Third-quarter profits improved annually at two of the nation's biggest megabanks, though mortgage banking results were mixed.
For the latest completed quarter, JPMorgan Chase reported net income of $5.6 billion compared to a loss of $380 million a year ago. Earnings last year were flattened by a $7.2 billion (after-tax) legal expense, while Q3 2014's results include a $1.0 billion after-tax charge.
Revenue for the quarter totaled $25.2 billion, up 5 percent from a year prior.
Commenting on the results, chairman and CEO Jamie Dimon said the bank has "continued to deliver strong underlying performance" in maintaining its balance sheet, simplifying business, and adapting to regulatory changes.
"We remain very focused on executing the control agenda and investing to protect our customers and the company for the future," he said.
Mortgage banking net income was $439 million, down $266 million from a year ago and $270 million from the prior quarter. Much of the year-over-year decline stemmed from a reduced benefit from credit loss provisions—$19 million compared to last year's $1 billion.
Originations for the quarter came to $21.2 billion, down 48 percent from last year but up 26 percent from the second quarter, JPMorgan reported.
The bank's mortgage servicing income (pretax) was $138 million in Q3, up from a loss of $406 million a year prior as a result of lower expenses and higher risk management income. As of the end of the quarter, total third-party mortgage loans serviced were $766.3 billion, down 8 percent from Q3 2013 and up 3 percent from Q2 2014.
Revenues came to $21.1 billion, down slightly from last year's $21.4 billion.
"The Company's third quarter results demonstrated strength in the fundamental drivers of our long-term growth," said John Stumpf, chairman and CEO of Wells Fargo. "We continue to see signs of a steadily improving economy, and I remain optimistic about the opportunities ahead for Wells Fargo."
While profits were up slightly, mortgage business at the country's biggest home lender was down on a quarterly basis. According to the bank's report, mortgage banking noninterest income was $1.6 billion in Q3, down $90 million from Q2 2014 and about level with where it was last year.
Home mortgage originations last quarter came to $48 billion, up $1 billion from the second quarter but down from $80 billion a year ago, Wells Fargo reported. Applications totaled $64 billion with a pipeline of $25 billion at quarter-end, down from $72 billion and $30 billion, respectively, in Q2.
The bank explained that origination gains were largely due to an increase in the gain on sale margin (1.82 percent compared to 1.41 percent in the second quarter), though that was "more than offset" by a decline in servicing income driven by lower net mortgage servicing rights and an increase in unreimbursed directing servicing costs.
Meanwhile, credit losses were $668 million in the third quarter, an improvement of 31 percent from last year, allowing the bank to release $300 million from its allowance for credit losses.
"Credit quality continued to trend positively in the third quarter as loan losses remained at historic lowers, nonperforming assets continued to decrease, delinquency rates were stable, and we continued to originate high quality loans," said Mike Loughlin, chief risk officer. "We continue to expect future reserve releases absent a significant deterioration in the economic environment, but expect a lower level of future releases as the rate of credit improvement slows and the loan portfolio continues to grow."
Coming from two of the biggest names in U.S. banking and mortgages, Tuesday's earnings report provide a glimpse at how the market performed at a time when housing usually starts to slow down each year. Also released on Tuesday was the latest from Citigroup, which took in $3.4 billion during the quarter. Earnings from other big-name firms, including Bank of America, Goldman Sachs, and Morgan Stanley, are due later this week.