First Republic Bank (NYSE: FRC) reported stronger-than-expected Q4 results. Driven by robust growth in loans, deposits, and wealth management assets, FRC exceeded both earnings and revenue estimates.
However, despite the quarterly beat, shares of the American bank and wealth management company dropped 4.2% on January 14 to close at $192.06.
Q4 Performance
The bank reported earnings of $2.02 per share, a 26.3% year-over-year gain, further outpacing analysts’ estimates of $1.90 per share. The company reported earnings of $1.60 per share for the prior-year period.
Furthermore, revenues jumped 26.4% year-over-year to $1.4 billion and exceeded consensus estimates of $1.34 billion.
During the quarter, the bank witnessed the highest loan originations of $16.96 billion, in its history. In addition, credit quality remained strong with non-performing assets that were as low as 8 basis points of the total assets.
Net interest income climbed 25.4% to $1.1 billion, while net interest margin improved to 2.68% in the quarter, up 3 basis points from the year-ago period. The provision for credit losses was $24 million for the quarter.
The company reported total loans of $135 billion, up 19.9% from the prior-year quarter, driven by a higher number of single families, capital call lines of credit, and multifamily and stock-secured loans, which were partially offset by a decline in PPP loans. Additionally, total deposits surged 36% to $156.3 billion.
Furthermore, the bank declared a quarterly cash dividend of $0.22 per common share payable on February 10 to shareholders on record as of January 27.
Management Weighs In
The bank’s Co-CEO (Acting) and President, Mike Roffler, commented, “This was a terrific year for First Republic…Loans, deposits and wealth management assets all grew nicely for both the fourth quarter and the full year. First Republic continues to succeed by executing a client-centric business model focused on exceptional service.”
Wall Street’s Take
Following the Q4 results, Maxim Group analyst Michael Diana reiterated a Buy rating on First Republic Bank with a price target of $250 (30.2% upside potential).
Overall, the stock has a Hold consensus rating based on 2 Buys, 5 Holds and 1 Sell. The average First Republic Bank price target of $222.50 implies 15.9% upside potential to current levels. Shares have gained 24% over the past year.
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