First Republic Reports 2020 Results

First Republic Reports 2020 Results

Revenues Increased 17% Year-Over-Year

Tangible Book Value Per Share Increased 14% Year-Over-Year

SAN FRANCISCO–(BUSINESS WIRE)–
First Republic Bank (NYSE: FRC) today announced financial results for the quarter and year ended December 31, 2020.

“First Republic had another very successful year,” said Founder, Chairman and CEO Jim Herbert. “Founded in 1985, this was our 35^th consecutive year of profitability. First Republic continues to deliver safe, consistent growth, reflecting the strength of our client focused service model.”

Full Year Highlights

Financial Results

– Revenues were $3.9 billion, up 17.2%.

– Net interest income was $3.3 billion, up 18.0%.

– Net income was $1.1 billion, up 14.4%.

– Diluted earnings per share of $5.81, up 11.7%.

– Loan originations totaled $50.7 billion (excluding $2.0 billion of originations under the Small Business Administration’s Paycheck Protection Program (“PPP”)).

– Tangible book value per share was $57.30, up 14.1%.

– Efficiency ratio was 61.9%, compared to 64.2% last year.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.14%.

– Nonperforming assets remained at a low 13 basis points of total assets.

– Net charge-offs were only $2.4 million, or less than 1 basis point of average loans.

Continued Franchise Development

– Loans totaled $110.7 billion, up 21.9% (excluding PPP and for sale loans).

– Deposits were $114.9 billion, up 27.5%.

– Wealth management assets were $194.5 billion, up 28.7%.

– Wealth management revenues were $526.5 million, up 11.9%.

Quarterly Highlights

– Compared to last year’s fourth quarter:

– Revenues were $1.1 billion, up 23.1%.

– Net interest income was $892.7 million, up 24.0%.

– Net income was $295.6 million, up 20.0%.

– Diluted earnings per share of $1.60, up 15.1%.

– Loan originations were $16.7 billion.

– Net recoveries were $600,000.

– Net interest margin was 2.73%, compared to 2.71% for the prior quarter.

– Efficiency ratio was 61.6%, compared to 60.7% for the prior quarter.

– Wealth management assets were $194.5 billion, up 15.6% from the prior quarter.

“We’re very pleased with the double-digit growth of revenue, net interest income and earnings per share, both for the full year and the fourth quarter,” said Mike Roffler, Chief Financial Officer. “We remain focused on maintaining our capital strength and successfully raised, net, over $900 million in new Tier 1 capital in 2020.”

Quarterly Cash Dividend of $0.20 per Share

The Bank declared a cash dividend for the fourth quarter of $0.20 per share of common stock, which is payable on February 11, 2021 to shareholders of record as of January 28, 2021. The current quarterly dividend is an increase over last year’s fourth quarter dividend, our 9^th consecutive year of dividend increases.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were only 13 basis points of total assets at December 31, 2020.

The provision for credit losses for the full year was $157.1 million, with net loan charge-offs of only $2.4 million. For the quarter, the provision for credit losses was $35.1 million, which was driven by loan growth.

Continued Capital Strength

The Bank’s Tier 1 leverage ratio was 8.14%^{at December 31, 2020, compared to 8.38% at September 30, 2020.}

During the fourth quarter, the Bank redeemed all of the outstanding shares of its 5.70% Noncumulative Perpetual Series F Preferred Stock, which totaled $100.0 million. In addition, the Bank sold 1,725,000 new shares of common stock in an underwritten public offering, which added approximately $225.4 million to common equity. Total common stock sold and preferred stock issued in 2020, net of preferred stock redeemed, added $908.0 million of Tier 1 capital in 2020.

The Bank has not and does not engage in common stock buybacks.

Tangible Book Value Growth

Tangible book value per common share at December 31, 2020 was $57.30, up 14.1% from a year ago.

Continued Franchise Development

Loan Originations

Loan originations were $16.7 billion for the quarter, up 48.8% from the same quarter a year ago. For 2020, loan originations (excluding PPP loans) totaled $50.7 billion, up 33.6% compared to the prior year. The increases were primarily due to increases in single family and business lending.

Single family loan originations were 47% of the total volume for the quarter and the full year (excluding PPP loans) and had a weighted average loan-to-value ratio of 56% for the full year. In addition, multifamily and commercial real estate loans originated were 9% of total originations for the quarter and 10% for the year (excluding PPP loans), and had a weighted average loan-to-value ratio of 50% for the year.

Loans, excluding PPP loans and loans held for sale, totaled $110.7 billion at December 31, 2020, up 21.9% compared to a year ago primarily due to increases in single family loans (67% of growth), business and multifamily loans.

COVID-19 Loan Modifications

Remaining loan modifications at year-end to those borrowers experiencing financial challenges as a result of COVID-19 (not classified as troubled debt restructurings) totaled $1.3 billion, and were 1.1% of total loans as of December 31, 2020. Such remaining modifications decreased 67% since September 30, 2020.

The Bank has limited exposure to several of the areas most directly impacted by COVID-19, such as the retail, hotel and restaurant industries, which totaled $2.5 billion as of December 31, 2020, only 2.2% of total loans. As of December 31, 2020, the Bank had modifications of these portfolios for $160 million, or 6%.

Deposit Growth

Total deposits increased to $114.9 billion, up 27.5% compared to a year ago, and had an average rate paid of 11 basis points during the quarter.

At December 31, 2020, checking deposit balances were 66.9% of total deposits.

Investments

Total investment securities at December 31, 2020 were $18.5 billion, a slight decrease compared to the prior quarter and a slight increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $18.1 billion at December 31, 2020, and represented 12.8% of quarterly average total assets.

Wealth Management

Total wealth management assets were $194.5 billion at December 31, 2020, up 15.6% for the quarter and up 28.7% compared to a year ago. The increases in wealth management assets were due to both net client inflow and market appreciation.

Wealth management revenues totaled $151.4 million for the quarter, up 17.9% compared to last year’s fourth quarter. For 2020, wealth management revenues were $526.5 million, an increase of 11.9% compared to the prior year. Such revenues represented 14.0% of the Bank’s total revenues for the quarter and 13.4% of the Bank’s total revenues for the year.

Wealth management assets at December 31, 2020 included investment management assets of $83.6 billion, brokerage assets and money market mutual funds of $97.1 billion, and trust and custody assets of $13.8 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.1 billion for the quarter, up 23.1% compared to the fourth quarter a year ago, and were $3.9 billion for 2020, up 17.2% compared to the prior year.

Net Interest Income Growth

Net interest income was $892.7 million for the quarter, up 24.0% compared to the fourth quarter a year ago, and was $3.3 billion for 2020, up 18.0% compared to the prior year. The increases in net interest income resulted primarily from growth in average interest-earning assets. The increase for the year was partially offset by a decrease in net interest margin.

Net Interest Margin

The net interest margin increased to 2.73% in the fourth quarter, from 2.71% in the prior quarter. For 2020, the net interest margin was 2.72%, compared to 2.83% for the prior year. The decrease for the year was primarily due to average yields on earning assets declining more than the offsetting decrease in average funding costs.

Noninterest Income

Noninterest income was $187.6 million for the quarter, up 19.3% compared to the fourth quarter a year ago, and was $654.2 million for 2020, up 13.3% compared to the prior year. The increase for the quarter was primarily driven by higher wealth management fees. The increase for the year was primarily driven by higher wealth management fees and an elevated gain on sale of loans, partially offset by lower loan servicing fees.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $666.0 million for the quarter, up 19.2% compared to the fourth quarter a year ago, and was $2.4 billion for 2020, up 13.0% compared to the prior year. The increases were primarily due to increased salaries and benefits and information systems costs from the continued investments in the expansion of the franchise. The increase for the year was partially offset by lower travel and entertainment, as well as advertising and marketing expenses.

The efficiency ratio was 61.6% for the quarter, compared to 63.7% for the fourth quarter a year ago. For 2020, the efficiency ratio was 61.9%, compared to 64.2% for 2019.

Income Taxes

The Bank’s effective tax rate for the fourth quarter of 2020 was 22.1%, compared to 19.6% for the prior quarter, and 20.3% for the fourth quarter a year ago. The increase from the prior quarter was primarily due to an increase from state taxes, and a tax refund from an amended tax return in the third quarter of 2020. The increase from the fourth quarter a year ago was primarily the result of lower excess tax benefits from a decrease in stock option exercises by employees, as well as an increase from state taxes.

The effective tax rate for 2020 was 20.2%, compared to 17.9% for 2019. The increase for the year was primarily the result of lower excess tax benefits from a decrease in stock option exercises by employees, partially offset by a tax refund from an amended tax return.

Conference Call Details

First Republic Bank’s fourth quarter 2020 earnings conference call is scheduled for January 14, 2021 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 263-0877 and use confirmation code 3942335 approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (856) 344-9283 and enter the same confirmation code.

The call will also be broadcast live over the Internet and can be accessed in the Investor Relations section of First Republic’s website at https://ir.firstrepublic.com/events-calendar. To listen to the live webcast, please visit the site at least 15 minutes prior to the start time to register, download and install any necessary audio software.

For those unable to join the live presentation, a replay of the call will be available beginning January 14, 2021, at 11:00 a.m. PT / 2:00 p.m. ET, through January 21, 2021, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 3942335#. International callers should dial +1 (719) 457-0820 and enter the same confirmation code. 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 https://ir.firstrepublic.com/events-calendar.

The Bank’s press releases are available after release in the Newsroom and Investor Relations section of First Republic Bank’s website at firstrepublic.com.

About First Republic Bank

Founded in 1985, First Republic and its subsidiaries offer private banking, private business banking and private wealth management, including investment, trust and brokerage services. First Republic specializes in delivering exceptional, relationship-based service and offers a complete line of products, including residential, commercial and personal loans, deposit services, and wealth management. 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 Jackson, Wyoming. First Republic is a constituent of the S&P 500 Index and KBW Nasdaq Bank Index. For more information, visit firstrepublic.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimates,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them.

Forward-looking statements involving such risks and uncertainties include, but are not limited to, statements regarding: projections of loans, assets, deposits, liabilities, revenues, expenses, tax liabilities, net income, capital expenditures, liquidity, dividends, capital structure, investments or other financial items; expectations regarding the banking and wealth management industries; descriptions of plans or objectives of management for future operations, products or services; forecasts of future economic conditions generally and in our market areas in particular, which may affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans; our opportunities for growth and our plans for expansion (including opening new offices); expectations about the performance of any new offices; projections about the amount and the value of intangible assets, as well as amortization of recorded amounts; future provisions for credit losses on loans and debt securities, as well as for unfunded loan commitments; changes in nonperforming assets; expectations regarding the impact and duration of COVID-19; projections about future levels of loan originations or loan repayments; projections regarding costs, including the impact on our efficiency ratio; and descriptions of assumptions underlying or relating to any of the foregoing.

Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: significant competition to attract and retain banking and wealth management customers, from both traditional and non-traditional financial services and technology companies; our ability to recruit and retain key managers, employees and board members; natural or other disasters, including earthquakes, fires, pandemics or acts of terrorism affecting the markets in which we operate; the negative impacts and disruptions resulting from COVID-19 on our colleagues and clients, the communities we serve and the domestic and global economy, which may have an adverse effect on our business, financial position and results of operations; interest rate risk and credit risk; our ability to maintain and follow high underwriting standards; economic and market conditions, including those affecting the valuation of our investment securities portfolio and credit losses on our loans and debt securities; real estate prices generally and in our markets; our geographic and product concentrations; demand for our products and services; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate and the 11th District Monthly Weighted Average Cost of Funds Index, as well as other alternative reference rates; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; any future changes to regulatory capital requirements; legislative and regulatory actions affecting us and the financial services industry, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), including increased compliance costs, limitations on activities and requirements to hold additional capital, as well as changes to the Dodd-Frank Act pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act; our ability to avoid litigation and its associated costs and liabilities; future Federal Deposit Insurance Corporation (“FDIC”) special assessments or changes to regular assessments; fraud, cybersecurity and privacy risks; and custom technology preferences of our customers and our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications. For a discussion of these and other risks and uncertainties, see First Republic’s FDIC filings, including, but not limited to, the risk factors in First Republic’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any subsequent reports filed by First Republic with the FDIC. These filings are available in the Investor Relations section of our website.

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout our public filings under the Exchange Act. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

CONSOLIDATED STATEMENTS OF INCOME
		Quarter Ended December 31,									Quarter Ended September 30,					Year Ended December 31,
(in thousands, except per share amounts)		2020				2019					2020					2020					2019
Interest income:
Loans		$	845,150			$	780,326				$	811,708				$	3,244,796				$	2,986,210
Investments		138,429				146,080					142,971					576,484					547,988
Other		5,754				5,679					6,116					23,889					21,446
Cash and cash equivalents		1,819				4,869					1,181					7,504					23,835
Total interest income		991,152				936,954					961,976					3,852,673					3,579,479
Interest expense:
Deposits		30,405				128,705					54,355					276,085					500,557
Borrowings		68,019				88,131					77,341					314,036					314,755
Total interest expense		98,424				216,836					131,696					590,121					815,312
Net interest income		892,728				720,118					830,280					3,262,552					2,764,167
Provision for credit losses		35,066				9,579					28,538					157,091					61,690
Net interest income after provision for credit losses		857,662				710,539					801,742					3,105,461					2,702,477
Noninterest income:
Investment management fees		114,287				97,106					96,638					395,304					359,332
Brokerage and investment fees		11,489				12,416					10,796					50,517					41,035
Insurance fees		5,569				4,186					2,216					11,655					12,708
Trust fees		5,366				4,328					4,543					19,484					16,549
Foreign exchange fee income		14,688				10,365					12,575					49,552					41,026
Deposit fees		6,115				6,609					5,753					23,713					26,071
Loan and related fees		7,167				6,175					7,171					27,908					19,819
Loan servicing fees, net		1,248				1,788					144					(1,401		)			11,348
Gain on sale of loans		2,412				69					13,797					16,987					535
Gain (loss) on investment securities		88				(1,541		)			(405		)			3,840					(3,436		)
Income from investments in life insurance		16,997				14,034					20,546					53,503					45,570
Other income (loss)		2,211				1,810					(2,791		)			3,171					6,663
Total noninterest income		187,637				157,345					170,983					654,233					577,220
Noninterest expense:
Salaries and employee benefits		415,767				325,094					373,225					1,494,400					1,245,526
Information systems		79,331				69,278					74,549					298,632					273,337
Occupancy		56,627				50,474					55,543					220,752					192,678
Professional fees		18,015				22,476					19,845					66,494					68,099
Advertising and marketing		13,762				17,615					8,909					43,135					65,961
FDIC assessments		11,650				10,912					11,003					44,113					38,759
Other expenses		70,892				62,996					65,136					258,203					262,101
Total noninterest expense		666,044				558,845					608,210					2,425,729					2,146,461
Income before provision for income taxes		379,255				309,039					364,515					1,333,965					1,133,236
Provision for income taxes		83,695				62,709					71,378					269,814					202,907
Net income		295,560				246,330					293,137					1,064,151					930,329
Dividends on preferred stock		16,072				10,708					14,816					58,725					49,070
Net income available to common shareholders		$	279,488			$	235,622				$	278,321				$	1,005,426				$	881,259
Basic earnings per common share		$	1.61			$	1.40				$	1.62				$	5.85				$	5.25
Diluted earnings per common share		$	1.60			$	1.39				$	1.61				$	5.81				$	5.20
Weighted average shares—basic		173,111				168,544					172,142					171,933					167,908
Weighted average shares—diluted		174,708				169,776					172,932					173,053					169,551

CONSOLIDATED BALANCE SHEETS
		As of
($ in thousands)		December 31, 2020					September 30, 2020					December 31, 2019 (1)
ASSETS
Cash and cash equivalents		$	5,094,754				$	3,691,149				$	1,699,557
Debt securities available-for-sale		1,906,315					1,711,202					1,282,169
Debt securities held-to-maturity		16,610,212					16,929,422					17,147,633
Less: Allowance for credit losses		(6,902		)			(5,716		)			—
Debt securities held-to-maturity, net		16,603,310					16,923,706					17,147,633
Equity securities (fair value)		20,566					20,478					19,586
Loans: (1)
Single family		61,370,246					56,628,359					47,985,651
Home equity lines of credit		2,449,533					2,431,991					2,501,432
Single family construction		787,854					739,091					761,589
Multifamily		13,768,957					13,392,531					12,353,359
Commercial real estate		8,018,158					7,781,797					7,449,058
Multifamily/commercial construction		2,024,420					2,038,949					1,695,954
Capital call lines of credit		8,149,946					6,203,877					5,570,322
Tax-exempt		3,365,572					3,276,705					3,042,193
Other business		3,340,048					2,982,532					3,034,301
PPP		1,841,376					2,091,102					—
Stock secured		2,518,338					2,311,754					1,897,511
Other secured		1,818,550					1,780,652					1,433,399
Unsecured		3,113,267					3,102,311					3,072,062
Total loans		112,566,265					104,761,651					90,796,831
Allowance for credit losses		(635,019		)			(604,747		)			(496,104		)
Loans, net		111,931,246					104,156,904					90,300,727
Loans held for sale		20,679					33,655					23,304
Investments in life insurance		2,061,362					1,949,360					1,434,642
Tax credit investments		1,131,905					1,099,713					1,100,509
Premises, equipment and leasehold improvements, net		403,482					390,241					386,841
Goodwill and other intangible assets		227,512					229,185					235,269
Other assets		3,101,003					3,020,178					2,633,397
Total Assets		$	142,502,134				$	133,225,771				$	116,263,634
LIABILITIES AND EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking		$	46,281,112				$	41,538,676				$	33,124,265
Interest-bearing checking		30,603,221					26,081,189					19,696,859
Money market checking		16,778,884					15,868,769					12,790,707
Money market savings and passbooks		12,584,522					11,419,289					10,586,355
Certificates of deposit		8,681,061					9,495,453					13,935,060
Total Deposits		114,928,800					104,403,376					90,133,246
Short-term borrowings		—					5,000					800,000
Long-term FHLB advances		11,755,000					13,505,000					12,200,000
Senior notes		996,145					995,626					497,719
Subordinated notes		778,313					778,204					777,885
Other liabilities		2,293,230					2,193,956					2,003,677
Total Liabilities		130,751,488					121,881,162					106,412,527
Shareholders’ Equity:
Preferred stock		1,545,000					1,645,000					1,145,000
Common stock		1,741					1,722					1,686
Additional paid-in capital		4,834,172					4,571,499					4,214,915
Retained earnings		5,346,355					5,102,229					4,484,375
Accumulated other comprehensive income		23,378					24,159					5,131
Total Shareholders’ Equity		11,750,646					11,344,609					9,851,107
Total Liabilities and Shareholders’ Equity		$	142,502,134				$	133,225,771				$	116,263,634
____________
(1) For comparability, the Bank has adjusted certain prior period loan amounts to conform to the current period presentation under the Current Expected Credit Losses (“CECL”) methodology.

		Quarter Ended December 31,																									Quarter Ended September 30,
		2020												2019 (4)													2020
Average Balances, Yields and Rates		Average Balance				Interest Income/Expense (1)					Yields/ Rates (2)			Average Balance				Interest Income/Expense (1)					Yields/ Rates (2)				Average Balance				Interest Income/Expense (1)					Yields/ Rates (2)
($ in thousands)
Assets:
Cash and cash equivalents		$	6,965,598			$	1,819				0.10	%		$	1,377,686			$	4,869				1.40	%			$	4,427,985			$	1,181				0.11	%
Investment securities:
U.S. Government-sponsored agency securities		50,000				196					1.57	%		461,671				3,239					2.81	%			202,174				1,186					2.35	%
Agency residential and commercial MBS		5,786,312				32,237					2.23	%		6,826,144				47,764					2.80	%			6,250,577				37,437					2.40	%
Other residential and commercial MBS		35,437				184					2.08	%		4,276				39					3.66	%			37,860				201					2.13	%
Municipal securities		12,638,677				130,938					4.14	%		10,981,068				116,245					4.23	%			12,309,647				129,097					4.19	%
Other investment securities (3)		76,272				511					2.68	%		43,840				322					2.94	%			44,782				309					2.76	%
Total investment securities		18,586,698				164,066					3.53	%		18,316,999				167,609					3.66	%			18,845,040				168,230					3.57	%
Loans: (4)
Residential real estate (5)		61,523,322				445,028					2.89	%		48,938,892				391,415					3.20	%			56,906,612				421,545					2.96	%
Multifamily (6)		13,596,444				125,042					3.60	%		12,043,858				118,431					3.85	%			13,312,631				124,759					3.67	%
Commercial real estate		7,909,682				78,599					3.89	%		7,414,885				78,229					4.13	%			7,801,603				78,412					3.93	%
Multifamily/commercial construction		2,788,321				31,588					4.43	%		2,415,923				28,931					4.69	%			2,739,717				30,608					4.37	%
Business (7)		13,382,558				115,809					3.39	%		11,556,437				121,665					4.12	%			12,538,201				110,487					3.45	%
PPP		2,004,127				14,419					2.82	%		—				—					—	%			2,091,580				10,825					2.03	%
Other (8)		7,253,376				41,385					2.23	%		6,085,084				48,261					3.10	%			6,995,592				41,735					2.33	%
Total loans		108,457,830				851,870					3.11	%		88,455,079				786,932					3.52	%			102,385,936				818,371					3.16	%
FHLB stock		412,789				5,754					5.55	%		394,487				5,678					5.71	%			457,808				6,116					5.31	%
Total interest-earning assets		134,422,915				1,023,509					3.02	%		108,544,251				965,088					3.52	%			126,116,769				993,898					3.12	%
Noninterest-earning cash		452,927												362,139													433,852
Goodwill and other intangibles		228,315												256,614													230,051
Other assets		5,706,213												4,581,436													5,074,504
Total noninterest-earning assets		6,387,455												5,200,189													5,738,407
Total Assets		$	140,810,370											$	113,744,440												$	131,855,176
Liabilities and Equity:
Deposits:
Checking		$	73,876,676			2,214					0.01	%		$	51,333,186			8,777					0.07	%			$	64,895,753			2,413					0.01	%
Money market checking and savings		29,149,550				14,139					0.19	%		21,298,741				49,682					0.93	%			26,220,043				13,675					0.21	%
CDs		8,813,489				14,052					0.63	%		13,694,721				70,246					2.04	%			11,334,100				38,267					1.34	%
Total deposits		111,839,715				30,405					0.11	%		86,326,648				128,705					0.59	%			102,449,896				54,355					0.21	%
Borrowings:
Short-term borrowings		8,638				4					0.17	%		3,056,545				13,530					1.76	%			5,030				0					0.00	%
Long-term FHLB advances		13,298,478				52,873					1.58	%		11,488,043				62,146					2.15	%			14,739,238				62,201					1.68	%
Senior notes (9)		995,892				6,034					2.42	%		497,610				3,351					2.69	%			995,373				6,032					2.42	%
Subordinated notes (9)		778,260				9,108					4.68	%		777,834				9,104					4.68	%			778,151				9,108					4.68	%
Total borrowings		15,081,268				68,019					1.80	%		15,820,032				88,131					2.21	%			16,517,792				77,341					1.86	%
Total interest-bearing liabilities		126,920,983				98,424					0.31	%		102,146,680				216,836					0.84	%			118,967,688				131,696					0.44	%
Noninterest-bearing liabilities		2,341,078												2,093,561													2,082,793
Preferred equity		1,552,609												899,728													1,226,522
Common equity		9,995,700												8,604,471													9,578,173
Total Liabilities and Equity		$	140,810,370											$	113,744,440												$	131,855,176
Net interest spread (10)											2.71	%											2.68	%												2.68	%
Net interest income (fully taxable-equivalent basis) and net interest margin (11)						$	925,085				2.73	%						$	748,252				2.73	%							$	862,202				2.71	%
Reconciliation of tax-equivalent net interest income to reported net interest income:
Tax-equivalent adjustment						(32,357		)										(28,134		)											(31,922		)
Net interest income, as reported						$	892,728											$	720,118												$	830,280

		Year Ended December 31,
		2020												2019 (4)
Average Balances, Yields and Rates		Average Balance				Interest Income/Expense (1)					Yields/ Rates			Average Balance				Interest Income/Expense (1)					Yields/ Rates
($ in thousands)
Assets:
Cash and cash equivalents		$	4,018,429			$	7,504				0.19	%		$	1,268,405			$	23,835				1.88	%
Investment securities:
U.S. Government-sponsored agency securities		193,246				4,957					2.56	%		818,000				24,066					2.94	%
Agency residential and commercial MBS		6,348,004				159,520					2.51	%		6,735,598				191,869					2.85	%
Other residential and commercial MBS		26,215				600					2.29	%		4,450				170					3.83	%
Municipal securities		12,066,413				510,825					4.23	%		9,218,509				409,127					4.44	%
Other investment securities (3)		52,204				1,447					2.77	%		26,848				726					2.70	%
Total investment securities		18,686,082				677,349					3.62	%		16,803,405				625,958					3.73	%
Loans: (4)
Residential real estate (5)		55,885,085				1,676,247					3.00	%		44,655,754				1,465,364					3.28	%
Multifamily (6)		13,092,607				489,402					3.68	%		11,248,189				439,408					3.85	%
Commercial real estate		7,751,600				313,254					3.97	%		7,088,827				301,831					4.20	%
Multifamily/commercial construction		2,678,312				121,949					4.48	%		2,319,279				114,902					4.89	%
Business (7)		12,845,826				465,101					3.56	%		11,302,160				503,782					4.40	%
PPP		1,432,501				32,903					2.26	%		—				—					—	%
Other (8)		6,841,682				172,808					2.48	%		5,559,309				187,536					3.33	%
Total loans		100,527,613				3,271,664					3.23	%		82,173,518				3,012,823					3.64	%
FHLB stock		442,338				23,889					5.40	%		331,862				21,446					6.46	%
Total interest-earning assets		123,674,462				3,980,406					3.20	%		100,577,190				3,684,062					3.64	%
Noninterest-earning cash		438,893												347,065
Goodwill and other intangibles		231,084												266,062
Other assets		5,103,458												4,376,016
Total noninterest-earning assets		5,773,435												4,989,143
Total Assets		$	129,447,897											$	105,566,333
Liabilities and Equity:
Deposits:
Checking		$	62,938,940			16,186					0.03	%		$	48,097,161			30,318					0.06	%
Money market checking and savings		25,506,568				87,908					0.34	%		20,113,724				196,582					0.98	%
CDs		11,754,513				171,991					1.46	%		12,769,459				273,657					2.14	%
Total deposits		100,200,021				276,085					0.28	%		80,980,344				500,557					0.62	%
Borrowings:
Short-term borrowings		310,392				4,704					1.52	%		2,278,831				50,361					2.21	%
Long-term FHLB advances		14,330,041				250,031					1.74	%		9,738,767				209,816					2.15	%
Senior notes (9)		938,185				22,873					2.44	%		680,199				18,169					2.67	%
Subordinated notes (9)		778,099				36,428					4.68	%		777,681				36,409					4.68	%
Total borrowings		16,356,717				314,036					1.92	%		13,475,478				314,755					2.34	%
Total interest-bearing liabilities		116,556,738				590,121					0.51	%		94,455,822				815,312					0.86	%
Noninterest-bearing liabilities		2,130,829												1,859,115
Preferred equity		1,267,951												929,849
Common equity		9,492,379												8,321,547
Total Liabilities and Equity		$	129,447,897											$	105,566,333
Net interest spread (10)											2.69	%											2.78	%
Net interest income (fully taxable-equivalent basis) and net interest margin (11)						$	3,390,285				2.72	%						$	2,868,750				2.83	%
Reconciliation of tax-equivalent net interest income to reported net interest income:
Tax-equivalent adjustment						(127,733		)										(104,583		)
Net interest income, as reported						$	3,262,552											$	2,764,167

__________

(1) Interest income is presented on a fully taxable-equivalent basis.

(2) Yields/rates are annualized.

(3) Includes corporate debt securities, mutual funds and marketable equity securities.

(4) For comparability, the Bank has adjusted certain prior period loan amounts to conform to the current period presentation under CECL.

(5) Includes single family, home equity lines of credit, and single family construction loans. Also includes single family loans held for sale.

(6) Includes multifamily loans held for sale.

(7) Includes capital call lines of credit, tax-exempt and other business loans.

(8) Includes stock secured, other secured and unsecured loans.

(9) Average balances include unamortized issuance discounts and costs. Interest expense includes amortization of issuance discounts and costs.

(10) Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities.

(11) Net interest margin represents net interest income on a fully taxable-equivalent basis divided by total average interest-earning assets.

		Quarter Ended December 31,										Quarter Ended September 30,				Year Ended December 31,
Operating Information		2020					2019					2020				2020				2019
($ in thousands, except per share amounts)
Net income to average assets (1)		0.84			%		0.86			%		0.88		%		0.82		%		0.88		%
Net income available to common shareholders to average common equity (1)		11.12			%		10.86			%		11.56		%		10.59		%		10.59		%
Net income available to common shareholders to average tangible common equity (1)		11.38			%		11.20			%		11.84		%		10.86		%		10.94		%
Dividends per common share		$	0.20				$	0.19				$	0.20			$	0.79			$	0.75
Dividend payout ratio		12.5			%		13.7			%		12.4		%		13.6		%		14.4		%
Efficiency ratio (2), (3)		61.6			%		63.7			%		60.7		%		61.9		%		64.2		%
Net loan charge-offs (recoveries)		$	(600	)			$	(1,060	)			$	1,687			$	2,387			$	4,634
Net loan charge-offs (recoveries) to average total loans (1)		(0.00		)	%		(0.00		)	%		0.01		%		0.00		%		0.01		%
Allowance for loan credit losses to:
Total loans		0.56			%		0.55			%		0.58		%		0.56		%		0.55		%
Nonaccrual loans		344.9			%		346.5			%		368.2		%		344.9		%		346.5		%
__________
(1) For periods less than a year, ratios are annualized.
(2) Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.
(3) The provision for unfunded loan commitments is included in the provision for credit losses for 2020 periods. For 2019 periods, the provision for unfunded loan commitments is included in other noninterest expense.

		Quarter Ended December 31,								Quarter Ended September 30,				Year Ended December 31,
Effective Tax Rate		2020				2019				2020				2020				2019
Effective tax rate, prior to excess tax benefits and tax refund from an amended tax return		22.5		%		21.6		%		21.1		%		21.9		%		21.4		%
Excess tax benefits—stock options		—				(1.2	)			(0.1	)			(0.6	)			(2.9	)
Excess tax benefits—other stock awards		(0.4	)			(0.1	)			(0.1	)			(0.7	)			(0.6	)
Total excess tax benefits		(0.4	)			(1.3	)			(0.2	)			(1.3	)			(3.5	)
Tax refund from an amended tax return		—				—				(1.3	)			(0.4	)			—
Effective tax rate		22.1		%		20.3		%		19.6		%		20.2		%		17.9		%

Provision for Credit Losses		Quarter Ended December 31,								Quarter Ended September 30,				Year Ended December 31,
		2020				2019				2020				2020				2019
($ in thousands)
Debt securities held-to-maturity		$	1,186			$	—			$	333			$	2,233			$	—
Loans		29,672				9,579				22,437				142,977				61,690
Unfunded loan commitments (1)		4,208				—				5,768				11,881				—
Total provision		$	35,066			$	9,579			$	28,538			$	157,091			$	61,690
__________
(1) The provision for unfunded loan commitments is included in the provision for credit losses for 2020 periods. For 2019 periods, the provision for unfunded loan commitments is included in other noninterest expense, which is not presented in this table.

		Quarter Ended December 31, 2020																Year Ended December 31, 2020
Allowance for Credit Losses		Debt Securities Held-to- Maturity				Loans				Unfunded Loan Commitments (1)				Total				Debt Securities Held-to- Maturity				Loans					Unfunded Loan Commitments (1)				Total
($ in thousands)
Balance at beginning of period (2)		$	5,716			$	604,747			$	23,370			$	633,833			$	4,669			$	494,429				$	15,697			$	514,795
Provision for credit losses		1,186				29,672				4,208				35,066				2,233				142,977					11,881				157,091
Net (charge-offs) recoveries		—				600				—				600				—				(2,387		)			—				(2,387		)
Balance at end of period		$	6,902			$	635,019			$	27,578			$	669,499			$	6,902			$	635,019				$	27,578			$	669,499
__________
(1) The allowance for credit losses on unfunded loan commitments is included in other liabilities.
(2) For the year ended December 31, 2020, represents the balance after the cumulative effect adjustment from the adoption of CECL.

		Quarter Ended December 31,								Quarter Ended September 30,				Year Ended December 31,
Mortgage Loan Sales		2020				2019				2020				2020				2019
($ in thousands)
Loans sold:
Flow sales:
Agency		$	152,210			$	34,519			$	44,118			$	232,912			$	85,945
Non-agency		—				7,717				—				31,870				50,983
Total flow sales		152,210				42,236				44,118				264,782				136,928
Bulk sales:
Non-agency		—				—				235,732				673,401				152,119
Securitizations		—				—				—				300,116				—
Total loans sold		$	152,210			$	42,236			$	279,850			$	1,238,299			$	289,047
Gain on sale of loans:
Amount (1)		$	2,412			$	69			$	13,797			$	16,987			$	535
Gain as a percentage of loans sold (1)		1.58		%		0.16		%		4.93		%		1.37		%		0.19		%
__________
(1) The gain for the quarter ended September 30, 2020 and full year 2020 included $10.3 million related to realized discounts on previously purchased loans when these loans were sold. Excluding these discounts of $10.3 million, the gain as a percentage of loans sold was 1.24% and 0.54% for the quarter ended September 30, 2020 and full year 2020, respectively.

		Quarter Ended December 31,									Quarter Ended September 30,				Year Ended December 31,
Loan Originations		2020				2019 (1)					2020				2020 (2)					2019 (1)
($ in thousands)
Single family		$	7,777,589			$	5,275,965				$	6,813,850			$	23,985,959				$	16,405,784
Home equity lines of credit		619,257				456,150					432,443				1,904,945					1,524,031
Single family construction		223,909				133,368					186,833				639,222					588,429
Multifamily		1,016,575				1,214,394					955,951				3,700,649					3,320,158
Commercial real estate		437,947				401,084					193,228				1,413,716					1,710,820
Multifamily/commercial construction		303,054				340,650					245,220				1,300,609					1,175,922
Capital call lines of credit		3,854,094				1,708,006					1,803,907				9,448,577					7,171,710
Tax-exempt		305,826				52,550					328,711				918,610					287,020
Other business		771,484				512,954					243,788				2,549,308					1,621,666
PPP		—				—					—				1,981,797					—
Stock secured		669,840				650,240					685,250				2,467,066					1,769,385
Other secured		412,902				170,231					189,386				1,374,842					1,011,232
Unsecured		312,809				308,360					159,379				998,346					1,377,319
Total loans originated		$	16,705,286			$	11,223,952				$	12,237,946			$	52,683,646				$	37,963,476
__________
(1) For comparability, the Bank has adjusted certain prior period amounts to conform to the current period presentation under CECL.
(2) Excluding PPP loan originations, total loan originations were $50.7 billion for the year ended December 31, 2020.

		As of
Asset Quality Information		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
($ in thousands)
Nonperforming assets:
Nonaccrual loans		$	184,132			$	164,247			$	164,930			$	125,418			$	143,181
Other real estate owned		—				—				1,071				1,071				—
Total nonperforming assets		$	184,132			$	164,247			$	166,001			$	126,489			$	143,181
Nonperforming assets to total assets		0.13		%		0.12		%		0.13		%		0.10		%		0.12		%
Accruing loans 90 days or more past due		$	—			$	935			$	3,764			$	—			$	—
Restructured accruing loans		$	11,253			$	11,378			$	11,501			$	13,418			$	13,287

		December 31, 2020
COVID-19 Loan Modifications (1), (2), (3), (4), (5)		Unpaid Principal Balance				Deferred Interest (6)				LTV (7)			Average Loan Size				Number of Loans
($ in millions)
Single family		$	407			$	5			63	%		$	1.2			354
Home equity lines of credit		11				—				55	%		$	0.4			25
Single family construction		2				—				75	%		$	2.0			1
Multifamily		291				1				53	%		$	5.6			52
Commercial real estate		297				1				50	%		$	5.5			54
Multifamily/commercial construction		35				—				35	%		$	8.9			4
Capital call lines of credit		—				—				n/a			$	—			—
Tax-exempt		150				—				n/a			$	30.0			5
Other business		59				—				n/a			$	1.5			39
Stock secured		—				—				n/a			$	—			—
Other secured		3				—				n/a			$	0.3			11
Unsecured (8)		15				—				n/a			$	0.1			153
Total		$	1,270			$	7										698
__________
(1) COVID-19 loan modifications are not classified as troubled debt restructurings.
(2) Includes 164 loans totaling $222 million that have completed their deferral period, but for which a regular payment is not yet due.
(3) Includes 269 loans totaling $504 million that received additional relief beyond their initial modification period.
(4) Excludes loans that have completed their deferral period and returned to a regular payment schedule or are no longer outstanding. As of December 31, 2020, $3.1 billion of loans have completed their deferral period or are no longer outstanding, and 99% of the outstanding loans were current.
(5) Loan modifications requested by borrowers that were in process but not yet completed as of December 31, 2020 totaled $53 million for initial relief, and $39 million for additional relief beyond the initial modification period.
(6) Represents interest payments not made during the deferral period through December 31, 2020.
(7) Weighted average loan-to-value (“LTV”) ratios for real estate secured loans are based on appraised value at the time of origination.
(8) Consists of household debt refinance loans.

		December 31, 2020
Loan Industry Information		Unpaid Principal Balance				LTV			Average Loan Size				Number of Loans			Personal Guarantee %
($ in millions)
Retail		$	1,831			49	%		$	2.7			703			77	%
Hotel		416				48	%		$	6.6			65			72	%
Restaurant (1)		219				49	%		$	1.1			210			93	%
Total (2)		$	2,466										978
__________
(1) Approximately 70% of loans to restaurants are real estate secured.
(2) Amounts in the table above exclude $43 million of loans to hotels and $132 million of loans to restaurants under the PPP.

		As of
Loan Servicing Portfolio		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
($ in millions)
Loans serviced for investors		$	7,094			$	7,799			$	8,316			$	9,203			$	9,298

Common Shares, Book Value per Common Share and Tangible Book Value per Common Share		As of
		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
(in thousands, except per share amounts)
Number of shares of common stock outstanding		174,124				172,188				172,094				171,395				168,621
Book value per common share		$	58.61			$	56.33			$	54.80			$	53.76			$	51.63
Tangible book value per common share		$	57.30			$	55.00			$	53.46			$	52.40			$	50.24

		As of
Capital Ratios		December 31, 2020 (1), (2)				September 30, 2020 (2)				June 30, 2020 (2)				March 31, 2020 (2)				December 31, 2019
Tier 1 leverage ratio (Tier 1 capital to average assets)		8.14		%		8.38		%		8.15		%		8.46		%		8.39		%
Common Equity Tier 1 capital to risk-weighted assets		9.67		%		9.78		%		9.80		%		9.87		%		9.86		%
Tier 1 capital to risk-weighted assets		11.18		%		11.50		%		11.04		%		11.14		%		11.21		%
Total capital to risk-weighted assets		12.55		%		12.94		%		12.49		%		12.62		%		12.73		%
Regulatory Capital (3)
($ in thousands)
Common Equity Tier 1 capital		$	9,894,870			$	9,375,688			$	9,103,771			$	8,887,905			$	8,371,192
Tier 1 capital		$	11,439,870			$	11,020,688			$	10,248,771			$	10,032,905			$	9,516,192
Total capital		$	12,842,344			$	12,396,304			$	11,604,141			$	11,365,654			$	10,802,209
Assets (3)
($ in thousands)
Average assets		$	140,493,283			$	131,517,445			$	125,690,830			$	118,626,842			$	113,403,507
Risk-weighted assets		$	102,321,489			$	95,823,385			$	92,870,859			$	90,072,400			$	84,885,943
__________
(1) Ratios and amounts as of December 31, 2020 are preliminary.
(2) In accordance with the CECL Capital Rule, the Bank elected to delay the estimated impact of CECL on its regulatory capital and risk-weighted assets over a five-year transition period ending December 31, 2024. Ratios and amounts for 2020 periods have been adjusted to exclude the following impacts attributed to the adoption of CECL: decreases in retained earnings, increases in allowance for credit losses on loans, held-to-maturity debt securities and unfunded loan commitments, decreases in average assets, and increases in risk-weighted assets.
(3) As defined by regulatory capital rules.

		As of
Wealth Management Assets		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
($ in millions)
First Republic Investment Management		$	83,596			$	74,661			$	68,124			$	60,056			$	66,029
Brokerage and investment:
Brokerage		88,059				76,769				70,178				60,189				68,807
Money market mutual funds		9,003				4,416				5,933				6,893				4,268
Total brokerage and investment		97,062				81,185				76,111				67,082				73,075
Trust Company:
Trust		9,910				8,687				7,905				7,288				7,121
Custody		3,889				3,651				3,646				3,461				4,818
Total Trust Company		13,799				12,338				11,551				10,749				11,939
Total Wealth Management Assets		$	194,457			$	168,184			$	155,786			$	137,887			$	151,043

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210114005282/en/

Investors:

Andrew Greenebaum / Lasse Glassen

Addo Investor Relations

[email protected]

[email protected]

(310) 829-5400

Media:

Greg Berardi

Blue Marlin Partners

[email protected]

(415) 239-7826

KEYWORDS: California United States North America

INDUSTRY KEYWORDS: Banking Professional Services Finance

MEDIA:

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