 |
|
| View previous topic :: View next topic |
| Author |
JP Morgan (JPM) |
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
 Posted: Wed Jul 18, 2007 9:38 am Post subject: JP Morgan (JPM) |
 |
|
JPM beat estimates but folks are now worried about further losses on loans as, according to the article, "even borrowers with good credit defaulted on home equity loans." Subprime and declining home prices not only causing the housing ATM to run dry, but also causing home equity loan defaults as well.
------------------------------------------------------------------------------
JPMorgan profit hurt by home equity loans
Wednesday July 18, 11:30 am ET
By Tim McLaughlin
NEW YORK (Reuters) - JPMorgan Chase & Co. (NYSE:JPM - News) said on Wednesday it tripled the amount set aside for loan losses as even borrowers with good credit defaulted on home equity loans, hurting the bank's quarterly profit.
The negative trend provides a new worry for investors. Until now, most of the angst has been focused on subprime lending, or loans to people with weak credit.
JPMorgan Chief Financial Officer Mike Cavanagh said losses on home equity loans to prime borrowers, or those with good credit, will steepen, partly because U.S. housing prices have flattened or fallen in some areas.
"The loan loss reserve increase has investors spooked," said Kenneth Crawford, a portfolio manager at Argent Capital, which owns about $12 million in JPMorgan stock. "Credit quality is decreasing and it's a moving target."
JPMorgan shares were down $1.85, or 3.7 percent, to $48.07, in morning trade on the New York Stock Exchange.
The No. 3 U.S. bank said second-quarter net income was $4.2 billion, or $1.20 a share, compared with $3.5 billion, or 99 cents a share, a year earlier. That beat analysts' average estimate of $1.08 a share, helped by a sharp rise in investment banking revenue.
But the bank set aside $1.53 billion for loan losses, up from $493 million a year earlier. About a one-third of the increase resulted from higher loss estimates on home equity loans where borrowers had little equity in houses whose values are falling.
"It's definitely a change in trend that we're reacting to," Cavanagh told reporters on a conference call.
The bank was bolstering its reserve for loan losses to make the transition from a benign credit environment to one that is expected to get worse, he said.
"We think these reserve additions will cover us for the carrythrough of the trends we're already seeing," Cavanagh said.
Deutsche Bank analyst Mike Mayo estimated the extra money set aside for loan losses reduced JPMorgan's earnings by about $350 million, or 10 cents a share.
WEAK SPOTS
JPMorgan said regional banking and auto finance were weak spots in the quarter, with profit in those areas declining.
The bank's retail finance division set aside $587 million, part of the overall loan loss reserve number, up from $100 million a year earlier, to reflect weak housing prices and the resulting increase in losses on home equity loans.
Cavanagh said the bank had problems with home equity loans started by independent mortgage brokers. The bank has since tightened underwriting standards and raised prices to reflect elevated risk.
JPMorgan's overall net revenue rose 25 percent to $18.9 billion, higher than the $17.5 billion expected by analysts.
Investment banking continued to be a bright spot as JPMorgan raked in fees from merger and acquisition advice. Investment banking revenue surged 34 percent to $5.8 billion, from $4.3 billion a year earlier. The first quarter was better, though, at $6.3 billion.
The bank's retail financial services division, which includes home loans, credit cards and auto financing, reported $785 million in net income, down 10 percent.
JPMorgan's asset management business saw profit soar 44 percent to $493 million as the unit took in more money from clients. The unit now has $1.1 trillion under management. |
|
| Back to top |
|
 |
| Author |
JP Morgan (JPM) Replies |
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Wed Oct 14, 2009 9:53 am Post subject: |
|
|
Morningstar's notes on JPM's 3Q earnings:
| Quote: | JPMorgan 3Q Profit Soars On Broad Strength
By Matthias Rieker and Joan E. Solsman
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- JPMorgan Chase & Co.'s (JPM) third-quarter earnings soared as strong investment-banking results outweighed another sizable provision for loan losses.
The $2 billion the bank set aside to cover current and future losses from consumer loans reflects the bank's tradition of protecting its balance sheet even as many bankers see a slowdown in the rate delinquencies are increasing. Chairman and Chief Executive Jamie Dimon said the cost of covering delinquencies and loan losses will remain elevated "for the foreseeable future" in the company's consumer and credit-card operations.
So despite the strong profit, the quarter doesn't reflect a turnaround yet, but rather stabilization. It is the first time since JPMorgan Chase bought the collapsing Washington Mutual Inc. in September last year that assets and deposits did not shrink. Loan balances continued to shrink as the recession took its toll on loan demand and JPMorgan Chase rid itself of unprofitable loans. Demand for lines of credit by business borrowers is at record lows, Chief Financial Officer Michael Cavanagh told reporters during a conference call.
But lending became more profitable as high-priced deposits from Wamu continued to run off and the bank's funding costs declined.
Dimon also said the quarter's strong results reflect "broad-based growth" in several lines of businesses. Revenue in all but one of JPMorgan Chase's six lines of businesses improved from the second quarter, though profit was mixed because the bank set aside more money to cover delinquent loans.
JPMorgan posted a profit of $3.6 billion, or 82 cents a share, from $527 million, or 9 cents a share, a year earlier. Revenue increased 81% to $26.62 billion.
A survey of analysts by Thomson Reuters predicted a profit of 52 cents a share on $24.96 billion in revenue.
The bank booked $400 million in gains from leveraged loans and mortgage- related securities that were at the center of the financial meltdown but have improved in value in recent months.
Cavanagh told reporters that JPMorgan Chase sold leveraged loans stuck on its books in the third quarter. Still, the bank had net write-downs totaling $440 million.
The total reserve for loan losses totaled $31.5 billion, covering 5.3% of total loans. The net charge-off rate in JPMorgan's consumer business surged to 6.29% from 3.39%.
Fox-Pitt, Kelton analyst David Trone wrote in a research report, "core revenue flat versus a strong 2Q09... at $27.1 billion," as asset-management and retail- banking-revenue increases offset declining core revenue in investment banking and treasury services.
In investment banking, total revenue rose 85%, while the segment's profit more than doubled. The credit-card division posted a $700 million loss, compared with $292 million in earnings a year earlier, but revenue in cards rose 33% from a year earlier and 6% from the second quarter.
Dimon told investors during the call, "We know we will lose a lot of money next year on card, and it could be north of $1 billion the first and second quarter."
Treasury services was the only line of business that had declining revenue and profit from a year earlier and the previous quarter, mainly because of weaker securities lending.
During the call with reporters, Cavanagh said JPMorgan Chase continues to see a stabilization in delinquencies among mortgage and credit-card borrowers who are less than 60 days late on their payments, though he said that even those " early-stage delinquencies" remain at an "elevated level." During the call with analysts, he added: "We are not ready to declare that's a sustained trend," and he would not change JPMorgan Chase's expectations for loan losses.
Cavanagh said the bank "is getting close to the end of loan-loss reserves." He did not want to predict how soon the money the bank set aside for delinquent loans would peak because the performance of the U.S. economy remains uncertain.
Shares recently rose 3%, or $1.39, to $47.05. |
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Thu Jul 16, 2009 4:06 pm Post subject: |
|
|
JPMorgan
Published: July 16 2009 15:30 | Last updated: July 16 2009 19:04
JPMorgan Chase on Thursday told a tale of two banks. It provided an interesting prism through which to view the post-crisis debate about whether large banks should be torn asunder in a Glass-Steagall-style separation of investment and commercial banking. Net revenues at JPMorgan split pretty evenly between the two. Its investment bank followed Goldman Sachs’ record second quarter, with fees of $2.2bn driving a near-quadrupling in net income. It is to cease breaking out its mortgage-related and leveraged lending exposure, closing a chapter in the credit crunch story.
Crunch time, however, persists in the retail business, with expected losses increasing for prime and subprime mortgages as well as for credit cards. True, early-stage delinquencies are moderating, but it is anyone’s guess whether that is the spring of hope or only a rare bright day in a winter of despair.
Leaving aside unusually high earnings in JPMorgan’s investment securities portfolio, a corporate bucket that straddles the dividing line, “bog-standard” banking (commercial and retail banking, plus cards) made a loss of about $290m, versus $2.2bn of income in “high octane” investment banking, asset management and treasury and securities services. Costs relating to troubled loans in the investment bank doubled year on year, with a sharp jump quarter on quarter in the loss rate. But bog-standard banking dwarfed its high-octane counterpart, accounting for more than 90 per cent of the group’s $9.7bn in credit costs.
That bodes ill for bog-standard banks around the US, many of which have the additional burden of large books of deteriorating commercial property loans. But it also debunks the notion that the resegregation of banking is a panacea.
High-octane banking is inherently unpredictable. But with JPMorgan’s credit cards, say, structurally unprofitable for the foreseeable future and unemployment still rising, it is – for good or for evil – carrying the day.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Thu Jun 18, 2009 10:16 am Post subject: |
|
|
10 Banks repaid TARP yesterday. The repayment of TARP was expected to give the companies leeway in their operations. Worker pay, for example, was expected to be better aligned with risk taking not subject to government intervention. Moreover, the repayment of TARP was seen as a sign of financial health. The companies are strongly capitalized and conditions are normalizing basis the repayment. Everything Wall St. believes in.
Wall St., not the market. On the contrary, the market is interpreting this as a failure of TARP. Far from the 11-1 leverage envisioned the money never really went anywhere--contrary to economist's insistence of its vast superiority to the original intent, signified in the acronym. Blame borrowers?
In any event the realization is depressing.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Fri Apr 17, 2009 7:12 am Post subject: |
|
|
Morningstar on JPM:
| Quote: | | J.P. Morgan Chase JPM reported net income of $2.1 billion, or $0.40 per share, for the first quarter, as increased provisioning for loan losses pressured results. The results were roughly in line with our expectations, and we are leaving our fair value estimate unchanged. Provisions for loan losses nearly doubled from the first quarter of 2008, to $8.6 billion from $4.4 billion, as JP Morgan built its allowance for loan losses to a healthy 4.5% of total loans, more than twice the current level of nonperforming loans. As expected, credit quality deteriorated across most categories, and we think provisioning is likely to remain high throughout 2009. However, the company's $11.7 billion in pretax, preprovision earnings power provides a substantial cushion against credit losses. The company's recent dividend cut contributed to improvements in the bank's Tier 1 capital ratio, which increased to 11.3% from 10.9%, and its tangible common equity ratio, which rose to 4.3% from 4.0%. Investment banking revenue was $8.3 billion for the quarter, while the bank wrote down $711 million in leveraged loans. Finally, market declines were offset by inflows in the company's asset-management business, contributing to a 6% decline in assets under management when compared with the first quarter of 2008. We see nothing in the quarterly earnings that materially changes our opinion of the bank. |
 |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Mon Mar 02, 2009 10:05 am Post subject: |
|
|
Splits 500m in HSBC underwriting with GS.....still finding a way to make money 
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Wed Feb 25, 2009 12:03 am Post subject: |
|
|
Morningstar on JPM's dividend cut:
| Quote: | After two quarters of earning less than its dividend, J.P. Morgan Chase JPM announced it would slash its quarterly dividend from $0.38 per share to $0.05. The reduction will save the company about $5 billion annually. Since J.P. Morgan accepted funds from the Troubled Asset Relief Program, the dividend will probably stay at the $0.05 quarterly rate until the bank can repay the government. While we are disappointed to see the cut, the preservation of capital is key in this environment. J.P. Morgan's 3.9% tangible common equity/asset ratio does not give the company a ton of maneuvering room. While the company indicated that it was solidly profitable in the first two months of the quarter, we expect its first-quarter profit will fall short of the old dividend rate but be higher than the new one. The dividend cut does not affect our long-term view of the company, and we are maintaining our fair value estimate.
Jaime Peters, CFA, CPA |
|
|
| Back to top |
|
|
diesel
Moderator
Joined: 05 Oct 2006
Posts: 793
Location: Australia & New Zealand
|
| Posted: Mon Feb 09, 2009 3:44 pm Post subject: |
|
|
http://optionsforemployees.com/articles/article.php?id=146
| Quote: |
As readers will recall, J.P. Morgan received the first large bail-out from the New York FED of $55 Billion, guaranteed by Bear Stearns' worthless assets, to prop up its own liquidity position and buy Bear Stearns stock.
J.P. Morgan also recently received another $25 Billion in TARP payments from the Treasury.
This article is about how J.P. Morgan's executives , instead of receiving easy to detect cash bonuses, received very large bonuses in the form of Stock Appreciation Rights (SARs) and Restricted Stock Units. These equity compensation securities are not easy to understand or value by other than experts in the field.
SARs are very similar to employee stock options and Restricted Stock Units are very similar to Restricted Stock.
These SARs were granted on January 20, 2009, the day that the J.P.Morgan stock reached its lowest in five years. The stock quickly rebounded as illustrated in the graph below. The arrow indicates the day and the price of the stock when the grant was made.
On January 22, 2008 we see a repetition of the grants of SARs with the stock hitting a low point followed by a substantial rebound in the next days.
Let's examine the size of the bonuses of the top 15 executives, at J.P. Morgan, that were granted on January, 20, 2009 and reported two days later.
See the link below:
http://www.secform4.com/insider-trading/19617.htm
Stock Appreciation Rights Granted
SARs Amounts Name of Exercise Value 2/4/09
Granted Grantee Price
700,000 Winters 19.49 $11,300,000
700,000 Black 19.49 $11,300,000
500,000 Staley 19.49 $8,100,000
300,000 Scharf 19.49 $4,890,000
250,000 Drew 19.49 $4,075,000
200,000 Miller 19.49 $3,260,000
200,000 Rauchenberger 19.49 $3,260,000
200,000 Smith 19.49 $3,260,000
200,000 Zubrow 19.49 $3,260,000
200,000 Bisignano 19.49 $3,260,000
200,000 Mandelbaum 19.49 $3,260,000
200,000 Cavanaugh 19.49 $3,260,000
200,000 Cutler 19.49 $3,260,000
200,000 Maclin 19.49 $3,260,000
100,000 Daley 19.49 $1,630,000
----------------------------------------------------------------------------------------
Total value (2/6/09) of SARs Granted = $81,405,000
Restricted Stock Units Granted
RSUs Amounts Name of Market Value RSUs Value
Granted Grantee of stock 2/4/09 2/4/09
115,474 Staley 24.10 $2,782,923
102,644 Miller 24.10 $2,473,720
102,644 Scharf 24.10 $2,473,720
102,644 Smith 24.10 $2,473,720
102,644 Bisignano 24.10 $2,473,720
102,644 Cavanaugh 24.10 $2,473,720
102,644 Drew 24.10 $2,473,720
102,644 Maclin 24.10 $2,473,720
89,813 Zubrow 24.10 $2,164,493
89,813 Cutler 24.10 $2,164,493
59,662 Daley 24.10 $1,364,542
35,926 Rauchenberger 24.10 $865,816
--------------------------------------------------------------------------------------------------
Total value (2/6/09) of RSUs Granted = $30,500,000
Total value (2/6/09)of Grants to top 15 executives= $111,905,000
|
| Quote: | Neither J.P. Morgan, Goldman Sachs or any other bank will return the TARP monies because the actual values of the Preferred Stock and Warrant packages were 50% lower than what the taxpayers were forced to pay. And the actual values of those packages have dropped considerably in every case since the welfare payments to Goldman, Morgan , Bank of America etc. were made.
In the case of Bank of America and Merrill, the warrants purchased by the Treasury are down over 88% since the bail-out.
An interesting question arises from an examination of the fact that for the past two years grants were made on or around January 20. It just happened that the stock dropped prior to the grant and moved upward immediately after the grants. Its hard to accept the idea that those executives just got very lucky for two years in a row. Yes, I am suggesting collusion in the manipulation of the stock to accommodate the grants of options etc. |
I cant believe the US is simply letting these banks rape it. This crap is killing the US. These criminals should be put on public trial and then shot by firing squad! I find it reprehensible that these bankers get bailouts while the states are left to fend for themselves! Who provides the social services the Banks or the States?
_________________
All cats are gray in the dark. |
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
|
| Posted: Fri Jan 16, 2009 1:32 am Post subject: |
|
|
Morningstar's first impression of JPM earnings:
http://quicktake.morningstar.com/Stocknet/san.aspx?id=271069
| Quote: | | The third-quarter addition of Washington Mutual was a definite positive for J.P. Morgan's fourth quarter. Loan losses are tracking in line with J.P. Morgan's original expectations--a very good and a bit surprising situation considering the general sense of rapid fourth-quarter deterioration in the mortgage market. On top of the income boost (since the mark-to-market accounting basically eliminated the income statement hit from loan losses at WaMu in the fourth quarter), J.P. Morgan booked a one-time $1.3 billion gain from negative goodwill. One final, and we think very important, note is that J.P. Morgan indicated deposits at WaMu were basically flat with the end of the third quarter. This is outstanding, considering all of the press surrounding J.P. Morgan's purchase of the failed bank, which we thought might cause nervous customers to flee to other banking institutions. |
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Thu Jan 15, 2009 7:56 pm Post subject: |
|
|
Number One buying on weakness today. BofA number four:
http://online.wsj.com/mdc/public/page/2_3022-mfgppl-moneyflow.html?mod=topnav_2_3002
JPM said that home equity losses could approximate $1 bln over the next several quarters, and it would narrow the value of loans to home value (tighten standards). Non-performing loans in the mortgage area continue to rise both on a prime and subprime basis. This is consistent with the rise in unemployment and weak income growth. JPM said that looses were primarily from CA and FL which accounted for 80% of total loss. 90% of the loss was from 2006 and 2007 Vintages. Prime mortgage loss was projected to be as high as $400 mln over the next several quarters. JPM also said it was tightening underwriting stands, especially in regions with rising unemployment and home price deterioration. Sub-Prime losses were expected to be as high as $375 mln to $425 mln in 2009. JPM said it eliminated new production and the portfolio is running off. The net charge off rate for heritage JPM was 9.976% compared to 2.08% a year ago.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Thu Jan 15, 2009 9:00 am Post subject: |
|
|
o Sees card services loss at 8% near end of ’09. Ex Wamu
o Has not had losses beyond initial view of Wamu
o See home lending quarterly losses over next several quarters
o Tier One ratio is 10.8%.
http://ftalphaville.ft.com/blog/2009/01/15/51204/a-jpm-jolt/
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
|
| Posted: Thu Jan 15, 2009 5:41 am Post subject: |
|
|
It would be nice for credit card losses to show stabilization.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
Please log in to view without the ad banners |
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
Powered by phpBB
|
FAQ
Search
Memberlist
Usergroups
Statistics
Register
Profile
Log in to check your private messages
Log in
