lead by JPMorgan Chase JPM to add a collective $30 billion to its deposit base "may not solve the substantial business, liquidity, funding, and profitability challenges that we believe the bank is now likely facing."