First Republic Reports Third Quarter 2021 Results

Rhea-AI Summary

First Republic Bank (NYSE: FRC) reported robust financial results for Q3 2021, achieving a 30.1% year-over-year revenue growth of $1.3 billion. Net interest income rose 26.7% to $1.1 billion, while net income increased by 26.1% to $369.7 million. The bank originated a record $15.5 billion in loans, up 26.3% from last year, and deposits surged 39.2% to $145.3 billion. A quarterly dividend of $0.22 per share was declared. Despite strong performance, net interest margin slightly declined to 2.65%.

Positive

• Revenues increased by 30.1% year-over-year to $1.3 billion.
• Net interest income rose 26.7% to $1.1 billion.
• Net income up 26.1% to $369.7 million.
• Loan originations reached a record $15.5 billion, up 26.3% year-over-year.
• Deposits surged 39.2% to $145.3 billion.
• Wealth management assets grew 49.7% to $251.7 billion.

Negative

• Net interest margin declined to 2.65% from 2.68% in the prior quarter.
• Noninterest expenses increased by 31.3% to $798.5 million.

Net Interest Income Increased 26.7% Year-Over-Year

SAN FRANCISCO--(BUSINESS WIRE)-- First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended September 30, 2021.

“First Republic had another strong quarter of growth in loans, deposits and wealth management assets,” said Jim Herbert, Founder, Chairman and Co-CEO. “Our client-centric business model continues to perform very well across all our segments and markets.”

“This was another successful quarter for First Republic,” said Hafize Gaye Erkan, Co-CEO and President. “Credit quality remains excellent, further reflecting the safety and stability of First Republic.”

Quarterly Highlights

Financial Results

– Year-over-year:

– Revenues were $1.3 billion, up 30.1%.

– Net interest income was $1.1 billion, up 26.7%.

– Net income was $369.7 million, up 26.1%.

– Diluted earnings per share of $1.91, up 18.6%.

– Tangible book value per share was $65.19, up 18.5%.

– Loan originations totaled $15.5 billion, our strongest third quarter ever.

– Net interest margin was 2.65%, compared to 2.68% for the prior quarter.

– Efficiency ratio was 61.3%, compared to 62.0% for the prior quarter.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.55%.

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

– Net charge-offs were only $292,000, or less than 1 basis point of average loans.

Continued Franchise Growth

– Year-over-year:

– Loans totaled $128.4 billion, up 22.5%.

– Deposits were $145.3 billion, up 39.2%.

– Wealth management assets were $251.7 billion, up 49.7%.

– Wealth management revenues were $209.3 million, up 65.1%.

“Revenue and net interest income growth were very strong during the third quarter,” said Mike Roffler, Chief Financial Officer. “We’re also pleased to have accessed the capital markets twice during the quarter, raising $1.2 billion.”

Quarterly Cash Dividend of $0.22 per Share

The Bank declared a cash dividend for the third quarter of $0.22 per share of common stock, which is payable on November 12, 2021 to shareholders of record as of October 28, 2021.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were at a very low 7 basis points of total assets at September 30, 2021. The Bank had modest net loan charge-offs of only $292,000 for the quarter.

During the third quarter, the Bank recorded a provision for credit losses of $34.0 million, which was primarily driven by loan growth.

Continued Book Value Growth and Capital Strength

Book value per common share at September 30, 2021 was $66.44, up 17.9% from a year ago. Tangible book value per common share at September 30, 2021 was $65.19, up 18.5% from a year ago.

The Bank’s Tier 1 leverage ratio was 8.55% at September 30, 2021, compared to 8.05% at June 30, 2021.

During the third quarter, the Bank issued $750.0 million of 4.000% Noncumulative Perpetual Series M Preferred Stock, which qualifies as Tier 1 capital.

In addition, the Bank sold 2,300,000 new shares of common stock in an underwritten public offering, which added approximately $443.9 million to common equity.

Total common stock sold and preferred stock issued, net of preferred stock redeemed, added approximately $1.2 billion and $2.1 billion of Tier 1 capital in the third quarter and first nine months of 2021, respectively, and contributed to the 30.5% increase in total equity year-over-year.

Continued Franchise Growth

Loan Originations

Loan originations were $15.5 billion for the quarter, up 26.3% from the same quarter a year ago. This was primarily due to increases in capital call lines of credit and commercial real estate lending.

Single family loan originations were 45% 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 12% of total originations for the quarter and had a weighted average loan-to-value ratio of 47%.

Loans totaled $128.4 billion at September 30, 2021, up 22.5% compared to a year ago, primarily due to increases in single family, capital call lines of credit and multifamily loans, partially offset by a decrease in loans under the Small Business Administration’s Paycheck Protection Program (“PPP”).

Deposit Growth

Total deposits increased to $145.3 billion, up 39.2% compared to a year ago, and had an average rate paid of 6 basis points during the quarter.

At September 30, 2021, checking deposit balances were 68.8% of total deposits.

Investments

Total investment securities at September 30, 2021 were $24.2 billion, a 5.6% increase compared to the prior quarter and a 29.6% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $28.6 billion at September 30, 2021, and represented 16.7% of quarterly average total assets.

Wealth Management

Total wealth management assets were $251.7 billion at September 30, 2021, up 4.5% compared to the prior quarter and up 49.7% compared to a year ago. The increases in wealth management assets were due to net client inflow and market appreciation.

Wealth management revenues totaled $209.3 million for the quarter, up 65.1% compared to last year’s third quarter. Such revenues represented 16.1% of the Bank’s total revenues for the quarter.

Wealth management assets at September 30, 2021 included investment management assets of $101.1 billion, brokerage assets and money market mutual funds of $133.9 billion, and trust and custody assets of $16.8 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.3 billion for the quarter, up 30.1% compared to the third quarter a year ago.

Net Interest Income Growth

Net interest income was $1.1 billion for the quarter, up 26.7% compared to the third quarter a year ago. The increase in net interest income resulted primarily from growth in average interest-earning assets, modestly offset by a decrease in net interest margin.

Net Interest Margin

The net interest margin declined to 2.65% in the third quarter, from 2.68% in the prior quarter. The modest decline was primarily due to higher average cash balances during the quarter.

Noninterest Income

Noninterest income was $250.4 million for the quarter, up 46.4% compared to the third quarter a year ago. The increase was primarily driven by higher wealth management fees, partially offset by lower gain on sale of loans. Such gain was elevated in the third quarter a year ago due to realized discounts on previously purchased loans when these loans were sold.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $798.5 million for the quarter, up 31.3% compared to the third quarter a year ago. The increase was primarily due to increased salaries, incentive compensation and benefits, information systems and occupancy costs from the continued investments in the expansion of the franchise, and higher professional fees.

The efficiency ratio was 61.3% for the quarter, compared to 60.7% for the third quarter a year ago. For the first nine months of 2021, the efficiency ratio was 62.2%, compared to 62.0% for the first nine months of 2020.

Income Taxes

The Bank’s effective tax rate for the third quarter of 2021 was 21.4%, compared to 19.6% for the third quarter a year ago. The increase was primarily due to the prior year including a tax refund from an amended tax return.

Conference Call Details

First Republic Bank’s third quarter 2021 earnings conference call is scheduled for October 13, 2021 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (888) 394-8218 and provide confirmation code 9610366 approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (856) 344-9221 and provide the same confirmation code.

The call will also be broadcast live over the Internet and can be accessed in the Investor Relations section of First Republic’s website at ir.firstrepublic.com/events-calendar. To listen to the live webcast, please visit the site at least 15 minutes prior to the start time to register, download and install any necessary audio software.

For those unable to join the live presentation, a replay of the call will be available beginning October 13, 2021 at 11:00 a.m. PT / 2:00 p.m. ET through October 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 9610366#. 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 September 30,								Quarter Ended June 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)		2021				2020				2021				2021				2020
Interest income:
Loans		$	946,846			$	811,708			$	912,885			$	2,732,901			$	2,399,646
Investments			161,017				142,971				156,947				458,675				438,055
Other			4,677				6,116				5,103				14,969				18,135
Cash and cash equivalents			5,131				1,181				3,070				11,095				5,685
Total interest income			1,117,671				961,976				1,078,005				3,217,640				2,861,521
Interest expense:
Deposits			22,410				54,355				24,096				74,077				245,680
Borrowings			42,977				77,341				50,044				148,632				246,017
Total interest expense			65,387				131,696				74,140				222,709				491,697
Net interest income			1,052,284				830,280				1,003,865				2,994,931				2,369,824
Provision for credit losses			34,025				28,538				16,143				35,560				122,025
Net interest income after provision for credit losses			1,018,259				801,742				987,722				2,959,371				2,247,799
Noninterest income:
Investment management fees			148,491				96,638				136,516				404,049				281,017
Brokerage and investment fees			22,644				10,796				17,574				54,782				39,028
Insurance fees			5,918				2,216				2,668				11,660				6,086
Trust fees			6,231				4,543				6,245				18,207				14,118
Foreign exchange fee income			26,032				12,575				20,612				63,811				34,864
Deposit fees			6,849				5,753				6,618				19,636				17,598
Loan and related fees			8,336				7,171				8,877				24,698				20,741
Loan servicing fees, net			548				144				1,057				3,093				(2,649	)
Gain on sale of loans			140				13,797				58				507				14,575
Gain (loss) on investment securities			2,139				(405	)			1,329				4,123				3,752
Income from investments in life insurance			20,328				20,546				21,457				58,334				36,506
Other income (loss)			2,702				(2,791	)			3,597				9,917				960
Total noninterest income			250,358				170,983				226,608				672,817				466,596
Noninterest expense:
Salaries and employee benefits			514,499				373,225				481,503				1,459,406				1,078,633
Information systems			90,941				74,549				88,980				263,437				219,301
Occupancy			66,953				55,543				63,526				188,028				164,125
Professional fees			27,911				19,845				25,475				74,640				48,479
Advertising and marketing			13,620				8,909				16,560				42,813				29,373
FDIC assessments			13,368				11,003				13,254				38,522				32,463
Other expenses			71,239				65,136				73,467				214,846				187,311
Total noninterest expense			798,531				608,210				762,765				2,281,692				1,759,685
Income before provision for income taxes			470,086				364,515				451,565				1,350,496				954,710
Provision for income taxes			100,399				71,378				78,459				272,870				186,119
Net income			369,687				293,137				373,106				1,077,626				768,591
Dividends on preferred stock			24,427				14,816				23,655				66,607				42,653
Net income available to common shareholders		$	345,260			$	278,321			$	349,451			$	1,011,019			$	725,938
Basic earnings per common share		$	1.94			$	1.62			$	1.98			$	5.73			$	4.23
Diluted earnings per common share		$	1.91			$	1.61			$	1.95			$	5.66			$	4.21
Weighted average shares—basic			178,065				172,142				176,419				176,446				171,537
Weighted average shares—diluted			180,420				172,932				178,864				178,757				172,514

CONSOLIDATED BALANCE SHEETS
		As of
($ in thousands)		September 30, 2021				June 30, 2021				December 31, 2020				September 30, 2020
ASSETS
Cash and cash equivalents		$	12,279,447			$	7,876,952			$	5,094,754			$	3,691,149
Debt securities available-for-sale			2,960,571				2,634,983				1,906,315				1,711,202
Debt securities held-to-maturity, net			21,192,537				20,236,298				16,603,310				16,923,706
Equity securities (fair value)			31,682				29,550				20,566				20,478
Loans:
Single family			73,490,788				69,908,787				61,370,246				56,628,359
Home equity lines of credit			2,429,152				2,441,034				2,449,533				2,431,991
Single family construction			984,835				877,548				787,854				739,091
Multifamily			15,416,780				14,803,219				13,768,957				13,392,531
Commercial real estate			8,486,124				8,234,934				8,018,158				7,781,797
Multifamily/commercial construction			2,064,107				2,060,980				2,024,420				2,038,949
Capital call lines of credit			9,088,424				8,127,473				8,149,946				6,203,877
Tax-exempt			3,577,586				3,566,385				3,365,572				3,276,705
Other business			3,553,875				3,656,598				3,340,048				2,982,532
PPP			876,487				1,374,765				1,841,376				2,091,102
Stock secured			3,120,176				2,965,857				2,518,338				2,311,754
Other secured			2,261,224				2,051,617				1,818,550				1,780,652
Unsecured			3,025,536				3,047,981				3,113,267				3,102,311
Total loans			128,375,094				123,117,178				112,566,265				104,761,651
Allowance for credit losses			(668,186	)			(636,910	)			(635,019	)			(604,747	)
Loans, net			127,706,908				122,480,268				111,931,246				104,156,904
Loans held for sale			3,782				3,169				20,679				33,655
Investments in life insurance			2,627,940				2,597,637				2,061,362				1,949,360
Tax credit investments			1,180,690				1,224,114				1,131,905				1,099,713
Premises, equipment and leasehold improvements, net			430,675				418,725				403,482				390,241
Goodwill and other intangible assets			223,183				224,497				227,512				229,185
Other assets			3,933,088				3,920,541				3,101,003				3,020,178
Total Assets		$	172,570,503			$	161,646,734			$	142,502,134			$	133,225,771
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking		$	65,833,005			$	59,449,158			$	46,281,112			$	41,538,676
Interest-bearing checking			34,089,265				32,165,327				30,603,221				26,081,189
Money market checking			21,860,807				20,373,535				16,778,884				15,868,769
Money market savings and passbooks			15,946,902				14,747,597				12,584,522				11,419,289
Certificates of deposit			7,596,366				7,921,218				8,681,061				9,495,453
Total Deposits			145,326,345				134,656,835				114,928,800				104,403,376
Short-term borrowings			—				—				—				5,000
Long-term FHLB advances			7,700,000				9,000,000				11,755,000				13,505,000
Senior notes			997,722				997,193				996,145				995,626
Subordinated notes			778,648				778,535				778,313				778,204
Other liabilities			2,965,994				2,939,444				2,293,230				2,193,956
Total Liabilities			157,768,709				148,372,007				130,751,488				121,881,162
Shareholders’ Equity:
Preferred stock			2,892,500				2,142,500				1,545,000				1,645,000
Common stock			1,793				1,767				1,741				1,722
Additional paid-in capital			5,685,384				5,204,166				4,834,172				4,571,499
Retained earnings			6,241,963				5,936,669				5,346,355				5,102,229
Accumulated other comprehensive income (loss)			(19,846	)			(10,375	)			23,378				24,159
Total Shareholders’ Equity			14,801,794				13,274,727				11,750,646				11,344,609
Total Liabilities and Shareholders’ Equity		$	172,570,503			$	161,646,734			$	142,502,134			$	133,225,771

		Quarter Ended September 30,																						Quarter Ended June 30,
		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 millions)
Assets:
Interest-bearing deposits with banks		$	13,384			$	5			0.15	%		$	4,428			$	1			0.11	%		$	11,281			$	3			0.11	%
Investment securities:
U.S. Government-sponsored agency securities			100				0			1.59	%			202				1			2.35	%			100				0			1.59	%
Agency residential and commercial MBS			6,200				28			1.84	%			6,251				37			2.40	%			5,647				29			2.05	%
Other residential and commercial MBS			28				0			2.25	%			38				0			2.13	%			30				0			2.04	%
Tax-exempt municipal securities			14,174				141			3.97	%			11,551				123			4.26	%			13,470				135			4.02	%
Taxable municipal securities			1,670				12			2.98	%			758				6			3.26	%			1,612				12			3.00	%
Other investment securities			1,405				10			2.86	%			45				0			2.76	%			1,376				10			2.85	%
Total investment securities			23,576				192			3.26	%			18,845				168			3.57	%			22,234				187			3.36	%
Loans:
Residential real estate			74,233				520			2.80	%			56,907				422			2.96	%			69,854				491			2.81	%
Multifamily			15,126				135			3.49	%			13,313				125			3.67	%			14,392				127			3.49	%
Commercial real estate			8,357				82			3.82	%			7,802				78			3.93	%			8,117				78			3.82	%
Multifamily/commercial construction			2,963				34			4.54	%			2,740				31			4.37	%			2,969				38			5.00	%
Business			15,928				129			3.17	%			12,538				110			3.45	%			15,894				129			3.21	%
PPP			1,123				12			4.01	%			2,092				11			2.03	%			1,843				15			3.32	%
Other			8,158				43			2.06	%			6,996				42			2.33	%			7,653				42			2.15	%
Total loans			125,887				954			3.00	%			102,386				818			3.16	%			120,722				920			3.03	%
FHLB stock			266				5			6.99	%			458				6			5.31	%			313				5			6.55	%
Total interest-earning assets			163,113				1,156			2.81	%			126,117				994			3.12	%			154,550				1,115			2.87	%
Noninterest-earning cash			392											434											386
Goodwill and other intangibles			224											230											225
Other assets			6,891											5,075											6,724
Total noninterest-earning assets			7,506											5,738											7,335
Total Assets		$	170,619										$	131,855										$	161,885
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing checking		$	33,642				1			0.01	%		$	25,539				2			0.04	%		$	33,329				2			0.02	%
Money market checking			21,861				6			0.11	%			15,432				8			0.21	%			19,928				6			0.12	%
Money market savings and passbooks			15,831				6			0.16	%			10,788				5			0.20	%			14,783				6			0.17	%
CDs			7,779				9			0.46	%			11,334				38			1.34	%			8,040				10			0.51	%
Total interest-bearing deposits (3)			79,114				22			0.11	%			63,093				54			0.34	%			76,080				24			0.13	%
Borrowings:
Short-term borrowings			0				0			0.09	%			5				0			0.00	%			—				—			—	%
Long-term FHLB advances			8,545				28			1.29	%			14,739				62			1.68	%			10,062				35			1.39	%
Senior notes			997				6			2.42	%			995				6			2.42	%			997				6			2.42	%
Subordinated notes			779				9			4.68	%			778				9			4.68	%			778				9			4.68	%
Total borrowings			10,321				43			1.66	%			16,518				77			1.86	%			11,838				50			1.69	%
Total interest-bearing liabilities (4)			89,434				65			0.29	%			79,611				132			0.66	%			87,918				74			0.34	%
Noninterest-bearing checking			64,008											39,357											58,051
Other noninterest-bearing liabilities			2,904											2,083											2,796
Total noninterest-bearing liabilities			66,912											41,440											60,847
Preferred shareholders’ equity			2,729											1,227											2,143
Common shareholders’ equity			11,543											9,578											10,978
Total Liabilities and Shareholders’ Equity		$	170,619										$	131,855										$	161,885
Net interest spread (5)										2.52	%										2.47	%										2.54	%
Net interest income (fully taxable-equivalent basis) and net interest margin (6)						$	1,090			2.65	%						$	862			2.71	%						$	1,041			2.68	%
Reconciliation of tax-equivalent net interest income to net interest income: (7)
Municipal securities tax-equivalent adjustment							(31	)										(25	)										(30	)
Business loans tax-equivalent adjustment							(7	)										(7	)										(7	)
Net interest income						$	1,052										$	830										$	1,004
Supplemental information:
Total deposits (interest-bearing and noninterest-bearing)		$	143,122			$	22			0.06	%		$	102,450			$	54			0.21	%		$	134,131			$	24			0.07	%
Total deposits (interest-bearing and noninterest-bearing) and borrowings		$	153,442			$	65			0.17	%		$	118,968			$	132			0.44	%		$	145,968			$	74			0.20	%

		Nine Months Ended September 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 millions)
Assets:
Interest-bearing deposits with banks		$	12,045			$	11			0.12	%		$	3,029			$	6			0.25	%
Investment securities:
U.S. Government-sponsored agency securities			98				1			1.54	%			241				5			2.63	%
Agency residential and commercial MBS			5,826				88			2.01	%			6,537				127			2.60	%
Other residential and commercial MBS			30				0			2.04	%			23				0			2.40	%
Tax-exempt municipal securities			13,312				403			4.04	%			11,165				361			4.32	%
Taxable municipal securities			1,456				32			2.98	%			709				18			3.34	%
Other investment securities			1,074				22			2.78	%			44				1			2.83	%
Total investment securities			21,795				548			3.35	%			18,719				513			3.65	%
Loans:
Residential real estate			69,880				1,480			2.82	%			53,992				1,231			3.04	%
Multifamily			14,484				385			3.50	%			12,923				364			3.70	%
Commercial real estate			8,170				238			3.84	%			7,699				235			4.00	%
Multifamily/commercial construction			2,933				103			4.63	%			2,641				90			4.49	%
Business			15,636				382			3.22	%			12,666				349			3.62	%
PPP			1,649				43			3.42	%			1,241				18			1.96	%
Other			7,722				124			2.12	%			6,703				131			2.58	%
Total loans			120,476				2,754			3.03	%			97,865				2,420			3.27	%
FHLB stock			307				15			6.51	%			452				18			5.36	%
Total interest-earning assets			154,623				3,328			2.86	%			120,065				2,956			3.26	%
Noninterest-earning cash			397											434
Goodwill and other intangibles			225											232
Other assets			6,572											4,901
Total noninterest-earning assets			7,194											5,567
Total Assets		$	161,817										$	125,633
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing checking		$	32,993				5			0.02	%		$	22,736				14			0.08	%
Money market checking			20,237				20			0.13	%			14,162				47			0.45	%
Money market savings and passbooks			14,760				19			0.17	%			10,122				26			0.35	%
CDs			8,075				31			0.51	%			12,742				158			1.66	%
Total interest-bearing deposits (3)			76,065				74			0.13	%			59,762				246			0.55	%
Borrowings:
Short-term borrowings			0				0			0.09	%			412				5			1.52	%
Long-term FHLB advances			9,966				103			1.38	%			14,676				197			1.79	%
Senior notes			997				18			2.42	%			919				17			2.44	%
Subordinated notes			778				27			4.68	%			778				27			4.68	%
Total borrowings			11,741				149			1.69	%			16,785				246			1.96	%
Total interest-bearing liabilities (4)			87,806				223			0.34	%			76,547				492			0.86	%
Noninterest-bearing checking			57,961											36,530
Other noninterest-bearing liabilities			2,780											2,060
Total noninterest-bearing liabilities			60,741											38,590
Preferred shareholders' equity			2,281											1,172
Common shareholders' equity			10,989											9,323
Total Liabilities and Shareholders’ Equity		$	161,817										$	125,633
Net interest spread (5)										2.52	%										2.41	%
Net interest income (fully taxable-equivalent basis) and net interest margin (6)						$	3,105			2.67	%						$	2,464			2.72	%
Reconciliation of tax-equivalent net interest income to net interest income: (7)
Municipal securities tax-equivalent adjustment							(89	)										(75	)
Business loans tax-equivalent adjustment							(21	)										(20	)
Net interest income						$	2,995										$	2,370
Supplemental information:
Total deposits (interest-bearing and noninterest-bearing)		$	134,026			$	74			0.07	%		$	96,292			$	246			0.34	%
Total deposits (interest-bearing and noninterest-bearing) and borrowings		$	145,767			$	223			0.20	%		$	113,077			$	492			0.58	%

____________________
Note:		Amounts presented in the tables above may not add due to rounding. 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.

		Quarter Ended September 30,								Quarter Ended June 30,				Nine Months Ended September 30,
Selected Financial Data and Ratios		2021				2020				2021				2021				2020
($ in thousands, except per share amounts)
Return on average assets (1), (2)		0.86		%		0.88		%		0.92		%		0.89		%		0.82		%
Return on average common shareholders’ equity (1)		11.87		%		11.56		%		12.77		%		12.30		%		10.40		%
Return on average tangible common shareholders’ equity (1), (3)		12.10		%		11.84		%		13.04		%		12.56		%		10.67		%
Average equity to average assets		8.37		%		8.19		%		8.10		%		8.20		%		8.35		%
Dividends per common share		$	0.22			$	0.20			$	0.22			$	0.64			$	0.59
Dividend payout ratio		11.5		%		12.4		%		11.3		%		11.3		%		14.0		%
Book value per common share		$	66.44			$	56.33			$	62.99			$	66.44			$	56.33
Tangible book value per common share (4)		$	65.19			$	55.00			$	61.72			$	65.19			$	55.00
Efficiency ratio (5)		61.3		%		60.7		%		62.0		%		62.2		%		62.0		%
Net loan charge-offs		$	292			$	1,687			$	1,219			$	1,998			$	2,987
Net loan charge-offs to average total loans (1)		0.00		%		0.01		%		0.00		%		0.00		%		0.00		%
Allowance for loan credit losses to:
Total loans		0.52		%		0.58		%		0.52		%		0.52		%		0.58		%
Nonaccrual loans		524.4		%		368.2		%		479.3		%		524.4		%		368.2		%

____________________
(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 September 30,						Quarter Ended June 30,			Nine Months Ended September 30,
Effective Tax Rate		2021			2020			2021			2021			2020
Effective tax rate, prior to excess tax benefits—stock awards and tax refund from an amended tax return		23.2	%		21.1	%		21.7	%		22.5	%		21.6	%
Excess tax benefits—stock awards		(1.8	)		(0.2	)		(4.3	)		(2.3	)		(1.6	)
Tax refund from an amended tax return		—			(1.3	)		—			—			(0.5	)
Effective tax rate		21.4	%		19.6	%		17.4	%		20.2	%		19.5	%

Provision (Reversal of Provision) for Credit Losses		Quarter Ended September 30,								Quarter Ended June 30,				Nine Months Ended September 30,
		2021				2020				2021				2021				2020
($ in thousands)
Debt securities held-to-maturity		$	296			$	333			$	383			$	1,801			$	1,047
Loans			31,568				22,437				17,304				35,165				113,305
Unfunded loan commitments			2,161				5,768				(1,544	)			(1,406	)			7,673
Total provision		$	34,025			$	28,538			$	16,143			$	35,560			$	122,025

		Quarter Ended September 30,								Quarter Ended June 30,				Nine Months Ended September 30,
Mortgage Loan Sales		2021				2020				2021				2021				2020
($ in thousands)
Loans sold:
Flow sales:
Agency		$	17,544			$	44,118			$	4,315			$	64,261			$	80,702
Non-agency		—				—				—				1,073				31,870
Total flow sales		17,544				44,118				4,315				65,334				112,572
Bulk sales:
Non-agency		—				235,732				—				—				673,401
Securitizations		—				—				—				—				300,116
Total loans sold		$	17,544			$	279,850			$	4,315			$	65,334			$	1,086,089
Gain on sale of loans:
Amount (1)		$	140			$	13,797			$	58			$	507			$	14,575
Gain as a percentage of loans sold		0.80		%		4.93		%		1.34		%		0.78		%		1.34		%

____________________
(1)		The gain for the quarter and nine months ended September 30, 2020 included $10.3 million related to realized discounts on previously purchased loans when these loans were sold.

		Quarter Ended September 30,								Quarter Ended June 30,				Nine Months Ended September 30,
Loan Originations		2021				2020				2021				2021				2020
($ in thousands)
Single family		$	6,998,315			$	6,813,850			$	8,661,680			$	22,562,187			$	16,208,370
Home equity lines of credit		588,488				432,443				610,658				1,822,807				1,285,688
Single family construction		283,278				186,833				215,014				722,796				415,313
Multifamily		1,199,660				955,951				1,101,450				3,092,180				2,684,074
Commercial real estate		724,777				193,228				458,196				1,496,964				975,769
Multifamily/commercial construction		355,981				245,220				272,145				938,950				997,555
Capital call lines of credit		3,128,180				1,803,907				2,921,192				9,180,689				5,594,483
Tax-exempt		38,100				328,711				208,327				460,394				612,784
Other business		533,709				243,788				520,394				2,079,257				1,777,824
PPP		—				—				35,586				724,534				1,981,797
Stock secured		753,409				685,250				775,795				2,239,242				1,797,226
Other secured		546,286				189,386				598,630				1,583,905				961,940
Unsecured		303,916				159,379				372,192				1,021,956				685,537
Total loans originated		$	15,454,099			$	12,237,946			$	16,751,259			$	47,925,861			$	35,978,360

		As of
Asset Quality Information		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
($ in thousands)
Nonperforming assets:
Nonaccrual loans		$	127,430			$	132,880			$	172,794			$	184,132			$	164,247
Other real estate owned		—				—				1,334				—				—
Total nonperforming assets		$	127,430			$	132,880			$	174,128			$	184,132			$	164,247
Nonperforming assets to total assets		0.07		%		0.08		%		0.11		%		0.13		%		0.12		%
Accruing loans 90 days or more past due		$	—			$	—			$	851			$	—			$	935
Restructured accruing loans		$	10,197			$	11,407			$	11,658			$	11,253			$	11,378

		September 30, 2021
COVID-19 Loan Modifications (1), (2), (3), (4)		Unpaid Principal Balance				LTV (5)			Average Loan Size				Number of Loans
($ in millions)
Single family		$	64			61	%		$	1.2			54
Home equity lines of credit		0				60	%		$	0.2			1
Single family construction		3				75	%		$	2.6			1
Multifamily		30				63	%		$	30.4			1
Commercial real estate		91				48	%		$	4.6			20
Multifamily/commercial construction		—				n/a			$	—			—
Capital call lines of credit		—				n/a			$	—			—
Tax-exempt		7				n/a			$	3.3			2
Other business		6				n/a			$	1.6			4
Stock secured		—				n/a			$	—			—
Other secured		2				n/a			$	0.3			6
Unsecured (6)		3				n/a			$	0.1			26
Total		$	206										115

____________________
(1)		COVID-19 loan modifications are not classified as troubled debt restructurings.
(2)		Includes 23 loans totaling $23 million that have completed their deferral period, but for which a regular payment is not yet due.
(3)		Includes 83 loans totaling $177 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 September 30, 2021, $3.6 billion of loans have completed their deferral period or are no longer outstanding, and 99% of the outstanding loans were current.
(5)		Weighted average loan-to-value (“LTV”) ratios for real estate secured loans are based on appraised value at the time of origination.
(6)		Consists of household debt refinance loans.

		September 30, 2021
Loan Industry Information		Unpaid Principal Balance				LTV			Average Loan Size				Number of Loans			Personal Guarantee %
($ in millions)
Retail		$	1,903			49	%		$	2.6			744			80	%
Hotel		523				46	%		$	7.9			68			78	%
Restaurant (1)		174				48	%		$	0.9			205			94	%
Total (2)		$	2,600										1,017

____________________
(1)		Approximately 78% of loans to restaurants are real estate secured.
(2)		Amounts in the table above exclude $36 million of loans to hotels and $170 million of loans to restaurants under the PPP.

		As of
Loan Servicing Portfolio		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
($ in millions)
Loans serviced for investors		$	5,117			$	5,640			$	6,314			$	7,094			$	7,799

Return on Average Common Shareholders’ Equity and Return on Average Tangible Common Shareholders’ Equity (1), (2)		Quarter Ended September 30,								Quarter Ended June 30,				Nine Months Ended September 30,
		2021				2020				2021				2021				2020
($ in thousands)
Average common shareholders’ equity (a)		$	11,543,395			$	9,578,173			$	10,977,612			$	10,988,556			$	9,323,381
Less: Average goodwill and other intangible assets		223,816				230,051				225,183				225,217				232,014
Average tangible common shareholders’ equity (b)		$	11,319,579			$	9,348,122			$	10,752,429			$	10,763,339			$	9,091,367
Net income available to common shareholders (c)		$	345,260			$	278,321			$	349,451			$	1,011,019			$	725,938
Return on average common shareholders’ equity (c) / (a)		11.87		%		11.56		%		12.77		%		12.30		%		10.40		%
Return on average tangible common shareholders’ equity (c) / (b)		12.10		%		11.84		%		13.04		%		12.56		%		10.67		%

____________________
(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)		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
(in thousands, except per share amounts)
Total shareholders’ equity		$	14,801,794			$	13,274,727			$	12,941,730			$	11,750,646			$	11,344,609
Less: Preferred stock		2,892,500				2,142,500				2,142,500				1,545,000				1,645,000
Total common shareholders’ equity (a)		11,909,294				11,132,227				10,799,230				10,205,646				9,699,609
Less: Goodwill and other intangible assets		223,183				224,497				225,925				227,512				229,185
Total tangible common shareholders’ equity (b)		$	11,686,111			$	10,907,730			$	10,573,305			$	9,978,134			$	9,470,424
Number of shares of common stock outstanding (c)		179,261				176,742				176,287				174,124				172,188
Book value per common share (a) / (c)		$	66.44			$	62.99			$	61.26			$	58.61			$	56.33
Tangible book value per common share (b) / (c)		$	65.19			$	61.72			$	59.98			$	57.30			$	55.00

____________________
(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)		September 30, 2021 (3)				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
($ in thousands)
Capital Ratios:
Tier 1 leverage ratio (Tier 1 capital to average assets)		8.55		%		8.05		%		8.32		%		8.14		%		8.38		%
Common Equity Tier 1 capital to risk-weighted assets		9.61		%		9.51		%		9.64		%		9.67		%		9.78		%
Tier 1 capital to risk-weighted assets		11.99		%		11.38		%		11.60		%		11.18		%		11.50		%
Total capital to risk-weighted assets		13.16		%		12.60		%		12.87		%		12.55		%		12.94		%
Regulatory Capital:
Common Equity Tier 1 capital		$	11,673,889			$	10,875,436			$	10,548,615			$	9,894,870			$	9,375,688
Tier 1 capital		$	14,566,389			$	13,017,936			$	12,691,115			$	11,439,870			$	11,020,688
Total capital		$	15,994,370			$	14,420,504			$	14,082,378			$	12,842,344			$	12,396,304
Assets:
Average assets		$	170,373,171			$	161,636,891			$	152,465,399			$	140,493,283			$	131,517,445
Risk-weighted assets		$	121,515,782			$	114,405,537			$	109,413,168			$	102,321,489			$	95,823,385

____________________
(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 September 30, 2021 are preliminary.

		As of
Wealth Management Assets		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
($ in millions)
First Republic Investment Management		$	101,105			$	99,459			$	90,819			$	83,596			$	74,661
Brokerage and investment:
Brokerage		115,793				112,359				101,478				88,059				76,769
Money market mutual funds		18,074				13,109				11,435				9,003				4,416
Total brokerage and investment		133,867				125,468				112,913				97,062				81,185
Trust Company:
Trust		12,220				11,496				10,986				9,910				8,687
Custody		4,533				4,439				4,216				3,889				3,651
Total Trust Company		16,753				15,935				15,202				13,799				12,338
Total Wealth Management Assets		$	251,725			$	240,862			$	218,934			$	194,457			$	168,184

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211013005361/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 Q3 2021 financial results?

First Republic Bank reported Q3 2021 revenues of $1.3 billion, a 30.1% increase year-over-year, with net interest income at $1.1 billion, up 26.7%.

How much did First Republic Bank raise in capital during Q3 2021?

First Republic Bank raised $1.2 billion in capital markets during Q3 2021.

What is the recent dividend declared by First Republic Bank?

First Republic Bank declared a quarterly cash dividend of $0.22 per share, payable on November 12, 2021.

What was the loan origination amount for First Republic Bank in Q3 2021?

Loan originations for Q3 2021 totaled $15.5 billion, marking the strongest third quarter ever for the bank.

What were the growth rates for First Republic Bank's deposits and wealth management assets in Q3 2021?

Deposits grew 39.2% to $145.3 billion, and wealth management assets increased by 49.7% to $251.7 billion.