UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 25, 2010
JPMORGAN CHASE & CO.
(Exact name of registrant as specified in its charter)
| Delaware | No. 001-05805 | No. 13-2624428 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 270 Park Avenue, New York, New York | 10017 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 270-6000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure |
On February 25, 2010, JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) held an Investor Day during which it provided information to investors about the Firm and its various lines of business.
Exhibit 99.1 is a copy of the slides furnished at, and posted on the Firm’s website in connection with, the presentation. The slides are being furnished pursuant to Item 7.01, and the information contained therein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities under that Section. Furthermore, the information contained in Exhibit 99.1 shall not be deemed to be incorporated by reference into the filings of the Firm under the Securities Act of 1933.
The information in, or furnished as an Exhibit to, this Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause JPMorgan Chase’s results to differ materially from those described in the forward-looking statements can be found in JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 2009, which has been filed with the Securities and Exchange Commission and is available on JPMorgan Chase’s website (www.jpmorganchase.com) and the Securities and Exchange Commission’s website (www.sec.gov).
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
| Exhibit No. |
Description | |
| 99.1 | JPMorgan Chase & Co. Investor Day Presentation Slides. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| JPMORGAN CHASE & CO. | ||||||
| (Registrant) | ||||||
| Date: February 26, 2010 | By: | /s/ Anthony J. Horan | ||||
| Anthony J. Horan | ||||||
| Corporate Secretary | ||||||
 Exhibit 99.1 |
 Forward looking statements This presentation contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are
based upon the current beliefs and expectations of JPMorgan Chase’s
management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that
could cause JPMorgan Chase’s actual results to differ materially from
those described in the forward-looking statements can be found in JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31,
2009, which has been filed with the Securities and Exchange Commission and
is available on JPMorgan Chase’s website (www.jpmorganchase.com)
and on the Securities and Exchange Commission’s website (www.sec.gov). JPMorgan Chase does not undertake to update the forward-looking statements to
reflect the impact of circumstances or events that may arise after the date
of the forward-looking statements. The 2004 financial information
provided in this presentation is presented on a pro forma combined basis, which includes purchase accounting adjustments made in connection with the merger of
Bank One Corporation with and into JPMorgan Chase. The 2004 pro forma
combined historical results represent how the financial information of
JPMorgan Chase and Bank One may have appeared on a combined basis
had the two companies been merged as of January 1, 2004. Additional information,
including a reconciliation from pro forma results to GAAP, can be found in
the Current Report on Form 8-K/A furnished to the Securities and
Exchange Commission on July 20, 2005. Disclaimer 0 |
 2010
Investor Day agenda Presentation Speaker Start time Opening remarks and firm overview Mike Cavanagh 10:00 AM Investment Bank Jes Staley 10:30 AM Treasury & Securities Services Heidi Miller 11:30 AM Asset Management Mary Erdoes 12:00 PM Lunch 12:30 PM Commercial Banking Todd Maclin 1:30 PM Card Services Gordon Smith 2:00 PM Break 3:00 PM Retail Financial Services Charlie Scharf 3:15 PM Closing remarks and Q&A Jamie Dimon 4:15 PM |
 February 25, 2010 F I R M O V E R V I E W Mike Cavanagh, Chief Financial Officer |
 JPM’s fundamentals remain extremely strong Each standalone business has a top 1, 2 or 3 position Unparalleled client relationships in 100+ countries Culture of innovation; new products and programs launched during crisis (e.g., Sapphire, Ultimate Rewards, Deposit-Friendly ATMs, Secondary Private Equity
Fund) Robust technology infrastructure to serve clients Significant earnings power; never experienced quarterly loss through crisis Continued investment across LOBs driving organic growth Margin improvement across all businesses since 2004 JPM / BankOne merger to onset of financial crisis Consistent record of operating efficiency and delivering merger saves Businesses stronger together than apart; additional revenue streams generated
Tier 1 Capital of $133B, resulting in 11.1% Tier 1 Capital ratio and 8.8% Tier 1 Common ratio¹; never breached old management target of 8.0 - 8.5% Tier 1 Capital ratio during financial crisis High quality capital and very high level of reserves ($32.5B)¹ Strong funding and liquidity profile: $900B deposits, 1.5x loan coverage¹
Risk management culture embedded in Firm’s DNA Benefits from diversification – funding, capital, lower volatility Strong and stable management team Significant combined years of experience at Firm Deep bench of talent; thoughtful succession planning ¹ As of 12/31/09 1 Excellent Franchises Significant Earnings Power Fortress Balance Sheet Strong Management Team |
 Excellent franchises position JPM well for the future #1 ranking in Global IB Fees with 9.2% market share¹ Leadership across all capital raising categories² Ranked #1 for FY2009 in: Debt, Equity & Equity Related, Equity & Equity-related, Debt, Long-term Debt and Loan Syndications² Strong international franchise with #1 fee rankings in EMEA and Latin America¹ Achieved leadership positions in markets businesses with estimated 12% share of industry³ #3 in deposit market share 4 #3 in Branch network 5 #3 in Mortgage Servicing 6 #3 in Mortgage Originations 6 #3 in Home Equity Originations 7 9.2% market share in Mortgage Originations 6 #1 in Auto Finance 8 20% market share of General Purpose Credit Card outstandings 9 17.3% market share of sales volume 9 #1 co-brand card issuer in the U.S.³ #1 merchant acquirer in e-commerce payment processing³ Treasury Services #1 in ACH originations 12 #1 in US Dollar Clearing with > 20% in market share 12 #1 in Purchasing Cards 13 #1 in Liquidity 12 Worldwide Securities Services #2 in global assets under custody 5 #2 Global Fund Services for registered investment pools 5 #1 Depository Receipts (by market capitalization)³
#1 global money market fund manager 14 #2 US-based global hedge fund manager 15 #1 global provider for UHNW clients 16 #4 US mutual fund family 17 Gold Standard Award for Funds Management (UK); only firm ever to win seven Gold Standard awards 18 Asset Management Company of the Year for Asia, Hong Kong 19 Best overall performing foreign asset manager operating in China 20 #1 Private Bank in Asia 21 Maintained middle market top 3 leadership position nationally in market penetration and lead share 10 #1 in lead share and market penetration in 3 of the top 4 MSAs 10 Top 2 leading provider of Treasury Services products and international services to middle market clients 10 Top 3 asset-based lending lead arranger in the U.S.² #1 multi-family lender in the U.S. 11 Note: Please see footnotes on slide 25 2 Investment Bank Retail Financial Services Card Services Commercial Banking Treasury & Securities Services Asset Management |
 Significant earnings power helps to counter the impact of the economic environment
¹ IB revenue includes annual payment from TSS, which is offset in Corporate Note: 2004 data is presented on an unaudited pro forma combined basis that represents how
the financial information of JPMorgan Chase & Co. and Bank One Corporation may have appeared had the two companies been merged for the full year. Pretax preprovision profit excludes the impact of merger costs and litigation reserve charge 3 Pretax pre-provision profit ($ in billions) 2004 2009 2004-2009 CAGR Investment Bank 1 $4.8 $12.7 22% Retail Financial Services 6.0 15.9 22% Card Services 9.6 14.9 9% Commercial Banking 1.5 3.5 19% Treasury & Securities Services 0.5 2.1 30% Asset Management 1.4 2.5 13% Corporate 1 (2.0) 4.7 NM Total Pretax Pre-Provision $21.8 $56.3 21% Adjustments for WaMu/BSC & Normalizing 2009 (IB/CIO) - 15.0 +/- - Adjusted Pretax Pre-Provision $21.8 $41.3 14% |
 Note: 2004 data is presented on an unaudited pro forma combined basis that represents how
the financial information of JPMorgan Chase & Co. and Bank One Corporation may have appeared had the two companies been merged for the full year 1 Represents EMEA and Asia region revenue 2 Excludes approximately 13 million credit card accounts acquired in the WaMu
transaction Earnings improvement achieved through continual investment in
growth opportunities Good underlying momentum in core business drivers
propelling growth across businesses 4 2004 2009 2008-2009 % O/(U) 2004-2009 CAGR IB Fees ($mm) $3,671 $7,169 21% 14% Advisory ($mm) 939 1,867 (7)% 15% Equity and Debt Underwriting ($mm) 2,732 5,302 36% 14% Non-US IB Fees($mm) 1,073 2,471 31% 18% Equity Markets ($mm) 1,704 4,393 22% 21% Investment Bank International Revenue ($mm) 1 5,985 12,953 33% 17% Retail Banking Average Deposits $171.8 $340.8 39% 15% # of ATMs 6,650 15,406 6% 18% # of Branches 2,508 5,154 (6)% 15% # of Branch Bankers & Sales Specialists 8,388 23,903 11% 23% Retail Financial Services Credit Cards Originated in Branches 408,794 1,752,895 3% 34% Average Outstandings $128.8 $172.4 6% 6% Charge Volume $282.7 $328.3 (11)% 3% Card Services # of Net new accts opened (000's) 9,697 10,226 (31)% 2 1% Growth drivers ($ in billions) |
 Note: 2004 data is presented on an unaudited pro forma combined basis that represents how
the financial information of JPMorgan Chase & Co. and Bank One Corporation may have appeared had the two companies been merged for the full year 1 Represents total revenue related to investment banking products sold to Commercial
Banking clients. CAGR is calculated for the period 2005-2009 2 Includes deposits and deposits swept to on-balance sheet liabilities 3 Reflects the transfer in 2007 of held-for-investment prime mortgage loans from AM
to Corporate within the Corporate/Private Equity segment Earnings improvement
achieved through continual investment in growth opportunities Good underlying
momentum in core business drivers propelling growth across businesses 5
Growth drivers ($ in billions) 2004 2009 2008-2009 % O/(U) 2004-2009 CAGR IB Revenue, Gross 1 ($mm) NA $1,163 20% 20% Average Liability Balances 2 62.6 113.2 10% 13% Commercial Banking Average Loans 46.3 106.7 30% 18% Average Liability Balances 2 $137.1 $248.1 (11)% 13% Average USD Liability Balances 2 89.2 117.5 (22)% 6% Average Foreign Liability Balances 2 47.9 130.6 1% 22% Global Assets under Custody ($T) 9.3 14.9 13% 10% Assets under Management $791 $1,249 10% 10% U.S. / Canada 554 837 5% 9% International 237 412 23% 12% Average Loans 3 25.1 35.0 (8)% 7% Asset Management Average Deposits 38.6 77.0 10% 15% Treasury & Securities Services |
 Significant growth of collaboration between businesses Surpassed $1B revenue target for IB revenue generated by CB clients in FY2009 IB client referrals to Private Bank/Private Wealth Management represented estimated total client net worth of $22B IB and CB referrals resulted in $6.7B or 29% of 2009 Institutional Management/Retirement Planning Service new AUS mandates Treasury & Securities Services Investment Bank Commercial Banking $0.7B, ’04-’09 CAGR of 16% 1 Shared revenue $1.2B, ’05-’09 CAGR of 21% 2 $2.6B, ’04-’09 CAGR of 6% 3 Our businesses operate more strongly together than apart Wholesale business synergies 1 Represents revenue from FX products being sold to TSS clients 2 Represents gross IB revenue to CB clients; includes advisory, ECM and DCM products
fees 3 Represents revenue from TS products being sold to CB clients Great opportunities remain for further collaboration between businesses 6 Significant collaboration between IB/CB/TSS (FY 2009) |
 Our
businesses operate more strongly together than apart Benefits of retail branch
network to the rest of the Firm Business Banking loan originations of
$2.3B Home lending products sold in branches of $23.1B Investment sales in branches of $21.8B CB clients completed 25 million retail channel transactions WaMu acquisition drives significant future growth across the Firm — RFS, Card, CB and AM 69% 69% 48% 38% 27% JPM Consumer Business Banking Private Wealth Management Commercial Banking Private Banking ~1.8mm credit cards originated in the branches ~8.9mm retail households have a credit card 7 Current branch footprint Customers who used a branch teller in 4Q09 Asset Management (FY2009) Commercial Banking (FY2009) Card Services (FY2009) Retail Financial Services (FY2009) |
 JPM
has maintained a fortress balance sheet throughout the crisis 7% 8% 9% 10% 11% 12% Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Tier 1 Capital Ratio Old Target Tier 1: 8.0 -8.5% 12/31/07 12/31/08 12/31/09 Tier 1 Common $73.7 $86.9 $105.3 Risk Weighted Assets $1,052 $1,245 $1,198 Tier 1 Capital Ratio 8.4% 10.9% 11.1% Tier 1 Common Ratio 7.0% 7.0% 8.8% Tier 1 Leverage Ratio 6.0% 6.9% 6.9% Never breached old management targets of 8.0% to 8.5% Tier 1 even without TARP and
Bear Stearns RWA relief 1 See note D on slide 25 8 Capital position summary 1 – Basel I ($ in billions) Capital position excluding government assistance (TARP and Bear Stearns Relief)
|
 Fortress balance sheet extends to balance sheet funding Very high capital levels $900B+ of customer deposits covers loans 1.5x IB markets businesses funded with long-term debt to meet cash needs Liquid investment portfolio and large available collateral pools provide significant contingency funding sources Limited reliance on short-term, unsecured funding All wholesale funding financing executed centrally to manage maturity profile, etc. Funds transfer pricing process is controlled centrally to ensure proper and consistent arms-length crediting/charging for liquidity across all LOBs 9 Strong Funding and Liquidity Profile Robust Central Treasury Practices |
 JPM
is positioned well for any environment, but execution against key challenges will be critical Select challenges we face: Continued high levels of credit costs in 2010 (at least) Economic conditions including high levels of uncertainty Legislative and regulatory changes for financial services Heightened competition from domestic and foreign banks and non-banks Delivering against and beyond growth plans 10 |
 Refinement of standalone business capital requirements validates strong firmwide capital position 1 Pro forma Year-end 2009 updated for elements of the new methodology 2 Calculated based on Tier 1 Common Standalone capital levels, unique to each LOB, refined to incorporate Tier 1 Common expectations Standalone capital levels based on consideration of a number of different factors including: Comparison to peer capital levels by business Level of loan loss reserves LOB earnings power and ability to generate capital over time Economic risk capital Strong capital position today will be further strengthened by significant earnings and need for lower
reserve levels over time 11 New vs. current LOB equity ($ in billions) Current 1 New O/(U) Investment Bank $33.0 $40.0 $7.0 Retail Financial Svcs. 25.0 28.0 3.0 Card Services 15.0 15.0 - Commercial Banking 8.0 8.0 - Treasury & Sec. Svcs. 5.0 6.5 1.5 Asset Management 7.0 6.5 (0.5) Corporate / Other NA 49.0 - Total LOB Common Equity NA $153.0 - Excess Common Equity 2 NA 4.2 - Total Firm Common Equity $157.2 $157.2 - |
 Credit performance improvement is a key driver to improved earnings outlook 3.04% 1.00% 1.00% 2009 Prior Expectations 2009 prior and new expectations for net charge-off rates New Expectations IB 1.02% 0.50% 0.50% CB 8.45% 5.00% 4.50% +/ Card (Chase) 4.32% 0.30% Home Equity 3.05% 0.08% 0.10% +/ Prime Mortgage 0.25-0.35% +/- Reserve levels will adjust as underlying credit improves and certain portfolios run off 1 See note C on slide 25 2 Represents the establishment of an allowance for loan losses for the receivables of credit card securitization trusts being consolidated due to the implementation of FAS
166/167 Reserves—pro forma 4Q09 for credit card trust consolidation 12 Pro forma 12/31/09 ($ in billions) Allowance for Loan Losses 1 Loan Loss Coverage Ratio 1 Wholesale $7.1 3.6% Consumer 31.5 6.6% Firmwide $38.6 5.5% Memo: Credit card consolidation 2 (included in Consumer) $7.0 |
 Tremendous growth opportunities position us well for the future Open 120+ new branches and hire an additional 2,100 personal bankers and 450 investment sales reps in 2010 Expand Small Business; hire 300+ additional small business bankers, adding to the existing 1,900 small business bankers Maximize value of existing Chase and former WaMu branches Increase penetration of products through cross-sell Leverage heritage WaMu footprint for expanded Small Business, Middle Market and Private Banking Capitalizing on our retail platform Repositioning our Card business New Card products to better serve our growing share of the affluent segment and further increase share of spend market Use Ultimate Rewards and Blueprint to improve engagement with Chase products Accelerating international wholesale businesses Expand reach of Global Corporate Bank Broaden network coverage and TS product capabilities across regions Focused on 3,000 shared IB/TS Multinational and International Large Corporate Clients Continued expansion of IB Emerging Markets franchise (e.g., BRIC) IM growth in Emerging Markets (e.g., China, India, Korea, Brazil); further capitalize on cross- border investment flows Commodities expansion (including acquired RBS Sempra assets) International Equities and Prime Services expansion (e.g., Prime Brokerage EMEA development, Asia build-out) Mid-Corporate and Middle Market international revenue expansion 13 |
 Performance targets reflect LOB equity, normalized credit and growth Performance targets (through the cycle) We expect to deliver strong returns across all businesses 1 ROE at Performance Target calculated using target metric and Steady State assumptions.
Steady State reflects fully normalized credit and the completion of the run-off in the loan portfolios 14 Performance Targets Line of Business Investment Bank ROE 20% 17%+/- 17%+/- Retail Financial Services ROE 28-30% 30% +/- 30% +/- Card Services ROE 23-25% 20% +/- 20% +/- Commercial Banking Overhead 45% < 40% ROE - 20%+/- 20%+/- Treasury & Securities Services Pretax margin 35% 35% +/- 30% +/- 1 Asset Management Pretax margin 35% 35% +/- 35% +/- 1 Target Metric New Targets ROE at Targets 1 Old Targets |
 JPM Significant earnings upside if the Firm reaches performance targets Steady State reflects normalized credit and stable loan portfolios Earnings growth will result in significant capital generation Excess capital provides flexibility for dividend increases, share buybacks, new
investments & acquisitions Net income by LOB ($ in billions) $22 - $24 $11.7 ¹ Net income projections based on performance target and steady state assumptions;
additional assumptions were made for TSS and AM ROE targets including Steady
State revenue and tax rate 15 $6.9 $0.1 ($2.2) $1.3 $1.2 $1.4 $3.0 IB RFS Card CB T&SS AM Corporate 2009 Net Income Net Income at Performance Targets¹
|
 Agenda Page 16 Appendix 16 |
 Investment Bank
Leadership positions #1 ranking in Global IB Fees with 9.2% market share 4 Leadership across all capital raising categories 5 Ranked #1 for FY2009 in: Debt, Equity & Equity Related, Equity & Equity-related, Debt, Long-term Debt and Loan Syndications 5 Strong international franchise with #1 fee rankings in EMEA and Latin America 4 Achieved leadership positions in markets businesses with estimated 12% share of industry 6 Growth initiatives Build-out Commodities platform Continue international growth through base business and Global Corporate Bank, particularly in Emerging Markets $1B investment in technology to build next generation platforms Outlook Expect Fixed Income and Equity Markets revenue to normalize over time as conditions stabilize $ in millions 1 Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage ratio and net charge-off rate 2 Calculated based on average equity 3 Average Trading and Credit Portfolio VAR at 99% confidence interval 4 Source: Dealogic 5 Source: Thomson Reuters, FY2009 6 Source: Based on internal JPM estimates 17 2007 2008 2009 Revenue $18,291 $12,335 $28,109 IB Fees 6,616 5,907 7,169 Fixed Income Markets 6,339 1,957 17,564 Equity Markets 3,903 3,611 4,393 Credit Portfolio 1,433 860 (1,017) Expense 13,074 13,844 15,401 Credit Costs 654 2,015 2,279 Net Income $3,139 ($1,175) $6,899 Key Statistics ($B) Overhead Ratio 71% 112% 55% Comp/Revenue 44% 62% 33% EOP Loans $89.8 $85.0 $49.1 Allow. for Loan Losses $1.3 $3.4 $3.8 Net Charge-off Rate 1 0.06% 0.14% 3.04% ALL / EOP Loans 1 1.97% 4.83% 8.25% ROE 2 15% (5%) 21% VAR ($mm) 3 $106 $202 $248 EOP Equity $21.0 $33.0 $33.0 |
 Retail Financial Services – Drivers 1 Includes purchased credit-impaired loans acquired as part of the WaMu
transaction 2 Does not include held-for-sale loans Retail Banking ($ in billions) Consumer Lending ($ in billions) Total Consumer Lending originations of $181.0B: Mortgage loan originations down 11% YoY Auto originations up 22% YoY: – YoY increase driven by market share gains in Prime segments and new manufacturing relationships 3rd party mortgage loans serviced down 8% YoY Average deposits of $340.8B up 39% YoY YoY increase largely due to the impact of the WaMu transaction Deposit margin expansion reflects disciplined pricing strategy and a portfolio shift to wider spread deposit products Branch production statistics: Checking accounts up 5% YoY Credit card sales up 3% YoY Mortgage originations up 84% YoY Investment sales up 23% YoY 2007 2008 2009 Key Statistics Average Deposits $206.7 $244.6 $340.8 Deposit Margin 2.72% 2.89% 2.96% Checking Accounts (mm) 10.8 24.5 25.7 # of Branches 3,152 5,474 5,154 # of ATMs 9,186 14,568 15,406 Investment Sales ($mm) $18,360 $17,640 $21,784 18 2007 2008 2009 Credit Metrics NCO Rate (excl. credit-impaired) 0.67% 2.08% 3.68% ALL/Loans (excl. credit-impaired) 1.24% 3.16% 5.04% Key Statistics Home Equity Originations $48.3 $16.3 $2.4 Avg Home Equity Loans Owned 1 $90.4 $107.0 $135.9 Mortgage Loan Originations $159.4 $169.0 $150.7 Avg Mortgage Loans Owned 1,2 $36.2 $77.4 $142.2 3rd Party Mtg Loans Svc'd (EOP) $615 $1,173 $1,082 Auto Originations $21.3 $19.4 $23.7 Avg Auto Loans $41.1 $43.8 $43.6 |
 Retail Financial Services 1 Calculated based on average equity 2 Source: SNL Corporation; market share data as of June 2009, updated for subsequent acquisitions for all banks through Sept 2009; includes deposits in domestic offices (50 states and D.C.), Puerto Rico and U.S. Territories only and
non-retail branches are not included 3 Source: 4Q09 Company reports 4 Source: Inside Mortgage Finance, 4Q09 5 Source: National Mortgage News, 3Q09 6 Source: Autocount (including captives), YTD December 2009 Leadership positions #3 in deposit market share 2 #3 in Branch network 3 #3 in Mortgage Servicing 4 Growth initiatives Build-out WaMu footprint Create a consistent customer experience Build and train sales force Expand product breadth and service capabilities (i.e., investments sales, small
business lending) Ramping up new build capacity; 120+ new builds in 2010 Continue to focus on attractive segments (e.g., increase share of affluent investments,
small business lending) Drive customer engagement through products and service innovation (e.g., mobile
banking, credit and debit rewards) Outlook NSF/OD policy changes estimated to reduce annualized net income by $500mm +/-
Home Lending portfolio expected to decline by 10-15%, reducing net interest
income by $1B +/- Credit environment remains uncertain Signs of stability improvement Over next several quarters, quarterly losses could reach: – $1.4B for Home Equity – $600mm for Prime Mortgage – $500mm for Subprime Mortgage Continued elevation in credit-related expense Expense remains modestly above 2009 levels, reflecting investments in branch new builds
and sales force hires $ in millions #3 in Mortgage Originations 4 #3 in Home Equity Originations 5 9.2% market share in Mortgage Originations 4 #1 in Auto Finance 6 19 2007 2008 2009 Retail Financial Services Net Income $2,925 $880 $97 ROE 1 18% 5% 0% EOP Equity ($B) $16.0 $25.0 $25.0 Retail Banking Net Interest Income 6,193 7,659 10,781 Noninterest Revenue 3,763 4,951 7,169 Revenue $9,956 $12,610 $17,950 Expense 6,166 7,232 10,357 Credit Costs 79 449 1,142 Net Income $2,245 $2,982 $3,903 Consumer Lending Net Interest Income 4,333 6,506 9,711 Noninterest Revenue 3,016 4,404 5,031 Revenue $7,349 $10,910 $14,742 Expense 3,739 4,845 6,391 Credit Costs 2,531 9,456 14,798 Net Income $680 ($2,102) ($3,806) |
 Card
Services 1 Calculated based on average equity 2 Excludes WaMu 3 Source: Based on internal JPM estimates $ in millions Leadership positions 20% market share of General Purpose Credit Card outstandings 2 17.3% market share of sales volume 2 #1 co-brand card issuer in the U.S. 3 Growth initiatives Continue to focus on increasing customer engagement Capture benefits from recent product launches Increase penetration of Retail channel including newly converted WaMu branches Establish Ultimate Rewards as a core relationship tool Leverage co-brand partnerships to enhance the brand and drive engagement of
affluent customers Outlook Chase losses could approach 11% in 1Q10, including the adverse timing effect
of payment holiday of approx. 60bps, with improving trend in 2Q10; 2H10
dependent on environment WaMu losses could approach 24% +/- over the next several quarters Anticipate net income reduction from legislative changes of $500-$750mm Estimated full year average outstandings expected to decline 10-15% in 2010
due to run-off of WaMu portfolio and lower yielding promotional balances
Expect $1B +/- net loss in 1Q10 with improving trend in 2Q10, before potential reserve actions; 2H10 dependent on the environment and reserve actions Continue to invest in the business 20 2007 2008 2009 Revenue $15,235 $16,474 $20,304 Expense 4,914 5,140 5,381 Credit Costs 5,711 10,059 18,462 Net Income $2,919 $780 ($2,225) Key Statistics Incl WaMu ($B) ROO (Pretax) 3.09% 0.78% (2.05)% ROE 1 21% 5% (15)% EOP Equity $14.1 $15.0 $15.0 Key Statistics Excl WaMu ($B) Avg Outstandings $149.3 $155.9 $148.8 EOP Outstandings $157.1 $162.1 $143.8 Charge Volume $354.6 $361.1 $312.2 Net Accts Opened (mm) 16.4 14.4 10.2 Managed Margin 8.16% 8.16% 8.97% Net Charge-Off Rate 3.68% 4.92% 8.45% 30+ Day Delinquency Rate 3.48% 4.36% 5.52% #1 merchant acquirer in e-commerce payment processing 3 |
 Leadership positions Maintained middle market top 3 leadership position nationally in market penetration and lead share 4 #1 in lead share and market penetration in 3 of the top 4 MSAs 4 Top 2 leading provider of Treasury Services products and international services to middle market clients 4 Top 3 asset-based lending lead arranger in the U.S. 5 #1 multi-family lender in the U.S. 6 Growth initiatives Build out Middle Market business in the expanded WaMu branch network and grow sales force Targeting growth in distinct geographies within California, Florida, Georgia, Oregon and Washington Continue to grow Mid-Corporate segment: focus on prospect conversions, expand international revenue and capitalize on opportunities to cross-sell IB products Invest in commercial real estate recovery: prepare business to capitalize on opportunities Outlook Strong reserves, but credit expected to remain at elevated levels 1 Includes deposits and deposits swept to on-balance sheet liabilities 2 Loans held-for-sale and loans at fair value were excluded when calculating the
loan loss coverage ratio and net charge-off rate 3 Calculated based on average equity 4 Source: Greenwich Market Study, FY2009 5 Source: Thomson Reuters, FY2009 6 Source: FDIC as of September 30, 2009 Commercial Banking $ in millions 21 2007 2008 2009 Revenue $4,103 $4,777 $5,720 Middle Market 2,689 2,939 3,055 Comm. Term Lending - 243 875 Mid-Corp. Banking 815 921 1,102 Real Estate 421 413 461 Other 178 261 227 Expense 1,958 1,946 2,176 Credit Costs 279 464 1,454 Net Income $1,134 $1,439 $1,271 Key Statistics ($B) Avg Loans $61.1 $82.3 $106.7 EOP Loans $66.2 $115.4 $97.4 Avg Liability Balances 1 $87.7 $103.1 $113.2 Allow. for Loan Losses $1.7 $2.8 $3.0 NPLs $0.1 $1.0 $2.8 Net Charge-Off Rate 2 0.07% 0.35% 1.02% ALL/Loans 2 2.81% 2.45% 3.12% ROE 3 17.0% 20% 16% Overhead Ratio 48% 41% 38% EOP Equity $6.7 $8.0 $8.0 |
 Treasury & Securities Services 1 Includes deposits and deposits swept to on-balance sheet liabilities 2 Calculated based on average equity 3 Source: Ernst & Young & Federal Reserve (Based on # of sweep accounts and
average daily balances) 4 Source: Nilson 5 Source: 4Q09 company reports 6 Source: Based on internal JPM estimates Leadership positions Treasury Services #1 in ACH originations 3 #1 in US Dollar Clearing with > 20% in market share 3 #1 in Purchasing Cards 4 #1 in Liquidity 3 Worldwide Securities Services #2 in global assets under custody 5 #2 Global Fund Services for registered investment pools 5 #1 Depository Receipts (by market capitalization) 6 Growth initiatives Continue to expand global footprint through Global Corporate Bank Expand branch footprint and local cash capabilities (BRIC+) to support our largest global clients Strengthen and expand product capabilities, particularly in: Integrated, global liquidity solutions Global Commercial Card solutions International Funds Services Invest in platforms to improve efficiency and provide market leading integrated
client solutions Differentiate client service and increase penetration of priority segments
Outlook Performance will be affected by market levels and liability balance flows $ in millions 22 2007 2008 2009 Revenue $6,945 $8,134 $7,344 Treasury Services 3,190 3,779 3,702 Worldwide Securities Svcs. 3,755 4,355 3,642 Expense 4,580 5,223 5,278 Credit Costs 19 82 55 Net Income $1,397 $1,767 $1,226 Key Statistics Avg Liability Balances ($B) 1 $228.9 $279.8 $248.1 Assets Under Custody ($T) $15.9 $13.2 $14.9 Pretax Margin 32% 33% 26% ROE 2 47% 47% 25% TSS Firmwide Revenue $9,565 $11,081 $10,231 TS Firmwide Revenue $5,810 $6,726 $6,589 TSS Firmwide Avg Liab Bal ($B) 1 $316.7 $382.9 $361.2 EOP Equity ($B) $3.0 $4.5 $5.0 |
 Asset Management Leadership positions Largest global money market fund manager 2 #2 US-based global hedge fund manager 3 #1 global provider for ultra-high-net-worth clients 4 #4 US mutual fund family 5 Gold Standard Award for Funds Management (UK); only firm ever to win seven Gold Standard awards 6 Asset Management Company of the Year for Asia, Hong Kong 7 Best overall performing foreign asset manager operating in China 8 #1 Private Bank in Asia 9 Growth initiatives Increasing the number of Private Banking client advisors and leverage WaMu footprint to increase Private Banking business in the U.S. and internationally Continue Investment Management growth, including onshore investing capabilities in Emerging Markets U.S. Retail fund distribution expansion Improve investment performance — Intense focus on generating strong risk-adjusted returns Enhance alternatives product capabilities across all asset classes and geographies Outlook Management and performance fees will be affected by market levels 1 Calculated based on average equity 2 Source: iMoneynet, December 31, 2009 3 Source: Absolute Return 4 Source: Euromoney magazine 5 Source: Barron’s 6 Source: Incisive media (UK) 7 Source: The Asset Magazine, September 2009 8 Source: PriceWaterhouseCoopers survey 9 Source: Risk magazine 2007 2008 2009 Revenue $8,635 $7,584 $7,965 Private Bank 2,362 2,565 2,585 Institutional 2,525 1,775 2,065 Retail 2,408 1,620 1,580 Private Wealth Management 1,340 1,387 1,316 J.P. Morgan Securities - 237 419 Expense 5,515 5,298 5,473 Credit Costs (18) 85 188 Net Income $1,966 $1,357 $1,430 Key Statistics ($B) Assets Under Management $1,193 $1,133 $1,249 Assets Under Supervision $1,572 $1,496 $1,701 Average Loans $29.5 $38.1 $35.0 EOP Loans $36.1 $36.2 $37.8 Average Deposits $58.9 $70.2 $77.0 Pretax Margin 36% 29% 29% ROE 1 51% 24% 20% EOP Equity $4.0 $7.0 $7.0 $ in millions 23 |
  Corporate/Private Equity Outlook Private Equity Results will be volatile Corporate Net interest income and securities gains will generally trend with the size of the investment portfolio Quarterly net income expected to decline to approximately $300mm, subject to the size and duration of the investment securities portfolio Private Equity portfolio ($ in billions) Net Income ($ in millions) 2007 2008 2009 Private Equity 2,165 (690) (78) Corporate (150) 1,458 3,743 Merger Related (130) (211) (635) Net Income $1,885 $557 $3,030 24 $6.2 $6.1 $7.2 $6.9 $7.3 6.3% 5.8% 9.2% 8.6% 9.7% $5.0 $5.5 $6.0 $6.5 $7.0 $7.5 $8.0 2005 2006 2007 2008 2009 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Portfolio as % of equity ex. goodwill EOP Carrying value |
 Non-GAAP financial measures A. Financial results are presented on a managed basis, as such basis is described in the Firm’s Annual
Report on Form 10-K for the year ended December 31, 2009. B. All non-GAAP financial measures included in this presentation are provided to assist readers in
understanding certain trend information. Additional information concerning such
non-GAAP financial measures can be found herein, to which reference is hereby made.
C. The ratio for the allowance for loan losses to end-of-period loans excludes the following: loans
accounted for at fair value and loans held-for-sale; purchased credit-impaired
loans; the allowance for loan losses related to purchased credit-impaired loans; and, loans from the Washington Mutual Master Trust, which were consolidated on the firm's balance sheet at fair value
during the second quarter of 2009. Additionally, Consumer Lending net charge-off rates
exclude the impact of purchased credit-impaired loans. The allowance related to the
purchased credit-impaired portfolio was $1.6 billion at December 31, 2009. D. Tier 1 Common Capital ("Tier 1 Common") is defined as Tier 1 capital less elements of capital not
in the form of common equity – such as qualifying perpetual preferred stock, qualifying
noncontrolling interest in subsidiaries and qualifying trust preferred capital debt securities.
Tier 1 common capital, a non-GAAP financial measure, is used by banking regulators, investors and analysts to assess and compare the quality and composition of the Firm’s capital with the capital of other financial services
companies. The Firm uses Tier 1 common capital along with the other capital measures to assess
and monitor its capital position. Footnotes and notes on non-GAAP
financial measures 1 Source: Dealogic 2 Source: Thomson Reuters, FY2009 3 Source: Based on internal JPM estimates 4 Source: SNL Corporation; market share data as of June 2009, updated for subsequent acquisitions for all banks through Sept 2009; includes deposits in domestic offices (50 states and D.C.), Puerto Rico and U.S. Territories only and non-retail branches are not included 5 Source: 4Q09 Company reports 6 Source: Inside Mortgage Finance, 4Q09 7 Source: National Mortgage News, 3Q09 8 Source: Autocount (including captives), YTD December 2009 9 Excludes WaMu 10 Source: Greenwich Market Study, FY2009 11 Source: FDIC as of September 30, 2009 12 Source: Ernst & Young & Federal Reserve (Based on # of sweep accounts and average daily balances) 13 Source: Nilson 14 Source: iMoneynet, December 31, 2009 15 Source: Absolute Return 16 Source: Euromoney magazine 17 Source: Barron’s 18 Source: Incisive media (UK) 19 Source: The Asset Magazine, September 2009 20 Source: PriceWaterhouseCoopers survey 21 Source: Risk magazine 25 |
 February 25, 2010 I N V E S T M E N T B A N K Jes Staley, Investment Bank Chief Executive Officer |
 Thoughts on the IB 2010 priorities Performance metrics Leadership in 2009 Growth initiatives Agenda Derivatives 2010 outlook 1 |
 Thoughts on the IB Client franchise 5,000 issuers 16,000 investors Reputation and client trust Leader in capital markets Highest industry market share 9.5% Hybrid business model – credit originator and market maker Proven risk manager Talent Strengths Fixed Income margin compression Regulatory environment Maintaining price discipline Perception of our social contribution Economic environment Challenges 2 |
 Thoughts on the IB 2009 Market environment and 2010 business outlook 2009 market environment Sec’d Prods Prime serv’s M&A ECM Emerging Markets FX/ Rates DCM Equities Commod’s Credit + _ 3 |
 2010
Priorities Clients Vigilant focus on clients’ long-term interests Reputation Role financing governments, non-profits and corporates Talent and diversity Strategy Performance ROE IB fee wallet share Markets revenue wallet share Control and discipline Growth Emerging markets: China/Brazil focus Commodities Global Corporate Bank Redefine markets Investment Performance Efficient capital allocation Manage stress loss Management of Credit Portfolio Technology Strategic Re- engineering Project Low-cost provider International location strategy 4 |
 Performance metrics ROE 17% +/- Wallet share 10% of Global IB fees 15% of Market revenue 15% reduction in error rate 5 Control and discipline |
 Source: Dealogic, on a pro forma basis for all industry mergers IB Return on Equity Global IB fees wallet share Control / Discipline Performance metrics Markets revenue wallet share 8.7% 8.4% 8.5% 9.2% 10.0% 2006 2007 2008 2009 Target Rank
#2 #2 #2 #1 Note: Represents JPM share of top 10 competitors 7.6% 7.2% 8.6% 12.4% 15.0% 2006 2007 2008 2009 Target Rank:
#8 #6
#5 #3 15% reduction 6 $21 $21 $26 $33 $40 15% (5)% 21% 18% 17%+/- Target 2006 2007 2008 2009 2010Est Allocated capital ($B) ROE (%) 0.0000% 0.0001% 0.0002% 0.0003% 0.0004% 0.0005% Target 2009 2008 2007 |
 League table results Helped clients issue $620B of stocks and bonds, more than any other firm 1 Provided urgent financing for municipalities Advised on 322 mergers and acquisitions globally, more than any other firm 1 Advised on many of the largest and most complex transactions 11 of the year’s largest 25 deals 1 119 cross-border deals, more than any firm 1 Loaned $204B to 295 issuers globally 1,2 Average loan size $691mm, more than double the market average 1 Loans used to fund payrolls, restructure balance sheets, finance growth and create jobs 1 Source: Dealogic 2 Lead left bookrunner basis 3 Source: 2008 data is pro forma for JPM merger with Bear Stearns 4 Global Equity & Equity-related includes rights offerings 5 Global Debt & Long-term Debt includes ABS, MBS and taxable municipal
securities 6 Global M&A for 2008 adds back transactions withdrawn since 12/31/08 Leadership in 2009 7 2009 2008 3 Rank Share Rank Share Based on fees (per Dealogic) Global IB fees #1 9.2% #2 8.5% Based on volumes (per Thomson Reuters) Global Debt, Equity & Equity-related #1 9.5% #1 9.4% 4 #1 12.6% #1 10.3% Global Debt 5 #1 9.2% #1 9.3% Global Long-term Debt 5 #1 8.5% #3 8.8% Global M&A Announced 6 #3 23.6% #2 27.6% Global Loan Syndications #1 9.6% #1 11.3% Global Equity & Equity-related |
 Leadership in 2009 Supporting low carbon economy Helping clients raise critical capital State of Illinois State of California Committed $4B to pay off IOUs issued during the state’s cash-flow crisis Underwrote $1.4B – the entire amount offered – of bonds Raised $12.2B in equity, convertibles, bonds and asset-backed securities for Ford Motor Company in 2009 Invested over $100mm of tax equity in Horizon Wind Energy’s wind power project J.P. Morgan’s total wind portfolio of 58 wind farms across 16 states A leader in sourcing, developing and trading emission reduction credits ClimateCare acquired in 2008 EcoSecurities acquired in 2009 Helping universities and hospitals University of Virginia Texas Children's Hospital Led $250mm Build America Bond issuance Raised $200mm to help fund the hospital’s Neurological Research Institute and a new pediatric hospital Financing for state and local governments Raised $375mm for Chinese property developer Country Garden – the first Asia high yield bond in more than a year 8 |
 Growth initiatives Emerging Markets Provided critical capital raising Cemex follow-on Sappi refinancing Petrobras bond VisaNet (now Cielo), the largest Brazilian IPO ever Re-opened key emerging markets Hong Kong IPO, Asia High Yield, LBO Led 8 of 10 largest Asia primary equity deals Raised $20B for corporate recapitalizations in Asia Sovereign debt issuance for Brazil, Mexico, Qatar and South Africa Expand local client coverage; add onshore bankers Build cash equities and derivatives – Russia, Brazil, China, India, Taiwan, Korea Focus on local debt and Fixed Income flows Deliver the firm through cross-selling and Global Corporate Banking 2010 priorities 2009 client support 9 |
 Growth initiatives Commodities – RBS Sempra acquisition Acquiring global metals, global oil and European power and gas assets of RBS Sempra Commodities Closing in 2Q10, subject to regulatory approvals Expected to pay $1.7B subject to distributions prior to closing Immediately profitable after closing Transaction overview Highly complementary to our existing Global Commodities business Allows us to deliver more comprehensive solutions to our clients globally Nearly doubles the number of corporate clients Diversifies our Fixed Income earnings Rationale 10 |
 Growth initiatives Commodities – RBS Sempra acquisition EMEA Power & Gas Base Metals Global Oil Physical Financial Trading Custody Physical Financial J.P. Morgan 2 4 4 0 2 4 RBS Sempra 4 2 2 5 5 2 Pro forma 5 5 5 5 5 5 11 |
 Growth initiatives Technology – $1B investment 2010 priorities 2009 progress Execute three-year Strategic Reengineering Program focused on: Next-generation front-end derivative and emerging market trading platforms OTC clearing requirements Core processing infrastructure Build-out electronic and algorithmic trading infrastructure for Equities Implement Prime Services offering globally, including Synthetic Prime Brokerage Implement global location strategy Completed Bear Stearns merger Migrated 600,000 OTC Derivatives positions Mapped over 14,000 clients and converted 465,000 total accounts Launched state-of-the-art platforms for FX Options, Brazil and Prime Services Consolidated infrastructure in US Cash Equities and Commodities Processed record volumes, up 82% from pre-merger levels 12 |
 Our
derivatives business remains client-focused Derivatives widely used by
corporations, governments, agencies and supra-nationals to manage risk
and lower the cost of capital Derivative receivables, gross of collateral,
declined by 45% to $146B at year-end 2009 Derivative receivables, gross (as
of 12/31/09) Derivative Receivables, Gross of Collateral $79T at 12/31/09 Derivative Notional Outstanding Gross Derivative Receivables Less Bilateral Netting Net derivative receivables are only 19 basis points of notional $1.6T ($1.4T) $88T at 12/31/08 $146B 13 |
 Derivative receivables, net (as of 12/31/09) Counterparty exposure is well managed Net exposure declined by 55% while revenue increased over 25% year-over-year
Net derivative receivables represent less than 10% of IB assets at
year-end 2009 IB Level 3 assets, including derivatives, declined over 15%
during 2009 Less Cash Collateral Less Other Less Liquid Collateral Derivative Receivables, Net of All Collateral Derivative Receivables, Net of Cash Collateral Derivative Receivables, Gross of Collateral $146B ($66B) ($15B) $80B $65B $143B at 12/31/08 $266B at 12/31/08 1 Other high quality includes low risk counterparties, including senior or preferred
positions in special purpose entities 83% 17% 14 Risk Group Percent Other high quality 1 26% AAA to AA- 36% A+ to A- 12% BBB+ to BBB- 9% BB+ to B- 14% CCC+ & below 3% Total 100% Exposure by Product Percent Interest Rate 29% Credit derivatives 28% Foreign exchange 27% Equity 8% Commodity 8% Total 100% |
 Disadvantages
corporates by tying up liquidity Leading reform of OTC
derivative markets Comprehensive, rigorous oversight of all dealers and
large market participants Transaction reporting for all trades to
regulators Mandatory clearing of most standardized, highly liquid derivative
contracts between dealers and major swap participants Clearing for all OTC derivative: Will divert funding away from job creation Exchange trading for all derivatives Even standardized liquid contracts not amenable to exchange trading Actively participating in strengthening OTC market infrastructure Investing in technology to provide clients superior access to liquidity Reform we advocate Regulation we believe would be harmful to the economy Leading the market evolution 15 |
 2010
Outlook Expect Fixed Income margin compression and reduced capital
raising Target ROE of 17% +/- Focus on growth initiatives: Emerging Markets Commodities Technology Maintain leading share through vigilant client focus 16 |
 February 25, 2010 T R E A S U R Y & S E C U R I T I E S S E R V I C E S Heidi Miller, Treasury & Securities Services Chief Executive Officer
|
 2009
Recap by business 2010 Priorities International expansion ## Agenda Financial performance Business drivers Expense focus Global Corporate Bank 1 |
 Why
we love this business World class market leading franchise Strong organic revenue and profit growth over past 5 years Truly global business with ~50% of revenue non-US High return, low capital intensity, scale advantages Stable, annuity-like revenue stream Significant client and platform leverage across the firm 2 |
 $0.5 $1.5 $1.8 $2.4 $2.9 $2.1 2004 2005 2006 2007 2008 2009 Operating margin Revenue TSS – strong 5-year growth trend despite market-driven impact to revenue in 2009 $5.5 $6.1 $6.9 $8.1 $7.3 Efficiency ratio 73% 72% 64% 66% 70% 88% $4.7 TSS revenue and operating margin ($ in billions) 3 |
 “Flight to quality” impact leveled off $251 $232 $234 $277 $336 $260 $268 $254 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Flight to quality: 29% growth Reversal and leveling-off Average liability balance trend by quarter ($ in billions) 4 |
 TSS
– complete and diversified product set 2009 TS revenue $3.7B 2009 WSS revenue $3.6B 34% 40% 14% 12% Liquidity Solutions Core Cash Management Card Products Trade & Logistics Global Custody Global Fund Services Financing & Markets Products 47% 31% 22% (Clearance & Collateral
Management, Securities Lending, Depositary Receipts) 2009 WSS revenue contribution 2009 TS revenue contribution 5 |
 TSS
– and we continue to win in the market place Kasikornbank Worldwide Securities Services select 2009 wins Treasury Services select 2009 wins 6 |
 $1.3 $1.5 $1.1 $0.9 $1.0 $0.4 2004 2005 2006 2007 2008 2009 Operating margin Revenue TS – strong upward trajectory over the period despite deposit spread compression $2.9 $3.0 $3.2 $3.8 $3.7 $2.5 TS revenue and operating margin ($ in billions) 7 |
 TS
2009 results – spreads tell the story Key drivers of performance Spread compression on flat balances Trade volumes down, but spreads jump International payment volumes up, offset by lower domestic volumes Wholesale Card and Government volumes up FY 2009 vs. FY 2008 8 2008 2009 Total revenue $3.78B $3.70B Revenue (2)% Average balances $161B $161B Fed Funds 1.92% 0.16% Net interest income (15)% Noninterest revenue 10% Expense 2% |
 3,503 3,870 4,000 3,896 2006 2007 2008 2009 105 111 116 114 2006 2007 2008 2009 17 19 23 27 2006 2007 2008 2009 145 170 171 193 2006 2007 2008 2009 TS – underlying business growth remains solid with increased volumes Note: Annual transaction volume Note: Annual transaction volume Note: Annual transaction volume ACH volume (# in millions) USD clearing volume (# in millions) Wholesale cards issued (# in millions) Int’l electronic funds transfer volume (# in millions) 9 |
 TS
– Best in Class market positions with continued award recognition
Best Overall Bank for Cash Management: North America (Global Finance) Best Global Cash Management Services in Asia Pacific (Asiamoney) Best Cash Management Specialist, Financial Institutions (The Asset) Best Liquidity Solutions Provider (The Asset) Best Bank for Risk Management in North America (Global Finance) 1 Based on number of sweep accounts and average daily balances Treasury Services rankings Treasury Services awards 10 Cash management ACH #1 USD clearing #1 Check clearing #2 Controlled disbursement #2 Liquidity 1 #1 Card Purchasing #1 T&E #5 |
 TS
– disciplined expense management Revenue 7.7% 5.5% Total expense 220 bps Operating leverage Offshoring Site consolidation Exited Retail Lockbox Absorbed BoNY and WaMu volumes with little added expense Platform rationalization and upgrades Expense containment while continuing investment initiatives FY 2009 vs. FY 2006 CAGR Key 2009 expense initiatives 11 |
 TS
– 2010 priorities Expand Global Footprint Branch footprint and local cash capabilities (BRIC+) to support our largest global clients Strengthen and Expand Product Capabilities Integrated, global liquidity solutions Self-clearing capabilities in more markets Global Commercial Card solutions Continued Platform Investment Global DDA, ACH and Wire platforms New Card and Trade platforms Differentiate Client Service Shorten onboarding times, reduce exception processing, and simplify documentation 12 |
 $0.5 $0.9 $1.3 $1.5 $0.7 $0.1 2004 2005 2006 2007 2008 2009 Operating margin Revenue WSS – strong organic growth $2.7 $3.1 $3.8 $4.4 $3.6 $2.2 WSS revenue and operating margin ($ in billions) 13 |
 Balances and spreads down Securities lending on-loan balances and spreads down Decline in FX volatility Asset levels down due to equity market levels, but net AUC flows positive WSS 2009 results – driven by the markets 1 Averages of 4Q08 and 4Q09 JPM G7 and Emerging Markets FX volatility indices FY 2009 vs. FY 2008 Key drivers of performance 14 200 8 200 9 Total revenue $ 4.36 B $3. 64 B Revenue (16 )% Average balances $1 19 B $ 87 B Fed Funds 1.92% 0.16% FX volatility 1 24.5 13.6 Net interest income (6 )% Noninterest revenue (20) % Market driven NIR (34) % Volume driven NIR (1)% Expense 1% |
 Securities lending market dynamic Balances have declined approximately 40% since end of 2008, driven by: Lower demand from Broker/Dealers Client restrictions on investments and counterparties Government and regulatory actions, which have reduced demand or eliminated economics Revenue fell in 2009 due to: Lower balances Lower yield on cash collateral investments due to Fed Funds / LIBOR spread compression and increased client risk aversion Lower intrinsic value for US Treasury securities Lower dividend season revenue Industry dynamics Higher value placed on transparency and risk mitigation - movement to cash vs. security collateral 2006 2007 2008 2009 $300 $408 $384 $220 Average on-loan balances ($ in billions) Securities lending dynamics 15 |
 269 315 338 336 2006 2007 2008 2009 2,022 2,673 3,574 4,006 2006 2007 2008 2009 13,428 15,841 21,611 22,059 2006 2007 2008 2009 WSS – business foundation improves 2006 2007 2008 2009 CAGR: 2% 2009 Net AUC flow of ~$800B, up 7% vs. 2008 Global International Domestic $13.9 $15.9 $13.2 $14.9 23% 77% 19% 81% 25% 75% $234B $183B $311B Note: Annual volume Net asset values produced (# in 000’s) Funds under administration (#) Assets under custody (AUC, $ in trillions) # of depositary receipt programs 16 $297B Market cap |
 U.S. -
Non- Govt Fixed Income Foreign - Govt Fixed Income Foreign - Non-Govt Fixed Income Foreign - Other U.S. - Other U.S. - Govt Fixed Income U.S. - Equities Foreign - Equities WSS – AUC mix drives revenue Total AUC: $14.9T United States Other Nations Rate card differentials FX flows Securities lending opportunities Size of lendable base Total AUC: $14.9T Other G7 Countries Implications Implications 2009 assets by location 2009 AUC by asset type 17 |
 Global Custody
#2 Global Fund Services for registered investment pools #2 European Fund Services #1 Depositary Receipts by market capitalization
#1 Collateral Management #1 WSS – Best in Class market positions with continued award recognition Best Global Custodian (Asian Investor) Fund Administrator of the Year: Europe (ICFA magazine) Pension Custodian of the Year (ICFA magazine) Best Overall Hedge Fund Administrator (HFMWeek) Securities Lending Manager of the Year (Global Pensions) Best Depositary Receipt Bank (The Asset) Worldwide Securities Services awards Worldwide Securities Services rankings 18 |
 WSS
– expense saves offset by investment agenda Efficiencies from… Offshoring / location strategy Process re-engineering / leveraging technology Vendor reductions Investment in… Foundational platforms Product and geographic build out Platform optimization & efficiency On-boarding clients 2,914 2,899 2008 2009 2009 Efficiencies 2009 Investment spend $300mm+ $160mm+ 1% WSS expense ($ in millions) Key 2009 expense initiatives 2009 efficiencies fund investments 19 |
 WSS
– 2010 priorities Expand Global Footprint Strengthen and Expand Product Capabilities Continued Platform Investment Increase Penetration of Priority Segments Increase wallet share of the top 150 Asset Gatherers and increase penetration of top 500 Sub-custody capability in select markets Increase local presence for sales and local service Global Corporate Bank partnership ETF and Transfer Agency capabilities International collateral management capabilities Alternative investment servicing capabilities Global fund accounting platform Joint securities lending platform with the IB Processing utilities across products 20 |
 TSS
continues to focus on international growth Percentage of non-US
revenue Percentage of non-US employees 21 26% 48% 2004 2009 51 68 2004 2009 Number of non-US locations 35% 48% 2004 2009 |
 Support for increasingly complex international operations Multiple regional/local offices Numerous banking relationships Cash visibility Liquidity and credit access Cash and payments concentration Comprehensive working capital and supply chain and risk management solutions Risk management (e.g. direct clearing as a sub-custodian) Footprint Capabilities Coverage Credit TSS – a “bankers’ bank”, but focused on meeting the needs of the world’s largest companies Areas of focus for 2010 Client needs 22 |
 Global Corporate Bank – acceleration underway A business JV between TSS and the IB to manage corporate banking relationships with approximately 3,000 of the world’s largest companies Cash Management Liquidity / credit access Trade Finance Working Capital / Syndicated Lending FX Derivatives Commodities Debt Capital Markets Local Currency Services More local Corporate Banking coverage Footprint additions and branch upgrades Increased credit and support infrastructure to support balance sheet growth Local treasury operations Focus products What is it? 23 Required build out |
 2009 performance largely market-driven Underlying drivers of our business are strong A mid-30s% pretax margin still a target We continue to invest aggressively in our business International expansion and meeting the needs of our largest clients remain top priorities 24 In summary… |
 February 25, 2010 A S S E T M A N A G E M E N T Mary Erdoes, Asset Management Chief Executive Officer |
 $1.2T AUM $1.7T AUS $8.0B Revenue $1.4B Net income 29% Pretax Margin Who we are: an integrated manufacturer and distributor of multiple alpha sources
15,000+ People 800+ Investment professionals 2,800+ Advisors 153 Locations 32 Countries Liquidity/ Fixed income Equities/ Multi-asset Hedge funds/ Private equity Real assets/ Highbridge Private Banking solutions Institutional Ultra high-net-worth High-net-worth Retail Understand 1 Note: All data reflect FY2009 amounts or year-end balances
|
 The depth of the performance-based culture 800+ investment professionals: 58% US / 42% International 14-year average industry experience; 20%+ over 20 years Consistent long-term focus; continuous refinement The breadth of distribution globally Over 2,800 distribution personnel worldwide covering: – Institutions (pension funds, sovereigns, corporates, endowments) – Ultra-high-net-worth (in 17 countries) – High-net-worth (81 offices across the US) – Retail (direct and indirect across 7 major fund platforms) The innovation and power of the platform Cash: first to launch a AAA-rated money market fund in China Fixed income: Strategic Income Opportunity Funds launched last year, now $8B+ Equities: fundamental 130/30 was first of its kind, now #1 globally in AUM Highbridge: statistical arbitrage engine as basis for $8B mutual fund platform Private Equity: secondary fund launch of $800mm Global Access Portfolios: doubled to $7.5B in 15 months New CEO perspectives on Asset Management 2 |
 Where we’ve come from… 2001 2009 Size AUM $605B $1,249B Revenue $3,085mm $7,965mm Total employees 8,000+ 15,000+ Locations 72 153 Quality Top quartile funds (3-year) 56 Funds 141 Funds 4 or 5 star rated funds 97 Funds 170 Funds Top 5 institutional client annual revenue $55mm $98mm Net new Private Banking clients <0 3,800+ Top 5 retail distributor AUM $3B $28B Financial Return on Equity 3% 20% Margin 10% 29% Earnings $178mm $1,430mm 3 |
 Understand …where we are headed: 2010 Priorities 1) Investment performance Continue focus on risk-adjusted returns (74% of fund AUM in top 2 quartiles, but only 42% 4/5 star) Flows into long-term assets (targeted at 6%+ of AUM per year) 4) International presence Europe: maintain cross-border equity position and establish fixed income leadership Japan: expand local coverage (2 new offices) Asia: bring full power of platform to region Latin America: develop local capabilities 2) Innovative products Continued investment in core alpha generation Expansion of absolute return/hybrid strategies Risk-adjusted solutions for 401k, HNW, retail 3) Private Banking expansion UHNW: sustain market leadership HNW: capitalize on U.S. investment; expand internationally Grow client advisors by 10% per year (2,300 today) 5) Continued investment Technology spend up 11% Initiatives up 30% (new/enhanced platforms) Run-rate down 13% (efficiencies) Early 2008 cuts allowed 2009 growth, continuing in 2010 Strengthen position in US retail Leverage firmwide capabilities 4 |
 Investment performance Maintain highest focus… 51% 75% 62% 71% 84% 68% 47% 88% 82% 25% 50% 75% 100% 2007 2008 2009 1 year 3 year 5 year Equities performance (as of December 2009) Target 65% Fixed Income performance (as of December 2009) 70% 43% 77% 88% 63% 78% 96% 87% 78% 25% 50% 75% 100% 2007 2008 2009 1 year 3 year 5 year Target 65% US platform investment performance (% AUM in top 2 Lipper quartiles) Understanding the components US equity – 79% Emerging markets equity – 100% Pacific equity – 0% 5 year (% in top 2 Lipper quartiles) 5 year (% in top 2 Lipper quartiles) US fixed income (Columbus) – 97% Municipals – 94% Global fixed income (NY) – 0% 5 |
 8 11 14 27 21 17 15 22 49 29 28 29 2006 2007 2008 2009 Intermediary Direct US Retail distribution Long-term investment is now paying dividends… 2009 record results for long-term mutual fund flows; #3 in industry #4 US mutual fund family based on 5-year performance (Barron’s); 60% of US AUM is rated either 4 or 5 stars Aggressive efforts to establish top 5 position in long-term AUM Top 10 industry-wide for number of wholesalers, expected to grow by 30% Focus Hiring and training Further penetration of traditional products Innovative products (retirement, long/short, inflation, commodities) Highlights 2009 US net flows - long-term mutual funds ($ in billions) 26 1 4 21 10 20 30 Fixed income US Equity Int'l Equity Total LT Flows Rank 4th 3rd 19th 3rd US gross sales - long-term mutual funds ($ in billions) US Retail long - term mutual fund AUM ($ in billions) 88 49 64 61 25 50 75 100 2006 2007 2008 2009 LT Rank 19th 20th 15th 11th Source: Lipper 6 |
 Assets under supervision ($ in billions) Private Banking Continue outperformance and outstanding service… Highlights Client advisor headcount continually increasing; 800+ people over 5 years Positive AUS flows every year, totaling $158B since 2005 Expense management discipline: Front office headcount: 5% CAGR Non-front office headcount: 2% CAGR Credit losses in line with expected stresses through the cycle Pretax margin less volatile than competitors Focus Hiring and training WaMu footprint International HNW Product innovation (especially for HNW) 318 328 378 452 102 137 142 124 129 50 55 403 2005 2006 2007 2008 2009 PB PWM JPMS $636 $552 $545 $465 $420 Revenue ($ in billions) 1.7 1.7 2.6 2.6 1.0 1.2 1.3 1.4 1.3 0.2 0.4 2.4 2005 2006 2007 2008 2009 PB PWM JPMS $4.3 $4.2 $3.7 $2.9 $2.7 7 |
 37 73 89 201 238 311 469 440 151 144 238 311 400 613 591 2005 2006 2007 2008 2009 International United States Largest global money fund manager Largest money fund globally (prime money market fund $168B) Regulatory changes - SEC money market regulations (business as usual) Focus Managing expected outflows Watching potential areas of concern – Floating NAVs – Capital against funds – Low rate environment/fee compression Develop local onshore products for emerging markets Liquidity Extending our leadership position… Highlights Global Cash Year-End AUM ($ in billions) 8 |
 International expansion: Brazil case study Investment Management Institutional/Retail Distribution Add local manufacturing of alpha Across all asset classes Expand to HNW clients Expand local presence Expand local distribution Retail through local partners Third-party wealth management providers Pension market UHNW focused PB only 4 offices Sizeable UHNW business Small local presence (mostly Sao Paulo) All client segments PB, IM, Retail, Institutional 7 offices 9 Private Banking Private Banking Current Future Manage alpha mostly from NY/London Locally manage $1.5B in AUM Investment Management |
 International expansion: Asia Japan (since 1971) #1 largest foreign asset management firm Major distributor of hybrid products into Japan But…local Japanese equities has to improve performance #3 largest foreign JV asset management firm #1 AAA-rated money fund provider But…a long way to #1 China (since 2004) #1 largest foreign asset management firm #1 internet seller of mutual funds But…only $11B in AUM, room to grow Taiwan (since 1985) #3 international equity retail flows But…ranked #31 in total AUM Korea (since 2006) 10 |
 Competitive comparison and global standing External recognition Global #1 global money market fund manager (iMoneyNet) #2 US-based global hedge fund manager (Absolute Return) #1 global provider for UHNW clients (Euromoney) United States #4 mutual fund family (Barron’s) Europe “Gold Standard Award for Funds Management” (Incisive media (UK)); (Only firm ever to win seven Gold Standard awards) Asia “Asset Management Company of the Year” (The Asset) “Best overall performing foreign
asset manager operating in China” (PriceWaterhouseCoopers survey) #1 Private Bank in Asia (Asia Risk Magazine) 2009 Pretax income growth
Note: Competitors include AllianceBernstein, BlackRock, BNY Mellon, Credit Suisse,
Goldman Sachs AM, Legg Mason, Northern Trust, UBS 2009 Assets under management
($ in billions) 627 682 871 1,115 1,177 1,249 2,157 496 JPM 3,346 2009 Net flows ($ in billions) (74) (115) 28 33 (55) (138) (3) JPM NA 156 Competitors Competitors Competitors 11 (10%) (25%) (28%) (36%) (43%) (70%) JPM NA NA 5% |
 Asset Management greatly benefits from the power of the JPM network 12 Card Services Retail Financial Services Commercial Banking Investment Bank Treasury & Securities Services Banking services Fund management Client referrals Aircraft leasing Fund management Fund management Structured products Brokerage Fund management Client referrals Fund accounting Transfer agency Custody Securities lending Credit cards |
 Blank slide Conclusion Institutional leadership Ultra-high-net-worth leadership US leadership Retail success High-net-worth success International presence Use knowledge and edge from institutional success to drive… Utilize client insight and product knowledge to enable… Capitalize on global brand to build a stronger… Investment performance Alternative/Hybrid growth Continue strong traditional performance and drive innovation in… 13 Increase scale of products and distribution, capitalizing on investments made in this highly leverageable business |
 February 25, 2010 C O M M E R C I A L B A N K I N G Todd Maclin, Commercial Banking Chief Executive Officer |
 Agenda Page 1 State of the business 1 Credit environment 11 Growth opportunities 16 Appendix 22 |
 Consistency of earnings through positive operating leverage Revenue by product vs. expense growth ($ in millions) Note: Expense excludes provision 1,215 1,344 1,419 1,743 2,663 2,062 2,243 2,350 2,648 2,642 213 334 386 415 1,856 1,979 1,958 1,946 2,176 1,632 1,821 2,145 2,831 3,544 211 Lending revenue Treasury Services revenue IB revenue/other Expense Operating margin 2005 2006 2007 2008 2009 EXPENSE CAGR = 3% 62% 59% 52% 48% 47% Operating margin 2 |
 Key
performance metrics Lending vs. non-lending revenue sources (FY 2009)
ROE trend with target metrics Overhead ratio trend with target metrics 16% 20% 17% 18% 10% 20% 30% 2006 2007 2008 2009 48% 38% 41% 52% 53% 30% 35% 40% 45% 50% 55% 2005 2006 2007 2008 2009 Target: 20% +/- Target: < 40% 21% Excluding WaMu Investment Bank 7% Lending 47% heritage JPM 62% heritage WaMu 38% Treasury Services 46% 3 |
 Profile of a Chase Commercial Banking client Total CB relationships = 55,000 25,000 Middle Market, Mid-Corporate, and Real Estate Banking clients 30,000 Commercial Term Lending relationships Average relationship tenor 1 = 18 years + In 2009, 1,700 new relationships and over 7,600 expanded relationships 1 Average products used per relationship 1 = 7+ Highlights Client ROE increases with level of cross-sell across product categories2 (%) Lending Lending + TS Lending + TS + IB 7-10% 18-20% 24-26% 1 Metrics do not include Commercial Term Lending Business 2 Client ROE ranges represent average through-the-cycle returns on broad product
groupings 4 |
 Cross-LOB impact of Commercial Banking clients Over 25mm transactions at Retail branches by CB clients Over $650mm in loan commitment referrals from Business Banking Note: All metrics reflect 2009 performance 1 Commercial Card revenue captured in overall Treasury Services Commercial Banking Clients Over $150mm in Commercial Card and Paymentech revenue 1 $1,163mm gross IB revenue 820 CB clients used IB products for first time Over $275mm in Private Banking and Investment Management revenue CB clients generate $2,642 mm in deposit and TS product revenue 80% client penetration Treasury Services Retail Card Investment Bank Asset Management 5 |
 Conservative client selection and portfolio diversification = moderate credit risk
452 391 73 160 279 464 1,454 1,362 1,340 951 1,271 1,010 1,134 1,439 2005 2006 2007 2008 2009 2008 2009 Credit Costs Net Income 0.93% 0.40% Net charge-off ratio 1.02% 0.35% 0.07% 0.05% 0.05% Including WaMu Excluding WaMu Credit costs vs. net income ($ in millions) 6 |
 Middle Market Banking 46% Real Estate Banking 7% Commercial Term Lending 19%
Community Development 2% Other 2% Mid-Corporate Banking 24% Real Estate 30% Retail 9% Consumer 5% Oil & Gas 4% State & Muni 5% Utilities 4% Business Service 4% Other 29% Healthcare 10% Dynamic portfolio management produces credit diversity and granularity, minimizing risk
of earnings volatility Exposure by industry (4Q09) Total Exposure: $186.1B Outstandings by loan size (4Q09) Total Loans: $97.4B Total Exposure: $186.1B $20mm & Over 16% $10mm-$20mm 15% $5mm-$10mm 17% $3mm-$5mm 13% $1mm-$3mm 24% Under $1mm 15% Exposure by business (4Q09) 7 |
 1.02% 1.88% Chase CB Peer Median Total CB NCO ratio 2009 Performance against peers confirms our strategic differences in client portfolio and
risk tolerance 2.87% 4.13% Chase CB Peer Median Total CB NPL ratio 0.70% 1.65% Chase CB Peer Median C&I NCO ratio 1.36% 2.60% Chase CB Peer Median CRE NCO ratio 1.01% 2.75% Chase CB Peer Median Note: Metrics calculated based on FY 2009 performance, NCO ratios based on average loan
balances, NPL ratios based on ending loan balances Peer group includes: BAC,
COF, CMA, FITB, KEY, PNC, STI, USB, WFC, ZION CRE defined as Real Estate Banking, Commercial Term Lending, and Community Development. C&I defined as Middle Market, Mid-Corporate, and all other Commercial Banking businesses C&I NPL ratio 4.67% 7.31% Chase CB Peer Median CRE NPL ratio 8 |
 2.59% 2.30% 2.45% 2.65% 2.87% 3.01% 3.12% 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Reserve policy supports our “through-the-cycle” mentality Loan loss reserve ratio (to average total loans) 9 |
 Expense discipline and earnings-driven compensation Compensation expense vs. non-compensation expense ($ in millions) 654 740 706 692 1,239 1,252 1,254 1,400 776 1,202 21.9% 40.6% 32.9% 24.4% 40.1% 13.6% 14.5% 17.2% 19.5% 18.8% $0 $500 $1,000 $1,500 $2,000 $2,500 2005 2006 2007 2008 2009 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Comp expense Non-comp expense Comp % of operating margin Comp % of revenue 10 |
 Agenda Page 11 Credit environment 11 State of the business 1 Growth opportunities 16 Appendix 22 |
 1.50% 1.60% 1.70% 1.80% 1.90% 2.00% 2.10% 2.20% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Pricing improvement has offset weakened loan demand Loan spread on total CB loan balances Loan volume decline ($ in billions) Pricing up 40% since 3Q08 Note: Chase loan balances are end-of-period; Source: Federal Reserve
102 106 111 115 97 1,618 1,343 1,414 1,499 1,564 1,300 1,400 1,500 1,600 1,700 4Q08 1Q09 2Q09 3Q09 4Q09 90 95 100 105 110 115 120 Industry C&I loans CB loans 12 |
 2009
credit costs driven by commercial real estate Mid Corporate 5% Middle Market 28% Com Dev 2% CTL 31% Real Estate 31% Other 3% 2009 CB NCO by business Total = $1.1B 64% of NCOs from CRE portfolios 2009 CTL NCO ratio by region Note: NCO ratios based on average loan balances 0.06% 0.18% 0.86% 1.36% 0.07% 1.02% 0.05% 0.06% 0.70% 0.35% 0.05% 0.19% 2006 2007 2008 2009 CRE Total CB C & I 50bps through- the-cycle loss rate NCO ratio trend 0.56% 1.21% 1.52% 0.11% 22.41% Southern California Northern California and Pacific Northwest East Florida Central $15,446 $10,401 $7,082 $584 $2,600 End-of-period loan balances 39% of losses from Florida 13 |
 Chase commercial real estate exposure Highlights Commercial Term Lending (64% of CRE) Stable, seasoned multi-family concentration Fully underwritten, “cash flow” lending Supply-constrained markets / renters by necessity 2009 charge-off rate: 0.91% 0.57% without Florida Real Estate Banking (22% of CRE) Institutional grade Real Estate investors and developers 2009 charge-off rate: 2.87% Community Development (7% of CRE) Low-to-moderate income - housing and community redevelopment 2009 charge-off rate: 0.80% Middle Market/Mid-Corporate (7% of CRE) Investment real estate tied to commercial relationships 2009 charge-off rate: minimal 2009 end-of-period balances ($ in billions) Loans Exposure Commercial Term Lending $35.6 $35.6 For sale housing 0.7 1.2 Commercial constr/develop 9.7 11.4 Real Estate Banking 10.4 12.6 REB as of % of total CB exposure 11% 7% Community Development Banking 2.3 3.8 Middle Market & Mid-Corporate 3.2 4.1 Total CRE exposure & loans $51.5 $56.1 Percentage of total CB exposure 30% 14 |
 1.00 1.20 1.40 1.60 1.80 2.00 Dec- 04 Jun- 05 Dec- 05 Jun- 06 Dec- 06 Jun- 07 Dec- 07 Jun- 08 Dec- 08 Jun- 09 Dec- 09 US commercial real estate industry outlook National Commercial Property Price Index Source: Moody’s/REAL Commercial Property Price Indices, December 2009 Industry outlook Fundamentals not improving Massive debt maturity problem; refinancing likely requires equity/debt mark-downs Diminished CRE bank lending appetite Value disconnect between buyers and sellers Banks and borrowers: Amend, Pretend, Extend 130 100 170 630 2008/2009 2010 2011 2012+ Source: Real Estate Roundtable submission to the Joint Economic Committee Hearing on the Commercial Real Estate Industry CRE debt maturities ($ in billions) Source: Real Estate Roundtable submission to the Joint Economic Committee Hearing on the Commercial Real Estate Industry Estimated CRE capital gap ($ in billions) 1.91 1.08 410 310 500 1,800 2008/2009 2010 2011 2012+ 15 |
 Agenda Page 16 Growth opportunities 16 State of the business 1 Credit environment 11 Appendix 22 |
 While strong prospecting efforts in mature markets continue, expansion markets provide
significant opportunity Progress 121 dedicated full-time resources have been hired / relocated Profitable in 2011 Opportunity Over 9,300 identified Middle Market prospects in key markets Fully capable of delivering total JPM franchise to new markets 15,500+ prospect calls 150+ conversions 7,800+ prospect calls 75+ conversions 10,400+ prospect calls 125+ conversions Nationwide Over 84,000 total prospect calls, up 26% from 2008 Converted over 700 prospects to clients nationwide Business Development Group Over 53,000 prospect calls, up 68% from 2008 Added 6 full-time employees to the BDG, a 40% increase Converted over 80 prospects totaling over $16mm in closed revenue Note: Rankings represent market share determined by Greenwich Associates 2009
Survey In IL, TX, CA, and FL Chase is tied for the ranking with a
competitor # 1 # 1 # 1 # 5 # 5 # 8 Existing markets Expansion markets Prospecting efforts 17 |
 Differentiated product capabilities continue to drive growth Deposit balance growth ($ in millions) Gross IB revenue growth ($ in millions) 552 716 888 966 1,163 2005 2006 2007 2008 2009 CAGR = 16% 66,055 73,613 87,726 103,121 113,152 2005 2006 2007 2008 2009 CAGR = 11% Lending Core Cash Mgmt Investment Banking Treasury Services Products Custody & Fiduciary Retail & Credit Cards Alternative Financing Int’l TS Asset Management Regional competitors JPM product capabilities 18 |
 International capabilities are a key differentiator Growth in clients using international products 1,088 1,365 1,628 2,166 2006 2007 2008 2009 CAGR = 19% International deposit growth ($ in millions) 958 1,581 2,834 4,553 5,906 2005 2006 2007 2008 2009 CAGR = 44% CB clients have growing international banking requirements Companies between $200mm-$1B in sales 65% 1 expect non-US revenue increase in 5 years 60% 1 plan to expand overseas in next 5 years Weak and distracted competitors provide opportunity Increase penetration with current client base An estimated 6,000 clients have meaningful international operations We only do business overseas with one-third Highlights 1 Results from 2009 KPMG Survey on Global Expansion 19 |
 Healthy balance sheet positions us to invest opportunistically Commercial Lending and Treasury Services Partner with top-tier investor clients to finance distressed acquisitions Conservative terms, L+400-500 pricing Expansion of Deposit and TS business Commercial Real Estate Council Performing loan portfolio purchases from undercapitalized/overextended banks Utilize our workout resources on distressed portfolio acquisitions Opportunistic Investments Firmwide Initiatives Representative example for Commercial Real Estate opportunities 20 |
 Excellent franchise well positioned for future growth Great client franchise; low risk and stable earnings Loyal, conservative, experienced business owners Reliance on bank as primary capital provider/trusted advisor High demand for JPM’s full suite of products Non-lending revenue growth outpaces more RWA-dependent growth Prolific referral targets for IB, TSS, Card, AM Significant benefits and economies of scale Risk management: portfolio granularity and distribution Self-funding client base Expense highly correlated to earnings Positive operating leverage Ongoing opportunities for growth Expansion markets Increasing market share Opportunistic investing in recovery 21 |
 Agenda Page 22 Appendix 22 State of the business 1 Credit environment 11 Growth opportunities 16 |
 Commercial Banking organizational overview Middle Market Banking: Commercial, municipal, community financial institutions and not-for-profit clients; annual revenue generally between
$10mm and $500mm Mid-Corporate Banking: Clients with broader, international banking and investment banking needs; annual revenue generally between $500mm and $2B Real Estate Banking: Full service banking to investors and developers of institutional-grade real estate properties Commercial Term Lending: Term financing to real estate investors/owners, primarily multifamily, but also office, retail and industrial properties Chase Business Credit: Asset Based Lending (ABL) business generally secured and governed by the borrower’s accounts receivable and inventory Equipment Leasing: Term financing for corporate and high-net-worth clients: aircraft,
machinery, and other equipment Community Development Banking: Community development finance for affordable housing and economic development projects Chase Capital Corp: Mezzanine financing for commercial clients 2009 CB revenue = $5.7B Commercial Term Lending 15% Mid-Corporate Banking 19% Real Estate Banking 8% Middle Market Banking 54% Other 4% Customer segments Product specialties 23 |
 February 25, 2010 C A R D S E R V I C E S Gordon Smith, Card Services Chief Executive Officer |
 Executive summary The majority of our business segments have remained profitable through the cycle
Specific strategies are in place to improve the unprofitable business
segments We are seeing early signs that credit trends are improving across
all stages of delinquency Implementation of the majority of provisions in the CARD Act is complete Consumer spending is recovering slowly across all income segments, most industry
categories and geographies The strategic priorities outlined in 2008 are in market, positioning us for growth in a
post- CARD Act environment Our ROE target is 20% +/- 1 |
 Source: Internal Chase data which excludes WaMu, loan loss reserve actions, intra
company revenue sharing, intangible amortization, deferral of loan fees (FAS 91) and securitization income 1 Paymentech ROE represents return on tangible equity 4 of our 6 business segments remained profitable through the cycle and those business segments have also shown strong historical performance Affluent and HNW Partners (co-brand & retail) Paymentech 1 Profitable in 2009 % of OS 2006 2007 2008 2009 Small Business Mass Affluent rewards-engaged Mass Affluent Mass Affluent Total engaged: 66% 100% Card Services totals: 20% ROE < 0% ROE < 20% ROE 34% X X 2 |
 Unengaged /
underperforming Engaged Unengaged / underperforming Engaged In 2009, the rewards-engaged customers outperformed across all key metrics Source: Internal Chase data which excludes WaMu Sales/statement — 2009 Balance/statement — 2009 Net charge-off rate — 2009 Unengaged / underperforming Engaged 1.9x higher 3 46% lower 240bps lower |
 Through the cycle, we expect returns on the rewards engaged business to return close to
historical levels, which exceed our ROE targets We have focused on retooling the underperforming businesses: Small business: – Invest in unique tools, strategies and infrastructure – Launch new products (Ink) – Deploy new customer engagement strategies Mass Affluent non-rewards and unengaged customer strategies – Implement segment specific risk management strategies – Utilize Blueprint to increase overall customer engagement – Incorporate income and debt levels into portfolio analytics Strategies are in place to drive improved performance in the underperforming businesses 4 |
 $0 $40 $80 $120 $160 4Q08 1Q09 2Q09 3Q09 4Q09 6% 7% 8% 9% 10% Outstandings attrition has come largely from low margin loans Source: Internal Chase data 1 Data excludes WaMu (11)% YoY change ($18B) Year/year outstandings decline (5% +/- APR) $2B (15% +/- APR ) ($12B) (<1% APR) ($8B) Intro Promo Contract rate Components of YoY outstandings decline Net Interest Margin Outstandings 5 Outstandings ($ in billions) 1 and net interest margin (%) |
 Historically, a large portion of proceeds from cash-out refinancing and home equity
loans were used for personal consumption and to repay non-mortgage
debt Source: 2007 Federal Reserve publication “Sources and Uses of Equity
Extracted from Homes” 1 Home equity loans include both closed-end home equity loans and home equity lines of
credit >75% Estimated uses of cash-out refinancing Estimated uses of home equity loans 1 6 100% 27% 17% 34% 22% 0% 20% 40% 60% 80% 100% Total Repayment of non- mortgage debt Personal consumption Home improvement Real estate and financial assets 100% 26% 29% 31% 14% 0% 20% 40% 60% 80% 100% Total Repayment of non-mortgage debt Personal consumption Home improvement Real estate, Business expense and other >85% |
 Agenda Page 7 Credit environment 7 Regulatory update 22 Key consumer spending trends 25 Strategy — Progress to date 34 |
 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 2Q08 1Q09 4Q09 Net charge-off rate 30+ days delinquency rate As initial jobless claims and housing prices stabilize, credit losses show signs of
improvement Source: S&P for Case-Shiller index data; Bureau of Labor Statistics Source: Chase earnings releases; SEC filings (excluding WaMu) Note: Data includes the timing benefit of the payment holiday (approximately 60bps for
net charge-off rate and 20bps for 30+ days delinquency) 120 130 140 150 160 170 180 190 200 210 220 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 2Q08 1Q09 4Q09 1.2 1.4 1.6 1.8 2 2.2 2.4 2.6 2.8 Case-Shiller 20 city composite housing price index Initial jobless claims [monthly] Initial jobless claims and Case-Shiller housing price index Card Services net charge-off rate, 30+ days delinquency rate 8 |
 Credit losses have continued to stay at the lower end of the competitive range 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 Chase C AXP BAC COF DFS Source: Earnings releases; SEC filings Note: Internal Chase data which excludes WaMu and includes the timing benefit of the
payment holiday of approximately 60bps in 4Q09 Net charge-off rate
9 |
 Jan-08
May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 Roll-rate improvements are being observed in early delinquency buckets Source: Internal Chase data which excludes WaMu and the impact of the payment
holiday Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 Delinquency $ roll-rate from current to bucket 2 (31-60 Dpd) Delinquency $ roll-rate from current to bucket 1 (1-30 Dpd) Delinquency $ roll-rate from bucket 2 to bucket 3 (61-90 Dpd) Delinquency $ roll-rate from bucket 1 to bucket 2 (31-60 Dpd) 10 |
 We
continue to maintain strong portfolio quality vs. our competitors 1
Chase data as of Nov-09; represents Chase Issuance Trust 2 AXP FICO>720 is based off disclosure in Fixed Income Investor Presentation Source: SEC Filings (BAC – Dec-09, COF – Mar-09, DFS – Dec-09, AXP – Jul-09, C – Sept-09, Chase – Nov-09) 17.8% 20.2% 25.1% 28.2% 28.2% 29.3% AXP Chase BAC C DFS COF 56.0% 55.0% 44.1% 42.7% 42.0% 38.8% Chase¹ AXP BAC COF DFS C Trust receivables — FICO<660 or no FICO score Trust receivables — FICO>720 1 2 11 |
 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Jan-10 Card Services bankruptcy filings have stabilized with improvement observed in
January Source: Administrative office of the US Courts; Internal Chase data
which excludes WaMu Card Services average monthly bankruptcy filings (units) 12 |
 Our
credit strategies are focused on a few key drivers Continue to leverage retail
and partner customer data to inform our risk management practices Increase engagement of customers across all segments to help drive superior performance Use of overall customer balance sheet to augment our proprietary risk scores Debt-to-income measures Overall changes in debt and exposure levels Loan-to-value/mortgage data overlays Dynamic management of credit lines 13 |
 Chase relationship data provides powerful additional insight into credit risk Source: Internal Chase data Note: Data shown represents year 2 charge-off rate of a representative acquisition
vintage No current Chase relationship Card Services only Retail Financial Services only Card Services and Retail Financial Services Chase relationship at origination 260bps lower Card Services net charge-off rate (year 2 rate) 14 |
 0.00% 1.00% 2.00% 3.00% 4.00% 701-720 721-740 741-760 761-780 780+ FICO scores No partner relationship Partner relationship Moderate/low engagement High engagement The addition of partner data also provides improved risk prediction Source: Internal Chase data Note: Data shown represents 2009 performance for the partner business segments only
Customers who are engaged with a partner exhibit better risk performance Average 2.0x lower across all FICO bands Partner relationship — net charge-off unit rate Depth of partner relationship — net charge-off unit rate 15 |
 A
continued focus on rewards has helped drive a positive risk selection Rewards
represented 60% of outstandings at the end of 2009 Source: Internal Chase data
which excludes WaMu 1 Excludes Retail Partner general purpose credit cards 36% 40% 47% 54% 56% 60% 64% 60% 53% 46% 44% 40% 2004 2005 2006 2007 2008 2009 General Purpose Credit Cards - rewards General Purpose Credit Cards - nonrewards Rewards as % of end-of-period outstandings1 16 |
 Loss rates have been highly correlated to a customers’ external card debt Card Services portfolio is skewed to lower debt customers Source: Internal Chase data Note: 2008 unit loss rates based on Dec-08 performance of a representative Dec-07
vintage; 2009 unit loss rates based on Dec-09 performance of a
representative Dec-08 vintage 2% 3% 4% 5% 7% 3% 3% 5% 7% 9% 13% 5% <$5K $5-$10K $10-$20K $20-$30K $30K+ Total 2008 2009 Average net charge-off unit rate by external card debt 17 |
 No credit line
decrease Credit line decrease No credit line decrease Credit line decrease No credit line decrease Credit line decrease Over the past 2 years we have reduced portfolio exposure to customers with high debt
Source: Internal Chase data Note: Data shown for active accounts only and based on 4Q09 performance and is
representative of FY2009 performance 1 Total debt represents total customer debt (including mortgage) Credit line decreases and account closures were targeted to customers with high
debt-to-income 60% higher >3x higher >2x higher Total debt1 BankCard debt/income External card utilization 18 |
 We
are focused on a core universe of lower risk and lower debt populations for
new acquisitions 2007 2008 2009 200bps lower Source: Chase internal data; Direct mail universe 2007 2008 2009 15% higher 2007 2008 2009 23 pts higher Average BankCard debt/income – acquisitions Average FICO – acquisitions Average income – acquisitions 19 |
 Our
credit eligible prospect universe has decreased by approximately 15%
Source: Chase internal data; Direct mail and preapproved universe 1 Credit eligible population defined as those prospects that meet Card Services credit
criteria Applying behavioral trends related to debt levels,
debt-to-income ratio, bankcard utilization and inquiry levels will
reduce the eligible prospect population BankCard debt 2x higher BankCard utilization (%) 4x higher Income 30% lower Total debt to income > 50% higher Profile of eliminated universe (vs. remaining) Remaining eligible universe 85% Eliminated universe 15% 20 1 |
 We
have risk management strategies in place to drive improved performance As new
unemployment claims and housing prices stabilize, credit losses have shown signs of improvement Roll-rate improvements are being observed across all early delinquency
buckets We believe continued improvement will be dependent on the
following: – Absolute level of employment – New unemployment claims – Home value stability Our credit losses have continued to remain at the lower end of the competitive
range We continue to maintain strong portfolio quality vs. our
competitors Credit environment summary 21 |
 Agenda Page 22 Regulatory update 22 Credit environment 7 Key consumer spending trends 25 Strategy — Progress to date 34 |
 A
number of key CARD Act regulations have taken effect in February 2010 Effective Effective Effective August 20, 2009 February 22, 2010 August 22, 2010 Regulations¹ Regulations Advance notice of Change in Terms Time to make payments 45-day Overlimit Fee suppression with line decreases Reasonable and Proportional Fees 6-month Review of Repricing Actions 1 Major provisions only; not an exhaustive list Status Status Status COMPLETE COMPLETE DEVELOPMENT Payment Processing and Allocation Statement formats and disclosures Same day each month payment due dates Repricing restrictions and cure provisions Opt-in for Overlimit Fees “Pay to Pay” fee restrictions “Ability to Pay” assessment Protections for Young Consumers and Students Regulations 23 |
 Card Services has adapted a number of business practices in response to the new regulations Pricing restrictions Payment allocation Time to make payments Payment processing Fee restrictions Pricing review General Easy, consumer-oriented products, features, communications, and disclosures Selective pricing changes Acquisitions Shortened introductory APR duration Increased Goto APR Refinements to offer targeting Balance Build Elimination of life-of-loan offers Shorter duration promotional offers Reduced balance transfer volumes Net income impact: $500-750mm¹ after tax 1 Reasonable fees and pricing review impacts not included Primary CARD Act provisions Chase response 24 |
 Agenda Page 25 Key consumer spending trends 25 Credit environment 7 Regulatory update 22 Strategy — Progress to date 34 |
 Since 3Q09, we have seen a strengthening in consumer sales Source: Conference Board, internal Chase data which excludes WaMu 1 Sales data excludes cash advances and balance transfers The Conference Board Consumer Confidence Index Card Services sales change YoY Consumer Confidence Index vs. sales volumes¹ 26 -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% Jan- 08 Feb- 08 Mar- 08 Apr- 08 May- 08 Jun- 08 Jul- 08 Aug- 08 Sep- 08 Oct- 08 Nov- 08 Dec- 08 Jan- 09 Feb- 09 Mar- 09 Apr- 09 May- 09 Jun- 09 Jul- 09 Aug- 09 Sep- 09 Oct- 09 Nov- 09 Dec- 09 Jan- 10 0 10 20 30 40 50 60 70 80 90 100 |
 We
have seen strengthening in sales across our affluent customers Source:
Internal Chase data which excludes WaMu (1.0)% (1.7)% (4.5)% (4.7)% (3.5)% (3.8)% 0.8% 3.3% 4.8% (6.0)% (4.0)% (2.0)% 0.0% 2.0% 4.0% 6.0% <$75K $75-$125K >$125K 4Q08 3Q09 4Q09 Sales growth YoY — household income (annual) 27 |
 (3.1)% 0.4% (8.4)% (6.8)% 2.5% (3.4)% (1.0)% 7.7% 0.0% (10.0)% (8.0)% (6.0)% (4.0)% (2.0)% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% >200% 50-200% <50% 4Q08 3Q09 4Q09 We have also seen a strengthening in sales across our low indebted customers Source: Internal Chase data which excludes WaMu Note: Debt represents total customer debt (including mortgage) Sales growth YoY – debt-to-income ratio 28 |
 Sales growth is stronger in states where home prices depreciated least Source: Internal Chase data which excludes WaMu States with high levels of housing price stress (9.4)% (6.8)% (2.2)% (8.2)% (8.7)% (4.2)% (4.8)% 1.3% 1.4% (1.6)% 1.0% 2.8% (9.3)% (4.8)% (6.8)% (12.0)% (10.0)% (8.0)% (6.0)% (4.0)% (2.0)% 0.0% 2.0% 4.0% CA FL NV AZ All others 4Q08 3Q09 4Q09 Faster rebound in states less subject to housing price stress Sales growth YoY — state 29 |
 (20.0)% (15.0)% (10.0)% (5.0)% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Jan-10 Discretionary Non-discretionary (excl oil) Non-discretionary Sales have strengthened across discretionary and non-discretionary categories
1 Non-Discretionary includes supermarkets, wholesale clubs, discount stores, pharmacies
and gas (except where noted) Source: Internal Chase data which excludes
WaMu Sales growth YoY — discretionary vs. non discretionary1 30 |
 Positive momentum in sales towards the end of 2009 and extending to early 2010 Source: Internal Chase data which excludes WaMu (12)% (12)% (11)% (10)% (10)% (8)% (6)% (5)% (2)% (2)% (1)% 1% 2% 2% Home Furnishing Furniture Travel Agencies Hotel/Motel Department Stores Airlines Car Rental Specialty Retail Stores Restaurants Sporting Goods Computers Telecommunication Serv. Automotive Parts Supermarkets (1)% 3% 10% 1% (4)% 10% 3% 1% 4% (1)% 8% (0)% 5% 2% Sales growth YoY 2009 vs. 2008 Nov-08 to Jan-09 vs. Nov-09 to Jan-10 31 |
 (10.0)% (13.4)% (5.7)% (10.1)% (7.6)% (7.9)% (7.7)% (7.0)% (5.3)% (0.9)% 1.1% 5.2% (15.0)% (10.0)% (5.0)% 0.0% 5.0% 10.0% <$20K $20-$30K $30-$80K >$80k 4Q08 3Q09 4Q09 Customers with larger wallet sizes have exhibited a greater rebound in sales within select
spending categories Source: Internal Chase data which excludes WaMu 1 Wallet size is defined as a cardmembers total credit card spend Sales growth YoY — wallet size1: department stores 32 |
 (4.6)% (5.2)% (9.2)% (11.2)% (14.6)% (14.7)% Chase DFS COF AXP U.S. Card BAC C 116 23 (27) (48) (122) (154) Chase DFS COF AXP U.S. Card C BAC Source: Earnings releases; Internal Chase data 1 Chase sales data excludes WaMu, cash advances, BT’s and private label 2 DFS sales data excludes cash advances 3 BAC includes U.S. and International Consumer, excludes Small Business 4 C includes C Branded and excludes non-core Retail Partner portfolios Throughout the downturn Chase continued to gain sales volume market share 2009 YoY change in sales volume 1 2 3 4 2009 GPCC sales volume market share 16.5% 5.2% 5.6% 20.3% 10.0% 12.5% Change in general purpose credit card (GPCC) sales volume market share (bps) — 2007 vs. 2009 33 |
 Agenda Page 34 Strategy — Progress to date 34 Credit environment 7 Regulatory update 22 Key consumer spending trends 25 |
 Create lifelong, engaged relationships with our customers by being a trusted provider of financial services Vision Build a strong proprietary brand Launch customer-focused, flagship proprietary products Focus on partnerships that enhance and extend brand Leverage branch distribution Ensure consistency across all channels Rationalize existing rewards products Develop proprietary rewards platform Develop targeted offers for each customer segment Make redemption easy and intuitive Engage the customer early in the lifecycle Leverage every interaction to enhance the relationship Create a superior online experience Improve customer service Brand Rewards Customer experience We continue to stay focused on our core vision, despite a challenging business environment 35 |
 In
2009, we delivered on a number of key features outlined in our overall strategy 2008 - Strategy 2009 – Launch/Integrate 2010 - Execution Brand, value proposition: Focus on building Chase brand Launch new products and features Rationalize the partner business Renew focus on overall customer experience to drive engagement Assets and capabilities: Enhanced risk management tools Leverage enterprise relationship Customer-segment focused Focused on debt-to-income ratio and mortgage data WaMu branch network integration Establish overall Card Services strategy Complete business reorganization New products Establish brand/positioning Grow engaged customer base Establish Ultimate Rewards as a core relationship tool Scale adoption of Blueprint Complete partner portfolio rationalization Continue to invest in building our small business presence 36 |
 2007 2009 Over the past 2 years, Card Services has shown strong brand growth Source: Proprietary Chase Brand Health Tracking Online Survey of 400 US adult consumers per month (2007 – 2009) 1,800 bps higher 2007 2009 600 bps higher Unaided brand awareness Consideration 37 |
 We
continue to invest in partners that have strong overall brands which align
with Chase New partner — Hyatt Global hospitality company with more than 415 worldwide properties World-class brand Strong, growing loyalty program Travel partners Hotel partners Other partners Canada 38 |
 Total 2009
partner 2009 w/ partner terminations Total 2009 partner 2009 w/ partner terminations We have made significant progress in rationalizing our existing partner portfolio
12/31/2008 12/31/2009 Total 2009 partner 2009 w/ partner terminations Source: Internal Chase data as of Dec-09 207 118 43% lower 2% lower 1% lower Average outstandings Gross sales ROE Number of partners 70bps higher 39 |
 We
have streamlined our proprietary product portfolio Legacy Chase The new Chase 5 primary product brands 100+ Chase- branded programs 40 |
 Our
branch presence and strong co-brand partnerships provide superior access to the affluent market Source: Internal Chase data Note: Hotel partner presence based on hotel locations; airline concentration based on
location of airline hubs Chase strategic advantage 1,019 branches 340 branches 162 branches 416 branches 221 branches 257 branches 93 branches 56 branches 144 branches 40 branches 190 branches 78 branches Retail branches Partner concentration/coverage 12% 7% 6% 5% 5% 4% 3% 3% 3% 3% 2% 2% 2% 2% 2% New York Los Angeles CA bay area Chicago Washington DC Boston Philadelphia Houston Dallas/Ft. Worth Miami Atlanta Seattle Tampa Detroit San Diego Top15 affluent DMA’s – 60% of affluent population 41 |
 Overall
satisfaction Willingness to recommend Early results from Sapphire show strong customer satisfaction scores Source: Internal Chase data Note: Satisfaction scores based on Chase proprietary customer survey as of
Dec-09 2009 customer satisfaction scores – Chase Sapphire >90% >85% 42 |
 Early results from Ink Bold show an ability to generate strong engagement Chase business card rewards Ink Bold >2x higher Chase business card rewards Ink Bold >3x higher Source: Internal Chase data as of Dec-09 Average transaction size Average sales/statement 43 |
 Blueprint was launched, providing customers with a unique set of features that enable them to better manage their finances Design your plan and see progress on every statement Avoid paying interest Pay off larger purchases Pay down your balance faster See your spending trends at a glance 44 |
       Blueprint has been well-received “Something New: A Credit Card on Consumers’ Side” Kathy Chu | Sep. 15, 2009 “Most Innovative New Program for 2009” Editor’s Choice Award | Jan. 12, 2010 “Chase’s new credit card tool can actually help you save money” Best of 2009 | Dec. 2009 # 10: Way to Play it Smart Under the CARD Act Jan. 17, 2010 “I truly think it’s revolutionary.” Leading National Consumer Advocacy Leader “Chase Blueprint brings new transparency and consumer control to credit cards.” Bryan Derman | Sep. 15, 2009 45 |
 Customers using Blueprint have shown early signs of strong spend engagement Source: Internal Chase data as of Dec-09 3 months prior to enrollment 3 months after enrollment ~ 10% higher Average sales lift post-enrollment 46 |
 Jul-09
Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Full Pay enrolled No Full Pay enrollment Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Full Pay enrolled No Full Pay enrollment Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Full Pay enrolled No Full Pay enrollment Full Pay is showing early indications that it is a tool that enables incremental
spend capture ~30% were not spending in category before enrollment Source: Internal Chase data as of Dec-09 20% were not spending in category before enrollment Full Pay enrollment available Lift in sales – Full Pay Lift in sales – Gas & convenience category Lift in sales – Grocery store category 47 |
 Ultimate Rewards was launched in May 2009 48 |
 2 5 >20 <1 Jun-09 Sept-09 Dec-09 Dec-10 In 2010, Chase debit cards will be added to Ultimate Rewards giving customers greater earning power Source: Internal Chase data Note: Data based on open accounts Projected Ultimate Rewards accounts (millions) 49 |
 We
have created targeted engagement strategies across the customer lifecycle to
reinforce product value, drive usage and build the Chase brand New customers Deliver early, frequent, relevant contacts at start of relationship Engaged customers Low engaged, high potential customers Drive higher customer engagement Reinforce rewards, benefits and provide superior service Increase wallet share through relevant offers and competitive discussions 50 |
 To build stronger relationships with new customers, we have designed an end-to-end engagement strategy utilizing multiple touchpoints during the first 90 days After 90 days First 90 days Source: Internal Chase data 1 Sales/month data for 1Q08 vintage as of 4Q09 >80% higher Early engagement strategy New customer touchpoints (first 90 days) Sales/month based on account activation1 51 |
 2008 2009 2008 2009 We continue to drive down operating expense 1 Headcount includes contractors 2 2008 data represents 4Q08 annualized numbers to normalize for WaMu acquisition and
consolidation of Paymentech Source: Internal Chase data 2 Reduction of ~3,000 16% lower $500mm value Headcount1 Operating expense as a % of average outstandings – indexed to 2008 52 |
 Key
overall business strategy messages Continued to invest in the business
throughout the downturn Made significant progress towards building a stronger
Chase proprietary brand Launched a number of key products and features in
2009, early results are encouraging Continuing to rationalize our existing
partnership portfolio Focused on providing a superior customer
experience 2010 focus will be on execution against our key product
launches 53 |
 Executive summary The majority of our business segments have remained profitable through the cycle
Specific strategies are in place to improve the unprofitable business
segments We are seeing early signs that credit trends are improving across
all stages of delinquency Implementation of the majority of provisions in the CARD Act is complete Consumer spending is recovering slowly across all income segments, most industry
categories and geographies The strategic priorities outlined in 2008 are in market, positioning us for growth in a
post- CARD Act environment Our ROE target is 20% +/- 54 |
 In
spite of credit and regulatory challenges, repositioning of Card business has potential to achieve a 20% +/- return on equity Source: Internal Chase data which excludes WaMu, loan loss reserve actions, intra company
revenue sharing, intangible amortization, deferral of loan fees (FAS 91) and securitization income 1 Paymentech ROE represents return on tangible equity Affluent & HNW Partners (co-brand & retail) Paymentech 2006 2007 2008 2009 Small Business Mass Affluent rewards engaged Mass Affluent = 20% ROE < 0% ROE < 20% ROE Steady State Total engaged: TOTAL Card Services : 55 1 |
 February 25, 2010 R E T A I L F I N A N C I A L S E R V I C E S Charlie Scharf, Retail Financial Services Chief Executive Officer
|
 2005 2009 Retail Financial Services Net income $3,427 $97 ROE 26% 0% Average equity ($B) $13.4 $25.0 Retail Banking Total revenue $8,274 $17,950 Credit costs 206 1,142 Expense 5,372 10,357 Net income $1,645 $3,903 Consumer Lending Total revenue $6,556 $14,742 Credit costs 519 14,798 Expense 3,213 6,391 Net income $1,782 ($3,806) Retail Financial Services $3.9B Retail Banking profit offset almost entirely by losses in Consumer Lending
($ in millions) 1 |
 RFS
net income ($ in millions) Retail Banking CAGR of 12% (excluding WaMu) Strong profit and profit growth excluding Home Lending portfolio Home Lending Portfolio, excluding reserve changes, will continue to lose money for the next 3 – 5 years 2005 2009 CAGR Retail Banking $1,645 $3,903 24% Mortgage Bank 379 1,200 33% Auto 268 384 9% Other 152 60 NM Subtotal $2,444 $5,547 23% Home Lending portfolio 983 (5,450) NM Total RFS $3,427 $97 NM 2 |
 Agenda Page 3 Retail Banking 3 Home Lending portfolio updates 19 Repurchase expense 35 Capital and returns 40 Appendix 48 |
 2005 2006 2007 2008 2009 Pretax income ($ in billions) Consumer Banking and Business Banking Consistent organic growth $2.7 $3.2 $3.7 $4.9 $6.5 4 |
 Great benefit of being part of JPM Marketing Ability to continue to invest throughout the downturn - examples Increased marketing spend by over $200mm over 4 years; increase of 90% and CAGR of 18% since 2005 New Branches Grew branch network by 2,513 branches from end of 2005 to 5,154 Of which 642 branches represented organic growth of 24% Additional Salespeople Added 10,924 Personal Bankers since 2005 Of which 4,463 represented organic growth of 63% Replace ATMs with Deposit- Friendly Added 7,456 Deposit Friendly ATMs since 2007; nearly 50% of current ATM fleet is Deposit Friendly 5 |
 Great benefit of being part of JPM (continued) Building Chase brand with Card – enormous benefit Over $2B marketing spend this year across all Consumer lines of business 1.1mm new Retail Bank customers (since 2007) that were previously only Card
customers Specialized cards and joint rewards programs – ~40% of bank customers have a Chase card Cross-line of business leverage Percentage of customers that used a branch teller in 4Q09 – 69% of JPM consumer households – 69% of Business Banking customers – 48% of PWM customers – 38% of CB customers – 27% of Private Banking customers Sharing of products with TSS and CB Cross-referrals of affluent customers with AM Of 2009 mortgage originations, 27% of customers had or now have a bank account 6 |
 Consistent focus since 2002 Acquire net new customers – grow checking accounts Deepen relationships Product (card, loans, investments) Services (bill pay, debit rewards, overdraft protection, alerts, mobile) Invest in Chase distribution network New builds / ATMs Branch rebrand / reconfiguration of interiors and exteriors Customer service Actively engage customers in the branch 7 |
 605 794 914 961 564 2005 2006 2007 2008 2009 Chase organic growth – Retail Banking (excluding WaMu) Total revenue ($ in billions) Net income ($ in billions) Net new checking accounts (in 000’s) Personal bankers (#) 7,067 7,573 9,650 10,558 11,530 2005 2006 2007 2008 2009 1.9 2.2 2.7 2.6 1.7 0.2 0.1 0.1 0.5 2005 2006 2007 2008 2009 Net Income Credit impact 11.8 11.0 9.9 8.4 9.0 2005 2006 2007 2008 2009 CAGR 15% CAGR 13% CAGR 14% CAGR 9% 8 |
 Households with active online bill pay (# in 000’s) Households with direct deposit (# in 000’s) Total debit reward cards (# in 000’s) Mobile & Alert users (# in 000’s) 1,279 1,685 2,277 1,022 Jan-07 Jan-08 Jan-09 Dec-09 Organic growth drivers (excluding WaMu) 4,926 5,852 6,744 4,240 Jan-07 Jan-08 Jan-09 Dec-09 1,759 3,369 5,350 823 Jan-07 Jan-08 Jan-09 Dec-09 CAGR 31% CAGR 17% CAGR 87% 5,957 6,850 1,833 3,147 2007 2008 2009 Enrolled Mobile Users Enrolled Alert Users Note: Includes Retail and Card users CAGR 66% 9 |
 Washington Mutual update First conversion completed 7 months from announcement Last conversion completed in 13 months Conversions included: 30,000 new branch workstations Over 2,000 new branch servers Loan and deposit systems Finished over 900 “occasio” style branch retrofits Installed 1,100+ Deposit Friendly ATMs in heritage WaMu branches Continue to build and train sales force Over the next few years, we will add – Over 2,000 Personal Bankers – 450 +/- Investment Sales Representatives – 375 +/- Small Business Bankers Create a consistent customer experience Expand ATM presence and continue Deposit Friendly ATM growth Conversions complete Business integration – 2010+ 10 |
 Core message: We’re Chase; We’re a robust Retail bank; We’re here in
(California); We’re here to help 18% 68% 61% 61% 60% 54% 53% 64% 10% 20% 30% 40% 50% 60% 70% 1Q09 2Q09 3Q09 4Q09 Heritage Chase California Awareness in heritage Chase1 and California footprints Unaided awareness in California as a bank with checking 1 Heritage Chase represents Texas, Illinois, New York, and New Jersey 11 |
 WaMu cross-sell and growth drivers $0.6 $1.4 $1.6 $2.0 $1.3 $0.4 4Q08 1Q09 2Q09 3Q09 4Q09 WaMu Growth Opportunity $0.8 $1.1 $1.5 $1.5 $0.9 $1.0 4Q08 1Q09 2Q09 3Q09 4Q09 WaMu Growth Opportunity CAGR 88% CAGR 233% Investment sales ($ in billions) Mortgage sales ($ in billions) 94 143 156 138 85 4Q08 1Q09 2Q09 3Q09 4Q09 CAGR 46% Note: Growth opportunity estimate based on Chase per branch data applied to WaMu branch count 751 849 870 934 950 995 889 773 302 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 WaMu Growth Opportunity CAGR 62% Note: Household data available for WaMu starting May 2009 Credit Cards - Retail Banking (000’s) Households with active online bill pay (000’s) 12 |
 CA/FL WaMu sales force Personal bankers Financial advisors 2,689 3,141 3,774 3,592 2,697 4Q08 1Q09 2Q09 3Q09 4Q09 Business bankers Loan officers 141 225 271 314 145 4Q08 1Q09 2Q09 3Q09 4Q09 384 407 419 518 380 4Q08 1Q09 2Q09 3Q09 4Q09 CAGR 40% CAGR 123% CAGR 35% est. est. 330 413 449 473 373 4Q08 1Q09 2Q09 3Q09 4Q09 CAGR 43% est. est. est. est. est. est. 13 |
 2010 products and services innovation Any Phone Device 2 Way Text Message Chase Quick Deposit Chase Network/Quick Pay Chase Ultimate Rewards Debit/Credit Rewards Pooling Chase Real Cash New Co-Brand Partnerships Deposit Friendly ATM Instant Issue Debit Contact-Less/“Blink” Debit Spanish Website Channel Integrated platform Credit and debit rewards Mobile banking 14 |
 Business Banking opportunity is significant Chase WaMu Deposits ($B) $46.7 $7.6 Loans ($B) 16.4 1.3 Non-lending revenue $2,100 $500 Lending revenue 500 100 Subtotal $2,600 $600 # of branches 3,190 1,863 Revenue per branch ($ in 000’s) ~$800 ~$300 Leverage the Chase model in WaMu branch footprint Offering a full range of products (e.g. Treasury Services, Lending) Achievable at minimal additional cost, driving meaningful revenue growth $500k per branch in incremental revenue x 2k WaMu branches = $1B revenue 2009 ($ in millions, unless otherwise noted) 15 |
 Business Banking has undertaken several initiatives to increase lending Market Coverage New / Enhanced Products Lending initiatives Business Banking announced addition of 300+ additional small business bankers on 11/9/09 ~160 bankers have been added to date Launched new Owner Occupied Real Estate promotion that generates significant fee savings for customers Introduced new small business credit cards (Ink cards) that help owners manage their cash-flow needs Credit Process Improvements Realigned credit policy (in light of stabilizing market conditions) to improve approval rates – implemented new credit scorecard Implemented second review of declined applications to provide more opportunities for approval Initial results have been very positive: Loan volume is up sharply year-over- year Application volume and loan pipeline continue to get stronger Chase has become one of the top SBA lenders Chase committed to lending $10B to Small Businesses in 2010 16 |
 Affluent banking opportunity is significant Significant opportunity to capture share with existing customers and attract new customers Capture of 20-25% wallet share with 10-20% of current affluent clients would
result in incremental pre-tax of $500mm - $1B Note: Share of Wallet calculated using total U.S. asset, investment and deposit estimates
from IXI WealthComplete®, June 2009. IXI is an Equifax company Mass Affluent <$500k $500k-$5mm Total % of Chase Consumer Bank households 92% 8% 100% % of Total deposit & investment wallet 33% 67% 100% Chase share of existing clients' wallet Deposit wallet 28% 11% 18% Investment wallet 9% 2% 4% Total wallet 19% 5% 9% Current Chase Consumer Bank household distribution and share of wallet by wealth
level Potential incremental opportunity with affluent clients 17 |
 Retail Banking opportunities Continue to execute in Chase footprint Build out WaMu consumer products and customer base Build out WaMu Business Banking Debit overdraft changes short-term negative – but a much better customer experience over time Capture greater share of affluent Relationship products Entry and mass product differentiation These are large opportunities 18 |
 Agenda Page 19 Home Lending portfolio updates 19 Retail Banking 3 Repurchase expense 35 Capital and returns 40 Appendix 48 |
 4Q09
Outstandings ($ in billions) Consumer Lending portfolio Total loans Non purchased credit-impaired Credit- impaired Home Equity $134 $101 $33 Option ARM 46 9 37 Prime Mortgage 81 59 22 Subprime Mortgage 22 13 9 Total Home Lending portfolio¹ $283 $182 $101 Fair value mark² $20 NA $20 Home Lending carrying value 263 $182 81 Auto 46 46 NA Student and other 15 15 NA Total Consumer Lending portfolio $324 $243 $81 Loan loss reserve (LLR) $13.8 $12.2 $1.6 LLR as % of loans / LLR + FVM as % of UPB CI NA 5.0% 21.4% 36% of loans in the $101B purchased credit-impaired portfolio are marked with
life-of- loan loss assumptions 5.0% reserve ratio on non purchased credit-impaired portfolio 1 Credit-impaired represents Unpaid Principal Balance (UPB) not book value 2 Fair Value Mark (FVM) remaining is the original mark reduced by liquidation losses realized Note: Table above excludes prime mortgage loans and student loans classified as
held-for-sale 20 |
 1Q09 2Q09 3Q09 4Q09 Home Equity $1,098 $1,265 $1,142 $1,177 Prime Mortgage¹ 316 496 540 597 Subprime Mortgage 364 410 422 452 Total Home Lending portfolio $1,778 $2,171 $2,104 $2,226 Home Lending portfolio losses 1 Includes Option ARM Growth in 2008 and 2009 with some degree of leveling in 2H09 Over the next several quarters, quarterly losses could reach: $1.4B for Home Equity $600mm for Prime Mortgage $500mm for Subprime Mortgage Net charge-offs ($ in millions), excluding purchased credit-impaired
portfolio 21 |
 $0 $1,000 $2,000 $3,000 $4,000 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 $0 $1,300 $2,600 $3,900 $5,200 $6,500 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 $0 $1,000 $2,000 $3,000 $4,000 $5,000 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Prime Mortgage delinquency trend ($ in millions) Subprime Mortgage delinquency trend ($ in millions) Home Equity delinquency trend ($ in millions) Commentary 30-150 showing stability across portfolios (not yet improving) 150+ rising in mortgage portfolios Consumer credit—delinquency trends Excluding purchased credit-impaired loans 30 – 150 day delinquencies 30+ day delinquencies 150+ day delinquencies Note: Delinquencies prior to September 2008 are heritage Chase Prime Mortgage excludes Held for Sale, Asset Wealth Management and Government Insured
Loans 30 – 150 day delinquencies 30+ day delinquencies 150+ day delinquencies 30 – 150 day delinquencies 30+ day delinquencies 150+ day delinquencies 22 |
 Delinquency treatment Delinquent accounts are treated consistently whether in a trial modification or not
Each month that cumulative trial payments are less than contractual payment an
account will age through to the next delinquency bucket When a loan is permanently modified the loan is returned to current status Loss recognition Accounts are charged-off and written down to collateral value at 150 DPD (days past
due) Only exception to this policy are accounts that reach 150 DPD during
their trial period that are current with each and every scheduled trial
payment The cumulative impact of this exception was less than $150mm at
12/31/09 We continue to take additional write downs, as required, as loans
progress towards foreclosure and REO, with the objective of the extension in
foreclosure timelines not to result in deferred losses When a loan is
permanently modified: A TDR (life of loan) reserve is established; TDR
reserves are reviewed on a quarterly basis for continued adequacy
Loan is returned to accrual status once 6 payments have been made, 3 after
permanent modification We will be very transparent about the performance of modified loans in our
reporting Accounting and Control: objective not to defer delinquencies or
losses 23 |
 Loans are written down to the fair value of collateral less cost to sell at 150 DPD As loans progress through the foreclosure process, additional write downs are
recorded. Approximately one-third of loans greater than 150 DPD are being resolved in ways other than foreclosure/REO Loan loss reserves are established to cover expected losses for loans that are resolved
later and at higher severities through the foreclosure process. In addition
to the write-downs shown above we are holding ~20% of the gross UPB in
reserve against these delinquent loans Increase in 150+ mortgage delinquencies
– Prime and Subprime mortgage Gross UPB Net UPB % Write Down 1 1Q08 $1,559 $1,383 11% 4Q09 8,413 5,743 32% Difference: $6,854 $4,360 4Q09 $8,413 $5,743 32% Subject to foreclosure moratoriums 499 242 52% Extended foreclosure / REO timelines 2,477 1,469 41% In foreclosure / loss mitigation 3,273 2,402 27% Effective trial 1,743 1,232 29% Effective trial held from write-down 421 398 5% Note: Numbers in table above represent a combination of Prime and Subprime
mortgages 1 Write-down as % of gross UPB ($ in millions), excluding purchased credit-impaired portfolio 24 |
 Purchased credit-impaired loans Loans recorded at fair value at acquisition Changes in cash flows trigger accounting events – impairment or change in yields Principal credit losses tracked on both a 150 day net charge-off basis and
liquidation (cash) basis 150 day net charge-offs provide a leading
indicator of liquidation losses (not a cash flow) Liquidation losses
recorded when cash proceeds received from resolving loan through REO 1
The carrying values above are net of the loan mark but not the LLR 2 Original loss estimates were $30.47 billion, resulting in an overall loss rate of
25%. Principal loss estimates, and therefore the adjusted lifetime loss estimates, increased by $400 million for Option ARMs and $1 billion for Prime Mortgage. These subsequent increases were
recorded as LLR vs. an adjustment to the loan mark Note: 150 day net
charge-offs reflect losses recorded on a basis consistent with the non-Purchased Credit Impaired Portfolio. The net losses shown in this table are not included in the net charge offs reported by the firm as these loans were considered impaired on the acquisition date and
were written down to fair value in accordance with SOP 03-3 Balances ($ in
millions) Principal losses (nonaccretable difference/LLR) 25 Lifetime loss estimates adj 2 LTD losses – 150 day NCOs LTD losses - liquidation $ % $ % $ % Home Equity $13,138 32% $6,790 17% $6,060 15% Option ARMS 10,650 25% 5,617 13% 1,744 4% Prime Mortgage 4,240 17% 2,319 9% 794 3% Subprime Mortgage 3,842 35% 2,003 18% 796 7% Total Portfolio $31,870 27% $16,729 14% $9,394 8% Remaining Mark/Current UPB 1 16% 22% 9/25/2008 12/31/2009 UPB Carrying value UPB Carrying value 1 Home Equity $40,785 $28,478 $32,958 $26,520 Option ARMs 42,552 32,302 37,379 29,039 Prime Mortgage 25,643 22,329 21,972 19,693 Subprime Mortgage 10,841 6,999 9,021 5,993 Total Portfolio $119,821 $90,108 $101,330 $81,245 |
 Excluding purchased credit-impaired portfolio ($ in millions) Home equity delinquency $0 $250 $500 $750 $1,000 $1,250 $1,500 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 30 - 59 days delinquent 60 - 89 days delinquent 90 - 150 days delinquent 150+ days delinquent Jan-10 Note: Data prior to September 2008 is heritage Chase 26 |
 Home equity 30-149 day delinquency by vintage Heritage Chase portfolio ($ in millions) $0 $100 $200 $300 $400 $500 $600 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 Time on books (months) FY 2004 FY 2005 1H06 2H06 1H07 2H07 1H08 2H08 B A C 27 |
 -45% HPI ~$6B/yr Home equity – loss scenarios (when will seasoning occur) 4Q annualized losses were $4.7B (excluding purchased credit-impaired) HPI projections are used to forecast portfolio balances by CLTV band, and future losses
are estimated using vintage loss rates by CLTV band and projecting forward
under three scenarios Scenario based on: National HPI peak-to-trough of -37% Loss rates staying flat to 4Q09 annualized, and decreasing/increasing 1% annualized
per quarter for better/worse scenarios for >100% CLTV loans Losses ($B) Better Flat Worse 2010 4.0 4.5 5.0 2011 3.0 4.0 5.5 2012 2.0 3.0 5.0 -37% HPI Home Equity losses over next several quarters could reach $1.4B 28 $200mm/y r $400mm/y r |
 Excluding purchased credit-impaired portfolio Prime mortgage delinquency $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 30 - 59 days delinquent 60 - 89 days delinquent 90 - 150 days delinquent 150+ days delinquent Note: Delinquencies prior to September 2008 are heritage Chase Prime Mortgage excludes Held for Sale, Asset Wealth Management and Government Insured
Loans Jan-10 29 |
 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 Time on books (months) FY 2004 FY 2005 1H06 2H06 1H07 2H07 1H08 2H08 Prime mortgage 30-149 day delinquency by vintage Heritage Chase portfolio ($ in millions) 30 |
  Owned REO by state 2008 1Q09 2Q09 3Q09 4Q09 Units referred to foreclosure 68,029 27,579 27,280 26,222 16,686 Total in process 33,278 51,411 64,526 76,594 83,845 REO Beginning 8,297 12,656 12,432 9,777 8,687 Adds 14,771 6,217 4,443 4,460 3,659 Sold/Other (10,412) (6,441) (7,098) (5,550) (4,981) Ending 12,656 12,432 9,777 8,687 7,365 Michigan 10% All Other 46% Ohio 4% Illinois 10% Minnesota 4% California 15% Florida 11% Owned REO REO Inventory (in units) Note: Includes owned not-at-risk Inventory California 1,099 Florida 793 Michigan 764 Illinois 713 Minnesota 302 Ohio 297 All Other 3,397 Total 7,365 Total ($B) $1.7 Units (as of December 2009) 31 |
 Projection of REO – total serviced portfolio 33.0 29.5 26.5 24.5 47.3 53.1 51.8 46.4 42.3 35.2 29.2 23.1 45.0 38.0 31.5 26.5 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Historical Baseline Stressed REO units (in 000’s) Inventory levels have fallen significantly Lower inflows due to foreclosure timelines and trial modifications Faster outflows – average days to sell from 182 (Dec 2008) to 157 (Jan 2010) REO expected to grow steadily – size and speed of growth will depend on: Foreclosure timelines Loan modifications Delinquencies Forecast assumptions available in appendix 32 |
 Source: LoanPerformance MarketTrends, Chase Source: LoanPerformance MarketTrends, Zillow, Chase Foreclosure inventory (units, in 000’s) REO % of home sales Distressed inventory trends / forecast – Los Angeles market example Market-level analysis to understand impact on home prices/sales: using Chase and
industry data/estimates Goal: understand potential range of outcomes
REO levels and % of home sales continue to grow through 2011 and remain high (below peak levels) Source: Chase, Moody’s Economy.com Source: LoanPerformance MarketTrends, Chase Note: Industry estimates based on forecast of Chase serviced portfolio Industry REO inventory (units, in 000’s) REO % of home sales 0 10 20 30 40 50 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 0 2 4 6 8 10 12 14 16 Industry Chase 0% 10% 20% 30% 40% 50% 60% 70% Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Chase Est. LP Est. Zillow 0% 10% 20% 30% 40% 50% 60% 70% Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Actual Baseline Adverse 0 5 10 15 20 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Actual Baseline Adverse 33 |
 REO
as a % of home sales Estimated REO as a % of home sales – Top 10 MSAs (Baseline assumptions) Expect REO as % of home sales to grow and remain high (but below 2009 peaks) in most markets through at least 2012 2Q09 4Q09 4Q12 Los Angeles 52% 39% 22 – 28% New York 11% 12% 12 – 16% Santa Ana 30% 16% 18 – 23% Long Island 8% 8% 5 – 7% Chicago 33% 28% 21 – 28% San Diego 38% 25% 24 – 31% San Francisco 14% 10% 9 – 12% Oakland 47% 20% 18 – 23% Phoenix 57% 37% 39 – 50% San Jose 43% 22% 14 - 18% 34 |
 Agenda Page 35 Repurchase expense 35 Retail Banking 3 Home Lending portfolio updates 19 Capital and returns 40 Appendix 48 |
 Repurchase risk Repurchase demands and associated losses have grown significantly over the last 12-18
months Delinquencies (90+ DPD loans) and accordingly repurchase demands are concentrated in 2005- 2007 vintages Demands grew through 2008 and into 2009 and remain at elevated levels Top drivers for finalized repurchases reflect misrepresentations as follows: Credit / undisclosed debt Income / employment Appraisal Misrepresentations typically surface and are resolved through a review process with the
GSE's within 24-36 months +/- As such we expect, and are seeing, the contribution of earlier vintages to repurchases
and losses to decline In 4Q09 approximately 14%, 58% and 20% of repurchase demands respectively
came from 2006, 2007 and 2008 vintages Background and timing 36 |
 Repurchase risk (continued) Demands received from investors are reviewed and ~50% are successfully rescinded
("cured") by providing additional documentation or evidence
We are able to put or claim back any losses on ~40% of loans that were third party
originated When the repurchase is finalized for our account we either
buy-back the loan and include in NPLs or make-whole the investor for losses incurred In 2009, we repurchased or made-whole $1.1B of loan UPB In 2009, $1.6B of repurchase expenses / reserve build were reflected as contra revenues
against production income Settled repurchase expenses have been running at $150mm+/- per quarter over the last 2-3 quarters In estimating reserves both demands presented and probable future demands are
considered; reserves are based on best estimates and experience to date and
subject to significant uncertainty At December 31, 2009, we have $1.5B of reserves in RFS for presented and future
demands Process and accounting 37 |
 Repurchase risk (continued) Volume remains elevated at ~$1B per quarter and likely to remain high as we work through bad vintages Channel Mix Wholesale Broker remains elevated at ~45% SISA (stated income stated assets) concentration has declined from 43% in 2006 vintage demands to 12% in 2008/09 vintage State concentration Florida 29% California 21% Arizona 6% Third-party originated 40% 0% 10% 20% 30% 40% 50% 60% 70% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 2005 & Prior FY 2006 FY 2007 FY 2008 FY 2009 $0 $200 $400 $600 $800 $1,000 $1,200 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 FY 2009 FY 2008 FY 2007 FY 2006 2005 & Prior Repurchase demand from investor by vintage ($ in millions) Repurchase demand from investor by vintage % Activity overview 38 |
 Repurchase risk (continued) Repurchases result in one of the following outcomes, relative to default status: Loan buyback – Repurchase a loan REO – Buy back the property Make-Whole – Remit funds to the GSE covering loss on disposition of the loan/property Of the $1.1B repurchased in 2009, approximately two-thirds were loans
/ REO repurchased vs. losses reimbursed $218mm of repurchased loans on balance sheet in NPL status at 12/31/09 $41mm of REO relating to loan repurchases on balance sheet at 12/31/09 FY 2009 UPB of loans repurchased $1,085 Repurchase expense 580 Change in reserves 1,032 Total Expense $1,612 2009 repurchases ($ in millions) 39 |
 Agenda Page 40 Capital and returns 40 Retail Banking 3 Home Lending portfolio updates 19 Repurchase expense 35 Appendix 48 |
 RFS
capital and returns Intend to report “RFS ongoing” and “runoff Home Lending portfolios” separately going forward Goal to provide clarity to ongoing earnings of RFS franchise Clearly separate impact of runoff portfolios which will include WaMu purchased credit-impaired Discontinued products (e.g. subprime, Alt-A, and option-ARM) Broker originated loans Limited documentation loans Current ECLTVs greater than 80% Note: ECLTV = estimated combined loan to value considering all available lien positions
related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by Moody's Economy.com 41 |
 Home Lending portfolio breakout At current production level ongoing portfolio expected to run down $5-10B over the
next 2 years – financial impact is not material to RFS results Note: Table above excludes Mortgage Banking ($ in billions, unless otherwise noted) 42 2009 Actuals Average Loans Net Interest Income ($mm) Net Income ($mm) Ongoing Home Equity $35 Prime Mortgage 5 Total ongoing $40 $850 $250 Runoff Purchased credit-impaired $85 Home Equity 73 Prime Mortgage 49 Option ARM 9 Subprime 14 Total runoff $230 $5,700 ($5,700) Total Home Lending $270 $6,550 ($5,450) |
 RFS
capital and ROE - 2009 Retail Banking is allocated capital as a stand alone business with a theoretical asset
allocation (i.e. fully matched balance sheet) Retail Banking has consistently delivered 40% +/- ROE, performing at target today Ongoing Consumer Lending business achieving / priced to target returns Total RFS challenged in medium term; will continue until bad loans runoff Average Loans Equity Net Income ($mm) ROE Retail Banking $18 $9.5 $3,903 41% Consumer Lending 109 7.5 1,894 25% RFS ongoing $127 $17.0 $5,797 34% Home Lending runoff 230 8.0 (5,700) NM Total RFS $357 $25.0 $97 0% ($ in billions, unless otherwise noted) 43 |
 RFS
capital and ROE Ongoing franchise delivers near target ROE in proforma 2009 with higher capital allocated 2009 Equity 2010 Equity Proforma ROE ROE target Retail Banking $9.5 $10.0 39% 40% Consumer Lending 7.5 10.5 18% 15% RFS ongoing $17.0 $20.5 28% 30% Home Lending runoff 8.0 7.5 NM Total RFS $25.0 $28.0 0% 30% 2009 income over 2010 equity ($ in billions) 44 |
 Simulated runoff portfolio forecast $3B +/- of capital is freed up over next three years as runoff portfolio liquidates 2009 2010 2011 2012 Average loans Purchased credit-impaired $85 $75 $65 $55 Other runoff 145 120 100 85 Total $230 $195 $165 $140 Equity $8.0 $7.5 $6.5 $5.0 ($ in billions) 45 |
 Home Lending runoff portfolio - simulated 2010 results are for scenario purposes only In 2011 and 2012: Charge-offs could decline $2B – $3B per year Reserve releases could range from $1B – $4B per year Net Income could range from $0 – ($2.5B) in 2011 and $0 +/- in 2012 As the credit environment improves and losses decline, the Home Lending runoff portfolio could break even in 2012 / 2013 after which it could contribute net income of $500mm +/-, declining slowly over time 2009 2010 Net interest income $5,700 $4,200 Expense 1,550 1,750 Charge-off and reserve change 13,600 7,000 – 11,000 Net Income ($5,700) ($3,000) – ($5,000) ($ in millions) 46 |
 Total RFS simulation Retail Banking uses 2010 analyst average, growing at 8% per year thereafter Consumer Lending held flat for 2010 scenario, growing at 8% per year thereafter
Runoff from prior page Future runoff net income ranges shown are for scenario purposes only to provide a
variety of possible results Key assumptions 2012 2009 2010 2011 2012 Equity ROE Retail Banking $3,903 $4,000 $4,300 $4,600 $10.5 44% Consumer Lending 1,894 1,900 2,000 2,200 11.5 19% RFS ongoing $5,797 $5,900 $6,300 $6,800 $22.0 31% Home Lending runoff (5,700) (3,000) – (5,000) 0 – (2,500) 0 +/- 5.0 NM Total RFS $97 $2,900 - $900 $6,300 - $3,800 $6,800 +/- $27.0 25%+/- Net income ($ in millions, equity in billions) 47 |
 Agenda Page 48 Appendix 48 Retail Banking 3 Home Lending portfolio updates 19 Repurchase expense 35 Capital and returns 40 |
 NSF/OD policy changes and timeline 50 Home Lending severity 51 Purchased credit-impaired portfolio 52 Option ARM recast risk 56 Prime portfolio - delinquencies and losses 67 Subprime portfolio - delinquencies and losses 71 REO forecast assumptions 76 Page Home Equity portfolio - delinquencies and losses 57 Appendix table of contents Modification overview 77 Home Lending - portfolio runoff detail 78 49 |
 Policy Change Date NSF/OD changes January 28 Reduce daily maximum number of NSF / OD items from 6 to 3 March 29 Debit card & ATM transaction posting order modified so transactions are recognized as they occur, not largest to smallest; checks, ACH, and deposits still
post at end of day; deposits post first, everything else posts high to
low Implement a $5 cushion (if the account is overdrawn by less than $5 at the end of the day Chase will not charge an overdraft fee) Move to a flat $34 NSF fee from a tiered structure that charged up to $35 Move to a standard $15 extended overdraft fee Customers have the option to say “no” to Chase Debit Card Overdraft Coverage July 1 New checking accounts can choose to opt in or out of Chase Debit Card Overdraft Coverage August 15 All checking account customers (i.e. existing portfolio) that have not chosen to opt
in will no longer receive Chase Debit Card Overdraft Coverage Annualized after-tax financial impact: ~$500mm 50 |
 Home Lending average loss per unit / severity Commentary on Home Equity trends Home Equity severity ~90% 57% of 2009 losses are coming from Home Equity 10% 20% 30% 40% 50% 60% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Prime Subprime Note: Severity is calculated by taking total cum losses for a loan and dividing by the
last outstanding principal balance. The severity month is tagged by the most recent month in which the loan took a loss Excluding purchased credit-impaired portfolio 51 |
 Purchased credit-impaired current ECLTVs CA/FL represented 65% at year-end 2009 The underlying customer delinquency rate for the purchased credit-impaired
loans was 28% at December 31, 2009 24% (or $24.2 billion) is in some stage of loss mitigation or in the process of foreclosure 1 Represents the combined unpaid principal balance of loans which considers all available
lien positions related to the property, which we own or service, divided by the collateral value. Current property values are estimated based on home valuation
models utilizing nationally recognized home price index valuation estimates and do not represent actual appraisals 2 Ratios of carrying value to current collateral value for the prime mortgage and option
ARM portfolios are net of the allowance for loan losses of $1.1 billion and $491 million, respectively, as of December 31, 2009 Note: ECLTV = estimated combined loan to value considering all available lien positions
related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com As of December 31, 2009 52 UPB Current ECLTV ratio 1 Carrying value Carrying value to collateral value Home Equity 32,958 127% 26,520 102% Option ARMs 37,379 128% 29,039 98% 2 Prime Mortgage 21,972 121% 19,693 102% 2 Subprime Mortgage 9,021 122% 5,993 81% Total 101,330 81,245 |
 Remaining accretable yield represents interest income to be recognized over the
remaining life of loans at current market rates For variable rate loans, the interest rate recorded is adjusted based on the underlying
variable rate index In 2009, $2.1B of net interest income, or 2.43%, earned on purchased credit-impaired
portfolio. The impact on the total Consumer Lending portfolio, which had a reported 270 bps net
yield, was (8) bps Purchased credit-impaired portfolio yields ($ in millions) 1 Accretable yield dollars and percentages are net of internal funding costs 2 Accretable yield percentages calculated using average loan balances, net of LLR
53 9/25/08 1Q09 2Q09 3Q09 4Q09 Carrying Value, Ending $90,108 $87,572 $85,406 $83,202 $81,245 Remaining Accretable Yield 39,454 29,114 26,963 24,459 25,544 Accretable Yield $ - Net 1 NA 607 487 487 494 Accretable Yield % - Net 1,2 NA 2.79% 2.26% 2.29% 2.42% |
 0% 5% 10% 15% 20% 25% 30% 35% Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 December 2009 UPB $21,972 Accounts (000) 60K Average loan size (as of today in ‘000s) $365 Current average ECLTV 121% >150% ECLTV 21% >100% ECLTV 72% Average original CLTV 77% Limited documentation 73% Average original FICO 704 Average current FICO 663 % of loans Broker originated 55% % of loans in CA/FL 66% % in 2006/2007 vintage 60% 30+ rate 30.2% 90+ rate 25.0% Note: Prime mortgage excludes government insured loans ECLTV = estimated combined loan to value considering all available lien positions related
to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com Original CLTV = original combined loan to value that was
available upon underwriting the loan Purchased credit-impaired – Prime
$5.2B in loss mitigation/modification pipeline Prime Mortgage key characteristics 30 – 150 day delinquencies 30+ day delinquencies 150+ day delinquencies Prime Mortgage delinquency trend Commentary 54 |
 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 December 2009 UPB $37,379 Accounts 89K Average loan size (as of today in ‘000s) $420 Current average estimated ECLTV 128% >150% current ECLTV 29% >100% current ECLTV 73% Average original CLTV 73% Limited documentation 79% Average original FICO 699 Average current FICO 642 % of loans Broker originated 52% % of loans in CA/FL 66% % in 2006/2007 vintage 58% % of loans making minimum payments 52% (78% of Currents) 30+ rate 36.6% 90+ rate 30.4% Purchased credit-impaired – Option
ARM $7.5B in loss mitigation/modification pipeline 30 – 150 day delinquencies 30+ day delinquencies 150+ day delinquencies Option ARM key characteristics Option ARM delinquency trend Commentary Note: ECLTV = estimated combined loan to value considering all available lien positions
related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com Original CLTV = original combined loan to value that was
available upon underwriting the loan 55 |
 Option ARM recast risk – total portfolio 2010 2011 2012 2013+ Total Total UPB $6,322 $3,946 $5,024 $4,252 $19,544 Weighted-average payment shock % 7% 28% 49% 12% 23% Weighted-average ECLTV at recast 105% 119% 102% 60% 97% Option ARM recasts - current accounts ($ in millions) Most borrowers are making minimum payments or payments that are below interest only 52% of all borrowers are making minimum payments Of borrowers who are current today 78% are making minimum payments and 18% are negatively amortizing ~$15B in current conventional Option Arms are projected to recast in the next
3 years with increasingly severe payment shock. Bulk of recasts are scheduled from bad vintages in 2005-2007 ECLTV and payment shock at recast drive delinquency Modification efforts targeting borrowers with high payment shocks are underway Note: Estimates made using current market interest rates ECLTV = estimate combined loan to value considering all available lien positions related
to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 56 |
 Home equity portfolio statistics 1st Lien 2nd Lien Total UPB $27.4 $74.0 $101.4 # of Accounts (000’s) 455 1,397 1,852 % Behind Chase 1st NA 31% NA Average current ECLTV 65% 97% 88% 4Q09 Loss Rate 1.01% 5.92% 4.52% UPB % <100 ECLTV 90% 65% 72% 100-125 ECLTV 6% 19% 15% 125+ ECLTV 4% 16% 13% ($ in billions), excluding purchased credit-impaired portfolio Note: ECLTV = estimated combined loan to value considering all available lien positions
related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 57 |
 $624 $597 $630 $744 $720 $725 $798 $833 $317 $323 $375 $496 $500 $475 $532 $537 $568 $641 $758 $1,022 $1,010 $952 $1,015 $990 $472 $599 $857 $914 $879 $968 $924 $43 $49 $409 $60 $64 $8 $18 $29 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Prior to 2005 2005 2006 2007 2008 Early and late stage delinquency by vintage (30+ days delinquent) Note: Data prior to September 2008 is heritage Chase Home Equity – excluding purchased credit-impaired portfolio ($ in millions) 58 |
 $77 $61 $95 $110 $113 $120 $201 $109 $164 $191 $171 $182 $248 $263 $219 $315 $443 $493 $429 $456 $191 $165 $278 $386 $455 $411 $400 $1 $7 $10 $16 $18 $19 $23 $21 $36 $35 $141 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Prior to 2005 2005 2006 2007 2008 Home Equity contribution to losses Note: Data prior to September 2008 is heritage Chase Net charge-offs ($ in millions), excluding purchased credit-impaired
portfolio 59 |
 Home Equity 30+ Delinquency $ Amount 100+ current ECLTV 414 379 423 518 506 510 551 603 64 74 78 86 96 101 97 90 0 200 400 600 800 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 0.0% 2.0% 4.0% 6.0% 8.0% 30-150 day delinquencies 150+ day delinquencies NCO rate 57 111 286 563 705 609 704 660 51 47 52 39 31 2 6 11 0 100 200 300 400 500 600 700 800 900 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 30-150 day delinquencies 150+ day delinquencies NCO rate 240 341 356 404 386 347 368 295 29 36 44 46 45 46 37 15 0 100 200 300 400 500 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 30-150 day delinquencies 150+ day delinquencies NCO rate Note: Data prior to September 2008 is heritage Chase ECLTV = estimated combined loan to value considering all available lien positions related
to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 807 784 874 1,063 1,042 1,003 1,123 1,142 318 316 316 321 354 419 422 442 0 500 1000 1500 2000 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 0.0% 0.5% 1.0% 1.5% 2.0% 30-150 day delinquencies 150+ day delinquencies NCO rate <100% current ECLTV 100 – 125% current ECLTV 125 – 150% current ECLTV >150% current ECLTV 60 |
 Current ECLTV
12/31/07¹ 12/31/08 12/31/09 < 80% $51.6 $58.5 $48.5 80 – 90% 15.9 15.3 12.4 90 – 100% 13.9 11.9 10.9 100 – 125% 12.2 16.1 16.0 125 – 150% 1.1 7.4 5.9 >150% 0.1 5.1 7.7 Total $94.8 $114.3 $101.4 Home equity current ECLTV stratification – UPB $ (UPB $ in billions), excluding purchased credit-impaired portfolio 1 12/31/2007 is heritage Chase Only ECLTV = estimated combined loan to value considering all available lien positions related
to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com $13.4 $28.6 $29.6 61 |
 Current ECLTV
1Q09 2Q09 3Q09 4Q09 < 80% 0.32% 0.33% 0.34% 0.40% 80 – 100% 2.07% 2.42% 2.43% 2.84% 100 – 125% 5.91% 7.21% 6.80% 7.15% 125 – 150% 12.12% 14.72% 13.10% 12.76% >150% 28.32% 33.32% 29.34% 27.17% Total 3.93% 4.61% 4.25% 4.52% Home equity losses by current ECLTV Note: ECLTV = estimated combined loan to value considering all available lien positions
related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com Net charge-offs ($ in millions), excluding purchased
credit-impaired portfolio Annualized loss rates, excluding purchased
credit-impaired portfolio 62 Current ECLTV 1Q09 2Q09 3Q09 4Q09 < 80% $45 $46 $45 $51 80 – 100% 128 148 144 161 100 – 125% 234 284 258 277 125 – 150% 211 240 219 182 >150% 480 547 476 506 Total $1,098 $1,265 $1,142 $1,177 |
 Home Equity loss rates by state UPB Loss Rate Losses ($) 4Q09 1Q09 2Q09 3Q09 4Q09 4Q09 California $20.7 6.46% 7.81% 6.67% 7.04% $367 Florida 5.3 11.24% 12.71% 9.52% 11.27% 151 Arizona 5.2 7.14% 7.09% 7.47% 9.60% 126 New York 16.9 1.40% 1.94% 2.09% 2.23% 95 Illinois 6.6 2.63% 2.98% 2.96% 3.67% 61 Michigan 3.2 5.01% 5.63% 5.85% 6.47% 53 Nevada 0.5 13.36% 15.54% 15.37% 17.97% 21 All Other 43.0 2.46% 2.99% 3.00% 2.79% 303 Total $101.4 3.93% 4.61% 4.25% 4.52% $1,177 (UPB $ in billions, losses in millions), excluding purchased credit-impaired
portfolio 63 |
 Home Equity current ECLTV by state – UPB $ <80% 80 – 90% 90 – 100% 100 – 125% 125 – 150% >150% California $7.8 $2.0 $1.6 $3.0 $2.5 $3.8 Arizona 1.1 0.3 0.3 0.9 0.8 1.9 Florida 1.2 0.4 0.4 1.1 0.9 1.4 Michigan 0.8 0.3 0.3 0.7 0.7 0.4 Nevada 0.1 0.0 0.0 0.1 0.1 0.2 Illinois 2.8 1.0 1.0 1.6 0.2 0.0 New York 10.2 2.2 1.9 2.4 0.2 0.0 All Other 24.5 6.2 5.4 6.2 0.5 0.0 Total $48.5 $12.4 $10.9 $16.0 $5.9 $7.7 % of Total 48% 12% 11% 16% 6% 7% (UPB $ in billions), excluding purchased credit-impaired portfolio Note: ECLTV = estimated combined loan to value considering all available lien positions
related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 64 |
 Home Equity losses by current ECLTV <80% 80 – 100% 100 – 125% 125 – 150% >150% California $22 $12 $78 $322 $1,084 Florida <1 5 58 147 425 Arizona <1 <1 20 54 359 Nevada 1 <1 5 9 63 Michigan 4 18 38 67 67 Illinois 1 38 116 58 0 New York 16 87 198 33 0 All Other 143 421 540 162 11 Total $187 $581 $1,053 $852 $2,009 % of Total 4% 12% 23% 18% 43% 2009 net charge-offs ($ in millions), excluding purchased credit-impaired
portfolio Note: ECLTV = estimated combined loan to value considering all
available lien positions related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 65 |
 <80% 80 – 100% 100 – 125% 125 – 150% >150% California 0.29% 0.35% 2.67% 13.38% 29.49% Florida 0.00% 0.61% 5.60% 16.65% 29.68% Arizona 0.00% 0.00% 2.28% 6.90% 18.83% Nevada 1.25% 0.00% 6.39% 13.27% 33.14% Michigan 0.46% 2.86% 4.89% 9.71% 15.41% Illinois 0.02% 1.77% 7.10% 37.00% 4.67% New York 0.16% 2.17% 8.60% 17.51% 0.48% All Other 0.60% 3.67% 8.48% 21.94% 26.72% Total 0.39% 2.49% 6.58% 14.41% 26.06% Home Equity losses rates by current ECLTV 2009 annualized loss rates , excluding purchased credit impaired portfolio Note: ECLTV = estimated combined loan to value considering all available lien positions
related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 66 |
 Net
charge-offs ($ in millions), excluding purchased credit-impaired portfolio Prime contribution to losses Note: Data prior to September 2008 is heritage Chase $12 $11 $18 $13 $19 $39 $44 $61 $18 $37 $62 $72 $122 $159 $149 $156 $20 $56 $93 $100 $148 $247 $285 $288 $4 $10 $23 $63 $47 $36 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Prior to 2006 2006 2007 2008 67 |
 Prime losses by current ECLTV Current ECLTV 1Q09 2Q09 3Q09 4Q09 < 80% 0.49% 0.83% 0.75% 0.66% 80 – 100% 0.63% 1.55% 1.61% 1.70% 100 – 125% 1.33% 3.01% 3.36% 3.80% 125 – 150% 4.90% 8.53% 9.12% 11.28% >150% 15.33% 18.79% 22.99% 23.33% Total 1.95% 3.07% 3.45% 3.81% Annualized loss rates, excluding purchased credit-impaired Current ECLTV 1Q09 2Q09 3Q09 4Q09 < 80% $33 $53 $48 $41 80 – 100% 28 66 68 70 100 – 125% 34 75 83 98 125 – 150% 54 89 95 105 >150% 163 198 231 254 Total $312 $481 $525 $568 Net charge-offs ($ in millions), excluding purchased credit-impaired Note: ECLTV = estimated combined loan to value considering all available lien positions
related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 68 |
 Prime loss rates by state UPB Loss Rate Losses ($) 4Q09 1Q09 2Q09 3Q09 4Q09 4Q09 California $18.3 3.38% 4.76% 4.80% 4.75% $217 Florida 5.2 5.71% 6.08% 10.00% 8.52% 111 New York 7.8 0.31% 0.36% 0.53% 1.30% 25 Arizona 1.3 3.38% 7.45% 7.38% 7.16% 24 Nevada 0.7 4.83% 9.34% 8.07% 7.26% 13 Illinois 2.2 0.65% 1.41% 2.14% 1.58% 9 Michigan 1.2 1.80% 4.58% 1.86% 3.27% 9 All Other 22.7 0.39% 1.67% 1.71% 2.81% 160 Total $59.4 1.95% 3.07% 3.45% 3.81% $568 Note: Loss rates are annualized (UPB $ in billions), excluding purchased credit-impaired 69 |
 <80% 80 – 100% 100 – 125% 125 – 150% >150% California $41 $34 $112 $186 $516 Florida 12 22 47 85 240 Arizona 3 3 12 15 52 Nevada 1 1 7 9 33 Michigan 3 5 11 6 5 Illinois 5 12 8 5 0 New York 9 19 17 2 0 All Other 101 136 76 35 0 Total $175 $232 $290 $343 $846 % of Total 9% 12% 16% 18% 45% Prime losses by current ECLTV FY2009 net charge-offs ($ in millions), excluding purchased credit-impaired
portfolio Note: ECLTV = estimated combined loan to value considering all
available lien positions related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 70 |
 Excluding purchased credit-impaired portfolio Subprime mortgage delinquency Note: 30+ day delinquencies prior to September 2008 are heritage Chase $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 30 - 59 days delinquent 60 - 89 days delinquent 90 - 150 days delinquent 150+ days delinquent Jan-10 71 |
 Excluding purchased credit-impaired portfolio (net charge-offs - $ in millions) Subprime contribution to losses Note: Data prior to September 2008 is heritage Chase $54 $77 $84 $64 $117 $117 $104 $127 $50 $42 $47 $40 $42 $42 $50 $51 $45 $73 $139 $204 $195 $237 $250 $261 $3 $14 $18 $13 $10 $11 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Prior to 2006 2006 2007 2008 72 |
 Subprime losses by current ECLTV Current ECLTV 1Q09 2Q09 3Q09 4Q09 < 80% 2.85% 3.19% 2.71% 3.28% 80 – 100% 6.22% 8.10% 7.76% 9.95% 100 – 125% 12.74% 16.30% 16.45% 18.61% 125 – 150% 22.05% 25.28% 23.46% 26.59% >150% 34.57% 36.73% 51.57% 43.93% Total 9.91% 11.50% 12.31% 14.01% Current ECLTV 1Q09 2Q09 3Q09 4Q09 < 80% $36 $38 $31 $34 80 – 100% 61 77 71 87 100 – 125% 93 116 112 125 125 – 150% 81 81 80 71 >150% 93 98 128 135 Total $364 $410 $422 $452 Net charge-offs ($ in millions), excluding purchased credit-impaired
portfolio Annualized loss rates, excluding purchased credit-impaired
portfolio Note: ECLTV = estimated combined loan to value considering all
available lien positions related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 73 |
 Subprime loss rates by state UPB Loss Rate Losses ($) 4Q09 1Q09 2Q09 3Q09 4Q09 4Q09 Florida $1.6 24.93% 21.74% 30.80% 31.27% $130 California 1.7 15.24% 14.73% 12.60% 14.60% 62 New York 1.5 5.18% 4.88% 5.02% 9.36% 36 Illinois 0.6 16.90% 18.37% 22.12% 20.51% 30 Michigan 0.3 28.12% 35.77% 27.75% 23.50% 19 Arizona 0.3 16.43% 19.23% 18.68% 16.54% 13 Nevada 0.1 18.52% 16.74% 19.88% 21.23% 5 All Other 6.4 3.34% 7.66% 7.49% 9.77% 157 Total $12.5 9.91% 11.50% 12.31% 14.01% $452 Note: Loss Rate calculated using Quarter End Balances. Loss rates are annualized
(UPB $ in billions), excluding purchased credit-impaired portfolio 74 |
 Subprime losses by current ECLTV <80% 80 – 100% 100 – 125% 125 – 150% >150% Arizona $2 $2 $6 $12 $35 California 7 11 47 85 116 Florida 13 16 70 133 253 Illinois 10 23 75 18 0 Michigan 6 13 25 31 35 Nevada 0 0 2 2 15 New York 13 31 52 3 0 All Other 88 200 169 28 1 Total $139 $296 $446 $312 $455 % of Total 8% 18% 27% 19% 28% Net charge-offs ($ in millions), excluding purchased credit-impaired
portfolio Note: ECLTV = estimated combined loan to value considering all
available lien positions related to the property which we own or service Current ECLTVs are calculated using original appraised value adjusted using the latest HPI published by
Moody's Economy.com 75 |
 Key
assumptions used for REO forecast Delinquency Assumptions Loss Mitigation Assumptions Delinquency units (30+) Increase 10% to 25% through mid 2010 Delinquency units (30-59) Flattish to +7% though mid 2010 % of delinquent units that flow into loss mitigation 50%-75% % of loss mitigation units that turn into permanent modifications 12.5%-25% Recidivism rate on completed modifications 1 year out: 35%-50% 3 years out: 50%-65% Foreclosure Timelines Timelines to remain at current levels Conservative assumptions used to understand the range of outcomes – business may perform meaningfully better REO and distressed sales lower with: Lower delinquency Higher percent of permanent modifications Lower recidivism Current elongated foreclosure timelines (timing only for REO) 76 |
 25 customers do not pay as agreed 75 customers pay as agreed 29 do not submit all documents required or submit documents that require refinement for underwriting 13 are not HAMP eligible but will qualify for other modification products 33 are able to be underwritten Program Summary (as of January 31, 2010) Modification overview Many borrowers return forms missing key information (signatures, SSN, etc.) or do not return one of four required documents Current outreach strategy includes 36 calls, 15 letters, and 2 door-knocks per account prior to cancellation for missing documents Treasury issued a new directive 5 requiring mortgagor document perfection prior to HAMP trial modification offer 1 Data in table from January 1, 2009 through January 31, 2010. HAMP program launched
April 1 2 Chase program modifications include Home Equity 3 HAMP modifications offered data as of January 29, 2010 4 Seasoned population are those HAMP modifications with first payments due April
– November, therefore all required payments were complete by January
31 5 Treasury directive issued January 28, 2010 and effective June 1, 2010 Modification offers continue to grow, but obtaining documents required for HAMP completion
remains an issue For every 100 seasoned 4 HAMP trial modifications offered: Dedicated resources 15 operating sites across the country Approximately 14,750 staff dedicated to loss mitigation Local loan-modification counselors in 34 Chase Homeownership Centers Focused campaign Borrowers assigned a specific agent with end-to-end responsibility What we are doing Documentation challenges and mitigation efforts 77 HAMP Chase Programs² Agency Total Modifications offered 3 222,192 193,104 232,166 647,462 Approved for permanent modifications 41,149 70,888 30,676 142,713 Permanent modifications completed 11,592 60,210 28,089 99,891 1 |
 Home Lending runoff portfolio - simulated 2010 results are for scenario purposes only and numbers are rounded 2009 2010 Purchased credit-impaired Net Interest Income $2,100 $1,800 Expenses 650 750 Impairment 1,600 Net Income ($100) $600 Runoff (excl purchased credit-impaired) Net Interest Income $3,600 $2,400 Expenses 900 1,000 Charge-offs and reserve change 12,000 7,000 - 11,000 Net Income (5,600) (3,500) - (5,500) Total ($5,700) ($3,000) - ($5,000) ($ in millions) 78 |