Business Wire | Oct 13, 2020 07:02AM EDT

First Republic Reports Third Quarter 2020 Results

Oct. 13, 2020

SAN FRANCISCO--(BUSINESS WIRE)--Oct. 13, 2020--First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended September 30, 2020.

"First Republic's client-centric business model delivered another quarter of safe, consistent growth," said Jim Herbert, Founder, Chairman and CEO of First Republic. "Lending, deposits and wealth management all continued to grow strongly due to our focus on exceptional, differentiated client service."

Quarterly Highlights

Financial Results

* Year-over-year: Revenues were $1.0 billion, up 19.6%. Net interest income was $830.3 million, up 19.5%. Net income was $293.1 million, up 24.8%. Diluted earnings per share of $1.61, up 22.9% (included $0.09 positive impact from discounts on loans sold, insurance proceeds and an amended tax return refund). Tangible book value per share was $55.00, up 12.6%. * Loan originations totaled $12.2 billion, our best quarter ever. * Net interest margin was 2.71%, compared to 2.70% for the prior quarter. * Efficiency ratio was 60.7%, compared to 62.0% for the prior quarter.

Continued Capital and Credit Strength

* Tier 1 leverage ratio was 8.38%. * Nonperforming assets remained at a low 12 basis points of total assets. * Net charge-offs were only $1.7 million, or less than 1 basis point of average loans.

Continued Franchise Development

* Year-over-year: Loans totaled $102.7 billion, up 19.0% (excluding SBA Paycheck Protection Program ("PPP") and for sale loans). Deposits were $104.4 billion, up 21.8%. Wealth management assets were $168.2 billion, up 19.9%. Wealth management revenues were $126.8 million, up 10.5%.

"We're very pleased with the double-digit growth of revenue, net interest income and earnings per share, both this quarter and year to date," said Mike Roffler, Chief Financial Officer. "Credit quality, capital and liquidity remain strong. We're pleased to have raised $500 million of Tier 1 fixed-for-life perpetual, preferred stock during the quarter at the lowest dividend rate ever for a bank."

Quarterly Cash Dividend of $0.20 per Share

The Bank declared a cash dividend for the third quarter of $0.20 per share of common stock, which is payable on November 12, 2020 to shareholders of record as of October 29, 2020. The current quarterly dividend is an increase over last year, our ninth consecutive year of dividend increases.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were only 12 basis points of total assets at September 30, 2020.

The provision for credit losses for the quarter was $28.5 million, which was driven by loan growth and an economic outlook reflecting the impact of COVID-19. For the first nine months of 2020, the provision for credit losses was $122.0 million, with net loan charge-offs of only $3.0 million.

Continued Capital Strength

The Bank's Tier 1 leverage ratio was 8.38%at September 30, 2020, up from 8.15% at June 30, 2020.

During the third quarter, the Bank issued $500.0 million of 4.125% Noncumulative Perpetual Series K Preferred Stock, which qualifies as Tier 1 capital. In addition, on October 9, 2020, the Bank redeemed the $100.0 million of outstanding shares of its 5.70% Noncumulative Perpetual Series F Preferred Stock.

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

Tangible Book Value Growth

Tangible book value per common share at September 30, 2020 was $55.00, up 12.6% from a year ago.

Continued Franchise Development

Loan Originations

Loan originations were $12.2 billion for the quarter, up 11.6% from the same quarter a year ago primarily due to an increase in single family lending.

Single family loan originations were 56% of the total for the quarter and had a weighted average loan-to-value ratio of 58%. In addition, multifamily and commercial real estate loans originated were 9% of total originations, and had a weighted average loan-to-value ratio of 50%.

Loans, excluding PPP loans and loans held for sale, totaled $102.7 billion at September 30, 2020, up 19.0% compared to a year ago primarily due to increases in single family and multifamily loans.

COVID-19 Loan Modifications

Loan modifications to those borrowers experiencing financial challenges as a result of COVID-19 (not classified as troubled debt restructurings) totaled $3.9 billion, and were 3.7% of total loans.

The Bank has limited exposure to several of the areas most directly impacted by COVID-19, such as the retail, hotel and restaurant industries, which totaled $2.4 billion as of September 30, 2020, only 2.3% of total loans. As of September 30, 2020, the Bank had modifications of these portfolios for $640 million, or 26%.

Deposit Growth

Total deposits increased to $104.4 billion, up 21.8% compared to a year ago, and had an average rate paid of 21 basis points during the quarter.

At September 30, 2020, checking deposit balances were 64.8% of total deposits.

Investments

Total investment securities at September 30, 2020 were $18.7 billion, a 7.1% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $17.1 billion at September 30, 2020, and represented 12.9% of quarterly average total assets.

Wealth Management

Total wealth management assets were $168.2 billion at September 30, 2020, up 8.0% for the quarter and up 19.9% compared to a year ago. The increases in wealth management assets were due to market appreciation and net client inflow.

Wealth management revenues totaled $126.8 million for the quarter, up 10.5% compared to last year's third quarter. Such revenues represented 12.7% of the Bank's total revenues for the quarter.

Wealth management assets at September 30, 2020 included investment management assets of $74.7 billion, brokerage assets and money market mutual funds of $81.2 billion, and trust and custody assets of $12.3 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.0 billion for the quarter, up 19.6% compared to the third quarter a year ago.

Net Interest Income Growth

Net interest income was $830.3 million for the quarter, up 19.5% compared to the third quarter a year ago. The increase in net interest income resulted primarily from growth in average interest-earning assets, partially offset by a decrease in net interest margin.

Net Interest Margin

The net interest margin increased to 2.71% in the third quarter, from 2.70% in the prior quarter.

Noninterest Income

Noninterest income was $171.0 million for the quarter, up 20.2% compared to the third quarter a year ago. The increase was primarily driven by the elevated gain on sale of loans, which included $10.3 million related to discounts on loans purchased, higher investment management fees, and income from investments in life insurance, which included a $5.3 million gain from life insurance proceeds.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $608.2 million for the quarter, up 13.9% compared to the third quarter a year ago. The increase was primarily due to increased salaries and benefits and information systems costs from the continued investments in the quality and expansion of the franchise, partially offset by lower travel and entertainment, as well as advertising and marketing expenses.

The efficiency ratio was 60.7% for the quarter, compared to 63.8% for the third quarter a year ago. For the first nine months of 2020, the efficiency ratio was 62.0%.

Income Taxes

The Bank's effective tax rate for the third quarter of 2020 was 19.6%, compared to 19.4% for the prior quarter, and 18.0% for the third quarter a year ago. For the first nine months of 2020, the Bank's effective tax rate was 19.5%, compared to 17.0% a year ago. The increases were primarily the result of lower excess tax benefits from a decrease in stock option exercises by employees, partially offset by a tax refund from an amended tax return.

Conference Call Details

First Republic Bank's third quarter 2020 earnings conference call is scheduled for October 13, 2020 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 353-6461 and use confirmation code 2953562# approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (334) 323-0501 and enter the same confirmation code.

The call will also be broadcast live over the Internet and can be accessed in the Investor Relations section of First Republic's website at firstrepublic.com. 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 October 13, 2020, at 11:00 a.m. PT / 2:00 p.m. ET, through October 20, 2020, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 2953562#. 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 firstrepublic.com.

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

About First Republic Bank

Founded in 1985, First Republic and its subsidiaries offer private banking, private business banking and private wealth management, including investment, trust and brokerage services. First Republic specializes in delivering exceptional, relationship-based service 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 the COVID-19 pandemic (collectively referred to as "COVID-19" herein); 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; the possibility of earthquakes, fires and other natural disasters affecting the markets in which we operate; the negative impacts and disruptions resulting from COVID-19 on our colleagues and clients, the communities we serve and the domestic and global economy, which may have an adverse effect on our business, financial position and results of operations; interest rate risk and credit risk; our ability to maintain and follow high underwriting standards; economic and market conditions, including those affecting the valuation of our investment securities portfolio and credit losses on our loans and debt securities; real estate prices generally and in our markets; our geographic and product concentrations; demand for our products and services; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate and the 11th District Monthly Weighted Average Cost of Funds Index, as well as other alternative reference rates; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; any future changes to regulatory capital requirements; legislative and regulatory actions affecting us and the financial services industry, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), including increased compliance costs, limitations on activities and requirements to hold additional capital, as well as changes to the Dodd-Frank Act pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act; our ability to avoid litigation and its associated costs and liabilities; future Federal Deposit Insurance Corporation ("FDIC") special assessments or changes to regular assessments; fraud, cybersecurity and privacy risks; and custom technology preferences of our customers and our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications. For a discussion of these and other risks and uncertainties, see First Republic's FDIC filings, including, but not limited to, the risk factors in First Republic's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any subsequent reports filed by First Republic with the FDIC. These filings are available in the Investor Relations section of our website.

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

CONSOLIDATED STATEMENTS OF INCOME

Quarter Ended Quarter Nine Months Ended September 30, Ended September 30, June 30, (in thousands,except per 2020 2019 2020 2020 2019share amounts)

Interest income:

Loans $ 811,708 $ 764,468 $ 791,286 $ 2,399,646 $ 2,205,884

Investments 142,971 134,099 146,515 438,055 401,908

Other 6,116 5,779 5,059 18,135 15,767

Cash and cash 1,181 5,430 564 5,685 18,966 equivalents

Total interest 961,976 909,776 943,424 2,861,521 2,642,525 income



Interest expense:

Deposits 54,355 134,917 72,480 245,680 371,852

Borrowings 77,341 79,874 83,532 246,017 226,624

Total interest 131,696 214,791 156,012 491,697 598,476 expense



Net interest 830,280 694,985 787,412 2,369,824 2,044,049 income

Provision for 28,538 16,711 31,117 122,025 52,111 credit losses

Net interestincome after 801,742 678,274 756,295 2,247,799 1,991,938 provision forcredit losses



Noninterest income:

Investmentmanagement 96,638 83,582 85,083 281,017 262,226 fees

Brokerage andinvestment 10,796 12,673 12,406 39,028 28,619 fees

Insurance fees 2,216 2,712 1,713 6,086 8,522

Trust fees 4,543 4,105 4,599 14,118 12,221

Foreignexchange fee 12,575 11,685 10,105 34,864 30,661 income

Deposit fees 5,753 6,563 5,248 17,598 19,462

Loan and 7,171 5,341 7,456 20,741 13,644 related fees

Loan servicing 144 2,347 (4,445) (2,649) 9,560 fees, net

Gain (loss) on 13,797 122 (1,147) 14,575 466 sale of loans

Gain (loss) oninvestment (405) (683) 1,529 3,752 (1,895) securities

Income frominvestments in 20,546 12,152 7,800 36,506 31,536 life insurance

Other income (2,791) 1,608 1,222 960 4,853 (loss)

Totalnoninterest 170,983 142,207 131,569 466,596 419,875 income



Noninterest expense:

Salaries andemployee 373,225 309,655 344,204 1,078,633 920,432 benefits

Information 74,549 66,612 74,037 219,301 204,059 systems

Occupancy 55,543 50,722 54,941 164,125 142,204

Professional 19,845 17,507 15,517 48,479 45,623 fees

Advertising 8,909 15,912 8,621 29,373 48,346 and marketing

FDIC 11,003 9,748 11,275 32,463 27,847 assessments

Other expenses 65,136 63,794 60,863 187,311 199,105

Totalnoninterest 608,210 533,950 569,458 1,759,685 1,587,616 expense



Income beforeprovision for 364,515 286,531 318,406 954,710 824,197 income taxes

Provision for 71,378 51,687 61,638 186,119 140,198 income taxes

Net income 293,137 234,844 256,768 768,591 683,999

Dividends onpreferred 14,816 12,787 14,817 42,653 38,362 stock

Net incomeavailable to $ 278,321 $ 222,057 $ 241,951 $ 725,938 $ 645,637 commonshareholders



Basic earningsper common $ 1.62 $ 1.32 $ 1.41 $ 4.23 $ 3.85 share

Dilutedearnings per $ 1.61 $ 1.31 $ 1.40 $ 4.21 $ 3.81 common share



Weightedaverage 172,142 168,272 171,627 171,537 167,694 shares-basic

Weightedaverage 172,932 169,346 172,659 172,514 169,449 shares-diluted

CONSOLIDATED BALANCE SHEETS

As of

($ in thousands)

September 30,2020

June 30,2020

December 31, 2019 (1)

September 30,2019 (1)

ASSETS

Cash and cash equivalents

$

3,691,149

$

3,099,170

$

1,699,557

$

2,181,600

Debt securities available-for-sale

1,711,202

1,576,956

1,282,169

1,401,105

Debt securities held-to-maturity

16,929,422

17,513,211

17,147,633

16,002,722

Less: Allowance for credit losses

(5,716)

(5,383)

-

-

Debt securities held-to-maturity, net

16,923,706

17,507,828

17,147,633

16,002,722

Equity securities (fair value)

20,478

21,104

19,586

19,736

Loans: (1)

Single family (1-4 units)

56,628,359

52,435,246

47,985,651

44,882,363

Home equity lines of credit

2,431,991

2,419,359

2,501,432

2,530,740

Single family construction

739,091

733,909

761,589

743,699

Multifamily (5+ units)

13,392,531

13,187,857

12,353,359

11,672,916

Commercial real estate

7,781,797

7,793,137

7,449,058

7,415,677

Multifamily/commercial construction

2,038,949

1,966,292

1,695,954

1,583,968

Capital call lines of credit

6,203,877

6,173,992

5,570,322

5,568,342

Tax-exempt

3,276,705

3,186,066

3,042,193

3,042,765

Other business

2,982,532

3,179,023

3,034,301

2,953,756

PPP

2,091,102

2,092,307

-

-

Stock secured

2,311,754

1,924,107

1,897,511

1,610,914

Other secured

1,780,652

1,702,535

1,433,399

1,293,084

Unsecured

3,102,311

3,221,405

3,072,062

3,006,586

Total loans

104,761,651

100,015,235

90,796,831

86,304,810

Allowance for credit losses

(604,747)

(583,997)

(496,104)

(485,465)

Loans, net

104,156,904

99,431,238

90,300,727

85,819,345

Loans held for sale

33,655

313,655

23,304

31,693

Investments in life insurance

1,949,360

1,468,712

1,434,642

1,425,057

Tax credit investments

1,099,713

1,105,853

1,100,509

1,039,061

Premises, equipment and leasehold improvements, net

390,241

388,256

386,841

373,693

Goodwill and other intangible assets

229,185

230,975

235,269

264,658

Other real estate owned

-

1,071

-

-

Other assets

3,020,178

3,159,069

2,633,397

2,470,065

Total Assets

$

133,225,771

$

128,303,887

$

116,263,634

$

111,028,735

LIABILITIES AND EQUITY

Liabilities:

Deposits:

Noninterest-bearing checking

$

41,538,676

$

37,586,940

$

33,124,265

$

32,720,317

Interest-bearing checking

26,081,189

23,833,458

19,696,859

17,438,402

Money market checking

15,868,769

14,639,069

12,790,707

11,242,205

Money market savings and passbooks

11,419,289

10,236,015

10,586,355

10,277,249

Certificates of deposit

9,495,453

12,238,479

13,935,060

14,042,346

Total Deposits

104,403,376

98,533,961

90,133,246

85,720,519

Short-term borrowings

5,000

5,000

800,000

775,000

Long-term FHLB advances

13,505,000

15,405,000

12,200,000

10,900,000

Senior notes

995,626

995,109

497,719

497,494

Subordinated notes

778,204

778,096

777,885

777,781

Other liabilities

2,193,956

2,010,793

2,003,677

2,926,735

Total Liabilities

121,881,162

117,727,959

106,412,527

101,597,529

Shareholders' Equity:

Preferred stock

1,645,000

1,145,000

1,145,000

940,000

Common stock

1,722

1,721

1,686

1,685

Additional paid-in capital

4,571,499

4,543,051

4,214,915

4,198,442

Retained earnings

5,102,229

4,858,965

4,484,375

4,281,249

Accumulated other comprehensive income

24,159

27,191

5,131

9,830

Total Shareholders' Equity

11,344,609

10,575,928

9,851,107

9,431,206

Total Liabilities and Shareholders' Equity

$

133,225,771

$

128,303,887

$

116,263,634

$

111,028,735

____________

(1) For comparability, the Bank has adjusted certain prior period loan amounts to conform to the current period presentation under the Current Expected Credit Losses ("CECL") methodology.

CONSOLIDATED BALANCE SHEETS

As of

($ in thousands) September 30, June 30, December 31, September 30, 2020 2020 2019 ^(1) 2019 ^(1)

ASSETS

Cash and cash $ 3,691,149 $ 3,099,170 $ 1,699,557 $ 2,181,600 equivalents

Debt securities 1,711,202 1,576,956 1,282,169 1,401,105 available-for-sale



Debt securities 16,929,422 17,513,211 17,147,633 16,002,722 held-to-maturity

Less: Allowance for (5,716) (5,383) - - credit losses

Debt securitiesheld-to-maturity, 16,923,706 17,507,828 17,147,633 16,002,722 net



Equity securities 20,478 21,104 19,586 19,736 (fair value)



Loans: ^(1)

Single family (1-4 56,628,359 52,435,246 47,985,651 44,882,363 units)

Home equity lines 2,431,991 2,419,359 2,501,432 2,530,740 of credit

Single family 739,091 733,909 761,589 743,699 construction

Multifamily (5+ 13,392,531 13,187,857 12,353,359 11,672,916 units)

Commercial real 7,781,797 7,793,137 7,449,058 7,415,677 estate

Multifamily/commercial 2,038,949 1,966,292 1,695,954 1,583,968 construction

Capital call lines 6,203,877 6,173,992 5,570,322 5,568,342 of credit

Tax-exempt 3,276,705 3,186,066 3,042,193 3,042,765

Other business 2,982,532 3,179,023 3,034,301 2,953,756

PPP 2,091,102 2,092,307 - -

Stock secured 2,311,754 1,924,107 1,897,511 1,610,914

Other secured 1,780,652 1,702,535 1,433,399 1,293,084

Unsecured 3,102,311 3,221,405 3,072,062 3,006,586

Total loans 104,761,651 100,015,235 90,796,831 86,304,810

Allowance for (604,747) (583,997) (496,104) (485,465) credit losses

Loans, net 104,156,904 99,431,238 90,300,727 85,819,345



Loans held for sale 33,655 313,655 23,304 31,693

Investments in life 1,949,360 1,468,712 1,434,642 1,425,057 insurance

Tax credit 1,099,713 1,105,853 1,100,509 1,039,061 investments

Premises, equipmentand leasehold 390,241 388,256 386,841 373,693 improvements, net

Goodwill and other 229,185 230,975 235,269 264,658 intangible assets

Other real estate - 1,071 - - owned

Other assets 3,020,178 3,159,069 2,633,397 2,470,065

Total Assets $ 133,225,771 $ 128,303,887 $ 116,263,634 $ 111,028,735



LIABILITIES AND EQUITY

Liabilities:

Deposits:

Noninterest-bearing $ 41,538,676 $ 37,586,940 $ 33,124,265 $ 32,720,317 checking

Interest-bearing 26,081,189 23,833,458 19,696,859 17,438,402 checking

Money market 15,868,769 14,639,069 12,790,707 11,242,205 checking

Money marketsavings and 11,419,289 10,236,015 10,586,355 10,277,249 passbooks

Certificates of 9,495,453 12,238,479 13,935,060 14,042,346 deposit

Total Deposits 104,403,376 98,533,961 90,133,246 85,720,519



Short-term 5,000 5,000 800,000 775,000 borrowings

Long-term FHLB 13,505,000 15,405,000 12,200,000 10,900,000 advances

Senior notes 995,626 995,109 497,719 497,494

Subordinated notes 778,204 778,096 777,885 777,781

Other liabilities 2,193,956 2,010,793 2,003,677 2,926,735

Total Liabilities 121,881,162 117,727,959 106,412,527 101,597,529



Shareholders' Equity:

Preferred stock 1,645,000 1,145,000 1,145,000 940,000

Common stock 1,722 1,721 1,686 1,685

Additional paid-in 4,571,499 4,543,051 4,214,915 4,198,442 capital

Retained earnings 5,102,229 4,858,965 4,484,375 4,281,249

Accumulated othercomprehensive 24,159 27,191 5,131 9,830 income

Total Shareholders' 11,344,609 10,575,928 9,851,107 9,431,206 Equity

Total Liabilitiesand Shareholders' $ 133,225,771 $ 128,303,887 $ 116,263,634 $ 111,028,735 Equity

____________

^(1) For comparability, the Bank has adjusted certain prior period loan amountsto conform to the current period presentation under the Current Expected CreditLosses ("CECL") methodology.

Quarter Ended September 30,

Quarter Ended June 30,

2020

2019 (4)

2020

Average Balances, Yieldsand Rates

Average Balance

Interest Income/Expense (1)

Yields/

Rates (2)

Average Balance

Interest Income/Expense (1)

Yields/

Rates (2)

Average Balance

Interest Income/Expense (1)

Yields/

Rates (2)

($ in thousands)

Assets:

Cash and cash equivalents

$

4,427,985

$

1,181

0.11

%

$

1,161,441

$

5,430

1.86

%

$

2,789,666

$

564

0.08

%

Investment securities:

U.S. Government-sponsored agency securities

202,174

1,186

2.35

%

740,893

5,375

2.90

%

214,835

1,367

2.55

%

Agency residential and commercial MBS

6,250,577

37,437

2.40

%

6,593,422

46,762

2.84

%

6,615,707

42,661

2.58

%

Other residential and commercial MBS

37,860

201

2.13

%

4,473

43

3.84

%

27,499

182

2.65

%

Municipal securities

12,309,647

129,097

4.19

%

9,184,274

101,154

4.41

%

11,949,615

126,906

4.25

%

Other investment securities (3)

44,782

309

2.76

%

24,977

156

2.49

%

43,800

309

2.83

%

Total investment securities

18,845,040

168,230

3.57

%

16,548,039

153,490

3.71

%

18,851,456

171,425

3.64

%

Loans: (4)

Residential real estate (5)

56,906,612

421,545

2.96

%

45,754,902

374,690

3.27

%

53,737,207

404,691

3.01

%

Multifamily (6)

13,312,631

124,759

3.67

%

11,391,573

111,727

3.84

%

12,887,676

120,657

3.70

%

Commercial real estate

7,801,603

78,412

3.93

%

7,280,053

77,654

4.17

%

7,718,257

77,635

3.98

%

Multifamily/commercial construction

2,739,717

30,608

4.37

%

2,294,560

29,055

4.95

%

2,632,682

29,468

4.43

%

Business (7)

12,538,201

110,487

3.45

%

11,551,439

129,314

4.38

%

13,069,640

115,666

3.50

%

PPP

2,091,580

10,825

2.03

%

-

-

-

%

1,620,772

7,659

1.87

%

Other (8)

6,995,592

41,735

2.33

%

5,704,872

48,746

3.34

%

6,658,487

42,116

2.50

%

Total loans

102,385,936

818,371

3.16

%

83,977,399

771,186

3.63

%

98,324,721

797,892

3.23

%

FHLB stock

457,808

6,116

5.31

%

321,778

5,779

7.13

%

491,938

5,059

4.14

%

Total interest-earning assets

126,116,769

993,898

3.12

%

102,008,657

935,885

3.63

%

120,457,781

974,940

3.22

%

Noninterest-earning cash

433,852

335,648

425,440

Goodwill and other intangibles

230,051

266,032

231,934

Other assets

5,074,504

4,409,665

4,905,493

Total noninterest-earning assets

5,738,407

5,011,345

5,562,867

Total Assets

$

131,855,176

$

107,020,002

$

126,020,648

Liabilities and Equity:

Deposits:

Checking

$

64,895,753

2,413

0.01

%

$

48,666,948

8,501

0.07

%

$

58,978,081

3,127

0.02

%

Money market checking and savings

26,220,043

13,675

0.21

%

20,536,777

53,046

1.02

%

24,133,700

15,224

0.25

%

CDs

11,334,100

38,267

1.34

%

13,170,046

73,370

2.21

%

12,721,452

54,129

1.71

%

Total deposits

102,449,896

54,355

0.21

%

82,373,771

134,917

0.65

%

95,833,233

72,480

0.30

%

Borrowings:

Short-term borrowings

5,030

0

0.00

%

2,204,262

12,520

2.25

%

2,747

0

0.04

%

Long-term FHLB advances

14,739,238

62,201

1.68

%

9,796,739

54,901

2.22

%

15,868,682

68,391

1.73

%

Senior notes (9)

995,373

6,032

2.42

%

497,384

3,350

2.69

%

994,905

6,034

2.43

%

Subordinated notes (9)

778,151

9,108

4.68

%

777,730

9,103

4.68

%

778,044

9,107

4.68

%

Total borrowings

16,517,792

77,341

1.86

%

13,276,115

79,874

2.39

%

17,644,378

83,532

1.90

%

Total interest-bearing liabilities

118,967,688

131,696

0.44

%

95,649,886

214,791

0.89

%

113,477,611

156,012

0.55

%

Noninterest-bearing liabilities

2,082,793

2,037,177

2,067,585

Preferred equity

1,226,522

940,000

1,145,000

Common equity

9,578,173

8,392,939

9,330,452

Total Liabilities and Equity

$

131,855,176

$

107,020,002

$

126,020,648

Net interest spread (10)

2.68

%

2.74

%

2.67

%

Net interest income (fully taxable-equivalent basis) and net interest margin (11)

$

862,202

2.71

%

$

721,094

2.80

%

$

818,928

2.70

%

Reconciliation of tax-equivalent net interestincome to reported net interest income:

Tax-equivalent adjustment

(31,922)

(26,109)

(31,516)

Net interest income, as reported

$

830,280

$

694,985

$

787,412

Quarter Ended September 30, Quarter Ended June 30,

2020 2019 ^(4) 2020

Yields Yields YieldsAverage Balances, Interest / Interest / Interest /Yields and Rates Average Balance Income/ Average Balance Income/ Average Balance Income/ Expense ^(1) Rates Expense ^(1) Rates Expense ^(1) Rates ^(2) ^(2) ^(2)

($ in thousands)

Assets:

Cash and cash $ 4,427,985 $ 1,181 0.11 % $ 1,161,441 $ 5,430 1.86 % $ 2,789,666 $ 564 0.08 %equivalents

Investment securities:

U.S.Government-sponsored 202,174 1,186 2.35 % 740,893 5,375 2.90 % 214,835 1,367 2.55 %agency securities

Agency residential 6,250,577 37,437 2.40 % 6,593,422 46,762 2.84 % 6,615,707 42,661 2.58 %and commercial MBS

Other residential 37,860 201 2.13 % 4,473 43 3.84 % 27,499 182 2.65 %and commercial MBS

Municipal securities 12,309,647 129,097 4.19 % 9,184,274 101,154 4.41 % 11,949,615 126,906 4.25 %

Other investment 44,782 309 2.76 % 24,977 156 2.49 % 43,800 309 2.83 %securities^ (3)

Total investment 18,845,040 168,230 3.57 % 16,548,039 153,490 3.71 % 18,851,456 171,425 3.64 %securities



Loans: ^(4)

Residential real 56,906,612 421,545 2.96 % 45,754,902 374,690 3.27 % 53,737,207 404,691 3.01 %estate ^(5)

Multifamily ^(6) 13,312,631 124,759 3.67 % 11,391,573 111,727 3.84 % 12,887,676 120,657 3.70 %

Commercial real 7,801,603 78,412 3.93 % 7,280,053 77,654 4.17 % 7,718,257 77,635 3.98 %estate

Multifamily/commercial 2,739,717 30,608 4.37 % 2,294,560 29,055 4.95 % 2,632,682 29,468 4.43 %construction

Business ^(7) 12,538,201 110,487 3.45 % 11,551,439 129,314 4.38 % 13,069,640 115,666 3.50 %

PPP 2,091,580 10,825 2.03 % - - - % 1,620,772 7,659 1.87 %

Other ^(8) 6,995,592 41,735 2.33 % 5,704,872 48,746 3.34 % 6,658,487 42,116 2.50 %

Total loans 102,385,936 818,371 3.16 % 83,977,399 771,186 3.63 % 98,324,721 797,892 3.23 %

FHLB stock 457,808 6,116 5.31 % 321,778 5,779 7.13 % 491,938 5,059 4.14 %

Totalinterest-earning 126,116,769 993,898 3.12 % 102,008,657 935,885 3.63 % 120,457,781 974,940 3.22 %assets



Noninterest-earning 433,852 335,648 425,440 cash

Goodwill and other 230,051 266,032 231,934 intangibles

Other assets 5,074,504 4,409,665 4,905,493

Totalnoninterest-earning 5,738,407 5,011,345 5,562,867 assets

Total Assets $ 131,855,176 $ 107,020,002 $ 126,020,648



Liabilities and Equity:

Deposits:

Checking $ 64,895,753 2,413 0.01 % $ 48,666,948 8,501 0.07 % $ 58,978,081 3,127 0.02 %

Money market 26,220,043 13,675 0.21 % 20,536,777 53,046 1.02 % 24,133,700 15,224 0.25 %checking and savings

CDs 11,334,100 38,267 1.34 % 13,170,046 73,370 2.21 % 12,721,452 54,129 1.71 %

Total deposits 102,449,896 54,355 0.21 % 82,373,771 134,917 0.65 % 95,833,233 72,480 0.30 %



Borrowings:

Short-term 5,030 0 0.00 % 2,204,262 12,520 2.25 % 2,747 0 0.04 %borrowings

Long-term FHLB 14,739,238 62,201 1.68 % 9,796,739 54,901 2.22 % 15,868,682 68,391 1.73 %advances

Senior notes^ (9) 995,373 6,032 2.42 % 497,384 3,350 2.69 % 994,905 6,034 2.43 %

Subordinated notes ^ 778,151 9,108 4.68 % 777,730 9,103 4.68 % 778,044 9,107 4.68 %(9)

Total borrowings 16,517,792 77,341 1.86 % 13,276,115 79,874 2.39 % 17,644,378 83,532 1.90 %

Totalinterest-bearing 118,967,688 131,696 0.44 % 95,649,886 214,791 0.89 % 113,477,611 156,012 0.55 %liabilities



Noninterest-bearing 2,082,793 2,037,177 2,067,585 liabilities

Preferred equity 1,226,522 940,000 1,145,000

Common equity 9,578,173 8,392,939 9,330,452

Total Liabilities $ 131,855,176 $ 107,020,002 $ 126,020,648 and Equity



Net interest spread 2.68 % 2.74 % 2.67 %^(10)

Net interest income(fullytaxable-equivalent $ 862,202 2.71 % $ 721,094 2.80 % $ 818,928 2.70 %basis) and netinterest margin^(11)



Reconciliation of tax-equivalent netinterest income to reported net interest income:

Tax-equivalent adjustment (31,922) (26,109) (31,516)

Net interest income, as reported $ 830,280 $ 694,985 $ 787,412

Nine Months Ended September 30,

2020

2019 (4)

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

$

3,028,868

$

5,685

0.25

%

$

1,231,578

$

18,966

2.06

%

Investment securities:

U.S. Government-sponsored agency securities

241,343

4,760

2.63

%

938,081

20,827

2.96

%

Agency residential and commercial MBS

6,536,601

127,283

2.60

%

6,705,085

144,106

2.87

%

Other residential and commercial MBS

23,118

415

2.40

%

4,508

131

3.88

%

Municipal securities

11,874,265

379,182

4.26

%

8,624,534

293,060

4.53

%

Other investment securities (3)

44,125

939

2.83

%

21,121

403

2.54

%

Total investment securities

18,719,452

512,579

3.65

%

16,293,329

458,527

3.75

%

Loans: (4)

Residential real estate (5)

53,991,954

1,231,219

3.04

%

43,212,352

1,073,950

3.31

%

Multifamily (6)

12,923,436

364,360

3.70

%

10,980,052

320,977

3.85

%

Commercial real estate

7,698,522

234,655

4.00

%

6,978,946

223,602

4.22

%

Multifamily/commercial construction

2,641,375

90,361

4.49

%

2,286,710

85,971

4.96

%

Business (7)

12,665,609

349,205

3.62

%

11,216,470

382,143

4.49

%

PPP

1,240,568

18,484

1.96

%

-

-

-

%

Other (8)

6,703,449

131,423

2.58

%

5,382,125

139,274

3.41

%

Total loans

97,864,913

2,419,707

3.27

%

80,056,655

2,225,917

3.69

%

FHLB stock

452,260

18,135

5.36

%

310,758

15,768

6.78

%

Total interest-earning assets

120,065,493

2,956,106

3.26

%

97,892,320

2,719,178

3.69

%

Noninterest-earning cash

434,181

341,984

Goodwill and other intangibles

232,014

269,246

Other assets

4,901,072

4,306,791

Total noninterest-earning assets

5,567,267

4,918,021

Total Assets

$

125,632,760

$

102,810,341

Liabilities and Equity:

Deposits:

Checking

$

59,266,405

13,972

0.03

%

$

47,006,632

21,541

0.06

%

Money market checking and savings

24,283,378

73,769

0.41

%

19,714,378

146,900

1.00

%

CDs

12,742,008

157,939

1.66

%

12,457,649

203,411

2.18

%

Total deposits

96,291,791

245,680

0.34

%

79,178,659

371,852

0.63

%

Borrowings:

Short-term borrowings

411,712

4,700

1.52

%

2,016,744

36,832

2.44

%

Long-term FHLB advances

14,676,405

197,158

1.79

%

9,149,268

147,669

2.16

%

Senior notes (9)

918,809

16,839

2.44

%

741,731

14,818

2.66

%

Subordinated notes (9)

778,045

27,320

4.68

%

777,629

27,305

4.68

%

Total borrowings

16,784,971

246,017

1.96

%

12,685,372

226,624

2.39

%

Total interest-bearing liabilities

113,076,762

491,697

0.58

%

91,864,031

598,476

0.87

%

Noninterest-bearing liabilities

2,060,245

1,780,107

Preferred equity

1,172,372

940,000

Common equity

9,323,381

8,226,203

Total Liabilities and Equity

$

125,632,760

$

102,810,341

Net interest spread (10)

2.68

%

2.82

%

Net interest income (fully taxable-equivalent basis) and net interest margin (11)

$

2,464,409

2.72

%

$

2,120,702

2.87

%

Reconciliation of tax-equivalent net interest incometo reported net interest income:

Tax-equivalent adjustment

(94,585)

(76,653)

Net interest income, as reported

$

2,369,824

$

2,044,049

Nine Months Ended September 30,

2020 2019 ^(4)

Yields YieldsAverage Balances, Interest / Interest /Yields and Rates Average Balance Income/ Average Balance Income/ Expense ^(1) Rates Expense ^(1) Rates ^(2) ^(2)

($ in thousands)

Assets:

Cash and cash $ 3,028,868 $ 5,685 0.25 % $ 1,231,578 $ 18,966 2.06 %equivalents

Investment securities:

U.S.Government-sponsored 241,343 4,760 2.63 % 938,081 20,827 2.96 %agency securities

Agency residential 6,536,601 127,283 2.60 % 6,705,085 144,106 2.87 %and commercial MBS

Other residential 23,118 415 2.40 % 4,508 131 3.88 %and commercial MBS

Municipal securities 11,874,265 379,182 4.26 % 8,624,534 293,060 4.53 %

Other investment 44,125 939 2.83 % 21,121 403 2.54 %securities^ (3)

Total investment 18,719,452 512,579 3.65 % 16,293,329 458,527 3.75 %securities



Loans: ^(4)

Residential real 53,991,954 1,231,219 3.04 % 43,212,352 1,073,950 3.31 %estate ^(5)

Multifamily ^(6) 12,923,436 364,360 3.70 % 10,980,052 320,977 3.85 %

Commercial real 7,698,522 234,655 4.00 % 6,978,946 223,602 4.22 %estate

Multifamily/commercial 2,641,375 90,361 4.49 % 2,286,710 85,971 4.96 %construction

Business ^(7) 12,665,609 349,205 3.62 % 11,216,470 382,143 4.49 %

PPP 1,240,568 18,484 1.96 % - - - %

Other ^(8) 6,703,449 131,423 2.58 % 5,382,125 139,274 3.41 %

Total loans 97,864,913 2,419,707 3.27 % 80,056,655 2,225,917 3.69 %

FHLB stock 452,260 18,135 5.36 % 310,758 15,768 6.78 %

Totalinterest-earning 120,065,493 2,956,106 3.26 % 97,892,320 2,719,178 3.69 %assets



Noninterest-earning 434,181 341,984 cash

Goodwill and other 232,014 269,246 intangibles

Other assets 4,901,072 4,306,791

Totalnoninterest-earning 5,567,267 4,918,021 assets

Total Assets $ 125,632,760 $ 102,810,341



Liabilities and Equity:

Deposits:

Checking $ 59,266,405 13,972 0.03 % $ 47,006,632 21,541 0.06 %

Money market 24,283,378 73,769 0.41 % 19,714,378 146,900 1.00 %checking and savings

CDs 12,742,008 157,939 1.66 % 12,457,649 203,411 2.18 %

Total deposits 96,291,791 245,680 0.34 % 79,178,659 371,852 0.63 %



Borrowings:

Short-term 411,712 4,700 1.52 % 2,016,744 36,832 2.44 %borrowings

Long-term FHLB 14,676,405 197,158 1.79 % 9,149,268 147,669 2.16 %advances

Senior notes ^(9) 918,809 16,839 2.44 % 741,731 14,818 2.66 %

Subordinated notes ^ 778,045 27,320 4.68 % 777,629 27,305 4.68 %(9)

Total borrowings 16,784,971 246,017 1.96 % 12,685,372 226,624 2.39 %

Totalinterest-bearing 113,076,762 491,697 0.58 % 91,864,031 598,476 0.87 %liabilities



Noninterest-bearing 2,060,245 1,780,107 liabilities

Preferred equity 1,172,372 940,000

Common equity 9,323,381 8,226,203

Total Liabilities $ 125,632,760 $ 102,810,341 and Equity



Net interest spread 2.68 % 2.82 %^(10)

Net interest income(fullytaxable-equivalent $ 2,464,409 2.72 % $ 2,120,702 2.87 %basis) and netinterest margin^(11)



Reconciliation oftax-equivalent netinterest income to reported netinterest income:

Tax-equivalent (94,585) (76,653) adjustment

Net interest income, $ 2,369,824 $ 2,044,049 as reported

__________

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

(2) Yields/rates are annualized.

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

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

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

(6) Includes multifamily loans held for sale.

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

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

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

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

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

__________

^(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 equitysecurities.

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

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

^(6) Includes multifamily loans held for sale.

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

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

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

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

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



Quarter EndedSeptember 30,

Quarter EndedJune 30,

Nine Months EndedSeptember 30,

Operating Information

2020

2019

2020

2020

2019

($ in thousands, except per share amounts)

Net income to average assets (1)

0.88

%

0.87

%

0.82

%

0.82

%

0.89

%

Net income available to common shareholders to

average common equity (1)

11.56

%

10.50

%

10.43

%

10.40

%

10.49

%

Net income available to common shareholders to

average tangible common equity (1)

11.84

%

10.84

%

10.70

%

10.67

%

10.85

%

Dividends per common share

$

0.20

$

0.19

$

0.20

$

0.59

$

0.56

Dividend payout ratio

12.4

%

14.5

%

14.3

%

14.0

%

14.7

%

Efficiency ratio (2), (3)

60.7

%

63.8

%

62.0

%

62.0

%

64.4

%

Net loan charge-offs

$

1,687

$

4,341

$

1,098

$

2,987

$

5,694

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

0.01

%

0.02

%

0.00

%

0.00

%

0.01

%

Allowance for loan credit losses to:

Total loans

0.58

%

0.56

%

0.58

%

0.58

%

0.56

%

Nonaccrual loans

368.2

%

354.5

%

354.1

%

368.2

%

354.5

%

__________

(1) Ratios are annualized.

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

(3) The provision for unfunded loan commitments is included in the provision for credit losses for 2020 periods. For 2019 periods, the provision for unfunded loan commitments is included in other noninterest expense.

Quarter Ended Quarter Nine Months Ended September 30, Ended September 30, June 30,

Operating 2020 2019 2020 2020 2019Information

($ in thousands,except per share amounts)

Net income to 0.88 % 0.87 % 0.82 % 0.82 % 0.89 %average assets ^(1)

Net incomeavailable to commonshareholders to 11.56 % 10.50 % 10.43 % 10.40 % 10.49 %

average commonequity ^(1)

Net incomeavailable to commonshareholders to 11.84 % 10.84 % 10.70 % 10.67 % 10.85 %

average tangiblecommon equity ^(1)

Dividends per $ 0.20 $ 0.19 $ 0.20 $ 0.59 $ 0.56 common share

Dividend payout 12.4 % 14.5 % 14.3 % 14.0 % 14.7 %ratio

Efficiency ratio ^ 60.7 % 63.8 % 62.0 % 62.0 % 64.4 %(2), (3)



Net loan $ 1,687 $ 4,341 $ 1,098 $ 2,987 $ 5,694 charge-offs

Net loancharge-offs to 0.01 % 0.02 % 0.00 % 0.00 % 0.01 %average total loans^(1)



Allowance for loan credit losses to:

Total loans 0.58 % 0.56 % 0.58 % 0.58 % 0.56 %

Nonaccrual loans 368.2 % 354.5 % 354.1 % 368.2 % 354.5 %

__________

^(1) Ratios are annualized.

^(2) Efficiency ratio is the ratio of noninterest expense to the sum of netinterest income and noninterest income.

^(3) The provision for unfunded loan commitments is included in the provisionfor credit losses for 2020 periods. For 2019 periods, the provision forunfunded loan commitments is included in other noninterest expense.

Quarter EndedSeptember 30,

Quarter EndedJune 30,

Nine Months EndedSeptember 30,

Effective Tax Rate

2020

2019

2020

2020

2019

Effective tax rate, prior to excess tax benefits and tax refund from an amended tax return

21.1

%

21.4

%

22.5

%

21.6

%

21.4

%

Excess tax benefits-stock options

(0.1)

(3.3)

(1.0)

(0.8)

(3.6)

Excess tax benefits-other stock awards

(0.1)

(0.1)

(2.1)

(0.8)

(0.8)

Total excess tax benefits

(0.2)

(3.4)

(3.1)

(1.6)

(4.4)

Tax refund from an amended tax return

(1.3)

-

-

(0.5)

-

Effective tax rate

19.6

%

18.0

%

19.4

%

19.5

%

17.0

%

Quarter Quarter Ended Ended Nine Months Ended September 30, June September 30, 30,

Effective Tax Rate 2020 2019 2020 2020 2019

Effective tax rate, prior toexcess tax benefits and tax 21.1 % 21.4 % 22.5 % 21.6 % 21.4 %refund from an amended taxreturn



Excess tax benefits-stock (0.1) (3.3) (1.0) (0.8) (3.6) options

Excess tax benefits-other (0.1) (0.1) (2.1) (0.8) (0.8) stock awards

Total excess tax benefits (0.2) (3.4) (3.1) (1.6) (4.4)



Tax refund from an amended (1.3) - - (0.5) -tax return

Effective tax rate 19.6 % 18.0 % 19.4 % 19.5 % 17.0 %



Provision for Credit Losses

Quarter EndedSeptember 30,

Quarter EndedJune 30,

Nine Months EndedSeptember 30,

2020

2019

2020

2020

2019

($ in thousands)

Debt securities held-to-maturity

$

333

$

-

$

296

$

1,047

$

-

Loans

22,437

16,711

43,189

113,305

52,111

Unfunded loan commitments (1)

5,768

-

(12,368)

7,673

-

Total provision

$

28,538

$

16,711

$

31,117

$

122,025

$

52,111

__________

(1) The provision for unfunded loan commitments is included in the provision for credit losses for 2020 periods. For 2019 periods, the provision for unfunded loan commitments is included in other noninterest expense, which is not presented in this table.

Quarter Ended Quarter Nine Months EndedProvision for September 30, Ended September 30,Credit Losses June 30,

2020 2019 2020 2020 2019

($ in thousands)

Debt securities $ 333 $ - $ 296 $ 1,047 $ - held-to-maturity

Loans 22,437 16,711 43,189 113,305 52,111

Unfunded loan 5,768 - (12,368) 7,673 - commitments ^(1)

Total provision $ 28,538 $ 16,711 $ 31,117 $ 122,025 $ 52,111

__________

^(1) The provision for unfunded loan commitments is included in the provisionfor credit losses for 2020 periods. For 2019 periods, the provision forunfunded loan commitments is included in other noninterest expense, which isnot presented in this table.

Quarter EndedSeptember 30, 2020

Nine Months EndedSeptember 30, 2020

Allowance for CreditLosses

Debt Securities Held-to-Maturity

Loans

Unfunded Loan Commitments (1)

Total

Debt Securities Held-to-Maturity

Loans

Unfunded Loan Commitments (1)

Total

($ in thousands)

Balance at beginning of

period (2)

$

5,383

$

583,997

$

17,602

$

606,982

$

4,669

$

494,429

$

15,697

$

514,795

Provision for credit losses

333

22,437

5,768

28,538

1,047

113,305

7,673

122,025

Net charge-offs

-

(1,687)

-

(1,687)

-

(2,987)

-

(2,987)

Balance at end of period

$

5,716

$

604,747

$

23,370

$

633,833

$

5,716

$

604,747

$

23,370

$

633,833

__________

(1) The allowance for credit losses on unfunded loan commitments is included in other liabilities.

(2) For the nine months ended September 30, 2020, represents the balance after the cumulative effect adjustment from the adoption of CECL.

Quarter Ended Nine Months Ended September 30, 2020 September 30, 2020

Allowance Unfunded Unfundedfor Credit Debt Securities Loans Loan Total Debt Securities Loans Loan TotalLosses Held-to-Maturity Commitments Held-to-Maturity Commitments ^(1) ^(1)

($ in thousands)

Balance atbeginningof $ 5,383 $ 583,997 $ 17,602 $ 606,982 $ 4,669 $ 494,429 $ 15,697 $ 514,795

period ^(2)

Provisionfor credit 333 22,437 5,768 28,538 1,047 113,305 7,673 122,025 losses

Net - (1,687) - (1,687) - (2,987) - (2,987) charge-offs

Balance atend of $ 5,716 $ 604,747 $ 23,370 $ 633,833 $ 5,716 $ 604,747 $ 23,370 $ 633,833 period

__________

^(1) The allowance for credit losses on unfunded loan commitments is includedin other liabilities.

^(2) For the nine months ended September 30, 2020, represents the balance afterthe cumulative effect adjustment from the adoption of CECL.

Quarter EndedSeptember 30,

Quarter EndedJune 30,

Nine Months EndedSeptember 30,

Mortgage Loan Sales

2020

2019

2020

2020

2019

($ in thousands)

Loans sold:

Flow sales:

Agency

$

44,118

$

25,214

$

10,810

$

80,702

$

51,426

Non-agency

-

11,932

-

31,870

43,266

Total flow sales

44,118

37,146

10,810

112,572

94,692

Bulk sales:

Non-agency

235,732

-

-

673,401

152,119

Securitizations

-

-

300,116

300,116

-

Total loans sold

$

279,850

$

37,146

$

310,926

$

1,086,089

$

246,811

Gain (loss) on sale of loans:

Amount (1)

$

13,797

$

122

$

(1,147)

$

14,575

$

466

Gain (loss) as a percentage of loans sold (1)

4.93

%

0.33

%

(0.37)

%

1.34

%

0.19

%

__________

(1) The gain for the quarter and nine months ended September 30, 2020 included $10.3 million related to discounts on purchased loans. Excluding these discounts of $10.3 million, the gain as a percentage of loans sold was 1.24% and 0.39% for the quarter and nine months ended September 30, 2020, respectively.

Quarter Ended Quarter Nine Months Ended September 30, Ended September 30, June 30,

Mortgage Loan 2020 2019 2020 2020 2019Sales

($ in thousands)

Loans sold:

Flow sales:

Agency $ 44,118 $ 25,214 $ 10,810 $ 80,702 $ 51,426

Non-agency - 11,932 - 31,870 43,266

Total flow 44,118 37,146 10,810 112,572 94,692 sales



Bulk sales:

Non-agency 235,732 - - 673,401 152,119



Securitizations - - 300,116 300,116 -



Total loans $ 279,850 $ 37,146 $ 310,926 $ 1,086,089 $ 246,811 sold



Gain (loss) on sale of loans:

Amount ^(1) $ 13,797 $ 122 $ (1,147) $ 14,575 $ 466

Gain (loss) asa percentage of 4.93 % 0.33 % (0.37) % 1.34 % 0.19 %loans sold ^(1)

__________

^(1) The gain for the quarter and nine months ended September 30, 2020 included$10.3 million related to discounts on purchased loans. Excluding thesediscounts of $10.3 million, the gain as a percentage of loans sold was 1.24%and 0.39% for the quarter and nine months ended September 30, 2020,respectively.

Quarter EndedSeptember 30,

Quarter EndedJune 30,

Nine Months EndedSeptember 30,

Loan Originations

2020

2019 (1)

2020 (2)

2020

2019 (1)

($ in thousands)

Single family (1-4 units)

$

6,813,850

$

4,872,598

$

5,875,184

$

16,208,370

$

11,129,819

Home equity lines of credit

432,443

359,154

457,737

1,285,688

1,067,881

Single family construction

186,833

175,361

119,318

415,313

455,061

Multifamily (5+ units)

955,951

710,183

946,820

2,684,074

2,105,764

Commercial real estate

193,228

543,964

330,683

975,769

1,309,736

Multifamily/commercial construction

245,220

387,144

131,414

997,555

835,272

Capital call lines of credit

1,803,907

2,337,530

1,405,347

5,594,483

5,463,704

Tax-exempt

328,711

48,125

184,054

612,784

234,470

Other business

243,788

428,533

914,257

1,777,824

1,108,712

PPP

-

-

1,981,797

1,981,797

-

Stock secured

685,250

443,691

519,416

1,797,226

1,119,145

Other secured

189,386

218,831

358,730

961,940

841,001

Unsecured

159,379

438,278

203,270

685,537

1,068,959

Total loans originated

$

12,237,946

$

10,963,392

$

13,428,027

$

35,978,360

$

26,739,524

__________

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

(2) Excluding PPP loan originations, total loan originations were $11.4 billion for the quarter ended June 30, 2020.

Quarter Ended Quarter Ended Nine Months Ended September 30, June 30, September 30,

Loan 2020 2019 ^(1) 2020 ^(2) 2020 2019 ^(1)Originations

($ in thousands)

Singlefamily (1-4 $ 6,813,850 $ 4,872,598 $ 5,875,184 $ 16,208,370 $ 11,129,819 units)

Home equitylines of 432,443 359,154 457,737 1,285,688 1,067,881 credit

Singlefamily 186,833 175,361 119,318 415,313 455,061 construction

Multifamily 955,951 710,183 946,820 2,684,074 2,105,764 (5+ units)

Commercial 193,228 543,964 330,683 975,769 1,309,736 real estate

Multifamily/commercial 245,220 387,144 131,414 997,555 835,272 construction

Capital calllines of 1,803,907 2,337,530 1,405,347 5,594,483 5,463,704 credit

Tax-exempt 328,711 48,125 184,054 612,784 234,470

Other 243,788 428,533 914,257 1,777,824 1,108,712 business

PPP - - 1,981,797 1,981,797 -

Stock 685,250 443,691 519,416 1,797,226 1,119,145 secured

Other 189,386 218,831 358,730 961,940 841,001 secured

Unsecured 159,379 438,278 203,270 685,537 1,068,959

Total loans $ 12,237,946 $ 10,963,392 $ 13,428,027 $ 35,978,360 $ 26,739,524 originated

__________

^(1) For comparability, the Bank has adjusted certain prior period amounts toconform to the current period presentation under CECL.

^(2) Excluding PPP loan originations, total loan originations were $11.4billion for the quarter ended June 30, 2020.

As of

Asset Quality Information

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

($ in thousands)

Nonperforming assets:

Nonaccrual loans

$

164,247

$

164,930

$

125,418

$

143,181

$

136,928

Other real estate owned

-

1,071

1,071

-

-

Total nonperforming assets

$

164,247

$

166,001

$

126,489

$

143,181

$

136,928

Nonperforming assets to total assets

0.12

%

0.13

%

0.10

%

0.12

%

0.12

%

Accruing loans 90 days or more past due

$

935

$

3,764

$

-

$

-

$

-

Restructured accruing loans

$

11,378

$

11,501

$

13,418

$

13,287

$

14,964

As of

Asset Quality September June 30, March 31, December SeptemberInformation 30, 2020 2020 31, 30, 2020 2019 2019

($ in thousands)

Nonperforming assets:

Nonaccrual $ 164,247 $ 164,930 $ 125,418 $ 143,181 $ 136,928 loans

Other real - 1,071 1,071 - - estate owned

Totalnonperforming $ 164,247 $ 166,001 $ 126,489 $ 143,181 $ 136,928 assets



Nonperformingassets to 0.12 % 0.13 % 0.10 % 0.12 % 0.12 %total assets



Accruingloans 90 days $ 935 $ 3,764 $ - $ - $ - or more pastdue



Restructuredaccruing $ 11,378 $ 11,501 $ 13,418 $ 13,287 $ 14,964 loans

September 30, 2020

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

Unpaid Principal Balance

Deferred Interest (5)

LTV (6)

Average Loan Size

Number of Loans

($ in millions)

Single family (1-4 units)

$

1,780

$

25

60

%

$

1.0

1,788

Home equity lines of credit

71

1

57

%

$

0.4

174

Single family construction

10

-

55

%

$

1.4

7

Multifamily (5+ units)

548

7

52

%

$

3.1

179

Commercial real estate

1,004

13

48

%

$

3.7

275

Multifamily/commercial construction

68

2

41

%

$

6.8

10

Capital call lines of credit

-

-

n/a

$

-

-

Tax-exempt

72

1

n/a

$

17.9

4

Other business

176

2

n/a

$

1.3

138

Stock secured

-

-

n/a

$

-

-

Other secured

5

-

n/a

$

0.5

12

Unsecured (7)

131

-

n/a

$

0.1

985

Total

$

3,865

$

51

3,572

__________

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

(2) Includes 936 loans totaling $297 million that have completed their deferral period, but for which a normal payment is not yet due.

(3) Includes 10 loans totaling $46 million that were modified a second time.

(4) Excludes 395 loans totaling $330 million that have completed their deferral period and returned to a normal payment schedule or are no longer outstanding.

(5) Represents interest payments not made during the deferral period through September 30, 2020.

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

(7) Includes $130 million of household debt refinance loans.

September 30, 2020

COVID-19 Loan Modifications Unpaid Deferred LTV Average Number^(1), (2), (3), (4) Principal Interest ^(6) Loan of Balance ^(5) Size Loans

($ in millions)

Single family (1-4 units) $ 1,780 $ 25 60 % $ 1.0 1,788

Home equity lines of credit 71 1 57 % $ 0.4 174

Single family construction 10 - 55 % $ 1.4 7

Multifamily (5+ units) 548 7 52 % $ 3.1 179

Commercial real estate 1,004 13 48 % $ 3.7 275

Multifamily/commercial 68 2 41 % $ 6.8 10 construction

Capital call lines of credit - - n/a $ - -

Tax-exempt 72 1 n/a $ 17.9 4

Other business 176 2 n/a $ 1.3 138

Stock secured - - n/a $ - -

Other secured 5 - n/a $ 0.5 12

Unsecured ^(7) 131 - n/a $ 0.1 985

Total $ 3,865 $ 51 3,572

__________

^(1) COVID-19 loan modifications are not classified as troubled debtrestructurings.

^(2) Includes 936 loans totaling $297 million that have completed theirdeferral period, but for which a normal payment is not yet due.

^(3) Includes 10 loans totaling $46 million that were modified a second time.

^(4) Excludes 395 loans totaling $330 million that have completed theirdeferral period and returned to a normal payment schedule or are no longeroutstanding.

^(5) Represents interest payments not made during the deferral period throughSeptember 30, 2020.

^(6) Weighted average loan-to-value ("LTV") ratios for real estate securedloans are based on appraised value at the time of origination.

^(7) Includes $130 million of household debt refinance loans.

September 30, 2020

Loan Industry Information

Unpaid Principal Balance

LTV

Average Loan Size

Number of Loans

Personal Guarantee %

($ in millions)

Retail

$

1,774

49

%

$

2.7

682

76

%

Hotel

430

48

%

$

6.8

65

74

%

Restaurant (1)

231

51

%

$

1.1

215

94

%

Total (2)

$

2,435

962

__________

(1) Approximately 70% of loans to restaurants are real estate secured.

(2) Amounts in the table above exclude $43 million of loans for hotels and $135 million of loans for restaurants under the PPP.

September 30, 2020

Loan Industry Unpaid Average Number PersonalInformation Principal LTV Loan of Guarantee Balance Size Loans %

($ in millions)

Retail $ 1,774 49 % $ 2.7 682 76 %

Hotel 430 48 % $ 6.8 65 74 %

Restaurant ^(1) 231 51 % $ 1.1 215 94 %

Total ^(2) $ 2,435 962

__________

^(1) Approximately 70% of loans to restaurants are real estate secured.

^(2) Amounts in the table above exclude $43 million of loans for hotels and$135 million of loans for restaurants under the PPP.

As of

Loan Servicing Portfolio

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

($ in millions)

Loans serviced for investors

$

7,799

$

8,316

$

9,203

$

9,298

$

10,080

As of

Loan Servicing September June 30, March 31, December SeptemberPortfolio 30, 2020 2020 31, 30, 2020 2019 2019

($ in millions)

Loans serviced for $ 7,799 $ 8,316 $ 9,203 $ 9,298 $ 10,080 investors

Common Shares, Book Value per Common Shareand Tangible Book Value per Common Share

As of

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

(in thousands, except per share amounts)

Number of shares of common stock outstanding

172,188

172,094

171,395

168,621

168,450

Book value per common share

$

56.33

$

54.80

$

53.76

$

51.63

$

50.41

Tangible book value per common share

$

55.00

$

53.46

$

52.40

$

50.24

$

48.84

Common Shares, Book As ofValue per CommonShare and Tangible September June 30, March 31, December SeptemberBook Value per 30, 2020 2020 31, 30,Common Share 2020 2019 2019

(in thousands,except per share amounts)

Number of shares ofcommon stock 172,188 172,094 171,395 168,621 168,450 outstanding

Book value per $ 56.33 $ 54.80 $ 53.76 $ 51.63 $ 50.41 common share

Tangible book value $ 55.00 $ 53.46 $ 52.40 $ 50.24 $ 48.84 per common share

As of

Capital Ratios

September 30,2020 (1), (2)

June 30,2020 (2)

March 31,2020 (2)

December 31,2019

September 30,2019

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

8.38

%

8.15

%

8.46

%

8.39

%

8.50

%

Common Equity Tier 1 capital to risk-weighted assets

9.78

%

9.80

%

9.87

%

9.86

%

9.91

%

Tier 1 capital to risk-weighted assets

11.50

%

11.04

%

11.14

%

11.21

%

11.05

%

Total capital to risk-weighted assets

12.94

%

12.49

%

12.62

%

12.73

%

12.61

%

Regulatory Capital (3)

($ in thousands)

Common Equity Tier 1 capital

$

9,375,688

$

9,103,771

$

8,887,905

$

8,371,192

$

8,124,179

Tier 1 capital

$

11,020,688

$

10,248,771

$

10,032,905

$

9,516,192

$

9,064,179

Total capital

$

12,396,304

$

11,604,141

$

11,365,654

$

10,802,209

$

10,340,902

Assets (3)

($ in thousands)

Average assets

$

131,517,445

$

125,690,830

$

118,626,842

$

113,403,507

$

106,659,003

Risk-weighted assets

$

95,823,385

$

92,870,859

$

90,072,400

$

84,885,943

$

81,994,651

__________

(1) Ratios and amounts as of September 30, 2020 are preliminary.

(2) In accordance with the CECL Interim Final Rule, the Bank elected to delay the estimated impact of CECL on its regulatory capital and risk-weighted assets over a five-year transition period ending December 31, 2024. Ratios and amounts for 2020 periods have been adjusted to exclude the following impacts attributed to the adoption of CECL: decreases in retained earnings, increases in allowance for credit losses on loans, held-to-maturity debt securities and unfunded loan commitments, decreases in average assets, and increases in risk-weighted assets.

(3) As defined by regulatory capital rules.

As of

Capital September 30, June 30, March 31, December 31, September 30,Ratios 2020 ^(1), (2) 2020 ^(2) 2020 ^(2) 2019 2019

Tier 1leverageratio (Tier 1 8.38 % 8.15 % 8.46 % 8.39 % 8.50 %capital toaverageassets)

Common EquityTier 1capital to 9.78 % 9.80 % 9.87 % 9.86 % 9.91 %risk-weightedassets

Tier 1capital to 11.50 % 11.04 % 11.14 % 11.21 % 11.05 %risk-weightedassets

Total capitalto 12.94 % 12.49 % 12.62 % 12.73 % 12.61 %risk-weightedassets

Regulatory Capital ^(3)

($ in thousands)

Common EquityTier 1 $ 9,375,688 $ 9,103,771 $ 8,887,905 $ 8,371,192 $ 8,124,179 capital

Tier 1 $ 11,020,688 $ 10,248,771 $ 10,032,905 $ 9,516,192 $ 9,064,179 capital

Total capital $ 12,396,304 $ 11,604,141 $ 11,365,654 $ 10,802,209 $ 10,340,902

Assets ^(3)

($ in thousands)

Average $ 131,517,445 $ 125,690,830 $ 118,626,842 $ 113,403,507 $ 106,659,003 assets

Risk-weighted $ 95,823,385 $ 92,870,859 $ 90,072,400 $ 84,885,943 $ 81,994,651 assets

__________

^(1) Ratios and amounts as of September 30, 2020 are preliminary.

^(2) In accordance with the CECL Interim Final Rule, the Bank elected to delaythe estimated impact of CECL on its regulatory capital and risk-weighted assetsover a five-year transition period ending December 31, 2024. Ratios and amountsfor 2020 periods have been adjusted to exclude the following impacts attributedto the adoption of CECL: decreases in retained earnings, increases in allowancefor credit losses on loans, held-to-maturity debt securities and unfunded loancommitments, decreases in average assets, and increases in risk-weightedassets.

^(3) As defined by regulatory capital rules.

As of

Wealth Management Assets

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

($ in millions)

First Republic Investment Management

$

74,661

$

68,124

$

60,056

$

66,029

$

61,204

Brokerage and investment:

Brokerage

76,769

70,178

60,189

68,807

63,053

Money market mutual funds

4,416

5,933

6,893

4,268

4,402

Total brokerage and investment

81,185

76,111

67,082

73,075

67,455

Trust Company:

Trust

8,687

7,905

7,288

7,121

6,366

Custody

3,651

3,646

3,461

4,818

5,210

Total Trust Company

12,338

11,551

10,749

11,939

11,576

Total Wealth Management Assets

$

168,184

$

155,786

$

137,887

$

151,043

$

140,235

View source version on businesswire.com: https://www.businesswire.com/news/home/20201013005378/en/

CONTACT: Investors: Andrew Greenebaum / Lasse Glassen Addo Investor Relations agreenebaum@addoir.com lglassen@addoir.com (310) 829-5400

CONTACT: Media: Greg Berardi Blue Marlin Partners greg@bluemarlinpartners.com (415) 239-7826