First Republic Bank is considering strategic options and looking to reduce its balance sheet after experiencing a more significant drop in deposits than anticipated in Q1 2023. Deposits fell to $104.5 billion as of March 31, representing a 41% decline from the end of 2022, despite receiving a $30 billion cash injection from the largest lenders in the country to support its finances. The decline was larger than the $137 billion forecast in a Bloomberg survey. First Republic plans to reduce its workforce by up to 25% and is reviewing strategic options to strengthen its capital position following the “unprecedented” deposit outflows. The bank’s deposit base has stabilized recently, with deposits declining by just 1.7% between the end of March and April 21.
The bank ended 2022 with almost $27 billion in loan markdowns and unrealized losses on long-dated bonds on its balance sheet. The bank’s Q1 2023 revenue fell 13% YoY to $1.21 billion, and net income fell 33% to $269 million, beating the average analyst estimate of $171 million. First Republic shares fell 16% in late New York trading.
