Business & Finance
Business and Finance
Business and Finance
Fri, October 15, 2010
Thu, October 14, 2010 
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: JPMorgan Chase & Company (NYSE: [ JPM ]), Bank of America Corp. (NYSE: [ BAC ]), PNC Financial Services Group Inc. (NYSE: [ PNC ]), Citigroup (NYSE: [ C ]) and Goldman Sachs (NYSE: [ GS ]).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: [ http://at.zacks.com/?id=4579 ]
Here are highlights from Wednesdaya™s Analyst Blog:
In JPMorgan We Trust
JPMorgan Chase & Companya™s (NYSE: [ JPM ]) third quarter earnings came in at $1.01 per share, substantially ahead of the Zacks Consensus Estimate of 91 cents. Results also soared from the earnings of 82 cents in the prior-year quarter.
The better-than-expected numbers were primarily supported by a slowdown in provision for credit losses, which more than offset a pressure on trading revenues, investment banking revenues and non-interest income. Strong mortgage loan production by Retail Financial Services, higher Card Services sales volume and strong net inflows in Asset Management were also impressive during the quarter.
Quarter in Detail
Net income available to common shareholders was $4.4 billion, up 23% from $3.6 billion in the prior-year quarter. A significantly lower provision for credit losses primarily drove the results. However, lower revenues and higher non-interest expenses were the offsetting factors.
Managed net revenues for the quarter came in at $24.3 billion, down 15% from $28.8 billion in the year-ago quarter. However, this compares favorably with the Zacks Consensus Estimate of $24.2 billion.
Managed non-interest revenues were $11.7 billion, down 16% from $14.0 billion in the prior-year quarter. The decrease was driven by lower principal transaction revenues as a result of weak trading performance. Net interest income was $12.6 billion, down 15% from $14.8 billion in the year-ago quarter. The decline in net interest income was due primarily to JPMorgana™s lower loan balances.
Non-interest expenses for the quarter were $14.4 billion, up 7% from $13.5 billion in the prior-year quarter. The increase was driven by higher litigation expense.
Managed provision for credit losses decreased 67% year over year to $3.2 billion. Total consumer provision for credit losses was $3.2 billion, down 64% from $9.0 billion in the year-ago quarter. This reflects a reduction in the allowance for credit losses as a result of improved delinquency trends and reduced net charge-offs.
Credit Quality
JPMorgana™s credit quality showed a decent improvement during the quarter. As of September 30, 2010, nonperforming assets were $17.7 billion, down from $18.2 billion in the prior quarter and $20.4 billion in the prior-year quarter. Net charge-offs decreased to $4.9 billion from $5.7 billion in the prior quarter and $8.1 billion in the prior-year quarter. As a result, the managed charge-off rate improved to 2.84% from 3.28% in the prior-quarter and 4.30% in the year-ago quarter.
Evaluation of Capital
JPMorgan maintained a strong capital position with an estimated Tier 1 common capital ratio of 9.5% as of September 30, 2010, versus 9.6% on June 30, 2010 and 8.2% on September 30, 2009.
Book value per common share was $42.29 as on September 30, 2010, compared with $40.99 as on June 30, 2010 and $39.12 as on September 30, 2009.
JPMorgan is one of the major lenders to have recently decided to rein in their foreclosure activities as rampant paperwork irregularities led to a wrong evaluation of the authenticity of information provided in the mortgage documents. The other lenders that have taken similar decisions are General Motors Acceptance Corporation (aGMACa) Mortgage LCC, a wholly-owned subsidiary of Ally Financial, Bank of America Corp. (NYSE: [ BAC ]) and PNC Financial Services Group Inc. (NYSE: [ PNC ]). As a precautionary measure, lawmakers have asked several other lenders to halt their processes as well.
Though concerns relating to the near-term impact of the financial reform law and the suspension of foreclosures due to paperwork flaws overcast its share price in the recent days, the stock was up about 0.2% following the announcement of third quarter results.
Though most of the major banks had to absorb extraordinary shocks from the recession, JPMorgan maintained consistent profitability throughout the downturn in the economy. Despite the impact on earnings power from the recent financial reform law and continuing pressure on trading revenues, JPMorgan is expected to deliver, based on its prudent business model and strong fundamentals.
JPMorgan shares are maintaining a Zacks #3 Rank, which translates into a short-term aHolda™ recommendation. We have a long-term aNeutrala recommendation on the stock.
Several major banks are scheduled to report next week, including Citigroup (NYSE: [ C ]) on October 18, and Bank of America and Goldman Sachs (NYSE: [ GS ]), both on October 19.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: [ http://at.zacks.com/?id=5514 ].
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: [ http://at.zacks.com/?id=5516 ]
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at [ http://at.zacks.com/?id=4580 ].
Visit [ http://www.zacks.com/performance ] for information about the performance numbers displayed in this press release.
Follow us on Twitter: [ http://twitter.com/zacksresearch ]
Join us on Facebook: [ http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts ]
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
