SAN FRANCISCO--(BUSINESS WIRE)--First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended September 30, 2017.
“First Republic had another very good quarter,” said Jim Herbert, Chairman and CEO. “Wealth management assets reached a significant milestone, now exceeding $100 billion. This was also our best third quarter loan origination volume ever.”
Quarterly Highlights
Financial Results
– Year-over-year:
– Revenues were $670.3 million, up 20.1%.
– Net interest income was $551.0 million, up 19.6%.
– Net income was $200.0 million, up 16.4%.
– Diluted earnings per share of $1.14, up 14.0%.
– Tangible book value per share was $38.90, up 16.4%.
– Loan originations totaled $7.2 billion, our best third quarter ever.
– Loans sold totaled $822.4 million.
– Loans held for sale totaled $716.0 million, up from $202.3 million at prior quarter-end.
– Net interest margin was 3.09%, compared to 3.16% for the prior quarter.
– Efficiency ratio was 62.4%.
Continued Capital and Credit Strength
– Total regulatory capital has grown 20.1% from a year ago.
– Common Equity Tier 1 ratio was 10.58%, compared to 10.52% a year ago.
– Nonperforming assets remained very low at 4 basis points of total assets.
– Net charge-offs were less than 1 basis point of average loans.
– Provision for loan losses totaled $10.1 million for the quarter, reflecting continued loan growth.
Continued Franchise Development
– Year-over-year:
– Loans, excluding loans held for sale, totaled $59.5 billion, up 19.3%.
– Deposits were $65.4 billion, up 18.8%.
– Wealth management assets were $101.3 billion, up 26.4%.
– Wealth management revenues were $88.4 million, up 22.9%.
“Both net interest income and revenues were up 20% year-over-year,” said Mike Roffler, Chief Financial Officer. “Tangible book value per share increased more than 16%, and the Bank’s credit quality and capital remain strong.”
Quarterly Cash Dividend Declared
The Bank declared a cash dividend for the third quarter of $0.17 per share of common stock, which is payable on November 9, 2017 to shareholders of record as of October 26, 2017.
Very Strong Asset Quality
Credit quality remains very strong. Nonperforming assets were only 4 basis points of total assets at September 30, 2017.
The Bank had net charge-offs for the quarter of only $655,000, or less than 1 basis point of average loans, while adding $10.1 million to its allowance for loan losses due to continued loan growth. For the nine months ended September 30, 2017, the Bank has had net charge-offs of only $1.8 million, while adding $43.1 million to its allowance for loan losses.
Continued Capital Strength
Total regulatory capital has grown 20.1% from a year ago.
The Bank’s Common Equity Tier 1 ratio was 10.58% at September 30, 2017, compared to 10.52% a year ago.
Tangible Book Value Growth
Tangible book value per common share at September 30, 2017 was $38.90, up 16.4% from a year ago.
Continued Franchise Development
Strong Loan Originations
Loan originations were $7.2 billion for the quarter, our best third quarter ever for loan volume. Loan originations were up 11.9% compared to the third quarter a year ago primarily due to increases in business, multifamily and single family lending.
Loans, excluding loans held for sale, totaled $59.5 billion at September 30, 2017, up 19.3% compared to a year ago.
Deposit Growth
Total deposits increased to $65.4 billion, up 18.8% compared to a year ago.
At September 30, 2017, checking accounts totaled 60.5% of deposits.
The average rate paid on deposits was 0.25% during the quarter, compared to 0.18% for the prior quarter.
Investments
Total investment securities at September 30, 2017 were $17.5 billion, up 20.9% annualized, for the first nine months of 2017.
High-quality liquid assets, including eligible cash, totaled $10.6 billion at September 30, 2017, and represented 13.0% of average total assets.
Mortgage Banking Activity
During the third quarter, the Bank sold $822.4 million of loans and recorded a gain on sale of $2.0 million, compared to loan sales of $948.0 million and a gain of $1.8 million during the third quarter of last year.
Loans held for sale at quarter-end totaled $716.0 million, compared to $202.3 million at the end of the prior quarter and $514.3 million a year ago.
Loans serviced for investors at quarter-end totaled $12.1 billion, up 5.4% from a year ago. Net loan servicing fees for the quarter were $3.5 million, up 10.6% from a year ago.
Continued Expansion of Wealth Management
Wealth management revenues totaled $88.4 million for the quarter, up 22.9% compared to last year’s third quarter. Such revenues represented 13.2% of the Bank’s total revenues for the quarter.
Total wealth management assets were $101.3 billion at September 30, 2017, up 26.4% compared to a year ago. The growth in wealth management assets was due to both net new assets from existing and new clients and market appreciation.
Wealth management assets included investment management assets of $50.3 billion, brokerage assets and money market mutual funds of $41.9 billion, and trust and custody assets of $9.2 billion.
Income Statement and Key Ratios
Highlights
Strong Revenue Growth
Total revenues were $670.3 million for the quarter, up 20.1% compared to the third quarter a year ago.
Strong Net Interest Income Growth
Net interest income was $551.0 million for the quarter, up 19.6% compared to the third quarter a year ago. The increase in net interest income resulted primarily from growth in average earning assets.
Net Interest Margin
The Bank’s net interest margin was 3.09% for the third quarter, compared to 3.16% for the prior quarter. The decrease from the prior quarter was primarily due to higher deposit and borrowing costs.
Noninterest Income
Noninterest income was $119.3 million for the quarter, up 22.7% compared to the third quarter a year ago. The increase was primarily from growth in wealth management revenues.
Noninterest Expense and Efficiency Ratio
Noninterest expense was $418.4 million for the quarter, up 23.9% compared to the third quarter a year ago. The increase was primarily due to increased salaries and benefits, information systems and other costs from the continued investments in the expansion of the franchise, including investments in Gradifi.
The efficiency ratio was 62.4% for the quarter, compared to 61.9% for the prior quarter and 60.5% for the third quarter a year ago.
Income Tax Rate
The Bank’s effective tax rate for the third quarter of 2017 was 17.3%, compared to 15.3% for the prior quarter. The increase in the effective tax rate during the quarter resulted from lower tax benefits from vesting of share-based awards.
Conference Call Details
First Republic Bank’s third quarter 2017 earnings conference call is scheduled for October 13, 2017 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (877) 407-0792 approximately 10 minutes prior to the start time (to allow time for registration). International callers should dial (201) 689-8263.
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 October 13, 2017, at 10:00 a.m. PT / 1:00 p.m. ET, through October 20, 2017, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (844) 512-2921 and use conference ID #13670890. International callers should dial (412) 317-6671 and enter the same conference ID number. A replay of the webcast also will be available for 90 days following the call, 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, with a solid commitment to responsiveness and action. 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; and New York, New York. First Republic offers a complete line of banking products for individuals and businesses, including deposit services, as well as residential, commercial and personal loans. 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. 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 and include statements about economic performance in our markets, growth in our loan originations and wealth management assets, our progress in preparing for, and our compliance with, any enhanced regulatory requirements, and our projected tax rate. 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.
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 nontraditional financial services and technology companies; our ability to recruit and retain key managers, employees and board members; the possibility of earthquakes 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 affecting the valuation of our investment securities portfolio, which could result in other-than-temporary impairment if the general economy deteriorates, credit ratings decline, the financial condition of issuers deteriorates, interest rates increase or the liquidity for securities is limited; real estate prices generally and in our markets; our geographic and product concentrations; demand for our products and services; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; the phase-in of the final capital rules regarding the Basel III framework, changes to the definitions and components of regulatory capital and a new approach for risk-weighted assets; legislative and regulatory actions affecting us and the financial services industry, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, including increased compliance costs, limitations on activities and requirements to hold additional capital; our ability to avoid litigation and its associated costs and liabilities; the impact of new accounting standards; future 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. 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 in our Annual Report on Form 10-K and any subsequent reports filed by First Republic with the FDIC. 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 |
Nine Months Ended |
|||||||||||||||||||||||
| (in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2017 | 2016 | ||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||
| Loans | $ | 497,162 | $ | 403,299 | $ | 462,810 | $ | 1,388,370 | $ | 1,154,980 | |||||||||||||||
| Investments | 132,948 | 94,684 | 130,435 | 381,441 | 271,725 | ||||||||||||||||||||
| Other | 3,864 | 3,701 | 2,784 | 10,019 | 9,447 | ||||||||||||||||||||
| Cash and cash equivalents | 3,193 | 2,630 | 3,126 | 8,987 | 7,127 | ||||||||||||||||||||
| Total interest income | 637,167 | 504,314 | 599,155 | 1,788,817 | 1,443,279 | ||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||
| Deposits | 40,260 | 19,661 | 26,355 | 88,666 | 52,559 | ||||||||||||||||||||
| Borrowings | 45,954 | 24,049 | 40,836 | 117,549 | 64,183 | ||||||||||||||||||||
| Total interest expense | 86,214 | 43,710 | 67,191 | 206,215 | 116,742 | ||||||||||||||||||||
| Net interest income | 550,953 | 460,604 | 531,964 | 1,582,602 | 1,326,537 | ||||||||||||||||||||
| Provision for loan losses | 10,113 | 18,000 | 23,938 | 43,139 | 36,692 | ||||||||||||||||||||
| Net interest income after provision for loan losses | 540,840 | 442,604 | 508,026 | 1,539,463 | 1,289,845 | ||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||
| Investment management fees | 70,796 | 56,843 | 68,819 | 200,510 | 164,771 | ||||||||||||||||||||
| Brokerage and investment fees | 7,843 | 6,627 | 6,965 | 22,847 | 21,717 | ||||||||||||||||||||
| Trust fees | 3,246 | 3,015 | 3,448 | 9,896 | 8,991 | ||||||||||||||||||||
| Foreign exchange fee income | 6,551 | 5,460 | 7,081 | 19,493 | 16,022 | ||||||||||||||||||||
| Deposit fees | 5,736 | 5,278 | 5,655 | 16,763 | 15,358 | ||||||||||||||||||||
| Loan and related fees | 3,270 | 3,709 | 3,375 | 9,911 | 10,447 | ||||||||||||||||||||
| Loan servicing fees, net | 3,520 | 3,182 | 3,577 | 9,868 | 10,443 | ||||||||||||||||||||
| Gain on sale of loans | 1,963 | 1,785 | 841 | 6,168 | 4,010 | ||||||||||||||||||||
| Gain (loss) on investment securities, net | 1,204 | (663 | ) | (602 | ) | (833 | ) | 2,418 | |||||||||||||||||
| Income from investments in life insurance | 8,865 | 12,065 | 9,538 | 28,038 | 30,604 | ||||||||||||||||||||
| Other income (loss) | 6,339 | (30 | ) | 675 | 7,503 | 1,197 | |||||||||||||||||||
| Total noninterest income | 119,333 | 97,271 | 109,372 | 330,164 | 285,978 | ||||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||||
| Salaries and employee benefits | 236,996 | 193,340 | 221,929 | 680,832 | 562,538 | ||||||||||||||||||||
| Information systems | 53,663 | 38,917 | 51,053 | 150,486 | 110,124 | ||||||||||||||||||||
| Occupancy | 34,129 | 30,945 | 33,631 | 101,126 | 86,862 | ||||||||||||||||||||
| Professional fees | 17,573 | 12,466 | 12,236 | 40,974 | 37,942 | ||||||||||||||||||||
| FDIC assessments | 14,197 | 11,800 | 13,601 | 40,948 | 31,200 | ||||||||||||||||||||
| Advertising and marketing | 10,639 | 7,169 | 11,560 | 31,225 | 22,616 | ||||||||||||||||||||
| Amortization of intangibles | 5,019 | 6,116 | 5,293 | 15,879 | 19,163 | ||||||||||||||||||||
| Other expenses | 46,143 | 36,983 | 47,797 | 132,528 | 106,567 | ||||||||||||||||||||
| Total noninterest expense | 418,359 | 337,736 | 397,100 | 1,193,998 | 977,012 | ||||||||||||||||||||
| Income before provision for income taxes | 241,814 | 202,139 | 220,298 | 675,629 | 598,811 | ||||||||||||||||||||
| Provision for income taxes | 41,805 | 30,321 | 33,698 | 112,246 | 104,501 | ||||||||||||||||||||
| Net income | 200,009 | 171,818 | 186,600 | 563,383 | 494,310 | ||||||||||||||||||||
| Dividends on preferred stock | 14,272 | 17,377 | 14,344 | 43,768 | 51,213 | ||||||||||||||||||||
| Net income available to common shareholders | $ | 185,737 | $ | 154,441 | $ | 172,256 | $ | 519,615 | $ | 443,097 | |||||||||||||||
| Basic earnings per common share | $ | 1.18 | $ | 1.03 | $ | 1.10 | $ | 3.32 | $ | 3.00 | |||||||||||||||
| Diluted earnings per common share | $ | 1.14 | $ | 1.00 | $ | 1.06 | $ | 3.21 | $ | 2.90 | |||||||||||||||
| Dividends per common share | $ | 0.17 | $ | 0.16 | $ | 0.17 | $ | 0.50 | $ | 0.47 | |||||||||||||||
| Weighted average shares—basic | 157,752 | 149,800 | 157,302 | 156,699 | 147,665 | ||||||||||||||||||||
| Weighted average shares—diluted | 162,377 | 154,824 | 162,335 | 161,725 | 153,038 | ||||||||||||||||||||
|
CONSOLIDATED BALANCE SHEETS |
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| As of | ||||||||||||||||
| ($ in thousands) |
September 30, |
June 30, |
September 30, |
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|
ASSETS |
||||||||||||||||
| Cash and cash equivalents | $ | 2,681,599 | $ | 2,295,125 | $ | 1,386,967 | ||||||||||
| Investment securities available-for-sale | 2,312,218 | 2,235,923 | 1,710,571 | |||||||||||||
| Investment securities held-to-maturity | 15,218,615 | 14,642,402 | 11,094,535 | |||||||||||||
| Loans: | ||||||||||||||||
| Single family (1-4 units) | 29,799,762 | 29,078,735 | 24,940,843 | |||||||||||||
| Home equity lines of credit | 2,668,604 | 2,681,502 | 2,586,875 | |||||||||||||
| Multifamily (5+ units) | 8,060,467 | 7,453,388 | 6,214,940 | |||||||||||||
| Commercial real estate | 5,879,437 | 5,809,698 | 5,184,184 | |||||||||||||
| Single family construction | 549,978 | 523,478 | 494,427 | |||||||||||||
| Multifamily/commercial construction | 1,053,708 | 987,712 | 841,021 | |||||||||||||
| Business | 7,952,335 | 7,981,609 | 7,113,369 | |||||||||||||
| Stock secured | 1,029,463 | 994,413 | 872,392 | |||||||||||||
| Other secured | 974,933 | 837,423 | 684,712 | |||||||||||||
| Unsecured | 1,504,263 | 1,412,117 | 926,052 | |||||||||||||
| Total loans | 59,472,950 | 57,760,075 | 49,858,815 | |||||||||||||
| Allowance for loan losses | (347,765 | ) | (338,307 | ) | (296,105 | ) | ||||||||||
| Loans, net | 59,125,185 | 57,421,768 | 49,562,710 | |||||||||||||
| Loans held for sale | 716,046 | 202,348 | 514,291 | |||||||||||||
| Investments in life insurance | 1,320,775 | 1,292,238 | 1,266,194 | |||||||||||||
| Tax credit investments | 1,126,647 | 1,113,378 | 1,071,255 | |||||||||||||
| Prepaid expenses and other assets | 1,183,044 | 1,146,712 | 845,329 | |||||||||||||
| Premises, equipment and leasehold improvements, net | 277,809 | 260,308 | 190,213 | |||||||||||||
| Goodwill | 198,447 | 203,177 | 171,616 | |||||||||||||
| Other intangible assets | 96,520 | 101,539 | 118,238 | |||||||||||||
| Mortgage servicing rights | 63,191 | 61,383 | 60,432 | |||||||||||||
| Other real estate owned | — | 1,930 | 1,196 | |||||||||||||
| Total Assets | $ | 84,320,096 | $ | 80,978,231 | $ | 67,993,547 | ||||||||||
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LIABILITIES AND EQUITY |
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| Liabilities: | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Noninterest-bearing checking | $ | 25,122,856 | $ | 25,769,912 | $ | 20,965,249 | ||||||||||
| Interest-bearing checking | 14,457,910 | 14,374,273 | 12,747,952 | |||||||||||||
| Money market checking | 9,895,827 | 9,019,626 | 8,381,381 | |||||||||||||
| Money market savings and passbooks | 8,843,432 | 8,099,880 | 8,126,741 | |||||||||||||
| Certificates of deposit | 7,116,298 | 6,030,015 | 4,840,374 | |||||||||||||
| Total Deposits | 65,436,323 | 63,293,706 | 55,061,697 | |||||||||||||
| Short-term borrowings | 450,000 | 150,000 | 200,000 | |||||||||||||
| Long-term FHLB advances | 8,300,000 | 7,550,000 | 4,600,000 | |||||||||||||
| Senior notes | 894,304 | 893,865 | 397,755 | |||||||||||||
| Subordinated notes | 776,989 | 776,895 | 387,329 | |||||||||||||
| Debt related to variable interest entities | — | 22,519 | 26,981 | |||||||||||||
| Other liabilities | 1,034,534 | 1,031,163 | 875,287 | |||||||||||||
| Total Liabilities | 76,892,150 | 73,718,148 | 61,549,049 | |||||||||||||
| Shareholders’ Equity: | ||||||||||||||||
| Preferred stock | 990,000 | 990,000 | 1,139,525 | |||||||||||||
| Common stock | 1,579 | 1,577 | 1,501 | |||||||||||||
| Additional paid-in capital | 3,536,400 | 3,525,283 | 2,962,355 | |||||||||||||
| Retained earnings | 2,899,417 | 2,741,041 | 2,322,296 | |||||||||||||
| Accumulated other comprehensive income | 550 | 2,182 | 18,821 | |||||||||||||
| Total Shareholders’ Equity | 7,427,946 | 7,260,083 | 6,444,498 | |||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 84,320,096 | $ | 80,978,231 | $ | 67,993,547 | ||||||||||
| Quarter Ended September 30, | Quarter Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | |||||||||||||||||||||||||||||||||||||||||
|
Average Balances, Yields |
Average |
Interest |
Yields/ |
Average |
Interest |
Yields/ |
Average |
Interest |
Yields/ |
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| ($ in thousands) | |||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,121,328 | $ | 3,193 | 1.13 | % | $ | 2,162,287 | $ | 2,630 | 0.48 | % | $ | 1,321,995 | $ | 3,126 | 0.95 | % | |||||||||||||||||||||||||
| Investment securities | 17,172,684 | 174,515 | 4.07 | % | 12,082,727 | 127,614 | 4.22 | % | 16,522,412 | 171,954 | 4.17 | % | |||||||||||||||||||||||||||||||
| Loans | 58,965,714 | 509,222 | 3.41 | % | 49,030,453 | 414,812 | 3.35 | % | 55,752,697 | 474,401 | 3.39 | % | |||||||||||||||||||||||||||||||
| FHLB stock | 274,424 | 3,864 | 5.59 | % | 173,543 | 3,701 | 8.48 | % | 221,393 | 2,784 | 5.04 | % | |||||||||||||||||||||||||||||||
|
Total interest-earning
assets |
77,534,150 | 690,794 | 3.53 | % | 63,449,010 | 548,757 | 3.43 | % | 73,818,497 | 652,265 | 3.52 | % | |||||||||||||||||||||||||||||||
| Noninterest-earning cash | 315,592 | 277,963 | 333,651 | ||||||||||||||||||||||||||||||||||||||||
|
Goodwill and other intangibles |
301,823 | 292,824 | 307,275 | ||||||||||||||||||||||||||||||||||||||||
| Other assets | 3,280,800 | 3,002,133 | 3,258,671 | ||||||||||||||||||||||||||||||||||||||||
|
Total noninterest-earning assets |
3,898,215 | 3,572,920 | 3,899,597 | ||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 81,432,365 | $ | 67,021,930 | $ | 77,718,094 | |||||||||||||||||||||||||||||||||||||
| Liabilities and Equity: | |||||||||||||||||||||||||||||||||||||||||||
| Checking | $ | 39,109,681 | 3,585 | 0.04 | % | $ | 33,276,648 | 1,387 | 0.02 | % | $ | 38,014,639 | 1,435 | 0.02 | % | ||||||||||||||||||||||||||||
|
Money market checking and savings |
17,641,318 | 16,156 | 0.36 | % | 15,921,781 | 4,667 | 0.12 | % | 16,336,980 | 7,130 | 0.18 | % | |||||||||||||||||||||||||||||||
| CDs | 6,327,378 | 20,519 | 1.29 | % | 4,688,438 | 13,607 | 1.15 | % | 5,774,830 | 17,790 | 1.24 | % | |||||||||||||||||||||||||||||||
| Total deposits | 63,078,377 | 40,260 | 0.25 | % | 53,886,867 | 19,661 | 0.15 | % | 60,126,449 | 26,355 | 0.18 | % | |||||||||||||||||||||||||||||||
| Short-term borrowings | 653,263 | 1,968 | 1.20 | % | 174,205 | 515 | 1.18 | % | 1,433,516 | 3,698 | 1.03 | % | |||||||||||||||||||||||||||||||
| Long-term FHLB advances | 7,558,696 | 28,828 | 1.51 | % | 4,794,022 | 17,924 | 1.49 | % | 6,541,209 | 24,439 | 1.50 | % | |||||||||||||||||||||||||||||||
| Senior notes (3) | 894,086 | 5,918 | 2.65 | % | 397,657 | 2,575 | 2.59 | % | 534,418 | 3,469 | 2.60 | % | |||||||||||||||||||||||||||||||
| Subordinated notes (3) | 776,943 | 9,094 | 4.68 | % | 256,805 | 2,951 | 4.60 | % | 776,850 | 9,093 | 4.68 | % | |||||||||||||||||||||||||||||||
| Other borrowings | 20,123 | 146 | 2.90 | % | 27,557 | 84 | 1.23 | % | 25,147 | 137 | 2.20 | % | |||||||||||||||||||||||||||||||
| Total borrowings | 9,903,111 | 45,954 | 1.85 | % | 5,650,246 | 24,049 | 1.70 | % | 9,311,140 | 40,836 | 1.76 | % | |||||||||||||||||||||||||||||||
|
Total interest-bearing liabilities |
72,981,488 | 86,214 | 0.47 | % | 59,537,113 | 43,710 | 0.29 | % | 69,437,589 | 67,191 | 0.39 | % | |||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities | 1,029,656 | 1,055,656 | 1,036,242 | ||||||||||||||||||||||||||||||||||||||||
| Preferred equity | 990,000 | 1,139,525 | 966,374 | ||||||||||||||||||||||||||||||||||||||||
| Common equity | 6,431,221 | 5,289,636 | 6,277,889 | ||||||||||||||||||||||||||||||||||||||||
|
Total Liabilities and Equity |
$ | 81,432,365 | $ | 67,021,930 | $ | 77,718,094 | |||||||||||||||||||||||||||||||||||||
| Net interest spread (4) | 3.06 | % | 3.14 | % | 3.13 | % | |||||||||||||||||||||||||||||||||||||
|
Net interest income (fully taxable-equivalent basis) and net interest margin (5) |
$ | 604,580 | 3.09 | % | $ | 505,047 | 3.16 | % | $ | 585,074 | 3.16 | % | |||||||||||||||||||||||||||||||
|
Reconciliation of tax-equivalent net interest income to reported net interest income: |
|||||||||||||||||||||||||||||||||||||||||||
| Tax-equivalent adjustment | (53,627 | ) | (44,443 | ) | (53,110 | ) | |||||||||||||||||||||||||||||||||||||
|
Net interest income, as reported |
$ | 550,953 | $ | 460,604 | $ | 531,964 | |||||||||||||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||||||||||||||||||
|
(1) |
Interest income is presented on a fully taxable-equivalent basis. |
||
|
(2) |
Yields/rates are annualized. |
||
|
(3) |
Average balances include unamortized issuance discounts and costs. Interest expense includes amortization of issuance discounts and costs. |
||
|
(4) |
Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities. |
||
|
(5) |
Net interest margin represents net interest income on a fully taxable-equivalent basis divided by total average interest-earning assets. |
|
|
|||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2017 | 2016 | ||||||||||||||||||||||||||||
| Average Balances, Yields and Rates |
Average Balance |
Interest |
Yields/ |
Average Balance |
Interest |
Yields/ |
|||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,296,152 | $ | 8,987 | 0.93 | % | $ | 1,960,525 | $ | 7,127 | 0.49 | % | |||||||||||||||||
| Investment securities | 16,382,720 | 501,874 | 4.08 | % | 11,443,730 | 364,324 | 4.24 | % | |||||||||||||||||||||
| Loans | 55,957,670 | 1,423,277 | 3.37 | % | 46,839,497 | 1,188,112 | 3.36 | % | |||||||||||||||||||||
| FHLB stock | 219,457 | 10,019 | 6.10 | % | 156,165 | 9,447 | 8.08 | % | |||||||||||||||||||||
| Total interest-earning assets | 73,855,999 | 1,944,157 | 3.50 | % | 60,399,917 | 1,569,010 | 3.44 | % | |||||||||||||||||||||
| Noninterest-earning cash | 318,898 | 273,545 | |||||||||||||||||||||||||||
| Goodwill and other intangibles | 307,202 | 299,126 | |||||||||||||||||||||||||||
| Other assets | 3,236,300 | 2,971,873 | |||||||||||||||||||||||||||
| Total noninterest-earning assets | 3,862,400 | 3,544,544 | |||||||||||||||||||||||||||
| Total Assets | $ | 77,718,399 | $ | 63,944,461 | |||||||||||||||||||||||||
| Liabilities and Equity: | |||||||||||||||||||||||||||||
| Checking | $ | 38,165,057 | 6,146 | 0.02 | % | $ | 32,346,408 | 2,499 | 0.01 | % | |||||||||||||||||||
| Money market checking and savings | 16,764,072 | 28,275 | 0.23 | % | 14,385,197 | 9,738 | 0.09 | % | |||||||||||||||||||||
| CDs | 5,819,803 | 54,245 | 1.25 | % | 4,552,188 | 40,322 | 1.18 | % | |||||||||||||||||||||
| Total deposits | 60,748,932 | 88,666 | 0.20 | % | 51,283,793 | 52,559 | 0.14 | % | |||||||||||||||||||||
| Short-term borrowings | 738,187 | 6,185 | 1.12 | % | 632,215 | 2,844 | 0.60 | % | |||||||||||||||||||||
| Long-term FHLB advances | 6,635,165 | 73,882 | 1.49 | % | 4,294,161 | 50,314 | 1.57 | % | |||||||||||||||||||||
| Senior notes (3) | 610,671 | 11,964 | 2.61 | % | 397,459 | 7,720 | 2.59 | % | |||||||||||||||||||||
| Subordinated notes (3) | 715,510 | 25,102 | 4.68 | % | 86,227 | 2,951 | 4.56 | % | |||||||||||||||||||||
| Other borrowings | 23,694 | 416 | 2.34 | % | 28,535 | 354 | 1.65 | % | |||||||||||||||||||||
| Total borrowings | 8,723,227 | 117,549 | 1.80 | % | 5,438,597 | 64,183 | 1.58 | % | |||||||||||||||||||||
| Total interest-bearing liabilities | 69,472,159 | 206,215 | 0.40 | % | 56,722,390 | 116,742 | 0.27 | % | |||||||||||||||||||||
| Noninterest-bearing liabilities | 1,035,590 | 1,057,461 | |||||||||||||||||||||||||||
| Preferred equity | 986,836 | 1,117,627 | |||||||||||||||||||||||||||
| Common equity | 6,223,814 | 5,046,983 | |||||||||||||||||||||||||||
| Total Liabilities and Equity | $ | 77,718,399 | $ | 63,944,461 | |||||||||||||||||||||||||
| Net interest spread (4) | 3.10 | % | 3.17 | % | |||||||||||||||||||||||||
|
Net interest income (fully taxable-equivalent basis) and net interest margin (5) |
$ | 1,737,942 | 3.12 | % | $ | 1,452,268 | 3.19 | % | |||||||||||||||||||||
|
Reconciliation of tax-equivalent net interest income to reported net interest income: |
|||||||||||||||||||||||||||||
| Tax-equivalent adjustment | (155,340 | ) | (125,731 | ) | |||||||||||||||||||||||||
| Net interest income, as reported | $ | 1,582,602 | $ | 1,326,537 | |||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
(1) |
Interest income is presented on a fully taxable-equivalent basis. |
||
|
(2) |
Yields/rates are annualized. |
||
|
(3) |
Average balances include unamortized issuance discounts and costs. Interest expense includes amortization of issuance discounts and costs. |
||
|
(4) |
Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities. |
||
|
(5) |
Net interest margin represents net interest income on a fully taxable-equivalent basis divided by total average interest-earning assets. |
||
|
Quarter Ended |
Quarter Ended |
Nine Months Ended |
||||||||||||||||||||||||
| Operating Information | 2017 | 2016 | 2017 | 2017 | 2016 | |||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||||||||
| Net income to average assets (1) | 0.97 | % | 1.02 | % | 0.96 | % | 0.97 | % | 1.03 | % | ||||||||||||||||
| Net income available to common shareholders to average common equity (1) | 11.46 | % | 11.62 | % | 11.01 | % | 11.16 | % | 11.73 | % | ||||||||||||||||
| Net income available to common shareholders to average tangible common equity (1) | 12.02 | % | 12.30 | % | 11.57 | % | 11.74 | % | 12.47 | % | ||||||||||||||||
| Dividend payout ratio | 14.9 | % | 16.0 | % | 16.0 | % | 15.6 | % | 16.2 | % | ||||||||||||||||
| Efficiency ratio (2) | 62.4 | % | 60.5 | % | 61.9 | % | 62.4 | % | 60.6 | % | ||||||||||||||||
|
Net loan charge-offs |
$ | 655 | $ | 626 | $ | 609 | $ | 1,772 | $ | 1,645 | ||||||||||||||||
|
Net loan charge-offs to average total loans (1) |
0.00 | % | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||
| (1) 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 |
Nine Months Ended |
||||||||||||||||||||||||
| Mortgage Loan Sales | 2017 | 2016 | 2017 | 2017 | 2016 | |||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||||||||
| Loans sold: | ||||||||||||||||||||||||||
| Flow sales: | ||||||||||||||||||||||||||
| Agency | $ | 26,152 | $ | 137,949 | $ | 34,261 | $ | 110,145 | $ | 253,906 | ||||||||||||||||
| Non-agency | 88,534 | 92,750 | 72,829 | 217,565 | 190,439 | |||||||||||||||||||||
| Total flow sales | 114,686 | 230,699 | 107,090 | 327,710 | 444,345 | |||||||||||||||||||||
| Bulk sales: | ||||||||||||||||||||||||||
| Non-agency | 707,669 | 717,256 | 332,735 | 1,580,225 | 1,902,075 | |||||||||||||||||||||
| Total loans sold | $ | 822,355 | $ | 947,955 | $ | 439,825 | $ | 1,907,935 | $ | 2,346,420 | ||||||||||||||||
| Gain on sale of loans: | ||||||||||||||||||||||||||
| Amount | $ | 1,963 | $ | 1,785 | $ | 841 | $ | 6,168 | $ | 4,010 | ||||||||||||||||
| Gain as a percentage of loans sold | 0.24 | % | 0.19 | % | 0.19 | % | 0.32 | % | 0.17 | % | ||||||||||||||||
| As of | |||||||||||||||||||||||||
| Loan Servicing Portfolio |
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||
| Loans serviced for investors | $ | 12,111 | $ | 11,791 | $ | 11,838 | $ | 11,655 | $ | 11,494 | |||||||||||||||
|
Quarter Ended |
Quarter Ended |
Nine Months Ended |
|||||||||||||||||||||||
| Loan Originations | 2017 | 2016 | 2017 | 2017 | 2016 | ||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||||
| Single family (1-4 units) | $ | 2,987,278 | $ | 2,805,361 | $ | 3,053,014 | $ | 8,556,966 | $ | 7,551,306 | |||||||||||||||
| Home equity lines of credit | 459,709 | 454,529 | 424,223 | 1,298,255 | 1,362,807 | ||||||||||||||||||||
| Multifamily (5+ units) | 805,429 | 566,528 | 646,538 | 1,860,913 | 1,799,560 | ||||||||||||||||||||
| Commercial real estate | 197,596 | 311,466 | 336,054 | 929,219 | 907,850 | ||||||||||||||||||||
| Construction | 413,842 | 410,538 | 496,813 | 1,149,456 | 861,924 | ||||||||||||||||||||
| Business | 1,879,393 | 1,529,400 | 1,654,184 | 4,486,005 | 3,434,861 | ||||||||||||||||||||
| Stock and other secured | 320,952 | 207,241 | 450,674 | 1,255,148 | 1,073,454 | ||||||||||||||||||||
| Unsecured | 179,686 | 190,836 | 236,884 | 647,444 | 794,810 | ||||||||||||||||||||
| Total loans originated | $ | 7,243,885 | $ | 6,475,899 | $ | 7,298,384 | $ | 20,183,406 | $ | 17,786,572 | |||||||||||||||
| As of | ||||||||||||||||||||||||||
| Asset Quality Information |
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||||||||
| Nonperforming assets: | ||||||||||||||||||||||||||
| Nonaccrual loans | $ | 37,922 | $ | 43,384 | $ | 51,694 | $ | 49,020 | $ | 52,759 | ||||||||||||||||
| Other real estate owned | — | 1,930 | — | — | 1,196 | |||||||||||||||||||||
| Total nonperforming assets | $ | 37,922 | $ | 45,314 | $ | 51,694 | $ | 49,020 | $ | 53,955 | ||||||||||||||||
| Nonperforming assets to total assets | 0.04 | % | 0.06 | % | 0.07 | % | 0.07 | % | 0.08 | % | ||||||||||||||||
| Accruing loans 90 days or more past due | $ | — | $ | — | $ | — | $ | — | $ | 3,083 | ||||||||||||||||
| Restructured accruing loans | $ | 18,242 | $ | 13,001 | $ | 14,224 | $ | 14,278 | $ | 13,968 | ||||||||||||||||
| As of | |||||||||||||||||||||||||
| Book Value Ratios |
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
||||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||||||
| Number of shares of common stock outstanding | 157,930 | 157,686 | 157,122 | 154,292 | 150,109 | ||||||||||||||||||||
| Book value per common share | $ | 40.76 | $ | 39.76 | $ | 39.13 | $ | 37.39 | $ | 35.34 | |||||||||||||||
| Tangible book value per common share | $ | 38.90 | $ | 37.83 | $ | 37.16 | $ | 35.35 | $ | 33.41 | |||||||||||||||
| As of | |||||||||||||||||||||||||||||||
| 2017 | 2016 | ||||||||||||||||||||||||||||||
| September 30 (1) | June 30 | March 31 | December 31 | September 30 | |||||||||||||||||||||||||||
| Capital Ratios | Actual |
Fully |
Actual | ||||||||||||||||||||||||||||
|
Tier 1 leverage ratio (Tier 1 capital to average assets) |
8.78 | % | 8.76 | % | 8.99 | % | 9.22 | % | 9.37 | % | 9.26 | % | |||||||||||||||||||
|
Common Equity Tier 1 capital to risk-weighted assets |
10.58 | % | 10.48 | % | 10.72 | % | 11.15 | % | 10.83 | % | 10.52 | % | |||||||||||||||||||
|
Tier 1 capital to risk-weighted assets |
12.27 | % | 12.18 | % | 12.49 | % | 12.94 | % | 13.07 | % | 12.88 | % | |||||||||||||||||||
|
Total capital to risk-weighted assets |
14.23 | % | 14.13 | % | 14.51 | % | 15.04 | % | 14.46 | % | 14.33 | % | |||||||||||||||||||
|
Regulatory Capital (3) |
|||||||||||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||||||||||
| Common Equity Tier 1 capital | $ | 6,140,330 | $ | 6,112,026 | $ | 5,975,457 | $ | 5,852,885 | $ | 5,496,582 | $ | 5,046,133 | |||||||||||||||||||
| Tier 1 capital | $ | 7,121,330 | $ | 7,102,026 | $ | 6,960,057 | $ | 6,788,885 | $ | 6,631,383 | $ | 6,180,343 | |||||||||||||||||||
| Total capital | $ | 8,259,581 | $ | 8,240,277 | $ | 8,087,714 | $ | 7,892,528 | $ | 7,337,725 | $ | 6,875,478 | |||||||||||||||||||
| Assets (3) | |||||||||||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||||||||||
| Average assets | $ |
81,125,539 |
$ | 81,106,237 | $ | 77,419,255 | $ | 73,624,461 | $ | 70,779,188 | $ | 66,758,108 | |||||||||||||||||||
| Risk-weighted assets | $ | 58,027,813 | $ | 58,325,800 | $ | 55,730,798 | $ | 52,476,984 | $ | 50,744,017 | $ | 47,969,927 | |||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||
|
(1) |
Ratios and amounts as of September 30, 2017 are preliminary. |
||
|
(2) |
Certain adjustments required under the Basel III Capital Rules will be phased in through the end of 2018. The ratios and amounts shown in this column are calculated assuming a fully phased-in basis of all such adjustments as if they were effective as of September 30, 2017. |
||
|
(3) |
As defined by regulatory capital rules. |
| As of | |||||||||||||||||||||||||
| Wealth Management Assets |
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||||
| First Republic Investment Management | $ | 50,318 | $ | 47,530 | $ | 44,573 | $ | 41,154 | $ | 40,103 | |||||||||||||||
| Brokerage and investment: | |||||||||||||||||||||||||
| Brokerage | 40,652 | 37,658 | 35,397 | 32,218 | 31,058 | ||||||||||||||||||||
| Money market mutual funds | 1,201 | 1,402 | 1,795 | 2,048 | 1,902 | ||||||||||||||||||||
| Total brokerage and investment | 41,853 | 39,060 | 37,192 | 34,266 | 32,960 | ||||||||||||||||||||
| Trust Company: | |||||||||||||||||||||||||
|
Trust |
4,441 | 4,276 | 3,929 | 3,754 | 3,171 | ||||||||||||||||||||
| Custody | 4,734 | 4,559 | 4,438 | 4,406 | 3,954 | ||||||||||||||||||||
| Total Trust Company | 9,175 | 8,835 | 8,367 | 8,160 | 7,125 | ||||||||||||||||||||
| Total Wealth Management Assets | $ | 101,346 | $ | 95,425 | $ | 90,132 | $ | 83,580 | $ | 80,188 | |||||||||||||||
