First Republic Cutting Up to 25% of Workforce After ‘Unprecedented’ Deposit Outflows

First Republic Bank expects to reduce its workforce by as much as 25% in the second quarter.

In its first earnings report since experiencing a bank run and getting support from 11 banks in the form of $30 billion in deposits, the bank said in a Monday (April 24) press release that it is working to strengthen its business, restructure its balance sheet and reduce expenses.

“With the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business,” First Republic Founder and Executive Chairman Jim Herbert and CEO and President Mike Roffler said in the release. “We remain fully committed to serving our communities, and we are grateful for the ongoing support of our clients and colleagues.”

To restructure its balance sheet, First Republic is working to increase insured deposits, reduce borrowings from the Federal Reserve Bank and decrease loan balances, according to the press release.

To reduce its expenses, the bank is cutting executive officer compensation, condensing corporate office space and decreasing its workforce by 20% to 25%, the release said.

This news comes about six weeks after 11 large United States banks made uninsured deposits totaling $30 billion into First Republic in the wake of the turmoil the banking industry experienced in early March.

The deposits were made after reports that First Republic had been downgraded by Fitch Ratings and S&P Global Ratings and was considering a sale and options to enhance its liquidity.

After the closures of Silvergate Capital, Silicon Valley Bank and Signature Bank, regional banks were slipping and there were continued waves of worry over bank runs.

According to the Monday press release, First Republic’s total deposits stood at $104.5 billion as of March 31, including the $30 billion in deposits received from the large banks. That total was down from $176.4 billion on Dec. 31, 2022.

“With the closure of several banks in March, we experienced unprecedented deposit outflows,” First Republic Chief Financial Officer Neal Holland said in the release. “We moved swiftly and leveraged our high-quality loan and securities portfolios to secure additional liquidity. We are working to restructure our balance sheet and reduce our expenses and short-term borrowings.”