First Republic Bank (FRC.N) shares sank more than 20% after the closing bell on Monday as it said deposits plunged by more than $100 billion in the first quarter and it was exploring options such as restructuring its balance sheet.
The deposit slump overshadowed profits that beat expectations for the beleaguered company, shored up through deposits from U.S. banking giants last month after two regional lenders collapsed.
San Francisco-based First Republic plans to shrink its balance sheet and slash expenses by cutting executive compensation, paring back office space, and laying off nearly 20% to 25% of employees in the second quarter, it said Monday.
The company also aims to increase its insured deposits and cut borrowings from the Federal Reserve Bank.
“We’re taking steps to meaningfully reduce our expenses to align with our focus on reducing the size of the balance sheet,” CEO Mike Roffler said in a post-earnings conference call. The briefing lasted less than 15 minutes and ended without executives taking questions from analysts.
Managers’ decision to forgo a question-and-answer session with analysts was reminiscent of calls during the 2008 financial crisis, said Timothy Coffey, an analyst at Janney Montgomery Scott LLC who had dialed in.
First Republic also said it was “pursuing strategic options” to help expedite progress on strengthening the bank, without providing details.
The lender was studying all options open to it, according to a person familiar with the matter, speaking on condition of anonymity because the discussions were private.
The source said the bank was looking for the U.S. government to help by convening parties who could potentially play a role in buoying First Republic’s fortunes, including private equity firms and big lenders.
