First Republic Reports Second Quarter 2022 Results

Rhea-AI Summary

First Republic Bank (NYSE: FRC) reported strong financial results for Q2 2022, with revenues of $1.5 billion, marking a 22.6% year-over-year increase. Net interest income rose 24.1% to $1.2 billion, and net income increased 16% to $433 million. The bank achieved record loan originations of $22 billion, a 31.1% rise year-over-year. Tangible book value per share climbed 13.1% to $69.81. A quarterly cash dividend of $0.27 was declared, payable on August 11, 2022. Credit quality remains robust, with nonperforming assets at a low 7 basis points.

Positive

• Revenues increased by 22.6% to $1.5 billion.
• Net interest income grew 24.1% to $1.2 billion.
• Net income rose by 16% to $433 million.
• Record loan originations of $22 billion, up 31.1%.
• Tangible book value per share increased 13.1% to $69.81.

Negative

• Noninterest expense increased 19.7% to $913 million, reflecting higher investment costs.

Year-Over-Year Revenues Increased 23% and Earnings Per Share Increased 11%

Tangible Book Value Per Share Increased 13% Year-Over-Year

SAN FRANCISCO--(BUSINESS WIRE)-- First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended June 30, 2022.

“First Republic had an excellent quarter, reflecting the consistency of our client-focused model and culture,” said Mike Roffler, Chief Executive Officer and President. “Loan growth was very strong, and credit quality remains excellent.”

Quarterly Highlights

Financial Results

– Year-over-year:

– Revenues were $1.5 billion, up 22.6%.

– Net interest income was $1.2 billion, up 24.1%.

– Net income was $433 million, up 16.0%.

– Diluted earnings per share of $2.16, up 10.8%.

– Tangible book value per share was $69.81, up 13.1%.

– Loan originations totaled $22.0 billion, our best quarter ever.

– Net interest margin was 2.80%, compared to 2.68% for the prior quarter.

– Efficiency ratio was 60.5%, compared to 62.0% for the prior quarter.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.59%.

– Nonperforming assets remained at a low 7 basis points of total assets.

– Net charge-offs were only $1.3 million, or less than 1 basis point of average loans.

Continued Franchise Growth

– Year-over-year:

– Loans totaled $151.5 billion, up 23.1%.

– Deposits were $165.6 billion, up 23.0%.

– Wealth management assets were $246.8 billion, up 2.5%.

– Wealth management revenues were $232 million, up 26.4%.

“We are pleased to see growth in total revenue of 23% and net interest income of 24% during the second quarter,” said Olga Tsokova, Chief Financial Officer (Acting) and Chief Accounting Officer. “Tangible book value per share increased 13% year-over-year, to just under $70, and our capital remains strong.”

Quarterly Cash Dividend of $0.27 per Share

The Bank declared a cash dividend for the second quarter of $0.27 per share of common stock, which is payable on August 11, 2022 to shareholders of record as of July 28, 2022.

Strong Asset Quality

Credit quality remains very strong. Nonperforming assets were at a very low 7 basis points of total assets at June 30, 2022. The Bank had modest net loan charge-offs of only $1.3 million for the quarter.

During the second quarter, the Bank recorded a provision for credit losses of $31 million, which was primarily driven by loan growth.

Continued Book Value Growth

Book value per common share at June 30, 2022 was $71.03, up 12.8% from a year ago. Tangible book value per common share at June 30, 2022 was $69.81, up 13.1% from a year ago.

Capital Strength

The Bank’s Tier 1 leverage ratio was 8.59% at June 30, 2022, compared to 8.70% at March 31, 2022.

Continued Franchise Growth

Loan Originations

Loan originations were $22.0 billion for the quarter, our best quarter ever. This was up 31.1% from the same quarter a year ago, primarily due to increases in single family and multifamily lending.

Single family loan originations were 48% of the total loan origination volume for the quarter and had a weighted average loan-to-value ratio of 61%. In addition, multifamily and commercial real estate loans originated were 14% of total originations and had a weighted average loan-to-value ratio of 52%.

Loans totaled $151.5 billion at June 30, 2022, up 23.1% compared to a year ago. Our loan growth was primarily due to increases in single family, multifamily, stock secured and capital call lines of credit, partially offset by a decrease in loans under the Small Business Administration’s Paycheck Protection Program (“PPP”).

Investments

Total investment securities at June 30, 2022 were $31.2 billion, a 2.9% increase compared to the prior quarter and a 36.1% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $28.2 billion at June 30, 2022, and represented 14.7% of quarterly average total assets.

Deposit Growth and Funding

Total deposits increased to $165.6 billion, up 23.0% compared to a year ago. Deposits were our primary source of funding at June 30, 2022, and represented 93% of our funding base.

At June 30, 2022, checking deposit balances were 71.6% of total deposits.

Other sources of funding at June 30, 2022 included short-term and long-term FHLB advances, which totaled $11.0 billion, up 22.2% compared to a year ago.

Deposits had an average rate paid of 9 basis points during the quarter, and average total funding costs were 16 basis points during the quarter.

Wealth Management

Total wealth management assets were $246.8 billion at June 30, 2022, down 10.0% compared to the prior quarter and up 2.5% compared to a year ago. The decrease in wealth management assets for the quarter was due to market decline. The increase in wealth management assets for the year was due to net client inflow, partially offset by market decline.

Wealth management revenues totaled $232 million for the quarter, up 26.4% compared to last year’s second quarter. Such revenues represented 15.4% of the Bank’s total revenues for the quarter.

Wealth management assets at June 30, 2022 included investment management assets of $100.2 billion, brokerage assets and money market mutual funds of $127.5 billion, and trust and custody assets of $19.1 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.5 billion for the quarter, up 22.6% compared to the second quarter a year ago.

Net Interest Income Growth

Net interest income was $1.2 billion for the quarter, up 24.1% compared to the second quarter a year ago. The increase in net interest income resulted primarily from growth in average interest-earning assets and the increase in net interest margin.

Net Interest Margin

The net interest margin increased to 2.80% in the second quarter, from 2.68% in the prior quarter. The increase was due to lower average cash balances, as well as average yields on interest-earning assets increasing more than the offsetting increase in average funding costs.

Noninterest Income

Noninterest income was $263 million for the quarter, up 16.0% compared to the second quarter a year ago. The increase was primarily driven by higher wealth management fees, partially offset by a decrease in income from investments in life insurance.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $913 million for the quarter, up 19.7% compared to the second quarter a year ago, primarily due to continued investments in our business expansion, including hiring additional colleagues to support our growth and information systems initiatives, as well as higher travel and entertainment.

The efficiency ratio was 60.5% for the quarter, compared to 62.0% for last year’s second quarter.

Income Taxes

The Bank’s effective tax rate for the second quarter of 2022 was 23.4%, compared to 17.4% for the second quarter a year ago. The increase was primarily the result of lower excess tax benefits upon vesting of stock awards.

Conference Call Details

First Republic Bank’s second quarter 2022 earnings conference call is scheduled for July 14, 2022 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 2688216 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 for the live presentation, a replay of the call will be available beginning July 14, 2022 at 11:00 a.m. PT / 2:00 p.m. ET through July 21, 2022 at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 2688216#. International callers should dial +1 (719) 457-0820 and enter the same confirmation code. A replay of the webcast will also be available for 90 days following, accessible in the Investor Relations section of First Republic Bank’s website at ir.firstrepublic.com/events-calendar.

The Bank’s press releases are available after release in the Newsroom and Investor Relations section of First Republic Bank’s website at firstrepublic.com.

About First Republic Bank

Founded in 1985, First Republic and its subsidiaries offer private banking, private business banking and private wealth management. First Republic specializes in delivering exceptional, relationship-based service and provides a complete line of products, including residential, commercial and personal loans, deposit services, and private wealth management, including investment, brokerage, insurance, trust and foreign exchange services. Services are offered through preferred banking or wealth management offices primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and San Diego, California; Portland, Oregon; Boston, Massachusetts; Palm Beach, Florida; Greenwich, Connecticut; New York, New York; Jackson, Wyoming; and Bellevue, Washington. First Republic is a constituent of the S&P 500 Index and KBW Nasdaq Bank Index. For more information, visit firstrepublic.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimates,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them.

Forward-looking statements involving such risks and uncertainties include, but are not limited to, statements regarding: projections of loans, assets, deposits, liabilities, revenues, expenses, tax liabilities, net income, capital expenditures, liquidity, dividends, capital structure, investments or other financial items; expectations regarding the banking and wealth management industries; descriptions of plans or objectives of management for future operations, products or services; forecasts of future economic conditions generally and in our market areas in particular, which may affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans; our opportunities for growth and our plans for expansion (including opening new offices); expectations about the performance of any new offices; projections about the amount and the value of intangible assets, 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; expectations regarding our executive transitions; projections about future levels of loan originations or loan repayments; projections regarding costs, including the impact on our efficiency ratio; and descriptions of assumptions underlying or relating to any of the foregoing.

Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: significant competition to attract and retain banking and wealth management customers, from both traditional and non-traditional financial services and technology companies; our ability to recruit and retain key managers, employees and board members; natural or other disasters, including earthquakes, wildfires, pandemics or acts of terrorism affecting the markets in which we operate; the adverse effects of climate change on our business, clients and counterparties; the negative impacts and disruptions resulting from COVID-19 on our colleagues and clients, the communities we serve and the domestic and global economy, which may have an adverse effect on our business, financial position and results of operations; inflation; interest rate risk and credit risk; our ability to maintain and follow high underwriting standards; economic and market conditions, including those affecting the valuation of our investment securities portfolio and credit losses on our loans and debt securities; real estate prices generally and in our markets; our geographic and product concentrations; demand for our products and services; developments and uncertainty related to the future use and availability of some reference rates; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; 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.

Explanatory Note

Some amounts presented within this document may not recalculate due to rounding.

CONSOLIDATED STATEMENTS OF INCOME
		Quarter Ended June 30,								Quarter Ended March 31,				Six Months Ended June 30,
(in millions, except per share amounts)		2022				2021				2022				2022				2021
Interest income:
Loans		$	1,094			$	913			$	1,002			$	2,096			$	1,786
Investments			209				157				180				389				298
Other			2				5				2				4				10
Cash and cash equivalents			11				3				5				16				6
Total interest income			1,316				1,078				1,189				2,505				2,100
Interest expense:
Deposits			37				24				20				57				52
Borrowings			33				51				24				57				106
Total interest expense			70				75				44				114				158
Net interest income			1,246				1,003				1,145				2,391				1,942
Provision for credit losses			31				16				10				41				1
Net interest income after provision for credit losses			1,215				987				1,135				2,350				1,941
Noninterest income:
Investment management fees			164				136				165				329				255
Brokerage and investment fees			33				17				22				55				32
Insurance fees			3				3				4				7				6
Trust fees			7				6				7				14				12
Foreign exchange fee income			25				21				23				48				38
Deposit fees			8				7				6				14				13
Loan and related fees			10				9				9				19				16
Income from investments in life insurance			11				21				14				25				38
Other income, net			2				6				1				3				12
Total noninterest income			263				226				251				514				422
Noninterest expense:
Salaries and employee benefits			567				482				560				1,127				945
Information systems			114				88				107				221				172
Occupancy			70				63				69				139				121
Professional fees			27				26				23				50				47
Advertising and marketing			17				16				13				30				29
FDIC assessments			15				13				15				30				25
Other expenses			103				74				79				182				144
Total noninterest expense			913				762				866				1,779				1,483
Income before provision for income taxes			565				451				520				1,085				880
Provision for income taxes			132				78				119				251				172
Net income			433				373				401				834				708
Dividends on preferred stock			41				23				37				78				42
Net income available to common shareholders		$	392			$	350			$	364			$	756			$	666
Basic earnings per common share		$	2.18			$	1.98			$	2.03			$	4.21			$	3.79
Diluted earnings per common share		$	2.16			$	1.95			$	2.00			$	4.17			$	3.74
Weighted average shares—basic			180				176				180				180				176
Weighted average shares—diluted			181				179				182				182				178

CONSOLIDATED BALANCE SHEETS
		As of
($ in millions)		June 30, 2022				March 31, 2022				December 31, 2021				June 30, 2021
ASSETS
Cash and cash equivalents		$	6,237			$	7,756			$	12,947			$	7,877
Debt securities available-for-sale			3,438				3,446				3,381				2,635
Debt securities held-to-maturity, net			27,710				26,831				22,292				20,236
Equity securities (fair value)			23				25				28				30
Loans:
Single family			89,295				81,833				76,793				69,909
Home equity lines of credit			2,699				2,597				2,584				2,441
Single family construction			1,117				1,041				993				878
Multifamily			18,346				16,953				15,966				14,803
Commercial real estate			9,182				8,753				8,531				8,235
Multifamily/commercial construction			2,019				1,955				1,927				2,061
Capital call lines of credit			10,727				10,970				10,999				8,127
Tax-exempt			3,605				3,656				3,680				3,566
Other business			4,638				4,081				3,961				3,657
PPP			82				232				545				1,375
Stock secured			4,041				3,651				3,435				2,966
Other secured			2,774				2,623				2,457				2,052
Unsecured			2,994				2,968				3,085				3,048
Total loans			151,519				141,313				134,956				123,118
Allowance for credit losses			(729	)			(701	)			(694	)			(637	)
Loans, net			150,790				140,612				134,262				122,481
Investments in life insurance			3,340				2,682				2,650				2,598
Tax credit investments			1,304				1,231				1,220				1,224
Premises, equipment and leasehold improvements, net			474				467				454				419
Goodwill and other intangible assets			220				221				222				224
Other assets			4,372				3,850				3,631				3,923
Total Assets		$	197,908			$	187,121			$	181,087			$	161,647
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking		$	75,208			$	72,424			$	70,840			$	59,449
Interest-bearing checking			43,421				41,589				41,248				32,165
Money market checking			21,235				21,846				20,303				20,374
Money market savings and passbooks			18,796				19,159				16,573				14,748
Certificates of deposit			6,987				7,042				7,357				7,921
Total Deposits			165,647				162,060				156,321				134,657
Short-term FHLB advances			6,300				—				—				—
Long-term FHLB advances			4,700				3,700				3,700				9,000
Senior notes			499				999				998				997
Subordinated notes			779				779				779				779
Other liabilities			3,557				3,429				3,391				2,939
Total Liabilities			181,482				170,967				165,189				148,372
Shareholders’ Equity:
Preferred stock			3,633				3,633				3,633				2,143
Common stock			2				2				2				2
Additional paid-in capital			5,782				5,763				5,725				5,203
Retained earnings			7,236				6,893				6,569				5,937
Accumulated other comprehensive loss			(227	)			(137	)			(31	)			(10	)
Total Shareholders’ Equity			16,426				16,154				15,898				13,275
Total Liabilities and Shareholders’ Equity		$	197,908			$	187,121			$	181,087			$	161,647

		Quarter Ended June 30,																						Quarter Ended March 31,
		2022											2021											2022
Average Balances, Yields and Rates		Average Balance				Interest Income/ Expense (1)				Yield/ Rates (2)			Average Balance				Interest Income/ Expense (1)				Yield/ Rates (2)			Average Balance				Interest Income/ Expense (1)				Yield/ Rates (2)
($ in millions)
Assets:
Interest-bearing deposits with banks		$	5,713			$	11			0.80	%		$	11,281			$	3			0.11	%		$	11,342			$	5			0.18	%
Investment securities:
U.S. Government-sponsored agency securities			165				1			2.05	%			100				1			1.59	%			117				0			1.37	%
Agency residential and commercial MBS			10,667				56			2.10	%			5,646				29			2.05	%			9,142				39			1.70	%
Other residential and commercial MBS			22				0			2.37	%			30				0			2.04	%			24				0			2.04	%
Tax-exempt municipal securities			16,711				161			3.86	%			13,470				136			4.02	%			15,595				151			3.87	%
Taxable municipal securities			1,774				14			3.18	%			1,612				12			3.00	%			1,715				13			2.97	%
Other investment securities			1,440				10			2.87	%			1,376				9			2.85	%			1,416				10			2.85	%
Total investment securities			30,779				242			3.15	%			22,234				187			3.36	%			28,009				213			3.04	%
Loans:
Residential real estate			89,358				620			2.78	%			69,854				491			2.81	%			82,416				567			2.75	%
Multifamily			17,480				153			3.46	%			14,392				127			3.49	%			16,281				140			3.45	%
Commercial real estate			8,983				85			3.77	%			8,117				78			3.82	%			8,633				82			3.77	%
Multifamily/commercial construction			2,004				24			4.60	%			2,969				38			5.00	%			1,929				22			4.62	%
Business			18,469				160			3.43	%			15,894				129			3.21	%			18,590				145			3.12	%
PPP			138				3			8.46	%			1,843				15			3.32	%			381				7			7.59	%
Other			9,628				56			2.31	%			7,653				42			2.15	%			9,058				47			2.06	%
Total loans			146,060				1,101			3.00	%			120,722				920			3.03	%			137,288				1,010			2.94	%
FHLB stock			201				2			3.40	%			312				5			6.55	%			115				2			7.60	%
Total interest-earning assets			182,753				1,356			2.96	%			154,549				1,115			2.87	%			176,754				1,230			2.78	%
Noninterest-earning cash			442											386											449
Goodwill and other intangibles			220											225											221
Other assets			7,759											6,725											7,142
Total noninterest-earning assets			8,421											7,336											7,812
Total Assets		$	191,174										$	161,885										$	184,566
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing checking		$	41,878				5			0.05	%		$	33,329				2			0.02	%		$	40,400				1			0.01	%
Money market checking			20,873				13			0.25	%			19,928				6			0.12	%			21,659				5			0.09	%
Money market savings and passbooks			17,682				11			0.25	%			14,783				6			0.17	%			17,925				7			0.15	%
CDs			6,975				8			0.43	%			8,040				10			0.51	%			7,217				7			0.40	%
Total interest-bearing deposits (3)			87,408				37			0.17	%			76,080				24			0.13	%			87,201				20			0.09	%
Borrowings:
Federal funds purchased			186				0			0.73	%			—				—			—	%			—				—			—	%
Short-term FHLB advances			2,953				9			1.20	%			—				—			—	%			—				—			—	%
Long-term FHLB advances			4,097				11			1.09	%			10,062				36			1.39	%			3,700				9			0.95	%
Senior notes			691				4			2.38	%			997				6			2.42	%			998				6			2.42	%
Subordinated notes			779				9			4.68	%			778				9			4.68	%			779				9			4.68	%
Total borrowings			8,706				33			1.54	%			11,837				51			1.69	%			5,477				24			1.75	%
Total interest-bearing liabilities (4)			96,114				70			0.29	%			87,917				75			0.34	%			92,678				44			0.19	%
Noninterest-bearing checking			75,411											58,051											72,251
Other noninterest-bearing liabilities			3,354											2,796											3,613
Total noninterest-bearing liabilities			78,765											60,847											75,864
Preferred shareholders’ equity			3,633											2,143											3,633
Common shareholders’ equity			12,662											10,978											12,391
Total Liabilities and Shareholders’ Equity		$	191,174										$	161,885										$	184,566
Net interest spread (5)										2.66	%										2.54	%										2.59	%
Net interest income (fully taxable-equivalent basis) and net interest margin (6)						$	1,286			2.80	%						$	1,040			2.68	%						$	1,186			2.68	%
Reconciliation of tax-equivalent net interest income to net interest income: (7)
Municipal securities tax-equivalent adjustment							(33	)										(30	)										(34	)
Business loans tax-equivalent adjustment							(7	)										(7	)										(7	)
Net interest income						$	1,246										$	1,003										$	1,145
Supplemental information:
Total deposits (interest-bearing and noninterest-bearing)		$	162,819			$	37			0.09	%		$	134,131			$	24			0.07	%		$	159,452			$	20			0.05	%
Total deposits (interest-bearing and noninterest-bearing) and borrowings		$	171,525			$	70			0.16	%		$	145,968			$	75			0.20	%		$	164,929			$	44			0.11	%

		Six Months Ended June 30,
		2022											2021
Average Balances, Yields and Rates		Average Balance				Interest Income/ Expense (1)				Yield/ Rates (2)			Average Balance				Interest Income/ Expense (1)				Yield/ Rates (2)
($ in millions)
Assets:
Interest-bearing deposits with banks		$	8,512			$	16			0.39	%		$	11,364			$	6			0.11	%
Investment securities:
U.S. Government-sponsored agency securities			141				1			1.76	%			97				1			1.52	%
Agency residential and commercial MBS			9,909				95			1.91	%			5,636				60			2.11	%
Other residential and commercial MBS			23				0			2.19	%			32				0			1.95	%
Tax-exempt municipal securities			16,156				309			3.83	%			12,874				263			4.08	%
Taxable municipal securities			1,744				27			3.07	%			1,347				20			2.98	%
Other investment securities			1,428				20			2.86	%			905				12			2.73	%
Total investment securities			29,401				452			3.08	%			20,891				356			3.40	%
Loans:
Residential real estate			85,906				1,187			2.76	%			67,668				960			2.84	%
Multifamily			16,884				293			3.45	%			14,159				250			3.51	%
Commercial real estate			8,808				167			3.77	%			8,075				156			3.85	%
Multifamily/commercial construction			1,967				46			4.61	%			2,918				69			4.68	%
Business			18,529				305			3.27	%			15,488				253			3.24	%
PPP			259				10			7.82	%			1,916				31			3.24	%
Other			9,345				103			2.19	%			7,501				81			2.15	%
Total loans			141,698				2,111			2.97	%			117,725				1,800			3.05	%
FHLB stock			158				4			4.92	%			329				10			6.31	%
Total interest-earning assets			179,769				2,583			2.87	%			150,309				2,172			2.88	%
Noninterest-earning cash			446											400
Goodwill and other intangibles			221											226
Other assets			7,452											6,409
Total noninterest-earning assets			8,119											7,035
Total Assets		$	187,888										$	157,344
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing checking		$	41,143				6			0.03	%		$	32,664				4			0.02	%
Money market checking			21,264				18			0.17	%			19,411				14			0.14	%
Money market savings and passbooks			17,803				18			0.20	%			14,215				12			0.18	%
CDs			7,095				15			0.41	%			8,225				22			0.53	%
Total interest-bearing deposits (3)			87,305				57			0.13	%			74,515				52			0.14	%
Borrowings:
Federal funds purchased			93				0			0.73	%			0				0			0.26	%
Short-term FHLB advances			1,485				9			1.20	%			0				0			0.15	%
Long-term FHLB advances			3,899				20			1.02	%			10,689				76			1.42	%
Senior notes			844				10			2.41	%			997				12			2.42	%
Subordinated notes			779				18			4.68	%			778				18			4.68	%
Total borrowings			7,100				57			1.62	%			12,464				106			1.71	%
Total interest-bearing liabilities (4)			94,405				114			0.24	%			86,979				158			0.36	%
Noninterest-bearing checking			73,840											54,887
Other noninterest-bearing liabilities			3,483											2,717
Total noninterest-bearing liabilities			77,323											57,604
Preferred shareholders' equity			3,633											2,054
Common shareholders' equity			12,527											10,707
Total Liabilities and Shareholders’ Equity		$	187,888										$	157,344
Net interest spread (5)										2.63	%										2.52	%
Net interest income (fully taxable-equivalent basis) and net interest margin (6)						$	2,469			2.74	%						$	2,014			2.67	%
Reconciliation of tax-equivalent net interest income to net interest income: (7)
Municipal securities tax-equivalent adjustment							(64	)										(58	)
Business loans tax-equivalent adjustment							(14	)										(14	)
Net interest income						$	2,391										$	1,942
Supplemental information:
Total deposits (interest-bearing and noninterest-bearing)		$	161,145			$	57			0.07	%		$	129,402			$	52			0.08	%
Total deposits (interest-bearing and noninterest-bearing) and borrowings		$	168,245			$	114			0.14	%		$	141,866			$	158			0.22	%

__________
Note: Certain prior period amounts have been reclassified to conform to the current period presentation.
(1)		Interest income on tax-exempt securities and loans has been adjusted to the fully taxable-equivalent basis using the statutory federal income tax rate in effect for each respective period presented.
(2)		Yields/rates are annualized.
(3)		Refer to supplemental information in this table for average balances, interest expense and rates for total deposits (interest-bearing and noninterest-bearing).
(4)		Refer to supplemental information in this table for average balances, interest expense and rates for total deposits (interest-bearing and noninterest-bearing) and borrowings.
(5)		Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
(6)		Net interest margin represents net interest income on a fully taxable-equivalent basis divided by total average interest-earning assets.
(7)		Fully taxable-equivalent net interest income is considered a non-GAAP financial measure, and is reconciled to GAAP net interest income in this table.

Selected Financial Data and Ratios		Quarter Ended June 30,								Quarter Ended March 31,				Six Months Ended June 30,
		2022				2021				2022				2022				2021
($ in millions, except per share amounts)
Selected Financial Data and Ratios:
Return on average assets (1), (2)			0.91	%			0.92	%			0.88	%			0.90	%			0.91	%
Return on average common shareholders’ equity (1)			12.43	%			12.77	%			11.91	%			12.17	%			12.54	%
Return on average tangible common shareholders’ equity (1), (3)			12.65	%			13.04	%			12.12	%			12.39	%			12.81	%
Average equity to average assets			8.52	%			8.10	%			8.68	%			8.60	%			8.11	%
Dividends per common share		$	0.27			$	0.22			$	0.22			$	0.49			$	0.42
Dividend payout ratio			12.5	%			11.3	%			11.0	%			11.8	%			11.2	%
Efficiency ratio (4)			60.5	%			62.0	%			62.0	%			61.2	%			62.7	%
Selected Asset Quality Ratios:
Net loan charge-offs (recoveries)		$	1.3			$	1.2			$	(0.3	)		$	1.0			$	1.7
Net loan charge-offs (recoveries) to average total loans (1)			0.00	%			0.00	%			(0.00	) %			0.00	%			0.00	%
Selected Ratios (period-end):
Book value per common share		$	71.03			$	62.99			$	69.70
Tangible book value per common share (5)		$	69.81			$	61.72			$	68.47

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

Effective Tax Rate		Quarter Ended June 30,						Quarter Ended March 31,			Six Months Ended June 30,
		2022			2021			2022			2022			2021
Effective tax rate, prior to excess tax benefits—stock awards		24.0	%		21.7	%		23.4	%		23.7	%		22.1	%
Excess tax benefits—stock awards		(0.6	)		(4.3	)		(0.5	)		(0.6	)		(2.5	)
Effective tax rate		23.4	%		17.4	%		22.9	%		23.1	%		19.6	%

Provision (Reversal of Provision) for Credit Losses		Quarter Ended June 30,								Quarter Ended March 31,				Six Months Ended June 30,
		2022				2021				2022				2022				2021
($ in millions)
Debt securities held-to-maturity		$	1			$	1			$	1			$	2			$	2
Loans			29				17				7				36				3
Unfunded loan commitments			1				(2	)			2				3				(4	)
Total provision		$	31			$	16			$	10			$	41			$	1

Loan Originations		Quarter Ended June 30,								Quarter Ended March 31,				Six Months Ended June 30,
		2022				2021				2022				2022				2021
($ in millions)
Single family		$	10,638			$	8,662			$	8,376			$	19,014			$	15,564
Home equity lines of credit			744				610				689				1,433				1,234
Single family construction			540				215				267				807				440
Multifamily			2,330				1,102				1,709				4,039				1,893
Commercial real estate			816				458				566				1,382				772
Multifamily/commercial construction			492				272				384				876				583
Capital call lines of credit			3,096				2,921				3,020				6,116				6,052
Tax-exempt			92				208				90				182				422
Other business			1,078				521				538				1,616				1,546
PPP			—				36				—				—				725
Stock secured			915				776				1,136				2,051				1,486
Other secured			815				598				666				1,481				1,037
Unsecured			413				372				369				782				718
Total loans originated		$	21,969			$	16,751			$	17,810			$	39,779			$	32,472

		As of
Asset Quality Information		June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021
($ in millions)
Nonperforming assets:
Nonaccrual loans		$	137			$	140			$	139			$	127			$	133
Other real estate owned			—				—				—				—				—
Total nonperforming assets		$	137			$	140			$	139			$	127			$	133
Nonaccrual loans to total loans			0.09	%			0.10	%			0.10	%			0.10	%			0.11	%
Nonperforming assets to total assets			0.07	%			0.08	%			0.08	%			0.07	%			0.08	%
Accruing loans 90 days or more past due		$	—			$	—			$	—			$	—			$	—
Restructured accruing loans		$	12			$	12			$	13			$	10			$	11
Allowance for loan credit losses to:
Total loans			0.48	%			0.50	%			0.51	%			0.52	%			0.52	%
Nonaccrual loans			531.2	%			498.8	%			500.5	%			524.4	%			479.3	%

		As of
Loan Servicing Portfolio		June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021
($ in millions)
Loans serviced for investors		$	3,919			$	4,298			$	4,677			$	5,117			$	5,640

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,
		2022				2021				2022				2022				2021
($ in millions)
Average common shareholders’ equity (a)		$	12,662			$	10,978			$	12,391			$	12,527			$	10,707
Less: Average goodwill and other intangible assets			(220	)			(225	)			(221	)			(221	)			(226	)
Average tangible common shareholders’ equity (b)		$	12,442			$	10,753			$	12,170			$	12,306			$	10,481
Net income available to common shareholders (c)		$	392			$	350			$	364			$	756			$	666
Return on average common shareholders’ equity (c) / (a)			12.43	%			12.77	%			11.91	%			12.17	%			12.54	%
Return on average tangible common shareholders’ equity (c) / (b)			12.65	%			13.04	%			12.12	%			12.39	%			12.81	%

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

Book Value per Common Share and Tangible Book Value per Common Share (1)		As of
		June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021
(in millions, except per share amounts)
Total shareholders’ equity		$	16,426			$	16,154			$	15,898			$	14,802			$	13,275
Less: Preferred stock			(3,633	)			(3,633	)			(3,633	)			(2,893	)			(2,143	)
Total common shareholders’ equity (a)			12,793				12,521				12,265				11,909				11,132
Less: Goodwill and other intangible assets			(220	)			(221	)			(222	)			(223	)			(224	)
Total tangible common shareholders’ equity (b)		$	12,573			$	12,300			$	12,043			$	11,686			$	10,908
Number of shares of common stock outstanding (c)			180				180				179				179				177
Book value per common share (a) / (c)		$	71.03			$	69.70			$	68.34			$	66.44			$	62.99
Tangible book value per common share (b) / (c)		$	69.81			$	68.47			$	67.10			$	65.19			$	61.72

__________
(1)		Tangible book value per common share is considered a non-GAAP financial measure, and is reconciled to GAAP book value per common share in this table.

Regulatory Capital Ratios and Components (1), (2)		As of
		June 30, 2022 (3)				March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021
($ in millions)
Capital Ratios:
Tier 1 leverage ratio (Tier 1 capital to average assets)			8.59	%			8.70	%			8.76	%			8.55	%			8.05	%
Common Equity Tier 1 capital to risk-weighted assets			9.15	%			9.48	%			9.65	%			9.81	%			9.51	%
Tier 1 capital to risk-weighted assets			11.75	%			12.25	%			12.56	%			12.25	%			11.38	%
Total capital to risk-weighted assets			12.82	%			13.37	%			13.72	%			13.45	%			12.60	%
Regulatory Capital:
Common Equity Tier 1 capital		$	12,791			$	12,418			$	12,045			$	11,674			$	10,875
Tier 1 capital		$	16,424			$	16,051			$	15,678			$	14,566			$	13,018
Total capital		$	17,924			$	17,521			$	17,124			$	15,994			$	14,421
Assets:
Average assets		$	191,202			$	184,410			$	178,969			$	170,373			$	161,637
Risk-weighted assets		$	139,811			$	131,024			$	124,820			$	118,941			$	114,406

__________
(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, 2022 are preliminary.

		As of
Wealth Management Assets		June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021
($ in millions)
First Republic Investment Management		$	100,204			$	108,771			$	109,130			$	101,105			$	99,459
Brokerage and investment:
Brokerage			116,979				128,129				128,258				115,793				112,359
Money market mutual funds			10,510				18,543				23,673				18,074				13,109
Total brokerage and investment			127,489				146,672				151,931				133,867				125,468
Trust Company:
Trust			14,994				14,344				13,695				12,220				11,496
Custody			4,099				4,408				4,687				4,533				4,439
Total Trust Company			19,093				18,752				18,382				16,753				15,935
Total Wealth Management Assets		$	246,786			$	274,195			$	279,443			$	251,725			$	240,862

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220714005204/en/

Investors:

Andrew Greenebaum / Lasse Glassen

Addo Investor Relations

agreenebaum@addo.com

lglassen@addo.com

(310) 829-5400



Media:

Greg Berardi

Blue Marlin Partners

gberardi@firstrepublic.com

(415) 239-7826

Source: First Republic Bank

FAQ

What were First Republic Bank's revenues for Q2 2022?

First Republic Bank reported revenues of $1.5 billion for Q2 2022, a 22.6% increase year-over-year.

How much did First Republic Bank's net income increase in Q2 2022?

Net income for First Republic Bank rose by 16% to $433 million in Q2 2022.

What is First Republic Bank's stock symbol?

The stock symbol for First Republic Bank is FRC.

What was the tangible book value per share for First Republic Bank in Q2 2022?

Tangible book value per share for First Republic Bank was $69.81, up 13.1% year-over-year.

When is the next earnings conference call for First Republic Bank?

First Republic Bank's next earnings conference call is scheduled for July 14, 2022.