While we're just over a week into earnings season, Bank of America remains the only too-big-to-fail bank to report its results for the first three months of the year. JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) kicked things off at the end of last week. Both banks blew bottom-line estimates out of the water. JPMorgan earned $1.59 per share, a 33.6% improvement over last year. And Wells Fargo earned $0.92 per share, a 23% year-over-year increase.
The one concern was the top line, as revenues at both banks fell. But fears that this would impact the entire industry were allayed yesterday when Citigroup notched progress in earnings and revenue. For the quarter, the nation's third largest bank by assets earned $1.23 per share on $20.5 billion in revenues. That equates to year-over-year growth rates of 29% and 6%, respectively.
And lest there be any doubt about the health of the banking industry, Citigroup's results were followed up today by similar performances from Goldman Sachs and U.S. Bancorp. Compared to the same quarter last year, Goldman's top line expanded by 1% and its bottom line by 7%. Meanwhile, U.S. Bancorp's revenue fell by 1.1% while its net income grew by 6.3%.
For Bank of America, investors will be watching three things. The first is its mortgage origination volume. After shedding its wholesale and correspondent mortgage operations, Bank of America has finally focused on growing this number again. It notched consistent gains last year, but with Wells Fargo's mortgage volume falling markedly in the first quarter, it remains to be seen how Bank of America will perform.
The second thing investors will be watching is the bank's expenses. As I discussed here, one of Bank of America's biggest problems is its expense ratio, particularly as it relates to its mortgage servicing portfolio. Thus, the faster it can shed its third-party mortgage-servicing obligations the better.
And finally, given Goldman's impressive performance, there's a good likelihood that Bank of America's Merrill Lynch division more than held its own in the first quarter. This is particularly true as Goldman's profits were driven more by investment banking, which is a strength of Bank of America's, as opposed to trading, which isn't as significant of a contributor.
Suffice it to say, the proof is in the pudding. But given the fact that Bank of America's shares are up by 1.75% at the time of writing, it seems clear that investors are expecting good things tomorrow.