FRC First Republic Bank

Year-Over-Year Revenues Increased 20%

Wealth Management Assets Surpassed $100 Billion

First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended September 30, 2017.

“First Republic had another very good quarter,” said Jim Herbert, Chairman and CEO. “Wealth management assets reached a significant milestone, now exceeding $100 billion. This was also our best third quarter loan origination volume ever.”

Quarterly Highlights

Financial Results

– Year-over-year:

– Revenues were $670.3 million, up 20.1%.

– Net interest income was $551.0 million, up 19.6%.

– Net income was $200.0 million, up 16.4%.

– Diluted earnings per share of $1.14, up 14.0%.

– Tangible book value per share was $38.90, up 16.4%.

– Loan originations totaled $7.2 billion, our best third quarter ever.

– Loans sold totaled $822.4 million.

– Loans held for sale totaled $716.0 million, up from $202.3 million at prior quarter-end.

– Net interest margin was 3.09%, compared to 3.16% for the prior quarter.

– Efficiency ratio was 62.4%.

Continued Capital and Credit Strength

– Total regulatory capital has grown 20.1% from a year ago.

– Common Equity Tier 1 ratio was 10.58%, compared to 10.52% a year ago.

– Nonperforming assets remained very low at 4 basis points of total assets.

– Net charge-offs were less than 1 basis point of average loans.

– Provision for loan losses totaled $10.1 million for the quarter, reflecting continued loan growth.

Continued Franchise Development

– Year-over-year:

– Loans, excluding loans held for sale, totaled $59.5 billion, up 19.3%.

– Deposits were $65.4 billion, up 18.8%.

– Wealth management assets were $101.3 billion, up 26.4%.

– Wealth management revenues were $88.4 million, up 22.9%.

“Both net interest income and revenues were up 20% year-over-year,” said Mike Roffler, Chief Financial Officer. “Tangible book value per share increased more than 16%, and the Bank’s credit quality and capital remain strong.”

Quarterly Cash Dividend Declared

The Bank declared a cash dividend for the third quarter of $0.17 per share of common stock, which is payable on November 9, 2017 to shareholders of record as of October 26, 2017.

Very Strong Asset Quality

Credit quality remains very strong. Nonperforming assets were only 4 basis points of total assets at September 30, 2017.

The Bank had net charge-offs for the quarter of only $655,000, or less than 1 basis point of average loans, while adding $10.1 million to its allowance for loan losses due to continued loan growth. For the nine months ended September 30, 2017, the Bank has had net charge-offs of only $1.8 million, while adding $43.1 million to its allowance for loan losses.

Continued Capital Strength

Total regulatory capital has grown 20.1% from a year ago.

The Bank’s Common Equity Tier 1 ratio was 10.58% at September 30, 2017, compared to 10.52% a year ago.

Tangible Book Value Growth

Tangible book value per common share at September 30, 2017 was $38.90, up 16.4% from a year ago.

Continued Franchise Development

Strong Loan Originations

Loan originations were $7.2 billion for the quarter, our best third quarter ever for loan volume. Loan originations were up 11.9% compared to the third quarter a year ago primarily due to increases in business, multifamily and single family lending.

Loans, excluding loans held for sale, totaled $59.5 billion at September 30, 2017, up 19.3% compared to a year ago.

Deposit Growth

Total deposits increased to $65.4 billion, up 18.8% compared to a year ago.

At September 30, 2017, checking accounts totaled 60.5% of deposits.

The average rate paid on deposits was 0.25% during the quarter, compared to 0.18% for the prior quarter.

Investments

Total investment securities at September 30, 2017 were $17.5 billion, up 20.9% annualized, for the first nine months of 2017.

High-quality liquid assets, including eligible cash, totaled $10.6 billion at September 30, 2017, and represented 13.0% of average total assets.

Mortgage Banking Activity

During the third quarter, the Bank sold $822.4 million of loans and recorded a gain on sale of $2.0 million, compared to loan sales of $948.0 million and a gain of $1.8 million during the third quarter of last year.

Loans held for sale at quarter-end totaled $716.0 million, compared to $202.3 million at the end of the prior quarter and $514.3 million a year ago.

Loans serviced for investors at quarter-end totaled $12.1 billion, up 5.4% from a year ago. Net loan servicing fees for the quarter were $3.5 million, up 10.6% from a year ago.

Continued Expansion of Wealth Management

Wealth management revenues totaled $88.4 million for the quarter, up 22.9% compared to last year’s third quarter. Such revenues represented 13.2% of the Bank’s total revenues for the quarter.

Total wealth management assets were $101.3 billion at September 30, 2017, up 26.4% compared to a year ago. The growth in wealth management assets was due to both net new assets from existing and new clients and market appreciation.

Wealth management assets included investment management assets of $50.3 billion, brokerage assets and money market mutual funds of $41.9 billion, and trust and custody assets of $9.2 billion.

Income Statement and Key Ratios

Highlights

Strong Revenue Growth

Total revenues were $670.3 million for the quarter, up 20.1% compared to the third quarter a year ago.

Strong Net Interest Income Growth

Net interest income was $551.0 million for the quarter, up 19.6% compared to the third quarter a year ago. The increase in net interest income resulted primarily from growth in average earning assets.

Net Interest Margin

The Bank’s net interest margin was 3.09% for the third quarter, compared to 3.16% for the prior quarter. The decrease from the prior quarter was primarily due to higher deposit and borrowing costs.

Noninterest Income

Noninterest income was $119.3 million for the quarter, up 22.7% compared to the third quarter a year ago. The increase was primarily from growth in wealth management revenues.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $418.4 million for the quarter, up 23.9% compared to the third quarter a year ago. The increase was primarily due to increased salaries and benefits, information systems and other costs from the continued investments in the expansion of the franchise, including investments in Gradifi.

The efficiency ratio was 62.4% for the quarter, compared to 61.9% for the prior quarter and 60.5% for the third quarter a year ago.

Income Tax Rate

The Bank’s effective tax rate for the third quarter of 2017 was 17.3%, compared to 15.3% for the prior quarter. The increase in the effective tax rate during the quarter resulted from lower tax benefits from vesting of share-based awards.

Conference Call Details

First Republic Bank’s third quarter 2017 earnings conference call is scheduled for October 13, 2017 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (877) 407-0792 approximately 10 minutes prior to the start time (to allow time for registration). International callers should dial (201) 689-8263.

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 10 minutes prior to the start time to register, download and install any necessary audio software.

For those unable to join the live presentation, a replay of the call will be available beginning October 13, 2017, at 10:00 a.m. PT / 1:00 p.m. ET, through October 20, 2017, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (844) 512-2921 and use conference ID #13670890. International callers should dial (412) 317-6671 and enter the same conference ID number. A replay of the webcast also will be available for 90 days following the call, 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, with a solid commitment to responsiveness and action. 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; and New York, New York. First Republic offers a complete line of banking products for individuals and businesses, including deposit services, as well as residential, commercial and personal loans. 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. 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 and include statements about economic performance in our markets, growth in our loan originations and wealth management assets, our progress in preparing for, and our compliance with, any enhanced regulatory requirements, and our projected tax rate. 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.

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 nontraditional financial services and technology companies; our ability to recruit and retain key managers, employees and board members; the possibility of earthquakes and other natural disasters affecting the markets in which we operate; interest rate risk and credit risk; our ability to maintain and follow high underwriting standards; economic and market conditions affecting the valuation of our investment securities portfolio, which could result in other-than-temporary impairment if the general economy deteriorates, credit ratings decline, the financial condition of issuers deteriorates, interest rates increase or the liquidity for securities is limited; real estate prices generally and in our markets; our geographic and product concentrations; demand for our products and services; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; the phase-in of the final capital rules regarding the Basel III framework, changes to the definitions and components of regulatory capital and a new approach for risk-weighted assets; legislative and regulatory actions affecting us and the financial services industry, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, including increased compliance costs, limitations on activities and requirements to hold additional capital; our ability to avoid litigation and its associated costs and liabilities; the impact of new accounting standards; future 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. 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 in our Annual Report on Form 10-K and any subsequent reports filed by First Republic with the FDIC. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

 

CONSOLIDATED STATEMENTS OF INCOME

       

Quarter Ended September 30,

   

Quarter Ended June 30,

   

Nine Months Ended September 30,

(in thousands, except per share amounts) 2017     2016 2017 2017     2016 Interest income: Loans $ 497,162 $ 403,299 $ 462,810 $ 1,388,370 $ 1,154,980 Investments 132,948 94,684 130,435 381,441 271,725 Other 3,864 3,701 2,784 10,019 9,447 Cash and cash equivalents 3,193   2,630   3,126   8,987   7,127 Total interest income 637,167   504,314   599,155   1,788,817   1,443,279   Interest expense: Deposits 40,260 19,661 26,355 88,666 52,559 Borrowings 45,954   24,049   40,836   117,549   64,183 Total interest expense 86,214   43,710   67,191   206,215   116,742   Net interest income 550,953 460,604 531,964 1,582,602 1,326,537 Provision for loan losses 10,113   18,000   23,938   43,139   36,692 Net interest income after provision for loan losses 540,840   442,604   508,026   1,539,463   1,289,845   Noninterest income: Investment management fees 70,796 56,843 68,819 200,510 164,771 Brokerage and investment fees 7,843 6,627 6,965 22,847 21,717 Trust fees 3,246 3,015 3,448 9,896 8,991 Foreign exchange fee income 6,551 5,460 7,081 19,493 16,022 Deposit fees 5,736 5,278 5,655 16,763 15,358 Loan and related fees 3,270 3,709 3,375 9,911 10,447 Loan servicing fees, net 3,520 3,182 3,577 9,868 10,443 Gain on sale of loans 1,963 1,785 841 6,168 4,010 Gain (loss) on investment securities, net 1,204 (663 ) (602 ) (833 ) 2,418 Income from investments in life insurance 8,865 12,065 9,538 28,038 30,604 Other income (loss) 6,339   (30 ) 675   7,503   1,197 Total noninterest income 119,333   97,271   109,372   330,164   285,978   Noninterest expense: Salaries and employee benefits 236,996 193,340 221,929 680,832 562,538 Information systems 53,663 38,917 51,053 150,486 110,124 Occupancy 34,129 30,945 33,631 101,126 86,862 Professional fees 17,573 12,466 12,236 40,974 37,942 FDIC assessments 14,197 11,800 13,601 40,948 31,200 Advertising and marketing 10,639 7,169 11,560 31,225 22,616 Amortization of intangibles 5,019 6,116 5,293 15,879 19,163 Other expenses 46,143   36,983   47,797   132,528   106,567 Total noninterest expense 418,359   337,736   397,100   1,193,998   977,012   Income before provision for income taxes 241,814 202,139 220,298 675,629 598,811 Provision for income taxes 41,805   30,321   33,698   112,246   104,501 Net income 200,009 171,818 186,600 563,383 494,310 Dividends on preferred stock 14,272   17,377   14,344   43,768   51,213 Net income available to common shareholders $ 185,737   $ 154,441   $ 172,256   $ 519,615   $ 443,097   Basic earnings per common share $ 1.18   $ 1.03   $ 1.10   $ 3.32   $ 3.00 Diluted earnings per common share $ 1.14   $ 1.00   $ 1.06   $ 3.21   $ 2.90 Dividends per common share $ 0.17   $ 0.16   $ 0.17   $ 0.50   $ 0.47   Weighted average shares—basic 157,752   149,800   157,302   156,699   147,665 Weighted average shares—diluted 162,377   154,824   162,335   161,725   153,038    

CONSOLIDATED BALANCE SHEETS

        As of ($ in thousands)

September 30, 2017

   

June 30, 2017

   

September 30, 2016

ASSETS

Cash and cash equivalents $ 2,681,599 $ 2,295,125 $ 1,386,967 Investment securities available-for-sale 2,312,218 2,235,923 1,710,571 Investment securities held-to-maturity 15,218,615 14,642,402 11,094,535   Loans: Single family (1-4 units) 29,799,762 29,078,735 24,940,843 Home equity lines of credit 2,668,604 2,681,502 2,586,875 Multifamily (5+ units) 8,060,467 7,453,388 6,214,940 Commercial real estate 5,879,437 5,809,698 5,184,184 Single family construction 549,978 523,478 494,427 Multifamily/commercial construction 1,053,708 987,712 841,021 Business 7,952,335 7,981,609 7,113,369 Stock secured 1,029,463 994,413 872,392 Other secured 974,933 837,423 684,712 Unsecured 1,504,263   1,412,117   926,052   Total loans 59,472,950   57,760,075   49,858,815   Allowance for loan losses (347,765 ) (338,307 ) (296,105 ) Loans, net 59,125,185   57,421,768   49,562,710     Loans held for sale 716,046 202,348 514,291 Investments in life insurance 1,320,775 1,292,238 1,266,194 Tax credit investments 1,126,647 1,113,378 1,071,255 Prepaid expenses and other assets 1,183,044 1,146,712 845,329 Premises, equipment and leasehold improvements, net 277,809 260,308 190,213 Goodwill 198,447 203,177 171,616 Other intangible assets 96,520 101,539 118,238 Mortgage servicing rights 63,191 61,383 60,432 Other real estate owned —   1,930   1,196   Total Assets $ 84,320,096   $ 80,978,231   $ 67,993,547    

LIABILITIES AND EQUITY

Liabilities: Deposits: Noninterest-bearing checking $ 25,122,856 $ 25,769,912 $ 20,965,249 Interest-bearing checking 14,457,910 14,374,273 12,747,952 Money market checking 9,895,827 9,019,626 8,381,381 Money market savings and passbooks 8,843,432 8,099,880 8,126,741 Certificates of deposit 7,116,298   6,030,015   4,840,374   Total Deposits 65,436,323   63,293,706   55,061,697     Short-term borrowings 450,000 150,000 200,000 Long-term FHLB advances 8,300,000 7,550,000 4,600,000 Senior notes 894,304 893,865 397,755 Subordinated notes 776,989 776,895 387,329 Debt related to variable interest entities — 22,519 26,981 Other liabilities 1,034,534   1,031,163   875,287   Total Liabilities 76,892,150   73,718,148   61,549,049     Shareholders’ Equity: Preferred stock 990,000 990,000 1,139,525 Common stock 1,579 1,577 1,501 Additional paid-in capital 3,536,400 3,525,283 2,962,355 Retained earnings 2,899,417 2,741,041 2,322,296 Accumulated other comprehensive income 550   2,182   18,821   Total Shareholders’ Equity 7,427,946   7,260,083   6,444,498   Total Liabilities and Shareholders’ Equity $ 84,320,096   $ 80,978,231   $ 67,993,547           Quarter Ended September 30,     Quarter Ended June 30, 2017     2016 2017

Average Balances, Yields and Rates

AverageBalance

   

InterestIncome/Expense (1)

   

Yields/Rates (2)

AverageBalance

   

InterestIncome/Expense (1)

   

Yields/Rates (2)

AverageBalance

   

InterestIncome/Expense (1)

   

Yields/Rates (2)

($ in thousands) Assets: Cash and cash equivalents $ 1,121,328 $ 3,193 1.13 % $ 2,162,287 $ 2,630 0.48 % $ 1,321,995 $ 3,126 0.95 % Investment securities 17,172,684 174,515 4.07 % 12,082,727 127,614 4.22 % 16,522,412 171,954 4.17 % Loans 58,965,714 509,222 3.41 % 49,030,453 414,812 3.35 % 55,752,697 474,401 3.39 % FHLB stock 274,424   3,864   5.59 % 173,543   3,701   8.48 % 221,393   2,784   5.04 % Total interest-earning

assets

77,534,150   690,794   3.53 % 63,449,010   548,757   3.43 % 73,818,497   652,265   3.52 %   Noninterest-earning cash 315,592 277,963 333,651

Goodwill and other intangibles

301,823 292,824 307,275 Other assets 3,280,800   3,002,133   3,258,671  

Total noninterest-earning assets

3,898,215   3,572,920   3,899,597   Total Assets $ 81,432,365   $ 67,021,930   $ 77,718,094     Liabilities and Equity: Checking $ 39,109,681 3,585 0.04 % $ 33,276,648 1,387 0.02 % $ 38,014,639 1,435 0.02 %

Money market checking and savings

17,641,318 16,156 0.36 % 15,921,781 4,667 0.12 % 16,336,980 7,130 0.18 % CDs 6,327,378   20,519   1.29 % 4,688,438   13,607   1.15 % 5,774,830   17,790   1.24 % Total deposits 63,078,377   40,260   0.25 % 53,886,867   19,661   0.15 % 60,126,449   26,355   0.18 %   Short-term borrowings 653,263 1,968 1.20 % 174,205 515 1.18 % 1,433,516 3,698 1.03 % Long-term FHLB advances 7,558,696 28,828 1.51 % 4,794,022 17,924 1.49 % 6,541,209 24,439 1.50 % Senior notes (3) 894,086 5,918 2.65 % 397,657 2,575 2.59 % 534,418 3,469 2.60 % Subordinated notes (3) 776,943 9,094 4.68 % 256,805 2,951 4.60 % 776,850 9,093 4.68 % Other borrowings 20,123   146   2.90 % 27,557   84   1.23 % 25,147   137   2.20 % Total borrowings 9,903,111   45,954   1.85 % 5,650,246   24,049   1.70 % 9,311,140   40,836   1.76 %

Total interest-bearing liabilities

72,981,488   86,214   0.47 % 59,537,113   43,710   0.29 % 69,437,589   67,191   0.39 %   Noninterest-bearing liabilities 1,029,656 1,055,656 1,036,242 Preferred equity 990,000 1,139,525 966,374 Common equity 6,431,221   5,289,636   6,277,889  

Total Liabilities and Equity

$ 81,432,365   $ 67,021,930   $ 77,718,094     Net interest spread (4) 3.06 % 3.14 % 3.13 %

Net interest income (fully taxable-equivalent basis) and net interest margin (5)

$ 604,580   3.09 % $ 505,047   3.16 % $ 585,074   3.16 %  

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

Tax-equivalent adjustment (53,627 ) (44,443 ) (53,110 )

Net interest income, as reported

$ 550,953   $ 460,604   $ 531,964  

 

 

(1)

   

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

(2)

Yields/rates are annualized.

(3)

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

(4)

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

(5)

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

 

      Nine Months Ended September 30, 2017     2016 Average Balances, Yields and Rates

Average Balance

   

InterestIncome/Expense (1)

   

Yields/Rates (2)

Average Balance    

InterestIncome/Expense (1)

   

Yields/Rates (2)

($ in thousands) Assets: Cash and cash equivalents $ 1,296,152 $ 8,987 0.93 % $ 1,960,525 $ 7,127 0.49 % Investment securities 16,382,720 501,874 4.08 % 11,443,730 364,324 4.24 % Loans 55,957,670 1,423,277 3.37 % 46,839,497 1,188,112 3.36 % FHLB stock 219,457   10,019   6.10 % 156,165   9,447   8.08 % Total interest-earning assets 73,855,999   1,944,157   3.50 % 60,399,917   1,569,010   3.44 %   Noninterest-earning cash 318,898 273,545 Goodwill and other intangibles 307,202 299,126 Other assets 3,236,300   2,971,873   Total noninterest-earning assets 3,862,400   3,544,544   Total Assets $ 77,718,399   $ 63,944,461     Liabilities and Equity: Checking $ 38,165,057 6,146 0.02 % $ 32,346,408 2,499 0.01 % Money market checking and savings 16,764,072 28,275 0.23 % 14,385,197 9,738 0.09 % CDs 5,819,803   54,245   1.25 % 4,552,188   40,322   1.18 % Total deposits 60,748,932   88,666   0.20 % 51,283,793   52,559   0.14 %   Short-term borrowings 738,187 6,185 1.12 % 632,215 2,844 0.60 % Long-term FHLB advances 6,635,165 73,882 1.49 % 4,294,161 50,314 1.57 % Senior notes (3) 610,671 11,964 2.61 % 397,459 7,720 2.59 % Subordinated notes (3) 715,510 25,102 4.68 % 86,227 2,951 4.56 % Other borrowings 23,694   416   2.34 % 28,535   354   1.65 % Total borrowings 8,723,227   117,549   1.80 % 5,438,597   64,183   1.58 % Total interest-bearing liabilities 69,472,159   206,215   0.40 % 56,722,390   116,742   0.27 %   Noninterest-bearing liabilities 1,035,590 1,057,461 Preferred equity 986,836 1,117,627 Common equity 6,223,814   5,046,983   Total Liabilities and Equity $ 77,718,399   $ 63,944,461     Net interest spread (4) 3.10 % 3.17 %

Net interest income (fully taxable-equivalent basis) and net interest margin (5)

$ 1,737,942   3.12 % $ 1,452,268   3.19 %  

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

Tax-equivalent adjustment (155,340 ) (125,731 ) Net interest income, as reported $ 1,582,602   $ 1,326,537  

 

(1)

   

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

(2)

Yields/rates are annualized.

(3)

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

(4)

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

(5)

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

         

Quarter Ended September 30,

   

Quarter EndedJune 30,

   

Nine Months EndedSeptember 30,

Operating Information 2017     2016 2017 2017     2016 ($ in thousands) Net income to average assets (1) 0.97 % 1.02 % 0.96 % 0.97 % 1.03 % Net income available to common shareholders to average common equity (1) 11.46 % 11.62 % 11.01 % 11.16 % 11.73 % Net income available to common shareholders to average tangible common equity (1) 12.02 % 12.30 % 11.57 % 11.74 % 12.47 % Dividend payout ratio 14.9 % 16.0 % 16.0 % 15.6 % 16.2 % Efficiency ratio (2) 62.4 % 60.5 % 61.9 % 62.4 % 60.6 %  

Net loan charge-offs

$ 655 $ 626 $ 609 $ 1,772 $ 1,645

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

0.00 % 0.01 % 0.00 % 0.00 % 0.00 %

 

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

Quarter EndedSeptember 30,

   

Quarter EndedJune 30,

   

Nine Months EndedSeptember 30,

Mortgage Loan Sales 2017     2016 2017 2017     2016 ($ in thousands) Loans sold: Flow sales: Agency $ 26,152 $ 137,949 $ 34,261 $ 110,145 $ 253,906 Non-agency 88,534   92,750   72,829   217,565   190,439   Total flow sales 114,686 230,699 107,090 327,710 444,345   Bulk sales: Non-agency 707,669   717,256   332,735   1,580,225   1,902,075   Total loans sold $ 822,355   $ 947,955   $ 439,825   $ 1,907,935   $ 2,346,420     Gain on sale of loans: Amount $ 1,963 $ 1,785 $ 841 $ 6,168 $ 4,010 Gain as a percentage of loans sold 0.24 % 0.19 % 0.19 % 0.32 % 0.17 %           As of Loan Servicing Portfolio

September 30,2017

   

June 30,2017

   

March 31,2017

   

December 31,2016

   

September 30,2016

($ in millions) Loans serviced for investors $ 12,111   $ 11,791   $ 11,838   $ 11,655   $ 11,494          

Quarter EndedSeptember 30,

   

Quarter EndedJune 30,

   

Nine Months EndedSeptember 30,

Loan Originations 2017     2016 2017 2017     2016 ($ in thousands) Single family (1-4 units) $ 2,987,278 $ 2,805,361 $ 3,053,014 $ 8,556,966 $ 7,551,306 Home equity lines of credit 459,709 454,529 424,223 1,298,255 1,362,807 Multifamily (5+ units) 805,429 566,528 646,538 1,860,913 1,799,560 Commercial real estate 197,596 311,466 336,054 929,219 907,850 Construction 413,842 410,538 496,813 1,149,456 861,924 Business 1,879,393 1,529,400 1,654,184 4,486,005 3,434,861 Stock and other secured 320,952 207,241 450,674 1,255,148 1,073,454 Unsecured 179,686   190,836   236,884   647,444   794,810 Total loans originated $ 7,243,885   $ 6,475,899   $ 7,298,384   $ 20,183,406   $ 17,786,572           As of Asset Quality Information

September 30,2017

   

June 30,2017

   

March 31,2017

   

December 31,2016

   

September 30,2016

($ in thousands) Nonperforming assets: Nonaccrual loans $ 37,922 $ 43,384 $ 51,694 $ 49,020 $ 52,759 Other real estate owned —   1,930   —   —   1,196   Total nonperforming assets $ 37,922   $ 45,314   $ 51,694   $ 49,020   $ 53,955     Nonperforming assets to total assets 0.04 % 0.06 % 0.07 % 0.07 % 0.08 %   Accruing loans 90 days or more past due $ — $ — $ — $ — $ 3,083   Restructured accruing loans $ 18,242 $ 13,001 $ 14,224 $ 14,278 $ 13,968           As of Book Value Ratios

September 30,2017

   

June 30,2017

   

March 31,2017

   

December 31,2016

   

September 30,2016

(in thousands, except per share amounts) Number of shares of common stock outstanding 157,930   157,686   157,122   154,292   150,109 Book value per common share $ 40.76   $ 39.76   $ 39.13   $ 37.39   $ 35.34 Tangible book value per common share $ 38.90   $ 37.83   $ 37.16   $ 35.35   $ 33.41           As of 2017     2016 September 30 (1)     June 30     March 31 December 31     September 30 Capital Ratios Actual    

FullyPhased-in (2)

Actual

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

8.78 % 8.76 % 8.99 % 9.22 % 9.37 % 9.26 %

Common Equity Tier 1 capital to risk-weighted assets

10.58 % 10.48 % 10.72 % 11.15 % 10.83 % 10.52 %

Tier 1 capital to risk-weighted assets

12.27 % 12.18 % 12.49 % 12.94 % 13.07 % 12.88 %

Total capital to risk-weighted assets

14.23 % 14.13 % 14.51 % 15.04 % 14.46 % 14.33 %

Regulatory Capital (3)

($ in thousands) Common Equity Tier 1 capital $ 6,140,330 $ 6,112,026 $ 5,975,457 $ 5,852,885 $ 5,496,582 $ 5,046,133 Tier 1 capital $ 7,121,330 $ 7,102,026 $ 6,960,057 $ 6,788,885 $ 6,631,383 $ 6,180,343 Total capital $ 8,259,581 $ 8,240,277 $ 8,087,714 $ 7,892,528 $ 7,337,725 $ 6,875,478 Assets (3) ($ in thousands) Average assets $

81,125,539

$ 81,106,237 $ 77,419,255 $ 73,624,461 $ 70,779,188 $ 66,758,108 Risk-weighted assets $ 58,027,813 $ 58,325,800 $ 55,730,798 $ 52,476,984 $ 50,744,017 $ 47,969,927

 

(1)

   

Ratios and amounts as of September 30, 2017 are preliminary.

(2)

Certain adjustments required under the Basel III Capital Rules will be phased in through the end of 2018. The ratios and amounts shown in this column are calculated assuming a fully phased-in basis of all such adjustments as if they were effective as of September 30, 2017.

(3)

As defined by regulatory capital rules.

        As of Wealth Management Assets

September 30,2017

   

June 30,2017

   

March 31,2017

   

December 31,2016

   

September 30,2016

($ in millions) First Republic Investment Management $ 50,318 $ 47,530 $ 44,573 $ 41,154 $ 40,103   Brokerage and investment: Brokerage 40,652 37,658 35,397 32,218 31,058 Money market mutual funds 1,201   1,402   1,795   2,048   1,902 Total brokerage and investment 41,853   39,060   37,192   34,266   32,960   Trust Company:

Trust

4,441 4,276 3,929 3,754 3,171 Custody 4,734   4,559   4,438   4,406   3,954 Total Trust Company 9,175   8,835   8,367   8,160   7,125 Total Wealth Management Assets $ 101,346   $ 95,425   $ 90,132   $ 83,580   $ 80,188  

View source version on businesswire.com: http://www.businesswire.com/news/home/20171013005130/en/

Investors:Addo Investor RelationsAndrew Greenebaum, 310-829-5400agreenebaum@addoir.comLasse Glassen, 310-829-5400lglassen@addoir.comorMedia:Blue Marlin PartnersGreg Berardi, 415-239-7826greg@bluemarlinpartners.com