The Three Percent Solution

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46 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ANALYTICS The laTesT Wells Fargo, JPMorgan kick off earnings season with Q4 report originations played a role in year-over-year net- income gains for each of the lending giants. t wo of the nation's largest mortgage lenders, JPMorgan Chase and Wells Fargo, reported year-over-year increases in their net incomes for 2014, according to the banks' respective earnings statements released in mid-January. JPMorgan Chase reported a record net income of $21.8 billion for the full year of 2014, up from 2013's net income of $17.9 billion. The firm's earnings per share (EPS) for 2014 was $5.29, which was also a record (for 2013, EPS was $4.35). Revenue experienced a slight decline, however, from $99.8 billion in 2013 down to $97.9 billion in 2014. "2014 was a record year for the firm for net income and EPS. We delivered on our commitments—including business simplification, controls, expense discipline, and meeting our capital targets for the year—while maintaining excellent customer satisfaction rankings," said Jaime Dimon, chairman and CEO of JPMorgan Chase. "I am proud of this great company, its exceptional manage- ment team and employees, and everything we are achieving for our clients, shareholders, and communi- ties," he added. "Each of our busi- nesses and the company are very well positioned going into 2015 for long-term growth and success." Wells Fargo's net income for 2014 was $23.1 billion, a 5-per- cent increase from a year earlier. Diluted earnings per share also experienced a 5-percent jump in 2014 up to $4.10. Wells Fargo's 2014 revenue of $84.3 billion represent- ed a 1-percent increase from 2013. "Wells Fargo had another strong year in 2014, with con- tinued strength in the funda- mental drivers of long-term performance: growing customers, loans, deposits, and capital," said John Stumpf, the bank's chair- man and CEO. "As a result of this performance, we were able to return more capi- tal to our shareholders during the year," he added. "Our success is the result of our 265,000 team mem- bers remaining focused on meeting the financial needs of our custom- ers in the communities we serve. As the U.S. economy continues to build momentum, I'm optimistic that our diversified business model will continue to benefit all of our stakeholders in 2015." Despite reporting record net earnings for the full year 2014, JPMorgan's Q 4 2014 net income of $4.9 billion was actually a de- cline from $5.3 billion reported in the same quarter a year earlier. Earnings per share and revenues also experienced year-over-year declines in the fourth quarter of 2014—EPS fell from $1.30 to $1.19, while revenue dropped 2 percent to $23.6 billion. A decline in mortgage banking net income put a drag on earn- ings for the quarter. According to JPMorgan, mortgage income came out to $338 million in the quarter, a decline of $255 million from the year prior as credit losses and lower origination volumes ate into revenues. On the other hand, originations did pick up from the previous quarter, rising 8 percent to an esti- mated $23 billion "despite a season- ally slow quarter," the bank said. Wells Fargo's net earnings, di- luted EPS, and revenues for Q 4 2014 all increased from Q 4 2013. Net income nudged upward by 2 percent to $5.7 billion; diluted EPS also rose by 2 percent up to $1.02; and revenues jumped by 4 percent up to $21.4 billion. Originations also slowed at the country's biggest mortgage lender, though it still turned out a substantial $44 billion in new loans. Third-quarter originations amounted to $48 billion. Meanwhile, applications for new loans increased slightly to $66 billion, while Wells' applica- tion pipeline rose to $26 billion, indicating a potential uptick in the bank's first-quarter mortgage business if the economy holds steady and the market doesn't take another downturn. "Our performance in the fourth quarter was a great exam- ple of the benefit of our diversi- fied business model and reflected a continuation of the solid results we generated all year," said John Shrewsberry, CFO for Wells Fargo. "Compared with the prior quarter, we increased deposits and grew commercial and con- sumer loans while maintaining our risk and pricing discipline. Revenue increased as net inter- est income benefited from loan growth and the prudent deploy- ment of our liquidity."

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