Knowing all too well that today's financial markets are cloaked in paranoia, investors haven't been asking "What have you done for me today?" The prime issue facing banks today is "Are you going to be here tomorrow?"
So while JPMorgan Chase
Second-quarter net income came in at $2 billion, or $0.54 per share, down 55% from the $1.20 per share earned in the same period last year. The results were nipped by the integration of Bear Stearns, which lopped off about $500 million from the bottom line. Revenue slid 3% to $18.4 billion, but easily trounced expectations of $16.55 billion. Credit-loss provisions swelled $1.3 billion, while the firm's investment banking unit took just over $1 billion in write-offs related to leveraged lending and mortgage products. Tier 1 capital -- one of the strongest indicators of a bank's health these days -- increased to $98.7 billion, or 9.1%.
JPMorgan logged a surge in mortgage banking profits for the quarter, coming in at $169 million, or 138% ahead of the prior year, while mortgage loan origination climbed 27% from the year before. What's it doing moving into such a soured segment right now? The mortgage mayhem over the past year has made the market ripe for the picking for banks -- like JPMorgan -- with enough fortitude to jump in the middle of the chaos. Earlier this year, the bank made an offer to acquire Washington Mutual
What this mean for the market?
There are three main banks that are staying one step ahead of the tattered financial sector: Goldman Sachs
Sure, there's a mountain of challenges ahead of the entire banking industry, but the three amigos mentioned are some of the only banks that will not only outshine their peers, but can actually swoop in and capitalize on other banks' problems. The adoption of Bear Stearns at an insanely low price is a great example of JPMorgan being able to create a treasure out of someone else's trash.
Will there be more bottom fishing? For hungry shoppers like JPMorgan, acquisitions of troubled peers will provide the blueprint of what's to come of this never-ending financial soap opera.
Until then, check out: