First Republic Reports Second Quarter 2021 Results

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Tangible Book Value Per Share Up 15.5% Year-Over-Year

Net Interest Income Increased 27.5% Year-Over-Year

SAN FRANCISCO, July 13, 2021--(BUSINESS WIRE)--First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended June 30, 2021.

"First Republic had another very strong quarter of organic growth," said Jim Herbert, Founder, Chairman and Co-CEO of First Republic Bank. "First Republic’s brand of exceptional client service resulted in significant growth in single family loans, deposits and wealth management assets."

"Our results this quarter were representative of how our service-focused business model continues to resonate strongly with clients," said Hafize Gaye Erkan, Co-CEO and President. "Providing exceptional service is a proven differentiator for First Republic."

Quarterly Highlights

Financial Results

– Year-over-year:

– Revenues were $1.2 billion, up 33.9%.

– Net interest income was $1.0 billion, up 27.5%.

– Net income was $373.1 million, up 45.3%.

– Diluted earnings per share of $1.95, up 39.3% (included $0.11 positive impact from tax benefits on vesting of stock awards).

– Tangible book value per share was $61.72, up 15.5%.

– Loan originations totaled $16.8 billion, our strongest quarter ever.

– Net interest margin was 2.68%, compared to 2.67% for the prior quarter.

– Efficiency ratio was 62.0%, compared to 63.5% for the prior quarter.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.05%.

– Nonperforming assets were at a very low 8 basis points of total assets.

– Net charge-offs were only $1.2 million, or less than 1 basis point of average loans.

Continued Franchise Growth

– Year-over-year:

– Loans totaled $123.1 billion, up 22.7%.

– Deposits were $134.7 billion, up 36.7%.

– Wealth management assets were $240.9 billion, up 54.6%.

– Wealth management revenues were $183.6 million, up 61.2%.

"We are quite pleased with the growth of revenue and net interest income during the second quarter," said Mike Roffler, Chief Financial Officer. "Credit quality remains excellent, further reflecting the safety and stability of First Republic."

Quarterly Cash Dividend of $0.22 per Share

The Bank declared a cash dividend for the second quarter of $0.22 per share of common stock, which is payable on August 12, 2021 to shareholders of record as of July 29, 2021.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were at a very low 8 basis points of total assets at June 30, 2021. The Bank had modest net loan charge-offs of only $1.2 million for the quarter.

During the second quarter, the Bank recorded a provision for credit losses of $16.1 million, which was primarily driven by loan growth.

Continued Book Value Growth and Capital Strength

Book value per common share at June 30, 2021 was $62.99, up 14.9% from a year ago. Tangible book value per common share at June 30, 2021 was $61.72, up 15.5% from a year ago.

The Bank’s Tier 1 leverage ratio was 8.05% at June 30, 2021, compared to 8.32% at March 31, 2021.

Continued Franchise Growth

Loan Originations

Loan originations were our largest ever at $16.8 billion for the quarter, up 24.7% from the same quarter a year ago. This was primarily due to increases in single family and business lending, partially offset by a decrease in loan originations under the Small Business Administration’s Paycheck Protection Program ("PPP").

Single family loan originations were 52% of the total volume for the quarter and had a weighted average loan-to-value ratio of 60%. Multifamily and commercial real estate loans originated were only 9% of total originations, and had a weighted average loan-to-value ratio of 49%.

Loans totaled $123.1 billion at June 30, 2021, up 22.7% compared to a year ago, primarily due to increases in single family loans, business, multifamily and stock secured loans, partially offset by a decrease in PPP loans.

COVID-19 Loan Modifications Continue to Decline

Remaining loan modifications to those borrowers experiencing financial challenges as a result of COVID-19 (not classified as troubled debt restructurings) totaled $634 million, and were only 0.5% of total loans as of June 30, 2021, down from a peak of approximately 4% of total loans as of June 30, 2020.

Deposit Growth

Total deposits increased to $134.7 billion, up 36.7% compared to a year ago, and had an average rate paid of 7 basis points during the quarter.

At June 30, 2021, checking deposit balances were 68.0% of total deposits.

Investments

Total investment securities at June 30, 2021 were $22.9 billion, a 5.6% increase compared to the prior quarter and a 19.9% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $23.2 billion at June 30, 2021, and represented 14.3% of quarterly average total assets.

Wealth Management

Total wealth management assets were $240.9 billion at June 30, 2021, up 10.0% compared to the prior quarter and up 54.6% 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 $183.6 million for the quarter, up 61.2% compared to last year’s second quarter. Such revenues represented 14.9% of the Bank’s total revenues for the quarter.

Wealth management assets at June 30, 2021 included investment management assets of $99.5 billion, brokerage assets and money market mutual funds of $125.5 billion, and trust and custody assets of $15.9 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.2 billion for the quarter, up 33.9% compared to the second quarter a year ago.

Net Interest Income Growth

Net interest income was $1.0 billion for the quarter, up 27.5% compared to the second quarter a year ago. The increase in net interest income resulted primarily from growth in average interest-earning assets.

Net Interest Margin

The net interest margin increased to 2.68% in the second quarter, from 2.67% in the prior quarter.

Noninterest Income

Noninterest income was $226.6 million for the quarter, up 72.2% compared to the second quarter a year ago. The increase was primarily driven by higher wealth management fees, income from investments in life insurance and loan servicing fees.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $762.8 million for the quarter, up 33.9% compared to the second quarter a year ago. The increase was primarily due to increased salaries and benefits, information systems and occupancy costs from the continued investments in the expansion of the franchise, and higher professional fees and advertising and marketing costs.

The efficiency ratio was 62.0% for both the second quarter of 2021 and 2020.

Income Taxes

The Bank’s effective tax rate for the second quarter of 2021 was 17.4%, compared to 21.9% for the prior quarter, and 19.4% for the second quarter a year ago. The decrease from the second quarter a year ago was primarily the result of higher excess tax benefits upon vesting of stock awards due to higher market valuation levels. For the first six months of 2021, the Bank’s effective tax rate was 19.6%, compared to 19.4% a year ago.

Conference Call Details

First Republic Bank’s second quarter 2021 earnings conference call is scheduled for July 13, 2021 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 458-4148 and provide confirmation code 3341684 approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (856) 344-9290 and provide 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 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 July 13, 2021, at 11:00 a.m. PT / 2:00 p.m. ET, through July 20, 2021, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 3341684#. 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 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, wildfires, 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 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.

Non-GAAP Financial Measures

Our management uses and believes that investors benefit from using certain non-GAAP measures of our financial performance, which include tangible book value per common share, return on average tangible common shareholders’ equity, and net interest income on a fully taxable-equivalent basis. Management believes that tangible book value per common share and return on average tangible common shareholders’ equity are useful additional measures 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.

CONSOLIDATED STATEMENTS OF INCOME

Quarter Ended
June 30,

Quarter Ended
March 31,

Six Months Ended
June 30,

(in thousands, except per share amounts)

2021

2020

2021

2021

2020

Interest income:

Loans

$

912,885

$

791,286

$

873,170

$

1,786,055

$

1,587,938

Investments

156,947

146,515

140,711

297,658

295,084

Other

5,103

5,059

5,189

10,292

12,019

Cash and cash equivalents

3,070

564

2,894

5,964

4,504

Total interest income

1,078,005

943,424

1,021,964

2,099,969

1,899,545

Interest expense:

Deposits

24,096

72,480

27,571

51,667

191,325

Borrowings

50,044

83,532

55,611

105,655

168,676

Total interest expense

74,140

156,012

83,182

157,322

360,001

Net interest income

1,003,865

787,412

938,782

1,942,647

1,539,544

Provision (reversal of provision) for credit

losses

16,143

31,117

(14,608

)

1,535

93,487

Net interest income after provision (reversal of

provision) for credit losses

987,722

756,295

953,390

1,941,112

1,446,057

Noninterest income:

Investment management fees

136,516

85,083

119,042

255,558

184,379

Brokerage and investment fees

17,574

12,406

14,564

32,138

28,232

Insurance fees

2,668

1,713

3,074

5,742

3,870

Trust fees

6,245

4,599

5,731

11,976

9,575

Foreign exchange fee income

20,612

10,105

17,167

37,779

22,289

Deposit fees

6,618

5,248

6,169

12,787

11,845

Loan and related fees

8,877

7,456

7,485

16,362

13,570

Loan servicing fees, net

1,057

(4,445

)

1,488

2,545

(2,793

)

Gain (loss) on sale of loans

58

(1,147

)

309

367

778

Gain on investment securities

1,329

1,529

655

1,984

4,157

Income from investments in life insurance

21,457

7,800

16,549

38,006

15,960

Other income

3,597

1,222

3,618

7,215

3,751

Total noninterest income

226,608

131,569

195,851

422,459

295,613

Noninterest expense:

Salaries and employee benefits

481,503

344,204

463,404

944,907

705,408

Information systems

88,980

74,037

83,516

172,496

144,752

Occupancy

63,526

54,941

57,549

121,075

108,582

Professional fees

25,475

15,517

21,254

46,729

28,634

Advertising and marketing

16,560

8,621

12,633

29,193

20,464

FDIC assessments

13,254

11,275

11,900

25,154

21,460

Other expenses

73,467

60,863

70,140

143,607

122,175

Total noninterest expense

762,765

569,458

720,396

1,483,161

1,151,475

Income before provision for income taxes

451,565

318,406

428,845

880,410

590,195

Provision for income taxes

78,459

61,638

94,012

172,471

114,741

Net income

373,106

256,768

334,833

707,939

475,454

Dividends on preferred stock

23,655

14,817

18,525

42,180

27,837

Net income available to common shareholders

$

349,451

$

241,951

$

316,308

$

665,759

$

447,617

Basic earnings per common share

$

1.98

$

1.41

$

1.81

$

3.79

$

2.61

Diluted earnings per common share

$

1.95

$

1.40

$

1.79

$

3.74

$

2.60

Weighted average shares—basic

176,419

171,627

174,820

175,624

171,231

Weighted average shares—diluted

178,864

172,659

176,951

177,913

172,343

CONSOLIDATED BALANCE SHEETS

As of

($ in thousands)

June 30,
2021

March 31,
2021

December 31,
2020

June 30,
2020

ASSETS

Cash and cash equivalents

$

7,876,952

$

8,889,492

$

5,094,754

$

3,099,170

Debt securities available-for-sale

2,634,983

2,428,833

1,906,315

1,576,956

Debt securities held-to-maturity

20,244,705

19,240,358

16,610,212

17,513,211

Less: Allowance for credit losses

(8,407

)

(8,024

)

(6,902

)

(5,383

)

Debt securities held-to-maturity, net

20,236,298

19,232,334

16,603,310

17,507,828

Equity securities (fair value)

29,550

21,221

20,566

21,104

Loans:

Single family

69,908,787

65,178,442

61,370,246

52,435,246

Home equity lines of credit

2,441,034

2,392,314

2,449,533

2,419,359

Single family construction

877,548

841,962

787,854

733,909

Multifamily

14,803,219

14,141,208

13,768,957

13,187,857

Commercial real estate

8,234,934

8,065,262

8,018,158

7,793,137

Multifamily/commercial construction

2,060,980

2,101,119

2,024,420

1,966,292

Capital call lines of credit

8,127,473

8,653,802

8,149,946

6,173,992

Tax-exempt

3,566,385

3,454,471

3,365,572

3,186,066

Other business

3,656,598

3,679,420

3,340,048

3,179,023

PPP

1,374,765

2,142,253

1,841,376

2,092,307

Stock secured

2,965,857

2,519,637

2,518,338

1,924,107

Other secured

2,051,617

1,862,529

1,818,550

1,702,535

Unsecured

3,047,981

3,050,999

3,113,267

3,221,405

Total loans

123,117,178

118,083,418

112,566,265

100,015,235

Allowance for credit losses

(636,910

)

(620,825

)

(635,019

)

(583,997

)

Loans, net

122,480,268

117,462,593

111,931,246

99,431,238

Loans held for sale

3,169

20,679

313,655

Investments in life insurance

2,597,637

2,328,844

2,061,362

1,468,712

Tax credit investments

1,224,114

1,127,465

1,131,905

1,105,853

Premises, equipment and leasehold improvements, net

418,725

412,331

403,482

388,256

Goodwill and other intangible assets

224,497

225,925

227,512

230,975

Other real estate owned

1,334

1,071

Other assets

3,920,541

3,667,588

3,101,003

3,159,069

Total Assets

$

161,646,734

$

155,797,960

$

142,502,134

$

128,303,887

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:

Deposits:

Noninterest-bearing checking

$

59,449,158

$

53,806,762

$

46,281,112

$

37,586,940

Interest-bearing checking

32,165,327

32,542,600

30,603,221

23,833,458

Money market checking

20,373,535

19,210,069

16,778,884

14,639,069

Money market savings and passbooks

14,747,597

14,097,001

12,584,522

10,236,015

Certificates of deposit

7,921,218

8,250,521

8,681,061

12,238,479

Total Deposits

134,656,835

127,906,953

114,928,800

98,533,961

Short-term borrowings

5,000

Long-term FHLB advances

9,000,000

10,505,000

11,755,000

15,405,000

Senior notes

997,193

996,668

996,145

995,109

Subordinated notes

778,535

778,423

778,313

778,096

Other liabilities

2,939,444

2,669,186

2,293,230

2,010,793

Total Liabilities

148,372,007

142,856,230

130,751,488

117,727,959

Shareholders’ Equity:

Preferred stock

2,142,500

2,142,500

1,545,000

1,145,000

Common stock

1,767

1,763

1,741

1,721

Additional paid-in capital

5,204,166

5,191,932

4,834,172

4,543,051

Retained earnings

5,936,669

5,626,958

5,346,355

4,858,965

Accumulated other comprehensive income (loss)

(10,375

)

(21,423

...

)

23,378

27,191

Total Shareholders’ Equity

13,274,727

12,941,730

11,750,646

10,575,928

Total Liabilities and Shareholders’ Equity

$

161,646,734

$

155,797,960

$

142,502,134

$

128,303,887

Quarter Ended June 30,

Quarter Ended March 31,

2021

2020

2021

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 thousands)

Assets:

Cash and cash equivalents

$

11,280,780

$

3,070

0.11

%

$

2,789,666

$

564

0.08

%

$

11,448,652

$

2,894

0.10

%

Investment securities:

U.S. Government-sponsored

agency securities

100,000

398

1.59

%

214,835

1,367

2.55

%

93,889

339

1.45

%

Agency residential and

commercial MBS

5,646,537

29,000

2.05

%

6,615,707

42,661

2.58

%

5,625,748

30,536

2.17

%

Other residential and

commercial MBS

30,297

154

2.04

%

27,499

182

2.65

%

32,992

154

1.87

%

Municipal securities

15,082,004

147,297

3.91

%

11,949,615

126,906

4.25

%

13,349,101

134,990

4.04

%

Other investment

securities (3)

1,375,557

9,800

2.85

%

43,800

309

2.83

%

429,289

2,568

2.39

%

Total investment securities

22,234,395

186,649

3.36

%

18,851,456

171,425

3.64

%

19,531,019

168,587

3.45

%

Loans:

Residential real estate (4)

69,853,517

491,229

2.81

%

53,737,207

404,691

3.01

%

65,458,977

469,010

2.87

%

Multifamily (5)

14,392,073

126,888

3.49

%

12,887,676

120,657

3.70

%

13,922,237

122,829

3.53

%

Commercial real estate

8,117,288

78,427

3.82

%

7,718,257

77,635

3.98

%

8,032,825

77,879

3.88

%

Multifamily/commercial

construction

2,969,059

37,522

5.00

%

2,632,682

29,468

4.43

%

2,867,284

31,100

4.34

%

Business (6)

15,894,165

128,914

3.21

%

13,069,640

115,666

3.50

%

15,076,564

123,741

3.28

%

PPP

1,842,716

15,476

3.32

%

1,620,772

7,659

1.87

%

1,989,987

15,766

3.17

%

Other (7)

7,652,991

41,518

2.15

%

6,658,487

42,116

2.50

%

7,347,624

39,685

2.16

%

Total loans

120,721,809

919,974

3.03

%

98,324,721

797,892

3.23

%

114,695,498

880,010

3.07

%

FHLB stock

312,647

5,103

6.55

%

491,938

5,059

4.14

%

344,990

5,189

6.10

%

Total interest-earning

assets

154,549,631

1,114,796

2.87

%

120,457,781

974,940

3.22

%

146,020,159

1,056,680

2.90

%

Noninterest-earning cash

385,537

425,440

413,625

Goodwill and other

intangibles

225,183

231,934

226,683

Other assets

6,724,321

4,905,493

6,091,492

Total noninterest-earning

assets

7,335,041

5,562,867

6,731,800

Total Assets

$

161,884,672

$

126,020,648

$

152,751,959

Liabilities and Shareholders’

Equity:

Deposits:

Checking

$

91,379,594

1,740

0.01

%

$

58,978,081

3,127

0.02

%

$

83,679,569

2,074

0.01

%

Money market checking

19,927,834

6,100

0.12

%

14,315,050

9,860

0.28

%

18,888,949

7,644

0.16

%

Money market savings and

passbooks

14,783,456

6,117

0.17

%

9,818,650

5,364

0.22

%

13,640,388

6,310

0.19

%

CDs

8,039,804

10,139

0.51

%

12,721,452

54,129

1.71

%

8,413,083

11,543

0.56

%

Total deposits

134,130,688

24,096

0.07

%

95,833,233

72,480

0.30

%

124,621,989

27,571

0.09

%

Borrowings:

Short-term borrowings

%

2,747

0.04

%

6

0

0.18

%

Long-term FHLB advances

10,062,253

34,892

1.39

%

15,868,682

68,391

1.73

%

11,321,666

40,463

1.45

%

Senior notes (8)

996,937

6,040

2.42

%

994,905

6,034

2.43

%

996,412

6,038

2.42

%

Subordinated notes (8)

778,480

9,112

4.68

%

778,044

9,107

4.68

%

778,369

9,110

4.68

%

Total borrowings

11,837,670

50,044

1.69

%

17,644,378

83,532

1.90

%

13,096,453

55,611

1.72

%

Total interest-bearing

liabilities

145,968,358

74,140

0.20

%

113,477,611

156,012

0.55

%

137,718,442

83,182

0.24

%

Noninterest-bearing liabilities

2,796,202

2,067,585

2,637,481

Preferred shareholders’ equity

2,142,500

1,145,000

1,963,583

Common shareholders’ equity

10,977,612

9,330,452

10,432,453

Total Liabilities and

Shareholders’ Equity

$

161,884,672

$

126,020,648

$

152,751,959

Net interest spread (9)

2.67

%

2.67

%

2.65

%

Net interest income (fully

taxable-equivalent basis) and

net interest margin (10)

$

1,040,656

2.68

%

$

818,928

2.70

%

$

973,498

2.67

%

Reconciliation of tax-equivalent net interest

income to net interest income: (11)

Municipal securities tax-equivalent adjustment

(29,702

)

(24,909

)

(27,876

)

Business loans tax-equivalent adjustment

(7,089

)

(6,607

)

(6,840

)

Net interest income

$

1,003,865

$

787,412

$

938,782

Six Months Ended June 30,

2021

2020

Average Balances, Yields and Rates

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

$

11,364,252

$

5,964

0.11

%

$

2,321,623

$

4,504

0.39

%

Investment securities:

U.S. Government-sponsored agency securities

96,961

737

1.52

%

261,142

3,574

2.74

%

Agency residential and commercial MBS

5,636,200

59,537

2.11

%

6,681,185

89,846

2.69

%

Other residential and commercial MBS

31,637

309

1.95

%

15,667

214

2.73

%

Municipal securities

14,220,340

282,375

3.97

%

11,654,183

249,935

4.29

%

Other investment securities (3)

905,037

12,367

2.73

%

43,791

629

2.87

%

Total investment securities

20,890,175

355,325

3.40

%

18,655,968

344,198

3.69

%

Loans:

Residential real estate (4)

67,668,387

960,239

2.84

%

52,518,610

809,674

3.08

%

Multifamily (5)

14,158,453

249,718

3.51

%

12,726,699

239,601

3.72

%

Commercial real estate

8,075,290

156,306

3.85

%

7,646,415

156,244

4.04

%

Multifamily/commercial construction

2,918,453

68,622

4.68

%

2,591,664

59,753

4.56

%

Business (6)

15,487,623

252,666

3.24

%

12,730,013

238,698

3.71

%

PPP

1,915,944

31,242

3.24

%

810,386

7,659

1.87

%

Other (7)

7,501,151

81,201

2.15

%

6,555,772

89,687

2.71

%

Total loans

117,725,301

1,799,994

3.05

%

95,579,559

1,601,316

3.33

%

FHLB stock

328,729

10,292

6.31

%

449,455

12,019

5.38

%

Total interest-earning assets

150,308,457

2,171,575

2.88

%

117,006,605

1,962,037

3.34

%

Noninterest-earning cash

399,504

434,348

Goodwill and other intangibles

225,929

233,006

Other assets

6,409,654

4,813,403

Total noninterest-earning assets

7,035,087

5,480,757

Total Assets

$

157,343,544

$

122,487,362

Liabilities and Shareholders’ Equity:

Deposits:

Checking

$

87,550,852

3,813

0.01

%

$

56,420,801

11,559

0.04

%

Money market checking

19,411,261

13,744

0.14

%

13,519,835

39,163

0.58

%

Money market savings and passbooks

14,215,079

12,427

0.18

%

9,784,569

20,931

0.43

%

CDs

8,225,414

21,683

0.53

%

13,453,699

119,672

1.79

%

Total deposits

129,402,606

51,667

0.08

%

93,178,904

191,325

0.41

%

Borrowings:

Short-term borrowings

3

0.18

%

617,287

4,700

1.53

%

Long-term FHLB advances

10,688,481

75,355

1.42

%

14,644,643

134,957

1.85

%

Senior notes (8)

996,676

12,078

2.42

%

880,106

10,807

2.46

%

Subordinated notes (8)

778,424

18,222

4.68

%

777,991

18,212

4.68

%

Total borrowings

12,463,584

105,655

1.71

%

16,920,027

168,676

2.00

%

Total interest-bearing liabilities

141,866,190

157,322

0.22

%

110,098,931

360,001

0.66

%

Noninterest-bearing liabilities

2,717,280

2,048,845

Preferred shareholders’ equity

2,053,536

1,145,000

Common shareholders’ equity

10,706,538

9,194,586

Total Liabilities and Shareholders’ Equity

$

157,343,544

$

122,487,362

Net interest spread (9)

2.66

%

2.68

%

Net interest income (fully taxable-equivalent basis) and

net interest margin (10)

$

2,014,253

2.67

%

$

1,602,036

2.72

%

Reconciliation of tax-equivalent net interest income

to net interest income: (11)

Municipal securities tax-equivalent adjustment

(57,667)

(49,113)

Business loans tax-equivalent adjustment

(13,939)

(13,379)

Net interest income

$

1,942,647

$

1,539,544

_____________________

(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)

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

(5)

Includes multifamily loans held for sale.

(6)

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

(7)

Includes stock secured, other secured and unsecured loans.

(8)

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

(9)

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

(10)

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

(11)

Fully taxable-equivalent net interest income is considered a non-GAAP financial measure, and is reconciled to GAAP net interest income in this table.

Quarter Ended
June 30,

Quarter Ended
March 31,

Six Months Ended
June 30,

Selected Financial Data and Ratios

2021

2020

2021

2021

2020

($ in thousands, except per share amounts)

Return on average assets (1), (2)

0.92

%

0.82

%

0.89

%

0.91

%

0.78

%

Return on average common shareholders’ equity (1)

12.77

%

10.43

%

12.30

%

12.54

%

9.79

%

Return on average tangible common shareholders’

equity (1), (3)

13.04

%

10.70

%

12.57

%

12.81

%

10.04

%

Average total equity to average total assets

8.10

%

8.31

%

8.12

%

8.11

%

8.44

%

Dividends per common share

$

0.22

$

0.20

$

0.20

$

0.42

$

0.39

Dividend payout ratio

11.3

%

14.3

%

11.2

%

11.2

%

15.0

%

Book value per common share

$

62.99

$

54.80

$

61.26

$

62.99

$

54.80

Tangible book value per common share (4)

$

61.72

$

53.46

$

59.98

$

61.72

$

53.46

Efficiency ratio (5)

62.0

%

62.0

%

63.5

%

62.7

%

62.7

%

Net loan charge-offs

$

1,219

$

1,098

$

487

$

1,706

$

1,300

Net loan charge-offs to average total loans (1)

0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

Allowance for loan credit losses to:

Total loans

0.52

%

0.58

%

0.53

%

0.52

%

0.58

%

Nonaccrual loans

479.3

%

354.1

%

359.3

%

479.3

%

354.1

%

_____________________

(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)

Refer to "Book Value per Common Share and Tangible Book Value per Common Share" table in this document for a reconciliation of this non-GAAP financial

measure to the most comparable GAAP measure.

(5)

Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.

Quarter Ended
June 30,

Quarter Ended
March 31,

Six Months Ended
June 30,

Effective Tax Rate

2021

2020

2021

2021

2020

Effective tax rate, prior to excess tax benefits—stock

awards

21.7

%

22.5

%

22.6

%

22.1

%

21.9

%

Excess tax benefits—stock awards

(4.3

)

(3.1

)

(0.7

)

(2.5

)%

(2.5

)%

Effective tax rate

17.4

%

19.4

%

21.9

%

19.6

%

19.4

%

Provision (Reversal of Provision) for Credit Losses

Quarter Ended
June 30,

Quarter Ended
March 31,

Six Months Ended
June 30,

2021

2020

2021

2021

2020

($ in thousands)

Debt securities held-to-maturity

$

383

$

296

$

1,122

$

1,505

$

714

Loans

17,304

43,189

(13,707

)

3,597

90,868

Unfunded loan commitments

(1,544

)

(12,368

)

(2,023

)

(3,567

)

1,905

Total provision (reversal of provision)

$

16,143

$

31,117

$

(14,608

)

$

1,535

$

93,487

Quarter Ended
June 30,

Quarter Ended
March 31,

Six Months Ended
June 30,

Mortgage Loan Sales

2021

2020

2021

2021

2020

($ in thousands)

Loans sold:

Flow sales:

Agency

$

4,315

$

10,810

$

42,402

$

46,717

$

36,584

Non-agency

1,073

1,073

31,870

Total flow sales

4,315

10,810

43,475

47,790

68,454

Bulk sales:

Non-agency

437,669

Securitizations

300,116

300,116

Total loans sold

$

4,315

$

310,926

$

43,475

$

47,790

$

806,239

Gain (loss) on sale of loans:

Amount

$

58

$

(1,147)

$

309

$

367

$

778

Gain (loss) as a percentage of loans sold

1.34

%

(0.37)

%

0.71

%

0.77

%

0.10

%

Quarter Ended
June 30,

Quarter Ended
March 31,

Six Months Ended
June 30,

Loan Originations

2021

2020

2021

2021

2020

($ in thousands)

Single family

$

8,661,680

$

5,875,184

$

6,902,192

$

15,563,872

$

9,394,520

Home equity lines of credit

610,658

457,737

623,661

1,234,319

853,245

Single family construction

215,014

119,318

224,504

439,518

228,480

Multifamily

1,101,450

946,820

791,070

1,892,520

1,728,123

Commercial real estate

458,196

330,683

313,991

772,187

782,541

Multifamily/commercial construction

272,145

131,414

310,824

582,969

752,335

Capital call lines of credit

2,921,192

1,405,347

3,131,317

6,052,509

3,790,576

Tax-exempt

208,327

184,054

213,967

422,294

284,073

Other business

520,394

914,257

1,025,154

1,545,548

1,534,036

PPP

35,586

1,981,797

688,948

724,534

1,981,797

Stock secured

775,795

519,416

710,038

1,485,833

1,111,976

Other secured

598,630

358,730

438,989

1,037,619

772,554

Unsecured

372,192

203,270

345,848

718,040

526,158

Total loans originated

$

16,751,259

$

13,428,027

$

15,720,503

$

32,471,762

$

23,740,414

As of

Asset Quality Information

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

($ in thousands)

Nonperforming assets:

Nonaccrual loans

$

132,880

$

172,794

$

184,132

$

164,247

$

164,930

Other real estate owned

1,334

1,071

Total nonperforming assets

$

132,880

$

174,128

$

184,132

$

164,247

$

166,001

Nonperforming assets to total assets

0.08

%

0.11

%

0.13

%

0.12

%

0.13

%

Accruing loans 90 days or more past due

$

$

851

$

$

935

$

3,764

Restructured accruing loans

$

11,407

$

11,658

$

11,253

$

11,378

$

11,501

June 30, 2021

COVID-19 Loan Modifications (1), (2), (3), (4), (5)

Unpaid
Principal
Balance

LTV (6)

Average Loan
Size

Number of
Loans

($ in millions)

Single family

$

124

60%

$

1.1

116

Home equity lines of credit

2

64%

$

0.3

6

Single family construction

2

75%

$

2.4

1

Multifamily

161

51%

$

6.4

25

Commercial real estate

157

47%

$

5.2

30

Multifamily/commercial construction

9

45%

$

8.9

1

Capital call lines of credit

n/a

$

Tax-exempt

141

n/a

$

23.5

6

Other business

30

n/a

$

2.5

12

Stock secured

n/a

$

Other secured

2

n/a

$

0.4

6

Unsecured (7)

6

n/a

$

0.1

60

Total

$

634

263

_____________________

(1)

COVID-19 loan modifications are not classified as troubled debt restructurings.

(2)

Includes 62 loans totaling $274 million that have completed their deferral period, but for which a regular payment is not yet due.

(3)

Includes 136 loans totaling $328 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 June 30, 2021,

$3.4 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 June 30, 2021 totaled $7 million for initial relief, and

$2 million for additional relief beyond the initial modification period.

(6)

Weighted average loan-to-value ("LTV") ratios for real estate secured loans are based on appraised value at the time of origination.

(7)

Consists of household debt refinance loans.

June 30, 2021

Loan Industry Information

Unpaid
Principal
Balance

LTV

Average Loan
Size

Number of
Loans

Personal
Guarantee %

($ in millions)

Retail

$

1,859

49

%

$

2.6

729

78

%

Hotel

468

48

%

$

7.3

66

76

%

Restaurant (1)

210

49

%

$

1.1

199

95

%

Total (2)

$

2,537

994

_____________________

(1)

Approximately 74% of loans to restaurants are real estate secured.

(2)

Amounts in the table above exclude $50 million of loans to hotels and $214 million of loans to restaurants under the PPP.

As of

Loan Servicing Portfolio

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

($ in millions)

Loans serviced for investors

$

5,640

$

6,314

$

7,094

$

7,799

$

8,316

Return on Average Common Shareholders’ Equity

and Return on Average Tangible Common

Shareholders’ Equity (1), (2)

Quarter Ended
June 30,

Quarter Ended
March 31,

Six Months Ended
June 30,

2021

2020

2021

2021

2020

($ in thousands)

Average common shareholders’ equity (a)

$

10,977,612

$

9,330,452

$

10,432,453

$

10,706,538

$

9,194,586

Less: Average goodwill and other intangible assets

225,183

231,934

226,683

225,929

233,006

Average tangible common shareholders’ equity (b)

$

10,752,429

$

9,098,518

$

10,205,770

$

10,480,609

$

8,961,580

Net income available to common shareholders (c)

$

349,451

$

241,951

$

316,308

$

665,759

$

447,617

Return on average common shareholders’

equity (c) / (a)

12.77

%

10.43

%

12.30

%

12.54

%

9.79

%

Return on average tangible common shareholders’

equity (c) / (b)

13.04

%

10.70

%

12.57

%

12.81

%

10.04

%

_____________________

(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.

As of

Book Value per Common Share and Tangible

Book Value per Common Share (1)

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

(in thousands, except per share amounts)

Total shareholders’ equity

$

13,274,727

$

12,941,730

$

11,750,646

$

11,344,609

$

10,575,928

Less: Preferred stock

2,142,500

2,142,500

1,545,000

1,645,000

1,145,000

Total common shareholders’ equity (a)

11,132,227

10,799,230

10,205,646

9,699,609

9,430,928

Less: Goodwill and other intangible assets

224,497

225,925

227,512

229,185

230,975

Total tangible common shareholders’ equity (b)

$

10,907,730

$

10,573,305

$

9,978,134

$

9,470,424

$

9,199,953

Number of shares of common stock outstanding (c)

176,742

176,287

174,124

172,188

172,094

Book value per common share (a) / (c)

$

62.99

$

61.26

$

58.61

$

56.33

$

54.80

Tangible book value per common share (b) / (c)

$

61.72

$

59.98

$

57.30

$

55.00

$

53.46

_____________________

(1)

Tangible book value per common share is considered a non-GAAP financial measure, and is reconciled to GAAP book value per common share in this table.

As of

Regulatory Capital Ratios and Components (1), (2)

June 30,
2021 (3)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

($ in thousands)

Capital Ratios:

Tier 1 leverage ratio (Tier 1 capital to average

assets)

8.05

%

8.32

%

8.14

%

8.38

%

8.15

%

Common Equity Tier 1 capital to risk-weighted

assets

9.51

%

9.64

%

9.67

%

9.78

%

9.80

%

Tier 1 capital to risk-weighted assets

11.38

%

11.60

%

11.18

%

11.50

%

11.04

%

Total capital to risk-weighted assets

12.60

%

12.87

%

12.55

%

12.94

%

12.49

%

Regulatory Capital:

Common Equity Tier 1 capital

$

10,875,436

$

10,548,615

$

9,894,870

$

9,375,688

$

9,103,771

Tier 1 capital

$

13,017,936

$

12,691,115

$

11,439,870

$

11,020,688

$

10,248,771

Total capital

$

14,420,504

$

14,082,378

$

12,842,344

$

12,396,304

$

11,604,141

Assets:

Average assets

$

161,636,891

$

152,465,399

$

140,493,283

$

131,517,445

$

125,690,830

Risk-weighted assets

$

114,404,874

$

109,413,168

$

102,321,489

$

95,823,385

$

92,870,859

_____________________

(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 June 30, 2021 are preliminary.

As of

Wealth Management Assets

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

($ in millions)

First Republic Investment Management

$

99,459

$

90,819

$

83,596

$

74,661

$

68,124

Brokerage and investment:

Brokerage

112,359

101,478

88,059

76,769

70,178

Money market mutual funds

13,109

11,435

9,003

4,416

5,933

Total brokerage and investment

125,468

112,913

97,062

81,185

76,111