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First Republic CEO: 'Biggest' banks giving on LTV in home-loan market

Chairman andFounding CEO James Herbert II said some of the industry's biggest players aredriving standards lower in their bid to win home loans in the bank's market.

Duringan April 14 conference call to discuss the company's first-quarter , Herbert said demand wasstable for the company's segment of the mortgage market, but said it has beenmore challenged maintaining its volume in the business as competitors havebecome more aggressive about winning credits.

"Thenumber of players in the larger-home marketplace has increased recently … thathas led to a pricing pressure," Herbert said, adding that "the otherthing it has led to is a decline in standards — and by that, I don't meannecessarily credit underwriting standards, but I do mean loan-to-value ratios."

Askedby one analyst to identify who was driving that behavior, Herbert responded:"Big banks; the biggest." 

Companyexecutives also said that its growth in the wealth management business wouldlikely push its efficiency expectations to the higher end of previouslydisclosed estimates. The company had targeted an efficiency ratio of between57% and 61%, but company CFO and Executive Vice President Michael Roffler saidthe range was probably now limited to between 59% and 61%.

FirstRepublic reported first-quarter net income available to common shareholders of$132.4 million, or 88 cents per share, compared to $102.0 million, or 71 centsper share, in the first quarter of 2015. The S&P Capital IQ consensusnormalized EPS estimate for the recent quarter was 81 cents.