We measure success over years and decades, not quarters. A key factor in the Bank’s consistent performance over 35 years has been maintaining strong corporate governance practices and a thoughtful, consistent approach to risk management.

Board of Directors

First Republic’s Board of Directors is composed of industry leaders in their respective fields. Throughout the Bank’s history our Board has been diverse. In fact, women have been represented on our Board of Directors since 1987, our third year of operation. Today, the Board continues to be diverse, consisting of 40% women and 20% people of color.1,2

Over time, we have strategically added directors to balance new perspectives and expertise with depth of institutional knowledge and experience. Our directors’ diverse backgrounds help support the long-term strength and success of First Republic by providing the mix of skills, experiences and perspectives necessary to guide our company’s strategies and monitor their execution. Directors are subject to reelection every year.

As of December 31, 2020:
40%
Women
Representation1
20%
People of Color
Representation1,2

¹ Board members consist of the 10 director nominees included in the 2021 Proxy Statement.
² “People of Color” includes all nonwhite ethnicities as defined by the EEOC, which include American Indian / Alaska Native, Asian, Black, Native Hawaiian / Pacific Islander, two or more races, and Hispanic or Latinx.

Board evaluation

The Board conducts annual self-assessments and evaluates whether its current members collectively have the experience, education, diversity and skills necessary to carry out their responsibilities effectively. The Board also regularly assesses the process for selecting Board Members, as well as whether current membership brings diverse perspectives and experiences to the Board. These ongoing evaluations demonstrate our Board’s commitment to effective governance as well as diversity of perspective, expertise, background and tenure.

FIRST REPUBLIC BANK BOARD OF DIRECTORS AS OF DECEMBER 31, 2020

FIRST REPUBLIC BANK BOARD OF DIRECTORS AS OF DECEMBER 31, 2020
A
Audit Committee
C
Compensation Committee
CGN
Corporate Governance and Nominating Committee
ERM
Directors’ Enterprise Risk Management Committee
IST
Directors’ Information Security and Technology Committee
I
Investment Committee
T
Directors’ Trist Committee
Member
Chair
  • For more information on our directors, please refer to the Bank’s Proxy Statement.
  • 1The legal predecessors to First Republic Bank have been in existence since 1985. In September 2007, First Republic merged into Merrill Lynch Bank & Trust Company, F.S.B. (“MLFSB”), a subsidiary of Merrill Lynch & Co., Inc., which itself subsequently merged into Bank of America, N.A. (“BANA”), a subsidiary of Bank of America Corporation, in November 2009. The current First Republic Bank acquired the First Republic division of BANA in mid-2010. While a division of MLFSB and BANA, First Republic maintained a separate Advisory Board. Each of the individuals listed in this table has been a director of First Republic, a member of our Advisory Board or a director of our publicly traded predecessor since the date indicated.

Corporate Governance Profile

Strong corporate governance practices demonstrate our Board and executive team’s accountability to our stakeholders.

  • Lead Outside Director
  • All members of the Corporate Governance and Nominating Committee, Compensation Committee and Audit Committee are independent directors
  • Annual director elections
  • Annual compensation limits for non-employee directors
  • Stock ownership guidelines for directors
  • Strong director attendance
  • Robust investor outreach program
  • Annual Board self-assessments
  • Majority voting for director elections
  • No shares with enhanced voting rights
  • Proxy access

Executive compensation

Our executive compensation philosophy is informed by the same values that shape our culture: commitment to performance, accountability, safety and soundness. Our executive compensation program emphasizes sustainable and responsible growth, appropriately balancing near-term and long-term performance goals with safe operations. Importantly, our compensation program intends to motivate and reward adherence to our core value of Doing the Right Thing for all key stakeholders.

Because our executives set our long-term strategic goals and have the greatest ability to influence our strategy, a majority of our executives’ compensation is directly linked to our strategy and performance, with the greatest compensation opportunities weighted toward long-term objectives. We seek to utilize metrics and incentives that further our main objective of long-term sustainable growth that is achieved in a safe and sound manner and without excessive risk-taking.

  • Majority performance-based variable and “at risk” compensation
  • Stock ownership guidelines
  • Clawback policy
  • Limited perquisites
  • Limits on annual bonuses
  • No excise tax gross-ups
  • No “single trigger” cash payments
  • No guaranteed base salary increases
  • No guaranteed minimum bonuses
  • No guaranteed equity award grants
  • No repricing of stock options
  • No holding Bank securities in margin accounts
  • No pledging Bank securities as collateral for loans
  • No hedging transactions with respect to Bank securities
  • No short sales with respect to Bank securities
  • No excessive risk-taking

For more information on our compensation program, please refer to the Bank’s Proxy Statement.

Board Oversight

Committees of the board

The Board is responsible for overseeing all strategic aspects of our operations and management and maintains committees through which it oversees risk.

Audit Committee

Audit Committee

Reviews the integrity of First Republic’s financial statements, effectiveness of internal controls, and compliance with certain legal and regulatory requirements.

Compensation Committee

Compensation Committee

Designs the compensation program to promote the Bank’s strategic focus on consistency, stability and responsible growth over the long term.

Corporate Governance and Nominating Committee

Corporate Governance and Nominating Committee

Oversees corporate governance matters and recommends individuals to serve as directors and on various committees to optimize Board organization, membership, diversity and structure.

Directors’ Enterprise Risk Management Committee

Directors’ Enterprise Risk Management Committee

Provides additional oversight of First Republic’s ERM program to help ensure that risks are prioritized and that appropriate risk management strategies are in place.

Directors’ Information Security and Technology Committee

Directors’ Information Security and Technology Committee

Provides oversight of the information security and enterprisewide technology functions of the Bank.

Directors’ Loan Committee

Directors’ Loan Committee

Reviews all new loans or renewals made by the Bank that exceed certain limits as set forth in the Board-approved loan policy.

Investment Committee

Investment Committee

Monitors First Republic’s investment portfolio and recommends investment policies to optimize performance while keeping the portfolio within the bounds of good banking practices.

Directors’ Trust Committee

Directors’ Trust Committee

Oversees First Republic’s exercise of trust powers.

Credit Risk Management

We underwrite our loans one at a time, adhering to our conservative credit philosophy. Our credit approvers and bankers work together to assess each deal to make sure it’s structured appropriately for the client and the Bank.”

David B. Lichtman, Senior Executive Vice President, Chief Credit Officer

We never compromise on credit quality and have maintained our disciplined, conservative underwriting standards through varying economic conditions.

Credit risk management involves a partnership between our Relationship Managers and our credit approval team, who work closely to fully understand the borrower’s financial picture.

Each loan is underwritten to withstand potential economic downturns with stress testing performed at the individual loan level. For real estate secured loans, we place a strong emphasis on low loan-to-value ratios.

Our targeted markets and simple, consistent loan offerings have allowed us to build substantial local knowledge and lending expertise. Our Credit Officers, who approve loans, and Relationship Managers are located throughout our geographic footprint and are making decisions in areas and properties they know well. In fact, as of December 31, 2020, 90% of real estate secured loans are located within 20 miles of a First Republic office.

Our strong credit criteria make us a better partner to our clients by increasing the safety of the Bank and protecting clients from taking excessive risk. Over the past 21 years, the average annual net charge-offs of the Top 50 U.S. Banks have been nearly eight times higher than those of First Republic.1,2

We recognize that from time to time, clients may undergo hardship, often through no fault of their own. At such times, we work with our clients on a one-on-one basis to reach the best outcome.

Our compensation program reinforces responsible lending practices, with credit clawback provisions on all loan originations since 1986. This structure incentivizes bankers and approvers to provide loans that are well-suited to the client.

When credit issues do arise, bankers, in conjunction with credit administration, are responsible for resolving their own non-performing loans. This allows the banker to take a personalized approach with the client.

Weekly companywide meetings attended by nearly all of our senior management, bankers, credit and loan production colleagues provide meaningful learning opportunities and reinforce credit quality as a cultural cornerstone of the Bank.


1 Compares the average of the median annual net charge-offs for the top 50 U.S. Banks by asset size from 2000-2020 to the average annual net charge-offs of First Republic Bank from 2000-2020. Top 50 U.S. bank data sourced from S&P Global Market Intelligence.

2 Includes estimated charge-offs on divested loans retained by Bank of America for the period from July 1, 2010, to December 31, 2018. First Republic was sold to Merrill Lynch in September 2007; through the acquisition of Merrill Lynch it became part of Bank of America in January 2009; then it became independent again through a management-led buyback in July 2010.

Strong Capital

For 35 years, First Republic has delivered consistently strong asset growth. To support this growth, the Bank maintains a strong capital position at all times. We access the capital markets opportunistically with small deal sizes to ensure that we have enough capital on hand to fund approximately two years of growth.

This proactive approach allows us to continue to serve our clients even during periods of market turmoil, when access to capital may be limited.

Interest Rate Risk Management

Consistent with our conservative risk mindset, we strive for net interest margin stability. We manage our interest rate risk primarily by originating and retaining adjustable-rate and hybrid loans and funding these loans predominantly with deposits. We manage toward a neutral balance sheet position and typically sell our long-term fixed-rate loans, while still retaining servicing of such loans.

With a stable net interest margin, we focus on growing net interest income as we grow our assets.

Strong Liquidity

We maintain strong levels of liquidity to allow us to meet our financial obligations in both normal operating circumstances as well as in situations of stress.

We believe strong liquidity is fundamental to prudent risk management and keep a portfolio of high-quality liquid assets (HQLA) on our balance sheet.

Focus and discipline

Equally important to mitigating risk is clearly outlining what we don’t do as a business.

We know our strengths and maintain a list of business activities not undertaken, emphasizing our continued focus.

As the Bank evolves, we reevaluate this list periodically to ensure it continues to reflect our strategy and capabilities.

Enterprise Risk Management

At First Republic, every individual is accountable for risk management, and the stability of our performance over time reflects our strong risk mindset.”

Stephanie Bontemps, Executive Vice President, Chief Risk Officer

Our Enterprise Risk Management (ERM) program enhances our safety by guiding how we identify, measure, monitor and control risks. The Bank’s Chief Risk Officer oversees our ERM program and reports to the Board’s Enterprise Risk Management Committee.

Our ERM program follows the “three lines of defense” approach, demonstrating the collaboration between our business groups who own and manage our risks:

First Line

Business teams which own and manage risks

Second Line

ERM, Compliance and BSA/AML teams which provide guidance to and monitor our business groups

Third Line

Internal Audit team which reviews the efforts of our first two lines

Our ERM program is further strengthened by our Risk Liaison Network, composed of members of the first line who help our colleagues understand and address the risks associated with their team’s activities.

Risk Liaisons dedicate up to 25% of their time to the risk program, establishing and managing their functional group’s risk activities, managing risk metrics, and developing and participating in risk training programs.

In 2018, we launched the First Republic Risk Academy to educate colleagues on the various types of risk and to reinforce their knowledge of the Bank’s core risks. The Risk Academy includes in-person and self-directed virtual training courses that allow colleagues to customize their experience.

ERM is dedicated to promoting and preserving our strong risk culture. The team regularly conducts Risk Mindset Surveys of our colleagues to assess the health of our risk culture and ensure it remains strong as we grow.

We continue to adapt our ERM program to reflect the ever-changing nature of our risks, helping ensure that our strategy remains aligned with our risk appetite and our core values.

Managing climate change related risk

Climate change related risk is an emerging area of focus for financial institutions. This risk includes increased likelihood and severity of wildfires, floods or other natural disasters which may damage collateral, reduce the value of collateral in prone areas or increase insurance premiums for clients.

These risks are overseen by the Directors’ Enterprise Risk Management Committee and managed by the Enterprise Risk Management Team which conducts periodic assessments of such risks, including insurance availability and adequacy to support clients.

With a significant portion of our real estate lending located in California, First Republic has experienced natural disasters including the Northridge earthquake in 1994.

Learning from this experience, we have taken precautions to mitigate our exposure in the event of such potential occurrences:

  • Originating loans at conservative loan-to-value ratios
  • Lending against the value of only the land for properties with masonry buildings
  • Purchasing a parametric earthquake insurance policy, which pays the Bank proceeds upon the occurrence of an earthquake with a minimum magnitude and within a specified distance from certain California offices, regardless of actual losses incurred
  • Requiring hazard insurance which covers many non-earthquake related hazards
  • Lending against the value of only the land for properties with masonry buildings
  • Purchasing a parametric earthquake insurance policy, which pays the Bank proceeds upon the occurrence of an earthquake with a minimum magnitude and within a specified distance from certain California offices, regardless of actual losses incurred
  • Requiring hazard insurance which covers many non-earthquake related hazards

In recent years, wildfires have become more common in California. The Bank requires all real estate collateral to be insured for hazards including wildfires. As a result, we’ve never experienced a loss from wildfire.

Despite this, we recognize the impact that these unpredictable disasters have on our clients and communities. For this reason, in 2019, we developed an internal mapping application that identifies clients potentially impacted by wildfires or other natural disasters and emergencies. This app allows bankers to proactively reach out to their clients to offer assistance when it is needed most.

Additionally, First Republic is committed to responding quickly to those impacted by a disaster, converting our banking offices into accessible internet cafes and partnering with frontline disaster relief organizations, such as Center for Disaster Philanthropy, by providing charitable contributions and colleague volunteering opportunities.


For more information about how First Republic is managing its own impact on the environment, please see Managing Our Impact on the Environment.

Leadership

When you have an organization with such a strong representation of women at the senior levels, all the younger women can see a clear path for success.”

Susie Cranston, Executive Vice President, First Republic Investment Management

First Republic’s executive team shares a passion for client service and understands that it is our colleagues who bring our service model to life.

Despite having an average age of just 51 years, our executive team has average tenure of 17 years at First Republic (excluding our Founder, Chairman and CEO), reflecting their commitment to the long-term success of the Bank.

Our highly collaborative leadership team operates without silos, leading by example for the broader Bank. Our consistent results over time demonstrate our leadership’s long-term orientation.

Senior management team

Our thoughtful leadership planning extends beyond our executive team, and in recent years, we’ve added numerous roles and deputies to key positions throughout our overall senior management team. This team, inclusive of executive leadership, reflects a very deep and diverse leadership bench with a wide breadth of skills and knowledge.¹

As of December 31, 2020:
49%
Women Representation¹
23%
People of Color Representation²

¹ Senior management (82 colleagues) is defined as those people with a bank title of Regional Managing Director, Executive Managing Director or Senior Vice President and above, as well as subsidiary titles of Executive President and above.
² “People of Color” includes all nonwhite ethnicities as defined by the EEOC, which include American Indian/Alaska Native, Asian, Black, Native Hawaiian / Pacific Islander, two or more races, and Hispanic or Latinx.