Time to Focus on Bank EarningsEarnings season for major U.S. banks will kick off early Friday, when Wells Fargo ( WFC) announces its third-quarter results, with JPMorgan Chase ( JPM) also reporting before the market open. Plenty of coverage heading into third-quarter earnings season has centered on the major decline in mortgage loan production, as rising long-term interest rates have curtailed the refinancing wave. Atlantic Equities analyst Richard Staite in his preview for eight large-cap banks on Sept. 23 estimated the group's third-quarter mortgage production revenue would plunge 45% from the second quarter and 55% from the third quarter of 2012. Staite also estimated that trading group for the eight large-cap banks he covers -- including Wells Fargo, JPMorgan, Bank of America ( BAC), Citigroup ( C), Morgan Stanley ( MS), U.S. Bancorp ( USB) and PNC Financial Services Group ( PNC) -- would decline 20% in the third quarter from a year earlier. But despite those painful revenue declines, Staite estimated a total revenue decline of just 5% year-over-year for the group, reflecting a continuing decline in expenses and "relatively stable net interest income." For Wells Fargo, the consensus third-quarter net income estimate among analysts polled by Thomson Reuters is $5.229 billion, or 97 cents share, compared to 98 cents the previous quarter and 88 cents a year earlier. The consensus third-quarter revenue estimate is $20.973 billion, declining from $21.378 billion in the second quarter and $21.213 billion in the third quarter of 2012. Wells Fargo's shares on Thursday rose over 2% to close at $41.22.
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