Wells Fargo & Co (WFC), JPMorgan Chase & Co. (JPM): How Much Do Mortgage Volumes Matter?

Investment banking and community banking are significantly more substantial to bottom line income. The company earned $2.84 billion from its investment banking operation. Consumer and community banking, its bread and butter Chase banking division, delivered a whopping $3.09 billion profit on the back of credit cards and savings accounts. Mortgage banking results are included in its community banking totals. All-in, mortgage banking makes up a fraction of its total community banking haul.

Why it matters

Over time, a company’s position in its market becomes much too familiar with its investors. It is only natural that investors would watch Wells Fargo & Co (NYSE:WFC) and JPMorgan Chase & Co. (NYSE:JPM) as bellwethers for the mortgage market, as they control 28% and 12% of the mortgage market, respectively.

However, investors should not make the mistake of watching mortgages volumes to determine profits for JPMorgan Chase & Co. (NYSE:JPM) or Wells Fargo. These banks are highly diversified, highly-profitable operations. Whether or not either bank reports a gain or loss is unlikely to have to do with the volume of new home loans.

Bottom-line income for both firms is much more levered to the loans they hold, not the loans they originate to sell.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of JPMorgan Chase & Co (NYSE:JPM). and Wells Fargo. Jordan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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