First Republic Reports Second Quarter 2021 Results

Rhea-AI Summary

First Republic Bank (NYSE: FRC) reported strong Q2 2021 results with revenues of $1.2 billion, a 33.9% increase year-over-year. Net interest income rose to $1.0 billion, up 27.5%, and net income reached $373.1 million, marking a 45.3% gain. The bank achieved record loan originations of $16.8 billion, a 24.7% increase, and total deposits grew by 36.7% to $134.7 billion. Wealth management assets surged 54.6% to $240.9 billion. A quarterly dividend of $0.22 per share was declared, payable on August 12, 2021, signaling confidence in sustained growth.

Positive

• Revenues increased 33.9% year-over-year to $1.2 billion.
• Net interest income rose 27.5% to $1.0 billion.
• Net income surged 45.3% to $373.1 million.
• Record loan originations of $16.8 billion, up 24.7% year-over-year.
• Total deposits increased 36.7% to $134.7 billion.
• Wealth management assets grew 54.6% to $240.9 billion.

Negative

• Noninterest expense increased 33.9% to $762.8 million.
• Tier 1 leverage ratio decreased from 8.32% to 8.05%.

First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended June 30, 2021.

“First Republic had another very strong quarter of organic growth,” said Jim Herbert, Founder, Chairman and Co-CEO of First Republic Bank. “First Republic’s brand of exceptional client service resulted in significant growth in single family loans, deposits and wealth management assets.”

“Our results this quarter were representative of how our service-focused business model continues to resonate strongly with clients,” said Hafize Gaye Erkan, Co-CEO and President. “Providing exceptional service is a proven differentiator for First Republic.”

Quarterly Highlights

Financial Results

– Year-over-year:

– Revenues were $1.2 billion, up 33.9%.

– Net interest income was $1.0 billion, up 27.5%.

– Net income was $373.1 million, up 45.3%.

– Diluted earnings per share of $1.95, up 39.3% (included $0.11 positive impact from tax benefits on vesting of stock awards).

– Tangible book value per share was $61.72, up 15.5%.

– Loan originations totaled $16.8 billion, our strongest quarter ever.

– Net interest margin was 2.68%, compared to 2.67% for the prior quarter.

– Efficiency ratio was 62.0%, compared to 63.5% for the prior quarter.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.05%.

– Nonperforming assets were at a very low 8 basis points of total assets.

– Net charge-offs were only $1.2 million, or less than 1 basis point of average loans.

Continued Franchise Growth

– Year-over-year:

– Loans totaled $123.1 billion, up 22.7%.

– Deposits were $134.7 billion, up 36.7%.

– Wealth management assets were $240.9 billion, up 54.6%.

– Wealth management revenues were $183.6 million, up 61.2%.

“We are quite pleased with the growth of revenue and net interest income during the second quarter,” said Mike Roffler, Chief Financial Officer. “Credit quality remains excellent, further reflecting the safety and stability of First Republic.”

Quarterly Cash Dividend of $0.22 per Share

The Bank declared a cash dividend for the second quarter of $0.22 per share of common stock, which is payable on August 12, 2021 to shareholders of record as of July 29, 2021.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were at a very low 8 basis points of total assets at June 30, 2021. The Bank had modest net loan charge-offs of only $1.2 million for the quarter.

During the second quarter, the Bank recorded a provision for credit losses of $16.1 million, which was primarily driven by loan growth.

Continued Book Value Growth and Capital Strength

Book value per common share at June 30, 2021 was $62.99, up 14.9% from a year ago. Tangible book value per common share at June 30, 2021 was $61.72, up 15.5% from a year ago.

The Bank’s Tier 1 leverage ratio was 8.05% at June 30, 2021, compared to 8.32% at March 31, 2021.

Continued Franchise Growth

Loan Originations

Loan originations were our largest ever at $16.8 billion for the quarter, up 24.7% from the same quarter a year ago. This was primarily due to increases in single family and business lending, partially offset by a decrease in loan originations under the Small Business Administration’s Paycheck Protection Program (“PPP”).

Single family loan originations were 52% of the total volume for the quarter and had a weighted average loan-to-value ratio of 60%. Multifamily and commercial real estate loans originated were only 9% of total originations, and had a weighted average loan-to-value ratio of 49%.

Loans totaled $123.1 billion at June 30, 2021, up 22.7% compared to a year ago, primarily due to increases in single family loans, business, multifamily and stock secured loans, partially offset by a decrease in PPP loans.

COVID-19 Loan Modifications Continue to Decline

Remaining loan modifications to those borrowers experiencing financial challenges as a result of COVID-19 (not classified as troubled debt restructurings) totaled $634 million, and were only 0.5% of total loans as of June 30, 2021, down from a peak of approximately 4% of total loans as of June 30, 2020.

Deposit Growth

Total deposits increased to $134.7 billion, up 36.7% compared to a year ago, and had an average rate paid of 7 basis points during the quarter.

At June 30, 2021, checking deposit balances were 68.0% of total deposits.

Investments

Total investment securities at June 30, 2021 were $22.9 billion, a 5.6% increase compared to the prior quarter and a 19.9% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $23.2 billion at June 30, 2021, and represented 14.3% of quarterly average total assets.

Wealth Management

Total wealth management assets were $240.9 billion at June 30, 2021, up 10.0% compared to the prior quarter and up 54.6% compared to a year ago. The increases in wealth management assets were due to both net client inflow and market appreciation.

Wealth management revenues totaled $183.6 million for the quarter, up 61.2% compared to last year’s second quarter. Such revenues represented 14.9% of the Bank’s total revenues for the quarter.

Wealth management assets at June 30, 2021 included investment management assets of $99.5 billion, brokerage assets and money market mutual funds of $125.5 billion, and trust and custody assets of $15.9 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.2 billion for the quarter, up 33.9% compared to the second quarter a year ago.

Net Interest Income Growth

Net interest income was $1.0 billion for the quarter, up 27.5% compared to the second quarter a year ago. The increase in net interest income resulted primarily from growth in average interest-earning assets.

Net Interest Margin

The net interest margin increased to 2.68% in the second quarter, from 2.67% in the prior quarter.

Noninterest Income

Noninterest income was $226.6 million for the quarter, up 72.2% compared to the second quarter a year ago. The increase was primarily driven by higher wealth management fees, income from investments in life insurance and loan servicing fees.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $762.8 million for the quarter, up 33.9% compared to the second quarter a year ago. The increase was primarily due to increased salaries and benefits, information systems and occupancy costs from the continued investments in the expansion of the franchise, and higher professional fees and advertising and marketing costs.

The efficiency ratio was 62.0% for both the second quarter of 2021 and 2020.

Income Taxes

The Bank’s effective tax rate for the second quarter of 2021 was 17.4%, compared to 21.9% for the prior quarter, and 19.4% for the second quarter a year ago. The decrease from the second quarter a year ago was primarily the result of higher excess tax benefits upon vesting of stock awards due to higher market valuation levels. For the first six months of 2021, the Bank’s effective tax rate was 19.6%, compared to 19.4% a year ago.

Conference Call Details

First Republic Bank’s second quarter 2021 earnings conference call is scheduled for July 13, 2021 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 458-4148 and provide confirmation code 3341684 approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (856) 344-9290 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 the live presentation, a replay of the call will be available beginning July 13, 2021, at 11:00 a.m. PT / 2:00 p.m. ET, through July 20, 2021, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 3341684#. 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 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, wildfires, 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 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.

CONSOLIDATED STATEMENTS OF INCOME
		Quarter Ended June 30,							Quarter Ended March 31,				Six Months Ended June 30,
(in thousands, except per share amounts)		2021			2020				2021				2021			2020
Interest income:
Loans		$	912,885		$	791,286			$	873,170			$	1,786,055		$	1,587,938
Investments		156,947			146,515				140,711				297,658			295,084
Other		5,103			5,059				5,189				10,292			12,019
Cash and cash equivalents		3,070			564				2,894				5,964			4,504
Total interest income		1,078,005			943,424				1,021,964				2,099,969			1,899,545
Interest expense:
Deposits		24,096			72,480				27,571				51,667			191,325
Borrowings		50,044			83,532				55,611				105,655			168,676
Total interest expense		74,140			156,012				83,182				157,322			360,001
Net interest income		1,003,865			787,412				938,782				1,942,647			1,539,544
Provision (reversal of provision) for credit losses		16,143			31,117				(14,608		)		1,535			93,487
Net interest income after provision (reversal of provision) for credit losses		987,722			756,295				953,390				1,941,112			1,446,057
Noninterest income:
Investment management fees		136,516			85,083				119,042				255,558			184,379
Brokerage and investment fees		17,574			12,406				14,564				32,138			28,232
Insurance fees		2,668			1,713				3,074				5,742			3,870
Trust fees		6,245			4,599				5,731				11,976			9,575
Foreign exchange fee income		20,612			10,105				17,167				37,779			22,289
Deposit fees		6,618			5,248				6,169				12,787			11,845
Loan and related fees		8,877			7,456				7,485				16,362			13,570
Loan servicing fees, net		1,057			(4,445		)		1,488				2,545			(2,793		)
Gain (loss) on sale of loans		58			(1,147		)		309				367			778
Gain on investment securities		1,329			1,529				655				1,984			4,157
Income from investments in life insurance		21,457			7,800				16,549				38,006			15,960
Other income		3,597			1,222				3,618				7,215			3,751
Total noninterest income		226,608			131,569				195,851				422,459			295,613
Noninterest expense:
Salaries and employee benefits		481,503			344,204				463,404				944,907			705,408
Information systems		88,980			74,037				83,516				172,496			144,752
Occupancy		63,526			54,941				57,549				121,075			108,582
Professional fees		25,475			15,517				21,254				46,729			28,634
Advertising and marketing		16,560			8,621				12,633				29,193			20,464
FDIC assessments		13,254			11,275				11,900				25,154			21,460
Other expenses		73,467			60,863				70,140				143,607			122,175
Total noninterest expense		762,765			569,458				720,396				1,483,161			1,151,475
Income before provision for income taxes		451,565			318,406				428,845				880,410			590,195
Provision for income taxes		78,459			61,638				94,012				172,471			114,741
Net income		373,106			256,768				334,833				707,939			475,454
Dividends on preferred stock		23,655			14,817				18,525				42,180			27,837
Net income available to common shareholders		$	349,451		$	241,951			$	316,308			$	665,759		$	447,617
Basic earnings per common share		$	1.98		$	1.41			$	1.81			$	3.79		$	2.61
Diluted earnings per common share		$	1.95		$	1.40			$	1.79			$	3.74		$	2.60
Weighted average shares—basic		176,419			171,627				174,820				175,624			171,231
Weighted average shares—diluted		178,864			172,659				176,951				177,913			172,343

CONSOLIDATED BALANCE SHEETS
		As of
($ in thousands)		June 30, 2021				March 31, 2021				December 31, 2020				June 30, 2020
ASSETS
Cash and cash equivalents		$	7,876,952			$	8,889,492			$	5,094,754			$	3,099,170
Debt securities available-for-sale		2,634,983				2,428,833				1,906,315				1,576,956
Debt securities held-to-maturity		20,244,705				19,240,358				16,610,212				17,513,211
Less: Allowance for credit losses		(8,407		)		(8,024		)		(6,902		)		(5,383		)
Debt securities held-to-maturity, net		20,236,298				19,232,334				16,603,310				17,507,828
Equity securities (fair value)		29,550				21,221				20,566				21,104
Loans:
Single family		69,908,787				65,178,442				61,370,246				52,435,246
Home equity lines of credit		2,441,034				2,392,314				2,449,533				2,419,359
Single family construction		877,548				841,962				787,854				733,909
Multifamily		14,803,219				14,141,208				13,768,957				13,187,857
Commercial real estate		8,234,934				8,065,262				8,018,158				7,793,137
Multifamily/commercial construction		2,060,980				2,101,119				2,024,420				1,966,292
Capital call lines of credit		8,127,473				8,653,802				8,149,946				6,173,992
Tax-exempt		3,566,385				3,454,471				3,365,572				3,186,066
Other business		3,656,598				3,679,420				3,340,048				3,179,023
PPP		1,374,765				2,142,253				1,841,376				2,092,307
Stock secured		2,965,857				2,519,637				2,518,338				1,924,107
Other secured		2,051,617				1,862,529				1,818,550				1,702,535
Unsecured		3,047,981				3,050,999				3,113,267				3,221,405
Total loans		123,117,178				118,083,418				112,566,265				100,015,235
Allowance for credit losses		(636,910		)		(620,825		)		(635,019		)		(583,997		)
Loans, net		122,480,268				117,462,593				111,931,246				99,431,238
Loans held for sale		3,169				—				20,679				313,655
Investments in life insurance		2,597,637				2,328,844				2,061,362				1,468,712
Tax credit investments		1,224,114				1,127,465				1,131,905				1,105,853
Premises, equipment and leasehold improvements, net		418,725				412,331				403,482				388,256
Goodwill and other intangible assets		224,497				225,925				227,512				230,975
Other real estate owned		—				1,334				—				1,071
Other assets		3,920,541				3,667,588				3,101,003				3,159,069
Total Assets		$	161,646,734			$	155,797,960			$	142,502,134			$	128,303,887
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking		$	59,449,158			$	53,806,762			$	46,281,112			$	37,586,940
Interest-bearing checking		32,165,327				32,542,600				30,603,221				23,833,458
Money market checking		20,373,535				19,210,069				16,778,884				14,639,069
Money market savings and passbooks		14,747,597				14,097,001				12,584,522				10,236,015
Certificates of deposit		7,921,218				8,250,521				8,681,061				12,238,479
Total Deposits		134,656,835				127,906,953				114,928,800				98,533,961
Short-term borrowings		—				—				—				5,000
Long-term FHLB advances		9,000,000				10,505,000				11,755,000				15,405,000
Senior notes		997,193				996,668				996,145				995,109
Subordinated notes		778,535				778,423				778,313				778,096
Other liabilities		2,939,444				2,669,186				2,293,230				2,010,793
Total Liabilities		148,372,007				142,856,230				130,751,488				117,727,959
Shareholders’ Equity:
Preferred stock		2,142,500				2,142,500				1,545,000				1,145,000
Common stock		1,767				1,763				1,741				1,721
Additional paid-in capital		5,204,166				5,191,932				4,834,172				4,543,051
Retained earnings		5,936,669				5,626,958				5,346,355				4,858,965
Accumulated other comprehensive income (loss)		(10,375		)		(21,423		)		23,378				27,191
Total Shareholders’ Equity		13,274,727				12,941,730				11,750,646				10,575,928
Total Liabilities and Shareholders’ Equity		$	161,646,734			$	155,797,960			$	142,502,134			$	128,303,887

		Quarter Ended June 30,																						Quarter Ended March 31,
		2021											2020											2021
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 thousands)
Assets:
Cash and cash equivalents		$	11,280,780			$	3,070			0.11	%		$	2,789,666			$	564			0.08	%		$	11,448,652			$	2,894			0.10	%
Investment securities:
U.S. Government-sponsored agency securities		100,000				398				1.59	%		214,835				1,367				2.55	%		93,889				339				1.45	%
Agency residential and commercial MBS		5,646,537				29,000				2.05	%		6,615,707				42,661				2.58	%		5,625,748				30,536				2.17	%
Other residential and commercial MBS		30,297				154				2.04	%		27,499				182				2.65	%		32,992				154				1.87	%
Municipal securities		15,082,004				147,297				3.91	%		11,949,615				126,906				4.25	%		13,349,101				134,990				4.04	%
Other investment securities (3)		1,375,557				9,800				2.85	%		43,800				309				2.83	%		429,289				2,568				2.39	%
Total investment securities		22,234,395				186,649				3.36	%		18,851,456				171,425				3.64	%		19,531,019				168,587				3.45	%
Loans:
Residential real estate (4)		69,853,517				491,229				2.81	%		53,737,207				404,691				3.01	%		65,458,977				469,010				2.87	%
Multifamily (5)		14,392,073				126,888				3.49	%		12,887,676				120,657				3.70	%		13,922,237				122,829				3.53	%
Commercial real estate		8,117,288				78,427				3.82	%		7,718,257				77,635				3.98	%		8,032,825				77,879				3.88	%
Multifamily/commercial construction		2,969,059				37,522				5.00	%		2,632,682				29,468				4.43	%		2,867,284				31,100				4.34	%
Business (6)		15,894,165				128,914				3.21	%		13,069,640				115,666				3.50	%		15,076,564				123,741				3.28	%
PPP		1,842,716				15,476				3.32	%		1,620,772				7,659				1.87	%		1,989,987				15,766				3.17	%
Other (7)		7,652,991				41,518				2.15	%		6,658,487				42,116				2.50	%		7,347,624				39,685				2.16	%
Total loans		120,721,809				919,974				3.03	%		98,324,721				797,892				3.23	%		114,695,498				880,010				3.07	%
FHLB stock		312,647				5,103				6.55	%		491,938				5,059				4.14	%		344,990				5,189				6.10	%
Total interest-earning assets		154,549,631				1,114,796				2.87	%		120,457,781				974,940				3.22	%		146,020,159				1,056,680				2.90	%
Noninterest-earning cash		385,537											425,440											413,625
Goodwill and other intangibles		225,183											231,934											226,683
Other assets		6,724,321											4,905,493											6,091,492
Total noninterest-earning assets		7,335,041											5,562,867											6,731,800
Total Assets		$	161,884,672										$	126,020,648										$	152,751,959
Liabilities and Shareholders’ Equity:
Deposits:
Checking		$	91,379,594			1,740				0.01	%		$	58,978,081			3,127				0.02	%		$	83,679,569			2,074				0.01	%
Money market checking		19,927,834				6,100				0.12	%		14,315,050				9,860				0.28	%		18,888,949				7,644				0.16	%
Money market savings and passbooks		14,783,456				6,117				0.17	%		9,818,650				5,364				0.22	%		13,640,388				6,310				0.19	%
CDs		8,039,804				10,139				0.51	%		12,721,452				54,129				1.71	%		8,413,083				11,543				0.56	%
Total deposits		134,130,688				24,096				0.07	%		95,833,233				72,480				0.30	%		124,621,989				27,571				0.09	%
Borrowings:
Short-term borrowings		—				—				—	%		2,747				—				0.04	%		6				0				0.18	%
Long-term FHLB advances		10,062,253				34,892				1.39	%		15,868,682				68,391				1.73	%		11,321,666				40,463				1.45	%
Senior notes (8)		996,937				6,040				2.42	%		994,905				6,034				2.43	%		996,412				6,038				2.42	%
Subordinated notes (8)		778,480				9,112				4.68	%		778,044				9,107				4.68	%		778,369				9,110				4.68	%
Total borrowings		11,837,670				50,044				1.69	%		17,644,378				83,532				1.90	%		13,096,453				55,611				1.72	%
Total interest-bearing liabilities		145,968,358				74,140				0.20	%		113,477,611				156,012				0.55	%		137,718,442				83,182				0.24	%
Noninterest-bearing liabilities		2,796,202											2,067,585											2,637,481
Preferred shareholders’ equity		2,142,500											1,145,000											1,963,583
Common shareholders’ equity		10,977,612											9,330,452											10,432,453
Total Liabilities and Shareholders’ Equity		$	161,884,672										$	126,020,648										$	152,751,959
Net interest spread (9)										2.67	%										2.67	%										2.65	%
Net interest income (fully taxable-equivalent basis) and net interest margin (10)						$	1,040,656			2.68	%						$	818,928			2.70	%						$	973,498			2.67	%
Reconciliation of tax-equivalent net interest income to net interest income: (11)
Municipal securities tax-equivalent adjustment						(29,702		)									(24,909		)									(27,876		)
Business loans tax-equivalent adjustment						(7,089		)									(6,607		)									(6,840		)
Net interest income						$	1,003,865										$	787,412										$	938,782

		Six Months Ended June 30,
		2021											2020
Average Balances, Yields and Rates		Average Balance				Interest Income/Expense (1)				Yields/ Rates (2)			Average Balance				Interest Income/Expense (1)				Yields/ Rates (2)
($ in thousands)
Assets:
Cash and cash equivalents		$	11,364,252			$	5,964			0.11	%		$	2,321,623			$	4,504			0.39	%
Investment securities:
U.S. Government-sponsored agency securities		96,961				737				1.52	%		261,142				3,574				2.74	%
Agency residential and commercial MBS		5,636,200				59,537				2.11	%		6,681,185				89,846				2.69	%
Other residential and commercial MBS		31,637				309				1.95	%		15,667				214				2.73	%
Municipal securities		14,220,340				282,375				3.97	%		11,654,183				249,935				4.29	%
Other investment securities (3)		905,037				12,367				2.73	%		43,791				629				2.87	%
Total investment securities		20,890,175				355,325				3.40	%		18,655,968				344,198				3.69	%
Loans:
Residential real estate (4)		67,668,387				960,239				2.84	%		52,518,610				809,674				3.08	%
Multifamily (5)		14,158,453				249,718				3.51	%		12,726,699				239,601				3.72	%
Commercial real estate		8,075,290				156,306				3.85	%		7,646,415				156,244				4.04	%
Multifamily/commercial construction		2,918,453				68,622				4.68	%		2,591,664				59,753				4.56	%
Business (6)		15,487,623				252,666				3.24	%		12,730,013				238,698				3.71	%
PPP		1,915,944				31,242				3.24	%		810,386				7,659				1.87	%
Other (7)		7,501,151				81,201				2.15	%		6,555,772				89,687				2.71	%
Total loans		117,725,301				1,799,994				3.05	%		95,579,559				1,601,316				3.33	%
FHLB stock		328,729				10,292				6.31	%		449,455				12,019				5.38	%
Total interest-earning assets		150,308,457				2,171,575				2.88	%		117,006,605				1,962,037				3.34	%
Noninterest-earning cash		399,504											434,348
Goodwill and other intangibles		225,929											233,006
Other assets		6,409,654											4,813,403
Total noninterest-earning assets		7,035,087											5,480,757
Total Assets		$	157,343,544										$	122,487,362
Liabilities and Shareholders’ Equity:
Deposits:
Checking		$	87,550,852			3,813				0.01	%		$	56,420,801			11,559				0.04	%
Money market checking		19,411,261				13,744				0.14	%		13,519,835				39,163				0.58	%
Money market savings and passbooks		14,215,079				12,427				0.18	%		9,784,569				20,931				0.43	%
CDs		8,225,414				21,683				0.53	%		13,453,699				119,672				1.79	%
Total deposits		129,402,606				51,667				0.08	%		93,178,904				191,325				0.41	%
Borrowings:
Short-term borrowings		3				—				0.18	%		617,287				4,700				1.53	%
Long-term FHLB advances		10,688,481				75,355				1.42	%		14,644,643				134,957				1.85	%
Senior notes (8)		996,676				12,078				2.42	%		880,106				10,807				2.46	%
Subordinated notes (8)		778,424				18,222				4.68	%		777,991				18,212				4.68	%
Total borrowings		12,463,584				105,655				1.71	%		16,920,027				168,676				2.00	%
Total interest-bearing liabilities		141,866,190				157,322				0.22	%		110,098,931				360,001				0.66	%
Noninterest-bearing liabilities		2,717,280											2,048,845
Preferred shareholders’ equity		2,053,536											1,145,000
Common shareholders’ equity		10,706,538											9,194,586
Total Liabilities and Shareholders’ Equity		$	157,343,544										$	122,487,362
Net interest spread (9)										2.66	%										2.68	%
Net interest income (fully taxable-equivalent basis) and net interest margin (10)						$	2,014,253			2.67	%						$	1,602,036			2.72	%
Reconciliation of tax-equivalent net interest income to net interest income: (11)
Municipal securities tax-equivalent adjustment						(57,667)											(49,113)
Business loans tax-equivalent adjustment						(13,939)											(13,379)
Net interest income						$	1,942,647										$	1,539,544

_____________________
(1)		Interest income is presented on a fully taxable-equivalent basis.
(2)		Yields/rates are annualized.
(3)		Includes corporate debt securities, mutual funds and marketable equity securities.
(4)		Includes single family, home equity lines of credit, and single family construction loans. Also includes single family loans held for sale.
(5)		Includes multifamily loans held for sale.
(6)		Includes capital call lines of credit, tax-exempt and other business loans.
(7)		Includes stock secured, other secured and unsecured loans.
(8)		Average balances include unamortized issuance discounts and costs. Interest expense includes amortization of issuance discounts and costs.
(9)		Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
(10)		Net interest margin represents net interest income on a fully taxable-equivalent basis divided by total average interest-earning assets.
(11)		Fully taxable-equivalent net interest income is considered a non-GAAP financial measure, and is reconciled to GAAP net interest income in this table.

		Quarter Ended June 30,								Quarter Ended March 31,				Six Months Ended June 30,
Selected Financial Data and Ratios		2021				2020				2021				2021				2020
($ in thousands, except per share amounts)
Return on average assets (1), (2)		0.92		%		0.82		%		0.89		%		0.91		%		0.78		%
Return on average common shareholders’ equity (1)		12.77		%		10.43		%		12.30		%		12.54		%		9.79		%
Return on average tangible common shareholders’ equity (1), (3)		13.04		%		10.70		%		12.57		%		12.81		%		10.04		%
Average total equity to average total assets		8.10		%		8.31		%		8.12		%		8.11		%		8.44		%
Dividends per common share		$	0.22			$	0.20			$	0.20			$	0.42			$	0.39
Dividend payout ratio		11.3		%		14.3		%		11.2		%		11.2		%		15.0		%
Book value per common share		$	62.99			$	54.80			$	61.26			$	62.99			$	54.80
Tangible book value per common share (4)		$	61.72			$	53.46			$	59.98			$	61.72			$	53.46
Efficiency ratio (5)		62.0		%		62.0		%		63.5		%		62.7		%		62.7		%
Net loan charge-offs		$	1,219			$	1,098			$	487			$	1,706			$	1,300
Net loan charge-offs to average total loans (1)		0.00		%		0.00		%		0.00		%		0.00		%		0.00		%
Allowance for loan credit losses to:
Total loans		0.52		%		0.58		%		0.53		%		0.52		%		0.58		%
Nonaccrual loans		479.3		%		354.1		%		359.3		%		479.3		%		354.1		%

_____________________
(1)		Ratios are annualized.
(2)		Return on average assets is the ratio of net income to average assets.
(3)		Refer to “Return on Average Common Shareholders’ Equity and Return on Average Tangible Common Shareholders' Equity” table in this document for a reconciliation of this non-GAAP financial measure to the most comparable GAAP measure.
(4)		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.
(5)		Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.

		Quarter Ended June 30,						Quarter Ended March 31,			Six Months Ended June 30,
Effective Tax Rate		2021			2020			2021			2021			2020
Effective tax rate, prior to excess tax benefits—stock awards		21.7	%		22.5	%		22.6	%		22.1	%		21.9	%
Excess tax benefits—stock awards		(4.3	)		(3.1	)		(0.7	)		(2.5	)%		(2.5	)%
Effective tax rate		17.4	%		19.4	%		21.9	%		19.6	%		19.4	%

Provision (Reversal of Provision) for Credit Losses		Quarter Ended June 30,								Quarter Ended March 31,				Six Months Ended June 30,
		2021				2020				2021				2021				2020
($ in thousands)
Debt securities held-to-maturity		$	383			$	296			$	1,122			$	1,505			$	714
Loans		17,304				43,189				(13,707		)		3,597				90,868
Unfunded loan commitments		(1,544		)		(12,368		)		(2,023		)		(3,567		)		1,905
Total provision (reversal of provision)		$	16,143			$	31,117			$	(14,608	)		$	1,535			$	93,487

		Quarter Ended June 30,								Quarter Ended March 31,				Six Months Ended June 30,
Mortgage Loan Sales		2021				2020				2021				2021				2020
($ in thousands)
Loans sold:
Flow sales:
Agency		$	4,315			$	10,810			$	42,402			$	46,717			$	36,584
Non-agency		—				—				1,073				1,073				31,870
Total flow sales		4,315				10,810				43,475				47,790				68,454
Bulk sales:
Non-agency		—				—				—				—				437,669
Securitizations		—				300,116				—				—				300,116
Total loans sold		$	4,315			$	310,926			$	43,475			$	47,790			$	806,239
Gain (loss) on sale of loans:
Amount		$	58			$	(1,147)			$	309			$	367			$	778
Gain (loss) as a percentage of loans sold		1.34		%		(0.37)		%		0.71		%		0.77		%		0.10		%

		Quarter Ended June 30,								Quarter Ended March 31,				Six Months Ended June 30,
Loan Originations		2021				2020				2021				2021				2020
($ in thousands)
Single family		$	8,661,680			$	5,875,184			$	6,902,192			$	15,563,872			$	9,394,520
Home equity lines of credit		610,658				457,737				623,661				1,234,319				853,245
Single family construction		215,014				119,318				224,504				439,518				228,480
Multifamily		1,101,450				946,820				791,070				1,892,520				1,728,123
Commercial real estate		458,196				330,683				313,991				772,187				782,541
Multifamily/commercial construction		272,145				131,414				310,824				582,969				752,335
Capital call lines of credit		2,921,192				1,405,347				3,131,317				6,052,509				3,790,576
Tax-exempt		208,327				184,054				213,967				422,294				284,073
Other business		520,394				914,257				1,025,154				1,545,548				1,534,036
PPP		35,586				1,981,797				688,948				724,534				1,981,797
Stock secured		775,795				519,416				710,038				1,485,833				1,111,976
Other secured		598,630				358,730				438,989				1,037,619				772,554
Unsecured		372,192				203,270				345,848				718,040				526,158
Total loans originated		$	16,751,259			$	13,428,027			$	15,720,503			$	32,471,762			$	23,740,414

		As of
Asset Quality Information		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
($ in thousands)
Nonperforming assets:
Nonaccrual loans		$	132,880			$	172,794			$	184,132			$	164,247			$	164,930
Other real estate owned		—				1,334				—				—				1,071
Total nonperforming assets		$	132,880			$	174,128			$	184,132			$	164,247			$	166,001
Nonperforming assets to total assets		0.08		%		0.11		%		0.13		%		0.12		%		0.13		%
Accruing loans 90 days or more past due		$	—			$	851			$	—			$	935			$	3,764
Restructured accruing loans		$	11,407			$	11,658			$	11,253			$	11,378			$	11,501

		June 30, 2021
COVID-19 Loan Modifications (1), (2), (3), (4), (5)		Unpaid Principal Balance				LTV (6)		Average Loan Size				Number of Loans
($ in millions)
Single family		$	124			60%		$	1.1			116
Home equity lines of credit		2				64%		$	0.3			6
Single family construction		2				75%		$	2.4			1
Multifamily		161				51%		$	6.4			25
Commercial real estate		157				47%		$	5.2			30
Multifamily/commercial construction		9				45%		$	8.9			1
Capital call lines of credit		—				n/a		$	—			—
Tax-exempt		141				n/a		$	23.5			6
Other business		30				n/a		$	2.5			12
Stock secured		—				n/a		$	—			—
Other secured		2				n/a		$	0.4			6
Unsecured (7)		6				n/a		$	0.1			60
Total		$	634									263

_____________________
(1)		COVID-19 loan modifications are not classified as troubled debt restructurings.
(2)		Includes 62 loans totaling $274 million that have completed their deferral period, but for which a regular payment is not yet due.
(3)		Includes 136 loans totaling $328 million that received additional relief beyond their initial modification period.
(4)		Excludes loans that have completed their deferral period and returned to a regular payment schedule or are no longer outstanding. As of June 30, 2021, $3.4 billion of loans have completed their deferral period or are no longer outstanding, and 99% of the outstanding loans were current.
(5)		Loan modifications requested by borrowers that were in process but not yet completed as of June 30, 2021 totaled $7 million for initial relief, and $2 million for additional relief beyond the initial modification period.
(6)		Weighted average loan-to-value (“LTV”) ratios for real estate secured loans are based on appraised value at the time of origination.
(7)		Consists of household debt refinance loans.

		June 30, 2021
Loan Industry Information		Unpaid Principal Balance				LTV			Average Loan Size				Number of Loans			Personal Guarantee %
($ in millions)
Retail		$	1,859			49	%		$	2.6			729			78	%
Hotel		468				48	%		$	7.3			66			76	%
Restaurant (1)		210				49	%		$	1.1			199			95	%
Total (2)		$	2,537										994

_____________________
(1)		Approximately 74% of loans to restaurants are real estate secured.
(2)		Amounts in the table above exclude $50 million of loans to hotels and $214 million of loans to restaurants under the PPP.

		As of
Loan Servicing Portfolio		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
($ in millions)
Loans serviced for investors		$	5,640			$	6,314			$	7,094			$	7,799			$	8,316

Return on Average Common Shareholders’ Equity and Return on Average Tangible Common Shareholders’ Equity (1), (2)		Quarter Ended June 30,								Quarter Ended March 31,				Six Months Ended June 30,
		2021				2020				2021				2021				2020
($ in thousands)
Average common shareholders’ equity (a)		$	10,977,612			$	9,330,452			$	10,432,453			$	10,706,538			$	9,194,586
Less: Average goodwill and other intangible assets		225,183				231,934				226,683				225,929				233,006
Average tangible common shareholders’ equity (b)		$	10,752,429			$	9,098,518			$	10,205,770			$	10,480,609			$	8,961,580
Net income available to common shareholders (c)		$	349,451			$	241,951			$	316,308			$	665,759			$	447,617
Return on average common shareholders’ equity (c) / (a)		12.77		%		10.43		%		12.30		%		12.54		%		9.79		%
Return on average tangible common shareholders’ equity (c) / (b)		13.04		%		10.70		%		12.57		%		12.81		%		10.04		%

_____________________
(1)		Return on average tangible common shareholders’ equity is considered a non-GAAP financial measure, and is reconciled to GAAP return on average common shareholders’ equity in this table.
(2)		Ratios are annualized.

		As of
Book Value per Common Share and Tangible Book Value per Common Share (1)		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
(in thousands, except per share amounts)
Total shareholders’ equity		$	13,274,727			$	12,941,730			$	11,750,646			$	11,344,609			$	10,575,928
Less: Preferred stock		2,142,500				2,142,500				1,545,000				1,645,000				1,145,000
Total common shareholders’ equity (a)		11,132,227				10,799,230				10,205,646				9,699,609				9,430,928
Less: Goodwill and other intangible assets		224,497				225,925				227,512				229,185				230,975
Total tangible common shareholders’ equity (b)		$	10,907,730			$	10,573,305			$	9,978,134			$	9,470,424			$	9,199,953
Number of shares of common stock outstanding (c)		176,742				176,287				174,124				172,188				172,094
Book value per common share (a) / (c)		$	62.99			$	61.26			$	58.61			$	56.33			$	54.80
Tangible book value per common share (b) / (c)		$	61.72			$	59.98			$	57.30			$	55.00			$	53.46

_____________________
(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.

		As of
Regulatory Capital Ratios and Components (1), (2)		June 30, 2021 (3)				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
($ in thousands)
Capital Ratios:
Tier 1 leverage ratio (Tier 1 capital to average assets)		8.05		%		8.32		%		8.14		%		8.38		%		8.15		%
Common Equity Tier 1 capital to risk-weighted assets		9.51		%		9.64		%		9.67		%		9.78		%		9.80		%
Tier 1 capital to risk-weighted assets		11.38		%		11.60		%		11.18		%		11.50		%		11.04		%
Total capital to risk-weighted assets		12.60		%		12.87		%		12.55		%		12.94		%		12.49		%
Regulatory Capital:
Common Equity Tier 1 capital		$	10,875,436			$	10,548,615			$	9,894,870			$	9,375,688			$	9,103,771
Tier 1 capital		$	13,017,936			$	12,691,115			$	11,439,870			$	11,020,688			$	10,248,771
Total capital		$	14,420,504			$	14,082,378			$	12,842,344			$	12,396,304			$	11,604,141
Assets:
Average assets		$	161,636,891			$	152,465,399			$	140,493,283			$	131,517,445			$	125,690,830
Risk-weighted assets		$	114,404,874			$	109,413,168			$	102,321,489			$	95,823,385			$	92,870,859

_____________________
(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 June 30, 2021 are preliminary.

		As of
Wealth Management Assets		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
($ in millions)
First Republic Investment Management		$	99,459			$	90,819			$	83,596			$	74,661			$	68,124
Brokerage and investment:
Brokerage		112,359				101,478				88,059				76,769				70,178
Money market mutual funds		13,109				11,435				9,003				4,416				5,933
Total brokerage and investment		125,468				112,913				97,062				81,185				76,111
Trust Company:
Trust		11,496				10,986				9,910				8,687				7,905
Custody		4,439				4,216				3,889				3,651				3,646
Total Trust Company		15,935				15,202				13,799				12,338				11,551
Total Wealth Management Assets		$	240,862			$	218,934			$	194,457			$	168,184			$	155,786

 

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FAQ

What were First Republic Bank's Q2 2021 revenues?

First Republic Bank reported revenues of $1.2 billion for Q2 2021.

How much did net income grow for First Republic Bank in Q2 2021?

Net income for First Republic Bank grew 45.3% to $373.1 million in Q2 2021.

What was the loan origination amount for First Republic Bank in Q2 2021?

First Republic Bank achieved record loan originations of $16.8 billion in Q2 2021.

How much did deposits increase for First Republic Bank in Q2 2021?

Total deposits increased by 36.7% to $134.7 billion in Q2 2021.

What dividend did First Republic Bank declare in Q2 2021?

First Republic Bank declared a cash dividend of $0.22 per share for Q2 2021.