JPMorgan Discloses $700 Million Earnings Hit
NEW YORK (TheStreet) -- JPMorgan Chase(JPM) said in an 8-K filing with the Securities and Exchange Commission it will take a $700 million hit to fourth quarter earnings as a result of the cash portion of a Monday settlement between ten of the nation's largest housing lenders, the Federal Reserve and the Office of Controller of Currency (OCC).
In total, the Monday settlement will cost the banks $8.5 billion as a result of improper foreclosure practices such as robo-signing between 2009 and 2010.
While the Fed and OCC settlement creates varying financial costs for the banks involved, it also precipitated a variance in how the settlement was disclosed to shareholders.
Notably, JPMorgan's Wednesday filing is the first on-the-record confirmation to shareholders of its foreclosure review costs and comes roughly 48 hours after its competitors Bank of America(BAC) , Wells Fargo (WFC) and Citigroup(C) disclosed in press statements the fourth quarter financial hit of the settlement.
Under Monday's settlement, JPMorgan said in its filing it will make a cash payment of $753 million for distribution to borrowers. The bank, which is the largest in the U.S. by total assets, will commit a further $1.2 billion to foreclosure prevention action, according to the settlement. As a result, JPMorgan will take a $700 million pre-tax hit to fourth quarter earnings due on Tuesday.
On Monday, JPMorgan spokesperson Amy Bonitatibus, noted that the bank would disclose the costs of the foreclosure settlement - called the Independent Foreclosure Review - in an 8-K filing, but couldn't confirm its timing.
"We worked very hard over the last eighteen months fulfilling our obligations under the Independent Foreclosure Review and are pleased to have it now behind us," Bonitatibus added in a statement emailed on Monday.
In a follow up Wednesday phone conversation, Bonitatibus declined to comment when asked why the bank's disclosure of IFR settlement costs to investors came days after competitors like Bank of America and Wells Fargo.