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Oct 6 (Reuters) - JPMorgan Chase & Co’s (JPM.N) third-quarter earnings estimates were cut by Fox-Pitt Kelton analyst David Trone to a loss, citing additional mark-to-market losses, losses on government-sponsored enterprises’ (GSE) securities, and a build in credit reserve. Trone now expects a loss of 10 cents a share in the third quarter compared to his prior view of profit of 32 cents a share.
He expects the company to record net marks of $4.3 billion in the quarter, comprising $2.0 billion on leveraged loans, $1.0 billion on mortgage assets, $1.2 billion loss on GSE securities and $400 million related to a settlement on auction rate securities. Trone also expects a $1.7 billion in reserve build associated with the Washington Mutual acquisition.
These losses will be partially offset by $300 million of liability valuation gains and a $700 million tax benefit, a large part of which will be in the investment bank, he added.
For the fourth quarter, Trone raised earnings estimates to 86 cents a share from 79 cents a share, and for 2009 to $3.91 a share from $3.82 a share, citing net income contribution from Washington Mutual.
JPMorgan may record reversal gains in the future from assets that were conservatively marked during the Bear Stearns and Washington Mutual acquisitions, Trone said, adding that upward earnings revisions are likely.
The company will gain market share in the long term across its traditional banking and securities units, from the demise of some peers, he said.
JPMorgan’s shares were down 5 percent at $43.66 in morning trade on the New York Stock Exchange. (Reporting by Amiteshwar Singh in Bangalore; Editing by Jarshad Kakkrakandy)