First Republic Bank (NYSE: FRC) today announced financial
results for the quarter ended March 31, 2023.
Jim Herbert, Founder and Executive Chairman, and Mike Roffler,
CEO and President of First Republic said, “With the stabilization
of our deposit base and the strength of our credit quality and
capital position, we continue to take steps to strengthen our
business. We remain fully committed to serving our communities, and
we are grateful for the ongoing support of our clients and
colleagues.”
Financial Results
- Year-over-year:
- Revenues were $1.2 billion, down 13.4%.
- Net interest income was $923 million, down 19.4%. (1)
- Net income was $269 million, down 32.9%.
- Diluted earnings per share of $1.23, down 38.5%.
- Book value per share was $76.97, up 10.4%.
- Net interest margin was 1.77%, compared to 2.45% for the prior
quarter. (1)
- Efficiency ratio was 70.4%, compared to 63.9% for the prior
quarter.
Capital Position and Credit
Quality
- Tier 1 leverage ratio was 8.25%.
- Common Equity Tier 1 ratio was 9.32%.
- Nonperforming assets were 0.06% of total assets.
- Net recoveries were $0.2 million.
Wealth Management
- Year-over-year:
- Wealth management assets were $289.5 billion, up 5.6%.
- Wealth management revenues were $223 million, up 0.7%.
Balance Sheet
- Year-over-year:
- Loans totaled $173.3 billion, up 22.6%.
- Deposits were $104.5 billion, down 35.5%. (2)
- Borrowings were $106.7 billion, up $101.2 billion.
__________
(1)
Following the recent industry
developments, net interest income and net interest margin were, and
continue to be, materially impacted due to the unprecedented loss
of deposits resulting in higher funding costs.
(2)
Deposits were down 40.8% from
December 31, 2022. Deposits at March 31, 2023 included $30 billion
of time deposits received from the large U.S. banks.
Neal Holland, Chief Financial Officer of First Republic said,
“With the closure of several banks in March, we experienced
unprecedented deposit outflows. We moved swiftly and leveraged our
high-quality loan and securities portfolios to secure additional
liquidity. We are working to restructure our balance sheet and
reduce our expenses and short-term borrowings.”
Selected Financial Data and
Ratios
As of or for the
Quarter Ended
March 31, 2023
As of or for the
Quarter Ended
December 31, 2022
As of or for the
Quarter Ended
March 31, 2022
($ in millions, except per share
amounts)
Financial Results
Revenues
$
1,209
$
1,437
$
1,396
Net interest income
$
923
$
1,174
$
1,145
Net income
$
269
$
386
$
401
Diluted earnings per share
$
1.23
$
1.88
$
2.00
Book value per share
$
76.97
$
75.38
$
69.70
Net interest margin
1.77
%
2.45
%
2.68
%
Efficiency ratio (1)
70.4
%
63.9
%
62.0
%
Capital Position and Credit Quality
Tier 1 leverage ratio
8.25
%
8.51
%
8.70
%
Common Equity Tier 1 ratio
9.32
%
9.17
%
9.48
%
Nonperforming assets to total assets
0.06
%
0.05
%
0.08
%
Net loan charge-offs (recoveries)
$
(0.2
)
$
0.9
$
(0.3
)
Wealth Management
Total wealth management assets
$
289,464
$
271,244
$
274,195
Total wealth management revenues
$
223
$
210
$
221
Balance Sheet
Total loans
$
173,311
$
166,868
$
141,313
Total deposits (2)
$
104,474
$
176,437
$
162,060
Short-term borrowings
$
80,365
$
6,700
$
—
Long-term borrowings
$
26,304
$
8,579
$
5,478
__________
(1) Efficiency ratio is the ratio of
noninterest expense to the sum of net interest income and
noninterest income.
(2) As of March 31, 2023, included $30
billion of time deposits received from the large U.S. banks.
Recent Industry Events
The recent industry events, beginning in March 2023, have
impacted the Bank’s funding sources.
As of March 9, 2023, total deposits were $173.5 billion, down
1.7% from year-end 2022. On March 10, 2023, following the highly
public closure of a large regional bank, First Republic began
experiencing unprecedented deposit outflows.
On March 16, 2023, First Republic received uninsured deposits
totaling $30 billion from a group of America’s largest banks. This
support for First Republic allowed the Bank to reduce its
short-term borrowings. At that time, daily deposit outflows had
slowed considerably.
Deposit activity began to stabilize beginning the week of March
27, 2023, and has remained stable through Friday, April 21, 2023.
Total deposits were $102.7 billion as of April 21, 2023, down only
1.7% from March 31, 2023, primarily reflecting seasonal client tax
payments that occur each April.
In response to the unprecedented deposit outflows, the Bank
enhanced its financial position through access to additional
liquidity from the Federal Reserve Bank, the Federal Home Loan Bank
and JP Morgan Chase & Co. Total borrowings peaked on March 15,
2023, at $138.1 billion. At that time, the Bank had $34.0 billion
of cash on its balance sheet. Total borrowings totaled $104.0
billion, and cash and cash equivalents totaled $10.0 billion as of
April 21, 2023. This includes $25.5 billion of long-term advances
with the Federal Home Loan Bank, compared to $7.3 billion as of
December 31, 2022.
As a result of the recent events, the Bank is taking actions to
strengthen its business and restructure its balance sheet. These
actions include efforts to increase insured deposits, reduce
borrowings from the Federal Reserve Bank, and decrease loan
balances to correspond with the reduced reliance on uninsured
deposits. Through these actions, the Bank intends to reduce the
size of its balance sheet, reduce its reliance on short-term
borrowings, and address the challenges it continues to face. Refer
to the Forward-Looking Statements below.
The Bank is also taking steps to reduce expenses, including
significant reductions to executive officer compensation,
condensing corporate office space, and reducing non-essential
projects and activities. The Bank also expects to reduce its
workforce by approximately 20-25% in the second quarter.
In addition to these actions, the Bank is pursuing strategic
options to expedite its progress while reinforcing its capital
position.
Suspension of Dividends on Common Stock and Noncumulative
Preferred Stock
In response to recent events, as announced on March 16, 2023,
the Bank’s Board of Directors determined to suspend its common
stock dividend. In addition, on April 6, 2023, the Bank’s Board of
Directors determined to suspend payment of the quarterly cash
dividend on each series of the Bank’s outstanding noncumulative
perpetual preferred stock.
Asset Quality
Nonperforming assets were 6 basis points of total assets at
March 31, 2023.
The provision for credit losses for the quarter was $16 million.
The Bank had net loan recoveries of $0.2 million for the
quarter.
Book Value
Book value per common share at March 31, 2023 was $76.97, up
2.1% from the prior quarter.
Capital Position
The Bank’s Tier 1 leverage ratio was 8.25% at March 31, 2023,
compared to 8.51% in the prior quarter. The Common Equity Tier 1
ratio was 9.32% at March 31, 2023, compared to 9.17% in the prior
quarter.
In February 2023, the Bank sold 2,875,000 new shares of common
stock in an underwritten public offering, which added $397 million
to common equity.
Balance Sheet
Loans
Loans totaled $173.3 billion at March 31, 2023, up 3.9% compared
to the prior quarter. The increase was primarily due to increases
in single family and multifamily loans, as well as higher capital
call lines of credit outstanding due to increased utilization in
March.
Investments
Total investment securities at March 31, 2023 were $34.8
billion, a 9.8% increase compared to the prior quarter.
High-quality liquid assets, including eligible cash and
unencumbered investment securities, totaled $14.4 billion at March
31, 2023, and represented 6.6% of quarterly average total
assets.
Deposits
Total deposits declined $72.0 billion during the quarter, to
$104.5 billion at March 31, 2023 reflecting outflows toward the
middle of March 2023. At March 31, 2023, excluding the $30 billion
of deposits made by the large U.S. banks, total deposits consisted
of 58.4% in checking deposits, 15.0% in other liquid deposits, and
26.6% in CDs. At March 31, 2023, excluding the $30 billion of
deposits made by the large U.S. banks, our estimated uninsured
deposits totaled $19.8 billion, or 27% of total deposits. Insured
deposits declined moderately during the quarter and have remained
stable from March 31 through April 21. Refer to the Deposits table
for additional details regarding our deposits.
Funding
Other sources of funding at March 31, 2023 included secured
short-term borrowings from the Federal Reserve, securities sold
under agreements to repurchase, and short-term and long-term FHLB
advances, which totaled $105.9 billion.
Our unused, available borrowing capacity at the Federal Reserve
Bank discount window and FHLB at March 31, 2023 was $12.4 billion
and $1.7 billion, respectively. This available borrowing capacity
is supported by pledged loans and investment securities. In
addition, at March 31, 2023, cash and cash equivalents totaled
$13.2 billion.
As of April 21, 2023, the Bank had $45.1 billion of cash and
cash equivalents and unused available borrowing capacity,
representing more than two times our estimated uninsured deposits,
excluding the $30 billion of deposits made by the large U.S.
banks.
Wealth Management
Total wealth management assets were $289.5 billion at March 31,
2023, up 6.7% compared to the prior quarter and included investment
management assets of $118.9 billion, brokerage assets and money
market mutual funds of $149.7 billion, and trust and custody assets
of $20.9 billion.
Wealth management fees, which consist of investment management,
brokerage and investment, insurance, trust and foreign exchange fee
income, totaled $223 million for the quarter, up 6.7% compared to
the prior quarter. Such revenues represented 18.5% of the Bank’s
total revenues.
Following the recent industry events and as of April 21, 2023,
wealth management assets from teams that have departed First
Republic were responsible for less than 20% of total wealth
management assets as of March 31, 2023. As of April 21, 2023, First
Republic has retained nearly 90% of its total wealth professionals
and anticipates retaining a portion of the wealth management assets
associated with departing teams.
Income Statement and Key Ratios
Revenue
Total revenues were $1.2 billion for the quarter, down 15.9%
compared to the prior quarter. The decrease was due to a decrease
in net interest income, partially offset by an increase in
noninterest income. Following the recent industry developments, net
interest income and net interest margin were, and continue to be,
materially impacted due to the unprecedented loss of deposits
resulting in higher funding costs.
Net Interest Income
Net interest income was $923 million for the quarter, down 21.4%
compared to the prior quarter. The decrease in net interest income
was primarily due to substantially higher funding costs, which was
partially offset by CD withdrawal penalties that reduced interest
expense on deposits by approximately $57 million.
Net Interest Margin
The net interest margin decreased to 1.77% for the quarter, from
2.45% in the prior quarter. The decrease was primarily due to
higher short-term borrowings, which was partially offset by the
impact of CD withdrawal penalties that increased the net interest
margin by 11 basis points.
Noninterest Income
Noninterest income was $286 million for the quarter, up 8.7%
compared to the prior quarter. The increase was primarily driven by
higher investment management fees.
Noninterest Expense and Efficiency
Ratio
Noninterest expense was $852 million for the quarter, down 7.4%
compared to the prior quarter. The decrease was primarily due to a
reversal of previously recognized share-based compensation expense
related to performance-based stock awards of $107 million. The
decrease was partially offset by higher FDIC assessment expense of
$27 million and goodwill impairment of $25 million. The impaired
goodwill consisted of all of the Commercial Banking operating
segment’s goodwill. The Commercial Banking operating segment is one
of the Bank’s two reportable operating segments as identified in
the Bank’s Annual Report on Form 10-K for the year ended December
31, 2022.
The efficiency ratio was 70.4% for the quarter, compared to
63.9% for the prior quarter.
Income Taxes
The Bank’s effective tax rate for the first quarter of 2023 was
21.2%, compared to 20.9% for the prior quarter.
Conference Call Details
First Republic Bank’s first quarter 2023 earnings conference
call is scheduled for April 24, 2023 at 1:30 p.m. PT / 4:30 p.m.
ET.
To access the conference call by telephone, please dial (877)
400-0505 and provide confirmation code 3782547 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.
To access the conference call online, please visit the Investor
Relations section of First Republic’s website at
ir.firstrepublic.com/events-calendar approximately 15 minutes prior
to the start time (to allow time to register, download and install
any necessary audio software).
For those unable to join on April 24, 2023, a replay will be
available 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 specializes in delivering
exceptional, relationship-based service. First Republic provides a
complete line of banking products, including residential,
commercial and personal loans, deposit services, as well as 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, projections, future
plans and strategies, objectives, assumptions or anticipated 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.
Examples of forward-looking statements and general risks
include, among others: statements regarding our expectations with
regard to our business, financial and operating results; forecasts
of future economic conditions generally and in our markets in
particular, including expectations relating to interest rates and
inflation, and their impact on our net interest margin; and our
plans and actions to strengthen our business following recent
industry developments, such as restructuring our balance sheet,
reducing our expenses, repaying our borrowings, reducing reliance
on uninsured deposits and increasing our insured deposit base,
decreasing loan balances and pursuing other strategic options; and
descriptions of assumptions underlying or relating to any of the
foregoing. The forward-looking statements contained herein reflect
our current views about future events and financial performance and
are subject to risks, uncertainties, assumptions and changes in
circumstances, including in the near term, that may cause our
actual results to differ materially from historical results and
those expressed in any forward-looking statement.
There can be no certainty that the Bank will be able to take
actions to strengthen our business within a time frame that is
acceptable to the market or our regulators. There can be no
certainty as to the future of the Bank if we are not able to do
so.
Some factors that could cause actual results to differ
materially from historical results or expected outcomes include,
but are not limited to: demand for our products and services,
including deposit attrition or further significant deposit
outflows; our ability to retain our banking and wealth management
clients, including those associated with departing wealth
management teams; our ability to access adequate sources of funding
and liquidity, in particular through the Federal Reserve, the
Federal Home Loan Bank and other sources where our borrowings are
far above historic levels or where we had not previously borrowed;
our ability to satisfy our obligations when they become due; our
ability to reduce our funding costs and improve our asset and
liability mix; difficulties encountered by, or the soundness of,
other financial institutions; adverse publicity about First
Republic or the banking industry more generally, including as a
result of bank failures and concerns about capital and liquidity;
changes in our credit ratings and the impact on the cost of, and
the ability to access, additional funding and capital, and our
ability to conduct bank operations (such as offering our products
and services and acting as a loan servicer); inflation and actions
by central banks to manage inflation; interest rate risk
(sensitivity to increases or decreases to interest rate
fluctuations) and credit risk; our ability to retain key managers
and employees, including those in our wealth management business;
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 changes to liquidity and regulatory
capital requirements applicable to us; legislative and regulatory
actions affecting us, the banking industry or the financial
services industry more generally; litigation, investigations and
other legal actions or proceedings, and associated costs and
liabilities; future Federal Deposit Insurance Corporation (“FDIC”)
special assessments or changes to regular assessments; and other
matters discussed in the risk factors included in the Bank’s Annual
Report on Form 10-K for the year ended December 31, 2022 as filed
with the FDIC. In addition, state and federal banking regulators,
including the California Department of Financial Protection and
Innovation and the FDIC, have broad authority to oversee the Bank
and to close the Bank and commence a conservatorship or
receivership under various circumstances specified in state and
federal banking laws.
Any forward-looking statement made by us in this press release
is based only on information currently available to us and speaks
only as of the date on which it is made. We do not intend and
disclaim any duty or obligation to update or revise any industry
information or forward-looking statements, whether written or oral,
that may be made from time to time, set forth in this press release
to reflect new information, future events or otherwise.
Non-GAAP Financial Measures
Our management uses and believes that investors benefit from
using certain non-GAAP measures of our financial performance, which
include return on average tangible common shareholders’ equity and
net interest income on a fully taxable-equivalent basis. Management
believes that return on average tangible common shareholders’
equity is a useful additional measure 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
March 31,
Quarter Ended
December 31,
(in millions, except per share
amounts)
2023
2022
2022
Interest income:
Loans
$
1,565
$
1,002
$
1,438
Investments
252
180
231
Cash and cash equivalents
74
5
24
Other
6
2
6
Total interest income
1,897
1,189
1,699
Interest expense:
Deposits
555
20
428
Borrowings
419
24
97
Total interest expense
974
44
525
Net interest income
923
1,145
1,174
Provision for credit losses
16
10
30
Net interest income after provision for
credit losses
907
1,135
1,144
Noninterest income:
Investment management fees
159
165
141
Brokerage and investment fees
29
22
29
Insurance fees
3
4
8
Trust fees
8
7
7
Foreign exchange fee income
24
23
25
Deposit fees
8
6
7
Loan and related fees
10
9
10
Income from investments in life
insurance
38
14
34
Other income, net
7
1
2
Total noninterest income
286
251
263
Noninterest expense:
Salaries and employee benefits
453
560
551
Information systems
115
107
123
Occupancy
77
69
73
Professional fees
30
23
27
Advertising and marketing
17
13
23
FDIC assessments
46
15
19
Goodwill impairment
25
—
—
Other expenses
89
79
103
Total noninterest expense
852
866
919
Income before provision for income
taxes
341
520
488
Provision for income taxes
72
119
102
Net income
269
401
386
Dividends on preferred stock
40
37
40
Net income available to common
shareholders
$
229
$
364
$
346
Basic earnings per common share
$
1.24
$
2.03
$
1.89
Diluted earnings per common share
$
1.23
$
2.00
$
1.88
Weighted average shares—basic
185
180
183
Weighted average shares—diluted
186
182
184
CONSOLIDATED BALANCE
SHEETS
As of
($ in millions)
March 31, 2023
December 31,
2022
March 31, 2022
ASSETS
Cash and cash equivalents
$
13,159
$
4,283
$
7,756
Debt securities available-for-sale
3,409
3,347
3,446
Debt securities held-to-maturity, net
31,389
28,348
26,831
Equity securities (fair value)
24
24
25
Loans:
Single family
101,109
98,768
81,833
Home equity lines of credit
2,946
2,775
2,597
Single family construction
1,307
1,217
1,041
Multifamily
22,731
21,588
16,953
Commercial real estate
11,067
10,830
8,753
Multifamily/commercial construction
2,382
2,139
1,955
Capital call lines of credit
11,486
9,988
10,970
Tax-exempt
3,770
3,713
3,656
Other business
5,549
5,092
4,313
Stock secured
4,387
4,553
3,651
Other secured
3,458
3,191
2,623
Unsecured
3,119
3,014
2,968
Total loans
173,311
166,868
141,313
Allowance for credit losses
(802
)
(784
)
(701
)
Loans, net
172,509
166,084
140,612
Investments in life insurance
4,039
3,435
2,682
Tax credit investments
1,393
1,383
1,231
Premises, equipment and leasehold
improvements, net
488
483
467
Goodwill and other intangible assets
193
218
221
Other assets
6,341
5,034
3,850
Total Assets
$
232,944
$
212,639
$
187,121
LIABILITIES AND SHAREHOLDERS’
EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking
$
20,297
$
62,579
$
72,424
Interest-bearing checking
23,162
41,178
41,589
Money market checking
6,028
25,805
21,846
Money market savings and passbooks
5,159
21,663
19,159
Certificates of deposit (1)
49,828
25,212
7,042
Total Deposits
104,474
176,437
162,060
Short-term borrowings
80,365
6,700
—
Long-term FHLB advances
25,525
7,300
3,700
Senior notes
—
500
999
Subordinated notes
779
779
779
Other liabilities
3,811
3,477
3,429
Total Liabilities
214,954
195,193
170,967
Shareholders’ Equity:
Preferred stock
3,633
3,633
3,633
Common stock
2
2
2
Additional paid-in capital
6,585
6,256
5,763
Retained earnings
8,065
7,886
6,893
Accumulated other comprehensive loss
(295
)
(331
)
(137
)
Total Shareholders’ Equity
17,990
17,446
16,154
Total Liabilities and Shareholders’
Equity
$
232,944
$
212,639
$
187,121
__________
(1) As of March 31, 2023, included $30
billion of time deposits received from the large U.S. banks.
Quarter Ended March
31,
Quarter Ended December
31,
2023
2022
2022
Average Balances, Yields and
Rates
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates (2)
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates (2)
Average Balance
Interest Income/ Expense
(1)
Yield/ Rates (2)
($ in millions)
Assets:
Interest-bearing deposits with banks
$
6,372
$
74
4.70
%
$
11,342
$
5
0.18
%
$
2,704
$
24
3.49
%
Investment securities:
U.S. Government-sponsored agency
securities
165
1
2.05
%
117
0
1.37
%
165
1
2.05
%
Agency residential and commercial MBS
12,448
86
2.77
%
9,142
39
1.70
%
10,535
66
2.49
%
Other residential and commercial MBS
18
0
4.20
%
24
0
2.04
%
18
0
3.77
%
Tax-exempt municipal securities
17,707
147
3.33
%
15,595
151
3.87
%
17,697
175
3.97
%
Taxable municipal securities
1,773
14
3.14
%
1,715
13
2.97
%
1,774
13
3.13
%
Other investment securities
1,442
11
2.88
%
1,416
10
2.85
%
1,440
10
2.88
%
Total investment securities
33,553
259
3.08
%
28,009
213
3.04
%
31,629
265
3.37
%
Loans:
Residential real estate
103,672
823
3.18
%
82,416
567
2.75
%
100,645
772
3.07
%
Multifamily
21,905
203
3.70
%
16,281
140
3.45
%
20,856
192
3.60
%
Commercial real estate
10,945
114
4.15
%
8,633
82
3.77
%
10,401
107
4.02
%
Multifamily/commercial construction
2,278
34
6.02
%
1,929
22
4.62
%
2,105
31
5.77
%
Business
18,649
271
5.82
%
18,971
152
3.21
%
17,771
240
5.29
%
Other
10,817
125
4.62
%
9,058
47
2.06
%
10,479
103
3.86
%
Total loans
168,266
1,570
3.73
%
137,288
1,010
2.94
%
162,257
1,445
3.53
%
FHLB stock
517
6
4.88
%
115
2
7.60
%
353
6
7.27
%
Total interest-earning assets
208,708
1,909
3.66
%
176,754
1,230
2.78
%
196,943
1,740
3.51
%
Noninterest-earning cash
522
449
478
Goodwill and other intangibles
218
221
219
Other assets
9,135
7,142
8,464
Total noninterest-earning assets
9,875
7,812
9,161
Total Assets
$
218,583
$
184,566
$
206,104
Liabilities and Shareholders’
Equity:
Deposits:
Interest-bearing checking
$
35,218
79
0.91
%
$
40,400
1
0.01
%
$
39,252
55
0.55
%
Money market checking
22,408
155
2.80
%
21,659
5
0.09
%
24,084
134
2.20
%
Money market savings and passbooks
17,954
107
2.43
%
17,925
7
0.15
%
20,423
100
1.95
%
CDs
29,541
214
2.93
%
7,217
7
0.40
%
20,546
139
2.69
%
Total interest-bearing deposits (3)
105,121
555
2.14
%
87,201
20
0.09
%
104,305
428
1.63
%
Borrowings:
Federal Reserve Discount Window
16,302
195
4.85
%
—
—
—
%
—
—
—
%
Short-term FHLB advances
8,722
103
4.80
%
—
—
—
%
6,131
54
3.51
%
Federal Reserve Bank Term Funding
Program
2,318
26
4.57
%
—
—
—
%
—
—
—
%
Federal funds purchased
844
11
4.59
%
—
—
—
%
419
5
4.00
%
Securities sold under agreements to
repurchase
94
1
5.23
%
—
—
—
%
—
—
—
%
Long-term FHLB advances
9,944
73
2.99
%
3,700
9
0.95
%
6,004
26
1.79
%
Senior notes
239
1
2.10
%
998
6
2.42
%
500
3
2.15
%
Subordinated notes
779
9
4.68
%
779
9
4.68
%
779
9
4.68
%
Total borrowings
39,242
419
4.33
%
5,477
24
1.75
%
13,833
97
2.79
%
Total interest-bearing liabilities (4)
144,363
974
2.73
%
92,678
44
0.19
%
118,138
525
1.76
%
Noninterest-bearing checking
52,051
72,251
67,067
Other noninterest-bearing liabilities
4,373
3,613
3,609
Total noninterest-bearing liabilities
56,424
75,864
70,676
Preferred shareholders’ equity
3,633
3,633
3,633
Common shareholders’ equity
14,163
12,391
13,657
Total Liabilities and Shareholders’
Equity
$
218,583
$
184,566
$
206,104
Net interest spread (5)
0.93
%
2.59
%
1.74
%
Net interest income (fully
taxable-equivalent basis) and net interest margin (6)
$
935
1.77
%
$
1,186
2.68
%
$
1,215
2.45
%
Reconciliation of tax-equivalent net
interest income to net interest income: (7)
Municipal securities tax-equivalent
adjustment
(7
)
(34
)
(34
)
Business loans tax-equivalent
adjustment
(5
)
(7
)
(7
)
Net interest income
$
923
$
1,145
$
1,174
Supplemental information:
Total deposits (interest-bearing and
noninterest-bearing)
$
157,172
$
555
1.43
%
$
159,452
$
20
0.05
%
$
171,372
$
428
0.99
%
Total deposits (interest-bearing and
noninterest-bearing) and borrowings
$
196,414
$
974
2.01
%
$
164,929
$
44
0.11
%
$
185,205
$
525
1.12
%
__________ 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 March
31,
Quarter Ended December
31,
2023
2022
2022
($ in millions, except per share
amounts)
Selected Financial Data and
Ratios:
Return on average assets (1), (2)
0.50
%
0.88
%
0.74
%
Return on average common shareholders’
equity (1)
6.55
%
11.91
%
10.05
%
Return on average tangible common
shareholders’ equity (1), (3)
6.65
%
12.12
%
10.21
%
Average equity to average assets
8.14
%
8.68
%
8.39
%
Dividends per common share
$
0.27
$
0.22
$
0.27
Dividend payout ratio (4)
21.9
%
11.0
%
14.4
%
Efficiency ratio (5)
70.4
%
62.0
%
63.9
%
Selected Asset Quality Ratios:
Net loan charge-offs (recoveries)
$
(0.2
)
$
(0.3
)
$
0.9
Net loan charge-offs (recoveries) to
average total loans (1)
(0.00
) %
(0.00
) %
0.00
%
Selected Ratios (period-end):
Book value per common share
$
76.97
$
69.70
$
75.38
__________
(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)
As announced on March 16, 2023,
the Bank’s Board of Directors determined to suspend its common
stock dividend. In addition, on April 6, 2023, the Bank’s Board of
Directors determined to suspend payment of the quarterly cash
dividend on each series of the Bank’s outstanding noncumulative
perpetual preferred stock.
(5)
Efficiency ratio is the ratio of
noninterest expense to the sum of net interest income and
noninterest income.
Effective Tax Rate
Quarter Ended March
31,
Quarter Ended December
31,
2023
2022
2022
Effective tax rate, prior to excess tax
benefits—stock awards and other adjustments
19.5
%
23.4
%
21.9
%
Excess tax benefits—stock awards
0.2
(0.5
)
(0.3
)
Research and development tax credit
adjustments
—
—
(0.7
)
Goodwill impairment
1.5
—
—
Effective tax rate
21.2
%
22.9
%
20.9
%
Provision (Reversal of Provision) for
Credit Losses
Quarter Ended March
31,
Quarter Ended December
31,
2023
2022
2022
($ in millions)
Debt securities held-to-maturity
$
—
$
1
$
—
Loans
18
7
25
Unfunded loan commitments
(2
)
2
5
Total provision
$
16
$
10
$
30
Loan Originations
Quarter Ended March
31,
Quarter Ended December
31,
2023
2022
2022
($ in millions)
Single family
$
3,716
$
8,376
$
5,894
Home equity lines of credit
468
689
499
Single family construction
158
267
387
Multifamily
1,300
1,709
1,581
Commercial real estate
386
566
879
Multifamily/commercial construction
597
384
445
Capital call lines of credit
2,349
3,020
2,477
Tax-exempt
39
90
195
Other business
637
538
1,090
Stock secured
815
1,136
976
Other secured
684
666
839
Unsecured
289
369
360
Total loans originated
$
11,438
$
17,810
$
15,622
As of March 31, 2023
Commercial Real Estate
Portfolio
Unpaid Principal Balance
(1)
Percent of Total Loans
LTV (2)
Average Loan Commitment
Size
($ in millions)
Mixed Use
$
2,603
1.5
%
45
%
$
4.4
Retail
$
2,602
1.5
%
48
%
$
3.0
Office
$
2,522
1.5
%
45
%
$
3.8
Warehouse/Industrial
$
1,563
0.9
%
45
%
$
2.9
Hotel
$
623
0.4
%
46
%
$
8.8
Healthcare
$
274
0.2
%
49
%
$
3.1
Restaurant
$
155
0.1
%
48
%
$
1.4
Other
$
729
0.4
%
43
%
$
3.3
__________
(1) Represents the unpaid principal
balance, excluding unamortized net deferred fees and costs.
(2) Weighted average loan-to-value (LTV)
at origination.
As of
Asset Quality Information
March 31, 2023
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
($ in millions)
Nonperforming assets:
Nonaccrual loans
$
131
$
109
$
120
$
137
$
140
Other real estate owned
—
—
—
—
—
Total nonperforming assets
$
131
$
109
$
120
$
137
$
140
Nonaccrual loans to total loans
0.08
%
0.07
%
0.08
%
0.09
%
0.10
%
Nonperforming assets to total assets
0.06
%
0.05
%
0.06
%
0.07
%
0.08
%
Accruing loans 90 days or more past
due
$
—
$
—
$
—
$
—
$
—
Allowance for loan credit losses to:
Total loans
0.46
%
0.47
%
0.48
%
0.48
%
0.50
%
Nonaccrual loans
614.1
%
720.5
%
635.3
%
531.2
%
498.8
%
Deposits
As of
March 31, 2023
December 31,
2022
($ in millions)
Total deposits
$
104,474
$
176,437
Estimated insured deposits
$
54,651
$
57,615
Estimated uninsured deposits
$
49,823
$
118,822
Estimated insured deposits as % of total
deposits
52
%
33
%
Estimated uninsured deposits as % of total
deposits
48
%
67
%
Excluding $30
billion of time deposits received from the large U.S.
banks:
Total deposits (1)
$
74,413
n/a
Estimated insured deposits (1)
$
54,648
n/a
Estimated uninsured deposits (1)
$
19,765
n/a
Estimated insured deposits as % of total
deposits (1)
73
%
n/a
Estimated uninsured deposits as % of total
deposits (1)
27
%
n/a
Deposit types as %
of total deposits, excluding $30 billion of time deposits received
from the large U.S. banks:
Checking (1)
58.4
%
58.8
%
Other liquid deposits (1)
15.0
%
26.9
%
CDs (1)
26.6
%
14.3
%
__________
Note: Uninsured and insured amounts in the
table above are based on deposit principal balances.
(1) As of March 31, 2023, excludes $30
billion of time deposits received from the large U.S. banks.
As of
Short-Term Borrowings
March 31, 2023
December 31,
2022
($ in millions)
Federal Reserve Discount Window
$
63,500
$
—
Federal Reserve Bank Term Funding
Program
13,844
—
FHLB advances
2,575
6,700
Securities sold under agreements to
repurchase
446
—
Total short-term borrowings
$
80,365
$
6,700
As of
Loan Servicing Portfolio
March 31, 2023
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
($ in millions)
Loans serviced for investors
$
3,273
$
3,459
$
3,632
$
3,919
$
4,298
Return on Average Common Shareholders’
Equity and Return on Average Tangible Common Shareholders’ Equity
(1), (2)
Quarter Ended March
31,
Quarter Ended December
31,
2023
2022
2022
($ in millions)
Average common shareholders’ equity
(a)
$
14,163
$
12,391
$
13,657
Less: Average goodwill and other
intangible assets
(218
)
(221
)
(219
)
Average tangible common shareholders’
equity (b)
$
13,945
$
12,170
$
13,438
Net income available to common
shareholders (c)
$
229
$
364
$
346
Return on average common shareholders’
equity (c) / (a)
6.55
%
11.91
%
10.05
%
Return on average tangible common
shareholders’ equity (c) / (b)
6.65
%
12.12
%
10.21
%
__________
(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.
Regulatory Capital Ratios and
Components (1), (2)
As of
March 31, 2023 (3)
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
($ in millions)
Capital Ratios:
Tier 1 leverage ratio (Tier 1 capital to
average assets)
8.25
%
8.51
%
8.59
%
8.59
%
8.70
%
Common Equity Tier 1 capital to
risk-weighted assets
9.32
%
9.17
%
9.28
%
9.15
%
9.48
%
Tier 1 capital to risk-weighted assets
11.67
%
11.56
%
11.76
%
11.75
%
12.25
%
Total capital to risk-weighted assets
12.71
%
12.60
%
12.81
%
12.82
%
13.37
%
Regulatory Capital:
Common Equity Tier 1 capital
$
14,408
$
13,920
$
13,586
$
12,791
$
12,418
Tier 1 capital
$
18,041
$
17,553
$
17,219
$
16,424
$
16,051
Total capital
$
19,637
$
19,118
$
18,755
$
17,924
$
17,521
Assets:
Average assets
$
218,783
$
206,371
$
200,486
$
191,202
$
184,410
Risk-weighted assets
$
154,544
$
151,777
$
146,444
$
139,811
$
131,024
__________
(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 March
31, 2023 are preliminary.
As of
Wealth Management Assets
March 31, 2023
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
($ in millions)
First Republic Investment Management
$
118,902
$
112,176
$
100,125
$
100,204
$
108,771
Brokerage and investment:
Brokerage
144,565
130,844
119,299
116,979
128,129
Money market mutual funds
5,121
8,100
10,891
10,510
18,543
Total brokerage and investment
149,686
138,944
130,190
127,489
146,672
Trust Company:
Trust
17,031
16,318
15,270
14,994
14,344
Custody
3,845
3,806
3,943
4,099
4,408
Total Trust Company
20,876
20,124
19,213
19,093
18,752
Total Wealth Management Assets
$
289,464
$
271,244
$
249,528
$
246,786
$
274,195
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230424005719/en/
Investor and Media Relations Contacts Email:
InvestorRelations@firstrepublic.com
MediaRelations@firstrepublic.com Phone: (415) 392-1400
First Republic Bank (NYSE:FRC)
Gráfica de Acción Histórica
De Dic 2024 a Ene 2025
First Republic Bank (NYSE:FRC)
Gráfica de Acción Histórica
De Ene 2024 a Ene 2025
