FIRST REPUBLIC BANK
Basel III Regulatory Capital Disclosures
March 31, 2020
First Republic Bank | ||
Basel III Regulatory Capital Disclosures | ||
March 31, 2020 | ||
TABLE OF CONTENTS | ||
Section | Page | |
1. | Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 3 |
2. | Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 4 |
3. | Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 6 |
4. | Capital Conservation Buffer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 8 |
5. | Credit Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 8 |
6. | Counterparty Credit Risk-RelatedExposures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 12 |
7. | Credit Risk Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 14 |
8. | Securitization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 14 |
9. | Equity Exposures not Subject to Market Risk Capital Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 15 |
10. Interest Rate Risk for Non-TradingActivities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 16 | |
Information Regarding Forward-LookingStatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 17 | |
Exhibit A: Cross-ReferenceTable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 18 |
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
1. Introduction
Explanatory Note
As used throughout this document, the terms "First Republic," the "Bank," "we," "our" and "us" mean, except as the context indicates otherwise, First Republic Bank, a California-chartered commercial bank including all of its subsidiaries.
For references to disclosures contained within this report and in the Bank's other regulatory disclosures and public filings, refer to "Exhibit A: Cross-Reference Table." Included in Exhibit A are references to the Bank's Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Form 10-K"), the Bank's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 ("Q1 2020 Form 10-Q") and the Bank's Consolidated Reports of Condition and Income as of March 31, 2020 ("3/31/2020 Call Report").
Company Overview
Founded in 1985, First Republic Bank is a California-chartered commercial bank and trust company headquartered in San Francisco with deposits insured by the Federal Deposit Insurance Corporation ("FDIC"). First Republic and its subsidiaries offer private banking, private business banking and private wealth management, including investment, trust and brokerage services. First Republic specializes in delivering exceptional, relationship-based service and offers a complete line of products, including residential, commercial and personal loans, deposit services, and wealth management. As of
March 31, 2020, we had total assets of $123.9 billion, total deposits of $93.7 billion, total equity of $10.4 billion and wealth management assets under management or administration of $137.9 billion.
As of March 31, 2020, we provided our services through 90 offices, of which 79 are licensed deposit-taking offices primarily in the following areas: San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and San Diego, California; Portland, Oregon; Boston, Massachusetts; Palm Beach, Florida; Greenwich, Connecticut; New York, New York; and Jackson, Wyoming. We have 11 offices that offer exclusively lending, wealth management or trust services. We have been continuously headquartered in San Francisco since our inception.
Basis of Consolidation
The basis of consolidation used for regulatory reporting is the same as that used under the accounting principles generally accepted in the United States ("GAAP"). There are no subsidiaries that are deconsolidated or deducted from total capital.
See "Basis of Presentation and Organization" in Note 1, "Summary of Significant Accounting Policies" in "Item 1. Financial Statements" in the Q1 2020 Form 10-Q for more information on the basis of consolidation.
Restrictions on the Transfer of Funds or Regulatory Capital
There are no material restrictions or other major impediments on transfer of funds or total capital within the consolidated group.
Capital of Insurance Subsidiaries
The Bank does not have any insurance subsidiaries.
Compliance with Capital Requirements
As of March 31, 2020, First Republic had capital levels in excess of the minimum regulatory capital requirements and was "well-capitalized" under the prompt corrective action requirements currently in effect. For further detail on capital ratios, see "Capital Resources" in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Q1 2020 Form 10-Q. At March 31, 2020, each regulated subsidiary met all capital requirements to which it was subject.
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
2. Capital Structure
Common equity (i.e., common stock, capital surplus, and retained earnings) is the primary component of the Bank's capital structure. Common equity allows for the absorption of losses on an ongoing basis and is available for this purpose. Further, common equity allows for the conservation of resources during periods of stress, as it provides First Republic with discretion on the amount and timing of dividends and other distributions. Regulators and rating agencies also include forms of capital other than common equity (e.g., preferred stock and subordinated debt) in their calculations of capital adequacy. Such forms of capital are included in the Bank's Tier 1 capital and total capital.
The terms and conditions of the Bank's capital instruments are described in the following sections of the Bank's Q1
2020 Form 10-Q:
- Common Equity Tier 1 ("CET1") capital - Common stock terms and conditions are described in Note 13, "Common Stock and Stock Plans" in "Item 1. Financial Statements."
- Additional Tier 1 capital - Preferred stock terms and conditions are described in Note 12, "Preferred Stock" in "Item 1. Financial Statements."
- Tier 2 capital - Subordinated notes terms and conditions are described in Note 9, "Borrowings" in "Item 1. Financial Statements."
Beginning in the first quarter of 2020, the Bank adopted the Current Expected Credit Losses ("CECL") methodology under Accounting Standards Codification ("ASC") 326, in which the allowance for credit losses reflects expected credit losses over the life of loans and held-to-maturity debt securities, and incorporates macroeconomic forecasts as well as historical loss rates.
On March 27, 2020, the federal banking agencies issued an Interim Final Rule ("CECL Interim Final Rule") to provide regulatory capital relief from the impact of COVID-19 and application of the CECL methodology under ASC 326. The CECL Interim Final Rule allows banks the option to elect to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending December 31, 2024. The Bank elected this transition relief during the first quarter of 2020, upon adoption of CECL.
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
The following table presents the components of First Republic's capital structure:
Table 2.1: Capital Structure
($ in thousands) | March 31, 2020 | ||
Shareholders' equity: | |||
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 1,145,000 | |
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,714 | ||
Additional paid-incapital (surplus) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 4,543,650 | ||
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 4,652,089 | ||
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 17,312 | ||
Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 10,359,765 | ||
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .CECL Interim Final Rule retained earnings adjustments (1) | 20,219 | ||
CET1 capital adjustments and deductions: | |||
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | (1,145,000) | ||
Goodwill and other intangible assets, net of deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | (213,264) | ||
Deferred tax assets that arise from net operating loss and tax credit carryforwards, net of deferred tax liabilities . . . | (116,503) | ||
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | (17,312) | ||
CET1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 8,887,905 | ||
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,145,000 | ||
Additional Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,145,000 | ||
Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 10,032,905 | ||
Tier 2 capital instruments-subordinatednotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 777,990 | ||
Qualifying allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 576,963 | ||
CECL Interim Final Rule allowance for credit losses adjustments (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | (22,204) | ||
Tier 2 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,332,749 | ||
Total risk-basedcapital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 11,365,654 | |
__________ | |||
- In accordance with the CECL Interim Final Rule, the Bank elected to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending December 31, 2024. Amounts as of March 31, 2020 have been adjusted to exclude the following impacts attributed to the adoption of CECL: decreases in retained earnings and increases in allowance for credit losses on loans, held-to-maturity debt securities and unfunded loan commitments.
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
3. Capital Adequacy
The Bank is committed to maintaining a robust capital planning process. The objectives of the Bank's capital planning process are to (a) establish and refine capital goals, (b) determine appropriate capital targets and composition of capital, (c) make decisions about capital actions, and (d) maintain contingency capital plans. The Bank begins its capital planning process with its annual business planning process, including a rolling, multi-year projection of its balance sheet, income statement and key operating and capital ratios based on the current and expected state of the economy and the Bank's expected growth and investment plans.
The business plan allows the Bank to project a baseline case and thereby estimate balance sheet growth, expected earnings and capital resources under expected business conditions.
As described in "Item 1. Business-Supervision and Regulation-Stress Testing" in our 2019 Form 10-K, the Bank is not currently subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act's (the "Dodd-Frank Act") company-run stress testing requirements. Nevertheless, in the normal course of operations, the Bank periodically performs internal capital stress tests in order to (a) translate risk measures into estimates of potential losses over one or more stress scenarios, (b) define available capital resources under one or more stress scenarios and (c) bring together estimates of losses and capital resources under one or more stress scenarios to assess the combined impact on capital adequacy in relation to the Bank's business plans and stated goals for the level and composition of capital and proposed capital actions.
The Board of Directors of the Bank (the "Board") and senior management utilize internal capital stress testing to better understand the loss-absorption capabilities of the Bank's capital base and to better plan the Bank's capital actions, including new capital issuances and the payment of cash dividends on its common stock. In analyzing the Bank's performance and capital adequacy under stress, the Bank analyzes quarterly projected capital ratios under one or more economic scenarios and compares the results to projected capital ratios under its business plan.
In its capital adequacy assessment, the Bank also incorporates current and pending regulatory requirements, factors in material risks, and builds in appropriate capital buffers to manage against the impact of what we believe to be reasonably foreseeable sources of uncertainty and we seek to ensure adequate capital under stressful conditions. All assessments of capital adequacy are informed by current and relevant analysis and are subject to challenge by senior management and the Board and to regulatory oversight.
The Bank maintains internal controls governing its business planning and capital adequacy assessment processes. Such controls include appropriate policies and procedures, change control processes, model validation, comprehensive documentation, and review by internal audit. The primary objective of such controls and governance procedures is to provide a consistent, thoughtful, transparent, and reviewed process for (a) generating a baseline set of business projections, and (b) estimating hypothetical losses and capital levels under one or more stress scenarios.
First Republic is not subject to the Market Risk requirements (the "Market Risk Capital Rule") under subpart F of the rules issued by the federal banking agencies implementing the Basel Committee on Banking Supervision's capital framework (the "Basel III Capital Rules").
For additional information related to capital requirements, see "Capital Requirements" in "Item 1. Business- Supervision and Regulation" in our 2019 Form 10-K and "Capital Resources" in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Q1 2020 Form 10-Q. First Republic Bank is the top tier parent company of our corporate group and has no bank holding company or any depository institution subsidiaries.
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
The following table presents risk-weighted assets by exposure types:
Table 3.1: Basel III Standardized Approach Risk-Weighted Assets
($ in thousands) | March 31, 2020 | ||
On-balance sheet assets: | |||
Exposures to sovereign entities (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 31,746 | |
Exposures to certain supranational entities and multilateral development banks ("MDBs") . . . . . . . . . . . . . . . . . . . | - | ||
Exposures to depository institutions, foreign banks, and credit unions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 40,423 | ||
Exposures to public sector entities ("PSEs") (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 7,031,225 | ||
Exposures to government-sponsoredenterprises ("GSEs") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 631,861 | ||
Corporate exposures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 30,748,589 | ||
Residential mortgage exposures (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 26,893,662 | ||
Statutory multifamily mortgages and pre-soldconstruction loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 416,748 | ||
High volatility commercial real estate ("HVCRE") loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 503,393 | ||
Past due loans (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 98,184 | ||
Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 7,827,950 | ||
Other assets (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 3,798,913 | ||
Cleared transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | ||
Default fund contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | ||
Unsettled transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | ||
Securitization exposures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 4,089 | ||
Equity exposures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,719,034 | ||
Off-balance sheet exposures: | |||
Loan commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 9,863,005 | ||
Letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 416,561 | ||
All other off-balancesheet liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 30,232 | ||
Derivative contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 16,785 | ||
Total Standardized Approach Risk-WeightedAssets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 90,072,400 | |
----- | |||
- Represents exposures to the U.S. Government and U.S. Government agencies.
- Represents exposures to U.S. states and political subdivisions.
- Includes loans that are 90 days or more past due or on nonaccrual status.
- In accordance with the CECL Interim Final Rule, the Bank elected to delay the estimated impact of CECL on its risk-weighted assets over a five-year transition period ending December 31, 2024. Amount as of March 31, 2020 has been adjusted to exclude the impact of increases in deferred tax assets attributed to the adoption of CECL.
The following table presents the Bank's risk-based capital ratios:
Table 3.2: Capital Ratios
March 31, | |||
2020 | (1) | ||
CET1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 9.87 % | ||
Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 11.14 | % | |
Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 12.62 | % |
__________
- (1) As of March 31, 2020, the Bank's election of regulatory capital relief under the CECL Interim Final Rule resulted in a 2 basis point increase in the CET1 capital ratio and Tier 1 capital ratio, and no impact on the total capital ratio.
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
4. Capital Conservation Buffer
A "capital conservation buffer" of 2.5% of risk-weighted assets is also required under the Basel III Capital Rules. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a CET1 capital ratio above the minimum requirement but below the capital conservation buffer will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall and "eligible retained income" (that is, the greater of net income for the four calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not already reflected in net income, and the average of net income over the preceding four quarters).
The capital conservation buffer of a banking organization is the lowest of the following three ratios:
- The CET1 capital ratio minus its minimum CET1 capital ratio;
- The tier 1 capital ratio minus its minimum tier 1 capital ratio; and
- The total capital ratio minus its minimum total capital ratio.
The following table presents the capital conservation buffer calculations for the Bank:
March 31, 2020 | |||||
Minimum | Capital | ||||
Capital Ratios | Conservation | ||||
Capital Ratios | Buffer | ||||
CET1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 9.87 % | 4.50 % | 5.37 % | ||
Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 11.14 % | 6.00 % | 5.14 % | ||
Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 12.62 % | 8.00 % | 4.62 % |
As of March 31, 2020, the Bank's capital conservation buffer was 4.62%, which exceeded the minimum requirement
of 2.5%.
There were no limitations on the Bank's distributions or discretionary bonus payments resulting from the capital conservation buffer framework. As of March 31, 2020, the Bank's eligible retained income was $742.5 million.
5. Credit Risk
Loans
The following credit risk policies are described in Note 1, "Summary of Significant Accounting Policies" and Note 4, "Loans and Allowance for Credit Losses" in "Item 1. Financial Statements" in the Q1 2020 Form 10-Q and in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and the Impact of Accounting Estimates" and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Asset Quality" in the Q1 2020 Form 10-Q:
- Policy for determining past due or delinquency status
- Policy for placing loans on nonaccrual status
- Policy for returning loans to accrual status
- Definition of and policy for identifying individually assessed loans
- Methodology for estimating allowance for credit losses
- Policy for charging off uncollectible amounts
The majority of the Bank's loan portfolio is secured by real estate. A decline in real estate values can negatively impact our ability to recover our investment should the borrower become delinquent. We safeguard against this risk by rarely exceeding a loan-to-value ratio of 80% with respect to real estate lending. Discussion of the Bank's credit risk management process is presented in "Item 1. Business-LendingActivities-Underwriting" and "Item 1. Business-Lending Activities- Credit Risk Management" in the 2019 Form 10-K.
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
The following table presents the geographical distribution of total loan commitments. The location is based on the property address for real estate secured loans and the borrower's primary address for other loans.
Table 5.1: Total Loan Commitment by Geographic Location
March 31, 2020 | |||||||||||||||||||||
Percent of Total Commitment | |||||||||||||||||||||
Unpaid | San | New | Los | San | |||||||||||||||||
Unfunded | Total | York | Boston | ||||||||||||||||||
($ in thousands) | Principal | Francisco | Metro | Angeles | Diego | Other | Total | ||||||||||||||
Balance | Commitment | Commitment | Bay Area | Area | Area | Area | Area | ||||||||||||||
Residential real estate | |||||||||||||||||||||
Single family (1-4 units) (1) . . | $ 49,229,119 | $ | - | $ 49,229,119 | 16.3 % | 8.4 % | 7.0 % | 4.2 % | 1.2 % | 3.4 % | 40.5 % | ||||||||||
Home equity lines of credit . . | 2,676,543 | 5,400,884 | 8,077,427 | 3.2 | 0.9 | 1.2 | 0.7 | 0.2 | 0.4 | 6.6 | |||||||||||
Single family construction . . . | 782,498 | 654,683 | 1,437,181 | 0.4 | 0.1 | 0.4 | 0.0 | 0.0 | 0.1 | 1.0 | |||||||||||
Total residential real estate . | 52,688,160 | 6,055,567 | 58,743,727 | 19.9 | 9.4 | 8.6 | 4.9 | 1.4 | 3.9 | 48.1 | |||||||||||
Income property | |||||||||||||||||||||
Multifamily (5+ units) . . . . . . | 12,831,014 | 319,034 | 13,150,048 | 4.3 | 2.3 | 2.0 | 0.3 | 1.1 | 0.9 | 10.9 | |||||||||||
Commercial real estate . . . . . . | 7,723,827 | 335,696 | 8,059,523 | 2.8 | 1.3 | 1.3 | 0.3 | 0.2 | 0.8 | 6.7 | |||||||||||
Multifamily/commercial | 1,857,267 | 1,696,231 | 3,553,498 | 0.6 | 0.3 | 1.2 | 0.1 | 0.2 | 0.6 | 3.0 | |||||||||||
construction . . . . . . . . . . . . . | |||||||||||||||||||||
Total income property . . . . . | 22,412,108 | 2,350,961 | 24,763,069 | 7.7 | 3.9 | 4.5 | 0.7 | 1.5 | 2.3 | 20.6 | |||||||||||
Business | |||||||||||||||||||||
Capital call lines of credit . . . | 7,517,124 | 9,219,680 | 16,736,804 | 5.3 | 4.1 | 0.9 | 1.1 | 0.0 | 2.3 | 13.7 | |||||||||||
Tax-exempt . . . . . . . . . . . . . . | 3,090,527 | 299,971 | 3,390,498 | 0.8 | 0.6 | 0.7 | 0.4 | 0.2 | 0.2 | 2.9 | |||||||||||
Other business . . . . . . . . . . . . | 3,101,650 | 2,422,202 | 5,523,852 | 1.9 | 0.9 | 0.6 | 0.2 | 0.2 | 0.7 | 4.5 | |||||||||||
Total business . . . . . . . . . . . | 13,709,301 | 11,941,853 | 25,651,154 | 8.0 | 5.6 | 2.2 | 1.7 | 0.4 | 3.2 | 21.1 | |||||||||||
Other | |||||||||||||||||||||
Stock secured . . . . . . . . . . . . . | 1,915,899 | 3,552,422 | 5,468,321 | 1.2 | 0.6 | 0.9 | 0.4 | 0.2 | 1.3 | 4.6 | |||||||||||
Other secured . . . . . . . . . . . . . | 1,531,227 | 1,544,668 | 3,075,895 | 0.4 | 1.0 | 0.1 | 0.3 | 0.0 | 0.6 | 2.4 | |||||||||||
Unsecured . . . . . . . . . . . . . . . . | 3,207,518 | 677,626 | 3,885,144 | 1.0 | 0.8 | 0.6 | 0.3 | 0.1 | 0.4 | 3.2 | |||||||||||
Total other . . . . . . . . . . . . . . | 6,654,644 | 5,774,716 | 12,429,360 | 2.6 | 2.4 | 1.6 | 1.0 | 0.3 | 2.3 | 10.2 | |||||||||||
Total . . . . . . . . . . . . . . . . . . . | $ 95,464,213 | $ | 26,123,097 | $121,587,310 | 38.2 % | 21.3 % | 16.9 % | 8.3 % | 3.6 % | 11.7 % | 100.0 % | ||||||||||
-----
- Includes loans held for sale.
9
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
As of March 31, 2020, the total allowance for credit losses is $541.9 million, of which $523.1 million and $18.8 million are the total allowance for credit losses on non-individually assessed loans and individually assessed loans, respectively.
The following table presents the geographical distribution of the Bank's individually assessed loans and allowance on individually assessed loans:
Table 5.2: Individually Assessed Loans by Geographic Location and Allowance on Individually Assessed Loans
March 31, 2020 | ||||||||||||||||||||||
San | New York | Los | Boston | San Diego | ||||||||||||||||||
($ in thousands) | Francisco | Metro | Angeles | Other | Total | |||||||||||||||||
Bay Area | Area | Area | Area | Area | ||||||||||||||||||
Individually Assessed Loans with No Related Allowance | ||||||||||||||||||||||
Single family (1-4units) . . . . . . . . . . . . . . . . . . . . . | $ | 4,923 | $ | 22,074 | $ | 8,699 | $ | 4,029 | $ | 4,371 | $ | 8,489 | $ | 52,585 | ||||||||
Home equity lines of credit . . . . . . . . . . . . . . . . . . . | 1,031 | 3,304 | 586 | 599 | 1,033 | 1,930 | 8,483 | |||||||||||||||
Commercial real estate . . . . . . . . . . . . . . . . . . . . . . | - | - | - | - | - | 4,500 | 4,500 | |||||||||||||||
Multifamily/commercial construction . . . . . . . . . . | - | - | 57,881 | - | - | - | 57,881 | |||||||||||||||
Other business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,137 | - | 1,597 | - | - | 2,734 | ||||||||||||||||
Stock secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | - | - | - | - | 252 | 252 | |||||||||||||||
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | - | - | 193 | - | - | 193 | |||||||||||||||
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 7,091 | 25,378 | 68,763 | 4,821 | 5,404 | 15,171 | 126,628 | |||||||||||||||
Individually Assessed Loans with Related Allowance | ||||||||||||||||||||||
Single family (1-4units) . . . . . . . . . . . . . . . . . . . . . | 42,097 | 25,918 | 32,389 | 5,711 | - | 6,739 | 112,854 | |||||||||||||||
Home equity lines of credit . . . . . . . . . . . . . . . . . . . | 8,130 | 3,055 | 7,514 | 499 | 641 | - | 19,839 | |||||||||||||||
Single family construction . . . . . . . . . . . . . . . . . . . | - | - | 8,753 | - | - | - | 8,753 | |||||||||||||||
Commercial real estate . . . . . . . . . . . . . . . . . . . . . . | 2,577 | - | - | - | - | 3,882 | 6,459 | |||||||||||||||
Tax-exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 18,459 | - | - | - | - | - | 18,459 | |||||||||||||||
Other business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 10,215 | 405 | 129 | 60 | 29 | 13,102 | 23,940 | |||||||||||||||
Other secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 2,044 | 23 | 250 | - | - | - | 2,317 | |||||||||||||||
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 2,030 | 4,801 | 1,224 | 412 | 128 | 2,164 | 10,759 | |||||||||||||||
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 85,552 | 34,202 | 50,259 | 6,682 | 798 | 25,887 | 203,380 | |||||||||||||||
Total individually assessed loans . . . . . . . . . . | $ | 92,643 | $ | 59,580 | $ | 119,022 | $ | 11,503 | $ | 6,202 | $ | 41,058 | $ | 330,008 | ||||||||
Allowance on individually assessed loans . . . . . . . | $ | 7,177 | $ | 3,754 | $ | 5,708 | $ | 410 | $ | 74 | $ | 1,638 | $ | 18,761 | ||||||||
10
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
The following table presents the geographical distribution of past due loans:
Table 5.3: Past Due Loans by Geographic Location
March 31, 2020 | ||||||||||||||||||||||
San | New York | Los | Boston | San Diego | ||||||||||||||||||
($ in thousands) | Francisco | Metro | Angeles | Other | Total | |||||||||||||||||
Bay Area | Area | Area | Area | Area | ||||||||||||||||||
30 - 89 Days Past Due | ||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||
Single family (1-4units) . . . . . . . . . . . . . . . . . . . . | $ | 2,807 | $ | 16,429 | $ | 12,725 | $ | 3,993 | $ | - | $ | 51 | $ | 36,005 | ||||||||
Home equity lines of credit . . . . . . . . . . . . . . . . . . | 1,954 | 1,690 | 626 | - | 1,051 | - | 5,321 | |||||||||||||||
Single family construction . . . . . . . . . . . . . . . . . . . | - | - | 8,753 | - | - | - | 8,753 | |||||||||||||||
Total residential real estate . . . . . . . . . . . . . . . . . | 4,761 | 18,119 | 22,104 | 3,993 | 1,051 | 51 | 50,079 | |||||||||||||||
Income property | ||||||||||||||||||||||
Multifamily/commercial construction . . . . . . . . | - | 2,417 | - | - | - | - | 2,417 | |||||||||||||||
Business | ||||||||||||||||||||||
Capital call lines of credit . . . . . . . . . . . . . . . . . . . . | - | - | 1,461 | - | - | - | 1,461 | |||||||||||||||
Other business . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,224 | 49 | 100 | 807 | - | 26 | 2,206 | |||||||||||||||
Total business . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,224 | 49 | 1,561 | 807 | - | 26 | 3,667 | |||||||||||||||
Other | ||||||||||||||||||||||
Other secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | - | - | - | - | 2,683 | 2,683 | |||||||||||||||
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 12,833 | 1,508 | 73 | - | - | 75 | 14,489 | |||||||||||||||
Total other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 12,833 | 1,508 | 73 | - | - | 2,758 | 17,172 | |||||||||||||||
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 18,818 | 22,093 | 23,738 | 4,800 | 1,051 | 2,835 | 73,335 | |||||||||||||||
90 Days or More Past Due (1) | ||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||
Single family (1-4units) . . . . . . . . . . . . . . . . . . . . | - | 14,014 | 3,166 | - | - | 502 | 17,682 | |||||||||||||||
Home equity lines of credit . . . . . . . . . . . . . . . . . . | 620 | 143 | 275 | - | 1,033 | - | 2,071 | |||||||||||||||
Total residential real estate . . . . . . . . . . . . . . . . . | 620 | 14,157 | 3,441 | - | 1,033 | 502 | 19,753 | |||||||||||||||
Business | ||||||||||||||||||||||
Other business . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | - | 453 | - | - | - | 453 | |||||||||||||||
Other | ||||||||||||||||||||||
Stock secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | - | - | - | - | 252 | 252 | |||||||||||||||
Other secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | 23 | - | - | - | - | 23 | |||||||||||||||
Total other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | 23 | - | - | - | 252 | 275 | |||||||||||||||
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 620 | 14,180 | 3,894 | - | 1,033 | 754 | 20,481 | |||||||||||||||
Total Past Due Loans . . . . . . . . . . . . . . . . . . . | $ | 19,438 | $ | 36,273 | $ | 27,632 | $ | 4,800 | $ | 2,084 | $ | 3,589 | $ | 93,816 | ||||||||
-----
-----
- All loans are nonaccrual.
The following table presents the remaining contractual maturities of loans and unfunded loan commitments:
Table 5.4: Remaining Contractual Maturities of Loans and Unfunded Loan Commitments
March 31, 2020 | ||||||||||||
($ in thousands) | 1 Year or Less | >1 to 5 Years | > 5 Years | Total | ||||||||
Loans (unpaid principal balance) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 11,517,767 | $ | 9,018,242 | $ | 74,928,204 | $ | 95,464,213 | ||||
Unfunded loan commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 14,711,039 | 5,503,068 | 5,908,990 | 26,123,097 | ||||||||
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 26,228,806 | $ | 14,521,310 | $ | 80,837,194 | $ | 121,587,310 | ||||
-----
- Includes loans held for sale.
11
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
The following table presents information for business, multifamily and commercial real estate loans by industry or type. For information on other loan categories, refer to Note 4, "Loans and Allowance for Credit Losses" in "Item 1. Financial Statements" in the Q1 2020 Form 10-Q.
Table 5.5: Business, Multifamily and Commercial Real Estate Loans: Total Commitment by Industry or Type and Amortized Cost in Past Due, Nonaccrual and Individually Assessed Loans by Industry or Type
March 31, 2020 | ||||||||||||||||||||||||||
Individually Assessed Loans | ||||||||||||||||||||||||||
Amortized Cost | Amortized Cost | |||||||||||||||||||||||||
Total | 30 - 89 | 90 Days or | Total | With No | With | Related | ||||||||||||||||||||
($ in thousands) | Days | More Past | Nonaccrual | Amortized | ||||||||||||||||||||||
Commitment | Past Due | Due | Cost | Allowance | Allowance | Allowance | ||||||||||||||||||||
Business | ||||||||||||||||||||||||||
Private Equity/ | $ | 17,096,244 | $ | 2,616 | $ | - | $ | 1,154 | $ | 1,137 | $ | 1,137 | $ | - | $ | - | ||||||||||
Venture Capital Funds . . . . . . . | ||||||||||||||||||||||||||
Schools/Non-profit Organizations | 4,278,111 | - | - | 95 | 19,385 | - | 19,385 | 974 | ||||||||||||||||||
Investment Firms . . . . . . . . . . . . . | 1,134,641 | - | - | - | - | - | - | - | ||||||||||||||||||
Real Estate Related Entities . . . . | 926,174 | - | - | - | 376 | - | 376 | 41 | ||||||||||||||||||
Professional Service Firms . . . . . | 423,430 | 48 | - | 110 | 6,341 | 1,144 | 5,197 | 523 | ||||||||||||||||||
Aviation/Marine . . . . . . . . . . . . . | 362,281 | - | - | - | 10,759 | - | 10,759 | 538 | ||||||||||||||||||
Vineyards/Wine . . . . . . . . . . . . . . | 246,003 | - | - | - | 3,998 | - | 3,998 | 200 | ||||||||||||||||||
Clubs and Membership | 241,826 | - | - | - | - | - | - | - | ||||||||||||||||||
Organizations . . . . . . . . . . . . . . | ||||||||||||||||||||||||||
Entertainment Industry . . . . . . . . | 104,080 | - | 453 | 453 | 1,816 | 453 | 1,363 | 149 | ||||||||||||||||||
Other . . . . . . . . . . . . . . . . . . . . . . | 838,364 | 1,003 | - | 386 | 1,321 | - | 1,321 | 486 | ||||||||||||||||||
Total . . . . . . . . . . . . . . . . . . . . . | $ | 25,651,154 | $ | 3,667 | $ | 453 | $ | 2,198 | $ | 45,133 | $ | 2,734 | $ | 42,399 | $ | 2,911 | ||||||||||
Multifamily and | ||||||||||||||||||||||||||
Commercial Real Estate | ||||||||||||||||||||||||||
Multifamily . . . . . . . . . . . . . . . . . | $ | 13,150,048 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Mixed Use . . . . . . . . . . . . . . . . . . | 2,173,842 | - | - | - | 1,563 | - | 1,563 | 78 | ||||||||||||||||||
Office . . . . . . . . . . . . . . . . . . . . . . | 1,999,910 | - | - | - | - | - | - | - | ||||||||||||||||||
Retail . . . . . . . . . . . . . . . . . . . . . . | 1,807,381 | - | - | - | 5,086 | 4,500 | 586 | 29 | ||||||||||||||||||
Warehouse/Industrial . . . . . . . . . | 827,747 | - | - | - | - | - | - | - | ||||||||||||||||||
Hotel . . . . . . . . . . . . . . . . . . . . . . | 420,052 | - | - | - | - | - | - | - | ||||||||||||||||||
Healthcare Facility . . . . . . . . . . . | 206,614 | - | - | - | - | - | - | - | ||||||||||||||||||
Restaurant . . . . . . . . . . . . . . . . . . | 115,680 | - | - | - | 428 | - | 428 | 21 | ||||||||||||||||||
Other . . . . . . . . . . . . . . . . . . . . . . | 508,297 | - | - | - | 3,882 | - | 3,882 | 194 | ||||||||||||||||||
Total . . . . . . . . . . . . . . . . . . . . . | $ | 21,209,571 | $ | - | $ | - | $ | - | $ | 10,959 | $ | 4,500 | $ | 6,459 | $ | 322 | ||||||||||
Investment Securities
The Bank adopted ASC 326 effective January 1, 2020. Under the new accounting standard, an allowance for credit losses is recorded for held-to-maturity debt securities, and represents the portion of the amortized cost, excluding interest receivable, that the Bank does not expect to collect over the securities' contractual life. The Bank also evaluates available- for-sale debt securities that experienced a decline in fair value below amortized cost for credit impairment.
For information on credit exposures related to investment securities, refer to Note 3, "Investment Securities and Allowance for Credit Losses" in "Item 1. Financial Statements" in the Q1 2020 Form 10-Q.
6. Counterparty Credit Risk-Related Exposures
The Bank has exposure to various counterparties and routinely executes transactions with the Bank's clients and counterparties in the financial services industry, including commercial banks, brokers, dealers and investment banks. Such transactions may expose the Bank to credit risk in the event of a default by a counterparty. In addition, the Bank's credit risk may be increased in the event that any collateral that the Bank holds cannot be realized upon or is liquidated at prices not
12
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
sufficient to recover the full amount of the credit or derivative exposure due to the Bank. The Bank posts collateral to certain counterparties to secure exposures to those counterparties. These collateral agreements do not require that additional collateral be posted in the event that the Bank experiences a deterioration in its creditworthiness. In accordance with internal policy on limitations on counterparty exposures, the Bank evaluates its collateral positions on a regular basis as part of its ongoing monitoring of counterparty exposures.
Foreign Exchange Contracts
The Bank has freestanding derivative assets and liabilities, which consist of foreign exchange contracts executed with clients in which the Bank offsets the client exposure with a financial institution counterparty. The Bank does not retain significant foreign exchange risk. The Bank does retain credit risk, both to the client and the financial institution counterparty, which is evaluated and managed by the Bank in the normal course of its operations. In addition, the Bank has foreign exchange contracts associated with client deposits denominated in various foreign currencies. Management does not currently anticipate non-performance by any of the counterparties.
Counterparties in foreign exchange derivative contracts are either First Republic clients or financial institution counterparties. The Bank is exposed to the risk that the client or financial institution counterparty will not fulfill its transaction obligations. Such credit risk is not significant and is typically addressed by establishing a credit limit for the client or financial institution.
Client credit limits are based primarily on credit guidelines established and monitored by the Bank and take into account the client's outstanding debt and general creditworthiness, and collateral held by the Bank. Financial institution counterparty credit risk is managed through credit, contract and settlement limits established and monitored by the Bank. To mitigate this risk, the Bank enters into master netting and bilateral collateral agreements with certain counterparties. These agreements allow the Bank to settle its derivative contracts with such counterparties on a net basis and to offset the net derivative exposure against the related collateral in the event of default. Daily collateral management activities are performed by the Bank in accordance with bilateral netting agreements. Currently, the primary form of collateral related to foreign exchange contracts with clients and financial institution counterparties is cash.
Interest Rate Contracts
The Bank originates certain mortgage loans with the intention of selling these loans to investors. The Bank enters into commitments to originate the loans whereby the interest rate on the loan paid by the borrower is set prior to funding ("interest rate lock commitments"). Such interest rate lock commitments are accounted for as freestanding derivative instruments that do not qualify as hedges. However, the interest rate exposure is economically hedged by the forward loan sale commitment to the investor. Credit risk associated with these interest rate contracts is nominal.
The following table presents the Bank's over-the-counter derivatives:
Table 6.1: Over-the-Counter Derivatives
March 31, 2020 | |||||||||
($ in thousands) | Notional or | Fair Value (1) | Net Unsecured Credit | ||||||
Contractual Amount (1) | Exposure (2) | ||||||||
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . | $ | 3,599,339 | $ | 28,611 | $ | 3,473 | |||
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . | 363,459 | 42 | 42 | ||||||
Total over-the-counter derivatives . . . . . . . . . . . . . . | $ | 3,962,798 | $ | 28,653 | $ | 3,515 | |||
-----
- Excludes written options and spot contracts for regulatory capital purposes.
- Represents the amount of credit exposure that is reduced due to the netting of offsetting positive and negative exposures where a valid master netting agreement exists, and collateral is held.
13
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
Collateral Held
With respect to the Bank's counterparty credit risk, the primary form of collateral is cash. At March 31, 2020, the fair value of cash collateral accepted by the Bank as part of foreign exchange derivative activities was $20.3 million.
7. Credit Risk Mitigation
The Bank uses various strategies to mitigate counterparty credit risk, including establishing credit risk appetite measures and setting internal policy limits on acceptable levels of exposure to each counterparty, although there can be no assurance that these strategies will be successful under all circumstances. The Bank also obtains collateral from derivatives counterparties to manage overall credit risk. Refer to Section 6, "Counterparty Credit Risk-RelatedExposures-Collateral Held" within this document for discussion of collateral related to derivative counterparties.
Certain exposures within the Bank's investment securities portfolio are issued or guaranteed by the U.S. Government, U.S. Government agencies or U.S. Government-sponsored agencies. The following table presents the investment securities exposures that are covered by guarantees and the risk-weighted asset amount associated with such exposures:
Table 7.1: Exposures Covered by Guarantees
March 31, 2020
($ in thousands)
Debt securities available-for-sale:
Agency residential mortgage-backedsecurities ("MBS") (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agency commercial MBS (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities held-to-maturity:
U.S. Government-sponsoredagency securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agency residential MBS (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agency commercial MBS (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-----
Exposure | Risk-Weighted | |||
Amount (1) | Asset Amount | |||
$ | 381,383 | $ | 75,321 | |
788,500 | 35,547 | |||
225,000 | 45,000 | |||
2,379,963 | 475,993 | |||
3,165,217 | - | |||
$ | 6,940,063 | $ | 631,861 | |
- Since the Bank has made the accumulated other comprehensive income ("AOCI") opt-out election, the available-for-sale exposure amounts for purposes of risk weighting is the carrying value of the security less any unrealized gain on the exposure plus any unrealized loss on the exposure included in AOCI.
- Issued or guaranteed by U.S. Government agencies or U.S. Government-sponsored agencies.
8. Securitization
As of March 31, 2020, the Bank has securitization exposures related to its investments in non-agency residential mortgage backed securities created by third parties, which totaled $3.7 million. For these securitization exposures, the Bank calculates the regulatory capital requirements in accordance with the Simplified Supervisory Formula Approach ("SSFA") to determine the risk-weighting for these assets, which considers the Bank's seniority in the securitization structure and risk factors inherent in the underlying assets.
14
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
The following table presents the Bank's securitization exposures by risk weight range for the non-agency residential mortgage-backed securities created by third parties:
Table 8.1: Securitization Exposures by Risk Weight Range
March 31, 2020 | |||||||||
($ in thousands) | On-Balance Sheet | Risk-Weighted Asset | Capital Requirement (2) | ||||||
Exposure (1) | Amount (SSFA) | ||||||||
Greater than 100% through 1,250% . . . . . . . . . . . . . $ | 3,730 | $ | 4,089 | $ | 327 | ||||
-----
- Since the Bank has made the AOCI opt-out election, the available-for-sale exposure amounts for purposes of risk weighting is the carrying value of the security less any unrealized gain on the exposure plus any unrealized loss on the exposure included in AOCI.
- Calculated by multiplying the risk-weighted asset by the total risk-based capital ratio of 8%, which represents the minimum to be adequately capitalized.
9. Equity Exposures not Subject to Market Risk Capital Rule
The Bank's equity exposures, which are not subject to the Market Risk Capital Rule, include the following investments:
Federal Home Loan Bank ("FHLB") stock: FHLB stock is redeemable at par and recorded at cost, which approximates fair value. FHLB stock is a statutory investment required by regulation as part of FHLB membership.
Low income housing tax credit investments: Low income housing tax credit investments are accounted for using a proportional amortization method, whereby the initial cost of the Bank's low income housing tax credit investments is amortized over the life of the investment. Under the proportional amortization method, amortization expense recognized in each period is based on the amount of tax credits and other tax benefits for the period as a percentage of expected total tax credits and other tax benefits of the investment. Amortization expense is presented as a component of provision for income taxes on the statement of income. Such investments are designed to generate a return primarily through the realization of federal tax credits.
Investments in mutual funds and marketable equity securities: Mutual funds and marketable equity securities have readily determinable fair values and are recorded at fair value, with changes in fair value recognized in earnings.
Other investments: Other investments consist of equity investments without readily determinable fair values. These investments are accounted for under the equity method or at cost less impairment, adjusted for observable price changes of the same or similar investment. Equity method investments are recorded at cost and subsequently adjusted for allocated earnings or losses, as well as for cash distributions. Such investments are periodically evaluated for impairment.
Latent revaluation gains and losses are unrealized gains and losses, which are not recognized in the Bank's balance sheets or statements of income and comprehensive income. Since the carrying value of the Bank's equity method investments and non-marketable equity securities approximates their fair value, management believes that any unrealized latent revaluation gains or losses that may exist are immaterial.
Investments in separate account life insurance: Investments in separate account life insurance are initially recorded at cost and the carrying value of the investment is subsequently adjusted quarterly to its cash surrender value. The Bank recognizes the resulting income or loss in noninterest income. The carrying amount of investments in separate account life insurance reflects the total cash surrender value of each policy, which approximates fair value.
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
The following table presents capital requirements for equity exposures:
Table 9.1: Equity Exposures by Type and Risk Weight
March 31, 2020 | ||||||||||||
Non-Publicly | Publicly | Risk-Weighted | Capital | |||||||||
($ in thousands) | Traded | Traded | Asset | |||||||||
Exposures (1) | Exposures (1) | Amount | Requirements (2) | |||||||||
Simple Risk Weight Approach: (3) | ||||||||||||
20% risk weight: | ||||||||||||
FHLB stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 494,100 | $ | - | $ | 98,820 | $ | 7,906 | ||||
100% risk weight: | ||||||||||||
Low income housing tax credit investments . . . . . | 1,106,693 | - | 1,106,693 | 88,535 | ||||||||
Marketable equity securities . . . . . . . . . . . . . . . . . . | - | 1,436 | 1,436 | 115 | ||||||||
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . | 73,094 | - | 73,094 | 5,848 | ||||||||
Other Risk-Weighting Approaches: (4) | ||||||||||||
Investments in separate account life insurance . . . . | 78,562 | - | 435,363 | 34,829 | ||||||||
Mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | - | 18,139 | 3,628 | 290 | ||||||||
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 1,752,449 | $ | 19,575 | $ | 1,719,034 | $ | 137,523 | ||||
----- | ||||||||||||
- For non-publicly traded exposures, the amount represents cost. For publicly traded exposures, the amount represents fair value.
- Calculated by multiplying the risk-weighted asset by the total risk-based capital ratio of 8%, which represents the minimum to be adequately capitalized.
- The Bank applies the simple risk-weight approach to equity exposures that are not mutual funds or other investment funds.
- The Bank applies the full look-through, simple modified look-through or alternative modified look-through approach to equity exposures that are mutual funds and other investment funds.
There were no net realized gains or losses arising from sales and liquidations of any equity exposures for the quarter ended March 31, 2020.
10. Interest Rate Risk for Non-Trading Activities
See "Interest Rate Risk Management" in "Item 3. Quantitative and Qualitative Disclosures About Market Risk" in the Q1 2020 Form 10-Q for information on interest rate risk for non-trading activities.
16
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
Information Regarding Forward-Looking Statements
This document, our 2019 Form 10-K and Q1 2020 Form 10-Q contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this document, our 2019 Form 10-K and Q1 2020 Form 10-Q that are not historical facts are hereby identified as "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "anticipates," "believes," "can," "could," "may," "predicts," "potential," "should," "will," "estimates," "plans," "projects," "continuing," "ongoing," "expects," "intends" and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties. Our actual results could differ materially from those expressed or anticipated in such forward-looking statements as a result of risks and uncertainties more fully described in the risk factors in our 2019 Form 10-K and Q1 2020 Form 10-Q.
Forward-looking statements involving such risks and uncertainties include, but are not limited to, statements regarding: projections of loans, assets, deposits, liabilities, revenues, expenses, tax liabilities, net income, capital expenditures, liquidity, dividends, capital structure, investments or other financial items; expectations regarding the banking and wealth management industries; descriptions of plans or objectives of management for future operations, products or services; forecasts of future economic conditions generally and in our market areas in particular, which may affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans; our opportunities for growth and our plans for expansion (including opening new offices); expectations about the performance of any new offices; projections about the amount and the value of intangible assets, as well as amortization of recorded amounts; future provisions for credit losses on loans and debt securities, as well as for unfunded loan commitments; changes in nonperforming assets; expectations regarding the impact of the COVID-19 pandemic (collectively referred to as "COVID-19" herein); projections about future levels of loan originations or loan repayments; projections regarding costs, including the impact on our efficiency ratio; and descriptions of assumptions underlying or relating to any of the foregoing. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: significant competition to attract and retain banking and wealth management customers, from both traditional and non-traditional financial services and technology companies; our ability to recruit and retain key managers, employees and board members; the possibility of earthquakes, fires and other natural disasters affecting the markets in which we operate; the negative impacts and disruptions resulting from COVID-19 on our colleagues and clients, the communities we serve and the domestic and global economy, which may have an adverse effect on our business, financial position and results of operations; interest rate risk and credit risk; our ability to maintain and follow high underwriting standards; economic and market conditions, including those affecting the valuation of our investment securities portfolio and credit losses on our loans and debt securities; real estate prices generally and in our markets; our geographic and product concentrations; demand for our products and services; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate and the 11th District Monthly Weighted Average Cost of Funds Index, as well as other alternative reference rates; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; any future changes to regulatory capital requirements; legislative and regulatory actions affecting us and the financial services industry, such as the Dodd-Frank Act, including increased compliance costs, limitations on activities and requirements to hold additional capital, as well as changes to the Dodd-Frank Act pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act; our ability to avoid litigation and its associated costs and liabilities; future FDIC special assessments or changes to regular assessments; fraud, cybersecurity and privacy risks; and custom technology preferences of our customers and our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications.
For a discussion of these and other risks and uncertainties, see the risk factors in our 2019 Form 10-K and Q1 2020 Form 10-Q and any subsequent reports filed by First Republic under the Exchange Act. These filings are available in the Investor Relations section of our website. All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed in our 2019 Form 10-K and Q1 2020 Form 10-Q and our other public filings under the Exchange Act. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
17
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
Exhibit A: Cross-Reference Table
Basel III | |||||
Regulatory | Form | ||||
Capital | |||||
Disclosure Requirement | Disclosure Location | Disclosures | 10-K/10-Q | ||
Page | Page | ||||
Table 1 - Scope of Application | |||||
Qualitative Disclosures | |||||
(a) | The name of the top corporate entity in the group to which | Basel III Regulatory Capital Disclosures: | |||
subpart D of this part applies. | 1. Introduction | 3 | |||
2019 Form 10-K: | 4-5 | ||||
- Item 1. Business-General | |||||
Q1 2020 Form 10-Q: | |||||
- Item 1. Financial Statements: | 7 | ||||
Note 1. Summary of Significant Accounting Policies | |||||
(b) | A brief description of the differences in the basis for | Not applicable. The Bank does not have a difference in the | |||
consolidating entities for accounting and regulatory | basis of consolidation for accounting and regulatory | ||||
purposes, with a description of those entities: | purposes. | ||||
(1) That are fully consolidated; | Basel III Regulatory Capital Disclosures: | ||||
(2) That are deconsolidated and deducted from total | 1. Introduction | 3 | |||
capital; | |||||
(3) For which the total capital requirement is deducted; and | |||||
(4) That are neither consolidated nor deducted (for | |||||
example, where the investment in the entity is assigned a | |||||
risk weight in accordance with this subpart). | |||||
(c) | Any restrictions, or other major impediments, on transfer | Basel III Regulatory Capital Disclosures: | |||
of funds or total capital within the group. | 1. Introduction | 3 | |||
Quantitative Disclosures | |||||
(d) | The aggregate amount of surplus capital of insurance | Not applicable. The Bank does not have insurance | |||
subsidiaries included in the total capital of the consolidated | subsidiaries. | ||||
group. | Basel III Regulatory Capital Disclosures: | ||||
3 | |||||
1. Introduction | |||||
(e) | The aggregate amount by which actual total capital is less | Not applicable. Actual total capital exceeds the minimum | |||
than the minimum total capital requirement in all | total capital requirements. | ||||
subsidiaries, with total capital requirements and the | Basel III Regulatory Capital Disclosures: | ||||
name(s) of the subsidiaries with such deficiencies. | 3 | ||||
1. Introduction | |||||
Table | 2 - Capital Structure | ||||
Qualitative Disclosures | |||||
(a) | Summary information on the terms and conditions of the | Basel III Regulatory Capital Disclosures: | |||
main features of all regulatory capital instruments. | 2. Capital Structure | 4 | |||
Q1 2020 Form 10-Q: | |||||
- Item 1. Financial Statements: | 40-41 | ||||
Note 9. Borrowings | |||||
Note 12. Preferred Stock | 48-49 | ||||
Note 13. Common Stock and Stock Plans | 49-52 | ||||
- Item 2. Management's Discussion and Analysis of | |||||
Financial Condition and Results of Operations-Capital | 105-106 | ||||
Resources | |||||
18
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
Basel III | |||
Regulatory | Form | ||
Capital | |||
Disclosure Requirement | Disclosure Location | Disclosures | 10-K/10-Q |
Page | Page |
Table 2 - Capital Structure (continued)
Quantitative Disclosures
- The amount of common equity tier 1 capital, with separate disclosure of:
- Common stock and related surplus;
- Retained earnings;
- Common equity minority interest;
- AOCI; and
- Regulatory adjustments and deductions made to common equity tier 1 capital.
- The amount of tier 1 capital, with separate disclosure of:
- Additional tier 1 capital elements, including additional tier 1 capital instruments and tier 1 minority interest not included in common equity tier 1 capital; and
- Regulatory adjustments and deductions made to tier 1 capital.
- The amount of total capital, with separate disclosure of:
- Tier 2 capital elements, including tier 2 capital instruments and total capital minority interest not included in tier 1 capital; and
- Regulatory adjustments and deductions made to total capital.
Basel III Regulatory Capital Disclosures: | |
Table 2.1: Capital Structure | 5 |
Q1 2020 Form 10-Q:
- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Capital
Resources | 105-106 |
3/31/2020 Call Report:
- Schedule RC-R
Table 3 - Capital Adequacy
Qualitative Disclosures
(a) A summary discussion of the FDIC-supervised institution's | Basel III Regulatory Capital Disclosures: | |
approach to assessing the adequacy of its capital to support | 3. Capital Adequacy | 6 |
current and future activities. | 2019 Form 10-K: | |
- Item 1. Business-Supervision and Regulation-Capital | 16-17 | |
Requirements |
Q1 2020 Form 10-Q:
- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Capital
Resources | 105-106 |
Quantitative Disclosures
- Risk-weightedassets for:
- Exposures to sovereign entities;
- Exposures to certain supranational entities and MDBs;
- Exposures to depository institutions, foreign banks, and credit unions;
- Exposures to PSEs;
- Corporate exposures;
- Residential mortgage exposures;
- Statutory multifamily mortgages and pre-sold construction loans;
- HVCRE loans;
- Past due loans;
- Other assets;
- Cleared transactions;
- Default fund contributions;
- Unsettled transactions;
- Securitization exposures; and
- Equity exposures.
Basel III Regulatory Capital Disclosures:
Table 3.1: Basel III Standardized Approach Risk-Weighted 7 Assets
3/31/2020 Call Report:
- Schedule RC-R
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
Basel III | |||||
Regulatory | Form | ||||
Capital | |||||
Disclosure Requirement | Disclosure Location | Disclosures | 10-K/10-Q | ||
Page | Page | ||||
Table 3 - Capital Adequacy (continued) | |||||
(c) | Standardized market risk-weighted assets as calculated | Not applicable. The Bank is not subject to Subpart F | |||
under subpart F of this part. | (Market Risk Capital Rule) requirements. | ||||
Basel III Regulatory Capital Disclosures: | 6 | ||||
3. Capital Adequacy | |||||
(d) | Common equity tier 1, tier 1 and total risk-based capital | Basel III Regulatory Capital Disclosures: | |||
ratios: | Table 3.2: Capital Ratios | 7 | |||
Q1 2020 Form 10-Q: | |||||
- Item 2. Management's Discussion and Analysis of | |||||
Financial Condition and Results of Operations-Capital | |||||
(1) For the top consolidated group; and | Resources | 105-106 | |||
3/31/2020 Call Report: | |||||
- Schedule RC-R | |||||
(2) For each depository institution subsidiary. | Not applicable. The Bank's subsidiaries are not depository | ||||
institutions. | |||||
Basel III Regulatory Capital Disclosures: | 6 | ||||
3. Capital Adequacy | |||||
(e) | Total standardized risk-weighted assets. | Basel III Regulatory Capital Disclosures: | |||
Table 3.1: Basel III Standardized Approach Risk-Weighted | 7 | ||||
Assets | |||||
Q1 2020 Form 10-Q: | |||||
- Item 2. Management's Discussion and Analysis of | |||||
Financial Condition and Results of Operations-Capital | 105-106 | ||||
Resources | |||||
3/31/2020 Call Report: | |||||
- Schedule RC-R | |||||
Table | 4 - Capital Conservation Buffer | ||||
Quantitative Disclosures | |||||
(a) | At least quarterly, the FDIC-supervised institution must | Basel III Regulatory Capital Disclosures: | |||
calculate and publicly disclose the capital conservation | 4. Capital Conservation Buffer | 8 | |||
buffer as described under § 324.11. | Q1 2020 Form 10-Q: | ||||
- Item 2. Management's Discussion and Analysis of | |||||
Financial Condition and Results of Operations-Capital | 105-106 | ||||
Resources | |||||
3/31/2020 Call Report: | |||||
- Schedule RC-R | |||||
(b) | At least quarterly, the FDIC-supervised institution must | Basel III Regulatory Capital Disclosures: | |||
calculate and publicly disclose the eligible retained income | 4. Capital Conservation Buffer | 8 | |||
of the FDIC-supervised institution, as described under | |||||
§ 324.11. | |||||
(c) | At least quarterly, the FDIC-supervised institution must | Basel III Regulatory Capital Disclosures: | |||
calculate and publicly disclose any limitations it has on | 4. Capital Conservation Buffer | 8 | |||
distributions and discretionary bonus payments resulting | |||||
from the capital conservation buffer framework described | |||||
under § 324.11, including the maximum payout amount for | |||||
the quarter. | |||||
20
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March 31, 2020
Basel III | |||
Regulatory | Form | ||
Capital | |||
Disclosure Requirement | Disclosure Location | Disclosures | 10-K/10-Q |
Page | Page |
Table 5 - Credit Risk
Qualitative Disclosures
- The general qualitative disclosure requirement with respect to credit risk (excluding counterparty credit risk disclosed in accordance with Table 6 to § 324.63), including the:
- Policy for determining past due or delinquency status;
- Policy for placing loans on nonaccrual;
- Policy for returning loans to accrual status;
- Definition of and policy for identifying individually assessed loans (for financial accounting purposes);
- Description of the methodology that the FDIC- supervised institution uses to estimate its allowance for loan and lease losses or adjusted allowance for credit losses, as applicable, including statistical methods used where applicable;
- Policy for charging-off uncollectible amounts; and
- Discussion of the FDIC-supervised institution's credit risk management policy.
Basel III Regulatory Capital Disclosures:
5. Credit Risk-Loans
5. Credit Risk-Investment Securities
2019 Form 10-K:
- Item 1. Business-Underwriting
- Item 1. Business-Credit Risk Management
- Item 8. Financial Statements and Supplementary Data: Note 1. Summary of Significant Accounting Policies
Q1 2020 Form 10-Q:
- Item 1. Financial Statements:
Note 1. Summary of Significant Accounting Policies Note 3. Investment Securities and Allowance for Credit
Losses
Note 4. Loans and Allowance for Credit Losses
- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Balance Sheet Analysis-Asset Quality
- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Balance Sheet Analysis-Allowance for Credit Losses
8
12
9-10
10-11
109-110
10-11
16-18
28-30
95
97
Quantitative Disclosures
(b) | Total credit risk exposures and average credit risk | Basel III Regulatory Capital Disclosures: | ||
exposures, after accounting offsets in accordance with | Table 5.1: Total Loan Commitment by Geographic | 9 | ||
GAAP, without taking into account the effects of credit | Location | |||
risk mitigation techniques (for example, collateral and | Q1 2020 Form 10-Q: | |||
netting not permitted under GAAP), over the period | ||||
categorized by major types of credit exposure. For | - Item 1. Financial Statements: | |||
example, FDIC-supervised institutions could use | Note 3. Investment Securities and Allowance for Credit | 13-20 | ||
categories similar to that used for financial statement | Losses | |||
purposes. Such categories might include, for instance: | Note 4. Loans and Allowance for Credit Losses | 21-34 | ||
- Item 2. Management's Discussion and Analysis of | ||||
(1) Loans, off-balance sheet commitments, and other non- | ||||
Financial Condition and Results of Operations: | ||||
derivative off-balance sheet exposures; | ||||
-Results of Operations-Net Interest Income-Yields/ | ||||
(2) Debt securities; and | Rates | 66-67 | ||
-Balance Sheet Analysis-Loan Portfolio | 84-94 | |||
3/31/2020 Call Report: | ||||
- Schedule RC-B | ||||
- Schedule RC-C | ||||
- Schedule RC-L | ||||
(3) OTC derivatives. | Not applicable. Credit risk exposures related to over-the- | |||
counter derivatives are not significant. | ||||
(c) | Geographic distribution of exposures, categorized in | Basel III Regulatory Capital Disclosures: | ||
significant areas by major types of credit exposure. | Table 5.1: Total Loan Commitment by Geographic | 9 | ||
Location | ||||
Q1 2020 Form 10-Q: | ||||
- Item 2. Management's Discussion and Analysis of | ||||
Financial Condition and Results of Operations-Balance | 85 | |||
Sheet Analysis-Loan Portfolio | ||||
(d) | Industry or counterparty type distribution of exposures, | Basel III Regulatory Capital Disclosures: | ||
categorized by major types of credit exposure. | - Table 5.1: Total Loan Commitment by Geographic | 9 | ||
Location | ||||
- Table 5.5: Business, Multifamily and Commercial Real | ||||
Estate Loans: Total Commitment by Industry or Type and | ||||
Amortized Cost in Past Due, Nonaccrual and Individually | ||||
Assessed Loans by Industry or Type | 12 |
3/31/2020 Call Report:
- Schedule RC-B
- Schedule RC-C
- Schedule RC-L
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First Republic Bank
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Basel III | |||
Regulatory | Form | ||
Capital | |||
Disclosure Requirement | Disclosure Location | Disclosures | 10-K/10-Q |
Page | Page |
Table 5 - Credit Risk (continued)
- By major industry or counterparty type:
(1) Amount of individually assessed loans for which there | Basel III Regulatory Capital Disclosures: | |||
was a related allowance under GAAP; | Table 5.5: Business, Multifamily and Commercial Real | |||
Estate Loans: Total Commitment by Industry or Type and | ||||
(2) Amount of individually assessed loans for which there | ||||
Amortized Cost in Past Due, Nonaccrual and Individually | ||||
was no related allowance under GAAP; | ||||
Assessed Loans by Industry or Type | 12 | |||
(3) Amount of loans past due 90 days and on nonaccrual; | Q1 2020 Form 10-Q: | |||
- Item 1. Financial Statements: | 24 | |||
Note 4. Loans and Allowance for Credit Losses | ||||
(4) Amount of loans past due 90 days and still accruing; | ||||
(5) The balance in the allowance for loan and lease losses | Q1 2020 Form 10-Q: | |||
or adjusted allowance for credit losses, as applicable, at the | - Item 1. Financial Statements: | 31 | ||
end of each period, disaggregated on the basis of the | Note 4. Loans and Allowance for Credit Losses | |||
FDIC-supervised institution's impairment method. To | 3/31/2020 Call Report: | |||
disaggregate the information required on the basis of | ||||
impairment methodology, an entity shall separately | - Schedule RI-C | |||
disclose the amounts based on the requirements in GAAP; | ||||
and | ||||
(6) Charge-offs during the period. | Q1 2020 Form 10-Q: | |||
- Item 1. Financial Statements: | 31 | |||
Note 4. Loans and Allowance for Credit Losses | ||||
3/31/2020 Call Report: | ||||
- Schedule RI-B | ||||
(f) | Amount of individually assessed loans and, if available, | Basel III Regulatory Capital Disclosures: | ||
the amount of past due loans categorized by significant | - Table 5.2: Individually Assessed Loans by Geographic | 10 | ||
geographic areas including, if practical, the amounts of | Location and Allowance on Individually Assessed Loans | |||
allowances related to each geographical area, further | - Table 5.3: Past Due Loans by Geographic Location | 11 | ||
categorized as required by GAAP. | ||||
(g) | Reconciliation of changes in ALLL or AACL, as | Q1 2020 Form 10-Q: | ||
applicable | - Item 1. Financial Statements: | 31 | ||
Note 4. Loans and Allowance for Credit Losses | ||||
3/31/2020 Call Report: | ||||
- Schedule RI-B | ||||
(h) | Remaining contractual maturity delineation (for example, | Basel III Regulatory Capital Disclosures: | ||
one year or less) of the whole portfolio, categorized by | Table 5.4: Remaining Contractual Maturities of Loans and | 11 | ||
credit exposure. | Unfunded Loan Commitments | |||
Q1 2020 Form 10-Q: | ||||
- Item 1. Financial Statements: | 20 | |||
Note 3. Investment Securities and Allowance for Credit | ||||
Losses | ||||
3/31/2020 Call Report: | ||||
- Schedule RC-B |
22
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
Basel III | |||||
Regulatory | Form | ||||
Capital | |||||
Disclosure Requirement | Disclosure Location | Disclosures | 10-K/10-Q | ||
Page | Page | ||||
Table 6 - Counterparty Credit Risk-Related Exposures | |||||
Qualitative Disclosures | |||||
(a) | The general qualitative disclosure requirement with respect | Basel III Regulatory Capital Disclosures: | |||
to OTC derivatives, eligible margin loans, and repo-style | 6. Counterparty Credit Risk-Related Exposures | 12-13 | |||
transactions, including a discussion of: | 2019 Form 10-K: | ||||
(1) The methodology used to assign credit limits for | |||||
- Item 8. Financial Statements and Supplementary Data: | |||||
counterparty credit exposures; | |||||
Note 1. Summary of Significant Accounting Policies | 114 | ||||
(2) Policies for securing collateral, valuing and managing | Q1 2020 Form 10-Q: | ||||
collateral, and establishing credit reserves; | |||||
- Item 1. Financial Statements: | |||||
(3) The primary types of collateral taken; and | 41-42 | ||||
Note 10. Derivative Financial Instruments | |||||
(4) The impact of the amount of collateral the FDIC- | Not applicable. Collateral agreements do not require that | ||||
supervised institution would have to provide given a | additional collateral be posted in the event that the Bank | ||||
deterioration in the FDIC-supervised institution's own | experiences a deterioration in its creditworthiness. | ||||
creditworthiness. | Basel III Regulatory Capital Disclosures: | ||||
12-13 | |||||
6. Counterparty Credit Risk-Related Exposures | |||||
Quantitative Disclosures | |||||
(b) | Gross positive fair value of contracts, collateral held | Basel III Regulatory Capital Disclosures: | |||
(including type, for example, cash, government securities), | - Table 6.1: Over-the-Counter Derivatives | 13 | |||
and net unsecured credit exposure. An FDIC-supervised | 6. Counterparty Credit Risk-Related Exposures | 14 | |||
institution also must disclose the notional value of credit | Q1 2020 Form 10-Q: | ||||
derivative hedges purchased for counterparty credit risk | |||||
protection and the distribution of current credit exposure | - Item 1. Financial Statements: | 42 | |||
by exposure type. | Note 10. Derivative Financial Instruments | ||||
(c) | Notional amount of purchased and sold credit derivatives, | Not applicable. The Bank does not have credit derivatives. | |||
segregated between use for the FDIC-supervised | |||||
institution's own credit portfolio and in its intermediation | |||||
activities, including the distribution of the credit derivative | |||||
products used, categorized further by protection bought | |||||
and sold within each product group. | |||||
Table 7 - Credit Risk Mitigation
Qualitative Disclosures
- The general qualitative disclosure requirement with respect to credit risk mitigation, including:
- Policies and processes for collateral valuation and management;
- A description of the main types of collateral taken by the FDIC-supervised institution;
- The main types of guarantors/credit derivative counterparties and their creditworthiness; and
- Information about (market or credit) risk concentrations with respect to credit risk mitigation.
Basel III Regulatory Capital Disclosures: | ||
7. Credit Risk Mitigation | 14 | |
2019 Form 10-K: | ||
- Item 8. Financial Statements and Supplementary Data: | 114 | |
Note 1. Summary of Significant Accounting Policies | ||
Q1 2020 Form 10-Q: | ||
- Item 1. Financial Statements: | 41-42 | |
Note 10. Derivative Financial Instruments | ||
Quantitative Disclosures
(b) | For each separately disclosed credit risk portfolio, the total | Basel III Regulatory Capital Disclosures: | 14 | ||
exposure that is covered by eligible financial collateral, | 6. Counterparty Credit Risk-Related Exposures | ||||
and after the application of haircuts. | |||||
(c) | For each separately disclosed portfolio, the total exposure | Basel III Regulatory Capital Disclosures: | |||
that is covered by guarantees/credit derivatives and the | Table 7.1: Exposures Covered by Guarantees | 14 | |||
risk-weighted asset amount associated with that exposure. | |||||
23
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
Basel III | |||
Regulatory | Form | ||
Capital | |||
Disclosure Requirement | Disclosure Location | Disclosures | 10-K/10-Q |
Page | Page | ||
Table 8 - Securitization | |||
Qualitative Disclosures | |||
(a) The general qualitative disclosure requirement with respect | Not applicable. In 2020, the Bank has not had any | ||
to a securitization (including synthetic securitizations), | securitization activities. | ||
including a discussion of: |
- The FDIC-supervised institution's objectives for securitizing assets, including the extent to which these activities transfer credit risk of the underlying exposures away from the FDIC-supervised institution to other entities and including the type of risks assumed and retained with resecuritization activity;
- The nature of the risks (e.g. liquidity risk) inherent in the securitized assets;
- The roles played by the FDIC-supervised institution in the securitization process and an indication of the extent of the FDIC-supervised institution's involvement in each of them;
- The processes in place to monitor changes in the credit and market risk of securitization exposures including how those processes differ for resecuritization exposures;
- The FDIC-supervised institution's policy for mitigating the credit risk retained through securitization and resecuritization exposures; and
- The risk-based capital approaches that the FDIC- supervised institution follows for its securitization exposures including the type of securitization exposure to which each approach applies.
(b) | A list of: | Not applicable. In 2020, the Bank has not had any | ||
securitization activities. | ||||
(1) | The type of securitization SPEs that the FDIC- | |||
supervised institution, as sponsor, uses to securitize third- | ||||
party exposures. The FDIC-supervised institution must | ||||
indicate whether it has exposure to these SPEs, either on- | ||||
or off- balance sheet; and | ||||
(2) | Affiliated entities: | |||
(i) That the FDIC-supervised institution manages or | ||||
advises; and | ||||
(ii) That invest either in the securitization exposures that | ||||
the FDIC-supervised institution has securitized or in | ||||
securitization SPEs that the FDIC-supervised institution | ||||
sponsors. | ||||
(c) | Summary of the FDIC-supervised institution's accounting | Not applicable. In 2020, the Bank has not had any | ||
policies for securitization activities, including: | securitization activities. | |||
(1) | Whether the transactions are treated as sales or | |||
financings; | ||||
(2) | Recognition of gain-on-sale; | |||
(3) | Methods and key assumptions applied in valuing | |||
retained or purchased interests; | ||||
(4) | Changes in methods and key assumptions from the | |||
previous period for valuing retained interests and impact of | ||||
the changes; | ||||
(5) | Treatment of synthetic securitizations; | |||
(6) | How exposures intended to be securitized are valued | |||
and whether they are recorded under subpart D of this part; | ||||
and | ||||
(7) | Policies for recognizing liabilities on the balance sheet | |||
for arrangements that could require the FDIC-supervised | ||||
institution to provide financial support for securitized | ||||
assets. | ||||
(d) | An explanation of significant changes to any quantitative | Not applicable. In 2020, the Bank has not had any | ||
information since the last reporting period. | securitization activities. |
24
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
Basel III | |||||
Regulatory | Form | ||||
Capital | |||||
Disclosure Requirement | Disclosure Location | Disclosures | 10-K/10-Q | ||
Page | Page | ||||
Table 8 - Securitization (continued) | |||||
Quantitative Disclosures | |||||
(e) | The total outstanding exposures securitized by the FDIC- | Not applicable. In 2020, the Bank has not had any | |||
supervised institution in securitizations that meet the | securitization activities. | ||||
operational criteria provided in § 324.41 (categorized into | |||||
traditional and synthetic securitizations), by exposure type, | |||||
separately for securitizations of third-party exposures for | |||||
which the FDIC-supervised institution acts only as | |||||
sponsor. | |||||
(f) | For exposures securitized by the FDIC-supervised | Not applicable. In 2020, the Bank has not had any | |||
institution in securitizations that meet the operational | securitization activities. | ||||
criteria in § 324.41: | |||||
(1) Amount of securitized assets that are individually | |||||
assessed/past due categorized by exposure type; and | |||||
(2) Losses recognized by the FDIC-supervised institution | |||||
during the current period categorized by exposure type. | |||||
(g) | The total amount of outstanding exposures intended to be | Not applicable. The Bank has no outstanding exposures | |||
securitized categorized by exposure type. | intended to be securitized. | ||||
(h) | Aggregate amount of: | Basel III Regulatory Capital Disclosures: | |||
Table 8.1: Securitization Exposures by Risk Weight Range | 15 | ||||
(1) On-balance sheet securitization exposures retained or | |||||
purchased categorized by exposure type; and | |||||
(2) Off-balance sheet securitization exposures categorized | Not applicable. The Bank does not have any off-balance | ||||
by exposure type. | sheet securitization exposures. | ||||
(i) | (1) Aggregate amount of securitization exposures retained | Basel III Regulatory Capital Disclosures: | |||
or purchased and the associated capital requirements for | Table 8.1: Securitization Exposures by Risk Weight Range | 15 | |||
these exposures, categorized between securitization and | |||||
resecuritization exposures, further categorized into a | |||||
meaningful number of risk weight bands and by risk-based | |||||
capital approach (e.g., SSFA); and | |||||
(2) Aggregate amount disclosed separately by type of | Not applicable. The Bank does not have any such | ||||
underlying exposure in the pool of any: (i) After-tax gain- | securitization exposures. | ||||
on-sale on a securitization that has been deducted from | |||||
common equity tier 1 capital; and (ii) Credit-enhancing | |||||
interest-only strip that is assigned a 1,250 percent risk | |||||
weight. | |||||
(j) | Summary of current year's securitization activity, including | Not applicable. In 2020, the Bank has not had any | |||
the amount of exposures securitized (by exposure type), | securitization activities. | ||||
and recognized gain or loss on sale by exposure type. | |||||
(k) | Aggregate amount of resecuritization exposures retained or | Not applicable. The Bank does not have any | |||
purchased categorized according to: (1) Exposures to | resecuritization exposures. | ||||
which credit risk mitigation is applied and those not | |||||
applied; and (2) Exposures to guarantors categorized | |||||
according to guarantor creditworthiness categories or | |||||
guarantor name. | |||||
25
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2020
Basel III | |||||
Regulatory | Form | ||||
Capital | |||||
Disclosure Requirement | Disclosure Location | Disclosures | 10-K/10-Q | ||
Page | Page | ||||
Table 9 - Equity Exposures not Subject to Market Risk Capital Rules | |||||
Qualitative Disclosures | |||||
(a) | The general qualitative disclosure requirement with respect | Basel III Regulatory Capital Disclosures: | |||
to equity risk for equities not subject to subpart F of this | 9. Equity Exposures not Subject to Market Risk Capital | 15 | |||
part, including: | Rule | ||||
(1) Differentiation between holdings on which capital | |||||
gains are expected and those taken under other objectives | |||||
including for relationship and strategic reasons; and | |||||
(2) Discussion of important policies covering the valuation | |||||
of and accounting for equity holdings not subject to | |||||
subpart F of this part. This includes the accounting | |||||
techniques and valuation methodologies used, including | |||||
key assumptions and practices affecting valuation as well | |||||
as significant changes in these practices. | |||||
Quantitative Disclosures | |||||
(b) | Value disclosed on the balance sheet of investments, as | Basel III Regulatory Capital Disclosures: | 16 | ||
well as the fair value of those investments; for securities | Table 9.1: Equity Exposures by Type and Risk Weight | ||||
that are publicly traded, a comparison to publicly-quoted | 3/31/2020 Call Report: | ||||
share values where the share price is materially different | |||||
from fair value. | - Schedule RC-F | ||||
- Schedule RC-R | |||||
(c) | The types and nature of investments, including the amount | ||||
that is: |
- Publicly traded; and
- Non-publiclytraded.
(d) | The cumulative realized gains (losses) arising from sales | Basel III Regulatory Capital Disclosures: | |||
and liquidations in the reporting period. | 9. Equity Exposures not Subject to Market Risk Capital | 16 | |||
Rule | |||||
(e) | (1) Total unrealized gains (losses). | Not applicable. There are no unrealized gains (losses) | |||
included in tier 1 or tier 2 capital related to publicly traded | |||||
equity exposures. | |||||
(2) Total latent revaluation gains (losses). | Not applicable. Any latent revaluation gains or losses that | ||||
may exist are immaterial. | |||||
Basel III Regulatory Capital Disclosures: | |||||
9. Equity Exposures not Subject to Market Risk Capital | 15 | ||||
Rule | |||||
(3) Any amounts of the above included in tier 1 or tier 2 | Not applicable. There are no unrealized gains (losses) | ||||
capital. | included in tier 1 or tier 2 capital related to publicly traded | ||||
equity exposures. | |||||
(f) | Capital requirements categorized by appropriate equity | Basel III Regulatory Capital Disclosures: | |||
groupings, consistent with the FDIC-supervised | Table 9.1: Equity Exposures by Type and Risk Weight | 16 | |||
institution's methodology, as well as the aggregate amounts | |||||
and the type of equity investments subject to any | |||||
supervisory transition regarding regulatory capital | |||||
requirements. | |||||
Table 10 - Interest Rate Risk for Non-Trading Activities | |||||
Qualitative Disclosures | |||||
(a) | The general qualitative disclosure requirement, including | Q1 2020 Form 10-Q: | |||
the nature of interest rate risk for non-trading activities and | - Item 3. Quantitative and Qualitative Disclosures About | 107-109 | |||
key assumptions, including assumptions regarding loan | Market Risk | ||||
prepayments and behavior of non-maturity deposits, and | |||||
frequency of measurement of interest rate risk for non- | |||||
trading activities. | |||||
Quantitative Disclosures | |||||
(b) | The increase (decline) in earnings or economic value (or | Q1 2020 Form 10-Q: | |||
relevant measure used by management) for upward and | - Item 3. Quantitative and Qualitative Disclosures About | 109 | |||
downward rate shocks according to management's method | Market Risk | ||||
for measuring interest rate risk for non-trading activities, | |||||
categorized by currency (as appropriate). | |||||
26
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First Republic Bank published this content on 08 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2020 14:59:03 UTC