This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Bank of America Castoff Doing Way Better Than Bank of America

NEW YORK ( TheStreet) -- First Republic Bank (FRC - Get Report), was already one of the best bank growth stories out there, but its recent agreement to acquire Luminous Capital will further improve its earnings and revenue mix, according to Jefferies analyst Casey Haire.

After being acquired by Bank of America (BAC - Get Report) as part of that company's purchase of Merrill Lynch in January 2009, First Republic was sold in July 2010 for $1.86 billion to an investor group that included Colony Financial (CLNY) and General Atlantic LLC, and was led by First Republic's original management team. First Republic completed a public offering of common shares in December of 2010.

First Republic is headquartered in San Francisco and had $32.6 billion in total assets as of Sept. 30, with offices in with offices in California, Oregon, Connecticut, Massachusetts and New York, focusing on private banking and jumbo mortgage lending.

The Bank on Nov. 2 announced a deal to acquire Luminous Capital of Los Angeles, which is an investment advisor with $5.5 billion in assets under management. The cost of the deal was not disclosed, but the bank made clear that Luminous team would stay in place, saying that "the six partners of the firm will sign long-term employment contracts as part of the transaction," which is expected to close by the end of the year.

Haire on Tuesday upgraded First Republic to a "Buy" rating from a "Hold" rating, while increasing his price target for the shares to $39 from $35, saying that the "the addition of Luminous is not only accretive to EPS (2% in our view) but also boosts FRC's fee contribution into the mid-teens (vs. 12% in 2011), & thus decreases the company's reliance on spread income."

While many of the largest U.S. banks -- especially Bank of America and Citigroup (C) -- have touted cross-selling opportunities when making transformative acquisitions, with some very disappointing results, First Republic has a specialized focus on high-net-worth clients, with a reputation for excellent customer service, that Haire expects to lead to a successful integration with Luminous.

Haire said that "on the Luminous side, the firm can now recommend banking products to its clientele without worrying about tarnishing its brand due to poor service quality. For FRC, the addition of Luminous provides the company with a reputable & established team to extract more wealth management business from its borrower base, which is under-penetrated from a wealth management perspective (only 25% of FRC clients participate)."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
BAC $16.30 1.90%
FRC $57.93 0.40%
AAPL $126.91 0.40%
FB $80.04 -1.40%
GOOG $569.18 -1.10%

Markets

DOW 17,872.50 -263.22 -1.45%
S&P 500 2,076.05 -24.99 -1.19%
NASDAQ 4,936.6460 -46.1630 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs