Quick Thoughts On JPMorgan Earnings

All in all, JPMorgan (NYSE: JPM) reported pretty decent earnings this morning. The company beat the consensus number by $0.12, with about $0.06 of that coming from actual better-than-expected operating performance.

Net interest income was down about 3% sequentially (not so good), but investment banking was pretty strong (positive). The company also had a lot of shuffling of reserves - adding $2.1B in reserves to WaMu's credit book, adding $1.5B to litigation reserves, releasing $2B in reserves tied to credit cards, releasing $1.2B in reserves tied to the bank's core mortgage portfolio (its own mortgages, not WaMu's), and recognizing $1.2B in securities gains.

Non-performing assets were down 6% on a sequential basis (though still quite high at $16.6B), while consumer NPLs were down about 10% (and wholesale were up 6%).

So, bottom line(s):

- A good quarter, but not a blow-out

- Cards continue to recover nicely, and that should be good news for Citi (NYSE: C), Bank of America (NYSE: BAC), US Bancorp (NYSE: USB), American Express (NYSE: AXP), and Capital One (NYSE: COF). Interestingly, but not surprisingly, debtors are making sure they take care of their credit card bills, even while they default on their mortgage (after all, you can't spend a house, right?).

- Lower net interest income and higher losses/charge-offs in commercial real estate are bad news for regional banks. It wouldn't surprise me to see a little concern regarding banks like Comerica (NYSE: CMA), BB&T (NYSE: BBT), Zions (Nasdaq: ZION), Westamerica (Nasdaq: WABC) and so on.

- Loan growth is coming back and losses are getting better. The GSE put-back issue may be close to over (if the Bank of America deal is any indication), and there seems to be increasing clarity on the foreclosure litigation front.

- JPMorgan is moving on to the next phase and figuring out what to do with its capital. I would like to see them get more active internationally, but time will tell if Dimon agrees with me.

I would BUY JPMorgan shares today.

Disclosure: I own shares of JPMorgan and BB&T.