First Republic grows wealth assets despite advisor departures

Despite several high-profile departures of advisors over the past month, First Republic has retained most of its financial advisors and even more of its assets under management.

In the San Francisco-based bank’s first earnings call since turmoil struck in March, First Republic reported total wealth management assets rose to $289.5 billion in the first quarter, a 6.7% increase from the previous quarter and up 5.6% year over year. The financial advisors who departed First Republic were responsible for less than 20% of total wealth management assets, and the bank anticipates retaining a portion of the assets associated with departing teams, CEO Michael Roffler said on the earnings call.

As of last Friday, First Republic has retained nearly 90% of its financial advisors, Roffler said.

“This is a testament to the terrific wealth management franchise our talented teams have built over the years,” he said. “We remain fully committed to our integrated banking and wealth management model and the unique benefits it provides to clients.”

First Republic had $11 billion in net client inflows during the quarter. However, wealth management revenue remained mostly flat, up just 0.7% over the year-ago period.

Over the past decade, First Republic became an attractive destination for wirehouse advisors, using high bonuses to lure advisors in areas where the bank was looking to expand.

[More on First Republic News: Crack appears in First Republic wealth management business]

After the collapse of Silicon Valley Bank and Signature Bank, depositors pulled money from regional banks like First Republic, S&P Global Inc. cut First Republic's credit rating, and the bank’s stock price plummeted.

First Republic stabilized after a collection of big banks contributed $30 billion in uninsured deposits to ensure its liquidity.

However, a number of large advisors teams have left amid the turmoil. Recently, a First Republic team managing $2.3 billion in client assets moved to Rockefeller Global Family Office. Earlier in April, a New York-based First Republic team with $10.8 billion in client assets led by Adam Zipper and Joseph Duarte jumped to Morgan Stanley.

While Roffler reported that the bank retained 97% of client relationships, bank deposits were down 35.5% year-over-year and down 1.7% from the end of 2022. Net income was down 32.9% and revenue was down 13.4%.

To reduce expenses, First Republic plans to significantly reduce executive officer compensation, condense corporate office space and lay off as much as 25% of its workforce in the second quarter.

First Republic did not take questions from analysts after finishing prepared remarks on the call.

[More: First Republic’s efforts to woo rich clients may be bank’s undoing]