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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James H. Herbert, II

younger households through these two programs. These households represent fully [Phonetic] 35% of our total consumer borrowing base at this point, up from only 19% three years ago.

2019 was the ninth full year since we bought back First Republic from the Bank of America and undertook our second IPO. Over these past nine years, we've grown loans from $18.6 billion to $91 billion. Tangible book value per share over this period has grown from $15.19 to $50.24, while have also paid cumulative cash dividends of $4.55. That's a compound growth of tangible book value per share and dividend payout of over 15% per annum. These results demonstrate very clearly the power of our client-centric sustainable organic growth model. Overall, it was a terrific quarter and a terrific year.

Now, let me turn the call over to Gaye Erkan, President.

Hafize Gaye Erkan

Thank you, Jim. It was indeed an excellent quarter and terrific year. Loan originations for the fourth quarter were $11.2 billion, our best quarter ever. For the full year 2019, loan originations were $38 billion, another record year.

Single-family residential volume was also a record both for the quarter and year at $5.3 billion and $16.4 billion respectively. Importantly, our loan to value ratio for single-family originations in 2019 was a conservative 58%. Refinance accounted for just over 60% of single-family residential volume during 2019. As we have noted before, refinancing continues to be a means of getting trial with new clients.

Multi-family and commercial real estate lending also performed well. 2019 originations were up 13% from last year. Most importantly, credit quality remains strong. When we look at our fourth quarter originations for multi-family and other commercial real estate, our medium loan size was $1.5 million, with a conservative loan to value ratio of 48% and strong debt service coverage ratios. As always, we have not and will not compromise our credit standards.

Business banking also had a terrific year. Total business loans and lines outstanding were $11.6 billion at year-end, representing 13% of total loans outstanding. A key focus for us is the growth of business loans and line commitments, which were up 14% year-over-year. This reflects our ongoing ability to create new relationships and deepen existing ones.

Our success in business banking results primarily from following our satisfied private banking clients to their businesses and nonprofits, which provides an important diversified source of funding. Business deposits were up 15% for the year and represented 56% of total deposits at year-end. For every dollar of business loans outstanding, we have over $4 of business deposit funding.

Turning to the overall deposit base, total deposits were up 14% from a year ago. Checking deposits remained strong and represented 59% of total deposits at quarter end. The average rate paid on deposits for the quarter was 59 basis points. Our diversified deposit gathering efforts performed well across all of our channels: preferred banking, business banking, private wealth management, as well as our integrated preferred banking office network.

In 2019, we