QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) |
Page | ||||
Part I Financial information |
||||
Item 1 Consolidated Financial Statements JPMorgan Chase & Co.: |
||||
Consolidated statements of income (unaudited) for the three months
ended March 31, 2006, and March 31, 2005 |
60 | |||
Consolidated balance sheets (unaudited) at March 31, 2006, and December 31, 2005 |
61 | |||
Consolidated statements of changes in stockholders equity (unaudited) for
the three months ended March 31, 2006, and March 31, 2005 |
62 | |||
Consolidated statements of cash flows (unaudited) for the three months ended
March 31, 2006, and March 31, 2005 |
63 | |||
Notes to consolidated financial statements (unaudited) |
64 | |||
Consolidated average balance sheet, interest and rates (unaudited) for the three months
ended March 31, 2006, and March 31, 2005 |
87 | |||
Glossary of Terms and Line of Business Metrics |
88 | |||
Item 4 Controls and Procedures |
93 | |||
Part II Other information |
||||
Item 6 Exhibits |
95 |
2
Three months ended March 31, | ||||||||
2006 | 2005 | |||||||
Revenue |
||||||||
Investment banking fees |
$ | 1,169 | $ | 993 | ||||
Principal transactions |
2,602 | 2,636 | ||||||
Lending & deposit related fees |
841 | 820 | ||||||
Asset management, administration and commissions |
2,973 | 2,498 | ||||||
Securities gains (losses) |
(116 | ) | (822 | ) | ||||
Mortgage fees and related income |
241 | 362 | ||||||
Credit card income |
1,910 | 1,734 | ||||||
Other income |
556 | 201 | ||||||
Noninterest revenue |
10,176 | 8,422 | ||||||
Interest income |
13,301 | 10,632 | ||||||
Interest expense |
8,241 | 5,407 | ||||||
Net interest income |
5,060 | 5,225 | ||||||
Total net revenue |
15,236 | 13,647 | ||||||
Provision for credit losses |
831 | 427 | ||||||
Noninterest expense |
||||||||
Compensation expense |
5,600 | 4,702 | ||||||
Occupancy expense |
602 | 525 | ||||||
Technology and communications expense |
874 | 920 | ||||||
Professional & outside services |
888 | 1,074 | ||||||
Marketing |
519 | 483 | ||||||
Other expense |
834 | 1,705 | ||||||
Amortization of intangibles |
364 | 383 | ||||||
Merger costs |
71 | 145 | ||||||
Total noninterest expense |
9,752 | 9,937 | ||||||
Income before income tax expense |
4,653 | 3,283 | ||||||
Income tax expense |
1,572 | 1,019 | ||||||
Net income |
$ | 3,081 | $ | 2,264 | ||||
Net income applicable to common stock |
$ | 3,077 | $ | 2,259 | ||||
Net income per common share |
||||||||
Basic earnings per share |
$ | 0.89 | $ | 0.64 | ||||
Diluted earnings per share |
0.86 | 0.63 | ||||||
Average basic shares |
3,472.7 | 3,517.5 | ||||||
Average diluted shares |
3,570.8 | 3,569.8 | ||||||
Cash dividends per common share |
$ | 0.34 | $ | 0.34 | ||||
60
March 31, | December 31, | |||||||
2006 | 2005 | |||||||
Assets |
||||||||
Cash and due from banks |
$ | 36,903 | $ | 36,670 | ||||
Deposits with banks |
10,545 | 21,661 | ||||||
Federal funds sold and securities purchased under resale agreements |
153,755 | 133,981 | ||||||
Securities borrowed |
93,280 | 74,604 | ||||||
Trading assets (including assets pledged of $86,839 at March 31, 2006, and $79,657 at December 31, 2005) |
312,025 | 298,377 | ||||||
Securities: |
||||||||
Available-for-sale (including assets pledged of $40,445 at March 31, 2006, and $17,614 at December 31, 2005) |
67,054 | 47,523 | ||||||
Held-to-maturity (fair value: $74 at March 31, 2006, and $80 at December 31, 2005) |
72 | 77 | ||||||
Interests in purchased receivables |
29,029 | 29,740 | ||||||
Loans |
432,081 | 419,148 | ||||||
Allowance for loan losses |
(7,275 | ) | (7,090 | ) | ||||
Loans, net of Allowance for loan losses |
424,806 | 412,058 | ||||||
Private equity investments |
6,499 | 6,374 | ||||||
Accrued interest and accounts receivable |
21,657 | 22,421 | ||||||
Premises and equipment |
8,985 | 9,081 | ||||||
Goodwill |
43,899 | 43,621 | ||||||
Other intangible assets: |
||||||||
Mortgage servicing rights |
7,539 | 6,452 | ||||||
Purchased credit card relationships |
3,243 | 3,275 | ||||||
All other intangibles |
4,832 | 4,832 | ||||||
Other assets |
49,159 | 48,195 | ||||||
Total assets |
$ | 1,273,282 | $ | 1,198,942 | ||||
Liabilities |
||||||||
Deposits: |
||||||||
U.S. offices: |
||||||||
Noninterest-bearing |
$ | 128,982 | $ | 135,599 | ||||
Interest-bearing |
309,779 | 287,774 | ||||||
Non-U.S. offices: |
||||||||
Noninterest-bearing |
6,591 | 7,476 | ||||||
Interest-bearing |
139,113 | 124,142 | ||||||
Total deposits |
584,465 | 554,991 | ||||||
Federal funds purchased and securities sold under repurchase agreements |
151,006 | 125,925 | ||||||
Commercial paper |
15,933 | 13,863 | ||||||
Other borrowed funds |
14,400 | 10,479 | ||||||
Trading liabilities |
160,098 | 145,930 | ||||||
Accounts payable, accrued expenses and other liabilities (including the Allowance for lending-related
commitments of $384 at March 31, 2006, and $400 at December 31, 2005) |
73,693 | 78,460 | ||||||
Beneficial interests issued by consolidated VIEs |
42,237 | 42,197 | ||||||
Long-term debt (including structured notes accounted for at fair value of $8.4 billion at March 31, 2006) |
112,133 | 108,357 | ||||||
Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities |
10,980 | 11,529 | ||||||
Total liabilities |
1,164,945 | 1,091,731 | ||||||
Commitments and contingencies (see Note 17 of this Form 10Q) |
||||||||
Stockholders equity |
||||||||
Preferred stock |
| 139 | ||||||
Common stock ($1 par value; authorized 9,000,000,000 shares; issued 3,644,744,120 shares and
3,618,189,597 shares at March 31, 2006, and December 31, 2005, respectively) |
3,645 | 3,618 | ||||||
Capital surplus |
76,153 | 74,994 | ||||||
Retained earnings |
35,892 | 33,848 | ||||||
Accumulated other comprehensive income (loss) |
(1,017 | ) | (626 | ) | ||||
Treasury stock, at cost (171,793,672 shares at March 31, 2006, and 131,500,350 shares at December 31, 2005) |
(6,336 | ) | (4,762 | ) | ||||
Total stockholders equity |
108,337 | 107,211 | ||||||
Total liabilities and stockholders equity |
$ | 1,273,282 | $ | 1,198,942 | ||||
61
Three months ended March 31, | ||||||||
2006 | 2005 | |||||||
Preferred stock |
||||||||
Balance at beginning of the year |
$ | 139 | $ | 339 | ||||
Redemption of preferred stock |
(139 | ) | | |||||
Balance at end of period |
| 339 | ||||||
Common stock |
||||||||
Balance at beginning of year |
3,618 | 3,585 | ||||||
Issuance of common stock |
27 | 13 | ||||||
Balance at end of period |
3,645 | 3,598 | ||||||
Capital surplus |
||||||||
Balance at beginning of year |
74,994 | 72,801 | ||||||
Issuance of common stock and commitments to issue common stock for employee
stock-based awards and related tax effects |
1,159 | 593 | ||||||
Balance at end of period |
76,153 | 73,394 | ||||||
Retained earnings |
||||||||
Balance at beginning of year |
33,848 | 30,209 | ||||||
Cumulative effect of change in accounting principles |
172 | | ||||||
Balance at beginning of year, adjusted |
34,020 | 30,209 | ||||||
Net income |
3,081 | 2,264 | ||||||
Cash dividends declared: |
||||||||
Preferred stock |
(4 | ) | (5 | ) | ||||
Common stock ($0.34 per share each period) |
(1,205 | ) | (1,215 | ) | ||||
Balance at end of period |
35,892 | 31,253 | ||||||
Accumulated other comprehensive income (loss) |
||||||||
Balance at beginning of year |
(626 | ) | (208 | ) | ||||
Other comprehensive income (loss) |
(391 | ) | (415 | ) | ||||
Balance at end of period |
(1,017 | ) | (623 | ) | ||||
Treasury stock, at cost |
||||||||
Balance at beginning of year |
(4,762 | ) | (1,073 | ) | ||||
Purchase of treasury stock |
(1,291 | ) | (1,316 | ) | ||||
Share repurchases related to employee stock-based awards |
(283 | ) | (232 | ) | ||||
Balance at end of period |
(6,336 | ) | (2,621 | ) | ||||
Total stockholders equity at end of period |
$ | 108,337 | $ | 105,340 | ||||
Comprehensive income |
||||||||
Net income |
$ | 3,081 | $ | 2,264 | ||||
Other comprehensive income (loss) |
(391 | ) | (415 | ) | ||||
Comprehensive income |
$ | 2,690 | $ | 1,849 | ||||
62
Three months ended March 31, | ||||||||
2006 | 2005 | |||||||
(Restated) | (Restated) | |||||||
Operating activities |
||||||||
Net income |
$ | 3,081 | $ | 2,264 | ||||
Adjustments to reconcile net income to net cash (used in) operating
activities: |
||||||||
Provision for credit losses |
831 | 427 | ||||||
Depreciation and amortization |
837 | 1,165 | ||||||
Deferred tax provision |
554 | 462 | ||||||
Investment securities (gains) losses |
116 | 822 | ||||||
Private equity unrealized (gains) losses |
(84 | ) | (201 | ) | ||||
Stock-based compensation |
839 | 381 | ||||||
Originations and purchases of loans held-for-sale |
(26,733 | ) | (17,001 | ) | ||||
Proceeds from sales and securitizations of loans held-for-sale |
25,760 | 16,950 | ||||||
Net change in: |
||||||||
Trading assets |
(9,330 | ) | 545 | |||||
Securities borrowed |
(18,676 | ) | (5,746 | ) | ||||
Accrued interest and accounts receivable |
848 | 338 | ||||||
Other assets |
(2,459 | ) | (6,974 | ) | ||||
Trading liabilities |
11,383 | (472 | ) | |||||
Accounts payable, accrued expenses and other liabilities |
(6,330 | ) | (4,730 | ) | ||||
Other operating adjustments |
222 | 184 | ||||||
Net cash (used in) operating activities |
(19,141 | ) | (11,586 | ) | ||||
Investing activities |
||||||||
Net change in: |
||||||||
Deposits with banks |
11,405 | 7,465 | ||||||
Federal funds sold and securities purchased under resale agreements |
(19,774 | ) | (31,239 | ) | ||||
Held-to-maturity securities: |
||||||||
Proceeds |
5 | 9 | ||||||
Available-for-sale securities: |
||||||||
Proceeds from maturities |
6,456 | 8,703 | ||||||
Proceeds from sales |
30,369 | 28,232 | ||||||
Purchases |
(56,931 | ) | (19,543 | ) | ||||
Proceeds from sales and securitization of loans held-for-investment |
7,537 | 4,929 | ||||||
Originations and other changes in loans, net |
(13,778 | ) | (6,237 | ) | ||||
Net cash (used) in business acquisitions |
(663 | ) | (304 | ) | ||||
All other investing activities, net |
873 | 1,374 | ||||||
Net cash (used in) investing activities |
(34,501 | ) | (6,611 | ) | ||||
Financing activities |
||||||||
Net change in: |
||||||||
Deposits |
25,483 | 6,377 | ||||||
Federal funds purchased and securities sold under repurchase agreements |
25,081 | 9,275 | ||||||
Commercial paper and other borrowed funds |
943 | 1,543 | ||||||
Proceeds from the issuance of long-term debt and capital debt securities |
12,354 | 15,796 | ||||||
Repayments of long-term debt and capital debt securities |
(9,316 | ) | (9,903 | ) | ||||
Net issuance of stock and stock-based awards |
393 | 190 | ||||||
Excess tax benefits related to stock-based compensation |
135 | | ||||||
Redemption of preferred stock |
(139 | ) | | |||||
Treasury stock purchased |
(1,291 | ) | (1,316 | ) | ||||
Cash dividends paid |
(1,215 | ) | (1,227 | ) | ||||
All other financing activities, net |
1,393 | 8 | ||||||
Net cash provided by financing activities |
53,821 | 20,743 | ||||||
Effect of exchange rate changes on cash and due from banks |
54 | (121 | ) | |||||
Net increase in cash and due from banks |
233 | 2,425 | ||||||
Cash and due from banks at the beginning of the year |
36,670 | 35,168 | ||||||
Cash and due from banks at the end of the period |
$ | 36,903 | $ | 37,593 | ||||
Cash interest paid |
$ | 8,395 | $ | 5,191 | ||||
Cash income taxes paid |
234 | 1,187 | ||||||
63
64
Three months ended | Six months ended | |||||||||||||||
March 31, 2005 | June 30, 2005 | |||||||||||||||
As previously | As previously | |||||||||||||||
(in millions) | reported | Restated | reported | Restated | ||||||||||||
Operating activities |
||||||||||||||||
Net income |
$ | 2,264 | $ | 2,264 | $ | 3,258 | $ | 3,258 | ||||||||
Adjustments to reconcile net income to net cash (used in) operating activities: |
||||||||||||||||
Provision for credit losses |
427 | 427 | 1,014 | 1,014 | ||||||||||||
Depreciation and amortization |
1,165 | 1,165 | 2,221 | 2,221 | ||||||||||||
Deferred tax (benefit) provision |
462 | 462 | (1,038 | ) | (1,038 | ) | ||||||||||
Investment securities (gains) losses |
822 | 822 | 752 | 752 | ||||||||||||
Private equity unrealized (gains) losses |
(201 | ) | (201 | ) | (35 | ) | (35 | ) | ||||||||
Stock-based compensation |
381 | 381 | | | ||||||||||||
Originations and purchases of loans held-for-sale |
| (17,001 | ) | | (45,147 | ) | ||||||||||
Proceeds from sales and securizations of loans held-for-sale |
| 16,950 | | 39,357 | ||||||||||||
Net change in: |
||||||||||||||||
Trading assets |
545 | 545 | (1,499 | ) | (1,499 | ) | ||||||||||
Securities borrowed |
(5,746 | ) | (5,746 | ) | (11,029 | ) | (11,029 | ) | ||||||||
Accrued interest and accounts receivable |
338 | 338 | (2,787 | ) | (2,787 | ) | ||||||||||
Other assets |
(6,974 | ) | (6,974 | ) | (6,813 | ) | (6,813 | ) | ||||||||
Trading liabilities |
(472 | ) | (472 | ) | (18,300 | ) | (18,300 | ) | ||||||||
Accounts payable, accrued expenses and other liabilities |
(4,730 | ) | (4,730 | ) | 1,903 | 1,903 | ||||||||||
Other operating adjustments |
184 | 184 | | | ||||||||||||
Net cash (used in) operating activities |
(11,535 | ) | (11,586 | ) | (32,353 | ) | (38,143 | ) | ||||||||
Investing activities |
||||||||||||||||
Net change in: |
||||||||||||||||
Deposits with banks |
7,465 | 7,465 | 12,717 | 12,717 | ||||||||||||
Federal
funds sold and securities purchased under resale agreements |
(31,239 | ) | (31,239 | ) | (29,273 | ) | (29,273 | ) | ||||||||
Held-to-maturity securities: |
||||||||||||||||
Proceeds |
9 | 9 | 18 | 18 | ||||||||||||
Available-for-sale securities: |
||||||||||||||||
Proceeds from maturities |
8,703 | 8,703 | 17,008 | 17,008 | ||||||||||||
Proceeds from sales |
28,232 | 28,232 | 45,146 | 45,146 | ||||||||||||
Purchases |
(19,543 | ) | (19,543 | ) | (31,731 | ) | (31,731 | ) | ||||||||
Proceeds from sales and securitizations of loans held-for-investment |
21,373 | 4,929 | 51,085 | 11,761 | ||||||||||||
Originations and other changes in loans, net |
(22,732 | ) | (6,237 | ) | (66,577 | ) | (21,463 | ) | ||||||||
Net cash (used) in business acquisitions or dispositions |
(304 | ) | (304 | ) | (413 | ) | (413 | ) | ||||||||
All other investing activities, net |
1,374 | 1,374 | 2,489 | 2,489 | ||||||||||||
Net cash
(used in) provided by investing activities |
(6,662 | ) | (6,611 | ) | 469 | 6,259 | ||||||||||
Financing activities: |
||||||||||||||||
Net change in: |
||||||||||||||||
Deposits |
6,377 | 6,377 | 13,301 | 13,301 | ||||||||||||
Federal funds purchased and securities sold under
repurchase agreements |
9,275 | 9,275 | 9,563 | 9,563 | ||||||||||||
Commercial paper and other borrowed funds |
1,543 | 1,543 | 3,914 | 3,914 | ||||||||||||
Proceeds from the issuance of long-term debt and capital debt securities |
15,796 | 15,796 | 23,068 | 23,068 | ||||||||||||
Repayments of long-term debt and capital debt securities |
(9,903 | ) | (9,903 | ) | (14,033 | ) | (14,033 | ) | ||||||||
Net issuance of stock and stock-based awards |
190 | 190 | 337 | 337 | ||||||||||||
Redemption of preferred stock |
| | (200 | ) | (200 | ) | ||||||||||
Treasury stock purchased |
(1,316 | ) | (1,316 | ) | (1,910 | ) | (1,910 | ) | ||||||||
Cash dividends paid |
(1,227 | ) | (1,227 | ) | (2,449 | ) | (2,449 | ) | ||||||||
All other financing activities, net |
8 | 8 | 435 | 435 | ||||||||||||
Net cash provided by financing activities |
20,743 | 20,743 | 32,026 | 32,026 | ||||||||||||
Effect of exchange rate changes on cash and due from banks |
(121 | ) | (121 | ) | (218 | ) | (218 | ) | ||||||||
Net increase (decrease) in cash and due from banks |
2,425 | 2,425 | (76 | ) | (76 | ) | ||||||||||
Cash and due from banks at the beginning of the year |
35,168 | 35,168 | 35,168 | 35,168 | ||||||||||||
Cash and due
from banks at the end of the period |
$ | 37,593 | $ | 37,593 | $ | 35,092 | $ | 35,092 | ||||||||
Cash interest paid |
$ | 5,191 | $ | 5,191 | $ | 11,056 | $ | 11,056 | ||||||||
Cash income taxes paid |
1,187 | 1,187 | 2,432 | 2,432 |
64A
Nine months ended | Three months ended | |||||||||||||||
September 30, 2005 | March 31, 2006 | |||||||||||||||
As previously | As previously | |||||||||||||||
(in millions) | reported | Restated | reported | Restated | ||||||||||||
Operating activities |
||||||||||||||||
Net income |
$ | 5,785 | $ | 5,785 | $ | 3,081 | $ | 3,081 | ||||||||
Adjustments to reconcile net income to net cash (used in)
operating activities: |
||||||||||||||||
Provision for credit losses |
2,259 | 2,259 | 831 | 831 | ||||||||||||
Depreciation and amortization |
3,255 | 3,255 | 837 | 837 | ||||||||||||
Deferred tax (benefit) provision |
(531 | ) | (531 | ) | 554 | 554 | ||||||||||
Investment securities (gains) losses |
796 | 796 | 116 | 116 | ||||||||||||
Private equity unrealized (gains) losses |
30 | 30 | (84 | ) | (84 | ) | ||||||||||
Stock-based compensation |
| | 839 | 839 | ||||||||||||
Originations and purchases of loans held-for-sale |
| (78,528 | ) | | (26,733 | ) | ||||||||||
Proceeds from sales and securizations of loans held-for-sale |
| 70,581 | | 25,760 | ||||||||||||
Net change in: |
||||||||||||||||
Trading assets |
(13,400 | ) | (13,400 | ) | (9,330 | ) | (9,330 | ) | ||||||||
Securities borrowed |
(16,953 | ) | (16,953 | ) | (18,676 | ) | (18,676 | ) | ||||||||
Accrued interest and accounts receivable |
(7,414 | ) | (7,414 | ) | 848 | 848 | ||||||||||
Other assets |
(7,315 | ) | (7,315 | ) | (2,459 | ) | (2,459 | ) | ||||||||
Trading liabilities |
768 | 768 | 11,383 | 11,383 | ||||||||||||
Accounts payable, accrued expenses and other liabilities |
(290 | ) | (290 | ) | (6,330 | ) | (6,330 | ) | ||||||||
Other operating adjustments |
| | 222 | 222 | ||||||||||||
Net cash
(used in) operating activities |
(33,010 | ) | (40,957 | ) | (18,168 | ) | (19,141 | ) | ||||||||
Investing activities |
||||||||||||||||
Net change in: |
||||||||||||||||
Deposits with banks |
7,460 | 7,460 | 11,405 | 11,405 | ||||||||||||
Federal
funds sold and securities purchased under resale agreements |
(21,364 | ) | (21,364 | ) | (19,774 | ) | (19,774 | ) | ||||||||
Held-to-maturity securities: |
||||||||||||||||
Proceeds |
26 | 26 | 5 | 5 | ||||||||||||
Available-for-sale securities: |
||||||||||||||||
Proceeds from maturities |
24,113 | 24,113 | 6,456 | 6,456 | ||||||||||||
Proceeds from sales |
58,159 | 58,159 | 30,369 | 30,369 | ||||||||||||
Purchases |
(62,709 | ) | (62,709 | ) | (56,931 | ) | (56,931 | ) | ||||||||
Proceeds from sales and securitizations of loans held-for-investment |
88,449 | 16,586 | 33,180 | 7,537 | ||||||||||||
Originations and other changes in loans, net |
(109,283 | ) | (29,473 | ) | (40,394 | ) | (13,778 | ) | ||||||||
Net cash (used) in business acquisitions or dispositions |
(503 | ) | (503 | ) | (663 | ) | (663 | ) | ||||||||
All other investing activities, net |
4,445 | 4,445 | 873 | 873 | ||||||||||||
Net cash (used in) investing activities |
(11,207 | ) | (3,260 | ) | (35,474 | ) | (34,501 | ) | ||||||||
Financing activities: |
||||||||||||||||
Net change in: |
||||||||||||||||
Deposits |
12,153 | 12,153 | 25,483 | 25,483 | ||||||||||||
Federal funds purchased and securities sold under
repurchase agreements |
15,617 | 15,617 | 25,081 | 25,081 | ||||||||||||
Commercial paper and other borrowed funds |
9,922 | 9,922 | 943 | 943 | ||||||||||||
Proceeds from the issuance of long-term debt and capital debt securities |
31,995 | 31,995 | 12,354 | 12,354 | ||||||||||||
Repayments of long-term debt and capital debt securities |
(22,211 | ) | (22,211 | ) | (9,316 | ) | (9,316 | ) | ||||||||
Net issuance of stock and stock-based awards |
429 | 429 | 393 | 393 | ||||||||||||
Excess tax benefits related to stock-based compensation |
| | 135 | 135 | ||||||||||||
Redemption of preferred stock |
(200 | ) | (200 | ) | (139 | ) | (139 | ) | ||||||||
Treasury stock purchased |
(2,411 | ) | (2,411 | ) | (1,291 | ) | (1,291 | ) | ||||||||
Cash dividends paid |
(3,669 | ) | (3,669 | ) | (1,215 | ) | (1,215 | ) | ||||||||
All other financing activities, net |
804 | 804 | 1,393 | 1,393 | ||||||||||||
Net cash provided by financing activities |
42,429 | 42,429 | 53,821 | 53,821 | ||||||||||||
Effect of exchange rate changes on cash and due from banks |
(344 | ) | (344 | ) | 54 | 54 | ||||||||||
Net increase (decrease) in cash and due from banks |
(2,132 | ) | (2,132 | ) | 233 | 233 | ||||||||||
Cash and due from banks at the beginning of the year |
35,168 | 35,168 | 36,670 | 36,670 | ||||||||||||
Cash and due
from banks at the end of the period |
$ | 33,036 | $ | 33,036 | $ | 36,903 | $ | 36,903 | ||||||||
Cash interest paid |
$ | 17,849 | $ | 17,849 | $ | 8,395 | $ | 8,395 | ||||||||
Cash income taxes paid |
3,585 | 3,585 | 234 | 234 |
64B
64C
Three months ended March 31, | ||||||||
(in millions) | 2006 | 2005 | ||||||
Trading revenue |
$ | 2,343 | $ | 1,859 | ||||
Private equity gains (losses) |
259 | 777 | ||||||
Principal transactions |
$ | 2,602 | $ | 2,636 | ||||
65
March 31, | December 31, | |||||||
(in millions) | 2006 | 2005 | ||||||
Trading assets |
||||||||
Debt and equity instruments: |
||||||||
U.S. government and federal agency obligations |
$ | 16,018 | $ | 16,283 | ||||
U.S. government-sponsored enterprise obligations |
18,175 | 24,172 | ||||||
Obligations of state and political subdivisions |
7,650 | 9,887 | ||||||
Certificates of deposit, bankers acceptances and commercial paper |
9,169 | 5,652 | ||||||
Debt securities issued by non-U.S. governments |
53,049 | 48,671 | ||||||
Corporate securities and other |
155,214 | 143,925 | ||||||
Total debt and equity instruments |
259,275 | 248,590 | ||||||
Derivative receivables: (a) |
||||||||
Interest rate |
31,328 | 30,416 | ||||||
Foreign exchange |
2,179 | 2,855 | ||||||
Equity |
6,813 | 5,575 | ||||||
Credit derivatives |
3,881 | 3,464 | ||||||
Commodity |
8,549 | 7,477 | ||||||
Total derivative receivables |
52,750 | 49,787 | ||||||
Total trading assets |
$ | 312,025 | $ | 298,377 | ||||
Trading liabilities |
||||||||
Debt and equity instruments(b) |
$ | 104,160 | $ | 94,157 | ||||
Derivative payables:(a) |
||||||||
Interest rate |
28,095 | 28,488 | ||||||
Foreign exchange |
3,265 | 3,453 | ||||||
Equity |
14,656 | 11,539 | ||||||
Credit derivatives |
2,904 | 2,445 | ||||||
Commodity |
7,018 | 5,848 | ||||||
Total derivative payables |
55,938 | 51,773 | ||||||
Total trading liabilities |
$ | 160,098 | $ | 145,930 | ||||
(a) | Included in Trading assets and Trading liabilities are the reported receivables
(unrealized gains) and payables (unrealized losses) related to derivatives. These amounts
include the derivative assets and liabilities net of cash received and paid of $22.7 billion
and $17.5 billion at March 31, 2006, and $26.7 billion and $18.9 billion at December 31,
2005, respectively, under legally enforceable master netting agreements. |
|
(b) | Primarily represents securities sold, not yet purchased. |
March 31, 2006 | December 31, 2005 | |||||||||||||||
(in millions) | Carrying value | Cost | Carrying value | Cost | ||||||||||||
Total private equity investments |
$ | 6,499 | $ | 8,104 | $ | 6,374 | $ | 8,036 | ||||||||
66
Three months ended March 31, | ||||||||
(in millions) | 2006 | 2005 | ||||||
Interest income |
||||||||
Loans |
$ | 7,497 | $ | 6,034 | ||||
Securities |
748 | 1,078 | ||||||
Trading assets |
2,550 | 2,232 | ||||||
Federal funds sold and securities purchased under resale agreements |
1,543 | 727 | ||||||
Securities borrowed |
385 | 221 | ||||||
Deposits with banks |
247 | 154 | ||||||
Interests in purchased receivables |
331 | 186 | ||||||
Total interest income |
13,301 | 10,632 | ||||||
Interest expense |
||||||||
Interest-bearing deposits |
3,665 | 1,997 | ||||||
Short-term and other liabilities |
2,934 | 2,214 | ||||||
Long-term debt |
1,235 | 924 | ||||||
Beneficial interests issued by consolidated VIEs |
407 | 272 | ||||||
Total interest expense |
8,241 | 5,407 | ||||||
Net interest income |
5,060 | 5,225 | ||||||
Provision for credit losses |
831 | 427 | ||||||
Net interest income after provision for credit losses |
$ | 4,229 | $ | 4,798 | ||||
Pension plans | ||||||||||||||||||||||||
U.S. | Non-U.S. | OPEB | ||||||||||||||||||||||
Three months ended March 31, (in millions) | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||
Components of net periodic benefit cost |
||||||||||||||||||||||||
Benefits earned during the period |
$ | 68 | $ | 75 | $ | 7 | $ | 5 | $ | 2 | $ | 4 | ||||||||||||
Interest cost on benefit obligations |
107 | 108 | 28 | 26 | 18 | 21 | ||||||||||||||||||
Expected return on plan assets |
(173 | ) | (173 | ) | (29 | ) | (27 | ) | (23 | ) | (22 | ) | ||||||||||||
Amortization of unrecognized amounts: |
||||||||||||||||||||||||
Prior service cost |
1 | 2 | | | (5 | ) | 1 | |||||||||||||||||
Net actuarial loss |
3 | | 10 | 10 | 6 | | ||||||||||||||||||
Curtailment loss |
| | 1 | | | | ||||||||||||||||||
Subtotal |
6 | 12 | 17 | 14 | (2 | ) | 4 | |||||||||||||||||
Other defined benefit pension plans(a) |
6 | 7 | 10 | 9 | | | ||||||||||||||||||
Total defined benefit pension plans |
12 | 19 | 27 | 23 | (2 | ) | 4 | |||||||||||||||||
Defined contribution plans |
59 | 61 | 44 | 45 | | | ||||||||||||||||||
Total pension and other postretirement benefit expense |
$ | 71 | $ | 80 | $ | 71 | $ | 68 | $ | (2 | ) | $ | 4 | |||||||||||
(a) | Includes U.S. defined benefit pension plans not subject to Title IV of the Employee
Retirement Income Security Act of 1974 (e.g., Excess Retirement Plan) and immaterial non-U.S.
defined benefit pension plans. |
67
(in thousands, except weighted average data) | Shares | Weighed average fair value | ||||||
Restricted stock / RSUs outstanding, January 1 |
84,604 | $ | 35.22 | |||||
Granted |
41,988 | 39.16 | ||||||
Lapsed(a) |
(30,610 | ) | 30.45 | |||||
Forfeited |
(2,732 | ) | 43.20 | |||||
Restricted stock / RSUs outstanding, March 31 |
93,250 | $ | 38.32 | |||||
(a) | Lapsed awards represent awards granted in prior years for which, in the case of
restricted stock restrictions have lapsed and, in the case of RSUs, the awards have been
converted into common stock. |
68
(in thousands, except | Number of | Weighted-average | Weighted-average remaining | Aggregate | ||||||||||||
weighted-average data) |
options/SARs | exercise price | contractual life (in years) | intrinsic value | ||||||||||||
Outstanding, January 1 |
338,575 | $ | 37.93 | |||||||||||||
Granted |
670 | 40.25 | ||||||||||||||
Exercised |
(17,175 | ) | 28.12 | |||||||||||||
Forfeited |
(323 | ) | 36.61 | |||||||||||||
Cancelled |
(1,772 | ) | 46.89 | |||||||||||||
Outstanding, March 31 |
319,975 | $ | 38.42 | 4.9 | $ | 2,000,498 | ||||||||||
Exercisable, March 31 |
285,095 | 38.89 | 4.5 | 1,749,350 | ||||||||||||
(in thousands, except | Number of | Weighted-average | Weighted-average remaining | Aggregate | ||||||||||||
weighted-average data) |
options | exercise price | contractual life (in years) | intrinsic value | ||||||||||||
Outstanding, January 1 |
105,582 | $ | 40.78 | |||||||||||||
Granted |
| | ||||||||||||||
Exercised |
(2,468 | ) | 25.46 | |||||||||||||
Forfeited |
(410 | ) | 37.83 | |||||||||||||
Cancelled |
(484 | ) | 46.08 | |||||||||||||
Outstanding, March 31 |
102,220 | $ | 41.14 | 4.3 | $ | 395,988 | ||||||||||
Exercisable, March 31 |
76,787 | 42.46 | 3.8 | 280,862 | ||||||||||||
69
Three months ended March 31, | ||||
(in millions, except per share data) | 2005 | |||
Net income as reported |
$ | 2,264 | ||
Add: Employee stock-based compensation expense included in reported net income, net
of related tax effects |
229 | |||
Deduct: Employee stock-based compensation expense determined under the fair-value
method for all awards, net of related tax effects |
(289 | ) | ||
Pro forma net income |
$ | 2,204 | ||
Earnings per share: |
||||
Basic: As reported |
$ | 0.64 | ||
Pro forma |
0.62 | |||
Diluted: As reported |
$ | 0.63 | ||
Pro forma |
0.62 | |||
70
Three months ended March 31 | 2006 | 2005 | ||||||
Weighted-average annualized valuation
assumptions |
||||||||
Risk-free interest rate |
4.41 | % | 4.23 | % | ||||
Expected dividend yield |
3.38 | 3.55 | ||||||
Expected common stock price volatility |
36 | 41 | ||||||
Expected life (in years) |
7.0 | 6.8 | ||||||
Three months ended March 31, | ||||||||
(in millions) | 2006 | 2005 | ||||||
Expense category |
||||||||
Compensation |
$ | 4 | $ | 55 | ||||
Technology and communications and other |
67 | 90 | ||||||
Total(a) |
$ | 71 | $ | 145 | ||||
(a) | All of the costs in the table require the expenditure of cash. |
(in millions) | 2006 | 2005 | ||||||
Liability balance, January 1 |
$ | 797 | $ | 952 | ||||
Recorded as merger costs |
71 | 145 | ||||||
Liability utilized |
(133 | ) | (180 | ) | ||||
Liability balance, March 31 |
$ | 735 | $ | 917 | ||||
71
Three months ended March 31, | ||||||||
(in millions) | 2006 | 2005 | ||||||
Realized gains |
$ | 101 | $ | 101 | ||||
Realized losses |
(217 | ) | (923 | ) | ||||
Securities gains (losses) |
$ | (116 | ) | $ | (822 | ) | ||
March 31, 2006 | December 31, 2005 | |||||||||||||||||||||||||||||||
Gross | Gross | Gross | Gross | |||||||||||||||||||||||||||||
Amortized | unrealized | unrealized | Fair | Amortized | unrealized | unrealized | Fair | |||||||||||||||||||||||||
(in millions) | cost | gains | losses | value | cost | gains | losses | value | ||||||||||||||||||||||||
Available-for-sale securities |
||||||||||||||||||||||||||||||||
U.S. government and federal
agency obligations: |
||||||||||||||||||||||||||||||||
U.S. treasuries |
$ | 5,890 | $ | 2 | $ | 32 | $ | 5,860 | $ | 4,245 | $ | 24 | $ | 2 | $ | 4,267 | ||||||||||||||||
Mortgage-backed securities |
71 | 3 | 1 | 73 | 80 | 3 | | 83 | ||||||||||||||||||||||||
Agency obligations |
82 | 7 | | 89 | 165 | 16 | | 181 | ||||||||||||||||||||||||
Collateralized mortgage
obligations |
25 | | | 25 | 4 | | | 4 | ||||||||||||||||||||||||
U.S. government-sponsored enterprise
obligations |
41,703 | 55 | 1,070 | 40,688 | 22,604 | 9 | 596 | 22,017 | ||||||||||||||||||||||||
Obligations of state and political
subdivisions |
663 | 18 | 8 | 673 | 712 | 21 | 7 | 726 | ||||||||||||||||||||||||
Debt securities issued by non-U.S.
governments |
5,491 | 5 | 37 | 5,459 | 5,512 | 12 | 18 | 5,506 | ||||||||||||||||||||||||
Corporate debt securities |
5,934 | 12 | 115 | 5,831 | 5,754 | 39 | 74 | 5,719 | ||||||||||||||||||||||||
Equity securities |
3,055 | 115 | 3 | 3,167 | 3,179 | 110 | 7 | 3,282 | ||||||||||||||||||||||||
Other, primarily asset-backed
securities(a) |
5,150 | 68 | 29 | 5,189 | 5,738 | 23 | 23 | 5,738 | ||||||||||||||||||||||||
Total available-for-sale securities |
$ | 68,064 | $ | 285 | $ | 1,295 | $ | 67,054 | $ | 47,993 | $ | 257 | $ | 727 | $ | 47,523 | ||||||||||||||||
Held-to-maturity securities(b) |
||||||||||||||||||||||||||||||||
Total held-to-maturity securities |
$ | 72 | $ | 2 | $ | | $ | 74 | $ | 77 | $ | 3 | $ | | $ | 80 | ||||||||||||||||
(a) | Includes collateralized mortgage obligations of private issuers, which generally have
underlying collateral consisting of obligations of the U.S. government and federal agencies
and corporations. |
|
(b) | Consists primarily of mortgage-backed securities. |
(in millions) | March 31, 2006 | December 31, 2005 | ||||||
Securities purchased under resale agreements |
$ | 147,111 | $ | 129,570 | ||||
Securities borrowed |
93,280 | 74,604 | ||||||
Securities sold under repurchase agreements |
$ | 129,238 | $ | 103,052 | ||||
Securities loaned |
14,170 | 14,072 | ||||||
72
(in millions) | March 31, 2006 | December 31, 2005 | ||||||
U.S. wholesale loans: |
||||||||
Commercial and industrial |
$ | 73,830 | $ | 70,233 | ||||
Real estate |
12,980 | 13,612 | ||||||
Financial institutions |
13,163 | 11,100 | ||||||
Lease financing receivables |
2,513 | 2,621 | ||||||
Other |
16,015 | 14,499 | ||||||
Total U.S. wholesale loans |
118,501 | 112,065 | ||||||
Non-U.S. wholesale loans: |
||||||||
Commercial and industrial |
33,456 | 27,452 | ||||||
Real estate |
1,397 | 1,475 | ||||||
Financial institutions |
10,375 | 7,975 | ||||||
Lease financing receivables |
1,070 | 1,144 | ||||||
Total non-U.S. wholesale loans |
46,298 | 38,046 | ||||||
Total wholesale loans:(a) |
||||||||
Commercial and industrial |
107,286 | 97,685 | ||||||
Real estate(b) |
14,377 | 15,087 | ||||||
Financial institutions |
23,538 | 19,075 | ||||||
Lease financing receivables |
3,583 | 3,765 | ||||||
Other |
16,015 | 14,499 | ||||||
Total wholesale loans |
164,799 | 150,111 | ||||||
Total consumer loans:(c) |
||||||||
Home equity |
75,241 | 73,866 | ||||||
Mortgage |
57,690 | 58,959 | ||||||
Auto loans and leases |
44,600 | 46,081 | ||||||
All other loans |
25,060 | 18,393 | ||||||
Credit card receivables(d) |
64,691 | 71,738 | ||||||
Total consumer loans |
267,282 | 269,037 | ||||||
Total loans(e)(f)(g) |
$ | 432,081 | $ | 419,148 | ||||
(a) | Includes Investment Bank, Commercial Banking, Treasury & Securities Services and Asset & Wealth Management. |
|
(b) | Represents credits extended for real estaterelated purposes to borrowers who are primarily
in the real estate development or investment businesses and for which the primary repayment is
from the sale, lease, management, operations or refinancing of the property. |
|
(c) | Includes Retail Financial Services and Card Services. |
|
(d) | Includes billed finance charges and fees net of an allowance for uncollectible amounts. |
|
(e) | Loans are presented net of unearned income of $2.7 billion and $3.0 billion at March 31, 2006, and December 31, 2005, respectively. |
|
(f) | Includes loans held-for-sale (primarily related to securitization and syndication activities)
of $34.2 billion at both March 31, 2006, and December 31, 2005. |
|
(g) | Amounts are presented gross of the Allowance for loan losses. |
Three months ended March 31, | ||||||||
(in millions) | 2006 | 2005 | ||||||
Net gains on sales of loans held-for-sale |
$ | 164 | $ | 152 | ||||
Lower of cost or market adjustments |
(85 | ) | (126 | ) | ||||
73
Three months ended March 31, | ||||||||
(in millions) | 2006 | 2005 | ||||||
Allowance for loan losses at January 1 |
$ | 7,090 | $ | 7,320 | ||||
Gross charge-offs |
(882 | ) | (1,033 | ) | ||||
Gross recoveries |
214 | 217 | ||||||
Net charge-offs |
(668 | ) | (816 | ) | ||||
Provision for loan
losses |
847 | 431 | ||||||
Other |
6 | | ||||||
Allowance for loan losses at March 31 |
$ | 7,275 | (a) | $ | 6,935 | (b) | ||
(a) | Includes $118 million of asset-specific and $7.2 billion of formula-based allowance.
Included within the formula-based allowance was $5.0 billion related to a statistical
calculation and an adjustment to the statistical calculation of $2.2 billion. |
|
(b) | Includes $385 million of asset-specific and $6.5 billion of formula-based allowance. Included
within the formula-based allowance was $4.5 billion related to a statistical calculation and
an adjustment to the statistical calculation of $2.0 billion. |
Three months ended March 31, | ||||||||
(in millions) | 2006 | 2005 | ||||||
Allowance for lending-related commitments at January 1 |
$ | 400 | $ | 492 | ||||
Provision for lending-related
commitments |
(16 | ) | (4 | ) | ||||
Allowance for lending-related commitments at March 31(a) |
$ | 384 | $ | 488 | ||||
(a) | At March 31, 2006, includes $49 million of asset-specific and $335 million of
formula-based allowance. At March 31, 2005, includes $144 million of asset-specific and $344
million of formula-based allowance. The formula-based allowance for lending-related
commitments is based upon a statistical calculation. There is no adjustment to the statistical
calculation for lending-related commitments. |
(in billions) | March 31, 2006 | December 31, 2005 | ||||||
Credit card receivables |
$ | 87.9 | $ | 96.0 | ||||
Residential mortgage receivables |
31.3 | 29.8 | ||||||
Wholesale activities(a) |
85.0 | 72.9 | ||||||
Automobile loans |
4.7 | 5.5 | ||||||
Total |
$ | 208.9 | $ | 204.2 | ||||
(a) | Includes co-sponsored securitizations, which include non-JPMorgan Chase originated assets. |
74
Three months ended March 31, | ||||||||||||||||||||||||||||||||
2006 | 2005 | |||||||||||||||||||||||||||||||
Residential | Wholesale | Residential | Wholesale | |||||||||||||||||||||||||||||
(in millions) | mortgage | Credit card | Automobile | activities(b) | mortgage | Credit card | Automobile | activities(b) | ||||||||||||||||||||||||
Principal securitized |
$ | 3,178 | $ | 4,525 | $ | | $ | 9,897 | $ | 3,574 | $ | 425 | $ | | $ | 2,764 | ||||||||||||||||
Pre-tax gains |
89 | 30 | | 53 | 10 | 2 | | 36 | ||||||||||||||||||||||||
Cash flow information: |
||||||||||||||||||||||||||||||||
Proceeds from securitizations |
$ | 3,140 | $ | 4,525 | $ | | $ | 10,006 | $ | 3,596 | $ | 425 | $ | | $ | 2,803 | ||||||||||||||||
Servicing fees collected |
| 12 | | | 1 | 1 | | | ||||||||||||||||||||||||
Other cash flows received |
| 69 | | | | 4 | | | ||||||||||||||||||||||||
Proceeds from collections reinvested
in revolving securitizations |
| 51,896 | | | | 31,464 | | | ||||||||||||||||||||||||
Key assumptions (rates per annum): |
||||||||||||||||||||||||||||||||
Prepayment rate(a) |
| 22.2 | % | | 35-45 | % | | 16.7 | % | | | |||||||||||||||||||||
PPR | PPR | |||||||||||||||||||||||||||||||
Weighted-average life (in years) |
| 0.4 | | 1.5-4.7 | | 0.5 | | | ||||||||||||||||||||||||
Expected credit losses |
| 3.3 | % | | 1.3-2.4 | % | | 5.7 | % | | | |||||||||||||||||||||
Discount rate |
| 12.0 | % | | 14.5-18.5 | % | | 12.0 | % | | | |||||||||||||||||||||
(a) | PPR: principal payment rate. |
|
(b) | Wholesale activities consist of wholesale loans (primarily commercial real estate) originated
by the Investment Bank as well as $6.7 billion and $537 million of consumer loans purchased
from the market during the quarter ended March 31, 2006 and 2005, respectively, and then
packaged and securitized by the Investment Bank. |
(in millions) | March 31, 2006 | December 31, 2005 | ||||||
Residential mortgage(a) |
$ | 172 | $ | 182 | ||||
Credit card(a) |
816 | 808 | ||||||
Automobile(a)(b) |
133 | 150 | ||||||
Wholesale activities(c) |
470 | 265 | ||||||
Total |
$ | 1,591 | $ | 1,405 | ||||
(a) | Pre-tax unrealized gains recorded in Stockholders equity that relate to retained
securitization interests totaled $62 million and $60 million for Residential mortgage, and $3
million and $6 million for Credit card at March 31, 2006 and December 31, 2005, respectively;
and $5 million for Automobile at both March 31, 2006, and December 31, 2005. |
|
(b) | In addition to the automobile retained interest amounts noted above, the Firm also retained
senior securities totaling $208 million at March 31, 2006, and $490 million at December 31,
2005, from auto securitizations that are classified as AFS securities. These securities are
valued using quoted market prices and are therefore not included in the key economic
assumption and sensitivities table that follows. |
|
(c) | In addition to the wholesale retained interest amounts noted above, the Firm also retained
subordinated securities totaling $56 million at March 31, 2006, and $51 million at December
31, 2005, predominantly from re-securitization activities. These securities are valued using
quoted market prices and are therefore not included in the key assumptions and sensitivities
table that follows. |
75
Residential | ||||||||||||||||
March 31, 2006 (in millions) | Mortgage | Credit card | Automobile | Wholesale activities | ||||||||||||
Weighted-average life (in years) | 0.7-3.6 | 0.4-0.5 | 1.1 | 0.2-4.5 | ||||||||||||
Prepayment rate(a) |
16.6-44.2% CPR | 18.2-22.2% PPR | 1.4% ABS | 0.0-50% | (d) | |||||||||||
Impact of 10% adverse change |
$ | (2 | ) | $ | (45 | ) | $ | (2 | ) | $ | (5 | ) | ||||
Impact of 20% adverse change |
(5 | ) | (90 | ) | (4 | ) | (11 | ) | ||||||||
Loss assumption |
0.0-4.4% | (b) | 3.2-5.6 | % | 0.8 | % | 0.0-2.7% | (b) | ||||||||
Impact of 10% adverse change |
$ | (8 | ) | $ | (98 | ) | $ | (4 | ) | $ | (16 | ) | ||||
Impact of 20% adverse change |
(15 | ) | (196 | ) | (8 | ) | (30 | ) | ||||||||
Discount rate |
14-30% | (c) | 7.2-12.0 | % | 7.6 | % | 0.0-21.8 | % | ||||||||
Impact of 10% adverse change |
$ | (3 | ) | $ | (2 | ) | $ | (1 | ) | $ | (13 | ) | ||||
Impact of 20% adverse change |
(7 | ) | (3 | ) | (2 | ) | (27 | ) | ||||||||
Residential | ||||||||||||||||
December 31, 2005 (in millions) | Mortgage | Credit card | Automobile | Wholesale activities | ||||||||||||
Weighted-average life (in years) |
0.53.5 | 0.40.7 | 1.2 | 0.24.1 | ||||||||||||
Prepayment rate(a) |
20.143.7% CPR | 11.920.8% PPR | 1.5% ABS | 0.050.0 | %(d) | |||||||||||
Impact of 10% adverse change |
$ | (3 | ) | $ | (44 | ) | $ | | $ | (5 | ) | |||||
Impact of 20% adverse change |
(5 | ) | (88 | ) | (2 | ) | (6 | ) | ||||||||
Loss assumption |
0.05.2 | %(b) | 3.28.1 | % | 0.7 | % | 0.02.0 | %(b) | ||||||||
Impact of 10% adverse change |
$ | (10 | ) | $ | (77 | ) | $ | (4 | ) | $ | (6 | ) | ||||
Impact of 20% adverse change |
(19 | ) | (153 | ) | (9 | ) | (11 | ) | ||||||||
Discount rate |
12.730.0 | %(c) | 6.912.0 | % | 7.2 | % | 0.218.5 | % | ||||||||
Impact of 10% adverse change |
$ | (4 | ) | $ | (2 | ) | $ | (1 | ) | $ | (6 | ) | ||||
Impact of 20% adverse change |
(8 | ) | (4 | ) | (3 | ) | (12 | ) | ||||||||
(a) | CPR: constant prepayment rate; PPR: principal payment rate; ABS: absolute prepayment speed. |
|
(b) | Expected credit losses for prime residential mortgage and certain wholesale securitizations
are minimal and are incorporated into other assumptions. |
|
(c) | The Firm sold certain residual interests from sub-prime mortgage securitizations via Net
Interest Margin (NIM) securitizations and retained residual interests in these NIM
transactions, which are valued using an 18% yield. |
|
(d) | Prepayment risk on certain wholesale retained interests are minimal and are incorporated into other assumptions. |
76
Nonaccrual and 90 days | ||||||||||||||||||||||||
Total Loans | or more past due | Net loan charge-offs | ||||||||||||||||||||||
March 31, | Dec. 31, | March 31, | Dec. 31, | Three months ended March 31, | ||||||||||||||||||||
(in millions) | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||
Home equity |
$ | 75,241 | $ | 73,866 | $ | 451 | $ | 422 | $ | 33 | $ | 35 | ||||||||||||
Mortgage |
57,690 | 58,959 | 451 | 442 | 12 | 6 | ||||||||||||||||||
Auto loans and leases |
44,600 | 46,081 | 157 | 193 | 51 | 83 | ||||||||||||||||||
All other loans |
25,060 | 18,393 | 290 | 281 | 25 | 28 | ||||||||||||||||||
Credit card receivables |
64,691 | 71,738 | 968 | 1,091 | 567 | 673 | ||||||||||||||||||
Total consumer loans |
267,282 | 269,037 | 2,317 | 2,429 | 688 | 825 | ||||||||||||||||||
Total wholesale loans |
164,799 | 150,111 | 801 | 1,042 | (20 | ) | (9 | ) | ||||||||||||||||
Total loans reported |
432,081 | 419,148 | 3,118 | 3,471 | 668 | 816 | ||||||||||||||||||
Securitized loans: |
||||||||||||||||||||||||
Residential mortgage(a) |
7,296 | 8,061 | 289 | 370 | 15 | 32 | ||||||||||||||||||
Automobile |
4,629 | 5,439 | 8 | 11 | 4 | 5 | ||||||||||||||||||
Credit card |
69,580 | 70,527 | 913 | 730 | 449 | 917 | ||||||||||||||||||
Total consumer loans securitized |
81,505 | 84,027 | 1,210 | 1,111 | 468 | 954 | ||||||||||||||||||
Securitized wholesale activities |
16,154 | 9,049 | 11 | 4 | | | ||||||||||||||||||
Total loan securitized(b) |
97,659 | 93,076 | 1,221 | 1,115 | 468 | 954 | ||||||||||||||||||
Total loans reported and
securitized(c) |
$ | 529,740 | $ | 512,224 | $ | 4,339 | $ | 4,586 | $ | 1,136 | $ | 1,770 | ||||||||||||
(a) | Includes $5.3 billion and $5.9 billion of outstanding principal balances on securitized
sub-prime 14 family residential mortgage loans as of March 31, 2006, and December 31, 2005,
respectively. |
|
(b) | Total assets held in securitization-related SPEs were $208.9 billion and $204.2 billion at
March 31, 2006, and December 31, 2005, respectively. The $97.7 billion and $93.1 billion of
loans securitized at March 31 2006, and December 31, 2005, respectively, excludes: $92.8
billion and $85.6 billion of securitized loans, respectively, in which the Firms only
continuing involvement is the servicing of the assets; $18.1 billion and $24.8 billion of
sellers interests in credit card master trusts, respectively; and $0.3 billion and $0.7
billion of escrow accounts and other assets, respectively. |
|
(c) | Represents both loans on the Consolidated balance sheets and loans that have been
securitized, but excludes loans for which the Firms only continuing involvement is servicing
of the assets. |
Consolidated | Nonconsolidated | Total | ||||||||||||||||||||||
Mar. 31, | Dec. 31, | Mar. 31, | Dec. 31, | Mar. 31, | Dec. 31, | |||||||||||||||||||
(in billions) | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||
Total commercial paper issued by
conduits |
$ | 34.2 | $ | 35.2 | $ | 9.0 | $ | 8.9 | $ | 43.2 | $ | 44.1 | ||||||||||||
Commitments |
||||||||||||||||||||||||
Asset-purchase agreements |
$ | 49.6 | $ | 47.9 | $ | 15.1 | $ | 14.3 | $ | 64.7 | $ | 62.2 | ||||||||||||
Program-wide liquidity commitments |
5.0 | 5.0 | 1.0 | 1.0 | 6.0 | 6.0 | ||||||||||||||||||
Program-wide limited credit
enhancements |
1.3 | 1.3 | 1.0 | 1.0 | 2.3 | 2.3 | ||||||||||||||||||
Maximum exposure to loss (a) |
50.1 | 48.4 | 15.4 | 14.8 | 65.5 | 63.2 | ||||||||||||||||||
(a) | The Firms maximum exposure to loss is limited to the amount of drawn commitments (i.e.,
sellers assets held by the multi-seller conduits for which the Firm provides liquidity
support) of $40.4 billion and $41.6 billion at March 31, 2006, and December 31, 2005,
respectively, plus contractual but undrawn commitments of $25.1 billion and $21.6 billion at
March 31, 2006, and December 31, 2005, respectively. Since the Firm provides credit
enhancement and liquidity to these multi-seller conduits, the maximum exposure is not adjusted
to exclude exposure absorbed by third-party liquidity providers. |
77
(in billions) | March 31, 2006 | December 31, 2005 | ||||||
Credit-linked note vehicles(a) |
$ | 15.4 | $ | 13.5 | ||||
Municipal bond vehicles(b) |
12.6 | 13.7 | ||||||
(a) | Assets of $1.8 billion and $1.8 billion reported in the table above were recorded on the
Firms Consolidated balance sheets at March 31, 2006 and December 31, 2005, respectively, due
to contractual relationships held by the Firm that relate to collateral held by the VIE. |
|
(b) | Total amounts consolidated due to the Firm owning residual interests were $4.8 billion and
$4.9 billion at March 31, 2006, and December 31, 2005, respectively, and are reported in the
table. Total liquidity commitments were $6.0 billion and $5.8 billion at March 31, 2006, and
December 31, 2005, respectively. The Firms maximum credit exposure to all municipal bond
vehicles was $10.8 billion and $10.7 billion at March 31, 2006, and December 31, 2005,
respectively. |
(in billions) | March 31, 2006 | December 31, 2005 | ||||||
Consolidated VIE assets(a) |
||||||||
Investment securities |
$ | 1.9 | $ | 1.9 | ||||
Trading assets(b) |
9.5 | 9.3 | ||||||
Loans |
10.1 | 8.1 | ||||||
Interests in purchased receivables |
27.8 | 29.6 | ||||||
Other assets |
5.6 | 3.0 | ||||||
Total consolidated assets |
$ | 54.9 | $ | 51.9 | ||||
(a) | The Firm also holds $3.7 billion and $3.9 billion of assets, at March 31, 2006, and
December 31, 2005, respectively, primarily as a sellers interest, in certain consumer
securitizations in a segregated entity, as part of a two-step securitization transaction. This
interest is included in the securitization activities disclosed in Note 12 on pages 7477 of
this Form 10Q. |
|
(b) | Includes the fair value of securities and derivatives. |
78
(in millions) | March 31, 2006 | December 31, 2005 | ||||||
Goodwill |
$ | 43,899 | $ | 43,621 | ||||
Mortgage servicing rights |
7,539 | 6,452 | ||||||
Purchased credit card relationships |
3,243 | 3,275 | ||||||
All other intangibles: |
||||||||
Other credit cardrelated intangibles |
$ | 288 | $ | 124 | ||||
Core deposit intangibles |
2,567 | 2,705 | ||||||
Other intangibles |
1,977 | 2,003 | ||||||
Total All other intangible assets |
$ | 4,832 | $ | 4,832 | ||||
(in millions) | March 31, 2006 | December 31, 2005 | ||||||
Investment Bank |
$ | 3,536 | $ | 3,531 | ||||
Retail Financial Services |
15,531 | 14,991 | ||||||
Card Services |
12,693 | 12,984 | ||||||
Commercial Banking |
2,656 | 2,651 | ||||||
Treasury & Securities Services |
2,078 | 2,062 | ||||||
Asset & Wealth Management |
7,028 | 7,025 | ||||||
Corporate (Private Equity) |
377 | 377 | ||||||
Total goodwill |
$ | 43,899 | $ | 43,621 | ||||
79
Three months ended March 31, (in millions) | 2006 | |||
Balance at beginning of period after valuation allowance |
$ | 6,452 | ||
Cumulative effect of change in accounting principle |
230 | |||
Fair value at beginning of period |
6,682 | |||
Originations of MSRs |
344 | |||
Purchase of MSRs |
151 | |||
Total additions |
495 | |||
Sales |
-- | |||
Change in valuation due to inputs and assumptions |
711 | |||
Change in valuation due to runoff and other |
(349 | ) | ||
Fair value at March 31 |
$ | 7,539 | ||
Weighted-average prepayment speed assumption (CPR) |
14.99 | % | ||
Weighted-average discount rate |
9.67 | % | ||
Three months ended March 31, (in millions) | 2005 | |||
Balance at beginning of period |
$ | 6,111 | ||
Additions |
374 | |||
Sales |
| |||
Other-than-temporary impairment |
| |||
Amortization |
(339 | ) | ||
SFAS 133 hedge valuation adjustments |
371 | |||
Balance at March 31 |
6,517 | |||
Valuation allowance at beginning of period |
1,031 | |||
SFAS 140 impairment (recovery) adjustment |
(177 | ) | ||
Less: Valuation allowance at end of period |
854 | |||
Balance at March 31, after valuation allowance |
$ | 5,663 | ||
Estimated fair value at March 31 |
$ | 5,663 | ||
Weighted-average prepayment speed assumption (CPR) |
14.97 | % | ||
Weighted-average discount rate |
8.27 | % | ||
CPR: Constant prepayment rate |
80
March 31, 2006 | December 31, 2005 | |||||||||||||||||||||||
Net | Net | |||||||||||||||||||||||
Gross | Accumulated | carrying | Gross | Accumulated | carrying | |||||||||||||||||||
(in millions) | amount | amortization | value | amount | amortization | value | ||||||||||||||||||
Purchased credit card relationships |
$ | 5,478 | $ | 2,235 | $ | 3,243 | $ | 5,325 | $ | 2,050 | $ | 3,275 | ||||||||||||
All other intangibles: |
||||||||||||||||||||||||
Other credit cardrelated intangibles |
$ | 348 | $ | 60 | $ | 288 | $ | 183 | $ | 59 | $ | 124 | ||||||||||||
Core deposit intangibles |
3,797 | 1,230 | 2,567 | 3,797 | 1,092 | 2,705 | ||||||||||||||||||
Other intangibles |
2,599 | 622 | (a) | 1,977 | 2,582 | 579 | (a) | 2,003 | ||||||||||||||||
Total All other intangibles |
$ | 6,744 | $ | 1,912 | $ | 4,832 | $ | 6,562 | $ | 1,730 | $ | 4,832 | ||||||||||||
(a) | Includes $3 million and $4 million of amortization expense related to servicing assets
on securitized automobile loans, which is recorded in Asset management, administration and
commissions, for the three months ended March 31, 2006 and 2005. |
Three months ended | ||||||||
Amortization expense | March 31, | |||||||
(in millions) | 2006 | 2005 | ||||||
Purchased credit card relationships |
$ | 185 | $ | 175 | ||||
Other credit cardrelated intangibles |
1 | 11 | ||||||
Core deposit intangibles |
138 | 157 | ||||||
Other intangibles |
40 | 40 | ||||||
Total amortization expense |
$ | 364 | $ | 383 | ||||
Purchased | Other credit | Core | ||||||||||||||||||
For the year: | credit card | cardrelated | deposit | Other | ||||||||||||||||
(in millions) | relationships | intangibles | intangibles | intangibles | Total | |||||||||||||||
2006 (a) |
$ | 712 | $ | 7 | $ | 547 | $ | 162 | $ | 1,428 | ||||||||||
2007 |
640 | 11 | 469 | 147 | 1,267 | |||||||||||||||
2008 |
534 | 17 | 402 | 134 | 1,087 | |||||||||||||||
2009 |
390 | 23 | 329 | 125 | 867 | |||||||||||||||
2010 |
329 | 28 | 276 | 112 | 745 | |||||||||||||||
(a) | Includes $185 million, $1 million, $138 million and $40 million of amortization expense
related to purchased credit card relationships, other credit card-related intangibles, core
deposit intangibles and other intangibles, respectively, recognized during the first three
months of 2006. |
81
Three months ended March 31, | ||||||||
(in millions, except per share amounts) | 2006 | 2005 | ||||||
Basic earnings per share |
||||||||
Net income |
$ | 3,081 | $ | 2,264 | ||||
Less: preferred stock dividends |
4 | 5 | ||||||
Net income applicable to common stock |
$ | 3,077 | $ | 2,259 | ||||
Weighted-average basic shares outstanding |
3,472.7 | 3,517.5 | ||||||
Net income per share |
$ | 0.89 | $ | 0.64 | ||||
Diluted earnings per share |
||||||||
Net income applicable to common stock |
$ | 3,077 | $ | 2,259 | ||||
Weighted-average basic shares outstanding |
3,472.7 | 3,517.5 | ||||||
Add: Broad-based options |
5.2 | 3.8 | ||||||
Restricted stock, restricted stock units and key employee options |
92.9 | 48.5 | ||||||
Weighted-average diluted shares outstanding |
3,570.8 | 3,569.8 | ||||||
Net income per share(a) |
$ | 0.86 | $ | 0.63 | ||||
(a) | Options issued under employee benefit plans to purchase 162 million and 305 million
shares of common stock were outstanding for the three months ended March 31, 2006 and 2005,
respectively, but were not included in the computation of diluted EPS because the options were
anti-dilutive. |
Unrealized | Cash | Accumulated other | ||||||||||||||
(in millions) | gains (losses) | Translation | flow | comprehensive | ||||||||||||
Three months ended March 31, 2006 | on AFS securities(a) | adjustments | hedges | income (loss) | ||||||||||||
Balance at December 31, 2005 |
$ | (224 | ) | $ | (8 | ) | $ | (394 | ) | $ | (626 | ) | ||||
Net change |
(398) | (b) | (5) | (c) | 12 | (d) | (391 | ) | ||||||||
Balance at March 31, 2006 |
$ | (622 | ) | $ | (13 | ) | $ | (382 | ) | $ | (1,017 | ) | ||||
Unrealized | Cash | Accumulated other | ||||||||||||||
(in millions) | gains (losses) | Translation | flow | comprehensive | ||||||||||||
Three months ended March 31, 2005 | on AFS securities(a) | adjustments | hedges | income (loss) | ||||||||||||
Balance at December 31, 2004 |
$ | (61 | ) | $ | (8 | ) | $ | (139 | ) | $ | (208 | ) | ||||
Net change |
(246 | )(b) | | (c) | (169 | )(d) | (415 | ) | ||||||||
Balance at March 31, 2005 |
$ | (307 | ) | $ | (8 | ) | $ | (308 | ) | $ | (623 | ) | ||||
(a) | Represents the after-tax difference between the fair value and amortized cost of the AFS
securities portfolio and retained interests in securitizations recorded in Other assets. |
|
(b) | The net changes during the first quarter of 2006 and 2005 were due primarily to an increase
in rates, partially offset by sales of investment securities at losses. |
|
(c) | At March 31, 2006 and 2005, included $58 million and $(130) million, respectively, of
after-tax gains (losses) on foreign currency translation from operations for which the
functional currency is other than the U.S. dollar, offset by $(63) million and $130 million,
respectively, of after-tax gains (losses) on hedges. |
|
(d) | The net change for the three months ended March 31, 2006, included $12 million of after-tax
losses recognized in income. The net change for the three months ended March 31, 2005,
included $64 million of after-tax losses recognized in income and $233 million of after-tax
losses representing the net change in derivative fair values that were reported in
comprehensive income. |
82
Three months ended March 31, (in millions) | 2006 | 2005 | ||||||
Fair value hedge ineffective net gains/(losses)(a) |
$ | (30 | ) | $ | (101 | ) | ||
Cash flow hedge ineffective net gains/(losses)(a) |
(2 | ) | | |||||
Cash flow hedging gains on forecasted transactions that failed to
occur |
| | ||||||
(a) | Includes ineffectiveness and the components of hedging instruments that have been
excluded from the assessment of hedge effectiveness. |
Allowance for | ||||||||||||||||
Contractual amount | lending-related commitments | |||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||
(in millions) | 2006 | 2005 | 2006 | 2005 | ||||||||||||
Lending-related |
||||||||||||||||
Consumer(a) |
$ | 669,402 | $ | 655,596 | $ | 15 | $ | 15 | ||||||||
Wholesale: |
||||||||||||||||
Other unfunded commitments to extend credit (b)(c)(d) |
201,186 | 208,469 | 192 | 208 | ||||||||||||
Asset purchase agreements(e) |
34,821 | 31,095 | 5 | 3 | ||||||||||||
Standby letters of credit and guarantees(c)(f)(g) |
82,613 | 77,199 | 171 | 173 | ||||||||||||
Other letters of credit(c) |
3,955 | 4,346 | 1 | 1 | ||||||||||||
Total wholesale |
322,575 | 321,109 | 369 | 385 | ||||||||||||
Total lending-related |
$ | 991,977 | $ | 976,705 | $ | 384 | $ | 400 | ||||||||
Other guarantees |
||||||||||||||||
Securities lending guarantees(h) |
$ | 283,111 | $ | 244,316 | NA | NA | ||||||||||
Derivatives qualifying as guarantees(i) |
64,936 | 61,759 | NA | NA | ||||||||||||
(a) | Includes Credit card lendingrelated commitments of $589 billion and $579 billion at
March 31, 2006 and December 31, 2005, respectively, which represent the total available credit
to the Firms cardholders. The Firm has not experienced, and does not anticipate, that all of
its cardholders will exercise their entire available lines of credit at the same point in
time. The Firm can reduce or cancel a credit card commitment by providing the cardholder prior
notice or, in some cases, without notice, as permitted by law. |
|
(b) | Includes unused advised lines of credit totaling $28.4 billion and $28.3 billion at March 31,
2006, and December 31, 2005, respectively, which are not legally binding. In regulatory
filings with the FRB, unused advised lines are not reportable. |
83
(c) | Represents contractual amount net of risk participations totaling $36.8 billion and $29.3
billion at March 31, 2006, and December 31, 2005, respectively. |
|
(d) | Excludes unfunded commitments to private third-party equity funds of $227 million and $242
million at March 31, 2006, and December 31, 2005, respectively. |
|
(e) | Represents asset purchase agreements with the Firms administered multi-seller asset-backed
commercial paper conduits, which excludes $31.2 billion and $32.4 billion at March 31, 2006,
and December 31, 2005, respectively, related to conduits that were consolidated in accordance
with FIN 46R, as the underlying assets of the conduits are reported in the Firms Consolidated
balance sheets. It also includes $1.3 billion and $1.3 billion of asset purchase agreements to
other third-party entities at March 31, 2006 and December 31, 2005, respectively. |
|
(f) | JPMorgan Chase held collateral relating to $10.5 billion and $9.0 billion of these
arrangements at March 31, 2006, and December 31, 2005, respectively. |
|
(g) | Includes unused commitments to issue standby letters of credit of $39.8 billion and $37.5
billion at March 31, 2006, and December 31, 2005, respectively. |
|
(h) | Collateral held by the Firm in support of securities lending indemnification agreements was
$283 billion at March 31, 2006, and $245 billion at December 31, 2005, respectively. |
|
(i) | Represents notional amounts of derivative guarantees. For a further discussion of guarantees,
see Note 27 on pages 124125 of JPMorgan Chases 2005 Annual Report. |
84
(in millions, except ratios) | Investment | Retail Financial | Card | Commercial | ||||||||||||
Three months ended March 31, 2006 | Bank | Services(d) | Services(e) | Banking | ||||||||||||
Net interest income |
$ | 190 | $ | 2,562 | $ | 3,013 | $ | 667 | ||||||||
Noninterest revenue |
4,509 | 1,201 | 672 | 233 | ||||||||||||
Total net revenue |
4,699 | 3,763 | 3,685 | 900 | ||||||||||||
Provision for credit losses |
183 | 85 | 1,016 | 7 | ||||||||||||
Credit reimbursement (to)/from
TSS(b) |
30 | | | -- | ||||||||||||
Merger costs(c) |
| | | -- | ||||||||||||
Other noninterest expense |
3,191 | 2,238 | 1,243 | 498 | ||||||||||||
Income (loss) before income tax expense |
1,355 | 1,440 | 1,426 | 395 | ||||||||||||
Income tax expense (benefit) |
505 | 559 | 525 | 155 | ||||||||||||
Net income (loss) |
$ | 850 | $ | 881 | $ | 901 | $ | 240 | ||||||||
Average equity |
$ | 20,000 | $ | 13,896 | $ | 14,100 | $ | 5,500 | ||||||||
Average assets |
646,220 | 231,587 | 145,994 | 54,771 | ||||||||||||
Return on average equity |
17 | % | 26 | % | 26 | % | 18 | % | ||||||||
Overhead ratio |
68 | 59 | 34 | 55 | ||||||||||||
(in millions, except ratios) | Treasury & | Asset & Wealth | Reconciling | |||||||||||||||||
Three months ended March 31, 2006 | Securities Services | Management | Corporate | Items(e)(f) | Total | |||||||||||||||
Net interest income |
$ | 572 | $ | 246 | $ | (545 | ) | $ | (1,645 | ) | $ | 5,060 | ||||||||
Noninterest revenue |
1,105 | 1,338 | 139 | 979 | 10,176 | |||||||||||||||
Total net revenue |
1,677 | 1,584 | (406 | ) | (666 | ) | 15,236 | |||||||||||||
Provision for credit losses |
(4 | ) | (7 | ) | | (449 | ) | 831 | ||||||||||||
Credit reimbursement (to)/from
TSS(b) |
(30 | ) | | | | -- | ||||||||||||||
Merger costs(c) |
| | 71 | | 71 | |||||||||||||||
Other noninterest expense |
1,158 | 1,098 | 255 | | 9,681 | |||||||||||||||
Income (loss) before income tax expense |
493 | 493 | (732 | ) | (217 | ) | 4,653 | |||||||||||||
Income tax expense (benefit) |
181 | 180 | (316 | ) | (217 | ) | 1,572 | |||||||||||||
Net income (loss) |
$ | 312 | $ | 313 | $ | (416 | ) | $ | | $ | 3,081 | |||||||||
Average equity |
$ | 2,900 | $ | 3,500 | $ | 47,271 | $ | | $ | 107,167 | ||||||||||
Average assets |
30,131 | 41,012 | 166,199 | (67,557 | ) | 1,248,357 | ||||||||||||||
Return on average equity |
44 | % | 36 | % | NM | NM | 12 | % | ||||||||||||
Overhead ratio |
69 | 69 | NM | NM | 64 | |||||||||||||||
85
(in millions, except ratios) | Investment | Retail Financial | Card | Commercial | ||||||||||||
Three months ended March 31, 2005 | Bank | Services(d) | Services(e) | Banking | ||||||||||||
Net interest income |
$ | 634 | $ | 2,653 | $ | 3,007 | $ | 600 | ||||||||
Noninterest revenue |
3,553 | 1,194 | 772 | 227 | ||||||||||||
Total net revenue |
4,187 | 3,847 | 3,779 | 827 | ||||||||||||
Provision for credit losses |
(366 | ) | 94 | 1,636 | (6 | ) | ||||||||||
Credit reimbursement (to)/from
TSS(b) |
38 | | | | ||||||||||||
Merger costs(c) |
| | | | ||||||||||||
Other noninterest expense |
2,527 | 2,162 | 1,313 | 454 | ||||||||||||
Income (loss) before income tax expense |
2,064 | 1,591 | 830 | 379 | ||||||||||||
Income tax expense (benefit) |
736 | 603 | 308 | 148 | ||||||||||||
Net income (loss) |
$ | 1,328 | $ | 988 | $ | 522 | $ | 231 | ||||||||
Average equity |
$ | 20,000 | $ | 13,100 | $ | 11,800 | $ | 3,400 | ||||||||
Average assets |
568,222 | 225,120 | 138,512 | 51,135 | ||||||||||||
Return on average equity |
27 | % | 31 | % | 18 | % | 28 | % | ||||||||
Overhead ratio |
60 | 56 | 35 | 55 | ||||||||||||
(in millions, except ratios) | Treasury & | Asset & Wealth | Reconciling | |||||||||||||||||
Three months ended March 31, 2005 | Securities Services | Management | Corporate | Items(e)(f) | Total | |||||||||||||||
Net interest income |
$ | 515 | $ | 282 | $ | (673 | ) | $ | (1,793 | ) | $ | 5,225 | ||||||||
Noninterest revenue |
983 | 1,079 | (86 | ) | 700 | 8,422 | ||||||||||||||
Total net revenue |
1,498 | 1,361 | (759 | ) | (1,093 | ) | 13,647 | |||||||||||||
Provision for credit losses |
(3 | ) | (7 | ) | (4 | ) | (917 | ) | 427 | |||||||||||
Credit reimbursement (to)/from
TSS(b) |
(38 | ) | | | | | ||||||||||||||
Merger costs(c) |
| | 145 | | 145 | |||||||||||||||
Other noninterest expense |
1,067 | 934 | 1,335 | | 9,792 | |||||||||||||||
Income (loss) before income tax expense |
396 | 434 | (2,235 | ) | (176 | ) | 3,283 | |||||||||||||
Income tax expense (benefit) |
142 | 158 | (900 | ) | (176 | ) | 1,019 | |||||||||||||
Net income (loss) |
$ | 254 | $ | 276 | $ | (1,335 | ) | $ | | $ | 2,264 | |||||||||
Average equity |
$ | 1,900 | $ | 2,400 | $ | 52,745 | $ | | $ | 105,345 | ||||||||||
Average assets |
29,534 | 39,716 | 178,088 | (67,509 | ) | 1,162,818 | ||||||||||||||
Return on average equity |
54 | % | 47 | % | NM | NM | 9 | % | ||||||||||||
Overhead ratio |
71 | 69 | NM | NM | 73 | |||||||||||||||
(a) | In addition to analyzing the Firms results on a reported basis, management reviews the
Firms and the lines of business results on a managed basis, which is a non-GAAP financial
measure. The Firms definition of managed basis starts with the reported U.S. GAAP results and
includes certain reclassifications that do not have any impact on Net income as reported by
the lines of business or by the Firm as a whole. |
|
(b) | TSS reimburses the IB for credit portfolio exposures the IB manages on behalf of clients the
segments share. |
|
(c) | All Merger costs are reported in the Corporate business segment. Merger costs attributed to
the business segments for 2006 and 2005 were as follows: |
Three months ended March 31, (in | ||||||||
millions) | 2006 | 2005 | ||||||
Investment Bank |
$ | 2 | $ | 5 | ||||
Retail Financial Services |
7 | 26 | ||||||
Card Services |
13 | 11 | ||||||
Commercial Banking |
| 2 | ||||||
Treasury & Securities Services |
26 | 20 | ||||||
Asset & Wealth Management |
6 | 14 | ||||||
Corporate |
17 | 67 | ||||||
Total Merger costs |
$ | 71 | $ | 145 | ||||
(d) | Retail Financial Services has been reorganized into three businesses: Regional Banking,
Mortgage Banking and Auto Finance. For a further discussion see page 13 of this Form 10Q. |
|
(e) | Managed results for Card Services exclude the impact of credit card securitizations on Total
net revenue, Provision for credit losses and Average assets, as JPMorgan Chase treats the sold
receivables as if they were still on the balance sheet in evaluating the overall performance
of the net charge-offs and receivables. These adjustments are eliminated in Reconciling items
to arrive at the Firms reported U.S. GAAP results. The related securitization adjustments
were as follows: |
Three months ended March 31, (in | ||||||||
millions) | 2006 | 2005 | ||||||
Net interest income |
$ | 1,574 | $ | 1,732 | ||||
Noninterest revenue |
(1,125 | ) | (815 | ) | ||||
Provision for credit losses |
449 | 917 | ||||||
Average assets |
67,557 | 67,509 | ||||||
(f) | Segment managed results reflect revenues on a tax-equivalent basis with the corresponding
income tax impact recorded within income tax expense. These adjustments are eliminated in
Reconciling items to arrive at the Firms reported U.S. GAAP results. Tax-equivalent
adjustments were as follows: |
Three months ended March 31, (in | ||||||||
millions) | 2006 | 2005 | ||||||
Net interest income |
$ | 71 | $ | 61 | ||||
Noninterest revenue |
146 | 115 | ||||||
Income tax expense |
217 | 176 | ||||||
86
Three months ended March 31, 2006 | Three months ended March 31, 2005 | |||||||||||||||||||||||
Average | Rate | Average | Rate | |||||||||||||||||||||
Balance | Interest | (Annualized) | Balance | Interest | (Annualized) | |||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Deposits with Banks |
$ | 20,672 | $ | 247 | 4.85 | % | $ | 15,232 | $ | 154 | 4.11 | % | ||||||||||||
Federal Funds Sold and Securities Purchased
under Resale Agreements |
147,391 | 1,543 | 4.25 | 121,189 | 727 | 2.43 | ||||||||||||||||||
Securities Borrowed |
84,220 | 385 | 1.86 | 52,449 | 221 | 1.71 | ||||||||||||||||||
Trading Assets Debt Instruments |
185,679 | 2,597 | 5.67 | 187,669 | 2,264 | 4.89 | ||||||||||||||||||
Securities: Available-for-Sale |
60,146 | 792 | 5.34 | (a) | 93,332 | 1,133 | 4.92 | (a) | ||||||||||||||||
Held-to-Maturity |
77 | 1 | 6.63 | 106 | 3 | 9.73 | ||||||||||||||||||
Interests in Purchased Receivables |
30,028 | 331 | 4.47 | 29,277 | 186 | 2.58 | ||||||||||||||||||
Loans |
429,239 | 7,476 | 7.06 | 398,494 | 6,005 | 6.11 | ||||||||||||||||||
Total Interest-Earning Assets |
957,452 | 13,372 | 5.66 | 897,748 | 10,693 | 4.83 | ||||||||||||||||||
Allowance for Loan Losses |
(7,121 | ) | (7,192 | ) | ||||||||||||||||||||
Cash and Due from Banks |
32,286 | 29,831 | ||||||||||||||||||||||
Trading assets Equity instruments |
70,762 | 43,717 | ||||||||||||||||||||||
Trading assets Derivative receivables |
52,031 | 65,237 | ||||||||||||||||||||||
Other assets |
142,947 | 133,477 | ||||||||||||||||||||||
Total Assets |
$ | 1,248,357 | $ | 1,162,818 | ||||||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||
Interest-Bearing Deposits |
$ | 434,100 | $ | 3,665 | 3.42 | % | $ | 388,355 | $ | 1,997 | 2.09 | % | ||||||||||||
Federal Funds Purchased and Securities Sold
under Repurchase Agreements |
158,818 | 1,358 | 3.47 | 151,335 | 924 | 2.48 | ||||||||||||||||||
Commercial Paper |
15,310 | 150 | 3.97 | 12,665 | 62 | 2.00 | ||||||||||||||||||
Other Borrowings(b) |
124,773 | 1,426 | 4.64 | 98,259 | 1,228 | 5.06 | ||||||||||||||||||
Beneficial Interests Issued
by Consolidated VIEs |
42,192 | 407 | 3.92 | 45,294 | 272 | 2.44 | ||||||||||||||||||
Long-term Debt |
118,875 | 1,235 | 4.21 | 108,004 | 924 | 3.47 | ||||||||||||||||||
Total Interest-Bearing Liabilities |
894,068 | 8,241 | 3.74 | 803,912 | 5,407 | 2.73 | ||||||||||||||||||
Noninterest-Bearing Deposits |
128,553 | 127,405 | ||||||||||||||||||||||
Trading liabilities Derivative Payables |
54,842 | 63,741 | ||||||||||||||||||||||
All Other Liabilities, including the |
||||||||||||||||||||||||
Allowance
for Lending-related Commitments |
63,590 | 62,076 | ||||||||||||||||||||||
Total Liabilities |
1,141,053 | 1,057,134 | ||||||||||||||||||||||
STOCKHOLDERS EQUITY |
||||||||||||||||||||||||
Preferred Stock |
137 | 339 | ||||||||||||||||||||||
Common Stockholders Equity |
107,167 | 105,345 | ||||||||||||||||||||||
Total Stockholders Equity |
107,304 | 105,684 | ||||||||||||||||||||||
Total Liabilities, Preferred Stock and
Stockholders Equity |
$ | 1,248,357 | $ | 1,162,818 | ||||||||||||||||||||
INTEREST RATE SPREAD |
1.92 | % | 2.10 | % | ||||||||||||||||||||
NET INTEREST INCOME AND MARGIN |
||||||||||||||||||||||||
ON INTEREST-EARNING ASSETS |
$ | 5,131 | 2.17 | % | $ | 5,286 | 2.39 | % | ||||||||||||||||
(a) | For the three months ended March 31, 2006 and 2005, the annualized rate for
available-for-sale securities based upon amortized cost was 5.29% and 4.90%, respectively. |
|
(b) | Includes securities sold but not yet purchased. |
87
88
89
Mortgage servicing income | ||
(a)
|
Servicing revenue represents all gross income earned from servicing third-party mortgage loans including stated service fee, excess service fees, late fees, and other ancillary fees. Also includes income associated with the servicing of subprime mortgages. | |
(b)
|
Changes in MSR asset fair value due to: |
-
|
inputs or assumptions in the model include interest rates and other market-based factors. Also includes updates to assumption used in the MSR valuation process and changes in the value of servicing assets associated with subprime loans. | |
-
|
other changes in fair value include any factors other than those noted in the definition above. The single largest component of this line item is the change in MSR value due to servicing portfolio runoff (or time decay). For periods prior to January 1, 2006, this amount represents MSR asset amortization expense under SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities a replacement of FASB Statement No. 125. Includes the results of both prime and subprime servicing assets. | |
-
|
derivative valuation adjustments and other represents fair value adjustments to the derivatives and other instruments used to hedge the MSR asset. |
90
91
93
31.1 | Certification | ||
31.2 | Certification | ||
32 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
95
JPMORGAN CHASE & CO. | ||||
(Registrant) | ||||
Date: August 3, 2006 |
||||
By | /s/ Joseph L. Sclafani | |||
Joseph L. Sclafani | ||||
Executive Vice President and Controller | ||||
[Principal Accounting Officer] |
96
EXHIBIT NO. | EXHIBITS | PAGE AT WHICH LOCATED | ||||
31.1
|
Certification | 98 | ||||
31.2
|
Certification | 99 |
32
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | 100 |
97
I, James Dimon, certify that: | ||
1. | I have reviewed this quarterly report on Form 10Q of JPMorgan Chase & Co.; | |
2. | Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based upon my knowledge, the Consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based upon our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ James Dimon
|
||
President and Chief Executive Officer |
98
I, Michael J. Cavanagh, certify that: | ||
1. | I have reviewed this quarterly report on Form 10Q of JPMorgan Chase & Co.; | |
2. | Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based upon my knowledge, the Consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based upon our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Michael J. Cavanagh
|
||
Executive Vice President and Chief Financial Officer |
99
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of JPMorgan Chase & Co. |
Date: August 3, 2006
|
By: | /s/ James Dimon | ||
James Dimon | ||||
President and Chief Executive Officer | ||||
Date: August 3, 2006
|
By: | /s/ Michael J. Cavanagh | ||
Michael J. Cavanagh | ||||
Executive Vice President and Chief Financial Officer |
100