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First Republic Bank Reports Record Earnings

First Republic Bank (NYSE: FRC) today announced financial results for the third quarter and nine months ended September 30, 2012.

“We are very pleased with the continued stability and strength of our earnings, including mortgage banking results,” said Jim Herbert, Chairman and Chief Executive Officer of First Republic Bank. “Credit quality remains excellent, our capital ratios are strong and we have effectively managed our core net interest margin and efficiency ratio.”

Financial Highlights

  • Book value per share increased by 4% during the quarter and 15% year over year to $21.48.
  • Tier 1 leverage ratio increased to 9.33%, up from 8.95% a year ago.
  • Asset quality remains very strong; nonperforming assets were only 13 basis points of total assets.
  • Net income was $102.7 million for the third quarter of 2012, compared to $87.8 million for last year’s third quarter, up 17%. Diluted earnings per share (“EPS”) were $0.72 for the third quarter of 2012, compared to $0.66 for last year’s third quarter.
  • Excluding the impact of purchase accounting, net income for the third quarter of 2012 was $78.7 million, up 43% from last year’s third quarter. On this non-GAAP basis, the third quarter diluted EPS were $0.54, up 29% year over year. (1)
  • Net income was $292.4 million for the nine months ended September 30, 2012, an increase of 12% compared to the same period in 2011, and diluted EPS were $1.99 compared to $1.97 for the same period in 2011.
  • Excluding the impact of purchase accounting and the one-time charge on redemption of preferred stock in the second quarter of 2012, diluted EPS for the nine months ended September 30, 2012 were $1.53, up 24% compared to $1.23 for the same period in 2011. (1)
  • Net interest margin was 4.13% for the quarter, compared to 4.27% for the prior quarter and 4.48% for last year’s third quarter.
  • Excluding the impact of purchase accounting, the net interest margin was 3.47% for the quarter, compared to 3.48% for the prior quarter and 3.41% for last year’s third quarter. (1)
  • The efficiency ratio was 52.1% for the third quarter of 2012, compared to 52.4% for the prior quarter and 48.4% for last year’s third quarter.
  • Excluding the impact of purchase accounting, the efficiency ratio was 58.6% for this quarter, improving from 60.5% for the prior quarter and 58.8% for last year’s third quarter. (1)
  • Loan originations were $4.0 billion for the third quarter of 2012, slightly above the prior quarter; for the nine months ended September 30, 2012, loan originations were $11.2 billion.
  • Loans sold were $774 million for the quarter and pre-tax net gains on sales were $12.5 million, compared to sales of $436 million and net gains of $4.8 million in the prior quarter.
  • Loans outstanding were $26.9 billion at September 30, 2012, up 5% for the quarter.
  • Deposits were $25.7 billion at September 30, 2012, up 6% for the quarter.
  • Wealth management assets were $24.8 billion at September 30, 2012, up 7% for the quarter and 22% since year-end.

“First Republic continues to deliver strong results across the franchise,” said President and Chief Operating Officer, Katherine August-deWilde. “We’re building on the accelerating economic momentum in our coastal, urban markets. In particular, we’re pleased that the continuing high quality of our home loans is allowing us to sell into the secondary market with excellent execution.”

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