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TheStreet Open House

Bank of America Castoff Doing Way Better Than Bank of America

First Republic reported third-quarter earnings available to common stockholders of $97.0 million, or 72 cents a share, increasing from $87.8 million, or 66 cents a share, in the third quarter of 2011. The company's total loans grew by 27% year-over-year, to $26.3 billion, as of Sept. 30. First Republic's return on average assets (ROA) has ranged between 1.27% and 1.34%, while its return on equity (ROE) has ranged between 13.13% and 15.12%, over the past five quarters, according to Thomson Reuters Bank Insight.

Those are very respectable returns in the prolonged low-rate environment, and while Bank of America certainly had good reason to take the $1.86 billion when it unloaded First Republic in 2010, there's no question that First Republic has thrived on its own, with the shares returning 21% since the IPO on Dec. 9, 2010 through Tuesday's close at $44.56, while Bank of America's shares were down 23%, though Tuesday's close at $9.63.

Haire raised his 2013 earnings estimate for First Republic $2.26 a share from $2.21, while raising his 2014 EPS estimate to $2.49 from $3.27, saying that the benefit of the Luminous acquisition would be partially "offset by last week's $150mm preferred issuance (at 5.6% coupon), which will add $8mm of below-the-line dividends annually."

First Republic's shares have returned 10% year-to-date, following a 5% return in 2011.

The shares trade for 1.7 times their reported Sept. 30 tangible book value of $20.37, and for 11.5 times the consensus 2013 EPS estimate of $2.93, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $2.96.

FRC Chart FRC data by YCharts

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

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-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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