First Republic Bank, troubled over loan values and cash outflows, stated in a regulatory filing Friday that its board has decided to suspend payments on its preferred stock.
“The right of holders to receive dividends is noncumulative, and the Board is not required to declare a dividend payable in respect of any dividend period,” First Republic said, calling the move “a measure of prudent oversight.”
The decision involves seven series of preferred stocks, the bank said, and is meant to preserve capital, according to The Wall Street Journal.
First Republic suspended its common stock dividend March 16 to focus “on reducing its borrowings and evaluating the composition and size of its balance sheet,” the bank said in a release that also announced 11 banks would be infusing First Republic with $30 billion to help keep it afloat.
The lender’s customers had pulled roughly $70 billion in deposits amid a crisis of confidence among shareholders of several U.S. regional banks in the days following the SVB and Signature failures.
First Republic is not alone among midsize banks making changes at the board level. Phoenix-based Western Alliance, which itself saw an 82% drop in stock price during the week after the bank failures, announced Friday that one of its board members, Patricia Arvielo, is resigning.
Arvielo aims to “focus on existing commitments and [the resignation] does not relate to any disagreement on matters relating to the Company’s or the Bank’s operations, policies or practices or any other matter,” the bank said in a filing.
The board appointed Mary Tuuk Kuras to fill the seat Arvielo held. Kuras, who has been appointed to the board’s committees on risk management and finance and investment, will stand for election at Western Alliance’s June 14 meeting, the bank said.
For First Republic’s part, the dividend move comes after eight executive officers waived their 2023 bonuses “in light of the recent volatility in the banking system and its subsequent impact,” the bank said March 22.
First Republic had $3.6 billion in preferred stock outstanding as of Dec. 31, 2022, according to its latest annual filing. The lender paid $158 million in dividends on preferred stock, the Journal reported.
First Republic is set to announce its first-quarter earnings April 24.