FRC
$125.75
First Republic Bank
($2.92)
(2.27%)
Earnings Details
3rd Quarter September 2020
Tuesday, October 13, 2020 7:00:00 AM
Tweet Share Watch
Summary

First Republic Bank Beats

First Republic Bank (FRC) reported 3rd Quarter September 2020 earnings of $1.61 per share on revenue of $1.1 billion. The consensus earnings estimate was $1.38 per share on revenue of $955.6 million. The Earnings Whisper number was $1.42 per share. Revenue grew 7.7% 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
$1.61
Earnings Whisper
$1.42
Consensus Estimate
$1.38
Reported Revenue
$1.13 Bil
Revenue Estimate
$955.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

First Republic Reports Third Quarter 2020 Results

Revenues Increased 20% Year-Over-Year

Net Interest Income Increased 19% Year-Over-Year

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

“First Republic’s client-centric business model delivered another quarter of safe, consistent growth,” said Jim Herbert, Founder, Chairman and CEO of First Republic. “Lending, deposits and wealth management all continued to grow strongly due to our focus on exceptional, differentiated client service.”

Quarterly Highlights

Financial Results

  • Year-over-year:
    • Revenues were $1.0 billion, up 19.6%.
    • Net interest income was $830.3 million, up 19.5%.
    • Net income was $293.1 million, up 24.8%.
    • Diluted earnings per share of $1.61, up 22.9% (included $0.09 positive impact from discounts on loans sold, insurance proceeds and an amended tax return refund).
    • Tangible book value per share was $55.00, up 12.6%.
  • Loan originations totaled $12.2 billion, our best quarter ever.
  • Net interest margin was 2.71%, compared to 2.70% for the prior quarter.
  • Efficiency ratio was 60.7%, compared to 62.0% for the prior quarter.

Continued Capital and Credit Strength

  • Tier 1 leverage ratio was 8.38%. 
  • Nonperforming assets remained at a low 12 basis points of total assets.
  • Net charge-offs were only $1.7 million, or less than 1 basis point of average loans.

Continued Franchise Development

  • Year-over-year:
    • Loans totaled $102.7 billion, up 19.0% (excluding SBA Paycheck Protection Program (“PPP”) and for sale loans).
    • Deposits were $104.4 billion, up 21.8%.
    • Wealth management assets were $168.2 billion, up 19.9%.
    • Wealth management revenues were $126.8 million, up 10.5%.

“We’re very pleased with the double-digit growth of revenue, net interest income and earnings per share, both this quarter and year to date,” said Mike Roffler, Chief Financial Officer. “Credit quality, capital and liquidity remain strong. We’re pleased to have raised $500 million of Tier 1 fixed-for-life perpetual, preferred stock during the quarter at the lowest dividend rate ever for a bank.”

Quarterly Cash Dividend of $0.20 per Share

The Bank declared a cash dividend for the third quarter of $0.20 per share of common stock, which is payable on November 12, 2020 to shareholders of record as of October 29, 2020. The current quarterly dividend is an increase over last year, our ninth consecutive year of dividend increases.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were only 12 basis points of total assets at September 30, 2020.

The provision for credit losses for the quarter was $28.5 million, which was driven by loan growth and an economic outlook reflecting the impact of COVID-19. For the first nine months of 2020, the provision for credit losses was $122.0 million, with net loan charge-offs of only $3.0 million.

Continued Capital Strength

The Bank’s Tier 1 leverage ratio was 8.38% at September 30, 2020, up from 8.15% at June 30, 2020.

During the third quarter, the Bank issued $500.0 million of 4.125% Noncumulative Perpetual Series K Preferred Stock, which qualifies as Tier 1 capital. In addition, on October 9, 2020, the Bank redeemed the $100.0 million of outstanding shares of its 5.70% Noncumulative Perpetual Series F Preferred Stock.

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

Tangible Book Value Growth

Tangible book value per common share at September 30, 2020 was $55.00, up 12.6% from a year ago.

Continued Franchise Development

Loan Originations

Loan originations were $12.2 billion for the quarter, up 11.6% from the same quarter a year ago primarily due to an increase in single family lending.

Single family loan originations were 56% of the total for the quarter and had a weighted average loan-to-value ratio of 58%. In addition, multifamily and commercial real estate loans originated were 9% of total originations, and had a weighted average loan-to-value ratio of 50%.

Loans, excluding PPP loans and loans held for sale, totaled $102.7 billion at September 30, 2020, up 19.0% compared to a year ago primarily due to increases in single family and multifamily loans.

COVID-19 Loan Modifications

Loan modifications to those borrowers experiencing financial challenges as a result of COVID-19 (not classified as troubled debt restructurings) totaled $3.9 billion, and were 3.7% 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 September 30, 2020, only 2.3% of total loans. As of September 30, 2020, the Bank had modifications of these portfolios for $640 million, or 26%.

Deposit Growth

Total deposits increased to $104.4 billion, up 21.8% compared to a year ago, and had an average rate paid of 21 basis points during the quarter.

At September 30, 2020, checking deposit balances were 64.8% of total deposits.

Investments

Total investment securities at September 30, 2020 were $18.7 billion, a 7.1% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $17.1 billion at September 30, 2020, and represented 12.9% of quarterly average total assets.

Wealth Management

Total wealth management assets were $168.2 billion at September 30, 2020, up 8.0% for the quarter and up 19.9% compared to a year ago. The increases in wealth management assets were due to market appreciation and net client inflow.

Wealth management revenues totaled $126.8 million for the quarter, up 10.5% compared to last year’s third quarter. Such revenues represented 12.7% of the Bank’s total revenues for the quarter.

Wealth management assets at September 30, 2020 included investment management assets of $74.7 billion, brokerage assets and money market mutual funds of $81.2 billion, and trust and custody assets of $12.3 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.0 billion for the quarter, up 19.6% compared to the third quarter a year ago.

Net Interest Income Growth

Net interest income was $830.3 million for the quarter, up 19.5% compared to the third 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 increased to 2.71% in the third quarter, from 2.70% in the prior quarter.

Noninterest Income

Noninterest income was $171.0 million for the quarter, up 20.2% compared to the third quarter a year ago. The increase was primarily driven by the elevated gain on sale of loans, which included $10.3 million related to discounts on loans purchased, higher investment management fees, and income from investments in life insurance, which included a $5.3 million gain from life insurance proceeds.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $608.2 million for the quarter, up 13.9% compared to the third quarter a year ago. The increase was primarily due to increased salaries and benefits and information systems costs from the continued investments in the quality and expansion of the franchise, partially offset by lower travel and entertainment, as well as advertising and marketing expenses.

The efficiency ratio was 60.7% for the quarter, compared to 63.8% for the third quarter a year ago. For the first nine months of 2020, the efficiency ratio was 62.0%.

Income Taxes

The Bank’s effective tax rate for the third quarter of 2020 was 19.6%, compared to 19.4% for the prior quarter, and 18.0% for the third quarter a year ago. For the first nine months of 2020, the Bank’s effective tax rate was 19.5%, compared to 17.0% a year ago. The increases were primarily the result of lower excess tax benefits from a decrease in stock option exercises by employees, partially offset by a tax refund from an amended tax return.

Conference Call Details

First Republic Bank’s third quarter 2020 earnings conference call is scheduled for October 13, 2020 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 353-6461 and use confirmation code 2953562# approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (334) 323-0501 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 October 13, 2020, at 11:00 a.m. PT / 2:00 p.m. ET, through October 20, 2020, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 2953562#. 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
September 30,

 

Quarter Ended
June 30,

 

Nine Months Ended
September 30,

(in thousands, except per share amounts)

 

2020

 

2019

 

2020

2020

 

2019

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans

 

$

811,708

 

 

$

764,468

 

 

$

791,286

 

 

$

2,399,646

 

 

$

2,205,884

 

Investments

 

142,971

 

 

134,099

 

 

146,515

 

 

438,055

 

 

401,908

 

Other

 

6,116

 

 

5,779

 

 

5,059

 

 

18,135

 

 

15,767

 

Cash and cash equivalents

 

1,181

 

 

5,430

 

 

564

 

 

5,685

 

 

18,966

 

Total interest income

 

961,976

 

 

909,776

 

 

943,424

 

 

2,861,521

 

 

2,642,525

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

54,355

 

 

134,917

 

 

72,480

 

 

245,680

 

 

371,852

 

Borrowings

 

77,341

 

 

79,874

 

 

83,532

 

 

246,017

 

 

226,624

 

Total interest expense

 

131,696

 

 

214,791

 

 

156,012

 

 

491,697

 

 

598,476

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

830,280

 

 

694,985

 

 

787,412

 

 

2,369,824

 

 

2,044,049

 

Provision for credit losses

 

28,538

 

 

16,711

 

 

31,117

 

 

122,025

 

 

52,111

 

Net interest income after provision for credit losses

 

801,742

 

 

678,274

 

 

756,295

 

 

2,247,799

 

 

1,991,938

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

96,638

 

 

83,582

 

 

85,083

 

 

281,017

 

 

262,226

 

Brokerage and investment fees

 

10,796

 

 

12,673

 

 

12,406

 

 

39,028

 

 

28,619

 

Insurance fees

 

2,216

 

 

2,712

 

 

1,713

 

 

6,086

 

 

8,522

 

Trust fees

 

4,543

 

 

4,105

 

 

4,599

 

 

14,118

 

 

12,221

 

Foreign exchange fee income

 

12,575

 

 

11,685

 

 

10,105

 

 

34,864

 

 

30,661

 

Deposit fees

 

5,753

 

 

6,563

 

 

5,248

 

 

17,598

 

 

19,462

 

Loan and related fees

 

7,171

 

 

5,341

 

 

7,456

 

 

20,741

 

 

13,644

 

Loan servicing fees, net

 

144

 

 

2,347

 

 

(4,445)

 

 

(2,649)

 

 

9,560

 

Gain (loss) on sale of loans

 

13,797

 

 

122

 

 

(1,147)

 

 

14,575

 

 

466

 

Gain (loss) on investment securities

 

(405)

 

 

(683)

 

 

1,529

 

 

3,752

 

 

(1,895)

 

Income from investments in life insurance

 

20,546

 

 

12,152

 

 

7,800

 

 

36,506

 

 

31,536

 

Other income (loss)

 

(2,791)

 

 

1,608

 

 

1,222

 

 

960

 

 

4,853

 

Total noninterest income

 

170,983

 

 

142,207

 

 

131,569

 

 

466,596

 

 

419,875

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

373,225

 

 

309,655

 

 

344,204

 

 

1,078,633

 

 

920,432

 

Information systems

 

74,549

 

 

66,612

 

 

74,037

 

 

219,301

 

 

204,059

 

Occupancy

 

55,543

 

 

50,722

 

 

54,941

 

 

164,125

 

 

142,204

 

Professional fees

 

19,845

 

 

17,507

 

 

15,517

 

 

48,479

 

 

45,623

 

Advertising and marketing

 

8,909

 

 

15,912

 

 

8,621

 

 

29,373

 

 

48,346

 

FDIC assessments

 

11,003

 

 

9,748

 

 

11,275

 

 

32,463

 

 

27,847

 

Other expenses

 

65,136

 

 

63,794

 

 

60,863

 

 

187,311

 

 

199,105

 

Total noninterest expense

 

608,210

 

 

533,950

 

 

569,458

 

 

1,759,685

 

 

1,587,616

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

364,515

 

 

286,531

 

 

318,406

 

 

954,710

 

 

824,197

 

Provision for income taxes

 

71,378

 

 

51,687

 

 

61,638

 

 

186,119

 

 

140,198

 

Net income

 

293,137

 

 

234,844

 

 

256,768

 

 

768,591

 

 

683,999

 

Dividends on preferred stock

 

14,816

 

 

12,787

 

 

14,817

 

 

42,653

 

 

38,362

 

Net income available to common shareholders

 

$

278,321

 

 

$

222,057

 

 

$

241,951

 

 

$

725,938

 

 

$

645,637

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.62

 

 

$

1.32

 

 

$

1.41

 

 

$

4.23

 

 

$

3.85

 

Diluted earnings per common share

 

$

1.61

 

 

$

1.31

 

 

$

1.40

 

 

$

4.21

 

 

$

3.81

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares—basic

 

172,142

 

 

168,272

 

 

171,627

 

 

171,537

 

 

167,694

 

Weighted average shares—diluted

 

172,932

 

 

169,346

 

 

172,659

 

 

172,514

 

 

169,449

 

CONSOLIDATED BALANCE SHEETS

 

 

As of

($ in thousands)

 

September 30,
2020

 

June 30,
2020

 

December 31,
2019 (1)

 

September 30,
2019 (1)

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,691,149

 

 

$

3,099,170

 

 

$

1,699,557

 

 

$

2,181,600

 

Debt securities available-for-sale

 

1,711,202

 

 

1,576,956

 

 

1,282,169

 

 

1,401,105

 

 

 

 

 

 

 

 

 

Debt securities held-to-maturity

 

16,929,422

 

 

17,513,211

 

 

17,147,633

 

 

16,002,722

 

Less: Allowance for credit losses

 

(5,716)

 

 

(5,383)

 

 

 

 

 

Debt securities held-to-maturity, net

 

16,923,706

 

 

17,507,828

 

 

17,147,633

 

 

16,002,722

 

 

 

 

 

 

 

 

 

Equity securities (fair value)

 

20,478

 

 

21,104

 

 

19,586

 

 

19,736

 

 

 

 

 

 

 

 

 

Loans: (1)

 

 

 

 

 

 

 

 

Single family (1-4 units)

 

56,628,359

 

 

52,435,246

 

 

47,985,651

 

 

44,882,363

 

Home equity lines of credit

 

2,431,991

 

 

2,419,359

 

 

2,501,432

 

 

2,530,740

 

Single family construction

 

739,091

 

 

733,909

 

 

761,589

 

 

743,699

 

Multifamily (5+ units)

 

13,392,531

 

 

13,187,857

 

 

12,353,359

 

 

11,672,916

 

Commercial real estate

 

7,781,797

 

 

7,793,137

 

 

7,449,058

 

 

7,415,677

 

Multifamily/commercial construction

 

2,038,949

 

 

1,966,292

 

 

1,695,954

 

 

1,583,968

 

Capital call lines of credit

 

6,203,877

 

 

6,173,992

 

 

5,570,322

 

 

5,568,342

 

Tax-exempt

 

3,276,705

 

 

3,186,066

 

 

3,042,193

 

 

3,042,765

 

Other business

 

2,982,532

 

 

3,179,023

 

 

3,034,301

 

 

2,953,756

 

PPP

 

2,091,102

 

 

2,092,307

 

 

 

 

 

Stock secured

 

2,311,754

 

 

1,924,107

 

 

1,897,511

 

 

1,610,914

 

Other secured

 

1,780,652

 

 

1,702,535

 

 

1,433,399

 

 

1,293,084

 

Unsecured

 

3,102,311

 

 

3,221,405

 

 

3,072,062

 

 

3,006,586

 

Total loans

 

104,761,651

 

 

100,015,235

 

 

90,796,831

 

 

86,304,810

 

Allowance for credit losses

 

(604,747)

 

 

(583,997)

 

 

(496,104)

 

 

(485,465)

 

Loans, net

 

104,156,904

 

 

99,431,238

 

 

90,300,727

 

 

85,819,345

 

 

 

 

 

 

 

 

 

Loans held for sale

 

33,655

 

 

313,655

 

 

23,304

 

 

31,693

 

Investments in life insurance

 

1,949,360

 

 

1,468,712

 

 

1,434,642

 

 

1,425,057

 

Tax credit investments

 

1,099,713

 

 

1,105,853

 

 

1,100,509

 

 

1,039,061

 

Premises, equipment and leasehold improvements, net

 

390,241

 

 

388,256

 

 

386,841

 

 

373,693

 

Goodwill and other intangible assets

 

229,185

 

 

230,975

 

 

235,269

 

 

264,658

 

Other real estate owned

 

 

 

1,071

 

 

 

 

 

Other assets

 

3,020,178

 

 

3,159,069

 

 

2,633,397

 

 

2,470,065

 

Total Assets

 

$

133,225,771

 

 

$

128,303,887

 

 

$

116,263,634

 

 

$

111,028,735

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

$

41,538,676

 

 

$

37,586,940

 

 

$

33,124,265

 

 

$

32,720,317

 

Interest-bearing checking

 

26,081,189

 

 

23,833,458

 

 

19,696,859

 

 

17,438,402

 

Money market checking

 

15,868,769

 

 

14,639,069

 

 

12,790,707

 

 

11,242,205

 

Money market savings and passbooks

 

11,419,289

 

 

10,236,015

 

 

10,586,355

 

 

10,277,249

 

Certificates of deposit

 

9,495,453

 

 

12,238,479

 

 

13,935,060

 

 

14,042,346

 

Total Deposits

 

104,403,376

 

 

98,533,961

 

 

90,133,246

 

 

85,720,519

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

5,000

 

 

5,000

 

 

800,000

 

 

775,000

 

Long-term FHLB advances

 

13,505,000

 

 

15,405,000

 

 

12,200,000

 

 

10,900,000

 

Senior notes

 

995,626

 

 

995,109

 

 

497,719

 

 

497,494

 

Subordinated notes

 

778,204

 

 

778,096

 

 

777,885

 

 

777,781

 

Other liabilities

 

2,193,956

 

 

2,010,793

 

 

2,003,677

 

 

2,926,735

 

Total Liabilities

 

121,881,162

 

 

117,727,959

 

 

106,412,527

 

 

101,597,529

 

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock

 

1,645,000

 

 

1,145,000

 

 

1,145,000

 

 

940,000

 

Common stock

 

1,722

 

 

1,721

 

 

1,686

 

 

1,685

 

Additional paid-in capital

 

4,571,499

 

 

4,543,051

 

 

4,214,915

 

 

4,198,442

 

Retained earnings

 

5,102,229

 

 

4,858,965

 

 

4,484,375

 

 

4,281,249

 

Accumulated other comprehensive income

 

24,159

 

 

27,191

 

 

5,131

 

 

9,830

 

Total Shareholders’ Equity

 

11,344,609

 

 

10,575,928

 

 

9,851,107

 

 

9,431,206

 

Total Liabilities and Shareholders’ Equity

 

$

133,225,771

 

 

$

128,303,887

 

 

$

116,263,634

 

 

$

111,028,735

 

____________

 

 

 

 

 

 

 

 

(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 September 30,

 

Quarter Ended June 30,

 

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

 

$

4,427,985

 

 

$

1,181

 

 

0.11

%

 

$

1,161,441

 

 

$

5,430

 

 

1.86

%

 

$

2,789,666

 

 

$

564

 

 

0.08

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agency securities

 

202,174

 

 

1,186

 

 

2.35

%

 

740,893

 

 

5,375

 

 

2.90

%

 

214,835

 

 

1,367

 

 

2.55

%

Agency residential and commercial MBS

 

6,250,577

 

 

37,437

 

 

2.40

%

 

6,593,422

 

 

46,762

 

 

2.84

%

 

6,615,707

 

 

42,661

 

 

2.58

%

Other residential and commercial MBS

 

37,860

 

 

201

 

 

2.13

%

 

4,473

 

 

43

 

 

3.84

%

 

27,499

 

 

182

 

 

2.65

%

Municipal securities

 

12,309,647

 

 

129,097

 

 

4.19

%

 

9,184,274

 

 

101,154

 

 

4.41

%

 

11,949,615

 

 

126,906

 

 

4.25

%

Other investment securities (3)

 

44,782

 

 

309

 

 

2.76

%

 

24,977

 

 

156

 

 

2.49

%

 

43,800

 

 

309

 

 

2.83

%

Total investment securities

 

18,845,040

 

 

168,230

 

 

3.57

%

 

16,548,039

 

 

153,490

 

 

3.71

%

 

18,851,456

 

 

171,425

 

 

3.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans: (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate (5)

 

56,906,612

 

 

421,545

 

 

2.96

%

 

45,754,902

 

 

374,690

 

 

3.27

%

 

53,737,207

 

 

404,691

 

 

3.01

%

Multifamily (6)

 

13,312,631

 

 

124,759

 

 

3.67

%

 

11,391,573

 

 

111,727

 

 

3.84

%

 

12,887,676

 

 

120,657

 

 

3.70

%

Commercial real estate

 

7,801,603

 

 

78,412

 

 

3.93

%

 

7,280,053

 

 

77,654

 

 

4.17

%

 

7,718,257

 

 

77,635

 

 

3.98

%

Multifamily/commercial construction

 

2,739,717

 

 

30,608

 

 

4.37

%

 

2,294,560

 

 

29,055

 

 

4.95

%

 

2,632,682

 

 

29,468

 

 

4.43

%

Business (7)

 

12,538,201

 

 

110,487

 

 

3.45

%

 

11,551,439

 

 

129,314

 

 

4.38

%

 

13,069,640

 

 

115,666

 

 

3.50

%

PPP

 

2,091,580

 

 

10,825

 

 

2.03

%

 

 

 

 

 

%

 

1,620,772

 

 

7,659

 

 

1.87

%

Other (8)

 

6,995,592

 

 

41,735

 

 

2.33

%

 

5,704,872

 

 

48,746

 

 

3.34

%

 

6,658,487

 

 

42,116

 

 

2.50

%

Total loans

 

102,385,936

 

 

818,371

 

 

3.16

%

 

83,977,399

 

 

771,186

 

 

3.63

%

 

98,324,721

 

 

797,892

 

 

3.23

%

FHLB stock

 

457,808

 

 

6,116

 

 

5.31

%

 

321,778

 

 

5,779

 

 

7.13

%

 

491,938

 

 

5,059

 

 

4.14

%

Total interest-earning assets

 

126,116,769

 

 

993,898

 

 

3.12

%

 

102,008,657

 

 

935,885

 

 

3.63

%

 

120,457,781

 

 

974,940

 

 

3.22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

433,852

 

 

 

 

 

 

335,648

 

 

 

 

 

 

425,440

 

 

 

 

 

Goodwill and other intangibles

 

230,051

 

 

 

 

 

 

266,032

 

 

 

 

 

 

231,934

 

 

 

 

 

Other assets

 

5,074,504

 

 

 

 

 

 

4,409,665

 

 

 

 

 

 

4,905,493

 

 

 

 

 

Total noninterest-earning assets

 

5,738,407

 

 

 

 

 

 

5,011,345

 

 

 

 

 

 

5,562,867

 

 

 

 

 

Total Assets

 

$

131,855,176

 

 

 

 

 

 

$

107,020,002

 

 

 

 

 

 

$

126,020,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

64,895,753

 

 

2,413

 

 

0.01

%

 

$

48,666,948

 

 

8,501

 

 

0.07

%

 

$

58,978,081

 

 

3,127

 

 

0.02

%

Money market checking and savings

 

26,220,043

 

 

13,675

 

 

0.21

%

 

20,536,777

 

 

53,046

 

 

1.02

%

 

24,133,700

 

 

15,224

 

 

0.25

%

CDs

 

11,334,100

 

 

38,267

 

 

1.34

%

 

13,170,046

 

 

73,370

 

 

2.21

%

 

12,721,452

 

 

54,129

 

 

1.71

%

Total deposits

 

102,449,896

 

 

54,355

 

 

0.21

%

 

82,373,771

 

 

134,917

 

 

0.65

%

 

95,833,233

 

 

72,480

 

 

0.30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

5,030

 

 

0

 

 

0.00

%

 

2,204,262

 

 

12,520

 

 

2.25

%

 

2,747

 

 

0

 

 

0.04

%

Long-term FHLB advances

 

14,739,238

 

 

62,201

 

 

1.68

%

 

9,796,739

 

 

54,901

 

 

2.22

%

 

15,868,682

 

 

68,391

 

 

1.73

%

Senior notes (9)

 

995,373

 

 

6,032

 

 

2.42

%

 

497,384

 

 

3,350

 

 

2.69

%

 

994,905

 

 

6,034

 

 

2.43

%

Subordinated notes (9)

 

778,151

 

 

9,108

 

 

4.68

%

 

777,730

 

 

9,103

 

 

4.68

%

 

778,044

 

 

9,107

 

 

4.68

%

Total borrowings

 

16,517,792

 

 

77,341

 

 

1.86

%

 

13,276,115

 

 

79,874

 

 

2.39

%

 

17,644,378

 

 

83,532

 

 

1.90

%

Total interest-bearing liabilities

 

118,967,688

 

 

131,696

 

 

0.44

%

 

95,649,886

 

 

214,791

 

 

0.89

%

 

113,477,611

 

 

156,012

 

 

0.55

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

2,082,793

 

 

 

 

 

 

2,037,177

 

 

 

 

 

 

2,067,585

 

 

 

 

 

Preferred equity

 

1,226,522

 

 

 

 

 

 

940,000

 

 

 

 

 

 

1,145,000

 

 

 

 

 

Common equity

 

9,578,173

 

 

 

 

 

 

8,392,939

 

 

 

 

 

 

9,330,452

 

 

 

 

 

Total Liabilities and Equity

 

$

131,855,176

 

 

 

 

 

 

$

107,020,002

 

 

 

 

 

 

$

126,020,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (10)

 

 

 

 

 

2.68

%

 

 

 

 

 

2.74

%

 

 

 

 

 

2.67

%

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

 

 

 

$

862,202

 

 

2.71

%

 

 

 

$

721,094

 

 

2.80

%

 

 

 

$

818,928

 

 

2.70

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent adjustment

 

(31,922)

 

 

 

 

 

 

(26,109)

 

 

 

 

 

 

(31,516)

 

 

 

Net interest income, as reported

 

$

830,280

 

 

 

 

 

 

$

694,985

 

 

 

 

 

 

$

787,412

 

 

 

 

Nine Months Ended September 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

 

$

3,028,868

 

 

$

5,685

 

 

0.25

%

 

$

1,231,578

 

 

$

18,966

 

 

2.06

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agency securities

 

241,343

 

 

4,760

 

 

2.63

%

 

938,081

 

 

20,827

 

 

2.96

%

Agency residential and commercial MBS

 

6,536,601

 

 

127,283

 

 

2.60

%

 

6,705,085

 

 

144,106

 

 

2.87

%

Other residential and commercial MBS

 

23,118

 

 

415

 

 

2.40

%

 

4,508

 

 

131

 

 

3.88

%

Municipal securities

 

11,874,265

 

 

379,182

 

 

4.26

%

 

8,624,534

 

 

293,060

 

 

4.53

%

Other investment securities (3)

 

44,125

 

 

939

 

 

2.83

%

 

21,121

 

 

403

 

 

2.54

%

Total investment securities

 

18,719,452

 

 

512,579

 

 

3.65

%

 

16,293,329

 

 

458,527

 

 

3.75

%

 

 

 

 

 

 

 

 

 

 

 

 

Loans: (4)

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate (5)

 

53,991,954

 

 

1,231,219

 

 

3.04

%

 

43,212,352

 

 

1,073,950

 

 

3.31

%

Multifamily (6)

 

12,923,436

 

 

364,360

 

 

3.70

%

 

10,980,052

 

 

320,977

 

 

3.85

%

Commercial real estate

 

7,698,522

 

 

234,655

 

 

4.00

%

 

6,978,946

 

 

223,602

 

 

4.22

%

Multifamily/commercial construction

 

2,641,375

 

 

90,361

 

 

4.49

%

 

2,286,710

 

 

85,971

 

 

4.96

%

Business (7)

 

12,665,609

 

 

349,205

 

 

3.62

%

 

11,216,470

 

 

382,143

 

 

4.49

%

PPP

 

1,240,568

 

 

18,484

 

 

1.96

%

 

 

 

 

 

%

Other (8)

 

6,703,449

 

 

131,423

 

 

2.58

%

 

5,382,125

 

 

139,274

 

 

3.41

%

Total loans

 

97,864,913

 

 

2,419,707

 

 

3.27

%

 

80,056,655

 

 

2,225,917

 

 

3.69

%

FHLB stock

 

452,260

 

 

18,135

 

 

5.36

%

 

310,758

 

 

15,768

 

 

6.78

%

Total interest-earning assets

 

120,065,493

 

 

2,956,106

 

 

3.26

%

 

97,892,320

 

 

2,719,178

 

 

3.69

%

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

434,181

 

 

 

 

 

 

341,984

 

 

 

 

 

Goodwill and other intangibles

 

232,014

 

 

 

 

 

 

269,246

 

 

 

 

 

Other assets

 

4,901,072

 

 

 

 

 

 

4,306,791

 

 

 

 

 

Total noninterest-earning assets

 

5,567,267

 

 

 

 

 

 

4,918,021

 

 

 

 

 

Total Assets

 

$

125,632,760

 

 

 

 

 

 

$

102,810,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

59,266,405

 

 

13,972

 

 

0.03

%

 

$

47,006,632

 

 

21,541

 

 

0.06

%

Money market checking and savings

 

24,283,378

 

 

73,769

 

 

0.41

%

 

19,714,378

 

 

146,900

 

 

1.00

%

CDs

 

12,742,008

 

 

157,939

 

 

1.66

%

 

12,457,649

 

 

203,411

 

 

2.18

%

Total deposits

 

96,291,791

 

 

245,680

 

 

0.34

%

 

79,178,659

 

 

371,852

 

 

0.63

%

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

411,712

 

 

4,700

 

 

1.52

%

 

2,016,744

 

 

36,832

 

 

2.44

%

Long-term FHLB advances

 

14,676,405

 

 

197,158

 

 

1.79

%

 

9,149,268

 

 

147,669

 

 

2.16

%

Senior notes (9)

 

918,809

 

 

16,839

 

 

2.44

%

 

741,731

 

 

14,818

 

 

2.66

%

Subordinated notes (9)

 

778,045

 

 

27,320

 

 

4.68

%

 

777,629

 

 

27,305

 

 

4.68

%

Total borrowings

 

16,784,971

 

 

246,017

 

 

1.96

%

 

12,685,372

 

 

226,624

 

 

2.39

%

Total interest-bearing liabilities

 

113,076,762

 

 

491,697

 

 

0.58

%

 

91,864,031

 

 

598,476

 

 

0.87

%

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

2,060,245

 

 

 

 

 

 

1,780,107

 

 

 

 

 

Preferred equity

 

1,172,372

 

 

 

 

 

 

940,000

 

 

 

 

 

Common equity

 

9,323,381

 

 

 

 

 

 

8,226,203

 

 

 

 

 

Total Liabilities and Equity

 

$

125,632,760

 

 

 

 

 

 

$

102,810,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (10)

 

 

 

 

 

2.68

%

 

 

 

 

 

2.82

%

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

 

 

 

$

2,464,409

 

 

2.72

%

 

 

 

$

2,120,702

 

 

2.87

%

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent adjustment

 

 

 

(94,585)

 

 

 

 

 

 

(76,653)

 

 

 

Net interest income, as reported

 

 

 

$

2,369,824

 

 

 

 

 

 

$

2,044,049

 

 

 

__________

(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 and other business 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
September 30,

 

Quarter Ended
June 30,

 

Nine Months Ended
September 30,

Operating Information

 

2020

 

2019

 

2020

 

2020

 

2019

($ in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Net income to average assets (1)

 

0.88

%

 

0.87

%

 

0.82

%

 

0.82

%

 

0.89

%

Net income available to common shareholders to

average common equity (1)

 

11.56

%

 

10.50

%

 

10.43

%

 

10.40

%

 

10.49

%

Net income available to common shareholders to

average tangible common equity (1)

 

11.84

%

 

10.84

%

 

10.70

%

 

10.67

%

 

10.85

%

Dividends per common share

 

$

0.20

 

 

$

0.19

 

 

$

0.20

 

 

$

0.59

 

 

$

0.56

 

Dividend payout ratio

 

12.4

%

 

14.5

%

 

14.3

%

 

14.0

%

 

14.7

%

Efficiency ratio (2), (3)

 

60.7

%

 

63.8

%

 

62.0

%

 

62.0

%

 

64.4

%

 

 

 

 

 

 

 

 

 

 

 

Net loan charge-offs

 

$

1,687

 

 

$

4,341

 

 

$

1,098

 

 

$

2,987

 

 

$

5,694

 

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

 

0.01

%

 

0.02

%

 

0.00

%

 

0.00

%

 

0.01

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan credit losses to:

 

 

 

 

 

 

 

 

 

 

Total loans

 

0.58

%

 

0.56

%

 

0.58

%

 

0.58

%

 

0.56

%

Nonaccrual loans

 

368.2

%

 

354.5

%

 

354.1

%

 

368.2

%

 

354.5

%

__________

 

 

 

 

 

 

 

 

 

 

(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.

 

 

Quarter Ended
September 30,

 

Quarter Ended
June 30,

 

Nine Months Ended
September 30,

Effective Tax Rate

 

2020

 

2019

 

2020

 

2020

 

2019

Effective tax rate, prior to excess tax benefits and tax refund from an amended tax return

 

21.1

%

 

21.4

%

 

22.5

%

 

21.6

%

 

21.4

%

 

 

 

 

 

 

 

 

 

 

 

Excess tax benefits—stock options

 

(0.1)

 

 

(3.3)

 

 

(1.0)

 

 

(0.8)

 

 

(3.6)

 

Excess tax benefits—other stock awards

 

(0.1)

 

 

(0.1)

 

 

(2.1)

 

 

(0.8)

 

 

(0.8)

 

Total excess tax benefits

 

(0.2)

 

 

(3.4)

 

 

(3.1)

 

 

(1.6)

 

 

(4.4)

 

 

 

 

 

 

 

 

 

 

 

 

Tax refund from an amended tax return

 

(1.3)

 

 

 

(0.5)

 

Effective tax rate

 

19.6

%

 

18.0

%

 

19.4

%

 

19.5

%

 

17.0

%

 

 

 

 

 

 

 

 

 

 

 

Provision for Credit Losses

 

Quarter Ended
September 30,

 

Quarter Ended
June 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2020

 

2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Debt securities held-to-maturity

 

$

333

 

 

$

 

 

$

296

 

 

$

1,047

 

 

$

 

Loans

 

22,437

 

 

16,711

 

 

43,189

 

 

113,305

 

 

52,111

 

Unfunded loan commitments (1)

 

5,768

 

 

 

 

(12,368)

 

 

7,673

 

 

 

Total provision

 

$

28,538

 

 

$

16,711

 

 

$

31,117

 

 

$

122,025

 

 

$

52,111

 

__________

 

 

 

 

 

 

 

 

 

 

(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
September 30, 2020

 

Nine Months Ended
September 30, 2020

Allowance for Credit Losses

 

Debt Securities Held-to-Maturity

 

Loans

 

Unfunded Loan Commitments (1)

 

Total

 

Debt Securities Held-to-Maturity

 

Loans

 

Unfunded Loan Commitments (1)

 

Total

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of

period (2)

 

$

5,383

 

 

$

583,997

 

 

$

17,602

 

 

$

606,982

 

 

$

4,669

 

 

$

494,429

 

 

$

15,697

 

 

$

514,795

 

Provision for credit losses

 

333

 

 

22,437

 

 

5,768

 

 

28,538

 

 

1,047

 

 

113,305

 

 

7,673

 

 

122,025

 

Net charge-offs

 

 

 

(1,687)

 

 

 

 

(1,687)

 

 

 

 

(2,987)

 

 

 

 

(2,987)

 

Balance at end of period

 

$

5,716

 

 

$

604,747

 

 

$

23,370

 

 

$

633,833

 

 

$

5,716

 

 

$

604,747

 

 

$

23,370

 

 

$

633,833

 

__________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(2) For the nine months ended September 30, 2020, represents the balance after the cumulative effect adjustment from the adoption of CECL.

 

Quarter Ended
September 30,

 

Quarter Ended
June 30,

 

Nine Months Ended
September 30,

Mortgage Loan Sales

 

2020

 

2019

 

2020

 

2020

 

2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Loans sold:

 

 

 

 

 

 

 

 

 

 

Flow sales:

 

 

 

 

 

 

 

 

 

 

Agency

 

$

44,118

 

 

$

25,214

 

 

$

10,810

 

 

$

80,702

 

 

$

51,426

 

Non-agency

 

 

 

11,932

 

 

 

 

31,870

 

 

43,266

 

Total flow sales

 

44,118

 

 

37,146

 

 

10,810

 

 

112,572

 

 

94,692

 

 

 

 

 

 

 

 

 

 

 

Bulk sales:

 

 

 

 

 

 

 

 

 

 

Non-agency

 

235,732

 

 

 

 

 

 

673,401

 

 

152,119

 

 

 

 

 

 

 

 

 

 

 

Securitizations

 

 

 

 

 

300,116

 

 

300,116

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans sold

 

$

279,850

 

 

$

37,146

 

 

$

310,926

 

 

$

1,086,089

 

 

$

246,811

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of loans:

 

 

 

 

 

 

 

 

 

 

Amount (1)

 

$

13,797

 

 

$

122

 

 

$

(1,147)

 

 

$

14,575

 

 

$

466

 

Gain (loss) as a percentage of loans sold (1)

 

4.93

%

 

0.33

%

 

(0.37)

%

 

1.34

%

 

0.19

%

__________

 

 

 

 

 

 

 

 

 

 

(1) The gain for the quarter and nine months ended September 30, 2020 included $10.3 million related to discounts on purchased loans. Excluding these discounts of $10.3 million, the gain as a percentage of loans sold was 1.24% and 0.39% for the quarter and nine months ended September 30, 2020, respectively.

 

Quarter Ended
September 30,

 

Quarter Ended
June 30,

 

Nine Months Ended
September 30,

Loan Originations

 

2020

 

2019 (1)

 

2020 (2)

 

2020

 

2019 (1)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Single family (1-4 units)

 

$

6,813,850

 

 

$

4,872,598

 

 

$

5,875,184

 

 

$

16,208,370

 

 

$

11,129,819

 

Home equity lines of credit

 

432,443

 

 

359,154

 

 

457,737

 

 

1,285,688

 

 

1,067,881

 

Single family construction

 

186,833

 

 

175,361

 

 

119,318

 

 

415,313

 

 

455,061

 

Multifamily (5+ units)

 

955,951

 

 

710,183

 

 

946,820

 

 

2,684,074

 

 

2,105,764

 

Commercial real estate

 

193,228

 

 

543,964

 

 

330,683

 

 

975,769

 

 

1,309,736

 

Multifamily/commercial construction

 

245,220

 

 

387,144

 

 

131,414

 

 

997,555

 

 

835,272

 

Capital call lines of credit

 

1,803,907

 

 

2,337,530

 

 

1,405,347

 

 

5,594,483

 

 

5,463,704

 

Tax-exempt

 

328,711

 

 

48,125

 

 

184,054

 

 

612,784

 

 

234,470

 

Other business

 

243,788

 

 

428,533

 

 

914,257

 

 

1,777,824

 

 

1,108,712

 

PPP

 

 

 

 

 

1,981,797

 

 

1,981,797

 

 

 

Stock secured

 

685,250

 

 

443,691

 

 

519,416

 

 

1,797,226

 

 

1,119,145

 

Other secured

 

189,386

 

 

218,831

 

 

358,730

 

 

961,940

 

 

841,001

 

Unsecured

 

159,379

 

 

438,278

 

 

203,270

 

 

685,537

 

 

1,068,959

 

Total loans originated

 

$

12,237,946

 

 

$

10,963,392

 

 

$

13,428,027

 

 

$

35,978,360

 

 

$

26,739,524

 

__________

 

 

 

 

 

 

 

 

 

 

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

(2) Excluding PPP loan originations, total loan originations were $11.4 billion for the quarter ended June 30, 2020.

 

As of

Asset Quality Information

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

164,247

 

 

$

164,930

 

 

$

125,418

 

 

$

143,181

 

 

$

136,928

 

Other real estate owned

 

 

 

1,071

 

 

1,071

 

 

 

 

 

Total nonperforming assets

 

$

164,247

 

 

$

166,001

 

 

$

126,489

 

 

$

143,181

 

 

$

136,928

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets

 

0.12

%

 

0.13

%

 

0.10

%

 

0.12

%

 

0.12

%

 

 

 

 

 

 

 

 

 

 

 

Accruing loans 90 days or more past due

 

$

935

 

 

$

3,764

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Restructured accruing loans

 

$

11,378

 

 

$

11,501

 

 

$

13,418

 

 

$

13,287

 

 

$

14,964

 

 

September 30, 2020

COVID-19 Loan Modifications (1), (2), (3), (4)

 

Unpaid Principal Balance

 

Deferred Interest (5)

 

LTV (6)

 

Average Loan Size

 

Number of Loans

($ in millions)

 

 

 

 

 

 

 

 

 

 

Single family (1-4 units)

 

$

1,780

 

 

$

25

 

 

60

%

 

$

1.0

 

 

1,788

 

Home equity lines of credit

 

71

 

 

1

 

 

57

%

 

$

0.4

 

 

174

 

Single family construction

 

10

 

 

 

 

55

%

 

$

1.4

 

 

7

 

Multifamily (5+ units)

 

548

 

 

7

 

 

52

%

 

$

3.1

 

 

179

 

Commercial real estate

 

1,004

 

 

13

 

 

48

%

 

$

3.7

 

 

275

 

Multifamily/commercial construction

 

68

 

 

2

 

 

41

%

 

$

6.8

 

 

10

 

Capital call lines of credit

 

 

 

 

 

n/a

 

$

 

 

 

Tax-exempt

 

72

 

 

1

 

 

n/a

 

$

17.9

 

 

4

 

Other business

 

176

 

 

2

 

 

n/a

 

$

1.3

 

 

138

 

Stock secured

 

 

 

 

 

n/a

 

$

 

 

 

Other secured

 

5

 

 

 

 

n/a

 

$

0.5

 

 

12

 

Unsecured (7)

 

131

 

 

 

 

n/a

 

$

0.1

 

 

985

 

Total

 

$

3,865

 

 

$

51

 

 

 

 

 

 

3,572

 

__________

 

 

 

 

 

 

 

 

 

 

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

(2) Includes 936 loans totaling $297 million that have completed their deferral period, but for which a normal payment is not yet due.

(3) Includes 10 loans totaling $46 million that were modified a second time.

(4) Excludes 395 loans totaling $330 million that have completed their deferral period and returned to a normal payment schedule or are no longer outstanding.

(5) Represents interest payments not made during the deferral period through September 30, 2020.

(6) Weighted average loan-to-value (“LTV”) ratios for real estate secured loans are based on appraised value at the time of origination.

(7) Includes $130 million of household debt refinance loans.

 

September 30, 2020

Loan Industry Information

 

Unpaid Principal Balance

 

LTV

 

Average Loan Size

 

Number of Loans

 

Personal Guarantee %

($ in millions)

 

 

 

 

 

 

 

 

 

 

Retail

 

$

1,774

 

 

49

%

 

$

2.7

 

 

682

 

 

76

%

Hotel

 

430

 

 

48

%

 

$

6.8

 

 

65

 

 

74

%

Restaurant (1)

 

231

 

 

51

%

 

$

1.1

 

 

215

 

 

94

%

Total (2)

 

$

2,435

 

 

 

 

 

 

962

 

 

 

__________

 

 

 

 

 

 

 

 

 

 

(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

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

($ in millions)

 

 

 

 

 

 

 

 

 

 

Loans serviced for investors

 

$

7,799

 

 

$

8,316

 

 

$

9,203

 

 

$

9,298

 

 

$

10,080

 

 

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

 

As of

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Number of shares of common stock outstanding

 

172,188

 

 

172,094

 

 

171,395

 

 

168,621

 

 

168,450

 

Book value per common share

 

$

56.33

 

 

$

54.80

 

 

$

53.76

 

 

$

51.63

 

 

$

50.41

 

Tangible book value per common share

 

$

55.00

 

 

$

53.46

 

 

$

52.40

 

 

$

50.24

 

 

$

48.84

 

 

As of

Capital Ratios

 

September 30,
2020 (1), (2)

 

June 30,
2020 (2)

 

March 31,
2020 (2)

 

December 31,
2019

 

September 30,
2019

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

 

8.38

%

 

8.15

%

 

8.46

%

 

8.39

%

 

8.50

%

Common Equity Tier 1 capital to risk-weighted assets

 

9.78

%

 

9.80

%

 

9.87

%

 

9.86

%

 

9.91

%

Tier 1 capital to risk-weighted assets

 

11.50

%

 

11.04

%

 

11.14

%

 

11.21

%

 

11.05

%

Total capital to risk-weighted assets

 

12.94

%

 

12.49

%

 

12.62

%

 

12.73

%

 

12.61

%

Regulatory Capital (3)

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 capital

 

$

9,375,688

 

 

$

9,103,771

 

 

$

8,887,905

 

 

$

8,371,192

 

 

$

8,124,179

 

Tier 1 capital

 

$

11,020,688

 

 

$

10,248,771

 

 

$

10,032,905

 

 

$

9,516,192

 

 

$

9,064,179

 

Total capital

 

$

12,396,304

 

 

$

11,604,141

 

 

$

11,365,654

 

 

$

10,802,209

 

 

$

10,340,902

 

Assets (3)

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Average assets

 

$

131,517,445

 

 

$

125,690,830

 

 

$

118,626,842

 

 

$

113,403,507

 

 

$

106,659,003

 

Risk-weighted assets

 

$

95,823,385

 

 

$

92,870,859

 

 

$

90,072,400

 

 

$

84,885,943

 

 

$

81,994,651

 

__________

 

 

 

 

 

 

 

 

 

 

(1) Ratios and amounts as of September 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

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

($ in millions)

 

 

 

 

 

 

 

 

 

 

First Republic Investment Management

 

$

74,661

 

 

$

68,124

 

 

$

60,056

 

 

$

66,029

 

 

$

61,204

 

 

 

 

 

 

 

 

 

 

 

Brokerage and investment:

 

 

 

 

 

 

 

 

 

 

Brokerage

 

76,769

 

 

70,178

 

 

60,189

 

 

68,807

 

 

63,053

 

Money market mutual funds

 

4,416

 

 

5,933

 

 

6,893

 

 

4,268

 

 

4,402

 

Total brokerage and investment

 

81,185

 

 

76,111

 

 

67,082

 

 

73,075

 

 

67,455

 

 

 

 

 

 

 

 

 

 

 

Trust Company:

 

 

 

 

 

 

 

 

 

 

Trust

 

8,687

 

 

7,905

 

 

7,288

 

 

7,121

 

 

6,366

 

Custody

 

3,651

 

 

3,646

 

 

3,461

 

 

4,818

 

 

5,210

 

Total Trust Company

 

12,338

 

 

11,551

 

 

10,749

 

 

11,939

 

 

11,576

 

Total Wealth Management Assets

 

$

168,184

 

 

$

155,786

 

 

$

137,887

 

 

$

151,043

 

 

$

140,235

 

 

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