First Republic Bank (FRC) focuses on serving a high net worth client base with plans to expand into markets outside its native California, posting positive metrics and faster growth than some of its financial services peers, says Karen Firestone, President, CEO & Co-Founder of Aureus Asset Management.
“The wealth management platform at First Republic includes over $32 billion in assets under management. They still have only about a 1% market share of high-net individuals in the New York area, compared to 13% in San Francisco, their home market, and there is growth potential in other promising markets as well. FRC has a strong balance sheet, very high credit quality and assets that are growing much faster than its competitors. At the current price of $37.5, the stock sells for about 12 times 2013 earnings,” Firestone said.
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Firestone incorporated First Republic in her investment portfolio over a year ago. She uses traditional investment values such as diversification, fundamental research analysis and risk management to build an overall allocation that’s customized for each relationship, incorporating global perspective for the long term.
“Just to elaborate, First Republic was a purchase based on our belief almost 18 months as that the housing market was improving, when this was a contrarian idea. We actually first got to know the firm because one of our clients was switching banks and really liked FRC. We were intrigued and did considerable research, talking to local managers as well as meeting with the top executives,” Firestone said.
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