First Republic Bank FRC, which received a lifeline from a group of big banks last month, recently announced an austerity measure to survive through trying times.
What Happened: First Republic’s board has decided to suspend payment of quarterly cash dividends on its non-cumulative perpetual preferred stocks as a measure of “prudent oversight,” the bank said in an 8-K filing on Friday. Since the terms of each series of preferred stock are non-cumulative, the board is not required to declare a dividend payable in respect of any dividend period, the bank added.
First Republic also said it would release first-quarter results after the market closes on April 24. Pointing to the bank’s reference to “prudent oversight,” Phil Timyan, an investor specializing in community bank investing, asked on Twitter, “Where has that been hiding?”
Ross Gerber, co-founder of Gerber Kawasaki Wealth and Investment Management, also took to the social media platform, writing, “This could be the next shoe to drop.”
Why It’s Important: The collapse of Silicon Valley Bank and Signature Bank has triggered contagion fears and huge deposit outflows from regional banks.
A group of the U.S.’ 11 biggest lenders, led by JPMorgan Chase & Co. JPM and under the behest of the government, deposited a combined $30 billion in First Republic in mid-March to keep its operations going.
First Republic ended Thursday’s session 4.39% higher at $14.03, according to Benzinga Pro data.
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