All right. Well, good morning. Welcome to First Republic's 2022 Investor Day. We really appreciate you all coming to New York to spend the day with us, and thank you for those listening through the webcast as well. My name is Mike Ioanilli. I'm the Head of Investor Relations for First Republic. Before we get started, I have a few housekeeping items. First, the fire exits are right over here to my left, your right, and then all the way through the doors over here at the back of the building as well. We have plugs at every seat, so you can stay plugged in. I know this crowd likes to stay connected. Today's presentation can be found on the Filings section of the bank's website. Please note that we may make forward-looking statements during the event that 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, see the bank's FDIC filings, all available on the bank's website. In addition, some of our discussion today may include non-GAAP financial measures. Please take a moment to notice the full disclosure, which is on the screen and in the materials. Lastly, we're gonna hold the Q&A session at the end of the day, so I know it's gonna be difficult, but if you could please keep your questions until that time, we would appreciate it. Without further ado, I'd like to welcome Jim Herbert, our founder and Executive Chairman, to the stage. Thanks, Mike. There's gonna be a test on that, disclosure page here shortly, so, we'll run through it. Good morning, everybody. It's great to be together again. This is really, really a pleasure. It's almost like life is normal. I'm gonna go through just a few basic points today and turn this over to our new management team. Let me just make a couple of points if I could, fairly directly and quickly. We'll also have Q&A at the end, I think. You know, we're a private wealth management bank. We've been at this for 37 years. We've been intensely focused, urban coastal, acquiring clients one at a time. Our product is service, service. I think each of you have a plaque there of a quote from somebody that's been a client of the bank, hopefully for a while on the table. We've been at this for 37 years. A lot of our competitors have been at it for 100 years or more of a similar nature, Northern Trust, JP Morgan, et cetera. It's been an amazing run. It will continue to be one. I would just note that as we grow, as our clients grow, we grow, and we have gotten them at an earlier stage of their life in many cases, and they have come along with us. That growth of those clients and the growth, and the clients that we acquire along the way has put us in a position where this bank has about 16%+ of the households in this country that have more than $10 million liquidity. That country in 37 years. That's the success of the model. Clients stay with us. They grow. They compound. Their deposits compound. Their loans compound, and they bring their friends. It's not a complicated model, and it works in all environments. I've been doing this or 37 years here and five years in a bank before this. In that period of time, there have been nine, including this one, up and down in the Fed funds rates. We'll come to a chart here in a minute. We get through those. They happen. They go, and they end. In the meantime, we keep doing clients. We keep credit steady, and we do a very good job of growing. Assets have compounded, obviously. Importantly, assets per person have compounded. We are continually more efficient in delivering the same quality of service. I would note that our Net Promoter Score, our service measure, is at an all-time high. How can that be? It's counterintuitive. Because we do it one at a time. We have fantastic people that are empowered, and they take great care of the clients all the time, and they own those clients. That's a model that is, that goes through all kinds of storms. The net income compounds and the income per person has gone up each year. We have an improving profitability model as well, mostly because we don't move people around. They stay with their clients. They have more of them. Their teams get bigger, their teams get more efficient, and the model continues to grow and prosper. Why does that happen? We provide extraordinary client service. How? People. Entrepreneurship, tested model, focus, focus, focus. Empower people. Empower your colleagues. Empower the front line. Empower the back line. Solve the client's problems. Make a mistake? No big deal. Learn from it. Do it again. Do it better. Very simple, highly repetitive model that has worked for 37 years. A happy client. You all have one on your tables. Our objective is to have a very steady return on equity. We're about 80% less volatile than many of our competitors on return. We have always focused on steady, steady. Predictable. NIM is under pressure right now. You're gonna hear more about that during the day. That'll come, that'll go. What won't come or go is client service, client growth, quality of credit. We've compounded very nicely the value basically of building our tangible book value per share. This is the bottom line as far as we're concerned. Growth in tangible book value per share. We try to hit 10%+. We managed to hit 14%. Some years are better, some years are worse, but basically, they're all above 10%. Let's talk perspective for a minute. I have been doing this for a while. Look at the chart. This is the chart of the time that the Fed funds rate is inverted to the 10-year Treasury. We're in number seven in the history of this bank. I'm in number nine in the two banks. The first ones were whoppers, 1981, 1982. Notice, with the exception of 1995, where the then designated maestro, Greenspan, landed softly, they come down really fast. Why? They overshoot. It's not their fault. It's not nobody's fault. It's just data. It's the way things happen. This one is extremely aggressive, it's direct, it's sharp, and it's continuing to go up. It will work, and that will plateau, and then it will come down. We intend to keep up our service. We intend to continue to bring in new clients. We intend to keep credit strong. We have capital in advance because that's what we do. We always bank capital in advance. We have a great management team. Wealth management is growing. I think we announced two teams this week. Basically, we're on target to run the bank exactly as we have run it through this. In spite of this. The first bank I ran, we didn't have checking until 1997. We ran the first 12 years of the bank with CDs and passbooks, and the prior bank, CDs and passbooks. In fact, the prior bank wasn't insured. We made loans at 21%. Who's gonna borrow money to buy a house at 5.5%? What? We loaned money for home loans at 21%. House prices came down. I bought my house in 1982. The market adjusts. This is just math. It adjusts. Our volumes, you'll hear today, are very strong. Mostly purchase, which is even better because we touch the client many, many, many times. With that quick summary, let me turn this over to our new management team, starting with Mike Roffler, CEO and President. Thank you. Thank you, Jim. Good morning, everybody. It's wonderful to be here. I guess we're almost three years to the day since we were all together, and a lot sure has happened in that time period, hasn't it? I think in November of 2019, we never would have imagined what February, March of 2020 would bring in the next two to three years that, you know, changed everyone's perspective. But what stayed no different at First Republic was the focus on the client. Each and every day, our colleagues get up, and the first thing they think about is, "How do I take great care of the client that we already have?" We're gonna go through a few things, some you've seen before, which is our unending focus on delivering extraordinary service each and every day. That leads to the growth you see here. We thought it'd be interesting, since we're back three years together. In that three years, the growth has compounded over 20% by any of our important measures. This is, again, the result. One client at a time, one credit deal at a time, one interaction in a Preferred Banking office at a time that just compounds over each and every year. Frankly, the more that we have, the more it leads to referral, right? Jim showed the page where the clients also grow at terrific rates once they're here. Why? Model and culture. Our people. You'll see several of them today, many of whom serve clients each and every day. Hopefully, you'll get to interact with them at the breaks a little bit. My guess is you all go to a cocktail party, and if the topic of a bank comes up, it's usually not very good, right? There's something that happened, there's some event. When you go to a cocktail party and someone mentions First Republic and that's where the power of referral comes, the power of service comes because the relationship. They know Kelly, they know Margaret, they know Mohamed, right? When I meet a client, the first thing I ask, "Oh, I'm a client. Well, who's your banker?" And not only do they know it, but usually I know it. Again, it tells you that connectivity that we have as a company between the leadership of the bank all the way down to the individual banking office who's delivering service each and every day. Now, we've got the Net Promoter Score. Think of the hotels you stay at, think of the airlines you fly, think of the restaurants you go to. If they're more than twice what you experience elsewhere, my guess is you go back, right? We have consistently been more than twice the banking industry average, and you can put us up at any of the leading brands in the country in different businesses, different service businesses. It's as strong as ever. Even more when we're the lead bank and the client considers us that, right? Now, we're probably at the tail end of our 2022 Net Promoter Score survey. Thus far, our differentiated service model is as strong as ever. Right? We continue to get great feedback about the power of the service model continuing even as the bank has grown, right? You see here going back to 2016, we are 2.5x the size we are at the 2021 study. The Net Promoter Score continues to improve even with a much larger organization, including growth in people, right? Jim talked about our colleagues. You know, we're close to 7,000 strong now, maybe a little bit more. Those colleagues, when they join us, all believe in this, right? The wealth management teams that I know Bob and others will touch on later, people join us because of our service and because we have a similar belief in serving clients as they do when they join. This does show it is scalable. We get that question all the time. Well, you get bigger, you can't have personalized service. It has to go to a center. It has to go to a robotic, you know. No, no, it's gotta be cookie cutter. No. This is the result of individualized attention each and every day. Client service is also not cyclical, right? This shows growth over time, including the rate environment overlaid. Rates go up as they did in 2017, 2018, 2019, our growth continued to be very strong. Why? Service. When times are uncertain, when questions come, our colleagues are always there. Right now is a great example of that. There is a lot of uncertainty in the economy, uncertainty with housing prices, businesses, how they're doing. Our colleagues are always available, and they're actually making the calls to clients, right? Now is when we actually deepen and further enhance relationships, even relative to when times are great because our people are so connected to their clients. This is why you see growth in almost any environment consistent over time. Okay. Sorry about that. Slides got off. Also all segments, personal banking, business banking, wealth management, Eagle, all segments, generations of the bank continue to increase, right? Especially during challenging times. Our clients always say it best. I know there are many quotes on the tables here. It comes back to culture. Everything is grounded in culture and people believing in a service model and doing what's best for the client and doing what's right for the client in all times. This is what we see. I mean, these testimonials, you see the pictures, I think over here. All clients love to talk about the bank and provide those stories to their colleagues. That doesn't change no matter the environment that we're in right now. Why is that? We... Jim mentioned it. Entrepreneurial empowerment. Hire great people, and then we get out of their way, right? Here's the parameters of what the business that we like, and you all know that's in our, I think our investor deck, the businesses we don't like, the things we don't wanna do. Do as much of what we wanna do as we can do, right? Don't limit ourselves. Hire great people. Let them get out of the way. They know how to serve clients best. Let them go. That's why you see where does growth come from, right? Comes from, first of all, Jim showed on the earlier slide, compounding of existing clients. At the cocktail party, when they tell them, "Call this banker, call Mary Jane, call Elise," and sure enough, that's what happens. 85%+ of our growth comes from clients who do more with us and their direct feedback about the service we've provided. We've measured this probably, what, four or five years running. It's pretty much 75%-85% every year we measure. What does that then lead to? Household growth over time. The number one thing we think about, I said it earlier, provide great service to the clients you have. They will lead you to the next household that comes to the bank. We've consistently grown sort of low teens on households over the years. If you think about the slide Jim showed earlier, those households then growing 7% or 8%, that's the compounding effect that you have of our growth rate over time. Simple as that. Even in a challenging environment like you've seen in 2022, our household growth remains very strong. That portrays future growth because those clients are just here now. Okay. I know everyone wants to talk about outlook. We're gonna talk about it a little bit, acknowledging it is a unusual environment. We have a few pages to show just how unusual it is. Jim showed the chart earlier about it is a cycle, and cycles do end, and at some point it will change. The most important thing we focus on is being safe and sound in these environments and serving clients each and every day. That won't change. This really is a bit unprecedented. Since the bank was founded, the Feds hiked 75 basis points 5x. 37 years, only 5x. four of them have happened since June, right? Four or five months time, 4.5 months time, you've had four jumbo rate hikes relative to all of the bank's history of the five. Just the steepness of that line. If you look at the bottom line, that's the 2015 to 2018 cycle. It took over three years to go up 225 basis points. It definitely is a challenging period. The second thing is, and this obviously just got started, I think, in September at the full pace, is quantitative tightening. Not only is the Fed shrinking their balance sheet $100 billion a month. If you go back a year, they were increasing it about that pace, maybe a little bit more. You have a $200 billion swing just in a year's time that has resulted in, you know, a bit of what you see in the marketplace with interest rates. Also some of the information you see on the Federal Reserve data on deposits, especially since about April, continuing to trend down from an industry-wide standpoint. What is foundational doesn't change even in this environment, right? Client service, no change. In fact, probably doubling down on client service. Foundation of strong credit and capital, right? We always try to run with enough capital to continue serving clients for periods that we're in right now, where maybe it's not as advantageous to go to the capital markets, right? If you look at August, the transaction last year was probably our biggest capital raising year in the history of the bank, preparing for what might be an uncertain situation. That allows us to be there to serve clients. There will be opportunities embedded in the next 12 months where other banks have pulled back. You've seen in the news layoffs at many institutions, right? Well, that usually leads to a service challenge, right? You can't get something done. Jim said it, people are buying houses even with rates at 5.5%. They're maybe not buying as many. Maybe they're being a little bit more discerning on price, but they are buying them, and they will continue to buy them. We're gonna be there to serve, right? The pricing is gonna be different than it was a year ago, but we will be there to serve. We're there. We're doing deals every single day as others pull back. You've seen very public announcements about things they're not doing. Clients have told us, "My bank that I've done these deals with, they're closed for the year." Could you imagine? Closed for the year. We are open every day, and we will lend money every day, safely. Just as of the end of October, our non-performing assets remain very low, 5 basis points. 5 basis points, very low. Safe credit, strong capital at all times. Think of service, credit, capital. That's what leads to growth, even in times like this. The growth will be safe, and we'll come out of this with a larger, safer loan portfolio to go forth. All right, everyone wants to talk about deposits, I'm sure. Obviously, it's changed, right? The last few years, interest rates were zero. Checking balances at our bank, other banks all went up quite a bit. That was a bit unusual. We were over 70% deposits of checking. We had never been that high before, and it sort of stayed there for about a year. Our CDs at the same time probably dropped to less than 4%, which was the bottom. As Jim said, the bank started with CDs. That's also unusual. Well, what has happened, again, we're serving clients. As the Fed, if you think of the chart I showed on the Fed, as rates have risen, a lot more conversations happen with clients about, "Oh, I could actually get a little bit of yield on my dollars now." We talk about that, and we're there to serve. This, you know, this mix was a bit fast in how it migrated. I think that you'll continue to see some migration, and as we talk about sort of the updated outlook, we'll talk about it a bit more, but you'll continue to see that as clients engage with us and talk about yields. I don't think this is different than what a lot of others are experiencing right now. All right, the 2022 outlook. We've always provided our guidance in a series of ratios and ranges, right? Part of that is we're very nimble and entrepreneurial. I think Olga is gonna touch on this a little bit, but, you know, we've had yield curve inversions before, where the margin changes a bit over time, and we've had to adapt, and we do so quickly, right? Because of our entrepreneurial spirit and our colleagues and their teamwork, we're very vocal and very clear that, "Hey, there might be some headwinds in front of us. We need everybody's help." You ask people at the break. Sorry, Mike. Everyone will lean in to help with these, get us through these challenges, but focus will never change from the client. Okay, the top row is our 2022 guidance. We're gonna meet or exceed on all these measures. Obviously, the where you end in the range has changed a little bit, and we'll get to that in the fourth quarter here. That's pretty consistent. 2020, 2021, guidance never changed. Right in the middle of it. Obviously, given the deposit discussion we just had, 2022 is a little bit different as we head into 2023. If we look at the end of the year, loan growth's gonna look to exceed 20%. We continue to have a healthy pipeline, and based on where we were in September, you know, we're gonna be above 20% with continued credit quality that is excellent. The margin and if I... Actually, let me put in 2023 for a bit on loan growth. We continue to believe mid-teens loan growth for 2023, given our service model and the opportunities we see in the marketplace. We will do less volume, right? Refinance is slowing. We'll also have less payoff rate, so we won't need to do as much volume to grow at that level. When there is client demand, we will meet it, and that's why we remain confident in all cycles of growing our loans at mid-teens. Okay, the margin. We talked at, about a month ago that we'd end up at the lower end of the range for the year. That equates in the fourth quarter to about 2.45%, right? I think many of you that publish information and things we can see on Bloomberg, that feels like about the right area based on being at the low end for the full year. Now, let's talk about 2023 a little bit. Obviously, we'll have more to say in January because there'll be another Fed meeting, there'll be two CPI reports, and so we'll have a bit more clarity. But if we look at it is gonna likely trend a little bit lower for 2023, about 10-15 basis points off of the Q4 number, which also the Q4 number I think is pretty similar to consensus estimates for next year. I would think about 10-15 at the current environment that we have off of that number for 2023. Now how or what's the back behind that? Federal Reserve gets to 4.5% by the end of this year and peaks at about 5.25% in the first half of next year. That's a little bit higher than I think we talked about in October, but it's pretty consistent and in line with the current market views. Our checking mix went from 72%- 64%. We do continue to anticipate a bit of a downward migration, and by the end of 2023, a little bit above 50% as clients normalize balances and yield is obtained. Olga's gonna touch on this ever so briefly, but there'll be a little bit of starting to buy HQLA in advance of 2025 when we cross $250 billion. That's a pretty modest thing, but it is something we will start doing the later part of the year, most likely. That obviously has an impact on efficiency a little bit. Efficiency for the fourth quarter, around 63%-64%, given the lower net interest margin. Olga's gonna talk a little bit about some of the things we're doing to mitigate a bit of this as we look forward to 2023. Currently, efficiency looks to be around 65% roughly for next year. A couple things impacting that. Obviously, lower margin. Second, this was in mid to late October. The FDIC, as part of restoring the insurance fund, has added a, I think it's 2 basis point on their calculator for all the banks or at least larger banks. That's factored in now. The third is there's gonna be some positives because we're gonna mitigate some of this, and Olga's gonna talk about expense management a little bit. Because again, as I mentioned earlier, when we react, we react quickly, and that's what we're doing right now. Finally, the tax rate, this is more of a technical thing, is a little higher because, one, the FDIC is a non-deductible expense, and the second is, municipal bonds are impacted a little bit just from a calculator standpoint, on their tax benefits. The tax rate you see on the page here looks relatively right for 2023 also. I'm gonna have Olga come up and talk a little bit about expense management and the things we're doing there, along with $250 billion, and then I'll wrap us up before we move on. Thank you, Mike. Good morning, everyone. Let me talk about expenses. As we're entering the rising rate environment, we took a close look at our expense base to identify opportunities to slow down the expense growth. We've done this before, and what we're doing now is similar to what we've done in 2019, when the rate environment was challenging and the yield curve was inverted. For those of you who have been here at our 2019 investor day, you remember some of those conversations. Let me give you some examples about how we manage the expenses. I'll start with compensation. Compensation is the largest part of our expense base, and a big portion of this ties to production. As rates rise and our volume slows down from its exceptional pace, they will have impact on compensation. Our incentive compensation will adjust accordingly. We compensate our colleagues for checking balances. As our clients migrate, they're checking to more higher-yielding products like CDs, which is good, which is, it has a negative impact on margin, but it has a positive impact on compensation. We've been looking to slow down the growth in our headcount from 15% growth rate we have experienced over the past year. We're also taking close look at our projects and looking to pace them over longer term horizon. What's important, we're not sacrificing the investments in client service and long-term growth. For example, we'll continue to bring on wealth management teams. Since our last earnings call, we brought on four wealth management teams, and we just announced two of them this week. Moving on to 250. Another assumed anticipated topic. As we continue to grow and our growth engine continues to be very strong, we'll continue to grow our assets, and we'll be reaching $150 billion in total assets. With $250 billion, as well as designation of Category III bank, we will have additional regulatory requirements related to that. They're a number of them here. The good news is, for many of them, we already have infrastructure in place. For example, we're already doing DFAST, we're doing resolution planning. We built this infrastructure over the recent years. What it really means, we don't expect any significant cost related to those initiatives. What we will be focusing on over the next couple of years, building out the compliance with liquidity coverage ratio. Let me walk you through how the timing works. Once our fourth quarter average total assets exceed $250 billion on a trailing basis, we become the Category III bank. After that, we have two more quarters to demonstrate compliance with the rules. If we do the timelines, so it takes us to early 2025 when we have to demonstrate compliance. This will be the reduced LCR compliance. What does it mean for the next two years? We have to build our HQLA portfolio, and we will do so opportunistically. Just to note that LCR calculation itself is very dynamic and the amount of HQLA purchase that we have to buy may vary. That is factored in the outlook that Mike just provided. Now I'll turn it back over to Mike. Thank you, Olga. Thank you. Just on the expense management for a moment. One of the things that we're very careful to balance, and you see it this week with the hiring of the two wealth management teams, there's a time to acquire great talent. There's a time to invest in future capabilities that will drive client service. We make sure we do not sacrifice those even in the midst of challenging time periods. We may stretch out certain initiatives or certain projects, but there's nothing that we're going to do that will damage the long-term client service aspect of this organization. Okay. There are non-negotiables like that, and that's where value is driven. We're gonna continue. There's great teams to hire. We will continue to do so. Okay. If we get past the, as Jim showed in his chart, when this ends, it ends quickly, right? What does this really mean for the long term of First Republic if you get past the challenging year of 2023? We'll come out of it with exceptional, extraordinary client service intact. We will have deepened relationships with existing clients, and we'll continue to acquire households because we gain trial and then we deepen those relationships. Nothing changes with respect to that. That focus is completely intact in how we're gonna drive forward together. It's really a testament to our colleagues and their commitment to the client each and every day. Jim talked about the bottom line a little bit. Compounded tangible book value per share continues to be strong. Return on equity continues to deliver in all environments. Nothing changes. Why? We stay true to who we are, right? Service, focused geographic markets, focused product set. All the things we have done over many years at this company, they'll continue to be a hallmark. Most importantly, I know some of our colleagues are probably listening. That said, they also know the client is what matters. If they're in the preferred banking office at Park Avenue, we know they are focused on the client right now each and every day. That consistent execution doesn't go away, not impacted by any of this, these short-term challenges. Why? You saw this early. Our people. Focus culture, entrepreneurial. We ask them to help us solve challenges. We ask them to stay focused on the client each and every day. We create that environment that allows them to do so, and they are empowered to do what's best for the client. We have a last picture of our colleagues who are here today. You'll see most of them in various settings. There are over 400 collective years of experience at First Republic in this room. They live, breathe, sleep the culture of this bank each and every day. I have two welcomes that I like to do. Hopefully you'll get a chance to catch up with them. Susie Cranston, who joined us a little over a decade ago now, I think, if I have the dates right, and has been a key contributor to the growth of our wealth management franchise, working with Bob Thornton and the other leadership members. She was named Chief Operating Officer effective September 1st, and we are so thrilled to have her in that role, and she's making a great difference already, continuing to ensure alignment of operations with our client-facing colleagues. Then second, I'd like to introduce Neal Holland, our new Chief Financial Officer. He's on his sixth day. So please spend a few minutes, say hello. We're very excited to have him. He joins us from Union Bank, MUFG. With that, I'm gonna ask Neal to come to the stage to bring forth our next set of panelists. Thank you. Great. Thank you, Mike. Well, it's great to be here. As Mike mentioned, I started exactly one week ago, so, really getting up to speed and having a great time with the organization. I couldn't be more excited to be here today, meeting the people in the room and, you know, really can't be more excited about joining this organization. Just thinking about the dynamic, interesting nature of the company. I just couldn't think of a better place to be. You know, First Republic has amazing growth opportunities ahead. You know, we've talked about the great client experience. We've talked about the unique culture, and I'm really excited to leverage my background and experience and help the company through the next phase of growth. As Mike mentioned, I'm here today to introduce our next talker or next speakers. With that, we'll be talking a little bit about client experience and growth, two of the topics I just mentioned. We've got Shannon Hughson, our Head of Marketing and Communications, and James Herbert, our Head of Strategy. Thank you. Thank you. Thank you. Okay. Hi. Hi, everyone. It's wonderful to see so many familiar, friendly faces in the room here today. We appreciate you being here. Jim and I are going to talk about extraordinary service and opportunities ahead. Following our introductory section here, we've navigated challenging quarters. We focus on our business on the long term. You'll hear this throughout the day, we have an uninterrupted, consistent focus on the long term, exceptional service, safe growth, opportunities ahead. Service is our driver of growth. You all know us well. You know this is how we compete. This is how we win. This consistency is intentional. We've run a long-standing, consistent business model for the last 37 years. In our 1985 annual report, in the letter, Jim issued, in our first year upon our founding, he wrote, "First Republic's philosophy is to provide the highest quality banking service available." In 2022, when Mike took over as CEO in his first earnings call, he read, "The continuity of our unique service-focused culture has been at the heart of everything we've done for over 36 years. That doesn't change." James and I, and many others that you'll see here on the stage today, are gonna talk about why that matters. Our Net Promoter Score, you all have heard us talk about this often, but as a quick reminder, this measures the likelihood of our clients to recommend First Republic to a colleague, to a friend, to a relative. We compete and we win on service, and our Net Promoter Score is really what we think of as our report card. You can see here our 2021 Net Promoter Score, where we had 88, as a lead bank when clients self-identified First Republic as their primary bank, and 79 for First Republic overall. This isn't just a little bit better. We don't aspire to be a little bit better than the competition. This is twice as good. We also look at best in class high touch service brands like Apple, brands like the Ritz-Carlton, Airbnb, and we aspire to be better than those. We achieve a higher Net Promoter Score than these high touch, very well-established, well-regarded brands. Why is this the case? Because we proactively engage with our clients. Because we remain in the market. We don't exit folks. We don't move people around. We don't change relationship managers. We remain consistently in the market, and that matters at all times. It matters even more so in challenging times. Importantly, when folks reach out to call our bankers and wealth managers, like Kelly, like Todd, like Mohamed, like the faces in the room here today, they're there for them consistently at all times. That's why you saw in 2021 our Net Promoter Score increase from already high levels during a pandemic. We also look at our Net Promoter Score as a way to continually evolve and improve our service. We're constantly looking to achieve that winning factor of exceptional service. Our tagline is that it's a privilege to serve you. It's not just a pleasure to serve our clients, it's very intentional. It's a privilege to serve them. We take that privilege very seriously. We use our Net Promoter Score to understand our clients and the drivers of service that really help support that best-in-class Net Promoter Score. A few takeaways from our 2021 survey. First, we get some context around what exceptional service means. It means that the clients appreciate when we're responsive. They appreciate the quality of advice, the quality of our relationship managers and our wealth professionals. They appreciate the care and kindness. It seems like a small thing, but the care and kindness that our folks bring to the table and use each and every day to help take care of our clients. We have consistency across business lines, across regions, and across channels. This includes an exceptional experience, both in person, if you walk into one of our offices or meet with one of our client-facing professionals and online. Consistency across the in-person and the digital experience, consistently high scores. Also consistently high scores relative to our multigenerational strategy. Regardless of your generation, you might be a millennial, you might be a boomer, a Gen X, our clients appreciate the advice and the relationship that they have with their banker, with their wealth professional. Lastly, for the first time, we exceeded the high fifties with clients identifying us as their lead bank. This means we are their primary banking institution. In our 2021 survey, 61% of clients selected First Republic, self-identified us as their primary banking institution for the first time after having kind of sat in the mid-50s to high 50s for a number of years. Service drives our growth, and importantly, our markets are our supreme focus on dedicated geographies fuels our opportunities. James is going to talk about that. Thank you, Shannon. Thanks, James. As we think about the long-term franchise opportunity, we want to share the results of a study that we do with Capgemini every other year, looking at high net worth households. The purpose of this study is really threefold. How do we analyze the performance in our current markets? How do we assess how we're doing? How do we identify opportunities for future growth? The takeaway here is that our markets are strong, our results have been robust, and there's great runway ahead of us. Let's start with the first one, understanding our current markets. While there's a lot going on in this slide, as is general with two-by-twos like this, you want to find yourself in the upper right quadrant, which we do. The X-axis here is how fast high net worth households are growing. The vertical is the density of those households, and the bubble sizes are how many there are in each of those, in each of those markets. In summary, our carefully selected markets have a large population of high net worth households that are denser and faster-growing than the rest of the United States. Now, anecdotally, we've all heard about people moving during the pandemic, but we would note that at the end of 2021, there were more high net worth households almost two years into the pandemic than there were in 2019, the last time we completed this survey. Our markets are creating high net worth households faster than the rest of the U.S. As we can see, over the last 18 years we've been doing this, we've grown from 700,000 households to 3.1 million households in our markets, a rate that's nearly double the rest of the U.S. This is important because it means the opportunity in our existing carefully selected markets is continually growing and opportunity for us to grow with it. The share of all high net worth households in our markets over that period of time has increased from 46%- 62%, which is an amazing change over that period and creates greater density for us. While our markets only have 22% of all the U.S. households in the country, they have 62% and growing of the high net worth households in the country. We can see on the right-hand side, our markets are now five times more dense than the rest of the U.S. That's particularly important for First Republic, given our client service and referral-centric model for two primary reasons. The first is that when we have a satisfied promoter, as Shannon was talking about, it makes it more likely that the conversation that they have with someone in that market is going to lead to a like client becoming and trying First Republic. The second is that it makes our relationship managers, our wealth managers, and our bankers more efficient with their time when they go out and prospect for new clients. This is great, but how will we know if this is working? Outsized growth. We've grown the number of high net worth clients that we serve at 12% per year to almost 140,000, faster than an organic rate of growth in those markets as we take share. This is important both for our long-term compounding and a testament to the service and satisfaction that our clients experience, their willingness to refer to their friends, family, and colleagues, and speaks to how well our value proposition and service-driven model resonates with the clients that we meet and the prospects that we meet in the market. We've got great markets that are large, dense, and fast-growing, and we're doing outsized growth. What does the future look like? The opportunity is tremendous. If we think about it, we actually only have one of 22 households in any particular market or neighborhood, implying a huge amount of upside and growth for us. As we think about our market share, which is about 4.5%, this declined slightly from the previous study largely for two positive reasons. The first is that we added Seattle/ Bellevue, a brand new market that we're extremely excited about to our survey. The second is that the high net worth households in our markets grew at the fastest rate ever over the 18 years we've been doing the survey, both of which significantly added to the denominator. To put it in perspective, as we think about the opportunity, just in the last two years, our markets added almost 5x more high net worth households than the bank has managed to acquire over its 37-year history. An indicator of the huge opportunity directly in front of us, as well as the tremendous runway in the future. I will reiterate the stat that Jim said as well, which is that we now have over 16% of all the 10+ million high net worth households in the U.S. Now, with our markets being strong and our results being good, we will note that high net worth households actually only account for about 50% of our consumer base. I'm gonna hand it back to Shannon to talk a little bit more about what we're doing around brand awareness, how we're working in and with our communities, and to talk about overall consumer growth. Thanks. Thanks, James. I love this slide because said another way, despite having 20%+ growth across our businesses over the last few years, we still have 21 more households available to us. When you think about winning, competing on service and being 2x the competition, that's an extraordinary opportunity. Let me talk a little bit about how the Net Promoter Score drives growth and how that positive promotion of First Republic works in our marketplace. As James mentioned, the high net worth households is a component of our business, and we look to serve our clients and our communities. We serve large complex needs, but we take a community first approach to building our business, and that's really a unique position in the marketplace. An organization that can serve very large, very complex clients across banking and wealth management needs, but takes a truly local grassroots approach to building the business. We curate about 1 billion impressions each year across our markets. We do so by leveraging our clients, the positive promotion of our clients. You are surrounded by it here today. We also do so by supporting our communities. Fully 20% of our modest marketing spend each year is invested directly into the sponsorship, the granting, and the events that we do with our nonprofit organizations. We follow our clients to new markets. We not only follow them physically, we follow their hearts, the things that they're passionate about, the causes and the support that they care about, and that further embeds us within the community. We stay local. You can see that with the testimonials here and Peggy and Jackson, again, resonating within that local close-knit community. We meet clients and prospects where they are. It might be searching for financial wellness on YouTube. It could be walking down, maybe some of y'all do this, down Ninth Avenue by our new presence in the Hudson Yards, Manhattan West area. Let me share with you quickly how this testimonial comes from life, comes to life. This is an email we received just a few weeks ago. "Shannon, we hear from people who've seen our testimonial on your website, YouTube, LinkedIn, and in your annual report. It was the talk of my Stanford Business School reunion. If you hadn't seen it, you felt left out. At a parent meeting at our daughter's school, everyone had seen it. Our Asian friends loved the Asian representation. A neighbor on a dog walk yelled across the street, "We saw your ad. We bank there, too." Another neighbor passed and said, "I've been thinking about switching." The ads reach so many people in our lives, Pacific Heights residents, CEOs, professors, tech colleagues, students, doctors, lawyers. It starts conversations like, "Why do you like First Republic so much?" I get to talk about our experience, which I always enjoy. Thank you for letting us be a part of First Republic." That came from one of our clients featured in our campaigns, but really shows that positive promotion and action, that driver of our organic growth. Now I'm gonna briefly touch upon a couple of mini case studies on how we do this within our markets. In 2013, we entered Palm Beach. We followed our existing clients. We did so by supporting the organizations that they cared about, that they were contributing to, that they were serving on the boards on. Over the last five years since entering Palm Beach, we've experienced a growth in total households compounded annually of 25%, and we have an average PBO size of just over $700 million. Again, that comes from that positive word-of-mouth promotion, and we continue to harvest growth almost a decade later in our Florida region. In 2018, we entered Jackson, Wyoming. Again, same approach, following existing clients, and this time we doubled down on supporting those nonprofit and community organizations that they care about. Over the past three years, we've seen a compounded annual growth rate of total client households in that market of over 40%. 42% and a PBO average of $800 million. Again, following that existing client to a new market and continuing to cultivate this growth over the five-year mark. Now this year, just a few months ago, we opened in Bellevue, Washington. Since that time, just over these last few months, our PDO, Preferred Banking Office, has grown to over $100 million. Again, through the support of the organizations that our clients, both those who moved to the area and our new clients that we've acquired since that time, continue to seed that future growth that we saw in Palm Beach, again in Jackson, and now in Bellevue. That's what contributes to total client household growth that Jim and Mike spoke about earlier. As a result of this positive word of mouth, the reputation that we've grown in the marketplace for exceptional service, a strong brand, and really a community-first approach to serving our regions. The opportunities ahead are tremendous to continue this momentum, to continue to acquire new households and serve existing ones. You'll hear in just a moment from our Chief Banking Officer, Mike Selfridge, from the folks who are our brand, the people who do the exceptional service day in and day out and the uniqueness of our relationship banking model. Before we do that, we want to leave you with some words from our clients directly. We have received consistent support and guidance from our financial institution. That is invaluable. First Republic's a fantastic bank, but what really impresses me about the relationship is the ways in which they have provided us with opportunities that I really regard as a next level of service. I think it was that feeling that I had from the bank that they were making an investment in me, and I was trusting in them. In my career, any time I've had a mutual trust with an institution or a person, it's always paid dividends. Our lead core value, we have a few, but our leading core value is yes and, which means you yes and everything. In working with First Republic Bank, I learned that their philosophy is manage toward yes. It's like, perfect. It's a perfect match. First Republic gets credit for helping dozens and dozens of nifty learners start and sustain active businesses, creating wealth, creating jobs, and creating opportunities in places where it didn't exist before. Not only did I inherit a bank, I inherited a champion, a partner, a kind of like a financial advisor to the executive director. What are businesses? They're enterprises that create jobs. They're engines of opportunity for individuals, for communities, and eventually societies. What we did yesterday matters. What we do today matters, and what we do tomorrow will matter. As long as we're doing it together, I feel pretty good about where we are. The organization that you work for is able to continue to grow because of a great partner like First Republic Bank. Well, welcome. Good to see everybody. My name is Mike Selfridge. I am the Chief Banking Officer at First Republic Bank, and I'm joined by my esteemed colleagues and leadership team here. We're gonna talk about the unique model, relationship-based model of First Republic. Really what we wanna cover is why is it differentiated in the marketplace? I am delighted to introduce my team here. Joining me is Kellie Abreu, our Deputy Chief Banking Officer. Margaret Mak, our chief deposit strategist. Anna Hirano, head of deposits. Chris Coleman, our head of business banking. Why is First Republic so differentiated, and why does it matter to you all? I would say there's several answers to that. Then I would also say it's not easily replicable. First and foremost, I sort of look at three pillars of client origination. Our business bank, our personal and private bank, and our private wealth management group. Consistent strategy, as you just heard, a few carefully selected urban markets with deep market share opportunity. The numbers James just showed, about 137,000-138,000 high net worth households, about half, 3.1 million high net worth households to go after. A lot of opportunity ahead of us. Simplicity is at our core. Extraordinary service is our foundation. What does that mean? It means a few things to me. First, Shannon talked about that consistent service. Whether your single point of contact is your business banker, your wealth manager, your private banker, it's the consistent level of service and the single point of contact. Yet an entire organization behind that single point of contact to deliver the products and services to meet the needs of our client location, whether you go to the Boston Back Bay or the Bellevue, Washington branches, consistent level of service. That is a cultural competitive advantage of First Republic. Why is that important? Because that consistent, stable, predictable, delightful service matters not only to our stakeholders, but it matters more importantly to our clients. When I think of our competitors versus First Republic, and they're different models, I will give them that, but when you segment your clients, small client, medium client, large client, geographically segmented, product segmented, it gets very confusing. Again, single point of contact with the entire organization to back the client experience. To me, it's part model, and it's a lot of culture that differentiates us in the marketplace. Lastly, I want to touch. You'll hear more about our next generation strategy, but we've been actively underway for a number of years with our next generation strategy, acquiring the next generation of household, introducing them to their banker, their banker for life, and then those relationships span over a lifetime. Perhaps it starts with a personal line of credit, a professional loan. As they go through inflection points in life, we're there to deliver the right products and the right experience at the right time. What does it mean? It means we originate high-quality relationships, pristine credit, and we deliver safe, compounded growth over time. When I think of the lifetime value of a client relationship from age 32 that spans decades, it is quite significant. The growth model is unique. There's a saying here, "The best client you have is the one right in front of you." Don't lose a client. Again, simplicity in our model, difficult in execution. Our attrition rate of households is a fraction of what the industry would experience. That client we didn't lose actually garners about half of our growth rate because they bring us more, because they're delighted with the experience, and they happen to grow their own personal balance sheets or their business balance sheets, compounding. Because of the Net Promoter Score you heard earlier, they refer their friends or colleagues. Safe compounding over time, and that gets you the results on both the loan and deposit side. One relationship at a time delivers compounded growth in pristine loans over time in a number of economic environments and a number of interest rate cycles. One relationship at a time generates deposit opportunities, stable compounding over time in various economic cycles and various interest rate environments. One client at a time leads to what you heard as lead bank, which is a higher net promoter client. Happy client does more with First Republic. The more you do with First Republic, the happier you are with First Republic, and it creates a virtuous cycle. And then, of course, as clients grow, they bring us more. They bring us checking. They bring us savings. They bring us CDs. They bring us wealth management. That's the model. Simple to describe, simple in our structure, difficult to execute, and I think that's really the differentiator of First Republic. With that, I'm going to turn it over to Kellie Abreu, our Deputy Chief Banking Officer. Thanks, Mike. I'm Kellie Abreu, and I've been with the bank for over 21 years. Today, I'm delighted to discuss our client-centric model. Being with the bank for many years is not unusual. In fact, this team on stage has a collective tenure of over 100 years. Bankers tend to stay with First Republic for a long time because our culture of empowerment. In fact, 90% of the loans made since inception in 1985 have been made by bankers still with the bank. In fact, what we know is banker stability leads to client stability as relationships develop over time, and client stability leads to referrals and growth. At First Republic, the client is always the center of the relationship and has a dedicated banker who is empowered to deliver all of the products and services that we offer. This dedicated banker works alongside the client for life. As the relationship grows, the banker brings in the appropriate partner, whether it be for business banking or wealth management. Most importantly, we don't segregate our clients by net worth, type, or geography. As I said before, our bankers tend to stay with us for a very long time because they're empowered to take excellent care of our clients. This consistent client focus fuels our growth as nearly 90% of our loan growth comes from existing clients and their referrals. Like myself, all relationship managers are credit trained and are able to quickly approve the client. That is what makes us different. I am the client's advocate and advisor, and that's our secret sauce. Now I'd like to turn it over to my fabulous colleague, Margaret Mak. Thank you, Kellie. Good morning, everybody. My name is Margaret Mak, and I've been with First Republic for over 35 years. Like Kelly, I'm both a player and a coach. I manage deposit strategy and my own book of business. Relationship banking is what drives our growth. Her team and mine work like a mini family office for our clients, providing banking services for them and their families. I'm proud not only to have clients for over 30 years, but now bank their children and grandchildren. Do I look that old? I don't. I hope not. My only job, by the way. Our model is very simple, and it's not changed very much since I've been with the bank. Gaining trial is key. It doesn't matter how much a client brings in. While we would love to have clients bring all their banking with us, I'm really happy with just a little bit. Just try us. You'll like us. Once we gain trial, we work very hard, very, very hard to deliver an exceptional client experience. A key part of our model is that we stay with our clients forever. This is why the teams are set up with a lender, a deposit banker, a loan processor, and a wealth advisor. This provides consistency and predictability of service. This allows us to build a long-term trusting relationship with our clients. Our clients are very proud to be clients of First Republic. Look around. They love telling others. It's quite remarkable. Over time, this model compounds, and that brings us back to the beginning, gaining trial. Please, all of you who have not been clients of First Republic, gain trial. You know, if you want to do a good analysis of who we are and what we are, bank with us. Bank with me. I look forward to being of service. It's a privilege. With that, I'd like to introduce my best friend, really. I shouldn't say that word, really. My good friend and colleague, they wrote it for me, Anna Hirano. Anna. Thank you very much, Margaret. She is correct. We are one of our best friends. Anyway, welcome. Good morning. I'm Anna Hirano. I'm Head of Deposits. I oversee our branch network and have been with First Republic since 1993. Over the past three decades, through this expansion, our approach remains consistent. Community engagement, collaboration with our business partners and exceptional service. Our preferred banking offices are much more than branches. They anchor our presence in the community, supporting local nonprofit organizations and small businesses within the neighborhoods. Unlike other banks, our clients enjoy coming to our offices. When they first step in, they immediately feel the warm decor and hospitable service. This is the value contributor to our Net Promoter Score. Importantly, our preferred banking offices are highly integrated with the rest of the bank. Clients can, in a way, interact with the bank in a way that is convenient for them. They can either come in to an office, call, email, or use our mobile app. While other banks are closing offices and pushing clients to digital-only channels, we continue to open new offices in selected locations across our markets, so the clients have choices. This helps deepen our community presence, build our brand, and importantly, gather deposits. Lastly, our exceptional colleagues of our office network are empowered to provide extraordinary service. We talked about empowerment kind of throughout this theme this morning. We give them the tools and training, but we don't dictate how they build their business and/or serve their community. You can see a picture of our community engagements with our branches and our preferred banking office colleagues and clients of the bank. Today, we have 84 offices with an average of over $700 million in deposits. In keeping with our strategy, we have opened six offices since our last Investor Day, and we expect to open four more this coming year. We like to say our clients come in for the banking, they stay for the service, and they come in for the fresh-baked cookies. We laugh about it, but it really is true. Thank you very much. I'd like to introduce Chris Coleman, who's been with us 14 years, 15 year? Yes. This morning was 16 years. Over to you, Chris. Yes, great. There we go. Thank you, Anna, and good morning, everyone. I'd like to describe how business banking fits into the overall model of First Republic. First, I would say we add value fundamentally by integrating our efforts with the preferred banking office that Anna just described and with the private bankers that Kellie described, along with our wealth management teams that you'll hear more about this afternoon. Business banking is probably best described as both focused and diversified. Diversified in our deposit base and highly focused in our lending. On our deposit base, no one industry comprises more than 11% of total bank deposits. We think this is a terrific hedge against a pullback in any given sector. Our lending is focused on certain industries, half a dozen industries, principally. 95% of our lending occurs in those industries. What are the key ones? Nonprofits, private equity and venture capital, and professional services, meaning your law firms, medical practices, CPAs, business consultants. That's principally what that consists of. In addition, we have some specialty areas like the wine industry practice, which I think you'll get some exposure to late today if you can stay for us for the social event and the cocktail hour. For those of us from California, we felt we'd be remiss if we didn't bring along some of that inventory that we are financing, and we'd love to share some of the client wines with you and get to know you much better. You'll also be able to meet a group of our bankers and really hear from the boots on the ground as well. The industry focus allows us to maintain high credit quality, and it accelerates growth. Think of it this way. If a business banker is highly focused and expert on law firms or on nonprofits, they naturally get more referrals from the local market, from other service providers and from happy clients. It accelerates growth. In addition, someone who's living and breathing a given sector every single day is more likely to detect headwinds in that industry for a potential downward. They're likely to detect those headwinds early in the cycle, which is critical to then share with clients, get their feedback on challenges and opportunities so that we can together partner with them and navigate more troubled waters. That's going on today as we speak every single day around the country with our business bankers. That's what creates that third bullet point there on the left. 10 basis points only in cumulative losses in 22 years, or put another way, less than 1/2 of 1 basis point per year in charge-offs. The bottom line here on the slide is critical. For every $1 we lend, we have $6 in deposits. What does that do for us? Since most of that is business checking, that provides our lowest cost of funds to fund our single-family mortgage business and our commercial real estate business, as well as other endeavors. That's very powerful. It's all relationship-oriented. To spend a little time on capital call lending, that's for those of you less familiar, that serves our private equity and venture capital business. The bar chart shows the growth rates. We're approaching $30 billion in commitments as of September 30th. We like this sector for the multiple revenue drivers it creates, but it also has very strong credit metrics that support us, and one can see that actually over the last four decades in this sector. We've had no losses in 22 years. This is some of the underpinnings and the way this is structured enhance credit quality. It's short-term financing. A given fund or private equity manager wants to make an investment today, then calls capital. It's the speed to delivery in the marketplace for founders of tech, life science, and middle market companies that our venture capital and private equity clients can then serve. That's the value of these lines of credit. They're short-term financing with also very low advance rates against a pool of investors or limited partners who are not only strong financially, institutional players, endowments, insurance companies, pension funds, but importantly for us, diverse or what we call granular. We're not depending on only one or two limited partners to come through. In addition, at its foundation, the credit metrics are strong because of a very strong legal or contractual commitment for the investor to meet that capital call. It's very buttoned up. In addition to their economic incentives and very, very important, the reputational incentive for that investor in this asset class, all of that supports the meeting of capital calls, which is our principal repayment source. Circling back to the revenue drivers, this is an outstanding source of foreign exchange for us, foreign exchange fee income, as well as private banking and what we call professional loan programs, which will be described later in the program here this afternoon. Very briefly, as it pertains to private equity firms, this is a financing we do for individuals within the firm, associates, partners, as part of their general commitment to the funds. It enables them to invest in the fund. The limited partners love this because they have the skin in the game for the success of that fund. Meanwhile, that's a gateway to more private banking opportunities for these individuals. Another big sector for us is the nonprofit arena. It is a form of us expressing our commitment to the marketplace and the communities we serve. We have over 5,000 nonprofit organizations. It's about 1/4 of the business lending, so it is substantial for us, very meaningful. Importantly, it has a very attractive deposit-to-loan ratio. You see 1.5x. That's just the organization, actually. A big strategic objective for us is to serve the board members, and that's not included in the numbers, but is very robust as well. Our wealth management partners are able to manage the endowments for these organizations. Again, multiple sources of revenue. I would lastly just draw your attention to the circle diagram that has been modified. Kelly shared our main one earlier with the client in the middle. This one's been adapted for nonprofits. It's all about the mission for them. That's central. In the center of that diagram. The green portions is what we call beyond banking. Yes, we provide treasury management services, banking to the individuals within the organization, and of course, financing for them. Beyond banking services, we also provide networking events. What I call community building locally and actually nationally of Executive Directors and CFOs. There's multiple services listed there, but one example is what we call our Fundraisers Alliance. This is convening small events. We like small events because it creates more dialogue among those clients. They can share best practices and what's working in the fundraising environment. Again, very topical today. We do cybersecurity types trainings as well. Nonprofits have been targeted very heavily recently by fraudsters. Again, it's all in the interest of building community and loyalty and longevity to the client relationship. This is an important part of what we do in the community, and there's more. To wrap us up, I wanna bring Mike Selfridge back to talk about other ways that we are giving back. Mike. Thank you, Chris. Let me close with two thoughts here. First thought, culturally aligned, collaboratively working to deliver on the client experience consistently, organic growth and values instilled 37 years ago from Jim Herbert that have carried us forward to today, and that matters. Again, simplicity, hard to replicate. Two, we're very proud of the fact, as Chris noted, that we are part of the community, and I think being part of the community means being in the community. In some ways, I view us maybe as a large community bank. In that regard, one of our eight core values is do the right thing, and doing the right thing is being in the community, investing, lending, volunteering. We're very proud of what we do to create equity within our various communities that we serve. For example, last year, we committed nearly $5 billion in lending and investment capital to our communities to serve those that are underserved or underrepresented. As Chris highlighted, the thousands of nonprofits that we work with, we wanna keep with the theme of quotes from our clients. This is one of our nonprofits clients. "A lot of people talk with no action, but First Republic takes action on their words." Thank you very much. I'd like to thank Chris, Kellie, Margaret, and Anna. Great presentation. I'll now hand the podium over to David Lichtman, our Chief Credit Officer. Thank you. Thank you, Mike. Morning, everyone. I'm David Lichtman, Chief Credit Officer at First Republic. I've been at the bank for 36 years and been Chief Credit Officer for a little over 25 years. I'm responsible for the bank's loan portfolio with our team. We have about $150 billion of loans outstanding in the bank, and we're gonna do a deep dive into the portfolio and how we do it. Joining me on stage today is Susan DeTray and Dan Warnier. Susan is in charge of head of credit administration and has been at the bank for almost eight years. In credit administration, she's responsible for everything from loan policy, loan loss reserves, collections, special assets, loan monitoring, and a whole host of other activities. Hi, Steve. Dan Warnier joined First Republic two years ago, is in charge of our East Coast credit team. Prior to coming to First Republic, Dan worked at JP Morgan for 20+ years, most recently was in charge of their U.S. credit portfolio in their private bank. As you heard from the prior speakers, our loan portfolio grows 20% a year after year after year, where the banking industry grows mid-single digit range on loan growth, which is a great accomplishment on First Republic's part. What's more important, I would argue, is the quality of and the performance of that loan portfolio. Let's jump into that a little bit. We're looking at net charge-offs over 12 years since the bank's divestiture from Bank of America 12 years ago. We'll start with the big four banks here, BofA, Citi, Chase, and Wells Fargo. You can see their average annual net charge-offs over this 12-year period. We're gonna add in the top 20 banks in the United States, and you can see the general average charge-off range is 25 to call it 90 basis points per year after year after year. Here's First Republic, 1 basis point, a little under 1 basis point per year over this 12-year period. We're gonna jump into how we achieve that, but that's clearly best-in-class results over an extended timeframe. Let's go back to the beginning of First Republic in 1985. $440 billion of loans we've originated, and we've lost cumulatively only 8 basis points over those 35+ years. $346 million total on $440 billion of total originations. A little over half of that is residential real estate, home loans, home equity lines, and we've lost in that same 35+ year timeframe, cumulatively 3 basis points total over 35+ years. Think of what happened in the great financial crisis and what people lost. We lost 3 basis points over 35+ years. One of the keys is looking at cycles and how your loan portfolio performs in various cycles. We went back to the three most recent economic downturns, the dot-com bubble burst in the early 2000s, the great financial crisis, and the most recent era of COVID over the last few years. We compared our losses to the top 50 banks in the United States. You can see the dashed gray line are the top 50 banks' average annual losses, 33 basis points per year over this 22-year timeframe. Then you see the lower dashed green line. That's First Republic. 3 basis points per year after year, over this 22-year timeframe. We were 10x better, or they were 10x worse, depending on how you wanna look at it, in terms of charge-offs and losses over an extended timeframe through three economic cycles. With that, let me turn it over to Susan deTray. Thank you. Thank Thank you, David. I wrote down earlier that Mike Roffler said, "What is foundational doesn't change." A core story of First Republic is of safe, consistent growth. What we choose to do and where we choose to do it are key elements of this story. We focus on urban coastal markets, as these markets are centers of excellence in industry, education, and the arts. They both attract and create high-net-worth households, and they grow. Despite our own strong growth, we've maintained only a 4%-5% penetration of these same markets, representing continued and significant opportunity and absolutely no reason to stretch on credit quality. In 2002, our four primary markets, San Francisco, Los Angeles, Boston, and New York, represented just over 80% of the loan portfolio. 20 years later, they still represent just over 80% of the loan portfolio. Over 80% of our loans are secured by real estate, with nearly 90% of those loans secured by real estate within a 20 mi radius of a First Republic office. We also maintain both bankers and credit approvers in all of our primary markets. Why is this important? It's important because strong local knowledge supports the development of deep personal relationships, and those relationships, when combined with local market expertise, supports high asset quality in our loan portfolio. In line with our market consistency is our loan type consistency. In 2002, 60% of our loan portfolio consisted of consumer mortgages. 20 years later, that number stands at 61%, so virtually no change. In fact, the only change of any note is a slight decrease in commercial real estate loans as a percentage of the loan portfolio, largely in favor of growth in our business loan portfolio. Of importance is what we don't do. We don't do auto loans or credit cards or factoring or derivatives, et cetera. We believe in simplicity and consistency, and this consistency allows us to be very good at what we do, offer expert advice, and be confident, and importantly, decisive in meeting our clients' needs. We do so safely. It was noted before that 63% of new business comes from existing clients, and that another 26% comes from referrals from those same clients. As with our markets and our loan types, these are sources of safe and consistent growth. Also, as previously noted, just over 80% of our loans are secured by real estate. Across all of our the years and all of our geographies and in each one of those related loan types, we've maintained conservative loan-to-value and debt service coverage ratios as well as low median loan amounts. This discipline has assisted our clients, and therefore the bank, in weathering economic storms. With respect to economic storms, it should be noted that over the past three years alone, we've set aside approximately $275 million in allowance for credit losses, though largely related to loan growth. However, during that same period of time, we've only experienced $10 million in net charge-offs. Again, safe, consistent growth. With that, I'll turn it over to Dan to speak to credit culture. Thank you, Susan. You're welcome. Good morning, everyone. David ran us through the numbers in terms of the growth and the safety of our credit book. We have very low losses, and what I wanted to do was go a little bit behind the scenes in terms of how the credit culture, the unique credit culture at First Republic, helps drive those numbers. I've been with the firm a couple of years, as David said, and I've been very impressed with certain aspects of the end-to-end process that is really unique. First of all, we have a single integrated credit team. It's under one person. We are not siloed, and we have a very flat organizational structure. What does that mean? It means that we have consistent credit approval, and we're not competing against other units within the bank. We're working towards the bank as a whole being successful. We have 40 full-time credit approval people in our team, and they have an extensive background across markets and across products. Some of them have spent their entire career at First Republic, so they very much get the culture here. Others have spent time at other banks, whether they be multinational banks, regional banks, or local banks, and so there's a great diversity of background and of approval experience that counts towards giving a great perspective as to how we can handle our clients. Our credit approvers are also located in the same places as our bankers, our underwriters, and so we get to see our clients. We're physically located with the same people. We get to see our clients, we get to see their projects, and we get to learn the local vagaries of markets by getting to know the appraisers locally, and we get to know that local knowledge, which really can then be delivered to our clients because we are informed, we can make informed decisions, and we can give great advice to our clients. We can act as advisors rather than just being a rubber stamp at the end. A key tenet at First Republic is to take responsibility and to be empowered, and both bankers and credit approvers are allowed to make decisions as we meet clients. On the spot, we can create solutions, and we can work towards creating a solution for a client that isn't controlled by our risk appetite at a very high level, but is it a good deal? Is it a deal we want to do? In which case, we'll move forward, and we'll move fast. If it's a deal that we can't do, we'll explain it to the client as to why. We'll see what we can do, and then we will move on. We also have a very efficient structuring and approval process at First Republic. When we have a deal that we're looking at, we get all the right people in the room, and we analyze it together in parallel. That's very important. Many other places will do it sequentially, and it stretches out the approval process a great deal. We have a very compact process, and it allows us to deliver to our clients quickly. Natalie will tell you a little bit more about the training of our teams, later on, but we don't just do it in classrooms. We get our senior bankers to train our junior bankers. We get them to go in our markets, to look at our projects, to meet our clients, and to serve them as best we can. Now I'll take you a little deeper into the broad structure of First Republic and how it's been successful in terms of supporting the credit model. In terms of incentives, you heard a little bit about the clawback structure for bankers, and there's no doubt that that's highly effective in terms of the bankers bringing deals that make sense for credit approval. It's not just a case of taking deals, throwing them against the wall, and seeing if something sticks. It's deeper than that. The bankers own the relationship through the good times and through the bad times. If the client is experiencing financial difficulty, it's not simply passed off to a collections team, although we do have a very good special assets team that works in concert with the bankers. The banker's there throughout. It's a consistent face and a familiar face for the client in their time of need, and that's very important. We also have no volume goals. Our goals are to serve our clients, to deliver quickly, and to make good credit decisions. We're not tied to an arbitrary volume goal, and that's extremely important. In fact, over half of our banker compensation comes from deposits and assets under management, so we've decoupled purely having loan production as being the incentive. You will have picked up that consistency is extremely important at First Republic, and being there for our clients through the cycles, operating in markets that we know and offering products that we know is, again, something that is very much valued by our clients, especially as we go potentially into a more difficult credit cycle coming forward. We also have a very high degree of retained and repeat business. You saw before that 2/3 of our loans are with clients that we already have here. A further 1/4 are from new clients, but that are referred by those existing clients. As a credit approver, it's much easier to approve a new loan if I know the client, if I've met them. I know their business. I've been in their office. Than if it's someone that I'm starting with completely cold. The more touches we have with a client, the more likely we are to be in communication with them should they have any issue throughout their financial life. I'm gonna reiterate a statistic that was shown before, but I think it's really impressive and really important, that 90% of our loans, since the founding of the firm in 1985 were originated by bankers that are still here. 90%. Therefore, you'll see that we have deep experience. We have a lot of institutional knowledge, and our clients really benefit from that. With that, I'll hand back over to David. Great. Thank you, Dan. You've heard about our charge-off results, and you heard how we got there. Our best-in-class charge-off results. One basis point per year over the past 12 years. How were we able to get there? The consistency of the markets we're in, the consistency of the loan types that we do, and as Susan points out, the what we don't do. The stability of the bankers that we have, the stability of the credit team that we have leads to the stability of the clients. When you're lending to the same client and their referrals over time, you get to know how they will perform, and you can make good, safe, sound credit decisions. We know with the Fed raising rates, trying to slow down inflation, there'll be some economic challenges, a recession, a downturn, some form of economic turbulence, and we are highly confident that our loan portfolio will continue to perform extremely well with whatever happens going forward and with the economy. With that, let me turn it over to Mike Ioanilli. Thank you for listening. All right. Thank you, David. Okay, now we're going to break for lunch. We have about an hour planned for lunch here. Lunch is going to be served at the back of the floor where breakfast was served. And you can eat your lunch there, or you can feel free to bring it back into this room if you wanna check emails and whatnot. I would just ask that you please be back in your seats at 12:45 P.M. for our client discussion, which begins at 12:50 P.M. Thank you, everyone. All right. Thank you, everyone. If we could please take our seats. Okay. It's my pleasure to introduce our Chief People Officer, Molly Richardson, for a chat with our clients from The Urban Grape. So Molly, with that, please take it away. Terrific. Thank you so much, Mike, and good afternoon, everyone. It's a privilege to be here today, and it's a privilege to get to facilitate this conversation with two amazing First Republic clients. Before I introduce them, I do have a disclaimer that I need to share, which is that the views and opinions expressed by our guests this afternoon are solely their own and not those of First Republic Bank. With that out of the way, I would love to introduce Hadley Douglas and TJ Douglas, founders of The Urban Grape, and clients of First Republic. Welcome, TJ, and welcome, Hadley. Delighted to have you here. Happy to be here. Thank you. Thank you. Well, you know I'm a big fan. I've told you that many times, because I love what you all do, but I also love the story of how you discovered First Republic. Would you mind telling that story? How did you first come across First Republic? Yeah. I first heard of First Republic from a lot of clients. One of my tasks at the Urban Grape is working with high-net-worth clients and physically managing their cellars. When they would pay me to do that, it'd come out, you know, First Republic checks. I'm like, "What is this bank?" I know it's across the street from my dentist's office, but I've never been inside, right? One day after a very bad experience at another local institution in Boston, I'm like, "You know what? I'm just gonna give it a try. You know, I'm in sales. I should feel confident walking into this bank that I think is a very high level." I walked in there, and this was in 2017. I walked in, and our friend now, Tamara, stood up. She was at her back desk, and she stood up, and she welcomed me, and kinda just went from there. Tamara is here today, your banker and friend. We're delighted to have her and you all down from Boston. Was it kismet? You walked in the door. You saw Tamara, and you became a client instantly. What was the need? What was the experience? Well, it wasn't kismet. It was cookies. It was cookies. Okay. I think that's really, really what it was, but. I love the truth was spoken. Yeah. Yeah. Okay. It's the cookies. Yeah, you know, I think about you know, sales. I've been in the wine and sales and hospitality business for 25 years now, and I can't just I don't wanna just sell someone a bottle of wine. I wanna know what experience they're trying to create with that. I'll ask questions. "What are you doing? What do you usually you know, drink? Is mom coming over? Is it on your roof deck?" to have to kind of understand their wine lifestyle. Before I you know, Tamara said to me, you know, "Would you like to open up an account here?" that was the last thing. It was a conversation. "What are you looking for? Tell me about your family. Tell me about your business." She really wanted to understand the experiences that I've had and the experiences that I think I wanna create, and that's when it really kicked off. That was probably, I don't know, 15 minutes into the meeting, you know, after I was offered water, coffee, and a cookie. You know, so it was great. I think for me too, TJ has always primarily dealt with our banking institutions, but a big change was that after he met with Tamara, he wanted me to come in and meet with Tamara. I went kicking and screaming. 'Cause, like, I just don't wanna have to deal with moving all the accounts, everything like that. I will not forget sitting at her back desk there at the time and just having her really walk through everything and making sure that I felt as comfortable as TJ did. Mm-hmm. understanding that I was the one who was a little bit more reticent about moving the relationship and really helping me understand why it would be beneficial for us. Okay. Thanks for sharing that. Obviously we lead with service. Yeah. You all lead with service. What was that original need? What was that original banking need? How did the relationship start? I wanted someone to know us. You know, we are. We've worked really hard to be parts of our community. You know, part of our mission for when we wrote the business plan 13 years ago for the Urban Grape was to help build community through beverage, right? Like, that's our platform is the beverage platform. I wanted the bank to be part of my community. I wanted to walk in and not just stand in line. I wanted to walk in and not have someone say, "Next," right? I wanted someone to walk in and be treated like we treat people at the Urban Grape and in our businesses with a smile, and, "It's nice to see you," you know, "Mr. Douglas or TJ," or maybe not even know my name, but, "Oh, you're the owner of the Urban Grape. It's so nice to see you. How can I help you today?" That's just to me, for me, it's built inside of me. That's hospitality, right? But it's unfortunately going the extra mile in that industry. For all of you at First Republic or FRB, it just seems like it's part of your ethos, which I really appreciate. Anything else? I was just gonna say that I know what we also really love about the experience is that when TJ walks in there, he's greeted by his first name, but when our delivery driver walks in there. Mm-hmm To drop off the deposits, he's greeted in the same exact way. Yeah. That's extremely important to us. It just shows how much, you know, at our previous banks, we were just unknown. They didn't take the time to get to know us. They didn't take the time to understand how to support our business. Certainly weren't remembering the names of our delivery drivers who were dropping the envelopes. To have that kind of relationship was really important to us. Okay. It's really more in other institutions that we've worked with, and we're specifically talking about our business. You know, later we moved all of our personal stuff over as well. With the business side, every other place that I've been, it's just been transactional, you know? Can we talk about that, TJ? Was the original need a, like, need for The Urban Grape from a business perspective? Originally it was business, yeah. We pride ourselves in growing with our clients as our clients' needs grow. Mm-hmm. How has our relationship grown with the Urban Grape as your needs have? Starting with business and then also on the personal side it sounded like. You know, having, you know, a private banker and, you know, maybe that private banker isn't doing everything that you need done, but that banker has the relationship and gets you the answer, and the task can be completed, like, super efficiently, all under one roof, and I wanted to have that for our family as well, right? Whether it's our mortgage, we can call Betsy, right? Whether it's something else, we can call Patrick, right? Or we just call Tamara, and Tamara puts us in touch with Patrick and Betsy, and we just have one person to go to. I really appreciate that. We've done everything from mortgage to our kids' savings accounts to now our director of operations at the Urban Grape and the other companies. She just opened up an account there because she's like, "I see the relationships that our business has." She wants that for her family now too. We're growing it, and that's a trust thing, you know? That's trust that happens truly only through experiences. Thank you. You said some things that just sort of made my heart leap with joy, you said the names of the bankers. Yeah. the people at First Republic that you interact with, in addition to Tamara. Can you talk about how you interact with Tamara and the team? What are the ways? You know, you're busy urban professionals. Mm-hmm. You know, philanthropists, invest in your community, you're raising your kids. How do you interact with the team at First Republic? You know, if we have a question about a deposit that a driver comes up, and they can't read the scribble on the check or the date was incorrect, I'll get you know, an email from Thomas, right? "Hey, TJ." You know, we're on the relationship thing. You know, where I'll get something from, like, I think, Vitaly, and Vitaly is like, "Mr. Douglas." I'm like, "You can call me TJ. It's okay, right?" If you know, if there's something that needs to be fixed, we can get that done immediately, and they'll contact me. If I need to pay a vendor for our wine company, they can you know, initiate the wire transfer. I might just go through, you know, my go-to person, and then I'll get the secured email, you know, 30 minutes later, confirming, get the phone call confirming, and then it's completed, and it's just so easy. Mm-hmm. Right? You know, part of success in business, I think, is one, being transparent and having intentionality with everything, but it's also convenience, right? And everything is convenient, you know? I just wanted to add that, yes, we have our business banking there, we've got our mortgage there, we have our personal banking, our kids' savings accounts, but we've even now started to work with FRB on wealth management, you know, with them looking in and saying to me specifically, "Your life insurance payments seem really high. You know, can we look at this and start to work on them, see if we can get those payments down?" So I think what's been amazing for us is how they're really looking at the complete package of our lives and how many more areas they delve into than we ever could have thought of. Did you have any expectations? Like, so you had talked about the clients that you had worked with, and you saw sort of the logo and the names. Yeah. Maybe an impression that you had, but you hadn't gone into the bank branch. You clearly had an experience at another financial institution. I guess, did you go into that preferred banking office with an expectation? If so, what was it? I'm hoping that we- Yeah. Like, you know. Yeah. I wanna know, like, what that sort of hesitation was or curiosity or maybe what the expectation was. Absolutely. My expectation was based off of previous experiences that here is a private bank. I don't know what the opposite of a private bank is, right? Here I am, you know, at that time, 30-something Black liquor store owner walking in to a place where it might not be a space where I'm initially accepted. That went away when I- Instantly. Walked through the door, and someone stood up and put their hand out and walked towards me and greeted me. We went away within seconds. Have you know, gone past the expectations? Absolutely. Yeah. TJ has a saying, "Just get it in the glass." You know? Mm-hmm. To get someone to I'm gonna use that. a different type of wine. A different type of get trial. Just get it in the glass. Yeah. Just gotta get it in the glass, right? That's exactly what it was for us. You know, we just had to get us through the door, and we were hook, line, and sinker and sold and saw all the possibilities there. Yes, did we psych ourselves out of walking through the door a little bit? We're also in an industry where we see people doing that with being scared of wine and intimidated by wine, the wine store itself. You know, I think all we had to do was get it in the glass. Yeah. I always love hearing that the ways we have exceeded your expectations, and we always strive for excellence. We are human, and we're not perfect. We make mistakes. We try to learn from those mistakes and not make them again, but it is a part of, you know, the experience of working in, you know, a people-driven service business. Mm-hmm. Mistakes will happen. Have there been any mistakes? Have there been disappointments? Have you had a, you know, you know? Have we faltered in any way? If so, how or what happened? Listen, we have come a couple times when the cookies haven't been hot and fresh. That is a deep disappointment. Because you set that expectation that there are always gonna be warm cookies. Yes. When there aren't, it can be a lot. No, I think that for us, I wouldn't say that there have been mistakes or anything like that. I think that we don't always get a yes. Mm-hmm. You know, we are entrepreneurs, we're founders, we're trying to grow our business. We're always asking the bank for more. I think what's really important is that sometimes your bank says no to us, and that doesn't always feel great. It's not no, period. It's no, and here's how we can get you to yes. It's never the end of the conversation. Even though that is disappointing sometimes, it never feels like a closed door. I would go so far as to say that, you know, the entire institution has also realized, okay, well, if we become clients of The Urban Grape, and we use them for our wine and wine gifts and, you know, ship gifts across the country and things like that from The Urban Grape, we will increase their sales, and then we're gonna be able to say yes to them in other ways. They've actually become very invested partners with us, to help us grow our business, which is something we've never seen before from any of our other banks. Could be like, "No, but this is how we get it in the glass. Yeah, exactly. That's right. Exactly. Sometimes you have to hear no. I mean, it's reality. As our founder has ingrained in many of us, a quick no is better than a slow yes. Yeah. Certainly in helping you and our clients. I would really love to talk about The Urban Grape because I think what you all are doing in terms of making wine more approachable and accessible in the sort of progressive way that you all are doing it is just wonderful. Because it can be very intimidating. Mm-hmm. People can be sort of hesitant to, you know, approach wine in many ways. Do you wanna tell us about the philosophy behind the Urban Grape? You start. Yeah. Well, first, if you look at this picture of our store, this picture was taken a few years ago. It's gorgeous. Most liquor stores or wine shops don't look like this, right? There are no boxes on the floor. There's a comfortable, warming space. It's clean. That's the biggest thing. It's clean, right? There also aren't signs saying, "Goes great with turkey," or you know, this is a Chardonnay section. Which if people have walked by, they're like, "You know what? That place actually looks really expensive. That place is not for me." Right? Kind of like First Republic with my impression going in, it's like, "This might not be for me, but I'm gonna give it a try." Once we get someone to come in and give it a try, we get it in their glass. What that is that we've organized differently. I wanted to, you know, help build community through beverage and take the intimidation out of wine. When we opened up our first store in Chestnut Hill 13 years ago, I think 12 years ago, I created a system called the progressive scale, where wine is organized by its viscosity, like skim milk, whole milk, heavy cream. That way, people don't have to, you know, learn how to pronounce different grape varietals. That intimidates them. They don't have to memorize vintages or places on Earth that they've never been to, which is all intimidating. If you can say, "I wanna shop by the fours because that feels good on my palate," it takes the intimidation out, and it lets people explore. We wrote a book about this in 2017 called Drink Progressively. It's just really fun. It lets people learn about wine, educate their palate without us, like, shoving information down their throat, which is very intimidating. Drink Progressively is two things. It's what TJ just explained, looking at wine by its body as opposed to varietal or region, but it's also really just fundamentally looking at the pipeline of who is a customer in the wine industry into who is a person who can have a career in the wine industry in a different way. To that end, we've opened the Urban Grape Wine Studies Award for Students of Color, which is a pipeline to turn customers into people who can have careers in the industry. It's a year-long mentorship program, internships, paid internships on all sides of the industry. Those interns actually go to California and make the wine for our new company, Progressive Wine Company, which is also at FRB. A portion of that, the proceeds of that wine go back to support the program in the following year. Everything we're trying to do is about creating more community, creating more access for wine, whether it's just how you shop for it or who thinks that they can shop for it. We're excited trying to build our little corner of the wine industry to be a super inclusive place. Well, I'm definitely excited for whenever you open, you know, the Los Angeles version of the We're working on it. The Urban Grape. Speaking of, will we be drinking progressively a little later this evening? Yeah. Are there? We will? Okay. Yeah. Would you like to tell us about? Yeah, we're doing two wines later this afternoon. We're doing a white and a red, just to keep it simple. We're doing on a progressive scale of one to 10, we're doing a 9 W, so big, full-bodied, kinda heavy cream wine. It's a Chardonnay from Pride Mountain Vineyards in California. Then we're doing a 7 R, so 7 Red, kind of medium plus body, a Cabernet Sauvignon from Knights Bridge. It's a Cab, and Knights Bridge, some of you may know, this is the property that Jim Bailey of Cambridge has started a few years ago. Both of those wineries are actually client wineries of First Republic Bank. We'll use those to taste, we'll use those for client gifting, and it's this ecosystem of keeping everything, you know, kind of circular within bank and wine, and it's really wonderful. I hope you enjoy them. Excellent. We'll get it in the glass. Yeah. That concludes my formal sort of. Okay Questions of our little fireside chat here, but I am sure our guests in the audience will have a few questions, if you're game. Mm-hmm. If there are questions, I believe, of course, Steven Alexopoulos. Center row, young gentleman, right up front has a question. Hello. I'm curious, as an existing client of the bank, there's a view that the bank's very aggressive with trying to get new clients in. It's not as clear when you're an existing client, so I'm curious to hear your perceptions of either the, you know, rate you receive on deposits, what you're paying on loans. Do you feel like you're at market? Do you feel like the rates aren't as competitive? I don't know if you use another bank also to compare it to. What's your perception of, on the pricing side versus alternatives? Yeah, see, I thought you were gonna ask me about Chardonnay, so it's good. I think extremely competitive, but there's also a lot of dialogue on our end, like, "Okay, if we're doing this, we see the market going this way, so let's prepare by doing this," right? Having a conversation. You know, we're not bankers. We put our trust in people that are educated and that this is their profession. So to ask if, you know, Hadley and I sit on the U.S. Chamber of Commerce, small business council, and we're down in D.C. last week, and it was all about inflation and rates and we're like, "Is this what people talk about all day?" It was really new. Without trying to like kind of give you Yeah. Sorry. We talk about wine. Yeah. It's a little bit different. Without giving you an answer that I'm not fully educated on, I say that they try to educate us and try to prepare us. Mm-hmm. for what's coming down the line on that. Then with new customers on this, new bank customers, I've seen this with, you know, our 31-year-old director of operations, who's been with us for a few years. She felt that she needed to get to a six-figure salary in order to become a First Republic client. When she went in there, she went out, and she's like, "Okay, my dad passed away a few years ago, and he left this money. I have no idea where it is." Okay, well, great. First Republic's gonna help you find and how to figure out how to manage that. "I have four checking accounts in two different states. How do we do that?" This is. That 31-year-old professional, that new client is a new client that's gonna tell all of their friends and their family members, and I think First Republic will be able to get more customers. Mm-hmm. In that sense. Just like with us, if we can educate and create a pipeline for people that aren't normally represented in that space, you're gonna get more customers. I would say, is it aggressive or is it helpful? I mean, you know, so for instance, the partnership between FRB and TriNet, we're starting to look at moving all of our Payroll benefits. Payroll benefits over there, because there's a nice program between the two that will save us money. Is that aggressive or is that helpful? For us, it's helpful. We are educated by the bank about those options so that we can make good decisions that will ultimately save us money. I've never felt like they're, you know, just gonna say whatever they need to say to try and get us to do something. It's just always presented in a way that they show the benefit of it. Yeah. Yes. My question is, do you have an Islay in the back? I'm just kidding. Two questions. Number one, if you could share, you know, at what point or what were the requests that First Republic said no to? Mm-hmm. The second question is, it sounds like you have your operating account, your deposit account with First Republic. Mm-hmm. You know, do you think that as some of your vendors or let's say, you know, things get more digital, right? You're no longer having to have an email about how unclear the check is. Mm-hmm. Do you think that the product can grow as, you know, your vendor needs or requests become more digital in nature? Yeah. Yeah, I deal with that every morning. You definitely. I'm your guy. I can talk about. Like, every morning, I update my apps on my Yeah. It's the weirdest thing, right? You know, when I get an update from First Republic, I'm thinking, "Great, what is this?" Maybe the font changes or maybe I can transfer money quicker between, you know, 'cause we're an LLC, so we don't pay ourselves a check. We get owner's draws, right? That comes from one company and gets transferred, and it's quick, and it's seamless. I think it gets better and better with time. Right now, the reason we have our Urban Grape on here, but we're starting kind of a parent company, and it's got our wine company, my consulting company, the Urban Grape brick-and-mortar on there. I can look and see all of my accounts on there, both personal and for business. It makes it very easy for me to manage everything and have one, kind of shot of my entire life financially on here. I think it's great. I've been on other platforms before, and this to me is just, it's seamless. I look forward to the technology increasing on this because as we go more digital, even on our own business, you know, there might be some possibility where you can pay with your First Republic on our website, kind of like a PayPal, where you don't have to get the credit card, which could then save us 3%, right? I don't know, but I'm always looking forward to something like that. An example of the no is a line of credit. You know, we couldn't get one originally with the bank, and we were fine. We knew it would make our lives easier to have a line of credit because we're an inventory-based company. We also have 60-day terms, things like that. We knew we were fine without it. We knew it would be easier with one, and they gave us real benchmarks. Every time they said no for three years, they gave us real benchmarks about what we had to hit, and then we were able to finally get one this year. You know, that's what I mean why it's never just no, period. Mm-hmm. It's okay. It's no, here's what we wanna see. Here's how we think you can get there, and educating us as well as to why they have said no. Why the benchmarks were put in place. Yes. As entrepreneurs, that's the challenge for us. Like, we gotta hit those benchmarks then. Yeah. We do successfully, and then it's the next conversation. We get what we need. Yeah. Yeah. Terrific. Excellent. Do we have time for one last question? There is one. If there's not, that's okay as well. Oh, yes. Have you given any referrals? Have you given any referrals was the question. That $250 goes a long way. You want to get anyone else of any referral in there for that $250. Yeah, we do referrals for. You know, it's honestly weird because I haven't been in this position before we joined on and partnered with First Republic. I've never talked about a bank before. You know, I've never like, "Oh, you know, at FRB, we're doing this and, you know, we're doing this wine or this Zoom call with the," you know. That conversation comes up often, and shockingly, in my space in the Boston area, I have so many people it's like, "Oh, do you know so-and-so? They're my banker." Right? They're already a client of First Republic. I think where the referrals are coming are people in my industry that really don't understand or know that a place like First Republic exists, right? We all come from hospitality, so it would almost make sense that if we come from hospitality, that we wanna continue and be in a hospitable place. That's where the referrals come from. It's people my age and younger in our industry, and hopefully everyone is getting more clients and better service because of it. It's a great question- and- answer to end on. TJ and Hadley, I just thank you. Thank you for doing this. Thank you for your business. Thank you for being a client. Tamara, sitting in the back, you're amazing. Thank you for doing what you do. Yes, absolutely. Susie, we've got to work on our operations to make sure those cookies are always hot in the C-suites. Let's shift so we can get it in the glass for the next session. I'm delighted to introduce Bob Thornton, Chris Wolfe, and Kelly Johnson, who are gonna lead the next session on wealth management. Thank you both again. Thank you. Thank you. Good morning or good afternoon, everyone. My name is Bob Thornton. I'm the President of Private Wealth Management. Chris and Kelly and I have been patiently sitting in the back, chomping at the bit to come up and talk to you about wealth management. I want to introduce my colleagues, Kelly Johnson, who's the president of the First Republic Trust Company, and heads our family wealth services, and Chris Wolfe, who's our chief investment officer. They've both been here for quite a long time and are key members of our management team in running the wealth management business. The reason we're up here today is we're quite proud of the continued growth of our business, and we want to share a little bit more with you about what are the drivers of our business and why we think those drivers will continue to support our growth, and success within First Republic, and more importantly, serving our clients. I'm going to ask Kelly to lead off, and we're each going to take a few slides and talk about what these drivers are. Kelly. Thank you, Bob. Good afternoon, everyone. You've heard a lot this morning about why First Republic is so successful. This slide, it really illustrates how private wealth management contributes to that success. What you see here is a comparison between big wealth management firms and boutique firms, and where First Republic Private Wealth Management fits in. Those of you who know us well know that we have all the capabilities of big firms and all the advantages of boutique firms. Unlike some of our larger competitors who are limited in the way that they can configure service delivery, we offer a flexible, customized approach. While boutique firms can offer some flexibility, they don't have the capabilities or the access to best-in-class managers that we can offer. What does this mean for our clients? We offer comprehensive services. We have dedicated experts to meet all client needs. We offer independent advice and transparency in fees. All of this ensures that we're able to make decisions in the best interest of our clients. Importantly, we make decisions quickly. You've heard this throughout the day, but we're a very flat organization. We have open dialogue with Mike Roffler and Mike Selfridge. All of our producers have direct access to our senior executives, and we empower our teams. You heard, I think it was David Lichtman earlier, talk about kind of our nimble, responsive approach, and that applies across the organization. It's just part of our culture. It's who we are. These qualities, combined with our global research capabilities, allow us to attract top talent. High-caliber wealth management teams join First Republic because they want the benefits of working with a truly client-centric firm that can adapt to client needs and provide fully integrated private banking services. You've heard we've had two new teams welcomed just in the last week. Maybe. Pardon me. Let's see. There we go. Our business strategy is quite simple. We meet our client needs in this comprehensive way. This is really all of the services that we can provide our clients through our wealth management offering. In addition, we train our investment advisors to be true wealth managers. Everything we do is centered around the client's needs and our client experience. That results in deeper, long-lasting client relationships as opposed to brief transactions. Our strategy. Well, this puts us among our strongest competitors, and it allows us to attract premium fees and retain or maintain consistent growth. I think Chris is going to delve into growth more deeply. Thank you. Thanks. Thanks. Okay. Well, can you hear me okay? I'm gonna take Kelly's points and talk a little bit about some numbers that back up what Kelly was talking about. I think a way to do that is to start on what's happened over the last 10 years. Over the last 10 years, the private wealth business has grown assets at a 24% clip. That's across the three critical parts of our business, trust, the investment management business, as well as the broker-dealer. For comparison, I think some people may have this in their heads already, S&P was up compounded about 12%. Nasdaq Composite was up about 15%. If you look at 24%, it's not just the market story, and I'll talk about that in just a moment. I think the key here is it's a diversified business model, number one, and number two is it gets the idea that, as Kelly described, there's a broad range of services, essentially virtual experts that wealth managers can tap into across a variety of client needs in order to be able to address those needs. Now, one of the results of the growth is that something else has been transformative in the way that we think about wealth management and the bank working together. Everybody knows the bank is awesome, will be awesome. I think you've heard all that story already. Private Wealth Management is awesome too. Take a look at the chart on the left. There's two numbers here that are important. Over the same time period, you can see that we were 7% of the overall revenues and that we've grown to 15%. Think about that. The bank is already growing. How can you grow to an extent where you got to grow faster than where the bank is to be 15%? There's some interesting dynamics around that. The two things on the right, I think, help highlight how did we get there. The first is, when we bring wealth managers on board, we bring clients on board, it's not just one thing that we're doing with them, as Kelly explained, it's many things that we do with them. It drives our investment management growth. That trusted relationship anchored in investment management is the hallmark of the growth story, and I'll show that in just a minute. The second piece of it is there is a broad range of services, FX, for example, foreign exchange, the management of that for clients with global businesses, as an example. The insurance questions that were raised a little bit earlier, wealth planning, financial planning. The idea is really that that virtual set of opportunities allows us not only to talk to clients about many needs, but also to create the opportunities for them to stay with First Republic. This growth number, I think, is driven by a number of things. I'll share one more slide about growth because I think this also addresses some questions you may have as well. What we're showing is over the same timeframe from 2012 year-end to third quarter 2022, markets relative to client flows. If your clients like you, it's kinda a Jerry Maguire moment. Show me the money. The money is showing up in client flows. That's really been the driver of the acceleration of growth in the private wealth management business. I think there is a belief out there that it's markets. It's not really markets. If you reference the numbers I gave before, S&P is up 12%, Nasdaq Composite up 15%. You're in a place where really it comes down to wealth managers and that are working at First Republic like what they see, like a platform that is agnostic, has unbiased advice, which is what we've built over the last several years, and really step on the gas pedal and drive that client flow dynamic across a number of opportunities, not just investment management, but as I mentioned earlier, a number of pieces. Now, that opportunity set has a link to referrals, which is something I'm gonna turn over to Bob and have him touch on. Mm-hmm. I think everyone is familiar with the growth in our assets under management. It's been a consistent story. I think what really sets us apart as a wealth management organization is how we look to drive the overall enterprise value and specifically the cross-sell activity. I'm gonna talk a little bit about what that is, how it continues to grow, and most importantly, why it's happening. Let me first look at deposit referrals. One of our key missions in growing wealth management, hiring advisors, is making sure they're a big part of the deposit story. If you look on the left side of this chart, you can see that the deposit relationships that are referred to the bank just since 2020 has increased from $5.9 billion to nearly $12 billion. The vast majority of those deposit relationships are just plain no interest checking. One of the questions may be, well, why are we able to do that? Because it's something our competitors would love to do. Well, one reason is the minute a wealth management team walks in the door, they have an assigned preferred banker to work with them. We immediately help them understand how to open accounts, get their accounts opened. Once the advisor's here and they still do a lot of loan volume, we don't give relationship pricing just based on AUM in most cases to get to our best relationship pricing. We want the full deposit relationship. That's a very important part of our overall enterprise model. We recognize advisors for the deposit activity. It's a very key focus and one of the reasons we've been able to grow deposit balances so quickly. The other is we have about 70% of our, all of our wealth management clients have a deposit relationship. Now, this number includes both bank-referred clients as well as the clients that the advisors themselves bring to First Republic. When we last met, that number of 69% was about 60%. Again, it's another indication of the focus we have around driving deposit franchise. One of the reasons we do it, besides wanting to have the full relationship, is that our competitors, all of whom are banks, are very much focused on winning their business through their banking services and their relationship pricing. One of the things our advisors have realized is you don't want to leave your banking, clients' banking activities with a competitor or the firm they left behind. You want them at First Republic. This is a look at the referral activity of the actual advisors, and it's not just wealth managers, it's trust professionals, it's foreign exchange. Everyone does significant deposit activity. This page shifts more to what the enterprise impact is. I think as most of you know, there's two key parts of our deposit totals, the referred deposits, the banking consumer relationships we refer, and then sweep balances that are held within investment accounts. You can see that again, four years ago, the total deposits that PWM was associated with the bank was 9% of our total. It's grown nearly 40% since then to about 12.5% of our deposit totals. Again, it's because we make sure that it's a key part of the hiring story. This particular circle on the right is focused just on the advisors who have AUM with the firm, not the bank-referred clients. We want every client, if we can, of every advisor to have a deposit relationship. What this shows is that as of the end of last quarter, 3/4 of our wealth managers have the majority of their clients with deposit relationships. I say that because while we care a lot about balances, we care about households, and we care about penetration, 'cause that's ultimately what's gonna maximize the deposit opportunity. That is something we want to get to 95% that every cl... Advisors, wealth management clients, the majority of their banks separate. We'll never get to 100%, but we want to get to very high percentage in that regard. That talks about the deposit side. Let me turn and talk briefly about our great bank partnership. One of the most unique success stories we have at First Republic is our bankers and the amount of AUM they refer to our wealth professionals. You can see that over the last few years, that has climbed from four and a half billion dollars to last year of $7.8 billion. Now think about that, $7.8 billion to about 108 teams, and a few other professionals in trust and the like. When I tell advisors about the referral activity, they don't believe it. They literally do not believe it. They hear about it other firms, we get investment banking referrals. They don't believe it. I actually have a presentation I walk them through to show them factually how this occurs at First Republic. Anyway, why does it happen? It happens because we have great caliber professionals. We have wealth advisors. The teams we hire manage money, wealth managers. We have about 20 wealth advisors who just focus on cross-sell. Most importantly, our wealth professionals, our bankers sit together, they work together, they're in the same offices, and there's a lot of trust and a lot of cross-referral activity. As you can see, over the last three years, 80% of our bankers are referring wealth management AUM. I think the overall growth participation's been quite remarkable given that, as we all know, loans and financing is a huge part of people's focus. It shows that again, this model drives a lot of enterprise value. Before I go to the last slide and just talk a little bit about why we're confident about growth, I wanna chat a little bit about why we continue to hire wealth manager teams, why we continue to invest in that area. It's quite simple. Number one, we hire people who are growers. They're top caliber people. Many are on the Barron's and Forbes list. They're growers, so it's a great investment to find people who grow your business. Number two, they're all great cultural fits. We take a lot of care in finding people who are gonna work well within the organization. Lastly, they are profitable very quickly. The reason is, again, not only do they grow fee revenue quite successfully and bring over almost all their book, it's the deposit part of it that really makes it particularly attractive to hire these teams. That's a key focus of our business. One of the reasons or the key reasons we're very bullish on our continued growth is, one, we think we have. If you look at firms between, I don't know, $50 billion and $1 trillion, I don't think there's another organization that can match us in the breadth of services and the caliber of banking. I think that we really stand alone in terms of what we can offer to clients and frankly, advisors and bankers. Number two, as Chris and Kelly touched on, we have an unbiased approach to how we serve the client, and I think that's very important in terms of trust and willingness to give us more of their, more of their business, their families, their friends. We're really not into the proprietary product. We want to do what's right for the client, and we're structured that way. Last, as always, it's the service level. We rarely lose clients. We rarely lose advisors. As you can see from the cross-sell activity, clients trust First Republic and they love the business model. With that, I'll conclude, and we look forward to the Q&A period. I'll also ask Mr. Mackin and team to come up. Thank you. Okay. Good afternoon. My name is Patrick Mackin. I head Eagle Lending, and I'm delighted to be with Erin Fitzsimmons, Senior Managing Director, who heads our professional lending programs, Neil Adam, Senior Managing Director in Boston, Natalie Johnson. I almost forgot your name, but I didn't. Natalie Johnson, who heads our relationship manager training and development program, and a rising young star in the relationship manager world, Brittany Whitmer. What we're here to talk to you today is about a generational opportunity that we found that we had at First Republic, and that opportunity was for us to gain trial with the millennial generation. If I was gonna paraphrase TJ to get it in the glass, right? What I'd like to do is start with a quick review of what our demographic consumer borrowing household was. In this slide, you can see that in 2015, our consumer borrowing households fell in primarily two buckets. They were either Gen X or baby boomers, and those two groups represented 75% of our consumer borrowing households. The opportunity for us or to get it in the glass was to increase consumer borrowing households in the millennial generation. How do we do that? Professional loan programs and student loan refinance, which has morphed into personal line of credit, was our opportunity to address this next generation. We started professional lending in 2010, and we've originated over $7 billion in loans. For clarification, Chris Coleman said earlier, professional lending can be offered to private equity or venture capital to allow their people to invest using leverage to invest in their funds. It could be to an accounting firm to finance their ownership equity interest in that firm. Student loan refinancing began in 2014. The name kinda says it all, right? With the opportunity to refinance your student loan debt. We morphed that into personal line of credit in 2020. We've originated $5 billion in loans in that category. I'm delighted to say that credit quality has remained excellent. For SLR and PLOC, the cumulative net charge-off has been 5 basis points, and for professional lending, it's been zero. The good news continues. By planting the seeds of future growth, these relationships created through the next generation programs now represent 33% of our consumer borrowing households. As you can see on this slide, over the last eight years, these households have grown at a rate of 51%. What have we done? We've been transforming the First Republic consumer borrowing household demographics. Today, instead of only representing 12% of our borrowing households, millennials now represent 43% of the total. This really works. If one more good point on this is next generation clients grow at an even faster rate than our traditional single-family residential clients. Professional loan clients grow at a 43% compounded growth rate. Student loan refinance personal line of credits grow at a 32% total, 32%. Professional loan clients have a deposit to loan ratio of 99%, and student loan refinance personal line of credit at a 43%. With that, I'd like to turn it over to Erin Fitzsimmons, who's gonna expand a little bit about professional lending. Thank you, Patrick. The professional loan program has been a fantastic way for First Republic to bring new households into the bank and introduce us to rising professionals committed to investing in their business. Over the last 12 years, First Republic has worked with some of the top private equity firms in the United States. Through this partnership, we have been able to provide customized lending solutions for their employees to meet their co-investment needs. In turn, First Republic has been introduced to thousands of individual banking clients. The clients brought in through the professional loan program have strong income, liquidity, and FICO scores. Because of this, we have had zero credit losses across this portfolio. In addition to the statistics mentioned on the slide behind me, the professional loan program has proven to be an excellent deposit client. The professional loan program portfolio, as Patrick mentioned, is self-funding with roughly one-to-one consumer household deposits to loan outstanding. This really does work. Over time, we've seen the profile of this client develop and grow and mature. The borrower who was an associate of private equity firm 10 years ago is now a senior level executive at that firm. In some cases, they've moved to another firm, and they've taken us with them. First Republic was there at the beginning of their career, which has helped build the foundation for a lifelong client. We're excited to be on this journey with these borrowers who participate in the loan programs, and we continue to be there to service their future banking needs and wealth management. With that, I will hand it over to Neil Adam to introduce the personal line of credit borrower. Thank you, Erin. Hi, everyone. As Patrick and Erin have mentioned, First Republic's NextGen strategy is all about gaining trial. Said another way, it's finding ways for new clients to experience how First Republic does banking and how we build relationships. We, of course, do that through providing excellent client service to be their day-to-day bank and grow with the client so that we're front of mind when they need us. For the past seven years, our student loan refinance and personal line of credit offering has been seeding the bank with the high net worth households of the future. By starting to work with these clients earlier in their careers, we're extending their lifespan with First Republic, which helps increase overall wallet share acquisition, but also client retention. As a quick reminder, the personal line of credit helps clients prepare for important life events. These are things like refinancing their student loans, preparing for a family, or just having a line of credit to manage cash flows and prepare for the future. Looking at some key statistics of the personal line of credit client, the average borrower is 34 years old. They have terrific credit. Most of them hold graduate degrees. They make over $250,000 a year. Most importantly, they keep more on deposit with First Republic than they have outstanding on their lines of credit. We've originated over $5 billion in student loan refinance or personal lines of credit, and we're finding that these are the same great clients that we would get through other lead products. The only difference is we're now getting to work with them earlier in their careers. These are really great households to First Republic. While helping them with buying their first home or refinancing their mortgage and getting them to refer their friends is always gonna be the goal, we're now also seeing some really incredible opportunities from those referrals. You know, things like business banking, wealth management, and even large professional loan programs. This is very exciting, and this really does work. One of the opportunities we've identified through working with this NextGen of clients is to produce and develop our next generation of relationship managers. To speak with you more about that initiative is my colleague, Natalie Johnson, who's vice president of relationship manager training and development. Thank you, Neal. You are correct. First Republic has been intentional and proactive in making sure there are relationship managers ready to support the growth of the next generation of clients. It is a simple model that really is working. Since 2017, we have taken colleagues with about four years of experience at First Republic, paired them with a mentor, supported them through an intensive learning process and introduced them to next generation clients. Here are a few more details. First, each cohort is comprised of 15-20 colleagues from across the organization. That six-month training that they go through is then followed up by two years of supported integration. Secondly, each relationship manager in the cohort is mentored by a senior relationship manager. This gives them hands-on experience, understanding how to develop solid client relationships, the importance of strong credit quality, and also how to build a team of internal partners around each client. Third, new relationship managers get to put what they have learned immediately into practice. They support the clients that were introduced to First Republic through the next generation programs, and these are their clients for life. As of today, 30% of all current relationship managers have gone through this program, and they will continue the tradition of exceptional client service that First Republic is known for. They will continue the growth of the bank. While I could share plenty of success stories, and I'm kind of a proud mama and want to do that, I will not. Instead, I will introduce you to Brittany Whitmer, who is a graduate of our fourth cohort in 2019, and she will share her journey with you. Thank you, Natalie. My name is Brittany Whitmer. I've been with First Republic for 10 years, and the last three of those were through the relationship management program. My mentor was Kellie Abreu, who we heard from earlier. We've learned about how our unique offerings are attracting this next generation of clients, and we've touched on how we then partner these NextGen clients with the next gen of relationship managers. What does this translate to? The numbers behind me are representative of my own book of business after graduating from the program in 2019. I've grown my book to over 300 households, $261 million in loans outstanding, $10 million in assets under management, $65 million in deposits, 80% of which are held in checking. More than 75% of my clients consider First Republic to be their lead bank. How do I get to these results? It's simple. One client at a time, and I'll give you a recent example. We'll call this client Dr. B. Dr. B was raised in an Indian Army family. Growing up, she traveled the world until she landed at UCLA for periodontics and dentistry research. After she completed additional specialty training and her husband earned his MBA, they moved to the Bay Area for excellent job opportunities. However, their combined cost of education left them with significant student debt. First Republic offered them an opportunity to refinance their student debt through our student loan refinance program at a more affordable cost and over a shorter term. Through the student loan refi program, these clients immediately moved over all of their day-to-day banking. Since then, I've helped Dr. B- To obtain a business line of credit to buy into her first dental practice, and I've pre-approved them to purchase their first home. This level of trust and service that we can support our clients' needs have led to very happy clients and very happy referrals. It's extraordinary client stories like this showcasing how First Republic's next gen strategy really works. We partner with these clients earlier on in their career, and these clients subsequently become clients for life. It looks like you all are ready for a break, so I'll pass it back to Patrick to wrap this up. All right. Thanks, Brittany. As you've heard today, we've been able to transform the consumer borrowing households of the bank. We're bringing in clients earlier in their careers. They have excellent credit with virtually no credit losses, and they're really the same exact client that we brought in, we've always brought in, just younger and earlier in their careers. To paraphrase my whole team here, this really works. Thank you. Okay. Thank you, everyone. We have just another break scheduled here, so if you could all please just be back in your seats at 2:15 P.M., we'll keep the program moving. Thank you. Okay, everyone, if you don't mind please taking a seat. All right, it's my pleasure to introduce to you Susie Cranston, our Chief Operating Officer, and Mohamed Fahmy, our Regional Managing Director of San Francisco. Good afternoon. As Mike said, I'm Susie Cranston. I am the Chief Operating Officer for First Republic. While I am new in this role, as Mike mentioned earlier, I am not new to First Republic. For the last decade, I've been working with Bob Thornton and the private wealth management team. I have been responsible for overseeing all of our advisors, all our wealth management and investment management professionals, as well as private wealth management operations, client service, and product management. Prior to joining First Republic 10 years ago, I spent 13 years at McKinsey & Company, where I worked primarily with financial services institutions, on topics ranging from operational transformation to frontline effectiveness to, operating efficiency and risk management. It's been fun in this new role to spend some time on those topics again. I am delighted to be joined here today by Mohamed Fahmy. Mohamed is a regional managing director in our San Francisco office. He oversees a large team of relationship managers, bankers, and other professionals. Mohamed has been with First Republic for over 19 years, although he doesn't look it. I will also say that Mohamed holds a very special place in my heart because he's my mom's banker, so we hear a lot about Mohamed in my family. Mohamed is actually joining me today because we're gonna talk about the fact that our frontline at First Republic is actually a core part of the operations team. He's going to spend some time explaining that to you in a little bit more detail. Before I turn it over to Mohamed, I wanted to give you all a bit of an overview about operations at First Republic. The mission of operations at First Republic is to deliver the same exceptional service that we deliver to our frontline clients, that our frontline delivers to clients. Operations wants to deliver that exceptional service to our frontline. That's a mission that everybody feels very passionately about and believes in very deeply. Now, the vast majority of our operations team does all the things that you would expect an operations team to do. We process wires, we update information in systems, we close loans. What is different about operations at First Republic is that we do not deliver that service at arm's length. Many of you are familiar with organizations that have actually outsourced their operations to different cities, different states, sometimes even different countries. At First Republic, our operations team is co-located with our frontline and the rest of our organization. We're going to talk about the benefits of that and why we think that helps drive continuous improvement and efficiency and a number of great outcomes for our clients. Before I talk about that further, I want to talk a bit about another area of operations that does touch clients directly. The people that answer the phones when our clients call in, that's our client care team. Again, a little bit different at First Republic, our client care team doesn't use any automated phone trees. Many of you are probably used to dialing into some companies, and you have to hit seven if you want this question answered or hit five if you want that question answered. At First Republic, we pick up the phone. I'm sure you're all going to be shocked to hear that the reason we do that is people don't love automated phone trees. It's one example of how we prioritize the client experience and really try to deliver what our clients want. What you may be wondering now, and I'll get this question a lot, is how scalable is our operations? The best way that I can answer that question is with the numbers. What you're seeing on the top of this slide, the loan deposit and AUM growth, those are the numbers that Mike showed earlier. Mike Roffler showed at the beginning of today, and that is the growth over the last three years. What is probably not surprising to many of you is the numbers across the bottom of the chart, which show some of the growth that we've had to deliver on the operational side in order to support the financial results that you see a lot. You can see over the last three years, while staying at home and homeschooling children and dealing with COVID, our operations team has seamlessly done a 63% increase in loans processed, 88% increase in wire volume, 171% increase in PWM trading volume. Those are phenomenal increases in productivity in a very short period of time. What I really want to underscore, and the most important takeaway that I hope you have from this chart, is that we achieve these results while improving the Net Promoter Score by seven points. So that is the best, as I said, numerical analysis I can give you that shows scaling is just part of how we operate. That's the day-to-day business as usual here at First Republic and our operations team. That is what we handle and manage towards every day. At the break, somebody was asking me for, you know, a tangible example of that. What does that actually mean in practice, right? I'll start at the highest level I can explain it at, which is that we bring in the best people, and we design efficient processes that can also be customizable within regulatory frameworks. We are trying to constantly empower the front line in operations the same way that we empower the front line that works with clients. That drives continuous improvement, that drives efficiency, that drives exceptional client outcomes. One example of this, just a few weeks ago, I was down on the commercial lending floor, and an RM came running down and said, "Hey, we have a client situation. The client really needs us to close this loan by 1:00 P.M. today." We didn't have all the right final documentation for the loan folder yet. As you can probably imagine, we don't start closing loans and writing up the documentation till we have the loan files complete in most cases. I watched this take place seamlessly. The loan closer on that floor said, "No problem. We'll start getting these loan documents completed. They started to work in getting everything put together, and we were able to close that loan for the client by that 1:00 P.M. deadline. That's the kind of exceptional service that happens when you have the kind of partnership that we do at First Republic. What I'd love to do is actually turn it over to Mohamed Fahmy to explain that to you in a bit more detail. Thank you, Susie. Just to keep it super simple, from the moment a client engages with a First Republic relationship manager, the operations team and the front line work hand in hand to deliver on our promise of exceptional service. To be clear, most of our operations groups are embedded and co-located with our relationship management team. If we get a loan request, we're immediately connecting with our credit team. For instance, as Dan and David talked about earlier, we're committing to the transaction subject to all kinds of verifications that are required, but we are able to deliver on that exceptional service because we are co-located working together. Not only are we doing that, but in parallel, we're working with our operations teams to meet our regulatory requirements, to collect the verifications of documentation, to understand better what our clients needs, and able to respond quickly to our clients' sometimes changing demands. Maybe we started the loan with a request and they changed the loan amount or wanted to do a different program. If we were siloed, if we're not working together or we're not co-located, it will take us a longer time to respond. Because we are working so closely together, we're able to deliver on that exceptional service. Another ancillary benefit of that is also great ideas come from people working together. Because our operations teams and our relationship management teams are working so closely together, we have our moments where someone says, "Have we considered?" A great example of that is early on in the pandemic. Early on in the pandemic, we realized that we did not have a dynamic and transparent pipeline management and prioritization solution. We came up with the loan activity monitoring portal. This was a collaboration between the front line, which had actually designed this, alongside our continuous process improvement team. The idea was pretty simple. Can we have a dynamic and transparent way for us to prioritize our days as relationship managers? How do I know which loans do I need to work on and focus on today? Well, fast-forward a couple of months after we put it together, our operations groups came back to us and said, "Hold on a second. Could I have access to the same portal? I need access to your real-time prioritization." So we gave them access. Not only that, our closing and funding teams came back and said, "This could help me not only prioritize but staff appropriately. Now I know the complexity of the deals that are coming in the pipeline, and I also know the volume that's coming in the pipeline. I could scale up and down based on complexity and need in real time." Once we put all of this together, we've partnered, and Scott Finder is going to touch on this a little bit later, with our digital channels team because our clients also wanted access to the same information. Where am I with my loan? Scott will touch on that later. I think the question that Susie started with was, could we scale our operations? I think not only could we scale it, but I think we asked the right questions because we're working so closely and collaboratively together. With that, I'll hand it back over to Susie. Thank you, Mohamed. Mohamed's example of our loan activity. I forget the acronym. Management portal. Management portal. portal. Thank you. LAMP is what we call it internally. That is a perfect example of how we partner across the board to find the right types of improvements. The other thing that we do on a very regular basis is something called Net Promoter Score 2.0. You've heard today a bit about our annual Net Promoter Score survey that we do, and you've seen the results from that annual review where we survey a broad array of clients. What NPS 2.0 is, it's a basically more real-time tool to get feedback from clients about how things are going. A client goes into a branch and has a transaction or gets a new ATM card or calls into the client care team, and when that happens, we follow up with a brief NPS survey, and we get the feedback about how that transaction went. The reason that this is such an important part of our operational prioritization process is it allows the client to give us real-time feedback about how things are going. It allows us to ensure that as we're improving things, we're doing things that will have the biggest and best impact on the client experience. We use NPS 2.0, and we meet weekly, actually, as a team to go through the feedback. The individual clients that we serve, the individual relationship managers that serve each client that gets surveyed call that client back personally to say thank you for the feedback and explain what we're doing with it, which allows us to continue to deepen the relationship. We also meet monthly to review the feedback and truly use that to prioritize our agenda to figure out when there's a best practice somewhere we need to share more broadly or to figure out when there's a, you know, issue that we need to address, and hopefully, we can identify earlier with this NPS 2.0 process. Before we hand this presentation over to Scott Finder, I wanted to conclude the overview of operations with a bit of a story because when we think about what differentiates operations, it's the same story that you've heard all day. It's the people. I asked the team a few weeks ago in advance of this presentation, "Could you share a story of something that's happened in the last few weeks that really illustrates how much people in operations care about clients and what we deliver for clients on a regular basis?" The story that I heard was about somebody who had called into our client care center. This client had gone to a big box retailer and had purchased something that cost $20. Like many of us, as they were leaving, they just signed the receipt. They didn't really look at it carefully. When they got back home, they realized that they'd actually been charged $320 instead of $20. The client was upset and called into the client care team and said, "Hey, is there something anybody could do to help us?" Alicia, in our client care team, picked up the phone and said, "Well, let's check with the credit card processor." As you would expect, since the receipt had been signed, the credit card processor could not reverse the charge. I think in many organizations, that might be the end of our client's story, but not at First Republic, because our client care team member empowered herself to be creative. Alicia realized maybe she could call the manager of the big box retailer and see if they could review the security footage from when the client checked out. Sure enough, she got on the phone with the client. They were able to convince the manager to review the security footage, and the client ended up with their $300 refunded to them. The question is, for those of you that don't bank at First Republic yet, would your bank do that for you? Would somebody go that extra mile for you? This story is an example of which I have many every day, but really is indicative of how much all the people in this room from First Republic and all the people at First Republic in general care about clients. It's part of what makes us so excited to come to work every day. Thank you for letting us give this brief overview of operations. We appreciate it. With that, I'd like to welcome Scott Finder, our Chief Digital Officer, to the stage. Thank you. Thanks. All right. Thanks, Susie. As Susie said, my name is Scott Finder. I'm the Chief Digital Officer. We are gonna start with my colleague, Jim Hughes, our Chief Information Officer, who's gonna magically appear by video. Thank you, Scott. Hopefully, everyone can hear me. Yeah. I apologize for not being there in person, but after 2.5 years without even a sniffle or cough and feeling pretty immune to COVID-19, I finally tested positive last week and didn't want to contaminate anyone. We're pretty excited about the progress we've made on our technology front. Five years ago, we developed a technology strategy and roadmap with a focus on modernizing and upgrading our technology capabilities to enable us to continue to grow and scale, meet our client emerging needs, enhance the productivity of our colleagues so that they may continue to stay focused on our clients. Next slide, please, Scott. We've made tremendous strides in the last five years. We have literally replaced every single physical item of technology hardware in the bank. We've replaced and upgraded all of our networks and supporting infrastructure. We've migrated most of our infrastructure, many of our systems into the cloud, and the cloud provides a strong foundation to allow us to scale and improve our resiliency. We've modernized all of our workplace productivity tools. Actually, we just completed that just before the pandemic broke, and it allowed us to seamlessly transition to remote working without any loss of productivity. We've modernized all of our databases, and most of them are now all running in the cloud as well, and we've dramatically increased our ability to deliver client insights and analytics. We've replaced our digital consumer application and modernized the foundation to build better digital capabilities faster and safer than before. We have replaced or upgraded nearly every major system in the company. In fact, earlier this year, we completed our core banking system replacement. It was the largest technology investment in the company's history. Next slide, please, Scott. The investment in the new core banking system sets us up to continue to grow for decades and scale the bank to $250 billion in assets and beyond. There are many, many benefits that we derive from the new banking core. Just a few examples. One is on a more technical note. It gave us the opportunity to really modernize our technical architecture. We built a set of a layer of services and interfaces around our legacy systems in the new core, which will allow us to quickly innovate new digital capabilities and also to rapidly plug and play things both internally developed or from, say, a fintech into our ecosystem. The new integration layer makes us much more agile to respond to changing client needs and new opportunities. Another benefit of the new core is in the area of colleague productivity in our branches. Prior to replacing the core, we had tasks and transactions that required sometimes up to four or five different systems to complete. We were with the new core able to bring that all down into a single system, reducing transaction time, increasing accuracy, and requiring less time to train new bankers. Finally, I'd highlight one of the big benefits of the new core is in support of our business banking clients with new products and services that were nearly impossible for us to provide in the old core. Examples include improvements in cash and treasury management and the offering of escrow accounts, which is a huge lift for us, particularly during this focus on deposit gathering. Next slide, please. You heard a little bit about this from Susie on our call center, but while many banks leverage technology to reduce cost and drive customers to less expensive channels, we've stayed dedicated to a set of technology guiding principles. We are a high-touch bank, so we always look to see how we can leverage high tech to enable high touch. Empower colleagues, serve clients, not disintermediate. We let clients bank their way if it's in person or digitally or any combination. Stay focused on unlocking our bankers' productivity to allow them to do what they do best, serve our clients. We own the technology where it matters. We still need vendors and third parties, but we wanna be great at owning the user experience, the interfaces between the systems, as I've mentioned already, and the management of our data. Finally, being just relentlessly focused on resiliency, reliability, and security. Next slide, please. As we look at the next five years, building on the technology foundation we've established over the last five years, we continue to invest in proprietary experiences, data, and insights. Continue to invest in giving our clients more personalized services to give them even more flexibility. Focused on colleague productivity, enabling more scalable service model, increasing households served by 15% while at the same time increasing Net Promoter Score. With our past investments, we believe that we have greatly improved our speed to market for new services and products. We will continue to automate more manual tasks and scale to meet our growth. The investments we've made to date set us up for a more rapid digital evolution. To better describe that, let me hand off to Scott Finder to share the progress we're making in this area. Scott. Thanks, Jim. I'll share some examples to give you an idea of the things we're doing in digital, but importantly also to tell you how we think about digital servicing at First Republic. Jim mentioned our new core. I'll elaborate on that from the digital perspective. We're very excited about the new core. On an ongoing basis in digital and throughout the organization, we're looking at new technologies, either technologies that we may wanna develop ourselves or partner with outside parties like fintechs. In many cases, like other banks that have had legacy core banking platforms, when you're considering adopting a new technology or even just running an experiment, often you have to integrate it with your core banking system because that's where the account data is. You wanna pull the account data with the new technology and see what magic you can create. The challenge is to do that work often requires a very customized interface to integrate with a legacy core. You really have to pause and ask yourself, is it worth the investment? It's time intensive, it's resources, and you have to be very selective when you're dealing with a legacy core as to see what initiatives are you gonna take on. With the new core, with our new core, we have a set of modern APIs. Really what that means is we have a much easier interface to efficiently integrate with new technologies. It takes a lot of the thinking out of the decision. Should we experiment with this? Can we do it fast and cheap and see if there's value from it to decide if we wanna go on and do more with it. It gives us speed to market and allows us to innovate and rapidly adopt new capabilities where it makes sense. As an example, we talk to our clients a lot, and there's three things in digital that we hear from clients and in other areas all the time. Our clients care about security, of course, they want their accounts to be safe. They care about efficiency, they don't have a lot of time. They want us to help them solve problems. In talking with our business clients more recently, we heard a theme, and the theme was that payments are a challenge. Specifically, making payments to their suppliers, as well as invoicing their own customers to collect payments and the reconciliation process involved. It can take several minutes for one payment. In aggregate, that means a lot of manual task time instead of running your business. What we did is leverage those APIs of our new core, and we partnered with a Bay Area-based Fintech to bring together a new capability that we're calling Bill Center. Put simply, it dramatically reduces the amount of time that our clients spend on payments. This is a real win for us. Unlike Fintechs and many banks, we wrap this whole thing in a personal service experience, and that really leads to sticky deposits. This is just one example of how we're delivering for what clients want. Over the pandemic, we've spent a lot of time enhancing and delivering new capabilities. We've also spent a lot of time trying to get trial of our digital capabilities and drive adoption because when our clients use our platforms, they become much more sticky. I'm happy to say that now more than four out of five of our clients are digitally active, so they're logging in every month one or more times. And the adoption of these capabilities are growing as well. One of the things that our clients care a lot about are sending payments via wires. Our clients send a lot of wires. What we've been doing is enhancing and expanding our digital wires capability, making it even safer and even easier to use. We've seen a 65% lift over the last couple of years in terms of wires that are now initiated digitally versus offline, manually, phone calls, emails, et cetera. This is a big deal for us. It's important for us to keep up as client behaviors and preferences continue to change. As long as we have the strong foundation that we have, the entrepreneurial culture, and the ability to rapidly deliver, we can keep deepening our service levels. A key area that we help clients is in the home buying process. This is an area where preferences have evolved as well. At First Republic, four out of five mortgage apps are now completed online. Mohamed spoke about LAMP, our Loan Activity Management Portal, and how empowering relationship managers and operations teams to work smarter together because of the LAMP process. This technology plus the teamwork means we're faster and better at closing a loan. One step further, we're now offering the transparency for clients as well. First Republic's new Loan Activity Management Portal gives bankers and clients real-time transparency into loan status and next steps. LAMP has improved my interaction with our clients by giving us more time to develop a relationship. We're no longer spending as much time looking up data, going through the system, trying to find answers to questions. We're now able to better focus on the client. LAMP helps me set expectations with my clients. It also helps me set expectations with my team. It will be extremely powerful for our clients to be able to log into the mobile app, know exactly where they are in the process, what next step they need to take in order to close a transaction. When a client sends us an email with a question, "Hey, where's my loan? What are we doing?" Push a button, we answer. It's easy. It's fast. LAMP, high tech empowers high-touch service. Now right in the mobile app, clients can access what we call the mortgage tracker, so they can see the status of their loan with a banker one tap away. It gives them peace of mind. It services operational transparency. Clients have always liked that bankers keep them up to speed on what matters to them, and that really doesn't change. Now they also have an end-to-end view to reduce, you know, any potential questions, confusion. They know where things stand. This is a human-led, digitally enhanced client experience. That, plus internal efficiency, is a real sweet spot for us. This is just the beginning. We can extend this, you know, well beyond mortgages, so it's a foundation for us to further differentiate. Last example I want to point out, we talked about, you heard from Patrick about our PLP, our Partner Loan Program, and this is a key part of our growth strategy. One of the things that our investment firms, private equity, venture capital, et cetera, these clients have to manage are capital calls. The investment firm has to send out messages, usually by email to their investors, or in this case to their employees who are co-investing, to say, "Hey, it's time to send in that money that you committed to co-invest in this fund." The employee has to say, "Okay, well, how am I gonna cover that?" Maybe there's a banker messaging me, "Oh, I don't have enough money in that account. Do I wanna transfer it? Do I wanna draw down on my line of credit that we offer?" Then, you know, I need to send a wire in, but I didn't respond the first time, so now the banker's sending me a message again and my employer, the fund, is sending me a message again. Capital calls in the industry are kind of a very manual inefficient process, and we've heard the pain in the email-based approach to this. We're really excited. We just began rolling out this capital call manager tool in our mobile app. Now we surface the information that the clients on all ends of the equation that they need. The investor knows it's time to send in the money. They have the option, do they wanna draw it on the line? Do they wanna make a transfer? Do they want to wire? They can do it all right from the app. They can track across their different investments how much have they committed. "Oh, I forgot how much I sent in already. What's coming?" They can have a list of all their investments and they can manage and have clarity about what's coming next. This is a great way in my mind to reduce the complexity, drive clarity, and simplify everybody's life in the process. This is also a great example of one of the principles of how we think about digital at First Republic. Our goal at First Republic is not to beat every bank to the punch with every new feature that's coming out. Sure, the basics matter, but our job is to understand what matters most to our clients and to really differentiate the client experience for our clients. This is about digital empowering people, it's about providing transparency, and it's about team-based personal service. Our primary collective focus since our founding has been client service. Stick to your knitting is something that we say a lot. The changing technology landscape will continue to do just that. It will continue to change. For us, that's about new opportunities, new technologies, new methods, new capabilities to deliver on the needs of our clients. But our client service roots remain unchanged. Thank you. Now I'll turn it over to my colleague, Todd Rassiger, Regional Managing Director of Boston. Thanks, guy. Good job. Good afternoon. My name is Todd Rassiger. I'm the Regional Managing Director for Boston, and I also lead our business banking team on the East Coast. I'm excited to deliver this presentation to you today, along with the team, not only because we're the last presentation before all that great wine that TJ and Hadley shared with you. One is the best part that we get to share is similar to what TJ and Hadley shared, is everything that we talked about, you get to see come to life in client examples and see how we work together. That's what our team will be talking about today. The other thing is we love bragging about our amazing colleagues, and you'll see through this presentation that we've got the best in the business. Particularly the folks here on the stage. We've got Patrick Mackin, you heard from earlier. Tamara Pipp, who is the famous Tamara from TJ and Hadley. You've heard her name. I think she's trending on social media. Andy Wiles and Marissa Gentile. The headline for today that you heard is that exceptional service delivered by a collaborative and empowered team, one client at a time, right, leads to happy clients. That is the formula. When we have happy clients, they drive our growth by doing more with us, and they refer their friends, their colleagues, and their family. It's incredibly important to understand that because this creates this flywheel of opportunity that keeps growing and growing and growing. The thing that powers that flywheel are our colleagues. Think about this for a moment. How empowering is it to know and motivating to know that your main job as a banker at First Republic is to deliver exceptional service while protecting the bank? To know that you can work in an environment without silos, where you can trust your colleagues throughout the organization, frontline, behind the scenes. You heard from a lot of the folks here that are building infrastructure, that we can count on them to know that we can deliver. That is incredibly inspiring and motivating as a banker delivering that service to a client, right? When you look at that and you say this system and you see directly how it benefits your client, it benefits the bank, and it benefits you personally, that just unlocks a whole new level of performance that we get from our team, right? It also creates a source of pride as well. In today's example, we're gonna cover, the team will show you how we went from a simple introduction to a business based in Boston, turn that introduction into a full banking relationship that includes corporate banking, consumer banking for all the partners of this business that touches on deposits, lending, and wealth management. We'll show this to you on the screen as we go along. Kellie Abreu, my colleague earlier, introduced that client wheel. We're gonna show you how this starts to fill out as we go deeper into these relationships. Okay. The other thing too, that we wanna double down on in highlighting is these types of holistic relationships that you'll hear today, that you heard from Urban Grape, where we handle the personal and the business, colleagues, employees, family and friends. This is the norm for First Republic. This is what we do. You heard simple statements from TJ saying, "It's convenience. I'm known. I walk in, people understand who I am." You heard Hadley share that sometimes we get a no, and then we understand the roadmap forward. That's what this team does day in and day out, and they know they can rely upon one another. Let's walk through the timeline of this specific client opportunity. Similar to many of our opportunities, this came as a referral, right? You heard earlier in the day that the growth from the bank, 90% comes from existing clients doing more, and then also them referring their friends, family and colleagues. This is what happened. This was a client based in Boston, happy client. They referred us a new opportunity. We met with the leadership team of this company, and the first need that was abundantly clear was they wanted to have a financing program in place for their partners to be able to buy and expand their equity into this firm. When we know we've got an opportunity like that, we bring the experts immediately. Patrick Mackin on the team who is the master at designing these programs. Patrick, can you walk through? Sure. Thank you. How this came about. Thank you for saying I was a master. Yeah. The opportunity here was they had a program in place at another institution. It wasn't necessarily broken. The relationship wasn't broken, right? What was the pain point and what was the true need, right? What we found out is it could be a little better, right? Really, they were looking for an organization they could scale with, and they felt that they were just about to outgrow the bank that they were with. We brought in a team, me being one of them, Howard Noble, our Deputy Chief Credit Officer, the rest of the team, Todd, et cetera. What we did was we sat down with them. The beauty of professional lending is we can have the opportunity to not only understand how the firm makes money How the people that work there make money and how the economics of the funds or the equity interests work, and then we can design a custom solution around it. It took a team, and, I'm pleased to say it worked out very well. We ended up putting a program together that I believe, Andy, all partners participated in. Absolutely. Right? That the firm backstopped. That was step one. Step one. Perfect. Thanks, Patrick. All right, so step one is that. Now we've got these amazing opportunities, several new clients into the bank on the personal side. Tamara, can you walk us through how you start working with those individuals and how you start to deepen the relationship? Yes, absolutely. Thank you, Todd. As relationship managers, Andy and I were involved in the partner loan program right from the beginning. We helped to field questions, we gathered documents just to support the partners' loans, and we collaborated internally and coordinated the individual account opening process. Given the immense success of the firm, we knew that there was an opportunity to expand the relationship with these partners. We wanted to dig very deep. We scheduled one-on-one meetings, and we got to know them and their families and hear their pain points where there was a void. Through this process, we actually uncovered that they had needs that touched various aspects of the bank. For many of these partners, this was their first experience with First Republic, so we wanted to make sure that they had a lasting impression. The service we provided really drilled down to timely responses, immediate solutions. Sometimes we were just a listening ear. We were bankers that had a think outside the box mentality, and we were really there just to help make their lives easier. We were able to deliver this service because as colleagues of the bank, we felt empowered to make decisions in the best interest of our clients. I trusted that my colleagues felt the same way because that is our culture. Fundamentally, we know that a happy client leads to referrals. A happy client also leads to our clients wanting to do more with us. That's exactly what happened in this case, and Andy is going to speak about that in a moment. The partners introduced us to their families and their friends and their colleagues, and they became clients, and they became happy, and they referred business. There creates this endless loop of growth and success, right? In this particular success story, the results really speak for themselves. Great. Thank you so much, Tamara. Good afternoon. As my colleagues have said today, by taking a team approach and by growing one relationship at a time, we've achieved some really, really exciting success. Currently, we bank all eligible partners of the firm, of which over 90% consider First Republic to be the lead bank. Consumer deposits are in excess of $100 million. We've originated home loans for over 60% of the partners, including loans for primary homes, vacation homes, and investment properties. We've brought in our internal wealth management colleagues to assist with managing over $20 million in discretionary assets, as well as to assist with financial planning needs such as trust and estate planning, insurance services, and foreign exchange services. It is really, really important to emphasize, though, on this one point. Even though we've brought in these other colleagues to assist us with that one particular need, this team here has remained a constant in the relationship. We've identified the opportunity. We've assisted with selecting the person internally to help them with that need. Then we've also been involved in the sales process all along. Remaining that one constant has allowed us to remain as the primary point of contact for the relationship. Finally, due to the trust that we've developed with each of the individual partners, we received over $90 million in non-partner wealth management referrals. Really exciting. I would say that, you know, we're more than thrilled with the success of this relationship, and I'll look forward to bringing on more partners in 2023. Great. Thank you, Andy. I think that's an important piece too, because the pie keeps expanding. New partners get added to the firm. The firm has success. There's more opportunities. Speaking of that, as we get to know the decision makers of the firm, we deliver day in and day out. We know the CEO, the CFO of the firm who asked us about business banking. What can we do for their actual firm itself, both on the deposit side and the lending side? Ma rissa, can you speak to that? Perfect. Thanks, Todd. The way we're structured as preferred banker, what's unique is that I become the dedicated PB to each of these individual partners at the firm. I join in on these meetings with my colleagues to understand our clients' unique banking needs so that we can deliver seamlessly and help them transition from their current bank. As Todd mentioned, what's great about these programs is that we really get to know the firm's key decision makers, and this frequently leads to conversations on how we can partner with them on their corporate banking. The leadership team was impressed with how well we took care of their employees, and they agreed on a meeting with their finance team. We sat down with their CFO to understand their existing corporate account structure, to learn, you know, what was working well at their current bank and also some pain points they've run into. Tamara mentioned earlier, these pain points are things we hear often in these type of discovery calls. You know, simple things that we know we can execute really well on, reply times, streamlined account opening, and consistent point of contact. What really stood out was our unsiloed team approach. This is the group that knows their employees so well, and the fact that we'd be supporting them on the corporate side really resonated with them. They were pleased with our sophisticated offering and decided to move forward. Today, we are thrilled to be their lead and only corporate banking partner, where they maintain a business line of credit and over $200 million in stable operating deposits. We really look forward to deepening this relationship as the firm grows. Excellent. Can I ask you, Marissa, I'll ask you, how closely Patrick's in California, we're in Boston. How closely do we all sit next to each other? I'd say within yards. It's the same hallway. Why does that matter? We are such a flat organization, and we are able to execute on decisions in really short order. You know, we come together as a team when this client needs something, and that really is a value add for them. Yeah. If I could just add. Yeah, please. Neil Adam, who you've seen before. Do you wanna move to Boston? I would love to move to Boston. Neil Adam is on my team, also sits with them and is also involved in this relationship. Look, what we've covered, and again, what you heard from Urban Grape, these are just core elements. People wanna be treated well, they wanna be known, they wanna know that you can execute. A lot of our clients are entrepreneurs, they're investors, they're professionals, they have families. They don't have time to wait on hold. They don't have time to work with different people at different levels. They want one point of person who they can trust. They want a team that can execute and that enjoys working with each other. So that's what we bring day in, day out. Now you can see this chart here. It's almost all gold. We're sensitive that there's still one place that's not gold yet. But I promise you the team is working on it. The other piece here too is that by this team delivering the way they do, the pies keep growing, right? Because we keep getting more opportunities through that daily care, and it also spawns off new circles of client relationships with the referrals. Thank you for giving us the opportunity to share this story. We appreciate your time today, and I'm gonna turn it back over to Mike now. Thank you, team. Thanks for coming. All right. Thank you, Todd and team. We just have one final break for 15 minutes, and then we'll head into Q&A. I appreciate everyone's patience. Please be back at 3:15 P.M. Okay, everyone, if you don't mind please taking a seat. All right, we have two options. We can either do Q&A or go right to wine. What do you think? Wine. Can we- What was that, Steve? Wine? Did someone say wine with Q&A? That's a good idea. Yeah. Get it in the glass. Okay. Well, we have the Q&A. Thanks for waiting patiently to the end of the day. We really appreciate that. I would just ask if you do ask a question, if you could please state your name and firm before asking the question, that would be great. Who's going to start off here? Okay. Being bashful. Erika. Hi, Erika Najarian, UBS. Before we get to the strategy questions, I just wanted to get some of the outlook questions out of the way, if you don't mind. I just wanted to clarify the statement on the net interest margin. First, you said 10-15 basis points off of the 2.45% in the fourth quarter. Is that 2.30%-2.35% a full year number? And also as we think about that significant mix shift that you implied in terms of, you know, checking, going to 50%, you know, is that then mostly going to be made up with CD growth, or are you also looking at alternative forms of funding? To the first part of your question, yes, full year perspective outlook. To the second part, obviously, we've been very active in CDs recently. Historically, the bank has been involved in the CD market. We also have plenty of capacity to use the Federal Home Loan Bank because our level of usage is quite below where it's normally been. I'd say either of those would be options we could have to fill in given some of the migration that we anticipate would occur. Thanks. Hi, Steven Alexopoulos, JP Morgan. To follow up on that question. Mike, when we think about assets repricing with a lag and 10-15 basis points down, and we appreciate the transparency on margin, but how are you thinking about the NIM progressing? We're down 30 basis points somewhere around there, a little less for 4Q. Do we move down sharply in the first half of 2023 to get to that and then rise in the second half? Like, can you take us through how you see the year progressing, and when do the assets start benefiting us? Basically, when's the timeline when the NIM starts to stabilize? Mike Selfridge, do you want to talk about assets a little bit and maybe loan pricing? Yeah. What's happening relative to maybe recent before we go into that? Yeah. I mean, I'll fill in at least the asset side, and I would say we're getting a pickup in pricing. We're still seeing good volume. Obviously, it's more of a purchase market, but if you look at locks more recently, and the recent information I have is probably last week. I think for all real estate locks in all of Q3 was about 3.80%. Today, it's about 5.50%. So it's pretty good and still good volume. People are still buying homes. They're transacting. Single family, all of Q3 was probably 3.65%. Today, it's a little over 5%, maybe 5.15%. So we're getting there, and we're doing new transactions, and then the prime-based book is, and the variable book is increasing with Fed funds. Then sort of in the trajectory, if you think back to the outlook we gave with the Federal Reserve being a big part of that, and that the 5.25% that they get to happens by sort of mid-year, right? The first half of the year, you probably do see a little bit of a dip from the 2.45% for the fourth quarter. Then all else equal, it should flatten out a little bit. The benefit of retail CDs that we're doing, they will roll over relatively quickly, and you will stabilize your funding costs. The, as Mike said, the asset yields will continue to climb. If the Fed stays on that course, it feels like by mid-year, you're sort of at that level, and, you know, it's a drift from there, I think, a little bit up. Okay. Secondly, if I could ask one more? Steve, let me add to that for just a second, though. Yeah. This retail CD thing, I think we ought to spend just a second on because retail CDs are not just a funding source. They're a client acquisition source. It's something we haven't done a lot of recently because who wanted a CD at 1/4 point, right, or 1/2 a point? When we're out, and Anna's probably here in the back and Margaret, but when we're out in the offices, the offices now have more traffic now than they've had probably in two years of new clients coming in. I mean, I don't know how many we're doing per office per day. And what we're getting about half the time or more is checking as well. The retail CDs tend to be priced back. Retail CDs have the advantage of a person, a place, convenience, relationship, okay? That's a different client than we have in many other cases, but a good client, very good client in many cases. The retail CD strategy is a funding strategy, but it's also a tremendous client acquisition strategy. I'm gonna guess our households would go up half again as fast as they have in the last 12 months. The other question that I've gotten quite a bit sitting here today from investors is the 65% efficiency ratio guidance for next year. Could you help us think about in a very uncertain backdrop how much confidence you have in that? Is there a bit of a cushion built into that? Is that what you think you'll do? Maybe just give us some color around how confident you are that you could deliver on that in this backdrop. Yeah. Well, I know we've talked about this a lot. It definitely is the ratio, so the margin impacts it. I mentioned this earlier. We act, as you've seen and learned a bit from our team today, extremely collaboratively. We are very open and transparent, and we discuss it as a management team, as a group, frankly, inside the company the headwinds that face us. As a result, everybody leans in, right? Everybody finds and look for ways, how can I help? How can we help? I might ask Susie to comment a little bit because I know she is helping lead a team, a group of people who are doing this, and maybe talk about our confidence and what it is we're looking at and doing. Yeah. You know, the good news about First Republic, as you have all probably picked up today, is that people really are willing to look and lean in and find opportunities. You know, there's a number of things that we already have underway that we have a very high confidence in. For example, you know, we have quite a bit of growth projected into the growing project budgets that support IT and a number of other things that happen around First Republic. Some of those things we can change the pacing on. Some of those things we can do some of the prep work up front without taking the cost. You know, we found quite a bit of savings there already that we know we're going to achieve. We also are looking at things like headcount growth, and can we maybe reallocate people to support certain areas in the short term to just slow that growth down? We found quite a bit of savings already, and I would say that, you know, we still feel like we're in the first inning of that. Maybe if I can add to that, we talk about initiatives early on, and Susie had mentioned them as well. So far we have identified at least $100 million of planned spend, which we can defer beyond 2023. That's just an example of the teamwork and the collaboration coming together, and frankly, everyone leaning in to help solve this challenge. Just a question on the loan growth front. I know that on the mid-teens loan growth in 2022, particularly given the mortgage backdrop, you gotta assume that there's clearly gonna be pressure on the mortgage front. Can you maybe talk about where you're getting that growth as you look at 2023 in terms of the mid-teens, particularly if you see pressure on the mortgage front? What are the main drivers of the growth in 2023, and how does that differ from what you saw in 2022? I'll kick it off, maybe hand over to David and Mike. It's what the panel said earlier, sticking to our knitting, and we talked a little bit about today, CPR is coming down a bit, so a little less lock volume that's needed. Frankly, now it's more of a purchase market for us for obvious reasons. Refi has a lot of headwind. Having said that, people are still transacting. They're still going through what I call the inflection points in life. In some ways, they're actually qualifying themselves even more given the economic backdrop. Nobody goes down and doubles down on a house when they're very uncertain about their own financial situation. I would say, single family, multifamily, commercial, we're seeing opportunities, and then we're still picking up fund opportunities. Nonprofits, professional services is a big area for us. I think it's a number of things, John. I would say anything you want to add? Yeah. I would add a couple more points to that. One is we're always growing our relationship manager base, our business banker base, and they bring in new clients and grow the portfolio as well. Secondly, it's the opportunity in the market of other banks either going out of lending, certain types of lending, shutting their doors on something, shrinking their strike zone on types of deals they'll do, and which leaves more opportunity for us to pick up great new clients and great new business. I'd add just one thing if I could. Purchase market, the most important thing is certainty. Certainty of close, timing. You'll refinance, 60 days, 90 days, fine. Just hold the rate. Purchase, gotta have it closed in 30 days. What happens is we have a much greater opportunity to display our capabilities. The intermediary, often the real estate broker who suggested you check with First Republic, knows we're gonna close on time. We pick up market share. The second a market shifts to purchase, we've been through this for many times over the years, the second a market shifts to purchase, we get market share because we're more reliable. Hi. Thanks for all the detail in the presentations today. This is Manan Gosalia, Morgan Stanley. I had one follow-up on the NIM side, and then I have a separate question on credit. On NIM, when we think about the rebound in NIM once rates stabilize, how should we think about it given the convexity in the mortgage portfolio? Should we think about NIM rebounding fairly quickly and then stabilizing within a couple of quarters? Or should we think about a longer lead time for NIM to rebound? On the overall, a lot of it's gonna depend on how fast. Remember the one chart we showed after the Fed hikes, how fast it comes down? Well, right now, the market doesn't seem to expect that, right? If you just look at the forward curve, it feels like they're going to try and stabilize maybe at a little bit higher place. In that scenario, you sort of see incremental improvement because our retail CD money market are repricing a bit quicker, and the mortgage portfolio will sort of stabilize. If there's not a big refi incentive, we'll have an ever-increasing yield if it's a pretty stable environment. Got it. Then, you know, maybe a question for David. You know, the strength and consistency of the underwriting standards, you know, comes across over a long period of time. At the same time, you're investing and bringing in more of the next generation clients, and presumably, they have not seen the level of rate increases, you know, as they're putting on more mortgages. I guess, how do you balance the, you know, the need to bring in those clients versus balancing your underwriting standards? I wouldn't call it a need to bring in clients. I'd call it an opportunity to find the best clients for us. When we underwrite, as you say, we always underwrite very conservatively. We stress test our interest rates. Example, say, on a 10-year fixed rate loan, the note rate may be 5% or 5.5% today. We're going to qualify that borrower at 7% or 7.5%. We've added an extra layer of protection to make sure borrowers can withstand higher interest rates. We also make sure they have great liquidity, great jobs, great ability to service the debt, even if an unexpected negative event happens in their financial life. This part's really important, what David just said about the I was having a discussion earlier. The way we qualify prepares you for this type of scenario where rates go much higher. You know, if you're underwriting mortgages at 2.5% or 3%, we're still qualifying at 6%, 5%, 6%. We always have had this built in, I mean, frankly, since the bank was founded because you can't necessarily plan for rates to be that low forever, and you do want to stress test at initiation of the loan, not just after you've already made the loan. Yeah. Yeah. Ryan Nash, Goldman Sachs. This question is for either Mike Roffler or Jim. If I think about the message we heard, you know, not only today, but for, you know, for I think as long as most of us have been following us about consistency, right? Consistency of the model, consistency of the business. We're obviously entering a period of time as, you know, was articulated, that just looks very different from what we've seen for an extended period of time. I'm curious, just how do you think about the trade-off between, growth versus some of these cyclical pressures on the margin and funding? You know, I think back to times in the past where there was pressures when you passed $50 billion, you used some alternative scenarios. I'm just curious, how are you thinking about managing the consistency with the cyclical headwinds you're facing right now? Maybe I'll start and you can add on. I think, Ryan, we come at it from, as you've heard today, from the client's perspective, right? We wake up, our colleagues, there are many of them here. I know that some of our New York colleagues have shown up for the reception here shortly. We think about the client and what do they want to do? What are they trying to accomplish? If we can serve them in a manner that makes sense from a credit and a risk standpoint and a price standpoint, we're going to serve them. I think we've always thought about acquiring a household, deepening a relationship with that household. Over the long term, and as you heard earlier, some of our clients have been with us for 30+ years. There is tremendous value in that relationship over a long period of time, and the incremental might be a little less attractive right now. You know what? Over the long term, think of The Urban Grape story, where we've gone, or the last panel, where we've gone and expanded out from that one start of a corporate relationship. That's what we're here to do and serve. I think that's always the first thing on our mind versus, you know, is this the right environment to grow or not? The question really revolves around the client. Yeah, I think that's right. I think the fundamental issue here is one of the most important questions in almost all business discussions is over what period of time. We run the bank for forever. Our client—we get our clients and we keep them. What's the 30-, 40-, 50-year value of this client? That's kind of point one. Point two, there's a lining in every cloud. In this cloud, it's called others are going to pull back. It's part of the answer we gave on the home purchase. In this cloud, others are going to pull back. They already are, and it's just getting started. You watch these next six months. Services are going to go down, opportunity to differentiate ourselves is going to go up, and we're going to take in new clients. The other one is, I think on the young millennial clients in particular, they self-fund. You saw the relationship. They use very little capital. Accelerating that at this time is actually quite easy. This is a moment for us to further differentiate ourselves. We have to see through the temporary compression of NIM. When we come out the other side with, I'm going to guess, our household acquisition in this period of time, so call it 12, 18 months, whatever it's going to be, is going to be 50% higher than it would have been normally. Got it. Maybe, you know, one other follow-up on funding. I think, Mike, when you gave some of the guidance as it pertains to deposits, I think you said, checking or non-interest bearing remaining a little bit above 50%. I'm curious on your, you know, degree of confidence in that. How do you assess the risks of that? What incentives do you have in place to keep, you know, your depositors to keep their deposits in non-interest bearing, just given that obviously the opportunity cost of keeping it at those levels is as high as it's been in the last 40 years? Thanks. Sure. Maybe the second part of that, I mean, we've always engaged with clients on earnings credit rates, for example, other vendor programs where it incentivizes the client to maybe leave a little bit more in checking to offset some of those charges. We're very competitive, very attractive in that space. They also may leave operating balances in order. You know, certainty, the team you've heard from, the people you've heard from, they don't just call a call center number and have to go through a menu. They know where to go to get something done. There's value to that to the client. In terms of degree of confidence, we believe we haven't been below 50% since 2014, so it's been a while. The 72% was clearly unusual. We have seen average balances start to trend lower. They're not quite where they were back in 2018, 2019, but they're getting there. I think when you add in sort of a continued decline, maybe in individual average account size, but then the acquisition of new offsetting some of that, we feel like that, you know, low 50s is a good place to be sort of by the end of next year. Yeah. Chris McGratty from KBW. On the margin guide, what's the assumed deposit beta you're using for next year? Sure, yeah. We expect deposit beta to be in low thirties, and which is comparable to last cycle, we were in high teens, 9%-10%. Cumulative, yeah. Cumulative, yeah. Within the deposit repricing, you know, the wealth customers I presume are more rate sensitive. Maybe could you segregate where deposit pricing might be within portfolios? I'm trying to think if I would distinguish them that much, to be honest with you. I wouldn't. If you look at our balances, the vast majority are checking. They've dropped a bit, but they've remained close to that. So we don't really look at them as different. Yeah. Maybe one last one. On the fourth quarter, Mike, the implied efficiency ratio for Q4 is roughly in line with consensus, a little bit better. What degree of expense adjustments, reversals might be in that? I guess what might be the reasonable, based on your commitment to expense control next year, like, what does that imply for next year in terms of overall expense growth of the company? Expense dollar growth next year? Probably in the low double digits. On the fourth quarter, there's not a lot of reversal. There might be a little bit for incentive comp that comes down as the checking balances come down, but I wouldn't call it a meaningful part of our base. Thank you. Ebrahim Poonawala, Bank of America. I guess, going back to Jim, your comments at the beginning of the day around compounding value, and I think Susan talked about significant scale benefits. As we think about how this value accretes to shareholders and appreciate the consistency of that ROE, but over time, from a shareholder perspective, should we expect that ROE gradually moves higher and we kind of break out of the 10%-12% range to something higher or not? I think it's pretty hard to say. Right now, I wouldn't expect it to break out. It could. If we slowed down the growth, it'd break out right away. But the long-term value, I mean, the number we gave out on the percentage of households in the country of a certain size that we're banking is actually a stunning number. We've been at this 37 years. I think that's larger than people have been at it 100 years. Where's the ultimate value? What's the end game? What's the ultimate value? Where's the franchise value? As these young clients move through the life cycle, they compound, and we're acquiring them at almost no capital cost. $40,000 loan, $3,200 capital. $1 million home loan, $80,000 capital. So we have discovered. I've been doing this for 40 years. The first time we ever discovered a way to get clients better than home loans was this, the PLP and the PLOC. It's capital efficiency. It's multiples capital efficiency because of when you're getting them, and then they stay with you. We have ingrained into the system now a growth rate that is much faster than the historical growth rate, but it's only five years old, and it's about 35% of total net. Five years from now, think where they're gonna be. Think of their age from 38 to 43, 44. They're in their J curve. I think that for at least the foreseeable future, five, 10 years, you wanna stay right with that because you're gonna develop one of the great institutions in the world. Great. Can I get just one follow-up in terms of when we think about the expense outlook? I think, Mike, you mentioned efficiency ratio is the ratio. Should we think about, so expense growth vis-à-vis loan growth mid-teen, or should we think about checking account deposit growth as a better reflection of how expense growth could translate, could sort of evolve next year? Both those things will have an impact, right? Olga talked about earlier today, a portion of our compensation is volume-based. If there's a little less loan volume, there's a little less compensation expense. If your checking balances are, you know, let's say they're flat, you're not gonna have a growth in expenses associated with that. That's part of the Chris asked a question, the sort of low double-digit growth rate is you assume certain less incentives are lesser this year than they have been because you're not growing, you know, checking or growing loan volume. There is a definite sort of correlation with those items. Is one more powerful than the other in terms of influencing that? I wouldn't say so, no. Thank you. Hi. Terry McEvoy from Stephens. A question for Susie. First off, thanks for the reminder to check your bill before you buy that next TV. The real question is, when that call comes in, does the employee see the level of importance of that client, i.e. the profitability? Then given the discussion around headcount and efficiency, how much leeway does that employee have to solve that problem versus move on to the next task? Yeah. What I would say is that when the call comes in, we don't have a you know prioritization based on the profitability of the client, so we treat all the incoming calls equally. In terms of the discretion that employees have to resolve the client issue, they have full discretion to resolve those client issues. It really is a true empowerment at the front line to make sure that we're delivering whatever that client needs. Oftentimes, it can require multiple interactions after they've hung up with the client to get the final outcome resolved. We do try to be very disciplined about making sure we're tracking down to completion any client issue that comes up. Bill Carcache, Wolfe Research. I'll ask a question. How are you thinking about the margin impact of the HQLA dynamics that you discussed earlier regarding the reg- Yeah. Regulatory issues? Along similar lines, if we think about the margin, setting aside the cyclical sort of near-term dynamics that we're talking about, You know, for so long the story's been about earning asset growth, even in low rate environments, outpacing the potential for any margin pressure. As you think of sort of a quote-unquote steady-state NIM, if you will, does the earning asset growth of the business sort of approximate net interest income growth? Is that how you think about it? Any thoughts on that? Thank you for the question, the way you phrased that last part. I mean, on the first part, for the 2023 part, that does include a starting of what we're gonna need to build, as Olga mentioned, by early 2025, but it's not a big impact, I would say, in the current period or most recent coming period. What you described about when you sort of get through the challenge of 2023, let's call it, which is only about really what we're talking about margin, because credit, business flow, household growth, you'll come through with household growth, as Jim mentioned, probably as strong as it's been. Credit coming through whatever storm is gonna happen or challenge that might happen next year, very strong. You should have sort of margin net interest income growth stable with earning asset growth. Go back to, I think, 2019 to 2020 is a good example of this. Yield curve inverted. Margin sort of settled down. We tightened the belts a bit on expenses to get our efficiency ratio sort of staying within a reasonable range, and then from there, the earnings growth sort of leveled up for two years. Really, actually almost three years till this most recent time. That is the right long-term way that we're thinking about it also. It is a bit of a, you know, a little dip here and then, you know, the trajectory we've seen in the past. Hi, this is Ajay Grewal, JP Morgan. You guys do a tremendous job of acquiring clients. You do a tremendous job of keeping them happy. Great underwriting. I just wanna go to the line of questioning that Ebrahim had started about ROE. Since 2016, your ROE has consistently come down. If you normalize for the provisioning that has happened over the last year or so, it's just a little north of 10%. My question to you is, the incremental capital that you're investing, how should we think about the return on that capital relative to what you already have on the books? What kind of return are you getting on that incremental capital? You know, it's interesting. We've always thought of a 10%-12%, I think it was even said, 10%-12% like clockwork, safe, growing tangible book basis while delivering that stable return. Jim said it earlier. You could bump the ROE if we decided to stop hiring wealth teams, if we decided to stop growing, but that would get in the way of the most important thing, which is serving the client and their needs. Think of that last panel we had, and if we stopped on the wheel, right? If we stopped after three things and said, "That's enough because that's the maximum return we can get from that relationship," well, that would forego future relationships, referrals possibly, or deepening of those relationships. I think we tend to look at it as that stable return over time that compounds and leads to strong tangible book value return and consistency in all cycles. We've just happened to come through cycles, frankly, for the last decade that have been extremely good, right? I think we've always looked at it more on a, to Jim's comment, what's your timeframe and how long? If we deliver that stability over time, that leads to the consistent returns that we've had. I appreciate that, but when does it then flatten out? When does it stop going down? If you're putting incremental capital to work at between 10%-12%, there should be a stabilization in the ROE at some point, yes? It is stable. Uh, hmm? It is stable. I would say it is pretty stable. I mean, if you look at over a long period, I would say it is pretty stable, especially relative to the ups and downs you'll see elsewhere. That was that one chart that we had where it was 80%- Yeah. less volatile than our peer group. I think it was a peer group basis. Mm-hmm. Mm-hmm. Mm-hmm. It was 80% less volatile. We value stability very highly because it's the basis upon which we continue to do what we do. To go back to my comments on the younger generation, that millennial business is very capital light to bring them into the fold and get them up to about five or six products. That's almost a sea change in how we acquire new clients. Then Bob's business in his growth in wealth management is capital super light. Those two pieces of the growth puzzle are, in fact, somewhat different than they have been over the last 10 years. They have been building very heavily in the last five years. Their return is just really breaking out. You saw the growth rate in Bob's deposit numbers. In the wealth management flow out of the bank to wealth management, those are annual increases of dramatic nature. The other one is the 50%, 40% or 50% growth rate in the millennial and their growth rate, because they're coming from a small base. I think to your point, it's not inconceivable if you look five years, seven years ahead, that the ROE could go up as those two pieces of the business become a larger share of the total. Thank you. Hey. Jeff Muscatello from Douglass Winthrop Advisors. First, thank you. Today has been extremely helpful. I actually thought Todd and his team were talking about my company. We started as investors in FRC. We ended up using FRC as... You know, I personally used the PLP loan to invest in my company, then brought my wife over, now we have a mortgage. If anyone was doubting that this process works, it definitely does. Should we go to wine now? For both the wealth management and the loan book, you kind of seem like you're at a really nice point. You're kind of not too big, not too small. You're not necessarily tier three bank yet. As you're looking kind of three, five years out, what are some of the biggest hurdles that you see, as you kind of increase your scale, but also what are some of the potential sources of operating leverage as you get bigger? Want me to start? You can start. I would actually love to hear from. Well, look, the wealth management business, I think one of the things that's very important, the numbers are terrific, but one of the things that's really worked well in the wealth management business is the ability to really pick great teams, have enough time to integrate them into the organization. We typically hire 10-12 teams a year, and so they're very successful. They don't strain the organization, but they meaningfully bring to the bottom line. From an operating leverage perspective, and Susie can address this as well, you know, as we continue to invest in the technology platform, everything from our performance reporting to what we've implemented in terms of our CRB capabilities, the digital side, it just adds more leverage to the teams. You know, I'll give you a very simple task. When you're reporting clients' portfolios and their wealthy clients and they have assets held away with private equity firms, bringing that onto the report used to be a very manual task. Now it's an automated task. Those are all the things that take time. I think the real operating leverage is somewhat less people growth, but more importantly, the time for the teams to focus on, again, the breadth of the services we provide and the banking side. I don't know if you want to add anything. No, I think that's exactly right. I mean, there are so many opportunities that we're working on bringing to our teams that will add the exact kind of leverage Bob was just mentioning. Another one that comes to mind, for example, is, as you can imagine, a lot of our wealth management clients have a very significant number of alternative investments. The K-1s involved in that. Getting aggregated reporting used to be something that we almost had to hire dedicated people to get accomplished. Now that can be pretty much automated, and we're in the process of doing that. Bob's absolutely right that we'll be able to continue to see leverage. That's just within wealth. I mean, those opportunities also exist, extend more broadly across the bank. I think I might add onto that a little bit as well. Both culturally and strategically, I think, a challenge that is also a wonderful opportunity is one of the slides that was shown earlier. I think it was in your presentation, Jim. Think big, but act small. What I mean by that is, as we continue to grow, not just in assets, but also, in people and size, I think, a challenge we will have is resisting the urge to think big and act big, because what differentiates us is the acting small. That is the opportunity. Resisting the urge to have to centralize everything and continue to be focused and deliberate about empowerment and decentralization, especially in the front line and especially within the preferred banking offices and within our regions, and ensuring that we have the right people in place who feel empowered to do that. Jon Armstrong with RBC Capital Markets. Just maybe kind of a follow-up on this, but if you take the 15% growth and you project it out for five years, it's a double. So you're $400 billion-$500 billion. Is that possible with your current business model? Can you core fund that? Well, I would say it's absolutely possible with our core business model because service doesn't go out of style. You heard from James and Shannon, we have more than enough market opportunity in where we are, and we've only scratched the surface in some of those markets, frankly. Because of our service delivery, our people and how they interact with clients, your 15% is about a double every five years. My guess is if we did that math going back to 1985, that's about what's happened every five years. I think the strength of the markets, the strength of our service delivery is all what results in that and the relationships we have with clients. Jim, one for you. This has kind of been a master class on culture and, you have a great team, but I don't want to create or, you know, any HIPAA violations here, but how are you doing? I'm doing very well, thank you. How long do you want to be in the Chair as the Executive Chairman? Strategically, do you just prefer the company to continue to grow as is or again, does anything need to change? Well, thank you for the inquiry. I I appreciate it. I'm doing fine. Thank you very much. I love the position. As long as Mike and others will put up with me, I want to stay around. I find this to be incredibly creative. To be the very best is really fun. Look at the people you just saw here today. Who wouldn't want to bank with these people? It's an amazing opportunity. Your question about 15% growth, I think we have the model that can continue to do what we've done for so long. It's been about 15% pretty much the whole time. Now, we have a 250 barrier, you know, we have to deal with that, but that's LCR. The other pieces, as I think one of the slides showed, we're in pretty good shape. I think that the. We're developing and have developed one of the finest client service organizations in the country. It happens to be a bank. I think that's where the pride is, and that's where the fun is. I love it. I'm having fun. As long as I'm useful, I'll be around. Thank you. You've had a couple questions about the impact of driving growth on your profitability, obviously next year, but even kind of longer term. I was wondering if you could step back and think about, say, 10 years from now and growth has slowed to, you know, a low or mid-single digit rate like most banks grow at. What sort of efficiency ratio might you run at in that scenario? It's an interesting question because I'm gonna go back to I wasn't even at the company yet. One of our former directors, Barry Merrill, probably, I don't know, 2001 or 2002. Yeah. The story goes that he said, "What you just described is harvest mode. Well, when do we go to harvest mode?" Right? Jim's chuckling 'cause he remembers the conversation, if I had to guess. It's a fair question. I think what we see is the markets and the client service and the segment we serve, there's no harvest mode on the horizon. That theoretically 10 years from now question, you know, you probably would reduce your efficiency ratio because you wouldn't be investing for growth like we are now. One of the great things we do is invest for the future with the wealth management business, the next generation business. They're all parts of the organization to seed that future growth. While it's a great question about 10 years from now, we don't see the runway running out because of the strength of the market and the brand, and frankly, our people that you've all, you know, heard from today, who really drive that with our clients. And if I can- 25 years from now? The third CEO after me can answer that question. What is your target profit on a client basis? You're driving a profit million. See- -Reinvestment. Yeah. Give us an outline. How profitable is it if you weren't investing? I don't mean to be evasive, but we think about the client first and foremost in the next deeper relationship. I'll answer it this way. If we could print 12% ROE from now for 25 years, and we could compound, to use John's 15%, me and the next two after me will sign up for that deal every day. Keep the quality. Keep the credit. Yeah. Keep the NPS where it is. If I can add on the efficiency ratio, if Bob and his team continue to grow the wealth management business. Yes. As a percentage of revenues of the bank, that wealth management business typically have a high efficiency ratio but less capital intensive. That can have an impact. That'd be a great trade. Yeah. I think we have time for about two more, and I see Erika here and maybe John next, and then we'll have plenty of time to talk to management and the bankers and wealth management folks afterwards. I'm sorry to prevent everybody from wine, but I have a two-part question on business banking deposits. It's become a bigger part of your business than, you know, 10 years ago. A couple of questions. Number one, could you give us a little bit more detail in terms of the composition of those business banking deposits? I think that you know, there's sort of a two-part, you know, disquiet among investors. Number one, you know, as we think about a potential liquidity crunch with the Fed raising rates and QT, you know, they're now thinking about, you know, the velocity of those deposits that are very different from the consumer. It'd be great to understand, like industry, fund, you know, deposits to funds, and also operational versus non-operational. That gets me to the second question. I'm sorry, this is two parts. Number one, you know, can you stay within 10%-12% ROE as you cross 250 and all that implies in terms of having to be more liquid? I forgot my other question, which is good. I can start with the first. Business banking is bigger in numbers, but it's still about the same percentage as it was even 10 years ago. When you heard stories like Urban Grape and our client back there, we're looking at a few things. The consumer household that's behind the business, the business itself. If you look at the total business banking, households we have today in deposits being about 63% of our total deposits in business, I think of it as a few ways. Delighted client, they're growing their own balance sheets, and then no one segment is more than 11% of our total deposits. Within that, we obviously have private equity, we have nonprofits, we have venture capital, we have a lot of professional services, doctors, lawyers, accounting firms, wineries that you heard. It's a pretty diversified deposit base. As far as the flows, there's a certain amount of working capital that is DDA to run the business. As Mike alluded to the earnings credit rate, I think there's some embedded Embedded rate within the deposit base of business that's always been there. We're not a nickel and dime type, if that's the right word, organization. We offset with a high earnings credit that's now 2% all those fees that tend to drive clients crazy. I think it's stable and it's been inching down. I don't know where it ends up. Companies are a little more sophisticated in certain categories. Maybe the venture-backed tech companies have been a little more efficient with their idle funds. We don't break out sort of operational and idle. That would be the one segment I'd say that has. They tend to have a little more idle cash because they raise big rounds and burn it off and raise another round. Other than that, it's stable and diversified. On the second question, based on sort of our review and what we think we have to do, we do believe it'll stay within that 10%-12% band. Sorry. Thanks. John Pancari, Evercore ISI. Just one quick last two-parter, I promise. The first on that, Mike, on the expense growth that you mentioned, the double-digit expense growth, is that, did you mean fourth quarter 2023 versus fourth quarter 2022? Full year 2023. Full year 2023 versus full year 2022 double-digit expense growth? Yep. Okay. I said low- Reve- I said low double digits. Low double digits. Sorry. Against revenue To be clear. The revenue growth implied in that is? I think I would say we provided a pretty good NIM outlook, and I'd use that for you to assess the revenue growth. Sure. Thank you. Good. I tried. All right. Lastly on the capital levels, how are you thinking about what's a reasonable, if we can go with maybe a leverage ratio and a CET1 ratio? Yeah As we think about capital here and the likelihood of a raise? I'd say this, and this is actually a good question to end on. We've always had a very methodical approach to capital raising, as you've seen. You know, last year when the markets were much more attractive, we were very active because we always wanted to raise in advance because you don't know when it's gonna get harder to raise capital. Right now it would be a bit harder. The last transaction we did in August was very timely for making sure we can continue to serve clients while not accessing capital. You know, our goal is always to be for up to two years. The reality of it is, we're also agnostic, as you've seen over the years. We will gladly go to the preferred market versus common because they both assist the leverage ratio. You know, in terms of levels, I think you've seen us run around 8% on leverage. Maybe it was a little bit below that sometimes, but it's very much based on what our sort of future business prospect outlook looks like for growth as to when we come back. We raised in August, and so we feel really good about where we're at. Great. Great. Well, thank you all very much for a wonderful day. We hope that you got a deeper understanding of the bank's business model, culture, client service, and most importantly, our team with over 400 years of First Republic experience alone, you can get a feel for as, I think, John said it, a master class in culture. Also getting to hear from a client. We have many clients just like The Urban Grape, who would gladly tell you and take all of the time out there to tell you about their terrific colleagues and all that we bring. We are very bullish on the long term. We know there are some short-term, you know, challenges that everyone, frankly, is facing right now, but our long-term prospects have almost never been stronger. I wanna thank the team for a wonderful day, and I hope you can enjoy the reception a little bit, and meet some of our colleagues from New York. Thank you all. With that, I'm gonna turn it over to Kellie Abreu. I've almost forgot the most important part. Thank you, Mike. We can end the webcast now. Thank you all.