First Republic's 3Q marked by strong revenue growth, rising expenses

First Republic Bank’s third-quarter profits climbed 7% from the same quarter a year earlier, to $213.5 million, as strong revenue growth more than offset steep increases in interest and noninterest expenses.

The San Francisco company said Friday that total revenue increased 14.7% in the quarter to $769 million, thanks to double-digit gains in both interest and noninterest income. Net interest income climbed more than 15% year over year to $635 million, as total loans, excluding those held for sale, increased 22% to $72.3 billion.

First Republic
Deposits increased 23% year over year at First Republic, a somewhat slower pace than loans did.

The $96.1 billion-asset company said that strong demand for home purchase, business and multifamily loans more than made up for a slowdown in mortgage refinances.

Meanwhile, fee income increased nearly 13% to $134.4 million, as wealth management assets climbed 29% year over year to $131 billion.

Deposits also increased by double digits, climbing 14% to $74.8 billion.

“Growth and new client acquisition across the franchise remain very strong,” said Chairman and CEO James Herbert.

Earnings per share came in at $1.19, falling a penny short of the mean estimates of analysts polled by FactSet Research Systems.

Overall profits were tamped down somewhat by increased expenses resulting from higher interest rates and the company’s continued investment in franchise development.

Interest expenses rose 69% year over year to $146 million as deposit costs more than doubled. Noninterest expenses climbed 16% to $484 million, due primarily to higher costs for salaries and benefits.

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