First Republic Reports 2020 Results
First Republic Bank (NYSE: FRC) reported robust financial results for 2020, marking its 35th consecutive profitable year. Revenues reached $3.9 billion, a 17.2% increase, with net income at $1.1 billion, up 14.4%. The bank achieved a loan origination total of $50.7 billion and a diluted EPS of $5.81, up 11.7%. Capital strength remains evident with a Tier 1 leverage ratio of 8.14% and nonperforming assets at a low 13 basis points.
Quarterly, revenues were $1.1 billion, up 23.1%, with net interest income rising to $892.7 million.
- Revenue of $3.9 billion for 2020, up 17.2%.
- Net income increased to $1.1 billion, up 14.4%.
- Loan originations totaled $50.7 billion, an increase of 33.6%.
- Diluted earnings per share increased to $5.81, up 11.7%.
- Wealth management assets rose to $194.5 billion, up 28.7%.
- Net interest margin decreased to 2.72% from 2.83% year-over-year.
- Noninterest expense increased to $2.4 billion, up 13.0% for 2020.
First Republic Bank (NYSE: FRC) today announced financial results for the quarter and year ended December 31, 2020.
“First Republic had another very successful year,” said Founder, Chairman and CEO Jim Herbert. “Founded in 1985, this was our 35th consecutive year of profitability. First Republic continues to deliver safe, consistent growth, reflecting the strength of our client focused service model.”
Full Year Highlights
Financial Results
– Revenues were
– Net interest income was
– Net income was
– Diluted earnings per share of
– Loan originations totaled
– Tangible book value per share was
– Efficiency ratio was
Continued Capital and Credit Strength
– Tier 1 leverage ratio was
– Nonperforming assets remained at a low 13 basis points of total assets.
– Net charge-offs were only
Continued Franchise Development
– Loans totaled
– Deposits were
– Wealth management assets were
– Wealth management revenues were
Quarterly Highlights
– Compared to last year’s fourth quarter:
– Revenues were
– Net interest income was
– Net income was
– Diluted earnings per share of
– Loan originations were
– Net recoveries were
– Net interest margin was
– Efficiency ratio was
– Wealth management assets were
“We’re very pleased with the double-digit growth of revenue, net interest income and earnings per share, both for the full year and the fourth quarter,” said Mike Roffler, Chief Financial Officer. “We remain focused on maintaining our capital strength and successfully raised, net, over
Quarterly Cash Dividend of
The Bank declared a cash dividend for the fourth quarter of
Strong Asset Quality
Credit quality remains strong. Nonperforming assets were only 13 basis points of total assets at December 31, 2020.
The provision for credit losses for the full year was
Continued Capital Strength
The Bank’s Tier 1 leverage ratio was
During the fourth quarter, the Bank redeemed all of the outstanding shares of its
The Bank has not and does not engage in common stock buybacks.
Tangible Book Value Growth
Tangible book value per common share at December 31, 2020 was
Continued Franchise Development
Loan Originations
Loan originations were
Single family loan originations were
Loans, excluding PPP loans and loans held for sale, totaled
COVID-19 Loan Modifications
Remaining loan modifications at year-end to those borrowers experiencing financial challenges as a result of COVID-19 (not classified as troubled debt restructurings) totaled
The Bank has limited exposure to several of the areas most directly impacted by COVID-19, such as the retail, hotel and restaurant industries, which totaled
Deposit Growth
Total deposits increased to
At December 31, 2020, checking deposit balances were
Investments
Total investment securities at December 31, 2020 were
High-quality liquid assets, including eligible cash, totaled
Wealth Management
Total wealth management assets were
Wealth management revenues totaled
Wealth management assets at December 31, 2020 included investment management assets of
Income Statement and Key Ratios
Revenue Growth
Total revenues were
Net Interest Income Growth
Net interest income was
Net Interest Margin
The net interest margin increased to
Noninterest Income
Noninterest income was
Noninterest Expense and Efficiency Ratio
Noninterest expense was
The efficiency ratio was
Income Taxes
The Bank’s effective tax rate for the fourth quarter of 2020 was
The effective tax rate for 2020 was
Conference Call Details
First Republic Bank’s fourth quarter 2020 earnings conference call is scheduled for January 14, 2021 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 263-0877 and use confirmation code 3942335 approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (856) 344-9283 and enter the same confirmation code.
The call will also be broadcast live over the Internet and can be accessed in the Investor Relations section of First Republic’s website at https://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 the live presentation, a replay of the call will be available beginning January 14, 2021, at 11:00 a.m. PT / 2:00 p.m. ET, through January 21, 2021, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 3942335#. International callers should dial +1 (719) 457-0820 and enter the same confirmation code. A replay of the webcast also will be available for 90 days following, accessible in the Investor Relations section of First Republic Bank’s website at https://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, including investment, trust and brokerage services. First Republic specializes in delivering exceptional, relationship-based service and offers a complete line of products, including residential, commercial and personal loans, deposit services, and wealth management. Services are offered through preferred banking or wealth management offices primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and San Diego, California; Portland, Oregon; Boston, Massachusetts; Palm Beach, Florida; Greenwich, Connecticut; New York, New York; and Jackson, Wyoming. First Republic is a constituent of the S&P 500 Index and KBW Nasdaq Bank Index. For more information, visit firstrepublic.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimates,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them.
Forward-looking statements involving such risks and uncertainties include, but are not limited to, statements regarding: projections of loans, assets, deposits, liabilities, revenues, expenses, tax liabilities, net income, capital expenditures, liquidity, dividends, capital structure, investments or other financial items; expectations regarding the banking and wealth management industries; descriptions of plans or objectives of management for future operations, products or services; forecasts of future economic conditions generally and in our market areas in particular, which may affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans; our opportunities for growth and our plans for expansion (including opening new offices); expectations about the performance of any new offices; projections about the amount and the value of intangible assets, as well as amortization of recorded amounts; future provisions for credit losses on loans and debt securities, as well as for unfunded loan commitments; changes in nonperforming assets; expectations regarding the impact and duration of COVID-19; 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, fires, pandemics or acts of terrorism affecting the markets in which we operate; 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; 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, such as the London Interbank Offered Rate and the 11th District Monthly Weighted Average Cost of Funds Index, as well as other alternative reference rates; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; any future changes to regulatory capital requirements; legislative and regulatory actions affecting us and the financial services industry, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), including increased compliance costs, limitations on activities and requirements to hold additional capital, as well as changes to the Dodd-Frank Act pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act; our ability to avoid litigation and its associated costs and liabilities; future Federal Deposit Insurance Corporation (“FDIC”) special assessments or changes to regular assessments; fraud, cybersecurity and privacy risks; and custom technology preferences of our customers and our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications. For a discussion of these and other risks and uncertainties, see First Republic’s FDIC filings, including, but not limited to, the risk factors in First Republic’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any subsequent reports filed by First Republic with the FDIC. These filings are available in the Investor Relations section of our website.
All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout our public filings under the Exchange Act. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
CONSOLIDATED STATEMENTS OF INCOME |
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Quarter Ended
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Quarter Ended
|
|
Year Ended
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(in thousands, except per share amounts) |
|
2020 |
|
2019 |
|
2020 |
2020 |
|
2019 |
|||||||||||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Loans |
|
$ |
845,150 |
|
|
$ |
780,326 |
|
|
|
$ |
811,708 |
|
|
|
$ |
3,244,796 |
|
|
|
$ |
2,986,210 |
|
|
Investments |
|
138,429 |
|
|
146,080 |
|
|
|
142,971 |
|
|
|
576,484 |
|
|
|
547,988 |
|
|
|||||
Other |
|
5,754 |
|
|
5,679 |
|
|
|
6,116 |
|
|
|
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