JPMorgan Chase (JPM) reported a $5.4 billion profit in the first quarter of 2012, or $1.31 per share, a 3.6% decline from a year earlier when the bank earned $5.6 billion.

The New-York based bank beat estimates by analysts surveyed by Bloomberg who said earnings per share would come in at $1.18.

Total revenue for the three months ended March 31 rose 6% from a year earlier to $27.4 billion.

Chase’s mortgage production and servicing unit reported net income of $461 million, compared with a net loss of $1.1 billion a year earlier.

“Our results for the quarter reflected positive credit trends for our consumer real estate and credit card portfolios,” Chief Executive Jamie Dimon said. “Estimated losses declined for these portfolios, and we reduced the related loan loss reserves by a total of $1.8 billion in the first quarter.”

“However, with respect to our mortgage banking business, we expect to see elevated levels of costs and losses associated with mortgage-related issues for a while longer. Credit trends across our wholesale portfolios were stable and continued to be strong,” Dimon added.

Mortgage production-related revenue, excluding repurchase losses, totaled $1.6 billion, up 80% from $878 million in the same period in 2011. The improvement, the bank said, is “a reflection of wider margins, driven by market conditions and mix, and higher volumes, due to a favorable refinancing environment, including the impact of the Home Affordable Refinance Programs.”

Mortgage loan originations in the first quarter expanded 6% to $38.4 billion from the first quarter of 2011 and remained flat from the prior quarter. Retail channel originations in the quarter grew 11% to $23.4 billion from a year earlier.

Chase’s mortgage loan application volumes ballooned 33% to $59.9 billion from $45 billion a year earlier. In the fourth quarter of 2011, application volume totaled $52.5 billion, reflecting refinancing activity.

Mortgage servicing-related revenue fell 5% to $1.2 billion from the first quarter of 2011, a result of a decline in third-party loans serviced.

Commenting on Chase’s balance sheet, Dimon said, “We strengthened our fortress balance sheet, ending the first quarter with a strong Basel I Tier 1 common ratio of 10.4%. We estimate that our Basel III Tier 1 common ratio was approximately 8.4% at the end of the first quarter.”


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