First Republic Bank reported on Monday that its deposits dropped by 40.8% to $104.5 billion during the first quarter of 2023. This happened while two other banks collapsed, causing customers to worry about more banks failing.
Analysts had predicted that the drop would not be so severe, expecting deposits to be around $145 billion by the end of the quarter.
The bank said that deposit flows have now stabilized. From March 27, 2023, to April 21, 2023, deposit activity remained steady with $102.7 billion in total deposits. This small decrease was mainly due to customers making tax payments in April.
In March, 11 larger banks provided $30 billion in temporary deposits to First Republic to help support the banking system. Without these deposits, First Republic’s deposits would have dropped by over 50%. CEO Michael Roffler thanked the banks and regulators for their help.
Roffler also mentioned that, despite the drop in deposits, the bank managed to keep more than 97% of its customers since the start of the quarter.
First Republic is now cutting costs by reducing executive pay, using less office space, and planning to decrease its staff by 20-25% in the second quarter. The bank is also looking into other options to improve its financial position. After a 12% increase during regular trading, First Republic’s shares fell by 20% in extended trading.