FEDERAL DEPOSIT INSURANCE CORPORATION Washington, D.C. 20429
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 4, 2019
FIRST REPUBLIC BANK (Exact name of registrant as specified in its charter)
California 80-0513856 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.)
111 Pine Street, 2nd Floor San Francisco, CA 94111 (Address, including zip code, of principal executive office)
Registrant’s telephone number, including area code: (415) 392-1400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 par value FRC New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of 5.70% FRC-PrF New York Stock Exchange Noncumulative Perpetual Series F Preferred Stock Depositary Shares, Each Representing a 1/40th Interest in a Share of 5.50% FRC-PrG New York Stock Exchange Noncumulative Perpetual Series G Preferred Stock Depositary Shares, Each Representing a 1/40th Interest in a Share of 5.125% FRC-PrH New York Stock Exchange Noncumulative Perpetual Series H Preferred Stock Depositary Shares, Each Representing a 1/40th Interest in a Share of 5.50% FRC-PrI New York Stock Exchange Noncumulative Perpetual Series I Preferred Stock
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 7.01 Regulation FD Disclosure
As previously announced, First Republic Bank (the “Bank”) will host an Investor Day for institutional investors and analysts on Monday, November 4, 2019, from 10:00 a.m. to 5:00 p.m. ET in New York City. The event will include presentations by Jim Herbert, Chairman, CEO & Founder, Gaye Erkan, President & Board Member, members of the Company’s executive management and broader leadership teams, as well as clients. The presentations will include information about First Republic’s strategy, client-focused culture, and current initiatives. Pursuant to Regulation FD, the Bank hereby furnishes to the Federal Deposit Insurance Corporation the slides that will be discussed during the presentations. The slides are attached hereto as Exhibit 99.1. These slides will be available through the Investor Relations section of the Bank’s website at www.firstrepublic.com. A live audio webcast of the presentations can also be accessed through the Investor Relations section of the Bank’s website, and a replay of the webcast will be available through the Investor Relations section of the Bank’s website.
The information furnished by the Bank pursuant to this item, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 First Republic Bank 2019 Investor Day Slides.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 4, 2019.
First Republic Bank
By: /s/ Michael J. Roffler Name: Michael J. Roffler Title: Executive Vice President and Chief Financial Officer
3
EXHIBIT INDEX
Exhibit Number Description
Exhibit 99.1 First Republic Bank 2019 Investor Day Slides.
Investor Day 201
/PWFNCFSUI 1BSL)ZBUU/FX:PSL Session Time
Registration 9:30 am
Introduction 10:00 am
Notice Mike Ioanilli, Head of Investor Relations
Welcome & Opening Remarks Jim Herbert, CEO, Chairman & Founder
Sustainable Organic Growth Hafize Gaye Erkan, President & Board Member
Drivers of Growth 10:25 am
First Republic Markets & Net Promoter Score Jason Bender, Chief Operating Officer
Business Banking Mike Selfridge, Chief Banking Officer Chris Coleman, Head of Business Banking Jeff Bruce, Deputy Regional Managing Director Scott Aleali, Private Equity Finance Managing Director
Attracting the Next Generation of Clients James Herbert, Co-Head of Eagle Lending Patrick Macken, Co-Head of Eagle Lending Erin Fitzsimmons, Managing Director
Private Wealth Management Bob Thornton, President of Private Wealth Management Kristin Ashman, Senior Managing Director George Fuchs, Managing Director
Break 11:50 am
Client Panel 12:00 pm
Our Clients Say It Best Moderated by: Mollie Richardson, Chief Administrative and Chief People Officer Rahul Tripathi, Chief Financial Officer and Chief Operating Officer, The Brearley School Barney Walker, Director of Institutional Investments Rajvi Patel, Vice President and Counsel, Mizuho Damien Dwin, Co-CEO and Co-Founder, Brightwood Capital Advisors Session Time
Lunch & Guest Speaker 12:35 pm
Guest Speaker Ian Bremmer, President & Founder, Eurasia Group & GZERO Media
Credit & Finance 1:45 pm
Credit Culture David Lichtman, Chief Credit Officer Ruth Aronowitz, Senior Managing Director Garrett Sokoloff, Senior Managing Director
Sound Financial Management Mike Roffler, Chief Financial Officer Olga Tsokova, Chief Accounting Officer
Break 2:25 pm
Culture and Technology & Operations 2:35 pm
Scaling Service Our Culture Hafize Gaye Erkan, President & Board Member Fatema K. Arande, Head of Deposits, East Coast Samir Kaji, Senior Managing Director, Tech & Venture Capital
Tech-Ops: Scaling Our Service Culture Jason Bender, Chief Operating Officer Scott Finder, Chief Digital Officer
Audience Q&A 3:15pm
Audience Q&A Moderated by: Mike Ioanilli, Head of Investor Relations Jim Herbert, Chairman, CEO & Founder Hafize Gaye Erkan, President & Board Member Mike Roffler, Chief Financial Officer Mike Selfridge, Chief Banking Officer Jason Bender, Chief Operating Officer David Lichtman, Chief Credit Officer Bob Thornton, President of Private Wealth Management Mollie Richardson, Chief Administrative and Chief People Officer Session Time
Closing 4:10 pm
Closing Remarks Jim Herbert, Chairman, CEO & Founder
Banker Reception: One Team, One Dream Introduced by: Shannon Houston, Chief Marketing and Communications Officer First Republic Bank Investor Day 2019
Member FDIC and Equal Housing Lender / It’s a privilege to serve you® Notice
This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this presentation 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, as amended. 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 and growth in our loan originations and wealth management assets. 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.
Forward-looking statements involving such risks and uncertainties include, but are not limited to, statements regarding: projections of loans, assets, deposits, liabilities, revenues, expenses, tax liabilities, net income, capital expenditures, liquidity, dividends, capital structure, investments or other financial items; expectations regarding the banking and wealth management industries; descriptions of plans or objectives of management for future operations, products or services; forecasts of future economic conditions generally and in our market areas in particular, which may affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans; our opportunities for growth and our plans for expansion (including opening new offices); expectations about the performance of any new offices; projections about the amount and the value of intangible assets, as well as amortization of recorded amounts; future provisions for loan losses, changes in nonperforming assets, impairment of investments and our allowance for loan losses; projections about future levels of loan originations or loan repayments; projections regarding costs, including the impact on our efficiency ratio; and descriptions of assumptions underlying or relating to any of the foregoing.
Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: significant competition to attract and retain banking and wealth management customers, from both traditional and non-traditional financial services and technology companies; our ability to recruit and retain key managers, employees and board members; the possibility of earthquakes, fires and other natural disasters affecting the markets in which we operate; interest rate risk and credit risk; our ability to maintain and follow high underwriting standards; economic and market conditions, including those affecting the valuation of our investment securities portfolio, which could result in other-than-temporary impairment if the general economy deteriorates, credit ratings decline, the financial condition of issuers deteriorates, interest rates increase or the liquidity for securities is limited; real estate prices generally and in our markets; our geographic and product concentrations; demand for our products and services; developments and uncertainty related to the future use and availability of reference rates, such as the London Interbank Offered Rate and the 11th District Monthly Weighted Average Cost of Funds Index; the regulatory environment in which we operate, our regulatory compliance and future regulatory requirements; the impact of tax reform legislation; any future changes to regulatory capital requirements; legislative and regulatory actions affecting us and the financial services industry, such as the Dodd- Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), including increased compliance costs, limitations on activities and requirements to hold additional capital, as well as changes to the Dodd-Frank Act pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act; our ability to avoid litigation and its associated costs and liabilities; the impact of new accounting standards, including the estimated impact of the Current Expected Credit Losses (“CECL”) accounting standard; future Federal Deposit Insurance Corporation (“FDIC”) special assessments or changes to regular assessments; fraud, cybersecurity and privacy risks; and custom technology preferences of our customers and our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications.
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 any subsequent reports filed by First Republic with the FDIC. 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. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout our public filings under the Exchange Act. 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.
This presentation includes certain non-GAAP financial measures historically used by the Bank (specifically, core net interest margin, a non-GAAP measure, was used in 2007 through 2016, as referenced herein). For a reconciliation of the core net interest margin to its equivalent ratio under GAAP, see the Bank's Annual Reports on Form 10-K.
2 Welcome & Opening Remarks
Jim Herbert Chairman, CEO & Founder
3 / It’s a privilege to serve you® De novo founding in 1985 – organic growth to 22nd largest bank in U.S.1, 4 Outperformance for 34 years
FRC #14,0002 FRC #223, 4 In total asset size In total asset size FRC has surpassed 99.9% of banks
Constituent of the S&P 500
1985 2019
1. Asset growth includes First Republic Bank’s acquisition of the Bank of Walnut Creek in 2006, which had assets of approximately $560m. 2. Bassett, W et. al. ‘The Economic Performance of Small Banks, 1985-2000’, Federal Reserve Bulletin (2001). Includes commercial banks and savings banks. 3. As of June 30, 2019 there are approximately 4,600 banks in the U.S. Source: Federal Financial Institutions Examination Council (US). 4. Source: SNL. Based on total asset size as of September 30, 2019. Excludes asset managers (Ameriprise) and specialty lenders (American Express, Ally, Discover, Synchrony). 4 How has this happened?
5 Disruptively superior client service
Driver of FRC’s outperformance over 34 years.
6 SHAREHOLDER 1985 LETTER “First Republic’s philosophy… is to provide the highest quality banking services available ...”
7 / It’s a privilege to serve you® Exceptional people providing extraordinary service
• Empowered colleagues • Well priced 01 • Stable colleague base capital access • Very positive, Happy supports growth work environment Colleagues
04 Organic and 02 Sustainable Happy Happy Growth Model Shareholders Clients
• Both clients & markets grow 03 • Extraordinary service above average rates • Very low client attrition Clients Do More + Refer Others
8 / It’s a privilege to serve you® Since 1985, it is always about the client
Referrals Get Many Client Referrals
Growth Grow as Our Clients Grow
Differentiated Service Deliver Significantly Differentiated Service
Trial Gain Trial, Gain Trial, Gain Trial
9 / It’s a privilege to serve you® Banker stability leads to client stability & strong credit
BANKER LONGEVITY BY LOAN ORIGINATION VOLUME:
10 years + 71% 90% 2.5 to 10 years OF LOANS, SINCE 1985, ORIGINATED BY BANKERS STILL WITH FIRST REPUBLIC 27% < 2.5 years
Since 1985, $256 billion loans originated, 2% only 13 bps cumulative total net losses1
1. Includes loss experience on loans retained by Bank of America. From 1985 through September 30, 2019, Single Family Residential has experienced net losses of only 0.2 bps per year.
10 / It’s a privilege to serve you® Client satisfaction outperforms even the best brands
2018 NET PROMOTER SCORE SUMMARY 1 81 –as “Lead Bank”2,3
75 Ritz-Carlton
74 JetBlue
72 –Overall2
64 Nordstrom 63 Apple 2X 62 Netflix U.S. BANKING INDUSTRY CLIENT SATISFACTION LEVEL 35 U.S. Banking Industry Avg.
1. Source: SATMETRIX NPS (2018) for brands listed and U.S. Banking Industry Average, excluding FRC. Please note: the brands listed under ‘Top Service-Focused Brands’ are brands selected for comparison purposes. 2. Source: FRC/Greenwich Associates NPS Study (2018). 3. Over 50% of First Republic clients self-designate First Republic as their “Lead Bank.” 11 / It’s a privilege to serve you® Satisfied repeat clients drive strong organic growth
Sources of Checking Deposit Growth1 Sources of New Loan Originations4 Q4 2007 to Q4 2018 Q4 2015 to Q4 2018
21% Deposits from new clients 15% Loans from new clients Loans from existing client 26% 2 % Deposits from existing referrals 28 client referrals2 85% 79% Loans to existing, Existing clients’ deposits 59% Credit proven clients 51% growth 8% Average attrition for U.S. Banks3 -2% Annual attrition1
1. As measured by change in balances. Checking defined as all business and consumer checking, excluding money market checking. 2. Referrals as identified by KYC referral information for the first customer of new relationships in 2015-2018. 3. Source: Harland Clarke. Represents U.S. banking industry client attrition data from 2014 – October 2017. 4. Based on principal balance at origination, for loans originated during 2015-2018, excluding overdraft lines of credit and refinanced FRC loans. Includes all loan originations whether on balance sheet, sold or currently held for sale. 12 What is further powering our growth?
13 / It’s a privilege to serve you® Consistent execution while carefully adding to strategy Business Banking, Next Generation Strategy and Private Wealth Management are outsized drivers of growth.
9/30/16 9/30/19
1) Business Banking Deposits $30B $50B +18% CAGR1
2) Private Wealth Management AUM $80B $140B +20% CAGR1
3) Millennial Strategy: Student Loan Refinancing+ Professional Loan Program 17% share 34% share Households increasing as a share of 2x consumer borrowing households
1. 3-year CAGR calculated from September 30, 2016 through September 30, 2019.
14 / It’s a privilege to serve you® FRC client relationship lifespan is doubling
+14 years Historically 24 years +15 years 31 45 69+ 84+
Capturing the Existing Continued Growth of Next Generation Existing Generation
Through Clients Because
Successful Millennial Vast majority of FRB clients Full service Generation strategies are still under age 70 planning + wealth management
Life expectancy continues to increase
15 The stunning power of differentiated client service.
16 / It’s a privilege to serve you® Superior service leads to superior growth
Asset Growth Indexed to September 30, 2009 10-Year Annual Growth Rate1 470% First Growth Republic Bank 19% KBW Index (excl. FRC) 3%
34% Growth 100 100
Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19
KBW Index (excluding FRC) First Republic Bank
Source: SNL. 1. 10-Year Annual Growth Rate reflects 10-Year CAGR of Total Assets from September 30, 2009 through September 30, 2019 . 17 / It’s a privilege to serve you® The bottom line – Tangible book value per share1 While also paying total cash dividends of $4.55 per share2
$50 48.84 Growth in Tangible Book Value Per Share 45.26
40.43 $40 35.35
30.16 $30 26.56 22.83 20.07 $20 18.25
13.39
$10
$0 7/1/2010 2011 2012 2013 2014 2015 2016 2017 2018 3Q 2019
1. 2011 – 2018 reflects Year End Tangible Book Value Per Share. 2. Cash Dividends paid since 2012, with increases every year for 7 consecutive years. Including dividend payable on November 14, 2019 to shareholders of record as of October 31, 2019. 3. 9.25-year CAGR from 7/1/2010 (Date of divestiture from Bank of America) through 9/30/2019; reflects Tangible Book Value Per Share. 4. Increase in Tangible Book Value Per Share Plus Dividends is 3.99x. 18 / It’s a privilege to serve you® FRC client service drives share price performance
Price Change Since 12/8/101,2 ANNUAL EQUIVALENT 350% 324.9% TOTAL RETURN (including reinvestment 300% of dividends)
250%
200% 18.6% FRC 150% 149.7% +41%
100% 115.0% 13.2% S&P 500 50%
0% 11.4% KBW NASDAQ -50% Bank Index3
Source: Bloomberg 1. All calculations include reinvestment of dividends into the same stock (FRC) or index (S&P 500, and after IPO, also includes KBW Bank Index). 2. From IPO date of December 8, 2010 through November 1, 2019. 3. Index consists of 24 banking stocks representing the large U.S. national money centers, regional banks, and thrift institutions. First Republic is a component of this index. 19 Sustainable Organic Growth The Power of Our Client Service Culture
Hafize Gaye Erkan President
20 / It’s a privilege to serve you®
Circling Back Before Looking Forward First Republic’s Growth Over the Past Decade
21 / It’s a privilege to serve you® Growth in total assets
% CAGR To ta l A s s e t s YE 2010 – Q3 2019
22 / It’s a privilege to serve you® Growth in total deposits
% CAGR To ta l D e p o s i t s YE 2010 – Q3 2019
23 / It’s a privilege to serve you® Growth in total assets under management (AUM)
% CAGR To ta l AU M YE 2010 – Q3 2019
24 / It’s a privilege to serve you® Growth in total revenues
% CAGR To ta l R e v enu e s 2010 FY – Q3 2019 LTM
25 Revenue Per Employee
First Top 25 Top 25 KBW Republic Technology Average1 Luxury Average2 Bank Average $680k $670k $460k $390k
Note: 2018 Revenue per Employee 1 Top 25 constituents by revenue - S&P Dow Jones IT Sector 2 Top 25 constituents by revenue - S&P Dow Jones Global Luxury Index 26 / It’s a privilege to serve you®
Our most relevant growth peers may not even be in banking…
27 / It’s a privilege to serve you®
Who are we? “First Republic is a service organization that just happens to be a bank.” 1
1. Jim Herbert, Chairman, CEO & Founder 28 / It’s a privilege to serve you® Our most important measures of success
Our client satisfaction Household acquisition and retention fueled by referrals from satisfied clients
29 / It’s a privilege to serve you® We are keeping our clients happy and satisfied…
Net Promoter Score (NPS) Measuring Client Satisfaction & Loyalty
72 75 72 First Republic 62 55 2x US Banking Average
35 35 34 35 US Banking 29 Average
2013 2014 2015 2016 2017 2018
Source for First Republic scores: FRC/Greenwich Associates NPS Studies. Source for al other scores: SATMETRIX NPS (2018) for brands listed and U.S. Banking Industry Average, excluding FRC. 30 / It’s a privilege to serve you® And acquiring households faster than ever
9% CAGR 17% CAGR Consumer Household Growth Consumer Household Growth
HISTORICAL LAST THREE RUN RATE1 YEARS2
1. 2006 – 2016 2. 2017 –2019 Q3 31 / It’s a privilege to serve you® First Republic has created a differentiated service moat
Service
32 / It’s a privilege to serve you®
Keys to Our Continued Success
33 / It’s a privilege to serve you® Culture is the secret sauce
EMPOWERMENT CLIENT SERVICE & STABILITY First Republic Service Culture ACCURACY TEAMWORK & SPEED
34 / It’s a privilege to serve you® Purpose of existence: Service excellence
Trust Time Experience Peace Quick Banking Made of Mind Decisions Delightful
35 / It’s a privilege to serve you® Trusted advisor: Single point of contact
Client Relationship Manager Stable Single Point-of-Contact Since 1985
Preferred Preferred Wealth Online Business Mobile Banking Office Banker Professional Banking Banker Banking Since 1985 Since 1985 Since 1997 Since 1998 Since 1999 Since 2012
36 / It’s a privilege to serve you® Scaling our proven service model
Empowering Our Trusted Advisors
Eagle Intelligence Knowledge = Service Trusted Advisor
Service Team Continuous Process Improvement Productivity
High Tech EMPOWERS High Touch Service 37 / It’s a privilege to serve you®
38 Differentiated service drives organic asset growth
75 First Republic NPS 72 72 Consistently Exceptional 62 55 $99 $88 $73 1 $Billions $59 Assets $48 >2x Growth in 5 Years $42 Doing more of what we do best: taking great care of clients, one relationship at a time
2013 2014 2015 2016 2017 2018
Source: FRC/Greenwich Associates NPS Studies. 1. FRC Total Assets at year-end. 38 / It’s a privilege to serve you® Benefits of long-term, stable relationships
Client Knowledge
Safe Credit
Prudent Risk Management
Advantaged Sticky Funding
39 / It’s a privilege to serve you® Long-term, stable relationships lead to advantaged funding
84% 59% DEPOSIT CHECKING FUNDED1 DEPOSITS1
Organic • Lower-Cost • Sticky • Diversified
1. FRC Total Deposits as a % of Total Liabilities and FRC Checking as a % of Total Deposits, ending balances as of 9/30/19. 40 / It’s a privilege to serve you®
Is this growth sustainable? Yes, and it compounds.
41 / It’s a privilege to serve you®
The biggest win is not OVER losing the existing client
ONLY % Growth from Within existing clients and referrals1 % “The best client is Attrition1 the one we already have”
Jim Herbert, Chairman, CEO & Founder
1. See slide 12. 42 / It’s a privilege to serve you® Delivering exceptional service, one relationship at a time
Satisfied Trusted Client/Promoter Advisor + 1 801 First Republic Referrals Satisfied Client Trusted, caring Expanding our relationship over network of clients 5 years organically
1. Average new client relationship network expanding from our top 5% of promoters. 43 / It’s a privilege to serve you® Trusted relationships lead to a referral network
44 / It’s a privilege to serve you®
The more we have, the more we get.
45 / It’s a privilege to serve you® Superior service leads to superior performance 2x First Republic NPS: 72 US Banking Average
2010 – 20191 FRC Rank FRC Top 25 Banks2
Asset Growth #1 20% 5%
Credit Quality 3 Net Charge Offs as a % of Average Loans #1 0.02% 0.65%
Revenue Growth #1 14% 3%
Tangible Book Value Per Share4 #1 14% 8%
Total Shareholder Return5 #1 17% 10%
Source for First Republic score: FRC/Greenwich Associates NPS Study, 2018. | Source for U.S. Banking Industry Average, excluding FRC: SATMETRIX NPS (2018). | All other information S&P Market Intelligence, Bloomberg and company filings. 1. Asset Growth CAGR from 12/31/2010 to 9/30/2019. Revenue Growth CAGR from FY 2010 to LTM 9/30/2019. Credit Quality yearly average from FY 2010 to 1H 2019. Total Shareholder Return CAGR from 12/31/2010 to 10/25/2019. 2. Unweighted average (except NPS) of top 25 publicly traded U.S. banks as measured by assets as of 9/30/2019 based on S&P Market Intelligence regulatory data. Excludes credit card lenders (American Express, Discover, and Synchrony) and asset managers (Ameriprise). Metrics are unweighted averages. Includes ALLY, BAC, BBT, BK, C, CFG, CMA, COF, FITB, FRC, GS, HBAN, JPM, KEY, MS, MTB, NTRS, PNC, RF, SCHW, STI, STT, USB, WFC, ZION. 3. Does not include estimated charge-offs on divested loans retained by Bank of America. 4. Calculated as growth in reported TBVPS from 4Q10 to 3Q19 (where available from SNL). If reported TBVPS unavailable from SNL for both 4Q10 & 3Q19, basic TBVPS (per SNL) used for growth calculation. If basic TBVPS (per SNL) unavailable for 3Q19, growth in basic TBVPS calculated from 4Q10 to 2Q19. Excludes ALLY given their IPO in April 2014. 5. Total shareholder return for ALLY & CFG from their IPO dates. 46 / It’s a privilege to serve you® 34 years of organic growth and still growing
TOTAL ASSETS AUM $111BN $140BN <5% Market Share1 With Continued Focus on: High-Touch Service Culture Exceptional People Happy Clients Plenty of Room to Grow
1. Based on Total Deposits in our markets as of June 30, 2019 (Source: 2019 FDIC Deposit Market Share Reports) and FRC high net worth households in its markets (Source: FRC/Greenwich Associates NPS Study, 2018). 47 / It’s a privilege to serve you®
Service Excellence Delivered One Client at a Time
48 / It’s a privilege to serve you®
Wo r k Ha rd Stay Humble
49 First Republic Markets & Net Promoter Score
Jason Bender Chief Operating Officer
50 / It’s a privilege to serve you®
Our Markets Extraordinary Opportunities
51 / It’s a privilege to serve you® Strong geographic markets First Republic Markets Economic Index1
200 +91%
175 +34% Outperformance1,2 150 +68%
125
100
75 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q192Q19 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
FRC Markets U.S.
1. The First Republic Markets Economic Index TM is a proprietary index, produced in conjunction with Rosen Consulting Group and designed to indicate aggregate economic performance of FRC’s markets utilizing publicly available regional economic data. 2. FRC markets (8 in total), in aggregate, and weighted by loan balances outstanding as of June 30, 2019, have grown 91% since 1Q 2005 compared to 68% for the U.S. as a whole, or 34% higher growth comparatively. These 8 markets are: San Francisco, Los Angeles, San Diego, Portland, New York, Boston, Newport Beach and Palm Beach. Excludes Jackson, Wyoming, which was opened in December 2018. 52 / It’s a privilege to serve you® First Republic market footprint As of 9/30/2019 | Since 12/31/2010
Producers Banking Loans Deposits & Support Offices $ Balance CAGR $ Balance CAGR
San Francisco Bay Area1 664 40 $34B 15% $39B 18%
New York 291 11 $19B 21% $17B 21%
Southern California2 300 18 $18B 21% $11B 15%
Boston 181 5 $7B 26% $9B 22%
Source: First Republic Form10-K (12/31/2010), company information. Note: Table does not include figures outside of these four markets. “Other” figures include: Producers & Support of 107, Banking Offices of 4, Loans of $8.7 billion, and Deposits of $9.8 billion (including Eagle Sweep deposits). 1. In Forms 10-K and 10-Q, “San Francisco Bay Area” for Loans; “Northern California” for Deposits. 2. In Forms 10-K and 10-Q, “Los Angeles Area” and “San Diego Area” for Loans; “Southern California” for Deposits. 53 / It’s a privilege to serve you® High Net Worth Households (HNW HHs)1 First Republic Markets Have a Disproportionate Share of U.S. HNW HHs
All U.S. U.S. HNW Households Households
128MM 3.5MM
2 FRC Markets 21% FRC markets contain 27MM 59% of all U.S. HNW HHs3 FRC Markets2 2.1MM 59%
FRC markets’ share of U.S. Rest of U.S. HNW HHs is increasing: 101MM
Rest of U.S. 2017 59% Share +28% increase 1.5MM 20034 46% Share
Source: FRC/Capgemini Consulting Study, 2018 (study as of 2017) 1. High net worth households (“HNW HHs”) defined as households with at least $1 million of investable assets. Represents less than 50% of First Republic’s client households as of December 31, 2017. 2. As of December 31, 2017 FRC markets include San Francisco, Los Angeles, San Diego, Portland, New York, Boston, Newport Beach and Palm Beach. 3. As of December 31, 2017. 4. 2003 figures include all 2017 FRC markets for purpose of comparison although Boston, Portland and Palm Beach were opened in 2006, 2007 and 2013 respectively. 54 / It’s a privilege to serve you® Number of HNW HHs in FRC markets growing rapidly FRC Markets Producing / Attracting HNW HHs Faster than Rest of U.S. FRC Markets Rest of U.S.
HNW HH Growth1
FRC Markets 8.1% Nearly 1.5MM Rest of U.S. 4.2% 2x 1.2MM 1.2MM
0.9MM 2.1MM 1.0MM 0.9MM 0.9MM 1.7MM 0.8MM 1.5MM 1.2MM 1.0MM 1.0MM 0.8MM 0.7MM
2003 2005 2007 2009 2011 2013 2015 2017
Source: FRC/Capgemini Consulting Study, 2018 (study as of 2017) 1. Compounded Annual Growth Rate (“CAGR”) of HNW HHs in FRC markets and rest of U.S. from 2003 to 2017. 55 / It’s a privilege to serve you® Comparatively Attractive Markets By Number, Density and Growth of HNW HHs1,2
12%
FRB Key Markets Newport Beach New York 10% Select Global Markets San Francisco Select Other U.S. Markets
8% Palm Beach Sample bubble size3 (9.0%) Washington D.C. Boston
Boston (172.4k HNWI HH) U.S. Average Switzerland 6% Los Angeles (excl. Newport Beach)
Norway (113.3k HNWI HH) Norway Chicago Seattle 4% Detroit Portland Singapore Philadelphia San Diego Houston U.S. Average Hong Kong (2.8%) Density HHs in HNW of 2017 2% Dallas Atlanta (HNW HH Population/Adult (HNW HH HH Population) U.K. Germany France 0% China
-2% 0% 2% 4% 6% 8% 10% 12% 14% 16%
2012 – 2017 (%) Annualized Growth Rate of HNW HH Population
Source: FRC/Capgemini Consulting Study, 2018 (study as of 2017) 1. Capgemini U.S.-MSA Lorenz Model Analysis and Macroeconomic Analysis, 2018. The numbers for Select other U.S. markets are estimated based on the growth rate for Rest of U.S., with 2014 as the base year. 2. 2015 – 2017 Annualized growth for non-FRC market U.S. cities approximated with growth rate for all of U.S. outside FRC Markets. 3. Bubble size reflects relative HNW HH populations in 2017. 56 / It’s a privilege to serve you® Our market share of HNW HHs FRC Market Share of HNW HHs Remains Quite Modest...Enormous Opportunity!
FRC Penetration of HNW HHs in its Markets HNW HHs Banked by FRC1
4.5% We have grown HNW 100 4.2% % 2 4.0% HHs at 13 per year 3.9% 3.8% 4.0% 80 3.6% 87K 3.5% 3.5% Our vibrant markets have 70K 60 3.0% grown at 8% per year3 2.8% 57K 3.0% 40 43K 2.5% 39K Significant room for growth
# of $1MM+ FRC Households # of $1MM+ FRC (000s) 32K 20 2.0% with just 4.2% share 21K 16K FRC Market Penetration of $1MM+ Households Penetration of $1MM+ FRC Market 0 1.5% Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15 Dec-17
Source: FRC/Capgemini Consulting Study, 2018 (study as of 2017) 1. High net worth households (“HNW HHs”) defined as households with at least $1 million of investable assets. Represents less than 50% of First Republic’s client households as of December 31, 2017. 2. Compounded Annual Growth Rate (“CAGR”) of HNW HHs Banked by FRC from 2003 to 2017 3. From 2003 to 2017. 57 / It’s a privilege to serve you®
Net Promoter Score A Service Score Card
58 Extraordinary client service is the key. Net Promoter Score is just the measure.
59 / It’s a privilege to serve you® Net Promoter Score (NPS) overview NPS is a quantitative measure of client satisfaction and loyalty
Calculated based on responses to one question: “How likely are you to recommend First Republic to a friend or colleague?”
Responses to Question (0 to 10 Scale) NPS = Promoters – Detractors Score ranges from -100 to +100 9 to 10 “Promoters”
7 to 8 “Passives” NPS over +50 is considered “excellent” 0 to 6 “Detractors”
60 / It’s a privilege to serve you® FRC’s client satisfaction outperforms even best brands
2018 NET PROMOTER SCORE SUMMARY 81 –as “Lead Bank”1
75 Ritz-Carlton
74 JetBlue
72 –Overall
64 Nordstrom 63 Apple 2X 62 Netflix U.S. BANKING INDUSTRY CLIENT SATISFACTION LEVEL 35 U.S. Banking Industry Avg.
Source: SATMETRIX NPS (2018) for brands listed and U.S. Banking Industry Average, excluding FRC. Please note: the brands listed under ‘Top Service-Focused Brands’ are brands selected for comparison purposes. Source: FRC/Greenwich Associates NPS Study (2018). 1. Over 50% of First Republic clients self-designate First Republic as their “Lead Bank.” 61 / It’s a privilege to serve you® NPS also explains why First Republic clients are satisfied1
Provides extraordinary service 61%
Top 3 Themes Related to Meets my unique needs 29% Service2
Treats me with special consideration 19%
Only 12% Offers favorable rates on their products 12% mentioned rates
Responds to my inquiries in a timely manner 7%
Peace of mind and sense of security 1%
Source: FRC/Greenwich Associates NPS Study, 2018. 1 Based on analysis of over 4,000 First Republic client comments from FRC/Greenwich Associates NPS Study, 2018. 2 Percentages and themes are not mutually exclusive. 62 / It’s a privilege to serve you® The compounding power of extraordinary service First Republic Deposits ($B): San Francisco Market (MSA) $40
$34
Very Satisfied Clients: $29 Expand their business over time 20% Refer family, friends, colleagues COMPOUNDED ANNUAL GROWTH RATE IN FRC $23 DEPOSITS OVER 25 YEARS $18 $16 $14 Growth of San Francisco Deposit Market, same period: <7% $12 $10 $8 $7 $5 $5 $3 $4 $1 $2 $2 $2 $2 $0 $0 $1 $1 $1 $1
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Source: Annual FDIC Deposit Market Share Report for San Francisco MSA, 1994 - 2019. Note: 2008 – 2010 estimated based on company information. 63 / It’s a privilege to serve you® San Francisco deposit market share over 25 Years1 1994 2019
Market Market Rank Institution Share Rank Institution Share 1 Bank of America 29.95% 1 Bank of America 32.24% 2 Wells Fargo 17.35% 2 Wells Fargo 20.62%
3 Great Western Bank 4.31% 3 First Republic 10.43% 4 Union Bank 3.90% 4 JPMorgan Chase 7.39% 5 American Savings Bank 3.74% 5 Bank of the West 6.27% 6 World Savings 3.20% 6 Citibank 4.27% 7 Home Savings of America 3.16% 7 Bank of America California 2.83% 8 First Insterstate Bank of California 2.34% 8 MUFG Union Bank 2.44% 9 Citibank 2.18% 9 U.S. Bank 1.30% 10 First Nationwide Bank 2.11% 10 Silicon Valley Bank 1.13% 11 Bay View Federal Bank 1.87% 11 HSBC Bank 1.06% 12 Bank of the West 1.81% 12 East West Bank 0.96% 13 San Francisco Federal 1.70% 13 Fremont Bank 0.96% 14 EurekaBank 1.52% 20x 14 Mechanics Bank 0.81% 15 Bank of California 1.41% increase in 15 Comerica Bank 0.74% 16 Sumitomo Bank 1.32% 16 City National Bank 0.69% 17 Glendale Federal 1.06% FRC market 17 Sterling Bank and Trust 0.45% 18 United Savings Bank 0.97% 18 Bank of Marin 0.43% 19 Westamerica Bank 0.96% share 19 Boston Private Bank and Trust 0.32% 20 Mechanics Bank 0.91% 20 Westamerica Bank 0.31% 21 Coast Federal Bank 0.87% 21 Zions Bancorporation 0.30% 22 California Federal Bank 0.85% 22 Cathay Bank 0.29% 23 Sanway Bank 0.84% 23 Umpqua Bank 0.28% 24 California Savings and Loan 0.61% 24 Heritage Bank of Commerce 0.26% 25 Imperial Bank 0.59% 25 Tri Counties Bank 0.24%
26 First Republic 0.52% 26 California Bank of Commerce 0.22% 27 Continental Savings 0.50% 27 Western Alliance Bnak 0.20% 28 Home Federal 0.48% 28 Industrial and Commercial Bank of China 0.18% 29 Fremont Bank 0.42% 29 Pacific Coast Bankers' Bank 0.17% 30 Pacific Bank 0.38% 30 Bank of the Orient 0.17%
Source: Annual FDIC Deposit Market Share Report for San Francisco MSA, 1994 and 2019. 1. Top 30 market share holders in San Francisco MSA, 1994 and 2019, as of June 30 for each year. 64 Break
65 Business Banking
Mike Selfridge Chris Coleman Chief Banking Officer Head of Business Banking Jeff Bruce Scott Aleali Deputy Regional Managing Director Private Equity Finance Managing Director
66 / It’s a privilege to serve you® Our strategy is focused on creating value for clients
Unified, cohesive client delivery More than just a bank
O Holistic solution by delivering business O Specialty knowledge of industry verticals and personal banking together O Excel in customized solutions O Business Banking, Preferred Banking Wealth Management, Relationship O Provide community and networking Management, Servicing, Wire Room opportunities
O We move quickly and decisively O Thought leadership
O Seamless collaboration / lack of silos O Advice on everything from finding office space to a CFO
67 / It’s a privilege to serve you® While enhancing First Republic’s consistent outperformance
41BPS 4.38% 4.3 to 1 AVERAGE BUSINESS AVERAGE BUSINESS BUSINESS DEPOSITS TO DEPOSIT RATE1 LOAN YIELD1 BUSINESS LOANS OUTSTANDING2
1. Average for 3Q19. 2. As of September 30, 2019. 68 / It’s a privilege to serve you® Strong deposit growth; primarily checking Growth in Business Checking and Total Deposits ($B)
$60.0 $49.8B % $50.0 28 12X 58% CAGR1 $40.0 GROWTH IN OF TOTAL BANK BUSINESS CHECKING DEPOSITS $36.1B SINCE 2010 32% $30.0 CAGR1
$20.0
$10.0 $5.7B
$3.1B $0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 3Q19
Business Checking Deposits Total Business Deposits
1. 8.75-year CAGR from December 31, 2010 through September 30, 2019.
69 / It’s a privilege to serve you® Steady source of loan growth Growth in Business Loans and Commitments ($B)
$30.0 $25.4B 31% $25.0 11X CAGR2 GROWTH IN $20.0 LOAN COMMITMENTS SINCE 2010 $15.0 $11.6B 30% CAGR2 $10.0
$5.0 $2.3B
B $0.0 $1.2 2010 2011 2012 2013 2014 2015 2016 2017 2018 3Q19
Business Loans Outstanding1 Business Loan Commitments
1. Loan amounts represent recorded investment. 2. 8.75-year CAGR from December 31, 2010 through September 30, 2019. 70 / It’s a privilege to serve you® Exceptional credit history Business Loan Origination Volume ($B) and Net Charge-Offs (%)
2000 – 3Q191
$50B $92M 0.18% CUMULATIVE TOTAL CUMULATIVE NET LOSSES2 CUMULATIVE NET LOSSES1 ORIGINATIONS
1. Includes estimated charge-offs on divested loans retained by Bank of America for period from July 1, 2010 to December 31, 2018. First Republic Bank was sold to Merrill Lynch in September 2007; through the acquisition of Merrill Lynch it became part of Bank of America in January 2009; then it became independent again through a management led buyback in July 2010. 2. Includes a business loan loss of $40 million involving fraud in 2009. 71 / It’s a privilege to serve you® Bringing the full bank to the client Growing a relationship with two individuals into a $100M+ relationship over 20 years
Private Banking Business Banking Wealth Management Next Generation Relationship began with two FRC brings the same level of Private Wealth Management Professional Loan Program principals of a private equity personalized service through offers foreign exchange, 401k provides the opportunity to fund in the early 2000’s business banking and investment management serve the next generation to the business of company leaders
One Relationship Manager quarterbacks a team of 10 colleagues across the bank to deliver a seamless experience through the life of the relationship
SUPERIOR SERVICE ALLOWS US TO DEVELOP NEW RELATIONSHIPS AND GROW EXISTING ONES
72 / It’s a privilege to serve you® Capital call lending is a key driver of business loan growth Focus on increasing capital call line commitments
Short-term loans to…
O Bridge the time between when an investment is made by the GP REPRESENTS and when capital contributions are received from investors (LPs). Utilization can vary based on velocity of advances, Limited Partners include… 6% valuation, fund closings OF THE TOTAL O More than 18,000 limited partners which include institutional LOAN PORTFOLIO2 endowments, pension funds and insurance companies. 1
O No one limited partner represents more than 2% of fund commitments.1 Following our clients
General Partners are… Large opportunities within First Republic markets offer synergies with private banking and wealth O Highly experienced industry professionals with strong track management records and diverse fund strategies.
1. Data as of September 30, 2018. 2. Represents recorded investment, excluding loans held for sale. 73 / It’s a privilege to serve you® Capital call lending fits First Republic’s safe growth model
STRONG OPERATIONAL SAFE CREDIT PROFILE FITS THE FRB STRATEGY1 CAPABILITY1
$16.5B 0 4.34% COMMITMENTS LOAN LOSSES SINCE AVERAGE YIELD THE FIRST LINE IN 2000
• 19 years serving the sector • Average repayment period of less than 60 days • Opportunity to deliver the whole bank including professional loans • Experienced bankers and strong • Secured by uncalled capital/right to call capital operational expertise and personal banking • Credit extended at the fund level • Contractual obligations not subject to fund performance • Strong institutional LPs
1. Data as of September 30, 2019. 74 / It’s a privilege to serve you® First Republic is THE bank for nonprofits Following our clients’ hearts and minds
We ser ve 3,500+ Nonprofits1 across our communities through events, thought leadership and dedicated content and industry associations. • Top categories include schools, social service, performing arts, museums, charitable and other membership organizations • Offer customized, tax-exempt financing as key differentiator • Frequently bank board members, donors and staff
3.7x 3.5x GROWTH IN LOANS GROWTH IN DEPOSITS OUTSTANDING OUTSTANDING SINCE 20121 SINCE 20121
1. Data as of September 30, 2019.
75 Do The Right Thing First Republic Values
76 / It’s a privilege to serve you® Supporting communities with volunteerism and sponsorship
12.9k HOURS VOLUNTEERED IN 20191
Up 22% from the same time one year ago
467 NONPROFITS SUPPORTED IN 20192
Up 12% from the same time one year ago
1. 12.9k hours volunteered by First Republic employees from January 1, 2019 through September 30, 2019, compared to 10.6k hours during the first nine months of 2018. 2. 467 nonprofit organizations supported through philanthropic or sponsorship contributions from January 1, 2019 through September 30, 2019, compared to 417 organizations during the first nine months of 2018. 77 Attracting the Next Generation of Clients
James Herbert Patrick Macken Erin Fitzsimmons Co-Head of Eagle Lending Co-Head of Eagle Lending Managing Director
78 / It’s a privilege to serve you® Professional Loan Program (“PLP”) Propelling emerging business leaders
Enabling partners and employees of • 3,800+ private equity firms in the US professional, private equity or venture • 1,400+ private equity firms in First Republic capital firms to make individual, required markets1 contributions or commitments • Increase penetration of medical, legal and investment markets
39 ~51% 768 $485K Average age Hold a graduate degree2 Average FICO Median income
1. Firms located in SF Bay Area, Los Angeles, New York and Boston. Source: Preqin Capital Market Company as of October 15, 2019. 2. Limited education data: percentage computed using recent available data and estimates provided by PLP analyst management. 79 / It’s a privilege to serve you® Student Loan Refinance (“SLR”) Supporting graduates in achieving their goals
• Refinancing one or more federal or • An estimated ~400K+ potential clients in private student loans into a single loan First Republic markets1, and growing • No in-school lending
32 ~90% 770 $185K Average age2 Hold a graduate degree Average FICO Median income
1. 2017 TransUnion data and FRC analysis based on minimum loan amount, minimum FICO score and First Republic markets. 2. Average age of the borrower at the time of origination. Other than being 18 years old or legally able to enter into a contract, there are no age requirements or age restrictions for loan eligibility. 80 / It’s a privilege to serve you® Growth transforming the Bank’s demographics PLP & SLR have generated 26K borrowing households since 2014 and now represent 34% of Bank’s consumer borrowing households
GROWTH PER ANNUM SINCE 2014 PLP & SLR PERCENTAGE OF BANK’S TOTAL (HHs GENERATED CONSUMER BORROWING HOUSEHOLDS BY PLP & SLR)1
2014 3Q19
6% 34% 76%
1. 4.75-year CAGR from December 31, 2014 through September 30, 2019.
81 / It’s a privilege to serve you® Scaling the high-touch service model Relationship Manager Development Program designed to provide bankers for life
NET PROMOTER SCORE O High-touch service model resonates with PLP & SLR clients
O Intensive training program, alongside close mentorship, to support continued credit strength and 75 exceptional client service O Since the first program in 2017, First Republic has trained three cohorts of 45+ Relationship Managers 2018 PLP & SLR CLIENTS1
1. FRC/Greenwich Associates NPS Study, 2018
82 / It’s a privilege to serve you® Never compromising on credit Credit quality of PLP & SLR households is on par with the broader bank
PROFESSIONAL LOAN STUDENT LOAN REFINANCE PROGRAM
PLP & SLR reflect the same credit culture as 0bps 3bps the rest of First Republic CUMULATIVE NET LOSSES CUMULATIVE NET LOSSES OVER 12 YEARS OVER 5 YEARS
83 / It’s a privilege to serve you® Capital efficiency PLP & SLR acquire ~4x and ~9x more households, respectively, with the same capital used for a Single-Family Residential (“SFR”) loan client
1.0 3.7 9.2 Typical SFR HH PLP HHs SLR HHs Avg. Loan $1.25M1 Avg. Loan $340K Avg. Loan $135K
$1.25M of loans
1. Average SFR loan size obtained by those households that, along with the mortgage, originated a deposit and/or wealth relationship with the Bank between 2008-2011 and were still with the Bank 5 years after origination.
84 / It’s a privilege to serve you® PLP & SLR households are quickly deepening their relationships with the Bank
CROSS-SERVICED 3-YEAR DEPOSIT GROWTH1 LIQUIDITY-TO-LOAN2 MORTGAGES
PLP 7.5x 40% ~2,000 SLR 3.0x
1. Findings per 2019 Oliver Wyman study: SLR is 2015 cohort and PLP is 2013 cohort – data as of 12/31/2018. 2. Liquidity-to-loan computed as: [Deposits + Assets Under Management] / Loans. 85 Private Wealth Management
Bob Thornton Kristin Ashman George Fuchs President of PWM Senior Managing Director Managing Director
86 / It’s a privilege to serve you® A perfect fit for clients and advisors Combining advanced capabilities with a high touch client focus
FIRST REPUBLIC PRIVATE WEALTH MANAGEMENT ($140B in AUM) SMALL BOUTIQUE LARGE GLOBAL FIRMS FIRMS (<$3B AUM) (AUM > $1T) Transparency of investment process, advice and fees
Limited research Entrepreneurial Access to best in class Size discourages capabilities spirit Client centric and managers adapting to individual relationship based culture client needs
Key employee risk High levels of Great, high-touch banking Global research and Lack of integrated high- communication service asset class capabilities touch banking
Disciplined asset allocation, Narrow investment Access to senior Ability to recruit top Competing internal profit and investment process expertise management talent centers create conflicts of interest Team addressing full scope of wealth management needs
87 / It’s a privilege to serve you® The ability to meet all of our client’s needs
INVESTMENT MANAGEMENT Open Architecture Portfolio and Liquidity Management / Endowment Management / Automated Investing
COMPREHENSIVE FINANCIAL PLANNING Wealth Protection Strategies / Philanthropic, Charity & Donation Strategies / Legacy Strategies
TRUST & ESTATE PLANNING Trust Solutions / Estate Settlement & Administration / Tax Efficient Strategies
PRIVATE BANKING Full-service Banking and Real Estate Financing / Consolidated Wealth Reporting / Special & Structured Lending
RISK & ADVISORY SERVICES Risk Analysis & Management / Insurance Assessment, Advice & Solutions / Foreign Exchange
88 / It’s a privilege to serve you® Wealth Management is diversifying total bank revenues Share contribution to total bank revenues has more than doubled since 20101
6% 14%
2010 3Q2019
1. Private Wealth Management (“PWM”) fee income includes investment management, brokerage and investment, insurance, trust and foreign exchange fees.
89 / It’s a privilege to serve you® Assets under management has increased 8.5x since 2010
1 Total Assets Under Management ($B) Investment Management Brokerage Trust
$160 $11.6B X $120 8 GROWTH IN $67.5B ASSETS UNDER MANAGEMENT SINCE 2010 $80 $61.2B
$40 $3.6B $6.5B $0 $6.5B 2010 2011 2012 2013 2014 2015 2016 2017 2018 3Q19
1. Excluding account balances that are swept into Bank deposits and safekeeping assets from the Bank’s private equity and venture capital clients. 90 / It’s a privilege to serve you® Net client flow is the primary driver of asset growth Net client flow consists of growth from existing clients, self-sourced new clients, bank referrals and new hires
Sources of AUM growth1 ($B) Net Client Flow Market Appreciation / Depreciation
$30.0
$20.0 $12.4 $1.5 $24.4 $10.0 $3.7 $3.2 $16.6 $10.3 $11.6 $11.0 $7.1 $7.6 $0.0 -$2.6 -$1.3 -$5.1
-$10.0 2 2013 2014 2015 2016 20172018 3Q19
1. Net client flow includes adding to the balance in existing accounts by the depositing of additional funds and the opening of new accounts, offset by the closing of accounts or the withdrawing of funds. The portion of the net change that cannot be attributed to the deposit or withdrawal of funds is reported in market appreciation (depreciation). 2. Excludes asset growth from the acquisition of Constellation Wealth Advisors in October 2015. 91 / It’s a privilege to serve you® Collaborative growth: Banker referrals to Wealth Management Since January 2018, over 80% of First Republic Relationship Managers have referred new PWM clients
Total AUM from Bank referrals ($B)
$8 Wealth Managers and Bankers are co-located, which 6.1 O facilitates teamwork and collaboration
$5 4.5 4.6 O Mutual respect for the level of service being provided O Compensation structure favors collaboration and 3.1 3.2 incentivizes long-term relationships
$3 O Robust training and education programs O Wealth Advisor role created to facilitate client referrals between Bankers and Wealth Managers
$0 2014 2015 2016 2017 2018
92 / It’s a privilege to serve you® Collaborative growth: Wealth Management supporting deposit growth Over 60% of PWM households have a deposit relationship with First Republic, up from 48% in 2016
PWM Referred Deposits1 & Sweep Ending Balances ($B) Total PWM Contribution to Bank Deposits
+21% 9.4% 10.7% $8.1 $6.7 +28% $5.2 6.1% Growth $4.1 +11% Growth $2.6 $2.8 3.3%
3Q18 3Q19 3Q19 Referred Deposit Balances Sweep Ending Balance % PWM Referred Deposit % Sweep Balance
1. Does not include Foreign Currency Accounts. 93 / It’s a privilege to serve you® Opportunities ahead: Deepening existing relationships
TOTAL BANKING CLIENTS TOTAL PWM CLIENTS
91% 39%
91% OF BANKING CLIENTS ARE NOT YET 39% OF PRIVATE WEALTH MANAGEMENT CLIENTS UTILIZING WEALTH MANAGEMENT SERVICES ARE NOT YET UTILIZING BANKING SERVICES
94 / It’s a privilege to serve you® Opportunities ahead: Continued growth and evolution
INTRABANK ATTRACTING TOP ENGAGING LATER GROW FEE LINES ENGAGING THE REFERRALS TEAMS GENERATIONS (FX, INSURANCE) NEXT GENERATION THROUGH EAGLE INVEST
95 Break
96 Client Panel
Hosted by Mollie Richardson Chief Administrative Officer and Chief People Officer
97 / It’s a privilege to serve you® Client Panel
In keeping with requirements set out by the U.S. Securities Exchange Commission, First Republic Investment Management does not allow the use of client testimonials and will not be represented on this panel.
The views and opinions expressed by our Client Guests are solely their own and are not those of First Republic Bank.
98 Client Panel
Hosted by Mollie Richardson Chief Administrative Officer and Chief People Officer
99 Break
100 Special Guest Speaker
Ian Bremmer Founder & President, Eurasia Group & GZERO Media
101 / It’s a privilege to serve you® Special Guest Speaker
First Republic Bank is not the author of this presentation, and the views and opinions expressed herein and in the accompanying discussion are solely those of the author and are not those of First Republic Bank. First Republic Bank makes no claim as to the veracity or accuracy of any of the views or opinions expressed in this presentation.
102 Special Guest Speaker
Ian Bremmer Founder & President, Eurasia Group & GZERO Media
103 Credit Culture
David Lichtman Ruth Aronowitz Garrett Sokoloff Chief Credit Officer Senior Managing Director Senior Managing Director
104 / It’s a privilege to serve you® First Republic’s growth and credit are both strong FRC has maintained pristine credit quality while delivering exceptional asset growth
Average Net Charge-offs Compared to Asset Growth 2010-20191, 2
2.50% COF
2.00% C
1.50% Charge-offs (%) BAC JPM 1.00% BBT FITB USB STI WFC CFG KEY HBAN 0.50% ZION PNC CMA 0.25% MTB NTRS FRC GS STT BK 0.00% MS 0% 5% 10% 15% 20% Asset Growth
Source: SNL (CAGR) 1. 8.5-year CAGR from December 31, 2010 through June 30, 2019. 2. Does not include estimated charge-offs on divested loans retained by Bank of America. 105 / It’s a privilege to serve you® FRC has outperformed during good times and bad
Net Charge-Offs (Recoveries) as % of Average Loans
1 DOT-COM BUBBLE ERA FINANCIAL CRISIS ERA FRC average annual net charge-offs Top 50 U.S. Banks average annual net charge-offs2
1.90% FRC1,3 Top 50 U.S. Banks2 1.65%
1.40%
1.15% Top 50 U.S. Banks’ 0.90% average annual net charge-offs are 0.65%
0.40% 6.7x those of First Republic 0.15% (40 bps vs 6 bps)
-0.10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-19 4,5 YTD
1. Includes estimated charge-offs on divested loans for period from July 1, 2010 to December 31, 2018. Average spans 19.75 years. 2. Source: SNL Financial. Comprised of the median for the top 50 U.S. Banks by asset size, including FRC, as of December 31 of each corresponding year, and June 30, 2019. Average spans 19.5 years. 3. Beginning in 2009, net charge-offs include charge-offs against unaccreted loan discounts, if any. 4. FRC data point calculated on an annualized basis. 5. Top 50 U.S. Banks data point as of June 30, 2019. Industry data as of September 30, 2019 is not yet available. 106 / It’s a privilege to serve you® Credit culture has been consistent since 1985
1985 – 3Q19
TOTAL LOANS1 $256B 0.13% CUMULATIVE TOTAL CUMULATIVE NET LOSSES (%) ORIGINATIONS
SINGLE FAMILY RESIDENTIAL1, 2
$139B 0.06% CUMULATIVE TOTAL CUMULATIVE NET LOSSES (%) ORIGINATIONS
1. Includes estimated charge-offs on divested loans retained by Bank of America for period from July 1, 2010 to December 31, 2018. First Republic Bank was sold to Merrill Lynch in September 2007; through the acquisition of Merrill Lynch it became part of Bank of America in January 2009; then it became independent again through a management led buyback in July 2010. 2. Originations and losses include Single Family Residential (“SFR”) Loans, Home Equity Lines of Credit, Single Family Owner Occupied Construction Loans, as well as all SFR Loans sold in Secondary Market. Includes a $7.4 million loss in 2006/07 related to a business loan fraud in New York. 107 / It’s a privilege to serve you® Our standards remain high Low Loan-to-Value Ratios (LTVs) are a hallmark of our underwriting process
Loan-to-Value at Loan Origination1
60% 59% 58% 57% 57% 56% 55%
52% 52% 51%
50% 47%
40% Single Family HELOC Multifamily CRE Construction 2010-2014 Avg LTV 2015-2019 Avg LTV
1. Presented on a combined LTV basis, including the first residential mortgage and a second lien, where applicable. 108 / It’s a privilege to serve you® We know our markets 90% of all real estate loans are located within 20 miles of an FRC office
% OF TOTAL $86BN LOANS1 AS OF SEPTEMBER 30, 2019 YEAR OF MARKET ENTRY2
Palm Beach 1% Other 7% Portland 2% San Francisco/ 2007 San Diego 4% Silicon Valley 2018 39% 2006 1999 Boston 8% 1985
1985 1985
Los Angeles 17% 2013
New York 22%
1. Represents recorded investment, excluding loans held for sale. 2. Year listed at each location indicate the year we entered the market. 109 / It’s a privilege to serve you® We know our products A simple set of products allows for deeper expertise
% OF TOTAL $86BN LOANS AS OF SEPTEMBER 30, 2019
Other Construction 3% 6% WE HAVE BEEN DOING REAL Commercial Real ESTATE SECURED LOANS SINCE Estate 9% SFR / HELOC 55%
Business 13% 1985 AND THEY STILL REPRESENT THE MAJORITY OF OUR LOAN BOOK Multifamily 14%
110 / It’s a privilege to serve you® We know our clients Banker tenure and stability lead to deeper relationships and stronger credit
Relationship Banking Model We hire exceptional people who serve their clients through the life of the relationship
Higher Workforce Retention $230B Longer tenures means deep, long-term client relationships OUR CURRENT BANKERS HAVE ORIGINATED OVER Compensation alignment $230B OF LOANS • Credit claw back since 1986 reinforces credit as a corner stone • On average, over half of banker compensation comes from client deposits and assets under management • Uncapped compensation further supports banker retention
Service driving repeat business • Over 50% of new loan originations are to existing, proven clients1
1. Based on principal balance at origination, for loans originated during 2015-2018, excluding overdraft lines of credit and refinanced FRC loans. Includes all loan originations whether on balance sheet, sold or currently held for sale.
111 / It’s a privilege to serve you® First Republic’s unique review model Product and market experience of Executive Loan Committee (“ELC”) members complements client knowledge of Relationship Managers (“RMs”)
RELATIONSHIP MANAGER TO ELC 6:1 MEMBER RATIO1
AVERAGE YEARS OF EXPERIENCE FOR ELC MEMBERS CONSULTATIVE NOT ADVERSARIAL RELATIONSHIP 29 QUICK DECISION MAKING
CERTAINTY OF CLOSING
DIFFERENTIATED CLIENT SERVICE AVERAGE YEARS OF TENURE OF BANKERS AT RMS TRAINED BY ELC ON CREDIT, UNDERWRITING AND FRIST REPUBLIC CLIENT ADVICE 7
1. includes full-time Relationship Managers and Business Bankers and core, regional and business unit ELC members as of 10/28/2019. 112 Do The Right Thing First Republic Values
113 / It’s a privilege to serve you® Supporting affordable housing and community development
LENDING INVESTMENTS
13.4% 28.9%$$4.7bn 1.6bn SINGLE FAMILY SINGLE FAMILY TOTAL COMMUNITY TOTAL LOW-INCOME RESIDENTIAL LOANS RESIDENTIAL LOANS DEVELOPMENT LOANS HOUSING TAX CREDIT ORIGINATED2,3 INVESTMENTS COMMITTED4 TO LOW-TO-MODERATE IN LOW-TO-MODERATE INCOME BORROWERS1 INCOME CENSUS TRACTS1
Compared to 12.1% for all lending Compared to 22.3% for all lending institutions in FRC’s footprint institutions in FRC’s footprint
1. Percentage of single family residential loans funded by unit in low- to moderate-income census tracts, as determined by Home Mortgage Disclosure Act data (“HMDA”). 2. Community Development Lending (“CDL”) includes multifamily and commercial real estate loans, along with lending to nonprofit organizations and other commercial entities, that meet the Community Reinvestment Act (“CRA”) standards for “community development.” Balances are cumulative through period-end. 3. Loans originated from 2011 through 2017, the most recent reportable time period. 4. Includes all low-income housing tax credit investments. Balances is as of December 31, 2018. 114 Sound Financial Management
Mike Roffler Olga Tsokova Chief Financial Officer Chief Accounting Officer
115 / It’s a privilege to serve you® Current Expected Credit Losses (“CECL”) considers First Republic’s exceptional credit track record
First 2 Years Remaining Life of Loan BASED ON QUARTERLY BASED ON FIRST REPUBLIC’S CREDIT HISTORY COMPANY FORECAST OF ACROSS LOAN CATEGORIES ECONOMIC CONDITIONS
116 / It’s a privilege to serve you® CECL will have an insignificant impact on financial results1
ESTIMATED DAY 1 IMPACT
QUANTITATIVE WEIGHTED AVG LIFE OF LOAN TYPE ESTIMATED IMPACT RESERVE IMPACT LOAN (YEARS) TO CAPITAL SINGLE FAMILY + 5.4 MULTIFAMILY + 5.1 COMMERCIAL REAL ESTATE + 4.4 BUSINESS2 - 2.3 <10 BPS STUDENT LOAN REFINANCE + 3.6 IMPACT TO LEVERAGE Actual impact will depend on the following at the time of adoption: RATIO
• Current conditions • Finalization of models • Macroeconomic forecasts • Finalization of qualitative • Portfolio composition adjustment factors
1. Based upon results of the September 30, 2019 parallel run . 2. Excludes capital call lines of credit and tax exempt loans. 117 / It’s a privilege to serve you® Sound financial management is designed to support our client-centric business model
BUSINESS MODEL FINANCIAL MANAGEMENT
Acquire great households, deliver exceptional service, Gain trial with competitive pricing, focus on the keep clients for life lifetime value of the client
Be the lead bank, growing with satisfied clients Compensate based on the retention and depth of the relationship
Operate as a team without internal silos Don’t emphasize cost accounting
Always maintain the highest credit standards Deliver consistent financial results
Be there to serve clients through all cycles Stay well capitalized at all times
118 / It’s a privilege to serve you® The longer we have the client, the higher client’s lifetime value Gain trial earlier Grow the relationship Serve the client longer
70% of Total Households 59% of Total Liquidity
50%
40%
30%
20%
10%
0% Generation Z Millennials Generation X Baby Boomers Silent Generation (Ages 21 and below) (Ages 22 – 37) (Ages 38 – 53) (Ages 54 – 72) (Ages 73 – 90)
1 1, 2 Consumer Borrowing Households Total Liquidity
1. As of September 30, 2019. 2. Total liquidity includes deposits and assets under management. 119 / It’s a privilege to serve you® Investments made to deliver exceptional service and drive further growth
DELIVERING EXCEPTIONAL SERVICE DRIVING FURTHER GROWTH
Hiring high-performing, service-oriented Hiring exceptional wealth management colleagues teams
Staffing teams to provide high-touch Attracting the next generation of client to service the bank
Investing in cyber security and Selectively opening new Preferred technology & operations to scale the Banking Offices service model
120 / It’s a privilege to serve you® Staying well capitalized to support organic growth
Total Bank Assets (000)
Jan 2019 Common Sep 2018 Common $173M $100,000,000 $204M Oct 2019 Pref. Redemption Oct 2017 Common $190M | 5.50% March 2017 Common $280M Jun 2018 Preferred $238M $300M | 5.50% Dec 2018 Pref. Redemption Nov 2016 Common $200M | 7.00% $80,000,000 $330M Jan 2018 Pref. Redemption May 2017 Preferred $150M | 5.625% $200M | 5.125% Jun 2017 Pref. Redemption Jan 2017 Pref. Redemption $150M | 6.20% $200M | 6.70% $60,000,000
$40,000,000 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19
Total Bank Assets
Note: For common and preferred stock issuances, amounts represent the aggregate offering proceeds, before underwriting discount or offering expenses. For preferred stock redemptions, amounts represent the aggregate redemption amount. 121 / It’s a privilege to serve you® Conservative provisioning supports a high growth model
PROVISION FOR LOAN LOSSES (AS A PERCENT OF AVERAGE LOANS) $34M ANNUAL POST-TAX IMPACT PROVISION FOR LOAN TO EARNINGS 12bps LOSSES1
1 bps bps NET CHARGE-OFFS 65 0.5 ANNUAL IMPACT TO RETURN ON TANGIBLE COMMON EQUITY
1. 5.75 year average from Q1 2014 through Q3 2019.
122 / It’s a privilege to serve you® Today’s environment is challenging but not unprecedented
10 Year US Treasury Relative to the Fed Funds Rate (%)1
12.00 Yield curve inverted by nearly 10.00 80 bps during 3Q but has since returned to 2Q 8.00 levels
6.00
4.00
2.00
0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 10 Year US Treasury Fed Funds Rate
1. Source: Bloomberg.
123 / It’s a privilege to serve you® Stable and consistent balance sheet management during times of uncertainty
LOANS INVESTMENTS DEPOSITS OTHER FUNDING
Focus on full relationship Manage to 12% high quality Fund asset growth primarily Opportunistic use of the clients liquid assets with deposits of total assets FHLB to provide fixed-rate (84% at Sep 30, 2019) term funding Maintain tight credit Opportunistically add standards late in the cycle investments to support net Barbell approach with interest income checking and certificate of Respond to client demand deposits which creates deeper client relationships
Adjust rates and duration while managing client expectations
124 / It’s a privilege to serve you® Containing near-term expense growth while maintaining a long-term focus
Investments with a direct tie to risk, client service or long-term growth Off Limits E.g. We will not pass up the opportunity to hire a high quality wealth management team
Potential Opportunities Investments that can be timed more sequentially without sacrificing service or growth E.g. Subleasing real estate
Low Hanging Fruit Full review of the cost base for quick-wins E.g. Eliminating excess technology licenses
125 / It’s a privilege to serve you® Consistently strong business performance
LOAN GROWTH DEPOSIT GROWTH REVENUE GROWTH NET CHARGE-OFFS
5-YEAR CAGR1 5-YEAR CAGR1 5-YEAR CAGR1 5-YEAR AVERAGE1
19% 14 bps 18% 16%
3% 3% 2% 0. 1 bps
22 2 2 3 BKX Index First Republic BKX Index First Republic BKX Index First Republic BKX Index First Republic
1. Data from 2Q14 to 2Q19. Source: SNL. 2. Index data excludes FRC metrics. 3. Does not include estimated charge-offs on divested loans retained by Bank of America. 126 / It’s a privilege to serve you® Creating long-term shareholder value
TANGIBLE BOOK VALUE TOTAL SHAREHOLDER PER SHARE RETURN
5-YEAR CAGR1 5-YEAR CAGR2
14% 17%
7% 10%
3 3 BKX Index First Republic BKX Index First Republic
1. Data from 2Q14 to 2Q19. Source: SNL. 2. CAGR calculated from September 30, 2014 through October 31, 2019. Source: Bloomberg. 3. Index data excludes FRC metrics. 127 Break
128 Scaling Our Service Culture EMPOWER!
Fatema K. Arande Hafize Gaye Erkan Samir Kaji Head of Deposits President Senior Managing Director East Coast Tech and Venture Capital
129 / It’s a privilege to serve you®
Client satisfaction is ALL that matters
130 / It’s a privilege to serve you®
Our primary technological advantage: Empowering Our People
131 / It’s a privilege to serve you® Scaling extraordinary service through technology & innovation
Eagle Lifelong Intelligence Learning Continuous Tr ust & Process Delegate Improvement Innovation
132 / It’s a privilege to serve you®
Continuous Process Improvement (CPI)
133 / It’s a privilege to serve you® CPI: Leveraging our entrepreneurial culture
Colleague-Sourced Colleague-Driven More Time to Ideas +=Solutions Serve & Delight Clients
Recurring Annual 900+ 200+ 230k Hours Gained Ideas Submitted Ideas Implemented or Since 2017 Since 2017 Equivalent Workforce 2.4% Expansion
Source: Company information 134 / It’s a privilege to serve you® CPI Spotlight: Deposit Client Onboarding Less time spent on processes, more time delighting clients Client ABC Product Selection 50% Client ABC LESS TIME OPENING ACCOUNTS XXXXXXXXX
XXX-XXX 8 1 Take Samuel to Lunch INTEGRATED DIGITAL SYSTEM WORKFLOW
Source: Company information 135 / It’s a privilege to serve you® CPI testimonials
Simplify Everyday Activity Robotic Process Automation Client Feedback
Director, Preferred Relationship Private Banking Banking Client Services Manager Client
“I saw an opportunity to “All we have to do is email “Thanks for your quick simplify the process of the bot a couple pieces of response. The turn-around pre-funding new accounts, information. It prepares the time… at First Republic is and I had the support to letter, and we forward it to second to none.” get it done.” our client. It’s ideal for RMs on the go!”
136 / It’s a privilege to serve you®
Eagle Intelligence
137 / It’s a privilege to serve you®
Data is most powerful when used by caring people to guide client service.
138 / It’s a privilege to serve you® Eagle Intelligence at the service of our trusted advisors
First Republic Trusted Advisor & Empowered Entrepreneur
Eagle Intelligence: Knowledge Enables Banker-Delivered Service & Speed
Eagle Tearsheets Eagle Miner Quant for Banker (Q4B) Smart Prospecting Deepening Relationships Analytics Concierge
139 / It’s a privilege to serve you® Eagle Miner: Timely customized recommendations
CLIENT INSIGHTS ENGINE
Client Data
Client Preferences New BIO LLC is expected to IPO in next 3-6 months.
Call Email Add to Calendar Like Dismiss Money In Motion
Life Events Your active client and referral source. Last contact 47 days ago, and birthday is next Tuesday
Call Email Add to Calendar Digital Banking Activity Like Dismiss
Self Learning
140 / It’s a privilege to serve you® Quant for Banker: Personalized analytics concierge
Bankers With Quants Bankers Without Quants 2x Deposit Growth
Jun ’18Jul ‘18 Aug ’18 Sep ’18 Oct ’18 Nov ’18 Dec ’18 Jan ’19 Feb ’19 Mar ’19 Apr ’19 May ’19 Jun ’19 Jul ’19 Aug ’19 Sep ’19 v Quant for Banker Program Launch
Source: Company information 141 / It’s a privilege to serve you®
Quant for Banker Spotlight
142 / It’s a privilege to serve you® Quant for Banker: Harnessing collective wisdom
143 / It’s a privilege to serve you® Hospitality at scale
How can we How do we create continue to provide more meaningful hospitality at scale? touchpoints?
Are we being Are we proactive with client prospecting relationships? effectively?
Leveraging data and information is key!
144 / It’s a privilege to serve you® Client hospitality demands anticipating client needs
Capital Call Activity Today $ Inflows
Approaching Next Funding Round Operating Balance
Cash Burn
Time Time
Pitchbook Help VC Network
Capital Call Line of Credit Cash Management Solutions 145 / It’s a privilege to serve you® Venture capital prospect ranking
External Fund Data Fund Raising Info Dry Powder Levels Active Investing Status UCC-1 Filings Fund Size … Prospect Internal Client Data Cross-check Existing Clients Ranking Model Identified prospective fund led to new relationship with LinkedIn Prioritize Common Connections Parameters calibrated by bankers $25mm & $50mm Deposits Line of credit
146 / It’s a privilege to serve you®
What EMPOWER! Means to Our Colleagues
147 / It’s a privilege to serve you® Our entrepreneurs are empowered for success
1 2 3 4 Empowered Tr usted FR B World-Class Actionable Entrepreneurs Reputation Collaborators Intelligence
Resources, trust and Safe, sustainable One team, Data-driven insights access to create growth built on client One dream driving better outcomes unique value for clients satisfaction more effectively
148 / It’s a privilege to serve you®
EMPOWER! amplifies our proven service model
Growing and Happy, stable referring others colleagues
Organic Growth Model
Satisfied, loyal clients
149 / It’s a privilege to serve you®
First Republic Colleague Testimonials
150 Tech-Ops: Scaling Our Service Culture
Jason Bender Scott Finder Chief Operating Officer Chief Digital Officer
151 / It’s a privilege to serve you®
“You have to start with the customer< experience and work backwards towards the technology.”
–Steve Jobs
152 / It’s a privilege to serve you®
The goal… To respect the human relationship and use technology to deliver on an exceptional experience.
The challenge… How do we do that?
153 / It’s a privilege to serve you® High Tech EMPOWERS! High Touch
154 / It’s a privilege to serve you® Our Tech-Ops priorities
DELIGHT EMPOWER INVEST IN CLIENTS COLLEAGUES INFRASTRUCTURE
155 / It’s a privilege to serve you®
Delight Clients
156 / It’s a privilege to serve you® Improved experience – Digital Mortgage Application
“This was the easiest online mortgage application I've ever completed. The interface was simple, elegant, and I enjoyed the experience.” First Republic Client, Online Review > %
MORTGAGE APPLICATIONS SUBMITTED ONLINE
Source: Company information 157 / It’s a privilege to serve you® Unparalleled client experience – Emergency Response App
• Identifies potentially impacted clients
• Guides targeted outreach during crisis
• Helping clients, communities, and colleagues
158 / It’s a privilege to serve you®
EMPOWER! Colleagues
159 / It’s a privilege to serve you® Scaling extraordinary service through technology & innovation
Eagle Lifelong Intelligence Learning Continuous Tr ust & Process Delegate Improvement Innovation
160 / It’s a privilege to serve you® Innovation through EMPOWER! Ideas platform
Every colleague can easily submit, review, vote for, and comment on ideas
2,100+ Unique visitors1 4,600+ Votes cast1
Focused on Process Improvement
Source: Company information 1. Since launch in 2Q18 161 / It’s a privilege to serve you® Innovation through rapid prototyping
Prototyping in weeks now instead of months FIRST REPUBLIC ATM REBATE CARD Sunshine Cafe, Boston, MA 90% FASTER DELIVERY! $63.04 CASE STUDY: • Modern software Debit Card Notifications development methodology . Built on top of new Visa debit processing • New secure cloud system development environment
. Prototypes developed • Partnership with open, and deployed in two agile vendors weeks Prototype Implementation
162 / It’s a privilege to serve you®
Invest in Infrastructure
163 / It’s a privilege to serve you® KEY ACH System (4Q17) INFRASTRUCTURE UPGRADES SFR Loan Origination System (1Q18)
PWM Performance Reporting (1Q19)
Debit Processing System (4Q19)
Wire System (4Q19)
Modern Core Banking System (2021) 164 / It’s a privilege to serve you® Spotlight: productivity and innovation with a modern core
Modular and Unbundled … enabling best-in-class services
50% Faster Integrations1 … for quick pilots and innovations 400+ APIs … and growing
Omnichannel Solutions … for consistency across channels
Source: Vendor-provided information 1. Up to 50% faster based on vendor experience with third party integrations 165 / It’s a privilege to serve you®
Digital Banking
166 / It’s a privilege to serve you® Digital to enhance – not replace – relationships
First Republic always puts human relationships first… And in an increasingly digital age... % We are complementing relationships Clients for whom with digital capabilities online/mobile is important to FRC relationship1
1. FRC/Greenwich Associates NPS Study, 2018
167 / It’s a privilege to serve you® Digital adoption increasing with new consumer digital platform
163k Over the last 12 months…
137k Increase in Active Digital Banking Users1 119k 19% 92k
Increase in Active 29% Mobile Users2
9/30/18 9/30/19 Increase in Mobile Digital Banking Active Mobile 31% Check Deposits ($) Active Users Users
Source: Company information 1. Digital Banking Active Users (Consumer) defined as users with at least one log-in in the last 90 days. 2. Digital Banking Active Mobile Users (Consumer) defined as users with at least one log-in to the FRC mobile banking app in the last 90 days. 168 / It’s a privilege to serve you® Digital adoption increasing among business clients
Over the last 12 months…
21K Increase in Digital 1 17K 27% Active Business Clients
Increase in Corporate 42% Online Sessions
Increase in Digital 9/30/18 9/30/19 Payments ($) 42% (wires, ACH, Bill Pay) Digital Active Companies
Source: Company information 1.Digital Active Business Clients defined as business clients with at least one log-in in the last 90 days. 169 / It’s a privilege to serve you® Elements of digital strategy
. Digital-to-Human connection
. Frictionless money movement
170 / It’s a privilege to serve you® Digital enables high touch We use the screen to bring your bankers to you.
Your team on Choose who to Pick a contact Use online to every screen contact method meet offline
Note: Phase 1 includes call and email. Additional capabilities planned – chat and video conference. 171 / It’s a privilege to serve you® Frictionless money movement Example: Choose Your Own Card Limit
172 / It’s a privilege to serve you® Personal financial management tools Help clients manage their financial lives
• Take control of your finances Consolidated Transactions Spending
• Monitor transactions across ALL of your accounts (FRC and others)
• Customize transaction tracking
173 / It’s a privilege to serve you® Delightful design – new Corporate Online interface
Built to support customization Ta i lored to cl ients’ individual needs
Giving new users access 5x Faster
Source: Company information 174 / It’s a privilege to serve you®
Technology to Enhance Not Replace Our Human Relationships
175 Break
176 Audience Q&A
177 Banker Reception
Shannon Houston Chief Marketing and Communications Officer
178 © 2019 First Republic Bank. All rights reserved. 161620-1019