(Updated - April 25, 2023 5:37 AM EDT)

Investing.com -- First Republic reported Monday mixed first-quarter results and announced plans to slash its workforce by at least a fifth as the midsize American lender suffered a deeper-than-expected drop in deposit levels after customers raced to pull funds following the recent banking turmoil.

First Republic Bank (NYSE: FRC) plunged 21% in pre-market Tuesday following the report.

The regional bank reported EPS of $1.23 on revenue of $1.20 billion, that compared with estimates for $0.97 and $1.22 respectively.

The mixed results come as the bank reported that deposits slumped 35.5% to $104.47B in Q1 year-on-year, well below Wall Street expectations for $136.36B.

The larger-than-expected drop in deposit outflows followed the recent collapse of SVB and Signature Bank that sparked a crisis of confidence in the banking system, forcing customers to pull their funds from smaller banks in favor of larger lenders.

Net interest income fell 19.4% to $923M in Q1 year on year.

The struggling regional bank said it was exploring strategic options to expedite its progress while reinforcing its capital position, which includes efforts to cut costs.

The bank expects to reduce its workforce by approximately 20% to 25% in the second quarter.

Evercore ISI analyst John Pancari says the results suggest the bank is "in a holding pattern and is burning fuel."

"The bank has lost meaningful deposits and is planning to shrink its asset base accordingly. But this will take time given the duration of its loans, and FRC could erode capital in the meantime if bottom line losses materialize."

On a more positive note, Wolfe Research analyst Bill Carache believes the results were better than expected.

"FRC's unclear outlook keeps us cautious, and our lack confidence in its ability to remix into lower-cost deposits leads us to now assume a larger mix of higher-cost CD funding."

By Yasin Ebrahim and Senad Karaahmetovic