April 13, 2018
SAN FRANCISCO--(BUSINESS WIRE)--First Republic Bank (NYSE: FRC) today announced financial results for
the quarter ended March 31, 2018.
“First Republic had an excellent quarter,” said Jim Herbert, Chairman
and CEO. “Loans, deposits and wealth management assets continued to
increase nicely. First Republic again delivered consistently strong
results, while continuing to make investments in infrastructure and its
next generation of clients.”
Revenues were $720.9 million, up 19.9%.
Net income was $199.1 million, up 12.6%.
Diluted earnings per share of $1.13, up 11.9%.
Loan originations totaled $7.3 billion, our strongest first
quarter ever, up 29.9%.
Tangible book value per share was $41.46, up 11.6%.
Net interest margin was 2.97%.
Efficiency ratio was 64.0%.
Continued Capital and Credit Strength
Common Equity Tier 1 ratio was 10.47%, compared to 11.15% a year ago.
Increased quarterly dividend to $0.18 per share in April 2018.
Nonperforming assets remained very low at 5 basis points of total
Net charge-offs were only $154,000, or less than 1 basis point of
Continued Franchise Development
Loans, excluding loans held for sale, totaled $65.2 billion, up
Deposits were $71.3 billion, up 16.4%.
Wealth management assets were $113.0 billion, up 25.4%.
Wealth management revenues were $99.5 million, up 27.6%.
“Revenue grew 20% and net interest income grew 18% compared to a year
ago, while tangible book value was up 12%,” said Mike Roffler, Chief
Financial Officer. “Asset quality remains excellent and capital is
Increased Quarterly Cash Dividend to $0.18 per
The Bank announced an increase in its quarterly cash dividend to $0.18
per share of common stock. This first quarter dividend is payable on
May 10, 2018 to shareholders of record as of April 26, 2018.
Very Strong Asset Quality
Credit quality remains very strong. Nonperforming assets were only 5
basis points of total assets at March 31, 2018.
The Bank had net charge-offs for the quarter of $154,000, while adding
$13.0 million to its allowance for loan losses due to continued loan
Continued Capital Strength
The Bank’s Common Equity Tier 1 ratio was 10.47% at March 31,
2018, compared to 11.15% a year ago.
In addition, as previously announced, on January 2, 2018, the Bank
redeemed all of the outstanding shares of its 5.625% Noncumulative
Perpetual Series C Preferred Stock, which totaled $150.0 million.
Tangible Book Value Growth
Tangible book value per common share at March 31, 2018 was $41.46, up
11.6% from a year ago.
Continued Franchise Development
Strong Loan Originations
Loan originations were $7.3 billion for the quarter, compared to $5.6
billion for the same quarter a year ago, an increase of 29.9%, primarily
due to increases in business lending, multifamily and construction loans.
Loans, excluding loans held for sale, totaled $65.2 billion at March 31,
2018, up 20.9% compared to a year ago. The increase was primarily due to
growth in single family, multifamily and business loans.
Total deposits increased to $71.3 billion, up 16.4% compared to a year
At March 31, 2018, checking accounts totaled 62.2% of deposits.
The average rate paid on deposits was 0.30% during the quarter, compared
to 0.28% for the prior quarter.
Total investment securities at March 31, 2018 were $16.5 billion, down
11.0% for the quarter and up 3.6% compared to a year ago.
High-quality liquid assets, including eligible cash, totaled $11.1
billion at March 31, 2018, and represented 12.8% of average total assets.
During the first quarter, the Bank performed a repositioning of its
investment portfolio and sold certain intermediate and long-term,
fixed-rate investment securities totaling $2.2 billion, and recognized a
gain on sale of $10.7 million.
Mortgage Banking Activity
During the first quarter, the Bank sold $161.4 million of loans and
recorded a gain on sale of $689,000, compared to loan sales of $645.8
million and a gain of $3.4 million during the first quarter of last year.
Loans serviced for investors at quarter-end totaled $12.2 billion, up
3.0% from a year ago.
Continued Expansion of Wealth Management
Wealth management revenues totaled $99.5 million for the quarter, up
27.6% compared to last year’s first quarter. Such revenues represented
13.8% of the Bank’s total revenues for the quarter.
Total wealth management assets were $113.0 billion at March 31, 2018, up
5.6% for the quarter and up 25.4% compared to a year ago. The growth in
wealth management assets for the quarter was due to client inflows. The
year-over-year growth was due to both net new assets from existing and
new clients, and market appreciation.
Wealth management assets included investment management assets of $55.1
billion, brokerage assets and money market mutual funds of $48.3
billion, and trust and custody assets of $9.6 billion.
Income Statement and Key Ratios
Strong Revenue Growth
Total revenues were $720.9 million for the quarter, up 19.9% compared to
the first quarter a year ago.
Strong Net Interest Income Growth
Net interest income was $587.8 million for the quarter, up 17.6%
compared to the first 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 2.97% for the first quarter. Such net
interest margin reflects the new computation of tax-equivalent yields,
which were slightly reduced following the enactment of tax reform
legislation (the “Tax Reform Act”) in December 2017.
Noninterest income was $133.1 million for the quarter, up 31.2% compared
to the first quarter a year ago. The increase was primarily from growth
in wealth management revenues and gain on sale of investments related to
the previously discussed repositioning of the Bank’s investment
Noninterest Expense and Efficiency Ratio
Noninterest expense was $461.6 million for the quarter, up 21.9%
compared to the first quarter a year ago. The efficiency ratio was 64.0%
for the quarter, compared to 63.0% for the first quarter a year ago. The
increases were primarily due to increased salaries and benefits,
information systems and other costs from the continued investments in
the expansion of the franchise.
Beginning in 2018, the Tax Reform Act reduced the federal tax rate for
corporations from 35% to 21% and changes or limits certain tax
The Bank’s effective tax rate for the first quarter of 2018 was 19.2%,
which reflects the new federal tax rate, along with changes in tax
Conference Call Details
First Republic Bank’s first quarter 2018 earnings conference call is
scheduled for April 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
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
For those unable to join the live presentation, a replay of the call
will be available beginning April 13, 2018, at 10:00 a.m. PT / 1:00 p.m.
ET, through April 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 #13678017.
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.
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 final capital rules
regarding the Basel III framework, changes to the definitions and
components of regulatory capital and a new approach for risk-weighted
assets; 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. 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 in our Annual Report on Form 10-K and any subsequent reports
filed by First Republic with the FDIC. 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.
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