Having the Federal Reserve handpick you as the go-to bank to pull fallen comrades out of the gutter says quite a bit about your credibility. Sure enough, JPMorgan Chase (NYSE: JPM ) is setting itself up to become Wall Street's next dominant force.
On Wednesday, New York-based JPMorgan announced first-quarter net income of $2.4 billion, or $0.68 per share, on revenue of $16.9 billion. That's down from $4.8 billion in net income, or $1.34 per share, on $19.0 billion in revenue in the same period last year. This quarter's results include $1.5 billion in pre-tax proceeds from its sale of its shares in the recent IPO of Visa (NYSE: V ) .
JPMorgan tacked on $2.5 billion to loan-loss provisions, pushing the total amount set aside for possible losses to $12.6 billion. Additionally, $2.6 billion was written off its loan portfolio. Return on equity fell to 8% from 17% a year ago. While the House of Morgan has held up far better than the majority of its peers during the credit crunch, few financial institutions have emerged completely unscathed.
JPMorgan now owns nearly half of Bear Stearns' (NYSE: BSC ) shares, making the government-backed acquisition practically written in stone. After an original $2-per-share bid was made during Bear's darkest hour, shareholders revolted, insisting that the price was grossly inadequate. JPMorgan quintupled the offer not long after. Just last week, troubled thrift Washington Mutual (NYSE: WM ) disclosed it had turned down a preliminary buyout offer from JPMorgan before deciding to fix its troubles on its own.
What lies ahead for JPMorgan? Many think it's still hungry for acquisitions, looking to feast off its competitors' troubles. Now that WaMu is off the radar, some have speculated SunTrust Banks (NYSE: STI ) , with a large banking network in the Southeast, could be the next target. Once Bear Stearns' choice assets -- such as its prime brokerage business -- get integrated into JPMorgan's platform, rival banks like Goldman Sachs (NYSE: GS ) and Citigroup (NYSE: C ) could be in for a serious run for their money.
While the rest of the industry fights for survival, JPMorgan's credit pains will likely produce a mere flesh wound, especially considering Thursday's announcement that JPMorgan will be issuing $6 billion in preferred shares. Having the ability to pounce on opportunity while others flounder should put it in a position to come out of the banking crisis stronger than when it entered it.
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