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Big Four Release Earnings, Citing Economy, Litigation

Litigation fees, poor economic climes, and new regulation helped shape earnings figures over the third quarter for the nation's largest lenders and financial institutions in October.


Along with numerous other banking holding companies and investment firms, ""Bank of America"":https://www.bankofamerica.com/, ""Citigroup"":http://www.citigroup.com/citi/homepage/, ""JPMorgan Chase"":http://www.jpmorganchase.com/corporate/Home/home.htm, and ""Wells Fargo"":https://www.wellsfargo.com/ released their reports to the media and investors over the past two weeks.

The results: more mortgage lenders continue to exit the business, while financial institutions stepped up the public debate against onerous regulations and ongoing court battles with federal agencies.

Bank of America led the way in overall earnings, reporting $6.2 billion in net income and $0.56 per diluted share. This compares with sour figures seen last year for the lender, which reported net losses of $7.3 billion and $0.77 per diluted share over the same stretch last year.

""CEO Brian Moynihan"":http://mediaroom.bankofamerica.com/phoenix.zhtml?c=234503&p=irol-govBio&ID=197628 highlighted recent changes, including the decision to exit correspondent lending, by describing in a statement ""our ongoing transformation toward becoming a leaner, more focused company├â┬ó├óÔÇÜ┬¼├é┬ª in a very challenging environment.""

Bank of America drubbed up $33 billion in residential loans for first-time homebuyers over the third quarter, laying claim to 151,000 borrowers who either purchased a new home or refinanced their current mortgages.

The financial institution attended to 12,000 first-time homebuyers via retail channels and reportedly reached 54,000 low- to moderate-income homebuyers, with first mortgages and refinance amounting to 47 percent and


53 percent of activity, respectively.

By earnings, JPMorgan Chase ranked second over the third quarter, reporting $4.3 billion in net income and $1.02 per diluted share. Revenue hovered at more than $24 billion.

Said ""CEO Jamie Dimon"":http://investing.businessweek.com/businessweek/research/stocks/people/person.asp?personId=170444&ticker=JPM:US in a statement: ""Our shareholders should rest assured that we are being extremely cautious while navigating through this challenging economic environment. We are working hard to meet all of the requirements of the new and complex regulatory environment, and we continue to invest in the future while remaining focused on serving our clients and communities around the world.""

JPMorgan chalked up the figures to $1 billion in pretax litigation fees incurred by federal agencies, other lenders, and a number of plaintiffs, which persist in fighting the financial institution over subprime mortgage losses during the financial crisis.

Wells Fargo resumed the role of preferred lender among all the mortgage giants, citing a first-quarter $214-million uptick that crested at $1.8 billion in mortgage banking non-interest income. Originations topped $89 billion, up from $64 billion from the second quarter.

The mortgage lender also recorded $4.1 billion in net income, 3 percent above figures seen last quarter and more than 20 percent from the same time last year.

""The economic recovery has been more sluggish and uneven than anyone anticipated,"" ""John Stumpf"":https://www.wellsfargo.com/about/corporate/executive_officers/stumpf, Wells' chairman and CEO, said in a statement. ""We can't change the economic environment, yet we have worked hard to control the variables we can.""

Of the big four, Citigroup fell last in line by third-quarter figures, reporting $3.8 billion in net income and $1.33 per diluted share. Earnings rounded out to $2.6 billion for the mortgage giant and revenue came to $20.8 billion for the financial institution.

Addressing shareholders in a ""YouTube video"":http://www.youtube.com/watch?v=bZLst_sTLGs, ""CFO John Gerspach"":http://people.forbes.com/profile/john-c-gerspach/19725 described the results as ""a solid performance, especially given the tough economic environment.""

In other news, the big four recently signed on to modifications en route for the Home Affordable Refinance Program.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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