San Francisco-based private bank and wealth management company – First Republic Bank (FRC) announced the pricing of the public offering of 4 million shares of its common stock at a price of $53.22 per share. The offering is expected to end on or around March 21, 2014, subject to certain conditions.
First Republic Bank has permitted a 30-day option to the underwriters for covering over-allotments, if any. The option includes the purchase of an additional 0.6 million shares of common stock at the public offering price including the underwriters’ discount.
J.P. Morgan Securities LLC, a division of JPMorgan Chase & Co. (JPM) and BofA Merrill Lynch, a unit of Bank of America Corporation (BAC) are acting as the joint book-running managers.
The net proceeds from the offering are anticipated to be used for general corporate purposes. These purposes might include funding of loans and purchase of investment securities. Further, debt repayment and other operational needs can be met through such proceeds.
Notably, since First Republic Bank’s initial public offering in Dec 2010, this is the first common equity primary issuance.
During 2013, First Republic Bank originated loans worth $17.8 billion and bought investment securities worth $1.6 billion. As of Dec 31, 2013, the bank’s total long-term debt came in at $5.2 billion.
First Republic Bank’s cash and cash equivalents showed a balance of $807.9 million as of Dec 31, 2013, up 34% year over year. Cash position improved mainly due to an increase in deposits.
The latest capital raising move will aid the company in reducing its total debt burden to some extent. On the other side, First Republic Bank’s capital ratios will improve and the bank will be able to further pursue growth and acquisition opportunities.
Yet, the unsettled economic environment and stringent regulatory issues remain concerns. First Republic Bank currently carries a Zacks Rank #3 (Hold).
Among other West banks, Preferred Bank (PFBC) with a Zacks Rank #1 (Strong Buy) is worth considering.
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