Just a few months after hiring an investment banker to explore a sale, San Francisco's First Republic Bancorp has called off the search.

The $2.2 billion-asset thrift on Tuesday told its investment banker, Montgomery Securities, that it has decided to remain independent. First Republic, which specializes in jumbo mortgages, will also consider other strategic moves, including buying or investing in other financial services companies, a spokesman said.

The move surprised observers. "It's rare that a bank reverses course at that stage," said Tom Rudkin, managing director at Advest Inc. in New York. He said a company might scrap a sale because it got unacceptably low offers or because it couldn't overcome "social" issues involved in a merger, such as job security for senior management and other employees.

First Republic's spokesman, Owen Blicksilver, wouldn't comment on whether it or Montgomery had received any offer.

"When they looked at the opportunities involving a change of control, they decided it made more sense to remain independent," Mr. Blicksilver said. "If you look at this company and its strengths in the high-end mortgage business and you look at the potential it has going forward, you have a fundamentally strong company."

Mr. Blicksilver said First Republic would still consider offers from other companies but "they're not out actively seeking a buyer."

Investors reacted sharply to the news; First Republic's stock fell $2.25 a share in trading Thursday, to $20. And the stock was trading at $20 Friday afternoon.

The reversal of strategy takes a large player off the auction block at a time when merger activity among thrifts is brisk. Many thrifts are worried that they might miss opportunities to get high takeover prices if they don't act now.

The action is particularly heated in California, where attention has been focused on the battle for the nation's third-largest thrift, Chatsworth-based Great Western Financial Corp.

Montgomery Securities thrift analyst Caren Mayer speculated in a research report Thursday that First Republic's decision may have been driven by concern that employees were worried about job security and by fear that customers might walk away.

Mr. Blicksilver denied that such concerns had affected the thrift's decision but admitted that ending the search for a buyer would also reassure employees and customers.

"There's no question that when you go through a process like this, it does create some uncertainty," he said. But it's "not significant enough to have a major impact on the business."

In fact, the company's announcement that it was taking itself off the market came as First Republic is having one of its best months ever in jumbo mortgage originations, he said.

The company's board has also expanded its share repurchase program, authorizing buybacks of 500,000 shares of common stock in addition to previous authorizations. Since First Republic began a stock buyback program in June 1993, it has repurchased 486,000 shares and had unused board approval to buy back another 170,000.

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