FRC
$155.59
First Republic Bank
$.59
.38%
Earnings Details
Quarter December 2020
Thursday, January 14, 2021 7:00:00 AM
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Summary

First Republic Bank Beats

First Republic Bank (FRC) reported Quarter December 2020 earnings of $1.60 per share on revenue of $1.2 billion. The consensus earnings estimate was $1.52 per share on revenue of $1.0 billion. The Earnings Whisper number was $1.55 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
$1.60
Earnings Whisper
$1.55
Consensus Estimate
$1.52
Reported Revenue
$1.18 Bil
Revenue Estimate
$1.02 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

First Republic Reports 2020 Results

Revenues Increased 17% Year-Over-Year

Tangible Book Value Per Share Increased 14% Year-Over-Year

SAN FRANCISCO--(BUSINESS WIRE)--First Republic Bank (NYSE: FRC) today announced financial results for the quarter and year ended December 31, 2020.

“First Republic had another very successful year,” said Founder, Chairman and CEO Jim Herbert. “Founded in 1985, this was our 35th consecutive year of profitability. First Republic continues to deliver safe, consistent growth, reflecting the strength of our client focused service model.”

Full Year Highlights

Financial Results

– Revenues were $3.9 billion, up 17.2%.

– Net interest income was $3.3 billion, up 18.0%.

– Net income was $1.1 billion, up 14.4%.

– Diluted earnings per share of $5.81, up 11.7%.

– Loan originations totaled $50.7 billion (excluding $2.0 billion of originations under the Small Business Administration’s Paycheck Protection Program (“PPP”)).

– Tangible book value per share was $57.30, up 14.1%.

– Efficiency ratio was 61.9%, compared to 64.2% last year.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.14%.

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

– Net charge-offs were only $2.4 million, or less than 1 basis point of average loans.

Continued Franchise Development

– Loans totaled $110.7 billion, up 21.9% (excluding PPP and for sale loans).

– Deposits were $114.9 billion, up 27.5%.

– Wealth management assets were $194.5 billion, up 28.7%.

– Wealth management revenues were $526.5 million, up 11.9%.

Quarterly Highlights

– Compared to last year’s fourth quarter:

– Revenues were $1.1 billion, up 23.1%.

– Net interest income was $892.7 million, up 24.0%.

– Net income was $295.6 million, up 20.0%.

– Diluted earnings per share of $1.60, up 15.1%.

– Loan originations were $16.7 billion.

– Net recoveries were $600,000.

– Net interest margin was 2.73%, compared to 2.71% for the prior quarter.

– Efficiency ratio was 61.6%, compared to 60.7% for the prior quarter.

– Wealth management assets were $194.5 billion, up 15.6% from the prior quarter.

“We’re very pleased with the double-digit growth of revenue, net interest income and earnings per share, both for the full year and the fourth quarter,” said Mike Roffler, Chief Financial Officer. “We remain focused on maintaining our capital strength and successfully raised, net, over $900 million in new Tier 1 capital in 2020.”

Quarterly Cash Dividend of $0.20 per Share

The Bank declared a cash dividend for the fourth quarter of $0.20 per share of common stock, which is payable on February 11, 2021 to shareholders of record as of January 28, 2021. The current quarterly dividend is an increase over last year’s fourth quarter dividend, our 9th consecutive year of dividend increases.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were only 13 basis points of total assets at December 31, 2020.

The provision for credit losses for the full year was $157.1 million, with net loan charge-offs of only $2.4 million. For the quarter, the provision for credit losses was $35.1 million, which was driven by loan growth.

Continued Capital Strength

The Bank’s Tier 1 leverage ratio was 8.14% at December 31, 2020, compared to 8.38% at September 30, 2020.

During the fourth quarter, the Bank redeemed all of the outstanding shares of its 5.70% Noncumulative Perpetual Series F Preferred Stock, which totaled $100.0 million. In addition, the Bank sold 1,725,000 new shares of common stock in an underwritten public offering, which added approximately $225.4 million to common equity. Total common stock sold and preferred stock issued in 2020, net of preferred stock redeemed, added $908.0 million of Tier 1 capital in 2020.

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

Tangible Book Value Growth

Tangible book value per common share at December 31, 2020 was $57.30, up 14.1% from a year ago.

Continued Franchise Development

Loan Originations

Loan originations were $16.7 billion for the quarter, up 48.8% from the same quarter a year ago. For 2020, loan originations (excluding PPP loans) totaled $50.7 billion, up 33.6% compared to the prior year. The increases were primarily due to increases in single family and business lending.

Single family loan originations were 47% of the total volume for the quarter and the full year (excluding PPP loans) and had a weighted average loan-to-value ratio of 56% for the full year. In addition, multifamily and commercial real estate loans originated were 9% of total originations for the quarter and 10% for the year (excluding PPP loans), and had a weighted average loan-to-value ratio of 50% for the year.

Loans, excluding PPP loans and loans held for sale, totaled $110.7 billion at December 31, 2020, up 21.9% compared to a year ago primarily due to increases in single family loans (67% of growth), business and multifamily loans.

COVID-19 Loan Modifications

Remaining loan modifications at year-end to those borrowers experiencing financial challenges as a result of COVID-19 (not classified as troubled debt restructurings) totaled $1.3 billion, and were 1.1% of total loans as of December 31, 2020. Such remaining modifications decreased 67% since September 30, 2020.

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 $2.5 billion as of December 31, 2020, only 2.2% of total loans. As of December 31, 2020, the Bank had modifications of these portfolios for $160 million, or 6%.

Deposit Growth

Total deposits increased to $114.9 billion, up 27.5% compared to a year ago, and had an average rate paid of 11 basis points during the quarter.

At December 31, 2020, checking deposit balances were 66.9% of total deposits.

Investments

Total investment securities at December 31, 2020 were $18.5 billion, a slight decrease compared to the prior quarter and a slight increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $18.1 billion at December 31, 2020, and represented 12.8% of quarterly average total assets.

Wealth Management

Total wealth management assets were $194.5 billion at December 31, 2020, up 15.6% for the quarter and up 28.7% compared to a year ago. The increases in wealth management assets were due to both net client inflow and market appreciation.

Wealth management revenues totaled $151.4 million for the quarter, up 17.9% compared to last year’s fourth quarter. For 2020, wealth management revenues were $526.5 million, an increase of 11.9% compared to the prior year. Such revenues represented 14.0% of the Bank’s total revenues for the quarter and 13.4% of the Bank’s total revenues for the year.

Wealth management assets at December 31, 2020 included investment management assets of $83.6 billion, brokerage assets and money market mutual funds of $97.1 billion, and trust and custody assets of $13.8 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.1 billion for the quarter, up 23.1% compared to the fourth quarter a year ago, and were $3.9 billion for 2020, up 17.2% compared to the prior year.

Net Interest Income Growth

Net interest income was $892.7 million for the quarter, up 24.0% compared to the fourth quarter a year ago, and was $3.3 billion for 2020, up 18.0% compared to the prior year. The increases in net interest income resulted primarily from growth in average interest-earning assets. The increase for the year was partially offset by a decrease in net interest margin.

Net Interest Margin

The net interest margin increased to 2.73% in the fourth quarter, from 2.71% in the prior quarter. For 2020, the net interest margin was 2.72%, compared to 2.83% for the prior year. The decrease for the year was primarily due to average yields on earning assets declining more than the offsetting decrease in average funding costs.

Noninterest Income

Noninterest income was $187.6 million for the quarter, up 19.3% compared to the fourth quarter a year ago, and was $654.2 million for 2020, up 13.3% compared to the prior year. The increase for the quarter was primarily driven by higher wealth management fees. The increase for the year was primarily driven by higher wealth management fees and an elevated gain on sale of loans, partially offset by lower loan servicing fees.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $666.0 million for the quarter, up 19.2% compared to the fourth quarter a year ago, and was $2.4 billion for 2020, up 13.0% compared to the prior year. The increases were primarily due to increased salaries and benefits and information systems costs from the continued investments in the expansion of the franchise. The increase for the year was partially offset by lower travel and entertainment, as well as advertising and marketing expenses.

The efficiency ratio was 61.6% for the quarter, compared to 63.7% for the fourth quarter a year ago. For 2020, the efficiency ratio was 61.9%, compared to 64.2% for 2019.

Income Taxes

The Bank’s effective tax rate for the fourth quarter of 2020 was 22.1%, compared to 19.6% for the prior quarter, and 20.3% for the fourth quarter a year ago. The increase from the prior quarter was primarily due to an increase from state taxes, and a tax refund from an amended tax return in the third quarter of 2020. The increase from the fourth quarter a year ago was primarily the result of lower excess tax benefits from a decrease in stock option exercises by employees, as well as an increase from state taxes.

The effective tax rate for 2020 was 20.2%, compared to 17.9% for 2019. The increase for the year was 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 fourth quarter 2020 earnings conference call is scheduled for January 14, 2021 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 263-0877 and use confirmation code 3942335 approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (856) 344-9283 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 https://ir.firstrepublic.com/events-calendar. 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 January 14, 2021, at 11:00 a.m. PT / 2:00 p.m. ET, through January 21, 2021, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 3942335#. 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 https://ir.firstrepublic.com/events-calendar.

The Bank’s press releases are available after release in the Newsroom and 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 COVID-19; 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; natural or other disasters, including earthquakes, fires, pandemics or acts of terrorism 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
December 31,

 

Quarter Ended
September 30,

 

Year Ended
December 31,

(in thousands, except per share amounts)

 

2020

 

2019

 

2020

2020

 

2019

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans

 

$

845,150

 

 

$

780,326

 

 

 

$

811,708

 

 

 

$

3,244,796

 

 

 

$

2,986,210

 

 

Investments

 

138,429

 

 

146,080

 

 

 

142,971

 

 

 

576,484

 

 

 

547,988

 

 

Other

 

5,754

 

 

5,679

 

 

 

6,116

 

 

 

23,889

 

 

 

21,446

 

 

Cash and cash equivalents

 

1,819

 

 

4,869

 

 

 

1,181

 

 

 

7,504

 

 

 

23,835

 

 

Total interest income

 

991,152

 

 

936,954

 

 

 

961,976

 

 

 

3,852,673

 

 

 

3,579,479

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

30,405

 

 

128,705

 

 

 

54,355

 

 

 

276,085

 

 

 

500,557

 

 

Borrowings

 

68,019

 

 

88,131

 

 

 

77,341

 

 

 

314,036

 

 

 

314,755

 

 

Total interest expense

 

98,424

 

 

216,836

 

 

 

131,696

 

 

 

590,121

 

 

 

815,312

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

892,728

 

 

720,118

 

 

 

830,280

 

 

 

3,262,552

 

 

 

2,764,167

 

 

Provision for credit losses

 

35,066

 

 

9,579

 

 

 

28,538

 

 

 

157,091

 

 

 

61,690

 

 

Net interest income after provision for credit
losses

 

857,662

 

 

710,539

 

 

 

801,742

 

 

 

3,105,461

 

 

 

2,702,477

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

114,287

 

 

97,106

 

 

 

96,638

 

 

 

395,304

 

 

 

359,332

 

 

Brokerage and investment fees

 

11,489

 

 

12,416

 

 

 

10,796

 

 

 

50,517

 

 

 

41,035

 

 

Insurance fees

 

5,569

 

 

4,186

 

 

 

2,216

 

 

 

11,655

 

 

 

12,708

 

 

Trust fees

 

5,366

 

 

4,328

 

 

 

4,543

 

 

 

19,484

 

 

 

16,549

 

 

Foreign exchange fee income

 

14,688

 

 

10,365

 

 

 

12,575

 

 

 

49,552

 

 

 

41,026

 

 

Deposit fees

 

6,115

 

 

6,609

 

 

 

5,753

 

 

 

23,713

 

 

 

26,071

 

 

Loan and related fees

 

7,167

 

 

6,175

 

 

 

7,171

 

 

 

27,908

 

 

 

19,819

 

 

Loan servicing fees, net

 

1,248

 

 

1,788

 

 

 

144

 

 

 

(1,401

)

 

 

11,348

 

 

Gain on sale of loans

 

2,412

 

 

69

 

 

 

13,797

 

 

 

16,987

 

 

 

535

 

 

Gain (loss) on investment securities

 

88

 

 

(1,541

)

 

 

(405

)

 

 

3,840

 

 

 

(3,436

)

 

Income from investments in life insurance

 

16,997

 

 

14,034

 

 

 

20,546

 

 

 

53,503

 

 

 

45,570

 

 

Other income (loss)

 

2,211

 

 

1,810

 

 

 

(2,791

)

 

 

3,171

 

 

 

6,663

 

 

Total noninterest income

 

187,637

 

 

157,345

 

 

 

170,983

 

 

 

654,233

 

 

 

577,220

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

415,767

 

 

325,094

 

 

 

373,225

 

 

 

1,494,400

 

 

 

1,245,526

 

 

Information systems

 

79,331

 

 

69,278

 

 

 

74,549

 

 

 

298,632

 

 

 

273,337

 

 

Occupancy

 

56,627

 

 

50,474

 

 

 

55,543

 

 

 

220,752

 

 

 

192,678

 

 

Professional fees

 

18,015

 

 

22,476

 

 

 

19,845

 

 

 

66,494

 

 

 

68,099

 

 

Advertising and marketing

 

13,762

 

 

17,615

 

 

 

8,909

 

 

 

43,135

 

 

 

65,961

 

 

FDIC assessments

 

11,650

 

 

10,912

 

 

 

11,003

 

 

 

44,113

 

 

 

38,759

 

 

Other expenses

 

70,892

 

 

62,996

 

 

 

65,136

 

 

 

258,203

 

 

 

262,101

 

 

Total noninterest expense

 

666,044

 

 

558,845

 

 

 

608,210

 

 

 

2,425,729

 

 

 

2,146,461

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

379,255

 

 

309,039

 

 

 

364,515

 

 

 

1,333,965

 

 

 

1,133,236

 

 

Provision for income taxes

 

83,695

 

 

62,709

 

 

 

71,378

 

 

 

269,814

 

 

 

202,907

 

 

Net income

 

295,560

 

 

246,330

 

 

 

293,137

 

 

 

1,064,151

 

 

 

930,329

 

 

Dividends on preferred stock

 

16,072

 

 

10,708

 

 

 

14,816

 

 

 

58,725

 

 

 

49,070

 

 

Net income available to common shareholders

 

$

279,488

 

 

$

235,622

 

 

 

$

278,321

 

 

 

$

1,005,426

 

 

 

$

881,259

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.61

 

 

$

1.40

 

 

 

$

1.62

 

 

 

$

5.85

 

 

 

$

5.25

 

 

Diluted earnings per common share

 

$

1.60

 

 

$

1.39

 

 

 

$

1.61

 

 

 

$

5.81

 

 

 

$

5.20

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares—basic

 

173,111

 

 

168,544

 

 

 

172,142

 

 

 

171,933

 

 

 

167,908

 

 

Weighted average shares—diluted

 

174,708

 

 

169,776

 

 

 

172,932

 

 

 

173,053

 

 

 

169,551

 

 

CONSOLIDATED BALANCE SHEETS

 

 

 

As of

($ in thousands)

 

December 31,
2020

 

September 30,
2020

 

December 31,
2019 (1)

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,094,754

 

 

 

$

3,691,149

 

 

 

$

1,699,557

 

 

Debt securities available-for-sale

 

1,906,315

 

 

 

1,711,202

 

 

 

1,282,169

 

 

 

 

 

 

 

 

 

Debt securities held-to-maturity

 

16,610,212

 

 

 

16,929,422

 

 

 

17,147,633

 

 

Less: Allowance for credit losses

 

(6,902

)

 

 

(5,716

)

 

 

 

 

Debt securities held-to-maturity, net

 

16,603,310

 

 

 

16,923,706

 

 

 

17,147,633

 

 

 

 

 

 

 

 

 

Equity securities (fair value)

 

20,566

 

 

 

20,478

 

 

 

19,586

 

 

 

 

 

 

 

 

 

Loans: (1)

 

 

 

 

 

 

Single family

 

61,370,246

 

 

 

56,628,359

 

 

 

47,985,651

 

 

Home equity lines of credit

 

2,449,533

 

 

 

2,431,991

 

 

 

2,501,432

 

 

Single family construction

 

787,854

 

 

 

739,091

 

 

 

761,589

 

 

Multifamily

 

13,768,957

 

 

 

13,392,531

 

 

 

12,353,359

 

 

Commercial real estate

 

8,018,158

 

 

 

7,781,797

 

 

 

7,449,058

 

 

Multifamily/commercial construction

 

2,024,420

 

 

 

2,038,949

 

 

 

1,695,954

 

 

Capital call lines of credit

 

8,149,946

 

 

 

6,203,877

 

 

 

5,570,322

 

 

Tax-exempt

 

3,365,572

 

 

 

3,276,705

 

 

 

3,042,193

 

 

Other business

 

3,340,048

 

 

 

2,982,532

 

 

 

3,034,301

 

 

PPP

 

1,841,376

 

 

 

2,091,102

 

 

 

 

 

Stock secured

 

2,518,338

 

 

 

2,311,754

 

 

 

1,897,511

 

 

Other secured

 

1,818,550

 

 

 

1,780,652

 

 

 

1,433,399

 

 

Unsecured

 

3,113,267

 

 

 

3,102,311

 

 

 

3,072,062

 

 

Total loans

 

112,566,265

 

 

 

104,761,651

 

 

 

90,796,831

 

 

Allowance for credit losses

 

(635,019

)

 

 

(604,747

)

 

 

(496,104

)

 

Loans, net

 

111,931,246

 

 

 

104,156,904

 

 

 

90,300,727

 

 

 

 

 

 

 

 

 

Loans held for sale

 

20,679

 

 

 

33,655

 

 

 

23,304

 

 

Investments in life insurance

 

2,061,362

 

 

 

1,949,360

 

 

 

1,434,642

 

 

Tax credit investments

 

1,131,905

 

 

 

1,099,713

 

 

 

1,100,509

 

 

Premises, equipment and leasehold improvements, net

 

403,482

 

 

 

390,241

 

 

 

386,841

 

 

Goodwill and other intangible assets

 

227,512

 

 

 

229,185

 

 

 

235,269

 

 

Other assets

 

3,101,003

 

 

 

3,020,178

 

 

 

2,633,397

 

 

Total Assets

 

$

142,502,134

 

 

 

$

133,225,771

 

 

 

$

116,263,634

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing checking

 

$

46,281,112

 

 

 

$

41,538,676

 

 

 

$

33,124,265

 

 

Interest-bearing checking

 

30,603,221

 

 

 

26,081,189

 

 

 

19,696,859

 

 

Money market checking

 

16,778,884

 

 

 

15,868,769

 

 

 

12,790,707

 

 

Money market savings and passbooks

 

12,584,522

 

 

 

11,419,289

 

 

 

10,586,355

 

 

Certificates of deposit

 

8,681,061

 

 

 

9,495,453

 

 

 

13,935,060

 

 

Total Deposits

 

114,928,800

 

 

 

104,403,376

 

 

 

90,133,246

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

 

 

5,000

 

 

 

800,000

 

 

Long-term FHLB advances

 

11,755,000

 

 

 

13,505,000

 

 

 

12,200,000

 

 

Senior notes

 

996,145

 

 

 

995,626

 

 

 

497,719

 

 

Subordinated notes

 

778,313

 

 

 

778,204

 

 

 

777,885

 

 

Other liabilities

 

2,293,230

 

 

 

2,193,956

 

 

 

2,003,677

 

 

Total Liabilities

 

130,751,488

 

 

 

121,881,162

 

 

 

106,412,527

 

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

Preferred stock

 

1,545,000

 

 

 

1,645,000

 

 

 

1,145,000

 

 

Common stock

 

1,741

 

 

 

1,722

 

 

 

1,686

 

 

Additional paid-in capital

 

4,834,172

 

 

 

4,571,499

 

 

 

4,214,915

 

 

Retained earnings

 

5,346,355

 

 

 

5,102,229

 

 

 

4,484,375

 

 

Accumulated other comprehensive income

 

23,378

 

 

 

24,159

 

 

 

5,131

 

 

Total Shareholders’ Equity

 

11,750,646

 

 

 

11,344,609

 

 

 

9,851,107

 

 

Total Liabilities and Shareholders’ Equity

 

$

142,502,134

 

 

 

$

133,225,771

 

 

 

$

116,263,634

 

 

____________

 

 

 

 

 

 

(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 December 31,

 

Quarter Ended September 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

 

$

6,965,598

 

 

$

1,819

 

 

 

0.10

%

 

$

1,377,686

 

 

$

4,869

 

 

 

1.40

%

 

$

4,427,985

 

 

$

1,181

 

 

 

0.11

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored
agency securities

 

50,000

 

 

196

 

 

 

1.57

%

 

461,671

 

 

3,239

 

 

 

2.81

%

 

202,174

 

 

1,186

 

 

 

2.35

%

Agency residential and
commercial MBS

 

5,786,312

 

 

32,237

 

 

 

2.23

%

 

6,826,144

 

 

47,764

 

 

 

2.80

%

 

6,250,577

 

 

37,437

 

 

 

2.40

%

Other residential and
commercial MBS

 

35,437

 

 

184

 

 

 

2.08

%

 

4,276

 

 

39

 

 

 

3.66

%

 

37,860

 

 

201

 

 

 

2.13

%

Municipal securities

 

12,638,677

 

 

130,938

 

 

 

4.14

%

 

10,981,068

 

 

116,245

 

 

 

4.23

%

 

12,309,647

 

 

129,097

 

 

 

4.19

%

Other investment

securities (3)

 

76,272

 

 

511

 

 

 

2.68

%

 

43,840

 

 

322

 

 

 

2.94

%

 

44,782

 

 

309

 

 

 

2.76

%

Total investment securities

 

18,586,698

 

 

164,066

 

 

 

3.53

%

 

18,316,999

 

 

167,609

 

 

 

3.66

%

 

18,845,040

 

 

168,230

 

 

 

3.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans: (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate (5)

 

61,523,322

 

 

445,028

 

 

 

2.89

%

 

48,938,892

 

 

391,415

 

 

 

3.20

%

 

56,906,612

 

 

421,545

 

 

 

2.96

%

Multifamily (6)

 

13,596,444

 

 

125,042

 

 

 

3.60

%

 

12,043,858

 

 

118,431

 

 

 

3.85

%

 

13,312,631

 

 

124,759

 

 

 

3.67

%

Commercial real estate

 

7,909,682

 

 

78,599

 

 

 

3.89

%

 

7,414,885

 

 

78,229

 

 

 

4.13

%

 

7,801,603

 

 

78,412

 

 

 

3.93

%

Multifamily/commercial
construction

 

2,788,321

 

 

31,588

 

 

 

4.43

%

 

2,415,923

 

 

28,931

 

 

 

4.69

%

 

2,739,717

 

 

30,608

 

 

 

4.37

%

Business (7)

 

13,382,558

 

 

115,809

 

 

 

3.39

%

 

11,556,437

 

 

121,665

 

 

 

4.12

%

 

12,538,201

 

 

110,487

 

 

 

3.45

%

PPP

 

2,004,127

 

 

14,419

 

 

 

2.82

%

 

 

 

 

 

 

%

 

2,091,580

 

 

10,825

 

 

 

2.03

%

Other (8)

 

7,253,376

 

 

41,385

 

 

 

2.23

%

 

6,085,084

 

 

48,261

 

 

 

3.10

%

 

6,995,592

 

 

41,735

 

 

 

2.33

%

Total loans

 

108,457,830

 

 

851,870

 

 

 

3.11

%

 

88,455,079

 

 

786,932

 

 

 

3.52

%

 

102,385,936

 

 

818,371

 

 

 

3.16

%

FHLB stock

 

412,789

 

 

5,754

 

 

 

5.55

%

 

394,487

 

 

5,678

 

 

 

5.71

%

 

457,808

 

 

6,116

 

 

 

5.31

%

Total interest-earning
assets

 

134,422,915

 

 

1,023,509

 

 

 

3.02

%

 

108,544,251

 

 

965,088

 

 

 

3.52

%

 

126,116,769

 

 

993,898

 

 

 

3.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

452,927

 

 

 

 

 

 

362,139

 

 

 

 

 

 

433,852

 

 

 

 

 

Goodwill and other
intangibles

 

228,315

 

 

 

 

 

 

256,614

 

 

 

 

 

 

230,051

 

 

 

 

 

Other assets

 

5,706,213

 

 

 

 

 

 

4,581,436

 

 

 

 

 

 

5,074,504

 

 

 

 

 

Total noninterest-earning
assets

 

6,387,455

 

 

 

 

 

 

5,200,189

 

 

 

 

 

 

5,738,407

 

 

 

 

 

Total Assets

 

$

140,810,370

 

 

 

 

 

 

$

113,744,440

 

 

 

 

 

 

$

131,855,176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

73,876,676

 

 

2,214

 

 

 

0.01

%

 

$

51,333,186

 

 

8,777

 

 

 

0.07

%

 

$

64,895,753

 

 

2,413

 

 

 

0.01

%

Money market checking and
savings

 

29,149,550

 

 

14,139

 

 

 

0.19

%

 

21,298,741

 

 

49,682

 

 

 

0.93

%

 

26,220,043

 

 

13,675

 

 

 

0.21

%

CDs

 

8,813,489

 

 

14,052

 

 

 

0.63

%

 

13,694,721

 

 

70,246

 

 

 

2.04

%

 

11,334,100

 

 

38,267

 

 

 

1.34

%

Total deposits

 

111,839,715

 

 

30,405

 

 

 

0.11

%

 

86,326,648

 

 

128,705

 

 

 

0.59

%

 

102,449,896

 

 

54,355

 

 

 

0.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

8,638

 

 

4

 

 

 

0.17

%

 

3,056,545

 

 

13,530

 

 

 

1.76

%

 

5,030

 

 

0

 

 

 

0.00

%

Long-term FHLB advances

 

13,298,478

 

 

52,873

 

 

 

1.58

%

 

11,488,043

 

 

62,146

 

 

 

2.15

%

 

14,739,238

 

 

62,201

 

 

 

1.68

%

Senior notes (9)

 

995,892

 

 

6,034

 

 

 

2.42

%

 

497,610

 

 

3,351

 

 

 

2.69

%

 

995,373

 

 

6,032

 

 

 

2.42

%

Subordinated notes (9)

 

778,260

 

 

9,108

 

 

 

4.68

%

 

777,834

 

 

9,104

 

 

 

4.68

%

 

778,151

 

 

9,108

 

 

 

4.68

%

Total borrowings

 

15,081,268

 

 

68,019

 

 

 

1.80

%

 

15,820,032

 

 

88,131

 

 

 

2.21

%

 

16,517,792

 

 

77,341

 

 

 

1.86

%

Total interest-bearing
liabilities

 

126,920,983

 

 

98,424

 

 

 

0.31

%

 

102,146,680

 

 

216,836

 

 

 

0.84

%

 

118,967,688

 

 

131,696

 

 

 

0.44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

2,341,078

 

 

 

 

 

 

2,093,561

 

 

 

 

 

 

2,082,793

 

 

 

 

 

Preferred equity

 

1,552,609

 

 

 

 

 

 

899,728

 

 

 

 

 

 

1,226,522

 

 

 

 

 

Common equity

 

9,995,700

 

 

 

 

 

 

8,604,471

 

 

 

 

 

 

9,578,173

 

 

 

 

 

Total Liabilities and
Equity

 

$

140,810,370

 

 

 

 

 

 

$

113,744,440

 

 

 

 

 

 

$

131,855,176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (10)

 

 

 

 

 

2.71

%

 

 

 

 

 

2.68

%

 

 

 

 

 

2.68

%

Net interest income (fully

taxable-equivalent basis) and

net interest margin (11)

 

 

 

$

925,085

 

 

 

2.73

%

 

 

 

$

748,252

 

 

 

2.73

%

 

 

 

$

862,202

 

 

 

2.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent adjustment

 

(32,357

)

 

 

 

 

 

 

(28,134

)

 

 

 

 

 

 

(31,922

)

 

 

 

Net interest income, as reported

 

$

892,728

 

 

 

 

 

 

 

$

720,118

 

 

 

 

 

 

 

$

830,280

 

 

 

 

 

 

Year Ended December 31,

 

 

2020

 

2019 (4)

Average Balances, Yields and Rates

 

Average
Balance

 

Interest
Income/Expense
(1)

 

Yields/
Rates

 

Average
Balance

 

Interest
Income/Expense
(1)

 

Yields/
Rates

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,018,429

 

 

$

7,504

 

 

 

0.19

%

 

$

1,268,405

 

 

$

23,835

 

 

 

1.88

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agency securities

 

193,246

 

 

4,957

 

 

 

2.56

%

 

818,000

 

 

24,066

 

 

 

2.94

%

Agency residential and commercial MBS

 

6,348,004

 

 

159,520

 

 

 

2.51

%

 

6,735,598

 

 

191,869

 

 

 

2.85

%

Other residential and commercial MBS

 

26,215

 

 

600

 

 

 

2.29

%

 

4,450

 

 

170

 

 

 

3.83

%

Municipal securities

 

12,066,413

 

 

510,825

 

 

 

4.23

%

 

9,218,509

 

 

409,127

 

 

 

4.44

%

Other investment securities (3)

 

52,204

 

 

1,447

 

 

 

2.77

%

 

26,848

 

 

726

 

 

 

2.70

%

Total investment securities

 

18,686,082

 

 

677,349

 

 

 

3.62

%

 

16,803,405

 

 

625,958

 

 

 

3.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans: (4)

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate (5)

 

55,885,085

 

 

1,676,247

 

 

 

3.00

%

 

44,655,754

 

 

1,465,364

 

 

 

3.28

%

Multifamily (6)

 

13,092,607

 

 

489,402

 

 

 

3.68

%

 

11,248,189

 

 

439,408

 

 

 

3.85

%

Commercial real estate

 

7,751,600

 

 

313,254

 

 

 

3.97

%

 

7,088,827

 

 

301,831

 

 

 

4.20

%

Multifamily/commercial construction

 

2,678,312

 

 

121,949

 

 

 

4.48

%

 

2,319,279

 

 

114,902

 

 

 

4.89

%

Business (7)

 

12,845,826

 

 

465,101

 

 

 

3.56

%

 

11,302,160

 

 

503,782

 

 

 

4.40

%

PPP

 

1,432,501

 

 

32,903

 

 

 

2.26

%

 

 

 

 

 

 

%

Other (8)

 

6,841,682

 

 

172,808

 

 

 

2.48

%

 

5,559,309

 

 

187,536

 

 

 

3.33

%

Total loans

 

100,527,613

 

 

3,271,664

 

 

 

3.23

%

 

82,173,518

 

 

3,012,823

 

 

 

3.64

%

FHLB stock

 

442,338

 

 

23,889

 

 

 

5.40

%

 

331,862

 

 

21,446

 

 

 

6.46

%

Total interest-earning assets

 

123,674,462

 

 

3,980,406

 

 

 

3.20

%

 

100,577,190

 

 

3,684,062

 

 

 

3.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

438,893

 

 

 

 

 

 

347,065

 

 

 

 

 

Goodwill and other intangibles

 

231,084

 

 

 

 

 

 

266,062

 

 

 

 

 

Other assets

 

5,103,458

 

 

 

 

 

 

4,376,016

 

 

 

 

 

Total noninterest-earning assets

 

5,773,435

 

 

 

 

 

 

4,989,143

 

 

 

 

 

Total Assets

 

$

129,447,897

 

 

 

 

 

 

$

105,566,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

62,938,940

 

 

16,186

 

 

 

0.03

%

 

$

48,097,161

 

 

30,318

 

 

 

0.06

%

Money market checking and savings

 

25,506,568

 

 

87,908

 

 

 

0.34

%

 

20,113,724

 

 

196,582

 

 

 

0.98

%

CDs

 

11,754,513

 

 

171,991

 

 

 

1.46

%

 

12,769,459

 

 

273,657

 

 

 

2.14

%

Total deposits

 

100,200,021

 

 

276,085

 

 

 

0.28

%

 

80,980,344

 

 

500,557

 

 

 

0.62

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

310,392

 

 

4,704

 

 

 

1.52

%

 

2,278,831

 

 

50,361

 

 

 

2.21

%

Long-term FHLB advances

 

14,330,041

 

 

250,031

 

 

 

1.74

%

 

9,738,767

 

 

209,816

 

 

 

2.15

%

Senior notes (9)

 

938,185

 

 

22,873

 

 

 

2.44

%

 

680,199

 

 

18,169

 

 

 

2.67

%

Subordinated notes (9)

 

778,099

 

 

36,428

 

 

 

4.68

%

 

777,681

 

 

36,409

 

 

 

4.68

%

Total borrowings

 

16,356,717

 

 

314,036

 

 

 

1.92

%

 

13,475,478

 

 

314,755

 

 

 

2.34

%

Total interest-bearing liabilities

 

116,556,738

 

 

590,121

 

 

 

0.51

%

 

94,455,822

 

 

815,312

 

 

 

0.86

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

2,130,829

 

 

 

 

 

 

1,859,115

 

 

 

 

 

Preferred equity

 

1,267,951

 

 

 

 

 

 

929,849

 

 

 

 

 

Common equity

 

9,492,379

 

 

 

 

 

 

8,321,547

 

 

 

 

 

Total Liabilities and Equity

 

$

129,447,897

 

 

 

 

 

 

$

105,566,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (10)

 

 

 

 

 

2.69

%

 

 

 

 

 

2.78

%

Net interest income (fully taxable-equivalent basis) and

net interest margin (11)

 

 

 

$

3,390,285

 

 

 

2.72

%

 

 

 

$

2,868,750

 

 

 

2.83

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent adjustment

 

 

 

(127,733

)

 

 

 

 

 

 

(104,583

)

 

 

 

Net interest income, as reported

 

 

 

$

3,262,552

 

 

 

 

 

 

 

$

2,764,167

 

 

 

 

__________

(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
December 31,

 

Quarter Ended
September 30,

 

Year Ended
December 31,

Operating Information

 

2020

 

2019

 

2020

 

2020

 

2019

($ in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Net income to average assets (1)

 

0.84

 

%

 

0.86

 

%

 

0.88

%

 

0.82

%

 

0.88

%

Net income available to common shareholders to

average common equity (1)

 

11.12

 

%

 

10.86

 

%

 

11.56

%

 

10.59

%

 

10.59

%

Net income available to common shareholders to

average tangible common equity (1)

 

11.38

 

%

 

11.20

 

%

 

11.84

%

 

10.86

%

 

10.94

%

Dividends per common share

 

$

0.20

 

 

 

$

0.19

 

 

 

$

0.20

 

 

$

0.79

 

 

$

0.75

 

Dividend payout ratio

 

12.5

 

%

 

13.7

 

%

 

12.4

%

 

13.6

%

 

14.4

%

Efficiency ratio (2), (3)

 

61.6

 

%

 

63.7

 

%

 

60.7

%

 

61.9

%

 

64.2

%

 

 

 

 

 

 

 

 

 

 

 

Net loan charge-offs (recoveries)

 

$

(600

)

 

 

$

(1,060

)

 

 

$

1,687

 

 

$

2,387

 

 

$

4,634

 

Net loan charge-offs (recoveries) to average total

loans (1)

 

(0.00

)

%

 

(0.00

)

%

 

0.01

%

 

0.00

%

 

0.01

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan credit losses to:

 

 

 

 

 

 

 

 

 

 

Total loans

 

0.56

 

%

 

0.55

 

%

 

0.58

%

 

0.56

%

 

0.55

%

Nonaccrual loans

 

344.9

 

%

 

346.5

 

%

 

368.2

%

 

344.9

%

 

346.5

%

__________

 

 

 

 

 

 

 

 

 

 

(1) For periods less than a year, 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
December 31,

 

Quarter Ended
September 30,

 

Year Ended
December 31,

Effective Tax Rate

 

2020

 

2019

 

2020

 

2020

 

2019

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

 

22.5

 

%

 

21.6

 

%

 

21.1

 

%

 

21.9

 

%

 

21.4

 

%

 

 

 

 

 

 

 

 

 

 

 

Excess tax benefits—stock options

 

 

 

 

(1.2

)

 

 

(0.1

)

 

 

(0.6

)

 

 

(2.9

)

 

Excess tax benefits—other stock awards

 

(0.4

)

 

 

(0.1

)

 

 

(0.1

)

 

 

(0.7

)

 

 

(0.6

)

 

Total excess tax benefits

 

(0.4

)

 

 

(1.3

)

 

 

(0.2

)

 

 

(1.3

)

 

 

(3.5

)

 

 

 

 

 

 

 

 

 

 

 

 

Tax refund from an amended tax return

 

 

 

 

 

 

 

(1.3

)

 

 

(0.4

)

 

 

 

 

Effective tax rate

 

22.1

 

%

 

20.3

 

%

 

19.6

 

%

 

20.2

 

%

 

17.9

 

%

 

 

 

 

 

 

 

 

 

 

 

Provision for Credit Losses

 

Quarter Ended
December 31,

 

Quarter Ended
September 30,

 

Year Ended
December 31,

 

2020

 

2019

 

2020

 

2020

 

2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Debt securities held-to-maturity

 

$

1,186

 

 

$

 

 

$

333

 

 

$

2,233

 

 

$

 

Loans

 

29,672

 

 

9,579

 

 

22,437

 

 

142,977

 

 

61,690

 

Unfunded loan commitments (1)

 

4,208

 

 

 

 

5,768

 

 

11,881

 

 

 

Total provision

 

$

35,066

 

 

$

9,579

 

 

$

28,538

 

 

$

157,091

 

 

$

61,690

 

__________

 

 

 

 

 

 

 

 

 

 

(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
December 31, 2020

 

Year Ended
December 31, 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)

 

$

5,716

 

 

$

604,747

 

 

$

23,370

 

 

$

633,833

 

 

$

4,669

 

 

$

494,429

 

 

 

$

15,697

 

 

$

514,795

 

 

Provision for credit losses

 

1,186

 

 

29,672

 

 

4,208

 

 

35,066

 

 

2,233

 

 

142,977

 

 

 

11,881

 

 

157,091

 

 

Net (charge-offs) recoveries

 

 

 

600

 

 

 

 

600

 

 

 

 

(2,387

)

 

 

 

 

(2,387

)

 

Balance at end of period

 

$

6,902

 

 

$

635,019

 

 

$

27,578

 

 

$

669,499

 

 

$

6,902

 

 

$

635,019

 

 

 

$

27,578

 

 

$

669,499

 

 

__________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(2) For the year ended December 31, 2020, represents the balance after the cumulative effect adjustment from the adoption of CECL.

 

 

Quarter Ended
December 31,

 

Quarter Ended
September 30,

 

Year Ended
December 31,

Mortgage Loan Sales

 

2020

 

2019

 

2020

 

2020

 

2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Loans sold:

 

 

 

 

 

 

 

 

 

 

Flow sales:

 

 

 

 

 

 

 

 

 

 

Agency

 

$

152,210

 

 

$

34,519

 

 

$

44,118

 

 

$

232,912

 

 

$

85,945

 

Non-agency

 

 

 

7,717

 

 

 

 

31,870

 

 

50,983

 

Total flow sales

 

152,210

 

 

42,236

 

 

44,118

 

 

264,782

 

 

136,928

 

 

 

 

 

 

 

 

 

 

 

 

Bulk sales:

 

 

 

 

 

 

 

 

 

 

Non-agency

 

 

 

 

 

235,732

 

 

673,401

 

 

152,119

 

 

 

 

 

 

 

 

 

 

 

 

Securitizations

 

 

 

 

 

 

 

300,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans sold

 

$

152,210

 

 

$

42,236

 

 

$

279,850

 

 

$

1,238,299

 

 

$

289,047

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of loans:

 

 

 

 

 

 

 

 

 

 

Amount (1)

 

$

2,412

 

 

$

69

 

 

$

13,797

 

 

$

16,987

 

 

$

535

 

Gain as a percentage of loans sold (1)

 

1.58

%

 

0.16

%

 

4.93

%

 

1.37

%

 

0.19

%

__________

 

 

 

 

 

 

 

 

 

 

(1) The gain for the quarter ended September 30, 2020 and full year 2020 included $10.3 million related to realized discounts on previously purchased loans when these loans were sold. Excluding these discounts of $10.3 million, the gain as a percentage of loans sold was 1.24% and 0.54% for the quarter ended September 30, 2020 and full year 2020, respectively.

 

 

Quarter Ended
December 31,

 

Quarter Ended
September 30,

 

Year Ended
December 31,

Loan Originations

 

2020

 

2019 (1)

 

2020

 

2020 (2)

 

2019 (1)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Single family

 

$

7,777,589

 

 

$

5,275,965

 

 

$

6,813,850

 

 

$

23,985,959

 

 

$

16,405,784

 

Home equity lines of credit

 

619,257

 

 

456,150

 

 

432,443

 

 

1,904,945

 

 

1,524,031

 

Single family construction

 

223,909

 

 

133,368

 

 

186,833

 

 

639,222

 

 

588,429

 

Multifamily

 

1,016,575

 

 

1,214,394

 

 

955,951

 

 

3,700,649

 

 

3,320,158

 

Commercial real estate

 

437,947

 

 

401,084

 

 

193,228

 

 

1,413,716

 

 

1,710,820

 

Multifamily/commercial construction

 

303,054

 

 

340,650

 

 

245,220

 

 

1,300,609

 

 

1,175,922

 

Capital call lines of credit

 

3,854,094

 

 

1,708,006

 

 

1,803,907

 

 

9,448,577

 

 

7,171,710

 

Tax-exempt

 

305,826

 

 

52,550

 

 

328,711

 

 

918,610

 

 

287,020

 

Other business

 

771,484

 

 

512,954

 

 

243,788

 

 

2,549,308

 

 

1,621,666

 

PPP

 

 

 

 

 

 

 

1,981,797

 

 

 

Stock secured

 

669,840

 

 

650,240

 

 

685,250

 

 

2,467,066

 

 

1,769,385

 

Other secured

 

412,902

 

 

170,231

 

 

189,386

 

 

1,374,842

 

 

1,011,232

 

Unsecured

 

312,809

 

 

308,360

 

 

159,379

 

 

998,346

 

 

1,377,319

 

Total loans originated

 

$

16,705,286

 

 

$

11,223,952

 

 

$

12,237,946

 

 

$

52,683,646

 

 

$

37,963,476

 

__________

 

 

 

 

 

 

 

 

 

 

(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 $50.7 billion for the year ended December 31, 2020.

 

 

As of

Asset Quality Information

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

184,132

 

 

$

164,247

 

 

$

164,930

 

 

$

125,418

 

 

$

143,181

 

Other real estate owned

 

 

 

 

 

1,071

 

 

1,071

 

 

 

Total nonperforming assets

 

$

184,132

 

 

$

164,247

 

 

$

166,001

 

 

$

126,489

 

 

$

143,181

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets

 

0.13

%

 

0.12

%

 

0.13

%

 

0.10

%

 

0.12

%

 

 

 

 

 

 

 

 

 

 

 

Accruing loans 90 days or more past due

 

$

 

 

$

935

 

 

$

3,764

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Restructured accruing loans

 

$

11,253

 

 

$

11,378

 

 

$

11,501

 

 

$

13,418

 

 

$

13,287

 

 

 

December 31, 2020

COVID-19 Loan Modifications (1), (2), (3), (4), (5)

 

Unpaid
Principal
Balance

 

Deferred
Interest (6)

 

LTV (7)

 

Average Loan
Size

 

Number of
Loans

($ in millions)

 

 

 

 

 

 

 

 

 

 

Single family

 

$

407

 

 

$

5

 

 

63

%

 

$

1.2

 

 

354

 

Home equity lines of credit

 

11

 

 

 

 

55

%

 

$

0.4

 

 

25

 

Single family construction

 

2

 

 

 

 

75

%

 

$

2.0

 

 

1

 

Multifamily

 

291

 

 

1

 

 

53

%

 

$

5.6

 

 

52

 

Commercial real estate

 

297

 

 

1

 

 

50

%

 

$

5.5

 

 

54

 

Multifamily/commercial construction

 

35

 

 

 

 

35

%

 

$

8.9

 

 

4

 

Capital call lines of credit

 

 

 

 

 

n/a

 

$

 

 

 

Tax-exempt

 

150

 

 

 

 

n/a

 

$

30.0

 

 

5

 

Other business

 

59

 

 

 

 

n/a

 

$

1.5

 

 

39

 

Stock secured

 

 

 

 

 

n/a

 

$

 

 

 

Other secured

 

3

 

 

 

 

n/a

 

$

0.3

 

 

11

 

Unsecured (8)

 

15

 

 

 

 

n/a

 

$

0.1

 

 

153

 

Total

 

$

1,270

 

 

$

7

 

 

 

 

 

 

698

 

__________

 

 

 

 

 

 

 

 

 

 

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

(2) Includes 164 loans totaling $222 million that have completed their deferral period, but for which a regular payment is not yet due.

(3) Includes 269 loans totaling $504 million that received additional relief beyond their initial modification period.

(4) Excludes loans that have completed their deferral period and returned to a regular payment schedule or are no longer outstanding. As of December 31, 2020, $3.1 billion of loans have completed their deferral period or are no longer outstanding, and 99% of the outstanding loans were current.

(5) Loan modifications requested by borrowers that were in process but not yet completed as of December 31, 2020 totaled $53 million for initial relief, and $39 million for additional relief beyond the initial modification period.

(6) Represents interest payments not made during the deferral period through December 31, 2020.

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

(8) Consists of household debt refinance loans.

 

 

December 31, 2020

Loan Industry Information

 

Unpaid
Principal
Balance

 

LTV

 

Average Loan
Size

 

Number of
Loans

 

Personal
Guarantee %

($ in millions)

 

 

 

 

 

 

 

 

 

 

Retail

 

$

1,831

 

 

49

%

 

$

2.7

 

 

703

 

 

77

%

Hotel

 

416

 

 

48

%

 

$

6.6

 

 

65

 

 

72

%

Restaurant (1)

 

219

 

 

49

%

 

$

1.1

 

 

210

 

 

93

%

Total (2)

 

$

2,466

 

 

 

 

 

 

978

 

 

 

__________

 

 

 

 

 

 

 

 

 

 

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

(2) Amounts in the table above exclude $43 million of loans to hotels and $132 million of loans to restaurants under the PPP.

 

 

As of

Loan Servicing Portfolio

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

($ in millions)

 

 

 

 

 

 

 

 

 

 

Loans serviced for investors

 

$

7,094

 

 

$

7,799

 

 

$

8,316

 

 

$

9,203

 

 

$

9,298

 

 

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

 

As of

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Number of shares of common stock outstanding

 

174,124

 

 

172,188

 

 

172,094

 

 

171,395

 

 

168,621

 

Book value per common share

 

$

58.61

 

 

$

56.33

 

 

$

54.80

 

 

$

53.76

 

 

$

51.63

 

Tangible book value per common share

 

$

57.30

 

 

$

55.00

 

 

$

53.46

 

 

$

52.40

 

 

$

50.24

 

 

 

As of

Capital Ratios

 

December 31,
2020 (1), (2)

 

September 30,
2020 (2)

 

June 30,
2020 (2)

 

March 31,
2020 (2)

 

December 31,
2019

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

 

8.14

%

 

8.38

%

 

8.15

%

 

8.46

%

 

8.39

%

Common Equity Tier 1 capital to risk-weighted
assets

 

9.67

%

 

9.78

%

 

9.80

%

 

9.87

%

 

9.86

%

Tier 1 capital to risk-weighted assets

 

11.18

%

 

11.50

%

 

11.04

%

 

11.14

%

 

11.21

%

Total capital to risk-weighted assets

 

12.55

%

 

12.94

%

 

12.49

%

 

12.62

%

 

12.73

%

Regulatory Capital (3)

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 capital

 

$

9,894,870

 

 

$

9,375,688

 

 

$

9,103,771

 

 

$

8,887,905

 

 

$

8,371,192

 

Tier 1 capital

 

$

11,439,870

 

 

$

11,020,688

 

 

$

10,248,771

 

 

$

10,032,905

 

 

$

9,516,192

 

Total capital

 

$

12,842,344

 

 

$

12,396,304

 

 

$

11,604,141

 

 

$

11,365,654

 

 

$

10,802,209

 

Assets (3)

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Average assets

 

$

140,493,283

 

 

$

131,517,445

 

 

$

125,690,830

 

 

$

118,626,842

 

 

$

113,403,507

 

Risk-weighted assets

 

$

102,321,489

 

 

$

95,823,385

 

 

$

92,870,859

 

 

$

90,072,400

 

 

$

84,885,943

 

__________

 

 

 

 

 

 

 

 

 

 

(1) Ratios and amounts as of December 31, 2020 are preliminary.

(2) In accordance with the CECL Capital 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

 

December 31,
2020

 

September 30,
2020

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

($ in millions)

 

 

 

 

 

 

 

 

 

 

First Republic Investment Management

 

$

83,596

 

 

$

74,661

 

 

$

68,124

 

 

$

60,056

 

 

$

66,029

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage and investment:

 

 

 

 

 

 

 

 

 

 

Brokerage

 

88,059

 

 

76,769

 

 

70,178

 

 

60,189

 

 

68,807

 

Money market mutual funds

 

9,003

 

 

4,416

 

 

5,933

 

 

6,893

 

 

4,268

 

Total brokerage and investment

 

97,062

 

 

81,185

 

 

76,111

 

 

67,082

 

 

73,075

 

 

 

 

 

 

 

 

 

 

 

 

Trust Company:

 

 

 

 

 

 

 

 

 

 

Trust

 

9,910

 

 

8,687

 

 

7,905

 

 

7,288

 

 

7,121

 

Custody

 

3,889

 

 

3,651

 

 

3,646

 

 

3,461

 

 

4,818

 

Total Trust Company

 

13,799

 

 

12,338

 

 

11,551

 

 

10,749

 

 

11,939

 

Total Wealth Management Assets

 

$

194,457

 

 

$

168,184

 

 

$

155,786

 

 

$

137,887

 

 

$

151,043

 

 

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