Year-Over-Year Revenues Increased 23% and Earnings Per Share Increased 11%

Tangible Book Value Per Share Increased 13% Year-Over-Year

First Republic Bank (NYSE:FRC) today announced financial results for the quarter ended June 30, 2022.

"First Republic had an excellent quarter, reflecting the consistency of our client-focused model and culture," said Mike Roffler, Chief Executive Officer and President. "Loan growth was very strong, and credit quality remains excellent."

Quarterly Highlights

Financial Results

– Year-over-year:

– Revenues were $1.5 billion, up 22.6%.

– Net interest income was $1.2 billion, up 24.1%.

– Net income was $433 million, up 16.0%.

– Diluted earnings per share of $2.16, up 10.8%.

– Tangible book value per share was $69.81, up 13.1%.

– Loan originations totaled $22.0 billion, our best quarter ever.

– Net interest margin was 2.80%, compared to 2.68% for the prior quarter.

– Efficiency ratio was 60.5%, compared to 62.0% for the prior quarter.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.59%.

– Nonperforming assets remained at a low 7 basis points of total assets.

– Net charge-offs were only $1.3 million, or less than 1 basis point of average loans.

Continued Franchise Growth

– Year-over-year:

– Loans totaled $151.5 billion, up 23.1%.

– Deposits were $165.6 billion, up 23.0%.

– Wealth management assets were $246.8 billion, up 2.5%.

– Wealth management revenues were $232 million, up 26.4%.

"We are pleased to see growth in total revenue of 23% and net interest income of 24% during the second quarter," said Olga Tsokova, Chief Financial Officer (Acting) and Chief Accounting Officer. "Tangible book value per share increased 13% year-over-year, to just under $70, and our capital remains strong."

Quarterly Cash Dividend of $0.27 per Share

The Bank declared a cash dividend for the second quarter of $0.27 per share of common stock, which is payable on August 11, 2022 to shareholders of record as of July 28, 2022.

Strong Asset Quality

Credit quality remains very strong. Nonperforming assets were at a very low 7 basis points of total assets at June 30, 2022. The Bank had modest net loan charge-offs of only $1.3 million for the quarter.

During the second quarter, the Bank recorded a provision for credit losses of $31 million, which was primarily driven by loan growth.

Continued Book Value Growth

Book value per common share at June 30, 2022 was $71.03, up 12.8% from a year ago. Tangible book value per common share at June 30, 2022 was $69.81, up 13.1% from a year ago.

Capital Strength

The Bank's Tier 1 leverage ratio was 8.59%at June 30, 2022, compared to 8.70% at March 31, 2022.

Continued Franchise Growth

Loan Originations

Loan originations were $22.0 billion for the quarter, our best quarter ever. This was up 31.1% from the same quarter a year ago, primarily due to increases in single family and multifamily lending.

Single family loan originations were 48% of the total loan origination volume for the quarter and had a weighted average loan-to-value ratio of 61%. In addition, multifamily and commercial real estate loans originated were 14% of total originations and had a weighted average loan-to-value ratio of 52%.

Loans totaled $151.5 billion at June 30, 2022, up 23.1% compared to a year ago. Our loan growth was primarily due to increases in single family, multifamily, stock secured and capital call lines of credit, partially offset by a decrease in loans under the Small Business Administration's Paycheck Protection Program ("PPP").

Investments

Total investment securities at June 30, 2022 were $31.2 billion, a 2.9% increase compared to the prior quarter and a 36.1% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $28.2 billion at June 30, 2022, and represented 14.7% of quarterly average total assets.

Deposit Growth and Funding

Total deposits increased to $165.6 billion, up 23.0% compared to a year ago. Deposits were our primary source of funding at June 30, 2022, and represented 93% of our funding base.

At June 30, 2022, checking deposit balances were 71.6% of total deposits.

Other sources of funding at June 30, 2022 included short-term and long-term FHLB advances, which totaled $11.0 billion, up 22.2% compared to a year ago.

Deposits had an average rate paid of 9 basis points during the quarter, and average total funding costs were 16 basis points during the quarter.

Wealth Management

Total wealth management assets were $246.8 billion at June 30, 2022, down 10.0% compared to the prior quarter and up 2.5% compared to a year ago. The decrease in wealth management assets for the quarter was due to market decline. The increase in wealth management assets for the year was due to net client inflow, partially offset by market decline.

Wealth management revenues totaled $232 million for the quarter, up 26.4% compared to last year's second quarter. Such revenues represented 15.4% of the Bank's total revenues for the quarter.

Wealth management assets at June 30, 2022 included investment management assets of $100.2 billion, brokerage assets and money market mutual funds of $127.5 billion, and trust and custody assets of $19.1 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.5 billion for the quarter, up 22.6% compared to the second quarter a year ago.

Net Interest Income Growth

Net interest income was $1.2 billion for the quarter, up 24.1% compared to the second quarter a year ago. The increase in net interest income resulted primarily from growth in average interest-earning assets and the increase in net interest margin.

Net Interest Margin

The net interest margin increased to 2.80% in the second quarter, from 2.68% in the prior quarter. The increase was due to lower average cash balances, as well as average yields on interest-earning assets increasing more than the offsetting increase in average funding costs.

Noninterest Income

Noninterest income was $263 million for the quarter, up 16.0% compared to the second quarter a year ago. The increase was primarily driven by higher wealth management fees, partially offset by a decrease in income from investments in life insurance.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $913 million for the quarter, up 19.7% compared to the second quarter a year ago, primarily due to continued investments in our business expansion, including hiring additional colleagues to support our growth and information systems initiatives, as well as higher travel and entertainment.

The efficiency ratio was 60.5% for the quarter, compared to 62.0% for last year's second quarter.

Income Taxes

The Bank's effective tax rate for the second quarter of 2022 was 23.4%, compared to 17.4% for the second quarter a year ago. The increase was primarily the result of lower excess tax benefits upon vesting of stock awards.

Conference Call Details

First Republic Bank's second quarter 2022 earnings conference call is scheduled for July 14, 2022 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 2688216 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 for the live presentation, a replay of the call will be available beginning July 14, 2022 at 11:00 a.m. PT / 2:00 p.m. ET through July 21, 2022 at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 2688216#. International callers should dial +1 (719) 457-0820 and enter the same confirmation code. A replay of the webcast will also 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. First Republic specializes in delivering exceptional, relationship-based service and provides a complete line of products, including residential, commercial and personal loans, deposit services, and 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, 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; expectations regarding our executive transitions; 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 adverse effects of climate change on our business, clients and counterparties; 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; inflation; 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; 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.

Explanatory Note

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


CONSOLIDATED STATEMENTS OF INCOME

	Quarter Ended June 30,				Quarter Ended March 31,		Six Months Ended June 30,
(in millions, except per share amounts)	2022		2021		2022		2022		2021

Interest income:
Loans	$	1,094	$	913	$	1,002	$	2,096	$	1,786
Investments		209		157		180		389		298
Other		2		5		2		4		10
Cash and cash equivalents		11		3		5		16		6
Total interest income		1,316		1,078		1,189		2,505		2,100

Interest expense:
Deposits		37		24		20		57		52
Borrowings		33		51		24		57		106
Total interest expense		70		75		44		114		158

Net interest income		1,246		1,003		1,145		2,391		1,942
Provision for credit losses		31		16		10		41		1
Net interest income after provision for credit losses		1,215		987		1,135		2,350		1,941

Noninterest income:
Investment management fees		164		136		165		329		255
Brokerage and investment fees		33		17		22		55		32
Insurance fees		3		3		4		7		6
Trust fees		7		6		7		14		12
Foreign exchange fee income		25		21		23		48		38
Deposit fees		8		7		6		14		13
Loan and related fees		10		9		9		19		16
Income from investments in life insurance		11		21		14		25		38
Other income, net		2		6		1		3		12
Total noninterest income		263		226		251		514		422

Noninterest expense:
Salaries and employee benefits		567		482		560		1,127		945
Information systems		114		88		107		221		172
Occupancy		70		63		69		139		121
Professional fees		27		26		23		50		47
Advertising and marketing		17		16		13		30		29
FDIC assessments		15		13		15		30		25
Other expenses		103		74		79		182		144
Total noninterest expense		913		762		866		1,779		1,483

Income before provision for income taxes		565		451		520		1,085		880
Provision for income taxes		132		78		119		251		172
Net income		433		373		401		834		708
Dividends on preferred stock		41		23		37		78		42
Net income available to common shareholders	$	392	$	350	$	364	$	756	$	666

Basic earnings per common share	$	2.18	$	1.98	$	2.03	$	4.21	$	3.79
Diluted earnings per common share	$	2.16	$	1.95	$	2.00	$	4.17	$	3.74

Weighted average shares—basic		180		176		180		180		176
Weighted average shares—diluted		181		179		182		182		178

CONSOLIDATED BALANCE SHEETS

	As of
($ in millions)	June 30, 2022			March 31, 2022			December 31, 2021			June 30, 2021

ASSETS
Cash and cash equivalents	$	6,237		$	7,756		$	12,947		$	7,877
Debt securities available-for-sale		3,438			3,446			3,381			2,635
Debt securities held-to-maturity, net		27,710			26,831			22,292			20,236
Equity securities (fair value)		23			25			28			30

Loans:
Single family		89,295			81,833			76,793			69,909
Home equity lines of credit		2,699			2,597			2,584			2,441
Single family construction		1,117			1,041			993			878
Multifamily		18,346			16,953			15,966			14,803
Commercial real estate		9,182			8,753			8,531			8,235
Multifamily/commercial construction		2,019			1,955			1,927			2,061
Capital call lines of credit		10,727			10,970			10,999			8,127
Tax-exempt		3,605			3,656			3,680			3,566
Other business		4,638			4,081			3,961			3,657
PPP		82			232			545			1,375
Stock secured		4,041			3,651			3,435			2,966
Other secured		2,774			2,623			2,457			2,052
Unsecured		2,994			2,968			3,085			3,048
Total loans		151,519			141,313			134,956			123,118
Allowance for credit losses		(729	)		(701	)		(694	)		(637	)
Loans, net		150,790			140,612			134,262			122,481

Investments in life insurance		3,340			2,682			2,650			2,598
Tax credit investments		1,304			1,231			1,220			1,224
Premises, equipment and leasehold improvements, net		474			467			454			419
Goodwill and other intangible assets		220			221			222			224
Other assets		4,372			3,850			3,631			3,923
Total Assets	$	197,908		$	187,121		$	181,087		$	161,647

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking	$	75,208		$	72,424		$	70,840		$	59,449
Interest-bearing checking		43,421			41,589			41,248			32,165
Money market checking		21,235			21,846			20,303			20,374
Money market savings and passbooks		18,796			19,159			16,573			14,748
Certificates of deposit		6,987			7,042			7,357			7,921
Total Deposits		165,647			162,060			156,321			134,657

Short-term FHLB advances		6,300			—			—			—
Long-term FHLB advances		4,700			3,700			3,700			9,000
Senior notes		499			999			998			997
Subordinated notes		779			779			779			779
Other liabilities		3,557			3,429			3,391			2,939
Total Liabilities		181,482			170,967			165,189			148,372

Shareholders' Equity:
Preferred stock		3,633			3,633			3,633			2,143
Common stock		2			2			2			2
Additional paid-in capital		5,782			5,763			5,725			5,203
Retained earnings		7,236			6,893			6,569			5,937
Accumulated other comprehensive loss		(227	)		(137	)		(31	)		(10	)
Total Shareholders' Equity		16,426			16,154			15,898			13,275
Total Liabilities and Shareholders' Equity	$	197,908		$	187,121		$	181,087		$	161,647

	Quarter Ended June 30,												Quarter Ended March 31,
	2022						2021						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	$	5,713	$	11	0.80	%	$	11,281	$	3	0.11	%	$	11,342	$	5	0.18	%
Investment securities:
U.S. Government-sponsored agency securities		165		1	2.05	%		100		1	1.59	%		117		0	1.37	%
Agency residential and commercial MBS		10,667		56	2.10	%		5,646		29	2.05	%		9,142		39	1.70	%
Other residential and commercial MBS		22		0	2.37	%		30		0	2.04	%		24		0	2.04	%
Tax-exempt municipal securities		16,711		161	3.86	%		13,470		136	4.02	%		15,595		151	3.87	%
Taxable municipal securities		1,774		14	3.18	%		1,612		12	3.00	%		1,715		13	2.97	%
Other investment securities		1,440		10	2.87	%		1,376		9	2.85	%		1,416		10	2.85	%
Total investment securities		30,779		242	3.15	%		22,234		187	3.36	%		28,009		213	3.04	%

Loans:
Residential real estate		89,358		620	2.78	%		69,854		491	2.81	%		82,416		567	2.75	%
Multifamily		17,480		153	3.46	%		14,392		127	3.49	%		16,281		140	3.45	%
Commercial real estate		8,983		85	3.77	%		8,117		78	3.82	%		8,633		82	3.77	%
Multifamily/commercial construction		2,004		24	4.60	%		2,969		38	5.00	%		1,929		22	4.62	%
Business		18,469		160	3.43	%		15,894		129	3.21	%		18,590		145	3.12	%
PPP		138		3	8.46	%		1,843		15	3.32	%		381		7	7.59	%
Other		9,628		56	2.31	%		7,653		42	2.15	%		9,058		47	2.06	%
Total loans		146,060		1,101	3.00	%		120,722		920	3.03	%		137,288		1,010	2.94	%
FHLB stock		201		2	3.40	%		312		5	6.55	%		115		2	7.60	%
Total interest-earning assets		182,753		1,356	2.96	%		154,549		1,115	2.87	%		176,754		1,230	2.78	%

Noninterest-earning cash		442						386						449
Goodwill and other intangibles		220						225						221
Other assets		7,759						6,725						7,142
Total noninterest-earning assets		8,421						7,336						7,812
Total Assets	$	191,174					$	161,885					$	184,566

Liabilities and Shareholders' Equity:
Deposits:
Interest-bearing checking	$	41,878		5	0.05	%	$	33,329		2	0.02	%	$	40,400		1	0.01	%
Money market checking		20,873		13	0.25	%		19,928		6	0.12	%		21,659		5	0.09	%
Money market savings and passbooks		17,682		11	0.25	%		14,783		6	0.17	%		17,925		7	0.15	%
CDs		6,975		8	0.43	%		8,040		10	0.51	%		7,217		7	0.40	%
Total interest-bearing deposits ⁽³⁾		87,408		37	0.17	%		76,080		24	0.13	%		87,201		20	0.09	%

Borrowings:
Federal funds purchased		186		0	0.73	%		—		—	—	%		—		—	—	%
Short-term FHLB advances		2,953		9	1.20	%		—		—	—	%		—		—	—	%
Long-term FHLB advances		4,097		11	1.09	%		10,062		36	1.39	%		3,700		9	0.95	%
Senior notes		691		4	2.38	%		997		6	2.42	%		998		6	2.42	%
Subordinated notes		779		9	4.68	%		778		9	4.68	%		779		9	4.68	%
Total borrowings		8,706		33	1.54	%		11,837		51	1.69	%		5,477		24	1.75	%
Total interest-bearing liabilities ⁽⁴⁾		96,114		70	0.29	%		87,917		75	0.34	%		92,678		44	0.19	%