First Republic Sees Strong Loan Growth in 1Q, Will Start Paying Dividend

Two years after regaining its independence, First Republic Bank (FRC) in San Francisco is about to start a paying a dividend again.

The $29 billion-asset company said in its first-quarter earnings announcement Wednesday that it intends to pay investors a quarterly cash dividend of 10 cents per share following the release of its second-quarter earnings in July. Chairman and Chief Executive Jim Herbert said the decision, which is still subject to shareholder approval, is a reflection on First Republic's steady performance and strong capital position.

Founded in 1985, First Republic was an independent company that paid dividends to investors until 2007, when it sold itself to Merrill Lynch. It became part of Bank of America (BAC) when B of A took over Merrill in 2009, but it was spun off in July 2010 and has been an independent, publicly traded company since.

The company, which caters largely to professionals and wealthy individuals, reported earnings of $91.8 million in the first quarter, an increase of 3.4% over the same period in 2011. Earnings per share held steady at 67 cents but still beat estimates of analysts polled by Thomson Reuters by a penny.

Net interest income climbed nearly 11% year over year as total loans outstanding increased 23%, to $23.9 billion. The company originated $3.2 billion of loans in the quarter, the most in a single quarter in its history.

Earnings were tamped down somewhat, however, by increased expenses. Its noninterest expense climbed 22% year over year, to $164.8 million as the company added staff, particularly in the wealth management area, opened new offices and invested in new technology.

First Republic intends to open 10 new offices this year, including seven in New York and Boston.

First Republic's shares were trading at $33.20 midday Monday, down 0.9% from Tuesday's closing price.