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Wells Fargo, Chase Improve Earnings in Q2

""Wells Fargo"":https://www.wellsfargo.com/ and ""JPMorgan Chase"":http://www.jpmorganchase.com/corporate/Home/home.htm both released their quarterly earnings reports Friday, revealing mixed loan numbers.


Wells Fargo reported record net income of $5.5 billion for the second quarter, up from $5.2 billion in Q1 and $4.6 billion in Q2 2012. For the first six months of the year, net income was a record $10.7 billion compared to $8.9 billion last year.

""Compared with the prior quarter, we grew loans, deposits, and net interest income, and both our efficiency ratio and credit quality improved,"" said chairman and CEO John Stumpf. ""Wells Fargo again demonstrated an ability to grow during a dynamic economic and interest rate environment, and we feel very well positioned to continue to perform for our shareholders over the long term.""

According to the report, originations totaled $112 billion, up from $109 in the first quarter, while applications totaled $146 billion, up from $140 billion. As of the end of the quarter, there was $63 billion worth of applications in the pipeline compared to $74 billion as of March 31.

Wells Fargo's mortgage servicing portfolio totaled $1.9 trillion. The ratio of mortgage servicing rights to related loans serviced for others was 81 basis points compared to 70 basis points in Q1.

Credit performance was also improved, according to chief risk officer Mike Loughlin. Credit losses were $1.2 billion in Q2 2013, a decline of $1 billion year-over-year. The [COLUMN_BREAK]

quarterly loss rate fell to 0.58 percent, with consumer losses totaling 1.01 percent.

""The consumer loss levels have improved rapidly due primarily to the positive momentum in the residential real estate market, with home prices improving faster and in more markets than expected,"" Loughlin said. ""We released $500 million from the allowance for credit losses in the second quarter, reflecting improvement in home prices and credit performance.""

The bank also noted its estimated Tier 1 common equity ratio under the recently adopted Basel III capital rules increased to 8.54 percent.

Meanwhile, JPMorgan reported net income of $6.5 billion for Q2, beating last year's $5.0 billion but falling just short of the first quarter.

Mortgage originations totaled $49.0 billion, up 12 percent from the prior year but down 7 percent from Q1. Purchase originations were $17.4 billion, up 50 percent from last year and 44 percent from the first quarter.

Mortgage banking net income totaled $1.1 billion, a decrease of $179 million (14 percent) compared to Q2 2012. According to JPMorgan, the decline was ""driven by lower net revenue, partially offset by lower noninterest expense and lower provision for credit losses.""

""Loan growth across the industry continued to be soft, reflecting a cautious stance by consumers, many small businesses and corporations,"" said chairman and CEO Jamie Dimon. ""However, we continue to see broad-based signs that the U.S. economy is improving and we are hopeful that, as jobs are added and confidence builds, the U.S. economy will strengthen over time.""

Mortgage servicing pretax income was $133 million, an increase of $68 million year-over-year.

The bank estimated its liquidity coverage ratio was 118 percent in Q2, exceeding the proposed Basel III requirements. Dimon noted the bank's estimated Basel III Tier 1 common ratio was approximately 9.3 percent as of the end of the second quarter, adding that JPMorgan is ""committed to achieving a Basel III Tier 1 common ratio of 9.5 percent by the end of this year.""

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.

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