Record First Quarter Loan Volume

Will Initiate Cash Dividend in Second Half of 2012

SAN FRANCISCO--(BUSINESS WIRE)-- First Republic Bank (FRC) (First Republic or the Bank) (NYSE:FRC) today announced financial results for the quarter ended March 31, 2012.

First Republic also announced plans to initiate a quarterly cash dividend of $0.10 per share on its common stock. Subject to declaration by First Republics Board of Directors, the Bank expects to commence payment during the third quarter of 2012 following the release of second quarter results.

We are pleased to report continued high credit quality, as well as strong earnings in the first quarter of 2012, said Jim Herbert, Chairman and Chief Executive Officer. These results point to the ability of the franchise to deliver sustainable growth and profits, even as we have continued to make significant investments. We look forward to initiating a dividend, which reflects the strength of our business and capital position.

Financial Highlights

• Net income was $91.8 million for the first quarter of 2012, compared to $88.8 million for last years first quarter. Diluted earnings per share (EPS) were $0.67 for the first quarter of 2012 and 2011.
• Excluding the impact of purchase accounting, net income was $68.1 million, up 25% from last years first quarter. On this basis, diluted EPS were $0.49, up 20% from last years first quarter. ⁽¹⁾
• Asset quality remains strong; nonperforming assets were only 11 basis points of total assets.
• Loan originations were $3.2 billion, our highest first quarter ever.
• Loans outstanding were $23.9 billion at March 31, 2012, up 3% for the quarter and 23% year over year.
• Deposits were $23.3 billion at March 31, 2012, up 4% for the quarter and 16% year over year.
• Wealth management assets were $22.1 billion at March 31, 2012, up 8% for the quarter and 17% year over year.
• Net interest margin was 4.39% for the quarter, compared to 4.53% for the prior quarter and 4.76% for last years first quarter.
• Excluding the impact of purchase accounting, the net interest margin was 3.64% for the quarter, compared to 3.55% for both the prior quarter and last years first quarter. ⁽¹⁾
• The efficiency ratio was 52.5% for the first quarter of 2012, compared to 50.2% for the prior quarter and 47.3% for last years first quarter.
• Excluding the impact of purchase accounting, the efficiency ratio was 59.6% for the quarter, compared to 59.9% for the prior quarter and 58.7% for last years first quarter.⁽¹⁾
• Book value per share increased by 16% year over year to $20.10 per share.

In the first quarter, First Republic had meaningful contributions to earnings from across the company private banking, business banking and wealth management, said Katherine August-deWilde, President and Chief Operating Officer. We continued to build our franchise by investing in people, offices and technology to support our future growth.

Asset Quality Remains Strong

The Banks credit quality remains strong. At March 31, 2012, nonperforming assets were only 11 basis points of total assets. For the first quarter of 2012, annualized net charge-offs to average loans were 1 basis point.

During the first quarter of 2012, the Bank recorded a provision for loan losses of $14.9 million. The Banks provision for loan losses is related primarily to loans outstanding that have been originated since July 1, 2010. At March 31, 2012, the allowance related to these loans totaled $72.3 million, or 0.58% of such loans.

Capital Strength

The Banks Tier 1 leverage and total risk-based capital ratios at March 31, 2012 were 9.48% and 14.47%, respectively. These ratios include the issuance of $199.5 million of 6.70% Noncumulative Perpetual Series A Preferred Stock and the redemption of the Series A preferred stock of First Republic Preferred Capital Corporation during the quarter. These activities resulted in a net increase in Tier 1 capital of $164 million.

The Bank continues to exceed all current regulatory guidelines for well-capitalized institutions.

Strong Book Value Growth

Book value per share was $20.10 at March 31, 2012, up 16% from a year ago.

Continued Franchise Development

Asset growth

Total assets at March 31, 2012 were $29.7 billion. During the last twelve months, loans increased $4.4 billion and investment securities increased $1.7 billion. These assets were funded primarily by deposit growth of $3.2 billion and a $2.2 billion increase in intermediate-term, fixed-rate Federal Home Loan Bank (FHLB) advances.

Loans outstanding were $23.9 billion at March 31, 2012, up 3% for the quarter and 23% from a year ago.

Deposit growth strong continued mix improvement

Total deposits were $23.3 billion at March 31, 2012, up 4% for the quarter and 16% from a year ago.

At March 31, 2012, checking and savings accounts were 85% of total deposits, compared to 72% a year ago. Such accounts increased 36% during the last twelve months from $14.5 billion to $19.7 billion. Certificates of deposit (CDs) represented 15% of total deposits at March 31, 2012, a decrease from 28% a year ago.

The contractual rate paid on all deposits averaged 0.40% during the first quarter of 2012, compared to 0.50% for the fourth quarter of 2011 and 0.79% during the first quarter a year ago, with the reduction in rate coming both from an improved deposit mix and lower market rates of interest.

At March 31, 2012, 96% of deposits were core deposits (excluding CDs greater than $250,000 and any brokered deposits).

Wealth management expands

Wealth management assets were $22.1 billion at March 31, 2012, up 8% for the quarter and 17% from a year ago. Fees earned on wealth management assets, including investment advisory, trust and brokerage fees, were up 17% in the first quarter of 2012 compared to last years first quarter.

The Bank offers investment management services for individuals, endowments, businesses and 401(k) plans through First Republic Investment Management. At March 31, 2012, clients had $9.0 billion of assets under management, up 13% for the quarter and 21% from a year ago.

Client assets held at First Republic Securities Company and in money market mutual funds were $8.4 billion at March 31, 2012, up 8% for the quarter and 16% from a year ago.

The Bank also offers personal trust and custody services through First Republic Trust Company. At March 31, 2012, First Republic Trust Company administered $4.7 billion of trust and custody assets, up 1% for the quarter and 11% from a year ago.

Mortgage banking and servicing activity

The Bank sold $552 million of longer-term, fixed-rate home loans during the first quarter of 2012 and recorded gains of $3.8 million. By comparison, during the first quarter a year ago, the Bank recorded gains of $527,000, excluding $3.8 million of purchase accounting discounts on loans sold.

Loans serviced for investors totaled $3.7 billion at March 31, 2012, compared to $3.8 billion at March 31, 2011. Net loan servicing fees were ($1.9) million for the first quarter of 2012, compared to ($232,000) for the first quarter a year ago, due to continued rapid loan prepayments that resulted in an increase in the amount of impairment charges on mortgage servicing rights. At March 31, 2012, the carrying value of mortgage servicing rights was $17.5 million, or 48 basis points of such loans serviced.

Earnings Summary

Strong revenue growth

Total revenues were $313.9 million for the first quarter of 2012, compared to $314.9 million for the fourth quarter of 2011 and $285.6 million for the first quarter a year ago.

Excluding the impact of purchase accounting, revenues were $267.6 million for the first quarter of 2012, compared to $220.0 million for the first quarter of 2011, a 22% increase from a year ago. On this basis, revenues were up 5% over the prior quarter. ⁽¹⁾

Net interest income grows

Net interest income was $281.3 million for the first quarter of 2012, compared to $285.5 million for the fourth quarter of 2011 and $254.5 million for the first quarter a year ago.

Net interest income excluding the impact of purchase accounting (contractual net interest income) was $235.0 million for the first quarter of 2012, compared to $193.8 million for the first quarter of 2011, up 21% from a year ago. ⁽¹⁾ The increase in contractual net interest income was primarily due to increases in the average balances of loans and investment securities and lower deposit costs.

Net interest margin

The Banks net interest margin was 4.39% for the first quarter of 2012, compared to 4.53% for the fourth quarter of 2011 and 4.76% for the first quarter a year ago.

Net interest margin excluding the impact of purchase accounting (contractual net interest margin) was 3.64% for the first quarter of 2012, compared to 3.55% for the fourth quarter of 2011 and the first quarter a year ago. ⁽¹⁾

The increase in the contractual net interest margin compared to the prior quarter is due to lower average cash balances, which were invested in loans and investment securities, as well as lower deposit costs due both to market rates and a continued improvement in the deposit mix. The Bank took advantage of the lower interest rate environment to increase intermediate-term, fixed-rate FHLB advances by $950 million during the first quarter of 2012.

Noninterest income

Noninterest income for the first quarter of 2012 was $32.6 million, compared to $29.4 million for the fourth quarter of 2011 and $31.1 million for the first quarter a year ago. The increase compared to last years first quarter was primarily due to increases in investment advisory fees and income from investments in life insurance, partially offset by a decline in net loan servicing fees and a reduced benefit from purchase accounting.

Noninterest expense

Noninterest expense for the first quarter of 2012 was $164.8 million, compared to $158.0 million for the fourth quarter of 2011 and $135.0 million for the first quarter a year ago, a 22% increase year over year. Noninterest expense has grown primarily due to an increase in personnel to support loan, deposit and wealth management growth, increased occupancy costs as the Bank continues to add offices and higher technology costs.

Efficiency ratio

The Banks efficiency ratio was 52.5% for the first quarter of 2012, compared to 50.2% for the fourth quarter of 2011 and 47.3% for the first quarter a year ago.

Excluding the impact of purchase accounting, the Banks efficiency ratio was 59.6% for the first quarter of 2012, compared to 59.9% for the fourth quarter of 2011 and 58.7% for the first quarter a year ago. ⁽¹⁾

Income tax rate

The Banks effective tax rate for fiscal year 2012 is expected to be 31.0%, compared to 35.7% for fiscal year 2011. This decline in the effective tax rate results from a higher level of tax-exempt securities, bank-owned life insurance, tax credit investments and tax-advantaged loans.

_________

⁽¹⁾ See non-GAAP reconciliation under section Use of Non-GAAP Financial Measures.

Conference Call Details

First Republic Banks first quarter 2012 earnings conference call is scheduled for April 18, 2012 at 11:00 a.m. PDT / 2:00 p.m. EDT. To listen to the live call by telephone, please dial (877) 941-1427 approximately 10 minutes prior to the start time (to allow time for registration) and use conference ID #4526386. International callers should dial (480) 629-9664. The call will also be broadcast live over the Internet and can be accessed in the Investor Relations section of First Republic's website at www.firstrepublic.com. To listen to the live webcast, please visit the site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. A replay of the call will also be available for 90 days on the website. For those unable to participate in the live presentation, a replay will be available beginning April 18, 2012, at 2:00 p.m. PDT / 5:00 p.m. EDT, through April 25, 2012, at 8:59 p.m. PDT / 11:59 p.m. EDT. To access the replay, dial (877) 870-5176 (U.S.) and use conference ID #4526386. International callers should dial (858) 384-5517 and enter the same conference ID number. The Banks press releases are available after release on the Banks website at www.firstrepublic.com.

About First Republic Bank

First Republic Bank and its subsidiaries provide private banking, private business banking and private wealth management. Founded in 1985, First Republic specializes in exceptional, relationship-based service offered through preferred banking or wealth management offices primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland, Boston, Greenwich and New York City. First Republic offers a complete line of banking products for individuals and businesses, including deposit services, as well as residential, commercial and personal loans. First Republic is a component of the S&P Total Market Index, the Wilshire 5000 Total Market Index^SM, the Russell 1000 ^®, Russell 3000 ^® and Russell Global indices and six Dow Jones indices. More information is available on the Banks website at www.firstrepublic.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this press release 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. 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 and include statements about economic performance in our markets, growth in our loan originations and wealth management assets, and our projected tax rate. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: our ability to compete for banking and wealth management customers; earthquakes and other natural disasters in our markets; changes in interest rates; our ability to maintain high underwriting standards; economic conditions in our markets; and conditions in financial markets and economic conditions generally; regulatory restrictions on our operations and current or future legislative or regulatory changes affecting the banking and investment management industries. For a discussion of these and other risks and uncertainties, see First Republics FDIC filings, including, but not limited to, the risk factors in First Republics Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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. 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.

CONSOLIDATED STATEMENT OF INCOME
			Three Months										Three Months
			Ended										Ended
			March 31,										December 31,
(in thousands, except per share amounts)			2012					2011					2011
Interest income:
Interest on loans			$	279,674				$	268,740				$	288,226
Interest on investments				28,859					11,988					25,338
Interest on cash equivalents				623					1,193					1,197
Total interest income				309,156					281,921					314,761
Interest expense:
Interest on customer deposits				14,987					21,754					17,628
Interest on FHLB advances and other borrowings				12,345					5,095					11,035
Interest on subordinated notes				556					578					561
Total interest expense				27,888					27,427					29,224
Net interest income				281,268					254,494					285,537
Provision for loan losses				14,852					7,613					16,159
Net interest income after provision for loan losses				266,416					246,881					269,378
Noninterest income:
Investment advisory fees				12,699					10,656					11,897
Brokerage and investment fees				2,765					2,346					2,219
Trust fees				1,773					1,726					1,729
Foreign exchange fee income				2,421					2,095					3,298
Deposit customer fees				3,281					3,642					3,169
Loan servicing fees, net				(1,904	)				(232	)				(341	)
Loan and related fees				1,483					816					1,801
Gain on sale of loans				3,809					4,354					335
Income from investments in life insurance				5,371					3,730					4,785
Other income				947					1,933					510
Total noninterest income				32,645					31,066					29,402
Noninterest expense:
Salaries and related benefits				82,507					64,221					74,352
Occupancy				19,895					16,014					18,595
Information systems				16,174					12,513					16,065
Advertising and marketing				5,962					6,309					8,567
FDIC and other deposit assessments				5,400					8,700					5,552
Professional fees				4,278					4,433					4,711
Amortization of intangibles				5,288					5,917					5,444
Tax credit investments				5,250					1,604					3,680
Other expenses				20,001					15,278					21,035
Total noninterest expense				164,755					134,989					158,001
Income before provision for income taxes				134,306					142,958					140,779
Provision for income taxes				41,635					52,895					49,016
Net income before noncontrolling interests				92,671					90,063					91,763
Less: Net income from noncontrolling interests				913					1,291					1,072
First Republic Bank net income				91,758					88,772					90,691
Dividends on preferred stock				2,451					-					-
Net income available to common stockholders			$	89,307				$	88,772				$	90,691
Basic earnings per common share			$	0.69				$	0.69				$	0.70
Diluted earnings per common share			$	0.67				$	0.67				$	0.68
Weighted average shares - basic				129,498					128,858					129,313
Weighted average shares - diluted				133,621					132,509					132,939

CONSOLIDATED BALANCE SHEET
			As of
			March 31,					December 31,					March 31,
($ in thousands)			2012					2011					2011
ASSETS
Cash and cash equivalents			$	1,429,286				$	630,780				$	2,269,977
Securities purchased under agreements to resell				12,973					4,890					10,000
Investment securities available-for-sale				682,835					722,280					107,903
Investment securities held-to-maturity				2,209,463					2,097,198					1,131,257
Loans:
Single family (1-4 units)				14,175,779					13,538,218					11,548,932
Home equity lines of credit				1,826,061					1,878,969					1,715,388
Commercial real estate				2,629,595					2,504,791					2,261,140
Multifamily (5+ units)				2,569,780					2,437,169					2,027,580
Single family construction				198,240					183,863					175,039
Multifamily/commercial construction				110,193					122,885					91,065
Commercial business loans				1,799,668					1,656,795					1,206,154
Other secured				192,619					169,502					157,974
Unsecured loans and lines of credit				300,038					224,069					120,271
Stock secured				79,005					103,208					34,992
Total unpaid principal balance				23,880,978					22,819,469					19,338,535
Net unaccreted discount				(455,885	)				(493,895	)				(631,366	)
Net deferred fees and costs				13,456					10,020					2,969
Allowance for loan losses				(82,418	)				(68,113	)				(25,908	)
Loans, net				23,356,131					22,267,481					18,684,230
Loans held for sale				53,184					305,881					166,771
Investments in life insurance				591,397					585,956					395,551
Tax credit investments				389,000					330,447					128,063
Prepaid expenses and other assets				695,575					548,395					381,360
Premises, equipment and leasehold improvements, net				123,439					118,365					101,932
Goodwill				24,604					24,604					24,604
Other intangible assets				129,286					134,574					151,380
Mortgage servicing rights				17,466					17,269					20,967
Other real estate owned				4,348					3,681					1,928
Total Assets			$	29,718,987				$	27,791,801				$	23,575,923
LIABILITIES AND EQUITY
Liabilities:
Customer deposits:
Noninterest-bearing accounts			$	6,275,752				$	6,115,571				$	3,481,238
Interest-bearing checking accounts				3,793,085					3,675,813					2,690,088
Money Market (MM) checking accounts				3,583,467					3,139,448					3,098,728
MM savings and passbooks				6,030,096					5,520,558					5,215,000
Certificates of deposit				3,572,561					4,007,869					5,543,472
Total customer deposits				23,254,961					22,459,259					20,028,526
FHLB advances				3,050,000					2,200,000					900,000
Subordinated notes				65,032					65,711					67,717
Debt related to variable interest entity				60,030					63,259					23,050
Other liabilities				425,491					408,550					237,742
Total Liabilities				26,855,514					25,196,779					21,257,035
Equity:
First Republic Bank stockholders' equity
Preferred stock				199,525					-					-
Common stock				1,302					1,294					1,289
Additional paid-in capital				2,019,194					2,020,832					1,999,569
Retained earnings				583,757					494,450					231,134
Accumulated other comprehensive income				12,895					1,186					326
Total First Republic Bank stockholders' equity				2,816,673					2,517,762					2,232,318
Noncontrolling interests				46,800					77,260					86,570
Total Equity				2,863,473					2,595,022					2,318,888
Total Liabilities and Equity			$	29,718,987				$	27,791,801				$	23,575,923

			Three Months										Three Months
			Ended										Ended
			March 31,										December 31,
($ in thousands)			2012					2011					2011
Operating Information
Loans originated			$	3,156,526				$	1,855,220				$	3,312,813
Loans sold			$	552,050				$	238,797				$	52,137
Net income to average assets (2)				1.29	%				1.55	%				1.30	%
Net income available to common stockholders to average common equity (2)				13.86	%				16.35	%				14.49	%
Efficiency ratio (3)				52.5	%				47.3	%				50.2	%
Efficiency ratio (non-GAAP) (3), (4)				59.6	%				58.7	%				59.9	%
Yields/Rates (2)
Cash and cash equivalents				0.27	%				0.23	%				0.26	%
Securities purchased under agreements to resell				0.09	%				0.14	%				0.08	%
Investment securities (5)				5.65	%				6.26	%				5.52	%
Loans (5)				4.88	%				5.77	%				5.31	%
Total interest-earning assets				4.81	%				5.27	%				4.98	%
Customer deposits				0.26	%				0.44	%				0.31	%
Borrowings				1.95	%				2.58	%				2.06	%
Total interest-bearing liabilities				0.44	%				0.54	%				0.47	%
Net interest spread				4.37	%				4.73	%				4.51	%
Net interest margin				4.39	%				4.76	%				4.53	%
Net interest margin (non-GAAP) (4)				3.64	%				3.55	%				3.55	%
(2) Ratios are annualized.
(3) Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.
(4) For a reconciliation of these ratios to the equivalent GAAP ratios, see "Use of Non-GAAP Financial Measures."
(5) Yield is calculated on a tax-equivalent basis.

The following table separates our loan portfolio as of March 31, 2012 between loans acquired on July 1, 2010 and loans originated since July 1, 2010:

			Composition of Loan Portfolio
			Loans acquired					Loans originated					Total loans at
			on July 1,					since July 1,					March 31,
($ in thousands)			2010					2010					2012
Single family (1-4 units)			$	6,758,871				$	7,416,908				$	14,175,779
Home equity lines of credit				1,219,439					606,622					1,826,061
Commercial real estate				1,627,780					1,001,815					2,629,595
Multifamily (5+ units)				1,143,302					1,426,478					2,569,780
Single family construction				41,929					156,311					198,240
Multifamily/commercial construction				18,689					91,504					110,193
Commercial business loans				544,888					1,254,780					1,799,668
Other secured				87,763					104,856					192,619
Unsecured loans and lines of credit				61,627					238,411					300,038
Stock secured				11,785					67,220					79,005
Total unpaid principal balance				11,516,073					12,364,905					23,880,978
Net unaccreted discount				(455,043	)				(842	)				(455,885	)
Net deferred fees and costs				(7,632	)				21,088					13,456
Allowance for loan losses				(10,164	)				(72,254	)				(82,418	)
Loans, net			$	11,043,234				$	12,312,897				$	23,356,131

			As of
			March 31,					December 31,					March 31,
(in thousands, except per share amounts)			2012					2011					2011
Book Value
Number of shares of common stock outstanding				130,236					129,372					128,858
Book value per common share			$	20.10				$	19.46				$	17.32
Tangible book value per common share			$	18.91				$	18.23				$	15.96
Capital Ratios
Tier 1 leverage ratio				9.48	%				8.81	%				9.24	%
Tier 1 common equity ratio (6)				12.73	%				12.84	%				14.16	%
Tier 1 risk-based capital ratio				14.01	%				13.25	%				14.69	%
Total risk-based capital ratio				14.47	%				13.65	%				14.97	%
(6) Tier 1 common equity ratio represents common equity less goodwill and intangible assets divided by risk-weighted assets.
			As of
			March 31,					December 31,					March 31,
($ in millions)			2012					2011					2011
Assets Under Management (7)
First Republic Investment Management			$	8,955				$	7,940				$	7,417
Brokerage and Investment:
Brokerage				7,777					6,806					6,528
Money Market Mutual Funds				666					1,037					776
Total Brokerage and Investment				8,443					7,843					7,304
Trust Company:
Trust				2,089					1,963					1,867
Custody				2,565					2,641					2,319
Total Trust Company				4,654					4,604					4,186
Total Wealth Management Assets				22,052					20,387					18,907
Loans serviced for investors				3,651					3,381					3,778
Total fee-based assets			$	25,703				$	23,768				$	22,685
(7) Assets under management are presented excluding sweep deposits.
			As of
			March 31,					December 31,					March 31,
($ in thousands)			2012					2011					2011
Asset Quality Information
Nonperforming assets:
Nonaccrual loans			$	27,480				$	26,373				$	20,999
Other real estate owned				4,348					3,681					1,928
Total nonperforming assets			$	31,828				$	30,054				$	22,927
Nonperforming assets to total assets				0.11	%				0.11	%				0.10	%
Accruing loans 90 days or more past due			$	-				$	-				$	1,517
Restructured performing loans			$	5,783				$	6,674				$	5,162

			Average Balance Sheet
			Three Months								Three Months
			Ended								Ended
			March 31,								December 31,
($ in thousands)			2012				2011				2011
Assets:
Cash equivalents			$	912,075			$	2,080,705			$	1,820,229
Securities purchased under agreements to resell				21,018				2,944				4,912
Investment securities (8)				2,958,810				1,184,071				2,671,429
Loans				22,996,300				18,703,214				21,656,992
Total interest-earning assets				26,888,203				21,970,934				26,153,562
Noninterest-earning assets				1,733,236				1,293,118				1,621,175
Total Assets			$	28,621,439			$	23,264,052			$	27,774,737
Liabilities and Equity:
Checking			$	9,749,583			$	6,046,086			$	9,198,227
Money market checking and savings				9,254,760				8,169,663				8,881,723
CDs				3,759,487				5,659,053				4,502,482
Total deposits				22,763,830				19,874,802				22,582,432
FHLB advances				2,530,769				797,778				2,102,174
Subordinated notes				65,363				68,039				66,039
Debt related to variable interest entity				62,425				24,905				71,105
Total borrowings				2,658,557				890,722				2,239,318
Total interest-bearing liabilities				25,422,387				20,765,524				24,821,750
Noninterest-bearing liabilities				392,820				210,406				392,236
Equity before noncontrolling interests				2,739,693				2,201,552				2,483,491
Noncontrolling interests				66,539				86,570				77,260
Total Liabilities and Equity			$	28,621,439			$	23,264,052			$	27,774,737
(8) Includes FHLB stock.

Purchase Accounting Accretion and Amortization

The following table presents the impact of purchase accounting for the periods indicated:

			Three Months								Three Months
			Ended								Ended
			March 31,								December 31,
($ in thousands)			2012				2011				2011
Accretion/amortization to net interest income:
Loans			$	38,153			$	43,309			$	48,936
Deposits				7,458				16,722				10,744
Borrowings				680				657				675
Total			$	46,291			$	60,688			$	60,355
Noninterest income:
Gain on sale of loans			$	-			$	3,827			$	-
Loan commitments				69				1,054				109
Total			$	69			$	4,881			$	109
Amortization to noninterest expense:
Intangible assets			$	5,288			$	5,917			$	5,444

Use of Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted accounting principles in the United States (GAAP) and the prevailing practices in the banking industry. However, due to the application of purchase accounting, management uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate our performance, including net income, earnings per share, net interest margin and the efficiency ratio.

Our net income, earnings per share, net interest margin and efficiency ratio are significantly impacted by accretion and amortization of the fair value adjustments recorded in purchase accounting. The accretion and amortization affect our net income, earnings per share and certain operating ratios as we accrete loan discounts to interest income; accrete discounts on loan commitments to noninterest income; recognize discounts established in purchase accounting on the sale of loans, which increase gain on sale of loans; amortize premiums on liabilities such as CDs and subordinated notes to interest expense; and amortize intangible assets to noninterest expense.

We believe these non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and ratios, provide meaningful supplemental information regarding our performance. Our management uses, and believes that investors benefit from referring to, these non-GAAP measures and ratios in assessing our current operating results and related trends, and when planning and forecasting future periods. However, these non-GAAP measures and ratios should be considered in addition to, not as a substitute for or preferable to, ratios prepared in accordance with GAAP. In the tables below, we have provided a reconciliation of, where applicable, the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios used in this press release, or a reconciliation of the non-GAAP calculation of the financial measure for the periods indicated:

			Three Months										Three Months
			Ended										Ended
			March 31,										December 31,
(in thousands, except per share amounts)			2012					2011					2011
Non-GAAP earnings
Net income			$	91,758				$	88,772				$	90,691
Accretion / amortization added to net interest income				(46,291	)				(60,688	)				(60,355	)
Discounts recognized in gain on sale of loans				-					(3,827	)				-
Accretion added to noninterest income				(69	)				(1,054	)				(109	)
Amortization of intangible assets				5,288					5,917					5,444
Add back tax impact of the above items				17,456					25,352					23,384
Non-GAAP net income				68,142					54,472					59,055
Dividends on preferred stock				2,451					-					-
Non-GAAP net income available to common stockholders			$	65,691				$	54,472				$	59,055
GAAP earnings per common share - diluted			$	0.67				$	0.67				$	0.68
Impact of purchase accounting, net of tax				(0.18	)				(0.26	)				(0.24	)
Non-GAAP earnings per common share - diluted			$	0.49				$	0.41				$	0.44
Weighted average diluted common shares outstanding				133,621					132,509					132,939

			Three Months										Three Months
			Ended										Ended
			March 31,										December 31,
($ in thousands)			2012					2011					2011
Net interest margin
Net interest income			$	281,268				$	254,494				$	285,537
Add: Tax-equivalent adjustment				15,043					7,365					13,231
Net interest income (tax-equivalent basis)				296,311					261,859					298,768
Less: Accretion / amortization				(46,291	)				(60,688	)				(60,355	)
Non-GAAP net interest income (tax-equivalent basis)			$	250,020				$	201,171				$	238,413
Average interest-earning assets			$	26,888,203				$	21,970,934				$	26,153,562
Add: Average unamortized loan discounts				481,015					662,898					528,104
Adjusted average interest-earning assets			$	27,369,218				$	22,633,832				$	26,681,666
Net interest margin reported				4.39	%				4.76	%				4.53	%
Adjusted net interest margin (non-GAAP)				3.64	%				3.55	%				3.55	%
			Three Months										Three Months
			Ended										Ended
			March 31,										December 31,
($ in thousands)			2012					2011					2011
Efficiency ratio
Net interest income			$	281,268				$	254,494				$	285,537
Less: Accretion / amortization				(46,291	)				(60,688	)				(60,355	)
Adjusted net interest income (non-GAAP)			$	234,977				$	193,806				$	225,182
Noninterest income			$	32,645				$	31,066				$	29,402
Less: Accretion of discounts on loan commitments				(69	)				(1,054	)				(109	)
Discounts recognized in gain on sale of loans				-					(3,827	)				-
Adjusted noninterest income (non-GAAP)			$	32,576				$	26,185				$	29,293
Total revenue			$	313,913				$	285,560				$	314,939
Total revenue (non-GAAP)			$	267,553				$	219,991				$	254,475
Noninterest expense			$	164,755				$	134,989				$	158,001
Less: Intangible amortization				(5,288	)				(5,917	)				(5,444	)
Adjusted noninterest expense (non-GAAP)			$	159,467				$	129,072				$	152,557
Efficiency ratio				52.5	%				47.3	%				50.2	%
Efficiency ratio (non-GAAP)				59.6	%				58.7	%				59.9	%

Investor Contact:
Addo Communications
Andrew Greenebaum / Lasse Glassen, 310-829-5400
andrewg@addocommunications.com
lasseg@addocommunications.com
or
Media Contact:
Blue Marlin Partners
Greg Berardi, 415-239-7826
greg@bluemarlinpartners.com

Source: First Republic Bank

Copyright Business Wire 2012