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First Republic Bank Reports Record Earnings

Stocks in this article: FRC

At September 30, 2012, 96% of deposits were core deposits. (2)

Wealth management expansion

Total wealth management assets were $24.8 billion at September 30, 2012, up 7% for the quarter and 22% since year-end. Wealth management assets include investment management assets of $10.8 billion, brokerage assets and money market mutual funds of $9.2 billion, and trust and custody assets of $4.9 billion.

Wealth management fees earned, including investment advisory, trust and brokerage fees, were up 18% in the third quarter of 2012 compared to last year’s third quarter and were up 20% for the first nine months of 2012 compared to the prior year.

Mortgage banking activity strong

The Bank sold $774 million of primarily longer-term, fixed-rate home loans during the third quarter of 2012 and recorded net gains of $12.5 million. By comparison, during the prior quarter, the Bank sold $436 million of loans and recorded net gains of $4.8 million. The higher level of gain on sales resulted from a higher volume of loans sold and improved pricing on loans sold. For the nine months ended September 30, 2012, the Bank sold $1.8 billion of loans and recorded net gains of $21.1 million, compared to loan sales of $677 million and net gains of $6.1 million for the same period last year.

At September 30, 2012, the carrying value of mortgage servicing rights (“MSRs”) was $16.4 million, or 38 basis points of such loans serviced. Low interest rates and rapid loan repayments have resulted in continuing impairment charges on MSRs.

Loans serviced for investors totaled $4.3 billion at September 30, 2012, up 14% compared to $3.8 billion at September 30, 2011.

Income Statement and Key Ratio Summary

Strong revenues

Total revenues were $342.7 million for the third quarter of 2012, compared to $327.2 million for the prior quarter and $299.2 million for last year’s third quarter, a 15% increase from a year ago.

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