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Bank Earnings: A Mixed Bag

The Wall Street earnings week that began with JPMorgan Chase (JPM) announcing a 19 percent slide came to a close with both Goldman Sachs (GS) and Morgan Stanley (MS) beating estimates, offering a new look at where the U.S.’s big six banks stand at the end of the first quarter.

Wells Fargo (WFC) saw its earnings climb 14 percent to $5.89 billion, the most of its peers. JPMorgan was next, at $5.3 billion. Both were hurt by weak housing demand across the country, reducing mortgage activity. Among the surprises: Citigroup (C) released $673 million from reserves that cover loan losses to help beat analysts’ profit expectations, some welcome news for a bank that in March had its capital plan rejected by the Federal Reserve for the second time in three years. At the same time, Bank of America (BAC) was the only big bank to post a loss—of 5¢ per share—when analysts had been expecting a profit of 5¢. Bank of America was hit by $6 billion in legal costs, including a $3.6 billion mortgage deal with Fannie Mae.

Every bank reported declining revenue from trading—except Morgan Stanley, where fixed-income trading helped it post surprisingly high net income of $1.51 billion. The bank was also aided by gains in its wealth management division.

Goldman Sachs had a mixed quarter, beating Wall Street expectations with $2.03 billion in net income, which was a decline of 10 percent from the first quarter of 2013.

Nick Summers covers Wall Street and finance for Bloomberg Businessweek. Twitter: @nicksummers.

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