Business Wire | Jul 14, 2020 07:00AM EDT

First Republic Reports Second Quarter 2020 Results

Jul. 14, 2020

SAN FRANCISCO--(BUSINESS WIRE)--Jul. 14, 2020--First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended June 30, 2020.

"Second quarter results were very strong," said Jim Herbert, Founder, Chairman and CEO of First Republic. "Loan origination volume was our best ever, while deposits and wealth management assets also grew very nicely. Since its founding 35 years ago, First Republic's simple, conservative, client-centric business model has delivered consistently strong results."

Quarterly Highlights

Financial Results

- Year-over-year:

- Revenues were $919.0 million, up 12.2%.

- Net interest income was $787.4 million, up 16.8%.

- Provision for credit losses was $31.1 million, compared to $21.2 million for the second quarter of 2019.

- Net income was $256.8 million, up 15.4%.

- Diluted earnings per share of $1.40, up 12.9%.

- Tangible book value per share was $53.46, up 12.2%.

- Loan originations totaled $11.4 billion (excluding originations under the Small Business Administration's Paycheck Protection Program ("PPP")), our best quarter ever.

- Net interest margin was 2.70%, compared to 2.74% for the prior quarter.

- Efficiency ratio was 62.0%, compared to 63.5% for the prior quarter. (1)

Continued Capital and Credit Strength

- Tier 1 leverage ratio was 8.15%.

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

- Net charge-offs were only $1.1 million, or less than 1 basis point of average loans.

Continued Franchise Development

- Year-over-year:

- Loans totaled $97.9 billion, up 19.1% (excluding PPP and for sale loans).

- Deposits were $98.5 billion, up 18.1%.

- Wealth management assets were $155.8 billion, up 13.2%.

- Wealth management revenues were $113.9 million, down 5.3%.

"We're very pleased with the continued double-digit growth in total revenue, net interest income and earnings per share," said Mike Roffler, Chief Financial Officer. "Credit quality, capital and liquidity remain strong."

Quarterly Cash Dividend of $0.20 per Share

The Bank declared a cash dividend for the second quarter of $0.20 per share of common stock, which is payable on August 13, 2020 to shareholders of record as of July 30, 2020. The current quarterly dividend is an increase from the same quarter last year.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were only 13 basis points of total assets at June 30, 2020. The Bank had modest net loan charge-offs of $1.1 million for the quarter.

During the second quarter, the Bank recorded a provision for credit losses of $31.1 million, which included a provision for credit losses of $43.5 million for loans and held-to-maturity debt securities, offset by a reversal of a prior provision for unfunded loan commitments of $12.4 million. In the second quarter of 2019, the provision for credit losses for loans was $21.2 million. The increase in the provision for credit losses compared to a year ago reflects loan growth, as well as the CECL methodology beginning in 2020, which incorporates a significant change in economic outlook compared to the prior year.

COVID-19

Our response to the pandemic includes: quite successful company-wide remote working arrangements, modified openings and hours in our preferred banking offices, social distancing and other measures to ensure the safety of our colleagues and clients; and community support through corporate contributions for those in need. In addition, we continue to support those of our clients who are experiencing financial challenges by offering loan modifications. We have also provided loans to small businesses under the PPP.

Loan Modifications

Loan modifications to those borrowers experiencing financial challenges as a result of COVID-19 (not classified as troubled debt restructurings) totaled approximately $3.9 billion, and an additional $345 million were in process as of June 30, 2020. Total completed and in process modifications as of June 30, 2020 were 4.3% 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 June 30, 2020, only 2.4% of total loans. As of June 30, 2020, the Bank had completed and in process modifications of these portfolios for approximately $650 million, or 27%.

Continued Capital Strength

The Bank's Tier 1 leverage ratio was 8.15% at June 30, 2020, compared to 8.46% at March 31, 2020.

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

Tangible Book Value Growth

Tangible book value per common share at June 30, 2020 was $53.46, up 12.2% from a year ago.

Continued Franchise Development

Loan Originations and Sales

Loan originations (excluding PPP loans) were $11.4 billion for the quarter, up 23.1% from the same quarter a year ago primarily due to increases in single family and business lending. The Bank also originated $2.0 billion of PPP loans during the quarter.

Single family loan originations were 51% of the total for the quarter (excluding PPP loans) and had a weighted average loan-to-value ratio of 53%. In addition, multifamily and commercial real estate loans originated were 11% of total originations (excluding PPP loans), and had a weighted average loan-to-value ratio of 47%.

Loans, excluding PPP loans and loans held for sale, totaled $97.9 billion at June 30, 2020, up 19.1% compared to a year ago primarily due to increases in single family and multifamily loans.

During the second quarter, the Bank sold approximately $300 million of single family loans through its own securitization.

Deposit Growth

Total deposits increased to $98.5 billion, up 18.1% compared to a year ago, and had an average cost of 30 basis points during the quarter.

At June 30, 2020, checking deposit balances were 62.3% of total deposits.

Investments

Total investment securities at June 30, 2020 were $19.1 billion, an 18.1% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $16.9 billion at June 30, 2020, and represented 13.4% of quarterly average total assets.

Wealth Management

Total wealth management assets were $155.8 billion at June 30, 2020, up 13.0% for the quarter and up 13.2% compared to a year ago. The increases in wealth management assets were due to market appreciation and net client inflow.

Wealth management revenues totaled $113.9 million for the quarter, down 5.3% compared to last year's second quarter primarily due to the market decline in the prior quarter. Such revenues represented 12.4% of the Bank's total revenues for the quarter.

Wealth management assets at June 30, 2020 included investment management assets of $68.1 billion, brokerage assets and money market mutual funds of $76.1 billion, and trust and custody assets of $11.6 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $919.0 million for the quarter, up 12.2% compared to the second quarter a year ago.

Net Interest Income Growth

Net interest income was $787.4 million for the quarter, up 16.8% compared to the second 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 was 2.70% for the second quarter, compared to 2.74% for the prior quarter. The modest decline was primarily due to average yields on earning assets declining slightly more than the offsetting decrease in average funding costs.

Noninterest Income

Noninterest income was $131.6 million for the quarter, down 9.5% compared to the second quarter a year ago. The decrease was primarily the result of lower investment management fees due to a market decline in the prior quarter and lower loan servicing fees due to a valuation allowance established on mortgage servicing rights from accelerated repayments of loans in the servicing portfolio.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $569.5 million for the quarter, up 7.7% compared to the second quarter a year ago. The increase was primarily due to higher staffing levels and resultant higher salaries and benefits from the continued investments in the expansion of the franchise, offset by lower travel, advertising and marketing.

The efficiency ratio was 62.0% for the quarter, compared to 64.5% for the second quarter a year ago.

Income Taxes

The Bank's effective tax rate for the second quarter of 2020 was 19.4%, compared to 19.5% for the prior quarter, and 17.4% for the second quarter a year ago. For the first six months of 2020, the Bank's effective tax rate was 19.4%.

_____

The provision for unfunded loan commitments is included in the provision^(1) for credit losses for 2020 periods. The efficiency ratio for the quarter ended March 31, 2020 has been updated to conform to this change in presentation.

Conference Call Details

First Republic Bank's second quarter 2020 earnings conference call is scheduled for July 14, 2020 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (800) 949-2175 and use confirmation code 3743466# approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (720) 543-0197 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 July 14, 2020, at 11:00 a.m. PT / 2:00 p.m. ET, through July 21, 2020, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (888) 203-1112 and use confirmation code 3743466#. 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 Six Months Ended June 30, Ended June 30, March 31, (in thousands,except per 2020 2019 2020 2020 2019share amounts)

Interest income:

Loans $ 791,286 $ 741,328 $ 796,652 $ 1,587,938 $ 1,441,416

Investments 146,515 134,044 148,569 295,084 267,809

Other 5,059 4,813 6,960 12,019 9,988

Cash and cash 564 5,547 3,940 4,504 13,536 equivalents

Total interest 943,424 885,732 956,121 1,899,545 1,732,749 income



Interest expense:

Deposits 72,480 129,188 118,845 191,325 236,935

Borrowings 83,532 82,518 85,144 168,676 146,750

Total interest 156,012 211,706 203,989 360,001 383,685 expense



Net interest 787,412 674,026 752,132 1,539,544 1,349,064 income

Provision for 31,117 21,200 62,370 93,487 35,400 credit losses

Net interestincome after 756,295 652,826 689,762 1,446,057 1,313,664 provision forcredit losses



Noninterest income:

Investmentmanagement 85,083 93,720 99,296 184,379 178,644 fees

Brokerage andinvestment 12,406 8,287 15,826 28,232 15,946 fees

Insurance fees 1,713 3,696 2,157 3,870 5,810

Trust fees 4,599 4,227 4,976 9,575 8,116

Foreignexchange fee 10,105 10,345 12,184 22,289 18,976 income

Deposit fees 5,248 6,579 6,597 11,845 12,899

Loan and 7,456 4,296 6,114 13,570 8,303 related fees

Loan servicing (4,445) 3,425 1,652 (2,793) 7,213 fees, net

Gain (loss) on (1,147) (15) 1,925 778 344 sale of loans

Gain (loss) oninvestment 1,529 (1,063) 2,628 4,157 (1,212) securities

Income frominvestments in 7,800 10,049 8,160 15,960 19,384 life insurance

Other income 1,222 1,804 2,529 3,751 3,245

Totalnoninterest 131,569 145,350 164,044 295,613 277,668 income



Noninterest expense:

Salaries andemployee 344,204 297,524 361,204 705,408 610,777 benefits

Information 74,037 70,277 70,715 144,752 137,447 systems

Occupancy 54,941 47,587 53,641 108,582 91,482

Professional 15,517 16,435 13,117 28,634 28,116 fees

Advertising 8,621 16,700 11,843 20,464 32,434 and marketing

FDIC 11,275 9,196 10,185 21,460 18,099 assessments

Other expenses 60,863 71,135 61,312 122,175 135,311

Totalnoninterest 569,458 528,854 582,017 1,151,475 1,053,666 expense



Income beforeprovision for 318,406 269,322 271,789 590,195 537,666 income taxes

Provision for 61,638 46,758 53,103 114,741 88,511 income taxes

Net income 256,768 222,564 218,686 475,454 449,155

Dividends onpreferred 14,817 12,788 13,020 27,837 25,575 stock

Net incomeavailable to $ 241,951 $ 209,776 $ 205,666 $ 447,617 $ 423,580 commonshareholders



Basic earningsper common $ 1.41 $ 1.25 $ 1.20 $ 2.61 $ 2.53 share

Dilutedearnings per $ 1.40 $ 1.24 $ 1.20 $ 2.60 $ 2.50 common share



Weightedaverage 171,627 167,685 170,835 171,231 167,400 shares-basic

Weightedaverage 172,659 169,572 172,039 172,343 169,503 shares-diluted

CONSOLIDATED BALANCE SHEETS

As of

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

ASSETS

Cash and cash $ 3,099,170 $ 3,949,378 $ 1,699,557 $ 2,220,073 equivalents

Debt securities 1,576,956 1,243,798 1,282,169 1,438,061 available-for-sale



Debt securities 17,513,211 17,534,920 17,147,633 14,721,568 held-to-maturity

Less: Allowance for (5,383) (5,087) - - credit losses

Debt securitiesheld-to-maturity, 17,507,828 17,529,833 17,147,633 14,721,568 net



Equity securities 21,104 19,575 19,586 19,529 (fair value)



Loans: ^(1)

Single family (1-4 52,435,246 49,063,193 47,985,651 41,758,981 units)

Home equity lines 2,419,359 2,703,919 2,501,432 2,587,554 of credit

Single family 733,909 779,239 761,589 702,928 construction

Multifamily (5+ 13,187,857 12,823,392 12,353,359 11,160,686 units)

Commercial real 7,793,137 7,715,266 7,449,058 7,166,368 estate

Multifamily/commercial 1,966,292 1,839,445 1,695,954 1,611,794 construction

Capital call lines 6,173,992 7,512,231 5,570,322 5,660,887 of credit

Tax-exempt 3,186,066 3,087,751 3,042,193 3,035,959

Other business 3,179,023 3,094,922 3,034,301 2,989,664

PPP 2,092,307 - - -

Stock secured 1,924,107 1,919,971 1,897,511 1,514,855

Other secured 1,702,535 1,531,705 1,433,399 1,235,588

Unsecured 3,221,405 3,214,028 3,072,062 2,812,357

Total loans 100,015,235 95,285,062 90,796,831 82,237,621

Allowance for (583,997) (541,906) (496,104) (473,095) credit losses

Loans, net 99,431,238 94,743,156 90,300,727 81,764,526



Loans held for sale 313,655 354,873 23,304 12,502

Investments in life 1,468,712 1,460,909 1,434,642 1,412,883 insurance

Tax credit 1,105,853 1,106,693 1,100,509 1,054,192 investments

Premises, equipmentand leasehold 388,256 392,953 386,841 348,609 improvements, net

Goodwill and other 230,975 232,985 235,269 267,490 intangible assets

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

Other assets 3,159,069 2,879,705 2,633,397 2,440,203

Total Assets $ 128,303,887 $ 123,914,929 $ 116,263,634 $ 105,699,636



LIABILITIES AND EQUITY

Liabilities:

Deposits:

Noninterest-bearing $ 37,586,940 $ 36,920,635 $ 33,124,265 $ 32,023,125 checking

Interest-bearing 23,833,458 20,941,790 19,696,859 16,649,251 checking

Money market 14,639,069 12,636,674 12,790,707 10,874,671 checking

Money marketsavings and 10,236,015 9,052,690 10,586,355 9,921,688 passbooks

Certificates of 12,238,479 14,140,550 13,935,060 13,962,348 deposit

Total Deposits 98,533,961 93,692,339 90,133,246 83,431,083



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

Long-term FHLB 15,405,000 16,250,000 12,200,000 9,800,000 advances

Senior notes 995,109 994,742 497,719 497,269

Subordinated notes 778,096 777,990 777,885 777,678

Other liabilities 2,010,793 1,840,093 2,003,677 1,973,963

Total Liabilities 117,727,959 113,555,164 106,412,527 96,479,993



Shareholders' Equity:

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

Common stock 1,721 1,714 1,686 1,682

Additional paid-in 4,543,051 4,543,650 4,214,915 4,186,304 capital

Retained earnings 4,858,965 4,652,089 4,484,375 4,091,636

Accumulated othercomprehensive 27,191 17,312 5,131 21 income

Total Shareholders' 10,575,928 10,359,765 9,851,107 9,219,643 Equity

Total Liabilitiesand Shareholders' $ 128,303,887 $ 123,914,929 $ 116,263,634 $ 105,699,636 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 June 30, Quarter Ended March 31,

2020 2019 ^(4) 2020

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

($ in thousands)

Assets:

Cash and cash $ 2,789,666 $ 564 0.08 % $ 1,091,353 $ 5,547 2.04 % $ 1,853,579 $ 3,940 0.85 %equivalents

Investment securities:

U.S.Government-sponsored 214,835 1,367 2.55 % 1,031,797 7,675 2.98 % 307,449 2,207 2.87 %agency securities

Mortgage-backed securities:

Agency residential 6,615,707 42,661 2.58 % 6,669,868 47,724 2.86 % 6,746,664 47,186 2.80 %and commercial MBS

Other residential 27,499 182 2.65 % 4,523 43 3.78 % 3,834 32 3.33 %and commercial MBS

Municipal securities 11,949,615 126,906 4.25 % 8,497,645 96,980 4.57 % 11,358,749 122,542 4.32 %

Other investment 43,800 309 2.83 % 19,332 127 2.63 % 43,783 320 2.92 %securities^ (3)

Total investment 18,851,456 171,425 3.64 % 16,223,165 152,549 3.76 % 18,460,479 172,287 3.73 %securities



Loans: ^(4)

Residential real 53,737,207 404,691 3.01 % 42,856,354 357,475 3.34 % 51,300,013 404,982 3.16 %estate ^(5)

Multifamily ^(6) 12,887,676 120,657 3.70 % 11,004,251 109,548 3.94 % 12,565,723 118,944 3.74 %

Commercial real 7,718,257 77,635 3.98 % 6,948,173 74,002 4.21 % 7,574,573 78,609 4.11 %estate

Multifamily/commercial 2,632,682 29,468 4.43 % 2,287,098 28,672 4.96 % 2,550,647 30,285 4.70 %construction

Business ^(7) 14,690,412 123,325 3.32 % 11,410,239 131,658 4.57 % 12,390,386 122,971 3.93 %

Other ^(8) 6,658,487 42,116 2.50 % 5,346,380 46,581 3.45 % 6,453,056 47,572 2.92 %

Total loans 98,324,721 797,892 3.23 % 79,852,495 747,936 3.73 % 92,834,398 803,363 3.44 %

FHLB stock 491,938 5,059 4.14 % 331,218 4,813 5.83 % 406,974 6,960 6.88 %

Totalinterest-earning 120,457,781 974,940 3.22 % 97,498,231 910,845 3.72 % 113,555,430 986,550 3.46 %assets



Noninterest-earning 425,440 345,174 443,255 cash

Goodwill and other 231,934 269,404 234,078 intangibles

Other assets 4,905,493 4,312,290 4,721,313

Totalnoninterest-earning 5,562,867 4,926,868 5,398,646 assets

Total Assets $ 126,020,648 $ 102,425,099 $ 118,954,076



Liabilities and Equity:

Deposits:

Checking $ 58,978,081 3,127 0.02 % $ 45,813,205 6,946 0.06 % $ 53,863,519 8,432 0.06 %

Money market 24,133,700 15,224 0.25 % 19,323,615 51,536 1.07 % 22,475,109 44,869 0.80 %checking and savings

CDs 12,721,452 54,129 1.71 % 12,799,189 70,706 2.22 % 14,185,945 65,544 1.86 %

Total deposits 95,833,233 72,480 0.30 % 77,936,009 129,188 0.66 % 90,524,573 118,845 0.53 %



Borrowings:

Short-term 2,747 0 0.04 % 2,875,590 18,282 2.55 % 1,231,827 4,700 1.53 %borrowings

Long-term FHLB 15,868,682 68,391 1.73 % 9,132,967 49,601 2.18 % 13,420,604 66,566 1.99 %advances

Senior notes^ (9) 994,905 6,034 2.43 % 835,544 5,534 2.65 % 765,308 4,773 2.49 %

Subordinated notes ^ 778,044 9,107 4.68 % 777,628 9,101 4.68 % 777,938 9,105 4.68 %(9)

Total borrowings 17,644,378 83,532 1.90 % 13,621,729 82,518 2.43 % 16,195,677 85,144 2.11 %

Totalinterest-bearing 113,477,611 156,012 0.55 % 91,557,738 211,706 0.93 % 106,720,250 203,989 0.77 %liabilities



Noninterest-bearing 2,067,585 1,733,674 2,030,107 liabilities

Preferred equity 1,145,000 940,000 1,145,000

Common equity 9,330,452 8,193,687 9,058,719

Total Liabilities $ 126,020,648 $ 102,425,099 $ 118,954,076 and Equity



Net interest spread 2.67 % 2.79 % 2.69 %^(10)

Net interest income(fullytaxable-equivalent $ 818,928 2.70 % $ 699,139 2.85 % $ 782,561 2.74 %basis) and netinterest margin^(11)



Reconciliation oftax-equivalent netinterest income to reported netinterest income:

Tax-equivalent (31,516) (25,113) (30,429) adjustment

Net interest income, $ 787,412 $ 674,026 $ 752,132 as reported

Six Months Ended June 30,

2020 2019 ^(4)

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

($ in thousands)

Assets:

Cash and cash $ 2,321,623 $ 4,504 0.39 % $ 1,267,228 $ 13,536 2.15 %equivalents

Investment securities:

U.S.Government-sponsored 261,142 3,574 2.74 % 1,038,310 15,452 2.98 %agency securities

Mortgage-backed securities:

Agency residential 6,681,185 89,846 2.69 % 6,761,842 97,343 2.88 %and commercial MBS

Other residential 15,667 214 2.73 % 4,525 88 3.91 %and commercial MBS

Municipal securities 11,654,183 249,935 4.29 % 8,340,025 191,481 4.59 %

Other investment 43,791 629 2.87 % 19,161 247 2.58 %securities^ (3)

Total investment 18,655,968 344,198 3.69 % 16,163,863 304,611 3.77 %securities



Loans: ^(4)

Residential real 52,518,610 809,674 3.08 % 41,920,005 699,259 3.34 %estate ^(5)

Multifamily ^(6) 12,726,699 239,601 3.72 % 10,770,882 209,249 3.86 %

Commercial real 7,646,415 156,244 4.04 % 6,825,897 145,949 4.25 %estate

Multifamily/commercial 2,591,664 59,753 4.56 % 2,282,720 56,916 4.96 %construction

Business ^(7) 13,540,399 246,357 3.60 % 11,046,209 252,702 4.55 %

Other ^(8) 6,555,772 89,687 2.71 % 5,218,077 90,528 3.45 %

Total loans 95,579,559 1,601,316 3.33 % 78,063,790 1,454,603 3.72 %

FHLB stock 449,455 12,019 5.38 % 305,157 9,988 6.60 %

Totalinterest-earning 117,006,605 1,962,037 3.34 % 95,800,038 1,782,738 3.71 %assets



Noninterest-earning 434,348 345,205 cash

Goodwill and other 233,006 270,879 intangibles

Other assets 4,813,403 4,254,502

Totalnoninterest-earning 5,480,757 4,870,586 assets

Total Assets $ 122,487,362 $ 100,670,624



Liabilities and Equity:

Deposits:

Checking $ 56,420,801 11,559 0.04 % $ 46,162,715 13,040 0.06 %

Money market 23,304,404 60,094 0.52 % 19,296,363 93,854 0.98 %checking and savings

CDs 13,453,699 119,672 1.79 % 12,095,546 130,041 2.17 %

Total deposits 93,178,904 191,325 0.41 % 77,554,624 236,935 0.62 %



Borrowings:

Short-term 617,287 4,700 1.53 % 1,921,431 24,312 2.55 %borrowings

Long-term FHLB 14,644,643 134,957 1.85 % 8,820,165 92,768 2.12 %advances

Senior notes ^(9) 880,106 10,807 2.46 % 865,930 11,468 2.65 %

Subordinated notes ^ 777,991 18,212 4.68 % 777,578 18,202 4.68 %(9)

Total borrowings 16,920,027 168,676 2.00 % 12,385,104 146,750 2.39 %

Totalinterest-bearing 110,098,931 360,001 0.66 % 89,939,728 383,685 0.86 %liabilities



Noninterest-bearing 2,048,845 1,649,443 liabilities

Preferred equity 1,145,000 940,000

Common equity 9,194,586 8,141,453

Total Liabilities $ 122,487,362 $ 100,670,624 and Equity



Net interest spread 2.68 % 2.85 %^(10)

Net interest income(fullytaxable-equivalent $ 1,602,036 2.72 % $ 1,399,053 2.91 %basis) and netinterest margin^(11)



Reconciliation oftax-equivalent netinterest income to reported netinterest income:

Tax-equivalent (62,492) (49,989) adjustment

Net interest income, $ 1,539,544 $ 1,349,064 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 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, other business, and PPPloans.

^(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 Quarter Ended Ended Six Months Ended June 30, March June 30, 31,

Operating 2020 2019 2020 2020 2019Information

($ in thousands,except per share amounts)

Net income to 0.82 % 0.87 % 0.74 % 0.78 % 0.90 %average assets ^(1)

Net income availableto commonshareholders to 10.43 % 10.27 % 9.13 % 9.79 % 10.49 %average commonequity ^(1)

Net income availableto commonshareholders to 10.70 % 10.62 % 9.37 % 10.04 % 10.85 %average tangiblecommon equity ^(1)

Dividends per common $ 0.20 $ 0.19 $ 0.19 $ 0.39 $ 0.37 share

Dividend payout 14.3 % 15.4 % 15.9 % 15.0 % 14.8 %ratio

Efficiency ratio ^ 62.0 % 64.5 % 63.5 % 62.7 % 64.8 %(2), (3)



Net loan charge-offs $ 1,098 $ 1,226 $ 202 $ 1,300 $ 1,353

Net loan charge-offsto average total 0.00 % 0.01 % 0.00 % 0.00 % 0.00 %loans ^(1)



Allowance for loan credit losses to:

Total loans 0.58 % 0.58 % 0.57 % 0.58 % 0.58 %

Nonaccrual loans 354.1 % 326.3 % 432.1 % 354.1 % 326.3 %

__________

^(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. Theefficiency ratio for the quarter ended March 31, 2020 has been updated toconform to this change in presentation.

Quarter Quarter Ended Ended Six Months Ended June 30, March June 30, 31,

Effective Tax Rate 2020 2019 2020 2020 2019

Effective tax rate, prior to 22.5 % 20.9 % 21.3 % 21.9 % 21.4 %excess tax benefits



Excess tax benefits-stock (1.0) (1.3) (1.5) (1.3) (3.8) options

Excess tax benefits-other (2.1) (2.2) (0.3) (1.2) (1.1) stock awards

Total excess tax benefits (3.1) (3.5) (1.8) (2.5) (4.9)



Effective tax rate 19.4 % 17.4 % 19.5 % 19.4 % 16.5 %

Quarter Ended Quarter Six Months Ended June 30, Ended June 30, March 31,

Provision for 2020 2019 2020 2020 2019Credit Losses($ in thousands)

Debt securities $ 296 $ - $ 418 $ 714 $ - held-to-maturity

Loans 43,189 21,200 47,679 90,868 35,400

Unfunded loan (12,368) - 14,273 1,905 - commitments ^(1)

Total provision $ 31,117 $ 21,200 $ 62,370 $ 93,487 $ 35,400

__________

^(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 Ended Six Months Ended June 30, 2020 June 30, 2020

Allowance Unfunded Unfundedfor Credit Debt Securities Loans Loan Total Debt Securities Loans Loan TotalLosses Held-to-Maturity Commitments Held-to-Maturity Commitments ^(2) ^(2)

($ in thousands)

Balance atbeginning $ 5,087 $ 541,906 $ 29,970 $ 576,963 $ 4,669 $ 494,429 $ 15,697 $ 514,795 of period ^(1)

Provisionfor credit 296 43,189 (12,368) 31,117 714 90,868 1,905 93,487 losses

Net - (1,098) - (1,098) - (1,300) - (1,300) charge-offs

Balance atend of $ 5,383 $ 583,997 $ 17,602 $ 606,982 $ 5,383 $ 583,997 $ 17,602 $ 606,982 period

__________

^(1) For the six months ended June 30, 2020, represents the balance after thecumulative effect adjustment from the adoption of CECL.

^(2) The allowance for credit losses on unfunded loan commitments is includedin other liabilities.

Quarter Ended Quarter Six Months Ended June 30, Ended June 30, March 31,

Mortgage Loan 2020 2019 2020 2020 2019Sales

($ in thousands)

Loans sold:

Flow sales:

Agency $ 10,810 $ 14,533 $ 25,774 $ 36,584 $ 26,212

Non-agency - 14,503 31,870 31,870 31,334

Total flow 10,810 29,036 57,644 68,454 57,546 sales



Bulk sales:

Non-agency - - 437,669 437,669 152,119



Securitizations 300,116 - - 300,116 -



Total loans $ 310,926 $ 29,036 $ 495,313 $ 806,239 $ 209,665 sold



Gain (loss) on sale of loans:

Amount $ (1,147) $ (15) $ 1,925 $ 778 $ 344

Gain (loss) asa percentage of (0.37) % (0.05) % 0.39 % 0.10 % 0.16 %loans sold



Quarter Ended Quarter Ended Six Months Ended June 30, March 31, June 30,

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

($ in thousands)

Singlefamily (1-4 $ 5,875,184 $ 4,067,326 $ 3,519,336 $ 9,394,520 $ 6,257,221 units)

Home equitylines of 457,737 356,589 395,508 853,245 708,727 credit

Singlefamily 119,318 155,431 109,162 228,480 279,700 construction

Multifamily 946,820 812,638 781,303 1,728,123 1,395,581 (5+ units)

Commercial 330,683 519,244 451,858 782,541 765,772 real estate

Multifamily/commercial 131,414 318,015 620,921 752,335 448,128 construction

Capital calllines of 1,405,347 1,423,451 2,385,229 3,790,576 3,126,174 credit

Tax-exempt 184,054 101,920 100,019 284,073 186,345

Other 914,257 424,180 619,779 1,534,036 680,179 business

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

Stock 519,416 468,741 592,560 1,111,976 675,454 secured

Other 358,730 355,421 413,824 772,554 622,170 secured

Unsecured 203,270 296,373 322,888 526,158 630,681

Total loans $ 13,428,027 $ 9,299,329 $ 10,312,387 $ 23,740,414 $ 15,776,132 originated

__________

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

As of

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

($ in thousands)

Nonperforming assets:

Nonaccrual $ 164,930 $ 125,418 $ 143,181 $ 136,928 $ 144,993 loans

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

Totalnonperforming $ 166,001 $ 126,489 $ 143,181 $ 136,928 $ 144,993 assets



Nonperformingassets to 0.13 % 0.10 % 0.12 % 0.12 % 0.14 %total assets



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



Restructuredaccruing $ 11,501 $ 13,418 $ 13,287 $ 14,964 $ 12,176 loans

As of June 30, 2020

Completed In Process ^(2)

Loan Unpaid Average Number Unpaid Average NumberModifications Principal LTV Loan of Principal LTV Loan of^(1) Balance Size Loans Balance Size Loans

($ in millions)

Single family $ 1,741 59 % $ 1.0 1,787 $ 230 64 % $ 1.3 175 (1-4 units)

Home equitylines of 78 56 % 0.4 178 26 59 % 0.6 56 credit

Single family 17 49 % 1.9 9 - - % - - construction

Multifamily 554 51 % 3.0 183 4 53 % 0.7 5 (5+ units)

Commercial 1,038 48 % 3.7 283 58 54 % 4.2 14 real estate

Multifamily/commercial 52 44 % 5.2 10 4 29 % 3.9 1 construction

Capital calllines of - n/a - - - n/a - - credit

Tax-exempt 72 n/a 18.0 4 12 n/a 6.1 2

Other 210 n/a 1.3 157 4 n/a 0.3 14 business

Stock secured - n/a - - - n/a - -

Other secured 6 n/a 0.4 13 - n/a - -

Unsecured ^ 136 n/a 0.1 999 7 n/a 0.4 19 (3)

Total $ 3,904 $ 345

__________

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

^(2) Loan modifications requested by borrowers that have not yet beencompleted.

^(3) Unsecured loan modifications completed and in process include $135 millionand $2 million, respectively, of household debt refinance loans.

As of June 30, 2020

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

($ in millions)

Retail $ 1,772 50 % $ 2.7 674 76 %

Hotel 431 48 % 6.8 66 74 %

Restaurant ^(1) 224 51 % 1.1 215 94 %

Total ^(2) $ 2,427

__________

^(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 June 30, March 31, December September June 30,Portfolio 2020 2020 31, 30, 2019 2019 2019

($ in millions)

Loans serviced for $ 8,316 $ 9,203 $ 9,298 $ 10,080 $ 10,746 investors

As of

Common Shares, Book December SeptemberValue per Common June 30, March 31, 31, 30, June 30,Share and Tangible 2020 2020 2019 2019 2019Book Value perCommon Share(in thousands,except per share amounts)

Number of shares ofcommon stock 172,094 171,395 168,621 168,450 168,176 outstanding

Book value per $ 54.80 $ 53.76 $ 51.63 $ 50.41 $ 49.23 common share

Tangible book value $ 53.46 $ 52.40 $ 50.24 $ 48.84 $ 47.64 per common share

As of

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

Tier 1leverageratio (Tier 1 8.15 % 8.46 % 8.39 % 8.50 % 8.69 %capital toaverageassets)

Common EquityTier 1capital to 9.80 % 9.87 % 9.86 % 9.91 % 10.19 %risk-weightedassets

Tier 1capital to 11.04 % 11.14 % 11.21 % 11.05 % 11.39 %risk-weightedassets

Total capitalto 12.49 % 12.62 % 12.73 % 12.61 % 13.02 %risk-weightedassets

Regulatory Capital ^(3)

($ in thousands)

Common EquityTier 1 $ 9,103,771 $ 8,887,905 $ 8,371,192 $ 8,124,179 $ 7,934,602 capital

Tier 1 $ 10,248,771 $ 10,032,905 $ 9,516,192 $ 9,064,179 $ 8,874,602 capital

Total capital $ 11,604,141 $ 11,365,654 $ 10,802,209 $ 10,340,902 $ 10,138,375

Assets ^(3)

($ in thousands)

Average $ 125,690,830 $ 118,626,842 $ 113,403,507 $ 106,659,003 $ 102,097,363 assets

Risk-weighted $ 92,870,859 $ 90,072,400 $ 84,885,943 $ 81,994,651 $ 77,889,111 assets

__________

^(1) Ratios and amounts as of June 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 June 30, March 31, December September June 30,Management 2020 2020 31, 30, 2019Assets 2019 2019

($ in millions)

FirstRepublic $ 68,124 $ 60,056 $ 66,029 $ 61,204 $ 61,192 InvestmentManagement



Brokerageand investment:

Brokerage 70,178 60,189 68,807 63,053 61,583

Moneymarket 5,933 6,893 4,268 4,402 3,312 mutualfunds

Totalbrokerage 76,111 67,082 73,075 67,455 64,895 andinvestment



Trust Company:

Trust 7,905 7,288 7,121 6,366 6,319

Custody 3,646 3,461 4,818 5,210 5,225

Total Trust 11,551 10,749 11,939 11,576 11,544 Company

TotalWealth $ 155,786 $ 137,887 $ 151,043 $ 140,235 $ 137,631 ManagementAssets

View source version on businesswire.com: https://www.businesswire.com/news/home/20200714005369/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