S&P Cuts San Francisco-Based First Republic Bank's Ratings – Again

By Tom Joyce | The Center Square contributor, The Center Square California

March 22, 2023

(The Center Square) – S&P Global Ratings cut San Francisco-based bank First Republic's credit rating three by three notches to "B-plus" from "BB-plus." It also warned that "further cuts might come," according to a press release issued Sunday. Additionally, S&P Global Ratings reduced the bank's long-term issuer credit rating to "B+" from "BB+," among other categorical cuts.

First Republic Bank faced "high liquidity stress with substantial outflows" last week, according to the release. Therefore, S&P Global said the bank needs more deposits and loans from the Federal Reserve and to suspend its common stock dividend.

"The high deposit volatility in the wake of recent bank failures has significantly intensified vulnerabilities within First Republic's operating model," S&P Global said in its release. "Nonetheless, we view the deposit infusion as an action to stem liquidity pressures."

Additionally, S&P Global said the $30 billion in deposits that First Republic should help ease its near-term liquidity pressures but will not solve the bank's long-term problems.

The rating downgrade was the second in four days for First Republic. Previously, the bank had an "A-minus" credit rating.

First Republic's stock value has tumbled. It fell 32.8% last Friday to $23.03. Since March 8, it has fallen 80% – the day Silicon Valley Bank's parent SVB Financial Group's financial problems became widely known.

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