Preferreds off intraday, end higher; JPMorgan earnings disappoint, Wells tops expectations

By Stephanie N. Rotondo

Phoenix, April 11 - Preferred stocks were slightly lower in early Friday trading following disappointing earnings from JPMorgan Chase & Co. and a mixed financial report from Wells Fargo & Co.

The Wells Fargo Hybrid and Preferred Securities index was off 1 basis point as of mid-morning. However, as investors digested the numbers, the index began to tick up, closing 8 bps higher for the day.

Before the market opened, JPMorgan released its quarterly report, which showed a 19% decline in profit as fixed income trading revenues declined and mortgage lending dipped. For its part, Wells Fargo reported a 14% increase in its quarterly profit, despite a 3% decline in revenues.

Wells' revenue slide was attributed to a decline in home lending.

Meanwhile, Citigroup Inc. is on tap to release earnings on Monday. Leading up to that, the bank's preferreds were on the mixed side.

The 6.875% series K fixed-to-floating rate noncumulative preferreds (NYSE: CPK) ended up a penny at $26.10. The 7.125% series J fixed-to-floating rate noncumulative preferreds (NYSE: CPJ) lost a penny, closing at $26.62.

Earnings begin to flow

Though earnings were below expectations, JPMorgan's preferreds were firming on the day.

The 6.7% series T noncumulative preferreds (NYSE: JPMPB) finished the day up 2 cents at $25.63 and the 5.5% series O noncumulative preferreds (NYSE: JPMPD) put on 8 cents to end at $22.41.

For the first quarter, the New York-based bank reported a profit of $5.27 billion, or $1.28 per share. That was a decline of 19% year over year.

Revenues were also 8.5% lower at $23.68 billion.

Analysts were expecting earnings of $1.40 per share on revenues of $24.53 billion.

By sector, bond trading revenues took a 21% hit while home mortgage lending declined 84%.

As for Wells Fargo, its results were a little easier to stomach. Its preferreds were also slightly firmer on the day.

The 5.2% series N class A noncumulative perpetual preferreds (NYSE: WFCPN) were up 2 cents at $21.39. The 5.85% series Q fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPQ) rose a penny to $24.98.

The San Francisco-based financial institution reported a profit of $5.89 billion, or $1.05 per share. That reflected a 14% increase year over year.

However, revenues slumped 3% to $20.63 billion.

The figures were better than analysts were expecting, though barely. Analysts polled by Thomson Reuters had forecast earnings of 97 cents per share on revenues of $20.6 billion.

Still, Wells Fargo - considered the leader in home mortgage lending - saw originations fall to $36 billion in the first quarter of the year. That compared to $109 billion a year earlier and $50 billion in the last quarter of 2013.

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