Today’s Stock of the Week is a small bank, but a bank that is a bit different. It focuses on a very specific clientele in selected markets…
First Republic Bank (FRC) offers investors something unusual—a bank that is a growth stock. Founded in 1985 and with just 68 locations, First Republic serves high-net-worth clients in the country’s most affluent areas—San Francisco, where it is based, plus Los Angeles, Boston, New York City, Palm Beach and Greenwich, Connecticut.
First Republic is very strong in two measures important to banking—capital and asset quality. It is a niche bank with a strong focus on customer service for a limited client base, for which it provides private banking plus investment management. It has $65 billion in total bank assets and $75 billion in investment assets, and its business model gives it earnings growth that is unusual for its sector.
Higher interest rates will result in still better earnings, but rates are less important to First Republic than to other banks because of its unusual approach. Revenue of $1.84 billion in 2015 should grow to $2.18 billion this year and $2.49 billion in 2017. The dividend of $0.64/share/yr. recently yielded 0.83% and appears secure.
Earnings per share: 2017 est./$4.40… 2016 est./$4… 2015/$3.12.
Peter Tuz is president of Chase Investment Counsel, which manages $377 million, and portfolio manager of the $82 million Chase Growth Fund (CHASX) and $24 million Chase Midcap Growth Fund (CHAMX), Charlottesville, Virginia. ChaseInv.com
