first republic banks stock fell sharply on tuesday as analysts sifted through a difficult firstquarter update from the closelywatched lender and found little clarity on its future as it retools its core business after a drop in deposits first republic stock frc is down 219 as the most heavilytraded issue in premarket action with volume of about 27 million shares according to marketwatchs premarket screener analysts at raymond james said the banks firstquarter results released late monday were disappointing with a dramatic decline in core deposit balances increased reliance on highcost borrowings and substantial net interest margin compression from march first republic stock is getting battered heres how the banks tailspin started and why it hasnt stopped first republic aired plans to reduce its loan portfolio and cut costs including laying off up to 25 of its workforce we believe frc shares will remain volatile until we gain more clarity on the banks future said raymond james analyst david j long raymond james analysts reiterated a market perform rating on first republic and said it was not a surprise to see a decline in core deposits in the first quarter given its relatively high degree of uninsured deposits and high concentration of large depositors and a downgrade of its credit to junk status despite a 30 billion deposit from 11 banks in march also read moodys revises macro outlook on us banks to strong from very strong as credit strength ebbs while the bank has been able to secure liquidity to meet these deposit outflows in the nearterm these funding sources do not come cheap and will cause severe profitability headwinds for the foreseeable future long said wedbush analysts reiterated a neutral rating on first republic and said the banks heavy deposit outflows are expected to weigh on its profit margins we expect frc to embrace a new approach and a different business model as it adjusts to operating with a smaller balance sheet wedbush analyst david chiaverini said the bank shared plans to at least temporarily change to an originate and sell model for loans to generate incremental fee income while limiting the impact on capital wedbush analysts said we believe this approach makes sense for first republic during this period of transition but we also believe the bank may need to originate loans with higher yields than before to generate credit buyer demand which may lead to a slowing pace of originations chiaverini said wedbush said its neutral rating is based on first republics diminished earnings power uncertainty around its future business model and higher cost of capital also readkeycorps comericas and zions stocks slide as lost deposits weigh on earnings this content was created by marketwatch which is operated by dow jones  co marketwatch is published independently from dow jones newswires and the wall street journal