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Sterne Agee senior research analyst Todd Hagerman weighs in on JPMorgan and Wells Fargo earnings.
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It's our view well JPMorgan and -- Wells Fargo also are weighing on the markets today despite the fact Franklin at both banks reported first quarter earnings that beat the street Tottenham and covers the financial sector he's a senior research analyst its journey case.
All right so.
Overall how to fill up the numbers -- all this morning from both from JPMorgan and Wells Fargo was anything in either report that really kind of shocked he would act.
Yeah what we saw today from both companies quite frankly is -- the ongoing sore spot as -- through both the consumer banking units as well as mortgage in particular.
We saw from JPMorgan.
A real large charge as it relates to ongoing.
Litigation costs related to mortgage.
Both you that both companies reporting.
Down earnings in their consumer banking units.
Both companies reporting elevated costs as -- expenses.
Associated to their their mortgage banking unit.
We'll get a bit of the surprise with with the optimism that kind of infiltrated some of the stocks with the big run to this point.
And you know the stocks with a big expectation.
Very ripe for pullback today.
Okay Simpson not surprise probably that the pullback at the same time plus rolled out on JPMorgan here for just a second is Jamie Dimon and all of this -- -- come out.
You mentioned litigation issues that's gonna give -- problem moving forward.
Cover JPMorgan.
Are you concerned at all about investor lawsuits against him in particular because remember.
You know Bank of America not cannot earlier is that we're gonna fight says it's going to be fine and it wasn't fine for shareholders innovative did at the bottom line -- -- -- bank does not have.
JPMorgan.
Management has.
Pretty regularly talked about the fact that these mortgage related costs would come down over time.
And more specifically.
-- the litigation related costs that -- so.
Exceptionally high and twenty -- -- -- and the expectations where they -- gonna come down.
We had an about face today with JPMorgan.
With the really outsized charge.
Even post the -- settlement which really took people by surprise.
I think you know the point at the end of the day is we're not out of the did the mortgage mess yet.
Both companies showing the fact that.
Related costs and expenses remain high.
They talked about the fact that they will remain high for the foreseeable future.
And that's certainly kind of cuts in the some of the optimism that many folks have -- -- -- -- the housing job creation so forth.
OK you've got -- -- on JPMorgan let's move over to Wells Fargo different story in particular it is about the mortgage business that.
Wells Fargo looking -- the numbers here for the first quarter I mean this is -- the fourth largest bank in the country but at the same time.
I mean mortgage income was ups are -- -- a positive turn around here do you think on the mortgage side of the business for Wells Fargo.
Wells Fargo reported a very robust numbers relates to mortgage banking.
Not necessarily.
A a big surprise to the marketplace.
I think you know it as we take a look.
Drill down through the numbers on mortgage banking was certainly.
Exceptional for the company.
He saw some soft spots within the numbers.
Notably you know you're spreading and come as -- referenced before the consumer banking unit the elevated costs as it relates to mortgage.
Hire reps and warranties costs those things again kind of caught in two.
Be the real strength -- as a relates to mortgage banking and Wells Fargo so and again -- expectations are very high.
All right cut you don't go to got a lot more earnings they got dragged you would -- -- particular though about Citi you know speaking about mortgages.
Citi as had a lot of issues has been management issues a lot of questions about management -- in the leadership that city -- -- you have about the stock and -- you wellness stocks.
What is it that you're saying is Citi that may be some are not right now.
Well I think you know for Citigroup in particular.
What really catches my attention is the fact that this company has now been profitable for the better part of the last couple years.
They really have the lowest our balance sheet mortgage related exposure well to their peers where that Bank of America.
Or Wells Fargo and quite frankly.
You know the the they continue to grow tangible book value at a pretty healthy pace the wall we're really discounting the earnings from the company.
You know you look at the end of the day you look at the valuation and it's a very compelling story very compelling investor right now in our opinion.
All right Todd -- Sterne Agee senior.
Research analysts it's going to be well Anderson I think that's it Belize and the other rest of the banks come out what their numbers dot.
