Record Loan Origination Quarter; Revenues
Increased 9% Year-Over-Year
First Republic Bank (NYSE: FRC) today announced financial
results for the quarter ended September 30, 2019.
“Third quarter results were very strong,” said Jim Herbert,
Chairman, CEO & Founder. “Loans, deposits and wealth management
assets grew nicely. Our client-focused business model continues to
perform very well.”
Quarterly Highlights
Financial Results
- Year-over-year:
- Revenues were $837.2 million, up 8.9%.
- Net interest income was $695.0 million, up 9.5%.
- Net income was $234.8 million, up 10.0%.
- Diluted earnings per share of $1.31, up 10.1%.
- Tangible book value per share was $48.84, up 11.0%.
- Loan originations totaled $11.1 billion, our strongest quarter
ever.
- Net interest margin was 2.80%, compared to 2.85% last
quarter.
- Efficiency ratio was 63.8%, compared to 64.5% last
quarter.
Continued Capital and Credit Strength
- Common Equity Tier 1 ratio was 9.91%, compared to 10.47% a year
ago.
- Nonperforming assets remained at a low 12 basis points of total
assets.
- Net charge-offs were only $4.3 million, or 2 basis points of
average loans.
Continued Franchise Development
- Year-over-year:
- Loans, excluding loans held for sale, totaled $86.3 billion, up
19.3%.
- Deposits were $85.7 billion, up 14.7%.
- Wealth management assets were $140.2 billion, up 7.1%.
- Wealth management revenues were $114.8 million, up 4.7%.
“We’re pleased with year-over-year revenue growth of 9%,” said
Mike Roffler, Chief Financial Officer. “Loan volume for the quarter
was another record, and credit quality and capital strength remain
excellent.”
Quarterly Cash Dividend
Declared
The Bank declared a cash dividend for the third quarter of $0.19
per share of common stock, which is payable on November 14, 2019 to
shareholders of record as of October 31, 2019.
Very Strong Asset
Quality
Credit quality remains strong. Nonperforming assets were only 12
basis points of total assets at September 30, 2019.
The Bank had net charge-offs for the quarter of $4.3 million,
while adding $16.7 million to its allowance for loan losses due to
continued loan growth.
Continued Capital
Strength
The Bank’s Common Equity Tier 1 ratio was 9.91% at September 30,
2019, compared to 10.47% a year ago.
As previously announced, the Bank will redeem its $190.0 million
of 5.50% Noncumulative Perpetual Series D Preferred Stock on
October 18, 2019.
Tangible Book Value
Growth
Tangible book value per common share at September 30, 2019 was
$48.84, up 11.0% from a year ago.
Continued Franchise
Development
Loan Originations
Loan originations were $11.1 billion for the quarter, up 58.4%
compared to the same quarter a year ago, primarily due to increases
in single family and business lending.
Loans, excluding loans held for sale, totaled $86.3 billion at
September 30, 2019, up 19.3% compared to a year ago, primarily due
to increases in single family, multifamily, business, and
commercial real estate loans.
Deposit Growth
Total deposits increased to $85.7 billion, up 14.7% compared to
a year ago.
At September 30, 2019, checking accounts totaled 58.5% of
deposits.
Investments
Total investment securities at September 30, 2019 were $17.4
billion, up 7.7% compared to the prior quarter and up 6.8% compared
to a year ago.
High-quality liquid assets, including eligible cash, totaled
$13.6 billion at September 30, 2019, and represented 12.7% of
average total assets.
Wealth Management
Wealth management revenues totaled $114.8 million for the
quarter, up 4.7% compared to last year’s third quarter. Such
revenues represented 13.7% of the Bank’s total revenues for the
quarter.
Total wealth management assets were $140.2 billion at September
30, 2019, up 1.9% for the quarter and up 7.1% compared to a year
ago. The increases in wealth management assets were driven by net
new assets from existing and new clients, and market
appreciation.
Wealth management assets included investment management assets
of $61.2 billion, brokerage assets and money market mutual funds of
$67.5 billion, and trust and custody assets of $11.6 billion.
Income Statement and Key
Ratios
Revenue Growth
Total revenues were $837.2 million for the quarter, up 8.9%
compared to the third quarter a year ago.
Net Interest Income Growth
Net interest income was $695.0 million for the quarter, up 9.5%
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 net interest margin was 2.80% for the third quarter,
compared to 2.85% for the prior quarter. The decline was primarily
due to a more rapid decrease in the average yield on loans,
compared to the offsetting decrease in total funding costs.
Noninterest Income
Noninterest income was $142.2 million for the quarter, up 5.8%
compared to the third quarter a year ago. The increase was
primarily from growth in brokerage and investment fees and foreign
exchange fee income, partially offset by a decline in investment
management fees attributable to the departure of wealth managers in
the second quarter.
Noninterest Expense and Efficiency
Ratio
Noninterest expense was $534.0 million for the quarter, up 10.3%
compared to the third quarter a year ago. The increase was
primarily due to increased salaries and benefits, occupancy and
information systems expenses from the continued investments in the
expansion of the franchise.
The efficiency ratio was 63.8% for the quarter, compared to
63.0% for the third quarter a year ago. For the first nine months
of 2019, the efficiency ratio was 64.4%.
Income Taxes
The Bank’s effective tax rate for the third quarter of 2019 was
18.0%, compared to 19.8% for the third quarter a year ago. For the
first nine months of 2019, the Bank’s effective tax rate was 17.0%,
compared to 18.6% a year ago. The decreases were primarily the
result of higher excess tax benefits from an increase in stock
option exercises by employees.
Conference Call Details
First Republic Bank’s third quarter 2019 earnings conference
call is scheduled for October 15, 2019 at 7:00 a.m. PT / 10:00 a.m.
ET. To access the event by telephone, please dial (800) 353-6461
and use confirmation code #7297625 approximately 10 minutes prior
to the start time (to allow time for registration). International
callers should dial +1 (334) 323-0501 and enter the same
confirmation code.
The call will also be broadcast live over the Internet and can
be accessed in the Investor Relations section of First Republic’s
website at firstrepublic.com. To listen to the live webcast, please
visit the site at least 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 15, 2019, at 11:00 a.m. PT
/ 2:00 p.m. ET, through October 22, 2019, at 8:59 p.m. PT / 11:59
p.m. ET. To access the replay, dial (888) 203-1112 and use
confirmation code #7297625. International callers should dial +1
(719) 457-0820 and enter the same confirmation code. A replay of
the webcast also will be available for 90 days following,
accessible in the Investor Relations section of First Republic
Bank’s website at firstrepublic.com.
The Bank’s press releases are available after release in the
Investor Relations section of First Republic Bank’s website at
firstrepublic.com.
About First Republic
Bank
Founded in 1985, First Republic and its subsidiaries offer
private banking, private business banking and private wealth
management, including investment, trust and brokerage services.
First Republic specializes in delivering exceptional,
relationship-based service and offers a complete line of products,
including residential, commercial and personal loans, deposit
services, and wealth management. Services are offered through
preferred banking or wealth management offices primarily in San
Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and
San Diego, California; Portland, Oregon; Boston, Massachusetts;
Palm Beach, Florida; Greenwich, Connecticut; New York, New York;
and Jackson, Wyoming. First Republic is a constituent of the
S&P 500 Index and KBW Nasdaq Bank Index. For more information,
visit firstrepublic.com.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Statements in this press release that are not historical
facts are hereby identified as “forward-looking statements” for the
purpose of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Any statements about our expectations, beliefs, plans, predictions,
forecasts, objectives, assumptions or future events or performance
are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words
or phrases such as “anticipates,” “believes,” “can,” “could,”
“may,” “predicts,” “potential,” “should,” “will,” “estimates,”
“plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends”
and similar words or phrases. Accordingly, these statements are
only predictions and involve estimates, known and unknown risks,
assumptions and uncertainties that could cause actual results to
differ materially from those expressed in them.
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 September
30,
Quarter Ended June 30,
Nine Months Ended September
30,
(in thousands, except per share
amounts)
2019
2018
2019
2019
2018
Interest income:
Loans
$
764,468
$
633,794
$
741,328
$
2,205,884
$
1,765,019
Investments
134,099
134,111
134,044
401,908
406,373
Other
5,779
5,237
4,813
15,767
15,065
Cash and cash equivalents
5,430
6,896
5,547
18,966
16,494
Total interest income
909,776
780,038
885,732
2,642,525
2,202,951
Interest expense:
Deposits
134,917
81,438
129,188
371,852
193,852
Borrowings
79,874
64,146
82,518
226,624
175,194
Total interest expense
214,791
145,584
211,706
598,476
369,046
Net interest income
694,985
634,454
674,026
2,044,049
1,833,905
Provision for loan losses
16,711
18,633
21,200
52,111
51,003
Net interest income after provision for
loan losses
678,274
615,821
652,826
1,991,938
1,782,902
Noninterest income:
Investment management fees
83,582
88,560
93,720
262,226
249,602
Brokerage and investment fees
12,673
7,207
8,287
28,619
23,770
Insurance fees
2,712
1,851
3,696
8,522
4,646
Trust fees
4,105
3,599
4,227
12,221
10,694
Foreign exchange fee income
11,685
8,439
10,345
30,661
25,383
Deposit fees
6,563
6,225
6,579
19,462
18,490
Loan and related fees
5,341
4,091
4,296
13,644
11,842
Loan servicing fees, net
2,347
3,151
3,425
9,560
9,856
Gain (loss) on sale of loans
122
303
(15
)
466
5,037
Gain (loss) on investment securities
(683
)
(1,655
)
(1,063
)
(1,895
)
6,515
Income from investments in life
insurance
12,152
11,608
10,049
31,536
30,697
Other income
1,608
996
1,804
4,853
3,366
Total noninterest income
142,207
134,375
145,350
419,875
399,898
Noninterest expense:
Salaries and employee benefits
309,655
279,248
297,524
920,432
828,207
Information systems
66,612
59,259
70,277
204,059
177,753
Occupancy
50,722
38,792
47,587
142,204
112,180
Professional fees
17,507
15,718
16,435
45,623
44,720
Advertising and marketing
15,912
13,527
16,700
48,346
40,575
FDIC assessments
9,748
17,679
9,196
27,847
49,275
Other expenses
63,794
59,776
71,135
199,105
165,427
Total noninterest expense
533,950
483,999
528,854
1,587,616
1,418,137
Income before provision for income
taxes
286,531
266,197
269,322
824,197
764,663
Provision for income taxes
51,687
52,651
46,758
140,198
142,253
Net income
234,844
213,546
222,564
683,999
622,410
Dividends on preferred stock
12,787
17,112
12,788
38,362
41,497
Net income available to common
shareholders
$
222,057
$
196,434
$
209,776
$
645,637
$
580,913
Basic earnings per common share
$
1.32
$
1.20
$
1.25
$
3.85
$
3.58
Diluted earnings per common share
$
1.31
$
1.19
$
1.24
$
3.81
$
3.52
Weighted average shares—basic
168,272
163,048
167,685
167,694
162,322
Weighted average shares—diluted
169,346
165,498
169,572
169,449
165,109
CONSOLIDATED BALANCE SHEETS
As of
($ in thousands)
September 30, 2019
June 30, 2019
December 31, 2018
September 30, 2018
ASSETS
Cash and cash equivalents
$
2,181,600
$
2,220,073
$
2,811,159
$
3,013,645
Debt securities available-for-sale
1,401,105
1,438,061
1,779,116
2,000,271
Debt securities held-to-maturity
16,002,722
14,721,568
14,436,973
14,294,769
Equity securities (fair value)
19,736
19,529
18,719
19,121
Loans:
Single family (1-4 units)
44,882,363
41,758,981
37,955,252
36,213,714
Home equity lines of credit
2,530,740
2,587,554
2,542,713
2,543,652
Multifamily (5+ units)
11,725,331
11,216,640
10,357,839
9,779,693
Commercial real estate
7,504,334
7,251,509
6,677,440
6,459,654
Single family construction
743,699
702,928
645,924
654,643
Multifamily/commercial construction
1,442,896
1,470,699
1,576,582
1,422,746
Business
11,564,863
11,686,510
10,998,503
10,382,050
Stock secured
1,610,914
1,514,855
1,432,911
1,371,546
Other secured
1,293,084
1,235,588
1,105,751
1,101,721
Unsecured
3,006,586
2,812,357
2,572,367
2,399,078
Total loans
86,304,810
82,237,621
75,865,282
72,328,497
Allowance for loan losses
(485,465
)
(473,095
)
(439,048
)
(415,825
)
Loans, net
85,819,345
81,764,526
75,426,234
71,912,672
Loans held for sale
31,693
12,502
98,985
274,181
Investments in life insurance
1,425,057
1,412,883
1,376,579
1,361,473
Tax credit investments
1,039,061
1,054,192
1,057,541
1,074,834
Prepaid expenses and other assets
2,424,383
2,390,649
1,538,971
1,483,892
Premises, equipment and leasehold
improvements, net
373,693
348,609
332,483
324,052
Goodwill and other intangible assets
264,658
267,490
273,974
277,625
Mortgage servicing rights
45,682
49,554
54,470
57,687
Total Assets
$
111,028,735
$
105,699,636
$
99,205,204
$
96,094,222
LIABILITIES AND EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking
$
32,720,317
$
32,023,125
$
30,033,658
$
29,317,754
Interest-bearing checking
17,438,402
16,649,251
17,089,520
15,517,614
Money market checking
11,242,205
10,874,671
10,317,436
9,708,305
Money market savings and passbooks
10,277,249
9,921,688
10,245,107
8,961,311
Certificates of deposit
14,042,346
13,962,348
11,377,515
11,254,268
Total Deposits
85,720,519
83,431,083
79,063,236
74,759,252
Short-term borrowings
775,000
—
100,000
100,000
Long-term FHLB advances
10,900,000
9,800,000
8,700,000
9,600,000
Senior notes
497,494
497,269
896,432
896,001
Subordinated notes
777,781
777,678
777,475
777,376
Other liabilities
2,926,735
1,973,963
990,284
1,294,906
Total Liabilities
101,597,529
96,479,993
90,527,427
87,427,535
Shareholders’ Equity:
Preferred stock
940,000
940,000
940,000
1,140,000
Common stock
1,685
1,682
1,649
1,648
Additional paid-in capital
4,198,442
4,186,304
4,024,306
4,000,146
Retained earnings
4,281,249
4,091,636
3,731,205
3,546,298
Accumulated other comprehensive income
(loss)
9,830
21
(19,383
)
(21,405
)
Total Shareholders’ Equity
9,431,206
9,219,643
8,677,777
8,666,687
Total Liabilities and Shareholders’
Equity
$
111,028,735
$
105,699,636
$
99,205,204
$
96,094,222
Quarter Ended September
30,
Quarter Ended June 30,
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
$
1,161,441
$
5,430
1.86
%
$
1,490,468
$
6,896
1.84
%
$
1,091,353
$
5,547
2.04
%
Investment securities:
U.S. Government-sponsored agency
securities
740,893
5,375
2.90
%
1,044,897
7,776
2.98
%
1,031,797
7,675
2.98
%
Mortgage-backed securities:
Agency residential and commercial
MBS
6,593,422
46,762
2.84
%
7,355,930
51,705
2.81
%
6,669,868
47,724
2.86
%
Other residential and commercial
MBS
4,473
43
3.84
%
4,690
37
3.16
%
4,523
43
3.78
%
Municipal securities
9,184,274
101,154
4.41
%
7,989,269
93,425
4.68
%
8,497,645
96,980
4.57
%
Other investment securities
(3)
24,977
156
2.49
%
19,669
115
2.34
%
19,332
127
2.63
%
Total investment securities
16,548,039
153,490
3.71
%
16,414,455
153,058
3.73
%
16,223,165
152,549
3.76
%
Loans:
Residential real estate
45,754,902
374,690
3.27
%
37,929,270
306,521
3.23
%
42,856,354
357,475
3.34
%
Multifamily
11,446,955
112,624
3.85
%
9,907,089
94,352
3.73
%
11,064,723
110,508
3.95
%
Commercial real estate
7,366,320
79,213
4.21
%
6,369,984
67,360
4.14
%
7,013,324
75,180
4.24
%
Construction
2,152,911
26,599
4.83
%
1,996,313
24,286
4.76
%
2,161,475
26,534
4.86
%
Business
11,551,439
129,314
4.38
%
9,828,856
108,350
4.31
%
11,410,239
131,658
4.57
%
Other
5,704,872
48,746
3.34
%
4,744,162
39,593
3.27
%
5,346,380
46,581
3.45
%
Total loans
83,977,399
771,186
3.63
%
70,775,674
640,462
3.58
%
79,852,495
747,936
3.73
%
FHLB stock
321,778
5,779
7.13
%
298,880
5,237
6.95
%
331,218
4,813
5.83
%
Total interest-earning assets
102,008,657
935,885
3.63
%
88,979,477
805,653
3.59
%
97,498,231
910,845
3.72
%
Noninterest-earning cash
335,648
353,753
345,174
Goodwill and other
intangibles
266,032
279,523
269,404
Other assets
4,409,665
3,518,736
4,312,290
Total noninterest-earning
assets
5,011,345
4,152,012
4,926,868
Total Assets
$
107,020,002
$
93,131,489
$
102,425,099
Liabilities and
Equity:
Deposits:
Checking
$
48,666,948
8,501
0.07
%
$
44,102,853
5,186
0.05
%
$
45,813,205
6,946
0.06
%
Money market checking and
savings
20,536,777
53,046
1.02
%
18,095,858
31,313
0.69
%
19,323,615
51,536
1.07
%
CDs
13,170,046
73,370
2.21
%
9,770,083
44,939
1.82
%
12,799,189
70,706
2.22
%
Total deposits
82,373,771
134,917
0.65
%
71,968,794
81,438
0.45
%
77,936,009
129,188
0.66
%
Borrowings:
Short-term borrowings
2,204,262
12,520
2.25
%
423,383
2,248
2.11
%
2,875,590
18,282
2.55
%
Long-term FHLB advances
9,796,739
54,901
2.22
%
9,681,793
46,872
1.92
%
9,132,967
49,601
2.18
%
Senior notes (4)
497,384
3,350
2.69
%
895,791
5,928
2.65
%
835,544
5,534
2.65
%
Subordinated notes (4)
777,730
9,103
4.68
%
777,328
9,098
4.68
%
777,628
9,101
4.68
%
Total borrowings
13,276,115
79,874
2.39
%
11,778,295
64,146
2.16
%
13,621,729
82,518
2.43
%
Total interest-bearing
liabilities
95,649,886
214,791
0.89
%
83,747,089
145,584
0.69
%
91,557,738
211,706
0.93
%
Noninterest-bearing
liabilities
2,037,177
894,573
1,733,674
Preferred equity
940,000
1,140,000
940,000
Common equity
8,392,939
7,349,827
8,193,687
Total Liabilities and Equity
$
107,020,002
$
93,131,489
$
102,425,099
Net interest spread (5)
2.74
%
2.90
%
2.79
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
721,094
2.80
%
$
660,069
2.94
%
$
699,139
2.85
%
Reconciliation of
tax-equivalent net interest income to reported net interest
income:
Tax-equivalent adjustment
(26,109
)
(25,615
)
(25,113
)
Net interest income, as
reported
$
694,985
$
634,454
$
674,026
Nine Months Ended September
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
$
1,231,578
$
18,966
2.06
%
$
1,341,984
$
16,494
1.64
%
Investment securities:
U.S. Treasury and other U.S.
Government agency securities
—
—
—
%
6,277
87
1.85
%
U.S. Government-sponsored agency
securities
938,081
20,827
2.96
%
1,081,651
23,989
2.96
%
Mortgage-backed securities:
Agency residential and commercial
MBS
6,705,085
144,106
2.87
%
7,462,205
152,656
2.73
%
Other residential and commercial
MBS
4,508
131
3.88
%
5,167
222
5.73
%
Municipal securities
8,624,534
293,060
4.53
%
8,139,055
287,447
4.71
%
Other investment securities
(3)
21,121
403
2.54
%
19,838
359
2.41
%
Total investment securities
16,293,329
458,527
3.75
%
16,714,193
464,760
3.71
%
Loans:
Residential real estate
43,212,351
1,073,950
3.31
%
36,374,722
859,923
3.15
%
Multifamily
11,039,188
323,788
3.87
%
9,386,554
260,084
3.65
%
Commercial real estate
7,042,107
226,874
4.25
%
6,264,665
195,345
4.11
%
Construction
2,164,414
79,888
4.87
%
1,889,493
67,149
4.69
%
Business
11,216,470
382,143
4.49
%
9,204,049
295,925
4.24
%
Other
5,382,125
139,274
3.41
%
4,377,812
106,081
3.20
%
Total loans
80,056,655
2,225,917
3.69
%
67,497,295
1,784,507
3.51
%
FHLB stock
310,758
15,768
6.78
%
293,369
15,065
6.87
%
Total interest-earning assets
97,892,320
2,719,178
3.69
%
85,846,841
2,280,826
3.53
%
Noninterest-earning cash
341,984
348,613
Goodwill and other
intangibles
269,246
283,651
Other assets
4,306,791
3,477,584
Total noninterest-earning
assets
4,918,021
4,109,848
Total Assets
$
102,810,341
$
89,956,689
Liabilities and
Equity:
Deposits:
Checking
$
47,006,632
21,541
0.06
%
$
43,312,861
16,173
0.05
%
Money market checking and
savings
19,714,378
146,900
1.00
%
17,374,636
71,238
0.55
%
CDs
12,457,649
203,411
2.18
%
8,715,306
106,441
1.63
%
Total deposits
79,178,659
371,852
0.63
%
69,402,803
193,852
0.37
%
Borrowings:
Short-term borrowings
2,016,744
36,832
2.44
%
841,818
11,409
1.81
%
Long-term FHLB advances
9,149,268
147,669
2.16
%
8,985,073
118,716
1.77
%
Senior notes (4)
741,731
14,818
2.66
%
895,368
17,777
2.65
%
Subordinated notes (4)
777,629
27,305
4.68
%
777,231
27,292
4.68
%
Total borrowings
12,685,372
226,624
2.39
%
11,499,490
175,194
2.04
%
Total interest-bearing
liabilities
91,864,031
598,476
0.87
%
80,902,293
369,046
0.61
%
Noninterest-bearing
liabilities
1,780,107
924,458
Preferred equity
940,000
961,978
Common equity
8,226,203
7,167,960
Total Liabilities and Equity
$
102,810,341
$
89,956,689
Net interest spread (5)
2.82
%
2.92
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
2,120,702
2.87
%
$
1,911,780
2.95
%
Reconciliation of
tax-equivalent net interest income to reported net interest
income:
Tax-equivalent adjustment
(76,653
)
(77,875
)
Net interest income, as
reported
$
2,044,049
$
1,833,905
__________
(1) Interest income is presented
on a fully taxable-equivalent basis.
(2) Yields/rates are
annualized.
(3) Includes corporate debt
securities, mutual funds and marketable equity securities.
(4) 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 September
30,
Quarter Ended June 30,
Nine Months Ended September
30,
Operating Information
2019
2018
2019
2019
2018
($ in thousands, except per share
amounts)
Net income to average assets
(1)
0.87
%
0.91
%
0.87
%
0.89
%
0.93
%
Net income available to common
shareholders to average common equity (1)
10.50
%
10.60
%
10.27
%
10.49
%
10.84
%
Net income available to common
shareholders to average tangible common equity (1)
10.84
%
11.02
%
10.62
%
10.85
%
11.28
%
Dividends per common share
$
0.19
$
0.18
$
0.19
$
0.56
$
0.53
Dividend payout ratio
14.5
%
15.2
%
15.4
%
14.7
%
15.1
%
Efficiency ratio (2)
63.8
%
63.0
%
64.5
%
64.4
%
63.5
%
Net loan charge-offs
$
4,341
$
185
$
1,226
$
5,694
$
1,110
Net loan charge-offs to average
total loans (1)
0.02
%
0.00
%
0.01
%
0.01
%
0.00
%
Allowance for loan losses to:
Total loans
0.56
%
0.57
%
0.58
%
0.56
%
0.57
%
Nonaccrual loans
354.5
%
976.6
%
326.3
%
354.5
%
976.6
%
__________
(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 September
30,
Quarter Ended June 30,
Nine Months Ended September
30,
Effective Tax Rate
2019
2018
2019
2019
2018
Effective tax rate, prior to
excess tax benefits
21.4
%
20.8
%
20.9
%
21.4
%
21.1
%
Excess tax benefits—stock
options
(3.3
)%
(0.9
)%
(1.3
)%
(3.6
)%
(1.3
)%
Excess tax benefits—other stock
awards
(0.1
)%
(0.1
)%
(2.2
)%
(0.8
)%
(1.2
)%
Total excess tax benefits
(3.4
)%
(1.0
)%
(3.5
)%
(4.4
)%
(2.5
)%
Effective tax rate
18.0
%
19.8
%
17.4
%
17.0
%
18.6
%
Quarter Ended September
30,
Quarter Ended June 30,
Nine Months Ended September
30,
Mortgage Loan Sales
2019
2018
2019
2019
2018
($ in thousands)
Loans sold:
Flow sales:
Agency
$
25,214
$
15,365
$
14,533
$
51,426
$
37,136
Non-agency
11,932
76,772
14,503
43,266
165,292
Total flow sales
37,146
92,137
29,036
94,692
202,428
Bulk sales:
Non-agency
—
—
—
152,119
773,041
Total loans sold
$
37,146
$
92,137
$
29,036
$
246,811
$
975,469
Gain (loss) on sale of loans:
Amount
$
122
$
303
$
(15
)
$
466
$
5,037
Gain (loss) as a percentage of loans
sold
0.33
%
0.33
%
(0.05
)%
0.19
%
0.52
%
Quarter Ended September
30,
Quarter Ended June 30,
Nine Months Ended September
30,
Loan Originations
2019
2018
2019
2019
2018
($ in thousands)
Single family (1-4 units)
$
4,872,598
$
2,623,429
$
4,067,326
$
11,129,819
$
8,075,457
Home equity lines of credit
359,154
399,606
356,589
1,067,881
1,162,037
Multifamily (5+ units)
710,983
781,450
817,428
2,113,864
2,464,757
Commercial real estate
556,151
263,292
571,454
1,376,433
880,682
Construction
549,518
373,842
416,446
1,215,536
1,222,884
Business
2,983,097
1,978,596
2,087,326
7,352,635
7,133,106
Stock and other secured
662,522
321,020
824,162
1,960,146
1,736,016
Unsecured
438,278
287,748
296,373
1,068,959
1,034,317
Total loans originated
$
11,132,301
$
7,028,983
$
9,437,104
$
27,285,273
$
23,709,256
As of
Loan Servicing Portfolio
September 30, 2019
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
($ in millions)
Loans serviced for investors
$
10,080
$
10,746
$
11,326
$
11,573
$
11,733
As of
Asset Quality Information
September 30, 2019
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
($ in thousands)
Nonperforming assets:
Nonaccrual loans
$
136,928
$
144,993
$
51,081
$
46,465
$
42,578
Other real estate owned
—
—
—
—
—
Total nonperforming assets
$
136,928
$
144,993
$
51,081
$
46,465
$
42,578
Nonperforming assets to total assets
0.12
%
0.14
%
0.05
%
0.05
%
0.04
%
Accruing loans 90 days or more past
due
$
—
$
—
$
—
$
—
$
—
Restructured accruing loans
$
14,964
$
12,176
$
10,208
$
11,514
$
11,830
As of
Book Value and Capital Ratios
September 30, 2019
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
(in thousands, except per share
amounts)
Number of shares of common stock
outstanding
168,450
168,176
167,393
164,902
164,761
Book value per common share
$
50.41
$
49.23
$
48.42
$
46.92
$
45.68
Tangible book value per common share
$
48.84
$
47.64
$
46.81
$
45.26
$
44.00
As of
Capital Ratios
September 30, 2019 (1)
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
Tier 1 leverage ratio (Tier 1 capital to
average assets)
8.50
%
8.69
%
8.84
%
8.68
%
8.94
%
Common Equity Tier 1 capital to
risk-weighted assets
9.91
%
10.19
%
10.54
%
10.38
%
10.47
%
Tier 1 capital to risk-weighted assets
11.05
%
11.39
%
11.82
%
11.70
%
12.14
%
Total capital to risk-weighted assets
12.61
%
13.02
%
13.50
%
13.43
%
13.90
%
Regulatory Capital (2)
($ in thousands)
Common Equity Tier 1 capital
$
8,124,179
$
7,934,602
$
7,776,620
$
7,379,997
$
7,158,043
Tier 1 capital
$
9,064,179
$
8,874,602
$
8,716,620
$
8,319,997
$
8,298,043
Total capital
$
10,340,902
$
10,138,375
$
9,960,317
$
9,549,738
$
9,505,044
Assets (2)
($ in thousands)
Average assets
$
106,659,003
$
102,097,363
$
98,582,697
$
95,905,266
$
92,771,143
Risk-weighted assets
$
81,994,611
$
77,889,111
$
73,753,991
$
71,116,459
$
68,370,630
__________
(1) Ratios and amounts as of September 30,
2019 are preliminary.
(2) As defined by regulatory capital
rules.
As of
Wealth Management Assets
September 30, 2019
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
($ in millions)
First Republic Investment Management
$
61,204
$
61,192
$
66,675
$
60,591
$
62,506
Brokerage and investment:
Brokerage
63,053
61,583
59,391
53,046
54,823
Money market mutual funds
4,402
3,312
2,818
2,358
3,149
Total brokerage and investment
67,455
64,895
62,209
55,404
57,972
Trust Company:
Trust
6,366
6,319
5,955
5,350
5,406
Custody
5,210
5,225
5,060
4,868
5,105
Total Trust Company
11,576
11,544
11,015
10,218
10,511
Total Wealth Management Assets
$
140,235
$
137,631
$
139,899
$
126,213
$
130,989
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191015005398/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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