SAN FRANCISCO--(BUSINESS WIRE)--First Republic Bank (NYSE: FRC) today announced financial results for the quarter ended March 31, 2023.
Jim Herbert, Founder and Executive Chairman, and Mike Roffler, CEO and President of First Republic said, “With the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business. We remain fully committed to serving our communities, and we are grateful for the ongoing support of our clients and colleagues.”
Financial Results
-
Year-over-year:
- Revenues were $1.2 billion, down 13.4%.
- Net interest income was $923 million, down 19.4%. (1)
- Net income was $269 million, down 32.9%.
- Diluted earnings per share of $1.23, down 38.5%.
- Book value per share was $76.97, up 10.4%.
- Net interest margin was 1.77%, compared to 2.45% for the prior quarter. (1)
- Efficiency ratio was 70.4%, compared to 63.9% for the prior quarter.
Capital Position and Credit Quality
- Tier 1 leverage ratio was 8.25%.
- Common Equity Tier 1 ratio was 9.32%.
- Nonperforming assets were 0.06% of total assets.
- Net recoveries were $0.2 million.
Wealth Management
-
Year-over-year:
- Wealth management assets were $289.5 billion, up 5.6%.
- Wealth management revenues were $223 million, up 0.7%.
Balance Sheet
-
Year-over-year:
- Loans totaled $173.3 billion, up 22.6%.
- Deposits were $104.5 billion, down 35.5%. (2)
- Borrowings were $106.7 billion, up $101.2 billion.
| __________ | ||
(1) |
Following the recent industry developments, net interest income and net interest margin were, and continue to be, materially impacted due to the unprecedented loss of deposits resulting in higher funding costs. |
|
(2) |
Deposits were down 40.8% from December 31, 2022. Deposits at March 31, 2023 included $30 billion of time deposits received from the large U.S. banks. |
|
Neal Holland, Chief Financial Officer of First Republic said, “With the closure of several banks in March, we experienced unprecedented deposit outflows. We moved swiftly and leveraged our high-quality loan and securities portfolios to secure additional liquidity. We are working to restructure our balance sheet and reduce our expenses and short-term borrowings.”
Selected Financial Data and Ratios |
|
As of or for the Quarter Ended March 31, 2023 |
|
As of or for the Quarter Ended December 31, 2022 |
|
As of or for the Quarter Ended March 31, 2022 |
||||||
($ in millions, except per share amounts) |
|
|
|
|
|
|
||||||
Financial Results |
|
|
|
|
|
|
||||||
Revenues |
|
$ |
1,209 |
|
|
$ |
1,437 |
|
|
$ |
1,396 |
|
Net interest income |
|
$ |
923 |
|
|
$ |
1,174 |
|
|
$ |
1,145 |
|
Net income |
|
$ |
269 |
|
|
$ |
386 |
|
|
$ |
401 |
|
Diluted earnings per share |
|
$ |
1.23 |
|
|
$ |
1.88 |
|
|
$ |
2.00 |
|
Book value per share |
|
$ |
76.97 |
|
|
$ |
75.38 |
|
|
$ |
69.70 |
|
Net interest margin |
|
|
1.77 |
% |
|
|
2.45 |
% |
|
|
2.68 |
% |
Efficiency ratio (1) |
|
|
70.4 |
% |
|
|
63.9 |
% |
|
|
62.0 |
% |
Capital Position and Credit Quality |
|
|
|
|
|
|
||||||
Tier 1 leverage ratio |
|
|
8.25 |
% |
|
|
8.51 |
% |
|
|
8.70 |
% |
Common Equity Tier 1 ratio |
|
|
9.32 |
% |
|
|
9.17 |
% |
|
|
9.48 |
% |
Nonperforming assets to total assets |
|
|
0.06 |
% |
|
|
0.05 |
% |
|
|
0.08 |
% |
Net loan charge-offs (recoveries) |
|
$ |
(0.2 |
) |
|
$ |
0.9 |
|
|
$ |
(0.3 |
) |
Wealth Management |
|
|
|
|
|
|
||||||
Total wealth management assets |
|
$ |
289,464 |
|
|
$ |
271,244 |
|
|
$ |
274,195 |
|
Total wealth management revenues |
|
$ |
223 |
|
|
$ |
210 |
|
|
$ |
221 |
|
Balance Sheet |
|
|
|
|
|
|
||||||
Total loans |
|
$ |
173,311 |
|
|
$ |
166,868 |
|
|
$ |
141,313 |
|
Total deposits (2) |
|
$ |
104,474 |
|
|
$ |
176,437 |
|
|
$ |
162,060 |
|
Short-term borrowings |
|
$ |
80,365 |
|
|
$ |
6,700 |
|
|
$ |
— |
|
Long-term borrowings |
|
$ |
26,304 |
|
|
$ |
8,579 |
|
|
$ |
5,478 |
|
__________ |
|
|
|
|
|
|
||||||
(1) Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income. |
||||||||||||
(2) As of March 31, 2023, included $30 billion of time deposits received from the large U.S. banks. |
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Recent Industry Events
The recent industry events, beginning in March 2023, have impacted the Bank’s funding sources.
As of March 9, 2023, total deposits were $173.5 billion, down 1.7% from year-end 2022. On March 10, 2023, following the highly public closure of a large regional bank, First Republic began experiencing unprecedented deposit outflows.
On March 16, 2023, First Republic received uninsured deposits totaling $30 billion from a group of America’s largest banks. This support for First Republic allowed the Bank to reduce its short-term borrowings. At that time, daily deposit outflows had slowed considerably.
Deposit activity began to stabilize beginning the week of March 27, 2023, and has remained stable through Friday, April 21, 2023. Total deposits were $102.7 billion as of April 21, 2023, down only 1.7% from March 31, 2023, primarily reflecting seasonal client tax payments that occur each April.
In response to the unprecedented deposit outflows, the Bank enhanced its financial position through access to additional liquidity from the Federal Reserve Bank, the Federal Home Loan Bank and JP Morgan Chase & Co. Total borrowings peaked on March 15, 2023, at $138.1 billion. At that time, the Bank had $34.0 billion of cash on its balance sheet. Total borrowings totaled $104.0 billion, and cash and cash equivalents totaled $10.0 billion as of April 21, 2023. This includes $25.5 billion of long-term advances with the Federal Home Loan Bank, compared to $7.3 billion as of December 31, 2022.
As a result of the recent events, the Bank is taking actions to strengthen its business and restructure its balance sheet. These actions include efforts to increase insured deposits, reduce borrowings from the Federal Reserve Bank, and decrease loan balances to correspond with the reduced reliance on uninsured deposits. Through these actions, the Bank intends to reduce the size of its balance sheet, reduce its reliance on short-term borrowings, and address the challenges it continues to face. Refer to the Forward-Looking Statements below.
The Bank is also taking steps to reduce expenses, including significant reductions to executive officer compensation, condensing corporate office space, and reducing non-essential projects and activities. The Bank also expects to reduce its workforce by approximately 20-25% in the second quarter.
In addition to these actions, the Bank is pursuing strategic options to expedite its progress while reinforcing its capital position.
Suspension of Dividends on Common Stock and Noncumulative Preferred Stock
In response to recent events, as announced on March 16, 2023, the Bank’s Board of Directors determined to suspend its common stock dividend. In addition, on April 6, 2023, the Bank’s Board of Directors determined to suspend payment of the quarterly cash dividend on each series of the Bank’s outstanding noncumulative perpetual preferred stock.
Asset Quality
Nonperforming assets were 6 basis points of total assets at March 31, 2023.
The provision for credit losses for the quarter was $16 million. The Bank had net loan recoveries of $0.2 million for the quarter.
Book Value
Book value per common share at March 31, 2023 was $76.97, up 2.1% from the prior quarter.
Capital Position
The Bank’s Tier 1 leverage ratio was 8.25% at March 31, 2023, compared to 8.51% in the prior quarter. The Common Equity Tier 1 ratio was 9.32% at March 31, 2023, compared to 9.17% in the prior quarter.
In February 2023, the Bank sold 2,875,000 new shares of common stock in an underwritten public offering, which added $397 million to common equity.
Balance Sheet
Loans
Loans totaled $173.3 billion at March 31, 2023, up 3.9% compared to the prior quarter. The increase was primarily due to increases in single family and multifamily loans, as well as higher capital call lines of credit outstanding due to increased utilization in March.
Investments
Total investment securities at March 31, 2023 were $34.8 billion, a 9.8% increase compared to the prior quarter. High-quality liquid assets, including eligible cash and unencumbered investment securities, totaled $14.4 billion at March 31, 2023, and represented 6.6% of quarterly average total assets.
Deposits
Total deposits declined $72.0 billion during the quarter, to $104.5 billion at March 31, 2023 reflecting outflows toward the middle of March 2023. At March 31, 2023, excluding the $30 billion of deposits made by the large U.S. banks, total deposits consisted of 58.4% in checking deposits, 15.0% in other liquid deposits, and 26.6% in CDs. At March 31, 2023, excluding the $30 billion of deposits made by the large U.S. banks, our estimated uninsured deposits totaled $19.8 billion, or 27% of total deposits. Insured deposits declined moderately during the quarter and have remained stable from March 31 through April 21. Refer to the Deposits table for additional details regarding our deposits.
Funding
Other sources of funding at March 31, 2023 included secured short-term borrowings from the Federal Reserve, securities sold under agreements to repurchase, and short-term and long-term FHLB advances, which totaled $105.9 billion.
Our unused, available borrowing capacity at the Federal Reserve Bank discount window and FHLB at March 31, 2023 was $12.4 billion and $1.7 billion, respectively. This available borrowing capacity is supported by pledged loans and investment securities. In addition, at March 31, 2023, cash and cash equivalents totaled $13.2 billion.
As of April 21, 2023, the Bank had $45.1 billion of cash and cash equivalents and unused available borrowing capacity, representing more than two times our estimated uninsured deposits, excluding the $30 billion of deposits made by the large U.S. banks.
Wealth Management
Total wealth management assets were $289.5 billion at March 31, 2023, up 6.7% compared to the prior quarter and included investment management assets of $118.9 billion, brokerage assets and money market mutual funds of $149.7 billion, and trust and custody assets of $20.9 billion.
Wealth management fees, which consist of investment management, brokerage and investment, insurance, trust and foreign exchange fee income, totaled $223 million for the quarter, up 6.7% compared to the prior quarter. Such revenues represented 18.5% of the Bank’s total revenues.
Following the recent industry events and as of April 21, 2023, wealth management assets from teams that have departed First Republic were responsible for less than 20% of total wealth management assets as of March 31, 2023. As of April 21, 2023, First Republic has retained nearly 90% of its total wealth professionals and anticipates retaining a portion of the wealth management assets associated with departing teams.
Income Statement and Key Ratios
Revenue
Total revenues were $1.2 billion for the quarter, down 15.9% compared to the prior quarter. The decrease was due to a decrease in net interest income, partially offset by an increase in noninterest income. Following the recent industry developments, net interest income and net interest margin were, and continue to be, materially impacted due to the unprecedented loss of deposits resulting in higher funding costs.
Net Interest Income
Net interest income was $923 million for the quarter, down 21.4% compared to the prior quarter. The decrease in net interest income was primarily due to substantially higher funding costs, which was partially offset by CD withdrawal penalties that reduced interest expense on deposits by approximately $57 million.
Net Interest Margin
The net interest margin decreased to 1.77% for the quarter, from 2.45% in the prior quarter. The decrease was primarily due to higher short-term borrowings, which was partially offset by the impact of CD withdrawal penalties that increased the net interest margin by 11 basis points.
Noninterest Income
Noninterest income was $286 million for the quarter, up 8.7% compared to the prior quarter. The increase was primarily driven by higher investment management fees.
Noninterest Expense and Efficiency Ratio
Noninterest expense was $852 million for the quarter, down 7.4% compared to the prior quarter. The decrease was primarily due to a reversal of previously recognized share-based compensation expense related to performance-based stock awards of $107 million. The decrease was partially offset by higher FDIC assessment expense of $27 million and goodwill impairment of $25 million. The impaired goodwill consisted of all of the Commercial Banking operating segment’s goodwill. The Commercial Banking operating segment is one of the Bank’s two reportable operating segments as identified in the Bank’s Annual Report on Form 10-K for the year ended December 31, 2022.
The efficiency ratio was 70.4% for the quarter, compared to 63.9% for the prior quarter.
Income Taxes
The Bank’s effective tax rate for the first quarter of 2023 was 21.2%, compared to 20.9% for the prior quarter.
Conference Call Details
First Republic Bank’s first quarter 2023 earnings conference call is scheduled for April 24, 2023 at 1:30 p.m. PT / 4:30 p.m. ET.
To access the conference call by telephone, please dial (877) 400-0505 and provide confirmation code 3782547 approximately 15 minutes prior to the start time (to allow time for registration). International callers should dial +1 (856) 344-9221 and provide the same confirmation code.
To access the conference call online, please visit the Investor Relations section of First Republic’s website at ir.firstrepublic.com/events-calendar approximately 15 minutes prior to the start time (to allow time to register, download and install any necessary audio software).
For those unable to join on April 24, 2023, a replay will be available following, accessible in the Investor Relations section of First Republic Bank’s website at ir.firstrepublic.com/events-calendar.
The Bank’s press releases are available after release in the Newsroom and Investor Relations section of First Republic Bank’s website at firstrepublic.com.
About First Republic Bank
Founded in 1985, First Republic specializes in delivering exceptional, relationship-based service. First Republic provides a complete line of banking products, including residential, commercial and personal loans, deposit services, as well as private wealth management, including investment, brokerage, insurance, trust and foreign exchange services. Services are offered through preferred banking or wealth management offices primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and San Diego, California; Portland, Oregon; Boston, Massachusetts; Palm Beach, Florida; Greenwich, Connecticut; New York, New York; Jackson, Wyoming; and Bellevue, Washington. First Republic is a constituent of the S&P 500 Index and KBW Nasdaq Bank Index. For more information, visit firstrepublic.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements about our expectations, beliefs, projections, future plans and strategies, objectives, assumptions or anticipated events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimates,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases.
Examples of forward-looking statements and general risks include, among others: statements regarding our expectations with regard to our business, financial and operating results; forecasts of future economic conditions generally and in our markets in particular, including expectations relating to interest rates and inflation, and their impact on our net interest margin; and our plans and actions to strengthen our business following recent industry developments, such as restructuring our balance sheet, reducing our expenses, repaying our borrowings, reducing reliance on uninsured deposits and increasing our insured deposit base, decreasing loan balances and pursuing other strategic options; and descriptions of assumptions underlying or relating to any of the foregoing. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances, including in the near term, that may cause our actual results to differ materially from historical results and those expressed in any forward-looking statement.
There can be no certainty that the Bank will be able to take actions to strengthen our business within a time frame that is acceptable to the market or our regulators. There can be no certainty as to the future of the Bank if we are not able to do so.
Some factors that could cause actual results to differ materially from historical results or expected outcomes include, but are not limited to: demand for our products and services, including deposit attrition or further significant deposit outflows; our ability to retain our banking and wealth management clients, including those associated with departing wealth management teams; our ability to access adequate sources of funding and liquidity, in particular through the Federal Reserve, the Federal Home Loan Bank and other sources where our borrowings are far above historic levels or where we had not previously borrowed; our ability to satisfy our obligations when they become due; our ability to reduce our funding costs and improve our asset and liability mix; difficulties encountered by, or the soundness of, other financial institutions; adverse publicity about First Republic or the banking industry more generally, including as a result of bank failures and concerns about capital and liquidity; changes in our credit ratings and the impact on the cost of, and the ability to access, additional funding and capital, and our ability to conduct bank operations (such as offering our products and services and acting as a loan servicer); inflation and actions by central banks to manage inflation; interest rate risk (sensitivity to increases or decreases to interest rate fluctuations) and credit risk; our ability to retain key managers and employees, including those in our wealth management business; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements, which may result in costs, fees, penalties, business restrictions, reputational harm or other adverse consequences; any changes to liquidity and regulatory capital requirements applicable to us; legislative and regulatory actions affecting us, the banking industry or the financial services industry more generally; litigation, investigations and other legal actions or proceedings, and associated costs and liabilities; future Federal Deposit Insurance Corporation (“FDIC”) special assessments or changes to regular assessments; and other matters discussed in the risk factors included in the Bank’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the FDIC. In addition, state and federal banking regulators, including the California Department of Financial Protection and Innovation and the FDIC, have broad authority to oversee the Bank and to close the Bank and commence a conservatorship or receivership under various circumstances specified in state and federal banking laws.
Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise.
Non-GAAP Financial Measures
Our management uses and believes that investors benefit from using certain non-GAAP measures of our financial performance, which include return on average tangible common shareholders’ equity and net interest income on a fully taxable-equivalent basis. Management believes that return on average tangible common shareholders’ equity is a useful additional measure to evaluate our performance and capital position without the impact of goodwill and other intangible assets and preferred stock. In addition, to facilitate relevant comparisons of net interest income from taxable and tax-exempt interest-earning assets, when calculating yields and net interest margin, we adjust interest income on tax-exempt securities and tax-advantaged loans so such amounts are fully equivalent to interest income on taxable sources. We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information that is not otherwise required by GAAP or other applicable requirements. These non-GAAP financial measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP. A reconciliation of the non-GAAP calculation of the financial measure to the most comparable GAAP financial measure is presented in relevant tables in this document.
Explanatory Note
Some amounts presented within this document may not recalculate due to rounding.
CONSOLIDATED STATEMENTS OF INCOME |
|||||||||
|
|
Quarter Ended March 31, |
|
Quarter Ended December 31, |
|||||
(in millions, except per share amounts) |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
|
|
|
|
|
|||
Interest income: |
|
|
|
|
|
|
|||
Loans |
|
$ |
1,565 |
|
$ |
1,002 |
|
$ |
1,438 |
Investments |
|
|
252 |
|
|
180 |
|
|
231 |
Cash and cash equivalents |
|
|
74 |
|
|
5 |
|
|
24 |
Other |
|
|
6 |
|
|
2 |
|
|
6 |
Total interest income |
|
|
1,897 |
|
|
1,189 |
|
|
1,699 |
|
|
|
|
|
|
|
|||
Interest expense: |
|
|
|
|
|
|
|||
Deposits |
|
|
555 |
|
|
20 |
|
|
428 |
Borrowings |
|
|
419 |
|
|
24 |
|
|
97 |
Total interest expense |
|
|
974 |
|
|
44 |
|
|
525 |
|
|
|
|
|
|
|
|||
Net interest income |
|
|
923 |
|
|
1,145 |
|
|
1,174 |
Provision for credit losses |
|
|
16 |
|
|
10 |
|
|
30 |
Net interest income after provision for credit losses |
|
|
907 |
|
|
1,135 |
|
|
1,144 |
|
|
|
|
|
|
|
|||
Noninterest income: |
|
|
|
|
|
|
|||
Investment management fees |
|
|
159 |
|
|
165 |
|
|
141 |
Brokerage and investment fees |
|
|
29 |
|
|
22 |
|
|
29 |
Insurance fees |
|
|
3 |
|
|
4 |
|
|
8 |
Trust fees |
|
|
8 |
|
|
7 |
|
|
7 |
Foreign exchange fee income |
|
|
24 |
|
|
23 |
|
|
25 |
Deposit fees |
|
|
8 |
|
|
6 |
|
|
7 |
Loan and related fees |
|
|
10 |
|
|
9 |
|
|
10 |
Income from investments in life insurance |
|
|
38 |
|
|
14 |
|
|
34 |
Other income, net |
|
|
7 |
|
|
1 |
|
|
2 |
Total noninterest income |
|
|
286 |
|
|
251 |
|
|
263 |
|
|
|
|
|
|
|
|||
Noninterest expense: |
|
|
|
|
|
|
|||
Salaries and employee benefits |
|
|
453 |
|
|
560 |
|
|
551 |
Information systems |
|
|
115 |
|
|
107 |
|
|
123 |
Occupancy |
|
|
77 |
|
|
69 |
|
|
73 |
Professional fees |
|
|
30 |
|
|
23 |
|
|
27 |
Advertising and marketing |
|
|
17 |
|
|
13 |
|
|
23 |
FDIC assessments |
|
|
46 |
|
|
15 |
|
|
19 |
Goodwill impairment |
|
|
25 |
|
|
— |
|
|
— |
Other expenses |
|
|
89 |
|
|
79 |
|
|
103 |
Total noninterest expense |
|
|
852 |
|
|
866 |
|
|
919 |
|
|
|
|
|
|
|
|||
Income before provision for income taxes |
|
|
341 |
|
|
520 |
|
|
488 |
Provision for income taxes |
|
|
72 |
|
|
119 |
|
|
102 |
Net income |
|
|
269 |
|
|
401 |
|
|
386 |
Dividends on preferred stock |
|
|
40 |
|
|
37 |
|
|
40 |
Net income available to common shareholders |
|
$ |
229 |
|
$ |
364 |
|
$ |
346 |
|
|
|
|
|
|
|
|||
Basic earnings per common share |
|
$ |
1.24 |
|
$ |
2.03 |
|
$ |
1.89 |
Diluted earnings per common share |
|
$ |
1.23 |
|
$ |
2.00 |
|
$ |
1.88 |
|
|
|
|
|
|
|
|||
Weighted average shares—basic |
|
|
185 |
|
|
180 |
|
|
183 |
Weighted average shares—diluted |
|
|
186 |
|
|
182 |
|
|
184 |
CONSOLIDATED BALANCE SHEETS |
||||||||||||
|
|
As of |
||||||||||
($ in millions) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
|
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
|
||||||
Cash and cash equivalents |
|
$ |
13,159 |
|
|
$ |
4,283 |
|
|
$ |
7,756 |
|
Debt securities available-for-sale |
|
|
3,409 |
|
|
|
3,347 |
|
|
|
3,446 |
|
Debt securities held-to-maturity, net |
|
|
31,389 |
|
|
|
28,348 |
|
|
|
26,831 |
|
Equity securities (fair value) |
|
|
24 |
|
|
|
24 |
|
|
|
25 |
|
|
|
|
|
|
|
|
||||||
Loans: |
|
|
|
|
|
|
||||||
Single family |
|
|
101,109 |
|
|
|
98,768 |
|
|
|
81,833 |
|
Home equity lines of credit |
|
|
2,946 |
|
|
|
2,775 |
|
|
|
2,597 |
|
Single family construction |
|
|
1,307 |
|
|
|
1,217 |
|
|
|
1,041 |
|
Multifamily |
|
|
22,731 |
|
|
|
21,588 |
|
|
|
16,953 |
|
Commercial real estate |
|
|
11,067 |
|
|
|
10,830 |
|
|
|
8,753 |
|
Multifamily/commercial construction |
|
|
2,382 |
|
|
|
2,139 |
|
|
|
1,955 |
|
Capital call lines of credit |
|
|
11,486 |
|
|
|
9,988 |
|
|
|
10,970 |
|
Tax-exempt |
|
|
3,770 |
|
|
|
3,713 |
|
|
|
3,656 |
|
Other business |
|
|
5,549 |
|
|
|
5,092 |
|
|
|
4,313 |
|
Stock secured |
|
|
4,387 |
|
|
|
4,553 |
|
|
|
3,651 |
|
Other secured |
|
|
3,458 |
|
|
|
3,191 |
|
|
|
2,623 |
|
Unsecured |
|
|
3,119 |
|
|
|
3,014 |
|
|
|
2,968 |
|
Total loans |
|
|
173,311 |
|
|
|
166,868 |
|
|
|
141,313 |
|
Allowance for credit losses |
|
|
(802 |
) |
|
|
(784 |
) |
|
|
(701 |
) |
Loans, net |
|
|
172,509 |
|
|
|
166,084 |
|
|
|
140,612 |
|
|
|
|
|
|
|
|
||||||
Investments in life insurance |
|
|
4,039 |
|
|
|
3,435 |
|
|
|
2,682 |
|
Tax credit investments |
|
|
1,393 |
|
|
|
1,383 |
|
|
|
1,231 |
|
Premises, equipment and leasehold improvements, net |
|
|
488 |
|
|
|
483 |
|
|
|
467 |
|
Goodwill and other intangible assets |
|
|
193 |
|
|
|
218 |
|
|
|
221 |
|
Other assets |
|
|
6,341 |
|
|
|
5,034 |
|
|
|
3,850 |
|
Total Assets |
|
$ |
232,944 |
|
|
$ |
212,639 |
|
|
$ |
187,121 |
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
||||||
Liabilities: |
|
|
|
|
|
|
||||||
Deposits: |
|
|
|
|
|
|
||||||
Noninterest-bearing checking |
|
$ |
20,297 |
|
|
$ |
62,579 |
|
|
$ |
72,424 |
|
Interest-bearing checking |
|
|
23,162 |
|
|
|
41,178 |
|
|
|
41,589 |
|
Money market checking |
|
|
6,028 |
|
|
|
25,805 |
|
|
|
21,846 |
|
Money market savings and passbooks |
|
|
5,159 |
|
|
|
21,663 |
|
|
|
19,159 |
|
Certificates of deposit (1) |
|
|
49,828 |
|
|
|
25,212 |
|
|
|
7,042 |
|
Total Deposits |
|
|
104,474 |
|
|
|
176,437 |
|
|
|
162,060 |
|
|
|
|
|
|
|
|
||||||
Short-term borrowings |
|
|
80,365 |
|
|
|
6,700 |
|
|
|
— |
|
Long-term FHLB advances |
|
|
25,525 |
|
|
|
7,300 |
|
|
|
3,700 |
|
Senior notes |
|
|
— |
|
|
|
500 |
|
|
|
999 |
|
Subordinated notes |
|
|
779 |
|
|
|
779 |
|
|
|
779 |
|
Other liabilities |
|
|
3,811 |
|
|
|
3,477 |
|
|
|
3,429 |
|
Total Liabilities |
|
|
214,954 |
|
|
|
195,193 |
|
|
|
170,967 |
|
|
|
|
|
|
|
|
||||||
Shareholders’ Equity: |
|
|
|
|
|
|
||||||
Preferred stock |
|
|
3,633 |
|
|
|
3,633 |
|
|
|
3,633 |
|
Common stock |
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
|
6,585 |
|
|
|
6,256 |
|
|
|
5,763 |
|
Retained earnings |
|
|
8,065 |
|
|
|
7,886 |
|
|
|
6,893 |
|
Accumulated other comprehensive loss |
|
|
(295 |
) |
|
|
(331 |
) |
|
|
(137 |
) |
Total Shareholders’ Equity |
|
|
17,990 |
|
|
|
17,446 |
|
|
|
16,154 |
|
Total Liabilities and Shareholders’ Equity |
|
$ |
232,944 |
|
|
$ |
212,639 |
|
|
$ |
187,121 |
|
__________ |
|
|
|
|
|
|
||||||
(1) As of March 31, 2023, included $30 billion of time deposits received from the large U.S. banks. |
||||||||||||
|
|
Quarter Ended March 31, |
|
Quarter Ended December 31, |
||||||||||||||||||||||||||
|
|
2023 |
|
2022 |
|
2022 |
||||||||||||||||||||||||
Average Balances, Yields and Rates |
|
Average
|
|
Interest Income/
|
|
Yield/
|
|
Average
|
|
Interest Income/
|
|
Yield/
|
|
Average
|
|
Interest Income/
|
|
Yield/
|
||||||||||||
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing deposits with banks |
|
$ |
6,372 |
|
$ |
74 |
|
|
4.70 |
% |
|
$ |
11,342 |
|
$ |
5 |
|
|
0.18 |
% |
|
$ |
2,704 |
|
$ |
24 |
|
|
3.49 |
% |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government-sponsored agency securities |
|
|
165 |
|
|
1 |
|
|
2.05 |
% |
|
|
117 |
|
|
0 |
|
|
1.37 |
% |
|
|
165 |
|
|
1 |
|
|
2.05 |
% |
Agency residential and commercial MBS |
|
|
12,448 |
|
|
86 |
|
|
2.77 |
% |
|
|
9,142 |
|
|
39 |
|
|
1.70 |
% |
|
|
10,535 |
|
|
66 |
|
|
2.49 |
% |
Other residential and commercial MBS |
|
|
18 |
|
|
0 |
|
|
4.20 |
% |
|
|
24 |
|
|
0 |
|
|
2.04 |
% |
|
|
18 |
|
|
0 |
|
|
3.77 |
% |
Tax-exempt municipal securities |
|
|
17,707 |
|
|
147 |
|
|
3.33 |
% |
|
|
15,595 |
|
|
151 |
|
|
3.87 |
% |
|
|
17,697 |
|
|
175 |
|
|
3.97 |
% |
Taxable municipal securities |
|
|
1,773 |
|
|
14 |
|
|
3.14 |
% |
|
|
1,715 |
|
|
13 |
|
|
2.97 |
% |
|
|
1,774 |
|
|
13 |
|
|
3.13 |
% |
Other investment securities |
|
|
1,442 |
|
|
11 |
|
|
2.88 |
% |
|
|
1,416 |
|
|
10 |
|
|
2.85 |
% |
|
|
1,440 |
|
|
10 |
|
|
2.88 |
% |
Total investment securities |
|
|
33,553 |
|
|
259 |
|
|
3.08 |
% |
|
|
28,009 |
|
|
213 |
|
|
3.04 |
% |
|
|
31,629 |
|
|
265 |
|
|
3.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential real estate |
|
|
103,672 |
|
|
823 |
|
|
3.18 |
% |
|
|
82,416 |
|
|
567 |
|
|
2.75 |
% |
|
|
100,645 |
|
|
772 |
|
|
3.07 |
% |
Multifamily |
|
|
21,905 |
|
|
203 |
|
|
3.70 |
% |
|
|
16,281 |
|
|
140 |
|
|
3.45 |
% |
|
|
20,856 |
|
|
192 |
|
|
3.60 |
% |
Commercial real estate |
|
|
10,945 |
|
|
114 |
|
|
4.15 |
% |
|
|
8,633 |
|
|
82 |
|
|
3.77 |
% |
|
|
10,401 |
|
|
107 |
|
|
4.02 |
% |
Multifamily/commercial construction |
|
|
2,278 |
|
|
34 |
|
|
6.02 |
% |
|
|
1,929 |
|
|
22 |
|
|
4.62 |
% |
|
|
2,105 |
|
|
31 |
|
|
5.77 |
% |
Business |
|
|
18,649 |
|
|
271 |
|
|
5.82 |
% |
|
|
18,971 |
|
|
152 |
|
|
3.21 |
% |
|
|
17,771 |
|
|
240 |
|
|
5.29 |
% |
Other |
|
|
10,817 |
|
|
125 |
|
|
4.62 |
% |
|
|
9,058 |
|
|
47 |
|
|
2.06 |
% |
|
|
10,479 |
|
|
103 |
|
|
3.86 |
% |
Total loans |
|
|
168,266 |
|
|
1,570 |
|
|
3.73 |
% |
|
|
137,288 |
|
|
1,010 |
|
|
2.94 |
% |
|
|
162,257 |
|
|
1,445 |
|
|
3.53 |
% |
FHLB stock |
|
|
517 |
|
|
6 |
|
|
4.88 |
% |
|
|
115 |
|
|
2 |
|
|
7.60 |
% |
|
|
353 |
|
|
6 |
|
|
7.27 |
% |
Total interest-earning assets |
|
|
208,708 |
|
|
1,909 |
|
|
3.66 |
% |
|
|
176,754 |
|
|
1,230 |
|
|
2.78 |
% |
|
|
196,943 |
|
|
1,740 |
|
|
3.51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Noninterest-earning cash |
|
|
522 |
|
|
|
|
|
|
449 |
|
|
|
|
|
|
478 |
|
|
|
|
|||||||||
Goodwill and other intangibles |
|
|
218 |
|
|
|
|
|
|
221 |
|
|
|
|
|
|
219 |
|
|
|
|
|||||||||
Other assets |
|
|
9,135 |
|
|
|
|
|
|
7,142 |
|
|
|
|
|
|
8,464 |
|
|
|
|
|||||||||
Total noninterest-earning assets |
|
|
9,875 |
|
|
|
|
|
|
7,812 |
|
|
|
|
|
|
9,161 |
|
|
|
|
|||||||||
Total Assets |
|
$ |
218,583 |
|
|
|
|
|
$ |
184,566 |
|
|
|
|
|
$ |
206,104 |
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities and Shareholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest-bearing checking |
|
$ |
35,218 |
|
|
79 |
|
|
0.91 |
% |
|
$ |
40,400 |
|
|
1 |
|
|
0.01 |
% |
|
$ |
39,252 |
|
|
55 |
|
|
0.55 |
% |
Money market checking |
|
|
22,408 |
|
|
155 |
|
|
2.80 |
% |
|
|
21,659 |
|
|
5 |
|
|
0.09 |
% |
|
|
24,084 |
|
|
134 |
|
|
2.20 |
% |
Money market savings and passbooks |
|
|
17,954 |
|
|
107 |
|
|
2.43 |
% |
|
|
17,925 |
|
|
7 |
|
|
0.15 |
% |
|
|
20,423 |
|
|
100 |
|
|
1.95 |
% |
CDs |
|
|
29,541 |
|
|
214 |
|
|
2.93 |
% |
|
|
7,217 |
|
|
7 |
|
|
0.40 |
% |
|
|
20,546 |
|
|
139 |
|
|
2.69 |
% |
Total interest-bearing deposits (3) |
|
|
105,121 |
|
|
555 |
|
|
2.14 |
% |
|
|
87,201 |
|
|
20 |
|
|
0.09 |
% |
|
|
104,305 |
|
|
428 |
|
|
1.63 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Borrowings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Federal Reserve Discount Window |
|
|
16,302 |
|
|
195 |
|
|
4.85 |
% |
|
|
— |
|
|
— |
|
|
— |
% |
|
|
— |
|
|
— |
|
|
— |
% |
Short-term FHLB advances |
|
|
8,722 |
|
|
103 |
|
|
4.80 |
% |
|
|
— |
|
|
— |
|
|
— |
% |
|
|
6,131 |
|
|
54 |
|
|
3.51 |
% |
Federal Reserve Bank Term Funding Program |
|
|
2,318 |
|
|
26 |
|
|
4.57 |
% |
|
|
— |
|
|
— |
|
|
— |
% |
|
|
— |
|
|
— |
|
|
— |
% |
Federal funds purchased |
|
|
844 |
|
|
11 |
|
|
4.59 |
% |
|
|
— |
|
|
— |
|
|
— |
% |
|
|
419 |
|
|
5 |
|
|
4.00 |
% |
Securities sold under agreements to repurchase |
|
|
94 |
|
|
1 |
|
|
5.23 |
% |
|
|
— |
|
|
— |
|
|
— |
% |
|
|
— |
|
|
— |
|
|
— |
% |
Long-term FHLB advances |
|
|
9,944 |
|
|
73 |
|
|
2.99 |
% |
|
|
3,700 |
|
|
9 |
|
|
0.95 |
% |
|
|
6,004 |
|
|
26 |
|
|
1.79 |
% |
Senior notes |
|
|
239 |
|
|
1 |
|
|
2.10 |
% |
|
|
998 |
|
|
6 |
|
|
2.42 |
% |
|
|
500 |
|
|
3 |
|
|
2.15 |
% |
Subordinated notes |
|
|
779 |
|
|
9 |
|
|
4.68 |
% |
|
|
779 |
|
|
9 |
|
|
4.68 |
% |
|
|
779 |
|
|
9 |
|
|
4.68 |
% |
Total borrowings |
|
|
39,242 |
|
|
419 |
|
|
4.33 |
% |
|
|
5,477 |
|
|
24 |
|
|
1.75 |
% |
|
|
13,833 |
|
|
97 |
|
|
2.79 |
% |
Total interest-bearing liabilities (4) |
|
|
144,363 |
|
|
974 |
|
|
2.73 |
% |
|
|
92,678 |
|
|
44 |
|
|
0.19 |
% |
|
|
118,138 |
|
|
525 |
|
|
1.76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Noninterest-bearing checking |
|
|
52,051 |
|
|
|
|
|
|
72,251 |
|
|
|
|
|
|
67,067 |
|
|
|
|
|||||||||
Other noninterest-bearing liabilities |
|
|
4,373 |
|
|
|
|
|
|
3,613 |
|
|
|
|
|
|
3,609 |
|
|
|
|
|||||||||
Total noninterest-bearing liabilities |
|
|
56,424 |
|
|
|
|
|
|
75,864 |
|
|
|
|
|
|
70,676 |
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred shareholders’ equity |
|
|
3,633 |
|
|
|
|
|
|
3,633 |
|
|
|
|
|
|
3,633 |
|
|
|
|
|||||||||
Common shareholders’ equity |
|
|
14,163 |
|
|
|
|
|
|
12,391 |
|
|
|
|
|
|
13,657 |
|
|
|
|
|||||||||
Total Liabilities and Shareholders’ Equity |
|
$ |
218,583 |
|
|
|
|
|
$ |
184,566 |
|
|
|
|
|
$ |
206,104 |
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net interest spread (5) |
|
|
|
|
|
0.93 |
% |
|
|
|
|
|
2.59 |
% |
|
|
|
|
|
1.74 |
% |
|||||||||
Net interest income (fully taxable-equivalent basis) and net interest margin (6) |
|
|
|
$ |
935 |
|
|
1.77 |
% |
|
|
|
$ |
1,186 |
|
|
2.68 |
% |
|
|
|
$ |
1,215 |
|
|
2.45 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reconciliation of tax-equivalent net interest income to net interest income: (7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Municipal securities tax-equivalent adjustment |
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
(34 |
) |
|
|
|
|
|
|
(34 |
) |
|
|
|||||
Business loans tax-equivalent adjustment |
|
|
|
|
|
(5 |
) |
|
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
(7 |
) |
|
|
|||||
Net interest income |
|
|
|
|
$ |
923 |
|
|
|
|
|
|
$ |
1,145 |
|
|
|
|
|
|
$ |
1,174 |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Supplemental information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total deposits (interest-bearing and noninterest-bearing) |
|
$ |
157,172 |
|
$ |
555 |
|
|
1.43 |
% |
|
$ |
159,452 |
|
$ |
20 |
|
|
0.05 |
% |
|
$ |
171,372 |
|
$ |
428 |
|
|
0.99 |
% |
Total deposits (interest-bearing and noninterest-bearing) and borrowings |
|
$ |
196,414 |
|
$ |
974 |
|
|
2.01 |
% |
|
$ |
164,929 |
|
$ |
44 |
|
|
0.11 |
% |
|
$ |
185,205 |
|
$ |
525 |
|
|
1.12 |
% |
| __________ | ||
| Note: Certain prior period amounts have been reclassified to conform to the current period presentation. | ||
(1) |
|
Interest income on tax-exempt securities and loans has been adjusted to the fully taxable-equivalent basis using the statutory federal income tax rate in effect for each respective period presented. |
(2) |
|
Yields/rates are annualized. |
(3) |
|
Refer to supplemental information in this table for average balances, interest expense and rates for total deposits (interest-bearing and noninterest-bearing). |
(4) |
|
Refer to supplemental information in this table for average balances, interest expense and rates for total deposits (interest-bearing and noninterest-bearing) and borrowings. |
(5) |
|
Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities. |
(6) |
|
Net interest margin represents net interest income on a fully taxable-equivalent basis divided by total average interest-earning assets. |
(7) |
|
Fully taxable-equivalent net interest income is considered a non-GAAP financial measure, and is reconciled to GAAP net interest income in this table. |
Selected Financial Data and Ratios |
|
Quarter Ended
|
|
Quarter Ended
|
||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
|
($ in millions, except per share amounts) |
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Selected Financial Data and Ratios: |
|
|
|
|
|
|
||||||
Return on average assets (1), (2) |
|
|
0.50 |
% |
|
|
0.88 |
% |
|
|
0.74 |
% |
Return on average common shareholders’ equity (1) |
|
|
6.55 |
% |
|
|
11.91 |
% |
|
|
10.05 |
% |
Return on average tangible common shareholders’ equity (1), (3) |
|
|
6.65 |
% |
|
|
12.12 |
% |
|
|
10.21 |
% |
Average equity to average assets |
|
|
8.14 |
% |
|
|
8.68 |
% |
|
|
8.39 |
% |
Dividends per common share |
|
$ |
0.27 |
|
|
$ |
0.22 |
|
|
$ |
0.27 |
|
Dividend payout ratio (4) |
|
|
21.9 |
% |
|
|
11.0 |
% |
|
|
14.4 |
% |
Efficiency ratio (5) |
|
|
70.4 |
% |
|
|
62.0 |
% |
|
|
63.9 |
% |
|
|
|
|
|
|
|
||||||
Selected Asset Quality Ratios: |
|
|
|
|
|
|
||||||
Net loan charge-offs (recoveries) |
|
$ |
(0.2 |
) |
|
$ |
(0.3 |
) |
|
$ |
0.9 |
|
Net loan charge-offs (recoveries) to average total loans (1) |
|
|
(0.00 |
) % |
|
|
(0.00 |
) % |
|
|
0.00 |
% |
|
|
|
|
|
|
|
||||||
Selected Ratios (period-end): |
|
|
|
|
|
|
||||||
Book value per common share |
|
$ |
76.97 |
|
|
$ |
69.70 |
|
|
$ |
75.38 |
|
| __________ | ||||||||
(1) |
|
Ratios are annualized. |
||||||
(2) |
|
Return on average assets is the ratio of net income to average assets. |
||||||
(3) |
|
Refer to “Return on Average Common Shareholders’ Equity and Return on Average Tangible Common Shareholders’ Equity” table in this document for a reconciliation of this non-GAAP financial measure to the most comparable GAAP measure. |
||||||
(4) |
|
As announced on March 16, 2023, the Bank’s Board of Directors determined to suspend its common stock dividend. In addition, on April 6, 2023, the Bank’s Board of Directors determined to suspend payment of the quarterly cash dividend on each series of the Bank’s outstanding noncumulative perpetual preferred stock. |
||||||
(5) |
|
Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income. |
||||||
Effective Tax Rate |
|
Quarter Ended
|
|
Quarter Ended
|
|||||
|
2023 |
|
2022 |
|
2022 |
||||
|
|
|
|
|
|
|
|||
Effective tax rate, prior to excess tax benefits—stock awards and other adjustments |
|
19.5 |
% |
|
23.4 |
% |
|
21.9 |
% |
Excess tax benefits—stock awards |
|
0.2 |
|
|
(0.5 |
) |
|
(0.3 |
) |
Research and development tax credit adjustments |
|
— |
|
|
— |
|
|
(0.7 |
) |
Goodwill impairment |
|
1.5 |
|
|
— |
|
|
— |
|
Effective tax rate |
|
21.2 |
% |
|
22.9 |
% |
|
20.9 |
% |
Provision (Reversal of Provision) for Credit Losses |
|
Quarter Ended
|
|
Quarter Ended
|
||||||
|
|
2023 |
|
|
|
2022 |
|
|
2022 |
|
($ in millions) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
Debt securities held-to-maturity |
|
$ |
— |
|
|
$ |
1 |
|
$ |
— |
Loans |
|
|
18 |
|
|
|
7 |
|
|
25 |
Unfunded loan commitments |
|
|
(2 |
) |
|
|
2 |
|
|
5 |
Total provision |
|
$ |
16 |
|
|
$ |
10 |
|
$ |
30 |
Loan Originations |
|
Quarter Ended
|
|
Quarter Ended
|
|||||
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
($ in millions) |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
Single family |
|
$ |
3,716 |
|
$ |
8,376 |
|
$ |
5,894 |
Home equity lines of credit |
|
|
468 |
|
|
689 |
|
|
499 |
Single family construction |
|
|
158 |
|
|
267 |
|
|
387 |
Multifamily |
|
|
1,300 |
|
|
1,709 |
|
|
1,581 |
Commercial real estate |
|
|
386 |
|
|
566 |
|
|
879 |
Multifamily/commercial construction |
|
|
597 |
|
|
384 |
|
|
445 |
Capital call lines of credit |
|
|
2,349 |
|
|
3,020 |
|
|
2,477 |
Tax-exempt |
|
|
39 |
|
|
90 |
|
|
195 |
Other business |
|
|
637 |
|
|
538 |
|
|
1,090 |
Stock secured |
|
|
815 |
|
|
1,136 |
|
|
976 |
Other secured |
|
|
684 |
|
|
666 |
|
|
839 |
Unsecured |
|
|
289 |
|
|
369 |
|
|
360 |
Total loans originated |
|
$ |
11,438 |
|
$ |
17,810 |
|
$ |
15,622 |
|
|
As of March 31, 2023 |
||||||||||
Commercial Real Estate Portfolio |
|
Unpaid Principal
|
|
Percent of Total
|
|
LTV (2) |
|
Average Loan
|
||||
($ in millions) |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Mixed Use |
|
$ |
2,603 |
|
1.5 |
% |
|
45 |
% |
|
$ |
4.4 |
Retail |
|
$ |
2,602 |
|
1.5 |
% |
|
48 |
% |
|
$ |
3.0 |
Office |
|
$ |
2,522 |
|
1.5 |
% |
|
45 |
% |
|
$ |
3.8 |
Warehouse/Industrial |
|
$ |
1,563 |
|
0.9 |
% |
|
45 |
% |
|
$ |
2.9 |
Hotel |
|
$ |
623 |
|
0.4 |
% |
|
46 |
% |
|
$ |
8.8 |
Healthcare |
|
$ |
274 |
|
0.2 |
% |
|
49 |
% |
|
$ |
3.1 |
Restaurant |
|
$ |
155 |
|
0.1 |
% |
|
48 |
% |
|
$ |
1.4 |
Other |
|
$ |
729 |
|
0.4 |
% |
|
43 |
% |
|
$ |
3.3 |
__________ |
|
|
|
|
|
|
|
|
||||
(1) Represents the unpaid principal balance, excluding unamortized net deferred fees and costs. |
||||||||||||
(2) Weighted average loan-to-value (LTV) at origination. |
||||||||||||
|
|
As of |
||||||||||||||||||
Asset Quality Information |
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||||
($ in millions) |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nonperforming assets: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Nonaccrual loans |
|
$ |
131 |
|
|
$ |
109 |
|
|
$ |
120 |
|
|
$ |
137 |
|
|
$ |
140 |
|
Other real estate owned |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total nonperforming assets |
|
$ |
131 |
|
|
$ |
109 |
|
|
$ |
120 |
|
|
$ |
137 |
|
|
$ |
140 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nonaccrual loans to total loans |
|
|
0.08 |
% |
|
|
0.07 |
% |
|
|
0.08 |
% |
|
|
0.09 |
% |
|
|
0.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nonperforming assets to total assets |
|
|
0.06 |
% |
|
|
0.05 |
% |
|
|
0.06 |
% |
|
|
0.07 |
% |
|
|
0.08 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accruing loans 90 days or more past due |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for loan credit losses to: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Total loans |
|
|
0.46 |
% |
|
|
0.47 |
% |
|
|
0.48 |
% |
|
|
0.48 |
% |
|
|
0.50 |
% |
Nonaccrual loans |
|
|
614.1 |
% |
|
|
720.5 |
% |
|
|
635.3 |
% |
|
|
531.2 |
% |
|
|
498.8 |
% |
Deposits |
|
As of |
||||||
|
March 31,
|
|
December 31,
|
|||||
($ in millions) |
|
|
|
|
||||
|
|
|
|
|
||||
Total deposits |
|
$ |
104,474 |
|
|
$ |
176,437 |
|
Estimated insured deposits |
|
$ |
54,651 |
|
|
$ |
57,615 |
|
Estimated uninsured deposits |
|
$ |
49,823 |
|
|
$ |
118,822 |
|
Estimated insured deposits as % of total deposits |
|
|
52 |
% |
|
|
33 |
% |
Estimated uninsured deposits as % of total deposits |
|
|
48 |
% |
|
|
67 |
% |
|
|
|
|
|
||||
Excluding $30 billion of time deposits received from the large U.S. banks: |
|
|
|
|
||||
Total deposits (1) |
|
$ |
74,413 |
|
|
|
n/a |
|
Estimated insured deposits (1) |
|
$ |
54,648 |
|
|
|
n/a |
|
Estimated uninsured deposits (1) |
|
$ |
19,765 |
|
|
|
n/a |
|
Estimated insured deposits as % of total deposits (1) |
|
|
73 |
% |
|
|
n/a |
|
Estimated uninsured deposits as % of total deposits (1) |
|
|
27 |
% |
|
|
n/a |
|
|
|
|
|
|
||||
Deposit types as % of total deposits, excluding $30 billion of time deposits received from the large U.S. banks: |
|
|
|
|
||||
Checking (1) |
|
|
58.4 |
% |
|
|
58.8 |
% |
Other liquid deposits (1) |
|
|
15.0 |
% |
|
|
26.9 |
% |
CDs (1) |
|
|
26.6 |
% |
|
|
14.3 |
% |
|
|
|
|
|
||||
__________ |
|
|
|
|
||||
Note: Uninsured and insured amounts in the table above are based on deposit principal balances. |
||||||||
(1) As of March 31, 2023, excludes $30 billion of time deposits received from the large U.S. banks. |
||||||||
|
|
As of |
||||
Short-Term Borrowings |
|
March 31,
|
|
December 31,
|
||
($ in millions) |
|
|
|
|
||
|
|
|
|
|
||
Federal Reserve Discount Window |
|
$ |
63,500 |
|
$ |
— |
Federal Reserve Bank Term Funding Program |
|
|
13,844 |
|
|
— |
FHLB advances |
|
|
2,575 |
|
|
6,700 |
Securities sold under agreements to repurchase |
|
|
446 |
|
|
— |
Total short-term borrowings |
|
$ |
80,365 |
|
$ |
6,700 |
|
|
As of |
|||||||||||||
Loan Servicing Portfolio |
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|||||
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans serviced for investors |
|
$ |
3,273 |
|
$ |
3,459 |
|
$ |
3,632 |
|
$ |
3,919 |
|
$ |
4,298 |
Return on Average Common Shareholders’ Equity and Return on Average Tangible Common Shareholders’ Equity (1), (2) |
|
|
|
|
|
|
||||||
|
Quarter Ended
|
|
Quarter Ended
|
|||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
|
($ in millions) |
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Average common shareholders’ equity (a) |
|
$ |
14,163 |
|
|
$ |
12,391 |
|
|
$ |
13,657 |
|
Less: Average goodwill and other intangible assets |
|
|
(218 |
) |
|
|
(221 |
) |
|
|
(219 |
) |
Average tangible common shareholders’ equity (b) |
|
$ |
13,945 |
|
|
$ |
12,170 |
|
|
$ |
13,438 |
|
|
|
|
|
|
|
|
||||||
Net income available to common shareholders (c) |
|
$ |
229 |
|
|
$ |
364 |
|
|
$ |
346 |
|
|
|
|
|
|
|
|
||||||
Return on average common shareholders’ equity (c) / (a) |
|
|
6.55 |
% |
|
|
11.91 |
% |
|
|
10.05 |
% |
Return on average tangible common shareholders’ equity (c) / (b) |
|
|
6.65 |
% |
|
|
12.12 |
% |
|
|
10.21 |
% |
| __________ | ||
(1) |
Return on average tangible common shareholders’ equity is considered a non-GAAP financial measure, and is reconciled to GAAP return on average common shareholders’ equity in this table. |
|
(2) |
Ratios are annualized. |
|
Regulatory Capital Ratios and Components (1), (2) |
|
As of |
||||||||||||||||||
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|||||||||||
($ in millions) |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital Ratios: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Tier 1 leverage ratio (Tier 1 capital to average assets) |
|
|
8.25 |
% |
|
|
8.51 |
% |
|
|
8.59 |
% |
|
|
8.59 |
% |
|
|
8.70 |
% |
Common Equity Tier 1 capital to risk-weighted assets |
|
|
9.32 |
% |
|
|
9.17 |
% |
|
|
9.28 |
% |
|
|
9.15 |
% |
|
|
9.48 |
% |
Tier 1 capital to risk-weighted assets |
|
|
11.67 |
% |
|
|
11.56 |
% |
|
|
11.76 |
% |
|
|
11.75 |
% |
|
|
12.25 |
% |
Total capital to risk-weighted assets |
|
|
12.71 |
% |
|
|
12.60 |
% |
|
|
12.81 |
% |
|
|
12.82 |
% |
|
|
13.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Regulatory Capital: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Common Equity Tier 1 capital |
|
$ |
14,408 |
|
|
$ |
13,920 |
|
|
$ |
13,586 |
|
|
$ |
12,791 |
|
|
$ |
12,418 |
|
Tier 1 capital |
|
$ |
18,041 |
|
|
$ |
17,553 |
|
|
$ |
17,219 |
|
|
$ |
16,424 |
|
|
$ |
16,051 |
|
Total capital |
|
$ |
19,637 |
|
|
$ |
19,118 |
|
|
$ |
18,755 |
|
|
$ |
17,924 |
|
|
$ |
17,521 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Average assets |
|
$ |
218,783 |
|
|
$ |
206,371 |
|
|
$ |
200,486 |
|
|
$ |
191,202 |
|
|
$ |
184,410 |
|
Risk-weighted assets |
|
$ |
154,544 |
|
|
$ |
151,777 |
|
|
$ |
146,444 |
|
|
$ |
139,811 |
|
|
$ |
131,024 |
|
__________ |
||
(1) |
As defined by regulatory capital rules. |
|
(2) |
Beginning in 2020, ratios and amounts reflect the Bank's election to delay the estimated impact of the Current Expected Credit Losses (“CECL”) allowance methodology on its regulatory capital, average assets and risk-weighted assets over a five-year transition period ending December 31, 2024. |
|
(3) |
Ratios and amounts as of March 31, 2023 are preliminary. |
|
|
As of |
||||||||||||||
Wealth Management Assets |
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|||||
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
First Republic Investment Management |
|
$ |
118,902 |
|
$ |
112,176 |
|
$ |
100,125 |
|
$ |
100,204 |
|
$ |
108,771 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Brokerage and investment: |
|
|
|
|
|
|
|
|
|
|
|||||
Brokerage |
|
|
144,565 |
|
|
130,844 |
|
|
119,299 |
|
|
116,979 |
|
|
128,129 |
Money market mutual funds |
|
|
5,121 |
|
|
8,100 |
|
|
10,891 |
|
|
10,510 |
|
|
18,543 |
Total brokerage and investment |
|
|
149,686 |
|
|
138,944 |
|
|
130,190 |
|
|
127,489 |
|
|
146,672 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Trust Company: |
|
|
|
|
|
|
|
|
|
|
|||||
Trust |
|
|
17,031 |
|
|
16,318 |
|
|
15,270 |
|
|
14,994 |
|
|
14,344 |
Custody |
|
|
3,845 |
|
|
3,806 |
|
|
3,943 |
|
|
4,099 |
|
|
4,408 |
Total Trust Company |
|
|
20,876 |
|
|
20,124 |
|
|
19,213 |
|
|
19,093 |
|
|
18,752 |
Total Wealth Management Assets |
|
$ |
289,464 |
|
$ |
271,244 |
|
$ |
249,528 |
|
$ |
246,786 |
|
$ |
274,195 |
