UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): July 20, 2005
JPMORGAN CHASE & CO.
Delaware | 1-5805 | 13-2624428 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
270 Park Avenue, New York, NY | 10017 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (212) 270-6000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On July 20, 2005, JPMorgan Chase & Co. (JPMorgan Chase) reported 2005 second quarter net income of $1.0 billion, or $0.28 per share, compared to a net loss of ($0.5) billion, or ($0.27) per share, for the second quarter of 2004. A copy of the 2005 second quarter earnings release is attached hereto as Exhibit 99.1, and a copy of the earnings release financial supplement is attached hereto as Exhibit 99.2.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit Number | Description of Exhibit | |
12.1
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges | |
12.2
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements | |
99.1
|
JPMorgan Chase & Co. Earnings Release Second Quarter 2005 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement Second Quarter 2005 |
The earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chases management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause JPMorgan Chases results to differ materially from those described in the forward-looking statements can be found in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, and in the 2004 Annual Report on Form 10-K for the year ended December 31, 2004, of JPMorgan Chase filed with the Securities and Exchange Commission and available at the Securities and Exchange Commissions Internet site (http://www.sec.gov).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
JPMORGAN CHASE & CO. | |||||||
(Registrant) | |||||||
By: | /s/ Joseph L. Sclafani | ||||||
Joseph L. Sclafani | |||||||
Executive Vice President and Controller [Principal Accounting Officer] |
Dated: July 20, 2005
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EXHIBIT INDEX
Exhibit Number | Description of Exhibit | |
12.1
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges | |
12.2
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements | |
99.1
|
JPMorgan Chase & Co. Earnings Release Second Quarter 2005 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement Second Quarter 2005 |
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EXHIBIT 12.1
JPMORGAN CHASE & CO.
Computation of Ratio of Earnings to Fixed Charges
Six Months Ended June 30, (in millions, except ratios) | 2005 | |||
Excluding Interest on Deposits |
||||
Income before income taxes |
$ | 4,540 | ||
Fixed charges: |
||||
Interest expense |
7,006 | |||
One-third of rents, net of income from subleases (a) |
182 | |||
Total fixed charges |
7,188 | |||
Add: Equity in undistributed loss of affiliates |
71 | |||
Earnings before taxes and fixed charges,
excluding capitalized interest |
$ | 11,799 | ||
Fixed charges, as above |
$ | 7,188 | ||
Ratio of earnings to fixed charges |
1.64 | |||
Including Interest on Deposits |
||||
Fixed charges, as above |
$ | 7,188 | ||
Add: Interest on deposits |
4,349 | |||
Total fixed charges and interest on deposits |
$ | 11,537 | ||
Earnings before taxes and fixed charges,
excluding capitalized interest, as above |
$ | 11,799 | ||
Add: Interest on deposits |
4,349 | |||
Total earnings before taxes,
fixed charges and interest on deposits |
$ | 16,148 | ||
Ratio of earnings to fixed charges |
1.40 | |||
(a) | The proportion deemed representative of the interest factor. |
EXHIBIT 12.2
JPMORGAN CHASE & CO.
Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividend Requirements
Six Months Ended June 30, (in millions, except ratios) | 2005 | |||
Excluding Interest on Deposits |
||||
Income before income taxes |
$ | 4,540 | ||
Fixed charges: |
||||
Interest expense |
7,006 | |||
One-third of rents, net of income from subleases (a) |
182 | |||
Total fixed charges |
7,188 | |||
Add: Equity in undistributed loss of affiliates |
71 | |||
Earnings before taxes and fixed charges,
excluding capitalized interest |
$ | 11,799 | ||
Fixed charges, as above |
$ | 7,188 | ||
Preferred stock dividends (pre-tax) |
11 | |||
Fixed charges including preferred stock dividends |
$ | 7,199 | ||
Ratio of earnings to fixed charges and
preferred stock dividend requirements |
1.64 | |||
Including Interest on Deposits |
||||
Fixed charges including preferred stock dividends, as above |
$ | 7,199 | ||
Add: Interest on deposits |
4,349 | |||
Total fixed charges including preferred stock
dividends and interest on deposits |
$ | 11,548 | ||
Earnings before taxes and fixed charges,
excluding capitalized interest, as above |
$ | 11,799 | ||
Add: Interest on deposits |
4,349 | |||
Total earnings before taxes, fixed charges
and interest on deposits |
$ | 16,148 | ||
Ratio of earnings to fixed charges
and preferred stock dividend requirements |
1.40 | |||
(a) | The proportion deemed representative of the interest factor. |
JPMorgan Chase & Co. 270 Park Avenue, New York, NY 10017-2070 NYSE symbol: JPM www.jpmorganchase.com |
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News release: IMMEDIATE RELEASE
JPMORGAN CHASE REPORTS 2005 SECOND-QUARTER NET INCOME OF $1.0 BILLION
| REPORTED EARNINGS of $0.28 and OPERATING EARNINGS of $0.66(1) |
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| INVESTMENT BANK weak trading results; strong investment banking fees |
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| RETAIL strength in Consumer Banking and Home Equity businesses |
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| CARD, TSS and AWM produced double-or triple-digit earnings growth |
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| Non-operating litigation reserve charge of $1.2 billion (after-tax) |
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| Tier 1 ratio of 8.2% (est.) |
New York, July 20, 2005 JPMorgan Chase & Co. (NYSE: JPM) today reported 2005 second-quarter net income of $1.0 billion, or $0.28 per share, compared to a net loss of $0.5 billion, or $0.27 per share, for the second quarter of 2004. Current period results include a $1.9 billion (pre-tax) litigation reserve charge, or $0.33 per share, and $279 million (pre-tax) of merger charges, or $0.05 per share, reflecting the merger with Bank One Corporation completed on July 1, 2004. Excluding these charges, operating earnings would have been $2.3 billion, or $0.66 per share. Prior-year reported results included a $3.7 billion (pre-tax) litigation reserve charge, or $1.09 per share, and $90 million (pre-tax) of merger charges, or $0.03 per share, but do not include Bank Ones results. Excluding these charges, operating earnings would have been $1.8 billion, or $0.85 per share. Refer to the Merger and other financial information section of this press release for additional information concerning the merger.
William B. Harrison, Jr., Chairman and Chief Executive Officer, commented, As we announced last month, trading performance for the second quarter was very weak. Our other major businesses, however, reported good results, with Card Services, Treasury & Securities Services and Asset & Wealth Management posting double-or triple-digit earnings growth, and Investment Banking fees remaining strong. Commenting on the Enron litigation settlement and increased legal reserves, Mr. Harrison said, Our resolution of the Enron class-action lawsuit substantially reduces our risk related to this matter. Given the current legal environment, litigation reserves were increased by $1.9 billion. We believe that with this action the firms litigation reserves are adequate to meet its remaining litigation exposure.
James Dimon, President and Chief Operating Officer, said, In our first full year as a combined firm, we have made significant progress in all of our businesses both in terms of integrating the Bank One and JPMorgan Chase franchises and in executing our growth strategy. In the coming quarter we will execute the Texas market conversion and complete the platform conversion in Card Services. These conversions are among many projects underway to make our firm more efficient and drive improved profitability. During the second quarter, we launched a national advertising campaign that introduced a modernized Chase brand, and we began converting hundreds of Bank One branches and millions of Bank One credit cards to the Chase name.
Investor Contact:
|
Julia Bates | Media Contact: | Joe Evangelisti | |||
(212) 270-7318 | (212) 270-7438 |
JPMorgan Chase & Co.
News Release
In the discussion of the business segments below, information is presented on an operating basis. Operating basis excludes the after-tax impact of non-operating litigation charges taken in the first and second quarters of 2005 and the second quarter of 2004, merger costs and costs related to the conformance of accounting policies. In addition, for the Investment Bank, operating basis includes in trading revenue net interest income related to trading activities; and for the case of Card Services, operating basis excludes the impact of credit card securitizations. Further, in the discussion below revenues are shown on a tax equivalent basis. For more information about operating basis, as well as other non-GAAP financial measures used by management, see Note 1 below.
The following discussion compares the second quarter of 2005 to the second quarter of 2004. Unless otherwise indicated, historical results for the 2004 second quarter are JPMorgan Chase (h-JPMC) on a standalone basis. The proforma combined lines of business information present the business segments of the company as if these segments had existed as of the earliest date indicated and reflect purchase accounting adjustments, reporting reclassifications and management accounting policy changes. For further information regarding the proforma combined financial information, including reconciliation to JPMorgan Chase GAAP financial information, see information furnished pursuant to Regulation FD by JPMorgan Chase on Form 8-K dated October 1, 2004, as amended on October 20, 2004, January 19, 2005, April 20, 2005 and July 20, 2005. In managements view, the proforma combined financial results provide investors with information to enable them to better understand the underlying trends of the company and each of the lines of business. For a description of the firms business segments, see Note 2 below.
INVESTMENT BANK (IB)
Operating Results IB | 2Q04 h-JPMC | 2Q04 Proforma | |||||||||||||||||||||||
($ millions) | 2Q05 | $ O/(U) | % O/(U) | $ O/(U) | % O/(U) | ||||||||||||||||||||
Net Revenues |
$ | 2,750 | ($189 | ) | (6 | %) | ($647 | ) | (19 | %) | |||||||||||||||
Provision for Credit Losses |
(343 | ) | (215 | ) | (168 | ) | (28 | ) | (9 | ) | |||||||||||||||
Noninterest Expenses |
2,178 | 122 | 6 | 3 | | ||||||||||||||||||||
Operating Earnings |
$ | 606 | ($38 | ) | (6 | %) | ($410 | ) | (40 | %) | |||||||||||||||
Discussion of Historical Results:
Operating earnings were $606 million, down $38 million, or 6%, from the prior year. The lower
performance was due to decreased trading revenues, partially offset by the merger. Trading
revenues for the quarter were $614 million, down $622 million, or 50%, from the prior year. The
disappointing trading performance reflected a challenging market environment. This resulted in
weak portfolio management results, lower proprietary trading revenues due to fewer market
opportunities and reduced client flows. In addition, there were specific losses that affected
equity trading results. Trading revenues were generally weaker in Europe than in the United States
and Asia. Partially offsetting the weak trading results were strong investment banking fees and
continued improvement in credit quality.
Total revenues of $2.8 billion were down $189 million, or 6%, compared to the prior year. Investment banking fees of $965 million remained strong, increasing $74 million, or 8%, compared to the prior year. Advisory revenues of $359 million were up 34% from the prior year and represent the highest quarter since 2000. Debt underwriting revenues of $502 million increased 25% from the prior year driven by higher levels of loan syndication fees, while equity underwriting fees of $104 million were down 53% reflecting reduced levels of market volumes. European investment banking fees remained particularly strong increasing by 33% from the prior year. Fixed Income Markets revenues of $1.4 billion were down $154 million, or 10% from the prior year. The decline was driven by weaker trading performance in credit and interest rate markets, reflecting weak portfolio management results within client-related market-making activities, as well as reduced proprietary trading results, partially offset by the merger. Equity Markets revenues of $72 million decreased $89 million, or 55%, versus the prior year. The decline was due to poor portfolio management trading results, primarily related to both losses from a few concentrated client-driven positions and a write-down in trade receivables in connection with a disputed claim with a creditworthy entity.
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JPMorgan Chase & Co.
News Release
The overall Investment Bank trading value-at-risk increased from $65 million to $102 million since the first quarter. This increase was driven by higher levels in fixed income and equity value-at-risk measures, which were partially offset by the benefit of diversification.
Credit Portfolio revenues of $295 million were down 6% compared to the prior year, reflecting lower trading revenues from hedging activity and lower net interest income from reduced loan balances and commitments, partially offset by the merger.
The provision for credit losses was a benefit of $343 million, compared to a benefit of $128 million in the prior year. The increased benefit was primarily attributable to a greater reduction in the allowance for credit losses, due to continued improvement in credit quality as a result of the change in the loan portfolio mix toward higher rated clients and net recoveries, as well as refinements in the data used to estimate the allowance for credit losses.
Expenses of $2.2 billion were up $122 million, or 6%, from the prior year due to the merger and increased compensation expense. The increase in compensation expense reflected the Cazenove joint venture, net investments in technology and operations staffing, and onboarding of previously externally contracted staff. Partially offsetting these increases was reduced performance-based incentive compensation.
Discussion of Proforma Combined Results:
Operating earnings were $606 million, down $410 million, or 40%, from the prior year and 54% from
the prior quarter. The declines from both periods reflected significantly lower trading revenues.
Trading revenues for the quarter were $614 million, down $714 million, or 54%, from the prior year
and 72% from the prior quarter. The disappointing trading performance reflected a challenging
market environment. This resulted in weak portfolio management results, lower proprietary trading
revenues due to fewer market opportunities and reduced client flows. In addition, there were
specific losses that affected equity trading. Trading results were generally weaker in Europe than
in the United States and Asia. Partially offsetting the weak trading results were strong
investment banking fees and continued improvement in credit quality.
Total revenues of $2.8 billion were down $647 million, or 19%, compared to the prior year. Investment banking fees of $965 million remained strong, increasing $28 million, or 3%, compared to the prior year. Advisory revenues of $359 million were up 33% from the prior year and represented the highest quarter since 2000. Debt underwriting revenues of $502 million increased 13% from the prior year driven by higher levels of loan syndication fees, while equity underwriting fees of $104 million were down 53% reflecting reduced levels of market volumes. European investment banking fees remained particularly strong increasing by 32% from the prior year. Fixed Income Markets revenues of $1.4 billion were down $397 million, or 22%, from the prior year. The decline was driven by weaker trading performance in credit and interest rate markets, reflecting weak portfolio management results within client-related market-making activities, as well as reduced proprietary trading results. Equity Markets revenues of $72 million decreased $122 million, or 63%, versus the prior year. The decline was due to poor portfolio management trading results, primarily related to both losses from a few concentrated client-driven positions and a write-down in trade receivables in connection with a disputed claim with a creditworthy entity.
The overall Investment Bank trading value-at-risk increased from $65 million to $102 million since the first quarter. This increase was driven by higher levels in fixed income and equity value-at-risk measures, which were partially offset by the benefit of diversification.
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JPMorgan Chase & Co.
News Release
Credit Portfolio revenues of $295 million were down 35% compared to the prior year, reflecting lower trading revenues from hedging activity and lower net interest income from reduced loan balances and commitments.
The provision for credit losses was a benefit of $343 million, compared to a benefit of $315 million in the prior year. The increased benefit was primarily attributable to a greater reduction in the allowance for credit losses, due to continued improvement in credit quality as a result of the change in the loan portfolio mix toward higher rated clients and net recoveries, as well as refinements in the data used to estimate the allowance for credit losses.
Expenses of $2.2 billion were essentially flat to last year as reduced performance-based incentive compensation expense was offset by increased staff costs from higher headcount levels. Headcount of 19,269 increased by 1,474 from the prior year, primarily due to the Cazenove joint venture, net investments in technology and operations staffing, and onboarding of previously externally contracted staff.
Other Highlights Include(3):
| Return on equity was 12% for the quarter and 19% for the first half of 2005. |
|
| The Investment Bank continued to build its franchise by maintaining a top 3 ranking in global announced
M&A and improving its global equity and equity-related market share to #4 from #6. |
|
| According to Dealogic, the Investment Bank ranked #1 globally in terms of IB fees earned from advisory and
stock, bond and loan underwriting for the first half of 2005. |
|
| Average loans of $51.4 billion were up $3.9 billion from the prior quarter reflecting a 4% increase in
Credit Portfolio loans and higher balances related to securitization and principal investment activities. |
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| Allowance for loan losses to average loans was 2.90%; nonperforming assets were $946 million, down 44%
from the prior year. |
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| Announced agreement to acquire Neovest Holdings, Inc., a provider of high-performance equities trading
technology and direct market access. |
RETAIL FINANCIAL SERVICES (RFS)
Operating Results RFS | 2Q04 h- JPMC | 2Q04 Proforma | |||||||||||||||||||||||
($ millions) | 2Q05 | $ O/(U) | % O/(U) | $ O/(U) | % O/(U) | ||||||||||||||||||||
Total Net Revenue |
$ | 3,799 | $ | 1,964 | 107 | % | $ | (74 | ) | (2 | )% | ||||||||||||||
Provision for Credit Losses |
94 | 16 | 21 | (81 | ) | (46 | ) | ||||||||||||||||||
Noninterest Expense |
2,126 | 995 | 88 | (144 | ) | (6 | ) | ||||||||||||||||||
Non-core Portfolio Operating Earnings(1) |
| | | (46 | ) | NM | |||||||||||||||||||
Operating Earnings |
$ | 980 | $ | 584 | 147 | % | $ | 42 | 4 | % | |||||||||||||||
(1) | Second quarter 2004 proforma results include operating earnings
of $46 million ($74 million pre-tax) related to sales of heritage Bank One
brokered home equity loans which were deemed non-core. |
Discussion of Historical Results:
Operating earnings were $980 million, up $584 million from the prior year. The increase was
largely due to the merger, but also reflected wider spreads on deposits, increased deposit
balances, growth in retained consumer real estate loans and improved MSR risk management results.
These benefits were partially offset by a reduction in revenue related to lower prime mortgage
originations and the decision to retain subprime mortgage loans rather than securitize.
Net revenue increased to $3.8 billion, up $2.0 billion from the prior year. Net interest income of $2.6 billion increased $1.3 billion as a result of the merger, wider spreads on deposits, increased deposit balances, as well as growth in retained consumer real estate loans. These benefits were partially offset by
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JPMorgan Chase & Co.
News Release
the impact of lower first mortgage warehouse balances in the Home Finance business, lower production volumes in Auto & Education Finance, and the absence of loan portfolios sold in late 2004 and the first quarter of 2005. Noninterest revenue of $1.2 billion increased $617 million due to the merger and better MSR risk management results. These increases were offset partially by a drop in prime mortgage originations and the absence of subprime mortgage loan securitization gains.
The provision for credit losses totaled $94 million, up $16 million from last year. The increase was largely due to the merger, but also reflected higher provision expense related to the decision to retain subprime mortgage loans. These increases were partially offset by reductions in the allowance for loan losses due to lower net charge-offs and improved credit trends in most consumer lending portfolios.
Expenses rose to $2.1 billion, an increase of $1.0 billion from the prior year, primarily due to the merger. Results also included ongoing investments in retail banking distribution and sales. These costs were more than offset by expense savings in nearly all businesses.
Home Finance operating earnings were $413 million, up $92 million compared to the prior year. Operating earnings for the Prime Production & Servicing segment of $136 million were up $8 million. Results reflected improved MSR risk management results and lower expenses, offset by reduced production revenue given the drop in prime mortgage originations. Earnings for the Consumer Real Estate Lending segment of $277 million were up $84 million. Growth was largely due to the merger, but also reflected higher retained loan balances, merger-related expense savings and lower credit costs. These increases were partially offset by the absence of subprime loan securitization gains and the $4 billion manufactured home loan portfolio sold in late 2004.
Consumer & Small Business operating earnings totaled $437 million, up $435 million from the prior year largely driven by the merger. Results also benefited from wider spreads on deposits, increased balances, and cost savings initiatives. These benefits were partially offset by continued investment in the branch distribution network.
Auto & Education Finance operating earnings of $118 million were up $47 million from last year. Growth was primarily due to the merger. Results reflected lower production volumes due to the competitive nature of the operating environment, and the absence of the $2 billion recreational vehicle loan portfolio sold in early 2005.
Insurance operating earnings of $12 million were up $10 million from the prior year on net revenues of $149 million. The increase was primarily due to the merger.
Discussion of Proforma Combined Results:
Operating earnings of $980 million were up $42 million, or 4%, from the prior year. Prior year
results included $46 million of operating earnings related to sales of heritage Bank One brokered
home equity loans which were deemed non-core. Excluding this non-core income, operating earnings
were up $88 million, or 10%, from the prior year. Performance reflected merger-related expense
savings, wider spreads on deposit products, higher retained consumer real estate loan balances and
improved MSR risk management results. These benefits were partially offset by a reduction in
revenue due to lower prime mortgage originations and the decision to retain subprime mortgage loans
rather than securitize.
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JPMorgan Chase & Co.
News Release
To illustrate the underlying business trends, the following description of RFS performance excludes the impact of the prior years non-core actions related to heritage Bank One brokered home equity loans, which added $46 million to operating earnings.
Net revenues of $3.8 billion were down $74 million, or 2%, from the prior year. Net interest income was down slightly at $2.6 billion, reflecting reduced mortgage warehouse balances, the absence of loan portfolios sold in late 2004 and the first quarter of 2005, and lower auto loan and lease balances. Favorable offsets were provided by wider spreads on deposit products and higher retained consumer real estate loans. Noninterest revenue of $1.2 billion was down $24 million, or 2%, from the prior year, driven by lower prime mortgage originations and the absence of subprime mortgage loan securitization gains. Improved MSR risk management results provided a partial offset.
The provision for credit losses totaled $94 million, down $81 million, or 46%, from the prior year. Results reflected lower net charge-offs, continued good credit quality trends across all business segments and the benefit of certain portfolios in run-off.
Expenses of $2.1 billion were down $144 million, or 6%, from the prior year, reflecting increased operating efficiencies in nearly all businesses, partially offset by ongoing investments in retail banking distribution and sales.
Home Finance operating earnings totaled $413 million, down $5 million, or 1%, from the prior year. Operating earnings for the Prime Production & Servicing segment totaled $136 million, down $7 million. Results reflected lower prime mortgage originations, partially offset by improved MSR risk management results. Earnings for the Consumer Real Estate Lending segment increased to $277 million, up $2 million, reflecting increased portfolio balances and lower provision for credit losses. These benefits were partially offset by the absence of subprime loan securitization gains and the $4 billion manufactured home loan portfolio that was sold in late 2004.
Other Highlights Include:
| Mortgage loan originations of $30.9 billion were down 35% from the prior
year and up 16% from the prior quarter. |
|
| Home equity loan originations of $15.8 billion were up 3% from the prior
year and 33% from the prior quarter. |
|
| Mortgage loans serviced of $502 billion increased $26 billion, or 5%. |
|
| Average mortgage loans retained of $47.0 billion increased 18%; period-end
mortgage loans were $47.4 billion. |
|
| Average home equity loans retained of $69.1 billion increased 11%;
period-end home equity loans were $72.3 billion. |
|
| Nonperforming assets of $799 million declined $188 million, or 19%. |
|
| Net charge-off rate was 0.13%, down from 0.27%. The prior year net
charge-off rate was 0.18% excluding charge-offs associated with the
manufactured home portfolio. |
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JPMorgan Chase & Co.
News Release
Consumer & Small Business operating earnings totaled $437 million, up $129 million from the prior year. Results reflected wider spreads on deposits, increased balances, and cost savings initiatives, partially offset by continued investment in the branch distribution network. Compared to the prior quarter, operating earnings decreased 8%, primarily due to the absence of the seasonal tax-refund anticipation lending business.
Other Highlights Include:
| Checking accounts grew by 230,000 to 8.6 million during the quarter.
Heritage Chase branches contributed significantly, adding nearly 66,000
accounts, compared to 19,000 accounts in the second quarter of 2004. |
|
| Average core deposits were
$149 billion, up 1% from the prior year and flat to the prior quarter. |
|
| Average total deposits were
$175 billion, up 1% from the prior year and prior quarter. |
|
| Branch sales of credit cards increased by 81% from the prior year and 16%
from the prior quarter. |
|
| Overhead ratio decreased to 65% from 73% in the prior year, up from 62% in
the first quarter, which benefited from inclusion of the tax-refund
anticipation lending business. |
|
| Number of branches increased to 2,539, up 104 from the prior year and up 22
from the prior quarter. |
Auto & Education Finance operating earnings were $118 million, down $26 million from the prior year. Performance reflected reduced loan and lease balances, and the absence of the $2 billion recreational vehicle loan portfolio sold last quarter. Expenses increased reflecting depreciation on owned automobiles subject to operating leases. Favorable credit trends provided a partial offset, with a reduction in the allowance for loan losses reported for the quarter. Overall results continue to reflect lower production volumes given the competitive nature of the operating environment.
Other Highlights Include:
| Average loan receivables were $49.8 billion, down $4.1 billion, or 8%, from
the prior year and down $3.5 billion, or 7%, from the prior quarter. |
|
| Average lease receivables of $6.6 billion declined $3.5 billion, or 35%, as planned. |
|
| The net charge-off rate dropped to 0.36% from 0.45%. |
Insurance operating earnings totaled $12 million, down $10 million from the prior year, on net revenues of $149 million. The decline was primarily due to increased proprietary annuity sales commissions paid and investments in technology infrastructure.
Other Highlights Include:
| Gross insurance-related revenues were $404 million, down $20 million, or 5%. |
|
| Proprietary annuity sales were $282 million, up from $74 million. |
|
| Term life premiums were $122 million, up 4%. |
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JPMorgan Chase & Co.
News Release
CARD SERVICES (CS)
Operating Results CS | 2Q04 h- JPMC | 2Q04 Proforma | |||||||||||||||||||||||
($ millions) | 2Q05 | $ O/(U) | % O/(U) | $ O/(U) | % O/(U) | ||||||||||||||||||||
Net Revenues |
$ | 3,886 | $ | 2,299 | 145 | % | $ | 110 | 3 | % | |||||||||||||||
Provision for Credit Losses |
1,641 | 893 | 119 | (116 | ) | (7 | ) | ||||||||||||||||||
Noninterest Expenses |
1,383 | 818 | 145 | 17 | 1 | ||||||||||||||||||||
Operating Earnings |
$ | 542 | $ | 366 | 208 | % | $ | 133 | 33 | % | |||||||||||||||
Discussion of Historical Results:
Operating earnings of $542 million increased $366 million from the prior year due to the merger,
lower provision for credit losses and higher revenue, partially offset by higher marketing spend
and a charge to increase litigation reserves.
Total revenues of $3.9 billion increased $2.3 billion, primarily due to the merger. Net interest income of $3.0 billion increased $1.7 billion, primarily due to the merger, including the acquisition of a private label portfolio and higher loan balances, partially offset by an increase in balances in their introductory period driven by a significant increase in new account originations. Noninterest revenue of $910 million increased $594 million, primarily due to the merger and increased interchange income from higher charge volume, partially offset by higher volume-driven payments to partners and higher rewards expense.
The managed provision for credit losses of $1.6 billion increased $893 million, primarily due to the merger, including the acquisition of a private label portfolio, and increased bankruptcy losses from accelerated filings due to the pending change in bankruptcy legislation, partially offset by lower contractual net charge-offs. Managed credit ratios remained strong, benefiting from the continued low level of delinquencies. The managed net charge-off rate for the quarter was 4.87%, down from 5.85% in the prior year. The 30-day managed delinquency rate was 3.34%, down from 4.26% in the prior year.
Expenses of $1.4 billion increased $818 million, primarily due to the merger, including the acquisition of a private label portfolio. Additionally, increased marketing spend and a charge to increase litigation reserves were primarily offset by merger saves, including lower processing costs and compensation expenses.
Discussion of Proforma Combined Results:
Operating earnings of $542 million increased $133 million, or 33%, from the prior year. Results
were driven by lower provision for credit losses, higher revenue and merger saves, partially offset
by higher marketing spend and a charge to increase litigation reserves.
Total revenues of $3.9 billion increased $110 million, or 3%. Net interest income of $3.0 billion increased $81 million, or 3%, due to higher loan balances and the acquisition of a private label portfolio. These benefits were partially offset by an increase in balances in their introductory period driven by a significant increase in new account originations. Noninterest revenue of $910 million increased $29 million, or 3%, from the prior year. Higher charge volume resulted in increased interchange income, partially offset by higher volume-driven payments to partners and rewards expense.
The managed provision for credit losses of $1.6 billion decreased $116 million, or 7%. This decrease was due to lower contractual net charge-offs, partially offset by increased bankruptcy losses from accelerated filings due to the pending change in bankruptcy legislation and the acquisition of a private label portfolio. Managed credit ratios remained strong, benefiting from a continued low level of delinquencies. The
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managed net charge-off rate for the quarter declined to 4.87% from 5.56% in the prior year, but was up slightly from 4.83% in the prior quarter. The 30-day managed delinquency rate was 3.34%, down from 3.72% in the prior year and 3.54% in the prior quarter, due to improved credit quality.
Expenses of $1.4 billion increased $17 million, or 1%. Increased marketing spend and a charge to increase litigation reserves were primarily offset by merger saves, including lower processing costs and compensation expenses.
Other Highlights Include:
| Pre-tax income to average managed loans (ROO) was 2.56%, up 49 basis points. |
|
| Net interest income as a percentage of average managed loans was 8.83%. |
|
| Average managed loans of $135.2 billion increased $8.3 billion, or 7%. |
|
| Charge volume of $75.6 billion increased $5.0 billion, or 7%. |
|
| Merchant processing volume of $141.2 billion increased $21.9 billion, or
18%, and total transactions of 4.7 billion increased 809 million, or 21%. |
|
| Managed net charge-off rate of 4.87% was down from 5.56%, reflecting an
overall improvement in credit quality. |
|
| Net accounts opened, excluding the private label acquisition, increased by
600,000, or 27%, to 2.8 million, driven by increased marketing effectiveness
and investment. |
|
| Announced the rollout of Chase credit cards with blink, which provides
contactless functionality that increases transaction speed and convenience. |
|
| New co-brand relationships announced included Coldwater Creek and Sheetz,
Inc., and renewals included American Medical Association. |
COMMERCIAL BANKING (CB)
Operating Results CB | 2Q04 h- JPMC | 2Q04 Proforma | |||||||||||||||||||||||
($ millions) | 2Q05 | $ O/(U) | % O/(U) | $ O/(U) | % O/(U) | ||||||||||||||||||||
Net Revenues |
$ | 900 | $ | 566 | 169 | % | $ | 34 | 4 | % | |||||||||||||||
Provision for Credit Losses |
142 | 123 | NM | 124 | NM | ||||||||||||||||||||
Noninterest Expenses |
473 | 270 | 133 | 2 | | ||||||||||||||||||||
Operating Earnings |
$ | 174 | $ | 109 | 168 | ($60 | ) | (26 | ) | ||||||||||||||||
Discussion of Historical Results:
Operating earnings were $174 million, an increase of $109 million from the prior year. The increase
in results was primarily due to the merger, partially offset by increased provision for credit
losses. The larger provision reflects higher reserves, primarily due to refinements in the
data used to estimate the allowance for credit losses. Despite this increase, credit
quality of the portfolio remains strong.
Revenues were $900 million, an increase of $566 million, primarily due to the merger. In addition, net interest income of $648 million was positively affected by wider spreads on liability balances and increases in loan and liability balances, partially offset by narrower loan spreads. Noninterest revenue of $252 million was negatively affected by lower fees in lieu of compensating balances and lower gains on the sales of assets acquired in the satisfaction of debt and real estate investments, partially offset by strong investment banking revenue.
Provision for credit losses was $142 million for the quarter, compared to $19 million in the prior year. The higher provision reflects refinements in the data used to estimate the allowance for credit losses, not a deterioration of credit quality. The credit quality of the portfolio remains strong with net recoveries of $3 million for the quarter compared to net charge-offs of $30 million in the prior year.
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Expenses increased $270 million to $473 million, primarily related to the merger. In addition, there was an increase in unit costs for Treasury Services products, partially offset by lower compensation-related and other expenses.
Discussion of Proforma Combined Results:
Operating earnings were $174 million, a decrease of $60 million, or 26%, from the prior year.
These results were driven by the increase in provision for credit losses. The larger provision
reflects higher reserves primarily due to refinements in the data used to estimate the
allowance for credit losses. Despite this increase, credit quality of the portfolio remains
strong. In addition to the effect of the provision, earnings benefited from growth in net interest
income, partially offset by lower noninterest revenue.
Revenues were $900 million, an increase of $34 million, or 4%. Net interest income was $648 million, an increase of $55 million, or 9%, driven by wider spreads on liability balances and higher loan and liability balances, partially offset by narrower loan spreads. Noninterest revenue was $252 million, down $21 million, or 8%, primarily resulting from lower fees in lieu of compensating balances and lower gains on the sales of assets acquired in the satisfaction of debt and real estate investments, partially offset by strong investment banking revenue.
On a segment basis, revenue for Middle Market was $594 million, an increase of $32 million, or 6%, driven by increased Treasury Services and lending revenue. Corporate Banking revenue of $138 million increased $4 million, or 3%, driven by increased Treasury Services and Investment Banking revenue. Real Estate revenue was $131 million, a decline of $4 million, or 3%, primarily reflecting lower gains on the sale of investments.
Provision for credit losses was $142 million, compared to $18 million in the prior year. The higher charge reflects refinements in the data used to estimate the allowance for credit losses, not a deterioration of credit quality. The credit quality of the portfolio remains strong with net recoveries of $3 million, an improvement of $33 million, and nonperforming loans of $434 million, a decrease of $180 million, or 29%. The nonperforming loans to average loans ratio declined 38 bps to 0.85%, and the allowance for loan losses to average loans was 2.80%.
Expenses of $473 million increased $2 million, reflecting increased unit costs for Treasury Services products, partially offset by lower compensation-related and other expenses.
Other Highlights Include:
| Average loan balances of $51.2 billion
were up $1.5 billion, or 3%, from the
prior year, driven by 8% growth in the Middle Market segment and 6% growth in
Corporate Banking. Real Estate loans declined 11% from last year due to
continued competitive market conditions. |
|
| Treasury Services revenue grew $73 million, or 15%, from the prior year,
driven by improvement in liability spreads across all businesses and increased
volumes primarily in Real Estate and Middle Market. |
|
| Overhead ratio of 53% declined 100 bps from last year and the prior quarter. |
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TREASURY & SECURITIES SERVICES (TSS)
Operating Results TSS | 2Q04 h- JPMC | 2Q04 Proforma | |||||||||||||||||||||||
($ millions) | 2Q05 | $ O/(U) | % O/(U) | $ O/(U) | % O/(U) | ||||||||||||||||||||
Net Revenue |
$ | 1,588 | $ | 495 | 45 | % | $ | 220 | 16 | % | |||||||||||||||
Noninterest Expense |
1,194 | 250 | 26 | % | 19 | 2 | % | ||||||||||||||||||
Operating Earnings |
$ | 229 | $ | 128 | 127 | % | $ | 126 | 122 | % | |||||||||||||||
Discussion of Historical Results:
Operating earnings for the quarter were $229 million, an increase of $128 million, due to widening
spreads on liability balances (which include deposits and deposits swept into on-balance sheet
liabilities), improved fee-based revenue, liability balance growth and the merger. Current period
results include charges of $58 million (after-tax) to terminate a client contract. Prior year
results include a software impairment charge of $42 million (after-tax) and a gain of $10 million
(after-tax) on the sale of a business.
TSS net revenue of $1.6 billion increased $495 million, or 45%. Net interest income grew to $510 million, up $259 million, as a result of the merger, wider spreads on foreign and noninterest bearing liability balances, and average liability balance growth of 43%, to $164 billion. Noninterest revenue of $1.1 billion increased $236 million, or 28%. This improvement was due to the merger, an increase in assets under custody to $10.2 trillion driven by new business and market value appreciation, the acquisition of Vastera and growth in securities lending and wholesale cards. Partially offsetting this revenue growth were lower service charges on deposits and the absence, in the current period, of a gain on the sale of a business.
Treasury Services net revenue grew to $682 million, Investor Services to $544 million and Institutional Trust Services to $362 million. TSS firmwide net revenue, which includes Treasury Services net revenue recorded in other lines of business, grew to $2.2 billion, up $876 million, or 65%. In the aggregate, Treasury Services firmwide net revenue grew to $1.3 billion, up $697 million, or 113%.
Credit reimbursement to the Investment Bank was $38 million, an increase of $36 million, primarily as a result of the merger. TSS is charged a credit reimbursement related to certain exposures managed within the Investment Bank credit portfolio on behalf of clients shared with TSS.
Noninterest expense of $1.2 billion was up $250 million, or 26%, due to the merger, charges to terminate a client contract, the Vastera acquisition and onboarding fund accounting clients. Partially offsetting these increases were lower allocations of Corporate segment expenses and increased product unit costs charged to other lines of business, primarily Commercial Banking. The prior year included a software impairment charge of $67 million (pre-tax).
Discussion of Proforma Combined Results:
Operating earnings for the quarter were $229 million, an increase of $126 million due to widening
spreads on liability balances (which include deposits and deposits swept into on-balance sheet
liabilities), improved fee-based revenue and liability balance growth. Current period results
include charges of $58 million (after-tax) to terminate a client contract. Prior year results
include a software impairment charge of $42 million (after-tax) and a gain of $10 million
(after-tax) on the sale of a business.
TSS net revenue of $1.6 billion improved by $220 million, or 16%. Net interest income of $510 million was up $139 million, or 37%, primarily resulting from wider spreads on liability balances, and an increase of 24% in average liability balances to $164 billion. Noninterest revenue of $1.1 billion increased by $81 million, or 8%. The improvement was due to an increase in assets under custody to $10.2 trillion driven
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News Release
by new business and market value appreciation, the acquisition of Vastera and growth in securities lending and wholesale cards. Partially offsetting this revenue growth were lower service charges on deposits and the absence, in the current period, of a gain on the sale of a business.
Treasury Services net revenue grew to $682 million, Investor Services grew to $544 million and Institutional Trust Services grew to $362 million. TSS firmwide net revenue, which includes Treasury Services net revenue recorded in other lines of business, grew to $2.2 billion, up $272 million, or 14%. In the aggregate, Treasury Services firmwide net revenue grew to $1.3 billion, up $150 million, or 13%.
Credit reimbursement to the Investment Bank was $38 million, down $5 million. TSS is charged a credit reimbursement related to certain exposures managed within the Investment Bank credit portfolio on behalf of clients shared with TSS.
Noninterest expense of $1.2 billion was up $19 million due to charges to terminate a client contract, the Vastera acquisition and onboarding fund accounting clients. Partially offsetting these increases were lower allocations of Corporate segment expenses and increased product unit costs charged to other lines of business, primarily Commercial Banking. The prior year included a software impairment charge of $67 million (pre-tax).
Other Highlights Include:
| Pre-tax margin(4) was 22%, up from 11% in the prior year. |
|
| Average liability balances were $164 billion, an increase of 24%. |
|
| Assets under custody increased to $10.2 trillion, up 19% (excluding assets under
custody added from Institutional Trust Services beginning March 31, 2005). |
|
| Corporate Trust Securities under administration were $6.7 trillion, an increase of
4%. |
|
| ACH transactions originated increased 21%, clearing volumes increased 15%, and
wholesale cards issued increased 12%. |
|
| During the quarter Treasury Services successfully completed the U.S. dollar
clearing, trade system and ACH merger-related conversions. |
ASSET & WEALTH MANAGEMENT (AWM)
Operating Results AWM | 2Q04 h- JPMC | 2Q04 Proforma | |||||||||||||||||||||||
($ millions) | 2Q05 | $ O/(U) | % O/(U) | $ O/(U) | % O/(U) | ||||||||||||||||||||
Net Revenues |
$ | 1,343 | $ | 515 | 62 | % | $ | 158 | 13 | % | |||||||||||||||
Provision for Credit Losses |
(20 | ) | (16 | ) | (400 | ) | (15 | ) | (300 | ) | |||||||||||||||
Noninterest Expenses |
917 | 236 | 35 | 23 | 3 | ||||||||||||||||||||
Operating Earnings |
$ | 283 | $ | 184 | 186 | % | $ | 93 | 49 | % | |||||||||||||||
Discussion of Historical Results:
Operating earnings were $283 million, up $184 million from the prior year, due to the merger and
increased revenue, partially offset by higher compensation expense.
Total revenue was $1.3 billion, up $515 million, or 62%. Noninterest revenue, principally fees and commissions, of $1.1 billion was up $358 million due to the merger, the acquisition of a majority interest in Highbridge Capital Management in the fourth quarter of 2004, net asset inflows and global equity market appreciation. Net interest income of $274 million was up $157 million due to higher deposit balances and an improved loan mix.
The provision for credit losses was a benefit of $20 million, an improvement of $16 million, driven by refinements in the data used to estimate the allowance for credit losses and increased recoveries.
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Expenses of $917 million increased $236 million, or 35%, reflecting the merger, the acquisition of Highbridge and increased compensation expense primarily due to higher performance-based incentives, which were driven by improved investment results.
Discussion of Proforma Combined Results:
Operating earnings were $283 million, up $93 million, or 49%, from the prior year. Performance was
driven by increased revenues, partially offset by higher compensation expense.
Revenues were $1.3 billion, up $158 million, or 13%. Noninterest revenue, principally fees and commissions, of $1.1 billion was up $125 million, or 13%, due to the acquisition of a majority interest in Highbridge Capital Management in the fourth quarter of 2004, net asset inflows that were primarily equity-related and global equity market appreciation. Net interest income of $274 million was up $33 million, or 14%, benefiting primarily from higher deposit and loan balances and an improved product mix.
Private Bank client segment revenue grew 5% to $409 million, and Private Client Services client segment revenue grew 7% to $258 million, driven primarily by revenue growth from deposit products. Retail client segment revenue grew 15% to $363 million, as a result of increased global equity inflows from our third-party distribution network. Institutional client segment revenue grew 30% to $313 million, primarily due to the consolidation impact of Highbridge, as well as global equity market appreciation.
Provision for credit losses was a benefit of $20 million, an improvement of $15 million, driven by refinements in the data used to estimate the allowance for credit losses and increased recoveries.
Expenses of $917 million increased $23 million, or 3%, reflecting the acquisition of Highbridge and increased compensation expenses, primarily due to higher performance-based incentives, which were driven by improved investment results.
Other Highlights Include:
| Pre-tax margin(4) was 33%, up from 25% in the prior year. |
|
| Assets under Supervision were $1.1 trillion, an increase of 8%. |
|
| Assets under Management were $783 billion, an increase of 4%. |
|
| Assets under Management do not reflect the firms 43% interest in American
Centurys $98 billion of assets under management. |
|
| Loans were up 7% to $27 billion. |
|
| Deposits were up 10% to $41 billion. |
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CORPORATE
Operating Results - Corporate | 2Q04 h- JPMC | 2Q04 Proforma | |||||||||||||||||||||||
($ millions) | 2Q05 | $ O/(U) | % O/(U) | $ O/(U) | % O/(U) | ||||||||||||||||||||
Net Revenues |
($366 | ) | ($926 | ) | NM | $ | (603 | ) | NM | ||||||||||||||||
Provision for Credit Losses |
1 | 28 | NM | 28 | NM | ||||||||||||||||||||
Noninterest Expenses |
477 | 344 | 259 | (11 | ) | (2 | ) | ||||||||||||||||||
Operating Earnings |
($486 | ) | ($811 | ) | NM | ($383 | ) | (372 | ) | ||||||||||||||||
Discussion of Historical Results:
Operating earnings were a loss of $486 million, down from
earnings of $325 million in the prior year.
Net revenues of negative $366 million were down $926 million from the prior year. Net interest income was negative $763 million compared to $20 million in the prior year. The decline was driven primarily by actions and policies adopted in conjunction with the merger and the repositioning of the treasury portfolio. Noninterest revenue of $397 million declined $143 million and included private equity gains of $300 million which were down $92 million.
Noninterest expenses were $477 million, up $344 million from the prior year, primarily due to the merger.
Discussion of Proforma Combined Results:
Operating earnings were a loss of $486 million compared to a loss of $103 million in the prior
year.
Net revenues were negative $366 million, $603 million lower than the prior year. Net interest income was negative $763 million, a decline of $498 million, primarily due to the repositioning of the treasury portfolio. Noninterest revenue of $397 million declined $105 million and included private equity gains of $300 million which were down $92 million.
Noninterest expenses were $477 million, a decrease of $11 million, or 2%, from the prior year.
Other Highlights Include:
| Private Equity portfolio was $6.4 billion, down from $8.6 billion in the prior year. |
|
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JPMORGAN CHASE (JPMC)
Operating Results JPMC | 2Q04 h- JPMC | 2Q04 Proforma | |||||||||||||||||||||||
($ millions) | 2Q05 | $ O/(U) | % O/(U) | $ O/(U) | % O/(U) | ||||||||||||||||||||
Net Revenues |
$ | 13,900 | $ | 4,724 | 51 | % | $ | (876 | ) | (6 | )% | ||||||||||||||
Provision for credit losses |
1,517 | 828 | 120 | % | (89 | ) | (6 | )% | |||||||||||||||||
Noninterest Expenses |
8,748 | 3,035 | 53 | % | (91 | ) | (1 | )% | |||||||||||||||||
Operating Earnings |
$ | 2,328 | $ | 522 | 29 | % | $ | (459 | ) | (16 | )% | ||||||||||||||
Second quarter financial results for JPMC included the following:
($ millions) | Pre-tax | After-tax | ||||||||||
Reduction in wholesale allowance |
$ | 166 | $ | 103 | ||||||||
MSR risk management results |
166 | 103 | ||||||||||
Discussion of Historical Results:
Operating earnings of $2.3 billion increased $522 million, or 29%, from the prior year, primarily
as a result of the merger.
Total revenues were $13.9 billion, up $4.7 billion, or 51%, primarily due to the merger. Noninterest revenues of $7.4 billion were up $1.6 billion, or 28%, from the prior year, primarily due to the merger. Also contributing to the increase in noninterest revenues were higher asset management, administration and commissions revenues resulting from recent acquisitions, organic business growth and improved global equity markets. Partially offsetting these increases were lower trading revenues, down $727 million, or 55%, from the prior year, reflecting a challenging market environment, weak portfolio management results and lower proprietary trading revenues. Net interest income was $6.5 billion, up $3.1 billion, or 92%, primarily due to the merger, higher consumer loan and deposit balances, and wider spreads on consumer deposits and wholesale liabilities, partially offset by the reduced level of the treasury portfolio and tighter wholesale loan spreads.
The provision for credit losses was $1.5 billion, an increase of $828 million, primarily due to the merger. Total wholesale provision for credit losses was a benefit of $218 million for the quarter compared to a benefit of $137 million in the prior year, reflecting continued improvement in credit quality and, to a lesser degree, the refinements made in the data used to estimate the allowance for credit losses. The wholesale loan net recovery rate was 0.17% for the quarter compared to a net charge-off rate of 0.29% in the prior year. The increase in the consumer provision from the prior year was mainly due to the merger, but also reflected increased bankruptcy losses from accelerated filings and higher provision expense related to the decision to retain subprime mortgage loans rather than securitize. The managed net charge-off rate for Card Services declined to 4.87% from 5.85% in the prior year. Retail Financial Services net charge-off rate decreased to 0.25% compared to 0.29% in the prior year, primarily due to favorable loss severity for both real estate lending and vehicle finance as a result of strength in real estate and used car valuations. The firm had total nonperforming assets of $2.8 billion at June 30, 2005, up 14% from the prior year.
Expenses, which exclude the non-operating litigation charges discussed below, were $8.7 billion, up $3.0 billion, or 53%, from the prior year, primarily due to the merger. Additionally, recent acquisitions and charges to terminate a client contract were partially offset by merger-related savings and other efficiencies.
The firm took a $1.9 billion ($1.2 billion after-tax) non-operating litigation charge in connection with its settlement of the Enron class action litigation. In the second quarter of 2004, the firm took a $3.7 billion ($2.3 billion after-tax) non-operating charge to increase litigation reserves.
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Discussion of Proforma Combined Results:
Operating earnings were $2.3 billion, down $459 million, or 16%, from the prior year. The decrease
in earnings was driven by significantly lower revenue partially offset by lower expense and lower
provision for credit losses.
Total revenues were $13.9 billion, down $876 million, or 6%. Noninterest revenues of $7.4 billion were down $503 million, or 6%, from the prior year, primarily due to lower trading revenues. Trading revenues declined $822 million, or 58%, reflecting a challenging market environment, weak portfolio management results and lower proprietary trading revenues. Noninterest revenues were also negatively affected by lower lending and deposit-related fees as a result of higher interest rates. Partially offsetting these declines were increased asset management and commissions revenues related to the recent acquisitions, organic business growth, and improved global equity markets. Net interest income was $6.5 billion, down $373 million, or 5%, primarily due to the reduced level of the treasury portfolio and tighter wholesale loan spreads, partially offset by higher consumer loan and deposit balances and wider spreads on consumer deposits and wholesale liabilities.
The provision for credit losses was $1.5 billion, down $89 million, or 6%. Total wholesale provision for credit losses was a benefit of $218 million for the quarter compared to a benefit of $326 million in the prior year, reflecting continued improvement in credit quality and, to a lesser degree, the refinements made in the data used to estimate the allowance for credit losses. The wholesale loan net recovery rate was 0.17% for the quarter compared to a net charge-off rate of 0.13% in the prior year. Total consumer managed provision for credit losses decreased to $1.7 billion, down 10%, reflecting lower net charge-offs and positive delinquency trends. Partially offsetting the reduction was increased bankruptcy losses from accelerated filings. The managed net charge-off rate for Card Services declined to 4.87% from 5.56% in the prior year. Retail Financial Services net charge-off rate was 0.25% compared to 0.40% in the prior year. The improvement compared to the prior year reflected favorable loss severity for both real estate lending and vehicle finance as a result of strength in real estate and used car valuations. The firm had total nonperforming assets of $2.8 billion at June 30, 2005, down 30% from the prior years level of $4.1 billion.
Expenses, which exclude the non-operating litigation charges discussed below, were $8.7 billion, down $91 million, or 1%, from the prior year, driven primarily by merger-related savings and other efficiencies. Partially offsetting these improvements were higher expenses related to recent acquisitions and charges to terminate a client contract.
The firm took a $1.9 billion ($1.2 billion after-tax) non-operating litigation charge in connection with its settlement of the Enron class action litigation. In the second quarter of 2004, the firm took a $3.7 billion ($2.3 billion after-tax) non-operating charge to increase litigation reserves.
Other Corporate Items
| Tier 1 capital ratio was 8.2% at June 30, 2005 (estimated), 8.6% at March 31, 2005 and 8.6% at June 30, 2004. |
|
| During the quarter, $594 million of common stock was repurchased, reflecting 16.8 million shares at an average price of $35.32 per share. |
|
| Headcount of approximately 168,461 was up 4,080 since March 31, 2005, primarily due to business growth, technology insourcing and the acquisition of Vastera.
|
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Merger and other financial information
| Merger between JPMorgan Chase & Co. and Bank One Corporation: On July 1, 2004, JPMorgan
Chase and Bank One completed the merger of their holding companies. The merger was
accounted for as a purchase. Accordingly, the earnings for JPMorgan Chase and Bank One are
combined for all periods since completion of the merger; all time periods prior to the
merger date are, on a reported basis, JPMorgan Chase only. |
|
| Merger saves and costs: For the quarter ended June 30, 2005, approximately $440 million
of merger savings have been realized, which is an annualized rate of $1.8 billion.
Management continues to estimate annual merger savings of approximately $3.0 billion.
Approximately two-thirds of the savings are anticipated to be realized by the end of 2005.
Merger costs of approximately $279 million were expensed during the second quarter of 2005,
bringing the total amount expensed year-to-date to $424 million and $1.8 billion cumulative
since the merger announcement. Management continues to estimate remaining merger costs
of $1.2 billion to $1.7 billion, which are expected to be expensed over the next two years. |
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Notes:
1. | In addition to analyzing the firms results on a reported basis, management
analyzes the firms and the lines of business results on an operating basis, which is a
non-GAAP financial measure. The definition of operating basis starts with the reported
U.S. GAAP results. In the case of the Investment Bank, noninterest revenue on an
operating basis includes in trading revenue net interest income related to trading
activities. Trading activities generate revenues, which are recorded for U.S. GAAP
purposes in two line items on the income statement: trading revenue, which includes the
mark-to-market gains or losses on trading positions; and net interest income, which
includes the interest income or expense related to those positions. Combining both the
trading revenue and related net interest income enables management to evaluate the
Investment Banks trading activities, by considering all revenue related to these
activities, and facilitates operating comparisons to other competitors. In the case of
Card Services, operating, or managed, basis excludes the impact of credit card
securitizations on total net revenue, the provision for credit losses, net charge-offs
and loan receivables. JPMorgan Chase uses the concept of managed receivables to
evaluate the credit performance and overall financial performance of the underlying
credit card loans, both sold and not sold: as the same borrower is continuing to use
the credit card for ongoing charges, a borrowers credit performance will impact both
the loan receivables sold under SFAS 140 and those not sold. Thus, in its disclosures
regarding managed receivables, JPMorgan Chase treats the sold receivables as if they
were still on the balance sheet in order to disclose the credit performance (such as
net charge-off rates) of the entire managed credit card portfolio. Commencing with the
first quarter of 2005, operating revenue (noninterest revenue and net interest income)
for each of the segments and the firm is presented on a tax-equivalent basis.
Accordingly, revenue from tax-exempt securities and investments that receive tax
credits are presented in the operating results on a basis comparable to taxable
securities and investments. This allows management to assess the comparability of
revenues arising from both taxable and tax-exempt sources. The corresponding income
tax impact related to these items is recorded within income tax expense. The Corporate
sectors and the firms operating revenue and income tax expense for the periods prior
to the first quarter of 2005 have been restated to be similarly presented on a
tax-equivalent basis. The restatement had no impact on the Corporate sectors or the
firms operating results. Finally, as noted above, operating basis excludes the
non-operating litigation charges taken in the second and first quarters of 2005 and
second quarter of 2004, merger costs and costs related to the conformance of certain
accounting policies a result of the merger, as management believes these items are not
part of the firms normal daily business operations and, therefore, not indicative of
trends nor provide meaningful comparisons with other periods. See page 7 of JPMorgan
Chases Earnings Release Financial Supplement (Second Quarter 2005) for a
reconciliation of JPMorgan Chases income statement from a reported to operating basis. |
||
2. | Following the merger with Bank One, JPMorgan Chase reorganized its business
segments. The Investment Bank now includes portions of Bank Ones Commercial Bank;
Global Treasury has been transferred to the Corporate segment. Retail Financial
Services is comprised of Chase Financial Services, excluding Card Services and Middle
Market, and includes Bank Ones Retail line of business and insurance activities. Card
Services is the combination of Chase Card Services and Bank One Card Services. The
Commercial Banking segment is comprised of Chase Middle Market, and the Middle Market
portion of Bank Ones Commercial Bank. Treasury & Securities Services added Bank Ones
Global Treasury Services (formerly in Commercial Bank). Asset & Wealth Management is
JPMorgan Chases Investment Management & Private Bank plus Bank Ones Investment
Management Group (excluding insurance activity). The Corporate segment is Bank Ones
Corporate line of business excluding discontinued loan and lease portfolios (now in
Retail Financial Services), plus JPMorgan Partners and Global Treasury. |
||
3. | Market share data is from Thomson Financial and is proforma for the merger of
JPMorgan Chase and Bank One. |
||
4. | Pre-tax margin represents operating earnings before income taxes divided by
total net revenue, which is, in managements view, a comprehensive measure of pre-tax
performance by measuring earnings after all costs are taken into consideration. It is
therefore another basis by which management evaluates TSS and AWMs performance and
that of competitors. |
18
JPMorgan Chase & Co.
News Release
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $1.2 trillion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, asset and wealth management, and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase has its corporate headquarters in New York and its U.S. consumer and commercial banking headquarters in Chicago. Under the JPMorgan, Chase and Bank One brands, the firm serves millions of consumers in the United States and many of the worlds most prominent corporate, institutional and government clients. Information about the firm is available at www.jpmorganchase.com.
JPMorgan Chase will host a conference call today at 9:00 a.m. (Eastern time) to review second quarter financial results. Investors can dial (800) 289-0569 (domestic) / (913) 981-5542 (international), or via live audio webcast. The live audio webcast and presentation slides will be available on www.jpmorganchase.com. A replay of the conference call will be available beginning at 12:00 p.m. (Eastern time) on July 20, 2005 through 12:00 a.m. (Eastern time) on July 29, 2005 at (888) 203-1112 (domestic) or (719) 457-0820 (international); access code 7040918. The replay also will be available on www.jpmorganchase.com. Additional detailed financial, statistical and business-related information is included in a financial supplement. The earnings release and the financial supplement are available on the JPMorgan Chase Internet site (www.jpmorganchase.com).
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chases management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause JPMorgan Chases results to differ materially from those described in the forward-looking statements can be found in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, and in the 2004 Annual Report on Form 10-K for the year December 31, 2004 of JPMorgan Chase, each filed with the Securities and Exchange Commission and available at the Securities and Exchange Commissions Internet site (http://www.sec.gov).
19
JPMORGAN CHASE & CO. CONSOLIDATED FINANCIAL HIGHLIGHTS (in millions, except per share, ratio and headcount data) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||
2QTR | 1QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA |
||||||||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 12,743 | $ | 13,647 | $ | 8,631 | (7 | )% | 48 | % | $ | 26,390 | $ | 17,642 | 50 | % | ||||||||||||||||||||
Provision for Credit Losses |
587 | 427 | 203 | 37 | 189 | 1,014 | 218 | 365 | ||||||||||||||||||||||||||||
Noninterest Expense |
10,899 | 9,937 | 9,503 | 10 | 15 | 20,836 | 15,596 | 34 | ||||||||||||||||||||||||||||
Net Income (Loss) |
994 | 2,264 | (548 | ) | (56 | ) | NM | 3,258 | 1,382 | 136 | ||||||||||||||||||||||||||
Per Common Share: |
||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share Diluted |
$ | 0.28 | $ | 0.63 | $ | (0.27 | ) | (56 | ) | NM | $ | 0.91 | $ | 0.65 | 40 | |||||||||||||||||||||
Cash Dividends Declared Per Share |
0.34 | 0.34 | 0.34 | | | 0.68 | 0.68 | | ||||||||||||||||||||||||||||
Book Value Per Share |
29.95 | 29.78 | 21.52 | 1 | 39 | 29.95 | 21.52 | 39 | ||||||||||||||||||||||||||||
Closing Share Price |
35.32 | 34.60 | 38.77 | 2 | (9 | ) | 35.32 | 38.77 | (9 | ) | ||||||||||||||||||||||||||
Common Shares Outstanding: |
||||||||||||||||||||||||||||||||||||
Weighted-Average Diluted Shares Outstanding |
3,548.3 | 3,569.8 | 2,042.8 | (1 | ) | 74 | 3,559.0 | 2,096.3 | 70 | |||||||||||||||||||||||||||
Common Shares Outstanding at Period-end |
3,514.0 | 3,525.3 | 2,087.5 | | 68 | 3,514.0 | 2,087.5 | 68 | ||||||||||||||||||||||||||||
SELECTED RATIOS: |
||||||||||||||||||||||||||||||||||||
Return on Common Equity (ROE) (a) |
4 | % | 9 | % | NM | (500 | )bp | NM | 6 | % | 6 | % | | bp | ||||||||||||||||||||||
Return on Equity-Goodwill (ROE-GW) (a) (b) |
6 | 15 | NM | (900 | ) | NM | 11 | 7 | 400 | |||||||||||||||||||||||||||
Return on Assets (ROA) (a) (c) |
0.34 | 0.79 | NM | (45 | ) | NM | 0.56 | 0.35 | 21 | |||||||||||||||||||||||||||
Tier 1 Capital Ratio |
8.2 | (d) | 8.6 | 8.2 | % | (40 | ) | | bp | |||||||||||||||||||||||||||
Total Capital Ratio |
11.3 | (d) | 11.9 | 11.2 | (60 | ) | 10 | |||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||
Total Assets |
$ | 1,171,283 | $ | 1,178,305 | $ | 817,763 | (1 | )% | 43 | % | ||||||||||||||||||||||||||
Wholesale Loans |
149,588 | 137,401 | 77,044 | 9 | 94 | |||||||||||||||||||||||||||||||
Consumer Loans |
266,437 | 265,268 | 148,894 | | 79 | |||||||||||||||||||||||||||||||
Deposits |
534,640 | 531,379 | 346,539 | 1 | 54 | |||||||||||||||||||||||||||||||
Common Stockholders Equity |
105,246 | 105,001 | 44,932 | | 134 | |||||||||||||||||||||||||||||||
Headcount |
168,461 | 164,381 | 94,615 | 2 | 78 | |||||||||||||||||||||||||||||||
LINE OF BUSINESS EARNINGS |
||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 606 | $ | 1,325 | $ | 644 | (54 | ) | (6 | ) | $ | 1,931 | $ | 1,661 | 16 | % | ||||||||||||||||||||
Retail Financial Services |
980 | 988 | 396 | (1 | ) | 147 | 1,968 | 602 | 227 | |||||||||||||||||||||||||||
Card Services |
542 | 522 | 176 | 4 | 208 | 1,064 | 338 | 215 | ||||||||||||||||||||||||||||
Commercial Banking |
174 | 243 | 65 | (28 | ) | 168 | 417 | 139 | 200 | |||||||||||||||||||||||||||
Treasury & Securities Services |
229 | 245 | 101 | (7 | ) | 127 | 474 | 199 | 138 | |||||||||||||||||||||||||||
Asset & Wealth Management |
283 | 276 | 99 | 3 | 186 | 559 | 221 | 153 | ||||||||||||||||||||||||||||
Corporate (e) |
(486 | ) | (687 | ) | 325 | 29 | NM | (1,173 | ) | 576 | NM | |||||||||||||||||||||||||
Total Operating Earnings |
2,328 | 2,912 | 1,806 | (20 | ) | 29 | 5,240 | 3,736 | 40 | |||||||||||||||||||||||||||
Reconciling Items (After-Tax): |
||||||||||||||||||||||||||||||||||||
Merger Costs |
(173 | ) | (90 | ) | (60 | ) | 92 | 188 | (263 | ) | (60 | ) | 338 | |||||||||||||||||||||||
Litigation Reserve Charge |
(1,161 | ) | (558 | ) | (2,294 | ) | 108 | (49 | ) | (1,719 | ) | (2,294 | ) | (25 | ) | |||||||||||||||||||||
Accounting Policy Conformity |
| | | NM | NM | | | NM | ||||||||||||||||||||||||||||
Net Income (Loss) |
$ | 994 | $ | 2,264 | $ | (548 | ) | (56 | ) | NM | $ | 3,258 | $ | 1,382 | 136 | |||||||||||||||||||||
Note: Effective July 1, 2004, Bank One Corporation (Bank One) merged with and into JPMorgan Chase & Co. (JPMorgan Chase). Bank Ones results of operations are included in JPMorgan Chases results beginning July 1, 2004. In accordance with U.S. GAAP, the results of operations for the second and first quarters of 2005, each reflect three months of results of operations for the combined Firm, while the results of operations for the second quarter of 2004 reflects only the results of operations for heritage JPMorgan Chase. The results of operations for year-to-date 2005 reflect six months of results of operations for the combined Firm, while year-to-date 2004 reflects six months of results of operations for heritage JPMorgan Chase.
(a) | Based on annualized amounts. |
|
(b) | Net income applicable to common stock divided by Total average common equity (net of goodwill). The Firm uses return on equity less goodwill, a non-GAAP financial measure, to evaluate
the operating performance of the Firm. The Firm utilizes this measure to facilitate operating comparisons to other competitors. |
|
(c) | Represents Net income divided by Total average assets. |
|
(d) | Estimated |
|
(e) | Includes Private Equity, Treasury, and corporate staff and other centrally managed expenses. |
|
NM | Not meaningful due to net loss. |
20
JPMORGAN CHASE & CO. PRO FORMA CONSOLIDATED FINANCIAL HIGHLIGHTS (in millions, except per share, ratio and headcount data) |
![]() |
PRO FORMA | PRO FORMA | |||||||||||||||||||||||||||||||||||
COMBINED | 2QTR 2005 | COMBINED | YTD 2005 | |||||||||||||||||||||||||||||||||
2QTR | 1QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA |
||||||||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 12,743 | $ | 13,647 | $ | 13,279 | (7 | )% | (4 | )% | $ | 26,390 | $ | 27,086 | (3 | )% | ||||||||||||||||||||
Provision for Credit Losses |
587 | 427 | 248 | 37 | 137 | 1,014 | 401 | 153 | ||||||||||||||||||||||||||||
Noninterest Expense |
10,899 | 9,937 | 12,629 | 10 | (14 | ) | 20,836 | 21,741 | (4 | ) | ||||||||||||||||||||||||||
Net Income |
994 | 2,264 | 433 | (56 | ) | 130 | 3,258 | 3,460 | (6 | ) | ||||||||||||||||||||||||||
Per Common Share: |
||||||||||||||||||||||||||||||||||||
Net Income Per Share Diluted |
$ | 0.28 | $ | 0.63 | $ | 0.12 | (56 | ) | 133 | $ | 0.91 | $ | 0.96 | (5 | ) | |||||||||||||||||||||
Cash Dividends Declared Per Share |
0.34 | 0.34 | 0.34 | | | 0.68 | 0.68 | | ||||||||||||||||||||||||||||
Book Value Per Share |
29.95 | 29.78 | 29.06 | 1 | 3 | 29.95 | 29.06 | 3 | ||||||||||||||||||||||||||||
Closing Share Price |
35.32 | 34.60 | 38.77 | 2 | (9 | ) | 35.32 | 38.77 | (9 | ) | ||||||||||||||||||||||||||
Common Shares Outstanding: |
||||||||||||||||||||||||||||||||||||
Weighted-Average Diluted Shares Outstanding |
3,548.3 | 3,569.8 | 3,588.6 | (1 | ) | (1 | ) | 3,559.0 | 3,589.0 | (1 | ) | |||||||||||||||||||||||||
Common Shares Outstanding at Period-end |
3,514.0 | 3,525.3 | 3,559.0 | | (1 | ) | 3,514.0 | 3,559.0 | (1 | ) | ||||||||||||||||||||||||||
SELECTED RATIOS: |
||||||||||||||||||||||||||||||||||||
Return on Common Equity (ROE) (a) |
4 | % | 9 | % | 2 | % | (500 | )bp | 200 | bp | 6 | % | 7 | % | (100 | )bp | ||||||||||||||||||||
Return on Equity-Goodwill (ROE-GW) (a) (b) |
6 | 15 | 3 | (900 | ) | 300 | 11 | 11 | | |||||||||||||||||||||||||||
Return on Assets (ROA) (a) (c) |
0.34 | 0.79 | 0.15 | (45 | ) | 19 | 0.56 | 0.61 | (5 | ) | ||||||||||||||||||||||||||
Tier 1 Capital Ratio |
8.2 | (d) | 8.6 | 8.6 | (40 | ) | (40 | ) | ||||||||||||||||||||||||||||
Total Capital Ratio |
11.3 | (d) | 11.9 | 11.8 | (60 | ) | (50 | ) | ||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||
Total Assets |
$ | 1,171,283 | $ | 1,178,305 | $ | 1,153,304 | (1 | )% | 2 | % | ||||||||||||||||||||||||||
Wholesale Loans |
149,588 | 137,401 | 133,011 | 9 | 12 | |||||||||||||||||||||||||||||||
Consumer Loans |
266,437 | 265,268 | 225,557 | | 18 | |||||||||||||||||||||||||||||||
Deposits |
534,640 | 531,379 | 511,386 | 1 | 5 | |||||||||||||||||||||||||||||||
Common Stockholders Equity |
105,246 | 105,001 | 103,439 | | 2 | |||||||||||||||||||||||||||||||
Headcount |
168,461 | 164,381 | 165,608 | 2 | 2 | |||||||||||||||||||||||||||||||
LINE OF BUSINESS EARNINGS |
||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 606 | $ | 1,325 | $ | 1,016 | (54 | ) | (40 | ) | $ | 1,931 | $ | 2,367 | (18 | )% | ||||||||||||||||||||
Retail Financial Services |
980 | 988 | 938 | (1 | ) | 4 | 1,968 | 1,682 | 17 | |||||||||||||||||||||||||||
Card Services |
542 | 522 | 409 | 4 | 33 | 1,064 | 745 | 43 | ||||||||||||||||||||||||||||
Commercial Banking |
174 | 243 | 234 | (28 | ) | (26 | ) | 417 | 523 | (20 | ) | |||||||||||||||||||||||||
Treasury & Securities Services |
229 | 245 | 103 | (7 | ) | 122 | 474 | 196 | 142 | |||||||||||||||||||||||||||
Asset & Wealth Management |
283 | 276 | 190 | 3 | 49 | 559 | 419 | 33 | ||||||||||||||||||||||||||||
Corporate (e) |
(486 | ) | (687 | ) | (103 | ) | 29 | (372 | ) | (1,173 | ) | (118 | ) | NM | ||||||||||||||||||||||
Total Operating Earnings |
2,328 | 2,912 | 2,787 | (20 | ) | (16 | ) | 5,240 | 5,814 | (10 | ) | |||||||||||||||||||||||||
Reconciling Items (After-Tax): |
||||||||||||||||||||||||||||||||||||
Merger Costs |
(173 | ) | (90 | ) | (60 | ) | 92 | 188 | (263 | ) | (60 | ) | 338 | |||||||||||||||||||||||
Litigation Reserve Charge |
(1,161 | ) | (558 | ) | (2,294 | ) | 108 | (49 | ) | (1,719 | ) | (2,294 | ) | (25 | ) | |||||||||||||||||||||
Accounting Policy Conformity |
| | | NM | NM | | | NM | ||||||||||||||||||||||||||||
Net Income |
$ | 994 | $ | 2,264 | $ | 433 | (56 | ) | 130 | $ | 3,258 | $ | 3,460 | (6 | ) | |||||||||||||||||||||
(a) | Based on annualized amounts. |
|
(b) | Net income applicable to common stock divided by Total average common equity (net of goodwill). The Firm uses return on equity less goodwill, a non-GAAP financial measure, to evaluate
the operating performance of the Firm. The Firm utilizes this measure to facilitate operating comparisons to other competitors. |
|
(c) | Represents Net income divided by Total average assets. |
|
(d) | Estimated. |
|
(e) | Includes Private Equity, Treasury, and corporate staff and other centrally managed expenses. |
|
NM | Not meaningful due to net loss. |
21
Exhibit 99.2
EARNINGS RELEASE FINANCIAL SUPPLEMENT
SECOND QUARTER 2005
JPMORGAN CHASE & CO. | ![]() |
Page | ||||
Consolidated Results |
||||
Financial Highlights |
3 | |||
Statements of Income Reported Basis |
4 | |||
Consolidated Balance Sheets |
5 | |||
Condensed Average Balance Sheets and Annualized Yields |
6 | |||
Reconciliation from Reported to Operating Basis Summary |
7 | |||
Statements of Income Operating Basis |
8 | |||
Business Detail |
||||
Line of Business Financial Highlights Operating Basis |
9 | |||
Investment Bank |
10 | |||
Retail Financial Services |
13 | |||
Card Services Managed Basis |
17 | |||
Commercial Banking |
20 | |||
Treasury & Securities Services |
21 | |||
Asset & Wealth Management |
23 | |||
Corporate |
26 | |||
Consolidated Credit-Related Information |
28 | |||
Supplemental Detail |
||||
Capital |
33 | |||
Glossary of Terms |
34 | |||
Appendix : Reconciliation from Reported to Operating Basis |
36 |
Page 2
JPMORGAN CHASE & CO. | ![]() |
|
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||
(in millions, except per share, ratio and headcount data) |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA |
||||||||||||||||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 12,743 | $ | 13,647 | $ | 12,950 | $ | 12,505 | $ | 8,631 | (7 | )% | 48 | % | $ | 26,390 | $ | 17,642 | 50 | % | ||||||||||||||||||||||||
Provision for Credit Losses |
587 | 427 | 1,157 | 1,169 | 203 | 37 | 189 | 1,014 | 218 | 365 | ||||||||||||||||||||||||||||||||||
Noninterest Expense |
10,899 | 9,937 | 9,386 | 9,377 | 9,503 | 10 | 15 | 20,836 | 15,596 | 34 | ||||||||||||||||||||||||||||||||||
Net Income (Loss) |
994 | 2,264 | 1,666 | 1,418 | (548 | ) | (56 | ) | NM | 3,258 | 1,382 | 136 | ||||||||||||||||||||||||||||||||
Per Common Share: |
||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share Diluted |
$ | 0.28 | $ | 0.63 | $ | 0.46 | $ | 0.39 | $ | (0.27 | ) | (56 | ) | NM | $ | 0.91 | $ | 0.65 | 40 | |||||||||||||||||||||||||
Cash Dividends Declared Per Share |
0.34 | 0.34 | 0.34 | 0.34 | 0.34 | | | 0.68 | 0.68 | | ||||||||||||||||||||||||||||||||||
Book Value Per Share |
29.95 | 29.78 | 29.61 | 29.42 | 21.52 | 1 | 39 | 29.95 | 21.52 | 39 | ||||||||||||||||||||||||||||||||||
Closing Share Price |
35.32 | 34.60 | 39.01 | 39.73 | 38.77 | 2 | (9 | ) | 35.32 | 38.77 | (9 | ) | ||||||||||||||||||||||||||||||||
Common Shares Outstanding: |
||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Diluted Shares Outstanding |
3,548.3 | 3,569.8 | 3,602.0 | 3,592.0 | 2,042.8 | (1 | ) | 74 | 3,559.0 | 2,096.3 | 70 | |||||||||||||||||||||||||||||||||
Common Shares Outstanding at Period-end |
3,514.0 | 3,525.3 | 3,556.2 | 3,564.1 | 2,087.5 | | 68 | 3,514.0 | 2,087.5 | 68 | ||||||||||||||||||||||||||||||||||
SELECTED RATIOS: |
||||||||||||||||||||||||||||||||||||||||||||
Return on Common Equity (ROE) (a) |
4 | % | 9 | % | 6 | % | 5 | % | NM | (500 | )bp | NM | 6 | % | 6 | % | | bp | ||||||||||||||||||||||||||
Return on Equity-Goodwill (ROE-GW) (a) (b) |
6 | 15 | 11 | 9 | NM | (900 | ) | NM | 11 | 7 | 400 | |||||||||||||||||||||||||||||||||
Return on Assets (ROA) (a) (c) |
0.34 | 0.79 | 0.57 | 0.50 | NM | (45 | ) | NM | 0.56 | 0.35 | 21 | |||||||||||||||||||||||||||||||||
Tier 1 Capital Ratio |
8.2 | (d) | 8.6 | 8.7 | 8.6 | 8.2 | % | (40 | ) | | bp | |||||||||||||||||||||||||||||||||
Total Capital Ratio |
11.3 | (d) | 11.9 | 12.2 | 12.0 | 11.2 | (60 | ) | 10 | |||||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||||||
Total Assets |
$ | 1,171,283 | $ | 1,178,305 | $ | 1,157,248 | $ | 1,138,469 | $ | 817,763 | (1 | )% | 43 | % | ||||||||||||||||||||||||||||||
Wholesale Loans |
149,588 | 137,401 | 135,067 | 132,344 | 77,044 | 9 | 94 | |||||||||||||||||||||||||||||||||||||
Consumer Loans |
266,437 | 265,268 | 267,047 | 261,357 | 148,894 | | 79 | |||||||||||||||||||||||||||||||||||||
Deposits |
534,640 | 531,379 | 521,456 | 496,454 | 346,539 | 1 | 54 | |||||||||||||||||||||||||||||||||||||
Common Stockholders Equity |
105,246 | 105,001 | 105,314 | 104,844 | 44,932 | | 134 | |||||||||||||||||||||||||||||||||||||
Headcount |
168,461 | 164,381 | 160,968 | 162,275 | 94,615 | 2 | 78 | |||||||||||||||||||||||||||||||||||||
LINE OF BUSINESS EARNINGS |
||||||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 606 | $ | 1,325 | $ | 660 | $ | 627 | $ | 644 | (54 | ) | (6 | ) | $ | 1,931 | $ | 1,661 | 16 | % | ||||||||||||||||||||||||
Retail Financial Services |
980 | 988 | 775 | 822 | 396 | (1 | ) | 147 | 1,968 | 602 | 227 | |||||||||||||||||||||||||||||||||
Card Services |
542 | 522 | 515 | 421 | 176 | 4 | 208 | 1,064 | 338 | 215 | ||||||||||||||||||||||||||||||||||
Commercial Banking |
174 | 243 | 254 | 215 | 65 | (28 | ) | 168 | 417 | 139 | 200 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
229 | 245 | 145 | 96 | 101 | (7 | ) | 127 | 474 | 199 | 138 | |||||||||||||||||||||||||||||||||
Asset & Wealth Management |
283 | 276 | 263 | 197 | 99 | 3 | 186 | 559 | 221 | 153 | ||||||||||||||||||||||||||||||||||
Corporate (e) |
(486 | ) | (687 | ) | (296 | ) | (219 | ) | 325 | 29 | NM | (1,173 | ) | 576 | NM | |||||||||||||||||||||||||||||
Total Operating Earnings |
2,328 | 2,912 | 2,316 | 2,159 | 1,806 | (20 | ) | 29 | 5,240 | 3,736 | 40 | |||||||||||||||||||||||||||||||||
Reconciling Items (After-Tax): |
||||||||||||||||||||||||||||||||||||||||||||
Merger Costs |
(173 | ) | (90 | ) | (324 | ) | (462 | ) | (60 | ) | 92 | 188 | (263 | ) | (60 | ) | 338 | |||||||||||||||||||||||||||
Litigation Reserve Charge |
(1,161 | ) | (558 | ) | | | (2,294 | ) | 108 | (49 | ) | (1,719 | ) | (2,294 | ) | (25 | ) | |||||||||||||||||||||||||||
Accounting Policy Conformity |
| | (326 | ) | (279 | ) | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||
Net Income (Loss) |
$ | 994 | $ | 2,264 | $ | 1,666 | $ | 1,418 | $ | (548 | ) | (56 | ) | NM | $ | 3,258 | $ | 1,382 | 136 | |||||||||||||||||||||||||
Note: Effective July 1, 2004, Bank One Corporation (Bank One) merged with and into JPMorgan Chase & Co. (JPMorgan Chase). Bank Ones results of operations are included in JPMorgan Chases results beginning July 1, 2004. In accordance with U.S. GAAP, the results of operations for the second and first quarters of 2005, and fourth and third quarters of 2004, each reflect three months of results of operations for the combined Firm, while the results of operations for the second quarter of 2004 reflects only the results of operations for heritage JPMorgan Chase. The results of operations for year-to-date 2005 reflect six months of results of operations for the combined Firm, while year-to-date 2004 reflects six months of results of operations for heritage JPMorgan Chase.
(a) | Based on annualized amounts. |
|
(b) | Net income applicable to common stock divided by Total average common equity
(net of goodwill). The Firm uses return on equity less goodwill, a non-GAAP financial
measure, to evaluate the operating performance of the Firm. The Firm
utilizes this measure to facilitate operating comparisons to other competitors. |
|
(c) | Represents Net income divided by Total average assets. |
|
(d) | Estimated |
|
(e) | Includes Private Equity, Treasury, and corporate staff and other centrally managed expenses. |
|
NM Not meaningful due to net loss. |
Page 3
JPMORGAN CHASE &
CO. STATEMENTS OF INCOME REPORTED BASIS (in millions, except per share, ratio and headcount data) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 961 | $ | 993 | $ | 1,073 | $ | 879 | $ | 893 | (3 | )% | 8 | % | $ | 1,954 | $ | 1,585 | 23 | % | ||||||||||||||||||||||||
Trading Revenue (a) |
387 | 1,859 | 611 | 408 | 873 | (79 | ) | (56 | ) | 2,246 | 2,593 | (13 | ) | |||||||||||||||||||||||||||||||
Lending & Deposit Related Fees |
851 | 820 | 903 | 943 | 412 | 4 | 107 | 1,671 | 826 | 102 | ||||||||||||||||||||||||||||||||||
Asset Management, Administration and Commissions |
2,541 | 2,498 | 2,330 | 2,185 | 1,814 | 2 | 40 | 5,039 | 3,650 | 38 | ||||||||||||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
407 | (45 | ) | 569 | 413 | 460 | NM | (12 | ) | 362 | 892 | (59 | ) | |||||||||||||||||||||||||||||||
Mortgage Fees and Related Income |
336 | 362 | 85 | 233 | 294 | (7 | ) | 14 | 698 | 488 | 43 | |||||||||||||||||||||||||||||||||
Credit Card Income |
1,763 | 1,734 | 1,822 | 1,782 | 631 | 2 | 179 | 3,497 | 1,236 | 183 | ||||||||||||||||||||||||||||||||||
Other Income |
496 | 201 | 228 | 210 | 260 | 147 | 91 | 697 | 392 | 78 | ||||||||||||||||||||||||||||||||||
Noninterest Revenue |
7,742 | 8,422 | 7,621 | 7,053 | 5,637 | (8 | ) | 37 | 16,164 | 11,662 | 39 | |||||||||||||||||||||||||||||||||
Interest Income |
10,949 | 10,632 | 9,862 | 9,493 | 5,614 | 3 | 95 | 21,581 | 11,240 | 92 | ||||||||||||||||||||||||||||||||||
Interest Expense |
5,948 | 5,407 | 4,533 | 4,041 | 2,620 | 10 | 127 | 11,355 | 5,260 | 116 | ||||||||||||||||||||||||||||||||||
Net Interest Income |
5,001 | 5,225 | 5,329 | 5,452 | 2,994 | (4 | ) | 67 | 10,226 | 5,980 | 71 | |||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
12,743 | 13,647 | 12,950 | 12,505 | 8,631 | (7 | ) | 48 | 26,390 | 17,642 | 50 | |||||||||||||||||||||||||||||||||
Provision for Credit Losses |
587 | 427 | 1,157 | 1,169 | 203 | 37 | 189 | 1,014 | 218 | 365 | ||||||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
4,266 | 4,702 | 4,211 | 4,050 | 2,943 | (9 | ) | 45 | 8,968 | 6,245 | 44 | |||||||||||||||||||||||||||||||||
Occupancy Expense |
580 | 525 | 609 | 604 | 440 | 10 | 32 | 1,105 | 871 | 27 | ||||||||||||||||||||||||||||||||||
Technology and Communications Expense |
896 | 920 | 1,051 | 1,046 | 786 | (3 | ) | 14 | 1,816 | 1,605 | 13 | |||||||||||||||||||||||||||||||||
Professional & Outside Services |
1,130 | 1,074 | 1,191 | 1,103 | 752 | 5 | 50 | 2,204 | 1,568 | 41 | ||||||||||||||||||||||||||||||||||
Marketing |
537 | 483 | 428 | 506 | 202 | 11 | 166 | 1,020 | 401 | 154 | ||||||||||||||||||||||||||||||||||
Other Expense |
954 | 805 | 981 | 920 | 511 | 19 | 87 | 1,759 | 958 | 84 | ||||||||||||||||||||||||||||||||||
Amortization of Intangibles |
385 | 383 | 392 | 396 | 79 | 1 | 387 | 768 | 158 | 386 | ||||||||||||||||||||||||||||||||||
Total
Noninterest Expense before Merger Costs and Litigation Reserve Charge |
8,748 | 8,892 | 8,863 | 8,625 | 5,713 | (2 | ) | 53 | 17,640 | 11,806 | 49 | |||||||||||||||||||||||||||||||||
Merger Costs |
279 | 145 | 523 | 752 | 90 | 92 | 210 | 424 | 90 | 371 | ||||||||||||||||||||||||||||||||||
Litigation Reserve Charge |
1,872 | 900 | | | 3,700 | 108 | (49 | ) | 2,772 | 3,700 | (25 | ) | ||||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
10,899 | 9,937 | 9,386 | 9,377 | 9,503 | 10 | 15 | 20,836 | 15,596 | 34 | ||||||||||||||||||||||||||||||||||
Income (Loss) before Income Tax Expense |
1,257 | 3,283 | 2,407 | 1,959 | (1,075 | ) | (62 | ) | NM | 4,540 | 1,828 | 148 | ||||||||||||||||||||||||||||||||
Income Tax Expense (Benefit) |
263 | 1,019 | 741 | 541 | (527 | ) | (74 | ) | NM | 1,282 | 446 | 187 | ||||||||||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 994 | $ | 2,264 | $ | 1,666 | $ | 1,418 | $ | (548 | ) | (56 | ) | NM | $ | 3,258 | $ | 1,382 | 136 | |||||||||||||||||||||||||
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK |
$ | 991 | $ | 2,259 | $ | 1,653 | $ | 1,405 | $ | (561 | ) | (56 | ) | NM | $ | 3,250 | $ | 1,356 | 140 | |||||||||||||||||||||||||
NET INCOME (LOSS) PER COMMON SHARE |
||||||||||||||||||||||||||||||||||||||||||||
Basic Earnings per Share |
$ | 0.28 | $ | 0.64 | $ | 0.47 | $ | 0.40 | $ | (0.27 | ) | (56 | ) | NM | $ | 0.93 | $ | 0.67 | 39 | |||||||||||||||||||||||||
Diluted Earnings per Share |
0.28 | 0.63 | 0.46 | 0.39 | (0.27 | ) | (56 | ) | NM | 0.91 | 0.65 | 40 | ||||||||||||||||||||||||||||||||
WeightedAverage Basic Shares Outstanding |
3,493.0 | 3,517.5 | 3,514.7 | 3,513.5 | 2,042.8 | (1 | ) | 71 | 3,505.2 | 2,037.6 | 72 | |||||||||||||||||||||||||||||||||
WeightedAverage Diluted Shares Outstanding |
3,548.3 | 3,569.8 | 3,602.0 | 3,592.0 | 2,042.8 | (1 | ) | 74 | 3,559.0 | 2,096.3 | 70 | |||||||||||||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||||||
ROE |
4 | % | 9 | % | 6 | % | 5 | % | NM | (500 | )bp | NM | 6 | % | 6 | % | | bp | ||||||||||||||||||||||||||
ROE-GW |
6 | 15 | 11 | 9 | NM | (900 | ) | NM | 11 | 7 | 400 | |||||||||||||||||||||||||||||||||
ROA |
0.34 | 0.79 | 0.57 | 0.50 | NM | (45 | ) | NM | 0.56 | 0.35 | 21 | |||||||||||||||||||||||||||||||||
Effective Income Tax Rate |
21 | 31 | 31 | 28 | 49 | % | (1,000 | ) | (2,800 | )bp | 28 | 24 | 400 | |||||||||||||||||||||||||||||||
Overhead Ratio |
86 | 73 | 72 | 75 | 110 | 1,300 | (2,400 | ) | 79 | 88 | (900 | ) | ||||||||||||||||||||||||||||||||
Headcount |
168,461 | 164,381 | 160,968 | 162,275 | 94,615 | 2 | % | 78 | % | 168,461 | 94,615 | 78 | % | |||||||||||||||||||||||||||||||
(a) | Trading NII is not included in Trading revenue. See page 10 for additional details. |
Page 4
JPMORGAN CHASE & CO. CONSOLIDATED BALANCE SHEETS (in millions) |
![]() |
Heritage | Jun 30, 2005 | |||||||||||||||||||||||||||||
JPMC Only | Change | |||||||||||||||||||||||||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Jun 30 | ||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 2005 | 2004 | ||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||||
Cash and Due from Banks |
$ | 35,092 | $ | 37,593 | $ | 35,168 | $ | 30,815 | $ | 23,525 | (7 | )% | 49 | % | ||||||||||||||||
Deposits with Banks |
9,080 | 14,331 | 21,680 | 33,082 | 39,135 | (37 | ) | (77 | ) | |||||||||||||||||||||
Federal Funds Sold and Securities Purchased under Resale Agreements |
130,785 | 132,751 | 101,354 | 96,031 | 100,851 | (1 | ) | 30 | ||||||||||||||||||||||
Securities Borrowed |
58,457 | 53,174 | 47,428 | 50,546 | 44,947 | 10 | 30 | |||||||||||||||||||||||
Trading Assets: |
||||||||||||||||||||||||||||||
Debt and Equity Instruments |
235,803 | 230,725 | 222,832 | 214,852 | 187,640 | 2 | 26 | |||||||||||||||||||||||
Derivative Receivables |
55,015 | 60,388 | 65,982 | 57,795 | 49,980 | (9 | ) | 10 | ||||||||||||||||||||||
Securities |
58,573 | 75,251 | 94,512 | 92,816 | 64,915 | (22 | ) | (10 | ) | |||||||||||||||||||||
Interests in Purchased Receivables |
27,887 | 28,484 | 31,722 | 30,479 | | (2 | ) | NM | ||||||||||||||||||||||
Loans (Net of Allowance for Loan Losses) |
409,231 | 395,734 | 394,794 | 386,208 | 221,971 | 3 | 84 | |||||||||||||||||||||||
Private Equity Investments |
6,488 | 7,333 | 7,735 | 8,547 | 6,663 | (12 | ) | (3 | ) | |||||||||||||||||||||
Accrued Interest and Accounts Receivable |
24,245 | 21,098 | 21,409 | 19,876 | 15,050 | 15 | 61 | |||||||||||||||||||||||
Premises and Equipment |
9,354 | 9,344 | 9,145 | 8,880 | 6,268 | | 49 | |||||||||||||||||||||||
Goodwill |
43,537 | 43,440 | 43,203 | 42,947 | 8,731 | | 399 | |||||||||||||||||||||||
Other Intangible Assets: |
||||||||||||||||||||||||||||||
Mortgage Servicing Rights |
5,026 | 5,663 | 5,080 | 5,168 | 5,707 | (11 | ) | (12 | ) | |||||||||||||||||||||
Purchased Credit Card Relationships |
3,528 | 3,703 | 3,878 | 4,055 | 893 | (5 | ) | 295 | ||||||||||||||||||||||
All Other Intangibles |
5,319 | 5,514 | 5,726 | 5,945 | 799 | (4 | ) | NM | ||||||||||||||||||||||
Other Assets |
53,863 | 53,779 | 45,600 | 50,427 | 40,688 | | 32 | |||||||||||||||||||||||
TOTAL ASSETS |
$ | 1,171,283 | $ | 1,178,305 | $ | 1,157,248 | $ | 1,138,469 | $ | 817,763 | (1 | ) | 43 | |||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||||||||
U.S. Offices: |
||||||||||||||||||||||||||||||
Noninterest-Bearing |
$ | 138,025 | $ | 130,533 | $ | 129,257 | $ | 122,054 | $ | 87,972 | 6 | 57 | ||||||||||||||||||
Interest-Bearing |
263,952 | 271,592 | 261,673 | 254,611 | 141,118 | (3 | ) | 87 | ||||||||||||||||||||||
Non-U.S. Offices: |
||||||||||||||||||||||||||||||
Noninterest-Bearing |
7,289 | 6,669 | 6,931 | 7,259 | 7,320 | 9 | | |||||||||||||||||||||||
Interest-Bearing |
125,374 | 122,585 | 123,595 | 112,530 | 110,129 | 2 | 14 | |||||||||||||||||||||||
Total Deposits |
534,640 | 531,379 | 521,456 | 496,454 | 346,539 | 1 | 54 | |||||||||||||||||||||||
Federal Funds Purchased and Securities Sold under Repurchase Agreements |
137,350 | 137,062 | 127,787 | 167,313 | 152,619 | | (10 | ) | ||||||||||||||||||||||
Commercial Paper |
12,842 | 13,063 | 12,605 | 10,307 | 15,300 | (2 | ) | (16 | ) | |||||||||||||||||||||
Other Borrowed Funds |
12,716 | 10,124 | 9,039 | 9,454 | 9,435 | 26 | 35 | |||||||||||||||||||||||
Trading Liabilities: |
||||||||||||||||||||||||||||||
Debt and Equity Instruments |
83,011 | 96,090 | 87,942 | 78,767 | 82,338 | (14 | ) | 1 | ||||||||||||||||||||||
Derivative Payables |
51,269 | 57,626 | 63,265 | 52,307 | 42,838 | (11 | ) | 20 | ||||||||||||||||||||||
Accounts Payable, Accrued Expenses and Other Liabilities
(including the Allowance for Lending-Related Commitments) |
77,064 | 72,183 | 75,722 | 68,675 | 56,576 | 7 | 36 | |||||||||||||||||||||||
Beneficial Interests Issued by Consolidated VIEs |
43,826 | 44,827 | 48,061 | 45,840 | 6,562 | (2 | ) | NM | ||||||||||||||||||||||
Long-Term Debt |
101,182 | 99,329 | 95,422 | 91,754 | 52,981 | 2 | 91 | |||||||||||||||||||||||
Junior Subordinated Deferrable Interest Debentures Held by Trusts that Issued
Guaranteed Capital Debt Securities |
11,998 | 11,282 | 10,296 | 11,745 | 6,634 | 6 | 81 | |||||||||||||||||||||||
TOTAL LIABILITIES |
1,065,898 | 1,072,965 | 1,051,595 | 1,032,616 | 771,822 | (1 | ) | 38 | ||||||||||||||||||||||
STOCKHOLDERS EQUITY |
||||||||||||||||||||||||||||||
Preferred Stock |
139 | 339 | 339 | 1,009 | 1,009 | (59 | ) | (86 | ) | |||||||||||||||||||||
Common Stock |
3,604 | 3,598 | 3,585 | 3,576 | 2,095 | | 72 | |||||||||||||||||||||||
Capital Surplus |
73,911 | 73,394 | 72,801 | 72,183 | 14,426 | 1 | 412 | |||||||||||||||||||||||
Retained Earnings |
31,032 | 31,253 | 30,209 | 29,779 | 29,596 | (1 | ) | 5 | ||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) |
(61 | ) | (623 | ) | (208 | ) | (242 | ) | (910 | ) | 90 | 93 | ||||||||||||||||||
Treasury Stock, at Cost |
(3,240 | ) | (2,621 | ) | (1,073 | ) | (452 | ) | (275 | ) | (24 | ) | NM | |||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
105,385 | 105,340 | 105,653 | 105,853 | 45,941 | | 129 | |||||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 1,171,283 | $ | 1,178,305 | $ | 1,157,248 | $ | 1,138,469 | $ | 817,763 | (1 | ) | 43 | |||||||||||||||||
Page 5
JPMORGAN CHASE & CO. CONDENSED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS (in millions, except rates) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||||||||||||||||||
Deposits with Banks |
$ | 18,646 | $ | 15,232 | $ | 31,799 | $ | 34,166 | $ | 26,905 | 22 | % | (31 | )% | $ | 16,948 | $ | 24,220 | (30 | )% | ||||||||||||||||||||||||
Federal Funds Sold and Securities Purchased
under Resale Agreements |
139,864 | 121,189 | 104,038 | 102,042 | 87,080 | 15 | 61 | 130,580 | 84,818 | 54 | ||||||||||||||||||||||||||||||||||
Securities Borrowed |
60,207 | 52,449 | 47,663 | 47,087 | 54,233 | 15 | 11 | 56,349 | 51,421 | 10 | ||||||||||||||||||||||||||||||||||
Trading Assets Debt Instruments |
193,660 | 187,669 | 186,013 | 170,663 | 153,548 | 3 | 26 | 190,681 | 159,968 | 19 | ||||||||||||||||||||||||||||||||||
Securities |
67,705 | 93,438 | 92,294 | 94,720 | 64,148 | (28 | ) | 6 | 80,500 | 64,070 | 26 | |||||||||||||||||||||||||||||||||
Interests in Purchased Receivables |
28,082 | 29,277 | 30,491 | 28,917 | | (4 | ) | NM | 28,676 | 1,268 | NM | |||||||||||||||||||||||||||||||||
Loans |
404,318 | 398,494 | 400,841 | 390,753 | 225,344 | 1 | 79 | 401,422 | 220,143 | 82 | ||||||||||||||||||||||||||||||||||
Total Interest-Earning Assets |
912,482 | 897,748 | 893,139 | 868,348 | 611,258 | 2 | 49 | 905,156 | 605,908 | 49 | ||||||||||||||||||||||||||||||||||
Trading Assets Equity Instruments |
43,935 | 43,717 | 35,803 | 30,275 | 38,934 | | 13 | 43,827 | 29,468 | 49 | ||||||||||||||||||||||||||||||||||
All Other Noninterest-Earning Assets |
219,616 | 221,353 | 225,946 | 218,712 | 152,678 | (1 | ) | 44 | 220,479 | 151,718 | 45 | |||||||||||||||||||||||||||||||||
TOTAL ASSETS |
$ | 1,176,033 | $ | 1,162,818 | $ | 1,154,888 | $ | 1,117,335 | $ | 802,870 | 1 | 46 | $ | 1,169,462 | $ | 787,094 | 49 | |||||||||||||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits |
$ | 394,455 | $ | 388,355 | $ | 377,368 | $ | 365,104 | $ | 254,034 | 2 | 55 | $ | 391,422 | $ | 246,120 | 59 | |||||||||||||||||||||||||||
Federal Funds Purchased and Securities Sold
under Repurchase Agreements |
158,268 | 151,335 | 158,633 | 163,206 | 155,335 | 5 | 2 | 154,821 | 150,354 | 3 | ||||||||||||||||||||||||||||||||||
Commercial Paper |
12,496 | 12,665 | 10,885 | 12,497 | 14,283 | (1 | ) | (13 | ) | 12,580 | 13,718 | (8 | ) | |||||||||||||||||||||||||||||||
Other Borrowings (a) |
98,936 | 98,259 | 89,674 | 84,387 | 80,364 | 1 | 23 | 98,600 | 80,375 | 23 | ||||||||||||||||||||||||||||||||||
Beneficial Interests Issued by Consolidated VIEs |
43,743 | 45,294 | 46,366 | 43,308 | 7,433 | (3 | ) | 488 | 44,514 | 8,598 | 418 | |||||||||||||||||||||||||||||||||
Long-Term Debt |
111,858 | 108,004 | 104,599 | 101,061 | 57,019 | 4 | 96 | 109,941 | 55,297 | 99 | ||||||||||||||||||||||||||||||||||
Total Interest-Bearing Liabilities |
819,756 | 803,912 | 787,525 | 769,563 | 568,468 | 2 | 44 | 811,878 | 554,462 | 46 | ||||||||||||||||||||||||||||||||||
Noninterest-Bearing Liabilities |
250,792 | 253,222 | 261,487 | 242,394 | 186,529 | (1 | ) | 34 | 252,000 | 185,282 | 36 | |||||||||||||||||||||||||||||||||
TOTAL LIABILITIES |
1,070,548 | 1,057,134 | 1,049,012 | 1,011,957 | 754,997 | 1 | 42 | 1,063,878 | 739,744 | 44 | ||||||||||||||||||||||||||||||||||
Preferred Stock |
216 | 339 | 1,002 | 1,009 | 1,009 | (36 | ) | (79 | ) | 277 | 1,009 | (73 | ) | |||||||||||||||||||||||||||||||
Common Stockholders Equity |
105,269 | 105,345 | 104,874 | 104,369 | 46,864 | | 125 | 105,307 | 46,341 | 127 | ||||||||||||||||||||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
105,485 | 105,684 | 105,876 | 105,378 | 47,873 | | 120 | 105,584 | 47,350 | 123 | ||||||||||||||||||||||||||||||||||
TOTAL LIABILITIES, PREFERRED STOCK
AND STOCKHOLDERS EQUITY |
$ | 1,176,033 | $ | 1,162,818 | $ | 1,154,888 | $ | 1,117,335 | $ | 802,870 | 1 | 46 | $ | 1,169,462 | $ | 787,094 | 49 | |||||||||||||||||||||||||||
AVERAGE RATES |
||||||||||||||||||||||||||||||||||||||||||||
INTEREST-EARNING ASSETS |
||||||||||||||||||||||||||||||||||||||||||||
Deposits with Banks |
4.08 | % | 4.11 | % | 2.60 | % | 1.53 | % | 1.68 | % | (3) bp | 240 bp | 4.09 | % | 1.66 | % | 243 bp | |||||||||||||||||||||||||||
Federal Funds Sold and Securities Purchased
under Resale Agreements |
2.70 | 2.43 | 2.03 | 1.85 | 1.45 | 27 | 125 | 2.58 | 1.47 | 111 | ||||||||||||||||||||||||||||||||||
Securities Borrowed |
2.08 | 1.71 | 1.34 | 1.01 | 0.66 | 37 | 142 | 1.91 | 0.72 | 119 | ||||||||||||||||||||||||||||||||||
Trading Assets Debt Instruments |
5.06 | 4.89 | 4.44 | 4.64 | 4.37 | 17 | 69 | 4.98 | 4.36 | 62 | ||||||||||||||||||||||||||||||||||
Securities |
3.77 | 4.93 | 4.43 | 4.42 | 4.58 | (116 | ) | (81 | ) | 4.44 | 4.40 | 4 | ||||||||||||||||||||||||||||||||
Interests in Purchased Receivables |
3.08 | 2.58 | 2.11 | 1.63 | NM | 50 | NM | 2.83 | 1.79 | 104 | ||||||||||||||||||||||||||||||||||
Loans |
6.24 | 6.11 | 5.66 | 5.67 | 4.85 | 13 | 139 | 6.18 | 4.92 | 126 | ||||||||||||||||||||||||||||||||||
Total Interest-Earning Assets |
4.85 | 4.83 | 4.40 | 4.33 | 3.71 | 2 | 114 | 4.84 | 3.74 | 110 | ||||||||||||||||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits |
2.39 | 2.09 | 1.76 | 1.44 | 1.29 | 30 | 110 | 2.24 | 1.33 | 91 | ||||||||||||||||||||||||||||||||||
Federal Funds Purchased and Securities Sold
under Repurchase Agreements |
2.69 | 2.48 | 1.96 | 1.53 | 1.17 | 21 | 152 | 2.59 | 1.20 | 139 | ||||||||||||||||||||||||||||||||||
Commercial Paper |
2.42 | 2.00 | 1.65 | 1.08 | 0.79 | 42 | 163 | 2.21 | 0.76 | 145 | ||||||||||||||||||||||||||||||||||
Other Borrowings (a) |
4.56 | 5.06 | 4.13 | 5.16 | 4.44 | (50 | ) | 12 | 4.81 | 4.48 | 33 | |||||||||||||||||||||||||||||||||
Beneficial Interests Issued by Consolidated VIEs |
2.92 | 2.44 | 1.97 | 1.58 | 2.04 | 48 | 88 | 2.68 | 1.79 | 89 | ||||||||||||||||||||||||||||||||||
Long-Term Debt |
3.64 | 3.47 | 3.31 | 3.10 | 2.85 | 17 | 79 | 3.56 | 2.94 | 62 | ||||||||||||||||||||||||||||||||||
Total Interest-Bearing Liabilities |
2.91 | 2.73 | 2.29 | 2.09 | 1.85 | 18 | 106 | 2.82 | 1.91 | 91 | ||||||||||||||||||||||||||||||||||
INTEREST RATE SPREAD |
1.94 | % | 2.10 | % | 2.11 | % | 2.24 | % | 1.86 | % | (16 | ) | 8 | 2.02 | % | 1.83 | % | 19 | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS |
2.24 | % | 2.39 | % | 2.38 | % | 2.48 | % | 1.98 | % | (15 | ) | 26 | 2.31 | % | 2.00 | % | 31 | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS
ADJUSTED FOR SECURITIZATIONS |
2.76 | % | 2.95 | % | 2.95 | % | 3.05 | % | 2.40 | % | (19 | ) | 36 | 2.85 | % | 2.42 | % | 43 | ||||||||||||||||||||||||||
(a) Includes securities sold but not yet purchased.
Page 6
OPERATING BASIS
In addition to analyzing the Firms results on a reported basis, management reviews the Firms and the lines of business results on an operating basis, which is a non-GAAP financial measure. The definition of operating basis starts with the reported U.S. GAAP results. In the case of the IB, noninterest revenue on an operating basis includes, in Trading revenue, Net interest income related to trading activities. Trading activities generate revenues, which are recorded for U.S. GAAP purposes in two line items on the income statement: Trading revenue, which includes the mark-to-market gains or losses on trading positions; and Net interest income, which includes the interest income or expense related to those positions. Combining both the Trading revenue and related Net interest income enables management to evaluate IBs trading activities, by considering all revenue related to these activities, and facilitates operating comparisons to other competitors.
In the case of Card Services, operating, or managed, basis excludes the impact of credit card securitizations on total net revenue, the Provision for credit losses, net charge-offs and loan receivables. JPMorgan Chase uses the concept of managed receivables to evaluate the credit performance and overall financial performance of the underlying credit card loans, both sold and not sold: as the same borrower is continuing to use the credit card for ongoing charges, a borrowers credit performance will affect both the loan receivables sold under SFAS 140 and those not sold. Thus, in its disclosures regarding managed loan receivables, JPMorgan Chase treats the sold receivables as if they were still on the balance sheet in order to disclose the credit performance (such as net charge-off rates) of the entire managed credit card portfolio.
Operating basis also excludes merger costs, significant litigation reserve charges, and accounting policy conformity adjustments, as management believes these items are not part of the Firms normal daily business operations (and, therefore, are not indicative of trends) and do not provide meaningful comparisons with other periods.
Finally, commencing with the first quarter of 2005, Operating revenue (Noninterest Revenue and Net interest income) for each of the segments and the Firm is presented on a tax-equivalent basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits are presented in the operating results on a basis comparable to taxable securities and investments. This allows management to assess the comparability of revenues arising from both taxable and tax-exempt sources. The corresponding income tax impact related to these items is recorded within Income tax expense. The Corporate sectors and the Firms operating revenue and income tax expense for the periods prior to the first quarter of 2005 have been restated to be similarly presented on a tax-equivalent basis. This restatement had no impact on the Corporate sectors or the Firms operating results.
JPMORGAN CHASE & CO. RECONCILIATION FROM REPORTED TO OPERATING BASIS SUMMARY (in millions) |
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JPMorgan Chase prepares its Consolidated financial statements using accounting principles generally accepted in the United States of America (U.S. GAAP), which is referred to as reported basis. This presentation provides the reader with an understanding of the Firms results that can be consistently tracked from year to year and enables comparisons to the Firms performance with other companies U.S. GAAP financial statements. In addition to analyzing the Firms results on a reported basis, management reviews line-of-business results on an operating basis, which is a non-GAAP financial measure. The financial information that is presented on the following pages is presented on an operating basis; for additional information, see the previous page for a more detailed definition of operating basis and the Appendix.
Heritage | Heritage | ||||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | ||||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | ||||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | ||||||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
|||||||||||||||||||||||||||||||||||||||||||||
Total Net Revenue Reported |
$ | 12,743 | $ | 13,647 | $ | 12,950 | $ | 12,505 | $ | 8,631 | (7 | )% | 48 | % | $ | 26,390 | $ | 17,642 | 50 | % | |||||||||||||||||||||||||
Impact of: |
|||||||||||||||||||||||||||||||||||||||||||||
Credit Card Securitizations |
930 | 917 | 1,011 | 928 | 486 | 1 | 91 | 1,847 | 959 | 93 | |||||||||||||||||||||||||||||||||||
Accounting Policy Conformity Adjustments |
| | | 118 | | NM | NM | | | NM | |||||||||||||||||||||||||||||||||||
Tax Equivalent Adjustments |
227 | 176 | 188 | 28 | 59 | 29 | 285 | 403 | 107 | 277 | |||||||||||||||||||||||||||||||||||
Total Net Revenue Operating |
$ | 13,900 | $ | 14,740 | $ | 14,149 | $ | 13,579 | $ | 9,176 | (6 | ) | 51 | $ | 28,640 | $ | 18,708 | 53 | |||||||||||||||||||||||||||
PROVISION FOR CREDIT LOSSES |
|||||||||||||||||||||||||||||||||||||||||||||
Provision for Credit Losses Reported |
$ | 587 | $ | 427 | $ | 1,157 | $ | 1,169 | $ | 203 | 37 | 189 | $ | 1,014 | $ | 218 | 365 | ||||||||||||||||||||||||||||
Impact of: |
|||||||||||||||||||||||||||||||||||||||||||||
Credit Card Securitizations |
930 | 917 | 1,011 | 928 | 486 | 1 | 91 | 1,847 | 959 | 93 | |||||||||||||||||||||||||||||||||||
Accounting Policy Conformity Adjustments |
| | (525 | ) | (333 | ) | | NM | NM | | | NM | |||||||||||||||||||||||||||||||||
Provision for Credit Losses Operating |
$ | 1,517 | $ | 1,344 | $ | 1,643 | $ | 1,764 | $ | 689 | 13 | 120 | $ | 2,861 | $ | 1,177 | 143 | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
|||||||||||||||||||||||||||||||||||||||||||||
Total Noninterest Expense Reported |
$ | 10,899 | $ | 9,937 | $ | 9,386 | $ | 9,377 | $ | 9,503 | 10 | 15 | $ | 20,836 | $ | 15,596 | 34 | ||||||||||||||||||||||||||||
Impact of: |
|||||||||||||||||||||||||||||||||||||||||||||
Merger Costs |
(279 | ) | (145 | ) | (523 | ) | (752 | ) | (90 | ) | (92 | ) | (210 | ) | (424 | ) | (90 | ) | (371 | ) | |||||||||||||||||||||||||
Litigation Reserve Charges |
(1,872 | ) | (900 | ) | | | (3,700 | ) | (108 | ) | 49 | (2,772 | ) | (3,700 | ) | 25 | |||||||||||||||||||||||||||||
Total Noninterest Expense Operating |
$ | 8,748 | $ | 8,892 | $ | 8,863 | $ | 8,625 | $ | 5,713 | (2 | ) | 53 | $ | 17,640 | $ | 11,806 | 49 | |||||||||||||||||||||||||||
INCOME TAX EXPENSE |
|||||||||||||||||||||||||||||||||||||||||||||
Income Tax Expense (Benefit) Reported |
$ | 263 | $ | 1,019 | $ | 741 | $ | 541 | $ | (527 | ) | (74 | ) | NM | $ | 1,282 | $ | 446 | 187 | ||||||||||||||||||||||||||
Impact of: |
|||||||||||||||||||||||||||||||||||||||||||||
Merger Costs |
106 | 55 | 199 | 290 | 30 | 93 | 253 | 161 | 30 | 437 | |||||||||||||||||||||||||||||||||||
Litigation Reserve Charges |
711 | 342 | | | 1,406 | 108 | (49 | ) | 1,053 | 1,406 | (25 | ) | |||||||||||||||||||||||||||||||||
Accounting Policy Conformity Adjustments |
| | 199 | 172 | | NM | NM | | | NM | |||||||||||||||||||||||||||||||||||
Tax Equivalent Adjustments |
227 | 176 | 188 | 28 | 59 | 29 | 285 | 403 | 107 | 277 | |||||||||||||||||||||||||||||||||||
Income Tax Expense Operating |
$ | 1,307 | $ | 1,592 | $ | 1,327 | $ | 1,031 | $ | 968 | (18 | ) | 35 | $ | 2,899 | $ | 1,989 | 46 | |||||||||||||||||||||||||||
NET INCOME |
|||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Reported |
$ | 994 | $ | 2,264 | $ | 1,666 | $ | 1,418 | $ | (548 | ) | (56 | ) | NM | $ | 3,258 | $ | 1,382 | 136 | ||||||||||||||||||||||||||
Impact of: |
|||||||||||||||||||||||||||||||||||||||||||||
Merger Costs |
173 | 90 | 324 | 462 | 60 | 92 | 188 | 263 | 60 | 338 | |||||||||||||||||||||||||||||||||||
Litigation Reserve Charges |
1,161 | 558 | | | 2,294 | 108 | (49 | ) | 1,719 | 2,294 | (25 | ) | |||||||||||||||||||||||||||||||||
Accounting Policy Conformity Adjustments |
| | 326 | 279 | | NM | NM | | | NM | |||||||||||||||||||||||||||||||||||
Net Income Operating |
$ | 2,328 | $ | 2,912 | $ | 2,316 | $ | 2,159 | $ | 1,806 | (20 | ) | 29 | $ | 5,240 | $ | 3,736 | 40 | |||||||||||||||||||||||||||
Page 7
JPMORGAN
CHASE & CO. STATEMENTS OF INCOME OPERATING BASIS (in millions, except per share and ratio data) |
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Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 961 | $ | 993 | $ | 1,073 | $ | 879 | $ | 893 | (3 | )% | 8 | % | $ | 1,954 | $ | 1,585 | 23 | % | ||||||||||||||||||||||||
Trading-Related Revenue (Including Trading NII) |
585 | 2,187 | 1,122 | 832 | 1,312 | (73 | ) | (55 | ) | 2,772 | 3,608 | (23 | ) | |||||||||||||||||||||||||||||||
Lending & Deposit Related Fees |
851 | 820 | 903 | 943 | 412 | 4 | 107 | 1,671 | 826 | 102 | ||||||||||||||||||||||||||||||||||
Asset Management, Administration and Commissions |
2,541 | 2,498 | 2,330 | 2,185 | 1,814 | 2 | 40 | 5,039 | 3,650 | 38 | ||||||||||||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
407 | (45 | ) | 569 | 413 | 460 | NM | (12 | ) | 362 | 892 | (59 | ) | |||||||||||||||||||||||||||||||
Mortgage Fees and Related Income |
336 | 362 | 85 | 233 | 294 | (7 | ) | 14 | 698 | 488 | 43 | |||||||||||||||||||||||||||||||||
Credit Card Income |
1,035 | 919 | 1,036 | 934 | 324 | 13 | 219 | 1,954 | 603 | 224 | ||||||||||||||||||||||||||||||||||
Other Income |
639 | 316 | 407 | 389 | 256 | 102 | 150 | 955 | 383 | 149 | ||||||||||||||||||||||||||||||||||
Noninterest Revenue |
7,355 | 8,050 | 7,525 | 6,808 | 5,765 | (9 | ) | 28 | 15,405 | 12,035 | 28 | |||||||||||||||||||||||||||||||||
Interest Income |
13,054 | 12,592 | 11,233 | 11,000 | 6,031 | 4 | 116 | 25,646 | 11,933 | 115 | ||||||||||||||||||||||||||||||||||
Interest Expense |
6,509 | 5,902 | 4,609 | 4,229 | 2,620 | 10 | 148 | 12,411 | 5,260 | 136 | ||||||||||||||||||||||||||||||||||
Net Interest Income |
6,545 | 6,690 | 6,624 | 6,771 | 3,411 | (2 | ) | 92 | 13,235 | 6,673 | 98 | |||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
13,900 | 14,740 | 14,149 | 13,579 | 9,176 | (6 | ) | 51 | 28,640 | 18,708 | 53 | |||||||||||||||||||||||||||||||||
Managed Provision for Credit Losses |
1,517 | 1,344 | 1,643 | 1,764 | 689 | 13 | 120 | 2,861 | 1,177 | 143 | ||||||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
4,266 | 4,702 | 4,211 | 4,050 | 2,943 | (9 | ) | 45 | 8,968 | 6,245 | 44 | |||||||||||||||||||||||||||||||||
Occupancy Expense |
580 | 525 | 609 | 604 | 440 | 10 | 32 | 1,105 | 871 | 27 | ||||||||||||||||||||||||||||||||||
Technology and Communications Expense |
896 | 920 | 1,051 | 1,046 | 786 | (3 | ) | 14 | 1,816 | 1,605 | 13 | |||||||||||||||||||||||||||||||||
Professional & Outside Services |
1,130 | 1,074 | 1,191 | 1,103 | 752 | 5 | 50 | 2,204 | 1,568 | 41 | ||||||||||||||||||||||||||||||||||
Marketing |
537 | 483 | 428 | 506 | 202 | 11 | 166 | 1,020 | 401 | 154 | ||||||||||||||||||||||||||||||||||
Other Expense |
954 | 805 | 981 | 920 | 511 | 19 | 87 | 1,759 | 958 | 84 | ||||||||||||||||||||||||||||||||||
Amortization of Intangibles |
385 | 383 | 392 | 396 | 79 | 1 | 387 | 768 | 158 | 386 | ||||||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
8,748 | 8,892 | 8,863 | 8,625 | 5,713 | (2 | ) | 53 | 17,640 | 11,806 | 49 | |||||||||||||||||||||||||||||||||
Operating Earnings before Income Tax Expense |
3,635 | 4,504 | 3,643 | 3,190 | 2,774 | (19 | ) | 31 | 8,139 | 5,725 | 42 | |||||||||||||||||||||||||||||||||
Income Tax Expense |
1,307 | 1,592 | 1,327 | 1,031 | 968 | (18 | ) | 35 | 2,899 | 1,989 | 46 | |||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 2,328 | $ | 2,912 | $ | 2,316 | $ | 2,159 | $ | 1,806 | (20 | ) | 29 | $ | 5,240 | $ | 3,736 | 40 | ||||||||||||||||||||||||||
Operating Earnings Per Common Share |
||||||||||||||||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.66 | $ | 0.81 | $ | 0.64 | $ | 0.60 | $ | 0.85 | (19 | ) | (22 | ) | $ | 1.47 | $ | 1.77 | (17 | ) | ||||||||||||||||||||||||
Operating Financial Ratios |
||||||||||||||||||||||||||||||||||||||||||||
ROE |
9 | % | 11 | % | 9 | % | 8 | % | 15 | % | (200 | )bp | (600 | )bp | 10 | % | 16 | % | (600 | )bp | ||||||||||||||||||||||||
ROE-GW |
15 | 19 | 15 | 14 | 19 | (400 | ) | (400 | ) | 17 | 20 | (300 | ) | |||||||||||||||||||||||||||||||
ROA |
0.75 | 0.96 | 0.75 | 0.72 | 0.87 | (21 | ) | (12 | ) | 0.85 | 0.92 | (7 | ) | |||||||||||||||||||||||||||||||
Effective Income Tax Rate |
36 | 35 | 36 | 32 | 35 | 100 | 100 | 36 | 35 | 100 | ||||||||||||||||||||||||||||||||||
Overhead Ratio |
63 | 60 | 63 | 64 | 62 | 300 | 100 | 62 | 63 | (100 | ) | |||||||||||||||||||||||||||||||||
RECONCILIATION OF OPERATING EARNINGS PER SHARE
TO NET INCOME (LOSS) PER SHARE DILUTED |
||||||||||||||||||||||||||||||||||||||||||||
Operating Earnings |
$ | 0.66 | $ | 0.81 | $ | 0.64 | $ | 0.60 | $ | 0.85 | (19 | )% | (22 | )% | $ | 1.47 | $ | 1.77 | (17 | )% | ||||||||||||||||||||||||
Reconciling Items (Net of Taxes): |
||||||||||||||||||||||||||||||||||||||||||||
Merger Costs |
(0.05 | ) | (0.03 | ) | (0.09 | ) | (0.13 | ) | (0.03 | ) | (67 | ) | (67 | ) | (0.08 | ) | (0.03 | ) | (167 | ) | ||||||||||||||||||||||||
Litigation Reserve Charge |
(0.33 | ) | (0.15 | ) | | | (1.09 | ) | (120 | ) | 70 | (0.48 | ) | (1.09 | ) | 56 | ||||||||||||||||||||||||||||
Accounting Policy Conformity |
| | (0.09 | ) | (0.08 | ) | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||
Net Income (Loss) |
$ | 0.28 | $ | 0.63 | $ | 0.46 | $ | 0.39 | $ | (0.27 | ) | (56 | ) | NM | $ | 0.91 | $ | 0.65 | 40 | |||||||||||||||||||||||||
Page 8
JPMORGAN
CHASE & CO. LINE OF BUSINESS FINANCIAL HIGHLIGHTS OPERATING BASIS (in millions, except ratio data) |
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|
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 2,750 | $ | 4,180 | $ | 3,201 | $ | 2,701 | $ | 2,939 | (34 | )% | (6 | )% | $ | 6,930 | $ | 6,703 | 3 | % | ||||||||||||||||||||||||
Retail Financial Services |
3,799 | 3,847 | 3,545 | 3,800 | 1,835 | (1 | ) | 107 | 7,646 | 3,446 | 122 | |||||||||||||||||||||||||||||||||
Card Services |
3,886 | 3,779 | 3,830 | 3,771 | 1,587 | 3 | 145 | 7,665 | 3,144 | 144 | ||||||||||||||||||||||||||||||||||
Commercial Banking |
900 | 850 | 885 | 833 | 334 | 6 | 169 | 1,750 | 656 | 167 | ||||||||||||||||||||||||||||||||||
Treasury & Securities Services |
1,588 | 1,482 | 1,413 | 1,339 | 1,093 | 7 | 45 | 3,070 | 2,105 | 46 | ||||||||||||||||||||||||||||||||||
Asset & Wealth Management |
1,343 | 1,361 | 1,310 | 1,193 | 828 | (1 | ) | 62 | 2,704 | 1,676 | 61 | |||||||||||||||||||||||||||||||||
Corporate |
(366 | ) | (759 | ) | (35 | ) | (58 | ) | 560 | 52 | NM | (1,125 | ) | 978 | NM | |||||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 13,900 | $ | 14,740 | $ | 14,149 | $ | 13,579 | $ | 9,176 | (6 | ) | 51 | $ | 28,640 | $ | 18,708 | 53 | ||||||||||||||||||||||||||
OPERATING EARNINGS |
||||||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 606 | $ | 1,325 | $ | 660 | $ | 627 | $ | 644 | (54 | ) | (6 | ) | $ | 1,931 | $ | 1,661 | 16 | |||||||||||||||||||||||||
Retail Financial Services |
980 | 988 | 775 | 822 | 396 | (1 | ) | 147 | 1,968 | 602 | 227 | |||||||||||||||||||||||||||||||||
Card Services |
542 | 522 | 515 | 421 | 176 | 4 | 208 | 1,064 | 338 | 215 | ||||||||||||||||||||||||||||||||||
Commercial Banking |
174 | 243 | 254 | 215 | 65 | (28 | ) | 168 | 417 | 139 | 200 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
229 | 245 | 145 | 96 | 101 | (7 | ) | 127 | 474 | 199 | 138 | |||||||||||||||||||||||||||||||||
Asset & Wealth Management |
283 | 276 | 263 | 197 | 99 | 3 | 186 | 559 | 221 | 153 | ||||||||||||||||||||||||||||||||||
Corporate |
(486 | ) | (687 | ) | (296 | ) | (219 | ) | 325 | 29 | NM | (1,173 | ) | 576 | NM | |||||||||||||||||||||||||||||
TOTAL OPERATING EARNINGS |
$ | 2,328 | $ | 2,912 | $ | 2,316 | $ | 2,159 | $ | 1,806 | (20 | ) | 29 | $ | 5,240 | $ | 3,736 | 40 | ||||||||||||||||||||||||||
AVERAGE EQUITY (a) |
||||||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 20,000 | $ | 20,000 | $ | 20,000 | $ | 20,000 | $ | 14,015 | | 43 | $ | 20,000 | $ | 14,550 | 37 | |||||||||||||||||||||||||||
Retail Financial Services |
13,250 | 13,100 | 13,050 | 13,050 | 5,005 | 1 | 165 | 13,175 | 5,091 | 159 | ||||||||||||||||||||||||||||||||||
Card Services |
11,800 | 11,800 | 11,800 | 11,800 | 3,346 | | 253 | 11,800 | 3,369 | 250 | ||||||||||||||||||||||||||||||||||
Commercial Banking |
3,400 | 3,400 | 3,400 | 3,400 | 747 | | 355 | 3,400 | 771 | 341 | ||||||||||||||||||||||||||||||||||
Treasury & Securities Services |
1,900 | 1,900 | 1,900 | 1,900 | 3,203 | | (41 | ) | 1,900 | 3,196 | (41 | ) | ||||||||||||||||||||||||||||||||
Asset & Wealth Management |
2,400 | 2,400 | 2,400 | 2,400 | 5,370 | | (55 | ) | 2,400 | 5,420 | (56 | ) | ||||||||||||||||||||||||||||||||
Corporate (b) |
52,519 | 52,745 | 52,324 | 51,819 | 15,178 | | 246 | 52,632 | 13,944 | 277 | ||||||||||||||||||||||||||||||||||
TOTAL AVERAGE EQUITY |
$ | 105,269 | $ | 105,345 | $ | 104,874 | $ | 104,369 | $ | 46,864 | | 125 | $ | 105,307 | $ | 46,341 | 127 | |||||||||||||||||||||||||||
RETURN ON EQUITY (a) |
||||||||||||||||||||||||||||||||||||||||||||
Investment Bank |
12 | % | 27 | % | 13 | % | 12 | % | 18 | % | (1,500 | )bp | (600 | )bp | 19 | % | 23 | % | (400 | )bp | ||||||||||||||||||||||||
Retail Financial Services |
30 | 31 | 24 | 25 | 32 | (100 | ) | (200 | ) | 30 | 24 | 600 | ||||||||||||||||||||||||||||||||
Card Services |
18 | 18 | 17 | 14 | 21 | | (300 | ) | 18 | 20 | (200 | ) | ||||||||||||||||||||||||||||||||
Commercial Banking |
21 | 29 | 30 | 25 | 35 | (800 | ) | (1,400 | ) | 25 | 36 | (1,100 | ) | |||||||||||||||||||||||||||||||
Treasury & Securities Services |
48 | 52 | 30 | 20 | 13 | (400 | ) | 3,500 | 50 | 13 | 3,700 | |||||||||||||||||||||||||||||||||
Asset & Wealth Management |
47 | 47 | 44 | 33 | 7 | | 4,000 | 47 | 8 | 3,900 | ||||||||||||||||||||||||||||||||||
JPMC ROE |
9 | 11 | 9 | 8 | 15 | (200 | ) | (600 | ) | 10 | 16 | (600 | ) | |||||||||||||||||||||||||||||||
JPMC ROE-GW |
15 | 19 | 15 | 14 | 19 | (400 | ) | (400 | ) | 17 | 20 | (300 | ) | |||||||||||||||||||||||||||||||
(a) | As a result of the Merger, new capital allocation methodologies were implemented during the third quarter of 2004. The capital allocated to each line of business considers several factors: stand-alone peer comparables, economic risk
measures and regulatory capital requirements. In addition, effective with the third quarter of 2004, goodwill, as well as the associated capital, is only allocated to the Corporate line of business. Prior periods have not been revised to
reflect these new methodologies and also may not be comparable to the presentation beginning in the third quarter of 2004. |
|
(b) | Effective with the third quarter of 2004, all goodwill is allocated to the Corporate line of business. Prior to the third quarter of 2004, goodwill was allocated to the various lines of business. |
Page 9
JPMORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS (in millions, except ratio data) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees: |
||||||||||||||||||||||||||||||||||||||||||||
Advisory |
$ | 359 | $ | 263 | $ | 250 | $ | 273 | $ | 268 | 37 | % | 34 | % | $ | 622 | $ | 415 | 50 | % | ||||||||||||||||||||||||
Equity Underwriting |
104 | 239 | 213 | 170 | 221 | (56 | ) | (53 | ) | 343 | 398 | (14 | ) | |||||||||||||||||||||||||||||||
Debt Underwriting |
502 | 483 | 617 | 468 | 402 | 4 | 25 | 985 | 768 | 28 | ||||||||||||||||||||||||||||||||||
Total Investment Banking Fees |
965 | 985 | 1,080 | 911 | 891 | (2 | ) | 8 | 1,950 | 1,581 | 23 | |||||||||||||||||||||||||||||||||
Trading-Related Revenue: |
||||||||||||||||||||||||||||||||||||||||||||
Fixed Income and Other |
940 | 1,915 | 1,173 | 657 | 1,293 | (51 | ) | (27 | ) | 2,855 | 3,178 | (10 | ) | |||||||||||||||||||||||||||||||
Equities |
(280 | ) | 225 | (42 | ) | 220 | (86 | ) | NM | (226 | ) | (55 | ) | 249 | NM | |||||||||||||||||||||||||||||
Credit Portfolio |
(46 | ) | 59 | (44 | ) | (35 | ) | 29 | NM | NM | 13 | 85 | (85 | ) | ||||||||||||||||||||||||||||||
Total Trading-Related Revenue (a) |
614 | 2,199 | 1,087 | 842 | 1,236 | (72 | ) | (50 | ) | 2,813 | 3,512 | (20 | ) | |||||||||||||||||||||||||||||||
Lending & Deposit Related Fees |
146 | 157 | 176 | 155 | 112 | (7 | ) | 30 | 303 | 208 | 46 | |||||||||||||||||||||||||||||||||
Asset Management, Administration and Commissions |
413 | 408 | 346 | 313 | 348 | 1 | 19 | 821 | 741 | 11 | ||||||||||||||||||||||||||||||||||
Other Income |
270 | 127 | 178 | 91 | 45 | 113 | 500 | 397 | 59 | NM | ||||||||||||||||||||||||||||||||||
Noninterest Revenue |
2,408 | 3,876 | 2,867 | 2,312 | 2,632 | (38 | ) | (9 | ) | 6,284 | 6,101 | 3 | ||||||||||||||||||||||||||||||||
Net Interest Income (a) |
342 | 304 | 334 | 389 | 307 | 13 | 11 | 646 | 602 | 7 | ||||||||||||||||||||||||||||||||||
TOTAL NET REVENUE (b) |
2,750 | 4,180 | 3,201 | 2,701 | 2,939 | (34 | ) | (6 | ) | 6,930 | 6,703 | 3 | ||||||||||||||||||||||||||||||||
Provision for Credit Losses |
(343 | ) | (366 | ) | (173 | ) | (151 | ) | (128 | ) | 6 | (168 | ) | (709 | ) | (316 | ) | (124 | ) | |||||||||||||||||||||||||
Credit Reimbursement from TSS (c) |
38 | 38 | 43 | 43 | 2 | | NM | 76 | 4 | NM | ||||||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
1,192 | 1,616 | 1,389 | 992 | 1,126 | (26 | ) | 6 | 2,808 | 2,512 | 12 | |||||||||||||||||||||||||||||||||
Noncompensation Expense |
986 | 909 | 1,001 | 932 | 930 | 8 | 6 | 1,895 | 1,870 | 1 | ||||||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
2,178 | 2,525 | 2,390 | 1,924 | 2,056 | (14 | ) | 6 | 4,703 | 4,382 | 7 | |||||||||||||||||||||||||||||||||
Operating Earnings Before Income Tax Expense |
953 | 2,059 | 1,027 | 971 | 1,013 | (54 | ) | (6 | ) | 3,012 | 2,641 | 14 | ||||||||||||||||||||||||||||||||
Income Tax Expense (Benefit) |
347 | 734 | 367 | 344 | 369 | (53 | ) | (6 | ) | 1,081 | 980 | 10 | ||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 606 | $ | 1,325 | $ | 660 | $ | 627 | $ | 644 | (54 | ) | (6 | ) | $ | 1,931 | $ | 1,661 | 16 | |||||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||||||
ROE |
12 | % | 27 | % | 13 | % | 12 | % | 18 | % | (1,500 | )bp | (600 | )bp | 19 | % | 23 | % | (400 | )bp | ||||||||||||||||||||||||
ROA |
0.41 | 0.95 | 0.49 | 0.50 | 0.59 | (54 | ) | (18 | ) | 0.67 | 0.78 | (11 | ) | |||||||||||||||||||||||||||||||
Overhead Ratio |
79 | 60 | 75 | 71 | 70 | 1,900 | 900 | 68 | 65 | 300 | ||||||||||||||||||||||||||||||||||
Compensation Expense as a % of Total Net Revenue |
43 | 39 | 43 | 37 | 38 | 400 | 500 | 41 | 37 | 400 | ||||||||||||||||||||||||||||||||||
REVENUE BY BUSINESS (d) |
||||||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 965 | $ | 985 | $ | 1,080 | $ | 911 | $ | 891 | (2 | )% | 8 | % | $ | 1,950 | $ | 1,581 | 23 | % | ||||||||||||||||||||||||
Fixed Income Markets |
1,418 | 2,289 | 1,530 | 1,115 | 1,572 | (38 | ) | (10 | ) | 3,707 | 3,669 | 1 | ||||||||||||||||||||||||||||||||
Equities Markets |
72 | 556 | 243 | 455 | 161 | (87 | ) | (55 | ) | 628 | 793 | (21 | ) | |||||||||||||||||||||||||||||||
Credit Portfolio |
295 | 350 | 348 | 220 | 315 | (16 | ) | (6 | ) | 645 | 660 | (2 | ) | |||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 2,750 | $ | 4,180 | $ | 3,201 | $ | 2,701 | $ | 2,939 | (34 | ) | (6 | ) | $ | 6,930 | $ | 6,703 | 3 | |||||||||||||||||||||||||
REVENUE BY REGION |
||||||||||||||||||||||||||||||||||||||||||||
Americas |
$ | 1,833 | $ | 2,224 | $ | 1,829 | $ | 1,591 | $ | 1,497 | (18 | ) | 22 | $ | 4,057 | $ | 3,450 | 18 | ||||||||||||||||||||||||||
Europe/Middle East/Africa |
554 | 1,535 | 1,013 | 741 | 1,032 | (64 | ) | (46 | ) | 2,089 | 2,328 | (10 | ) | |||||||||||||||||||||||||||||||
Asia/Pacific |
363 | 421 | 359 | 369 | 410 | (14 | ) | (11 | ) | 784 | 925 | (15 | ) | |||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 2,750 | $ | 4,180 | $ | 3,201 | $ | 2,701 | $ | 2,939 | (34 | ) | (6 | ) | $ | 6,930 | $ | 6,703 | 3 | |||||||||||||||||||||||||
(a) | Trading revenue, on a reported basis, excludes the impact of net interest income related to the IBs trading activities; this income is recorded in Net interest income. However, in this presentation, to assess the profitability of the IBs trading
business, the Firm combines these revenues for segment reporting. The amount reclassified from Net interest income to Trading revenue was $207 million, $324 million, $511 million, $430 million and $427 million, during the quarters ended
June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004, and June 30, 2004 and $531 million and $1.0 billion year-to-date June 30, 2005 and 2004 respectively. |
|
(b) | Total net revenue includes tax-equivalent adjustments, primarily due to tax-exempt income from municipal bonds and income tax credits related to affordable housing investments, of $206 million, $155 million, $167 million, $9 million and $54 million
for the quarters ended June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004, and June 30, 2004, respectively. The year-to-date tax equivalent adjustments were $361 million and $98 million for 2005 and 2004, respectively. |
|
(c) | TSS is charged a credit reimbursement related to certain exposures managed within the IB credit portfolio on behalf of clients shared with TSS. |
|
(d) | See account details of Fixed Income Markets, Equities Markets and Credit Portfolio in the Composition of Revenues tables on page 12. |
Page 10
JPMORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except headcount and rankings data) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS DATA (Average) |
||||||||||||||||||||||||||||||||||||||||||||
Total Assets |
$ | 592,383 | $ | 566,778 | $ | 533,898 | $ | 496,347 | $ | 439,166 | 5 | % | 35 | % | $ | 579,651 | $ | 430,658 | 35 | % | ||||||||||||||||||||||||
Trading Assets Debt and Equity Instruments |
232,980 | 225,367 | 219,466 | 197,150 | 186,975 | 3 | 25 | 229,194 | 181,881 | 26 | ||||||||||||||||||||||||||||||||||
Trading Assets Derivative Receivables |
56,436 | 63,574 | 65,417 | 60,465 | 51,925 | (11 | ) | 9 | 59,985 | 54,484 | 10 | |||||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||||||
Credit Portfolio |
30,435 | 29,236 | 31,289 | 31,129 | 26,192 | 4 | 16 | 29,838 | 26,956 | 11 | ||||||||||||||||||||||||||||||||||
Other Loans (a) |
20,967 | 18,232 | 16,385 | 14,650 | 12,537 | 15 | 67 | 19,608 | 11,508 | 70 | ||||||||||||||||||||||||||||||||||
Total Loans (b) |
51,402 | 47,468 | 47,674 | 45,779 | 38,729 | 8 | 33 | 49,446 | 38,464 | 29 | ||||||||||||||||||||||||||||||||||
Adjusted Assets (c) |
453,895 | 445,840 | 432,085 | 401,010 | 373,461 | 2 | 22 | 449,845 | 370,493 | 21 | ||||||||||||||||||||||||||||||||||
Equity (d) |
20,000 | 20,000 | 20,000 | 20,000 | 14,015 | | 43 | 20,000 | 14,550 | 37 | ||||||||||||||||||||||||||||||||||
Headcount |
19,269 | 17,993 | 17,478 | 17,420 | 15,829 | 7 | 22 | 19,269 | 15,829 | 22 | ||||||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||||||
Net Charge-offs (Recoveries) |
$ | (47 | ) | $ | (5 | ) | $ | 14 | $ | (16 | ) | $ | 15 | NM | NM | $ | (52 | ) | $ | 49 | NM | |||||||||||||||||||||||
Nonperforming Assets |
||||||||||||||||||||||||||||||||||||||||||||
- Nonperforming Loans (e) |
711 | 814 | 954 | 1,075 | 1,202 | (13 | ) | (41 | ) | 711 | 1,202 | (41 | ) | |||||||||||||||||||||||||||||||
- Other Nonperforming Assets |
235 | 242 | 242 | 246 | 339 | (3 | ) | (31 | ) | 235 | 339 | (31 | ) | |||||||||||||||||||||||||||||||
Allowance for Loan Losses |
971 | 1,191 | 1,547 | 1,841 | 742 | (18 | ) | 31 | 971 | 742 | 31 | |||||||||||||||||||||||||||||||||
Allowance for Lending-Related Commitments |
225 | 296 | 305 | 358 | 183 | (24 | ) | 23 | 225 | 183 | 23 | |||||||||||||||||||||||||||||||||
Net Charge-off (Recovery) Rate (b) |
(0.56 | )% | (0.05 | )% | 0.14 | % | (0.17 | )% | 0.18 | % | (51 | ) bp | (74 | ) bp | (0.29 | )% | 0.30 | % | (59 | ) bp | ||||||||||||||||||||||||
Allowance for Loan Losses to Average Loans (b) |
2.90 | 3.03 | 3.87 | 4.78 | 2.21 | (13 | ) | 69 | 2.67 | 2.23 | 44 | |||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Nonperforming Loans (e) |
137 | 147 | 163 | 172 | 62 | (1,000 | ) | 7,500 | 137 | 62 | 7,500 | |||||||||||||||||||||||||||||||||
Nonperforming Loans to Average Loans |
1.38 | 1.71 | 2.00 | 2.35 | 3.10 | (33 | ) | (172 | ) | 1.44 | 3.13 | (169 | ) | |||||||||||||||||||||||||||||||
MARKET RISK AVERAGE TRADING AND CREDIT PORTFOLIO VAR (f) (g) | ||||||||||||||||||||||||||||||||||||||||||||
Trading Activities: |
||||||||||||||||||||||||||||||||||||||||||||
Fixed Income (f) |
$ | 82 | $ | 57 | $ | 68 | $ | 80 | $ | 77 | 44 | % | 6 | % | $ | 70 | $ | 75 | (7 | )% | ||||||||||||||||||||||||
Foreign Exchange |
21 | 23 | 18 | 13 | 16 | (9 | ) | 31 | 22 | 19 | 16 | |||||||||||||||||||||||||||||||||
Equities |
45 | 18 | 20 | 25 | 29 | 150 | 55 | 32 | 35 | (9 | ) | |||||||||||||||||||||||||||||||||
Commodities and Other |
15 | 10 | 9 | 10 | 8 | 50 | 88 | 12 | 8 | 50 | ||||||||||||||||||||||||||||||||||
Diversification |
(61 | ) | (43 | ) | (42 | ) | (43 | ) | (42 | ) | (42 | ) | (45 | ) | (52 | ) | (46 | ) | (13 | ) | ||||||||||||||||||||||||
Total Trading VAR |
102 | 65 | 73 | 85 | 88 | 57 | 16 | 84 | 91 | (8 | ) | |||||||||||||||||||||||||||||||||
Credit Portfolio VAR (g) |
13 | 13 | 13 | 13 | 15 | | (13 | ) | 13 | 15 | (13 | ) | ||||||||||||||||||||||||||||||||
Diversification |
(13 | ) | (8 | ) | (7 | ) | (9 | ) | (9 | ) | (63 | ) | (44 | ) | (11 | ) | (8 | ) | (38 | ) | ||||||||||||||||||||||||
Total Trading and Credit Portfolio VAR |
$ | 102 | $ | 70 | $ | 79 | $ | 89 | $ | 94 | 46 | 9 | $ | 86 | $ | 98 | (12 | ) | ||||||||||||||||||||||||||
YTD | Full Year | |||||||||||||||||||||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||||||||||||||||||||
MARKET SHARES AND RANKINGS (h) |
||||||||||||||||||||||||||||||||||||||||||
Global Debt, Equity and Equity-Related |
6%/#5 | 7%/#3 | ||||||||||||||||||||||||||||||||||||||||
Global Syndicated Loans |
17%/#1 | 19%/#1 | ||||||||||||||||||||||||||||||||||||||||
Global Long-Term Debt |
6%/#4 | 7%/#2 | ||||||||||||||||||||||||||||||||||||||||
Global Equity and Equity-Related |
9%/#4 | 6%/#6 | ||||||||||||||||||||||||||||||||||||||||
Global Announced M&A |
22%/#3 | 25%/#2 | ||||||||||||||||||||||||||||||||||||||||
U.S. Debt, Equity and Equity-Related |
7%/#4 | 8%/#5 | ||||||||||||||||||||||||||||||||||||||||
U.S. Syndicated Loans |
31%/#1 | 32%/#1 | ||||||||||||||||||||||||||||||||||||||||
U.S. Long-Term Debt |
10%/#2 | 12%/#2 | ||||||||||||||||||||||||||||||||||||||||
U.S. Equity and Equity-Related |
8%/#5 | 8%/#6 | ||||||||||||||||||||||||||||||||||||||||
U.S. Announced M&A |
18%/#6 | 32%/#1 |
(a) | Other Loans consists of loans not directly managed by the Credit Portfolio Group and include (i) warehouse loans held as part of the IBs mortgage-backed, asset-backed and other securitization businesses; (ii) loans held for principal investment
purposes and (iii) certain other extension of loans that are directly managed outside of the Credit Portfolio Group. |
|
(b) | Loans include loans
held-for-sale of $17,871 million, $8,154 million, $7,684 million, $7,281 million and $5,199 million for the quarters ended June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004 and June 30, 2004, respectively.
The year-to-date average loans held-for-sale were $13,039 million and $5,222 million for 2005 and 2004, respectively. These amounts are not included in the allowance coverage ratios and net charge-off rates. |
|
(c) | Adjusted assets, a non-GAAP financial measure, equals total assets minus (i) securities purchased under resale agreements and securities borrowed less securities sold, not yet purchased; (ii) assets of variable interest entities (VIEs)
consolidated under FIN 46R; (iii) cash and securities segregated and on deposit for regulatory and other purposes; and (iv) goodwill and intangibles. The amount of adjusted assets is presented to assist the reader in comparing the IBs asset and
capital levels to other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a companys capital adequacy. The IB believes an adjusted asset amount, which excludes certain assets
considered to have a low-risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry. |
|
(d) | Equity includes $15.1 billion of economic risk capital assigned to the IB for the quarter ended June 30, 2005. |
|
(e) | Nonperforming loans include loans held-for-sale of $2 million, $2 million, $2 million, $4 million and $2 million at June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004, and June 30, 2004, respectively. These amounts are not
included in the allowance coverage ratios. |
|
(f) | Includes all mark-to-market trading activities, plus available-for-sale securities held for proprietary purposes. |
|
(g) | Includes VAR on derivative credit valuation adjustments, credit valuation adjustment hedges and mark-to-market loan hedges, which are reported in Trading Revenue. This VAR does not include the accrual loan portfolio, which is not marked to market. |
|
(h) | Source: Thomson Financial Securities data. Global announced M&A is based on rank value; all other rankings are based on proceeds, with full credit to each book manager/equal if joint. Because of joint assignments, market share of all
participants will add up to more than 100%. The market share and rankings for the year ended December 31, 2004 are presented on a combined basis, as if the merger of JPMorgan Chase and Bank One had been in effect during the period. |
Page 11
JPMORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS, CONTINUED (in millions) |
![]() |
SECOND QUARTER 2005 | ||||||||||||||||||||||||||||
COMPOSITION OF REVENUES | Asset Management, | |||||||||||||||||||||||||||
Investment | Trading-Related | Lending & Deposit | Administration and | Other | Net Interest | Total Net | ||||||||||||||||||||||
Banking Fees | Revenue | Related Fees | Commissions | Income | Income | Revenue | ||||||||||||||||||||||
Investment Banking Fees |
$ | 965 | $ | | $ | | $ | | $ | | $ | | $ | 965 | ||||||||||||||
Fixed Income Markets |
| 940 | 61 | 50 | 192 | 175 | 1,418 | |||||||||||||||||||||
Equities Markets |
| (280 | ) | | 350 | (17 | ) | 19 | 72 | |||||||||||||||||||
Credit Portfolio |
| (46 | ) | 85 | 13 | 95 | 148 | 295 | ||||||||||||||||||||
Total Net Revenue |
$ | 965 | $ | 614 | $ | 146 | $ | 413 | $ | 270 | $ | 342 | $ | 2,750 | ||||||||||||||
HERITAGE JPMC | ||||||||||||||||||||||||||||
SECOND QUARTER 2004 | ||||||||||||||||||||||||||||
Asset Management, | ||||||||||||||||||||||||||||
Investment | Trading-Related | Lending & Deposit | Administration and | Other | Net Interest | Total Net | ||||||||||||||||||||||
Banking Fees | Revenue | Related Fees | Commissions | Income | Income | Revenue | ||||||||||||||||||||||
Investment Banking Fees |
$ | 891 | $ | | $ | | $ | | $ | | $ | | $ | 891 | ||||||||||||||
Fixed Income Markets |
| 1,293 | 28 | 59 | 63 | 129 | 1,572 | |||||||||||||||||||||
Equities Markets |
| (86 | ) | | 279 | (52 | ) | 20 | 161 | |||||||||||||||||||
Credit Portfolio |
| 29 | 84 | 10 | 34 | 158 | 315 | |||||||||||||||||||||
Total Net Revenue |
$ | 891 | $ | 1,236 | $ | 112 | $ | 348 | $ | 45 | $ | 307 | $ | 2,939 | ||||||||||||||
YEAR-TO-DATE 2005 | ||||||||||||||||||||||||||||
Asset Management, | ||||||||||||||||||||||||||||
Investment | Trading-Related | Lending & Deposit | Administration and | Other | Net Interest | Total Net | ||||||||||||||||||||||
Banking Fees | Revenue | Related Fees | Commissions | Income | Income | Revenue | ||||||||||||||||||||||
Investment Banking Fees |
$ | 1,950 | $ | | $ | | $ | | $ | | $ | | $ | 1,950 | ||||||||||||||
Fixed Income Markets |
| 2,855 | 126 | 114 | 296 | 316 | 3,707 | |||||||||||||||||||||
Equities Markets |
| (55 | ) | | 683 | (37 | ) | 37 | 628 | |||||||||||||||||||
Credit Portfolio |
| 13 | 177 | 24 | 138 | 293 | 645 | |||||||||||||||||||||
Total Net Revenue |
$ | 1,950 | $ | 2,813 | $ | 303 | $ | 821 | $ | 397 | $ | 646 | $ | 6,930 | ||||||||||||||
HERITAGE JPMC | ||||||||||||||||||||||||||||
YEAR-TO-DATE 2004 | ||||||||||||||||||||||||||||
Asset Management, | ||||||||||||||||||||||||||||
Investment | Trading-Related | Lending & Deposit | Administration and | Other | Net Interest | Total Net | ||||||||||||||||||||||
Banking Fees | Revenue | Related Fees | Commissions | Income | Income | Revenue | ||||||||||||||||||||||
Investment Banking Fees |
$ | 1,581 | $ | | $ | | $ | | $ | | $ | | $ | 1,581 | ||||||||||||||
Fixed Income Markets |
| 3,178 | 54 | 119 | 112 | 206 | 3,669 | |||||||||||||||||||||
Equities Markets |
| 249 | | 604 | (99 | ) | 39 | 793 | ||||||||||||||||||||
Credit Portfolio |
| 85 | 154 | 18 | 46 | 357 | 660 | |||||||||||||||||||||
Total Net Revenue |
$ | 1,581 | $ | 3,512 | $ | 208 | $ | 741 | $ | 59 | $ | 602 | $ | 6,703 | ||||||||||||||
Page 12
JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratio and headcount data) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||
Lending & Deposit Related Fees |
$ | 358 | $ | 340 | $ | 373 | $ | 395 | $ | 124 | 5 | % | 189 | % | $ | 698 | $ | 245 | 185 | % | ||||||||||||||||||||||||
Asset Management, Administration and Commissions (a) |
369 | 394 | 368 | 375 | 132 | (6 | ) | 180 | 763 | 277 | 175 | |||||||||||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
| 10 | (89 | ) | 6 | | NM | NM | 10 | | NM | |||||||||||||||||||||||||||||||||
Mortgage Fees and Related Income (a) |
341 | 368 | 117 | 211 | 333 | (7 | ) | 2 | 709 | 538 | 32 | |||||||||||||||||||||||||||||||||
Credit Card Income |
105 | 94 | 97 | 89 | 25 | 12 | 320 | 199 | 44 | 352 | ||||||||||||||||||||||||||||||||||
Other Income |
68 | (12 | ) | 27 | 18 | 10 | NM | NM | 56 | (14 | ) | NM | ||||||||||||||||||||||||||||||||
Noninterest Revenue |
1,241 | 1,194 | 893 | 1,094 | 624 | 4 | 99 | 2,435 | 1,090 | 123 | ||||||||||||||||||||||||||||||||||
Net Interest Income |
2,558 | 2,653 | 2,652 | 2,706 | 1,211 | (4 | ) | 111 | 5,211 | 2,356 | 121 | |||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
3,799 | 3,847 | 3,545 | 3,800 | 1,835 | (1 | ) | 107 | 7,646 | 3,446 | 122 | |||||||||||||||||||||||||||||||||
Provision for Credit Losses |
94 | 94 | 78 | 239 | 78 | | 21 | 188 | 132 | 42 | ||||||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
820 | 822 | 807 | 855 | 450 | | 82 | 1,642 | 959 | 71 | ||||||||||||||||||||||||||||||||||
Noncompensation Expense |
1,181 | 1,215 | 1,276 | 1,250 | 680 | (3 | ) | 74 | 2,396 | 1,411 | 70 | |||||||||||||||||||||||||||||||||
Amortization of Intangibles |
125 | 125 | 132 | 133 | 1 | | NM | 250 | 2 | NM | ||||||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
2,126 | 2,162 | 2,215 | 2,238 | 1,131 | (2 | ) | 88 | 4,288 | 2,372 | 81 | |||||||||||||||||||||||||||||||||
Operating Earnings Before Income Tax Expense |
1,579 | 1,591 | 1,252 | 1,323 | 626 | (1 | ) | 152 | 3,170 | 942 | 237 | |||||||||||||||||||||||||||||||||
Income Tax Expense (Benefit) |
599 | 603 | 477 | 501 | 230 | (1 | ) | 160 | 1,202 | 340 | 254 | |||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 980 | $ | 988 | $ | 775 | $ | 822 | $ | 396 | (1 | ) | 147 | $ | 1,968 | $ | 602 | 227 | ||||||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||||||
ROE |
30 | % | 31 | % | 24 | % | 25 | % | 32 | % | (100 | )bp | (200 | )bp | 30 | % | 24 | % | 600 | bp | ||||||||||||||||||||||||
ROA |
1.74 | 1.78 | 1.35 | 1.44 | 1.09 | (4 | ) | 65 | 1.76 | 0.85 | 91 | |||||||||||||||||||||||||||||||||
Overhead Ratio |
56 | 56 | 62 | 59 | 62 | | (600 | ) | 56 | 69 | (1,300 | ) | ||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS (Ending) |
||||||||||||||||||||||||||||||||||||||||||||
Total Assets |
$ | 223,391 | $ | 224,562 | $ | 226,560 | $ | 227,952 | $ | 148,682 | (1 | )% | 50 | % | $ | 223,391 | $ | 148,682 | 50 | % | ||||||||||||||||||||||||
Loans (b) |
197,927 | 199,215 | 202,473 | 201,116 | 131,712 | (1 | ) | 50 | 197,927 | 131,712 | 50 | |||||||||||||||||||||||||||||||||
Core Deposits (c) |
159,702 | 162,241 | 156,885 | 154,589 | 80,100 | (2 | ) | 99 | 159,702 | 80,100 | 99 | |||||||||||||||||||||||||||||||||
Total Deposits |
185,558 | 187,225 | 182,372 | 180,307 | 79,937 | (1 | ) | 132 | 185,558 | 79,937 | 132 | |||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS (Average) |
||||||||||||||||||||||||||||||||||||||||||||
Total Assets |
$ | 225,574 | $ | 225,120 | $ | 228,647 | $ | 227,716 | $ | 146,693 | | 54 | $ | 225,348 | $ | 143,210 | 57 | |||||||||||||||||||||||||||
Loans (d) |
197,707 | 198,494 | 202,419 | 198,244 | 128,225 | | 54 | 198,098 | 124,791 | 59 | ||||||||||||||||||||||||||||||||||
Core Deposits (c) |
161,044 | 159,682 | 159,015 | 158,800 | 84,897 | 1 | 90 | 160,367 | 82,189 | 95 | ||||||||||||||||||||||||||||||||||
Total Deposits |
186,523 | 184,336 | 183,105 | 183,501 | 93,565 | 1 | 99 | 185,435 | 91,000 | 104 | ||||||||||||||||||||||||||||||||||
Equity |
13,250 | 13,100 | 13,050 | 13,050 | 5,005 | 1 | 165 | 13,175 | 5,091 | 159 | ||||||||||||||||||||||||||||||||||
Headcount |
59,631 | 59,322 | 59,632 | 60,691 | 30,480 | 1 | 96 | 59,631 | 30,480 | 96 | ||||||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||||||
Net Charge-offs |
$ | 114 | $ | 152 | $ | 606 | $ | 219 | $ | 80 | (25 | ) | 43 | $ | 266 | $ | 165 | 61 | ||||||||||||||||||||||||||
Nonperforming Loans (e) |
1,132 | 1,150 | 1,161 | 1,308 | 519 | (2 | ) | 118 | 1,132 | 519 | 118 | |||||||||||||||||||||||||||||||||
Nonperforming Assets |
1,319 | 1,351 | 1,385 | 1,557 | 693 | (2 | ) | 90 | 1,319 | 693 | 90 | |||||||||||||||||||||||||||||||||
Allowance for Loan Losses |
1,135 | 1,168 | 1,228 | 1,764 | 1,061 | (3 | ) | 7 | 1,135 | 1,061 | 7 | |||||||||||||||||||||||||||||||||
Net Charge-off Rate (d) |
0.25 | % | 0.34 | % | 1.28 | % | 0.47 | % | 0.29 | % | (9 | )bp | (4 | )bp | 0.29 | % | 0.30 | % | (1 | )bp | ||||||||||||||||||||||||
Allowance for Loan Losses to Ending Loans (b) |
0.61 | 0.64 | 0.67 | 0.94 | 0.90 | (3 | ) | (29 | ) | 0.61 | 0.90 | (29 | ) | |||||||||||||||||||||||||||||||
Allowance for Loan Losses to Nonperforming Loans (e) |
103 | 104 | 107 | 143 | 223 | (100 | ) | (12,000 | ) | 103 | 223 | (12,000 | ) | |||||||||||||||||||||||||||||||
Nonperforming Loans to Total Loans |
0.57 | 0.58 | 0.57 | 0.65 | 0.39 | (1 | ) | 18 | 0.57 | 0.39 | 18 | |||||||||||||||||||||||||||||||||
(a) | Reflects the transfer of certain insurance revenues from Mortgage Fees and Related Income to Asset Management, Administration and Commissions. |
|
(b) | End-of-period loans include loans held-for-sale of $13,112 million, $16,532 million, $18,022 million, $12,816 million and $14,217 million at June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004, and June 30, 2004, respectively.
These amounts are not included in the allowance coverage ratios. |
|
(c) | Includes demand and savings deposits. |
|
(d) | Average loans include loans
held-for-sale of $14,620 million, $15,861 million, $13,534 million,
$14,479 million and $15,638 million for the quarters ended June 30,
2005, March 31, 2005, December 31, 2004, September 30, 2004, and June 30, 2004,
respectively. The year-to-date average loans held-for-sale were $15,237 million
and $15,475 million for 2005 and 2004, respectively. These amounts are not
included in the net charge-off rate. |
|
(e) | Nonperforming loans include
loans held-for-sale of $26 million, $31 million, $13 million,
$74 million and $44 million at June 30, 2005, March 31,
2005, December 31, 2004, September 30, 2004, and June 30,
2004, respectively. These amounts are not included in the allowance
coverage ratios. |
Page 13
JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
RETAIL BUSINESSES |
||||||||||||||||||||||||||||||||||||||||||||
HOME FINANCE |
||||||||||||||||||||||||||||||||||||||||||||
PRIME PRODUCTION AND SERVICING |
||||||||||||||||||||||||||||||||||||||||||||
Production |
$ | 135 | $ | 228 | $ | 196 | $ | 168 | $ | 186 | (41 | )% | (27 | )% | $ | 363 | $ | 364 | | % | ||||||||||||||||||||||||
Servicing: |
||||||||||||||||||||||||||||||||||||||||||||
Mortgage Servicing Revenue, Net of Amortization |
142 | 146 | 169 | 134 | 193 | (3 | ) | (26 | ) | 288 | 348 | (17 | ) | |||||||||||||||||||||||||||||||
MSR Risk Management Results |
166 | 106 | (187 | ) | 153 | 86 | 57 | 93 | 272 | 147 | 85 | |||||||||||||||||||||||||||||||||
Total Net Revenue |
443 | 480 | 178 | 455 | 465 | (8 | ) | (5 | ) | 923 | 859 | 7 | ||||||||||||||||||||||||||||||||
Noninterest Expense |
229 | 229 | 266 | 296 | 264 | | (13 | ) | 458 | 553 | (17 | ) | ||||||||||||||||||||||||||||||||
Operating Earnings |
136 | 158 | (56 | ) | 103 | 128 | (14 | ) | 6 | 294 | 193 | 52 | ||||||||||||||||||||||||||||||||
CONSUMER REAL ESTATE LENDING |
||||||||||||||||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 707 | $ | 713 | $ | 725 | $ | 704 | $ | 512 | (1 | ) | 38 | $ | 1,420 | $ | 947 | 50 | ||||||||||||||||||||||||||
Provision for Credit Losses |
38 | 30 | (20 | ) | 65 | 38 | 27 | | 68 | 29 | 134 | |||||||||||||||||||||||||||||||||
Noninterest Expense |
234 | 238 | 283 | 264 | 172 | (2 | ) | 36 | 472 | 375 | 26 | |||||||||||||||||||||||||||||||||
Operating Earnings |
277 | 284 | 295 | 237 | 193 | (2 | ) | 44 | 561 | 349 | 61 | |||||||||||||||||||||||||||||||||
TOTAL HOME FINANCE |
||||||||||||||||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 1,150 | $ | 1,193 | $ | 903 | $ | 1,159 | $ | 977 | (4 | ) | 18 | $ | 2,343 | $ | 1,806 | 30 | ||||||||||||||||||||||||||
Provision for Credit Losses |
38 | 30 | (20 | ) | 65 | 38 | 27 | | 68 | 29 | 134 | |||||||||||||||||||||||||||||||||
Noninterest Expense |
463 | 467 | 549 | 560 | 436 | (1 | ) | 6 | 930 | 928 | | |||||||||||||||||||||||||||||||||
Operating Earnings |
413 | 442 | 239 | 340 | 321 | (7 | ) | 29 | 855 | 542 | 58 | |||||||||||||||||||||||||||||||||
Origination Volume by Channel (in billions) |
||||||||||||||||||||||||||||||||||||||||||||
Retail |
$ | 22.8 | $ | 18.3 | $ | 18.5 | $ | 19.7 | $ | 20.8 | 25 | 10 | $ | 41.1 | $ | 36.0 | 14 | |||||||||||||||||||||||||||
Wholesale |
13.2 | 10.7 | 11.7 | 11.6 | 15.7 | 23 | (16 | ) | 23.9 | 25.2 | (5 | ) | ||||||||||||||||||||||||||||||||
Correspondent |
3.6 | 2.3 | 4.2 | 5.4 | 7.9 | 57 | (54 | ) | 5.9 | 13.2 | (55 | ) | ||||||||||||||||||||||||||||||||
Correspondent Negotiated Transactions |
7.1 | 7.2 | 10.0 | 11.3 | 12.5 | (1 | ) | (43 | ) | 14.3 | 20.2 | (29 | ) | |||||||||||||||||||||||||||||||
Total |
46.7 | 38.5 | 44.4 | 48.0 | 56.9 | 21 | (18 | ) | 85.2 | 94.6 | (10 | ) | ||||||||||||||||||||||||||||||||
Origination Volume by Business (in billions) |
||||||||||||||||||||||||||||||||||||||||||||
Mortgage |
$ | 30.9 | $ | 26.6 | $ | 32.4 | $ | 34.1 | $ | 47.1 | 16 | (34 | ) | $ | 57.5 | $ | 78.1 | (26 | ) | |||||||||||||||||||||||||
Home Equity |
15.8 | 11.9 | 12.0 | 13.9 | 9.8 | 33 | 61 | 27.7 | 16.5 | 68 | ||||||||||||||||||||||||||||||||||
Total |
46.7 | 38.5 | 44.4 | 48.0 | 56.9 | 21 | (18 | ) | 85.2 | 94.6 | (10 | ) | ||||||||||||||||||||||||||||||||
Business Metrics (in billions) |
||||||||||||||||||||||||||||||||||||||||||||
Loans Serviced Mortgage (Ending) (a) |
$ | 501.7 | $ | 495.8 | $ | 492.5 | $ | 486.8 | $ | 464.6 | 1 | 8 | $ | 501.7 | $ | 464.6 | 8 | |||||||||||||||||||||||||||
MSR Net Carrying Value (Ending) |
5.0 | 5.7 | 5.1 | 5.2 | 5.7 | (12 | ) | (12 | ) | 5.0 | 5.7 | (12 | ) | |||||||||||||||||||||||||||||||
End of Period Loans Owned |
||||||||||||||||||||||||||||||||||||||||||||
Mortgage Loans Held-for-Sale |
11.2 | 9.6 | 14.2 | 9.5 | 13.6 | 17 | (18 | ) | 11.2 | 13.6 | (18 | ) | ||||||||||||||||||||||||||||||||
Mortgage Loans Retained |
47.4 | 46.0 | 42.6 | 46.5 | 40.5 | 3 | 17 | 47.4 | 40.5 | 17 | ||||||||||||||||||||||||||||||||||
Home Equity and Other Loans |
72.3 | 68.8 | 67.9 | 67.3 | 29.8 | 5 | 143 | 72.3 | 29.8 | 143 | ||||||||||||||||||||||||||||||||||
Total End of Period Loans Owned |
130.9 | 124.4 | 124.7 | 123.3 | 83.9 | 5 | 56 | 130.9 | 83.9 | 56 | ||||||||||||||||||||||||||||||||||
Average Loans Owned |
||||||||||||||||||||||||||||||||||||||||||||
Mortgage Loans Held-for-Sale |
10.5 | 11.4 | 10.1 | 10.9 | 14.6 | (8 | ) | (28 | ) | 10.9 | 13.8 | (21 | ) | |||||||||||||||||||||||||||||||
Mortgage Loans Retained |
47.0 | 44.3 | 44.6 | 44.0 | 38.2 | 6 | 23 | 45.7 | 37.0 | 24 | ||||||||||||||||||||||||||||||||||
Home Equity and Other Loans |
69.1 | 66.5 | 70.1 | 66.2 | 27.0 | 4 | 156 | 67.8 | 25.6 | 165 | ||||||||||||||||||||||||||||||||||
Total Average Loans Owned |
126.6 | 122.2 | 124.8 | 121.1 | 79.8 | 4 | 59 | 124.4 | 76.4 | 63 | ||||||||||||||||||||||||||||||||||
Overhead Ratio |
40 | % | 39 | % | 61 | % | 48 | % | 45 | % | 100 | bp | (500 | )bp | 40 | % | 51 | % | (1,100 | )bp | ||||||||||||||||||||||||
Credit Quality Statistics |
||||||||||||||||||||||||||||||||||||||||||||
30+ Day Delinquency Rate (b) |
1.17 | % | 1.15 | % | 1.27 | % | 1.50 | % | 1.18 | % | 2 | (1 | ) | 1.17 | % | 1.18 | % | (1 | ) | |||||||||||||||||||||||||
Net Charge-offs |
||||||||||||||||||||||||||||||||||||||||||||
Mortgage |
$ | 8 | $ | 6 | $ | 5 | $ | 6 | $ | 5 | 33 | % | 60 | % | $ | 14 | $ | 8 | 75 | % | ||||||||||||||||||||||||
Home Equity and Other Loans |
30 | 35 | 449 | 57 | 23 | (14 | ) | 30 | 65 | 48 | 35 | |||||||||||||||||||||||||||||||||
Total Net Charge-offs |
38 | 41 | 454 | 63 | 28 | (7 | ) | 36 | 79 | 56 | 41 | |||||||||||||||||||||||||||||||||
Net Charge-off Rate |
||||||||||||||||||||||||||||||||||||||||||||
Mortgage |
0.07 | % | 0.05 | % | 0.04 | % | 0.05 | % | 0.05 | % | 2 | bp | 2 | bp | 0.06 | % | 0.04 | % | 2 | bp | ||||||||||||||||||||||||
Home Equity and Other Loans |
0.17 | 0.21 | 2.55 | 0.34 | 0.34 | (4 | ) | (17 | ) | 0.19 | 0.38 | (19 | ) | |||||||||||||||||||||||||||||||
Total Net Charge-off Rate (c) |
0.13 | 0.15 | 1.57 | 0.23 | 0.17 | (2 | ) | (4 | ) | 0.14 | 0.18 | (4 | ) | |||||||||||||||||||||||||||||||
Nonperforming Assets |
$ | 799 | $ | 841 | $ | 844 | $ | 997 | $ | 468 | (5 | )% | 71 | % | $ | 799 | $ | 468 | 71 | % | ||||||||||||||||||||||||
(a) | Includes prime first mortgage loans and subprime loans. |
|
(b) | Excludes delinquencies related to loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by government agencies of $0.7 billion, $0.7 billion, $0.9 billion, $0.9 billion, and $1.1 billion for June 30, 2005,
March 31, 2005, December 31, 2004, September 30, 2004 and June 30, 2004 respectively. These amounts are excluded as reimbursement is proceeding normally. |
|
(c) | Excludes mortgage loans held for sale. |
Page 14
JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) |
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Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
RETAIL BUSINESSES, CONTINUED |
||||||||||||||||||||||||||||||||||||||||||||
CONSUMER & SMALL BUSINESS BANKING |
||||||||||||||||||||||||||||||||||||||||||||
Noninterest Revenue |
$ | 741 | $ | 729 | $ | 710 | $ | 734 | $ | 222 | 2 | % | 234 | % | $ | 1,470 | $ | 420 | 250 | % | ||||||||||||||||||||||||
Net Interest Income |
1,364 | 1,428 | 1,395 | 1,342 | 393 | (4 | ) | 247 | 2,792 | 784 | 256 | |||||||||||||||||||||||||||||||||
Total Net Revenue |
2,105 | 2,157 | 2,105 | 2,076 | 615 | (2 | ) | 242 | 4,262 | 1,204 | 254 | |||||||||||||||||||||||||||||||||
Provision for Credit Losses |
25 | 36 | 39 | 79 | 20 | (31 | ) | 25 | 61 | 47 | 30 | |||||||||||||||||||||||||||||||||
Noninterest Expense |
1,362 | 1,339 | 1,362 | 1,379 | 593 | 2 | 130 | 2,701 | 1,240 | 118 | ||||||||||||||||||||||||||||||||||
Operating Earnings (Loss) |
437 | 477 | 430 | 377 | 2 | (8 | ) | NM | 914 | (47 | ) | NM | ||||||||||||||||||||||||||||||||
Business Metrics (in billions) |
||||||||||||||||||||||||||||||||||||||||||||
End-of-Period
Balances Small Business Loans |
$ | 12.5 | $ | 12.4 | $ | 12.5 | $ | 12.4 | $ | 2.2 | 1 | 468 | $ | 12.5 | $ | 2.2 | 468 | |||||||||||||||||||||||||||
Consumer and Other Loans (a) |
1.8 | 2.2 | 2.2 | 2.3 | 1.9 | (18 | ) | (5 | ) | 1.8 | 1.9 | (5 | ) | |||||||||||||||||||||||||||||||
Total Loans |
14.3 | 14.6 | 14.7 | 14.7 | 4.1 | (2 | ) | 249 | 14.3 | 4.1 | 249 | |||||||||||||||||||||||||||||||||
Core Deposits (b) |
147.9 | 150.8 | 146.3 | 144.5 | 69.7 | (2 | ) | 112 | 147.9 | 69.7 | 112 | |||||||||||||||||||||||||||||||||
Total Deposits |
173.7 | 175.7 | 171.8 | 170.2 | 79.5 | (1 | ) | 118 | 173.7 | 79.5 | 118 | |||||||||||||||||||||||||||||||||
Average Balances |
||||||||||||||||||||||||||||||||||||||||||||
Small Business Loans |
12.4 | 12.4 | 12.4 | 12.4 | 2.2 | | 464 | 12.4 | 2.2 | 464 | ||||||||||||||||||||||||||||||||||
Consumer and Other Loans (a) |
1.9 | 2.6 | 2.2 | 2.3 | 1.9 | (27 | ) | | 2.3 | 2.0 | 15 | |||||||||||||||||||||||||||||||||
Total Loans |
14.3 | 15.0 | 14.6 | 14.7 | 4.1 | (5 | ) | 249 | 14.7 | 4.2 | 250 | |||||||||||||||||||||||||||||||||
Core Deposits (b) |
149.3 | 149.3 | 147.8 | 147.8 | 72.1 | | 107 | 149.3 | 71.1 | 110 | ||||||||||||||||||||||||||||||||||
Total Deposits |
174.8 | 173.9 | 171.8 | 172.5 | 80.7 | 1 | 117 | 174.4 | 79.8 | 119 | ||||||||||||||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||||||
Branches |
2,539 | 2,517 | 2,508 | 2,467 | 569 | 22 | # | 1,970 | # | 2,539 | 569 | 1,970 | # | |||||||||||||||||||||||||||||||
ATMs |
6,961 | 6,687 | 6,650 | 6,587 | 1,921 | 274 | 5,040 | 6,961 | 1,921 | 5,040 | ||||||||||||||||||||||||||||||||||
Personal Bankers |
6,258 | 5,798 | 5,750 | 5,744 | 1,705 | 460 | 4,553 | 6,258 | 1,705 | 4,553 | ||||||||||||||||||||||||||||||||||
Personal Checking Accounts (in thousands) |
7,662 | 7,445 | 7,286 | 7,222 | 1,982 | 217 | 5,680 | 7,662 | 1,982 | 5,680 | ||||||||||||||||||||||||||||||||||
Business Checking Accounts (in thousands) |
918 | 905 | 894 | 891 | 352 | 13 | 566 | 918 | 352 | 566 | ||||||||||||||||||||||||||||||||||
Active Online Customers (in thousands) |
4,053 | 3,671 | 3,359 | 3,152 | NA | 382 | NM | 4,053 | NA | NM | ||||||||||||||||||||||||||||||||||
Debit Cards Issued (in thousands) |
8,834 | 8,596 | 8,392 | 8,282 | 2,430 | 238 | 6,404 | 8,834 | 2,430 | 6,404 | ||||||||||||||||||||||||||||||||||
Overhead Ratio |
65 | % | 62 | % | 65 | % | 66 | % | 96 | % | 300 | bp | (3,100 | )bp | 63 | % | 103 | % | (4,000 | )bp | ||||||||||||||||||||||||
Retail Brokerage Business Metrics |
||||||||||||||||||||||||||||||||||||||||||||
Investment Sales Volume |
$ | 2,907 | $ | 2,870 | $ | 2,770 | $ | 2,563 | $ | 1,047 | 1 | % | 178 | % | $ | 5,777 | $ | 1,991 | 190 | % | ||||||||||||||||||||||||
Number of Dedicated Investment Sales Representatives |
1,422 | 1,352 | 1,364 | 1,393 | 390 | 5 | 265 | 1,422 | 390 | 265 | ||||||||||||||||||||||||||||||||||
Credit Quality Statistics |
||||||||||||||||||||||||||||||||||||||||||||
Net Charge-offs |
||||||||||||||||||||||||||||||||||||||||||||
Small Business |
$ | 25 | $ | 19 | $ | 32 | $ | 24 | $ | 12 | 32 | 108 | $ | 44 | $ | 21 | 110 | |||||||||||||||||||||||||||
Consumer and Other Loans |
4 | 9 | 24 | 36 | 9 | (56 | ) | (56 | ) | 13 | 17 | (24 | ) | |||||||||||||||||||||||||||||||
Total Net Charge-Offs |
29 | 28 | 56 | 60 | 21 | 4 | 38 | 57 | 38 | 50 | ||||||||||||||||||||||||||||||||||
Net Charge-off Rate |
||||||||||||||||||||||||||||||||||||||||||||
Small Business |
0.81 | % | 0.62 | % | 1.03 | % | 0.77 | % | 2.19 | % | 19 | bp | (138 | )bp | 0.72 | % | 1.92 | % | (120 | )bp | ||||||||||||||||||||||||
Consumer and Other Loans |
0.84 | 1.40 | 4.34 | 6.23 | 1.91 | (56 | ) | (107 | ) | 1.14 | 1.71 | (57 | ) | |||||||||||||||||||||||||||||||
Total Net Charge-Off Rate |
0.81 | 0.76 | 1.53 | 1.62 | 2.06 | 5 | (125 | ) | 0.78 | 1.82 | (104 | ) | ||||||||||||||||||||||||||||||||
Nonperforming Assets |
$ | 284 | $ | 293 | $ | 299 | $ | 313 | $ | 85 | (3 | )% | 234 | % | $ | 284 | $ | 85 | 234 | % | ||||||||||||||||||||||||
(a) | Primarily community development loans. |
|
(b) | Includes demand and savings deposits. |
Page 15
JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
RETAIL BUSINESSES |
||||||||||||||||||||||||||||||||||||||||||||
AUTO & EDUCATION FINANCE |
||||||||||||||||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 395 | $ | 324 | $ | 364 | $ | 397 | $ | 218 | 22 | % | 81 | % | $ | 719 | $ | 384 | 87 | % | ||||||||||||||||||||||||
Provision for Credit Losses |
31 | 28 | 59 | 95 | 20 | 11 | 55 | 59 | 56 | 5 | ||||||||||||||||||||||||||||||||||
Noninterest Expense |
170 | 205 | 166 | 163 | 80 | (17 | ) | 113 | 375 | 161 | 133 | |||||||||||||||||||||||||||||||||
Operating Earnings |
118 | 55 | 84 | 85 | 71 | 115 | 66 | 173 | 101 | 71 | ||||||||||||||||||||||||||||||||||
Business Metrics (in billions) |
||||||||||||||||||||||||||||||||||||||||||||
End-of-Period Loans and Lease Receivables |
||||||||||||||||||||||||||||||||||||||||||||
Loans Outstanding |
$ | 46.2 | $ | 52.8 | $ | 54.6 | $ | 53.7 | $ | 34.9 | (13 | ) | 32 | $ | 46.2 | $ | 34.9 | 32 | ||||||||||||||||||||||||||
Lease Receivables |
6.1 | 7.0 | 8.0 | 8.9 | 8.6 | (13 | ) | (29 | ) | 6.1 | 8.6 | (29 | ) | |||||||||||||||||||||||||||||||
Total End-of-Period Loans and Lease Receivables |
52.3 | 59.8 | 62.6 | 62.6 | 43.5 | (13 | ) | 20 | 52.3 | 43.5 | 20 | |||||||||||||||||||||||||||||||||
Average Loans and Lease Receivables |
||||||||||||||||||||||||||||||||||||||||||||
Loans Outstanding (Average) (a) |
$ | 49.8 | $ | 53.3 | $ | 54.2 | $ | 52.9 | $ | 35.2 | (7 | ) | 41 | $ | 51.5 | $ | 35.1 | 47 | ||||||||||||||||||||||||||
Lease Receivables (Average) |
6.6 | 7.6 | 8.4 | 9.2 | 8.9 | (13 | ) | (26 | ) | 7.1 | 9.1 | (22 | ) | |||||||||||||||||||||||||||||||
Total Average Loans and Lease Receivables (a) |
56.4 | 60.9 | 62.6 | 62.1 | 44.1 | (7 | ) | 28 | 58.6 | 44.2 | 33 | |||||||||||||||||||||||||||||||||
Overhead Ratio |
43 | % | 63 | % | 46 | % | 41 | % | 37 | % | (2,000 | )bp | 600 | bp | 52 | % | 42 | % | 1,000 | bp | ||||||||||||||||||||||||
Credit Quality Statistics |
||||||||||||||||||||||||||||||||||||||||||||
30+ Day Delinquency Rate |
1.46 | % | 1.33 | % | 1.55 | % | 1.38 | % | 1.04 | % | 13 | 42 | 1.46 | % | 1.04 | % | 42 | |||||||||||||||||||||||||||
Net Charge-offs |
||||||||||||||||||||||||||||||||||||||||||||
Loans |
$ | 45 | $ | 74 | $ | 85 | $ | 83 | $ | 23 | (39 | )% | 96 | % | $ | 119 | $ | 51 | 133 | % | ||||||||||||||||||||||||
Lease Receivables |
2 | 9 | 11 | 13 | 8 | (78 | ) | (75 | ) | 11 | 20 | (45 | ) | |||||||||||||||||||||||||||||||
Total Net Charge-offs |
47 | 83 | 96 | 96 | 31 | (43 | ) | 52 | 130 | 71 | 83 | |||||||||||||||||||||||||||||||||
Net Charge-off Rate
Loans (a) |
0.39 | % | 0.61 | % | 0.67 | % | 0.65 | % | 0.27 | % | (22 | )bp | 12 | bp | 0.51 | % | 0.31 | % | 20 | bp | ||||||||||||||||||||||||
Lease Receivables |
0.12 | 0.48 | 0.52 | 0.56 | 0.36 | (36 | ) | (24 | ) | 0.31 | 0.44 | (13 | ) | |||||||||||||||||||||||||||||||
Total Net Charge-off Rate (a) |
0.36 | 0.60 | 0.65 | 0.64 | 0.29 | (24 | ) | 7 | 0.48 | 0.34 | 14 | |||||||||||||||||||||||||||||||||
Nonperforming Assets |
$ | 236 | $ | 217 | $ | 242 | $ | 247 | $ | 140 | 9 | % | 69 | % | $ | 236 | $ | 140 | 69 | % | ||||||||||||||||||||||||
INSURANCE |
||||||||||||||||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 149 | $ | 173 | $ | 173 | $ | 168 | $ | 25 | (14 | ) | 496 | $ | 322 | $ | 52 | NM | ||||||||||||||||||||||||||
Noninterest Expense |
131 | 151 | 138 | 136 | 22 | (13 | ) | 495 | 282 | 43 | NM | |||||||||||||||||||||||||||||||||
Operating Earnings |
12 | 14 | 22 | 20 | 2 | (14 | ) | 500 | 26 | 6 | 333 | |||||||||||||||||||||||||||||||||
Memo: |
||||||||||||||||||||||||||||||||||||||||||||
Consolidated Gross Insurance-Related Revenue (b) |
404 | 416 | 421 | 429 | 165 | (3 | ) | 145 | 820 | 341 | 140 | |||||||||||||||||||||||||||||||||
Business Metrics Ending Balances |
||||||||||||||||||||||||||||||||||||||||||||
Invested Assets |
$ | 7,641 | $ | 7,349 | $ | 7,368 | $ | 7,489 | $ | 1,729 | 4 | 342 | $ | 7,641 | $ | 1,729 | 342 | |||||||||||||||||||||||||||
Policy Loans |
394 | 394 | 397 | 398 | | | NM | 394 | | NM | ||||||||||||||||||||||||||||||||||
Insurance Policy and Claims Reserves |
7,562 | 7,337 | 7,279 | 7,477 | 1,255 | 3 | NM | 7,562 | 1,255 | NM | ||||||||||||||||||||||||||||||||||
Term Life Premiums First Year Annualized |
16 | 14 | 13 | 15 | | 14 | NM | 30 | | NM | ||||||||||||||||||||||||||||||||||
Term Life Premiums First Year Annualized and Renewals |
122 | 110 | 119 | 115 | | 11 | NM | 232 | | NM | ||||||||||||||||||||||||||||||||||
Proprietary Annuity Sales |
282 | 119 | 35 | 39 | 58 | 137 | 386 | 401 | 134 | 199 | ||||||||||||||||||||||||||||||||||
Number of Policies in Force Direct / Assumed (in thousands) |
2,454 | 2,540 | 2,611 | 2,633 | 608 | (3 | ) | 304 | 2,454 | 608 | 304 | |||||||||||||||||||||||||||||||||
Insurance in Force Direct / Assumed |
280,176 | 280,082 | 277,827 | 274,390 | 33,772 | | NM | 280,176 | 33,772 | NM | ||||||||||||||||||||||||||||||||||
Insurance in Force Retained |
83,324 | 83,799 | 80,691 | 76,727 | 33,772 | (1 | ) | 147 | 83,324 | 33,772 | 147 | |||||||||||||||||||||||||||||||||
A.M. Best Rating |
A | A | A | A | A | A | A | |||||||||||||||||||||||||||||||||||||
(a) | Average loans include loans held-for-sale of $4.1 billion, $4.5 billion, $3.4 billion, $2.2 billion and $1.1 billion for the quarters ended June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004, and June 30, 2004, respectively.
The year-to-date average loans held-for-sale were $4.3 billion and $1.7 billion for 2005 and 2004, respectively. These are not included in the net charge-off rate. |
|
(b) | Includes revenue reported in the results of other businesses. |
Page 16
JPMORGAN CHASE & CO. CARD SERVICES MANAGED BASIS FINANCIAL HIGHLIGHTS (in millions, except ratio data and where otherwise noted) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||
Asset Management, Administration and Commissions |
$ | | $ | | $ | | $ | 26 | $ | 25 | NM | NM | $ | | $ | 49 | NM | |||||||||||||||||||||||||||
Credit Card Income |
868 | 761 | 886 | 784 | 271 | 14 | % | 220 | % | 1,629 | 509 | 220 | % | |||||||||||||||||||||||||||||||
Other Income |
42 | 11 | 31 | 44 | 20 | 282 | 110 | 53 | 42 | 26 | ||||||||||||||||||||||||||||||||||
Noninterest Revenue |
910 | 772 | 917 | 854 | 316 | 18 | 188 | 1,682 | 600 | 180 | ||||||||||||||||||||||||||||||||||
Net Interest Income |
2,976 | 3,007 | 2,913 | 2,917 | 1,271 | (1 | ) | 134 | 5,983 | 2,544 | 135 | |||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
3,886 | 3,779 | 3,830 | 3,771 | 1,587 | 3 | 145 | 7,665 | 3,144 | 144 | ||||||||||||||||||||||||||||||||||
Provision for Credit Losses |
1,641 | 1,636 | 1,735 | 1,662 | 748 | | 119 | 3,277 | 1,454 | 125 | ||||||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
291 | 285 | 270 | 317 | 150 | 2 | 94 | 576 | 306 | 88 | ||||||||||||||||||||||||||||||||||
Noncompensation Expense |
904 | 839 | 825 | 926 | 353 | 8 | 156 | 1,743 | 734 | 137 | ||||||||||||||||||||||||||||||||||
Amortization of Intangibles |
188 | 189 | 187 | 194 | 62 | (1 | ) | 203 | 377 | 124 | 204 | |||||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,383 | 1,313 | 1,282 | 1,437 | 565 | 5 | 145 | 2,696 | 1,164 | 132 | ||||||||||||||||||||||||||||||||||
Operating Earnings Before Income Tax Expense |
862 | 830 | 813 | 672 | 274 | 4 | 215 | 1,692 | 526 | 222 | ||||||||||||||||||||||||||||||||||
Income Tax Expense |
320 | 308 | 298 | 251 | 98 | 4 | 227 | 628 | 188 | 234 | ||||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 542 | $ | 522 | $ | 515 | $ | 421 | $ | 176 | 4 | 208 | $ | 1,064 | $ | 338 | 215 | |||||||||||||||||||||||||||
Memo: Net Securitization Gains (Amortization) |
$ | 15 | $ | (12 | ) | $ | | $ | (2 | ) | $ | (4 | ) | NM | NM | $ | 3 | $ | (6 | ) | NM | |||||||||||||||||||||||
FINANCIAL METRICS |
||||||||||||||||||||||||||||||||||||||||||||
ROE |
18 | % | 18 | % | 17 | % | 14 | % | 21 | % | | bp | (300 | )bp | 18 | % | 20 | % | (200 | )bp | ||||||||||||||||||||||||
Overhead Ratio |
36 | 35 | 33 | 38 | 36 | 100 | | 35 | 37 | (200 | ) | |||||||||||||||||||||||||||||||||
% of Average Managed Outstandings: |
||||||||||||||||||||||||||||||||||||||||||||
Net Interest Income |
8.83 | 9.13 | 8.79 | 8.90 | 9.98 | (30 | ) | (115 | ) | 8.98 | 9.97 | (99 | ) | |||||||||||||||||||||||||||||||
Provision for Credit Losses |
4.87 | 4.97 | 5.24 | 5.07 | 5.88 | (10 | ) | (101 | ) | 4.92 | 5.70 | (78 | ) | |||||||||||||||||||||||||||||||
Noninterest Revenue |
2.70 | 2.34 | 2.77 | 2.61 | 2.48 | 36 | 22 | 2.52 | 2.35 | 17 | ||||||||||||||||||||||||||||||||||
Risk Adjusted Margin (a) |
6.66 | 6.51 | 6.32 | 6.44 | 6.59 | 15 | 7 | 6.58 | 6.62 | (4 | ) | |||||||||||||||||||||||||||||||||
Noninterest Expense |
4.10 | 3.99 | 3.87 | 4.39 | 4.44 | 11 | (34 | ) | 4.05 | 4.56 | (51 | ) | ||||||||||||||||||||||||||||||||
Pre-tax Income |
2.56 | 2.52 | 2.45 | 2.05 | 2.15 | 4 | 41 | 2.54 | 2.06 | 48 | ||||||||||||||||||||||||||||||||||
Operating Earnings |
1.61 | 1.58 | 1.55 | 1.28 | 1.38 | 3 | 23 | 1.60 | 1.32 | 28 | ||||||||||||||||||||||||||||||||||
BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||||||
Charge Volume (in billions) |
$ | 75.6 | $ | 70.3 | $ | 75.3 | $ | 73.3 | $ | 23.5 | 8 | % | 222 | % | $ | 145.9 | $ | 45.0 | 224 | % | ||||||||||||||||||||||||
Net Accounts Opened (in thousands) |
2,789 | 2,744 | 2,729 | 2,755 | 1,013 | 2 | 175 | 5,533 | 2,039 | 171 | ||||||||||||||||||||||||||||||||||
Credit Cards Issued (in thousands) |
95,465 | 94,367 | 94,285 | 95,946 | 35,529 | 1 | 169 | 95,465 | 35,529 | 169 | ||||||||||||||||||||||||||||||||||
Number of Registered Internet Customers (in millions) |
12.0 | 10.9 | 13.6 | 12.4 | 4.5 | 10 | 167 | 12.0 | 4.5 | 167 | ||||||||||||||||||||||||||||||||||
Merchant Acquiring Business
Bank Card Volume (in billions) |
$ | 141.2 | $ | 125.1 | $ | 135.9 | $ | 123.5 | $ | 71.8 | 13 | 97 | $ | 266.3 | $ | 136.8 | 95 | |||||||||||||||||||||||||||
Total Transactions (in millions) |
4,735 | 4,285 | 4,462 | 3,972 | 1,875 | 11 | 153 | 9,020 | 3,632 | 148 | ||||||||||||||||||||||||||||||||||
(a) | Represents Total net revenue less Provision for credit losses. |
Page 17
JPMORGAN CHASE & CO. CARD SERVICES MANAGED BASIS FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except headcount and ratio data) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
SELECTED ENDING BALANCES |
||||||||||||||||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||||||
Loans on Balance Sheets |
$ | 68,510 | $ | 66,053 | $ | 64,575 | $ | 60,241 | $ | 17,182 | 4 | % | 299 | % | $ | 68,510 | $ | 17,182 | 299 | % | ||||||||||||||||||||||||
Securitized Loans |
68,808 | 67,328 | 70,795 | 71,256 | 34,138 | 2 | 102 | 68,808 | 34,138 | 102 | ||||||||||||||||||||||||||||||||||
Managed Loans |
$ | 137,318 | $ | 133,381 | $ | 135,370 | $ | 131,497 | $ | 51,320 | 3 | 168 | $ | 137,318 | $ | 51,320 | 168 | |||||||||||||||||||||||||||
SELECTED AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||||||
Managed Assets |
$ | 140,741 | $ | 138,512 | $ | 138,013 | $ | 136,753 | $ | 51,510 | 2 | 173 | $ | 139,632 | $ | 51,630 | 170 | |||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||||||
Loans on Balance Sheets |
$ | 67,131 | $ | 64,218 | $ | 61,317 | $ | 59,386 | $ | 17,155 | 5 | 291 | $ | 65,683 | $ | 17,096 | 284 | |||||||||||||||||||||||||||
Securitized Loans |
68,075 | 69,370 | 70,505 | 70,980 | 34,052 | (2 | ) | 100 | 68,718 | 34,239 | 101 | |||||||||||||||||||||||||||||||||
Managed Loans |
$ | 135,206 | $ | 133,588 | $ | 131,822 | $ | 130,366 | $ | 51,207 | 1 | 164 | $ | 134,401 | $ | 51,335 | 162 | |||||||||||||||||||||||||||
Equity |
11,800 | 11,800 | 11,800 | 11,800 | 3,346 | | 253 | 11,800 | 3,369 | 250 | ||||||||||||||||||||||||||||||||||
Headcount |
20,647 | 20,137 | 19,598 | 20,473 | 9,975 | 3 | % | 107 | % | 20,647 | 9,975 | 107 | % | |||||||||||||||||||||||||||||||
CREDIT QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||||||
Net Charge-offs |
$ | 1,641 | $ | 1,590 | $ | 1,735 | $ | 1,598 | $ | 745 | 3 | 120 | $ | 3,231 | $ | 1,488 | 117 | |||||||||||||||||||||||||||
Net Charge-off Rate |
4.87 | % | 4.83 | % | 5.24 | % | 4.88 | % | 5.85 | % | 4 | bp | (98 | )bp | 4.85 | % | 5.83 | % | (98 | )bp | ||||||||||||||||||||||||
Delinquency ratios |
||||||||||||||||||||||||||||||||||||||||||||
30+ days |
3.34 | % | 3.54 | % | 3.70 | % | 3.81 | % | 4.26 | % | (20 | ) | (92 | ) | 3.34 | % | 4.26 | % | (92 | ) | ||||||||||||||||||||||||
90+ days |
1.54 | 1.71 | 1.72 | 1.75 | 1.94 | (17 | ) | (40 | ) | 1.54 | 1.94 | (40 | ) | |||||||||||||||||||||||||||||||
Allowance for Loan Losses |
$ | 3,055 | $ | 3,040 | $ | 2,994 | $ | 2,273 | $ | 1,191 | | % | 157 | % | $ | 3,055 | $ | 1,191 | 157 | % | ||||||||||||||||||||||||
Allowance for Loan Losses to Period-end Loans (a) |
4.46 | % | 4.60 | % | 4.64 | % | 3.77 | % | 6.93 | % | (14 | )bp | (247 | )bp | 4.46 | % | 6.93 | % | (247 | )bp | ||||||||||||||||||||||||
(a) | The heritage Bank One sellers interest was decertificated effective July 1, 2004, and is reported in Loans on the Consolidated balance sheets. As a result, the Allowance for Loan Losses to Period-end Loans ratio beginning September 30, 2004,
declined as the remaining portion of the decertificated sellers interest was recorded at fair value without a corresponding allowance for loan loss. |
Page 18
JPMORGAN CHASE & CO. CARD RECONCILIATION OF REPORTED AND MANAGED DATA (in millions) |
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Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
INCOME STATEMENT DATA (a) |
||||||||||||||||||||||||||||||||||||||||||||
Credit Card Income |
||||||||||||||||||||||||||||||||||||||||||||
Reported Data for the period |
$ | 1,596 | $ | 1,576 | $ | 1,672 | $ | 1,632 | $ | 578 | 1 | % | 176 | % | $ | 3,172 | $ | 1,142 | 178 | % | ||||||||||||||||||||||||
Securitization Adjustments |
(728 | ) | (815 | ) | (786 | ) | (848 | ) | (307 | ) | 11 | (137 | ) | (1,543 | ) | (633 | ) | (144 | ) | |||||||||||||||||||||||||
Managed Credit Card Income |
$ | 868 | $ | 761 | $ | 886 | $ | 784 | $ | 271 | 14 | 220 | $ | 1,629 | $ | 509 | 220 | |||||||||||||||||||||||||||
Other Income |
||||||||||||||||||||||||||||||||||||||||||||
Reported Data for the Period |
$ | 42 | $ | 11 | $ | 30 | $ | 47 | $ | 65 | 282 | (35 | ) | $ | 53 | $ | 126 | (58 | ) | |||||||||||||||||||||||||
Securitization Adjustments |
| | 1 | (3 | ) | (45 | ) | NM | NM | | (84 | ) | NM | |||||||||||||||||||||||||||||||
Managed Other Income |
$ | 42 | $ | 11 | $ | 31 | $ | 44 | $ | 20 | 282 | 110 | $ | 53 | $ | 42 | 26 | |||||||||||||||||||||||||||
Net Interest Income |
||||||||||||||||||||||||||||||||||||||||||||
Reported Data for the Period |
$ | 1,318 | $ | 1,275 | $ | 1,117 | $ | 1,138 | $ | 433 | 3 | 204 | $ | 2,593 | $ | 868 | 199 | |||||||||||||||||||||||||||
Securitization Adjustments |
1,658 | 1,732 | 1,796 | 1,779 | 838 | (4 | ) | 98 | 3,390 | 1,676 | 102 | |||||||||||||||||||||||||||||||||
Managed Net Interest Income |
$ | 2,976 | $ | 3,007 | $ | 2,913 | $ | 2,917 | $ | 1,271 | (1 | ) | 134 | $ | 5,983 | $ | 2,544 | 135 | ||||||||||||||||||||||||||
Total Net Revenue (b) |
||||||||||||||||||||||||||||||||||||||||||||
Reported Data for the Period |
$ | 2,956 | $ | 2,862 | $ | 2,819 | $ | 2,843 | $ | 1,101 | 3 | 168 | $ | 5,818 | $ | 2,185 | 166 | |||||||||||||||||||||||||||
Securitization Adjustments |
930 | 917 | 1,011 | 928 | 486 | 1 | 91 | 1,847 | 959 | 93 | ||||||||||||||||||||||||||||||||||
Managed Total Net Revenue |
$ | 3,886 | $ | 3,779 | $ | 3,830 | $ | 3,771 | $ | 1,587 | 3 | 145 | $ | 7,665 | $ | 3,144 | 144 | |||||||||||||||||||||||||||
Provision for Credit Losses |
||||||||||||||||||||||||||||||||||||||||||||
Reported Data for the Period |
$ | 711 | $ | 719 | $ | 724 | $ | 734 | $ | 262 | (1 | ) | 171 | $ | 1,430 | $ | 495 | 189 | ||||||||||||||||||||||||||
Securitization Adjustments |
930 | 917 | 1,011 | 928 | 486 | 1 | 91 | 1,847 | 959 | 93 | ||||||||||||||||||||||||||||||||||
Managed Provision for Credit Losses |
$ | 1,641 | $ | 1,636 | $ | 1,735 | $ | 1,662 | $ | 748 | | 119 | $ | 3,277 | $ | 1,454 | 125 | |||||||||||||||||||||||||||
BALANCE SHEETS AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||||||
Total Average Assets |
||||||||||||||||||||||||||||||||||||||||||||
Reported Data for the Period |
$ | 74,515 | $ | 71,003 | $ | 69,485 | $ | 67,718 | $ | 18,484 | 5 | 303 | $ | 72,768 | $ | 18,439 | 295 | |||||||||||||||||||||||||||
Securitization Adjustments |
66,226 | 67,509 | 68,528 | 69,035 | 33,026 | (2 | ) | 101 | 66,864 | 33,191 | 101 | |||||||||||||||||||||||||||||||||
Managed Average Assets |
$ | 140,741 | $ | 138,512 | $ | 138,013 | $ | 136,753 | $ | 51,510 | 2 | 173 | $ | 139,632 | $ | 51,630 | 170 | |||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||||||
Net Charge-offs (Recoveries) |
||||||||||||||||||||||||||||||||||||||||||||
Reported Net Charge-offs Data for the period |
$ | 711 | $ | 673 | $ | 724 | $ | 670 | $ | 259 | 6 | 175 | $ | 1,384 | $ | 529 | 162 | |||||||||||||||||||||||||||
Securitization Adjustments |
930 | 917 | 1,011 | 928 | 486 | 1 | 91 | 1,847 | 959 | 93 | ||||||||||||||||||||||||||||||||||
Managed Net Charge-offs |
$ | 1,641 | $ | 1,590 | $ | 1,735 | $ | 1,598 | $ | 745 | 3 | 120 | $ | 3,231 | $ | 1,488 | 117 | |||||||||||||||||||||||||||
(a) | JPMorgan Chase uses the concept of managed receivables to evaluate the credit performance and overall financial performance of the underlying credit card loans, both sold and not sold: as the same borrower is continuing to use
the credit card for ongoing charges, a borrowers credit performance will affect both the loan receivables sold under SFAS 140 and those not sold. Thus, in its disclosures regarding managed loan receivables, JPMorgan Chase treats
the sold receivables as if they were still on the balance sheet in order to disclose the credit performance (such as net charge-off rates) of the entire managed credit card portfolio. Operating results exclude the impact of credit card
securitizations on Total net revenue, the Provision for credit losses, net charge-offs and loan receivables. Securitization does not change reported net income versus operating earnings; however, it does affect the classification of items
on the Consolidated statements of income. |
|
(b) | Includes Credit Card Income, Other Income and Net Interest Income. |
Page 19
JPMORGAN CHASE & CO. COMMERCIAL BANKING FINANCIAL HIGHLIGHTS (in millions, except ratio and headcount data) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||
Lending & Deposit Related Fees |
$ | 143 | $ | 142 | $ | 147 | $ | 162 | $ | 67 | 1 | % | 113 | % | $ | 285 | $ | 132 | 116 | % | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
15 | 15 | 12 | 12 | 4 | | 275 | 30 | 8 | 275 | ||||||||||||||||||||||||||||||||||
Other Income (a) |
94 | 68 | 103 | 51 | 29 | 38 | 224 | 162 | 55 | 195 | ||||||||||||||||||||||||||||||||||
Noninterest Revenue |
252 | 225 | 262 | 225 | 100 | 12 | 152 | 477 | 195 | 145 | ||||||||||||||||||||||||||||||||||
Net Interest Income |
648 | 625 | 623 | 608 | 234 | 4 | 177 | 1,273 | 461 | 176 | ||||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
900 | 850 | 885 | 833 | 334 | 6 | 169 | 1,750 | 656 | 167 | ||||||||||||||||||||||||||||||||||
Provision for Credit Losses |
142 | (6 | ) | 21 | 14 | 19 | NM | NM | 136 | 6 | NM | |||||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
160 | 163 | 153 | 176 | 65 | (2 | ) | 146 | 323 | 136 | 138 | |||||||||||||||||||||||||||||||||
Noncompensation Expense |
296 | 278 | 281 | 286 | 138 | 6 | 114 | 574 | 276 | 108 | ||||||||||||||||||||||||||||||||||
Amortization of Intangibles |
17 | 17 | 17 | 18 | | | NM | 34 | | NM | ||||||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
473 | 458 | 451 | 480 | 203 | 3 | 133 | 931 | 412 | 126 | ||||||||||||||||||||||||||||||||||
Operating Earnings Before Income Tax Expense |
285 | 398 | 413 | 339 | 112 | (28 | ) | 154 | 683 | 238 | 187 | |||||||||||||||||||||||||||||||||
Income Tax Expense |
111 | 155 | 159 | 124 | 47 | (28 | ) | 136 | 266 | 99 | 169 | |||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 174 | $ | 243 | $ | 254 | $ | 215 | $ | 65 | (28 | ) | 168 | $ | 417 | $ | 139 | 200 | ||||||||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||||||
Revenue by Product: |
||||||||||||||||||||||||||||||||||||||||||||
Lending |
$ | 285 | $ | 269 | $ | 280 | $ | 314 | $ | 86 | 6 | 231 | $ | 554 | $ | 170 | 226 | |||||||||||||||||||||||||||
Treasury Services |
558 | 542 | 528 | 499 | 221 | 3 | 152 | 1,100 | 440 | 150 | ||||||||||||||||||||||||||||||||||
Investment Banking |
62 | 40 | 61 | 24 | 20 | 55 | 210 | 102 | 35 | 191 | ||||||||||||||||||||||||||||||||||
Other |
(5 | ) | (1 | ) | 16 | (4 | ) | 7 | (400 | ) | NM | (6 | ) | 11 | NM | |||||||||||||||||||||||||||||
Total Commercial Banking Revenue |
$ | 900 | $ | 850 | $ | 885 | $ | 833 | $ | 334 | 6 | 169 | $ | 1,750 | $ | 656 | 167 | |||||||||||||||||||||||||||
Revenue by Business: |
||||||||||||||||||||||||||||||||||||||||||||
Middle Market |
$ | 594 | $ | 572 | $ | 571 | $ | 551 | $ | 192 | 4 | 209 | $ | 1,166 | $ | 377 | 209 | |||||||||||||||||||||||||||
Corporate Banking |
138 | 123 | 142 | 109 | 59 | 12 | 134 | 261 | 116 | 125 | ||||||||||||||||||||||||||||||||||
Real Estate |
131 | 119 | 133 | 123 | 60 | 10 | 118 | 250 | 112 | 123 | ||||||||||||||||||||||||||||||||||
Other |
37 | 36 | 39 | 50 | 23 | 3 | 61 | 73 | 51 | 43 | ||||||||||||||||||||||||||||||||||
Total Commercial Banking Revenue |
$ | 900 | $ | 850 | $ | 885 | $ | 833 | $ | 334 | 6 | 169 | $ | 1,750 | $ | 656 | 167 | |||||||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||||||
ROE |
21 | % | 29 | % | 30 | % | 25 | % | 35 | % | (800 | )bp | (1,400 | )bp | 25 | % | 36 | % | (1,100 | )bp | ||||||||||||||||||||||||
ROA |
1.25 | 1.79 | 1.81 | 1.53 | 1.51 | (54 | ) | (26 | ) | 1.51 | 1.67 | (16 | ) | |||||||||||||||||||||||||||||||
Overhead Ratio |
53 | 54 | 51 | 58 | 61 | (100 | ) | (800 | ) | 53 | 63 | (1,000 | ) | |||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS DATA (Average) |
||||||||||||||||||||||||||||||||||||||||||||
Total Assets |
$ | 55,963 | $ | 55,080 | $ | 55,837 | $ | 55,957 | $ | 17,281 | 2 | % | 224 | % | $ | 55,524 | $ | 16,760 | 231 | % | ||||||||||||||||||||||||
Loans and Leases |
51,184 | 49,969 | 50,469 | 50,324 | 14,717 | 2 | 248 | 50,580 | 14,241 | 255 | ||||||||||||||||||||||||||||||||||
Liability Balances (b) |
72,498 | 71,613 | 69,360 | 66,944 | 38,058 | 1 | 90 | 72,058 | 37,327 | 93 | ||||||||||||||||||||||||||||||||||
Equity |
3,400 | 3,400 | 3,400 | 3,400 | 747 | | 355 | 3,400 | 771 | 341 | ||||||||||||||||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||||||
Loans by Business: |
||||||||||||||||||||||||||||||||||||||||||||
Middle Market |
$ | 31,051 | $ | 30,216 | $ | 29,997 | $ | 29,307 | $ | 5,203 | 3 | 497 | $ | 30,636 | $ | 5,156 | 494 | |||||||||||||||||||||||||||
Corporate Banking |
6,239 | 5,788 | 6,109 | 6,087 | 2,608 | 8 | 139 | 6,015 | 2,579 | 133 | ||||||||||||||||||||||||||||||||||
Real Estate |
10,169 | 10,345 | 10,679 | 11,646 | 4,330 | (2 | ) | 135 | 10,256 | 3,970 | 158 | |||||||||||||||||||||||||||||||||
Other |
3,725 | 3,620 | 3,684 | 3,284 | 2,576 | 3 | 45 | 3,673 | 2,536 | 45 | ||||||||||||||||||||||||||||||||||
Total Commercial Banking Loans |
$ | 51,184 | $ | 49,969 | $ | 50,469 | $ | 50,324 | $ | 14,717 | 2 | 248 | $ | 50,580 | $ | 14,241 | 255 | |||||||||||||||||||||||||||
Headcount |
4,474 | 4,495 | 4,555 | 4,595 | 1,690 | | 165 | 4,474 | 1,690 | 165 | ||||||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||||||
Net Charge-offs (Recoveries) |
$ | (3 | ) | $ | 2 | $ | 45 | $ | (13 | ) | $ | 30 | NM | NM | $ | (1 | ) | $ | 29 | NM | ||||||||||||||||||||||||
Nonperforming Loans |
434 | 433 | 527 | 579 | 132 | | 229 | 434 | 132 | 229 | ||||||||||||||||||||||||||||||||||
Allowance for Loan Losses |
1,431 | 1,312 | 1,322 | 1,350 | 107 | 9 | NM | 1,431 | 107 | NM | ||||||||||||||||||||||||||||||||||
Allowance for Lending-Related Commitments |
196 | 170 | 169 | 164 | 24 | 15 | NM | 196 | 24 | NM | ||||||||||||||||||||||||||||||||||
Net Charge-off (Recovery) Rate |
(0.02 | )% | 0.02 | % | 0.35 | % | (0.10 | )% | 0.82 | % | (4 | )bp | (84 | )bp | 0.00 | % | 0.41 | % | (41 | )bp | ||||||||||||||||||||||||
Allowance for Loan Losses to Average Loans |
2.80 | 2.63 | 2.62 | 2.68 | 0.73 | 17 | 207 | 2.83 | 0.75 | 208 | ||||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Nonperforming Loans |
330 | 303 | 251 | 233 | 81 | 2,700 | 24,900 | 330 | 81 | 24,900 | ||||||||||||||||||||||||||||||||||
Nonperforming Loans to Average Loans |
0.85 | 0.87 | 1.04 | 1.15 | 0.90 | (2 | ) | (5 | ) | 0.86 | 0.93 | (7 | ) | |||||||||||||||||||||||||||||||
(a) | IB-related and commercial card revenues are included in Other Income. |
|
(b) | Liability balances include deposits and deposits that are swept to on-balance sheet liabilities. |
Page 20
JPMORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratios, headcount data and otherwise noted) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||
Lending & Deposit Related Fees |
$ | 197 | $ | 170 | $ | 200 | $ | 218 | $ | 111 | 16 | % | 77 | % | $ | 367 | $ | 229 | 60 | % | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
736 | 692 | 630 | 600 | 633 | 6 | 16 | 1,428 | 1,215 | 18 | ||||||||||||||||||||||||||||||||||
Other Income |
145 | 124 | 112 | 103 | 98 | 17 | 48 | 269 | 167 | 61 | ||||||||||||||||||||||||||||||||||
Noninterest Revenue |
1,078 | 986 | 942 | 921 | 842 | 9 | 28 | 2,064 | 1,611 | 28 | ||||||||||||||||||||||||||||||||||
Net Interest Income |
510 | 496 | 471 | 418 | 251 | 3 | 103 | 1,006 | 494 | 104 | ||||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
1,588 | 1,482 | 1,413 | 1,339 | 1,093 | 7 | 45 | 3,070 | 2,105 | 46 | ||||||||||||||||||||||||||||||||||
Provision for Credit Losses |
2 | (3 | ) | 3 | | 3 | NM | (33 | ) | (1 | ) | 4 | NM | |||||||||||||||||||||||||||||||
Credit Reimbursement to IB (a) |
(38 | ) | (38 | ) | (43 | ) | (43 | ) | (2 | ) | | NM | (76 | ) | (4 | ) | NM | |||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
522 | 504 | 471 | 472 | 347 | 4 | 50 | 1,026 | 686 | 50 | ||||||||||||||||||||||||||||||||||
Noncompensation Expense |
642 | 532 | 643 | 654 | 582 | 21 | 10 | 1,174 | 1,094 | 7 | ||||||||||||||||||||||||||||||||||
Amortization of Intangibles |
30 | 29 | 32 | 30 | 15 | 3 | 100 | 59 | 31 | 90 | ||||||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,194 | 1,065 | 1,146 | 1,156 | 944 | 12 | 26 | 2,259 | 1,811 | 25 | ||||||||||||||||||||||||||||||||||
Operating Earnings before Income Tax Expense |
354 | 382 | 221 | 140 | 144 | (7 | ) | 146 | 736 | 286 | 157 | |||||||||||||||||||||||||||||||||
Income Tax Expense |
125 | 137 | 76 | 44 | 43 | (9 | ) | 191 | 262 | 87 | 201 | |||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 229 | $ | 245 | $ | 145 | $ | 96 | $ | 101 | (7 | ) | 127 | $ | 474 | $ | 199 | 138 | ||||||||||||||||||||||||||
REVENUE BY BUSINESS |
||||||||||||||||||||||||||||||||||||||||||||
Treasury Services (TS) |
$ | 682 | $ | 618 | $ | 642 | $ | 629 | $ | 366 | 10 | 86 | $ | 1,300 | $ | 723 | 80 | |||||||||||||||||||||||||||
Investor Services (IS) |
544 | 508 | 454 | 404 | 453 | 7 | 20 | 1,052 | 851 | 24 | ||||||||||||||||||||||||||||||||||
Institutional Trust Services (ITS) |
362 | 356 | 317 | 306 | 274 | 2 | 32 | 718 | 531 | 35 | ||||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 1,588 | $ | 1,482 | $ | 1,413 | $ | 1,339 | $ | 1,093 | 7 | 45 | $ | 3,070 | $ | 2,105 | 46 | |||||||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||||||
ROE |
48 | % | 52 | % | 30 | % | 20 | % | 13 | % | (400 | )bp | 3,500 | bp | 50 | % | 13 | % | 3,700 | bp | ||||||||||||||||||||||||
Overhead Ratio |
75 | 72 | 81 | 86 | 86 | 300 | (1,100 | ) | 74 | 86 | (1,200 | ) | ||||||||||||||||||||||||||||||||
Pre-tax Margin Ratio (b) |
22 | 26 | 16 | 10 | 13 | (400 | ) | 900 | 24 | 14 | 1,000 | |||||||||||||||||||||||||||||||||
BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||||||
Assets under Custody (in billions) (c) |
$ | 10,190 | $ | 10,154 | $ | 9,300 | $ | 8,427 | $ | 7,980 | | % | 28 | % | $ | 10,190 | $ | 7,980 | 28 | % | ||||||||||||||||||||||||
Corporate Trust Securities under Administration (in billions) (d) |
6,704 | 6,745 | 6,676 | 6,569 | 6,241 | (1 | ) | 7 | 6,704 | 6,241 | 7 | |||||||||||||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||||||
ACH transactions originated (in millions) |
727 | 699 | 693 | 651 | 341 | 4 | 113 | 1,426 | 650 | 119 | ||||||||||||||||||||||||||||||||||
Total US$ Clearing Volume (in thousands) |
24,200 | 21,705 | 22,590 | 21,781 | 18,727 | 11 | 29 | 45,905 | 36,791 | 25 | ||||||||||||||||||||||||||||||||||
Total Non-US$ Clearing Volume (in thousands) |
13,372 | 11,587 | 11,131 | 10,490 | 9,866 | 15 | 36 | 24,959 | 19,891 | 25 | ||||||||||||||||||||||||||||||||||
Wholesale Check Volume (in millions) |
921 | 877 | NA | NA | NA | 5 | NM | 1,798 | NA | NM | ||||||||||||||||||||||||||||||||||
Wholesale Cards Issued (in thousands) (e) |
12,075 | 11,834 | 11,787 | 11,260 | 9,420 | 2 | 28 | 23,909 | 18,379 | 30 | ||||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS (Average) |
||||||||||||||||||||||||||||||||||||||||||||
Total Assets |
$ | 26,437 | $ | 27,033 | $ | 28,538 | $ | 24,831 | $ | 21,040 | (2 | ) | 26 | $ | 26,733 | $ | 20,141 | 33 | ||||||||||||||||||||||||||
Loans |
9,956 | 10,091 | 9,988 | 8,457 | 6,783 | (1 | ) | 47 | 10,023 | 6,460 | 55 | |||||||||||||||||||||||||||||||||
Liability Balances (f) |
164,036 | 154,673 | 147,789 | 136,606 | 114,624 | 6 | 43 | 159,380 | 109,046 | 46 | ||||||||||||||||||||||||||||||||||
Equity |
1,900 | 1,900 | 1,900 | 1,900 | 3,203 | | (41 | ) | 1,900 | 3,196 | (41 | ) | ||||||||||||||||||||||||||||||||
Headcount |
23,871 | 23,073 | 22,612 | 22,246 | 15,023 | 3 | 59 | 23,871 | 15,023 | 59 | ||||||||||||||||||||||||||||||||||
FIRMWIDE DISCLOSURES |
||||||||||||||||||||||||||||||||||||||||||||
Treasury Services Firmwide Revenue (g) |
$ | 1,314 | $ | 1,237 | $ | 1,238 | $ | 1,205 | $ | 617 | 6 | 113 | $ | 2,551 | $ | 1,222 | 109 | |||||||||||||||||||||||||||
Treasury & Securities Services Firmwide Revenue (g) |
2,220 | 2,101 | 2,009 | 1,915 | 1,344 | 6 | 65 | 4,321 | 2,604 | 66 | ||||||||||||||||||||||||||||||||||
Treasury Services Firmwide Overhead Ratio (h) |
54 | % | 56 | % | 61 | % | 59 | % | 65 | % | (200 | )bp | (1,100 | )bp | 55 | % | 67 | % | (1,200 | )bp | ||||||||||||||||||||||||
Treasury & Securities Services Firmwide Overhead Ratio (h) |
66 | 63 | 69 | 72 | 79 | 300 | (1,300 | ) | 64 | 79 | (1,500 | ) | ||||||||||||||||||||||||||||||||
Treasury Services Firmwide Liability Balances (i) |
$ | 138,058 | $ | 133,770 | $ | 130,505 | $ | 125,813 | $ | 79,448 | 3 | % | 74 | % | $ | 135,926 | $ | 77,133 | 76 | % | ||||||||||||||||||||||||
Treasury & Securities Services Firmwide Liability Balances (i) |
236,534 | 226,286 | 217,149 | 203,550 | 152,682 | 5 | 55 | 231,438 | 146,373 | 58 | ||||||||||||||||||||||||||||||||||
Page 21
JPMORGAN CHASE & CO. | ![]() |
|
TREASURY & SECURITIES SERVICES | ||
FINANCIAL HIGHLIGHTS, CONTINUED | ||
(in millions) |
FOOTNOTES
(a) | TSS is charged a credit reimbursement related to certain exposures managed within the IB credit portfolio on behalf of clients shared with TSS. |
|||
(b) | Pre-tax margin represents Operating Earnings before Income Taxes divided by Total Net Revenue, which is a comprehensive measure of pre-tax performance and is another basis by which TSS management evaluates its performance and that of its
competitors. Pre-tax margin is an effective measure of TSS earnings after all operating costs are taken into consideration. |
|||
(c) | Beginning March 31, 2005, assets under custody include an estimated $400 billion of ITS assets under custody that have not been included previously.
At June 30, 2005 approximately 5% of total assets under custody were trust related. |
|||
(d) | Corporate Trust Securities under Administration include debt held in trust on behalf of third parties and debt serviced as agent. |
|||
(e) | Wholesale cards issued include domestic commercial card, stored value card, prepaid card, and government electronic benefit card products. |
|||
(f) | Liability balances include deposits and deposits swept to on-balance sheet liabilities. |
FIRMWIDE DISCLOSURES
(g) | Firmwide revenues include TS revenues recorded in the Commercial Banking, Consumer & Small Business Banking and Asset & Wealth Management lines of business (see below) and exclude FX revenues recorded in the IB for TSS-related FX activity. TSS firmwide FX revenue, which includes FX revenue recorded in TSS
and FX revenue associated with TSS customers who are FX customers of the IB, was $96 million and $90 million for the quarters ended June 30, 2005 and March 31, 2005, respectively. |
|||
(h) | Overhead ratios have been calculated based on firmwide revenues and TSS and TS expenses, respectively, including those allocated to certain other lines of business. FX revenues and expenses recorded in the IB for TSS-related FX activity
are not included in this ratio. |
|||
(i) | Firmwide liability balances include TS liability balances recorded in certain other lines of business. Liability balances associated with TS customers who are also customers of the Commercial Banking line of business are not included in
TS liability balances. |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
Treasury Services Revenue Reported in Commercial Banking |
$ | 558 | $ | 542 | $ | 528 | $ | 499 | $ | 221 | 3 | % | 152 | % | $ | 1,100 | $ | 440 | 150 | % | ||||||||||||||||||||||||
Treasury Services Revenue Reported in Other Lines of Business |
74 | 77 | 68 | 77 | 30 | (4 | ) | 147 | 151 | 59 | 156 | |||||||||||||||||||||||||||||||||
Page 22
JPMORGAN CHASE & CO. ASSET & WEALTH MANAGEMENT FINANCIAL HIGHLIGHTS (in millions, except ratio, headcount and ranking data, and where otherwise noted) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||||||
Lending & Deposit Related Fees |
$ | 6 | $ | 9 | $ | 10 | $ | 10 | $ | 4 | (33 | )% | 50 | % | $ | 15 | $ | 8 | 88 | % | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
994 | 975 | 952 | 859 | 657 | 2 | 51 | 1,969 | 1,329 | 48 | ||||||||||||||||||||||||||||||||||
Other Income |
69 | 95 | 60 | 55 | 50 | (27 | ) | 38 | 164 | 100 | 64 | |||||||||||||||||||||||||||||||||
Noninterest Revenue |
1,069 | 1,079 | 1,022 | 924 | 711 | (1 | ) | 50 | 2,148 | 1,437 | 49 | |||||||||||||||||||||||||||||||||
Net Interest Income |
274 | 282 | 288 | 269 | 117 | (3 | ) | 134 | 556 | 239 | 133 | |||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
1,343 | 1,361 | 1,310 | 1,193 | 828 | (1 | ) | 62 | 2,704 | 1,676 | 61 | |||||||||||||||||||||||||||||||||
Provision for Credit Losses |
(20 | ) | (7 | ) | (21 | ) | 1 | (4 | ) | (186 | ) | (400 | ) | (27 | ) | 6 | NM | |||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
509 | 538 | 459 | 452 | 343 | (5 | ) | 48 | 1,047 | 668 | 57 | |||||||||||||||||||||||||||||||||
Noncompensation Expense |
383 | 371 | 436 | 409 | 335 | 3 | 14 | 754 | 657 | 15 | ||||||||||||||||||||||||||||||||||
Amortization of Intangibles |
25 | 25 | 24 | 23 | 3 | | NM | 50 | 5 | NM | ||||||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
917 | 934 | 919 | 884 | 681 | (2 | ) | 35 | 1,851 | 1,330 | 39 | |||||||||||||||||||||||||||||||||
Operating Earnings before Income Tax Expense |
446 | 434 | 412 | 308 | 151 | 3 | 195 | 880 | 340 | 159 | ||||||||||||||||||||||||||||||||||
Income Tax Expense |
163 | 158 | 149 | 111 | 52 | 3 | 213 | 321 | 119 | 170 | ||||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 283 | $ | 276 | $ | 263 | $ | 197 | $ | 99 | 3 | 186 | $ | 559 | $ | 221 | 153 | |||||||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||||||
ROE |
47 | % | 47 | % | 44 | % | 33 | % | 7 | % | | bp | 4,000 | bp | 47 | % | 8 | % | 3,900 | bp | ||||||||||||||||||||||||
Overhead Ratio |
68 | 69 | 70 | 74 | 82 | (100 | ) | (1,400 | ) | 68 | 79 | (1,100 | ) | |||||||||||||||||||||||||||||||
Pre-tax Margin Ratio (a) |
33 | 32 | 31 | 26 | 18 | 100 | 1,500 | 33 | 20 | 1,300 | ||||||||||||||||||||||||||||||||||
BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||||||
Client Advisors |
1,409 | 1,390 | 1,333 | 1,334 | 629 | 1 | % | 124 | % | 1,409 | 629 | 124 | % | |||||||||||||||||||||||||||||||
Brown Co Average Daily Trades |
26,267 | 29,753 | 30,521 | 23,969 | 28,702 | (12 | ) | (8 | ) | 28,010 | 32,586 | (14 | ) | |||||||||||||||||||||||||||||||
Retirement Planning Services Participants |
1,210,000 | 1,181,000 | 918,000 | 874,000 | 844,000 | 2 | 43 | 1,210,000 | 844,000 | 43 | ||||||||||||||||||||||||||||||||||
Star Rankings: (b) |
||||||||||||||||||||||||||||||||||||||||||||
% of Customer Assets in Funds Ranked 4 or Better |
50 | % | 48 | % | 48 | % | 56 | % | 48 | % | 4 | 4 | 50 | % | 48 | % | 4 | |||||||||||||||||||||||||||
% of Customer Assets in Funds Ranked 3 or Better |
80 | % | 79 | % | 81 | % | 80 | % | 78 | % | 1 | 3 | 80 | % | 78 | % | 3 | |||||||||||||||||||||||||||
Funds Quartile Ranking (1YR) : (c) |
||||||||||||||||||||||||||||||||||||||||||||
% of AUM in 1st and 2nd Quartiles |
75 | % | 71 | % | 66 | % | 63 | % | 49 | % | 6 | 53 | 75 | % | 49 | % | 53 | |||||||||||||||||||||||||||
REVENUE BY CLIENT SEGMENT |
||||||||||||||||||||||||||||||||||||||||||||
Private Bank |
$ | 409 | $ | 422 | $ | 427 | $ | 383 | $ | 368 | (3 | ) | 11 | $ | 831 | $ | 744 | 12 | ||||||||||||||||||||||||||
Retail |
363 | 346 | 358 | 292 | 269 | 5 | 35 | 709 | 534 | 33 | ||||||||||||||||||||||||||||||||||
Institutional |
313 | 322 | 265 | 267 | 172 | (3 | ) | 82 | 635 | 359 | 77 | |||||||||||||||||||||||||||||||||
Private Client Services |
258 | 271 | 260 | 251 | 19 | (5 | ) | NM | 529 | 39 | NM | |||||||||||||||||||||||||||||||||
Total Net Revenue |
$ | 1,343 | $ | 1,361 | $ | 1,310 | $ | 1,193 | $ | 828 | (1 | ) | 62 | $ | 2,704 | $ | 1,676 | 61 | ||||||||||||||||||||||||||
SELECTED BALANCE SHEETS DATA (Average) |
||||||||||||||||||||||||||||||||||||||||||||
Total Assets |
$ | 42,001 | $ | 39,716 | $ | 40,689 | $ | 39,882 | $ | 35,083 | 6 | 20 | $ | 40,865 | $ | 35,189 | 16 | |||||||||||||||||||||||||||
Loans |
26,572 | 26,357 | 25,966 | 25,408 | 17,620 | 1 | 51 | 26,465 | 17,359 | 52 | ||||||||||||||||||||||||||||||||||
Deposits (d) |
40,774 | 42,043 | 43,415 | 38,940 | 24,069 | (3 | ) | 69 | 41,405 | 23,589 | 76 | |||||||||||||||||||||||||||||||||
Equity |
2,400 | 2,400 | 2,400 | 2,400 | 5,370 | | (55 | ) | 2,400 | 5,420 | (56 | ) | ||||||||||||||||||||||||||||||||
Headcount |
12,455 | 12,378 | 12,287 | 12,368 | 8,690 | 1 | 43 | 12,455 | 8,690 | 43 | ||||||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||||||
Net Charge-offs (Recoveries) |
$ | (2 | ) | $ | (6 | ) | $ | 5 | $ | 6 | $ | 6 | 67 | NM | $ | (8 | ) | $ | 61 | NM | ||||||||||||||||||||||||
Nonperforming Loans |
100 | 78 | 79 | 125 | 102 | 28 | (2 | ) | 100 | 102 | (2 | ) | ||||||||||||||||||||||||||||||||
Allowance for Loan Losses |
195 | 214 | 216 | 241 | 76 | (9 | ) | 157 | 195 | 76 | 157 | |||||||||||||||||||||||||||||||||
Allowance for Lending Related Commitments |
3 | 5 | 5 | 5 | 2 | (40 | ) | 50 | 3 | 2 | 50 | |||||||||||||||||||||||||||||||||
Net Charge-off (Recovery) Rate |
(0.03 | )% | (0.09 | )% | 0.08 | % | 0.09 | % | 0.14 | % | 6 | bp | (17) | bp | (0.06 | )% | 0.71 | % | (77 | )bp | ||||||||||||||||||||||||
Allowance for Loan Losses to Average Loans |
0.73 | 0.81 | 0.83 | 0.95 | 0.43 | (8 | ) | 30 | 0.74 | 0.44 | 30 | |||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Nonperforming Loans |
195 | 274 | 273 | 193 | 75 | (7,900 | ) | 12,000 | 195 | 75 | 12,000 | |||||||||||||||||||||||||||||||||
Nonperforming Loans to Average Loans |
0.38 | 0.30 | 0.30 | 0.49 | 0.58 | 8 | (20 | ) | 0.38 | 0.59 | (21 | ) | ||||||||||||||||||||||||||||||||
(a) | Pre-tax margin represents Operating Earnings before Income Tax Expense divided by Total Net Revenue, which is a comprehensive measure of pre-tax performance and is another basis by which AWM management evaluates its performance and that
of its competitors. Pre-tax margin is an effective measure of AWMs earnings, after all costs are taken into consideration. |
|
(b) | Derived from Morningstar for the United States; Micropal for the United Kingdom, Luxembourg, Hong Kong and Taiwan; and Nomura for Japan. |
|
(c) | Quartile ranking sourced from Lipper for the United States and Taiwan; Micropal for the United Kingdom, Luxemburg and Hong Kong; and Nomura for Japan. |
|
(d) | Reflects the transfer of certain consumer deposits from Retail Financial Services to Asset & Wealth Management. |
Page 23
JPMORGAN CHASE & CO. | ![]() |
|
ASSET & WEALTH MANAGEMENT | ||
FINANCIAL HIGHLIGHTS, CONTINUED | ||
(in billions) |
Heritage | ||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | |||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | |||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | ||||||||||||||||||||||||
Asset Class |
||||||||||||||||||||||||||||||
Liquidity |
$ | 223 | $ | 228 | $ | 232 | $ | 210 | $ | 152 | (2 | )% | 47 | % | ||||||||||||||||
Fixed Income |
171 | 171 | 171 | 174 | 117 | | 46 | |||||||||||||||||||||||
Equities & Balanced |
323 | 326 | 326 | 298 | 261 | (1 | ) | 24 | ||||||||||||||||||||||
Alternatives |
66 | 65 | 62 | 53 | 45 | 2 | 47 | |||||||||||||||||||||||
Assets under Management |
783 | 790 | 791 | 735 | 575 | (1 | ) | 36 | ||||||||||||||||||||||
Custody / Brokerage / Administration / Deposits |
310 | 302 | 315 | 268 | 221 | 3 | 40 | |||||||||||||||||||||||
Total Assets under Supervision |
$ | 1,093 | $ | 1,092 | $ | 1,106 | $ | 1,003 | $ | 796 | | 37 | ||||||||||||||||||
Client Segment |
||||||||||||||||||||||||||||||
Private Bank |
||||||||||||||||||||||||||||||
Assets under Management |
$ | 135 | $ | 138 | $ | 139 | $ | 136 | $ | 139 | (2 | ) | (3 | ) | ||||||||||||||||
Custody / Brokerage / Administration / Deposits |
165 | 161 | 165 | 143 | 138 | 2 | 20 | |||||||||||||||||||||||
Assets under Supervision |
300 | 299 | 304 | 279 | 277 | | 8 | |||||||||||||||||||||||
Retail |
||||||||||||||||||||||||||||||
Assets under Management |
141 | 138 | 133 | 122 | 101 | 2 | 40 | |||||||||||||||||||||||
Custody / Brokerage / Administration / Deposits |
97 | 94 | 88 | 81 | 80 | 3 | 21 | |||||||||||||||||||||||
Assets under Supervision |
238 | 232 | 221 | 203 | 181 | 3 | 31 | |||||||||||||||||||||||
Institutional |
||||||||||||||||||||||||||||||
Assets under Management |
455 | 462 | 466 | 426 | 328 | (2 | ) | 39 | ||||||||||||||||||||||
Custody / Brokerage / Administration / Deposits |
3 | 5 | 21 | 4 | | (40 | ) | NM | ||||||||||||||||||||||
Assets under Supervision |
458 | 467 | 487 | 430 | 328 | (2 | ) | 40 | ||||||||||||||||||||||
Private Client Services |
||||||||||||||||||||||||||||||
Assets under Management |
52 | 52 | 53 | 51 | 7 | | NM | |||||||||||||||||||||||
Custody / Brokerage / Administration / Deposits |
45 | 42 | 41 | 40 | 3 | 7 | NM | |||||||||||||||||||||||
Assets under Supervision |
97 | 94 | 94 | 91 | 10 | 3 | NM | |||||||||||||||||||||||
Total Assets under Supervision |
$ | 1,093 | $ | 1,092 | $ | 1,106 | $ | 1,003 | $ | 796 | | 37 | ||||||||||||||||||
Geographic Region |
||||||||||||||||||||||||||||||
Americas |
||||||||||||||||||||||||||||||
Assets under Management |
$ | 535 | $ | 558 | $ | 562 | $ | 531 | $ | 370 | (4 | ) | 45 | |||||||||||||||||
Custody / Brokerage / Administration / Deposits |
270 | 263 | 281 | 238 | 189 | 3 | 43 | |||||||||||||||||||||||
Assets under Supervision |
805 | 821 | 843 | 769 | 559 | (2 | ) | 44 | ||||||||||||||||||||||
International |
||||||||||||||||||||||||||||||
Assets under Management |
248 | 232 | 229 | 204 | 205 | 7 | 21 | |||||||||||||||||||||||
Custody / Brokerage / Administration / Deposits |
40 | 39 | 34 | 30 | 32 | 3 | 25 | |||||||||||||||||||||||
Assets under Supervision |
288 | 271 | 263 | 234 | 237 | 6 | 22 | |||||||||||||||||||||||
Total Assets under Supervision |
$ | 1,093 | $ | 1,092 | $ | 1,106 | $ | 1,003 | $ | 796 | | 37 | ||||||||||||||||||
Memo: |
||||||||||||||||||||||||||||||
Mutual Funds Assets: |
||||||||||||||||||||||||||||||
Liquidity |
$ | 174 | $ | 175 | $ | 183 | $ | 163 | $ | 117 | (1 | ) | 49 | |||||||||||||||||
Fixed Income |
41 | 45 | 41 | 48 | 30 | (9 | ) | 37 | ||||||||||||||||||||||
Equities, Balanced & Alternatives |
114 | 106 | 104 | 97 | 74 | 8 | 54 | |||||||||||||||||||||||
Total Mutual Funds Assets |
$ | 329 | $ | 326 | $ | 328 | $ | 308 | $ | 221 | 1 | 49 | ||||||||||||||||||
Page 24
JPMORGAN CHASE & CO. | ![]() |
|
ASSET & WEALTH MANAGEMENT | ||
FINANCIAL HIGHLIGHTS, CONTINUED | ||
(in billions) |
Heritage | Heritage | |||||||||||||||||||||||||||||||
JPMC Only | JPMC Only | |||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Year-to-date | |||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 2005 | 2004 | ||||||||||||||||||||||||||
Assets Under Management Rollforward |
||||||||||||||||||||||||||||||||
Beginning Balance |
$ | 790 | $ | 791 | $ | 735 | $ | 575 | $ | 589 | $ | 791 | $ | 561 | ||||||||||||||||||
Liquidity Net Asset Flows |
(5 | ) | (6 | ) | 16 | (9 | ) | (7 | ) | (11 | ) | (4 | ) | |||||||||||||||||||
Fixed Income Net Asset Flows |
(2 | ) | 4 | (2 | ) | (5 | ) | | 2 | (1 | ) | |||||||||||||||||||||
Equities, Balanced & Alternatives Net Asset Flows |
8 | 1 | 6 | (2 | ) | 3 | 9 | 10 | ||||||||||||||||||||||||
Acquisitions (a) |
| | 7 | 176 | | | | |||||||||||||||||||||||||
Market / Other Impacts (b) |
(8 | ) | | 29 | | (10 | ) | (8 | ) | 9 | ||||||||||||||||||||||
Ending Balance |
$ | 783 | $ | 790 | $ | 791 | $ | 735 | $ | 575 | $ | 783 | $ | 575 | ||||||||||||||||||
Custody / Brokerage / Administration / Deposits Rollforward |
||||||||||||||||||||||||||||||||
Beginning Balance |
$ | 302 | $ | 315 | $ | 268 | $ | 221 | $ | 216 | $ | 315 | $ | 203 | ||||||||||||||||||
Custody / Brokerage / Administration / Deposits Net Asset Flows |
(1 | ) | 7 | 12 | 12 | 3 | 6 | 9 | ||||||||||||||||||||||||
Acquisitions (a) |
| | | 38 | | | | |||||||||||||||||||||||||
Market / Other Impacts |
9 | (20 | ) | 35 | (3 | ) | 2 | (11 | ) | 9 | ||||||||||||||||||||||
Ending Balance |
$ | 310 | $ | 302 | $ | 315 | $ | 268 | $ | 221 | $ | 310 | $ | 221 | ||||||||||||||||||
Assets Under Supervision Rollforward |
||||||||||||||||||||||||||||||||
Beginning Balance |
$ | 1,092 | $ | 1,106 | $ | 1,003 | $ | 796 | $ | 805 | $ | 1,106 | $ | 764 | ||||||||||||||||||
Net Asset Flows |
| 6 | 32 | (4 | ) | (1 | ) | 6 | 14 | |||||||||||||||||||||||
Acquisitions (a) |
| | 7 | 214 | | | | |||||||||||||||||||||||||
Market / Other Impacts (b) |
1 | (20 | ) | 64 | (3 | ) | (8 | ) | (19 | ) | 18 | |||||||||||||||||||||
Ending Balance |
$ | 1,093 | $ | 1,092 | $ | 1,106 | $ | 1,003 | $ | 796 | $ | 1,093 | $ | 796 | ||||||||||||||||||
(a) | Reflects the Merger with Bank One ($214 billion) in the third quarter of 2004 and the acquisition of a majority interest in Highbridge Capital Management in the fourth quarter of 2004 ($7 billion). |
|
(b) | Includes AWMs strategic decision to exit the Institutional Fiduciary business in the second quarter of 2005 ($12bn). |
Page 25
JPMORGAN CHASE & CO. | ![]() |
|
CORPORATE | ||
FINANCIAL HIGHLIGHTS | ||
(in millions, except headcount data) |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||||||
Revenue |
||||||||||||||||||||||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
$ | 310 | $ | (130 | ) | $ | 584 | $ | 347 | $ | 436 | NM | % | (29 | )% | $ | 180 | $ | 855 | (79 | )% | |||||||||||||||||||||||
Other Income |
87 | 48 | 38 | 131 | 104 | 81 | (16 | ) | 135 | 146 | (8 | ) | ||||||||||||||||||||||||||||||||
Noninterest Revenue |
397 | (82 | ) | 622 | 478 | 540 | NM | (26 | ) | 315 | 1,001 | (69 | ) | |||||||||||||||||||||||||||||||
Net Interest Income |
(763 | ) | (677 | ) | (657 | ) | (536 | ) | 20 | (13 | ) | NM | (1,440 | ) | (23 | ) | NM | |||||||||||||||||||||||||||
TOTAL NET REVENUE |
(366 | ) | (759 | ) | (35 | ) | (58 | ) | 560 | 52 | NM | (1,125 | ) | 978 | NM | |||||||||||||||||||||||||||||
Provision for Credit Losses |
1 | (4 | ) | | (1 | ) | (27 | ) | NM | NM | (3 | ) | (109 | ) | 97 | |||||||||||||||||||||||||||||
Noninterest Expense |
||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
772 | 774 | 662 | 786 | 462 | | 67 | 1,546 | 978 | 58 | ||||||||||||||||||||||||||||||||||
Noncompensation Expense |
1,042 | 996 | 1,215 | 1,146 | 857 | 5 | 22 | 2,038 | 1,727 | 18 | ||||||||||||||||||||||||||||||||||
Subtotal |
1,814 | 1,770 | 1,877 | 1,932 | 1,319 | 2 | 38 | 3,584 | 2,705 | 32 | ||||||||||||||||||||||||||||||||||
Net Expenses Allocated to Other Businesses |
(1,337 | ) | (1,335 | ) | (1,417 | ) | (1,426 | ) | (1,186 | ) | | (13 | ) | (2,672 | ) | (2,370 | ) | (13 | ) | |||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
477 | 435 | 460 | 506 | 133 | 10 | 259 | 912 | 335 | 172 | ||||||||||||||||||||||||||||||||||
Operating Earnings before Income Tax Expense |
(844 | ) | (1,190 | ) | (495 | ) | (563 | ) | 454 | 29 | NM | (2,034 | ) | 752 | NM | |||||||||||||||||||||||||||||
Income Tax Expense (Benefit) |
(358 | ) | (503 | ) | (199 | ) | (344 | ) | 129 | 29 | NM | (861 | ) | 176 | NM | |||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | (486 | ) | $ | (687 | ) | $ | (296 | ) | $ | (219 | ) | $ | 325 | 29 | NM | $ | (1,173 | ) | $ | 576 | NM | ||||||||||||||||||||||
SELECTED AVERAGE BALANCE SHEETS |
||||||||||||||||||||||||||||||||||||||||||||
Short-term Investments (a) |
$ | 16,779 | $ | 13,164 | $ | 19,252 | $ | 26,432 | $ | 9,903 | 27 | 69 | $ | 14,982 | $ | 6,248 | 140 | |||||||||||||||||||||||||||
Investment Portfolio (b) |
50,751 | 74,795 | 72,583 | 74,708 | 58,043 | (32 | ) | (13 | ) | 62,707 | 58,240 | 8 | ||||||||||||||||||||||||||||||||
Goodwill (c) |
43,524 | 43,306 | 42,980 | 42,958 | 342 | 1 | NM | 43,415 | 344 | NM | ||||||||||||||||||||||||||||||||||
Total Assets |
159,160 | 178,089 | 197,794 | 204,884 | 125,122 | (11 | ) | 27 | 168,572 | 122,697 | 37 | |||||||||||||||||||||||||||||||||
Headcount |
28,114 | 26,983 | 24,806 | 24,482 | 12,928 | 4 | 117 | 28,114 | 12,928 | 117 | ||||||||||||||||||||||||||||||||||
TREASURY |
||||||||||||||||||||||||||||||||||||||||||||
Securities Gains (Losses) (d) |
$ | 6 | $ | (918 | ) | $ | 77 | $ | 109 | $ | 41 | NM | (85 | ) | $ | (912 | ) | $ | 161 | NM | ||||||||||||||||||||||||
Investment Portfolio (Average) |
$ | 43,652 | $ | 65,646 | $ | 63,362 | $ | 65,508 | $ | 51,509 | (34 | ) | (15 | ) | $ | 54,588 | $ | 51,044 | 7 | |||||||||||||||||||||||||
Investment Portfolio (Ending) |
$ | 34,319 | $ | 46,943 | $ | 64,949 | $ | 61,331 | $ | 49,133 | (27 | ) | (30 | ) | $ | 34,319 | $ | 49,133 | (30 | ) | ||||||||||||||||||||||||
(a) | Represents Federal funds sold, Securities borrowed, Trading assets debt and equity instruments and Trading assets derivative receivables. |
|
(b) | Represents investment securities and private equity investments. |
|
(c) | Effective with the third quarter of 2004, all goodwill is allocated to the Corporate line of business. Prior to the third quarter of 2004, goodwill was allocated to the various lines of business. |
|
(d) | Losses in the first quarter of 2005 were primarily due to the sale of $20 billion of investment securities during the month of March 2005. Excludes gains/losses on securities used to manage risk associated with mortgage servicing rights. |
Page 26
JPMORGAN CHASE & CO. | ![]() |
|
CORPORATE | ||
FINANCIAL HIGHLIGHTS, CONTINUED | ||
(in millions) |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
PRIVATE EQUITY |
||||||||||||||||||||||||||||||||||||||||||||
Private Equity Gains (Losses) |
||||||||||||||||||||||||||||||||||||||||||||
Direct Investments |
||||||||||||||||||||||||||||||||||||||||||||
Realized Gains |
$ | 555 | $ | 633 | $ | 442 | $ | 277 | $ | 402 | (12 | )% | 38 | % | $ | 1,188 | $ | 704 | 69 | % | ||||||||||||||||||||||||
Write-ups / (Write-downs) |
(133 | ) | 206 | (111 | ) | (31 | ) | (27 | ) | NM | (393 | ) | 73 | (50 | ) | NM | ||||||||||||||||||||||||||||
Mark-to-Market Gains (Losses) |
(153 | ) | (89 | ) | 167 | (27 | ) | (1 | ) | (72 | ) | NM | (242 | ) | 24 | NM | ||||||||||||||||||||||||||||
Total Direct Investments |
269 | 750 | 498 | 219 | 374 | (64 | ) | (28 | ) | 1,019 | 678 | 50 | ||||||||||||||||||||||||||||||||
Third-Party Fund Investments |
31 | 39 | 8 | 16 | 18 | (21 | ) | 72 | 70 | 10 | NM | |||||||||||||||||||||||||||||||||
Total Private Equity Gains |
300 | 789 | 506 | 235 | 392 | (62 | ) | (23 | ) | 1,089 | 688 | 58 | ||||||||||||||||||||||||||||||||
Other Income |
11 | 5 | 16 | 14 | 11 | 120 | | 16 | 23 | (30 | ) | |||||||||||||||||||||||||||||||||
Net Interest Income |
(56 | ) | (50 | ) | (70 | ) | (89 | ) | (53 | ) | (12 | ) | (6 | ) | (106 | ) | (112 | ) | 5 | |||||||||||||||||||||||||
Total Net Revenue |
255 | 744 | 452 | 160 | 350 | (66 | ) | (27 | ) | 999 | 599 | 67 | ||||||||||||||||||||||||||||||||
Total Noninterest Expense |
66 | 62 | 79 | 73 | 67 | 6 | (1 | ) | 128 | 136 | (6 | ) | ||||||||||||||||||||||||||||||||
Operating Earnings before Income Tax Expense |
189 | 682 | 373 | 87 | 283 | (72 | ) | (33 | ) | 871 | 463 | 88 | ||||||||||||||||||||||||||||||||
Income Tax Expense |
67 | 245 | 134 | 27 | 96 | (73 | ) | (30 | ) | 312 | 160 | 95 | ||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 122 | $ | 437 | $ | 239 | $ | 60 | $ | 187 | (72 | ) | (35 | ) | $ | 559 | $ | 303 | 84 | |||||||||||||||||||||||||
Private Equity Portfolio Information |
||||||||||||||||||||||||||||||||||||||||||||
Direct Investments |
||||||||||||||||||||||||||||||||||||||||||||
Publicly-Held Securities |
||||||||||||||||||||||||||||||||||||||||||||
Carrying Value |
$ | 761 | $ | 1,149 | $ | 1,170 | $ | 958 | $ | 811 | (34 | ) | (6 | ) | ||||||||||||||||||||||||||||||
Cost |
580 | 808 | 744 | 675 | 566 | (28 | ) | 2 | ||||||||||||||||||||||||||||||||||||
Quoted Public Value |
1,082 | 1,713 | 1,758 | 1,415 | 1,306 | (37 | ) | (17 | ) | |||||||||||||||||||||||||||||||||||
Privately-Held Direct Securities |
||||||||||||||||||||||||||||||||||||||||||||
Carrying Value |
5,037 | 5,490 | 5,686 | 6,011 | 4,821 | (8 | ) | 4 | ||||||||||||||||||||||||||||||||||||
Cost |
6,362 | 6,689 | 7,178 | 7,551 | 6,307 | (5 | ) | 1 | ||||||||||||||||||||||||||||||||||||
Third-Party Fund Investments |
||||||||||||||||||||||||||||||||||||||||||||
Carrying Value |
552 | 550 | 641 | 1,138 | 751 | | (26 | ) | ||||||||||||||||||||||||||||||||||||
Cost |
921 | 934 | 1,042 | 1,761 | 1,208 | (1 | ) | (24 | ) | |||||||||||||||||||||||||||||||||||
Total Private Equity Portfolio Carrying Value |
$ | 6,350 | $ | 7,189 | $ | 7,497 | $ | 8,107 | $ | 6,383 | (12 | ) | (1 | ) | ||||||||||||||||||||||||||||||
Total Private Equity Portfolio Cost |
$ | 7,863 | $ | 8,431 | $ | 8,964 | $ | 9,987 | $ | 8,081 | (7 | ) | (3 | ) | ||||||||||||||||||||||||||||||
Page 27
JPMORGAN CHASE & CO. | ![]() |
|
CREDIT-RELATED INFORMATION | ||
(in millions) |
Heritage | Jun 30, 2005 | |||||||||||||||||||||||||||||
JPMC Only | Change | |||||||||||||||||||||||||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Jun 30 | ||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 2005 | 2004 | ||||||||||||||||||||||||
CREDIT EXPOSURE |
||||||||||||||||||||||||||||||
WHOLESALE (a) |
||||||||||||||||||||||||||||||
Loans U.S. |
$ | 110,096 | $ | 101,261 | $ | 99,868 | $ | 99,451 | $ | 45,532 | 9 | % | 142 | % | ||||||||||||||||
Loans Non-U.S. |
39,492 | 36,140 | 35,199 | 32,893 | 31,512 | 9 | 25 | |||||||||||||||||||||||
TOTAL WHOLESALE LOANS REPORTED |
149,588 | 137,401 | 135,067 | 132,344 | 77,044 | 9 | 94 | |||||||||||||||||||||||
CONSUMER (b) |
||||||||||||||||||||||||||||||
Home Finance |
||||||||||||||||||||||||||||||
Home Equity and Other |
72,346 | 68,779 | 67,837 | 67,368 | 29,969 | 5 | 141 | |||||||||||||||||||||||
Mortgage |
58,594 | 55,588 | 56,816 | 56,035 | 54,060 | 5 | 8 | |||||||||||||||||||||||
Total Home Finance |
130,940 | 124,367 | 124,653 | 123,403 | 84,029 | 5 | 56 | |||||||||||||||||||||||
Auto & Education Finance |
52,309 | 59,837 | 62,712 | 62,587 | 43,543 | (13 | ) | 20 | ||||||||||||||||||||||
Consumer & Small Business and Other |
14,678 | 15,011 | 15,107 | 15,126 | 4,140 | (2 | ) | 255 | ||||||||||||||||||||||
Credit Card Receivables Reported |
68,510 | 66,053 | 64,575 | 60,241 | 17,182 | 4 | 299 | |||||||||||||||||||||||
TOTAL CONSUMER LOANS REPORTED |
266,437 | 265,268 | 267,047 | 261,357 | 148,894 | | 79 | |||||||||||||||||||||||
TOTAL LOANS REPORTED |
416,025 | 402,669 | 402,114 | 393,701 | 225,938 | 3 | 84 | |||||||||||||||||||||||
Credit Card Securitizations |
68,808 | 67,328 | 70,795 | 71,256 | 34,138 | 2 | 102 | |||||||||||||||||||||||
TOTAL LOANS MANAGED |
484,833 | 469,997 | 472,909 | 464,957 | 260,076 | 3 | 86 | |||||||||||||||||||||||
Derivative Receivables |
55,015 | 60,388 | 65,982 | 57,795 | 49,980 | (9 | ) | 10 | ||||||||||||||||||||||
Interests in Purchased Receivables (c) |
27,887 | 28,484 | 31,722 | 30,479 | | (2 | ) | NM | ||||||||||||||||||||||
Other Receivables |
| | | | 108 | NM | NM | |||||||||||||||||||||||
TOTAL CREDIT-RELATED ASSETS |
567,735 | 558,869 | 570,613 | 553,231 | 310,164 | 2 | 83 | |||||||||||||||||||||||
Wholesale Lending-Related Commitments |
314,034 | 316,282 | 309,399 | 315,946 | 213,671 | (1 | ) | 47 | ||||||||||||||||||||||
TOTAL |
$ | 881,769 | $ | 875,151 | $ | 880,012 | $ | 869,177 | $ | 523,835 | 1 | 68 | ||||||||||||||||||
Memo: Total by Category |
||||||||||||||||||||||||||||||
Total Wholesale Exposure (d) |
$ | 546,524 | $ | 542,555 | $ | 542,170 | $ | 536,564 | $ | 340,803 | 1 | 60 | ||||||||||||||||||
Total Consumer Managed Loans (e) |
335,245 | 332,596 | 337,842 | 332,613 | 183,032 | 1 | 83 | |||||||||||||||||||||||
Total |
$ | 881,769 | $ | 875,151 | $ | 880,012 | $ | 869,177 | $ | 523,835 | 1 | 68 | ||||||||||||||||||
Risk Profile of Wholesale Credit Exposure: |
||||||||||||||||||||||||||||||
Investment-Grade |
$ | 427,966 | $ | 433,928 | $ | 441,930 | $ | 429,198 | $ | 282,127 | (1 | ) | 52 | |||||||||||||||||
Noninvestment-Grade: |
||||||||||||||||||||||||||||||
Noncriticized |
112,140 | 101,859 | 91,605 | 97,126 | 52,438 | 10 | 114 | |||||||||||||||||||||||
Criticized Performing (f) |
4,536 | 4,859 | 6,263 | 8,113 | 3,738 | (7 | ) | 21 | ||||||||||||||||||||||
Criticized Nonperforming (f) |
1,504 | 1,590 | 2,021 | 1,772 | 2,126 | (5 | ) | (29 | ) | |||||||||||||||||||||
Total Noninvestment-Grade |
$ | 118,180 | $ | 108,308 | $ | 99,889 | $ | 107,011 | $ | 58,302 | 9 | 103 | ||||||||||||||||||
Purchased Held-for-Sale Wholesale Loans (g) |
$ | 378 | $ | 319 | $ | 351 | $ | 355 | $ | 374 | 18 | 1 | ||||||||||||||||||
(a) | Includes Investment Bank, Commercial Banking, Treasury & Securities Services and Asset & Wealth Management. |
|
(b) | Includes Retail Financial Services and Card Services. |
|
(c) | These represent undivided interests in pools of receivables and similar types of assets. |
|
(d) | Represents Total Wholesale Loans, Derivative Receivables, Interests in Purchased Receivables, Other Receivables and Wholesale Lending-Related Commitments. |
|
(e) | Represents Total Consumer Loans plus Credit Card Securitizations, excluding consumer lending-related commitments. |
|
(f) | For the quarter ended March 31, 2005, the Firm conformed its methodology for reporting Criticized exposure. Excluding this change in methodology, Criticized exposure
would have been $7,632 million in the first quarter of 2005. |
|
(g) | Represents distressed wholesale loans purchased as part of IBs proprietary investing activities. |
Note: | The risk profile is based on JPMorgan Chases internal risk ratings, which generally correspond to the following ratings as defined by Standard & Poors / Moodys: |
Investment-Grade: AAA / Aaa to BBB- / Baa3 Noninvestment-Grade: BB+ / Ba1 and below |
Page 28
JPMORGAN CHASE & CO. CREDIT-RELATED INFORMATION, CONTINUED (in millions, except ratio data) |
![]() |
Heritage | Jun 30, 2005 | |||||||||||||||||||||||||||||
JPMC Only | Change | |||||||||||||||||||||||||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Jun 30 | ||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 2005 | 2004 | ||||||||||||||||||||||||
NONPERFORMING ASSETS AND RATIOS |
||||||||||||||||||||||||||||||
WHOLESALE LOANS |
||||||||||||||||||||||||||||||
Loans U.S. |
$ | 959 | $ | 1,005 | $ | 1,228 | $ | 1,405 | $ | 726 | (5 | )% | 32 | % | ||||||||||||||||
Loans Non-U.S. |
292 | 324 | 346 | 378 | 715 | (10 | ) | (59 | ) | |||||||||||||||||||||
TOTAL WHOLESALE LOANS-REPORTED (a) |
1,251 | 1,329 | 1,574 | 1,783 | 1,441 | (6 | ) | (13 | ) | |||||||||||||||||||||
CONSUMER LOANS |
||||||||||||||||||||||||||||||
Home Finance |
662 | 691 | 673 | 789 | 320 | (4 | ) | 107 | ||||||||||||||||||||||
Auto & Education Finance |
190 | 171 | 193 | 211 | 114 | 11 | 67 | |||||||||||||||||||||||
Consumer & Small Business and Other |
280 | 288 | 295 | 308 | 85 | (3 | ) | 229 | ||||||||||||||||||||||
Credit Card Receivables Reported |
9 | 8 | 8 | 9 | 9 | 13 | | |||||||||||||||||||||||
TOTAL CONSUMER LOANS-REPORTED |
1,141 | 1,158 | 1,169 | 1,317 | 528 | (1 | ) | 116 | ||||||||||||||||||||||
TOTAL LOANS REPORTED (a) |
2,392 | 2,487 | 2,743 | 3,100 | 1,969 | (4 | ) | 21 | ||||||||||||||||||||||
Derivative Receivables |
234 | 241 | 241 | 238 | 223 | (3 | ) | 5 | ||||||||||||||||||||||
Other Receivables |
| | | | 108 | NM | NM | |||||||||||||||||||||||
Assets Acquired in Loan Satisfactions |
206 | 221 | 247 | 299 | 182 | (7 | ) | 13 | ||||||||||||||||||||||
TOTAL NONPERFORMING ASSETS (a) |
$ | 2,832 | $ | 2,949 | $ | 3,231 | $ | 3,637 | $ | 2,482 | (4 | ) | 14 | |||||||||||||||||
PURCHASED HELD-FOR-SALE WHOLESALE LOANS (b) |
$ | 378 | $ | 319 | $ | 351 | $ | 355 | $ | 374 | 18 | 1 | ||||||||||||||||||
TOTAL NONPERFORMING LOANS TO TOTAL LOANS |
0.57 | % | 0.62 | % | 0.68 | % | 0.79 | % | 0.87 | % | (5 | )bp | (30 | )bp | ||||||||||||||||
NONPERFORMING ASSETS BY LOB |
||||||||||||||||||||||||||||||
Investment Bank |
$ | 946 | $ | 1,056 | $ | 1,196 | $ | 1,321 | $ | 1,541 | (10 | )% | (39 | )% | ||||||||||||||||
Retail Financial Services |
1,319 | 1,351 | 1,385 | 1,557 | 693 | (2 | ) | 90 | ||||||||||||||||||||||
Card Services |
9 | 8 | 8 | 9 | 9 | 13 | | |||||||||||||||||||||||
Commercial Banking |
452 | 452 | 547 | 606 | 132 | | 242 | |||||||||||||||||||||||
Treasury & Securities Services |
6 | 4 | 14 | 4 | 5 | 50 | 20 | |||||||||||||||||||||||
Asset and Wealth Management |
100 | 78 | 81 | 140 | 102 | 28 | (2 | ) | ||||||||||||||||||||||
TOTAL |
$ | 2,832 | $ | 2,949 | $ | 3,231 | $ | 3,637 | $ | 2,482 | (4 | ) | 14 | |||||||||||||||||
(a) | Excludes purchased held-for-sale (HFS) wholesale loans. |
|
(b) | Represents distressed wholesale loans purchased as part of IBs proprietary investing activities. |
Page 29
JPMORGAN CHASE & CO. | ![]() |
|
CREDIT-RELATED INFORMATION, CONTINUED | ||
(in millions, except ratio data) |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
GROSS CHARGE-OFFS |
||||||||||||||||||||||||||||||||||||||||||||
Wholesale Loans |
$ | 31 | $ | 61 | $ | 123 | $ | 80 | $ | 172 | (49 | )% | (82 | )% | $ | 92 | $ | 340 | (73 | )% | ||||||||||||||||||||||||
Consumer (Excluding Card) |
167 | 219 | 658 | 269 | 104 | (24 | ) | 61 | 386 | 216 | 79 | |||||||||||||||||||||||||||||||||
Credit Card Receivables Reported |
811 | 753 | 784 | 760 | 281 | 8 | 189 | 1,564 | 575 | 172 | ||||||||||||||||||||||||||||||||||
Total Loans Reported |
1,009 | 1,033 | 1,565 | 1,109 | 557 | (2 | ) | 81 | 2,042 | 1,131 | 81 | |||||||||||||||||||||||||||||||||
Credit Card Securitizations |
1,060 | 1,034 | 1,126 | 1,039 | 540 | 3 | 96 | 2,094 | 1,067 | 96 | ||||||||||||||||||||||||||||||||||
Total Loans Managed |
2,069 | 2,067 | 2,691 | 2,148 | 1,097 | | 89 | 4,136 | 2,198 | 88 | ||||||||||||||||||||||||||||||||||
RECOVERIES |
||||||||||||||||||||||||||||||||||||||||||||
Wholesale Loans |
83 | 70 | 55 | 104 | 119 | 19 | (30 | ) | 153 | 198 | (23 | ) | ||||||||||||||||||||||||||||||||
Consumer (Excluding Card) |
53 | 67 | 52 | 50 | 24 | (21 | ) | 121 | 120 | 51 | 135 | |||||||||||||||||||||||||||||||||
Credit Card Receivables Reported |
100 | 80 | 60 | 90 | 22 | 25 | 355 | 180 | 46 | 291 | ||||||||||||||||||||||||||||||||||
Total Loans Reported |
236 | 217 | 167 | 244 | 165 | 9 | 43 | 453 | 295 | 54 | ||||||||||||||||||||||||||||||||||
Credit Card Securitizations |
130 | 117 | 115 | 111 | 54 | 11 | 141 | 247 | 108 | 129 | ||||||||||||||||||||||||||||||||||
Total Loans Managed |
366 | 334 | 282 | 355 | 219 | 10 | 67 | 700 | 403 | 74 | ||||||||||||||||||||||||||||||||||
NET CHARGE-OFFS |
||||||||||||||||||||||||||||||||||||||||||||
Wholesale Loans |
(52 | ) | (9 | ) | 68 | (24 | ) | 53 | (478 | ) | NM | (61 | ) | 142 | NM | |||||||||||||||||||||||||||||
Consumer (Excluding Card) |
114 | 152 | 606 | 219 | 80 | (25 | ) | 43 | 266 | 165 | 61 | |||||||||||||||||||||||||||||||||
Credit Card Receivables Reported |
711 | 673 | 724 | 670 | 259 | 6 | 175 | 1,384 | 529 | 162 | ||||||||||||||||||||||||||||||||||
Total Loans Reported |
773 | 816 | 1,398 | 865 | 392 | (5 | ) | 97 | 1,589 | 836 | 90 | |||||||||||||||||||||||||||||||||
Credit Card Securitizations |
930 | 917 | 1,011 | 928 | 486 | 1 | 91 | 1,847 | 959 | 93 | ||||||||||||||||||||||||||||||||||
Total Loans Managed |
$ | 1,703 | $ | 1,733 | $ | 2,409 | $ | 1,793 | $ | 878 | (2 | ) | 94 | $ | 3,436 | $ | 1,795 | 91 | ||||||||||||||||||||||||||
NET
CHARGE-OFF RATES ANNUALIZED |
||||||||||||||||||||||||||||||||||||||||||||
Wholesale Loans (a) |
(0.17 | )% | (0.03 | )% | 0.21 | % | (0.08 | )% | 0.29 | % | (14 | )bp | (46 | )bp | (0.10 | )% | 0.39 | % | (49 | )bp | ||||||||||||||||||||||||
Consumer (Excluding Card) (b) |
0.25 | 0.34 | 1.28 | 0.47 | 0.29 | (9 | ) | (4 | ) | 0.29 | 0.30 | (1 | ) | |||||||||||||||||||||||||||||||
Credit Card Receivables Reported |
4.25 | 4.25 | 4.70 | 4.49 | 6.07 | | (182 | ) | 4.25 | 6.22 | (197 | ) | ||||||||||||||||||||||||||||||||
Total Loans Reported (a) (b) |
0.83 | 0.88 | 1.47 | 0.93 | 0.77 | (5 | ) | 6 | 0.86 | 0.84 | 2 | |||||||||||||||||||||||||||||||||
Credit Card Securitizations |
5.48 | 5.36 | 5.70 | 5.20 | 5.74 | 12 | (26 | ) | 5.42 | 5.63 | (21 | ) | ||||||||||||||||||||||||||||||||
Total Loans Managed (a) (b) |
1.55 | 1.58 | 2.13 | 1.62 | 1.48 | (3 | ) | 7 | 1.57 | 1.54 | 3 | |||||||||||||||||||||||||||||||||
Memo: Credit Card Managed |
4.87 | 4.83 | 5.24 | 4.88 | 5.85 | 4 | (98 | ) | 4.85 | 5.83 | (98 | ) | ||||||||||||||||||||||||||||||||
(a) | Wholesale loans
held-for-sale were $17,871 million, $8,154 million, $7,684 million, $7,281 million and $5,199 million for the quarters ended June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004 and June 30, 2004,
respectively. The year-to-date average loans held-for-sale were
$13,039 million and $5,222 million for 2005 and 2004, respectively. These amounts are not included in the net charge-off rates. |
|
(b) | Average consumer loans (excluding Card) held-for-sale were $14,620 million, $15,861 million, $13,534 million, $14,479 million and $15,638 million for the quarters ended June 30, 2005, March 31, 2005, December 31, 2004,
September 30, 2004 and June 30, 2004, respectively. The year-to-date average loans held-for-sale were $15,237 million and $15,475 million for 2005 and 2004, respectively. These amounts are not included in the net charge-off rates. |
Page 30
JPMORGAN CHASE & CO. CREDIT-RELATED INFORMATION, CONTINUED (in millions, except ratio data) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||||||||||||||||||
Beginning Balance |
$ | 6,935 | $ | 7,320 | $ | 7,493 | $ | 3,967 | $ | 4,120 | (5 | )% | 68 | % | $ | 7,320 | $ | 4,523 | 62 | % | ||||||||||||||||||||||||
Addition Resulting from the Bank One Merger, July 1, 2004 |
| | | 3,123 | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||||
Net Charge-Offs |
(773 | ) | (816 | ) | (1,398 | ) | (865 | ) | (392 | ) | 5 | (97 | ) | (1,589 | ) | (836 | ) | (90 | ) | |||||||||||||||||||||||||
Provision for Loan Losses: |
||||||||||||||||||||||||||||||||||||||||||||
Provision Excluding Accounting Policy Conformity |
636 | 431 | 681 | 835 | 240 | 48 | 165 | 1,067 | 282 | 278 | ||||||||||||||||||||||||||||||||||
Accounting Policy Conformity |
| | 525 | 560 | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||||
Total Provision for Loan Losses |
636 | 431 | 1,206 | 1,395 | 240 | 48 | 165 | 1,067 | 282 | 278 | ||||||||||||||||||||||||||||||||||
Other |
(4 | ) | | 19 | (127 | )(a) | (1 | ) | NM | (300 | ) | (4 | ) | (2 | ) | (100 | ) | |||||||||||||||||||||||||||
Ending Balance |
$ | 6,794 | $ | 6,935 | $ | 7,320 | $ | 7,493 | $ | 3,967 | (2 | ) | 71 | $ | 6,794 | $ | 3,967 | 71 | ||||||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||||||||||||||||||
Beginning Balance |
$ | 488 | $ | 492 | $ | 541 | $ | 260 | $ | 297 | (1 | ) | 64 | $ | 492 | $ | 324 | 52 | ||||||||||||||||||||||||||
Addition Resulting from the Bank One Merger, July 1, 2004 |
| | | 508 | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||||
Provision for Lending-Related Commitments: |
||||||||||||||||||||||||||||||||||||||||||||
Provision Excluding Accounting Policy Conformity |
(49 | ) | (4 | ) | (49 | ) | 1 | (37 | ) | NM | (32 | ) | (53 | ) | (64 | ) | 17 | |||||||||||||||||||||||||||
Accounting Policy Conformity |
| | | (227 | ) | | NM | NM | | | NM | |||||||||||||||||||||||||||||||||
Total Provision for Lending-Related Commitments |
(49 | ) | (4 | ) | (49 | ) | (226 | ) | (37 | ) | NM | (32 | ) | (53 | ) | (64 | ) | 17 | ||||||||||||||||||||||||||
Other |
| | | (1 | ) | | NM | NM | | | NM | |||||||||||||||||||||||||||||||||
Ending Balance |
$ | 439 | $ | 488 | $ | 492 | $ | 541 | $ | 260 | (10 | ) | 69 | $ | 439 | $ | 260 | 69 | ||||||||||||||||||||||||||
ALLOWANCE COMPONENTS AND RATIOS |
||||||||||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||||||||||||||||||
Wholesale |
||||||||||||||||||||||||||||||||||||||||||||
Asset Specific |
$ | 314 | $ | 385 | $ | 469 | $ | 498 | NA | (18 | ) | NM | ||||||||||||||||||||||||||||||||
Formula
Based (b) Statistical Calculation |
1,604 | 1,448 | 1,639 | 1,832 | NA | 11 | NM | |||||||||||||||||||||||||||||||||||||
Adjustments to the Statistical Calculation |
686 | 894 | 990 | 1,126 | NA | (23 | ) | NM | ||||||||||||||||||||||||||||||||||||
Total Wholesale |
2,604 | 2,727 | 3,098 | 3,456 | 1,715 | (5 | ) | 52 | ||||||||||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||||||||||||||||||
Formula
Based Statistical Calculation |
3,064 | 3,113 | 3,169 | 3,159 | NA | (2 | ) | NM | ||||||||||||||||||||||||||||||||||||
Adjustments to the Statistical Calculation |
1,126 | 1,095 | 1,053 | 878 | NA | 3 | NM | |||||||||||||||||||||||||||||||||||||
Total Consumer |
4,190 | 4,208 | 4,222 | 4,037 | 2,252 | | 86 | |||||||||||||||||||||||||||||||||||||
Total Allowance for Loan Losses |
6,794 | 6,935 | 7,320 | 7,493 | 3,967 | (2 | ) | 71 | ||||||||||||||||||||||||||||||||||||
Allowance for Lending-Related Commitments |
439 | 488 | 492 | 541 | 260 | (10 | ) | 69 | ||||||||||||||||||||||||||||||||||||
Total Allowance for Credit Losses |
$ | 7,233 | $ | 7,423 | $ | 7,812 | $ | 8,034 | $ | 4,227 | (3 | ) | 71 | |||||||||||||||||||||||||||||||
Wholesale Allowance for Loan Losses to Total Wholesale Loans (c) |
1.98 | % | 2.11 | % | 2.43 | % | 2.76 | % | 2.39 | % | (13 | )bp | (41 | )bp | ||||||||||||||||||||||||||||||
Consumer Allowance for Loan Losses to Total Consumer Loans (d) |
1.65 | 1.69 | 1.70 | 1.62 | 1.67 | (4 | ) | (2 | ) | |||||||||||||||||||||||||||||||||||
Allowance
for Loan Losses to Total Loans (c) (d) |
1.76 | 1.83 | 1.94 | 2.01 | 1.92 | (7 | ) | (16 | ) | |||||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Total Nonperforming Loans (e) |
287 | 283 | 268 | 248 | 206 | 400 | 8,100 | |||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES BY LOB |
||||||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 971 | $ | 1,191 | $ | 1,547 | $ | 1,841 | $ | 742 | (18 | )% | 31 | % | ||||||||||||||||||||||||||||||
Retail Financial Services |
1,135 | 1,168 | 1,228 | 1,764 | 1,061 | (3 | ) | 7 | ||||||||||||||||||||||||||||||||||||
Card Services |
3,055 | 3,040 | 2,994 | 2,273 | 1,191 | | 157 | |||||||||||||||||||||||||||||||||||||
Commercial Banking |
1,431 | 1,312 | 1,322 | 1,350 | 107 | 9 | NM | |||||||||||||||||||||||||||||||||||||
Treasury & Securities Services |
7 | 5 | 9 | 9 | 2 | 40 | 250 | |||||||||||||||||||||||||||||||||||||
Asset and Wealth Management |
195 | 214 | 216 | 241 | 76 | (9 | ) | 157 | ||||||||||||||||||||||||||||||||||||
Corporate |
| 5 | 4 | 15 | 788 | NM | NM | |||||||||||||||||||||||||||||||||||||
Total |
$ | 6,794 | $ | 6,935 | $ | 7,320 | $ | 7,493 | $ | 3,967 | (2 | ) | 71 | |||||||||||||||||||||||||||||||
(a) | Related to the transfer of the allowance for accrued interest and fees on reported and securitized credit card loans. |
|
(b) | During the second quarter 2005, the Firm refined its historical and market based inputs used for estimating the Formula Based component of the allowance. These refinements resulted in an increase to the Statistical Calculation and a decrease
to the Adjustments to the Statistical Calculation, the component of the allowance that covers estimate imprecision. |
|
(c) | Loans held-for-sale
were $17,871 million, $8,154 million, $7,684 million, $7,281 million and $5,199 million at June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004 and June 30, 2004, respectively. These amounts are not included
in the allowance coverage ratios. |
|
(d) | Loans held-for-sale were $13,112 million, $16,532 million, $18,022 million, $12,816 million and $14,217 million at June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004 and June 30, 2004, respectively. These amounts are not
included in the allowance coverage ratios. |
|
(e) | Nonperforming loans held-for-sale were $28 million, $33 million, $15 million, $78 million and $46 million at June 30, 2005, March 31, 2005, December 31, 2004, September 30, 2004 and June 30, 2004, respectively. These amounts are not included
in the allowance coverage ratios. |
Page 31
JPMORGAN CHASE & CO. CREDIT-RELATED INFORMATION, CONTINUED (in millions) |
![]() |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||||||
LOANS |
||||||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | (271 | ) | $ | (356 | ) | $ | (120 | ) | $ | (148 | ) | $ | (96 | ) | 24 | % | (182 | )% | $ | (627 | ) | $ | (257 | ) | (144 | )% | |||||||||||||||||
Commercial Banking |
116 | (8 | ) | 17 | 10 | 23 | NM | 404 | 108 | 8 | NM | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
2 | (5 | ) | 3 | | 3 | NM | (33 | ) | (3 | ) | 4 | NM | |||||||||||||||||||||||||||||||
Asset & Wealth Management |
(18 | ) | (7 | ) | (21 | ) | 1 | (3 | ) | (157 | ) | (500 | ) | (25 | ) | 8 | NM | |||||||||||||||||||||||||||
Corporate |
1 | (4 | ) | | (1 | ) | (27 | ) | NM | NM | (3 | ) | (109 | ) | 97 | |||||||||||||||||||||||||||||
Total Wholesale |
(170 | ) | (380 | ) | (121 | ) | (138 | ) | (100 | ) | 55 | (70 | ) | (550 | ) | (346 | ) | (59 | ) | |||||||||||||||||||||||||
Retail Financial Services |
95 | 92 | 78 | 239 | 78 | 3 | 22 | 187 | 133 | 41 | ||||||||||||||||||||||||||||||||||
Card Services |
711 | 719 | 724 | 734 | 262 | (1 | ) | 171 | 1,430 | 495 | 189 | |||||||||||||||||||||||||||||||||
Total Consumer |
806 | 811 | 802 | 973 | 340 | (1 | ) | 137 | 1,617 | 628 | 157 | |||||||||||||||||||||||||||||||||
Accounting Policy Conformity (a) |
| | 525 | 560 | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||||
Total Provision for Loan Losses |
636 | 431 | 1,206 | 1,395 | 240 | 48 | 165 | 1,067 | 282 | 278 | ||||||||||||||||||||||||||||||||||
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | (72 | ) | $ | (10 | ) | $ | (53 | ) | $ | (3 | ) | $ | (32 | ) | NM | (125 | ) | $ | (82 | ) | $ | (59 | ) | (39 | ) | ||||||||||||||||||
Commercial Banking |
26 | 2 | 4 | 4 | (4 | ) | NM | NM | 28 | (2 | ) | NM | ||||||||||||||||||||||||||||||||
Treasury & Securities Services |
| 2 | | | | NM | NM | 2 | | NM | ||||||||||||||||||||||||||||||||||
Asset & Wealth Management |
(2 | ) | | | | (1 | ) | NM | (100 | ) | (2 | ) | (2 | ) | | |||||||||||||||||||||||||||||
Corporate |
| | | | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||||
Total Wholesale |
(48 | ) | (6 | ) | (49 | ) | 1 | (37 | ) | NM | (30 | ) | (54 | ) | (63 | ) | 14 | |||||||||||||||||||||||||||
Retail Financial Services |
(1 | ) | 2 | | | | NM | NM | 1 | (1 | ) | NM | ||||||||||||||||||||||||||||||||
Card Services |
| | | | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||||
Total Consumer |
(1 | ) | 2 | | | | NM | NM | 1 | (1 | ) | NM | ||||||||||||||||||||||||||||||||
Accounting Policy Conformity (b) |
| | | (227 | ) | | NM | NM | | | NM | |||||||||||||||||||||||||||||||||
Total Provision for Lending-Related Commitments |
(49 | ) | (4 | ) | (49 | ) | (226 | ) | (37 | ) | NM | (32 | ) | (53 | ) | (64 | ) | 17 | ||||||||||||||||||||||||||
TOTAL PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | (343 | ) | $ | (366 | ) | $ | (173 | ) | $ | (151 | ) | $ | (128 | ) | 6 | (168 | ) | $ | (709 | ) | $ | (316 | ) | (124 | ) | ||||||||||||||||||
Commercial Banking |
142 | (6 | ) | 21 | 14 | 19 | NM | NM | 136 | 6 | NM | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
2 | (3 | ) | 3 | | 3 | NM | (33 | ) | (1 | ) | 4 | NM | |||||||||||||||||||||||||||||||
Asset & Wealth Management |
(20 | ) | (7 | ) | (21 | ) | 1 | (4 | ) | (186 | ) | (400 | ) | (27 | ) | 6 | NM | |||||||||||||||||||||||||||
Corporate |
1 | (4 | ) | | (1 | ) | (27 | ) | NM | NM | (3 | ) | (109 | ) | 97 | |||||||||||||||||||||||||||||
Total Wholesale |
(218 | ) | (386 | ) | (170 | ) | (137 | ) | (137 | ) | 44 | (59 | ) | (604 | ) | (409 | ) | (48 | ) | |||||||||||||||||||||||||
Retail Financial Services |
94 | 94 | 78 | 239 | 78 | | 21 | 188 | 132 | 42 | ||||||||||||||||||||||||||||||||||
Card Services |
711 | 719 | 724 | 734 | 262 | (1 | ) | 171 | 1,430 | 495 | 189 | |||||||||||||||||||||||||||||||||
Total Consumer |
805 | 813 | 802 | 973 | 340 | (1 | ) | 137 | 1,618 | 627 | 158 | |||||||||||||||||||||||||||||||||
Accounting Policy Conformity |
| | 525 | 333 | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||||
Total Provision for Credit Losses |
587 | 427 | 1,157 | 1,169 | 203 | 37 | 189 | 1,014 | 218 | 365 | ||||||||||||||||||||||||||||||||||
Securitized Credit Losses |
930 | 917 | 1,011 | 928 | 486 | 1 | 91 | 1,847 | 959 | 93 | ||||||||||||||||||||||||||||||||||
Accounting Policy Conformity |
| | (525 | ) | (333 | ) | | NM | NM | | | NM | ||||||||||||||||||||||||||||||||
Managed Provision for Credit Losses |
$ | 1,517 | $ | 1,344 | $ | 1,643 | $ | 1,764 | $ | 689 | 13 | 120 | $ | 2,861 | $ | 1,177 | 143 | |||||||||||||||||||||||||||
(a) | Reflects an increase of $721 million for both the fourth quarter and third quarter of 2004, as a result of the decertification of heritage Bank One sellers interest in credit card securitizations, partially offset by reductions of $196 million
and $161 million to conform methodologies in the fourth and third quarters of 2004, respectively. |
|
(b) | Reflects a reduction of $227 million for the third quarter of 2004 to conform methodologies in the wholesale portfolio. |
Page 32
JPMORGAN CHASE & CO. CAPITAL |
![]() |
|
(in millions, except ratio and per share data) |
Heritage | Heritage | |||||||||||||||||||||||||||||||||||||||||||
JPMC Only | 2QTR 2005 | JPMC Only | YTD 2005 | |||||||||||||||||||||||||||||||||||||||||
2QTR | 1QTR | 4QTR | 3QTR | 2QTR | Change | Year-to-date | Change | |||||||||||||||||||||||||||||||||||||
2005 | 2005 | 2004 | 2004 | 2004 | 1QTR 2005 | 2QTR 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||||||||||
COMMON SHARES OUTSTANDING |
||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Basic Shares Outstanding |
3,493.0 | 3,517.5 | 3,514.7 | 3,513.5 | 2,042.8 | (1 | )% | 71 | % | 3,505.2 | 2,037.6 | 72 | % | |||||||||||||||||||||||||||||||
Weighted-Average Diluted Shares Outstanding |
3,548.3 | 3,569.8 | 3,602.0 | 3,592.0 | 2,042.8 | (1 | ) | 74 | 3,559.0 | 2,096.3 | 70 | |||||||||||||||||||||||||||||||||
Common Shares Outstanding at Period End |
3,514.0 | 3,525.3 | 3,556.2 | 3,564.1 | 2,087.5 | | 68 | 3,514.0 | 2,087.5 | 68 | ||||||||||||||||||||||||||||||||||
Cash Dividends Declared per Share |
$ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.34 | | | $ | 0.68 | $ | 0.68 | | |||||||||||||||||||||||||||
Book Value per Share |
29.95 | 29.78 | 29.61 | 29.42 | 21.52 | 1 | 39 | 29.95 | 21.52 | 39 | ||||||||||||||||||||||||||||||||||
Dividend Payout |
122 | % | 54 | % | 74 | % | 87 | % | NM | 6,800 | bp | NM | bp | 75 | % | 106 | % | (3,100 | )bp | |||||||||||||||||||||||||
SHARE PRICE |
||||||||||||||||||||||||||||||||||||||||||||
High |
$ | 36.50 | $ | 39.69 | $ | 40.45 | $ | 40.25 | $ | 42.57 | (8 | )% | (14 | )% | $ | 39.69 | $ | 43.84 | (9 | )% | ||||||||||||||||||||||||
Low |
33.35 | 34.32 | 36.32 | 35.50 | 34.62 | (3 | ) | (4 | ) | 33.35 | 34.62 | (4 | ) | |||||||||||||||||||||||||||||||
Close |
35.32 | 34.60 | 39.01 | 39.73 | 38.77 | 2 | (9 | ) | 35.32 | 38.77 | (9 | ) | ||||||||||||||||||||||||||||||||
STOCK REPURCHASE PROGRAM (b) |
||||||||||||||||||||||||||||||||||||||||||||
Aggregate Repurchases |
$ | 593.7 | $ | 1,315.6 | $ | 599.8 | $ | 137.9 | NM | $ | 1,909.3 | NM | ||||||||||||||||||||||||||||||||
Common Shares Repurchased |
16.8 | 36.0 | 15.8 | 3.5 | NM | 52.8 | NM | |||||||||||||||||||||||||||||||||||||
Average Purchase Price |
$ | 35.32 | $ | 36.57 | $ | 38.01 | $ | 39.42 | NM | $ | 36.17 | NM | ||||||||||||||||||||||||||||||||
CAPITAL RATIOS |
||||||||||||||||||||||||||||||||||||||||||||
Tier 1 Capital |
$ | 69,779 | (a) | $ | 69,435 | $ | 68,621 | $ | 69,309 | $ | 43,537 | | 60 | |||||||||||||||||||||||||||||||
Total Capital |
96,086 | (a) | 96,378 | 96,807 | 96,666 | 59,357 | | 62 | ||||||||||||||||||||||||||||||||||||
Risk-Weighted Assets |
848,394 | (a) | 811,822 | 791,373 | 803,464 | 530,270 | 5 | 60 | ||||||||||||||||||||||||||||||||||||
Adjusted Average Assets |
1,135,653 | (a) | 1,110,058 | 1,102,456 | 1,065,244 | 790,390 | 2 | 44 | ||||||||||||||||||||||||||||||||||||
Tier 1 Capital Ratio |
8.2 | %(a) | 8.6 | % | 8.7 | % | 8.6 | % | 8.2 | % | (40 | )bp | | bp | ||||||||||||||||||||||||||||||
Total Capital Ratio |
11.3 | (a) | 11.9 | 12.2 | 12.0 | 11.2 | (60 | ) | 10 | |||||||||||||||||||||||||||||||||||
Tier 1 Leverage Ratio |
6.1 | (a) | 6.3 | 6.2 | 6.5 | 5.5 | (20 | ) | 60 | |||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS |
||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
$ | 43,537 | $ | 43,440 | $ | 43,203 | $ | 42,947 | $ | 8,731 | | % | 399 | % | ||||||||||||||||||||||||||||||
Mortgage Servicing Rights |
5,026 | 5,663 | 5,080 | 5,168 | 5,707 | (11 | ) | (12 | ) | |||||||||||||||||||||||||||||||||||
Purchased Credit Card Relationships |
3,528 | 3,703 | 3,878 | 4,055 | 893 | (5 | ) | 295 | ||||||||||||||||||||||||||||||||||||
All Other Intangibles |
5,319 | 5,514 | 5,726 | 5,945 | 799 | (4 | ) | NM | ||||||||||||||||||||||||||||||||||||
Total Intangibles |
$ | 57,410 | $ | 58,320 | $ | 57,887 | $ | 58,115 | $ | 16,130 | (2 | ) | 256 | |||||||||||||||||||||||||||||||
(a) | Estimated |
|
(b) | Excludes commission costs. |
Page 33
JPMORGAN CHASE & CO. Glossary of Terms |
![]() |
ACH: Automated Clearing House
Assets Under Management: Represent assets actively managed by Asset & Wealth Management on behalf of institutional, private banking, private client services and retail clients. Excludes assets managed by American Century Companies, Inc., in which the Firm has a 43% ownership interest.
Assets Under Supervision: Represent assets under management as well as custody, brokerage, administration and deposit accounts.
Average Managed Assets: Refers to total assets on the Firms balance sheet plus credit card receivables that have been securitized.
bp: Denotes basis points; 100 bp equals 1%.
Contractual Credit Card Charge-off: In accordance with the Federal Financial Institutions Examination Council Policy, credit card loans are charged-off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification of the filing of bankruptcy, whichever is earlier.
Corporate: Includes Private Equity, Treasury, and corporate staff and other centrally managed expenses.
Managed Credit Card Receivables or Managed Basis: Refers to credit card receivables on the Firms balance sheet plus credit card receivables that have been securitized.
NA: Data is not applicable for the period presented.
NM: Not meaningful
Operating Basis or Operating Earnings: Reported results excluding the impact of merger costs, other special items and credit card securitizations.
Overhead Ratio: Noninterest expense as a percentage of total net revenue.
Reported Basis: Financial statements prepared under accounting principles generally accepted in the United States of America (U.S. GAAP). The reported basis includes the impact of merger costs, other special items and credit card securitizations.
Segment Results: All periods are on a comparable basis, although restatements may occur in future periods to reflect further alignment of management accounting policies or changes in organizational structures between businesses.
Special Items: Includes merger costs, litigation reserve charge and accounting policy conformity adjustments.
Unaudited: The financial statements and information included throughout this document are unaudited and have not been subjected to auditing procedures sufficient to permit an independent certified public accountant to express an opinion.
Value-at-Risk (VAR): A measure of the dollar amount of potential loss from adverse market moves in an ordinary market environment.
Page 34
JPMORGAN CHASE & CO. Line of Business Metrics |
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Investment Banking
IBs revenues are comprised of the following:
1. Investment banking fees includes advisory, equity underwriting, bond underwriting and loan syndication fees.
2. Fixed income markets includes client and portfolio management revenue related to both market-making and proprietary risk-taking across global fixed income markets, including government and corporate debt, foreign exchange, interest rate and commodities markets.
3. Equities markets includes client and portfolio management revenue related to market-making and proprietary risk-taking across global equity products, including cash instruments, derivatives and convertibles.
4. Credit portfolio revenue includes Net interest income, fees and loan sale activity for IBs credit portfolio. Credit portfolio revenue also includes gains or losses on securities received as part of a loan restructuring, and changes in the credit valuation adjustment (CVA), which is the component of the fair value of a derivative that reflects the credit quality of the counterparty. Credit portfolio revenue also includes the results of risk management related to the Firms lending and derivative activities.
Retail Financial Services
Description of selected business metrics within Home Finance:
1. Secondary marketing involves the sale of mortgage loans into the secondary market and risk management of this activity from the point of loan commitment to customers through loan closing and subsequent sale.
Home Finances origination channels are comprised of the following:
1. Retail A mortgage banker employed by the Firm directly contacts borrowers who are buying or refinancing a home through a branch office, through the Internet or by phone. Borrowers are frequently referred to a mortgage banker by real estate brokers, home builders or other third parties.
2. Wholesale A third-party mortgage broker refers loans to a mortgage banker at the Firm. Brokers are independent loan originators that specialize in finding and counseling borrowers but do not provide funding for loans.
3. Correspondent Banks, thrifts, other mortgage banks and other financial institutions sell closed loans to the Firm.
4. Correspondent negotiated transactions (CNT) Mid- to large-sized mortgage lenders, banks and bank-owned mortgage companies sell servicing to the Firm on an as-originated basis. These transactions supplement traditional production channels and provide growth opportunities in the servicing portfolio in stable and rising-rate periods.
Description of selected business metrics within Consumer & Small Business Banking:
1. Personal bankers Retail branch office personnel who acquire, retain and expand new and existing customer relationships by assessing customer needs and recommending and selling appropriate banking products and services.
2. Investment sales representatives Licensed retail branch sales personnel, assigned to support several branches, who assist with the sale of investment products including college planning accounts, mutual funds, annuities and retirement accounts.
Description of selected business metrics within Insurance:
1. Proprietary annuity sales represent annuity contracts marketed through and issued by subsidiaries of the Firm.
2. Insurance in force direct/assumed includes the aggregate face amount of insurance policies directly underwritten and assumed through reinsurance.
3. Insurance in force retained includes the aggregate face amounts of insurance policies directly underwritten and assumed through reinsurance, after reduction for face amounts ceded to reinsurers.
Card Services
Description of selected business metrics within Card Services:
1. Charge volume Represents the dollar amount of cardmember purchases, balance transfers and cash advance activity.
2. Net accounts opened Includes originations, purchases and sales.
3. Merchant acquiring business Represents an entity that processes payments for merchants. JPMorgan Chase is a majority owner of Paymentech, Inc. and a 50% owner of Chase Merchant Services.
4. Bank card volume Represents the dollar amount of transactions processed for the merchants.
5. Total transactions Represents the number of transactions and authorizations processed for the merchants.
Commercial Banking
Commercial Banking revenues are comprised of the following:
1. Lending incorporates a variety of financing alternatives, such as term loans, revolving lines of credit and asset-based structures and leases, which are often secured by receivables, inventory, equipment or real estate.
2. Treasury services incorporates a broad range of products and services to help clients manage short-term liquidity through deposits and sweeps, and longer-term investment needs through money market accounts, certificates of deposit and mutual funds; manage working capital through lockbox, global trade, global clearing and commercial card products; and have ready access to information to manage their business through on-line reporting tools.
3. Investment banking products provide clients with more sophisticated capital-raising alternatives, through loan syndications, investment-grade debt, asset-backed securities, private placements, high-yield bonds and equity underwriting, and balance sheet and risk management tools through foreign exchange, derivatives, M&A and advisory services.
Treasury & Securities Services
Treasury & Securities Services firmwide metrics include certain TSS product revenues and liability balances reported in other lines of business for customers who are also customers of those lines of business. In order to capture the firmwide impact of TS and TSS products and revenues, management reviews firmwide metrics such as firmwide liability balances, firmwide revenue and firmwide overhead ratios in assessing financial performance for TSS. Firmwide metrics are necessary in order to understand the aggregate TSS business.
Asset & Wealth Management
AWMs client segments are comprised of the following:
1. The Private bank addresses every facet of wealth management for ultra-high-net-worth individuals and families worldwide, including investment management, capital markets and risk management, tax and estate planning, banking, capital raising and specialty wealth advisory services.
2. Retail provides more than 2 million customers worldwide with investment management, retirement planning and administration, and brokerage services through third-party and direct distribution channels.
3. Institutional serves more than 3,000 large and mid-size corporate and public institutions, endowments and foundations, and governments globally. AWM offers institutions comprehensive global investment services, including investment management across asset classes, pension analytics, asset-liability management, active risk budgeting and overlay strategies.
4. Private client services offers high-net-worth individuals, families and business owners comprehensive wealth management solutions that include financial planning, personal trust, investment and banking products and services.
Page 35
APPENDIX
JPMORGAN CHASE & CO. RECONCILIATION FROM REPORTED TO OPERATING BASIS (in millions, except per share and ratio data) |
![]() |
SECOND QUARTER 2005 | ||||||||||||||||||||||||||||||||
Special Items (c) | ||||||||||||||||||||||||||||||||
Reported | Trading | Credit | Merger | Litigation | Accounting | Tax Equivalent | Operating | |||||||||||||||||||||||||
Results | Reclass (a) | Card (b) | Costs | Reserves | Policy Conformity | Adjustments (d) | Basis | |||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 961 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 961 | ||||||||||||||||
Trading Revenue |
387 | 198 | | | | | | 585 | ||||||||||||||||||||||||
Lending & Deposit Related Fees |
851 | | | | | | | 851 | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
2,541 | | | | | | | 2,541 | ||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
407 | | | | | | | 407 | ||||||||||||||||||||||||
Mortgage Fees and Related Income |
336 | | | | | | | 336 | ||||||||||||||||||||||||
Credit Card Income |
1,763 | | (728 | ) | | | | | 1,035 | |||||||||||||||||||||||
Other Income |
496 | | | | | | 143 | 639 | ||||||||||||||||||||||||
Noninterest Revenue |
7,742 | 198 | (728 | ) | | | | 143 | 7,355 | |||||||||||||||||||||||
Net Interest Income |
5,001 | (198 | ) | 1,658 | | | | 84 | 6,545 | |||||||||||||||||||||||
TOTAL NET REVENUE |
12,743 | | 930 | | | | 227 | 13,900 | ||||||||||||||||||||||||
Provision for Credit Losses |
587 | | 930 | | | | | 1,517 | ||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||
Compensation Expense |
4,266 | | | | | | | 4,266 | ||||||||||||||||||||||||
Occupancy Expense |
580 | | | | | | | 580 | ||||||||||||||||||||||||
Technology and Communications Expense |
896 | | | | | | | 896 | ||||||||||||||||||||||||
Professional & Outside Services |
1,130 | | | | | | | 1,130 | ||||||||||||||||||||||||
Marketing |
537 | | | | | | | 537 | ||||||||||||||||||||||||
Other Expense |
954 | | | | | | | 954 | ||||||||||||||||||||||||
Amortization of Intangibles |
385 | | | | | | | 385 | ||||||||||||||||||||||||
Total Noninterest Expense before Merger Costs and
Litigation Reserve Charge |
8,748 | | | | | | | 8,748 | ||||||||||||||||||||||||
Merger Costs |
279 | | | (279 | ) | | | | | |||||||||||||||||||||||
Litigation Reserve Charge |
1,872 | | | | (1,872 | ) | | | | |||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
10,899 | | | (279 | ) | (1,872 | ) | | | 8,748 | ||||||||||||||||||||||
Income (Loss) before Income Tax Expense |
1,257 | | | 279 | 1,872 | | 227 | 3,635 | ||||||||||||||||||||||||
Income Tax Expense (Benefit) |
263 | | | 106 | 711 | | 227 | 1,307 | ||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 994 | $ | | $ | | $ | 173 | $ | 1,161 | $ | | $ | | $ | 2,328 | ||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.28 | $ | | $ | | $ | 0.05 | $ | 0.33 | $ | | $ | | $ | 0.66 | ||||||||||||||||
ROE |
4 | % | | % | | % | 1 | % | 4 | % | | % | | % | 9 | % | ||||||||||||||||
ROE-GW |
6 | | | 1 | 8 | | | 15 | ||||||||||||||||||||||||
ROA |
0.34 | NM | NM | NM | NM | NM | NM | 0.75 | ||||||||||||||||||||||||
Overhead Ratio |
86 | NM | NM | NM | NM | NM | NM | 63 | ||||||||||||||||||||||||
Effective Income Tax Rate |
21 | NM | NM | 38 | 38 | NM | 100 | 36 |
(a) | The reclassification of trading-related net interest income from Net Interest Income to
Trading Revenue primarily impacts the Investment Bank segment results. |
|
(b) | The impact of credit card securitizations affects Card Services. See page 19 for further
information. |
|
(c) | Special items are excluded from Operating earnings, as management believes these items are
not part of the Firms normal daily business operations (and, therefore, are not indicative of
trends), and do not provide meaningful comparisons with other periods. These items include Merger
costs, significant litigation charges, charges to conform accounting policies and other items.
Merger costs of $279 million reflects costs associated with the merger; significant litigation
charges of $1.9 billion were taken in the second quarter of 2005. |
|
(d) | For a description of the tax-equivalent adjustments, see the Operating Basis cover page. |
Page 36
JPMORGAN CHASE & CO. RECONCILIATION FROM REPORTED TO OPERATING BASIS (in millions, except per share and ratio data) |
![]() |
FIRST QUARTER 2005 | ||||||||||||||||||||||||||||||||
Special Items (c) | ||||||||||||||||||||||||||||||||
Reported | Trading | Credit | Merger | Litigation | Accounting | Tax Equivalent | Operating | |||||||||||||||||||||||||
Results | Reclass (a) | Card (b) | Costs | Reserves | Policy Conformity | Adjustments (d) | Basis | |||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 993 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 993 | ||||||||||||||||
Trading Revenue |
1,859 | 328 | | | | | | 2,187 | ||||||||||||||||||||||||
Lending & Deposit Related Fees |
820 | | | | | | | 820 | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
2,498 | | | | | | | 2,498 | ||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
(45 | ) | | | | | | | (45 | ) | ||||||||||||||||||||||
Mortgage Fees and Related Income |
362 | | | | | | | 362 | ||||||||||||||||||||||||
Credit Card Income |
1,734 | | (815 | ) | | | | | 919 | |||||||||||||||||||||||
Other Income |
201 | | | | | | 115 | 316 | ||||||||||||||||||||||||
Noninterest Revenue |
8,422 | 328 | (815 | ) | | | | 115 | 8,050 | |||||||||||||||||||||||
Net Interest Income |
5,225 | (328 | ) | 1,732 | | | | 61 | 6,690 | |||||||||||||||||||||||
TOTAL NET REVENUE |
13,647 | | 917 | | | | 176 | 14,740 | ||||||||||||||||||||||||
Provision for Credit Losses |
427 | | 917 | | | | | 1,344 | ||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||
Compensation Expense |
4,702 | | | | | | | 4,702 | ||||||||||||||||||||||||
Occupancy Expense |
525 | | | | | | | 525 | ||||||||||||||||||||||||
Technology and Communications Expense |
920 | | | | | | | 920 | ||||||||||||||||||||||||
Professional & Outside Services |
1,074 | | | | | | | 1,074 | ||||||||||||||||||||||||
Marketing |
483 | | | | | | | 483 | ||||||||||||||||||||||||
Other Expense |
805 | | | | | | | 805 | ||||||||||||||||||||||||
Amortization of Intangibles |
383 | | | | | | | 383 | ||||||||||||||||||||||||
Total Noninterest Expense before Merger Costs and
Litigation Reserve Charge |
8,892 | | | | | | | 8,892 | ||||||||||||||||||||||||
Merger Costs |
145 | | | (145 | ) | | | | | |||||||||||||||||||||||
Litigation Reserve Charge |
900 | | | | (900 | ) | | | | |||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
9,937 | | | (145 | ) | (900 | ) | | | 8,892 | ||||||||||||||||||||||
Income (Loss) before Income Tax Expense |
3,283 | | | 145 | 900 | | 176 | 4,504 | ||||||||||||||||||||||||
Income Tax Expense (Benefit) |
1,019 | | | 55 | 342 | | 176 | 1,592 | ||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 2,264 | $ | | $ | | $ | 90 | $ | 558 | $ | | $ | | $ | 2,912 | ||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.63 | $ | | $ | | $ | 0.03 | $ | 0.15 | $ | | $ | | $ | 0.81 | ||||||||||||||||
ROE |
9 | % | | % | | % | | % | 2 | % | | % | | % | 11 | % | ||||||||||||||||
ROE-GW |
15 | | | 1 | 3 | | | 19 | ||||||||||||||||||||||||
ROA |
0.79 | NM | NM | NM | NM | NM | NM | 0.96 | ||||||||||||||||||||||||
Overhead Ratio |
73 | NM | NM | NM | NM | NM | NM | 60 | ||||||||||||||||||||||||
Effective Income Tax Rate |
31 | NM | NM | 38 | 38 | NM | 100 | 35 |
(a) | The reclassification of trading-related net interest income from Net Interest Income to
Trading Revenue primarily impacts the Investment Bank segment results. |
|
(b) | The impact of credit card securitizations affects Card Services. See page 19 for further
information. |
|
(c) | Special items are excluded from Operating earnings, as management believes these items are
not part of the Firms normal daily business operations (and, therefore, are not indicative of
trends), and do not provide meaningful comparisons with other periods. These items include merger
costs, significant litigation charges, charges to conform accounting policies and other items.
Merger costs of $145 million reflects costs associated with the merger; significant litigation
charges of $900 million were taken in the first quarter of 2005. |
|
(d) | For a description of the tax-equivalent adjustments, see the Operating Basis cover page. |
Page 37
JPMORGAN CHASE & CO. RECONCILIATION FROM REPORTED TO OPERATING BASIS (in millions, except per share and ratio data) |
![]() |
FOURTH QUARTER 2004 | ||||||||||||||||||||||||||||||||
Special Items (c) | ||||||||||||||||||||||||||||||||
Reported | Trading | Credit | Merger | Litigation | Accounting | Tax Equivalent | Operating | |||||||||||||||||||||||||
Results | Reclass (a) | Card (b) | Costs | Reserves | Policy Conformity | Adjustments (d) | Basis | |||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 1,073 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 1,073 | ||||||||||||||||
Trading Revenue |
611 | 511 | | | | | | 1,122 | ||||||||||||||||||||||||
Lending & Deposit Related Fees |
903 | | | | | | | 903 | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
2,330 | | | | | | | 2,330 | ||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
569 | | | | | | | 569 | ||||||||||||||||||||||||
Mortgage Fees and Related Income |
85 | | | | | | | 85 | ||||||||||||||||||||||||
Credit Card Income |
1,822 | | (786 | ) | | | | | 1,036 | |||||||||||||||||||||||
Other Income |
228 | | 1 | | | | 178 | 407 | ||||||||||||||||||||||||
Noninterest Revenue |
7,621 | 511 | (785 | ) | | | | 178 | 7,525 | |||||||||||||||||||||||
Net Interest Income |
5,329 | (511 | ) | 1,796 | | | | 10 | 6,624 | |||||||||||||||||||||||
TOTAL NET REVENUE |
12,950 | | 1,011 | | | | 188 | 14,149 | ||||||||||||||||||||||||
Provision for Credit Losses |
1,157 | | 1,011 | | | (525 | ) | | 1,643 | |||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||
Compensation Expense |
4,211 | | | | | | | 4,211 | ||||||||||||||||||||||||
Occupancy Expense |
609 | | | | | | | 609 | ||||||||||||||||||||||||
Technology and Communications Expense |
1,051 | | | | | | | 1,051 | ||||||||||||||||||||||||
Professional & Outside Services |
1,191 | | | | | | | 1,191 | ||||||||||||||||||||||||
Marketing |
428 | | | | | | | 428 | ||||||||||||||||||||||||
Other Expense |
981 | | | | | | | 981 | ||||||||||||||||||||||||
Amortization of Intangibles |
392 | | | | | | | 392 | ||||||||||||||||||||||||
Total Noninterest Expense before Merger Costs and
Litigation Reserve Charge |
8,863 | | | | | | | 8,863 | ||||||||||||||||||||||||
Merger Costs |
523 | | | (523 | ) | | | | | |||||||||||||||||||||||
Litigation Reserve Charge |
| | | | | | | | ||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
9,386 | | | (523 | ) | | | | 8,863 | |||||||||||||||||||||||
Income (Loss) before Income Tax Expense |
2,407 | | | 523 | | 525 | 188 | 3,643 | ||||||||||||||||||||||||
Income Tax Expense (Benefit) |
741 | | | 199 | | 199 | 188 | 1,327 | ||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 1,666 | $ | | $ | | $ | 324 | $ | | $ | 326 | $ | | $ | 2,316 | ||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.46 | $ | | $ | | $ | 0.09 | $ | | $ | 0.09 | $ | | $ | 0.64 | ||||||||||||||||
ROE |
6 | % | | % | | % | 1 | % | | % | 2 | % | | % | 9 | % | ||||||||||||||||
ROE-GW |
11 | | | 2 | | 2 | | 15 | ||||||||||||||||||||||||
ROA |
0.57 | NM | NM | NM | NM | NM | NM | 0.75 | ||||||||||||||||||||||||
Overhead Ratio |
72 | NM | NM | NM | NM | NM | NM | 63 | ||||||||||||||||||||||||
Effective Income Tax Rate |
31 | NM | NM | 38 | NM | 38 | 100 | 36 |
(a) | The reclassification of trading-related
net interest income from Net Interest Income to
Trading Revenue primarily impacts the Investment Bank segment results. |
|
(b) | The impact of credit card securitizations
affects Card Services. See page 19 for further
information. |
|
(c) | Special items are excluded from Operating
earnings, as management believes these items are
not part of the Firms normal daily business operations (and, therefore, are not indicative of
trends), and do not provide meaningful comparisons with other periods. These items include merger
costs, significant litigation charges, charges to conform accounting policies and other items.
Merger costs of $523 million reflects costs associated with the merger. |
|
(d) | For a description of the tax-equivalent
adjustments, see the Operating Basis cover page. |
Page 38
JPMORGAN CHASE & CO.
|
![]() |
|
RECONCILIATION FROM REPORTED TO OPERATING BASIS |
||
(in millions, except per share and ratio data) |
THIRD QUARTER 2004 | ||||||||||||||||||||||||||||||||
Special Items (c) | ||||||||||||||||||||||||||||||||
Reported | Trading | Credit | Merger | Litigation | Accounting | Tax Equivalent | Operating | |||||||||||||||||||||||||
Results | Reclass (a) | Card (b) | Costs | Reserves | Policy Conformity | Adjustments (d) | Basis | |||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 879 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 879 | ||||||||||||||||
Trading Revenue |
408 | 424 | | | | | | 832 | ||||||||||||||||||||||||
Lending & Deposit Related Fees |
943 | | | | | | | 943 | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
2,185 | | | | | | | 2,185 | ||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
413 | | | | | | | 413 | ||||||||||||||||||||||||
Mortgage Fees and Related Income |
233 | | | | | | | 233 | ||||||||||||||||||||||||
Credit Card Income |
1,782 | | (848 | ) | | | | | 934 | |||||||||||||||||||||||
Other Income |
210 | | (3 | ) | | | 118 | 64 | 389 | |||||||||||||||||||||||
Noninterest Revenue |
7,053 | 424 | (851 | ) | | | 118 | 64 | 6,808 | |||||||||||||||||||||||
Net Interest Income |
5,452 | (424 | ) | 1,779 | | | | (36 | ) | 6,771 | ||||||||||||||||||||||
TOTAL NET REVENUE |
12,505 | | 928 | | | 118 | 28 | 13,579 | ||||||||||||||||||||||||
Provision for Credit Losses |
1,169 | | 928 | | | (333 | ) | | 1,764 | |||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||
Compensation Expense |
4,050 | | | | | | | 4,050 | ||||||||||||||||||||||||
Occupancy Expense |
604 | | | | | | | 604 | ||||||||||||||||||||||||
Technology and Communications Expense |
1,046 | | | | | | | 1,046 | ||||||||||||||||||||||||
Professional & Outside Services |
1,103 | | | | | | | 1,103 | ||||||||||||||||||||||||
Marketing |
506 | | | | | | | 506 | ||||||||||||||||||||||||
Other Expense |
920 | | | | | | | 920 | ||||||||||||||||||||||||
Amortization of Intangibles |
396 | | | | | | | 396 | ||||||||||||||||||||||||
Total Noninterest Expense before Merger Costs and |
8,625 | | | | | | | 8,625 | ||||||||||||||||||||||||
Litigation Reserve Charge |
||||||||||||||||||||||||||||||||
Merger Costs |
752 | | | (752 | ) | | | | | |||||||||||||||||||||||
Litigation Reserve Charge |
| | | | | | | | ||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
9,377 | | | (752 | ) | | | | 8,625 | |||||||||||||||||||||||
Income (Loss) before Income Tax Expense |
1,959 | | | 752 | | 451 | 28 | 3,190 | ||||||||||||||||||||||||
Income Tax Expense (Benefit) |
541 | | | 290 | | 172 | 28 | 1,031 | ||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 1,418 | $ | | $ | | $ | 462 | $ | | $ | 279 | $ | | $ | 2,159 | ||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.39 | $ | | $ | | $ | 0.13 | $ | | $ | 0.08 | $ | | $ | 0.60 | ||||||||||||||||
ROE |
5 | % | | % | | % | 2 | % | | % | 1 | % | | % | 8 | % | ||||||||||||||||
ROE-GW |
9 | | | 3 | | 2 | | 14 | ||||||||||||||||||||||||
ROA |
0.50 | NM | NM | NM | NM | NM | NM | 0.72 | ||||||||||||||||||||||||
Overhead Ratio |
75 | NM | NM | NM | NM | NM | NM | 64 | ||||||||||||||||||||||||
Effective Income Tax Rate |
28 | NM | NM | 39 | NM | 38 | 100 | 32 |
(a) | The reclassification of trading-related net interest income from Net Interest Income to Trading Revenue primarily impacts the Investment Bank segment results. |
|
(b) | The impact of credit card securitizations affects Card Services. See page 19 for further information. |
|
(c) | Special items are excluded from Operating earnings, as management believes these items are not part of the Firms normal daily business operations (and, therefore, are not indicative of trends), and do not provide meaningful
comparisons with other periods. These items include merger costs, significant litigation charges, charges to conform accounting policies and other items. Merger costs of $752 million reflects costs associated with the merger. |
|
(d) | For a description of the tax-equivalent adjustments, see the Operating Basis cover page. |
Page 39
JPMORGAN CHASE & CO.
|
![]() |
|
RECONCILIATION FROM REPORTED TO OPERATING BASIS |
||
(in millions, except per share and ratio data) |
SECOND QUARTER 2004 | ||||||||||||||||||||||||||||||||
Special Items (c) | ||||||||||||||||||||||||||||||||
Reported | Trading | Credit | Merger | Litigation | Accounting | Tax Equivalent | Operating | |||||||||||||||||||||||||
Results | Reclass (a) | Card (b) | Costs | Reserves | Policy Conformity | Adjustments (d) | Basis | |||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 893 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 893 | ||||||||||||||||
Trading Revenue |
873 | 439 | | | | | | 1,312 | ||||||||||||||||||||||||
Lending & Deposit Related Fees |
412 | | | | | | | 412 | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
1,814 | | | | | | | 1,814 | ||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
460 | | | | | | | 460 | ||||||||||||||||||||||||
Mortgage Fees and Related Income |
294 | | | | | | | 294 | ||||||||||||||||||||||||
Credit Card Income |
631 | | (307 | ) | | | | | 324 | |||||||||||||||||||||||
Other Income |
260 | | (45 | ) | | | | 41 | 256 | |||||||||||||||||||||||
Noninterest Revenue |
5,637 | 439 | (352 | ) | | | | 41 | 5,765 | |||||||||||||||||||||||
Net Interest Income |
2,994 | (439 | ) | 838 | | | | 18 | 3,411 | |||||||||||||||||||||||
TOTAL NET REVENUE |
8,631 | | 486 | | | | 59 | 9,176 | ||||||||||||||||||||||||
Provision for Credit Losses |
203 | | 486 | | | | | 689 | ||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||
Compensation Expense |
2,943 | | | | | | | 2,943 | ||||||||||||||||||||||||
Occupancy Expense |
440 | | | | | | | 440 | ||||||||||||||||||||||||
Technology and Communications Expense |
786 | | | | | | | 786 | ||||||||||||||||||||||||
Professional & Outside Services |
752 | | | | | | | 752 | ||||||||||||||||||||||||
Marketing |
202 | | | | | | | 202 | ||||||||||||||||||||||||
Other Expense |
511 | | | | | | | 511 | ||||||||||||||||||||||||
Amortization of Intangibles |
79 | | | | | | | 79 | ||||||||||||||||||||||||
Total Noninterest Expense before Merger Costs and |
5,713 | | | | | | | 5,713 | ||||||||||||||||||||||||
Litigation Reserve Charge |
||||||||||||||||||||||||||||||||
Merger Costs |
90 | | | (90 | ) | | | | | |||||||||||||||||||||||
Litigation Reserve Charge |
3,700 | | | | (3,700 | ) | | | | |||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
9,503 | | | (90 | ) | (3,700 | ) | | | 5,713 | ||||||||||||||||||||||
Income (Loss) before Income Tax Expense |
(1,075 | ) | | | 90 | 3,700 | | 59 | 2,774 | |||||||||||||||||||||||
Income Tax Expense (Benefit) |
(527 | ) | | | 30 | 1,406 | | 59 | 968 | |||||||||||||||||||||||
NET INCOME (LOSS) |
$ | (548 | ) | $ | | $ | | $ | 60 | $ | 2,294 | $ | | $ | | $ | 1,806 | |||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | (0.27 | ) | $ | | $ | | $ | 0.03 | $ | 1.09 | $ | | $ | | $ | 0.85 | |||||||||||||||
ROE |
NM | NM | NM | NM | NM | NM | NM | 15 | % | |||||||||||||||||||||||
ROE-GW |
NM | NM | NM | NM | NM | NM | NM | 19 | ||||||||||||||||||||||||
ROA |
NM | NM | NM | NM | NM | NM | NM | 0.87 | ||||||||||||||||||||||||
Overhead Ratio |
110 | % | NM | NM | NM | NM | NM | NM | 62 | |||||||||||||||||||||||
Effective Income Tax Rate |
49 | NM | NM | 33 | % | 38 | % | NM | 100 | % | 35 |
(a) | The reclassification of trading-related net interest income from Net Interest Income to Trading Revenue primarily impacts the Investment Bank segment results. |
|
(b) | The impact of credit card securitizations affects Card Services. See page 19 for further information. |
|
(c) | Special items are excluded from Operating earnings, as management believes these items are not part of the Firms normal daily business operations (and, therefore, are not indicative of trends), and do not provide meaningful
comparisons with other periods. These items include merger costs, significant litigation charges, charges to conform accounting policies and other items. Merger costs of $90 million reflects costs associated with the merger;
significant litigation charges of $3.7 billion were taken in the second quarter of 2004. |
|
(d) | For a description of the tax-equivalent adjustments, see the Operating Basis cover page. |
Page 40
JPMORGAN CHASE & CO.
|
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|
RECONCILIATION FROM REPORTED TO OPERATING BASIS |
||
(in millions, except per share and ratio data) |
YEAR-TO-DATE 2005 | ||||||||||||||||||||||||||||||||
Special Items (c) | ||||||||||||||||||||||||||||||||
Reported | Trading | Credit | Merger | Litigation | Accounting | Tax Equivalent | Operating | |||||||||||||||||||||||||
Results | Reclass (a) | Card (b) | Costs | Reserves | Policy Conformity | Adjustments (d) | Basis | |||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 1,954 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 1,954 | ||||||||||||||||
Trading Revenue |
2,246 | 526 | | | | | | 2,772 | ||||||||||||||||||||||||
Lending & Deposit Related Fees |
1,671 | | | | | | | 1,671 | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
5,039 | | | | | | | 5,039 | ||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
362 | | | | | | | 362 | ||||||||||||||||||||||||
Mortgage Fees and Related Income |
698 | | | | | | | 698 | ||||||||||||||||||||||||
Credit Card Income |
3,497 | | (1,543 | ) | | | | | 1,954 | |||||||||||||||||||||||
Other Income |
697 | | | | | | 258 | 955 | ||||||||||||||||||||||||
Noninterest Revenue |
16,164 | 526 | (1,543 | ) | | | | 258 | 15,405 | |||||||||||||||||||||||
Net Interest Income |
10,226 | (526 | ) | 3,390 | | | | 145 | 13,235 | |||||||||||||||||||||||
TOTAL NET REVENUE |
26,390 | | 1,847 | | | | 403 | 28,640 | ||||||||||||||||||||||||
Provision for Credit Losses |
1,014 | | 1,847 | | | | | 2,861 | ||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||
Compensation Expense |
8,968 | | | | | | | 8,968 | ||||||||||||||||||||||||
Occupancy Expense |
1,105 | | | | | | | 1,105 | ||||||||||||||||||||||||
Technology and Communications Expense |
1,816 | | | | | | | 1,816 | ||||||||||||||||||||||||
Professional & Outside Services |
2,204 | | | | | | | 2,204 | ||||||||||||||||||||||||
Marketing |
1,020 | | | | | | | 1,020 | ||||||||||||||||||||||||
Other Expense |
1,759 | | | | | | | 1,759 | ||||||||||||||||||||||||
Amortization of Intangibles |
768 | | | | | | | 768 | ||||||||||||||||||||||||
Total Noninterest Expense before Merger Costs and |
17,640 | | | | | | | 17,640 | ||||||||||||||||||||||||
Litigation Reserve Charge |
||||||||||||||||||||||||||||||||
Merger Costs |
424 | | | (424 | ) | | | | | |||||||||||||||||||||||
Litigation Reserve Charge |
2,772 | | | | (2,772 | ) | | | | |||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
20,836 | | | (424 | ) | (2,772 | ) | | | 17,640 | ||||||||||||||||||||||
Income (Loss) before Income Tax Expense |
4,540 | | | 424 | 2,772 | | 403 | 8,139 | ||||||||||||||||||||||||
Income Tax Expense (Benefit) |
1,282 | | | 161 | 1,053 | | 403 | 2,899 | ||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 3,258 | $ | | $ | | $ | 263 | $ | 1,719 | $ | | $ | | $ | 5,240 | ||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.91 | $ | | $ | | $ | 0.08 | $ | 0.48 | $ | | $ | | $ | 1.47 | ||||||||||||||||
ROE |
6 | % | | % | | % | 1 | % | 3 | % | | % | | % | 10 | % | ||||||||||||||||
ROE-GW |
11 | | | 1 | 5 | | | 17 | ||||||||||||||||||||||||
ROA |
0.56 | NM | NM | NM | NM | NM | NM | 0.85 | ||||||||||||||||||||||||
Overhead Ratio |
79 | NM | NM | NM | NM | NM | NM | 62 | ||||||||||||||||||||||||
Effective Income Tax Rate |
28 | NM | NM | 38 | 38 | NM | 100 | 36 |
(a) | The reclassification of trading-related net interest income from Net Interest Income to Trading Revenue primarily impacts the Investment Bank segment results. |
|
(b) | The impact of credit card securitizations affects Card Services. See page 19 for further information. |
|
(c) | Special items are excluded from Operating earnings, as management believes these items are not part of the Firms normal daily business operations (and, therefore, are not indicative of trends), and do not provide meaningful
comparisons with other periods. These items include Merger costs, significant litigation charges, charges to conform accounting policies and other items. Merger costs of $424 million reflects costs associated with the merger;
significant litigation charges of $2.8 billion were taken in the first six months of 2005. |
|
(d) | For a description of the tax-equivalent adjustments, see the Operating Basis cover page. |
Page 41
JPMORGAN
CHASE & CO. RECONCILIATION FROM REPORTED TO OPERATING BASIS |
![]() |
|
(in millions, except per share and ratio data) |
YEAR-TO-DATE 2004 | ||||||||||||||||||||||||||||||||
Special Items (c) | ||||||||||||||||||||||||||||||||
Reported | Trading | Credit | Merger | Litigation | Accounting | Tax Equivalent | Operating | |||||||||||||||||||||||||
Results | Reclass (a) | Card (b) | Costs | Reserves | Policy Conformity | Adjustments (d) | Basis | |||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 1,585 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 1,585 | ||||||||||||||||
Trading Revenue |
2,593 | 1,015 | | | | | | 3,608 | ||||||||||||||||||||||||
Lending & Deposit Related Fees |
826 | | | | | | | 826 | ||||||||||||||||||||||||
Asset Management, Administration and Commissions |
3,650 | | | | | | | 3,650 | ||||||||||||||||||||||||
Securities / Private Equity Gains (Losses) |
892 | | | | | | | 892 | ||||||||||||||||||||||||
Mortgage Fees and Related Income |
488 | | | | | | | 488 | ||||||||||||||||||||||||
Credit Card Income |
1,236 | | (633 | ) | | | | | 603 | |||||||||||||||||||||||
Other Income |
392 | | (84 | ) | | | | 75 | 383 | |||||||||||||||||||||||
Noninterest Revenue |
11,662 | 1,015 | (717 | ) | | | | 75 | 12,035 | |||||||||||||||||||||||
Net Interest Income |
5,980 | (1,015 | ) | 1,676 | | | | 32 | 6,673 | |||||||||||||||||||||||
TOTAL NET REVENUE |
17,642 | | 959 | | | | 107 | 18,708 | ||||||||||||||||||||||||
Provision for Credit Losses |
218 | | 959 | | | | | 1,177 | ||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||
Compensation Expense |
6,245 | | | | | | | 6,245 | ||||||||||||||||||||||||
Occupancy Expense |
871 | | | | | | | 871 | ||||||||||||||||||||||||
Technology and Communications Expense |
1,605 | | | | | | | 1,605 | ||||||||||||||||||||||||
Professional & Outside Services |
1,568 | | | | | | | 1,568 | ||||||||||||||||||||||||
Marketing |
401 | | | | | | | 401 | ||||||||||||||||||||||||
Other Expense |
958 | | | | | | | 958 | ||||||||||||||||||||||||
Amortization of Intangibles |
158 | | | | | | | 158 | ||||||||||||||||||||||||
Total Noninterest Expense before Merger Costs and |
11,806 | | | | | | | 11,806 | ||||||||||||||||||||||||
Litigation Reserve Charge |
||||||||||||||||||||||||||||||||
Merger Costs |
90 | | | (90 | ) | | | | | |||||||||||||||||||||||
Litigation Reserve Charge |
3,700 | | | | (3,700 | ) | | | | |||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
15,596 | | | (90 | ) | (3,700 | ) | | | 11,806 | ||||||||||||||||||||||
Income (Loss) before Income Tax Expense |
1,828 | | | 90 | 3,700 | | 107 | 5,725 | ||||||||||||||||||||||||
Income Tax Expense (Benefit) |
446 | | | 30 | 1,406 | | 107 | 1,989 | ||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 1,382 | $ | | $ | | $ | 60 | $ | 2,294 | $ | | $ | | $ | 3,736 | ||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.65 | $ | | $ | | $ | 0.03 | $ | 1.09 | $ | | $ | | $ | 1.77 | ||||||||||||||||
ROE |
6 | % | | % | | % | | % | 10 | % | | % | | % | 16 | % | ||||||||||||||||
ROE-GW |
7 | | | | 13 | | | 20 | ||||||||||||||||||||||||
ROA |
0.35 | NM | NM | NM | NM | NM | NM | 0.92 | ||||||||||||||||||||||||
Overhead Ratio |
88 | NM | NM | NM | NM | NM | NM | 63 | ||||||||||||||||||||||||
Effective Income Tax Rate |
24 | NM | NM | 33 | 38 | NM | 100 | 35 |
(a) | The reclassification of trading-related net interest income from Net Interest Income to Trading Revenue primarily impacts the Investment Bank segment results. |
|
(b) | The impact of credit card securitizations affects Card Services. See page 19 for further information. |
|
(c) | Special items are excluded from Operating earnings, as management believes these items are not part of the Firms normal daily business operations (and, therefore, are not indicative of trends), and do not provide meaningful
comparisons with other periods. These items include Merger costs, significant litigation charges, charges to conform accounting policies and other items. Merger costs of $90 million reflects costs associated with the merger;
significant litigation charges of $3.7 billion were taken in the first six months of 2004. |
|
(d) | For a description of the tax-equivalent adjustments, see the Operating Basis cover page. |
Page 42