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23 » VISIT US ONLINE @ DSNEWS.COM GOLDMAN SACHS REPORTS SPIKES IN NET EARNINGS, NET SHARE PRICE e Goldman Sachs Group, Inc. reported a third-quarter net revenue of $8.39 billion and net earnings of $2.24 billion, according to the company's Q 3 earnings statement. e net earnings total is a 50 percent jump from Q 3 2013, when the invest- ment bank reported net earnings of $1.43 billion. For the three-month period ending on Sep- tember 30, Goldman Sachs reported diluted earn- ings per common share of $4.57, which is up from $4.10 reported for Q2 and $2.88 reported for Q 3 2013. e company reported an annualized return on common shareholders' equity of 11.8 percent for the third quarter and 11.2 percent year-to-date for the first three quarters. "e combination of improving economic con- ditions in the U.S. and a strong global franchise con- tinued to drive client activity across our diverse set of businesses," said Lloyd C. Blankfein, chairman and CEO of Goldman Sachs. "While conditions and sentiment can shift quickly, the strength of our transaction backlog indicates our clients' desire to pursue and execute their strategic plans for growth." Goldman Sachs saw 2 percent increases in both book value per common share and tangible book value per common share in Q 3 up to $161.38 and $151.70, respectively. e firm saw assets under supervision reach a record level of $1.15 trillion in Q 3 with net inflows of $20 billion that include $13 billion in long term assets under supervision. The Q 3 earnings report also indicated that Goldman Sachs ranked first in worldwide announced and completed mergers and acquisitions year-to-date in 2014 and also ranked first in worldwide equity and equity-related offerings and common stock offerings for the first nine months of 2014. Assets under supervision increased to a record $1.15 trillion for Goldman Sachs, with net inflows during the quarter of $20 billion, including $13 bil- lion in long-term assets under supervision. Mean- while, the firm increased its quarterly dividend to $0.60 per share on October 15. WELLS FARGO, JPMORGAN CHASE PROFITS TURN UPWARD IN Q3 ird-quarter profits improved annually at two of the nation's biggest megabanks, though mortgage banking results were mixed. For the latest completed quarter, JPMorgan Chase reported net income of $5.6 billion compared to a loss of $380 million a year ago. Earnings last year were flattened by a $7.2 billion (after-tax) legal expense, while Q 3 2014's results include a $1 billion after-tax charge. Revenue for the quarter totaled $25.2 billion, up 5 percent from a year prior. Commenting on the results, chairman and CEO Jamie Dimon said the bank has "continued to deliver strong underlying performance" in maintaining its balance sheet, simplifying business, and adapting to regulatory changes. "We remain very focused on executing the con- trol agenda and investing to protect our customers and the company for the future," he said. Mortgage banking net income was $439 mil- lion, down $266 million from a year ago and $270 million from the prior quarter. Much of the year- over-year decline stemmed from a reduced benefit from credit loss provisions—$19 million compared to last year's $1 billion. Originations for the quarter came to $21.2 billion, down 48 percent from last year but up 26 percent from the second quarter, JPMorgan reported. e bank's mortgage servicing income (pretax) was $138 million in Q 3, up from a loss of $406 million a year prior as a result of lower expenses and higher risk management income. As of the end of the quarter, total third-party mortgage loans serviced were $766.3 billion, down 8 percent from Q 3 2013 and up 3 percent from Q2 2014. On the other side of the country, Wells Fargo posted profits of $5.7 billion for the quarter, up from $5.6 billion in Q 3 2013 and flat from Q2 2014. Revenues came to $21.1 billion, down slightly from last year's $21.4 billion. "e company's third-quarter results demon- strated strength in the fundamental drivers of our long-term growth," said John Stumpf, chairman and CEO of Wells Fargo. "We continue to see signs of a steadily improving economy, and I remain optimistic about the opportunities ahead for Wells Fargo." While profits were up slightly, mortgage business at the country's biggest home lender was down on a quarterly basis. According to the bank's report, mortgage banking noninterest income was $1.6 billion in Q 3, down $90 million from Q2 2014 and about level with where it was last year. Home mortgage originations last quarter came to $48 billion, up $1 billion from the second quarter but down from $80 billion a year ago, Wells Fargo reported. Applications totaled $64 billion with a pipeline of $25 billion at quarter-end, down from $72 billion and $30 billion, respectively, in Q2. e bank explained that origination gains were largely due to an increase in the gain on sale margin (1.82 percent compared to 1.41 percent in the second quarter), though that was "more than offset" by a decline in servicing income driven by lower net mortgage servicing rights and an increase in unreimbursed directing servicing costs. Meanwhile, credit losses were $668 million in the third quarter, an improvement of 31 percent from last year, allowing the bank to release $300 million from its allowance for credit losses. "Credit quality continued to trend positively in the third quarter as loan losses remained at historic low, nonperforming assets continued to decrease, delinquency rates were stable, and we continued to originate high-quality loans," said Mike Loughlin, chief risk officer. "We continue to expect future reserve releases absent a signifi- cant deterioration in the economic environment but expect a lower level of future releases as the rate of credit improvement slows and the loan portfolio continues to grow." Coming from two of the biggest names in U.S. banking and mortgages, the earnings report provides a glimpse at how the market performed at a time when housing usually starts to slow down each year. Also released that same day was the latest from Citigroup, which took in $3.4 billion during the quarter. Earnings from other big-name firms, including Bank of America, Goldman Sachs, and Morgan Stanley, were due later that week.

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