Fitch Affirms First Republic Bank's RMBS Servicer

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the following U.S. residential mortgage servicer rating for First Republic Bank (FRB):

--U.S. residential primary servicer rating for Prime product affirmed at 'RPS2-'; Outlook Stable.

The affirmation of the servicer rating and Outlook is based on FRB's effective high touch servicing model and established internal control environment. Due to this personal service approach and the low level of delinquencies, the rating also reflects FRB's moderate use of servicing technology and the relatively low volume of REO assets that the company historically has handled. In addition, the rating incorporates the company's financial condition. FRB is rated 'A-'; Outlook Stable by Fitch.

FRB is a California-chartered commercial bank and trust company that was founded in 1985. FRB specializes in providing personalized, relationship-based preferred banking, preferred business banking, real estate lending, trust and wealth management services to clients in selected metropolitan areas throughout the United States. FRB's servicing operations are headquartered in San Francisco CA with an additional site in Las Vegas NV. FRB does not use any off-shore resources in its servicing operations. As of March 31, 2015, FRB was servicing more than 45,000 loans totaling $32.9 billion, which included approximately 30,000 non-agency prime loans totaling $29.1 billion.

FRB's high touch servicing model is well integrated into the bank's overall residential lending strategy. Relationship managers (RMs) are involved in all aspects of residential mortgage origination and servicing. The incentive structure for RMs ensures strong knowledge of the borrowers and mortgaged properties that helps to address performance concerns. This servicing model is extremely effective for the high quality loans and high net worth borrowers that comprise most of FRB's residential mortgage portfolio. As of March 31, 2015, only 0.10% of the servicing portfolio was 30+ days delinquent, in bankruptcy, or in foreclosure. However, this servicing model may not be as effective for higher risk, lower quality, or delinquent/defaulted portfolios.

Although FRB has an established control environment, as a result of the current regulatory environment and the bank's growth in recent years, it is making substantial investments in its regulatory, audit and compliance infrastructure. This includes adding personnel and implementing enhancements to systems and procedures in compliance, enterprise risk management, and other areas of the company. FRB currently has a number of focused projects underway to implement new regulatory requirements and further enhance existing processes.

FRB relies on its experienced servicing management and staff that operate without a significant emphasis on technology. FRB has not invested in extensive collections or default management systems due to its historically very low volume of delinquencies and defaults. These factors may limit the scalability of the servicing operation. Also, most defaulted loans are resolved prior to completing a foreclosure sale, limiting the volume of REO properties that FRB has historically handled. As of March 31, 2015, FRB did not have any REO properties in its portfolio.

Fitch rates residential mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within some of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information on Fitch's residential servicer rating program, please see Fitch's report 'Rating Criteria for U.S. Residential and Small Balance Commercial Mortgage Servicers', dated April 23, 2015 which is available on the Fitch Ratings web site at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Rating Criteria for Structured Finance Servicers' (Jan. 31, 2014);

--'U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria' (Jan. 31, 2014).

Applicable Criteria and Related Research:

Rating Criteria for Structured Finance Servicers -- Effective Jan. 30, 2014 to April 23, 2015

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731750

U.S. Residential and Small Balance Commercial Mortgage Servicer Rating Criteria -- Effective January 31, 2011 to January 30, 2014

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=600065

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=984786

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Fitch Ratings
Primary Analyst:
Thomas Crowe, +1-212-908-0227
Senior Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst:
Roelof Slump, +1-212-908-0705
Managing Director
or
Committee Chairperson
Grant Bailey, +1-212-908-0544
Managing Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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