JP Morgan Chase announced its first quarter earnings today at 40 cents compared to Bloomberg’s reported consensus expectations of 32 cents.  The release can be found here.  Most of their earnings came from investment banking activities which are non-recurring in nature:

“Revenue in the investment-banking unit was a record $8.3 billion, including $4.9 billion from fixed-income trading alone. The business generated $3 billion in the same period a year earlier. Investment-banking profit was $1.61 billion, compared with a loss of $87 million in the first quarter of 2008.”

Most of the investment banking unit’s business was handed to it by the federal government intent on making the sacred banks money by sacrificing taxpayer money at their alter.  So… about 75% of Dimon’s earnings for the quarter are not likely to recur.  In addition, the future for chargeoffs is bleak.

JP Morgan has, compared to the rest of the banks a fairly high Tangible Common Equity of $87.2 billion of tangible common equity or 7.2% of risk-weighted assets.  Rolfe Winkler shows TCE for Morgan at 72 as of year end.  How the company was able to increase its TCE by $15B  in one quarter is unclear to us. (update: Rolfe Winkler tells me in an email: “They’re ignoring mortgage-servicing rights, which FASB classifies as intangibles.  By my calc, TCE would go from $72 billion to $74 billion.”)  However, since they compare favorably to other banks in this conservative measure, they are proud of it (from footnote b of the release):

“Tangible Common Equity (“TCE”) represents common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less identifiable intangible assets (other than MSRs) and goodwill, net of related deferred tax liabilities. TCE is, in management’s view, a meaningful measure of capital quality.”

They should be proud of it – if its real.