Credit: Shutterstock photoSan Francisco-based private bank and wealth management company - First Republic Bank ( FRC ) priced senior notes worth $400 million. Recently, in March the company also announced the pricing of the public offering of 4 million shares of its common stock.
The senior notes, which are set to mature on Jun 17, 2019, will carry an annual interest of 2.375%. First Republic will make interest payment on the senior notes on a semi-annual basis. Such payment will be made in arrears on Jun 17 and Dec 17 of each year, starting Dec 17, 2014.
Joint book-running managers for the transaction include Goldman, Sachs & Co - the subsidiary of The Goldman Sachs Group, Inc. ( GS ), Morgan Stanley & Co. LLC - an arm of Morgan Stanley ( MS ) and JPMorgan Chase & Co. ( JPM ).
The company anticipates utilizing the net proceeds from the offering in a number of purposes including financing loans and purchasing investment securities. However, we believe the senior notes offering might lead to further increase in interest expenses thereby affecting overall profitability.
Notably, for the quarter ended Mar 2014, interest expenses increased 42.4% year over year to $36.7 million. Long-term debt stood at $5.65 billion, up from $5.15 billion in the prior quarter.
First Republic exhibits decent fundamentals amid a competitive banking environment. However, the company is combating several issues including a continuous decline in net interest margin amid a still low interest rate environment and persistent rise in operating expenses.
First Republic currently holds a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
FIRST REP BK SF (FRC): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
To read this article on Zacks.com click here.
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.
