Record Loan Origination Year; Revenues
Increased 10% for the Year
First Republic Bank (NYSE: FRC) today announced financial
results for the quarter and year ended December 31, 2019.
“2019 was another very strong year across the board,” said
Founder, Chairman and CEO Jim Herbert. “Loans, deposits and wealth
management assets all grew nicely. Our results continue to reflect
the strength of our unique, client-focused service model.”
Full Year Highlights
Financial Results
– Revenues were $3.3 billion, up 9.7%.
– Net interest income was $2.8 billion, up 10.5%.
– Net income was $930.3 million, up 9.0%.
– Diluted earnings per share of $5.20, up 8.1%.
– Loan originations totaled $38.0 billion, our best year
ever.
– Tangible book value per share was $50.24, up 11.0%.
– Efficiency ratio was 64.2%, compared to 63.0% last year.
Continued Capital and Credit Strength
– Tier 1 leverage ratio was 8.39%, compared to 8.68% a year
ago.
– Nonperforming assets remained at a low 12 basis points of
total assets.
– Net charge-offs were only $4.6 million, or less than 1 basis
point of average loans.
Continued Franchise Development
– Loans, excluding loans held for sale, totaled $90.8 billion,
up 19.7%.
– Deposits were $90.1 billion, up 14.0%.
– Wealth management assets were $151.0 billion, up 19.7%.
– Wealth management revenues were $470.7 million, up 8.5%.
Quarterly Highlights
– Compared to last year’s fourth quarter:
– Revenues were $877.5 million, up 8.2%.
– Net interest income was $720.1 million, up
7.9%.
– Net income was $246.3 million, up 6.4%.
– Diluted EPS of $1.39, up 7.8%.
– Loan originations were $11.2 billion, our best quarter
ever.
– Net recoveries were $1.1 million.
– Net interest margin was 2.73%, compared to 2.80% for the prior
quarter.
– Efficiency ratio was 63.7%, compared to 63.8% for the prior
quarter.
– Wealth management assets were $151.0 billion, up 7.7% from the
prior quarter.
“We’re pleased with revenue growth of 9.7% and net interest
income growth of 10.5% for the year, despite a very challenging
interest rate environment in 2019,” said Chief Financial Officer
Mike Roffler. “Capital and credit quality remain excellent.”
Quarterly Cash Dividend
Declared
The Bank declared a cash dividend for the fourth quarter of
$0.19 per share of common stock, which is payable on February 13,
2020 to shareholders of record as of January 30, 2020.
Very Strong Asset
Quality
Credit quality remains strong. Nonperforming assets were only 12
basis points of total assets at December 31, 2019.
The Bank had net recoveries for the quarter of $1.1 million,
while adding $9.6 million to its allowance for loan losses due to
continued loan growth. During the full year, the Bank had net
charge-offs of only $4.6 million, while adding $61.7 million to its
allowance for loan losses.
Continued Capital
Strength
The Bank’s Tier 1 leverage ratio was 8.39% at December 31, 2019,
compared to 8.68% a year ago.
During the fourth quarter, the Bank redeemed all of the
outstanding shares of its 5.50% Noncumulative Perpetual Series D
Preferred Stock, which totaled $190.0 million. In addition, the
Bank issued $395.0 million of 4.70% Noncumulative Perpetual Series
J Preferred Stock, which qualifies as Tier 1 capital.
Tangible Book Value
Growth
Tangible book value per common share at December 31, 2019 was
$50.24, up 11.0% from a year ago.
Continued Franchise
Development
Loan Originations
Loan originations were $11.2 billion for the quarter, up 42.5%
compared to the same quarter a year ago. For 2019, loan
originations totaled $38.0 billion, up 20.7% compared to the prior
year. The increase for the quarter was primarily due to increases
in single family, stock and other secured, and multifamily lending.
The increase for the year was primarily due to increases in single
family, stock and other secured, and commercial real estate
lending.
Loans, excluding loans held for sale, totaled $90.8 billion at
December 31, 2019, up 19.7% compared to a year ago, primarily due
to increases in single family, multifamily, commercial real estate
and business loans.
Deposit Growth
Total deposits increased to $90.1 billion, up 14.0% compared to
a year ago.
At December 31, 2019, checking accounts totaled 58.6% of
deposits.
Investments
Total investment securities at December 31, 2019 were $18.4
billion, up 5.9% compared to the prior quarter and up 13.6%
compared to a year ago.
High-quality liquid assets, including eligible cash, totaled
$14.5 billion at December 31, 2019, and represented 12.7% of
average total assets.
Wealth Management
Wealth management revenues totaled $128.4 million for the
quarter, up 7.3% compared to last year’s fourth quarter. For all of
2019, wealth management revenues were $470.7 million, an increase
of 8.5% compared to the prior year. Such revenues represented 14.6%
of the Bank’s total revenues for the quarter and 14.1% of the
Bank’s total revenues for the year.
Total wealth management assets were $151.0 billion at December
31, 2019, up 7.7% for the quarter and up 19.7% compared to a year
ago. The increases in wealth management assets were driven by
market appreciation and net new assets from existing and new
clients.
Wealth management assets included investment management assets
of $66.0 billion, brokerage assets and money market mutual funds of
$73.1 billion, and trust and custody assets of $11.9 billion.
Income Statement and Key
Ratios
Revenue Growth
Total revenues were $877.5 million for the quarter, up 8.2%
compared to the fourth quarter a year ago and were $3.3 billion for
2019, up 9.7% compared to the prior year.
Net Interest Income Growth
Net interest income was $720.1 million for the quarter, up 7.9%
compared to the fourth quarter a year ago, and was $2.8 billion for
2019, up 10.5% compared to the prior year. The increases in net
interest income resulted primarily from growth in average earning
assets.
Net Interest Margin
The net interest margin was 2.73% for the fourth quarter,
compared to 2.80% for the prior quarter. For 2019, the net interest
margin was 2.83%, compared to 2.96% for the prior year. The
decrease for the quarter was primarily due to a greater decline in
the average yield on loans, compared to a modest decrease in total
funding costs. The decrease for the year was primarily due to an
increase in total funding costs, partially offset by an increase in
the average yield on loans.
Noninterest Income
Noninterest income was $157.3 million for the quarter, up 9.6%
compared to the fourth quarter a year ago, and was $577.2 million
for 2019, up 6.2% compared to the prior year. The increases were
primarily from growth in wealth management fees and income from
investments in life insurance.
Noninterest Expense and Efficiency
Ratio
Noninterest expense was $558.8 million for the quarter, up 12.1%
compared to the fourth quarter a year ago, and was $2.1 billion for
2019, up 12.0% compared to the prior year. The increases were
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 63.7% for the quarter, compared to
61.5% for the fourth quarter a year ago. For 2019, the efficiency
ratio was 64.2%, compared to 63.0% for 2018.
Income Taxes
The Bank’s effective tax rate for the fourth quarter of 2019 was
20.3%, compared to 19.4% for the fourth quarter a year ago.
The effective tax rate for 2019 was 17.9%, compared to 18.8% for
2018. The decrease for the year was primarily the result of higher
excess tax benefits from an increase in stock options exercised by
employees.
Conference Call Details
First Republic Bank’s fourth quarter and full year 2019 earnings
conference call is scheduled for January 14, 2020 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 7083625# 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 January 14, 2020, at 11:00 a.m. PT
/ 2:00 p.m. ET, through January 21, 2020, at 8:59 p.m. PT / 11:59
p.m. ET. To access the replay, dial (888) 203-1112 and use
confirmation code 7083625#. International callers should dial +1
(719) 457-0820 and enter the same confirmation code. A replay of
the webcast also will be available for 90 days following,
accessible in the Investor Relations section of First Republic
Bank’s website at firstrepublic.com.
The Bank’s press releases are available after release in the
Investor Relations section of First Republic Bank’s website at
firstrepublic.com.
About First Republic
Bank
Founded in 1985, First Republic and its subsidiaries offer
private banking, private business banking and private wealth
management, including investment, trust and brokerage services.
First Republic specializes in delivering exceptional,
relationship-based service and offers a complete line of products,
including residential, commercial and personal loans, deposit
services, and wealth management. Services are offered through
preferred banking or wealth management offices primarily in San
Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and
San Diego, California; Portland, Oregon; Boston, Massachusetts;
Palm Beach, Florida; Greenwich, Connecticut; New York, New York;
and Jackson, Wyoming. First Republic is a constituent of the
S&P 500 Index and KBW Nasdaq Bank Index. For more information,
visit firstrepublic.com.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Statements in this press release that are not historical
facts are hereby identified as “forward-looking statements” for the
purpose of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Any statements about our expectations, beliefs, plans, predictions,
forecasts, objectives, assumptions or future events or performance
are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words
or phrases such as “anticipates,” “believes,” “can,” “could,”
“may,” “predicts,” “potential,” “should,” “will,” “estimates,”
“plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends”
and similar words or phrases. Accordingly, these statements are
only predictions and involve estimates, known and unknown risks,
assumptions and uncertainties that could cause actual results to
differ materially from those expressed in them.
Forward-looking statements involving such risks and
uncertainties include, but are not limited to, statements
regarding: projections of loans, assets, deposits, liabilities,
revenues, expenses, tax liabilities, net income, capital
expenditures, liquidity, dividends, capital structure, investments
or other financial items; expectations regarding the banking and
wealth management industries; descriptions of plans or objectives
of management for future operations, products or services;
forecasts of future economic conditions generally and in our market
areas in particular, which may affect the ability of borrowers to
repay their loans and the value of real property or other property
held as collateral for such loans; our opportunities for growth and
our plans for expansion (including opening new offices);
expectations about the performance of any new offices; projections
about the amount and the value of intangible assets, as well as
amortization of recorded amounts; future provisions for credit
losses on loans and debt securities; changes in nonperforming
assets; projections about future levels of loan originations or
loan repayments; projections regarding costs, including the impact
on our efficiency ratio; and descriptions of assumptions underlying
or relating to any of the foregoing.
Factors that could cause actual results to differ from those
discussed in the forward-looking statements include, but are not
limited to: significant competition to attract and retain banking
and wealth management customers, from both traditional and
non-traditional financial services and technology companies; our
ability to recruit and retain key managers, employees and board
members; the possibility of earthquakes, fires and other natural
disasters affecting the markets in which we operate; interest rate
risk and credit risk; our ability to maintain and follow high
underwriting standards; economic and market conditions, including
those affecting the valuation of our investment securities
portfolio and credit losses on our loans and debt securities; real
estate prices generally and in our markets; our geographic and
product concentrations; demand for our products and services;
developments and uncertainty related to the future use and
availability of 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; 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
Quarter Ended
Year Ended
December 31,
September 30,
December 31,
(in thousands, except per share
amounts)
2019
2018
2019
2019
2018
Interest income:
Loans
$
780,326
$
677,450
$
764,468
$
2,986,210
$
2,442,469
Investments
146,080
134,380
134,099
547,988
540,753
Other
5,679
10,122
5,779
21,446
25,187
Cash and cash equivalents
4,869
6,703
5,430
23,835
23,197
Total interest income
936,954
828,655
909,776
3,579,479
3,031,606
Interest expense:
Deposits
128,705
96,188
134,917
500,557
290,040
Borrowings
88,131
65,264
79,874
314,755
240,458
Total interest expense
216,836
161,452
214,791
815,312
530,498
Net interest income
720,118
667,203
694,985
2,764,167
2,501,108
Provision for loan losses
9,579
25,089
16,711
61,690
76,092
Net interest income after provision for
loan losses
710,539
642,114
678,274
2,702,477
2,425,016
Noninterest income:
Investment management fees
97,106
91,937
83,582
359,332
341,539
Brokerage and investment fees
12,416
8,097
12,673
41,035
31,867
Insurance fees
4,186
5,444
2,712
12,708
10,090
Trust fees
4,328
3,939
4,105
16,549
14,633
Foreign exchange fee income
10,365
10,223
11,685
41,026
35,606
Deposit fees
6,609
6,484
6,563
26,071
24,974
Loan and related fees
6,175
3,871
5,341
19,819
15,713
Loan servicing fees, net
1,788
3,446
2,347
11,348
13,302
Gain on sale of loans
69
579
122
535
5,616
Gain (loss) on investment securities
(1,541
)
(1,313
)
(683
)
(3,436
)
5,202
Income from investments in life
insurance
14,034
9,973
12,152
45,570
40,670
Other income
1,810
867
1,608
6,663
4,233
Total noninterest income
157,345
143,547
142,207
577,220
543,445
Noninterest expense:
Salaries and employee benefits
325,094
281,021
309,655
1,245,526
1,109,228
Information systems
69,278
63,999
66,612
273,337
241,752
Occupancy
50,474
40,078
50,722
192,678
152,258
Professional fees
22,476
15,338
17,507
68,099
60,058
Advertising and marketing
17,615
19,888
15,912
65,961
60,463
FDIC assessments
10,912
8,847
9,748
38,759
58,122
Other expenses
62,996
69,411
63,794
262,101
234,838
Total noninterest expense
558,845
498,582
533,950
2,146,461
1,916,719
Income before provision for income
taxes
309,039
287,079
286,531
1,133,236
1,051,742
Provision for income taxes
62,709
55,661
51,687
202,907
197,914
Net income
246,330
231,418
234,844
930,329
853,828
Dividends on preferred stock
10,708
16,228
12,787
49,070
57,725
Net income available to common
shareholders
$
235,622
$
215,190
$
222,057
$
881,259
$
796,103
Basic earnings per common share
$
1.40
$
1.31
$
1.32
$
5.25
$
4.89
Diluted earnings per common share
$
1.39
$
1.29
$
1.31
$
5.20
$
4.81
Weighted average shares—basic
168,544
164,804
168,272
167,908
162,948
Weighted average shares—diluted
169,776
167,100
169,346
169,551
165,612
CONSOLIDATED BALANCE SHEETS
As of
December 31,
September 30,
December 31,
($ in thousands)
2019
2019
2018
ASSETS
Cash and cash equivalents
$
1,699,557
$
2,181,600
$
2,811,159
Debt securities available-for-sale
1,282,169
1,401,105
1,779,116
Debt securities held-to-maturity
17,147,633
16,002,722
14,436,973
Equity securities (fair value)
19,586
19,736
18,719
Loans:
Single family (1-4 units)
47,985,651
44,882,363
37,955,252
Home equity lines of credit
2,501,432
2,530,740
2,542,713
Multifamily (5+ units)
12,428,452
11,725,331
10,357,839
Commercial real estate
7,537,085
7,504,334
6,677,440
Single family construction
761,589
743,699
645,924
Multifamily/commercial construction
1,532,834
1,442,896
1,576,582
Business
11,646,816
11,564,863
10,998,503
Stock secured
1,897,511
1,610,914
1,432,911
Other secured
1,433,399
1,293,084
1,105,751
Unsecured
3,072,062
3,006,586
2,572,367
Total loans
90,796,831
86,304,810
75,865,282
Allowance for loan losses
(496,104
)
(485,465
)
(439,048
)
Loans, net
90,300,727
85,819,345
75,426,234
Loans held for sale
23,304
31,693
98,985
Investments in life insurance
1,434,642
1,425,057
1,376,579
Tax credit investments
1,100,509
1,039,061
1,057,541
Premises, equipment and leasehold
improvements, net
386,841
373,693
332,483
Goodwill and other intangible assets
235,269
264,658
273,974
Other assets
2,633,397
2,470,065
1,593,441
Total Assets
$
116,263,634
$
111,028,735
$
99,205,204
LIABILITIES AND
EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking
$
33,124,265
$
32,720,317
$
30,033,658
Interest-bearing checking
19,696,859
17,438,402
17,089,520
Money market checking
12,790,707
11,242,205
10,317,436
Money market savings and passbooks
10,586,355
10,277,249
10,245,107
Certificates of deposit
13,935,060
14,042,346
11,377,515
Total Deposits
90,133,246
85,720,519
79,063,236
Short-term borrowings
800,000
775,000
100,000
Long-term FHLB advances
12,200,000
10,900,000
8,700,000
Senior notes
497,719
497,494
896,432
Subordinated notes
777,885
777,781
777,475
Other liabilities
2,003,677
2,926,735
990,284
Total Liabilities
106,412,527
101,597,529
90,527,427
Shareholders’ Equity:
Preferred stock
1,145,000
940,000
940,000
Common stock
1,686
1,685
1,649
Additional paid-in capital
4,214,915
4,198,442
4,024,306
Retained earnings
4,484,375
4,281,249
3,731,205
Accumulated other comprehensive income
(loss)
5,131
9,830
(19,383
)
Total Shareholders’ Equity
9,851,107
9,431,206
8,677,777
Total Liabilities and Shareholders’
Equity
$
116,263,634
$
111,028,735
$
99,205,204
Quarter Ended December
31,
Quarter Ended September
30,
2019
2018
2019
Average
Interest Income/
Yields/
Average
Interest Income/
Yields/
Average
Interest Income/
Yields/
Average Balances, Yields and
Rates
Balance
Expense (1)
Rates (2)
Balance
Expense (1)
Rates (2)
Balance
Expense (1)
Rates (2)
($ in thousands)
Assets:
Cash and cash equivalents
$
1,377,686
$
4,869
1.40
%
$
1,275,293
$
6,702
2.09
%
$
1,161,441
$
5,430
1.86
%
Investment securities:
U.S. Government-sponsored agency
securities
461,671
3,239
2.81
%
1,044,914
7,772
2.98
%
740,893
5,375
2.90
%
Mortgage-backed securities:
Agency residential and commercial MBS
6,826,144
47,764
2.80
%
7,098,381
50,849
2.87
%
6,593,422
46,762
2.84
%
Other residential and commercial MBS
4,276
39
3.66
%
4,611
44
3.78
%
4,473
43
3.84
%
Municipal securities
10,981,068
116,245
4.23
%
8,087,947
94,909
4.69
%
9,184,274
101,154
4.41
%
Other investment securities (3)
43,840
322
2.94
%
18,955
120
2.54
%
24,977
156
2.49
%
Total investment securities
18,316,999
167,609
3.66
%
16,254,808
153,694
3.78
%
16,548,039
153,490
3.71
%
Loans:
Residential real estate
48,938,892
391,415
3.20
%
39,587,922
325,318
3.28
%
45,754,902
374,690
3.27
%
Multifamily
12,112,107
119,386
3.86
%
10,243,384
97,696
3.73
%
11,446,955
112,624
3.85
%
Commercial real estate
7,501,102
79,527
4.15
%
6,612,822
70,319
4.16
%
7,366,320
79,213
4.21
%
Construction
2,261,457
26,678
4.62
%
2,145,727
26,464
4.83
%
2,152,911
26,599
4.83
%
Business
11,556,437
121,665
4.12
%
10,694,770
121,711
4.45
%
11,551,439
129,314
4.38
%
Other
6,085,084
48,261
3.10
%
4,943,880
42,791
3.39
%
5,704,872
48,746
3.34
%
Total loans
88,455,079
786,932
3.52
%
74,228,505
684,299
3.64
%
83,977,399
771,186
3.63
%
FHLB stock (4)
394,487
5,678
5.71
%
293,331
10,122
13.69
%
321,778
5,779
7.13
%
Total interest-earning assets
108,544,251
965,088
3.52
%
92,051,937
854,817
3.68
%
102,008,657
935,885
3.63
%
Noninterest-earning cash
362,139
344,749
335,648
Goodwill and other intangibles
256,614
275,645
266,032
Other assets
4,581,436
3,572,767
4,409,665
Total noninterest-earning assets
5,200,189
4,193,161
5,011,345
Total Assets
$
113,744,440
$
96,245,098
$
107,020,002
Liabilities and Equity:
Deposits:
Checking
$
51,333,186
8,777
0.07
%
$
45,218,239
5,720
0.05
%
$
48,666,948
8,501
0.07
%
Money market checking and savings
21,298,741
49,682
0.93
%
18,960,266
37,051
0.78
%
20,536,777
53,046
1.02
%
CDs
13,694,721
70,246
2.04
%
10,720,940
53,417
1.98
%
13,170,046
73,370
2.21
%
Total deposits
86,326,648
128,705
0.59
%
74,899,445
96,188
0.51
%
82,373,771
134,917
0.65
%
Borrowings:
Short-term borrowings
3,056,545
13,530
1.76
%
650,543
3,868
2.36
%
2,204,262
12,520
2.25
%
Long-term FHLB advances
11,488,043
62,146
2.15
%
9,201,630
46,365
2.00
%
9,796,739
54,901
2.22
%
Senior notes (5)
497,610
3,351
2.69
%
896,223
5,931
2.65
%
497,384
3,350
2.69
%
Subordinated notes (5)
777,834
9,104
4.68
%
777,427
9,099
4.68
%
777,730
9,103
4.68
%
Total borrowings
15,820,032
88,131
2.21
%
11,525,823
65,263
2.25
%
13,276,115
79,874
2.39
%
Total interest-bearing liabilities
102,146,680
216,836
0.84
%
86,425,268
161,451
0.74
%
95,649,886
214,791
0.89
%
Noninterest-bearing liabilities
2,093,561
982,269
2,037,177
Preferred equity
899,728
1,129,130
940,000
Common equity
8,604,471
7,708,431
8,392,939
Total Liabilities and Equity
$
113,744,440
$
96,245,098
$
107,020,002
Net interest spread (6)
2.68
%
2.94
%
2.74
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (7)
$
748,252
2.73
%
$
693,366
2.98
%
$
721,094
2.80
%
Reconciliation of tax-equivalent net
interest
income to reported net interest
income:
Tax-equivalent adjustment
(28,134
)
(26,163
)
(26,109
)
Net interest income, as reported
$
720,118
$
667,203
$
694,985
Year Ended December
31,
2019
2018
Average
Interest Income/
Yields/
Average
Interest Income/
Yields/
Average Balances, Yields and
Rates
Balance
Expense (1)
Rates
Balance
Expense (1)
Rates
($ in thousands)
Assets:
Cash and cash equivalents
$
1,268,405
$
23,835
1.88
%
$
1,325,174
$
23,197
1.75
%
Investment securities:
U.S. Treasury and other U.S. Government
agency securities
—
—
—
%
4,694
87
1.85
%
U.S. Government-sponsored agency
securities
818,000
24,066
2.94
%
1,072,391
31,761
2.96
%
Mortgage-backed securities:
Agency residential and commercial MBS
6,735,598
191,869
2.85
%
7,370,501
203,505
2.76
%
Other residential and commercial MBS
4,450
170
3.83
%
5,027
265
5.28
%
Municipal securities
9,218,509
409,127
4.44
%
8,126,173
382,662
4.71
%
Other investment securities (3)
26,848
726
2.70
%
19,617
480
2.44
%
Total investment securities
16,803,405
625,958
3.73
%
16,598,403
618,760
3.73
%
Loans:
Residential real estate
44,655,754
1,465,364
3.28
%
37,184,625
1,185,240
3.19
%
Multifamily
11,309,622
443,174
3.86
%
9,602,522
357,780
3.67
%
Commercial real estate
7,157,799
306,401
4.22
%
6,352,419
265,664
4.12
%
Construction
2,188,874
106,566
4.80
%
1,954,078
93,613
4.73
%
Business
11,302,160
503,782
4.40
%
9,579,793
417,636
4.30
%
Other
5,559,309
187,536
3.33
%
4,520,492
148,873
3.25
%
Total loans
82,173,518
3,012,823
3.64
%
69,193,929
2,468,806
3.54
%
FHLB stock (4)
331,862
21,446
6.46
%
293,359
25,187
8.59
%
Total interest-earning assets
100,577,190
3,684,062
3.64
%
87,410,865
3,135,950
3.57
%
Noninterest-earning cash
347,065
347,639
Goodwill and other intangibles
266,062
281,633
Other assets
4,376,016
3,501,575
Total noninterest-earning assets
4,989,143
4,130,847
Total Assets
$
105,566,333
$
91,541,712
Liabilities and Equity:
Deposits:
Checking
$
48,097,161
30,318
0.06
%
$
43,793,120
21,892
0.05
%
Money market checking and savings
20,113,724
196,582
0.98
%
17,774,302
108,290
0.61
%
CDs
12,769,459
273,657
2.14
%
9,220,835
159,858
1.73
%
Total deposits
80,980,344
500,557
0.62
%
70,788,257
290,040
0.41
%
Borrowings:
Short-term borrowings
2,278,831
50,361
2.21
%
793,606
15,277
1.93
%
Long-term FHLB advances
9,738,767
209,816
2.15
%
9,039,658
165,081
1.83
%
Senior notes (5)
680,199
18,169
2.67
%
895,584
23,709
2.65
%
Subordinated notes (5)
777,681
36,409
4.68
%
777,280
36,391
4.68
%
Total borrowings
13,475,478
314,755
2.34
%
11,506,128
240,458
2.09
%
Total interest-bearing liabilities
94,455,822
815,312
0.86
%
82,294,385
530,498
0.64
%
Noninterest-bearing liabilities
1,859,115
939,028
Preferred equity
929,849
1,004,110
Common equity
8,321,547
7,304,189
Total Liabilities and Equity
$
105,566,333
$
91,541,712
Net interest spread (6)
2.78
%
2.92
%
Net interest income (fully
taxable-equivalent basis) and
net interest margin (7)
$
2,868,750
2.83
%
$
2,605,452
2.96
%
Reconciliation of tax-equivalent net
interest income
to reported net interest
income:
Tax-equivalent adjustment
(104,583
)
(104,344
)
Net interest income, as reported
$
2,764,167
$
2,501,108
(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) Yield for the quarter and year ended
December 31, 2018 includes an FHLB special dividend of $4.8
million.
(5) Average balances include unamortized
issuance discounts and costs. Interest expense includes
amortization of issuance discounts and costs.
(6) Net interest spread represents the
average yield on interest-earning assets less the average rate on
interest-bearing liabilities.
(7) Net interest margin represents net
interest income on a fully taxable-equivalent basis divided by
total average interest-earning assets.
Quarter Ended
Quarter Ended
Year Ended
December 31,
September 30,
December 31,
Operating Information
2019
2018
2019
2019
2018
($ in thousands, except per share
amounts)
Net income to average assets (1)
0.86
%
0.95
%
0.87
%
0.88
%
0.93
%
Net income available to common
shareholders to average common equity (1)
10.86
%
11.08
%
10.50
%
10.59
%
10.90
%
Net income available to common
shareholders to average tangible common equity (1)
11.20
%
11.49
%
10.84
%
10.94
%
11.34
%
Dividends per common share
$
0.19
$
0.18
$
0.19
$
0.75
$
0.71
Dividend payout ratio
13.7
%
14.0
%
14.5
%
14.4
%
14.8
%
Efficiency ratio (2)
63.7
%
61.5
%
63.8
%
64.2
%
63.0
%
Net loan charge-offs (recoveries)
$
(1,060
)
$
1,866
$
4,341
$
4,634
$
2,976
Net loan charge-offs (recoveries) to
average total loans (1)
(0.00
%)
0.01
%
0.02
%
0.01
%
0.00
%
Allowance for loan losses to:
Total loans
0.55
%
0.58
%
0.56
%
0.55
%
0.58
%
Nonaccrual loans
346.5
%
944.9
%
354.5
%
346.5
%
944.9
%
(1) For periods less than a year, ratios
are annualized.
(2) Efficiency ratio is the ratio of
noninterest expense to the sum of net interest income and
noninterest income.
Quarter Ended
Quarter Ended
Year Ended
December 31,
September 30,
December 31,
Effective Tax Rate
2019
2018
2019
2019
2018
Effective tax rate, prior to excess tax
benefits
21.6
%
20.7
%
21.4
%
21.4
%
21.0
%
Excess tax benefits—stock options
(1.2
)%
(1.2
)%
(3.3
)%
(2.9
)%
(1.3
)%
Excess tax benefits—other stock awards
(0.1
)%
(0.1
)%
(0.1
)%
(0.6
)%
(0.9
)%
Total excess tax benefits
(1.3
)%
(1.3
)%
(3.4
)%
(3.5
)%
(2.2
)%
Effective tax rate
20.3
%
19.4
%
18.0
%
17.9
%
18.8
%
Quarter Ended
Quarter Ended
Year Ended
December 31,
September 30,
December 31,
Mortgage Loan Sales
2019
2018
2019
2019
2018
($ in thousands)
Loans sold:
Flow sales:
Agency
$
34,519
$
4,945
$
25,214
$
85,945
$
42,081
Non-agency
7,717
6,785
11,932
50,983
172,077
Total flow sales
42,236
11,730
37,146
136,928
214,158
Bulk sales:
Non-agency
—
—
—
152,119
773,041
Securitizations
—
251,931
—
—
251,931
Total loans sold
$
42,236
$
263,661
$
37,146
$
289,047
$
1,239,130
Gain on sale of loans:
Amount
$
69
$
579
$
122
$
535
$
5,616
Gain as a percentage of loans sold
0.16
%
0.22
%
0.33
%
0.19
%
0.45
%
Quarter Ended
Quarter Ended
Year Ended
December 31,
September 30,
December 31,
Loan Originations
2019
2018
2019
2019
2018
($ in thousands)
Single family (1-4 units)
$
5,275,965
$
2,709,197
$
4,872,598
$
16,405,784
$
10,784,654
Home equity lines of credit
456,150
380,710
359,154
1,524,031
1,542,747
Multifamily (5+ units)
1,226,394
856,577
710,983
3,340,258
3,321,334
Commercial real estate
447,254
355,137
556,151
1,823,687
1,235,819
Construction
415,848
471,904
549,518
1,631,384
1,694,788
Business (1)
2,273,510
2,390,545
2,814,189
9,080,396
9,379,905
Stock and other secured
820,471
365,374
662,522
2,780,617
2,101,390
Unsecured
308,360
348,235
438,278
1,377,319
1,382,552
Total loans originated
$
11,223,952
$
7,877,679
$
10,963,393
$
37,963,476
$
31,443,189
(1)
Origination amounts for certain business
lines of credit (i.e. capital call lines of credit) reflect the
Bank's contractual obligations in effect during the reporting
period and exclude amounts that are contingent upon future credit
approvals. Prior periods presented have also been adjusted to
exclude the contingent amounts for these lines of credit.
As of
December 31,
September 30,
June 30,
March 31,
December 31,
Loan Servicing Portfolio
2019
2019
2019
2019
2018
($ in millions)
Loans serviced for investors
$
9,298
$
10,080
$
10,746
$
11,326
$
11,573
As of
December 31,
September 30,
June 30,
March 31,
December 31,
Asset Quality Information
2019
2019
2019
2019
2018
($ in thousands)
Nonperforming assets:
Nonaccrual loans
$
143,181
$
136,928
$
144,993
$
51,081
$
46,465
Other real estate owned
—
—
—
—
—
Total nonperforming assets
$
143,181
$
136,928
$
144,993
$
51,081
$
46,465
Nonperforming assets to total assets
0.12
%
0.12
%
0.14
%
0.05
%
0.05
%
Accruing loans 90 days or more past
due
$
—
$
—
$
—
$
—
$
—
Restructured accruing loans
$
13,287
$
14,964
$
12,176
$
10,208
$
11,514
As of
December 31,
September 30,
June 30,
March 31,
December 31,
Book Value and Capital Ratios
2019
2019
2019
2019
2018
(in thousands, except per share
amounts)
Number of shares of common stock
outstanding
168,621
168,450
168,176
167,393
164,902
Book value per common share
$
51.63
$
50.41
$
49.23
$
48.42
$
46.92
Tangible book value per common share
$
50.24
$
48.84
$
47.64
$
46.81
$
45.26
As of
December 31,
September 30,
June 30,
March 31,
December 31,
Capital Ratios
2019 (1)
2019
2019
2019
2018
Tier 1 leverage ratio (Tier 1 capital to
average
assets)
8.39
%
8.50
%
8.69
%
8.84
%
8.68
%
Common Equity Tier 1 capital to
risk-weighted
assets
9.86
%
9.91
%
10.19
%
10.54
%
10.38
%
Tier 1 capital to risk-weighted assets
11.21
%
11.05
%
11.39
%
11.82
%
11.70
%
Total capital to risk-weighted assets
12.73
%
12.61
%
13.02
%
13.50
%
13.43
%
Regulatory Capital (2)
($ in thousands)
Common Equity Tier 1 capital
$
8,371,192
$
8,124,179
$
7,934,602
$
7,776,620
$
7,379,997
Tier 1 capital
$
9,516,192
$
9,064,179
$
8,874,602
$
8,716,620
$
8,319,997
Total capital
$
10,802,209
$
10,340,902
$
10,138,375
$
9,960,317
$
9,549,738
Assets (2)
($ in thousands)
Average assets
$
113,403,507
$
106,659,003
$
102,097,363
$
98,582,697
$
95,905,266
Risk-weighted assets
$
84,885,953
$
81,994,651
$
77,889,111
$
73,753,991
$
71,116,459
(1) Ratios and amounts as of December 31,
2019 are preliminary.
(2) As defined by regulatory capital
rules.
As of
December 31,
September 30,
June 30,
March 31,
December 31,
Wealth Management Assets
2019
2019
2019
2019
2018
($ in millions)
First Republic Investment Management
$
66,029
$
61,204
$
61,192
$
66,675
$
60,591
Brokerage and investment:
Brokerage
68,807
63,053
61,583
59,391
53,046
Money market mutual funds
4,268
4,402
3,312
2,818
2,358
Total brokerage and investment
73,075
67,455
64,895
62,209
55,404
Trust Company:
Trust
7,121
6,366
6,319
5,955
5,350
Custody
4,818
5,210
5,225
5,060
4,868
Total Trust Company
11,939
11,576
11,544
11,015
10,218
Total Wealth Management Assets
$
151,043
$
140,235
$
137,631
$
139,899
$
126,213
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200114005265/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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