NEW YORK, NY (AP) - During the crisis last month, customers of First Republic Bank withdrew more than $100 billion from the bank. Fears were rife that this could be the third failed bank after the failure of Silicon Valley Bank as well as Signature Bank.
First Republic, a San Francisco-based bank, said on Monday that the bank's bleeding stopped only after a number of large banks intervened to help it out by depositing $30 billion worth of uninsured funds.
The bank plans to sell assets and restructure the balance sheet. It also said that it expects to layoff up to a quarter its workforce at the end 2022, which was about 7,200 people.
First Republic released its first-quarter results on Monday, showing that it had 173.5 billion dollars in deposits at the beginning of March, before Silicon Valley Bank collapsed on March 9. By April 21, the bank had $102.7 billion in deposits, including $30 billion from the large banks. Since late March, it said that its deposits had been relatively stable.
In a joint press release, Jim Herbert, executive chairman of the bank, and Mike Roffler CEO of the bank, stated that they continue to take measures to strengthen their business.
First Republic was a bank that most in the industry envied before Silicon Valley Bank failed. Clients of the bank, mainly wealthy and powerful people, rarely defaulted. The bank made most of its profit by making low-cost loan to the wealthy, including Meta Platforms CEO Mark Zuckerberg.
Despite the crisis, there was no loan book at this bank that was more than 90 day past due.
Its franchise was a liability, however, when analysts and bank customers began to focus on the fact the that the vast majority, like Silicon Valley, of First Republic's deposit, were not insured -- that is above the limit of $250,000 set by the FDIC. This means that, if First Republic failed, its depositors might not receive all their money.
According to earnings, the bank's profit fell by 33% compared to a year ago, while revenues dropped 13%.