Shares for First Republic Bank were trading higher Thursday after the bank reported earnings and revenue above Wall Street estimates and strong loan originations for its second quarter.
First Republic (ticker: FRC) on Thursday reported earnings for the quarter ended June 30 of $2.16 a share, which was higher than Wall Street estimates of $2.09 a share, according to FactSet. Revenue of $1.5 billion beat analysts' estimates of $1.47 billion.
Despite what looks to be a strong quarter for First Republic, disappointing results from other banks and, in turn, increased concerns of a possible recession, sent stocks broadly lower Thursday.
JPMorgan Chase (JPM) stock sank 4.4% Thursday after the big bank said it was temporarily suspending share buybacks and reported earnings below Wall Street estimates. Morgan Stanley (MS) also reported an earnings miss for its second quarter on Thursday, and the stock fell 2.3%. The S&P 500 index fell 2%.
Shares of First Republic bucked the trend, rising 1.4% higher to $150.43. The stock is still down 30% in 2022.
First Republic said loan originations, or the process in which a buyer obtains a loan, were $22 billion in the second quarter, a 31.1% increase from the same period last year. This was mostly due to increases in single-family and multifamily lending, the bank said in its earning release. Single-family loan originations equaled 48% of the total loan origination volume for the quarter.
"Loan growth was very strong, and credit quality remains excellent," CEO Mike Roffler said in the earnings release.
RBC Capital Markets analyst Jon Arfstrom wrote in a research note that "this was a strong quarter for the company with loan growth and margin expansion as highlights, though we would also point out the modest deposit growth and clean credit as notable items as investors are laser focused on those two risks for the industry." He rates the bank at Sector Perform with a $180 price target.
Evercore ISI analyst John Pancari is more bullish on the bank with a Buy-equivalent rating of Outperform and a $173 price target. He said in a research note Thursday that overall the quarter was marked by "better than expected loan trends …, in-line [average] deposit trends, and better wealth fees."
The week of bank earnings isn't over yet, with both Wells Fargo (WFC) and Citigroup (C) expected to report their quarterly results before the markets open Friday morning. It seems that investors aren't optimistic about what those earnings will look like, with Wells Fargo trading 2.4% lower Thursday while Citigroup stock fell 4.1%.