First Republic Bank

Thank you. And welcome to First Republic Bank’s first quarter 2017 conference call.

Speaking today will be Jim Herbert, the Bank’s Chairman and Chief Executive Officer; Mike Roffler, Chief Financial Officer; Mike Selfridge, Chief Banking Officer; Gaye Erkan, Chief Deposit Officer and Chief Investment Officer; Bob Thornton, President of Wealth Management; Mollie Richardson, Chief Administrative Officer and Chief People Officer; and Jason Bender, Chief Operating Officer. Before I hand the call over to Jim, please note that we may make forward-looking statements during today’s call 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, including the Form 8-K filed today, all available on the Bank’s website. And now, I’d like to turn the call over to Jim Herbert.

Thank you, Dianne, and thanks to everyone for joining the call today. It was a strong first quarter, with strong growth on all fronts.

Year-over-year revenue grew 16% and tangible book value per share has grown 20% in the last year. We were strong across the enterprise, let me share a few highlights.

Year-over-year total deposits have grown 20%, total loans have grown 19% and wealth management assets are up 23%, they now exceed $90 billion. Loan origination volume was very strong in the first quarter.

It was in fact our best first quarter that we’ve ever had. We also have a robust backlog going into the next quarter and foresee a good spring home buying season.

We’re quite pleased that net interest income are our primary revenue driver has grown 18% year-over-year. At the current point in time, we consider ourselves to be somewhat later in the credit cycle and we’re paying even additional attention to prudent lending and credit quality.

To that point, our credit quality continues to be excellent. Non-performing assets were at a very low 7 basis points.

Net charge-offs for the quarter totaled only $0.5 million or a single basis point. We’re also focused on remaining very strongly capitalized, which is another core strength and focus of First Republic.

Year-over-year growth in our regulatory capital was 31%. We take an opportunistic approach to accessing capital markets and the past five quarters have represented a particularly strong set of opportunities.

Over the past 15 months we’ve accessed the capital market six times raising $1.4 billion of regulatory capital, net of the redemption of our Series A 6.7% preferred stock. On March 31st, our common equity Tier-1 ratio was 11.2% and our total risk based capital ratio was 15%, both ratios are stronger, despite the overall growth than they were at the same time last year.

While this strong capital position and these raises have a slightly dilutive effect on short-term earnings, it positions us very well for continued growth opportunities ahead. As everyone knows, we tend to look long-term, we play the long game and this capital raising has been very much in that regard.

We’re well-positioned today for going into our current capital, along with well-protected against future uncertainties. First Republic continues to succeed by executing a simple business plan, focused on excellent credit, strong capital at all times and most important of all, exceptional differentiated client service.

Now let me turn the call over to Mike Roffler, our Chief Financial Officer.

Thanks, Jim. I’d like to cover revenues, net interest income and margin, efficiency ratio, expenses related to Gradifi along with income taxes.

We’re pleased to report another strong quarter of revenue growth. Revenue was up 16% compared to a year ago, driven by strong activity across the franchise.

As Jim mentioned, we are focused on growing net interest income and are very pleased it is up 18% year-over-year. As we mentioned on our last call, we are no longer reporting net interest margin on a core basis.

Turning to the first quarter, our net interest margin was 3.13%, compared to 3.16% in the fourth quarter. We would note that the fourth quarter included a 3 basis point benefit to the margin due to the positive impact of a special FHLB dividend.

Excluding such benefit, our net interest margin has remained consistent. Also during the first quarter, our loan yields were down by 1 basis point.

This was entirely caused by reduced benefits from prepayment penalty income and purchase accounting accretion. These two items reduced our loan yields during the quarter by 4 basis points compared to the fourth quarter.

Importantly, the contractual loan yield on our portfolio at March 31st increased by 5 basis points compared to December 31st. This increase was due to the recent rise in the Fed funds rate, our adjustable loan rates and new loan originations in the first quarter at a modestly higher average rate than the existing contractual portfolio yield.

Regarding expenses, the efficiency ratio for the quarter was 63%. First quarter expenses are typically higher due to the seasonal impact of elevated payroll taxes and employee benefits, which added about $14 million to our first quarter expenses.

Without such seasonal increase, our efficiency ratio would have been about 61%. The first quarter was also impacted by higher expenses from the hiring of several successful wealth management teams, which Bob will cover shortly.

Additionally, we incurred a full quarter of expenses from Gradifi, which we acquired in December of last year. Jason will talk more about this significant long-term growth opportunity.

As we build out the platform, we expect expenses associated with Gradifi to be $3 million to $5 million per quarter through this year. Turning to income taxes, our effective tax rate was 17.2%.

For the full year, we continue to expect the effective tax rate to be in a range of 17% to 20%. Turning to our share count, the first quarter had the partial impact of our March common stock offering.

Using yesterday’s stock price and ending March shares outstanding, our diluted share count estimate for the second quarter is about a $162.6 million. Finally, we’re very pleased to have increased the quarterly dividend by $0.01 per share to $0.17 per share.

Now, I would like to turn the call over to Chief Banking Officer, Mike Selfridge.

Thank you, Mike. I’ll cover overall lending activity, business banking, our multifamily and commercial real estate portfolios, and economic conditions in our markets.

Loan origination volume was $5.6 billion during the first quarter. This was our best first quarter ever.

Loan volume was up 17% compared to the first quarter of last year. Single-family residential lending volume was 40% purchase and 60% refinance during the quarter.

While loan demand is strong, loan pricing remains very competitive. As a reminder, we won’t compete on lose our credit standards, but we do compete on pricing to acquire new high-quality relationships and retain existing ones.

In a rising rate environment, as we shift more to purchase activity, our ability to execute effectively and deliver exceptional client service is a competitive advantage. Business banking had another good quarter.

Year-over-year business loans outstanding were up 17%. Business banking also continues to be a very important contributor to the deposit franchise.

Business deposits were up 22% compared to a year ago and business deposits continue to represent 53% of total deposits within average rate paid of 6 basis points. Our multifamily and commercial real estate portfolios continue to perform very well and credit quality remains excellent.

We would note that most of our multifamily and commercial real estate loans are typically made to existing clients with whom we have a private banking relationship. The medium size of these loans is quite modest under $2 million.

We apply very disciplined underwriting standards to multifamily and commercial real estate lending, and our loan to value ratios have remained in the low 50% range. Non-performing assets in multifamily and commercial real estate at March 31st were less than 5 basis points of such loans.

Turning to geographic markets, economic conditions are very good across our footprint and our clients are quite active. In our largest market, the San Francisco Bay Area, the diverse and very dynamic economy continues to be quite strong.

Residential real estate prices are stable, with the market that remains supply constraint. While the San Francisco Bay Area represents just under half of our total loan portfolio, our markets in New York, Southern California, Boston, Portland and Palm Beach also continue to perform very well.

Economic activity in our regions overall tends to be stronger than the rest of the United States as a whole and we continue to benefit from this strength. Overall, we are very pleased with the quarter.

And now I’d like to turn the call over to Gaye Erkan, Chief Deposit Officer and Chief Investment Officer.

Thank you, Mike. We’re pleased with the continued growth of both our investment portfolio and deposit franchise.

In terms of investments, our total securities portfolio increased to $16 billion and represented 21% of total assets at the end of the first quarter. In the fourth quarter we achieved our long-term objective of growing high-quality liquid assets to at least 12% of average total assets.

As discussed, we expect to maintain around this level now on an ongoing basis. At the end of the first quarter, high-quality liquid assets including eligible cash totaled $10 billion.

In terms of deposit gathering the first quarter was another very strong quarter, supported by growth across the franchise in consumer and business banking. Total deposits increased to $61.2 billion, up 20% compared to a year ago.

We are very pleased that our growth in deposits fully funded our loan growth over the same time period. At March 31st, checking deposits represented 63% of our total deposits.

The average rate paid on deposits during the quarter remained at 15 basis points consistent with the prior two quarters. Private wealth management also continues to be a meaningful contributor to deposits, both in terms of sweep accounts, as well as the growth of deposit relationships with wealth management client.

And now, I would like to turn the call over to Bob Thornton, President of Private Wealth Management.

Thank you, Gaye. Wealth management had a strong quarter.

Wealth management assets as of March 31st were up 23% year-over-year, driven by both net client inflows and market appreciation. Wealth management fee revenues for the quarter were up 13% compared to a year ago.

This quarter’s fee revenues do not yet include the benefit of the significant growth in assets that occurred during the first quarter. We’re also very pleased to have added several significant wealth management teams during the quarter.

Typically, we immediately incur the salary and recruiting expenses of these teams, while the revenues associated follow a quarter or two later. And as Gaye noted, wealth management continues to be an important contributor to deposit franchise.

Sweep accounts totaled $5.3 billion and represented 9% of total deposits at the end of the first quarter. These accounts have an average balance of only $150,000 and are also highly diversified.

The robust growth in assets under management give us strong momentum going into the second quarter. We continue to see opportunities to recruit additional investment professionals to First Republic, as well as deepen our existing wealth management and banking relationships.

Our relationship based, client-focused model, which is fully integrated across our wealth management banking teams allows us to fully server clients’ financial needs. This integrated approach continues to be a key competitive advantage.

Overall, we’re very pleased with the growth in wealth management. And now, it’s my pleasure to turn the call over to Mollie Richardson, our Chief Administrative Officer and Chief People Officer.

Thank you, Bob. Let me take a moment to talk about community engagement lending initiative, our efforts to acquire the next-generation of the Bank’s client and our continued commitment to our people.

Our Eagle Community Home Loan program, which offers special fixed rate, dedicated bankers and customized service to underserved minority areas continues to grow very nicely. In addition to our Eagle Community Home Loan program, which is only one part of our overall community engagement efforts, we also focus on substantial outreach on investments in housing, financial literacy programs, philanthropy and volunteer work by First Republic employees.

Building our next-generation of clients is another key focus for us, as we look to continually seed the banks future growth opportunities. We look for innovative ways to acquire new clients earlier in their careers often before they have purchase their first home.

To such innovative and highly effective solutions, include our All-in-One Student Loan Refinance program and our Professional Loan program, which gives employees a way to invest in their firm. Today we have over 150 programs in place across our footprint.

Together these programs provide a strong channel through which we acquire a growing number of clients each year. Turning to our employee engagement efforts, providing a competitive benefit package is just one way we acknowledge our extraordinary people.

We recently launched a new Paid Family Care Leave benefit. Our regular part-time and full-time employees who have completed at least one year of service with the Bank are now eligible for six weeks of Paid Care Family Leave annually.

We are also pleased to now offer House Advocate, a benefit that provides access to medical support professionals and related insurance assistants. This service helps with the range of needs from finding the right doctors, specialists and hospitals to scheduling appointment and securing second opinion.

Finally, we are delighted to see enrolment in our Student Debt Repayment benefit administered by Gradifi, continue to increase following a very well received launch this past summer. We now have over 600 employees enrolled in this valuable benefit.

Caring for our clients begins with caring for our people and these programs are just a few of the ways in which we do so. Now let me turn the call to Jason Bender, Chief Operating Officer.

Thanks, Mollie. I’d like to provide some perspective on our ongoing investments and service, as well as talk about the opportunity we have at Gradifi.

At First Republic exceptional service is what allows us to grow consistently and safely. As we have discussed on prior calls, we measure our client satisfaction with our service through our net promoter score, which remains more than twice as good as that of the U.S.

banking industry. Client service has been at the heart of our business model and our long-term growth strategy since the Bank was founded.

Satisfied clients do more with us and they refer their friends and colleagues. Our ability to continually deliver this high level of service, now and into the future requires ongoing investments in our people, operations and infrastructure.

For example, among other key operational investments, we will be launching in 2017 a new loan origination system. This next-generation technology and the process improvements to go with it, will allow us to originate loans more effectively and with greater convenience to our clients.

We’re pleased to support our strong safe growth, while maintaining exceptionally high levels of client service through this type of consistent investment in the franchise. Let me now take a moment to talk about Gradifi, which we acquired in December 2016.

Gradifi is the leading administrator of corporate HR-based student debt repayment benefit plan. Gradifi enables employers to make a direct monthly contribution to pay down employee student loans.

As employers compete to acquire and retain talent, they increasingly realize that offering a student loan repayment benefit program is a competitive advantage. As the leading administrator of such benefit plans, Gradifi continues to add new employers and their employees each week.

With Gradifi, we believe we have once in a generation opportunity to address the student debt challenge, which grows invisibility every day. Through this partnership, we can establish a position in this entirely new market and add another channel to build our next-generation of clients.

And now, let me turn the call back to Jim.

Thank you everyone. Overall, it was a good quarter, marked by very robust growth across the franchise, continued excellent credit quality and a very strong capital position, in fact even stronger than it was at the same time last year.

Our culture of extraordinary client service and care continues to be the key to our growth. The growth doesn’t come from acquisition of new clients as much as it comes from the growth of existing clients and their direct referrals.

Thank you for joining the call. We’d like to open for questions now.

Hey. Good morning, guys.

This is Travis Potts on for Casey. Just starting on the HQLA bill this quarter, looks like you went up to about 13.5% as a percentage of the total balance sheet.

Can you just talk about the strategy there and kind of why you’re going past that 12% threshold you had talked about and kind of how high we can see that number go?

Sure. Hi.

This is Gaye. The HQLA ratio, the HQLA level includes cash, eligible cash and our cash is a component in HQLA, which may fluctuate quarter-over-quarter and actually the -- if you strip out the increase in cash from the end of fourth quarter to the end of the first quarter, you would see that the HQLA ratio would be right around 12.5%.

So we do expect to maintain above 12%, while cash may fluctuate, HQLA securities portfolio will be a larger component of that ratio. Thanks.

Right. So, it’s kind of a little bit more about the liquidity from maybe the capital raises than anything else.

All right. And then...

That as well as the strong deposit growth we have seen as well. We are very pleased with the deposit growth in the quarter.

Got it. And then moving to wealth management, it looks like kind of fee capture rates declined a little bit across most our areas.

Can you talk about where you’ve seen that and kind of what drove that?

I guess, what I -- this is Bob. I’d say, overall, we are -- we’ve experienced very strong growth in the quarter.

One thing I’d probably note is year-over-year, while our assets were up about 23%, the revenues were up about 13% and that really reflects the fact that I mentioned that the asset -- quality of the asset for this quarter was not in the -- were not in the first revenue quarter. The one thing I probably would maybe share a little bit more detail on is around the brokerage revenue.

Brokerage revenue consists of our attritional brokerage activity, money market, mutual funds and insurance. Insurance is going as part of our business and in fact in the fourth quarter we had quite a lot of insurance activities, people sort of met year-end planning goals to the little more seasonal during the fourth quarter.

There is also an expense that was previously recorded as revenue, it’s now are just recorded as an expense credit, so that was an adjustment of about some $50,000. So that impacted a little bit of the growth in the quarter.

Got it. That’s helpful.

Thank you. And then, just a last one I had on the refi production this quarter, I was wondering if you had the refi purchase split?

Yeah. The part -- the split was 40% purchase, 60% refi.

Perfect. Thank you.

Hey. Good morning, everybody.

Good morning.

I wanted to start on the loan originations, given the mid-quarter update that was provided with the capital raise, it looks like March is over $2 billion of originations. Can you talk about what drove the acceleration in the back half of the quarter and are you seeing that momentum continue so far here in 2Q?

To some extent, Steve, your numbers are about right, I’d have check in but it sounds about right. It was very strong.

But it’s all show the end of the quarter, that’s always a little bit of a raise, but we are also -- at least in the west March is the beginning of the spring purchase season, okay. And so you get more and more closings beginning to pickup.

To some extent, that number is driving our comment about what we think will be a pretty robust spring season.

Okay. Can we be still comfortable with the mid teens loan growth for the full year?

Yes.

Okay. And then I had a question on the margin, the yield curve is compressed quite a bit since early March, relative to the 3.13% FTE NIM in the quarter, maybe for Mike Roffler, where is that new money NIM currently tracking?

So the -- in the year -- during the quarter and even in March, our loan yields were holding up pretty well. We were slightly above sort of the portfolio yield on average, obviously since quarter end, it’s obviously changed and will adjust the competition as appropriate, given the curve is flatten, but it held up pretty good throughout the quarter.

Okay. And then deposit costs were flat again this quarter, maybe for Gaye, with a couple of Fed rate hikes recently, are you seeing any pressure at all to raise deposit cost?

So as you have mentioned, we’ve demonstrated our ability to meaningful lag increases in the short-term interest rate. The past few quarters you mentioned we were stable at [ph] 15% (26:44) and over the past years there were actually three Fed hikes and we only increased by only 1 bp.

Given the diversification of our deposit sources, the high level of checking as a percentage of total deposits and the relationship nature, we do expect to continue to lag increase in interest rates, while there may be a very modest like moves in the deposit rates, again we do expect to lag meaningfully.

Okay. And if I could squeeze one more and maybe for Mike Roffler, you mentioned Gradifi, we should look for $3 million to $5 million of expenses per quarter.

What was the level that we had actually here in the first quarter?

It would have been just slightly under $3 million.

Okay. Perfect.

Thanks for all the color.

Let me piggyback on that for one second, Steve. One of the things that’s going on in Gradifi is that, first of all, we’ve just -- we only own it now for 90 days or so.

We now have kind of figured out their run rates and so on, we hadn’t really figured those out. And importantly, a big part of the core run rate of loss is driven by our commitment to marketing.

We could expand it or we could contract it. What’s going on is that we’re trying to find the middle ground on the marketing of the new product, including sales within the company, which we’re beginning to get fairly good at, actually fairly quickly, I’m delighted in terms of our relationships with businesses that might use their service and then we’re having -- we’re basically finding a balance, the proper balance for other marketing initiatives but more classical nature.

They’re having a pretty good success rate on booking new clients and new companies, but this is going to be an investment for the next couple of years for us. The thing that I think is possibly underappreciated is, it is clearly a potentially major feeder for our All-in-One Student Loan Refinance business and we have not even tried to do that yet.

Okay. Terrific color.

Thanks, Jim.

Thanks.

Great. Thanks.

I guess, maybe just little more broadly on the margin. I mean you guys within, at least with the micro averaging of our data been certainly at the top half of Banks with asset -- in terms of asset sensitivity.

But given the couple of the rate hikes we’ve seen, I guess, the improvement in margins been a little bit weaker than I and maybe some others have expected. And it could be, obviously, they were seeing with the reported and not the core anymore, the NIM.

But when we think about sort of what are some of the reasons for why it’s been little weaker, because obviously you are holding deposit cost down and then how should we think about sort of the expectation for NIM going forward?

Ken, I think, I’d say two things. One, you’re right the core GAAP maybe transition, and I think, I talked about this in the comments just this quarter alone, a little bit of less prepayment income in purchase accounting accretion knocked the loan yields down by 4 basis points, which is not insignificant.

When you add those two together from a dollar standpoint it’s $5 million lower in revenue this quarter versus Q4 and so that is a meaningful number. Second, the other thing I comment is, we always have focused on stability and consistency over long periods of time and so issuing 30-year subordinated debt in the quarter does have a little bit of a carry cost to that.

In the fourth quarter we extended some of our Federal Home Loan Bank fixed rate term advances, those things have an early cost, but then they protect you in the future. And the last point I’d make is, our sensitivity has always been a bigger impact in year two than year one, given a growing balance sheet of loans and a growing balance sheet of investments and we’re focused on stability over time, when you look at our chart sort of 3% to 3.25%, and importantly, growing net interest income is really what allows us to keep investing in the business and in the franchise and that’s where our focus lies.

Got you. But on a go forward basis is 3% to 3.25% is still the right kind of range to think about, because obviously you get the asset sensitivity piece from higher rates, but I totally understand like it’s standing out liability duration, et cetera?

Yeah. We are focused on stability of that range, that’s absolutely correct.

Okay. Perfect.

And then just on the expense side, obviously a little higher this quarter. Just if you can just dump it down for me a little bit, like what’s the right range going forward from here?

Is -- I think last I heard it was in the low 60s, is 63 in the low 60?

So, we would consider 63 to be low 60s, yes, it is elevated a little bit this quarter, because of the seasonal payroll taxes, so we do feel like low 60s is still the right range for us to operate in.

Got you. Okay.

So, all right. Understood.

Okay. Thank you.

Ken, this is Jim. Let me make just one added point on the last point.

We’ve got two investments that are going on that are little elevated from our normal. Gradifi, we just went over.

The other one is Bob Thornton’s comment on wealth management. First Republic has succeeded in becoming, thanks to Bob and his team’s efforts primarily, but the whole organization, a particularly desirable place for teams -- wealth management teams to migrate too.

Those teams are coming in, we had three I believe, Bob, in the first quarter in a fairly meaningful way. When you hire teams you always have upfront costs and if you look at it on a 12-month four quarter basis, the first quarter of hire is always negative on a team.

So the more we bring-in, in any given quarter, the more we are investing in the business. And then the second quarter kind of breaks even the third quarter you make money, fourth quarter you’re off to the races.

And so it’s about a one year activity, if you think about each team you add. The more core opportunity we have, the more we’re going to incur that kind of expense pressure upfront.

So we’re -- but we’re, as you know, we play the long game and the long game is to get the best teams you can possibly get in here when you can get them. And so we don’t mess around with timing.

We just bring them in when we can.

Understood. But, I guess, I would sort of also imply that, as you keep hiring teams, you’re also going to keep this for that upward pressure on efficiency, without imagining you’re going to add more teams over time?

That’s correct. And that’s what we were -- that’s the point I was trying to make, you said it very well.

Okay.

And the other thing about those teams is, they generally don’t get to cross selling banking for a while, because they are focused entirely on bringing their book over. And -- but we’re -- what we’re having is extraordinary success in cross selling into the banking side over a period of a couple of years.

All right. Thanks a lot, Jim.

Thanks.

Hey. Good morning.

Thanks for taking my question. Maybe you’re looking for a little bit of color on the originations in the commercial business portfolio down a little bit sequentially and also the net growth in the loans outstanding for this.

Is this primarily private equity capital call or any kind of change in the business, will be great?

So on the C&I side, no change in the business, and the first quarter tends to be a little bit slower for us, it was a quite an active fourth quarter. Capital calling activity, the utilization rate dropped another percent and I would note though that the commitments year-over-year are up 22%, we’re acquiring new clients and we feel good about the pipeline where it stands today.

Is that your question on the C&I side?

Exactly. Yeah.

Okay.

And then maybe just a quick one on the gain on sale margin, obviously a small component of the earnings. Well in terms of the gain on sale margin going to 50 basis points, any color in terms of whether this is a sustainable level or should we be expecting the kind of 10 basis points to 20 basis points that we’ve been seeing for the past year or so?

10 basis points to 20 basis points is probably more realistic range going forward, but as we’ve commented on other calls that gain on sale can bounce around a bit from quarter-to-quarter just based on market rates.

Okay.

If we can keep breakeven are better on a raising rate environment, we’re really happy.

Understood. Thanks for taking the question.

Okay.

Hey. Good morning.

First one on expenses, the comp line, I know you talked about the seasonality this quarter, but with full run rate of Gradifi in that $3 million to $5 million and thinking about how that transition from first to second has been in the past and should we assume flattish to maybe slightly up on the comp line, is that fair for 2Q?

Yeah. I think that’s right.

Typically you’ve seen it comeback a little bit from less payroll taxes and then impacted by either production volumes or new peoples, so sort of flattish to slightly up make sense.

Okay. Okay.

And then on the coverage ratios, reserves down a 1 basis point, I think you guys have talked about in the past been in that 60 basis point to 65 basis point range, is that still the goal going forward?

Yeah. I think we’ve been sort of 58 basis points, 59 basis points, 60 basis points.

It’s really a function of mix of portfolio as Mike Selfridge mentioned. Our business loans were just up modestly.

They obviously get a higher reserve factor than single family does, so it’s more a mix driven, but we feel good in this range going forward and it could tick up a little bit if mix changes.

Okay. And then just on the wealth management side, it does appear that your revenues tied to that AUM wasn’t fully recognized at least that increase in the first quarter, I assume that’s coming, but can you talk about the opportunity to pickup more teams, it sounds like -- and where they coming from, it sounds like you might be winning some from Wells of late, but just curious what the opportunity is there and what inning we might be in?

I think one of the reasons why we’ve been very successful to attract teams from the best firms on the street and around the country is really because we have a model that delivers all the capabilities and sophistication of services of sort of the biggest firms, but really of the benefit of a boutique, great banking services, that’s very attractive to our -- to advisors. And we -- as you saw we had three very strong hires this year, we have a strong pipeline of additional hires.

I just think we’re unique option for teams, and I think, we’ll still see some very good hiring opportunities as we move throughout the next 12 months.

Okay. Maybe just a housekeeping one, do you have the taxable equivalent adjustment in the quarter, we could back into it, but great to have it on a dollar basis?

Sorry, I do not have that right in front of me.

That’s okay. I’ll follow-up.

Thanks.

Hi. Good morning.

This is actually Timur Braziler filling in for Jared. I guess my first question just again circling back to the addition of the wealth management teams.

Could you identify how many teams were actually brought on and how big their book of business was at their prior institution?

We hired three teams. We generally don’t talk about how the book -- large the book was, but what I would say is, it did have a meaningful impact on our growth in assets in the first quarter, but notwithstanding that we still had strong net client full growth in the first quarter.

Okay. And then I guess just generally speaking, what’s the typical timeline that new teams within wealth management are expected to bring their book-of-business online with you guys?

As Jim mentioned a minute ago, when we hire a team it generally takes a couple of quarters for them to bring over the book that we expect for them to bring from their prior firm.

Okay. That’s helpful.

And just going back to the commentary that Jim had provided on the various geographies, looking at the loan growth this quarter, was it fairly split geographically to your current concentration 50% and kind of the San Francisco area and 50% other or are there any geographies that on a relative basis all of a sudden look more attractive versus some of your other ones?

No. I would say overall it was split, just as you suggested and that sort of supports the mix of the loan portfolio overall.

Okay. Great.

And then...

The opportunities in all of our markets, I will note that.

Okay. Great.

Thank you. And just I guess one last one for Gaye maybe, looking at the excess cash balances during the quarter, how fast should we expect those to be deployed and tie their securities or loans?

And is the expectation if it’s going into securities to be going into the similar type of structure as prior HQLA build or is there an opportunity to maybe differs by the investment portfolio into some other products?

It is a question especially given that we’re going and we’re going into the second quarter and the second quarter is the tax season, just from a deposit perspective. So given the tax seasonality we would expect just historically speaking the cash balances used towards that into that seasonality and the second half seems to be a lot stronger in terms of the deposit growth than the first half of the year, we also -- details average balance growth -- average account balance growth as well.

I might add one point. This goes back to our margin discussion too.

The team is extremely disciplined on investing and lending, and if we carry a little bit of excess cash balances for a little while, we don’t let it burn a whole in our pocket, because it is much more important for the long-term thinking and averaging over time then it is to sort of put the money out immediately.

This is Bob. I just want to add one more thing and just to be clear about your question about the teams.

Well it takes a quarter or two to bring the assets over. I just want to remind you that we’re also not billing on those assets until the four following quarters that they’re recorded.

So effectively it’s really coming a quarter after each quarter end when we have the assets all recorded.

Okay. Perfect.

Thank you.

Hi. Good morning, everyone.

Good morning.

Bob, I guess, some good color on the wealth management revenues relative to the AUM. It sounds like the accounting change, the higher insurance components and then just kind of the natural revenue lag there kind of accounts for may be the -- may be a little bit below what people would have expected given the AUM hike.

I’m wondering too if -- has the recent price cuts by some of the wealth management competitors in the space, is that impacting your thoughts on the outlook there in terms of the fee schedule or anything?

No. I think, again, we look at investment managing the assets is a key part of what clients pay us for, but I also think they pay us to be their trusted advisor.

And given the number of things we can bring to those clients and deposit services, liquidating the balance sheet, that we haven’t seen erosion in our fee pricing.

Okay. And then, there is some good color on the expectation for the strong spring selling season, and Mike Selfridge, you mentioned, a pretty good outlook for the C&I pipeline.

How about on commercial real estate and multifamily, can we get any guidance on your expectations for growth in those books?

I would -- let me just say, overall, the pipeline is strong and it’s about where it was at the end of last quarter. It’s hard to say on commercial and multifamily.

Those tend to be a little bit volatile. I will say, as I mentioned in my remarks, half our growth is coming from existing clients.

They are quite active. It’s still call it inventory constrained.

So it’s hard to find good deals. But they are out they are working hard and finding them.

So we -- I would say we feel good about our future prospects in multifamily and commercial real estate.

Okay. Terrific.

Thanks for taking my question.

Thank you very much. Thanks everybody for turning in on the call today.

We’re very pleased with the growth of the quarter. Obviously, there are some minor issues going on, but they are really minor.

In long-term, we’re particularly pleased with the capital we’ve been able to raise and now we expect to go to deploy it. Thank you very much.