By Pam Martens and Russ Martens: April 24, 2023
First Republic Bank Has a Soaring Eagle in its Logo.
Give First Republic Bank an A+ for arrogance and an F for its ability to hold on to its customers’ deposits, despite all that incessant talk about how loyal they are.
The A+ for arrogance comes from the bank’s refusal to take even one question from reporters or bank analysts on today’s first quarter earnings call. The call began at 4:30 p.m. ET and lasted approximately 12 minutes. It was heavy on spin.
For example, a big effort was made to dress up the amount of deposits the bank still had on hand at the end of the first quarter, which is necessary if anyone is to believe the narrative that it has “retained 97 percent of client relationships” over the quarter. (The relationships may, indeed, still be there in some fashion but deposits have flown the coop.)
The hard numbers for deposits, provided by a careful dissection of the detailed earnings release, are as follows:
As of December 31, 2022, First Republic Bank had $176.47 billion in deposits. At the end of the first quarter, on March 31, 2023, the bank was down to $104.474 billion in deposits. But that figure includes the “rescue” deposits of $30 billion from the mega banks on Wall Street that were strong-armed into placing the funds into First Republic by the likes of Treasury Secretary Janet Yellen and JPMorgan Chase honcho Jamie Dimon. Subtract that $30 billion and you have First Republic Bank with just $74.474 billion in deposits from real customers as of March 31, 2023.
In simple math terms, using real customers and not strong-armed mega banks, First Republic Bank lost a staggering $102 billion in deposits in one quarter, or 58 percent of the deposits it had on hand at the end of 2022.
Federal banking regulators need to step up to the plate and explain their intentions for this wobbly bank before Americans lose even more confidence in U.S. banks and credit rating agencies have even more incentive to downgrade the whole U.S. banking system.
Editor’s Note: Wall Street On Parade has no stock position or derivatives position, long or short, in any U.S. bank or Wall Street firm; nor has it had any such position during our more than a decade of publishing.
