First Republic reports mixed results amid deeper deposit outflows; Eyes job cuts

Investing.com -- First Republic reported Monday mixed first-quarter results and announced plans to slash its workforce by at least a fifth as the midsize American lender suffered a deeper-than-expected drop in deposit levels after customers raced to pull funds following the recent banking turmoil.

First Republic Bank (NYSE:FRC) plunged 8% in volatile trade in after-hours following the report. 

The regional bank reported EPS of $1.23 on revenue of $1.20 billion, that compared with estimates for $0.97 and $1.22 respectively.

The mixed results come as the bank reported that deposits slumped 35.5% to $104.47B in Q1 year-on-year, well below Wall Street expectations for $136.36B.

The larger-than-expected drop in deposit outflows followed the recent collapse of SVB and Signature Bank that sparked a crisis of confidence in the banking system, forcing customers to pull their funds from smaller banks in favor of larger lenders. 

Net interest income fell 19.4% to $923M in Q1 year on year.

In March, First Republic was rescued by major Wall Street banks pledging $30B in uninsured deposits to help the regional lender shore up its liquidity. But with interest rate payments from recent borrowing needed to strengthen its finance ramping up, concerns about its ability to turn a profit intensified. 

The struggling regional bank said it was exploring strategic options to expedite its progress while reinforcing its capital position, which includes efforts to cut costs. 

A potential sale, however, is unlikely to attract suitors, Wedbush said in recent note. The unrealized losses embedded on the lender's balance sheet - that has pushed tangible equity on a fair value basis deep into negative territory - would prevent a potential acquirer from "making a realistic offer that would be palatable to shareholders," it added.

The bank expects to reduce its workforce by approximately 20% to 25% in the second quarter.