“Luxury home prices in California set records again in the second quarter of 2005 due to double-digits gains,” said Katherine August-deWilde, Chief Operating Officer of First Republic Bank. “Despite these significant increases, we are starting to see some resistance to prices, and buyers are exercising more caution. First Republic believes values will not appreciate as rapidly as they have over the past few years, particularly if interest rates continue to rise.”

First Republic Bank (NYSE: FRC) produces the Prestige Home Index each quarter with Fiserv CSW Inc., a leading provider of automated property valuation services and home price metrics to U.S. financial institutions. Historical results of the Index are accessible at www.firstrepublic.com.

Los Angeles Area Values
On a year-over-year basis, luxury homes in Los Angeles continued to appreciate faster than anywhere else in California. Powered by a robust economy and the strength of the entertainment industry, Los Angeles values have posted double-digit price increases for the past 10 quarters on a year-over-year basis – the longest continuous stretch of appreciation in the history of the Index.

While prices have risen rapidly, real estate agents said sales are slowing, inventory is increasing, and sales are taking longer. Agents attributed those trends to the seasonal sales cycle, but also cited rising interest rates and greater caution among buyers as prices reach new heights.

“ Seller expectations have outstripped what buyers are willing to pay,” said Bennett Carr of Prudential Estate Properties in Beverly Hills. “If buyers find that a property has all of the amenities they want, they’re willing to pay top dollar. If not, they’ll wait. Our market has become more like San Francisco’s, where it’s always difficult to find the most attractive properties.”

In the San Fernando Valley, agent Jim Pearson of Prudential John Aaroe & Associates in Encino said that the frenzied pace of buying has subsided. Properties needing work are fetching lower prices and are taking longer to sell. Houses that are in good or excellent condition are selling at or above the asking price. He expects prices will continue rising for homes that are well presented.

“ Prices are definitely leveling, but the market is still strong, even the high end,” Pearson said. “The market is very particular right now, but a good house will sell. I just put people in a home for $4.1 million that didn’t go into the market. They knew what they had, and it sold quickly.”

In Orange County, prices and sales were strong in the second quarter, but the market slowed in June. Buyers have become more selective as prices have risen. “Buyers are being very cautious about value,” said Marilyn Ryder of Seven Gables Real Estate in Tustin. “If they don’t see value, they will move to the next property. Even so, the market is still strong. We’ve seen an abnormally good market for so long that when it comes a normal market, it seems like it’s slow.”

San Diego Area Values
In San Diego, average values surpassed the $2 million mark for the first time in the second quarter of 2005. For the sixth consecutive quarter, values rose by double digits on a year-over-year basis. Over the past five years, luxury home values in San Diego have nearly doubled.

Despite the rising values, agents said they are seeing widening differences in market conditions by neighborhood and price range. “In Rancho Santa Fe, we still have a lack of inventory for properties under $4 million,” said Linda Sansone of Willis Allen Co. in Rancho Santa Fe. “This market has seen larger appreciation than homes in the $5 million to $7 million range. I see prices leveling off or going up a little, but not falling in Rancho Santa Fe. This is the Beverly Hills of San Diego.”

Deborah Chew of Chew Voss Properties in San Diego said prices are cooling somewhat as inventory rises. She said the number of homes for sale between $1 million and $2 million is double that in the $2 million to $4 million range. Rising interest rates are starting to prevent move-up buyers from purchasing higher-priced homes, she said. “I see prices stabilizing,” Chew said. “I also have a lot of buyers who are waiting. They are cautious because San Diego prices have gone up so fast. A lot of them think the bubble will burst.”

San Francisco Bay Area Values
In the San Francisco Bay Area, prices appreciated on an annual basis less than in Los Angeles and San Diego, but still posted their fifth consecutive quarter of double-digit gains in the second quarter of 2005. However, in the past quarter, San Francisco values are up 3.9 percent, a faster rate of quarterly appreciation than Los Angeles and San Diego.

Agents said there are many qualified buyers, but they are becoming more particular as values rise. The lower end of the luxury market is experiencing the most activity, while the market above $5 million remains slow because of a dearth of highly desirable properties.

“ Buyers in the mid-$2 million range are looking for the family homes, and I’m still seeing some overbidding,” said Gloria Smith of Sotheby’s International Realty in San Francisco. “Over $5 million, people want it all. They are not going to buy something average. It has to have a great view or a great location.”

On the San Francisco Peninsula, much of the appreciation has occurred in the lower end of the luxury market because of strong demand. Many buyers are also reluctant to purchase homes that need major improvements because of the time, cost and potential disruptions.

“ Anything under $2 million is on fire, but from $2.5 million to $4 million, it is definitely slow,” said Hugh Cornish of Coldwell Banker in Menlo Park “Above $5 million is very slow. People are leaning toward turnkey product, as opposed to making improvements. That has slowed down the market.”

In the affluent San Jose communities of Saratoga and Los Gatos, the market is relatively strong, although there is a lack of marquee properties for sale at the upper end of the market.

“ There are still plenty of buyers willing to spend $3 million to $7 million, but the inventory is overpriced,” said Benjamin Guilardi of Alain Pinel Real Estate in Los Gatos. “That’s why these homes are staying on the market for so long. But anything to $1.5 million seems to be getting multiple offers.”

About The First Republic Prestige Home Index
The First Republic Prestige Home Index™ is the first statistical model of its kind customized to measure changes in homes valued at more than $1 million in key California urban markets. Some common features of luxury homes in the Index: 3,000 to 6,000 square feet, three to six bedrooms, and three to six bathrooms. San Francisco Bay Area properties include a cross-section of luxury homes in Alamo, Atherton, Belvedere, Danville, Healdsburg, Hillsborough, Lafayette, Los Altos, Los Gatos, Mill Valley, Moraga, Orinda, Palo Alto, Piedmont, Portola Valley, Ross, St. Helena, San Francisco, Saratoga, Sonoma, Tiburon and Woodside. Properties in Los Angeles represent a cross-section of luxury homes in Arcadia, Beverly Hills, Calabasas, La Cañada Flintridge, Encino, Los Angeles, Malibu, Marina del Rey, North Hollywood, Pacific Palisades, Pasadena, Playa del Rey, Santa Monica, Studio City and the West Los Angeles enclaves of Bel Air, Brentwood and Westwood. San Diego properties represent a cross-section of luxury homes in Carlsbad, Coronado, Del Mar, Encinitas, La Jolla, La Mesa, Poway, Rancho Santa Fe, San Diego and Solana Beach. In producing the Index, Fiserv CSW, Inc. draws upon its economic database and years of experience in tracking single-family home values; collects and cross-checks data from multiple sources; achieves a weighted balance of validation elements such as repeat sales, comparable sales, and physical home characteristics; and combines this with First Republic's extensive local market knowledge.

About First Republic Bank
First Republic Bank (NYSE:FRC) is a private bank and wealth management firm. The Bank and its subsidiaries specialize in providing personalized, relationship-based wealth management services, including private banking, private business banking, investment management, trust, brokerage and real estate lending. As of June 30, 2005, the Bank and its subsidiaries had total Bank assets and other managed assets of $25.5 billion. First Republic Bank provides access to its services online and through preferred banking offices in seven major metropolitan areas: San Francisco, Los Angeles, Orange County, San Diego, Santa Barbara, Las Vegas and New York City. More information is available on the Bank’s web site at http://www.firstrepublic.com.

# # #