Table of Contents

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

Date of Report:		Commission file number
July 17, 2002		1-5805

J.P. MORGAN CHASE & CO.

---

(Exact name of registrant as specified in its charter)

Delaware		13-2624428
(State or other jurisdiction of incorporation or organization)		(I.R.S. 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

 

---

	Item 5.Other Events
	Item 7. Financial Statements, Pro forma Financial Information and Exhibits
SIGNATURE
EXHIBIT INDEX
EXHIBIT 12(A)
EXHIBIT 12(B)
EXHIBIT 99.1
EXHIBIT 99.2

---

Table of Contents

Item 5.   Other Events

         On July 17, 2002, J.P. Morgan Chase & Co. (NYSE: JPM) announced 2002 second quarter reported earnings per share of $0.50, compared with $0.48 in the first quarter of 2002 and $0.18 in the second quarter of 2001. Reported net income was $1,028 million in the second quarter compared to $982 million in the first quarter and $378 million one year ago.

         Operating earnings per share, which exclude merger and restructuring charges associated with programs announced prior to 2002, were $0.58 compared with $0.57 in the first quarter of 2002 and $0.38 in the second quarter of 2001. Operating earnings were $1,179 million in the second quarter compared to $1,150 million in the first quarter and $786 million one year ago. Operating earnings for 2001 have been increased by adding back amortization of goodwill to present 2001 results on a basis comparable to the results for 2002 which include the impact of the implementation on January 1, 2002 of SFAS 142. For a reconciliation between Operating and Reported earnings see the table on page 7 of the press release attached as an exhibit hereto.

         A copy of J.P. Morgan Chase & Co.’s press release is attached as an exhibit hereto. That press release contains statements that are forward-looking 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. These risks and uncertainties could cause our results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties are described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 and in the 2001 Annual Report on Form 10-K, each filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (http://www.sec.gov), to which reference is hereby made.

Item 7.    Financial Statements, Pro forma Financial Information and Exhibits

Exhibit Number		Description
12 (a) 12 (b)   99.1 99.2		Computation of Ratio of Earnings to Fixed Charges Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements Press Release – 2002 Second Quarter Earnings 2002 Second Quarter Financial Supplement

 

---

Table of Contents

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.

		J.P. MORGAN CHASE & CO.
		(Registrant)
		By: /s/ Joseph L. Sclafani Joseph L. Sclafani
		Executive Vice President and Controller [Principal Accounting Officer]
Dated: July 19, 2002

 

---

Table of Contents

EXHIBIT INDEX

Exhibit No.		Description		Page
12 (a)		Computation of Ratio of Earnings to Fixed Charges			5
12 (b)		Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements			6
99.1		Press Release – 2002 Second Quarter Earnings			7
99.2		2002 Second Quarter Financial Supplement			8

 

 

EXHIBIT 12(a)

J.P. MORGAN CHASE & CO.

Computation of Ratio of Earnings to Fixed Charges
(in millions, except ratios)

			Six Months Ended
			June 30, 2002
Excluding Interest on Deposits
Income before income taxes			$	3,046
Fixed charges:
	Interest expense			4,320
	One-third of rents, net of income from subleases (a)			126
Total fixed charges				4,446
Less: Equity in undistributed income of affiliates				(50	)
Earnings before taxes and fixed charges, excluding capitalized interest			$	7,442
Fixed charges, as above			$	4,446
Ratio of earnings to fixed charges				1.67
Including Interest on Deposits
Fixed charges, as above			$	4,446
Add: Interest on deposits				2,655
Total fixed charges and interest on deposits			$	7,101
Earnings before taxes and fixed charges, excluding capitalized interest, as above			$	7,442
Add: Interest on deposits				2,655
Total earnings before taxes, fixed charges and interest on deposits			$	10,097
Ratio of earnings to fixed charges				1.42

---

(a)

The proportion deemed representative of the interest factor.

 

 

EXHIBIT 12(b)

J.P. MORGAN CHASE & CO.

Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividend Requirements
(in millions, except ratios)

			Six Months Ended
			June 30, 2002
Excluding Interest on Deposits
Income before income taxes			$	3,046
Fixed charges:
	Interest expense			4,320
	One-third of rents, net of income from subleases (a)			126
Total fixed charges				4,446
Less: Equity in undistributed income of affiliates				(50	)
Earnings before taxes and fixed charges, excluding capitalized interest			$	7,442
Fixed charges, as above			$	4,446
Preferred stock dividends				26
Fixed charges including preferred stock dividends			$	4,472
Ratio of earnings to fixed charges and preferred stock dividend requirements				1.66
Including Interest on Deposits
Fixed charges including preferred stock dividends, as above			$	4,472
Add: Interest on deposits				2,655
Total fixed charges including preferred stock dividends and interest on deposits			$	7,127
Earnings before taxes and fixed charges, excluding capitalized interest, as above			$	7,442
Add: Interest on deposits				2,655
Total earnings before taxes, fixed charges and interest on deposits			$	10,097
Ratio of earnings to fixed charges and preferred stock dividend requirements				1.42

---

(a)

The proportion deemed representative of the interest factor.

 

 

J.P. Morgan Chase & Co. 270 Park Avenue, New York, NY 10017-2070 NYSE symbol: JPM www.jpmorganchase.com

---

News release: IMMEDIATE RELEASE

JPMORGAN CHASE REPORTS 2002 SECOND QUARTER RESULTS

		New York, July 17, 2002 – J.P. Morgan Chase & Co. (NYSE: JPM) today announced 2002 second quarter reported earnings per share, inclusive of all restructuring charges, of $0.50, compared with $0.48 in the first quarter of 2002 and $0.18 in the second quarter of 2001. Reported net income was $1,028 million in the second quarter compared to $982 million in the first quarter and $378 million one year ago.
		Operating earnings per share, which exclude previously announced merger and restructuring charges, were $0.58 compared with $0.57 in the first quarter of 2002 and $0.38 in the second quarter of 2001. Operating earnings were $1,179 million in the second quarter compared to $1,150 million in the first quarter and $786 million one year ago. Operating earnings for 2001 have been increased by adding back amortization of goodwill to present 2001 results on a basis comparable to the results for 2002 which include the impact of the implementation on January 1, 2002 of SFAS 142. For a reconciliation between Operating and Reported earnings see the table on page 7.
		Operating ROE for the second quarter was 11% and excluding JPMorgan Partners was 15%. The contribution of JPMorgan Partners to operating earnings per share was a loss of $0.08 in the second quarter compared to a $0.12 loss in the first quarter of 2002 and a $0.30 loss in the second quarter of 2001.
		“Second quarter earnings continued to be affected by weak capital markets and remain well below the potential of this franchise,” said William B. Harrison, Jr., Chairman and Chief Executive Officer. “We are pleased with the strong results in our consumer and services businesses and the significant gains this quarter in market share across virtually all investment banking products. Our focus today is on financial discipline and delivering superior service and products to clients.”
		Highlights for the second quarter of 2002

	•		Retail & Middle Market Financial Services reported record operating earnings of $686 million, up 29% from the first quarter of 2002 and up 60% from the second quarter of 2001.
	•		Trading revenues were down approximately 30% from both the first quarter of 2002 and the second quarter of 2001.
	•		Investment banking fees increased from the first quarter reflecting market share gains, particularly in equity underwriting.
	•		Treasury & Securities Services reported record operating earnings of $177 million, up 22% from the first quarter of 2002 and up 16% from the second quarter of 2001.
	•		Credit costs remained high but stable, while nonperforming assets were marginally higher than the first quarter of this year.

---

Investor Contact:		John Borden (212) 270-7318		Media Contact:		Jon Diat (212)270-5089 Joe Evangelisti (212)270-7438

 

---

 

J.P. Morgan Chase & Co.
News Release

		Business segment results
		Retail & Middle Market Financial Services had a second consecutive quarter of record revenues and operating earnings. Operating earnings of $686 million were up 29% from the first quarter and up 60% from the second quarter of 2001 driven by strong performances across the consumer credit businesses and middle market. ROE for the second quarter was 26%, compared to 21% last quarter and 19% for the second quarter of 2001.
		Operating revenues of $3.50 billion were up 11% from the first quarter and 27% from the second quarter of 2001 driven by continued high production volumes across all consumer businesses and low interest rates. Home Finance revenues were driven by an increase in customer servicing balances and higher mortgage origination and servicing margins impacted by business mix and a strong housing environment as well as better than expected servicing risk management performance resulting from wider spreads. Managed credit card outstandings increased 29% from June 30, 2001 to $49.5 billion due to the Providian acquisition in the first quarter of 2002 and organic growth. There were close to 900,000 new accounts originated during the quarter, the seventh consecutive quarter of additions at this level. Total deposits grew 2% from the first quarter and 12% from the second quarter of 2001.
		Operating expenses of $1.67 billion increased by 7% from the first quarter and by 16% from the second quarter of 2001. The increases reflected the impact of higher expenses related to higher volumes. Savings generated by Six Sigma productivity programs continued to partially offset the growth in expenses.
		Managed credit costs of $736 million were 1% higher than the first quarter and were 17% higher than the second quarter of 2001, primarily due to increased charge-offs related to the full quarter impact of the Providian credit card portfolio.
		The Investment Bank had operating earnings of $485 million in the second quarter, a decline of 35% from the first quarter and 38% lower than the second quarter of 2001. Operating ROE was 10% for the quarter compared to 16% last quarter and 17% for the second quarter of 2001.
		Operating revenues of $3.09 billion in the second quarter of 2002 were 14% lower than last quarter and down 17% from the second quarter of 2001.
		Trading revenues (including related net interest income) and brokerage commissions of $1.41 billion decreased 28% from the first quarter and were down 23% from the second quarter of 2001. The decline from the first quarter was driven largely by fixed income results, particularly in interest-rate markets and emerging markets. The decline from the second quarter of 2001 was primarily due to lower equity derivatives revenues driven by difficult market conditions.
		Investment banking fees totaled $783 million in the second quarter, an increase of 6% from the first quarter but 15% lower than the second quarter of 2001. The increase from the first quarter reflects a 33% increase in equity underwriting fees and flat M&A fees and debt underwriting revenues. Market

2

---

 

J.P. Morgan Chase & Co.
News Release

		share gains in the second quarter included global announced M&A (#1), U.S. and global equity and equity-related (#6), U.S. investment grade bonds (#2) and global loan syndications (#1). 1
		Operating expenses for the second quarter of $2.02 billion decreased by 4% from the first quarter and by 11% from the second quarter of 2001. Operating expenses in the second quarter included $123 million in severance and other costs associated with restructuring programs announced in 2002. This compared to $47 million of such costs in the first quarter. The overhead ratio for the second quarter was 65% compared to 58% in the first quarter and 61% in the second quarter of 2001.
		Investment Management & Private Banking had operating earnings of $118 million, down 6% from the first quarter and 2% higher than the second quarter of 2001. Pre-tax margin in the second quarter was 21% compared with 22% last quarter and 19% in the second quarter of 2001.
		Operating revenues of $691 million in the second quarter were 5% below the first quarter and 12% lower than the second quarter of 2001. Continued declines in global equity markets valuations and eroding investor activity levels accounted for most of the decreases. Operating expenses of $520 million for the quarter were 5% lower than the first quarter and down 18% from the second quarter of 2001 as a result of continued reductions in compensation and other expenses. Private Banking credit costs were unchanged from the first quarter but increased from the prior year.
		Total assets under management at quarter-end of $541 billion were 7% lower than the first quarter and down 11% from the second quarter of 2001. Falling equity prices accounted for most of the year on year declines; outflows from institutional cash management products accounted for the balance. These effects outweighed continued positive flows and a year-over-year increase in assets under management for the retail mutual funds.
		Treasury & Securities Services had record operating earnings of $177 million, an increase of 22% from the first quarter and 16% from the second quarter of 2001. Operating ROE for the quarter was 23% compared to 20% in each of the last quarter and the second quarter of 2001.
		Operating revenues were $985 million in the second quarter of 2002, up 5% from the first quarter and up 2% from the second quarter of 2001. Revenues in Investor Services were up 9% from the first quarter and were virtually flat compared to the second quarter of 2001. The increase from the first quarter was due to higher custody fees, foreign exchange revenue and securities lending fees. Institutional Trust revenues increased 9% from the first quarter of 2002 due to higher American Depositary Receipt revenues and new business. The 12% increase in Institutional Trust revenues from the second quarter of 2001 reflected the impact of acquisitions and new business wins partially offset by the effect of slower fixed income activity. The impact of lower interest rates on Treasury & Securities Services revenues was largely offset by higher deposits resulting from increased business volumes.
		Operating expenses were virtually unchanged from the first quarter and declined 2% from the second quarter of 2001. The business continues to focus on cost containment and improving its overhead ratio, while selectively investing in acquisitions for future growth. The overhead ratio for the second quarter was 72% compared to 76% in each of the first quarter of 2002 and the second quarter of 2001.

---

1 Derived from Thomson Financial Securities Data, based on proceeds

3

---

 

J.P. Morgan Chase & Co.
News Release

		JPMorgan Partners had an operating loss of $165 million for the quarter compared to an operating loss of $248 million in the first quarter and an operating loss of $610 million in the second quarter of 2001.
		Total net private equity gains were negative $125 million, as compared to negative $255 million in the first quarter and negative $823 million in the second quarter of 2001. The second quarter 2002 results were driven by writedowns and write-offs on private holdings of $216 million and net mark-to-market losses on public securities of $20 million, partially offset by net realized gains of $111 million. Losses were concentrated in telecommunications and technology investments. The private equity market continues to be unsettled, with limited exit opportunities and constrained financing.
		Expenses
		Operating expenses were $4.97 billion, a 3% decline from the first quarter of this year and a 5% reduction from the second quarter of 2001. Second quarter operating expenses included $162 million in costs related to headcount reductions and other costs associated with restructuring programs announced in 2002. This compared with $106 million of these expenses in the first quarter.
		Credit
		Commercial net charge-offs in the second quarter of 2002 were $293 million, compared to $320 million in the previous quarter and $212 million in the second quarter of 2001. The charge-off ratio was 1.17% for the second quarter of 2002, 1.27% for the first quarter of 2002 and 0.77% for the second quarter of 2001.
		Consumer net charge-offs on a managed basis were $862 million, up from $754 million in the prior quarter and $586 million in the second quarter of 2001. On a managed basis, the credit card net charge-off ratio was 6.42%, compared to 5.87% for the first quarter and 5.54% for the second quarter of 2001. The increase was primarily due to the inclusion of the Providian portfolio for the full quarter. Consumer credit trends continued to improve with positive trends in 30-, 60- and 90-day delinquencies in credit cards and lower delinquencies and low loss ratios in auto and home financing.
		Provision for Loan Losses equaled net charge-offs this quarter. The provision for loan losses also equaled net charge-offs in the first quarter of 2002 and the second quarter of 2001.
		Total Nonperforming Assets were $4.38 billion at June 30, 2002, which includes $1.13 billion related to the Enron surety receivables and letter of credit. Excluding this amount, which is the subject of litigation with creditworthy entities, nonperforming assets totaled $3.25 billion. This compares to $3.18 billion last quarter and $2.50 billion as of June 30, 2001. The increase from the first quarter of 2002 related primarily to nonperforming telecommunications loans.

4

---

 

J.P. Morgan Chase & Co.
News Release

		Total assets and capital
		Total assets as of June 30, 2002 were $741 billion, compared with $713 billion as of both March 31, 2002 and June 30, 2001. The increase from March 31, 2002 was largely driven by growth in trading assets. Commercial loans increased 3%, or $2.9 billion, from the first quarter but fell 7%, or $8.1 billion, from the second quarter of 2001. Managed consumer loans declined by 1% from the first quarter and increased 8% from the second quarter of 2001. The Tier 1 capital ratio was 8.7% at June 30, compared to 8.6% at March 31, 2002 and 8.7% at June 30, 2001.
		Other financial information
		Special Items in the second quarter of 2002 included $229 million (pre-tax) in merger and restructuring costs, compared to $255 million (pre-tax) in the first quarter of 2002. Special items in the second quarter of 2001 included merger and restructuring costs (pre-tax) of $478 million.
		J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $741 billion and operations in more than 50 countries. With relationships with over 99% of the Fortune 1000 companies, the firm is a leader in investment banking, asset management, private banking, private equity, custody and transaction services and retail and middle market financial services. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers and the world’s most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the internet at www.jpmorganchase.com.
		JPMorgan Chase will hold a presentation for the investment community on Wednesday, July 17, 2002 at 11:00 a.m. (Eastern Daylight Time) to review second quarter 2002 financial results. A live audio webcast of the presentation will be available on www.jpmorganchase.com. In addition, persons interested in listening to the presentation by telephone may dial in at (973) 872-3100. A telephone replay of the presentation will be available beginning at 1:00 p.m. (EDT) on July 17, 2002 and continuing through 6:00 p.m. (EDT) on July 23, 2002 at (973) 341-3080 pin #3335966. 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 web site (www.jpmorganchase.com).
		This press release contains statements that are forward-looking 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. These risks and uncertainties could cause our results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties are described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 and in the 2001 Annual Report on Form 10-K, each filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (http://www.sec.gov), to which reference is hereby made.

5

---

 

J.P. MORGAN CHASE & CO. CONSOLIDATED FINANCIAL HIGHLIGHTS (in millions, except per share and ratio data)

																2QTR 2002																YTD 2002
																Over (Under)								YEAR TO DATE								Over (Under)
				2QTR				1QTR				2QTR
				2002				2002				2001				1Q 2002				2Q 2001				2002				2001				2001
OPERATING INCOME STATEMENT(a)(b)
OPERATING REVENUE:
Investment Banking Fees				$	785			$	755			$	929				4	%			(16	)%		$	1,540			$	1,870				(18	)%
Trading-Related Revenue (Incl. Trading NII)					1,136				1,720				1,594				(34	)			(29	)			2,856				3,761				(24	)
Fees and Commissions					2,745				2,493				2,422				10				13				5,238				4,504				16
Private Equity — Realized Gains (Losses)					(10	)			(10	)			(46	)			—				78				(20	)			366			NM
Private Equity — Unrealized Gains (Losses)					(115	)			(228	)			(783	)			50				85				(343	)			(1,068	)			68
Securities Gains					124				114				67				9				85				238				522				(54	)
Other Revenue					273				137				280				99				(3	)			410				537				(24	)
Net Interest Income (Excl. Trading NII)					2,970				2,938				2,759				1				8				5,908				5,296				12
		TOTAL OPERATING REVENUE			7,908				7,919				7,222				—				9				15,827				15,788				—
OPERATING EXPENSE:
Compensation Expense					2,761				2,823				3,026				(2	)			(9	)			5,584				6,362				(12	)
Noncompensation Expense					2,204				2,280				2,188				(3	)			1				4,484				4,381				2
	TOTAL OPERATING EXPENSE				4,965				5,103				5,214				(3	)			(5	)			10,068				10,743				(6	)
Credit Costs					1,155				1,074				798				8				45				2,229				1,486				50
Operating Income before Taxes					1,788				1,742				1,210				3				48				3,530				3,559				(1	)
Income Taxes					609				592				424				3				44				1,201				1,246				(4	)
OPERATING EARNINGS				$	1,179			$	1,150			$	786				3				50			$	2,329			$	2,313				1
Special Items & Change in Acctng Principle					(151	)			(168	)			(312	)			10				52				(319	)			(549	)			42
Amortization of Goodwill, Net of Taxes(c)					—				—				(96	)		NM				NM					—				(187	)		NM
NET INCOME				$	1,028			$	982			$	378				5				172			$	2,010			$	1,577				27
OPERATING BASIS
Diluted Earnings per Share				$	0.58			$	0.57			$	0.38				2				53			$	1.15			$	1.12				3
Shareholder Value Added					(57	)			(59	)			(481	)			3				88				(116	)			(196	)			41
Return on Managed Assets					0.62	%			0.63	%			0.42	%			(1	)bp			20	bp			0.63	%			0.62	%			1	bp
Return on Common Equity					11.4				11.4				7.4				—				400				11.4				11.0				40
Overhead Ratio					63				64				72				(100	)			(900	)			64				68				(400	)
Common Dividend Payout Ratio					59				60				89				(100	)			(3,000	)			60				60				—
Compensation Exp. as a % of Revenue					35				36				42				(100	)			(700	)			35				40				(500	)
Noncompensation Exp. as a % of Revenue					28				29				30				(100	)			(200	)			28				28				—
NET INCOME PER COMMON SHARE
Basic				$	0.51			$	0.49			$	0.18				4	%			183	%		$	1.00			$	0.78				28	%
Diluted					0.50				0.48				0.18				4				178				0.99				0.76				30
COMMON SHARES OUTSTANDING
Basic Average Shares Outstanding					1,982.6				1,978.2				1,978.4				—				—				1,980.4				1,972.6				—
Diluted Average Shares Outstanding					2,016.0				2,005.8				2,033.6				1				(1	)			2,011.0				2,033.0				(1	)
Common Shares Outstanding — Period End					1,993.4				1,990.2				1,989.2				—				—				1,993.4				1,989.2				—
CASH DIVIDENDS DECLARED PER SHARE				$	0.34			$	0.34			$	0.34				—				—			$	0.68			$	0.68				—
BOOK VALUE PER SHARE					20.93				20.16				20.81				4				1
CAPITAL RATIOS
Tier I Capital Ratio					8.7	%(d)			8.6	%			8.7	%			10	bp			—	bp
Total Capital Ratio					12.6	(d)			12.5				12.2				10				40
Tier I Leverage					5.4	(d)			5.4				5.4				—				—

Note: Prior periods have been restated to conform with current methodologies.

(a)		See page 10 for a reconciliation between reported results and operating results.
(b)		In the first quarter of 2002, the Firm implemented EITF 01-14, “Income Statement Characterization of Reimbursements Received for ‘Out-of-Pocket’ Expenses Incurred (Formerly EITF Abstracts, Topic D-103).” Consequently, prior period amounts have been restated.
(c)		Reported net income for 2002 reflects the adoption of SFAS 142 and, accordingly, the Firm ceased amortizing goodwill effective January 1, 2002. There was no impairment of goodwill upon adoption of SFAS 142. Previously reported operating earnings for 2001 have been adjusted by adding back amortization of goodwill to make 2001 results comparable to 2002.
(d)		Estimated

bp — Denotes basis points; 100 bp equals 1%

NM — Not meaningful

Page 6

---

 

J.P. MORGAN CHASE & CO
LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY
(in millions, except per share and ratio data)

																	2QTR 2002																YTD 2002
																	Over (Under)								YEAR TO DATE								Over (Under)
					2QTR				1QTR				2QTR
					2002				2002				2001				1Q 2002				2Q 2001				2002				2001				2001
OPERATING REVENUE
Investment Bank					$	3,093			$	3,608			$	3,711				(14	)%			(17	)%		$	6,701			$	8,034				(17)	%
Treasury & Securities Services						985				934				962				5				2				1,919				1,915				—
Investment Management & Private Banking						691				729				789				(5	)			(12	)			1,420				1,592				(11	)
Retail & Middle Market Financial Services						3,504				3,154				2,769				11				27				6,658				5,448				22
Corporate (a)						(186	)			(203	)			(123	)			8				(51	)			(389	)			(402	)			3
	OPERATING REVENUE EXCL. JPMP					8,087				8,222				8,108				(2	)			—				16,309				16,587				(2	)
JPMorgan Partners						(179	)			(303	)			(886	)			41				80				(482	)			(799	)			40
		OPERATING REVENUE (b)			$	7,908			$	7,919			$	7,222				—				9			$	15,827			$	15,788				—
EARNINGS
Investment Bank					$	485			$	750			$	785				(35	)			(38	)		$	1,235			$	1,812				(32	)
Treasury & Securities Services						177				145				152				22				16				322				314				3
Investment Management & Private Banking						118				125				116				(6	)			2				243				217				12
Retail & Middle Market Financial Services						686				533				428				29				60				1,219				854				43
Corporate (a)						(122	)			(155	)			(85	)			21				(44	)			(277	)			(270	)			(3	)
		OPERATING EARNINGS EXCL. JPMP				1,344				1,398				1,396				(4	)			(4	)			2,742				2,927				(6	)
JPMorgan Partners						(165	)			(248	)			(610	)			33				73				(413	)			(614	)			33
		OPERATING EARNINGS (b)				1,179				1,150				786				3				50				2,329				2,313				1
Special Items & Change in Acctng Principle						(151	)			(168	)			(312	)			10				52				(319	)			(549	)			42
Amortization of Goodwill, Net of Taxes						—				—				(96	)		NM				NM					—				(187	)		NM
			NET INCOME (b)		$	1,028			$	982			$	378				5				172			$	2,010			$	1,577				27
EARNINGS PER SHARE — DILUTED
OPERATING EARNINGS EXCL. JPMP					$	0.66			$	0.69			$	0.68				(4	)			(3	)		$	1.35			$	1.42				(5	)
Impact of JPMP						(0.08	)			(0.12	)			(0.30	)			33				73				(0.20	)			(0.30	)			33
OPERATING EARNINGS (b)						0.58				0.57				0.38				2				53				1.15				1.12				3
Special Items & Change in Acctng Principle						(0.08	)			(0.09	)			(0.15	)			11				47				(0.16	)			(0.27	)			41
Amortization of Goodwill, Net of Taxes						—				—				(0.05	)		NM				NM					—				(0.09	)		NM
NET INCOME (b)					$	0.50			$	0.48			$	0.18				4				178			$	0.99			$	0.76				30
OPERATING RETURN ON COMMON EQUITY
Investment Bank						10.4	%			15.9	%			16.7	%			(550	)bp			(630	)bp			13.2	%			18.7	%			(550	)bp
Treasury & Securities Services						22.9				19.8				19.8				310				310				21.4				21.2				20
Investment Management & Private Banking						7.8				8.4				7.3				(60	)			50				8.1				6.7				140
Retail & Middle Market Financial Services						26.0				20.9				18.5				510				750				23.5				18.9				460
OPERATING RETURN ON COMMON EQUITY (b)						11.4				11.4				7.4				—				400				11.4				11.0				40

(a)		Includes Support Units and the effects remaining at the corporate level after the implementation of management accounting policies.
(b)		Represents consolidated JPMorgan Chase.

Page 7

---

 

J.P. MORGAN CHASE & CO. CONSOLIDATED BALANCE SHEET (in millions)

															Jun 30, 2002
			Jun 30th				Mar 31st				Jun 30th				Over (Under)
			2002				2002				2001				Mar 31, 02				Jun 30, 01
ASSETS
Cash and Due from Banks			$	21,878			$	22,637			$	24,219				(3	)%			(10	)%
Deposits with Banks				10,517				9,691				11,903				9				(12	)
Federal Funds Sold and Securities Purchased under Resale Agreements				71,740				76,719				61,308				(6	)			17
Securities Borrowed				48,429				40,880				38,296				18				26
Trading Assets:
	Debt and Equity Instruments			159,746				144,992				139,135				10				15
	Derivative Receivables			69,858				63,224				68,910				10				1
Securities				64,526				61,225				68,488				5				(6	)
Loans (Net of Allowance for Loan Losses)				207,080				209,541				216,245				(1	)			(4	)
Goodwill				8,089				8,055				8,640				—				(6	)
Other Intangibles:
	Mortgage Servicing Rights			5,689				6,918				7,073				(18	)			(20	)
	Purchased Credit Card Relationships			1,426				1,508				568				(5	)			151
	All Other Intangibles			313				327				74				(4	)		NM
Private Equity Investments				8,229				8,553				9,855				(4	)			(16	)
Other Assets				63,026				58,238				57,988				8				9
TOTAL ASSETS			$	740,546			$	712,508			$	712,702				4				4
LIABILITIES
Deposits			$	293,829			$	282,037			$	276,804				4				6
Federal Funds Purchased and Securities Sold under Repurchase Agreements				162,656				152,837				155,062				6				5
Commercial Paper				14,561				23,726				19,985				(39	)			(27	)
Other Borrowed Funds				17,352				16,968				18,418				2				(6	)
Trading Liabilities:
	Debt and Equity Instruments			67,952				71,141				53,571				(4	)			27
	Derivative Payables			55,575				44,997				62,373				24				(11	)
Accounts Payable and Other Liabilities (Including the Allowance for Credit Losses)				38,083				36,910				38,157				3				—
Long-Term Debt				42,363				37,322				40,917				14				4
Guaranteed Preferred Beneficial Interests in the Firm’s Junior Subordinated Deferrable Interest Debentures				5,439				5,439				4,439				—				23
TOTAL LIABILITIES				697,810				671,377				669,726				4				4
PREFERRED STOCK OF SUBSIDIARY				—				—				550			NM				NM
STOCKHOLDERS’ EQUITY
Preferred Stock				1,009				1,009				1,025				—				(2	)
Common Stock				2,020				2,016				1,990				—				2
Capital Surplus				13,111				12,783				12,000				3				9
Retained Earnings				27,605				27,278				28,265				1				(2	)
Accumulated Other Comprehensive Income (Loss)				79				(909	)			(834	)		NM				NM
Treasury Stock, at Cost				(1,088	)			(1,046	)			(20	)			(4	)		NM
TOTAL STOCKHOLDERS’ EQUITY				42,736				41,131				42,426				4				1
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND STOCKHOLDERS’ EQUITY			$	740,546			$	712,508			$	712,702				4				4

Note: Prior periods have been restated to conform with current methodologies.

Page 8

---

 

J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (in millions, except ratios)

																	Jun 30, 2002
					Jun 30th				Mar 31st				Jun 30th				Over (Under)
					2002				2002				2001				Mar 31, 02				Jun 30, 01
CREDIT-RELATED ASSETS:
Commercial Loans					$	104,701			$	101,752			$	112,790				3	%			(7	)%
Derivative and FX Contracts						69,858				63,224				68,910				10				1
	Total Commercial Credit-Related Assets (a)					174,559				164,976				181,700				6				(4	)
Managed Consumer Loans (b)						134,884				136,019				124,881				(1	)			8
	Total Managed Credit-Related Assets				$	309,443			$	300,995			$	306,581				3				1
NET CHARGE-OFFS: (c)
Commercial Loans					$	293			$	320			$	212				(8	)			38
Credit Card — Managed (b)						767				658				507				17				51
All Other Consumer						95				96				79				(1	)			20
Managed Consumer Loans						862				754				586				14				47
	Total Managed Net Charge-offs				$	1,155			$	1,074			$	798				8				45
NET CHARGE-OFF RATES — ANNUALIZED:
Total Commercial Loans						1.17	%			1.27	%			0.77	%			(10	)bp			40	bp
Credit Card — Managed						6.42				5.87				5.54				55				88
Total Managed Loans						1.96				1.82				1.37				14				59
NONPERFORMING ASSETS:
Commercial Loans					$	2,512			$	2,359			$	1,890				6	%			33	%
Derivative and FX Contracts						144				155				88				(7	)			64
Consumer Loans						450				534				401				(16	)			12
Assets Acquired in Loan Satisfactions						142				130				119				9				19
		Total				3,248				3,178				2,498				2				30
Other Receivables (d)						1,130				1,130				—				—			NM
			Total Nonperforming Assets		$	4,378	(e)		$	4,308			$	2,498				2				75
SELECTED COUNTRY TOTAL EXPOSURE
(in billions)
Argentina					$	0.4	(f)		$	0.5			$	1.4				(20	)			(71	)
Brazil						2.1	(f)			2.7				2.8				(22	)			(25	)
Turkey						0.1	(f)			0.1				0.2				—				(50	)
Venezuela						0.3	(f)			0.2				0.5				50				(40	)

(a)		Excludes unfunded commercial lending-related commitments totaling $241 billion at June 30, 2002, $243 billion at March 31, 2002 and $257 billion at June 30, 2001. Unused advised lines of credit totaling $18 billion at June 30, 2002, $19 billion at March 31, 2002 and $21 billion at June 30, 2001 are included within these unfunded commitments.
(b)		Includes credit card receivables that have been securitized.
(c)		Net charge-offs are presented for the quarter ended as of the date indicated.
(d)		This amount relates to the Enron-related surety receivables and letter of credit, which are the subject of litigation with credit-worthy entities. These receivables are classified in Other Assets at June 30, 2002.
(e)		Nonperforming assets have not been reduced for credit protection (single name credit default swaps and collateralized loan obligations) aggregating $37 million related to nonperforming counterparties. Nonperforming assets exclude nonaccrual loans held for sale (“HFS”) of $126 million, including $44 million of nonaccrual residential mortgages transferred to the HFS portfolio after recording charge-offs of $15 million during the second quarter of 2002. HFS loans are carried at lower of cost or market and declines in value are recorded in Other Revenue.
(f)		Estimated

Page 9

---

 

J.P. MORGAN CHASE & CO. RECONCILIATION OF REPORTED TO OPERATING RESULTS (in millions, except per share data)

		SECOND QUARTER 2002																SECOND QUARTER 2001
		REPORTED				CREDIT				SPECIAL				OPERATING				REPORTED				CREDIT				SPECIAL				AMORTIZATION				OPERATING
		RESULTS				CARD				ITEMS				BASIS				RESULTS				CARD				ITEMS				OF GOODWILL				BASIS
		(a)				(b)				(c)								(a)				(b)				(c)				(d)
INCOME STATEMENT
Revenue		$	7,574			$	334			$	—			$	7,908			$	6,949			$	273			$	—			$	—			$	7,222
Expense			4,873				—				—				4,873				5,178				—				—				—				5,178
Amortization of Intangibles			92				—				—				92				183				—				—				(147	)			36
Operating Margin			2,609				334				—				2,943				1,588				273				—				147				2,008
Credit Costs			821				334				—				1,155				525				273				—				—				798
Income before Merger and Restructuring Costs			1,788				—				—				1,788				1,063				—				—				147				1,210
Merger and Restructuring Costs			229				—				(229	)			—				478				—				(478	)			—				—
Income before Tax Expense			1,559				—				229				1,788				585				—				478				147				1,210
Tax Expense			531				—				78				609				207				—				166				51				424
Net Income		$	1,028			$	—			$	151			$	1,179			$	378			$	—			$	312			$	96			$	786
NET INCOME PER SHARE
Basic		$	0.51											$	0.59			$	0.18															$	0.39
Diluted			0.50												0.58				0.18																0.38

		YEAR TO DATE 2002																YEAR TO DATE 2001
		REPORTED				CREDIT				SPECIAL				OPERATING				REPORTED				CREDIT				SPECIAL				AMORTIZATION				OPERATING
		RESULTS				CARD				ITEMS				BASIS				RESULTS				CARD				ITEMS				OF GOODWILL				BASIS
		(a)				(b)				(c)								(a)				(b)				(c)				(d)
INCOME STATEMENT
Revenue		$	15,172			$	655			$	—			$	15,827			$	15,274			$	514			$	—			$	—			$	15,788
Expense			9,907				—				—				9,907				10,671				—				—				—				10,671
Amortization of Intangibles			161				—				—				161				360				—				—				(288	)			72
Operating Margin			5,104				655				—				5,759				4,243				514				—				288				5,045
Credit Costs			1,574				655				—				2,229				972				514				—				—				1,486
Income before Merger and Restructuring Costs			3,530				—				—				3,530				3,271				—				—				288				3,559
Merger and Restructuring Costs			484				—				(484	)			—				806				—				(806	)			—				—
Income before Tax Expense			3,046				—				484				3,530				2,465				—				806				288				3,559
Tax Expense			1,036				—				165				1,201				863				—				282				101				1,246
Income before Effect of Acctng Change			2,010				—				319				2,329				1,602				—				524				187				2,313
Net Effect of Change in Acctng Principle			—				—				—				—				(25	)			—				25				—				—
Net Income		$	2,010			$	—			$	319			$	2,329			$	1,577			$	—			$	549			$	187			$	2,313
NET INCOME PER SHARE
Basic		$	1.00											$	1.16			$	0.78	(e)														$	1.15
Diluted			0.99												1.15				0.76	(e)															1.12

---

(a)		Represents condensed results as reported in JPMorgan Chase’s financial statements.
(b)		This column excludes the impact of credit card securitizations. For receivables that have been securitized, amounts that would have been reported as net interest income and as provision for loan losses are instead reported as components of noninterest revenue.
(c)		Includes merger and restructuring costs and special items. The 2002 second quarter and year to date includes $229 million and $484 million, respectively, in merger and restructuring expenses. The 2001 second quarter and year to date includes $478 million and $806 million, respectively, in merger and restructuring expenses.
(d)		Reported net income for 2002 reflects the adoption of SFAS 142 and, accordingly, the Firm ceased amortizing goodwill effective January 1, 2002. There was no impairment of goodwill upon adoption of SFAS 142. Previously reported operating earnings for 2001 have been adjusted by adding back amortization of goodwill to make 2001 results comparable to 2002.
(e)		Includes the effect of the accounting change. Excluding the accounting change, basic and diluted net income per share were $0.79 and $0.77, respectively.

Page 10

 

PRESS RELEASE FINANCIAL SUPPLEMENT

SECOND QUARTER 2002

---

 

J.P. MORGAN CHASE & CO. TABLE OF CONTENTS

		Page
JPMorgan Chase Consolidated
Statement of Income — Reported Basis			3
Lines of Business Financial Highlights Summary			4
Statement of Income — Operating Basis Excluding JPMorgan Partners			5
Statement of Income — Operating Basis			6
Reconciliation from Reported to Operating Basis			7
Segment Detail
Investment Bank			8
Treasury & Securities Services			9
Investment Management & Private Banking			10
JPMorgan Partners			11
Investment Portfolio — Private and Public Securities			12
Retail & Middle Market Financial Services			13
Business-Related Metrics			14
Supplemental Detail
Noninterest Revenue and Noninterest Expense Detail			15
Consolidated Balance Sheet			16
Condensed Average Balance Sheet and Annualized Yields			17
Credit-Related Information			18-19
Capital			20
Glossary of Terms			21

Page 2

---

 

J.P. MORGAN CHASE & CO. STATEMENT OF INCOME — REPORTED BASIS (in millions, except per share and ratio data)

																							2QTR 2002																YTD 2002
			2QTR				1QTR				4QTR				3QTR				2QTR				Over (Under)								YEAR TO DATE								Over (Under)
			2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
REVENUE
Investment Banking Fees			$	785			$	755			$	931			$	811			$	929				4	%			(16	)%		$	1,540			$	1,870				(18	)%
Trading Revenue				731				1,299				355				1,301				1,261				(44	)			(42	)			2,030				3,262				(38	)
Fees and Commissions				2,885				2,584				2,493				2,397				2,460				12				17				5,469				4,591				19
Private Equity — Realized Gains (Losses)				(10	)			(10	)			81				204				(46	)			—				78				(20	)			366				NM
Private Equity — Unrealized Gains (Losses)				(115	)			(228	)			(505	)			(311	)			(783	)			50				85				(343	)			(1,068	)			68
Securities Gains				124				114				202				142				67				9				85				238				522				(54	)
Other Revenue				292				157				151				218				280				86				4				449				532				(16	)
Total Noninterest Revenue				4,692				4,671				3,708				4,762				4,168				—				13				9,363				10,075				(7	)
Interest Income				6,498				6,286				6,823				7,709				8,469				3				(23	)			12,784				17,649				(28	)
Interest Expense				3,616				3,359				3,879				5,050				5,688				8				(36	)			6,975				12,450				(44	)
Net Interest Income				2,882				2,927				2,944				2,659				2,781				(2	)			4				5,809				5,199				12
Revenue before Provision for Loan Losses				7,574				7,598				6,652				7,421				6,949				—				9				15,172				15,274				(1	)
Provision for Loan Losses				821				753				1,468				745				525				9				56				1,574				972				62
	TOTAL NET REVENUE			6,753				6,845				5,184				6,676				6,424				(1	)			5				13,598				14,302				(5	)
EXPENSE
Compensation Expense				2,761				2,823				2,622				2,860				3,026				(2	)			(9	)			5,584				6,362				(12	)
Occupancy Expense				365				338				334				339				327				8				12				703				675				4
Technology and Communications Expense				629				665				640				663				674				(5	)			(7	)			1,294				1,328				(3	)
Merger and Restructuring Costs				229				255				841				876				478				(10	)			(52	)			484				806				(40	)
Amortization of Intangibles				92				69				187				182				183				33				(50	)			161				360				(55	)
Other Expense				1,118				1,208				1,128				1,087				1,151				(7	)			(3	)			2,326				2,306				1
	TOTAL NONINTEREST EXPENSE			5,194				5,358				5,752				6,007				5,839				(3	)			(11	)			10,552				11,837				(11	)
Income (Loss) before Income Tax Expense and Effect of Accounting Change				1,559				1,487				(568	)			669				585				5				166				3,046				2,465				24
Income Tax Expense (Benefit)				531				505				(236	)			220				207				5				157				1,036				863				20
INCOME BEFORE EFFECT OF ACCOUNTING CHANGE				1,028				982				(332	)			449				378				5				172				2,010				1,602				25
Net Effect of Change in Accounting Principle				—				—				—				—				—				NM				NM				—				(25	)			NM
NET INCOME (LOSS)			$	1,028			$	982			$	(332	)		$	449			$	378				5				172			$	2,010			$	1,577				27
NET INCOME (LOSS) PER SHARE (a)
Basic			$	0.51			$	0.49			$	(0.18	)		$	0.22			$	0.18				4				183			$	1.00			$	0.78				28
Diluted				0.50				0.48				(0.18	)			0.22				0.18				4				178				0.99				0.76				30
PERFORMANCE RATIOS
Return on Average Assets				0.56	%			0.55	%			NM				0.24	%			0.21	%			1	bp			35	bp			0.56	%			0.43	%			13	bp
Return on Average Common Equity				10.0				9.7				NM				4.2				3.5				30				650				9.8				7.5				230
FULL-TIME EQUIVALENT EMPLOYEES (b)				95,878				96,938				95,812				96,633				97,224				(1	)%			(1	)%

Note: Prior periods have been restated to conform with current methodologies.

(a)		Basic and diluted earnings per share have been reduced by $0.01 in the first six months of 2001 due to the impact of the adoption of SFAS 133 relating to the accounting for derivative instruments and hedging activities.
(b)		Represents actual period end amount for each respective quarter.

Page 3

 

---

 

J.P. MORGAN CHASE & CO. LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY (in millions, except per share and ratio data)

																									2QTR 2002																YTD 2002
					2QTR				1QTR				4QTR				3QTR				2QTR				Over (Under)								YEAR TO DATE								Over (Under)
					2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
OPERATING REVENUE
Investment Bank					$	3,093			$	3,608			$	3,080			$	3,542			$	3,711				(14	)%			(17	)%		$	6,701			$	8,034				(17	)%
Treasury & Securities Services						985				934				937				973				962				5				2				1,919				1,915				—
Investment Management & Private Banking						691				729				719				726				789				(5	)			(12	)			1,420				1,592				(11	)
Retail & Middle Market Financial Services						3,504				3,154				2,953				2,877				2,769				11				27				6,658				5,448				22
Corporate (a)						(186	)			(203	)			(321	)			(250	)			(123	)			8				(51	)			(389	)			(402	)			3
	OPERATING REVENUE EXCLUDING JPMP					8,087				8,222				7,368				7,868				8,108				(2	)			—				16,309				16,587				(2	)
JPMorgan Partners						(179	)			(303	)			(452	)			(177	)			(886	)			41				80				(482	)			(799	)			40
		OPERATING REVENUE (b)			$	7,908			$	7,919			$	6,916			$	7,691			$	7,222				—				9			$	15,827			$	15,788				—
EARNINGS
Investment Bank					$	485			$	750			$	372			$	706			$	785				(35	)			(38	)		$	1,235			$	1,812				(32	)
Treasury & Securities Services						177				145				157				172				152				22				16				322				314				3
Investment Management & Private Banking						118				125				95				118				116				(6	)			2				243				217				12
Retail & Middle Market Financial Services						686				533				335				427				428				29				60				1,219				854				43
Corporate (a)						(122	)			(155	)			(258	)			(136	)			(85	)			21				(44	)			(277	)			(270	)			(3	)
		OPERATING EARNINGS EXCLUDING JPMP				1,344				1,398				701				1,287				1,396				(4	)			(4	)			2,742				2,927				(6	)
JPMorgan Partners						(165	)			(248	)			(345	)			(154	)			(610	)			33				73				(413	)			(614	)			33
		OPERATING EARNINGS (b)				1,179				1,150				356				1,133				786				3				50				2,329				2,313				1
Special Items & Net Effect of Change in Acctng Principle						(151	)			(168	)			(579	)			(587	)			(312	)			10				52				(319	)			(549	)			42
Amortization of Goodwill, Net of Taxes						—				—				(109	)			(97	)			(96	)			NM				NM				—				(187	)			NM
			NET INCOME (LOSS) (b)		$	1,028			$	982			$	(332	)		$	449			$	378				5				172			$	2,010			$	1,577				27
EARNINGS PER SHARE — DILUTED
OPERATING EARNINGS EXCLUDING JPMP					$	0.66			$	0.69			$	0.34			$	0.63			$	0.68				(4	)			(3	)		$	1.35			$	1.42				(5	)
Impact of JPMP						(0.08	)			(0.12	)			(0.17	)			(0.08	)			(0.30	)			33				73				(0.20	)			(0.30	)			33
OPERATING EARNINGS (b)						0.58				0.57				0.17				0.55				0.38				2				53				1.15				1.12				3
Special Items & Net Effect of Change in Acctng Principle						(0.08	)			(0.09	)			(0.29	)			(0.29	)			(0.15	)			11				47				(0.16	)			(0.27	)			41
Amortization of Goodwill, Net of Taxes						—				—				(0.05	)			(0.04	)			(0.05	)			NM				NM				—				(0.09	)			NM
NET INCOME (LOSS) (b)					$	0.50			$	0.48			$	(0.18	)(c)		$	0.22			$	0.18				4				178			$	0.99			$	0.76				30
OPERATING RETURN ON COMMON EQUITY
Investment Bank						10.4	%			15.9	%			7.7	%			15.2	%			16.7	%			(550	)bp			(630	)bp			13.2	%			18.7	%			(550	)bp
Treasury & Securities Services						22.9				19.8				21.5				23.3				19.8				310				310				21.4				21.2				20
Investment Management & Private Banking						7.8				8.4				6.1				7.6				7.3				(60	)			50				8.1				6.7				140
Retail & Middle Market Financial Services						26.0				20.9				13.7				17.8				18.5				510				750				23.5				18.9				460
OPERATING RETURN ON COMMON EQUITY (b)						11.4				11.4				3.3				10.7				7.4				—				400				11.4				11.0				40

(a)		Includes Support Units and the effects remaining at the corporate level after the implementation of management accounting policies.
(b)		Represents consolidated JPMorgan Chase.
(c)		Diluted EPS is reported as $(0.18) which is the same as basic EPS, instead of $(0.17), since using diluted average shares outstanding would cause antidilution. As a result, the net loss earnings per share does not foot by $(0.01).

Page 4

 

---

 

J.P. MORGAN CHASE & CO. STATEMENT OF INCOME — OPERATING BASIS EXCLUDING JPMORGAN PARTNERS (in millions, except per share and ratio data)

																								2QTR 2002																YTD 2002
				2QTR				1QTR				4QTR				3QTR				2QTR				Over (Under)								YEAR TO DATE								Over (Under)
				2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
OPERATING REVENUE
Investment Banking Fees				$	785			$	755			$	932			$	812			$	928				4	%			(15	)%		$	1,540			$	1,870				(18	)%
Trading-Related Revenue (Including Trading NII)					1,123				1,710				896				1,608				1,587				(34	)			(29	)			2,833				3,735				(24	)
Fees and Commissions					2,725				2,466				2,297				2,289				2,403				11				13				5,191				4,472				16
Private Equity — Realized Gains (Losses)					1				3				(26	)			—				10				(67	)			(90	)			4				2				100
Private Equity — Unrealized Gains (Losses)					(1	)			14				—				(5	)			(16	)			NM				94				13				(20	)			NM
Securities Gains					124				114				202				142				67				9				85				238				522				(54	)
Other Revenue					277				134				158				206				284				107				(2	)			411				533				(23	)
Net Interest Income (Excluding Trading NII)					3,053				3,026				2,909				2,816				2,845				1				7				6,079				5,473				11
		TOTAL OPERATING REVENUE			8,087				8,222				7,368				7,868				8,108				(2	)			—				16,309				16,587				(2	)
OPERATING EXPENSE
Compensation Expense					2,723				2,782				2,583				2,826				2,993				(2	)			(9	)			5,505				6,286				(12	)
Noncompensation Expense					2,158				2,232				2,085				2,092				2,150				(3	)			—				4,390				4,288				2
	TOTAL OPERATING EXPENSE				4,881				5,014				4,668				4,918				5,143				(3	)			(5	)			9,895				10,574				(6	)
Credit Costs					1,155				1,074				1,732				1,015				798				8				45				2,229				1,486				50
Operating Income before Taxes					2,051				2,134				968				1,935				2,167				(4	)			(5	)			4,185				4,527				(8	)
Income Taxes					707				736				267				648				771				(4	)			(8	)			1,443				1,600				(10	)
OPERATING EARNINGS				$	1,344			$	1,398			$	701			$	1,287			$	1,396				(4	)			(4	)		$	2,742			$	2,927				(6	)
OPERATING BASIS
Diluted Earnings per Share				$	0.66			$	0.69			$	0.34			$	0.63			$	0.68				(4	)			(3	)		$	1.35			$	1.42				(5	)
Return on Common Equity					15.1	%			16.2	%			7.7	%			14.3	%			15.8	%			(110	)bp			(70	)bp			15.6	%			16.8	%			(120	)bp
Overhead Ratio					60				61				63				63				63				(100	)			(300	)			61				64				(300	)
Compensation Expense as a % of Operating Revenue					34				34				35				36				37				—				(300	)			34				38				(400	)
Noncompensation Expense as a % of Operating Revenue					27				27				28				27				27				—				—				27				26				100

Page 5

 

---

 

J.P. MORGAN CHASE & CO. STATEMENT OF INCOME — OPERATING BASIS (in millions, except per share and ratio data)

																								2QTR 2002																YTD 2002
				2QTR				1QTR				4QTR				3QTR				2QTR				Over (Under)								YEAR TO DATE								Over (Under)
				2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
OPERATING REVENUE
Investment Banking Fees				$	785			$	755			$	931			$	811			$	929				4	%			(16	)%		$	1,540			$	1,870				(18	)%
Trading-Related Revenue (Including Trading NII)					1,136				1,720				904				1,614				1,594				(34	)			(29	)			2,856				3,761				(24	)
Fees and Commissions					2,745				2,493				2,340				2,297				2,422				10				13				5,238				4,504				16
Private Equity — Realized Gains (Losses)					(10	)			(10	)			81				204				(46	)			—				78				(20	)			366				NM
Private Equity — Unrealized Gains (Losses)					(115	)			(228	)			(505	)			(311	)			(783	)			50				85				(343	)			(1,068	)			68
Securities Gains					124				114				202				142				67				9				85				238				522				(54	)
Other Revenue					273				137				138				209				280				99				(3	)			410				537				(24	)
Net Interest Income (Excluding Trading NII)					2,970				2,938				2,825				2,725				2,759				1				8				5,908				5,296				12
		TOTAL OPERATING REVENUE			7,908				7,919				6,916				7,691				7,222				—				9				15,827				15,788				—
OPERATING EXPENSE
Compensation Expense					2,761				2,823				2,622				2,860				3,026				(2	)			(9	)			5,584				6,362				(12	)
Noncompensation Expense					2,204				2,280				2,138				2,125				2,188				(3	)			1				4,484				4,381				2
	TOTAL OPERATING EXPENSE				4,965				5,103				4,760				4,985				5,214				(3	)			(5	)			10,068				10,743				(6	)
Credit Costs					1,155				1,074				1,732				1,015				798				8				45				2,229				1,486				50
Operating Income before Taxes					1,788				1,742				424				1,691				1,210				3				48				3,530				3,559				(1	)
Income Taxes					609				592				68				558				424				3				44				1,201				1,246				(4	)
OPERATING EARNINGS				$	1,179			$	1,150			$	356			$	1,133			$	786				3				50			$	2,329			$	2,313				1
OPERATING BASIS
Diluted Earnings per Share				$	0.58			$	0.57			$	0.17			$	0.55			$	0.38				2				53			$	1.15			$	1.12				3
SVA					(57	)			(59	)			(915	)			(136	)			(481	)			3				88				(116	)			(196	)			41
Return on Managed Assets					0.62	%			0.63	%			0.19	%			0.59	%			0.42	%			(1	)bp			20	bp			0.63	%			0.62	%			1	bp
Return on Common Equity					11.4				11.4				3.3				10.7				7.4				—				400				11.4				11.0				40
Overhead Ratio					63				64				69				65				72				(100	)			(900	)			64				68				(400	)
Common Dividend Payout Ratio					59				60				199				61				89				(100	)			(3,000	)			60				60				—
Effective Tax Rate					34				34				16				33				35				—				(100	)			34				35				(100	)
Compensation Expense as a % of Operating Revenue					35				36				38				37				42				(100	)			(700	)			35				40				(500	)
Noncompensation Expense as a % of Operating Revenue					28				29				31				28				30				(100	)			(200	)			28				28				—

Note: Prior periods have been restated to conform with current methodologies.

Page 6

 

---

 

J.P. MORGAN CHASE & CO. RECONCILIATION FROM REPORTED TO OPERATING BASIS (in millions)

																								2QTR 2002																YTD 2002
				2QTR				1QTR				4QTR				3QTR				2QTR				Over (Under)								YEAR TO DATE								Over (Under)
				2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
REVENUE
TRADING REVENUE
		Reported		$	731			$	1,299			$	355			$	1,301			$	1,261				(44	)%			(42	)%		$	2,030			$	3,262				(38	)%
		Trading-Related NII			405				421				549				313				333				(4	)			22				826				499				66
		Operating		$	1,136			$	1,720			$	904			$	1,614			$	1,594				(34	)			(29	)		$	2,856			$	3,761				(24	)
CREDIT CARD REVENUE (a)
		Reported		$	669			$	587			$	662			$	548			$	465				14				44			$	1,256			$	898				40
		Credit Card Securitizations			(140	)			(91	)			(153	)			(100	)			(38	)			54				NM				(231	)			(87	)			166
		Operating		$	529			$	496			$	509			$	448			$	427				7				24			$	1,025			$	811				26
OTHER REVENUE
		Reported		$	292			$	157			$	151			$	218			$	280				86				4			$	449			$	532				(16	)
		Credit Card Securitizations			(19	)			(20	)			(13	)			(9	)			—				(5	)			NM				(39	)			5				NM
		Operating		$	273			$	137			$	138			$	209			$	280				99				(3	)		$	410			$	537				(24	)
NET INTEREST INCOME
		Reported		$	2,882			$	2,927			$	2,944			$	2,659			$	2,781				(2	)			4			$	5,809			$	5,199				12
		Credit Card Securitizations			493				432				430				379				311				14				59				925				596				55
		Trading-Related NII			(405	)			(421	)			(549	)			(313	)			(333	)			(4	)			22				(826	)			(499	)			66
		Operating		$	2,970			$	2,938			$	2,825			$	2,725			$	2,759				1				8			$	5,908			$	5,296				12
TOTAL REVENUE
		Reported		$	7,574			$	7,598			$	6,652			$	7,421			$	6,949				—				9			$	15,172			$	15,274				(1	)
		Credit Card Securitizations			334				321				264				270				273				4				22				655				514				27
		Total Operating Revenue		$	7,908			$	7,919			$	6,916			$	7,691			$	7,222				—				9			$	15,827			$	15,788				—
EXPENSE
	Reported			$	5,194			$	5,358			$	5,752			$	6,007			$	5,839				(3	)			(11	)		$	10,552			$	11,837				(11	)
	Merger and Restructuring Costs				(229	)			(255	)			(841	)			(876	)			(478	)			(10	)			(52	)			(484	)			(806	)			(40	)
	Amortization of Goodwill				—				—				(151	)			(146	)			(147	)			NM				NM				—				(288	)			NM
	Operating Expense			$	4,965			$	5,103			$	4,760			$	4,985			$	5,214				(3	)			(5	)		$	10,068			$	10,743				(6	)
CREDIT COSTS
	Provision for Loan Losses — Reported			$	821			$	753			$	1,468			$	745			$	525				9				56			$	1,574			$	972				62
	Credit Card Securitizations				334				321				264				270				273				4				22				655				514				27
	Credit Costs — Operating			$	1,155			$	1,074			$	1,732			$	1,015			$	798				8				45			$	2,229			$	1,486				50

(a)

Included in Fees and Commissions.

Page 7

 

---

 

          

          

          

 

---

 

J.P. MORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS (in millions, except ratios)

																										2QTR 2002																YTD 2002
						2QTR				1QTR				4QTR				3QTR				2QTR				Over (Under)								YEAR TO DATE								Over (Under)
						2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
OPERATING INCOME STATEMENT
REVENUE:
Trading Revenue (Including Trading NII)						$	1,105			$	1,694			$	1,020			$	1,500			$	1,551				(35	)%			(29	)%		$	2,799			$	3,646				(23	)%
Investment Banking Fees							783				741				933				806				920				6				(15	)			1,524				1,859				(18	)
Net Interest Income							638				715				786				758				707				(11	)			(10	)			1,353				1,389				(3	)
Fees and Commissions							419				380				363				349				357				10				17				799				778				3
All Other Revenue							148				78				(22	)			129				176				90				(16	)			226				362				(38	)
				TOTAL OPERATING REVENUE			3,093				3,608				3,080				3,542				3,711				(14	)			(17	)			6,701				8,034				(17	)
EXPENSE:
Compensation Expense							1,157				1,181				1,136				1,256				1,349				(2	)			(14	)			2,338				2,952				(21	)
Noncompensation Expense							859				929				741				891				925				(8	)			(7	)			1,788				1,884				(5	)
			TOTAL OPERATING EXPENSE				2,016				2,110				1,877				2,147				2,274				(4	)			(11	)			4,126				4,836				(15	)
Operating Margin							1,077				1,498				1,203				1,395				1,437				(28	)			(25	)			2,575				3,198				(19	)
Credit Costs							306				282				617				268				167				9				83				588				262				124
Operating Income Before Taxes							771				1,216				586				1,127				1,270				(37	)			(39	)			1,987				2,936				(32	)
Income Taxes							286				466				214				421				485				(39	)			(41	)			752				1,124				(33	)
OPERATING EARNINGS						$	485			$	750			$	372			$	706			$	785				(35	)			(38	)		$	1,235			$	1,812				(32	)
Average Common Equity						$	18,564			$	19,018			$	18,812			$	18,309			$	18,711				(2	)			(1	)		$	18,790			$	19,355				(3	)
Average Assets							503,526				467,117				510,573				513,143				506,204				8				(1	)			485,422				508,469				(5	)
SVA							(75	)			182				(202	)			147				217				NM				NM				107				643				(83	)
Return on Common Equity							10.4	%			15.9	%			7.7	%			15.2	%			16.7	%			(550	)bp			(630	)bp			13.2	%			18.7	%			(550	)bp
Overhead Ratio							65				58				61				61				61				700				400				62				60				200
Compensation Expense as a % of Operating Revenue							37				33				37				35				36				400				100				35				37				(200	)
TRADING-RELATED REVENUE AND COMMISSIONS (a)
Equities						$	355			$	419			$	290			$	425			$	645				(15	)%			(45	)%		$	774			$	1,390				(44	)%
Fixed Income and Other							1,051				1,538				995				1,308				1,177				(32	)			(11	)			2,589				2,834				(9	)
		Total				$	1,406			$	1,957			$	1,285			$	1,733			$	1,822				(28	)			(23	)		$	3,363			$	4,224				(20	)
INVESTMENT BANKING FEES
Advisory						$	192			$	191			$	268			$	330			$	303				1				(37	)		$	383			$	647				(41	)%
Underwriting and Other Fees							591				550				665				476				617				7				(4	)			1,141				1,212				(6	)
		Total				$	783			$	741			$	933			$	806			$	920				6				(15	)		$	1,524			$	1,859				(18	)
MARKET SHARE/ RANKINGS: (b)
	Global Syndicated Loans						28.8%/#1				21.9%/#1				24.5%/#1				21.8%/#1				30.9%/#1												25.9%/#1				29.2%/#1
	U.S. Investment Grade Bonds						17.7%/#2				15.9%/#2				13.2%/#2				14.7%/#2				13.5%/#2												16.7%/#2				14.5%/#2
	Euro-Denominated Corporate International Bonds						5.4%/#7				5.8%/#4				6.1%/#7				9.5%/#1				8.3%/#2												5.6%/#5				6.8%/#2
	Global Equity and Equity-Related						6.1%/#6				4.9%/#6				5.0%/#8				5.0%/#7				1.7%/#9												5.5%/#7				2.1%/#10
	U.S. Equity and Equity-Related						8.4%/#6				4.5%/#7				7.8%/#5				5.5%/#7				1.8%/#8												6.2%/#6				1.5%/#9
	Global Announced M&A						19.5%/#1				11.6%/#8				26.2%/#4				30.9%/#5				12.2%/#8												16.0%/#5				15.6%/#6

Note: Prior periods have been restated to conform with current methodologies.

(a)		Includes Trading Revenue (including trading NII), and brokerage commissions which are primarily reported within Fees and Commissions.
(b)		Derived from Thomson Financial Securities Data. Global announced M&A based on rank value; all others based on proceeds, with full credit to each book manager/equal if joint.

Page 8

 

---

 

J.P. MORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratios)

																										2QTR 2002																YTD 2002
						2QTR				1QTR				4QTR				3QTR				2QTR				Over (Under)								YEAR TO DATE								Over (Under)
						2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
	OPERATING INCOME STATEMENT
	REVENUE:
	Fees and Commissions					$	609			$	587			$	565			$	556			$	568				4	%			7	%		$	1,196			$	1,116				7	%
	Net Interest Income						323				313				327				354				337				3				(4	)			636				693				(8	)
	All Other Revenue						53				34				45				63				57				56				(7	)			87				106				(18	)
				TOTAL OPERATING REVENUE			985				934				937				973				962				5				2				1,919				1,915				—
	EXPENSE:
	Compensation Expense						301				304				275				288				289				(1	)			4				605				588				3
	Noncompensation Expense						411				405				419				419				438				1				(6	)			816				840				(3	)
			TOTAL OPERATING EXPENSE				712				709				694				707				727				—				(2	)			1,421				1,428				—
	Operating Margin						273				225				243				266				235				21				16				498				487				2
	Credit Costs						(1	)			1				4				1				2				NM				NM				—				2				NM
	Operating Income Before Taxes						274				224				239				265				233				22				18				498				485				3
	Income Taxes						97				79				82				93				81				23				20				176				171				3
	OPERATING EARNINGS					$	177			$	145			$	157			$	172			$	152				22				16			$	322			$	314				3
Average Common Equity						$	3,081			$	2,960			$	2,877			$	2,910			$	3,054				4				1			$	3,021			$	2,969				2
Average Assets							18,321				16,373				17,823				18,378				18,558				12				(1	)			17,352				17,831				(3	)
SVA							84				56				69				83				60				50				40				140				135				4
Return on Common Equity							22.9	%			19.8	%			21.5	%			23.3	%			19.8	%			310	bp			310	bp			21.4	%			21.2	%			20	bp
Overhead Ratio							72				76				74				73				76				(400	)			(400	)			74				75				(100	)
OPERATING REVENUE BY BUSINESS:
		Treasury Services				$	331			$	334			$	350			$	345			$	333				(1)	%			(1)	%		$	665			$	655				2	%
		Investor Services					428				392				392				434				427				9				—				820				862				(5	)
		Institutional Trust Services					221				203				190				189				197				9				12				424				388				9
		Other					5				5				5				5				5				—				—				10				10				—
		Total Treasury & Securities Services				$	985			$	934			$	937			$	973			$	962				5				2			$	1,919			$	1,915				—

Note: Prior periods have been restated to conform with current methodologies.

Page 9

 

---

 

J.P. MORGAN CHASE & CO. INVESTMENT MANAGEMENT & PRIVATE BANKING FINANCIAL HIGHLIGHTS (in millions, except ratios)

																										2QTR 2002																YTD 2002
						2QTR				1QTR				4QTR				3QTR				2QTR				Over (Under)								YEAR TO DATE								Over (Under)
						2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
	OPERATING INCOME STATEMENT
	REVENUE:
	Fees and Commissions					$	532			$	561			$	552			$	554			$	586				(5	)%			(9	)%		$	1,093			$	1,176				(7	)%
	Net Interest Income						106				105				131				122				132				1				(20	)			211				266				(21	)
	All Other Revenue						53				63				36				50				71				(16	)			(25	)			116				150				(23	)
				TOTAL OPERATING REVENUE			691				729				719				726				789				(5	)			(12	)			1,420				1,592				(11	)
	EXPENSE:
	Compensation Expense						239				271				279				292				328				(12	)			(27	)			510				695				(27	)
	Noncompensation Expense						281				275				296				279				310				2				(9	)			556				621				(10	)
			TOTAL OPERATING EXPENSE				520				546				575				571				638				(5	)			(18	)			1,066				1,316				(19	)
	Operating Margin						171				183				144				155				151				(7	)			13				354				276				28
	Credit Costs						23				23				30				3				2				—				NM				46				2				NM
	Operating Income Before Taxes						148				160				114				152				149				(8	)			(1	)			308				274				12
	Income Taxes						30				35				19				34				33				(14	)			(9	)			65				57				14
	OPERATING EARNINGS					$	118			$	125			$	95			$	118			$	116				(6	)			2			$	243			$	217				12
Average Common Equity						$	6,012			$	5,975			$	6,013			$	6,070			$	6,227				1				(3	)		$	5,993			$	6,333				(5	)
Average Assets							32,989				34,690				33,602				33,951				33,329				(5	)			(1	)			33,835				34,038				(1	)
SVA							(64	)			(53	)			(89	)			(67	)			(73	)			(21	)			12				(117	)			(165	)			29
Return on Common Equity							7.8	%			8.4	%			6.1	%			7.6	%			7.3	%			(60	)bp			50	bp			8.1	%			6.7	%			140	bp
Overhead Ratio							75				75				80				79				81				—				(600	)			75				83				(800	)
(in billions)
ASSETS UNDER MANAGEMENT (a)(b)						$	541	(c)		$	581			$	602			$	582			$	609				(7	)%			(11	)%
		Private Banking					132	(c)			139				138				135				142				(5	)			(7	)
		Institutional					341	(c)			373				404				390				406				(9	)			(16	)
		Retail					68	(c)			69				60				57				61				(1	)			11
ASSETS UNDER MANAGEMENT						$	541	(c)		$	581			$	602			$	582			$	609				(7	)			(11	)
		Americas					375	(c)			417				438				421				431				(10	)			(13	)
		Europe and Asia					166	(c)			164				164				161				178				1				(7	)
ASSETS UNDER MANAGEMENT						$	541	(c)		$	581			$	602			$	582			$	609				(7	)			(11	)
		Fixed Income and Cash					293	(c)			312				328				313				312				(6	)			(6	)
		Equities and Other					248	(c)			269				274				269				297				(8	)			(16	)
CLIENT POSITIONS (b)(d)
		Private Banking				$	277	(c)		$	276			$	299			$	300			$	314				—				(12	)

Note: Prior periods have been restated to conform with current methodologies.

(a)		Assets under management represent assets actively managed by Investment Management & Private Banking on behalf of institutional and Private Banking clients. Excludes assets managed at American Century Companies Inc.
(b)		Assets under management and client positions restated for transfer of certain clients to RMMFS.
(c)		Estimated
(d)		Client Positions represent assets under management as well as custody, restricted stock, deposit, brokerage and loan accounts.

Page 10

 

---

 

J.P. MORGAN CHASE & CO. JPMORGAN PARTNERS FINANCIAL HIGHLIGHTS (in millions, except ratios)

																							2QTR 2002																YTD 2002
																							Over (Under)								YEAR TO DATE								Over (Under)
			2QTR 2002				1QTR 2002				4QTR 2001				3QTR 2001				2QTR 2001				1Q 2002				2Q 2001				2002				2001				2001
OPERATING INCOME STATEMENT
REVENUE:
Private Equity:
	Realized Gains (Losses)		$	(11	)		$	(13	)		$	107			$	204			$	(56	)			15	%			80	%		$	(24	)		$	364			NM
	Unrealized Gains (Losses)			(114	)			(242	)			(505	)			(306	)			(767	)			53				85				(356	)			(1,048	)			66	%
Total Private Equity Gains (Losses)				(125	)			(255	)			(398	)			(102	)			(823	)			51				85				(380	)			(684	)			44
Net Interest Income (Loss)				(83	)			(88	)			(84	)			(91	)			(86	)			6				3				(171	)			(177	)			3
Fees and Other Revenue				29				40				30				16				23				(28	)			26				69				62				11
	TOTAL OPERATING REVENUE			(179	)			(303	)			(452	)			(177	)			(886	)			41				80				(482	)			(799	)			40
EXPENSE:
Compensation Expense				38				41				39				34				33				(7	)			15				79				76				4
Noncompensation Expense				46				48				53				33				38				(4	)			21				94				93				1
	TOTAL OPERATING EXPENSE			84				89				92				67				71				(6	)			18				173				169				2
Operating Income (Loss) Before Taxes				(263	)			(392	)			(544	)			(244	)			(957	)			33				73				(655	)			(968	)			32
Income Taxes (Benefit)				(98	)			(144	)			(199	)			(90	)			(347	)			(32	)			(72	)			(242	)			(354	)			(32	)
OPERATING EARNINGS (LOSS)			$	(165	)		$	(248	)		$	(345	)		$	(154	)		$	(610	)			33				73			$	(413	)		$	(614	)			33
Average Common Equity			$	5,493			$	5,708			$	6,131			$	6,120			$	6,601				(4	)			(17	)		$	5,600			$	6,868				(18	)
Average Assets				10,153				10,599				11,717				11,357				12,235				(4	)			(17	)			10,375				12,940				(20	)
SVA				(372	)			(461	)			(579	)			(387	)			(860	)			19				57				(833	)			(1,131	)			26

Note: Prior periods have been restated to conform with current methodologies.

Page 11

---

 

J.P. MORGAN CHASE & CO. JPMORGAN PARTNERS INVESTMENT PORTFOLIO — PRIVATE AND PUBLIC SECURITIES (in millions, except ratios)

																							Jun 30, 2002
																							Over (Under)
			Jun 30th 2002				Mar 31st 2002				Dec 31st 2001				Sep 30th 2001				Jun 30th 2001				Mar 31, 02				Jun 30, 01
PORTFOLIO INFORMATION
Public Securities (133 companies)(a)(b)
	Carrying Value		$	695			$	705			$	998			$	1,149			$	1,680				(1	)%			(59	)%
	Cost			860				809				802				829				974				6				(12	)
Private Direct Securities (949 companies)(b)
	Carrying Value			5,707				6,054				6,289				6,371				6,089				(6	)			(6	)
	Cost			7,066				7,317				7,544				7,322				6,998				(3	)			1
Private Fund Investments (319 funds)(b)
	Carrying Value			1,827				1,794				1,910				2,108				2,086				2				(12	)
	Cost			2,164				2,119				2,182				2,217				2,201				2				(2	)
Total Investment Portfolio - Carrying Value			$	8,229			$	8,553			$	9,197			$	9,628			$	9,855				(4	)			(16	)
Total Investment Portfolio - Cost			$	10,090			$	10,245			$	10,528			$	10,368			$	10,173				(2	)			(1	)

Public Securities Investments at June 30, 2002
(dollars and shares in millions)

											Quoted
											Public
			Symbol				Shares				Value				Cost
JetBlue Airways Corporation			JBLU					3.4			$	157			$	20
Encore Acquisition Company			EAC					4.9				85				34
Guitar Center Inc.			GTRC					3.6				67				39
Fisher Scientific International, Inc.			FSH					2.4				66				21
Triton PCS Holdings, Inc.			TPC					16.0				62				70
dj Orthopedics, Inc.			DJO					5.9				48				54
1-800-FLOWERS.COM, Inc.			FLWS					3.9				44				14
United Auto Group, Inc.			UAG					2.0				42				24
AT&T Wireless Services, Inc. (c)			AWE					7.0				41				5
Wild Oats Markets, Inc.			OATS					2.3				38				19
	Top Ten Public Securities										$	650			$	300
Other Public Securities (123 companies)												356				560
	Total Public Securities (133 companies)										$	1,006			$	860

(a)  Publicly traded positions only.

(b)  Represents the number of companies and funds at June 30, 2002.

(c)  Does not include 3.3 million shares held directly by the holding company, received upon a distribution from JPMP.

Page 12

---

 

J.P. MORGAN CHASE & CO. RETAIL & MIDDLE MARKET FINANCIAL SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratios)

																																							YTD
																																							2002
																							2QTR 2002																Over
																							Over (Under)								YEAR TO DATE								(Under)
			2QTR 2002				1QTR 2002				4QTR 2001				3QTR 2001				2QTR 2001				1Q 2002				2Q 2001				2002				2001				2001
OPERATING INCOME STATEMENT
REVENUE:
Net Interest Income			$	2,141			$	2,049			$	1,859			$	1,823			$	1,761				4	%			22	%		$	4,190			$	3,439				22	%
Fees and Commissions				1,169				931				809				820				879				26				33				2,100				1,384				52
Securities Gains				19				(13	)			61				1				—			NM				NM					6				316				(98	)
All Other Revenue				175				187				224				233				129				(6	)			36				362				309				17
	TOTAL OPERATING REVENUE			3,504				3,154				2,953				2,877				2,769				11				27				6,658				5,448				22
EXPENSE:
Compensation Expense				689				656				608				623				603				5				14				1,345				1,176				14
Noncompensation Expense				981				911				896				847				842				8				17				1,892				1,662				14
	TOTAL OPERATING EXPENSE			1,670				1,567				1,504				1,470				1,445				7				16				3,237				2,838				14
Operating Margin				1,834				1,587				1,449				1,407				1,324				16				39				3,421				2,610				31
Credit Costs				736				726				925				722				629				1				17				1,462				1,226				19
Operating Income Before Taxes				1,098				861				524				685				695				28				58				1,959				1,384				42
Income Taxes				412				328				189				258				267				26				54				740				530				40
OPERATING EARNINGS			$	686			$	533			$	335			$	427			$	428				29				60			$	1,219			$	854				43
Average Common Equity			$	10,558			$	10,261			$	9,596			$	9,449			$	9,215				3				15			$	10,410			$	9,002				16
Average Managed Assets(a)				179,483				179,535				169,828				167,961				168,023				—				7				179,509				164,534				9
SVA				368				225				42				139				148				64				149				593				310				91
Return on Common Equity				26.0	%			20.9	%			13.7	%			17.8	%			18.5	%		510bp				750bp					23.5	%			18.9	%		460 bp
Overhead Ratio				48				50				51				51				52				(200	)			(400	)			49				52				(300	)
RETAIL & MIDDLE MARKET FINANCIAL SERVICES’ BUSINESSES
CARDMEMBER SERVICES:
Operating Revenues			$	1,492			$	1,359			$	1,261			$	1,149			$	1,072				10	%			39	%		$	2,851			$	2,072				38	%
Operating Earnings				178				151				176				129				113				18				58				329				208				58
HOME FINANCE:
Operating Revenues			$	772			$	527			$	441			$	467			$	413				46				87			$	1,299			$	774				68
Operating Earnings				268				132				89				122				99				103				171				400				189				112
REGIONAL BANKING GROUP:
Operating Revenues			$	726			$	743			$	754			$	789			$	809				(2	)			(10	)		$	1,469			$	1,630				(10	)
Operating Earnings				90				126				108				126				131				(29	)			(31	)			216				273				(21	)
MIDDLE MARKETS:
Operating Revenues			$	329			$	335			$	313			$	322			$	321				(2	)			2			$	664			$	650				2
Operating Earnings				94				84				66				76				62				12				52				178				131				36
AUTO FINANCE:
Operating Revenues			$	167			$	171			$	164			$	140			$	136				(2	)			23			$	338			$	248				36
Operating Earnings				82				33				36				33				36				148				128				115				58				98

Note: Prior periods have been restated to conform with current methodologies.

(a)  Excludes the impact of credit card securitizations.

Page 13

---

 

J.P. MORGAN CHASE & CO. RETAIL & MIDDLE MARKET FINANCIAL SERVICES BUSINESS-RELATED METRICS

																																						YTD
																																						2002
																						2QTR 2002																Over
																						Over (Under)								YEAR TO DATE								(Under)
		2QTR				1QTR				4QTR				3QTR				2QTR
		2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
Cardmember Services - Managed Basis
End-of-Period Outstandings (in billions)		$	49.5			$	48.9			$	41.6			$	38.9			$	38.3				1	%			29	%		$	49.5			$	38.3				29	%
Total Purchases & Cash Advances (a) (in billions)			20.9				18.9				20.3				17.9				17.8				11				17				39.8				34.0				17
Total Accounts (in millions)			28.1				27.7				23.9				23.4				22.4				1				25				28.1				22.4				25
Net Charge-Off Ratio			6.41	%			5.82	%			5.56	%			5.74	%			5.57	%			59	bp			84	bp			6.13	%			5.49	%			64	bp
Overhead Ratio			34				34				34				34				34				—				—				34				36				(200	)
Regional Banking Group
Total Average Deposits (in billions)		$	71.4			$	70.5			$	67.1			$	66.5			$	66.6				1	%			7	%		$	70.9			$	66.6				6	%
Total Average Assets Under Management(b) (in billions)			103.5				103.1				101.2				100.3				100.0				—				4				103.3				100.1				3
Number of Branches			533				538				531				533				537				(1	)			(1	)			533				537				(1	)
Number of ATMs			1,878				1,895				1,907				1,875				1,904				(1	)			(1	)			1,878				1,904				(1	)
Number of Online Customers (in thousands)			1,066				1,003				937				876				811				6				31				1,066				811				31
Overhead Ratio			78	%			74	%			73	%			70	%			69	%			400	bp			900	bp			76	%			68	%			800	bp
Home Finance
Originations (in billions)		$	26.5			$	32.7			$	50.4			$	47.4			$	54.4				(19	)%			(51	)%		$	59.2			$	86.4				(31	)%
Loans Serviced (in billions)			436	(c)			426				430				427				409				2				7				436				409				7
Total Average Loans Owned (in billions)			54.1				56.9				57.3				57.0				55.8				(5	)			(3	)			55.5				53.8				3
Number of Customers (in millions)			4.0	(c)			4.0				4.0				4.1				4.0				—				—				4.0				4.0				—
Net Charge-Off Ratio			0.30	%			0.21	%			0.21	%			0.20	%			0.14	%			9	bp			16	bp			0.25	%			0.15	%			10	bp
Overhead Ratio			39				55				64				55				60				(1,600	)			(2,100	)			46				59				(1,300	)
Middle Markets
Total Average Loans (in billions)		$	13.7			$	13.9			$	14.5			$	14.6			$	14.7				(1	)%			(7	)%		$	13.8			$	14.8				(7	)%
Total Average Deposits (in billions)			25.2				23.6				20.9				18.9				18.8				7				34				24.4				18.7				30
Nonperforming Average Loans as a % of Total Average Loans			1.88	%			2.16	%			2.16	%			2.15	%			2.28	%			(28	)bp			(40	)bp			2.02	%			2.42	%			(40	)bp
Overhead Ratio			53				51				58				53				56				200				(300	)			52				54				(200	)
Auto Finance
Loan and Lease Receivables (in billions)		$	29.3			$	28.8			$	28.4			$	27.2			$	26.2				2	%			12	%		$	29.3			$	26.2				12	%
Origination Volume (in billions)			5.2				5.8				5.6				5.2				4.8				(10	)			8				10.9				9.1				20
Market Share			4.2	%(c)			5.2	%			5.2	%			4.2	%			3.9	%			(100	)bp			30	bp			5.0	%			3.9	%			110	bp
Net Charge-Off Ratio			0.38				0.55				0.71				0.50				0.42				(17	)			(4	)			0.46				0.46				—
Overhead Ratio			35				34				33				37				37				100				(200	)			34				38				(400	)

(a)  Sum of total customer purchases, cash advances and balance transfers.

(b)  Assets under management includes deposits.

(c)  Estimated

Page 14

---

 

 

 

 

SUPPLEMENTAL DETAIL

 

 

 

---

 

J.P. MORGAN CHASE & CO. NONINTEREST REVENUE AND NONINTEREST EXPENSE DETAIL ON A REPORTED BASIS (in millions)

																																							YTD
																																							2002
																							2QTR 2002																Over
																							Over (Under)								YEAR TO DATE								(Under)
			2QTR				1QTR				4QTR				3QTR				2QTR
			2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
NONINTEREST REVENUE
Investment Banking Fees:
	Advisory		$	189			$	191			$	271			$	329			$	308				(1	)%			(39	)%		$	380			$	648				(41	)%
	Underwriting and Other Fees			596				564				660				482				621				6				(4	)			1,160				1,222				(5	)
	Total		$	785			$	755			$	931			$	811			$	929				4				(16	)		$	1,540			$	1,870				(18	)
Trading-Related Revenue:(a)
	Equities		$	120			$	223			$	101			$	251			$	450				(46	)			(73	)		$	343			$	955				(64	)
	Fixed Income and Other			1,016				1,497				803				1,363				1,144				(32	)			(11	)			2,513				2,806				(10	)
	Total		$	1,136			$	1,720			$	904			$	1,614			$	1,594				(34	)			(29	)		$	2,856			$	3,761				(24	)
Fees and Commissions:
	Investment Management, Custody and Processing Services		$	981			$	992			$	987			$	960			$	988				(1	)			(1	)		$	1,973			$	2,004				(2	)
	Credit Card Revenue			669				587				662				548				465				14				44				1,256				898				40
	Brokerage and Investment Services			333				304				305				268				308				10				8				637				671				(5	)
	Mortgage Servicing Fees, Net of Amortization and Writedowns			257				48				(81	)			9				75			NM				NM					305				(158	)		NM
	Other Lending-Related Service Fees			128				130				118				125				122				(2	)			5				258				252				2
	Deposit Service Charges			273				290				277				262				258				(6	)			6				563				484				16
	Other Fees			244				233				225				225				244				5				—				477				440				8
	Total		$	2,885			$	2,584			$	2,493			$	2,397			$	2,460				12				17			$	5,469			$	4,591				19
Other Revenue:
	Residential Mortgage Origination/Sales Activities		$	146			$	100			$	162			$	157			$	152				46				(4	)		$	246			$	257				(4	)
	All Other Revenue			146				57				(11	)			61				128				156				14				203				275				(26	)
	Total		$	292			$	157			$	151			$	218			$	280				86				4			$	449			$	532				(16	)
NONINTEREST EXPENSE
Other Expense:
Professional Services			$	311			$	307			$	289			$	267			$	288				1				8			$	618			$	583				6
Outside Services				240				249				213				232				220				(4	)			9				489				443				10
Marketing				144				146				179				137				144				(1	)			—				290				285				2
Travel and Entertainment				112				101				78				116				137				11				(18	)			213				259				(18	)
All Other				311				405				369				335				362				(23	)			(14	)			716				736				(3	)
Total			$	1,118			$	1,208			$	1,128			$	1,087			$	1,151				(7	)			(3	)		$	2,326			$	2,306				1

Note: Prior periods have been restated to conform with current methodologies.

(a)  Includes trading-related net interest income.

Page 15

---

 

J.P. MORGAN CHASE & CO. CONSOLIDATED BALANCE SHEET (in millions)

																								Jun 30, 2002
																								Over (Under)
				Jun 30th 2002				Mar 31st 2002				Dec 31st 2001				Sep 30th 2001				Jun 30th 2001				Mar 31, 02				Jun 30, 01
ASSETS
Cash and Due from Banks				$	21,878			$	22,637			$	22,600			$	22,299			$	24,219				(3	)%			(10	)%
Deposits with Banks					10,517				9,691				12,743				9,341				11,903				9				(12	)
Federal Funds Sold and Securities Purchased under Resale Agreements					71,740				76,719				63,727				78,997				61,308				(6	)			17
Securities Borrowed					48,429				40,880				36,580				37,499				38,296				18				26
Trading Assets:
	Debt and Equity Instruments				159,746				144,992				118,248				165,143				139,135				10				15
	Derivative Receivables				69,858				63,224				71,157				85,407				68,910				10				1
Securities					64,526				61,225				59,760				66,468				68,488				5				(6	)
Loans (Net of Allowance for Loan Losses)					207,080				209,541				212,920				219,411				216,245				(1	)			(4	)
Goodwill					8,089				8,055				8,336				8,477				8,640				—				(6	)
Other Intangibles:
	Mortgage Servicing Rights				5,689				6,918				6,579				5,731				7,073				(18	)			(20	)
	Purchased Credit Card Relationships				1,426				1,508				519				542				568				(5	)			151
	All Other Intangibles				313				327				44				64				74				(4	)		NM
Private Equity Investments					8,229				8,553				9,197				9,628				9,855				(4	)			(16	)
Other Assets					63,026				58,238				71,165				90,293				57,988				8				9
TOTAL ASSETS				$	740,546			$	712,508			$	693,575			$	799,300			$	712,702				4				4
LIABILITIES
Deposits:
	Noninterest-Bearing			$	73,529			$	72,659			$	76,974			$	72,734			$	64,231				1				14
	Interest-Bearing				220,300				209,378				216,676				208,870				212,573				5				4
		Total Deposits			293,829				282,037				293,650				281,604				276,804				4				6
Federal Funds Purchased and Securities Sold under Repurchase Agreements					162,656				152,837				128,445				181,775				155,062				6				5
Commercial Paper					14,561				23,726				18,510				19,299				19,985				(39	)			(27	)
Other Borrowed Funds					17,352				16,968				10,835				21,941				18,418				2				(6	)
Trading Liabilities:
	Debt and Equity Instruments				67,952				71,141				52,988				58,594				53,571				(4	)			27
	Derivative Payables				55,575				44,997				56,063				70,817				62,373				24				(11	)
Accounts Payable, Accrued Expenses and Other Liabilities (Including the Allowance for Credit Losses)					38,083				36,910				47,813				75,231				38,157				3				—
Long-Term Debt					42,363				37,322				39,183				42,315				40,917				14				4
Guaranteed Preferred Beneficial Interests in the Firm’s Junior Subordinated Deferrable Interest Debentures					5,439				5,439				4,439				4,439				4,439				—				23
TOTAL LIABILITIES					697,810				671,377				651,926				756,015				669,726				4				4
PREFERRED STOCK OF SUBSIDIARY					—				—				550				550				550			NM				NM
STOCKHOLDERS’ EQUITY
Preferred Stock					1,009				1,009				1,009				1,009				1,025				—				(2	)
Common Stock					2,020				2,016				1,997				1,993				1,990				—				2
Capital Surplus					13,111				12,783				12,495				12,244				12,000				3				9
Retained Earnings					27,605				27,278				26,993				28,021				28,265				1				(2	)
Accumulated Other Comprehensive Income (Loss)					79				(909	)			(442	)			267				(834	)		NM				NM
Treasury Stock, at Cost					(1,088	)			(1,046	)			(953	)			(799	)			(20	)			(4	)		NM
TOTAL STOCKHOLDERS’ EQUITY					42,736				41,131				41,099				42,735				42,426				4				1
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND STOCKHOLDERS’ EQUITY				$	740,546			$	712,508			$	693,575			$	799,300			$	712,702				4				4

Note: Prior periods have been restated to conform with current methodologies.

Page 16

---

 

J.P. MORGAN CHASE & CO. CONDENSED AVERAGE BALANCE SHEET AND ANNUALIZED YIELDS (in millions, except rates)

																																						YTD
																																						2002
																						2QTR 2002																Over
																						Over (Under)								YEAR TO DATE								(Under)
		2QTR 2002				1QTR 2002				4QTR 2001				3QTR 2001				2QTR 2001				1Q 2002				2Q 2001				2002				2001				2001
AVERAGE BALANCES
ASSETS
Deposits with Banks		$	9,287			$	12,326			$	10,810			$	8,583			$	9,535				(25	)%			(3	)%		$	10,798			$	8,531				27	%
Federal Funds Sold and Securities Purchased under Resale Agreements			83,317				81,004				85,582				80,396				86,556				3				(4	)			82,166				84,706				(3	)
Securities and Trading Assets			201,512				180,951				188,988				200,161				194,736				11				3				191,288				197,789				(3	)
Securities Borrowed			46,537				41,739				39,213				38,122				38,006				11				22				44,152				37,635				17
Loans			211,495				217,847				218,625				224,125				217,447				(3	)			(3	)			214,654				218,285				(2	)
Total Interest- Earning Assets			552,148				533,867				543,218				551,387				546,280				3				1				543,058				546,946				(1	)
Noninterest- Earning Assets			182,798				184,779				196,557				185,891				189,488				(1	)			(4	)			183,783				186,430				(1	)
TOTAL ASSETS		$	734,946			$	718,646			$	739,775			$	737,278			$	735,768				2				—			$	726,841			$	733,376				(1	)
LIABILITIES
Interest-Bearing Deposits		$	221,687			$	218,049			$	223,314			$	207,430			$	215,987				2				3			$	219,879			$	216,366				2
Federal Funds Purchased and Securities Sold under Repurchase Agreements			166,919				153,662				164,714				170,708				167,126				9				—				160,327				159,940				—
Commercial Paper			18,514				18,901				17,134				21,307				17,818				(2	)			4				18,706				17,890				5
Other Borrowings(a)			78,614				67,408				55,388				67,218				63,038				17				25				73,042				66,801				9
Long-Term Debt			42,482				43,046				44,964				44,788				45,173				(1	)			(6	)			42,762				46,303				(8	)
Total Interest- Bearing Liabilities			528,216				501,066				505,514				511,451				509,142				5				4				514,716				507,300				1
Noninterest- Bearing Liabilities			164,832				175,800				191,098				182,757				183,118				(6	)			(10	)			170,285				182,670				(7	)
TOTAL LIABILITIES			693,048				676,866				696,612				694,208				692,260				2				—				685,001				689,970				(1	)
PREFERRED STOCK OF SUBSIDIARY			—				354				550				550				550			NM				NM					176				550				(68	)
Preferred Stock			1,009				1,009				1,009				1,017				1,239				—				(19	)			1,009				1,362				(26	)
Common Stockholders’ Equity			40,889				40,417				41,604				41,503				41,719				1				(2	)			40,655				41,494				(2	)
TOTAL STOCKHOLDERS’ EQUITY			41,898				41,426				42,613				42,520				42,958				1				(2	)			41,664				42,856				(3	)
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND STOCKHOLDERS’ EQUITY		$	734,946			$	718,646			$	739,775			$	737,278			$	735,768				2				—			$	726,841			$	733,376				(1	)
AVERAGE RATES
INTEREST- EARNING ASSETS
Deposits with Banks			3.31	%			2.96	%			3.76	%			4.64	%			4.65	%		35bp				(134)bp					3.11	%			5.90	%		(279)bp
Federal Funds Sold and Securities Purchased under Resale Agreements			2.58				2.45				3.18				4.19				4.98				13				(240	)			2.52				5.41				(289	)
Securities and Trading Assets			5.18				5.35				5.40				5.51				5.90				(17	)			(72	)			5.26				5.88				(62	)
Securities Borrowed			1.49				1.77				2.00				3.17				3.66				(28	)			(217	)			1.63				4.50				(287	)
Loans			5.95				5.87				5.97				6.54				7.55				8				(160	)			5.91				7.91				(200	)
Total Interest- Earning Assets			4.74				4.79				5.00				5.56				6.23				(5	)			(149	)			4.76				6.52				(176	)
INTEREST- BEARING LIABILITIES
Interest-Bearing Deposits			2.38				2.49				2.52				3.48				3.94				(11	)			(156	)			2.44				4.43				(199	)
Federal Funds Purchased and Securities Sold under Repurchase Agreements			2.06				2.07				2.63				3.81				4.29				(1	)			(223	)			2.07				4.95				(288	)
Commercial Paper			1.84				1.76				2.30				3.53				4.39				8				(255	)			1.80				5.18				(338	)
Other Borrowings			5.24				4.81				6.17				5.31				6.04				43				(80	)			5.04				5.83				(79	)
Long-Term Debt			3.10				3.35				3.58				4.43				5.63				(25	)			(253	)			3.22				6.00				(278	)
Total Interest- Bearing Liabilities			2.75				2.72				3.04				3.92				4.48				3				(173	)			2.73				4.95				(222	)
TOTAL INVESTABLE FUNDS			2.63				2.55				2.83				3.63				4.17				8				(154	)			2.59				4.59				(200	)
INTEREST RATE SPREAD			1.99	%			2.07	%			1.96	%			1.64	%			1.75	%			(8	)			24				2.03	%			1.57	%			46
NET INTEREST MARGIN			2.11	%			2.24	%			2.17	%			1.93	%			2.06	%			(13	)			5				2.17	%			1.93	%			24
NET INTEREST MARGIN ADJUSTED FOR SECURITIZATIONS			2.36	%			2.47	%			2.39	%			2.13	%			2.22	%			(11	)			14				2.41	%			2.09	%			32

---

(a)

Includes securities sold but not yet purchased.

Page 17

---

 

J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (in millions, except ratios)

																						June 30, 2002
																						Over (Under)
		Jun 30th 2002				Mar 31st 2002				Dec 31st 2001				Sep 30th 2001				Jun 30th 2001				Mar 31, 02				Jun 30, 01
CREDIT-RELATED ASSETS
COMMERCIAL LOANS
Domestic Commercial		$	67,124			$	64,068			$	66,436			$	77,712			$	74,563				5	%			(10	)%
Foreign Commercial			37,577				37,684				38,428				38,866				38,227				—				(2	)
Total Commercial Loans			104,701				101,752				104,864				116,578				112,790				3				(7	)
Derivative and FX Contracts			69,858				63,224				71,157				85,407				68,910				10				1
TOTAL COMMERCIAL CREDIT-RELATED			174,559				164,976				176,021				201,985				181,700				6				(4	)
CONSUMER LOANS
Credit Card - Reported			21,036				24,746				19,387				19,255				19,531				(15	)			8
Credit Card - Securitizations			27,499				23,225				21,424				18,724				17,753				18				55
Credit Card - Managed			48,535				47,971				40,811				37,979				37,284				1				30
1-4 Family Residential Mortgages			52,669				54,460				59,430				55,160				56,743				(3	)			(7	)
Auto Financings			26,666				26,002				25,667				24,448				23,322				3				14
Other Consumer(a)			7,014				7,586				8,096				7,844				7,532				(8	)			(7	)
TOTAL MANAGED CONSUMER LOANS			134,884				136,019				134,004				125,431				124,881				(1	)			8
TOTAL MANAGED CREDIT- RELATED ASSETS		$	309,443			$	300,995			$	310,025			$	327,416			$	306,581				3				1
NONPERFORMING ASSETS AND RATIOS
COMMERCIAL LOANS
Domestic Commercial		$	1,402			$	1,399			$	1,275			$	1,438			$	1,528				—				(8	)
Foreign Commercial			1,110				960				722				580				362				16				207
Total Commercial Loans			2,512				2,359				1,997				2,018				1,890				6				33
Derivative and FX Contracts			144				155				170				46				88				(7	)			64
TOTAL			2,656				2,514				2,167				2,064				1,978				6				34
CONSUMER LOANS
Credit Card - Reported			18				19				22				23				25				(5	)			(28	)
Credit Card - Securitizations			—				—				—				—				—			NM				NM
Credit Card - Managed			18				19				22				23				25				(5	)			(28	)
1-4 Family Residential Mortgages			275				351				280				273				263				(22	)			5
Auto Financings			103				98				118				110				97				5				6
Other Consumer (a)			54				66				79				53				16				(18	)			238
Total Consumer Loans			450				534				499				459				401				(16	)			12
TOTAL			3,106				3,048				2,666				2,523				2,379				2				31
Assets Acquired in Loan Satisfactions			142				130				124				123				119				9				19
TOTAL			3,248				3,178				2,790				2,646				2,498				2				30
Other Receivables (b)			1,130				1,130				1,130				—				—				—			NM
TOTAL NONPERFORMING ASSETS		$	4,378	(c)		$	4,308			$	3,920			$	2,646			$	2,498				2				75
TOTAL NONPERFORMING ASSETS TO TOTAL ASSETS			0.59	%			0.60	%			0.57	%			0.33	%			0.35	%		(1)bp				24bp
PAST DUE 90 DAYS AND OVER AND ACCRUING
COMMERCIAL LOANS
Domestic Commercial		$	29			$	42			$	30			$	19			$	48				(31	)%			(40	)%
Foreign Commercial			2				10				5				44				34				(80	)			(94	)
TOTAL COMMERCIAL CREDIT-RELATED			31				52				35				63				82				(40	)			(62	)
CONSUMER LOANS
Credit Card - Reported			505				619				449				394				326				(18	)			55
Credit Card - Securitizations			457				478				457				348				374				(4	)			22
Credit Card - Managed			962				1,097				906				742				700				(12	)			37
1-4 Family Residential Mortgages			—				—				—				—				—			NM				NM
Auto Financings			—				—				1				1				1			NM				NM
Other Consumer (a)			37				45				36				28				66				(18	)			(44	)
TOTAL CONSUMER LOANS			999				1,142				943				771				767				(13	)			30
TOTAL CR.-REL. ACCRUING ASSETS PAST DUE 90 DAYS		$	1,030			$	1,194			$	978			$	834			$	849				(14	)			21

---

(a)		Consists of installment loans (direct and indirect types of consumer finance), student loans, unsecured revolving lines of credit and foreign consumer loans.
(b)		This amount relates to the Enron-related surety receivables and letter of credit, which are the subject of litigation with credit-worthy entities. These receivables are classified in Other Assets at June 30, 2002.
(c)		Nonperforming assets have not been reduced for credit protection (single name credit default swaps and collateralized loan obligations) aggregating $37 million related to nonperforming counterparties. Nonperforming assets exclude nonaccrual loans held for sale (“HFS”) of $126 million, including $44 million of nonaccrual residential mortgages transferred to the HFS portfolio after recording charge-offs of $15 million during the second quarter of 2002. HFS loans are carried at lower of cost or market and declines in value are recorded in Other Revenue.

Page 18

---

 

J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.) (in millions, except ratios)

																																							YTD
																																							2002
																							2QTR 2002																Over
																							Over (Under)								YEAR TO DATE								(Under)
			2QTR				1QTR				4QTR				3QTR				2QTR
			2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
NET CHARGE-OFFS
COMMERCIAL LOANS
Domestic Commercial			$	181			$	207			$	388			$	126			$	177				(13	)%			2	%		$	388			$	303				28	%
Foreign Commercial				112				113				45				63				35				(1	)			220				225				57				295
TOTAL COMMERCIAL LOANS				293				320				433				189				212				(8	)			38				613				360				70
CONSUMER LOANS
Credit Card - Reported				433				337				274				264				234				28				85				770				452				70
Credit Card - Securitizations				334				321				264				270				273				4				22				655				514				27
Credit Card - Managed				767				658				538				534				507				17				51				1,425				966				48
1-4 Family Residential Mortgages				21				13				18				15				7				62				200				34				17				100
Auto Financings				29				38				50				32				26				(24	)			12				67				55				22
Other Consumer				45				45				43				45				46				—				(2	)			90				88				2
TOTAL CONSUMER LOANS				862				754				649				626				586				14				47				1,616				1,126				44
TOTAL MANAGED NET CHARGE-OFFS			$	1,155			$	1,074			$	1,082			$	815			$	798				8				45			$	2,229			$	1,486				50
NET CHARGE-OFF RATES - ANNUALIZED
COMMERCIAL LOANS
Domestic Commercial				1.13	%			1.24	%			2.04	%			0.59	%			0.90	%		(11)bp				23bp					1.18	%			0.76	%		42bp
Foreign Commercial				1.24				1.34				0.53				0.79				0.46				(10	)			78				1.29				0.35				94
TOTAL COMMERCIAL LOANS				1.17				1.27				1.58				0.65				0.77				(10	)			40				1.22				0.64				58
CONSUMER LOANS
Credit Card - Reported				7.67				5.78				5.74				5.47				4.69				189				298				6.71				4.59				212
Credit Card - Securitizations				5.30				5.98				5.23				5.82				6.55				(68	)			(125	)			5.61				6.20				(59	)
Credit Card - Managed				6.42				5.87				5.48				5.64				5.54				55				88				6.15				5.33				82
1-4 Family Residential Mortgages				0.16				0.09				0.12				0.10				0.05				7				11				0.12				0.06				6
Auto Financings				0.43				0.58				0.79				0.53				0.46				(15	)			(3	)			0.50				0.51				(1	)
Other Consumer				2.35				2.16				2.12				2.33				2.30				19				5				2.25				2.11				14
TOTAL CONSUMER LOANS				2.53				2.22				1.98				1.96				1.89				31				64				2.38				1.87				51
TOTAL MANAGED NET CHARGE-OFF RATES				1.96				1.82				1.80				1.33				1.37				14				59				1.89				1.28				61
ALLOWANCE FOR LOAN LOSSES AND RATIOS
Allowance for Loan Losses (a)			$	5,006			$	5,005			$	4,524			$	3,874			$	3,673				—	%			36	%
	To Total Loans			2.36	%			2.33	%			2.08	%			1.74	%			1.67	%		3bp				69bp
	To Total Nonperforming Loans			169				173				181				156				160				(400	)			900
	To Total Nonperforming Assets			114				116				115				146				147				(200	)			(3,300	)
ALLOWANCE COMPONENTS (a)
Commercial Specific and Expected			$	1,806			$	1,798			$	1,724			$	1,768			$	1,650				—	%			9	%
Consumer Expected				2,387				2,518				2,105				1,694				1,637				(5	)			46
Total Specific and Expected				4,193				4,316				3,829				3,462				3,287				(3	)			28
Residual Component				813				689				695				412				386				18				111
Total			$	5,006			$	5,005			$	4,524			$	3,874			$	3,673				—				36

(a)  Represents period end balances for each respective quarter.

Page 19

---

 

J.P. MORGAN CHASE & CO. CAPITAL

																																								YTD
																																								2002
																								2QTR 2002																Over
																								Over (Under)								YEAR TO DATE								(Under)
				2QTR				1QTR				4QTR				3QTR				2QTR
				2002				2002				2001				2001				2001				1Q 2002				2Q 2001				2002				2001				2001
SOURCES AND USES OF TIER 1 CAPITAL
	(in billions)
Sources of Free Cash Flow
	Operating Earnings Less Dividends			$	0.5	(a)		$	0.5			$	(0.3	)		$	0.4			$	0.1				—	%		NM				$	1.0	(a)		$	0.9				11	%
		Plus: Preferred Stock and Equivalents/Other Items			(0.6	)(a)			0.2				(0.7	)			(0.4	)			(0.6	)		NM					—	%			(0.4	)(a)			(0.4	)			—
		Less: Capital for Internal Asset Growth			0.4	(a)			0.5				1.4				(1.3	)			(0.5	)			(20	)		NM					0.9	(a)			(1.0	)		NM
Total Sources of Free Cash Flow				$	0.3			$	1.2			$	0.4			$	(1.3	)		$	(1.0	)			(75	)		NM				$	1.5			$	(0.5	)		NM
Uses of Free Cash Flow
		Increases (Decreases) in Capital Ratios		$	0.6	(a)		$	1.4			$	0.5			$	(1.8	)		$	(0.7	)			(57	)		NM				$	2.0	(a)		$	0.4			NM
		Acquisitions			—	(a)			—				—				—				—			NM				NM					—	(a)			0.1			NM
		Repurchases Net of Stock Issuances			(0.3	)(a)			(0.2	)			(0.1	)			0.5				(0.3	)			(50	)			—				(0.5	)(a)			(1.0	)			50
Total Uses of Free Cash Flow				$	0.3			$	1.2			$	0.4			$	(1.3	)		$	(1.0	)			(75	)		NM				$	1.5			$	(0.5	)		NM
COMMON SHARES OUTSTANDING
	(in millions)
Basic Weighted- Average Shares Outstanding					1,982.6				1,978.2				1,969.6				1,975.3				1,978.4				—				—				1,980.4				1,972.6				—
Diluted Weighted- Average Shares Outstanding					2,016.0				2,005.8				2,007.4				2,020.9				2,033.6				1				(1	)			2,011.0				2,033.0				(1	)
Common Shares Outstanding - at Period End					1,993.4				1,990.2				1,973.4				1,972.9				1,989.2				—				—				1,993.4				1,989.2				—
CASH DIVIDENDS DECLARED PER SHARE				$	0.34			$	0.34			$	0.34			$	0.34			$	0.34				—				—			$	0.68			$	0.68				—
BOOK VALUE PER SHARE					20.93				20.16				20.32				21.15				20.81				4				1
SHARE PRICE
	High			$	38.75			$	39.68			$	40.95			$	46.01			$	50.60				(2	)			(23	)		$	39.68			$	59.19				(33	)
	Low				30.15				26.70				31.30				29.04				39.21				13				(23	)			26.70				37.58				(29	)
	Close				33.92				35.65				36.35				34.15				44.60				(5	)			(24	)			33.92				44.60				(24	)
CAPITAL RATIOS
Tier I Capital Ratio					8.7	%(a)			8.6	%			8.3	%			8.2	%			8.7	%		10bp				—bp
Total Capital Ratio					12.6	(a)			12.5				11.9				11.6				12.2				10				40
Tier I Leverage					5.4	(a)			5.4				5.2				5.3				5.4				—				—

Note: Prior periods have been restated to conform with current methodologies.

(a)  Estimated

Page 20

---

 

J.P. MORGAN CHASE & CO. Glossary of Terms

Average Managed Assets: Excludes the impact of credit card securitizations.

bp: Denotes basis points; 100 bp equals 1%.

Corporate: Includes Support Units and the effects remaining at the corporate level after the implementation of management accounting policies.

JPMorgan Partners (“JPMP”): JPMorgan Chase’s private equity business. Public securities held by JPMP are marked-to-market at the quoted public value less liquidity discounts, with the resulting unrealized gains/losses included in the income statement. JPMP’s valuation policy for public securities incorporates the use of liquidity discounts and price averaging methodologies in certain circumstances to take into account the fact that JPMP cannot immediately realize the quoted public values as a result of the regulatory, corporate, or other contractual sales restrictions generally imposed on these holdings. Private investments are initially carried at cost, which is viewed as an approximation of fair value. The carrying value of private investments is adjusted to reflect valuation changes resulting from unaffiliated party transactions and for evidence of a decline in value.

Managed Credit Card Receivables or Managed Basis: JPMorgan Chase uses this terminology to refer to its credit card receivables on the balance sheet plus securitized credit card receivables.

NM: Not meaningful

Operating Basis or Operating Earnings: Reported results excluding the impact of merger and restructuring costs, special items, credit card securitizations and the amortization of goodwill.

Other Consumer Loans: Consists of installment loans (direct and indirect types of consumer finance), student loans, unsecured lines of credit and foreign consumer.

Overhead Ratio: Operating expense (excluding merger and restructuring costs and special items) as a percentage of the operating revenues.

Reported Basis: Financial statements prepared under generally accepted accounting principles. The reported basis includes the impact of credit card securitizations, merger and restructuring costs, special items, and the net effect of the change in accounting principle.

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.

SFAS 133: As a result of the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 133 “Accounting for Derivative Instruments and Hedging Activities”, net income for the first half of 2001 includes the cumulative effect of a transition adjustment of $(25) million, net of taxes. The impact on each of basic and diluted earnings per share was $(0.01).

SFAS 142: Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

Shareholder Value Added (“SVA”): Represents operating earnings minus preferred dividends and an explicit charge for capital.

Special Items: Includes merger and restructuring costs and special items.

Trading-Related Revenue: Includes net interest income (“NII”) attributable to trading activities.

Unaudited: The financial statements and information included throughout this document are unaudited.

Page 21