Mortgage lending, particularly jumbo loans, drove the overall growth of loans on JPMorgan Chase's balance sheet during the second quarter.
The analysts at Keefe, Bruyette & Woods said JPMorgan Chase's mortgage results were in line with their expectations.
JPMorgan Chase reported total origination volume of $29.3 billion, compared with
Correspondent purchases accounted for $19.5 billion of second-quarter production at JPMorgan Chase, up from $16.6 billion in the first quarter and $9.6 billion for the second quarter of 2014.
During the conference call, company executives were asked what type of mortgages were being added, Marianne Lake, the chief financial officer, responded that over half were jumbo, with the remainder being a portfolio product called conventional conforming C plus.
"We have a fairly large securities portfolio and our decisions around that are in part driven by our overall interest-rate risk positioning, but with respect to the mortgages it's fundamentally a better execution decision for us. We will portfolio or loan where it makes economic sense to do it relative to distributing it, other than jumbo where, clearly, they will always go on our balance sheet," Lake said.
Prime credit quality mortgages owned by JPMorgan at the end of the quarter totaled $131.3 billion, up from $117.1 billion three months prior and $98.6 billion on June 30, 2014.
Net income for the mortgage unit was $584 million, up from $328 million in the fourth quarter but a drop from the $733 million earned in the second quarter of 2014.
Total mortgage revenue was down on a year-over-year basis, $1.8 billion for the most recent period compared with $2.3 billion in the second quarter 2014. That is being cited as the prime reason for a 3% drop in revenue for JPMorgan Chase.
Net production revenue was $233 million, down from $323 million one year prior. Loan servicing revenue was $707 million, down from $867 million over the same time frame, while the company reduced the fair market value of its mortgage servicing rights by $228 million, compared with a $237 million reduction one year prior.
At the corporate level, JPMorgan Chase had net income of $2.53 billion, up from $2.2 billion in the first quarter and $2.5 billion in the second quarter of 2014.
