JPMorgan, Wells Fargo post record 3Q results

• JPMorgan earned $5.3 billion, Wells Fargo earned $4.7 billion in Q3
• Revenue at JP Morgan rose 6%, sales up 8% at Wells Fargo
• Both stocks fall Friday despite outpacing earnings expectations

NEW YORK (AP) — JPMorgan Chase, the country's biggest bank by assets, posted a record quarterly profit Friday.

The bank said it earned $5.3 billion for common shareholders, a widely used measurement, from July through September, up 36% from the same period a year ago.

Although the figures far outpaced expectations, JP Morgan shares were down 0.5% in trading Friday.

Wells Fargo, the nation's biggest mortgage lender, posted record earnings in the third quarter. The bank increased mortgage lending and pocketed more fees.

It expanded its loan portfolio by making new loans to consumers and collected more interest on loans than in the same period a year earlier. Revenue was lower than analysts expected, however, and Wells Fargo (WFC) stock fell 3% in trading Friday.

JP Morgan earnings for common shareholders (JPM) includes expenses for payments to preferred shareholders. Minus those expenses, net income would have been even higher, at $5.7 billion.

Earnings were $1.40 per share, far exceeding the $1.21 predicted by analysts polled by FactSet, a provider of financial data.

Revenue rose 6% to $25.1 billion, beating expectations of $24.4 billion. Earnings were helped because the bank set aside less money for bad loans. It set aside $1.8 billion for potential loan losses, down 26% from $2.4 billion a year ago.

Revenue from mortgages shot up 29%. Low interest rates, as well as a government program called Home Affordable Refinance Programs, encouraged homeowners to refinance.

CEO Jamie Dimon said he believes the housing market "has turned a corner."

He noted, however, that the bank is still seeing a high level of souring mortgage loans, and said he expects high default-related expenses "for a while longer" despite the bank's efforts to modify loans for homeowners struggling to pay mortgages they can no longer afford.

The bank gave few details on the surprise $6 billion trading loss that dominated its previous earnings report other than noting a credit portfolio moved to the investment bank from the chief investment office, which was responsible for a bad trade, "experienced a modest loss."

JPMorgan's investment banking unit earned more fees for underwriting stock and debt offerings, a possible signal that wary companies and investors are willing to return to the market.

Debit card revenue fell, which the bank blamed on new rules crimping the fees that banks charge stores whenever customers pay via debit card.

Wells Fargo's quarterly report was dominated by the revenue and profits from its booming mortgage business. The bank said it originated $139 billion of mortgage loans, up from $89 billion in last year's third quarter. And more homeowners refinanced at record-low mortgage rates.

On Tuesday, the federal government sued San Francisco-based Wells Fargo, alleging that to qualify for federal loan insurance the bank misled regulators about the quality of thousands of loans. The lawsuit seeks to recover hundreds of millions of dollars paid to Wells by the Federal Housing Administration after borrowers defaulted on their loans.

Wells' net income in the quarter ended Sept. 30 rose 23%, to $4.7 billion, from $3.8 billion in the same period last year. That amounts to 88 cents per share, a penny higher than the FactSet consensus estimate. The earnings don't include dividend payments to preferred stockholders. The bank earned 72 cents per share in last year's third quarter.

Revenue rose 8% to $21.2 billion, slightly lower than analysts expected. Net interest income, which includes interest on loans, edged up 1% to $10.7 billion from $10.5 billion. Non-interest income, which includes fees, insurance and mortgage banking revenue, rose 16%.

Card fees rose modestly, while mortgage banking accounted for the bulk of fee increases. That category also includes trading gains, another bright spot for Wells this quarter. Wells reported net gains from trading of $529 million, compared with a loss of $442 million a year earlier. Wells' trading business is smaller than those of its big Wall Street rivals.