FIRST REPUBLIC PREFERRED CAPITAL CORPORATION 111 Pine Street San Francisco, California 94111 First Republic Bank 111 Pine Street San Francisco, California 94111 December 20, 2001 Ladies and Gentlemen: First Republic Preferred Capital Corporation (the...

                                                                    EXHIBIT 10.3

                  FIRST REPUBLIC PREFERRED CAPITAL CORPORATION
                                 000 Xxxx Xxxxxx
                         Xxx Xxxxxxxxx, Xxxxxxxxxx 00000



First Republic Bank
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000

December 20, 2001

Ladies and Gentlemen:

First Republic Preferred Capital Corporation (the "Corporation") and First
Republic Bank (the "Bank") are parties to an Amended and Restated Master Loan
Purchase and Servicing Agreement, dated as of December 1, 2001 (the
"Agreement"). Pursuant to the Agreement, from time to time the Bank may agree to
sell to the Corporation, and the Corporation may agree to purchase from the
Bank, all of the Bank's right, title and interest in and to certain residential
mortgage loans, on a servicing retained basis, in accordance with the terms and
conditions of the Agreement. On October 31, 2001, the Corporation filed with the
Securities and Exchange Commission a Registration Statement on Form S-11 (File
No. 333-72510) (as amended, the "Registration Statement") that included a
prospectus (as modified by any amendment to the Registration Statement, the
"Prospectus") in connection with an initial public offering of Series B
preferred shares (the "Offering").

At the completion of the Offering, the Bank hereby agrees to sell to the
Corporation, and the Corporation hereby agrees to purchase from the Bank,
pursuant to the Agreement, residential mortgage loans having an outstanding
aggregate principal balance equal to approximately two times the amount of the
gross proceeds of the Offering. The consideration for the loans will be the
gross proceeds of the Offering and shares of common stock of the Corporation
with a value equal to such proceeds. The residential mortgage loans will be
consistent with the description thereof in the Prospectus; provided, that any
mortgage loans that have been repaid will be replaced by mortgage loans that are
(i) of the same type and character as the mortgages included in the mortgage
loan portfolio described in the Prospectus and (ii) mutually acceptable to the
Bank and the Corporation.

If you are in agreement with the foregoing, please sign below as indicated.

Very truly yours,

First Republic Preferred Capital Corporation

By:   /s/ Xxxxxx X. Xxxxxx, Xx.
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      Name: Xxxxxx X. Xxxxxx, Xx.
      Title: Vice President

First Republic Bank


By:   /s/ Xxxxxx X. Xxxxxxxxx
      --------------------------------------
      Name: Xxxxxx X. Xxxxxxxxx
      Title: Sr. Vice President and General Counsel