2018 an inflection year as expense surge ends
We have revisited our bottom-up expense growth estimates post FRC's recent result and following our conversation with management. The analysis reinforces our view that FY18 will be an inflection year and that the surge in expenses is over. As a result, we expect cost efficiency to improve from FY19, helping FRC to return to mid-teens EPS growth. We reiterate our Overweight rating.First Republic Bank is a commercial bank and trust company. The company conducts its business through two reportable business segments: Commercial Banking and Wealth Management. The principal business activities of the Commercial Banking segment are accepting funds from the general public, originating loans (primarily real estate secured mortgage loans) and investing in investment securities. Wealth Management segment consists of subsidiary First Republic Investment Management, Inc.; the company's money market mutual fund activities through third-party providers and the brokerage activities of First Republic Securities Company, LLC; the Trust Company; and the company's foreign exchange activities.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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