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JPMorgan Beats Expectations Amid a Mountain Of Legal Costs

Core earnings come in ahead of estimates

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JPMorgan Chase’s (JPM) kicked off third-quarter earnings season for big financials this morning beating Wall Street analysts expectations.

JPMorgan reported a net loss of 17 cent per share, but excluding non-recurring items (litigation expense and reserve losses), JPMorgan’s core businesses earned EPS of $1.42.

Third quarter net revenue came in at $23.9 billion.

On average, analysts were expecting the bank to post adjusted earnings per share of $1.28 and revenue of $24 billion, according to data compiled by Bloomberg.

The bank reported a mountain of legal costs of $7.2 billion (that’s after-tax).

Those legal expenses have caused the bank to report its first quarterly loss since Jamie Dimon became CEO.

JPMorgan’s stock was trading up more than 1.5% in the pre-market.

Here’s an excerpt from the release (emphasis ours):

JPMorgan Chase Reports Third-Quarter 2013 Net Loss of $0.4 Billion, or $(0.17) Per Share, on Revenue1 of $23.9 Billion



  • Strong underlying performance across our businesses2
    Consumer & Community Banking deposits were up 10%; client investment assets were a record $179.0 billion, up 16%; credit card sales volume1 was a record $107.0 billion, up 11%; merchant processing volume of $185.9 billion, up 14%
    • Corporate & Investment Bank maintained its #1 ranking for Global Investment Banking fees; client deposits were $386.0 billion, up 10%; assets under custody were a record $19.7 trillion
    • Asset Management achieved its eighteenth consecutive quarter of positive net long-term client flows, with $19 billion for the third quarter; client assets were $2.2 trillion, up 11%; loan balances were a record $90.5 billion
  • Third-quarter results included the following significant items
    • $9.15 billion pretax expense; $7.20 billion after-tax ($1.85 per share after-tax decrease in earnings) for legal expense in Corporate, including reserves for litigation and regulatory proceedings
    • $1.60 billion pretax benefit; $992 million after-tax ($0.26 per share after-tax increase in earnings) from reduced reserves in Consumer & Community Banking
  • Fortress balance sheet remains strong
    • Basel I Tier 1 common1 of $145 billion, and ratio of 10.5%
    • Estimated Basel III Tier 1 common1,3 ratio of 9.3%
    • Estimated Firm supplementary leverage ratio (“SLR”) of 4.7%
    • As planned, resubmitted our capital plan to the Federal Reserve and expect to receive feedback by year-end
  • JPMorgan Chase supported consumers, businesses and our communities
    • $1.6 trillion of credit1 provided and capital raised in the first nine months of 2013
      • $221 billion of credit1 provided for consumers; originated more than 700,000 mortgages
      • $14 billion of credit1 provided for U.S. small businesses
      • $442 billion of credit1 provided for corporations
      • $829 billion of capital raised for clients
      • $59 billion of credit1 provided and capital raised for nonprofit and government entities, including states, municipalities, hospitals and universities
  • Hired more than 6,000 U.S. veterans and service members since the beginning of 2011
  • Ended the quarter with over 5,600 branches, 32.9 million active online customers and over 1,900 Chase Private Client locations

New York, October 11, 2013 – JPMorgan Chase & Co. (NYSE: JPM) today reported net loss of $0.4 billion for the third quarter of 2013, compared with net income of $5.7 billion in the third quarter of 2012. Earnings per share were $(0.17), compared with $1.40 in the third quarter of 2012. Revenue1 for the quarter was $23.9 billion, compared with $25.9 billion in the prior year. The Firm’s return on tangible common equity1 for the third quarter of 2013 was (2)%, compared with 16% in the prior year.

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