First Republic stock plunges after depositors flee

Shares of First Republic Bank fell on Tuesday after it said depositors withdrew more than $100 billion during last month’s crisis. Silicon Valley Bank and Signature Bank.

The San Francisco bank said it could only be done late Monday Stop the bleeding A group of big banks offered to bail out $30 billion in uninsured deposits.

Shares of Republic fell more than 49% since Tuesday to close at $8.10 a share.

First Republic had about $290 billion in assets as of March 31 SVP At the time of its failure. The troubled bank said it plans to lay off a quarter of its 7,200-strong workforce by the end of 2022, sell assets and restructure its balance sheet.

“With still a high degree of uncertainty over results and expected losses beyond next year, we recommend investors sell stocks as the outlook remains largely unclear,” Citi analyst Arren Cyganovich said in a note to clients.

Other regional banks were under pressure on a day of declines in markets. The S&P 500 lost 1.2% on Tuesday afternoon. The Dow fell 0.8% and the tech-heavy Nasdaq fell 1.5%.

Silicon Valley bank officials may have ignored warning signs before the collapse

Before the failure of Silicon Valley Bank, First Republic had a banking franchise that was the envy of much of the industry. Its clients, often the rich and powerful, rarely defaulted on their loans. The bank made most of its money by providing low-cost loans to wealthy individuals, including MetaPlatforms CEO Mark Zuckerberg.

But when bank customers and analysts noted that most of First Republic’s deposits, such as Silicon Valley and Signature Bank, were uninsured, its lien exceeded the $250,000 limit set by the FDIC. If First Republic fails, its depositors risk not getting their money back.

First Republic reported first-quarter results on Monday that showed the Silicon Valley bank had $173.5 billion in deposits before it failed on March 9. On April 21, it had $102.7 billion in deposits, including $30 billion deposited by large banks. Since late March, its deposits have remained relatively stable.

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