7:55 Very pleasant hold music…
8:00 Still holding. Same symphony as in the opening credits of Trading Places. Can anyone remember which one it is?
8:07 Call beginning, opening statements.
8:08 Starting with CFO Mike Cavanaugh, going to the slides (see below). Says accounting rule changes had no effect.
8:10 “We feel great about our capital position.”
8:12 Running through slides very fast. Says charge-offs and reserves were all in-line with expectations from the last investor day.
8:13 Seeing benefit of the Bear merger in strong gains from trading, credit, etc.
8:16 Dramatic increases in deposits. WaMu balances remaining stable, despite that fact that “we are not a price chaser” on deposits.
8:18 Lots of talk about WaMu and how it’s helped the bank. (Sheil Bair haters on alert!)
8:20 Showing slide nine. Home equity loans deteriorating, but company insists its all in line with latest expectations. Prime mortgage per-quarter losses could hit $500 million per quarter, which is higher than previous estimates. (See slide 10).
8:28 Assets under management declined due to market declines, but inflows are growing.
8:32 Q&A time
Q: Right off the bat is the TARP question…
A: Jamie Dimon: “I think we’ve been fairly consistent in TARP. We’d like to repay it ASAP. We’re waiting for guidance from the government of the United States… Obviously we have the werewithall… we’ll await the results of the stress test”
On whether they’d need to raise capital to repay TARP, Dimon says: “I don’t think we need to, I don’t see why a company with that kind of capital needs to raise capital. What Goldman did is what Goldman did, has nothing to do with us.”
Q: On FASB?
A: “Whole thing was a big hullabaloo about nothing.” Had no impact.
Q: Auto industry exposure?
A: At worst, at the far end, company could lose $1 billion.
Q: Mike Mayo: Investment bank compensation seemed low to revenue..
A: Comp has nothing to do with revenue, that’s just how it expressed. There are no changes to comp practices.
Q: Mayo, again:Credit card losses. Are they getting non-linear?
A: Wherever home prices are going down and unemployment going up, charge-offs go up.
Q: Meredith Whitney: Setting up for another leg down in subprime?
Q: Whitney, again. Will you be profitable on cards this year?
A: No. But that’s not news.
A: No intent on using PPIP. We have our own assets, if we want to sell them, we’ll sell them. And we’re certainly not going to borrow from the government. And PPIP is just one.
“I don’t think toxic assets are the problem… I don’t think the toxic assets are the problem.” Banks are just 25% of the system. There’s hedge funds, insurance funds, pension funds. System is very different than it was 50 years ago.
Q: Loan loss reserves.
A: Plenty of reserves. Loan loss reserves need to be re-examined by regulators
Q: Is the California market bottoming?
A: No question that there’s more activity in the California market. Homes are moving much faster. There’s more bids on them. The bids are closer to the offering prices. But there’s nothing in that activity that will change loss estimates yet.
9:03 call done.
The market has had a muted reaction to the JPMorgan (JPM) earnings report, which solidly beat expectations. Join us here as we cover the conference call LIVE at 8:00 AM.