Year-Over-Year Revenues Increased 23% and
Earnings Per Share Increased 11%
Tangible Book Value Per Share Increased 13%
Year-Over-Year
First Republic Bank (NYSE: FRC) today announced financial
results for the quarter ended June 30, 2022.
“First Republic had an excellent quarter, reflecting the
consistency of our client-focused model and culture,” said Mike
Roffler, Chief Executive Officer and President. “Loan growth was
very strong, and credit quality remains excellent.”
Quarterly Highlights
Financial Results
– Year-over-year:
– Revenues were $1.5 billion, up 22.6%.
– Net interest income was $1.2 billion, up
24.1%.
– Net income was $433 million, up 16.0%.
– Diluted earnings per share of $2.16, up
10.8%.
– Tangible book value per share was $69.81,
up 13.1%.
– Loan originations totaled $22.0 billion, our best quarter
ever.
– Net interest margin was 2.80%, compared to 2.68% for the prior
quarter.
– Efficiency ratio was 60.5%, compared to 62.0% for the prior
quarter.
Continued Capital and Credit
Strength
– Tier 1 leverage ratio was 8.59%.
– Nonperforming assets remained at a low 7 basis points of total
assets.
– Net charge-offs were only $1.3 million, or less than 1 basis
point of average loans.
Continued Franchise Growth
– Year-over-year:
– Loans totaled $151.5 billion, up 23.1%.
– Deposits were $165.6 billion, up 23.0%.
– Wealth management assets were $246.8
billion, up 2.5%.
– Wealth management revenues were $232
million, up 26.4%.
“We are pleased to see growth in total revenue of 23% and net
interest income of 24% during the second quarter,” said Olga
Tsokova, Chief Financial Officer (Acting) and Chief Accounting
Officer. “Tangible book value per share increased 13%
year-over-year, to just under $70, and our capital remains
strong.”
Quarterly Cash Dividend of $0.27 per Share
The Bank declared a cash dividend for the second quarter of
$0.27 per share of common stock, which is payable on August 11,
2022 to shareholders of record as of July 28, 2022.
Strong Asset Quality
Credit quality remains very strong. Nonperforming assets were at
a very low 7 basis points of total assets at June 30, 2022. The
Bank had modest net loan charge-offs of only $1.3 million for the
quarter.
During the second quarter, the Bank recorded a provision for
credit losses of $31 million, which was primarily driven by loan
growth.
Continued Book Value Growth
Book value per common share at June 30, 2022 was $71.03, up
12.8% from a year ago. Tangible book value per common share at June
30, 2022 was $69.81, up 13.1% from a year ago.
Capital Strength
The Bank’s Tier 1 leverage ratio was 8.59% at June 30, 2022,
compared to 8.70% at March 31, 2022.
Continued Franchise Growth
Loan Originations
Loan originations were $22.0 billion for the quarter, our best
quarter ever. This was up 31.1% from the same quarter a year ago,
primarily due to increases in single family and multifamily
lending.
Single family loan originations were 48% of the total loan
origination volume for the quarter and had a weighted average
loan-to-value ratio of 61%. In addition, multifamily and commercial
real estate loans originated were 14% of total originations and had
a weighted average loan-to-value ratio of 52%.
Loans totaled $151.5 billion at June 30, 2022, up 23.1% compared
to a year ago. Our loan growth was primarily due to increases in
single family, multifamily, stock secured and capital call lines of
credit, partially offset by a decrease in loans under the Small
Business Administration’s Paycheck Protection Program (“PPP”).
Investments
Total investment securities at June 30, 2022 were $31.2 billion,
a 2.9% increase compared to the prior quarter and a 36.1% increase
compared to a year ago.
High-quality liquid assets, including eligible cash, totaled
$28.2 billion at June 30, 2022, and represented 14.7% of quarterly
average total assets.
Deposit Growth and Funding
Total deposits increased to $165.6 billion, up 23.0% compared to
a year ago. Deposits were our primary source of funding at June 30,
2022, and represented 93% of our funding base.
At June 30, 2022, checking deposit balances were 71.6% of total
deposits.
Other sources of funding at June 30, 2022 included short-term
and long-term FHLB advances, which totaled $11.0 billion, up 22.2%
compared to a year ago.
Deposits had an average rate paid of 9 basis points during the
quarter, and average total funding costs were 16 basis points
during the quarter.
Wealth Management
Total wealth management assets were $246.8 billion at June 30,
2022, down 10.0% compared to the prior quarter and up 2.5% compared
to a year ago. The decrease in wealth management assets for the
quarter was due to market decline. The increase in wealth
management assets for the year was due to net client inflow,
partially offset by market decline.
Wealth management revenues totaled $232 million for the quarter,
up 26.4% compared to last year’s second quarter. Such revenues
represented 15.4% of the Bank’s total revenues for the quarter.
Wealth management assets at June 30, 2022 included investment
management assets of $100.2 billion, brokerage assets and money
market mutual funds of $127.5 billion, and trust and custody assets
of $19.1 billion.
Income Statement and Key Ratios
Revenue Growth
Total revenues were $1.5 billion for the quarter, up 22.6%
compared to the second quarter a year ago.
Net Interest Income Growth
Net interest income was $1.2 billion for the quarter, up 24.1%
compared to the second quarter a year ago. The increase in net
interest income resulted primarily from growth in average
interest-earning assets and the increase in net interest
margin.
Net Interest Margin
The net interest margin increased to 2.80% in the second
quarter, from 2.68% in the prior quarter. The increase was due to
lower average cash balances, as well as average yields on
interest-earning assets increasing more than the offsetting
increase in average funding costs.
Noninterest Income
Noninterest income was $263 million for the quarter, up 16.0%
compared to the second quarter a year ago. The increase was
primarily driven by higher wealth management fees, partially offset
by a decrease in income from investments in life insurance.
Noninterest Expense and Efficiency
Ratio
Noninterest expense was $913 million for the quarter, up 19.7%
compared to the second quarter a year ago, primarily due to
continued investments in our business expansion, including hiring
additional colleagues to support our growth and information systems
initiatives, as well as higher travel and entertainment.
The efficiency ratio was 60.5% for the quarter, compared to
62.0% for last year’s second quarter.
Income Taxes
The Bank’s effective tax rate for the second quarter of 2022 was
23.4%, compared to 17.4% for the second quarter a year ago. The
increase was primarily the result of lower excess tax benefits upon
vesting of stock awards.
Conference Call Details
First Republic Bank’s second quarter 2022 earnings conference
call is scheduled for July 14, 2022 at 7:00 a.m. PT / 10:00 a.m.
ET. To access the event by telephone, please dial (800) 458-4148
and provide confirmation code 2688216 approximately 15 minutes
prior to the start time (to allow time for registration).
International callers should dial +1 (856) 344-9290 and provide 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 ir.firstrepublic.com/events-calendar. To listen to the
live webcast, please visit the site at least 15 minutes prior to
the start time to register, download and install any necessary
audio software.
For those unable to join for the live presentation, a replay of
the call will be available beginning July 14, 2022 at 11:00 a.m. PT
/ 2:00 p.m. ET through July 21, 2022 at 8:59 p.m. PT / 11:59 p.m.
ET. To access the replay, dial (888) 203-1112 and use confirmation
code 2688216#. International callers should dial +1 (719) 457-0820
and enter the same confirmation code. A replay of the webcast will
also be available for 90 days following, accessible in the Investor
Relations section of First Republic Bank’s website at
ir.firstrepublic.com/events-calendar.
The Bank’s press releases are available after release in the
Newsroom and 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. First Republic specializes in delivering exceptional,
relationship-based service and provides a complete line of
products, including residential, commercial and personal loans,
deposit services, and private wealth management, including
investment, brokerage, insurance, trust and foreign exchange
services. 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; Jackson, Wyoming; and
Bellevue, Washington. 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, as well as for unfunded loan
commitments; changes in nonperforming assets; expectations
regarding the impact and duration of COVID-19; expectations
regarding our executive transitions; 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; natural or other disasters, including earthquakes,
wildfires, pandemics or acts of terrorism affecting the markets in
which we operate; the adverse effects of climate change on our
business, clients and counterparties; the negative impacts and
disruptions resulting from COVID-19 on our colleagues and clients,
the communities we serve and the domestic and global economy, which
may have an adverse effect on our business, financial position and
results of operations; inflation; 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 some
reference rates; the regulatory environment in which we operate,
our regulatory compliance and future regulatory requirements; 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.
Non-GAAP Financial Measures
Our management uses and believes that investors benefit from
using certain non-GAAP measures of our financial performance, which
include tangible book value per common share, return on average
tangible common shareholders’ equity, and net interest income on a
fully taxable-equivalent basis. Management believes that tangible
book value per common share and return on average tangible common
shareholders’ equity are useful additional measures to evaluate our
performance and capital position without the impact of goodwill and
other intangible assets and preferred stock. In addition, to
facilitate relevant comparisons of net interest income from taxable
and tax-exempt interest-earning assets, when calculating yields and
net interest margin, we adjust interest income on tax-exempt
securities and tax-advantaged loans so such amounts are fully
equivalent to interest income on taxable sources. We believe that
these non-GAAP financial measures, when taken together with the
corresponding GAAP financial measures, provide meaningful
supplemental information that is not otherwise required by GAAP or
other applicable requirements. These non-GAAP financial measures
should be considered in addition to, not as a substitute for,
financial measures prepared in accordance with GAAP. A
reconciliation of the non-GAAP calculation of the financial measure
to the most comparable GAAP financial measure is presented in
relevant tables in this document.
Explanatory Note
Some amounts presented within this document may not recalculate
due to rounding.
CONSOLIDATED STATEMENTS OF
INCOME
Quarter Ended June
30,
Quarter Ended March
31,
Six Months Ended June
30,
(in millions, except per share
amounts)
2022
2021
2022
2022
2021
Interest income:
Loans
$
1,094
$
913
$
1,002
$
2,096
$
1,786
Investments
209
157
180
389
298
Other
2
5
2
4
10
Cash and cash equivalents
11
3
5
16
6
Total interest income
1,316
1,078
1,189
2,505
2,100
Interest expense:
Deposits
37
24
20
57
52
Borrowings
33
51
24
57
106
Total interest expense
70
75
44
114
158
Net interest income
1,246
1,003
1,145
2,391
1,942
Provision for credit losses
31
16
10
41
1
Net interest income after provision for
credit losses
1,215
987
1,135
2,350
1,941
Noninterest income:
Investment management fees
164
136
165
329
255
Brokerage and investment fees
33
17
22
55
32
Insurance fees
3
3
4
7
6
Trust fees
7
6
7
14
12
Foreign exchange fee income
25
21
23
48
38
Deposit fees
8
7
6
14
13
Loan and related fees
10
9
9
19
16
Income from investments in life
insurance
11
21
14
25
38
Other income, net
2
6
1
3
12
Total noninterest income
263
226
251
514
422
Noninterest expense:
Salaries and employee benefits
567
482
560
1,127
945
Information systems
114
88
107
221
172
Occupancy
70
63
69
139
121
Professional fees
27
26
23
50
47
Advertising and marketing
17
16
13
30
29
FDIC assessments
15
13
15
30
25
Other expenses
103
74
79
182
144
Total noninterest expense
913
762
866
1,779
1,483
Income before provision for income
taxes
565
451
520
1,085
880
Provision for income taxes
132
78
119
251
172
Net income
433
373
401
834
708
Dividends on preferred stock
41
23
37
78
42
Net income available to common
shareholders
$
392
$
350
$
364
$
756
$
666
Basic earnings per common share
$
2.18
$
1.98
$
2.03
$
4.21
$
3.79
Diluted earnings per common share
$
2.16
$
1.95
$
2.00
$
4.17
$
3.74
Weighted average shares—basic
180
176
180
180
176
Weighted average shares—diluted
181
179
182
182
178
CONSOLIDATED BALANCE
SHEETS
As of
($ in millions)
June 30, 2022
March 31, 2022
December 31, 2021
June 30, 2021
ASSETS
Cash and cash equivalents
$
6,237
$
7,756
$
12,947
$
7,877
Debt securities available-for-sale
3,438
3,446
3,381
2,635
Debt securities held-to-maturity, net
27,710
26,831
22,292
20,236
Equity securities (fair value)
23
25
28
30
Loans:
Single family
89,295
81,833
76,793
69,909
Home equity lines of credit
2,699
2,597
2,584
2,441
Single family construction
1,117
1,041
993
878
Multifamily
18,346
16,953
15,966
14,803
Commercial real estate
9,182
8,753
8,531
8,235
Multifamily/commercial construction
2,019
1,955
1,927
2,061
Capital call lines of credit
10,727
10,970
10,999
8,127
Tax-exempt
3,605
3,656
3,680
3,566
Other business
4,638
4,081
3,961
3,657
PPP
82
232
545
1,375
Stock secured
4,041
3,651
3,435
2,966
Other secured
2,774
2,623
2,457
2,052
Unsecured
2,994
2,968
3,085
3,048
Total loans
151,519
141,313
134,956
123,118
Allowance for credit losses
(729
)
(701
)
(694
)
(637
)
Loans, net
150,790
140,612
134,262
122,481
Investments in life insurance
3,340
2,682
2,650
2,598
Tax credit investments
1,304
1,231
1,220
1,224
Premises, equipment and leasehold
improvements, net
474
467
454
419
Goodwill and other intangible assets
220
221
222
224
Other assets
4,372
3,850
3,631
3,923
Total Assets
$
197,908
$
187,121
$
181,087
$
161,647
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking
$
75,208
$
72,424
$
70,840
$
59,449
Interest-bearing checking
43,421
41,589
41,248
32,165
Money market checking
21,235
21,846
20,303
20,374
Money market savings and passbooks
18,796
19,159
16,573
14,748
Certificates of deposit
6,987
7,042
7,357
7,921
Total Deposits
165,647
162,060
156,321
134,657
Short-term FHLB advances
6,300
—
—
—
Long-term FHLB advances
4,700
3,700
3,700
9,000
Senior notes
499
999
998
997
Subordinated notes
779
779
779
779
Other liabilities
3,557
3,429
3,391
2,939
Total Liabilities
181,482
170,967
165,189
148,372
Shareholders’ Equity:
Preferred stock
3,633
3,633
3,633
2,143
Common stock
2
2
2
2
Additional paid-in capital
5,782
5,763
5,725
5,203
Retained earnings
7,236
6,893
6,569
5,937
Accumulated other comprehensive loss
(227
)
(137
)
(31
)
(10
)
Total Shareholders’ Equity
16,426
16,154
15,898
13,275
Total Liabilities and Shareholders’
Equity
$
197,908
$
187,121
$
181,087
$
161,647
Quarter Ended June 30,
Quarter Ended March
31,
2022
2021
2022
Average Balances, Yields and
Rates
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates (2)
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates (2)
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates (2)
($ in millions)
Assets:
Interest-bearing deposits with banks
$
5,713
$
11
0.80
%
$
11,281
$
3
0.11
%
$
11,342
$
5
0.18
%
Investment securities:
U.S. Government-sponsored agency
securities
165
1
2.05
%
100
1
1.59
%
117
0
1.37
%
Agency residential and commercial MBS
10,667
56
2.10
%
5,646
29
2.05
%
9,142
39
1.70
%
Other residential and commercial MBS
22
0
2.37
%
30
0
2.04
%
24
0
2.04
%
Tax-exempt municipal securities
16,711
161
3.86
%
13,470
136
4.02
%
15,595
151
3.87
%
Taxable municipal securities
1,774
14
3.18
%
1,612
12
3.00
%
1,715
13
2.97
%
Other investment securities
1,440
10
2.87
%
1,376
9
2.85
%
1,416
10
2.85
%
Total investment securities
30,779
242
3.15
%
22,234
187
3.36
%
28,009
213
3.04
%
Loans:
Residential real estate
89,358
620
2.78
%
69,854
491
2.81
%
82,416
567
2.75
%
Multifamily
17,480
153
3.46
%
14,392
127
3.49
%
16,281
140
3.45
%
Commercial real estate
8,983
85
3.77
%
8,117
78
3.82
%
8,633
82
3.77
%
Multifamily/commercial construction
2,004
24
4.60
%
2,969
38
5.00
%
1,929
22
4.62
%
Business
18,469
160
3.43
%
15,894
129
3.21
%
18,590
145
3.12
%
PPP
138
3
8.46
%
1,843
15
3.32
%
381
7
7.59
%
Other
9,628
56
2.31
%
7,653
42
2.15
%
9,058
47
2.06
%
Total loans
146,060
1,101
3.00
%
120,722
920
3.03
%
137,288
1,010
2.94
%
FHLB stock
201
2
3.40
%
312
5
6.55
%
115
2
7.60
%
Total interest-earning assets
182,753
1,356
2.96
%
154,549
1,115
2.87
%
176,754
1,230
2.78
%
Noninterest-earning cash
442
386
449
Goodwill and other intangibles
220
225
221
Other assets
7,759
6,725
7,142
Total noninterest-earning assets
8,421
7,336
7,812
Total Assets
$
191,174
$
161,885
$
184,566
Liabilities and Shareholders’
Equity:
Deposits:
Interest-bearing checking
$
41,878
5
0.05
%
$
33,329
2
0.02
%
$
40,400
1
0.01
%
Money market checking
20,873
13
0.25
%
19,928
6
0.12
%
21,659
5
0.09
%
Money market savings and passbooks
17,682
11
0.25
%
14,783
6
0.17
%
17,925
7
0.15
%
CDs
6,975
8
0.43
%
8,040
10
0.51
%
7,217
7
0.40
%
Total interest-bearing deposits (3)
87,408
37
0.17
%
76,080
24
0.13
%
87,201
20
0.09
%
Borrowings:
Federal funds purchased
186
0
0.73
%
—
—
—
%
—
—
—
%
Short-term FHLB advances
2,953
9
1.20
%
—
—
—
%
—
—
—
%
Long-term FHLB advances
4,097
11
1.09
%
10,062
36
1.39
%
3,700
9
0.95
%
Senior notes
691
4
2.38
%
997
6
2.42
%
998
6
2.42
%
Subordinated notes
779
9
4.68
%
778
9
4.68
%
779
9
4.68
%
Total borrowings
8,706
33
1.54
%
11,837
51
1.69
%
5,477
24
1.75
%
Total interest-bearing liabilities (4)
96,114
70
0.29
%
87,917
75
0.34
%
92,678
44
0.19
%
Noninterest-bearing checking
75,411
58,051
72,251
Other noninterest-bearing liabilities
3,354
2,796
3,613
Total noninterest-bearing liabilities
78,765
60,847
75,864
Preferred shareholders’ equity
3,633
2,143
3,633
Common shareholders’ equity
12,662
10,978
12,391
Total Liabilities and Shareholders’
Equity
$
191,174
$
161,885
$
184,566
Net interest spread (5)
2.66
%
2.54
%
2.59
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
1,286
2.80
%
$
1,040
2.68
%
$
1,186
2.68
%
Reconciliation of tax-equivalent net
interest income to net interest income: (7)
Municipal securities tax-equivalent
adjustment
(33
)
(30
)
(34
)
Business loans tax-equivalent
adjustment
(7
)
(7
)
(7
)
Net interest income
$
1,246
$
1,003
$
1,145
Supplemental information:
Total deposits (interest-bearing and
noninterest-bearing)
$
162,819
$
37
0.09
%
$
134,131
$
24
0.07
%
$
159,452
$
20
0.05
%
Total deposits (interest-bearing and
noninterest-bearing) and borrowings
$
171,525
$
70
0.16
%
$
145,968
$
75
0.20
%
$
164,929
$
44
0.11
%
Six Months Ended June
30,
2022
2021
Average Balances, Yields and
Rates
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates (2)
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates (2)
($ in millions)
Assets:
Interest-bearing deposits with banks
$
8,512
$
16
0.39
%
$
11,364
$
6
0.11
%
Investment securities:
U.S. Government-sponsored agency
securities
141
1
1.76
%
97
1
1.52
%
Agency residential and commercial MBS
9,909
95
1.91
%
5,636
60
2.11
%
Other residential and commercial MBS
23
0
2.19
%
32
0
1.95
%
Tax-exempt municipal securities
16,156
309
3.83
%
12,874
263
4.08
%
Taxable municipal securities
1,744
27
3.07
%
1,347
20
2.98
%
Other investment securities
1,428
20
2.86
%
905
12
2.73
%
Total investment securities
29,401
452
3.08
%
20,891
356
3.40
%
Loans:
Residential real estate
85,906
1,187
2.76
%
67,668
960
2.84
%
Multifamily
16,884
293
3.45
%
14,159
250
3.51
%
Commercial real estate
8,808
167
3.77
%
8,075
156
3.85
%
Multifamily/commercial construction
1,967
46
4.61
%
2,918
69
4.68
%
Business
18,529
305
3.27
%
15,488
253
3.24
%
PPP
259
10
7.82
%
1,916
31
3.24
%
Other
9,345
103
2.19
%
7,501
81
2.15
%
Total loans
141,698
2,111
2.97
%
117,725
1,800
3.05
%
FHLB stock
158
4
4.92
%
329
10
6.31
%
Total interest-earning assets
179,769
2,583
2.87
%
150,309
2,172
2.88
%
Noninterest-earning cash
446
400
Goodwill and other intangibles
221
226
Other assets
7,452
6,409
Total noninterest-earning assets
8,119
7,035
Total Assets
$
187,888
$
157,344
Liabilities and Shareholders’
Equity:
Deposits:
Interest-bearing checking
$
41,143
6
0.03
%
$
32,664
4
0.02
%
Money market checking
21,264
18
0.17
%
19,411
14
0.14
%
Money market savings and passbooks
17,803
18
0.20
%
14,215
12
0.18
%
CDs
7,095
15
0.41
%
8,225
22
0.53
%
Total interest-bearing deposits (3)
87,305
57
0.13
%
74,515
52
0.14
%
Borrowings:
Federal funds purchased
93
0
0.73
%
0
0
0.26
%
Short-term FHLB advances
1,485
9
1.20
%
0
0
0.15
%
Long-term FHLB advances
3,899
20
1.02
%
10,689
76
1.42
%
Senior notes
844
10
2.41
%
997
12
2.42
%
Subordinated notes
779
18
4.68
%
778
18
4.68
%
Total borrowings
7,100
57
1.62
%
12,464
106
1.71
%
Total interest-bearing liabilities (4)
94,405
114
0.24
%
86,979
158
0.36
%
Noninterest-bearing checking
73,840
54,887
Other noninterest-bearing liabilities
3,483
2,717
Total noninterest-bearing liabilities
77,323
57,604
Preferred shareholders' equity
3,633
2,054
Common shareholders' equity
12,527
10,707
Total Liabilities and Shareholders’
Equity
$
187,888
$
157,344
Net interest spread (5)
2.63
%
2.52
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
2,469
2.74
%
$
2,014
2.67
%
Reconciliation of tax-equivalent net
interest income to net interest income: (7)
Municipal securities tax-equivalent
adjustment
(64
)
(58
)
Business loans tax-equivalent
adjustment
(14
)
(14
)
Net interest income
$
2,391
$
1,942
Supplemental information:
Total deposits (interest-bearing and
noninterest-bearing)
$
161,145
$
57
0.07
%
$
129,402
$
52
0.08
%
Total deposits (interest-bearing and
noninterest-bearing) and borrowings
$
168,245
$
114
0.14
%
$
141,866
$
158
0.22
%
__________ Note: Certain prior period amounts have been
reclassified to conform to the current period presentation.
(1)
Interest income on tax-exempt
securities and loans has been adjusted to the fully
taxable-equivalent basis using the statutory federal income tax
rate in effect for each respective period presented.
(2)
Yields/rates are annualized.
(3)
Refer to supplemental information
in this table for average balances, interest expense and rates for
total deposits (interest-bearing and noninterest-bearing).
(4)
Refer to supplemental information
in this table for average balances, interest expense and rates for
total deposits (interest-bearing and noninterest-bearing) and
borrowings.
(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.
(7)
Fully taxable-equivalent net
interest income is considered a non-GAAP financial measure, and is
reconciled to GAAP net interest income in this table.
Selected Financial Data and
Ratios
Quarter Ended June
30,
Quarter Ended March
31,
Six Months Ended June
30,
2022
2021
2022
2022
2021
($ in millions, except per share
amounts)
Selected Financial Data and
Ratios:
Return on average assets (1), (2)
0.91
%
0.92
%
0.88
%
0.90
%
0.91
%
Return on average common shareholders’
equity (1)
12.43
%
12.77
%
11.91
%
12.17
%
12.54
%
Return on average tangible common
shareholders’ equity (1), (3)
12.65
%
13.04
%
12.12
%
12.39
%
12.81
%
Average equity to average assets
8.52
%
8.10
%
8.68
%
8.60
%
8.11
%
Dividends per common share
$
0.27
$
0.22
$
0.22
$
0.49
$
0.42
Dividend payout ratio
12.5
%
11.3
%
11.0
%
11.8
%
11.2
%
Efficiency ratio (4)
60.5
%
62.0
%
62.0
%
61.2
%
62.7
%
Selected Asset Quality Ratios:
Net loan charge-offs (recoveries)
$
1.3
$
1.2
$
(0.3
)
$
1.0
$
1.7
Net loan charge-offs (recoveries) to
average total loans (1)
0.00
%
0.00
%
(0.00
) %
0.00
%
0.00
%
Selected Ratios (period-end):
Book value per common share
$
71.03
$
62.99
$
69.70
Tangible book value per common share
(5)
$
69.81
$
61.72
$
68.47
__________
(1)
Ratios are annualized.
(2)
Return on average assets is the
ratio of net income to average assets.
(3)
Refer to “Return on Average
Common Shareholders’ Equity and Return on Average Tangible Common
Shareholders’ Equity” table in this document for a reconciliation
of this non-GAAP financial measure to the most comparable GAAP
measure.
(4)
Efficiency ratio is the ratio of
noninterest expense to the sum of net interest income and
noninterest income.
(5)
Refer to “Book Value per Common
Share and Tangible Book Value per Common Share” table in this
document for a reconciliation of this non-GAAP financial measure to
the most comparable GAAP measure.
Effective Tax Rate
Quarter Ended June
30,
Quarter Ended March
31,
Six Months Ended June
30,
2022
2021
2022
2022
2021
Effective tax rate, prior to excess tax
benefits—stock awards
24.0
%
21.7
%
23.4
%
23.7
%
22.1
%
Excess tax benefits—stock awards
(0.6
)
(4.3
)
(0.5
)
(0.6
)
(2.5
)
Effective tax rate
23.4
%
17.4
%
22.9
%
23.1
%
19.6
%
Provision (Reversal of Provision) for
Credit Losses
Quarter Ended June
30,
Quarter Ended March
31,
Six Months Ended June
30,
2022
2021
2022
2022
2021
($ in millions)
Debt securities held-to-maturity
$
1
$
1
$
1
$
2
$
2
Loans
29
17
7
36
3
Unfunded loan commitments
1
(2
)
2
3
(4
)
Total provision
$
31
$
16
$
10
$
41
$
1
Loan Originations
Quarter Ended June
30,
Quarter Ended March
31,
Six Months Ended June
30,
2022
2021
2022
2022
2021
($ in millions)
Single family
$
10,638
$
8,662
$
8,376
$
19,014
$
15,564
Home equity lines of credit
744
610
689
1,433
1,234
Single family construction
540
215
267
807
440
Multifamily
2,330
1,102
1,709
4,039
1,893
Commercial real estate
816
458
566
1,382
772
Multifamily/commercial construction
492
272
384
876
583
Capital call lines of credit
3,096
2,921
3,020
6,116
6,052
Tax-exempt
92
208
90
182
422
Other business
1,078
521
538
1,616
1,546
PPP
—
36
—
—
725
Stock secured
915
776
1,136
2,051
1,486
Other secured
815
598
666
1,481
1,037
Unsecured
413
372
369
782
718
Total loans originated
$
21,969
$
16,751
$
17,810
$
39,779
$
32,472
As of
Asset Quality Information
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
($ in millions)
Nonperforming assets:
Nonaccrual loans
$
137
$
140
$
139
$
127
$
133
Other real estate owned
—
—
—
—
—
Total nonperforming assets
$
137
$
140
$
139
$
127
$
133
Nonaccrual loans to total loans
0.09
%
0.10
%
0.10
%
0.10
%
0.11
%
Nonperforming assets to total assets
0.07
%
0.08
%
0.08
%
0.07
%
0.08
%
Accruing loans 90 days or more past
due
$
—
$
—
$
—
$
—
$
—
Restructured accruing loans
$
12
$
12
$
13
$
10
$
11
Allowance for loan credit losses to:
Total loans
0.48
%
0.50
%
0.51
%
0.52
%
0.52
%
Nonaccrual loans
531.2
%
498.8
%
500.5
%
524.4
%
479.3
%
As of
Loan Servicing Portfolio
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
($ in millions)
Loans serviced for investors
$
3,919
$
4,298
$
4,677
$
5,117
$
5,640
Return on Average Common
Shareholders’ Equity and Return on Average Tangible
Common Shareholders’ Equity (1), (2)
Quarter Ended June
30,
Quarter Ended March
31,
Six Months Ended June
30,
2022
2021
2022
2022
2021
($ in millions)
Average common shareholders’ equity
(a)
$
12,662
$
10,978
$
12,391
$
12,527
$
10,707
Less: Average goodwill and other
intangible assets
(220
)
(225
)
(221
)
(221
)
(226
)
Average tangible common shareholders’
equity (b)
$
12,442
$
10,753
$
12,170
$
12,306
$
10,481
Net income available to common
shareholders (c)
$
392
$
350
$
364
$
756
$
666
Return on average common shareholders’
equity (c) / (a)
12.43
%
12.77
%
11.91
%
12.17
%
12.54
%
Return on average tangible common
shareholders’ equity (c) / (b)
12.65
%
13.04
%
12.12
%
12.39
%
12.81
%
__________
(1)
Return on average tangible common
shareholders’ equity is considered a non-GAAP financial measure,
and is reconciled to GAAP return on average common shareholders’
equity in this table.
(2)
Ratios are annualized.
Book Value per Common Share and Tangible Book
Value per Common Share (1)
As of
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
(in millions, except per share
amounts)
Total shareholders’ equity
$
16,426
$
16,154
$
15,898
$
14,802
$
13,275
Less: Preferred stock
(3,633
)
(3,633
)
(3,633
)
(2,893
)
(2,143
)
Total common shareholders’ equity (a)
12,793
12,521
12,265
11,909
11,132
Less: Goodwill and other intangible
assets
(220
)
(221
)
(222
)
(223
)
(224
)
Total tangible common shareholders’ equity
(b)
$
12,573
$
12,300
$
12,043
$
11,686
$
10,908
Number of shares of common stock
outstanding (c)
180
180
179
179
177
Book value per common share (a) / (c)
$
71.03
$
69.70
$
68.34
$
66.44
$
62.99
Tangible book value per common share (b) /
(c)
$
69.81
$
68.47
$
67.10
$
65.19
$
61.72
__________
(1)
Tangible book value per common
share is considered a non-GAAP financial measure, and is reconciled
to GAAP book value per common share in this table.
Regulatory Capital Ratios and Components (1), (2)
As of
June 30, 2022
(3)
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
($ in millions)
Capital Ratios:
Tier 1 leverage ratio (Tier 1 capital to
average assets)
8.59
%
8.70
%
8.76
%
8.55
%
8.05
%
Common Equity Tier 1 capital to
risk-weighted assets
9.15
%
9.48
%
9.65
%
9.81
%
9.51
%
Tier 1 capital to risk-weighted assets
11.75
%
12.25
%
12.56
%
12.25
%
11.38
%
Total capital to risk-weighted assets
12.82
%
13.37
%
13.72
%
13.45
%
12.60
%
Regulatory Capital:
Common Equity Tier 1 capital
$
12,791
$
12,418
$
12,045
$
11,674
$
10,875
Tier 1 capital
$
16,424
$
16,051
$
15,678
$
14,566
$
13,018
Total capital
$
17,924
$
17,521
$
17,124
$
15,994
$
14,421
Assets:
Average assets
$
191,202
$
184,410
$
178,969
$
170,373
$
161,637
Risk-weighted assets
$
139,811
$
131,024
$
124,820
$
118,941
$
114,406
__________
(1)
As defined by regulatory capital
rules.
(2)
Beginning in 2020, ratios and
amounts reflect the Bank's election to delay the estimated impact
of the Current Expected Credit Losses (“CECL”) allowance
methodology on its regulatory capital, average assets and
risk-weighted assets over a five-year transition period ending
December 31, 2024.
(3)
Ratios and amounts as of June 30,
2022 are preliminary.
As of
Wealth Management Assets
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
($ in millions)
First Republic Investment Management
$
100,204
$
108,771
$
109,130
$
101,105
$
99,459
Brokerage and investment:
Brokerage
116,979
128,129
128,258
115,793
112,359
Money market mutual funds
10,510
18,543
23,673
18,074
13,109
Total brokerage and investment
127,489
146,672
151,931
133,867
125,468
Trust Company:
Trust
14,994
14,344
13,695
12,220
11,496
Custody
4,099
4,408
4,687
4,533
4,439
Total Trust Company
19,093
18,752
18,382
16,753
15,935
Total Wealth Management Assets
$
246,786
$
274,195
$
279,443
$
251,725
$
240,862
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220714005204/en/
Investors: Andrew Greenebaum / Lasse Glassen Addo
Investor Relations agreenebaum@addo.com lglassen@addo.com (310)
829-5400 Media: Greg Berardi Blue Marlin Partners
gberardi@firstrepublic.com (415) 239-7826
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