FRC
$112.33
First Republic Bank
($.61)
(.54%)
Earnings Details
2nd Quarter June 2020
Tuesday, July 14, 2020 7:00:00 AM
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Summary

First Republic Bank Beats

First Republic Bank (FRC) reported 2nd Quarter June 2020 earnings of $1.40 per share on revenue of $1.1 billion. The consensus earnings estimate was $1.20 per share on revenue of $901.5 million. The Earnings Whisper number was $1.18 per share. Revenue grew 4.3% on a year-over-year basis.

First Republic Bank and its subsidiaries provides private banking, private business banking and private wealth management, including investment, trust and brokerage services.

Results
Reported Earnings
$1.40
Earnings Whisper
$1.18
Consensus Estimate
$1.20
Reported Revenue
$1.07 Bil
Revenue Estimate
$901.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

First Republic Reports Second Quarter 2020 Results

Revenues Increased 12% Year-Over-Year

Net Income Increased 15% Year-Over-Year

SAN FRANCISCO--(BUSINESS WIRE)--First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended June 30, 2020.

“Second quarter results were very strong,” said Jim Herbert, Founder, Chairman and CEO of First Republic. “Loan origination volume was our best ever, while deposits and wealth management assets also grew very nicely. Since its founding 35 years ago, First Republic’s simple, conservative, client-centric business model has delivered consistently strong results.”

Quarterly Highlights

Financial Results

– Year-over-year:

– Revenues were $919.0 million, up 12.2%.

– Net interest income was $787.4 million, up 16.8%.

– Provision for credit losses was $31.1 million, compared to $21.2 million for the second quarter of 2019.

– Net income was $256.8 million, up 15.4%.

– Diluted earnings per share of $1.40, up 12.9%.

– Tangible book value per share was $53.46, up 12.2%.

– Loan originations totaled $11.4 billion (excluding originations under the Small Business Administration’s Paycheck Protection Program (“PPP”)), our best quarter ever.

– Net interest margin was 2.70%, compared to 2.74% for the prior quarter.

– Efficiency ratio was 62.0%, compared to 63.5% for the prior quarter. (1)

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.15%.

– Nonperforming assets remained at a low 13 basis points of total assets.

– Net charge-offs were only $1.1 million, or less than 1 basis point of average loans.

Continued Franchise Development

– Year-over-year:

– Loans totaled $97.9 billion, up 19.1% (excluding PPP and for sale loans).

– Deposits were $98.5 billion, up 18.1%.

– Wealth management assets were $155.8 billion, up 13.2%.

– Wealth management revenues were $113.9 million, down 5.3%.

“We’re very pleased with the continued double-digit growth in total revenue, net interest income and earnings per share,” said Mike Roffler, Chief Financial Officer. “Credit quality, capital and liquidity remain strong.”

Quarterly Cash Dividend of $0.20 per Share

The Bank declared a cash dividend for the second quarter of $0.20 per share of common stock, which is payable on August 13, 2020 to shareholders of record as of July 30, 2020. The current quarterly dividend is an increase from the same quarter last year.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were only 13 basis points of total assets at June 30, 2020. The Bank had modest net loan charge-offs of $1.1 million for the quarter.

During the second quarter, the Bank recorded a provision for credit losses of $31.1 million, which included a provision for credit losses of $43.5 million for loans and held-to-maturity debt securities, offset by a reversal of a prior provision for unfunded loan commitments of $12.4 million. In the second quarter of 2019, the provision for credit losses for loans was $21.2 million. The increase in the provision for credit losses compared to a year ago reflects loan growth, as well as the CECL methodology beginning in 2020, which incorporates a significant change in economic outlook compared to the prior year.

COVID-19

Our response to the pandemic includes: quite successful company-wide remote working arrangements, modified openings and hours in our preferred banking offices, social distancing and other measures to ensure the safety of our colleagues and clients; and community support through corporate contributions for those in need. In addition, we continue to support those of our clients who are experiencing financial challenges by offering loan modifications. We have also provided loans to small businesses under the PPP.

Loan Modifications

Loan modifications to those borrowers experiencing financial challenges as a result of COVID-19 (not classified as troubled debt restructurings) totaled approximately $3.9 billion, and an additional $345 million were in process as of June 30, 2020. Total completed and in process modifications as of June 30, 2020 were 4.3% of total loans.

The Bank has limited exposure to several of the areas most directly impacted by COVID-19, such as the retail, hotel and restaurant industries, which totaled $2.4 billion as of June 30, 2020, only 2.4% of total loans. As of June 30, 2020, the Bank had completed and in process modifications of these portfolios for approximately $650 million, or 27%.

Continued Capital Strength

The Bank’s Tier 1 leverage ratio was 8.15% at June 30, 2020, compared to 8.46% at March 31, 2020.

The Bank has not and does not engage in common stock buybacks.

Tangible Book Value Growth

Tangible book value per common share at June 30, 2020 was $53.46, up 12.2% from a year ago.

Continued Franchise Development

Loan Originations and Sales

Loan originations (excluding PPP loans) were $11.4 billion for the quarter, up 23.1% from the same quarter a year ago primarily due to increases in single family and business lending. The Bank also originated $2.0 billion of PPP loans during the quarter.

Single family loan originations were 51% of the total for the quarter (excluding PPP loans) and had a weighted average loan-to-value ratio of 53%. In addition, multifamily and commercial real estate loans originated were 11% of total originations (excluding PPP loans), and had a weighted average loan-to-value ratio of 47%.

Loans, excluding PPP loans and loans held for sale, totaled $97.9 billion at June 30, 2020, up 19.1% compared to a year ago primarily due to increases in single family and multifamily loans.

During the second quarter, the Bank sold approximately $300 million of single family loans through its own securitization.

Deposit Growth

Total deposits increased to $98.5 billion, up 18.1% compared to a year ago, and had an average cost of 30 basis points during the quarter.

At June 30, 2020, checking deposit balances were 62.3% of total deposits.

Investments

Total investment securities at June 30, 2020 were $19.1 billion, an 18.1% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $16.9 billion at June 30, 2020, and represented 13.4% of quarterly average total assets.

Wealth Management

Total wealth management assets were $155.8 billion at June 30, 2020, up 13.0% for the quarter and up 13.2% compared to a year ago. The increases in wealth management assets were due to market appreciation and net client inflow.

Wealth management revenues totaled $113.9 million for the quarter, down 5.3% compared to last year’s second quarter primarily due to the market decline in the prior quarter. Such revenues represented 12.4% of the Bank’s total revenues for the quarter.

Wealth management assets at June 30, 2020 included investment management assets of $68.1 billion, brokerage assets and money market mutual funds of $76.1 billion, and trust and custody assets of $11.6 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $919.0 million for the quarter, up 12.2% compared to the second quarter a year ago.

Net Interest Income Growth

Net interest income was $787.4 million for the quarter, up 16.8% compared to the second quarter a year ago. The increase in net interest income resulted primarily from growth in average interest-earning assets, partially offset by a decrease in net interest margin.

Net Interest Margin

The net interest margin was 2.70% for the second quarter, compared to 2.74% for the prior quarter. The modest decline was primarily due to average yields on earning assets declining slightly more than the offsetting decrease in average funding costs.

Noninterest Income

Noninterest income was $131.6 million for the quarter, down 9.5% compared to the second quarter a year ago. The decrease was primarily the result of lower investment management fees due to a market decline in the prior quarter and lower loan servicing fees due to a valuation allowance established on mortgage servicing rights from accelerated repayments of loans in the servicing portfolio.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $569.5 million for the quarter, up 7.7% compared to the second quarter a year ago. The increase was primarily due to higher staffing levels and resultant higher salaries and benefits from the continued investments in the expansion of the franchise, offset by lower travel, advertising and marketing.

The efficiency ratio was 62.0% for the quarter, compared to 64.5% for the second quarter a year ago.

Income Taxes

The Bank’s effective tax rate for the second quarter of 2020 was 19.4%, compared to 19.5% for the prior quarter, and 17.4% for the second quarter a year ago. For the first six months of 2020, the Bank’s effective tax rate was 19.4%.

_____

 

(1)

The provision for unfunded loan commitments is included in the provision for credit losses for 2020 periods. The efficiency ratio for the quarter ended March 31, 2020 has been updated to conform to this change in presentation.

Conference Call Details

First Republic Bank’s second quarter 2020 earnings conference call is scheduled for July 14, 2020 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 949-2175 and use confirmation code 3743466# approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (720) 543-0197 and enter the same confirmation code.

The call will also be broadcast live over the Internet and can be accessed in the Investor Relations section of First Republic’s website at firstrepublic.com. To listen to the live webcast, please visit the site at least 15 minutes prior to the start time to register, download and install any necessary audio software.

For those unable to join the live presentation, a replay of the call will be available beginning July 14, 2020, at 11:00 a.m. PT / 2:00 p.m. ET, through July 21, 2020, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 3743466#. International callers should dial +1 (719) 457-0820 and enter the same confirmation code. A replay of the webcast also will be available for 90 days following, accessible in the Investor Relations section of First Republic Bank’s website at firstrepublic.com.

The Bank’s press releases are available after release in the Investor Relations section of First Republic Bank’s website at firstrepublic.com.

About First Republic Bank

Founded in 1985, First Republic and its subsidiaries offer private banking, private business banking and private wealth management, including investment, trust and brokerage services. First Republic specializes in delivering exceptional, relationship-based service and offers a complete line of products, including residential, commercial and personal loans, deposit services, and wealth management. Services are offered through preferred banking or wealth management offices primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and San Diego, California; Portland, Oregon; Boston, Massachusetts; Palm Beach, Florida; Greenwich, Connecticut; New York, New York; and Jackson, Wyoming. First Republic is a constituent of the S&P 500 Index and KBW Nasdaq Bank Index. For more information, visit firstrepublic.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimates,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them.

Forward-looking statements involving such risks and uncertainties include, but are not limited to, statements regarding: projections of loans, assets, deposits, liabilities, revenues, expenses, tax liabilities, net income, capital expenditures, liquidity, dividends, capital structure, investments or other financial items; expectations regarding the banking and wealth management industries; descriptions of plans or objectives of management for future operations, products or services; forecasts of future economic conditions generally and in our market areas in particular, which may affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans; our opportunities for growth and our plans for expansion (including opening new offices); expectations about the performance of any new offices; projections about the amount and the value of intangible assets, as well as amortization of recorded amounts; future provisions for credit losses on loans and debt securities, as well as for unfunded loan commitments; changes in nonperforming assets; expectations regarding the impact and duration of the COVID-19 pandemic (collectively referred to as “COVID-19” herein); projections about future levels of loan originations or loan repayments; projections regarding costs, including the impact on our efficiency ratio; and descriptions of assumptions underlying or relating to any of the foregoing.

Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: significant competition to attract and retain banking and wealth management customers, from both traditional and non-traditional financial services and technology companies; our ability to recruit and retain key managers, employees and board members; the possibility of earthquakes, fires and other natural disasters affecting the markets in which we operate; the negative impacts and disruptions resulting from COVID-19 on our colleagues and clients, the communities we serve and the domestic and global economy, which may have an adverse effect on our business, financial position and results of operations; interest rate risk and credit risk; our ability to maintain and follow high underwriting standards; economic and market conditions, including those affecting the valuation of our investment securities portfolio and credit losses on our loans and debt securities; real estate prices generally and in our markets; our geographic and product concentrations; demand for our products and services; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate and the 11th District Monthly Weighted Average Cost of Funds Index, as well as other alternative reference rates; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; any future changes to regulatory capital requirements; legislative and regulatory actions affecting us and the financial services industry, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), including increased compliance costs, limitations on activities and requirements to hold additional capital, as well as changes to the Dodd-Frank Act pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act; our ability to avoid litigation and its associated costs and liabilities; future Federal Deposit Insurance Corporation (“FDIC”) special assessments or changes to regular assessments; fraud, cybersecurity and privacy risks; and custom technology preferences of our customers and our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications. For a discussion of these and other risks and uncertainties, see First Republic’s FDIC filings, including, but not limited to, the risk factors in First Republic’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any subsequent reports filed by First Republic with the FDIC. These filings are available in the Investor Relations section of our website.

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout our public filings under the Exchange Act. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

Quarter Ended
June 30,

 

Quarter Ended
March 31,

 

Six Months Ended
June 30,

(in thousands, except per share amounts)

 

2020

 

2019

 

2020

2020

 

2019

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans

 

$

791,286

 

 

$

741,328

 

 

$

796,652

 

 

$

1,587,938

 

 

$

1,441,416

 

Investments

 

146,515

 

 

134,044

 

 

148,569

 

 

295,084

 

 

267,809

 

Other

 

5,059

 

 

4,813

 

 

6,960

 

 

12,019

 

 

9,988

 

Cash and cash equivalents

 

564

 

 

5,547

 

 

3,940

 

 

4,504

 

 

13,536

 

Total interest income

 

943,424

 

 

885,732

 

 

956,121

 

 

1,899,545

 

 

1,732,749

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

72,480

 

 

129,188

 

 

118,845

 

 

191,325

 

 

236,935

 

Borrowings

 

83,532

 

 

82,518

 

 

85,144

 

 

168,676

 

 

146,750

 

Total interest expense

 

156,012

 

 

211,706

 

 

203,989

 

 

360,001

 

 

383,685

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

787,412

 

 

674,026

 

 

752,132

 

 

1,539,544

 

 

1,349,064

 

Provision for credit losses

 

31,117

 

 

21,200

 

 

62,370

 

 

93,487

 

 

35,400

 

Net interest income after provision for credit losses

 

756,295

 

 

652,826

 

 

689,762

 

 

1,446,057

 

 

1,313,664

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

85,083

 

 

93,720

 

 

99,296

 

 

184,379

 

 

178,644

 

Brokerage and investment fees

 

12,406

 

 

8,287

 

 

15,826

 

 

28,232

 

 

15,946

 

Insurance fees

 

1,713

 

 

3,696

 

 

2,157

 

 

3,870

 

 

5,810

 

Trust fees

 

4,599

 

 

4,227

 

 

4,976

 

 

9,575

 

 

8,116

 

Foreign exchange fee income

 

10,105

 

 

10,345

 

 

12,184

 

 

22,289

 

 

18,976

 

Deposit fees

 

5,248

 

 

6,579

 

 

6,597

 

 

11,845

 

 

12,899

 

Loan and related fees

 

7,456

 

 

4,296

 

 

6,114

 

 

13,570

 

 

8,303

 

Loan servicing fees, net

 

(4,445)

 

 

3,425

 

 

1,652

 

 

(2,793)

 

 

7,213

 

Gain (loss) on sale of loans

 

(1,147)

 

 

(15)

 

 

1,925

 

 

778

 

 

344

 

Gain (loss) on investment securities

 

1,529

 

 

(1,063)

 

 

2,628

 

 

4,157

 

 

(1,212)

 

Income from investments in life insurance

 

7,800

 

 

10,049

 

 

8,160

 

 

15,960

 

 

19,384

 

Other income

 

1,222

 

 

1,804

 

 

2,529

 

 

3,751

 

 

3,245

 

Total noninterest income

 

131,569

 

 

145,350

 

 

164,044

 

 

295,613

 

 

277,668

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

344,204

 

 

297,524

 

 

361,204

 

 

705,408

 

 

610,777

 

Information systems

 

74,037

 

 

70,277

 

 

70,715

 

 

144,752

 

 

137,447

 

Occupancy

 

54,941

 

 

47,587

 

 

53,641

 

 

108,582

 

 

91,482

 

Professional fees

 

15,517

 

 

16,435

 

 

13,117

 

 

28,634

 

 

28,116

 

Advertising and marketing

 

8,621

 

 

16,700

 

 

11,843

 

 

20,464

 

 

32,434

 

FDIC assessments

 

11,275

 

 

9,196

 

 

10,185

 

 

21,460

 

 

18,099

 

Other expenses

 

60,863

 

 

71,135

 

 

61,312

 

 

122,175

 

 

135,311

 

Total noninterest expense

 

569,458

 

 

528,854

 

 

582,017

 

 

1,151,475

 

 

1,053,666

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

318,406

 

 

269,322

 

 

271,789

 

 

590,195

 

 

537,666

 

Provision for income taxes

 

61,638

 

 

46,758

 

 

53,103

 

 

114,741

 

 

88,511

 

Net income

 

256,768

 

 

222,564

 

 

218,686

 

 

475,454

 

 

449,155

 

Dividends on preferred stock

 

14,817

 

 

12,788

 

 

13,020

 

 

27,837

 

 

25,575

 

Net income available to common shareholders

 

$

241,951

 

 

$

209,776

 

 

$

205,666

 

 

$

447,617

 

 

$

423,580

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.41

 

 

$

1.25

 

 

$

1.20

 

 

$

2.61

 

 

$

2.53

 

Diluted earnings per common share

 

$

1.40

 

 

$

1.24

 

 

$

1.20

 

 

$

2.60

 

 

$

2.50

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares—basic

 

171,627

 

 

167,685

 

 

170,835

 

 

171,231

 

 

167,400

 

Weighted average shares—diluted

 

172,659

 

 

169,572

 

 

172,039

 

 

172,343

 

 

169,503

 

CONSOLIDATED BALANCE SHEETS

 

 

 

As of

($ in thousands)

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019 (1)

 

June 30,
2019 (1)

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,099,170

 

 

$

3,949,378

 

 

$

1,699,557

 

 

$

2,220,073

 

Debt securities available-for-sale

 

1,576,956

 

 

1,243,798

 

 

1,282,169

 

 

1,438,061

 

 

 

 

 

 

 

 

 

 

Debt securities held-to-maturity

 

17,513,211

 

 

17,534,920

 

 

17,147,633

 

 

14,721,568

 

Less: Allowance for credit losses

 

(5,383)

 

 

(5,087)

 

 

 

 

 

Debt securities held-to-maturity, net

 

17,507,828

 

 

17,529,833

 

 

17,147,633

 

 

14,721,568

 

 

 

 

 

 

 

 

 

 

Equity securities (fair value)

 

21,104

 

 

19,575

 

 

19,586

 

 

19,529

 

 

 

 

 

 

 

 

 

 

Loans: (1)

 

 

 

 

 

 

 

 

Single family (1-4 units)

 

52,435,246

 

 

49,063,193

 

 

47,985,651

 

 

41,758,981

 

Home equity lines of credit

 

2,419,359

 

 

2,703,919

 

 

2,501,432

 

 

2,587,554

 

Single family construction

 

733,909

 

 

779,239

 

 

761,589

 

 

702,928

 

Multifamily (5+ units)

 

13,187,857

 

 

12,823,392

 

 

12,353,359

 

 

11,160,686

 

Commercial real estate

 

7,793,137

 

 

7,715,266

 

 

7,449,058

 

 

7,166,368

 

Multifamily/commercial construction

 

1,966,292

 

 

1,839,445

 

 

1,695,954

 

 

1,611,794

 

Capital call lines of credit

 

6,173,992

 

 

7,512,231

 

 

5,570,322

 

 

5,660,887

 

Tax-exempt

 

3,186,066

 

 

3,087,751

 

 

3,042,193

 

 

3,035,959

 

Other business

 

3,179,023

 

 

3,094,922

 

 

3,034,301

 

 

2,989,664

 

PPP

 

2,092,307

 

 

 

 

 

 

 

Stock secured

 

1,924,107

 

 

1,919,971

 

 

1,897,511

 

 

1,514,855

 

Other secured

 

1,702,535

 

 

1,531,705

 

 

1,433,399

 

 

1,235,588

 

Unsecured

 

3,221,405

 

 

3,214,028

 

 

3,072,062

 

 

2,812,357

 

Total loans

 

100,015,235

 

 

95,285,062

 

 

90,796,831

 

 

82,237,621

 

Allowance for credit losses

 

(583,997)

 

 

(541,906)

 

 

(496,104)

 

 

(473,095)

 

Loans, net

 

99,431,238

 

 

94,743,156

 

 

90,300,727

 

 

81,764,526

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

313,655

 

 

354,873

 

 

23,304

 

 

12,502

 

Investments in life insurance

 

1,468,712

 

 

1,460,909

 

 

1,434,642

 

 

1,412,883

 

Tax credit investments

 

1,105,853

 

 

1,106,693

 

 

1,100,509

 

 

1,054,192

 

Premises, equipment and leasehold improvements, net

 

388,256

 

 

392,953

 

 

386,841

 

 

348,609

 

Goodwill and other intangible assets

 

230,975

 

 

232,985

 

 

235,269

 

 

267,490

 

Other real estate owned

 

1,071

 

 

1,071

 

 

 

 

 

Other assets

 

3,159,069

 

 

2,879,705

 

 

2,633,397

 

 

2,440,203

 

Total Assets

 

$

128,303,887

 

 

$

123,914,929

 

 

$

116,263,634

 

 

$

105,699,636

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

$

37,586,940

 

 

$

36,920,635

 

 

$

33,124,265

 

 

$

32,023,125

 

Interest-bearing checking

 

23,833,458

 

 

20,941,790

 

 

19,696,859

 

 

16,649,251

 

Money market checking

 

14,639,069

 

 

12,636,674

 

 

12,790,707

 

 

10,874,671

 

Money market savings and passbooks

 

10,236,015

 

 

9,052,690

 

 

10,586,355

 

 

9,921,688

 

Certificates of deposit

 

12,238,479

 

 

14,140,550

 

 

13,935,060

 

 

13,962,348

 

Total Deposits

 

98,533,961

 

 

93,692,339

 

 

90,133,246

 

 

83,431,083

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

5,000

 

 

 

 

800,000

 

 

 

Long-term FHLB advances

 

15,405,000

 

 

16,250,000

 

 

12,200,000

 

 

9,800,000

 

Senior notes

 

995,109

 

 

994,742

 

 

497,719

 

 

497,269

 

Subordinated notes

 

778,096

 

 

777,990

 

 

777,885

 

 

777,678

 

Other liabilities

 

2,010,793

 

 

1,840,093

 

 

2,003,677

 

 

1,973,963

 

Total Liabilities

 

117,727,959

 

 

113,555,164

 

 

106,412,527

 

 

96,479,993

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock

 

1,145,000

 

 

1,145,000

 

 

1,145,000

 

 

940,000

 

Common stock

 

1,721

 

 

1,714

 

 

1,686

 

 

1,682

 

Additional paid-in capital

 

4,543,051

 

 

4,543,650

 

 

4,214,915

 

 

4,186,304

 

Retained earnings

 

4,858,965

 

 

4,652,089

 

 

4,484,375

 

 

4,091,636

 

Accumulated other comprehensive income

 

27,191

 

 

17,312

 

 

5,131

 

 

21

 

Total Shareholders’ Equity

 

10,575,928

 

 

10,359,765

 

 

9,851,107

 

 

9,219,643

 

Total Liabilities and Shareholders’ Equity

 

$

128,303,887

 

 

$

123,914,929

 

 

$

116,263,634

 

 

$

105,699,636

 

____________

 

 

 

 

 

 

 

 

(1) For comparability, the Bank has adjusted certain prior period loan amounts to conform to the current period presentation under the Current Expected Credit Losses (“CECL”) methodology.

 

 

Quarter Ended June 30,

 

Quarter Ended March 31,

 

 

2020

 

2019 (4)

 

2020

Average Balances, Yields and Rates

 

Average
Balance

 

Interest Income/
Expense (1)

 

Yields/
Rates (2)

 

Average
Balance

 

Interest Income/
Expense (1)

 

Yields/
Rates (2)

 

Average
Balance

 

Interest Income/
Expense (1)

 

Yields/
Rates (2)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,789,666

 

 

$

564

 

 

0.08

%

 

$

1,091,353

 

 

$

5,547

 

 

2.04

%

 

$

1,853,579

 

 

$

3,940

 

 

0.85

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agency securities

 

214,835

 

 

1,367

 

 

2.55

%

 

1,031,797

 

 

7,675

 

 

2.98

%

 

307,449

 

 

2,207

 

 

2.87

%

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency residential and commercial MBS

 

6,615,707

 

 

42,661

 

 

2.58

%

 

6,669,868

 

 

47,724

 

 

2.86

%

 

6,746,664

 

 

47,186

 

 

2.80

%

Other residential and commercial MBS

 

27,499

 

 

182

 

 

2.65

%

 

4,523

 

 

43

 

 

3.78

%

 

3,834

 

 

32

 

 

3.33

%

Municipal securities

 

11,949,615

 

 

126,906

 

 

4.25

%

 

8,497,645

 

 

96,980

 

 

4.57

%

 

11,358,749

 

 

122,542

 

 

4.32

%

Other investment securities (3)

 

43,800

 

 

309

 

 

2.83

%

 

19,332

 

 

127

 

 

2.63

%

 

43,783

 

 

320

 

 

2.92

%

Total investment securities

 

18,851,456

 

 

171,425

 

 

3.64

%

 

16,223,165

 

 

152,549

 

 

3.76

%

 

18,460,479

 

 

172,287

 

 

3.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans: (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate (5)

 

53,737,207

 

 

404,691

 

 

3.01

%

 

42,856,354

 

 

357,475

 

 

3.34

%

 

51,300,013

 

 

404,982

 

 

3.16

%

Multifamily (6)

 

12,887,676

 

 

120,657

 

 

3.70

%

 

11,004,251

 

 

109,548

 

 

3.94

%

 

12,565,723

 

 

118,944

 

 

3.74

%

Commercial real estate

 

7,718,257

 

 

77,635

 

 

3.98

%

 

6,948,173

 

 

74,002

 

 

4.21

%

 

7,574,573

 

 

78,609

 

 

4.11

%

Multifamily/commercial construction

 

2,632,682

 

 

29,468

 

 

4.43

%

 

2,287,098

 

 

28,672

 

 

4.96

%

 

2,550,647

 

 

30,285

 

 

4.70

%

Business (7)

 

14,690,412

 

 

123,325

 

 

3.32

%

 

11,410,239

 

 

131,658

 

 

4.57

%

 

12,390,386

 

 

122,971

 

 

3.93

%

Other (8)

 

6,658,487

 

 

42,116

 

 

2.50

%

 

5,346,380

 

 

46,581

 

 

3.45

%

 

6,453,056

 

 

47,572

 

 

2.92

%

Total loans

 

98,324,721

 

 

797,892

 

 

3.23

%

 

79,852,495

 

 

747,936

 

 

3.73

%

 

92,834,398

 

 

803,363

 

 

3.44

%

FHLB stock

 

491,938

 

 

5,059

 

 

4.14

%

 

331,218

 

 

4,813

 

 

5.83

%

 

406,974

 

 

6,960

 

 

6.88

%

Total interest-earning assets

 

120,457,781

 

 

974,940

 

 

3.22

%

 

97,498,231

 

 

910,845

 

 

3.72

%

 

113,555,430

 

 

986,550

 

 

3.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

425,440

 

 

 

 

 

 

345,174

 

 

 

 

 

 

443,255

 

 

 

 

 

Goodwill and other intangibles

 

231,934

 

 

 

 

 

 

269,404

 

 

 

 

 

 

234,078

 

 

 

 

 

Other assets

 

4,905,493

 

 

 

 

 

 

4,312,290

 

 

 

 

 

 

4,721,313

 

 

 

 

 

Total noninterest-earning assets

 

5,562,867

 

 

 

 

 

 

4,926,868

 

 

 

 

 

 

5,398,646

 

 

 

 

 

Total Assets

 

$

126,020,648

 

 

 

 

 

 

$

102,425,099

 

 

 

 

 

 

$

118,954,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

58,978,081

 

 

3,127

 

 

0.02

%

 

$

45,813,205

 

 

6,946

 

 

0.06

%

 

$

53,863,519

 

 

8,432

 

 

0.06

%

Money market checking and savings

 

24,133,700

 

 

15,224

 

 

0.25

%

 

19,323,615

 

 

51,536

 

 

1.07

%

 

22,475,109

 

 

44,869

 

 

0.80

%

CDs

 

12,721,452

 

 

54,129

 

 

1.71

%

 

12,799,189

 

 

70,706

 

 

2.22

%

 

14,185,945

 

 

65,544

 

 

1.86

%

Total deposits

 

95,833,233

 

 

72,480

 

 

0.30

%

 

77,936,009

 

 

129,188

 

 

0.66

%

 

90,524,573

 

 

118,845

 

 

0.53

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

2,747

 

 

0

 

 

0.04

%

 

2,875,590

 

 

18,282

 

 

2.55

%

 

1,231,827

 

 

4,700

 

 

1.53

%

Long-term FHLB advances

 

15,868,682

 

 

68,391

 

 

1.73

%

 

9,132,967

 

 

49,601

 

 

2.18

%

 

13,420,604

 

 

66,566

 

 

1.99

%

Senior notes (9)

 

994,905

 

 

6,034

 

 

2.43

%

 

835,544

 

 

5,534

 

 

2.65

%

 

765,308

 

 

4,773

 

 

2.49

%

Subordinated notes (9)

 

778,044

 

 

9,107

 

 

4.68

%

 

777,628

 

 

9,101

 

 

4.68

%

 

777,938

 

 

9,105

 

 

4.68

%

Total borrowings

 

17,644,378

 

 

83,532

 

 

1.90

%

 

13,621,729

 

 

82,518

 

 

2.43

%

 

16,195,677

 

 

85,144

 

 

2.11

%

Total interest-bearing liabilities

 

113,477,611

 

 

156,012

 

 

0.55

%

 

91,557,738

 

 

211,706

 

 

0.93

%

 

106,720,250

 

 

203,989

 

 

0.77

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

2,067,585

 

 

 

 

 

 

1,733,674

 

 

 

 

 

 

2,030,107

 

 

 

 

 

Preferred equity

 

1,145,000

 

 

 

 

 

 

940,000

 

 

 

 

 

 

1,145,000

 

 

 

 

 

Common equity

 

9,330,452

 

 

 

 

 

 

8,193,687

 

 

 

 

 

 

9,058,719

 

 

 

 

 

Total Liabilities and Equity

 

$

126,020,648

 

 

 

 

 

 

$

102,425,099

 

 

 

 

 

 

$

118,954,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (10)

 

 

 

 

 

2.67

%

 

 

 

 

 

2.79

%

 

 

 

 

 

2.69

%

Net interest income (fully taxable-equivalent basis) and net interest margin (11)

 

 

 

$

818,928

 

 

2.70

%

 

 

 

$

699,139

 

 

2.85

%

 

 

 

$

782,561

 

 

2.74

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of tax-equivalent net interest income to reported net interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent adjustment

 

(31,516)

 

 

 

 

 

 

(25,113)

 

 

 

 

 

 

(30,429)

 

 

 

Net interest income, as reported

 

$

787,412

 

 

 

 

 

 

$

674,026

 

 

 

 

 

 

$

752,132

 

 

 

 

 

Six Months Ended June 30,

 

 

2020

 

2019 (4)

Average Balances, Yields and Rates

 

Average
Balance

 

 

Interest Income/
Expense (1)

 

Yields/
Rates (2)

 

Average
Balance

 

Interest Income/
Expense (1)

 

Yields/
Rates (2)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,321,623

 

$

4,504

 

 

0.39

%

 

$

1,267,228

 

 

$

13,536

 

 

2.15

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agency securities

 

 

261,142

 

3,574

 

 

2.74

%

 

1,038,310

 

 

15,452

 

 

2.98

%

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

Agency residential and commercial MBS

 

 

6,681,185

 

89,846

 

 

2.69

%

 

6,761,842

 

 

97,343

 

 

2.88

%

Other residential and commercial MBS

 

 

15,667

 

214

 

 

2.73

%

 

4,525

 

 

88

 

 

3.91

%

Municipal securities

 

 

11,654,183

 

249,935

 

 

4.29

%

 

8,340,025

 

 

191,481

 

 

4.59

%

Other investment securities (3)

 

 

43,791

 

629

 

 

2.87

%

 

19,161

 

 

247

 

 

2.58

%

Total investment securities

 

 

18,655,968

 

344,198

 

 

3.69

%

 

16,163,863

 

 

304,611

 

 

3.77

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans: (4)

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate (5)

 

 

52,518,610

 

809,674

 

 

3.08

%

 

41,920,005

 

 

699,259

 

 

3.34

%

Multifamily (6)

 

 

12,726,699

 

239,601

 

 

3.72

%

 

10,770,882

 

 

209,249

 

 

3.86

%

Commercial real estate

 

 

7,646,415

 

156,244

 

 

4.04

%

 

6,825,897

 

 

145,949

 

 

4.25

%

Multifamily/commercial construction

 

 

2,591,664

 

59,753

 

 

4.56

%

 

2,282,720

 

 

56,916

 

 

4.96

%

Business (7)

 

 

13,540,399

 

246,357

 

 

3.60

%

 

11,046,209

 

 

252,702

 

 

4.55

%

Other (8)

 

 

6,555,772

 

89,687

 

 

2.71

%

 

5,218,077

 

 

90,528

 

 

3.45

%

Total loans

 

 

95,579,559

 

1,601,316

 

 

3.33

%

 

78,063,790

 

 

1,454,603

 

 

3.72

%

FHLB stock

 

 

449,455

 

12,019

 

 

5.38

%

 

305,157

 

 

9,988

 

 

6.60

%

Total interest-earning assets

 

 

117,006,605

 

1,962,037

 

 

3.34

%

 

95,800,038

 

 

1,782,738

 

 

3.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

 

434,348

 

 

 

 

 

345,205

 

 

 

 

 

Goodwill and other intangibles

 

 

233,006

 

 

 

 

 

270,879

 

 

 

 

 

Other assets

 

 

4,813,403

 

 

 

 

 

4,254,502

 

 

 

 

 

Total noninterest-earning assets

 

 

5,480,757

 

 

 

 

 

4,870,586

 

 

 

 

 

Total Assets

 

$

122,487,362

 

 

 

 

 

$

100,670,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

56,420,801

 

11,559

 

 

0.04

%

 

$

46,162,715

 

 

13,040

 

 

0.06

%

Money market checking and savings

 

 

23,304,404

 

60,094

 

 

0.52

%

 

19,296,363

 

 

93,854

 

 

0.98

%

CDs

 

 

13,453,699

 

119,672

 

 

1.79

%

 

12,095,546

 

 

130,041

 

 

2.17

%

Total deposits

 

 

93,178,904

 

191,325

 

 

0.41

%

 

77,554,624

 

 

236,935

 

 

0.62

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

617,287

 

4,700

 

 

1.53

%

 

1,921,431

 

 

24,312

 

 

2.55

%

Long-term FHLB advances

 

 

14,644,643

 

134,957

 

 

1.85

%

 

8,820,165

 

 

92,768

 

 

2.12

%

Senior notes (9)

 

 

880,106

 

10,807

 

 

2.46

%

 

865,930

 

 

11,468

 

 

2.65

%

Subordinated notes (9)

 

 

777,991

 

18,212

 

 

4.68

%

 

777,578

 

 

18,202

 

 

4.68

%

Total borrowings

 

 

16,920,027

 

168,676

 

 

2.00

%

 

12,385,104

 

 

146,750

 

 

2.39

%

Total interest-bearing liabilities

 

 

110,098,931

 

360,001

 

 

0.66

%

 

89,939,728

 

 

383,685

 

 

0.86

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

 

2,048,845

 

 

 

 

 

1,649,443

 

 

 

 

 

Preferred equity

 

 

1,145,000

 

 

 

 

 

940,000

 

 

 

 

 

Common equity

 

 

9,194,586

 

 

 

 

 

8,141,453

 

 

 

 

 

Total Liabilities and Equity

 

$

122,487,362

 

 

 

 

 

$

100,670,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (10)

 

 

 

 

 

2.68

%

 

 

 

 

 

2.85

%

Net interest income (fully taxable-equivalent basis) and net interest margin (11)

 

 

 

$

1,602,036

 

 

2.72

%

 

 

 

$

1,399,053

 

 

2.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of tax-equivalent net interest income to reported net interest income:

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent adjustment

 

 

 

(62,492)

 

 

 

 

 

 

(49,989)

 

 

 

Net interest income, as reported

 

 

 

$

1,539,544

 

 

 

 

 

 

$

1,349,064

 

 

 

____________

(1) Interest income is presented on a fully taxable-equivalent basis.

(2) Yields/rates are annualized.

(3) Includes corporate debt securities, mutual funds and marketable equity securities.

(4) For comparability, the Bank has adjusted certain prior period loan amounts to conform to the current period presentation under CECL.

(5) Includes single family, home equity lines of credit, and single family construction loans. Also includes single family loans held for sale.

(6) Includes multifamily loans held for sale.

(7) Includes capital call lines of credit, tax-exempt, other business, and PPP loans.

(8) Includes stock secured, other secured and unsecured loans.

(9) Average balances include unamortized issuance discounts and costs. Interest expense includes amortization of issuance discounts and costs.

(10) Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities.

(11) Net interest margin represents net interest income on a fully taxable-equivalent basis divided by total average interest-earning assets.

 

 

Quarter Ended
June 30,

 

Quarter Ended
March 31,

 

Six Months Ended
June 30,

Operating Information

 

2020

 

2019

 

2020

 

2020

 

2019

($ in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Net income to average assets (1)

 

0.82

%

 

0.87

%

 

0.74

%

 

0.78

%

 

0.90

%

Net income available to common shareholders to average common equity (1)

 

10.43

%

 

10.27

%

 

9.13

%

 

9.79

%

 

10.49

%

Net income available to common shareholders to average tangible common equity (1)

 

10.70

%

 

10.62

%

 

9.37

%

 

10.04

%

 

10.85

%

Dividends per common share

 

$

0.20

 

 

$

0.19

 

 

$

0.19

 

 

$

0.39

 

 

$

0.37

 

Dividend payout ratio

 

14.3

%

 

15.4

%

 

15.9

%

 

15.0

%

 

14.8

%

Efficiency ratio (2), (3)

 

62.0

%

 

64.5

%

 

63.5

%

 

62.7

%

 

64.8

%

 

 

 

 

 

 

 

 

 

 

 

Net loan charge-offs

 

$

1,098

 

 

$

1,226

 

 

$

202

 

 

$

1,300

 

 

$

1,353

 

Net loan charge-offs to average total loans (1)

 

0.00

%

 

0.01

%

 

0.00

%

 

0.00

%

 

0.00

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan credit losses to:

 

 

 

 

 

 

 

 

 

 

Total loans

 

0.58

%

 

0.58

%

 

0.57

%

 

0.58

%

 

0.58

%

Nonaccrual loans

 

354.1

%

 

326.3

%

 

432.1

%

 

354.1

%

 

326.3

%

__________

 

 

 

 

 

 

 

 

 

 

(1) Ratios are annualized.

(2) Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.

(3) The provision for unfunded loan commitments is included in the provision for credit losses for 2020 periods. For 2019 periods, the provision for unfunded loan commitments is included in other noninterest expense. The efficiency ratio for the quarter ended March 31, 2020 has been updated to conform to this change in presentation.

 

 

Quarter Ended
June 30,

 

Quarter Ended
March 31,

 

Six Months Ended
June 30,

Effective Tax Rate

 

2020

 

2019

 

2020

 

2020

 

2019

Effective tax rate, prior to excess tax benefits

 

22.5

%

 

20.9

%

 

21.3

%

 

21.9

%

 

21.4

%

 

 

 

 

 

 

 

 

 

 

 

Excess tax benefits—stock options

 

(1.0)

 

 

(1.3)

 

 

(1.5)

 

 

(1.3)

 

 

(3.8)

 

Excess tax benefits—other stock awards

 

(2.1)

 

 

(2.2)

 

 

(0.3)

 

 

(1.2)

 

 

(1.1)

 

Total excess tax benefits

 

(3.1)

 

 

(3.5)

 

 

(1.8)

 

 

(2.5)

 

 

(4.9)

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate

 

19.4

%

 

17.4

%

 

19.5

%

 

19.4

%

 

16.5

%

 

Quarter Ended
June 30,

 

Quarter Ended
March 31,

 

Six Months Ended
June 30,

Provision for Credit Losses

 

2020

 

2019

 

2020

 

2020

 

2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Debt securities held-to-maturity

 

$

296

 

 

$

 

 

$

418

 

 

$

714

 

 

$

 

Loans

 

43,189

 

 

21,200

 

 

47,679

 

 

90,868

 

 

35,400

 

Unfunded loan commitments (1)

 

(12,368)

 

 

 

 

14,273

 

 

1,905

 

 

 

Total provision

 

$

31,117

 

 

$

21,200

 

 

$

62,370

 

 

$

93,487

 

 

$

35,400

 

__________

 

 

 

 

 

 

 

 

 

 

(1) The provision for unfunded loan commitments is included in the provision for credit losses for 2020 periods. For 2019 periods, the provision for unfunded loan commitments is included in other noninterest expense, which is not presented in this table.

 

 

Quarter Ended
June 30, 2020

 

Six Months Ended
June 30, 2020

Allowance for Credit Losses

 

Debt Securities
Held-to-Maturity

 

Loans

 

Unfunded Loan
Commitments (2)

 

Total

 

Debt Securities
Held-to-Maturity

 

Loans

 

Unfunded Loan
Commitments (2)

 

Total

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period (1)

 

$

5,087

 

 

$

541,906

 

 

$

29,970

 

 

$

576,963

 

 

$

4,669

 

 

$

494,429

 

 

$

15,697

 

 

$

514,795

 

Provision for credit losses

 

296

 

 

43,189

 

 

(12,368)

 

 

31,117

 

 

714

 

 

90,868

 

 

1,905

 

 

93,487

 

Net charge-offs

 

 

 

(1,098)

 

 

 

 

(1,098)

 

 

 

 

(1,300)

 

 

 

 

(1,300)

 

Balance at end of period

 

$

5,383

 

 

$

583,997

 

 

$

17,602

 

 

$

606,982

 

 

$

5,383

 

 

$

583,997

 

 

$

17,602

 

 

$

606,982

 

__________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) For the six months ended June 30, 2020, represents the balance after the cumulative effect adjustment from the adoption of CECL.

(2) The allowance for credit losses on unfunded loan commitments is included in other liabilities.

 

 

Quarter Ended
June 30,

 

Quarter Ended
March 31,

 

Six Months Ended
June 30,

Mortgage Loan Sales

 

2020

 

2019

 

2020

 

2020

 

2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Loans sold:

 

 

 

 

 

 

 

 

 

 

Flow sales:

 

 

 

 

 

 

 

 

 

 

Agency

 

$

10,810

 

 

$

14,533

 

 

$

25,774

 

 

$

36,584

 

 

$

26,212

 

Non-agency

 

 

 

14,503

 

 

31,870

 

 

31,870

 

 

31,334

 

Total flow sales

 

10,810

 

 

29,036

 

 

57,644

 

 

68,454

 

 

57,546

 

 

 

 

 

 

 

 

 

 

 

 

Bulk sales:

 

 

 

 

 

 

 

 

 

 

Non-agency

 

 

 

 

 

437,669

 

 

437,669

 

 

152,119

 

 

 

 

 

 

 

 

 

 

 

 

Securitizations

 

300,116

 

 

 

 

 

 

300,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans sold

 

$

310,926

 

 

$

29,036

 

 

$

495,313

 

 

$

806,239

 

 

$

209,665

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of loans:

 

 

 

 

 

 

 

 

 

 

Amount

 

$

(1,147)

 

 

$

(15)

 

 

$

1,925

 

 

$

778

 

 

$

344

 

Gain (loss) as a percentage of loans sold

 

(0.37)

%

 

(0.05)

%

 

0.39

%

 

0.10

%

 

0.16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended
June 30,

 

Quarter Ended
March 31,

 

Six Months Ended
June 30,

Loan Originations

 

2020

 

2019 (1)

 

2020

 

2020

 

2019 (1)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Single family (1-4 units)

 

$

5,875,184

 

 

$

4,067,326

 

 

$

3,519,336

 

 

$

9,394,520

 

 

$

6,257,221

 

Home equity lines of credit

 

457,737

 

 

356,589

 

 

395,508

 

 

853,245

 

 

708,727

 

Single family construction

 

119,318

 

 

155,431

 

 

109,162

 

 

228,480

 

 

279,700

 

Multifamily (5+ units)

 

946,820

 

 

812,638

 

 

781,303

 

 

1,728,123

 

 

1,395,581

 

Commercial real estate

 

330,683

 

 

519,244

 

 

451,858

 

 

782,541

 

 

765,772

 

Multifamily/commercial construction

 

131,414

 

 

318,015

 

 

620,921

 

 

752,335

 

 

448,128

 

Capital call lines of credit

 

1,405,347

 

 

1,423,451

 

 

2,385,229

 

 

3,790,576

 

 

3,126,174

 

Tax-exempt

 

184,054

 

 

101,920

 

 

100,019

 

 

284,073

 

 

186,345

 

Other business

 

914,257

 

 

424,180

 

 

619,779

 

 

1,534,036

 

 

680,179

 

PPP

 

1,981,797

 

 

 

 

 

 

1,981,797

 

 

 

Stock secured

 

519,416

 

 

468,741

 

 

592,560

 

 

1,111,976

 

 

675,454

 

Other secured

 

358,730

 

 

355,421

 

 

413,824

 

 

772,554

 

 

622,170

 

Unsecured

 

203,270

 

 

296,373

 

 

322,888

 

 

526,158

 

 

630,681

 

Total loans originated

 

$

13,428,027

 

 

$

9,299,329

 

 

$

10,312,387

 

 

$

23,740,414

 

 

$

15,776,132

 

__________

 

 

 

 

 

 

 

 

 

 

(1) For comparability, the Bank has adjusted certain prior period amounts to conform to the current period presentation under CECL.

 

 

As of

Asset Quality Information

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

164,930

 

 

$

125,418

 

 

$

143,181

 

 

$

136,928

 

 

$

144,993

 

Other real estate owned

 

1,071

 

 

1,071

 

 

 

 

 

 

 

Total nonperforming assets

 

$

166,001

 

 

$

126,489

 

 

$

143,181

 

 

$

136,928

 

 

$

144,993

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets

 

0.13

%

 

0.10

%

 

0.12

%

 

0.12

%

 

0.14

%

 

 

 

 

 

 

 

 

 

 

 

Accruing loans 90 days or more past due

 

$

3,764

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Restructured accruing loans

 

$

11,501

 

 

$

13,418

 

 

$

13,287

 

 

$

14,964

 

 

$

12,176

 

 

 

As of June 30, 2020

 

 

Completed

 

In Process (2)

Loan Modifications (1)

 

Unpaid Principal
Balance

 

LTV

 

Average Loan
Size

 

Number of
Loans

 

Unpaid Principal
Balance

 

LTV

 

Average Loan
Size

 

Number of
Loans

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family (1-4 units)

 

$

1,741

 

 

59

%

 

$

1.0

 

 

1,787

 

 

$

230

 

 

64

%

 

$

1.3

 

 

175

 

Home equity lines of credit

 

78

 

 

56

%

 

0.4

 

 

178

 

 

26

 

 

59

%

 

0.6

 

 

56

 

Single family construction

 

17

 

 

49

%

 

1.9

 

 

9

 

 

 

 

%

 

 

 

 

Multifamily (5+ units)

 

554

 

 

51

%

 

3.0

 

 

183

 

 

4

 

 

53

%

 

0.7

 

 

5

 

Commercial real estate

 

1,038

 

 

48

%

 

3.7

 

 

283

 

 

58

 

 

54

%

 

4.2

 

 

14

 

Multifamily/commercial construction

 

52

 

 

44

%

 

5.2

 

 

10

 

 

4

 

 

29

%

 

3.9

 

 

1

 

Capital call lines of credit

 

 

 

n/a

 

 

 

 

 

 

 

n/a

 

 

 

 

Tax-exempt

 

72

 

 

n/a

 

18.0

 

 

4

 

 

12

 

 

n/a

 

6.1

 

 

2

 

Other business

 

210

 

 

n/a

 

1.3

 

 

157

 

 

4

 

 

n/a

 

0.3

 

 

14

 

Stock secured

 

 

 

n/a

 

 

 

 

 

 

 

n/a

 

 

 

 

Other secured

 

6

 

 

n/a

 

0.4

 

 

13

 

 

 

 

n/a

 

 

 

 

Unsecured (3)

 

136

 

 

n/a

 

0.1

 

 

999

 

 

7

 

 

n/a

 

0.4

 

 

19

 

Total

 

$

3,904

 

 

 

 

 

 

 

 

$

345

 

 

 

 

 

 

 

__________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) COVID-19 loan modifications are not classified as troubled debt restructurings.

(2) Loan modifications requested by borrowers that have not yet been completed.

(3) Unsecured loan modifications completed and in process include $135 million and $2 million, respectively, of household debt refinance loans.

 

 

As of June 30, 2020

Loan Industry Information

 

Unpaid Principal
Balance

 

LTV

 

Average Loan
Size

 

Number of
Loans

 

Personal
Guarantee %

($ in millions)

 

 

 

 

 

 

 

 

 

 

Retail

 

$

1,772

 

 

50

%

 

$

2.7

 

 

674

 

 

76

%

Hotel

 

431

 

 

48

%

 

6.8

 

 

66

 

 

74

%

Restaurant (1)

 

224

 

 

51

%

 

1.1

 

 

215

 

 

94

%

Total (2)

 

$

2,427

 

 

 

 

 

 

 

 

 

__________

 

 

 

 

 

 

 

 

 

 

(1) Approximately 70% of loans to restaurants are real estate secured.

(2) Amounts in the table above exclude $43 million of loans for hotels and $135 million of loans for restaurants under the PPP.

 

 

As of

Loan Servicing Portfolio

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

($ in millions)

 

 

 

 

 

 

 

 

 

 

Loans serviced for investors

 

$

8,316

 

 

$

9,203

 

 

$

9,298

 

 

$

10,080

 

 

$

10,746

 

 

As of

Common Shares, Book Value per Common Share and Tangible Book Value per Common Share

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Number of shares of common stock outstanding

 

172,094

 

 

171,395

 

 

168,621

 

 

168,450

 

 

168,176

 

Book value per common share

 

$

54.80

 

 

$

53.76

 

 

$

51.63

 

 

$

50.41

 

 

$

49.23

 

Tangible book value per common share

 

$

53.46

 

 

$

52.40

 

 

$

50.24

 

 

$

48.84

 

 

$

47.64

 

 

 

As of

Capital Ratios

 

June 30,
2020 (1),(2)

 

March 31,
2020 (2)

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

Tier 1 leverage ratio (Tier 1 capital to average assets)

 

8.15

%

 

8.46

%

 

8.39

%

 

8.50

%

 

8.69

%

Common Equity Tier 1 capital to risk-weighted assets

 

9.80

%

 

9.87

%

 

9.86

%

 

9.91

%

 

10.19

%

Tier 1 capital to risk-weighted assets

 

11.04

%

 

11.14

%

 

11.21

%

 

11.05

%

 

11.39

%

Total capital to risk-weighted assets

 

12.49

%

 

12.62

%

 

12.73

%

 

12.61

%

 

13.02

%

Regulatory Capital (3)

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 capital

 

$

9,103,771

 

 

$

8,887,905

 

 

$

8,371,192

 

 

$

8,124,179

 

 

$

7,934,602

 

Tier 1 capital

 

$

10,248,771

 

 

$

10,032,905

 

 

$

9,516,192

 

 

$

9,064,179

 

 

$

8,874,602

 

Total capital

 

$

11,604,141

 

 

$

11,365,654

 

 

$

10,802,209

 

 

$

10,340,902

 

 

$

10,138,375

 

Assets (3)

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Average assets

 

$

125,690,830

 

 

$

118,626,842

 

 

$

113,403,507

 

 

$

106,659,003

 

 

$

102,097,363

 

Risk-weighted assets

 

$

92,870,859

 

 

$

90,072,400

 

 

$

84,885,943

 

 

$

81,994,651

 

 

$

77,889,111

 

__________

 

 

 

 

 

 

 

 

 

 

(1) Ratios and amounts as of June 30, 2020 are preliminary.

(2) In accordance with the CECL Interim Final Rule, the Bank elected to delay the estimated impact of CECL on its regulatory capital and risk-weighted assets over a five-year transition period ending December 31, 2024. Ratios and amounts for 2020 periods have been adjusted to exclude the following impacts attributed to the adoption of CECL: decreases in retained earnings, increases in allowance for credit losses on loans, held-to-maturity debt securities and unfunded loan commitments, decreases in average assets, and increases in risk-weighted assets.

(3) As defined by regulatory capital rules.

 

 

As of

Wealth Management Assets

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

($ in millions)

 

 

 

 

 

 

 

 

 

 

First Republic Investment Management

 

$

68,124

 

 

$

60,056

 

 

$

66,029

 

 

$

61,204

 

 

$

61,192

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage and investment:

 

 

 

 

 

 

 

 

 

 

Brokerage

 

70,178

 

 

60,189

 

 

68,807

 

 

63,053

 

 

61,583

 

Money market mutual funds

 

5,933

 

 

6,893

 

 

4,268

 

 

4,402

 

 

3,312

 

Total brokerage and investment

 

76,111

 

 

67,082

 

 

73,075

 

 

67,455

 

 

64,895

 

 

 

 

 

 

 

 

 

 

 

 

Trust Company:

 

 

 

 

 

 

 

 

 

 

Trust

 

7,905

 

 

7,288

 

 

7,121

 

 

6,366

 

 

6,319

 

Custody

 

3,646

 

 

3,461

 

 

4,818

 

 

5,210

 

 

5,225

 

Total Trust Company

 

11,551

 

 

10,749

 

 

11,939

 

 

11,576

 

 

11,544

 

Total Wealth Management Assets

 

$

155,786

 

 

$

137,887

 

 

$

151,043

 

 

$

140,235

 

 

$

137,631

 

 

Investors:
Andrew Greenebaum / Lasse Glassen
Addo Investor Relations
agreenebaum@addoir.com
lglassen@addoir.com
(310) 829-5400

Media:
Greg Berardi
Blue Marlin Partners
greg@bluemarlinpartners.com
(415) 239-7826

Source: First Republic Bank