First Republic Reports Strong 2019 Results

World News: . []

First Republic Bank (NYSE: FRC) today announced financial results for the quarter and year ended December 31, 2019.

“2019 was another very strong year across the board,” said Founder, Chairman and CEO Jim Herbert. “Loans, deposits and wealth management assets all grew nicely. Our results continue to reflect the strength of our unique, client-focused service model.”

Full Year Highlights

Financial Results

– Revenues were $3.3 billion, up 9.7%.

– Net interest income was $2.8 billion, up 10.5%.

– Net income was $930.3 million, up 9.0%.

– Diluted earnings per share of $5.20, up 8.1%.

– Loan originations totaled $38.0 billion, our best year ever.

– Tangible book value per share was $50.24, up 11.0%.

– Efficiency ratio was 64.2%, compared to 63.0% last year.

Continued Capital and Credit Strength

– Tier 1 leverage ratio was 8.39%, compared to 8.68% a year ago.

– Nonperforming assets remained at a low 12 basis points of total assets.

– Net charge-offs were only $4.6 million, or less than 1 basis point of average loans.

Continued Franchise Development

– Loans, excluding loans held for sale, totaled $90.8 billion, up 19.7%.

– Deposits were $90.1 billion, up 14.0%.

– Wealth management assets were $151.0 billion, up 19.7%.

– Wealth management revenues were $470.7 million, up 8.5%.

Quarterly Highlights

– Compared to last year’s fourth quarter:

– Revenues were $877.5 million, up 8.2%.

– Net interest income was $720.1 million, up 7.9%.

– Net income was $246.3 million, up 6.4%.

– Diluted EPS of $1.39, up 7.8%.

– Loan originations were $11.2 billion, our best quarter ever.

– Net recoveries were $1.1 million.

– Net interest margin was 2.73%, compared to 2.80% for the prior quarter.

– Efficiency ratio was 63.7%, compared to 63.8% for the prior quarter.

– Wealth management assets were $151.0 billion, up 7.7% from the prior quarter.

“We’re pleased with revenue growth of 9.7% and net interest income growth of 10.5% for the year, despite a very challenging interest rate environment in 2019,” said Chief Financial Officer Mike Roffler. “Capital and credit quality remain excellent.”

Quarterly Cash Dividend Declared

The Bank declared a cash dividend for the fourth quarter of $0.19 per share of common stock, which is payable on February 13, 2020 to shareholders of record as of January 30, 2020.

Very Strong Asset Quality

Credit quality remains strong. Nonperforming assets were only 12 basis points of total assets at December 31, 2019.

The Bank had net recoveries for the quarter of $1.1 million, while adding $9.6 million to its allowance for loan losses due to continued loan growth. During the full year, the Bank had net charge-offs of only $4.6 million, while adding $61.7 million to its allowance for loan losses.

Continued Capital Strength

The Bank’s Tier 1 leverage ratio was 8.39% at December 31, 2019, compared to 8.68% a year ago.

During the fourth quarter, the Bank redeemed all of the outstanding shares of its 5.50% Noncumulative Perpetual Series D Preferred Stock, which totaled $190.0 million. In addition, the Bank issued $395.0 million of 4.70% Noncumulative Perpetual Series J Preferred Stock, which qualifies as Tier 1 capital.

Tangible Book Value Growth

Tangible book value per common share at December 31, 2019 was $50.24, up 11.0% from a year ago.

Continued Franchise Development

Loan Originations

Loan originations were $11.2 billion for the quarter, up 42.5% compared to the same quarter a year ago. For 2019, loan originations totaled $38.0 billion, up 20.7% compared to the prior year. The increase for the quarter was primarily due to increases in single family, stock and other secured, and multifamily lending. The increase for the year was primarily due to increases in single family, stock and other secured, and commercial real estate lending.

Loans, excluding loans held for sale, totaled $90.8 billion at December 31, 2019, up 19.7% compared to a year ago, primarily due to increases in single family, multifamily, commercial real estate and business loans.

Deposit Growth

Total deposits increased to $90.1 billion, up 14.0% compared to a year ago.

At December 31, 2019, checking accounts totaled 58.6% of deposits.

Investments

Total investment securities at December 31, 2019 were $18.4 billion, up 5.9% compared to the prior quarter and up 13.6% compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $14.5 billion at December 31, 2019, and represented 12.7% of average total assets.

Wealth Management

Wealth management revenues totaled $128.4 million for the quarter, up 7.3% compared to last year’s fourth quarter. For all of 2019, wealth management revenues were $470.7 million, an increase of 8.5% compared to the prior year. Such revenues represented 14.6% of the Bank’s total revenues for the quarter and 14.1% of the Bank’s total revenues for the year.

Total wealth management assets were $151.0 billion at December 31, 2019, up 7.7% for the quarter and up 19.7% compared to a year ago. The increases in wealth management assets were driven by market appreciation and net new assets from existing and new clients.

Wealth management assets included investment management assets of $66.0 billion, brokerage assets and money market mutual funds of $73.1 billion, and trust and custody assets of $11.9 billion.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $877.5 million for the quarter, up 8.2% compared to the fourth quarter a year ago and were $3.3 billion for 2019, up 9.7% compared to the prior year.

Net Interest Income Growth

Net interest income was $720.1 million for the quarter, up 7.9% compared to the fourth quarter a year ago, and was $2.8 billion for 2019, up 10.5% compared to the prior year. The increases in net interest income resulted primarily from growth in average earning assets.

Net Interest Margin

The net interest margin was 2.73% for the fourth quarter, compared to 2.80% for the prior quarter. For 2019, the net interest margin was 2.83%, compared to 2.96% for the prior year. The decrease for the quarter was primarily due to a greater decline in the average yield on loans, compared to a modest decrease in total funding costs. The decrease for the year was primarily due to an increase in total funding costs, partially offset by an increase in the average yield on loans.

Noninterest Income

Noninterest income was $157.3 million for the quarter, up 9.6% compared to the fourth quarter a year ago, and was $577.2 million for 2019, up 6.2% compared to the prior year. The increases were primarily from growth in wealth management fees and income from investments in life insurance.

Noninterest Expense and Efficiency Ratio

Noninterest expense was $558.8 million for the quarter, up 12.1% compared to the fourth quarter a year ago, and was $2.1 billion for 2019, up 12.0% compared to the prior year. The increases were primarily due to increased salaries and benefits, occupancy and information systems expenses from the continued investments in the expansion of the franchise.

The efficiency ratio was 63.7% for the quarter, compared to 61.5% for the fourth quarter a year ago. For 2019, the efficiency ratio was 64.2%, compared to 63.0% for 2018.

Income Taxes

The Bank’s effective tax rate for the fourth quarter of 2019 was 20.3%, compared to 19.4% for the fourth quarter a year ago.

The effective tax rate for 2019 was 17.9%, compared to 18.8% for 2018. The decrease for the year was primarily the result of higher excess tax benefits from an increase in stock options exercised by employees.

Conference Call Details

First Republic Bank’s fourth quarter and full year 2019 earnings conference call is scheduled for January 14, 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 7083625# approximately 10 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 LINK  . To listen to the live webcast, please visit the site at least 10 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 January 14, 2020, at 11:00 a.m. PT / 2:00 p.m. ET, through January 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 7083625#. 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 LINK  .

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

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 LINK  .

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; changes in nonperforming assets; 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; 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 reference rates, such as the London Interbank Offered Rate and the 11th District Monthly Weighted Average Cost of Funds Index; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; the impact of tax reform legislation; any future changes to regulatory capital requirements; legislative and regulatory actions affecting us and the financial services industry, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), including increased compliance costs, limitations on activities and requirements to hold additional capital, as well as changes to the Dodd-Frank Act pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act; our ability to avoid litigation and its associated costs and liabilities; future Federal Deposit Insurance Corporation (“FDIC”) special assessments or changes to regular assessments; fraud, cybersecurity and privacy risks; and custom technology preferences of our customers and our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications. For a discussion of these and other risks and uncertainties, see First Republic’s FDIC filings, including, but not limited to, the risk factors in First Republic’s Annual Report on Form 10-K and any subsequent reports filed by First Republic with the FDIC. These filings are available in the Investor Relations section of our website.

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

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

Quarter Ended

 

Quarter Ended

 

Year Ended

December 31,

 

September 30,

 

December 31,

(in thousands, except per share amounts)

 

2019

 

2018

 

2019

 

2019

 

2018

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans

 

$

780,326

 

 

$

677,450

 

 

$

764,468

 

 

$

2,986,210

 

 

$

2,442,469

 

Investments

 

146,080

 

 

134,380

 

 

134,099

 

 

547,988

 

 

540,753

 

Other

 

5,679

 

 

10,122

 

 

5,779

 

 

21,446

 

 

25,187

 

Cash and cash equivalents

 

4,869

 

 

6,703

 

 

5,430

 

 

23,835

 

 

23,197

 

Total interest income

 

936,954

 

 

828,655

 

 

909,776

 

 

3,579,479

 

 

3,031,606

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

128,705

 

 

96,188

 

 

134,917

 

 

500,557

 

 

290,040

 

Borrowings

 

88,131

 

 

65,264

 

 

79,874

 

 

314,755

 

 

240,458

 

Total interest expense

 

216,836

 

 

161,452

 

 

214,791

 

 

815,312

 

 

530,498

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

720,118

 

 

667,203

 

 

694,985

 

 

2,764,167

 

 

2,501,108

 

Provision for loan losses

 

9,579

 

 

25,089

 

 

16,711

 

 

61,690

 

 

76,092

 

Net interest income after provision for loan losses

 

710,539

 

 

642,114

 

 

678,274

 

 

2,702,477

 

 

2,425,016

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Investment management fees

 

97,106

 

 

91,937

 

 

83,582

 

 

359,332

 

 

341,539

 

Brokerage and investment fees

 

12,416

 

 

8,097

 

 

12,673

 

 

41,035

 

 

31,867

 

Insurance fees

 

4,186

 

 

5,444

 

 

2,712

 

 

12,708

 

 

10,090

 

Trust fees

 

4,328

 

 

3,939

 

 

4,105

 

 

16,549

 

 

14,633

 

Foreign exchange fee income

 

10,365

 

 

10,223

 

 

11,685

 

 

41,026

 

 

35,606

 

Deposit fees

 

6,609

 

 

6,484

 

 

6,563

 

 

26,071

 

 

24,974

 

Loan and related fees

 

6,175

 

 

3,871

 

 

5,341

 

 

19,819

 

 

15,713

 

Loan servicing fees, net

 

1,788

 

 

3,446

 

 

2,347

 

 

11,348

 

 

13,302

 

Gain on sale of loans

 

69

 

 

579

 

 

122

 

 

535

 

 

5,616

 

Gain (loss) on investment securities

 

(1,541

)

 

(1,313

)

 

(683

)

 

(3,436

)

 

5,202

 

Income from investments in life insurance

 

14,034

 

 

9,973

 

 

12,152

 

 

45,570

 

 

40,670

 

Other income

 

1,810

 

 

867

 

 

1,608

 

 

6,663

 

 

4,233

 

Total noninterest income

 

157,345

 

 

143,547

 

 

142,207

 

 

577,220

 

 

543,445

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

325,094

 

 

281,021

 

 

309,655

 

 

1,245,526

 

 

1,109,228

 

Information systems

 

69,278

 

 

63,999

 

 

66,612

 

 

273,337

 

 

241,752

 

Occupancy

 

50,474

 

 

40,078

 

 

50,722

 

 

192,678

 

 

152,258

 

Professional fees

 

22,476

 

 

15,338

 

 

17,507

 

 

68,099

 

 

60,058

 

Advertising and marketing

 

17,615

 

 

19,888

 

 

15,912

 

 

65,961

 

 

60,463

 

FDIC assessments

 

10,912

 

 

8,847

 

 

9,748

 

 

38,759

 

 

58,122

 

Other expenses

 

62,996

 

 

69,411

 

 

63,794

 

 

262,101

 

 

234,838

 

Total noninterest expense

 

558,845

 

 

498,582

 

 

533,950

 

 

2,146,461

 

 

1,916,719

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

309,039

 

 

287,079

 

 

286,531

 

 

1,133,236

 

 

1,051,742

 

Provision for income taxes

 

62,709

 

 

55,661

 

 

51,687

 

 

202,907

 

 

197,914

 

Net income

 

246,330

 

 

231,418

 

 

234,844

 

 

930,329

 

 

853,828

 

Dividends on preferred stock

 

10,708

 

 

16,228

 

 

12,787

 

 

49,070

 

 

57,725

 

Net income available to common shareholders

 

$

235,622

 

 

$

215,190

 

 

$

222,057

 

 

$

881,259

 

 

$

796,103

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.40

 

 

$

1.31

 

 

$

1.32

 

 

$

5.25

 

 

$

4.89

 

Diluted earnings per common share

 

$

1.39

 

 

$

1.29

 

 

$

1.31

 

 

$

5.20

 

 

$

4.81

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares—basic

 

168,544

 

 

164,804

 

 

168,272

 

 

167,908

 

 

162,948

 

Weighted average shares—diluted

 

169,776

 

 

167,100

 

 

169,346

 

 

169,551

 

 

165,612

 

 

CONSOLIDATED BALANCE SHEETS

 

 

As of

 

 

December 31,

 

September 30,

 

December 31,

($ in thousands)

 

2019

 

2019

 

2018

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,699,557

 

 

$

2,181,600

 

 

$

2,811,159

 

Debt securities available-for-sale

 

1,282,169

 

 

1,401,105

 

 

1,779,116

 

Debt securities held-to-maturity

 

17,147,633

 

 

16,002,722

 

 

14,436,973

 

Equity securities (fair value)

 

19,586

 

 

19,736

 

 

18,719

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

Single family (1-4 units)

 

47,985,651

 

 

44,882,363

 

 

37,955,252

 

Home equity lines of credit

 

2,501,432

 

 

2,530,740

 

 

2,542,713

 

Multifamily (5+ units)

 

12,428,452

 

 

11,725,331

 

 

10,357,839

 

Commercial real estate

 

7,537,085

 

 

7,504,334

 

 

6,677,440

 

Single family construction

 

761,589

 

 

743,699

 

 

645,924

 

Multifamily/commercial construction

 

1,532,834

 

 

1,442,896

 

 

1,576,582

 

Business

 

11,646,816

 

 

11,564,863

 

 

10,998,503

 

Stock secured

 

1,897,511

 

 

1,610,914

 

 

1,432,911

 

Other secured

 

1,433,399

 

 

1,293,084

 

 

1,105,751

 

Unsecured

 

3,072,062

 

 

3,006,586

 

 

2,572,367

 

Total loans

 

90,796,831

 

 

86,304,810

 

 

75,865,282

 

Allowance for loan losses

 

(496,104

)

 

(485,465

)

 

(439,048

)

Loans, net

 

90,300,727

 

 

85,819,345

 

 

75,426,234

 

 

 

 

 

 

 

 

Loans held for sale

 

23,304

 

 

31,693

 

 

98,985

 

Investments in life insurance

 

1,434,642

 

 

1,425,057

 

 

1,376,579

 

Tax credit investments

 

1,100,509

 

 

1,039,061

 

 

1,057,541

 

Premises, equipment and leasehold improvements, net

 

386,841

 

 

373,693

 

 

332,483

 

Goodwill and other intangible assets

 

235,269

 

 

264,658

 

 

273,974

 

Other assets

 

2,633,397

 

 

2,470,065

 

 

1,593,441

 

Total Assets

 

$

116,263,634

 

 

$

111,028,735

 

 

$

99,205,204

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing checking

 

$

33,124,265

 

 

$

32,720,317

 

 

$

30,033,658

 

Interest-bearing checking

 

19,696,859

 

 

17,438,402

 

 

17,089,520

 

Money market checking

 

12,790,707

 

 

11,242,205

 

 

10,317,436

 

Money market savings and passbooks

 

10,586,355

 

 

10,277,249

 

 

10,245,107

 

Certificates of deposit

 

13,935,060

 

 

14,042,346

 

 

11,377,515

 

Total Deposits

 

90,133,246

 

 

85,720,519

 

 

79,063,236

 

 

 

 

 

 

 

 

Short-term borrowings

 

800,000

 

 

775,000

 

 

100,000

 

Long-term FHLB advances

 

12,200,000

 

 

10,900,000

 

 

8,700,000

 

Senior notes

 

497,719

 

 

497,494

 

 

896,432

 

Subordinated notes

 

777,885

 

 

777,781

 

 

777,475

 

Other liabilities

 

2,003,677

 

 

2,926,735

 

 

990,284

 

Total Liabilities

 

106,412,527

 

 

101,597,529

 

 

90,527,427

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

Preferred stock

 

1,145,000

 

 

940,000

 

 

940,000

 

Common stock

 

1,686

 

 

1,685

 

 

1,649

 

Additional paid-in capital

 

4,214,915

 

 

4,198,442

 

 

4,024,306

 

Retained earnings

 

4,484,375

 

 

4,281,249

 

 

3,731,205

 

Accumulated other comprehensive income (loss)

 

5,131

 

 

9,830

 

 

(19,383

)

Total Shareholders’ Equity

 

9,851,107

 

 

9,431,206

 

 

8,677,777

 

Total Liabilities and Shareholders’ Equity

 

$

116,263,634

 

 

$

111,028,735

 

 

$

99,205,204

 

 

 

 

 

Quarter Ended December 31,

 

Quarter Ended September 30,

 

 

2019

 

2018

 

2019

 

 

Average

 

Interest Income/

 

Yields/

 

Average

 

Interest Income/

 

Yields/

 

Average

 

Interest Income/

 

Yields/

Average Balances, Yields and Rates

 

Balance

 

Expense (1)

 

Rates (2)

 

Balance

 

Expense (1)

 

Rates (2)

 

Balance

 

Expense (1)

 

Rates (2)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,377,686

 

 

$

4,869

 

 

1.40

%

 

$

1,275,293

 

 

$

6,702

 

 

2.09

%

 

$

1,161,441

 

 

$

5,430

 

 

1.86

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government-sponsored agency securities

 

461,671

 

 

3,239

 

 

2.81

%

 

1,044,914

 

 

7,772

 

 

2.98

%

 

740,893

 

 

5,375

 

 

2.90

%

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency residential and commercial MBS

 

6,826,144

 

 

47,764

 

 

2.80

%

 

7,098,381

 

 

50,849

 

 

2.87

%

 

6,593,422

 

 

46,762

 

 

2.84

%

Other residential and commercial MBS

 

4,276

 

 

39

 

 

3.66

%

 

4,611

 

 

44

 

 

3.78

%

 

4,473

 

 

43

 

 

3.84

%

Municipal securities

 

10,981,068

 

 

116,245

 

 

4.23

%

 

8,087,947

 

 

94,909

 

 

4.69

%

 

9,184,274

 

 

101,154

 

 

4.41

%

Other investment securities (3)

 

43,840

 

 

322

 

 

2.94

%

 

18,955

 

 

120

 

 

2.54

%

 

24,977

 

 

156

 

 

2.49

%

Total investment securities

 

18,316,999

 

 

167,609

 

 

3.66

%

 

16,254,808

 

 

153,694

 

 

3.78

%

 

16,548,039

 

 

153,490

 

 

3.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

48,938,892

 

 

391,415

 

 

3.20

%

 

39,587,922

 

 

325,318

 

 

3.28

%

 

45,754,902

 

 

374,690

 

 

3.27

%

Multifamily

 

12,112,107

 

 

119,386

 

 

3.86

%

 

10,243,384

 

 

97,696

 

 

3.73

%

 

11,446,955

 

 

112,624

 

 

3.85

%

Commercial real estate

 

7,501,102

 

 

79,527

 

 

4.15

%

 

6,612,822

 

 

70,319

 

 

4.16

%

 

7,366,320

 

 

79,213

 

 

4.21

%

Construction

 

2,261,457

 

 

26,678

 

 

4.62

%

 

2,145,727

 

 

26,464

 

 

4.83

%

 

2,152,911

 

 

26,599

 

 

4.83

%

Business

 

11,556,437

 

 

121,665

 

 

4.12

%

 

10,694,770

 

 

121,711

 

 

4.45

%

 

11,551,439

 

 

129,314

 

 

4.38

%

Other

 

6,085,084

 

 

48,261

 

 

3.10

%

 

4,943,880

 

 

42,791

 

 

3.39

%

 

5,704,872

 

 

48,746

 

 

3.34

%

Total loans

 

88,455,079

 

 

786,932

 

 

3.52

%

 

74,228,505

 

 

684,299

 

 

3.64

%

 

83,977,399

 

 

771,186

 

 

3.63

%

FHLB stock (4)

 

394,487

 

 

5,678

 

 

5.71

%

 

293,331

 

 

10,122

 

 

13.69

%

 

321,778

 

 

5,779

 

 

7.13

%

Total interest-earning assets

 

108,544,251

 

 

965,088

 

 

3.52

%

 

92,051,937

 

 

854,817

 

 

3.68

%

 

102,008,657

 

 

935,885

 

 

3.63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

362,139

 

 

 

 

 

 

344,749

 

 

 

 

 

 

335,648

 

 

 

 

 

Goodwill and other intangibles

 

256,614

 

 

 

 

 

 

275,645

 

 

 

 

 

 

266,032

 

 

 

 

 

Other assets

 

4,581,436

 

 

 

 

 

 

3,572,767

 

 

 

 

 

 

4,409,665

 

 

 

 

 

Total noninterest-earning assets

 

5,200,189

 

 

 

 

 

 

4,193,161

 

 

 

 

 

 

5,011,345

 

 

 

 

 

Total Assets

 

$

113,744,440

 

 

 

 

 

 

$

96,245,098

 

 

 

 

 

 

$

107,020,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

51,333,186

 

 

8,777

 

 

0.07

%

 

$

45,218,239

 

 

5,720

 

 

0.05

%

 

$

48,666,948

 

 

8,501

 

 

0.07

%

Money market checking and savings

 

21,298,741

 

 

49,682

 

 

0.93

%

 

18,960,266

 

 

37,051

 

 

0.78

%

 

20,536,777

 

 

53,046

 

 

1.02

%

CDs

 

13,694,721

 

 

70,246

 

 

2.04

%

 

10,720,940

 

 

53,417

 

 

1.98

%

 

13,170,046

 

 

73,370

 

 

2.21

%

Total deposits

 

86,326,648

 

 

128,705

 

 

0.59

%

 

74,899,445

 

 

96,188

 

 

0.51

%

 

82,373,771

 

 

134,917

 

 

0.65

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

3,056,545

 

 

13,530

 

 

1.76

%

 

650,543

 

 

3,868

 

 

2.36

%

 

2,204,262

 

 

12,520

 

 

2.25

%

Long-term FHLB advances

 

11,488,043

 

 

62,146

 

 

2.15

%

 

9,201,630

 

 

46,365

 

 

2.00

%

 

9,796,739

 

 

54,901

 

 

2.22

%

Senior notes (5)

 

497,610

 

 

3,351

 

 

2.69

%

 

896,223

 

 

5,931

 

 

2.65

%

 

497,384

 

 

3,350

 

 

2.69

%

Subordinated notes (5)

 

777,834

 

 

9,104

 

 

4.68

%

 

777,427

 

 

9,099

 

 

4.68

%

 

777,730

 

 

9,103

 

 

4.68

%

Total borrowings

 

15,820,032

 

 

88,131

 

 

2.21

%

 

11,525,823

 

 

65,263

 

 

2.25

%

 

13,276,115

 

 

79,874

 

 

2.39

%

Total interest-bearing liabilities

 

102,146,680

 

 

216,836

 

 

0.84

%

 

86,425,268

 

 

161,451

 

 

0.74

%

 

95,649,886

 

 

214,791

 

 

0.89

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

2,093,561

 

 

 

 

 

 

982,269

 

 

 

 

 

 

2,037,177

 

 

 

 

 

Preferred equity

 

899,728

 

 

 

 

 

 

1,129,130

 

 

 

 

 

 

940,000

 

 

 

 

 

Common equity

 

8,604,471

 

 

 

 

 

 

7,708,431

 

 

 

 

 

 

8,392,939

 

 

 

 

 

Total Liabilities and Equity

 

$

113,744,440

 

 

 

 

 

 

$

96,245,098

 

 

 

 

 

 

$

107,020,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (6)

 

 

 

 

 

2.68

%

 

 

 

 

 

2.94

%

 

 

 

 

 

2.74

%

Net interest income (fully taxable-equivalent basis) and net interest margin (7)

 

 

 

$

748,252

 

 

2.73

%

 

 

 

$

693,366

 

 

2.98

%

 

 

 

$

721,094

 

 

2.80

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of tax-equivalent net interest

income to reported net interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent adjustment

 

(28,134

)

 

 

 

 

 

(26,163

)

 

 

 

 

 

(26,109

)

 

 

Net interest income, as reported

 

$

720,118

 

 

 

 

 

 

$

667,203

 

 

 

 

 

 

$

694,985

 

 

 

 

 

 

 

Year Ended December 31,

 

 

2019

 

2018

 

 

Average

 

Interest Income/

 

Yields/

 

Average

 

Interest Income/

 

Yields/

Average Balances, Yields and Rates

Balance

 

Expense (1)

 

Rates

 

Balance

 

Expense (1)

 

Rates

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,268,405

 

 

$

23,835

 

 

1.88

%

 

$

1,325,174

 

 

$

23,197

 

 

1.75

%

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and other U.S. Government agency securities

 

 

 

 

 

%

 

4,694

 

 

87

 

 

1.85

%

U.S. Government-sponsored agency securities

 

818,000

 

 

24,066

 

 

2.94

%

 

1,072,391

 

 

31,761

 

 

2.96

%

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

Agency residential and commercial MBS

 

6,735,598

 

 

191,869

 

 

2.85

%

 

7,370,501

 

 

203,505

 

 

2.76

%

Other residential and commercial MBS

 

4,450

 

 

170

 

 

3.83

%

 

5,027

 

 

265

 

 

5.28

%

Municipal securities

 

9,218,509

 

 

409,127

 

 

4.44

%

 

8,126,173

 

 

382,662

 

 

4.71

%

Other investment securities (3)

 

26,848

 

 

726

 

 

2.70

%

 

19,617

 

 

480

 

 

2.44

%

Total investment securities

 

16,803,405

 

 

625,958

 

 

3.73

%

 

16,598,403

 

 

618,760

 

 

3.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

44,655,754

 

 

1,465,364

 

 

3.28

%

 

37,184,625

 

 

1,185,240

 

 

3.19

%

Multifamily

 

11,309,622

 

 

443,174

 

 

3.86

%

 

9,602,522

 

 

357,780

 

 

3.67

%

Commercial real estate

 

7,157,799

 

 

306,401

 

 

4.22

%

 

6,352,419

 

 

265,664

 

 

4.12

%

Construction

 

2,188,874

 

 

106,566

 

 

4.80

%

 

1,954,078

 

 

93,613

 

 

4.73

%

Business

 

11,302,160

 

 

503,782

 

 

4.40

%

 

9,579,793

 

 

417,636

 

 

4.30

%

Other

 

5,559,309

 

 

187,536

 

 

3.33

%

 

4,520,492

 

 

148,873

 

 

3.25

%

Total loans

 

82,173,518

 

 

3,012,823

 

 

3.64

%

 

69,193,929

 

 

2,468,806

 

 

3.54

%

FHLB stock (4)

 

331,862

 

 

21,446

 

 

6.46

%

 

293,359

 

 

25,187

 

 

8.59

%

Total interest-earning assets

 

100,577,190

 

 

3,684,062

 

 

3.64

%

 

87,410,865

 

 

3,135,950

 

 

3.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-earning cash

 

347,065

 

 

 

 

 

 

347,639

 

 

 

 

 

Goodwill and other intangibles

 

266,062

 

 

 

 

 

 

281,633

 

 

 

 

 

Other assets

 

4,376,016

 

 

 

 

 

 

3,501,575

 

 

 

 

 

Total noninterest-earning assets

 

4,989,143

 

 

 

 

 

 

4,130,847

 

 

 

 

 

Total Assets

 

$

105,566,333

 

 

 

 

 

 

$

91,541,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Checking

 

$

48,097,161

 

 

30,318

 

 

0.06

%

 

$

43,793,120

 

 

21,892

 

 

0.05

%

Money market checking and savings

 

20,113,724

 

 

196,582

 

 

0.98

%

 

17,774,302

 

 

108,290

 

 

0.61

%

CDs

 

12,769,459

 

 

273,657

 

 

2.14

%

 

9,220,835

 

 

159,858

 

 

1.73

%

Total deposits

 

80,980,344

 

 

500,557

 

 

0.62

%

 

70,788,257

 

 

290,040

 

 

0.41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

2,278,831

 

 

50,361

 

 

2.21

%

 

793,606

 

 

15,277

 

 

1.93

%

Long-term FHLB advances

 

9,738,767

 

 

209,816

 

 

2.15

%

 

9,039,658

 

 

165,081

 

 

1.83

%

Senior notes (5)

 

680,199

 

 

18,169

 

 

2.67

%

 

895,584

 

 

23,709

 

 

2.65

%

Subordinated notes (5)

 

777,681

 

 

36,409

 

 

4.68

%

 

777,280

 

 

36,391

 

 

4.68

%

Total borrowings

 

13,475,478

 

 

314,755

 

 

2.34

%

 

11,506,128

 

 

240,458

 

 

2.09

%

Total interest-bearing liabilities

 

94,455,822

 

 

815,312

 

 

0.86

%

 

82,294,385

 

 

530,498

 

 

0.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities

 

1,859,115

 

 

 

 

 

 

939,028

 

 

 

 

 

Preferred equity

 

929,849

 

 

 

 

 

 

1,004,110

 

 

 

 

 

Common equity

 

8,321,547

 

 

 

 

 

 

7,304,189

 

 

 

 

 

Total Liabilities and Equity

 

$

105,566,333

 

 

 

 

 

 

$

91,541,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (6)

 

 

 

 

 

2.78

%

 

 

 

 

 

2.92

%

Net interest income (fully taxable-equivalent basis) and

net interest margin (7)

 

 

 

$

2,868,750

 

 

2.83

%

 

 

 

$

2,605,452

 

 

2.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of tax-equivalent net interest income

to reported net interest income:

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent adjustment

 

 

 

(104,583

)

 

 

 

 

 

(104,344

)

 

 

Net interest income, as reported

 

 

 

$

2,764,167

 

 

 

 

 

 

$

2,501,108

 

 

 

 

(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) Yield for the quarter and year ended December 31, 2018 includes an FHLB special dividend of $4.8 million.

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

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

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

 

 

 

Quarter Ended

 

Quarter Ended

 

Year Ended

 

 

December 31,

 

September 30,

 

December 31,

Operating Information

 

2019

 

2018

 

2019

 

2019

 

2018

($ in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Net income to average assets (1)

 

0.86

%

 

0.95

%

 

0.87

%

 

0.88

%

 

0.93

%

Net income available to common shareholders to average common equity (1)

 

10.86

%

 

11.08

%

 

10.50

%

 

10.59

%

 

10.90

%

Net income available to common shareholders to average tangible common equity (1)

 

11.20

%

 

11.49

%

 

10.84

%

 

10.94

%

 

11.34

%

Dividends per common share

 

$

0.19

 

 

$

0.18

 

 

$

0.19

 

 

$

0.75

 

 

$

0.71

 

Dividend payout ratio

 

13.7

%

 

14.0

%

 

14.5

%

 

14.4

%

 

14.8

%

Efficiency ratio (2)

 

63.7

%

 

61.5

%

 

63.8

%

 

64.2

%

 

63.0

%

 

 

 

 

 

 

 

 

 

 

 

Net loan charge-offs (recoveries)

 

$

(1,060

)

 

$

1,866

 

 

$

4,341

 

 

$

4,634

 

 

$

2,976

 

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

 

(0.00

%)

 

0.01

%

 

0.02

%

 

0.01

%

 

0.00

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses to:

 

 

 

 

 

 

 

 

 

 

Total loans

 

0.55

%

 

0.58

%

 

0.56

%

 

0.55

%

 

0.58

%

Nonaccrual loans

 

346.5

%

 

944.9

%

 

354.5

%

 

346.5

%

 

944.9

%

(1) For periods less than a year, ratios are annualized.

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