""JPMorgan Chase & Co."":http://www.jpmorganchase.com (""NYSE: JPM"":http://www.nyse.com/about/listed/lcddata.html?ticker=JPM) kicked off of the earnings reporting season among major U.S. lenders Friday with stronger-than-expected results. The company reported net income of $17.4 billion for the full-year 2010, an increase of 48 percent compared with $11.7 billion for the prior year.
[IMAGE] During the fourth-quarter period, the financial institution brought in net income of $4.8 billion, up from $4.4 billion the previous quarter and $3.3 billion for the fourth quarter of 2009. Earnings per share were $1.12 in Q4 2010.
Ã¢â‚¬Å“Solid performance in the quarter and for the year reflected good results across most of our businesses, which benefited from strong client relationships and continued investments for growth,Ã¢â‚¬Â said Jamie Dimon, JPMorganÃ¢â‚¬â„¢s chairman and CEO.
Dimon noted, however, that the companyÃ¢â‚¬â„¢s mortgage business continues to be a Ã¢â‚¬Å“significant drag on returns.Ã¢â‚¬Â He said Ã¢â‚¬Å“while charge-offs and delinquencies have improved, credit costs still remain at abnormally high levels.Ã¢â‚¬Â
According to JPMorganÃ¢â‚¬â„¢s ""latest earnings announcement"":http://investor.shareholder.com/jpmorganchase/releasedetail.cfm?ReleaseID=543765, the companyÃ¢â‚¬â„¢s net revenue from its mortgage banking operations was $2.0 billion during the fourth quarter of 2010, more than double what it was during the same three-month period in 2009.
Noninterest expense for its mortgage banking business in the latest quarter was $1.7 billion, up by $580 million, or 50 percent, from the prior year. The company says the increase was driven by higher default-related expenses for its serviced portfolio, including costs associated with foreclosure delays due to affidavit errors.
JPMorgan originated $50.8 billion in new mortgage loans in Q4, up 46 percent from the prior year and 24 percent[COLUMN_BREAK]
from the prior quarter. Total third-party mortgage loans serviced were $968 billion, down 11 percent from the fourth quarter of 2009 and down 4 percent from the third quarter of 2010.
The company said its real estate portfolios reported a net loss of $823 million in Q4, compared with a net loss of $1.7 billion a year earlier. JPMorgan attributed the improvement to a lower provision for credit losses, which dropped from $3.7 billion this time last year to $2.3 billion.
According to the companyÃ¢â‚¬â„¢s earnings statement, the current-quarter provision reflected a $2.1 billion increase in the allowance for loan losses for the Washington Mutual loan portfolio, which JPMorgan described as Ã¢â‚¬Å“credit-impaired.Ã¢â‚¬Â The company says estimated future credit losses from the WaMu acquisition are largely related to home equity loans and, to a lesser extent, option adjustable-rate mortgage (ARM) loans.
Net charge-offs during the quarter were $1.8 billion, including the effect of the one-time $632 million adjustment related to delinquent loans within the Washington Mutual portfolio.
The company says this one-time acceleration of charge-offs was completely offset by an equivalent reduction in the allowance for loan losses, resulting in no net impact on current-period earnings. Absent this one-time adjustment, charge-offs during the quarter would have been $1.2 billion. Current-quarter charge-offs, excluding the one-time adjustment, were down $1.1 billion compared with the same period a year earlier.
Dimon says his organization remains committed to helping homeowners and preventing foreclosures.
Ã¢â‚¬Å“Since the beginning of 2009, we have offered 1,038,000 trial modifications to struggling homeowners,Ã¢â‚¬Â he said. Ã¢â‚¬Å“Of the 285,000 modifications we completed, more than 50 percent were modified under Chase programs, and the remainder were offered under government-sponsored or agency programs.Ã¢â‚¬Â
Dimon added, Ã¢â‚¬Å“I am proud of what our employees have done for our clients and our communitiesÃ¢â‚¬Â¦.Through [their] outstanding efforts Ã¢â‚¬Â¦ our firm has come through the worst economic storm in recent history stronger than we have ever beenÃ¢â‚¬Â¦.Although we continue to face challenges, there are signs of stability and growth returning to both the global capital markets and the U.S. economy.Ã¢â‚¬Â