This Day On The Street
Continue to site
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

'Storm Is Brewing' for Banks

First Republic Bank
Shares of First Republic Bank (FRC - Get Report) of San Francisco closed at $32.99 Monday, returning 8% year-to-date, following a 5% return during 2011. FRC Chart FRC data by YCharts

The shares trade for 1.7 times their reported March 31 tangible book value of $18.91, and for 11 times the consensus 2013 EPS estimate of $2.89. The consensus 2012 EPS estimate is $2.72.

The bank is expected to report its second-quarter results on July 18, with analysts estimating a 65-cent profit, declining from 67 cents in the first quarter, but increasing from 64 cents during the second quarter of 2011.

First Republic was acquired by Bank of America (BAC) as part of the purchase of Merrill Lynch in January 2009, and then sold in July 2010 to an investor group that included Colony Financial (CLNY) and General Atlantic LLC and was led by First Republic's original management team.

The bank then completed a public offering in December of 2010.

Alexopoulos rates First Republic "Overweight," with a $41 price target, and said on Tuesday that "with management still calling the pipeline its best ever amid good activity levels within the geographic footprint, we look for loan growth to remain strong at 18% annualized, moderating from a very strong 25% pace of growth in 1Q." The analyst expects First Republic's net interest margin to narrow by six basis points from a relatively strong 4.39% in the first quarter.

First Republic's first quarter net interest margin declined from 4.53% in the fourth quarter and 4.76% in the first quarter of 2011.

With the bank expanding its wealth management business through new office openings in Boston and now in Delaware, JPMorgan looks "for fee income to increase 4% linked-quarter on the back of wealth management fees."

The company plans to begin paying a quarterly dividend of 10 cents, beginning in the third quarter.

Alexopoulos estimates First Republic will earn $2.06 a share for all of 2012, followed by 203 EPS of $2.26.

The analyst said that First Republic "could be the strongest generator of intrinsic value in our group" of covered mid-cap regional banks, and that the bank differentiates itself from most of the competition by targeting "exclusively either high net worth or those on the path to becoming high net worth," while delivering "service levels that are among the highest in the industry today."

Alexopoulos illustrated his point on customer service by saying that "while many banks struggle to get to 2-3 products sold per retail customer, FRC is currently averaging 9 products per customer."

Interested in more on First Republic Bank? See TheStreet Ratings' report card for this stock.
3 of 7

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
Only $9.95
14-Days Free
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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AF $16.02 0.00%
BXS $23.36 0.00%
FHN $14.01 0.00%
FRC $62.55 0.00%
SBNY $135.87 0.00%


Chart of I:DJI
DOW 16,472.37 +200.36 1.23%
S&P 500 1,951.36 +27.54 1.43%
NASDAQ 4,707.7750 +80.6910 1.74%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs