First Republic Bank Stock Crashes, Analysts Give Key Insights Into Q1 Print

Shares of First Republic Bank FRC Tuesday crashed after the company reported a decline in deposits and announced layoff plans. Here are some key analyst takeaways from First Republic Bank’s quarterly results.

• Raymond James analyst David Long maintained a Market Perform rating on the stock.
• Wedbush analyst David Chiaverini reiterated a Neutral rating and price target of $8.
• Keefe Bruyette & Woods analyst Christopher McGratty said that First Republic Bank’s quarterly results were impacted by a 41% sequential decline in deposits

Check out other analyst stock ratings.

Raymond James

“As expected, it was a rather disappointing quarter given that dramatic decline in core deposit balances, increased reliance on high-cost borrowings, and substantial NIM compression,” Long said in a note.

“In response to these issues, the team disclosed their intentions to shrink the bank by reducing the loan portfolio while cutting costs, including laying off a sizable amount of its workforce,” the analyst stated. “Net, we believe FRC shares will remain volatile until we gain more clarity on the bank’s future."

Wedbush

The “dramatic” decline in deposits forced First Republic Bank to “significantly increase its borrowings, peaking at $138 billion on 3/15, and totaling $104 billion as of 4/21, compared to ~ $15 billion at 12/31,” Chiaverini wrote in a note.

“This increase in borrowings had a notable impact on the core NIM, which declined to 1.66% (ex-withdrawal penalties) compared to our forecast of 1.70%, and we forecast the NIM to come under substantial pressure in 2Q, negatively impacting the bank's earnings power significantly,” he added.

Keefe, Bruyette & Woods

Analyst Christopher McGratty said that First Republic Bank’s quarterly results were impacted by a 41% sequential decline in deposits, “with heavy borrowings used to plug the funding gap.”

The bank plans to reduce its workforce headcount by 20-25% in the second quarter of 2023.

FRC Price Action: Shares of First Republic Bank had declined by 28.60% to $11.42 at the time of publishing Tuesday.