First Republic Bank's (FRC.US) financial results beat expectations but deposits fell nearly 41% q/q to $104.5 billion in the first quarter. FactSet estimates ranged between $100 billion and $206 billion with a consensus of $145 billion. The bank said the outflow had stabilized but that was not enough to calm the reaction of the market, which fears a continuation of the 'run'. Shares lost 21% before the open:
Revenue: $1.21 billion vs. $1.15 billion forecast (Refinitiv) (13% decline y/y)
Earnings per share (EPS): $1.23 vs. $0.85 forecasts (Refinitiv) (33% decline y/y)
- The high percentage of uninsured deposits was one of the reasons the market viewed FRC as risky institution, but the bank on Monday indicated that 70% of deposits were insured as of the end of March, including the mentioned $30 billion deposits from major banks;
- The bank conveyed in a statement that the situation began to stabilize at the end of March and remained stable until last Friday, April 21, when deposits were about $102.7 billion, down 1.7% from March 31;
- Bank President Michael Roffer responded that despite the deposit outflow, the bank maintains relationships with 97% of its customers but did not elaborate on the thread. The bank will cut expenses by reducing management salaries and reducing office space, and will lay off up to 25% of its employees in Q2 of this year. FRC's cash position totaled $45.1 billion including $30 billion received from major banks.
First Republic Bank (FRC.US) W1 interval. The opening indicates a level of $12.6 per share, which will mark an ascent to new historical lows and an RSI well below 20 points, depicting an extreme oversold condition. Despite the massive discount to fundamental value and help from the major banks, investors have not been interested in FRC shares. Source: xStation5
