![]() The bank’s executives have taken no questions from investors or analysts since the bank reported its results, causing the stock to sink further.Īnd it’s hard to profitably restructure a balance sheet when a company has to sell off assets quickly and has fewer bankers to find opportunities for the bank to invest in. It also announced plans to lay off up to a quarter of its workforce, which totaled about 7,200 employees at the end of 2022.īut investors have remained skeptical. The bank planned to sell off unprofitable assets, including the low-interest mortgages that it provided to wealthy clients. ![]() Since the crisis, First Republic has been looking for a way to quickly turn itself around. “A successful absorption into a big bank would provide a proper, stable home for the firm to continue to provide its value proposition to the economy,” Kelly said. ![]() Kelly said that other options, such as government control or continuing to try to survive on its own, would see its value continue to disappear, along with credit and economic growth. It needs a big bank balance sheet behind it.” “First Republic has lots of knowledge about its customers and has been a profitable bank for its entire history - but its business model is not stable. “Getting the bank in the hands of a larger one is the best possible economic outcome,” said Steven Kelly, a researcher at the Yale School of Management’s Program on Financial Stability. First Republic said that it was able to stanch the bleeding only after a group of large banks stepped in to save it with $30 billion in uninsured deposits.īut now First Republic is in need of a bigger fix. The bank said depositors pulled more than $100 billion out of the bank during April’s crisis. Those fears were crystalized in the bank’s recent quarterly results. If First Republic were to fail, its depositors would be at risk of not getting all their money back. And that began to fuel worries about the franchise among analysts and investors. The 72-branch bank has made much of its money making low-cost loans to the rich, which reportedly included Meta Platforms Chief Executive Mark Zuckerberg.įlush with deposits from the well-heeled, First Republic saw total assets more than double from $102 billion at the end of 2019’s first quarter, when its full-time workforce was 4,600.īut the vast majority of First Republic’s deposits, like those in Silicon Valley and Signature Bank, were uninsured - that is, above the $250,000 limit set by the FDIC. Its clients - mostly the rich and powerful - rarely defaulted on their loans. commercial banks.īefore Silicon Valley Bank failed, First Republic had a banking franchise that was the envy of most of the industry. At the end of last year, the Federal Reserve ranked First Republic 14th in size among U.S. First Republic reported total assets of $233 billion as of March 31.
0 Comments
Leave a Reply. |