First Republic Bank to Sell New Preferred

Private banker First Republic Bank (FRC) will be selling a new non-cumulative preferred stock issue.

At the same time the company announced the new offering, they announced they would be calling for redemption their series F issue (FRC-F) 5.70% issue which became redeemable on 6/30/2020.

The issue will be investment grade so I am looking for a coupon in the 4.25 to 4.50% area.

FRC has a number of other issues outstanding which can be seen here.

FRC is regulated by the FDIC and thus they do not file with the SEC, but you can see data on their website on this new issue.

Thanks to mcg for catching this issue.

28 thoughts on “First Republic Bank to Sell New Preferred”

  1. I bought some flipping shares at 25 near the close. I will be happy to unload them at 25.50 or higher.

  2. RE: FRC-K

    This is an easy one to reduce to numbers. All the FRC preferred are fixed rate issues. So, comparing yields is easy. Col H gives you stripped yield but Col I gives you yield to call, which is what you’re likely to get if you buy and hold an issue. FRC is not one to let it’s preferred linger after their call dates, unless rates have moved even lower.

    YTC on the new K is at 3.89%, which is barely above the I issue (issued late 2019) at 3.67%.

    Very little meat on the bone here.

    I will not be surprised in the price on K gets bid up in the next few days but those buying are either planning to flip or haven’t done any comparison shopping. Institutional interest will be strong as FRC has no institutional preferred outstanding.

    https://docs.google.com/spreadsheets/d/1w5c5PAgXDFUTG0TarPN0i0RKsR6Kyfi9_lSHBvf_HZo/edit?usp=sharing

  3. 4.125% for a bank? That is crazy. Last few days have shown you can lose a years divi in just a day at that miserly perpetual coupon. Im assuming credit quality is high, but I dont need over kill with a highly liquid bank issue of that yield.
    Actually past couple days took advantage of drop offs to buy more EP-C at $48.16, reentered a position in GOODN at $24.25, and bought some more SJIJ at $25.27. But largely havent done a lot lately…Oh except bitch at TD because they forgot to pay me my FORFF dividends. They are digging into it and will let me know in a few days where they found them at…. This may serve as a reminder for anyone with a canadian issue to make sure you are getting your dividends. I dont think I have had a problem before though.

    1. Grid,

      I agree these rates seem like slim pickings. However if you look at the overall markets, these are not necessarily out of line with what’s generally going on.
      The Bond Buyers index is 2.20% as of last Thursday. The new MET-G institutional issue being brought has a 3.85% coupon – proceeds will retire a 5.25% issue. And look at Entergy – refinancing some of their first mortgage bonds. Then of course there are treasuries.

      1. Razor, I dont dispute that at all. I just think (for me) there are ways around a liquid 4% perpetual issue that protects one capital better and or provides safe income. And admittedly I do own a few high quality illiquid Ute issues down in that range. But they wont drop in unison with a market downdraft.
        I also am of belief that one can “overkill” safety at expense of capital erosion and yield. The key right now for income protection is avoiding stressed sectors looking for income more so than actual real highly credit rated preferred ratings per se.
        For example, SJI has no plans to let their BBB debt rating sag below IG, Im fine with the subordinated debt at BB considering the common stock dividend has been raised annually 21 years running and paid 69 straight years. So I will grab more of the higher regulated ute yield and give up a smidge of credit rating for whatever that actually protects one from.

        1. Grid,
          I’m with you in your thinking. I love SJIJ and have a good position in it. However, if SJI was issuing something new today, it would not surprise me to see a coupon less than what SJIJ has if they could do it. Don’t know how long current trends will last, but when I saw Public Storage issue @ 4.125 followed by Prudential – both within the last 2 or 3 weeks, it made me think we were entering another down draft in rates. Today it still looks that way. Again, don’t know when that will change or what might trigger a change.

          1. Razor, Its hard to know for sure. SJIJ was issued at 5.65% and is about a quarter over issue price. So the market is saying not much, but it could be up 50 cents quickly who knows…Also QDI is going to get the benefit of the doubt in lower yields being the tax nature of them. Look at the insane difference between NYCB-A and NYCB-U. And U sits above it in cap stack. Its the QDI status…I digress, I think we are in total agreement. Im not posting to suggesting this is out of line with what is coming to market now. I am suggesting there is still modest ways to fight back and work around it with other purchases.

              1. Jake, I have owned it off an on. If one is to assume low longer rates its a good buy. They lease basically to IG companies and heavily tethered to Fed Ex. They have a draining goofy mall type reit portfolio that hurts them but its minor. In todays world its a good relative yield. The price stays anchored because MNR uses this C series as an ATM so that keeps its price from rising. And of course it becomes callable in a year. They already said they would “re fi” if they can in a year, but a year is a long ways away. Its probably one of the better 6% YTC issues out there now for a pure income play.

            1. I picked up 500 shares of SJIJ today at an avg. price of $25.33. It looked like higher than normal volume today. Not sure why though but I’m happy to get that price.

              1. I also bought a small number of shares of SJIJ at $25.30. The next dividend will put my effective cost basis under par, and then I’ll simply let it ride until they call it Sept 2024 ( 1st call date )

                1. Inspy, Just buy CMS-B. Its laying there for taking over 1000 shares at $109.05, redemption price $110. That is same current yield. As you know one can get cheaper biding time. Heck 300 went at $108 today. You actually get something that is below redemption price, an A3 Moodys rating, and a small float that is covered by an infinite ratio compared to this one and cumulative to boot. Plus it keeps you in the warm confines of ute illiquids. And your memory is long enough to know how these dont plunge with the market on liquidity bouts like these liquid low yielders do.

                  1. Hey, thanks for the info. Grid.
                    I know nothing about CMS-B, so need to do some homework.
                    BTW, I sold a hundred shares of AILLL today @ $29.10. Should be able to buy back lower in future.

                    1. If interested its subsidiary Consumers Energy, not the holding company CMS Energy (though the ticker is confusing being CMS-B). Moodys just rated the preferred A3 (negative) in July and Fitch has it BBB+ (stable). Take your pick. An old 1960s 20-30 millionish old float. Its only preferred left from the subsidiary. I have owned it a few times. Had a shot at $107 after exD the other day and got greedy for $106 range and missed it. Totally safe payer, but the price is always the direct reflection of percieved worth and that is a personal decision.

                      https://s2.q4cdn.com/027997281/files/doc_downloads/2020/07/CMS-ENERGY-AND-CONSUMERS-CREDIT-RATINGS-07-2020.pdf

                      I have a decent amount of SJIJ myself. Could have flipped when it went over $26 pre exD couple weeks ago, but decided to just hold this issue and let it play out. 5.5% ish ute debt with 4 year call protection is pretty scarce so Im personally not looking to pawn mine off.

                2. Ha, Inspy, I was bouncing around on treadmill at gym and thought you were buying that 4.125% bank issue, which seemed unbecoming of your style…. You can disregard my previous post… I knew you were a ute guy, so I should have read it closer the first time, ha!

    2. Grid, That price seems higher than what you have paid for in the past for EP-C I seem to remember its one of your stocks you like to flip, buy around 43 or 44 then hold.
      This market has been making me nervous this last couple weeks, reminds me of the market back in February. I moved into a lot preferred’s back then with a mix of 6% to 8% and then got hit in March with the drop.
      The only thing I have bought last couple weeks is the NYCB-U as I can live with it dropping in the 30’s as it seems resilient enough to recover.

      1. Charles, A lot of my buying is on relative price movement with semi related peers of similar credit quality. Actually a year or so ago, I was banging out EP-C at $49 and flipping in $51-$53 range several times. The interesting part of EP-C is always the definable term maturity of issue. I wont even be medicare eligible when it matures. 🙂

          1. EOZ, No K-1, 100% certain. It never did…But parent KMI is now a C-Corp and doesnt issue K-1’s anymore either.

    3. I have owned Republic issues in the past but this is just too thin to consider. Better yields available in Canada.

  4. Updated price talk.

    4.125 to 4.25
    Expected yield to be @ low end of this range

    Limited availability

    Yippy Ky Yea

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