First Republic Reports 2022 Results

First Republic Bank (NYSE: FRC) today announced financial results for the quarter and year ended December 31, 2022.

“2022 was another terrific year of safe, consistent and organic growth,” said Mike Roffler, Chief Executive Officer and President. “We achieved our highest Net Promoter Score ever, which reflects our unwavering focus on exceptional client service.”

Full Year Highlights

Financial Results

• Revenues were $5.9 billion, up 16.5%.
• Net interest income was $4.8 billion, up 17.5%.
• Net income was $1.7 billion, up 12.7%.
• Diluted earnings per share of $8.25, up 7.4%.
• Loan originations totaled $73.4 billion, our best year ever.
• Book value per share was $75.38, up 10.3%.
• Tangible book value per share was $74.19, up 10.6%. ⁽¹⁾
• Efficiency ratio was 61.7%, compared to 62.5% last year.

Continued Capital and Credit Strength

• Tier 1 leverage ratio was 8.51%.
• Nonperforming assets were a low 5 basis points of total assets.
• Net charge-offs were only $2.9 million, or less than 1 basis point of average loans.

Continued Franchise Growth

• Loans totaled $166.9 billion, up 23.6%.
• Deposits were $176.4 billion, up 12.9%.
• Wealth management assets were $271.2 billion, down 2.9%.
• Wealth management revenues were $877 million, up 15.4%.

Quarterly Highlights

Financial Results

• Compared to last year’s fourth quarter:
  • Revenues were $1.4 billion, up 5.2%.
  • Net interest income was $1.2 billion, up 4.9%.
  • Net income was $386 million, down 3.6%.
  • Diluted earnings per share of $1.88, down 6.9%.
• Loan originations totaled $15.6 billion.
• Net charge-offs were $0.9 million.
• Compared to the prior quarter:
  • Net interest margin was 2.45%, compared to 2.71%.
  • Efficiency ratio was 63.9%, compared to 60.3%.
  • Wealth management assets were up 8.7%

“Revenue and net interest income growth were strong in 2022,” said Neal Holland, Chief Financial Officer. “Credit quality remains excellent, with nonperforming assets near all-time lows. Tangible book value per share increased 11%.”

Quarterly Cash Dividend of $0.27 per Share

The Bank declared a cash dividend for the fourth quarter of $0.27 per share of common stock, which is payable on February 9, 2023 to shareholders of record as of January 26, 2023.

Strong Asset Quality

Credit quality remains strong. Nonperforming assets were at a very low 5 basis points of total assets at December 31, 2022.

The provision for credit losses for the quarter was $30 million, with net loan charge-offs of only $0.9 million for the quarter. For the year, the provision for credit losses was $107 million, with net loan charge-offs of only $2.9 million.

Continued Book Value Growth

Book value per common share at December 31, 2022 was $75.38, up 10.3% from a year ago. Tangible book value per common share at December 31, 2022 was $74.19, up 10.6% from a year ago. ⁽¹⁾

Capital Strength

The Bank’s Tier 1 leverage ratio was 8.51%at December 31, 2022, compared to 8.59% at September 30, 2022.

Continued Franchise Growth

Loan Originations

Loan originations were $15.6 billion for the quarter. This was down 7.5% from the same quarter a year ago. For 2022, loan originations totaled $73.4 billion, up 13.2% compared to the prior year. The decrease for the quarter was primarily due to decreases in capital call lines of credit and single family lending. The increase for the year was primarily due to increases in single family, multifamily and commercial real estate lending.

Single family loan originations were 38% of the total loan origination volume for the quarter and 43% for the year, and had a weighted average loan-to-value ratio of 61% for the year. Multifamily and commercial real estate loans originated were 16% of total originations for both the quarter and the year, and had a weighted average loan-to-value ratio of 51% for the year. In addition, capital call lines of credit originated were 16% of total originations for both the quarter and the year.

Loans totaled $166.9 billion at December 31, 2022, up 23.6% compared to a year ago. The increase was driven by growth in substantially all loan categories, partially offset by lower capital call lines of credit outstanding.

Investments

Total investment securities at December 31, 2022 were $31.7 billion, a slight increase compared to September 30, 2022 and a 23.4% increase compared to a year ago.

High-quality liquid assets, including eligible cash, totaled $26.0 billion at December 31, 2022, and represented 12.6% of quarterly average total assets.

Deposit Growth and Funding

Total deposits increased to $176.4 billion, up 12.9% compared to a year ago. Deposits were our primary source of funding at December 31, 2022, and represented 92% of our large funding base.

At December 31, 2022, our deposit base consisted of 58.8% checking deposits, 26.9% other liquid deposits including money market checking and money market savings and passbooks, and 14.3% CDs.

Other sources of funding at December 31, 2022 included short-term and long-term FHLB advances, which totaled $14.0 billion.

Deposits had an average rate paid of 99 basis points during the quarter, and average total funding costs were 112 basis points during the quarter.

Wealth Management

Total wealth management assets were $271.2 billion at December 31, 2022, up 8.7% compared to the prior quarter and down 2.9% compared to a year ago. The increase in wealth management assets for the quarter was due to net client inflow and market appreciation. The decrease in wealth management assets for the year was due to market decline, meaningfully offset by net client inflow. Wealth management assets at December 31, 2022 included investment management assets of $112.2 billion, brokerage assets and money market mutual funds of $138.9 billion, and trust and custody assets of $20.1 billion.

Wealth management fees, which consist of investment management, brokerage and investment, insurance, trust and foreign exchange fee income, totaled $210 million for the quarter, up slightly compared to last year’s fourth quarter. For 2022, wealth management fees were $877 million, an increase of 15.4% compared to the prior year. Such revenues represented 14.6% of the Bank’s total revenues for the quarter and 15.0% of the Bank’s total revenues for the year.

Income Statement and Key Ratios

Revenue Growth

Total revenues were $1.4 billion for the quarter, up 5.2% compared to the fourth quarter a year ago and were $5.9 billion for 2022, up 16.5% compared to the prior year.

Net Interest Income Growth

Net interest income was $1.2 billion for the quarter, up 4.9% compared to the fourth quarter a year ago, and was $4.8 billion for 2022, up 17.5% compared to the prior year. The increases in net interest income for the quarter and the year resulted primarily from growth in average interest-earning assets, partially offset by decreases in net interest margin compared to a year ago.

Net Interest Margin

The net interest margin declined to 2.45% in the fourth quarter, from 2.71% in the prior quarter. For 2022, the net interest margin was 2.65%, compared to 2.67% for the prior year. The declines were due to average funding costs increasing more rapidly than the offsetting increases in the average yields on interest-earning assets.

Noninterest Income

Noninterest income was $263 million for the quarter, up 6.4% compared to the fourth quarter a year ago, and was $1.0 billion for 2022, up 12.1% compared to the prior year. The increase for the quarter was primarily driven by higher brokerage and investment fees and higher income from investments in life insurance, partially offset by lower investment management fees. The increase for the year was primarily driven by higher investment management fees and higher brokerage and investment fees.

Noninterest Expense and Efficiency Ratio

Noninterest expense for the quarter remained unchanged compared to the third quarter of 2022. Noninterest expense was $919 million for the quarter, up 6.2% compared to the fourth quarter a year ago, and was $3.6 billion for 2022, up 14.9% compared to the prior year. The increases were primarily due to continued investments in our business expansion, including hiring additional colleagues to support our growth, information systems initiatives and occupancy costs.

The efficiency ratio was 63.9% for the quarter, compared to 63.3% for last year’s fourth quarter. For 2022, the efficiency ratio was 61.7%, compared to 62.5% in 2021.

Income Taxes

The Bank’s effective tax rate for the fourth quarter of 2022 was 20.9%, compared to 16.1% for the fourth quarter a year ago. For 2022, the Bank’s effective tax rate was 22.2%, compared to 19.1% a year ago. The increases were primarily the result of higher research and development tax credits claimed in the prior year and lower excess tax benefits recognized in the current year.

__________

⁽¹⁾ Represents a non-GAAP financial measure. See reconciliation in “Book Value per Common Share and Tangible Book Value per Common Share” table in this document for additional details.

Conference Call Details

First Republic Bank’s fourth quarter 2022 earnings conference call is scheduled for January 13, 2023 at 7:00 a.m. PT / 10:00 a.m. ET. To access the event by telephone, please dial (888) 204-4368 and provide confirmation code 7764494 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.

The call will also be broadcast live over the Internet and can be accessed in the Investor Relations section of First Republic’s website at ir.firstrepublic.com/events-calendar. To listen to the live webcast, please visit the site at least 15 minutes prior to the start time to register, download and install any necessary audio software.

For those unable to join for the live presentation, a replay of the webcast will be available for 90 days following, accessible in the Investor Relations section of First Republic Bank’s website at ir.firstrepublic.com/events-calendar.

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

About First Republic Bank

Founded in 1985, First Republic and its subsidiaries offer private banking, private business banking and private wealth management. First Republic specializes in delivering exceptional, relationship-based service and provides a complete line of products, including residential, commercial and personal loans, deposit services, and private wealth management, including investment, brokerage, insurance, trust and foreign exchange services. Services are offered through preferred banking or wealth management offices primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and San Diego, California; Portland, Oregon; Boston, Massachusetts; Palm Beach, Florida; Greenwich, Connecticut; New York, New York; Jackson, Wyoming; and Bellevue, Washington. First Republic is a constituent of the S&P 500 Index and KBW Nasdaq Bank Index. For more information, visit firstrepublic.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this press release that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimates,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them.

Forward-looking statements involving such risks and uncertainties include, but are not limited to, statements regarding: projections of loans, assets, deposits, liabilities, revenues, expenses, tax liabilities, net income, net interest income, net interest margin, capital expenditures, liquidity, dividends, capital structure, investments or other financial items; forecasts of future economic conditions generally and in our market areas in particular, including expectations relating to interest rates and inflation, which may affect our net interest margin, the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans; expectations regarding the banking and wealth management industries; descriptions of plans or objectives of management for future operations, products or services; 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; 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); expectations regarding our executive transitions; projections about future levels of loan originations or loan repayments; projections regarding costs, including the impact on our efficiency ratio; and descriptions of assumptions underlying or relating to any of the foregoing.

Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: economic and market conditions, including volatility in the financial and securities markets, which may negatively impact the valuation of our investment securities portfolio, credit losses on our loans and debt securities, and the performance of our wealth management business; inflation; interest rate risk and credit risk; significant competition to attract and retain banking and wealth management customers, from both traditional and non-traditional financial services and technology companies; our ability to recruit and retain key managers, employees and board members; natural or other disasters, including earthquakes, wildfires, pandemics or acts of terrorism affecting the markets in which we operate; the adverse effects of climate change on our business, clients and counterparties; the negative impacts and disruptions resulting from COVID-19 on our colleagues and clients, the communities we serve and the domestic and global economy, which may have an adverse effect on our business, financial position and results of operations; our ability to maintain and follow high underwriting standards; real estate prices generally and in our markets; our geographic and product concentrations; demand for our products and services; developments and uncertainty related to the future use and availability of some reference rates; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements, 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, including more stringent liquidity requirements and heightened capital requirements applicable if we become a Category III banking organization under the FDIC’s regulations by reporting $250 billion or more in total consolidated assets or $75 billion or more in weighted short-term wholesale funding, nonbank assets or off-balance sheet exposure, based on a four quarter trailing average; 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; changes in federal, state or local tax laws; our ability to avoid litigation and its associated costs and liabilities; future Federal Deposit Insurance Corporation (“FDIC”) special assessments or changes to regular assessments; fraud, cybersecurity and privacy risks; and custom technology preferences of our customers and our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications. For a discussion of these and other risks and uncertainties, see First Republic’s FDIC filings, including, but not limited to, the risk factors in First Republic’s Annual Report on Form 10-K and any subsequent reports filed by First Republic with the FDIC. These filings are available in the Investor Relations section of our website.

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

Non-GAAP Financial Measures

Our management uses and believes that investors benefit from using certain non-GAAP measures of our financial performance, which include tangible book value per common share, return on average tangible common shareholders’ equity, and net interest income on a fully taxable-equivalent basis. Management believes that tangible book value per common share and return on average tangible common shareholders’ equity are useful additional measures to evaluate our performance and capital position without the impact of goodwill and other intangible assets and preferred stock. In addition, to facilitate relevant comparisons of net interest income from taxable and tax-exempt interest-earning assets, when calculating yields and net interest margin, we adjust interest income on tax-exempt securities and tax-advantaged loans so such amounts are fully equivalent to interest income on taxable sources. We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information that is not otherwise required by GAAP or other applicable requirements. These non-GAAP financial measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP. A reconciliation of the non-GAAP calculation of the financial measure to the most comparable GAAP financial measure is presented in relevant tables in this document.

Explanatory Note

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

CONSOLIDATED STATEMENTS OF INCOME
		Quarter Ended December 31,							Quarter Ended September 30,			Year Ended December 31,
(in millions, except per share amounts)		2022			2021				2022			2022			2021
Interest income:
Loans		$	1,438		$	992			$	1,269		$	4,803		$	3,725
Investments			231			165				219			839			624
Cash and cash equivalents			24			6				27			67			17
Other			6			4				3			13			19
Total interest income			1,699			1,167				1,518			5,722			4,385
Interest expense:
Deposits			428			20				169			654			95
Borrowings			97			27				80			234			176
Total interest expense			525			47				249			888			271
Net interest income			1,174			1,120				1,269			4,834			4,114
Provision for credit losses			30			24				36			107			59
Net interest income after provision for credit losses			1,144			1,096				1,233			4,727			4,055
Noninterest income:
Investment management fees			141			150				142			612			554
Brokerage and investment fees			29			19				34			118			74
Insurance fees			8			7				6			21			19
Trust fees			7			7				7			28			25
Foreign exchange fee income			25			24				25			98			88
Deposit fees			7			7				7			28			27
Loan and related fees			10			9				10			39			33
Income from investments in life insurance			34			27				23			82			85
Other income, net			2			(3	)			—			5			15
Total noninterest income			263			247				254			1,031			920
Noninterest expense:
Salaries and employee benefits			551			544				557			2,235			2,003
Information systems			123			99				124			468			362
Occupancy			73			66				73			285			254
Professional fees			27			27				31			108			101
Advertising and marketing			23			21				19			71			64
FDIC assessments			19			13				17			66			52
Other expenses			103			96				98			384			311
Total noninterest expense			919			866				919			3,617			3,147
Income before provision for income taxes			488			477				568			2,141			1,828
Provision for income taxes			102			77				123			476			350
Net income			386			400				445			1,665			1,478
Dividends on preferred stock			40			32				40			158			99
Net income available to common shareholders		$	346		$	368			$	405		$	1,507		$	1,379
Basic earnings per common share		$	1.89		$	2.05			$	2.23		$	8.32		$	7.78
Diluted earnings per common share		$	1.88		$	2.02			$	2.21		$	8.25		$	7.68
Weighted average shares—basic			183			179				182			181			177
Weighted average shares—diluted			184			182				183			183			180

CONSOLIDATED BALANCE SHEETS
		As of
($ in millions)		December 31, 2022				September 30, 2022				December 31, 2021
ASSETS
Cash and cash equivalents		$	4,283			$	5,532			$	12,947
Debt securities available-for-sale			3,347				3,348				3,381
Debt securities held-to-maturity, net			28,348				28,247				22,292
Equity securities (fair value)			24				22				28
Loans:
Single family			98,768				94,345				76,793
Home equity lines of credit			2,775				2,801				2,584
Single family construction			1,217				1,154				993
Multifamily			21,588				20,364				15,966
Commercial real estate			10,830				10,039				8,531
Multifamily/commercial construction			2,139				2,089				1,927
Capital call lines of credit			9,988				9,393				10,999
Tax-exempt			3,713				3,655				3,680
Other business			5,072				4,629				3,961
Paycheck Protection Program ("PPP")			20				30				545
Stock secured			4,553				4,251				3,435
Other secured			3,191				3,001				2,457
Unsecured			3,014				3,016				3,085
Total loans			166,868				158,767				134,956
Allowance for credit losses			(784	)			(760	)			(694	)
Loans, net			166,084				158,007				134,262
Investments in life insurance			3,435				3,409				2,650
Tax credit investments			1,383				1,285				1,220
Premises, equipment and leasehold improvements, net			483				483				454
Goodwill and other intangible assets			218				219				222
Other assets			5,034				4,557				3,631
Total Assets		$	212,639			$	205,109			$	181,087
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Noninterest-bearing checking		$	62,579			$	69,931			$	70,840
Interest-bearing checking			41,178				40,706				41,248
Money market checking			25,805				25,582				20,303
Money market savings and passbooks			21,663				20,231				16,573
Certificates of deposit			25,212				15,932				7,357
Total Deposits			176,437				172,382				156,321
Short-term FHLB advances			6,700				5,100				—
Long-term FHLB advances			7,300				5,900				3,700
Senior notes			500				500				998
Subordinated notes			779				779				779
Other liabilities			3,477				3,329				3,391
Total Liabilities			195,193				187,990				165,189
Shareholders’ Equity:
Preferred stock			3,633				3,633				3,633
Common stock			2				2				2
Additional paid-in capital			6,256				6,230				5,725
Retained earnings			7,886				7,591				6,569
Accumulated other comprehensive loss			(331	)			(337	)			(31	)
Total Shareholders’ Equity			17,446				17,119				15,898
Total Liabilities and Shareholders’ Equity		$	212,639			$	205,109			$	181,087

		Quarter Ended December 31,																				Quarter Ended September 30,
		2022										2021										2022
Average Balances, Yields and Rates		Average Balance			Interest Income/ Expense (1)				Yield/ Rates (2)			Average Balance			Interest Income/ Expense (1)				Yield/ Rates (2)			Average Balance			Interest Income/ Expense (1)				Yield/ Rates (2)
($ in millions)
Assets:
Interest-bearing deposits with banks		$	2,704		$	24			3.49	%		$	15,342		$	6			0.15	%		$	4,733		$	27			2.22	%
Investment securities:
U.S. Government-sponsored agency securities			165			1			2.05	%			100			0			1.59	%			165			1			2.05	%
Agency residential and commercial MBS			10,535			66			2.49	%			7,011			29			1.65	%			10,642			59			2.23	%
Other residential and commercial MBS			18			0			3.77	%			25			0			1.82	%			20			0			2.97	%
Tax-exempt municipal securities			17,697			175			3.97	%			14,869			146			3.93	%			17,389			169			3.91	%
Taxable municipal securities			1,774			13			3.13	%			1,670			12			2.99	%			1,773			14			3.09	%
Other investment securities			1,440			10			2.88	%			1,405			10			2.86	%			1,440			11			2.87	%
Total investment securities			31,629			265			3.37	%			25,080			197			3.15	%			31,429			254			3.24	%
Loans:
Residential real estate			100,645			772			3.07	%			78,436			545			2.78	%			95,588			701			2.93	%
Multifamily			20,856			192			3.60	%			15,479			154			3.90	%			19,139			171			3.48	%
Commercial real estate			10,401			107			4.02	%			8,525			83			3.82	%			9,558			94			3.84	%
Multifamily/commercial construction			2,105			31			5.77	%			2,044			24			4.70	%			2,062			26			5.05	%
Business			17,745			240			5.29	%			17,210			139			3.15	%			18,664			205			4.30	%
PPP			26			0			0.95	%			732			9			4.65	%			48			1			9.49	%
Other			10,479			103			3.86	%			8,578			45			2.03	%			9,957			77			3.02	%
Total loans			162,257			1,445			3.53	%			131,004			999			3.02	%			155,016			1,275			3.26	%
FHLB stock			353			6			7.27	%			143			4			11.17	%			366			3			3.26	%
Total interest-earning assets			196,943			1,740			3.51	%			171,569			1,206			2.79	%			191,544			1,559			3.23	%
Noninterest-earning cash			478										426										451
Goodwill and other intangibles			219										223										219
Other assets			8,464										6,967										8,199
Total noninterest-earning assets			9,161										7,616										8,869
Total Assets		$	206,104									$	179,185									$	200,413
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing checking		$	39,252			55			0.55	%		$	36,896			1			0.01	%		$	41,404			27			0.26	%
Money market checking			24,084			134			2.20	%			21,925			5			0.10	%			21,817			65			1.19	%
Money market savings and passbooks			20,423			100			1.95	%			16,935			6			0.15	%			18,616			47			1.01	%
CDs			20,546			139			2.69	%			7,482			8			0.42	%			9,607			30			1.26	%
Total interest-bearing deposits (3)			104,305			428			1.63	%			83,238			20			0.10	%			91,444			169			0.74	%
Borrowings:
Federal funds purchased			419			5			4.00	%			—			—			—	%			371			2			2.31	%
Short-term FHLB advances			6,131			54			3.51	%			—			—			—	%			7,586			45			2.36	%
Long-term FHLB advances			6,004			26			1.79	%			4,582			12			1.06	%			5,308			21			1.49	%
Senior notes			500			3			2.15	%			998			6			2.42	%			499			3			2.15	%
Subordinated notes			779			9			4.68	%			779			9			4.68	%			779			9			4.68	%
Total borrowings			13,833			97			2.79	%			6,359			27			1.72	%			14,543			80			2.16	%
Total interest-bearing liabilities (4)			118,138			525			1.76	%			89,597			47			0.21	%			105,987			249			0.93	%
Noninterest-bearing checking			67,067										71,308										73,851
Other noninterest-bearing liabilities			3,609										3,044										3,685
Total noninterest-bearing liabilities			70,676										74,352										77,536
Preferred shareholders’ equity			3,633										3,158										3,633
Common shareholders’ equity			13,657										12,078										13,257
Total Liabilities and Shareholders’ Equity		$	206,104									$	179,185									$	200,413
Net interest spread (5)									1.74	%									2.58	%									2.30	%
Net interest income (fully taxable-equivalent basis) and net interest margin (6)					$	1,215			2.45	%					$	1,159			2.68	%					$	1,310			2.71	%
Reconciliation of tax-equivalent net interest income to net interest income: (7)
Municipal securities tax-equivalent adjustment						(34	)									(32	)									(34	)
Business loans tax-equivalent adjustment						(7	)									(7	)									(7	)
Net interest income					$	1,174									$	1,120									$	1,269
Supplemental information:
Total deposits (interest-bearing and noninterest-bearing)		$	171,372		$	428			0.99	%		$	154,546		$	20			0.05	%		$	165,295		$	169			0.41	%
Total deposits (interest-bearing and noninterest-bearing) and borrowings		$	185,205		$	525			1.12	%		$	160,905		$	47			0.12	%		$	179,838		$	249			0.55	%

		Year Ended December 31,
		2022										2021
Average Balances, Yields and Rates		Average Balance			Interest Income/ Expense (1)				Yield/ Rates			Average Balance			Interest Income/ Expense (1)				Yield/ Rates
($ in millions)
Assets:
Interest-bearing deposits with banks		$	6,095		$	67			1.10	%		$	12,876		$	17			0.13	%
Investment securities:
U.S. Government-sponsored agency securities			153			3			1.92	%			98			2			1.56	%
Agency residential and commercial MBS			10,251			220			2.14	%			6,125			117			1.91	%
Other residential and commercial MBS			21			0			2.72	%			29			1			2.00	%
Tax-exempt municipal securities			16,855			653			3.87	%			13,704			549			4.01	%
Taxable municipal securities			1,759			54			3.09	%			1,510			45			2.98	%
Other investment securities			1,434			41			2.87	%			1,157			32			2.80	%
Total investment securities			30,473			971			3.19	%			22,623			746			3.30	%
Loans:
Residential real estate			92,061			2,660			2.89	%			72,679			2,048			2.82	%
Multifamily			18,453			656			3.50	%			14,735			539			3.61	%
Commercial real estate			9,399			368			3.86	%			8,260			321			3.83	%
Multifamily/commercial construction			2,026			103			5.03	%			2,067			105			4.99	%
Business			18,366			750			4.03	%			16,033			520			3.20	%
PPP			147			11			7.65	%			1,418			51			3.58	%
Other			9,785			283			2.85	%			7,938			169			2.10	%
Total loans			150,237			4,831			3.20	%			123,130			3,753			3.03	%
FHLB stock			260			13			5.13	%			266			19			7.14	%
Total interest-earning assets			187,065			5,882			3.13	%			158,895			4,535			2.84	%
Noninterest-earning cash			455										404
Goodwill and other intangibles			220										225
Other assets			7,895										6,671
Total noninterest-earning assets			8,570										7,300
Total Assets		$	195,635									$	166,195
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing checking		$	40,732			88			0.21	%		$	33,977			6			0.02	%
Money market checking			22,114			217			0.98	%			20,662			25			0.12	%
Money market savings and passbooks			18,668			165			0.89	%			15,308			25			0.17	%
CDs			11,119			184			1.66	%			7,926			39			0.49	%
Total interest-bearing deposits (3)			92,633			654			0.71	%			77,873			95			0.12	%
Borrowings:
Federal funds purchased			245			7			2.74	%			0			0			0.09	%
Short-term FHLB advances			4,193			108			2.58	%			0			0			0.15	%
Long-term FHLB advances			4,785			67			1.39	%			8,609			115			1.34	%
Senior notes			670			16			2.32	%			997			24			2.42	%
Subordinated notes			779			36			4.68	%			779			37			4.68	%
Total borrowings			10,672			234			2.19	%			10,385			176			1.70	%
Total interest-bearing liabilities (4)			103,305			888			0.86	%			88,258			271			0.31	%
Noninterest-bearing checking			72,135										61,325
Other noninterest-bearing liabilities			3,566										2,847
Total noninterest-bearing liabilities			75,701										64,172
Preferred shareholders' equity			3,633										2,502
Common shareholders' equity			12,996										11,263
Total Liabilities and Shareholders’ Equity		$	195,635									$	166,195
Net interest spread (5)									2.27	%									2.53	%
Net interest income (fully taxable-equivalent basis) and net interest margin (6)					$	4,994			2.65	%					$	4,264			2.67	%
Reconciliation of tax-equivalent net interest income to net interest income: (7)
Municipal securities tax-equivalent adjustment						(132	)									(122	)
Business loans tax-equivalent adjustment						(28	)									(28	)
Net interest income					$	4,834									$	4,114
Supplemental information:
Total deposits (interest-bearing and noninterest-bearing)		$	164,768		$	654			0.40	%		$	139,198		$	95			0.07	%
Total deposits (interest-bearing and noninterest-bearing) and borrowings		$	175,440		$	888			0.51	%		$	149,583		$	271			0.18	%

__________
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 December 31,								Quarter Ended September 30,				Year Ended December 31,
			2022				2021				2022				2022				2021
($ in millions, except per share amounts)
Selected Financial Data and Ratios:
Return on average assets (1), (2)				0.74	%			0.89	%			0.88	%			0.85	%			0.89	%
Return on average common shareholders’ equity (1)				10.05	%			12.08	%			12.12	%			11.60	%			12.24	%
Return on average tangible common shareholders’ equity (1), (3)				10.21	%			12.31	%			12.33	%			11.80	%			12.49	%
Average equity to average assets				8.39	%			8.50	%			8.43	%			8.50	%			8.28	%
Dividends per common share			$	0.27			$	0.22			$	0.27			$	1.03			$	0.86
Dividend payout ratio				14.4	%			10.9	%			12.2	%			12.5	%			11.2	%
Efficiency ratio (4)				63.9	%			63.3	%			60.3	%			61.7	%			62.5	%
Selected Asset Quality Ratios:
Net loan charge-offs			$	0.9			$	0.1			$	1.0			$	2.9			$	2.1
Net loan charge-offs to average total loans (1)				0.00	%			0.00	%			0.00	%			0.00	%			0.00	%
Selected Ratios (period-end):
Book value per common share			$	75.38			$	68.34			$	73.74
Tangible book value per common share (5)			$	74.19			$	67.10			$	72.54

__________
(1)		For periods less than a year, 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)		Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.
(5)		Refer to “Book Value per Common Share and Tangible Book Value per Common Share” table in this document for a reconciliation of this non-GAAP financial measure to the most comparable GAAP measure.

Effective Tax Rate		Quarter Ended December 31,						Quarter Ended September 30,			Year Ended December 31,
		2022			2021			2022			2022			2021
Effective tax rate, prior to excess tax benefits—stock awards and other adjustments		21.9	%		22.0	%		23.3	%		23.3	%		22.3	%
Excess tax benefits—stock awards		(0.3	)		(1.5	)		(0.6	)		(0.5	)		(2.1	)
Research and development tax credit adjustments		(0.7	)		(4.4	)		—			(0.2	)		(1.1	)
Tax refund from amended tax returns		—			—			(1.1	)		(0.4	)		—
Effective tax rate		20.9	%		16.1	%		21.6	%		22.2	%		19.1	%

Provision (Reversal of Provision) for Credit Losses		Quarter Ended December 31,							Quarter Ended September 30,			Year Ended December 31,
		2022			2021				2022			2022			2021
($ in millions)
Debt securities held-to-maturity		$	—		$	—			$	—		$	2		$	2
Loans			25			26				32			93			61
Unfunded loan commitments			5			(2	)			4			12			(4	)
Total provision		$	30		$	24			$	36		$	107		$	59

Loan Originations		Quarter Ended December 31,						Quarter Ended September 30,			Year Ended December 31,
		2022			2021			2022			2022			2021
($ in millions)
Single family		$	5,894		$	7,013		$	6,999		$	31,907		$	29,575
Home equity lines of credit			499			617			708			2,640			2,440
Single family construction			387			245			385			1,579			968
Multifamily			1,581			1,723			2,658			8,278			4,815
Commercial real estate			879			597			1,141			3,402			2,094
Multifamily/commercial construction			445			190			410			1,731			1,129
Capital call lines of credit			2,477			3,690			3,232			11,825			12,871
Tax-exempt			195			130			178			555			590
Other business			1,090			650			598			3,304			2,729
PPP			—			—			—			—			725
Stock secured			976			966			791			3,818			3,205
Other secured			839			546			563			2,883			2,130
Unsecured			360			517			333			1,475			1,539
Total loans originated		$	15,622		$	16,884		$	17,996		$	73,397		$	64,810

		As of
Asset Quality Information		December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
($ in millions)
Nonperforming assets:
Nonaccrual loans		$	109			$	120			$	137			$	140			$	139
Other real estate owned			—				—				—				—				—
Total nonperforming assets		$	109			$	120			$	137			$	140			$	139
Nonaccrual loans to total loans			0.07	%			0.08	%			0.09	%			0.10	%			0.10	%
Nonperforming assets to total assets			0.05	%			0.06	%			0.07	%			0.08	%			0.08	%
Accruing loans 90 days or more past due		$	—			$	—			$	—			$	—			$	—
Restructured accruing loans		$	12			$	12			$	12			$	12			$	13
Allowance for loan credit losses to:
Total loans			0.47	%			0.48	%			0.48	%			0.50	%			0.51	%
Nonaccrual loans			720.5	%			635.3	%			531.2	%			498.8	%			500.5	%

		As of
Loan Servicing Portfolio		December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
($ in millions)
Loans serviced for investors		$	3,459		$	3,632		$	3,919		$	4,298		$	4,677

Return on Average Common Shareholders’ Equity and Return on Average Tangible Common Shareholders’ Equity (1), (2)
		Quarter Ended December 31,								Quarter Ended September 30,				Year Ended December 31,
		2022				2021				2022				2022				2021
($ in millions)
Average common shareholders’ equity (a)		$	13,657			$	12,078			$	13,257			$	12,996			$	11,263
Less: Average goodwill and other intangible assets			(219	)			(223	)			(219	)			(220	)			(225	)
Average tangible common shareholders’ equity (b)		$	13,438			$	11,855			$	13,038			$	12,776			$	11,038
Net income available to common shareholders (c)		$	346			$	368			$	405			$	1,507			$	1,379
Return on average common shareholders’ equity (c) / (a)			10.05	%			12.08	%			12.12	%			11.60	%			12.24	%
Return on average tangible common shareholders’ equity (c) / (b)			10.21	%			12.31	%			12.33	%			11.80	%			12.49	%

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

Book Value per Common Share and Tangible Book Value per Common Share (1)		As of
		December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
(in millions, except per share amounts)
Total shareholders’ equity		$	17,446			$	17,119			$	16,426			$	16,154			$	15,898
Less: Preferred stock			(3,633	)			(3,633	)			(3,633	)			(3,633	)			(3,633	)
Total common shareholders’ equity (a)			13,813				13,486				12,793				12,521				12,265
Less: Goodwill and other intangible assets			(218	)			(219	)			(220	)			(221	)			(222	)
Total tangible common shareholders’ equity (b)		$	13,595			$	13,267			$	12,573			$	12,300			$	12,043
Number of shares of common stock outstanding (c)			183				183				180				180				179
Book value per common share (a) / (c)		$	75.38			$	73.74			$	71.03			$	69.70			$	68.34
Tangible book value per common share (b) / (c)		$	74.19			$	72.54			$	69.81			$	68.47			$	67.10

__________
(1)		Tangible book value per common share is considered a non-GAAP financial measure, and is reconciled to GAAP book value per common share in this table.

Regulatory Capital Ratios and Components (1), (2)		As of
		December 31, 2022 (3)				September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
($ in millions)
Capital Ratios:
Tier 1 leverage ratio (Tier 1 capital to average assets)			8.51	%			8.59	%			8.59	%			8.70	%			8.76	%
Common Equity Tier 1 capital to risk-weighted assets			8.99	%			9.28	%			9.15	%			9.48	%			9.65	%
Tier 1 capital to risk-weighted assets			11.34	%			11.76	%			11.75	%			12.25	%			12.56	%
Total capital to risk-weighted assets			12.35	%			12.81	%			12.82	%			13.37	%			13.72	%
Regulatory Capital:
Common Equity Tier 1 capital		$	13,920			$	13,586			$	12,791			$	12,418			$	12,045
Tier 1 capital		$	17,553			$	17,219			$	16,424			$	16,051			$	15,678
Total capital		$	19,118			$	18,755			$	17,924			$	17,521			$	17,124
Assets:
Average assets		$	206,371			$	200,486			$	191,202			$	184,410			$	178,969
Risk-weighted assets		$	154,789			$	146,444			$	139,811			$	131,024			$	124,820

__________
(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 December 31, 2022 are preliminary.

		As of
Wealth Management Assets		December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021
($ in millions)
First Republic Investment Management		$	112,176		$	100,125		$	100,204		$	108,771		$	109,130
Brokerage and investment:
Brokerage			130,844			119,299			116,979			128,129			128,258
Money market mutual funds			8,100			10,891			10,510			18,543			23,673
Total brokerage and investment			138,944			130,190			127,489			146,672			151,931
Trust Company:
Trust			16,318			15,270			14,994			14,344			13,695
Custody			3,806			3,943			4,099			4,408			4,687
Total Trust Company			20,124			19,213			19,093			18,752			18,382
Total Wealth Management Assets		$	271,244		$	249,528		$	246,786		$	274,195		$	279,443

 

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