How you describe the first series of earnings reports from the third quarter released on Tuesday by a trio of the largest banks may depend on your mood.
If you are feeling generous, you might say that JPMorgan Chase, Citigroup and Wells Fargo released uneven results, as loan growth was steady, but higher expenses ate into profits.
"Uneven is perhaps more reflective of how we see it," John Shrewsberry, Wells Fargo's chief financial officer, said in describing the San Francisco bank's third quarter and the recovery in general.
Or you could be more pessimistic and point out how margins are tightening at Wells Fargo because of its huge deposit growth; and how legal costs and other matters weighed on all three big banks' expenses.
"The [net interest margin] was under more pressure than we had forecast," Scott Siefers, an analyst at Sandler O'Neill, wrote in a research report on Wells Fargo. "Fees were weaker than we had hoped, and expenses were higher than we had modeled."
John Stumpf, Wells Fargo's chairman and chief executive, nevertheless tried to put a positive spin on the results. The San Francisco company is seeing more signs of optimism from its customers, based on job growth and increasing consumer confidence, he said in a conference call.
"There are currently more job openings than at any time since early 2001. Household wealth is at an all-time high," Stumpf said. "Consumers are now better-positioned for increased spending and borrowing."
Others pointed out that, with large banks like Citi, JPMorgan and Wells Fargo, the diversified revenue sources mean that most quarters will have some lumps.
"It's rare that you'll have everything clicking on all cylinders at the same time," Joe Morford, an analyst at RBC Capital Markets, said in an interview. "Some parts will do better at different parts in the cycle."
But the underlying theme of the earnings reports is that none of the three banks that reported Tuesday is fully locked-in, and for every positive development there seems to be at least one other factor to offset it. Some are beyond their control.
"There is still a [consumer] confidence issue," Nancy Bush, an analyst at NAB Research, said in an interview. "With ISIS, the Ebola virus and the stock market, Americans don't feel good right now." Those worries can deter consumer spending, borrowing and other activities.
There were rays of hope. Wells Fargo's total loans rose about 4% to $838.9 billion from a year earlier, as it expanded in multiple categories, including auto loans, multifamily lending, credit cards and commercial-and-industrial loans.
"We're reaching the full range of consumer types out there," Shrewsberry said in an interview.
Revenue at Citi rose 9.5% to $19.6 billion on higher bond-trading revenue and stronger commercial lending.
Citi, the top credit card issuer among U.S. banks, also reported card revenue up a modest 1% year over year.
JPMorgan's total loans were essentially flat from the previous quarter and up 2% from a year earlier. Credit card loans rose 2% from a year earlier and auto loans increased 4%. Commercial loans were up 6%.
Additionally, Marianne Lake, JPMorgan's chief financial officer, said in a conference call that "utilization rates were up slightly for the quarter and pipelines continue to move incrementally higher across the board."
Wells Fargo continued to add to its stockpile of deposits, as core deposits grew 8.5% to $1.1 trillion. Stumpf was asked during his conference call if his view had changed about the ho-hum business of checking accounts and collecting deposits.
"I'm going to bed earlier these days," Stumpf said. "I can dream even longer about [checking accounts]. I still just love checking."
But the growth in deposits comes with a downside. Siefers estimated that Wells Fargo's deposit growth cut 4 basis points off its net interest margin. The margin fell by a total of 33 basis points from a year ago, to 3.06%.
Those deposits, however, are "invaluable," Morford said. And they set up Wells Fargo to benefit nicely when rates rise and it can deploy those funds, he said.
"Personally, I don't get too worried about deposits," Morford said. "Maybe deposits are not worth that much in this part of the cycle. But once interest rates move up, [they're] going to be extremely valuable. That's been the hallmark of the Wells Fargo franchise historically, theirlow-cost deposit base."
In the short term, however, there are many factors adding to expenses. Citigroup, JPMorgan and Wells Fargo spent more on everything from increased regulatory scrutiny to preparing for a cyberattack.
"While our expense reduction efforts have been productive, we continue to face pressure related to legal costs and the need to invest in regulatory and compliance, as well as the critical need to protect our network from cybercrime," Michael Corbat, Citi's CEO, said during a conference call.
John Gerspach, Citi's chief financial officer, reiterated that the company projects its efficiency ratio next year will be in the mid-50% range.
Part of Citigroup's expenses in the quarter were a $382 million restructuring charge as it streamlines its business and focuses on more profitable urban markets.
Wells Fargo's noninterest expense rose 1% to $12.2 billion from a year ago, as it recorded $417 million in litigation accruals and as the costs of risk management and compliance functions have increased by about $100 million per quarter.
Matt Scully and Robert Barba contributed to this article.