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First Republic Reports First Quarter 2023 Results

First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended March 31, 2023.

Jim Herbert, Founder and Executive Chairman, and Mike Roffler, CEO and President of First Republic said, “With the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business. We remain fully committed to serving our communities, and we are grateful for the ongoing support of our clients and colleagues.”

Financial Results

  • Year-over-year:
    • Revenues were $1.2 billion, down 13.4%.
    • Net interest income was $923 million, down 19.4%. (1)
    • Net income was $269 million, down 32.9%.
    • Diluted earnings per share of $1.23, down 38.5%.
    • Book value per share was $76.97, up 10.4%.
  • Net interest margin was 1.77%, compared to 2.45% for the prior quarter. (1)
  • Efficiency ratio was 70.4%, compared to 63.9% for the prior quarter.

Capital Position and Credit Quality

  • Tier 1 leverage ratio was 8.25%.
  • Common Equity Tier 1 ratio was 9.32%.
  • Nonperforming assets were 0.06% of total assets.
  • Net recoveries were $0.2 million.

Wealth Management

  • Year-over-year:
    • Wealth management assets were $289.5 billion, up 5.6%.
    • Wealth management revenues were $223 million, up 0.7%.

Balance Sheet

  • Year-over-year:
    • Loans totaled $173.3 billion, up 22.6%.
    • Deposits were $104.5 billion, down 35.5%. (2)
    • Borrowings were $106.7 billion, up $101.2 billion.
__________

(1)

Following the recent industry developments, net interest income and net interest margin were, and continue to be, materially impacted due to the unprecedented loss of deposits resulting in higher funding costs.

(2)

Deposits were down 40.8% from December 31, 2022. Deposits at March 31, 2023 included $30 billion of time deposits received from the large U.S. banks.

Neal Holland, Chief Financial Officer of First Republic said, “With the closure of several banks in March, we experienced unprecedented deposit outflows. We moved swiftly and leveraged our high-quality loan and securities portfolios to secure additional liquidity. We are working to restructure our balance sheet and reduce our expenses and short-term borrowings.”

Selected Financial Data and Ratios

 

As of or for the

Quarter Ended

March 31, 2023

 

As of or for the

Quarter Ended

December 31, 2022

 

As of or for the

Quarter Ended

March 31, 2022

($ in millions, except per share amounts)

 

 

 

 

 

 

Financial Results

 

 

 

 

 

 

Revenues

 

$

1,209

 

 

$

1,437

 

 

$

1,396

 

Net interest income

 

$

923

 

 

$

1,174

 

 

$

1,145

 

Net income

 

$

269

 

 

$

386

 

 

$

401

 

Diluted earnings per share

 

$

1.23

 

 

$

1.88

 

 

$

2.00

 

Book value per share

 

$

76.97

 

 

$

75.38

 

 

$

69.70

 

Net interest margin

 

 

1.77

%

 

 

2.45

%

 

 

2.68

%

Efficiency ratio (1)

 

 

70.4

%

 

 

63.9

%

 

 

62.0

%

Capital Position and Credit Quality

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

8.25

%

 

 

8.51

%

 

 

8.70

%

Common Equity Tier 1 ratio

 

 

9.32

%

 

 

9.17

%

 

 

9.48

%

Nonperforming assets to total assets

 

 

0.06

%

 

 

0.05

%

 

 

0.08

%

Net loan charge-offs (recoveries)

 

$

(0.2

)

 

$

0.9

 

 

$

(0.3

)

Wealth Management

 

 

 

 

 

 

Total wealth management assets

 

$

289,464

 

 

$

271,244

 

 

$

274,195

 

Total wealth management revenues

 

$

223

 

 

$

210

 

 

$

221

 

Balance Sheet

 

 

 

 

 

 

Total loans

 

$

173,311

 

 

$

166,868

 

 

$

141,313

 

Total deposits (2)

 

$

104,474

 

 

$

176,437

 

 

$

162,060

 

Short-term borrowings

 

$

80,365

 

 

$

6,700

 

 

$

 

Long-term borrowings

 

$

26,304

 

 

$

8,579

 

 

$

5,478

 

__________

 

 

 

 

 

 

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

(2) As of March 31, 2023, included $30 billion of time deposits received from the large U.S. banks.

Recent Industry Events

The recent industry events, beginning in March 2023, have impacted the Bank’s funding sources.

As of March 9, 2023, total deposits were $173.5 billion, down 1.7% from year-end 2022. On March 10, 2023, following the highly public closure of a large regional bank, First Republic began experiencing unprecedented deposit outflows.

On March 16, 2023, First Republic received uninsured deposits totaling $30 billion from a group of America’s largest banks. This support for First Republic allowed the Bank to reduce its short-term borrowings. At that time, daily deposit outflows had slowed considerably.

Deposit activity began to stabilize beginning the week of March 27, 2023, and has remained stable through Friday, April 21, 2023. Total deposits were $102.7 billion as of April 21, 2023, down only 1.7% from March 31, 2023, primarily reflecting seasonal client tax payments that occur each April.

In response to the unprecedented deposit outflows, the Bank enhanced its financial position through access to additional liquidity from the Federal Reserve Bank, the Federal Home Loan Bank and JP Morgan Chase & Co. Total borrowings peaked on March 15, 2023, at $138.1 billion. At that time, the Bank had $34.0 billion of cash on its balance sheet. Total borrowings totaled $104.0 billion, and cash and cash equivalents totaled $10.0 billion as of April 21, 2023. This includes $25.5 billion of long-term advances with the Federal Home Loan Bank, compared to $7.3 billion as of December 31, 2022.

As a result of the recent events, the Bank is taking actions to strengthen its business and restructure its balance sheet. These actions include efforts to increase insured deposits, reduce borrowings from the Federal Reserve Bank, and decrease loan balances to correspond with the reduced reliance on uninsured deposits. Through these actions, the Bank intends to reduce the size of its balance sheet, reduce its reliance on short-term borrowings, and address the challenges it continues to face. Refer to the Forward-Looking Statements below.

The Bank is also taking steps to reduce expenses, including significant reductions to executive officer compensation, condensing corporate office space, and reducing non-essential projects and activities. The Bank also expects to reduce its workforce by approximately 20-25% in the second quarter.

In addition to these actions, the Bank is pursuing strategic options to expedite its progress while reinforcing its capital position.

Suspension of Dividends on Common Stock and Noncumulative Preferred Stock

In response to recent events, as announced on March 16, 2023, the Bank’s Board of Directors determined to suspend its common stock dividend. In addition, on April 6, 2023, the Bank’s Board of Directors determined to suspend payment of the quarterly cash dividend on each series of the Bank’s outstanding noncumulative perpetual preferred stock.

Asset Quality

Nonperforming assets were 6 basis points of total assets at March 31, 2023.

The provision for credit losses for the quarter was $16 million. The Bank had net loan recoveries of $0.2 million for the quarter.

Book Value

Book value per common share at March 31, 2023 was $76.97, up 2.1% from the prior quarter.

Capital Position

The Bank’s Tier 1 leverage ratio was 8.25% at March 31, 2023, compared to 8.51% in the prior quarter. The Common Equity Tier 1 ratio was 9.32% at March 31, 2023, compared to 9.17% in the prior quarter.

In February 2023, the Bank sold 2,875,000 new shares of common stock in an underwritten public offering, which added $397 million to common equity.

Balance Sheet

Loans

Loans totaled $173.3 billion at March 31, 2023, up 3.9% compared to the prior quarter. The increase was primarily due to increases in single family and multifamily loans, as well as higher capital call lines of credit outstanding due to increased utilization in March.

Investments

Total investment securities at March 31, 2023 were $34.8 billion, a 9.8% increase compared to the prior quarter. High-quality liquid assets, including eligible cash and unencumbered investment securities, totaled $14.4 billion at March 31, 2023, and represented 6.6% of quarterly average total assets.

Deposits

Total deposits declined $72.0 billion during the quarter, to $104.5 billion at March 31, 2023 reflecting outflows toward the middle of March 2023. At March 31, 2023, excluding the $30 billion of deposits made by the large U.S. banks, total deposits consisted of 58.4% in checking deposits, 15.0% in other liquid deposits, and 26.6% in CDs. At March 31, 2023, excluding the $30 billion of deposits made by the large U.S. banks, our estimated uninsured deposits totaled $19.8 billion, or 27% of total deposits. Insured deposits declined moderately during the quarter and have remained stable from March 31 through April 21. Refer to the Deposits table for additional details regarding our deposits.

Funding

Other sources of funding at March 31, 2023 included secured short-term borrowings from the Federal Reserve, securities sold under agreements to repurchase, and short-term and long-term FHLB advances, which totaled $105.9 billion.

Our unused, available borrowing capacity at the Federal Reserve Bank discount window and FHLB at March 31, 2023 was $12.4 billion and $1.7 billion, respectively. This available borrowing capacity is supported by pledged loans and investment securities. In addition, at March 31, 2023, cash and cash equivalents totaled $13.2 billion.

As of April 21, 2023, the Bank had $45.1 billion of cash and cash equivalents and unused available borrowing capacity, representing more than two times our estimated uninsured deposits, excluding the $30 billion of deposits made by the large U.S. banks.

Wealth Management

Total wealth management assets were $289.5 billion at March 31, 2023, up 6.7% compared to the prior quarter and included investment management assets of $118.9 billion, brokerage assets and money market mutual funds of $149.7 billion, and trust and custody assets of $20.9 billion.

Wealth management fees, which consist of investment management, brokerage and investment, insurance, trust and foreign exchange fee income, totaled $223 million for the quarter, up 6.7% compared to the prior quarter. Such revenues represented 18.5% of the Bank’s total revenues.

Following the recent industry events and as of April 21, 2023, wealth management assets from teams that have departed First Republic were responsible for less than 20% of total wealth management assets as of March 31, 2023. As of April 21, 2023, First Republic has retained nearly 90% of its total wealth professionals and anticipates retaining a portion of the wealth management assets associated with departing teams.

Income Statement and Key Ratios

Revenue

Total revenues were $1.2 billion for the quarter, down 15.9% compared to the prior quarter. The decrease was due to a decrease in net interest income, partially offset by an increase in noninterest income. Following the recent industry developments, net interest income and net interest margin were, and continue to be, materially impacted due to the unprecedented loss of deposits resulting in higher funding costs.

Net Interest Income

Net interest income was $923 million for the quarter, down 21.4% compared to the prior quarter. The decrease in net interest income was primarily due to substantially higher funding costs, which was partially offset by CD withdrawal penalties that reduced interest expense on deposits by approximately $57 million.

Net Interest Margin

The net interest margin decreased to 1.77% for the quarter, from 2.45% in the prior quarter. The decrease was primarily due to higher short-term borrowings, which was partially offset by the impact of CD withdrawal penalties that increased the net interest margin by 11 basis points.

Noninterest Income

Noninterest income was $286 million for the quarter, up 8.7% compared to the prior quarter. The increase was primarily driven by higher investment management fees.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $852 million for the quarter, down 7.4% compared to the prior quarter. The decrease was primarily due to a reversal of previously recognized share-based compensation expense related to performance-based stock awards of $107 million. The decrease was partially offset by higher FDIC assessment expense of $27 million and goodwill impairment of $25 million. The impaired goodwill consisted of all of the Commercial Banking operating segment’s goodwill. The Commercial Banking operating segment is one of the Bank’s two reportable operating segments as identified in the Bank’s Annual Report on Form 10-K for the year ended December 31, 2022.

The efficiency ratio was 70.4% for the quarter, compared to 63.9% for the prior quarter.

Income Taxes

The Bank’s effective tax rate for the first quarter of 2023 was 21.2%, compared to 20.9% for the prior quarter.

Conference Call Details

First Republic Bank’s first quarter 2023 earnings conference call is scheduled for April 24, 2023 at 1:30 p.m. PT / 4:30 p.m. ET.

To access the conference call by telephone, please dial (877) 400-0505 and provide confirmation code 3782547 approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (856) 344-9221 and provide the same confirmation code.

To access the conference call online, please visit the Investor Relations section of First Republic’s website at ir.firstrepublic.com/events-calendar approximately 15 minutes prior to the start time (to allow time to register, download and install any necessary audio software).

For those unable to join on April 24, 2023, a replay will be available following, accessible in the Investor Relations section of First Republic Bank’s website at ir.firstrepublic.com/events-calendar.

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

About First Republic Bank

Founded in 1985, First Republic specializes in delivering exceptional, relationship-based service. First Republic provides a complete line of banking products, including residential, commercial and personal loans, deposit services, as well as private wealth management, including investment, brokerage, insurance, trust and foreign exchange services. Services are offered through preferred banking or wealth management offices primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and San Diego, California; Portland, Oregon; Boston, Massachusetts; Palm Beach, Florida; Greenwich, Connecticut; New York, New York; Jackson, Wyoming; and Bellevue, Washington. First Republic is a constituent of the S&P 500 Index and KBW Nasdaq Bank Index. For more information, visit firstrepublic.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements about our expectations, beliefs, projections, future plans and strategies, objectives, assumptions or anticipated events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimates,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases.

Examples of forward-looking statements and general risks include, among others: statements regarding our expectations with regard to our business, financial and operating results; forecasts of future economic conditions generally and in our markets in particular, including expectations relating to interest rates and inflation, and their impact on our net interest margin; and our plans and actions to strengthen our business following recent industry developments, such as restructuring our balance sheet, reducing our expenses, repaying our borrowings, reducing reliance on uninsured deposits and increasing our insured deposit base, decreasing loan balances and pursuing other strategic options; and descriptions of assumptions underlying or relating to any of the foregoing. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances, including in the near term, that may cause our actual results to differ materially from historical results and those expressed in any forward-looking statement.

There can be no certainty that the Bank will be able to take actions to strengthen our business within a time frame that is acceptable to the market or our regulators. There can be no certainty as to the future of the Bank if we are not able to do so.

Some factors that could cause actual results to differ materially from historical results or expected outcomes include, but are not limited to: demand for our products and services, including deposit attrition or further significant deposit outflows; our ability to retain our banking and wealth management clients, including those associated with departing wealth management teams; our ability to access adequate sources of funding and liquidity, in particular through the Federal Reserve, the Federal Home Loan Bank and other sources where our borrowings are far above historic levels or where we had not previously borrowed; our ability to satisfy our obligations when they become due; our ability to reduce our funding costs and improve our asset and liability mix; difficulties encountered by, or the soundness of, other financial institutions; adverse publicity about First Republic or the banking industry more generally, including as a result of bank failures and concerns about capital and liquidity; changes in our credit ratings and the impact on the cost of, and the ability to access, additional funding and capital, and our ability to conduct bank operations (such as offering our products and services and acting as a loan servicer); inflation and actions by central banks to manage inflation; interest rate risk (sensitivity to increases or decreases to interest rate fluctuations) and credit risk; our ability to retain key managers and employees, including those in our wealth management business; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements, which may result in costs, fees, penalties, business restrictions, reputational harm or other adverse consequences; any changes to liquidity and regulatory capital requirements applicable to us; legislative and regulatory actions affecting us, the banking industry or the financial services industry more generally; litigation, investigations and other legal actions or proceedings, and associated costs and liabilities; future Federal Deposit Insurance Corporation (“FDIC”) special assessments or changes to regular assessments; and other matters discussed in the risk factors included in the Bank’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the FDIC. In addition, state and federal banking regulators, including the California Department of Financial Protection and Innovation and the FDIC, have broad authority to oversee the Bank and to close the Bank and commence a conservatorship or receivership under various circumstances specified in state and federal banking laws.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise.

Non-GAAP Financial Measures

Our management uses and believes that investors benefit from using certain non-GAAP measures of our financial performance, which include return on average tangible common shareholders’ equity and net interest income on a fully taxable-equivalent basis. Management believes that return on average tangible common shareholders’ equity is a useful additional measure to evaluate our performance and capital position without the impact of goodwill and other intangible assets and preferred stock. In addition, to facilitate relevant comparisons of net interest income from taxable and tax-exempt interest-earning assets, when calculating yields and net interest margin, we adjust interest income on tax-exempt securities and tax-advantaged loans so such amounts are fully equivalent to interest income on taxable sources. We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information that is not otherwise required by GAAP or other applicable requirements. These non-GAAP financial measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP. A reconciliation of the non-GAAP calculation of the financial measure to the most comparable GAAP financial measure is presented in relevant tables in this document.

Explanatory Note

Some amounts presented within this document may not recalculate due to rounding.

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

Quarter Ended

March 31,

 

Quarter Ended

December 31,

(in millions, except per share amounts)

 

 

2023

 

 

2022

 

 

2022

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

Loans

 

$

1,565

 

$

1,002

 

$

1,438

Investments

 

 

252

 

 

180

 

 

231

Cash and cash equivalents

 

 

74

 

 

5

 

 

24

Other

 

 

6

 

 

2

 

 

6

Total interest income

 

 

1,897

 

 

1,189

 

 

1,699

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

Deposits

 

 

555

 

 

20

 

 

428

Borrowings

 

 

419

 

 

24

 

 

97

Total interest expense

 

 

974

 

 

44

 

 

525

 

 

 

 

 

 

 

Net interest income

 

 

923

 

 

1,145

 

 

1,174

Provision for credit losses

 

 

16

 

 

10

 

 

30

Net interest income after provision for credit losses

 

 

907

 

 

1,135

 

 

1,144

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

Investment management fees

 

 

159

 

 

165

 

 

141

Brokerage and investment fees

 

 

29

 

 

22

 

 

29

Insurance fees

 

 

3

 

 

4

 

 

8

Trust fees

 

 

8

 

 

7

 

 

7

Foreign exchange fee income

 

 

24

 

 

23

 

 

25

Deposit fees

 

 

8

 

 

6

 

 

7

Loan and related fees

 

 

10

 

 

9

 

 

10

Income from investments in life insurance

 

 

38

 

 

14

 

 

34

Other income, net

 

 

7

 

 

1

 

 

2

Total noninterest income

 

 

286

 

 

251

 

 

263

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

 

453

 

 

560

 

 

551

Information systems

 

 

115

 

 

107

 

 

123

Occupancy

 

 

77

 

 

69

 

 

73

Professional fees

 

 

30

 

 

23

 

 

27

Advertising and marketing

 

 

17

 

 

13

 

 

23

FDIC assessments

 

 

46

 

 

15

 

 

19

Goodwill impairment

 

 

25

 

 

 

 

Other expenses

 

 

89

 

 

79

 

 

103

Total noninterest expense

 

 

852

 

 

866

 

 

919

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

341

 

 

520

 

 

488

Provision for income taxes

 

 

72

 

 

119

 

 

102

Net income

 

 

269

 

 

401

 

 

386

Dividends on preferred stock

 

 

40

 

 

37

 

 

40

Net income available to common shareholders

 

$

229

 

$

364

 

$

346

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.24

 

$

2.03

 

$

1.89

Diluted earnings per common share

 

$

1.23

 

$

2.00

 

$

1.88

 

 

 

 

 

 

 

Weighted average shares—basic

 

 

185

 

 

180

 

 

183

Weighted average shares—diluted

 

 

186

 

 

182

 

 

184

CONSOLIDATED BALANCE SHEETS

 

 

 

As of

($ in millions)

 

March 31,

2023

 

December 31,

2022

 

March 31,

2022

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,159

 

 

$

4,283

 

 

$

7,756

 

Debt securities available-for-sale

 

 

3,409

 

 

 

3,347

 

 

 

3,446

 

Debt securities held-to-maturity, net

 

 

31,389

 

 

 

28,348

 

 

 

26,831

 

Equity securities (fair value)

 

 

24

 

 

 

24

 

 

 

25

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

Single family

 

 

101,109

 

 

 

98,768

 

 

 

81,833

 

Home equity lines of credit

 

 

2,946

 

 

 

2,775

 

 

 

2,597

 

Single family construction

 

 

1,307

 

 

 

1,217

 

 

 

1,041

 

Multifamily

 

 

22,731

 

 

 

21,588

 

 

 

16,953

 

Commercial real estate

 

 

11,067

 

 

 

10,830

 

 

 

8,753

 

Multifamily/commercial construction

 

 

2,382

 

 

 

2,139

 

 

 

1,955

 

Capital call lines of credit

 

 

11,486

 

 

 

9,988

 

 

 

10,970

 

Tax-exempt

 

 

3,770

 

 

 

3,713

 

 

 

3,656

 

Other business

 

 

5,549

 

 

 

5,092

 

 

 

4,313

 

Stock secured

 

 

4,387

 

 

 

4,553

 

 

 

3,651

 

Other secured

 

 

3,458

 

 

 

3,191

 

 

 

2,623

 

Unsecured

 

 

3,119

 

 

 

3,014

 

 

 

2,968

 

Total loans

 

 

173,311

 

 

 

166,868

 

 

 

141,313

 

Allowance for credit losses

 

 

(802

)

 

 

(784

)

 

 

(701

)

Loans, net

 

 

172,509

 

 

 

166,084

 

 

 

140,612

 

 

 

 

 

 

 

 

Investments in life insurance

 

 

4,039

 

 

 

3,435

 

 

 

2,682

 

Tax credit investments

 

 

1,393

 

 

 

1,383

 

 

 

1,231

 

Premises, equipment and leasehold improvements, net

 

 

488

 

 

 

483

 

 

 

467

 

Goodwill and other intangible assets

 

 

193

 

 

 

218

 

 

 

221

 

Other assets

 

 

6,341

 

 

 

5,034

 

 

 

3,850

 

Total Assets

 

$

232,944

 

 

$

212,639

 

 

$

187,121

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing checking

 

$

20,297

 

 

$

62,579

 

 

$

72,424

 

Interest-bearing checking

 

 

23,162

 

 

 

41,178

 

 

 

41,589

 

Money market checking

 

 

6,028

 

 

 

25,805

 

 

 

21,846

 

Money market savings and passbooks

 

 

5,159

 

 

 

21,663

 

 

 

19,159

 

Certificates of deposit (1)

 

 

49,828

 

 

 

25,212

 

 

 

7,042

 

Total Deposits

 

 

104,474

 

 

 

176,437

 

 

 

162,060

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

80,365

 

 

 

6,700

 

 

 

 

Long-term FHLB advances

 

 

25,525

 

 

 

7,300

 

 

 

3,700

 

Senior notes

 

 

 

 

 

500

 

 

 

999

 

Subordinated notes

 

 

779

 

 

 

779

 

 

 

779

 

Other liabilities

 

 

3,811

 

 

 

3,477

 

 

 

3,429

 

Total Liabilities

 

 

214,954

 

 

 

195,193

 

 

 

170,967

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

Preferred stock

 

 

3,633

 

 

 

3,633

 

 

 

3,633

 

Common stock

 

 

2

 

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

6,585

 

 

 

6,256

 

 

 

5,763

 

Retained earnings

 

 

8,065

 

 

 

7,886

 

 

 

6,893

 

Accumulated other comprehensive loss

 

 

(295

)

 

 

(331

)

 

 

(137

)

Total Shareholders’ Equity

 

 

17,990

 

 

 

17,446

 

 

 

16,154

 

Total Liabilities and Shareholders’ Equity

 

$

232,944

 

 

$

212,639

 

 

$

187,121

 

__________

 

 

 

 

 

 

(1) As of March 31, 2023, included $30 billion of time deposits received from the large U.S. banks.

 

 

Quarter Ended March 31,

 

Quarter Ended December 31,

 

 

2023

 

2022

 

2022

Average Balances, Yields and Rates

 

Average

Balance

 

Interest Income/

Expense (1)

 

Yield/

Rates (2)

 

Average

Balance

 

Interest Income/

Expense (1)

 

Yield/

Rates (2)

 

Average

Balance

 

Interest Income/

Expense (1)

 

Yield/

Rates (2)

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits with banks

 

$

6,372

 

$

74

 

 

4.70

%

 

$

11,342

 

$

5

 

 

0.18

%

 

$

2,704

 

$

24

 

 

3.49

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agency securities

 

 

165

 

 

1

 

 

2.05

%

 

 

117

 

 

0

 

 

1.37

%

 

 

165

 

 

1

 

 

2.05

%

Agency residential and commercial MBS

 

 

12,448

 

 

86

 

 

2.77

%

 

 

9,142

 

 

39

 

 

1.70

%

 

 

10,535

 

 

66

 

 

2.49

%

Other residential and commercial MBS

 

 

18

 

 

0

 

 

4.20

%

 

 

24

 

 

0

 

 

2.04

%

 

 

18

 

 

0

 

 

3.77

%

Tax-exempt municipal securities

 

 

17,707

 

 

147

 

 

3.33

%

 

 

15,595

 

 

151

 

 

3.87

%

 

 

17,697

 

 

175

 

 

3.97

%

Taxable municipal securities

 

 

1,773

 

 

14

 

 

3.14

%

 

 

1,715

 

 

13

 

 

2.97

%

 

 

1,774

 

 

13

 

 

3.13

%

Other investment securities

 

 

1,442

 

 

11

 

 

2.88

%

 

 

1,416

 

 

10

 

 

2.85

%

 

 

1,440

 

 

10

 

 

2.88

%

Total investment securities

 

 

33,553

 

 

259

 

 

3.08

%

 

 

28,009

 

 

213

 

 

3.04

%

 

 

31,629

 

 

265

 

 

3.37

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

103,672

 

 

823

 

 

3.18

%

 

 

82,416

 

 

567

 

 

2.75

%

 

 

100,645

 

 

772

 

 

3.07

%

Multifamily

 

 

21,905

 

 

203

 

 

3.70

%

 

 

16,281

 

 

140

 

 

3.45

%

 

 

20,856

 

 

192

 

 

3.60

%

Commercial real estate

 

 

10,945

 

 

114

 

 

4.15

%

 

 

8,633

 

 

82

 

 

3.77

%

 

 

10,401

 

 

107

 

 

4.02

%

Multifamily/commercial construction

 

 

2,278

 

 

34

 

 

6.02

%

 

 

1,929

 

 

22

 

 

4.62

%

 

 

2,105

 

 

31

 

 

5.77

%

Business

 

 

18,649

 

 

271

 

 

5.82

%

 

 

18,971

 

 

152

 

 

3.21

%

 

 

17,771

 

 

240

 

 

5.29

%

Other

 

 

10,817

 

 

125

 

 

4.62

%

 

 

9,058

 

 

47

 

 

2.06

%

 

 

10,479

 

 

103

 

 

3.86

%

Total loans

 

 

168,266

 

 

1,570

 

 

3.73

%

 

 

137,288

 

 

1,010

 

 

2.94

%

 

 

162,257

 

 

1,445

 

 

3.53

%

FHLB stock

 

 

517

 

 

6

 

 

4.88

%

 

 

115

 

 

2

 

 

7.60

%

 

 

353

 

 

6

 

 

7.27

%

Total interest-earning assets

 

 

208,708

 

 

1,909

 

 

3.66

%

 

 

176,754

 

 

1,230

 

 

2.78

%

 

 

196,943

 

 

1,740

 

 

3.51

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

 

522

 

 

 

 

 

 

449

 

 

 

 

 

 

478

 

 

 

 

Goodwill and other intangibles

 

 

218

 

 

 

 

 

 

221

 

 

 

 

 

 

219

 

 

 

 

Other assets

 

 

9,135

 

 

 

 

 

 

7,142

 

 

 

 

 

 

8,464

 

 

 

 

Total noninterest-earning assets

 

 

9,875

 

 

 

 

 

 

7,812

 

 

 

 

 

 

9,161

 

 

 

 

Total Assets

 

$

218,583

 

 

 

 

 

$

184,566

 

 

 

 

 

$

206,104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking

 

$

35,218

 

 

79

 

 

0.91

%

 

$

40,400

 

 

1

 

 

0.01

%

 

$

39,252

 

 

55

 

 

0.55

%

Money market checking

 

 

22,408

 

 

155

 

 

2.80

%

 

 

21,659

 

 

5

 

 

0.09

%

 

 

24,084

 

 

134

 

 

2.20

%

Money market savings and passbooks

 

 

17,954

 

 

107

 

 

2.43

%

 

 

17,925

 

 

7

 

 

0.15

%

 

 

20,423

 

 

100

 

 

1.95

%

CDs

 

 

29,541

 

 

214

 

 

2.93

%

 

 

7,217

 

 

7

 

 

0.40

%

 

 

20,546

 

 

139

 

 

2.69

%

Total interest-bearing deposits (3)

 

 

105,121

 

 

555

 

 

2.14

%

 

 

87,201

 

 

20

 

 

0.09

%

 

 

104,305

 

 

428

 

 

1.63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Reserve Discount Window

 

 

16,302

 

 

195

 

 

4.85

%

 

 

 

 

 

 

%

 

 

 

 

 

 

%

Short-term FHLB advances

 

 

8,722

 

 

103

 

 

4.80

%

 

 

 

 

 

 

%

 

 

6,131

 

 

54

 

 

3.51

%

Federal Reserve Bank Term Funding Program

 

 

2,318

 

 

26

 

 

4.57

%

 

 

 

 

 

 

%

 

 

 

 

 

 

%

Federal funds purchased

 

 

844

 

 

11

 

 

4.59

%

 

 

 

 

 

 

%

 

 

419

 

 

5

 

 

4.00

%

Securities sold under agreements to repurchase

 

 

94

 

 

1

 

 

5.23

%

 

 

 

 

 

 

%

 

 

 

 

 

 

%

Long-term FHLB advances

 

 

9,944

 

 

73

 

 

2.99

%

 

 

3,700

 

 

9

 

 

0.95

%

 

 

6,004

 

 

26

 

 

1.79

%

Senior notes

 

 

239

 

 

1

 

 

2.10

%

 

 

998

 

 

6

 

 

2.42

%

 

 

500

 

 

3

 

 

2.15

%

Subordinated notes

 

 

779

 

 

9

 

 

4.68

%

 

 

779

 

 

9

 

 

4.68

%

 

 

779

 

 

9

 

 

4.68

%

Total borrowings

 

 

39,242

 

 

419

 

 

4.33

%

 

 

5,477

 

 

24

 

 

1.75

%

 

 

13,833

 

 

97

 

 

2.79

%

Total interest-bearing liabilities (4)

 

 

144,363

 

 

974

 

 

2.73

%

 

 

92,678

 

 

44

 

 

0.19

%

 

 

118,138

 

 

525

 

 

1.76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

 

52,051

 

 

 

 

 

 

72,251

 

 

 

 

 

 

67,067

 

 

 

 

Other noninterest-bearing liabilities

 

 

4,373

 

 

 

 

 

 

3,613

 

 

 

 

 

 

3,609

 

 

 

 

Total noninterest-bearing liabilities

 

 

56,424

 

 

 

 

 

 

75,864

 

 

 

 

 

 

70,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shareholders’ equity

 

 

3,633

 

 

 

 

 

 

3,633

 

 

 

 

 

 

3,633

 

 

 

 

Common shareholders’ equity

 

 

14,163

 

 

 

 

 

 

12,391

 

 

 

 

 

 

13,657

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

$

218,583

 

 

 

 

 

$

184,566

 

 

 

 

 

$

206,104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (5)

 

 

 

 

 

0.93

%

 

 

 

 

 

2.59

%

 

 

 

 

 

1.74

%

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

 

 

 

$

935

 

 

1.77

%

 

 

 

$

1,186

 

 

2.68

%

 

 

 

$

1,215

 

 

2.45

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of tax-equivalent net interest income to net interest income: (7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal securities tax-equivalent adjustment

 

 

 

 

 

(7

)

 

 

 

 

 

 

(34

)

 

 

 

 

 

 

(34

)

 

 

Business loans tax-equivalent adjustment

 

 

 

 

 

(5

)

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

(7

)

 

 

Net interest income

 

 

 

 

$

923

 

 

 

 

 

 

$

1,145

 

 

 

 

 

 

$

1,174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits (interest-bearing and

noninterest-bearing)

 

$

157,172

 

$

555

 

 

1.43

%

 

$

159,452

 

$

20

 

 

0.05

%

 

$

171,372

 

$

428

 

 

0.99

%

Total deposits (interest-bearing and

noninterest-bearing) and borrowings

 

$

196,414

 

$

974

 

 

2.01

%

 

$

164,929

 

$

44

 

 

0.11

%

 

$

185,205

 

$

525

 

 

1.12

%

__________
Note: Certain prior period amounts have been reclassified to conform to the current period presentation.

(1)

 

Interest income on tax-exempt securities and loans has been adjusted to the fully taxable-equivalent basis using the statutory federal income tax rate in effect for each respective period presented.

(2)

 

Yields/rates are annualized.

(3)

 

Refer to supplemental information in this table for average balances, interest expense and rates for total deposits (interest-bearing and noninterest-bearing).

(4)

 

Refer to supplemental information in this table for average balances, interest expense and rates for total deposits (interest-bearing and noninterest-bearing) and borrowings.

(5)

 

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

(6)

 

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

(7)

 

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

Selected Financial Data and Ratios

 

Quarter Ended

March 31,

 

Quarter Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2022

 

($ in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Financial Data and Ratios:

 

 

 

 

 

 

Return on average assets (1), (2)

 

 

0.50

%

 

 

0.88

%

 

 

0.74

%

Return on average common shareholders’ equity (1)

 

 

6.55

%

 

 

11.91

%

 

 

10.05

%

Return on average tangible common shareholders’ equity (1), (3)

 

 

6.65

%

 

 

12.12

%

 

 

10.21

%

Average equity to average assets

 

 

8.14

%

 

 

8.68

%

 

 

8.39

%

Dividends per common share

 

$

0.27

 

 

$

0.22

 

 

$

0.27

 

Dividend payout ratio (4)

 

 

21.9

%

 

 

11.0

%

 

 

14.4

%

Efficiency ratio (5)

 

 

70.4

%

 

 

62.0

%

 

 

63.9

%

 

 

 

 

 

 

 

Selected Asset Quality Ratios:

 

 

 

 

 

 

Net loan charge-offs (recoveries)

 

$

(0.2

)

 

$

(0.3

)

 

$

0.9

 

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

 

 

(0.00

) %

 

 

(0.00

) %

 

 

0.00

%

 

 

 

 

 

 

 

Selected Ratios (period-end):

 

 

 

 

 

 

Book value per common share

 

$

76.97

 

 

$

69.70

 

 

$

75.38

 

__________

(1)

 

Ratios are annualized.

(2)

 

Return on average assets is the ratio of net income to average assets.

(3)

 

Refer to “Return on Average Common Shareholders’ Equity and Return on Average Tangible Common Shareholders’ Equity” table in this document for a reconciliation of this non-GAAP financial measure to the most comparable GAAP measure.

(4)

 

As announced on March 16, 2023, the Bank’s Board of Directors determined to suspend its common stock dividend. In addition, on April 6, 2023, the Bank’s Board of Directors determined to suspend payment of the quarterly cash dividend on each series of the Bank’s outstanding noncumulative perpetual preferred stock.

(5)

 

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

 

Effective Tax Rate

 

Quarter Ended

March 31,

 

Quarter Ended

December 31,

 

2023

 

2022

 

2022

 

 

 

 

 

 

 

Effective tax rate, prior to excess tax benefits—stock awards and other adjustments

 

19.5

%

 

23.4

%

 

21.9

%

Excess tax benefits—stock awards

 

0.2

 

 

(0.5

)

 

(0.3

)

Research and development tax credit adjustments

 

 

 

 

 

(0.7

)

Goodwill impairment

 

1.5

 

 

 

 

 

Effective tax rate

 

21.2

%

 

22.9

%

 

20.9

%

Provision (Reversal of Provision) for Credit Losses

 

Quarter Ended

March 31,

 

Quarter Ended

December 31,

 

 

2023

 

 

 

2022

 

 

2022

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities held-to-maturity

 

$

 

 

$

1

 

$

Loans

 

 

18

 

 

 

7

 

 

25

Unfunded loan commitments

 

 

(2

)

 

 

2

 

 

5

Total provision

 

$

16

 

 

$

10

 

$

30

Loan Originations

 

Quarter Ended

March 31,

 

Quarter Ended

December 31,

 

 

2023

 

 

2022

 

 

2022

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

$

3,716

 

$

8,376

 

$

5,894

Home equity lines of credit

 

 

468

 

 

689

 

 

499

Single family construction

 

 

158

 

 

267

 

 

387

Multifamily

 

 

1,300

 

 

1,709

 

 

1,581

Commercial real estate

 

 

386

 

 

566

 

 

879

Multifamily/commercial construction

 

 

597

 

 

384

 

 

445

Capital call lines of credit

 

 

2,349

 

 

3,020

 

 

2,477

Tax-exempt

 

 

39

 

 

90

 

 

195

Other business

 

 

637

 

 

538

 

 

1,090

Stock secured

 

 

815

 

 

1,136

 

 

976

Other secured

 

 

684

 

 

666

 

 

839

Unsecured

 

 

289

 

 

369

 

 

360

Total loans originated

 

$

11,438

 

$

17,810

 

$

15,622

 

 

As of March 31, 2023

Commercial Real Estate Portfolio

 

Unpaid Principal

Balance (1)

 

Percent of Total

Loans

 

LTV (2)

 

Average Loan

Commitment Size

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mixed Use

 

$

2,603

 

1.5

%

 

45

%

 

$

4.4

Retail

 

$

2,602

 

1.5

%

 

48

%

 

$

3.0

Office

 

$

2,522

 

1.5

%

 

45

%

 

$

3.8

Warehouse/Industrial

 

$

1,563

 

0.9

%

 

45

%

 

$

2.9

Hotel

 

$

623

 

0.4

%

 

46

%

 

$

8.8

Healthcare

 

$

274

 

0.2

%

 

49

%

 

$

3.1

Restaurant

 

$

155

 

0.1

%

 

48

%

 

$

1.4

Other

 

$

729

 

0.4

%

 

43

%

 

$

3.3

__________

 

 

 

 

 

 

 

 

(1) Represents the unpaid principal balance, excluding unamortized net deferred fees and costs.

(2) Weighted average loan-to-value (LTV) at origination.

 

 

As of

Asset Quality Information

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

131

 

 

$

109

 

 

$

120

 

 

$

137

 

 

$

140

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$

131

 

 

$

109

 

 

$

120

 

 

$

137

 

 

$

140

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans to total loans

 

 

0.08

%

 

 

0.07

%

 

 

0.08

%

 

 

0.09

%

 

 

0.10

%

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets

 

 

0.06

%

 

 

0.05

%

 

 

0.06

%

 

 

0.07

%

 

 

0.08

%

 

 

 

 

 

 

 

 

 

 

 

Accruing loans 90 days or more past due

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan credit losses to:

 

 

 

 

 

 

 

 

 

 

Total loans

 

 

0.46

%

 

 

0.47

%

 

 

0.48

%

 

 

0.48

%

 

 

0.50

%

Nonaccrual loans

 

 

614.1

%

 

 

720.5

%

 

 

635.3

%

 

 

531.2

%

 

 

498.8

%

Deposits

 

As of

 

March 31,

2023

 

December 31,

2022

($ in millions)

 

 

 

 

 

 

 

 

 

Total deposits

 

$

104,474

 

 

$

176,437

 

Estimated insured deposits

 

$

54,651

 

 

$

57,615

 

Estimated uninsured deposits

 

$

49,823

 

 

$

118,822

 

Estimated insured deposits as % of total deposits

 

 

52

%

 

 

33

%

Estimated uninsured deposits as % of total deposits

 

 

48

%

 

 

67

%

 

 

 

 

 

Excluding $30 billion of time deposits received from the large U.S. banks:

 

 

 

 

Total deposits (1)

 

$

74,413

 

 

 

n/a

 

Estimated insured deposits (1)

 

$

54,648

 

 

 

n/a

 

Estimated uninsured deposits (1)

 

$

19,765

 

 

 

n/a

 

Estimated insured deposits as % of total deposits (1)

 

 

73

%

 

 

n/a

 

Estimated uninsured deposits as % of total deposits (1)

 

 

27

%

 

 

n/a

 

 

 

 

 

 

Deposit types as % of total deposits, excluding $30 billion of time deposits received from the large U.S. banks:

 

 

 

 

Checking (1)

 

 

58.4

%

 

 

58.8

%

Other liquid deposits (1)

 

 

15.0

%

 

 

26.9

%

CDs (1)

 

 

26.6

%

 

 

14.3

%

 

 

 

 

 

__________

 

 

 

 

Note: Uninsured and insured amounts in the table above are based on deposit principal balances.

(1) As of March 31, 2023, excludes $30 billion of time deposits received from the large U.S. banks.

 

 

As of

Short-Term Borrowings

 

March 31,

2023

 

December 31,

2022

($ in millions)

 

 

 

 

 

 

 

 

 

Federal Reserve Discount Window

 

$

63,500

 

$

Federal Reserve Bank Term Funding Program

 

 

13,844

 

 

FHLB advances

 

 

2,575

 

 

6,700

Securities sold under agreements to repurchase

 

 

446

 

 

Total short-term borrowings

 

$

80,365

 

$

6,700

 

 

As of

Loan Servicing Portfolio

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans serviced for investors

 

$

3,273

 

$

3,459

 

$

3,632

 

$

3,919

 

$

4,298

Return on Average Common Shareholders’ Equity and Return on Average Tangible Common Shareholders’ Equity (1), (2)

 

 

 

 

 

 

 

Quarter Ended

March 31,

 

Quarter Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2022

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shareholders’ equity (a)

 

$

14,163

 

 

$

12,391

 

 

$

13,657

 

Less: Average goodwill and other intangible assets

 

 

(218

)

 

 

(221

)

 

 

(219

)

Average tangible common shareholders’ equity (b)

 

$

13,945

 

 

$

12,170

 

 

$

13,438

 

 

 

 

 

 

 

 

Net income available to common shareholders (c)

 

$

229

 

 

$

364

 

 

$

346

 

 

 

 

 

 

 

 

Return on average common shareholders’ equity (c) / (a)

 

 

6.55

%

 

 

11.91

%

 

 

10.05

%

Return on average tangible common shareholders’ equity (c) / (b)

 

 

6.65

%

 

 

12.12

%

 

 

10.21

%

__________

(1)

Return on average tangible common shareholders’ equity is considered a non-GAAP financial measure, and is reconciled to GAAP return on average common shareholders’ equity in this table.

(2)

Ratios are annualized.

 

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

 

As of

 

March 31,

2023 (3)

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage ratio (Tier 1 capital to average assets)

 

 

8.25

%

 

 

8.51

%

 

 

8.59

%

 

 

8.59

%

 

 

8.70

%

Common Equity Tier 1 capital to risk-weighted assets

 

 

9.32

%

 

 

9.17

%

 

 

9.28

%

 

 

9.15

%

 

 

9.48

%

Tier 1 capital to risk-weighted assets

 

 

11.67

%

 

 

11.56

%

 

 

11.76

%

 

 

11.75

%

 

 

12.25

%

Total capital to risk-weighted assets

 

 

12.71

%

 

 

12.60

%

 

 

12.81

%

 

 

12.82

%

 

 

13.37

%

 

 

 

 

 

 

 

 

 

 

 

Regulatory Capital:

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 capital

 

$

14,408

 

 

$

13,920

 

 

$

13,586

 

 

$

12,791

 

 

$

12,418

 

Tier 1 capital

 

$

18,041

 

 

$

17,553

 

 

$

17,219

 

 

$

16,424

 

 

$

16,051

 

Total capital

 

$

19,637

 

 

$

19,118

 

 

$

18,755

 

 

$

17,924

 

 

$

17,521

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

Average assets

 

$

218,783

 

 

$

206,371

 

 

$

200,486

 

 

$

191,202

 

 

$

184,410

 

Risk-weighted assets

 

$

154,544

 

 

$

151,777

 

 

$

146,444

 

 

$

139,811

 

 

$

131,024

 

__________

(1)

As defined by regulatory capital rules.

(2)

Beginning in 2020, ratios and amounts reflect the Bank's election to delay the estimated impact of the Current Expected Credit Losses (“CECL”) allowance methodology on its regulatory capital, average assets and risk-weighted assets over a five-year transition period ending December 31, 2024.

(3)

Ratios and amounts as of March 31, 2023 are preliminary.

 

As of

Wealth Management Assets

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Republic Investment Management

 

$

118,902

 

$

112,176

 

$

100,125

 

$

100,204

 

$

108,771

 

 

 

 

 

 

 

 

 

 

 

Brokerage and investment:

 

 

 

 

 

 

 

 

 

 

Brokerage

 

 

144,565

 

 

130,844

 

 

119,299

 

 

116,979

 

 

128,129

Money market mutual funds

 

 

5,121

 

 

8,100

 

 

10,891

 

 

10,510

 

 

18,543

Total brokerage and investment

 

 

149,686

 

 

138,944

 

 

130,190

 

 

127,489

 

 

146,672

 

 

 

 

 

 

 

 

 

 

 

Trust Company:

 

 

 

 

 

 

 

 

 

 

Trust

 

 

17,031

 

 

16,318

 

 

15,270

 

 

14,994

 

 

14,344

Custody

 

 

3,845

 

 

3,806

 

 

3,943

 

 

4,099

 

 

4,408

Total Trust Company

 

 

20,876

 

 

20,124

 

 

19,213

 

 

19,093

 

 

18,752

Total Wealth Management Assets

 

$

289,464

 

$

271,244

 

$

249,528

 

$

246,786

 

$

274,195

 

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