First Republic Once Again Shows It's Different In All The Right Ways

The argument for owning First Republic (FRC), a bank that has often appeared to trade at robust (if not excessive) multiples, has long been that it’s a different sort of bank. Skeptical veteran investors can be forgiven for shaking their head at the “it’s different this time” argument, but First Republic continues to make the case that it really is a different sort of bank – one that can navigate this unexpected pandemic-driven recession better than the vast majority of its peers.

I liked First Republic after first quarter earnings, and the shares have risen about 16% since then – better than the average regional bank, but only a little better than the S&P 500. While that move has shrunk some of the undervaluation I saw, the shares do still look undervalued and I believe the long-term expected return here is pretty attractive, particularly if you believe that multiples can re-inflate somewhere down the road when investors return to the banking sector.

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First Republic Once Again Shows It's Different In All The Right Ways