JPMorgan Chase posted a $380 million third-quarter loss as the
nation's largest bank paid $9.2 billion for legal fees and settlements
of regulatory disputes stemming from the mortgage crisis and other
issues.
Excluding special charges, the bank said it earned $5.8 billion, or $1.42 a share, up slightly from $5.7 billion, or $1.40 a share, in the third quarter of 2012. Analysts had expected the bank to earn $1.19 a share. Revenue was $23.9 billion, down from $25.9 billion in the same quarter a year ago.
JPMorgan shares rallied on the earnings report, climbing 2.6% in trading before the market opened.
"While we had strong underlying performance across the businesses, unfortunately, the quarter was marred by large legal expense,'' CEO Jamie Dimon said in a statement. ``While we expect our litigation costs should abate and normalize over time, they may continue to be volatile over the next several quarters."
During the quarter, JPMorgan agreed to pay $920 million in fines and admitted that it failed to properly supervise traders who caused a $6 billion loss for the bank last year, an episode known as the "London whale" case.
The bank is currently in negotiations with the Justice Department for a settlement of other claims that could total $11 billion, including $7 billion in cash and $4 billion in consumer relief. Those claims relate to the bank's handling of mortgage-backed securities
Most of the legal expenses associated with those claims stem from problems at Bear Stearns and Washington Mutual, two troubled banks that JPMorgan took over in the midst of the financial crisis. The company got what looked at the time like big discounts on each institution, CreditSights analyst David Hendler wrote before JPMorgan reported.
``In a way, the full cost of the Bear Stearns and WaMu acquisitions are now being realized,'' he wrote.
Dimon's statement reflected this view.
``The Board continues to seek a fair and reasonable settlement with the government on mortgage-related issues – and one that recognizes the extraordinary circumstances of the Bear Stearns and Washington Mutual transactions, which were undertaken at the request or encouragement of the U.S. government," he said.
Earnings benefited from a $1.6 billion reduction in loan loss reserves, including $1 billion reserves to protect the bank's mortgage portfolio. At the same time, the mortgage business saw profit drop 13% as loan production volume fell 67% on higher interest rates.
In the bank's major businesses:
* JPMorgan's corporate and investment bank saw net income rise 12% to $2.24 billion from $1.99 billion as revenue fell 2%.
* Consumer and community banking saw revenue drop 13% and profit climb 15%, driven by the lower mortgage volume and the reversal of loan loss reserves.
SOURCE : http://www.usatoday.com/story/money/business/2013/10/11/jpmorgan-third-quarter-earnings/2963383
Excluding special charges, the bank said it earned $5.8 billion, or $1.42 a share, up slightly from $5.7 billion, or $1.40 a share, in the third quarter of 2012. Analysts had expected the bank to earn $1.19 a share. Revenue was $23.9 billion, down from $25.9 billion in the same quarter a year ago.
JPMorgan shares rallied on the earnings report, climbing 2.6% in trading before the market opened.
"While we had strong underlying performance across the businesses, unfortunately, the quarter was marred by large legal expense,'' CEO Jamie Dimon said in a statement. ``While we expect our litigation costs should abate and normalize over time, they may continue to be volatile over the next several quarters."
During the quarter, JPMorgan agreed to pay $920 million in fines and admitted that it failed to properly supervise traders who caused a $6 billion loss for the bank last year, an episode known as the "London whale" case.
The bank is currently in negotiations with the Justice Department for a settlement of other claims that could total $11 billion, including $7 billion in cash and $4 billion in consumer relief. Those claims relate to the bank's handling of mortgage-backed securities
Most of the legal expenses associated with those claims stem from problems at Bear Stearns and Washington Mutual, two troubled banks that JPMorgan took over in the midst of the financial crisis. The company got what looked at the time like big discounts on each institution, CreditSights analyst David Hendler wrote before JPMorgan reported.
``In a way, the full cost of the Bear Stearns and WaMu acquisitions are now being realized,'' he wrote.
Dimon's statement reflected this view.
``The Board continues to seek a fair and reasonable settlement with the government on mortgage-related issues – and one that recognizes the extraordinary circumstances of the Bear Stearns and Washington Mutual transactions, which were undertaken at the request or encouragement of the U.S. government," he said.
Earnings benefited from a $1.6 billion reduction in loan loss reserves, including $1 billion reserves to protect the bank's mortgage portfolio. At the same time, the mortgage business saw profit drop 13% as loan production volume fell 67% on higher interest rates.
In the bank's major businesses:
* JPMorgan's corporate and investment bank saw net income rise 12% to $2.24 billion from $1.99 billion as revenue fell 2%.
* Consumer and community banking saw revenue drop 13% and profit climb 15%, driven by the lower mortgage volume and the reversal of loan loss reserves.
SOURCE : http://www.usatoday.com/story/money/business/2013/10/11/jpmorgan-third-quarter-earnings/2963383
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