First Republic Bank’s stock continued to sink Wednesday, an ongoing rout that has erased 60% of its value just this week on concerns about the bank’s financial health in the wake of two other bank collapses.
Shares slumped almost 30%, following an even more severe tumble Tuesday, after the bank revealed that depositors withdrew more than $100 billion last month following the collapse of Silicon Valley Bank and Signature Bank.
Trading in the bank‘s shares was halted several times for volatility.
The bank said late Monday that it was only able to stop the bleeding after a group of large banks stepped in to save it by depositing $30 billion in uninsured deposits.
The San Francisco bank plans to sell off unprofitable assets, including low interest mortgages it provided to wealthy clients. It also has plans to lay off up to a quarter of its workforce, which totaled about 7,200 employees at the end of last year.
With deposits fleeing, First Republic was forced to borrow from federal programs to shore up its balance sheet. The interest the bank has to pay on those funds is much steeper than what it has to pay out on deposits, and the added expense will reduce net income.
Citi analyst downgraded First Republic on Wednesday, saying in a note to clients that there’s still a large level of uncertainty in outcomes and expected losses beyond the next year.
“The high cost of its borrowings relative to its earning assets puts it under-water and likely generates losses until it can right-size the balance sheet,” he wrote.
First Republic’s stock closed at $5.68 Wednesday, a fraction of the price it was a year ago when it traded for roughly $170. The stock is down 95% so far this year.
First Republic reported first-quarter results Monday that showed it had $173.5 billion in deposits before Silicon Valley Bank failed on March 9. On April 21, it had deposits of $102.7 billion, which included the $30 billion the big banks deposited. Deposits have been relatively stable since last March, the bank said.
Elsewhere, shares of other regional banks were mostly higher. PacWest Bancorp’s stock rose more than 7% after the bank reported that its total deposits increased.
PacWest said Tuesday that total deposits rose $1.1 billion to $28.2 billion as of March 31 compared with its most recent update of $27.1 billion as of March 20. Deposit balances further increased approximately $700 million as of Monday.