JPMorgan Chase & Company has reported fourth quarter 2010 net income of $4.8 billion, an increase of 47 percent compared to $3.3 billion for the fourth quarter of 2009. Full-year 2010 net income was $17.4 billion, an increase of 48 percent compared with $11.7 billion for the prior year. The company reported that mortgage loan originations stood at $50.8 billion for the end of 2010, up 46 percent from the prior year and 24 percent over the third quarter of 2010. Total third-party mortgage loans serviced were $968 billion, down 11 percent from 2009 and four percent over Q3 2010.
“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," said Jamie Dimon, chairman and chief executive officer. "Credit trends in our credit card and wholesale businesses continued to improve. In our mortgage business, while charge-offs and delinquencies have improved, credit costs still remain at abnormally high levels and continue to be a significant drag on our returns.”
Mortgage banking and other consumer lending reported a net income of $577 million, an
increase of $311 million, or 117 percent, from 2009. Net revenue stood at $2.8 billion, up by $1.2 billion, or 74 percent, from the prior year. Mortgage banking net revenue was $2 billion, up by $1.1 billion. JPMorgan Chase's mortgage banking net revenue included $244 million of net interest income, $1.6 billion of mortgage fees and related income, and $108 million of other non-interest revenue. Mortgage fees and related income comprised $749 million of net production revenue, $574 million of servicing operating revenue and $286 million of MSR risk management revenue. Production revenue, excluding repurchase losses, was $1.1 billion, an increase of $618 million, reflecting higher mortgage origination volumes and wider margins.
Total production revenue was reduced by $349 million of repurchase losses, compared with repurchase losses of $672 million in the prior year. Servicing operating revenue was flat to the prior year. MSR risk management revenue increased $177 million compared with the prior year.
“We remain committed to helping homeowners and preventing foreclosures," said Dimon. "Since the beginning of 2009, we have offered 1,038,000 trial modifications to struggling
homeowners. 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."
JPMOrgan Chase's real estate portfolios reported a net loss of $823 million, compared with a net loss of $1.7 billion in the prior year. The improvement was driven by a lower provision for credit losses. Net revenue was $1.3 billion, down by $217 million, or 14 percent, from the prior year. The decrease was driven by a decline in net interest income as a result of lower loan balances, reflecting net portfolio runoff.
The provision for credit losses was $2.3 billion, compared with $3.7 billion in the prior year. The current-quarter provision reflected a $2.1 billion increase in the allowance for loan losses for the Washington Mutual purchased credit-impaired loan portfolio. The impairment of the purchased J.P. Morgan Chase credit-impaired portfolio reflected an increase in estimated future credit losses and was largely related to home equity and, to a lesser extent, option adjustable-rate mortgage (ARM) loans. The current-quarter provision also reflected a reduction of $1.6 billion in the allowance for the mortgage loan portfolios. This
reduction in the allowance for loan losses included the effect of a one-time $632 million adjustment related to the timing of when recognizing charge-offs on delinquent loans. This adjustment was offset by an equivalent acceleration of charge-offs, resulting in no net impact on current-period earnings. Absent this one-time adjustment, the allowance for loan losses would have been reduced by $950 million. The remaining reduction of the allowance for the mortgage loan portfolios was the result of an improvement in delinquencies and lower estimated losses.
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