Profits at First Republic Bank (FRC) fell slightly in the second quarter as the San Francisco company took a one-time charge related to a stock repurchase and added more staff and locations to support its growth.
Despite strong revenue and loan gains, the $31 billion-asset company said Wednesday that second-quarter net income available to shareholders dipped 5%, to $80.6 million, from the same period a year earlier. The bulk of the decline is a result of a $13.2 million charge it took relating to the repurchase of preferred stock.
Earnings were also affected by a 24% increase in overhead, including salaries. The bank has been aggressively
Diluted earnings fell 6%, to 60 cents, but still beat consensus analysts' estimates by three cents, according to Thomson Reuters.
Higher expenses masked what was otherwise a strong quarter for First Republic, which caters largely to affluent households and growing businesses. Among its clients is Facebook founder Mark Zuckerberg, who has a
Loans outstanding totaled $25.5 billion at June 30, up 10% from six months earlier, thanks to strong loan originations during the quarter. First Republic originated $4 billion of loans in the quarter, its most ever in a single three-month period, the bank said in a news release. The company reported particularly strong growth in single- and multi-family mortgages, as well as multi-family construction loans.
Net interest income climbed 13% year over year, to $322 million, but its net interest margin contracted by 40 basis points, to 4.27%, due to declining loan yields stemming from persistently low interest rates.
Noninterest income climbed 35%, to nearly $37 million, due primarily to a more then ten-fold increase in recorded gains on sales of single-family mortgages.
First Republic's shares were down 0.6% in early trading Wednesday, to $32.99.
