San Francisco-based First Republic Bank guided net interest margin of 2.65% to 2.75% in 2020, assuming no change in the fed funds rate.
This is down from the bank's 2019 net interest margin of 2.83%. The company reported a NIM of 2.73% for the fourth quarter of 2019.
President and board member Hafize Erkan said the net interest margin may be in the lower half of the given range due to slightly lower NIM in the first quarter.
The October rate cut will affect loans in the first quarter of 2020, CFO Michael Roffler said on the bank's fourth-quarter earnings call. "You'll see a little bit of a down bias in the first quarter on loan yields, a few basis points," Roffler said. Funding costs have remained stable, he said.
In addition to net interest margin guidance, the company provided loan-growth guidance in the mid-teens, an efficiency ratio between 63.5% and 64.5% and a full-year tax rate of 20% to 21%.
The company's net income was up year over year by 10 cents per share. The company's stock price jumped after its results were announced, rising about 5.26% between market-close Jan. 13 and roughly 11:14 a.m. ET on Jan. 14.