1. Management stated that the accounting book value of common equity per share = $76.97. This is $76.97 = (Total Assets Total Liabilities preferred Stock) / shares outstanding. (Note: Page 3 does not give all assets and liabilities and omits common equity (around $14.3 billion). With a share price of $12 immediately after its EPS announcement, some looked at FRC stock and said this is a fire sale. A $12 stock with net assets (common book equity) per share = $76.97. Seems like a slam dunk winner. In fact, Yahoo Finances stock valuation tool said FRC was badly undervalued.

Based on our in-class discussion of First Republic (see Bank Tales of Woe power point in Canvas lectures folder), why was the low (stock price / book equity per share) ratio not indicative of the quality of FRC as an investment worth undertaking (see power points slides 6-9).