FRC
$105.79
First Republic Bank
$1.17
1.12%
Earnings Details
1st Quarter March 2020
Tuesday, April 14, 2020 6:50:00 AM
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Summary

First Republic Bank Beats

First Republic Bank (FRC) reported 1st Quarter March 2020 earnings of $1.20 per share on revenue of $1.1 billion. The consensus earnings estimate was $0.92 per share on revenue of $872.8 million. The Earnings Whisper number was $1.12 per share. Revenue grew 14.4% 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
$1.20
Earnings Whisper
$1.12
Consensus Estimate
$0.92
Reported Revenue
$1.12 Bil
Revenue Estimate
$872.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

First Republic Reports First Quarter 2020 Results

Revenues Increased 13% Year-Over-Year

Tangible Book Value Per Share Increased 12% Year-Over-Year

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

“Results for the first quarter were strong,” said Jim Herbert, Founder, Chairman and CEO of First Republic. “In these very unusual times, our strength and durability, coupled with a time-tested culture of service, enable us to take great care of our colleagues, communities, and clients.”

Quarterly Highlights

Financial Results

– Year-over year:

– Revenues were $916.2 million, up 13.5%.

– Net interest income was $752.1 million, up 11.4%.

– Provision for credit losses and unfunded loan commitments was $62.4 million, compared to $14.0 million for the first quarter of 2019.

– Net income was $218.7 million, down 3.5%.

– Diluted earnings per share of $1.20, down 4.8%.

– Tangible book value per share was $52.40, up 11.9%.

– Loan originations totaled $10.3 billion.

– Net interest margin was 2.74%, compared to 2.73% for the prior quarter.

– Efficiency ratio was 65.1%, compared to 65.0% for the first quarter of 2019.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.46%, compared to 8.39% for the prior quarter.

– Increased quarterly dividend to $0.20 per share in April 2020.

– Nonperforming assets remained at a low 10 basis points of total assets.

– Net charge-offs were only $202,000, or less than 1 basis point of average loans.

Continued Franchise Development

– Year-over-year:

– Loans, excluding loans held for sale, totaled $95.3 billion, up 23.3%.

– Deposits were $93.7 billion, up 14.8%.

– Wealth management assets were $137.9 billion, down 1.4%.

– Wealth management revenues were $134.4 million, up 25.4%.

“Credit quality, capital strength and liquidity remained strong,” said Mike Roffler, Chief Financial Officer. “Loans and deposits grew nicely and we’re pleased with 11.4% growth in net interest income and a stable net interest margin.”

Recent Developments

The COVID-19 pandemic has caused substantial disruptions to the global economy and the communities we serve. In response to the pandemic, we have implemented our contingency plans, which include company-wide remote working arrangements, modified hours in our preferred banking offices, and promoting social distancing. In addition, we are focused on supporting our clients who may be experiencing a financial hardship due to COVID-19, including deferrals as needed and participation in the Small Business Administration’s Paycheck Protection Program.

We are closely monitoring the rapid developments and uncertainties regarding the pandemic. We remain confident in our long-term underlying strength and stability, and our ability to navigate these challenging conditions.

Quarterly Cash Dividend of $0.20 per Share

The Bank announced an increase of $0.01 in its quarterly cash dividend to $0.20 per share of common stock. This first quarter dividend is payable on May 14, 2020 to shareholders of record as of April 30, 2020.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were only 10 basis points of total assets at March 31, 2020. The Bank had net loan charge-offs of $202,000 for the quarter.

Beginning in the first quarter, the Bank fully adopted the Current Expected Credit Losses (“CECL”) methodology under Accounting Standards Codification (“ASC”) 326, in which the allowance for credit losses reflects expected credit losses over the life of loans and held-to-maturity debt securities, and incorporates macroeconomic forecasts as well as historical loss rates. The allowance for expected credit losses at the end of the first quarter incorporates a change in the economic forecast late in the first quarter of 2020, to reflect the pandemic conditions, as compared to our initial adoption of CECL.

During the first quarter, the Bank recorded a total provision for credit losses and unfunded loan commitments of $62.4 million, which included a provision for credit losses of $48.1 million for loans and held-to-maturity debt securities, and an additional provision of $14.3 million included in noninterest expense for unfunded loan commitments. In the first quarter of 2019, the total provision for loans and unfunded loan commitments was $14.0 million.

Continued Capital Strength and Access to Capital Markets

The Bank’s Tier 1 leverage ratio was 8.46% at March 31, 2020, compared to 8.39% at December 31, 2019.

During the first quarter, the Bank sold 2,500,000 new shares of common stock in an underwritten public offering, which added approximately $290.6 million to common equity. This common stock and the Tier 1 qualified preferred stock issued in the fourth quarter of 2019, net of preferred stock redeemed in the fourth quarter of 2019, added $483.1 million of Tier 1 capital in the last six months.

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

Tangible Book Value Growth

Tangible book value per common share at March 31, 2020 was $52.40, up 11.9% from a year ago.

Continued Franchise Development

Loan Originations

Loan originations were $10.3 billion for the quarter, up 59.2% from the same quarter a year ago primarily due to increases in single family, business, multifamily/commercial construction and stock secured lending. Single family loan originations were 34% of the total for the quarter, and had a weighted average loan-to-value ratio of 57%. Multifamily and commercial real estate loans originated during the quarter, 12% of the total, had a weighted average loan-to-value ratio of 52%.

Loans, excluding loans held for sale, totaled $95.3 billion at March 31, 2020, up 23.3% compared to a year ago primarily due to increases in single family, multifamily and commercial real estate loans, along with an increase in capital call lines of credit outstanding.

Deposit Growth

Total deposits increased to $93.7 billion, up 14.8% compared to a year ago.

At March 31, 2020, checking deposit balances were 61.8% of total deposits.

Investments

Total investment securities at March 31, 2020 were $18.8 billion, a 16.9% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $17.6 billion at March 31, 2020, and represented 14.8% of average total assets.

Wealth Management

Wealth management revenues totaled $134.4 million for the quarter, up 25.4% compared to last year’s first quarter. Such revenues represented 14.7% of the Bank’s total revenues for the quarter.

Total wealth management assets were $137.9 billion at March 31, 2020, down 8.7% for the quarter and down 1.4% compared to a year ago. The decrease in wealth management assets for the quarter was primarily due to market decline, partially offset by net new assets from existing and new clients.

Wealth management assets included investment management assets of $60.1 billion, brokerage assets and money market mutual funds of $67.1 billion, and trust and custody assets of $10.7 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $916.2 million for the quarter, up 13.5% compared to the first quarter a year ago.

Net Interest Income Growth

Net interest income was $752.1 million for the quarter, up 11.4% compared to the first quarter a year ago. The increase in net interest income resulted primarily from growth in average interest-earning assets.

Net Interest Margin

The net interest margin was 2.74% for the first quarter, compared to 2.73% for the prior quarter.

Noninterest Income

Noninterest income was $164.0 million for the quarter, up 24.0% compared to the first quarter a year ago. The increase was primarily from growth in wealth management fees and a gain on investment securities for the quarter.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $596.3 million for the quarter, up 13.6% compared to the first quarter a year ago. The increase was primarily due to increased salaries and benefits and occupancy expenses from the continued investments in the expansion of the franchise, along with an increase in the provision for unfunded loan commitments.

The efficiency ratio was 65.1% for the quarter, compared to 65.0% for the first quarter a year ago.

Income Taxes

The Bank’s effective tax rate for the first quarter of 2020 was 19.5%, compared to 20.3% for the prior quarter, and 15.6% for the first quarter a year ago. The increase from a year ago was primarily the result of lower tax benefits due to a decrease in stock options exercised by employees.

Conference Call Details

First Republic Bank’s first quarter 2020 earnings conference call is scheduled for April 14, 2020 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 458-4148 and use confirmation code 1291711# approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (720) 543-0206 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 April 14, 2020, at 11:00 a.m. PT / 2:00 p.m. ET, through April 21, 2020, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 1291711#. 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; changes in nonperforming assets; expectations regarding the impact 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; the possibility of earthquakes, fires and other natural disasters affecting the markets in which we operate; the negative impacts and disruptions resulting from the COVID-19 pandemic on our colleagues, 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 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
March 31,

 

Quarter Ended
December 31,

(in thousands, except per share amounts)

 

2020

 

2019

 

2019

Interest income:

 

 

 

 

 

 

Loans

 

$

796,652

 

 

$

700,088

 

 

$

780,326

 

Investments

 

148,569

 

 

133,765

 

 

146,080

 

Other

 

6,960

 

 

5,175

 

 

5,679

 

Cash and cash equivalents

 

3,940

 

 

7,989

 

 

4,869

 

Total interest income

 

956,121

 

 

847,017

 

 

936,954

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

Deposits

 

118,845

 

 

107,747

 

 

128,705

 

Borrowings

 

85,144

 

 

64,232

 

 

88,131

 

Total interest expense

 

203,989

 

 

171,979

 

 

216,836

 

 

 

 

 

 

 

 

Net interest income

 

752,132

 

 

675,038

 

 

720,118

 

Provision for credit losses

 

48,097

 

 

14,200

 

 

9,579

 

Net interest income after provision for credit losses

 

704,035

 

 

660,838

 

 

710,539

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

Investment management fees

 

99,296

 

 

84,924

 

 

97,106

 

Brokerage and investment fees

 

15,826

 

 

7,659

 

 

12,416

 

Insurance fees

 

2,157

 

 

2,114

 

 

4,186

 

Trust fees

 

4,976

 

 

3,889

 

 

4,328

 

Foreign exchange fee income

 

12,184

 

 

8,631

 

 

10,365

 

Deposit fees

 

6,597

 

 

6,320

 

 

6,609

 

Loan and related fees

 

6,114

 

 

4,007

 

 

6,175

 

Loan servicing fees, net

 

1,652

 

 

3,788

 

 

1,788

 

Gain on sale of loans

 

1,925

 

 

359

 

 

69

 

Gain (loss) on investment securities

 

2,628

 

 

(149)

 

 

(1,541)

 

Income from investments in life insurance

 

8,160

 

 

9,335

 

 

14,034

 

Other income

 

2,529

 

 

1,441

 

 

1,810

 

Total noninterest income

 

164,044

 

 

132,318

 

 

157,345

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

361,204

 

 

313,253

 

 

325,094

 

Information systems

 

70,715

 

 

67,170

 

 

69,278

 

Occupancy

 

53,641

 

 

43,895

 

 

50,474

 

Professional fees

 

13,117

 

 

11,681

 

 

22,476

 

Advertising and marketing

 

11,843

 

 

15,734

 

 

17,615

 

FDIC assessments

 

10,185

 

 

8,903

 

 

10,912

 

Other expenses

 

75,585

 

 

64,176

 

 

62,996

 

Total noninterest expense

 

596,290

 

 

524,812

 

 

558,845

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

271,789

 

 

268,344

 

 

309,039

 

Provision for income taxes

 

53,103

 

 

41,753

 

 

62,709

 

Net income

 

218,686

 

 

226,591

 

 

246,330

 

Dividends on preferred stock

 

13,020

 

 

12,787

 

 

10,708

 

Net income available to common shareholders

 

$

205,666

 

 

$

213,804

 

 

$

235,622

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.20

 

 

$

1.28

 

 

$

1.40

 

Diluted earnings per common share

 

$

1.20

 

 

$

1.26

 

 

$

1.39

 

 

 

 

 

 

 

 

Weighted average shares—basic

 

170,835

 

 

167,112

 

 

168,544

 

Weighted average shares—diluted

 

172,039

 

 

169,410

 

 

169,776

 

CONSOLIDATED BALANCE SHEETS

 

 

 

As of

($ in thousands)

 

March 31,
2020

 

December 31,
2019 (1)

 

March 31,
2019 (1)

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,949,378

 

 

$

1,699,557

 

 

$

3,693,396

 

Debt securities available-for-sale

 

1,243,798

 

 

1,282,169

 

 

1,624,970

 

 

 

 

 

 

 

 

Debt securities held-to-maturity

 

17,534,920

 

 

17,147,633

 

 

14,442,876

 

Less: Allowance for credit losses

 

(5,087)

 

 

 

 

 

Debt securities held-to-maturity, net

 

17,529,833

 

 

17,147,633

 

 

14,442,876

 

 

 

 

 

 

 

 

Equity securities (fair value)

 

19,575

 

 

19,586

 

 

19,386

 

 

 

 

 

 

 

 

Loans: (1)

 

 

 

 

 

 

Single family (1-4 units)

 

49,063,193

 

 

47,985,651

 

 

39,134,534

 

Home equity lines of credit

 

2,703,919

 

 

2,501,432

 

 

2,502,837

 

Single family construction

 

779,239

 

 

761,589

 

 

690,370

 

Multifamily (5+ units)

 

12,823,392

 

 

12,353,359

 

 

10,755,210

 

Commercial real estate

 

7,715,266

 

 

7,449,058

 

 

6,763,664

 

Multifamily/commercial construction

 

1,839,445

 

 

1,695,954

 

 

1,604,996

 

Capital call lines of credit

 

7,512,231

 

 

5,570,322

 

 

4,524,749

 

Tax-exempt

 

3,087,751

 

 

3,042,193

 

 

3,046,352

 

Other business

 

3,094,922

 

 

3,034,301

 

 

3,044,943

 

Stock secured

 

1,919,971

 

 

1,897,511

 

 

1,375,454

 

Other secured

 

1,531,705

 

 

1,433,399

 

 

1,135,170

 

Student loan refinance

 

2,659,674

 

 

2,570,356

 

 

2,328,751

 

Other unsecured

 

554,354

 

 

501,706

 

 

358,067

 

Total loans

 

95,285,062

 

 

90,796,831

 

 

77,265,097

 

Allowance for credit losses

 

(541,906)

 

 

(496,104)

 

 

(453,121)

 

Loans, net

 

94,743,156

 

 

90,300,727

 

 

76,811,976

 

 

 

 

 

 

 

 

Loans held for sale

 

354,873

 

 

23,304

 

 

9,878

 

Investments in life insurance

 

1,460,909

 

 

1,434,642

 

 

1,404,083

 

Tax credit investments

 

1,106,693

 

 

1,100,509

 

 

1,040,924

 

Premises, equipment and leasehold improvements, net

 

392,953

 

 

386,841

 

 

339,745

 

Goodwill and other intangible assets

 

232,985

 

 

235,269

 

 

270,594

 

Other real estate owned

 

1,071

 

 

 

 

 

Other assets

 

2,879,705

 

 

2,633,397

 

 

2,189,400

 

Total Assets

 

$

123,914,929

 

 

$

116,263,634

 

 

$

101,847,228

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing checking

 

$

36,920,635

 

 

$

33,124,265

 

 

$

31,362,112

 

Interest-bearing checking

 

20,941,790

 

 

19,696,859

 

 

16,912,529

 

Money market checking

 

12,636,674

 

 

12,790,707

 

 

10,559,521

 

Money market savings and passbooks

 

9,052,690

 

 

10,586,355

 

 

9,858,736

 

Certificates of deposit

 

14,140,550

 

 

13,935,060

 

 

12,919,219

 

Total Deposits

 

93,692,339

 

 

90,133,246

 

 

81,612,117

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

 

800,000

 

 

 

Long-term FHLB advances

 

16,250,000

 

 

12,200,000

 

 

8,000,000

 

Senior notes

 

994,742

 

 

497,719

 

 

896,866

 

Subordinated notes

 

777,990

 

 

777,885

 

 

777,576

 

Other liabilities

 

1,840,093

 

 

2,003,677

 

 

1,514,685

 

Total Liabilities

 

113,555,164

 

 

106,412,527

 

 

92,801,244

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

Preferred stock

 

1,145,000

 

 

1,145,000

 

 

940,000

 

Common stock

 

1,714

 

 

1,686

 

 

1,674

 

Additional paid-in capital

 

4,543,650

 

 

4,214,915

 

 

4,203,473

 

Retained earnings

 

4,652,089

 

 

4,484,375

 

 

3,914,294

 

Accumulated other comprehensive income (loss)

 

17,312

 

 

5,131

 

 

(13,457)

 

Total Shareholders’ Equity

 

10,359,765

 

 

9,851,107

 

 

9,045,984

 

Total Liabilities and Shareholders’ Equity

 

$

123,914,929

 

 

$

116,263,634

 

 

$

101,847,228

 

____________

 

 

 

 

 

 

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

 

 

 

Quarter Ended March 31,

 

Quarter Ended December 31,

 

 

2020

 

2019 (4)

 

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)

 

Average Balance

 

Interest Income/
Expense (1)

 

Yields/
Rates (2)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,853,579

 

 

$

3,940

 

 

0.85

%

 

$

1,445,058

 

 

$

7,989

 

 

2.24

%

 

$

1,377,686

 

 

$

4,869

 

 

1.40

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agency securities

 

307,449

 

 

2,207

 

 

2.87

%

 

1,044,894

 

 

7,776

 

 

2.98

%

 

461,671

 

 

3,239

 

 

2.81

%

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency residential and commercial MBS

 

6,746,664

 

 

47,186

 

 

2.80

%

 

6,854,838

 

 

49,620

 

 

2.90

%

 

6,826,144

 

 

47,764

 

 

2.80

%

Other residential and commercial MBS

 

3,834

 

 

32

 

 

3.33

%

 

4,528

 

 

46

 

 

4.03

%

 

4,276

 

 

39

 

 

3.66

%

Municipal securities

 

11,358,749

 

 

122,542

 

 

4.32

%

 

8,180,654

 

 

94,501

 

 

4.62

%

 

10,981,068

 

 

116,245

 

 

4.23

%

Other investment

securities (3)

 

43,783

 

 

320

 

 

2.92

%

 

18,989

 

 

120

 

 

2.52

%

 

43,840

 

 

322

 

 

2.94

%

Total investment securities

 

18,460,479

 

 

172,287

 

 

3.73

%

 

16,103,903

 

 

152,063

 

 

3.78

%

 

18,316,999

 

 

167,609

 

 

3.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans: (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate (5)

 

51,300,013

 

 

404,982

 

 

3.16

%

 

40,973,253

 

 

341,784

 

 

3.34

%

 

48,938,892

 

 

391,415

 

 

3.20

%

Multifamily (6)

 

12,565,723

 

 

118,944

 

 

3.74

%

 

10,534,919

 

 

99,701

 

 

3.79

%

 

12,043,858

 

 

118,431

 

 

3.85

%

Commercial real estate

 

7,574,573

 

 

78,609

 

 

4.11

%

 

6,702,263

 

 

71,947

 

 

4.29

%

 

7,414,885

 

 

78,229

 

 

4.13

%

Multifamily/commercial construction

 

2,550,647

 

 

30,285

 

 

4.70

%

 

2,278,294

 

 

28,244

 

 

4.96

%

 

2,415,923

 

 

28,931

 

 

4.69

%

Business (7)

 

12,390,386

 

 

122,971

 

 

3.93

%

 

10,678,134

 

 

121,044

 

 

4.53

%

 

11,556,437

 

 

121,665

 

 

4.12

%

Other (8)

 

6,453,056

 

 

47,572

 

 

2.92

%

 

5,088,348

 

 

43,946

 

 

3.45

%

 

6,085,084

 

 

48,261

 

 

3.10

%

Total loans

 

92,834,398

 

 

803,363

 

 

3.44

%

 

76,255,211

 

 

706,666

 

 

3.71

%

 

88,455,079

 

 

786,932

 

 

3.52

%

FHLB stock

 

406,974

 

 

6,960

 

 

6.88

%

 

278,805

 

 

5,175

 

 

7.53

%

 

394,487

 

 

5,678

 

 

5.71

%

Total interest-earning assets

 

113,555,430

 

 

986,550

 

 

3.46

%

 

94,082,977

 

 

871,893

 

 

3.71

%

 

108,544,251

 

 

965,088

 

 

3.52

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

443,255

 

 

 

 

 

 

345,237

 

 

 

 

 

 

362,139

 

 

 

 

 

Goodwill and other intangibles

 

234,078

 

 

 

 

 

 

272,371

 

 

 

 

 

 

256,614

 

 

 

 

 

Other assets

 

4,721,313

 

 

 

 

 

 

4,196,071

 

 

 

 

 

 

4,581,436

 

 

 

 

 

Total noninterest-earning assets

 

5,398,646

 

 

 

 

 

 

4,813,679

 

 

 

 

 

 

5,200,189

 

 

 

 

 

Total Assets

 

$

118,954,076

 

 

 

 

 

 

$

98,896,656

 

 

 

 

 

 

$

113,744,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

53,863,519

 

 

8,432

 

 

0.06

%

 

$

46,516,109

 

 

6,094

 

 

0.05

%

 

$

51,333,186

 

 

8,777

 

 

0.07

%

Money market checking and savings

 

22,475,109

 

 

44,869

 

 

0.80

%

 

19,268,808

 

 

42,317

 

 

0.89

%

 

21,298,741

 

 

49,682

 

 

0.93

%

CDs

 

14,185,945

 

 

65,544

 

 

1.86

%

 

11,384,085

 

 

59,336

 

 

2.11

%

 

13,694,721

 

 

70,246

 

 

2.04

%

Total deposits

 

90,524,573

 

 

118,845

 

 

0.53

%

 

77,169,002

 

 

107,747

 

 

0.57

%

 

86,326,648

 

 

128,705

 

 

0.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

1,231,827

 

 

4,700

 

 

1.53

%

 

956,670

 

 

6,030

 

 

2.56

%

 

3,056,545

 

 

13,530

 

 

1.76

%

Long-term FHLB advances

 

13,420,604

 

 

66,566

 

 

1.99

%

 

8,503,889

 

 

43,167

 

 

2.06

%

 

11,488,043

 

 

62,146

 

 

2.15

%

Senior notes (9)

 

765,308

 

 

4,773

 

 

2.49

%

 

896,654

 

 

5,934

 

 

2.65

%

 

497,610

 

 

3,351

 

 

2.69

%

Subordinated notes (9)

 

777,938

 

 

9,105

 

 

4.68

%

 

777,526

 

 

9,101

 

 

4.68

%

 

777,834

 

 

9,104

 

 

4.68

%

Total borrowings

 

16,195,677

 

 

85,144

 

 

2.11

%

 

11,134,739

 

 

64,232

 

 

2.33

%

 

15,820,032

 

 

88,131

 

 

2.21

%

Total interest-bearing liabilities

 

106,720,250

 

 

203,989

 

 

0.77

%

 

88,303,741

 

 

171,979

 

 

0.79

%

 

102,146,680

 

 

216,836

 

 

0.84

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

2,030,107

 

 

 

 

 

 

1,564,278

 

 

 

 

 

 

2,093,561

 

 

 

 

 

Preferred equity

 

1,145,000

 

 

 

 

 

 

940,000

 

 

 

 

 

 

899,728

 

 

 

 

 

Common equity

 

9,058,719

 

 

 

 

 

 

8,088,637

 

 

 

 

 

 

8,604,471

 

 

 

 

 

Total Liabilities and Equity

 

$

118,954,076

 

 

 

 

 

 

$

98,896,656

 

 

 

 

 

 

$

113,744,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (10)

 

 

 

 

 

2.69

%

 

 

 

 

 

2.92

%

 

 

 

 

 

2.68

%

Net interest income (fully

taxable-equivalent basis) and

net interest margin (11)

 

 

 

$

782,561

 

 

2.74

%

 

 

 

$

699,914

 

 

2.97

%

 

 

 

$

748,252

 

 

2.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent adjustment

 

(30,429)

 

 

 

 

 

 

(24,876)

 

 

 

 

 

 

(28,134)

 

 

 

Net interest income, as reported

 

$

752,132

 

 

 

 

 

 

$

675,038

 

 

 

 

 

 

$

720,118

 

 

 

____________________

(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 loans and other business loans.

(8) Includes stock secured, other secured, student loan refinance and other 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
March 31,

 

Quarter Ended
December 31,

Operating Information

 

2020

 

2019

 

2019

($ in thousands, except per share amounts)

 

 

 

 

 

 

Net income to average assets (1)

 

0.74

%

 

0.93

%

 

0.86

%

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

 

9.13

%

 

10.72

%

 

10.86

%

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

 

9.37

%

 

11.09

%

 

11.20

%

Dividends per common share

 

$

0.19

 

 

$

0.18

 

 

$

0.19

 

Dividend payout ratio

 

15.9

%

 

14.3

%

 

13.7

%

Efficiency ratio (2)

 

65.1

%

 

65.0

%

 

63.7

%

 

 

 

 

 

 

 

Net loan charge-offs (recoveries)

 

$

202

 

 

$

127

 

 

$

(1,060)

 

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

 

0.00

%

 

0.00

%

 

(0.00)

%

 

 

 

 

 

 

 

Allowance for loan credit losses to:

 

 

 

 

 

 

Total loans

 

0.57

%

 

0.59

%

 

0.55

%

Nonaccrual loans

 

432.1

%

 

887.1

%

 

346.5

%

__________

 

 

 

 

 

 

(1) Ratios are annualized.

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

 

 

 

Quarter Ended
March 31,

 

Quarter Ended
December 31,

Effective Tax Rate

 

2020

 

2019

 

2019

Effective tax rate, prior to excess tax benefits

 

21.3

%

 

21.9

%

 

21.6

%

 

 

 

 

 

 

 

Excess tax benefits—stock options

 

(1.5)

 

 

(6.2)

 

 

(1.2)

 

Excess tax benefits—other stock awards

 

(0.3)

 

 

(0.1)

 

 

(0.1)

 

Total excess tax benefits

 

(1.8)

 

 

(6.3)

 

 

(1.3)

 

 

 

 

 

 

 

 

Effective tax rate

 

19.5

%

 

15.6

%

 

20.3

%

 

 

 

 

 

 

 

 

 

 

Quarter Ended
March 31,

 

Quarter Ended
December 31,

Provision for Credit Losses and Unfunded Loan Commitments

 

2020

 

2019

 

2019

($ in thousands)

 

 

 

 

 

 

Debt securities held-to-maturity

 

$

418

 

 

$

 

 

$

 

Loans

 

47,679

 

 

14,200

 

 

9,579

 

Provision for credit losses

 

48,097

 

 

14,200

 

 

9,579

 

Provision (reversal of provision) for unfunded loan commitments (1)

 

14,273

 

 

(217)

 

 

(1,449)

 

Total provision

 

$

62,370

 

 

$

13,983

 

 

$

8,130

 

Allowance for Credit Losses

 

Debt Securities
Held-to-Maturity

 

Loans

 

Unfunded Loan
Commitments

 

Total

($ in thousands)

 

 

 

 

 

 

 

 

Balance at 12/31/2019 (pre-CECL)

 

$

 

 

$

496,104

 

 

$

12,029

 

 

$

508,133

 

Cumulative adjustment (2)

 

4,669

 

 

(1,675)

 

 

3,668

 

 

6,662

 

Balance at 1/1/2020 (CECL)

 

4,669

 

 

494,429

 

 

15,697

 

 

514,795

 

Provision for credit losses

 

418

 

 

47,679

 

 

 

 

48,097

 

Provision for unfunded loan commitments

 

 

 

 

 

14,273

 

(1)

14,273

 

Total provision

 

418

 

 

47,679

 

 

14,273

 

 

62,370

 

Net charge-offs

 

 

 

(202)

 

 

 

 

(202)

 

Balance at 3/31/2020 (CECL)

 

$

5,087

 

 

$

541,906

 

 

$

29,970

 

(3)

$

576,963

 

__________

 

 

 

 

 

 

 

 

(1) Included in other noninterest expense.

(2) Cumulative effect adjustment recorded on January 1, 2020.

(3) Included in other liabilities.

 

 

 

Quarter Ended
March 31,

 

Quarter Ended
December 31,

Mortgage Loan Sales

 

2020

 

2019

 

2019

($ in thousands)

 

 

 

 

 

 

Loans sold:

 

 

 

 

 

 

Flow sales:

 

 

 

 

 

 

Agency

 

$

25,774

 

 

$

11,679

 

 

$

34,519

 

Non-agency

 

31,870

 

 

16,831

 

 

7,717

 

Total flow sales

 

57,644

 

 

28,510

 

 

42,236

 

 

 

 

 

 

 

 

Bulk sales:

 

 

 

 

 

 

Non-agency

 

437,669

 

 

152,119

 

 

 

 

 

 

 

 

 

 

Total loans sold

 

$

495,313

 

 

$

180,629

 

 

$

42,236

 

 

 

 

 

 

 

 

Gain on sale of loans:

 

 

 

 

 

 

Amount

 

$

1,925

 

 

$

359

 

 

$

69

 

Gain as a percentage of loans sold

 

0.39

%

 

0.20

%

 

0.16

%

 

 

 

 

 

 

 

 

 

 

Quarter Ended
March 31,

 

Quarter Ended
December 31,

Loan Originations

 

2020

 

2019 (1)

 

2019 (1)

($ in thousands)

 

 

 

 

 

 

Single family (1-4 units)

 

$

3,519,336

 

 

$

2,189,895

 

 

$

5,275,965

 

Home equity lines of credit

 

395,508

 

 

352,138

 

 

456,150

 

Single family construction

 

109,162

 

 

124,269

 

 

133,368

 

Multifamily (5+ units)

 

781,303

 

 

582,943

 

 

1,214,394

 

Commercial real estate

 

451,858

 

 

246,528

 

 

401,084

 

Multifamily/commercial construction

 

620,921

 

 

130,113

 

 

340,650

 

Capital call lines of credit (2)

 

2,385,229

 

 

1,702,723

 

 

1,708,006

 

Tax-exempt

 

100,019

 

 

84,425

 

 

52,550

 

Other business

 

619,779

 

 

255,999

 

 

512,954

 

Stock secured

 

592,560

 

 

206,713

 

 

650,240

 

Other secured

 

413,824

 

 

266,749

 

 

170,231

 

Student loan refinance

 

236,882

 

 

271,268

 

 

218,596

 

Other unsecured

 

86,006

 

 

63,040

 

 

89,764

 

Total loans originated

 

$

10,312,387

 

 

$

6,476,803

 

 

$

11,223,952

 

__________

 

 

 

 

 

 

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

(2) Origination amounts for certain business lines of credit (i.e., capital call lines of credit) reflect the Bank's contractual obligations in effect during the reporting period, and exclude amounts that are contingent upon future credit approvals.

 

 

 

As of

Loan Servicing Portfolio

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

($ in millions)

 

 

 

 

 

 

 

 

 

 

Loans serviced for investors

 

$

9,203

 

 

$

9,298

 

 

$

10,080

 

 

$

10,746

 

 

$

11,326

 

 
 

 

 

As of

Asset Quality Information

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

125,418

 

 

$

143,181

 

 

$

136,928

 

 

$

144,993

 

 

$

51,081

 

Other real estate owned

 

1,071

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$

126,489

 

 

$

143,181

 

 

$

136,928

 

 

$

144,993

 

 

$

51,081

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets

 

0.10

%

 

0.12

%

 

0.12

%

 

0.14

%

 

0.05

%

 

 

 

 

 

 

 

 

 

 

 

Accruing loans 90 days or more past due

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Restructured accruing loans

 

$

13,418

 

 

$

13,287

 

 

$

14,964

 

 

$

12,176

 

 

$

10,208

 

 

 

 

As of

Book Value and Capital Ratios

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Number of shares of common stock outstanding

 

171,395

 

 

168,621

 

 

168,450

 

 

168,176

 

 

167,393

 

Book value per common share

 

$

53.76

 

 

$

51.63

 

 

$

50.41

 

 

$

49.23

 

 

$

48.42

 

Tangible book value per common share

 

$

52.40

 

 

$

50.24

 

 

$

48.84

 

 

$

47.64

 

 

$

46.81

 

 

 

 

As of

Capital Ratios

 

March 31,
2020 (1),(2)

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

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

 

8.46

%

 

8.39

%

 

8.50

%

 

8.69

%

 

8.84

%

Common Equity Tier 1 capital to risk-weighted assets

 

9.87

%

 

9.86

%

 

9.91

%

 

10.19

%

 

10.54

%

Tier 1 capital to risk-weighted assets

 

11.14

%

 

11.21

%

 

11.05

%

 

11.39

%

 

11.82

%

Total capital to risk-weighted assets

 

12.62

%

 

12.73

%

 

12.61

%

 

13.02

%

 

13.50

%

Regulatory Capital (3)

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 capital

 

$

8,887,905

 

 

$

8,371,192

 

 

$

8,124,179

 

 

$

7,934,602

 

 

$

7,776,620

 

Tier 1 capital

 

$

10,032,905

 

 

$

9,516,192

 

 

$

9,064,179

 

 

$

8,874,602

 

 

$

8,716,620

 

Total capital

 

$

11,365,654

 

 

$

10,802,209

 

 

$

10,340,902

 

 

$

10,138,375

 

 

$

9,960,317

 

Assets (3)

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Average assets

 

$

118,626,842

 

 

$

113,403,507

 

 

$

106,659,003

 

 

$

102,097,363

 

 

$

98,582,697

 

Risk-weighted assets

 

$

90,072,911

 

 

$

84,885,943

 

 

$

81,994,651

 

 

$

77,889,111

 

 

$

73,753,991

 

__________

 

 

 

 

 

 

 

 

 

 

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

(2) In accordance with regulatory capital rules, the Bank elected an option to delay the estimated impact of CECL on its regulatory capital over a five-year transition

period ending December 31, 2024. As a result, capital ratios and amounts as of March 31, 2020 exclude the impact of the increased allowance for credit losses

on loans, held-to-maturity debt securities and unfunded loan commitments attributed to the adoption of CECL.

(3) As defined by regulatory capital rules.

 

 

 

As of

Wealth Management Assets

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

($ in millions)

 

 

 

 

 

 

 

 

 

 

First Republic Investment Management

 

$

60,056

 

 

$

66,029

 

 

$

61,204

 

 

$

61,192

 

 

$

66,675

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage and investment:

 

 

 

 

 

 

 

 

 

 

Brokerage

 

60,189

 

 

68,807

 

 

63,053

 

 

61,583

 

 

59,391

 

Money market mutual funds

 

6,893

 

 

4,268

 

 

4,402

 

 

3,312

 

 

2,818

 

Total brokerage and investment

 

67,082

 

 

73,075

 

 

67,455

 

 

64,895

 

 

62,209

 

 

 

 

 

 

 

 

 

 

 

 

Trust Company:

 

 

 

 

 

 

 

 

 

 

Trust

 

7,288

 

 

7,121

 

 

6,366

 

 

6,319

 

 

5,955

 

Custody

 

3,461

 

 

4,818

 

 

5,210

 

 

5,225

 

 

5,060

 

Total Trust Company

 

10,749

 

 

11,939

 

 

11,576

 

 

11,544

 

 

11,015

 

Total Wealth Management Assets

 

$

137,887

 

 

$

151,043

 

 

$

140,235

 

 

$

137,631

 

 

$

139,899

 

 

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