Delaware | 1-5805 | 13-2624428 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
270 Park Avenue, New York, NY (Address of Principal Executive Offices) |
10017 (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 Fourth Quarter 2009 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement Fourth Quarter 2009 |
2
JPMORGAN CHASE & CO. | ||||
(Registrant) | ||||
By: | /s/ Louis Rauchenberger | |||
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 Fourth Quarter 2009 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement Fourth Quarter 2009 |
4
Year ended December 31, (in millions, except ratios) | 2009 | |||
Excluding interest on deposits |
||||
Income before income tax expense and extraordinary gain |
$ | 16,067 | ||
Fixed charges: |
||||
Interest expense |
10,372 | |||
One-third of rents, net of income from subleases (a) |
569 | |||
Total fixed charges |
10,941 | |||
Less: Equity in undistributed income of affiliates |
(21 | ) | ||
Income before income tax expense, extraordinary gain, and fixed charges,
excluding capitalized interest |
$ | 26,987 | ||
Fixed charges, as above |
$ | 10,941 | ||
Ratio of earnings to fixed charges |
2.47 | |||
Including interest on deposits |
||||
Fixed charges, as above |
$ | 10,941 | ||
Add: Interest on deposits |
4,826 | |||
Total fixed charges and interest on deposits |
$ | 15,767 | ||
Income before income tax expense, extraordinary gain, and fixed charges,
excluding capitalized interest, as above |
$ | 26,987 | ||
Add: Interest on deposits |
4,826 | |||
Total Income before income tax expense, extraordinary gain,
fixed charges and interest on deposits |
$ | 31,813 | ||
Ratio of earnings to fixed charges |
2.02 | |||
(a) | The proportion deemed representative of the interest factor. |
Year ended December 31, (in millions, except ratios) | 2009 | |||
Excluding interest on deposits |
||||
Income before income tax expense and extraordinary gain |
$ | 16,067 | ||
Fixed charges: |
||||
Interest expense |
10,372 | |||
One-third of rents, net of income from subleases (a) |
569 | |||
Total fixed charges |
10,941 | |||
Less: Equity in undistributed income of affiliates |
(21 | ) | ||
Income before income tax expense, extraordinary gain, and fixed charges,
excluding capitalized interest |
$ | 26,987 | ||
Fixed charges, as above |
$ | 10,941 | ||
Preferred stock dividends (pre-tax) (b) |
3,435 | |||
Fixed charges including preferred stock dividends |
$ | 14,376 | ||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
1.88 | |||
Including interest on deposits |
||||
Fixed charges including preferred stock dividends, as above |
$ | 14,376 | ||
Add: Interest on deposits |
4,826 | |||
Total fixed charges including preferred stock dividends and interest on deposits |
$ | 19,202 | ||
Income before income tax expense, extraordinary gain, and fixed charges,
excluding capitalized interest, as above |
$ | 26,987 | ||
Add: Interest on deposits |
4,826 | |||
Total income before income tax expense, extraordinary gain,
fixed charges, and interest on deposits |
$ | 31,813 | ||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
1.66 | |||
(a) | The proportion deemed representative of the interest factor. | |
(b) | Includes a one-time $1.6 billion pre-tax payment of TARP preferred dividends. |
| Ranked #1 in Global Investment Banking Fees for full-year 2009 |
| Completed Washington Mutual integration and maintained solid growth in Retail Banking, opening more than 6 million new checking accounts in 2009 |
| Delivered solid fourth-quarter results in other businesses, including Asset Management and Commercial Banking |
| Credit costs remained high: added $1.9 billion to consumer loan loss reserves, resulting in firmwide credit reserves of $32.5 billion and loan loss coverage ratio of 5.5%1 |
| Balance sheet strengthened further: Tier 1 Capital of $133.0 billion, or 11.1%, and Tier 1 Common1 of $105.3 billion, or 8.8% (estimated), at year-end |
| Continued focus on sound lending and efforts to prevent foreclosures: |
- | Extended more than $600 billion in new credit during 2009 to consumers, corporations, small businesses, municipalities and non-profits (including more than 18 million card, home equity, mortgage, auto and education loans) |
- | Launched new initiative during the quarter to expand lending to small businesses by up to $4 billion in 2010; adding 325 small-business bankers and 100 middle-market bankers to support increased lending |
- | Extended offers to modify approximately 600,000 mortgages and approved 120,000 modifications during the year |
Investor Contact: Lauren Tyler (212) 270-7325 | Media Contact: Joe Evangelisti (212) 270-7438 |
1 | On a managed basis. For notes on managed basis and other non-GAAP measures, see page 12. |
2
Results for IB | 3Q09 | 4Q08 | ||||||||||||||||||||||||||
($ millions) | 4Q09 | 3Q09 | 4Q08 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 4,929 | $ | 7,508 | ($272 | ) | ($2,579 | ) | (34 | )% | $ | 5,201 | NM | |||||||||||||||
Provision for Credit Losses |
(181 | ) | 379 | 765 | (560 | ) | NM | (946 | ) | NM | ||||||||||||||||||
Noninterest Expense |
2,286 | 4,274 | 2,741 | (1,988 | ) | (47 | ) | (455 | ) | (17 | )% | |||||||||||||||||
Net Income /(Loss) |
$ | 1,901 | $ | 1,921 | ($2,364 | ) | ($20 | ) | (1 | )% | $ | 4,265 | NM |
§ | 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 on volume, for the year ended December 31, 2009, according to Thomson Reuters. |
§ | Ranked #1 in Global Investment Banking Fees for the year ended December 31, 2009, according to Dealogic. |
§ | Return on equity was 23% on $33.0 billion of average allocated capital. |
3
§ | End-of-period loans retained were $45.5 billion, down 36% from the prior year and 18% from the prior quarter. End-of-period fair-value and held-for-sale loans were $3.6 billion, down 74%, from the prior year and 22% from the prior quarter, driven primarily by reductions in leveraged loan exposure. |
Results for RFS | 3Q09 | 4Q08 | ||||||||||||||||||||||||||
($ millions) | 4Q09 | 3Q09 | 4Q08 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 7,669 | $ | 8,218 | $ | 8,684 | ($549 | ) | (7 | )% | ($1,015 | ) | (12 | )% | ||||||||||||||
Provision for Credit Losses |
4,229 | 3,988 | 3,576 | 241 | 6 | 653 | 18 | |||||||||||||||||||||
Noninterest Expense |
4,302 | 4,196 | 4,046 | 106 | 3 | % | 256 | 6 | % | |||||||||||||||||||
Net Income/(Loss) |
($399 | ) | $ | 7 | $ | 624 | ($406 | ) | NM | ($1,023 | ) | NM |
4
§ | Checking accounts totaled 25.7 million, up 5% from the prior year and 1% from the prior quarter. |
§ | Average total deposits were $329.8 billion, down 3% from both the prior year and prior quarter due to the maturity of time deposits acquired in the Washington Mutual transaction. |
§ | Deposit margin was 3.06%, compared with 2.94% in the prior year and 2.99% in the prior quarter. |
§ | Average Business Banking and other loans were $17.2 billion, down 5% from the prior year and 3% from the prior quarter, while originations were $670 million, down 13% from the prior year and up 40% from the prior quarter. |
§ | Branch sales of credit cards decreased 31% from the prior year and 6% from the prior quarter. |
§ | Branch sales of investment products increased 48% from the prior year, partially driven by significantly increased sales in the Washington Mutual footprint, and declined 6% from the prior quarter. |
§ | Overhead ratio (excluding amortization of core deposit intangibles) was 55%, compared with 54% in the prior year and 56% in the prior quarter. |
§ | Number of branches was 5,154, down 6% from the prior year and up 1% from the prior quarter. |
5
§ | Average mortgage loans were $136.3 billion, down by $13.7 billion. Mortgage loan originations were $34.8 billion, up 24% from the prior year and down 6% from the prior quarter. |
§ | Total third-party mortgage loans serviced were $1.1 trillion, a decrease of $90.5 billion, or 8%. |
§ | Average home equity loans were $130.0 billion, down by $12.8 billion. Home equity originations were $402 million, down 76% from the prior year and 20% from the prior quarter. |
§ | Average auto loans were $45.3 billion, up 6%. Auto loan originations were $5.9 billion, up 111% from the prior year and down 14% from the prior quarter. |
Results for CS | 3Q09 | 4Q08 | ||||||||||||||||||||||||||
($ millions) | 4Q09 | 3Q09 | 4Q08 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 5,148 | $ | 5,159 | $ | 4,908 | ($11 | ) | | % | $ | 240 | 5 | % | ||||||||||||||
Provision for Credit Losses |
4,239 | 4,967 | 3,966 | (728 | ) | (15 | ) | 273 | 7 | |||||||||||||||||||
Noninterest Expense |
1,396 | 1,306 | 1,489 | 90 | 7 | (93 | ) | (6 | ) | |||||||||||||||||||
Net Loss |
($306 | ) | ($700 | ) | ($371 | ) | $ | 394 | 56 | % | $ | 65 | 18 | % |
(*) | Presented on a managed basis; see notes on page 13 for further explanation of managed basis. |
6
§ | Return on equity was negative 8%, up from negative 10%. |
§ | Pretax income to average managed loans (ROO) was negative 1.18%, compared with negative 1.16% in the prior year and negative 2.61% in the prior quarter. |
§ | Net interest income as a percentage of average managed loans was 10.36%, up from 9.17% in the prior year and 10.15% in the prior quarter. Excluding the impact of the Washington Mutual transaction, the ratio was 9.40%. |
§ | Net accounts of 3.2 million were opened. |
§ | Charge volume was $86.9 billion, a decrease of $9.1 billion, or 9%. Excluding the impact of the Washington Mutual transaction, charge volume was $83.6 billion, a decrease of $4.6 billion, or 5%, driven by lower balance transfer volume. Sales volume increased 2%. |
§ | Merchant processing volume was $110.4 billion, on 4.9 billion total transactions processed. |
Results for CB | 3Q09 | 4Q08 | ||||||||||||||||||||||||||
($ millions) | 4Q09 | 3Q09 | 4Q08 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 1,406 | $ | 1,459 | $ | 1,479 | ($53 | ) | (4 | )% | ($73 | ) | (5 | )% | ||||||||||||||
Provision for Credit Losses |
494 | 355 | 190 | 139 | 39 | 304 | 160 | |||||||||||||||||||||
Noninterest Expense |
543 | 545 | 499 | (2 | ) | | 44 | 9 | ||||||||||||||||||||
Net Income |
$ | 224 | $ | 341 | $ | 480 | ($117 | ) | (34 | )% | ($256 | ) | (53 | )% |
7
§ | Overhead ratio was 39%, an increase from 34% in the prior year. |
§ | Gross investment banking revenue (which is shared with the Investment Bank) was $328 million, up by $87 million, or 36%. |
§ | Average loan balances were $100.2 billion, down by $17.5 billion, or 15%, from the prior year, and $3.9 billion, or 4%, from the prior quarter. |
§ | End-of-period loan balances were $97.4 billion, down by $18.0 billion, or 16%, from the prior year, and $4.5 billion, or 4%, from the prior quarter. |
§ | Average liability balances were $122.5 billion, up by $8.4 billion, or 7%, from the prior year and $13.2 billion, or 12%, from the prior quarter. |
Results for TSS | 3Q09 | 4Q08 | ||||||||||||||||||||||||||
($ millions) | 4Q09 | 3Q09 | 4Q08 | $O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 1,835 | $ | 1,788 | $ | 2,249 | $ | 47 | 3 | % | ($414 | ) | (18 | )% | ||||||||||||||
Provision for Credit Losses |
53 | 13 | 45 | 40 | 308 | 8 | 18 | |||||||||||||||||||||
Noninterest Expense |
1,391 | 1,280 | 1,339 | 111 | 9 | 52 | 4 | |||||||||||||||||||||
Net Income |
$ | 237 | $ | 302 | $ | 533 | ($65 | ) | (22 | )% | ($296 | ) | (56 | )% |
8
§ | Pretax margin1 was 20%, down from 37% in the prior year and 26% in the prior quarter. |
§ | Average liability balances were $250.7 billion, down 25% from the prior year and up 8% from the prior quarter. |
§ | Assets under custody were $14.9 trillion, up 13% from the prior year. |
Results for AM | 3Q09 | 4Q08 | ||||||||||||||||||||||||||
($ millions) | 4Q09 | 3Q09 | 4Q08 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 2,195 | $ | 2,085 | $ | 1,658 | $ | 110 | 5 | % | $ | 537 | 32 | % | ||||||||||||||
Provision for Credit Losses |
58 | 38 | 32 | 20 | 53 | 26 | 81 | |||||||||||||||||||||
Noninterest Expense |
1,470 | 1,351 | 1,213 | 119 | 9 | 257 | 21 | |||||||||||||||||||||
Net Income |
$ | 424 | $ | 430 | $ | 255 | ($6 | ) | (1 | )% | $ | 169 | 66 | % |
9
§ | Pretax margin1 was 30%, up from 25%. |
§ | Assets under management reflected net outflows of $24 billion for the quarter and net inflows of $28 billion for the year ended December 31, 2009. |
§ | Assets under management ranked in the top two quartiles for investment performance were 74% over five years, 62% over three years and 57% over one year. |
§ | Customer assets in 4 and 5 Star-rated funds were 42%. |
§ | Average loans were $36.1 billion, down by $714 million, or 2%, from the prior year. |
§ | End-of-period loan balances were $37.8 billion, up by $1.6 billion, or 4%, from the prior year and $1.9 billion, or 5%, from the prior quarter. |
§ | Average deposits were $77.4 billion, up by $441 million, or 1%, from the prior year. |
Results for Corporate/Private | 3Q09 | 4Q08 | ||||||||||||||||||||||||||
Equity ($ millions) | 4Q09 | 3Q09 | 4Q08 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 2,084 | $ | 2,594 | $ | 432 | ($510 | ) | (20 | )% | $ | 1,652 | 382 | % | ||||||||||||||
Provision for Credit Losses |
9 | 62 | (33 | ) | (53 | ) | (85 | ) | 42 | NM | ||||||||||||||||||
Noninterest Expense |
616 | 503 | (72 | ) | 113 | 22 | 688 | NM | ||||||||||||||||||||
Extraordinary Gain |
| 76 | 1,325 | (76 | ) | NM | (1,325 | ) | NM | |||||||||||||||||||
Net Income |
$ | 1,197 | $ | 1,287 | $ | 1,545 | ($90 | ) | (7 | )% | ($348 | ) | (23 | )% |
(*) | This segment includes the results of the Private Equity and Corporate business segments, as well as merger-related items. |
10
Results for JPM | 3Q09 | 4Q08 | ||||||||||||||||||||||||||
($ millions) | 4Q09 | 3Q09 | 4Q08 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | |||||||||||||||||||||
Net Revenue |
$ | 25,236 | $ | 28,780 | $ | 19,108 | ($3,544 | ) | (12 | )% | $ | 6,128 | 32 | % | ||||||||||||||
Provision for Credit Losses |
8,901 | 9,802 | 8,541 | (901 | ) | (9 | ) | 360 | 4 | |||||||||||||||||||
Noninterest Expense |
12,004 | 13,455 | 11,255 | (1,451 | ) | (11 | ) | 749 | 7 | |||||||||||||||||||
Extraordinary Gain |
| 76 | 1,325 | (76 | ) | NM | (1,325 | ) | NM | |||||||||||||||||||
Net Income |
$ | 3,278 | $ | 3,588 | $ | 702 | ($310 | ) | (9 | )% | $ | 2,576 | 367 | % |
(*) | Presented on a managed basis; see notes on page 13 for further explanation of managed basis. Net revenue on a U.S. GAAP basis was $23,164 million, $26,622 million and $17,226 million for the fourth quarter of 2009, third quarter of 2009 and fourth quarter of 2008, respectively. |
11
§ | Tier 1 Capital ratio was 11.1% at December 31, 2009 (estimated), 10.2% at September 30, 2009, and 10.9% at December 31, 2008. |
§ | Tier 1 Common ratio was 8.8% at December 31, 2009 (estimated), 8.2% at September 30, 2009, and 7.0% at December 31, 2008. |
§ | Headcount was 222,316, a decrease of 2,645, or 1%. |
12
13
14
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA: |
||||||||||||||||||||||||||||||||
Reported Basis |
||||||||||||||||||||||||||||||||
Total net revenue |
$ | 23,164 | $ | 26,622 | $ | 17,226 | (13 | )% | 34 | % | $ | 100,434 | $ | 67,252 | 49 | % | ||||||||||||||||
Total noninterest expense |
12,004 | 13,455 | 11,255 | (11 | ) | 7 | 52,352 | 43,500 | 20 | |||||||||||||||||||||||
Pre-provision profit (a) |
11,160 | 13,167 | 5,971 | (15 | ) | 87 | 48,082 | 23,752 | 102 | |||||||||||||||||||||||
Provision for credit losses |
7,284 | 8,104 | 7,313 | (10 | ) | | 32,015 | 20,979 | 53 | |||||||||||||||||||||||
Income/(loss) before extraordinary gain |
3,278 | 3,512 | (623 | ) | (7 | ) | NM | 11,652 | 3,699 | 215 | ||||||||||||||||||||||
Extraordinary gain |
| 76 | 1,325 | NM | NM | 76 | 1,906 | (96 | ) | |||||||||||||||||||||||
NET INCOME |
3,278 | 3,588 | 702 | (9 | ) | 367 | 11,728 | 5,605 | 109 | |||||||||||||||||||||||
Managed Basis (b) |
||||||||||||||||||||||||||||||||
Total net revenue |
$ | 25,236 | $ | 28,780 | $ | 19,108 | (12 | ) | 32 | $ | 108,647 | $ | 72,772 | 49 | ||||||||||||||||||
Total noninterest expense |
12,004 | 13,455 | 11,255 | (11 | ) | 7 | 52,352 | 43,500 | 20 | |||||||||||||||||||||||
Pre-provision profit (a) |
13,232 | 15,325 | 7,853 | (14 | ) | 68 | 56,295 | 29,272 | 92 | |||||||||||||||||||||||
Provision for credit losses |
8,901 | 9,802 | 8,541 | (9 | ) | 4 | 38,458 | 24,591 | 56 | |||||||||||||||||||||||
Income/(loss) before extraordinary gain |
3,278 | 3,512 | (623 | ) | (7 | ) | NM | 11,652 | 3,699 | 215 | ||||||||||||||||||||||
Extraordinary gain |
| 76 | 1,325 | NM | NM | 76 | 1,906 | (96 | ) | |||||||||||||||||||||||
NET INCOME |
3,278 | 3,588 | 702 | (9 | ) | 367 | 11,728 | 5,605 | 109 | |||||||||||||||||||||||
PER COMMON SHARE: |
||||||||||||||||||||||||||||||||
Basic Earnings (c) |
||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
0.75 | 0.80 | (0.29 | ) | (6 | ) | NM | 2.25 | 0.81 | 178 | ||||||||||||||||||||||
Net income |
0.75 | 0.82 | 0.06 | (9 | ) | NM | 2.27 | 1.35 | 68 | |||||||||||||||||||||||
Diluted Earnings (c) (d) |
||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
0.74 | 0.80 | (0.29 | ) | (8 | ) | NM | 2.24 | 0.81 | 177 | ||||||||||||||||||||||
Net income |
0.74 | 0.82 | 0.06 | (10 | ) | NM | 2.26 | 1.35 | 67 | |||||||||||||||||||||||
Cash dividends declared |
0.05 | 0.05 | 0.38 | | (87 | ) | 0.20 | 1.52 | (87 | ) | ||||||||||||||||||||||
Book value |
39.88 | 39.12 | 36.15 | 2 | 10 | 39.88 | 36.15 | 10 | ||||||||||||||||||||||||
Closing share price |
41.67 | 43.82 | 31.53 | (5 | ) | 32 | 41.67 | 31.53 | 32 | |||||||||||||||||||||||
Market capitalization |
164,261 | 172,596 | 117,695 | (5 | ) | 40 | 164,261 | 117,695 | 40 | |||||||||||||||||||||||
COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||||||||||
Weighted-average diluted shares outstanding (c) |
3,974.1 | 3,962.0 | 3,737.5 | | 6 | 3,879.7 | 3,521.8 | 10 | ||||||||||||||||||||||||
Common shares outstanding at period-end |
3,942.0 | 3,938.7 | 3,732.8 | | 6 | 3,942.0 | 3,732.8 | 6 | ||||||||||||||||||||||||
FINANCIAL RATIOS: (e) |
||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain: |
||||||||||||||||||||||||||||||||
Return on common equity (ROE) (f) |
8 | % | 9 | % | (3 | )% | 6 | % | 2 | % | ||||||||||||||||||||||
Return on tangible common equity (ROTCE) (f)(g) |
12 | 13 | (5 | ) | 10 | 4 | ||||||||||||||||||||||||||
Return on assets (ROA) |
0.65 | 0.70 | (0.11 | ) | 0.58 | 0.21 | ||||||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||||||
ROE (f) |
8 | 9 | 1 | 6 | 4 | |||||||||||||||||||||||||||
ROTCE (f)(g) |
12 | 14 | 1 | 10 | 6 | |||||||||||||||||||||||||||
ROA |
0.65 | 0.71 | 0.13 | 0.58 | 0.31 | |||||||||||||||||||||||||||
CAPITAL RATIOS: |
||||||||||||||||||||||||||||||||
Tier 1 capital ratio |
11.1 | (i) | 10.2 | 10.9 | ||||||||||||||||||||||||||||
Total capital ratio |
14.8 | (i) | 13.9 | 14.8 | ||||||||||||||||||||||||||||
Tier 1 common capital ratio (h) |
8.8 | (i) | 8.2 | 7.0 | ||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||
Total assets |
$ | 2,031,989 | $ | 2,041,009 | $ | 2,175,052 | | (7 | ) | $ | 2,031,989 | $ | 2,175,052 | (7 | ) | |||||||||||||||||
Wholesale loans |
204,175 | 218,953 | 262,044 | (7 | ) | (22 | ) | 204,175 | 262,044 | (22 | ) | |||||||||||||||||||||
Consumer loans |
429,283 | 434,191 | 482,854 | (1 | ) | (11 | ) | 429,283 | 482,854 | (11 | ) | |||||||||||||||||||||
Deposits |
938,367 | 867,977 | 1,009,277 | 8 | (7 | ) | 938,367 | 1,009,277 | (7 | ) | ||||||||||||||||||||||
Common stockholders equity |
157,213 | 154,101 | 134,945 | 2 | 17 | 157,213 | 134,945 | 17 | ||||||||||||||||||||||||
Total stockholders equity |
165,365 | 162,253 | 166,884 | 2 | (1 | ) | 165,365 | 166,884 | (1 | ) | ||||||||||||||||||||||
Headcount |
222,316 | 220,861 | 224,961 | 1 | (1 | ) | 222,316 | 224,961 | (1 | ) | ||||||||||||||||||||||
LINE OF BUSINESS NET INCOME/(LOSS) |
||||||||||||||||||||||||||||||||
Investment Bank |
$ | 1,901 | $ | 1,921 | $ | (2,364 | ) | (1 | ) | NM | $ | 6,899 | $ | (1,175 | ) | NM | ||||||||||||||||
Retail Financial Services |
(399 | ) | 7 | 624 | NM | NM | 97 | 880 | (89 | ) | ||||||||||||||||||||||
Card Services |
(306 | ) | (700 | ) | (371 | ) | 56 | 18 | (2,225 | ) | 780 | NM | ||||||||||||||||||||
Commercial Banking |
224 | 341 | 480 | (34 | ) | (53 | ) | 1,271 | 1,439 | (12 | ) | |||||||||||||||||||||
Treasury & Securities Services |
237 | 302 | 533 | (22 | ) | (56 | ) | 1,226 | 1,767 | (31 | ) | |||||||||||||||||||||
Asset Management |
424 | 430 | 255 | (1 | ) | 66 | 1,430 | 1,357 | 5 | |||||||||||||||||||||||
Corporate/Private Equity |
1,197 | 1,287 | 1,545 | (7 | ) | (23 | ) | 3,030 | 557 | 444 | ||||||||||||||||||||||
Net income |
$ | 3,278 | $ | 3,588 | $ | 702 | (9 | ) | 367 | $ | 11,728 | $ | 5,605 | 109 | ||||||||||||||||||
(a) | Pre-provision profit is total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses. | |
(b) | For further discussion of managed basis, see Note 1.a on page 13. | |
(c) | Effective January 1, 2009, the Firm implemented new FASB guidance for participating securities. Accordingly, prior period amounts have been revised as required. For further discussion of the guidance, see Per share-related information on page 36 of the Earnings Release Financial Supplement. | |
(d) | The calculation of full year 2009 earnings per share includes a one-time, non-cash reduction of $1.1 billion, or $0.27 per share, resulting from repayment of TARP preferred capital. | |
(e) | Quarterly ratios are based upon annualized amounts. | |
(f) | The calculation of full year 2009 net income applicable to common equity includes a one-time, non-cash reduction of $1.1 billion resulting from repayment of TARP preferred capital. Excluding this reduction, the adjusted ROE for the full year 2009 was 7% and the adjusted ROTCE was 11%, respectively. The Firm views the adjusted ROE and ROTCE, both non-GAAP financial measures, as meaningful because they increase the comparability to prior periods. | |
(g) | Net income applicable to common equity divided by total average common stockholders equity (i.e., total stockholders equity less preferred stock) less identifiable intangible assets (other than MSRs) and goodwill, net of related deferred tax liabilities. The Firm uses return on tangible common equity, a non-GAAP financial measure, to assess the Firms use of equity. | |
(h) | Tier 1 common is calculated as Tier 1 capital less qualifying perpetual preferred stock, qualifying trust preferred securities and qualifying minority interest in subsidiaries. The Firm uses the Tier 1 common capital ratio, a non-GAAP financial measure, to assess and compare the quality and composition of the Firms capital with the capital of other financial services companies. | |
(i) | Estimated. |
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
|
17 | |||
Commercial Banking
|
20 | |||
Treasury & Securities Services
|
22 | |||
Asset Management
|
24 | |||
Corporate/Private Equity
|
27 | |||
Credit-Related Information
|
29 | |||
Market Risk-Related Information
|
34 | |||
Supplemental Detail |
||||
Capital, Intangible Assets and Deposits
|
35 | |||
Per Share-Related Information
|
36 | |||
Glossary of Terms
|
37 |
Page 1
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA: |
||||||||||||||||||||||||||||||||||||||||
Reported Basis |
||||||||||||||||||||||||||||||||||||||||
Total net revenue |
$ | 23,164 | $ | 26,622 | $ | 25,623 | $ | 25,025 | $ | 17,226 | (13 | )% | 34 | % | $ | 100,434 | $ | 67,252 | 49 | % | ||||||||||||||||||||
Total noninterest expense |
12,004 | 13,455 | 13,520 | 13,373 | 11,255 | (11 | ) | 7 | 52,352 | 43,500 | 20 | |||||||||||||||||||||||||||||
Pre-provision profit (a) |
11,160 | 13,167 | 12,103 | 11,652 | 5,971 | (15 | ) | 87 | 48,082 | 23,752 | 102 | |||||||||||||||||||||||||||||
Provision for credit losses |
7,284 | 8,104 | 8,031 | 8,596 | 7,313 | (10 | ) | | 32,015 | 20,979 | 53 | |||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
3,278 | 3,512 | 2,721 | 2,141 | (623 | ) | (7 | ) | NM | 11,652 | 3,699 | 215 | ||||||||||||||||||||||||||||
Extraordinary gain |
| 76 | | | 1,325 | NM | NM | 76 | 1,906 | (96 | ) | |||||||||||||||||||||||||||||
NET INCOME |
3,278 | 3,588 | 2,721 | 2,141 | 702 | (9 | ) | 367 | 11,728 | 5,605 | 109 | |||||||||||||||||||||||||||||
Managed Basis (b) |
||||||||||||||||||||||||||||||||||||||||
Total net revenue |
$ | 25,236 | $ | 28,780 | $ | 27,709 | $ | 26,922 | $ | 19,108 | (12 | ) | 32 | $ | 108,647 | $ | 72,772 | 49 | ||||||||||||||||||||||
Total noninterest expense |
12,004 | 13,455 | 13,520 | 13,373 | 11,255 | (11 | ) | 7 | 52,352 | 43,500 | 20 | |||||||||||||||||||||||||||||
Pre-provision profit (a) |
13,232 | 15,325 | 14,189 | 13,549 | 7,853 | (14 | ) | 68 | 56,295 | 29,272 | 92 | |||||||||||||||||||||||||||||
Provision for credit losses |
8,901 | 9,802 | 9,695 | 10,060 | 8,541 | (9 | ) | 4 | 38,458 | 24,591 | 56 | |||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
3,278 | 3,512 | 2,721 | 2,141 | (623 | ) | (7 | ) | NM | 11,652 | 3,699 | 215 | ||||||||||||||||||||||||||||
Extraordinary gain |
| 76 | | | 1,325 | NM | NM | 76 | 1,906 | (96 | ) | |||||||||||||||||||||||||||||
NET INCOME |
3,278 | 3,588 | 2,721 | 2,141 | 702 | (9 | ) | 367 | 11,728 | 5,605 | 109 | |||||||||||||||||||||||||||||
PER COMMON SHARE: |
||||||||||||||||||||||||||||||||||||||||
Basic Earnings (c) |
||||||||||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
0.75 | 0.80 | 0.28 | 0.40 | (0.29 | ) | (6 | ) | NM | 2.25 | 0.81 | 178 | ||||||||||||||||||||||||||||
Net income |
0.75 | 0.82 | 0.28 | 0.40 | 0.06 | (9 | ) | NM | 2.27 | 1.35 | 68 | |||||||||||||||||||||||||||||
Diluted Earnings (c) (d) |
||||||||||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
0.74 | 0.80 | 0.28 | 0.40 | (0.29 | ) | (8 | ) | NM | 2.24 | 0.81 | 177 | ||||||||||||||||||||||||||||
Net income |
0.74 | 0.82 | 0.28 | 0.40 | 0.06 | (10 | ) | NM | 2.26 | 1.35 | 67 | |||||||||||||||||||||||||||||
Cash dividends declared |
0.05 | 0.05 | 0.05 | 0.05 | 0.38 | | (87 | ) | 0.20 | 1.52 | (87 | ) | ||||||||||||||||||||||||||||
Book value |
39.88 | 39.12 | 37.36 | 36.78 | 36.15 | 2 | 10 | 39.88 | 36.15 | 10 | ||||||||||||||||||||||||||||||
Closing share price |
41.67 | 43.82 | 34.11 | 26.58 | 31.53 | (5 | ) | 32 | 41.67 | 31.53 | 32 | |||||||||||||||||||||||||||||
Market capitalization |
164,261 | 172,596 | 133,852 | 99,881 | 117,695 | (5 | ) | 40 | 164,261 | 117,695 | 40 | |||||||||||||||||||||||||||||
COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||||||||||||||||||
Weighted-average diluted shares outstanding (c) |
3,974.1 | 3,962.0 | 3,824.1 | 3,758.7 | 3,737.5 | | 6 | 3,879.7 | 3,521.8 | 10 | ||||||||||||||||||||||||||||||
Common shares outstanding at period-end |
3,942.0 | 3,938.7 | 3,924.1 | 3,757.7 | 3,732.8 | | 6 | 3,942.0 | 3,732.8 | 6 | ||||||||||||||||||||||||||||||
FINANCIAL RATIOS: (e) |
||||||||||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain: |
||||||||||||||||||||||||||||||||||||||||
Return on common equity (ROE) (f) |
8 | % | 9 | % | 3 | % | 5 | % | (3 | )% | 6 | % | 2 | % | ||||||||||||||||||||||||||
Return on tangible common equity (ROTCE) (f)(g) |
12 | 13 | 5 | 8 | (5 | ) | 10 | 4 | ||||||||||||||||||||||||||||||||
Return on assets (ROA) |
0.65 | 0.70 | 0.54 | 0.42 | (0.11 | ) | 0.58 | 0.21 | ||||||||||||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||||||||||||||
ROE (f) |
8 | 9 | 3 | 5 | 1 | 6 | 4 | |||||||||||||||||||||||||||||||||
ROTCE (f)(g) |
12 | 14 | 5 | 8 | 1 | 10 | 6 | |||||||||||||||||||||||||||||||||
ROA |
0.65 | 0.71 | 0.54 | 0.42 | 0.13 | 0.58 | 0.31 | |||||||||||||||||||||||||||||||||
CAPITAL RATIOS: |
||||||||||||||||||||||||||||||||||||||||
Tier 1 capital ratio |
11.1 | (i) | 10.2 | 9.7 | 11.4 | 10.9 | ||||||||||||||||||||||||||||||||||
Total capital ratio |
14.8 | (i) | 13.9 | 13.3 | 15.2 | 14.8 | ||||||||||||||||||||||||||||||||||
Tier 1 common capital ratio (h) |
8.8 | (i) | 8.2 | 7.7 | 7.3 | 7.0 | ||||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 2,031,989 | $ | 2,041,009 | $ | 2,026,642 | $ | 2,079,188 | $ | 2,175,052 | | (7 | ) | $ | 2,031,989 | $ | 2,175,052 | (7 | ) | |||||||||||||||||||||
Wholesale loans |
204,175 | 218,953 | 231,625 | 242,284 | 262,044 | (7 | ) | (22 | ) | 204,175 | 262,044 | (22 | ) | |||||||||||||||||||||||||||
Consumer loans |
429,283 | 434,191 | 448,976 | 465,959 | 482,854 | (1 | ) | (11 | ) | 429,283 | 482,854 | (11 | ) | |||||||||||||||||||||||||||
Deposits |
938,367 | 867,977 | 866,477 | 906,969 | 1,009,277 | 8 | (7 | ) | 938,367 | 1,009,277 | (7 | ) | ||||||||||||||||||||||||||||
Common stockholders equity |
157,213 | 154,101 | 146,614 | 138,201 | 134,945 | 2 | 17 | 157,213 | 134,945 | 17 | ||||||||||||||||||||||||||||||
Total stockholders equity |
165,365 | 162,253 | 154,766 | 170,194 | 166,884 | 2 | (1 | ) | 165,365 | 166,884 | (1 | ) | ||||||||||||||||||||||||||||
Headcount |
222,316 | 220,861 | 220,255 | 219,569 | 224,961 | 1 | (1 | ) | 222,316 | 224,961 | (1 | ) | ||||||||||||||||||||||||||||
LINE OF BUSINESS NET INCOME/(LOSS) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 1,901 | $ | 1,921 | $ | 1,471 | $ | 1,606 | $ | (2,364 | ) | (1 | ) | NM | $ | 6,899 | $ | (1,175 | ) | NM | ||||||||||||||||||||
Retail Financial Services |
(399 | ) | 7 | 15 | 474 | 624 | NM | NM | 97 | 880 | (89 | ) | ||||||||||||||||||||||||||||
Card Services |
(306 | ) | (700 | ) | (672 | ) | (547 | ) | (371 | ) | 56 | 18 | (2,225 | ) | 780 | NM | ||||||||||||||||||||||||
Commercial Banking |
224 | 341 | 368 | 338 | 480 | (34 | ) | (53 | ) | 1,271 | 1,439 | (12 | ) | |||||||||||||||||||||||||||
Treasury & Securities Services |
237 | 302 | 379 | 308 | 533 | (22 | ) | (56 | ) | 1,226 | 1,767 | (31 | ) | |||||||||||||||||||||||||||
Asset Management |
424 | 430 | 352 | 224 | 255 | (1 | ) | 66 | 1,430 | 1,357 | 5 | |||||||||||||||||||||||||||||
Corporate/Private Equity |
1,197 | 1,287 | 808 | (262 | ) | 1,545 | (7 | ) | (23 | ) | 3,030 | 557 | 444 | |||||||||||||||||||||||||||
Net income |
$ | 3,278 | $ | 3,588 | $ | 2,721 | $ | 2,141 | $ | 702 | (9 | ) | 367 | $ | 11,728 | $ | 5,605 | 109 | ||||||||||||||||||||||
(a) | Pre-provision profit is total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses. | |
(b) | For further discussion of managed basis, see Reconciliation from reported to managed summary on page 6. | |
(c) | Effective January 1, 2009, the Firm implemented new FASB guidance for participating securities. Accordingly, prior period amounts have been revised as required. For further discussion of the guidance, see Per share-related information on page 36. | |
(d) | The calculation of second quarter and full year 2009 earnings per share includes a one-time, non-cash reduction of $1.1 billion, or $0.27 per share, resulting from repayment of TARP preferred capital. | |
(e) | Quarterly ratios are based upon annualized amounts. | |
(f) | The calculation of second quarter and full year 2009 net income applicable to common equity includes a one-time, non-cash reduction of $1.1 billion resulting from repayment of TARP preferred capital. Excluding this reduction, the adjusted ROE for the second quarter and full year 2009 was 6% and 7%, respectively, and the adjusted ROTCE for the second quarter and full year 2009 was 10% and 11%, respectively. The Firm views the adjusted ROE and ROTCE, both non-GAAP financial measures, as meaningful because they increase the comparability to prior periods. | |
(g) | Net income applicable to common equity divided by total average common stockholders equity (i.e., total stockholders equity less preferred stock) less identifiable intangible assets (other than MSRs) and goodwill, net of related deferred tax liabilities. The Firm uses return on tangible common equity, a non-GAAP financial measure, to assess the Firms use of equity. | |
(h) | Tier 1 common is calculated as Tier 1 capital less qualifying perpetual preferred stock, qualifying trust preferred securities and qualifying minority interest in subsidiaries. The Firm uses the Tier 1 common capital ratio, a non-GAAP financial measure, to assess and compare the quality and composition of the Firms capital with the capital of other financial services companies. | |
(i) | Estimated. |
Page 2
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees |
$ | 1,916 | $ | 1,679 | $ | 2,106 | $ | 1,386 | $ | 1,382 | 14 | % | 39 | % | $ | 7,087 | $ | 5,526 | 28 | % | ||||||||||||||||||||
Principal transactions |
838 | 3,860 | 3,097 | 2,001 | (7,885 | ) | (78 | ) | NM | 9,796 | (10,699 | ) | NM | |||||||||||||||||||||||||||
Lending & deposit-related fees |
1,765 | 1,826 | 1,766 | 1,688 | 1,776 | (3 | ) | (1 | ) | 7,045 | 5,088 | 38 | ||||||||||||||||||||||||||||
Asset management, administration and commissions |
3,361 | 3,158 | 3,124 | 2,897 | 3,234 | 6 | 4 | 12,540 | 13,943 | (10 | ) | |||||||||||||||||||||||||||||
Securities gains |
381 | 184 | 347 | 198 | 456 | 107 | (16 | ) | 1,110 | 1,560 | (29 | ) | ||||||||||||||||||||||||||||
Mortgage fees and related income |
450 | 843 | 784 | 1,601 | 1,789 | (47 | ) | (75 | ) | 3,678 | 3,467 | 6 | ||||||||||||||||||||||||||||
Credit card income |
1,844 | 1,710 | 1,719 | 1,837 | 2,049 | 8 | (10 | ) | 7,110 | 7,419 | (4 | ) | ||||||||||||||||||||||||||||
Other income |
231 | 625 | 10 | 50 | 593 | (63 | ) | (61 | ) | 916 | 2,169 | (58 | ) | |||||||||||||||||||||||||||
Noninterest revenue |
10,786 | 13,885 | 12,953 | 11,658 | 3,394 | (22 | ) | 218 | 49,282 | 28,473 | 73 | |||||||||||||||||||||||||||||
Interest income |
15,615 | 16,260 | 16,549 | 17,926 | 21,631 | (4 | ) | (28 | ) | 66,350 | 73,018 | (9 | ) | |||||||||||||||||||||||||||
Interest expense |
3,237 | 3,523 | 3,879 | 4,559 | 7,799 | (8 | ) | (58 | ) | 15,198 | 34,239 | (56 | ) | |||||||||||||||||||||||||||
Net interest income |
12,378 | 12,737 | 12,670 | 13,367 | 13,832 | (3 | ) | (11 | ) | 51,152 | 38,779 | 32 | ||||||||||||||||||||||||||||
TOTAL NET REVENUE |
23,164 | 26,622 | 25,623 | 25,025 | 17,226 | (13 | ) | 34 | 100,434 | 67,252 | 49 | |||||||||||||||||||||||||||||
Provision for credit losses |
7,284 | 8,104 | 8,031 | 8,596 | 7,313 | (10 | ) | | 32,015 | 20,979 | 53 | |||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
5,112 | 7,311 | 6,917 | 7,588 | 5,024 | (30 | ) | 2 | 26,928 | 22,746 | 18 | |||||||||||||||||||||||||||||
Occupancy expense |
944 | 923 | 914 | 885 | 955 | 2 | (1 | ) | 3,666 | 3,038 | 21 | |||||||||||||||||||||||||||||
Technology, communications and equipment expense |
1,182 | 1,140 | 1,156 | 1,146 | 1,207 | 4 | (2 | ) | 4,624 | 4,315 | 7 | |||||||||||||||||||||||||||||
Professional & outside services |
1,682 | 1,517 | 1,518 | 1,515 | 1,819 | 11 | (8 | ) | 6,232 | 6,053 | 3 | |||||||||||||||||||||||||||||
Marketing |
536 | 440 | 417 | 384 | 501 | 22 | 7 | 1,777 | 1,913 | (7 | ) | |||||||||||||||||||||||||||||
Other expense (a) |
2,262 | 1,767 | 2,190 | 1,375 | 1,242 | 28 | 82 | 7,594 | 3,740 | 103 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
256 | 254 | 265 | 275 | 326 | 1 | (21 | ) | 1,050 | 1,263 | (17 | ) | ||||||||||||||||||||||||||||
Merger costs |
30 | 103 | 143 | 205 | 181 | (71 | ) | (83 | ) | 481 | 432 | 11 | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
12,004 | 13,455 | 13,520 | 13,373 | 11,255 | (11 | ) | 7 | 52,352 | 43,500 | 20 | |||||||||||||||||||||||||||||
Income/(loss) before income tax expense and extraordinary gain |
3,876 | 5,063 | 4,072 | 3,056 | (1,342 | ) | (23 | ) | NM | 16,067 | 2,773 | 479 | ||||||||||||||||||||||||||||
Income tax expense/(benefit) (b) |
598 | 1,551 | 1,351 | 915 | (719 | ) | (61 | ) | NM | 4,415 | (926 | ) | NM | |||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
3,278 | 3,512 | 2,721 | 2,141 | (623 | ) | (7 | ) | NM | 11,652 | 3,699 | 215 | ||||||||||||||||||||||||||||
Extraordinary gain (c) |
| 76 | | | 1,325 | NM | NM | 76 | 1,906 | (96 | ) | |||||||||||||||||||||||||||||
NET INCOME |
$ | 3,278 | $ | 3,588 | $ | 2,721 | $ | 2,141 | $ | 702 | (9 | ) | 367 | $ | 11,728 | $ | 5,605 | 109 | ||||||||||||||||||||||
DILUTED EARNINGS PER SHARE |
||||||||||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain (d)(e) |
$ | 0.74 | $ | 0.80 | $ | 0.28 | $ | 0.40 | $ | (0.29 | ) | (8 | ) | NM | $ | 2.24 | $ | 0.81 | 177 | |||||||||||||||||||||
Extraordinary gain |
| 0.02 | | | 0.35 | NM | NM | 0.02 | 0.54 | (96 | ) | |||||||||||||||||||||||||||||
NET INCOME (d)(e) |
$ | 0.74 | $ | 0.82 | $ | 0.28 | $ | 0.40 | $ | 0.06 | (10 | ) | NM | $ | 2.26 | $ | 1.35 | 67 | ||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain: |
||||||||||||||||||||||||||||||||||||||||
ROE (f) |
8 | % | 9 | % | 3 | % | 5 | % | (3 | )% | 6 | % | 2 | % | ||||||||||||||||||||||||||
ROTCE (f) |
12 | 13 | 5 | 8 | (5 | ) | 10 | 4 | ||||||||||||||||||||||||||||||||
ROA |
0.65 | 0.70 | 0.54 | 0.42 | (0.11 | ) | 0.58 | 0.21 | ||||||||||||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||||||||||||||
ROE (f) |
8 | 9 | 3 | 5 | 1 | 6 | 4 | |||||||||||||||||||||||||||||||||
ROTCE (f) |
12 | 14 | 5 | 8 | 1 | 10 | 6 | |||||||||||||||||||||||||||||||||
ROA |
0.65 | 0.71 | 0.54 | 0.42 | 0.13 | 0.58 | 0.31 | |||||||||||||||||||||||||||||||||
Effective income tax rate |
15 | 31 | 33 | 30 | 54 | 27 | (33 | ) | ||||||||||||||||||||||||||||||||
Overhead ratio |
52 | 51 | 53 | 53 | 65 | 52 | 65 | |||||||||||||||||||||||||||||||||
EXCLUDING IMPACT OF MERGER COSTS (g) |
||||||||||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
$ | 3,278 | $ | 3,512 | $ | 2,721 | $ | 2,141 | $ | (623 | ) | (7 | ) | NM | $ | 11,652 | $ | 3,699 | 215 | |||||||||||||||||||||
Merger costs (after-tax) |
18 | 64 | 89 | 127 | 112 | (72 | ) | (84 | ) | 298 | 268 | 11 | ||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain excluding merger costs |
$ | 3,296 | $ | 3,576 | $ | 2,810 | $ | 2,268 | $ | (511 | ) | (8 | ) | NM | $ | 11,950 | $ | 3,967 | 201 | |||||||||||||||||||||
Diluted Per Share: |
||||||||||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain (d)(e) |
$ | 0.74 | $ | 0.80 | $ | 0.28 | $ | 0.40 | $ | (0.29 | ) | (8 | ) | NM | $ | 2.24 | $ | 0.81 | 177 | |||||||||||||||||||||
Merger costs (after-tax) |
0.01 | 0.02 | 0.02 | 0.03 | 0.03 | (50 | ) | (67 | ) | 0.08 | 0.07 | 14 | ||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain excluding merger costs (d)(e) |
$ | 0.75 | $ | 0.82 | $ | 0.30 | $ | 0.43 | $ | (0.26 | ) | (9 | ) | NM | $ | 2.32 | $ | 0.88 | 164 | |||||||||||||||||||||
(a) | Second quarter 2009 includes a $675 million FDIC special assessment. | |
(b) | The income tax expense in the fourth quarter of 2009 includes tax benefits recognized upon the resolution of tax audits. The income tax benefit in the full year of 2008 included the realization of a benefit from the release of deferred tax liabilities associated with the undistributed earnings of certain non-U.S. subsidiaries that were deemed to be reinvested indefinitely. | |
(c) | JPMorgan Chase acquired the banking operations of Washington Mutual Bank for $1.9 billion. The fair value of the net assets acquired exceeded the purchase price, which resulted in negative goodwill. In accordance with U.S. GAAP for business combinations, 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) | Effective January 1, 2009, the Firm implemented new FASB guidance for participating securities. Accordingly, prior period amounts have been revised as required. For further discussion of this guidance, see Per share-related information on page 36. | |
(e) | The calculation of second quarter and full year 2009 earnings per share includes a one-time, non-cash reduction of $1.1 billion, or $0.27 per share, resulting from repayment of TARP preferred capital. | |
(f) | The calculation of second quarter and full year 2009 net income applicable to common equity includes a one-time, non-cash reduction of $1.1 billion resulting from repayment of TARP preferred capital. Excluding this reduction, the adjusted ROE for the second quarter and full year 2009 was 6% and 7%, respectively, and the adjusted ROTCE for the second quarter and full year 2009 was 10% and 11%, respectively. The Firm views the adjusted ROE and ROTCE, both non-GAAP financial measures, as meaningful because they increase the comparability to prior periods. | |
(g) | 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
Dec 31, 2009 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | ||||||||||||||||||||||
2009 | 2009 | 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||
Cash and due from banks |
$ | 26,206 | $ | 21,068 | $ | 25,133 | $ | 26,681 | $ | 26,895 | 24 | % | (3 | )% | ||||||||||||||
Deposits with banks |
63,230 | 59,623 | 61,882 | 89,865 | 138,139 | 6 | (54 | ) | ||||||||||||||||||||
Federal funds sold and securities purchased under resale
agreements |
195,404 | 171,007 | 159,170 | 157,237 | 203,115 | 14 | (4 | ) | ||||||||||||||||||||
Securities borrowed |
119,630 | 128,059 | 129,263 | 127,928 | 124,000 | (7 | ) | (4 | ) | |||||||||||||||||||
Trading assets: |
||||||||||||||||||||||||||||
Debt and equity instruments |
330,918 | 330,370 | 298,135 | 298,453 | 347,357 | | (5 | ) | ||||||||||||||||||||
Derivative receivables |
80,210 | 94,065 | 97,491 | 131,247 | 162,626 | (15 | ) | (51 | ) | |||||||||||||||||||
Securities |
360,390 | 372,867 | 345,563 | 333,861 | 205,943 | (3 | ) | 75 | ||||||||||||||||||||
Loans |
633,458 | 653,144 | 680,601 | 708,243 | 744,898 | (3 | ) | (15 | ) | |||||||||||||||||||
Less: Allowance for loan losses |
31,602 | 30,633 | 29,072 | 27,381 | 23,164 | 3 | 36 | |||||||||||||||||||||
Loans, net of allowance for loan losses |
601,856 | 622,511 | 651,529 | 680,862 | 721,734 | (3 | ) | (17 | ) | |||||||||||||||||||
Accrued interest and accounts receivable |
67,427 | 59,948 | 61,302 | 52,168 | 60,987 | 12 | 11 | |||||||||||||||||||||
Premises and equipment |
11,118 | 10,675 | 10,668 | 10,336 | 10,045 | 4 | 11 | |||||||||||||||||||||
Goodwill |
48,357 | 48,334 | 48,288 | 48,201 | 48,027 | | 1 | |||||||||||||||||||||
Other intangible assets: |
||||||||||||||||||||||||||||
Mortgage servicing rights |
15,531 | 13,663 | 14,600 | 10,634 | 9,403 | 14 | 65 | |||||||||||||||||||||
Purchased credit card relationships |
1,246 | 1,342 | 1,431 | 1,528 | 1,649 | (7 | ) | (24 | ) | |||||||||||||||||||
All other intangibles |
3,375 | 3,520 | 3,651 | 3,821 | 3,932 | (4 | ) | (14 | ) | |||||||||||||||||||
Other assets |
107,091 | 103,957 | 118,536 | 106,366 | 111,200 | 3 | (4 | ) | ||||||||||||||||||||
TOTAL ASSETS |
$ | 2,031,989 | $ | 2,041,009 | $ | 2,026,642 | $ | 2,079,188 | $ | 2,175,052 | | (7 | ) | |||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||
Deposits |
$ | 938,367 | $ | 867,977 | $ | 866,477 | $ | 906,969 | $ | 1,009,277 | 8 | (7 | ) | |||||||||||||||
Federal funds purchased and securities loaned or sold under
repurchase agreements |
261,413 | 310,219 | 300,931 | 279,837 | 192,546 | (16 | ) | 36 | ||||||||||||||||||||
Commercial paper |
41,794 | 53,920 | 42,713 | 33,085 | 37,845 | (22 | ) | 10 | ||||||||||||||||||||
Other borrowed funds |
55,740 | 50,824 | 73,968 | 112,257 | 132,400 | 10 | (58 | ) | ||||||||||||||||||||
Trading liabilities: |
||||||||||||||||||||||||||||
Debt and equity instruments |
64,946 | 65,233 | 56,021 | 53,786 | 45,274 | | 43 | |||||||||||||||||||||
Derivative payables |
60,125 | 69,214 | 67,197 | 86,020 | 121,604 | (13 | ) | (51 | ) | |||||||||||||||||||
Accounts payable and other liabilities
(including the allowance for lending-related commitments) |
162,696 | 171,386 | 171,685 | 165,521 | 187,978 | (5 | ) | (13 | ) | |||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
15,225 | 17,859 | 20,945 | 9,674 | 10,561 | (15 | ) | 44 | ||||||||||||||||||||
Long-term debt |
246,703 | 254,413 | 254,226 | 243,569 | 252,094 | (3 | ) | (2 | ) | |||||||||||||||||||
Junior subordinated deferrable interest debentures held by trusts
that issued guaranteed capital debt securities |
19,615 | 17,711 | 17,713 | 18,276 | 18,589 | 11 | 6 | |||||||||||||||||||||
TOTAL LIABILITIES |
1,866,624 | 1,878,756 | 1,871,876 | 1,908,994 | 2,008,168 | (1 | ) | (7 | ) | |||||||||||||||||||
STOCKHOLDERS EQUITY |
||||||||||||||||||||||||||||
Preferred stock |
8,152 | 8,152 | 8,152 | 31,993 | 31,939 | | (74 | ) | ||||||||||||||||||||
Common stock |
4,105 | 4,105 | 4,105 | 3,942 | 3,942 | | 4 | |||||||||||||||||||||
Capital surplus |
97,982 | 97,564 | 97,662 | 91,469 | 92,143 | | 6 | |||||||||||||||||||||
Retained earnings |
62,481 | 59,573 | 56,355 | 55,487 | 54,013 | 5 | 16 | |||||||||||||||||||||
Accumulated other comprehensive income (loss) |
(91 | ) | 283 | (3,438 | ) | (4,490 | ) | (5,687 | ) | NM | 98 | |||||||||||||||||
Shares held in RSU trust |
(68 | ) | (86 | ) | (86 | ) | (86 | ) | (217 | ) | 21 | 69 | ||||||||||||||||
Treasury stock, at cost |
(7,196 | ) | (7,338 | ) | (7,984 | ) | (8,121 | ) | (9,249 | ) | 2 | 22 | ||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
165,365 | 162,253 | 154,766 | 170,194 | 166,884 | 2 | (1 | ) | ||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,031,989 | $ | 2,041,009 | $ | 2,026,642 | $ | 2,079,188 | $ | 2,175,052 | | (7 | ) | |||||||||||||||
Page 4
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||||||||||||||
Deposits with banks |
$ | 49,705 | $ | 62,248 | $ | 68,001 | $ | 88,587 | $ | 106,156 | (20 | )% | (53 | )% | $ | 67,015 | $ | 54,666 | 23 | % | ||||||||||||||||||||
Federal funds sold and securities purchased
under resale agreements |
156,848 | 151,705 | 142,226 | 160,986 | 205,182 | 3 | (24 | ) | 152,926 | 170,006 | (10 | ) | ||||||||||||||||||||||||||||
Securities borrowed |
125,453 | 129,301 | 122,235 | 120,752 | 123,523 | (3 | ) | 2 | 124,462 | 110,598 | 13 | |||||||||||||||||||||||||||||
Trading assets debt instruments |
256,414 | 250,148 | 245,444 | 252,098 | 269,576 | 3 | (5 | ) | 251,035 | 298,266 | (16 | ) | ||||||||||||||||||||||||||||
Securities |
374,327 | 359,451 | 354,216 | 281,420 | 174,652 | 4 | 114 | 342,655 | 123,551 | 177 | ||||||||||||||||||||||||||||||
Loans |
642,406 | 665,386 | 697,908 | 726,959 | 752,524 | (3 | ) | (15 | ) | 682,885 | 588,801 | 16 | ||||||||||||||||||||||||||||
Other assets (a) |
29,868 | 24,155 | 36,638 | 27,411 | 56,322 | 24 | (47 | ) | 29,510 | 27,404 | 8 | |||||||||||||||||||||||||||||
Total interest-earning assets |
1,635,021 | 1,642,394 | 1,666,668 | 1,658,213 | 1,687,935 | | (3 | ) | 1,650,488 | 1,373,292 | 20 | |||||||||||||||||||||||||||||
Trading assets equity instruments |
74,936 | 66,790 | 63,507 | 62,748 | 72,782 | 12 | 3 | 67,028 | 85,836 | (22 | ) | |||||||||||||||||||||||||||||
Goodwill |
48,341 | 48,328 | 48,273 | 48,071 | 46,838 | | 3 | 48,254 | 46,068 | 5 | ||||||||||||||||||||||||||||||
Other intangible assets: |
||||||||||||||||||||||||||||||||||||||||
Mortgage servicing rights |
13,768 | 14,384 | 12,256 | 11,141 | 14,837 | (4 | ) | (7 | ) | 12,898 | 11,229 | 15 | ||||||||||||||||||||||||||||
All other intangible assets |
4,741 | 4,984 | 5,218 | 5,443 | 5,586 | (5 | ) | (15 | ) | 5,095 | 5,779 | (12 | ) | |||||||||||||||||||||||||||
All other noninterest-earning assets |
216,418 | 222,296 | 242,450 | 281,503 | 339,887 | (3 | ) | (36 | ) | 240,438 | 269,413 | (11 | ) | |||||||||||||||||||||||||||
TOTAL ASSETS |
$ | 1,993,225 | $ | 1,999,176 | $ | 2,038,372 | $ | 2,067,119 | $ | 2,167,865 | | (8 | ) | $ | 2,024,201 | $ | 1,791,617 | 13 | ||||||||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
$ | 667,269 | $ | 660,998 | $ | 672,350 | $ | 736,460 | $ | 777,604 | 1 | (14 | ) | $ | 684,016 | $ | 645,058 | 6 | ||||||||||||||||||||||
Federal funds purchased and securities loaned or sold under
repurchase agreements |
283,263 | 303,175 | 289,971 | 226,110 | 203,568 | (7 | ) | 39 | 275,862 | 196,739 | 40 | |||||||||||||||||||||||||||||
Commercial paper |
42,290 | 42,728 | 37,371 | 33,694 | 40,486 | (1 | ) | 4 | 39,055 | 45,734 | (15 | ) | ||||||||||||||||||||||||||||
Other borrowings and liabilities (b) |
182,422 | 178,985 | 207,489 | 236,673 | 264,236 | 2 | (31 | ) | 201,182 | 161,555 | 25 | |||||||||||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
16,002 | 19,351 | 14,493 | 9,757 | 9,440 | (17 | ) | 70 | 14,930 | 13,220 | 13 | |||||||||||||||||||||||||||||
Long-term debt |
268,476 | 271,281 | 274,323 | 258,732 | 248,125 | (1 | ) | 8 | 268,238 | 234,909 | 14 | |||||||||||||||||||||||||||||
Total interest-bearing liabilities |
1,459,722 | 1,476,518 | 1,495,997 | 1,501,426 | 1,543,459 | (1 | ) | (5 | ) | 1,483,283 | 1,297,215 | 14 | ||||||||||||||||||||||||||||
Noninterest-bearing liabilities |
368,826 | 365,038 | 373,172 | 397,243 | 460,894 | 1 | (20 | ) | 375,961 | 356,148 | 6 | |||||||||||||||||||||||||||||
TOTAL LIABILITIES |
1,828,548 | 1,841,556 | 1,869,169 | 1,898,669 | 2,004,353 | (1 | ) | (9 | ) | 1,859,244 | 1,653,363 | 12 | ||||||||||||||||||||||||||||
Preferred stock |
8,152 | 8,152 | 28,338 | 31,957 | 24,755 | | (67 | ) | 19,054 | 9,138 | 109 | |||||||||||||||||||||||||||||
Common stockholders equity |
156,525 | 149,468 | 140,865 | 136,493 | 138,757 | 5 | 13 | 145,903 | 129,116 | 13 | ||||||||||||||||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
164,677 | 157,620 | 169,203 | 168,450 | 163,512 | 4 | 1 | 164,957 | 138,254 | 19 | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY |
$ | 1,993,225 | $ | 1,999,176 | $ | 2,038,372 | $ | 2,067,119 | $ | 2,167,865 | | (8 | ) | $ | 2,024,201 | $ | 1,791,617 | 13 | ||||||||||||||||||||||
AVERAGE RATES |
||||||||||||||||||||||||||||||||||||||||
INTEREST-EARNING ASSETS |
||||||||||||||||||||||||||||||||||||||||
Deposits with banks |
0.95 | % | 0.83 | % | 1.45 | % | 2.03 | % | 3.34 | % | 1.40 | % | 3.51 | % | ||||||||||||||||||||||||||
Federal funds sold and securities purchased
under resale agreements |
0.92 | 0.96 | 1.04 | 1.64 | 2.88 | 1.14 | 3.52 | |||||||||||||||||||||||||||||||||
Securities borrowed |
0.14 | (0.09 | ) | (0.32 | ) | 0.29 | 0.92 | | 2.08 | |||||||||||||||||||||||||||||||
Trading assets debt instruments |
4.63 | 4.78 | 4.91 | 5.27 | 6.18 | 4.89 | 5.89 | |||||||||||||||||||||||||||||||||
Securities |
3.32 | 3.62 | 3.64 | 4.16 | 5.14 | 3.65 | 5.22 | |||||||||||||||||||||||||||||||||
Loans |
5.51 | 5.64 | 5.65 | 5.87 | 6.44 | 5.67 | 6.54 | |||||||||||||||||||||||||||||||||
Other assets (a) |
1.42 | 2.18 | 0.80 | 2.44 | 3.06 | 1.62 | 3.27 | |||||||||||||||||||||||||||||||||
Total interest-earning assets |
3.80 | 3.95 | 4.00 | 4.41 | 5.12 | 4.04 | 5.36 | |||||||||||||||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
0.53 | 0.65 | 0.70 | 0.93 | 1.53 | 0.71 | 2.26 | |||||||||||||||||||||||||||||||||
Federal funds purchased and securities sold
under repurchase agreements |
0.08 | 0.20 | 0.23 | 0.36 | 0.95 | 0.21 | 2.37 | |||||||||||||||||||||||||||||||||
Commercial paper |
0.20 | 0.23 | 0.24 | 0.47 | 1.17 | 0.28 | 2.24 | |||||||||||||||||||||||||||||||||
Other borrowings and liabilities (b) |
1.87 | 1.70 | 1.32 | 1.46 | 2.56 | 1.57 | 3.24 | |||||||||||||||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
1.32 | 1.43 | 1.59 | 1.57 | 3.79 | 1.46 | 3.06 | |||||||||||||||||||||||||||||||||
Long-term debt |
2.01 | 2.09 | 2.60 | 2.73 | 3.87 | 2.35 | 3.56 | |||||||||||||||||||||||||||||||||
Total interest-bearing liabilities |
0.88 | 0.95 | 1.04 | 1.23 | 2.01 | 1.02 | 2.64 | |||||||||||||||||||||||||||||||||
INTEREST RATE SPREAD |
2.92 | % | 3.00 | % | 2.96 | % | 3.18 | % | 3.11 | % | 3.02 | % | 2.72 | % | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS |
3.02 | % | 3.10 | % | 3.07 | % | 3.29 | % | 3.28 | % | 3.12 | % | 2.87 | % | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS
ADJUSTED FOR SECURITIZATIONS |
3.33 | % | 3.40 | % | 3.37 | % | 3.60 | % | 3.55 | % | 3.42 | % | 3.19 | % | ||||||||||||||||||||||||||
(a) | Includes margin loans and the Firms investment in asset-backed commercial paper under the Federal Reserve Bank of Bostons AML facility. | |
(b) | Includes securities sold but not yet purchased, brokerage customer payables and advances from Federal Home Loan Banks. |
Page 5
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
CREDIT CARD INCOME |
||||||||||||||||||||||||||||||||||||||||
Credit card income reported |
$ | 1,844 | $ | 1,710 | $ | 1,719 | $ | 1,837 | $ | 2,049 | 8 | % | (10 | )% | $ | 7,110 | $ | 7,419 | (4 | )% | ||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
(375 | ) | (285 | ) | (294 | ) | (540 | ) | (710 | ) | (32 | ) | 47 | (1,494 | ) | (3,333 | ) | 55 | ||||||||||||||||||||||
Credit card income managed |
$ | 1,469 | $ | 1,425 | $ | 1,425 | $ | 1,297 | $ | 1,339 | 3 | 10 | $ | 5,616 | $ | 4,086 | 37 | |||||||||||||||||||||||
OTHER INCOME |
||||||||||||||||||||||||||||||||||||||||
Other income reported |
$ | 231 | $ | 625 | $ | 10 | $ | 50 | $ | 593 | (63 | ) | (61 | ) | $ | 916 | $ | 2,169 | (58 | ) | ||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
397 | 371 | 335 | 337 | 556 | 7 | (29 | ) | 1,440 | 1,329 | 8 | |||||||||||||||||||||||||||||
Other income managed |
$ | 628 | $ | 996 | $ | 345 | $ | 387 | $ | 1,149 | (37 | ) | (45 | ) | $ | 2,356 | $ | 3,498 | (33 | ) | ||||||||||||||||||||
TOTAL NONINTEREST REVENUE |
||||||||||||||||||||||||||||||||||||||||
Total noninterest revenue reported |
$ | 10,786 | $ | 13,885 | $ | 12,953 | $ | 11,658 | $ | 3,394 | (22 | ) | 218 | $ | 49,282 | $ | 28,473 | 73 | ||||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
(375 | ) | (285 | ) | (294 | ) | (540 | ) | (710 | ) | (32 | ) | 47 | (1,494 | ) | (3,333 | ) | 55 | ||||||||||||||||||||||
Tax-equivalent adjustments |
397 | 371 | 335 | 337 | 556 | 7 | (29 | ) | 1,440 | 1,329 | 8 | |||||||||||||||||||||||||||||
Total noninterest revenue managed |
$ | 10,808 | $ | 13,971 | $ | 12,994 | $ | 11,455 | $ | 3,240 | (23 | ) | 234 | $ | 49,228 | $ | 26,469 | 86 | ||||||||||||||||||||||
NET INTEREST INCOME |
||||||||||||||||||||||||||||||||||||||||
Net interest income reported |
$ | 12,378 | $ | 12,737 | $ | 12,670 | $ | 13,367 | $ | 13,832 | (3 | ) | (11 | ) | $ | 51,152 | $ | 38,779 | 32 | |||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
1,992 | 1,983 | 1,958 | 2,004 | 1,938 | | 3 | 7,937 | 6,945 | 14 | ||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
58 | 89 | 87 | 96 | 98 | (35 | ) | (41 | ) | 330 | 579 | (43 | ) | |||||||||||||||||||||||||||
Net interest income managed |
$ | 14,428 | $ | 14,809 | $ | 14,715 | $ | 15,467 | $ | 15,868 | (3 | ) | (9 | ) | $ | 59,419 | $ | 46,303 | 28 | |||||||||||||||||||||
TOTAL NET REVENUE |
||||||||||||||||||||||||||||||||||||||||
Total net revenue reported |
$ | 23,164 | $ | 26,622 | $ | 25,623 | $ | 25,025 | $ | 17,226 | (13 | ) | 34 | $ | 100,434 | $ | 67,252 | 49 | ||||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
1,617 | 1,698 | 1,664 | 1,464 | 1,228 | (5 | ) | 32 | 6,443 | 3,612 | 78 | |||||||||||||||||||||||||||||
Tax-equivalent adjustments |
455 | 460 | 422 | 433 | 654 | (1 | ) | (30 | ) | 1,770 | 1,908 | (7 | ) | |||||||||||||||||||||||||||
Total net revenue managed |
$ | 25,236 | $ | 28,780 | $ | 27,709 | $ | 26,922 | $ | 19,108 | (12 | ) | 32 | $ | 108,647 | $ | 72,772 | 49 | ||||||||||||||||||||||
PRE-PROVISION PROFIT |
||||||||||||||||||||||||||||||||||||||||
Total pre-provision profit reported |
$ | 11,160 | $ | 13,167 | $ | 12,103 | $ | 11,652 | $ | 5,971 | (15 | ) | 87 | $ | 48,082 | $ | 23,752 | 102 | ||||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
1,617 | 1,698 | 1,664 | 1,464 | 1,228 | (5 | ) | 32 | 6,443 | 3,612 | 78 | |||||||||||||||||||||||||||||
Tax-equivalent adjustments |
455 | 460 | 422 | 433 | 654 | (1 | ) | (30 | ) | 1,770 | 1,908 | (7 | ) | |||||||||||||||||||||||||||
Total pre-provision profit managed |
$ | 13,232 | $ | 15,325 | $ | 14,189 | $ | 13,549 | $ | 7,853 | (14 | ) | 68 | $ | 56,295 | $ | 29,272 | 92 | ||||||||||||||||||||||
PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||
Provision for credit losses reported |
$ | 7,284 | $ | 8,104 | $ | 8,031 | $ | 8,596 | $ | 7,313 | (10 | ) | | $ | 32,015 | $ | 20,979 | 53 | ||||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
1,617 | 1,698 | 1,664 | 1,464 | 1,228 | (5 | ) | 32 | 6,443 | 3,612 | 78 | |||||||||||||||||||||||||||||
Provision for credit losses managed |
$ | 8,901 | $ | 9,802 | $ | 9,695 | $ | 10,060 | $ | 8,541 | (9 | ) | 4 | $ | 38,458 | $ | 24,591 | 56 | ||||||||||||||||||||||
INCOME TAX EXPENSE/(BENEFIT) |
||||||||||||||||||||||||||||||||||||||||
Income tax expense/(benefit) reported |
$ | 598 | $ | 1,551 | $ | 1,351 | $ | 915 | $ | (719 | ) | (61 | ) | NM | $ | 4,415 | $ | (926 | ) | NM | ||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
455 | 460 | 422 | 433 | 654 | (1 | ) | (30 | ) | 1,770 | 1,908 | (7 | ) | |||||||||||||||||||||||||||
Income tax expense/(benefit) managed |
$ | 1,053 | $ | 2,011 | $ | 1,773 | $ | 1,348 | $ | (65 | ) | (48 | ) | NM | $ | 6,185 | $ | 982 | NM | |||||||||||||||||||||
Page 6
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
TOTAL NET REVENUE (FTE) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank (a) |
$ | 4,929 | $ | 7,508 | $ | 7,301 | $ | 8,371 | $ | (272 | ) | (34 | )% | NM | % | $ | 28,109 | $ | 12,335 | 128 | % | |||||||||||||||||||
Retail Financial Services |
7,669 | 8,218 | 7,970 | 8,835 | 8,684 | (7 | ) | (12 | ) | 32,692 | 23,520 | 39 | ||||||||||||||||||||||||||||
Card Services |
5,148 | 5,159 | 4,868 | 5,129 | 4,908 | | 5 | 20,304 | 16,474 | 23 | ||||||||||||||||||||||||||||||
Commercial Banking |
1,406 | 1,459 | 1,453 | 1,402 | 1,479 | (4 | ) | (5 | ) | 5,720 | 4,777 | 20 | ||||||||||||||||||||||||||||
Treasury & Securities Services |
1,835 | 1,788 | 1,900 | 1,821 | 2,249 | 3 | (18 | ) | 7,344 | 8,134 | (10 | ) | ||||||||||||||||||||||||||||
Asset Management |
2,195 | 2,085 | 1,982 | 1,703 | 1,658 | 5 | 32 | 7,965 | 7,584 | 5 | ||||||||||||||||||||||||||||||
Corporate/Private Equity (a) |
2,054 | 2,563 | 2,235 | (339 | ) | 402 | (20 | ) | 411 | 6,513 | (52 | ) | NM | |||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 25,236 | $ | 28,780 | $ | 27,709 | $ | 26,922 | $ | 19,108 | (12 | ) | 32 | $ | 108,647 | $ | 72,772 | 49 | ||||||||||||||||||||||
TOTAL PRE-PROVISION PROFIT |
||||||||||||||||||||||||||||||||||||||||
Investment Bank (a) |
$ | 2,643 | $ | 3,234 | $ | 3,234 | $ | 3,597 | $ | (3,013 | ) | (18 | ) | NM | $ | 12,708 | $ | (1,509 | ) | NM | ||||||||||||||||||||
Retail Financial Services |
3,367 | 4,022 | 3,891 | 4,664 | 4,638 | (16 | ) | (27 | ) | 15,944 | 11,443 | 39 | ||||||||||||||||||||||||||||
Card Services |
3,752 | 3,853 | 3,535 | 3,783 | 3,419 | (3 | ) | 10 | 14,923 | 11,334 | 32 | |||||||||||||||||||||||||||||
Commercial Banking |
863 | 914 | 918 | 849 | 980 | (6 | ) | (12 | ) | 3,544 | 2,831 | 25 | ||||||||||||||||||||||||||||
Treasury & Securities Services |
444 | 508 | 612 | 502 | 910 | (13 | ) | (51 | ) | 2,066 | 2,911 | (29 | ) | |||||||||||||||||||||||||||
Asset Management |
725 | 734 | 628 | 405 | 445 | (1 | ) | 63 | 2,492 | 2,286 | 9 | |||||||||||||||||||||||||||||
Corporate/Private Equity (a) |
1,438 | 2,060 | 1,371 | (251 | ) | 474 | (30 | ) | 203 | 4,618 | (24 | ) | NM | |||||||||||||||||||||||||||
TOTAL PRE-PROVISION PROFIT |
$ | 13,232 | $ | 15,325 | $ | 14,189 | $ | 13,549 | $ | 7,853 | (14 | ) | 68 | $ | 56,295 | $ | 29,272 | 92 | ||||||||||||||||||||||
NET INCOME/(LOSS) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 1,901 | $ | 1,921 | $ | 1,471 | $ | 1,606 | $ | (2,364 | ) | (1 | ) | NM | $ | 6,899 | $ | (1,175 | ) | NM | ||||||||||||||||||||
Retail Financial Services |
(399 | ) | 7 | 15 | 474 | 624 | NM | NM | 97 | 880 | (89 | ) | ||||||||||||||||||||||||||||
Card Services |
(306 | ) | (700 | ) | (672 | ) | (547 | ) | (371 | ) | 56 | 18 | (2,225 | ) | 780 | NM | ||||||||||||||||||||||||
Commercial Banking |
224 | 341 | 368 | 338 | 480 | (34 | ) | (53 | ) | 1,271 | 1,439 | (12 | ) | |||||||||||||||||||||||||||
Treasury & Securities Services |
237 | 302 | 379 | 308 | 533 | (22 | ) | (56 | ) | 1,226 | 1,767 | (31 | ) | |||||||||||||||||||||||||||
Asset Management |
424 | 430 | 352 | 224 | 255 | (1 | ) | 66 | 1,430 | 1,357 | 5 | |||||||||||||||||||||||||||||
Corporate/Private Equity |
1,197 | 1,287 | 808 | (262 | ) | 1,545 | (7 | ) | (23 | ) | 3,030 | 557 | 444 | |||||||||||||||||||||||||||
TOTAL NET INCOME/(LOSS) |
$ | 3,278 | $ | 3,588 | $ | 2,721 | $ | 2,141 | $ | 702 | (9 | ) | 367 | $ | 11,728 | $ | 5,605 | 109 | ||||||||||||||||||||||
AVERAGE EQUITY (b) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 33,000 | $ | 33,000 | $ | 33,000 | $ | 33,000 | $ | 33,000 | | | $ | 33,000 | $ | 26,098 | 26 | |||||||||||||||||||||||
Retail Financial Services |
25,000 | 25,000 | 25,000 | 25,000 | 25,000 | | | 25,000 | 19,011 | 32 | ||||||||||||||||||||||||||||||
Card Services |
15,000 | 15,000 | 15,000 | 15,000 | 15,000 | | | 15,000 | 14,326 | 5 | ||||||||||||||||||||||||||||||
Commercial Banking |
8,000 | 8,000 | 8,000 | 8,000 | 8,000 | | | 8,000 | 7,251 | 10 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
5,000 | 5,000 | 5,000 | 5,000 | 4,500 | | 11 | 5,000 | 3,751 | 33 | ||||||||||||||||||||||||||||||
Asset Management |
7,000 | 7,000 | 7,000 | 7,000 | 7,000 | | | 7,000 | 5,645 | 24 | ||||||||||||||||||||||||||||||
Corporate/Private Equity |
63,525 | 56,468 | 47,865 | 43,493 | 46,257 | 12 | 37 | 52,903 | 53,034 | | ||||||||||||||||||||||||||||||
TOTAL AVERAGE EQUITY |
$ | 156,525 | $ | 149,468 | $ | 140,865 | $ | 136,493 | $ | 138,757 | 5 | 13 | $ | 145,903 | $ | 129,116 | 13 | |||||||||||||||||||||||
RETURN ON EQUITY (b) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
23 | % | 23 | % | 18 | % | 20 | % | (28 | )% | 21 | % | (5 | )% | ||||||||||||||||||||||||||
Retail Financial Services |
(6 | ) | | | 8 | 10 | | 5 | ||||||||||||||||||||||||||||||||
Card Services |
(8 | ) | (19 | ) | (18 | ) | (15 | ) | (10 | ) | (15 | ) | 5 | |||||||||||||||||||||||||||
Commercial Banking |
11 | 17 | 18 | 17 | 24 | 16 | 20 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
19 | 24 | 30 | 25 | 47 | 25 | 47 | |||||||||||||||||||||||||||||||||
Asset Management |
24 | 24 | 20 | 13 | 14 | 20 | 24 |
(a) | In the second quarter of 2009, Investment Bank (IB) began reporting credit reimbursement from TSS as a component of total net revenue, whereas TSS continues to report its credit reimbursement to IB as a separate line item on its income statement (not part of total net revenue). Corporate/Private Equity includes an adjustment to offset IBs inclusion of the credit reimbursement in total net revenue. Prior periods have been revised for IB and Corporate/Private Equity to reflect this presentation. | |
(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
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees |
$ | 1,892 | $ | 1,658 | $ | 2,239 | $ | 1,380 | $ | 1,373 | 14 | % | 38 | % | $ | 7,169 | $ | 5,907 | 21 | % | ||||||||||||||||||||
Principal transactions |
84 | 2,714 | 1,841 | 3,515 | (6,160 | ) | (97 | ) | NM | 8,154 | (7,042 | ) | NM | |||||||||||||||||||||||||||
Lending & deposit-related fees |
174 | 185 | 167 | 138 | 138 | (6 | ) | 26 | 664 | 463 | 43 | |||||||||||||||||||||||||||||
Asset management, administration and commissions |
608 | 633 | 717 | 692 | 764 | (4 | ) | (20 | ) | 2,650 | 3,064 | (14 | ) | |||||||||||||||||||||||||||
All other income (a) |
(14 | ) | 63 | (108 | ) | (56 | ) | 139 | NM | NM | (115 | ) | (341 | ) | 66 | |||||||||||||||||||||||||
Noninterest revenue |
2,744 | 5,253 | 4,856 | 5,669 | (3,746 | ) | (48 | ) | NM | 18,522 | 2,051 | NM | ||||||||||||||||||||||||||||
Net interest income |
2,185 | 2,255 | 2,445 | 2,702 | 3,474 | (3 | ) | (37 | ) | 9,587 | 10,284 | (7 | ) | |||||||||||||||||||||||||||
TOTAL NET REVENUE (b) |
4,929 | 7,508 | 7,301 | 8,371 | (272 | ) | (34 | ) | NM | 28,109 | 12,335 | 128 | ||||||||||||||||||||||||||||
Provision for credit losses |
(181 | ) | 379 | 871 | 1,210 | 765 | NM | NM | 2,279 | 2,015 | 13 | |||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
549 | 2,778 | 2,677 | 3,330 | 1,166 | (80 | ) | (53 | ) | 9,334 | 7,701 | 21 | ||||||||||||||||||||||||||||
Noncompensation expense |
1,737 | 1,496 | 1,390 | 1,444 | 1,575 | 16 | 10 | 6,067 | 6,143 | (1 | ) | |||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
2,286 | 4,274 | 4,067 | 4,774 | 2,741 | (47 | ) | (17 | ) | 15,401 | 13,844 | 11 | ||||||||||||||||||||||||||||
Income/(loss) before income tax expense |
2,824 | 2,855 | 2,363 | 2,387 | (3,778 | ) | (1 | ) | NM | 10,429 | (3,524 | ) | NM | |||||||||||||||||||||||||||
Income tax expense/(benefit) (c) |
923 | 934 | 892 | 781 | (1,414 | ) | (1 | ) | NM | 3,530 | (2,349 | ) | NM | |||||||||||||||||||||||||||
NET INCOME/(LOSS) |
$ | 1,901 | $ | 1,921 | $ | 1,471 | $ | 1,606 | $ | (2,364 | ) | (1 | ) | NM | $ | 6,899 | $ | (1,175 | ) | NM | ||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
23 | % | 23 | % | 18 | % | 20 | % | (28 | )% | 21 | % | (5 | )% | ||||||||||||||||||||||||||
ROA |
1.12 | 1.12 | 0.83 | 0.89 | (1.08 | ) | 0.99 | (0.14 | ) | |||||||||||||||||||||||||||||||
Overhead ratio |
46 | 57 | 56 | 57 | NM | 55 | 112 | |||||||||||||||||||||||||||||||||
Compensation expense as a % of total net revenue |
11 | 37 | 37 | 40 | NM | 33 | 62 | |||||||||||||||||||||||||||||||||
REVENUE BY BUSINESS |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees: |
||||||||||||||||||||||||||||||||||||||||
Advisory |
$ | 611 | $ | 384 | $ | 393 | $ | 479 | $ | 579 | 59 | 6 | $ | 1,867 | $ | 2,008 | (7 | ) | ||||||||||||||||||||||
Equity underwriting |
549 | 681 | 1,103 | 308 | 330 | (19 | ) | 66 | 2,641 | 1,749 | 51 | |||||||||||||||||||||||||||||
Debt underwriting |
732 | 593 | 743 | 593 | 464 | 23 | 58 | 2,661 | 2,150 | 24 | ||||||||||||||||||||||||||||||
Total investment banking fees |
1,892 | 1,658 | 2,239 | 1,380 | 1,373 | 14 | 38 | 7,169 | 5,907 | 21 | ||||||||||||||||||||||||||||||
Fixed income markets |
2,735 | 5,011 | 4,929 | 4,889 | (1,671 | ) | (45 | ) | NM | 17,564 | 1,957 | NM | ||||||||||||||||||||||||||||
Equity markets |
971 | 941 | 708 | 1,773 | (94 | ) | 3 | NM | 4,393 | 3,611 | 22 | |||||||||||||||||||||||||||||
Credit portfolio (a) |
(669 | ) | (102 | ) | (575 | ) | 329 | 120 | NM | NM | (1,017 | ) | 860 | NM | ||||||||||||||||||||||||||
Total net revenue |
$ | 4,929 | $ | 7,508 | $ | 7,301 | $ | 8,371 | $ | (272 | ) | (34 | ) | NM | $ | 28,109 | $ | 12,335 | 128 | |||||||||||||||||||||
REVENUE BY REGION (a) |
||||||||||||||||||||||||||||||||||||||||
Americas |
$ | 2,872 | $ | 3,850 | $ | 4,118 | $ | 4,316 | $ | (2,203 | ) | (25 | ) | NM | $ | 15,156 | $ | 2,610 | 481 | |||||||||||||||||||||
Europe/Middle East/Africa |
1,502 | 2,912 | 2,303 | 3,073 | 2,026 | (48 | ) | (26 | ) | 9,790 | 7,710 | 27 | ||||||||||||||||||||||||||||
Asia/Pacific |
555 | 746 | 880 | 982 | (95 | ) | (26 | ) | NM | 3,163 | 2,015 | 57 | ||||||||||||||||||||||||||||
Total net revenue |
$ | 4,929 | $ | 7,508 | $ | 7,301 | $ | 8,371 | $ | (272 | ) | (34 | ) | NM | $ | 28,109 | $ | 12,335 | 128 | |||||||||||||||||||||
(a) | 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. IB recognizes this credit reimbursement in its credit portfolio business in all other income. Prior periods have been revised to conform with the current presentation. | |
(b) | Total net revenue included tax-equivalent adjustments, predominantly due to income tax credits related to affordable housing and alternative energy investments, as well as, tax-exempt income from municipal bond investments, of $357 million, $371 million, $334 million, $365 million, and $583 million for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $1.4 billion and $1.7 billion for full year 2009 and 2008, respectively. | |
(c) | The income tax benefit in the full year of 2008 includes the result of reduced deferred tax liabilities on overseas earnings. |
Page 8
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained (a) |
$ | 45,544 | $ | 55,703 | $ | 64,500 | $ | 66,506 | $ | 71,357 | (18 | )% | (36 | )% | $ | 45,544 | $ | 71,357 | (36 | )% | ||||||||||||||||||||
Loans held-for-sale & loans at fair value |
3,567 | 4,582 | 6,814 | 10,993 | 13,660 | (22 | ) | (74 | ) | 3,567 | 13,660 | (74 | ) | |||||||||||||||||||||||||||
Total loans |
49,111 | 60,285 | 71,314 | 77,499 | 85,017 | (19 | ) | (42 | ) | 49,111 | 85,017 | (42 | ) | |||||||||||||||||||||||||||
Equity |
33,000 | 33,000 | 33,000 | 33,000 | 33,000 | | | 33,000 | 33,000 | | ||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 674,241 | $ | 678,796 | $ | 710,825 | $ | 733,166 | $ | 869,159 | (1 | ) | (22 | ) | $ | 699,039 | $ | 832,729 | (16 | ) | ||||||||||||||||||||
Trading assets debt and equity instruments |
285,363 | 270,695 | 265,336 | 272,998 | 306,168 | 5 | (7 | ) | 273,624 | 350,812 | (22 | ) | ||||||||||||||||||||||||||||
Trading assets derivative receivables |
72,640 | 86,651 | 100,536 | 125,021 | 153,875 | (16 | ) | (53 | ) | 96,042 | 112,337 | (15 | ) | |||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained (a) |
51,573 | 61,269 | 68,224 | 70,041 | 73,110 | (16 | ) | (29 | ) | 62,722 | 73,108 | (14 | ) | |||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value |
4,158 | 4,981 | 8,934 | 12,402 | 16,378 | (17 | ) | (75 | ) | 7,589 | 18,502 | (59 | ) | |||||||||||||||||||||||||||
Total loans |
55,731 | 66,250 | 77,158 | 82,443 | 89,488 | (16 | ) | (38 | ) | 70,311 | 91,610 | (23 | ) | |||||||||||||||||||||||||||
Adjusted assets (b) |
519,403 | 515,718 | 531,632 | 589,163 | 685,242 | 1 | (24 | ) | 538,724 | 679,780 | (21 | ) | ||||||||||||||||||||||||||||
Equity |
33,000 | 33,000 | 33,000 | 33,000 | 33,000 | | | 33,000 | 26,098 | 26 | ||||||||||||||||||||||||||||||
Headcount |
24,654 | 24,828 | 25,783 | 26,142 | 27,938 | (1 | ) | (12 | ) | 24,654 | 27,938 | (12 | ) | |||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 685 | $ | 750 | $ | 433 | $ | 36 | $ | 87 | (9 | ) | NM | $ | 1,904 | $ | 105 | NM | ||||||||||||||||||||||
Nonperforming assets: |
||||||||||||||||||||||||||||||||||||||||
Nonperforming loans: |
||||||||||||||||||||||||||||||||||||||||
Nonperforming loans retained (a) |
3,196 | 4,782 | 3,407 | 1,738 | 1,143 | (33 | ) | 180 | 3,196 | 1,143 | 180 | |||||||||||||||||||||||||||||
Nonperforming loans held-for-sale & loans at fair value |
308 | 128 | 112 | 57 | 32 | 141 | NM | 308 | 32 | NM | ||||||||||||||||||||||||||||||
Total nonperforming loans |
3,504 | 4,910 | 3,519 | 1,795 | 1,175 | (29 | ) | 198 | 3,504 | 1,175 | 198 | |||||||||||||||||||||||||||||
Derivative receivables |
529 | 624 | 704 | 1,010 | 1,079 | (15 | ) | (51 | ) | 529 | 1,079 | (51 | ) | |||||||||||||||||||||||||||
Assets acquired in loan satisfactions |
203 | 248 | 311 | 236 | 247 | (18 | ) | (18 | ) | 203 | 247 | (18 | ) | |||||||||||||||||||||||||||
Total nonperforming assets |
4,236 | 5,782 | 4,534 | 3,041 | 2,501 | (27 | ) | 69 | 4,236 | 2,501 | 69 | |||||||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
3,756 | 4,703 | 5,101 | 4,682 | 3,444 | (20 | ) | 9 | 3,756 | 3,444 | 9 | |||||||||||||||||||||||||||||
Allowance for lending-related commitments |
485 | 401 | 351 | 295 | 360 | 21 | 35 | 485 | 360 | 35 | ||||||||||||||||||||||||||||||
Total allowance for credit losses |
4,241 | 5,104 | 5,452 | 4,977 | 3,804 | (17 | ) | 11 | 4,241 | 3,804 | 11 | |||||||||||||||||||||||||||||
Net charge-off rate (a) |
5.27 | % | 4.86 | % | 2.55 | % | 0.21 | % | 0.47 | % | 3.04 | % | 0.14 | % | ||||||||||||||||||||||||||
Allowance for loan losses to period-end loans retained (a) |
8.25 | 8.44 | 7.91 | 7.04 | 4.83 | 8.25 | 4.83 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to average loans retained (a) (d) |
7.28 | 7.68 | 7.48 | 6.68 | 4.71 | 5.99 | 4.71 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans retained (c) |
118 | 98 | 150 | 269 | 301 | 118 | 301 | |||||||||||||||||||||||||||||||||
Nonperforming loans to total period-end loans |
7.13 | 8.14 | 4.93 | 2.32 | 1.38 | 7.13 | 1.38 | |||||||||||||||||||||||||||||||||
Nonperforming loans to total average loans |
6.29 | 7.41 | 4.56 | 2.18 | 1.31 | 4.98 | 1.28 |
(a) | Loans retained included credit portfolio loans, leveraged leases and other accrual loans, and excluded loans held-for-sale and loans accounted for 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 consolidated variable interest entities (VIEs); (3) cash and securities segregated and on deposit for regulatory and other purposes; (4) goodwill and intangibles; (5) securities received as collateral; and (6) investments purchased under the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility. 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. IB believes an adjusted asset amount that excludes the assets discussed above, which were considered to have a low risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry. | |
(c) | Nonperforming loans excluded distressed loans held-for-sale that were purchased as part of IBs proprietary activities. | |
(d) | Excluding the impact of a loan originated in March 2008 to Bear Stearns, the adjusted ratio would be 4.84% for 2008. The average balance of the loan extended to Bear Stearns was $1.9 billion for 2008. |
Page 9
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
MARKET RISK AVERAGE TRADING AND CREDIT
PORTFOLIO VAR - 99% CONFIDENCE LEVEL (a) |
||||||||||||||||||||||||||||||||||||||||
Trading activities: |
||||||||||||||||||||||||||||||||||||||||
Fixed income |
$ | 171 | $ | 243 | $ | 249 | $ | 218 | $ | 276 | (30 | )% | (38 | )% | $ | 221 | $ | 181 | 22 | % | ||||||||||||||||||||
Foreign exchange |
23 | 30 | 26 | 40 | 55 | (23 | ) | (58 | ) | 30 | 34 | (12 | ) | |||||||||||||||||||||||||||
Equities |
35 | 28 | 77 | 162 | 87 | 25 | (60 | ) | 75 | 57 | 32 | |||||||||||||||||||||||||||||
Commodities and other |
26 | 38 | 34 | 28 | 30 | (32 | ) | (13 | ) | 32 | 32 | | ||||||||||||||||||||||||||||
Diversification (b) |
(92 | ) | (134 | ) | (136 | ) | (159 | ) | (146 | ) | 31 | 37 | (131 | ) | (108 | ) | (21 | ) | ||||||||||||||||||||||
Total trading VaR (c) |
163 | 205 | 250 | 289 | 302 | (20 | ) | (46 | ) | 227 | 196 | 16 | ||||||||||||||||||||||||||||
Credit portfolio VaR (d) |
41 | 50 | 133 | 182 | 165 | (18 | ) | (75 | ) | 101 | 69 | 46 | ||||||||||||||||||||||||||||
Diversification (b) |
(20 | ) | (49 | ) | (116 | ) | (135 | ) | (140 | ) | 59 | 86 | (80 | ) | (63 | ) | (27 | ) | ||||||||||||||||||||||
Total trading and credit portfolio VaR |
$ | 184 | $ | 206 | $ | 267 | $ | 336 | $ | 327 | (11 | ) | (44 | ) | $ | 248 | $ | 202 | 23 | |||||||||||||||||||||
Full Year 2009 | Full Year 2008 | |||||||
Market | Market | |||||||
MARKET SHARES AND RANKINGS (e) | Share | Rankings | Share | Rankings | ||||
Global debt, equity and equity-related |
10% | #1 | 9% | #1 | ||||
Global syndicated loans |
10% | #1 | 11% | #1 | ||||
Global long-term debt (f) |
9% | #1 | 9% | #3 | ||||
Global equity and equity-related (g) |
13% | #1 | 10% | #1 | ||||
Global announced M&A (h) |
24% | #3 | 28% | #2 | ||||
U.S. debt, equity and equity-related |
14% | #1 | 15% | #2 | ||||
U.S. syndicated loans |
23% | #1 | 24% | #1 | ||||
U.S. long-term debt (f) |
14% | #1 | 15% | #2 | ||||
U.S. equity and equity-related (g) |
13% | #1 | 11% | #1 | ||||
U.S. announced M&A (h) |
35% | #3 | 35% | #2 |
(a) | Results for full year 2008 include seven months of the combined Firms (JPMorgan Chase & Co.s and Bear Stearns) results and five months of 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. 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. Beginning in the fourth quarter of 2008, trading VaR includes the estimated credit spread sensitivity of certain mortgage products. | |
(d) | Includes VaR on derivative credit valuation adjustments (CVA), hedges of the CVA 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. Full year 2008 results are pro forma for the Bear Stearns merger. | |
(f) | Includes asset-backed securities, mortgage-backed securities and municipal securities. | |
(g) | Includes rights offerings; U.S. domiciled equity and equity-related transactions. | |
(h) | Global announced M&A is based upon rank value; all other rankings are 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 rankings for 2008 include transactions withdrawn since December 31, 2008. U.S. announced M&A represents any U.S. involvement ranking. |
Page 10
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Lending & deposit-related fees |
$ | 972 | $ | 1,046 | $ | 1,003 | $ | 948 | $ | 1,050 | (7 | )% | (7 | )% | $ | 3,969 | $ | 2,546 | 56 | % | ||||||||||||||||||||
Asset management, administration and commissions |
406 | 408 | 425 | 435 | 412 | | (1 | ) | 1,674 | 1,510 | 11 | |||||||||||||||||||||||||||||
Mortgage fees and related income |
481 | 873 | 807 | 1,633 | 1,962 | (45 | ) | (75 | ) | 3,794 | 3,621 | 5 | ||||||||||||||||||||||||||||
Credit card income |
441 | 416 | 411 | 367 | 367 | 6 | 20 | 1,635 | 939 | 74 | ||||||||||||||||||||||||||||||
Other income |
299 | 321 | 294 | 214 | 183 | (7 | ) | 63 | 1,128 | 739 | 53 | |||||||||||||||||||||||||||||
Noninterest revenue |
2,599 | 3,064 | 2,940 | 3,597 | 3,974 | (15 | ) | (35 | ) | 12,200 | 9,355 | 30 | ||||||||||||||||||||||||||||
Net interest income |
5,070 | 5,154 | 5,030 | 5,238 | 4,710 | (2 | ) | 8 | 20,492 | 14,165 | 45 | |||||||||||||||||||||||||||||
TOTAL NET REVENUE |
7,669 | 8,218 | 7,970 | 8,835 | 8,684 | (7 | ) | (12 | ) | 32,692 | 23,520 | 39 | ||||||||||||||||||||||||||||
Provision for credit losses |
4,229 | 3,988 | 3,846 | 3,877 | 3,576 | 6 | 18 | 15,940 | 9,905 | 61 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
1,722 | 1,728 | 1,631 | 1,631 | 1,604 | | 7 | 6,712 | 5,068 | 32 | ||||||||||||||||||||||||||||||
Noncompensation expense |
2,499 | 2,385 | 2,365 | 2,457 | 2,345 | 5 | 7 | 9,706 | 6,612 | 47 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
81 | 83 | 83 | 83 | 97 | (2 | ) | (16 | ) | 330 | 397 | (17 | ) | |||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
4,302 | 4,196 | 4,079 | 4,171 | 4,046 | 3 | 6 | 16,748 | 12,077 | 39 | ||||||||||||||||||||||||||||||
Income/(loss) before income tax expense (benefit) |
(862 | ) | 34 | 45 | 787 | 1,062 | NM | NM | 4 | 1,538 | (100 | ) | ||||||||||||||||||||||||||||
Income tax expense (benefit) |
(463 | ) | 27 | 30 | 313 | 438 | NM | NM | (93 | ) | 658 | NM | ||||||||||||||||||||||||||||
NET INCOME/(LOSS) |
$ | (399 | ) | $ | 7 | $ | 15 | $ | 474 | $ | 624 | NM | NM | $ | 97 | $ | 880 | (89 | ) | |||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
(6 | )% | | % | | % | 8 | % | 10 | % | | % | 5 | % | ||||||||||||||||||||||||||
Overhead ratio |
56 | 51 | 51 | 47 | 47 | 51 | 51 | |||||||||||||||||||||||||||||||||
Overhead ratio excluding core deposit intangibles (a) |
55 | 50 | 50 | 46 | 45 | 50 | 50 | |||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Assets |
$ | 387,269 | $ | 397,673 | $ | 399,916 | $ | 412,505 | $ | 419,831 | (3 | ) | (8 | ) | $ | 387,269 | $ | 419,831 | (8 | ) | ||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
340,332 | 346,765 | 353,934 | 364,220 | 368,786 | (2 | ) | (8 | ) | 340,332 | 368,786 | (8 | ) | |||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value (b) |
14,612 | 14,303 | 13,192 | 12,529 | 9,996 | 2 | 46 | 14,612 | 9,996 | 46 | ||||||||||||||||||||||||||||||
Total loans |
354,944 | 361,068 | 367,126 | 376,749 | 378,782 | (2 | ) | (6 | ) | 354,944 | 378,782 | (6 | ) | |||||||||||||||||||||||||||
Deposits |
357,463 | 361,046 | 371,241 | 380,140 | 360,451 | (1 | ) | (1 | ) | 357,463 | 360,451 | (1 | ) | |||||||||||||||||||||||||||
Equity |
25,000 | 25,000 | 25,000 | 25,000 | 25,000 | | | 25,000 | 25,000 | | ||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Assets |
$ | 395,045 | $ | 401,620 | $ | 410,228 | $ | 423,472 | $ | 423,699 | (2 | ) | (7 | ) | $ | 407,497 | $ | 304,442 | 34 | |||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
343,411 | 349,762 | 359,372 | 366,925 | 369,172 | (2 | ) | (7 | ) | 354,789 | 257,083 | 38 | ||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value (b) |
17,670 | 19,025 | 19,043 | 16,526 | 13,848 | (7 | ) | 28 | 18,072 | 17,056 | 6 | |||||||||||||||||||||||||||||
Total loans |
361,081 | 368,787 | 378,415 | 383,451 | 383,020 | (2 | ) | (6 | ) | 372,861 | 274,139 | 36 | ||||||||||||||||||||||||||||
Deposits |
356,464 | 366,944 | 377,259 | 370,278 | 358,523 | (3 | ) | (1 | ) | 367,696 | 258,362 | 42 | ||||||||||||||||||||||||||||
Equity |
25,000 | 25,000 | 25,000 | 25,000 | 25,000 | | | 25,000 | 19,011 | 32 | ||||||||||||||||||||||||||||||
Headcount |
108,971 | 106,951 | 103,733 | 100,677 | 102,007 | 2 | 7 | 108,971 | 102,007 | 7 |
(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 Retail Bankings core deposit intangibles amortization expense related to the 2006 Bank of New York transaction and the 2004 Bank One merger of $80 million, $83 million, $82 million, $83 million, and $97 million, for the quarters ending December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $328 million and $394 million for full year 2009 and 2008, respectively. | |
(b) | Loans at fair value consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets. These loans totaled $12.5 billion, $12.8 billion, $11.3 billion, $8.9 billion, and $8.0 billion, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. Average balances of these loans totaled $16.0 billion, $17.7 billion, $16.2 billion, $13.4 billion, and $12.0 billion, for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $15.8 billion and $14.2 billion for full year 2009 and 2008, respectively. |
Page 11
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 2,738 | $ | 2,550 | $ | 2,649 | $ | 2,176 | $ | 1,701 | 7 | % | 61 | % | $ | 10,113 | $ | 4,877 | 107 | % | ||||||||||||||||||||
Nonperforming loans: |
||||||||||||||||||||||||||||||||||||||||
Nonperforming loans retained |
10,611 | 10,091 | 8,792 | 7,714 | 6,548 | 5 | 62 | 10,611 | 6,548 | 62 | ||||||||||||||||||||||||||||||
Nonperforming loans held-for-sale and loans at fair value |
234 | 242 | 203 | 264 | 236 | (3 | ) | (1 | ) | 234 | 236 | (1 | ) | |||||||||||||||||||||||||||
Total nonperforming loans (a) (b) (c) |
10,845 | 10,333 | 8,995 | 7,978 | 6,784 | 5 | 60 | 10,845 | 6,784 | 60 | ||||||||||||||||||||||||||||||
Nonperforming assets (a) (b) (c) |
12,098 | 11,883 | 10,554 | 9,846 | 9,077 | 2 | 33 | 12,098 | 9,077 | 33 | ||||||||||||||||||||||||||||||
Allowance for loan losses |
14,776 | 13,286 | 11,832 | 10,619 | 8,918 | 11 | 66 | 14,776 | 8,918 | 66 | ||||||||||||||||||||||||||||||
Net charge-off rate (e) |
3.16 | % | 2.89 | % | 2.96 | % | 2.41 | % | 1.83 | % | 2.85 | % | 1.90 | % | ||||||||||||||||||||||||||
Net charge-off rate excluding purchased credit-impaired loans (d) (e) |
4.16 | 3.81 | 3.89 | 3.16 | 2.41 | 3.75 | 2.08 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to ending loans retained (e) |
4.34 | 3.83 | 3.34 | 2.92 | 2.42 | 4.34 | 2.42 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to ending loans retained excluding purchased
credit-impaired loans (d) (e) |
5.09 | 4.63 | 4.41 | 3.84 | 3.19 | 5.09 | 3.19 | |||||||||||||||||||||||||||||||||
Allowance
for loan losses to nonperforming loans retained (a) (d) (e) |
124 | 121 | 135 | 138 | 136 | 124 | 136 | |||||||||||||||||||||||||||||||||
Nonperforming loans to total loans |
3.06 | 2.86 | 2.45 | 2.12 | 1.79 | 3.06 | 1.79 | |||||||||||||||||||||||||||||||||
Nonperforming loans to total loans excluding purchased
credit-impaired loans (a) |
3.96 | 3.72 | 3.19 | 2.76 | 2.34 | 3.96 | 2.34 |
(a) | Excludes purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. | |
(b) | Certain of these loans are classified as trading assets on the Consolidated Balance Sheets. | |
(c) | Nonperforming loans and assets excluded: (1) mortgage loans insured by U.S. government agencies of $9.0 billion, $7.0 billion, $4.2 billion, $4.2 billion, and $3.0 billion, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively; (2) real estate owned insured by U.S. government agencies of $579 million, $579 million, $508 million, $433 million, and $364 million, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively; and (3) student 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 $542 million, $511 million, $473 million, $433 million, and $437 million, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. These amounts are excluded, as reimbursement is proceeding normally. | |
(d) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of $1.6 billion and $1.1 billion was recorded for these loans as of December 31, 2009 and September 30, 2009, respectively. No allowance for losses was recorded as of June 30, 2009, March 31, 2009 and December 31, 2008. To date, no charge-offs have been recorded for these loans. | |
(e) | 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. |
Page 12
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
RETAIL BANKING |
||||||||||||||||||||||||||||||||||||||||
Noninterest revenue |
$ | 1,804 | $ | 1,844 | $ | 1,803 | $ | 1,718 | $ | 1,834 | (2 | )% | (2 | )% | $ | 7,169 | $ | 4,951 | 45 | % | ||||||||||||||||||||
Net interest income |
2,716 | 2,732 | 2,719 | 2,614 | 2,687 | (1 | ) | 1 | 10,781 | 7,659 | 41 | |||||||||||||||||||||||||||||
Total net revenue |
4,520 | 4,576 | 4,522 | 4,332 | 4,521 | (1 | ) | | 17,950 | 12,610 | 42 | |||||||||||||||||||||||||||||
Provision for credit losses |
248 | 208 | 361 | 325 | 268 | 19 | (7 | ) | 1,142 | 449 | 154 | |||||||||||||||||||||||||||||
Noninterest expense |
2,574 | 2,646 | 2,557 | 2,580 | 2,533 | (3 | ) | 2 | 10,357 | 7,232 | 43 | |||||||||||||||||||||||||||||
Income before income tax expense |
1,698 | 1,722 | 1,604 | 1,427 | 1,720 | (1 | ) | (1 | ) | 6,451 | 4,929 | 31 | ||||||||||||||||||||||||||||
Net income |
$ | 1,027 | $ | 1,043 | $ | 970 | $ | 863 | $ | 1,040 | (2 | ) | (1 | ) | $ | 3,903 | $ | 2,982 | 31 | |||||||||||||||||||||
Overhead ratio |
57 | % | 58 | % | 57 | % | 60 | % | 56 | % | 58 | % | 57 | % | ||||||||||||||||||||||||||
Overhead ratio excluding core deposit intangibles (a) |
55 | 56 | 55 | 58 | 54 | 56 | 54 | |||||||||||||||||||||||||||||||||
BUSINESS METRICS (in billions) |
||||||||||||||||||||||||||||||||||||||||
Business banking origination volume |
$ | 0.7 | $ | 0.5 | $ | 0.6 | $ | 0.5 | $ | 0.8 | 40 | (13 | ) | $ | 2.3 | $ | 5.5 | (58 | ) | |||||||||||||||||||||
End-of-period loans owned |
17.0 | 17.4 | 17.8 | 18.2 | 18.4 | (2 | ) | (8 | ) | 17.0 | 18.4 | (8 | ) | |||||||||||||||||||||||||||
End-of-period deposits: |
||||||||||||||||||||||||||||||||||||||||
Checking |
$ | 121.9 | $ | 115.5 | $ | 114.1 | $ | 113.9 | $ | 109.2 | 6 | 12 | $ | 121.9 | $ | 109.2 | 12 | |||||||||||||||||||||||
Savings |
153.4 | 151.6 | 150.4 | 152.4 | 144.0 | 1 | 7 | 153.4 | 144.0 | 7 | ||||||||||||||||||||||||||||||
Time and other |
58.0 | 66.6 | 78.9 | 86.5 | 89.1 | (13 | ) | (35 | ) | 58.0 | 89.1 | (35 | ) | |||||||||||||||||||||||||||
Total end-of-period deposits |
333.3 | 333.7 | 343.4 | 352.8 | 342.3 | | (3 | ) | 333.3 | 342.3 | (3 | ) | ||||||||||||||||||||||||||||
Average loans owned |
$ | 17.2 | $ | 17.7 | $ | 18.0 | $ | 18.4 | $ | 18.2 | (3 | ) | (5 | ) | $ | 17.8 | $ | 16.7 | 7 | |||||||||||||||||||||
Average deposits: |
||||||||||||||||||||||||||||||||||||||||
Checking |
$ | 116.4 | $ | 114.0 | $ | 114.2 | $ | 109.4 | $ | 105.8 | 2 | 10 | $ | 113.5 | $ | 77.1 | 47 | |||||||||||||||||||||||
Savings |
153.1 | 151.2 | 151.2 | 148.2 | 145.3 | 1 | 5 | 150.9 | 114.3 | 32 | ||||||||||||||||||||||||||||||
Time and other |
60.3 | 74.4 | 82.7 | 88.2 | 88.7 | (19 | ) | (32 | ) | 76.4 | 53.2 | 44 | ||||||||||||||||||||||||||||
Total average deposits |
329.8 | 339.6 | 348.1 | 345.8 | 339.8 | (3 | ) | (3 | ) | 340.8 | 244.6 | 39 | ||||||||||||||||||||||||||||
Deposit margin |
3.06 | % | 2.99 | % | 2.92 | % | 2.85 | % | 2.94 | % | 2.96 | % | 2.89 | % | ||||||||||||||||||||||||||
Average assets |
$ | 28.2 | $ | 28.1 | $ | 29.1 | $ | 30.2 | $ | 28.7 | | (2 | ) | $ | 28.9 | $ | 26.3 | 10 | ||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 248 | $ | 208 | $ | 211 | $ | 175 | $ | 168 | 19 | 48 | $ | 842 | $ | 346 | 143 | |||||||||||||||||||||||
Net charge-off rate |
5.72 | % | 4.66 | % | 4.70 | % | 3.86 | % | 3.67 | % | 4.73 | % | 2.07 | % | ||||||||||||||||||||||||||
Nonperforming assets |
$ | 839 | $ | 816 | $ | 686 | $ | 579 | $ | 424 | 3 | 98 | $ | 839 | $ | 424 | 98 | |||||||||||||||||||||||
RETAIL BRANCH BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Investment sales volume |
$ | 5,851 | $ | 6,243 | $ | 5,292 | $ | 4,398 | $ | 3,956 | (6 | ) | 48 | $ | 21,784 | $ | 17,640 | 23 | ||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||
Branches |
5,154 | 5,126 | 5,203 | 5,186 | 5,474 | 1 | (6 | ) | 5,154 | 5,474 | (6 | ) | ||||||||||||||||||||||||||||
ATMs |
15,406 | 15,038 | 14,144 | 14,159 | 14,568 | 2 | 6 | 15,406 | 14,568 | 6 | ||||||||||||||||||||||||||||||
Personal bankers |
17,991 | 16,941 | 15,959 | 15,544 | 15,825 | 6 | 14 | 17,991 | 15,825 | 14 | ||||||||||||||||||||||||||||||
Sales specialists |
5,912 | 5,530 | 5,485 | 5,454 | 5,661 | 7 | 4 | 5,912 | 5,661 | 4 | ||||||||||||||||||||||||||||||
Active online customers (in thousands) |
15,424 | 13,852 | 13,930 | 12,882 | 11,710 | 11 | 32 | 15,424 | 11,710 | 32 | ||||||||||||||||||||||||||||||
Checking accounts (in thousands) |
25,712 | 25,546 | 25,252 | 24,984 | 24,499 | 1 | 5 | 25,712 | 24,499 | 5 |
(a) | Retail 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 method would result in an improving overhead ratio over time, all things remaining equal. This non-GAAP ratio excludes Retail Bankings core deposit intangibles amortization expense related to the 2006 Bank of New York transaction and the 2004 Bank One merger of $80 million, $83 million, $82 million, $83 million, and $97 million, for the quarters ending December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $328 million and $394 million for full year 2009 and 2008, respectively. |
Page 13
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
CONSUMER LENDING |
||||||||||||||||||||||||||||||||||||||||
Noninterest revenue |
$ | 795 | $ | 1,220 | $ | 1,137 | $ | 1,879 | $ | 2,140 | (35 | )% | (63 | )% | $ | 5,031 | $ | 4,404 | 14 | % | ||||||||||||||||||||
Net interest income |
2,354 | 2,422 | 2,311 | 2,624 | 2,023 | (3 | ) | 16 | 9,711 | 6,506 | 49 | |||||||||||||||||||||||||||||
Total net revenue |
3,149 | 3,642 | 3,448 | 4,503 | 4,163 | (14 | ) | (24 | ) | 14,742 | 10,910 | 35 | ||||||||||||||||||||||||||||
Provision for credit losses |
3,981 | 3,780 | 3,485 | 3,552 | 3,308 | 5 | 20 | 14,798 | 9,456 | 56 | ||||||||||||||||||||||||||||||
Noninterest expense |
1,728 | 1,550 | 1,522 | 1,591 | 1,513 | 11 | 14 | 6,391 | 4,845 | 32 | ||||||||||||||||||||||||||||||
Income/(loss) before income tax expense/(benefit) |
(2,560 | ) | (1,688 | ) | (1,559 | ) | (640 | ) | (658 | ) | (52 | ) | (289 | ) | (6,447 | ) | (3,391 | ) | (90 | ) | ||||||||||||||||||||
Net income/(loss) |
$ | (1,426 | ) | $ | (1,036 | ) | $ | (955 | ) | $ | (389 | ) | $ | (416 | ) | (38 | ) | (243 | ) | $ | (3,806 | ) | $ | (2,102 | ) | (81 | ) | |||||||||||||
Overhead ratio |
55 | % | 43 | % | 44 | % | 35 | % | 36 | % | 43 | % | 44 | % | ||||||||||||||||||||||||||
BUSINESS METRICS (in billions) |
||||||||||||||||||||||||||||||||||||||||
LOANS EXCLUDING PURCHASED CREDIT-IMPAIRED LOANS
(a) |
||||||||||||||||||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 101.4 | $ | 104.8 | $ | 108.2 | $ | 111.7 | $ | 114.3 | (3 | ) | (11 | ) | $ | 101.4 | $ | 114.3 | (11 | ) | ||||||||||||||||||||
Prime mortgage |
59.4 | 60.1 | 62.1 | 65.4 | 65.2 | (1 | ) | (9 | ) | 59.4 | 65.2 | (9 | ) | |||||||||||||||||||||||||||
Subprime mortgage |
12.5 | 13.3 | 13.8 | 14.6 | 15.3 | (6 | ) | (18 | ) | 12.5 | 15.3 | (18 | ) | |||||||||||||||||||||||||||
Option ARMs |
8.5 | 8.9 | 9.0 | 9.0 | 9.0 | (4 | ) | (6 | ) | 8.5 | 9.0 | (6 | ) | |||||||||||||||||||||||||||
Student loans |
15.8 | 15.5 | 15.6 | 17.3 | 15.9 | 2 | (1 | ) | 15.8 | 15.9 | (1 | ) | ||||||||||||||||||||||||||||
Auto loans |
46.0 | 44.3 | 42.9 | 43.1 | 42.6 | 4 | 8 | 46.0 | 42.6 | 8 | ||||||||||||||||||||||||||||||
Other |
0.7 | 0.8 | 1.0 | 1.0 | 1.3 | (13 | ) | (46 | ) | 0.7 | 1.3 | (46 | ) | |||||||||||||||||||||||||||
Total end-of-period loans |
244.3 | 247.7 | 252.6 | 262.1 | 263.6 | (1 | ) | (7 | ) | 244.3 | 263.6 | (7 | ) | |||||||||||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 103.3 | $ | 106.6 | $ | 110.1 | $ | 113.4 | $ | 114.6 | (3 | ) | (10 | ) | $ | 108.3 | $ | 99.9 | 8 | |||||||||||||||||||||
Prime mortgage |
59.4 | 60.6 | 63.3 | 65.4 | 65.0 | (2 | ) | (9 | ) | 62.2 | 45.0 | 38 | ||||||||||||||||||||||||||||
Subprime mortgage |
12.8 | 13.6 | 14.3 | 14.9 | 15.7 | (6 | ) | (18 | ) | 13.9 | 15.3 | (9 | ) | |||||||||||||||||||||||||||
Option ARMs |
8.7 | 8.9 | 9.1 | 8.8 | 9.0 | (2 | ) | (3 | ) | 8.9 | 2.3 | 287 | ||||||||||||||||||||||||||||
Student loans |
15.6 | 15.2 | 16.7 | 17.0 | 15.6 | 3 | | 16.1 | 13.6 | 18 | ||||||||||||||||||||||||||||||
Auto loans |
45.3 | 43.3 | 43.1 | 42.5 | 42.9 | 5 | 6 | 43.6 | 43.8 | | ||||||||||||||||||||||||||||||
Other |
0.7 | 0.9 | 1.0 | 1.5 | 1.5 | (22 | ) | (53 | ) | 1.0 | 1.1 | (9 | ) | |||||||||||||||||||||||||||
Total average loans |
245.8 | 249.1 | 257.6 | 263.5 | 264.3 | (1 | ) | (7 | ) | 254.0 | 221.0 | 15 | ||||||||||||||||||||||||||||
PURCHASED CREDIT-IMPAIRED LOANS (a) |
||||||||||||||||||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 26.5 | $ | 27.1 | $ | 27.7 | $ | 28.4 | $ | 28.6 | (2 | ) | (7 | ) | $ | 26.5 | $ | 28.6 | (7 | ) | ||||||||||||||||||||
Prime mortgage |
19.7 | 20.2 | 20.8 | 21.4 | 21.8 | (2 | ) | (10 | ) | 19.7 | 21.8 | (10 | ) | |||||||||||||||||||||||||||
Subprime mortgage |
6.0 | 6.1 | 6.4 | 6.6 | 6.8 | (2 | ) | (12 | ) | 6.0 | 6.8 | (12 | ) | |||||||||||||||||||||||||||
Option ARMs |
29.0 | 29.8 | 30.5 | 31.2 | 31.6 | (3 | ) | (8 | ) | 29.0 | 31.6 | (8 | ) | |||||||||||||||||||||||||||
Total end-of-period loans |
81.2 | 83.2 | 85.4 | 87.6 | 88.8 | (2 | ) | (9 | ) | 81.2 | 88.8 | (9 | ) | |||||||||||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 26.7 | $ | 27.4 | $ | 28.0 | $ | 28.4 | $ | 28.2 | (3 | ) | (5 | ) | $ | 27.6 | $ | 7.1 | 289 | |||||||||||||||||||||
Prime mortgage |
20.0 | 20.5 | 21.0 | 21.6 | 21.9 | (2 | ) | (9 | ) | 20.8 | 5.4 | 285 | ||||||||||||||||||||||||||||
Subprime mortgage |
6.1 | 6.2 | 6.5 | 6.7 | 6.8 | (2 | ) | (10 | ) | 6.3 | 1.7 | 271 | ||||||||||||||||||||||||||||
Option ARMs |
29.3 | 30.2 | 31.0 | 31.4 | 31.6 | (3 | ) | (7 | ) | 30.5 | 8.0 | 281 | ||||||||||||||||||||||||||||
Total average loans |
82.1 | 84.3 | 86.5 | 88.1 | 88.5 | (3 | ) | (7 | ) | 85.2 | 22.2 | 284 | ||||||||||||||||||||||||||||
TOTAL CONSUMER LENDING PORTFOLIO |
||||||||||||||||||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 127.9 | $ | 131.9 | $ | 135.9 | $ | 140.1 | $ | 142.9 | (3 | ) | (10 | ) | $ | 127.9 | $ | 142.9 | (10 | ) | ||||||||||||||||||||
Prime mortgage |
79.1 | 80.3 | 82.9 | 86.8 | 87.0 | (1 | ) | (9 | ) | 79.1 | 87.0 | (9 | ) | |||||||||||||||||||||||||||
Subprime mortgage |
18.5 | 19.4 | 20.2 | 21.2 | 22.1 | (5 | ) | (16 | ) | 18.5 | 22.1 | (16 | ) | |||||||||||||||||||||||||||
Option ARMs |
37.5 | 38.7 | 39.5 | 40.2 | 40.6 | (3 | ) | (8 | ) | 37.5 | 40.6 | (8 | ) | |||||||||||||||||||||||||||
Student loans |
15.8 | 15.5 | 15.6 | 17.3 | 15.9 | 2 | (1 | ) | 15.8 | 15.9 | (1 | ) | ||||||||||||||||||||||||||||
Auto loans |
46.0 | 44.3 | 42.9 | 43.1 | 42.6 | 4 | 8 | 46.0 | 42.6 | 8 | ||||||||||||||||||||||||||||||
Other |
0.7 | 0.8 | 1.0 | 1.0 | 1.3 | (13 | ) | (46 | ) | 0.7 | 1.3 | (46 | ) | |||||||||||||||||||||||||||
Total end-of-period loans |
325.5 | 330.9 | 338.0 | 349.7 | 352.4 | (2 | ) | (8 | ) | 325.5 | 352.4 | (8 | ) | |||||||||||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 130.0 | $ | 134.0 | $ | 138.1 | $ | 141.8 | $ | 142.8 | (3 | ) | (9 | ) | $ | 135.9 | $ | 107.0 | 27 | |||||||||||||||||||||
Prime mortgage |
79.4 | 81.1 | 84.3 | 87.0 | 86.9 | (2 | ) | (9 | ) | 83.0 | 50.4 | 65 | ||||||||||||||||||||||||||||
Subprime mortgage |
18.9 | 19.8 | 20.8 | 21.6 | 22.5 | (5 | ) | (16 | ) | 20.2 | 17.0 | 19 | ||||||||||||||||||||||||||||
Option ARMs |
38.0 | 39.1 | 40.1 | 40.2 | 40.6 | (3 | ) | (6 | ) | 39.4 | 10.3 | 283 | ||||||||||||||||||||||||||||
Student loans |
15.6 | 15.2 | 16.7 | 17.0 | 15.6 | 3 | | 16.1 | 13.6 | 18 | ||||||||||||||||||||||||||||||
Auto loans |
45.3 | 43.3 | 43.1 | 42.5 | 42.9 | 5 | 6 | 43.6 | 43.8 | | ||||||||||||||||||||||||||||||
Other |
0.7 | 0.9 | 1.0 | 1.5 | 1.5 | (22 | ) | (53 | ) | 1.0 | 1.1 | (9 | ) | |||||||||||||||||||||||||||
Total average loans owned (b) |
327.9 | 333.4 | 344.1 | 351.6 | 352.8 | (2 | ) | (7 | ) | 339.2 | 243.2 | 39 |
(a) | Purchased credit-impaired loans represent loans acquired in the Washington Mutual transaction for which a deterioration in credit quality occurred between the origination date and JPMorgan Chases acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated life of the loan when cash flows are reasonably estimable, even if the underlying loans are contractually past due. | |
(b) | Total average loans include loans held-for-sale of $1.7 billion, $1.3 billion, $2.8 billion, $3.1 billion, and $1.8 billion, for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $2.2 billion and $2.8 billion for full year 2009 and 2008, respectively. |
Page 14
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
CONSUMER LENDING (continued) |
||||||||||||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net
charge-offs excluding purchased credit-impaired loans: (a) |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 1,177 | $ | 1,142 | $ | 1,265 | $ | 1,098 | $ | 770 | 3 | % | 53 | % | $ | 4,682 | $ | 2,391 | 96 | % | ||||||||||||||||||||
Prime mortgage |
568 | 525 | 481 | 312 | 195 | 8 | 191 | 1,886 | 526 | 259 | ||||||||||||||||||||||||||||||
Subprime mortgage |
452 | 422 | 410 | 364 | 319 | 7 | 42 | 1,648 | 933 | 77 | ||||||||||||||||||||||||||||||
Option ARMs |
29 | 15 | 15 | 4 | | 93 | NM | 63 | | NM | ||||||||||||||||||||||||||||||
Auto loans |
148 | 159 | 146 | 174 | 207 | (7 | ) | (29 | ) | 627 | 568 | 10 | ||||||||||||||||||||||||||||
Other |
116 | 79 | 121 | 49 | 42 | 47 | 176 | 365 | 113 | 223 | ||||||||||||||||||||||||||||||
Total net charge-offs |
2,490 | 2,342 | 2,438 | 2,001 | 1,533 | 6 | 62 | 9,271 | 4,531 | 105 | ||||||||||||||||||||||||||||||
Net charge-off rate excluding purchased credit-impaired loans: (a) |
||||||||||||||||||||||||||||||||||||||||
Home equity |
4.52 | % | 4.25 | % | 4.61 | % | 3.93 | % | 2.67 | % | 4.32 | % | 2.39 | % | ||||||||||||||||||||||||||
Prime mortgage |
3.81 | 3.45 | 3.07 | 1.95 | 1.20 | 3.05 | 1.18 | |||||||||||||||||||||||||||||||||
Subprime mortgage |
14.01 | 12.31 | 11.50 | 9.91 | 8.08 | 11.86 | 6.10 | |||||||||||||||||||||||||||||||||
Option ARMs |
1.32 | 0.67 | 0.66 | 0.18 | | 0.71 | | |||||||||||||||||||||||||||||||||
Auto loans |
1.30 | 1.46 | 1.36 | 1.66 | 1.92 | 1.44 | 1.30 | |||||||||||||||||||||||||||||||||
Other |
3.11 | 2.08 | 3.15 | 1.25 | 1.08 | 2.39 | 0.93 | |||||||||||||||||||||||||||||||||
Total net charge-off rate excluding purchased credit-impaired loans (b) |
4.05 | 3.75 | 3.84 | 3.12 | 2.32 | 3.68 | 2.08 | |||||||||||||||||||||||||||||||||
Net charge-off rate reported: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
3.59 | 3.38 | 3.67 | 3.14 | 2.15 | 3.45 | 2.23 | |||||||||||||||||||||||||||||||||
Prime mortgage |
2.85 | 2.58 | 2.30 | 1.46 | 0.89 | 2.28 | 1.05 | |||||||||||||||||||||||||||||||||
Subprime mortgage |
9.49 | 8.46 | 7.91 | 6.83 | 5.64 | 8.16 | 5.49 | |||||||||||||||||||||||||||||||||
Option ARMs |
0.30 | 0.15 | 0.15 | 0.04 | | 0.16 | | |||||||||||||||||||||||||||||||||
Auto loans |
1.30 | 1.46 | 1.36 | 1.66 | 1.92 | 1.44 | 1.30 | |||||||||||||||||||||||||||||||||
Other |
3.11 | 2.08 | 3.15 | 1.25 | 1.08 | 2.39 | 0.93 | |||||||||||||||||||||||||||||||||
Total net charge-off rate reported (b) |
3.03 | 2.80 | 2.87 | 2.33 | 1.74 | 2.75 | 1.89 | |||||||||||||||||||||||||||||||||
30+ day delinquency rate excluding purchased credit-impaired loans (c) (d) (e) |
5.93 | 5.85 | 5.22 | 4.73 | 4.21 | 5.93 | 4.21 | |||||||||||||||||||||||||||||||||
Nonperforming assets (f) (g) |
$ | 11,259 | $ | 11,068 | $ | 9,868 | $ | 9,267 | $ | 8,653 | 2 | 30 | $ | 11,259 | $ | 8,653 | 30 | |||||||||||||||||||||||
Allowance for loan losses to ending loans retained |
4.27 | % | 3.74 | % | 3.23 | % | 2.83 | % | 2.36 | % | 4.27 | % | 2.36 | % | ||||||||||||||||||||||||||
Allowance for loan losses to ending loans retained excluding purchased
credit-impaired loans (a) |
5.04 | 4.56 | 4.34 | 3.79 | 3.16 | 5.04 | 3.16 |
(a) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of $1.6 billion and $1.1 billion was recorded for these loans as of December 31, 2009 and September 30, 2009, respectively. No allowance for losses was recorded as of June 30, 2009, March 31, 2009 and December 31, 2008. To date, no charge-offs have been recorded for these loans. | |
(b) | Average loans held-for-sale of $1.7 billion, $1.3 billion, $2.8 billion, $3.1 billion, and $1.8 billion, for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $2.2 billion and $2.8 billion for full year 2009 and 2008, respectively, were excluded when calculating the net charge-off rate. | |
(c) | Excluded mortgage loans that are insured by U.S. government agencies of $9.7 billion, $7.7 billion, $5.1 billion, $4.9 billion, and $3.5 billion, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. These amounts are excluded, as reimbursement is proceeding normally. | |
(d) | 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 $942 million, $903 million, $854 million, $770 million, and $824 million, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. These amounts are excluded, as reimbursement is proceeding normally. | |
(e) | The delinquency rate for purchased credit-impaired loans was 27.79%, 25.56%, 23.37%, 21.36%, and 17.89%, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. | |
(f) | Nonperforming assets excluded: (1) mortgage loans insured by U.S. government agencies of $9.0 billion, $7.0 billion, $4.2 billion, $4.2 billion, and $3.0 billion, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively; (2) real estate owned insured by U.S. government agencies of $579 million, $579 million, $508 million, $433 million, and $364 million, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively; and (3) student 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 $542 million, $511 million, $473 million, $433 million, and $437 million, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. These amounts are excluded, as reimbursement is proceeding normally. | |
(g) | Excludes purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. |
Page 15
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
CONSUMER LENDING (continued) |
||||||||||||||||||||||||||||||||||||||||
Origination volume: |
||||||||||||||||||||||||||||||||||||||||
Mortgage origination volume by channel |
||||||||||||||||||||||||||||||||||||||||
Retail |
$ | 12.3 | $ | 13.3 | $ | 14.7 | $ | 13.6 | $ | 7.6 | (8 | )% | 62 | % | $ | 53.9 | $ | 41.1 | 31 | % | ||||||||||||||||||||
Wholesale (a) |
3.4 | 3.4 | 2.4 | 2.6 | 3.8 | | (11 | ) | 11.8 | 29.4 | (60 | ) | ||||||||||||||||||||||||||||
Correspondent |
17.2 | 18.4 | 20.2 | 17.0 | 13.3 | (7 | ) | 29 | 72.8 | 55.5 | 31 | |||||||||||||||||||||||||||||
CNT (negotiated transactions) |
1.9 | 2.0 | 3.8 | 4.5 | 3.4 | (5 | ) | (44 | ) | 12.2 | 43.0 | (72 | ) | |||||||||||||||||||||||||||
Total mortgage origination volume |
34.8 | 37.1 | 41.1 | 37.7 | 28.1 | (6 | ) | 24 | 150.7 | 169.0 | (11 | ) | ||||||||||||||||||||||||||||
Home equity |
0.4 | 0.5 | 0.6 | 0.9 | 1.7 | (20 | ) | (76 | ) | 2.4 | 16.3 | (85 | ) | |||||||||||||||||||||||||||
Student loans |
0.6 | 1.5 | 0.4 | 1.7 | 1.0 | (60 | ) | (40 | ) | 4.2 | 6.9 | (39 | ) | |||||||||||||||||||||||||||
Auto |
5.9 | 6.9 | 5.3 | 5.6 | 2.8 | (14 | ) | 111 | 23.7 | 19.4 | 22 | |||||||||||||||||||||||||||||
Application volume: |
||||||||||||||||||||||||||||||||||||||||
Mortgage application volume by channel |
||||||||||||||||||||||||||||||||||||||||
Retail |
$ | 17.4 | $ | 17.8 | $ | 23.0 | $ | 32.7 | $ | 24.2 | (2 | ) | (28 | ) | $ | 90.9 | $ | 89.1 | 2 | |||||||||||||||||||||
Wholesale (a) |
3.7 | 4.7 | 4.3 | 3.7 | 8.8 | (21 | ) | (58 | ) | 16.4 | 63.0 | (74 | ) | |||||||||||||||||||||||||||
Correspondent |
22.3 | 23.0 | 26.7 | 27.3 | 21.2 | (3 | ) | 5 | 99.3 | 82.5 | 20 | |||||||||||||||||||||||||||||
Total mortgage application volume |
43.4 | 45.5 | 54.0 | 63.7 | 54.2 | (5 | ) | (20 | ) | 206.6 | 234.6 | (12 | ) | |||||||||||||||||||||||||||
Average mortgage loans held-for-sale & loans at fair value (b) |
16.2 | 18.0 | 16.7 | 14.0 | 12.2 | (10 | ) | 33 | 16.2 | 14.6 | 11 | |||||||||||||||||||||||||||||
Average assets |
366.8 | 373.5 | 381.1 | 393.3 | 395.0 | (2 | ) | (7 | ) | 378.6 | 278.1 | 36 | ||||||||||||||||||||||||||||
Third-party mortgage loans serviced (ending) |
1,082.1 | 1,098.9 | 1,117.5 | 1,148.8 | 1,172.6 | (2 | ) | (8 | ) | 1,082.1 | 1,172.6 | (8 | ) | |||||||||||||||||||||||||||
Third-party mortgage loans serviced (average) |
1,088.8 | 1,104.4 | 1,128.1 | 1,155.0 | 1,169.0 | (1 | ) | (7 | ) | 1,119.1 | 810.9 | 38 | ||||||||||||||||||||||||||||
MSR net carrying value (ending) |
15.5 | 13.6 | 14.6 | 10.6 | 9.3 | 14 | 67 | 15.5 | 9.3 | 67 | ||||||||||||||||||||||||||||||
Ratio of MSR net carrying value (ending) to third-party
mortgage loans serviced (ending) |
1.43 | % | 1.24 | % | 1.31 | % | 0.92 | % | 0.79 | % | 1.43 | % | 0.79 | % | ||||||||||||||||||||||||||
SUPPLEMENTAL MORTGAGE FEES AND RELATED INCOME DETAILS (in
millions) |
||||||||||||||||||||||||||||||||||||||||
Production revenue |
$ | (192 | ) | $ | (70 | ) | $ | 284 | $ | 481 | $ | 62 | (174 | ) | NM | $ | 503 | $ | 898 | (44 | ) | |||||||||||||||||||
Net mortgage servicing revenue: |
||||||||||||||||||||||||||||||||||||||||
Operating revenue: |
||||||||||||||||||||||||||||||||||||||||
Loan servicing revenue |
1,221 | 1,220 | 1,279 | 1,222 | 1,366 | | (11 | ) | 4,942 | 3,258 | 52 | |||||||||||||||||||||||||||||
Other changes in MSR asset fair value |
(657 | ) | (712 | ) | (837 | ) | (1,073 | ) | (843 | ) | 8 | 22 | (3,279 | ) | (2,052 | ) | (60 | ) | ||||||||||||||||||||||
Total operating revenue |
564 | 508 | 442 | 149 | 523 | 11 | 8 | 1,663 | 1,206 | 38 | ||||||||||||||||||||||||||||||
Risk management: |
||||||||||||||||||||||||||||||||||||||||
Changes in MSR asset fair value due to inputs or
assumptions in model |
1,762 | (1,099 | ) | 3,831 | 1,310 | (6,950 | ) | NM | NM | 5,804 | (6,849 | ) | NM | |||||||||||||||||||||||||||
Derivative valuation adjustments and other |
(1,653 | ) | 1,534 | (3,750 | ) | (307 | ) | 8,327 | NM | NM | (4,176 | ) | 8,366 | NM | ||||||||||||||||||||||||||
Total risk management |
109 | 435 | 81 | 1,003 | 1,377 | (75 | ) | (92 | ) | 1,628 | 1,517 | 7 | ||||||||||||||||||||||||||||
Total RFS net mortgage servicing revenue |
673 | 943 | 523 | 1,152 | 1,900 | (29 | ) | (65 | ) | 3,291 | 2,723 | 21 | ||||||||||||||||||||||||||||
Mortgage fees and related income |
481 | 873 | 807 | 1,633 | 1,962 | (45 | ) | (75 | ) | 3,794 | 3,621 | 5 | ||||||||||||||||||||||||||||
Ratio of annualized loan servicing revenue to third-party
mortgage loans serviced (average) |
0.44 | % | 0.44 | % | 0.45 | % | 0.43 | % | 0.46 | % | 0.44 | % | 0.40 | % | ||||||||||||||||||||||||||
MSR revenue multiple (c) |
3.25x | 2.82x | 2.91x | 2.14x | 1.72x | 3.25x | 1.98x |
(a) | Includes rural housing loans sourced through brokers and underwritten under U.S. Department of Agriculture guidelines. | |
(b) | Loans at fair value consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets. Average balances of these loans totaled $16.0 billion, $17.7 billion, $16.2 billion, $13.4 billion, and $12.0 billion, for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $15.8 billion and $14.2 billion for full year 2009 and 2008, respectively. | |
(c) | Represents the ratio of MSR net carrying value (ending) to third-party mortgage loans serviced (ending) divided by the ratio of annualized loan servicing revenue to third-party mortgage loans serviced (average). |
Page 16
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Credit card income |
$ | 931 | $ | 916 | $ | 921 | $ | 844 | $ | 862 | 2 | % | 8 | % | $ | 3,612 | $ | 2,768 | 30 | % | ||||||||||||||||||||
All other income |
(46 | ) | (85 | ) | (364 | ) | (197 | ) | (272 | ) | 46 | 83 | (692 | ) | (49 | ) | NM | |||||||||||||||||||||||
Noninterest revenue |
885 | 831 | 557 | 647 | 590 | 6 | 50 | 2,920 | 2,719 | 7 | ||||||||||||||||||||||||||||||
Net interest income |
4,263 | 4,328 | 4,311 | 4,482 | 4,318 | (2 | ) | (1 | ) | 17,384 | 13,755 | 26 | ||||||||||||||||||||||||||||
TOTAL NET REVENUE |
5,148 | 5,159 | 4,868 | 5,129 | 4,908 | | 5 | 20,304 | 16,474 | 23 | ||||||||||||||||||||||||||||||
Provision for credit losses |
4,239 | 4,967 | 4,603 | 4,653 | 3,966 | (15 | ) | 7 | 18,462 | 10,059 | 84 | |||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
336 | 354 | 329 | 357 | 335 | (5 | ) | | 1,376 | 1,127 | 22 | |||||||||||||||||||||||||||||
Noncompensation expense |
938 | 829 | 873 | 850 | 979 | 13 | (4 | ) | 3,490 | 3,356 | 4 | |||||||||||||||||||||||||||||
Amortization of intangibles |
122 | 123 | 131 | 139 | 175 | (1 | ) | (30 | ) | 515 | 657 | (22 | ) | |||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,396 | 1,306 | 1,333 | 1,346 | 1,489 | 7 | (6 | ) | 5,381 | 5,140 | 5 | |||||||||||||||||||||||||||||
Income/(loss) before income tax expense/(benefit) |
(487 | ) | (1,114 | ) | (1,068 | ) | (870 | ) | (547 | ) | 56 | 11 | (3,539 | ) | 1,275 | NM | ||||||||||||||||||||||||
Income tax expense/(benefit) |
(181 | ) | (414 | ) | (396 | ) | (323 | ) | (176 | ) | 56 | (3 | ) | (1,314 | ) | 495 | NM | |||||||||||||||||||||||
NET INCOME/(LOSS) |
$ | (306 | ) | $ | (700 | ) | $ | (672 | ) | $ | (547 | ) | $ | (371 | ) | 56 | 18 | $ | (2,225 | ) | $ | 780 | NM | |||||||||||||||||
Memo: Net securitization income/(loss) |
$ | 17 | $ | (43 | ) | $ | (268 | ) | $ | (180 | ) | $ | (261 | ) | NM | NM | $ | (474 | ) | $ | (183 | ) | (159 | ) | ||||||||||||||||
FINANCIAL METRICS |
||||||||||||||||||||||||||||||||||||||||
ROE |
(8 | )% | (19 | )% | (18 | )% | (15 | )% | (10 | )% | (15 | )% | 5 | % | ||||||||||||||||||||||||||
Overhead ratio |
27 | 25 | 27 | 26 | 30 | 27 | 31 | |||||||||||||||||||||||||||||||||
Percentage of average managed outstandings: |
||||||||||||||||||||||||||||||||||||||||
Net interest income |
10.36 | 10.15 | 9.93 | 9.91 | 9.17 | 10.08 | 8.45 | |||||||||||||||||||||||||||||||||
Provision for credit losses |
10.30 | 11.65 | 10.60 | 10.29 | 8.42 | 10.71 | 6.18 | |||||||||||||||||||||||||||||||||
Noninterest revenue |
2.15 | 1.95 | 1.28 | 1.43 | 1.25 | 1.69 | 1.67 | |||||||||||||||||||||||||||||||||
Risk adjusted margin (a) |
2.21 | 0.45 | 0.61 | 1.05 | 2.00 | 1.07 | 3.94 | |||||||||||||||||||||||||||||||||
Noninterest expense |
3.39 | 3.06 | 3.07 | 2.98 | 3.16 | 3.12 | 3.16 | |||||||||||||||||||||||||||||||||
Pretax income/(loss) (ROO) (b) |
(1.18 | ) | (2.61 | ) | (2.46 | ) | (1.92 | ) | (1.16 | ) | (2.05 | ) | 0.78 | |||||||||||||||||||||||||||
Net income/(loss) |
(0.74 | ) | (1.64 | ) | (1.55 | ) | (1.21 | ) | (0.79 | ) | (1.29 | ) | 0.48 | |||||||||||||||||||||||||||
BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Charge volume (in billions) |
$ | 86.9 | $ | 82.6 | $ | 82.8 | $ | 76.0 | $ | 96.0 | 5 | (9 | ) | $ | 328.3 | $ | 368.9 | (11 | ) | |||||||||||||||||||||
Net accounts opened (in millions) (c) |
3.2 | 2.4 | 2.4 | 2.2 | 4.3 | 33 | (26 | ) | 10.2 | 27.9 | (63 | ) | ||||||||||||||||||||||||||||
Credit cards issued (in millions) |
145.3 | 146.6 | 151.9 | 159.0 | 168.7 | (1 | ) | (14 | ) | 145.3 | 168.7 | (14 | ) | |||||||||||||||||||||||||||
Number of registered internet customers (in millions) |
32.3 | 31.3 | 30.5 | 33.8 | 35.6 | 3 | (9 | ) | 32.3 | 35.6 | (9 | ) | ||||||||||||||||||||||||||||
Merchant acquiring business (d) |
||||||||||||||||||||||||||||||||||||||||
Bank card volume (in billions) |
$ | 110.4 | $ | 103.5 | $ | 101.4 | $ | 94.4 | $ | 135.1 | 7 | (18 | ) | $ | 409.7 | $ | 713.9 | (43 | ) | |||||||||||||||||||||
Total transactions (in billions) |
4.9 | 4.5 | 4.5 | 4.1 | 4.9 | 9 | | 18.0 | 21.4 | (16 | ) |
(a) | Represents total net revenue less provision for credit losses. | |
(b) | Pretax return on average managed outstandings. | |
(c) | Results for full year 2008 included approximately 13 million credit card accounts acquired by JPMorgan Chase in the Washington Mutual transaction. | |
(d) | The Chase Paymentech Solutions joint venture was dissolved effective November 1, 2008. JPMorgan Chase retained approximately 51% of the business and operates the business under the name Chase Paymentech Solutions. For the period January 1, 2008, through October 31, 2008, the data presented represents activity for the Chase Paymentech Solutions joint venture and beyond that date, the data presented represents activity for Chase Paymentech Solutions. |
Page 17
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans on balance sheets |
$ | 78,786 | $ | 78,215 | $ | 85,736 | $ | 90,911 | $ | 104,746 | 1 | % | (25 | )% | $ | 78,786 | $ | 104,746 | (25 | )% | ||||||||||||||||||||
Securitized loans |
84,626 | 87,028 | 85,790 | 85,220 | 85,571 | (3 | ) | (1 | ) | 84,626 | 85,571 | (1 | ) | |||||||||||||||||||||||||||
Managed loans |
$ | 163,412 | $ | 165,243 | $ | 171,526 | $ | 176,131 | $ | 190,317 | (1 | ) | (14 | ) | $ | 163,412 | $ | 190,317 | (14 | ) | ||||||||||||||||||||
Equity |
$ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | | | $ | 15,000 | $ | 15,000 | | |||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Managed assets |
$ | 184,535 | $ | 192,141 | $ | 193,310 | $ | 201,200 | $ | 203,943 | (4 | ) | (10 | ) | $ | 192,749 | $ | 173,711 | 11 | |||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans on balance sheets |
$ | 77,759 | $ | 83,146 | $ | 89,692 | $ | 97,783 | $ | 98,790 | (6 | ) | (21 | ) | $ | 87,029 | $ | 83,293 | 4 | |||||||||||||||||||||
Securitized loans |
85,452 | 86,017 | 84,417 | 85,619 | 88,505 | (1 | ) | (3 | ) | 85,378 | 79,566 | 7 | ||||||||||||||||||||||||||||
Managed average loans |
$ | 163,211 | $ | 169,163 | $ | 174,109 | $ | 183,402 | $ | 187,295 | (4 | ) | (13 | ) | $ | 172,407 | $ | 162,859 | 6 | |||||||||||||||||||||
Equity |
$ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | $ | 15,000 | | | $ | 15,000 | $ | 14,326 | 5 | |||||||||||||||||||||||
Headcount |
22,676 | 22,850 | 22,897 | 23,759 | 24,025 | (1 | ) | (6 | ) | 22,676 | 24,025 | (6 | ) | |||||||||||||||||||||||||||
MANAGED CREDIT QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 3,839 | $ | 4,392 | $ | 4,353 | $ | 3,493 | $ | 2,616 | (13 | ) | 47 | $ | 16,077 | $ | 8,159 | 97 | ||||||||||||||||||||||
Net charge-off rate (a) |
9.33 | % | 10.30 | % | 10.03 | % | 7.72 | % | 5.56 | % | 9.33 | % | 5.01 | % | ||||||||||||||||||||||||||
Managed delinquency rates |
||||||||||||||||||||||||||||||||||||||||
30+ day (a) |
6.28 | % | 5.99 | % | 5.86 | % | 6.16 | % | 4.97 | % | 6.28 | % | 4.97 | % | ||||||||||||||||||||||||||
90+ day (a) |
3.59 | 2.76 | 3.25 | 3.22 | 2.34 | 3.59 | 2.34 | |||||||||||||||||||||||||||||||||
Allowance for loan losses (b) |
$ | 9,672 | $ | 9,297 | $ | 8,839 | $ | 8,849 | $ | 7,692 | 4 | 26 | $ | 9,672 | $ | 7,692 | 26 | |||||||||||||||||||||||
Allowance for loan losses to period-end loans (b) (c) |
12.28 | % | 11.89 | % | 10.31 | % | 9.73 | % | 7.34 | % | 12.28 | % | 7.34 | % | ||||||||||||||||||||||||||
KEY STATS WASHINGTON MUTUAL ONLY |
||||||||||||||||||||||||||||||||||||||||
Managed loans |
$ | 19,653 | $ | 21,163 | $ | 23,093 | $ | 25,908 | $ | 28,250 | (7 | ) | (30 | ) | $ | 19,653 | $ | 28,250 | (30 | ) | ||||||||||||||||||||
Managed average loans |
20,377 | 22,287 | 24,418 | 27,578 | 27,703 | (9 | ) | (26 | ) | 23,642 | 6,964 | 239 | ||||||||||||||||||||||||||||
Net interest income (d) |
17.12 | % | 17.04 | % | 17.90 | % | 16.45 | % | 14.87 | % | 17.11 | % | 14.87 | % | ||||||||||||||||||||||||||
Risk adjusted margin (d) (e) |
(0.66 | ) | (4.45 | ) | (3.89 | ) | 4.42 | 4.18 | (0.93 | ) | 4.18 | |||||||||||||||||||||||||||||
Net charge-off rate (f) |
20.49 | 21.94 | 19.17 | 14.57 | 12.09 | 18.79 | 12.09 | |||||||||||||||||||||||||||||||||
30+ day delinquency rate (f) |
12.72 | 12.44 | 11.98 | 10.89 | 9.14 | 12.72 | 9.14 | |||||||||||||||||||||||||||||||||
90+ day delinquency rate (f) |
7.76 | 6.21 | 6.85 | 5.79 | 4.39 | 7.76 | 4.39 | |||||||||||||||||||||||||||||||||
KEY STATS EXCLUDING WASHINGTON MUTUAL |
||||||||||||||||||||||||||||||||||||||||
Managed loans |
$ | 143,759 | $ | 144,080 | $ | 148,433 | $ | 150,223 | $ | 162,067 | | (11 | ) | $ | 143,759 | $ | 162,067 | (11 | ) | |||||||||||||||||||||
Managed average loans |
142,834 | 146,876 | 149,691 | 155,824 | 159,592 | (3 | ) | (11 | ) | 148,765 | 155,895 | (5 | ) | |||||||||||||||||||||||||||
Net interest income (d) |
9.40 | % | 9.10 | % | 8.63 | % | 8.75 | % | 8.18 | % | 8.97 | % | 8.16 | % | ||||||||||||||||||||||||||
Risk adjusted margin (d) (e) |
2.62 | 1.19 | 1.34 | 0.46 | 1.62 | 1.39 | 3.93 | |||||||||||||||||||||||||||||||||
Net charge-off rate |
8.64 | 9.41 | 8.97 | 6.86 | 5.29 | 8.45 | 4.92 | |||||||||||||||||||||||||||||||||
30+ day delinquency rate |
5.52 | 5.38 | 5.27 | 5.34 | 4.36 | 5.52 | 4.36 | |||||||||||||||||||||||||||||||||
90+ day delinquency rate |
3.13 | 2.48 | 2.90 | 2.78 | 2.09 | 3.13 | 2.09 |
(a) | Results reflect the impact of purchase accounting adjustments related to the Washington Mutual transaction and the consolidation of the Washington Mutual Master Trust. | |
(b) | Based on loans on balance sheets (reported basis). | |
(c) | Includes $1.0 billion, $3.0 billion and $5.0 billion of loans at December 31, 2009, September 30, 2009, and June 30, 2009, respectively, held by the Washington Mutual Master Trust, which were consolidated onto the Card Services balance sheet at fair value during the second quarter of 2009. No allowance for loan losses was recorded for these loans as of December 31, 2009, September 30, 2009, and June 30, 2009. Excluding these loans, the allowance for loan losses to period-end loans was 12.43%, 12.36% and 10.95%, respectively. | |
(d) | As a percentage of average managed outstandings. | |
(e) | Represents total net revenue less provision for credit losses. | |
(f) | Excludes the impact of purchase accounting adjustments related to the Washington Mutual transaction and the consolidation of the Washington Mutual Master Trust. |
Page 18
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
INCOME STATEMENT DATA (a) |
||||||||||||||||||||||||||||||||||||||||
Credit card income |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 1,306 | $ | 1,201 | $ | 1,215 | $ | 1,384 | $ | 1,553 | 9 | % | (16 | )% | $ | 5,106 | $ | 6,082 | (16 | )% | ||||||||||||||||||||
Securitization adjustments |
(375 | ) | (285 | ) | (294 | ) | (540 | ) | (691 | ) | (32 | ) | 46 | (1,494 | ) | (3,314 | ) | 55 | ||||||||||||||||||||||
Managed credit card income |
$ | 931 | $ | 916 | $ | 921 | $ | 844 | $ | 862 | 2 | 8 | $ | 3,612 | $ | 2,768 | 30 | |||||||||||||||||||||||
Net interest income |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 2,271 | $ | 2,345 | $ | 2,353 | $ | 2,478 | $ | 2,408 | (3 | ) | (6 | ) | $ | 9,447 | $ | 6,838 | 38 | |||||||||||||||||||||
Securitization adjustments |
1,992 | 1,983 | 1,958 | 2,004 | 1,910 | | 4 | 7,937 | 6,917 | 15 | ||||||||||||||||||||||||||||||
Managed net interest income |
$ | 4,263 | $ | 4,328 | $ | 4,311 | $ | 4,482 | $ | 4,318 | (2 | ) | (1 | ) | $ | 17,384 | $ | 13,755 | 26 | |||||||||||||||||||||
Total net revenue |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 3,531 | $ | 3,461 | $ | 3,204 | $ | 3,665 | $ | 3,689 | 2 | (4 | ) | $ | 13,861 | $ | 12,871 | 8 | ||||||||||||||||||||||
Securitization adjustments |
1,617 | 1,698 | 1,664 | 1,464 | 1,219 | (5 | ) | 33 | 6,443 | 3,603 | 79 | |||||||||||||||||||||||||||||
Managed total net revenue |
$ | 5,148 | $ | 5,159 | $ | 4,868 | $ | 5,129 | $ | 4,908 | | 5 | $ | 20,304 | $ | 16,474 | 23 | |||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 2,622 | $ | 3,269 | $ | 2,939 | $ | 3,189 | $ | 2,747 | (20 | ) | (5 | ) | $ | 12,019 | $ | 6,456 | 86 | |||||||||||||||||||||
Securitization adjustments |
1,617 | 1,698 | 1,664 | 1,464 | 1,219 | (5 | ) | 33 | 6,443 | 3,603 | 79 | |||||||||||||||||||||||||||||
Managed provision for credit losses |
$ | 4,239 | $ | 4,967 | $ | 4,603 | $ | 4,653 | $ | 3,966 | (15 | ) | 7 | $ | 18,462 | $ | 10,059 | 84 | ||||||||||||||||||||||
BALANCE SHEETS AVERAGE BALANCES (a) |
||||||||||||||||||||||||||||||||||||||||
Total average assets |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 102,748 | $ | 109,362 | $ | 111,722 | $ | 118,418 | $ | 118,290 | (6 | ) | (13 | ) | $ | 110,516 | $ | 96,807 | 14 | |||||||||||||||||||||
Securitization adjustments |
81,787 | 82,779 | 81,588 | 82,782 | 85,653 | (1 | ) | (5 | ) | 82,233 | 76,904 | 7 | ||||||||||||||||||||||||||||
Managed average assets |
$ | 184,535 | $ | 192,141 | $ | 193,310 | $ | 201,200 | $ | 203,943 | (4 | ) | (10 | ) | $ | 192,749 | $ | 173,711 | 11 | |||||||||||||||||||||
CREDIT QUALITY STATISTICS (a) |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 2,222 | $ | 2,694 | $ | 2,689 | $ | 2,029 | $ | 1,397 | (18 | ) | 59 | $ | 9,634 | $ | 4,556 | 111 | ||||||||||||||||||||||
Securitization adjustments |
1,617 | 1,698 | 1,664 | 1,464 | 1,219 | (5 | ) | 33 | 6,443 | 3,603 | 79 | |||||||||||||||||||||||||||||
Managed net charge-offs |
$ | 3,839 | $ | 4,392 | $ | 4,353 | $ | 3,493 | $ | 2,616 | (13 | ) | 47 | $ | 16,077 | $ | 8,159 | 97 | ||||||||||||||||||||||
Net charge-off rates |
||||||||||||||||||||||||||||||||||||||||
Reported |
11.34 | % | 12.85 | % | 12.03 | % | 8.42 | % | 5.63 | % | 11.07 | % | 5.47 | % | ||||||||||||||||||||||||||
Securitized |
7.51 | 7.83 | 7.91 | 6.93 | 5.48 | 7.55 | 4.53 | |||||||||||||||||||||||||||||||||
Managed net charge-off rate |
9.33 | 10.30 | 10.03 | 7.72 | 5.56 | 9.33 | 5.01 | |||||||||||||||||||||||||||||||||
(a) | JPMorgan Chase uses the concept of managed basis 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 and those not sold. Thus, in its disclosures regarding managed receivables, JPMorgan Chase treats the sold receivables as if they were still on the balance sheet in order to disclose the credit performance (such as net charge-off rates) of the entire managed credit card portfolio. 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 19
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Lending & deposit-related fees |
$ | 279 | $ | 269 | $ | 270 | $ | 263 | $ | 242 | 4 | % | 15 | % | $ | 1,081 | $ | 854 | 27 | % | ||||||||||||||||||||
Asset management, administration and commissions |
35 | 35 | 36 | 34 | 32 | | 9 | 140 | 113 | 24 | ||||||||||||||||||||||||||||||
All other income (a) |
149 | 170 | 152 | 125 | 102 | (12 | ) | 46 | 596 | 514 | 16 | |||||||||||||||||||||||||||||
Noninterest revenue |
463 | 474 | 458 | 422 | 376 | (2 | ) | 23 | 1,817 | 1,481 | 23 | |||||||||||||||||||||||||||||
Net interest income |
943 | 985 | 995 | 980 | 1,103 | (4 | ) | (15 | ) | 3,903 | 3,296 | 18 | ||||||||||||||||||||||||||||
TOTAL NET REVENUE |
1,406 | 1,459 | 1,453 | 1,402 | 1,479 | (4 | ) | (5 | ) | 5,720 | 4,777 | 20 | ||||||||||||||||||||||||||||
Provision for credit losses |
494 | 355 | 312 | 293 | 190 | 39 | 160 | 1,454 | 464 | 213 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
183 | 196 | 197 | 200 | 164 | (7 | ) | 12 | 776 | 692 | 12 | |||||||||||||||||||||||||||||
Noncompensation expense |
351 | 339 | 327 | 342 | 324 | 4 | 8 | 1,359 | 1,206 | 13 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
9 | 10 | 11 | 11 | 11 | (10 | ) | (18 | ) | 41 | 48 | (15 | ) | |||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
543 | 545 | 535 | 553 | 499 | | 9 | 2,176 | 1,946 | 12 | ||||||||||||||||||||||||||||||
Income before income tax expense |
369 | 559 | 606 | 556 | 790 | (34 | ) | (53 | ) | 2,090 | 2,367 | (12 | ) | |||||||||||||||||||||||||||
Income tax expense |
145 | 218 | 238 | 218 | 310 | (33 | ) | (53 | ) | 819 | 928 | (12 | ) | |||||||||||||||||||||||||||
NET INCOME |
$ | 224 | $ | 341 | $ | 368 | $ | 338 | $ | 480 | (34 | ) | (53 | ) | $ | 1,271 | $ | 1,439 | (12 | ) | ||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
Revenue by product: |
||||||||||||||||||||||||||||||||||||||||
Lending |
$ | 639 | $ | 675 | $ | 684 | $ | 665 | $ | 611 | (5 | ) | 5 | $ | 2,663 | $ | 1,743 | 53 | ||||||||||||||||||||||
Treasury services |
645 | 672 | 679 | 646 | 759 | (4 | ) | (15 | ) | 2,642 | 2,648 | | ||||||||||||||||||||||||||||
Investment banking |
108 | 99 | 114 | 73 | 88 | 9 | 23 | 394 | 334 | 18 | ||||||||||||||||||||||||||||||
Other |
14 | 13 | (24 | ) | 18 | 21 | 8 | (33 | ) | 21 | 52 | (60 | ) | |||||||||||||||||||||||||||
Total Commercial Banking revenue |
$ | 1,406 | $ | 1,459 | $ | 1,453 | $ | 1,402 | $ | 1,479 | (4 | ) | (5 | ) | $ | 5,720 | $ | 4,777 | 20 | |||||||||||||||||||||
IB revenue, gross (b) |
$ | 328 | $ | 301 | $ | 328 | $ | 206 | $ | 241 | 9 | 36 | $ | 1,163 | $ | 966 | 20 | |||||||||||||||||||||||
Revenue by business: |
||||||||||||||||||||||||||||||||||||||||
Middle Market Banking |
$ | 760 | $ | 771 | $ | 772 | $ | 752 | $ | 796 | (1 | ) | (5 | ) | $ | 3,055 | $ | 2,939 | 4 | |||||||||||||||||||||
Commercial Term Lending (c) |
191 | 232 | 224 | 228 | 243 | (18 | ) | (21 | ) | 875 | 243 | 260 | ||||||||||||||||||||||||||||
Mid-Corporate Banking |
277 | 278 | 305 | 242 | 243 | | 14 | 1,102 | 921 | 20 | ||||||||||||||||||||||||||||||
Real Estate Banking (c) |
100 | 121 | 120 | 120 | 131 | (17 | ) | (24 | ) | 461 | 413 | 12 | ||||||||||||||||||||||||||||
Other (c) |
78 | 57 | 32 | 60 | 66 | 37 | 18 | 227 | 261 | (13 | ) | |||||||||||||||||||||||||||||
Total Commercial Banking revenue |
$ | 1,406 | $ | 1,459 | $ | 1,453 | $ | 1,402 | $ | 1,479 | (4 | ) | (5 | ) | $ | 5,720 | $ | 4,777 | 20 | |||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
11 | % | 17 | % | 18 | % | 17 | % | 24 | % | 16 | % | 20 | % | ||||||||||||||||||||||||||
Overhead ratio |
39 | 37 | 37 | 39 | 34 | 38 | 41 |
(a) | Revenue from investment banking products sold to Commercial Banking (CB) clients and commercial card revenue is included in all other income. | |
(b) | Represents the total revenue related to investment banking products sold to CB clients. | |
(c) | Includes total net revenue on net assets acquired in the Washington Mutual transaction starting in the period ending December 31, 2008. |
Page 20
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
$ | 97,108 | $ | 101,608 | $ | 105,556 | $ | 110,923 | $ | 115,130 | (4 | )% | (16 | )% | $ | 97,108 | $ | 115,130 | (16 | )% | ||||||||||||||||||||
Loans held-for-sale & loans at fair value |
324 | 288 | 296 | 272 | 295 | 13 | 10 | 324 | 295 | 10 | ||||||||||||||||||||||||||||||
Total loans |
97,432 | 101,896 | 105,852 | 111,195 | 115,425 | (4 | ) | (16 | ) | 97,432 | 115,425 | (16 | ) | |||||||||||||||||||||||||||
Equity |
8,000 | 8,000 | 8,000 | 8,000 | 8,000 | | | 8,000 | 8,000 | | ||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 129,948 | $ | 130,316 | $ | 137,283 | $ | 144,298 | $ | 149,815 | | (13 | ) | $ | 135,408 | $ | 114,299 | 18 | ||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
99,794 | 103,752 | 108,750 | 113,568 | 117,351 | (4 | ) | (15 | ) | 106,421 | 81,931 | 30 | ||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value |
386 | 297 | 288 | 297 | 329 | 30 | 17 | 317 | 406 | (22 | ) | |||||||||||||||||||||||||||||
Total loans |
100,180 | 104,049 | 109,038 | 113,865 | 117,680 | (4 | ) | (15 | ) | 106,738 | 82,337 | 30 | ||||||||||||||||||||||||||||
Liability balances (a) |
122,471 | 109,293 | 105,829 | 114,975 | 114,113 | 12 | 7 | 113,152 | 103,121 | 10 | ||||||||||||||||||||||||||||||
Equity |
8,000 | 8,000 | 8,000 | 8,000 | 8,000 | | | 8,000 | 7,251 | 10 | ||||||||||||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
Loans by business: |
||||||||||||||||||||||||||||||||||||||||
Middle Market Banking |
$ | 34,794 | $ | 36,200 | $ | 38,193 | $ | 40,728 | $ | 42,613 | (4 | ) | (18 | ) | $ | 37,459 | $ | 42,193 | (11 | ) | ||||||||||||||||||||
Commercial Term Lending (b) |
36,507 | 36,943 | 36,963 | 36,814 | 37,039 | (1 | ) | (1 | ) | 36,806 | 9,310 | 295 | ||||||||||||||||||||||||||||
Mid-Corporate Banking |
13,510 | 14,933 | 17,012 | 18,416 | 18,169 | (10 | ) | (26 | ) | 15,951 | 16,297 | (2 | ) | |||||||||||||||||||||||||||
Real Estate Banking (b) |
11,133 | 11,547 | 12,347 | 13,264 | 13,529 | (4 | ) | (18 | ) | 12,066 | 9,008 | 34 | ||||||||||||||||||||||||||||
Other (b) |
4,236 | 4,426 | 4,523 | 4,643 | 6,330 | (4 | ) | (33 | ) | 4,456 | 5,529 | (19 | ) | |||||||||||||||||||||||||||
Total Commercial Banking loans |
$ | 100,180 | $ | 104,049 | $ | 109,038 | $ | 113,865 | $ | 117,680 | (4 | ) | (15 | ) | $ | 106,738 | $ | 82,337 | 30 | |||||||||||||||||||||
Headcount |
4,151 | 4,177 | 4,228 | 4,545 | 5,206 | (1 | ) | (20 | ) | 4,151 | 5,206 | (20 | ) | |||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 483 | $ | 291 | $ | 181 | $ | 134 | $ | 118 | 66 | 309 | $ | 1,089 | $ | 288 | 278 | |||||||||||||||||||||||
Nonperforming loans: |
||||||||||||||||||||||||||||||||||||||||
Nonperforming loans retained (c) |
2,764 | 2,284 | 2,090 | 1,531 | 1,026 | 21 | 169 | 2,764 | 1,026 | 169 | ||||||||||||||||||||||||||||||
Nonperforming loans held-for-sale & loans at fair value |
37 | 18 | 21 | | | 106 | NM | 37 | | NM | ||||||||||||||||||||||||||||||
Total nonperforming loans: |
2,801 | 2,302 | 2,111 | 1,531 | 1,026 | 22 | 173 | 2,801 | 1,026 | 173 | ||||||||||||||||||||||||||||||
Nonperforming assets |
2,989 | 2,461 | 2,255 | 1,651 | 1,142 | 21 | 162 | 2,989 | 1,142 | 162 | ||||||||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
3,025 | 3,063 | 3,034 | 2,945 | 2,826 | (1 | ) | 7 | 3,025 | 2,826 | 7 | |||||||||||||||||||||||||||||
Allowance for lending-related commitments |
349 | 300 | 272 | 240 | 206 | 16 | 69 | 349 | 206 | 69 | ||||||||||||||||||||||||||||||
Total allowance for credit losses |
3,374 | 3,363 | 3,306 | 3,185 | 3,032 | | 11 | 3,374 | 3,032 | 11 | ||||||||||||||||||||||||||||||
Net charge-off rate |
1.92 | % | 1.11 | % | 0.67 | % | 0.48 | % | 0.40 | % | 1.02 | % | 0.35 | % | ||||||||||||||||||||||||||
Allowance for loan losses to period-end loans retained |
3.12 | 3.01 | 2.87 | 2.65 | 2.45 | 3.12 | 2.45 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to average loans retained |
3.03 | 2.95 | 2.79 | 2.59 | 2.41 | 2.84 | 3.04 | (d) | ||||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans retained |
109 | 134 | 145 | 192 | 275 | 109 | 275 | |||||||||||||||||||||||||||||||||
Nonperforming loans to total period-end loans |
2.87 | 2.26 | 1.99 | 1.38 | 0.89 | 2.87 | 0.89 | |||||||||||||||||||||||||||||||||
Nonperforming loans to total average loans |
2.80 | 2.21 | 1.94 | 1.34 | 0.87 | 2.62 | 1.10 | (d) |
(a) | Liability balances include deposits and deposits swept to on-balance sheet liabilities such as commercial paper, federal funds purchased and securities loaned or sold under repurchase agreements. | |
(b) | Includes loans acquired in the Washington Mutual transaction starting in the period ended December 31, 2008. | |
(c) | Allowance for loan losses of $581 million, $496 million, $460 million, $352 million, and $208 million were held against nonperforming loans retained for the periods ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. | |
(d) | Average loans in the calculation of this ratio were adjusted to include $44.5 billion of loans acquired in the Washington Mutual transaction as if the transaction occurred on July 1, 2008. Excluding this adjustment, the unadjusted allowance for loan losses to average loans retained and nonperforming loans to total average loans ratios would have been 3.45% and 1.25%, respectively, for the period ended December 31, 2008. |
Page 21
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Lending & deposit-related fees |
$ | 330 | $ | 316 | $ | 314 | $ | 325 | $ | 304 | 4 | % | 9 | % | $ | 1,285 | $ | 1,146 | 12 | % | ||||||||||||||||||||
Asset management, administration and commissions |
675 | 620 | 710 | 626 | 748 | 9 | (10 | ) | 2,631 | 3,133 | (16 | ) | ||||||||||||||||||||||||||||
All other income |
212 | 201 | 221 | 197 | 268 | 5 | (21 | ) | 831 | 917 | (9 | ) | ||||||||||||||||||||||||||||
Noninterest revenue |
1,217 | 1,137 | 1,245 | 1,148 | 1,320 | 7 | (8 | ) | 4,747 | 5,196 | (9 | ) | ||||||||||||||||||||||||||||
Net interest income |
618 | 651 | 655 | 673 | 929 | (5 | ) | (33 | ) | 2,597 | 2,938 | (12 | ) | |||||||||||||||||||||||||||
TOTAL NET REVENUE |
1,835 | 1,788 | 1,900 | 1,821 | 2,249 | 3 | (18 | ) | 7,344 | 8,134 | (10 | ) | ||||||||||||||||||||||||||||
Provision for credit losses |
53 | 13 | (5 | ) | (6 | ) | 45 | 308 | 18 | 55 | 82 | (33 | ) | |||||||||||||||||||||||||||
Credit reimbursement to IB (a) |
(30 | ) | (31 | ) | (30 | ) | (30 | ) | (30 | ) | 3 | | (121 | ) | (121 | ) | | |||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
668 | 629 | 618 | 629 | 628 | 6 | 6 | 2,544 | 2,602 | (2 | ) | |||||||||||||||||||||||||||||
Noncompensation expense |
704 | 633 | 650 | 671 | 692 | 11 | 2 | 2,658 | 2,556 | 4 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
19 | 18 | 20 | 19 | 19 | 6 | | 76 | 65 | 17 | ||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,391 | 1,280 | 1,288 | 1,319 | 1,339 | 9 | 4 | 5,278 | 5,223 | 1 | ||||||||||||||||||||||||||||||
Income before income tax expense |
361 | 464 | 587 | 478 | 835 | (22 | ) | (57 | ) | 1,890 | 2,708 | (30 | ) | |||||||||||||||||||||||||||
Income tax expense |
124 | 162 | 208 | 170 | 302 | (23 | ) | (59 | ) | 664 | 941 | (29 | ) | |||||||||||||||||||||||||||
NET INCOME |
$ | 237 | $ | 302 | $ | 379 | $ | 308 | $ | 533 | (22 | ) | (56 | ) | $ | 1,226 | $ | 1,767 | (31 | ) | ||||||||||||||||||||
REVENUE BY BUSINESS |
||||||||||||||||||||||||||||||||||||||||
Treasury Services (b) |
$ | 918 | $ | 919 | $ | 934 | $ | 931 | $ | 1,068 | | (14 | ) | $ | 3,702 | $ | 3,779 | (2 | ) | |||||||||||||||||||||
Worldwide Securities Services (b) |
917 | 869 | 966 | 890 | 1,181 | 6 | (22 | ) | 3,642 | 4,355 | (16 | ) | ||||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 1,835 | $ | 1,788 | $ | 1,900 | $ | 1,821 | $ | 2,249 | 3 | (18 | ) | $ | 7,344 | $ | 8,134 | (10 | ) | |||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
19 | % | 24 | % | 30 | % | 25 | % | 47 | % | 25 | % | 47 | % | ||||||||||||||||||||||||||
Overhead ratio |
76 | 72 | 68 | 72 | 60 | 72 | 64 | |||||||||||||||||||||||||||||||||
Pretax margin ratio (c) |
20 | 26 | 31 | 26 | 37 | 26 | 33 | |||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Loans (d) |
$ | 18,972 | $ | 19,693 | $ | 17,929 | $ | 18,529 | $ | 24,508 | (4 | ) | (23 | ) | $ | 18,972 | $ | 24,508 | (23 | ) | ||||||||||||||||||||
Equity |
5,000 | 5,000 | 5,000 | 5,000 | 4,500 | | 11 | 5,000 | 4,500 | 11 | ||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 36,589 | $ | 33,117 | $ | 35,520 | $ | 38,682 | $ | 55,515 | 10 | (34 | ) | $ | 35,963 | $ | 54,563 | (34 | ) | |||||||||||||||||||||
Loans (d) |
18,888 | 17,062 | 17,524 | 20,140 | 31,283 | 11 | (40 | ) | 18,397 | 26,226 | (30 | ) | ||||||||||||||||||||||||||||
Liability balances (e) |
250,695 | 231,502 | 234,163 | 276,486 | 336,277 | 8 | (25 | ) | 248,095 | 279,833 | (11 | ) | ||||||||||||||||||||||||||||
Equity |
5,000 | 5,000 | 5,000 | 5,000 | 4,500 | | 11 | 5,000 | 3,751 | 33 | ||||||||||||||||||||||||||||||
Headcount |
26,609 | 26,389 | 27,252 | 26,998 | 27,070 | 1 | (2 | ) | 26,609 | 27,070 | (2 | ) | ||||||||||||||||||||||||||||
(a) | The IB credit portfolio group manages certain exposures on behalf of clients shared with TSS. TSS reimburses IB for a portion of the total cost of managing the credit portfolio. IB recognizes this credit reimbursement as a component of noninterest revenue. | |
(b) | Reflects an internal reorganization for escrow products, from Worldwide Securities Services to Treasury Services revenue of $39 million, $38 million, $46 million, $45 million, and $75 million for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $168 million and $224 million for full year 2009 and 2008, respectively. | |
(c) | 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. | |
(d) | Loan balances include wholesale overdrafts, commercial card and trade finance loans. | |
(e) | Liability balances include deposits and deposits swept to on-balance sheet liabilities such as commercial paper, federal funds purchased and securities loaned or sold under repurchase agreements. |
Page 22
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
TSS FIRMWIDE DISCLOSURES |
||||||||||||||||||||||||||||||||||||||||
Treasury Services revenue reported (a) |
$ | 918 | $ | 919 | $ | 934 | $ | 931 | $ | 1,068 | | % | (14 | )% | $ | 3,702 | $ | 3,779 | (2 | )% | ||||||||||||||||||||
Treasury Services revenue reported in Commercial Banking |
645 | 672 | 679 | 646 | 759 | (4 | ) | (15 | ) | 2,642 | 2,648 | | ||||||||||||||||||||||||||||
Treasury Services revenue reported in other lines of business |
57 | 63 | 63 | 62 | 82 | (10 | ) | (30 | ) | 245 | 299 | (18 | ) | |||||||||||||||||||||||||||
Treasury Services firmwide revenue (a) (b) |
1,620 | 1,654 | 1,676 | 1,639 | 1,909 | (2 | ) | (15 | ) | 6,589 | 6,726 | (2 | ) | |||||||||||||||||||||||||||
Worldwide Securities Services revenue (a) |
917 | 869 | 966 | 890 | 1,181 | 6 | (22 | ) | 3,642 | 4,355 | (16 | ) | ||||||||||||||||||||||||||||
Treasury & Securities Services firmwide revenue (b) |
$ | 2,537 | $ | 2,523 | $ | 2,642 | $ | 2,529 | $ | 3,090 | 1 | (18 | ) | $ | 10,231 | $ | 11,081 | (8 | ) | |||||||||||||||||||||
Treasury Services firmwide liability balances (average) (c) (d) |
$ | 289,024 | $ | 261,059 | $ | 258,312 | $ | 289,645 | $ | 312,559 | 11 | (8 | ) | $ | 274,472 | $ | 264,195 | 4 | ||||||||||||||||||||||
Treasury & Securities Services firmwide liability balances
(average) (c) |
373,166 | 340,795 | 339,992 | 391,461 | 450,390 | 9 | (17 | ) | 361,247 | 382,947 | (6 | ) | ||||||||||||||||||||||||||||
TSS FIRMWIDE FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
Treasury Services firmwide overhead ratio (e) |
54 | % | 52 | % | 51 | % | 53 | % | 44 | % | 53 | % | 50 | % | ||||||||||||||||||||||||||
Treasury & Securities Services firmwide overhead ratio (e) |
66 | 62 | 59 | 63 | 52 | 62 | 57 | |||||||||||||||||||||||||||||||||
FIRMWIDE BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Assets under custody (in billions) |
$ | 14,885 | $ | 14,887 | $ | 13,748 | $ | 13,532 | $ | 13,205 | | 13 | $ | 14,885 | $ | 13,205 | 13 | |||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||
US$ ACH transactions originated (in millions) |
975 | 965 | 978 | 978 | 1,006 | 1 | (3 | ) | 3,896 | 4,000 | (3 | ) | ||||||||||||||||||||||||||||
Total US$ clearing volume (in thousands) |
29,493 | 28,604 | 28,193 | 27,186 | 29,346 | 3 | 1 | 113,476 | 115,742 | (2 | ) | |||||||||||||||||||||||||||||
International electronic funds transfer volume (in thousands) (f) |
53,354 | 48,533 | 47,096 | 44,365 | 47,734 | 10 | 12 | 193,348 | 171,036 | 13 | ||||||||||||||||||||||||||||||
Wholesale check volume (in millions) |
514 | 530 | 572 | 568 | 572 | (3 | ) | (10 | ) | 2,184 | 2,408 | (9 | ) | |||||||||||||||||||||||||||
Wholesale cards issued (in thousands) (g) |
27,138 | 26,977 | 25,501 | 23,757 | 22,784 | 1 | 19 | 27,138 | 22,784 | 19 | ||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs/(recoveries) |
$ | | $ | | $ | 17 | $ | 2 | $ | | | | $ | 19 | $ | (2 | ) | NM | ||||||||||||||||||||||
Nonperforming loans |
14 | 14 | 14 | 30 | 30 | | (53 | ) | 14 | 30 | (53 | ) | ||||||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
88 | 15 | 15 | 51 | 74 | 487 | 19 | 88 | 74 | 19 | ||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
84 | 104 | 92 | 77 | 63 | (19 | ) | 33 | 84 | 63 | 33 | |||||||||||||||||||||||||||||
Total allowance for credit losses |
172 | 119 | 107 | 128 | 137 | 45 | 26 | 172 | 137 | 26 | ||||||||||||||||||||||||||||||
Net charge-off/(recovery) rate |
| % | | % | 0.39 | % | 0.04 | % | | % | 0.10 | % | (0.01 | )% | ||||||||||||||||||||||||||
Allowance for loan losses to period-end loans |
0.46 | 0.08 | 0.08 | 0.28 | 0.30 | 0.46 | 0.30 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to average loans |
0.47 | 0.09 | 0.09 | 0.25 | 0.24 | 0.48 | 0.28 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans |
NM | 107 | 107 | 170 | 247 | NM | 247 | |||||||||||||||||||||||||||||||||
Nonperforming loans to period-end loans |
0.07 | 0.07 | 0.08 | 0.16 | 0.12 | 0.07 | 0.12 | |||||||||||||||||||||||||||||||||
Nonperforming loans to average loans |
0.07 | 0.08 | 0.08 | 0.15 | 0.10 | 0.08 | 0.11 | |||||||||||||||||||||||||||||||||
(a) | Reflects an internal reorganization for escrow products, from Worldwide Securities Services to Treasury Services revenue, of $39 million, $38 million, $46 million, $45 million, and $75 million, for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $168 million and $224 million for full year 2009 and 2008, respectively. | |
(b) | TSS firmwide revenue includes FX revenue recorded in TSS and FX revenue associated with TSS customers who are FX customers of IB. However, some of the FX revenue associated with TSS customers who are FX customers of IB are not included in TS and TSS firmwide revenue. These amounts were $162 million, $154 million, $191 million, $154 million, and $271 million, for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $661 million and $880 million for full year 2009 and 2008, respectively. | |
(c) | Firmwide liability balances include liability balances recorded in Commercial Banking. | |
(d) | Reflects an internal reorganization for escrow products, from Worldwide Securities Services to Treasury Services liability balances, of $15.5 billion, $13.9 billion, $14.9 billion, $18.2 billion, and $22.3 billion for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and $15.6 billion and $21.5 billion for full year 2009 and 2008, respectively. | |
(e) | 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 IB for TSS-related FX activity are not included in this ratio. | |
(f) | International electronic funds transfer includes non-U.S. dollar ACH and clearing volume. | |
(g) | Wholesale cards issued include domestic commercial, stored value, prepaid and government electronic benefit card products. |
Page 23
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Asset management, administration and commissions |
$ | 1,632 | $ | 1,443 | $ | 1,315 | $ | 1,231 | $ | 1,362 | 13 | % | 20 | % | $ | 5,621 | $ | 6,004 | (6 | )% | ||||||||||||||||||||
All other income |
191 | 238 | 253 | 69 | (170 | ) | (20 | ) | NM | 751 | 62 | NM | ||||||||||||||||||||||||||||
Noninterest revenue |
1,823 | 1,681 | 1,568 | 1,300 | 1,192 | 8 | 53 | 6,372 | 6,066 | 5 | ||||||||||||||||||||||||||||||
Net interest income |
372 | 404 | 414 | 403 | 466 | (8 | ) | (20 | ) | 1,593 | 1,518 | 5 | ||||||||||||||||||||||||||||
TOTAL NET REVENUE |
2,195 | 2,085 | 1,982 | 1,703 | 1,658 | 5 | 32 | 7,965 | 7,584 | 5 | ||||||||||||||||||||||||||||||
Provision for credit losses |
58 | 38 | 59 | 33 | 32 | 53 | 81 | 188 | 85 | 121 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
907 | 858 | 810 | 800 | 689 | 6 | 32 | 3,375 | 3,216 | 5 | ||||||||||||||||||||||||||||||
Noncompensation expense |
543 | 474 | 525 | 479 | 504 | 15 | 8 | 2,021 | 2,000 | 1 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
20 | 19 | 19 | 19 | 20 | 5 | | 77 | 82 | (6 | ) | |||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,470 | 1,351 | 1,354 | 1,298 | 1,213 | 9 | 21 | 5,473 | 5,298 | 3 | ||||||||||||||||||||||||||||||
Income before income tax expense |
667 | 696 | 569 | 372 | 413 | (4 | ) | 62 | 2,304 | 2,201 | 5 | |||||||||||||||||||||||||||||
Income tax expense |
243 | 266 | 217 | 148 | 158 | (9 | ) | 54 | 874 | 844 | 4 | |||||||||||||||||||||||||||||
NET INCOME |
$ | 424 | $ | 430 | $ | 352 | $ | 224 | $ | 255 | (1 | ) | 66 | $ | 1,430 | $ | 1,357 | 5 | ||||||||||||||||||||||
REVENUE BY CLIENT SEGMENT |
||||||||||||||||||||||||||||||||||||||||
Private Bank |
$ | 723 | $ | 639 | $ | 640 | $ | 583 | $ | 630 | 13 | 15 | $ | 2,585 | $ | 2,565 | 1 | |||||||||||||||||||||||
Institutional |
584 | 534 | 487 | 460 | 327 | 9 | 79 | 2,065 | 1,775 | 16 | ||||||||||||||||||||||||||||||
Retail |
445 | 471 | 411 | 253 | 265 | (6 | ) | 68 | 1,580 | 1,620 | (2 | ) | ||||||||||||||||||||||||||||
Private Wealth Management |
331 | 339 | 334 | 312 | 330 | (2 | ) | | 1,316 | 1,387 | (5 | ) | ||||||||||||||||||||||||||||
Bear Stearns Private Client Services (a) |
112 | 102 | 110 | 95 | 106 | 10 | 6 | 419 | 237 | 77 | ||||||||||||||||||||||||||||||
Total net revenue |
$ | 2,195 | $ | 2,085 | $ | 1,982 | $ | 1,703 | $ | 1,658 | 5 | 32 | $ | 7,965 | $ | 7,584 | 5 | |||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
24 | % | 24 | % | 20 | % | 13 | % | 14 | % | 20 | % | 24 | % | ||||||||||||||||||||||||||
Overhead ratio |
67 | 65 | 68 | 76 | 73 | 69 | 70 | |||||||||||||||||||||||||||||||||
Pretax margin ratio (b) |
30 | 33 | 29 | 22 | 25 | 29 | 29 | |||||||||||||||||||||||||||||||||
BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||
Client advisors (c) |
1,934 | 1,891 | 1,838 | 1,872 | 1,840 | 2 | 5 | 1,934 | 1,840 | 5 | ||||||||||||||||||||||||||||||
Retirement planning services participants |
1,628,000 | 1,620,000 | 1,595,000 | 1,628,000 | 1,531,000 | | 6 | 1,628,000 | 1,531,000 | 6 | ||||||||||||||||||||||||||||||
Bear Stearns brokers (a) |
376 | 365 | 362 | 359 | 324 | 3 | 16 | 376 | 324 | 16 | ||||||||||||||||||||||||||||||
% of customer assets in 4 & 5 Star Funds (d) |
42 | % | 39 | % | 45 | % | 42 | % | 42 | % | 8 | | 42 | % | 42 | % | | |||||||||||||||||||||||
% of AUM in 1st and 2nd quartiles: (e) |
||||||||||||||||||||||||||||||||||||||||
1 year |
57 | % | 60 | % | 62 | % | 54 | % | 54 | % | (5 | ) | 6 | 57 | % | 54 | % | 6 | ||||||||||||||||||||||
3 years |
62 | % | 70 | % | 69 | % | 62 | % | 65 | % | (11 | ) | (5 | ) | 62 | % | 65 | % | (5 | ) | ||||||||||||||||||||
5 years |
74 | % | 74 | % | 80 | % | 66 | % | 76 | % | | (3 | ) | 74 | % | 76 | % | (3 | ) | |||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Loans |
$ | 37,755 | $ | 35,925 | $ | 35,474 | $ | 33,944 | $ | 36,188 | 5 | 4 | $ | 37,755 | $ | 36,188 | 4 | |||||||||||||||||||||||
Equity |
7,000 | 7,000 | 7,000 | 7,000 | 7,000 | | | 7,000 | 7,000 | | ||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 63,036 | $ | 60,345 | $ | 59,334 | $ | 58,227 | $ | 65,648 | 4 | (4 | ) | $ | 60,249 | $ | 65,550 | (8 | ) | |||||||||||||||||||||
Loans |
36,137 | 34,822 | 34,292 | 34,585 | 36,851 | 4 | (2 | ) | 34,963 | 38,124 | (8 | ) | ||||||||||||||||||||||||||||
Deposits |
77,352 | 73,649 | 75,355 | 81,749 | 76,911 | 5 | 1 | 77,005 | 70,179 | 10 | ||||||||||||||||||||||||||||||
Equity |
7,000 | 7,000 | 7,000 | 7,000 | 7,000 | | | 7,000 | 5,645 | 24 | ||||||||||||||||||||||||||||||
Headcount |
15,136 | 14,919 | 14,840 | 15,109 | 15,339 | 1 | (1 | ) | 15,136 | 15,339 | (1 | ) | ||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 35 | $ | 17 | $ | 46 | $ | 19 | $ | 12 | 106 | 192 | $ | 117 | $ | 11 | NM | |||||||||||||||||||||||
Nonperforming loans |
580 | 409 | 313 | 301 | 147 | 42 | 295 | 580 | 147 | 295 | ||||||||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
269 | 251 | 226 | 215 | 191 | 7 | 41 | 269 | 191 | 41 | ||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
9 | 5 | 4 | 4 | 5 | 80 | 80 | 9 | 5 | 80 | ||||||||||||||||||||||||||||||
Total allowance for credit losses |
278 | 256 | 230 | 219 | 196 | 9 | 42 | 278 | 196 | 42 | ||||||||||||||||||||||||||||||
Net charge-off rate |
0.38 | % | 0.19 | % | 0.54 | % | 0.22 | % | 0.13 | % | 0.33 | % | 0.03 | % | ||||||||||||||||||||||||||
Allowance for loan losses to period-end loans |
0.71 | 0.70 | 0.64 | 0.63 | 0.53 | 0.71 | 0.53 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to average loans |
0.74 | 0.72 | 0.66 | 0.62 | 0.52 | 0.77 | 0.50 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans |
46 | 61 | 72 | 71 | 130 | 46 | 130 | |||||||||||||||||||||||||||||||||
Nonperforming loans to period-end loans |
1.54 | 1.14 | 0.88 | 0.89 | 0.41 | 1.54 | 0.41 | |||||||||||||||||||||||||||||||||
Nonperforming loans to average loans |
1.61 | 1.17 | 0.91 | 0.87 | 0.40 | 1.66 | 0.39 | |||||||||||||||||||||||||||||||||
(a) | Bear Stearns Private Client Services was renamed to JPMorgan Securities at the beginning of 2010. | |
(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) | Periods prior to September 30, 2009 were revised to conform with current methodology. | |
(d) | 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. | |
(e) | 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. |
Page 24
Dec 31, 2009 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | ||||||||||||||||||||||
2009 | 2009 | 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||
Assets by asset class |
||||||||||||||||||||||||||||
Liquidity |
$ | 591 | $ | 634 | $ | 617 | $ | 625 | $ | 613 | (7 | )% | (4 | )% | ||||||||||||||
Fixed income |
226 | 215 | 194 | 180 | 180 | 5 | 26 | |||||||||||||||||||||
Equities & multi-asset |
339 | 316 | 264 | 215 | 240 | 7 | 41 | |||||||||||||||||||||
Alternatives |
93 | 94 | 96 | 95 | 100 | (1 | ) | (7 | ) | |||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
1,249 | 1,259 | 1,171 | 1,115 | 1,133 | (1 | ) | 10 | ||||||||||||||||||||
Custody / brokerage / administration / deposits |
452 | 411 | 372 | 349 | 363 | 10 | 25 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,701 | $ | 1,670 | $ | 1,543 | $ | 1,464 | $ | 1,496 | 2 | 14 | ||||||||||||||||
Assets by client segment |
||||||||||||||||||||||||||||
Institutional |
$ | 709 | $ | 737 | $ | 697 | $ | 668 | $ | 681 | (4 | ) | 4 | |||||||||||||||
Private Bank |
187 | 180 | 179 | 181 | 181 | 4 | 3 | |||||||||||||||||||||
Retail |
270 | 256 | 216 | 184 | 194 | 5 | 39 | |||||||||||||||||||||
Private Wealth Management |
69 | 71 | 67 | 68 | 71 | (3 | ) | (3 | ) | |||||||||||||||||||
Bear Stearns Private Client Services (a) |
14 | 15 | 12 | 14 | 6 | (7 | ) | 133 | ||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,249 | $ | 1,259 | $ | 1,171 | $ | 1,115 | $ | 1,133 | (1 | ) | 10 | |||||||||||||||
Institutional |
$ | 710 | $ | 737 | $ | 697 | $ | 669 | $ | 682 | (4 | ) | 4 | |||||||||||||||
Private Bank |
452 | 414 | 390 | 375 | 378 | 9 | 20 | |||||||||||||||||||||
Retail |
355 | 339 | 289 | 250 | 262 | 5 | 35 | |||||||||||||||||||||
Private Wealth Management |
129 | 131 | 123 | 120 | 124 | (2 | ) | 4 | ||||||||||||||||||||
Bear Stearns Private Client Services (a) |
55 | 49 | 44 | 50 | 50 | 12 | 10 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,701 | $ | 1,670 | $ | 1,543 | $ | 1,464 | $ | 1,496 | 2 | 14 | ||||||||||||||||
Assets by geographic region |
||||||||||||||||||||||||||||
U.S. / Canada |
$ | 837 | $ | 862 | $ | 814 | $ | 789 | $ | 798 | (3 | ) | 5 | |||||||||||||||
International |
412 | 397 | 357 | 326 | 335 | 4 | 23 | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,249 | $ | 1,259 | $ | 1,171 | $ | 1,115 | $ | 1,133 | (1 | ) | 10 | |||||||||||||||
U.S. / Canada |
$ | 1,182 | $ | 1,179 | $ | 1,103 | $ | 1,066 | $ | 1,084 | | 9 | ||||||||||||||||
International |
519 | 491 | 440 | 398 | 412 | 6 | 26 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,701 | $ | 1,670 | $ | 1,543 | $ | 1,464 | $ | 1,496 | 2 | 14 | ||||||||||||||||
Mutual fund assets by asset class |
||||||||||||||||||||||||||||
Liquidity |
$ | 539 | $ | 576 | $ | 569 | $ | 570 | $ | 553 | (6 | ) | (3 | ) | ||||||||||||||
Fixed income |
67 | 57 | 48 | 42 | 41 | 18 | 63 | |||||||||||||||||||||
Equities |
143 | 133 | 111 | 85 | 92 | 8 | 55 | |||||||||||||||||||||
Alternatives |
9 | 10 | 9 | 8 | 7 | (10 | ) | 29 | ||||||||||||||||||||
TOTAL MUTUAL FUND ASSETS |
$ | 758 | $ | 776 | $ | 737 | $ | 705 | $ | 693 | (2 | ) | 9 | |||||||||||||||
(a) | Bear Stearns Private Client Services was renamed to JPMorgan Securities at the beginning of 2010. |
Page 25
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 2009 | 2008 | ||||||||||||||||||||||
ASSETS UNDER SUPERVISION (continued) |
||||||||||||||||||||||||||||
Assets under management rollforward |
||||||||||||||||||||||||||||
Beginning balance |
$ | 1,259 | $ | 1,171 | $ | 1,115 | $ | 1,133 | $ | 1,153 | $ | 1,133 | $ | 1,193 | ||||||||||||||
Net asset flows: |
||||||||||||||||||||||||||||
Liquidity |
(44 | ) | 9 | (7 | ) | 19 | 86 | (23 | ) | 210 | ||||||||||||||||||
Fixed income |
12 | 13 | 8 | 1 | (7 | ) | 34 | (12 | ) | |||||||||||||||||||
Equities, multi-asset & alternative |
8 | 12 | 2 | (5 | ) | (18 | ) | 17 | (47 | ) | ||||||||||||||||||
Market / performance / other impacts |
14 | 54 | 53 | (33 | ) | (81 | ) | 88 | (211 | ) | ||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,249 | $ | 1,259 | $ | 1,171 | $ | 1,115 | $ | 1,133 | $ | 1,249 | $ | 1,133 | ||||||||||||||
Assets under supervision rollforward |
||||||||||||||||||||||||||||
Beginning balance |
$ | 1,670 | $ | 1,543 | $ | 1,464 | $ | 1,496 | $ | 1,562 | $ | 1,496 | $ | 1,572 | ||||||||||||||
Net asset flows |
(11 | ) | 45 | (9 | ) | 25 | 73 | 50 | 181 | |||||||||||||||||||
Market / performance / other impacts |
42 | 82 | 88 | (57 | ) | (139 | ) | 155 | (257 | ) | ||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,701 | $ | 1,670 | $ | 1,543 | $ | 1,464 | $ | 1,496 | $ | 1,701 | $ | 1,496 | ||||||||||||||
Page 26
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Principal transactions |
$ | 715 | $ | 1,109 | $ | 1,243 | $ | (1,493 | ) | $ | (1,620 | ) | (36) | % | NM | % | $ | 1,574 | $ | (3,588 | ) | NM | % | |||||||||||||||||
Securities gains |
378 | 181 | 366 | 214 | 499 | 109 | (24 | ) | 1,139 | 1,637 | (30 | ) | ||||||||||||||||||||||||||||
All other income (a) |
13 | 273 | (209 | ) | (19 | ) | 685 | (95 | ) | (98 | ) | 58 | 1,673 | (97 | ) | |||||||||||||||||||||||||
Noninterest revenue |
1,106 | 1,563 | 1,400 | (1,298 | ) | (436 | ) | (29 | ) | NM | 2,771 | (278 | ) | NM | ||||||||||||||||||||||||||
Net interest income (expense) |
978 | 1,031 | 865 | 989 | 868 | (5 | ) | 13 | 3,863 | 347 | NM | |||||||||||||||||||||||||||||
TOTAL NET REVENUE |
2,084 | 2,594 | 2,265 | (309 | ) | 432 | (20 | ) | 382 | 6,634 | 69 | NM | ||||||||||||||||||||||||||||
Provision for credit losses (b) |
9 | 62 | 9 | | (33 | ) | (85 | ) | NM | 80 | 1,981 | (96 | ) | |||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
747 | 768 | 655 | 641 | 438 | (3 | ) | 71 | 2,811 | 2,340 | 20 | |||||||||||||||||||||||||||||
Noncompensation expense (c) |
1,058 | 875 | 1,319 | 345 | 673 | 21 | 57 | 3,597 | 1,841 | 95 | ||||||||||||||||||||||||||||||
Merger costs |
30 | 103 | 143 | 205 | 181 | (71 | ) | (83 | ) | 481 | 432 | 11 | ||||||||||||||||||||||||||||
Subtotal |
1,835 | 1,746 | 2,117 | 1,191 | 1,292 | 5 | 42 | 6,889 | 4,613 | 49 | ||||||||||||||||||||||||||||||
Net expense allocated to other businesses |
(1,219 | ) | (1,243 | ) | (1,253 | ) | (1,279 | ) | (1,364 | ) | 2 | 11 | (4,994 | ) | (4,641 | ) | (8 | ) | ||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
616 | 503 | 864 | (88 | ) | (72 | ) | 22 | NM | 1,895 | (28 | ) | NM | |||||||||||||||||||||||||||
Income/(loss) before income tax expense (benefit) and extraordinary gain |
1,459 | 2,029 | 1,392 | (221 | ) | 537 | (28 | ) | 172 | 4,659 | (1,884 | ) | NM | |||||||||||||||||||||||||||
Income tax expense/(benefit) |
262 | 818 | 584 | 41 | 317 | (68 | ) | (17 | ) | 1,705 | (535 | ) | NM | |||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
1,197 | 1,211 | 808 | (262 | ) | 220 | (1 | ) | 444 | 2,954 | (1,349 | ) | NM | |||||||||||||||||||||||||||
Extraordinary gain (d) |
| 76 | | | 1,325 | NM | NM | 76 | 1,906 | (96 | ) | |||||||||||||||||||||||||||||
NET INCOME/(LOSS) |
$ | 1,197 | $ | 1,287 | $ | 808 | $ | (262 | ) | $ | 1,545 | (7 | ) | (23 | ) | $ | 3,030 | $ | 557 | 444 | ||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
||||||||||||||||||||||||||||||||||||||||
Private equity |
$ | 296 | $ | 172 | $ | (1 | ) | $ | (449 | ) | $ | (1,107 | ) | 72 | NM | $ | 18 | $ | (963 | ) | NM | |||||||||||||||||||
Corporate |
1,788 | 2,422 | 2,266 | 140 | 1,539 | (26 | ) | 16 | 6,616 | 1,032 | NM | |||||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 2,084 | $ | 2,594 | $ | 2,265 | $ | (309 | ) | $ | 432 | (20 | ) | 382 | $ | 6,634 | $ | 69 | NM | |||||||||||||||||||||
NET INCOME/(LOSS) |
||||||||||||||||||||||||||||||||||||||||
Private equity |
$ | 141 | $ | 88 | $ | (27 | ) | $ | (280 | ) | $ | (682 | ) | 60 | NM | $ | (78 | ) | $ | (690 | ) | 89 | ||||||||||||||||||
Corporate |
1,229 | 1,269 | 993 | 252 | 1,163 | (3 | ) | 6 | 3,743 | 1,458 | 157 | |||||||||||||||||||||||||||||
Merger-related items (e) |
(173 | ) | (70 | ) | (158 | ) | (234 | ) | 1,064 | (147 | ) | NM | (635 | ) | (211 | ) | (201 | ) | ||||||||||||||||||||||
TOTAL NET INCOME/(LOSS) |
$ | 1,197 | $ | 1,287 | $ | 808 | $ | (262 | ) | $ | 1,545 | (7 | ) | (23 | ) | $ | 3,030 | $ | 557 | 444 | ||||||||||||||||||||
Headcount |
20,199 | 20,747 | 21,522 | 22,339 | 23,376 | (3 | ) | (14 | ) | 20,199 | 23,376 | (14 | ) |
(a) | Included the following significant items: a gain of $1.0 billion from the dissolution of the Chase Paymentech Solutions joint venture in the fourth quarter of 2008, a charge of $375 million for the repurchase of auction rate securities in the third quarter of 2008, $423 million representing the Firms share of Bear Stearns losses from April 8 to May 30, 2008, in the second quarter of 2008, and proceeds of $1.5 billion from the sale of Visa shares in its initial public offering in the first quarter of 2008. | |
(b) | The fourth and third quarters of 2008 included accounting conformity loan loss reserve provisions related to the acquisition of Washington Mutual Banks banking operations. An analysis of loans acquired in the transaction was substantially completed during the fourth quarter. This resulted in an increase in the purchased credit-impaired loan balances, a corresponding reduction in the non-credit-impaired portfolio and a reduction in the estimate of incurred losses related to the non-credit-impaired portfolio requiring a reduction in the accounting conformity provision for these loans. Also, the fourth quarter of 2008 includes a provision for credit losses related to the transfer of higher quality credit card loans from the legacy Chase portfolio to a securitization trust previously established by Washington Mutual. | |
(c) | Second quarter 2009 includes a $675 million FDIC special assessment. | |
(d) | JPMorgan Chase acquired the banking operations of Washington Mutual Bank for $1.9 billion. The fair value of the net assets acquired exceeded the purchase price, which resulted in negative goodwill. In accordance with U.S. GAAP for business combinations, 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. | |
(e) | Included accounting conformity loan loss reserve provisions, extraordinary gains and merger costs related to the Washington Mutual transaction, as well as items related to the Bear Stearns merger, including Bear Stearns losses, merger costs, Bear Stearns asset management liquidation costs and Bear Stearns Private Client Services broker retention expense. |
Page 27
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
SUPPLEMENTAL |
||||||||||||||||||||||||||||||||||||||||
TREASURY |
||||||||||||||||||||||||||||||||||||||||
Securities gains (a) (b) |
$ | 378 | $ | 181 | $ | 374 | $ | 214 | $ | 512 | 109 | % | (26 | )% | $ | 1,147 | $ | 1,652 | (31 | )% | ||||||||||||||||||||
Investment securities portfolio (average) (b) |
353,224 | 339,745 | 336,263 | 265,785 | 159,209 | 4 | 122 | 324,037 | 113,010 | 187 | ||||||||||||||||||||||||||||||
Investment securities portfolio (ending) (b) |
340,163 | 351,823 | 326,414 | 316,498 | 192,564 | (3 | ) | 77 | 340,163 | 192,564 | 77 | |||||||||||||||||||||||||||||
Mortgage loans (average) |
7,794 | 7,469 | 7,228 | 7,210 | 7,277 | 4 | 7 | 7,427 | 7,059 | 5 | ||||||||||||||||||||||||||||||
Mortgage loans (ending) |
8,023 | 7,665 | 7,368 | 7,162 | 7,292 | 5 | 10 | 8,023 | 7,292 | 10 | ||||||||||||||||||||||||||||||
PRIVATE EQUITY |
||||||||||||||||||||||||||||||||||||||||
Private equity gains/(losses) |
||||||||||||||||||||||||||||||||||||||||
Direct investments |
||||||||||||||||||||||||||||||||||||||||
Realized gains |
$ | 12 | $ | 57 | $ | 25 | $ | 15 | $ | 24 | (79 | ) | (50 | ) | $ | 109 | $ | 1,717 | (94 | ) | ||||||||||||||||||||
Unrealized gains/(losses) (c) |
224 | 88 | 16 | (409 | ) | (1,000 | ) | 155 | NM | (81 | ) | (2,480 | ) | 97 | ||||||||||||||||||||||||||
Total direct investments |
236 | 145 | 41 | (394 | ) | (976 | ) | 63 | NM | 28 | (763 | ) | NM | |||||||||||||||||||||||||||
Third-party fund investments |
37 | 10 | (61 | ) | (68 | ) | (121 | ) | 270 | NM | (82 | ) | (131 | ) | 37 | |||||||||||||||||||||||||
Total private equity gains/(losses) (d) |
$ | 273 | $ | 155 | $ | (20 | ) | $ | (462 | ) | $ | (1,097 | ) | 76 | NM | $ | (54 | ) | $ | (894 | ) | 94 | ||||||||||||||||||
Private equity portfolio information |
||||||||||||||||||||||||||||||||||||||||
Direct investments |
||||||||||||||||||||||||||||||||||||||||
Publicly-held securities |
||||||||||||||||||||||||||||||||||||||||
Carrying value |
$ | 762 | $ | 674 | $ | 431 | $ | 305 | $ | 483 | 13 | 58 | ||||||||||||||||||||||||||||
Cost |
743 | 751 | 778 | 778 | 792 | (1 | ) | (6 | ) | |||||||||||||||||||||||||||||||
Quoted public value |
791 | 720 | 477 | 346 | 543 | 10 | 46 | |||||||||||||||||||||||||||||||||
Privately-held direct securities |
||||||||||||||||||||||||||||||||||||||||
Carrying value |
5,104 | 4,722 | 4,709 | 4,708 | 5,564 | 8 | (8 | ) | ||||||||||||||||||||||||||||||||
Cost |
5,959 | 5,823 | 5,627 | 5,519 | 6,296 | 2 | (5 | ) | ||||||||||||||||||||||||||||||||
Third-party fund investments (e) |
||||||||||||||||||||||||||||||||||||||||
Carrying value |
1,459 | 1,440 | 1,420 | 1,537 | 805 | 1 | 81 | |||||||||||||||||||||||||||||||||
Cost |
2,079 | 2,068 | 2,055 | 2,082 | 1,169 | 1 | 78 | |||||||||||||||||||||||||||||||||
Total private equity portfolio Carrying value |
$ | 7,325 | $ | 6,836 | $ | 6,560 | $ | 6,550 | $ | 6,852 | 7 | 7 | ||||||||||||||||||||||||||||
Total private equity portfolio Cost |
$ | 8,781 | $ | 8,642 | $ | 8,460 | $ | 8,379 | $ | 8,257 | 2 | 6 | ||||||||||||||||||||||||||||
(a) | All periods reflect repositioning of the Corporate investment securities portfolio, and exclude gains/losses on securities used to manage risk associated with MSRs. | |
(b) | Beginning in second quarter 2009, balances reflect Treasury and Chief Investment Office securities. Prior periods have been revised to conform with this change. | |
(c) | Unrealized gains (losses) contain 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. | |
(e) | Unfunded commitments to third-party private equity funds were $1.5 billion, $1.4 billion, $1.5 billion, $1.5 billion, and $1.4 billion at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. |
Page 28
Dec 31, 2009 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | ||||||||||||||||||||||
2009 | 2009 | 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||
CREDIT EXPOSURE |
||||||||||||||||||||||||||||
WHOLESALE (a) |
||||||||||||||||||||||||||||
Loans retained |
$ | 200,077 | $ | 213,718 | $ | 224,080 | $ | 230,534 | $ | 248,089 | (6) | % | (19 | )% | ||||||||||||||
Loans held-for-sale and loans at fair value |
4,098 | 5,235 | 7,545 | 11,750 | 13,955 | (22 | ) | (71 | ) | |||||||||||||||||||
TOTAL WHOLESALE LOANS REPORTED |
204,175 | 218,953 | 231,625 | 242,284 | 262,044 | (7 | ) | (22 | ) | |||||||||||||||||||
CONSUMER (b) |
||||||||||||||||||||||||||||
Home loan portfolio excluding purchased credit-impaired loans: |
||||||||||||||||||||||||||||
Home equity |
101,425 | 104,795 | 108,229 | 111,781 | 114,335 | (3 | ) | (11 | ) | |||||||||||||||||||
Prime mortgage |
66,892 | 67,597 | 68,878 | 71,731 | 72,266 | (1 | ) | (7 | ) | |||||||||||||||||||
Subprime mortgage |
12,526 | 13,270 | 13,825 | 14,594 | 15,330 | (6 | ) | (18 | ) | |||||||||||||||||||
Option ARMs |
8,536 | 8,852 | 9,034 | 8,940 | 9,018 | (4 | ) | (5 | ) | |||||||||||||||||||
Total home loan portfolio excluding purchased credit-impaired loans |
189,379 | 194,514 | 199,966 | 207,046 | 210,949 | (3 | ) | (10 | ) | |||||||||||||||||||
Home loan portfolio purchased credit-impaired loans: (c) |
||||||||||||||||||||||||||||
Home equity |
26,520 | 27,088 | 27,729 | 28,366 | 28,555 | (2 | ) | (7 | ) | |||||||||||||||||||
Prime mortgage |
19,693 | 20,229 | 20,807 | 21,398 | 21,855 | (3 | ) | (10 | ) | |||||||||||||||||||
Subprime mortgage |
5,993 | 6,135 | 6,341 | 6,565 | 6,760 | (2 | ) | (11 | ) | |||||||||||||||||||
Option ARMs |
29,039 | 29,750 | 30,529 | 31,243 | 31,643 | (2 | ) | (8 | ) | |||||||||||||||||||
Total home loan portfolio purchased credit-impaired loans |
81,245 | 83,202 | 85,406 | 87,572 | 88,813 | (2 | ) | (9 | ) | |||||||||||||||||||
Other consumer: |
||||||||||||||||||||||||||||
Auto |
46,031 | 44,309 | 42,887 | 43,065 | 42,603 | 4 | 8 | |||||||||||||||||||||
Credit card reported: |
||||||||||||||||||||||||||||
Credit card reported excluding loans held by the Washington Mutual Master Trust |
77,784 | 75,207 | 80,722 | 90,911 | 104,746 | 3 | (26 | ) | ||||||||||||||||||||
Credit card reported loans held by the Washington Mutual Master Trust (d) |
1,002 | 3,008 | 5,014 | | | (67 | ) | NM | ||||||||||||||||||||
Total credit card reported |
78,786 | 78,215 | 85,736 | 90,911 | 104,746 | 1 | (25 | ) | ||||||||||||||||||||
Other loans |
31,700 | 32,405 | 33,041 | 33,700 | 33,715 | (2 | ) | (6 | ) | |||||||||||||||||||
Loans retained |
427,141 | 432,645 | 447,036 | 462,294 | 480,826 | (1 | ) | (11 | ) | |||||||||||||||||||
Loans held-for-sale (e) |
2,142 | 1,546 | 1,940 | 3,665 | 2,028 | 39 | 6 | |||||||||||||||||||||
TOTAL CONSUMER LOANS REPORTED |
429,283 | 434,191 | 448,976 | 465,959 | 482,854 | (1 | ) | (11 | ) | |||||||||||||||||||
TOTAL LOANS REPORTED |
633,458 | 653,144 | 680,601 | 708,243 | 744,898 | (3 | ) | (15 | ) | |||||||||||||||||||
Credit card securitized |
84,626 | 87,028 | 85,790 | 85,220 | 85,571 | (3 | ) | (1 | ) | |||||||||||||||||||
TOTAL LOANS MANAGED |
718,084 | 740,172 | 766,391 | 793,463 | 830,469 | (3 | ) | (14 | ) | |||||||||||||||||||
Derivative receivables |
80,210 | 94,065 | 97,491 | 131,247 | 162,626 | (15 | ) | (51 | ) | |||||||||||||||||||
Receivables from customers |
15,745 | 13,148 | 12,977 | 14,504 | 16,141 | 20 | (2 | ) | ||||||||||||||||||||
Interests in purchased receivables |
2,927 | 2,329 | 2,972 | | | 26 | NM | |||||||||||||||||||||
TOTAL CREDIT-RELATED ASSETS |
816,966 | 849,714 | 879,831 | 939,214 | 1,009,236 | (4 | ) | (19 | ) | |||||||||||||||||||
Wholesale lending-related commitments |
347,155 | 343,135 | 343,991 | 363,013 | 379,871 | 1 | (9 | ) | ||||||||||||||||||||
TOTAL |
$ | 1,164,121 | $ | 1,192,849 | $ | 1,223,822 | $ | 1,302,227 | $ | 1,389,107 | (2 | ) | (16 | ) | ||||||||||||||
Memo: Total by category |
||||||||||||||||||||||||||||
Total wholesale exposure (f) |
$ | 650,212 | $ | 671,630 | $ | 689,056 | $ | 751,048 | $ | 820,682 | (3 | ) | (21 | ) | ||||||||||||||
Total consumer managed loans (g) |
513,909 | 521,219 | 534,766 | 551,179 | 568,425 | (1 | ) | (10 | ) | |||||||||||||||||||
Total |
$ | 1,164,121 | $ | 1,192,849 | $ | 1,223,822 | $ | 1,302,227 | $ | 1,389,107 | (2 | ) | (16 | ) | ||||||||||||||
Risk profile of wholesale credit exposure: |
||||||||||||||||||||||||||||
Investment-grade |
$ | 460,702 | $ | 474,005 | $ | 491,168 | $ | 546,968 | $ | 605,210 | (3 | ) | (24 | ) | ||||||||||||||
Noninvestment-grade: |
||||||||||||||||||||||||||||
Noncriticized |
133,557 | 141,578 | 141,408 | 147,891 | 159,379 | (6 | ) | (16 | ) | |||||||||||||||||||
Criticized performing |
26,095 | 27,217 | 26,453 | 25,320 | 22,568 | (4 | ) | 16 | ||||||||||||||||||||
Criticized nonperforming |
7,088 | 8,118 | 6,533 | 4,615 | 3,429 | (13 | ) | 107 | ||||||||||||||||||||
Total noninvestment-grade |
166,740 | 176,913 | 174,394 | 177,826 | 185,376 | (6 | ) | (10 | ) | |||||||||||||||||||
Loans held-for-sale & loans at fair value |
4,098 | 5,235 | 7,545 | 11,750 | 13,955 | (22 | ) | (71 | ) | |||||||||||||||||||
Receivables from customers |
15,745 | 13,148 | 12,977 | 14,504 | 16,141 | 20 | (2 | ) | ||||||||||||||||||||
Interests in purchased receivables |
2,927 | 2,329 | 2,972 | | | 26 | NM | |||||||||||||||||||||
Total wholesale exposure |
$ | 650,212 | $ | 671,630 | $ | 689,056 | $ | 751,048 | $ | 820,682 | (3 | ) | (21 | ) | ||||||||||||||
(a) | Includes Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management. | |
(b) | 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. | |
(c) | Purchased credit-impaired loans represent loans acquired in the Washington Mutual transaction for which a deterioration in credit quality occurred between the origination date and JPMorgan Chases acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated life of the loan when cash flows are reasonably estimable even if the underlying loans are contractually past due. | |
(d) | Represents loans held by the Washington Mutual Master Trust, which were consolidated onto the Firms balance sheet at fair value during the second quarter of 2009. No allowance for loan losses was recorded for these loans as of December 31, 2009, September 30, 2009 and June 30, 2009. | |
(e) | Included loans for prime mortgage of $450 million, $187 million, $589 million, $825 million, and $206 million at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and other (largely student loans) of $1.7 billion, $1.4 billion, $1.4 billion, $2.8 billion, and $1.8 billion at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. | |
(f) | Primarily 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. | |
Note: The risk profile is based on JPMorgan Chases internal risk ratings, which generally correspond to the following ratings as defined by Standard & Poors / Moodys: | ||
Investment-Grade: AAA / Aaa to BBB- / Baa3 | ||
Noninvestment-Grade: BB+ / Ba1 and below |
Page 29
Dec 31, 2009 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | ||||||||||||||||||||||
2009 | 2009 | 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||
NONPERFORMING ASSETS AND RATIOS |
||||||||||||||||||||||||||||
WHOLESALE LOANS |
||||||||||||||||||||||||||||
Loans retained |
$ | 6,559 | $ | 7,494 | $ | 5,829 | $ | 3,605 | $ | 2,350 | (12) | % | 179 | % | ||||||||||||||
Loans held-for-sale and loans at fair value |
345 | 146 | 133 | 57 | 32 | 136 | NM | |||||||||||||||||||||
TOTAL WHOLESALE LOANS |
6,904 | 7,640 | 5,962 | 3,662 | 2,382 | (10 | ) | 190 | ||||||||||||||||||||
CONSUMER LOANS (a) |
||||||||||||||||||||||||||||
Home loan portfolio (includes RFS and Corporate/Private Equity): |
||||||||||||||||||||||||||||
Home equity |
1,665 | 1,598 | 1,487 | 1,591 | 1,394 | 4 | 19 | |||||||||||||||||||||
Prime mortgage |
4,355 | 4,007 | 3,501 | 2,712 | 1,895 | 9 | 130 | |||||||||||||||||||||
Subprime mortgage |
3,248 | 3,233 | 2,773 | 2,545 | 2,690 | | 21 | |||||||||||||||||||||
Option ARMs |
312 | 244 | 182 | 97 | 10 | 28 | NM | |||||||||||||||||||||
Total home loan portfolio |
9,580 | 9,082 | 7,943 | 6,945 | 5,989 | 5 | 60 | |||||||||||||||||||||
Auto loans |
177 | 179 | 154 | 165 | 148 | (1 | ) | 20 | ||||||||||||||||||||
Credit card reported |
3 | 3 | 4 | 4 | 4 | | (25 | ) | ||||||||||||||||||||
Other loans |
900 | 863 | 722 | 625 | 430 | 4 | 109 | |||||||||||||||||||||
TOTAL CONSUMER LOANS (b) (c) |
10,660 | 10,127 | 8,823 | 7,739 | 6,571 | 5 | 62 | |||||||||||||||||||||
TOTAL NONPERFORMING LOANS REPORTED |
17,564 | 17,767 | 14,785 | 11,401 | 8,953 | (1 | ) | 96 | ||||||||||||||||||||
Derivative receivables |
529 | 624 | 704 | 1,010 | 1,079 | (15 | ) | (51 | ) | |||||||||||||||||||
Assets acquired in loan satisfactions |
1,648 | 1,971 | 2,028 | 2,243 | 2,682 | (16 | ) | (39 | ) | |||||||||||||||||||
TOTAL NONPERFORMING ASSETS (b) |
$ | 19,741 | $ | 20,362 | $ | 17,517 | $ | 14,654 | $ | 12,714 | (3 | ) | 55 | |||||||||||||||
TOTAL NONPERFORMING LOANS TO TOTAL LOANS REPORTED |
2.77 | % | 2.72 | % | 2.17 | % | 1.61 | % | 1.20 | % | ||||||||||||||||||
NONPERFORMING ASSETS BY LOB |
||||||||||||||||||||||||||||
Investment Bank |
$ | 4,236 | $ | 5,782 | $ | 4,534 | $ | 3,041 | $ | 2,501 | (27 | ) | 69 | |||||||||||||||
Retail Financial Services (c) |
11,864 | 11,641 | 10,351 | 9,582 | 8,841 | 2 | 34 | |||||||||||||||||||||
Card Services |
3 | 3 | 4 | 4 | 4 | | (25 | ) | ||||||||||||||||||||
Commercial Banking |
2,989 | 2,461 | 2,255 | 1,651 | 1,142 | 21 | 162 | |||||||||||||||||||||
Treasury & Securities Services |
14 | 14 | 14 | 30 | 30 | | (53 | ) | ||||||||||||||||||||
Asset Management |
582 | 422 | 326 | 319 | 172 | 38 | 238 | |||||||||||||||||||||
Corporate/Private Equity (d) |
53 | 39 | 33 | 27 | 24 | 36 | 121 | |||||||||||||||||||||
TOTAL |
$ | 19,741 | $ | 20,362 | $ | 17,517 | $ | 14,654 | $ | 12,714 | (3 | ) | 55 | |||||||||||||||
(a) | There were no nonperforming loans held-for-sale at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, or December 31, 2008. | |
(b) | Nonperforming loans and assets excluded: (1) mortgage loans insured by U.S. government agencies of $9.0 billion, $7.0 billion, $4.2 billion, $4.2 billion, and $3.0 billion, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively; (2) real estate owned insured by U.S. government agencies of $579 million, $579 million, $508 million, $433 million, and $364 million, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively; and (3) student 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 $542 million, $511 million, $473 million, $433 million, and $437 million, at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively. These amounts are excluded, as reimbursement is proceeding normally. | |
(c) | Excludes home lending purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. Also excludes loans held-for-sale and loans at fair value. | |
(d) | Predominantly relates to held-for-investment prime mortgage. |
Page 30
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
GROSS CHARGE-OFFS |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans |
$ | 1,230 | $ | 1,093 | $ | 697 | $ | 206 | $ | 238 | 13 | % | 417 | % | $ | 3,226 | $ | 521 | NM | % | ||||||||||||||||||||
Consumer loans (includes RFS and
Corporate/Private Equity) |
2,825 | 2,634 | 2,718 | 2,244 | 1,752 | 7 | 61 | 10,421 | 5,086 | 105 | ||||||||||||||||||||||||||||||
Credit card loans reported |
2,405 | 2,894 | 2,883 | 2,189 | 1,559 | (17 | ) | 54 | 10,371 | 5,157 | 101 | |||||||||||||||||||||||||||||
Total loans reported |
6,460 | 6,621 | 6,298 | 4,639 | 3,549 | (2 | ) | 82 | 24,018 | 10,764 | 123 | |||||||||||||||||||||||||||||
Credit card loans securitized |
1,733 | 1,810 | 1,776 | 1,579 | 1,351 | (4 | ) | 28 | 6,898 | 4,076 | 69 | |||||||||||||||||||||||||||||
Total loans managed |
8,193 | 8,431 | 8,074 | 6,218 | 4,900 | (3 | ) | 67 | 30,916 | 14,840 | 108 | |||||||||||||||||||||||||||||
RECOVERIES |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans |
26 | 35 | 18 | 15 | 21 | (26 | ) | 24 | 94 | 119 | (21 | ) | ||||||||||||||||||||||||||||
Consumer loans (includes RFS and
Corporate/Private Equity) |
74 | 13 | 67 | 68 | 51 | 469 | 45 | 222 | 209 | 6 | ||||||||||||||||||||||||||||||
Credit card loans reported |
183 | 200 | 194 | 160 | 162 | (9 | ) | 13 | 737 | 601 | 23 | |||||||||||||||||||||||||||||
Total loans reported |
283 | 248 | 279 | 243 | 234 | 14 | 21 | 1,053 | 929 | 13 | ||||||||||||||||||||||||||||||
Credit card loans securitized |
116 | 112 | 112 | 115 | 123 | 4 | (6 | ) | 455 | 464 | (2 | ) | ||||||||||||||||||||||||||||
Total loans managed |
399 | 360 | 391 | 358 | 357 | 11 | 12 | 1,508 | 1,393 | 8 | ||||||||||||||||||||||||||||||
NET CHARGE-OFFS |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans |
1,204 | 1,058 | 679 | 191 | 217 | 14 | 455 | 3,132 | 402 | NM | ||||||||||||||||||||||||||||||
Consumer loans (includes RFS and
Corporate/Private Equity) |
2,751 | 2,621 | 2,651 | 2,176 | 1,701 | 5 | 62 | 10,199 | 4,877 | 109 | ||||||||||||||||||||||||||||||
Credit card loans reported |
2,222 | 2,694 | 2,689 | 2,029 | 1,397 | (18 | ) | 59 | 9,634 | 4,556 | 111 | |||||||||||||||||||||||||||||
Total loans reported |
6,177 | 6,373 | 6,019 | 4,396 | 3,315 | (3 | ) | 86 | 22,965 | 9,835 | 134 | |||||||||||||||||||||||||||||
Credit card loans securitized |
1,617 | 1,698 | 1,664 | 1,464 | 1,228 | (5 | ) | 32 | 6,443 | 3,612 | 78 | |||||||||||||||||||||||||||||
Total loans managed |
$ | 7,794 | $ | 8,071 | $ | 7,683 | $ | 5,860 | $ | 4,543 | (3 | ) | 72 | $ | 29,408 | $ | 13,447 | 119 | ||||||||||||||||||||||
NET CHARGE-OFF RATES |
||||||||||||||||||||||||||||||||||||||||
Wholesale retained loans |
2.31 | % | 1.93 | % | 1.19 | % | 0.32 | % | 0.33 | % | 1.40 | % | 0.18 | % | ||||||||||||||||||||||||||
Consumer retained loans |
4.60 | 4.79 | 4.69 | 3.61 | 2.59 | 4.41 | 2.71 | |||||||||||||||||||||||||||||||||
Total retained loans reported |
3.85 | 3.84 | 3.52 | 2.51 | 1.80 | 3.42 | 1.73 | |||||||||||||||||||||||||||||||||
Consumer loans managed |
5.08 | 5.29 | 5.20 | 4.12 | 3.05 | 4.91 | 3.06 | |||||||||||||||||||||||||||||||||
Total loans managed |
4.29 | 4.30 | 4.00 | 2.98 | 2.20 | 3.88 | 2.08 | |||||||||||||||||||||||||||||||||
Consumer loans managed excluding purchased
credit-impaired loans (a) |
6.05 | 6.29 | 6.18 | 4.90 | 3.62 | 5.85 | 3.22 | |||||||||||||||||||||||||||||||||
Total loans managed excluding purchased
credit impaired loans (a) |
4.84 | 4.85 | 4.51 | 3.36 | 2.46 | 4.37 | 2.15 | |||||||||||||||||||||||||||||||||
Memo: Average Retained Loans |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans reported |
206,846 | 217,952 | 229,105 | 238,689 | 258,770 | 223,047 | 219,612 | |||||||||||||||||||||||||||||||||
Consumer loans reported |
428,964 | 440,376 | 456,292 | 471,918 | 475,239 | 449,245 | 347,435 | |||||||||||||||||||||||||||||||||
Total loans reported |
635,810 | 658,328 | 685,397 | 710,607 | 734,009 | 672,292 | 567,047 | |||||||||||||||||||||||||||||||||
Consumer loans managed |
514,416 | 526,393 | 540,709 | 557,537 | 563,744 | 534,623 | 427,001 | |||||||||||||||||||||||||||||||||
Total loans managed |
721,262 | 744,345 | 769,814 | 796,226 | 822,514 | 757,670 | 646,613 |
(a) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. |
Page 31
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||||||||||||||
Beginning balance |
$ | 30,633 | $ | 29,072 | $ | 27,381 | $ | 23,164 | $ | 19,052 | 5 | % | 61 | % | $ | 23,164 | $ | 9,234 | 151 | % | ||||||||||||||||||||
Acquired allowance resulting from the Washington Mutual transaction |
| | | | | | | | 2,535 | NM | ||||||||||||||||||||||||||||||
Net charge-offs |
6,177 | 6,373 | 6,019 | 4,396 | 3,315 | (3 | ) | 86 | 22,965 | 9,835 | 134 | |||||||||||||||||||||||||||||
Provision for loan losses (a) |
7,166 | 8,029 | 7,923 | 8,617 | 7,434 | (11 | ) | (4 | ) | 31,735 | 21,237 | 49 | ||||||||||||||||||||||||||||
Other (b) |
(20 | ) | (95 | ) | (213 | ) | (4 | ) | (7 | ) | 79 | (186 | ) | (332 | ) | (7 | ) | NM | ||||||||||||||||||||||
Ending balance |
$ | 31,602 | $ | 30,633 | $ | 29,072 | $ | 27,381 | $ | 23,164 | 3 | 36 | $ | 31,602 | $ | 23,164 | 36 | |||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||||||||||||||
Beginning balance |
$ | 821 | $ | 746 | $ | 638 | $ | 659 | $ | 713 | 10 | 15 | $ | 659 | $ | 850 | (22 | ) | ||||||||||||||||||||||
Provision for lending-related commitments |
118 | 75 | 108 | (21 | ) | (121 | ) | 57 | NM | 280 | (258 | ) | NM | |||||||||||||||||||||||||||
Other |
| | | | 67 | | NM | | 67 | NM | ||||||||||||||||||||||||||||||
Ending balance |
$ | 939 | $ | 821 | $ | 746 | $ | 638 | $ | 659 | 14 | 42 | $ | 939 | $ | 659 | 42 | |||||||||||||||||||||||
ALLOWANCE COMPONENTS AND RATIOS |
||||||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||||||||||||||
Wholesale |
||||||||||||||||||||||||||||||||||||||||
Asset specific |
$ | 2,046 | $ | 2,410 | $ | 2,108 | $ | 1,213 | $ | 712 | (15 | ) | 187 | |||||||||||||||||||||||||||
Formula based |
5,099 | 5,631 | 6,284 | 6,691 | 5,833 | (9 | ) | (13 | ) | |||||||||||||||||||||||||||||||
Total wholesale |
7,145 | 8,041 | 8,392 | 7,904 | 6,545 | (11 | ) | 9 | ||||||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||||||||||||||
Asset specific |
149 | 161 | 132 | 106 | 74 | (7 | ) | 101 | ||||||||||||||||||||||||||||||||
Formula based |
24,308 | 22,431 | 20,548 | 19,371 | 16,545 | 8 | 47 | |||||||||||||||||||||||||||||||||
Total consumer |
24,457 | 22,592 | 20,680 | 19,477 | 16,619 | 8 | 47 | |||||||||||||||||||||||||||||||||
Total allowance for loan losses |
31,602 | 30,633 | 29,072 | 27,381 | 23,164 | 3 | 36 | |||||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
939 | 821 | 746 | 638 | 659 | 14 | 42 | |||||||||||||||||||||||||||||||||
Total allowance for credit losses |
$ | 32,541 | $ | 31,454 | $ | 29,818 | $ | 28,019 | $ | 23,823 | 3 | 37 | ||||||||||||||||||||||||||||
REPORTED RATIOS |
||||||||||||||||||||||||||||||||||||||||
Wholesale allowance for loan losses to total wholesale retained loans |
3.57 | % | 3.76 | % | 3.75 | % | 3.43 | % | 2.64 | % | ||||||||||||||||||||||||||||||
Consumer allowance for loan losses to total consumer retained loans |
5.73 | 5.22 | 4.63 | 4.21 | 3.46 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses to total retained loans |
5.04 | 4.74 | 4.33 | 3.95 | 3.18 | |||||||||||||||||||||||||||||||||||
MANAGED RATIOS |
||||||||||||||||||||||||||||||||||||||||
Consumer allowance for loan losses to total consumer retained loans
excluding purchased credit-impaired
loans and loans held by the Washington Mutual Master Trust (c) (d) |
6.63 | 6.21 | 5.80 | 5.20 | 4.24 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses to ending loans excluding purchased
credit-impaired loans and loans held by the
Washington Mutual Master Trust (c) (d) |
5.51 | 5.28 | 5.01 | 4.53 | 3.62 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses to total retained nonperforming loans (c) (e) |
174 | 168 | 198 | 241 | 260 | |||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES BY LOB |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 3,756 | $ | 4,703 | $ | 5,101 | $ | 4,682 | $ | 3,444 | (20 | ) | 9 | |||||||||||||||||||||||||||
Retail Financial Services |
14,776 | 13,286 | 11,832 | 10,619 | 8,918 | 11 | 66 | |||||||||||||||||||||||||||||||||
Card Services |
9,672 | 9,297 | 8,839 | 8,849 | 7,692 | 4 | 26 | |||||||||||||||||||||||||||||||||
Commercial Banking |
3,025 | 3,063 | 3,034 | 2,945 | 2,826 | (1 | ) | 7 | ||||||||||||||||||||||||||||||||
Treasury & Securities Services |
88 | 15 | 15 | 51 | 74 | 487 | 19 | |||||||||||||||||||||||||||||||||
Asset Management |
269 | 251 | 226 | 215 | 191 | 7 | 41 | |||||||||||||||||||||||||||||||||
Corporate/Private Equity |
16 | 18 | 25 | 20 | 19 | (11 | ) | (16 | ) | |||||||||||||||||||||||||||||||
Total |
$ | 31,602 | $ | 30,633 | $ | 29,072 | $ | 27,381 | $ | 23,164 | 3 | 36 | ||||||||||||||||||||||||||||
(a) | Full year 2008 includes accounting conformity loan loss provision related to the acquisition of Washington Mutual Banks banking operations. | |
(b) | Activity from the second to fourth quarter of 2009 predominantly included a reclassification related to the issuance and retention of securities from the Chase Issuance Trust. | |
(c) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of $1.6 billion and $1.1 billion was recorded for these loans as of December 31, 2009 and September 30, 2009, respectively. No allowance for losses was recorded as of June 30, 2009, March 31, 2009 and December 31, 2008. To date, no charge-offs have been recorded for these loans. | |
(d) | Excludes loans held by the Washington Mutual Master Trust, which were consolidated onto the Firms balance sheet at fair value during the second quarter of 2009. No allowance for loan losses was recorded for these loans as of December 31, 2009, September 30, 2009 and June 30, 2009. | |
(e) | Excludes consumer purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. |
Page 32
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||
LOANS |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | (265 | ) | $ | 330 | $ | 815 | $ | 1,274 | $ | 869 | NM | % | NM | % | $ | 2,154 | $ | 2,216 | (3 | )% | |||||||||||||||||||
Commercial Banking |
445 | 326 | 280 | 263 | 180 | 37 | 147 | 1,314 | 505 | 160 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
73 | 1 | (20 | ) | (20 | ) | 27 | NM | 170 | 34 | 52 | (35 | ) | |||||||||||||||||||||||||||
Asset Management |
53 | 37 | 59 | 34 | 32 | 43 | 66 | 183 | 87 | 110 | ||||||||||||||||||||||||||||||
Corporate/Private Equity (a) (b) |
(2 | ) | (6 | ) | 7 | | 76 | 67 | NM | (1 | ) | 676 | NM | |||||||||||||||||||||||||||
Total wholesale |
304 | 688 | 1,141 | 1,551 | 1,184 | (56 | ) | (74 | ) | 3,684 | 3,536 | 4 | ||||||||||||||||||||||||||||
Retail Financial Services |
4,228 | 4,004 | 3,841 | 3,877 | 3,578 | 6 | 18 | 15,950 | 9,906 | 61 | ||||||||||||||||||||||||||||||
Card Services reported |
2,622 | 3,269 | 2,939 | 3,189 | 2,747 | (20 | ) | (5 | ) | 12,019 | 6,456 | 86 | ||||||||||||||||||||||||||||
Corporate/Private Equity (a) |
12 | 68 | 2 | | (75 | ) | (82 | ) | NM | 82 | 1,339 | (94 | ) | |||||||||||||||||||||||||||
Total consumer |
6,862 | 7,341 | 6,782 | 7,066 | 6,250 | (7 | ) | 10 | 28,051 | 17,701 | 58 | |||||||||||||||||||||||||||||
Total provision for loan losses |
$ | 7,166 | $ | 8,029 | $ | 7,923 | $ | 8,617 | $ | 7,434 | (11 | ) | (4 | ) | $ | 31,735 | $ | 21,237 | 49 | |||||||||||||||||||||
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 84 | $ | 49 | $ | 56 | $ | (64 | ) | $ | (104 | ) | 71 | NM | $ | 125 | $ | (201 | ) | NM | ||||||||||||||||||||
Commercial Banking |
49 | 29 | 32 | 30 | 10 | 69 | 390 | 140 | (41 | ) | NM | |||||||||||||||||||||||||||||
Treasury & Securities Services |
(20 | ) | 12 | 15 | 14 | 18 | NM | NM | 21 | 30 | (30 | ) | ||||||||||||||||||||||||||||
Asset Management |
5 | 1 | | (1 | ) | | 400 | NM | 5 | (2 | ) | NM | ||||||||||||||||||||||||||||
Corporate/Private Equity (a) |
(1 | ) | | | | 5 | NM | NM | (1 | ) | 5 | NM | ||||||||||||||||||||||||||||
Total wholesale |
117 | 91 | 103 | (21 | ) | (71 | ) | 29 | NM | 290 | (209 | ) | NM | |||||||||||||||||||||||||||
Retail Financial Services |
1 | (16 | ) | 5 | | (2 | ) | NM | NM | (10 | ) | (1 | ) | NM | ||||||||||||||||||||||||||
Card Services reported |
| | | | | | | | | | ||||||||||||||||||||||||||||||
Corporate/Private Equity (a) |
| | | | (48 | ) | | NM | | (48 | ) | NM | ||||||||||||||||||||||||||||
Total consumer |
1 | (16 | ) | 5 | | (50 | ) | NM | NM | (10 | ) | (49 | ) | 80 | ||||||||||||||||||||||||||
Total provision for lending-related commitments |
$ | 118 | $ | 75 | $ | 108 | $ | (21 | ) | $ | (121 | ) | 57 | NM | $ | 280 | $ | (258 | ) | NM | ||||||||||||||||||||
TOTAL PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | (181 | ) | $ | 379 | $ | 871 | $ | 1,210 | $ | 765 | NM | NM | $ | 2,279 | $ | 2,015 | 13 | ||||||||||||||||||||||
Commercial Banking |
494 | 355 | 312 | 293 | 190 | 39 | 160 | 1,454 | 464 | 213 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
53 | 13 | (5 | ) | (6 | ) | 45 | 308 | 18 | 55 | 82 | (33 | ) | |||||||||||||||||||||||||||
Asset Management |
58 | 38 | 59 | 33 | 32 | 53 | 81 | 188 | 85 | 121 | ||||||||||||||||||||||||||||||
Corporate/Private Equity (a) (b) |
(3 | ) | (6 | ) | 7 | | 81 | 50 | NM | (2 | ) | 681 | NM | |||||||||||||||||||||||||||
Total wholesale |
421 | 779 | 1,244 | 1,530 | 1,113 | (46 | ) | (62 | ) | 3,974 | 3,327 | 19 | ||||||||||||||||||||||||||||
Retail Financial Services |
4,229 | 3,988 | 3,846 | 3,877 | 3,576 | 6 | 18 | 15,940 | 9,905 | 61 | ||||||||||||||||||||||||||||||
Card Services reported |
2,622 | 3,269 | 2,939 | 3,189 | 2,747 | (20 | ) | (5 | ) | 12,019 | 6,456 | 86 | ||||||||||||||||||||||||||||
Corporate/Private Equity (a) |
12 | 68 | 2 | | (123 | ) | (82 | ) | NM | 82 | 1,291 | (94 | ) | |||||||||||||||||||||||||||
Total consumer |
6,863 | 7,325 | 6,787 | 7,066 | 6,200 | (6 | ) | 11 | 28,041 | 17,652 | 59 | |||||||||||||||||||||||||||||
Total provision for credit losses |
7,284 | 8,104 | 8,031 | 8,596 | 7,313 | (10 | ) | | 32,015 | 20,979 | 53 | |||||||||||||||||||||||||||||
Credit card securitized |
1,617 | 1,698 | 1,664 | 1,464 | 1,228 | (5 | ) | 32 | 6,443 | 3,612 | 78 | |||||||||||||||||||||||||||||
Managed provision for credit losses |
$ | 8,901 | $ | 9,802 | $ | 9,695 | $ | 10,060 | $ | 8,541 | (9 | ) | 4 | $ | 38,458 | $ | 24,591 | 56 | ||||||||||||||||||||||
(a) | Includes accounting conformity provisions related to the Washington Mutual transaction in the third quarter of 2008. | |
(b) | Includes provision expense related to loans acquired in the Bear Stearns transaction in the second quarter of 2008. |
Page 33
QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
AVERAGE IB TRADING VAR AND CREDIT
PORTFOLIO VAR - 99% CONFIDENCE LEVEL (a) |
||||||||||||||||||||||||||||||||||||||||
IB VaR by risk type: |
||||||||||||||||||||||||||||||||||||||||
Fixed income |
$ | 171 | $ | 243 | $ | 249 | $ | 218 | $ | 276 | (30 | )% | (38 | )% | $ | 221 | $ | 181 | 22 | % | ||||||||||||||||||||
Foreign exchange |
23 | 30 | 26 | 40 | 55 | (23 | ) | (58 | ) | 30 | 34 | (12 | ) | |||||||||||||||||||||||||||
Equities |
35 | 28 | 77 | 162 | 87 | 25 | (60 | ) | 75 | 57 | 32 | |||||||||||||||||||||||||||||
Commodities and other |
26 | 38 | 34 | 28 | 30 | (32 | ) | (13 | ) | 32 | 32 | | ||||||||||||||||||||||||||||
Diversification benefit to IB trading VaR (b) |
(92 | ) | (134 | ) | (136 | ) | (159 | ) | (146 | ) | 31 | 37 | (131 | ) | (108 | ) | (21 | ) | ||||||||||||||||||||||
99% IB Trading VaR (c) |
163 | 205 | 250 | 289 | 302 | (20 | ) | (46 | ) | 227 | 196 | 16 | ||||||||||||||||||||||||||||
Credit portfolio VaR (d) |
41 | 50 | 133 | 182 | 165 | (18 | ) | (75 | ) | 101 | 69 | 46 | ||||||||||||||||||||||||||||
Diversification benefit to IB trading and credit portfolio VaR (b) |
(20 | ) | (49 | ) | (116 | ) | (135 | ) | (140 | ) | 59 | 86 | (80 | ) | (63 | ) | (27 | ) | ||||||||||||||||||||||
99% Total IB trading and credit portfolio VaR |
$ | 184 | $ | 206 | $ | 267 | $ | 336 | $ | 327 | (11 | ) | (44 | ) | $ | 248 | $ | 202 | 23 | |||||||||||||||||||||
AVERAGE IB TRADING VAR, CREDIT PORTFOLIO
VAR AND OTHER VAR - 95% CONFIDENCE LEVEL (e) |
||||||||||||||||||||||||||||||||||||||||
IB VaR by risk type: |
||||||||||||||||||||||||||||||||||||||||
Fixed income |
$ | 121 | $ | 182 | $ | 179 | $ | 158 | $ | 194 | (34 | ) | (38 | ) | $ | 160 | ||||||||||||||||||||||||
Foreign exchange |
14 | 19 | 16 | 23 | 32 | (26 | ) | (56 | ) | 18 | ||||||||||||||||||||||||||||||
Equities |
21 | 19 | 50 | 97 | 47 | 11 | (55 | ) | 47 | |||||||||||||||||||||||||||||||
Commodities and other |
17 | 23 | 22 | 20 | 21 | (26 | ) | (19 | ) | 20 | ||||||||||||||||||||||||||||||
Diversification benefit to IB trading VaR (b) |
(62 | ) | (97 | ) | (97 | ) | (108 | ) | (103 | ) | 36 | 40 | (91 | ) | ||||||||||||||||||||||||||
95% IB Trading VaR (c) |
111 | 146 | 170 | 190 | 191 | (24 | ) | (42 | ) | 154 | ||||||||||||||||||||||||||||||
Credit portfolio VaR (d) |
24 | 29 | 68 | 86 | 66 | (17 | ) | (64 | ) | 52 | ||||||||||||||||||||||||||||||
Diversification benefit to IB trading and credit portfolio VaR (b) |
(11 | ) | (32 | ) | (60 | ) | (63 | ) | (50 | ) | 66 | 78 | (42 | ) | ||||||||||||||||||||||||||
95% Total IB trading and credit portfolio VaR |
124 | 143 | 178 | 213 | 207 | (13 | ) | (40 | ) | 164 | ||||||||||||||||||||||||||||||
Consumer Lending VaR (f) |
29 | 49 | 43 | 108 | 56 | (41 | ) | (48 | ) | 57 | ||||||||||||||||||||||||||||||
Corporate Risk Management VaR (g) |
78 | 99 | 111 | 121 | 76 | (21 | ) | 3 | 103 | |||||||||||||||||||||||||||||||
Diversification benefit to total other VaR (b) |
(19 | ) | (31 | ) | (29 | ) | (61 | ) | (31 | ) | 39 | 39 | (36 | ) | ||||||||||||||||||||||||||
Total other VaR |
88 | 117 | 125 | 168 | 101 | (25 | ) | (13 | ) | 124 | ||||||||||||||||||||||||||||||
Diversification benefit to total IB and other VaR (b) |
(67 | ) | (82 | ) | (89 | ) | (93 | ) | (56 | ) | 18 | (20 | ) | (82 | ) | |||||||||||||||||||||||||
Total IB and other VaR |
$ | 145 | $ | 178 | $ | 214 | $ | 288 | $ | 252 | (19 | ) | (42 | ) | $ | 206 | ||||||||||||||||||||||||
(a) | Results for full year 2008 include seven months of the combined Firms (JPMorgan Chase & Co.s and Bear Stearns) results and five months of 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 therefore usually less than the sum of the risks of the positions themselves. | |
(c) | IB Trading VaR includes predominantly all trading activities in IB; however, particular risk parameters of certain products are not fully captured, for example, correlation risk. The 95% IB Trading VaR includes syndicated lending facilities that the Firm intends to distribute, and the credit spread sensitivities of certain mortgage products. The 99% IB Trading VaR includes the credit spread sensitivities of certain mortgage products but does not include syndicated lending facilities that the Firm intends to distribute. Both the 95% and 99% IB Trading VaR do not include the debit valuation adjustments (DVA) taken on derivative and structured liabilities to reflect the credit quality of the Firm. | |
(d) | Includes VaR on derivative credit valuation adjustments (CVA), hedges of the CVA 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) | In the third quarter of 2008, the Firm revised the VaR measurement to create a more comprehensive view of its market risks by adding syndicated lending facilities that the Firm intends to distribute, and the credit spread sensitivities of certain mortgage products. In addition, certain actively managed positions utilized as part of the Firms risk management function within Corporate and in RFS mortgage banking businesses have been added to IB VaR to provide a Total IB and other VaR measure. Finally, the Firm moved from using a 99% confidence level to a 95% confidence level since the 95% level provides a more stable measure of the VaR for day-to-day risk management. Results for the full year ended December 31, 2008, are not available. This section presents the results of the Firms VaR measure under the revised measurement using a 95% confidence level. The Firm intends to only present the VaR at this confidence level once information for five quarters and two comparative year-to-date periods are available. | |
(f) | Consumer Lending VaR includes the Firms mortgage pipeline and warehouse, MSR and all related hedges. | |
(g) | Corporate Risk Management VaR includes certain actively managed positions utilized as part of the Firms risk management function within Corporate. It does not include certain nontrading activity such as Private Equity, principal investing (e.g., mezzanine financing, tax-oriented investments, etc.) and Corporate Treasury balance sheet and capital management positions as well as longer-term corporate investments. |
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Dec 31, 2009 | ||||||||||||||||||||||||||||||||||||||||
Change | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | 2009 Change | |||||||||||||||||||||||||||||||||
2009 | 2009 | 2009 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
CAPITAL RATIOS (a) |
||||||||||||||||||||||||||||||||||||||||
Tier 1 capital |
$ | 132,971 | (e) | $ | 126,541 | $ | 122,174 | $ | 137,144 | $ | 136,104 | 5 | % | (2 | )% | |||||||||||||||||||||||||
Total capital |
177,074 | (e) | 171,804 | 167,767 | 183,109 | 184,720 | 3 | (4 | ) | |||||||||||||||||||||||||||||||
Tier 1 common capital (b) |
105,284 | (e) | 101,420 | 96,850 | 87,878 | 86,908 | 4 | 21 | ||||||||||||||||||||||||||||||||
Risk-weighted assets |
1,198,080 | (e) | 1,237,760 | 1,260,237 | 1,207,490 | 1,244,659 | (3 | ) | (4 | ) | ||||||||||||||||||||||||||||||
Adjusted average assets |
1,933,767 | (e) | 1,940,689 | 1,969,339 | 1,923,186 | 1,966,895 | | (2 | ) | |||||||||||||||||||||||||||||||
Tier 1 capital ratio |
11.1 | %(e) | 10.2 | % | 9.7 | % | 11.4 | % | 10.9 | % | ||||||||||||||||||||||||||||||
Total capital ratio |
14.8 | (e) | 13.9 | 13.3 | 15.2 | 14.8 | ||||||||||||||||||||||||||||||||||
Tier 1 common capital ratio (b) |
8.8 | (e) | 8.2 | 7.7 | 7.3 | 7.0 | ||||||||||||||||||||||||||||||||||
Tier 1 leverage ratio |
6.9 | (e) | 6.5 | 6.2 | 7.1 | 6.9 | ||||||||||||||||||||||||||||||||||
TANGIBLE COMMON EQUITY (PERIOD-END) (c) |
||||||||||||||||||||||||||||||||||||||||
Common stockholders equity |
$ | 157,213 | $ | 154,101 | $ | 146,614 | $ | 138,201 | $ | 134,945 | 2 | 17 | ||||||||||||||||||||||||||||
Less: Goodwill |
48,357 | 48,334 | 48,288 | 48,201 | 48,027 | | 1 | |||||||||||||||||||||||||||||||||
Less: Other intangible assets |
4,621 | 4,862 | 5,082 | 5,349 | 5,581 | (5 | ) | (17 | ) | |||||||||||||||||||||||||||||||
Add: Deferred tax liabilities (d) |
2,538 | 2,527 | 2,535 | 2,502 | 2,717 | | (7 | ) | ||||||||||||||||||||||||||||||||
Total tangible common equity |
$ | 106,773 | $ | 103,432 | $ | 95,779 | $ | 87,153 | $ | 84,054 | 3 | 27 | ||||||||||||||||||||||||||||
TANGIBLE COMMON EQUITY (AVERAGE) (c) |
||||||||||||||||||||||||||||||||||||||||
Common stockholders equity |
$ | 156,525 | $ | 149,468 | $ | 140,865 | $ | 136,493 | $ | 138,757 | 5 | 13 | $ | 145,903 | $ | 129,116 | 13 | % | ||||||||||||||||||||||
Less: Goodwill |
48,341 | 48,328 | 48,273 | 48,071 | 46,838 | | 3 | 48,254 | 46,068 | 5 | ||||||||||||||||||||||||||||||
Less: Other intangible assets |
4,741 | 4,984 | 5,218 | 5,443 | 5,586 | (5 | ) | (15 | ) | 5,095 | 5,779 | (12 | ) | |||||||||||||||||||||||||||
Add: Deferred tax liabilities (d) |
2,533 | 2,531 | 2,518 | 2,609 | 2,547 | | (1 | ) | 2,547 | 2,369 | 8 | |||||||||||||||||||||||||||||
Total tangible common equity |
$ | 105,976 | $ | 98,687 | $ | 89,892 | $ | 85,588 | $ | 88,880 | 7 | 19 | $ | 95,101 | $ | 79,638 | 19 | |||||||||||||||||||||||
INTANGIBLE ASSETS (PERIOD-END) |
||||||||||||||||||||||||||||||||||||||||
Goodwill |
$ | 48,357 | $ | 48,334 | $ | 48,288 | $ | 48,201 | $ | 48,027 | | 1 | ||||||||||||||||||||||||||||
Mortgage servicing rights |
15,531 | 13,663 | 14,600 | 10,634 | 9,403 | 14 | 65 | |||||||||||||||||||||||||||||||||
Purchased credit card relationships |
1,246 | 1,342 | 1,431 | 1,528 | 1,649 | (7 | ) | (24 | ) | |||||||||||||||||||||||||||||||
All other intangibles |
3,375 | 3,520 | 3,651 | 3,821 | 3,932 | (4 | ) | (14 | ) | |||||||||||||||||||||||||||||||
Total intangibles |
$ | 68,509 | $ | 66,859 | $ | 67,970 | $ | 64,184 | $ | 63,011 | 2 | 9 | ||||||||||||||||||||||||||||
DEPOSITS (PERIOD-END) |
||||||||||||||||||||||||||||||||||||||||
U.S. offices: |
||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing |
$ | 204,003 | $ | 195,561 | $ | 192,247 | $ | 197,027 | $ | 210,899 | 4 | (3 | ) | |||||||||||||||||||||||||||
Interest-bearing |
439,104 | 415,122 | 433,862 | 463,913 | 511,077 | 6 | (14 | ) | ||||||||||||||||||||||||||||||||
Non-U.S. offices: |
||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing |
8,082 | 9,390 | 8,291 | 7,073 | 7,697 | (14 | ) | 5 | ||||||||||||||||||||||||||||||||
Interest-bearing |
287,178 | 247,904 | 232,077 | 238,956 | 279,604 | 16 | 3 | |||||||||||||||||||||||||||||||||
Total deposits |
$ | 938,367 | $ | 867,977 | $ | 866,477 | $ | 906,969 | $ | 1,009,277 | 8 | (7 | ) | |||||||||||||||||||||||||||
(a) | The Federal Reserve 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 capital and leverage requirements with respect to the Bear Stearns risk-weighted assets and other exposures acquired. The relief ended September 30, 2009. Commencing in the second quarter of 2009, the Firm no longer adjusted its risk-based capital ratios to take into account the relief in the calculation of its risk-based capital ratios. | |
(b) | Tier 1 common is calculated as Tier 1 capital less qualifying perpetual preferred stock, qualifying trust preferred securities and qualifying minority interest in subsidiaries. The Firm uses the Tier 1 common capital ratio, a non-GAAP financial measure, to assess and compare the quality and composition of the Firms capital with the capital of other financial services companies. | |
(c) | Tangible common equity (TCE) represents common stockholders equity (i.e., total stockholders equity less preferred stock) less identifiable intangible assets (other than MSRs) and goodwill, net of related deferred tax liabilities. The Firm views TCE, a non-GAAP financial measure, as a meaningful measure of capital quality. | |
(d) | Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in non-taxable transactions, which are netted with goodwill and other intangibles when calculating tangible common equity. | |
(e) | Estimated. |
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QUARTERLY TRENDS | FULL YEAR | |||||||||||||||||||||||||||||||||||||||
4Q09 Change | 2009 Change | |||||||||||||||||||||||||||||||||||||||
4Q09 | 3Q09 | 2Q09 | 1Q09 | 4Q08 | 3Q09 | 4Q08 | 2009 | 2008 | 2008 | |||||||||||||||||||||||||||||||
EARNINGS PER SHARE DATA (a) |
||||||||||||||||||||||||||||||||||||||||
Basic earnings per share: |
||||||||||||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain |
$ | 3,278 | $ | 3,512 | $ | 2,721 | $ | 2,141 | $ | (623 | ) | (7 | )% | NM | % | $ | 11,652 | $ | 3,699 | 215 | % | |||||||||||||||||||
Extraordinary gain |
| 76 | | | 1,325 | NM | NM | 76 | 1,906 | (96 | ) | |||||||||||||||||||||||||||||
Net income |
3,278 | 3,588 | 2,721 | 2,141 | 702 | (9 | ) | 367 | 11,728 | 5,605 | 109 | |||||||||||||||||||||||||||||
Less: Preferred stock dividends |
162 | 163 | 473 | 529 | 423 | (1 | ) | (62 | ) | 1,327 | 674 | 97 | ||||||||||||||||||||||||||||
Less: Accelerated amortization from redemption of preferred
stock issued to the U.S. Treasury (b) |
| | 1,112 | | | | | 1,112 | | NM | ||||||||||||||||||||||||||||||
Net income applicable to common equity |
3,116 | 3,425 | 1,136 | 1,612 | 279 | (9 | ) | NM | 9,289 | 4,931 | 88 | |||||||||||||||||||||||||||||
Less: Dividends and undistributed earnings allocated to
participating securities |
164 | 185 | 64 | 93 | 47 | (11 | ) | 249 | 515 | 189 | 172 | |||||||||||||||||||||||||||||
Net income applicable to common stockholders (c) |
$ | 2,952 | $ | 3,240 | $ | 1,072 | $ | 1,519 | $ | 232 | (9 | ) | NM | $ | 8,774 | $ | 4,742 | 85 | ||||||||||||||||||||||
Total weighted-average basic shares outstanding |
3,946.1 | 3,937.9 | 3,811.5 | 3,755.7 | 3,737.5 | | 6 | 3,862.8 | 3,501.1 | 10 | ||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain per share (b) |
$ | 0.75 | $ | 0.80 | $ | 0.28 | $ | 0.40 | $ | (0.29 | ) | (6 | ) | NM | $ | 2.25 | $ | 0.81 | 178 | |||||||||||||||||||||
Extraordinary gain per share |
| 0.02 | | | 0.35 | NM | NM | 0.02 | 0.54 | (96 | ) | |||||||||||||||||||||||||||||
Net income per share (b) |
$ | 0.75 | $ | 0.82 | $ | 0.28 | $ | 0.40 | $ | 0.06 | (9 | ) | NM | $ | 2.27 | $ | 1.35 | 68 | ||||||||||||||||||||||
Diluted earnings per share: |
||||||||||||||||||||||||||||||||||||||||
Net income applicable to common stockholders (c) |
$ | 2,952 | $ | 3,240 | $ | 1,072 | $ | 1,519 | $ | 232 | (9 | ) | NM | $ | 8,774 | $ | 4,742 | 85 | ||||||||||||||||||||||
Total weighted-average basic shares outstanding |
3,946.1 | 3,937.9 | 3,811.5 | 3,755.7 | 3,737.5 | | 6 | 3,862.8 | 3,501.1 | 10 | ||||||||||||||||||||||||||||||
Add: Employee stock options and SARs (d) |
28.0 | 24.1 | 12.6 | 3.0 | | (g) | 16 | NM | 16.9 | 20.7 | (18 | ) | ||||||||||||||||||||||||||||
Total weighted-average diluted shares outstanding (e) |
3,974.1 | 3,962.0 | 3,824.1 | 3,758.7 | 3,737.5 | | 6 | 3,879.7 | 3,521.8 | 10 | ||||||||||||||||||||||||||||||
Income/(loss) before extraordinary gain per share (b) |
$ | 0.74 | $ | 0.80 | $ | 0.28 | $ | 0.40 | $ | (0.29 | ) | (8 | ) | NM | $ | 2.24 | $ | 0.81 | 177 | |||||||||||||||||||||
Extraordinary gain per share |
| 0.02 | | | 0.35 | NM | NM | 0.02 | 0.54 | (96 | ) | |||||||||||||||||||||||||||||
Net income per share (b) |
$ | 0.74 | $ | 0.82 | $ | 0.28 | $ | 0.40 | $ | 0.06 | (10 | ) | NM | $ | 2.26 | $ | 1.35 | 67 | ||||||||||||||||||||||
COMMON SHARES OUTSTANDING |
||||||||||||||||||||||||||||||||||||||||
Common shares outstanding at period end (f) |
3,942.0 | 3,938.7 | 3,924.1 | 3,757.7 | 3,732.8 | | 6 | 3,942.0 | 3,732.8 | 6 | ||||||||||||||||||||||||||||||
Cash dividends declared per share |
$ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.38 | | (87 | ) | $ | 0.20 | $ | 1.52 | (87 | ) | |||||||||||||||||||||
Book value per share |
39.88 | 39.12 | 37.36 | 36.78 | 36.15 | 2 | 10 | 39.88 | 36.15 | 10 | ||||||||||||||||||||||||||||||
Dividend payout |
7 | % | 6 | % | 14 | % | 15 | % | 532 | % | 9 | % | 114 | % | ||||||||||||||||||||||||||
SHARE PRICE |
||||||||||||||||||||||||||||||||||||||||
High |
$ | 47.47 | $ | 46.50 | $ | 38.94 | $ | 31.64 | $ | 50.63 | 2 | (6 | ) | $ | 47.47 | $ | 50.63 | (6 | ) | |||||||||||||||||||||
Low |
40.04 | 31.59 | 25.29 | 14.96 | 19.69 | 27 | 103 | 14.96 | 19.69 | (24 | ) | |||||||||||||||||||||||||||||
Close |
41.67 | 43.82 | 34.11 | 26.58 | 31.53 | (5 | ) | 32 | 41.67 | 31.53 | 32 | |||||||||||||||||||||||||||||
Market capitalization |
164,261 | 172,596 | 133,852 | 99,881 | 117,695 | (5 | ) | 40 | 164,261 | 117,695 | 40 | |||||||||||||||||||||||||||||
STOCK REPURCHASE PROGRAM |
||||||||||||||||||||||||||||||||||||||||
Common shares repurchased |
| | | | | | | | | |
(a) | Effective January 1, 2009, the Firm implemented new FASB guidance for participating securities, which clarifies that unvested stock-based compensation awards containing nonforfeitable rights to dividends or dividend equivalents (collectively, dividends) are participating securities and should be included in the EPS calculation using the two-class method. JPMorgan Chase grants restricted stock and RSUs to certain employees under its stock-based compensation programs, which entitle the recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities. Under the two-class method, all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities, based on their respective rights to receive dividends. EPS data for the prior periods were revised as required by the guidance. | |
(b) | The calculation of second quarter and full year 2009 earnings per share includes a one-time non-cash reduction of $1.1 billion, or $0.27 per share, resulting from the redemption of Series K preferred stock issued to the U.S. Treasury. | |
(c) | Net income applicable to common stockholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options, SARs and warrants to dilutive shares outstanding, which alters the ratio used to allocate earnings to common stockholders and participating securities for purposes of calculating diluted EPS. | |
(d) | Excluded from the computation of diluted EPS (due to the antidilutive effect) were options issued under employee benefit plans and (subsequent to October 28, 2008) the warrant issued under the U.S. Treasurys Capital Purchase Program to purchase shares of the Firms common stock totaling 147 million, 241 million, 315 million, 363 million, and 353 million, for the quarters ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, and December 31, 2008, respectively, and 266 million and 209 million for the full year ended December 31, 2009 and 2008, respectively. | |
(e) | Participating securities were included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the calculation using the treasury-stock method. | |
(f) | On June 5, 2009, the Firm issued $5.8 billion, or 163 million shares, of its common stock at $35.25 per share; and on September 30, 2008, the Firm issued $11.5 billion, or 284 million shares, of its common stock at $40.50 per share. | |
(g) | Common equivalent shares have been excluded from the computation of diluted loss per share for the fourth quarter of 2008, as the effect would have been antidilutive. |
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Page 37
a) | Operating revenue comprises: |
| all gross income earned from servicing third-party mortgage loans including stated service fees, excess service fees, late fees and other ancillary fees. | ||
| modeled servicing portfolio runoff (or time decay). |
b) | Risk management comprises: |
| 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. | ||
| 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. |
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