UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10–Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2005		Commission file number 1-5805

JPMORGAN CHASE & CO.

Delaware		13-2624428
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
270 Park Avenue, New York, New York		10017
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (212) 270-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [   ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X] No [   ]

 

Common Stock, $1 Par Value		3,512,844,100

Number of shares outstanding of each of the issuer’s classes of common stock on July 31, 2005.

FORM 10-Q
TABLE OF CONTENTS

				Page
Part I – Financial information
Item 1		Consolidated Financial Statements — JPMorgan Chase & Co.:
		Consolidated statements of income (unaudited) for the three and six months ended June 30, 2005, and June 30, 2004			64
		Consolidated balance sheets (unaudited) at June 30, 2005, and December 31, 2004			65
		Consolidated statements of changes in stockholders’ equity (unaudited) for the six months ended June 30, 2005, and June 30, 2004			66
		Consolidated statements of cash flows (unaudited) for the six months ended June 30, 2005, and June 30, 2004			67
		Notes to consolidated financial statements (unaudited)			68
		Consolidated average balance sheet, interest and rates (unaudited) for the three and six months ended June 30, 2005, and June 30, 2004			89
		Glossary of Terms and Line of Business Metrics			91
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations:
		Consolidated Financial Highlights			3
		Introduction			4
		Executive Overview			6
		Consolidated Results of Operations			8
		Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures			10
		Business Segment Results			14
		Balance Sheet Analysis			41
		Capital Management			42
		Off-Balance Sheet Arrangements and Contractual Cash Obligations			44
		Risk Management			45
		Supervision and Regulation			61
		Critical Accounting Estimates Used by the Firm			62
		Accounting and Reporting Developments			63
Item 3		Quantitative and Qualitative Disclosures About Market Risk			95
Item 4		Controls and Procedures			95
Part II – Other information
Item 1		Legal Proceedings			95
Item 2		Unregistered Sales of Equity Securities and Use of Proceeds			96
Item 3		Defaults Upon Senior Securities			96
Item 4		Submission of Matters to a Vote of Security Holders			96
Item 5		Other Information			96
Item 6		Exhibits			96

JPMORGAN CHASE & CO.
CONSOLIDATED FINANCIAL HIGHLIGHTS

(in millions, except per share, ratio and headcount data)																						Six months ended June 30,
As of or for the period ended (a)		2Q 2005				1Q 2005				4Q 2004				3Q 2004				2Q 2004				2005				2004
Selected income statement data
Net interest income		$	5,001			$	5,225			$	5,329			$	5,452			$	2,994			$	10,226			$	5,980
Noninterest revenue			7,742				8,422				7,621				7,053				5,637				16,164				11,662
Total net revenue			12,743				13,647				12,950				12,505				8,631				26,390				17,642
Provision for credit losses			587				427				1,157				1,169				203				1,014				218
Noninterest expense before Merger costs and Litigation reserve charge			8,748				8,892				8,863				8,625				5,713				17,640				11,806
Merger costs			279				145				523				752				90				424				90
Litigation reserve charge			1,872				900				—				—				3,700				2,772				3,700
Total noninterest expense			10,899				9,937				9,386				9,377				9,503				20,836				15,596
Income (loss) before income tax expense (benefit)			1,257				3,283				2,407				1,959				(1,075	)			4,540				1,828
Income tax expense (benefit)			263				1,019				741				541				(527	)			1,282				446
Net income (loss)		$	994			$	2,264			$	1,666			$	1,418			$	(548	)		$	3,258			$	1,382
Per common share
Net income (loss) per share:
Basic		$	0.28			$	0.64			$	0.47			$	0.40			$	(0.27	)		$	0.93			$	0.67
Diluted			0.28				0.63				0.46				0.39				(0.27	)			0.91				0.65
Cash dividends declared per share			0.34				0.34				0.34				0.34				0.34				0.68				0.68
Book value per share			29.95				29.78				29.61				29.42				21.52
Common shares outstanding (average)
Basic			3,493				3,518				3,515				3,514				2,043				3,505				2,038
Diluted			3,548				3,570				3,602				3,592				2,043				3,559				2,096
Common shares at period-end			3,514				3,525				3,556				3,564				2,088
Selected ratios
Return on common equity (“ROE”)(b)			4	%			9	%			6	%			5	%		NM					6	%			6	%
Return on assets (“ROA”)(b)(c)			0.34				0.79				0.57				0.50			NM					0.56				0.35
Tier 1 capital ratio			8.2				8.6				8.7				8.6				8.2	%
Total capital ratio			11.3				11.9				12.2				12.0				11.2
Tier 1 leverage ratio			6.2				6.3				6.2				6.5				5.5
Selected balance sheet data (period-end)
Total assets		$	1,171,283			$	1,178,305			$	1,157,248			$	1,138,469			$	817,763
Securities			58,573				75,251				94,512				92,816				64,915
Total loans			416,025				402,669				402,114				393,701				225,938
Deposits			534,640				531,379				521,456				496,454				346,539
Long-term debt			101,182				99,329				95,422				91,754				52,981
Common stockholders’ equity			105,246				105,001				105,314				104,844				44,932
Total stockholders’ equity			105,385				105,340				105,653				105,853				45,941
Credit quality metrics
Allowance for credit losses		$	7,233			$	7,423			$	7,812			$	8,034			$	4,227			$	7,233			$	4,227
Nonperforming assets			2,832				2,949				3,231				3,637				2,482				2,832				2,482
Allowance for loan losses to total loans(d)			1.76	%			1.83	%			1.94	%			2.01	%			1.92	%			1.76	%			1.92	%
Net charge-offs		$	773			$	816			$	1,398			$	865			$	392			$	1,589			$	836
Net charge-off rate(b)(e)			0.83	%			0.88	%			1.47	%			0.93	%			0.77	%			0.86	%			0.84	%
Wholesale net charge-off (recovery) rate(b)(e)			(0.17	)			(0.03	)			0.21				(0.08	)			0.29				(0.10	)			0.39
Managed Card net charge-off rate(b)			4.87				4.83				5.24				4.88				5.85				4.85				5.83
Headcount			168,461				164,381				160,968				162,275				94,615
Share price(f)
High		$	36.50			$	39.69			$	40.45			$	40.25			$	42.57			$	39.69			$	43.84
Low			33.35				34.32				36.32				35.50				34.62				33.35				34.62
Close			35.32				34.60				39.01				39.73				38.77				35.32				38.77

(a)		Results for each quarter commencing with the third quarter of 2004, and for the six months ended June 30, 2005, include the combined Firm’s results; results for the second quarter of 2004 and six months ended June 30, 2004, reflect the results of heritage JPMorgan Chase only.
(b)		Based on annualized amounts.
(c)		Represents Net income divided by Total average assets.
(d)		Excluded from this ratio were loans held-for-sale.
(e)		Excluded from this ratio were average loans held-for-sale.
(f)		JPMorgan Chase’s common stock is listed and traded on the New York Stock Exchange, the London Stock Exchange Limited and the Tokyo Stock Exchange. The high, low and closing prices of JPMorgan Chase’s common stock are from The New York Stock Exchange Composite Transaction Tape.

NM – Not meaningful due to net loss.

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section of this Form 10–Q provides management’s discussion and analysis (“MD&A”) of the financial condition and results of operations of JPMorgan Chase. See the Glossary of terms on pages 91–92 for a definition of terms used throughout this Form 10–Q. The MD&A included in this Form 10–Q contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause JPMorgan Chase’s results to differ materially from those described in the forward-looking statements can be found in the JPMorgan Chase Quarterly Report on Form 10–Q for the quarter ended March 31, 2005, and the 2004 Annual Report on Form 10–K for the year ended December 31, 2004, each filed with the U.S. Securities and Exchange Commission and available at the Securities and Exchange Commission’s Internet site ( http://www.sec.gov ).

INTRODUCTION

JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the United States, with $1.2 trillion in assets, $105 billion in stockholders’ equity and operations in more than 50 countries. The Firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, asset and wealth management and private equity. Under the JPMorgan, Chase and Bank One brands, the Firm serves millions of customers in the United States and many of the world’s most prominent corporate, institutional and government clients.

JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank”), a national banking association with branches in 17 states; and Chase Bank USA, National Association, a national bank headquartered in Delaware that is the Firm’s credit card issuing bank. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities Inc. (“JPMSI”), its U.S. investment banking firm.

The headquarters for JPMorgan Chase is in New York City. The retail banking business, which includes the consumer banking, small business banking and consumer lending activities (with the exception of credit card), is headquartered in Chicago. Chicago also serves as the headquarters for the commercial banking business.

JPMorgan Chase’s activities are organized, for management reporting purposes, into six business segments, as well as Corporate. The Firm’s wholesale businesses are comprised of the Investment Bank, Commercial Banking, Treasury & Securities Services, and Asset & Wealth Management. The Firm’s consumer businesses are comprised of Retail Financial Services and Card Services. A description of the Firm’s business segments, and the products and services they provide to their respective client bases, follows:

Investment Bank

JPMorgan Chase is one of the world’s leading investment banks, as evidenced by the breadth of its client relationships and product capabilities. The Investment Bank (“IB”) has extensive relationships with corporations, financial institutions, governments and institutional investors worldwide. The Firm provides a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital raising in equity and debt markets, sophisticated risk management, and market-making in cash securities and derivative instruments. The IB also commits the Firm’s own capital to proprietary investing and trading activities.

Retail Financial Services

Retail Financial Services (“RFS”) includes Home Finance, Consumer & Small Business Banking, Auto & Education Finance and Insurance. Through this group of businesses, the Firm provides consumers and small businesses with a broad range of financial products and services including deposits, investments, loans and insurance. Home Finance is a leading provider of consumer real estate loan products and is one of the largest originators and servicers of home mortgages. Consumer & Small Business Banking offers one of the largest branch networks in the United States, covering 17 states with 2,539 branches and 6,961 automated teller machines. Auto & Education Finance is the largest bank originator of automobile loans as well as a top provider of loans for college students. Through its Insurance operations, the Firm sells and underwrites an extensive range of financial protection products and investment alternatives, including life insurance, annuities and debt protection products.

Card Services

Card Services (“CS”) is the largest issuer of general purpose credit cards in the United States, with over 95 million cards in circulation, and is the largest merchant acquirer. CS offers a wide variety of products to satisfy the needs of its cardmembers, including cards issued on behalf of many well-known partners, such as major airlines, hotels, universities, retailers and other financial institutions.

Commercial Banking

Commercial Banking (“CB”) serves more than 25,000 corporations, municipalities, financial institutions and not-for-profit entities, with annual revenues generally ranging from $10 million to $2 billion. A local market presence and a strong customer service model, coupled with a focus on risk management, provide a solid infrastructure for CB to provide the Firm’s complete product set – lending, treasury services, investment banking and investment management. CB clients benefit from the Firm’s retail branch network and commercial banking offices, including locations in 10 out of the top 15 major metropolitan areas in the U.S.

Treasury & Securities Services

Treasury & Securities Services (“TSS”) is a global leader in providing transaction, investment and information services to support the needs of corporations, issuers and institutional investors worldwide. TSS is the largest cash management provider in the world and a leading global custodian. The Treasury Services (“TS”) business provides clients with a broad range of capabilities, including U.S. dollar and multi-currency clearing, ACH, trade, and short-term liquidity and working capital tools. The Investor Services (“IS”) business provides a wide range of capabilities, including custody, funds services, securities lending, and performance measurement and execution products. The Institutional Trust Services (“ITS”) business provides trustee, depository and administrative services for debt and equity issuers. Treasury Services partners with the Commercial Banking, Consumer & Small Business Banking and Asset & Wealth Management segments to serve clients firmwide. As a result, certain Treasury Services revenues are included in other segments’ results. TSS has combined the management of the Investor Services and Institutional Trust Services businesses under the name Worldwide Securities Services to create an integrated franchise which will provide custody and investor services as well as securities clearance and trust services to clients globally.

Asset & Wealth Management

Asset & Wealth Management (“AWM”) provides investment management to retail and institutional investors, financial intermediaries and high-net-worth families and individuals globally. For retail investors, AWM provides investment management products and services, including a global mutual fund franchise, retirement plan administration and brokerage services. AWM delivers investment management to institutional investors across all asset classes. The Private Bank and Private Client Services businesses provide integrated wealth management services to ultra-high-net-worth and high-net-worth clients, respectively.

MERGER WITH BANK ONE CORPORATION

The results of operations of Bank One Corporation (“Bank One”) were included in the Firm’s results beginning July 1, 2004. Therefore, results of operations for the six months ended June 30, 2005, reflect six months of operations of the combined Firm, while the results of operations for the six months ended June 30, 2004, reflect the operations of heritage JPMorgan Chase only.

For the quarter ended June 30, 2005, approximately $440 million (pre-tax) of merger savings have been realized, which is an annualized rate of $1.8 billion. Management continues to estimate that annual merger savings of approximately $3.0 billion (pre-tax) will be achieved by the end of 2007; approximately two-thirds of the savings are anticipated to be realized by the end of 2005. Merger costs of approximately $279 million (pre-tax) were expensed during the second quarter of 2005, bringing the total amount expensed year-to-date to $424 million and $1.8 billion (pre-tax) cumulative since the merger announcement. Management continues to estimate remaining merger costs of $1.2 billion to $1.7 billion (pre-tax), which are expected to be expensed over the next two years. These estimated Merger-related charges will result from actions taken with respect to both JPMorgan Chase’s and Bank One’s operations, facilities and employees. The charges will be recorded based on the nature and timing of these integration actions.

OTHER BUSINESS EVENTS
Vastera

On April 1, 2005, JPMorgan Chase acquired Vastera, a provider of global trade management solutions, for approximately $129 million. Vastera’s business was combined with the Logistics and Trade Services businesses of TSS’s Treasury Services unit. Vastera automates trade management processes associated with the physical movement of goods internationally; the acquisition enables Treasury Services to offer management of information and processes in support of physical goods movement, together with financial settlement.

Enron litigation settlement

On June 14, 2005, JPMorgan Chase announced that it had reached an agreement in principle to settle, for $2.2 billion (pre-tax), the Enron class action litigation entitled Newby v. Enron Corp. The Firm also recorded a nonoperating charge of $1.9 billion (pre-tax) to cover the settlement and to increase its reserves for certain other remaining material legal matters.

Neovest Holdings, Inc.

On June 23, 2005, JPMorgan Chase agreed to acquire Neovest Holdings, Inc., a provider of high-performance equity trading technology and direct market access. Neovest’s electronic execution and order management capabilities provide investors with access to electronic communication networks (ECNs), exchanges, floor brokers, block desks and algorithmic products. With this transaction, the Investment Bank will offer a leading, broker-neutral trading platform across asset classes to institutional investors, asset managers and hedge funds. The transaction is expected to close in the third quarter of 2005.

EXECUTIVE OVERVIEW

This overview of management’s discussion and analysis highlights selected information and may not contain all of the information that is important to readers of this Form 10-Q. For a more complete understanding of events, trends and uncertainties as well as the liquidity, capital, credit and market risks, and the critical accounting estimates, affecting the Firm and its various lines of business, this Form 10-Q should be read in its entirety.

Business overview

The Firm reported 2005 second-quarter net income of $1.0 billion, or $0.28 per share, compared with a net loss of $548 million, or $0.27 per share, for the second quarter of 2004. Return on common equity for the quarter was 4%. Results included $1.3 billion of after-tax charges, or $0.38 per share, composed of a nonoperating litigation reserve charge of $1.2 billion and Merger costs of $173 million. The nonoperating litigation charge was related to the Firm’s settlement of the Enron class action as well as to certain of its other material legal proceedings. Excluding this charge and the Merger costs, operating earnings were $2.3 billion, or $0.66 per share, and return on common equity was 9%.

Net income for the first six months of 2005 was $3.3 billion, or $0.91 per share, compared with $1.4 billion, or $0.65 per share, in the comparable period last year. The increase is primarily attributable to the Merger. Return on common equity was 6%. The results include after-tax nonoperating litigation reserve charges of $1.7 billion and Merger costs of $263 million. In addition to the aforementioned litigation charge in the second quarter of 2005, the first-half nonoperating litigation charge also included a $558 million charge for the settlement costs of the WorldCom class action litigation. Excluding these litigation charges and Merger costs, operating earnings were $5.2 billion, or $1.47 per share, and return on common equity was 10%.

Global economic and market conditions affect performance in each of the Firm’s businesses. Early in the quarter, investor concerns over a slowing economy, outsized inflation readings, continued high energy prices and slowing corporate profits affected the markets. At the same time, the auto industry’s problems triggered debt downgrades and turmoil in the derivatives markets, and downbeat European economic news drove the dollar higher relative to the euro. This challenging environment had an adverse impact on the Investment Bank’s trading results. In addition, the yield curve continued to flatten as two quarter-point increases in the federal funds rate drove short-term rates higher while long-term rates remained at historic lows. Nevertheless, certain of the Firm’s consumer businesses benefited from a shift in consumer sentiment, as concerns about high oil prices and pending bankruptcy legislation were offset by an improving job market and low levels of inflation. Consumer spending rebounded over the quarter, which had a positive impact on credit card charge volume. Economic data at the end of the quarter left a more favorable impression of conditions going into the second half of the year.

The following discussion of each line of business results compares the second quarter of 2005 to the comparable period in the prior year, unless otherwise noted. On an operating basis, net income in each of the Firm’s business segments was affected significantly by the Merger. The summary below highlights factors other than the Merger that affected operating results.

Investment Bank earnings declined, as significantly lower trading revenues more than offset strength in investment banking fees (particularly advisory) and continued improvement in credit quality, which resulted in a greater reduction in the allowance for credit losses. Trading performance reflected a challenging market environment which resulted in weak portfolio management results, lower proprietary trading revenues and reduced client flows. Advisory revenues represented the highest quarter since 2000. Reduced performance-based incentive compensation expense was offset by increased staff costs from higher headcount levels.

Retail Financial Services earnings benefited from wider spreads on deposits, increased deposit balances, growth in retained consumer real estate loans and improved mortgage servicing right (“MSR”) risk management results. These benefits were partially offset by reduced revenue related to lower prime mortgage originations and a lack of securitization gains related to the decision to retain subprime mortgage loans. Continued strength in credit quality and lower net charge-offs led to a reduction in the Allowance for credit losses. Increased operating efficiencies in nearly all businesses offset ongoing investments in retail banking distribution and sales.

Card Services earnings growth reflected lower Provision for credit losses, higher revenue and merger saves. These benefits were partially offset by higher marketing spend and an operating charge to increase litigation reserves. The Provision for credit losses was reduced by lower contractual net charge-offs, but adversely affected by increased bankruptcy losses from accelerated filings due to the pending change in bankruptcy legislation and the acquisition of a private label portfolio. Managed credit ratios remained strong, benefiting from a continued low level of delinquencies. Revenue increased due to higher loan balances and increased interchange income from higher charge volume, partially offset by higher volume-driven payments to partners and higher rewards expense. Strong new account originations led to an increase in balances in their introductory periods, resulting in margin compression.

Commercial Banking earnings declined as a result of increased Provision for credit losses, which reflected higher reserves, primarily due to refinements in the data used to estimate the Allowance for credit losses and not to a deterioration in the credit quality of the portfolio, which remained strong. Underlying business trends were positive: wider spreads on higher liability balances (which include deposits and deposits swept into on-balance sheet liabilities), increased loan balances, and strong investment banking revenue resulted in increased revenues. Offsetting these improvements were lower fees in lieu of compensating balances, narrower loan spreads and lower gains on the sales of assets acquired in the satisfaction of debt. Expenses were essentially flat.

Treasury & Securities Services produced triple-digit earnings growth and significantly improved its pre-tax margin. Revenue increases were driven by widening spreads on liability balances, improved fee-based revenue and liability balance growth. Expenses increased due to charges to terminate a client contract, the Vastera acquisition and onboarding fund accounting clients. These expense increases were partially offset by lower allocations of Corporate segment expenses and increased product unit costs charged to other lines of business.

Asset & Wealth Management produced double-digit earnings growth and improved its pre-tax margin as well. Higher fee revenue resulted from the acquisition of a majority interest in Highbridge Capital Management, LLC, net asset inflows (particularly in equity and alternative asset classes) and global equity market appreciation. Expense increases reflected the acquisition of Highbridge and increased compensation expense primarily due to higher performance-based incentives which were driven by improved investment results.

Corporate segment earnings declined. Compared with the second quarter of 2004, the decline in revenue was due primarily to declining net interest income resulting from the repositioning of the treasury portfolio and lower private equity gains. Compared with the first half of 2004, the decline was primarily due to securities losses related to repositioning the treasury portfolio, compared with gains in the prior period; this decline more than offset the significant increase in private equity gains.

The Firm’s balance sheet remained strong, with total stockholders’ equity of $105 billion and a Tier 1 capital ratio at June 30, 2005 of 8.2%. The Firm repurchased $594 million, or 16.8 million shares, of common stock during the quarter and $1.9 billion, or 52.8 million shares, of common stock during the first half of the year.

Business outlook

The Investment Bank anticipates continued strength in investment banking fees, reflecting a pipeline at June 30, 2005, that is similar to that of the first half of the year. Trading conditions were difficult in April and May, but in June and July the IB saw a return to more normal markets. Nevertheless, trading markets are difficult to predict, and third-quarter investment banking and trading revenues have historically been negatively affected by the quieter summer months. The IB expects credit portfolio revenues to decline from first-half levels as gains from loan workouts and loan sales decrease. The ratio of compensation expense to revenue in the second quarter was 43%, bringing the year-to-date ratio to 41%, which is reflective of current market conditions.

In Retail Financial Services, a flatter yield curve and rising short term interest rates may lead to tighter deposit margins in coming quarters for Consumer & Small Business Banking. Favorable MSR risk management results recorded in the first two quarters of the year are not anticipated in the second half of the year given the unpredictability of certain market factors. The business expects pressure to remain on auto loan originations, although efforts continue to reduce the expense base and improve returns on new business. There is no indication that credit quality trends will deviate from current levels, although seasonal increases are possible. The business anticipates continued investment in retail banking distribution and sales.

In Card Services, favorable response to marketing initiatives significantly increased new account originations and, therefore, increased the number of balances in their introductory period. This, coupled with the competitive environment in which Card Services operates, could put some pressure on margins in the coming quarters. Marketing spend is currently expected to remain stable in the third quarter and experience a seasonal drop in the fourth quarter. The business anticipates, based on current indicators of credit quality, that credit costs for the second half of 2005 will be stable, primarily driven by strong performance, as well as an anticipated stabilization of bankruptcy filing trends subsequent to the October, 2005 legislative change. These positive trends may be offset by minimum payment changes in 2006.

Private equity gains in the first half totaled $1.1 billion. Although results can be volatile, given the occurrence of several large realized gains in the first half, management expects the level of gains in the second half of the year to be in the range of $200 million to $250 million per quarter.

The Firm anticipates wholesale credit costs returning to more normal levels over the next several quarters.

Management continues to expect to realize annualized merger savings of approximately $2.2 billion by the end of 2005, compared with an annualized rate of approximately $1.8 billion at the end of the second quarter. Incremental merger savings in the second quarter were $60 million and are anticipated to be approximately $110 million in the second half of 2005.

CONSOLIDATED RESULTS OF OPERATIONS

The following section provides a discussion of JPMorgan Chase’s consolidated results of operations on a reported basis. Factors that are primarily related to a single business segment are discussed in more detail within that business segment. For a discussion of the Critical accounting estimates used by the Firm that affect the Consolidated results of operations, see page 62 of this Form 10–Q, and pages 77–79 of the JPMorgan Chase 2004 Annual Report.

The following table presents the components of Total net revenue:

Total net revenue(a)		Three months ended June 30,												Six months ended June 30,
(in millions)		2005				2004				Change				2005				2004				Change
Investment banking fees		$	961			$	893				8	%		$	1,954			$	1,585				23	%
Trading revenue			387				873				(56	)			2,246				2,593				(13	)
Lending & deposit related fees			851				412				107				1,671				826				102
Asset management, administration and commissions			2,541				1,814				40				5,039				3,650				38
Securities/private equity gains (losses)			407				460				(12	)			362				892				(59	)
Mortgage fees and related income			336				294				14				698				488				43
Credit card income			1,763				631				179				3,497				1,236				183
Other income			496				260				91				697				392				78
Noninterest revenue			7,742				5,637				37				16,164				11,662				39
Net interest income			5,001				2,994				67				10,226				5,980				71
Total net revenue		$	12,743			$	8,631				48	%		$	26,390			$	17,642				50	%

(a) 2005 reflects the combined Firm’s results, while 2004 reflects the results of heritage JPMorgan Chase only.

Total net revenues rose by $4.1 billion, or 48%, from the second quarter of 2004 and $8.7 billion, or 50%, from the first half of 2004, resulting mainly from the Merger, which affected most revenue categories. The discussion that follows highlights factors other than the Merger that affected the comparison of the results of the three and six months ended June 30, 2005 and 2004.

Investment banking fees were up 8% from last year’s second quarter and up significantly on a year-to-date basis, reflecting strength in advisory and debt underwriting, partially offset by declines in equity underwriting fees due to reduced levels of market volumes. European investment banking fees were particularly strong in the first half of 2005. Trading revenues for both the second quarter and first half of 2005, were lower than comparable periods in 2004. A challenging market environment in the second quarter resulted in weak portfolio management results, lower proprietary trading revenues due to fewer market opportunities and reduced client flows. Second quarter trading results drove the first half decline in trading revenues as well. For a further discussion of Investment banking fees and Trading revenue, which are primarily recorded in the IB, see the IB segment results on pages 15-19 of this Form 10–Q.

Lending & deposit related fees increased significantly from the 2004 second quarter and year-to-date periods as a result of the Merger. Absent the merger, these fees would have declined in both periods, driven primarily by lower fees in lieu of compensating balances due to rising interest rates. In a rising interest rate environment, customers earn more credit from their deposit balances and thus compensate the Firm using balances instead of fees. For a further discussion on liability balances and deposits, see page 42 of this Form 10-Q.

The increases in Asset management, administration and commissions for the second quarter and first half of 2005 were driven by incremental fees from several recent investments, including a majority interest in Highbridge Capital Management, LLC, a joint venture with Cazenove Group plc (“Cazenove”) and the acquisition of Vastera. In addition, organic business growth, global equity market appreciation and net asset inflows contributed to the improvement. For additional information on these fees and commissions, see the segment discussions for AWM on pages 35-38, TSS on pages 32-34 and RFS on pages 20-27 of this Form 10–Q.

The decline in Securities/private equity gains (losses) compared with the second quarter of 2004 reflected lower private equity gains resulting primarily from higher mark-to-market losses on the portfolio. For the first half of the year, the decrease in Securities/private equity gains (losses) was mainly attributable to the net impact of two significant items recognized in the first quarter of 2005: securities losses of $822 million primarily related to the repositioning of the Treasury portfolio to manage exposure to rising interest rates, partially offset by significantly higher private equity gains due primarily to two large transactions. For a further discussion of Securities/private equity gains (losses), which are primarily recorded in the Firm’s Treasury and Private Equity businesses, see the Corporate segment discussion on pages 38-40 of this Form 10–Q.

Mortgage fees and related income rose from the second quarter and first six months of 2004 largely due to improvements in risk management results related to the MSR asset. The increase for both periods was offset in part by a reduction in revenue related to lower prime mortgage originations and the decision to retain subprime mortgage loans rather than securitize. Mortgage fees and related income excludes the impact of NII and AFS securities gains related to home mortgage activities. For a discussion of Mortgage fees and related income, which is primarily recorded in RFS’s Home Finance business, see the Home Finance discussion on pages 22-24 of this Form 10–Q.

Credit card income increased, compared with the second quarter and first half of 2004, primarily as a result of higher interchange income associated with growth in charge volume. This was partially offset by higher volume-driven payments to partners and higher rewards expense. For a further discussion of Credit card income, see CS’s segment results on pages 27-29 of this Form 10–Q.

The increase in Other income from the second quarter of 2004 was driven by higher net results from corporate and bank-owned life insurance policies and higher gains on securities from loan workouts and loan sales. Other income for the first six months of 2005 was up due to higher net results from the aforementioned insurance policies, revenues from loan workouts and loan sales, and a gain on sale of the recreational vehicle loan portfolio in the first quarter of 2005. These revenues were partially offset by write-downs on auto loans that were transferred to the held-for-sale portfolio in RFS in the first quarter of 2005.

Net interest income rose from the 2004 second quarter and first six months, principally as a result of wider spreads on consumer deposits and wholesale liability balances, and growth in consumer loan and deposit balances. In addition, 2005 first half results benefited from the absence of a $40 million charge taken in the first quarter of 2004 related to auto lease residuals. These favorable items were partially offset by the reduced level of the Treasury portfolio, tighter wholesale loan spreads and the absence of the $4 billion manufactured home loan portfolio that was sold in late 2004. The Firm’s total average interest-earning assets for the three months ended June 30, 2005, were $912 billion, up 49% from June 30, 2004, primarily as a result of the Merger. The net interest yield on these assets, on a fully taxable-equivalent basis, was 2.24%, an increase of 26 basis points from the prior year. The Firm’s total average interest-earning assets for the six months ended June 30, 2005, were $905 billion, up 49% from June 30, 2004, primarily as a result of the Merger. The net interest yield on these assets, on a fully taxable-equivalent basis, was 2.31%, an increase of 31 basis points from the prior year.

Provision for credit losses

The Provision for credit losses rose from the second quarter and first six months of 2004. This rise was primarily due to the Merger and an increase in the consumer provision as a result of increased credit card bankruptcy losses from accelerated filings. Credit quality in the card portfolio remained strong, however, with managed net charge-off ratios declining from the levels in both the second quarter and first six months of 2004. In addition, there was higher provision expense related to the decision to retain subprime mortgage loans rather than securitize, partially offset by a reduction in other RFS allowances for loan losses due to lower net charge offs and improved credit trends. The net increase in the consumer provision was partially offset by a benefit in the wholesale provision, reflecting continued improvement in credit quality. For further information about the Provision for credit losses and the Firm’s management of credit risk, see the Credit risk management discussion on pages 48-58 of this Form 10-Q.

Noninterest expense

The following table presents the components of Noninterest expense:

		Three months ended June 30,												Six months ended June 30,
(in millions)(a)		2005				2004				Change				2005				2004				Change
Compensation expense		$	4,266			$	2,943				45	%		$	8,968			$	6,245				44	%
Occupancy expense			580				440				32				1,105				871				27
Technology and communications expense			896				786				14				1,816				1,605				13
Professional & outside services			1,130				752				50				2,204				1,568				41
Marketing			537				202				166				1,020				401				154
Other expense			954				511				87				1,759				958				84
Amortization of intangibles			385				79				387				768				158				386
Total noninterest expense before merger costs and litigation reserve charge			8,748				5,713				53				17,640				11,806				49
Merger costs			279				90				210				424				90				371
Litigation reserve charge			1,872				3,700				(49	)			2,772				3,700				(25	)
Total noninterest expense		$	10,899			$	9,503				15	%		$	20,836			$	15,596				34	%

(a) 2005 reflects the combined Firm’s results, while 2004 reflects the results of heritage JPMorgan Chase only.

Total Noninterest expense was $10.9 billion for the three months ended June 30, 2005, up $1.4 billion, or 15%, from the second quarter of 2004. Excluding Merger costs and nonoperating Litigation reserve charges in the second quarters of 2004 and 2005, Noninterest expense would have been $8.7 billion, up 53% from the prior year. Total Noninterest expense for the first six months of 2005 was $20.8 billion, up 34% from the same period last year. Excluding Merger costs and nonoperating Litigation reserve charges, Noninterest expense for the first half would have been $17.6 billion, up 49%. The increases from 2004 were due primarily to the Merger, which affected each category of Noninterest expense. The discussion that follows highlights factors other than the Merger that affected the comparison of results.

The increases in Compensation expense from the second quarter and first half of 2004 were primarily the result of additional headcount due to the insourcing of the Firm’s global technology infrastructure (effective December 31, 2004, JPMorgan Chase terminated its outsourcing agreement with IBM) and the impact of several investments, including Highbridge, Cazenove and Vastera. These were partially offset by merger-related savings throughout the Firm.

Occupancy expense included charges for excess real estate of $35 million in the second quarter of 2005, compared with charges of $26 million in the same period of last year.

The increases in Technology and communications expense from both periods last year, primarily as a result of the Merger, were partially offset by the lower costs associated with insourcing the support for the Firm’s global technology infrastructure.

Professional & outside services rose from the second quarter and first six months of 2004, reflecting upgrades to the Firm’s systems and technology, the termination of the aforementioned IBM outsourcing agreement and the impact of business growth. These expense increases were partially offset by the benefits of vendor contract negotiations and other expense management initiatives.

Marketing expense was up from both periods of 2004 due to the costs of acquiring new credit card accounts and launching the new Chase brand.

The increases in Other expense from the second quarter and first half of 2004 reflected higher operating charges for several legal matters, incremental expenses of several recent investments, including Highbridge, Cazenove and Vastera, charges of $93 million (pre-tax) in the 2005 second quarter to terminate a client contract in Treasury & Securities Services and a $40 million (pre-tax) charge taken in the first quarter of 2005 related to the dissolution of a student loan joint venture. These items were partially offset by merger-related savings and other efficiencies. In addition, the prior-year quarter included software impairment write-offs of $67 million (pre-tax) recorded at Treasury & Securities Services.

For a discussion of Amortization of intangibles and Merger costs, refer to Note 14 and Note 7 on pages 81–83 and 73, respectively, of this Form 10–Q.

The Firm recorded a $1.9 billion ($1.2 billion after-tax) nonoperating litigation charge related to its settlement of the Enron class action litigation as well as to certain of its other material legal proceedings, compared with a $900 million ($558 million after-tax) nonoperating litigation charge in the first quarter of 2005 for the settlement costs of the WorldCom class action litigation. In the second quarter of 2004, the Firm took a $3.7 billion ($2.3 billion after-tax) nonoperating litigation charge to increase litigation reserves. For a further discussion of litigation, refer to Note 17 on page 84, and Part II, Item 1, Legal Proceedings, on pages 95–96 of this Form 10–Q.

Income tax expense

The Firm’s Income (loss) before income tax expense (benefit), Income tax expense (benefit) and effective tax rate were as follows for each of the periods indicated:

										Six months ended June 30,
(in millions, except rate)(a)		2Q05				2Q04				2005				2004
Income (loss) before income tax expense (benefit)		$	1,257			$	(1,075	)		$	4,540			$	1,828
Income tax expense (benefit)			263				(527	)			1,282				446
Effective tax rate			20.9	%			49.0	%			28.2	%			24.4	%

(a) 2005 reflects the combined Firm’s results, while 2004 reflects the results of heritage JPMorgan Chase only.

The reduction in the effective tax rate from the second quarter of 2004 was the result of changes in the level and proportion of income subject to federal, state and local taxes, including a higher level of tax-exempt income and business tax credits. The increase in the effective tax rate for the first half of 2005, as compared with the prior year period, was principally the result of higher reported pre-tax income, combined with changes in the proportion of income subject to federal, state and local taxes. The nonoperating litigation reserve charges in the first half of 2005 and 2004, reflecting tax benefits at a 38% marginal tax rate, also contributed to the low tax rate for both periods.

EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES

The Firm prepares its Consolidated financial statements using accounting principles generally accepted in the United States of America (“U.S. GAAP”); these financial statements appear on pages 64–67 of this Form 10–Q. That presentation, which is referred to as “reported basis,” provides the reader with an understanding of the Firm’s results that can be consistently tracked from year to year and enables a comparison of the Firm’s performance with other companies’ U.S. GAAP financial statements.

In addition to analyzing the Firm’s results on a reported basis, management reviews the Firm’s and the lines of business’ results on an “operating basis,” which is a non-GAAP financial measure. The definition of operating basis starts with the reported U.S. GAAP results. In the case of the IB, noninterest revenue on an operating basis includes, in Trading revenue, Net interest income related to trading activities. Trading activities generate revenues, which are recorded for U.S. GAAP purposes in two line items on the income statement: Trading revenue, which includes the mark-to-market gains or losses on trading positions; and Net interest income, which includes the interest income or expense related to those positions. Combining both the Trading revenue and related Net interest income enables management to evaluate IB’s trading activities, by considering all revenue related to these activities, and facilitates operating comparisons to other competitors.

In the case of CS, operating, or managed, basis excludes the impact of credit card securitizations on total net revenue, the Provision for credit losses, net charge-offs and loan receivables. Through securitization the Firm transforms a portion of its credit card receivables into securities, which are sold to investors. The credit card receivables are removed from the Consolidated balance sheet through the transfer of principal credit card receivables to a trust, and the sale of undivided interests in the trusts to investors that entitle the investors to specific cash flows generated from the credit card receivables. The Firm retains the remaining undivided interests in the trust as seller’s interests, which are recorded in Loans on the Consolidated balance sheet. A gain or loss on the sale of credit card receivables to investors is recorded in Other income. Securitization also affects the Firm’s Consolidated income statement by reclassifying as Credit card income, interest income, certain fee revenue, recoveries in excess of interest paid to the investors, gross credit losses and other trust expenses related to the securitized receivables. For a reconciliation of reported to managed basis of CS results, see page 29 of this Form 10–Q. For information regarding loans and residual interests sold and securitized, see Note 12 on pages 76–79 of this Form 10–Q. JPMorgan Chase uses the concept of “managed receivables” to evaluate the credit performance and overall financial performance of its underlying credit card loans, both sold and not sold: as the same borrower is continuing to use the credit card for ongoing charges, a borrower’s credit performance will affect both the loan receivables sold under SFAS 140 and those not sold. Thus, in its disclosures regarding managed loan 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. In addition, CS operations are funded, operating results are evaluated, and decisions about allocating resources such as employees and capital are based on managed financial information.

Operating basis also excludes Merger costs, litigation reserve charges deemed nonoperating and accounting policy conformity adjustments, as management believes these items are not part of the Firm’s normal daily business operations (and, therefore, are not indicative of trends) and do not provide meaningful comparisons with other periods. For additional detail on nonoperating litigation charges, see the Glossary of Terms on page 92 of this Form 10–Q.

Finally, commencing with the first quarter of 2005, Operating revenue (Noninterest Revenue and Net interest income) for each of the segments and the Firm is presented on a tax-equivalent basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits are presented in the operating results on a basis comparable to taxable securities and investments. This allows management to assess the comparability of revenues arising from both taxable and tax-exempt sources. The corresponding income tax impact related to these items is recorded within Income tax expense. The Corporate sector’s and the Firm’s operating revenue and income tax expense for the periods prior to the first quarter of 2005 have been restated to be similarly presented on a tax-equivalent basis. Previously, only the segments’ operating results were presented on a tax-equivalent basis, and the impact of the segments’ tax-equivalent adjustments was eliminated in the Corporate sector. This restatement had no impact on the Corporate sector’s or the Firm’s operating earnings.

Management also uses certain non-GAAP financial measures at the segment level. Management believes these non-GAAP financial measures provide information to investors in understanding the underlying operational performance and trends of the particular business segment and facilitate a comparison of the business segment with the performance of competitors.

The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to operating results:

Three months ended June 30, (a)		2005
(in millions, except per share and		Reported				Trading				Credit				Merger				Litigation				Tax-equivalent				Operating
ratio data)		results				reclass(c)				card(d)				costs(e)				charge(e)				adjustments				basis
Revenue
Investment banking fees		$	961			$	—			$	—			$	—			$	—			$	—			$	961
Trading revenue			387				198				—				—				—				—				585
Lending & deposit related fees			851				—				—				—				—				—				851
Asset management, administration and commissions			2,541				—				—				—				—				—				2,541
Securities/private equity gains (losses)			407				—				—				—				—				—				407
Mortgage fees and related income			336				—				—				—				—				—				336
Credit card income			1,763				—				(728	)			—				—				—				1,035
Other income			496				—				—				—				—				143				639
Noninterest revenue			7,742				198				(728	)			—				—				143				7,355
Net interest income			5,001				(198	)			1,658				—				—				84				6,545
Total net revenue			12,743				—				930				—				—				227				13,900
Provision for credit losses			587				—				930				—				—				—				1,517
Noninterest expense
Merger costs			279				—				—				(279	)			—				—				—
Litigation reserve charge			1,872				—				—				—				(1,872	)			—				—
All other noninterest expense			8,748				—				—				—				—				—				8,748
Total noninterest expense			10,899				—				—				(279	)			(1,872	)			—				8,748
Income before income tax expense			1,257				—				—				279				1,872				227				3,635
Income tax expense			263				—				—				106				711				227				1,307
Net income		$	994			$	—			$	—			$	173			$	1,161			$	—			$	2,328

Earnings per share – diluted		$	0.28			$	—			$	—			$	0.05			$	0.33			$	—			$	0.66
Return on common equity			4	%			—	%			—	%			1	%			4	%			—	%			9	%
Return on equity – goodwill(b)			6				—				—				1				8				—				15
Return on assets			0.34			NM				NM				NM				NM				NM					0.75
Overhead ratio			86			NM				NM				NM				NM				NM					63
Effective income tax rate			21			NM				NM					38				38				100				36

Three months ended June 30,(a)		2004
(in millions, except per share and		Reported				Trading				Credit				Merger				Litigation				Tax-equivalent				Operating
ratio data)		results				reclass(c)				card(d)				costs(e)				charge(e)				adjustments				basis
Revenue
Investment banking fees		$	893			$	—			$	—			$	—			$	—			$	—			$	893
Trading revenue			873				439				—				—				—				—				1,312
Lending & deposit related fees			412				—				—				—				—				—				412
Asset management, administration and commissions			1,814				—				—				—				—				—				1,814
Securities/private equity gains (losses)			460				—				—				—				—				—				460
Mortgage fees and related income			294				—				—				—				—				—				294
Credit card income			631				—				(307	)			—				—				—				324
Other income			260				—				(45	)			—				—				41				256
Noninterest revenue			5,637				439				(352	)			—				—				41				5,765
Net interest income			2,994				(439	)			838				—				—				18				3,411
Total net revenue			8,631				—				486				—				—				59				9,176
Provision for credit losses			203				—				486				—				—				—				689
Noninterest expense
Merger costs			90				—				—				(90	)			—				—				—
Litigation reserve charge			3,700				—				—				—				(3,700	)			—				—
All other noninterest expense			5,713				—				—				—				—				—				5,713
Total noninterest expense			9,503				—				—				(90	)			(3,700	)			—				5,713
Income before income tax expense			(1,075	)			—				—				90				3,700				59				2,774
Income tax expense			(527	)			—				—				30				1,406				59				968
Net income		$	(548	)		$	—			$	—			$	60			$	2,294			$	—			$	1,806
Earnings per share – diluted		$	(0.27	)		$	—			$	—			$	0.03			$	1.09			$	—			$	0.85
Return on common equity		NM				NM				NM				NM				NM				NM					15	%
Return on equity – goodwill(b)		NM				NM				NM				NM				NM				NM					19
Return on assets		NM				NM				NM				NM				NM				NM					0.87
Overhead ratio			110	%		NM				NM				NM				NM				NM					62
Effective income tax rate			49			NM				NM					33	%			38	%			100	%			35

Six months ended June 30, (a)		2005
(in millions, except per share and		Reported				Trading				Credit				Merger				Litigation				Tax-equivalent				Operating
ratio data)		results				reclass(c)				card(d)				costs(e)				charge(e)				adjustments				basis
Revenue
Investment banking fees		$	1,954			$	—			$	—			$	—			$	—			$	—			$	1,954
Trading revenue			2,246				526				—				—				—				—				2,772
Lending & deposit related fees			1,671				—				—				—				—				—				1,671
Asset management, administration and commissions			5,039				—				—				—				—				—				5,039
Securities/private equity gains (losses)			362				—				—				—				—				—				362
Mortgage fees and related income			698				—				—				—				—				—				698
Credit card income			3,497				—				(1,543	)			—				—				—				1,954
Other income			697				—				—				—				—				258				955
Noninterest revenue			16,164				526				(1,543	)			—				—				258				15,405
Net interest income			10,226				(526	)			3,390				—				—				145				13,235
Total net revenue			26,390				—				1,847				—				—				403				28,640
Provision for credit losses			1,014				—				1,847				—				—				—				2,861
Noninterest expense
Merger costs			424				—				—				(424	)			—				—				—
Litigation reserve charge			2,772				—				—				—				(2,772	)			—				—
All other noninterest expense			17,640				—				—				—				—				—				17,640
Total noninterest expense			20,836				—				—				(424	)			(2,772	)			—				17,640
Income before income tax expense			4,540				—				—				424				2,772				403				8,139
Income tax expense			1,282				—				—				161				1,053				403				2,899
Net income		$	3,258			$	—			$	—			$	263			$	1,719			$	—			$	5,240
Earnings per share – diluted		$	0.91			$	—			$	—			$	0.08			$	0.48			$	—			$	1.47
Return on common equity			6	%			—	%			—	%			1	%			3	%			—	%			10	%
Return on equity – goodwill(b)			11				—				—				1				5				—				17
Return on assets			0.56			NM				NM				NM				NM				NM					0.85
Overhead ratio			79			NM				NM				NM				NM				NM					62
Effective income tax rate			28			NM				NM					38				38				100				36

Six months ended June 30, (a)		2004
(in millions, except per share and		Reported				Trading				Credit				Merger				Litigation				Tax-equivalent				Operating
ratio data)		results				reclass(c)				card(d)				costs(e)				charge(e)				adjustments				basis
Revenue
Investment banking fees		$	1,585			$	—			$	—			$	—			$	—			$	—			$	1,585
Trading revenue			2,593				1,015				—				—				—				—				3,608
Lending & deposit related fees			826				—				—				—				—				—				826
Asset management, administration and commissions			3,650				—				—				—				—				—				3,650
Securities/private equity gains (losses)			892				—				—				—				—				—				892
Mortgage fees and related income			488				—				—				—				—				—				488
Credit card income			1,236				—				(633	)			—				—				—				603
Other income			392				—				(84	)			—				—				75				383
Noninterest revenue			11,662				1,015				(717	)			—				—				75				12,035
Net interest income			5,980				(1,015	)			1,676				—				—				32				6,673
Total net revenue			17,642				—				959				—				—				107				18,708
Provision for credit losses			218				—				959				—				—				—				1,177
Noninterest expense
Merger costs			90				—				—				(90	)			—				—				—
Litigation reserve charge			3,700				—				—				—				(3,700	)			—				—
All other noninterest expense			11,806				—				—				—				—				—				11,806
Total noninterest expense			15,596				—				—				(90	)			(3,700	)			—				11,806
Income before income tax expense			1,828				—				—				90				3,700				107				5,725
Income tax expense			446				—				—				30				1,406				107				1,989
Net income		$	1,382			$	—			$	—			$	60			$	2,294			$	—			$	3,736

Earnings per share – diluted		$	0.65			$	—			$	—			$	0.03			$	1.09			$	—			$	1.77
Return on common equity			6	%			—	%			—	%			—	%			10	%			—	%			16	%
Return on equity – goodwill(b)			7				—				—				—				13				—				20
Return on assets			0.35			NM				NM				NM				NM				NM					0.92
Overhead ratio			88			NM				NM				NM				NM				NM					63
Effective income tax rate			24			NM				NM					33				38				100				35

(a)		2005 reflects the combined Firm’s results, while 2004 reflects the results of heritage JPMorgan Chase only.
(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 utilizes this measure to facilitate operating comparisons to other competitors.
(c)		The reclassification of trading-related net interest income from Net interest income to Trading revenue primarily impacts the Investment Bank segment results.
(d)		The impact of credit card securitizations affects Card Services. See pages 27–29 of this Form 10–Q for further information.
(e)		The impact of Merger costs and nonoperating Litigation reserve charges are excluded from Operating earnings, as management believes these items are not part of the Firm’s normal daily business operations (and, therefore, are not indicative of trends), and do not provide meaningful comparisons with other periods.

Three months ended June 30, (a)		2005												2004
(in millions)		Reported				Securitized				Managed				Reported				Securitized				Managed
Loans – Period-end		$	416,025			$	68,808			$	484,833			$	225,938			$	34,138			$	260,076
Total assets – average			1,176,033				66,226				1,242,259				802,870				33,026				835,896