Strongest Loan Origination Quarter
Year-Over-Year Loans Increased 19%, Revenues
Increased 10%
First Republic Bank (NYSE: FRC) today announced financial
results for the quarter ended June 30, 2019.
“The franchise continues to perform well,” said Jim Herbert,
Chairman, CEO & Founder. “Loans and deposits grew very nicely
and our client-focused business model continues to deliver strong,
safe, organic growth.”
Quarterly Highlights
Financial Results
- Year-over-year:
- Revenues were $819.4 million, up 10.1%.
- Net interest income was $674.0 million, up 10.2%
- Net income was $222.6 million, up 6.1%.
- Diluted earnings per share of $1.24, up 3.3%.
- Tangible book value per share was $47.64, up 13.0%.
- Loan originations totaled $9.4 billion, our strongest quarter
ever.
- Net interest margin was 2.85%, compared to 2.97% last
quarter.
- Efficiency ratio was 64.5%, compared to 65.0% last
quarter.
Continued Capital and Credit Strength
- Common Equity Tier 1 ratio was 10.19%, compared to 10.18% a
year ago.
- Nonperforming assets remained at a low 14 basis points of total
assets.
- Net charge-offs were only $1.2 million, or 1 basis point of
average loans.
Continued Franchise Development
- Year-over-year:
- Loans, excluding loans held for sale, totaled $82.2 billion, up
18.9%.
- Deposits were $83.4 billion, up 14.6%.
- Wealth management assets were $137.6 billion and wealth
management revenues were $120.3 million. (1)
“New client household acquisition continues to be very strong,
reflecting our continuing success in delivering exceptional client
service,” said Mike Roffler, Chief Financial Officer. “Credit
quality and capital strength remain excellent.”
Quarterly Cash Dividend
Declared
The Bank declared a cash dividend for the second quarter of
$0.19 per share of common stock, which is payable on August 8, 2019
to shareholders of record as of July 25, 2019.
Very Strong Asset
Quality
Credit quality remains strong. Nonperforming assets were only 14
basis points of total assets at June 30, 2019.
The Bank had net charge-offs for the quarter of $1.2 million,
while adding $21.2 million to its allowance for loan losses due to
continued loan growth.
Continued Capital
Strength
The Bank’s Common Equity Tier 1 ratio was 10.19% at June 30,
2019, compared to 10.18% a year ago.
Tangible Book Value
Growth
Tangible book value per common share at June 30, 2019 was
$47.64, up 13.0% from a year ago.
Continued Franchise
Development
Loan Originations
Loan originations were $9.4 billion for the quarter, a slight
increase compared to the same quarter a year ago.
Loans, excluding loans held for sale, totaled $82.2 billion at
June 30, 2019, up 18.9% compared to a year ago primarily due to
increases in single family, business, multifamily and commercial
real estate loans.
Deposit Growth
Total deposits increased to $83.4 billion, up 14.6% compared to
a year ago.
At June 30, 2019, checking accounts totaled 58.3% of
deposits.
Investments
Total investment securities at June 30, 2019 were $16.2 billion,
a slight increase compared to the prior quarter and a slight
decrease compared to a year ago.
High-quality liquid assets, including eligible cash, totaled
$13.7 billion at June 30, 2019, and represented 13.3% of average
total assets.
Wealth Management
Wealth management revenues totaled $120.3 million for the
quarter. Such revenues represented 14.7% of the Bank’s total
revenues for the quarter.
Total wealth management assets were $137.6 billion at June 30,
2019, down 1.6% for the quarter. This net decrease in wealth
management assets was driven by the departure of wealth managers
previously announced on June 2, 2019, and was largely offset by
more than $8 billion of client inflows and market appreciation. The
Bank currently expects an outflow of approximately $4 billion of
wealth management assets in the third quarter of 2019 from the
departure of these wealth managers. After adjusting for these
expected outflows, wealth management assets would have increased by
approximately 10% year-over-year as of June 30, 2019.
Wealth management assets included investment management assets
of $61.2 billion, brokerage assets and money market mutual funds of
$64.9 billion, and trust and custody assets of $11.5 billion.
Income Statement and Key
Ratios
Revenue Growth
Total revenues were $819.4 million for the quarter, up 10.1%
compared to the second quarter a year ago.
Net Interest Income Growth
Net interest income was $674.0 million for the quarter, up 10.2%
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 2.85% for the second quarter,
compared to 2.97% for the prior quarter. The decline was primarily
due to an increase in the rate paid on deposits and an increase in
average short-term borrowings, while earning asset yields were
stable.
Noninterest Income
Noninterest income was $145.4 million for the quarter, up 9.8%
compared to the second quarter a year ago. The increase was
primarily from growth in wealth management revenues, partially
offset by a decrease in the gain on sale of loans.
Noninterest Expense and Efficiency
Ratio
Noninterest expense was $528.9 million for the quarter, up 11.9%
compared to the second quarter a year ago. The increase was
primarily due to increased salaries and benefits, information
systems and other expenses from the continued investments in the
expansion of the franchise.
The efficiency ratio was 64.5% for the quarter, compared to
63.5% for the second quarter a year ago.
Income Taxes
The Bank’s effective tax rate for the second quarter of 2019 was
17.4%, compared to 15.6% for the prior quarter, and 16.8% for the
second quarter a year ago. The increase from the first quarter was
primarily the result of lower excess tax benefits from a decrease
in stock option exercises by employees. For the first six months of
2019, the Bank’s effective tax rate was 16.5%.
_________ (1) The Bank currently expects an outflow of
approximately $4 billion of wealth management assets in the third
quarter of 2019 from the departure of wealth managers previously
announced in June 2019.
Conference Call Details
First Republic Bank’s second quarter 2019 earnings conference
call is scheduled for July 16, 2019 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 16, 2019, at 10:00 a.m. PT /
1:00 p.m. ET, through July 23, 2019, at 8:59 p.m. PT / 11:59 p.m.
ET. To access the replay, dial (844) 512-2921 and use conference ID
#13691471. 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 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.
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, including
those 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; developments
and uncertainty related to the future use and availability of
reference rates, such as the London Interbank Offered Rate and the
11th District Monthly Weighted Average Cost of Funds Index; the
regulatory environment in which we operate, our regulatory
compliance and future regulatory requirements; the impact of tax
reform legislation; 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; 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
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 June 30,
Quarter Ended March
31,
Six Months Ended June
30,
(in thousands, except per share
amounts)
2019
2018
2019
2019
2018
Interest income:
Loans
$
741,328
$
589,912
$
700,088
$
1,441,416
$
1,131,225
Investments
134,044
133,992
133,765
267,809
272,262
Other
4,813
4,850
5,175
9,988
9,828
Cash and cash equivalents
5,547
5,685
7,989
13,536
9,598
Total interest income
885,732
734,439
847,017
1,732,749
1,422,913
Interest expense:
Deposits
129,188
62,027
107,747
236,935
112,414
Borrowings
82,518
60,719
64,232
146,750
111,048
Total interest expense
211,706
122,746
171,979
383,685
223,462
Net interest income
674,026
611,693
675,038
1,349,064
1,199,451
Provision for loan losses
21,200
19,370
14,200
35,400
32,370
Net interest income after provision for
loan losses
652,826
592,323
660,838
1,313,664
1,167,081
Noninterest income:
Investment management fees
93,720
82,925
84,924
178,644
161,042
Brokerage and investment fees
8,287
7,705
7,659
15,946
16,563
Insurance fees
3,696
1,121
2,114
5,810
2,795
Trust fees
4,227
3,606
3,889
8,116
7,095
Foreign exchange fee income
10,345
9,547
8,631
18,976
16,944
Deposit fees
6,579
6,280
6,320
12,899
12,265
Loan and related fees
4,296
4,134
4,007
8,303
7,751
Loan servicing fees, net
3,425
3,186
3,788
7,213
6,705
Gain (loss) on sale of loans
(15
)
4,045
359
344
4,734
Gain (loss) on investment securities
(1,063
)
(1,027
)
(149
)
(1,212
)
8,170
Income from investments in life
insurance
10,049
9,612
9,335
19,384
19,089
Other income
1,804
1,287
1,441
3,245
2,370
Total noninterest income
145,350
132,421
132,318
277,668
265,523
Noninterest expense:
Salaries and employee benefits
297,524
271,935
313,253
610,777
548,959
Information systems
70,277
59,530
67,170
137,447
118,494
Occupancy
47,587
37,216
43,895
91,482
73,388
Professional fees
16,435
15,588
11,681
28,116
29,002
Advertising and marketing
16,700
15,120
15,734
32,434
27,048
FDIC assessments
9,196
16,064
8,903
18,099
31,596
Other expenses
71,135
57,104
64,176
135,311
105,651
Total noninterest expense
528,854
472,557
524,812
1,053,666
934,138
Income before provision for income
taxes
269,322
252,187
268,344
537,666
498,466
Provision for income taxes
46,758
42,406
41,753
88,511
89,602
Net income
222,564
209,781
226,591
449,155
408,864
Dividends on preferred stock
12,788
12,163
12,787
25,575
24,385
Net income available to common
shareholders
$
209,776
$
197,618
$
213,804
$
423,580
$
384,479
Basic earnings per common share
$
1.25
$
1.22
$
1.28
$
2.53
$
2.37
Diluted earnings per common share
$
1.24
$
1.20
$
1.26
$
2.50
$
2.33
Weighted average shares—basic
167,685
162,152
167,112
167,400
161,953
Weighted average shares—diluted
169,572
165,013
169,410
169,503
164,929
CONSOLIDATED BALANCE SHEETS
As of
($ in thousands)
June 30, 2019
March 31, 2019
December 31, 2018
June 30, 2018
ASSETS
Cash and cash equivalents
$
2,220,073
$
3,693,396
$
2,811,159
$
3,993,226
Debt securities available-for-sale
1,438,061
1,624,970
1,779,116
2,163,773
Debt securities held-to-maturity
14,721,568
14,442,876
14,436,973
14,284,071
Equity securities (fair value)
19,529
19,386
18,719
19,997
Loans:
Single family (1-4 units)
41,758,981
39,134,534
37,955,252
34,276,540
Home equity lines of credit
2,587,554
2,502,837
2,542,713
2,613,639
Multifamily (5+ units)
11,216,640
10,814,000
10,357,839
9,707,084
Commercial real estate
7,251,509
6,802,788
6,677,440
6,321,195
Single family construction
702,928
690,370
645,924
650,181
Multifamily/commercial construction
1,470,699
1,507,082
1,576,582
1,285,072
Business
11,686,510
10,616,044
10,998,503
9,603,626
Stock secured
1,514,855
1,375,454
1,432,911
1,380,255
Other secured
1,235,588
1,135,170
1,105,751
1,039,448
Unsecured
2,812,357
2,686,818
2,572,367
2,269,854
Total loans
82,237,621
77,265,097
75,865,282
69,146,894
Allowance for loan losses
(473,095
)
(453,121
)
(439,048
)
(397,377
)
Loans, net
81,764,526
76,811,976
75,426,234
68,749,517
Loans held for sale
12,502
9,878
98,985
46,753
Investments in life insurance
1,412,883
1,404,083
1,376,579
1,349,823
Tax credit investments
1,054,192
1,040,924
1,057,541
1,054,536
Prepaid expenses and other assets
2,390,649
2,136,675
1,538,971
1,533,840
Premises, equipment and leasehold
improvements, net
348,609
339,745
332,483
312,278
Goodwill and other intangible assets
267,490
270,594
273,974
281,550
Mortgage servicing rights
49,554
52,725
54,470
62,096
Total Assets
$
105,699,636
$
101,847,228
$
99,205,204
$
93,851,460
LIABILITIES AND EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking
$
32,023,125
$
31,362,112
$
30,033,658
$
28,428,832
Interest-bearing checking
16,649,251
16,912,529
17,089,520
15,490,545
Money market checking
10,874,671
10,559,521
10,317,436
10,054,060
Money market savings and passbooks
9,921,688
9,858,736
10,245,107
8,599,957
Certificates of deposit
13,962,348
12,919,219
11,377,515
10,198,556
Total Deposits
83,431,083
81,612,117
79,063,236
72,771,950
Short-term borrowings
—
—
100,000
600,000
Long-term FHLB advances
9,800,000
8,000,000
8,700,000
9,650,000
Senior notes
497,269
896,866
896,432
895,572
Subordinated notes
777,678
777,576
777,475
777,278
Other liabilities
1,973,963
1,514,685
990,284
880,687
Total Liabilities
96,479,993
92,801,244
90,527,427
85,575,487
Shareholders’ Equity:
Preferred stock
940,000
940,000
940,000
1,140,000
Common stock
1,682
1,674
1,649
1,626
Additional paid-in capital
4,186,304
4,203,473
4,024,306
3,772,323
Retained earnings
4,091,636
3,914,294
3,731,205
3,379,725
Accumulated other comprehensive income
(loss)
21
(13,457
)
(19,383
)
(17,701
)
Total Shareholders’ Equity
9,219,643
9,045,984
8,677,777
8,275,973
Total Liabilities and Shareholders’
Equity
$
105,699,636
$
101,847,228
$
99,205,204
$
93,851,460
Quarter Ended June 30,
Quarter Ended March
31,
2019
2018
2019
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
$
1,091,353
$
5,547
2.04
%
$
1,404,683
$
5,685
1.62
%
$
1,445,058
$
7,989
2.24
%
Investment securities:
U.S. Government-sponsored agency
securities
1,031,797
7,675
2.98
%
1,044,897
7,772
2.98
%
1,044,894
7,776
2.98
%
Mortgage-backed securities:
Agency residential and commercial MBS
6,669,868
47,724
2.86
%
7,423,001
50,842
2.74
%
6,854,838
49,620
2.90
%
Other residential and commercial MBS
4,523
43
3.78
%
4,753
38
3.21
%
4,528
46
4.03
%
Municipal securities
8,497,645
96,980
4.57
%
8,044,313
94,478
4.69
%
8,180,654
94,501
4.62
%
Other investment securities (3)
19,332
127
2.63
%
19,863
127
2.55
%
18,989
120
2.52
%
Total investment securities
16,223,165
152,549
3.76
%
16,536,827
153,257
3.70
%
16,103,903
152,063
3.78
%
Loans:
Residential real estate
42,851,879
357,475
3.34
%
36,424,028
287,872
3.16
%
40,973,253
341,784
3.34
%
Multifamily
11,064,723
110,508
3.95
%
9,389,300
87,044
3.67
%
10,596,540
100,656
3.80
%
Commercial real estate
7,013,324
75,180
4.24
%
6,276,975
65,473
4.13
%
6,739,792
72,481
4.30
%
Construction
2,161,475
26,534
4.86
%
1,893,614
22,238
4.65
%
2,179,144
26,755
4.91
%
Business
11,410,239
131,658
4.57
%
9,181,127
98,061
4.22
%
10,678,134
121,044
4.53
%
Other
5,346,380
46,581
3.45
%
4,414,474
35,746
3.20
%
5,088,348
43,946
3.45
%
Total loans
79,848,020
747,936
3.73
%
67,579,518
596,434
3.51
%
76,255,211
706,666
3.71
%
FHLB stock
331,218
4,813
5.83
%
300,068
4,850
6.48
%
278,805
5,175
7.53
%
Total interest-earning assets
97,493,756
910,845
3.72
%
85,821,096
760,226
3.53
%
94,082,977
871,893
3.71
%
Noninterest-earning cash
345,174
344,451
345,237
Goodwill and other intangibles
269,404
283,575
272,371
Other assets
4,319,976
3,472,410
4,196,071
Total noninterest-earning assets
4,934,554
4,100,436
4,813,679
Total Assets
$
102,428,310
$
89,921,532
$
98,896,656
Liabilities and Equity:
Deposits:
Checking
$
45,813,205
6,946
0.06
%
$
43,377,084
5,478
0.05
%
$
46,516,109
6,094
0.05
%
Money market checking and savings
19,323,615
51,536
1.07
%
16,885,281
21,787
0.52
%
19,268,808
42,317
0.89
%
CDs
12,799,189
70,706
2.22
%
8,710,862
34,762
1.60
%
11,384,085
59,336
2.11
%
Total deposits
77,936,009
129,188
0.66
%
68,973,227
62,027
0.36
%
77,169,002
107,747
0.57
%
Borrowings:
Short-term borrowings
2,875,590
18,282
2.55
%
1,419,945
6,652
1.88
%
956,670
6,030
2.56
%
Long-term FHLB advances
9,132,967
49,601
2.18
%
8,904,396
39,045
1.76
%
8,503,889
43,167
2.06
%
Senior notes (4)
835,544
5,534
2.65
%
895,364
5,925
2.65
%
896,654
5,934
2.65
%
Subordinated notes (4)
777,628
9,101
4.68
%
777,230
9,097
4.68
%
777,526
9,101
4.68
%
Total borrowings
13,621,729
82,518
2.43
%
11,996,935
60,719
2.03
%
11,134,739
64,232
2.33
%
Total interest-bearing liabilities
91,557,738
211,706
0.93
%
80,970,162
122,746
0.61
%
88,303,741
171,979
0.79
%
Noninterest-bearing liabilities
1,695,606
899,451
1,564,278
Preferred equity
940,000
900,989
940,000
Common equity
8,234,966
7,150,930
8,088,637
Total Liabilities and Equity
$
102,428,310
$
89,921,532
$
98,896,656
Net interest spread (5)
2.79
%
2.92
%
2.92
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
699,139
2.85
%
$
637,480
2.95
%
$
699,914
2.97
%
Reconciliation of tax-equivalent net
interest income to reported net interest income:
Tax-equivalent adjustment
(25,113
)
(25,787
)
(24,876
)
Net interest income, as reported
$
674,026
$
611,693
$
675,038
Six Months Ended June
30,
2019
2018
Average Balances, Yields and
Rates
Average Balance
Interest Income/ Expense
(1)
Yields/ Rates (2)
Average Balance
Interest Income/ Expense
(1)
Yields/ Rates (2)
($ in thousands)
Assets:
Cash and cash equivalents
$
1,267,228
$
13,536
2.15
%
$
1,266,512
$
9,598
1.53
%
Investment securities:
U.S. Treasury and other U.S. Government
agency securities
—
—
—
%
9,467
87
1.84
%
U.S. Government-sponsored agency
securities
1,038,310
15,452
2.98
%
1,100,333
16,213
2.95
%
Mortgage-backed securities:
Agency residential and commercial MBS
6,761,842
97,343
2.88
%
7,516,223
100,951
2.69
%
Other residential and commercial MBS
4,525
88
3.91
%
5,410
185
6.83
%
Municipal securities
8,340,025
191,481
4.59
%
8,215,189
194,023
4.72
%
Other investment securities (3)
19,161
247
2.58
%
19,923
244
2.45
%
Total investment securities
16,163,863
304,611
3.77
%
16,866,545
311,703
3.70
%
Loans:
Residential real estate
41,917,755
699,259
3.34
%
35,584,566
553,401
3.11
%
Multifamily
10,831,925
211,164
3.88
%
9,121,973
165,732
3.61
%
Commercial real estate
6,877,314
147,661
4.27
%
6,211,132
127,985
4.10
%
Construction
2,170,260
53,289
4.88
%
1,835,197
42,863
4.65
%
Business
11,046,209
252,702
4.55
%
8,886,468
187,575
4.20
%
Other
5,218,077
90,528
3.45
%
4,191,601
66,488
3.15
%
Total loans
78,061,540
1,454,603
3.72
%
65,830,937
1,144,044
3.47
%
FHLB stock
305,157
9,988
6.60
%
290,568
9,828
6.82
%
Total interest-earning assets
95,797,788
1,782,738
3.71
%
84,254,562
1,475,173
3.50
%
Noninterest-earning cash
345,205
346,000
Goodwill and other intangibles
270,879
285,750
Other assets
4,258,367
3,456,666
Total noninterest-earning assets
4,874,451
4,088,416
Total Assets
$
100,672,239
$
88,342,978
Liabilities and Equity:
Deposits:
Checking
$
46,162,715
13,040
0.06
%
$
42,911,318
10,987
0.05
%
Money market checking and savings
19,296,363
93,854
0.98
%
17,008,048
39,925
0.47
%
CDs
12,095,546
130,041
2.17
%
8,179,175
61,502
1.52
%
Total deposits
77,554,624
236,935
0.62
%
68,098,541
112,414
0.33
%
Borrowings:
Short-term borrowings
1,921,431
24,312
2.55
%
1,054,503
9,161
1.75
%
Long-term FHLB advances
8,820,165
92,768
2.12
%
8,630,939
71,845
1.68
%
Senior notes (4)
865,930
11,468
2.65
%
895,153
11,849
2.65
%
Subordinated notes (4)
777,578
18,202
4.68
%
777,182
18,193
4.68
%
Total borrowings
12,385,104
146,750
2.39
%
11,357,777
111,048
1.97
%
Total interest-bearing liabilities
89,939,728
383,685
0.86
%
79,456,318
223,462
0.57
%
Noninterest-bearing liabilities
1,630,305
939,648
Preferred equity
940,000
871,492
Common equity
8,162,206
7,075,520
Total Liabilities and Equity
$
100,672,239
$
88,342,978
Net interest spread (5)
2.85
%
2.93
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
1,399,053
2.91
%
$
1,251,711
2.96
%
Reconciliation of tax-equivalent net
interest income to reported net interest income:
Tax-equivalent adjustment
(49,989
)
(52,260
)
Net interest income, as reported
$
1,349,064
$
1,199,451
__________
(1) Interest income is presented
on a fully taxable-equivalent basis.
(2) Yields/rates are
annualized.
(3) Includes mutual funds and
marketable equity securities.
(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
2019
2018
2019
2019
2018
($ in thousands, except per share
amounts)
Net income to average assets (1)
0.87
%
0.94
%
0.93
%
0.90
%
0.93
%
Net income available to common
shareholders to average common equity (1)
10.22
%
11.08
%
10.72
%
10.47
%
10.96
%
Net income available to common
shareholders to average tangible common equity (1)
10.56
%
11.54
%
11.09
%
10.82
%
11.42
%
Dividends per common share
$
0.19
$
0.18
$
0.18
$
0.37
$
0.35
Dividend payout ratio
15.4
%
15.0
%
14.3
%
14.8
%
15.0
%
Efficiency ratio (2)
64.5
%
63.5
%
65.0
%
64.8
%
63.8
%
Net loan charge-offs
$
1,226
$
771
$
127
$
1,353
$
925
Net loan charge-offs to average total
loans (1)
0.01
%
0.00
%
0.00
%
0.00
%
0.00
%
Allowance for loan losses to:
Total loans
0.58
%
0.57
%
0.59
%
0.58
%
0.57
%
Nonaccrual loans
326.3
%
780.4
%
887.1
%
326.3
%
780.4
%
__________
(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
2019
2018
2019
2019
2018
Effective tax rate, prior to excess tax
benefits
20.9
%
21.5
%
21.9
%
21.4
%
21.3
%
Excess tax benefits—stock options
(1.3
)%
(1.3
)%
(6.2
)%
(3.8
)%
(1.5
)%
Excess tax benefits—other stock awards
(2.2
)%
(3.4
)%
(0.1
)%
(1.1
)%
(1.8
)%
Total excess tax benefits
(3.5
)%
(4.7
)%
(6.3
)%
(4.9
)%
(3.3
)%
Effective tax rate
17.4
%
16.8
%
15.6
%
16.5
%
18.0
%
Quarter Ended June 30,
Quarter Ended March
31,
Six Months Ended June
30,
Mortgage Loan Sales
2019
2018
2019
2019
2018
($ in thousands)
Loans sold:
Flow sales:
Agency
$
14,533
$
7,724
$
11,679
$
26,212
$
21,771
Non-agency
14,503
32,865
16,831
31,334
88,520
Total flow sales
29,036
40,589
28,510
57,546
110,291
Bulk sales:
Non-agency
—
681,332
152,119
152,119
773,041
Total loans sold
$
29,036
$
721,921
$
180,629
$
209,665
$
883,332
Gain (loss) on sale of loans:
Amount
$
(15
)
$
4,045
$
359
$
344
$
4,734
Gain (loss) as a percentage of loans
sold
(0.05
)%
0.56
%
0.20
%
0.16
%
0.54
%
Quarter Ended June 30,
Quarter Ended March
31,
Six Months Ended June
30,
Loan Originations
2019
2018
2019
2019
2018
($ in thousands)
Single family (1-4 units)
$
4,067,326
$
3,125,316
$
2,189,895
$
6,257,221
$
5,452,028
Home equity lines of credit
356,589
416,098
352,138
708,727
762,431
Multifamily (5+ units)
817,428
921,723
585,453
1,402,881
1,683,307
Commercial real estate
571,454
341,707
248,828
820,282
617,390
Construction
416,446
384,236
249,572
666,018
849,042
Business
2,087,326
3,097,056
2,282,212
4,369,538
5,154,510
Stock and other secured
824,162
748,450
473,462
1,297,624
1,414,996
Unsecured
296,373
318,227
334,308
630,681
746,569
Total loans originated
$
9,437,104
$
9,352,813
$
6,715,868
$
16,152,972
$
16,680,273
As of
Loan Servicing Portfolio
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
($ in millions)
Loans serviced for investors
$
10,746
$
11,326
$
11,573
$
11,733
$
12,374
As of
Asset Quality Information
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
($ in thousands)
Nonperforming assets:
Nonaccrual loans
$
144,993
$
51,081
$
46,465
$
42,578
$
50,920
Other real estate owned
—
—
—
—
—
Total nonperforming assets
$
144,993
$
51,081
$
46,465
$
42,578
$
50,920
Nonperforming assets to total assets
0.14
%
0.05
%
0.05
%
0.04
%
0.05
%
Accruing loans 90 days or more past
due
$
—
$
—
$
—
$
—
$
—
Restructured accruing loans
$
12,176
$
10,208
$
11,514
$
11,830
$
11,568
As of
Book Value and Capital Ratios
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
(in thousands, except per share
amounts)
Number of shares of common stock
outstanding
168,176
167,393
164,902
164,761
162,638
Book value per common share
$
49.23
$
48.42
$
46.92
$
45.68
$
43.88
Tangible book value per common share
$
47.64
$
46.81
$
45.26
$
44.00
$
42.15
As of
Capital Ratios
June 30, 2019 (1)
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
Tier 1 leverage ratio (Tier 1 capital to
average assets)
8.69
%
8.84
%
8.68
%
8.94
%
8.83
%
Common Equity Tier 1 capital to
risk-weighted assets
10.19
%
10.54
%
10.38
%
10.47
%
10.18
%
Tier 1 capital to risk-weighted assets
11.39
%
11.82
%
11.70
%
12.14
%
11.90
%
Total capital to risk-weighted assets
13.02
%
13.50
%
13.43
%
13.90
%
13.68
%
Regulatory Capital (2)
($ in thousands)
Common Equity Tier 1 capital
$
7,934,602
$
7,776,620
$
7,379,997
$
7,158,043
$
6,766,573
Tier 1 capital
$
8,874,602
$
8,716,620
$
8,319,997
$
8,298,043
$
7,906,573
Total capital
$
10,138,375
$
9,960,317
$
9,549,738
$
9,505,044
$
9,095,028
Assets (2)
($ in thousands)
Average assets
$
102,100,574
$
98,582,697
$
95,905,266
$
92,771,143
$
89,560,555
Risk-weighted assets
$
77,889,191
$
73,753,991
$
71,116,459
$
68,370,630
$
66,461,529
__________
(1) Ratios and amounts as of June 30, 2019
are preliminary.
(2) As defined by regulatory capital
rules.
As of
Wealth Management Assets
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
($ in millions)
First Republic Investment Management
$
61,192
$
66,675
$
60,591
$
62,506
$
59,329
Brokerage and investment:
Brokerage
61,583
59,391
53,046
54,823
50,356
Money market mutual funds
3,312
2,818
2,358
3,149
1,575
Total brokerage and investment
64,895
62,209
55,404
57,972
51,931
Trust Company:
Trust
6,319
5,955
5,350
5,406
5,125
Custody
5,225
5,060
4,868
5,105
4,739
Total Trust Company
11,544
11,015
10,218
10,511
9,864
Total Wealth Management Assets
$
137,631
$
139,899
$
126,213
$
130,989
$
121,124
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190716005318/en/
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
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