Beleaguered regional bank First Republic Bank FRC reported Monday after the market close first-quarter results that did not go down well with investors.
In premarket trading on Tuesday, the stock was shedding 21.62% to $12.54, according to Benzinga Pro data.
What Happened: CNBC Mad Money host Jim Cramer took to Twitter to defend First Republic, which he has highlighted as a good bank stock in the past, ahead of the current banking crisis.
“It looks like First Republic v. everything else judging from these fine earnings,” he tweeted.
First Republic reported first-quarter earnings per share of $1.23, ahead of the consensus estimate of $0.85 and revenue of $1.21, also exceeding the Street estimate of $1.15 billion.
The regional bank also said more than 70% of its deposits were insured at the end of March, except for the $30 billion from large banks.
As of April 21, the company said it had cash, cash equivalents and additional banking capacity of $45.1 billion.
What potentially spooked the market was the 40.8% plunge in its deposits to $104.5 billion in the first quarter. The bank, however, said deposit activity began to stabilize beginning in the first week of March 27, 2023, and remained stable through Friday.
Why It’s Important: In the aftermath of Silicon Valley Bank and Signature Bank’s collapse, anxious customers initiated a run on other regional banks, leading to liquidity problems.
The Treasury and the Federal Reserve mediated a resuscitation package for First Republic and consequently, a consortium of 11 big banks, led by JPMorgan Chase & Co. JPM deposited $30 billion in the regional bank.
First Republic also suspended dividend payment on its preferred shares in order to preserve liquidity.