First Republic Reports Strong First Quarter 2016 Results
SAN FRANCISCO, April 14, 2016 /PRNewswire/ -- First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended March 31, 2016.
"We're quite pleased with first quarter results," said Jim Herbert, Chairman and CEO. "Earnings, loans, deposits and wealth management assets all grew nicely. Credit quality and capital levels remain very strong."
Quarterly Highlights
Financial Results (1)
- Compared to last year's first quarter:
- Revenues were $519.6 million, up 22.8%.
- Net income was $148.9 million, up 28.4%.
- Diluted earnings per share ("EPS") of $0.88, up 23.9%.
- Loan originations totaled $4.8 billion, our highest first quarter ever.
- Loans sold totaled $477.7 million.
- Core net interest margin was 3.14%, compared to 3.02% for the prior quarter. (2)
- Efficiency ratio was 61.4%.
Continued Financial and Credit Strength
- Tier 1 leverage ratio was 9.38%.
- Common Equity Tier 1 ratio was 10.61%.
- Tangible book value per share was $31.05, up 11.0% from a year ago.
- Nonperforming assets were low at 10 basis points of total assets.
- Credit quality remains very strong, with net recoveries of $29,000 for the quarter.
Franchise Development
- Loans outstanding, excluding loans held for sale, totaled $45.4 billion, up 16.2% from a year ago.
- Deposits were $50.9 billion, up 27.5% from a year ago.
- Checking balances represented 64.0% of total deposits.
- Wealth management assets were $73.4 billion, up 30.3% from a year ago.
- Wealth management revenues were $68.9 million, up 31.4% from a year ago.
"Revenues grew 23% from a year ago and were driven by strong performance across all lines of business," said Chief Financial Officer Mike Roffler. "Net interest margin improved and our efficiency ratio remains stable."
Increased Quarterly Cash Dividend to $0.16 per Share
The Bank today announced an increase in its quarterly cash dividend for the first quarter to $0.16 per share of common stock, which is payable on May 12, 2016 to shareholders of record as of April 28, 2016.
Strong Asset Quality
Credit quality remains very strong. Nonperforming assets were 10 basis points of total assets at March 31, 2016.
The Bank had net recoveries for the quarter of $29,000, while adding $4.5 million to its allowance for loan losses due to continued loan growth.
Continued Capital Strength
During the first quarter, the Bank issued $150.0 million of 5.50% Noncumulative Perpetual Preferred Stock, which qualifies as Tier 1 capital.
The Bank's Tier 1 leverage ratio was 9.38% and Common Equity Tier 1 ratio was 10.61% at March 31, 2016. Total equity has grown 17.9% from a year ago.
Tangible Book Value Growth
Tangible book value per common share was $31.05 at March 31, 2016, up 11.0% from a year ago.
Continued Franchise Development
Loan Originations
Loan originations totaled $4.8 billion for the quarter, compared to $4.2 billion for the first quarter a year ago, up 13.0%.
Loans outstanding, excluding loans held for sale, totaled $45.4 billion at March 31, 2016, up 2.9% for the quarter and up 16.2% compared to a year ago.
Deposit Growth
Total deposits increased to $50.9 billion, up 6.4% for the quarter and up 27.5% compared to a year ago. At March 31, 2016, checking accounts totaled 64.0% of deposits. The Bank is almost entirely deposit-funded, with deposits representing 91% of total liabilities at March 31, 2016.
The average rate paid on deposits was 0.13% for the first quarter, compared to 0.14% for the prior quarter.
Investments
Total investments at March 31, 2016 were $11.4 billion, up 9.0% for the quarter and up 52.0% compared to a year ago.
High-quality liquid assets, from a regulatory perspective, totaled $7.0 billion at March 31, 2016, up 20.4% for the quarter and up 53.1% compared to a year ago. Such assets represent 11.2% of total assets at March 31, 2016.
Mortgage Banking Activity
During the first quarter, the Bank sold $477.7 million of loans and recorded a gain on sale of $1.4 million, compared to loan sales of $574.7 million and a gain on sale of $1.8 million during the first quarter of last year.
Loans serviced for investors at quarter-end totaled $10.7 billion, up 1.2% for the quarter and up 8.3% from a year ago. Net loan servicing fees for the quarter were $3.7 million, up 16.1% from $3.2 million a year ago.
Continued Expansion of Wealth Management
Wealth management revenues totaled $68.9 million for the quarter, up 31.4% compared to last year's first quarter. Such revenues represent 13% of total revenues.
Total wealth management assets were $73.4 billion at March 31, 2016, up 1.6% for the quarter and up 30.3% compared to a year ago.
The growth in wealth management assets for the quarter was primarily due to net new assets from both existing and new clients. Wealth management assets include investment management assets of $36.9 billion, brokerage assets and money market mutual funds of $29.2 billion, and trust and custody assets of $7.3 billion.
Income Statement and Key Ratios
Highlights
Strong Revenue Growth
Total revenues were $519.6 million for the quarter, up 22.8% compared to last year's first quarter.
Continued Net Interest Income Growth
Net interest income was $424.3 million for the quarter, up 21.9% compared to last year's first quarter, resulting primarily from growth in average earning assets.
Core Net Interest Margin
The Bank's net interest margin was 3.20% for the first quarter, compared to 3.10% for the prior quarter.
The core net interest margin was 3.14% for the quarter, compared to 3.02% for the prior quarter. The increase from the prior quarter was due to lower average cash balances, which were invested in loans and securities, and a 3 basis point increase in average contractual loan yields. (2)
Noninterest Income
Noninterest income was $95.3 million for the quarter, up 27.1% compared to the first quarter a year ago, which was primarily from increased wealth management revenues.
Efficiency Ratio
Noninterest expense was $319.2 million for the quarter, up 24.8% from the first quarter of last year.
The Bank's efficiency ratio was 61.4% for the quarter, compared to 60.8% for the prior quarter and 60.5% for the first quarter a year ago.
Income Tax Rate
The Bank's effective tax rate for 2016 is expected to be 24.0%, compared to 24.4% for 2015. The decrease in the effective tax rate results from the steady increase in tax credit investments, tax-exempt securities, tax-advantaged loans and bank-owned life insurance.
_________
(1) Beginning in 2016, due to the diminishing impact of purchase accounting, we will no longer present the following non-GAAP ("core") financial measures: net income, earnings per share, revenues, cost of average deposits, and efficiency ratio. See "Use of Non-GAAP Financial Measures" for additional information. (2) Core net interest margin is a non-GAAP financial measure that excludes the positive impact of purchase accounting. See non-GAAP reconciliation under section "Use of Non-GAAP Financial Measures."
Conference Call Details
First Republic Bank's first quarter 2016 earnings conference call is scheduled for April 14, 2016 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (855) 224-3902 approximately 10 minutes prior to the start time (to allow time for registration) and use conference ID #75260974. International callers should dial (734) 823-3244 and enter the same conference ID number. 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 www.firstrepublic.com. To listen to the live webcast, please visit the site at least 10 minutes prior to the start of the call to register, download and install any necessary audio software. A replay of the call will also be available for 90 days on the website. For those unable to join the live presentation, a replay will be available beginning April 14, 2016, at 10:00 a.m. PT / 1:00 p.m. ET, through April 21, 2016, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (855) 859-2056 and use conference ID #75260974. International callers should dial (404) 537-3406 and enter the same conference ID number. The Bank's press releases are available after release on the Bank's website at www.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, with a solid commitment to responsiveness and action. Services are offered through preferred banking or wealth management offices primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland, Boston, Palm Beach, Greenwich and New York City. First Republic offers a complete line of banking products for individuals and businesses, including deposit services, as well as residential, commercial and personal loans. For more information, visit www.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. 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 and include statements about economic performance in our markets, growth in our loan originations and wealth management assets, our progress in preparing for, and our compliance with, any enhanced regulatory requirements, and our projected tax rate. 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. Factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to: our ability to deal with significant competition for banking and wealth management customers; our projections for certain financial items; expectations concerning the bank and wealth management industries; earthquakes and other natural disasters in our markets; interest rate and credit risk; our plans or objectives for future operations, products or services; our ability to maintain and follow high underwriting standards; economic conditions generally and in our markets; our geographic concentration; our opportunities for growth; our future provisions for loan losses; our regulatory compliance and future regulatory requirements; the phase-in of the Basel III Capital Rules; and new accounting standards. 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. 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. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
|
CONSOLIDATED STATEMENT OF INCOME | ||||||||||||
|
Quarter Ended March 31, |
Quarter Ended December 31, | |||||||||||
|
(in thousands, except per share amounts) |
2016 |
2015 |
2015 | |||||||||
|
Interest income: |
||||||||||||
|
Loans |
$ |
368,250 |
$ |
321,875 |
$ |
357,446 |
||||||
|
Investments |
85,388 |
57,359 |
77,333 |
|||||||||
|
Other |
2,815 |
4,564 |
3,697 |
|||||||||
|
Cash and cash equivalents |
3,100 |
1,105 |
2,730 |
|||||||||
|
Total interest income |
459,553 |
384,903 |
441,206 |
|||||||||
|
Interest expense: |
||||||||||||
|
Deposits |
16,508 |
13,988 |
16,638 |
|||||||||
|
Borrowings |
18,730 |
22,896 |
19,869 |
|||||||||
|
Total interest expense |
35,238 |
36,884 |
36,507 |
|||||||||
|
Net interest income |
424,315 |
348,019 |
404,699 |
|||||||||
|
Provision for loan losses |
4,492 |
11,887 |
12,045 |
|||||||||
|
Net interest income after provision for loan losses |
419,823 |
336,132 |
392,654 |
|||||||||
|
Noninterest income: |
||||||||||||
|
Investment management fees |
52,760 |
41,211 |
49,814 |
|||||||||
|
Brokerage and investment fees |
7,860 |
3,699 |
7,654 |
|||||||||
|
Trust fees |
2,985 |
2,385 |
3,259 |
|||||||||
|
Foreign exchange fee income |
5,318 |
5,148 |
6,413 |
|||||||||
|
Deposit fees |
4,958 |
4,629 |
4,914 |
|||||||||
|
Gain on sale of loans |
1,403 |
1,812 |
1,480 |
|||||||||
|
Loan servicing fees, net |
3,749 |
3,230 |
3,752 |
|||||||||
|
Loan and related fees |
3,240 |
2,721 |
3,161 |
|||||||||
|
Income from investments in life insurance |
9,026 |
9,179 |
9,289 |
|||||||||
|
Gain (loss) on investment securities, net |
3,268 |
300 |
(515) |
|||||||||
|
Other income |
683 |
605 |
930 |
|||||||||
|
Total noninterest income |
95,250 |
74,919 |
90,151 |
|||||||||
|
Noninterest expense: |
||||||||||||
|
Salaries and employee benefits |
185,917 |
139,948 |
168,424 |
|||||||||
|
Information systems |
35,037 |
25,852 |
33,416 |
|||||||||
|
Occupancy |
27,648 |
25,572 |
27,220 |
|||||||||
|
Professional fees |
13,371 |
19,513 |
16,487 |
|||||||||
|
FDIC assessments |
9,600 |
8,350 |
9,500 |
|||||||||
|
Advertising and marketing |
7,190 |
5,214 |
7,617 |
|||||||||
|
Amortization of intangibles |
6,661 |
5,155 |
6,933 |
|||||||||
|
Other expenses |
33,770 |
26,069 |
31,327 |
|||||||||
|
Total noninterest expense |
319,194 |
255,673 |
300,924 |
|||||||||
|
Income before provision for income taxes |
195,879 |
155,378 |
181,881 |
|||||||||
|
Provision for income taxes |
47,013 |
39,466 |
41,835 |
|||||||||
|
Net income |
148,866 |
115,912 |
140,046 |
|||||||||
|
Dividends on preferred stock |
16,460 |
13,889 |
15,314 |
|||||||||
|
Net income available to common shareholders |
$ |
132,406 |
$ |
102,023 |
$ |
124,732 |
||||||
|
Basic earnings per common share |
$ |
0.91 |
$ |
0.73 |
$ |
0.87 |
||||||
|
Diluted earnings per common share |
$ |
0.88 |
$ |
0.71 |
$ |
0.84 |
||||||
|
Dividends per common share |
$ |
0.15 |
$ |
0.14 |
$ |
0.15 |
||||||
|
Weighted average shares—basic |
145,963 |
138,839 |
144,006 |
|||||||||
|
Weighted average shares—diluted |
149,719 |
142,791 |
147,814 |
|||||||||
|
CONSOLIDATED BALANCE SHEET | ||||||||||||
|
As of | ||||||||||||
|
($ in thousands) |
March 31, 2016 |
December 31, 2015 |
March 31, 2015 | |||||||||
|
ASSETS |
||||||||||||
|
Cash and cash equivalents |
$ |
1,946,147 |
$ |
1,131,110 |
$ |
1,644,534 |
||||||
|
Securities purchased under agreements to resell |
100 |
100 |
100 |
|||||||||
|
Investment securities available-for-sale |
1,809,820 |
2,910,801 |
1,428,898 |
|||||||||
|
Investment securities held-to-maturity |
9,580,850 |
7,540,678 |
6,064,700 |
|||||||||
|
Loans: |
||||||||||||
|
Single family (1-4 units) |
23,674,216 |
23,092,346 |
21,167,697 |
|||||||||
|
Home equity lines of credit |
2,431,527 |
2,370,188 |
2,121,713 |
|||||||||
|
Multifamily (5+ units) |
5,605,914 |
5,371,484 |
4,851,874 |
|||||||||
|
Commercial real estate |
4,818,890 |
4,462,834 |
4,021,575 |
|||||||||
|
Single family construction |
426,220 |
436,774 |
399,814 |
|||||||||
|
Multifamily/commercial construction |
743,900 |
693,364 |
494,539 |
|||||||||
|
Business |
5,887,850 |
6,232,378 |
5,059,337 |
|||||||||
|
Stock secured |
660,923 |
521,005 |
306,793 |
|||||||||
|
Other secured |
585,617 |
541,637 |
444,690 |
|||||||||
|
Unsecured loans and lines of credit |
609,917 |
423,795 |
245,942 |
|||||||||
|
Total unpaid principal balance |
45,444,974 |
44,145,805 |
39,113,974 |
|||||||||
|
Net unaccreted discount |
(101,071) |
(108,499) |
(140,639) |
|||||||||
|
Net deferred fees and costs |
52,216 |
46,263 |
33,423 |
|||||||||
|
Allowance for loan losses |
(265,579) |
(261,058) |
(219,216) |
|||||||||
|
Loans, net |
45,130,540 |
43,822,511 |
38,787,542 |
|||||||||
|
Loans held for sale |
42,380 |
48,681 |
63,824 |
|||||||||
|
Investments in life insurance |
1,177,692 |
1,168,596 |
1,022,466 |
|||||||||
|
Tax credit investments |
1,085,034 |
1,006,836 |
844,213 |
|||||||||
|
Prepaid expenses and other assets |
797,116 |
817,410 |
786,488 |
|||||||||
|
Premises, equipment and leasehold improvements, net |
174,857 |
172,008 |
162,051 |
|||||||||
|
Goodwill |
171,616 |
171,616 |
106,549 |
|||||||||
|
Other intangible assets |
130,740 |
137,400 |
104,846 |
|||||||||
|
Mortgage servicing rights |
54,225 |
53,538 |
50,249 |
|||||||||
|
Other real estate owned |
1,393 |
— |
— |
|||||||||
|
Total Assets |
$ |
62,102,510 |
$ |
58,981,285 |
$ |
51,066,460 |
||||||
|
LIABILITIES AND EQUITY |
||||||||||||
|
Liabilities: |
||||||||||||
|
Deposits: |
||||||||||||
|
Noninterest-bearing checking |
$ |
19,693,998 |
$ |
18,252,007 |
$ |
14,523,454 |
||||||
|
Interest-bearing checking |
12,910,792 |
12,027,363 |
9,261,476 |
|||||||||
|
Money market checking |
6,405,530 |
5,756,821 |
5,261,424 |
|||||||||
|
Money market savings and passbooks |
7,462,675 |
7,270,396 |
7,062,013 |
|||||||||
|
Certificates of deposit |
4,462,260 |
4,586,878 |
3,830,823 |
|||||||||
|
Total Deposits |
50,935,255 |
47,893,465 |
39,939,190 |
|||||||||
|
Securities sold under agreements to repurchase |
100,000 |
100,000 |
— |
|||||||||
|
Long-term FHLB advances |
3,800,000 |
4,000,000 |
4,925,000 |
|||||||||
|
Senior notes |
397,357 |
397,159 |
396,576 |
|||||||||
|
Debt related to variable interest entities |
28,750 |
29,643 |
32,800 |
|||||||||
|
Other liabilities |
856,423 |
855,335 |
697,897 |
|||||||||
|
Total Liabilities |
56,117,785 |
53,275,602 |
45,991,463 |
|||||||||
|
Shareholders' Equity: |
||||||||||||
|
Preferred stock |
1,139,525 |
989,525 |
889,525 |
|||||||||
|
Common stock |
1,463 |
1,461 |
1,421 |
|||||||||
|
Additional paid-in capital |
2,773,255 |
2,770,265 |
2,522,159 |
|||||||||
|
Retained earnings |
2,059,871 |
1,949,652 |
1,653,338 |
|||||||||
|
Accumulated other comprehensive income (loss) |
10,611 |
(5,220) |
8,554 |
|||||||||
|
Total Shareholders' Equity |
5,984,725 |
5,705,683 |
5,074,997 |
|||||||||
|
Total Liabilities and Shareholders' Equity |
$ |
62,102,510 |
$ |
58,981,285 |
$ |
51,066,460 |
||||||
|
Quarter Ended March 31, |
Quarter Ended December 31, | |||||||||||
|
Operating Information and Yields/Rates |
2016 |
2015 |
2015 | |||||||||
|
($ in thousands) |
||||||||||||
|
Operating Information |
||||||||||||
|
Net income to average assets (3) |
0.98 |
% |
0.94 |
% |
0.93 |
% | ||||||
|
Net income available to common shareholders to average common equity (3) |
11.01 |
% |
10.32 |
% |
10.74 |
% | ||||||
|
Dividend payout ratio |
17.0 |
% |
19.6 |
% |
17.8 |
% | ||||||
|
Efficiency ratio (4) |
61.4 |
% |
60.5 |
% |
60.8 |
% | ||||||
|
Net loan charge-offs (recoveries) |
$ |
(29) |
$ |
13 |
$ |
1,395 |
||||||
|
Net loan charge-offs to average total loans (3) |
0.00 |
% |
0.00 |
% |
0.01 |
% | ||||||
|
Yields/Rates (3) |
||||||||||||
|
Cash and cash equivalents |
0.50 |
% |
0.25 |
% |
0.28 |
% | ||||||
|
Investment securities (5), (6) |
4.32 |
% |
4.65 |
% |
4.39 |
% | ||||||
|
Loans (5), (7) |
3.38 |
% |
3.46 |
% |
3.39 |
% | ||||||
|
FHLB stock |
8.55 |
% |
7.48 |
% |
10.49 |
% | ||||||
|
Total interest-earning assets |
3.44 |
% |
3.53 |
% |
3.36 |
% | ||||||
|
Checking |
0.01 |
% |
0.01 |
% |
0.01 |
% | ||||||
|
Money market checking and savings |
0.07 |
% |
0.07 |
% |
0.07 |
% | ||||||
|
CDs (7) |
1.21 |
% |
1.22 |
% |
1.24 |
% | ||||||
|
Total deposits |
0.13 |
% |
0.15 |
% |
0.14 |
% | ||||||
|
Long-term FHLB advances |
1.63 |
% |
1.57 |
% |
1.55 |
% | ||||||
|
Senior notes (8) |
2.59 |
% |
2.59 |
% |
2.59 |
% | ||||||
|
Other borrowings |
1.53 |
% |
1.61 |
% |
1.39 |
% | ||||||
|
Total borrowings |
1.71 |
% |
1.64 |
% |
1.63 |
% | ||||||
|
Total interest-bearing liabilities |
0.26 |
% |
0.34 |
% |
0.27 |
% | ||||||
|
Net interest spread |
3.18 |
% |
3.19 |
% |
3.09 |
% | ||||||
|
Net interest margin (5) |
3.20 |
% |
3.21 |
% |
3.10 |
% | ||||||
|
Core net interest margin (non-GAAP) (2), (5) |
3.14 |
% |
3.09 |
% |
3.02 |
% | ||||||
|
(3) |
Ratios are annualized. | |||||||||||
|
(4) |
Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income. | |||||||||||
|
(5) |
Calculated on a fully taxable-equivalent basis. | |||||||||||
|
(6) |
Includes securities purchased under agreements to resell. | |||||||||||
|
(7) |
Yield/rate includes accretion/amortization of purchase accounting discounts/premiums. | |||||||||||
|
(8) |
Rate includes amortization of issuance discounts and costs. | |||||||||||
|
Quarter Ended March 31, |
Quarter Ended December 31, | |||||||||||
|
Mortgage Loan Sales |
2016 |
2015 |
2015 | |||||||||
|
($ in thousands) |
||||||||||||
|
Loans sold: |
||||||||||||
|
Agency |
$ |
60,228 |
$ |
36,595 |
$ |
73,244 |
||||||
|
Non-agency |
417,474 |
538,077 |
294,359 |
|||||||||
|
Total loans sold |
$ |
477,702 |
$ |
574,672 |
$ |
367,603 |
||||||
|
Gain on sale of loans: |
||||||||||||
|
Amount |
$ |
1,403 |
$ |
1,812 |
$ |
1,480 |
||||||
|
Gain as a percentage of loans sold |
0.29 |
% |
0.32 |
% |
0.40 |
% | ||||||
|
As of | ||||||||||||||||||||
|
Loan Servicing Portfolio |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
March 31, 2015 | |||||||||||||||
|
($ in millions) |
||||||||||||||||||||
|
Loans serviced for investors |
$ |
10,654 |
$ |
10,531 |
$ |
10,550 |
$ |
10,305 |
$ |
9,840 |
||||||||||
|
Quarter Ended March 31, |
Quarter Ended December 31, | |||||||||||
|
Loan Originations |
2016 |
2015 |
2015 | |||||||||
|
($ in thousands) |
||||||||||||
|
Single family (1-4 units) |
$ |
1,812,817 |
$ |
1,698,443 |
$ |
1,635,350 |
||||||
|
Home equity lines of credit |
425,732 |
258,992 |
398,267 |
|||||||||
|
Multifamily (5+ units) |
630,016 |
333,968 |
302,435 |
|||||||||
|
Commercial real estate |
241,045 |
378,626 |
292,369 |
|||||||||
|
Construction |
199,366 |
237,059 |
305,085 |
|||||||||
|
Business |
657,206 |
1,133,879 |
1,343,953 |
|||||||||
|
Stock and other secured |
497,971 |
161,463 |
270,259 |
|||||||||
|
Unsecured loans and lines of credit |
337,494 |
46,600 |
161,753 |
|||||||||
|
Total loans originated |
$ |
4,801,647 |
$ |
4,249,030 |
$ |
4,709,471 |
||||||
|
As of March 31, 2016 | ||||||||||||
|
Composition of Loan Portfolio |
Loans acquired on July 1, 2010 |
Loans originated since July 1, 2010 |
Total Loans | |||||||||
|
($ in thousands) |
||||||||||||
|
Single family (1-4 units) |
$ |
2,259,905 |
$ |
21,414,311 |
$ |
23,674,216 |
||||||
|
Home equity lines of credit |
405,765 |
2,025,762 |
2,431,527 |
|||||||||
|
Multifamily (5+ units) |
261,206 |
5,344,708 |
5,605,914 |
|||||||||
|
Commercial real estate |
384,794 |
4,434,096 |
4,818,890 |
|||||||||
|
Single family construction |
3,031 |
423,189 |
426,220 |
|||||||||
|
Multifamily/commercial construction |
1,226 |
742,674 |
743,900 |
|||||||||
|
Business |
260,523 |
5,627,327 |
5,887,850 |
|||||||||
|
Stock secured |
4,268 |
656,655 |
660,923 |
|||||||||
|
Other secured |
13,134 |
572,483 |
585,617 |
|||||||||
|
Unsecured loans and lines of credit |
24,917 |
585,000 |
609,917 |
|||||||||
|
Total unpaid principal balance |
3,618,769 |
41,826,205 |
45,444,974 |
|||||||||
|
Net unaccreted discount |
(100,822) |
(249) |
(101,071) |
|||||||||
|
Net deferred fees and costs |
(3,633) |
55,849 |
52,216 |
|||||||||
|
Allowance for loan losses |
(6,035) |
(259,544) |
(265,579) |
|||||||||
|
Loans, net |
$ |
3,508,279 |
$ |
41,622,261 |
$ |
45,130,540 |
||||||
|
As of | ||||||||||||||||||||
|
Asset Quality Information |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
March 31, 2015 | |||||||||||||||
|
($ in thousands) |
||||||||||||||||||||
|
Nonperforming assets: |
||||||||||||||||||||
|
Nonaccrual loans |
$ |
59,203 |
$ |
73,545 |
$ |
51,987 |
$ |
55,872 |
$ |
49,830 |
||||||||||
|
Other real estate owned |
1,393 |
— |
2,541 |
— |
— |
|||||||||||||||
|
Total nonperforming assets |
$ |
60,596 |
$ |
73,545 |
$ |
54,528 |
$ |
55,872 |
$ |
49,830 |
||||||||||
|
Nonperforming assets to total assets |
0.10 |
% |
0.12 |
% |
0.10 |
% |
0.11 |
% |
0.10 |
% | ||||||||||
|
Accruing loans 90 days or more past due |
$ |
3,189 |
$ |
4,199 |
$ |
698 |
$ |
2,118 |
$ |
202 |
||||||||||
|
Restructured accruing loans |
$ |
13,978 |
$ |
14,043 |
$ |
14,539 |
$ |
15,624 |
$ |
14,855 |
||||||||||
|
As of | ||||||||||||||||||||
|
Book Value Ratios |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
March 31, 2015 | |||||||||||||||
|
(in thousands, except per share amounts) |
||||||||||||||||||||
|
Number of shares of common stock outstanding |
146,314 |
146,110 |
142,477 |
142,389 |
142,105 |
|||||||||||||||
|
Book value per common share |
$ |
33.12 |
$ |
32.28 |
$ |
30.84 |
$ |
30.03 |
$ |
29.45 |
||||||||||
|
Tangible book value per common share |
$ |
31.05 |
$ |
30.16 |
$ |
29.43 |
$ |
28.58 |
$ |
27.97 |
||||||||||
|
As of | ||||||||||||||||||
|
2016 |
2015 | |||||||||||||||||
|
March 31, (9) |
December 31, |
September 30, |
June 30, |
March 31, | ||||||||||||||
|
Capital Ratios |
Actual |
Fully Phased-in(10) |
Actual | |||||||||||||||
|
Tier 1 leverage ratio |
9.38 |
% |
9.31 |
% |
9.21 |
% |
9.38 |
% |
9.86 |
% |
9.90 |
% | ||||||
|
Common Equity Tier 1 ratio |
10.61 |
% |
10.48 |
% |
10.76 |
% |
10.71 |
% |
10.87 |
% |
11.25 |
% | ||||||
|
Tier 1 risk-based capital ratio |
13.24 |
% |
13.11 |
% |
13.13 |
% |
13.21 |
% |
13.47 |
% |
13.73 |
% | ||||||
|
Total risk-based capital ratio |
13.88 |
% |
13.75 |
% |
13.78 |
% |
13.87 |
% |
14.13 |
% |
14.37 |
% | ||||||
|
(9) |
Ratios as of March 31, 2016 are preliminary. | |||||||||||||||||
|
(10) |
Certain adjustments required under the Basel III Capital Rules will be phased in through the end of 2018. The ratios shown in this column are calculated assuming a fully phased-in basis of all such adjustments as if they were effective as of March 31, 2016. | |||||||||||||||||
|
As of | ||||||||||||||||||||
|
Wealth Management Assets |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
March 31, 2015 | |||||||||||||||
|
($ in millions) |
||||||||||||||||||||
|
First Republic Investment Management |
$ |
36,872 |
$ |
35,230 |
$ |
28,969 |
$ |
28,998 |
$ |
28,530 |
||||||||||
|
Brokerage and investment: |
||||||||||||||||||||
|
Brokerage |
27,296 |
26,059 |
19,746 |
19,852 |
18,973 |
|||||||||||||||
|
Money market mutual funds |
1,906 |
4,155 |
3,012 |
1,732 |
2,100 |
|||||||||||||||
|
Total brokerage and investment |
29,202 |
30,214 |
22,758 |
21,584 |
21,073 |
|||||||||||||||
|
Trust Company: |
||||||||||||||||||||
|
Trust |
3,343 |
3,375 |
3,618 |
3,370 |
3,149 |
|||||||||||||||
|
Custody |
4,004 |
3,474 |
3,477 |
3,613 |
3,617 |
|||||||||||||||
|
Total Trust Company |
7,347 |
6,849 |
7,095 |
6,983 |
6,766 |
|||||||||||||||
|
Total Wealth Management Assets |
$ |
73,421 |
$ |
72,293 |
$ |
58,822 |
$ |
57,565 |
$ |
56,369 |
||||||||||
|
Quarter Ended March 31, |
Quarter Ended December 31, | |||||||||||
|
Average Balance Sheet |
2016 |
2015 |
2015 | |||||||||
|
($ in thousands) |
||||||||||||
|
Assets: |
||||||||||||
|
Cash and cash equivalents |
$ |
2,502,864 |
$ |
1,803,026 |
$ |
3,921,839 |
||||||
|
Investment securities (11) |
10,561,401 |
6,732,867 |
9,442,168 |
|||||||||
|
Loans (12) |
44,618,029 |
38,246,042 |
43,042,968 |
|||||||||
|
FHLB stock |
132,440 |
247,298 |
139,784 |
|||||||||
|
Total interest-earning assets |
57,814,734 |
47,029,233 |
56,546,759 |
|||||||||
|
Noninterest-earning cash |
269,185 |
252,964 |
287,695 |
|||||||||
|
Goodwill and other intangibles |
305,588 |
213,900 |
312,665 |
|||||||||
|
Other assets |
2,947,952 |
2,401,077 |
2,694,402 |
|||||||||
|
Total noninterest-earning assets |
3,522,725 |
2,867,941 |
3,294,762 |
|||||||||
|
Total Assets |
$ |
61,337,459 |
$ |
49,897,174 |
$ |
59,841,521 |
||||||
|
Liabilities and Equity: |
||||||||||||
|
Checking |
$ |
31,782,794 |
$ |
22,377,436 |
$ |
30,189,409 |
||||||
|
Money market checking and savings |
13,529,204 |
12,316,558 |
13,607,852 |
|||||||||
|
CDs (12) |
4,543,388 |
3,796,301 |
4,485,104 |
|||||||||
|
Total deposits |
49,855,386 |
38,490,295 |
48,282,365 |
|||||||||
|
Long-term FHLB advances |
3,857,143 |
5,217,778 |
4,302,174 |
|||||||||
|
Senior notes |
397,261 |
396,482 |
397,064 |
|||||||||
|
Other borrowings |
134,767 |
34,460 |
130,211 |
|||||||||
|
Total borrowings |
4,389,171 |
5,648,720 |
4,829,449 |
|||||||||
|
Total interest-bearing liabilities |
54,244,557 |
44,139,015 |
53,111,814 |
|||||||||
|
Noninterest-bearing liabilities |
1,184,329 |
858,821 |
1,133,650 |
|||||||||
|
Preferred equity |
1,073,591 |
889,525 |
989,525 |
|||||||||
|
Common equity |
4,834,982 |
4,009,813 |
4,606,532 |
|||||||||
|
Total Liabilities and Equity |
$ |
61,337,459 |
$ |
49,897,174 |
$ |
59,841,521 |
||||||
|
(11) |
Includes securities purchased under agreements to resell. | |||||||||||
|
(12) |
Average balances are presented net of purchase accounting discounts or premiums. | |||||||||||
|
Quarter Ended March 31, |
Quarter Ended December 31, | |||||||||||
|
Purchase Accounting Accretion and Amortization (13) |
2016 |
2015 |
2015 | |||||||||
|
($ in thousands) |
||||||||||||
|
Accretion/amortization to net interest income: |
||||||||||||
|
Loans |
$ |
7,425 |
$ |
12,122 |
$ |
9,974 |
||||||
|
Deposits |
— |
728 |
— |
|||||||||
|
Total |
$ |
7,425 |
$ |
12,850 |
$ |
9,974 |
||||||
|
Amortization to noninterest expense: |
||||||||||||
|
Intangible assets |
$ |
2,848 |
$ |
3,489 |
$ |
3,007 |
||||||
|
Net pre-tax impact of purchase accounting |
$ |
4,577 |
$ |
9,361 |
$ |
6,967 |
||||||
|
Impact of purchase accounting, net of tax, per share |
$ |
0.01 |
$ |
0.03 |
$ |
0.02 |
||||||
|
(13) |
Related to the Bank's re-establishment as an independent institution. |
Use of Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally accepted accounting principles in the United States ("GAAP") and the prevailing practices in the banking industry. Due to the application of purchase accounting from the Bank's re-establishment as an independent institution, management has historically used certain non-GAAP (i.e., core) measures and ratios that exclude the impact of these items to evaluate our performance, including net income, earnings per share, revenues, yield on average loans, cost of average deposits, net interest margin and the efficiency ratio. However, because of the diminishing impact of purchase accounting, beginning in the first quarter of 2016, only the yield on average loans and net interest margin will be presented on a non-GAAP basis.
The accretion and amortization of the fair value adjustments recorded in purchase accounting from the Bank's re-establishment as an independent institution affect our net interest margin and yield on average loans as we accrete loan discounts to interest income and amortize premiums on CDs to interest expense.
We believe these two non-GAAP measures, when taken together with the corresponding GAAP measures, provide meaningful supplemental information regarding our performance. Our management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing our operating results and related trends. However, these non-GAAP measures should be considered in addition to, and not as a substitute for or preferable to, the measurements prepared in accordance with GAAP. In the tables below, we have provided a reconciliation of, where applicable, the most comparable GAAP financial measures to the non-GAAP financial measures, or a reconciliation of the non-GAAP calculation of the financial measure:
|
Quarter Ended March 31, |
Quarter Ended December 31, | |||||||||||
|
Yield on Average Loans |
2016 |
2015 |
2015 | |||||||||
|
($ in thousands) |
||||||||||||
|
Interest income on loans |
$ |
368,250 |
$ |
321,875 |
$ |
357,446 |
||||||
|
Add: Tax-equivalent adjustment on loans |
10,753 |
8,728 |
10,571 |
|||||||||
|
Interest income on loans (tax-equivalent basis) |
379,003 |
330,603 |
368,017 |
|||||||||
|
Less: Accretion |
(7,425) |
(12,122) |
(9,974) |
|||||||||
|
Core interest income on loans (tax-equivalent basis) (non-GAAP) |
$ |
371,578 |
$ |
318,481 |
$ |
358,043 |
||||||
|
Average loans |
$ |
44,618,029 |
$ |
38,246,042 |
$ |
43,042,968 |
||||||
|
Add: Average unaccreted loan discounts |
105,948 |
148,595 |
114,338 |
|||||||||
|
Average loans (non-GAAP) |
$ |
44,723,977 |
$ |
38,394,637 |
$ |
43,157,306 |
||||||
|
Yield on average loans—reported (5) |
3.38 |
% |
3.46 |
% |
3.39 |
% | ||||||
|
Contractual yield on average loans (non-GAAP) (5) |
3.31 |
% |
3.32 |
% |
3.28 |
% | ||||||
|
Quarter Ended March 31, |
Quarter Ended December 31, | |||||||||||
|
Net Interest Margin |
2016 |
2015 |
2015 | |||||||||
|
($ in thousands) |
||||||||||||
|
Net interest income |
$ |
424,315 |
$ |
348,019 |
$ |
404,699 |
||||||
|
Add: Tax-equivalent adjustment |
39,434 |
29,658 |
36,927 |
|||||||||
|
Net interest income (tax-equivalent basis) |
463,749 |
377,677 |
441,626 |
|||||||||
|
Less: Accretion/amortization |
(7,425) |
(12,850) |
(9,974) |
|||||||||
|
Core net interest income (tax-equivalent basis) (non-GAAP) |
$ |
456,324 |
$ |
364,827 |
$ |
431,652 |
||||||
|
Average interest-earning assets |
$ |
57,814,734 |
$ |
47,029,233 |
$ |
56,546,759 |
||||||
|
Add: Average unaccreted loan discounts |
105,948 |
148,595 |
114,338 |
|||||||||
|
Average interest-earning assets (non-GAAP) |
$ |
57,920,682 |
$ |
47,177,828 |
$ |
56,661,097 |
||||||
|
Net interest margin—reported (5) |
3.20 |
% |
3.21 |
% |
3.10 |
% | ||||||
|
Core net interest margin (non-GAAP) (5) |
3.14 |
% |
3.09 |
% |
3.02 |
% | ||||||
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SOURCE First Republic Bank