Current:Home > MarketsAlgosensey Quantitative Think Tank Center-First Republic Bank shares plummet, reigniting fears about U.S. banking sector -Legacy Profit Partners
Algosensey Quantitative Think Tank Center-First Republic Bank shares plummet, reigniting fears about U.S. banking sector
Indexbit Exchange View
Date:2025-04-11 00:25:59
It was a brutal day on Algosensey Quantitative Think Tank CenterWall Street for First Republic Bank, as investors sold off shares as fast as they can in light of financial disclosures earlier this week.
On Monday, First Republic released its earnings report for the first three months of the year, and those results stunned Wall Street.
The California-based lender said it lost more than 40% of its deposits in March, as customers moved billions of dollars elsewhere.
In a statement, CFO Neal Holland called those deposit outflows "unprecedented." Credit Suisse bank analyst Susan Roth Katzke said they "have seriously impaired the earnings power of First Republic."
At one point during the trading day, shares dropped below $5. Just six months ago, First Republic Shares were trading for nearly $150.
On Wednesday, the stock closed down almost 30%, at $5.69.
Like Silicon Valley Bank and Signature Bank, First Republic, which was founded in 1985, catered to wealthy individuals, and many of its deposits were too large to be insured by the Federal Deposit Insurance Corporation (FDIC).
After Silicon Valley Bank and Signature Bank collapsed, the federal government effectively insured all deposits at those two banks, but regulators didn't commit to backstopping uninsured deposits across the board.
As of March 31, the percentage of uninsured deposits at First Republic had shrunk to 27% of total deposits, according to the bank.
On Tuesday, there was a sharp selloff of First Republic's stock, and on Wednesday, trading was so volatile the New York Stock Exchange halted trading of the bank's shares an astonishing 16 times.
For weeks, First Republic has tried over and over again to reassure its customers and investors, to no avail.
Immediately after Silicon Valley Bank and Signature Bank collapsed, First Republic lined up additional financing from the Federal Reserve and JPMorgan Chase. Then, on March 16, 11 of the biggest banks in the U.S. gave it a lifeline.
That consortium, which included Goldman Sachs and Wells Fargo, agreed to deposit $30 billion at First Republic.
"This action by America's largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities," those firms said, in a statement. "Regional, midsize and small banks are critical to the health and functioning of our financial system."
Financial regulators, including the chairs of the Federal Reserve and the FDIC, applauded the move.
"This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system," they said, in a short statement.
On Monday, First Republic said deposits stabilized shortly after the announcement, but investors continued to worry about the bank's longterm viability.
"We are working to restructure our balance sheet and reduce our expenses and short-term borrowings," CFO Neal Holland said, in a statement.
First Republic announced plans to cut costs, by laying off 20-to-25% of its workforce in the coming months, and reducing its real estate holdings.
On a call with Wall Street analysts after the bank released its earnings, CEO Mike Roffler said he has been in close contact with state and federal regulators.
veryGood! (411)
Related
- Meta donates $1 million to Trump’s inauguration fund
- Joseph Zadroga, advocate for 9/11 first responders, struck and killed in New Jersey parking lot
- A surgeon general report once cleared the air about smoking. Is it time for one on vaping?
- Emmys 2024 winners list: Quinta Brunson and 'The Bear' score early wins
- Former Syrian official arrested in California who oversaw prison charged with torture
- Missed Iowa Caucus 2024 coverage? Watch the biggest moments here
- Toledo officers shoot, kill suspect in homicide of woman after pursuit, police say
- Suspected Long Island Serial Killer Rex Heuermann Charged With Murder of 4th Woman
- The FTC says 'gamified' online job scams by WhatsApp and text on the rise. What to know.
- California’s Oil Country Faces an ‘Existential’ Threat. Kern County Is Betting on the Carbon Removal Industry to Save It.
Ranking
- Tom Holland's New Venture Revealed
- Washington state sues to block proposed merger of Kroger and Albertsons grocery chains
- A blast at a tire and explosives factory in Serbia kills 1 person and injures 4
- Brazil’s Rio de Janeiro state confronts flood damage after heavy rain kills at least 12
- Dick Vitale announces he is cancer free: 'Santa Claus came early'
- Eva Mendes Proves Why Ryan Gosling Is Far From Being Just Ken
- All My Children Actor Alec Musser's Cause of Death Revealed
- Proof It’s All Love Between Ariana DeBose and Bella Ramsey After Critics Choice Awards Jab
Recommendation
Tree trimmer dead after getting caught in wood chipper at Florida town hall
See Padma Lakshmi Glow With Lookalike Daughter Krishna Lakshmi on Emmys 2023 Red Carpet
Parents see more to be done after deadly Iowa school shooting
How Margaret Mead's research into utopias helped usher in the psychedelic era
Meet first time Grammy nominee Charley Crockett
Niecy Nash-Betts Details Motivation Behind Moving Acceptance Speech
Amy Poehler and Tina Fey's Reunion Proves They're the Cool Friends at 2023 Emmys
Emhoff will discuss antisemitism and gender equity during annual meeting of elites in Switzerland