UPDATE: Sterne Agee Initiates Coverage on First Republic Bank with Underperform Rating, $45 PT on Multiple Challenges Ahead

In a report published Thursday, Sterne Agee analyst Matthew Clark initiated coverage on First Republic Bank FRC with an Underperform rating and $45.00 price target. In the report, Sterne Agee noted, “We initiate coverage of FRC with an Underperform rating and $45 price target based on slower growth prospects, elevated regulatory expenses, the need to build liquidity for LCR and a valuation discount associated with becoming a $50B in asset bank. The multiple has actually expanded (+5% to 16.9x 2015E EPS) with the shares off 6% since FRC announced its 9-12% annualized expense drag on EPS.” First Republic Bank closed on Wednesday at $51.54.