First Republic Bank in San Francisco reported flat fourth-quarter profits as strong deposit growth and gains in both interest and fee income were largely offset by higher expenses.
The $48.3 billion-asset bank said Thursday that its net income available to common shareholders fell 0.9% from the fourth quarter of 2013, to $101.6 million. Its earnings per share of 72 cents were in line with the estimates of analysts polled by Bloomberg.
The quarterly dip can be attributed to a rapid rise in expenses as the company prepares for the increased regulatory scrutiny that comes with crossing the $50 billion-asset mark and becoming a systemically important financial institution. Its total noninterest expenses rose 22% from the fourth quarter of 2013, to $244 million, due largely to significant increases in salaries and professional fees. The company anticipates crossing the $50 billion mark sometime later this year.
Otherwise, it was a banner quarter for the bank, which caters to affluent individuals and their affiliated businesses and organizations. Deposits increased 15% year over year, to $37.1 billion, thanks largely to surge in noninterest-bearing checking deposits. Loans, meanwhile, increased 11% year over, to $37.6 million, leading to a 7.2% increase in interest income.
Fee income increased nearly 35% year over year, to $75.8 million, due primarily to strong gains in investment advisory fees, foreign exchange fees and gains on the sale of loans.
For the full-year, profits available to shareholders climbed 2.4%, to $431.5 million.