First Republic Bank (NYSE:FRC) Q4 2019 Earnings Conference Call - Final Transcript

Jan 14, 2020 • 10:00 am ET


First Republic Bank (NYSE:FRC) Q4 2019 Earnings Conference Call - Final Transcript


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Greetings and welcome to First Republic Bank's Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator Instructions]

I would now like to turn today's call over to Shannon Houston, Senior Vice President and Chief Marketing and Communications Officer. Please go ahead.

Shannon Houston

Thank you, and welcome to First Republic Bank's Fourth Quarter and Full Year 2019 Conference Call. Speaking today will be Jim Herbert, the Bank's Founder, Chairman and Chief Executive Officer; Gaye Erkan, President; and Mike Roffler, Chief Financial Officer.

Before I hand the call over to Jim, please note that we may make forward-looking statements during today's call that are subject to risks, uncertainties and assumptions. For a more complete discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, see the Bank's FDIC filings, including the Form 8-K filed today, all available on the Bank's website.

And now, I'd like to turn the call over to Jim Herbert.

James H. Herbert, II

Thank you, Shannon. 2019 was a very strong year across the board. Our results continue to demonstrate the growth power of our client-centric business model. First Republic's ability to deliver extraordinary client satisfaction for almost 35 years is reflected in our high Net Promoter Score, which is more than twice that of the banking industry. This in turn translates into stable clients, additional business from these satisfied clients, and a strong flow of referrals also from the satisfied client base. The result is a very successful compounding effect that continues to drive our growth organically and safely. This model has worked well irrespective of economic and market [Phonetic] conditions for several years.

Let me cover a few key metrics for the year. Total loans outstanding were up 19.7%, total deposits have grown 14%, and wealth management assets have increased by 19.7%. This growth in turn has led to strong financial performance. Year-over-year, total revenue grew 9.7%, our net interest income grew 10.5% and tangible book value per share increased 11% during the year.

We're pleased to report that our credit quality continues to be quite strong. During the fourth quarter, we had net recoveries of $1.1 million. For the entire year, net charge-offs were only $4.6 million, less than 1 basis point of average loans. Nonperforming assets ended the year at only 12 basis points. Capital remains very strong. At year-end, our Tier 1 leverage ratio was 8.39%.

Conditions in our markets continue to be quite healthy overall. Our clients remain very active and our loan pipeline is strong. We would note that the loan originations have some seasonality, with the fourth quarter typically being a bit stronger and the first quarter somewhat slower. This lower rate environment which we're operating in continues to represent a terrific opportunity to attract high-quality new households, particularly through our home loan refinance activities.

We continue to also be very successful in attracting younger generation clients through our student loan refinance and our professional loan programs. During the year, we added net nearly 8,000 new high-quality