Investing.com -- First Republic Bank (NYSE:FRC) shares shed more than a fourth of their value on Tuesday, touching a record low, after the lender suffered a deeper-than-expected drop in deposit levels in the first quarter as customers raced to pull funds following the recent turmoil in the banking sector.
The midsize American lender said deposits slumped by 35.5% to $104.47 billion in the first three months of its fiscal year, well below Wall Street expectations for $136.36B.
The larger-than-expected fall in deposits followed the recent collapse of SVB and Signature Bank that sparked a crisis of confidence in the banking system, leading many customers to withdraw their funds from smaller banks in favor of larger lenders.
Quarterly net interest income fell 19.4% year-on-year to $923 million.
The struggling regional bank said it was exploring strategic options to expedite its progress while reinforcing its capital position, which includes efforts to cut costs. The bank expects to reduce its workforce by approximately 20% to 25% in the second quarter.
Evercore ISI analysts said the results suggested that the bank is "in a holding pattern and is burning fuel."
"The bank has lost meaningful deposits and is planning to shrink its asset base accordingly. But this will take time given the duration of its loans, and [First Republic] could erode capital in the meantime if bottom line losses materialize," the analysts said.