Year-Over-Year Total Revenues Increased 16%
and Wealth Management Assets Increased 27%
First Republic Bank (NYSE: FRC) today announced financial
results for the quarter ended June 30, 2018.
“First Republic had an excellent second quarter and first half
of the year,” said Jim Herbert, Chairman and CEO. “Our
client-focused service model continues to attract many new
households, and business remains very good across the
enterprise.”
Quarterly Highlights
Financial Results
- Year-over-year:
- Revenues were $744.1 million, up
16.0%.
- Net income was $209.8 million, up
12.4%.
- Diluted earnings per share of $1.20, up
13.2%.
- Loan originations totaled $9.4 billion,
our best quarter ever.
- Tangible book value per share was
$42.15, up 11.4%.
- Net interest margin was 2.95%, compared
to 2.97% last quarter.
- Efficiency ratio was 63.5%, compared to
64.0% last quarter.
Continued Capital and Credit Strength
- Common Equity Tier 1 ratio was 10.18%,
compared to 10.72% a year ago.
- Nonperforming assets remained very low
at 5 basis points of total assets.
- Net charge-offs were only $771,000, or
less than 1 basis point of average loans.
Continued Franchise Development
- Year-over-year:
- Loans, excluding loans held for sale,
totaled $69.1 billion, up 19.7%.
- Deposits were $72.8 billion, up
15.0%.
- Wealth management assets were $121.1
billion, up 26.9%.
- Wealth management revenues were $104.9
million, up 21.5%.
“Total revenues increased 16% and net interest income grew 15%
compared to a year ago,” said Mike Roffler, Chief Financial
Officer. “We are pleased to have very successfully accessed the
capital markets with a perpetual preferred stock offering during
the quarter.”
Quarterly Cash Dividend
Declared
The Bank declared a cash dividend for the second quarter of
$0.18 per share of common stock, which is payable on August 9,
2018 to shareholders of record as of July 26, 2018.
Very Strong Asset
Quality
Credit quality remains very strong. Nonperforming assets were
only 5 basis points of total assets at June 30, 2018.
The Bank had net charge-offs for the quarter of $771,000, while
adding $19.4 million to its allowance for loan losses due to
continued loan growth.
Continued Capital Strength and Access
to Capital Markets
The Bank’s Common Equity Tier 1 ratio was 10.18% at
June 30, 2018, compared to 10.72% a year ago.
During the second quarter, the Bank issued $300.0 million of
5.50% noncumulative perpetual preferred stock, which qualifies as
Tier 1 capital. The Bank currently expects to redeem its $200.0
million of 7.00% Noncumulative Perpetual Series E Preferred Stock
when such stock becomes redeemable at the Bank’s option on or after
December 28, 2018, subject to all applicable regulatory
approvals.
Tangible Book Value
Growth
Tangible book value per common share at June 30, 2018 was
$42.15, up 11.4% from a year ago.
Continued Franchise
Development
Strong Loan Originations
Loan originations were $9.4 billion for the quarter, compared to
$7.3 billion for the same quarter a year ago, an increase of 28.1%,
primarily due to increases in business lines of credit,
multifamily, stock secured and other secured lending.
Loans, excluding loans held for sale, totaled $69.1 billion at
June 30, 2018, up 19.7% compared to a year ago.
Deposit Growth
Total deposits increased to $72.8 billion, up 15.0% compared to
a year ago.
At June 30, 2018, checking accounts totaled 60.4% of
deposits.
Investments
Total investment securities at June 30, 2018 were $16.5
billion, consistent with the prior quarter and down 2.4% compared
to a year ago.
High-quality liquid assets, including eligible cash, totaled
$11.0 billion at June 30, 2018, and represented 12.3% of
average total assets.
Mortgage Banking Activity
During the second quarter, the Bank sold $721.9 million of loans
and recorded a gain on sale of $4.0 million, compared to loan sales
of $439.8 million and a gain of $841,000 during the second quarter
of last year.
Loans serviced for investors at quarter-end totaled $12.4
billion, up 4.9% from a year ago.
Continued Expansion of Wealth
Management
Wealth management revenues totaled $104.9 million for the
quarter, up 21.5% compared to last year’s second quarter. Such
revenues represented 14.1% of the Bank’s total revenues for the
quarter.
Total wealth management assets were $121.1 billion at
June 30, 2018, up 7.2% for the quarter and up 26.9% 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 $59.3 billion, brokerage assets and money market mutual funds of
$51.9 billion, and trust and custody assets of $9.9 billion.
Income Statement and Key
Ratios
Strong Revenue Growth
Total revenues were $744.1 million for the quarter, up 16.0%
compared to the second quarter a year ago.
Strong Net Interest Income
Growth
Net interest income was $611.7 million for the quarter, up 15.0%
compared to the second quarter a year ago. The increase in net
interest income resulted primarily from growth in average earning
assets.
Net Interest Margin
The net interest margin was 2.95% for the second quarter,
compared to 2.97% for the prior quarter.
Noninterest Income
Noninterest income was $132.4 million for the quarter, up 21.1%
compared to the second quarter a year ago. The increase was
primarily from growth in wealth management revenues and gain on
sale of loans.
Noninterest Expense and Efficiency
Ratio
Noninterest expense was $472.6 million for the quarter, up 19.0%
compared to the second quarter a year ago. The efficiency ratio was
63.5% for the quarter, compared to 61.9% for the second quarter a
year ago. The increases were primarily due to increased salaries
and benefits and information systems costs from the continued
investments in the expansion of the franchise.
Income Taxes
Beginning in 2018, federal tax reform legislation reduces the
federal tax rate for corporations from 35% to 21% and changes or
limits certain tax deductions.
The Bank’s effective tax rate for the second quarter of 2018 was
16.8%, compared to 19.2% for the first quarter of 2018. The
decrease in the second quarter was the result of increased tax
benefits from the vesting of stock awards. For the first six months
of 2018, the Bank’s effective tax rate was 18.0%.
Conference Call Details
First Republic Bank’s second quarter 2018 earnings conference
call is scheduled for July 13, 2018 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 +1 (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 July 13, 2018, at 10:00 a.m.
PT / 1:00 p.m. ET, through July 20, 2018, at 8:59 p.m. PT / 11:59
p.m. ET. To access the replay, dial (844) 512-2921 and use
conference ID #13680929. International callers should dial +1 (412)
317-6671 and enter the same conference ID number. 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, 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; New York, New York; and later in
2018, Jackson, Wyoming. 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. 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
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; 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 impact of tax reform legislation; the phase-in of
the capital requirements under the Basel III framework, and 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, 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 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.
Further, any forward-looking statement speaks only as of the date
on which it is made, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which the statement is made or to reflect the
occurrence of unanticipated events.
CONSOLIDATED
STATEMENTS OF INCOME
Quarter Ended June 30, Quarter Ended
March 31, Six Months Ended June 30, (in
thousands, except per share amounts) 2018
2017 2018 2018 2017 Interest
income: Loans $ 589,912 $ 462,810 $ 541,313 $ 1,131,225 $ 891,208
Investments 133,992 130,435 138,270 272,262 248,493 Other 4,850
2,784 4,978 9,828 6,155 Cash and cash equivalents 5,685
3,126 3,913 9,598 5,794 Total interest
income 734,439 599,155 688,474 1,422,913
1,151,650 Interest expense: Deposits 62,027
26,355 50,387 112,414 48,406 Borrowings 60,719 40,836
50,329 111,048 71,595 Total interest expense
122,746 67,191 100,716 223,462 120,001
Net interest income 611,693 531,964 587,758 1,199,451
1,031,649 Provision for loan losses 19,370 23,938
13,000 32,370 33,026 Net interest income after
provision for loan losses 592,323 508,026 574,758
1,167,081 998,623 Noninterest income:
Investment management fees 82,925 68,819 78,117 161,042 129,714
Brokerage and investment fees 8,826 6,965 10,532 19,358 15,004
Trust fees 3,606 3,448 3,489 7,095 6,650 Foreign exchange fee
income 9,547 7,081 7,397 16,944 12,942 Deposit fees 6,280 5,655
5,985 12,265 11,027 Loan and related fees 4,134 3,375 3,617 7,751
6,641 Loan servicing fees, net 3,186 3,577 3,519 6,705 6,348 Gain
on sale of loans 4,045 841 689 4,734 4,205 Gain (loss) on
investment securities, net (1,027 ) (602 ) 9,197 8,170 (2,037 )
Income from investments in life insurance 9,612 9,538 9,477 19,089
19,173 Other income 1,287 675 1,083 2,370
1,164 Total noninterest income 132,421 109,372
133,102 265,523 210,831
Noninterest expense: Salaries and employee benefits 271,935 221,929
277,024 548,959 443,836 Information systems 59,530 51,053 58,964
118,494 96,823 Occupancy 37,216 33,631 36,172 73,388 66,997
Professional fees 15,588 12,236 13,414 29,002 23,401 FDIC
assessments 16,064 13,601 15,532 31,596 26,751 Advertising and
marketing 15,120 11,560 11,928 27,048 20,586 Other expenses 57,104
53,090 48,547 105,651 97,245
Total noninterest expense 472,557 397,100 461,581
934,138 775,639 Income before provision
for income taxes 252,187 220,298 246,279 498,466 433,815 Provision
for income taxes 42,406 33,698 47,196 89,602
70,441 Net income 209,781 186,600 199,083 408,864
363,374 Dividends on preferred stock 12,163 14,344
12,222 24,385 29,496 Net income available to
common shareholders $ 197,618 $ 172,256 $ 186,861
$ 384,479 $ 333,878 Basic earnings per
common share $ 1.22 $ 1.10 $ 1.16 $ 2.37
$ 2.14 Diluted earnings per common share $ 1.20
$ 1.06 $ 1.13 $ 2.33 $ 2.07
Dividends per common share $ 0.18 $ 0.17 $ 0.17
$ 0.35 $ 0.33 Weighted average
shares—basic 162,152 157,302 161,752 161,953
156,163 Weighted average shares—diluted 165,013
162,335 164,839 164,929 161,390
CONSOLIDATED
BALANCE SHEETS
As of ($ in thousands) June 30,
2018 March 31, 2018 June
30, 2017
ASSETS
Cash and cash equivalents $ 3,993,226 $ 3,839,931 $ 2,295,125
Investment securities available-for-sale 2,163,773 2,256,295
2,235,923 Investment securities held-to-maturity 14,284,071
14,264,992 14,642,402 Equity securities (fair value) 19,997 19,734
— Loans: Single family (1-4 units) 34,276,540 32,211,100
29,078,735 Home equity lines of credit 2,613,639 2,575,234
2,681,502 Multifamily (5+ units) 9,707,084 9,152,736 7,453,388
Commercial real estate 6,321,195 6,173,825 5,809,698 Single family
construction 650,181 621,847 523,478 Multifamily/commercial
construction 1,285,072 1,256,370 987,712 Business 9,603,626
8,991,752 7,981,609 Stock secured 1,380,255 1,207,646 994,413 Other
secured 1,039,448 954,317 837,423 Unsecured 2,269,854
2,047,107 1,412,117 Total loans 69,146,894
65,191,934 57,760,075 Allowance for loan losses
(397,377 ) (378,778 ) (338,307 ) Loans, net 68,749,517
64,813,156 57,421,768 Loans held for sale
46,753 686,393 202,348 Investments in life insurance 1,349,823
1,340,170 1,292,238 Tax credit investments 1,054,536 1,088,602
1,113,378 Prepaid expenses and other assets 1,533,840 1,265,806
1,146,712 Premises, equipment and leasehold improvements, net
312,278 299,587 260,308 Goodwill and other intangible assets
281,550 285,749 304,716 Mortgage servicing rights 62,096 63,093
61,383 Other real estate owned — — 1,930 Total
Assets $ 93,851,460 $ 90,223,508 $ 80,978,231
LIABILITIES AND
EQUITY
Liabilities: Deposits: Noninterest-bearing checking $ 28,428,832 $
27,496,642 $ 25,769,912 Interest-bearing checking 15,490,545
16,809,785 14,374,273 Money market checking 10,054,060 9,088,019
9,019,626 Money market savings and passbooks 8,599,957 8,865,304
8,099,880 Certificates of deposit 10,198,556 8,995,322
6,030,015 Total Deposits 72,771,950 71,255,072
63,293,706 Short-term borrowings 600,000 —
150,000 Long-term FHLB advances 9,650,000 8,500,000 7,550,000
Senior notes 895,572 895,147 893,865 Subordinated notes 777,278
777,180 776,895 Other liabilities 880,687 959,571
1,053,682 Total Liabilities 85,575,487 82,386,970
73,718,148 Shareholders’ Equity: Preferred
stock 1,140,000 840,000 990,000 Common stock 1,626 1,619 1,577
Additional paid-in capital 3,772,323 3,797,419 3,525,283 Retained
earnings 3,379,725 3,211,804 2,741,041 Accumulated other
comprehensive income (loss) (17,701 ) (14,304 ) 2,182 Total
Shareholders’ Equity 8,275,973 7,836,538 7,260,083
Total Liabilities and Shareholders’ Equity $ 93,851,460
$ 90,223,508 $ 80,978,231
Quarter Ended June 30, Quarter Ended March 31,
2018 2017 2018
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 $
1,404,683 $ 5,685 1.62 % $ 1,321,995 $ 3,126 0.95 % $ 1,126,806 $
3,913 1.41 % Investment securities (3) 16,536,827 153,257 3.70 %
16,522,412 171,954 4.17 % 17,199,928 158,446 3.68 % Loans (3)
67,579,518 596,434 3.51 % 55,752,697 474,401 3.39 % 64,062,925
547,610 3.42 % FHLB stock 300,068 4,850 6.48 %
221,393 2,784 5.04 % 280,962 4,978 7.19
%
Total interest-earning assets
85,821,096 760,226 3.53 % 73,818,497 652,265
3.52 % 82,670,621 714,947 3.46 %
Noninterest-earning cash 344,451 333,651 347,567
Goodwill and other intangibles
283,575 307,275 287,948 Other assets 3,472,410 3,258,671
3,440,748
Total noninterest-earning assets
4,100,436 3,899,597 4,076,263 Total Assets $
89,921,532 $ 77,718,094 $ 86,746,884
Liabilities and Equity: Checking $ 43,377,084 5,478 0.05 % $
38,014,639 1,435 0.02 % $ 42,440,377 5,509 0.05 %
Money market checking and savings
16,885,281 21,787 0.52 % 16,336,980 7,130 0.18 % 17,132,181 18,138
0.43 % CDs 8,710,862 34,762 1.60 % 5,774,830
17,790 1.24 % 7,641,580 26,740 1.42 % Total
deposits 68,973,227 62,027 0.36 % 60,126,449
26,355 0.18 % 67,214,138 50,387 0.30 %
Short-term borrowings 1,419,945 6,652 1.88 % 1,433,516 3,698 1.03 %
685,000 2,510 1.49 % Long-term FHLB advances 8,904,396 39,045 1.76
% 6,541,209 24,439 1.50 % 8,354,444 32,800 1.59 % Senior notes (4)
895,364 5,925 2.65 % 534,418 3,469 2.60 % 894,940 5,923 2.65 %
Subordinated notes (4) 777,230 9,097 4.68 % 776,850 9,093 4.68 %
777,133 9,096 4.68 % Other borrowings — — — % 25,147
137 2.20 % — — — % Total borrowings
11,996,935 60,719 2.03 % 9,311,140 40,836
1.76 % 10,711,517 50,329 1.90 %
Total interest-bearing liabilities
80,970,162 122,746 0.61 % 69,437,589 67,191
0.39 % 77,925,655 100,716 0.52 %
Noninterest-bearing liabilities 899,451 1,036,242 980,290 Preferred
equity 900,989 966,374 841,667 Common equity 7,150,930
6,277,889 6,999,272
Total Liabilities and Equity
$ 89,921,532 $ 77,718,094 $ 86,746,884
Net interest spread (5) 2.92 % 3.13 % 2.94 %
Net interest income (fully
taxable-equivalent basis) and net interest margin (3), (6)
$ 637,480 2.95 % $ 585,074 3.16 % $ 614,231
2.97 %
Reconciliation of tax-equivalent net
interest income to reported net interest income:
Tax-equivalent adjustment (3) (25,787 ) (53,110 ) (26,473 )
Net interest income, as reported
$ 611,693 $ 531,964 $ 587,758
__________
(1) Interest income is presented on a fully taxable-equivalent
basis. (2) Yields/rates are annualized. (3) Beginning in 2018, tax
equivalent adjustments to interest income and yields reflect the
corporate federal tax rate of 21%. (4) Average balances include
unamortized issuance discounts and costs. Interest expense includes
amortization of issuance discounts and costs. (5) Net interest
spread represents the average yield on interest-earning assets less
the average rate on interest-bearing liabilities. (6) Net interest
margin represents net interest income on a fully taxable-equivalent
basis divided by total average interest-earning assets.
Six Months Ended June
30, 2018 2017 Average Balances, Yields and
Rates
AverageBalance
InterestIncome/
Expense (1)
Yields/ Rates (2)
AverageBalance
InterestIncome/
Expense (1)
Yields/ Rates (2)
($ in thousands)
Assets: Cash and cash equivalents $
1,266,512 $ 9,598 1.53 % $ 1,385,012 $ 5,794 0.84 % Investment
securities (3) 16,866,545 311,703 3.70 % 15,981,192 327,359 4.10 %
Loans (3) 65,830,937 1,144,044 3.47 % 54,428,721 914,055 3.35 %
FHLB stock 290,568 9,828 6.82 % 191,517 6,155
6.48 % Total interest-earning assets 84,254,562
1,475,173 3.50 % 71,986,442 1,253,363 3.48 %
Noninterest-earning cash 346,000 320,576 Goodwill and other
intangibles 285,750 309,937 Other assets 3,456,666 3,213,682
Total noninterest-earning assets 4,088,416 3,844,195
Total Assets $ 88,342,978 $ 75,830,637
Liabilities and Equity: Checking $ 42,911,318 10,987 0.05 %
$ 37,684,917 2,561 0.01 % Money market checking and savings
17,008,048 39,925 0.47 % 16,318,179 12,119 0.15 % CDs 8,179,175
61,502 1.52 % 5,561,809 33,726 1.22 %
Total deposits 68,098,541 112,414 0.33 % 59,564,905
48,406 0.16 % Short-term borrowings 1,054,503
9,161 1.75 % 781,353 4,217 1.09 % Long-term FHLB advances 8,630,939
71,845 1.68 % 6,165,746 45,054 1.47 % Senior notes (4) 895,153
11,849 2.65 % 466,615 6,046 2.59 % Subordinated notes (4) 777,182
18,193 4.68 % 684,284 16,008 4.68 % Other borrowings — —
— % 25,509 270 2.12 % Total borrowings
11,357,777 111,048 1.97 % 8,123,507 71,595
1.77 % Total interest-bearing liabilities 79,456,318
223,462 0.57 % 67,688,412 120,001 0.36 %
Noninterest-bearing liabilities 939,648 1,038,605 Preferred
equity 871,492 985,228 Common equity 7,075,520 6,118,392
Total Liabilities and Equity $ 88,342,978 $
75,830,637 Net interest spread (5) 2.93 % 3.12 % Net
interest income (fully taxable-equivalent basis)
and net interest margin (3), (6)
$ 1,251,711 2.96 % $ 1,133,362 3.14 %
Reconciliation of tax-equivalent net
interest income to reported net interest income:
Tax-equivalent adjustment (3) (52,260 ) (101,713 ) Net interest
income, as reported $ 1,199,451 $ 1,031,649
__________
(1) Interest income is presented on a fully taxable-equivalent
basis. (2) Yields/rates are annualized. (3) Beginning in 2018, tax
equivalent adjustments to interest income and yields reflect the
corporate federal tax rate of 21%. (4) Average balances include
unamortized issuance discounts and costs. Interest expense includes
amortization of issuance discounts and costs. (5) Net interest
spread represents the average yield on interest-earning assets less
the average rate on interest-bearing liabilities. (6) Net interest
margin represents net interest income on a fully taxable-equivalent
basis divided by total average interest-earning assets.
Quarter Ended June 30,
Quarter Ended March 31,
Six Months Ended June 30, Operating
Information 2018 2017 2018
2018 2017 ($ in thousands) Net income to
average assets (1) 0.94 % 0.96 % 0.93 % 0.93 % 0.97 % Net income
available to common shareholders to average common equity (1) 11.08
% 11.01 % 10.83 % 10.96 % 11.00 % Net income available to common
shareholders to average tangible common equity (1) 11.54 % 11.57 %
11.29 % 11.42 % 11.59 %
Net interest income to average
interest-earning assets (1)
2.86 % 2.89 % 2.88 % 2.87 % 2.89 % Dividend payout ratio 15.0 %
16.0 % 15.0 % 15.0 % 16.0 % Efficiency ratio (2) 63.5 % 61.9 % 64.0
% 63.8 % 62.4 % Net loan charge-offs $ 771 $ 609 $ 154 $ 925
$ 1,117 Net loan charge-offs to average total loans (1) 0.00 % 0.00
% 0.00 % 0.00 % 0.00 % Allowance for loan losses to: Total
loans 0.57 % 0.59 % 0.58 % 0.57 % 0.59 % Nonaccrual loans 780.4 %
779.8 % 774.7 % 780.4 % 779.8 % __________ (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 June 30,
Quarter Ended March 31, Six Months Ended
June 30, Effective Tax Rate 2018
2017 2018 2018 2017 Effective
tax rate, prior to excess tax benefits 21.5 % 23.1 % 21.1
%
21.3 % 23.1 %
Excess tax benefits—stock options (1.3 )% (3.5
)%
(1.8
)%
(1.5 )% (4.1 )% Excess tax benefits—other stock awards (3.4 )% (4.3
)% (0.1 )% (1.8 )% (2.8 )% Total excess tax benefits (4.7 )% (7.8
)% (1.9 )% (3.3 )% (6.9 )%
Effective tax rate 16.8 % 15.3 % 19.2
%
18.0 % 16.2 %
Quarter Ended June 30,
Quarter Ended March 31, Six Months Ended
June 30, Mortgage Loan Sales 2018
2017 2018 2018 2017 ($ in
thousands) Loans sold: Flow sales: Agency $ 7,724 $ 34,261 $ 14,047
$ 21,771 $ 83,993 Non-agency 32,865 72,829 55,655
88,520 129,031 Total flow sales 40,589 107,090
69,702 110,291 213,024 Bulk sales: Non-agency 681,332
332,735 91,709 773,041 872,556 Total
loans sold $ 721,921 $ 439,825 $ 161,411 $
883,332 $ 1,085,580 Gain on sale of loans:
Amount $ 4,045 $ 841 $ 689 $ 4,734 $ 4,205 Gain as a percentage of
loans sold 0.56 % 0.19 % 0.43 % 0.54 % 0.39 %
Quarter Ended June 30, Quarter Ended
March 31, Six Months Ended June 30, Loan
Originations 2018 2017 2018
2018 2017 ($ in thousands) Single family (1-4
units) $ 3,125,316 $ 3,053,014 $ 2,326,712 $ 5,452,028 $ 5,569,688
Home equity lines of credit 416,098 424,223 346,333 762,431 838,546
Multifamily (5+ units) 921,723 646,538 761,584 1,683,307 1,055,484
Commercial real estate 341,707 336,054 275,683 617,390 731,623
Construction 384,236 496,813 464,806 849,042 735,614 Business
3,097,056 1,654,184 2,057,454 5,154,510 2,606,612 Stock and other
secured 748,450 450,674 666,546 1,414,996 934,196 Unsecured 318,227
236,884 428,342 746,569 467,758 Total
loans originated $ 9,352,813 $ 7,298,384 $ 7,327,460
$ 16,680,273 $ 12,939,521
As of
Loan Servicing Portfolio
June 30,2018
March 31,2018
December 31,2017
September 30,2017
June 30,2017
($ in millions) Loans serviced for investors $ 12,374 $
12,192 $ 12,495 $ 12,111 $ 11,791
As of Asset Quality Information
June 30,2018
March 31,2018
December 31,2017
September 30,2017
June 30,2017
($ in thousands) Nonperforming assets: Nonaccrual loans $ 50,920 $
48,895 $ 37,656 $ 37,922 $ 43,384 Other real estate owned —
— — — 1,930 Total nonperforming assets
$ 50,920 $ 48,895 $ 37,656 $ 37,922 $
45,314 Nonperforming assets to total assets 0.05 %
0.05 % 0.04 % 0.04 % 0.06 % Accruing loans 90 days or more
past due $ — $ — $ — $ — $ — Restructured accruing loans $
11,568 $ 11,853 $ 12,605 $ 18,242 $ 13,001
As
of Book Value Ratios
June 30,2018
March 31,2018
December 31,2017
September 30,2017
June 30,2017
(in thousands, except per share amounts) Number of shares of common
stock outstanding 162,638 161,863 161,696
157,930 157,686 Book value per common share $ 43.88 $
43.23 $ 42.23 $ 40.76 $ 39.76 Tangible book
value per common share $ 42.15 $ 41.46 $ 40.43
$ 38.90 $ 37.83
As of 2018
2017 Capital Ratios June 30 (1)
March 31 December 31 September
30 June 30 Tier 1 leverage ratio (Tier 1 capital
to average assets) 8.83 % 8.64 % 8.85 % 8.78 % 8.99 % Common Equity
Tier 1 capital to risk-weighted assets 10.18 % 10.47 % 10.63 %
10.58 % 10.72 % Tier 1 capital to risk-weighted assets 11.90 %
11.80 % 12.22 % 12.27 % 12.49 % Total capital to risk-weighted
assets 13.68 % 13.65 % 14.11 % 14.23 % 14.51 %
Regulatory
Capital (2) ($ in thousands) Common Equity Tier 1
capital $ 6,766,573 $ 6,624,101 $ 6,488,618 $ 6,140,330 $ 5,975,457
Tier 1 capital $ 7,906,573 $ 7,464,101 $ 7,457,944 $ 7,121,330 $
6,960,057 Total capital $ 9,095,028 $ 8,633,859 $ 8,615,389 $
8,259,581 $ 8,087,714
Assets (2) ($ in thousands)
Average assets $ 89,560,555 $ 86,378,664 $ 84,238,404 $ 81,125,539
$ 77,419,255 Risk-weighted assets $ 66,461,528 $ 63,239,135 $
61,054,077 $ 58,027,938 $ 55,730,798
__________
(1) Ratios and amounts as of June 30, 2018 are preliminary. (2) As
defined by regulatory capital rules.
As of
Wealth Management Assets
June 30,2018
March 31,2018
December 31,2017
September 30,2017
June 30,2017
($ in millions) First Republic Investment Management $ 59,329 $
55,104 $ 52,712 $ 50,318 $ 47,530 Brokerage and investment:
Brokerage 50,356 46,150 43,015 40,652 37,658 Money market mutual
funds 1,575 2,104 1,671 1,201 1,402
Total brokerage and investment 51,931 48,254 44,686
41,853 39,060 Trust Company: Trust 5,125 4,694
4,678 4,441 4,276 Custody 4,739 4,938 4,885
4,734 4,559 Total Trust Company 9,864 9,632
9,563 9,175 8,835 Total Wealth Management Assets $
121,124 $ 112,990 $ 106,961 $ 101,346 $
95,425
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180713005032/en/
Investors:Addo Investor RelationsAndrew Greenebaum /
Lasse Glassen,
310-829-5400agreenebaum@addoir.comlglassen@addoir.comorMedia:Blue
Marlin PartnersGreg Berardi,
415-239-7826greg@bluemarlinpartners.com
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