- JPMorgan Chase's (JPM - Get Report) main banking subsidiary JPMorgan Chase Bank, NA, saw its allowance for loan losses decline by $959 million during the third quarter. The company's smaller credit card subsidiary Chase Bank USA, NA added $5.2 million to reserves, which is a very small amount, considering that the card subsidiary's allowance for loan losses totaled $4.3 billion, as of Sept. 30. JPMorgan Chase Bank NA's ratio of nonperforming assets (excluding government-guaranteed loan balances and properties) to total assets was 1.29% as of Sept. 30, improving from 1.32% the previous quarter, according to Thomson Reuters Bank Insight, while the bank's loan loss reserves (including allocated transfer reserves) covered 2.96% of total loans. This level of reserve coverage was way "ahead of the pace" of loan losses, as the annualized third-quarter ratio of net charge-offs to average loans was 1.20%, implying that we will be seeing much more in the way of reserve releases from JPMorgan's largest subsidiary.
- Citibank, NA -- the main banking subsidiary of Citigroup (C - Get Report) -- saw its loan loss reserves decline by $1.7 billion during the third quarter. The bank's nonperforming assets ratio was 0.99% as of Sept. 30, increasing slightly from 0.93% the previous quarter. Loan loss reserves covered 3.57% of total loans as of Sept. 30, and the bank's ratio of net charge-offs to average loans of 2.48% in the third quarter.
- Bank of America (BAC - Get Report) main subsidiary Bank of America, NA released $3.5 billion in reserves during the third quarter. The bank's ratio of nonperforming assets to total assets was 2.44% as of Sept. 30, increasing from 2.20% the previous quarter. Reserves covered 2.53% of total loans, and the third-quarter net charge-off ratio was 1.35%. Bank of America's FIA Card Services, NA subsidiary released $560 million in loan loss reserves during the third quarter, with a third-quarter net charge-off ratio of 4.76%, improving from 5.36% in the second quarter. FIA's reserves covered 5.34% of total loans as of Sept. 30.
- Wells Fargo Bank, NA -- the main banking subsidiary of Wells Fargo (WFC - Get Report) -- released $980 million in reserves during the third quarter. The bank's nonperforming assets ratio improved to 2.55% as of Sept. 30, from 2.64% the previous quarter, and reserves covered 1.91% of total loans. The third-quarter ratio of net charge-offs to average loans was 1.06%. On the holding company level, Wells Fargo continues to out-earn the other members of the "big four" U.S banking club, with a third-quarter operating return on average assets of 1.46%, increasing from 1.40% the previous quarter, and 1.27% a year earlier, according to data supplied by Thomson Reuters Bank Insight. JPMorgan Chase was in second place, with a third-quarter ROA of 1.01%, increasing from 0.88% in the second quarter, and 0.76% in the third quarter of 2011.
U.S. Banks Continue Recovery (Update 1)
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