First Republic Bank (FRCB) 13 Oct 212021 Q3 Earnings call transcript

Company Profile

Participants

Mike Ioanilli	Vice President and Director, Investor Relations
Jim Herbert	Founder, Chairman and Co-Chief Executive Officer
Gaye Erkan	Co-Chief Executive Officer and President
Mike Roffler	Chief Financial Officer
Steven Alexopoulos	JPMorgan
Ebrahim Poonawala	Bank of America
John Pancari	Evercore
Dave Rochester	Compass Point
Bill Carcache	Wolfe Research
Casey Haire	Jefferies
Ken Zerbe	Morgan Stanley
Chris McGratty	KBW
Andrew Liesch	Piper Sandler
Terry McEvoy	Stephens
David Chiaverini	Wedbush
Tim Coffey	Janney

Call transcript

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Operator

Greetings and welcome to First Republic Bank’s Third Quarter 2021 Earnings Conference Call. Today’s conference is being recorded. [Operator Instructions] I would now like to turn the call over to Mike Ioanilli, Vice President and Director of Investor Relations. Please go ahead.

Mike Ioanilli

Thank you and welcome to First Republic Bank’s third quarter 2021 conference call.

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

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

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

Jim Herbert

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

exceptionally continues model to and of taking growth each been has exceptional business client-centric results year. at serving care perform our well grounded is a of all consistent Republic’s simple changed. model, unique markets. time, in Republic’s client existing one our success after across segments service, story organic XXXX, straightforward of Since First compounding has our execution well. in culture It which very of a Nothing First year a of clients our

exception. an quarter was This not

the basis continues credit share increased basis X billion. point. XX% importantly, of Let quite and up to And reflect assets. a at charge-offs outstanding has year-over-year end me book that’s assets quarter. of management Year-over-year, almost soundness the to Net grown points quality. across-the-board fraction total XX%. have were grown the for financial Net quarter. the per total year-to-date quarter safety strong up quarter growth only a This value the annualized. performance deposits organic very were Total strong revenue was income for a were more third Non-performing interest only review briefly very results XX%. loans Total XX.X% drove Wealth $XXX were The for than up XX% bank XX%. $XXX,XXX, assets total our of of year-over-year. tangible

on liquidity. focused very are capital we always, and As

During capital which continued the lowest ratio rate as This At as $X.X leverage issued M we ever stock, preferred of at billion our equity included support well our quarter Tier common our X quarter, dividend perpetual growth. was raised our actually Tier was third new end, X%. X.XX%. Series to X

was HQLA end XX.X% assets. of cash average included Our very This level at liquidity total levels. strong quarter

as XX continue We communities we focused for years. strengthening to be been on our have

managed participated SDS the providing example, in a will by month, be capital funds raise supportive For used These we Capital to Group. permanent housing housing. California this in for address additional by fund the challenge homeless’

year. a successful our is strengthening Our in and only communities. has on long-term been focus far modest the this participation strong investing Overall, of our initiative so XXXX and part

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

Gaye Erkan

you, Jim. while the deliver long-term our has of been business strong quarter, model acutely the It after to far. franchise. a simplicity us success performance Thank quarter indeed The on consistent of year allows focused remaining thus

service model. client Our our in scalability supports strong investments delivery further and the performance of

operational support continue our in to example, and our we For new to talent invest colleagues, growth. infrastructure

client banking further preferred to and empower markets enablement our in and technology New digital our reinforce our existing to presence offices and our trusted colleagues deepen relationships.

from key be up of accounted Let best just quarter. very refinance meaningfully during is was of this loans at single-family quarter was me providing at a $X billion. ever. residential large to some volume representing come weighted XX% growth A the at our origination origination client volume now strong opportunities clients great new provide originations year-to-date of I of the year-to-date acquisitions. XX%. for Refinance growth. loan to This volume single-family average us other a our with continues ago. on would Loan more for proportion ratio detail was that strong our Single-family performance. third of activity note year driver than quarter’s with additional Single-family from institutions, billion, continues XX% $XX.X loan-to-value

maintain ratio loans for loan-to-value XX%, underwriting the to slightly stringent real standards. the The at our during quarter weighted continue originated lower conservative quarter. We prior average estate remained than third all

of to as up the during in XX.X%. banking, loans Capital well business utilization Turning commitments, were as growth year-over-year. balances excluding loans, an business reflecting commitments increased and PPP line quarter, increased XX% outstanding rate

prior XX% exceptional In represented up deposits quarter a slightly of ago. deposits, the Total deposits. represented cost XX a quarter were basis of Business paid for points, year just points. checking X terms total was an average of quarter. on to rate funding, The funding At quarter. basis total XX% total it XX% from the up end, of was all deposits deposits from deposits leading

strength wealth wealth to billion. billion client to was have new third management total, from up $XX a wealth were of team X This of in increase XX% Republic. and under year-to-date, which another period quarter. quarter the Turning is an management, management Year-to-date, integrated team continues year-to-date. model from net to we welcomed increased assets to In teams fees The attract $XXX year high-quality ago. same This First the teams XX% of inflows. over very already our one this management includes

amazing the the of our power demonstrates ongoing colleagues. performance service of and quarter our dedication and model care third Our

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

Mike Roffler

Thank you, Gaye.

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

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

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

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

brief Let me core a conversion. on update now provide system our banking

I final us in and note pleased unchanged would first phase in-person that very XX%. of one XX% training in for quarter ratio of are delivery. give of our of are will quarter for extension progress delta at complete remains XXXX. our to time efficiency This the due to full COVID-XX that the been expect XXXX additional delayed and the We We core variant. to testing year with has now the conversion guidance the the conversion

the quarter, our loan provision $XX For strong of for was which is credit reflective losses our million, growth.

third As with will stock our earlier, In stock pleased XXXX, be offering fourth are Jim dividend approximately of in preferred $XX noted particularly Series preferred we quarter. our quarter the M million. the

the tax was rate, range our be tax this a we was the current year quarter tax for third Under the XXXX XX%. to for strong the to XX% XX.X%. Turning to full continue law, tax effective of in expect our rate rate Overall, quarter. to

Jim. Now, the call I will over back turn to

Jim Herbert

you, Thank Gaye. you, Thank Mike.

cycle we questions. operating doing tested focused soundly. very would Thank do model and the and only time remains Republic’s We of on quite business delighted you. best delivering on focused highest what take possible straightforward safely First service, staying client be level and your to now

Operator

Thank our you. first from with We Instructions] question JPMorgan. Alexopoulos Steven take will [Operator

Steven Alexopoulos

billion up at and everyone. morning, add picture XX% well. to as big we have bank management Good deposits feel I Jim wanted business when metrics, I Jim, on start key year-over-year, wealth Gaye, growth the your look XX% growing in a question your to at free ever company, with assets. for year-over-year. than quarter originations. assets it’s and billion up best are the terms up was now for Loans it’s what $XXX faster $XX quarter look When third XX% it of at I

As what entire business growth your company? you explains drivers, expected the mind key stronger across analyze being the and in than much delivered

Jim Herbert

of lose don’t embedded the they not – clients friends them to you with of you referrals. important more I’d very we compounding are adds in – and their to for also Thanks, we are you franchise. them, the the we don’t have existing effect you that, credit our of model. grow, In to take where and lose – they their credit or and the also what good have growth if business. they you but for. Steve. care and add is extremely network and going Well, This and of shouldn’t the you stay the But it’s compound lose don’t refer happy get don’t And from and clients nature take

up are equity loans. market. going we the We all in and And of And things a and and are in deposits in stock rising the we from market a benefiting very and are good are – nicely very system liquidity market. the in

So, important for let Gaye that too. very And some more account it’s take over to this into me to detail. turn

Gaye Erkan

by business the were up Absolutely. as at And over Single-family loans mostly is And XX% our When year-over-year single-family loan the originated ratio existing then, single-family I of loan-to-value note growth, driven strong would deposits. under months in year-over-year. was lending, residential with all was our of portfolio. our XX% you residential clients. Steve, loans the we mentioned residential last look our growth XX XX% that loan

activity and balances This continues by business mentioned, our with increase clients. referrals. Jim As the Half and average the the we deposits very in in liquidity existing strong client to the account seen our have from model increased seen well-known market. the we continued And is driven account benefit of balances. higher in activity reflected have the also

were regards households And year-over-year. to year-over-year. XX% example, for So, with over S&P was XX% up up business AUM, our XXX

you So, from clients strong as mentioned as as both reflect as inflows stock market quite does as our well AUM client existing the strong well new earlier.

benefit to what’s from on continues the and So, the model going perform market. nicely in

Steven Alexopoulos

tenure Maybe color. move Roffler here? of that do Mike does up? margin, to the for your recent some cash current that’s higher invest on helpful the if building level, the appetite this the the least Okay. has in excess impact That’s how at you XX-year, given NIM think And bottomed at holds the

Mike Roffler

and of during called cash on up is one It’s quarter. is and another that impacting $X balance little up things we the it So, was this sheet. billion the the continued average I and think to out bit go level a margin on the liquidity the of

With to about a going Yields And bit the there think be in decline higher, question caused your securities. probably buying always bit better – methodical. do the and little but that so, I a opportunities is prudent this are quarter. we little to tenure, respect that’s are

Just here, importantly, to going the cash in and lending most because respond standpoint. deploy a client are it methodical we and manner we from demand rational a to have

Steven Alexopoulos

Okay.

bottomed best point? the that at be has based NIM would think that, you on guess So this

Mike Roffler

cash bit, couple levels levels. the a basis a to based a of of near-term little you were up dissipate a the in the see little NIM Honestly, lot then would – cash points. it probably is the If on

Steven Alexopoulos

to one a a above question, And squeeze continues could in. final if quite been Okay. that just the It’s the run then quarters I growth loan more guidance. mid-teens few

still could market burn will think out pulls wave mid-teens pandemic with at growth? that grind a that staying buying point environment, you bit. in tenure, I’d guys Do the refi this to continues some Just deliver you if up, imagine this too. loan Thanks. the

Jim Herbert

Thanks, a ‘XX, and looked ‘XX of loan short Steve. one Well, We the XX%, to is answer XX% was back ‘XX answer yes. to – rising all growth. and to them which XXXX, to had ‘XX, went the XX% XX%, ‘XX ‘XX and environment. of year-over-year up rate And each at XXXX

really a refi. doesn’t I – family, think. activity. economy of good in is Gaye XX%, our over which going and so it purchase shifts to growth, rates indicated, So It’s more it backbone the bit But little remember, just up single as from just

Steven Alexopoulos

great. questions. Okay, for my taking Thanks

Jim Herbert

you. Thank

Operator

will America. with Ebrahim of from our We take question Bank next Poonawala

Ebrahim Poonawala

morning. Good

Jim Herbert

morning. Good

Ebrahim Poonawala

Just following about is growth, strong, your strong. we I loan is Jim, guess, acquisition business think client if up the on activity

the side, you the have housing supply On constraints in rates market. other and chain higher

housing terms in you you lack the Just go think where the to – if mix we talk a the refi over rates deal one, stay forward? next is are us, like what market how supply of and big of they to of look expect the as do growth about in And year?

Jim Herbert

tight. markets, the the – But of a hand, not we supply means. have I topped slightly. getting deal by And little other Listings prices our can’t we pretty is It a whole still in to below our are it see for so to very quite transacting be say done speak to don’t maybe up course. they But better. rising on little which any country, bit. an appear the constraint was, is But In want markets, occasional and asking do as it’s as good. frothy consider of little. I are

if years, has probably or back of And greater refinance go been I volume. XX% volume, always think single-family our loan – total we our all many do. basically about but you

some etcetera. a of seem extent, very by And so we activity, have just to adding to And the human driven there. refinancing, room, base moving, that’s nature job,

So a it. there pretty base seems to good under be

Ebrahim Poonawala

us even once once if terms the move mentioned just in of anything, efficiencies Mike, in come might ‘XX. terms XQ you or Got system? is conversion means, it. a what new the And revenue synergies through separate the to I that systems question. of guess that in Remind conversion you over

Mike Roffler

excited the clients. about colleagues with progress I the Yes. help think mean, will and and the that we’re I new in things our system serving

that So and I would we’re excited say what our investing and continuing to we’re that’s support service think always But I for really client serve about. clients.

is do. of will a make think, serving other more And This always like I the also clients we’re efficient things so operationally and going some make costs implementation we there bit there of go but away, we’re are well. sure to something to do and us,

Ebrahim Poonawala

Got Thank you. it.

Operator

Evercore. We will Pancari John take our with next question from

John Pancari

Good morning.

Jim Herbert

morning. Good

John Pancari

business, and talk could that? inflation little topic. then The there you separately, the the And expenses, an investing impacts seeing pretty also in about systems technology, On that same your that bit was inflation? wondering impact expense from still wage given impact if on related wage active notable you front that from has you’re on just you’re which are is that across delay, a still Thanks. and heavily just seen if hiring area any

Mike Roffler

First, outlook guidance, expense planned or our really no fourth change a to was quarter. on the conversion, it

$XX quarter, wage projected, of across thing So would bank. recently already all second, for in terms extra. mean I And we terms they are first still in is, did one minimum colleagues there. the in expenses were the inflation, our the – and little very colleagues then And are highlight – modest the wage of a increase to those for I it’s

And think been very for standpoint. from colleagues. have that’s think step great we And hiring, we hiring competitive and our it so a is I a

little to for new more and And it’s a so meaningful, bit I necessarily down don’t wages. we come seen think hires competition of that but some have does

John Pancari

I loan quarter. Can multifamily, figures it. some in growth construction, production Mike. you CRE, on And just know saw about the talk book production On your on the production you’re Alright. XX, starting very separately, strong result that’s the improving Thanks. all Thanks, seeing in there Got then what front. Page in CRE to there?

Gaye Erkan

absolutely. Yes,

pointed let As increased across multifamily that, is strongly estate, out, of and start some seen we you with me markets. commercial have activity. have both performing real Multifamily, all our

Coast is activity leasing existing multifamily robust, majority and mostly new activity the of very driving with And seeing vacancy You’re being by driven has down it lending been rates. the refinanced California, clients. West

front, exposure we buildings. And of the that’s its estate deals, don’t loans. [ph] one don’t smaller as optimism struggling potential tailwinds It’s well on scale real focused do hospitality, as international have know bit, we you a commercial our of to retail as the it’s multiuse A TON much and still there large as and great Class On you office either macro mostly area know, smaller wise. travel. that’s or but opening the And on type buildings, and but with

John Pancari

taking for Thanks, it. my Appreciate questions. Gaye. Alright. Got

Gaye Erkan

Thank you.

Operator

We next will Point. with Rochester from take Dave our Compass question

Dave Rochester

morning good quarter. Nice Hey, guys.

Can And was fantastic know side, of deposit the on I growth any back about trends? yet the start stronger in you generally impacting growth specific again talk deposit have half year. drivers to the those wanted just Just you this quarter.

expect wanted you So confirm just carry of kind momentum that to into XQ? to still

Gaye Erkan

Yes, absolutely.

diversified on seen activity have we activity, the mix especially across growth the new that healthy well of regions client increased both and It in and seen in industries well quite clients. deposit existing side. and terms both across business average we types, and been coming strong as of have referral and account has consumer So as balances a business client

of seen, growth has and have greatly. these private of from but terms accounts particularly estate real side, And deposits. no and in coming been XX% vertical sectors, mix deposit equity business new strong performing our of In referrals. is our from About than we technology, our a again, client half healthy consumer, more existing franchise total

clients happy that seeing colleagues, business as referrals, happy So on well. side we’re more and the

Dave Rochester

just front, exceeding bigger remind of I XQ you’ve to great. of balance next any just maybe maturity FHLBs. year? can balances hold that and And in That’s much a detail. matures got what you reason to the Is the materially those? that for the appreciate those guess, borrowings like looks cash now on one picture on And quick us I a that schedule how question, there then

Gaye Erkan

Yes.

yield about just additional and and provide have some given go carrying. the quarter We environment over it make rate for that deposit but fourth the it those, improvement billion in on coming so flows over the $X yields on will next And an we billion they due. we that does decisions in as the opportunistically side room $X are just call $X year, billion the on depending

Dave Rochester

Alright, great. you much. very Thank

Gaye Erkan

Thanks.

Operator

next Wolfe our take with Carcache from will question We Bill Research.

Bill Carcache

Jim, the could consistency deceleration the origination of lot thinking quarter quarter call strongest model comment the start at if Good how about on you ask and but Thanks. growth sense, of the I around your a quarter your your third to of this make was ever, morning. loan of here? wanted you’re from ever. was comments strongest the and Last pace in

some of especially against So to would up as it be deceleration comps. very high go natural see levels, you tougher these

hear just of be mortgage you you there on think then to Fed’s discuss hear if your if would kind And also your have Gaye, your business could please separately, could the tapering curious So the would thoughts thoughts? any, and pace. impact, also what love on to

Jim Herbert

The – I never the forced. loan loan is volume, the think volume

and your hesitating say you to about as back roughly really is take just reflect We XX% me of the activity component or with business doing, I But to direct in backbone it do most done business compete clients active, it. economy The of has business which to model. cases, And this. lot XX% you I’m exposed is with we win and many or Score clients and would our quite refinance to our will in us. it it. are of The bring their And volatility those they a Let are volume. that’s over it. of you Net tend XX% to some we where win done not That there, volatility. us as clients existing they And force good referrals. are clients loan and their at for never Promoter deals We – existing the When we deck, over the how reason with investor XX% active. the our XX, But opportunistically. the does bring to is will of a pace they their at referrals. are have they will existing

so And And model. a as nearly as need much it’s not model is active. right our market clients client a as this moment, condition-driven very demand are and it

growth In terms obvious, for to comment want maybe – and it let or grow, priced market. this comments. volume then current turn always new if you because additional have we was in but this, between to, of volume state the at which intrinsic tapering, on rate remind – rising Gaye to me just But maybe it’s you we the

you XX% if half. so have rate put and our of over it loans, is book repriced repayments, you about together our you’ve variable in got the new And year, with loan volume assets or

if So company fine. just at environments, rising done you rate the in we’ve back look

Gaye Erkan

in activity majority that known our other remained that clients refinance and rising cycles just clients tool. and the right would with XX% has Yes, a of various majority environment, given from diversified that add the of it’s the above acquisition with single-family comes has driver, and we loans a with at the Single-family originations largely lot been I residential a have institutions great refinance active. and that – seen of

different steepness existing And much balance known even growth seeing, case, So rate credit, plus the curve rising be with to slows bit, the in though sheet potentially known a plus safe, it steady assets. were rate the that helpful. rate mid-teens a still mostly clients, the continues, in repayment that’s tapering floating are we if it pretty And would that environment, also that cycles. stays across be with

great. XX% over which is our So over of reprices portfolio time, loaning

Bill Carcache

helpful. Thank That’s really you.

you give all that’s Have you the the been to could and wealth you recently? If looks? success that concerns to highlighted speak expectations whether had Any addition teams? you any the the discuss your adding outflows a On attrition to teams, nice side, client contributor notable broadly pipeline can at on of you any new inflows. and color ongoing have you around have management on how the also continue

Jim Herbert

like predict predict of but We the in folks, process. this all what is and certainly pipeline on at assets. is we hiring conversations we had The people team is would ongoing think effect going cohorts just quarter-to-quarter. is year’s have we teams. highly it’s individual came we It’s back water within happening, a because I have little it’s reflective the not the probably a their We’ve year either friends have effect, of have that teams, network – at to to is client unpredictable – rate have to this are saying, a notable very just an is We to hard attrition, network any – it’s what people that times. come specialized bit we over or basically and as hire on effect. Those however, going it’s from, of hard an could expect fine. where – forward, talking I they ongoing

Bill Carcache

give that relatively labor having little are they perhaps that hearing issues base some of are those of Mike, around If the last others. you insulated on supply what than bringing one. shortages was facing Very one labor a from are addressed in your would are impact guys. could on they more the sort we’re helpful. the say, bit customers you any that within or of business you market guys shortages banking, squeeze – challenges of and in banking business on competitive you color can wondering, constraints labor up But I chain verticals and you your from I the with market the client markets is

Mike Roffler

to I unusual of anything of or don’t point think out hiring what I that talk the about – sort think in us think hearing. consistent, relative don’t that’s I that terms challenges you’re Yes. I’d we

Bill Carcache

questions. my Okay. Thank taking for you

Operator

And Jefferies. our we from Casey question will Haire take next with

Casey Haire

securities Follow-up today Great. rates? new money Thanks. where well as are on morning NIM, the reinvestment as Good guys. loan yields

Gaye Erkan

And So, CRE, and when some XX blended. we $X.XXish, blend it the $X.XX, securities yields short-term, to on we portfolio, investments, seeing on short-term new the real was $X.XX. coming at we TEY. little about short-duration side, but floaters of at Single-family loans. some X.X% the then points are did are done multifamily purchases, of seeing HQLA munis $X.XX do in and comes the at low the have project a CMOs it a traditional is investments muni and about That’s over, is And pass-through around we around to purchase coming X%. basis high in estate blended Xs on money And Xs, $X.X. that type are and

money end to you new the that with cash at on $X.XX, brings points add levels about our elevated the So, marginal you and summarize $X.XX funding around to a XX, yields to $X.XX lower coming cost of to the basis guidance. then guidance XX

Casey Haire

others? Thanks the a of billion that’s that $X across a it harder your or for can Is that’s markets just that’s than versus resi on and originations, breakdown a there the is how compares how consistent, coming – Excellent. how give little historical? of you pretty pushing single-family geographically color. through market And then

Gaye Erkan

are well. suburbs centers Manhattan. Actually, active city across been we we Both – are now, catching and Manhattan are markets robust bit quite all the as also have and getting seeing up of is a our what has seeing very including active, activity quite been

seeing the Francisco. Angeles X So, five especially Boston is a And are all across months purchase Manhattan look that activity of it’s when to all markets. exception San Manhattan, the more within of or with floor across at Los of in months, you the our whether months of markets or supply. the be month of robust, of But to we is on to side our supply X

Jim Herbert

activity the of enough. just been would add strong. announced. has fact very York, in New this enough, of not City prematurely to Center cities Interestingly the City, the is It’s The say core San the quite Boston, thought. Center demise in would I just that the Francisco,

Casey Haire

Understood.

efficiency, of a on drag out. big the that year-to-date are you compression, at that’s efficiency lot a got of wealth your end build and guide. the conversion one you on question running last Just happening of your It And the ratio, guys picture Hudson low going on a in XX%, management things XX% Yards just NIM that curious spite XX% guys or figured about run of how the improving – – out guys running lower end – just feels year ratio you I like am to minimum, you efficiency more way at efficient. feel have are do this and a you next that towards guys is to beyond?

Mike Roffler

have throughout note our revenue I the obviously pleased nine months of we we that I running this Yes. mean the that end at at are range, quarter would in little and low that been was a lower. bit few even from driving of about the know there matched production. growth part quarters. is inflation, but wage pretty expense salaries was increase a last have And the well in that, the and growth question really been I what’s

assets expense our standpoint horizon long incentive revenues, right. in from which over is the that’s increases well an pretty is in a is the There growth seeing under are focus with an with in you matching so deposits. out, probably management, dollar associated that than really And more increase last squeezing of

the for We investing client future. are service in

I that’s over most what And several we with are so think important, And align the things time. last about quarters. it’s those pleased

Jim Herbert

Mike made model, and deposits, for clients our the goes that of compensation. is the in the loan the to If range. component I AUM approach our on could comment we But loans comment second, the just side. of X% it with about do Remember incentive both to callback that bonus one just the core this on an somewhere of attrition have

XXs up So, bring them bank if to for them years, the Promoter is client And satisfying of the modest into years, getting in them the have this That’s approach cost is Net client. the them and XX the the in to and XXs our all question XX client you less. are lifetime getting we is happily of approach about. in, bringing value happy, going a keep to them inside a land them, years, Score or XX the and compensation think to is, upfront the

Casey Haire

Thank you.

Operator

our Ken Zerbe next with question will take We from Morgan Stanley.

Ken Zerbe

Thanks. guys. Great. Good morning

Jim Herbert

Good morning Ken.

Ken Zerbe

what figure you obviously, change the maybe expecting question be don’t to year, XX% to so trying low – are another quarter? big ask out little I want that end fourth more Actually, higher ratio, or your efficiency Mike very to won’t. quarter? of for expect like with, material quarter a are But wouldn’t of my in just far you low Thanks. I start more materially this averaging why a XX%. question question, fourth unless specifically you to expenses guidance so guess like XX% am to in is picture very call Because terms I just in to something fourth closer I the you

Mike Roffler

There we is anything in we is your an the in at unusual Ken, in the XX% months probably on in puts that’s that there X be are sort quarter. fourth basis, is end which the will probably fourth lower of – I annual right around wouldn’t the staring think with quarter towards say us I observation right

we lead mentioned, just the talked Jim to production As does incentives. about

looked get the obviously those of year final balances end some end of the on at, based so And up. where at

little range. the of a of doesn’t tell you extra nothing But end in we sometimes our are that staring see unusual And there. is lower us bit at us sort of there

Ken Zerbe

you just high. represented foreign there last guys – different fairly were And fees, a question, client sort like of think then of know exchange mentioned they were to That’s healthy I terms hear. they a quarter, in good And of activity. level I

are I are a outlook higher for sort fees? high about we this particularly Can a even at exchange they quarter? quarter, unusually stronger. of foreign you is just or talk sustainably level, mean This the Thanks.

Jim Herbert

picking exchange driven It’s it’s a answer. that, quarter-to-quarter the frankly, the in are tremendous. our an area people to quite job is the – clients. – activity of to activity by is up, It’s strong that strong, and And of bit. that foreign have their us The business hard is the adoption the it’s mostly clients business ramp very building extraordinary continues of for generally exchange and of added exchange Having said by folks is service foreign and ramp to – up. all foreign and activities have business activity velocity our we running done little

the some And so plus we clients have of us parallel having their adopt sales. by activity – much the for provider and terms adding that service pretty and of exchange will new delivery foreign in growth people

Ken Zerbe

Perfect. much. very you Thank Understood. it. Got

Operator

will We next question Chris take our with KBW. McGratty from

Chris McGratty

Hi. Good morning.

provide was – prepared the in see basis driving to, mentioned around I remarks, any think up confirm capital also want Thanks. that if points. could call the provide that you factors? guys on one, I number color and any utilization XXX you

Mike Roffler

Yes.

XX% Just call was the to last quarter confirm, our of capital it utilization at over end XX% under was at just end. And just quarter.

is it about So, up X.X%. just

Gaye Erkan

low-XXs. we range seen in it is have historical our And that mid-XXs Yes. to

So, is the slight increase in driven deal utilization by increased the activity.

above powder a pre-pandemic and more of levels, the So, ahead activities to fundraising, strong deal quite from schedule. fundraising we exits remain are investments lifecycle shortening the the seeing and And to is PVC bit activity coming the to dry little levels. double bit PVC the a expected continue pre-pandemic deal exits

in But reflected hard it’s it’s to So, that. anticipate.

So, been it the to low-XXs. in has mid-XXs

Chris McGratty

Thank Okay. you.

Operator

And with we will Sandler. our next Piper question Andrew Liesch from go to

Andrew Liesch

for taking fee everyone. performance line in morning were questions. curious, the Thanks good quarter? investment there Mike, just one-time my fees income any management Hi, this

Mike Roffler

That AUM based just is was the just last ended where No, investment not. were management on – quarter. there

Andrew Liesch

Got it.

new the has firing onset and client for sheet acquisition. Okay. Jim Thanks. been And rapidly everything then And wealth of seems growth since on on Gaye, pandemic. cylinders all this quite of balance the be to going and

So, these what trends? now? my What’s this momentum disrupt is, worrying in can right you I question guess

Jim Herbert

don’t always two course, whoops strong happening that worries is two, I initially the some third don’t swan portfolio. thing pretty about they environment the in worries reflects around No, then, go One, an far. too future. somewhere them can in rising And is world. nature by then much guess, economy, but us black the that all but thing We everybody things. time anecdotal the We a event see the in number I the see And that rate due near are anecdotal. think a now,

Andrew Liesch

Got it. taking question. my for Thank Thanks you.

Operator

our question McEvoy with take We Terry Stephens. will next from

Terry McEvoy

Hi, good morning.

pretty of a is, guess growth fund growth to of in from investment limited where and QX? revenue the management investment question growth how see performance And in mutual management list, in flattish like the funds, that much the on And is standpoint, assets, would my and occurred question was impact quarterly on you impact growth? an last mutual kind money most of why any within my commentary management profitability within market I and wealth one brokerage Just the the area.

Gaye Erkan

on management So, client activity. the also investment depends the

client you year-over-year have at to when strong we quarter-over-quarter. So, as inflows seen opposed look

do higher clients So volume of management. brokerage our what and quarter. transactions – we and some And with investment had is this majority transaction

very we foreign decade, now share. about pleased continues the to seeing management at our have addition are or fees we investment drive about in PWM so So, to X% are growth. that revenues the to to we reflected. over trust, used exchange are XX% We insurance, last in that and at But

pleased banking speaks So, the management holistic wealth the that internally. teamwork and continued that of the approach the with that of the we very to drives are client growth. And and

wealth profitability is where that’s the of seeing the serving toolkit. banking but transactions. off separate that the differentiate it holistically is professionals growing, was management off-balance elevated, in mutual we are most. an did cash It’s of and move teamwork sheet So, professionals. not client amazing money you what the across market to That’s that revenue and the funds us some driven small. we tools in by silo that And It mostly with some

Terry McEvoy

Thanks for color. Great. incremental Appreciate the it.

Gaye Erkan

Thanks.

Operator

And Wedbush. with go question Chiaverini we our from will to next David

David Chiaverini

follow-up of Hi. A questions. couple Thanks.

you call pricing lines, but loan metrics capital the provide missed and the went capital you it, I on The pricing first on lines? call through did maybe when

Gaye Erkan

that Thank I for you did not. bringing up.

usually that it’s we minus So, level around minus prime that prime XX, that around XX, in. coming seeing are

David Chiaverini

that. have be, of the early on performance you too some is guys or magnitude could Thank Do through to for those usually, it in quarter. you had the fees, a sense a the And you come then fourth follow-up tell?

Mike Roffler

to So, the last fee. too we the been X last like meaningful amount to quarter you a of tell, the has are have sort it It’s had couple right, it be the last in fourth of probably expect early preliminary we two a years. but – years, don’t is quarter

quarter. a And to so from see bump I expect that don’t fourth the in

David Chiaverini

very Thanks Great. much.

Operator

with Tim will from take our We next Janney. Coffey question

Tim Coffey

Good you. morning Thank everybody.

Jim Herbert

Good morning.

Tim Coffey

estate multifamily to them your We get put some powder values movement of dry and their bench relates real have move work? the clients, off summer. the seen over as in and investor real encouraged And do that commercial you I to some to wondering, think am it estate

Jim Herbert

has little And that Commercial and and and a of in rents levels, retail stabilizing. is hand a are still there And values office at good is forward of real vacancy multifamily Yes, things bit. issue estate the slow. and high all in buried stabilized vision other course is up. the subsidies. picked on rent lot of kinds levels Multifamily is more

stimulating And amount is so The of going that activity I also fair a good is multifamily there news which needs. country activity. the multifamily definitely new is on, think

seeing we Gaye indicated as pickup, are So, a earlier.

Tim Coffey

you where migration are a coast you Montana we Texas. certainly mean am footings? heard with Okay. a if have not of I has meaningful to have migration about And any currently I have you, – then stick like I news of clients seen that? currently Bozeman, wondering inflow. inland seen from lot areas you seen – the don’t have can Jim, you if more your migration

Gaye Erkan

market. of stayed within majority have that So, move our do actually clients

muted And the have home the of have so suburbs, suburbs we the very we public allows on the to – to seen in a the terms have for have footprint. serve if cases made seen and migration especially some continue from the management clients, going example, clients, to that been So, the operational side. and into we in enhancements deposit an us has digital that in And second happen. these first moves wealth activity out has we lot where client or a of

Some those primary the whether over it’s clients welcome or Florida changes, residence although we limited, there well. Wyoming, as

of First has majority Republic that So, within footprint. been migration

Tim Coffey

just you do one Gaye. Thanks the I anything Great. quarter? am And personal did some line perhaps in the Last And quarter, on Okay. kind expanding of wondering, that in expressed product. of interest then credit you question. last

Jim Herbert

very very, well. is that Not product going –

of have a very it’s old comfortable stunning. We around are rate only now, households And credit with little actually be at But on we running would in per could remember, a year. been that it new without and that. up delighted, about year a are a we results we go are X,XXX if change, very, working rate bit. And the year

out. have we cohort, have money than a deposits As greater we

Tim Coffey

questions. are Those you. Thank my

Operator

Jim concludes conference closing today’s Herbert I question-and-answer And this At that to turn will back remarks. session. for time, the

Jim Herbert

us today. Have day. you joining good Thank for much all very a

Operator

call. you today’s Thank concludes This participation. for your

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