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First Republic (FRC) Interim Results Show Balance Sheet Growth
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First Republic Bank announced certain preliminary, unaudited financial information for fourth-quarter 2021 and full-year 2021. These results reflect another quarter of strong balance sheet growth and improving credit quality.
As of 2021-end, First Republic's total loans growth was 20% and 5% from the prior-year period and the end of third-quarter 2021, respectively. Further, total deposits advanced 36% from 2020-end and 7.5% from third quarter-end. For the third quarter, the company reported 22.5% and 39.2% year-over-year growth in loans and deposits, respectively.
First Republic’s exceptional credit quality is likely to have further strengthened in the fourth quarter. The bank projects net charge-offs to be $0.1 million for fourth-quarter 2021 and $2 million for 2021 or less than 1 basis point of average loans for 2021. Also, nonperforming assets are anticipated to be 8 basis points of total assets at 2021-end.
For third-quarter 2021, net loan charge-offs were $0.3 million, down 83% year over year. Also, the non-performing assets to total assets ratio was 0.07%, down from the year-ago quarter’s 0.12%.
Balance sheet strength is likely to drive the company’s net interest income (NII) and net interest margin (NIM). Along with third-quarter 2021 results, First Republic announced 2021 NIM guidance of 2.65-2.75% due to higher cash levels as a result of the current economic conditions and government stimulus.
Despite encouraging preliminary results, this positive news failed to raise investor optimism in the stock. In fact, shares of the company slipped 4.4% in yesterday’s trading hours. With FRC already hunting for its next CEO, Hafize Gaye Erkan has resigned as Co-CEO. Such managerial transitions have spurred uncertainty and resulted in a near-term headwind for the stock.
Shares of the company have gained 32.7%, underperforming the industry’s 49.7% rally over the past year.
Some better-ranked stocks in the banking space include Cathay General Bancorp (CATY - Free Report) , East West Bancorp (EWBC - Free Report) and Hope Bancorp (HOPE - Free Report) . At present, all the three stocks carry a Zacks Rank #2 (Buy).
In the past year, shares of Cathay General, East West Bancorp, and Hope Bancorp have gained 35.2%, 55%, and 35.3%, respectively.
Over the past 30 days, the Zacks Consensus Estimate for Cathay General’s 2022 earnings has been revised marginally upward. The same for East West Bancorp has been unchanged.
Earnings estimates for the current year for Hope Bancorp have been unchanged over the past month.
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First Republic (FRC) Interim Results Show Balance Sheet Growth
First Republic Bank announced certain preliminary, unaudited financial information for fourth-quarter 2021 and full-year 2021. These results reflect another quarter of strong balance sheet growth and improving credit quality.
As of 2021-end, First Republic's total loans growth was 20% and 5% from the prior-year period and the end of third-quarter 2021, respectively. Further, total deposits advanced 36% from 2020-end and 7.5% from third quarter-end. For the third quarter, the company reported 22.5% and 39.2% year-over-year growth in loans and deposits, respectively.
First Republic’s exceptional credit quality is likely to have further strengthened in the fourth quarter. The bank projects net charge-offs to be $0.1 million for fourth-quarter 2021 and $2 million for 2021 or less than 1 basis point of average loans for 2021. Also, nonperforming assets are anticipated to be 8 basis points of total assets at 2021-end.
For third-quarter 2021, net loan charge-offs were $0.3 million, down 83% year over year. Also, the non-performing assets to total assets ratio was 0.07%, down from the year-ago quarter’s 0.12%.
Balance sheet strength is likely to drive the company’s net interest income (NII) and net interest margin (NIM). Along with third-quarter 2021 results, First Republic announced 2021 NIM guidance of 2.65-2.75% due to higher cash levels as a result of the current economic conditions and government stimulus.
Despite encouraging preliminary results, this positive news failed to raise investor optimism in the stock. In fact, shares of the company slipped 4.4% in yesterday’s trading hours. With FRC already hunting for its next CEO, Hafize Gaye Erkan has resigned as Co-CEO. Such managerial transitions have spurred uncertainty and resulted in a near-term headwind for the stock.
Shares of the company have gained 32.7%, underperforming the industry’s 49.7% rally over the past year.
First Republic currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks in the banking space include Cathay General Bancorp (CATY - Free Report) , East West Bancorp (EWBC - Free Report) and Hope Bancorp (HOPE - Free Report) . At present, all the three stocks carry a Zacks Rank #2 (Buy).
In the past year, shares of Cathay General, East West Bancorp, and Hope Bancorp have gained 35.2%, 55%, and 35.3%, respectively.
Over the past 30 days, the Zacks Consensus Estimate for Cathay General’s 2022 earnings has been revised marginally upward. The same for East West Bancorp has been unchanged.
Earnings estimates for the current year for Hope Bancorp have been unchanged over the past month.