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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): July 19, 2006
JPMORGAN CHASE & CO.
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
| Delaware (State or Other Jurisdiction of Incorporation) |
1-5805 (Commission File Number) |
13-2624428 (IRS Employer Identification No.) |
| 270 Park Avenue, New York, NY | 10017 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s 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):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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| Item 7.01 Regulation FD Disclosure | ||||||||
| Item 9.01 Financial Statements and Exhibits | ||||||||
| SIGNATURE | ||||||||
| EXHIBIT INDEX | ||||||||
| EX-99.1: PRESENTATION SLIDES | ||||||||
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Item 7.01 Regulation FD Disclosure
On July 19, 2006, JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) held an investor
presentation to review second quarter 2006 earnings.
Exhibit 99.1 is a copy of slides furnished at, and posted on the Firm’s website in connection with,
the presentation. The slides are being furnished pursuant to Item 7.01, and the information
contained therein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, or otherwise subject to the liabilities under that Section. Furthermore, the
information contained in Exhibit 99.1 shall not be deemed to be incorporated by reference into the
filings of the Firm under the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
| Exhibit Number | Description of Exhibit | |
99.1
|
JPMorgan Chase & Co. Analyst Presentation Slides — Second Quarter 2006 Financial Results |
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 Chase’s 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 Chase’s results to differ materially from those described in the
forward-looking statements can be found in the Firm’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2006, and in the 2005 Annual Report on Form 10-K for the year ended December 31,
2005, filed with the Securities and Exchange Commission and available at the Securities and
Exchange Commission’s 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)
(Registrant)
By: /s/ Joseph L. Sclafani
Joseph L. Sclafani
Joseph L. Sclafani
Executive Vice President and Controller
[Principal Accounting Officer]
[Principal Accounting Officer]
Dated: July 19, 2006
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EXHIBIT INDEX
| Exhibit Number | Description of Exhibit | |
99.1
|
JPMorgan Chase & Co. Analyst Presentation Slides — Second Quarter 2006 Financial Results |
4
| F I N A N C I A L R E S U L T S Second Quarter 2006 J U L Y 1 9, 2 0 0 6 |
| 2Q06 Managed Results1 ($ in millions) 1 Managed basis presents revenue and credit costs without the effect of credit card securitizations. All references to credit costs refer to managed provision for credit losses. 2 Actual numbers for all periods, not over/under |
| 2Q06 Significant Items ($ in millions) Card results benefited from continued low bankruptcy losses Corporate Trust business moved to Discontinued Operations in Corporate |
| Investment Bank ($ in millions) 1 Actual numbers for all periods, not over/under 2 Average Trading and Credit Portfolio VAR 3 Ratio is calculated excluding effect of SFAS 123R Net income of $839mm up 37% YoY and down 1% QoQ ROE of 16% on higher allocated capital of $21bn Record IB fees of $1.4 billion up 42% YoY driven by record equity and debt underwriting fees Fixed Income Markets up 43% YoY reflecting strength across most products Equities Markets reflects strong commissions; trading results higher than weak 2Q05, but lower than record 1Q06 Credit costs reflect portfolio activity and stable credit quality Expense up 35% YoY due to higher performance-based compensation |
| Retail Financial Services ($ in millions) 1 Actual numbers for all periods, not over/under Net income of $868 million down 11% YoY and 1% QoQ driven by weaker results in Mortgage Banking Continued growth in key business drivers; some pressure on rates and margins given competitive and market environment Credit quality stable across all businesses Expense reflects ongoing business investment and acquisition of CFS in 1Q06 Bank of New York conversion on target for the first half of 2007; Integration plans proceed as expected Completed sale of insurance business in July 2006 |
| Regional Banking ($ in millions) 1 Actual numbers for all periods, not over/under Average deposits up 7% YoY; EOP balances down QoQ reflecting seasonality Branch production statistics YoY Checking accounts up 7% Credit card sales up 119% Mortgage loans up 46% Revenue up 4% YoY due to higher deposit and home equity balances, increased deposit- related fees and credit card sales Narrower spreads on deposits and loan portfolios YoY Expense up 5% reflecting increased net investments and acquisition of CFS in 1Q06 1Q06 includes seasonal tax business |
| Net income up due to improved spreads on lower balances Credit costs seasonally low Mortgage Banking & Auto Finance Auto Finance ($mm) 1 Actual numbers for all periods, not over/under Note: Results include loss on transfer of auto loans to held-for-sale of ($45)mm in 1Q06 Mortgage Banking ($mm) Increased originations and margins trending higher MSR risk management results down 1 Actual numbers for all periods, not over/under |
| Card Services (Managed) ($ in millions) 1 Actual numbers for all periods, not over/under Net income of $875mm up 61% YoY; ROO of 4.05% Avg outstandings of $137bn up 1% YoY and down 1% QoQ; EOP outstandings of $139bn up 1% YoY and 4% QoQ Balances negatively affected by continued high payment rates Completed acquisition of Kohl's private label portfolio with 21 million accounts and $1.6bn in loan balances (Sears Canada: 4Q05) Revenue down 2% YoY driven by: Narrower spread with managed margin down from 8.83% to 8.66% Partially offset by 1% increase in average loan balances and 12% increase in charge volume Credit costs include $90mm reserve release related to Hurricane Katrina Credit costs reflect continued low level of bankruptcy losses and strength in underlying credit quality Expense flat YoY due to merger savings offset by impact of Sears Canada and Kohl's acquisitions |
| Commercial Banking ($ in millions) 1 Actual numbers for all periods, not over/under 2 Includes deposits and deposits swept to on-balance sheet liabilities Net income of $283mm Loans up 10% YoY driven by growth across all segments Liability balances up 11% YoY Revenue up 9% YoY driven by wider spreads on higher liability balances and increased loan balances, partially offset by narrower loan spreads Investment Banking revenue from Commercial Banking clients up 24% YoY Credit costs down YoY due to prior year refinements in data used to estimate allowance; net charge-off rate reflects stable credit quality |
| Treasury & Securities Services ($ in millions) Beginning in 2Q06, Corporate Trust is excluded from TSS for all periods Record net income of $316mm up 68% YoY and 21% QoQ Pre-tax margin of 32% Liability balances up 26% YoY; Assets under custody up 19% YoY Record revenue up 12% YoY driven by wider spreads on higher liability balances, new business, organic growth, market appreciation and seasonally strong securities lending Expense down 4% YoY primarily due to absence of prior year charges related to termination of a client contract, partially offset by new business growth 1 Actual numbers for all periods, not over/under 2 Includes deposits and deposits swept to on-balance sheet liabilities |
| Asset & Wealth Management ($ in millions) 1 Actual numbers for all periods, not over/under 2 2Q06 & 1Q06 does not include the loans and deposits of BrownCo, which were both $3bn at the time of sale on November 30, 2005 Record net income of $343mm up 21% YoY Pre-tax margin of 34% Assets under management up 15% YoY, including Highbridge AUM of $11 billion up 52% YoY Record revenue of $1.6bn up 21% YoY due to increased assets under management Strong revenue growth in Private Bank Prior year results included BrownCo Expense up 18% YoY due to higher performance-related compensation, partially offset by sale of BrownCo in 4Q05 |
| Corporate Total Corporate ($mm) Treasury ($mm) 2 Actual numbers for all periods, not over/under Private Equity ($mm) Other Corporate ($mm) 1 Discontinued operations relate to the sale of select corporate trust businesses, with net income of $56mm in 2Q06, $54mm in 1Q06 and $57mm in 2Q05 |
| Capital Strength 1 Estimated for 2Q06 2 There is $7.1B remaining capacity from the $8B authorized by the Board in March 2006. |
| 2Q06 Summary Assessment Record IB fees and solid markets results Very low wholesale and consumer credit costs Card results benefit from low bankruptcy losses Record revenue and earnings in Asset & Wealth Management and Treasury & Securities Services on strong underlying growth Retail Financial Services Growth in checking accounts, credit cards and mortgage originations Weaker results in Mortgage Banking Strong private equity gains Better results in Treasury NII and Other Corporate net income |
| Comments on Outlook Very favorable credit environment -- not expected to continue Wholesale and consumer net charge-off rates will eventually return to normalized levels Card: Given current economic conditions (i.e., low level of unemployment) and impacts of new minimum payment rules and change in bankruptcy law, expect 2007 net charge-offs to remain below historical average IB fee pipeline continues to be strong; trading environment could be tougher in 2H06 RFS - Margin expected to be stable or down modestly in continued flat yield curve environment Card Services Expect low growth in balances - continued high payment rates and good spend levels Revenue stable in near term, inclusive of minimum payment impact Corporate Private equity gains expected to be below the $300mm quarterly average in 2H06 2Q06 Treasury NII and Other Corporate results ex. one-time items sustainable in 2H06, with quarterly volatility Acquisitions/divestitures 2H06 will not include insurance business Expect Bank of New York transaction to close in early 4Q06 |
| Disclaimer This presentation 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 Chase's 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 Chase's results to differ materially from those described in the forward-looking statements can be found in the firm's Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, and in the Annual Report on Form 10-K for the year ended December 31, 2005, filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission's Internet site (http://www.sec.gov). |