First Republic Bank FRC is down 21% as the most heavily-traded stock in premarket action with volume of more than one million shares, according to MarketWatch’s Premarket Screener. Analysts at Raymond James said the bank’s first-quarter results released late Monday were disappointing, with a “dramatic decline in core deposit balances, increased reliance on high-cost borrowings, and substantial net interest margin compression.” First Republic aired plans to reduce its loan portfolio and cut costs, including laying off up to 25% of its workforce. “We believe FRC shares will remain volatile until we gain more clarity on the bank’s future,” said analyst David J. Long. Raymond James reiterated a market perform rating on First Republic and said it was not a surprise to see a decline in core deposits in the first quarter given its relatively high degree of uninsured deposits and high concentration of large depositors, as well as a $30 billion deposit from 11 banks in March and a downgrade of its credit to junk status in recent weeks. “While the bank has been able to secure liquidity to meet these deposit outflows in the near-term, these funding sources do not come cheap, and will cause severe profitability headwinds for the foreseeable future,” Long said.
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