Pennsylvania-based Republic First Bank is overhauling its lending businesses as it seeks to recover from a significant loss in the first quarter of 2023.
The bank reported a loss of $9.7 million in the first three months of the year, which included a $3.1 million hit from an investment in Signature Bank.
Late last week, the bank — which trades as Republic Bank — announced that it was halting mortgage origination and “streamlining” its commercial lending business in New York City.
Mortgage origination at Republic Bank focused on “long-term jumbo mortgage products”, the bank said, with “aggressive” pricing and that came at a high cost. The bank is now focusing on shorter-term assets that can generate a “better risk-adjusted return”.
Republic Bank has cut jobs in its New York lending and credit teams, it said, with the aim of refocusing on “strong commercial relationships” in its core Philadelphia markets.
Thomas Geisel, president and CEO of the bank’s parent company Republic First Bancorp, said: “While these were difficult decisions — especially because of the inherent reduction in force required — we strongly believe they are in the best interests of the company and will allow us to build a strong foundation for the future.”
Longer-term lending programs have come under pressure as the Federal Reserve has raised interest rates, while banks with exposure to long-dated Treasury bonds have also incurred losses.
Separately, California-based PacWest Bancorp is talking to interested parties about the potential sale of its Lender Finance loan portfolio as it seeks to reinforce its balance sheet.
The bank has seen its share price drop significantly in the past few weeks amid the wider turmoil in the banking sector.
However, in a statement PacWest said it had “not experienced out-of-the-ordinary deposit flows” in the wake of the sale of First Republic Bank. Insured deposits increased from 71% at the end of the first quarter to 75% as of May 2.
It has also paid down $1 billion worth of debt and increased its liquidity position to 188% of uninsured deposits, also as of May 2.
PacWest has been implementing changes to its corporate strategy since the beginning of the year, including exiting “non-core” products and “improving our operational efficiency”, it stated.
“We have been executing this strategy and have accelerated many of these goals in response to recent market volatility in the banking industry,” the bank said.
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