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8 EARNINGS SEASON THE THIRD QUARTER REPORT CARD WELLS FARGO AND BANK OF AMERICA POST POSITIVE Q3 FINANCIAL REPORTS Wells Fargo reported a net income of $5.8 billion, or $1.05 per diluted common share, an increase of 1 percent year-over-year, according to the bank's 2015 third-quarter earnings statement released last month. Bank of America also posted strong financial results, with a third-quarter net income of $4.5 billion, or $0.37 per share, the bank's earning statement showed. Wells Fargo's strong third-quarter results were led by growth in loans, deposits, and capital, and positive credit quality. e bank saw strong growth in loans and deposits, with total average loans of $895.1 billion, up 7 percent or $61.9 billion year-over- year. As of September 30, 2015, total loans were $903.2 billion. Quarter-end loans rose $64.4 billion to $903.2 billion, while total average deposits increased $71.8 billion to $1.2 trillion. Revenue at Wells Fargo totaled $21.9 billion, an increase of 3 percent from $21.2 billion last year. Driven by growth in investment securities and loans, net interest income rose $187 million from the second quarter of 2015 to $11.5 billion in the following quarter. Meanwhile, the company's net interest margin was 2.96 percent, down 1 basis point from the previous quarter. John Stumpf, chairman and CEO of Wells Fargo noted that the strong third- quarter results "reflected the ability of our diversified business model to generate consistent financial performance in an uneven economic environment while continuing to meet our customers' financial needs." Mortgage banking noninterest income fell $116 million from the second quarter to $1.6 billion, Wells Fargo reported. In addition, residential mortgage originations were $55 billion in the third quarter, down $7 billion linked quarter. e production margin on residential held-for-sale mortgage originations was 1.88 percent, compared with 1.75 percent in the previous quarter. Net mortgage servicing rights (MSRs) results were $253 million, compared with $107 million in second quarter 2015. Bank of America's year-to-date net income totals $13.2 billion or $1.09 per share. Revenue declined $521 million to $20.9 billion from last year, mostly driven by higher negative market- related adjustments on their debt securities portfolio due to lower long-term interest rates. Net interest income for the bank also fell $702 million to $9.7 billion year-over-year due to lower consumer loan balances and lower yields. Meanwhile, noninterest income rose $181 million to $11.2 billion from last year, reflecting increases in mortgage banking and card income, higher asset management fees, and other income. e company originated $13.7 billion in first- lien residential mortgage loans and $3.1 billion in home equity loans in the third quarter of 2015, compared to $11.7 billion and $3.2 billion, respectively, in the year-ago quarter. Bank of America CEO Brian Moynihan explained that the "solid results" in the third quarter reflected the execution of the bank's "long-term strategy." "Our results this quarter reflect our ongoing efforts to improve operating leverage while continuing to invest in our business," said Paul Donofrio, CFO at Bank of America. "We built capital and liquidity to record levels and grew total loans for the second consecutive quarter while continuing to operate within our risk framework." In August 2015, there were 1.69 million residential mortgage loans that were 60 days or more overdue, a 47 percent decline from the peak of the housing crisis in August 2010 when there were 3.16 million mortgage loans 60 or more days overdue, according to HOPE NOW. KNOW THIS