First Republic Reports Strong Second Quarter 2018 Results

First Republic Bank (NYSE: FRC) today announced financial results for
the quarter ended June 30, 2018.

“First Republic had an excellent second quarter and first half of the
year,” said Jim Herbert, Chairman and CEO. “Our client-focused service
model continues to attract many new households, and business remains
very good across the enterprise.”

Quarterly Highlights

Financial Results

Continued Capital and Credit Strength

Continued Franchise Development

“Total revenues increased 16% and net interest income grew 15% compared
to a year ago,” said Mike Roffler, Chief Financial Officer. “We are
pleased to have very successfully accessed the capital markets with a
perpetual preferred stock offering during the quarter.”

Quarterly Cash Dividend Declared

The Bank declared a cash dividend for the second quarter of $0.18 per
share of common stock, which is payable on August 9, 2018 to
shareholders of record as of July 26, 2018.

Very Strong Asset Quality

Credit quality remains very strong. Nonperforming assets were only 5
basis points of total assets at June 30, 2018.

The Bank had net charge-offs for the quarter of $771,000, while adding
$19.4 million to its allowance for loan losses due to continued loan
growth.

Continued Capital Strength and Access to
Capital Markets

The Bank’s Common Equity Tier 1 ratio was 10.18% at June 30,
2018, compared to 10.72% a year ago.

During the second quarter, the Bank issued $300.0 million of 5.50%
noncumulative perpetual preferred stock, which qualifies as Tier 1
capital. The Bank currently expects to redeem its $200.0 million of
7.00% Noncumulative Perpetual Series E Preferred Stock when such stock
becomes redeemable at the Bank’s option on or after December 28, 2018,
subject to all applicable regulatory approvals.

Tangible Book Value Growth

Tangible book value per common share at June 30, 2018 was $42.15, up
11.4% from a year ago.

Continued Franchise Development

Strong Loan Originations

Loan originations were $9.4 billion for the quarter, compared to $7.3
billion for the same quarter a year ago, an increase of 28.1%, primarily
due to increases in business lines of credit, multifamily, stock secured
and other secured lending.

Loans, excluding loans held for sale, totaled $69.1 billion at June 30,
2018, up 19.7% compared to a year ago.

Deposit Growth

Total deposits increased to $72.8 billion, up 15.0% compared to a year
ago.

At June 30, 2018, checking accounts totaled 60.4% of deposits.

Investments

Total investment securities at June 30, 2018 were $16.5 billion,
consistent with the prior quarter and down 2.4% compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $11.0
billion at June 30, 2018, and represented 12.3% of average total assets.

Mortgage Banking Activity

During the second quarter, the Bank sold $721.9 million of loans and
recorded a gain on sale of $4.0 million, compared to loan sales of
$439.8 million and a gain of $841,000 during the second quarter of last
year.

Loans serviced for investors at quarter-end totaled $12.4 billion, up
4.9% from a year ago.

Continued Expansion of Wealth Management

Wealth management revenues totaled $104.9 million for the quarter, up
21.5% compared to last year’s second quarter. Such revenues represented
14.1% of the Bank’s total revenues for the quarter.

Total wealth management assets were $121.1 billion at June 30, 2018, up
7.2% for the quarter and up 26.9% compared to a year ago. The growth in
wealth management assets was due to both net new assets from existing
and new clients, and market appreciation.

Wealth management assets included investment management assets of $59.3
billion, brokerage assets and money market mutual funds of $51.9
billion, and trust and custody assets of $9.9 billion.

Income Statement and Key Ratios

Strong Revenue Growth

Total revenues were $744.1 million for the quarter, up 16.0% compared to
the second quarter a year ago.

Strong Net Interest Income Growth

Net interest income was $611.7 million for the quarter, up 15.0%
compared to the second quarter a year ago. The increase in net interest
income resulted primarily from growth in average earning assets.

Net Interest Margin

The net interest margin was 2.95% for the second quarter, compared to
2.97% for the prior quarter.

Noninterest Income

Noninterest income was $132.4 million for the quarter, up 21.1% compared
to the second quarter a year ago. The increase was primarily from growth
in wealth management revenues and gain on sale of loans.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $472.6 million for the quarter, up 19.0%
compared to the second quarter a year ago. The efficiency ratio was
63.5% for the quarter, compared to 61.9% for the second quarter a year
ago. The increases were primarily due to increased salaries and benefits
and information systems costs from the continued investments in the
expansion of the franchise.

Income Taxes

Beginning in 2018, federal tax reform legislation reduces the federal
tax rate for corporations from 35% to 21% and changes or limits certain
tax deductions.

The Bank’s effective tax rate for the second quarter of 2018 was 16.8%,
compared to 19.2% for the first quarter of 2018. The decrease in the
second quarter was the result of increased tax benefits from the vesting
of stock awards. For the first six months of 2018, the Bank’s effective
tax rate was 18.0%.

Conference Call Details

First Republic Bank’s second quarter 2018 earnings conference call is
scheduled for July 13, 2018 at 7:00 a.m. PT / 10:00 a.m. ET. To access
the event by telephone, please dial (877) 407-0792 approximately 10
minutes prior to the start time (to allow time for registration).
International callers should dial +1 (201) 689-8263.

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 firstrepublic.com.
To listen to the live webcast, please visit the site at least 10 minutes
prior to the start time to register, download and install any necessary
audio software.

For those unable to join the live presentation, a replay of the call
will be available beginning July 13, 2018, at 10:00 a.m. PT / 1:00 p.m.
ET, through July 20, 2018, at 8:59 p.m. PT / 11:59 p.m. ET. To access
the replay, dial (844) 512-2921 and use conference ID #13680929.
International callers should dial +1 (412) 317-6671 and enter the same
conference ID number. 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 firstrepublic.com.

The Bank’s press releases are available after release in the 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, 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 and San
Diego, California; Portland, Oregon; Boston, Massachusetts; Palm Beach,
Florida; Greenwich, Connecticut; New York, New York; and later in 2018,
Jackson, Wyoming. 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 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. 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 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; the possibility of
earthquakes, fires and other natural disasters affecting the markets in
which we operate; interest rate risk and credit risk; our ability to
maintain and follow high underwriting standards; economic and market
conditions affecting the valuation of our investment securities
portfolio, which could result in other-than-temporary impairment if the
general economy deteriorates, credit ratings decline, the financial
condition of issuers deteriorates, interest rates increase or the
liquidity for securities is limited; real estate prices generally and in
our markets; our geographic and product concentrations; demand for our
products and services; the regulatory environment in which we operate,
our regulatory compliance and future regulatory requirements; the impact
of tax reform legislation; the phase-in of the capital requirements
under the Basel III framework, and 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, including increased compliance
costs, limitations on activities and requirements to hold additional
capital; our ability to avoid litigation and its associated costs and
liabilities; the impact of new accounting standards; 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. 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 STATEMENTS OF INCOME

CONSOLIDATED BALANCE SHEETS

ASSETS

LIABILITIES AND EQUITY

Average Balances, Yields and Rates

AverageBalance

InterestIncome/Expense (1)

Yields/ Rates (2)

AverageBalance

InterestIncome/Expense (1)

Yields/ Rates (2)

AverageBalance

InterestIncome/Expense (1)

Yields/ Rates (2)

Total interest-earning assets

Goodwill and other intangibles

Total noninterest-earning assets

Money market checking and savings

Total interest-bearing liabilities

Total Liabilities and Equity

Net interest income (fully taxable-equivalent basis) and net
interest margin (3), (6)

Reconciliation of tax-equivalent net interest income to
reported net interest income:

Net interest income, as reported

__________

 

AverageBalance

InterestIncome/ Expense (1)

Yields/ Rates (2)

AverageBalance

InterestIncome/ Expense (1)

Yields/ Rates (2)

and net interest margin (3), (6)

Reconciliation of tax-equivalent net interest income to
reported net interest income:

__________

Quarter Ended June 30,

Quarter Ended March 31,

Net interest income to average interest-earning assets (1)

%

 

)%

)%

 

%

 

 

June 30,2018

March 31,2018

December 31,2017

September 30,2017

June 30,2017

June 30,2018

March 31,2018

December 31,2017

September 30,2017

June 30,2017

June 30,2018

March 31,2018

December 31,2017

September 30,2017

June 30,2017

__________

June 30,2018

March 31,2018

December 31,2017

September 30,2017

June 30,2017

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