Net Interest Income Grew 17% Year-Over-Year
Tangible Book Value Per Share Increased 11%
Year-Over-Year
First Republic Bank (NYSE: FRC) today announced financial
results for the quarter and year ended December 31, 2022.
“2022 was another terrific year of safe, consistent and organic
growth,” said Mike Roffler, Chief Executive Officer and President.
“We achieved our highest Net Promoter Score ever, which reflects
our unwavering focus on exceptional client service.”
Full Year Highlights
Financial Results
- Revenues were $5.9 billion, up 16.5%.
- Net interest income was $4.8 billion, up 17.5%.
- Net income was $1.7 billion, up 12.7%.
- Diluted earnings per share of $8.25, up 7.4%.
- Loan originations totaled $73.4 billion, our best year
ever.
- Book value per share was $75.38, up 10.3%.
- Tangible book value per share was $74.19, up 10.6%. (1)
- Efficiency ratio was 61.7%, compared to 62.5% last year.
Continued Capital and Credit
Strength
- Tier 1 leverage ratio was 8.51%.
- Nonperforming assets were a low 5 basis points of total
assets.
- Net charge-offs were only $2.9 million, or less than 1 basis
point of average loans.
Continued Franchise Growth
- Loans totaled $166.9 billion, up 23.6%.
- Deposits were $176.4 billion, up 12.9%.
- Wealth management assets were $271.2 billion, down 2.9%.
- Wealth management revenues were $877 million, up 15.4%.
Quarterly Highlights
Financial Results
- Compared to last year’s fourth quarter:
- Revenues were $1.4 billion, up 5.2%.
- Net interest income was $1.2 billion, up 4.9%.
- Net income was $386 million, down 3.6%.
- Diluted earnings per share of $1.88, down 6.9%.
- Loan originations totaled $15.6 billion.
- Net charge-offs were $0.9 million.
- Compared to the prior quarter:
- Net interest margin was 2.45%, compared to 2.71%.
- Efficiency ratio was 63.9%, compared to 60.3%.
- Wealth management assets were up 8.7%
“Revenue and net interest income growth were strong in 2022,”
said Neal Holland, Chief Financial Officer. “Credit quality remains
excellent, with nonperforming assets near all-time lows. Tangible
book value per share increased 11%.”
Quarterly Cash Dividend of $0.27 per Share
The Bank declared a cash dividend for the fourth quarter of
$0.27 per share of common stock, which is payable on February 9,
2023 to shareholders of record as of January 26, 2023.
Strong Asset Quality
Credit quality remains strong. Nonperforming assets were at a
very low 5 basis points of total assets at December 31, 2022.
The provision for credit losses for the quarter was $30 million,
with net loan charge-offs of only $0.9 million for the quarter. For
the year, the provision for credit losses was $107 million, with
net loan charge-offs of only $2.9 million.
Continued Book Value Growth
Book value per common share at December 31, 2022 was $75.38, up
10.3% from a year ago. Tangible book value per common share at
December 31, 2022 was $74.19, up 10.6% from a year ago. (1)
Capital Strength
The Bank’s Tier 1 leverage ratio was 8.51% at December 31, 2022,
compared to 8.59% at September 30, 2022.
Continued Franchise Growth
Loan Originations
Loan originations were $15.6 billion for the quarter. This was
down 7.5% from the same quarter a year ago. For 2022, loan
originations totaled $73.4 billion, up 13.2% compared to the prior
year. The decrease for the quarter was primarily due to decreases
in capital call lines of credit and single family lending. The
increase for the year was primarily due to increases in single
family, multifamily and commercial real estate lending.
Single family loan originations were 38% of the total loan
origination volume for the quarter and 43% for the year, and had a
weighted average loan-to-value ratio of 61% for the year.
Multifamily and commercial real estate loans originated were 16% of
total originations for both the quarter and the year, and had a
weighted average loan-to-value ratio of 51% for the year. In
addition, capital call lines of credit originated were 16% of total
originations for both the quarter and the year.
Loans totaled $166.9 billion at December 31, 2022, up 23.6%
compared to a year ago. The increase was driven by growth in
substantially all loan categories, partially offset by lower
capital call lines of credit outstanding.
Investments
Total investment securities at December 31, 2022 were $31.7
billion, a slight increase compared to September 30, 2022 and a
23.4% increase compared to a year ago.
High-quality liquid assets, including eligible cash, totaled
$26.0 billion at December 31, 2022, and represented 12.6% of
quarterly average total assets.
Deposit Growth and Funding
Total deposits increased to $176.4 billion, up 12.9% compared to
a year ago. Deposits were our primary source of funding at December
31, 2022, and represented 92% of our large funding base.
At December 31, 2022, our deposit base consisted of 58.8%
checking deposits, 26.9% other liquid deposits including money
market checking and money market savings and passbooks, and 14.3%
CDs.
Other sources of funding at December 31, 2022 included
short-term and long-term FHLB advances, which totaled $14.0
billion.
Deposits had an average rate paid of 99 basis points during the
quarter, and average total funding costs were 112 basis points
during the quarter.
Wealth Management
Total wealth management assets were $271.2 billion at December
31, 2022, up 8.7% compared to the prior quarter and down 2.9%
compared to a year ago. The increase in wealth management assets
for the quarter was due to net client inflow and market
appreciation. The decrease in wealth management assets for the year
was due to market decline, meaningfully offset by net client
inflow. Wealth management assets at December 31, 2022 included
investment management assets of $112.2 billion, brokerage assets
and money market mutual funds of $138.9 billion, and trust and
custody assets of $20.1 billion.
Wealth management fees, which consist of investment management,
brokerage and investment, insurance, trust and foreign exchange fee
income, totaled $210 million for the quarter, up slightly compared
to last year’s fourth quarter. For 2022, wealth management fees
were $877 million, an increase of 15.4% compared to the prior year.
Such revenues represented 14.6% of the Bank’s total revenues for
the quarter and 15.0% of the Bank’s total revenues for the
year.
Income Statement and Key Ratios
Revenue Growth
Total revenues were $1.4 billion for the quarter, up 5.2%
compared to the fourth quarter a year ago and were $5.9 billion for
2022, up 16.5% compared to the prior year.
Net Interest Income Growth
Net interest income was $1.2 billion for the quarter, up 4.9%
compared to the fourth quarter a year ago, and was $4.8 billion for
2022, up 17.5% compared to the prior year. The increases in net
interest income for the quarter and the year resulted primarily
from growth in average interest-earning assets, partially offset by
decreases in net interest margin compared to a year ago.
Net Interest Margin
The net interest margin declined to 2.45% in the fourth quarter,
from 2.71% in the prior quarter. For 2022, the net interest margin
was 2.65%, compared to 2.67% for the prior year. The declines were
due to average funding costs increasing more rapidly than the
offsetting increases in the average yields on interest-earning
assets.
Noninterest Income
Noninterest income was $263 million for the quarter, up 6.4%
compared to the fourth quarter a year ago, and was $1.0 billion for
2022, up 12.1% compared to the prior year. The increase for the
quarter was primarily driven by higher brokerage and investment
fees and higher income from investments in life insurance,
partially offset by lower investment management fees. The increase
for the year was primarily driven by higher investment management
fees and higher brokerage and investment fees.
Noninterest Expense and Efficiency
Ratio
Noninterest expense for the quarter remained unchanged compared
to the third quarter of 2022. Noninterest expense was $919 million
for the quarter, up 6.2% compared to the fourth quarter a year ago,
and was $3.6 billion for 2022, up 14.9% compared to the prior year.
The increases were primarily due to continued investments in our
business expansion, including hiring additional colleagues to
support our growth, information systems initiatives and occupancy
costs.
The efficiency ratio was 63.9% for the quarter, compared to
63.3% for last year’s fourth quarter. For 2022, the efficiency
ratio was 61.7%, compared to 62.5% in 2021.
Income Taxes
The Bank’s effective tax rate for the fourth quarter of 2022 was
20.9%, compared to 16.1% for the fourth quarter a year ago. For
2022, the Bank’s effective tax rate was 22.2%, compared to 19.1% a
year ago. The increases were primarily the result of higher
research and development tax credits claimed in the prior year and
lower excess tax benefits recognized in the current year.
__________
(1) Represents a non-GAAP financial measure. See reconciliation
in “Book Value per Common Share and Tangible Book Value per Common
Share” table in this document for additional details.
Conference Call Details
First Republic Bank’s fourth quarter 2022 earnings conference
call is scheduled for January 13, 2023 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 7764494 approximately 15 minutes
prior to the start time (to allow time for registration).
International callers should dial +1 (856) 344-9221 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, net interest
income, net interest margin, capital expenditures, liquidity,
dividends, capital structure, investments or other financial items;
forecasts of future economic conditions generally and in our market
areas in particular, including expectations relating to interest
rates and inflation, which may affect our net interest margin, the
ability of borrowers to repay their loans and the value of real
property or other property held as collateral for such loans;
expectations regarding the banking and wealth management
industries; descriptions of plans or objectives of management for
future operations, products or services; 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: economic and market conditions, including volatility in
the financial and securities markets, which may negatively impact
the valuation of our investment securities portfolio, credit losses
on our loans and debt securities, and the performance of our wealth
management business; inflation; interest rate risk and credit risk;
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; our ability to maintain and follow high underwriting
standards; 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 changes to liquidity and regulatory
capital requirements applicable to us, including more stringent
liquidity requirements and heightened capital requirements
applicable if we become a Category III banking organization under
the FDIC’s regulations by reporting $250 billion or more in total
consolidated assets or $75 billion or more in weighted short-term
wholesale funding, nonbank assets or off-balance sheet exposure,
based on a four quarter trailing average; 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
December 31,
Quarter Ended
September 30,
Year Ended
December 31,
(in millions, except per share
amounts)
2022
2021
2022
2022
2021
Interest income:
Loans
$
1,438
$
992
$
1,269
$
4,803
$
3,725
Investments
231
165
219
839
624
Cash and cash equivalents
24
6
27
67
17
Other
6
4
3
13
19
Total interest income
1,699
1,167
1,518
5,722
4,385
Interest expense:
Deposits
428
20
169
654
95
Borrowings
97
27
80
234
176
Total interest expense
525
47
249
888
271
Net interest income
1,174
1,120
1,269
4,834
4,114
Provision for credit losses
30
24
36
107
59
Net interest income after provision for
credit losses
1,144
1,096
1,233
4,727
4,055
Noninterest income:
Investment management fees
141
150
142
612
554
Brokerage and investment fees
29
19
34
118
74
Insurance fees
8
7
6
21
19
Trust fees
7
7
7
28
25
Foreign exchange fee income
25
24
25
98
88
Deposit fees
7
7
7
28
27
Loan and related fees
10
9
10
39
33
Income from investments in life
insurance
34
27
23
82
85
Other income, net
2
(3
)
—
5
15
Total noninterest income
263
247
254
1,031
920
Noninterest expense:
Salaries and employee benefits
551
544
557
2,235
2,003
Information systems
123
99
124
468
362
Occupancy
73
66
73
285
254
Professional fees
27
27
31
108
101
Advertising and marketing
23
21
19
71
64
FDIC assessments
19
13
17
66
52
Other expenses
103
96
98
384
311
Total noninterest expense
919
866
919
3,617
3,147
Income before provision for income
taxes
488
477
568
2,141
1,828
Provision for income taxes
102
77
123
476
350
Net income
386
400
445
1,665
1,478
Dividends on preferred stock
40
32
40
158
99
Net income available to common
shareholders
$
346
$
368
$
405
$
1,507
$
1,379
Basic earnings per common share
$
1.89
$
2.05
$
2.23
$
8.32
$
7.78
Diluted earnings per common share
$
1.88
$
2.02
$
2.21
$
8.25
$
7.68
Weighted average shares—basic
183
179
182
181
177
Weighted average shares—diluted
184
182
183
183
180
CONSOLIDATED BALANCE
SHEETS
As of
($ in millions)
December 31,
2022
September 30,
2022
December 31,
2021
ASSETS
Cash and cash equivalents
$
4,283
$
5,532
$
12,947
Debt securities available-for-sale
3,347
3,348
3,381
Debt securities held-to-maturity, net
28,348
28,247
22,292
Equity securities (fair value)
24
22
28
Loans:
Single family
98,768
94,345
76,793
Home equity lines of credit
2,775
2,801
2,584
Single family construction
1,217
1,154
993
Multifamily
21,588
20,364
15,966
Commercial real estate
10,830
10,039
8,531
Multifamily/commercial construction
2,139
2,089
1,927
Capital call lines of credit
9,988
9,393
10,999
Tax-exempt
3,713
3,655
3,680
Other business
5,072
4,629
3,961
Paycheck Protection Program ("PPP")
20
30
545
Stock secured
4,553
4,251
3,435
Other secured
3,191
3,001
2,457
Unsecured
3,014
3,016
3,085
Total loans
166,868
158,767
134,956
Allowance for credit losses
(784
)
(760
)
(694
)
Loans, net
166,084
158,007
134,262
Investments in life insurance
3,435
3,409
2,650
Tax credit investments
1,383
1,285
1,220
Premises, equipment and leasehold
improvements, net
483
483
454
Goodwill and other intangible assets
218
219
222
Other assets
5,034
4,557
3,631
Total Assets
$
212,639
$
205,109
$
181,087
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking
$
62,579
$
69,931
$
70,840
Interest-bearing checking
41,178
40,706
41,248
Money market checking
25,805
25,582
20,303
Money market savings and passbooks
21,663
20,231
16,573
Certificates of deposit
25,212
15,932
7,357
Total Deposits
176,437
172,382
156,321
Short-term FHLB advances
6,700
5,100
—
Long-term FHLB advances
7,300
5,900
3,700
Senior notes
500
500
998
Subordinated notes
779
779
779
Other liabilities
3,477
3,329
3,391
Total Liabilities
195,193
187,990
165,189
Shareholders’ Equity:
Preferred stock
3,633
3,633
3,633
Common stock
2
2
2
Additional paid-in capital
6,256
6,230
5,725
Retained earnings
7,886
7,591
6,569
Accumulated other comprehensive loss
(331
)
(337
)
(31
)
Total Shareholders’ Equity
17,446
17,119
15,898
Total Liabilities and Shareholders’
Equity
$
212,639
$
205,109
$
181,087
Quarter Ended December
31,
Quarter Ended September
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
$
2,704
$
24
3.49
%
$
15,342
$
6
0.15
%
$
4,733
$
27
2.22
%
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
10,535
66
2.49
%
7,011
29
1.65
%
10,642
59
2.23
%
Other residential and commercial MBS
18
0
3.77
%
25
0
1.82
%
20
0
2.97
%
Tax-exempt municipal securities
17,697
175
3.97
%
14,869
146
3.93
%
17,389
169
3.91
%
Taxable municipal securities
1,774
13
3.13
%
1,670
12
2.99
%
1,773
14
3.09
%
Other investment securities
1,440
10
2.88
%
1,405
10
2.86
%
1,440
11
2.87
%
Total investment securities
31,629
265
3.37
%
25,080
197
3.15
%
31,429
254
3.24
%
Loans:
Residential real estate
100,645
772
3.07
%
78,436
545
2.78
%
95,588
701
2.93
%
Multifamily
20,856
192
3.60
%
15,479
154
3.90
%
19,139
171
3.48
%
Commercial real estate
10,401
107
4.02
%
8,525
83
3.82
%
9,558
94
3.84
%
Multifamily/commercial construction
2,105
31
5.77
%
2,044
24
4.70
%
2,062
26
5.05
%
Business
17,745
240
5.29
%
17,210
139
3.15
%
18,664
205
4.30
%
PPP
26
0
0.95
%
732
9
4.65
%
48
1
9.49
%
Other
10,479
103
3.86
%
8,578
45
2.03
%
9,957
77
3.02
%
Total loans
162,257
1,445
3.53
%
131,004
999
3.02
%
155,016
1,275
3.26
%
FHLB stock
353
6
7.27
%
143
4
11.17
%
366
3
3.26
%
Total interest-earning assets
196,943
1,740
3.51
%
171,569
1,206
2.79
%
191,544
1,559
3.23
%
Noninterest-earning cash
478
426
451
Goodwill and other intangibles
219
223
219
Other assets
8,464
6,967
8,199
Total noninterest-earning assets
9,161
7,616
8,869
Total Assets
$
206,104
$
179,185
$
200,413
Liabilities and Shareholders’
Equity:
Deposits:
Interest-bearing checking
$
39,252
55
0.55
%
$
36,896
1
0.01
%
$
41,404
27
0.26
%
Money market checking
24,084
134
2.20
%
21,925
5
0.10
%
21,817
65
1.19
%
Money market savings and passbooks
20,423
100
1.95
%
16,935
6
0.15
%
18,616
47
1.01
%
CDs
20,546
139
2.69
%
7,482
8
0.42
%
9,607
30
1.26
%
Total interest-bearing deposits (3)
104,305
428
1.63
%
83,238
20
0.10
%
91,444
169
0.74
%
Borrowings:
Federal funds purchased
419
5
4.00
%
—
—
—
%
371
2
2.31
%
Short-term FHLB advances
6,131
54
3.51
%
—
—
—
%
7,586
45
2.36
%
Long-term FHLB advances
6,004
26
1.79
%
4,582
12
1.06
%
5,308
21
1.49
%
Senior notes
500
3
2.15
%
998
6
2.42
%
499
3
2.15
%
Subordinated notes
779
9
4.68
%
779
9
4.68
%
779
9
4.68
%
Total borrowings
13,833
97
2.79
%
6,359
27
1.72
%
14,543
80
2.16
%
Total interest-bearing liabilities (4)
118,138
525
1.76
%
89,597
47
0.21
%
105,987
249
0.93
%
Noninterest-bearing checking
67,067
71,308
73,851
Other noninterest-bearing liabilities
3,609
3,044
3,685
Total noninterest-bearing liabilities
70,676
74,352
77,536
Preferred shareholders’ equity
3,633
3,158
3,633
Common shareholders’ equity
13,657
12,078
13,257
Total Liabilities and Shareholders’
Equity
$
206,104
$
179,185
$
200,413
Net interest spread (5)
1.74
%
2.58
%
2.30
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
1,215
2.45
%
$
1,159
2.68
%
$
1,310
2.71
%
Reconciliation of tax-equivalent net
interest income to net interest income: (7)
Municipal securities tax-equivalent
adjustment
(34
)
(32
)
(34
)
Business loans tax-equivalent
adjustment
(7
)
(7
)
(7
)
Net interest income
$
1,174
$
1,120
$
1,269
Supplemental information:
Total deposits (interest-bearing and
noninterest-bearing)
$
171,372
$
428
0.99
%
$
154,546
$
20
0.05
%
$
165,295
$
169
0.41
%
Total deposits (interest-bearing and
noninterest-bearing) and borrowings
$
185,205
$
525
1.12
%
$
160,905
$
47
0.12
%
$
179,838
$
249
0.55
%
Year Ended December
31,
2022
2021
Average Balances, Yields and
Rates
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates
($ in millions)
Assets:
Interest-bearing deposits with banks
$
6,095
$
67
1.10
%
$
12,876
$
17
0.13
%
Investment securities:
U.S. Government-sponsored agency
securities
153
3
1.92
%
98
2
1.56
%
Agency residential and commercial MBS
10,251
220
2.14
%
6,125
117
1.91
%
Other residential and commercial MBS
21
0
2.72
%
29
1
2.00
%
Tax-exempt municipal securities
16,855
653
3.87
%
13,704
549
4.01
%
Taxable municipal securities
1,759
54
3.09
%
1,510
45
2.98
%
Other investment securities
1,434
41
2.87
%
1,157
32
2.80
%
Total investment securities
30,473
971
3.19
%
22,623
746
3.30
%
Loans:
Residential real estate
92,061
2,660
2.89
%
72,679
2,048
2.82
%
Multifamily
18,453
656
3.50
%
14,735
539
3.61
%
Commercial real estate
9,399
368
3.86
%
8,260
321
3.83
%
Multifamily/commercial construction
2,026
103
5.03
%
2,067
105
4.99
%
Business
18,366
750
4.03
%
16,033
520
3.20
%
PPP
147
11
7.65
%
1,418
51
3.58
%
Other
9,785
283
2.85
%
7,938
169
2.10
%
Total loans
150,237
4,831
3.20
%
123,130
3,753
3.03
%
FHLB stock
260
13
5.13
%
266
19
7.14
%
Total interest-earning assets
187,065
5,882
3.13
%
158,895
4,535
2.84
%
Noninterest-earning cash
455
404
Goodwill and other intangibles
220
225
Other assets
7,895
6,671
Total noninterest-earning assets
8,570
7,300
Total Assets
$
195,635
$
166,195
Liabilities and Shareholders’
Equity:
Deposits:
Interest-bearing checking
$
40,732
88
0.21
%
$
33,977
6
0.02
%
Money market checking
22,114
217
0.98
%
20,662
25
0.12
%
Money market savings and passbooks
18,668
165
0.89
%
15,308
25
0.17
%
CDs
11,119
184
1.66
%
7,926
39
0.49
%
Total interest-bearing deposits (3)
92,633
654
0.71
%
77,873
95
0.12
%
Borrowings:
Federal funds purchased
245
7
2.74
%
0
0
0.09
%
Short-term FHLB advances
4,193
108
2.58
%
0
0
0.15
%
Long-term FHLB advances
4,785
67
1.39
%
8,609
115
1.34
%
Senior notes
670
16
2.32
%
997
24
2.42
%
Subordinated notes
779
36
4.68
%
779
37
4.68
%
Total borrowings
10,672
234
2.19
%
10,385
176
1.70
%
Total interest-bearing liabilities (4)
103,305
888
0.86
%
88,258
271
0.31
%
Noninterest-bearing checking
72,135
61,325
Other noninterest-bearing liabilities
3,566
2,847
Total noninterest-bearing liabilities
75,701
64,172
Preferred shareholders' equity
3,633
2,502
Common shareholders' equity
12,996
11,263
Total Liabilities and Shareholders’
Equity
$
195,635
$
166,195
Net interest spread (5)
2.27
%
2.53
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
4,994
2.65
%
$
4,264
2.67
%
Reconciliation of tax-equivalent net
interest income to net interest income: (7)
Municipal securities tax-equivalent
adjustment
(132
)
(122
)
Business loans tax-equivalent
adjustment
(28
)
(28
)
Net interest income
$
4,834
$
4,114
Supplemental information:
Total deposits (interest-bearing and
noninterest-bearing)
$
164,768
$
654
0.40
%
$
139,198
$
95
0.07
%
Total deposits (interest-bearing and
noninterest-bearing) and borrowings
$
175,440
$
888
0.51
%
$
149,583
$
271
0.18
%
__________ 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 December
31,
Quarter Ended September
30,
Year Ended December
31,
2022
2021
2022
2022
2021
($ in millions, except per share
amounts)
Selected Financial Data and
Ratios:
Return on average assets (1), (2)
0.74
%
0.89
%
0.88
%
0.85
%
0.89
%
Return on average common shareholders’
equity (1)
10.05
%
12.08
%
12.12
%
11.60
%
12.24
%
Return on average tangible common
shareholders’
equity (1), (3)
10.21
%
12.31
%
12.33
%
11.80
%
12.49
%
Average equity to average assets
8.39
%
8.50
%
8.43
%
8.50
%
8.28
%
Dividends per common share
$
0.27
$
0.22
$
0.27
$
1.03
$
0.86
Dividend payout ratio
14.4
%
10.9
%
12.2
%
12.5
%
11.2
%
Efficiency ratio (4)
63.9
%
63.3
%
60.3
%
61.7
%
62.5
%
Selected Asset Quality Ratios:
Net loan charge-offs
$
0.9
$
0.1
$
1.0
$
2.9
$
2.1
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
$
75.38
$
68.34
$
73.74
Tangible book value per common share
(5)
$
74.19
$
67.10
$
72.54
__________
(1)
For periods less than a year, 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 December
31,
Quarter Ended September
30,
Year Ended December
31,
2022
2021
2022
2022
2021
Effective tax rate, prior to excess tax
benefits—stock awards and other adjustments
21.9
%
22.0
%
23.3
%
23.3
%
22.3
%
Excess tax benefits—stock awards
(0.3
)
(1.5
)
(0.6
)
(0.5
)
(2.1
)
Research and development tax credit
adjustments
(0.7
)
(4.4
)
—
(0.2
)
(1.1
)
Tax refund from amended tax returns
—
—
(1.1
)
(0.4
)
—
Effective tax rate
20.9
%
16.1
%
21.6
%
22.2
%
19.1
%
Provision (Reversal of Provision) for
Credit Losses
Quarter Ended December
31,
Quarter Ended September
30,
Year Ended December
31,
2022
2021
2022
2022
2021
($ in millions)
Debt securities held-to-maturity
$
—
$
—
$
—
$
2
$
2
Loans
25
26
32
93
61
Unfunded loan commitments
5
(2
)
4
12
(4
)
Total provision
$
30
$
24
$
36
$
107
$
59
Loan Originations
Quarter Ended December
31,
Quarter Ended September
30,
Year Ended December
31,
2022
2021
2022
2022
2021
($ in millions)
Single family
$
5,894
$
7,013
$
6,999
$
31,907
$
29,575
Home equity lines of credit
499
617
708
2,640
2,440
Single family construction
387
245
385
1,579
968
Multifamily
1,581
1,723
2,658
8,278
4,815
Commercial real estate
879
597
1,141
3,402
2,094
Multifamily/commercial construction
445
190
410
1,731
1,129
Capital call lines of credit
2,477
3,690
3,232
11,825
12,871
Tax-exempt
195
130
178
555
590
Other business
1,090
650
598
3,304
2,729
PPP
—
—
—
—
725
Stock secured
976
966
791
3,818
3,205
Other secured
839
546
563
2,883
2,130
Unsecured
360
517
333
1,475
1,539
Total loans originated
$
15,622
$
16,884
$
17,996
$
73,397
$
64,810
As of
Asset Quality Information
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
($ in millions)
Nonperforming assets:
Nonaccrual loans
$
109
$
120
$
137
$
140
$
139
Other real estate owned
—
—
—
—
—
Total nonperforming assets
$
109
$
120
$
137
$
140
$
139
Nonaccrual loans to total loans
0.07
%
0.08
%
0.09
%
0.10
%
0.10
%
Nonperforming assets to total assets
0.05
%
0.06
%
0.07
%
0.08
%
0.08
%
Accruing loans 90 days or more past
due
$
—
$
—
$
—
$
—
$
—
Restructured accruing loans
$
12
$
12
$
12
$
12
$
13
Allowance for loan credit losses to:
Total loans
0.47
%
0.48
%
0.48
%
0.50
%
0.51
%
Nonaccrual loans
720.5
%
635.3
%
531.2
%
498.8
%
500.5
%
As of
Loan Servicing Portfolio
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
($ in millions)
Loans serviced for investors
$
3,459
$
3,632
$
3,919
$
4,298
$
4,677
Return on Average Common
Shareholders’
Equity and Return on Average
Tangible
Common Shareholders’ Equity (1),
(2)
Quarter Ended December
31,
Quarter Ended September
30,
Year Ended December
31,
2022
2021
2022
2022
2021
($ in millions)
Average common shareholders’ equity
(a)
$
13,657
$
12,078
$
13,257
$
12,996
$
11,263
Less: Average goodwill and other
intangible assets
(219
)
(223
)
(219
)
(220
)
(225
)
Average tangible common shareholders’
equity (b)
$
13,438
$
11,855
$
13,038
$
12,776
$
11,038
Net income available to common
shareholders (c)
$
346
$
368
$
405
$
1,507
$
1,379
Return on average common shareholders’
equity (c) / (a)
10.05
%
12.08
%
12.12
%
11.60
%
12.24
%
Return on average tangible common
shareholders’ equity (c) / (b)
10.21
%
12.31
%
12.33
%
11.80
%
12.49
%
__________
(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)
For periods less than a year, ratios are
annualized.
Book Value per Common Share and Tangible
Book Value per Common Share (1)
As of
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
(in millions, except per share
amounts)
Total shareholders’ equity
$
17,446
$
17,119
$
16,426
$
16,154
$
15,898
Less: Preferred stock
(3,633
)
(3,633
)
(3,633
)
(3,633
)
(3,633
)
Total common shareholders’ equity (a)
13,813
13,486
12,793
12,521
12,265
Less: Goodwill and other intangible
assets
(218
)
(219
)
(220
)
(221
)
(222
)
Total tangible common shareholders’ equity
(b)
$
13,595
$
13,267
$
12,573
$
12,300
$
12,043
Number of shares of common stock
outstanding (c)
183
183
180
180
179
Book value per common share (a) / (c)
$
75.38
$
73.74
$
71.03
$
69.70
$
68.34
Tangible book value per common share (b) /
(c)
$
74.19
$
72.54
$
69.81
$
68.47
$
67.10
__________
(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
December 31,
2022 (3)
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
($ in millions)
Capital Ratios:
Tier 1 leverage ratio (Tier 1 capital to
average assets)
8.51
%
8.59
%
8.59
%
8.70
%
8.76
%
Common Equity Tier 1 capital to
risk-weighted assets
8.99
%
9.28
%
9.15
%
9.48
%
9.65
%
Tier 1 capital to risk-weighted assets
11.34
%
11.76
%
11.75
%
12.25
%
12.56
%
Total capital to risk-weighted assets
12.35
%
12.81
%
12.82
%
13.37
%
13.72
%
Regulatory Capital:
Common Equity Tier 1 capital
$
13,920
$
13,586
$
12,791
$
12,418
$
12,045
Tier 1 capital
$
17,553
$
17,219
$
16,424
$
16,051
$
15,678
Total capital
$
19,118
$
18,755
$
17,924
$
17,521
$
17,124
Assets:
Average assets
$
206,371
$
200,486
$
191,202
$
184,410
$
178,969
Risk-weighted assets
$
154,789
$
146,444
$
139,811
$
131,024
$
124,820
__________
(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 December 31, 2022
are preliminary.
As of
Wealth Management Assets
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
($ in millions)
First Republic Investment Management
$
112,176
$
100,125
$
100,204
$
108,771
$
109,130
Brokerage and investment:
Brokerage
130,844
119,299
116,979
128,129
128,258
Money market mutual funds
8,100
10,891
10,510
18,543
23,673
Total brokerage and investment
138,944
130,190
127,489
146,672
151,931
Trust Company:
Trust
16,318
15,270
14,994
14,344
13,695
Custody
3,806
3,943
4,099
4,408
4,687
Total Trust Company
20,124
19,213
19,093
18,752
18,382
Total Wealth Management Assets
$
271,244
$
249,528
$
246,786
$
274,195
$
279,443
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230113005044/en/
Investors: Andrew Greenebaum / Kimberly Esterkin Addo
Investor Relations agreenebaum@addo.com kesterkin@addo.com (310)
829-5400
Media: Greg Berardi Blue Marlin Partners
gberardi@firstrepublic.com (415) 239-7826
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