DS News

» VISIT US ONLINE @ DSNEWS.COM 9 FIRST QUARTER SEES SOLID YEAR-OVER-YEAR REVENUE INCREASES FOR WELLS FARGO, CHASE Both JPMorgan Chase and Wells Fargo reported solid revenues for the first quarter of 2015 compared to the same period last year, according to statements released from the banks in mid-April. New York-based Chase reported a net revenue of $24.8 billion for the first quarter, an increase of $967 million from Q1 2014, driven by strong performance in the corporate and investment bank, both in markets and investment banking. Also, lower gains in private equity partially offset the increase in fee revenue in asset management and mortgage banking Chase received in Q1. Chase's net interest income for Q1 was $11 billion, which was relatively unchanged from Q1 2014. Net income was up 12 percent year-over-year for Chase in Q1, driven predominantly by higher revenue, according to the bank. Net income increased by $645 million up to $5.9 billion. Chase's earnings per share rate was $1.45 for the first quarter. "JPMorgan Chase continues to support consumers, businesses and communities and make a significant positive impact," Chase CEO Jamie Dimon said. "We have an outstanding franchise which is getting safer and stronger, and is gaining market share over time. We continue to build the company for the long-term, we are investing in controls, infrastructure, systems, technology, new products and bankers. We will continue to navigate challenges and deliver for our clients, shareholders and communities." San Francisco-based Wells Fargo saw revenues jump by 3 percent in Q1 up to $21.3 billion, while net income declined slightly year- over-year—from $5.9 billion down to $5.8 billion. According to the bank, higher noninterest income was more than offset by the decline in net interest income, which was primarily a result of two fewer days in the quarter. Wells Fargo's noninterest income for Q1, $10.3 billion, was an increase of $29 million from the previous quarter. e bank received higher income from trading activities, debt security gains, mortgage origination gains, and insurance, which were offset by lower other income, such as from mortgage servicing (which was $108 million for Q1, compared to $235 million for the previous quarter). e mortgage banking noninterest income for Wells Fargo was $1.5 billion in Q1, which was an increase of $32 million from Q 4; residential mortgage originations were $49 billion in Q1, an increase of $5 billion from Q 4. e diluted earnings per share rate for Wells in Q1 was $1.04. "Our solid first quarter results again reflected the benefit of our diversified business model and the continued focus of our 266,000 team members on serving the needs of consumer and business customers," Wells Fargo Chairman and CEO John Stumpf said. "We continued to strengthen our customer relationships in the quarter, as reflected in strong growth in deposits and primary checking customers. In addition, our mortgage business was able to serve more customers by refinancing their mortgage loans with lower rates." NATIONSTAR POSTS NET LOSS IN FIRST QUARTER Nationstar Mortgage Holdings reported a net loss of $48 million, or $0.53 per share, for the first quarter of 2015 compared with a net income of $19 million ($0.21 per share) for the previous quarter, according to an announcement from the Lewisville, Texas-based residential mortgage servicer early last month. e decline in GAAP earnings per share was primarily driven by two variables, according to Nationstar: a noncash decrease in fair value mark-to-market adjustments in servicing of $110 million, or $0.77 per share, and a noncash quarterly increase in amortization partially offset by an increase of $17 million, or $0.12 per share. Cash flow increased by $31 million in Q1 from the previous quarter up to $114 million. e company said in its announcement that "adjusted cash flow provides a better view of the underlying performance of the business, including the company's ability to make strategic investments." "In the first quarter we capitalized on opportunities within the servicing transfer market, took advantage of the favorable originations conditions, and continued the evolution of Solutionstar into a comprehensive real estate technology company that we expect to revolutionize the way real estate transacts," said Jay Bray, CEO of Nationstar. "We have a significant runway of growth prospects across all three segments and continue to evaluate additional ways to increase shareholder value." Nationstar successfully closed on $24 billion in mortgage servicing rights (MSRs) acquisitions during Q1, and the company's servicing portfolio ended Q1 with an unpaid principal balance (UPB) of about $390 billion, representing an increase of about 2 percent from the end of 2014. e company currently has $31 billion in servicing acquisitions scheduled to board by Q2 2015 and $21 billion with pending agency approvals that will board upon receipt of those approvals. "e portfolios acquired, and the majority of portfolios under contract, are agency portfolios with low levels of delinquency, attractive returns and complement Nationstar's strategy of retaining Customers for Life," Nationstar said in the release. "ese higher performing portfolios contain customers that have a lower propensity to default providing an opportunity for Nationstar to offer a variety of corresponding mortgage and real estate service products and solutions." Nationstar completed approximately 16,500 workouts, or non-foreclosure solutions, in Q1 which, along with the recently boarded MSRs, drove the company's 60-plus day delinquency rate down to 8.8 percent for the quarter. Also, despite harsh weather conditions in February, Nationstar's Solutionstar division sold 5,483 single-family residential properties during Q1. Sales have picked up since February, with 2,043 sold in March and 2,100 in April, according to Nationstar, and the company expects sales to increase during the upcoming peak spring and summer selling seasons. Solutionstar ended Q1 with 9,114 REO properties in inventory, indicating a strong REO pipeline. The serious delinquency rate for residential mortgages was 3.9 percent in March (about 1.47 million homes), the lowest level since May 2008, according to CoreLogic. KNOW THIS

• Cover