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First Republic Reports Strong 2019 Results

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

Contacts:

Investors:
Andrew Greenebaum / Lasse Glassen
Addo Investor Relations
agreenebaum@addoir.com
lglassen@addoir.com
(310) 829-5400

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