Understanding what a business does well and not messing
that up in the pursuit of even more growth is an underappreciated
business talent, but First Republic (FRC)
has that going for it with its management team. While management often
fields questions from investors about building or buying its way into
new markets, continuing to drive market share growth within its core
high net worth (or HNW) market in California, New York City, and Boston
continues to drive exceptional performance for this specialized bank.
The
biggest challenge for First Republic may be funding its loan growth,
but so long as the market is willing to keep paying a premium for the
shares, equity raises make sense. While the HNW market is likely not as
bulletproof as the bulls want to believe (let’s see what happens in the
next real tech stock washout…), I have no problem assuming that First
Republic will generate double-digit loan and core earnings growth for a
long time to come (at least on an annualized basis). Valuation isn’t as
extreme as relative comparisons may seem (there really aren’t many, if
any, truly fair comparables), but if loan growth slows, the multiple
will definitely be at risk.
Read more here:
Robust Loan Growth Continues To Feed The First Republic Growth Machine
No comments:
Post a Comment