Greetings, welcome to First Republic Bank's third quarter 2021 earnings conference call. Today's conference is being recorded. During today's call, the lines will be in a listen-only mode. Following the presentation, the conference will be opened for questions. I would now like to turn the call over to Mike Ioanilli, Vice President and Director of Investor Relations. Please go ahead. Thank you, and welcome to First Republic Bank's third quarter 2021 conference call. Speaking today will be Jim Herbert, the bank's Founder, Chairman, and Co-CEO. Hafize Gaye Erkan, Co-CEO and President. Mike Roffler, Chief Financial Officer. Before I hand the call over to Jim, please note that we may make forward-looking statements during today's call, which are subject to risks, uncertainties, and assumptions. For a more complete discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, please see the bank's FDIC filings, including the Form 8-K filed today. All are available on the bank's website. Now I'd like to turn the call over to Jim Herbert. Thank you, Mike. Good morning, everyone. It was another strong quarter with robust growth in loans, deposits, and wealth management assets. First Republic's unique, simple client-centric business model continues to perform very well across all of our segments and our markets. Since 1985, First Republic's success has been grounded in a culture of exceptional service, taking care of each client one at a time, serving our existing clients exceptionally well. Nothing has changed. It is a story of straightforward execution of our model, which results in consistent compounding, organic growth year after year. This quarter was not an exception. Let me review briefly the results for the third quarter. Total loans outstanding were up 18.8% year-to-date annualized. Total deposits have grown 39% year-over-year. Wealth management assets were up 50% year-over-year to a total of more than $250 billion. This across-the-board organic growth drove our very strong financial performance for the quarter. Year-over-year, total revenue has grown 30%. Net interest income was up 27%. Quite importantly, tangible book value per share increased almost 19%. The safety and soundness of the bank continues to reflect very strong credit quality. Net charge-offs for the quarter were only $292,000, just a fraction of a basis point. Non-performing assets at quarter end were only seven basis points of total assets. As always, we're very focused on capital and liquidity. During the third quarter, we raised $1.2 billion of new Tier 1 capital to support our continued growth. This included common equity as well as our Series M perpetual preferred stock, which was issued at our lowest dividend rate ever, actually, 4%. At quarter end, our Tier 1 leverage ratio was 8.55%. Our HQLA liquidity level at quarter end was 16.7% of total average assets. This included very strong cash levels. We continue to be focused on strengthening our communities as we have been for 36 years. For example, this month, we participated in a capital raise for the SDS Supportive Housing Fund managed by SDS Capital Group. These funds will be used to address the homelessness challenge in California by providing additional permanent housing. Our participation in this initiative is only a modest part of our long-term focus on investing and strengthening our communities. Overall, 2021 so far has been a strong and successful year. Now let me turn the call over to Gaye Erkan, Co-CEO and President. Thank you, Jim. It has indeed been a strong year thus far. The simplicity of our business model allows us to deliver consistent performance quarter after quarter while remaining acutely focused on the long-term success of the franchise. Our strong performance supports further investments in the delivery and scalability of our client service model. For example, we continue to invest in our colleagues, new talent, and operational infrastructure to support our growth. New preferred banking offices to deepen our presence in our existing markets. Technology and digital enablement to further empower our colleagues and reinforce our trusted client relationships. Let me now provide some additional detail on this quarter's performance. Loan origination volume was very strong at $15.5 billion, up meaningfully from one year ago. This is our best third quarter ever. Single- family origination volume was strong at $7 billion. Single- family continues to be a key driver of our growth, representing more than 75% of our year-to-date loan growth. I would note that the weighted average loan-to-value ratio of single- family originations year to date was just 59%. Refinance accounted for 53% of single-family residential volume during the quarter. A large proportion of refinance activity continues to come from clients with loans at other institutions, providing us with great opportunities for new client acquisition. We continue to maintain our stringent underwriting standards. The weighted average loan-to-value ratio for all real estate loans originated during the third quarter remained conservative at 56%, slightly lower than the prior quarter. Turning to business banking, business loans and line commitments, excluding PPP loans, were up 31% year over year. Capital call outstanding balances increased during the quarter, reflecting growth in commitments as well as an increased utilization rate of 37.3%. In terms of funding, it was an exceptional quarter. Total deposits were up 39% from a year ago. At quarter end, checking deposits represented 69% of total deposits. Business deposits represented 62% of total deposits, up slightly from the prior quarter. The average rate paid on all deposits for the quarter was just 6 basis points, leading to a total funding cost of 17 basis points. Turning to wealth management, assets under management increased to $252 billion. This is an increase of $57 billion year to date, over 60% of which was from net client inflows. Year to date, wealth management fees were up 47% from the same period a year ago. The strength of our integrated model continues to attract very high-quality wealth management teams to First Republic. In total, we have welcomed nine new teams year to date. This includes one team in the third quarter and another team already this quarter. Our third quarter performance demonstrates the power of our service model and the ongoing dedication and care of our amazing colleagues. Now I would like to turn the call over to Mike Roffler, Chief Financial Officer. Thank you, Gaye. Our strong third quarter results reflect the consistency of our business model. Revenue growth for the quarter was exceptional, up 30% year-over-year. This was driven by strong organic growth across the franchise, including loans, deposits, and wealth management assets. Our net interest margin for the third quarter was 2.65%. This reflects the impact of our elevated cash position from fiscal and monetary policy, which has resulted in significant deposit growth. We continue to expect our net interest margin for the full year 2021 to be in our previously communicated range of 2.65%-2.75%. Importantly, net interest income was up a very strong 27% year-over-year. This is due to the robust growth in earning assets. Let me now provide a brief update on our core banking system conversion. We're very pleased with the progress of our core conversion and are in the final phase of delivery. We now expect to complete the conversion in the first quarter of 2022. This extension of one quarter will give us time for additional in-person testing and training that has been delayed due to the COVID-19 Delta variant. I would note that our efficiency ratio guidance for the full year 2021 remains unchanged at 62%-64%. For the quarter, our provision for credit losses was $34 million, which is reflective of our strong loan growth. As Jim noted earlier, we are particularly pleased with our Series M preferred stock offering in the third quarter. In the fourth quarter of 2021, our preferred stock dividend will be approximately $33 million. Turning to the tax rate, our effective tax rate for the third quarter was 21.4%. Under current tax law, we continue to expect our tax rate for the full year 2021 to be in the range of 20%-21%. Overall, this was a strong quarter. Now I'll turn the call back over to Jim. Thank you, Gaye. Thank you, Mike. First Republic's time and cycle-tested, quite straightforward business model remains very focused on delivering the highest possible level of client service, staying focused on doing only what we do best, and operating safely and soundly. We'd be delighted now to take your questions. Thank you. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to assemble the queue. We'll take our first question from Steven Alexopoulos with JPMorgan. Morning, everyone. I wanted to start with the big picture question for Jim, and Gaye feel free to add on as well. Jim Herbert, when I look at your key growth metrics, we have business bank deposits up 50% year-over-year, wealth management assets up 50% year-over-year. Loans are up 23%. It's your best quarter ever for the third quarter originations. When I look at the company, it's growing faster now at $170 billion than it was $70 billion in terms of assets. As you analyze the key business drivers, what in your mind explains much stronger than expected growth being delivered and across the entire company? Thanks, Steve. Well, the growth is embedded in the nature of the model in that we take extremely good care of our existing clients, we don't lose them. They compound and grow, and they refer their friends. The more you have of happy clients, the more you're going to get referrals. If they stay with you and you don't lose them, you don't lose their business. This adds to the compounding or network effect of the franchise. I'd also add, and it's very important not to take credit for what you shouldn't have credit for. We're in a very good market. Things are going up very nicely in the stock market and in deposits and loans. We're benefiting from all of the liquidity in the system and a rising equity market. It's very important to take that into account, too. Let me turn this over to Gaye for some more detail. Absolutely. When we look at our loan growth, over 70% of our loan growth year-over-year was driven by strong single-family residential lending, mostly with our existing clients. Single-family residential loans were up 30% year-over-year, I would note that the loan-to-value ratio of all single-family residential loans originated in the last 12 months was under 60%, as is our portfolio. Steve, you mentioned the business deposits. As Jim mentioned, our model continues to benefit from the liquidity and the activity in the market. This is reflected in the higher account balances. Half of the increase in the business deposits we have seen driven by increased average account balances with our existing well-known clients. We have also seen very strong client activity and continued referrals. For example, our business households were up over 20% year-over-year. With regards to AUM, S&P 500 was up 28% year-over-year. Our AUM does reflect the strong stock market as well as quite strong client inflows from both existing as well as new clients as Jim mentioned earlier. The model continues to perform nicely and benefit from what's going on in the market. Okay. That's helpful color. Maybe for Mike Roffler on the margin. Given the recent move higher in the 10-year, how does this impact your appetite to invest some of the excess cash that's building up? If the 10-year holds at least at the current level, do you think that NIM has bottomed here? One of the things that is impacting the margin, I think we called this out a little bit, is the level of liquidity and cash on the balance sheet. It's continued to go up, and it was up another $2 billion on average during the quarter. That caused the decline this quarter. With respect to your question about the 10-year, I do think there's probably a little bit better buying opportunities in securities. Yields are a little bit higher. We're always going to be prudent and methodical. Just because we have the cash here, we're going to deploy it in a rational and methodical manner, and most importantly, respond to client demand from a lending standpoint. Okay. Do you think NIM has bottomed based on that? Would that be the best guess at this point? Honestly, a lot of it in the near term is based on the cash levels. Okay. If the cash levels were to dissipate a little bit, you'd probably see the NIM up a little, a couple basis points. Okay. A final question, if I could squeeze one more in. It's been quite a few quarters that the loan growth just continues to run above the mid-teens guidance. Just staying with the 10-year, if that continues to grind up, this cools the refi market a bit, I'd imagine this pandemic buying wave will burn out at some point, too. Do you think in that environment you guys could still deliver mid-teens loan growth? Thanks. Thanks, Steven. Well, the short answer is yes. We went back and looked at 1993 to 1995, 1999 to 2000, 2004 to 2006, and 2015 to 2019, all of which had a rising rate environment. Each one of them was up 19%, 21%, 22%, and 19% year-over-year loan growth. It shifts a little bit in single- family, which is the backbone of our growth, as Gaye just indicated, over 70%, I think. Remember, rates going up, good economy, and so more activity. Okay. Great. Thanks for taking my questions. Thank you. We'll take our next question from Ebrahim Poonawala with Bank of America. Good morning. Good morning. Thank you. Just following up on the loan growth, Jim. Activity is strong. I guess your business client acquisition is strong. On the other side, you have higher rates and supply chain constraints in the housing market. Just talk to us, one, in terms of What do you expect the refi mix to look like if rates stay where they are and we go forward? How big of a deal is the lack of supply in the housing market as you think about growth over the next year? In our markets, we can't speak for the whole country, of course, but in our markets, the supply constraint is still pretty tight. It is getting a little better. Listings are up slightly. Prices appear to have maybe topped a little bit. I don't want to say they're done rising by any means. On the other hand, we do see an occasional deal transacting below asking, very little. It's not quite as frothy as it was, which I consider to be good. I think we probably all do. Our refinance volume, if you go back many years, basically has always been about 40% or greater of our total single-family loan volume. We seem to have a base there. To some extent, that's driven by the very nature of just human activity, adding a room, refinancing, moving, job, et cetera. There seems to be a pretty good base under it. Got it. I guess just a separate question. Mike, you mentioned the system conversion in 1Q 2022. Remind us once the conversion is over what that means, if anything, in terms of efficiencies or in terms of even revenue synergies that might come through once you move to the new system. Yeah. I think we're excited about the progress and the new system and the things that will help with our colleagues in serving clients. I think that's what we're really excited about. I would say that we're always investing for client service and continuing to support and serve our clients. There's always something we're going to do. This will make us, I think, operationally a bit more efficient. Some of the costs of implementation go away. There are other things we like to do and make sure we're serving clients well. Got it. Thank you. We'll take our next question from John Pancari with Evercore. Morning. Morning. On that same systems topic, the delay, was there any related expense impact from that? Separately, also on expenses, just want to see if you could talk a little bit about wage inflation and if you are seeing that impact across your business, just given that you're still active on the hiring front and that you're investing pretty heavily still in technology, which is an area that has seen notable impacts from wage inflation. Thanks. Yep. First on the conversion, really no change to our expense outlook or guidance. It was a planned fourth quarter, so those expenses were already projected, and they're still there. In the first quarter, it's very modest in terms of a little extra. The second, in terms of wage inflation, the one thing I would highlight is we did recently increase our minimum wage to $30 for all colleagues across the bank. We think that's a great step for our colleagues. I think we have been hiring, and it is very competitive from a hiring standpoint. I don't think it's necessarily meaningful, but we have seen a little bit more competition for new hires, and some of that does come down to wages. Got it. All right. Thanks, Mike. Separately on the loan growth front, on your production figures on page 13, I know multifamily, CRE, construction, also very strong production in the quarter. Can you just talk about what you're seeing there in the CRE book that's starting to result in some improving production there? Thanks. Yeah, absolutely. As you pointed out, both multifamily and commercial real estate, we have seen some increased activity. Multifamily, let me start with that, is performing strongly across all of our markets. You're seeing new leasing activity being very robust, driving down vacancy rates. Multifamily lending has been driven mostly by the California, the West Coast, and majority of it is refinance activity with existing clients. On the commercial real estate front, as you know, as it's smaller deals, we don't do large loans. That's mostly focused in either multi-use or office type of buildings, but on the smaller scale and class A buildings. We don't have much exposure, as you know, to retail and hospitality. That's the one area macro-wise it's still struggling a bit. It's great optimism and tailwinds there as well with RTO and potential opening of international travel. Got it. All right. Thanks, Gaye. Appreciate you taking my questions. Thank you. Thank you. We'll take our next question from Dave Rochester with Compass Point. Hey, good morning, guys. Nice quarter. Just wanted to start on the deposit side. Growth was fantastic yet again this quarter. Can you just talk about any specific drivers impacting those trends? I know you generally have stronger deposit growth in the back half of the year, so just kind of wanted to confirm you still expect that momentum to carry into 4Q. Yeah, absolutely. We have seen the deposit growth coming in both in terms of increased average account balances that we have seen across consumer as well as business, and quite strong client activity and referral activity, especially on the business side. It has been well diversified across client types, regions, and industries, and a healthy mix of both new and existing clients. In terms of consumer, we have seen, again, a healthy mix from new and existing client referrals. Business side, technology, private equity, and real estate has been performing greatly. About half of our growth has come in from these particularly strong sectors, but no vertical in our deposit franchise accounts more than 12% of our total deposits. Happy colleagues, happy clients, and more referrals. We're seeing that on the business side as well. That's great. Appreciate that detail. Maybe just a quick one on the borrowings front. Can you just remind us how much of that matures in 4Q, and then what the maturity schedule looks like for next year? I guess a bigger picture question, now that you've got your cash balances materially exceeding the balance of those FHLBs, is there any reason to hold on to those? Yeah. We have about just over $1 billion in the fourth quarter and an additional $3 billion in the next year, so call it just over $4 billion coming due. Depending on the rate environment and deposit flows that we'll make decisions as we go opportunistically on those. It does provide some room for improvement on the yield side, given the yields that they're carrying. All right. Great. Thank you very much. Thanks. We'll take our next question from Bill Carcache with Wolfe Research. Thanks. Good morning. Jim, your comments at the start of the call around the consistency of the model make a lot of sense, but I wanted to ask if you could comment on how you're thinking about the pace of deceleration in loan origination growth from here. Last quarter was your strongest ever, and this quarter was your strongest third quarter ever. It'd be natural to see some deceleration off of these very high levels, especially as you go up against tougher comps. Just would be curious to hear your thoughts there on the pace. Then separately, if you could also discuss what kind of impact, if any, you think the Fed's tapering could have on your mortgage business. Gaye, please, would also love to hear your thoughts. I think the loan volume is never forced. The reason I'm hesitating is just how to say this. We never force our loan volume. We do as many good deals as we are exposed to opportunistically. I would take you back to our investor deck, where about 80% or 85% of our business and over 60% is done with existing clients, and 85% roughly is done with existing clients and their direct referrals. That activity does not really reflect a lot of volatility. The refinance component of it has some volatility in it. Those clients are there, they're doing, they're active, the economy's quite active, and they will bring their business to us at the pace at which they bring it to us. We will compete for it, and in most cases, we'll win it. When you have a Net Promoter Score of over 70, you tend to win the business with your existing clients or their referrals. That's the backbone of the model. It's not nearly as much a market condition-driven model as it is a client need and demand model. Right this moment, our clients are very active. In terms of rising rate or tapering, if you want to, let me just comment on this and then turn it to Gaye for maybe additional comments. Because we grow, we have between the growth volume, which maybe it's intrinsic in this, but to state the obvious, new volume is always priced at current market. If you have new volume and you put it together with variable rate loans, repayments, you get about 52% of our assets or our loan book is repriced in a year. Over half. If you look back at the company in rising rate environments, we've done just fine. Yeah, I would just add that in the various cycles that we have seen in a rising rate environment, refinance activity, single-family residential has been the majority of the driver, and it's diversified a lot with the known clients. Refinance activity has remained largely above 40% of our single-family originations, given that majority of that comes from clients with loans at other institutions and a great acquisition tool. That stays pretty much steady across different rate cycles. With tapering potentially curbed, even if that were to be the case, would also be helpful. In a rising rate environment, the balance sheet growth safe, mostly with known existing clients, known credit. That's in mid-teens. Plus the repayment that we are seeing, even though it slows a bit, it still continues. Plus the floating rate assets. Over 50% of our loan portfolio reprices over time, which is great. That's really helpful. Thank you. On the wealth management side, you highlighted the success that you continue to have adding teams, and that's been a nice contributor to your client inflows. Have you had any notable outflows recently? If you could speak broadly to whether you have any concerns around attrition at all, and also discuss how the pipeline looks. Any color you can give on the expectations on the ongoing addition of new teams? We've not had any notable attrition either in teams, people, or assets. The pipeline is an ongoing process. It's unpredictable because it's the hiring of individual teams. Those are highly specialized folks, and we have conversations going on at all times. I think this year's effect this year rate is probably reflective of what we could expect going forward, but it's very hard to predict, and it's certainly hard to predict quarter to quarter. What is happening, however, is that we have within the teams who we hire, a bit of a network effect. Just like we have client network effect. We basically have people talking to cohorts or to their friends back at where they came from saying, "Come on over, the water's fine. Very helpful. If I could squeeze in one last one. Mike, you addressed the labor market shortages and the impact on the competitive labor market having on you guys. I was wondering within business banking, is your client base, can you give a little bit of color on any of the challenges that they're bringing up with you guys around labor market shortages and supply chain constraints that they're facing? Would you say your business banking customers are sort of in verticals that are relatively more insulated from some of those issues perhaps than what we're hearing from others? Yeah. I think the challenges that we talk about in terms of hiring that's sort of consistent. I don't think I'd point out anything that's unusual relative to us or what you're hearing. Okay. Thank you for taking my questions. We'll take our next question from Casey Haire with Jefferies. Great. Thanks. Good morning, guys. Follow up on the NIM. Where are new money loan yields today as well as securities reinvestment rates? We're seeing the real estate new money yields blended is about 2.90%. Single family is a little lower, around 2.75%-2.80%. Multifamily at 3.25%, CRE, we are seeing at 3.5%. When it comes to securities portfolio, the investments, the traditional pass-through type of investments are coming in around 1.5%-2%. The short term, we have done some short-term HQLA purchases, it was a blend of floaters and short duration CMOs and project loans. That's coming in about 75 basis points blended. On the muni side, we did do some purchase on munis, that's at high 2s, low 3s on TEY. The new money yields, to summarize, coming around 2.90% with a marginal funding cost at about 15-20 basis points. You add on the elevated cash levels, that brings you to the lower end of our guidance, $265-$275 guidance. Excellent. Thanks for the color. On the $7 billion of single- family resi originations, can you just give a breakdown of how that's coming across geographically through your markets and how that compares versus historical? Is it pretty consistent, or is there one market that's pushing a little harder than others? Actually, we are seeing the activity quite robust across all of our markets, and Manhattan has been catching up quite a bit as well. Both now what we are seeing is suburbs have been active and city centers are also getting very active, including Manhattan. When you look at the months of supply across all of our markets, with the exception of Manhattan, is within 1-2 months, whether it's Florida, Los Angeles or Boston or San Francisco. In Manhattan, we're seeing that to be more of a five months of supply. The activity is robust, especially on the purchase side, across all of our markets. Interestingly enough, just add to this thought. Interestingly enough, the demise of the Center City has been very prematurely announced. The activity in the Center City, San Francisco, New York, Boston, would say that the core of the cities is, in fact, quite strong. Understood. Just last one. Big picture question on efficiency. You guys year-to-date running at 62%, the low end of your guide. That's in spite of a lot of things happening that are a drag on the efficiency ratio. Wealth management, NIM compression. You got the conversion going on and your Hudson Yards build-out. It just feels like you guys have figured out a way to run more efficient. I'm just curious, how do you guys feel about improving that efficiency ratio or at a minimum, running towards the lower end of that 62%-64% next year and beyond? Yeah. We're obviously pleased that at nine months in, that we've been running at the low end of the range, and this quarter was a little bit even lower. I would note that our revenue and expense growth have been pretty well matched throughout the last few quarters. Part of that, I know there was a question about wage inflation, but what's really driving the increase in salaries is the growth from production. You're seeing increases in assets under management, increases in deposits. There's an expense associated with that from an incentive standpoint that's matching pretty well with the growth in revenues, which is really over a long horizon, is probably more of our focus than squeezing the last dollar out. We're investing for client service in the future, and so it's important those things align over time. That's what I think we're most pleased about with the last several quarters. If I could comment on this for just one second. It goes to the core of the model. The comment that Mike just made about the bonus component of our compensation. Remember that we do have an incentive approach to both deposits, AUM, and loans with callback on the loan side. Our attrition of clients is somewhere in the 2% range. Our approach to acquiring them, getting them up in their promoter score into the 70s and 80s, is a lifetime approach to the value of the client. That's all we think about. The question is, if you're going to have a client for 20, 30, 40 years, the upfront compensation to bring them in and land them happily inside the bank and keep them is modest or less. Thank you. We'll take our next question from Ken Zerbe with Morgan Stanley. Great. Thanks. Good morning, guys. Morning, Ken. Actually, maybe a question for Mike to start with. I don't want to ask another big-picture question, so I won't. Specifically in terms of fourth quarter efficiency ratio, obviously you're averaging so far this year call it very low 62%. I guess my question is what are you expecting in fourth quarter? I'm just trying to figure out why you wouldn't change your guidance to be a little more closer to the very low end of that 62%-64%, unless you expect something more material or materially higher expenses in fourth quarter. Thanks. Yeah. I wouldn't say there's anything we're staring at that's unusual in the fourth quarter. With 9 months in, Ken, I think your observation is right, that we'll probably be towards the lower end on an annual basis, which puts us sort of right around 62% probably in the fourth quarter. As Jim just mentioned, we talked about production does lead to incentives. Some of those obviously get looked at at the end of the year based on where final balances end up, and sometimes you see a little bit of extra there. There's nothing unusual staring at us that doesn't tell us we're sort of in the lower end of our range. That's good to hear. Then just a different question. In terms of foreign exchange fees, I know last quarter they were fairly high, and I think you guys mentioned they sort of represented a healthy level of client activity. This quarter, they're even stronger. Can you just talk about the outlook for foreign exchange fees? Are we at sort of a sustainably higher level, or is this a particularly unusually high quarter? Thanks. Quite frankly, it's hard to answer. Foreign exchange activity is very strong, and the folks that are running that have done an extraordinary job of building the business. It's tremendous. The adoption of foreign exchange, of us for their foreign exchange activities by our clients continues to ramp up, and we've added people in the area to service our clients. Having said all that, it's quarter to quarter a little bit. It's driven mostly by the velocity of business activity. Business activity generally is strong and picking up. The foreign exchange activity will parallel pretty much that, plus the growth we have by having new clients adopt us for their provider and adding some people in terms of delivery of service and sales. Got it. Understood. All right. Perfect. Thank you very much. We'll take our next question from Christopher McGratty with KBW. Okay, great. Morning. I think in the prepared remarks, you guys mentioned that capital call utilization was up around 100 basis points. I wanted to, number one, confirm that and also see if you could provide any color on driving factors. Thanks. Yeah. Just to confirm, our capital call utilization was just over 37% at quarter end, and it was just under 36% at the end of last quarter. It is up just about 1.5%. Yeah. It is in our historical range that we have seen mid-30s to low 40s. The slight increase in the utilization is driven by increased deal activity. We're seeing the PE/VC fundraising deal activity and exits to remain quite strong and expect it to continue. The deal activity is double the pre-pandemic levels. More dry powder above the pre-pandemic levels. The PE/VC life cycle is a bit shortening from fundraising and investments to exits coming a little bit ahead of schedule. It's reflected in that. It's hard to anticipate. It has been in the mid-30s to low 40s. Great. Thank you. We'll go to our next question from Andrew Liesch with Piper Sandler. Hi. Good morning, everyone. Thanks for taking the questions. Excuse me. Mike, just curious, were there any one-time performance fees in the investment management fee income line this quarter? No, there were not. The investment management's just based on where AUM ended last quarter. Got it. Okay, thanks. Jim and Gaye, everything seems to be firing on all cylinders. Balance sheet growth and wealth and new client acquisition. This has been going on quite rapidly since the onset of the pandemic. I guess my question is, what can disrupt this momentum and these trends? What's worrying you right now? Well, I think the thing that worries us pretty much all the time is two things. One, an anecdotal whoops somewhere in the portfolio. We don't see them now, but they are by nature anecdotal. Number two, a rising rate environment initially reflects a strong economy, but in due course can go too far. We don't see that happening in the near future. I guess the third thing always everybody worries about is some black swan event around the world. Got it. Thank you. Thanks for taking the question. We'll take our next question from Terry McEvoy with Stephens. Hi, good morning. Just one last question on my list. Within the wealth management assets, most of the growth occurred in brokerage and money market mutual funds. Pretty limited growth within the investment management area. I guess my question is, from a profitability and revenue standpoint, where would you like to see that growth, and how much of an impact does growth in the mutual fund kind of impact quarterly performance? Any commentary on why the investment management was flattish in Q3? The investment management also depends on the client activity. We have seen strong client inflows when you look at year-over-year as opposed to quarter-over-quarter. Majority of what we do with our clients is investment management. Brokerage had some transactions and higher transaction volume this quarter, so we are seeing that reflected. We are very pleased that insurance, trust, foreign exchange, in addition to investment management, continues to drive the growth. We used to have our PWM fees to revenues at about 5% or so about in the last decade, and now we're at over 15% share. We're very pleased with the continued growth. That speaks to the holistic approach of banking and the wealth management of the client and the teamwork that drives that internally. That's where it differentiates us the most. It's not some separate siloed transactions. It is mostly driven by holistically serving the client with an amazing teamwork across banking professionals and wealth management professionals. The cash that was elevated, we did move some of it to off-balance-sheet tools in the toolkit. That's what you're seeing in the money market mutual funds growing, but that profitability and revenue off of that is small. Great. Thanks for the incremental color. Appreciate it. Of course. Thanks. We'll go to our next question from David Chiaverini with Wedbush. Hi. Thanks. Couple follow-up questions. The first on capital call lines. When you went through the loan pricing metrics, and maybe I missed it, but did you provide the pricing on capital call lines? I did not. Thank you for bringing that up. It's usually around prime minus 50, prime minus 75, around that level that we're seeing that coming in. Thank you for that. A follow-up on the performance fees. Usually, you guys have some come through in the fourth quarter. Do you have a sense of the magnitude those could be, or is it too early to tell? You're right. The last two years, we have had a fourth quarter fee. It's probably too early to tell, but sort of the preliminary is we don't expect it to be a meaningful amount like it has been the last couple of years. I don't expect to see a bump from that in the fourth quarter. Great. Thanks very much. We'll take our next question from Timothy Coffey with Janney. Thank you. Morning, everybody. Morning. We've seen some movement in real estate values over the summer, and I'm wondering, as it relates to your commercial real estate and multifamily investor clients, do you think that move encouraged them to get off the bench and put some of their dry powder to work? Yes, a little bit. Commercial real estate, and of course, buried in that is retail and all kinds of things, office, is still slow. Multifamily, on the other hand, has picked up. Multifamily values are stabilized at good levels, high levels. Rents and vacancy is stabilizing. There's a lot more forward vision in the issue of rent subsidies. That is stimulating multifamily activity. The good news is there's also a fair amount of new multifamily activity going on, which I think the country definitely needs. We're seeing a pickup, as Gaye indicated earlier. Okay. Then, Gaye, if I can stick with you, have you seen a meaningful migration of your clients from the coast to more inland areas where you don't currently have footings? I mean, we've heard news about Texas. Bozeman, Montana certainly has seen a lot of inflow. I'm wondering if you're seeing any migration like that? Actually, a majority of clients that do move have stayed within our market. The migration activity has been very muted in terms of going out of First Republic footprint. In the cases where we have some clients, the digital and operational enhancements that we have made allows us to continue to serve those clients, especially on the deposit and wealth management side. That's good. Okay. Okay. We have seen a lot. For example, if a client moves from Manhattan to the suburbs or a second home in the suburbs, we have seen that to happen. Some primary residency changes, although limited, whether it's to Florida or Wyoming, we welcome those clients over there as well. The majority of that migration has been within First Republic footprint. Okay, great. Thanks, Gaye. Just one last question. Last quarter, you kind of expressed some interest in maybe perhaps expanding the personal line of credit product. I'm wondering, did you do anything on that in the quarter? That product is going very, very well. We're running at a rate of around 6,000 new households per year. We're very, very comfortable with that rate. If it could go up without credit change, we'd be delighted, and we're working on that. Remember, it's only about a year old now, a year and a little bit. The results have been actually stunning. As a cohort, we have greater deposits than we have money out. Great. Thank you. Those are my questions. That concludes today's question and answer session. At this time, I will turn the conference back to Jim Herbert for closing remarks. Thank you all very much for joining us today. Have a good day. This concludes today's call. 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