Year-Over-Year Net Interest Income Rose 21%
Tangible Book Value Per Share Increased 11%
First Republic Bank (NYSE: FRC) today announced financial
results for the quarter ended September 30, 2022.
“First Republic had another quarter of strong results,” said
Mike Roffler, Chief Executive Officer and President. “Loans were up
very nicely, and, importantly, credit quality remains excellent.
This quarter’s results demonstrate the durability of our
client-focused business model and service culture.”
Quarterly Highlights
Financial Results
– Year-over-year:
– Revenues were $1.5 billion, up 16.9%.
– Net interest income was $1.3 billion, up
20.6%.
– Net income was $445 million, up 20.5%.
– Diluted earnings per share of $2.21, up
15.7%.
– Tangible book value per share was $72.54,
up 11.3%.
– Loan originations totaled $18.0 billion, our second best
quarter ever.
– Net interest margin was 2.71%, compared to 2.80% for the prior
quarter.
– Efficiency ratio was 60.3%, compared to 60.5% for the prior
quarter.
Continued Capital and Credit
Strength
– Tier 1 leverage ratio was 8.59%.
– Nonperforming assets were a low 6 basis points of total
assets.
– Net charge-offs for the quarter were only $1 million, or less
than 1 basis point of average loans.
Continued Franchise Growth
– Year-over-year:
– Loans totaled $158.8 billion, up 23.7%.
– Deposits were $172.4 billion, up 18.6%.
– Wealth management assets were $249.5
billion, down 0.9%.
– Wealth management revenues were $214
million, up 2.4%.
“Revenue and net interest income growth were strong during the
third quarter,” said Olga Tsokova, Chief Financial Officer (Acting)
and Chief Accounting Officer. “We’re pleased to have accessed the
equity capital markets during the quarter, and we continue to
maintain a very strong capital position.”
Quarterly Cash Dividend of $0.27 per Share
The Bank declared a cash dividend for the third quarter of $0.27
per share of common stock, which is payable on November 10, 2022 to
shareholders of record as of October 27, 2022.
Strong Asset Quality
Credit quality remains very strong. Nonperforming assets were at
a very low 6 basis points of total assets at September 30,
2022.
The provision for credit losses for the quarter was $36 million,
which was primarily driven by loan growth. The Bank had modest net
loan charge-offs of only $1 million for the quarter. For the first
nine months of 2022, the provision for credit losses was $77
million, with net loan charge-offs of only $2 million.
Continued Book Value Growth
Book value per common share at September 30, 2022 was $73.74, up
11.0% from a year ago. Tangible book value per common share at
September 30, 2022 was $72.54, up 11.3% from a year ago.
Capital Strength
The Bank’s Tier 1 leverage ratio was 8.59% at both September 30,
2022 and June 30, 2022.
During the third quarter, the Bank sold 2,587,500 new shares of
common stock in an underwritten public offering, which added $402
million to common equity.
Continued Franchise Growth
Loan Originations
Loan originations were $18.0 billion for the quarter, our second
best quarter ever. This was up 16.4% from the same quarter a year
ago, primarily due to an increase in multifamily lending.
Single family loan originations were 39% of the total loan
origination volume for the quarter and had a weighted average
loan-to-value ratio of 63%. Multifamily and commercial real estate
loans originated were 21% of total originations and had a weighted
average loan-to-value ratio of 51%. In addition, capital call lines
of credit originated were 18% of total originations.
Loans totaled $158.8 billion at September 30, 2022, up 23.7%
compared to a year ago. Our loan growth was primarily due to
increases in single family, multifamily, commercial real estate,
stock secured and other business loans.
Investments
Total investment securities at September 30, 2022 were $31.6
billion, a slight increase compared to the prior quarter and a
30.7% increase compared to a year ago.
High-quality liquid assets, including eligible cash, totaled
$27.5 billion at September 30, 2022, and represented 13.7% of
quarterly average total assets.
Deposit Growth and Funding
Total deposits increased to $172.4 billion, up 18.6% compared to
a year ago. Deposits were our primary source of funding at
September 30, 2022, and represented 93% of our funding base.
At September 30, 2022, our deposit base consisted of 64.2% of
checking deposits, 26.6% of other liquid deposits including money
market checking and money marketing savings and passbooks, and 9.2%
of CDs.
Other sources of funding at September 30, 2022 included
short-term and long-term FHLB advances, which totaled $11.0
billion, up 42.9% compared to a year ago.
Deposits had an average rate paid of 41 basis points during the
quarter, and average total funding costs were 55 basis points
during the quarter.
Wealth Management
Total wealth management assets were $249.5 billion at September
30, 2022, up slightly compared to the prior quarter and down
slightly compared to a year ago. The variances in wealth management
assets were driven by net client inflow, partially offset by market
decline. Wealth management assets at September 30, 2022 included
investment management assets of $100.1 billion, brokerage assets
and money market mutual funds of $130.2 billion, and trust and
custody assets of $19.2 billion.
Wealth management fees, which consist of investment management,
brokerage and investment, insurance, trust and foreign exchange fee
income, totaled $214 million for the quarter, up 2.4% compared to
last year’s third quarter. Such revenues represented 14.1% of the
Bank’s total revenues for the quarter.
Investment management fees were $142 million for the quarter,
down 4.6% compared to $149 million a year ago. The decrease was
primarily driven by the level and mix of wealth management assets,
which was impacted by adverse market conditions.
Income Statement and Key Ratios
Revenue Growth
Total revenues were $1.5 billion for the quarter, up 16.9%
compared to the third quarter a year ago.
Net Interest Income Growth
Net interest income was $1.3 billion for the quarter, up 20.6%
compared to the third quarter a year ago. The increase in net
interest income for the quarter resulted primarily from growth in
average interest-earning assets and the increase in net interest
margin compared to a year ago.
Net Interest Margin
The net interest margin declined to 2.71% in the third quarter,
from 2.80% in the prior quarter. The decline was due to average
funding costs increasing more rapidly than the offsetting increase
in the average yields on interest-earning assets.
Noninterest Income
Noninterest income was $254 million for the quarter, up 1.8%
compared to the third quarter a year ago. The increase was
primarily driven by higher brokerage and investment fees, partially
offset by lower investment management fees.
Noninterest Expense and Efficiency
Ratio
Noninterest expense was $919 million for the quarter, up 15.1%
compared to the third 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 expense due
to an increase in events held in person.
The efficiency ratio was 60.3% for the quarter, compared to
61.3% for last year’s third quarter. For the first nine months of
2022, the efficiency ratio was 60.9%, compared to 62.2% for the
first nine months of 2021.
Income Taxes
The Bank’s effective tax rate for the third quarter of 2022 was
21.6%, compared to 21.4% for the third quarter a year ago. The
slight increase was primarily the result of lower excess tax
benefits upon vesting of stock awards, partially offset by a tax
refund from an amended tax return.
For the first nine months of 2022, the Bank’s effective tax rate
was 22.6%, compared to 20.2% 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 third quarter 2022 earnings conference
call is scheduled for October 14, 2022 at 7:00 a.m. PT / 10:00 a.m.
ET. To access the event by telephone, please dial (888) 204-4368
and provide confirmation code 2879019 approximately 15 minutes
prior to the start time (to allow time for registration).
International callers should dial +1 (856) 344-9299 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 webcast will 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; 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 the COVID-19
pandemic (collectively referred to as “COVID-19” herein);
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, which
may result in costs, fees, penalties, business restrictions,
reputational harm or other adverse consequences; 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;
changes in federal, state or local tax laws; 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 September
30,
Quarter Ended June
30,
Nine Months Ended
September 30,
(in millions, except per share
amounts)
2022
2021
2022
2022
2021
Interest income:
Loans
$
1,269
$
947
$
1,094
$
3,365
$
2,733
Investments
219
161
209
608
459
Cash and cash equivalents
27
5
11
43
11
Other
3
5
2
7
15
Total interest income
1,518
1,118
1,316
4,023
3,218
Interest expense:
Deposits
169
23
37
226
75
Borrowings
80
43
33
137
149
Total interest expense
249
66
70
363
224
Net interest income
1,269
1,052
1,246
3,660
2,994
Provision for credit losses
36
34
31
77
35
Net interest income after provision for
credit losses
1,233
1,018
1,215
3,583
2,959
Noninterest income:
Investment management fees
142
149
164
471
404
Brokerage and investment fees
34
23
33
89
55
Insurance fees
6
6
3
13
12
Trust fees
7
6
7
21
18
Foreign exchange fee income
25
26
25
73
64
Deposit fees
7
7
8
21
20
Loan and related fees
10
8
10
29
24
Income from investments in life
insurance
23
20
11
48
58
Other income, net
—
6
2
3
18
Total noninterest income
254
251
263
768
673
Noninterest expense:
Salaries and employee benefits
557
514
567
1,684
1,459
Information systems
124
91
114
345
263
Occupancy
73
67
70
212
188
Professional fees
31
27
27
81
74
Advertising and marketing
19
14
16
48
43
FDIC assessments
17
14
15
47
39
Other expenses
98
71
104
281
215
Total noninterest expense
919
798
913
2,698
2,281
Income before provision for income
taxes
568
471
565
1,653
1,351
Provision for income taxes
123
101
132
374
273
Net income
445
370
433
1,279
1,078
Dividends on preferred stock
40
25
41
118
67
Net income available to common
shareholders
$
405
$
345
$
392
$
1,161
$
1,011
Basic earnings per common share
$
2.23
$
1.94
$
2.18
$
6.44
$
5.73
Diluted earnings per common share
$
2.21
$
1.91
$
2.16
$
6.38
$
5.66
Weighted average shares—basic
182
178
180
180
176
Weighted average shares—diluted
183
180
181
182
179
CONSOLIDATED BALANCE
SHEETS
As of
($ in millions)
September 30,
2022
June 30, 2022
December 31,
2021
September 30,
2021
ASSETS
Cash and cash equivalents
$
5,532
$
6,237
$
12,947
$
12,279
Debt securities available-for-sale
3,348
3,438
3,381
2,961
Debt securities held-to-maturity, net
28,247
27,710
22,292
21,193
Equity securities (fair value)
22
23
28
32
Loans:
Single family
94,345
89,295
76,793
73,491
Home equity lines of credit
2,801
2,699
2,584
2,429
Single family construction
1,154
1,117
993
985
Multifamily
20,364
18,346
15,966
15,417
Commercial real estate
10,039
9,182
8,531
8,486
Multifamily/commercial construction
2,089
2,019
1,927
2,064
Capital call lines of credit
9,393
10,727
10,999
9,088
Tax-exempt
3,655
3,605
3,680
3,578
Other business
4,629
4,638
3,961
3,554
Paycheck Protection Program ("PPP")
30
82
545
876
Stock secured
4,251
4,041
3,435
3,120
Other secured
3,001
2,774
2,457
2,261
Unsecured
3,016
2,994
3,085
3,026
Total loans
158,767
151,519
134,956
128,375
Allowance for credit losses
(760
)
(729
)
(694
)
(668
)
Loans, net
158,007
150,790
134,262
127,707
Investments in life insurance
3,409
3,340
2,650
2,628
Tax credit investments
1,285
1,304
1,220
1,181
Premises, equipment and leasehold
improvements, net
483
474
454
431
Goodwill and other intangible assets
219
220
222
223
Other assets
4,557
4,372
3,631
3,936
Total Assets
$
205,109
$
197,908
$
181,087
$
172,571
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking
$
69,931
$
75,208
$
70,840
$
65,833
Interest-bearing checking
40,706
43,421
41,248
34,089
Money market checking
25,582
21,235
20,303
21,861
Money market savings and passbooks
20,231
18,796
16,573
15,947
Certificates of deposit
15,932
6,987
7,357
7,596
Total Deposits
172,382
165,647
156,321
145,326
Short-term FHLB advances
5,100
6,300
—
—
Long-term FHLB advances
5,900
4,700
3,700
7,700
Senior notes
500
499
998
998
Subordinated notes
779
779
779
779
Other liabilities
3,329
3,557
3,391
2,966
Total Liabilities
187,990
181,482
165,189
157,769
Shareholders’ Equity:
Preferred stock
3,633
3,633
3,633
2,893
Common stock
2
2
2
2
Additional paid-in capital
6,230
5,782
5,725
5,685
Retained earnings
7,591
7,236
6,569
6,242
Accumulated other comprehensive loss
(337
)
(227
)
(31
)
(20
)
Total Shareholders’ Equity
17,119
16,426
15,898
14,802
Total Liabilities and Shareholders’
Equity
$
205,109
$
197,908
$
181,087
$
172,571
Quarter Ended September
30,
Quarter Ended June 30,
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
$
4,733
$
27
2.22
%
$
13,384
$
5
0.15
%
$
5,713
$
11
0.80
%
Investment securities:
U.S. Government-sponsored agency
securities
165
1
2.05
%
100
0
1.59
%
165
1
2.05
%
Agency residential and commercial MBS
10,642
59
2.23
%
6,200
28
1.84
%
10,667
56
2.10
%
Other residential and commercial MBS
20
0
2.97
%
28
1
2.25
%
22
0
2.37
%
Tax-exempt municipal securities
17,389
169
3.91
%
14,173
140
3.97
%
16,711
161
3.86
%
Taxable municipal securities
1,773
14
3.09
%
1,670
13
2.98
%
1,774
14
3.18
%
Other investment securities
1,440
11
2.87
%
1,405
11
2.86
%
1,440
10
2.87
%
Total investment securities
31,429
254
3.24
%
23,576
193
3.26
%
30,779
242
3.15
%
Loans:
Residential real estate
95,588
701
2.93
%
74,233
520
2.80
%
89,358
620
2.78
%
Multifamily
19,139
171
3.48
%
15,125
134
3.49
%
17,480
153
3.46
%
Commercial real estate
9,558
94
3.84
%
8,357
82
3.82
%
8,983
85
3.77
%
Multifamily/commercial construction
2,062
26
5.05
%
2,963
34
4.54
%
2,004
24
4.60
%
Business
18,664
205
4.30
%
15,928
129
3.17
%
18,469
160
3.43
%
PPP
48
1
9.49
%
1,123
12
4.01
%
138
3
8.46
%
Other
9,957
77
3.02
%
8,158
43
2.06
%
9,628
56
2.31
%
Total loans
155,016
1,275
3.26
%
125,887
954
3.00
%
146,060
1,101
3.00
%
FHLB stock
366
3
3.26
%
266
5
6.99
%
201
2
3.40
%
Total interest-earning assets
191,544
1,559
3.23
%
163,113
1,157
2.81
%
182,753
1,356
2.96
%
Noninterest-earning cash
451
391
442
Goodwill and other intangibles
219
224
220
Other assets
8,199
6,891
7,759
Total noninterest-earning assets
8,869
7,506
8,421
Total Assets
$
200,413
$
170,619
$
191,174
Liabilities and Shareholders’
Equity:
Deposits:
Interest-bearing checking
$
41,404
27
0.26
%
$
33,642
1
0.01
%
$
41,878
5
0.05
%
Money market checking
21,817
65
1.19
%
21,861
6
0.11
%
20,873
13
0.25
%
Money market savings and passbooks
18,616
47
1.01
%
15,831
7
0.16
%
17,682
11
0.25
%
CDs
9,607
30
1.26
%
7,779
9
0.46
%
6,975
8
0.43
%
Total interest-bearing deposits (3)
91,444
169
0.74
%
79,113
23
0.11
%
87,408
37
0.17
%
Borrowings:
Federal funds purchased
371
2
2.31
%
0
0
0.09
%
186
0
0.73
%
Short-term FHLB advances
7,586
45
2.36
%
—
—
—
%
2,953
9
1.20
%
Long-term FHLB advances
5,308
21
1.49
%
8,545
28
1.29
%
4,097
11
1.09
%
Senior notes
499
3
2.15
%
997
6
2.42
%
691
4
2.38
%
Subordinated notes
779
9
4.68
%
779
9
4.68
%
779
9
4.68
%
Total borrowings
14,543
80
2.16
%
10,321
43
1.66
%
8,706
33
1.54
%
Total interest-bearing liabilities (4)
105,987
249
0.93
%
89,434
66
0.29
%
96,114
70
0.29
%
Noninterest-bearing checking
73,851
64,008
75,411
Other noninterest-bearing liabilities
3,685
2,904
3,354
Total noninterest-bearing liabilities
77,536
66,912
78,765
Preferred shareholders’ equity
3,633
2,729
3,633
Common shareholders’ equity
13,257
11,544
12,662
Total Liabilities and Shareholders’
Equity
$
200,413
$
170,619
$
191,174
Net interest spread (5)
2.30
%
2.52
%
2.66
%
Net interest income (fully
taxable-equivalent
basis) and net interest margin (6)
$
1,310
2.71
%
$
1,091
2.65
%
$
1,286
2.80
%
Reconciliation of tax-equivalent net
interest income to
net interest income: (7)
Municipal securities tax-equivalent
adjustment
(34
)
(31
)
(33
)
Business loans tax-equivalent
adjustment
(7
)
(8
)
(7
)
Net interest income
$
1,269
$
1,052
$
1,246
Supplemental information:
Total deposits (interest-bearing and
noninterest-bearing)
$
165,295
$
169
0.41
%
$
143,121
$
23
0.06
%
$
162,819
$
37
0.09
%
Total deposits (interest-bearing and
noninterest-bearing) and borrowings
$
179,838
$
249
0.55
%
$
153,442
$
66
0.17
%
$
171,525
$
70
0.16
%
Nine Months Ended September
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
$
7,238
$
43
0.79
%
$
12,045
$
11
0.12
%
Investment securities:
U.S. Government-sponsored agency
securities
149
2
1.87
%
98
1
1.54
%
Agency residential and commercial MBS
10,156
154
2.02
%
5,826
88
2.01
%
Other residential and commercial MBS
22
0
2.43
%
30
1
2.04
%
Tax-exempt municipal securities
16,572
478
3.85
%
13,312
403
4.04
%
Taxable municipal securities
1,754
41
3.08
%
1,456
33
2.98
%
Other investment securities
1,432
31
2.86
%
1,073
23
2.78
%
Total investment securities
30,085
706
3.13
%
21,795
549
3.35
%
Loans:
Residential real estate
89,169
1,888
2.82
%
69,881
1,480
2.82
%
Multifamily
17,644
464
3.46
%
14,484
384
3.50
%
Commercial real estate
9,061
261
3.80
%
8,170
238
3.84
%
Multifamily/commercial construction
1,999
72
4.76
%
2,933
103
4.63
%
Business
18,574
510
3.62
%
15,636
382
3.22
%
PPP
188
11
7.96
%
1,649
43
3.42
%
Other
9,551
180
2.48
%
7,723
124
2.12
%
Total loans
146,186
3,386
3.07
%
120,476
2,754
3.03
%
FHLB stock
228
7
4.02
%
307
15
6.51
%
Total interest-earning assets
183,737
4,142
2.99
%
154,623
3,329
2.86
%
Noninterest-earning cash
448
397
Goodwill and other intangibles
220
225
Other assets
7,704
6,572
Total noninterest-earning assets
8,372
7,194
Total Assets
$
192,109
$
161,817
Liabilities and Shareholders’
Equity:
Deposits:
Interest-bearing checking
$
41,231
33
0.11
%
$
32,993
5
0.02
%
Money market checking
21,450
83
0.52
%
20,237
20
0.13
%
Money market savings and passbooks
18,077
65
0.48
%
14,760
19
0.17
%
CDs
7,941
45
0.76
%
8,075
31
0.51
%
Total interest-bearing deposits (3)
88,699
226
0.34
%
76,065
75
0.13
%
Borrowings:
Federal funds purchased
187
2
1.79
%
0
0
0.09
%
Short-term FHLB advances
3,541
54
2.04
%
0
0
0.15
%
Long-term FHLB advances
4,374
41
1.21
%
9,966
104
1.38
%
Senior notes
728
13
2.35
%
997
18
2.42
%
Subordinated notes
779
27
4.68
%
778
27
4.68
%
Total borrowings
9,609
137
1.90
%
11,741
149
1.69
%
Total interest-bearing liabilities (4)
98,308
363
0.49
%
87,806
224
0.34
%
Noninterest-bearing checking
73,844
57,961
Other noninterest-bearing liabilities
3,551
2,780
Total noninterest-bearing liabilities
77,395
60,741
Preferred shareholders' equity
3,633
2,281
Common shareholders' equity
12,773
10,989
Total Liabilities and Shareholders’
Equity
$
192,109
$
161,817
Net interest spread (5)
2.50
%
2.52
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
3,779
2.73
%
$
3,105
2.67
%
Reconciliation of tax-equivalent net
interest income to net interest
income: (7)
Municipal securities tax-equivalent
adjustment
(98
)
(89
)
Business loans tax-equivalent
adjustment
(21
)
(22
)
Net interest income
$
3,660
$
2,994
Supplemental information:
Total deposits (interest-bearing and
noninterest-bearing)
$
162,543
$
226
0.19
%
$
134,026
$
75
0.07
%
Total deposits (interest-bearing and
noninterest-bearing) and borrowings
$
172,152
$
363
0.28
%
$
145,767
$
224
0.20
%
__________
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 September
30,
Quarter Ended June
30,
Nine Months Ended
September 30,
2022
2021
2022
2022
2021
($ in millions, except per share
amounts)
Selected Financial Data and
Ratios:
Return on average assets (1), (2)
0.88
%
0.86
%
0.91
%
0.89
%
0.89
%
Return on average common shareholders’
equity (1)
12.12
%
11.87
%
12.43
%
12.16
%
12.30
%
Return on average tangible common
shareholders’
equity (1), (3)
12.33
%
12.10
%
12.65
%
12.37
%
12.56
%
Average equity to average assets
8.43
%
8.37
%
8.52
%
8.54
%
8.20
%
Dividends per common share
$
0.27
$
0.22
$
0.27
$
0.76
$
0.64
Dividend payout ratio
12.2
%
11.5
%
12.5
%
11.9
%
11.3
%
Efficiency ratio (4)
60.3
%
61.3
%
60.5
%
60.9
%
62.2
%
Selected Asset Quality Ratios:
Net loan charge-offs
$
1.0
$
0.3
$
1.3
$
2.0
$
2.0
Net loan charge-offs to average total
loans (1)
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Selected Ratios (period-end):
Book value per common share
$
73.74
$
66.44
$
71.03
Tangible book value per common share
(5)
$
72.54
$
65.19
$
69.81
__________
(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 September
30,
Quarter Ended June
30,
Nine Months Ended
September 30,
2022
2021
2022
2022
2021
Effective tax rate, prior to excess tax
benefits—stock
awards and tax refund from an amended tax
return
23.3
%
23.2
%
24.0
%
23.6
%
22.5
%
Excess tax benefits—stock awards
(0.6
)
(1.8
)
(0.6
)
(0.6
)
(2.3
)
Tax refund from an amended tax return
(1.1
)
—
—
(0.4
)
—
Effective tax rate
21.6
%
21.4
%
23.4
%
22.6
%
20.2
%
Provision (Reversal of Provision) for
Credit Losses
Quarter Ended September
30,
Quarter Ended June
30,
Nine Months Ended
September 30,
2022
2021
2022
2022
2021
($ in millions)
Debt securities held-to-maturity
$
—
$
—
$
1
$
2
$
2
Loans
32
32
29
68
35
Unfunded loan commitments
4
2
1
7
(2
)
Total provision
$
36
$
34
$
31
$
77
$
35
Loan Originations
Quarter Ended September
30,
Quarter Ended June
30,
Nine Months Ended
September 30,
2022
2021
2022
2022
2021
($ in millions)
Single family
$
6,999
$
6,998
$
10,638
$
26,013
$
22,562
Home equity lines of credit
708
589
744
2,141
1,823
Single family construction
385
283
540
1,192
723
Multifamily
2,658
1,199
2,330
6,697
3,092
Commercial real estate
1,141
725
816
2,523
1,497
Multifamily/commercial construction
410
356
492
1,286
939
Capital call lines of credit
3,232
3,129
3,096
9,348
9,181
Tax-exempt
178
38
92
360
460
Other business
598
533
1,078
2,214
2,079
PPP
—
—
—
—
725
Stock secured
791
753
915
2,842
2,239
Other secured
563
547
815
2,044
1,584
Unsecured
333
304
413
1,115
1,022
Total loans originated
$
17,996
$
15,454
$
21,969
$
57,775
$
47,926
As of
Asset Quality Information
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
($ in millions)
Nonperforming assets:
Nonaccrual loans
$
120
$
137
$
140
$
139
$
127
Other real estate owned
—
—
—
—
—
Total nonperforming assets
$
120
$
137
$
140
$
139
$
127
Nonaccrual loans to total loans
0.08
%
0.09
%
0.10
%
0.10
%
0.10
%
Nonperforming assets to total assets
0.06
%
0.07
%
0.08
%
0.08
%
0.07
%
Accruing loans 90 days or more past
due
$
—
$
—
$
—
$
—
$
—
Restructured accruing loans
$
12
$
12
$
12
$
13
$
10
Allowance for loan credit losses to:
Total loans
0.48
%
0.48
%
0.50
%
0.51
%
0.52
%
Nonaccrual loans
635.3
%
531.2
%
498.8
%
500.5
%
524.4
%
As of
Loan Servicing Portfolio
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
($ in millions)
Loans serviced for investors
$
3,688
$
3,919
$
4,298
$
4,677
$
5,117
Return on Average Common
Shareholders’
Equity and Return on Average
Tangible
Common Shareholders’ Equity (1),
(2)
Quarter Ended September
30,
Quarter Ended June
30,
Nine Months Ended
September 30,
2022
2021
2022
2022
2021
($ in millions)
Average common shareholders’ equity
(a)
$
13,257
$
11,544
$
12,662
$
12,773
$
10,989
Less: Average goodwill and other
intangible assets
(219
)
(224
)
(220
)
(220
)
(225
)
Average tangible common shareholders’
equity (b)
$
13,038
$
11,320
$
12,442
$
12,553
$
10,764
Net income available to common
shareholders (c)
$
405
$
345
$
392
$
1,161
$
1,011
Return on average common shareholders’
equity (c) / (a)
12.12
%
11.87
%
12.43
%
12.16
%
12.30
%
Return on average tangible common
shareholders’
equity (c) / (b)
12.33
%
12.10
%
12.65
%
12.37
%
12.56
%
__________
(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
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
(in millions, except per share
amounts)
Total shareholders’ equity
$
17,119
$
16,426
$
16,154
$
15,898
$
14,802
Less: Preferred stock
(3,633
)
(3,633
)
(3,633
)
(3,633
)
(2,893
)
Total common shareholders’ equity (a)
13,486
12,793
12,521
12,265
11,909
Less: Goodwill and other intangible
assets
(219
)
(220
)
(221
)
(222
)
(223
)
Total tangible common shareholders’ equity
(b)
$
13,267
$
12,573
$
12,300
$
12,043
$
11,686
Number of shares of common stock
outstanding (c)
183
180
180
179
179
Book value per common share (a) / (c)
$
73.74
$
71.03
$
69.70
$
68.34
$
66.44
Tangible book value per common share (b) /
(c)
$
72.54
$
69.81
$
68.47
$
67.10
$
65.19
__________
(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
September 30, 2022
(3)
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
($ in millions)
Capital Ratios:
Tier 1 leverage ratio (Tier 1 capital to
average assets)
8.59
%
8.59
%
8.70
%
8.76
%
8.55
%
Common Equity Tier 1 capital to
risk-weighted assets
9.28
%
9.15
%
9.48
%
9.65
%
9.81
%
Tier 1 capital to risk-weighted assets
11.76
%
11.75
%
12.25
%
12.56
%
12.25
%
Total capital to risk-weighted assets
12.81
%
12.82
%
13.37
%
13.72
%
13.45
%
Regulatory Capital:
Common Equity Tier 1 capital
$
13,586
$
12,791
$
12,418
$
12,045
$
11,674
Tier 1 capital
$
17,219
$
16,424
$
16,051
$
15,678
$
14,566
Total capital
$
18,755
$
17,924
$
17,521
$
17,124
$
15,994
Assets:
Average assets
$
200,486
$
191,202
$
184,410
$
178,969
$
170,373
Risk-weighted assets
$
146,445
$
139,811
$
131,024
$
124,820
$
118,941
__________
(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 September 30,
2022 are preliminary.
As of
Wealth Management Assets
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
($ in millions)
First Republic Investment Management
$
100,125
$
100,204
$
108,771
$
109,130
$
101,105
Brokerage and investment:
Brokerage
119,299
116,979
128,129
128,258
115,793
Money market mutual funds
10,891
10,510
18,543
23,673
18,074
Total brokerage and investment
130,190
127,489
146,672
151,931
133,867
Trust Company:
Trust
15,270
14,994
14,344
13,695
12,220
Custody
3,943
4,099
4,408
4,687
4,533
Total Trust Company
19,213
19,093
18,752
18,382
16,753
Total Wealth Management Assets
$
249,528
$
246,786
$
274,195
$
279,443
$
251,725
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221013006051/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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