JPMorgan, Bank of America turn profits

JPMorgan Chase, the nation's third biggest banking company, reported Wednesday that strength in investment banking, including record trading revenue, contributed to a 78% increase in third-quarter profit.

Bank of America, the nation's No. 2 bank by assets, said its third-quarter earnings rose 10%, driven by double-digit revenue growth across all business segments.

Third-quarter results have been strong for the major money center banks, in large part because of much improved investment banking activity.

JPMorgan Chase, which merged with Chicago's Bank One a year ago, said net income totaled $2.53 billion, or 71 cents a share, in the July-September period, up from $1.42 billion, or 39 cents a share, a year earlier.

Revenue rose 16% to $14.47 billion.

Excluding merger-related chargers, operating earnings were $2.7 billion, or 75 cents a share, the bank said.

Analysts surveyed by Thomson Financial had projected profits of 72 cents a share on revenue of $13.8 billion.

JPMorgan, which is headquartered in New York, also announced that James Dimon, 49, president and chief operating officer, will succeed Chief Executive Officer William Harrison Jr., 62, at year's end.

That's six months earlier than planned. The bank said the change was possible "given the good progress made on successfully integrating the JPMorgan Chase and Bank One merger."

Harrison will continue as chairman of the board, the announcement said.

In the earnings report, Harrison said results "were strong across most of our businesses," especially trading revenue and investment banking fees.

JPMorgan Chase's investment banking division reported operating earnings of $1.1 billion, up $436 million. Trading revenue was $2.4 billion, up $1.6 billion.

The bank took a charge of $248 million, or the equivalent of 7 cents a share, to cover anticipated losses from customers hurt by Hurricane Katrina, which devastated the Gulf Coast in August.

Harrison said the bank continued to assess further possible losses from the storm.

Dimon said that the bank had completed combining and upgrading credit card portfolios in Texas in the third quarter. "These accomplishments set the stage for the New York tristate conversion."

Bank of America, which is headquartered in Charlotte, said its net income rose to $4.13 billion, or $1.02 a share, in the July-September period from $3.76 billion, or 91 cents a share, a year earlier. Excluding merger and restructuring charges, the company earned $1.04 a share, 2 cents better than the consensus estimate of analysts surveyed by Thomson Financial.

"Bank of America's results were terrific," Stephen Berman told Reuters. Berman, who helps invest $7 billion at Stein Roe Investment Counsel in New York and owns the company's shares, added, "Margin was stable, it had good loan growth, and it had very good income from market-sensitive parts of its investment bank."

During the quarter, Bank of America Chief Executive Kenneth Lewis reorganized business and investment banking. Last year the company acquired FleetBoston Financial, and in June it agreed to pay $35 billion for MBNA.

Asked on CNBC television whether more acquisitions are possible, Lewis said: "We never say never. If something proves to be good for the shareholders and we see value that others don't see, then we'll be opportunistic."

Revenue rose 16% to $14.81 billion, beating forecasts for $14.14 billion, while non-interest expense increased 4% to $7.29 billion.

"Revenue growth was very strong," Wayne Bopp, an analyst at Fifth Third Asset Management in Cincinnati, which oversees $21 billion, including the bank's shares, told Reuters. "There were a lot of doubters when Bank of America bought Fleet, and the bank has proven them wrong."

On Monday, Citigroup, the nation's largest financial institution, said its third-quarter earnings rose 35%, boosted by strong performance in corporate and capital markets businesses.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.