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4 Reasons Why First Republic (FRC) is a Solid Pick Now

Amid global headwinds, the domestic market indeed looks like a safer area for investments. We believe adding First Republic BankFRC to your investment portfolio is a good idea now! Notably, the stock of this California-based bank gained, which gained nearly 20% year to date, continues to reflect strength in several areas.

Why is it an Attractive Pick

Revenue Growth : Organic growth remains a key strength for First Republic as total revenues grew at a Compound Annual Growth Rate (CAGR) of 17% over the last three years (2012-2014). Over the same time frame, net interest income (NII), which the bank's primary source of income from operations, grew at a CAGR of 13% even amid the low interest rate environment. Notably, second-quarter 2015 marked the16th consecutive quarter of double-digit growth of core net interest income.

We expect a continued upward momentum in revenues with growth in loans and potential rising interest rates in the near term. Notably, for 2015, management expects loan growth of 12% to 14%.

$50-billion plus institution : As widely known, First Republic expects consolidated assets for the trailing four quarters to average at least $50 billion by the end of third-quarter 2015. Notably, the average of the last four quarter-end total assets came in at $49.8 billion. Though entry into a competitive market with larger players will pose a challenge for the company, we believe that it is well positioned to counter this and will have adequate room for further growth.

Earnings Per Share Strength : First Republic's earnings per share recorded a CAGR of nearly 6% over the last 3 years (2012-2014).

Earnings are expected to show an upswing in the near term as the company's projected EPS growth (F1/F0) is 7%. Also, the company has a decent earnings surprise history as it surpassed the Zacks Consensus Estimate by an average of 2.1% in the trailing four quarters.

Favorable Zacks Rank : First Republic currently carries a Zacks Rank #2 (Buy). This is driven by upward estimate revisions over the last 90 days. For 2015, the Zacks Consensus Estimate moved up 2% to $3.18 per share.

Considering the above positive traits, we believe investing in First Republic should not disappoint you.

Other Stocks to Consider

Some other top-ranked stocks in the finance space include BofI Holding, Inc. BOFI , Northrim Bancorp Inc. NRIM and First Financial Bancorp. FFBC . All three stocks sport a Zacks Rank #1(Strong Buy).

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FIRST REP BK SF (FRC): Free Stock Analysis Report

FIRST FIN BC-OH (FFBC): Free Stock Analysis Report

BOFI HLDG INC (BOFI): Free Stock Analysis Report

NORTHRIM BCP (NRIM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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