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As part of the transformation to full-service banking, First Republic Bank integrated its lending and deposit-gathering sides. Herbert was not sure how it should work, but he knew he wanted his top deposit-gathering banker leading the effort. “I asked Margaret Mak if she would start Preferred Banking,” Herbert recalled. Mak asked him what that was. “I don’t know,” he said. “That’s why I want you to start it, and let’s figure it out.”

Mak moved to an office on the second floor of First Republic Bank’s headquarters at 388 Market Street in San Francisco, where the Preferred Banking group took shape. Several colleagues helped assemble the new team structure, including Crocker Bank alum turned First Republic Relationship Manager Carmen Castro-Franceschi. The mortgage teams already consisted of a Relationship Manager and a Loan Processor. To work with existing mortgage clients to transfer their deposit relationships to First Republic, and to attract new clients, the Bank added a new position, the Preferred Banker. Modeled after Mak, who set the tone for the role and designed many of the services, Preferred Bankers joined the existing mortgage teams and added an additional level of deposit focus and expertise in serving the client’s full banking needs. 1

Each client had a banker and that banker handled everything for them.”

“In Preferred Banking,” the Bank explained to shareholders when the service was introduced in 1997, “each customer has a personal banker who is available to handle all the details of their banking requirements. Our bankers’ goal is to make doing business with us as easy as possible and to build long-term relationships based on service, discretion and trust.” 2

Mak and other First Republic Bank professionals listened closely to clients while developing the Preferred Banking service and role. They paid especially close attention to the concerns of clients from other institutions about declining service quality as smaller banks continued to be acquired by megabanks. The ultra-wealthy still received excellent personal service from their bankers, Mak realized. But that left many other very successful clients who felt neglected and undervalued, and who were amenable to changing banks. “We were very thoughtful on how to get them. And we did, one client at a time,” Mak said. 3 The potential for growth was staggering. The Bank calculated that as early as 1998, its then-modest in size, existing client base had more than $8 billion of personal liquid assets that were not with First Republic Bank. 4

Margaret Mak
Margaret Mak helped First Republic Bank launch its Preferred Banking services in 1997. “My goal is to make banking as easy as possible for my clients,” Mak said. “These are busy people who want a single point of contact and a single decision-maker that doesn’t change each month or year at their bank. This is precisely what my colleagues and I at First Republic provide – stability and service.”

Investment-grade strength

First Republic Bank took several steps in 1997 to further strengthen its already strong capital position. The Bank raised $70 million in the largest capital market transaction in its history by issuing 15-year subordinated, fixed-rate debentures. It also called an earlier issue of convertible subordinated debentures and converted them to common stock, adding another $30 million to shareholder equity.

Rating agencies took notice, granting an investment-grade rating on the $70 million in debentures, as well as on First Republic’s deposits and other senior debt obligations. On the equities side, FRC was included in the Russell 2000 Stock Index. The ratings upgrades and inclusion in the Russell index were yet another signal that First Republic Bank’s accomplishments were beginning to be acknowledged by the industry and market.5

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Preferred Banking offered individualized care and attention to those who found the service lacking at large commercial banks.

Explore Sections

Introduction Preferred Banking Silicon Valley Expansion
Internet Banking The Beginning of Wealth Management Expansion into New York “A Fishbowl on Park Avenue!” First Republic Trust Company First Republic Securities Company Cross-Selling Success "A Balancing Act" "It Made It So Much Stickier with the Client" Committed to New York
Positioned for Continued Growth