J.P. Morgan Earnings Miss the Mark on Legal Costs, Trading

For the full year, the bank posted EPS of $5.29, compared with 2013 EPS of $4.35. Revenues slipped 2%, from $99.8 billion in 2013 to $97.9 billion, in 2014. The consensus estimates called for EPS of $5.41 on revenues of $96.67 billion.

Quarterly profits slipped 7% from $5.3 billion in the fourth quarter of 2013 to $4.9 billion. For the full year, profits rose from $17.92 billion to $21.76 billion, a jump of 21%. Nearly $150 million of the gain comes from lower non-interest expenses. The company also reported $900 million in legal expenses in the fourth quarter.

Revenues for the quarter rose by $150 million in higher investment banking fees and $135 million comes. The big hit, however, came in fixed-income trading, down 23% year-over-year to $2.5 billion.

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The provision for credit losses in the consumer banking group in the fourth quarter this year totaled $950 million, compared with a $72 million in the year-ago quarter. The actual allowance for loan losses fell by $251 million, and total net charge-offs came in at $1.2 billion.

Net income in the mortgage banking group fell $255 million year-over-year to $338 million. Pretax income in the mortgage production group rose by $472 million year-over-year to $204 million. Mortgage originations totaled $23 billion, down 1% year-over-year, but up 8% sequentially

CEO Jamie Dimon said:

Consumer & Community Banking delivered impressive growth in deposits and investment assets in the fourth quarter and throughout 2014, while outperforming its expense reduction target for the year. Mortgage originations improved sequentially in the fourth quarter, despite a seasonally slow quarter. Our Card business delivered double-digit sales volume growth, outpacing the industry for the 27th consecutive quarter. Auto had a good quarter and the pipeline remains strong. The Corporate & Investment Bank saw strong performance in fees, maintaining its #1 position in Global IB fees in 2014 with particular strength in Europe, although Markets remained somewhat challenged. Commercial Banking grew period-end loans 8% versus the prior year and Commercial Banking clients generated record investment banking revenues for the quarter and the year. Lastly, Asset Management had over $80 billion of net long-term inflows for the second consecutive year and overall AUM grew 9% this quarter compared to the prior year.

J.P. Morgan increased its Basel III Tier 1 common ratio to 10.1% in the first quarter. However that total could be short of a proposed Fed requirement that the bank hold a 4.5% capital buffer in addition to its 7% Tier 1 minimum.

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The bank did not offer guidance in its press release, but the consensus estimates call for first-quarter EPS of $1.44 on revenues of $25.06 billion. The EPS estimate for the 2015 fiscal year is $5.91 on revenues of $100.15 billion.

Shares traded down about 2% in the premarket Wednesday morning, at $57.70. The current 52-week range is $52.97 to $63.49. Thomson Reuters had a consensus analyst price target of around $68.00 before the results were announced.