First Republic Bank (FRCB) 13 Jul 212021 Q2 Earnings call transcript

Company Profile

Participants

Mike Ioanilli	Vice President and Director of Investor Relations
Jim Herbert	Founder, Chairman and Co-Chief Executive Officer
Gaye Erkan	Co-Chief Executive Officer and President
Mike Roffler	Chief Financial Officer
Steve Alexopoulos	JP Morgan
Ken Zerbe	Morgan Stanley
John Pancari	Evercore Partners
Bill Carcache	Wolfe Research
Chris McGratty	KBW
Andrew Liesch	Piper Sandler
David Chiaverini	Wedbush Securities
Jared Shaw	Wells Fargo
Tim Coffey	Janney
Brock Vandervliet	UBS

Call transcript

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Operator

Greetings and welcome to First Republic Bank's Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded.

During today's call, the lines will be in a listen-only mode.

Following the presentation, the conference will be opened for questions. [Operator Instructions] I would now like to turn the call over to Mike Ioanilli, Vice President and Director of Investor Relations. ahead. go Please

Mike Ioanilli

welcome conference and Republic second Bank's Thank to XXXX call. quarter you First

will the Mike Speaking and Jim be today Herbert, Erkan, Officer. and Financial Co-CEO; Bank's CO-CEO President; Chief and Roffler, Gaye Chairman, Founder,

Before I Jim, that to call may we risks, today's over uncertainties, forward-looking during are please statements note make which the hand call to subject and assumptions.

the results forward-looking more and the filed uncertainties now, cause bank's the see actual to turn risks statements including discussion any that call website. to from the to Jim FDIC Herbert. of complete materially Form For today, a available differ filings, all And Bank's please on over like could X-K I'd are the

Jim Herbert

quarter assets. growth wealth with deposits, and Mike loans, robust It you, Thank good strong morning in management and everyone. very was another

The on colleague at client Republic’s model business all client consistent This Since our manner. is segments very continuing geographic care has all a in perform safe very approach success XXXX, each culture been while and XX of to operating predicated acquisitions. markets. a centric sound of Our and our in a of service empowerment, and of First taking well across is for years. growth led not to and personal organic mergers has very or straightforward time growth one grounded

a grown Total XX% up of Quite have and the year-over-year. Total up increased has loans quarter. revenue a per deposits focused fraction total value total to interest at only strong second board importantly, quarter franchise financial Non-performing point. billion. net tangible soundness only of year-over-year. outstanding drove Republic just assets assets XX.X% always normal and quarter-end, as Total HQLA XX% for of growth book First XX.X% was than continues total X assets $XXX basis for included and the This At a review credit more higher levels. remained XX% capital results the X.XX% quarter-end reflect quarter. our me assets. of was were up points, safety This was year-to-date, the charge across average leverage to income second X.X Net strong Let grown XX.X% The annualized. moment a cash year-over-year very on during organic liquidity. Wealth offs our basis year-over-year and share million, the the our were were performance. Tier We our of than were XX% ratio quality. X management

urban of quarter’s the very a is coastal remain the particularly home growth This refinance. and both strong clients total the loans this purchase activities, in quarter loan Our year. and active This so markets the of our substantial portion including far represented takes reopening evident hold. growth as single family during of

loans stability long-term particularly remained the past approximately on the This steady attracting a Republic’s new households. class, model, For our two asset some to and as residential portfolio for of underwriting at key XX% perspective have is entire First standards, very us stringent of safe a our with decades. loan

first in our Yards. responding our in and to opened well, the banking Clients quarter, During presence good. the has offices traffic we second quite actually foot Hudson been area are

a Beach very Jackson, to it's half Wyoming markets, Overall, XXXX. well. successful in Palm new other continue been first Our including perform and of strong

the intend continue to level. her Working successful First I'm congratulate an and from performance ensure together which partnership important particularly this like we contributor we delighted to to at emerge has Co-CEO. is Republic's pandemic. of consistency culture, new as Gaye I’d call Before invaluable turning to our on the Gaye a as her to been appointment take the moment really to our

the turn call and President. Co-CEO Erkan, me over let Now, Gaye to

Gaye Erkan

you alongside to continue honored very Thank special Jim. team. and our to serve leadership be appointed and much Co-CEO this I'm organization you truly

do will keep exceptional doing more on safety all extraordinary what our First We culture and an to work forward service we focus first people to and ahead look our to about unwavering of soundness, and hard delivering work clients. excited with continue Republic. best, I'm colleagues of opportunities to scaling at with our

Turning to our focus sound earnings a continued growth. on reflects that results, our quarter safe, it was organic terrific

Our top to client colleagues our is organization priority empowering as of an taking them and service. unparalleled exceptional care provide

Happy feels Each satisfaction Our clients, than the to happy in which more referrals do our client growth turn and clients comes and low the client business client more in repeat have, we our these client happy growth of and organic safe sources. get. we year, attrition, we more more referrals. results business people through the repeat exceptionally from lead XX%

we continued several and us have while in make allow These infrastructure. our the past service bank risk scale to technology model, our to investments strategic years, Over safe sound. keeping and investments

relationships are towards minimizing more trust tech our communities. to deepen to and geared investments time with digital and clients further Our and transactional to build serve time create

average now me loans billion, the Single continues quarter Family the client $X.X new provides also that additional other us during provide ratio of some percentage clients second second remain to with Single quarter was large volume accounted activity come loans quarter. $XX.X refinance was with Loan about the volume at origination which value from best to institutions, XX% all great a Residential at Residential during note originated record. for XX%. Let billion, opportunities acquisitions. would conservative A for loan Refinance weighted estate the for quarter. of volume Family our I ever. comments real

of at always perspective, For the activity interest years least rate accounted past across varying for volume. throughout XX has XX% family single refinance environments,

year-over-year. loans of XX%. reduction call XX% down driven mainly XX% banking, excluding PPP to quarter-over-quarter, up line commitments, Turning historic in by with to low-XXs. outstanding business our Capital utilization rate were utilization in-line a were This range from balances mid-XXs loans is and the business to

monetary as was XX% very well In activity, from and ago terms Total client meaningful policy. it year a up exceptional as by an of funding, impact a are quarter. deposits fiscal both from supported

diversified deposits total quarter. of funding increased to second total was cost deposits, Checking and all a total quarter deposit The billion up base. average represented modestly funding the by XX% a the deposits. of to paid leading the rate of quarter X just represented prior from deposits XX% for in XX basis points. on deposits We maintain points, continue X.X Business basis

to Turning from the to fees wealth was increased is $XXX billion. ago. wealth management, This were client of year to an billion than up inflows. which assets XX% more date, under management a same XX management of half increase period year Year from date, net to

four high quality our attract wealth continues very teams. to the new model we teams Republic. to welcomed management First strength of During quarter, integrated The

demonstrate our Our service results exceptional power our the the and second of model quarter dedication colleagues. of

Officer. to I like Now, would Roffler, Chief Mike call to over Financial turn the

Mike Roffler

Gaye. you, Thank

results growth including by Our was and strong management across our business the franchise, strong consistency reflect model. wealth up growth second of the for driven Revenue quarter organic was quarter loans, the year-over-year. This XX% assets. exceptional, deposits,

Our position margin interest fiscal net has the X.XX%. policy, from and for includes of the deposit which elevated was quarter cash This resulted monetary impact our growth. significant second in

our X.XX%. in of to We net be margin to XXXX the for full-year interest the X.XX% range continue to expect

net robust strong net to This Importantly, growth stable interest very due year-over-year. and margin. income a a XX.X% was in the interest earning assets up is

was with our second We the which for efficiency are quarter. ratio, pleased XX%

note deliver as to Our our increased our prior the outstanding expense Promoter invest growth I to would XXXX service. remains the year. Score we franchise from growth client that continue proportionate in revenue to actually Net

continue the to XX%. to for our range expect in We ratio the to be efficiency XXXX full-year XX% of

Since loan for in about for during the start added became effective loan Let of with our $XXX which of moment a $XX into place was and quarter mix, performance. reserves, million to only reflecting take guidelines] CECL, for [formula credit our experiencing been XXXX, loan we loss credit at CECL, me losses. growth, In six continued million provision the our has historic our now. CECL's million, talk quarters X while accordance CECL growth. have account

Turning last in in now awards to great quarter tax The a law, expect full-year for continue $X.XX the the to first we rate our vesting quarter rate These you to this in Jim. to to quarter the the the over for added I'll effective the quarter. benefits the the year. This tax compares increased range share the and be during call of second earnings the in rate, decline of due rate from was Under Overall, Thank second current same in tax XX% XXXX tax to quarter per tax the back half benefits the to resulting quarter. XX%. XX.X%. was to year. our turn prior $X.XX from stock was second tax tax

Jim Herbert

Thank you, Mike. Thank Gaye. you,

safely service, we and possible doing quite model remains very focused do well. tested and delivering It operating best very quite of business to time level continues the what only client work Our straightforward soundly. highest on

delighted questions. to Now, we'd be take any

Operator

start we from with And first Steve Alexopoulos. Instructions] [Operator our Please question you. go Thank ahead.

open. line Your is

Steve Alexopoulos

in side. highlights question here, selling spring record And how bit the was quarter originations originations, single one impact rates the XQ? the family season? did coming quarter billion down of supply my on of X start And loan another a the should a Just for is, lack of housing of almost the with we further expect

Gaye Erkan

the see peak me second an question. second have for quarter logs in is are It been the answer sure. let levels that the off we has so of pipe our We strong that Steve, of that quarter the our all, take coming – rate in exceptionally So seen first quarter.

While down year well for the the do the market, confident the loan and year as coming the growth limited last levels. our mid-teens refi the pipeline remain into the guidance. That strong second likes our off peak levels we're slowing supply constraints But half reflects rate of the remains above the with the year. seeing we as purchase inventory,

Steve Alexopoulos

too, deposits, in can some almost expected, you surge billion bank came I accounts XX%, the quarter, Okay, business in that's think business you it strength continuing? Gaye, draw, maybe bit down you almost checking that but X increase it color, And and was bank deposit, are private this sharp is a deposits as what helpful. like on saw for looks a deposits give

Gaye Erkan

of no mix. type it on growth sector individual so non-financial, is very that side, Actually, from and to deposit been the of diversified, XX% has over business two-thirds business XX% came

We consumer balances. are on is also seeing that the spending also consumer up the

kind to the of at consumers consumer, checking average versus average the So, accounts pre-pandemic average the levels balances. balances, when bit account look business compared average the plateauing I on are a account and higher the business

reflecting we the the on and follow role, to playing yields a the cash our their reiterate lot is that's sidelines. the But business the into Fed with that's also market, the as businesses. a with part of that in that clients along are Fed model, banking – the would also more stimulus I also keeping private obviously, So of

relationship it's all-in-all, So, client deepen. one to continue that we

Steve Alexopoulos

congratulations, first, announced us now And question, not change Co-CEO congratulations helpful. final Jim, But this Gaye, will for structure? Thanks. what of management under the walk responsibilities that's update was maybe on Co-CEO. you in could Okay, the a terms just surprise, that on through

Jim Herbert

not very Steve. initially, much. Thanks, Actually, probably

As you of for actually are reports the know been to and substantial well, back And pretty yet. yet. while. really this the And, transition. aligned We're The pandemic together along the rest direct Gaye with you calmness quite is of the well already. know, a the we're change out the office not team the running really of I've not

on. We There's have lot a going conversion a happening. core

approach] the it First to steady, board, [Eddy transition. So, seems it us a Republic to seems and very to

Steve Alexopoulos

Thanks my questions. Okay, taking terrific. for

Operator

Zerbe, question next from Morgan Stanley. Our is Ken

go is line ahead. open. Your Please

Ken Zerbe

of whereas, I in of I question terms are hiring Thank expenses, a related say sort of probably versus, where about I first great. look a items? compensation fair of of that far like it in the mean, Good sort Alright, else if at lot non-people had, I I the just franchise franchise is you've everything investment bit, less, investing looks coming related is, in you. expenses how the growing the morning. much from, people the expenses, guess talked is

Mike Roffler

Thanks, Ken.

at our base I think to large revenues. variable we the is, on that's compensation that focus one first there I'd portion when is thing tied a look is

especially talked production investment question, volumes doing. wealth those checking as strong incentives. to Gaye second so grow and had support there and balances on, of to about In grow, lead that greater earlier, levels fees, teams, fees they're all that people addition those the as part is And management some production the the going your

deliver based we’ll so to support always extraordinary business, of had team a as giving accordingly you grow approach in capacity then great all And had service again, staffed team investing operational a process. a services, because people volumes, you and service as loan bank and additional are operations operations, way sure to the and the book add investment also through and members manager additional so, client we've sure of all help making you're the deposit make the we've

Ken Zerbe

it. Got

terms the a because are of Okay. a just in understand, off management, know just of of different trying question, sort fee your about to fees Maybe income of, generally sort wealth that think lag. one based how to quarter I

affect effect first maybe fees the should XX.X% quarter, whatever quarter up be XX% like us sequentially. fees understand up quarter quarter. in on in is sort higher is second happened can AUM fees, the Thanks. variables were, feels of XX% fees? AUM this So you this quarter than last they are help just was piece, I It guess up that first quarter based was what just

Mike Roffler

Yeah.

June revenues. is at teams right. which XX fees is drive this may what assets investment be directionally So first late the way last management management first quarter it you the third have will under us the Ken, At the quarter, you're of came largest number benefits described where The over their is that and end the describing during early year, you also the joined of quarter. assets the year, component,

So, get little three, bill you the call but because a versus months there'll only do us joined period. this February quarterly in until quarter it five If someone you X, get the, stub from the through be revenue get don't we revenue, of quarter process. not the you bit

happen. bit that And of so, a little will

And rule to increase little than is so stronger normal, good it's general AUM thumb but one of probably the your use. a of in a

Ken Zerbe

it. Got

much. very you Okay, perfect. Thank

Operator

John Our from Partners. next Pancari, is Evercore question

Your line Please is ahead. go open.

John Pancari

Good morning.

want Just historical, your I expectations forward? rate that do on know are] below historical indicated the the or you business. you lending that get decline Do Thanks. going think question about line have what know time think to there? the there you utilization call just that XX%, your which a down it capital in-line had was are for being? it [which you thoughts to could level remains is level around I

Gaye Erkan

very what great it's And that idiosyncratic, that's to to John, we It's one estimate mid-XXs a deal and but variable that much hard we really specific but much very estimate is is have that the it's tried it question. it, very is one deal dependent. the because seen The to variable and the at been the to is it and low-XXs the know, have commitment the the [PVC down activity] now, be we we metric or has historical [the that range. you much to Right look pretty continues from XX%. growth strong. XXs] come one always is

continue expect the the would to terms commitment the in momentum very of exits, So, fundraising you the the as of for is the well. all very pre-pandemic the attractive And while half growth remain going above active, year. second through markets levels

try I would it reason, mid-XXs growth that for to be somewhere expect to then look the still high-XXs at between to probably. So commitment and

John Pancari

it. Got

front? the little LTV stress real CRE of And know the side, portfolio? any there, Gaye. you you bit indicate Are you at can commercial if a thank you about talk estate on seeing – I wanted Okay signs then in your trends origination, separately on XX% Thanks. current I reserve appears to see the talk right the at on and that level? XX, is what's you XX% your migration do that expectation that as higher out on be XX origination, LTV a in on also well, just could Slide into you or to the new production And about LTV expect Slide

Gaye Erkan

office underwriting much product conservative estate in and is both, standards the comes later of the markets specific. in commercial are we people And remain the as and terms there’ll we picture how do in office, be we remain multi-family city companies call see will We credit – region So, back it outlook to soft the just year – people general when and clear bringing the centers. much but remain very are don't how their theory as to real offices. to

very have limited CRE to and exposure retail We hospitality.

on still it our uncertain, service which and value While trends do to managers as we rising continue owner the experienced it's with positive and mostly safe we're be will refinance tourism to occupancy rates business holistic that tend global travel. depends relationship. deals, are seeing banking But hotel

Mike Roffler

if John, large, there's thing which you not home allocation. to you you to you might know, you coverage because in the just our I sorry reserve is a about, home one with other reserve talked you and on portfolio, you for than, And about of tied loan and maybe pretty a XX% know, step reserves, deck, reserve our And of there, know, tied at look the expected of portfolio back you loans, that highlight XX% low one-offs - – loans, moment, mentioned loss slide LTV again our and XX% here which a is have our ratios. know,

look feel about of If And rate our more reserve at portfolio, given it. that's the X% than on know, a strength it's loan you the of rest appropriate. the we underwriting, you

John Pancari

Got could project core update you project? Thank more, it. stand Thanks. helpful. just status on you a ask what I can us replacement And That's give – the where you that? on systems you. just on the are If one

Gaye Erkan

very pleased the with ongoing conversion We're core system. of Sure. our banking

So And with is the third validation the have nearly complete data we're the going too. data work the migration most development is along to of also complete. also

into end doing a multiple is, So, the bank. to going us have across end-to-end to milestone fall well the planned next we're as trainings And throughout mock lot testing. for summer user do the conversions of and we're the

expected before the we timeline – by our intend year. and with it end finalize in-line of it's to So,

John Pancari

taking Great. questions. All all right. my Thank for you

Gaye Erkan

Thank you.

Operator

from Wolfe Carcache, Research. Bill comes question next Our

open. is line Your

Bill Carcache

from trajectory the the you. origination kind that down Thank formation next is broadly, could break growth seeing if seeing you're of you're outlook discuss what coming generation Can your and more trends base? customer of from your morning. where that within household family loan What's you here single you Good growth customers? among

Jim Herbert

household the to question, hard formation thanks, Well, is answer.

is macro We’re to the seems us I only information picking have up subject, undoubtedly. think does. It it we same everybody

other of since that’s the doing before millennial refi. is which were the thing we we credit happening is share PLOC, doubled, households The larger lending, the our in of from already. line personal under client base, that what millennial have almost fact, over shifted in to homes That's a [indiscernible]

the it's households good it higher actually was than quality even and business is those so, the And of prior then.

The the they're households, it the the think I activity terms is the be. or buy, of to home first levels, of finding frankly, the [first actually. condo] rates, course, in growth thing, younger high very quite among may hardest whatever

going So, actually I business think is the very strongly.

Gaye Erkan

I And XX% the of and pleased are millennial the resonates new coupled the millennial management, year-over-year clients strong and over deposits the households would with our XX% we're millennial add, across fantastic very for mortgage household our clients, trusted acquisition be which offerings continues to wealth now human lending clients. and with around is advisor

Bill Carcache

switch can That’s on to the success Thank discuss the and If and variables brought I board? behind in also pipeline helpful. that gears discuss new how teams your teams management, maybe of attracting some wealth you you. retaining you've your the can looking momentum is

Gaye Erkan

that we we seeing pleased us. So, are very teams are great quality of joining

We PWM holistic prospective second banking the strong management have culture the four of fit continue have a seven wealth hires new Wealth new quarter, they Management and the model. Private in And Wealth and [Private as Management pipeline we year-to-date teams]. long team welcomed as hired teams, to

that well. new Also from have well I coming the year-to-date that net with existing new clients client their to we is client continues really strong note deepening in relationships, be inflows as teams. both that inflows as would So seen

Jim Herbert

got platform success we I'd better than banking new of nicely. with in add coming One a now cross-selling teams additional had the is, accelerating to clients one that thing is very before. down We've wealth our to the

Gaye Erkan

example, [X% year-over-year. Yeah, referred for up to deposit, are XX%]

Bill Carcache

run rise you. macro see Thank that, the where perhaps could you to faster of the outlook can a If to Very kind about do for how final business start and a the I business? it squeeze any how helpful. operationally question, about whether in If long-end we think how one short environment the the than little you you curve? you of think an just in rates bit performance difference makes eventually frame

Jim Herbert

I make difference probably run to the this It very to as Gaye much won't run referred how match a operationally we We business. think book do earlier.

in our not real if so, little question, but it simulation inversion, problematic, rate does rising the the very is thing. inversion models, it you Inversions is run. a your buried last look long. And particularly to an you The think, a does what environment in I problem not economy what implied, us much always at which the so threatening in generally, is don't short to

– is, don't of have portfolio rate than a together generally growth our much. nature XX, very don't is XX% the very with rates CPR. balance – XX% maybe mess you mortgages market unique various important they additional banks which items XX%, and sheet. of for ours balance have rate somewhat primarily, The is only the those referred repayment So, of but an that they the us, portfolio, priced have of growth reasons, the little to Gaye sheet to on our between what thing equal two all most in so that higher adds and And to XX% which per the XX% their or almost is and whatever year,

sheet the with changing balance us to from rather every growth XX%, the and XX% repayments year keep nicely. allows repriced So, market. rates we about That up to

Bill Carcache

you, And questions. me congratulations Gaye. my my for Thanks add Thank Jim. taking let

Gaye Erkan

Thank you.

Operator

Our next question is coming ahead. go Haire. from Please Casey

is open. line Your

Unidentified Analyst

couple the volatile are still new NIM also for given a the money long-end to Good and on on follow-ups where a all. of pretty just curve? Thanks. but some Maybe morning yields intact, color guidance, securities loan

Gaye Erkan

Absolutely.

barbell [Muni mostly the side, and Multi-family, yield CRE when logs. in X%. a the X.X%, some on is look in traditional matching around is been X% for referred So, investment there mid-X’s, duration we equivalent rate the HQLA HQLA of we at [earlier range we're in agency mostly on have as and which high-Xs to on on as deals, the And X.XX%, the about the AUM] Jim again and XX to strategies family from residential The X.X% management single X.X% and short-term side agency coming short-term seeing the government around doing type X%. so to to bips X.XX% in coming side], the HQLA, well. X.XX% safe perspective, tax agency is

in all high-Xs estate the funding So, of about coming coming the X] around points, you we’re assets XX more all, real assets [X.X cash range into in elevated seeing in basis levels. marginal into additional cost a marginal to and type put the with

to So this the that brings to the half quarter. X.XX lower of us X.XX, as printed we have

Unidentified Analyst

alright, great. Okay,

On So, is but I sheet? is I card, guys pretty size stable. do terms that in position what that balance cash working cash ideal wild for minimum timing mean, this know is, position, of a see the down what you

Mike Roffler

our You our in to the I And like know, billion] and of was run, sheet to a deposit us billion given to quarter you XX. X pretty like thought [X.X it be think balance good second X% place we just X% the size call would average the of activity for overall sort the feels sort that of of see. balance over sheet if

you You of so that guided to towards know, know, that the billion, X margin your by, X you you be, top is end and going billion, know, range. down bring

Unidentified Analyst

today. you could based that is than provide possibility what know, is remote that know, Mike, you you like, as can to where bips, you entertainment then, have ratio, lighter in little an about And a there what is and know, about, you mean, were not plant just COVID work much you've update you understood. guys entertainment, efficiency learned to benefit the And, could, that XXX a on just far? run I the ratio efficiency thus in a on the the pre-pandemic you Yeah, past think I you talked

Mike Roffler

do the a, talking know, than are bit about much, are think that lower running right? of continuing things it's I lower. what from we're learnings you more little we've a events, had had pandemic the events, we running that you And they starting sort don't not to events client ramp things they're quarter. They really we more year. know, to as have of used we may that And clients a we deep effect, the starting to are bit a into next also more. get in conversion anticipate but and we later quarters. do to little as see travel are, lower to to up. talked will the things those a our and been And think you're the entertain People travel, you your benefit I the starting think have do to and, Yeah, couple about, of you here Gaye internal fourth estimate still run mentioned to around or definitely probably the in do maybe know, process efficiency, X%, for core full

Unidentified Analyst

Gaye Thanks Okay, Thanks. for And great. taking the questions. congrats.

Gaye Erkan

much. Thank you very

Operator

Please Our McGratty, coming KBW. go is ahead. Chris next question from

Your line open. is

Chris McGratty

little on just operating Hi, question bit follow good morning. ask a I wanted to up on leverage. [Casey's] about efficiency, maybe and different

know, even operating industry didn't totally efficiency last in excess ratio where where on have generate hear the positive a up. when expense year leverage ability in the year you you were but are we growth? of How thinking an still the rates I that. are, you're they so to of kind maybe know, with of that Mike, normalization, was rates revenue growth You at was COVID about

suggest maybe tightening So, [next that do that bit would to little Thanks. better rounds]. me you a the

Mike Roffler

that model production. think that's And the the growth are you we or know, I revenue a business institutions that, don't is revenue and effectiveness focused have delivered standpoint always on client things of of it. and service, other one from that So, how

ratio promoter client stable a to net mentioned improving our efficiency earlier, how you always that in to pretty And has we while expanding offices deliver supporting, was is grow? tight so, a continuing we're service. client And Yards Hudson do very service like led range, deliver while think to what score,

in we and matched more growing. they're revenue so that of expense it, And relatively think I about terms growth are think growth how

your be leads very leverage we I positive not consistency that long of but time. a it operating may And it that view mentioned, so you think And a to period as stability important. over and

Jim Herbert

growth a the also slightly respond just delivery And This the of me same at service a is enterprise. time. focused more on of in Let way. we're quality basically philosophical

cost be long can not by We're a which leverage very operating It's others game. this We're cutting, haul. So, do. the in long for that game. achieved in

embedded. And approach as balance our so and – we safety that on costs, have so so we systems so, procedures has of to that invest always objective, the operating service a operating and of grow been said, leverage operating not quality and we primary table, grow. Mike primary good but maintain But clearly, continually and is and backup delivery just clients The because on – is not the a grow objective. our it's then so of it's we

or said, growth Gaye driven coming we're direct by for. our our clients referrals. of That's reaching something just not That's actually their XX% is As in.

have we level respond it we'll service so the to And that franchise, diminishing they're we to used us, have from of a or or never that expect and with have. to to intend

a is all value So, predictability model. above we what stability and the stability, balance. That's that's a balance. of And else the continual

wouldn’t operating the I So, have actually a look lot of leverage. company to for

Chris McGratty

you the appreciate in ramp did investments we one Mike up so third and should on know model. quarter, in the your [indiscernible] expect one, [indiscernible] this a I final I'm color. wondering, great income I Maybe more did bumped add QX? That's just typically It that. quarter.

Mike Roffler

did purchase mid-quarter. add one we So additional

was We time-to-time claim, also quarter in impact the from a and there have from second a modest that.

the million run And I think would purchase XX of so to factored after is, million quarter the rate range a is a think about XX sort I new from in.

Chris McGratty

lot. a thanks Great

Operator

Piper Our Please go Andrew coming Liesch, next ahead. Sandler. is question from

is Your line open.

Andrew Liesch

on great congratulations to Gaye, everyone. the morning, see. announcement, Good

Gaye Erkan

Thank you.

Andrew Liesch

quarters. expect are capital are that you tangible guess, your the last I capital and X% in Got assets [indiscernible] the them a below question how today? some where viewing up balance couple levels for to see right just position liquidity regulatory mean, solid normalize? on general, leaves certainly do sheet Is year-over-year, now now. ratios rise your I deposit as And – you any like you are there as of stands

Mike Roffler

the pleased were continue into of it that is will an remains the philosophy remain here point impact as when up an market. to appropriate. want also capital the the It and we a about future. XX.X, clients We you growth ratio And leverage I and you have think advance We And the think I grow I think a pricing. we cash that it's view on TCE, Andrew, margin. our extra raise the about future what attractive carrying as our we quarter the, or eye first outlook little So, as of to in about sort always And some at has talk think as think to keep that, anything, philosophy I mentioned, as years, of similar to serve our opportunity bit opportunistic of in much XX think, a does We because sort future. fund bring and good impact of been our we future then our has. is.

Andrew Liesch

it. Got

other covered all you. my step Thank You've questions. will I back.

Operator

Securities. Chiaverini, from is Our coming next question Wedbush David

open. line Your is go Please ahead.

David Chiaverini

like points looks when here? it sequentially I had the a downward subsiding mortgage, the yield average I rate pressure the on pricing is curious, getting in second you balance loan pricing sheet, came you're mentioned know, to basis a the Hi, down thanks. at on was X how of, resi the is look And follow up X% range. quarter, X.XX% I question about you

Gaye Erkan

has been it Actually stabilizing.

Just than on slightly rate what's be price recently logs higher to our just the we seen portfolio. have

So, which good is news.

would that plateau itself. So

the are the coming estate So, week multi-family at above. and X.XX% I would on in family, or single rate say real loans, six logs

David Chiaverini

made where other the directional slightly were the quarter? coming from rate second a where of in near-term, to are that the we hear. kind but to it staying is given good on way sounds margin or net interest in the the And – comment know, just the one That's with you with better, X.XX% in like the bias, same guidance, you Great. X.XX% locks stable there

Gaye Erkan

strong X.XX%, I the X.XX% well. would coming cash levels as reinforce deposit is on in because impact No, the the NIM too. elevated have The

bill. So, I us of metric mid-to-lower guidance, our interest strong net the the income sticking asset the really But net is to given that the the earnings would income is for pays growth be range. half interest

David Chiaverini

And run or modeling or the second into expenses. we you baked quarter either then Yards come shifting third rate question, in another through fourth sense. should quarter expense, fully Hudson quarter? makes Is step-up in one to know, expect now the to that the sort Yeah, of the

Mike Roffler

this in, in most is the is modest fully Yeah, improvement any and of it's depreciation pretty and up the rent tenant point. would at sort fully of, much step be pretty

David Chiaverini

much. Got Thanks very it.

Operator

Shaw, is go question next Jared from Wells Fargo. Please Our ahead.

open. line Your is

Jared Shaw

morning. I first, for fee the component performance to just, wealth Mike, guess, good Hi, any Thanks quarter? the question. there was revenue this management

Mike Roffler

there not. was No,

Jared Shaw

Okay. rates? And is the purchase Europe, then, you you know, I guess in geographies primary more higher think potentially generally, how market sensitive to do

Jim Herbert

supply. mostly increase sidelines. bit. sensitive. a say slightly But getting sellers little improving not biggest are supply little has it's a Listings off is That it's going that it's is prices The in all bit. the issue. up problem better. And I The pulled a would

New York, there’s of in the York exception. New but is else virtually supply everywhere nothing. There's plenty

Jared Shaw

the to as my for I congratulations Gaye give Thanks to want well. just Congratulations. Great. color.

Gaye Erkan

Thank you, Jared.

Operator

question next from Coffey Tim go ahead. is from Please Our Janney.

open. line Your is

Tim Coffey

the Great. Thank you. you for Good morning time. and thank

off wondering, LTV first on the look have residential such or seen weighted mortgage competition in there it than know, they you I'm greater just circumstances question than liquidity And we've quarter, you as, like the quarters. that in my if a So, before? is it of is having production the at ticked is, borrowers seems other recent a average function bit higher

Gaye Erkan

a be fluctuation. would quarter-over-quarter That

– XX% so We will in slight real real just – estate is of our is one-off. the average weighted our estate overall mid-XXs, pick-up a with to come lending a loans lending

standards. credit We will all. compromise We our remain in on conservative underwriting won't at

but not we when credit. fierce will on pricing, relationship to be comes will it We compromise

Tim Coffey

Okay. Fargo any was, then their do Wells canceling First my see from you benefit personal to of other lines question And credit? Republic

Jim Herbert

what more We're millennial they've on with up product, might focus go that think be the mostly – go significant suddenly but it in age, might opportunity. done it do. We that upset they not that. there depending up We actually may

Tim Coffey

would What would you of personal I not. credit? millennial your clients think percentage say use line of a

Jim Herbert

significant a Actually clients. the millennial amount of new

line product about year only a credit old. is of personal Our

XX,XXX So, has out our it X,XXX to so X,XXX far. probably of

Tim Coffey

a typical Okay, greater? line or is XXX,XXX amount

Jim Herbert

This something XXX,XXX XXX,XXX, is to about around to is quite The probably important, commitment actually, typical XX. the is typical XX commitment. usage like that. typical The

with is So checking. that funded self XXX% product

Tim Coffey

Great.

very Thank Okay. Alright. much. Those are my questions. you

Jim Herbert

you. Thank

Operator

Our is Vandervliet, next coming UBS. from question Brock

Your go open. line Please is ahead.

Brock Vandervliet

this the just earlier question. but what's coming point, Most question, at the to already of jumbo terms the back is in the average [Indiscernible] on LTV the of just covered jumbo product? LTV resi it

Gaye Erkan

residential mid-XXs, high-XXs the single mortgage. in in family usually are range, we the So

up-tick when the couple look was you So, of just percentage points at a the recent originations.

the we So, operating will that we to that remain high-XXs regard. the mid-XXs have really range And at. conservative been in is

Brock Vandervliet

– new has especially than least some of the of are competition cases a any and jumbo competition, originators, jumbo? around Okay, residential intense from at independent quarters significantly them product evidence LTVs one among we're introduced the know seeing very and that you of level, just seeing some higher in are, you

Jim Herbert

are for you they been started We've fact, if number not where was. error. down, how almost a liquid stumbled into jumbo axiomatic And I problem it of the deal, a And one since we it. raise to But there's LTV XXXX. someone which quite and this is after want is the And that through before more they of is good things learn in XXXX jumbo puts the that of sort in margin years the doing interesting. you is because do And how XX mortgages realized that need do more it we to to bank also, almost production, did product, your larger. are one do

And so, maintained for that range won't over LTV at sub-XX, three or decades And XX% around our slightly we've XX% right vary. slightly least. sub-XX

Brock Vandervliet

much. Okay. Alright. Thanks very

Operator

no call appears your I'd Jim At questions. Herbert back time, to are this for further remarks. like any It to there turn further

Jim Herbert

very your good time everyone We day. morning. Have Thank much for appreciate this you it. a

Operator

call. this Thank today's And for concludes your you participation.

disconnect. now may You

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