FIRST REPUBLIC BANK
Basel III Regulatory Capital Disclosures
March 31, 2021
First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2021
TABLE OF CONTENTS | ||
Glossary of Acronyms and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | ||
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | ||
Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | ||
3. | Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 6 |
4. | Capital Conservation Buffer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 8 |
5. | Credit Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 8 |
6. | Counterparty Credit Risk-RelatedExposures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 13 |
7. | Credit Risk Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 14 |
8. | Securitization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 15 |
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, 2021
GLOSSARY OF ACRONYMS AND TERMS
The following listing provides a reference to common acronyms and terms used throughout this report:
ACL . . . . . . . . . . . . . . . | Allowance for Credit Losses |
AOCI . . . . . . . . . . . . . . | Accumulated Other Comprehensive Income |
Board . . . . . . . . . . . . . . | Board of Directors |
CECL . . . . . . . . . . . . . . | Current Expected Credit Losses |
CECL Capital Rule . . . | Regulatory Capital Rule: Revised Transition of the Current Expected Credit Losses Methodology for |
Allowances | |
CET1 . . . . . . . . . . . . . . . | Common Equity Tier 1 |
COVID-19 . . . . . . . . . . | COVID-19 Pandemic |
Dodd-Frank Act . . . . . . | Dodd-Frank Wall Street Reform and Consumer Protection Act |
DTA . . . . . . . . . . . . . . . | Deferred Tax Asset |
DTL . . . . . . . . . . . . . . . . | Deferred Tax Liability |
FDIC . . . . . . . . . . . . . . . | Federal Deposit Insurance Corporation |
FHLB . . . . . . . . . . . . . . | Federal Home Loan Bank |
GAAP . . . . . . . . . . . . . . | Accounting Principles Generally Accepted in the United States of America |
GSE . . . . . . . . . . . . . . . . | Government-Sponsored Enterprise |
HVCRE . . . . . . . . . . . . | High Volatility Commercial Real Estate |
LIHTC . . . . . . . . . . . . . | Low Income Housing Tax Credit |
MBS . . . . . . . . . . . . . . . | Mortgage-Backed Securities |
PPP . . . . . . . . . . . . . . . . | SBA's Paycheck Protection Program |
PSE . . . . . . . . . . . . . . . . | Public Sector Entity |
RWA . . . . . . . . . . . . . . . | Risk-Weighted Asset |
SBA . . . . . . . . . . . . . . . . | U.S. Small Business Administration |
SPE . . . . . . . . . . . . . . . . | Special Purpose Entity |
SSFA . . . . . . . . . . . . . . . | Simplified Supervisory Formula Approach |
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2021
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, 2020 ("2020 Form 10-K"), the Bank's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 ("Q1 2021 Form 10-Q"), and the Bank's Consolidated Reports of Condition and Income as of March 31, 2021 ("3/31/2021 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 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, 2021, we had total assets of $155.8 billion, total deposits of $127.9 billion, total equity of $12.9 billion and wealth management assets under management or administration of $218.9 billion.
As of March 31, 2021, we provided our services through 92 offices, of which 80 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 12 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 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 2021 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, 2021, First Republic had capital levels in excess of the minimum regulatory capital requirements and met all capital ratio requirements to be "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 2021 Form 10-Q.
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First Republic Bank
Basel III Regulatory Capital Disclosures
March 31, 2021
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
2021 Form 10-Q:
- 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."
The following table presents the components of First Republic's regulatory capital:
Table 2.1: Capital Structure
($ in thousands) | March 31, | ||
2021 | |||
Shareholders' equity: | |||
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 2,142,500 | |
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,763 | ||
Additional paid-incapital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 5,191,932 | ||
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 5,626,958 | ||
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | (21,423) | ||
Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 12,941,730 | ||
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .CECL Capital Rule retained earnings adjustments (1) | 39,579 | ||
CET1 capital adjustments and deductions: | (2,142,500) | ||
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | |||
Goodwill and other intangible assets, net of deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | (201,116) | ||
DTAs that arise from tax credit carryforwards, net of DTLs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | (110,501) | ||
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 21,423 | ||
CET1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 10,548,615 | ||
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 2,142,500 | ||
Additional Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 2,142,500 | ||
Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 12,691,115 | ||
Tier 2 capital instruments-subordinatednotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 778,423 | ||
Qualifying ACL (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 654,404 | ||
CECL Capital Rule ACL adjustments (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | (41,564) | ||
Tier 2 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,391,263 | ||
Total risk-basedcapital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 14,082,378 | |
__________
- Beginning in 2020, amounts reflect the Bank's election to delay the estimated impact of the CECL ACL methodology on its regulatory capital over a five-year transition period ending December 31, 2024.
- Includes the ACL on loans, held-to-maturity debt securities and unfunded loan commitments.
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First Republic Bank published this content on 07 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2021 22:43:01 UTC.