Delaware | 1-5805 | 13-2624428 | ||
(State or Other Jurisdiction of | (Commission File Number) | (IRS Employer | ||
Incorporation) | Identification No.) |
270 Park Avenue, New York, NY | 10017 | |
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description of Exhibit | |
12.1
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges | |
12.2
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to
Fixed Charges and Preferred Stock Dividend Requirements |
|
99.1
|
JPMorgan Chase & Co. Earnings Release Third Quarter 2008 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement Third Quarter 2008 |
2
JPMORGAN CHASE & CO. | ||||||
(Registrant) | ||||||
By: | /s/ Louis Rauchenberger
|
|||||
Managing Director and Controller | ||||||
[Principal Accounting Officer] |
3
Exhibit Number | Description of Exhibit | |
12.1
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges | |
12.2
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements | |
99.1
|
JPMorgan Chase & Co. Earnings Release Third Quarter 2008 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement - - Third Quarter 2008 |
4
Nine months ended September 30, (in millions, except ratios) | 2008 | |||
Excluding Interest on Deposits |
||||
Income before income tax expense and extraordinary gain |
$ | 4,115 | ||
Fixed charges: |
||||
Interest expense |
14,889 | |||
One-third of rents, net of income from subleases (a) |
349 | |||
Total fixed charges |
15,238 | |||
Add: Equity in undistributed loss of affiliates |
497 | |||
Income before income tax expense and extraordinary gain and fixed charges,
excluding capitalized interest |
$ | 19,850 | ||
Fixed charges, as above |
$ | 15,238 | ||
Ratio of earnings to fixed charges |
1.30 | |||
Including Interest on Deposits |
||||
Fixed charges, as above |
$ | 15,238 | ||
Add: Interest on deposits |
11,551 | |||
Total fixed charges and interest on deposits |
$ | 26,789 | ||
Income before income tax expense and extraordinary gain and fixed charges,
excluding capitalized interest, as above |
$ | 19,850 | ||
Add: Interest on deposits |
11,551 | |||
Total income before income tax expense and extraordinary gain,
fixed charges and interest on deposits |
$ | 31,401 | ||
Ratio of earnings to fixed charges |
1.17 | |||
(a) | The proportion deemed representative of the interest factor. |
Nine months ended September 30, (in millions, except ratios) | 2008 | |||
Excluding Interest on Deposits |
||||
Income before income tax expense and extraordinary gain |
$ | 4,115 | ||
Fixed charges: |
||||
Interest expense |
14,889 | |||
One-third of rents, net of income from subleases (a) |
349 | |||
Total fixed charges |
15,238 | |||
Add: Equity in undistributed loss of affiliates |
497 | |||
Income before income tax expense and extraordinary gain and fixed charges,
excluding capitalized interest |
$ | 19,850 | ||
Fixed charges, as above |
$ | 15,238 | ||
Preferred stock dividends (pre-tax) |
344 | |||
Fixed charges including preferred stock dividends |
$ | 15,582 | ||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
1.27 | |||
Including Interest on Deposits |
||||
Fixed charges including preferred stock dividends, as above |
$ | 15,582 | ||
Add: Interest on deposits |
11,551 | |||
Total fixed charges including preferred stock dividends and interest on deposits |
$ | 27,133 | ||
Income before income tax expense and extraordinary gain and fixed charges,
excluding capitalized interest, as above |
$ | 19,850 | ||
Add: Interest on deposits |
11,551 | |||
Total income before income tax expense and extraordinary gain,
fixed charges and interest on deposits |
$ | 31,401 | ||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
1.16 | |||
(a) | The proportion deemed representative of the interest factor. |
JPMorgan Chase & Co. 270 Park Avenue, New York, NY 10017-2070 NYSE symbol: JPM www.jpmorganchase.com |
| Acquired Washington Mutuals banking operations on September 25: |
- | Significantly strengthened consumer franchise, with more than 5,400 branches | ||
- | Results included estimated1 losses of $640 million (after-tax) for Washington Mutual merger-related items: $1.2 billion charge to conform loan loss reserves and a $581 million extraordinary gain |
| Reported net markdowns of $3.6 billion due to mortgage-related positions and leveraged lending exposures in the Investment Bank | ||
| Maintained #1 rankings for Global Investment Banking Fees and Global Debt, Equity & Equity-related volumes for the quarter and year to date2 | ||
| Grew revenue by 16% and increased branch production at Retail Financial Services | ||
| Achieved double-digit net income growth at both Commercial Banking and Treasury & Securities Services | ||
| Reported the following significant after-tax items: |
- | $927 million benefit from reduced deferred tax liabilities | ||
- | $642 million loss on Fannie Mae and Freddie Mac preferred securities | ||
- | $248 million charge related to offer to repurchase auction-rate securities |
| Increased credit reserves by $1.3 billion firmwide to $15.3 billion, resulting in loan loss allowance coverage of 3.18% for consumer businesses and 2.11% for wholesale businesses, before Washington Mutual | ||
| Maintained strong Tier 1 Capital of $112 billion, or 8.9% (estimated); raised $11.5 billion of common equity during the quarter |
1 | Washington Mutual merger-related results subject to future refinements | |
2 | Source: Dealogic for fees and Thomson Reuters for volumes |
Investor Contact: Julia Bates (212) 270-7325 | Media Contact: Joe Evangelisti (212) 270-7438 |
2
Results for IB | 2Q08 | 3Q07 | ||||||||||||||||||||||||||
($ millions) | 3Q08 | 2Q08 | 3Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 4,035 | $ | 5,470 | $ | 2,946 | $ | (1,435 | ) | (26 | )% | $ | 1,089 | 37 | % | |||||||||||||
Provision for
Credit Losses |
234 | 398 | 227 | (164 | ) | (41 | ) | 7 | 3 | |||||||||||||||||||
Noninterest Expense |
3,816 | 4,734 | 2,378 | (918 | ) | (19 | ) | 1,438 | 60 | |||||||||||||||||||
Net Income |
$ | 882 | $ | 394 | $ | 296 | $ | 488 | 124 | % | $ | 586 | 198 | % | ||||||||||||||
§ | Ranked #1 in Global Debt, Equity and Equity-related; #1 in Global Equity and Equity-related; #1 in Global Long-Term Debt; #1 in Global Syndicated Loans; and #3 in Global Announced M&A, based upon volume, for the year to date ended September 30, 2008, according to Thomson Reuters. | ||
§ | Ranked #1 in Global Investment Banking Fees for the year to date ended September 30, 2008, according to Dealogic. |
3
§ | Return on Equity was 13% on $26.0 billion of average allocated capital. | ||
§ | Increased allocated capital to $33.0 billion on September 30, 2008. |
Results for RFS | 2Q08 | 3Q07 | ||||||||||||||||||||||||||
($ millions) | 3Q08 | 2Q08 | 3Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 4,875 | $ | 5,015 | $ | 4,201 | $ | (140 | ) | (3 | )% | $ | 674 | 16 | % | |||||||||||||
Provision for Credit Losses |
1,678 | 1,332 | 680 | 346 | 26 | 998 | 147 | |||||||||||||||||||||
Noninterest Expense |
2,772 | 2,670 | 2,469 | 102 | 4 | 303 | 12 | |||||||||||||||||||||
Net Income |
$ | 247 | $ | 606 | $ | 639 | $ | (359 | ) | (59 | )% | $ | (392 | ) | (61 | )% | ||||||||||||
4
§ | Checking accounts totaled 11.7 million, up 1.0 million, or 10%. | ||
§ | Average total deposits grew to $210.2 billion, up $4.9 billion, or 2%. |
§ | Average home equity loans were $94.8 billion, up $3.0 billion, or 3%. Home equity originations were $2.6 billion, down $8.6 billion, or 77%. | ||
§ | Average business banking loans were $16.4 billion and originations were $1.2 billion. | ||
§ | Number of branches grew to 3,179, up 83. | ||
§ | Branch sales of credit cards increased by 6%. | ||
§ | Branch sales of investment products increased by 1%. | ||
§ | Overhead ratio (excluding amortization of core deposit intangibles) decreased to 45% from 49%. |
§ | Mortgage loan originations were $37.7 billion, down 4% from the prior year and down 33% from the prior quarter. | ||
§ | Total third-party mortgage loans serviced were $681.8 billion, an increase of $81.8 billion, or 14%. |
§ | Auto loan originations were $3.8 billion, down 27%, reflecting industry-wide weakness in auto sales. | ||
§ | Average loans were $43.8 billion, up 10%. |
5
Results for CS | 2Q08 | 3Q07 | ||||||||||||||||||||||||||
($ millions) | 3Q08 | 2Q08 | 3Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 3,887 | $ | 3,775 | $ | 3,867 | $ | 112 | 3 | % | $ | 20 | 1 | % | ||||||||||||||
Provision for Credit Losses |
2,229 | 2,194 | 1,363 | 35 | 2 | 866 | 64 | |||||||||||||||||||||
Noninterest Expense |
1,194 | 1,185 | 1,262 | 9 | 1 | (68 | ) | (5 | ) | |||||||||||||||||||
Net Income |
$ | 292 | $ | 250 | $ | 786 | $ | 42 | 17 | % | $ | (494 | ) | (63 | )% | |||||||||||||
(a) | Presented on a managed basis; see Note 1 (page 13) for further explanation of managed basis. |
§ | Return on equity was 8%, down from 22%. | ||
§ | Pretax income to average managed loans (ROO) was 1.17%, compared with 3.31% in the prior year and 1.04% in the prior quarter. | ||
§ | Net interest income as a percentage of average managed loans was 8.18%, down from 8.29% in the prior year and up from 7.92% in the prior quarter. | ||
§ | Net accounts of 3.6 million were opened during the quarter. | ||
§ | Charge volume was $93.9 billion, an increase of $4.1 billion, or 5%, reflecting an increase of 5% in sales volume and a 2% increase in balance transfers. | ||
§ | Merchant processing volume was $197.1 billion, an increase of $15.7 billion, or 9%, and total transactions were 5.7 billion, an increase of 713 million, or 14% (data represents 100% of Chase Paymentech Solutions joint venture). |
6
§ | The termination of Chase Paymentech Solutions, a global payments and merchant-acquiring joint venture between JPMorgan Chase & Co. and First Data Corporation, is expected to be completed in the fourth quarter. JPMorgan Chase & Co. will retain approximately 51% of the business under the Chase Paymentech name. |
Results for CB | 2Q08 | 3Q07 | ||||||||||||||||||||||||||
($ millions) | 3Q08 | 2Q08 | 3Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 1,125 | $ | 1,106 | $ | 1,009 | $ | 19 | 2 | % | $ | 116 | 11 | % | ||||||||||||||
Provision for Credit Losses |
126 | 47 | 112 | 79 | 168 | 14 | 13 | |||||||||||||||||||||
Noninterest Expense |
486 | 476 | 473 | 10 | 2 | 13 | 3 | |||||||||||||||||||||
Net Income |
$ | 312 | $ | 355 | $ | 258 | $ | (43 | ) | (12 | )% | $ | 54 | 21 | % | |||||||||||||
§ | Overhead ratio was 43%, an improvement from 47%. | ||
§ | Gross investment banking revenue (which is shared with the Investment Bank) was $252 million, an increase of $58 million, or 30%. | ||
§ | Average loan balances were $72.3 billion, up $11.0 billion, or 18%, and up $1.2 billion, or 2%, from the prior quarter. |
7
§ | Average liability balances were $99.4 billion, up $11.3 billion, or 13%, and in line with the prior quarter. |
Results for TSS | 2Q08 | 3Q07 | ||||||||||||||||||||||||||
($ millions) | 3Q08 | 2Q08 | 3Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 1,953 | $ | 2,019 | $ | 1,748 | $ | (66 | ) | (3 | %) | $ | 205 | 12 | % | |||||||||||||
Provision for Credit Losses |
18 | 7 | 9 | 11 | 157 | 9 | 100 | |||||||||||||||||||||
Noninterest Expense |
1,339 | 1,317 | 1,134 | 22 | 2 | 205 | 18 | |||||||||||||||||||||
Net Income |
$ | 406 | $ | 425 | $ | 360 | $ | (19 | ) | (4 | %) | $ | 46 | 13 | % | |||||||||||||
§ | TSS pretax margin(2) was 29%, down from 33% in both the prior quarter and prior year. | ||
§ | Average liability balances were $260.0 billion, up 10%. | ||
§ | Assets under custody were $14.4 trillion, down 8%. | ||
§ | Key new client relationships/services added in the third quarter: |
| Selected by Banco Santander Chile as successor depositary bank for its ADR program. | ||
| In the aftermath of Hurricanes Gustav and Ivan, Louisianas Department of Social Services used J.P. Morgan prepaid debit cards to deliver more than $195 million in emergency food stamp benefits to more than 565,000 households. |
8
Results for AM | 2Q08 | 3Q07 | ||||||||||||||||||||||||||
($ millions) | 3Q08 | 2Q08 | 3Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 1,961 | $ | 2,064 | $ | 2,205 | $ | (103 | ) | (5 | )% | $ | (244 | ) | (11 | )% | ||||||||||||
Provision for Credit Losses |
20 | 17 | 3 | 3 | 18 | 17 | NM | |||||||||||||||||||||
Noninterest Expense |
1,362 | 1,400 | 1,366 | (38 | ) | (3 | ) | (4 | ) | | ||||||||||||||||||
Net Income |
$ | 351 | $ | 395 | $ | 521 | $ | (44 | ) | (11 | )% | $ | (170 | ) | (33 | )% | ||||||||||||
§ | Pretax margin(2) was 30%, down from 38%. | ||
§ | Assets under management were $1.2 trillion, down $10 billion, or 1%, included: |
| Growth of $156 billion, or 42%, in liquidity products; | ||
| Growth of $13 billion, or 11%, in alternative assets; and | ||
| The addition of $15 billion from the Bear Stearns merger. |
9
§ | Assets under management net inflows were $46 billion for the third quarter of 2008. Net inflows were $123 billion for the 12-month period ended September 30, 2008. | ||
§ | Assets under management that ranked in the top two quartiles for investment performance were 77% over five years, 67% over three years and 49% over one year. | ||
§ | Customer assets in 4 and 5 Star-rated funds were 39%. | ||
§ | Average loans of $39.8 billion were up $8.8 billion, or 29%. | ||
§ | Average deposits of $65.6 billion were up $5.7 billion, or 10%. |
Results for Corporate/Private | 2Q08 | 3Q07 | ||||||||||||||||||||||||||
Equity ($ millions) | 3Q08 | 2Q08 | 3Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | (1,748 | ) | $ | 229 | $ | 1,001 | $ | (1,977 | ) | NM | $ | (2,749 | ) | NM | |||||||||||||
Provision for Credit Losses |
2,355 | 290 | (31 | ) | 2,065 | NM | 2,386 | NM | ||||||||||||||||||||
Noninterest Expense |
168 | 395 | 245 | (227 | ) | (57 | ) | (77 | ) | (31) | ||||||||||||||||||
Extraordinary Gain |
581 | | | 581 | NM | 581 | NM | |||||||||||||||||||||
Net Income/(Loss) |
$ | (1,963 | ) | $ | (422 | ) | $ | 513 | $ | (1,541 | ) | (365 | )% | $ | (2,476 | ) | NM | |||||||||||
10
§ | Private Equity portfolio totaled $7.5 billion, up from $6.6 billion in the prior year and down from $7.7 billion in the prior quarter. The portfolio represented 7.5% of total stockholders equity less goodwill, down from 8.8% in the prior year and 8.9% in the prior quarter. |
Results for JPM(a) | 2Q08 | 3Q07 | ||||||||||||||||||||||||||
($ millions) | 3Q08 | 2Q08 | 3Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 16,088 | $ | 19,678 | $ | 16,977 | $ | (3,590 | ) | (18 | )% | $ | (889 | ) | (5 | )% | ||||||||||||
Provision for Credit
Losses(b) |
6,660 | 4,285 | 2,363 | 2,375 | 55 | 4,297 | 182 | |||||||||||||||||||||
Noninterest Expense |
11,137 | 12,177 | 9,327 | (1,040 | ) | (9 | ) | 1,810 | 19 | |||||||||||||||||||
Extraordinary Gain |
581 | | | 581 | NM | 581 | NM | |||||||||||||||||||||
Net Income |
$ | 527 | $ | 2,003 | $ | 3,373 | $ | (1,476 | ) | (74 | )% | $ | (2,846 | ) | (84 | )% | ||||||||||||
(a) | Presented on a managed basis; see Note 1 (page 13) for further explanation of managed basis. Net revenue on a U.S. GAAP basis was $14,737 million, $18,399 million and $16,112 million for the third quarter of 2008, second quarter of 2008 and third quarter of 2007, respectively. | |
(b) | Provision for the third quarter of 2008 included a $1,976 million charge to conform Washington Mutuals allowance for loan losses with JPMorgan Chase's accounting policy. |
11
§ | Tier 1 capital ratio was 8.9% at September 30, 2008 (estimated), 9.2% at June 30, 2008, and 8.4% at September 30, 2007. | ||
§ | Headcount was 228,452, which includes 41,785 from the acquisition of Washington Mutuals banking operations. The remaining 186,667, which includes the effect of the Bear Stearns merger, reflects an increase of 6,820 from September 30, 2007. |
12
13
Toll Free (U.S. and Canada) | International | Access Code | ||||||
1-800-701-9724 |
1-719-955-1577 | 463578 | ||||||
1-800-214-0694 |
1-719-955-1425 | 714140 | ||||||
1-888-732-6202 |
1-719-955-1017 | 343160 |
14
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||
SELECTED
INCOME STATEMENT DATA |
||||||||||||||||||||||||||||||||
Total net revenue |
$ | 14,737 | $ | 18,399 | $ | 16,112 | (20) | % | (9) | % | $ | 50,026 | $ | 53,988 | (7) | % | ||||||||||||||||
Provision for credit losses |
3,811 | 3,455 | 1,785 | 10 | 114 | 11,690 | 4,322 | 170 | ||||||||||||||||||||||||
Provision for credit losses accounting conformity (a) |
1,976 | | | NM | NM | 1,976 | | NM | ||||||||||||||||||||||||
Total noninterest expense |
11,137 | 12,177 | 9,327 | (9 | ) | 19 | 32,245 | 30,983 | 4 | |||||||||||||||||||||||
Income (loss) before extraordinary gain |
(54 | ) | 2,003 | 3,373 | NM | NM | 4,322 | 12,394 | (65 | ) | ||||||||||||||||||||||
Extraordinary gain (b) |
581 | | | NM | NM | 581 | | NM | ||||||||||||||||||||||||
Net income |
527 | 2,003 | 3,373 | (74 | ) | (84 | ) | 4,903 | 12,394 | (60 | ) | |||||||||||||||||||||
PER
COMMON SHARE: |
||||||||||||||||||||||||||||||||
Basic Earnings |
||||||||||||||||||||||||||||||||
Income
(loss) before extraordinary gain |
(0.06 | ) | 0.56 | 1.00 | NM | NM | 1.19 | 3.63 | (67 | ) | ||||||||||||||||||||||
Net income |
0.11 | 0.56 | 1.00 | (80 | ) | (89 | ) | 1.36 | 3.63 | (63 | ) | |||||||||||||||||||||
Diluted Earnings |
||||||||||||||||||||||||||||||||
Income
(loss) before extraordinary gain |
(0.06 | ) | 0.54 | 0.97 | NM | NM | 1.15 | 3.52 | (67 | ) | ||||||||||||||||||||||
Net income |
0.11 | 0.54 | 0.97 | (80 | ) | (89 | ) | 1.32 | 3.52 | (63 | ) | |||||||||||||||||||||
Cash dividends declared |
0.38 | 0.38 | 0.38 | | | 1.14 | 1.10 | 4 | ||||||||||||||||||||||||
Book value |
36.95 | 37.02 | 35.72 | | 3 | 36.95 | 35.72 | 3 | ||||||||||||||||||||||||
Closing share price |
46.70 | 34.31 | 45.82 | 36 | 2 | 46.70 | 45.82 | 2 | ||||||||||||||||||||||||
Market capitalization |
174,048 | 117,881 | 153,901 | 48 | 13 | 174,048 | 153,901 | 13 | ||||||||||||||||||||||||
COMMON
SHARES OUTSTANDING: |
||||||||||||||||||||||||||||||||
Weighted-average diluted shares outstanding |
3,444.6 | (g) | 3,531.0 | 3,477.7 | (2 | ) | (1 | ) | 3,525.3 | 3,519.6 | | |||||||||||||||||||||
Common shares outstanding at period-end (c) |
3,726.9 | 3,435.7 | 3,358.8 | 8 | 11 | 3,726.9 | 3,358.8 | 11 | ||||||||||||||||||||||||
FINANCIAL
RATIOS: (d) |
||||||||||||||||||||||||||||||||
Income (loss) before extraordinary gain: |
||||||||||||||||||||||||||||||||
Return on common equity (ROE) |
(1 | )% | 6 | % | 11 | % | 4 | % | 14 | % | ||||||||||||||||||||||
Return on equity-goodwill (ROE-GW) (e) |
(1 | ) | 10 | 18 | 7 | 23 | ||||||||||||||||||||||||||
Return on assets (ROA) |
(0.01 | ) | 0.48 | 0.91 | 0.35 | 1.16 | ||||||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||||||
ROE |
1 | 6 | 11 | 5 | 14 | |||||||||||||||||||||||||||
ROE-GW (e) |
2 | 10 | 18 | 8 | 23 | |||||||||||||||||||||||||||
ROA |
0.12 | 0.48 | 0.91 | 0.39 | 1.16 | |||||||||||||||||||||||||||
CAPITAL
RATIOS: |
||||||||||||||||||||||||||||||||
Tier 1 capital ratio |
8.9 | (h) | 9.2 | 8.4 | ||||||||||||||||||||||||||||
Total capital ratio |
12.7 | (h) | 13.4 | 12.5 | ||||||||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||
Total assets |
$ | 2,251,469 | $ | 1,775,670 | $ | 1,479,575 | 27 | 52 | $ | 2,251,469 | $ | 1,479,575 | 52 | |||||||||||||||||||
Wholesale loans |
288,445 | 229,359 | 197,728 | 26 | 46 | 288,445 | 197,728 | 46 | ||||||||||||||||||||||||
Consumer loans |
472,936 | 308,670 | 288,592 | 53 | 64 | 472,936 | 288,592 | 64 | ||||||||||||||||||||||||
Deposits |
969,783 | 722,905 | 678,091 | 34 | 43 | 969,783 | 678,091 | 43 | ||||||||||||||||||||||||
Common stockholders equity |
137,691 | 127,176 | 119,978 | 8 | 15 | 137,691 | 119,978 | 15 | ||||||||||||||||||||||||
Headcount |
228,452 | (i) | 195,594 | 179,847 | 17 | 27 | 228,452 | (i) | 179,847 | 27 | ||||||||||||||||||||||
LINE
OF BUSINESS NET INCOME |
||||||||||||||||||||||||||||||||
Investment Bank |
$ | 882 | $ | 394 | $ | 296 | 124 | 198 | $ | 1,189 | $ | 3,015 | (61 | ) | ||||||||||||||||||
Retail Financial Services |
247 | 606 | 639 | (59 | ) | (61 | ) | 626 | 2,283 | (73 | ) | |||||||||||||||||||||
Card Services |
292 | 250 | 786 | 17 | (63 | ) | 1,151 | 2,310 | (50 | ) | ||||||||||||||||||||||
Commercial Banking |
312 | 355 | 258 | (12 | ) | 21 | 959 | 846 | 13 | |||||||||||||||||||||||
Treasury & Securities Services |
406 | 425 | 360 | (4 | ) | 13 | 1,234 | 975 | 27 | |||||||||||||||||||||||
Asset Management |
351 | 395 | 521 | (11 | ) | (33 | ) | 1,102 | 1,439 | (23 | ) | |||||||||||||||||||||
Corporate/Private Equity (f) |
(1,963 | ) | (422 | ) | 513 | (365 | ) | NM | (1,358 | ) | 1,526 | NM | ||||||||||||||||||||
Net income |
$ | 527 | $ | 2,003 | $ | 3,373 | (74 | ) | (84 | ) | $ | 4,903 | $ | 12,394 | (60 | ) | ||||||||||||||||
(a) | Effective September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual, Inc. (Washington Mutual) from the Federal Deposit Insurance Corporation (FDIC). The third quarter of 2008 included an accounting conformity loan loss reserve provision related to this transaction. | |
(b) | JPMorgan Chase acquired the banking operations of Washington Mutual for $1.9 billion. The fair value of Washington Mutual net assets acquired exceeded the purchase price which resulted in negative goodwill. In accordance with SFAS 141, nonfinancial assets that are not held for sale were written down against that negative goodwill. The negative goodwill that remained after writing down nonfinancial assets was recognized as an extraordinary gain. | |
(c) | On September 30, 2008, the Firm issued $11.5 billion, or 284 million shares, of its common stock at $40.50 per share. | |
(d) | Ratios are based upon annualized amounts. | |
(e) | Net income applicable to common stock divided by total average common equity (net of goodwill). The Firm uses return on equity less goodwill, a non-GAAP financial measure, to evaluate the operating performance of the Firm. The Firm also utilizes this measure to facilitate comparisons to competitors. | |
(f) | The third quarter of 2008 included an accounting conformity loan loss reserve provision and an extraordinary gain related to the Washington Mutual transaction, as well as losses on preferred equity interests in Federal National Mortgage Association (FNMA), and Federal Home Loan Mortgage Corporation (Freddie Mac). Prior periods included the after-tax impact of material litigation actions, tax audit benefits, equity earnings related to Bear Stearns and merger costs. | |
(g) | Common equivalent shares have been excluded from the computation of diluted earnings per share for the third quarter of 2008, as the effect would be antidilutive. | |
(h) | Estimated. | |
(i) | Includes headcount related to the acquisition of Washington Mutual banking operations of 41,785. |
15
Page | ||||
Consolidated Results |
||||
Consolidated Financial Highlights |
2 | |||
Statements of Income |
3 | |||
Consolidated Balance Sheets |
4 | |||
Condensed Average Balance Sheets and Annualized Yields |
5 | |||
Reconciliation from Reported to Managed Summary |
6 | |||
Business Detail |
||||
Line of Business Financial Highlights Managed Basis |
7 | |||
Investment Bank |
8 | |||
Retail Financial Services |
11 | |||
Card Services Managed Basis |
16 | |||
Commercial Banking |
19 | |||
Treasury & Securities Services |
21 | |||
Asset Management |
23 | |||
Corporate/Private Equity |
26 | |||
Credit-Related Information |
28 | |||
Supplemental Detail |
||||
Capital, Intangible Assets and Deposits |
33 | |||
Glossary of Terms |
34 |
Page 1
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SELECTED
INCOME STATEMENT DATA |
||||||||||||||||||||||||||||||||||||||||
Total net revenue |
$ | 14,737 | $ | 18,399 | $ | 16,890 | $ | 17,384 | $ | 16,112 | (20 | )% | (9 | )% | $ | 50,026 | $ | 53,988 | (7 | )% | ||||||||||||||||||||
Provision for credit losses |
3,811 | 3,455 | 4,424 | 2,542 | 1,785 | 10 | 114 | 11,690 | 4,322 | 170 | ||||||||||||||||||||||||||||||
Provision for credit losses accounting conformity (a) |
1,976 | | | | | NM | NM | 1,976 | | NM | ||||||||||||||||||||||||||||||
Total noninterest expense |
11,137 | 12,177 | 8,931 | 10,720 | 9,327 | (9 | ) | 19 | 32,245 | 30,983 | 4 | |||||||||||||||||||||||||||||
Income
(loss) before extraordinary gain |
(54 | ) | 2,003 | 2,373 | 2,971 | 3,373 | NM | NM | 4,322 | 12,394 | (65 | ) | ||||||||||||||||||||||||||||
Extraordinary gain (b) |
581 | | | | | NM | NM | 581 | | NM | ||||||||||||||||||||||||||||||
Net income |
527 | 2,003 | 2,373 | 2,971 | 3,373 | (74 | ) | (84 | ) | 4,903 | 12,394 | (60 | ) | |||||||||||||||||||||||||||
PER
COMMON SHARE: |
||||||||||||||||||||||||||||||||||||||||
Basic Earnings |
||||||||||||||||||||||||||||||||||||||||
Income
(loss) before extraordinary gain |
(0.06 | ) | 0.56 | 0.70 | 0.88 | 1.00 | NM | NM | 1.19 | 3.63 | (67 | ) | ||||||||||||||||||||||||||||
Net income |
0.11 | 0.56 | 0.70 | 0.88 | 1.00 | (80 | ) | (89 | ) | 1.36 | 3.63 | (63 | ) | |||||||||||||||||||||||||||
Diluted Earnings |
||||||||||||||||||||||||||||||||||||||||
Income
(loss) before extraordinary gain |
(0.06 | ) | 0.54 | 0.68 | 0.86 | 0.97 | NM | NM | 1.15 | 3.52 | (67 | ) | ||||||||||||||||||||||||||||
Net income |
0.11 | 0.54 | 0.68 | 0.86 | 0.97 | (80 | ) | (89 | ) | 1.32 | 3.52 | (63 | ) | |||||||||||||||||||||||||||
Cash dividends declared |
0.38 | 0.38 | 0.38 | 0.38 | 0.38 | | | 1.14 | 1.10 | 4 | ||||||||||||||||||||||||||||||
Book value |
36.95 | 37.02 | 36.94 | 36.59 | 35.72 | | 3 | 36.95 | 35.72 | 3 | ||||||||||||||||||||||||||||||
Closing share price |
46.70 | 34.31 | 42.95 | 43.65 | 45.82 | 36 | 2 | 46.70 | 45.82 | 2 | ||||||||||||||||||||||||||||||
Market capitalization |
174,048 | 117,881 | 146,066 | 146,986 | 153,901 | 48 | 13 | 174,048 | 153,901 | 13 | ||||||||||||||||||||||||||||||
COMMON
SHARES OUTSTANDING: |
||||||||||||||||||||||||||||||||||||||||
Weighted-average diluted shares outstanding |
3,444.6 | (g) | 3,531.0 | 3,494.7 | 3,471.8 | 3,477.7 | (2 | ) | (1 | ) | 3,525.3 | 3,519.6 | | |||||||||||||||||||||||||||
Common shares outstanding at period-end (c) |
3,726.9 | 3,435.7 | 3,400.8 | 3,367.4 | 3,358.8 | 8 | 11 | 3,726.9 | 3,358.8 | 11 | ||||||||||||||||||||||||||||||
FINANCIAL
RATIOS: (d) |
||||||||||||||||||||||||||||||||||||||||
Income
(loss) before extraordinary gain: |
||||||||||||||||||||||||||||||||||||||||
Return on common equity (ROE) |
(1 | )% | 6 | % | 8 | % | 10 | % | 11 | % | 4 | % | 14 | % | ||||||||||||||||||||||||||
Return on equity-goodwill (ROE-GW) (e) |
(1 | ) | 10 | 12 | 15 | 18 | 7 | 23 | ||||||||||||||||||||||||||||||||
Return on assets (ROA) |
(0.01 | ) | 0.48 | 0.61 | 0.77 | 0.91 | 0.35 | 1.16 | ||||||||||||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||||||||||||||
ROE |
1 | 6 | 8 | 10 | 11 | 5 | 14 | |||||||||||||||||||||||||||||||||
ROE-GW (e) |
2 | 10 | 12 | 15 | 18 | 8 | 23 | |||||||||||||||||||||||||||||||||
ROA |
0.12 | 0.48 | 0.61 | 0.77 | 0.91 | 0.39 | 1.16 | |||||||||||||||||||||||||||||||||
CAPITAL
RATIOS: |
||||||||||||||||||||||||||||||||||||||||
Tier 1 capital ratio |
8.9 | (h) | 9.2 | 8.3 | 8.4 | 8.4 | ||||||||||||||||||||||||||||||||||
Total capital ratio |
12.7 | (h) | 13.4 | 12.5 | 12.6 | 12.5 | ||||||||||||||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 2,251,469 | $ | 1,775,670 | $ | 1,642,862 | $ | 1,562,147 | $ | 1,479,575 | 27 | 52 | $ | 2,251,469 | $ | 1,479,575 | 52 | |||||||||||||||||||||||
Wholesale loans |
288,445 | 229,359 | 231,297 | 213,076 | 197,728 | 26 | 46 | 288,445 | 197,728 | 46 | ||||||||||||||||||||||||||||||
Consumer loans |
472,936 | 308,670 | 305,759 | 306,298 | 288,592 | 53 | 64 | 472,936 | 288,592 | 64 | ||||||||||||||||||||||||||||||
Deposits |
969,783 | 722,905 | 761,626 | 740,728 | 678,091 | 34 | 43 | 969,783 | 678,091 | 43 | ||||||||||||||||||||||||||||||
Common stockholders equity |
137,691 | 127,176 | 125,627 | 123,221 | 119,978 | 8 | 15 | 137,691 | 119,978 | 15 | ||||||||||||||||||||||||||||||
Headcount |
228,452 | (i) | 195,594 | 182,166 | 180,667 | 179,847 | 17 | 27 | 228,452 | (i) | 179,847 | 27 | ||||||||||||||||||||||||||||
LINE
OF BUSINESS NET INCOME |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 882 | $ | 394 | $ | (87 | ) | $ | 124 | $ | 296 | 124 | 198 | $ | 1,189 | $ | 3,015 | (61 | ) | |||||||||||||||||||||
Retail Financial Services |
247 | 606 | (227 | ) | 752 | 639 | (59 | ) | (61 | ) | 626 | 2,283 | (73 | ) | ||||||||||||||||||||||||||
Card Services |
292 | 250 | 609 | 609 | 786 | 17 | (63 | ) | 1,151 | 2,310 | (50 | ) | ||||||||||||||||||||||||||||
Commercial Banking |
312 | 355 | 292 | 288 | 258 | (12 | ) | 21 | 959 | 846 | 13 | |||||||||||||||||||||||||||||
Treasury & Securities Services |
406 | 425 | 403 | 422 | 360 | (4 | ) | 13 | 1,234 | 975 | 27 | |||||||||||||||||||||||||||||
Asset Management |
351 | 395 | 356 | 527 | 521 | (11 | ) | (33 | ) | 1,102 | 1,439 | (23 | ) | |||||||||||||||||||||||||||
Corporate/Private Equity (f) |
(1,963 | ) | (422 | ) | 1,027 | 249 | 513 | (365 | ) | NM | (1,358 | ) | 1,526 | NM | ||||||||||||||||||||||||||
Net income |
$ | 527 | $ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | (74 | ) | (84 | ) | $ | 4,903 | $ | 12,394 | (60 | ) | ||||||||||||||||||||
(a) | The third quarter of 2008 included an accounting conformity loan loss reserve provision related to the acquisition of Washington Mutuals banking operations. | |
(b) | JPMorgan Chase acquired the banking operations of Washington Mutual for $1.9 billion. The fair value of Washington Mutual net assets acquired exceeded the purchase price which resulted in negative goodwill. In accordance with SFAS 141, nonfinancial assets that are not held for sale were written down against that negative goodwill. The negative goodwill that remained after writing down nonfinancial assets was recognized as an extraordinary gain. | |
(c) | On September 30, 2008, the Firm issued $11.5 billion, or 284 million shares, of its common stock at $40.50 per share. | |
(d) | Ratios are based upon annualized amounts. | |
(e) | Net income applicable to common stock divided by total average common equity (net of goodwill). The Firm uses return on equity less goodwill, a non-GAAP financial measure, to evaluate the operating performance of the Firm. The Firm also utilizes this measure to facilitate comparisons to competitors. | |
(f) | The third quarter of 2008 included an accounting conformity loan loss reserve provision and an extraordinary gain related to the Washington Mutual transaction, as well as losses on preferred equity interests in Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (Freddie Mac). Prior periods included the after-tax impact of material litigation actions, tax audit benefits, equity earnings related to Bear Stearns and merger costs. See Corporate/Private Equity Financial Highlights for additional details. | |
(g) | Common equivalent shares have been excluded from the computation of diluted earnings per share for the third quarter of 2008, as the effect would be antidilutive. | |
(h) | Estimated. | |
(i) | Includes headcount related to the acquisition of Washington Mutual banking operations of 41,785. |
Page 2
JPMORGAN CHASE & CO. STATEMENTS OF INCOME (in millions, except per share and ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees |
$ | 1,316 | $ | 1,612 | $ | 1,216 | $ | 1,662 | $ | 1,336 | (18 | )% | (1 | )% | $ | 4,144 | $ | 4,973 | (17 | )% | ||||||||||||||||||||
Principal transactions |
(2,763 | ) | 752 | (803 | ) | 165 | 650 | NM | NM | (2,814 | ) | 8,850 | NM | |||||||||||||||||||||||||||
Lending & deposit-related fees |
1,168 | 1,105 | 1,039 | 1,066 | 1,026 | 6 | 14 | 3,312 | 2,872 | 15 | ||||||||||||||||||||||||||||||
Asset management, administration and commissions |
3,485 | 3,628 | 3,596 | 3,896 | 3,663 | (4 | ) | (5 | ) | 10,709 | 10,460 | 2 | ||||||||||||||||||||||||||||
Securities gains (losses) |
424 | 647 | 33 | 148 | 237 | (34 | ) | 79 | 1,104 | 16 | NM | |||||||||||||||||||||||||||||
Mortgage fees and related income |
457 | 696 | 525 | 898 | 221 | (34 | ) | 107 | 1,678 | 1,220 | 38 | |||||||||||||||||||||||||||||
Credit card income |
1,771 | 1,803 | 1,796 | 1,857 | 1,777 | (2 | ) | | 5,370 | 5,054 | 6 | |||||||||||||||||||||||||||||
Other income |
(115 | ) | (138 | ) | 1,829 | 469 | 289 | 17 | NM | 1,576 | 1,360 | 16 | ||||||||||||||||||||||||||||
Noninterest revenue |
5,743 | 10,105 | 9,231 | 10,161 | 9,199 | (43 | ) | (38 | ) | 25,079 | 34,805 | (28 | ) | |||||||||||||||||||||||||||
Interest income |
17,326 | 16,529 | 17,532 | 18,619 | 18,806 | 5 | (8 | ) | 51,387 | 52,768 | (3 | ) | ||||||||||||||||||||||||||||
Interest expense |
8,332 | 8,235 | 9,873 | 11,396 | 11,893 | 1 | (30 | ) | 26,440 | 33,585 | (21 | ) | ||||||||||||||||||||||||||||
Net interest income |
8,994 | 8,294 | 7,659 | 7,223 | 6,913 | 8 | 30 | 24,947 | 19,183 | 30 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
14,737 | 18,399 | 16,890 | 17,384 | 16,112 | (20 | ) | (9 | ) | 50,026 | 53,988 | (7 | ) | |||||||||||||||||||||||||||
Provision for credit losses |
3,811 | 3,455 | 4,424 | 2,542 | 1,785 | 10 | 114 | 11,690 | 4,322 | 170 | ||||||||||||||||||||||||||||||
Provision for credit losses accounting conformity (a) |
1,976 | | | | | NM | NM | 1,976 | | NM | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
5,858 | 6,913 | 4,951 | 5,469 | 4,677 | (15 | ) | 25 | 17,722 | 17,220 | 3 | |||||||||||||||||||||||||||||
Occupancy expense |
766 | 669 | 648 | 659 | 657 | 14 | 17 | 2,083 | 1,949 | 7 | ||||||||||||||||||||||||||||||
Technology, communications and equipment expense |
1,112 | 1,028 | 968 | 986 | 950 | 8 | 17 | 3,108 | 2,793 | 11 | ||||||||||||||||||||||||||||||
Professional & outside services |
1,451 | 1,450 | 1,333 | 1,421 | 1,260 | | 15 | 4,234 | 3,719 | 14 | ||||||||||||||||||||||||||||||
Marketing |
453 | 413 | 546 | 570 | 561 | 10 | (19 | ) | 1,412 | 1,500 | (6 | ) | ||||||||||||||||||||||||||||
Other expense |
1,096 | 1,233 | 169 | 1,254 | 812 | (11 | ) | 35 | 2,498 | 2,560 | (2 | ) | ||||||||||||||||||||||||||||
Amortization of intangibles |
305 | 316 | 316 | 339 | 349 | (3 | ) | (13 | ) | 937 | 1,055 | (11 | ) | |||||||||||||||||||||||||||
Merger costs |
96 | 155 | | 22 | 61 | (38 | ) | 57 | 251 | 187 | 34 | |||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
11,137 | 12,177 | 8,931 | 10,720 | 9,327 | (9 | ) | 19 | 32,245 | 30,983 | 4 | |||||||||||||||||||||||||||||
Income (loss) before income tax expense and extraordinary gain |
(2,187 | ) | 2,767 | 3,535 | 4,122 | 5,000 | NM | NM | 4,115 | 18,683 | (78 | ) | ||||||||||||||||||||||||||||
Income tax expense (benefit) (b) |
(2,133 | ) | 764 | 1,162 | 1,151 | 1,627 | NM | NM | (207 | ) | 6,289 | NM | ||||||||||||||||||||||||||||
Income (loss) before extraordinary gain |
(54 | ) | 2,003 | 2,373 | 2,971 | 3,373 | NM | NM | 4,322 | 12,394 | (65 | ) | ||||||||||||||||||||||||||||
Extraordinary gain (c) |
581 | | | | | NM | NM | 581 | | NM | ||||||||||||||||||||||||||||||
NET INCOME |
$ | 527 | $ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | (74 | ) | (84 | ) | $ | 4,903 | $ | 12,394 | (60 | ) | ||||||||||||||||||||
DILUTED EARNINGS PER SHARE |
||||||||||||||||||||||||||||||||||||||||
Income (loss) before extraordinary gain |
$ | (0.06 | ) | $ | 0.54 | $ | 0.68 | $ | 0.86 | $ | 0.97 | NM | NM | $ | 1.15 | $ | 3.52 | (67 | ) | |||||||||||||||||||||
Extraordinary gain |
0.17 | | | | | NM | NM | 0.17 | | NM | ||||||||||||||||||||||||||||||
Net Income |
$ | 0.11 | $ | 0.54 | $ | 0.68 | $ | 0.86 | $ | 0.97 | (80 | ) | (89 | ) | $ | 1.32 | $ | 3.52 | (60 | ) | ||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
Income (loss) before extraordinary gain: |
||||||||||||||||||||||||||||||||||||||||
ROE |
(1 | )% | 6 | % | 8 | % | 10 | % | 11 | % | 4 | % | 14 | % | ||||||||||||||||||||||||||
ROE-GW |
(1 | ) | 10 | 12 | 15 | 18 | 7 | 23 | ||||||||||||||||||||||||||||||||
ROA |
(0.01 | ) | 0.48 | 0.61 | 0.77 | 0.91 | 0.35 | 1.16 | ||||||||||||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||||||||||||||
ROE |
1 | 6 | 8 | 10 | 11 | 5 | 14 | |||||||||||||||||||||||||||||||||
ROE-GW |
2 | 10 | 12 | 15 | 18 | 8 | 23 | |||||||||||||||||||||||||||||||||
ROA |
0.12 | 0.48 | 0.61 | 0.77 | 0.91 | 0.39 | 1.16 | |||||||||||||||||||||||||||||||||
Effective income tax rate (b) |
98 | 28 | 33 | 28 | 33 | (5 | ) | 34 | ||||||||||||||||||||||||||||||||
Overhead ratio |
76 | 66 | 53 | 62 | 58 | 64 | 57 | |||||||||||||||||||||||||||||||||
EXCLUDING IMPACT OF MERGER COSTS (d) |
||||||||||||||||||||||||||||||||||||||||
Income (loss) before extraordinary gain |
$ | (54 | ) | $ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | NM | NM | $ | 4,322 | $ | 12,394 | (65 | ) | |||||||||||||||||||||
Less merger costs (after-tax) |
60 | 96 | | 14 | 38 | (38 | ) | 58 | 156 | 116 | 34 | |||||||||||||||||||||||||||||
Income before extraordinary gain excluding merger costs |
$ | 6 | $ | 2,099 | $ | 2,373 | $ | 2,985 | $ | 3,411 | (100 | ) | (100 | ) | $ | 4,478 | $ | 12,510 | (64 | ) | ||||||||||||||||||||
Diluted Per Share: |
||||||||||||||||||||||||||||||||||||||||
Income (loss) before extraordinary gain |
$ | (0.06 | ) | $ | 0.54 | $ | 0.68 | $ | 0.86 | $ | 0.97 | NM | NM | $ | 1.15 | $ | 3.52 | (67 | ) | |||||||||||||||||||||
Less merger costs (after-tax) |
0.02 | 0.03 | | | 0.01 | (33 | ) | 100 | 0.05 | 0.03 | 67 | |||||||||||||||||||||||||||||
Income (loss) before extraordinary gain excluding merger costs |
$ | (0.04 | ) | $ | 0.57 | $ | 0.68 | $ | 0.86 | $ | 0.98 | NM | NM | $ | 1.20 | $ | 3.55 | (66 | ) | |||||||||||||||||||||
(a) | The third quarter of 2008 included an accounting conformity loan loss reserve provision related to the acquisition of Washington Mutuals banking operations. | |
(b) | The income tax benefit in the third quarter and year-to-date 2008 is predominantly the result of reduced deferred tax liabilities on overseas earnings, as well as the tax benefit associated with the conforming loan loss reserve provision related to the acquisition of Washington Mutuals banking operations. | |
(c) | JPMorgan Chase acquired the banking operations of Washington Mutual from the FDIC for $1.9 billion. The fair value of the net assets acquired from the FDIC exceeded the purchase price which resulted in negative goodwill. In accordance with SFAS 141, nonfinancial assets that are not held for sale were written down against that negative goodwill. The negative goodwill that remained after writing down nonfinancial assets was recognized as an extraordinary gain. | |
(d) | Net income excluding merger costs, a non-GAAP financial measure, is used by the Firm to facilitate comparison of results against the Firms ongoing operations and with other companies U.S. GAAP financial statements. |
Page 3
JPMORGAN CHASE & CO. CONSOLIDATED BALANCE SHEETS (in millions) |
Sep 30, 2008 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Sep 30 | ||||||||||||||||||||||
2008 | 2008 | 2008 | 2007 | 2007 | 2008 | 2007 | ||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||
Cash and due from banks |
$ | 54,350 | $ | 32,255 | $ | 46,888 | $ | 40,144 | $ | 32,766 | 69 | % | 66 | % | ||||||||||||||
Deposits with banks |
34,372 | 17,150 | 12,414 | 11,466 | 26,714 | 100 | 29 | |||||||||||||||||||||
Federal funds sold and securities purchased under resale agreements |
233,668 | 176,287 | 203,176 | 170,897 | 135,589 | 33 | 72 | |||||||||||||||||||||
Securities borrowed |
152,050 | 142,854 | 81,014 | 84,184 | 84,697 | 6 | 80 | |||||||||||||||||||||
Trading assets: |
||||||||||||||||||||||||||||
Debt and equity instruments |
401,609 | 409,608 | 386,170 | 414,273 | 389,119 | (2 | ) | 3 | ||||||||||||||||||||
Derivative receivables |
118,648 | 122,389 | 99,110 | 77,136 | 64,592 | (3 | ) | 84 | ||||||||||||||||||||
Securities |
150,779 | 119,173 | 101,647 | 85,450 | 97,706 | 27 | 54 | |||||||||||||||||||||
Loans (net of allowance for loan losses) |
742,329 | 524,783 | 525,310 | 510,140 | 478,207 | 41 | 55 | |||||||||||||||||||||
Accrued interest and accounts receivable (a) |
104,232 | 64,294 | 50,989 | 24,823 | 26,401 | 62 | 295 | |||||||||||||||||||||
Premises and equipment |
9,962 | 11,843 | 9,457 | 9,319 | 8,892 | (16 | ) | 12 | ||||||||||||||||||||
Goodwill |
46,121 | 45,993 | 45,695 | 45,270 | 45,335 | | 2 | |||||||||||||||||||||
Other intangible assets: |
||||||||||||||||||||||||||||
Mortgage servicing rights |
17,048 | 11,617 | 8,419 | 8,632 | 9,114 | 47 | 87 | |||||||||||||||||||||
Purchased credit card relationships |
1,827 | 1,984 | 2,140 | 2,303 | 2,427 | (8 | ) | (25 | ) | |||||||||||||||||||
All other intangibles |
3,653 | 3,675 | 3,815 | 3,796 | 3,959 | (1 | ) | (8 | ) | |||||||||||||||||||
Other assets |
180,821 | 91,765 | 66,618 | 74,314 | 74,057 | 97 | 144 | |||||||||||||||||||||
TOTAL ASSETS |
$ | 2,251,469 | $ | 1,775,670 | $ | 1,642,862 | $ | 1,562,147 | $ | 1,479,575 | 27 | 52 | ||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||
Deposits |
$ | 969,783 | $ | 722,905 | $ | 761,626 | $ | 740,728 | $ | 678,091 | 34 | 43 | ||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements |
224,075 | 194,724 | 192,633 | 154,398 | 178,767 | 15 | 25 | |||||||||||||||||||||
Commercial paper |
54,480 | 50,151 | 50,602 | 49,596 | 33,978 | 9 | 60 | |||||||||||||||||||||
Other borrowed funds |
134,445 | 22,594 | 28,430 | 28,835 | 31,154 | 495 | 332 | |||||||||||||||||||||
Trading liabilities: |
||||||||||||||||||||||||||||
Debt and equity instruments |
76,213 | 87,841 | 78,982 | 89,162 | 80,748 | (13 | ) | (6 | ) | |||||||||||||||||||
Derivative payables |
85,816 | 95,749 | 78,983 | 68,705 | 68,426 | (10 | ) | 25 | ||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities
(including the allowance for lending-related commitments) (b) |
260,563 | 171,004 | 106,088 | 94,476 | 86,524 | 52 | 201 | |||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
11,437 | 20,071 | 14,524 | 14,016 | 13,283 | (43 | ) | (14 | ) | |||||||||||||||||||
Long-term debt |
271,416 | 260,192 | 189,995 | 183,862 | 173,696 | 4 | 56 | |||||||||||||||||||||
Junior subordinated deferrable interest debentures held by trusts that issued
guaranteed capital debt securities |
17,398 | 17,263 | 15,372 | 15,148 | 14,930 | 1 | 17 | |||||||||||||||||||||
TOTAL LIABILITIES |
2,105,626 | 1,642,494 | 1,517,235 | 1,438,926 | 1,359,597 | 28 | 55 | |||||||||||||||||||||
STOCKHOLDERS EQUITY |
||||||||||||||||||||||||||||
Preferred stock |
8,152 | 6,000 | | | | 36 | NM | |||||||||||||||||||||
Common stock |
3,942 | 3,658 | 3,658 | 3,658 | 3,658 | 8 | 8 | |||||||||||||||||||||
Capital surplus |
90,535 | 78,870 | 78,072 | 78,597 | 78,295 | 15 | 16 | |||||||||||||||||||||
Retained earnings |
55,217 | 56,313 | 55,762 | 54,715 | 53,064 | (2 | ) | 4 | ||||||||||||||||||||
Accumulated other comprehensive income (loss) |
(2,227 | ) | (1,566 | ) | (512 | ) | (917 | ) | (1,830 | ) | (42 | ) | (22 | ) | ||||||||||||||
Shares held in RSU trust |
(267 | ) | (269 | ) | | | | 1 | NM | |||||||||||||||||||
Treasury stock, at cost |
(9,509 | ) | (9,830 | ) | (11,353 | ) | (12,832 | ) | (13,209 | ) | 3 | 28 | ||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
145,843 | 133,176 | 125,627 | 123,221 | 119,978 | 10 | 22 | |||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,251,469 | $ | 1,775,670 | $ | 1,642,862 | $ | 1,562,147 | $ | 1,479,575 | 27 | 52 | ||||||||||||||||
(a) | Includes margin loans; receivables from brokers, dealers and clearing organizations; and securities fails. | |
(b) | Includes brokerage customer payables; payables to brokers, dealers and clearing organizations; and securities fails. |
Page 4
JPMORGAN CHASE & CO. CONDENSED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS (in millions, except rates) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||||||||||||||
Deposits with banks |
$ | 41,303 | $ | 38,813 | $ | 31,975 | $ | 41,363 | $ | 39,906 | 6 | % | 4 | % | $ | 37,378 | $ | 24,848 | 50 | % | ||||||||||||||||||||
Federal funds sold and securities purchased
under resale agreements |
164,980 | 155,664 | 153,864 | 140,622 | 133,780 | 6 | 23 | 158,195 | 134,009 | 18 | ||||||||||||||||||||||||||||||
Securities borrowed |
134,651 | 100,322 | 83,490 | 86,649 | 87,955 | 34 | 53 | 106,258 | 85,878 | 24 | ||||||||||||||||||||||||||||||
Trading assets debt instruments |
298,760 | 302,053 | 322,986 | 308,175 | 310,445 | (1 | ) | (4 | ) | 307,899 | 287,680 | 7 | ||||||||||||||||||||||||||||
Securities |
119,443 | 109,834 | 89,757 | 93,236 | 95,694 | 9 | 25 | 106,392 | 95,982 | 11 | ||||||||||||||||||||||||||||||
Loans |
536,890 | 537,964 | 526,598 | 508,172 | 476,912 | | 13 | 533,829 | 470,078 | 14 | ||||||||||||||||||||||||||||||
Other assets (a) |
37,237 | 15,629 | | | | 138 | NM | 17,694 | | NM | ||||||||||||||||||||||||||||||
Total interest-earning assets |
1,333,264 | 1,260,279 | 1,208,670 | 1,178,217 | 1,144,692 | 6 | 16 | 1,267,645 | 1,098,475 | 15 | ||||||||||||||||||||||||||||||
Trading assets equity instruments |
92,300 | 99,525 | 78,810 | 93,453 | 86,177 | (7 | ) | 7 | 90,220 | 86,923 | 4 | |||||||||||||||||||||||||||||
Goodwill |
45,947 | 45,781 | 45,699 | 45,321 | 45,276 | | 1 | 45,809 | 45,194 | 1 | ||||||||||||||||||||||||||||||
Other intangible assets: |
||||||||||||||||||||||||||||||||||||||||
Mortgage servicing rights |
11,811 | 9,947 | 8,273 | 8,795 | 9,290 | 19 | 27 | 10,017 | 8,487 | 18 | ||||||||||||||||||||||||||||||
All other intangible assets |
5,512 | 5,823 | 6,202 | 6,220 | 6,532 | (5 | ) | (16 | ) | 5,845 | 6,840 | (15 | ) | |||||||||||||||||||||||||||
All other noninterest-earning assets |
267,525 | 247,344 | 222,143 | 198,031 | 185,367 | 8 | 44 | 245,749 | 183,853 | 34 | ||||||||||||||||||||||||||||||
TOTAL ASSETS |
$ | 1,756,359 | $ | 1,668,699 | $ | 1,569,797 | $ | 1,530,037 | $ | 1,477,334 | 5 | 19 | $ | 1,665,285 | $ | 1,429,772 | 16 | |||||||||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
$ | 589,348 | $ | 612,305 | $ | 600,132 | $ | 587,297 | $ | 540,937 | (4 | ) | 9 | $ | 600,554 | $ | 517,856 | 16 | ||||||||||||||||||||||
Federal funds purchased and securities sold
under repurchase agreements |
200,032 | 203,348 | 179,897 | 171,450 | 206,174 | (2 | ) | (3 | ) | 194,446 | 204,942 | (5 | ) | |||||||||||||||||||||||||||
Commercial paper |
47,579 | 47,323 | 47,584 | 48,821 | 26,511 | 1 | 79 | 47,496 | 24,726 | 92 | ||||||||||||||||||||||||||||||
Other borrowings (b) |
91,756 | 92,309 | 107,552 | 99,259 | 104,995 | (1 | ) | (13 | ) | 97,185 | 100,492 | (3 | ) | |||||||||||||||||||||||||||
Other liabilities (c) |
70,065 | 19,168 | | | | 266 | NM | 29,891 | | NM | ||||||||||||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
11,431 | 17,990 | 14,082 | 14,183 | 14,454 | (36 | ) | (21 | ) | 14,490 | 14,691 | (1 | ) | |||||||||||||||||||||||||||
Long-term debt |
261,385 | 229,336 | 200,354 | 191,797 | 177,851 | 14 | 47 | 230,472 | 162,929 | 41 | ||||||||||||||||||||||||||||||
Total interest-bearing liabilities |
1,271,596 | 1,221,779 | 1,149,601 | 1,112,807 | 1,070,922 | 4 | 19 | 1,214,534 | 1,025,636 | 18 | ||||||||||||||||||||||||||||||
Noninterest-bearing liabilities |
351,023 | 315,965 | 295,616 | 295,670 | 287,436 | 11 | 22 | 320,978 | 286,369 | 12 | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES |
1,622,619 | 1,537,744 | 1,445,217 | 1,408,477 | 1,358,358 | 6 | 19 | 1,535,512 | 1,312,005 | 17 | ||||||||||||||||||||||||||||||
Preferred stock |
7,100 | 4,549 | | | | 56 | NM | 3,895 | | NM | ||||||||||||||||||||||||||||||
Common stockholders equity |
126,640 | 126,406 | 124,580 | 121,560 | 118,976 | | 6 | 125,878 | 117,767 | 7 | ||||||||||||||||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
133,740 | 130,955 | 124,580 | 121,560 | 118,976 | 2 | 12 | 129,773 | 117,767 | 10 | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY |
$ | 1,756,359 | $ | 1,668,699 | $ | 1,569,797 | $ | 1,530,037 | $ | 1,477,334 | 5 | 19 | $ | 1,665,285 | $ | 1,429,772 | 16 | |||||||||||||||||||||||
AVERAGE RATES |
||||||||||||||||||||||||||||||||||||||||
INTEREST-EARNING ASSETS |
||||||||||||||||||||||||||||||||||||||||
Deposits with banks |
3.04 | % | 3.87 | % | 4.22 | % | 4.95 | % | 5.06 | % | 3.66 | % | 4.85 | % | ||||||||||||||||||||||||||
Federal funds sold and securities purchased
under resale agreements |
3.76 | 3.84 | 3.80 | 4.41 | 4.83 | 3.80 | 4.92 | |||||||||||||||||||||||||||||||||
Securities borrowed |
2.07 | 2.29 | 3.56 | 4.77 | 5.60 | 2.53 | 5.45 | |||||||||||||||||||||||||||||||||
Trading assets debt instruments |
6.06 | 5.59 | 5.75 | 5.84 | 6.09 | 5.80 | 5.90 | |||||||||||||||||||||||||||||||||
Securities |
5.09 | 5.27 | 5.47 | 5.58 | 5.69 | 5.26 | 5.68 | |||||||||||||||||||||||||||||||||
Loans |
6.31 | 6.36 | 7.10 | 7.60 | 7.80 | 6.58 | 7.66 | |||||||||||||||||||||||||||||||||
Other assets (a) |
3.29 | 3.97 | | | | 3.49 | | |||||||||||||||||||||||||||||||||
Total interest-earning assets |
5.22 | 5.34 | 5.88 | 6.30 | 6.55 | 5.47 | 6.46 | |||||||||||||||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
2.26 | 2.36 | 3.09 | 3.84 | 4.13 | 2.57 | 4.12 | |||||||||||||||||||||||||||||||||
Federal funds purchased and securities sold
under repurchase agreements |
2.63 | 2.73 | 3.31 | 4.35 | 5.18 | 2.87 | 5.16 | |||||||||||||||||||||||||||||||||
Commercial paper |
2.05 | 2.17 | 3.41 | 4.40 | 4.68 | 2.54 | 4.82 | |||||||||||||||||||||||||||||||||
Other borrowings (b) |
4.32 | 4.28 | 5.03 | 5.02 | 4.90 | 4.57 | 4.88 | |||||||||||||||||||||||||||||||||
Other liabilities (c) |
0.90 | 1.32 | | | | 0.99 | | |||||||||||||||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
2.87 | 2.24 | 3.78 | 4.36 | 4.52 | 2.90 | 3.86 | |||||||||||||||||||||||||||||||||
Long-term debt |
3.31 | 3.27 | 3.82 | 3.90 | 3.99 | 3.44 | 3.87 | |||||||||||||||||||||||||||||||||
Total interest-bearing liabilities |
2.61 | 2.71 | 3.45 | 4.06 | 4.41 | 2.91 | 4.38 | |||||||||||||||||||||||||||||||||
INTEREST RATE SPREAD |
2.61 | % | 2.63 | % | 2.43 | % | 2.24 | % | 2.14 | % | 2.56 | % | 2.08 | % | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS |
2.73 | % | 2.71 | % | 2.59 | % | 2.46 | % | 2.43 | % | 2.68 | % | 2.37 | % | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS
ADJUSTED FOR SECURITIZATIONS |
3.06 | % | 3.06 | % | 2.95 | % | 2.80 | % | 2.75 | % | 3.02 | % | 2.70 | % | ||||||||||||||||||||||||||
(a) | Predominantly margin loans. | |
(b) | Includes securities sold but not yet purchased. | |
(c) | Includes brokerage customer payables. |
Page 5
JPMORGAN CHASE & CO. RECONCILIATION FROM REPORTED TO MANAGED SUMMARY (in millions) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
CREDIT
CARD INCOME |
||||||||||||||||||||||||||||||||||||||||
Credit card income reported |
$ | 1,771 | $ | 1,803 | $ | 1,796 | $ | 1,857 | $ | 1,777 | (2 | )% | | % | $ | 5,370 | $ | 5,054 | 6 | % | ||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
(843 | ) | (843 | ) | (937 | ) | (885 | ) | (836 | ) | | (1 | ) | (2,623 | ) | (2,370 | ) | (11 | ) | |||||||||||||||||||||
Credit card income managed |
$ | 928 | $ | 960 | $ | 859 | $ | 972 | $ | 941 | (3 | ) | (1 | ) | $ | 2,747 | $ | 2,684 | 2 | |||||||||||||||||||||
OTHER
INCOME |
||||||||||||||||||||||||||||||||||||||||
Other income reported |
$ | (115 | ) | $ | (138 | ) | $ | 1,829 | $ | 469 | $ | 289 | 17 | NM | $ | 1,576 | $ | 1,360 | 16 | |||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
323 | 247 | 203 | 182 | 192 | 31 | 68 | 773 | 501 | 54 | ||||||||||||||||||||||||||||||
Other income managed |
$ | 208 | $ | 109 | $ | 2,032 | $ | 651 | $ | 481 | 91 | (57 | ) | $ | 2,349 | $ | 1,861 | 26 | ||||||||||||||||||||||
TOTAL
NONINTEREST REVENUE |
||||||||||||||||||||||||||||||||||||||||
Total noninterest revenue reported |
$ | 5,743 | $ | 10,105 | $ | 9,231 | $ | 10,161 | $ | 9,199 | (43 | ) | (38 | ) | $ | 25,079 | $ | 34,805 | (28 | ) | ||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
(843 | ) | (843 | ) | (937 | ) | (885 | ) | (836 | ) | | (1 | ) | (2,623 | ) | (2,370 | ) | (11 | ) | |||||||||||||||||||||
Tax-equivalent adjustments |
323 | 247 | 203 | 182 | 192 | 31 | 68 | 773 | 501 | 54 | ||||||||||||||||||||||||||||||
Total noninterest revenue managed |
$ | 5,223 | $ | 9,509 | $ | 8,497 | $ | 9,458 | $ | 8,555 | (45 | ) | (39 | ) | $ | 23,229 | $ | 32,936 | (29 | ) | ||||||||||||||||||||
NET
INTEREST INCOME |
||||||||||||||||||||||||||||||||||||||||
Net interest income reported |
$ | 8,994 | $ | 8,294 | $ | 7,659 | $ | 7,223 | $ | 6,913 | 8 | 30 | $ | 24,947 | $ | 19,183 | 30 | |||||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
1,716 | 1,673 | 1,618 | 1,504 | 1,414 | 3 | 21 | 5,007 | 4,131 | 21 | ||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
155 | 202 | 124 | 90 | 95 | (23 | ) | 63 | 481 | 287 | 68 | |||||||||||||||||||||||||||||
Net interest income managed |
$ | 10,865 | $ | 10,169 | $ | 9,401 | $ | 8,817 | $ | 8,422 | 7 | 29 | $ | 30,435 | $ | 23,601 | 29 | |||||||||||||||||||||||
TOTAL
NET REVENUE |
||||||||||||||||||||||||||||||||||||||||
Total net revenue reported |
$ | 14,737 | $ | 18,399 | $ | 16,890 | $ | 17,384 | $ | 16,112 | (20 | ) | (9 | ) | $ | 50,026 | $ | 53,988 | (7 | ) | ||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
873 | 830 | 681 | 619 | 578 | 5 | 51 | 2,384 | 1,761 | 35 | ||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
478 | 449 | 327 | 272 | 287 | 6 | 67 | 1,254 | 788 | 59 | ||||||||||||||||||||||||||||||
Total net revenue managed |
$ | 16,088 | $ | 19,678 | $ | 17,898 | $ | 18,275 | $ | 16,977 | (18 | ) | (5 | ) | $ | 53,664 | $ | 56,537 | (5 | ) | ||||||||||||||||||||
PROVISION
FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||
Provision for credit losses reported |
$ | 5,787 | $ | 3,455 | $ | 4,424 | $ | 2,542 | $ | 1,785 | 67 | 224 | $ | 13,666 | $ | 4,322 | 216 | |||||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
873 | 830 | 681 | 619 | 578 | 5 | 51 | 2,384 | 1,761 | 35 | ||||||||||||||||||||||||||||||
Provision for credit losses managed |
$ | 6,660 | $ | 4,285 | $ | 5,105 | $ | 3,161 | $ | 2,363 | 55 | 182 | $ | 16,050 | $ | 6,083 | 164 | |||||||||||||||||||||||
INCOME
TAX EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Income tax expense (benefit) reported |
$ | (2,133 | ) | $ | 764 | $ | 1,162 | $ | 1,151 | $ | 1,627 | NM | NM | $ | (207 | ) | $ | 6,289 | NM | |||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
478 | 449 | 327 | 272 | 287 | 6 | 67 | 1,254 | 788 | 59 | ||||||||||||||||||||||||||||||
Income tax expense (benefit) managed |
$ | (1,655 | ) | $ | 1,213 | $ | 1,489 | $ | 1,423 | $ | 1,914 | NM | NM | $ | 1,047 | $ | 7,077 | (85 | ) | |||||||||||||||||||||
Page 6
JPMORGAN CHASE & CO. LINE OF BUSINESS FINANCIAL HIGHLIGHTS MANAGED BASIS (in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
TOTAL NET REVENUE (FTE) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 4,035 | $ | 5,470 | $ | 3,011 | $ | 3,172 | $ | 2,946 | (26 | )% | 37 | % | $ | 12,516 | $ | 14,998 | (17 | )% | ||||||||||||||||||||
Retail Financial Services |
4,875 | 5,015 | 4,702 | 4,815 | 4,201 | (3 | ) | 16 | 14,592 | 12,664 | 15 | |||||||||||||||||||||||||||||
Card Services |
3,887 | 3,775 | 3,904 | 3,971 | 3,867 | 3 | 1 | 11,566 | 11,264 | 3 | ||||||||||||||||||||||||||||||
Commercial Banking |
1,125 | 1,106 | 1,067 | 1,084 | 1,009 | 2 | 11 | 3,298 | 3,019 | 9 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
1,953 | 2,019 | 1,913 | 1,930 | 1,748 | (3 | ) | 12 | 5,885 | 5,015 | 17 | |||||||||||||||||||||||||||||
Asset Management |
1,961 | 2,064 | 1,901 | 2,389 | 2,205 | (5 | ) | (11 | ) | 5,926 | 6,246 | (5 | ) | |||||||||||||||||||||||||||
Corporate/Private Equity |
(1,748 | ) | 229 | 1,400 | 914 | 1,001 | NM | NM | (119 | ) | 3,331 | NM | ||||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 16,088 | $ | 19,678 | $ | 17,898 | $ | 18,275 | $ | 16,977 | (18 | ) | (5 | ) | $ | 53,664 | $ | 56,537 | (5 | ) | ||||||||||||||||||||
NET INCOME |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 882 | $ | 394 | $ | (87 | ) | $ | 124 | $ | 296 | 124 | 198 | $ | 1,189 | $ | 3,015 | (61 | ) | |||||||||||||||||||||
Retail Financial Services |
247 | 606 | (227 | ) | 752 | 639 | (59 | ) | (61 | ) | 626 | 2,283 | (73 | ) | ||||||||||||||||||||||||||
Card Services |
292 | 250 | 609 | 609 | 786 | 17 | (63 | ) | 1,151 | 2,310 | (50 | ) | ||||||||||||||||||||||||||||
Commercial Banking |
312 | 355 | 292 | 288 | 258 | (12 | ) | 21 | 959 | 846 | 13 | |||||||||||||||||||||||||||||
Treasury & Securities Services |
406 | 425 | 403 | 422 | 360 | (4 | ) | 13 | 1,234 | 975 | 27 | |||||||||||||||||||||||||||||
Asset Management |
351 | 395 | 356 | 527 | 521 | (11 | ) | (33 | ) | 1,102 | 1,439 | (23 | ) | |||||||||||||||||||||||||||
Corporate/Private Equity (a) |
(1,963 | ) | (422 | ) | 1,027 | 249 | 513 | (365 | ) | NM | (1,358 | ) | 1,526 | NM | ||||||||||||||||||||||||||
TOTAL NET INCOME |
$ | 527 | $ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | (74 | ) | (84 | ) | $ | 4,903 | $ | 12,394 | (60 | ) | ||||||||||||||||||||
AVERAGE EQUITY (b) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 26,000 | $ | 23,319 | $ | 22,000 | $ | 21,000 | $ | 21,000 | 11 | 24 | $ | 23,781 | $ | 21,000 | 13 | |||||||||||||||||||||||
Retail Financial Services |
17,000 | 17,000 | 17,000 | 16,000 | 16,000 | | 6 | 17,000 | 16,000 | 6 | ||||||||||||||||||||||||||||||
Card Services |
14,100 | 14,100 | 14,100 | 14,100 | 14,100 | | | 14,100 | 14,100 | | ||||||||||||||||||||||||||||||
Commercial Banking |
7,000 | 7,000 | 7,000 | 6,700 | 6,700 | | 4 | 7,000 | 6,435 | 9 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
3,500 | 3,500 | 3,500 | 3,000 | 3,000 | | 17 | 3,500 | 3,000 | 17 | ||||||||||||||||||||||||||||||
Asset Management |
5,500 | 5,066 | 5,000 | 4,000 | 4,000 | 9 | 38 | 5,190 | 3,834 | 35 | ||||||||||||||||||||||||||||||
Corporate/Private Equity |
53,540 | 56,421 | 55,980 | 56,760 | 54,176 | (5 | ) | (1 | ) | 55,307 | 53,398 | 4 | ||||||||||||||||||||||||||||
TOTAL AVERAGE EQUITY |
$ | 126,640 | $ | 126,406 | $ | 124,580 | $ | 121,560 | $ | 118,976 | | 6 | $ | 125,878 | $ | 117,767 | 7 | |||||||||||||||||||||||
RETURN ON EQUITY (b) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
13 | % | 7 | % | (2 | )% | 2 | % | 6 | % | 7 | % | 19 | % | ||||||||||||||||||||||||||
Retail Financial Services |
6 | 14 | (5 | ) | 19 | 16 | 5 | 19 | ||||||||||||||||||||||||||||||||
Card Services |
8 | 7 | 17 | 17 | 22 | 11 | 22 | |||||||||||||||||||||||||||||||||
Commercial Banking |
18 | 20 | 17 | 17 | 15 | 18 | 18 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
46 | 49 | 46 | 56 | 48 | 47 | 43 | |||||||||||||||||||||||||||||||||
Asset Management |
25 | 31 | 29 | 52 | 52 | 28 | 50 |
(a) | The third quarter of 2008 included an accounting conformity loan loss reserve provision and an extraordinary gain related to the Washington Mutual transaction, as well as losses on preferred equity interests in FNMA and Freddie Mac. Prior periods included the after-tax impact of material litigation actions, tax audit benefits, equity earnings related to Bear Stearns and merger costs. See Corporate/Private Equity Financial Highlights for additional details. | |
(b) | Each business segment is allocated capital by taking into consideration stand-alone peer comparisons, economic risk measures and regulatory capital requirements. The amount of capital assigned to each business is referred to as equity. |
Page 7
JPMORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS (in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME
STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees |
$ | 1,593 | $ | 1,735 | $ | 1,206 | $ | 1,657 | $ | 1,330 | (8 | )% | 20 | % | $ | 4,534 | $ | 4,959 | (9 | )% | ||||||||||||||||||||
Principal transactions |
(922 | ) | 838 | (798 | ) | (623 | ) | (435 | ) | NM | (112 | ) | (882 | ) | 5,032 | NM | ||||||||||||||||||||||||
Lending & deposit-related fees |
118 | 105 | 102 | 142 | 118 | 12 | | 325 | 304 | 7 | ||||||||||||||||||||||||||||||
Asset management, administration and commissions |
847 | 709 | 744 | 705 | 712 | 19 | 19 | 2,300 | 1,996 | 15 | ||||||||||||||||||||||||||||||
All other income |
(279 | ) | (226 | ) | (66 | ) | (166 | ) | (76 | ) | (23 | ) | (267 | ) | (571 | ) | 88 | NM | ||||||||||||||||||||||
Noninterest revenue |
1,357 | 3,161 | 1,188 | 1,715 | 1,649 | (57 | ) | (18 | ) | 5,706 | 12,379 | (54 | ) | |||||||||||||||||||||||||||
Net interest income |
2,678 | 2,309 | 1,823 | 1,457 | 1,297 | 16 | 106 | 6,810 | 2,619 | 160 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE (a) |
4,035 | 5,470 | 3,011 | 3,172 | 2,946 | (26 | ) | 37 | 12,516 | 14,998 | (17 | ) | ||||||||||||||||||||||||||||
Provision for credit losses |
234 | 398 | 618 | 200 | 227 | (41 | ) | 3 | 1,250 | 454 | 175 | |||||||||||||||||||||||||||||
Credit reimbursement from TSS (b) |
31 | 30 | 30 | 30 | 31 | 3 | | 91 | 91 | | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
2,162 | 3,132 | 1,241 | 1,561 | 1,178 | (31 | ) | 84 | 6,535 | 6,404 | 2 | |||||||||||||||||||||||||||||
Noncompensation expense |
1,654 | 1,602 | 1,312 | 1,450 | 1,200 | 3 | 38 | 4,568 | 3,659 | 25 | ||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
3,816 | 4,734 | 2,553 | 3,011 | 2,378 | (19 | ) | 60 | 11,103 | 10,063 | 10 | |||||||||||||||||||||||||||||
Income (loss) before income tax expense |
16 | 368 | (130 | ) | (9 | ) | 372 | (96 | ) | (96 | ) | 254 | 4,572 | (94 | ) | |||||||||||||||||||||||||
Income tax expense (benefit) (c) |
(866 | ) | (26 | ) | (43 | ) | (133 | ) | 76 | NM | NM | (935 | ) | 1,557 | NM | |||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 882 | $ | 394 | $ | (87 | ) | $ | 124 | $ | 296 | 124 | 198 | $ | 1,189 | $ | 3,015 | (61 | ) | |||||||||||||||||||||
FINANCIAL
RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
13 | % | 7 | % | (2 | )% | 2 | % | 6 | % | 7 | % | 19 | % | ||||||||||||||||||||||||||
ROA |
0.39 | 0.19 | (0.05 | ) | 0.07 | 0.17 | 0.19 | 0.59 | ||||||||||||||||||||||||||||||||
Overhead ratio |
95 | 87 | 85 | 95 | 81 | 89 | 67 | |||||||||||||||||||||||||||||||||
Compensation expense as a % of total net revenue |
54 | 57 | 41 | 49 | 40 | 52 | 43 | |||||||||||||||||||||||||||||||||
REVENUE BY
BUSINESS |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees: |
||||||||||||||||||||||||||||||||||||||||
Advisory |
$ | 576 | $ | 370 | $ | 483 | $ | 646 | $ | 595 | 56 | (3 | ) | $ | 1,429 | $ | 1,627 | (12 | ) | |||||||||||||||||||||
Equity underwriting |
518 | 542 | 359 | 544 | 267 | (4 | ) | 94 | 1,419 | 1,169 | 21 | |||||||||||||||||||||||||||||
Debt underwriting |
499 | 823 | 364 | 467 | 468 | (39 | ) | 7 | 1,686 | 2,163 | (22 | ) | ||||||||||||||||||||||||||||
Total investment banking fees |
1,593 | 1,735 | 1,206 | 1,657 | 1,330 | (8 | ) | 20 | 4,534 | 4,959 | (9 | ) | ||||||||||||||||||||||||||||
Fixed income markets |
815 | 2,347 | 466 | 615 | 687 | (65 | ) | 19 | 3,628 | 5,724 | (37 | ) | ||||||||||||||||||||||||||||
Equity markets |
1,650 | 1,079 | 976 | 578 | 537 | 53 | 207 | 3,705 | 3,325 | 11 | ||||||||||||||||||||||||||||||
Credit portfolio |
(23 | ) | 309 | 363 | 322 | 392 | NM | NM | 649 | 990 | (34 | ) | ||||||||||||||||||||||||||||
Total net revenue |
$ | 4,035 | $ | 5,470 | $ | 3,011 | $ | 3,172 | $ | 2,946 | (26 | ) | 37 | $ | 12,516 | $ | 14,998 | (17 | ) | |||||||||||||||||||||
REVENUE BY
REGION |
||||||||||||||||||||||||||||||||||||||||
Americas |
$ | 1,052 | $ | 3,165 | $ | 536 | $ | 1,128 | $ | 1,016 | (67 | ) | 4 | $ | 4,753 | $ | 7,037 | (32 | ) | |||||||||||||||||||||
Europe/Middle East/Africa |
2,509 | 1,512 | 1,641 | 1,334 | 1,389 | 66 | 81 | 5,662 | 5,967 | (5 | ) | |||||||||||||||||||||||||||||
Asia/Pacific |
474 | 793 | 834 | 710 | 541 | (40 | ) | (12 | ) | 2,101 | 1,994 | 5 | ||||||||||||||||||||||||||||
Total net revenue |
$ | 4,035 | $ | 5,470 | $ | 3,011 | $ | 3,172 | $ | 2,946 | (26 | ) | 37 | $ | 12,516 | $ | 14,998 | (17 | ) | |||||||||||||||||||||
(a) | Total net revenue included tax-equivalent adjustments, predominantly due to tax-exempt income from municipal bond investments and income tax credits related to affordable housing investments, of $427 million, $404 million, $289 million, $230 million, and $255 million for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and $1.1 billion and $697 million for year-to-date 2008 and 2007, respectively. | |
(b) | Treasury & Securities Services (TSS) was charged a credit reimbursement related to certain exposures managed within the Investment Bank credit portfolio on behalf of clients shared with TSS. | |
(c) | The income tax benefit in the third quarter and year-to-date 2008 is predominantly the result of reduced deferred tax liabilities on overseas earnings. |
Page 8
JPMORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except headcount and ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Equity |
$ | 33,000 | $ | 26,000 | $ | 22,000 | $ | 21,000 | $ | 21,000 | 27 | % | 57 | % | $ | 33,000 | $ | 21,000 | 57 | % | ||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 890,040 | $ | 814,860 | $ | 755,828 | $ | 735,685 | $ | 710,665 | 9 | 25 | $ | 820,497 | $ | 688,730 | 19 | |||||||||||||||||||||||
Trading assets debt and equity instruments |
360,821 | 367,184 | 369,456 | 371,842 | 372,212 | (2 | ) | (3 | ) | 365,802 | 355,708 | 3 | ||||||||||||||||||||||||||||
Trading assets derivative receivables |
105,462 | 99,395 | 90,234 | 74,659 | 63,017 | 6 | 67 | 98,390 | 59,336 | 66 | ||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained (a) |
69,022 | 76,239 | 74,106 | 68,928 | 61,919 | (9 | ) | 11 | 73,107 | 59,996 | 22 | |||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value |
17,612 | 20,440 | 19,612 | 24,977 | 17,315 | (14 | ) | 2 | 19,215 | 15,278 | 26 | |||||||||||||||||||||||||||||
Total loans |
86,634 | 96,679 | 93,718 | 93,905 | 79,234 | (10 | ) | 9 | 92,322 | 75,274 | 23 | |||||||||||||||||||||||||||||
Adjusted assets (b) |
694,459 | 676,777 | 662,419 | 644,573 | 625,619 | 3 | 11 | 677,945 | 600,688 | 13 | ||||||||||||||||||||||||||||||
Equity |
26,000 | 23,319 | 22,000 | 21,000 | 21,000 | 11 | 24 | 23,781 | 21,000 | 13 | ||||||||||||||||||||||||||||||
Headcount |
30,989 | 37,057 | 25,780 | 25,543 | 25,691 | (16 | ) | 21 | 30,989 | 25,691 | 21 | |||||||||||||||||||||||||||||
CREDIT
DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs (recoveries) |
$ | 13 | $ | (8 | ) | $ | 13 | $ | (9 | ) | $ | 67 | NM | (81 | ) | $ | 18 | $ | 45 | (60 | ) | |||||||||||||||||||
Nonperforming assets: |
||||||||||||||||||||||||||||||||||||||||
Nonperforming loans (c) |
436 | 313 | 321 | 353 | 265 | 39 | 65 | 436 | 265 | 65 | ||||||||||||||||||||||||||||||
Other nonperforming assets |
147 | 177 | 118 | 100 | 60 | (17 | ) | 145 | 147 | 60 | 145 | |||||||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
2,654 | 2,429 | 1,891 | 1,329 | 1,112 | 9 | 139 | 2,654 | 1,112 | 139 | ||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
463 | 469 | 607 | 560 | 568 | (1 | ) | (18 | ) | 463 | 568 | (18 | ) | |||||||||||||||||||||||||||
Total allowance for credit losses |
3,117 | 2,898 | 2,498 | 1,889 | 1,680 | 8 | 86 | 3,117 | 1,680 | 86 | ||||||||||||||||||||||||||||||
Net charge-off (recovery) rate (a) (d) |
0.07 | % | (0.04 | )% | 0.07 | % | (0.05 | )% | 0.43 | % | 0.03 | % | 0.10 | % | ||||||||||||||||||||||||||
Allowance for loan losses to average loans (a) (d) |
3.85 | 3.19 | (e) | 2.55 | (e) | 1.93 | 1.80 | 3.63 | (e) | 1.85 | ||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans (c) |
657 | 843 | 683 | 439 | 585 | 657 | 585 | |||||||||||||||||||||||||||||||||
Nonperforming loans to average loans |
0.50 | 0.32 | 0.34 | 0.38 | 0.33 | 0.47 | 0.35 |
(a) | Loans retained included credit portfolio loans, leveraged leases and other accrual loans, and excluded loans at fair value. | |
(b) | Adjusted assets, a non-GAAP financial measure, equals total assets minus (1) securities purchased under resale agreements and securities borrowed less securities sold, not yet purchased; (2) assets of variable interest entities (VIEs) consolidated under FIN 46R; (3) cash and securities segregated and on deposit for regulatory and other purposes; and (4) goodwill and intangibles. The amount of adjusted assets is presented to assist the reader in comparing the Investment Banks (IB) asset and capital levels to other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a companys capital adequacy. The IB believes an adjusted asset amount that excludes the assets discussed above, which are considered to have a low risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry. | |
(c) | Nonperforming loans included loans held-for-sale and loans at fair value of $32 million, $25 million, $44 million, $50 million, and $75 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, which were excluded from the allowance coverage ratios. Nonperforming loans excluded distressed loans held-for-sale that were purchased as part of IBs proprietary activities. | |
(d) | Loans held-for-sale & loans at fair value were excluded when calculating the allowance coverage ratio and net charge-off (recovery) rate. | |
(e) | Excluding the impact of a loan originated in March 2008 to Bear Stearns, the adjusted ratio would be 3.46%, 2.61%, and 3.76% for the quarters ended June 30, 2008, and March 31, 2008, and year-to-date 2008, respectively. The average balance of the loan extended to Bear Stearns was $6.0 billion, $1.7 billion, and $2.6 billion for the quarters ended June 30, 2008, and March 31, 2008, and year-to-date 2008, respectively. |
Page 9
JPMORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio and rankings data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
MARKET RISK AVERAGE TRADING AND
CREDIT PORTFOLIO VAR (a) |
||||||||||||||||||||||||||||||||||||||||
Trading activities: |
||||||||||||||||||||||||||||||||||||||||
Fixed income |
$ | 183 | $ | 155 | $ | 120 | $ | 103 | $ | 98 | 18 | % | 87 | % | $ | 150 | $ | 72 | 108 | % | ||||||||||||||||||||
Foreign exchange |
20 | 26 | 35 | 31 | 23 | (23 | ) | (13 | ) | 27 | 21 | 29 | ||||||||||||||||||||||||||||
Equities |
80 | 30 | 31 | 63 | 35 | 167 | 129 | 47 | 43 | 9 | ||||||||||||||||||||||||||||||
Commodities and other |
41 | 31 | 28 | 29 | 28 | 32 | 46 | 33 | 34 | (3 | ) | |||||||||||||||||||||||||||||
Diversification (b) |
(104 | ) | (92 | ) | (92 | ) | (102 | ) | (72 | ) | (13 | ) | (44 | ) | (95 | ) | (68 | ) | (40 | ) | ||||||||||||||||||||
Total trading VAR (c) |
220 | 150 | 122 | 124 | 112 | 47 | 96 | 162 | 102 | 59 | ||||||||||||||||||||||||||||||
Credit portfolio VAR (d) |
47 | 35 | 30 | 26 | 17 | 34 | 176 | 38 | 14 | 171 | ||||||||||||||||||||||||||||||
Diversification (b) |
(49 | ) | (36 | ) | (30 | ) | (27 | ) | (22 | ) | (36 | ) | (123 | ) | (39 | ) | (16 | ) | (144 | ) | ||||||||||||||||||||
Total trading and credit portfolio VAR |
$ | 218 | $ | 149 | $ | 122 | $ | 123 | $ | 107 | 46 | 104 | $ | 161 | 100 | 61 | ||||||||||||||||||||||||
September 30, 2008 YTD | Full Year 2007 | |||||||||||||||
Market | Market | |||||||||||||||
MARKET SHARES AND RANKINGS (e) | Share | Rankings | Share | Rankings | ||||||||||||
Global debt, equity and equity-related |
10 | % | #1 | 8 | % | # 2 | ||||||||||
Global syndicated loans |
12 | % | #1 | 13 | % | # 1 | ||||||||||
Global long-term debt (f) |
9 | % | #1 | 7 | % | # 3 | ||||||||||
Global equity and equity-related (g) |
12 | % | #1 | 9 | % | # 2 | ||||||||||
Global announced M&A (h) |
24 | % | #3 | 27 | % | # 4 | ||||||||||
U.S. debt, equity and equity-related |
15 | % | #1 | 10 | % | # 2 | ||||||||||
U.S. syndicated loans |
27 | % | #1 | 24 | % | # 1 | ||||||||||
U.S. long-term debt (f) |
15 | % | #1 | 10 | % | # 2 | ||||||||||
U.S. equity and equity-related (g) |
17 | % | #1 | 11 | % | # 5 | ||||||||||
U.S. announced M&A (h) |
33 | % | #3 | 28 | % | # 3 |
(a) | Results for second quarter 2008 include one month of the combined Firms results and two months of heritage JPMorgan Chase & Co. results. All prior periods reflect heritage JPMorgan Chase & Co. results. | |
(b) | Average VARs were less than the sum of the VARs of their market risk components, which was due to risk offsets resulting from portfolio diversification. The diversification effect reflected the fact that the risks were not perfectly correlated. The risk of a portfolio of positions is usually less than the sum of the risks of the positions themselves. | |
(c) | Trading VAR includes predominantly all trading activities in IB; however, particular risk parameters of certain products are not fully captured, for example, correlation risk or the credit spread sensitivity of certain mortgage products. Trading VAR does not include VAR related to held-for-sale funded loans and unfunded commitments, nor the debit valuation adjustments (DVA) taken on derivative and structured liabilities to reflect the credit quality of the Firm. Trading VAR also does not include the MSR portfolio or VAR related to other corporate functions, such as Corporate/Private Equity. | |
(d) | Includes VAR on derivative credit valuation adjustments, hedges of the credit valuation adjustment and mark-to-market hedges of the retained loan portfolio, which are all reported in principal transactions revenue. This VAR does not include the retained loan portfolio. | |
(e) | Source: Thomson Reuters Securities data. September 30, 2008 YTD results are pro forma for the acquisition of Bear Stearns. Full year 2007 results represent heritage-JPMorgan Chase & Co. only. | |
(f) | Includes asset-backed securities, mortgage-backed securities and municipal securities. | |
(g) | Includes rights offerings; U.S. domiciled equity and equity-related transactions. | |
(h) | Source: Thomson Reuters Securities data. Global announced M&A is based upon rank value; all other rankings were based upon proceeds, with full credit to each book manager/equal if joint. Because of joint assignments, market share of all participants will add up to more than 100%. Global and U.S. announced M&A market share and ranking for 2007 include transactions withdrawn since December 31, 2007. U.S. announced M&A represents any U.S. involvement ranking. |
Page 10
JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratio and headcount data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME
STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Lending & deposit-related fees |
$ | 538 | $ | 497 | $ | 461 | $ | 496 | $ | 492 | 8 | % | 9 | % | $ | 1,496 | $ | 1,385 | 8 | % | ||||||||||||||||||||
Asset management, administration and commissions |
346 | 375 | 377 | 332 | 336 | (8 | ) | 3 | 1,098 | 943 | 16 | |||||||||||||||||||||||||||||
Securities gains (losses) |
| | | 1 | | | | | | | ||||||||||||||||||||||||||||||
Mortgage fees and related income |
437 | 696 | 525 | 888 | 229 | (37 | ) | 91 | 1,658 | 1,206 | 37 | |||||||||||||||||||||||||||||
Credit card income |
204 | 194 | 174 | 174 | 167 | 5 | 22 | 572 | 472 | 21 | ||||||||||||||||||||||||||||||
All other income |
206 | 198 | 154 | 219 | 296 | 4 | (30 | ) | 558 | 687 | (19 | ) | ||||||||||||||||||||||||||||
Noninterest revenue |
1,731 | 1,960 | 1,691 | 2,110 | 1,520 | (12 | ) | 14 | 5,382 | 4,693 | 15 | |||||||||||||||||||||||||||||
Net interest income |
3,144 | 3,055 | 3,011 | 2,705 | 2,681 | 3 | 17 | 9,210 | 7,971 | 16 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
4,875 | 5,015 | 4,702 | 4,815 | 4,201 | (3 | ) | 16 | 14,592 | 12,664 | 15 | |||||||||||||||||||||||||||||
Provision for credit losses |
1,678 | 1,332 | 2,492 | 1,051 | 680 | 26 | 147 | 5,502 | 1,559 | 253 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
1,120 | 1,184 | 1,160 | 1,113 | 1,087 | (5 | ) | 3 | 3,464 | 3,256 | 6 | |||||||||||||||||||||||||||||
Noncompensation expense |
1,552 | 1,386 | 1,310 | 1,313 | 1,265 | 12 | 23 | 4,248 | 3,753 | 13 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
100 | 100 | 100 | 114 | 117 | | (15 | ) | 300 | 351 | (15 | ) | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
2,772 | 2,670 | 2,570 | 2,540 | 2,469 | 4 | 12 | 8,012 | 7,360 | 9 | ||||||||||||||||||||||||||||||
Income (loss) before income tax expense |
425 | 1,013 | (360 | ) | 1,224 | 1,052 | (58 | ) | (60 | ) | 1,078 | 3,745 | (71 | ) | ||||||||||||||||||||||||||
Income tax expense (benefit) |
178 | 407 | (133 | ) | 472 | 413 | (56 | ) | (57 | ) | 452 | 1,462 | (69 | ) | ||||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 247 | $ | 606 | $ | (227 | ) | $ | 752 | $ | 639 | (59 | ) | (61 | ) | $ | 626 | $ | 2,283 | (73 | ) | |||||||||||||||||||
FINANCIAL
RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
6 | % | 14 | % | (5 | )% | 19 | % | 16 | % | 5 | % | 19 | % | ||||||||||||||||||||||||||
Overhead ratio |
57 | 53 | 55 | 53 | 59 | 55 | 58 | |||||||||||||||||||||||||||||||||
Overhead ratio excluding core deposit intangibles (a) |
55 | 51 | 53 | 50 | 56 | 53 | 55 | |||||||||||||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Assets |
$ | 228,982 | $ | 230,695 | $ | 227,916 | $ | 225,908 | $ | 216,754 | (1 | ) | 6 | $ | 228,982 | $ | 216,754 | 6 | ||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
187,548 | 187,595 | 184,211 | 181,016 | 172,498 | | 9 | 187,548 | 172,498 | 9 | ||||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value (b) |
9,655 | 16,282 | 18,000 | 16,541 | 18,274 | (41 | ) | (47 | ) | 9,655 | 18,274 | (47 | ) | |||||||||||||||||||||||||||
Total loans |
197,203 | 203,877 | 202,211 | 197,557 | 190,772 | (3 | ) | 3 | 197,203 | 190,772 | 3 | |||||||||||||||||||||||||||||
Deposits |
222,574 | 223,121 | 230,854 | 221,129 | 216,135 | | 3 | 222,574 | 216,135 | 3 | ||||||||||||||||||||||||||||||
Equity |
$ | 25,000 | $ | 17,000 | $ | 17,000 | $ | 16,000 | $ | 16,000 | 47 | 56 | 25,000 | 16,000 | 56 | |||||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Assets |
$ | 230,428 | $ | 232,725 | $ | 227,560 | $ | 221,557 | $ | 214,852 | (1 | ) | 7 | $ | 230,239 | $ | 216,218 | 6 | ||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
187,429 | 185,993 | 182,220 | 176,140 | 168,495 | 1 | 11 | 185,222 | 165,479 | 12 | ||||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value (b) |
16,037 | 20,492 | 17,841 | 17,538 | 19,560 | (22 | ) | (18 | ) | 18,116 | 24,289 | (25 | ) | |||||||||||||||||||||||||||
Total loans |
203,466 | 206,485 | 200,061 | 193,678 | 188,055 | (1 | ) | 8 | 203,338 | 189,768 | 7 | |||||||||||||||||||||||||||||
Deposits |
222,180 | 226,487 | 225,555 | 219,226 | 216,904 | (2 | ) | 2 | 224,731 | 217,669 | 3 | |||||||||||||||||||||||||||||
Equity |
17,000 | 17,000 | 17,000 | 16,000 | 16,000 | | 6 | 17,000 | 16,000 | 6 | ||||||||||||||||||||||||||||||
Headcount |
67,265 | 69,550 | 70,095 | 69,465 | 68,528 | (3 | ) | (2 | ) | 67,265 | 68,528 | (2 | ) |
(a) | Retail Financial Services uses the overhead ratio (excluding the amortization of core deposit intangibles (CDI)), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation results in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this method would result in an improving overhead ratio over time, all things remaining equal. This non-GAAP ratio excludes Regional Bankings core deposit intangible amortization expense related to The Bank of New York transaction and the Bank One merger of $99 million, $99 million, $99 million, $113 million, and $116 million for the quarters ending September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and $297 million and $347 million for year-to-date 2008 and 2007, respectively. | |
(b) | Loans included prime mortgage loans originated with the intent to sell, which were accounted for at fair value. These loans, classified as trading assets on the Consolidated balance sheets, totaled $8.1 billion, $14.1 billion, $13.5 billion, $12.6 billion, and $14.4 billion at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. Average loans included prime mortgage loans, classified as trading assets on the Consolidated balance sheets, of $14.5 billion, $16.9 billion, $13.4 billion, $13.5 billion, and $14.1 billion for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and $14.9 billion and $11.4 billion for the year-to-date 2008 and 2007, respectively. |
Page 11
JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
CREDIT
DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 1,196 | $ | 941 | $ | 789 | $ | 522 | $ | 350 | 27 | % | 242 | % | $ | 2,926 | $ | 805 | 263 | % | ||||||||||||||||||||
Nonperforming loans (a) (b) (c) |
4,443 | 3,515 | 2,992 | 2,399 | 1,820 | 26 | 144 | 4,443 | 1,820 | 144 | ||||||||||||||||||||||||||||||
Nonperforming assets (a) (b) (c) |
5,131 | 4,123 | 3,524 | 2,886 | 2,232 | 24 | 130 | 5,131 | 2,232 | 130 | ||||||||||||||||||||||||||||||
Allowance for loan losses |
4,957 | 4,475 | 4,208 | 2,634 | 2,105 | 11 | 135 | 4,957 | 2,105 | 135 | ||||||||||||||||||||||||||||||
Net charge-off rate (d) (e) |
2.44 | % | 1.99 | % | 1.71 | % | 1.17 | % | 0.82 | % | 2.05 | % | 0.65 | % | ||||||||||||||||||||||||||
Allowance for loan losses to ending loans (d) |
2.64 | 2.39 | 2.28 | 1.46 | 1.22 | 2.64 | 1.22 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans (d) |
117 | 134 | 147 | 113 | 117 | 117 | 117 | |||||||||||||||||||||||||||||||||
Nonperforming loans to total loans |
2.25 | 1.72 | 1.48 | 1.21 | 0.95 | 2.25 | 0.95 | |||||||||||||||||||||||||||||||||
REGIONAL
BANKING |
||||||||||||||||||||||||||||||||||||||||
Noninterest revenue |
$ | 1,049 | $ | 1,022 | $ | 878 | $ | 940 | $ | 1,013 | 3 | 4 | $ | 2,949 | $ | 2,783 | 6 | |||||||||||||||||||||||
Net interest income |
2,652 | 2,571 | 2,543 | 2,363 | 2,325 | 3 | 14 | 7,766 | 6,920 | 12 | ||||||||||||||||||||||||||||||
Total net revenue |
3,701 | 3,593 | 3,421 | 3,303 | 3,338 | 3 | 11 | 10,715 | 9,703 | 10 | ||||||||||||||||||||||||||||||
Provision for credit losses |
1,552 | 1,213 | 2,324 | 915 | 574 | 28 | 170 | 5,089 | 1,301 | 291 | ||||||||||||||||||||||||||||||
Noninterest expense |
1,773 | 1,778 | 1,794 | 1,785 | 1,760 | | 1 | 5,345 | 5,238 | 2 | ||||||||||||||||||||||||||||||
Income (loss) before income tax expense |
376 | 602 | (697 | ) | 603 | 1,004 | (38 | ) | (63 | ) | 281 | 3,164 | (91 | ) | ||||||||||||||||||||||||||
Net income (loss) |
218 | 354 | (433 | ) | 371 | 611 | (38 | ) | (64 | ) | 139 | 1,930 | (93 | ) | ||||||||||||||||||||||||||
ROE |
7 | % | 11 | % | (14 | ) | % 12 | % | 21 | % | 1 | % | 22 | % | ||||||||||||||||||||||||||
Overhead ratio |
48 | 49 | 52 | 54 | 53 | 50 | 54 | |||||||||||||||||||||||||||||||||
Overhead ratio excluding core deposit intangibles (f) |
45 | 47 | 50 | 51 | 49 | 47 | 50 |
(a) | Nonperforming loans included loans held-for-sale and loans accounted for at fair value of $207 million, $180 million, $129 million, $69 million, and $17 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. Certain of these loans are classified as trading assets on the Consolidated balance sheets. | |
(b) | Nonperforming loans and assets excluded (1) loans eligible for repurchase as well as loans repurchased from Governmental National Mortgage Association (GNMA) pools that are insured by U.S. government agencies of $1.8 billion, $1.9 billion, $1.8 billion, $1.5 billion, and $1.3 billion at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and (2) education loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $405 million, $ 371 million, $252 million, $279 million, and $241 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. These amounts for GNMA and education loans are excluded, as reimbursement is proceeding normally. | |
(c) | During the second quarter of 2008, the policy for classifying subprime mortgage and home equity loans as nonperforming was changed to conform with all other home lending products. Prior period nonperforming loans and assets have been revised to conform with this change. | |
(d) | Loans held-for-sale and loans accounted for at fair value under SFAS 159 were excluded when calculating the allowance coverage ratio and the net charge-off rate. | |
(e) | The net charge-off rate for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, and December 31, 2007, excluded $45 million, $19 million, $14 million, and $2 million, respectively, and the nine months ended September 30, 2008, excluded $78 million of charge-offs related to prime mortgage loans held by Corporate/Private Equity. | |
(f) | Regional Banking uses the overhead ratio (excluding the amortization of core deposit intangibles (CDI)), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation results in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this inclusion would result in an improving overhead ratio over time, all things remaining equal. This non-GAAP ratio excludes Regional Bankings core deposit intangible amortization expense related to The Bank of New York transaction and the Bank One merger of $99 million, $99 million, $99 million, $113 million, and $116 million for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and $297 million and $347 million for year-to-date 2008 and 2007, respectively. |
Page 12
JPMORGAN
CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
REGIONAL
BANKING (continued) |
||||||||||||||||||||||||||||||||||||||||
BUSINESS
METRICS (in billions) |
||||||||||||||||||||||||||||||||||||||||
Home equity origination volume |
$ | 2.6 | $ | 5.3 | $ | 6.7 | $ | 9.8 | $ | 11.2 | (51 | )% | (77 | )% | $ | 14.6 | $ | 38.5 | (62 | )% | ||||||||||||||||||||
End of period loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 94.6 | $ | 95.1 | $ | 95.0 | $ | 94.8 | $ | 93.0 | (1 | ) | 2 | $ | 94.6 | $ | 93.0 | 2 | ||||||||||||||||||||||
Mortgage (a) |
13.6 | 14.9 | 15.9 | 15.7 | 12.3 | (9 | ) | 11 | 13.6 | 12.3 | 11 | |||||||||||||||||||||||||||||
Business banking |
16.5 | 16.4 | 15.8 | 15.4 | 14.9 | 1 | 11 | 16.5 | 14.9 | 11 | ||||||||||||||||||||||||||||||
Education |
15.3 | 13.0 | 12.4 | 11.0 | 10.2 | 18 | 50 | 15.3 | 10.2 | 50 | ||||||||||||||||||||||||||||||
Other loans (b) |
1.0 | 1.1 | 1.1 | 2.3 | 2.4 | (9 | ) | (58 | ) | 1.0 | 2.4 | (58 | ) | |||||||||||||||||||||||||||
Total end of period loans |
141.0 | 140.5 | 140.2 | 139.2 | 132.8 | | 6 | 141.0 | 132.8 | 6 | ||||||||||||||||||||||||||||||
End of period deposits: |
||||||||||||||||||||||||||||||||||||||||
Checking |
$ | 69.0 | $ | 69.1 | $ | 69.1 | $ | 67.0 | $ | 64.5 | | 7 | $ | 69.0 | $ | 64.5 | 7 | |||||||||||||||||||||||
Savings |
105.0 | 105.8 | 105.4 | 96.0 | 95.7 | (1 | ) | 10 | 105.0 | 95.7 | 10 | |||||||||||||||||||||||||||||
Time and other |
37.5 | 37.0 | 44.6 | 48.7 | 46.5 | 1 | (19 | ) | 37.5 | 46.5 | (19 | ) | ||||||||||||||||||||||||||||
Total end of period deposits |
211.5 | 211.9 | 219.1 | 211.7 | 206.7 | | 2 | 211.5 | 206.7 | 2 | ||||||||||||||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 94.8 | $ | 95.1 | $ | 95.0 | $ | 94.0 | $ | 91.8 | | 3 | $ | 95.0 | $ | 89.1 | 7 | |||||||||||||||||||||||
Mortgage loans (a) |
14.3 | 15.6 | 15.8 | 13.7 | 9.9 | (8 | ) | 44 | 15.2 | 9.2 | 65 | |||||||||||||||||||||||||||||
Business banking |
16.4 | 16.1 | 15.6 | 15.1 | 14.8 | 2 | 11 | 16.1 | 14.5 | 11 | ||||||||||||||||||||||||||||||
Education (c) |
14.1 | 12.7 | 12.0 | 10.6 | 9.8 | 11 | 44 | 12.9 | 10.4 | 24 | ||||||||||||||||||||||||||||||
Other loans (b) |
1.0 | 1.1 | 1.5 | 2.3 | 2.4 | (9 | ) | (58 | ) | 1.2 | 2.6 | (54 | ) | |||||||||||||||||||||||||||
Total average loans (c) |
140.6 | 140.6 | 139.9 | 135.7 | 128.7 | | 9 | 140.4 | 125.8 | 12 | ||||||||||||||||||||||||||||||
Average deposits: |
||||||||||||||||||||||||||||||||||||||||
Checking |
$ | 68.0 | $ | 68.5 | $ | 66.3 | $ | 64.5 | $ | 64.9 | (1 | ) | 5 | $ | 63.4 | $ | 66.5 | (5 | ) | |||||||||||||||||||||
Savings |
105.5 | 105.8 | 100.3 | 96.3 | 97.1 | | 9 | 103.9 | 97.4 | 7 | ||||||||||||||||||||||||||||||
Time and other |
36.7 | 39.6 | 47.7 | 47.7 | 43.3 | (7 | ) | (15 | ) | 45.5 | 42.5 | 7 | ||||||||||||||||||||||||||||
Total average deposits |
210.2 | 213.9 | 214.3 | 208.5 | 205.3 | (2 | ) | 2 | 212.8 | 206.4 | 3 | |||||||||||||||||||||||||||||
Average assets |
148.7 | 149.3 | 149.9 | 147.1 | 140.6 | | 6 | 149.3 | 138.1 | 8 | ||||||||||||||||||||||||||||||
Average equity |
12.4 | 12.4 | 12.4 | 11.8 | 11.8 | | 5 | 12.4 | 11.8 | 5 | ||||||||||||||||||||||||||||||
CREDIT
DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
30+ day delinquency rate (d) (e) |
4.18 | % | 3.61 | % | 3.23 | % | 3.03 | % | 2.39 | % | 4.18 | % | 2.39 | % | ||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 663 | $ | 511 | $ | 447 | $ | 248 | $ | 150 | 30 | 342 | $ | 1,621 | $ | 316 | 413 | |||||||||||||||||||||||
Mortgage |
318 | 211 | 163 | 73 | 40 | 51 | NM | 692 | 86 | NM | ||||||||||||||||||||||||||||||
Business banking |
55 | 51 | 40 | 38 | 33 | 8 | 67 | 146 | 88 | 66 | ||||||||||||||||||||||||||||||
Other loans |
34 | 48 | 21 | 28 | 23 | (29 | ) | 48 | 103 | 88 | 17 | |||||||||||||||||||||||||||||
Total net charge-offs |
1,070 | 821 | 671 | 387 | 246 | 30 | 335 | 2,562 | 578 | 343 | ||||||||||||||||||||||||||||||
Net charge-off rate |
||||||||||||||||||||||||||||||||||||||||
Home equity |
2.78 | % | 2.16 | % | 1.89 | % | 1.05 | % | 0.65 | % | 2.28 | % | 0.47 | % | ||||||||||||||||||||||||||
Mortgage (f) |
7.59 | 4.95 | 3.79 | 2.06 | 1.60 | 5.40 | 1.25 | |||||||||||||||||||||||||||||||||
Business banking |
1.33 | 1.27 | 1.03 | 1.00 | 0.88 | 1.21 | 0.81 | |||||||||||||||||||||||||||||||||
Other loans |
0.97 | 1.80 | 0.89 | 1.21 | 1.01 | 1.21 | 1.28 | |||||||||||||||||||||||||||||||||
Total net charge-off rate (c) (f) |
2.92 | 2.35 | 1.94 | 1.16 | 0.78 | 2.41 | 0.63 | |||||||||||||||||||||||||||||||||
Nonperforming assets (g) (h) |
$ | 4,310 | $ | 3,506 | $ | 3,047 | $ | 2,574 | $ | 2,034 | 23 | 112 | $ | 4,310 | $ | 2,034 | 112 |
(a) | Balance reported predominantly reflected subprime mortgage loans owned. | |
(b) | Included commercial loans derived from community development activities prior to March 31, 2008. | |
(c) | Average loans included loans held-for-sale of $1.2 billion, $3.1 billion, $4.0 billion, $3.7 billion, and $3.2 billion for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and $2.8 billion and $3.8 billion for year-to-date 2008 and 2007, respectively. These amounts were excluded when calculating the net charge-off rate. | |
(d) | Excluded loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by U.S. government agencies of $2.0 billion, $1.5 billion, $1.5 billion, $1.2 billion, and $979 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(e) | Excluded loans that are 30 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $787 million, $594 million, $534 million, $663 million, and $590 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(f) | The net charge-off rate for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, and December 31, 2007, excluded $45 million, $19 million, $14 million, and $2 million, respectively, and the nine months ended September 30, 2008, excluded $78 million of charge-offs related to prime mortgage loans held by Corporate/Private Equity. | |
(g) | Nonperforming assets excluded (1) loans eligible for repurchase as well as loans repurchased from Governmental National Mortgage Association (GNMA) pools that are insured by U.S. government agencies of $1.8 billion, $1.9 billion, $1.8 billion, $1.5 billion, and $1.3 billion at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and (2) education loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $405 million, $371 million, $252 million, $279 million, and $241 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. These amounts for GNMA and education loans are excluded, as reimbursement is proceeding normally. | |
(h) | During the second quarter of 2008, the policy for classifying subprime mortgage and home equity loans as nonperforming was changed to conform with all other home lending products. Prior period nonperforming assets have been revised to conform with this change. |
Page 13
JPMORGAN
CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
REGIONAL
BANKING (continued) |
||||||||||||||||||||||||||||||||||||||||
RETAIL
BRANCH BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Investment sales volume |
$ | 4,389 | $ | 5,211 | $ | 4,084 | $ | 4,114 | $ | 4,346 | (16 | )% | 1 | % | $ | 13,684 | $ | 14,246 | (4 | )% | ||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||
Branches |
3,179 | 3,157 | 3,146 | 3,152 | 3,096 | 1 | 3 | 3,179 | 3,096 | 3 | ||||||||||||||||||||||||||||||
ATMs |
9,308 | 9,310 | 9,237 | 9,186 | 8,943 | | 4 | 9,308 | 8,943 | 4 | ||||||||||||||||||||||||||||||
Personal bankers |
10,201 | 9,995 | 9,826 | 9,650 | 9,503 | 2 | 7 | 10,201 | 9,503 | 7 | ||||||||||||||||||||||||||||||
Sales specialists |
3,959 | 4,116 | 4,133 | 4,105 | 4,025 | (4 | ) | (2 | ) | 3,959 | 4,025 | (2 | ) | |||||||||||||||||||||||||||
Active online customers (in thousands) |
7,315 | 7,180 | 6,454 | 5,918 | 5,706 | 2 | 28 | 7,315 | 5,706 | 28 | ||||||||||||||||||||||||||||||
Checking accounts (in thousands) |
11,672 | 11,336 | 11,068 | 10,839 | 10,644 | 3 | 10 | 11,672 | 10,644 | 10 | ||||||||||||||||||||||||||||||
MORTGAGE
BANKING |
||||||||||||||||||||||||||||||||||||||||
Production revenue |
$ | 254 | $ | 597 | $ | 576 | $ | 321 | $ | 176 | (57 | ) | 44 | $ | 1,427 | $ | 1,039 | 37 | ||||||||||||||||||||||
Net mortgage servicing revenue: |
||||||||||||||||||||||||||||||||||||||||
Loan servicing revenue |
695 | 678 | 634 | 665 | 629 | 3 | 10 | 2,007 | 1,845 | 9 | ||||||||||||||||||||||||||||||
Changes in MSR asset fair value: |
||||||||||||||||||||||||||||||||||||||||
Due to inputs or assumptions in model |
(786 | ) | 1,519 | (632 | ) | (766 | ) | (810 | ) | NM | 3 | 101 | 250 | (60 | ) | |||||||||||||||||||||||||
Other changes in fair value |
(390 | ) | (394 | ) | (425 | ) | (393 | ) | (377 | ) | 1 | (3 | ) | (1,209 | ) | (1,138 | ) | (6 | ) | |||||||||||||||||||||
Total changes in MSR asset fair value |
(1,176 | ) | 1,125 | (1,057 | ) | (1,159 | ) | (1,187 | ) | NM | 1 | (1,108 | ) | (888 | ) | (25 | ) | |||||||||||||||||||||||
Derivative valuation adjustments and other |
893 | (1,478 | ) | 598 | 1,232 | 788 | NM | 13 | 13 | (353 | ) | NM | ||||||||||||||||||||||||||||
Total net mortgage servicing revenue |
412 | 325 | 175 | 738 | 230 | 27 | 79 | 912 | 604 | 51 | ||||||||||||||||||||||||||||||
Total net revenue |
666 | 922 | 751 | 1,059 | 406 | (28 | ) | 64 | 2,339 | 1,643 | 42 | |||||||||||||||||||||||||||||
Noninterest expense |
747 | 649 | 536 | 518 | 485 | 15 | 54 | 1,932 | 1,469 | 32 | ||||||||||||||||||||||||||||||
Income (loss) before income tax expense |
(81 | ) | 273 | 215 | 541 | (79 | ) | NM | (3 | ) | 407 | 174 | 134 | |||||||||||||||||||||||||||
Net income (loss) |
(50 | ) | 169 | 132 | 332 | (48 | ) | NM | (4 | ) | 251 | 107 | 135 | |||||||||||||||||||||||||||
ROE |
(8 | )% | 28 | % | 22 | % | 66 | (10 | )% | 14 | % | 7 | % | |||||||||||||||||||||||||||
Business metrics (in billions) |
||||||||||||||||||||||||||||||||||||||||
Third-party mortgage loans serviced (ending) |
$ | 681.8 | $ | 659.1 | $ | 627.1 | $ | 614.7 | $ | 600.0 | 3 | 14 | $ | 681.8 | $ | 600.0 | 14 | |||||||||||||||||||||||
MSR net carrying value (ending) |
10.6 | 10.9 | 8.4 | 8.6 | 9.1 | (3 | ) | 16 | 10.6 | 9.1 | 16 | |||||||||||||||||||||||||||||
Avg mortgage loans held-for-sale & loans at fair value (a) |
14.9 | 17.4 | 13.8 | 13.8 | 16.4 | (14 | ) | (9 | ) | 15.4 | 20.4 | (25 | ) | |||||||||||||||||||||||||||
Average assets |
35.4 | 36.2 | 32.2 | 30.6 | 31.4 | (2 | ) | 13 | 34.6 | 35.0 | (1 | ) | ||||||||||||||||||||||||||||
Average equity |
2.4 | 2.4 | 2.4 | 2.0 | 2.0 | | 20 | 2.4 | 2.0 | 20 | ||||||||||||||||||||||||||||||
Mortgage origination volume by channel (in billions) |
||||||||||||||||||||||||||||||||||||||||
Retail |
$ | 8.4 | $ | 12.5 | $ | 12.6 | $ | 9.9 | $ | 11.1 | (33 | ) | (24 | ) | $ | 33.5 | $ | 35.6 | (6 | ) | ||||||||||||||||||||
Wholesale |
5.9 | 9.1 | 10.6 | 10.2 | 9.8 | (35 | ) | (40 | ) | 25.6 | 32.5 | (21 | ) | |||||||||||||||||||||||||||
Correspondent |
13.2 | 17.0 | 12.0 | 9.5 | 7.2 | (22 | ) | 83 | 42.2 | 18.4 | 129 | |||||||||||||||||||||||||||||
CNT (negotiated transactions) |
10.2 | 17.5 | 11.9 | 10.4 | 11.1 | (42 | ) | (8 | ) | 39.6 | 32.9 | 20 | ||||||||||||||||||||||||||||
Total |
37.7 | 56.1 | 47.1 | 40.0 | 39.2 | (33 | ) | (4 | ) | 140.9 | 119.4 | 18 |
(a) | Included $14.5 billion, $16.9 billion, $13.4 billion, $13.5 billion, and $14.1 billion of prime mortgage loans at fair value for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and $14.9 billion and $11.4 billion for year-to-date 2008 and 2007, respectively. These loans are classified as trading assets on the Consolidated balance sheets. |
Page 14
JPMORGAN
CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
AUTO FINANCE |
||||||||||||||||||||||||||||||||||||||||
Noninterest revenue |
$ | 157 | $ | 155 | $ | 151 | $ | 142 | $ | 140 | 1 | % | 12 | % | $ | 463 | $ | 409 | 13 | % | ||||||||||||||||||||
Net interest income |
349 | 343 | 379 | 308 | 307 | 2 | 14 | 1,071 | 898 | 19 | ||||||||||||||||||||||||||||||
Total net revenue |
506 | 498 | 530 | 450 | 447 | 2 | 13 | 1,534 | 1,307 | 17 | ||||||||||||||||||||||||||||||
Provision for credit losses |
124 | 117 | 168 | 133 | 96 | 6 | 29 | 409 | 247 | 66 | ||||||||||||||||||||||||||||||
Noninterest expense |
252 | 243 | 240 | 237 | 224 | 4 | 13 | 735 | 653 | 13 | ||||||||||||||||||||||||||||||
Income before income tax expense |
130 | 138 | 122 | 80 | 127 | (6 | ) | 2 | 390 | 407 | (4 | ) | ||||||||||||||||||||||||||||
Net income |
79 | 83 | 74 | 49 | 76 | (5 | ) | 4 | 236 | 246 | (4 | ) | ||||||||||||||||||||||||||||
ROE |
14 | % | 15 | % | 13 | % | 9 | % | 14 | % | 14 | % | 15 | % | ||||||||||||||||||||||||||
ROA |
0.68 | 0.71 | 0.65 | 0.44 | 0.70 | 0.68 | 0.76 | |||||||||||||||||||||||||||||||||
Business metrics (in billions) |
||||||||||||||||||||||||||||||||||||||||
Auto origination volume |
$ | 3.8 | $ | 5.6 | $ | 7.2 | $ | 5.6 | $ | 5.2 | (32 | ) | (27 | ) | $ | 16.6 | $ | 15.7 | 6 | |||||||||||||||||||||
End-of-period loans and lease related assets |
||||||||||||||||||||||||||||||||||||||||
Loans outstanding |
$ | 43.2 | $ | 44.7 | $ | 44.4 | $ | 42.0 | $ | 40.3 | (3 | ) | 7 | $ | 43.2 | $ | 40.3 | 7 | ||||||||||||||||||||||
Lease financing receivables |
0.1 | 0.2 | 0.3 | 0.3 | 0.6 | (50 | ) | (83 | ) | 0.1 | 0.6 | (83 | ) | |||||||||||||||||||||||||||
Operating lease assets |
2.2 | 2.1 | 2.0 | 1.9 | 1.8 | 5 | 22 | 2.2 | 1.8 | 22 | ||||||||||||||||||||||||||||||
Total end-of-period loans and
lease related assets |
45.5 | 47.0 | 46.7 | 44.2 | 42.7 | (3 | ) | 7 | 45.5 | 42.7 | 7 | |||||||||||||||||||||||||||||
Average loans and lease related assets |
||||||||||||||||||||||||||||||||||||||||
Loans outstanding |
$ | 43.8 | $ | 44.7 | $ | 42.9 | $ | 41.1 | $ | 39.9 | (2 | ) | 10 | $ | 43.8 | $ | 39.8 | 10 | ||||||||||||||||||||||
Lease financing receivables |
0.1 | 0.2 | 0.3 | 0.5 | 0.7 | (50 | ) | (86 | ) | 0.2 | 1.1 | (82 | ) | |||||||||||||||||||||||||||
Operating lease assets |
2.2 | 2.1 | 1.9 | 1.9 | 1.8 | 5 | 22 | 2.1 | 1.7 | 24 | ||||||||||||||||||||||||||||||
Total average loans and lease related assets |
46.1 | 47.0 | 45.1 | 43.5 | 42.4 | (2 | ) | 9 | 46.1 | 42.6 | 8 | |||||||||||||||||||||||||||||
Average assets |
46.4 | 47.3 | 45.5 | 43.8 | 42.9 | (2 | ) | 8 | 46.4 | 43.1 | 8 | |||||||||||||||||||||||||||||
Average equity |
2.3 | 2.3 | 2.3 | 2.2 | 2.2 | | 5 | 2.3 | 2.2 | 5 | ||||||||||||||||||||||||||||||
Credit quality statistics |
||||||||||||||||||||||||||||||||||||||||
30+ day delinquency rate |
1.82 | % | 1.57 | % | 1.44 | % | 1.85 | % | 1.65 | % | 1.82 | % | 1.65 | % | ||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||||||||||||||
Loans |
$ | 123 | $ | 118 | $ | 117 | $ | 132 | $ | 98 | 4 | 26 | $ | 358 | $ | 218 | 64 | |||||||||||||||||||||||
Lease receivables |
1 | 1 | 1 | 1 | 1 | | | 3 | 3 | | ||||||||||||||||||||||||||||||
Total net charge-offs |
124 | 119 | 118 | 133 | 99 | 4 | 25 | 361 | 221 | 63 | ||||||||||||||||||||||||||||||
Net charge-off rate |
||||||||||||||||||||||||||||||||||||||||
Loans |
1.12 | % | 1.06 | % | 1.10 | % | 1.27 | % | 0.97 | % | 1.09 | % | 0.73 | % | ||||||||||||||||||||||||||
Lease receivables |
3.98 | 2.01 | 1.34 | 0.79 | 0.57 | 2.00 | 0.36 | |||||||||||||||||||||||||||||||||
Total net charge-off rate |
1.12 | 1.07 | 1.10 | 1.27 | 0.97 | 1.10 | 0.72 | |||||||||||||||||||||||||||||||||
Nonperforming assets |
$ | 239 | $ | 164 | $ | 160 | $ | 188 | $ | 156 | 46 | 53 | $ | 239 | $ | 156 | 53 |
Page 15
JPMORGAN
CHASE & CO. CARD SERVICES - MANAGED BASIS FINANCIAL HIGHLIGHTS (in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME
STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Credit card income |
$ | 633 | $ | 673 | $ | 600 | $ | 712 | $ | 692 | (6 | )% | (9 | )% | $ | 1,906 | $ | 1,973 | (3 | )% | ||||||||||||||||||||
All other income |
13 | 91 | 119 | 122 | 67 | (86 | ) | (81 | ) | 223 | 239 | (7 | ) | |||||||||||||||||||||||||||
Noninterest revenue |
646 | 764 | 719 | 834 | 759 | (15 | ) | (15 | ) | 2,129 | 2,212 | (4 | ) | |||||||||||||||||||||||||||
Net interest income |
3,241 | 3,011 | 3,185 | 3,137 | 3,108 | 8 | 4 | 9,437 | 9,052 | 4 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
3,887 | 3,775 | 3,904 | 3,971 | 3,867 | 3 | 1 | 11,566 | 11,264 | 3 | ||||||||||||||||||||||||||||||
Provision for credit losses |
2,229 | 2,194 | 1,670 | 1,788 | 1,363 | 2 | 64 | 6,093 | 3,923 | 55 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
267 | 258 | 267 | 260 | 256 | 3 | 4 | 792 | 761 | 4 | ||||||||||||||||||||||||||||||
Noncompensation expense |
773 | 763 | 841 | 790 | 827 | 1 | (7 | ) | 2,377 | 2,383 | | |||||||||||||||||||||||||||||
Amortization of intangibles |
154 | 164 | 164 | 173 | 179 | (6 | ) | (14 | ) | 482 | 547 | (12 | ) | |||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,194 | 1,185 | 1,272 | 1,223 | 1,262 | 1 | (5 | ) | 3,651 | 3,691 | (1 | ) | ||||||||||||||||||||||||||||
Income before income tax expense |
464 | 396 | 962 | 960 | 1,242 | 17 | (63 | ) | 1,822 | 3,650 | (50 | ) | ||||||||||||||||||||||||||||
Income tax expense |
172 | 146 | 353 | 351 | 456 | 18 | (62 | ) | 671 | 1,340 | (50 | ) | ||||||||||||||||||||||||||||
NET INCOME |
$ | 292 | $ | 250 | $ | 609 | $ | 609 | $ | 786 | 17 | (63 | ) | $ | 1,151 | $ | 2,310 | (50 | ) | |||||||||||||||||||||
Memo: Net securitization gains (amortization) |
$ | (28 | ) | $ | 36 | $ | 70 | $ | 28 | $ | | NM | NM | $ | 78 | $ | 39 | 100 | ||||||||||||||||||||||
FINANCIAL
METRICS |
||||||||||||||||||||||||||||||||||||||||
ROE |
8 | % | 7 | % | 17 | % | 17 | % | 22 | % | 11 | % | 22 | % | ||||||||||||||||||||||||||
Overhead ratio |
31 | 31 | 33 | 31 | 33 | 32 | 33 | |||||||||||||||||||||||||||||||||
% of average managed outstandings: |
||||||||||||||||||||||||||||||||||||||||
Net interest income |
8.18 | 7.92 | 8.34 | 8.20 | 8.29 | 8.15 | 8.15 | |||||||||||||||||||||||||||||||||
Provision for credit losses |
5.63 | 5.77 | 4.37 | 4.67 | 3.64 | 5.26 | 3.53 | |||||||||||||||||||||||||||||||||
Noninterest revenue |
1.63 | 2.01 | 1.88 | 2.18 | 2.03 | 1.84 | 1.99 | |||||||||||||||||||||||||||||||||
Risk adjusted margin (a) |
4.19 | 4.16 | 5.85 | 5.71 | 6.68 | 4.73 | 6.61 | |||||||||||||||||||||||||||||||||
Noninterest expense |
3.01 | 3.12 | 3.33 | 3.20 | 3.37 | 3.15 | 3.32 | |||||||||||||||||||||||||||||||||
Pretax income (ROO) (b) |
1.17 | 1.04 | 2.52 | 2.51 | 3.31 | 1.57 | 3.29 | |||||||||||||||||||||||||||||||||
Net income |
0.74 | 0.66 | 1.60 | 1.59 | 2.10 | 0.99 | 2.08 | |||||||||||||||||||||||||||||||||
BUSINESS
METRICS |
||||||||||||||||||||||||||||||||||||||||
Charge volume (in billions) |
$ | 93.9 | $ | 93.6 | $ | 85.4 | $ | 95.5 | $ | 89.8 | | 5 | $ | 272.9 | $ | 259.1 | 5 | |||||||||||||||||||||||
Net accounts opened (in millions) |
3.6 | 3.6 | 3.4 | 5.3 | 4.0 | | (10 | ) | 10.6 | 11.1 | (5 | ) | ||||||||||||||||||||||||||||
Credit cards issued (in millions) |
156.9 | 157.6 | 156.4 | 155.0 | 153.6 | | 2 | 156.9 | 153.6 | 2 | ||||||||||||||||||||||||||||||
Number of registered internet customers (in millions) |
27.5 | 28.0 | 26.7 | 28.3 | 26.4 | (2 | ) | 4 | 27.5 | 26.4 | 4 | |||||||||||||||||||||||||||||
Merchant acquiring business (c) |
||||||||||||||||||||||||||||||||||||||||
Bank card volume (in billions) |
$ | 197.1 | $ | 199.3 | $ | 182.4 | $ | 194.4 | $ | 181.4 | (1 | ) | 9 | $ | 578.8 | $ | 524.7 | 10 | ||||||||||||||||||||||
Total transactions (in billions) |
5.7 | 5.6 | 5.2 | 5.4 | 5.0 | 2 | 14 | 16.5 | 14.3 | 15 |
(a) | Represents total net revenue less provision for credit losses. | |
(b) | Pretax return on average managed outstandings. | |
(c) | Represents 100% of the merchant acquiring business. |
Page 16
JPMORGAN
CHASE & CO. CARD SERVICES - MANAGED BASIS FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except headcount and ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SELECTED
ENDING BALANCES |
||||||||||||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans on balance sheets |
$ | 77,565 | $ | 76,278 | $ | 75,888 | $ | 84,352 | $ | 79,409 | 2 | % | (2 | )% | $ | 77,565 | $ | 79,409 | (2 | )% | ||||||||||||||||||||
Securitized loans |
81,745 | 79,120 | 75,062 | 72,701 | 69,643 | 3 | 17 | 81,745 | 69,643 | 17 | ||||||||||||||||||||||||||||||
Managed loans |
$ | 159,310 | $ | 155,398 | $ | 150,950 | $ | 157,053 | $ | 149,052 | 3 | 7 | $ | 159,310 | $ | 149,052 | 7 | |||||||||||||||||||||||
Equity |
$ | 15,000 | $ | 14,100 | $ | 14,100 | $ | 14,100 | $ | 14,100 | 6 | 6 | $ | 15,000 | $ | 14,100 | 6 | |||||||||||||||||||||||
SELECTED
AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||
Managed assets |
$ | 169,413 | $ | 161,601 | $ | 159,602 | $ | 158,183 | $ | 154,956 | 5 | 9 | $ | 163,560 | $ | 155,206 | 5 | |||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans on balance sheets |
$ | 79,183 | $ | 75,630 | $ | 79,445 | $ | 79,028 | $ | 79,993 | 5 | (1 | ) | $ | 78,090 | $ | 80,301 | (3 | ) | |||||||||||||||||||||
Securitized loans |
78,371 | 77,195 | 74,108 | 72,715 | 68,673 | 2 | 14 | 76,564 | 68,200 | 12 | ||||||||||||||||||||||||||||||
Managed average loans |
$ | 157,554 | $ | 152,825 | $ | 153,553 | $ | 151,743 | $ | 148,666 | 3 | 6 | $ | 154,654 | $ | 148,501 | 4 | |||||||||||||||||||||||
Equity |
$ | 14,100 | $ | 14,100 | $ | 14,100 | $ | 14,100 | $ | 14,100 | | | $ | 14,100 | $ | 14,100 | | |||||||||||||||||||||||
Headcount |
19,722 | 19,570 | 18,931 | 18,554 | 18,887 | 1 | 4 | 19,722 | 18,887 | 4 | ||||||||||||||||||||||||||||||
MANAGED
CREDIT QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 1,979 | $ | 1,894 | $ | 1,670 | $ | 1,488 | $ | 1,363 | 4 | 45 | $ | 5,543 | $ | 4,008 | 38 | |||||||||||||||||||||||
Net charge-off rate |
5.00 | % | 4.98 | % | 4.37 | % | 3.89 | % | 3.64 | % | 4.79 | % | 3.61 | % | ||||||||||||||||||||||||||
Managed delinquency ratios |
||||||||||||||||||||||||||||||||||||||||
30+ days |
3.69 | % | 3.46 | % | 3.66 | % | 3.48 | % | 3.25 | % | 3.69 | % | 3.25 | % | ||||||||||||||||||||||||||
90+ days |
1.74 | 1.76 | 1.84 | 1.65 | 1.50 | 1.74 | 1.50 | |||||||||||||||||||||||||||||||||
Allowance for loan losses (a) |
$ | 3,951 | $ | 3,705 | $ | 3,404 | $ | 3,407 | $ | 3,107 | 7 | 27 | $ | 3,951 | $ | 3,107 | 27 | |||||||||||||||||||||||
Allowance for loan losses to
period-end loans (a) |
5.09 | % | 4.86 | % | 4.49 | % | 4.04 | % | 3.91 | % | 5.09 | % | 3.91 | % |
(a) | Loans on a reported basis. |
Page 17
JPMORGAN CHASE & CO. CARD RECONCILIATION OF REPORTED AND MANAGED DATA (in millions) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME
STATEMENT DATA (a) |
||||||||||||||||||||||||||||||||||||||||
Credit card income |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 1,476 | $ | 1,516 | $ | 1,537 | $ | 1,597 | $ | 1,528 | (3) | % | (3) | % | $ | 4,529 | $ | 4,343 | 4 | % | ||||||||||||||||||||
Securitization adjustments |
(843 | ) | (843 | ) | (937 | ) | (885 | ) | (836 | ) | | (1 | ) | (2,623 | ) | (2,370 | ) | (11 | ) | |||||||||||||||||||||
Managed credit card income |
$ | 633 | $ | 673 | $ | 600 | $ | 712 | $ | 692 | (6 | ) | (9 | ) | $ | 1,906 | $ | 1,973 | (3 | ) | ||||||||||||||||||||
Net interest income |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 1,525 | $ | 1,338 | $ | 1,567 | $ | 1,633 | $ | 1,694 | 14 | (10 | ) | $ | 4,430 | $ | 4,921 | (10 | ) | |||||||||||||||||||||
Securitization adjustments |
1,716 | 1,673 | 1,618 | 1,504 | 1,414 | 3 | 21 | 5,007 | 4,131 | 21 | ||||||||||||||||||||||||||||||
Managed net interest income |
$ | 3,241 | $ | 3,011 | $ | 3,185 | $ | 3,137 | $ | 3,108 | 8 | 4 | $ | 9,437 | $ | 9,052 | 4 | |||||||||||||||||||||||
Total net revenue |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 3,014 | $ | 2,945 | $ | 3,223 | $ | 3,352 | $ | 3,289 | 2 | (8 | ) | $ | 9,182 | $ | 9,503 | (3 | ) | |||||||||||||||||||||
Securitization adjustments |
873 | 830 | 681 | 619 | 578 | 5 | 51 | 2,384 | 1,761 | 35 | ||||||||||||||||||||||||||||||
Managed total net revenue |
$ | 3,887 | $ | 3,775 | $ | 3,904 | $ | 3,971 | $ | 3,867 | 3 | 1 | $ | 11,566 | $ | 11,264 | 3 | |||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 1,356 | $ | 1,364 | $ | 989 | $ | 1,169 | $ | 785 | (1 | ) | 73 | $ | 3,709 | $ | 2,162 | 72 | ||||||||||||||||||||||
Securitization adjustments |
873 | 830 | 681 | 619 | 578 | 5 | 51 | 2,384 | 1,761 | 35 | ||||||||||||||||||||||||||||||
Managed provision for credit losses |
$ | 2,229 | $ | 2,194 | $ | 1,670 | $ | 1,788 | $ | 1,363 | 2 | 64 | $ | 6,093 | $ | 3,923 | 55 | |||||||||||||||||||||||
BALANCE
SHEETS AVERAGE BALANCES (a) |
||||||||||||||||||||||||||||||||||||||||
Total average assets |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 93,701 | $ | 87,021 | $ | 88,013 | $ | 88,244 | $ | 88,856 | 8 | 5 | $ | 89,594 | $ | 89,491 | | |||||||||||||||||||||||
Securitization adjustments |
75,712 | 74,580 | 71,589 | 69,939 | 66,100 | 2 | 15 | 73,966 | 65,715 | 13 | ||||||||||||||||||||||||||||||
Managed average assets |
$ | 169,413 | $ | 161,601 | $ | 159,602 | $ | 158,183 | $ | 154,956 | 5 | 9 | $ | 163,560 | $ | 155,206 | 5 | |||||||||||||||||||||||
CREDIT
QUALITY STATISTICS (a) |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 1,106 | $ | 1,064 | $ | 989 | $ | 869 | $ | 785 | 4 | 41 | $ | 3,159 | $ | 2,247 | 41 | |||||||||||||||||||||||
Securitization adjustments |
873 | 830 | 681 | 619 | 578 | 5 | 51 | 2,384 | 1,761 | 35 | ||||||||||||||||||||||||||||||
Managed net charge-offs |
$ | 1,979 | $ | 1,894 | $ | 1,670 | $ | 1,488 | $ | 1,363 | 4 | 45 | $ | 5,543 | $ | 4,008 | 38 | |||||||||||||||||||||||
(a) | JPMorgan Chase & Co. uses the concept of managed receivables to evaluate the credit performance and overall performance of the underlying credit card loans, both sold and not sold; as the same borrower is continuing to use the credit card for ongoing charges, a borrowers credit performance will affect both the receivables sold under SFAS 140 and those not sold. Thus, in its disclosures regarding managed receivables, JPMorgan Chase & Co. treats the sold receivables as if they were still on the balance sheet in order to disclose the credit performance (such as net charge-off rates) of the entire managed credit card portfolio. Managed results exclude the impact of credit card securitizations on total net revenue, the provision for credit losses, net charge-offs and loan receivables. Securitization does not change reported net income versus managed earnings; however, it does affect the classification of items on the Consolidated Statements of Income and Consolidated Balance Sheets. |
Page 18
JPMORGAN CHASE & CO. COMMERCIAL BANKING FINANCIAL HIGHLIGHTS (in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME
STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Lending & deposit-related fees |
$ | 212 | $ | 207 | $ | 193 | $ | 172 | $ | 159 | 2 | % | 33 | % | $ | 612 | $ | 475 | 29 | % | ||||||||||||||||||||
Asset management, administration and commissions |
29 | 26 | 26 | 24 | 24 | 12 | 21 | 81 | 68 | 19 | ||||||||||||||||||||||||||||||
All other income (a) |
147 | 150 | 115 | 130 | 107 | (2 | ) | 37 | 412 | 394 | 5 | |||||||||||||||||||||||||||||
Noninterest revenue |
388 | 383 | 334 | 326 | 290 | 1 | 34 | 1,105 | 937 | 18 | ||||||||||||||||||||||||||||||
Net interest income |
737 | 723 | 733 | 758 | 719 | 2 | 3 | 2,193 | 2,082 | 5 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
1,125 | 1,106 | 1,067 | 1,084 | 1,009 | 2 | 11 | 3,298 | 3,019 | 9 | ||||||||||||||||||||||||||||||
Provision for credit losses |
126 | 47 | 101 | 105 | 112 | 168 | 13 | 274 | 174 | 57 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
177 | 173 | 178 | 184 | 160 | 2 | 11 | 528 | 522 | 1 | ||||||||||||||||||||||||||||||
Noncompensation expense |
298 | 290 | 294 | 307 | 300 | 3 | (1 | ) | 882 | 890 | (1 | ) | ||||||||||||||||||||||||||||
Amortization of intangibles |
11 | 13 | 13 | 13 | 13 | (15 | ) | (15 | ) | 37 | 42 | (12 | ) | |||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
486 | 476 | 485 | 504 | 473 | 2 | 3 | 1,447 | 1,454 | | ||||||||||||||||||||||||||||||
Income before income tax expense |
513 | 583 | 481 | 475 | 424 | (12 | ) | 21 | 1,577 | 1,391 | 13 | |||||||||||||||||||||||||||||
Income tax expense |
201 | 228 | 189 | 187 | 166 | (12 | ) | 21 | 618 | 545 | 13 | |||||||||||||||||||||||||||||
NET INCOME |
$ | 312 | $ | 355 | $ | 292 | $ | 288 | $ | 258 | (12 | ) | 21 | $ | 959 | $ | 846 | 13 | ||||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
Revenue by product: |
||||||||||||||||||||||||||||||||||||||||
Lending |
$ | 377 | $ | 376 | $ | 379 | $ | 380 | $ | 343 | | 10 | $ | 1,132 | $ | 1,039 | 9 | |||||||||||||||||||||||
Treasury services |
643 | 630 | 616 | 631 | 594 | 2 | 8 | 1,889 | 1,719 | 10 | ||||||||||||||||||||||||||||||
Investment banking |
87 | 91 | 68 | 70 | 64 | (4 | ) | 36 | 246 | 222 | 11 | |||||||||||||||||||||||||||||
Other |
18 | 9 | 4 | 3 | 8 | 100 | 125 | 31 | 39 | (21 | ) | |||||||||||||||||||||||||||||
Total Commercial Banking revenue |
$ | 1,125 | $ | 1,106 | $ | 1,067 | $ | 1,084 | $ | 1,009 | 2 | 11 | $ | 3,298 | $ | 3,019 | 9 | |||||||||||||||||||||||
IB revenue, gross (b) |
$ | 252 | $ | 270 | $ | 203 | $ | 227 | $ | 194 | (7 | ) | 30 | $ | 725 | $ | 661 | 10 | ||||||||||||||||||||||
Revenue by business: |
||||||||||||||||||||||||||||||||||||||||
Middle Market Banking |
$ | 729 | $ | 708 | $ | 706 | $ | 695 | $ | 680 | 3 | 7 | $ | 2,143 | $ | 1,994 | 7 | |||||||||||||||||||||||
Mid-Corporate Banking |
236 | 235 | 207 | 239 | 167 | | 41 | 678 | 576 | 18 | ||||||||||||||||||||||||||||||
Real Estate Banking |
91 | 94 | 97 | 102 | 108 | (3 | ) | (16 | ) | 282 | 319 | (12 | ) | |||||||||||||||||||||||||||
Other |
69 | 69 | 57 | 48 | 54 | | 28 | 195 | 130 | 50 | ||||||||||||||||||||||||||||||
Total Commercial Banking revenue |
$ | 1,125 | $ | 1,106 | $ | 1,067 | $ | 1,084 | $ | 1,009 | 2 | 11 | $ | 3,298 | $ | 3,019 | 9 | |||||||||||||||||||||||
FINANCIAL
RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
18 | % | 20 | % | 17 | % | 17 | % | 15 | % | 18 | % | 18 | % | ||||||||||||||||||||||||||
Overhead ratio |
43 | 43 | 45 | 46 | 47 | 44 | 48 |
(a) | IB-related and commercial card revenue is included in all other income. | |
(b) | Represents the total revenue related to investment banking products sold to Commercial Banking (CB) clients. |
Page 19
JPMORGAN CHASE & CO. COMMERCIAL BANKING FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio and headcount data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Equity |
$ | 8,000 | $ | 7,000 | $ | 7,000 | $ | 6,700 | $ | 6,700 | 14 | % | 19 | % | $ | 8,000 | $ | 6,700 | 19 | % | ||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 101,681 | $ | 103,469 | $ | 101,979 | $ | 94,550 | $ | 86,652 | (2 | ) | 17 | $ | 102,374 | $ | 84,643 | 21 | ||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
71,901 | 70,682 | 67,510 | 63,749 | 60,839 | 2 | 18 | 70,038 | 59,045 | 19 | ||||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value |
397 | 379 | 521 | 1,795 | 433 | 5 | (8 | ) | 432 | 550 | (21 | ) | ||||||||||||||||||||||||||||
Total loans (a) |
72,298 | 71,061 | 68,031 | 65,544 | 61,272 | 2 | 18 | 70,470 | 59,595 | 18 | ||||||||||||||||||||||||||||||
Liability balances (b) |
99,410 | 99,404 | 99,477 | 96,716 | 88,081 | | 13 | 99,430 | 84,697 | 17 | ||||||||||||||||||||||||||||||
Equity |
7,000 | 7,000 | 7,000 | 6,700 | 6,700 | | 4 | 7,000 | 6,435 | 9 | ||||||||||||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
Loans by business: |
||||||||||||||||||||||||||||||||||||||||
Middle Market Banking |
$ | 43,155 | $ | 42,879 | $ | 40,111 | $ | 38,275 | $ | 37,617 | 1 | 15 | $ | 42,052 | $ | 37,016 | 14 | |||||||||||||||||||||||
Mid-Corporate Banking |
16,491 | 15,357 | 15,150 | 15,440 | 12,076 | 7 | 37 | 15,669 | 11,484 | 36 | ||||||||||||||||||||||||||||||
Real Estate Banking |
7,513 | 7,500 | 7,457 | 7,347 | 7,144 | | 5 | 7,490 | 7,038 | 6 | ||||||||||||||||||||||||||||||
Other |
5,139 | 5,325 | 5,313 | 4,482 | 4,435 | (3 | ) | 16 | 5,259 | 4,057 | 30 | |||||||||||||||||||||||||||||
Total Commercial Banking loans |
$ | 72,298 | $ | 71,061 | $ | 68,031 | $ | 65,544 | $ | 61,272 | 2 | 18 | $ | 70,470 | $ | 59,595 | 18 | |||||||||||||||||||||||
Headcount |
3,965 | 4,028 | 4,075 | 4,125 | 4,158 | (2 | ) | (5 | ) | 3,965 | 4,158 | (5 | ) | |||||||||||||||||||||||||||
CREDIT
DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 40 | $ | 49 | $ | 81 | $ | 33 | $ | 20 | (18 | ) | 100 | $ | 170 | $ | 11 | NM | ||||||||||||||||||||||
Nonperforming loans (c) |
572 | 486 | 446 | 146 | 134 | 18 | 327 | 572 | 134 | 327 | ||||||||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses (d) |
1,905 | 1,843 | 1,790 | 1,695 | 1,623 | 3 | 17 | 1,905 | 1,623 | 17 | ||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
191 | 170 | 200 | 236 | 236 | 12 | (19 | ) | 191 | 236 | (19 | ) | ||||||||||||||||||||||||||||
Total allowance for credit losses |
2,096 | 2,013 | 1,990 | 1,931 | 1,859 | 4 | 13 | 2,096 | 1,859 | 13 | ||||||||||||||||||||||||||||||
Net charge-off rate (a) |
0.22 | % | 0.28 | % | 0.48 | % | 0.21 | % | 0.13 | % | 0.32 | % | 0.02 | % | ||||||||||||||||||||||||||
Allowance for loan losses to average loans (a) |
2.65 | 2.61 | 2.65 | 2.66 | 2.67 | 2.72 | 2.75 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans (c) |
333 | 401 | 426 | 1,161 | 1,211 | 333 | 1,211 | |||||||||||||||||||||||||||||||||
Nonperforming loans to average loans |
0.79 | 0.68 | 0.66 | 0.22 | 0.22 | 0.81 | 0.22 |
(a) | Loans held-for-sale and loans accounted for at fair value were excluded when calculating the allowance coverage ratio and the net charge-off rate. | |
(b) | Liability balances include deposits and deposits swept to on-balance sheet liabilities such as commercial paper, federal funds purchased and securities sold under repurchase agreements. | |
(c) | Nonperforming loans included loans held-for-sale and loans at fair value of $26 million at both June 30, 2008 and March 31, 2008. These amounts were excluded when calculating the allowance coverage ratios. There were no nonperforming loans held-for-sale or held at fair value at September 30, 2008, December 31, 2007, and September 30, 2007. | |
(d) | The allowance for loan losses at June 30, 2008, included an amount related to loans acquired in the merger with Bear Stearns. |
Page 20
JPMORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS (in millions, except headcount and ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME
STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Lending & deposit-related fees |
$ | 290 | $ | 283 | $ | 269 | $ | 247 | $ | 244 | 2 | % | 19 | % | $ | 842 | $ | 676 | 25 | % | ||||||||||||||||||||
Asset management, administration and commissions |
719 | 846 | 820 | 806 | 730 | (15 | ) | (2 | ) | 2,385 | 2,244 | 6 | ||||||||||||||||||||||||||||
All other income |
221 | 228 | 200 | 228 | 171 | (3 | ) | 29 | 649 | 480 | 35 | |||||||||||||||||||||||||||||
Noninterest revenue |
1,230 | 1,357 | 1,289 | 1,281 | 1,145 | (9 | ) | 7 | 3,876 | 3,400 | 14 | |||||||||||||||||||||||||||||
Net interest income |
723 | 662 | 624 | 649 | 603 | 9 | 20 | 2,009 | 1,615 | 24 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
1,953 | 2,019 | 1,913 | 1,930 | 1,748 | (3 | ) | 12 | 5,885 | 5,015 | 17 | |||||||||||||||||||||||||||||
Provision for credit losses |
18 | 7 | 12 | 4 | 9 | 157 | 100 | 37 | 15 | 147 | ||||||||||||||||||||||||||||||
Credit reimbursement to IB (a) |
(31 | ) | (30 | ) | (30 | ) | (30 | ) | (31 | ) | (3 | ) | | (91 | ) | (91 | ) | | ||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
664 | 669 | 641 | 607 | 579 | (1 | ) | 15 | 1,974 | 1,746 | 13 | |||||||||||||||||||||||||||||
Noncompensation expense |
661 | 632 | 571 | 598 | 538 | 5 | 23 | 1,864 | 1,563 | 19 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
14 | 16 | 16 | 17 | 17 | (13 | ) | (18 | ) | 46 | 49 | (6 | ) | |||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,339 | 1,317 | 1,228 | 1,222 | 1,134 | 2 | 18 | 3,884 | 3,358 | 16 | ||||||||||||||||||||||||||||||
Income before income tax expense |
565 | 665 | 643 | 674 | 574 | (15 | ) | (2 | ) | 1,873 | 1,551 | 21 | ||||||||||||||||||||||||||||
Income tax expense |
159 | 240 | 240 | 252 | 214 | (34 | ) | (26 | ) | 639 | 576 | 11 | ||||||||||||||||||||||||||||
NET INCOME |
$ | 406 | $ | 425 | $ | 403 | $ | 422 | $ | 360 | (4 | ) | 13 | $ | 1,234 | $ | 975 | 27 | ||||||||||||||||||||||
REVENUE
BY BUSINESS |
||||||||||||||||||||||||||||||||||||||||
Treasury Services |
$ | 897 | $ | 852 | $ | 813 | $ | 824 | $ | 780 | 5 | 15 | 2,562 | $ | 2,189 | 17 | ||||||||||||||||||||||||
Worldwide Securities Services |
1,056 | 1,167 | 1,100 | 1,106 | 968 | (10 | ) | 9 | 3,323 | 2,826 | 18 | |||||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 1,953 | $ | 2,019 | $ | 1,913 | $ | 1,930 | $ | 1,748 | (3 | ) | 12 | $ | 5,885 | $ | 5,015 | 17 | ||||||||||||||||||||||
FINANCIAL
RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
46 | % | 49 | % | 46 | % | 56 | % | 48 | % | 47 | % | 43 | % | ||||||||||||||||||||||||||
Overhead ratio |
69 | 65 | 64 | 63 | 65 | 66 | 67 | |||||||||||||||||||||||||||||||||
Pretax margin ratio (b) |
29 | 33 | 34 | 35 | 33 | 32 | 31 | |||||||||||||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Equity |
$ | 4,500 | $ | 3,500 | $ | 3,500 | $ | 3,000 | $ | 3,000 | 29 | 50 | $ | 4,500 | $ | 3,000 | 50 | |||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 49,386 | $ | 56,192 | $ | 57,204 | $ | 60,830 | $ | 55,688 | (12 | ) | (11 | ) | $ | 54,243 | $ | 50,829 | 7 | |||||||||||||||||||||
Loans (c) |
26,650 | 23,822 | 23,086 | 23,489 | 20,602 | 12 | 29 | 24,527 | 19,921 | 23 | ||||||||||||||||||||||||||||||
Liability balances (d) |
259,992 | 268,293 | 254,369 | 250,645 | 236,381 | (3 | ) | 10 | 260,882 | 221,606 | 18 | |||||||||||||||||||||||||||||
Equity |
3,500 | 3,500 | 3,500 | 3,000 | 3,000 | | 17 | 3,500 | 3,000 | 17 | ||||||||||||||||||||||||||||||
Headcount |
27,592 | 27,232 | 26,561 | 25,669 | 25,209 | 1 | 9 | 27,592 | 25,209 | 9 |
(a) | TSS is charged a credit reimbursement related to certain exposures managed within the IB credit portfolio on behalf of clients shared with TSS. | |
(b) | Pretax margin represents income before income tax expense divided by total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors. | |
(c) | Loan balances include wholesale overdrafts, commercial card and trade finance loans. | |
(d) | Liability balances include deposits and deposits swept to on-balance sheet liabilities such as commercial paper, federal funds purchased and securities sold under repurchase agreements. |
Page 21
JPMORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
TSS
FIRMWIDE DISCLOSURES |
||||||||||||||||||||||||||||||||||||||||
Treasury Services revenue reported |
$ | 897 | $ | 852 | $ | 813 | $ | 824 | $ | 780 | 5 | % | 15 | % | $ | 2,562 | $ | 2,189 | 17 | % | ||||||||||||||||||||
Treasury Services revenue reported in Commercial Banking |
643 | 630 | 616 | 631 | 594 | 2 | 8 | 1,889 | 1,719 | 10 | ||||||||||||||||||||||||||||||
Treasury Services revenue reported in other lines of business |
76 | 72 | 69 | 75 | 70 | 6 | 9 | 217 | 195 | 11 | ||||||||||||||||||||||||||||||
Treasury Services firmwide revenue (a) |
1,616 | 1,554 | 1,498 | 1,530 | 1,444 | 4 | 12 | 4,668 | 4,103 | 14 | ||||||||||||||||||||||||||||||
Worldwide Securities Services revenue |
1,056 | 1,167 | 1,100 | 1,106 | 968 | (10 | ) | 9 | 3,323 | 2,826 | 18 | |||||||||||||||||||||||||||||
Treasury & Securities Services firmwide revenue (a) |
$ | 2,672 | $ | 2,721 | $ | 2,598 | $ | 2,636 | $ | 2,412 | (2 | ) | 11 | $ | 7,991 | $ | 6,929 | 15 | ||||||||||||||||||||||
Treasury Services firmwide liability balances (average) (b) |
$ | 227,760 | $ | 230,689 | $ | 221,716 | $ | 218,416 | $ | 201,671 | (1 | ) | 13 | $ | 226,725 | $ | 192,560 | 18 | ||||||||||||||||||||||
Treasury & Securities Services firmwide liability balances (average) (b) |
359,401 | 367,670 | 353,845 | 347,361 | 324,462 | (2 | ) | 11 | 360,302 | 306,302 | 18 | |||||||||||||||||||||||||||||
TSS
FIRMWIDE FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
Treasury Services firmwide overhead ratio (c) |
52 | % | 54 | % | 55 | % | 53 | % | 54 | % | 54 | % | 57 | % | ||||||||||||||||||||||||||
Treasury & Securities Services firmwide overhead ratio (c) |
60 | 58 | 58 | 57 | 59 | 59 | 60 | |||||||||||||||||||||||||||||||||
FIRMWIDE
BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Assets under custody (in billions) |
$ | 14,417 | $ | 15,476 | $ | 15,690 | $ | 15,946 | $ | 15,614 | (7 | ) | (8 | ) | $ | 14,417 | $ | 15,614 | (8 | ) | ||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||
US$ ACH transactions originated (in millions) |
997 | 993 | 1,004 | 984 | 943 | | 6 | 2,994 | 2,886 | 4 | ||||||||||||||||||||||||||||||
Total US$ clearing volume (in thousands) |
29,277 | 29,063 | 28,056 | 28,386 | 28,031 | 1 | 4 | 86,396 | 82,650 | 5 | ||||||||||||||||||||||||||||||
International electronic funds transfer volume (in thousands) (d) |
41,831 | 41,432 | 40,039 | 42,723 | 41,415 | 1 | 1 | 123,302 | 125,882 | (2 | ) | |||||||||||||||||||||||||||||
Wholesale check volume (in millions) |
595 | 618 | 623 | 656 | 731 | (4 | ) | (19 | ) | 1,836 | 2,269 | (19 | ) | |||||||||||||||||||||||||||
Wholesale cards issued (in thousands) (e) |
21,858 | 19,917 | 19,122 | 18,722 | 18,108 | 10 | 21 | 21,858 | 18,108 | 21 |
(a) | TSS firmwide FX revenue, which includes FX revenue recorded in TSS and FX revenue associated with TSS customers who are FX customers of the IB, was $196 million, $222 million, $191 million, $157 million, and $144 million for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and $609 million and $395 million for year-to-date 2008 and 2007, respectively. This is not included in the TS and TSS firmwide revenue. | |
(b) | Firmwide liability balances include TS liability balances recorded in the Commercial Banking line of business. | |
(c) | Overhead ratios have been calculated based upon firmwide revenue and TSS and TS expense, respectively, including those allocated to certain other lines of business. FX revenue and expense recorded in the IB for TSS-related FX activity are not included in this ratio. | |
(d) | International electronic funds transfer includes non-US$ ACH and clearing volume. | |
(e) | Wholesale cards issued include domestic commercial card, stored value card, prepaid card, and government electronic benefit card products. |
Page 22
JPMORGAN CHASE & CO. ASSET MANAGEMENT FINANCIAL HIGHLIGHTS (in millions, except ratio, ranking and headcount data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME
STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Asset management, administration and commissions |
$ | 1,538 | $ | 1,573 | $ | 1,531 | $ | 1,901 | $ | 1,760 | (2 | )% | (13 | )% | $ | 4,642 | $ | 4,920 | (6 | )% | ||||||||||||||||||||
All other income |
43 | 130 | 59 | 159 | 152 | (67 | ) | (72 | ) | 232 | 495 | (53 | ) | |||||||||||||||||||||||||||
Noninterest revenue |
1,581 | 1,703 | 1,590 | 2,060 | 1,912 | (7 | ) | (17 | ) | 4,874 | 5,415 | (10 | ) | |||||||||||||||||||||||||||
Net interest income |
380 | 361 | 311 | 329 | 293 | 5 | 30 | 1,052 | 831 | 27 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
1,961 | 2,064 | 1,901 | 2,389 | 2,205 | (5 | ) | (11 | ) | 5,926 | 6,246 | (5 | ) | |||||||||||||||||||||||||||
Provision for credit losses |
20 | 17 | 16 | (1 | ) | 3 | 18 | NM | 53 | (17 | ) | NM | ||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
816 | 886 | 825 | 1,030 | 848 | (8 | ) | (4 | ) | 2,527 | 2,491 | 1 | ||||||||||||||||||||||||||||
Noncompensation expense |
525 | 494 | 477 | 510 | 498 | 6 | 5 | 1,496 | 1,405 | 6 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
21 | 20 | 21 | 19 | 20 | 5 | 5 | 62 | 60 | 3 | ||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,362 | 1,400 | 1,323 | 1,559 | 1,366 | (3 | ) | | 4,085 | 3,956 | 3 | |||||||||||||||||||||||||||||
Income before income tax expense |
579 | 647 | 562 | 831 | 836 | (11 | ) | (31 | ) | 1,788 | 2,307 | (22 | ) | |||||||||||||||||||||||||||
Income tax expense |
228 | 252 | 206 | 304 | 315 | (10 | ) | (28 | ) | 686 | 868 | (21 | ) | |||||||||||||||||||||||||||
NET INCOME |
$ | 351 | $ | 395 | $ | 356 | $ | 527 | $ | 521 | (11 | ) | (33 | ) | $ | 1,102 | $ | 1,439 | (23 | ) | ||||||||||||||||||||
REVENUE BY
CLIENT SEGMENT |
||||||||||||||||||||||||||||||||||||||||
Private Bank (a) |
$ | 631 | $ | 708 | $ | 596 | $ | 650 | $ | 624 | (11 | ) | 1 | $ | 1,935 | $ | 1,712 | 13 | ||||||||||||||||||||||
Institutional |
486 | 472 | 490 | 754 | 603 | 3 | (19 | ) | 1,448 | 1,771 | (18 | ) | ||||||||||||||||||||||||||||
Retail |
399 | 490 | 466 | 640 | 639 | (19 | ) | (38 | ) | 1,355 | 1,768 | (23 | ) | |||||||||||||||||||||||||||
Private Wealth Management (a) |
352 | 356 | 349 | 345 | 339 | (1 | ) | 4 | 1,057 | 995 | 6 | |||||||||||||||||||||||||||||
Bear Stearns Brokerage |
93 | 38 | | | | 145 | NM | 131 | | NM | ||||||||||||||||||||||||||||||
Total net revenue |
$ | 1,961 | $ | 2,064 | $ | 1,901 | $ | 2,389 | $ | 2,205 | (5 | ) | (11 | ) | $ | 5,926 | $ | 6,246 | (5 | ) | ||||||||||||||||||||
FINANCIAL
RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
25 | % | 31 | % | 29 | % | 52 | % | 52 | % | 28 | % | 50 | % | ||||||||||||||||||||||||||
Overhead ratio |
69 | 68 | 70 | 65 | 62 | 69 | 63 | |||||||||||||||||||||||||||||||||
Pretax margin ratio (b) |
30 | 31 | 30 | 35 | 38 | 30 | 37 | |||||||||||||||||||||||||||||||||
BUSINESS
METRICS |
||||||||||||||||||||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||
Client advisors |
1,684 | 1,717 | 1,744 | 1,729 | 1,680 | (2 | ) | | 1,684 | 1,680 | | |||||||||||||||||||||||||||||
Retirement planning services participants |
1,492,000 | 1,505,000 | 1,519,000 | 1,501,000 | 1,495,000 | (1 | ) | | 1,492,000 | 1,495,000 | | |||||||||||||||||||||||||||||
Bear Stearns brokers |
323 | 326 | | | | (1 | ) | NM | 323 | | NM | |||||||||||||||||||||||||||||
% of customer assets in 4 & 5 Star Funds (c) |
39 | % | 40 | % | 49 | % | 55 | % | 55 | % | (3 | ) | (29 | ) | 39 | % | 55 | % | (29 | ) | ||||||||||||||||||||
% of AUM in 1st and 2nd quartiles: (d) |
||||||||||||||||||||||||||||||||||||||||
1 year |
49 | % | 51 | % | 52 | % | 57 | % | 47 | % | (4 | ) | 4 | 49 | % | 47 | % | 4 | ||||||||||||||||||||||
3 years |
67 | % | 70 | % | 73 | % | 75 | % | 73 | % | (4 | ) | (8 | ) | 67 | % | 73 | % | (8 | ) | ||||||||||||||||||||
5 years |
77 | % | 76 | % | 75 | % | 76 | % | 76 | % | 1 | 1 | 77 | % | 76 | % | 1 | |||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Equity |
$ | 7,000 | $ | 5,200 | $ | 5,000 | $ | 4,000 | $ | 4,000 | 35 | 75 | $ | 7,000 | $ | 4,000 | 75 | |||||||||||||||||||||||
SELECTED
BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 71,189 | $ | 65,015 | $ | 60,286 | $ | 55,989 | $ | 53,879 | 9 | 32 | $ | 65,518 | $ | 50,498 | 30 | |||||||||||||||||||||||
Loans (e) |
39,750 | 39,264 | 36,628 | 32,627 | 30,928 | 1 | 29 | 38,552 | 28,440 | 36 | ||||||||||||||||||||||||||||||
Deposits |
65,621 | 69,975 | 68,184 | 64,630 | 59,907 | (6 | ) | 10 | 67,918 | 56,920 | 19 | |||||||||||||||||||||||||||||
Equity |
5,500 | 5,066 | 5,000 | 4,000 | 4,000 | 9 | 38 | 5,190 | 3,834 | 35 | ||||||||||||||||||||||||||||||
Headcount |
15,493 | 15,840 | 14,955 | 14,799 | 14,510 | (2 | ) | 7 | 15,493 | 14,510 | 7 | |||||||||||||||||||||||||||||
CREDIT
DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs (recoveries) |
$ | (1 | ) | $ | 2 | $ | (2 | ) | $ | 2 | $ | (5 | ) | NM | 80 | $ | (1 | ) | $ | (10 | ) | 90 | ||||||||||||||||||
Nonperforming loans |
121 | 68 | 11 | 12 | 28 | 78 | 332 | 121 | 28 | 332 | ||||||||||||||||||||||||||||||
Allowance for loan losses |
170 | 147 | 130 | 112 | 115 | 16 | 48 | 170 | 115 | 48 | ||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
5 | 5 | 6 | 7 | 6 | | (17 | ) | 5 | 6 | (17 | ) | ||||||||||||||||||||||||||||
Net charge-off (recovery) rate |
(0.01) | % | 0.02 | % | (0.02) | % | 0.02 | % | (0.06 | )% | | % | (0.05 | )% | ||||||||||||||||||||||||||
Allowance for loan losses to average loans |
0.43 | 0.37 | 0.35 | 0.34 | 0.37 | 0.44 | 0.40 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans |
140 | 216 | 1,182 | 933 | 411 | 140 | 411 | |||||||||||||||||||||||||||||||||
Nonperforming loans to average loans |
0.30 | 0.17 | 0.03 | 0.04 | 0.09 | 0.31 | 0.10 |
(a) | In the third quarter of 2008, certain clients were transferred from Private Bank to Private Wealth Management. Prior periods have been revised to conform with this change. | |
(b) | Pretax margin represents income before income tax expense divided by total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors. | |
(c) | Derived from the following rating services: Morningstar for the United States; Micropal for the United Kingdom, Luxembourg, Hong Kong and Taiwan; and Nomura for Japan. | |
(d) | Derived from the following rating services: Lipper for the United States and Taiwan; Micropal for the United Kingdom, Luxembourg and Hong Kong; and Nomura for Japan. | |
(e) | Reflects the transfer in 2007 of held-for-investment prime mortgage loans from AM to Corporate within the Corporate/Private Equity segment. |
Page 23
JPMORGAN CHASE & CO. ASSET MANAGEMENT FINANCIAL HIGHLIGHTS, CONTINUED (in billions) |
Sep 30, 2008 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Sep 30 | ||||||||||||||||||||||
2008 | 2008 | 2008 | 2007 | 2007 | 2008 | 2007 | ||||||||||||||||||||||
Assets by asset class |
||||||||||||||||||||||||||||
Liquidity |
$ | 524 | $ | 478 | $ | 471 | $ | 400 | $ | 368 | 10 | % | 42 | % | ||||||||||||||
Fixed income |
189 | 199 | 200 | 200 | 195 | (5 | ) | (3 | ) | |||||||||||||||||||
Equities & balanced |
308 | 378 | 390 | 472 | 481 | (19 | ) | (36 | ) | |||||||||||||||||||
Alternatives |
132 | 130 | 126 | 121 | 119 | 2 | 11 | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
1,153 | 1,185 | 1,187 | 1,193 | 1,163 | (3 | ) | (1 | ) | |||||||||||||||||||
Custody / brokerage / administration / deposits |
409 | 426 | 382 | 379 | 376 | (4 | ) | 9 | ||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,562 | $ | 1,611 | $ | 1,569 | $ | 1,572 | $ | 1,539 | (3 | ) | 1 | |||||||||||||||
Assets by client segment |
||||||||||||||||||||||||||||
Institutional |
$ | 653 | $ | 645 | $ | 652 | $ | 632 | $ | 603 | 1 | 8 | ||||||||||||||||
Private Bank (a) |
194 | 181 | 179 | 183 | 179 | 7 | 8 | |||||||||||||||||||||
Retail |
223 | 276 | 279 | 300 | 304 | (19 | ) | (27 | ) | |||||||||||||||||||
Private Wealth Management (a) |
75 | 75 | 77 | 78 | 77 | | (3 | ) | ||||||||||||||||||||
Bear Stearns Brokerage |
8 | 8 | | | | | NM | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,153 | $ | 1,185 | $ | 1,187 | $ | 1,193 | $ | 1,163 | (3 | ) | (1 | ) | ||||||||||||||
Institutional |
$ | 653 | $ | 646 | $ | 652 | $ | 633 | $ | 604 | 1 | 8 | ||||||||||||||||
Private Bank (a) |
417 | 415 | 412 | 403 | 395 | | 6 | |||||||||||||||||||||
Retail |
303 | 357 | 366 | 394 | 399 | (15 | ) | (24 | ) | |||||||||||||||||||
Private Wealth Management (a) |
134 | 133 | 139 | 142 | 141 | 1 | (5 | ) | ||||||||||||||||||||
Bear Stearns Brokerage |
55 | 60 | | | | (8 | ) | NM | ||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,562 | $ | 1,611 | $ | 1,569 | $ | 1,572 | $ | 1,539 | (3 | ) | 1 | |||||||||||||||
Assets by geographic region |
||||||||||||||||||||||||||||
U.S. / Canada |
$ | 785 | $ | 771 | $ | 773 | $ | 760 | $ | 745 | 2 | 5 | ||||||||||||||||
International |
368 | 414 | 414 | 433 | 418 | (11 | ) | (12 | ) | |||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,153 | $ | 1,185 | $ | 1,187 | $ | 1,193 | $ | 1,163 | (3 | ) | (1 | ) | ||||||||||||||
U.S. / Canada |
$ | 1,100 | $ | 1,093 | $ | 1,063 | $ | 1,032 | $ | 1,022 | 1 | 8 | ||||||||||||||||
International |
462 | 518 | 506 | 540 | 517 | (11 | ) | (11 | ) | |||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,562 | $ | 1,611 | $ | 1,569 | $ | 1,572 | $ | 1,539 | (3 | ) | 1 | |||||||||||||||
Mutual fund assets by asset class |
||||||||||||||||||||||||||||
Liquidity |
$ | 470 | $ | 416 | $ | 405 | $ | 339 | $ | 308 | 13 | 53 | ||||||||||||||||
Fixed income |
44 | 47 | 45 | 46 | 46 | (6 | ) | (4 | ) | |||||||||||||||||||
Equities |
134 | 179 | 186 | 224 | 235 | (25 | ) | (43 | ) | |||||||||||||||||||
TOTAL MUTUAL FUND ASSETS |
$ | 648 | $ | 642 | $ | 636 | $ | 609 | $ | 589 | 1 | 10 | ||||||||||||||||
(a) | In the third quarter of 2008, certain clients were transferred from Private Bank to Private Wealth Management. Prior periods have been revised to conform with this change. |
Page 24
JPMORGAN CHASE & CO. ASSET MANAGEMENT FINANCIAL HIGHLIGHTS, CONTINUED (in billions) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2008 | 2007 | ||||||||||||||||||||||
ASSETS
UNDER SUPERVISION (continued) |
||||||||||||||||||||||||||||
Assets under management rollforward |
||||||||||||||||||||||||||||
Beginning balance |
$ | 1,185 | $ | 1,187 | $ | 1,193 | $ | 1,163 | $ | 1,109 | $ | 1,193 | $ | 1,013 | ||||||||||||||
Net asset flows: |
||||||||||||||||||||||||||||
Liquidity |
55 | 1 | 68 | 26 | 33 | 124 | 52 | |||||||||||||||||||||
Fixed income |
(4 | ) | (1 | ) | | 3 | (2 | ) | (5 | ) | 6 | |||||||||||||||||
Equities, balanced & alternative |
(5 | ) | (3 | ) | (21 | ) | 4 | 2 | (29 | ) | 24 | |||||||||||||||||
Market / performance / other impacts (a) |
(78 | ) | 1 | (53 | ) | (3 | ) | 21 | (130 | ) | 68 | |||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,153 | $ | 1,185 | $ | 1,187 | $ | 1,193 | $ | 1,163 | $ | 1,153 | $ | 1,163 | ||||||||||||||
Assets under supervision rollforward |
||||||||||||||||||||||||||||
Beginning balance |
$ | 1,611 | $ | 1,569 | $ | 1,572 | $ | 1,539 | $ | 1,472 | $ | 1,572 | $ | 1,347 | ||||||||||||||
Net asset flows |
61 | (5 | ) | 52 | 37 | 41 | 108 | 106 | ||||||||||||||||||||
Market / performance / other impacts (a) |
(110 | ) | 47 | (55 | ) | (4 | ) | 26 | (118 | ) | 86 | |||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,562 | $ | 1,611 | $ | 1,569 | $ | 1,572 | $ | 1,539 | $ | 1,562 | $ | 1,539 | ||||||||||||||
(a) | Second quarter 2008 reflects $15 billion for assets under management and $68 billion for assets under supervision from the Bear Stearns acquisition on May 30, 2008. |
Page 25
JPMORGAN CHASE & CO. CORPORATE/PRIVATE EQUITY FINANCIAL HIGHLIGHTS (in millions, except headcount data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Principal transactions (a) |
$ | (1,876 | ) | $ | (97 | ) | $ | 5 | $ | 773 | $ | 1,082 | NM | % | NM | % | $ | (1,968 | ) | $ | 3,779 | NM | % | |||||||||||||||||
Securities gains (losses) (b) |
440 | 656 | 42 | 146 | 128 | (33 | ) | 244 | 1,138 | (107 | ) | NM | ||||||||||||||||||||||||||||
All other income (c) |
(274 | ) | (378 | ) | 1,639 | 213 | 70 | 28 | NM | 987 | 228 | 333 | ||||||||||||||||||||||||||||
Noninterest revenue |
(1,710 | ) | 181 | 1,686 | 1,132 | 1,280 | NM | NM | 157 | 3,900 | (96 | ) | ||||||||||||||||||||||||||||
Net interest income (expense) |
(38 | ) | 48 | (286 | ) | (218 | ) | (279 | ) | NM | 86 | (276 | ) | (569 | ) | 51 | ||||||||||||||||||||||||
TOTAL NET REVENUE |
(1,748 | ) | 229 | 1,400 | 914 | 1,001 | NM | NM | (119 | ) | 3,331 | NM | ||||||||||||||||||||||||||||
Provision for credit losses (d) |
2,355 | 290 | 196 | 14 | (31 | ) | NM | NM | 2,841 | (25 | ) | NM | ||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
652 | 611 | 639 | 714 | 569 | 7 | 15 | 1,902 | 2,040 | (7 | ) | |||||||||||||||||||||||||||||
Noncompensation expense (e) |
570 | 699 | (82 | ) | 982 | 674 | (18 | ) | (15 | ) | 1,187 | 2,048 | (42 | ) | ||||||||||||||||||||||||||
Merger costs |
96 | 155 | | 22 | 61 | (38 | ) | 57 | 251 | 187 | 34 | |||||||||||||||||||||||||||||
Subtotal |
1,318 | 1,465 | 557 | 1,718 | 1,304 | (10 | ) | 1 | 3,340 | 4,275 | (22 | ) | ||||||||||||||||||||||||||||
Net expense allocated to other businesses |
(1,150 | ) | (1,070 | ) | (1,057 | ) | (1,057 | ) | (1,059 | ) | (7 | ) | (9 | ) | (3,277 | ) | (3,174 | ) | (3 | ) | ||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
168 | 395 | (500 | ) | 661 | 245 | (57 | ) | (31 | ) | 63 | 1,101 | (94 | ) | ||||||||||||||||||||||||||
Income (loss) before income tax expense and extraordinary gain |
(4,271 | ) | (456 | ) | 1,704 | 239 | 787 | NM | NM | (3,023 | ) | 2,255 | NM | |||||||||||||||||||||||||||
Income tax expense (benefit) |
(1,727 | ) | (34 | ) | 677 | (10 | ) | 274 | NM | NM | (1,084 | ) | 729 | NM | ||||||||||||||||||||||||||
Income (loss) before extraordinary gain |
(2,544 | ) | (422 | ) | 1,027 | 249 | 513 | NM | NM | (1,939 | ) | 1,526 | NM | |||||||||||||||||||||||||||
Extraordinary gain (f) |
581 | | | | | NM | NM | 581 | | NM | ||||||||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | (1,963 | ) | $ | (422 | ) | $ | 1,027 | $ | 249 | $ | 513 | (365) | NM | $ | (1,358 | ) | $ | 1,526 | NM | ||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
||||||||||||||||||||||||||||||||||||||||
Private equity |
$ | (216 | ) | $ | 197 | $ | 163 | $ | 688 | $ | 733 | NM | NM | $ | 144 | $ | 3,279 | (96 | ) | |||||||||||||||||||||
Corporate |
(1,532 | ) | 32 | 1,237 | 226 | 268 | NM | NM | (263 | ) | 52 | NM | ||||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | (1,748 | ) | $ | 229 | $ | 1,400 | $ | 914 | $ | 1,001 | NM | NM | $ | (119 | ) | $ | 3,331 | NM | |||||||||||||||||||||
NET INCOME (LOSS) |
||||||||||||||||||||||||||||||||||||||||
Private equity |
$ | (164 | ) | $ | 99 | $ | 57 | $ | 356 | $ | 409 | NM | NM | $ | (8 | ) | $ | 1,809 | NM | |||||||||||||||||||||
Corporate |
(1,064 | ) | 19 | 970 | (93 | ) | 142 | NM | NM | (75 | ) | (167 | ) | 55 | ||||||||||||||||||||||||||
Merger related items (g) |
(735 | ) | (540 | ) | | (14 | ) | (38 | ) | (36 | ) | NM | (1,275 | ) | (116 | ) | NM | |||||||||||||||||||||||
TOTAL NET INCOME (LOSS) |
$ | (1,963 | ) | $ | (422 | ) | $ | 1,027 | $ | 249 | $ | 513 | (365 | ) | NM | $ | (1,358 | ) | $ | 1,526 | NM | |||||||||||||||||||
Headcount |
21,641 | 22,317 | 21,769 | 22,512 | 22,864 | (3 | ) | (5 | ) | 21,641 | 22,864 | (5 | ) |
(a) | Included losses on preferred equity interests in Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (Freddie Mac) in the third quarter of 2008. | |
(b) | Included gain on sale of MasterCard shares in the second quarter of 2008. | |
(c) | Included proceeds from the sale of Visa shares in its initial public offering in the first quarter of 2008. | |
(d) | Included a $1.9 billion charge to conform Washington Mutual's loan loss reserves to JPMorgan Chase's accounting policy in the third quarter of 2008. | |
(e) | Included a release of credit card litigation reserves in the first quarter of 2008. | |
(f) | Effective September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual from the FDIC for $1.9 billion. The fair value of the Washington Mutual net assets acquired exceeded the purchase price which resulted in negative goodwill. In accordance with SFAS 141, nonfinancial assets that are not held for sale were written down against that negative goodwill. The negative goodwill that remained after writing down nonfinancial assets was recognized as an extraordinary gain. | |
(g) | The third quarter of 2008 included an accounting conformity loan loss reserve provision and an extraordinary gain related to the Washington Mutual transaction. The second quarter of 2008 reflects items related to the Bear Stearns merger, which included Bear Stearns equity earnings, merger costs, Bear Stearns asset management liquidation costs and Bear Stearns private client services broker retention expense. Periods prior to the second quarter of 2008 represent costs related to the Bank One and Bank of New York transactions. |
Page 26
JPMORGAN CHASE & CO. CORPORATE/PRIVATE EQUITY FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SUPPLEMENTAL |
||||||||||||||||||||||||||||||||||||||||
TREASURY |
||||||||||||||||||||||||||||||||||||||||
Securities gains (losses) (a) |
$ | 442 | $ | 656 | $ | 42 | $ | 146 | $ | 126 | (33) | % | 251 | % | $ | 1,140 | $ | (109 | ) | NM | % | |||||||||||||||||||
Investment securities portfolio (average) |
105,984 | 97,223 | 80,443 | 82,445 | 85,470 | 9 | 24 | 94,592 | 86,552 | 9 | ||||||||||||||||||||||||||||||
Investment securities portfolio (ending) |
115,703 | 103,751 | 91,323 | 76,200 | 86,495 | 12 | 34 | 115,703 | 86,495 | 34 | ||||||||||||||||||||||||||||||
Mortgage loans (average) (b) |
42,432 | 42,143 | 39,096 | 34,436 | 29,854 | 1 | 42 | 41,228 | 27,326 | 51 | ||||||||||||||||||||||||||||||
Mortgage loans (ending) (b) |
41,976 | 42,602 | 41,125 | 36,942 | 32,804 | (1 | ) | 28 | 41,976 | 32,804 | 28 | |||||||||||||||||||||||||||||
PRIVATE EQUITY |
||||||||||||||||||||||||||||||||||||||||
Private equity gains (losses) |
||||||||||||||||||||||||||||||||||||||||
Direct investments |
||||||||||||||||||||||||||||||||||||||||
Realized gains |
$ | 40 | $ | 540 | $ | 1,113 | $ | 100 | $ | 504 | (93 | ) | (92 | ) | $ | 1,693 | $ | 2,212 | (23 | ) | ||||||||||||||||||||
Unrealized gains (losses) (c) |
(273 | ) | (326 | ) | (881 | ) | 569 | 227 | 16 | NM | (1,480 | ) | 1,038 | NM | ||||||||||||||||||||||||||
Total direct investments |
(233 | ) | 214 | 232 | 669 | 731 | NM | NM | 213 | 3,250 | (93 | ) | ||||||||||||||||||||||||||||
Third-party fund investments |
27 | 6 | (43 | ) | 43 | 35 | 350 | (23 | ) | (10 | ) | 122 | NM | |||||||||||||||||||||||||||
Total private equity gains (losses) (d) |
$ | (206 | ) | $ | 220 | $ | 189 | $ | 712 | $ | 766 | NM | NM | $ | 203 | $ | 3,372 | (94 | ) | |||||||||||||||||||||
Private equity portfolio information |
||||||||||||||||||||||||||||||||||||||||
Direct investments |
||||||||||||||||||||||||||||||||||||||||
Publicly-held securities |
||||||||||||||||||||||||||||||||||||||||
Carrying value |
$ | 600 | $ | 615 | $ | 603 | $ | 390 | $ | 409 | (2 | ) | 47 | |||||||||||||||||||||||||||
Cost |
705 | 665 | 499 | 288 | 291 | 6 | 142 | |||||||||||||||||||||||||||||||||
Quoted public value |
657 | 732 | 720 | 536 | 560 | (10 | ) | 17 | ||||||||||||||||||||||||||||||||
Privately-held direct securities |
||||||||||||||||||||||||||||||||||||||||
Carrying value |
6,038 | 6,270 | 5,191 | 5,914 | 5,336 | (4 | ) | 13 | ||||||||||||||||||||||||||||||||
Cost |
6,058 | 6,113 | 4,973 | 4,867 | 5,003 | (1 | ) | 21 | ||||||||||||||||||||||||||||||||
Third-party fund investments |
||||||||||||||||||||||||||||||||||||||||
Carrying value |
889 | 838 | 811 | 849 | 839 | 6 | 6 | |||||||||||||||||||||||||||||||||
Cost |
1,121 | 1,094 | 1,064 | 1,076 | 1,078 | 2 | 4 | |||||||||||||||||||||||||||||||||
Total private equity portfolio Carrying value |
$ | 7,527 | $ | 7,723 | $ | 6,605 | $ | 7,153 | $ | 6,584 | (3 | ) | 14 | |||||||||||||||||||||||||||
Total private equity portfolio Cost |
$ | 7,884 | $ | 7,872 | $ | 6,536 | $ | 6,231 | $ | 6,372 | | 24 | ||||||||||||||||||||||||||||
(a) | The second quarter of 2008 included gain on the sale of MasterCard shares. All periods reflect repositioning of the Corporate investment securities portfolio and exclude gains/losses on securities used to manage risk associated with MSRs. | |
(b) | Held-for-investment prime mortgage loans were transferred from RFS and AM to the Corporate/Private Equity segment for risk management and reporting purposes. The initial transfers had no material impact on the financial results of Corporate/Private Equity. | |
(c) | Unrealized gains (losses) contains reversals of unrealized gains and losses that were recognized in prior periods and have now been realized. | |
(d) | Included in principal transactions revenue in the Consolidated Statements of Income. |
Page 27
JPMORGAN CHASE & CO. | ||
CREDIT-RELATED INFORMATION | ||
(in millions) |
Sep 30, 2008 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Sep 30 | ||||||||||||||||||||||
2008 | 2008 | 2008 | 2007 | 2007 | 2008 | 2007 | ||||||||||||||||||||||
CREDIT EXPOSURE (a) |
||||||||||||||||||||||||||||
WHOLESALE (b) |
||||||||||||||||||||||||||||
Loans U.S. |
$ | 202,169 | $ | 137,236 | $ | 141,921 | $ | 133,253 | $ | 126,343 | 47 | % | 60 | % | ||||||||||||||
Loans Non-U.S. |
86,276 | 92,123 | 89,376 | 79,823 | 71,385 | (6 | ) | 21 | ||||||||||||||||||||
TOTAL WHOLESALE LOANS REPORTED (c) |
288,445 | 229,359 | 231,297 | 213,076 | 197,728 | 26 | 46 | |||||||||||||||||||||
CONSUMER (d) |
||||||||||||||||||||||||||||
Home loan portfolio (includes RFS and
Corporate/Private Equity): |
||||||||||||||||||||||||||||
Home equity |
143,311 | 95,129 | 94,968 | 94,832 | 93,026 | 51 | 54 | |||||||||||||||||||||
Prime mortgage |
95,047 | 47,185 | 45,080 | 40,558 | 35,610 | 101 | 167 | |||||||||||||||||||||
Subprime mortgage |
22,025 | 14,792 | 15,775 | 15,473 | 12,120 | 49 | 82 | |||||||||||||||||||||
Option ARMs |
41,642 | | | | | NM | NM | |||||||||||||||||||||
Total home loan portfolio |
302,025 | 157,106 | 155,823 | 150,863 | 140,756 | 92 | 115 | |||||||||||||||||||||
Auto loans and leases |
43,306 | 44,867 | 44,714 | 42,350 | 40,871 | (3 | ) | 6 | ||||||||||||||||||||
Credit card reported |
92,881 | 76,278 | 75,888 | 84,352 | 79,409 | 22 | 17 | |||||||||||||||||||||
Other loans |
34,724 | 30,419 | 29,334 | 28,733 | 27,556 | 14 | 26 | |||||||||||||||||||||
TOTAL CONSUMER LOANS REPORTED |
472,936 | 308,670 | 305,759 | 306,298 | 288,592 | 53 | 64 | |||||||||||||||||||||
TOTAL LOANS REPORTED |
761,381 | 538,029 | 537,056 | 519,374 | 486,320 | 42 | 57 | |||||||||||||||||||||
Credit card securitized |
93,664 | 79,120 | 75,062 | 72,701 | 69,643 | 18 | 34 | |||||||||||||||||||||
TOTAL LOANS MANAGED |
855,045 | 617,149 | 612,118 | 592,075 | 555,963 | 39 | 54 | |||||||||||||||||||||
Derivative receivables |
118,648 | 122,389 | 99,110 | 77,136 | 64,592 | (3 | ) | 84 | ||||||||||||||||||||
Receivables from customers (e) |
25,422 | 26,572 | | | | (4 | ) | NM | ||||||||||||||||||||
TOTAL CREDIT-RELATED ASSETS |
999,115 | 766,110 | 711,228 | 669,211 | 620,555 | 30 | 61 | |||||||||||||||||||||
Wholesale lending-related commitments |
407,057 | 430,028 | 438,392 | 446,652 | 468,145 | (5 | ) | (13 | ) | |||||||||||||||||||
TOTAL |
$ | 1,406,172 | $ | 1,196,138 | $ | 1,149,620 | $ | 1,115,863 | $ | 1,088,700 | 18 | 29 | ||||||||||||||||
Memo: Total by category |
||||||||||||||||||||||||||||
Total wholesale exposure (f) |
$ | 839,572 | $ | 808,348 | $ | 768,799 | $ | 736,864 | $ | 730,465 | 4 | 15 | ||||||||||||||||
Total consumer managed loans (g) |
566,600 | 387,790 | 380,821 | 378,999 | 358,235 | 46 | 58 | |||||||||||||||||||||
Total |
$ | 1,406,172 | $ | 1,196,138 | $ | 1,149,620 | $ | 1,115,863 | $ | 1,088,700 | 18 | 29 | ||||||||||||||||
Risk profile of wholesale credit exposure: |
||||||||||||||||||||||||||||
Investment-grade (h) |
$ | 603,061 | $ | 595,043 | $ | 590,439 | $ | 571,394 | $ | 548,663 | 1 | 10 | ||||||||||||||||
Noninvestment-grade: (h) |
||||||||||||||||||||||||||||
Noncriticized |
178,001 | 154,218 | 147,771 | 134,983 | 155,172 | 15 | 15 | |||||||||||||||||||||
Criticized performing |
14,690 | 11,611 | 9,570 | 6,267 | 5,605 | 27 | 162 | |||||||||||||||||||||
Criticized nonperforming |
1,418 | 899 | 742 | 571 | 414 | 58 | 243 | |||||||||||||||||||||
Total noninvestment-grade |
194,109 | 166,728 | 158,083 | 141,821 | 161,191 | 16 | 20 | |||||||||||||||||||||
Loans held-for-sale & loans at fair value |
16,980 | 20,005 | 20,277 | 23,649 | 20,611 | (15 | ) | (18 | ) | |||||||||||||||||||
Receivables from customers (e) |
25,422 | 26,572 | | | | (4 | ) | NM | ||||||||||||||||||||
Total wholesale exposure |
$ | 839,572 | $ | 808,348 | $ | 768,799 | $ | 736,864 | $ | 730,465 | 4 | 15 | ||||||||||||||||
(a) | Includes credit exposure related to the acquisition of Washington Mutual. | |
(b) | Includes Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management. | |
(c) | Includes loans held-for-sale & loans at fair value. | |
(d) | Includes Retail Financial Services, Card Services and residential mortgage loans reported in the Corporate/Private Equity segment to be risk managed by the Chief Investment Office. | |
(e) | Represents margin loans to brokerage customers included in accrued interest and accounts receivable on the Consolidated Balance Sheet. | |
(f) | Represents total wholesale loans, derivative receivables, wholesale lending-related commitments and receivables from customers. | |
(g) | Represents total consumer loans plus credit card securitizations, and excludes consumer lending-related commitments. | |
(h) | Excludes loans held-for-sale & loans at fair value. |
Note: | The risk profile is based on JPMorgan Chase & Co.s internal risk ratings, which generally
correspond to the following ratings as defined by Standard & Poors / Moodys: Investment-Grade: AAA / Aaa to BBB- / Baa3 Noninvestment-Grade: BB+ / Ba1 and below |
Page 28
JPMORGAN CHASE & CO. | ||
CREDIT-RELATED INFORMATION, CONTINUED | ||
(in millions, except ratio data) |
Sep 30, 2008 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Sep 30 | ||||||||||||||||||||||
2008 | 2008 | 2008 | 2007 | 2007 | 2008 | 2007 | ||||||||||||||||||||||
NONPERFORMING
ASSETS AND RATIOS |
||||||||||||||||||||||||||||
WHOLESALE LOANS EXCLUDING WASHINGTON MUTUAL (a) |
||||||||||||||||||||||||||||
Loans U.S. |
$ | 913 | $ | 806 | $ | 761 | $ | 490 | $ | 401 | 13 | % | 128 | % | ||||||||||||||
Loans Non-U.S. |
220 | 64 | 20 | 24 | 26 | 244 | NM | |||||||||||||||||||||
TOTAL WHOLESALE LOANS-EXCLUDING WASHINGTON MUTUAL |
1,133 | 870 | 781 | 514 | 427 | 30 | 165 | |||||||||||||||||||||
CONSUMER LOANS EXCLUDING WASHINGTON MUTUAL (b) |
||||||||||||||||||||||||||||
Home loan portfolio (includes RFS and Corporate/Private Equity): |
||||||||||||||||||||||||||||
Home equity (c) |
1,142 | 1,008 | 924 | 786 | 556 | 13 | 105 | |||||||||||||||||||||
Prime mortgage |
1,496 | 1,232 | 860 | 501 | 282 | 21 | 430 | |||||||||||||||||||||
Subprime mortgage (c) |
2,384 | 1,715 | 1,401 | 1,017 | 790 | 39 | 202 | |||||||||||||||||||||
Total home loan portfolio |
5,022 | 3,955 | 3,185 | 2,304 | 1,628 | 27 | 208 | |||||||||||||||||||||
Auto loans and leases |
119 | 102 | 94 | 116 | 92 | 17 | 29 | |||||||||||||||||||||
Credit card reported |
5 | 6 | 6 | 7 | 7 | (17 | ) | (29 | ) | |||||||||||||||||||
Other loans |
382 | 340 | 335 | 341 | 336 | 12 | 14 | |||||||||||||||||||||
TOTAL CONSUMER LOANS-EXCLUDING WASHINGTON MUTUAL (d) |
5,528 | 4,403 | 3,620 | 2,768 | 2,063 | 26 | 168 | |||||||||||||||||||||
TOTAL LOANS EXCLUDING WASHINGTON MUTUAL (c) |
6,661 | 5,273 | 4,401 | 3,282 | 2,490 | 26 | 168 | |||||||||||||||||||||
Nonperforming loans acquired in Washington Mutual transaction |
6,662 | | | | | NM | NM | |||||||||||||||||||||
TOTAL NONPERFORMING LOANS REPORTED (c) |
13,323 | 5,273 | 4,401 | 3,282 | 2,490 | 153 | 435 | |||||||||||||||||||||
Derivative receivables |
45 | 80 | 31 | 29 | 34 | (44 | ) | 32 | ||||||||||||||||||||
Assets acquired in loan satisfactions - excluding Washington Mutual |
1,064 | 880 | 711 | 622 | 485 | 21 | 119 | |||||||||||||||||||||
Assets acquired in loan satisfactions acquired in Washington Mutual transaction |
1,478 | | | | | NM | NM | |||||||||||||||||||||
TOTAL NONPERFORMING ASSETS |
$ | 15,910 | $ | 6,233 | $ | 5,143 | $ | 3,933 | $ | 3,009 | 155 | 429 | ||||||||||||||||
TOTAL NONPERFORMING LOANS TO TOTAL LOANS EXCLUDING WASHINGTON MUTUAL |
1.21 | % | 0.98 | % | 0.82 | % | 0.63 | % | 0.51 | % | ||||||||||||||||||
TOTAL NONPERFORMING LOANS TO TOTAL LOANS REPORTED |
1.75 | % | 0.98 | % | 0.82 | % | 0.63 | % | 0.51 | % | ||||||||||||||||||
NONPERFORMING ASSETS BY LOB |
||||||||||||||||||||||||||||
Investment Bank |
$ | 583 | $ | 490 | $ | 439 | $ | 453 | $ | 325 | 19 | 79 | ||||||||||||||||
Retail Financial Services (c) |
4,924 | 3,943 | 3,395 | 2,817 | 2,215 | 25 | 122 | |||||||||||||||||||||
Card Services |
5 | 6 | 6 | 7 | 7 | (17 | ) | (29 | ) | |||||||||||||||||||
Commercial Banking |
624 | 510 | 453 | 148 | 136 | 22 | 359 | |||||||||||||||||||||
Treasury & Securities Services |
| | | | | | | |||||||||||||||||||||
Asset Management |
121 | 68 | 11 | 12 | 28 | 78 | 332 | |||||||||||||||||||||
Corporate/Private Equity (e) |
1,513 | 1,216 | 839 | 496 | 298 | 24 | 408 | |||||||||||||||||||||
TOTAL EXCLUDING WASHINGTON MUTUAL |
7,770 | 6,233 | 5,143 | 3,933 | 3,009 | 25 | 158 | |||||||||||||||||||||
Acquired in Washington Mutual transaction |
8,140 | | | | | NM | NM | |||||||||||||||||||||
TOTAL |
$ | 15,910 | $ | 6,233 | $ | 5,143 | $ | 3,933 | $ | 3,009 | 155 | 429 | ||||||||||||||||
(a) | Included nonperforming loans held-for-sale and loans at fair value of $32 million, $51 million, $70 million, $50 million, and $75 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. Excluded purchased held-for-sale wholesale loans. | |
(b) | There were no nonperforming loans held-for-sale at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007. | |
(c) | During the second quarter of 2008, the policy for classifying subprime mortgage and home equity loans as nonperforming was changed to conform with all other home lending products. Prior period nonperforming loans and assets have been revised to conform with this change. | |
(d) | Nonperforming loans and assets excluded (1) loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by U.S. government agencies of $1.8 billion, $1.9 billion, $1.8 billion, $1.5 billion, and $1.3 billion at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and (2) education loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $405 million, $371 million, $252 million, $279 million, and $241 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. These amounts for GNMA and education loans are excluded, as reimbursement is proceeding normally. | |
(e) | Predominantly relates to held-for-investment prime mortgage loans transferred from RFS and AM to the Corporate/Private Equity segment. |
Page 29
JPMORGAN CHASE & CO. | ||
CREDIT-RELATED INFORMATION, CONTINUED | ||
(in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
GROSS
CHARGE-OFFS |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans |
$ | 71 | $ | 82 | $ | 130 | $ | 54 | $ | 101 | (13 | )% | (30 | )% | $ | 283 | $ | 131 | 116 | % | ||||||||||||||||||||
Consumer (includes RFS and
Corporate/Private Equity) |
1,375 | 1,079 | 880 | 582 | 403 | 27 | 241 | 3,334 | 965 | 245 | ||||||||||||||||||||||||||||||
Credit card reported |
1,245 | 1,209 | 1,144 | 1,000 | 911 | 3 | 37 | 3,598 | 2,635 | 37 | ||||||||||||||||||||||||||||||
Total loans reported |
2,691 | 2,370 | 2,154 | 1,636 | 1,415 | 14 | 90 | 7,215 | 3,731 | 93 | ||||||||||||||||||||||||||||||
Credit card securitized |
985 | 949 | 791 | 716 | 679 | 4 | 45 | 2,725 | 2,085 | 31 | ||||||||||||||||||||||||||||||
Total loans managed |
3,676 | 3,319 | 2,945 | 2,352 | 2,094 | 11 | 76 | 9,940 | 5,816 | 71 | ||||||||||||||||||||||||||||||
RECOVERIES |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans |
19 | 41 | 38 | 29 | 19 | (54 | ) | | 98 | 84 | 17 | |||||||||||||||||||||||||||||
Consumer (includes RFS and
Corporate/Private Equity) |
49 | 54 | 55 | 47 | 49 | (9 | ) | | 158 | 150 | 5 | |||||||||||||||||||||||||||||
Credit card reported |
139 | 145 | 155 | 131 | 126 | (4 | ) | 10 | 439 | 388 | 13 | |||||||||||||||||||||||||||||
Total loans reported |
207 | 240 | 248 | 207 | 194 | (14 | ) | 7 | 695 | 622 | 12 | |||||||||||||||||||||||||||||
Credit card securitized |
112 | 119 | 110 | 97 | 101 | (6 | ) | 11 | 341 | 324 | 5 | |||||||||||||||||||||||||||||
Total loans managed |
319 | 359 | 358 | 304 | 295 | (11 | ) | 8 | 1,036 | 946 | 10 | |||||||||||||||||||||||||||||
NET
CHARGE-OFFS |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans |
52 | 41 | 92 | 25 | 82 | 27 | (37 | ) | 185 | 47 | 294 | |||||||||||||||||||||||||||||
Consumer (includes RFS and
Corporate/Private Equity) |
1,326 | 1,025 | 825 | 535 | 354 | 29 | 275 | 3,176 | 815 | 290 | ||||||||||||||||||||||||||||||
Credit card reported |
1,106 | 1,064 | 989 | 869 | 785 | 4 | 41 | 3,159 | 2,247 | 41 | ||||||||||||||||||||||||||||||
Total loans reported |
2,484 | 2,130 | 1,906 | 1,429 | 1,221 | 17 | 103 | 6,520 | 3,109 | 110 | ||||||||||||||||||||||||||||||
Credit card securitized |
873 | 830 | 681 | 619 | 578 | 5 | 51 | 2,384 | 1,761 | 35 | ||||||||||||||||||||||||||||||
Total loans managed |
$ | 3,357 | $ | 2,960 | $ | 2,587 | $ | 2,048 | $ | 1,799 | 13 | 87 | $ | 8,904 | $ | 4,870 | 83 | |||||||||||||||||||||||
NET
CHARGE-OFF RATES ANNUALIZED |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans (a) |
0.10 | % | 0.08 | % | 0.18 | % | 0.05 | % | 0.19 | % | 0.12 | % | 0.04 | % | ||||||||||||||||||||||||||
Consumer (includes RFS and
Corporate/Private Equity) (b) |
2.29 | 1.81 | 1.50 | 1.01 | 0.70 | 1.87 | 0.56 | |||||||||||||||||||||||||||||||||
Credit card reported |
5.56 | 5.66 | 5.01 | 4.36 | 3.89 | 5.40 | 3.74 | |||||||||||||||||||||||||||||||||
Total loans reported (a) (b) |
1.91 | 1.67 | 1.53 | 1.19 | 1.07 | 1.70 | 0.94 | |||||||||||||||||||||||||||||||||
Credit card securitized |
4.43 | 4.32 | 3.70 | 3.38 | 3.34 | 4.16 | 3.45 | |||||||||||||||||||||||||||||||||
Total loans managed (a) (b) |
2.24 | 2.02 | 1.81 | 1.48 | 1.37 | 2.02 | 1.28 | |||||||||||||||||||||||||||||||||
Memo: Credit card managed |
5.00 | 4.98 | 4.37 | 3.89 | 3.64 | 4.79 | 3.61 |
(a) | Average wholesale loans held-for-sale and loans at fair value were $18.0 billion, $20.8 billion, $20.1 billion, $26.8 billion, and $17.8 billion for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and $19.6 billion and $15.8 billion for year-to-date 2008 and 2007, respectively. These amounts were excluded when calculating the net charge-off rates. | |
(b) | Average consumer (excluding card) loans held-for-sale and loans at fair value were $1.5 billion, $3.6 billion, $4.4 billion, $4.0 billion, and $5.4 billion for the quarters ended September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, and $3.2 billion and $12.9 billion for year-to-date 2008 and 2007, respectively. These amounts were excluded when calculating the net charge-off rates. |
Page 30
JPMORGAN CHASE & CO. | ||
CREDIT-RELATED INFORMATION, CONTINUED | ||
(in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||||||||||||||
Beginning balance |
$ | 13,246 | $ | 11,746 | $ | 9,234 | $ | 8,113 | $ | 7,633 | 13 | % | 74 | % | $ | 9,234 | $ | 7,279 | 27 | % | ||||||||||||||||||||
Additions
resulting from acquisition, September 25, 2008 (a) |
2,535 | | | | | NM | NM | 2,535 | | NM | ||||||||||||||||||||||||||||||
Net charge-offs |
(2,484 | ) | (2,130 | ) | (1,906 | ) | (1,429 | ) | (1,221 | ) | (17 | ) | (103 | ) | (6,520 | ) | (3,109 | ) | (110 | ) | ||||||||||||||||||||
Provision for loan losses |
3,784 | 3,624 | 4,419 | 2,550 | 1,693 | 4 | 124 | 11,827 | 3,988 | 197 | ||||||||||||||||||||||||||||||
Provision
for credit losses accounting conformity (a) |
1,976 | | | | | NM | NM | 1,976 | | NM | ||||||||||||||||||||||||||||||
Other |
(5) | 6 | (1 | ) | | 8 | NM | NM | | (45 | ) | NM | ||||||||||||||||||||||||||||
Ending balance |
$ | 19,052 | $ | 13,246 | $ | 11,746 | $ | 9,234 | $ | 8,113 | 44 | 135 | $ | 19,052 | $ | 8,113 | 135 | |||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||||||||||||||
Beginning balance |
$ | 686 | $ | 855 | $ | 850 | $ | 858 | $ | 766 | (20 | ) | (10 | ) | $ | 850 | $ | 524 | 62 | |||||||||||||||||||||
Provision for lending-related commitments |
27 | (169 | ) | 5 | (8 | ) | 92 | NM | (71 | ) | (137 | ) | 334 | NM | ||||||||||||||||||||||||||
Ending balance |
$ | 713 | $ | 686 | $ | 855 | $ | 850 | $ | 858 | 4 | (17 | ) | $ | 713 | $ | 858 | (17 | ) | |||||||||||||||||||||
ALLOWANCE COMPONENTS AND RATIOS |
||||||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||||||||||||||
Wholesale |
||||||||||||||||||||||||||||||||||||||||
Asset specific |
$ | 253 | $ | 174 | $ | 146 | $ | 108 | $ | 53 | 45 | 377 | ||||||||||||||||||||||||||||
Formula based |
5,326 | 4,295 | 3,691 | 3,046 | 2,810 | 24 | 90 | |||||||||||||||||||||||||||||||||
Total wholesale |
5,579 | 4,469 | 3,837 | 3,154 | 2,863 | 25 | 95 | |||||||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||||||||||||||
Asset specific |
70 | 61 | 75 | 80 | 70 | 15 | | |||||||||||||||||||||||||||||||||
Formula based |
13,403 | 8,716 | 7,834 | 6,000 | 5,180 | 54 | 159 | |||||||||||||||||||||||||||||||||
Total consumer |
13,473 | 8,777 | 7,909 | 6,080 | 5,250 | 54 | 157 | |||||||||||||||||||||||||||||||||
Total allowance for loan losses |
19,052 | 13,246 | 11,746 | 9,234 | 8,113 | 44 | 135 | |||||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
713 | 686 | 855 | 850 | 858 | 4 | (17 | ) | ||||||||||||||||||||||||||||||||
Total allowance for credit losses |
$ | 19,765 | $ | 13,932 | $ | 12,601 | $ | 10,084 | $ | 8,971 | 42 | 120 | ||||||||||||||||||||||||||||
Wholesale allowance for loan losses to total wholesale loans (b) |
2.06 | % | 2.13 | % | 1.82 | % | 1.67 | % | 1.62 | % | ||||||||||||||||||||||||||||||
Consumer allowance for loan losses to total consumer loans (c) (d) |
3.42 | 2.86 | 2.63 | 2.01 | 1.84 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses to total loans (b) (c) (d) |
2.86 | 2.57 | 2.29 | 1.88 | 1.76 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses to total nonperforming loans (d) (e) |
287 | 254 | 271 | 286 | 336 | |||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES BY LOB |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 2,654 | $ | 2,429 | $ | 1,891 | $ | 1,329 | $ | 1,112 | 9 | 139 | ||||||||||||||||||||||||||||
Retail Financial Services |
4,957 | 4,475 | 4,208 | 2,634 | 2,105 | 11 | 135 | |||||||||||||||||||||||||||||||||
Card Services |
3,951 | 3,705 | 3,404 | 3,407 | 3,107 | 7 | 27 | |||||||||||||||||||||||||||||||||
Commercial Banking |
1,905 | 1,843 | 1,790 | 1,695 | 1,623 | 3 | 17 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
47 | 40 | 26 | 18 | 13 | 18 | 262 | |||||||||||||||||||||||||||||||||
Asset Management |
170 | 147 | 130 | 112 | 115 | 16 | 48 | |||||||||||||||||||||||||||||||||
Corporate/Private Equity |
857 | 607 | 297 | 39 | 38 | 41 | NM | |||||||||||||||||||||||||||||||||
Washington Mutual Acquisition |
4,511 | | | | | NM | NM | |||||||||||||||||||||||||||||||||
Total |
$ | 19,052 | $ | 13,246 | $ | 11,746 | $ | 9,234 | $ | 8,113 | 44 | 135 | ||||||||||||||||||||||||||||
(a) | Related to the Washington Mutual transaction in the third quarter of 2008. | |
(b) | Wholesale loans held-for-sale and loans at fair value were $17.0 billion, $20.0 billion, $20.3 billion, $23.6 billion, and $20.6 billion at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively, these amounts were excluded when calculating the allowance coverage ratios. | |
(c) | Consumer loans held-for-sale were $1.6 billion, $2.2 billion, $4.5 billion, $4.0 billion, and $3.9 billion at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. These amounts were excluded when calculating the allowance coverage ratios. | |
(d) | Approximately $77.7 billion in credit impaired loans acquired in the Washington Mutual transaction and accounted for under SOP 03-3 were excluded when calculating the ratio of allowance for loan losses to total loans. These loans are recorded at fair value on the acquisition date, including an adjustment for credit impairment. Accordingly, no allowance for loan losses has been recorded as of September 30, 2008. | |
(e) | Nonperforming loans held-for-sale and loans at fair value were $32 million, $51 million, $70 million, $50 million, and $75 million at September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, respectively. | |
(f) | Approximately $6.7 billion in nonperforming loans acquired in the Washington Mutual transaction and accounted for under SOP 3-3 were excluded when calculating the ratio of allowance for loan losses to total nonperforming loans. These loans were recorded at fair value on the acquisition date, including an adjustment for credit impairment. Accordingly, no allowance for loan losses has been recorded for these assets as of September 30, 2008. |
Page 31
JPMORGAN CHASE & CO. | ||
CREDIT-RELATED INFORMATION, CONTINUED | ||
(in millions) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
PROVISION
FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||
LOANS |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 238 | $ | 538 | $ | 571 | $ | 208 | $ | 146 | (56 | )% | 63 | % | $ | 1,347 | $ | 168 | NM | % | ||||||||||||||||||||
Commercial Banking |
105 | 77 | 143 | 105 | 98 | 36 | 7 | 325 | 125 | 160 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
7 | 7 | 11 | 5 | 3 | | 133 | 25 | 6 | 317 | ||||||||||||||||||||||||||||||
Asset Management |
21 | 17 | 17 | (2 | ) | 4 | 24 | 425 | 55 | (17 | ) | NM | ||||||||||||||||||||||||||||
Corporate/Private
Equity (a)(b) |
564 | 36 | | | | NM | NM | 600 | | NM | ||||||||||||||||||||||||||||||
Total wholesale |
935 | 675 | 742 | 316 | 251 | 39 | 273 | 2,352 | 282 | NM | ||||||||||||||||||||||||||||||
Retail Financial Services |
1,678 | 1,331 | 2,492 | 1,051 | 688 | 26 | 144 | 5,501 | 1,569 | 251 | ||||||||||||||||||||||||||||||
Card Services reported |
1,356 | 1,364 | 989 | 1,169 | 785 | (1 | ) | 73 | 3,709 | 2,162 | 72 | |||||||||||||||||||||||||||||
Corporate/Private Equity (a)(c) |
1,791 | 254 | 196 | 14 | (31 | ) | NM | NM | 2,241 | (25 | ) | NM | ||||||||||||||||||||||||||||
Total consumer |
4,825 | 2,949 | 3,677 | 2,234 | 1,442 | 64 | 235 | 11,451 | 3,706 | 209 | ||||||||||||||||||||||||||||||
Total provision for loan losses |
$ | 5,760 | $ | 3,624 | $ | 4,419 | $ | 2,550 | $ | 1,693 | 59 | 240 | $ | 13,803 | $ | 3,988 | 246 | |||||||||||||||||||||||
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | (4 | ) | $ | (140 | ) | $ | 47 | $ | (8 | ) | $ | 81 | 97 | NM | $ | (97 | ) | $ | 286 | NM | |||||||||||||||||||
Commercial Banking |
21 | (30 | ) | (42 | ) | | 14 | NM | 50 | (51 | ) | 49 | NM | |||||||||||||||||||||||||||
Treasury & Securities Services |
11 | | 1 | (1 | ) | 6 | NM | 83 | 12 | 9 | 33 | |||||||||||||||||||||||||||||
Asset Management |
(1 | ) | | (1 | ) | 1 | (1 | ) | NM | | (2 | ) | | NM | ||||||||||||||||||||||||||
Total wholesale |
27 | (170 | ) | 5 | (8 | ) | 100 | NM | (73 | ) | (138 | ) | 344 | NM | ||||||||||||||||||||||||||
Retail Financial Services |
| 1 | | | (8 | ) | NM | NM | 1 | (10 | ) | NM | ||||||||||||||||||||||||||||
Card Services reported |
| | | | | | | | | | ||||||||||||||||||||||||||||||
Total consumer |
| 1 | | | (8 | ) | NM | NM | 1 | (10 | ) | NM | ||||||||||||||||||||||||||||
Total provision for lending-related commitments |
$ | 27 | $ | (169 | ) | $ | 5 | $ | (8 | ) | $ | 92 | NM | (71 | ) | $ | (137 | ) | $ | 334 | NM | |||||||||||||||||||
TOTAL PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 234 | $ | 398 | $ | 618 | $ | 200 | $ | 227 | (41 | ) | 3 | $ | 1,250 | $ | 454 | 175 | ||||||||||||||||||||||
Commercial Banking |
126 | 47 | 101 | 105 | 112 | 168 | 13 | 274 | 174 | 57 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
18 | 7 | 12 | 4 | 9 | 157 | 100 | 37 | 15 | 147 | ||||||||||||||||||||||||||||||
Asset Management |
20 | 17 | 16 | (1 | ) | 3 | 18 | NM | 53 | (17 | ) | NM | ||||||||||||||||||||||||||||
Corporate/Private
Equity (a)(b) |
564 | 36 | | | | NM | NM | 600 | | NM | ||||||||||||||||||||||||||||||
Total wholesale |
962 | 505 | 747 | 308 | 351 | 90 | 174 | 2,214 | 626 | 254 | ||||||||||||||||||||||||||||||
Retail Financial Services |
1,678 | 1,332 | 2,492 | 1,051 | 680 | 26 | 147 | 5,502 | 1,559 | 253 | ||||||||||||||||||||||||||||||
Card Services reported |
1,356 | 1,364 | 989 | 1,169 | 785 | (1 | ) | 73 | 3,709 | 2,162 | 72 | |||||||||||||||||||||||||||||
Corporate/Private
Equity (a)(c) |
1,791 | 254 | 196 | 14 | (31 | ) | NM | NM | 2,241 | (25 | ) | NM | ||||||||||||||||||||||||||||
Total consumer |
4,825 | 2,950 | 3,677 | 2,234 | 1,434 | 64 | 236 | 11,452 | 3,696 | 210 | ||||||||||||||||||||||||||||||
Total provision for credit losses |
5,787 | 3,455 | 4,424 | 2,542 | 1,785 | 67 | 224 | 13,666 | 4,322 | 216 | ||||||||||||||||||||||||||||||
Card Services securitized |
873 | 830 | 681 | 619 | 578 | 5 | 51 | 2,384 | 1,761 | 35 | ||||||||||||||||||||||||||||||
Managed provision for credit losses |
$ | 6,660 | $ | 4,285 | $ | 5,105 | $ | 3,161 | $ | 2,363 | 55 | 182 | $ | 16,050 | $ | 6,083 | 164 | |||||||||||||||||||||||
(a) | Represents provision expense related to loans acquired in the Washington Mutual transaction in the third quarter of 2008. | |
(b) | Represents provision expense related to loans acquired in the Bear Stearns transaction in the second quarter of 2008. | |
(c) | Includes amounts related to held-for-investment prime mortgages transferred from RFS and AM to the Corporate/Private Equity segment during 2007. |
Page 32
JPMORGAN CHASE & CO. CAPITAL, INTANGIBLE ASSETS AND DEPOSITS |
||
(in millions, except per share and ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
3Q08 | 2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q08 | 3Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
COMMON
SHARES OUTSTANDING |
||||||||||||||||||||||||||||||||||||||||
Weighted-average basic shares outstanding |
3,444.6 | 3,426.2 | 3,396.0 | 3,367.1 | 3,375.9 | 1 | % | 2 | % | 3,422.3 | 3,415.8 | | % | |||||||||||||||||||||||||||
Weighted-average diluted shares outstanding |
3,444.6 | (d) | 3,531.0 | 3,494.7 | 3,471.8 | 3,477.7 | (2 | ) | (1 | ) | 3,525.3 | 3,519.6 | | |||||||||||||||||||||||||||
Common shares outstanding at period end |
3,726.9 | 3,435.7 | 3,400.8 | 3,367.4 | 3,358.8 | 8 | 11 | 3,726.9 | 3,358.8 | 11 | ||||||||||||||||||||||||||||||
Cash dividends declared per share |
$ | 0.38 | $ | 0.38 | $ | 0.38 | $ | 0.38 | $ | 0.38 | | | $ | 1.14 | $ | 1.10 | 4 | |||||||||||||||||||||||
Book value per share |
36.95 | 37.02 | 36.94 | 36.59 | 35.72 | | 4 | 36.95 | 35.72 | 3 | ||||||||||||||||||||||||||||||
Dividend payout (a) |
399 | % | 71 | % | 56 | % | 44 | % | 39 | % | 89 | % | 31 | % | ||||||||||||||||||||||||||
NET INCOME |
$ | 527 | $ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | (74 | ) | (84 | ) | $ | 4,903 | $ | 12,394 | (60 | ) | ||||||||||||||||||||
Preferred dividends |
161 | 90 | | | | 79 | NM | 251 | | NM | ||||||||||||||||||||||||||||||
Net income applicable to common stock |
$ | 366 | $ | 1,913 | $ | 2,373 | $ | 2,971 | $ | 3,373 | (81 | ) | (89 | ) | $ | 4,652 | $ | 12,394 | (62 | ) | ||||||||||||||||||||
NET INCOME PER SHARE |
||||||||||||||||||||||||||||||||||||||||
Basic earnings per share |
||||||||||||||||||||||||||||||||||||||||
Income
(loss) before extraordinary gain |
(0.06 | ) | 0.56 | 0.70 | 0.88 | 1.00 | NM | NM | 1.19 | 3.63 | (67 | ) | ||||||||||||||||||||||||||||
Net income |
0.11 | 0.56 | 0.70 | 0.88 | 1.00 | (80 | ) | (89 | ) | 1.36 | 3.63 | (63 | ) | |||||||||||||||||||||||||||
Diluted earnings per share |
||||||||||||||||||||||||||||||||||||||||
Income
(loss) before extraordinary gain |
(0.06 | ) | 0.54 | 0.68 | 0.86 | 0.97 | NM | NM | 1.15 | 3.52 | (67 | ) | ||||||||||||||||||||||||||||
Net income |
0.11 | 0.54 | 0.68 | 0.86 | 0.97 | (80 | ) | (89 | ) | 1.32 | 3.52 | (63 | ) | |||||||||||||||||||||||||||
SHARE PRICE |
||||||||||||||||||||||||||||||||||||||||
High |
$ | 49.00 | $ | 49.95 | $ | 49.29 | $ | 48.02 | $ | 50.48 | (2 | ) | (3 | ) | $ | 49.95 | $ | 53.25 | (6 | ) | ||||||||||||||||||||
Low |
29.24 | 33.96 | 36.01 | 40.15 | 42.16 | (14 | ) | (31 | ) | 29.24 | 42.16 | (31 | ) | |||||||||||||||||||||||||||
Close |
46.70 | 34.31 | 42.95 | 43.65 | 45.82 | 36 | 2 | 46.70 | 45.82 | 2 | ||||||||||||||||||||||||||||||
Market capitalization |
174,048 | 117,881 | 146,066 | 146,986 | 153,901 | 48 | 13 | 174,048 | 153,901 | 13 | ||||||||||||||||||||||||||||||
STOCK REPURCHASE PROGRAM (b) |
||||||||||||||||||||||||||||||||||||||||
Aggregate repurchases |
$ | | $ | | $ | | $ | 163.3 | $ | 2,135.4 | | NM | $ | | $ | 8,011.6 | NM | |||||||||||||||||||||||
Common shares repurchased |
| | | 3.6 | 47.0 | | NM | | 164.6 | NM | ||||||||||||||||||||||||||||||
Average purchase price |
$ | | $ | | $ | | $ | 45.29 | $ | 45.42 | | NM | $ | | $ | 48.67 | NM | |||||||||||||||||||||||
CAPITAL RATIOS (c) |
||||||||||||||||||||||||||||||||||||||||
Tier 1 capital |
$ | 111,824 | (e) | $ | 98,775 | $ | 89,646 | $ | 88,746 | $ | 86,096 | 13 | 30 | |||||||||||||||||||||||||||
Total capital |
159,265 | (e) | 145,012 | 134,948 | 132,242 | 128,543 | 10 | 24 | ||||||||||||||||||||||||||||||||
Risk-weighted assets |
1,255,419 | (e) | 1,079,199 | 1,075,697 | 1,051,879 | 1,028,551 | 16 | 22 | ||||||||||||||||||||||||||||||||
Adjusted average assets |
1,555,250 | (e) | 1,536,439 | 1,507,724 | 1,473,541 | 1,423,171 | 1 | 9 | ||||||||||||||||||||||||||||||||
Tier 1 capital ratio |
8.9 | %(e) | 9.2 | % | 8.3 | % | 8.4 | % | 8.4 | % | ||||||||||||||||||||||||||||||
Total capital ratio |
12.7 | (e) | 13.4 | 12.5 | 12.6 | 12.5 | ||||||||||||||||||||||||||||||||||
Tier 1 leverage ratio |
7.2 | (e) | 6.4 | 5.9 | 6.0 | 6.0 | ||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS (PERIOD-END) |
||||||||||||||||||||||||||||||||||||||||
Goodwill |
$ | 46,121 | $ | 45,993 | $ | 45,695 | $ | 45,270 | $ | 45,335 | | 2 | ||||||||||||||||||||||||||||
Mortgage servicing rights |
17,048 | 11,617 | 8,419 | 8,632 | 9,114 | 47 | 87 | |||||||||||||||||||||||||||||||||
Purchased credit card relationships |
1,827 | 1,984 | 2,140 | 2,303 | 2,427 | (8 | ) | (25 | ) | |||||||||||||||||||||||||||||||
All other intangibles |
3,653 | 3,675 | 3,815 | 3,796 | 3,959 | (1 | ) | (8 | ) | |||||||||||||||||||||||||||||||
Total intangibles |
$ | 68,649 | $ | 63,269 | $ | 60,069 | $ | 60,001 | $ | 60,835 | 9 | 13 | ||||||||||||||||||||||||||||
DEPOSITS |
||||||||||||||||||||||||||||||||||||||||
U.S. offices: |
||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing |
$ | 193,253 | $ | 125,606 | $ | 132,072 | $ | 129,406 | $ | 115,036 | 54 | 68 | ||||||||||||||||||||||||||||
Interest-bearing |
506,974 | 362,150 | 394,613 | 376,194 | 354,459 | 40 | 43 | |||||||||||||||||||||||||||||||||
Non-U.S. offices: |
||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing |
9,747 | 7,827 | 7,232 | 6,342 | 6,559 | 25 | 49 | |||||||||||||||||||||||||||||||||
Interest-bearing |
259,809 | 227,322 | 227,709 | 228,786 | 202,037 | 14 | 29 | |||||||||||||||||||||||||||||||||
Total deposits |
$ | 969,783 | $ | 722,905 | $ | 761,626 | $ | 740,728 | $ | 678,091 | 34 | 43 | ||||||||||||||||||||||||||||
(a) | Based on net income amounts. | |
(b) | Excludes commission costs. | |
(c) | The Federal Reserve has granted the Firm, for a period of 18 months following the merger with Bear Stearns, relief up to a certain specified amount and subject to certain conditions from the Federal Reserves risk-based and leverage capital guidelines in respect to the Bear Stearns risk-weighted assets and other exposures acquired. The amount of such relief is subject to reduction by one-sixth each quarter subsequent to the acquisition and expires on October 1, 2009. | |
(d) | Common equivalent shares have been excluded from the computation of diluted earnings per share for the third quarter of 2008, as the effect would be antidilutive | |
(e) | Estimated. |
Page 33
JPMORGAN CHASE & CO. Glossary of Terms |
Page 34
JPMORGAN CHASE & CO. Line of Business Metrics |
a) | Servicing revenue represents all gross income earned from servicing third-party mortgage loans including stated service fees, excess service fees, late fees and other ancillary fees. | ||
b) | Changes in MSR asset fair value due to: |
| market-based inputs such as interest rates and volatility, as well as updates to assumptions used in the MSR valuation model. | ||
| modeled servicing portfolio runoff (or time decay) |
c) | Derivative valuation adjustments and other, which represents changes in the fair value of derivative instruments used to offset the impact of changes in the market-based inputs to the MSR valuation model. |
Page 35
JPMORGAN CHASE & CO. Line of Business Metrics (continued) |
Page 36