First Republic Reports Third Quarter 2022 Results

Rhea-AI Summary

First Republic Bank (NYSE: FRC) reported third-quarter results for 2022, showing strong financial growth. Revenues increased 16.9% year-over-year to $1.5 billion, and net income rose 20.5% to $445 million. Notably, net interest income climbed 20.6% to $1.3 billion, driven by robust loan originations of $18 billion. The tangible book value per share reached $72.54, up 11.3%. The bank declared a cash dividend of $0.27 per share, effective November 10, 2022. Despite a minor decline in the net interest margin to 2.71%, credit quality remained solid with low nonperforming assets at 6 basis points.

Positive

• Revenues of $1.5 billion, up 16.9% year-over-year.
• Net income increased by 20.5% to $445 million.
• Net interest income rose 20.6% to $1.3 billion.
• Tangible book value per share increased 11.3% to $72.54.
• Loan originations totaled $18 billion, the second-best quarter ever.

Negative

• Net interest margin declined to 2.71%, down from 2.80% in the prior quarter.
• Noninterest expense rose 15.1% to $919 million, impacting efficiency.

Year-Over-Year Net Interest Income Rose 21%

Tangible Book Value Per Share Increased 11%

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

“First Republic had another quarter of strong results,” said Mike Roffler, Chief Executive Officer and President. “Loans were up very nicely, and, importantly, credit quality remains excellent. This quarter’s results demonstrate the durability of our client-focused business model and service culture.”

Quarterly Highlights

Financial Results

– Year-over-year:

– Revenues were $1.5 billion, up 16.9%.

– Net interest income was $1.3 billion, up 20.6%.

– Net income was $445 million, up 20.5%.

– Diluted earnings per share of $2.21, up 15.7%.

– Tangible book value per share was $72.54, up 11.3%.

– Loan originations totaled $18.0 billion, our second best quarter ever.

– Net interest margin was 2.71%, compared to 2.80% for the prior quarter.

– Efficiency ratio was 60.3%, compared to 60.5% for the prior quarter.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.59%.

– Nonperforming assets were a low 6 basis points of total assets.

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

Continued Franchise Growth

– Year-over-year:

– Loans totaled $158.8 billion, up 23.7%.

– Deposits were $172.4 billion, up 18.6%.

– Wealth management assets were $249.5 billion, down 0.9%.

– Wealth management revenues were $214 million, up 2.4%.

“Revenue and net interest income growth were strong during the third quarter,” said Olga Tsokova, Chief Financial Officer (Acting) and Chief Accounting Officer. “We’re pleased to have accessed the equity capital markets during the quarter, and we continue to maintain a very strong capital position.”

Quarterly Cash Dividend of $0.27 per Share

The Bank declared a cash dividend for the third quarter of $0.27 per share of common stock, which is payable on November 10, 2022 to shareholders of record as of October 27, 2022.

Strong Asset Quality

Credit quality remains very strong. Nonperforming assets were at a very low 6 basis points of total assets at September 30, 2022.

The provision for credit losses for the quarter was $36 million, which was primarily driven by loan growth. The Bank had modest net loan charge-offs of only $1 million for the quarter. For the first nine months of 2022, the provision for credit losses was $77 million, with net loan charge-offs of only $2 million.

Continued Book Value Growth

Book value per common share at September 30, 2022 was $73.74, up 11.0% from a year ago. Tangible book value per common share at September 30, 2022 was $72.54, up 11.3% from a year ago.

Capital Strength

The Bank’s Tier 1 leverage ratio was 8.59% at both September 30, 2022 and June 30, 2022.

During the third quarter, the Bank sold 2,587,500 new shares of common stock in an underwritten public offering, which added $402 million to common equity.

Continued Franchise Growth

Loan Originations

Loan originations were $18.0 billion for the quarter, our second best quarter ever. This was up 16.4% from the same quarter a year ago, primarily due to an increase in multifamily lending.

Single family loan originations were 39% of the total loan origination volume for the quarter and had a weighted average loan-to-value ratio of 63%. Multifamily and commercial real estate loans originated were 21% of total originations and had a weighted average loan-to-value ratio of 51%. In addition, capital call lines of credit originated were 18% of total originations.

Loans totaled $158.8 billion at September 30, 2022, up 23.7% compared to a year ago. Our loan growth was primarily due to increases in single family, multifamily, commercial real estate, stock secured and other business loans.

Investments

Total investment securities at September 30, 2022 were $31.6 billion, a slight increase compared to the prior quarter and a 30.7% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $27.5 billion at September 30, 2022, and represented 13.7% of quarterly average total assets.

Deposit Growth and Funding

Total deposits increased to $172.4 billion, up 18.6% compared to a year ago. Deposits were our primary source of funding at September 30, 2022, and represented 93% of our funding base.

At September 30, 2022, our deposit base consisted of 64.2% of checking deposits, 26.6% of other liquid deposits including money market checking and money marketing savings and passbooks, and 9.2% of CDs.

Other sources of funding at September 30, 2022 included short-term and long-term FHLB advances, which totaled $11.0 billion, up 42.9% compared to a year ago.

Deposits had an average rate paid of 41 basis points during the quarter, and average total funding costs were 55 basis points during the quarter.

Wealth Management

Total wealth management assets were $249.5 billion at September 30, 2022, up slightly compared to the prior quarter and down slightly compared to a year ago. The variances in wealth management assets were driven by net client inflow, partially offset by market decline. Wealth management assets at September 30, 2022 included investment management assets of $100.1 billion, brokerage assets and money market mutual funds of $130.2 billion, and trust and custody assets of $19.2 billion.

Wealth management fees, which consist of investment management, brokerage and investment, insurance, trust and foreign exchange fee income, totaled $214 million for the quarter, up 2.4% compared to last year’s third quarter. Such revenues represented 14.1% of the Bank’s total revenues for the quarter.

Investment management fees were $142 million for the quarter, down 4.6% compared to $149 million a year ago. The decrease was primarily driven by the level and mix of wealth management assets, which was impacted by adverse market conditions.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.5 billion for the quarter, up 16.9% compared to the third quarter a year ago.

Net Interest Income Growth

Net interest income was $1.3 billion for the quarter, up 20.6% compared to the third quarter a year ago. The increase in net interest income for the quarter resulted primarily from growth in average interest-earning assets and the increase in net interest margin compared to a year ago.

Net Interest Margin

The net interest margin declined to 2.71% in the third quarter, from 2.80% in the prior quarter. The decline was due to average funding costs increasing more rapidly than the offsetting increase in the average yields on interest-earning assets.

Noninterest Income

Noninterest income was $254 million for the quarter, up 1.8% compared to the third quarter a year ago. The increase was primarily driven by higher brokerage and investment fees, partially offset by lower investment management fees.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $919 million for the quarter, up 15.1% compared to the third 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 expense due to an increase in events held in person.

The efficiency ratio was 60.3% for the quarter, compared to 61.3% for last year’s third quarter. For the first nine months of 2022, the efficiency ratio was 60.9%, compared to 62.2% for the first nine months of 2021.

Income Taxes

The Bank’s effective tax rate for the third quarter of 2022 was 21.6%, compared to 21.4% for the third quarter a year ago. The slight increase was primarily the result of lower excess tax benefits upon vesting of stock awards, partially offset by a tax refund from an amended tax return.

For the first nine months of 2022, the Bank’s effective tax rate was 22.6%, compared to 20.2% 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 third quarter 2022 earnings conference call is scheduled for October 14, 2022 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (888) 204-4368 and provide confirmation code 2879019 approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (856) 344-9299 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 webcast 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. 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; 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 the COVID-19 pandemic (collectively referred to as “COVID-19” herein); 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, which may result in costs, fees, penalties, business restrictions, reputational harm or other adverse consequences; 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; changes in federal, state or local tax laws; 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 September 30,						Quarter Ended June 30,			Nine Months Ended September 30,
(in millions, except per share amounts)		2022			2021			2022			2022			2021
Interest income:
Loans		$	1,269		$	947		$	1,094		$	3,365		$	2,733
Investments			219			161			209			608			459
Cash and cash equivalents			27			5			11			43			11
Other			3			5			2			7			15
Total interest income			1,518			1,118			1,316			4,023			3,218
Interest expense:
Deposits			169			23			37			226			75
Borrowings			80			43			33			137			149
Total interest expense			249			66			70			363			224
Net interest income			1,269			1,052			1,246			3,660			2,994
Provision for credit losses			36			34			31			77			35
Net interest income after provision for credit losses			1,233			1,018			1,215			3,583			2,959
Noninterest income:
Investment management fees			142			149			164			471			404
Brokerage and investment fees			34			23			33			89			55
Insurance fees			6			6			3			13			12
Trust fees			7			6			7			21			18
Foreign exchange fee income			25			26			25			73			64
Deposit fees			7			7			8			21			20
Loan and related fees			10			8			10			29			24
Income from investments in life insurance			23			20			11			48			58
Other income, net			—			6			2			3			18
Total noninterest income			254			251			263			768			673
Noninterest expense:
Salaries and employee benefits			557			514			567			1,684			1,459
Information systems			124			91			114			345			263
Occupancy			73			67			70			212			188
Professional fees			31			27			27			81			74
Advertising and marketing			19			14			16			48			43
FDIC assessments			17			14			15			47			39
Other expenses			98			71			104			281			215
Total noninterest expense			919			798			913			2,698			2,281
Income before provision for income taxes			568			471			565			1,653			1,351
Provision for income taxes			123			101			132			374			273
Net income			445			370			433			1,279			1,078
Dividends on preferred stock			40			25			41			118			67
Net income available to common shareholders		$	405		$	345		$	392		$	1,161		$	1,011
Basic earnings per common share		$	2.23		$	1.94		$	2.18		$	6.44		$	5.73
Diluted earnings per common share		$	2.21		$	1.91		$	2.16		$	6.38		$	5.66
Weighted average shares—basic			182			178			180			180			176
Weighted average shares—diluted			183			180			181			182			179

CONSOLIDATED BALANCE SHEETS
		As of
($ in millions)		September 30, 2022				June 30, 2022				December 31, 2021				September 30, 2021
ASSETS
Cash and cash equivalents		$	5,532			$	6,237			$	12,947			$	12,279
Debt securities available-for-sale			3,348				3,438				3,381				2,961
Debt securities held-to-maturity, net			28,247				27,710				22,292				21,193
Equity securities (fair value)			22				23				28				32
Loans:
Single family			94,345				89,295				76,793				73,491
Home equity lines of credit			2,801				2,699				2,584				2,429
Single family construction			1,154				1,117				993				985
Multifamily			20,364				18,346				15,966				15,417
Commercial real estate			10,039				9,182				8,531				8,486
Multifamily/commercial construction			2,089				2,019				1,927				2,064
Capital call lines of credit			9,393				10,727				10,999				9,088
Tax-exempt			3,655				3,605				3,680				3,578
Other business			4,629				4,638				3,961				3,554
Paycheck Protection Program ("PPP")			30				82				545				876
Stock secured			4,251				4,041				3,435				3,120
Other secured			3,001				2,774				2,457				2,261
Unsecured			3,016				2,994				3,085				3,026
Total loans			158,767				151,519				134,956				128,375
Allowance for credit losses			(760	)			(729	)			(694	)			(668	)
Loans, net			158,007				150,790				134,262				127,707
Investments in life insurance			3,409				3,340				2,650				2,628
Tax credit investments			1,285				1,304				1,220				1,181
Premises, equipment and leasehold improvements, net			483				474				454				431
Goodwill and other intangible assets			219				220				222				223
Other assets			4,557				4,372				3,631				3,936
Total Assets		$	205,109			$	197,908			$	181,087			$	172,571
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking		$	69,931			$	75,208			$	70,840			$	65,833
Interest-bearing checking			40,706				43,421				41,248				34,089
Money market checking			25,582				21,235				20,303				21,861
Money market savings and passbooks			20,231				18,796				16,573				15,947
Certificates of deposit			15,932				6,987				7,357				7,596
Total Deposits			172,382				165,647				156,321				145,326
Short-term FHLB advances			5,100				6,300				—				—
Long-term FHLB advances			5,900				4,700				3,700				7,700
Senior notes			500				499				998				998
Subordinated notes			779				779				779				779
Other liabilities			3,329				3,557				3,391				2,966
Total Liabilities			187,990				181,482				165,189				157,769
Shareholders’ Equity:
Preferred stock			3,633				3,633				3,633				2,893
Common stock			2				2				2				2
Additional paid-in capital			6,230				5,782				5,725				5,685
Retained earnings			7,591				7,236				6,569				6,242
Accumulated other comprehensive loss			(337	)			(227	)			(31	)			(20	)
Total Shareholders’ Equity			17,119				16,426				15,898				14,802
Total Liabilities and Shareholders’ Equity		$	205,109			$	197,908			$	181,087			$	172,571

		Quarter Ended September 30,																				Quarter Ended June 30,
		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		$	4,733		$	27			2.22	%		$	13,384		$	5			0.15	%		$	5,713		$	11			0.80	%
Investment securities:
U.S. Government-sponsored agency securities			165			1			2.05	%			100			0			1.59	%			165			1			2.05	%
Agency residential and commercial MBS			10,642			59			2.23	%			6,200			28			1.84	%			10,667			56			2.10	%
Other residential and commercial MBS			20			0			2.97	%			28			1			2.25	%			22			0			2.37	%
Tax-exempt municipal securities			17,389			169			3.91	%			14,173			140			3.97	%			16,711			161			3.86	%
Taxable municipal securities			1,773			14			3.09	%			1,670			13			2.98	%			1,774			14			3.18	%
Other investment securities			1,440			11			2.87	%			1,405			11			2.86	%			1,440			10			2.87	%
Total investment securities			31,429			254			3.24	%			23,576			193			3.26	%			30,779			242			3.15	%
Loans:
Residential real estate			95,588			701			2.93	%			74,233			520			2.80	%			89,358			620			2.78	%
Multifamily			19,139			171			3.48	%			15,125			134			3.49	%			17,480			153			3.46	%
Commercial real estate			9,558			94			3.84	%			8,357			82			3.82	%			8,983			85			3.77	%
Multifamily/commercial construction			2,062			26			5.05	%			2,963			34			4.54	%			2,004			24			4.60	%
Business			18,664			205			4.30	%			15,928			129			3.17	%			18,469			160			3.43	%
PPP			48			1			9.49	%			1,123			12			4.01	%			138			3			8.46	%
Other			9,957			77			3.02	%			8,158			43			2.06	%			9,628			56			2.31	%
Total loans			155,016			1,275			3.26	%			125,887			954			3.00	%			146,060			1,101			3.00	%
FHLB stock			366			3			3.26	%			266			5			6.99	%			201			2			3.40	%
Total interest-earning assets			191,544			1,559			3.23	%			163,113			1,157			2.81	%			182,753			1,356			2.96	%
Noninterest-earning cash			451										391										442
Goodwill and other intangibles			219										224										220
Other assets			8,199										6,891										7,759
Total noninterest-earning assets			8,869										7,506										8,421
Total Assets		$	200,413									$	170,619									$	191,174
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing checking		$	41,404			27			0.26	%		$	33,642			1			0.01	%		$	41,878			5			0.05	%
Money market checking			21,817			65			1.19	%			21,861			6			0.11	%			20,873			13			0.25	%
Money market savings and passbooks			18,616			47			1.01	%			15,831			7			0.16	%			17,682			11			0.25	%
CDs			9,607			30			1.26	%			7,779			9			0.46	%			6,975			8			0.43	%
Total interest-bearing deposits (3)			91,444			169			0.74	%			79,113			23			0.11	%			87,408			37			0.17	%
Borrowings:
Federal funds purchased			371			2			2.31	%			0			0			0.09	%			186			0			0.73	%
Short-term FHLB advances			7,586			45			2.36	%			—			—			—	%			2,953			9			1.20	%
Long-term FHLB advances			5,308			21			1.49	%			8,545			28			1.29	%			4,097			11			1.09	%
Senior notes			499			3			2.15	%			997			6			2.42	%			691			4			2.38	%
Subordinated notes			779			9			4.68	%			779			9			4.68	%			779			9			4.68	%
Total borrowings			14,543			80			2.16	%			10,321			43			1.66	%			8,706			33			1.54	%
Total interest-bearing liabilities (4)			105,987			249			0.93	%			89,434			66			0.29	%			96,114			70			0.29	%
Noninterest-bearing checking			73,851										64,008										75,411
Other noninterest-bearing liabilities			3,685										2,904										3,354
Total noninterest-bearing liabilities			77,536										66,912										78,765
Preferred shareholders’ equity			3,633										2,729										3,633
Common shareholders’ equity			13,257										11,544										12,662
Total Liabilities and Shareholders’ Equity		$	200,413									$	170,619									$	191,174
Net interest spread (5)									2.30	%									2.52	%									2.66	%
Net interest income (fully taxable-equivalent basis) and net interest margin (6)					$	1,310			2.71	%					$	1,091			2.65	%					$	1,286			2.80	%
Reconciliation of tax-equivalent net interest income to net interest income: (7)
Municipal securities tax-equivalent adjustment						(34	)									(31	)									(33	)
Business loans tax-equivalent adjustment						(7	)									(8	)									(7	)
Net interest income					$	1,269									$	1,052									$	1,246
Supplemental information:
Total deposits (interest-bearing and noninterest-bearing)		$	165,295		$	169			0.41	%		$	143,121		$	23			0.06	%		$	162,819		$	37			0.09	%
Total deposits (interest-bearing and noninterest-bearing) and borrowings		$	179,838		$	249			0.55	%		$	153,442		$	66			0.17	%		$	171,525		$	70			0.16	%

		Nine Months Ended September 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		$	7,238		$	43			0.79	%		$	12,045		$	11			0.12	%
Investment securities:
U.S. Government-sponsored agency securities			149			2			1.87	%			98			1			1.54	%
Agency residential and commercial MBS			10,156			154			2.02	%			5,826			88			2.01	%
Other residential and commercial MBS			22			0			2.43	%			30			1			2.04	%
Tax-exempt municipal securities			16,572			478			3.85	%			13,312			403			4.04	%
Taxable municipal securities			1,754			41			3.08	%			1,456			33			2.98	%
Other investment securities			1,432			31			2.86	%			1,073			23			2.78	%
Total investment securities			30,085			706			3.13	%			21,795			549			3.35	%
Loans:
Residential real estate			89,169			1,888			2.82	%			69,881			1,480			2.82	%
Multifamily			17,644			464			3.46	%			14,484			384			3.50	%
Commercial real estate			9,061			261			3.80	%			8,170			238			3.84	%
Multifamily/commercial construction			1,999			72			4.76	%			2,933			103			4.63	%
Business			18,574			510			3.62	%			15,636			382			3.22	%
PPP			188			11			7.96	%			1,649			43			3.42	%
Other			9,551			180			2.48	%			7,723			124			2.12	%
Total loans			146,186			3,386			3.07	%			120,476			2,754			3.03	%
FHLB stock			228			7			4.02	%			307			15			6.51	%
Total interest-earning assets			183,737			4,142			2.99	%			154,623			3,329			2.86	%
Noninterest-earning cash			448										397
Goodwill and other intangibles			220										225
Other assets			7,704										6,572
Total noninterest-earning assets			8,372										7,194
Total Assets		$	192,109									$	161,817
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing checking		$	41,231			33			0.11	%		$	32,993			5			0.02	%
Money market checking			21,450			83			0.52	%			20,237			20			0.13	%
Money market savings and passbooks			18,077			65			0.48	%			14,760			19			0.17	%
CDs			7,941			45			0.76	%			8,075			31			0.51	%
Total interest-bearing deposits (3)			88,699			226			0.34	%			76,065			75			0.13	%
Borrowings:
Federal funds purchased			187			2			1.79	%			0			0			0.09	%
Short-term FHLB advances			3,541			54			2.04	%			0			0			0.15	%
Long-term FHLB advances			4,374			41			1.21	%			9,966			104			1.38	%
Senior notes			728			13			2.35	%			997			18			2.42	%
Subordinated notes			779			27			4.68	%			778			27			4.68	%
Total borrowings			9,609			137			1.90	%			11,741			149			1.69	%
Total interest-bearing liabilities (4)			98,308			363			0.49	%			87,806			224			0.34	%
Noninterest-bearing checking			73,844										57,961
Other noninterest-bearing liabilities			3,551										2,780
Total noninterest-bearing liabilities			77,395										60,741
Preferred shareholders' equity			3,633										2,281
Common shareholders' equity			12,773										10,989
Total Liabilities and Shareholders’ Equity		$	192,109									$	161,817
Net interest spread (5)									2.50	%									2.52	%
Net interest income (fully taxable-equivalent basis) and net interest margin (6)					$	3,779			2.73	%					$	3,105			2.67	%
Reconciliation of tax-equivalent net interest income to net interest income: (7)
Municipal securities tax-equivalent adjustment						(98	)									(89	)
Business loans tax-equivalent adjustment						(21	)									(22	)
Net interest income					$	3,660									$	2,994
Supplemental information:
Total deposits (interest-bearing and noninterest-bearing)		$	162,543		$	226			0.19	%		$	134,026		$	75			0.07	%
Total deposits (interest-bearing and noninterest-bearing) and borrowings		$	172,152		$	363			0.28	%		$	145,767		$	224			0.20	%

__________
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 September 30,								Quarter Ended June 30,				Nine Months Ended September 30,
		2022				2021				2022				2022				2021
($ in millions, except per share amounts)
Selected Financial Data and Ratios:
Return on average assets (1), (2)			0.88	%			0.86	%			0.91	%			0.89	%			0.89	%
Return on average common shareholders’ equity (1)			12.12	%			11.87	%			12.43	%			12.16	%			12.30	%
Return on average tangible common shareholders’ equity (1), (3)			12.33	%			12.10	%			12.65	%			12.37	%			12.56	%
Average equity to average assets			8.43	%			8.37	%			8.52	%			8.54	%			8.20	%
Dividends per common share		$	0.27			$	0.22			$	0.27			$	0.76			$	0.64
Dividend payout ratio			12.2	%			11.5	%			12.5	%			11.9	%			11.3	%
Efficiency ratio (4)			60.3	%			61.3	%			60.5	%			60.9	%			62.2	%
Selected Asset Quality Ratios:
Net loan charge-offs		$	1.0			$	0.3			$	1.3			$	2.0			$	2.0
Net loan charge-offs to average total loans (1)			0.00	%			0.00	%			0.00	%			0.00	%			0.00	%
Selected Ratios (period-end):
Book value per common share		$	73.74			$	66.44			$	71.03
Tangible book value per common share (5)		$	72.54			$	65.19			$	69.81

__________
(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 September 30,						Quarter Ended June 30,			Nine Months Ended September 30,
		2022			2021			2022			2022			2021
Effective tax rate, prior to excess tax benefits—stock awards and tax refund from an amended tax return		23.3	%		23.2	%		24.0	%		23.6	%		22.5	%
Excess tax benefits—stock awards		(0.6	)		(1.8	)		(0.6	)		(0.6	)		(2.3	)
Tax refund from an amended tax return		(1.1	)		—			—			(0.4	)		—
Effective tax rate		21.6	%		21.4	%		23.4	%		22.6	%		20.2	%

Provision (Reversal of Provision) for Credit Losses		Quarter Ended September 30,						Quarter Ended June 30,			Nine Months Ended September 30,
		2022			2021			2022			2022			2021
($ in millions)
Debt securities held-to-maturity		$	—		$	—		$	1		$	2		$	2
Loans			32			32			29			68			35
Unfunded loan commitments			4			2			1			7			(2	)
Total provision		$	36		$	34		$	31		$	77		$	35

Loan Originations		Quarter Ended September 30,						Quarter Ended June 30,			Nine Months Ended September 30,
		2022			2021			2022			2022			2021
($ in millions)
Single family		$	6,999		$	6,998		$	10,638		$	26,013		$	22,562
Home equity lines of credit			708			589			744			2,141			1,823
Single family construction			385			283			540			1,192			723
Multifamily			2,658			1,199			2,330			6,697			3,092
Commercial real estate			1,141			725			816			2,523			1,497
Multifamily/commercial construction			410			356			492			1,286			939
Capital call lines of credit			3,232			3,129			3,096			9,348			9,181
Tax-exempt			178			38			92			360			460
Other business			598			533			1,078			2,214			2,079
PPP			—			—			—			—			725
Stock secured			791			753			915			2,842			2,239
Other secured			563			547			815			2,044			1,584
Unsecured			333			304			413			1,115			1,022
Total loans originated		$	17,996		$	15,454		$	21,969		$	57,775		$	47,926

		As of
Asset Quality Information		September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
($ in millions)
Nonperforming assets:
Nonaccrual loans		$	120			$	137			$	140			$	139			$	127
Other real estate owned			—				—				—				—				—
Total nonperforming assets		$	120			$	137			$	140			$	139			$	127
Nonaccrual loans to total loans			0.08	%			0.09	%			0.10	%			0.10	%			0.10	%
Nonperforming assets to total assets			0.06	%			0.07	%			0.08	%			0.08	%			0.07	%
Accruing loans 90 days or more past due		$	—			$	—			$	—			$	—			$	—
Restructured accruing loans		$	12			$	12			$	12			$	13			$	10
Allowance for loan credit losses to:
Total loans			0.48	%			0.48	%			0.50	%			0.51	%			0.52	%
Nonaccrual loans			635.3	%			531.2	%			498.8	%			500.5	%			524.4	%

		As of
Loan Servicing Portfolio		September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
($ in millions)
Loans serviced for investors		$	3,688		$	3,919		$	4,298		$	4,677		$	5,117

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,
		2022				2021				2022				2022				2021
($ in millions)
Average common shareholders’ equity (a)		$	13,257			$	11,544			$	12,662			$	12,773			$	10,989
Less: Average goodwill and other intangible assets			(219	)			(224	)			(220	)			(220	)			(225	)
Average tangible common shareholders’ equity (b)		$	13,038			$	11,320			$	12,442			$	12,553			$	10,764
Net income available to common shareholders (c)		$	405			$	345			$	392			$	1,161			$	1,011
Return on average common shareholders’ equity (c) / (a)			12.12	%			11.87	%			12.43	%			12.16	%			12.30	%
Return on average tangible common shareholders’ equity (c) / (b)			12.33	%			12.10	%			12.65	%			12.37	%			12.56	%

__________
(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
		September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
(in millions, except per share amounts)
Total shareholders’ equity		$	17,119			$	16,426			$	16,154			$	15,898			$	14,802
Less: Preferred stock			(3,633	)			(3,633	)			(3,633	)			(3,633	)			(2,893	)
Total common shareholders’ equity (a)			13,486				12,793				12,521				12,265				11,909
Less: Goodwill and other intangible assets			(219	)			(220	)			(221	)			(222	)			(223	)
Total tangible common shareholders’ equity (b)		$	13,267			$	12,573			$	12,300			$	12,043			$	11,686
Number of shares of common stock outstanding (c)			183				180				180				179				179
Book value per common share (a) / (c)		$	73.74			$	71.03			$	69.70			$	68.34			$	66.44
Tangible book value per common share (b) / (c)		$	72.54			$	69.81			$	68.47			$	67.10			$	65.19

__________
(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
		September 30, 2022 (3)				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
($ in millions)
Capital Ratios:
Tier 1 leverage ratio (Tier 1 capital to average assets)			8.59	%			8.59	%			8.70	%			8.76	%			8.55	%
Common Equity Tier 1 capital to risk-weighted assets			9.28	%			9.15	%			9.48	%			9.65	%			9.81	%
Tier 1 capital to risk-weighted assets			11.76	%			11.75	%			12.25	%			12.56	%			12.25	%
Total capital to risk-weighted assets			12.81	%			12.82	%			13.37	%			13.72	%			13.45	%
Regulatory Capital:
Common Equity Tier 1 capital		$	13,586			$	12,791			$	12,418			$	12,045			$	11,674
Tier 1 capital		$	17,219			$	16,424			$	16,051			$	15,678			$	14,566
Total capital		$	18,755			$	17,924			$	17,521			$	17,124			$	15,994
Assets:
Average assets		$	200,486			$	191,202			$	184,410			$	178,969			$	170,373
Risk-weighted assets		$	146,445			$	139,811			$	131,024			$	124,820			$	118,941

__________
(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, 2022 are preliminary.

		As of
Wealth Management Assets		September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
($ in millions)
First Republic Investment Management		$	100,125		$	100,204		$	108,771		$	109,130		$	101,105
Brokerage and investment:
Brokerage			119,299			116,979			128,129			128,258			115,793
Money market mutual funds			10,891			10,510			18,543			23,673			18,074
Total brokerage and investment			130,190			127,489			146,672			151,931			133,867
Trust Company:
Trust			15,270			14,994			14,344			13,695			12,220
Custody			3,943			4,099			4,408			4,687			4,533
Total Trust Company			19,213			19,093			18,752			18,382			16,753
Total Wealth Management Assets		$	249,528		$	246,786		$	274,195		$	279,443		$	251,725

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221013006051/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 2022 revenue figures?

First Republic Bank reported revenues of $1.5 billion for Q3 2022, which is a 16.9% increase year-over-year.

How did First Republic Bank's net income change in Q3 2022?

Net income for Q3 2022 was $445 million, reflecting a 20.5% increase compared to the same quarter in the previous year.

What is the current net interest margin for First Republic Bank?

The net interest margin for Q3 2022 is 2.71%, down from 2.80% in the prior quarter.

How much did First Republic Bank earn in net interest income in Q3 2022?

First Republic Bank earned $1.3 billion in net interest income for Q3 2022, which is a 20.6% increase year-over-year.

When is the cash dividend for First Republic Bank's Q3 2022?

The cash dividend of $0.27 per share is payable on November 10, 2022, to shareholders on record as of October 27, 2022.