Credit quality excellent, loan pipeline strong
“our credit quality remains excellent. Our loan pipeline is strong. Conditions in our urban coastal markets are very good, particularly in our home market of San Francisco Bay area.”
Have grown deposits significantly since 2010
“We are pleased with the continued momentum in our deposit gathering franchise, as well as the improvement in the overall deposit mix. We would note that checking deposits were 26% of total deposits in 2010 following our divestiture and were almost 60% of total deposits for the first quarter of 2015.”
We’re seeing more supply of houses come to market and people are getting better at acquiring houses
“The market is still a little bit supply constrained. There are increasingly – there is increasingly more supply coming on the market. We had a very strong quarter in originations for several reasons. Our clients who have been looking for houses were able to acquire them. We also did good business in multi-family business and commercial real estate.
But the person who can’t buy a house or couldn’t buy a house last year because they didn’t win in a multiple bidding situation kept at it and bought a house this last quarter. As we come into spring, we’re seeing increasing supply. But we seem to be both picking up new clients and our clients are doing a better job of acquiring the houses they want.”
We win new clients by following our private bank clients
“We continue to win new clients through the strategy of following our private banking clients to the businesses they influence.”
A mortgage is just an entree into a broader relationship
“Actually, no. I think it’s very important to realize that when we bring in a client with a loan, we do many, many more things with that client. That client brings us deposits. They bring us assets under management and other fee income, and other loans, often they are business loans over time.
So you should think of the single-family loan origination not only as an asset on our balance sheet, I wish we make a spread, but as the acquisition of a client, and that client not only does a lot with us but does more with us over time and then recommends colleagues to us. So it’s a basic tenet of our business.”
Adding permanent people for growth
” would say relative to what we’re doing, we’re continuing to add people in our infrastructure. You’ll start to see sort of a reduced professional fee spend, but we’re replacing that with permanent people. There is a lot of this, which is ongoing costs, to support a larger enterprise that doesn’t go away.”