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First Republic Bank Reports Record Annual And Quarterly Earnings

Stocks in this article: FRC

At December 31, 2012, 97% of deposits were core deposits. (2)

Wealth management expansion

Total wealth management assets were $31.7 billion at December 31, 2012, up 28% for the quarter and 55% for the year. The increase in wealth management assets includes $5.9 billion of assets under management from the Luminous asset purchase; the Bank will begin earning fees on these assets beginning in the first quarter of 2013. Wealth management assets include investment management assets of $17.0 billion, brokerage assets and money market mutual funds of $9.7 billion, and trust and custody assets of $5.0 billion.

Wealth management fees earned, including investment advisory, trust and brokerage fees, for the fourth quarter of 2012 were up 36%, compared to last year’s fourth quarter and were up 24% for the full year.

Mortgage banking activity strong

The Bank sold $671 million of primarily fixed rate, longer-term home loans during the fourth quarter of 2012 and recorded net gains of $17.7 million. By comparison, during the prior quarter, the Bank sold $774 million of loans and recorded net gains of $12.5 million. The higher level of gain on sales resulted from improved pricing on loans sold to an average 2.64% gain. For the full year, the Bank sold $2.4 billion of loans and recorded net gains of $38.8 million, or 1.60% of loans sold, compared to loan sales of $729 million and net gains of $6.4 million for 2011.

At December 31, 2012, the carrying value of mortgage servicing rights (“MSRs”) was $17.8 million, or 39 basis points on such loans serviced.

Loans serviced for investors totaled $4.6 billion at December 31, 2012, up 35%, compared to $3.4 billion at December 31, 2011.

Income Statement and Key Ratio Summary

Strong core revenue growth

Total revenues were $357.9 million for the fourth quarter of 2012, compared to $342.7 million for the prior quarter and $314.9 million for last year’s fourth quarter, a 14% increase from a year ago. Total revenues for 2012 were $1.3 billion, up 13% from 2011.

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