Delaware | 1-5805 | 13-2624428 | ||
(State or Other Jurisdiction of | (Commission File Number) | (IRS Employer | ||
Incorporation) | Identification No.) | |||
270 Park Avenue, New York, NY | 10017 | |||
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description of Exhibit | |
12.1
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges | |
12.2
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements | |
99.1
|
JPMorgan Chase & Co. Earnings Release Second Quarter 2008 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement Second Quarter 2008 |
2
JPMORGAN CHASE & CO. | ||||||
(Registrant) |
||||||
By: | /s/ Louis Rauchenberger | |||||
Louis Rauchenberger | ||||||
Managing Director and Controller | ||||||
[Principal Accounting Officer] |
3
Exhibit Number | Description of Exhibit | |
12.1
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges | |
12.2
|
JPMorgan Chase & Co. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements | |
99.1
|
JPMorgan Chase & Co. Earnings Release Second Quarter 2008 Results | |
99.2
|
JPMorgan Chase & Co. Earnings Release Financial Supplement Second Quarter 2008 |
4
Six months ended June 30, (in millions, except ratios) | 2008 | |||
Excluding Interest on Deposits |
||||
Income before income taxes |
$ | 6,302 | ||
Fixed charges: |
||||
Interest expense |
9,908 | |||
One-third of rents, net of income from subleases (a) |
220 | |||
Total fixed charges |
10,128 | |||
Add: Equity in undistributed loss of affiliates |
454 | |||
Income before income taxes and fixed charges, excluding capitalized interest |
$ | 16,884 | ||
Fixed charges, as above |
$ | 10,128 | ||
Ratio of earnings to fixed charges |
1.67 | |||
Including Interest on Deposits |
||||
Fixed charges, as above |
$ | 10,128 | ||
Add: Interest on deposits |
8,200 | |||
Total fixed charges and interest on deposits |
$ | 18,328 | ||
Income before income taxes and fixed charges, excluding capitalized interest, as above |
$ | 16,884 | ||
Add: Interest on deposits |
8,200 | |||
Total income before income taxes,
fixed charges and interest on deposits |
$ | 25,084 | ||
Ratio of earnings to fixed charges |
1.37 | |||
Six months ended June 30, (in millions, except ratios) | 2008 | ||||
Excluding Interest on Deposits |
|||||
Income before income taxes |
$ | 6,302 | |||
Fixed charges: |
|||||
Interest expense |
9,908 | ||||
One-third of rents, net of income from subleases (a) |
220 | ||||
Total fixed charges |
10,128 | ||||
Add: Equity in undistributed loss of affiliates |
454 | ||||
Income before income taxes and fixed charges, excluding capitalized interest |
$ | 16,884 | |||
Fixed charges, as above |
$ | 10,128 | |||
Preferred stock dividends (pre-tax) |
130 | ||||
Fixed charges including preferred stock dividends |
$ | 10,258 | |||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
1.65 | ||||
Including Interest on Deposits |
|||||
Fixed charges including preferred stock dividends, as above |
$ | 10,258 | |||
Add: Interest on deposits |
8,200 | ||||
Total fixed charges including preferred stock dividends and interest on deposits |
$ | 18,458 | |||
Income before income taxes and fixed charges, excluding capitalized interest, as above |
$ | 16,884 | |||
Add: Interest on deposits |
8,200 | ||||
Total income before income taxes,
fixed charges and interest on deposits |
$ | 25,084 | |||
Ratio of earnings to fixed charges and preferred stock dividend requirements |
1.36 | ||||
JPMorgan Chase & Co. 270 Park Avenue, New York, NY 10017-2070 NYSE symbol: JPM |
||
www.jpmorganchase.com
|
![]() |
|
News release: IMMEDIATE RELEASE |
| Increased credit reserves by $1.3 billion firmwide; loan loss allowance coverage of
2.86% for consumer businesses and 2.13% for wholesale businesses |
||
| Recorded markdowns of $1.1 billion in the Investment Bank, related to leveraged
lending and mortgage-related positions |
||
| Continued to generate solid underlying business momentum: |
- | Commercial Banking and Treasury & Securities Services delivered record earnings
and revenue, benefiting from continued double-digit growth in loans and deposits |
||
- | Investment Bank ranked #1 for Global Investment Banking Fees for the first half
of 2008 and #1 for Global Debt, Equity & Equity-related volumes for the first half of
2008 and the second quarter of 2008(1) |
||
- | Retail Financial Services grew revenue by 15% |
| Completed acquisition of The Bear Stearns Companies Inc. on May 30, 2008; integration
progressing well |
||
| Tier 1 Capital remained strong at $98.7 billion, or 9.1%
(estimated) |
Investor Contact: Julia Bates (212) 270-7325
|
Media Contact: Joe Evangelisti (212) 270-7438 | |
(1)Source:
Dealogic for fees and Thomson for volumes |
Results for IB | 1Q08 | 2Q07 | |||||||||||||||||||||||||||||||||||
($ millions) | 2Q08 | 1Q08 | 2Q07 | $ O/(U) | O/(U)% | $ O/(U) | O/(U)% | ||||||||||||||||||||||||||||||
Net Revenue |
$ | 5,470 | $ | 3,011 | $ | 5,798 | $ | 2,459 | 82 | % | ($328 | ) | (6 | )% | |||||||||||||||||||||||
Provision for Credit Losses |
398 | 618 | 164 | (220 | ) | (36 | ) | 234 | 143 | ||||||||||||||||||||||||||||
Noninterest Expense |
4,734 | 2,553 | 3,854 | 2,181 | 85 | % | 880 | 23 | |||||||||||||||||||||||||||||
Net Income / (Loss) |
$ | 394 | ($87 | ) | $ | 1,179 | $ | 481 | NM | ($785 | ) | (67 | )% | ||||||||||||||||||||||||
2
§ | Ranked #1 in Global Debt, Equity and Equity-Related; #1 in Global Syndicated Loans;
#1 in Global Equity and Equity-Related; #1 in Global Long-Term Debt; and #3 in Global Announced M&A; based upon volume,
according to Thomson Financial for year-to-date ending June 30, 2008. |
||
§ | Ranked #1 in Global Investment Banking Fees for the first half of 2008, according to
Dealogic. |
||
§ | Return on Equity was 7% on $23.3 billion of average allocated capital; end of period
allocated capital was $26.0 billion. |
Results for RFS | 1Q08 | 2Q07 | |||||||||||||||||||||||||||||||||||
($ millions) | 2Q08 | 1Q08 | 2Q07 | $ O/(U) | O/(U)% | $ O/(U) | O/(U)% | ||||||||||||||||||||||||||||||
Net Revenue |
$ | 5,015 | $ | 4,702 | $ | 4,357 | $ | 313 | 7 | % | $ | 658 | 15 | % | |||||||||||||||||||||||
Provision for Credit Losses |
1,332 | 2,492 | 587 | (1,160 | ) | (47 | ) | 745 | 127 | ||||||||||||||||||||||||||||
Noninterest Expense |
2,670 | 2,570 | 2,484 | 100 | 4 | % | 186 | 7 | |||||||||||||||||||||||||||||
Net Income / (Loss) |
$ | 606 | ($227 | ) | $ | 785 | $ | 833 | NM | ($179 | ) | (23 | )% | ||||||||||||||||||||||||
3
§ | Checking accounts totaled 11.3 million, up 980,000, or 9%. |
||
§ | Average total deposits grew to $213.9 billion, up $6.6 billion, or 3%. |
||
§ | Average home equity loans were $95.1 billion, up $5.9 billion, or 7%. Home
equity originations were $5.3 billion, down $9.3 billion, or 64%. |
||
§ | Average business banking
loans were $16.1 billion and originations were $1.7
billion. |
||
§ | Number of branches grew to 3,157, up 68. |
||
§ | Branch sales of credit cards increased 4%. |
||
§ | Branch sales of investment products increased 2%. |
||
§ | Overhead ratio (excluding amortization of core deposit intangibles)
decreased to 47% from 50%. |
4
§ | Mortgage loan originations were $56.1 billion, up 27% from the prior year
and 19% from the prior quarter. |
||
§ | Total third-party mortgage loans serviced were $659.1 billion, an increase
of $86.7 billion, or 15%. |
§ | Auto loan originations were $5.6 billion, up 6%. |
||
§ | Average loans were $44.7 billion, up 11%. |
Results for CS | 1Q08 | 2Q07 | |||||||||||||||||||||||||||||||||||
($ millions) | 2Q08 | 1Q08 | 2Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | ||||||||||||||||||||||||||||||
Net Revenue |
$ | 3,775 | $ | 3,904 | $ | 3,717 | ($129 | ) | (3 | )% | $ | 58 | 2 | % | |||||||||||||||||||||||
Provision for Credit Losses |
2,194 | 1,670 | 1,331 | 524 | 31 | 863 | 65 | ||||||||||||||||||||||||||||||
Noninterest Expense |
1,185 | 1,272 | 1,188 | (87 | ) | (7 | ) | (3 | ) | | |||||||||||||||||||||||||||
Net Income |
$ | 250 | $ | 609 | $ | 759 | ($359 | ) | (59 | )% | ($509 | ) | (67 | )% | |||||||||||||||||||||||
5
§ | Return on equity was 7%, down from 22%. |
||
§ | Pretax income to average managed loans (ROO) was 1.04%, compared with 3.26%
in the prior year and 2.52% in the prior quarter. |
||
§ | Net interest income as a percentage of average managed loans was 7.92%, down
from 8.04% in the prior year and 8.34% in the prior quarter. |
||
§ | Net accounts of 3.6 million were opened during the quarter. |
||
§ | Charge volume was $93.6 billion, an increase of $5.6 billion, or 6%. The
growth reflects an increase of 7% in sales volume and a 4% increase in balance
transfers. |
||
§ | Announced the termination of Chase Paymentech Solutions, a global payments
and merchant acquiring joint venture between JPMorgan Chase and First Data
Corporation. The dissolution is expected to be completed by year-end 2008 and
JPMorgan Chase will retain approximately 51% of the business under the Chase
Paymentech name. |
||
§ | Merchant processing volume was $199.3 billion, an increase of $19.6 billion,
or 11%, and total transactions were 5.6 billion, an increase of 812 million, or
17%. |
Results for CB | 1Q08 | 2Q07 | |||||||||||||||||||||||||||||||||||
($ millions) | 2Q08 | 1Q08 | 2Q07 | $ O/(U) | O/(U)% | $ O/(U) | O/(U)% | ||||||||||||||||||||||||||||||
Net Revenue |
$ | 1,106 | $ | 1,067 | $ | 1,007 | $ | 39 | 4 | % | $ | 99 | 10 | % | |||||||||||||||||||||||
Provision for Credit Losses |
47 | 101 | 45 | (54 | ) | (53 | ) | 2 | 4 | ||||||||||||||||||||||||||||
Noninterest Expense |
476 | 485 | 496 | (9 | ) | (2 | ) | (20 | ) | (4 | ) | ||||||||||||||||||||||||||
Net Income |
$ | 355 | $ | 292 | $ | 284 | $ | 63 | 22 | % | $ | 71 | 25 | % | |||||||||||||||||||||||
6
§ | Overhead ratio was 43%, an improvement from 49%. |
||
§ | Record gross investment banking revenue (which is shared with the Investment
Bank) was $270 million, up by $34 million, or 14%. |
||
§ | Average loan balances were $71.1 billion, up $11.2 billion, or 19%, from the
prior year and up $3.0 billion, or 4%, from the prior quarter. |
||
§ | Average liability balances were $99.4 billion, up $15.2 billion, or 18%,
from the prior year and flat compared with the prior quarter. |
Results for TSS | 1Q08 | 2Q07 | |||||||||||||||||||||||||||||||||||
($ millions) | 2Q08 | 1Q08 | 2Q07 | $ O/(U) | O/(U) % | $ O/(U) | O/(U) % | ||||||||||||||||||||||||||||||
Net Revenue |
$ | 2,019 | $ | 1,913 | $ | 1,741 | $ | 106 | 6 | % | $ | 278 | 16 | % | |||||||||||||||||||||||
Provision for Credit Losses |
7 | 12 | | (5 | ) | (42 | ) | 7 | NM | ||||||||||||||||||||||||||||
Noninterest Expense |
1,317 | 1,228 | 1,149 | 89 | 7 | 168 | 15 | ||||||||||||||||||||||||||||||
Net Income |
$ | 425 | $ | 403 | $ | 352 | $ | 22 | 5 | % | $ | 73 | 21 | % | |||||||||||||||||||||||
7
§ | TSS pretax margin(2) was 33%, down from 34% in the prior quarter
and up from 32% in the prior year. |
||
§ | Average liability balances were $268.3 billion, up 23%. |
||
§ | Assets under custody grew to $15.5 trillion, up 2%. |
||
§ | Key new client relationships added in the second quarter: |
- | Chosen by Shell Asset Management to provide a combination of global
custody, fund accounting and securities lending services to support $70
billion in pooled investments; |
||
- | Launched programs delivering unemployment benefits through JPMorgan
debit cards for the states of Colorado and Michigan; and |
||
- | Served as lead arranger for Axiom Telecom on a $400 million trade
finance facility. |
Results for AM | 1Q08 | 2Q07 | |||||||||||||||||||||||||||||||||||
($ millions) | 2Q08 | 1Q08 | 2Q07 | $ O/(U) | O/(U)% | $ O/(U) | O/(U)% | ||||||||||||||||||||||||||||||
Net Revenue |
$ | 2,064 | $ | 1,901 | $ | 2,137 | $ | 163 | 9 | % | ($73 | ) | (3 | )% | |||||||||||||||||||||||
Provision for Credit Losses |
17 | 16 | (11 | ) | 1 | 6 | 28 | NM | |||||||||||||||||||||||||||||
Noninterest Expense |
1,400 | 1,323 | 1,355 | 77 | 6 | 45 | 3 | ||||||||||||||||||||||||||||||
Net Income |
$ | 395 | $ | 356 | $ | 493 | $ | 39 | 11 | % | ($98 | ) | (20 | )% | |||||||||||||||||||||||
8
§ | Pretax margin(2)
was 31%, down from 37%. |
||
§ | Assets under management were $1.2 trillion, up $76 billion, or 7%, including
growth of $11 billion, or 9%, in alternative assets and $15 billion from the
Bear Stearns acquisition. |
||
§ | Assets under management net outflows were $3 billion for the second quarter
of 2008. Net inflows were $110 billion for the past 12-month period. |
||
§ | Assets under management that ranked in the top two quartiles for investment
performance were 76% over five years, 70% over three years and 51% over one
year. |
||
§ | Customer assets in 4 and 5 Star rated funds were 40%. |
||
§ | Average loans of $39.3 billion were up $10.6 billion, or 37%. |
||
§ | Average deposits of $70.0 billion were up $14.0 billion, or 25%. |
1Q08 | 2Q07 | ||||||||||||||||||||||||||||||||||||
Results for Corporate / | |||||||||||||||||||||||||||||||||||||
Private Equity ($ millions) | 2Q08 | 1Q08 | 2Q07 | $ O/(U) | O/(U)% | $ O/(U) | O/(U)% | ||||||||||||||||||||||||||||||
Net Revenue |
$ | 229 | $ | 1,400 | $ | 1,062 | ($1,171 | ) | (84 | )% | ($833 | ) | (78 | )% | |||||||||||||||||||||||
Provision for Credit Losses |
290 | 196 | 3 | 94 | 48 | % | 287 | NM | |||||||||||||||||||||||||||||
Noninterest Expense |
395 | (500 | ) | 502 | 895 | NM | (107 | ) | (21 | )% | |||||||||||||||||||||||||||
Net Income/(Loss) |
($422 | ) | $ | 1,027 | $ | 382 | ($1,449 | ) | NM | ($804 | ) | NM | |||||||||||||||||||||||||
9
§ | Private Equity portfolio was $7.7 billion, up from $6.5 billion in the prior
year and $6.6 billion in the prior quarter. The portfolio represented 8.9% of
total stockholders equity less goodwill, up from 8.8% in the prior year and
8.3% in the prior quarter. |
Results for JPM | 1Q08 | 2Q07 | |||||||||||||||||||||||||||||||||||
($ millions) | 2Q08 | 1Q08 | 2Q07 | $ O/(U) | O/(U)% | $ O/(U) | O/(U)% | ||||||||||||||||||||||||||||||
Net Revenue(a) |
$ | 19,678 | $ | 17,898 | $ | 19,819 | $ | 1,780 | 10 | % | ($141 | ) | (1 | )% | |||||||||||||||||||||||
Provision for Credit Losses(a) |
4,285 | 5,105 | 2,119 | (820 | ) | (16 | ) | 2,166 | 102 | ||||||||||||||||||||||||||||
Noninterest Expense |
12,177 | 8,931 | 11,028 | 3,246 | 36 | 1,149 | 10 | ||||||||||||||||||||||||||||||
Net Income |
$ | 2,003 | $ | 2,373 | $ | 4,234 | ($370 | ) | (16 | )% | ($2,231 | ) | (53 | )% | |||||||||||||||||||||||
10
§ | Tier 1 capital ratio was 9.1% at June 30, 2008 (estimated), 8.3% at March
31, 2008, and 8.4% at June 30, 2007. |
||
§ | Closed the acquisition of The Bear Stearns Companies Inc. on May 30, 2008.
The agreement called for each share of Bear Stearns common stock to be
exchanged for 0.21753 shares of JPMorgan Chase common stock. |
||
§ | Headcount of 195,594 grew 15,930 since
June 30, 2007, predominantly
reflecting the Bear Stearns acquisition. |
11
12
13
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA |
||||||||||||||||||||||||||||||||
Total net revenue |
$ | 18,399 | $ | 16,890 | $ | 18,908 | 9 | % | (3) | % | $ | 35,289 | $ | 37,876 | (7 | )% | ||||||||||||||||
Provision for credit losses |
3,455 | 4,424 | 1,529 | (22 | ) | 126 | 7,879 | 2,537 | 211 | |||||||||||||||||||||||
Total noninterest expense |
12,177 | 8,931 | 11,028 | 36 | 10 | 21,108 | 21,656 | (3 | ) | |||||||||||||||||||||||
Net income |
2,003 | 2,373 | 4,234 | (16 | ) | (53 | ) | 4,376 | 9,021 | (51 | ) | |||||||||||||||||||||
PER COMMON SHARE: |
||||||||||||||||||||||||||||||||
Net income per share basic |
0.56 | 0.70 | 1.24 | (20 | ) | (55 | ) | 1.26 | 2.63 | (52 | ) | |||||||||||||||||||||
Net income per share diluted |
0.54 | 0.68 | 1.20 | (21 | ) | (55 | ) | 1.22 | 2.55 | (52 | ) | |||||||||||||||||||||
Cash dividends declared |
0.38 | 0.38 | 0.38 | | | 0.76 | 0.72 | 6 | ||||||||||||||||||||||||
Book value |
37.02 | 36.94 | 35.08 | | 6 | 37.02 | 35.08 | 6 | ||||||||||||||||||||||||
Closing share price |
34.31 | 42.95 | 48.45 | (20 | ) | (29 | ) | 34.31 | 48.45 | (29 | ) | |||||||||||||||||||||
Market capitalization |
117,881 | 146,066 | 164,659 | (19 | ) | (28 | ) | 117,881 | 164,659 | (28 | ) | |||||||||||||||||||||
COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||||||||||
Weighted-average diluted shares outstanding |
3,531.0 | 3,494.7 | 3,521.6 | 1 | | 3,512.9 | 3,540.5 | (1 | ) | |||||||||||||||||||||||
Common shares outstanding at period-end |
3,435.7 | 3,400.8 | 3,398.5 | 1 | 1 | 3,435.7 | 3,398.5 | 1 | ||||||||||||||||||||||||
FINANCIAL RATIOS: (a) |
||||||||||||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||||||
ROE |
6 | % | 8 | % | 14 | % | 7 | % | 16 | % | ||||||||||||||||||||||
ROE-GW (b) |
10 | 12 | 23 | 11 | 25 | |||||||||||||||||||||||||||
ROA |
0.48 | 0.61 | 1.19 | 0.54 | 1.29 | |||||||||||||||||||||||||||
CAPITAL RATIOS: |
||||||||||||||||||||||||||||||||
Tier 1 capital ratio |
9.1 | (d) | 8.3 | 8.4 | ||||||||||||||||||||||||||||
Total capital ratio |
13.5 | (d) | 12.5 | 12.0 | ||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||
Total assets |
$ | 1,775,670 | $ | 1,642,862 | $ | 1,458,042 | 8 | 22 | $ | 1,775,670 | $ | 1,458,042 | 22 | |||||||||||||||||||
Wholesale loans |
229,359 | 231,297 | 181,968 | (1 | ) | 26 | 229,359 | 181,968 | 26 | |||||||||||||||||||||||
Consumer loans |
308,670 | 305,759 | 283,069 | 1 | 9 | 308,670 | 283,069 | 9 | ||||||||||||||||||||||||
Deposits |
722,905 | 761,626 | 651,370 | (5 | ) | 11 | 722,905 | 651,370 | 11 | |||||||||||||||||||||||
Common stockholders equity |
127,176 | 125,627 | 119,211 | 1 | 7 | 127,176 | 119,211 | 7 | ||||||||||||||||||||||||
Headcount |
195,594 | 182,166 | 179,664 | 7 | 9 | 195,594 | 179,664 | 9 | ||||||||||||||||||||||||
LINE OF BUSINESS NET INCOME |
||||||||||||||||||||||||||||||||
Investment Bank |
$ | 394 | $ | (87 | ) | $ | 1,179 | NM | (67 | ) | $ | 307 | $ | 2,719 | (89 | ) | ||||||||||||||||
Retail Financial Services |
606 | (227 | ) | 785 | NM | (23 | ) | 379 | 1,644 | (77 | ) | |||||||||||||||||||||
Card Services |
250 | 609 | 759 | (59 | ) | (67 | ) | 859 | 1,524 | (44 | ) | |||||||||||||||||||||
Commercial Banking |
355 | 292 | 284 | 22 | 25 | 647 | 588 | 10 | ||||||||||||||||||||||||
Treasury & Securities Services |
425 | 403 | 352 | 5 | 21 | 828 | 615 | 35 | ||||||||||||||||||||||||
Asset Management |
395 | 356 | 493 | 11 | (20 | ) | 751 | 918 | (18 | ) | ||||||||||||||||||||||
Corporate/Private Equity (c) |
(422 | ) | 1,027 | 382 | NM | NM | 605 | 1,013 | (40 | ) | ||||||||||||||||||||||
Net income |
$ | 2,003 | $ | 2,373 | $ | 4,234 | (16 | ) | (53 | ) | $ | 4,376 | $ | 9,021 | (51 | ) | ||||||||||||||||
(a) | Ratios are based upon annualized amounts. | |
(b) | Net income applicable to common stock divided by total average common equity (net of goodwill). The Firm uses return on equity less goodwill, a non-GAAP financial measure, to evaluate the operating performance of the Firm. The Firm also utilizes this measure to facilitate comparisons to competitors. | |
(c) | Included the after-tax impact of material litigation actions, equity earnings related to Bear Stearns and merger costs. | |
(d) | Estimated. |
14
Page | ||||
Consolidated Results |
||||
Consolidated Financial Highlights |
2 | |||
Statements of Income |
3 | |||
Consolidated Balance Sheets |
4 | |||
Condensed Average Balance Sheets and Annualized Yields |
5 | |||
Reconciliation from Reported to Managed Summary |
6 | |||
Business Detail |
||||
Line of Business Financial Highlights Managed Basis |
7 | |||
Investment Bank |
8 | |||
Retail Financial Services |
11 | |||
Card Services Managed Basis |
16 | |||
Commercial Banking |
19 | |||
Treasury & Securities Services |
21 | |||
Asset Management |
23 | |||
Corporate/Private Equity |
26 | |||
Credit-Related Information |
28 | |||
Supplemental Detail |
||||
Capital, Intangible Assets and Deposits |
33 | |||
Glossary of Terms |
34 |
Page 1
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA |
||||||||||||||||||||||||||||||||||||||||
Total net revenue |
$ | 18,399 | $ | 16,890 | $ | 17,384 | $ | 16,112 | $ | 18,908 | 9 | % | (3 | )% | $ | 35,289 | $ | 37,876 | (7 | )% | ||||||||||||||||||||
Provision for credit losses |
3,455 | 4,424 | 2,542 | 1,785 | 1,529 | (22 | ) | 126 | 7,879 | 2,537 | 211 | |||||||||||||||||||||||||||||
Total noninterest expense |
12,177 | 8,931 | 10,720 | 9,327 | 11,028 | 36 | 10 | 21,108 | 21,656 | (3 | ) | |||||||||||||||||||||||||||||
Net income |
2,003 | 2,373 | 2,971 | 3,373 | 4,234 | (16 | ) | (53 | ) | 4,376 | 9,021 | (51 | ) | |||||||||||||||||||||||||||
PER COMMON SHARE: |
||||||||||||||||||||||||||||||||||||||||
Net income per share basic |
0.56 | 0.70 | 0.88 | 1.00 | 1.24 | (20 | ) | (55 | ) | 1.26 | 2.63 | (52 | ) | |||||||||||||||||||||||||||
Net income per share diluted |
0.54 | 0.68 | 0.86 | 0.97 | 1.20 | (21 | ) | (55 | ) | 1.22 | 2.55 | (52 | ) | |||||||||||||||||||||||||||
Cash dividends declared |
0.38 | 0.38 | 0.38 | 0.38 | 0.38 | | | 0.76 | 0.72 | 6 | ||||||||||||||||||||||||||||||
Book value |
37.02 | 36.94 | 36.59 | 35.72 | 35.08 | | 6 | 37.02 | 35.08 | 6 | ||||||||||||||||||||||||||||||
Closing share price |
34.31 | 42.95 | 43.65 | 45.82 | 48.45 | (20 | ) | (29 | ) | 34.31 | 48.45 | (29 | ) | |||||||||||||||||||||||||||
Market capitalization |
117,881 | 146,066 | 146,986 | 153,901 | 164,659 | (19 | ) | (28 | ) | 117,881 | 164,659 | (28 | ) | |||||||||||||||||||||||||||
COMMON SHARES OUTSTANDING: |
||||||||||||||||||||||||||||||||||||||||
Weighted-average diluted shares outstanding |
3,531.0 | 3,494.7 | 3,471.8 | 3,477.7 | 3,521.6 | 1 | | 3,512.9 | 3,540.5 | (1 | ) | |||||||||||||||||||||||||||||
Common shares outstanding at period-end |
3,435.7 | 3,400.8 | 3,367.4 | 3,358.8 | 3,398.5 | 1 | 1 | 3,435.7 | 3,398.5 | 1 | ||||||||||||||||||||||||||||||
FINANCIAL RATIOS: (a) |
||||||||||||||||||||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||||||||||||||
ROE |
6 | % | 8 | % | 10 | % | 11 | % | 14 | % | 7 | % | 16 | % | ||||||||||||||||||||||||||
ROE-GW (b) |
10 | 12 | 15 | 18 | 23 | 11 | 25 | |||||||||||||||||||||||||||||||||
ROA |
0.48 | 0.61 | 0.77 | 0.91 | 1.19 | 0.54 | 1.29 | |||||||||||||||||||||||||||||||||
CAPITAL RATIOS: |
||||||||||||||||||||||||||||||||||||||||
Tier 1 capital ratio |
9.1 | (d) | 8.3 | 8.4 | 8.4 | 8.4 | ||||||||||||||||||||||||||||||||||
Total capital ratio |
13.5 | (d) | 12.5 | 12.6 | 12.5 | 12.0 | ||||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 1,775,670 | $ | 1,642,862 | $ | 1,562,147 | $ | 1,479,575 | $ | 1,458,042 | 8 | 22 | $ | 1,775,670 | $ | 1,458,042 | 22 | |||||||||||||||||||||||
Wholesale loans |
229,359 | 231,297 | 213,076 | 197,728 | 181,968 | (1 | ) | 26 | 229,359 | 181,968 | 26 | |||||||||||||||||||||||||||||
Consumer loans |
308,670 | 305,759 | 306,298 | 288,592 | 283,069 | 1 | 9 | 308,670 | 283,069 | 9 | ||||||||||||||||||||||||||||||
Deposits |
722,905 | 761,626 | 740,728 | 678,091 | 651,370 | (5 | ) | 11 | 722,905 | 651,370 | 11 | |||||||||||||||||||||||||||||
Common stockholders equity |
127,176 | 125,627 | 123,221 | 119,978 | 119,211 | 1 | 7 | 127,176 | 119,211 | 7 | ||||||||||||||||||||||||||||||
Headcount |
195,594 | 182,166 | 180,667 | 179,847 | 179,664 | 7 | 9 | 195,594 | 179,664 | 9 | ||||||||||||||||||||||||||||||
LINE OF BUSINESS NET INCOME |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 394 | $ | (87 | ) | $ | 124 | $ | 296 | $ | 1,179 | NM | (67 | ) | $ | 307 | $ | 2,719 | (89 | ) | ||||||||||||||||||||
Retail Financial Services |
606 | (227 | ) | 752 | 639 | 785 | NM | (23 | ) | 379 | 1,644 | (77 | ) | |||||||||||||||||||||||||||
Card Services |
250 | 609 | 609 | 786 | 759 | (59 | ) | (67 | ) | 859 | 1,524 | (44 | ) | |||||||||||||||||||||||||||
Commercial Banking |
355 | 292 | 288 | 258 | 284 | 22 | 25 | 647 | 588 | 10 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
425 | 403 | 422 | 360 | 352 | 5 | 21 | 828 | 615 | 35 | ||||||||||||||||||||||||||||||
Asset Management |
395 | 356 | 527 | 521 | 493 | 11 | (20 | ) | 751 | 918 | (18 | ) | ||||||||||||||||||||||||||||
Corporate/Private Equity (c) |
(422 | ) | 1,027 | 249 | 513 | 382 | NM | NM | 605 | 1,013 | (40 | ) | ||||||||||||||||||||||||||||
Net income |
$ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | $ | 4,234 | (16 | ) | (53 | ) | $ | 4,376 | $ | 9,021 | (51 | ) | ||||||||||||||||||||
(a) | Ratios are based upon annualized amounts. | |
(b) | Net income applicable to common stock divided by total average common equity (net of goodwill). The Firm uses return on equity less goodwill, a non-GAAP financial measure, to evaluate the operating performance of the Firm. The Firm also utilizes this measure to facilitate comparisons to competitors. | |
(c) | Included the after-tax impact of material litigation actions, equity earnings related to Bear Stearns and merger costs. See Corporate/Private Equity Financial Highlights for additional details. | |
(d) | Estimated. |
Page 2
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees |
$ | 1,612 | $ | 1,216 | $ | 1,662 | $ | 1,336 | $ | 1,898 | 33 | % | (15 | )% | $ | 2,828 | $ | 3,637 | (22 | )% | ||||||||||||||||||||
Principal transactions |
752 | (803 | ) | 165 | 650 | 3,713 | NM | (80 | ) | (51 | ) | 8,200 | NM | |||||||||||||||||||||||||||
Lending & deposit-related fees |
1,105 | 1,039 | 1,066 | 1,026 | 951 | 6 | 16 | 2,144 | 1,846 | 16 | ||||||||||||||||||||||||||||||
Asset management, administration and commissions |
3,628 | 3,596 | 3,896 | 3,663 | 3,611 | 1 | | 7,224 | 6,797 | 6 | ||||||||||||||||||||||||||||||
Securities gains (losses) |
647 | 33 | 148 | 237 | (223 | ) | NM | NM | 680 | (221 | ) | NM | ||||||||||||||||||||||||||||
Mortgage fees and related income |
696 | 525 | 898 | 221 | 523 | 33 | 33 | 1,221 | 999 | 22 | ||||||||||||||||||||||||||||||
Credit card income |
1,803 | 1,796 | 1,857 | 1,777 | 1,714 | | 5 | 3,599 | 3,277 | 10 | ||||||||||||||||||||||||||||||
Other income |
(138 | ) | 1,829 | 469 | 289 | 553 | NM | NM | 1,691 | 1,071 | 58 | |||||||||||||||||||||||||||||
Noninterest revenue |
10,105 | 9,231 | 10,161 | 9,199 | 12,740 | 9 | (21 | ) | 19,336 | 25,606 | (24 | ) | ||||||||||||||||||||||||||||
Interest income |
16,529 | 17,532 | 18,619 | 18,806 | 17,342 | (6 | ) | (5 | ) | 34,061 | 33,962 | | ||||||||||||||||||||||||||||
Interest expense |
8,235 | 9,873 | 11,396 | 11,893 | 11,174 | (17 | ) | (26 | ) | 18,108 | 21,692 | (17 | ) | |||||||||||||||||||||||||||
Net interest income |
8,294 | 7,659 | 7,223 | 6,913 | 6,168 | 8 | 34 | 15,953 | 12,270 | 30 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
18,399 | 16,890 | 17,384 | 16,112 | 18,908 | 9 | (3 | ) | 35,289 | 37,876 | (7 | ) | ||||||||||||||||||||||||||||
Provision for credit losses |
3,455 | 4,424 | 2,542 | 1,785 | 1,529 | (22 | ) | 126 | 7,879 | 2,537 | 211 | |||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
6,913 | 4,951 | 5,469 | 4,677 | 6,309 | 40 | 10 | 11,864 | 12,543 | (5 | ) | |||||||||||||||||||||||||||||
Occupancy expense |
669 | 648 | 659 | 657 | 652 | 3 | 3 | 1,317 | 1,292 | 2 | ||||||||||||||||||||||||||||||
Technology, communications and equipment expense |
1,028 | 968 | 986 | 950 | 921 | 6 | 12 | 1,996 | 1,843 | 8 | ||||||||||||||||||||||||||||||
Professional & outside services |
1,450 | 1,333 | 1,421 | 1,260 | 1,259 | 9 | 15 | 2,783 | 2,459 | 13 | ||||||||||||||||||||||||||||||
Marketing |
413 | 546 | 570 | 561 | 457 | (24 | ) | (10 | ) | 959 | 939 | 2 | ||||||||||||||||||||||||||||
Other expense |
1,233 | 169 | 1,254 | 812 | 1,013 | NM | 22 | 1,402 | 1,748 | (20 | ) | |||||||||||||||||||||||||||||
Amortization of intangibles |
316 | 316 | 339 | 349 | 353 | | (10 | ) | 632 | 706 | (10 | ) | ||||||||||||||||||||||||||||
Merger costs |
155 | | 22 | 61 | 64 | NM | 142 | 155 | 126 | 23 | ||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
12,177 | 8,931 | 10,720 | 9,327 | 11,028 | 36 | 10 | 21,108 | 21,656 | (3 | ) | |||||||||||||||||||||||||||||
Income before income tax expense |
2,767 | 3,535 | 4,122 | 5,000 | 6,351 | (22 | ) | (56 | ) | 6,302 | 13,683 | (54 | ) | |||||||||||||||||||||||||||
Income tax expense |
764 | 1,162 | 1,151 | 1,627 | 2,117 | (34 | ) | (64 | ) | 1,926 | 4,662 | (59 | ) | |||||||||||||||||||||||||||
NET INCOME |
$ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | $ | 4,234 | (16 | ) | (53 | ) | $ | 4,376 | $ | 9,021 | (51 | ) | ||||||||||||||||||||
DILUTED EARNINGES PER SHARE |
0.54 | 0.68 | 0.86 | 0.97 | 1.20 | (21 | ) | (55 | ) | 1.22 | 2.55 | (52 | ) | |||||||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
Net income: |
||||||||||||||||||||||||||||||||||||||||
ROE |
6 | % | 8 | % | 10 | % | 11 | % | 14 | % | 7 | % | 16 | % | ||||||||||||||||||||||||||
ROE-GW |
10 | 12 | 15 | 18 | 23 | 11 | 25 | |||||||||||||||||||||||||||||||||
ROA |
0.48 | 0.61 | 0.77 | 0.91 | 1.19 | 0.54 | 1.29 | |||||||||||||||||||||||||||||||||
Effective income tax rate |
28 | 33 | 28 | 33 | 33 | 31 | 34 | |||||||||||||||||||||||||||||||||
Overhead ratio |
66 | 53 | 62 | 58 | 58 | 60 | 57 | |||||||||||||||||||||||||||||||||
EXCLUDING IMPACT OF MERGER COSTS (a) |
||||||||||||||||||||||||||||||||||||||||
Net income |
$ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | $ | 4,234 | (16 | ) | (53 | ) | $ | 4,376 | $ | 9,021 | (51 | ) | ||||||||||||||||||||
Less merger costs (after-tax) |
96 | | 14 | 38 | 40 | NM | 140 | 96 | 78 | 23 | ||||||||||||||||||||||||||||||
Net income excluding merger costs |
$ | 2,099 | $ | 2,373 | $ | 2,985 | $ | 3,411 | $ | 4,274 | (12 | ) | (51 | ) | $ | 4,472 | $ | 9,099 | (51 | ) | ||||||||||||||||||||
Diluted
Per Share: |
||||||||||||||||||||||||||||||||||||||||
Net income |
$ | 0.54 | $ | 0.68 | $ | 0.86 | $ | 0.97 | $ | 1.20 | (21 | ) | (55 | ) | $ | 1.22 | $ | 2.55 | (52 | ) | ||||||||||||||||||||
Less merger costs (after-tax) |
0.03 | | | 0.01 | 0.01 | NM | 200 | 0.03 | 0.02 | 50 | ||||||||||||||||||||||||||||||
Net income excluding merger costs |
$ | 0.57 | $ | 0.68 | $ | 0.86 | $ | 0.98 | $ | 1.21 | (16 | ) | (53 | ) | $ | 1.25 | $ | 2.57 | (51 | ) | ||||||||||||||||||||
(a) | Net income excluding merger costs, a non-GAAP financial measure, is used by the Firm to facilitate comparison of results against the Firms ongoing operations and with other companies U.S. GAAP financial statements. |
Page 3
Jun 30, 2008 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Jun 30 | ||||||||||||||||||||||
2008 | 2008 | 2007 | 2007 | 2007 | 2008 | 2007 | ||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||
Cash and due from banks |
$ | 32,255 | $ | 46,888 | $ | 40,144 | $ | 32,766 | $ | 35,449 | (31 | )% | (9 | )% | ||||||||||||||
Deposits with banks |
17,150 | 12,414 | 11,466 | 26,714 | 41,736 | 38 | (59 | ) | ||||||||||||||||||||
Federal funds sold and securities purchased under resale agreements |
176,287 | 203,176 | 170,897 | 135,589 | 125,930 | (13 | ) | 40 | ||||||||||||||||||||
Securities borrowed |
142,854 | 81,014 | 84,184 | 84,697 | 88,360 | 76 | 62 | |||||||||||||||||||||
Trading assets: |
||||||||||||||||||||||||||||
Debt and equity instruments |
409,608 | 386,170 | 414,273 | 389,119 | 391,508 | 6 | 5 | |||||||||||||||||||||
Derivative receivables |
122,389 | 99,110 | 77,136 | 64,592 | 59,038 | 23 | 107 | |||||||||||||||||||||
Securities |
119,173 | 101,647 | 85,450 | 97,706 | 95,984 | 17 | 24 | |||||||||||||||||||||
Loans (net of allowance for loan losses) |
524,783 | 525,310 | 510,140 | 478,207 | 457,404 | | 15 | |||||||||||||||||||||
Accrued interest and accounts receivable (a) |
64,294 | 50,989 | 24,823 | 26,401 | 26,716 | 26 | 141 | |||||||||||||||||||||
Premises and equipment |
11,843 | 9,457 | 9,319 | 8,892 | 9,044 | 25 | 31 | |||||||||||||||||||||
Goodwill |
45,993 | 45,695 | 45,270 | 45,335 | 45,254 | 1 | 2 | |||||||||||||||||||||
Other intangible assets: |
||||||||||||||||||||||||||||
Mortgage servicing rights |
11,617 | 8,419 | 8,632 | 9,114 | 9,499 | 38 | 22 | |||||||||||||||||||||
Purchased credit card relationships |
1,984 | 2,140 | 2,303 | 2,427 | 2,591 | (7 | ) | (23 | ) | |||||||||||||||||||
All other intangibles |
3,675 | 3,815 | 3,796 | 3,959 | 4,103 | (4 | ) | (10 | ) | |||||||||||||||||||
Other assets |
91,765 | 66,618 | 74,314 | 74,057 | 65,426 | 38 | 40 | |||||||||||||||||||||
TOTAL ASSETS |
$ | 1,775,670 | $ | 1,642,862 | $ | 1,562,147 | $ | 1,479,575 | $ | 1,458,042 | 8 | 22 | ||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||
Deposits |
$ | 722,905 | $ | 761,626 | $ | 740,728 | $ | 678,091 | $ | 651,370 | (5 | ) | 11 | |||||||||||||||
Federal funds purchased and securities sold under repurchase agreements |
194,724 | 192,633 | 154,398 | 178,767 | 205,961 | 1 | (5 | ) | ||||||||||||||||||||
Commercial paper |
50,151 | 50,602 | 49,596 | 33,978 | 25,116 | (1 | ) | 100 | ||||||||||||||||||||
Other borrowed funds |
22,594 | 28,430 | 28,835 | 31,154 | 29,263 | (21 | ) | (23 | ) | |||||||||||||||||||
Trading liabilities: |
||||||||||||||||||||||||||||
Debt and equity instruments |
87,841 | 78,982 | 89,162 | 80,748 | 93,969 | 11 | (7 | ) | ||||||||||||||||||||
Derivative payables |
95,749 | 78,983 | 68,705 | 68,426 | 61,396 | 21 | 56 | |||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities (including the allowance for lending-related commitments) (b) |
171,004 | 106,088 | 94,476 | 86,524 | 84,785 | 61 | 102 | |||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
20,071 | 14,524 | 14,016 | 13,283 | 14,808 | 38 | 36 | |||||||||||||||||||||
Long-term debt |
260,192 | 189,995 | 183,862 | 173,696 | 159,493 | 37 | 63 | |||||||||||||||||||||
Junior subordinated deferrable interest debentures held by trusts that issued
guaranteed capital debt securities |
17,263 | 15,372 | 15,148 | 14,930 | 12,670 | 12 | 36 | |||||||||||||||||||||
TOTAL LIABILITIES |
1,642,494 | 1,517,235 | 1,438,926 | 1,359,597 | 1,338,831 | 8 | 23 | |||||||||||||||||||||
STOCKHOLDERS EQUITY |
||||||||||||||||||||||||||||
Preferred stock |
6,000 | | | | | NM | NM | |||||||||||||||||||||
Common stock |
3,658 | 3,658 | 3,658 | 3,658 | 3,658 | | | |||||||||||||||||||||
Capital surplus |
78,870 | 78,072 | 78,597 | 78,295 | 78,020 | 1 | 1 | |||||||||||||||||||||
Retained earnings |
56,313 | 55,762 | 54,715 | 53,064 | 51,011 | 1 | 10 | |||||||||||||||||||||
Accumulated other comprehensive income (loss) |
(1,566 | ) | (512 | ) | (917 | ) | (1,830 | ) | (2,080 | ) | (206 | ) | 25 | |||||||||||||||
Shares held in RSU trust |
(269 | ) | | | | | NM | NM | ||||||||||||||||||||
Treasury stock, at cost |
(9,830 | ) | (11,353 | ) | (12,832 | ) | (13,209 | ) | (11,398 | ) | 13 | 14 | ||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
133,176 | 125,627 | 123,221 | 119,978 | 119,211 | 6 | 12 | |||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 1,775,670 | $ | 1,642,862 | $ | 1,562,147 | $ | 1,479,575 | $ | 1,458,042 | 8 | 22 | ||||||||||||||||
(a) | Includes margin loans; receivables from brokers, dealers and clearing organizations; and securities fails. | |
(b) | Includes brokerage customer payables; payables to brokers, dealers and clearing organizations; and securities fails. |
Page 4
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||||||||||||||
Deposits with banks |
$ | 38,813 | $ | 31,975 | $ | 41,363 | $ | 39,906 | $ | 18,153 | 21 | % | 114 | % | $ | 35,394 | $ | 17,193 | 106 | % | ||||||||||||||||||||
Federal funds sold and securities purchased
under resale agreements |
155,664 | 153,864 | 140,622 | 133,780 | 132,768 | 1 | 17 | 154,764 | 134,127 | 15 | ||||||||||||||||||||||||||||||
Securities borrowed |
100,322 | 83,490 | 86,649 | 87,955 | 90,810 | 20 | 10 | 91,906 | 84,822 | 8 | ||||||||||||||||||||||||||||||
Trading assets debt instruments |
302,053 | 322,986 | 308,175 | 310,445 | 294,931 | (6 | ) | 2 | 312,519 | 276,109 | 13 | |||||||||||||||||||||||||||||
Securities |
109,834 | 89,757 | 93,236 | 95,694 | 96,921 | 22 | 13 | 99,796 | 96,128 | 4 | ||||||||||||||||||||||||||||||
Loans |
537,964 | 526,598 | 508,172 | 476,912 | 465,763 | 2 | 16 | 532,281 | 466,604 | 14 | ||||||||||||||||||||||||||||||
Other assets (a) |
15,629 | | | | | NM | NM | 7,815 | | NM | ||||||||||||||||||||||||||||||
Total interest-earning assets |
1,260,279 | 1,208,670 | 1,178,217 | 1,144,692 | 1,099,346 | 4 | 15 | 1,234,475 | 1,074,983 | 15 | ||||||||||||||||||||||||||||||
Trading assets equity instruments |
99,525 | 78,810 | 93,453 | 86,177 | 85,830 | 26 | 16 | 89,168 | 87,302 | 2 | ||||||||||||||||||||||||||||||
Goodwill |
45,781 | 45,699 | 45,321 | 45,276 | 45,181 | | 1 | 45,740 | 45,153 | 1 | ||||||||||||||||||||||||||||||
Other intangible assets: |
||||||||||||||||||||||||||||||||||||||||
Mortgage servicing rights |
9,947 | 8,273 | 8,795 | 9,290 | 8,371 | 20 | 19 | 9,110 | 8,079 | 13 | ||||||||||||||||||||||||||||||
All other intangible assets |
5,823 | 6,202 | 6,220 | 6,532 | 6,854 | (6 | ) | (15 | ) | 6,012 | 6,996 | (14 | ) | |||||||||||||||||||||||||||
All other noninterest-earning assets |
247,344 | 222,143 | 198,031 | 185,367 | 186,404 | 11 | 33 | 234,743 | 183,084 | 28 | ||||||||||||||||||||||||||||||
TOTAL ASSETS |
$ | 1,668,699 | $ | 1,569,797 | $ | 1,530,037 | $ | 1,477,334 | $ | 1,431,986 | 6 | 17 | $ | 1,619,248 | $ | 1,405,597 | 15 | |||||||||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
$ | 612,305 | $ | 600,132 | $ | 587,297 | $ | 540,937 | $ | 513,451 | 2 | 19 | $ | 606,218 | $ | 506,125 | 20 | |||||||||||||||||||||||
Federal funds purchased and securities sold
under repurchase agreements |
203,348 | 179,897 | 171,450 | 206,174 | 209,323 | 13 | (3 | ) | 191,622 | 204,316 | (6 | ) | ||||||||||||||||||||||||||||
Commercial paper |
47,323 | 47,584 | 48,821 | 26,511 | 25,282 | (1 | ) | 87 | 47,453 | 23,819 | 99 | |||||||||||||||||||||||||||||
Other borrowings (b) |
92,309 | 107,552 | 99,259 | 104,995 | 100,715 | (14 | ) | (8 | ) | 99,931 | 98,202 | 2 | ||||||||||||||||||||||||||||
Other liabilities (c) |
19,168 | | | | | NM | NM | 9,584 | | NM | ||||||||||||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
17,990 | 14,082 | 14,183 | 14,454 | 13,641 | 28 | 32 | 16,036 | 14,811 | 8 | ||||||||||||||||||||||||||||||
Long-term debt |
229,336 | 200,354 | 191,797 | 177,851 | 162,465 | 14 | 41 | 214,846 | 155,345 | 38 | ||||||||||||||||||||||||||||||
Total interest-bearing liabilities |
1,221,779 | 1,149,601 | 1,112,807 | 1,070,922 | 1,024,877 | 6 | 19 | 1,185,690 | 1,002,618 | 18 | ||||||||||||||||||||||||||||||
Noninterest-bearing liabilities |
315,965 | 295,616 | 295,670 | 287,436 | 289,058 | 7 | 9 | 305,790 | 285,826 | 7 | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES |
1,537,744 | 1,445,217 | 1,408,477 | 1,358,358 | 1,313,935 | 6 | 17 | 1,491,480 | 1,288,444 | 16 | ||||||||||||||||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
130,955 | 124,580 | 121,560 | 118,976 | 118,051 | 5 | 11 | 127,768 | 117,153 | 9 | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY |
$ | 1,668,699 | $ | 1,569,797 | $ | 1,530,037 | $ | 1,477,334 | $ | 1,431,986 | 6 | 17 | $ | 1,619,248 | $ | 1,405,597 | 15 | |||||||||||||||||||||||
AVERAGE RATES |
||||||||||||||||||||||||||||||||||||||||
INTEREST-EARNING ASSETS |
||||||||||||||||||||||||||||||||||||||||
Deposits with banks |
3.87 | % | 4.22 | % | 4.95 | % | 5.06 | % | 4.56 | % | 4.03 | % | 4.61 | % | ||||||||||||||||||||||||||
Federal funds sold and securities purchased
under resale agreements |
3.84 | 3.80 | 4.41 | 4.83 | 4.99 | 3.82 | 4.97 | |||||||||||||||||||||||||||||||||
Securities borrowed |
2.29 | 3.56 | 4.77 | 5.60 | 5.31 | 2.87 | 5.36 | |||||||||||||||||||||||||||||||||
Trading assets debt instruments |
5.59 | 5.75 | 5.84 | 6.09 | 5.65 | 5.67 | 5.79 | |||||||||||||||||||||||||||||||||
Securities |
5.27 | 5.47 | 5.58 | 5.69 | 5.68 | 5.36 | 5.68 | |||||||||||||||||||||||||||||||||
Loans |
6.36 | 7.10 | 7.60 | 7.80 | 7.65 | 6.72 | 7.59 | |||||||||||||||||||||||||||||||||
Other assets
(a) |
3.97 | | | | | 3.97 | | |||||||||||||||||||||||||||||||||
Total interest-earning assets |
5.34 | 5.88 | 6.30 | 6.55 | 6.37 | 5.60 | 6.41 | |||||||||||||||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits |
2.36 | 3.09 | 3.84 | 4.13 | 4.17 | 2.72 | 4.12 | |||||||||||||||||||||||||||||||||
Federal funds purchased and securities sold
under repurchase agreements |
2.73 | 3.31 | 4.35 | 5.18 | 5.19 | 3.00 | 5.14 | |||||||||||||||||||||||||||||||||
Commercial paper |
2.17 | 3.41 | 4.40 | 4.68 | 4.92 | 2.79 | 4.91 | |||||||||||||||||||||||||||||||||
Other borrowings (b) |
4.28 | 5.03 | 5.02 | 4.90 | 4.69 | 4.68 | 4.87 | |||||||||||||||||||||||||||||||||
Other liabilities (c) |
1.32 | | | | | 1.32 | | |||||||||||||||||||||||||||||||||
Beneficial interests issued by consolidated VIEs |
2.24 | 3.78 | 4.36 | 4.52 | 3.22 | 2.92 | 3.54 | |||||||||||||||||||||||||||||||||
Long-term debt |
3.27 | 3.82 | 3.90 | 3.99 | 3.77 | 3.52 | 3.81 | |||||||||||||||||||||||||||||||||
Total interest-bearing liabilities |
2.71 | 3.45 | 4.06 | 4.41 | 4.37 | 3.07 | 4.36 | |||||||||||||||||||||||||||||||||
INTEREST RATE SPREAD |
2.63 | % | 2.43 | % | 2.24 | % | 2.14 | % | 2.00 | % | 2.53 | % | 2.05 | % | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS |
2.71 | % | 2.59 | % | 2.46 | % | 2.43 | % | 2.30 | % | 2.65 | % | 2.34 | % | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS
ADJUSTED FOR SECURITIZATIONS |
3.06 | % | 2.95 | % | 2.80 | % | 2.75 | % | 2.63 | % | 3.00 | % | 2.68 | % | ||||||||||||||||||||||||||
(a) | Predominantly margin loans. | |
(b) | Includes securities sold but not yet purchased. | |
(c) | Includes brokerage customer payables. |
Page 5
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
CREDIT CARD INCOME |
||||||||||||||||||||||||||||||||||||||||
Credit
card income - reported |
$ | 1,803 | $ | 1,796 | $ | 1,857 | $ | 1,777 | $ | 1,714 | | % | 5 | % | $ | 3,599 | $ | 3,277 | 10 | % | ||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
(843 | ) | (937 | ) | (885 | ) | (836 | ) | (788 | ) | 10 | (7 | ) | (1,780 | ) | (1,534 | ) | (16 | ) | |||||||||||||||||||||
Credit
card income - managed |
$ | 960 | $ | 859 | $ | 972 | $ | 941 | $ | 926 | 12 | 4 | $ | 1,819 | $ | 1,743 | 4 | |||||||||||||||||||||||
OTHER INCOME |
||||||||||||||||||||||||||||||||||||||||
Other
income - reported |
$ | (138 | ) | $ | 1,829 | $ | 469 | $ | 289 | $ | 553 | NM | NM | $ | 1,691 | $ | 1,071 | 58 | ||||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
247 | 203 | 182 | 192 | 199 | 22 | 24 | 450 | 309 | 46 | ||||||||||||||||||||||||||||||
Other
income - managed |
$ | 109 | $ | 2,032 | $ | 651 | $ | 481 | $ | 752 | (95 | ) | (86 | ) | $ | 2,141 | $ | 1,380 | 55 | |||||||||||||||||||||
TOTAL NONINTEREST REVENUE |
||||||||||||||||||||||||||||||||||||||||
Total
noninterest revenue - reported |
$ | 10,105 | $ | 9,231 | $ | 10,161 | $ | 9,199 | $ | 12,740 | 9 | (21 | ) | $ | 19,336 | $ | 25,606 | (24 | ) | |||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
(843 | ) | (937 | ) | (885 | ) | (836 | ) | (788 | ) | 10 | (7 | ) | (1,780 | ) | (1,534 | ) | (16 | ) | |||||||||||||||||||||
Tax-equivalent adjustments |
247 | 203 | 182 | 192 | 199 | 22 | 24 | 450 | 309 | 46 | ||||||||||||||||||||||||||||||
Total
noninterest revenue - managed |
$ | 9,509 | $ | 8,497 | $ | 9,458 | $ | 8,555 | $ | 12,151 | 12 | (22 | ) | $ | 18,006 | $ | 24,381 | (26 | ) | |||||||||||||||||||||
NET INTEREST INCOME |
||||||||||||||||||||||||||||||||||||||||
Net
interest income - reported |
$ | 8,294 | $ | 7,659 | $ | 7,223 | $ | 6,913 | $ | 6,168 | 8 | 34 | $ | 15,953 | $ | 12,270 | 30 | |||||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
1,673 | 1,618 | 1,504 | 1,414 | 1,378 | 3 | 21 | 3,291 | 2,717 | 21 | ||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
202 | 124 | 90 | 95 | 122 | 63 | 66 | 326 | 192 | 70 | ||||||||||||||||||||||||||||||
Net
interest income - managed |
$ | 10,169 | $ | 9,401 | $ | 8,817 | $ | 8,422 | $ | 7,668 | 8 | 33 | $ | 19,570 | $ | 15,179 | 29 | |||||||||||||||||||||||
TOTAL NET REVENUE |
||||||||||||||||||||||||||||||||||||||||
Total net
revenue - reported |
$ | 18,399 | $ | 16,890 | $ | 17,384 | $ | 16,112 | $ | 18,908 | 9 | (3 | ) | $ | 35,289 | $ | 37,876 | (7 | ) | |||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
830 | 681 | 619 | 578 | 590 | 22 | 41 | 1,511 | 1,183 | 28 | ||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
449 | 327 | 272 | 287 | 321 | 37 | 40 | 776 | 501 | 55 | ||||||||||||||||||||||||||||||
Total net
revenue - managed |
$ | 19,678 | $ | 17,898 | $ | 18,275 | $ | 16,977 | $ | 19,819 | 10 | (1 | ) | $ | 37,576 | $ | 39,560 | (5 | ) | |||||||||||||||||||||
PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||
Provision
for credit losses - reported |
$ | 3,455 | $ | 4,424 | $ | 2,542 | $ | 1,785 | $ | 1,529 | (22 | ) | 126 | $ | 7,879 | $ | 2,537 | 211 | ||||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Credit card securitizations |
830 | 681 | 619 | 578 | 590 | 22 | 41 | 1,511 | 1,183 | 28 | ||||||||||||||||||||||||||||||
Provision
for credit losses - managed |
$ | 4,285 | $ | 5,105 | $ | 3,161 | $ | 2,363 | $ | 2,119 | (16 | ) | 102 | $ | 9,390 | $ | 3,720 | 152 | ||||||||||||||||||||||
INCOME TAX EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Income
tax expense - reported |
$ | 764 | $ | 1,162 | $ | 1,151 | $ | 1,627 | $ | 2,117 | (34 | ) | (64 | ) | $ | 1,926 | $ | 4,662 | (59 | ) | ||||||||||||||||||||
Impact of: |
||||||||||||||||||||||||||||||||||||||||
Tax-equivalent adjustments |
449 | 327 | 272 | 287 | 321 | 37 | 40 | 776 | 501 | 55 | ||||||||||||||||||||||||||||||
Income
tax expense - managed |
$ | 1,213 | $ | 1,489 | $ | 1,423 | $ | 1,914 | $ | 2,438 | (19 | ) | (50 | ) | $ | 2,702 | $ | 5,163 | (48 | ) | ||||||||||||||||||||
Page 6
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
TOTAL NET REVENUE (FTE) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 5,470 | $ | 3,011 | $ | 3,172 | $ | 2,946 | $ | 5,798 | 82 | % | (6 | )% | $ | 8,481 | $ | 12,052 | (30 | )% | ||||||||||||||||||||
Retail Financial Services |
5,015 | 4,702 | 4,815 | 4,201 | 4,357 | 7 | 15 | 9,717 | 8,463 | 15 | ||||||||||||||||||||||||||||||
Card Services |
3,775 | 3,904 | 3,971 | 3,867 | 3,717 | (3 | ) | 2 | 7,679 | 7,397 | 4 | |||||||||||||||||||||||||||||
Commercial Banking |
1,106 | 1,067 | 1,084 | 1,009 | 1,007 | 4 | 10 | 2,173 | 2,010 | 8 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
2,019 | 1,913 | 1,930 | 1,748 | 1,741 | 6 | 16 | 3,932 | 3,267 | 20 | ||||||||||||||||||||||||||||||
Asset Management |
2,064 | 1,901 | 2,389 | 2,205 | 2,137 | 9 | (3 | ) | 3,965 | 4,041 | (2 | ) | ||||||||||||||||||||||||||||
Corporate/Private Equity |
229 | 1,400 | 914 | 1,001 | 1,062 | (84 | ) | (78 | ) | 1,629 | 2,330 | (30 | ) | |||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 19,678 | $ | 17,898 | $ | 18,275 | $ | 16,977 | $ | 19,819 | 10 | (1 | ) | $ | 37,576 | $ | 39,560 | (5 | ) | |||||||||||||||||||||
NET INCOME |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 394 | $ | (87 | ) | $ | 124 | $ | 296 | $ | 1,179 | NM | (67 | ) | $ | 307 | $ | 2,719 | (89 | ) | ||||||||||||||||||||
Retail Financial Services |
606 | (227 | ) | 752 | 639 | 785 | NM | (23 | ) | 379 | 1,644 | (77 | ) | |||||||||||||||||||||||||||
Card Services |
250 | 609 | 609 | 786 | 759 | (59 | ) | (67 | ) | 859 | 1,524 | (44 | ) | |||||||||||||||||||||||||||
Commercial Banking |
355 | 292 | 288 | 258 | 284 | 22 | 25 | 647 | 588 | 10 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
425 | 403 | 422 | 360 | 352 | 5 | 21 | 828 | 615 | 35 | ||||||||||||||||||||||||||||||
Asset Management |
395 | 356 | 527 | 521 | 493 | 11 | (20 | ) | 751 | 918 | (18 | ) | ||||||||||||||||||||||||||||
Corporate/Private Equity (a) |
(422 | ) | 1,027 | 249 | 513 | 382 | NM | NM | 605 | 1,013 | (40 | ) | ||||||||||||||||||||||||||||
TOTAL NET INCOME |
$ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | $ | 4,234 | (16 | ) | (53 | ) | $ | 4,376 | $ | 9,021 | (51 | ) | ||||||||||||||||||||
AVERAGE EQUITY (b) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 23,319 | $ | 22,000 | $ | 21,000 | $ | 21,000 | $ | 21,000 | 6 | 11 | $ | 22,659 | $ | 21,000 | 8 | |||||||||||||||||||||||
Retail Financial Services |
17,000 | 17,000 | 16,000 | 16,000 | 16,000 | | 6 | 17,000 | 16,000 | 6 | ||||||||||||||||||||||||||||||
Card Services |
14,100 | 14,100 | 14,100 | 14,100 | 14,100 | | | 14,100 | 14,100 | | ||||||||||||||||||||||||||||||
Commercial Banking |
7,000 | 7,000 | 6,700 | 6,700 | 6,300 | | 11 | 7,000 | 6,300 | 11 | ||||||||||||||||||||||||||||||
Treasury & Securities Services |
3,500 | 3,500 | 3,000 | 3,000 | 3,000 | | 17 | 3,500 | 3,000 | 17 | ||||||||||||||||||||||||||||||
Asset Management |
5,066 | 5,000 | 4,000 | 4,000 | 3,750 | 1 | 35 | 5,033 | 3,750 | 34 | ||||||||||||||||||||||||||||||
Corporate/Private Equity |
60,970 | 55,980 | 56,760 | 54,176 | 53,901 | 9 | 13 | 58,476 | 53,003 | 10 | ||||||||||||||||||||||||||||||
TOTAL AVERAGE EQUITY |
$ | 130,955 | $ | 124,580 | $ | 121,560 | $ | 118,976 | $ | 118,051 | 5 | 11 | $ | 127,768 | $ | 117,153 | 9 | |||||||||||||||||||||||
RETURN ON EQUITY (b) |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
7 | % | (2 | )% | 2 | % | 6 | % | 23 | % | 3 | % | 26 | % | ||||||||||||||||||||||||||
Retail Financial Services |
14 | (5 | ) | 19 | 16 | 20 | 4 | 21 | ||||||||||||||||||||||||||||||||
Card Services |
7 | 17 | 17 | 22 | 22 | 12 | 22 | |||||||||||||||||||||||||||||||||
Commercial Banking |
20 | 17 | 17 | 15 | 18 | 19 | 19 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
49 | 46 | 56 | 48 | 47 | 48 | 41 | |||||||||||||||||||||||||||||||||
Asset Management |
31 | 29 | 52 | 52 | 53 | 30 | 49 |
(a) | Included the after-tax impact of material litigation actions, equity earnings related to Bear Stearns and merger costs. See Corporate/Private Equity Financial Highlights for additional details. | |
(b) | Each business segment is allocated capital by taking into consideration stand-alone peer comparisons, economic risk measures and regulatory capital requirements. The amount of capital assigned to each business is referred to as equity. |
Page 7
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees |
$ | 1,735 | $ | 1,206 | $ | 1,657 | $ | 1,330 | $ | 1,900 | 44 | % | (9 | )% | $ | 2,941 | $ | 3,629 | (19 | )% | ||||||||||||||||||||
Principal transactions |
838 | (798 | ) | (623 | ) | (435 | ) | 2,325 | NM | (64 | ) | 40 | 5,467 | (99 | ) | |||||||||||||||||||||||||
Lending & deposit-related fees |
105 | 102 | 142 | 118 | 93 | 3 | 13 | 207 | 186 | 11 | ||||||||||||||||||||||||||||||
Asset management, administration and commissions |
709 | 744 | 705 | 712 | 643 | (5 | ) | 10 | 1,453 | 1,284 | 13 | |||||||||||||||||||||||||||||
All other income |
(226 | ) | (66 | ) | (166 | ) | (76 | ) | 122 | (242 | ) | NM | (292 | ) | 164 | NM | ||||||||||||||||||||||||
Noninterest revenue |
3,161 | 1,188 | 1,715 | 1,649 | 5,083 | 166 | (38 | ) | 4,349 | 10,730 | (59 | ) | ||||||||||||||||||||||||||||
Net interest income |
2,309 | 1,823 | 1,457 | 1,297 | 715 | 27 | 223 | 4,132 | 1,322 | 213 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE (a) |
5,470 | 3,011 | 3,172 | 2,946 | 5,798 | 82 | (6 | ) | 8,481 | 12,052 | (30 | ) | ||||||||||||||||||||||||||||
Provision for credit losses |
398 | 618 | 200 | 227 | 164 | (36 | ) | 143 | 1,016 | 227 | 348 | |||||||||||||||||||||||||||||
Credit reimbursement from TSS (b) |
30 | 30 | 30 | 31 | 30 | | | 60 | 60 | | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
3,132 | 1,241 | 1,561 | 1,178 | 2,589 | 152 | 21 | 4,373 | 5,226 | (16 | ) | |||||||||||||||||||||||||||||
Noncompensation expense |
1,602 | 1,312 | 1,450 | 1,200 | 1,265 | 22 | 27 | 2,914 | 2,459 | 19 | ||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
4,734 | 2,553 | 3,011 | 2,378 | 3,854 | 85 | 23 | 7,287 | 7,685 | (5 | ) | |||||||||||||||||||||||||||||
Income (loss) before income tax expense |
368 | (130 | ) | (9 | ) | 372 | 1,810 | NM | (80 | ) | 238 | 4,200 | (94 | ) | ||||||||||||||||||||||||||
Income tax expense (benefit) |
(26 | ) | (43 | ) | (133 | ) | 76 | 631 | 40 | NM | (69 | ) | 1,481 | NM | ||||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 394 | $ | (87 | ) | $ | 124 | $ | 296 | $ | 1,179 | NM | (67 | ) | $ | 307 | $ | 2,719 | (89 | ) | ||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
7 | % | (2 | )% | 2 | % | 6 | % | 23 | % | 3 | % | 26 | % | ||||||||||||||||||||||||||
ROA |
0.19 | (0.05 | ) | 0.07 | 0.17 | 0.68 | 0.08 | 0.81 | ||||||||||||||||||||||||||||||||
Overhead ratio |
87 | 85 | 95 | 81 | 66 | 86 | 64 | |||||||||||||||||||||||||||||||||
Compensation expense as a % of total net revenue |
57 | 41 | 49 | 40 | 45 | 52 | 43 | |||||||||||||||||||||||||||||||||
REVENUE BY BUSINESS |
||||||||||||||||||||||||||||||||||||||||
Investment banking fees: |
||||||||||||||||||||||||||||||||||||||||
Advisory |
$ | 370 | $ | 483 | $ | 646 | $ | 595 | $ | 560 | (23 | ) | (34 | ) | $ | 853 | $ | 1,032 | (17 | ) | ||||||||||||||||||||
Equity underwriting |
542 | 359 | 544 | 267 | 509 | 51 | 6 | 901 | 902 | | ||||||||||||||||||||||||||||||
Debt underwriting |
823 | 364 | 467 | 468 | 831 | 126 | (1 | ) | 1,187 | 1,695 | (30 | ) | ||||||||||||||||||||||||||||
Total investment banking fees |
1,735 | 1,206 | 1,657 | 1,330 | 1,900 | 44 | (9 | ) | 2,941 | 3,629 | (19 | ) | ||||||||||||||||||||||||||||
Fixed income markets |
2,347 | 466 | 615 | 687 | 2,445 | 404 | (4 | ) | 2,813 | 5,037 | (44 | ) | ||||||||||||||||||||||||||||
Equity markets |
1,079 | 976 | 578 | 537 | 1,249 | 11 | (14 | ) | 2,055 | 2,788 | (26 | ) | ||||||||||||||||||||||||||||
Credit portfolio |
309 | 363 | 322 | 392 | 204 | (15 | ) | 51 | 672 | 598 | 12 | |||||||||||||||||||||||||||||
Total net revenue |
$ | 5,470 | $ | 3,011 | $ | 3,172 | $ | 2,946 | $ | 5,798 | 82 | (6 | ) | $ | 8,481 | $ | 12,052 | (30 | ) | |||||||||||||||||||||
REVENUE BY REGION |
||||||||||||||||||||||||||||||||||||||||
Americas |
$ | 3,165 | $ | 536 | $ | 1,128 | $ | 1,016 | $ | 2,655 | 490 | 19 | $ | 3,701 | $ | 6,021 | (39 | ) | ||||||||||||||||||||||
Europe/Middle East/Africa |
1,512 | 1,641 | 1,334 | 1,389 | 2,327 | (8 | ) | (35 | ) | 3,153 | 4,578 | (31 | ) | |||||||||||||||||||||||||||
Asia/Pacific |
793 | 834 | 710 | 541 | 816 | (5 | ) | (3 | ) | 1,627 | 1,453 | 12 | ||||||||||||||||||||||||||||
Total net revenue |
$ | 5,470 | $ | 3,011 | $ | 3,172 | $ | 2,946 | $ | 5,798 | 82 | (6 | ) | $ | 8,481 | $ | 12,052 | (30 | ) | |||||||||||||||||||||
(a) | Total net revenue included tax-equivalent adjustments, predominantly due to tax-exempt income from municipal bond investments and income tax credits related to affordable housing investments, of $404 million, $289 million, $230 million, $255 million and $290 million for the quarters ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively, and $693 million and $442 million for year-to-date 2008 and 2007, respectively. | |
(b) | Treasury & Securities Services (TSS) was charged a credit reimbursement related to certain exposures managed within the Investment Bank credit portfolio on behalf of clients shared with TSS. |
Page 8
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS DATA (Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 814,860 | $ | 755,828 | $ | 735,685 | $ | 710,665 | $ | 696,230 | 8 | % | 17 | % | $ | 785,344 | $ | 677,581 | 16 | % | ||||||||||||||||||||
Trading assets debt and equity instruments |
367,184 | 369,456 | 371,842 | 372,212 | 359,387 | (1 | ) | 2 | 368,320 | 347,320 | 6 | |||||||||||||||||||||||||||||
Trading assets derivative receivables |
99,395 | 90,234 | 74,659 | 63,017 | 58,520 | 10 | 70 | 94,814 | 57,465 | 65 | ||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained (a) |
76,239 | 74,106 | 68,928 | 61,919 | 59,065 | 3 | 29 | 75,173 | 59,019 | 27 | ||||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value |
20,440 | 19,612 | 24,977 | 17,315 | 14,794 | 4 | 38 | 20,026 | 14,242 | 41 | ||||||||||||||||||||||||||||||
Total loans |
96,679 | 93,718 | 93,905 | 79,234 | 73,859 | 3 | 31 | 95,199 | 73,261 | 30 | ||||||||||||||||||||||||||||||
Adjusted assets (b) |
676,777 | 662,419 | 644,573 | 625,619 | 603,839 | 2 | 12 | 669,598 | 588,016 | 14 | ||||||||||||||||||||||||||||||
Equity |
23,319 | 22,000 | 21,000 | 21,000 | 21,000 | 6 | 11 | 22,659 | 21,000 | 8 | ||||||||||||||||||||||||||||||
Headcount |
37,057 | 25,780 | 25,543 | 25,691 | 25,356 | 44 | 46 | 37,057 | 25,356 | 46 | ||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs (recoveries) |
$ | (8 | ) | $ | 13 | $ | (9 | ) | $ | 67 | $ | (16 | ) | NM | 50 | $ | 5 | $ | (22 | ) | NM | |||||||||||||||||||
Nonperforming assets: |
||||||||||||||||||||||||||||||||||||||||
Nonperforming loans (c) |
313 | 321 | 353 | 265 | 72 | (2 | ) | 335 | 313 | 72 | 335 | |||||||||||||||||||||||||||||
Other nonperforming assets |
177 | 118 | 100 | 60 | 47 | 50 | 277 | 177 | 47 | 277 | ||||||||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses |
2,429 | 1,891 | 1,329 | 1,112 | 1,037 | 28 | 134 | 2,429 | 1,037 | 134 | ||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
469 | 607 | 560 | 568 | 487 | (23 | ) | (4 | ) | 469 | 487 | (4 | ) | |||||||||||||||||||||||||||
Total allowance for credit losses |
2,898 | 2,498 | 1,889 | 1,680 | 1,524 | 16 | 90 | 2,898 | 1,524 | 90 | ||||||||||||||||||||||||||||||
Net charge-off (recovery) rate (a) (d) |
(0.04 | )% | 0.07 | % | (0.05 | )% | 0.43 | % | (0.11 | )% | 0.01 | % | (0.08 | )% | ||||||||||||||||||||||||||
Allowance for loan losses to average loans (a) (d) |
3.19 | (e) | 2.55 | (e) | 1.93 | 1.80 | 1.76 | 3.23 | (e) | 1.76 | ||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans (c) |
843 | 683 | 439 | 585 | 2,206 | 843 | 2,206 | |||||||||||||||||||||||||||||||||
Nonperforming loans to average loans |
0.32 | 0.34 | 0.38 | 0.33 | 0.10 | 0.33 | 0.10 |
(a) | Loans retained included credit portfolio loans, leveraged leases and other accrual loans, and excluded loans at fair value. | |
(b) | Adjusted assets, a non-GAAP financial measure, equals total assets minus (1) securities purchased under resale agreements and securities borrowed less securities sold, not yet purchased; (2) assets of variable interest entities (VIEs) consolidated under FIN 46R; (3) cash and securities segregated and on deposit for regulatory and other purposes; and (4) goodwill and intangibles. The amount of adjusted assets is presented to assist the reader in comparing the Investment Banks (IB) asset and capital levels to other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a companys capital adequacy. The IB believes an adjusted asset amount that excludes the assets discussed above, which are considered to have a low risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry. | |
(c) | Nonperforming loans included loans held-for-sale and loans at fair value of $25 million, $44 million, $50 million, $75 million and $25 million at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively, which were excluded from the allowance coverage ratios. Nonperforming loans excluded distressed loans held-for-sale that were purchased as part of IBs proprietary activities. | |
(d) | Loans held-for-sale & loans at fair value were excluded when calculating the allowance coverage ratio and net charge-off (recovery) rate. | |
(e) | Excluding the impact of a loan originated in March, 2008 to Bear Stearns, the adjusted ratio would be 3.46%, 2.61% and 3.40% for the quarters ended June 30, 2008 and March 31, 2008, and the six months ended June 30, 2008, respectively. The average balance of the loan extended to Bear Stearns was $6.0 billion, $1.7 billion and $3.8 billion for the quarters ended June 30, 2008 and March 31, 2008, and the six months ended June 30, 2008, respectively. |
Page 9
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
MARKET RISK AVERAGE TRADING AND CREDIT PORTFOLIO VAR (a) |
||||||||||||||||||||||||||||||||||||||||
Trading activities: |
||||||||||||||||||||||||||||||||||||||||
Fixed income |
$ | 148 | $ | 120 | $ | 103 | $ | 98 | $ | 74 | 23 | % | 100 | % | $ | 134 | 60 | 123 | % | |||||||||||||||||||||
Foreign exchange |
26 | 35 | 31 | 23 | 20 | (26 | ) | 30 | 30 | 19 | 58 | |||||||||||||||||||||||||||||
Equities |
30 | 31 | 63 | 35 | 51 | (3 | ) | (41 | ) | 31 | 46 | (33 | ) | |||||||||||||||||||||||||||
Commodities and other |
31 | 28 | 29 | 28 | 40 | 11 | (23 | ) | 29 | 37 | (22 | ) | ||||||||||||||||||||||||||||
Diversification (b) |
(92 | ) | (92 | ) | (102 | ) | (72 | ) | (73 | ) | | (26 | ) | (91 | ) | (65 | ) | (40 | ) | |||||||||||||||||||||
Total trading VAR (c) |
143 | 122 | 124 | 112 | 112 | 17 | 28 | 133 | 97 | 37 | ||||||||||||||||||||||||||||||
Credit portfolio VAR (d) |
35 | 30 | 26 | 17 | 12 | 17 | 192 | 33 | 12 | 175 | ||||||||||||||||||||||||||||||
Diversification (b) |
(36 | ) | (30 | ) | (27 | ) | (22 | ) | (14 | ) | (20 | ) | (157 | ) | (34 | ) | (12 | ) | (183 | ) | ||||||||||||||||||||
Total trading and credit portfolio VAR |
$ | 142 | $ | 122 | $ | 123 | $ | 107 | $ | 110 | 16 | 29 | $ | 132 | 97 | 36 | ||||||||||||||||||||||||
June 30, 2008 YTD | Full Year 2007 | ||||||||||||||||||||
Market | Market | ||||||||||||||||||||
MARKET SHARES AND RANKINGS (e) | Share | Rankings | Share | Rankings | |||||||||||||||||
Global debt, equity and equity-related |
9 | % | # 1 | 8 | % | # 2 | |||||||||||||||
Global syndicated loans |
13 | % | # 1 | 13 | % | # 1 | |||||||||||||||
Global long-term debt (f) |
9 | % | # 1 | 7 | % | # 3 | |||||||||||||||
Global equity and equity-related (g) |
11 | % | # 1 | 9 | % | # 2 | |||||||||||||||
Global announced M&A (h) |
27 | % | # 3 | 27 | % | # 4 | |||||||||||||||
U.S. debt, equity and equity-related |
15 | % | # 1 | 10 | % | # 2 | |||||||||||||||
U.S. syndicated loans |
30 | % | # 1 | 24 | % | # 1 | |||||||||||||||
U.S. long-term debt (f) |
15 | % | # 1 | 10 | % | # 2 | |||||||||||||||
U.S. equity and equity-related (g) |
13 | % | # 3 | 11 | % | # 5 | |||||||||||||||
U.S.
announced M&A (h) |
41 | % | # 3 | 28 | % | # 3 |
(a) | Results for second quarter 2008 include one month of the combined Firm results and two months of heritage JPMorgan Chase results. All prior periods reflect heritage JPMorgan Chase results. | |
(b) | Average VARs were less than the sum of the VARs of their market risk components, which was due to risk offsets resulting from portfolio diversification. The diversification effect reflected the fact that the risks were not perfectly correlated. The risk of a portfolio of positions is usually less than the sum of the risks of the positions themselves. | |
(c) | Trading VAR includes predominantly all trading activities in IB; however, particular risk parameters of certain products are not fully captured, for example, correlation risk or the credit spread sensitivity of certain mortgage products. Trading VAR does not include VAR related to held-for-sale funded loans and unfunded commitments, nor the debit valuation adjustments (DVA) taken on derivative and structured liabilities to reflect the credit quality of the Firm. Trading VAR also does not include the MSR portfolio or VAR related to other corporate functions, such as Corporate/Private Equity. | |
(d) | Includes VAR on derivative credit valuation adjustments, hedges of the credit valuation adjustment and mark-to-market hedges of the retained loan portfolio, which are all reported in principal transactions revenue. This VAR does not include the retained loan portfolio. | |
(e) | Source: Thomson Reuters Securities data. June 30, 2008 YTD results are pro forma for the acquisition of Bear Stearns. Full year 2007 results represent heritage-JPMorgan Chase only. | |
(f) | Includes asset-backed securities, mortgage-backed securities and municipal securities. | |
(g) | Includes rights offerings; U.S. domiciled equity and equity-related transactions. | |
(h) | Global announced M&A is based upon rank value; all other rankings were based upon proceeds, with full credit to each book manager/equal if joint. Because of joint assignments, market share of all participants will add up to more than 100%. Global and U.S. announced M&A market share and ranking for 2007 include transactions withdrawn since December 31, 2007. U.S. announced M&A represents any U.S. involvement ranking. |
Page 10
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Lending & deposit-related fees |
$ | 497 | $ | 461 | $ | 496 | $ | 492 | $ | 470 | 8 | % | 6 | % | $ | 958 | $ | 893 | 7 | % | ||||||||||||||||||||
Asset management, administration and commissions |
375 | 377 | 332 | 336 | 344 | (1 | ) | 9 | 752 | 607 | 24 | |||||||||||||||||||||||||||||
Securities gains (losses) |
| | 1 | | | | | | | | ||||||||||||||||||||||||||||||
Mortgage fees and related income |
696 | 525 | 888 | 229 | 495 | 33 | 41 | 1,221 | 977 | 25 | ||||||||||||||||||||||||||||||
Credit card income |
194 | 174 | 174 | 167 | 163 | 11 | 19 | 368 | 305 | 21 | ||||||||||||||||||||||||||||||
All other income |
198 | 154 | 219 | 296 | 212 | 29 | (7 | ) | 352 | 391 | (10 | ) | ||||||||||||||||||||||||||||
Noninterest revenue |
1,960 | 1,691 | 2,110 | 1,520 | 1,684 | 16 | 16 | 3,651 | 3,173 | 15 | ||||||||||||||||||||||||||||||
Net interest income |
3,055 | 3,011 | 2,705 | 2,681 | 2,673 | 1 | 14 | 6,066 | 5,290 | 15 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
5,015 | 4,702 | 4,815 | 4,201 | 4,357 | 7 | 15 | 9,717 | 8,463 | 15 | ||||||||||||||||||||||||||||||
Provision for credit losses |
1,332 | 2,492 | 1,051 | 680 | 587 | (47 | ) | 127 | 3,824 | 879 | 335 | |||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
1,184 | 1,160 | 1,113 | 1,087 | 1,104 | 2 | 7 | 2,344 | 2,169 | 8 | ||||||||||||||||||||||||||||||
Noncompensation expense |
1,386 | 1,310 | 1,313 | 1,265 | 1,264 | 6 | 10 | 2,696 | 2,488 | 8 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
100 | 100 | 114 | 117 | 116 | | (14 | ) | 200 | 234 | (15 | ) | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
2,670 | 2,570 | 2,540 | 2,469 | 2,484 | 4 | 7 | 5,240 | 4,891 | 7 | ||||||||||||||||||||||||||||||
Income (loss) before income tax expense |
1,013 | (360 | ) | 1,224 | 1,052 | 1,286 | NM | (21 | ) | 653 | 2,693 | (76 | ) | |||||||||||||||||||||||||||
Income tax expense (benefit) |
407 | (133 | ) | 472 | 413 | 501 | NM | (19 | ) | 274 | 1,049 | (74 | ) | |||||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 606 | $ | (227 | ) | $ | 752 | $ | 639 | $ | 785 | NM | (23 | ) | $ | 379 | $ | 1,644 | (77 | ) | ||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
14 | % | (5 | )% | 19 | % | 16 | % | 20 | % | 4 | % | 21 | % | ||||||||||||||||||||||||||
Overhead ratio |
53 | 55 | 53 | 59 | 57 | 54 | 58 | |||||||||||||||||||||||||||||||||
Overhead ratio excluding core deposit intangibles (a) |
51 | 53 | 50 | 56 | 54 | 52 | 55 | |||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS (Ending) |
||||||||||||||||||||||||||||||||||||||||
Assets |
$ | 230,695 | $ | 227,916 | $ | 225,908 | $ | 216,754 | $ | 217,421 | 1 | 6 | $ | 230,695 | $ | 217,421 | 6 | |||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
187,595 | 184,211 | 181,016 | 172,498 | 166,992 | 2 | 12 | 187,595 | 166,992 | 12 | ||||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value (b) |
16,282 | 18,000 | 16,541 | 18,274 | 23,501 | (10 | ) | (31 | ) | 16,282 | 23,501 | (31 | ) | |||||||||||||||||||||||||||
Total loans |
203,877 | 202,211 | 197,557 | 190,772 | 190,493 | 1 | 7 | 203,877 | 190,493 | 7 | ||||||||||||||||||||||||||||||
Deposits |
223,121 | 230,854 | 221,129 | 216,135 | 217,689 | (3 | ) | 2 | 223,121 | 217,689 | 2 | |||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS (Average) |
||||||||||||||||||||||||||||||||||||||||
Assets |
$ | 232,725 | $ | 227,560 | $ | 221,557 | $ | 214,852 | $ | 216,692 | 2 | 7 | $ | 230,143 | $ | 216,912 | 6 | |||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
185,993 | 182,220 | 176,140 | 168,495 | 165,136 | 2 | 13 | 184,106 | 163,946 | 12 | ||||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value (b) |
20,492 | 17,841 | 17,538 | 19,560 | 25,166 | 15 | (19 | ) | 19,167 | 26,692 | (28 | ) | ||||||||||||||||||||||||||||
Total loans |
206,485 | 200,061 | 193,678 | 188,055 | 190,302 | 3 | 9 | 203,273 | 190,638 | 7 | ||||||||||||||||||||||||||||||
Deposits |
226,487 | 225,555 | 219,226 | 216,904 | 219,171 | | 3 | 226,021 | 218,058 | 4 | ||||||||||||||||||||||||||||||
Equity |
17,000 | 17,000 | 16,000 | 16,000 | 16,000 | | 6 | 17,000 | 16,000 | 6 | ||||||||||||||||||||||||||||||
Headcount |
69,550 | 70,095 | 69,465 | 68,528 | 68,254 | (1 | ) | 2 | 69,550 | 68,254 | 2 |
(a) | Retail Financial Services uses the overhead ratio (excluding the amortization of core deposit intangibles (CDI)), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation results in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this method would result in an improving overhead ratio over time, all things remaining equal. This non-GAAP ratio excludes Regional Bankings core deposit intangible amortization expense related to The Bank of New York transaction and the Bank One merger of $99 million, $99 million, $113 million, $116 million and $115 million for the quarters ending June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and $198 million and $231 million for year-to-date 2008 and 2007, respectively. | |
(b) | Loans included prime mortgage loans originated with the intent to sell, which were accounted for at fair value. These loans, classified as trading assets on the Consolidated balance sheets, totaled $14.1 billion, $13.5 billion, $12.6 billion, $14.4 billion and $15.2 billion at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. Average loans included prime mortgage loans, classified as trading assets on the Consolidated balance sheets, of $16.9 billion, $13.4 billion, $13.5 billion, $14.1 billion and $13.5 billion for the quarters ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and $15.2 billion and $10.0 billion for the year-to-date 2008 and 2007, respectively. |
Page 11
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 941 | $ | 789 | $ | 522 | $ | 350 | $ | 270 | 19 | % | 249 | % | $ | 1,730 | $ | 455 | 280 | % | ||||||||||||||||||||
Nonperforming loans (a) (b) |
3,873 | 3,292 | 2,704 | 1,991 | 1,760 | 18 | 120 | 3,873 | 1,760 | 120 | ||||||||||||||||||||||||||||||
Nonperforming assets (a) (b) |
4,481 | 3,824 | 3,190 | 2,404 | 2,099 | 17 | 113 | 4,481 | 2,099 | 113 | ||||||||||||||||||||||||||||||
Allowance for loan losses |
4,475 | 4,208 | 2,634 | 2,105 | 1,772 | 6 | 153 | 4,475 | 1,772 | 153 | ||||||||||||||||||||||||||||||
Net charge-off rate (c) (d) |
1.99 | % | 1.71 | % | 1.17 | % | 0.82 | % | 0.66 | % | 1.85 | % | 0.56 | % | ||||||||||||||||||||||||||
Allowance for loan losses to ending loans (c) |
2.39 | 2.28 | 1.46 | 1.22 | 1.06 | 2.39 | 1.06 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming loans (c) |
121 | 133 | 100 | 107 | 115 | 121 | 115 | |||||||||||||||||||||||||||||||||
Nonperforming loans to total loans |
1.90 | 1.63 | 1.37 | 1.04 | 0.92 | 1.90 | 0.92 | |||||||||||||||||||||||||||||||||
REGIONAL BANKING |
||||||||||||||||||||||||||||||||||||||||
Noninterest revenue |
$ | 1,022 | $ | 878 | $ | 940 | $ | 1,013 | $ | 977 | 16 | 5 | $ | 1,900 | $ | 1,770 | 7 | |||||||||||||||||||||||
Net interest income |
2,571 | 2,543 | 2,363 | 2,325 | 2,296 | 1 | 12 | 5,114 | 4,595 | 11 | ||||||||||||||||||||||||||||||
Total net revenue |
3,593 | 3,421 | 3,303 | 3,338 | 3,273 | 5 | 10 | 7,014 | 6,365 | 10 | ||||||||||||||||||||||||||||||
Provision for credit losses |
1,213 | 2,324 | 915 | 574 | 494 | (48 | ) | 146 | 3,537 | 727 | 387 | |||||||||||||||||||||||||||||
Noninterest expense |
1,778 | 1,794 | 1,785 | 1,760 | 1,749 | (1 | ) | 2 | 3,572 | 3,478 | 3 | |||||||||||||||||||||||||||||
Income (loss) before income tax expense |
602 | (697 | ) | 603 | 1,004 | 1,030 | NM | (42 | ) | (95 | ) | 2,160 | NM | |||||||||||||||||||||||||||
Net income (loss) |
354 | (433 | ) | 371 | 611 | 629 | NM | (44 | ) | (79 | ) | 1,319 | NM | |||||||||||||||||||||||||||
ROE |
11 | % | (14 | )% | 12 | % | 21 | % | 21 | % | (1 | )% | 23 | % | ||||||||||||||||||||||||||
Overhead ratio |
49 | 52 | 54 | 53 | 53 | 51 | 55 | |||||||||||||||||||||||||||||||||
Overhead ratio excluding core deposit intangibles (e) |
47 | 50 | 51 | 49 | 50 | 48 | 51 |
(a) | Nonperforming loans included loans held-for-sale and loans accounted for at fair value of $180 million, $129 million, $69 million, $17 million and $217 million at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. Certain of these loans are classified as trading assets on the Consolidated balance sheets. | |
(b) | Nonperforming loans and assets excluded (1) loans eligible for repurchase as well as loans repurchased from Governmental National Mortgage Association (GNMA) pools that are insured by U.S. government agencies of $1.9 billion, $1.8 billion, $1.5 billion, $1.3 billion and $1.2 billion at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and (2) education loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $371 million, $252 million, $279 million, $241 million and $200 million at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. These amounts for GNMA and education loans are excluded, as reimbursement is proceeding normally. | |
(c) | Loans held-for-sale and loans accounted for at fair value under SFAS 159 were excluded when calculating the allowance coverage ratio and the net charge-off rate. | |
(d) | The net charge-off rate for the quarters ended June 30, 2008, March 31, 2008 and December 31, 2007, excluded $19 million, $14 million and $2 million, respectively, and the six months ended June 30, 2008, excluded $33 million of charge-offs related to prime mortgage loans held by Corporate/Private Equity. | |
(e) | Regional Banking uses the overhead ratio (excluding the amortization of core deposit intangibles (CDI)), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation results in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this inclusion would result in an improving overhead ratio over time, all things remaining equal. This non-GAAP ratio excludes Regional Bankings core deposit intangible amortization expense related to The Bank of New York transaction and the Bank One merger of $99 million, $99 million, $113 million, $116 million and $115 million for the quarters ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and $198 million and $231 million for year-to-date 2008 and 2007, respectively. |
Page 12
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
REGIONAL BANKING (continued) |
||||||||||||||||||||||||||||||||||||||||
BUSINESS METRICS (in billions) |
||||||||||||||||||||||||||||||||||||||||
Home equity origination volume |
$ | 5.3 | $ | 6.7 | $ | 9.8 | $ | 11.2 | $ | 14.6 | (21 | )% | (64 | )% | $ | 12.0 | $ | 27.3 | (56 | )% | ||||||||||||||||||||
End of period loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 95.1 | $ | 95.0 | $ | 94.8 | $ | 93.0 | $ | 91.0 | | 5 | $ | 95.1 | $ | 91.0 | 5 | |||||||||||||||||||||||
Mortgage (a) |
14.9 | 15.9 | 15.7 | 12.3 | 8.8 | (6 | ) | 69 | 14.9 | 8.8 | 69 | |||||||||||||||||||||||||||||
Business banking |
16.4 | 15.8 | 15.4 | 14.9 | 14.6 | 4 | 12 | 16.4 | 14.6 | 12 | ||||||||||||||||||||||||||||||
Education |
13.0 | 12.4 | 11.0 | 10.2 | 10.2 | 5 | 27 | 13.0 | 10.2 | 27 | ||||||||||||||||||||||||||||||
Other loans (b) |
1.1 | 1.1 | 2.3 | 2.4 | 2.5 | | (56 | ) | 1.1 | 2.5 | (56 | ) | ||||||||||||||||||||||||||||
Total end of period loans |
140.5 | 140.2 | 139.2 | 132.8 | 127.1 | | 11 | 140.5 | 127.1 | 11 | ||||||||||||||||||||||||||||||
End of period deposits: |
||||||||||||||||||||||||||||||||||||||||
Checking |
$ | 69.1 | $ | 69.1 | $ | 67.0 | $ | 64.5 | $ | 67.3 | | 3 | $ | 69.1 | $ | 67.3 | 3 | |||||||||||||||||||||||
Savings |
105.8 | 105.4 | 96.0 | 95.7 | 97.7 | | 8 | 105.8 | 97.7 | 8 | ||||||||||||||||||||||||||||||
Time and other |
37.0 | 44.6 | 48.7 | 46.5 | 41.9 | (17 | ) | (12 | ) | 37.0 | 41.9 | (12 | ) | |||||||||||||||||||||||||||
Total end of period deposits |
211.9 | 219.1 | 211.7 | 206.7 | 206.9 | (3 | ) | 2 | 211.9 | 206.9 | 2 | |||||||||||||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 95.1 | $ | 95.0 | $ | 94.0 | $ | 91.8 | $ | 89.2 | | 7 | $ | 95.0 | $ | 87.8 | 8 | |||||||||||||||||||||||
Mortgage loans (a) |
15.6 | 15.8 | 13.7 | 9.9 | 8.8 | (1 | ) | 77 | 15.7 | 8.8 | 78 | |||||||||||||||||||||||||||||
Business banking |
16.1 | 15.6 | 15.1 | 14.8 | 14.5 | 3 | 11 | 15.9 | 14.4 | 10 | ||||||||||||||||||||||||||||||
Education (c) |
12.7 | 12.0 | 10.6 | 9.8 | 10.5 | 6 | 21 | 12.4 | 10.8 | 15 | ||||||||||||||||||||||||||||||
Other loans (b) |
1.1 | 1.5 | 2.3 | 2.4 | 2.4 | (27 | ) | (54 | ) | 1.3 | 2.7 | (52 | ) | |||||||||||||||||||||||||||
Total average loans (c) |
140.6 | 139.9 | 135.7 | 128.7 | 125.4 | 1 | 12 | 140.3 | 124.5 | 13 | ||||||||||||||||||||||||||||||
Average deposits: |
||||||||||||||||||||||||||||||||||||||||
Checking |
$ | 68.5 | $ | 66.3 | $ | 64.5 | $ | 64.9 | $ | 67.2 | 3 | 2 | $ | 67.4 | $ | 67.3 | | |||||||||||||||||||||||
Savings |
105.8 | 100.3 | 96.3 | 97.1 | 98.4 | 5 | 8 | 103.1 | 97.6 | 6 | ||||||||||||||||||||||||||||||
Time and other |
39.6 | 47.7 | 47.7 | 43.3 | 41.7 | (17 | ) | (5 | ) | 43.6 | 42.1 | 4 | ||||||||||||||||||||||||||||
Total average deposits |
213.9 | 214.3 | 208.5 | 205.3 | 207.3 | | 3 | 214.1 | 207.0 | 3 | ||||||||||||||||||||||||||||||
Average assets |
149.3 | 149.9 | 147.1 | 140.6 | 137.7 | | 8 | 149.6 | 136.8 | 9 | ||||||||||||||||||||||||||||||
Average equity |
12.4 | 12.4 | 11.8 | 11.8 | 11.8 | | 5 | 12.4 | 11.8 | 5 | ||||||||||||||||||||||||||||||
CREDIT DATA AND
QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
30+ day delinquency rate (d) (e) |
3.61 | % | 3.23 | % | 3.03 | % | 2.39 | % | 1.88 | % | 3.61 | % | 1.88 | % | ||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||||||||||||||
Home equity |
$ | 511 | $ | 447 | $ | 248 | $ | 150 | $ | 98 | 14 | 421 | $ | 958 | $ | 166 | 477 | |||||||||||||||||||||||
Mortgage |
211 | 163 | 73 | 40 | 26 | 29 | NM | 374 | 46 | NM | ||||||||||||||||||||||||||||||
Business banking |
51 | 40 | 38 | 33 | 30 | 28 | 70 | 91 | 55 | 65 | ||||||||||||||||||||||||||||||
Other loans |
48 | 21 | 28 | 23 | 52 | 129 | (8 | ) | 69 | 65 | 6 | |||||||||||||||||||||||||||||
Total net charge-offs |
821 | 671 | 387 | 246 | 206 | 22 | 299 | 1,492 | 332 | 349 | ||||||||||||||||||||||||||||||
Net charge-off rate |
||||||||||||||||||||||||||||||||||||||||
Home equity |
2.16 | % | 1.89 | % | 1.05 | % | 0.65 | % | 0.44 | % | 2.03 | % | 0.38 | % | ||||||||||||||||||||||||||
Mortgage (f) |
4.95 | 3.79 | 2.06 | 1.60 | 1.19 | 4.37 | 1.05 | |||||||||||||||||||||||||||||||||
Business banking |
1.27 | 1.03 | 1.00 | 0.88 | 0.83 | 1.15 | 0.77 | |||||||||||||||||||||||||||||||||
Other loans |
1.80 | 0.89 | 1.21 | 1.01 | 2.32 | 1.37 | 1.39 | |||||||||||||||||||||||||||||||||
Total net charge-off rate (c) (f) |
2.35 | 1.94 | 1.16 | 0.78 | 0.68 | 2.15 | 0.56 | |||||||||||||||||||||||||||||||||
Nonperforming assets (g) |
$ | 3,865 | $ | 3,348 | $ | 2,879 | $ | 2,206 | $ | 1,751 | 15 | 121 | $ | 3,865 | $ | 1,751 | 121 |
(a) | Balance reported predominantly reflected subprime mortgage loans owned. | |
(b) | Included commercial loans derived from community development activities prior to March 31, 2008. | |
(c) | Average loans included loans held-for-sale of $3.1 billion, $4.0 billion, $3.7 billion, $3.2 billion and $3.9 billion for the quarters ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and $3.6 billion and $4.1 billion for year-to-date 2008 and 2007, respectively. These amounts were excluded when calculating the net charge-off rate. | |
(d) | Excluded loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by U.S. government agencies of $1.5 billion, $1.5 billion, $1.2 billion, $979 million and $879 million at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(e) | Excluded loans that are 30 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $594 million, $534 million, $663 million, $590 million and $523 million at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(f) | The mortgage and total net charge-off rate for the quarters ended June 30, 2008, March 31, 2008 and December 31, 2007, excluded $19 million, $14 million and $2 million, respectively, and for the six months ended June 30, 2008, excluded $33 million of charge-offs related to prime mortgage loans held by the Corporate/Private Equity sector. | |
(g) | Nonperforming assets excluded (1) loans eligible for repurchase as well as loans repurchased from Governmental National Mortgage Association (GNMA) pools that are insured by U.S. government agencies of $1.9 billion, $1.8 billion, $1.5 billion, $1.3 billion and $1.2 billion at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and (2) education loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $371 million, $252 million, $279 million, $241 million and $200 million at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. These amounts for GNMA and education loans are excluded, as reimbursement is proceeding normally. |
Page 13
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
REGIONAL BANKING (continued) |
||||||||||||||||||||||||||||||||||||||||
RETAIL BRANCH BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Investment sales volume |
$ | 5,211 | $ | 4,084 | $ | 4,114 | $ | 4,346 | $ | 5,117 | 28 | % | 2 | % | $ | 9,295 | $ | 9,900 | (6 | )% | ||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||
Branches |
3,157 | 3,146 | 3,152 | 3,096 | 3,089 | | 2 | 3,157 | 3,089 | 2 | ||||||||||||||||||||||||||||||
ATMs |
9,310 | 9,237 | 9,186 | 8,943 | 8,649 | 1 | 8 | 9,310 | 8,649 | 8 | ||||||||||||||||||||||||||||||
Personal bankers |
9,995 | 9,826 | 9,650 | 9,503 | 9,025 | 2 | 11 | 9,995 | 9,025 | 11 | ||||||||||||||||||||||||||||||
Sales specialists |
4,116 | 4,133 | 4,105 | 4,025 | 3,915 | | 5 | 4,116 | 3,915 | 5 | ||||||||||||||||||||||||||||||
Active online customers (in thousands) |
7,180 | 6,454 | 5,918 | 5,706 | 5,448 | 11 | 32 | 7,180 | 5,448 | 32 | ||||||||||||||||||||||||||||||
Checking accounts (in thousands) |
11,336 | 11,068 | 10,839 | 10,644 | 10,356 | 2 | 9 | 11,336 | 10,356 | 9 | ||||||||||||||||||||||||||||||
MORTGAGE BANKING |
||||||||||||||||||||||||||||||||||||||||
Production revenue |
$ | 597 | $ | 576 | $ | 321 | $ | 176 | $ | 463 | 4 | 29 | $ | 1,173 | $ | 863 | 36 | |||||||||||||||||||||||
Net mortgage servicing revenue: |
||||||||||||||||||||||||||||||||||||||||
Loan servicing revenue |
678 | 634 | 665 | 629 | 615 | 7 | 10 | 1,312 | 1,216 | 8 | ||||||||||||||||||||||||||||||
Changes in MSR asset fair value: |
||||||||||||||||||||||||||||||||||||||||
Due to inputs or assumptions in model |
1,519 | (632 | ) | (766 | ) | (810 | ) | 952 | NM | 60 | 887 | 1,060 | (16 | ) | ||||||||||||||||||||||||||
Other changes in fair value |
(394 | ) | (425 | ) | (393 | ) | (377 | ) | (383 | ) | 7 | (3 | ) | (819 | ) | (761 | ) | (8 | ) | |||||||||||||||||||||
Total changes in MSR asset fair value |
1,125 | (1,057 | ) | (1,159 | ) | (1,187 | ) | 569 | NM | 98 | 68 | 299 | (77 | ) | ||||||||||||||||||||||||||
Derivative valuation adjustments and other |
(1,478 | ) | 598 | 1,232 | 788 | (1,014 | ) | NM | (46 | ) | (880 | ) | (1,141 | ) | 23 | |||||||||||||||||||||||||
Total net mortgage servicing revenue |
325 | 175 | 738 | 230 | 170 | 86 | 91 | 500 | 374 | 34 | ||||||||||||||||||||||||||||||
Total net revenue |
922 | 751 | 1,059 | 406 | 633 | 23 | 46 | 1,673 | 1,237 | 35 | ||||||||||||||||||||||||||||||
Noninterest expense |
649 | 536 | 518 | 485 | 516 | 21 | 26 | 1,185 | 984 | 20 | ||||||||||||||||||||||||||||||
Income (loss) before income tax expense |
273 | 215 | 541 | (79 | ) | 117 | 27 | 133 | 488 | 253 | 93 | |||||||||||||||||||||||||||||
Net income (loss) |
169 | 132 | 332 | (48 | ) | 71 | 28 | 138 | 301 | 155 | 94 | |||||||||||||||||||||||||||||
ROE |
28 | % | 22 | % | 66 | % | NM | 14 | % | 25 | % | 16 | % | |||||||||||||||||||||||||||
Business metrics (in billions) |
||||||||||||||||||||||||||||||||||||||||
Third-party mortgage loans serviced (ending) |
$ | 659.1 | $ | 627.1 | $ | 614.7 | $ | 600.0 | $ | 572.4 | 5 | 15 | $ | 659.1 | $ | 572.4 | 15 | |||||||||||||||||||||||
MSR net carrying value (ending) |
10.9 | 8.4 | 8.6 | 9.1 | 9.5 | 30 | 15 | 10.9 | 9.5 | 15 | ||||||||||||||||||||||||||||||
Avg mortgage loans held-for-sale & loans at fair value (a) |
17.4 | 13.8 | 13.8 | 16.4 | 21.3 | 26 | (18 | ) | 15.6 | 22.6 | (31 | ) | ||||||||||||||||||||||||||||
Average assets |
36.2 | 32.2 | 30.6 | 31.4 | 35.6 | 12 | 2 | 34.2 | 36.8 | (7 | ) | |||||||||||||||||||||||||||||
Average equity |
2.4 | 2.4 | 2.0 | 2.0 | 2.0 | | 20 | 2.4 | 2.0 | 20 | ||||||||||||||||||||||||||||||
Mortgage origination volume by channel (in billions) |
||||||||||||||||||||||||||||||||||||||||
Retail |
$ | 12.5 | $ | 12.6 | $ | 9.9 | $ | 11.1 | $ | 13.6 | (1 | ) | (8 | ) | $ | 25.1 | $ | 24.5 | 2 | |||||||||||||||||||||
Wholesale |
9.1 | 10.6 | 10.2 | 9.8 | 12.8 | (14 | ) | (29 | ) | 19.7 | 22.7 | (13 | ) | |||||||||||||||||||||||||||
Correspondent |
17.0 | 12.0 | 9.5 | 7.2 | 6.4 | 42 | 166 | 29.0 | 11.2 | 159 | ||||||||||||||||||||||||||||||
CNT (negotiated transactions) |
17.5 | 11.9 | 10.4 | 11.1 | 11.3 | 47 | 55 | 29.4 | 21.8 | 35 | ||||||||||||||||||||||||||||||
Total |
56.1 | 47.1 | 40.0 | 39.2 | 44.1 | 19 | 27 | 103.2 | 80.2 | 29 |
(a) | Included $16.9 billion, $13.4 billion, $13.5 billion, $14.1 billion and $13.5 billion of prime mortgage loans at fair value for the quarters ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and $15.2 billion and $10.0 billion for year-to-date 2008 and 2007, respectively. These loans are classified as trading assets on the Consolidated balance sheets. |
Page 14
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
AUTO FINANCE |
||||||||||||||||||||||||||||||||||||||||
Noninterest revenue |
$ | 155 | $ | 151 | $ | 142 | $ | 140 | $ | 138 | 3 | % | 12 | % | $ | 306 | $ | 269 | 14 | % | ||||||||||||||||||||
Net interest income |
343 | 379 | 308 | 307 | 312 | (9 | ) | 10 | 722 | 591 | 22 | |||||||||||||||||||||||||||||
Total net revenue |
498 | 530 | 450 | 447 | 450 | (6 | ) | 11 | 1,028 | 860 | 20 | |||||||||||||||||||||||||||||
Provision for credit losses |
117 | 168 | 133 | 96 | 92 | (30 | ) | 27 | 285 | 151 | 89 | |||||||||||||||||||||||||||||
Noninterest expense |
243 | 240 | 237 | 224 | 219 | 1 | 11 | 483 | 429 | 13 | ||||||||||||||||||||||||||||||
Income before income tax expense |
138 | 122 | 80 | 127 | 139 | 13 | (1 | ) | 260 | 280 | (7 | ) | ||||||||||||||||||||||||||||
Net income |
83 | 74 | 49 | 76 | 85 | 12 | (2 | ) | 157 | 170 | (8 | ) | ||||||||||||||||||||||||||||
ROE |
15 | % | 13 | % | 9 | % | 14 | % | 15 | % | 14 | % | 16 | % | ||||||||||||||||||||||||||
ROA |
0.71 | 0.65 | 0.44 | 0.70 | 0.79 | 0.68 | 0.79 | |||||||||||||||||||||||||||||||||
Business metrics (in billions) |
||||||||||||||||||||||||||||||||||||||||
Auto origination volume |
$ | 5.6 | $ | 7.2 | $ | 5.6 | $ | 5.2 | $ | 5.3 | (22 | ) | 6 | $ | 12.8 | $ | 10.5 | 22 | ||||||||||||||||||||||
End-of-period loans and lease related assets |
||||||||||||||||||||||||||||||||||||||||
Loans outstanding |
$ | 44.7 | $ | 44.4 | $ | 42.0 | $ | 40.3 | $ | 40.4 | 1 | 11 | $ | 44.7 | $ | 40.4 | 11 | |||||||||||||||||||||||
Lease financing receivables |
0.2 | 0.3 | 0.3 | 0.6 | 0.8 | (33 | ) | (75 | ) | 0.2 | 0.8 | (75 | ) | |||||||||||||||||||||||||||
Operating lease assets |
2.1 | 2.0 | 1.9 | 1.8 | 1.8 | 5 | 17 | 2.1 | 1.8 | 17 | ||||||||||||||||||||||||||||||
Total end-of-period loans and lease related assets |
47.0 | 46.7 | 44.2 | 42.7 | 43.0 | 1 | 9 | 47.0 | 43.0 | 9 | ||||||||||||||||||||||||||||||
Average loans and lease related assets |
||||||||||||||||||||||||||||||||||||||||
Loans outstanding |
$ | 44.7 | $ | 42.9 | $ | 41.1 | $ | 39.9 | $ | 40.1 | 4 | 11 | $ | 43.8 | $ | 39.8 | 10 | |||||||||||||||||||||||
Lease financing receivables |
0.2 | 0.3 | 0.5 | 0.7 | 1.0 | (33 | ) | (80 | ) | 0.3 | 1.2 | (75 | ) | |||||||||||||||||||||||||||
Operating lease assets |
2.1 | 1.9 | 1.9 | 1.8 | 1.7 | 11 | 24 | 2.0 | 1.7 | 18 | ||||||||||||||||||||||||||||||
Total average loans and lease related assets |
47.0 | 45.1 | 43.5 | 42.4 | 42.8 | 4 | 10 | 46.1 | 42.7 | 8 | ||||||||||||||||||||||||||||||
Average assets |
47.3 | 45.5 | 43.8 | 42.9 | 43.4 | 4 | 9 | 46.4 | 43.3 | 7 | ||||||||||||||||||||||||||||||
Average equity |
2.3 | 2.3 | 2.2 | 2.2 | 2.2 | | 5 | 2.3 | 2.2 | 5 | ||||||||||||||||||||||||||||||
Credit quality statistics |
||||||||||||||||||||||||||||||||||||||||
30+ day delinquency rate |
1.57 | % | 1.44 | % | 1.85 | % | 1.65 | % | 1.43 | % | 1.57 | % | 1.43 | % | ||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||||||||||||||
Loans |
$ | 118 | $ | 117 | $ | 132 | $ | 98 | $ | 62 | 1 | 90 | $ | 235 | $ | 120 | 96 | |||||||||||||||||||||||
Lease receivables |
1 | 1 | 1 | 1 | 1 | | | 2 | 2 | | ||||||||||||||||||||||||||||||
Total net charge-offs |
119 | 118 | 133 | 99 | 63 | 1 | 89 | 237 | 122 | 94 | ||||||||||||||||||||||||||||||
Net charge-off rate |
||||||||||||||||||||||||||||||||||||||||
Loans |
1.06 | % | 1.10 | % | 1.27 | % | 0.97 | % | 0.62 | % | 1.08 | % | 0.61 | % | ||||||||||||||||||||||||||
Lease receivables |
2.01 | 1.34 | 0.79 | 0.57 | 0.40 | 1.34 | 0.34 | |||||||||||||||||||||||||||||||||
Total net charge-off rate |
1.07 | 1.10 | 1.27 | 0.97 | 0.61 | 1.08 | 0.60 | |||||||||||||||||||||||||||||||||
Nonperforming assets |
$ | 164 | $ | 160 | $ | 188 | $ | 156 | $ | 131 | 2 | 25 | $ | 164 | $ | 131 | 25 |
Page 15
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Credit card income |
$ | 673 | $ | 600 | $ | 712 | $ | 692 | $ | 682 | 12 | % | (1 | )% | $ | 1,273 | $ | 1,281 | (1 | )% | ||||||||||||||||||||
All other income |
91 | 119 | 122 | 67 | 80 | (24 | ) | 14 | 210 | 172 | 22 | |||||||||||||||||||||||||||||
Noninterest revenue |
764 | 719 | 834 | 759 | 762 | 6 | | 1,483 | 1,453 | 2 | ||||||||||||||||||||||||||||||
Net interest income |
3,011 | 3,185 | 3,137 | 3,108 | 2,955 | (5 | ) | 2 | 6,196 | 5,944 | 4 | |||||||||||||||||||||||||||||
TOTAL NET REVENUE |
3,775 | 3,904 | 3,971 | 3,867 | 3,717 | (3 | ) | 2 | 7,679 | 7,397 | 4 | |||||||||||||||||||||||||||||
Provision for credit losses |
2,194 | 1,670 | 1,788 | 1,363 | 1,331 | 31 | 65 | 3,864 | 2,560 | 51 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
258 | 267 | 260 | 256 | 251 | (3 | ) | 3 | 525 | 505 | 4 | |||||||||||||||||||||||||||||
Noncompensation expense |
763 | 841 | 790 | 827 | 753 | (9 | ) | 1 | 1,604 | 1,556 | 3 | |||||||||||||||||||||||||||||
Amortization of intangibles |
164 | 164 | 173 | 179 | 184 | | (11 | ) | 328 | 368 | (11 | ) | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,185 | 1,272 | 1,223 | 1,262 | 1,188 | (7 | ) | | 2,457 | 2,429 | 1 | |||||||||||||||||||||||||||||
Income before income tax expense |
396 | 962 | 960 | 1,242 | 1,198 | (59 | ) | (67 | ) | 1,358 | 2,408 | (44 | ) | |||||||||||||||||||||||||||
Income tax expense |
146 | 353 | 351 | 456 | 439 | (59 | ) | (67 | ) | 499 | 884 | (44 | ) | |||||||||||||||||||||||||||
NET INCOME |
$ | 250 | $ | 609 | $ | 609 | $ | 786 | $ | 759 | (59 | ) | (67 | ) | $ | 859 | $ | 1,524 | (44 | ) | ||||||||||||||||||||
Memo: Net securitization gains |
$ | 36 | $ | 70 | $ | 28 | $ | | $ | 16 | (49 | ) | 125 | $ | 106 | $ | 39 | 172 | ||||||||||||||||||||||
FINANCIAL METRICS |
||||||||||||||||||||||||||||||||||||||||
ROE |
7 | % | 17 | % | 17 | % | 22 | % | 22 | % | 12 | % | 22 | % | ||||||||||||||||||||||||||
Overhead ratio |
31 | 33 | 31 | 33 | 32 | 32 | 33 | |||||||||||||||||||||||||||||||||
% of average managed outstandings: |
||||||||||||||||||||||||||||||||||||||||
Net interest income |
7.92 | 8.34 | 8.20 | 8.29 | 8.04 | 8.13 | 8.08 | |||||||||||||||||||||||||||||||||
Provision for credit losses |
5.77 | 4.37 | 4.67 | 3.64 | 3.62 | 5.07 | 3.48 | |||||||||||||||||||||||||||||||||
Noninterest revenue |
2.01 | 1.88 | 2.18 | 2.03 | 2.07 | 1.95 | 1.97 | |||||||||||||||||||||||||||||||||
Risk adjusted margin (a) |
4.16 | 5.85 | 5.71 | 6.68 | 6.49 | 5.01 | 6.57 | |||||||||||||||||||||||||||||||||
Noninterest expense |
3.12 | 3.33 | 3.20 | 3.37 | 3.23 | 3.23 | 3.30 | |||||||||||||||||||||||||||||||||
Pretax income (ROO) (b) |
1.04 | 2.52 | 2.51 | 3.31 | 3.26 | 1.78 | 3.27 | |||||||||||||||||||||||||||||||||
Net income |
0.66 | 1.60 | 1.59 | 2.10 | 2.06 | 1.13 | 2.07 | |||||||||||||||||||||||||||||||||
BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Charge volume (in billions) |
$ | 93.6 | $ | 85.4 | $ | 95.5 | $ | 89.8 | $ | 88.0 | 10 | 6 | $ | 179.0 | $ | 169.3 | 6 | |||||||||||||||||||||||
Net accounts opened (in millions) |
3.6 | 3.4 | 5.3 | 4.0 | 3.7 | 6 | (3 | ) | 7.0 | 7.1 | (1 | ) | ||||||||||||||||||||||||||||
Credit cards issued (in millions) |
157.6 | 156.4 | 155.0 | 153.6 | 150.9 | 1 | 4 | 157.6 | 150.9 | 4 | ||||||||||||||||||||||||||||||
Number of registered internet customers (in millions) |
28.0 | 26.7 | 28.3 | 26.4 | 24.6 | 5 | 14 | 28.0 | 24.6 | 14 | ||||||||||||||||||||||||||||||
Merchant acquiring business (c) |
||||||||||||||||||||||||||||||||||||||||
Bank card volume (in billions) |
$ | 199.3 | $ | 182.4 | $ | 194.4 | $ | 181.4 | $ | 179.7 | 9 | 11 | $ | 381.7 | $ | 343.3 | 11 | |||||||||||||||||||||||
Total transactions (in billions) |
5.6 | 5.2 | 5.4 | 5.0 | 4.8 | 8 | 17 | 10.8 | 9.3 | 16 |
(a) | Represents total net revenue less provision for credit losses. | |
(b) | Pretax return on average managed outstandings. | |
(c) | Represents 100% of the merchant acquiring business. |
Page 16
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SELECTED ENDING BALANCES |
||||||||||||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans on balance sheets |
$ | 76,278 | $ | 75,888 | $ | 84,352 | $ | 79,409 | $ | 80,495 | 1 | % | (5 | )% | $ | 76,278 | $ | 80,495 | (5 | )% | ||||||||||||||||||||
Securitized loans |
79,120 | 75,062 | 72,701 | 69,643 | 67,506 | 5 | 17 | 79,120 | 67,506 | 17 | ||||||||||||||||||||||||||||||
Managed loans |
$ | 155,398 | $ | 150,950 | $ | 157,053 | $ | 149,052 | $ | 148,001 | 3 | 5 | $ | 155,398 | $ | 148,001 | 5 | |||||||||||||||||||||||
SELECTED AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||
Managed assets |
$ | 161,601 | $ | 159,602 | $ | 158,183 | $ | 154,956 | $ | 154,406 | 1 | 5 | $ | 160,601 | $ | 155,333 | 3 | |||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans on balance sheets |
$ | 75,630 | $ | 79,445 | $ | 79,028 | $ | 79,993 | $ | 79,000 | (5 | ) | (4 | ) | $ | 77,537 | $ | 80,458 | (4 | ) | ||||||||||||||||||||
Securitized loans |
77,195 | 74,108 | 72,715 | 68,673 | 68,428 | 4 | 13 | 75,652 | 67,959 | 11 | ||||||||||||||||||||||||||||||
Managed average loans |
$ | 152,825 | $ | 153,553 | $ | 151,743 | $ | 148,666 | $ | 147,428 | | 4 | $ | 153,189 | $ | 148,417 | 3 | |||||||||||||||||||||||
Equity |
$ | 14,100 | $ | 14,100 | $ | 14,100 | $ | 14,100 | $ | 14,100 | | | $ | 14,100 | $ | 14,100 | | |||||||||||||||||||||||
Headcount |
19,570 | 18,931 | 18,554 | 18,887 | 18,913 | 3 | 3 | 19,570 | 18,913 | 3 | ||||||||||||||||||||||||||||||
MANAGED CREDIT QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
$ | 1,894 | $ | 1,670 | $ | 1,488 | $ | 1,363 | $ | 1,331 | 13 | 42 | $ | 3,564 | $ | 2,645 | 35 | |||||||||||||||||||||||
Net charge-off rate |
4.98 | % | 4.37 | % | 3.89 | % | 3.64 | % | 3.62 | % | 4.68 | % | 3.59 | % | ||||||||||||||||||||||||||
Managed delinquency ratios |
||||||||||||||||||||||||||||||||||||||||
30+ days |
3.46 | % | 3.66 | % | 3.48 | % | 3.25 | % | 3.00 | % | 3.46 | % | 3.00 | % | ||||||||||||||||||||||||||
90+ days |
1.76 | 1.84 | 1.65 | 1.50 | 1.42 | 1.76 | 1.42 | |||||||||||||||||||||||||||||||||
Allowance for loan losses (a) |
$ | 3,705 | $ | 3,404 | $ | 3,407 | $ | 3,107 | $ | 3,096 | 9 | 20 | $ | 3,705 | $ | 3,096 | 20 | |||||||||||||||||||||||
Allowance for loan losses to period-end loans (a) |
4.86 | % | 4.49 | % | 4.04 | % | 3.91 | % | 3.85 | % | 4.86 | % | 3.85 | % |
(a) | Loans on a reported basis. |
Page 17
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME STATEMENT DATA (a) |
||||||||||||||||||||||||||||||||||||||||
Credit card income |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 1,516 | $ | 1,537 | $ | 1,597 | $ | 1,528 | $ | 1,470 | (1 | )% | 3 | % | $ | 3,053 | $ | 2,815 | 8 | % | ||||||||||||||||||||
Securitization adjustments |
(843 | ) | (937 | ) | (885 | ) | (836 | ) | (788 | ) | 10 | (7 | ) | (1,780 | ) | (1,534 | ) | (16 | ) | |||||||||||||||||||||
Managed credit card income |
$ | 673 | $ | 600 | $ | 712 | $ | 692 | $ | 682 | 12 | (1 | ) | $ | 1,273 | $ | 1,281 | (1 | ) | |||||||||||||||||||||
Net interest income |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 1,338 | $ | 1,567 | $ | 1,633 | $ | 1,694 | $ | 1,577 | (15 | ) | (15 | ) | $ | 2,905 | $ | 3,227 | (10 | ) | ||||||||||||||||||||
Securitization adjustments |
1,673 | 1,618 | 1,504 | 1,414 | 1,378 | 3 | 21 | 3,291 | 2,717 | 21 | ||||||||||||||||||||||||||||||
Managed net interest income |
$ | 3,011 | $ | 3,185 | $ | 3,137 | $ | 3,108 | $ | 2,955 | (5 | ) | 2 | $ | 6,196 | $ | 5,944 | 4 | ||||||||||||||||||||||
Total net revenue |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 2,945 | $ | 3,223 | $ | 3,352 | $ | 3,289 | $ | 3,127 | (9 | ) | (6 | ) | $ | 6,168 | $ | 6,214 | (1 | ) | ||||||||||||||||||||
Securitization adjustments |
830 | 681 | 619 | 578 | 590 | 22 | 41 | 1,511 | 1,183 | 28 | ||||||||||||||||||||||||||||||
Managed total net revenue |
$ | 3,775 | $ | 3,904 | $ | 3,971 | $ | 3,867 | $ | 3,717 | (3 | ) | 2 | $ | 7,679 | $ | 7,397 | 4 | ||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 1,364 | $ | 989 | $ | 1,169 | $ | 785 | $ | 741 | 38 | 84 | $ | 2,353 | $ | 1,377 | 71 | |||||||||||||||||||||||
Securitization adjustments |
830 | 681 | 619 | 578 | 590 | 22 | 41 | 1,511 | 1,183 | 28 | ||||||||||||||||||||||||||||||
Managed provision for credit losses |
$ | 2,194 | $ | 1,670 | $ | 1,788 | $ | 1,363 | $ | 1,331 | 31 | 65 | $ | 3,864 | $ | 2,560 | 51 | |||||||||||||||||||||||
BALANCE SHEETS AVERAGE BALANCES
(a) |
||||||||||||||||||||||||||||||||||||||||
Total average assets |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 87,021 | $ | 88,013 | $ | 88,244 | $ | 88,856 | $ | 88,486 | (1 | ) | (2 | ) | $ | 87,517 | $ | 89,814 | (3 | ) | ||||||||||||||||||||
Securitization adjustments |
74,580 | 71,589 | 69,939 | 66,100 | 65,920 | 4 | 13 | 73,084 | 65,519 | 12 | ||||||||||||||||||||||||||||||
Managed average assets |
$ | 161,601 | $ | 159,602 | $ | 158,183 | $ | 154,956 | $ | 154,406 | 1 | 5 | $ | 160,601 | $ | 155,333 | 3 | |||||||||||||||||||||||
CREDIT QUALITY STATISTICS (a) |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 1,064 | $ | 989 | $ | 869 | $ | 785 | $ | 741 | 8 | 44 | $ | 2,053 | $ | 1,462 | 40 | |||||||||||||||||||||||
Securitization adjustments |
830 | 681 | 619 | 578 | 590 | 22 | 41 | 1,511 | 1,183 | 28 | ||||||||||||||||||||||||||||||
Managed net charge-offs |
$ | 1,894 | $ | 1,670 | $ | 1,488 | $ | 1,363 | $ | 1,331 | 13 | 42 | $ | 3,564 | $ | 2,645 | 35 | |||||||||||||||||||||||
(a) | JPMorgan Chase uses the concept of managed receivables to evaluate the credit performance and overall performance of the underlying credit card loans, both sold and not sold; as the same borrower is continuing to use the credit card for ongoing charges, a borrowers credit performance will affect both the receivables sold under SFAS 140 and those not sold. Thus, in its disclosures regarding managed receivables, JPMorgan Chase treats the sold receivables as if they were still on the balance sheet in order to disclose the credit performance (such as net charge-off rates) of the entire managed credit card portfolio. Managed results exclude the impact of credit card securitizations on total net revenue, the provision for credit losses, net charge-offs and loan receivables. Securitization does not change reported net income versus managed earnings; however, it does affect the classification of items on the Consolidated Statements of Income and Consolidated Balance Sheets. |
Page 18
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Lending & deposit-related fees |
$ | 207 | $ | 193 | $ | 172 | $ | 159 | $ | 158 | 7 | % | 31 | % | $ | 400 | $ | 316 | 27 | % | ||||||||||||||||||||
Asset management, administration and commissions |
26 | 26 | 24 | 24 | 21 | | 24 | 52 | 44 | 18 | ||||||||||||||||||||||||||||||
All other income (a) |
150 | 115 | 130 | 107 | 133 | 30 | 13 | 265 | 287 | (8 | ) | |||||||||||||||||||||||||||||
Noninterest revenue |
383 | 334 | 326 | 290 | 312 | 15 | 23 | 717 | 647 | 11 | ||||||||||||||||||||||||||||||
Net interest income |
723 | 733 | 758 | 719 | 695 | (1 | ) | 4 | 1,456 | 1,363 | 7 | |||||||||||||||||||||||||||||
TOTAL NET REVENUE |
1,106 | 1,067 | 1,084 | 1,009 | 1,007 | 4 | 10 | 2,173 | 2,010 | 8 | ||||||||||||||||||||||||||||||
Provision for credit losses |
47 | 101 | 105 | 112 | 45 | (53 | ) | 4 | 148 | 62 | 139 | |||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
173 | 178 | 184 | 160 | 182 | (3 | ) | (5 | ) | 351 | 362 | (3 | ) | |||||||||||||||||||||||||||
Noncompensation expense |
290 | 294 | 307 | 300 | 300 | (1 | ) | (3 | ) | 584 | 590 | (1 | ) | |||||||||||||||||||||||||||
Amortization of intangibles |
13 | 13 | 13 | 13 | 14 | | (7 | ) | 26 | 29 | (10 | ) | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
476 | 485 | 504 | 473 | 496 | (2 | ) | (4 | ) | 961 | 981 | (2 | ) | |||||||||||||||||||||||||||
Income before income tax expense |
583 | 481 | 475 | 424 | 466 | 21 | 25 | 1,064 | 967 | 10 | ||||||||||||||||||||||||||||||
Income tax expense |
228 | 189 | 187 | 166 | 182 | 21 | 25 | 417 | 379 | 10 | ||||||||||||||||||||||||||||||
NET INCOME |
$ | 355 | $ | 292 | $ | 288 | $ | 258 | $ | 284 | 22 | 25 | $ | 647 | $ | 588 | 10 | |||||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
Revenue by product: |
||||||||||||||||||||||||||||||||||||||||
Lending |
$ | 376 | $ | 379 | $ | 380 | $ | 343 | $ | 348 | (1 | ) | 8 | $ | 755 | $ | 696 | 8 | ||||||||||||||||||||||
Treasury services |
630 | 616 | 631 | 594 | 569 | 2 | 11 | 1,246 | 1,125 | 11 | ||||||||||||||||||||||||||||||
Investment banking |
91 | 68 | 70 | 64 | 82 | 34 | 11 | 159 | 158 | 1 | ||||||||||||||||||||||||||||||
Other |
9 | 4 | 3 | 8 | 8 | 125 | 13 | 13 | 31 | (58 | ) | |||||||||||||||||||||||||||||
Total Commercial Banking revenue |
$ | 1,106 | $ | 1,067 | $ | 1,084 | $ | 1,009 | $ | 1,007 | 4 | 10 | $ | 2,173 | $ | 2,010 | 8 | |||||||||||||||||||||||
IB revenue, gross (b) |
$ | 270 | $ | 203 | $ | 227 | $ | 194 | $ | 236 | 33 | 14 | $ | 473 | $ | 467 | 1 | |||||||||||||||||||||||
Revenue by business: |
||||||||||||||||||||||||||||||||||||||||
Middle Market Banking |
$ | 708 | $ | 706 | $ | 695 | $ | 680 | $ | 653 | | 8 | $ | 1,414 | $ | 1,314 | 8 | |||||||||||||||||||||||
Mid-Corporate Banking |
235 | 207 | 239 | 167 | 197 | 14 | 19 | 442 | 409 | 8 | ||||||||||||||||||||||||||||||
Real Estate Banking |
94 | 97 | 102 | 108 | 109 | (3 | ) | (14 | ) | 191 | 211 | (9 | ) | |||||||||||||||||||||||||||
Other |
69 | 57 | 48 | 54 | 48 | 21 | 44 | 126 | 76 | 66 | ||||||||||||||||||||||||||||||
Total Commercial Banking revenue |
$ | 1,106 | $ | 1,067 | $ | 1,084 | $ | 1,009 | $ | 1,007 | 4 | 10 | $ | 2,173 | $ | 2,010 | 8 | |||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
20 | % | 17 | % | 17 | % | 15 | % | 18 | % | 19 | % | 19 | % | ||||||||||||||||||||||||||
Overhead ratio |
43 | 45 | 46 | 47 | 49 | 44 | 49 |
(a) | IB-related and commercial card revenue is included in all other income. | |
(b) | Represents the total revenue related to investment banking products sold to Commercial Banking (CB) clients. |
Page 19
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS DATA
(Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 103,469 | $ | 101,979 | $ | 94,550 | $ | 86,652 | $ | 84,687 | 1 | % | 22 | % | $ | 102,724 | $ | 83,622 | 23 | % | ||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Loans retained |
70,682 | 67,510 | 63,749 | 60,839 | 59,071 | 5 | 20 | 69,096 | 58,133 | 19 | ||||||||||||||||||||||||||||||
Loans held-for-sale & loans at fair value |
379 | 521 | 1,795 | 433 | 741 | (27 | ) | (49 | ) | 450 | 609 | (26 | ) | |||||||||||||||||||||||||||
Total loans (a) |
71,061 | 68,031 | 65,544 | 61,272 | 59,812 | 4 | 19 | 69,546 | 58,742 | 18 | ||||||||||||||||||||||||||||||
Liability balances (b) |
99,404 | 99,477 | 96,716 | 88,081 | 84,187 | | 18 | 99,441 | 82,976 | 20 | ||||||||||||||||||||||||||||||
Equity |
7,000 | 7,000 | 6,700 | 6,700 | 6,300 | | 11 | 7,000 | 6,300 | 11 | ||||||||||||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
Loans by business: |
||||||||||||||||||||||||||||||||||||||||
Middle Market Banking |
$ | 42,879 | $ | 40,111 | $ | 38,275 | $ | 37,617 | $ | 37,099 | 7 | 16 | $ | 41,495 | $ | 36,710 | 13 | |||||||||||||||||||||||
Mid-Corporate Banking |
15,357 | 15,150 | 15,440 | 12,076 | 11,692 | 1 | 31 | 15,253 | 11,183 | 36 | ||||||||||||||||||||||||||||||
Real Estate Banking |
7,500 | 7,457 | 7,347 | 7,144 | 6,894 | 1 | 9 | 7,479 | 6,984 | 7 | ||||||||||||||||||||||||||||||
Other |
5,325 | 5,313 | 4,482 | 4,435 | 4,127 | | 29 | 5,319 | 3,865 | 38 | ||||||||||||||||||||||||||||||
Total Commercial Banking loans |
$ | 71,061 | $ | 68,031 | $ | 65,544 | $ | 61,272 | $ | 59,812 | 4 | 19 | $ | 69,546 | $ | 58,742 | 18 | |||||||||||||||||||||||
Headcount |
4,028 | 4,075 | 4,125 | 4,158 | 4,295 | (1 | ) | (6 | ) | 4,028 | 4,295 | (6 | ) | |||||||||||||||||||||||||||
CREDIT DATA AND QUALITY
STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs (recoveries) |
$ | 49 | $ | 81 | $ | 33 | $ | 20 | $ | (8 | ) | (40 | ) | NM | $ | 130 | $ | (9 | ) | NM | ||||||||||||||||||||
Nonperforming loans (c) |
486 | 446 | 146 | 134 | 135 | 9 | 260 | 486 | 135 | 260 | ||||||||||||||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses (d) |
1,843 | 1,790 | 1,695 | 1,623 | 1,551 | 3 | 19 | 1,843 | 1,551 | 19 | ||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
170 | 200 | 236 | 236 | 222 | (15 | ) | (23 | ) | 170 | 222 | (23 | ) | |||||||||||||||||||||||||||
Total allowance for credit losses |
2,013 | 1,990 | 1,931 | 1,859 | 1,773 | 1 | 14 | 2,013 | 1,773 | 14 | ||||||||||||||||||||||||||||||
Net charge-off (recovery) rate (a) |
0.28 | % | 0.48 | % | 0.21 | % | 0.13 | % | (0.05 | )% | 0.38 | % | (0.03 | )% | ||||||||||||||||||||||||||
Allowance for loan losses to average loans (a) |
2.61 | 2.65 | 2.66 | 2.67 | 2.63 | 2.67 | 2.67 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to nonperforming
loans (c) |
401 | 426 | 1,161 | 1,211 | 1,149 | 401 | 1,149 | |||||||||||||||||||||||||||||||||
Nonperforming loans to average loans |
0.68 | 0.66 | 0.22 | 0.22 | 0.23 | 0.70 | 0.23 |
(a) | Loans held-for-sale and loans accounted for at fair value were excluded when calculating the allowance coverage ratio and the net charge-off (recovery) rate. | |
(b) | Liability balances include deposits and deposits swept to on-balance sheet liabilities such as commercial paper, federal funds purchased and securities sold under repurchase agreements. | |
(c) | Nonperforming loans included loans held-for-sale and loans at fair value of $26 million at June 30, 2008, and March 31, 2008. These amounts were excluded when calculating the allowance coverage ratios. There were no nonperforming loans held-for-sale or held at fair value at December 31, 2007, September 30, 2007, and June 30, 2007, respectively. | |
(d) | The allowance for loan losses at June 30, 2008, included an amount transferred from Corporate/Private Equity related to loans acquired in the merger with Bear Stearns. |
Page 20
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Lending & deposit-related fees |
$ | 283 | $ | 269 | $ | 247 | $ | 244 | $ | 219 | 5 | % | 29 | % | $ | 552 | $ | 432 | 28 | % | ||||||||||||||||||||
Asset management, administration and commissions |
846 | 820 | 806 | 730 | 828 | 3 | 2 | 1,666 | 1,514 | 10 | ||||||||||||||||||||||||||||||
All other income |
228 | 200 | 228 | 171 | 184 | 14 | 24 | 428 | 309 | 39 | ||||||||||||||||||||||||||||||
Noninterest revenue |
1,357 | 1,289 | 1,281 | 1,145 | 1,231 | 5 | 10 | 2,646 | 2,255 | 17 | ||||||||||||||||||||||||||||||
Net interest income |
662 | 624 | 649 | 603 | 510 | 6 | 30 | 1,286 | 1,012 | 27 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
2,019 | 1,913 | 1,930 | 1,748 | 1,741 | 6 | 16 | 3,932 | 3,267 | 20 | ||||||||||||||||||||||||||||||
Provision for credit losses |
7 | 12 | 4 | 9 | | (42 | ) | NM | 19 | 6 | 217 | |||||||||||||||||||||||||||||
Credit reimbursement to IB (a) |
(30 | ) | (30 | ) | (30 | ) | (31 | ) | (30 | ) | | | (60 | ) | (60 | ) | | |||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
669 | 641 | 607 | 579 | 609 | 4 | 10 | 1,310 | 1,167 | 12 | ||||||||||||||||||||||||||||||
Noncompensation expense |
632 | 571 | 598 | 538 | 523 | 11 | 21 | 1,203 | 1,025 | 17 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
16 | 16 | 17 | 17 | 17 | | (6 | ) | 32 | 32 | | |||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,317 | 1,228 | 1,222 | 1,134 | 1,149 | 7 | 15 | 2,545 | 2,224 | 14 | ||||||||||||||||||||||||||||||
Income before income tax expense |
665 | 643 | 674 | 574 | 562 | 3 | 18 | 1,308 | 977 | 34 | ||||||||||||||||||||||||||||||
Income tax expense |
240 | 240 | 252 | 214 | 210 | | 14 | 480 | 362 | 33 | ||||||||||||||||||||||||||||||
NET INCOME |
$ | 425 | $ | 403 | $ | 422 | $ | 360 | $ | 352 | 5 | 21 | $ | 828 | $ | 615 | 35 | |||||||||||||||||||||||
REVENUE BY BUSINESS |
||||||||||||||||||||||||||||||||||||||||
Treasury Services |
$ | 852 | $ | 813 | $ | 824 | $ | 780 | $ | 720 | 5 | 18 | $ | 1,665 | $ | 1,409 | 18 | |||||||||||||||||||||||
Worldwide Securities Services |
1,167 | 1,100 | 1,106 | 968 | 1,021 | 6 | 14 | 2,267 | 1,858 | 22 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 2,019 | $ | 1,913 | $ | 1,930 | $ | 1,748 | $ | 1,741 | 6 | 16 | $ | 3,932 | $ | 3,267 | 20 | |||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
49 | % | 46 | % | 56 | % | 48 | % | 47 | % | 48 | % | 41 | % | ||||||||||||||||||||||||||
Overhead ratio |
65 | 64 | 63 | 65 | 66 | 65 | 68 | |||||||||||||||||||||||||||||||||
Pretax margin ratio (b) |
33 | 34 | 35 | 33 | 32 | 33 | 30 | |||||||||||||||||||||||||||||||||
SELECTED AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 56,192 | $ | 57,204 | $ | 60,830 | $ | 55,688 | $ | 50,687 | (2 | ) | 11 | $ | 56,698 | $ | 48,359 | 17 | ||||||||||||||||||||||
Loans (c) |
23,822 | 23,086 | 23,489 | 20,602 | 20,195 | 3 | 18 | 23,454 | 19,575 | 20 | ||||||||||||||||||||||||||||||
Liability balances (d) |
268,293 | 254,369 | 250,645 | 236,381 | 217,514 | 5 | 23 | 261,331 | 214,095 | 22 | ||||||||||||||||||||||||||||||
Equity |
3,500 | 3,500 | 3,000 | 3,000 | 3,000 | | 17 | 3,500 | 3,000 | 17 | ||||||||||||||||||||||||||||||
Headcount |
27,232 | 26,561 | 25,669 | 25,209 | 25,206 | 3 | 8 | 27,232 | 25,206 | 8 |
(a) | TSS is charged a credit reimbursement related to certain exposures managed within the IB credit portfolio on behalf of clients shared with TSS. | |
(b) | Pretax margin represents income before income tax expense divided by total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors. | |
(c) | Loan balances include wholesale overdrafts, commercial card and trade finance loans. | |
(d) | Liability balances include deposits and deposits swept to on-balance sheet liabilities such as commercial paper, federal funds purchased and securities sold under repurchase agreements. |
Page 21
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
TSS FIRMWIDE DISCLOSURES |
||||||||||||||||||||||||||||||||||||||||
Treasury Services revenue reported |
$ | 852 | $ | 813 | $ | 824 | $ | 780 | $ | 720 | 5 | % | 18 | % | $ | 1,665 | $ | 1,409 | 18 | % | ||||||||||||||||||||
Treasury Services revenue reported in Commercial Banking |
630 | 616 | 631 | 594 | 569 | 2 | 11 | 1,246 | 1,125 | 11 | ||||||||||||||||||||||||||||||
Treasury Services revenue reported in other lines of business |
72 | 69 | 75 | 70 | 65 | 4 | 11 | 141 | 125 | 13 | ||||||||||||||||||||||||||||||
Treasury Services firmwide revenue (a) |
1,554 | 1,498 | 1,530 | 1,444 | 1,354 | 4 | 15 | 3,052 | 2,659 | 15 | ||||||||||||||||||||||||||||||
Worldwide Securities Services revenue |
1,167 | 1,100 | 1,106 | 968 | 1,021 | 6 | 14 | 2,267 | 1,858 | 22 | ||||||||||||||||||||||||||||||
Treasury & Securities Services firmwide revenue (a) |
$ | 2,721 | $ | 2,598 | $ | 2,636 | $ | 2,412 | $ | 2,375 | 5 | 15 | $ | 5,319 | $ | 4,517 | 18 | |||||||||||||||||||||||
Treasury Services firmwide liability balances (average) (b) |
$ | 230,689 | $ | 221,716 | $ | 218,416 | $ | 201,671 | $ | 189,214 | 4 | 22 | $ | 226,203 | $ | 187,930 | 20 | |||||||||||||||||||||||
Treasury & Securities Services firmwide liability balances (average) (b) |
367,670 | 353,845 | 347,361 | 324,462 | 301,701 | 4 | 22 | 360,758 | 297,072 | 21 | ||||||||||||||||||||||||||||||
TSS FIRMWIDE FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
Treasury Services firmwide overhead ratio (c) |
54 | % | 55 | % | 53 | % | 54 | % | 59 | % | 54 | % | 59 | % | ||||||||||||||||||||||||||
Treasury & Securities Services firmwide overhead ratio (c) |
58 | 58 | 57 | 59 | 60 | 58 | 61 | |||||||||||||||||||||||||||||||||
FIRMWIDE BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Assets under custody (in billions) |
$ | 15,476 | $ | 15,690 | $ | 15,946 | $ | 15,614 | $ | 15,203 | (1 | ) | 2 | $ | 15,476 | $ | 15,203 | 2 | ||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||
US$ ACH transactions originated (in millions) |
993 | 1,004 | 984 | 943 | 972 | (1 | ) | 2 | 1,997 | 1,943 | 3 | |||||||||||||||||||||||||||||
Total US$ clearing volume (in thousands) |
29,063 | 28,056 | 28,386 | 28,031 | 27,779 | 4 | 5 | 57,119 | 54,619 | 5 | ||||||||||||||||||||||||||||||
International electronic funds transfer volume (in thousands) (d) |
41,432 | 40,039 | 42,723 | 41,415 | 42,068 | 3 | (2 | ) | 81,471 | 84,467 | (4 | ) | ||||||||||||||||||||||||||||
Wholesale check volume (in millions) |
618 | 623 | 656 | 731 | 767 | (1 | ) | (19 | ) | 1,241 | 1,538 | (19 | ) | |||||||||||||||||||||||||||
Wholesale cards issued (in thousands) (e) |
19,917 | 19,122 | 18,722 | 18,108 | 17,535 | 4 | 14 | 19,917 | 17,535 | 14 |
(a) | TSS firmwide FX revenue, which includes FX revenue recorded in TSS and FX revenue associated with TSS customers who are FX customers of the IB, was $222 million, $191 million, $157 million, $144 million and $139 million for the quarters ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and $413 million and $251 million for year-to-date 2008 and 2007, respectively. This is not included in the TS and TSS firmwide revenue. | |
(b) | Firmwide liability balances include TS liability balances recorded in the Commercial Bank line of business. | |
(c) | Overhead ratios have been calculated based upon firmwide revenue and TSS and TS expense, respectively, including those allocated to certain other lines of business. FX revenue and expense recorded in the IB for TSS-related FX activity are not included in this ratio. | |
(d) | International electronic funds transfer includes non-US$ ACH and clearing volume. | |
(e) | Wholesale cards issued include domestic commercial card, stored value card, prepaid card, and government electronic benefit card products. |
Page 22
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Asset management, administration and commissions |
$ | 1,573 | $ | 1,531 | $ | 1,901 | $ | 1,760 | $ | 1,671 | 3 | % | (6 | )% | $ | 3,104 | $ | 3,160 | (2 | )% | ||||||||||||||||||||
All other income |
130 | 59 | 159 | 152 | 173 | 120 | (25 | ) | 189 | 343 | (45 | ) | ||||||||||||||||||||||||||||
Noninterest revenue |
1,703 | 1,590 | 2,060 | 1,912 | 1,844 | 7 | (8 | ) | 3,293 | 3,503 | (6 | ) | ||||||||||||||||||||||||||||
Net interest income |
361 | 311 | 329 | 293 | 293 | 16 | 23 | 672 | 538 | 25 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
2,064 | 1,901 | 2,389 | 2,205 | 2,137 | 9 | (3 | ) | 3,965 | 4,041 | (2 | ) | ||||||||||||||||||||||||||||
Provision for credit losses |
17 | 16 | (1 | ) | 3 | (11 | ) | 6 | NM | 33 | (20 | ) | NM | |||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
886 | 825 | 1,030 | 848 | 879 | 7 | 1 | 1,711 | 1,643 | 4 | ||||||||||||||||||||||||||||||
Noncompensation expense |
494 | 477 | 510 | 498 | 456 | 4 | 8 | 971 | 907 | 7 | ||||||||||||||||||||||||||||||
Amortization of intangibles |
20 | 21 | 19 | 20 | 20 | (5 | ) | | 41 | 40 | 2 | |||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
1,400 | 1,323 | 1,559 | 1,366 | 1,355 | 6 | 3 | 2,723 | 2,590 | 5 | ||||||||||||||||||||||||||||||
Income before income tax expense |
647 | 562 | 831 | 836 | 793 | 15 | (18 | ) | 1,209 | 1,471 | (18 | ) | ||||||||||||||||||||||||||||
Income tax expense |
252 | 206 | 304 | 315 | 300 | 22 | (16 | ) | 458 | 553 | (17 | ) | ||||||||||||||||||||||||||||
NET INCOME |
$ | 395 | $ | 356 | $ | 527 | $ | 521 | $ | 493 | 11 | (20 | ) | 751 | 918 | (18 | ) | |||||||||||||||||||||||
REVENUE BY CLIENT SEGMENT |
||||||||||||||||||||||||||||||||||||||||
Private Bank |
$ | 765 | $ | 655 | $ | 713 | $ | 686 | $ | 646 | 17 | 18 | $ | 1,420 | $ | 1,206 | 18 | |||||||||||||||||||||||
Retail |
490 | 466 | 640 | 639 | 602 | 5 | (19 | ) | 956 | 1,129 | (15 | ) | ||||||||||||||||||||||||||||
Institutional |
472 | 490 | 754 | 603 | 617 | (4 | ) | (24 | ) | 962 | 1,168 | (18 | ) | |||||||||||||||||||||||||||
Private Client Services |
299 | 290 | 282 | 277 | 272 | 3 | 10 | 589 | 538 | 9 | ||||||||||||||||||||||||||||||
Bear Stearns Brokerage |
38 | | | | | NM | NM | 38 | | NM | ||||||||||||||||||||||||||||||
Total net revenue |
$ | 2,064 | $ | 1,901 | $ | 2,389 | $ | 2,205 | $ | 2,137 | 9 | (3 | ) | 3,965 | 4,041 | (2 | ) | |||||||||||||||||||||||
FINANCIAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
ROE |
31 | % | 29 | % | 52 | % | 52 | % | 53 | % | 30 | % | 49 | % | ||||||||||||||||||||||||||
Overhead ratio |
68 | 70 | 65 | 62 | 63 | 69 | 64 | |||||||||||||||||||||||||||||||||
Pretax margin ratio (a) |
31 | 30 | 35 | 38 | 37 | 30 | 36 | |||||||||||||||||||||||||||||||||
BUSINESS METRICS |
||||||||||||||||||||||||||||||||||||||||
Number of: |
||||||||||||||||||||||||||||||||||||||||
Client advisors |
1,717 | 1,744 | 1,729 | 1,680 | 1,582 | (2 | ) | 9 | 1,717 | 1,582 | 9 | |||||||||||||||||||||||||||||
Retirement planning services participants |
1,505,000 | 1,519,000 | 1,501,000 | 1,495,000 | 1,477,000 | (1 | ) | 2 | 1,505,000 | 1,477,000 | 2 | |||||||||||||||||||||||||||||
Bear Stearns brokers |
326 | | | | | NM | NM | 326 | | NM | ||||||||||||||||||||||||||||||
% of customer assets in 4 & 5 Star Funds (b) |
40 | % | 49 | % | 55 | % | 55 | % | 65 | % | (18 | ) | (38 | ) | 40 | % | 65 | % | (38 | ) | ||||||||||||||||||||
% of AUM in 1st and 2nd quartiles: (c) |
||||||||||||||||||||||||||||||||||||||||
1 year |
51 | % | 52 | % | 57 | % | 47 | % | 65 | % | (2 | ) | (22 | ) | 51 | % | 65 | % | (22 | ) | ||||||||||||||||||||
3 years |
70 | % | 73 | % | 75 | % | 73 | % | 77 | % | (4 | ) | (9 | ) | 70 | % | 77 | % | (9 | ) | ||||||||||||||||||||
5 years |
76 | % | 75 | % | 76 | % | 76 | % | 76 | % | 1 | | 76 | % | 76 | % | | |||||||||||||||||||||||
SELECTED BALANCE SHEETS DATA
(Average) |
||||||||||||||||||||||||||||||||||||||||
Total assets |
$ | 65,015 | $ | 60,286 | $ | 55,989 | $ | 53,879 | $ | 51,710 | 8 | 26 | $ | 62,651 | $ | 48,779 | 28 | |||||||||||||||||||||||
Loans (d) |
39,264 | 36,628 | 32,627 | 30,928 | 28,695 | 7 | 37 | 37,946 | 27,176 | 40 | ||||||||||||||||||||||||||||||
Deposits |
69,975 | 68,184 | 64,630 | 59,907 | 55,981 | 3 | 25 | 69,079 | 55,402 | 25 | ||||||||||||||||||||||||||||||
Equity |
5,066 | 5,000 | 4,000 | 4,000 | 3,750 | 1 | 35 | 5,033 | 3,750 | 34 | ||||||||||||||||||||||||||||||
Headcount |
15,840 | 14,955 | 14,799 | 14,510 | 14,108 | 6 | 12 | 15,840 | 14,108 | 12 | ||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS |
||||||||||||||||||||||||||||||||||||||||
Net charge-offs (recoveries) |
$ | 2 | $ | (2 | ) | $ | 2 | $ | (5 | ) | $ | (5 | ) | NM | NM | $ | | $ | (5 | ) | NM | |||||||||||||||||||
Nonperforming loans |
68 | 11 | 12 | 28 | 21 | NM | 224 | 68 | 21 | 224 | ||||||||||||||||||||||||||||||
Allowance for loan losses |
147 | 130 | 112 | 115 | 105 | 13 | 40 | 147 | 105 | 40 | ||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
5 | 6 | 7 | 6 | 7 | (17 | ) | (29 | ) | 5 | 7 | (29 | ) | |||||||||||||||||||||||||||
Net charge-off (recovery) rate |
0.02 | % | (0.02 | )% | 0.02 | % | (0.06 | )% | (0.07 | )% | | % | (0.04 | )% | ||||||||||||||||||||||||||
Allowance for loan losses to average loans |
0.37 | 0.35 | 0.34 | 0.37 | 0.37 | 0.39 | 0.39 | |||||||||||||||||||||||||||||||||
Allowance for loan losses to
nonperforming loans |
216 | 1,182 | 933 | 411 | 500 | 216 | 500 | |||||||||||||||||||||||||||||||||
Nonperforming loans to average loans |
0.17 | 0.03 | 0.04 | 0.09 | 0.07 | 0.18 | 0.08 |
(a) | Pretax margin represents income before income tax expense divided by total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors. | |
(b) | Derived from the following rating services: Morningstar for the United States; Micropal for the United Kingdom, Luxembourg, Hong Kong and Taiwan; and Nomura for Japan. | |
(c) | Derived from the following rating services: Lipper for the United States and Taiwan; Micropal for the United Kingdom, Luxembourg and Hong Kong; and Nomura for Japan. | |
(d) | Reflects the transfer in 2007 of held-for-investment prime mortgage loans from AM to Corporate within the Corporate/Private Equity segment. |
Page 23
Jun 30, 2008 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Jun 30 | ||||||||||||||||||||||
2008 | 2008 | 2007 | 2007 | 2007 | 2008 | 2007 | ||||||||||||||||||||||
Assets by asset class |
||||||||||||||||||||||||||||
Liquidity |
$ | 478 | $ | 471 | $ | 400 | $ | 368 | $ | 333 | 1 | % | 44 | % | ||||||||||||||
Fixed income |
199 | 200 | 200 | 195 | 190 | (1 | ) | 5 | ||||||||||||||||||||
Equities & balanced |
378 | 390 | 472 | 481 | 467 | (3 | ) | (19 | ) | |||||||||||||||||||
Alternatives |
130 | 126 | 121 | 119 | 119 | 3 | 9 | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
1,185 | 1,187 | 1,193 | 1,163 | 1,109 | | 7 | |||||||||||||||||||||
Custody / brokerage / administration / deposits |
426 | 382 | 379 | 376 | 363 | 12 | 17 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,611 | $ | 1,569 | $ | 1,572 | $ | 1,539 | $ | 1,472 | 3 | 9 | ||||||||||||||||
Assets by client segment |
||||||||||||||||||||||||||||
Institutional |
$ | 645 | $ | 652 | $ | 632 | $ | 603 | $ | 565 | (1 | ) | 14 | |||||||||||||||
Private Bank |
196 | 196 | 201 | 196 | 185 | | 6 | |||||||||||||||||||||
Retail |
276 | 279 | 300 | 304 | 300 | (1 | ) | (8 | ) | |||||||||||||||||||
Private Client Services |
60 | 60 | 60 | 60 | 59 | | 2 | |||||||||||||||||||||
Bear Stearns Brokerage |
8 | | | | | NM | NM | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,185 | $ | 1,187 | $ | 1,193 | $ | 1,163 | $ | 1,109 | | 7 | ||||||||||||||||
Institutional |
$ | 646 | $ | 652 | $ | 633 | $ | 604 | $ | 566 | (1 | ) | 14 | |||||||||||||||
Private Bank |
442 | 441 | 433 | 423 | 402 | | 10 | |||||||||||||||||||||
Retail |
357 | 366 | 394 | 399 | 393 | (2 | ) | (9 | ) | |||||||||||||||||||
Private Client Services |
106 | 110 | 112 | 113 | 111 | (4 | ) | (5 | ) | |||||||||||||||||||
Bear Stearns Brokerage |
60 | | | | | NM | NM | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,611 | $ | 1,569 | $ | 1,572 | $ | 1,539 | $ | 1,472 | 3 | 9 | ||||||||||||||||
Assets by geographic region |
||||||||||||||||||||||||||||
U.S. / Canada |
$ | 771 | $ | 773 | $ | 760 | $ | 745 | $ | 700 | | 10 | ||||||||||||||||
International |
414 | 414 | 433 | 418 | 409 | | 1 | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,185 | $ | 1,187 | $ | 1,193 | $ | 1,163 | $ | 1,109 | | 7 | ||||||||||||||||
U.S. / Canada |
$ | 1,093 | $ | 1,063 | $ | 1,032 | $ | 1,022 | $ | 971 | 3 | 13 | ||||||||||||||||
International |
518 | 506 | 540 | 517 | 501 | 2 | 3 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,611 | $ | 1,569 | $ | 1,572 | $ | 1,539 | $ | 1,472 | 3 | 9 | ||||||||||||||||
Mutual fund assets by asset class |
||||||||||||||||||||||||||||
Liquidity |
$ | 416 | $ | 405 | $ | 339 | $ | 308 | $ | 268 | 3 | 55 | ||||||||||||||||
Fixed income |
47 | 45 | 46 | 46 | 49 | 4 | (4 | ) | ||||||||||||||||||||
Equities |
179 | 186 | 224 | 235 | 235 | (4 | ) | (24 | ) | |||||||||||||||||||
TOTAL MUTUAL FUND ASSETS |
$ | 642 | $ | 636 | $ | 609 | $ | 589 | $ | 552 | 1 | 16 | ||||||||||||||||
Page 24
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 2008 | 2007 | ||||||||||||||||||||||
ASSETS UNDER SUPERVISION (continued) |
||||||||||||||||||||||||||||
Assets under management rollforward |
||||||||||||||||||||||||||||
Beginning balance |
$ | 1,187 | $ | 1,193 | $ | 1,163 | $ | 1,109 | $ | 1,053 | $ | 1,193 | $ | 1,013 | ||||||||||||||
Net asset flows: |
||||||||||||||||||||||||||||
Liquidity |
1 | 68 | 26 | 33 | 12 | 69 | 19 | |||||||||||||||||||||
Fixed income |
(1 | ) | | 3 | (2 | ) | 6 | (1 | ) | 8 | ||||||||||||||||||
Equities, balanced & alternative |
(3 | ) | (21 | ) | 4 | 2 | 12 | (24 | ) | 22 | ||||||||||||||||||
Market / performance / other impacts (a) |
1 | (53 | ) | (3 | ) | 21 | 26 | (52 | ) | 47 | ||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT |
$ | 1,185 | $ | 1,187 | $ | 1,193 | $ | 1,163 | $ | 1,109 | $ | 1,185 | $ | 1,109 | ||||||||||||||
Assets under supervision rollforward |
||||||||||||||||||||||||||||
Beginning balance |
$ | 1,569 | $ | 1,572 | $ | 1,539 | $ | 1,472 | $ | 1,395 | $ | 1,572 | $ | 1,347 | ||||||||||||||
Net asset flows |
(5 | ) | 52 | 37 | 41 | 38 | 47 | 65 | ||||||||||||||||||||
Market / performance / other impacts (a) |
47 | (55 | ) | (4 | ) | 26 | 39 | (8 | ) | 60 | ||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION |
$ | 1,611 | $ | 1,569 | $ | 1,572 | $ | 1,539 | $ | 1,472 | $ | 1,611 | $ | 1,472 | ||||||||||||||
(a) | Second quarter 2008 reflects $15 billion for assets under management and $68 billion for assets under supervision from the Bear Stearns acquisition on May 30, 2008. |
Page 25
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Principal transactions |
$ | (97 | ) | $ | 5 | $ | 773 | $ | 1,082 | $ | 1,372 | NM | % | NM | % | $ | (92 | ) | $ | 2,697 | NM | % | ||||||||||||||||||
Securities gains (losses) (a) |
656 | 42 | 146 | 128 | (227 | ) | NM | NM | 698 | (235 | ) | NM | ||||||||||||||||||||||||||||
All other income (b) |
(378 | ) | 1,639 | 213 | 70 | 90 | NM | NM | 1,261 | 158 | NM | |||||||||||||||||||||||||||||
Noninterest revenue |
181 | 1,686 | 1,132 | 1,280 | 1,235 | (89 | ) | (85 | ) | 1,867 | 2,620 | (29 | ) | |||||||||||||||||||||||||||
Net interest income (expense) |
48 | (286 | ) | (218 | ) | (279 | ) | (173 | ) | NM | NM | (238 | ) | (290 | ) | 18 | ||||||||||||||||||||||||
TOTAL NET REVENUE |
229 | 1,400 | 914 | 1,001 | 1,062 | (84 | ) | (78 | ) | 1,629 | 2,330 | (30 | ) | |||||||||||||||||||||||||||
Provision for credit losses |
290 | 196 | 14 | (31 | ) | 3 | 48 | NM | 486 | 6 | NM | |||||||||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation expense |
611 | 639 | 714 | 569 | 695 | (4 | ) | (12 | ) | 1,250 | 1,471 | (15 | ) | |||||||||||||||||||||||||||
Noncompensation expense (c) |
699 | (82 | ) | 982 | 674 | 818 | NM | (15 | ) | 617 | 1,374 | (55 | ) | |||||||||||||||||||||||||||
Merger costs |
155 | | 22 | 61 | 64 | NM | 142 | 155 | 126 | 23 | ||||||||||||||||||||||||||||||
Subtotal |
1,465 | 557 | 1,718 | 1,304 | 1,577 | 163 | (7 | ) | 2,022 | 2,971 | (32 | ) | ||||||||||||||||||||||||||||
Net expense allocated to other businesses |
(1,070 | ) | (1,057 | ) | (1,057 | ) | (1,059 | ) | (1,075 | ) | (1 | ) | | (2,127 | ) | (2,115 | ) | (1 | ) | |||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
395 | (500 | ) | 661 | 245 | 502 | NM | (21 | ) | (105 | ) | 856 | NM | |||||||||||||||||||||||||||
Income
(loss) before income tax expense |
(456 | ) | 1,704 | 239 | 787 | 557 | NM | NM | 1,248 | 1,468 | (15 | ) | ||||||||||||||||||||||||||||
Income tax expense (benefit) |
(34 | ) | 677 | (10 | ) | 274 | 175 | NM | NM | 643 | 455 | 41 | ||||||||||||||||||||||||||||
NET
INCOME (LOSS) |
$ | (422 | ) | $ | 1,027 | $ | 249 | $ | 513 | $ | 382 | NM | NM | $ | 605 | $ | 1,013 | (40 | ) | |||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
||||||||||||||||||||||||||||||||||||||||
Private equity |
$ | 197 | $ | 163 | $ | 688 | $ | 733 | $ | 1,293 | 21 | (85 | ) | $ | 360 | $ | 2,546 | (86 | ) | |||||||||||||||||||||
Corporate |
32 | 1,237 | 226 | 268 | (231 | ) | (97 | ) | NM | 1,269 | (216 | ) | NM | |||||||||||||||||||||||||||
TOTAL NET REVENUE |
$ | 229 | $ | 1,400 | $ | 914 | $ | 1,001 | $ | 1,062 | (84 | ) | (78 | ) | $ | 1,629 | $ | 2,330 | (30 | ) | ||||||||||||||||||||
NET INCOME (LOSS) |
||||||||||||||||||||||||||||||||||||||||
Private equity |
$ | 99 | $ | 57 | $ | 356 | $ | 409 | $ | 702 | 74 | (86 | ) | $ | 156 | $ | 1,400 | (89 | ) | |||||||||||||||||||||
Corporate |
19 | 970 | (93 | ) | 142 | (280 | ) | (98 | ) | NM | 989 | (309 | ) | NM | ||||||||||||||||||||||||||
Merger related items (d) |
(540 | ) | | (14 | ) | (38 | ) | (40 | ) | NM | NM | (540 | ) | (78 | ) | NM | ||||||||||||||||||||||||
TOTAL NET INCOME (LOSS) |
$ | (422 | ) | $ | 1,027 | $ | 249 | $ | 513 | $ | 382 | NM | NM | $ | 605 | $ | 1,013 | (40 | ) | |||||||||||||||||||||
Headcount |
22,317 | 21,769 | 22,512 | 22,864 | 23,532 | 3 | (5 | ) | 22,317 | 23,532 | (5 | ) |
(a) | Included gain on sale of MasterCard shares in the second quarter of 2008. | |
(b) | Included proceeds from the sale of Visa shares in its initial public offering in the first quarter of 2008. | |
(c) | Included a release of credit card litigation reserves in the first quarter of 2008. | |
(d) | The second quarter of 2008 reflects items related to the Bear Stearns merger, which include the Bear Stearns equity earnings, merger costs, Bear Stearns asset management liquidation costs and Bear Stearns private client services broker retention expense. Prior periods represent costs related to the Bank One and Bank of New York transactions. |
Page 26
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SUPPLEMENTAL |
||||||||||||||||||||||||||||||||||||||||
TREASURY |
||||||||||||||||||||||||||||||||||||||||
Securities gains (losses) (a) |
$ | 656 | $ | 42 | $ | 146 | $ | 126 | $ | (227 | ) | NM | % | NM | % | $ | 698 | $ | (235 | ) | NM | % | ||||||||||||||||||
Investment securities portfolio (average) |
97,223 | 80,443 | 82,445 | 85,470 | 87,760 | 21 | 11 | 88,833 | 87,102 | 2 | ||||||||||||||||||||||||||||||
Investment securities portfolio (ending) |
103,751 | 91,323 | 76,200 | 86,495 | 86,821 | 14 | 19 | 103,751 | 86,821 | 19 | ||||||||||||||||||||||||||||||
Mortgage loans (average) (b) |
42,143 | 39,096 | 34,436 | 29,854 | 26,830 | 8 | 57 | 40,620 | 26,041 | 56 | ||||||||||||||||||||||||||||||
Mortgage loans (ending) (b) |
42,602 | 41,125 | 36,942 | 32,804 | 27,299 | 4 | 56 | 42,602 | 27,299 | 56 | ||||||||||||||||||||||||||||||
PRIVATE EQUITY |
||||||||||||||||||||||||||||||||||||||||
Private equity gains (losses) |
||||||||||||||||||||||||||||||||||||||||
Direct investments |
||||||||||||||||||||||||||||||||||||||||
Realized gains |
$ | 540 | $ | 1,113 | $ | 100 | $ | 504 | $ | 985 | (51 | ) | (45 | ) | $ | 1,653 | $ | 1,708 | (3 | ) | ||||||||||||||||||||
Unrealized gains (losses) (c) |
(326 | ) | (881 | ) | 569 | 227 | 290 | 63 | NM | (1,207 | ) | 811 | NM | |||||||||||||||||||||||||||
Total direct investments |
214 | 232 | 669 | 731 | 1,275 | (8 | ) | (83 | ) | 446 | 2,519 | (82 | ) | |||||||||||||||||||||||||||
Third-party fund investments |
6 | (43 | ) | 43 | 35 | 53 | NM | (89 | ) | (37 | ) | 87 | NM | |||||||||||||||||||||||||||
Total private equity gains (d) |
$ | 220 | $ | 189 | $ | 712 | $ | 766 | $ | 1,328 | 16 | (83 | ) | $ | 409 | $ | 2,606 | (84 | ) | |||||||||||||||||||||
Private equity portfolio information |
||||||||||||||||||||||||||||||||||||||||
Direct investments |
||||||||||||||||||||||||||||||||||||||||
Publicly-held securities |
||||||||||||||||||||||||||||||||||||||||
Carrying value |
$ | 615 | $ | 603 | $ | 390 | $ | 409 | $ | 465 | 2 | 32 | ||||||||||||||||||||||||||||
Cost |
665 | 499 | 288 | 291 | 367 | 33 | 81 | |||||||||||||||||||||||||||||||||
Quoted public value |
732 | 720 | 536 | 560 | 600 | 2 | 22 | |||||||||||||||||||||||||||||||||
Privately-held direct securities |
||||||||||||||||||||||||||||||||||||||||
Carrying value |
6,270 | 5,191 | 5,914 | 5,336 | 5,247 | 21 | 19 | |||||||||||||||||||||||||||||||||
Cost |
6,113 | 4,973 | 4,867 | 5,003 | 5,228 | 23 | 17 | |||||||||||||||||||||||||||||||||
Third-party fund investments |
||||||||||||||||||||||||||||||||||||||||
Carrying value |
838 | 811 | 849 | 839 | 812 | 3 | 3 | |||||||||||||||||||||||||||||||||
Cost |
1,094 | 1,064 | 1,076 | 1,078 | 1,067 | 3 | 3 | |||||||||||||||||||||||||||||||||
Total private equity portfolio Carrying value |
$ | 7,723 | $ | 6,605 | $ | 7,153 | $ | 6,584 | $ | 6,524 | 17 | 18 | ||||||||||||||||||||||||||||
Total private equity portfolio Cost |
$ | 7,872 | $ | 6,536 | $ | 6,231 | $ | 6,372 | $ | 6,662 | 20 | 18 | ||||||||||||||||||||||||||||
(a) | The second quarter of 2008 included a gain on the sale of MasterCard shares. All periods reflect repositioning of the Corporate investment securities portfolio and exclude gains/losses on securities used to manage risk associated with MSRs. | |
(b) | Held-for-investment prime mortgage loans were transferred from RFS and AM to the Corporate/Private Equity segment for risk management and reporting purposes. The transfers had no material impact on the financial results of Corporate/Private Equity. | |
(c) | Unrealized gains (losses) contains reversals of unrealized gains and losses that were recognized in prior periods and have now been realized. | |
(d) | Included in principal transactions revenue in the Consolidated Statements of Income. |
Page 27
Jun 30, 2008 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Jun 30 | ||||||||||||||||||||||
2008 | 2008 | 2007 | 2007 | 2007 | 2008 | 2007 | ||||||||||||||||||||||
CREDIT EXPOSURE |
||||||||||||||||||||||||||||
WHOLESALE (a) |
||||||||||||||||||||||||||||
Loans U.S. |
$ | 137,236 | $ | 141,921 | $ | 133,253 | $ | 126,343 | $ | 111,082 | (3 | )% | 24 | % | ||||||||||||||
Loans Non-U.S. |
92,123 | 89,376 | 79,823 | 71,385 | 70,886 | 3 | 30 | |||||||||||||||||||||
TOTAL WHOLESALE LOANS REPORTED (b) |
229,359 | 231,297 | 213,076 | 197,728 | 181,968 | (1 | ) | 26 | ||||||||||||||||||||
CONSUMER (c) |
||||||||||||||||||||||||||||
Home equity |
95,129 | 94,968 | 94,832 | 93,026 | 90,989 | | 5 | |||||||||||||||||||||
Mortgage (includes RFS and Corporate/Private Equity) |
61,977 | 60,855 | 56,031 | 47,730 | 43,114 | 2 | 44 | |||||||||||||||||||||
Auto loans and leases |
44,867 | 44,714 | 42,350 | 40,871 | 41,231 | | 9 | |||||||||||||||||||||
Credit card reported |
76,278 | 75,888 | 84,352 | 79,409 | 80,495 | 1 | (5 | ) | ||||||||||||||||||||
Other loans |
30,419 | 29,334 | 28,733 | 27,556 | 27,240 | 4 | 12 | |||||||||||||||||||||
TOTAL CONSUMER LOANS REPORTED |
308,670 | 305,759 | 306,298 | 288,592 | 283,069 | 1 | 9 | |||||||||||||||||||||
TOTAL LOANS REPORTED |
538,029 | 537,056 | 519,374 | 486,320 | 465,037 | | 16 | |||||||||||||||||||||
Credit card securitized |
79,120 | 75,062 | 72,701 | 69,643 | 67,506 | 5 | 17 | |||||||||||||||||||||
TOTAL LOANS MANAGED |
617,149 | 612,118 | 592,075 | 555,963 | 532,543 | 1 | 16 | |||||||||||||||||||||
Derivative receivables |
122,389 | 99,110 | 77,136 | 64,592 | 59,038 | 23 | 107 | |||||||||||||||||||||
Receivables from customers (d) |
26,572 | | | | | NM | NM | |||||||||||||||||||||
TOTAL CREDIT-RELATED ASSETS |
766,110 | 711,228 | 669,211 | 620,555 | 591,581 | 8 | 30 | |||||||||||||||||||||
Wholesale lending-related commitments |
430,028 | 438,392 | 446,652 | 468,145 | 435,718 | (2 | ) | (1 | ) | |||||||||||||||||||
TOTAL |
$ | 1,196,138 | $ | 1,149,620 | $ | 1,115,863 | $ | 1,088,700 | $ | 1,027,299 | 4 | 16 | ||||||||||||||||
Memo: Total by category |
||||||||||||||||||||||||||||
Total wholesale exposure (e) |
$ | 808,348 | $ | 768,799 | $ | 736,864 | $ | 730,465 | $ | 676,724 | 5 | 19 | ||||||||||||||||
Total consumer managed loans (f) |
387,790 | 380,821 | 378,999 | 358,235 | 350,575 | 2 | 11 | |||||||||||||||||||||
Total |
$ | 1,196,138 | $ | 1,149,620 | $ | 1,115,863 | $ | 1,088,700 | $ | 1,027,299 | 4 | 16 | ||||||||||||||||
Risk profile of wholesale credit exposure: |
||||||||||||||||||||||||||||
Investment-grade (g) |
$ | 590,045 | $ | 590,439 | $ | 571,394 | $ | 548,663 | $ | 532,134 | | 11 | ||||||||||||||||
Noninvestment-grade: (g) |
||||||||||||||||||||||||||||
Noncriticized |
159,216 | 147,771 | 134,983 | 155,172 | 127,818 | 8 | 25 | |||||||||||||||||||||
Criticized performing |
11,607 | 9,570 | 6,267 | 5,605 | 4,964 | 21 | 134 | |||||||||||||||||||||
Criticized nonperforming |
903 | 742 | 571 | 414 | 252 | 22 | 258 | |||||||||||||||||||||
Total noninvestment-grade |
171,726 | 158,083 | 141,821 | 161,191 | 133,034 | 9 | 29 | |||||||||||||||||||||
Loans held-for-sale & loans at fair value |
20,005 | 20,277 | 23,649 | 20,611 | 11,556 | (1 | ) | 73 | ||||||||||||||||||||
Receivables from customers (d) |
26,572 | | | | | NM | NM | |||||||||||||||||||||
Total wholesale exposure |
$ | 808,348 | $ | 768,799 | $ | 736,864 | $ | 730,465 | $ | 676,724 | 5 | 19 | ||||||||||||||||
(a) | Includes Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management. | |
(b) | Includes loans held-for-sale & loans at fair value. | |
(c) | Includes Retail Financial Services, Card Services and residential mortgage loans reported in the Corporate/Private Equity segment to be risk managed by the Chief Investment Office. | |
(d) | Represents margin loans to brokerage customers included in accrued interest and accounts receivable on the Consolidated Balance Sheet. | |
(e) | Represents total wholesale loans, derivative receivables, wholesale lending-related commitments and receivables from customers. | |
(f) | Represents total consumer loans plus credit card securitizations, and excludes consumer lending-related commitments. | |
(g) | Excludes loans held-for-sale & loans at fair value. |
Note: | The risk profile is based on JPMorgan Chases internal risk ratings, which generally correspond to the following ratings as defined by Standard & Poors /
Moodys: Investment-Grade: AAA / Aaa to BBB- / Baa3 Noninvestment-Grade: BB+ / Ba1 and below |
Page 28
Jun 30, 2008 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Jun 30 | ||||||||||||||||||||||
2008 | 2008 | 2007 | 2007 | 2007 | 2008 | 2007 | ||||||||||||||||||||||
NONPERFORMING ASSETS AND RATIOS |
||||||||||||||||||||||||||||
WHOLESALE LOANS (a) |
||||||||||||||||||||||||||||
Loans U.S. |
$ | 806 | $ | 761 | $ | 490 | $ | 401 | $ | 190 | 6 | % | 324 | % | ||||||||||||||
Loans Non-U.S. |
64 | 20 | 24 | 26 | 38 | 220 | 68 | |||||||||||||||||||||
TOTAL WHOLESALE LOANS-REPORTED |
870 | 781 | 514 | 427 | 228 | 11 | 282 | |||||||||||||||||||||
CONSUMER LOANS (b) |
||||||||||||||||||||||||||||
Home equity |
1,032 | 948 | 810 | 576 | 483 | 9 | 114 | |||||||||||||||||||||
Mortgage (includes RFS and Corporate/Private Equity) |
3,281 | 2,537 | 1,798 | 1,224 | 1,034 | 29 | 217 | |||||||||||||||||||||
Auto loans and leases |
102 | 94 | 116 | 92 | 81 | 9 | 26 | |||||||||||||||||||||
Credit card reported |
6 | 6 | 7 | 7 | 8 | | (25 | ) | ||||||||||||||||||||
Other loans |
340 | 335 | 341 | 336 | 335 | 1 | 1 | |||||||||||||||||||||
TOTAL CONSUMER LOANS-REPORTED (c) |
4,761 | 3,920 | 3,072 | 2,235 | 1,941 | 21 | 145 | |||||||||||||||||||||
TOTAL LOANS REPORTED |
5,631 | 4,701 | 3,586 | 2,662 | 2,169 | 20 | 160 | |||||||||||||||||||||
Derivative receivables |
80 | 31 | 29 | 34 | 30 | 158 | 167 | |||||||||||||||||||||
Assets acquired in loan satisfactions |
880 | 711 | 622 | 485 | 387 | 24 | 127 | |||||||||||||||||||||
TOTAL NONPERFORMING ASSETS |
$ | 6,591 | $ | 5,443 | $ | 4,237 | $ | 3,181 | $ | 2,586 | 21 | 155 | ||||||||||||||||
TOTAL NONPERFORMING LOANS TO TOTAL LOANS |
1.05 | % | 0.88 | % | 0.69 | % | 0.55 | % | 0.47 | % | ||||||||||||||||||
NONPERFORMING ASSETS BY LOB |
||||||||||||||||||||||||||||
Investment Bank |
$ | 490 | $ | 439 | $ | 453 | $ | 325 | $ | 119 | 12 | 312 | ||||||||||||||||
Retail Financial Services |
4,301 | 3,695 | 3,121 | 2,387 | 2,097 | 16 | 105 | |||||||||||||||||||||
Card Services |
6 | 6 | 7 | 7 | 8 | | (25 | ) | ||||||||||||||||||||
Commercial Banking |
510 | 453 | 148 | 136 | 137 | 13 | 272 | |||||||||||||||||||||
Treasury & Securities Services |
| | | | | | | |||||||||||||||||||||
Asset Management |
68 | 11 | 12 | 28 | 21 | NM | 224 | |||||||||||||||||||||
Corporate/Private Equity (d) |
1,216 | 839 | 496 | 298 | 204 | 45 | 496 | |||||||||||||||||||||
TOTAL |
$ | 6,591 | $ | 5,443 | $ | 4,237 | $ | 3,181 | $ | 2,586 | 21 | 155 | ||||||||||||||||
(a) | Included nonperforming loans held-for-sale and loans at fair value of $51 million, $70 million, $50 million, $75 million and $25 million at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. Excluded purchased held-for-sale wholesale loans. | |
(b) | There were no nonperforming loans held-for-sale at June 30, 2008, March 31, 2008, December 31, 2007, and September 30, 2007, while there were $215 million at June 30, 2007. | |
(c) | Nonperforming loans and assets excluded (1) loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by U.S. government agencies of $1.9 billion, $1.8 billion, $1.5 billion, $1.3 billion and $1.2 billion at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and (2) education loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $371 million, $252 million, $279 million, $241 million and $200 million at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. These amounts for GNMA and education loans are excluded, as reimbursement is proceeding normally. | |
(d) | Predominantly relates to held-for-investment prime mortgage loans transferred from RFS and AM to the Corporate/Private Equity segment. |
Page 29
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
GROSS CHARGE-OFFS |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans |
$ | 82 | $ | 130 | $ | 54 | $ | 101 | $ | 13 | (37 | )% | NM | % | $ | 212 | $ | 30 | NM | % | ||||||||||||||||||||
Consumer (includes RFS and
Corporate/Private Equity) |
1,079 | 880 | 582 | 403 | 321 | 23 | 236 | 1,959 | 562 | 249 | ||||||||||||||||||||||||||||||
Credit card reported |
1,209 | 1,144 | 1,000 | 911 | 877 | 6 | 38 | 2,353 | 1,724 | 36 | ||||||||||||||||||||||||||||||
Total loans reported |
2,370 | 2,154 | 1,636 | 1,415 | 1,211 | 10 | 96 | 4,524 | 2,316 | 95 | ||||||||||||||||||||||||||||||
Credit card securitized |
949 | 791 | 716 | 679 | 704 | 20 | 35 | 1,740 | 1,406 | 24 | ||||||||||||||||||||||||||||||
Total loans managed |
3,319 | 2,945 | 2,352 | 2,094 | 1,915 | 13 | 73 | 6,264 | 3,722 | 68 | ||||||||||||||||||||||||||||||
RECOVERIES |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans |
41 | 38 | 29 | 19 | 42 | 8 | (2 | ) | 79 | 65 | 22 | |||||||||||||||||||||||||||||
Consumer (includes RFS and
Corporate/Private Equity) |
54 | 55 | 47 | 49 | 48 | (2 | ) | 13 | 109 | 101 | 8 | |||||||||||||||||||||||||||||
Credit card reported |
145 | 155 | 131 | 126 | 136 | (6 | ) | 7 | 300 | 262 | 15 | |||||||||||||||||||||||||||||
Total loans reported |
240 | 248 | 207 | 194 | 226 | (3 | ) | 6 | 488 | 428 | 14 | |||||||||||||||||||||||||||||
Credit card securitized |
119 | 110 | 97 | 101 | 114 | 8 | 4 | 229 | 223 | 3 | ||||||||||||||||||||||||||||||
Total loans managed |
359 | 358 | 304 | 295 | 340 | | 6 | 717 | 651 | 10 | ||||||||||||||||||||||||||||||
NET CHARGE-OFFS |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans |
41 | 92 | 25 | 82 | (29 | ) | (55 | ) | NM | 133 | (35 | ) | NM | |||||||||||||||||||||||||||
Consumer (includes RFS and
Corporate/Private Equity) |
1,025 | 825 | 535 | 354 | 273 | 24 | 275 | 1,850 | 461 | 301 | ||||||||||||||||||||||||||||||
Credit card reported |
1,064 | 989 | 869 | 785 | 741 | 8 | 44 | 2,053 | 1,462 | 40 | ||||||||||||||||||||||||||||||
Total loans reported |
2,130 | 1,906 | 1,429 | 1,221 | 985 | 12 | 116 | 4,036 | 1,888 | 114 | ||||||||||||||||||||||||||||||
Credit card securitized |
830 | 681 | 619 | 578 | 590 | 22 | 41 | 1,511 | 1,183 | 28 | ||||||||||||||||||||||||||||||
Total loans managed |
$ | 2,960 | $ | 2,587 | $ | 2,048 | $ | 1,799 | $ | 1,575 | 14 | 88 | $ | 5,547 | $ | 3,071 | 81 | |||||||||||||||||||||||
NET CHARGE-OFF RATES
ANNUALIZED |
||||||||||||||||||||||||||||||||||||||||
Wholesale loans (a) |
0.08 | % | 0.18 | % | 0.05 | % | 0.19 | % | (0.07 | )% | 0.13 | % | (0.04 | )% | ||||||||||||||||||||||||||
Consumer (includes RFS and
Corporate/Private Equity) (b) |
1.81 | 1.50 | 1.01 | 0.70 | 0.57 | 1.66 | 0.49 | |||||||||||||||||||||||||||||||||
Credit card reported |
5.66 | 5.01 | 4.36 | 3.89 | 3.76 | 5.32 | 3.66 | |||||||||||||||||||||||||||||||||
Total loans reported (a) (b) |
1.67 | 1.53 | 1.19 | 1.07 | 0.90 | 1.60 | 0.88 | |||||||||||||||||||||||||||||||||
Credit card securitized |
4.32 | 3.70 | 3.38 | 3.34 | 3.46 | 4.02 | 3.51 | |||||||||||||||||||||||||||||||||
Total loans managed (a) (b) |
2.02 | 1.81 | 1.48 | 1.37 | 1.25 | 1.91 | 1.23 | |||||||||||||||||||||||||||||||||
Memo: Credit card managed |
4.98 | 4.37 | 3.89 | 3.64 | 3.62 | 4.68 | 3.59 |
(a) | Average wholesale loans held-for-sale and loans at fair value were $20.8 billion, $20.1 billion, $26.8 billion, $17.8 billion and $15.5 billion for the quarters ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and $20.5 billion and $14.9 billion for year-to-date 2008 and 2007, respectively. These amounts were excluded when calculating the net charge-off rates. | |
(b) | Average consumer (excluding card) loans held-for-sale and loans at fair value were $3.6 billion, $4.4 billion, $4.0 billion, $5.4 billion and $11.7 billion for the quarters ended June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively, and $4.0 billion and $16.7 billion for year-to-date 2008 and 2007, respectively. These amounts were excluded when calculating the net charge-off rates. |
Page 30
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||||||||||||||
Beginning balance |
$ | 11,746 | $ | 9,234 | $ | 8,113 | $ | 7,633 | $ | 7,300 | 27 | % | 61 | % | $ | 9,234 | $ | 7,279 | 27 | % | ||||||||||||||||||||
Net charge-offs |
(2,130 | ) | (1,906 | ) | (1,429 | ) | (1,221 | ) | (985 | ) | (12 | ) | (116 | ) | (4,036 | ) | (1,888 | ) | (114 | ) | ||||||||||||||||||||
Provision for loan losses |
3,624 | 4,419 | 2,550 | 1,693 | 1,316 | (18 | ) | 175 | 8,043 | 2,295 | 250 | |||||||||||||||||||||||||||||
Other |
6 | (1 | ) | | 8 | 2 | NM | 200 | 5 | (53 | ) | NM | ||||||||||||||||||||||||||||
Ending balance |
$ | 13,246 | $ | 11,746 | $ | 9,234 | $ | 8,113 | $ | 7,633 | 13 | 74 | $ | 13,246 | $ | 7,633 | 74 | |||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||||||||||||||
Beginning balance |
$ | 855 | $ | 850 | $ | 858 | $ | 766 | $ | 553 | 1 | 55 | $ | 850 | $ | 524 | 62 | |||||||||||||||||||||||
Provision for lending-related commitments |
(169 | ) | 5 | (8 | ) | 92 | 213 | NM | NM | (164 | ) | 242 | NM | |||||||||||||||||||||||||||
Ending balance |
$ | 686 | $ | 855 | $ | 850 | $ | 858 | $ | 766 | (20 | ) | (10 | ) | $ | 686 | $ | 766 | (10 | ) | ||||||||||||||||||||
ALLOWANCE COMPONENTS AND RATIOS |
||||||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||||||||||||||||||
Wholesale |
||||||||||||||||||||||||||||||||||||||||
Asset specific |
$ | 174 | $ | 146 | $ | 108 | $ | 53 | $ | 52 | 19 | 235 | ||||||||||||||||||||||||||||
Formula based |
4,295 | 3,691 | 3,046 | 2,810 | 2,650 | 16 | 62 | |||||||||||||||||||||||||||||||||
Total wholesale |
4,469 | 3,837 | 3,154 | 2,863 | 2,702 | 16 | 65 | |||||||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||||||||||||||
Asset specific |
61 | 75 | 80 | 70 | 81 | (19 | ) | (25 | ) | |||||||||||||||||||||||||||||||
Formula based |
8,716 | 7,834 | 6,000 | 5,180 | 4,850 | 11 | 80 | |||||||||||||||||||||||||||||||||
Total consumer |
8,777 | 7,909 | 6,080 | 5,250 | 4,931 | 11 | 78 | |||||||||||||||||||||||||||||||||
Total allowance for loan losses |
13,246 | 11,746 | 9,234 | 8,113 | 7,633 | 13 | 74 | |||||||||||||||||||||||||||||||||
Allowance for lending-related commitments |
686 | 855 | 850 | 858 | 766 | (20 | ) | (10 | ) | |||||||||||||||||||||||||||||||
Total allowance for credit losses |
$ | 13,932 | $ | 12,601 | $ | 10,084 | $ | 8,971 | $ | 8,399 | 11 | 66 | ||||||||||||||||||||||||||||
Wholesale allowance for loan losses to total wholesale loans (a) |
2.13 | % | 1.82 | % | 1.67 | % | 1.62 | % | 1.59 | % | ||||||||||||||||||||||||||||||
Consumer allowance for loan losses to total consumer loans (b) |
2.86 | 2.63 | 2.01 | 1.84 | 1.79 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses to total loans (a) (b) |
2.57 | 2.29 | 1.88 | 1.76 | 1.71 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses to total nonperforming loans (c) |
237 | 254 | 261 | 314 | 396 | |||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES BY LOB |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 2,429 | $ | 1,891 | $ | 1,329 | $ | 1,112 | $ | 1,037 | 28 | 134 | ||||||||||||||||||||||||||||
Retail Financial Services |
4,475 | 4,208 | 2,634 | 2,105 | 1,772 | 6 | 153 | |||||||||||||||||||||||||||||||||
Card Services |
3,705 | 3,404 | 3,407 | 3,107 | 3,096 | 9 | 20 | |||||||||||||||||||||||||||||||||
Commercial Banking |
1,843 | 1,790 | 1,695 | 1,623 | 1,551 | 3 | 19 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
40 | 26 | 18 | 13 | 9 | 54 | 344 | |||||||||||||||||||||||||||||||||
Asset Management |
147 | 130 | 112 | 115 | 105 | 13 | 40 | |||||||||||||||||||||||||||||||||
Corporate/Private Equity |
607 | 297 | 39 | 38 | 63 | 104 | NM | |||||||||||||||||||||||||||||||||
Total |
$ | 13,246 | $ | 11,746 | $ | 9,234 | $ | 8,113 | $ | 7,633 | 13 | 74 | ||||||||||||||||||||||||||||
(a) | Wholesale loans held-for-sale and loans at fair value were $20.0 billion, $20.3 billion, $23.6 billion, $20.6 billion and $11.6 billion at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. These amounts were excluded when calculating the allowance coverage ratios. | |
(b) | Consumer loans held-for-sale were $2.2 billion, $4.5 billion, $4.0 billion, $3.9 billion and $8.3 billion at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. These amounts were excluded when calculating the allowance coverage ratios. | |
(c) | Nonperforming loans held-for-sale and loans at fair value were $51 million, $70 million, $50 million, $75 million and $240 million at June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007, respectively. These amounts were excluded when calculating the allowance coverage ratios. |
Page 31
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||
LOANS |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 538 | $ | 571 | $ | 208 | $ | 146 | $ | (13 | ) | (6 | )% | NM | % | $ | 1,109 | $ | 22 | NM | % | |||||||||||||||||||
Commercial Banking |
77 | 143 | 105 | 98 | 10 | (46 | ) | NM | 220 | 27 | NM | |||||||||||||||||||||||||||||
Treasury & Securities Services |
7 | 11 | 5 | 3 | (1 | ) | (36 | ) | NM | 18 | 3 | 500 | ||||||||||||||||||||||||||||
Asset Management |
17 | 17 | (2 | ) | 4 | (13 | ) | | NM | 34 | (21 | ) | NM | |||||||||||||||||||||||||||
Corporate/Private Equity (a) |
36 | | | | | NM | NM | 36 | | NM | ||||||||||||||||||||||||||||||
Total wholesale |
675 | 742 | 316 | 251 | (17 | ) | (9 | ) | NM | 1,417 | 31 | NM | ||||||||||||||||||||||||||||
Retail Financial Services |
1,331 | 2,492 | 1,051 | 688 | 589 | (47 | ) | 126 | 3,823 | 881 | 334 | |||||||||||||||||||||||||||||
Card Services reported |
1,364 | 989 | 1,169 | 785 | 741 | 38 | 84 | 2,353 | 1,377 | 71 | ||||||||||||||||||||||||||||||
Corporate/Private Equity (b) |
254 | 196 | 14 | (31 | ) | 3 | 30 | NM | 450 | 6 | NM | |||||||||||||||||||||||||||||
Total consumer |
2,949 | 3,677 | 2,234 | 1,442 | 1,333 | (20 | ) | 121 | 6,626 | 2,264 | 193 | |||||||||||||||||||||||||||||
Total provision for loan losses |
$ | 3,624 | $ | 4,419 | $ | 2,550 | $ | 1,693 | $ | 1,316 | (18 | ) | 175 | $ | 8,043 | $ | 2,295 | 250 | ||||||||||||||||||||||
LENDING-RELATED COMMITMENTS |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | (140 | ) | $ | 47 | $ | (8 | ) | $ | 81 | $ | 177 | NM | NM | $ | (93 | ) | $ | 205 | NM | ||||||||||||||||||||
Commercial Banking |
(30 | ) | (42 | ) | | 14 | 35 | 29 | NM | (72 | ) | 35 | NM | |||||||||||||||||||||||||||
Treasury & Securities Services |
| 1 | (1 | ) | 6 | 1 | NM | NM | 1 | 3 | (67 | ) | ||||||||||||||||||||||||||||
Asset Management |
| (1 | ) | 1 | (1 | ) | 2 | NM | NM | (1 | ) | 1 | NM | |||||||||||||||||||||||||||
Total wholesale |
(170 | ) | 5 | (8 | ) | 100 | 215 | NM | NM | (165 | ) | 244 | NM | |||||||||||||||||||||||||||
Retail Financial Services |
1 | | | (8 | ) | (2 | ) | NM | NM | 1 | (2 | ) | NM | |||||||||||||||||||||||||||
Card Services reported |
| | | | | | | | | | ||||||||||||||||||||||||||||||
Total consumer |
1 | | | (8 | ) | (2 | ) | NM | NM | 1 | (2 | ) | NM | |||||||||||||||||||||||||||
Total provision for lending-related commitments |
$ | (169 | ) | $ | 5 | $ | (8 | ) | $ | 92 | $ | 213 | NM | NM | $ | (164 | ) | $ | 242 | NM | ||||||||||||||||||||
TOTAL PROVISION FOR CREDIT LOSSES |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 398 | $ | 618 | $ | 200 | $ | 227 | $ | 164 | (36 | ) | 143 | $ | 1,016 | $ | 227 | 348 | ||||||||||||||||||||||
Commercial Banking |
47 | 101 | 105 | 112 | 45 | (53 | ) | 4 | 148 | 62 | 139 | |||||||||||||||||||||||||||||
Treasury & Securities Services |
7 | 12 | 4 | 9 | | (42 | ) | NM | 19 | 6 | 217 | |||||||||||||||||||||||||||||
Asset Management |
17 | 16 | (1 | ) | 3 | (11 | ) | 6 | NM | 33 | (20 | ) | NM | |||||||||||||||||||||||||||
Corporate/Private Equity (a) |
36 | | | | | NM | NM | 36 | | NM | ||||||||||||||||||||||||||||||
Total wholesale |
505 | 747 | 308 | 351 | 198 | (32 | ) | 155 | 1,252 | 275 | 355 | |||||||||||||||||||||||||||||
Retail Financial Services |
1,332 | 2,492 | 1,051 | 680 | 587 | (47 | ) | 127 | 3,824 | 879 | 335 | |||||||||||||||||||||||||||||
Card Services reported |
1,364 | 989 | 1,169 | 785 | 741 | 38 | 84 | 2,353 | 1,377 | 71 | ||||||||||||||||||||||||||||||
Corporate/Private Equity (b) |
254 | 196 | 14 | (31 | ) | 3 | 30 | NM | 450 | 6 | NM | |||||||||||||||||||||||||||||
Total consumer |
2,950 | 3,677 | 2,234 | 1,434 | 1,331 | (20 | ) | 122 | 6,627 | 2,262 | 193 | |||||||||||||||||||||||||||||
Total provision for credit losses |
3,455 | 4,424 | 2,542 | 1,785 | 1,529 | (22 | ) | 126 | 7,879 | 2,537 | 211 | |||||||||||||||||||||||||||||
Card Services securitized |
830 | 681 | 619 | 578 | 590 | 22 | 41 | 1,511 | 1,183 | 28 | ||||||||||||||||||||||||||||||
Managed provision for credit losses |
$ | 4,285 | $ | 5,105 | $ | 3,161 | $ | 2,363 | $ | 2,119 | (16 | ) | 102 | $ | 9,390 | $ | 3,720 | 152 | ||||||||||||||||||||||
(a) | Represent provision expense related to loans acquired in the merger with Bear Stearns. | |
(b) | Includes amounts related to held-for-investment prime mortgages transferred from RFS and AM to the Corporate/Private Equity segment during 2007. |
Page 32
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
2Q08 Change | 2008 Change | |||||||||||||||||||||||||||||||||||||||
2Q08 | 1Q08 | 4Q07 | 3Q07 | 2Q07 | 1Q08 | 2Q07 | 2008 | 2007 | 2007 | |||||||||||||||||||||||||||||||
COMMON SHARES OUTSTANDING |
||||||||||||||||||||||||||||||||||||||||
Weighted-average basic shares outstanding |
3,426.2 | 3,396.0 | 3,367.1 | 3,375.9 | 3,415.1 | 1 | % | | % | 3,411.1 | 3,435.7 | (1 | )% | |||||||||||||||||||||||||||
Weighted-average diluted shares outstanding |
3,531.0 | 3,494.7 | 3,471.8 | 3,477.7 | 3,521.6 | 1 | | 3,512.9 | 3,540.5 | (1 | ) | |||||||||||||||||||||||||||||
Common shares outstanding at period end |
3,435.7 | 3,400.8 | 3,367.4 | 3,358.8 | 3,398.5 | 1 | 1 | 3,435.7 | 3,398.5 | 1 | ||||||||||||||||||||||||||||||
Cash dividends declared per share |
$ | 0.38 | $ | 0.38 | $ | 0.38 | $ | 0.38 | $ | 0.38 | | | $ | 0.76 | $ | 0.72 | 6 | |||||||||||||||||||||||
Book value per share |
37.02 | 36.94 | 36.59 | 35.72 | 35.08 | | 6 | 37.02 | 35.08 | 6 | ||||||||||||||||||||||||||||||
Dividend payout (a) |
71 | % | 56 | % | 44 | % | 39 | % | 31 | % | 27 | 129 | 63 | % | 28 | % | 125 | |||||||||||||||||||||||
NET INCOME |
$ | 2,003 | $ | 2,373 | $ | 2,971 | $ | 3,373 | $ | 4,234 | (16 | ) | (53 | ) | $ | 4,376 | $ | 9,021 | (51 | ) | ||||||||||||||||||||
Preferred dividends |
90 | | | | | NM | NM | 90 | | NM | ||||||||||||||||||||||||||||||
Net income applicable to common stock |
$ | 1,913 | $ | 2,373 | $ | 2,971 | $ | 3,373 | $ | 4,234 | (19 | ) | (55 | ) | $ | 4,286 | $ | 9,021 | (52 | ) | ||||||||||||||||||||
NET INCOME PER SHARE |
||||||||||||||||||||||||||||||||||||||||
Basic |
0.56 | 0.70 | 0.88 | 1.00 | 1.24 | (20 | ) | (55 | ) | 1.26 | 2.63 | (52 | ) | |||||||||||||||||||||||||||
Diluted |
0.54 | 0.68 | 0.86 | 0.97 | 1.20 | (21 | ) | (55 | ) | 1.22 | 2.55 | (52 | ) | |||||||||||||||||||||||||||
SHARE PRICE |
||||||||||||||||||||||||||||||||||||||||
High |
$ | 49.95 | $ | 49.29 | $ | 48.02 | $ | 50.48 | $ | 53.25 | 1 | (6 | ) | $ | 49.95 | $ | 53.25 | (6 | ) | |||||||||||||||||||||
Low |
33.96 | 36.01 | 40.15 | 42.16 | 47.70 | (6 | ) | (29 | ) | 33.96 | 45.91 | (26 | ) | |||||||||||||||||||||||||||
Close |
34.31 | 42.95 | 43.65 | 45.82 | 48.45 | (20 | ) | (29 | ) | 34.31 | 48.45 | (29 | ) | |||||||||||||||||||||||||||
Market capitalization |
117,881 | 146,066 | 146,986 | 153,901 | 164,659 | (19 | ) | (28 | ) | 117,881 | 164,659 | (28 | ) | |||||||||||||||||||||||||||
STOCK REPURCHASE PROGRAM (b) |
||||||||||||||||||||||||||||||||||||||||
Aggregate repurchases |
$ | | $ | | $ | 163.3 | $ | 2,135.4 | $ | 1,875.3 | | NM | $ | | $ | 5,876.2 | NM | |||||||||||||||||||||||
Common shares repurchased |
| | 3.6 | 47.0 | 36.7 | | NM | | 117.6 | NM | ||||||||||||||||||||||||||||||
Average purchase price |
$ | | $ | | $ | 45.29 | $ | 45.42 | $ | 51.13 | | NM | $ | | $ | 49.97 | NM | |||||||||||||||||||||||
CAPITAL RATIOS (c) |
||||||||||||||||||||||||||||||||||||||||
Tier 1 capital |
$ | 98,730 | (d) | $ | 89,646 | $ | 88,746 | $ | 86,096 | $ | 85,096 | 10 | 16 | |||||||||||||||||||||||||||
Total capital |
145,931 | (d) | 134,948 | 132,242 | 128,543 | 122,276 | 8 | 19 | ||||||||||||||||||||||||||||||||
Risk-weighted assets |
1,083,206 | (d) | 1,075,697 | 1,051,879 | 1,028,551 | 1,016,031 | 1 | 7 | ||||||||||||||||||||||||||||||||
Adjusted average assets |
1,536,374 | (d) | 1,507,724 | 1,473,541 | 1,423,171 | 1,376,727 | 2 | 12 | ||||||||||||||||||||||||||||||||
Tier 1 capital ratio |
9.1 | %(d) | 8.3 | % | 8.4 | % | 8.4 | % | 8.4 | % | ||||||||||||||||||||||||||||||
Total capital ratio |
13.5 | (d) | 12.5 | 12.6 | 12.5 | 12.0 | ||||||||||||||||||||||||||||||||||
Tier 1 leverage ratio |
6.4 | (d) | 5.9 | 6.0 | 6.0 | 6.2 | ||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS (PERIOD-END) |
||||||||||||||||||||||||||||||||||||||||
Goodwill |
$ | 45,993 | $ | 45,695 | $ | 45,270 | $ | 45,335 | $ | 45,254 | 1 | 2 | ||||||||||||||||||||||||||||
Mortgage servicing rights |
11,617 | 8,419 | 8,632 | 9,114 | 9,499 | 38 | 22 | |||||||||||||||||||||||||||||||||
Purchased credit card relationships |
1,984 | 2,140 | 2,303 | 2,427 | 2,591 | (7 | ) | (23 | ) | |||||||||||||||||||||||||||||||
All other intangibles |
3,675 | 3,815 | 3,796 | 3,959 | 4,103 | (4 | ) | (10 | ) | |||||||||||||||||||||||||||||||
Total intangibles |
$ | 63,269 | $ | 60,069 | $ | 60,001 | $ | 60,835 | $ | 61,447 | 5 | 3 | ||||||||||||||||||||||||||||
DEPOSITS |
||||||||||||||||||||||||||||||||||||||||
U.S. offices: |
||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing |
$ | 125,606 | $ | 132,072 | $ | 129,406 | $ | 115,036 | $ | 120,470 | (5 | ) | 4 | |||||||||||||||||||||||||||
Interest-bearing |
362,150 | 394,613 | 376,194 | 354,459 | 342,079 | (8 | ) | 6 | ||||||||||||||||||||||||||||||||
Non-U.S. offices: |
||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing |
7,827 | 7,232 | 6,342 | 6,559 | 5,919 | 8 | 32 | |||||||||||||||||||||||||||||||||
Interest-bearing |
227,322 | 227,709 | 228,786 | 202,037 | 182,902 | | 24 | |||||||||||||||||||||||||||||||||
Total deposits |
$ | 722,905 | $ | 761,626 | $ | 740,728 | $ | 678,091 | $ | 651,370 | (5 | ) | 11 | |||||||||||||||||||||||||||
(a) | Based on net income amounts. | |
(b) | Excludes commission costs. | |
(c) | The Federal Reserve has granted the Firm, for a period of 18 months following the merger with Bear Stearns, relief up to a certain specified amount and subject to certain conditions from the Federal Reserves risk-based and leverage capital guidelines in respect to the Bear Stearns risk-weighted assets and other exposures acquired. The amount of such relief is subject to reduction by one-sixth each quarter subsequent to the acquisition and expires on October 1, 2009. | |
(d) | Estimated. |
Page 33
Page 34
a) | Servicing revenue represents all gross income earned from servicing third-party mortgage loans including stated service fees, excess service fees, late fees and other ancillary fees. | ||
b) | Changes in MSR asset fair value due to: |
| market-based inputs such as interest rates and volatility, as well as updates to assumptions used in the MSR valuation model. | |||
| modeled servicing portfolio runoff (or time decay) |
c) | Derivative valuation adjustments and other, which represents changes in the fair value of derivative instruments used to offset the impact of changes in the market-based inputs to the MSR valuation model. |
Page 35
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