Fees from advising wealthy households propelled First Republic Bank (FRC) in the first quarter.
Earnings at the $35.1 billion-asset bank rose 28% from a year earlier, to $114.5 million. Net interest income rose 5.8% from a year earlier, to $298 million. Net interest margin compressed 22 basis points compared to the first quarter of 2012, to 3.42%.
Noninterest income more than doubled from a year earlier, to $72.3 million, mostly because of investment advisory fees and a gain on loan sales. The higher fees reflected First Republic's December purchase of Luminous Capital Holdings, a Los Angeles firm that advises people who have significant assets to invest.
Noninterest expense rose 20% from a year earlier, to $197.4 million, because of higher personnel costs. The San Francisco company's efficiency ratio improved to 53.3% from 54.1% a year earlier.
First Republic's loan book grew 20%, from a year earlier, to $28 billion. Single-family home loans rose 18% from a year earlier, to $16.7 billion, and loans on multi-family residential buildings grew 27%, to $3.2 billion.
"We had an excellent first quarter," Jim Herbert, First Republic's chief executive, said in a press release. "Loan origination volume was our highest ever first quarter and earnings benefitted from a much higher-than-average level of loan sales and gains."