Chase Earnings Miss, but 12 Record Quarters in a Row for Wells

Two of the nation’s largest banksrnreleased their first quarter earnings on Thursday.  The results of one outpaced analysts’rnexpectations while the other posted disappointing results.  Wells Fargo continued its 2013 winning streakrnwith a 14 percent increase in first quarter earnings while J P Morgan Chasernmissed estimates by .13 per share, a shortfall of nearly 10 percent.  </p

Wells Fargo reported first quarter netrnincome of $5.89 billion or $1.05 per share compared to earnings in the samernperiod in 2013 of $5.17 billion or .92 cents and fourth quarter figures of $5.6rnbillion or $1.00 per share.   The profits came despite slightly lower revenuesrnthan both the previous quarter and a year earlier, $20.6 billion compared to $20.7rnbillion and $21.3 billion.</p

The bank said its 12^{th</supconsecutive record quarter} was due in part to continued improvement in creditrnquality.  Net charge-offs were down torn$825 million, a reduction of $594 million from the first quarter of 2013.  This was a rate of 0.41 annualized comparedrnto 0.72 percent.  Non-performing assetsrnwere reduced by $4.1 billion or 18 percent. The company released $500 millionrnin reserves because of the continued strong credit performance and improvedrneconomic conditions. </p

Total loans were up $4.2 billion fromrnthe fourth quarter to $826.4 billion, which the company attributed to therngrowth in commercial, auto, and 1-4 familyrnfirst mortgages more than offsetting a decline in junior residential mortgagesrnand a seasonal decline in credit card loans. rnCommunity banking profits were up 31 percent year-over-year and mortgagernoriginations were down 28 percent from that same period to $36 billion.</p

Chief Financial Officer Tim Sloan said,rn”we are very pleased with Wells Fargo’s performance in the first quarter,rnparticularly in some of the drivers of long term growth; loans, deposits,rninvestments, capital, and credit quality. </p

Analysts had expected the bank to postrnprofits of .96 per share.  While overallrnresults were ahead of that consensus, revenue was down slightly fromrnexpectations as were pretax profits and changes in reserve levels.</p

JP Morgan posted first quarter earningsrnof $5.3 billion, down 19 percent year-over-year; $1.28 per share again, $1.59.   Wall Street had been looking for aroundrn$1.40 per share.   Revenues were $23.9rnbillion, 8 percent below that of a year earlier. </p

The bank blamed its weaker results on a drop in trading revenue but itsrnconsumer and community banking revenue was down 1.2 billion or 10 percent torn$10.5 billion and mortgage originations were off 68 percent from a year earlierrnand 27 percent from the previous quarter to a total of $17 billion.  Income from the mortgage business was $114rnmillion, a drop of $559 million from a year earlier.    </p

Unlike Wells Fargo, Chase increasedrnits provisions for credit losses, raising the total to $850 million from $617rnmillion in the first quarter of 2013. rnThe bank has paid heavy fines and has been involved in costlyrnsettlements over the last year or more. rnIn a conference call the bank said that legal issues would continue butrnat lower levels than in the past.

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