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First Republic Bank (First Republic) (NYSE:FRC) today announced solid financial results for the quarter ended June 30, 2011.

Net income was $84.8 million for the second quarter of 2011 compared to $88.8 million for the first quarter of 2011. Earnings per share (EPS) on a diluted basis were $0.64 for the second quarter compared to $0.67 for the prior quarter.

Second quarter results were reduced by a one-time expense from accelerated vesting of certain stock options of $2.4 million after-tax, or $0.02 per share. The prior quarter results were increased by $2.2 million after-tax, or $0.02 per share, from purchase accounting discounts recognized upon the sale of certain acquired loans.

Excluding the positive impact of purchase accounting items, net income was $54.2 million for the second quarter compared to $54.5 million for the prior quarter. Diluted EPS were $0.41 for the second quarter of 2011 and $0.41 for the prior quarter. (1)

For the six months ended June 30, 2011, net income was $173.6 million and diluted EPS were $1.31. For the six months ended June 30, 2011, excluding the positive effect of purchase accounting items, net income was $108.7 million and diluted EPS were $0.82. (1)

First Republic’s very solid results during the second quarter include strong loan growth of 4%. Our credit quality remains very clean and our geographic markets continue to perform relatively well economically, said Jim Herbert, Chairman and Chief Executive Officer.

Financial Highlights

Bank assets were $23.8 billion at June 30, 2011, up 6% since December 31, 2010 and up 17% during the past twelve months since our reestablishment as an independent Bank on July 1, 2010. Total loans outstanding were $20.3 billion at June 30, 2011, up 5% since December 31, 2010 and up 13% in the last twelve months.

Loan originations were $2.4 billion during the second quarter, compared to $1.9 billion for the prior quarter. The Bank originated $8.4 billion of loans in the last twelve months. Deposits grew to $19.9 billion at June 30, 2011, up 4% since December 31, 2010 and up 11% in the last twelve months. Wealth management assets were $19.6 billion at June 30, 2011, up 17% since December 31, 2010 and up 34% during the last twelve months. Net interest margin was 4.67% for the second quarter compared to 4.76% for the prior quarter.

Excluding the impact of purchase accounting, the contractual net interest margin was 3.54% for the second quarter compared to 3.55% for the prior quarter. (1)

The efficiency ratio was 48.9% for the second quarter compared to 47.3% for the prior quarter.

Excluding the impact of purchase accounting, the efficiency ratio was 59.1% for the second quarter compared to 58.7% for the prior quarter. (1)

Book value per share increased by 21% over the past twelve months to $18.03 per share.

Loan originations were quite strong in the second quarter and our loan pipeline remains robust. Additionally, our wealth management business continues to expand very nicely, said Katherine August-deWilde, President and Chief Operating Officer.

Asset Quality Remains Strong

The Bank’s credit quality remains strong. At June 30, 2011, nonperforming assets were only 0.12% of total assets.

During the second quarter, the Bank recorded a provision for loan losses of $13.0 million. The Bank’s allowance for loan losses is related primarily to loans outstanding that were originated since July 1, 2010. At June 30, 2011, the allowance related to these loans was $33.0 million, or 0.56% of such outstanding loans.

Capital Strength

The Bank’s Tier 1 leverage and total risk-based capital ratios at June 30, 2011 were 9.38% and 14.74%, respectively. The Bank continues to meaningfully exceed all regulatory guidelines.

Book Value Growth

Book value and tangible book value per common share were $18.03 and $16.71, respectively, at June 30, 2011. This represents a 21% increase in book value per share and a 25% increase in tangible book value per share during the last twelve months.

Continued Franchise Development

Asset growth continues

Total assets at June 30, 2011 were $23.8 billion, a 6% increase from December 31, 2010 and a 17% increase since July 1, 2010. Since year-end, loans increased $1.1 billion and investment securities increased $901 million. These increases were funded by existing cash balances, an increase in deposits and an increase in term, fixed-rate Federal Home Loan Bank advances.

Loans outstanding were $20.3 billion at June 30, 2011, a 5% increase from December 31, 2010 and a 13% increase during the last twelve months.

Investment securities were $2.0 billion at June 30, 2011, representing 8% of total assets. Cash and equivalents were $791 million, or 3% of total assets at June 30, 2011.

Deposit mix changes

Total deposits were $19.9 billion at June 30, 2011. This represents a 4% increase from December 31, 2010 and an 11% increase since July 1, 2010. Deposits decreased modestly, less than 1%, during the current quarter as a result of our strategy to further improve the cost of our deposits. During the quarter, the Bank experienced a purposeful 9% reduction in certificates of deposits (CDs), almost entirely offset by growth in less costly liquid accounts.

At June 30, 2011, total liquid accounts, consisting of checking, money market and passbook accounts, were 75% of total deposits at June 30, 2011 compared to 66% twelve months ago. Such total liquid accounts have increased 27% since July 1, 2010. At the same time, certificates of deposits have declined to 25% of total deposits at June 30, 2011 from 34% at July 1, 2010.

The contractual rate paid on all deposits averaged 0.73% during the second quarter compared to 0.79% during the prior quarter, with the improvement coming primarily from an improved deposit mix.

Wealth management expands

Wealth management assets, excluding account balances that are swept into Bank deposits, were $19.6 billion at June 30, 2011. This represents a 17% increase from December 31, 2010 and a 34% increase during the last twelve months.

Wealth management assets are managed or administered by First Republic Private Wealth Management through First Republic Investment Management, First Republic Securities Company and First Republic Trust Company.

The Bank offers investment management services for individuals, endowments, businesses and 401(k) plans through First Republic Investment Management. At June 30, 2011, clients had $7.9 billion of assets under management, a 21% increase from December 31, 2010 and a 48% increase during the last twelve months.

The Bank offers money market mutual funds and the brokerage activities of clients are conducted through First Republic Securities Company. Client assets were $7.5 billion at June 30, 2011, a 16% increase from December 31, 2010 and a 36% increase during the last twelve months.

The Bank also offers personal trust and custody services through First Republic Trust Company. At June 30, 2011, First Republic Trust Company administered $4.2 billion of trust and custody assets, of which approximately half were custody assets. This represents an 11% increase from December 31, 2010 and a 10% increase during the last twelve months.

Loans Sold and Serviced

Loans serviced for investors totaled $3.9 billion at June 30, 2011 compared to $3.8 billion at December 31, 2010. Net loan servicing fees improved to $805,000 for the second quarter compared to a loss of $232,000 for the prior quarter due to a decline in impairment charges on mortgage servicing rights. At June 30, 2011, the carrying value of mortgage servicing rights was $21.7 million, or 56 basis points of such loans serviced.

The Bank sold $266.2 million of primarily longer-term, fixed-rate loans during the second quarter and recorded net gains of $427,000, compared to net gains of $4.4 million on loan sales of $238.8 million during the prior quarter. The net gains on loan sales during the prior quarter included $3.8 million of purchase accounting discounts established on loans originated prior to July 1, 2010, which represented $2.2 million after-tax, or $0.02 per share, compared to no such discounts on the newly originated loans sold in the second quarter.

Earnings Summary

Net interest income

Net interest income was $256.8 million for the second quarter, compared to $254.5 million for the prior quarter. The increase was primarily due to increases in the average balances of loans and investment securities.

Excluding the impact of purchase accounting, contractual net interest income was $198.0 million for the second quarter compared to $193.8 million for the prior quarter, up 2.2% quarter over quarter. (1)

The Bank’s net interest margin was 4.67% for the second quarter compared to 4.76% for the prior quarter.

Excluding the impact of purchase accounting, the contractual net interest margin was 3.54% for the second quarter compared to 3.55% for the prior quarter. (1)

Noninterest income

Noninterest income for the second quarter was $27.2 million compared to $31.1 million for the prior quarter, a decrease of $3.9 million. This decline was primarily due to a decrease in gain on sale of loans and accretion of discount on loan commitments, partially offset by an increase in investment advisory fees and loan servicing fees. The net gain on loan sales in the prior quarter included $3.8 million of purchase accounting discounts.

Noninterest expense

Noninterest expense for the second quarter was $138.8 million compared to $135.0 million for the prior quarter. Noninterest expense for the second quarter included approximately $4.2 million for a one-time charge associated with the accelerated vesting of certain stock options. Federal Deposit Insurance Corporation (FDIC) and other deposit assessments decreased $4.2 million as a result of the new ongoing deposit insurance assessment rules effective April 1, 2011.

Efficiency ratio steady

The Bank’s efficiency ratio, or noninterest expense as a percentage of net interest income and noninterest income, was 48.9% for the second quarter compared to 47.3% for the prior quarter.

Excluding the impact of purchase accounting, the Bank’s efficiency ratio was 59.1% for the second quarter compared to 58.7% for the prior quarter. (1)

Income tax rate declines

The Bank’s effective tax rate for the six months ended June 30, 2011 was 36.0% and represents the current estimated tax rate for the full year ended 2011. As a result, the effective tax rate for the second quarter decreased to 34.9% compared to 37.0% for the prior quarter. The lower annual projected tax rate is a result of the continued purchase of tax-exempt securities and tax credit investments.

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

Conference Call Details

First Republic Bank’s second quarter 2011 earnings conference call is scheduled for July 20, 2011 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 #4451949. 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 July 20, 2011, at 2:00 p.m. PDT / 5:00 p.m. EDT, through July 27, 2011, 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 #4451949. International callers should dial (858) 384-5517 and enter the same conference ID number. The Bank’s press releases are available after release on the Bank’s 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 Bank’s website at www.firstrepublic.com.

Corporate History and Reestablishment of First Republic as an Independent Entity

From 1985 until 2007, First Republic operated as an independent, publicly traded financial institution. Beginning in September 2007, First Republic operated as a separate division of Merrill Lynch Bank and Trust Company, F.S.B. and subsequently of Bank of America, N.A. following Bank of America’s acquisition of Merrill Lynch & Co. As a separate division of these entities, First Republic maintained its own market identity, office network and management team, operated its own systems and offered banking products and wealth management services to clients under the First Republic brand.

On June 30, 2010, First Republic Bank completed a management-led transaction, acquiring substantially all of the operations and assets, assuming substantially all of the liabilities of the First Republic division and receiving a capital contribution of $1.86 billion from a management-led investor group including Colony Capital and General Atlantic (the Transaction). As a result, all assets and liabilities of First Republic were measured at fair value in accordance with generally accepted accounting principles (GAAP). Comparisons to periods before July 1, 2010 are not presented in the press release because of different historical cost bases of accounting in those periods. Intangible assets and goodwill of $194 million were recorded at July 1, 2010. In addition, significant loan discounts and liability premiums were established due to the low interest rate environment and other market conditions. The majority of these discounts and premiums will be accreted or amortized over the life of the related instruments, resulting in an increase to future net interest income.

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 Republic’s FDIC filings, including, but not limited to, the risk factors in First Republic’s 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