SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
| Date of Report: | Commission file number | |
| April 17, 2002 | 1-5805 |
J.P. MORGAN CHASE & CO.
(Exact name of registrant as specified in its charter)
| Delaware | 13-2624428 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| 270 Park Avenue, New York, NY | 10017 | |||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 270-6000
Item 5. Other Events
On April 17, 2002, J.P. Morgan Chase & Co. (NYSE:JPM) announced 2002 first quarter results. First quarter 2002 operating earnings were $0.57 per share, compared with $0.17 in the fourth quarter of 2001 and $0.74 in the first quarter of 2001. Operating earnings were $1,150 million in the first quarter 2002, compared with $356 million in the fourth quarter of 2001 and $1,527 million one year ago. Operating earnings for 2001 have been adjusted by adding back amortization of goodwill to present 2001 results on a basis comparable to this year’s first quarter, which included the impact of the implementation of SFAS 142.
Reported net income, which includes special items such as merger and restructuring costs, was $982 million, or $0.48 per share, in the first quarter of 2002. This compares with a loss of $332 million, or $0.18 per share, in the 2001 fourth quarter and profits of $1,199 million, or $0.58 per share, in the first quarter of 2001.
A copy of J.P. Morgan Chase & Co.’s press release is attached as an exhibit hereto. That press release 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. These risks and uncertainties could cause our results to differ materially from those set forth in the forward-looking statements. Such risks and uncertainties are described in our 2001 Annual Report on Form 10-K, filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (http://www.sec.gov), to which reference is hereby made.
Item 7. Financial Statements, Pro forma Financial Information and Exhibits
| Exhibit Number | Description | |
| 12 (a) | Computation of Ratio of Earnings to Fixed Charges | |
| 12 (b) | Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements | |
| 99.1 | Press Release – 2002 First Quarter Earnings | |
| 99.2 | 2002 First Quarter Financial Supplement |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| J.P. MORGAN CHASE & CO. (Registrant) |
| By: /s/ Joseph L. Sclafani Joseph L. Sclafani |
| Executive Vice President and Controller [Principal Accounting Officer] |
Dated: April 19, 2002
3
EXHIBIT INDEX
| Exhibit No. | Description | Page | ||||
| 12 (a) | Computation of Ratio of Earnings to Fixed Charges | 5 | ||||
| 12 (b) | Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements | 6 | ||||
| 99.1 | Press Release – 2002 First Quarter Earnings | 7 | ||||
| 99.2 | 2002 First Quarter Financial Supplement | 8 | ||||
4
EXHIBIT 12(a)
J.P. MORGAN CHASE & CO.
Computation of Ratio of
Earnings to Fixed Charges
(in millions, except ratios)
| Three Months Ended | |||||
| March 31, 2002 | |||||
Excluding Interest on Deposits
|
|||||
Income before income taxes |
$ | 1,487 | |||
Fixed charges: |
|||||
Interest expense |
2,020 | ||||
One-third of rents, net of income from subleases (a) |
57 | ||||
Total fixed charges |
2,077 | ||||
Less: Equity in undistributed income of affiliates |
(15 | ) | |||
Earnings before taxes and fixed charges,
excluding capitalized interest |
$ | 3,549 | |||
Fixed charges, as above |
$ | 2,077 | |||
Ratio of earnings to fixed charges |
1.71 | ||||
Including Interest on Deposits
|
|||||
Fixed charges, as above |
$ | 2,077 | |||
Add: Interest on deposits |
1,339 | ||||
Total fixed charges and interest on deposits |
$ | 3,416 | |||
Earnings before taxes and fixed charges,
excluding capitalized interest, as above |
$ | 3,549 | |||
Add: Interest on deposits |
1,339 | ||||
Total earnings before taxes,
fixed charges and interest on deposits |
$ | 4,888 | |||
Ratio of earnings to fixed charges |
1.43 | ||||
(a) The proportion deemed representative of the interest factor.
EXHIBIT 12(b)
J.P. MORGAN CHASE & CO.
Computation of Ratio of
Earnings to Fixed Charges
and Preferred Stock Dividend Requirements
(in millions, except ratios)
| Three Months Ended | |||||
| March
31, 2002 |
|||||
Excluding Interest on Deposits
|
|||||
Income before income taxes |
$ | 1,487 | |||
Fixed charges: |
|||||
Interest expense |
2,020 | ||||
One-third of rents, net of income from subleases (a) |
57 | ||||
Total fixed charges |
2,077 | ||||
Less: Equity in undistributed income of affiliates |
(15 | ) | |||
Earnings before taxes and fixed charges,
excluding capitalized interest |
$ | 3,549 | |||
Fixed charges, as above |
$ | 2,077 | |||
Preferred stock dividends |
13 | ||||
Fixed charges including preferred stock dividends |
$ | 2,090 | |||
Ratio of earnings to fixed charges and
preferred stock dividend requirements |
1.70 | ||||
Including Interest on Deposits
|
|||||
Fixed charges including preferred stock dividends, as above |
$ | 2,090 | |||
Add: Interest on deposits |
1,339 | ||||
Total fixed charges including preferred stock
dividends and interest on deposits |
$ | 3,429 | |||
Earnings before taxes and fixed charges,
excluding capitalized interest, as above |
$ | 3,549 | |||
Add: Interest on deposits |
1,339 | ||||
Total earnings before taxes, fixed charges
and interest on deposits |
$ | 4,888 | |||
Ratio of earnings to fixed charges
and preferred stock dividend requirements |
1.43 | ||||
(a) The proportion deemed representative of the interest factor.
EXHIBIT 99.1
| J.P. Morgan Chase & Co. | ||
| 270 Park Avenue, New York, NY
10017-2070 NYSE symbol: JPM www.jpmorganchase.com |
 |
News release: IMMEDIATE RELEASE
JPMORGAN CHASE REPORTS 2002 FIRST QUARTER RESULTS
New York, April 17, 2002 – J.P. Morgan Chase & Co. (NYSE: JPM) today announced 2002 first quarter operating earnings per share of $0.57, compared with $0.17 in the fourth quarter of 2001 and $0.74 in the first quarter of 2001. Operating earnings were $1,150 million, compared with $356 million in the fourth quarter of 2001 and $1,527 million one year ago. Operating earnings for 2001 have been adjusted by adding back amortization of goodwill to present 2001 results on a basis comparable to this year’s first quarter, which included the impact of the implementation of SFAS 142.
Operating ROE was 11% and excluding JPMorgan Partners was 16%. The contribution to operating earnings per share of JPMorgan Partners was a loss of $0.12 in the first quarter compared to a $0.17 loss in the fourth quarter of 2001 and no impact in the first quarter of 2001.
Reported net income, which includes special items such as merger and restructuring costs, was $982 million, or $0.48 per share, in the first quarter of 2002. This compares with a loss of $332 million, or $0.18 per share, in the 2001 fourth quarter and profits of $1,199 million, or $0.58 per share, in the first quarter of 2001.
“First quarter results benefited from disciplined expense management and strong performance in our consumer businesses,” said William B. Harrison, Jr., Chairman and Chief Executive Officer. “In challenging markets, our Investment Bank posted a 16% ROE for the quarter and our Investment Management & Private Banking business showed margin improvement.”
Key events for the first quarter 2002
| • | Retail & Middle Market Financial Services posted record revenues of $3.1 billion and operating earnings growth of 25% from the first quarter of 2001, generating an operating ROE of 22%. | |
| • | The Investment Bank generated an operating ROE of 16% and an overhead ratio of 58% in a weak capital markets environment. For the first time, JPMorgan was the third-leading underwriter of stocks and bonds globally (per Thomson Financial). | |
| • | Investment Management & Private Banking pre-tax margin improved to 22%, driven by expense control. | |
| • | JPMorgan Partners had private equity losses of $255 million, driven primarily by the decline in the market price of Triton PCS. | |
| • | Credit costs declined from the fourth quarter of 2001 and equaled managed net charge-offs of $1,074 million in the first quarter of 2002. | |
| • | Commercial loans continued to decline, down 3% from year-end and down 10% from the first quarter of 2001. The Tier 1 capital ratio increased from year-end 2001 to 8.5%. |
| Investor Contact: | John Borden | Media Contact: | Jon Diat | |||
| (212) 270-7318 | (212) 270-5089 | |||||
| Joe Evangelisti | ||||||
| (212) 270-7438 |
J.P. Morgan Chase & Co.
News Release
Operating expenses in the 2002 first quarter were $5.1 billion, an 8% decline from first quarter of 2001 but a 7% increase from the 2001 fourth quarter. Expense growth from the fourth quarter included $106 million in non-merger related severance costs, $78 million related to the settlement of litigation with Sumitomo and $46 million in operating costs related to the acquisition of the credit card master trust of Providian. Given the weak market environment, management is continuing to take actions to reduce expenses and implement other productivity programs. Costs related to these initiatives that were not associated with previously announced programs were reported in operating results in the first quarter and will continue to be reflected in operating results going forward.
Business segment results
Retail & Middle Market Financial Services had record operating earnings of $526 million for the quarter, up 59% from the 2001 fourth quarter and an increase of 25% from the first quarter of 2001. Operating ROE for the first quarter was 22%, compared to 14% in the fourth quarter of 2001 and 20% for the first quarter of 2001.
Operating revenues of $3.13 billion (including $150 million of revenues from the card portfolio acquired from Providian) were up 7% and 18% from the fourth and first quarters of 2001, respectively. Credit card outstandings grew 31% to $49 billion (including Providian) and there were over 900,000 new accounts originated during the quarter, the sixth consecutive quarter of such additions. Mortgage originations totaled $33 billion in the quarter, down from $50 billion in the 2001 fourth quarter and up from the first quarter of 2001. Auto finance originations were $5.8 billion in the quarter, up 2% from the fourth quarter of 2001 and 34% over the first quarter of 2001. Total deposits were up 5% and 14% from the fourth and first quarters of 2001, respectively.
Operating expenses of $1.56 billion increased by 4% from the fourth quarter of 2001 and by 13% from the first quarter of 2001. The increases reflected the impact of the Providian acquisition as well as higher expenses related to production volumes. Partially offsetting these increases were savings related to Six Sigma productivity programs.
Credit costs of $726 million were 22% lower than the 2001 fourth quarter, which included $250 million in provision in excess of charge-offs. Credit costs were 22% higher than the first quarter of 2001, partially due to higher outstandings. The allowance for loan losses was higher than at year-end due to reserves established for the acquired card portfolio.
Investment Management & Private Banking had operating earnings of $126 million, up 30% from the 2001 fourth quarter and 19% better than the first quarter of 2001. Pre-tax margin in the first quarter was 22% compared with 16% in each of the fourth and first quarters of 2001.
Operating revenues of $741 million in the first quarter were 1% better than the 2001 fourth quarter but 10% lower than the first quarter of 2001. Operating expenses of $557 million for the first quarter were 5% lower than the 2001 fourth quarter and down 19% from the first quarter of 2001 reflecting the impact of cost
2
J.P. Morgan Chase & Co.
News Release
reductions taken in 2001. Credit costs in private banking were lower than in the 2001 fourth quarter and higher than the first quarter of 2001.
Strong growth in retail mutual funds across all asset classes was more than offset by outflows within the institutional segment, primarily outflows from lower-fee money market funds. Total assets under management at quarter-end of $583 billion were 4% lower than in each of the fourth and first quarters of 2001. In the retail segment, JPMorgan Flemings international mutual funds received 82 awards for performance including Best Overall Group and Best-Mixed Asset Manager.1
The Investment Bank had operating earnings of $755 million in the first quarter, more than double the fourth quarter of 2001 but 27% lower than the first quarter of 2001. Operating ROE was 16% for the quarter compared to 8% for the 2001 fourth quarter and 21% for the first quarter of 2001.
Operating revenues of $3.62 billion in the first quarter of 2002 were 17% better than the 2001 fourth quarter but 16% lower than the first quarter of 2001.
Trading revenues (including related net interest income) of $1.70 billion increased 66% from the fourth quarter of 2001 but were down 19% from the first quarter of 2001. The significant increase over the prior quarter reflected higher revenues across most businesses and was partly attributable to markdowns recorded against counterparty exposures in the fourth quarter of 2001. The decline from the first quarter of 2001 was primarily due to lower equity trading revenues as a result of lower client activity and lower volatility. Fixed income trading was lower compared to the first quarter of 2001 as strong credit trading results in the quarter were offset by lower interest rate trading, reflecting reduced opportunities from declining rates than existed one year ago.
Investment banking fees totaled $741 million in the first quarter, declining 21% from each of the fourth and the first quarters of 2001. The declines reflected continued weakness in M&A and equity underwriting markets as well as lower loan syndication activity during the quarter. For the quarter, leadership positions were maintained in syndicated lending (#1) and high-grade bonds (#2).2
Fees and commissions of $380 million in the first quarter increased by 5% from the fourth quarter of 2001 but declined 10% from the first quarter of 2001. The year-on-year decline was primarily due to lower margins from equity brokerage activities.
Operating expenses for the first quarter of $2.12 billion increased by 14% from the fourth quarter of 2001 but declined 17% from the first quarter of last year. Expenses in the first quarter included the cost of the Sumitomo settlement and severance-related costs. The overhead ratio for the quarter was 58% reflecting ongoing productivity and expense management initiatives intended to allow the Investment Bank to make strategic investments despite the current revenue environment.
| 1 Source: Lipper, March 2002 |
| 2 Derived from Thomson Financial Securities Data, based on proceeds |
3
J.P. Morgan Chase & Co.
News Release
Treasury & Securities Services had operating earnings of $141 million, down 14% from the 2001 fourth quarter and down 16% from the first quarter of 2001. Operating ROE for the quarter was 19% compared to 23% in the 2001 fourth quarter and 24% in the first quarter of 2001.
Operating revenues were $935 million in the first quarter of 2002, down 1% from the 2001 fourth quarter and down 2% from the first quarter of 2001. Revenues in Investor Services were down 10% from the first quarter of 2001 to $393 million as a result of weak global equity markets and lower asset levels, reduced money flows and lower business activity. Investor Services revenues were flat from the fourth quarter. Institutional Trust Services revenues increased 6% from each of the fourth and first quarters of 2001. Treasury Services revenues were down 5% from the fourth quarter but up 4% from the first quarter of 2001, as the effect of lower interest rates was offset by higher overall deposit levels resulting from increased business volumes.
Operating expenses rose 4% from the 2001 fourth quarter and 3% from the first quarter of 2001.
JPMorgan Partners had an operating loss of $248 million for the quarter compared to an operating loss of $345 million in the 2001 fourth quarter and an operating loss of $4 million in the first quarter of 2001.
Total private equity gains were negative $255 million, of which net unrealized losses were $242 million. The decline in value of Triton PCS was the largest contributor to unrealized losses. Hedging put in place to partially offset fluctuations in the values of public securities contributed $47 million in gains in the first quarter. Total private equity gains were negative $398 million in the 2001 fourth quarter and $139 million positive in the first quarter of 2001. Although private equity exit opportunities remain muted, market conditions have started to improve across several industry sectors.
Credit
Commercial net charge-offs in the first quarter of 2002 were $320 million, compared to $433 million in the 2001 fourth quarter and $148 million in the first quarter of 2001. The charge-off ratio was 1.27% for the first quarter of 2002, 1.58% for the fourth quarter of 2001 and 0.50% for the first quarter of 2001.
Consumer net charge-offs on a managed basis (i.e., including securitized assets) were $754 million, up from $649 million in the fourth quarter of 2001 and $540 million in the first quarter of 2001. On a managed basis, the credit card net charge-off ratio, including the Providian assets acquired on February 1, 2002, was 5.87% in the first quarter of 2002, compared to 5.48% for the fourth quarter of 2001 and 5.05% for the first quarter of 2001. The Providian credit card receivables will contribute to a higher managed charge-off ratio over the remainder of the year.
Provisions equaled charge-offs in the quarter. In the fourth quarter of 2001, $650 million of provisions in excess of charge-offs were recorded.
Total Nonperforming Assets were $4.31 billion at March 31, 2002, which includes $1.13 billion related to the Enron surety receivables and letter of credit. Excluding this amount, which is the subject of litigation with credit-worthy entities, nonperforming assets totaled $3.18 billion. This compares to $2.79 billion at December 31, 2001 and $2.23 billion as of March 31, 2001.
4
J.P. Morgan Chase & Co.
News Release
Total assets and capital
Total assets as of March 31, 2002 were $713 billion, compared with $694 billion at December 31, 2001 and $714 billion as of March 31, 2001. The increase over December 31, 2001 was largely driven by growth in trading assets. Commercial loans declined 3%, or $3.1 billion, from the fourth quarter of 2001 and 10%, or $11.5 billion, from the first quarter of 2001. Consumer loans were up slightly from year-end and increased 9% from the first quarter of 2001. The Tier 1 capital ratio was 8.5% at March 31, 2002, compared to 8.3% at December 31, 2001 and 8.7% at March 31, 2001.
Other financial information
Special Items in the first quarter of 2002 included $255 million (pre-tax) in merger and restructuring costs. Special items in the fourth quarter of 2001 included merger and restructuring costs of $841 million (pre-tax). Special items in the first quarter of 2001 included merger and restructuring costs (pre-tax) of $328 million and the cumulative effect of a transition adjustment of negative $25 million (after-tax) related to the adoption of SFAS 133 for the accounting for derivative instruments and hedging activities.
J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $713 billion and operations in more than 50 countries. With relationships with over 99% of the Fortune 1000 companies, the firm is a leader in investment banking, asset management, private banking, private equity, custody and transaction services and retail and middle market financial services. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers and the world’s most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the internet at www.jpmorganchase.com.
JPMorgan Chase will hold a presentation for the investment community on Wednesday, April 17, 2002 at 11:00 a.m. (Eastern Daylight Time) to review first quarter 2002 financial results. A live audio webcast of the presentation will be available on www.jpmorganchase.com. In addition, persons interested in listening to the presentation by telephone may dial in at (973) 872-3100. A telephone replay of the presentation will be available beginning at 1:00 p.m. (EDT) on April 17, 2002 and continuing through 6:00 p.m. (EDT) on April 23, 2002 at (973) 341-3080 pin #3183365. The replay also will be available on www.jpmorganchase.com. Additional detailed financial, statistical and business-related information is included in a financial supplement. The earnings release and the financial supplement are available on the JPMorgan Chase web site (www.jpmorganchase.com).
This press release 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. These uncertainties could cause our results to differ materially from such forward-looking statements. Such risks and uncertainties are described in our 2001 Annual Report on Form 10-K, filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (http://www.sec.gov), to which reference is hereby made.
5
| J.P. MORGAN CHASE &
CO. CONSOLIDATED FINANCIAL HIGHLIGHTS (in millions, except per share and ratio data) |
|
| 1QTR | 4QTR | 1QTR | ||||||||||||||||||||||||
| 2002 | 2001 | 2001 | ||||||||||||||||||||||||
OPERATING INCOME STATEMENT (a) (b) |
||||||||||||||||||||||||||
OPERATING REVENUE: |
||||||||||||||||||||||||||
Investment Banking Fees |
$ | 755 | $ | 931 | $ | 941 | ||||||||||||||||||||
Trading-Related Revenue (Including Trading NII) |
1,720 | 904 | 2,167 | |||||||||||||||||||||||
Fees and Commissions |
2,493 | 2,340 | 2,082 | |||||||||||||||||||||||
Private Equity — Realized Gains (Losses) |
(10 | ) | 81 | 412 | ||||||||||||||||||||||
Private Equity — Unrealized Gains (Losses) |
(228 | ) | (505 | ) | (285 | ) | ||||||||||||||||||||
Securities Gains |
114 | 202 | 455 | |||||||||||||||||||||||
Other Revenue |
137 | 138 | 257 | |||||||||||||||||||||||
Net Interest Income (Excluding Trading NII) |
2,938 | 2,825 | 2,537 | |||||||||||||||||||||||
TOTAL OPERATING REVENUE |
7,919 | 6,916 | 8,566 | |||||||||||||||||||||||
OPERATING EXPENSE: |
||||||||||||||||||||||||||
Compensation Expense |
2,823 | 2,622 | 3,336 | |||||||||||||||||||||||
Noncompensation Expense |
2,280 | 2,138 | 2,193 | |||||||||||||||||||||||
TOTAL OPERATING EXPENSE |
5,103 | 4,760 | 5,529 | |||||||||||||||||||||||
Credit Costs |
1,074 | 1,732 | 688 | |||||||||||||||||||||||
Operating Income before Taxes |
1,742 | 424 | 2,349 | |||||||||||||||||||||||
Income Taxes |
592 | 68 | 822 | |||||||||||||||||||||||
OPERATING EARNINGS |
$ | 1,150 | $ | 356 | $ | 1,527 | ||||||||||||||||||||
Special Items & Net Effect of Change in
Acctng Principle |
(168 | ) | (579 | ) | (237 | ) | ||||||||||||||||||||
Amortization of Goodwill, Net of Taxes (c) |
— | (109 | ) | (91 | ) | |||||||||||||||||||||
NET INCOME (LOSS) |
$ | 982 | $ | (332 | ) | $ | 1,199 | |||||||||||||||||||
OPERATING BASIS |
||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.57 | $ | 0.17 | $ | 0.74 | ||||||||||||||||||||
Shareholder Value Added |
(59 | ) | (915 | ) | 285 | |||||||||||||||||||||
Return on Managed Assets |
0.63 | % | 0.19 | % | 0.83 | % | ||||||||||||||||||||
Return on Common Equity |
11.4 | 3.3 | 14.8 | |||||||||||||||||||||||
Overhead Ratio |
64 | 69 | 65 | |||||||||||||||||||||||
Common Dividend Payout Ratio |
60 | 199 | 45 | |||||||||||||||||||||||
Compensation Expense as a % of Revenue |
36 | 38 | 39 | |||||||||||||||||||||||
Noncompensation Expense as a % of Revenue |
29 | 31 | 26 | |||||||||||||||||||||||
NET INCOME (LOSS) PER COMMON SHARE (d) |
||||||||||||||||||||||||||
Basic |
$ | 0.49 | $ | (0.18 | ) | $ | 0.60 | |||||||||||||||||||
Diluted |
0.48 | (0.18 | ) | 0.58 | ||||||||||||||||||||||
COMMON SHARES OUTSTANDING |
||||||||||||||||||||||||||
Basic Average Shares Outstanding |
1,978.2 | 1,969.6 | 1,966.6 | |||||||||||||||||||||||
Diluted Average Shares Outstanding |
2,005.8 | 2,007.4 | 2,032.2 | |||||||||||||||||||||||
Common Shares Outstanding — at Period End |
1,990.2 | 1,973.4 | 1,984.2 | |||||||||||||||||||||||
CASH DIVIDENDS DECLARED PER SHARE |
$ | 0.34 | $ | 0.34 | $ | 0.34 | ||||||||||||||||||||
BOOK VALUE PER SHARE |
20.16 | 20.32 | 21.17 | |||||||||||||||||||||||
CAPITAL RATIOS |
||||||||||||||||||||||||||
Tier I Capital Ratio |
8.5 | %(e) | 8.3 | % | 8.7 | % | ||||||||||||||||||||
Total Capital Ratio |
12.4 | (e) | 11.9 | 12.3 | ||||||||||||||||||||||
Tier I Leverage |
5.4 | (e) | 5.2 | 5.4 | ||||||||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| 1QTR 2002 | ||||||||||||||||||
| Over (Under) | ||||||||||||||||||
| 4Q 2001 | 1Q 2001 | |||||||||||||||||
OPERATING INCOME STATEMENT (a) (b) |
||||||||||||||||||
OPERATING REVENUE: |
||||||||||||||||||
Investment Banking Fees |
(19 | )% | (20 | )% | ||||||||||||||
Trading-Related Revenue (Including Trading NII) |
90 | (21 | ) | |||||||||||||||
Fees and Commissions |
7 | 20 | ||||||||||||||||
Private Equity — Realized Gains (Losses) |
NM | NM | ||||||||||||||||
Private Equity — Unrealized Gains (Losses) |
55 | 20 | ||||||||||||||||
Securities Gains |
(44 | ) | (75 | ) | ||||||||||||||
Other Revenue |
(1 | ) | (47 | ) | ||||||||||||||
Net Interest Income (Excluding Trading NII) |
4 | 16 | ||||||||||||||||
TOTAL OPERATING REVENUE |
15 | (8 | ) | |||||||||||||||
OPERATING EXPENSE: |
||||||||||||||||||
Compensation Expense |
8 | (15 | ) | |||||||||||||||
Noncompensation Expense |
7 | 4 | ||||||||||||||||
TOTAL OPERATING EXPENSE |
7 | (8 | ) | |||||||||||||||
Credit Costs |
(38 | ) | 56 | |||||||||||||||
Operating Income before Taxes |
311 | (26 | ) | |||||||||||||||
Income Taxes |
NM | (28 | ) | |||||||||||||||
OPERATING EARNINGS |
223 | (25 | ) | |||||||||||||||
Special Items & Net Effect of Change in
Acctng Principle |
71 | 29 | ||||||||||||||||
Amortization of Goodwill, Net of Taxes (c) |
NM | NM | ||||||||||||||||
NET INCOME (LOSS) |
NM | (18 | ) | |||||||||||||||
OPERATING BASIS |
||||||||||||||||||
Diluted Earnings per Share |
235 | (23 | ) | |||||||||||||||
Shareholder Value Added |
94 | NM | ||||||||||||||||
Return on Managed Assets |
44 | bp | (20 | )bp | ||||||||||||||
Return on Common Equity |
810 | (340 | ) | |||||||||||||||
Overhead Ratio |
(500 | ) | (100 | ) | ||||||||||||||
Common Dividend Payout Ratio |
(13,900 | ) | 1,500 | |||||||||||||||
Compensation Expense as a % of Revenue |
(200 | ) | (300 | ) | ||||||||||||||
Noncompensation Expense as a % of Revenue |
(200 | ) | 300 | |||||||||||||||
NET INCOME (LOSS) PER COMMON SHARE (d) |
||||||||||||||||||
Basic |
NM | (18 | )% | |||||||||||||||
Diluted |
NM | (17 | ) | |||||||||||||||
COMMON SHARES OUTSTANDING |
||||||||||||||||||
Basic Average Shares Outstanding |
— | % | 1 | |||||||||||||||
Diluted Average Shares Outstanding |
— | (1 | ) | |||||||||||||||
Common Shares Outstanding — at Period End |
1 | — | ||||||||||||||||
CASH DIVIDENDS DECLARED PER SHARE |
— | — | ||||||||||||||||
BOOK VALUE PER SHARE |
(1 | ) | (5 | ) | ||||||||||||||
CAPITAL RATIOS |
||||||||||||||||||
Tier I Capital Ratio |
20 | bp | (20 | )bp | ||||||||||||||
Total Capital Ratio |
50 | 10 | ||||||||||||||||
Tier I Leverage |
20 | — | ||||||||||||||||
Note: Prior periods have been restated to conform with current methodologies.
| (a) | See page 10 for a reconciliation between reported results and operating results. | |
| (b) | In the first quarter of 2002, the Firm implemented EITF 01-14, “Income Statement Characterization of Reimbursements Received for ‘Out-of-Pocket’ Expenses Incurred (Formerly EITF Abstracts, Topic D-103).” Consequently, prior period amounts have been restated. | |
| (c) | Reported net income for the first quarter 2002 reflects the adoption of SFAS 142 and, accordingly, the Firm ceased amortizing goodwill effective January 1, 2002. There was no impairment of goodwill upon adoption of SFAS 142. Previously reported operating earnings for 2001 have been adjusted by adding back amortization of goodwill to make 2001 results comparable to 2002. | |
| (d) | Basic and diluted earnings per share have been reduced by $0.01 in the first quarter of 2001 due to the impact of the adoption of SFAS 133 relating to the accounting for derivative instruments and hedging activities. | |
| (e) | Estimated | |
| bp | - | Denotes basis points; 100 bp equals 1% |
Page 6
| J.P. MORGAN CHASE &
CO. LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY (in millions, except per share and ratio data) |
|
| 1QTR | 4QTR | 1QTR | |||||||||||||||||||||||||
| 2002 | 2001 | 2001 | |||||||||||||||||||||||||
OPERATING REVENUE |
|||||||||||||||||||||||||||
Investment Bank |
$ | 3,620 | $ | 3,088 | $ | 4,327 | |||||||||||||||||||||
Treasury & Securities Services |
935 | 941 | 953 | ||||||||||||||||||||||||
Investment Management & Private Banking |
741 | 731 | 822 | ||||||||||||||||||||||||
Retail & Middle Market Financial Services |
3,131 | 2,936 | 2,654 | ||||||||||||||||||||||||
Corporate (a) |
(205 | ) | (328 | ) | (277 | ) | |||||||||||||||||||||
OPERATING REVENUE EXCLUDING JPMP |
8,222 | 7,368 | 8,479 | ||||||||||||||||||||||||
JPMorgan Partners |
(303 | ) | (452 | ) | 87 | ||||||||||||||||||||||
OPERATING REVENUE (b) |
$ | 7,919 | $ | 6,916 | $ | 8,566 | |||||||||||||||||||||
EARNINGS |
|||||||||||||||||||||||||||
Investment Bank |
$ | 755 | $ | 367 | $ | 1,033 | |||||||||||||||||||||
Treasury & Securities Services |
141 | 164 | 168 | ||||||||||||||||||||||||
Investment Management & Private Banking |
126 | 97 | 106 | ||||||||||||||||||||||||
Retail & Middle Market Financial Services |
526 | 330 | 421 | ||||||||||||||||||||||||
Corporate (a) |
(150 | ) | (257 | ) | (197 | ) | |||||||||||||||||||||
OPERATING EARNINGS EXCLUDING JPMP |
1,398 | 701 | 1,531 | ||||||||||||||||||||||||
JPMorgan Partners |
(248 | ) | (345 | ) | (4 | ) | |||||||||||||||||||||
OPERATING EARNINGS (b) |
1,150 | 356 | 1,527 | ||||||||||||||||||||||||
Special Items & Net Effect of Change in Acctng Principle |
(168 | ) | (579 | ) | (237 | ) | |||||||||||||||||||||
Amortization of Goodwill, Net of Taxes |
— | (109 | ) | (91 | ) | ||||||||||||||||||||||
NET INCOME (LOSS) (b) |
$ | 982 | $ | (332 | ) | $ | 1,199 | ||||||||||||||||||||
EARNINGS PER SHARE — DILUTED |
|||||||||||||||||||||||||||
OPERATING EARNINGS EXCLUDING JPMP |
$ | 0.69 | $ | 0.34 | $ | 0.74 | |||||||||||||||||||||
Impact of JPMP |
(0.12 | ) | (0.17 | ) | — | ||||||||||||||||||||||
OPERATING EARNINGS (b) |
0.57 | 0.17 | 0.74 | ||||||||||||||||||||||||
Special Items & Net Effect of Change in Acctng Principle |
(0.09 | ) | (0.29 | ) | (0.12 | ) | |||||||||||||||||||||
Amortization of Goodwill, Net of Taxes |
— | (0.05 | ) | (0.04 | ) | ||||||||||||||||||||||
NET INCOME (LOSS) (b) |
$ | 0.48 | $ | (0.18 | )(c) | $ | 0.58 | ||||||||||||||||||||
OPERATING RETURN ON COMMON EQUITY |
|||||||||||||||||||||||||||
Investment Bank |
15.9 | % | 7.6 | % | 20.8 | % | |||||||||||||||||||||
Treasury & Securities Services |
19.1 | 22.6 | 23.5 | ||||||||||||||||||||||||
Investment Management & Private Banking |
8.4 | 6.2 | 6.4 | ||||||||||||||||||||||||
Retail & Middle Market Financial Services |
21.5 | 14.2 | 19.9 | ||||||||||||||||||||||||
OPERATING RETURN ON COMMON EQUITY (b) |
11.4 | 3.3 | 14.8 | ||||||||||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| 1QTR 2002 | |||||||||||||||||||
| Over (Under) | |||||||||||||||||||
| 4QTR | 1QTR | ||||||||||||||||||
| 2001 | 2001 | ||||||||||||||||||
OPERATING REVENUE |
|||||||||||||||||||
Investment Bank |
17 | % | (16 | )% | |||||||||||||||
Treasury & Securities Services |
(1 | ) | (2 | ) | |||||||||||||||
Investment Management & Private Banking |
1 | (10 | ) | ||||||||||||||||
Retail & Middle Market Financial Services |
7 | 18 | |||||||||||||||||
Corporate (a) |
38 | 26 | |||||||||||||||||
OPERATING REVENUE EXCLUDING JPMP |
12 | (3 | ) | ||||||||||||||||
JPMorgan Partners |
33 | NM | |||||||||||||||||
OPERATING REVENUE (b) |
15 | (8 | ) | ||||||||||||||||
EARNINGS |
|||||||||||||||||||
Investment Bank |
106 | (27 | ) | ||||||||||||||||
Treasury & Securities Services |
(14 | ) | (16 | ) | |||||||||||||||
Investment Management & Private Banking |
30 | 19 | |||||||||||||||||
Retail & Middle Market Financial Services |
59 | 25 | |||||||||||||||||
Corporate (a) |
42 | 24 | |||||||||||||||||
OPERATING EARNINGS EXCLUDING JPMP |
99 | (9 | ) | ||||||||||||||||
JPMorgan Partners |
28 | NM | |||||||||||||||||
OPERATING EARNINGS (b) |
223 | (25 | ) | ||||||||||||||||
Special Items & Net Effect of Change in Acctng Principle |
71 | 29 | |||||||||||||||||
Amortization of Goodwill, Net of Taxes |
NM | NM | |||||||||||||||||
NET INCOME (LOSS) (b) |
NM | (18 | ) | ||||||||||||||||
EARNINGS PER SHARE — DILUTED |
|||||||||||||||||||
OPERATING EARNINGS EXCLUDING JPMP |
103 | (7 | ) | ||||||||||||||||
Impact of JPMP |
29 | NM | |||||||||||||||||
OPERATING EARNINGS (b) |
235 | (23 | ) | ||||||||||||||||
Special Items & Net Effect of Change in Acctng Principle |
69 | 25 | |||||||||||||||||
Amortization of Goodwill, Net of Taxes |
NM | NM | |||||||||||||||||
NET INCOME (LOSS) (b) |
NM | (17 | ) | ||||||||||||||||
OPERATING RETURN ON COMMON EQUITY |
|||||||||||||||||||
Investment Bank |
830 | bp | (490 | )bp | |||||||||||||||
Treasury & Securities Services |
(350 | ) | (440 | ) | |||||||||||||||
Investment Management & Private Banking |
220 | 200 | |||||||||||||||||
Retail & Middle Market Financial Services |
730 | 160 | |||||||||||||||||
OPERATING RETURN ON COMMON EQUITY (b) |
810 | (340 | ) | ||||||||||||||||
| (a) | Includes Support Units and the effects remaining at the corporate level after the implementation of management accounting policies. | |
| (b) | Represents consolidated JPMorgan Chase. | |
| (c) | Diluted EPS is reported as $(0.18) which is the same as basic EPS, instead of $(0.17), since using diluted average shares outstanding would cause antidilution. As a result, the net loss earnings per share does not foot by $(0.01). |
Page 7
| J.P. MORGAN CHASE & CO. CONSOLIDATED BALANCE SHEET (in millions) |
|
| Mar 31st | Dec 31st | Mar 31st | |||||||||||
| 2002 | 2001 | 2001 | |||||||||||
ASSETS |
|||||||||||||
Cash and Due from Banks |
$ | 22,637 | $ | 22,600 | $ | 22,371 | |||||||
Deposits with Banks |
9,691 | 12,743 | 7,979 | ||||||||||
Federal Funds Sold and Securities Purchased under Resale Agreements |
76,719 | 63,727 | 71,147 | ||||||||||
Securities Borrowed |
40,880 | 36,580 | 37,264 | ||||||||||
Trading Assets: |
|||||||||||||
Debt and Equity Instruments |
144,992 | 118,248 | 138,270 | ||||||||||
Derivative Receivables |
63,224 | 71,157 | 78,907 | ||||||||||
Securities |
61,225 | 59,760 | 69,731 | ||||||||||
Loans (Net of Allowance for Loan Losses) |
209,541 | 212,920 | 213,116 | ||||||||||
Goodwill |
7,924 | 8,205 | 8,667 | ||||||||||
Other Intangibles: |
|||||||||||||
Mortgage Servicing Rights |
6,918 | 6,579 | 6,062 | ||||||||||
Purchased Credit Card Relationships |
1,508 | 519 | 574 | ||||||||||
All Other Intangibles |
327 | 44 | 48 | ||||||||||
Private Equity Investments |
8,553 | 9,197 | 10,877 | ||||||||||
Other Assets |
58,369 | 71,296 | 48,611 | ||||||||||
TOTAL ASSETS |
$ | 712,508 | $ | 693,575 | $ | 713,624 | |||||||
LIABILITIES |
|||||||||||||
Deposits |
$ | 282,037 | $ | 293,650 | $ | 272,572 | |||||||
Federal Funds Purchased and Securities Sold under Repurchase Agreements |
152,837 | 128,445 | 145,703 | ||||||||||
Commercial Paper |
23,726 | 18,510 | 16,281 | ||||||||||
Other Borrowed Funds |
16,968 | 10,835 | 28,716 | ||||||||||
Trading Liabilities: |
|||||||||||||
Debt and Equity Instruments |
71,141 | 52,988 | 52,501 | ||||||||||
Derivative Payables |
44,997 | 56,063 | 73,312 | ||||||||||
Accounts Payable and Other Liabilities (Including the Allowance for Credit Losses) |
36,910 | 47,813 | 33,575 | ||||||||||
Long-Term Debt |
37,322 | 39,183 | 42,609 | ||||||||||
Guaranteed Preferred Beneficial Interests in the Firm’s
Junior Subordinated Deferrable Interest Debentures |
5,439 | 4,439 | 4,439 | ||||||||||
TOTAL LIABILITIES |
671,377 | 651,926 | 669,708 | ||||||||||
PREFERRED STOCK OF SUBSIDIARY |
— | 550 | 550 | ||||||||||
STOCKHOLDERS’ EQUITY |
|||||||||||||
Preferred Stock |
1,009 | 1,009 | 1,362 | ||||||||||
Common Stock |
2,016 | 1,997 | 1,984 | ||||||||||
Capital Surplus |
12,783 | 12,495 | 11,663 | ||||||||||
Retained Earnings |
27,278 | 26,993 | 28,592 | ||||||||||
Accumulated Other Comprehensive Income (Loss) |
(909 | ) | (442 | ) | (214 | ) | |||||||
Treasury Stock, at Cost |
(1,046 | ) | (953 | ) | (21 | ) | |||||||
TOTAL STOCKHOLDERS’ EQUITY |
41,131 | 41,099 | 43,366 | ||||||||||
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY
AND STOCKHOLDERS’ EQUITY |
$ | 712,508 | $ | 693,575 | $ | 713,624 | |||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| Mar 31, 2002 | |||||||||||||||||
| Over (Under) | |||||||||||||||||
| Dec 31, 01 | Mar 31, 01 | ||||||||||||||||
ASSETS |
|||||||||||||||||
Cash and Due from Banks |
— | % | 1 | % | |||||||||||||
Deposits with Banks |
(24 | ) | 21 | ||||||||||||||
Federal Funds Sold and Securities Purchased under Resale Agreements |
20 | 8 | |||||||||||||||
Securities Borrowed |
12 | 10 | |||||||||||||||
Trading Assets: |
|||||||||||||||||
Debt and Equity Instruments |
23 | 5 | |||||||||||||||
Derivative Receivables |
(11 | ) | (20 | ) | |||||||||||||
Securities |
2 | (12 | ) | ||||||||||||||
Loans (Net of Allowance for Loan Losses) |
(2 | ) | (2 | ) | |||||||||||||
Goodwill |
(3 | ) | (9 | ) | |||||||||||||
Other Intangibles: |
|||||||||||||||||
Mortgage Servicing Rights |
5 | 14 | |||||||||||||||
Purchased Credit Card Relationships |
191 | 163 | |||||||||||||||
All Other Intangibles |
NM | NM | |||||||||||||||
Private Equity Investments |
(7 | ) | (21 | ) | |||||||||||||
Other Assets |
(18 | ) | 20 | ||||||||||||||
TOTAL ASSETS |
3 | — | |||||||||||||||
LIABILITIES |
|||||||||||||||||
Deposits |
(4 | ) | 3 | ||||||||||||||
Federal Funds Purchased and Securities Sold under Repurchase Agreements |
19 | 5 | |||||||||||||||
Commercial Paper |
28 | 46 | |||||||||||||||
Other Borrowed Funds |
57 | (41 | ) | ||||||||||||||
Trading Liabilities: |
|||||||||||||||||
Debt and Equity Instruments |
34 | 36 | |||||||||||||||
Derivative Payables |
(20 | ) | (39 | ) | |||||||||||||
Accounts Payable and Other Liabilities (Including the Allowance for Credit Losses) |
(23 | ) | 10 | ||||||||||||||
Long-Term Debt |
(5 | ) | (12 | ) | |||||||||||||
Guaranteed Preferred Beneficial Interests in the Firm’s
Junior Subordinated Deferrable Interest Debentures |
23 | 23 | |||||||||||||||
TOTAL LIABILITIES |
3 | — | |||||||||||||||
PREFERRED STOCK OF SUBSIDIARY |
NM | NM | |||||||||||||||
STOCKHOLDERS’ EQUITY |
|||||||||||||||||
Preferred Stock |
— | (26 | ) | ||||||||||||||
Common Stock |
1 | 2 | |||||||||||||||
Capital Surplus |
2 | 10 | |||||||||||||||
Retained Earnings |
1 | (5 | ) | ||||||||||||||
Accumulated Other Comprehensive Income (Loss) |
(106 | ) | (325 | ) | |||||||||||||
Treasury Stock, at Cost |
10 | NM | |||||||||||||||
TOTAL STOCKHOLDERS’ EQUITY |
— | (5 | ) | ||||||||||||||
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY
AND STOCKHOLDERS’ EQUITY |
3 | — | |||||||||||||||
Page 8
J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (in millions, except ratios) |
|
| Mar 31st | Dec 31st | Mar 31st | |||||||||||||||||||||||||||||
| 2002 | 2001 | 2001 | |||||||||||||||||||||||||||||
CREDIT-RELATED ASSETS: |
|||||||||||||||||||||||||||||||
Commercial Loans |
$ | 101,752 | $ | 104,864 | $ | 113,217 | |||||||||||||||||||||||||
Derivative and FX Contracts |
63,224 | 71,157 | 78,907 | ||||||||||||||||||||||||||||
Total
Commercial Credit-Related Assets (a) |
164,976 | 176,021 | 192,124 | ||||||||||||||||||||||||||||
Managed Consumer Loans (b) |
136,019 | 134,004 | 120,196 | ||||||||||||||||||||||||||||
Total
Managed Credit-Related Assets |
$ | 300,995 | $ | 310,025 | $ | 312,320 | |||||||||||||||||||||||||
NET CHARGE-OFFS: (c) |
|||||||||||||||||||||||||||||||
Commercial Loans |
$ | 320 | $ | 433 | $ | 148 | |||||||||||||||||||||||||
Credit Card — Managed |
658 | 538 | 459 | ||||||||||||||||||||||||||||
All Other Consumer |
96 | 111 | 81 | ||||||||||||||||||||||||||||
Managed Consumer Loans |
754 | 649 | 540 | ||||||||||||||||||||||||||||
Total Managed Net Charge-offs |
$ | 1,074 | $ | 1,082 | $ | 688 | |||||||||||||||||||||||||
NET CHARGE-OFF RATES — ANNUALIZED: |
|||||||||||||||||||||||||||||||
Total Commercial Loans |
1.27 | % | 1.58 | % | 0.50 | % | |||||||||||||||||||||||||
Credit Card — Managed |
5.87 | 5.48 | 5.05 | ||||||||||||||||||||||||||||
Total Managed Loans |
1.82 | 1.80 | 1.17 | ||||||||||||||||||||||||||||
NONPERFORMING ASSETS: |
|||||||||||||||||||||||||||||||
Commercial Loans |
$ | 2,359 | $ | 1,997 | $ | 1,637 | |||||||||||||||||||||||||
Derivative and FX Contracts |
155 | 170 | 109 | ||||||||||||||||||||||||||||
Consumer Loans (b) |
534 | 499 | 377 | ||||||||||||||||||||||||||||
Assets Acquired in Loan Satisfactions |
130 | 124 | 111 | ||||||||||||||||||||||||||||
Total |
3,178 | 2,790 | 2,234 | ||||||||||||||||||||||||||||
Other Receivables (d) |
1,130 | 1,130 | — | ||||||||||||||||||||||||||||
Total Nonperforming Assets |
$ | 4,308 | (e) | $ | 3,920 | $ | 2,234 | ||||||||||||||||||||||||
SELECTED
COUNTRY TOTAL EXPOSURE (in billions) |
|||||||||||||||||||||||||||||||
Argentina |
$ | 0.5 | (f) | $ | 0.6 | $ | 1.8 | ||||||||||||||||||||||||
Brazil |
2.7 | (f) | 3.3 | 1.9 | |||||||||||||||||||||||||||
Turkey |
0.1 | (f) | 0.3 | 0.3 | |||||||||||||||||||||||||||
Venezuela |
0.2 | (f) | 0.3 | 0.4 | |||||||||||||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| Mar 31, 2002 | |||||||||||||||||||||||||||
| Over (Under) | |||||||||||||||||||||||||||
| Dec 31, 01 | Mar 31, 01 | ||||||||||||||||||||||||||
CREDIT-RELATED ASSETS: |
|||||||||||||||||||||||||||
Commercial Loans |
(3 | )% | (10 | )% | |||||||||||||||||||||||
Derivative and FX Contracts |
(11 | ) | (20 | ) | |||||||||||||||||||||||
Total
Commercial Credit-Related Assets (a) |
(6 | ) | (14 | ) | |||||||||||||||||||||||
Managed Consumer Loans (b) |
2 | 13 | |||||||||||||||||||||||||
Total
Managed Credit-Related Assets |
(3 | ) | (4 | ) | |||||||||||||||||||||||
NET CHARGE-OFFS: (c) |
|||||||||||||||||||||||||||
Commercial Loans |
(26 | ) | 116 | ||||||||||||||||||||||||
Credit Card — Managed |
22 | 43 | |||||||||||||||||||||||||
All Other Consumer |
(14 | ) | 19 | ||||||||||||||||||||||||
Managed Consumer Loans |
16 | 40 | |||||||||||||||||||||||||
Total Managed Net Charge-offs |
(1 | ) | 56 | ||||||||||||||||||||||||
NET CHARGE-OFF RATES — ANNUALIZED: |
|||||||||||||||||||||||||||
Total Commercial Loans |
(31 | )bp | 77 | bp | |||||||||||||||||||||||
Credit Card — Managed |
39 | 82 | |||||||||||||||||||||||||
Total Managed Loans |
2 | 65 | |||||||||||||||||||||||||
NONPERFORMING ASSETS: |
|||||||||||||||||||||||||||
Commercial Loans |
18 | % | 44 | % | |||||||||||||||||||||||
Derivative and FX Contracts |
(9 | ) | 42 | ||||||||||||||||||||||||
Consumer Loans (b) |
7 | 42 | |||||||||||||||||||||||||
Assets Acquired in Loan Satisfactions |
5 | 17 | |||||||||||||||||||||||||
Total |
14 | 42 | |||||||||||||||||||||||||
Other Receivables (d) |
— | NM | |||||||||||||||||||||||||
Total Nonperforming Assets |
10 | 93 | |||||||||||||||||||||||||
SELECTED
COUNTRY TOTAL EXPOSURE
(in billions) |
|||||||||||||||||||||||||||
Argentina |
(17 | ) | (72 | ) | |||||||||||||||||||||||
Brazil |
(18 | ) | 42 | ||||||||||||||||||||||||
Turkey |
(67 | ) | (67 | ) | |||||||||||||||||||||||
Venezuela |
(33 | ) | (50 | ) | |||||||||||||||||||||||
| (a) | Unfunded commercial lending-related commitments totaled $245 billion at March 31, 2002, $248 billion at December 31, 2001 and $262 billion at March 31, 2001. | |
| (b) | Includes credit card receivables that have been securitized. | |
| (c) | Net charge-offs are presented for the quarter ended as of the date indicated. | |
| (d) | This amount relates to the Enron-related surety receivables and letter of credit, which are the subject of litigation with credit-worthy entities. | |
| (e) | Nonperforming assets have not been reduced for credit protection (single name credit default swaps and collateralized loan obligations) aggregating $42 million related to nonperforming counterparties at March 31, 2002. | |
| (f) | Estimated |
Page 9
J.P. MORGAN CHASE & CO. RECONCILIATION OF REPORTED TO OPERATING RESULTS (in millions, except per share data) |
|
| FIRST QUARTER 2002 | ||||||||||||||||
| REPORTED | CREDIT | SPECIAL | OPERATING | |||||||||||||
| RESULTS | CARD | ITEMS | BASIS | |||||||||||||
| (a) | (b) | (c) | ||||||||||||||
INCOME STATEMENT |
||||||||||||||||
Revenue |
$ | 7,598 | $ | 321 | $ | — | $ | 7,919 | ||||||||
Expense |
5,034 | — | — | 5,034 | ||||||||||||
Amortization of Intangibles |
69 | — | — | 69 | ||||||||||||
Operating Margin |
2,495 | 321 | — | 2,816 | ||||||||||||
Credit Costs |
753 | 321 | — | 1,074 | ||||||||||||
Income before Merger and
Restructuring Costs |
1,742 | — | — | 1,742 | ||||||||||||
Merger and Restructuring Costs |
255 | — | (255 | ) | — | |||||||||||
Income before Tax Expense |
1,487 | — | 255 | 1,742 | ||||||||||||
Tax Expense |
505 | — | 87 | 592 | ||||||||||||
Income before Effect of Acctng Change |
982 | — | 168 | 1,150 | ||||||||||||
Net Effect of Change in Acctng Principle |
— | — | — | — | ||||||||||||
Net Income |
$ | 982 | $ | — | $ | 168 | $ | 1,150 | ||||||||
NET INCOME PER SHARE |
||||||||||||||||
Basic |
$ | 0.49 | $ | 0.57 | ||||||||||||
Diluted |
0.48 | 0.57 | ||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| FIRST QUARTER 2001 | ||||||||||||||||||||||||
| REPORTED | CREDIT | SPECIAL | AMORTIZATION | OPERATING | ||||||||||||||||||||
| RESULTS | CARD | ITEMS | OF GOODWILL | BASIS | ||||||||||||||||||||
| (a) | (b) | (c) | (d) | |||||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||
Revenue |
$ | 8,325 | $ | 241 | $ | — | $ | — | $ | 8,566 | ||||||||||||||
Expense |
5,493 | — | — | — | 5,493 | |||||||||||||||||||
Amortization of Intangibles |
177 | — | — | (141 | ) | 36 | ||||||||||||||||||
Operating Margin |
2,655 | 241 | — | 141 | 3,037 | |||||||||||||||||||
Credit Costs |
447 | 241 | — | — | 688 | |||||||||||||||||||
Income before Merger and
Restructuring Costs |
2,208 | — | — | 141 | 2,349 | |||||||||||||||||||
Merger and Restructuring Costs |
328 | — | (328 | ) | — | — | ||||||||||||||||||
Income before Tax Expense |
1,880 | — | 328 | 141 | 2,349 | |||||||||||||||||||
Tax Expense |
656 | — | 116 | 50 | 822 | |||||||||||||||||||
Income before Effect of Acctng Change |
1,224 | — | 212 | 91 | 1,527 | |||||||||||||||||||
Net Effect of Change in Acctng Principle |
(25 | ) | — | 25 | — | — | ||||||||||||||||||
Net Income |
$ | 1,199 | $ | — | $ | 237 | $ | 91 | $ | 1,527 | ||||||||||||||
NET INCOME PER SHARE |
||||||||||||||||||||||||
Basic |
$ | 0.60 | (e) | $ | 0.77 | |||||||||||||||||||
Diluted |
0.58 | (e) | 0.74 | |||||||||||||||||||||
| FOURTH QUARTER 2001 | ||||||||||||||||||||
| REPORTED | CREDIT | SPECIAL | AMORTIZATION | OPERATING | ||||||||||||||||
| RESULTS | CARD | ITEMS | OF GOODWILL | BASIS | ||||||||||||||||
| (a) | (b) | (c) | (d) | |||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||
Revenue |
$ | 6,652 | $ | 264 | $ | — | $ | — | $ | 6,916 | ||||||||||
Expense |
4,724 | — | — | — | 4,724 | |||||||||||||||
Amortization of Intangibles |
187 | — | — | (151 | ) | 36 | ||||||||||||||
Operating Margin |
1,741 | 264 | — | 151 | 2,156 | |||||||||||||||
Credit Costs |
1,468 | 264 | — | — | 1,732 | |||||||||||||||
Income before Merger and
Restructuring Costs |
273 | — | — | 151 | 424 | |||||||||||||||
Merger and Restructuring Costs |
841 | — | (841 | ) | — | — | ||||||||||||||
Income (Loss) before Tax Expense |
(568 | ) | — | 841 | 151 | 424 | ||||||||||||||
Tax Expense (Benefit) |
(236 | ) | — | 262 | 42 | 68 | ||||||||||||||
Net Income (Loss) |
$ | (332 | ) | $ | — | $ | 579 | $ | 109 | $ | 356 | |||||||||
NET INCOME (LOSS) PER SHARE |
||||||||||||||||||||
Basic |
$ | (0.18 | ) | $ | 0.17 | |||||||||||||||
Diluted |
(0.18 | ) | 0.17 | |||||||||||||||||
| (a) | Represents condensed results as reported in JPMorgan Chase’s financial statements. | |
| (b) | This column excludes the impact of credit card securitizations. For receivables that have been securitized, amounts that would have been reported as net interest income and as provision for loan losses are instead reported as components of noninterest revenue. | |
| (c) | Includes merger and restructuring costs and special items. The 2002 first quarter includes $255 million in merger and restructuring expenses. The 2001 first quarter includes $328 million in merger and restructuring expenses. The 2001 fourth quarter includes $841 million in merger and restructuring expenses. | |
| (d) | Reported net income for the first quarter 2002 reflects the adoption of SFAS 142 and, accordingly, the Firm ceased amortizing goodwill effective January 1, 2002. There was no impairment of goodwill upon adoption of SFAS 142. Previously reported operating earnings for 2001 have been adjusted by adding back amortization of goodwill to make 2001 results comparable to 2002. | |
| (e) | Includes the effect of the accounting change. Excluding the accounting change, basic and diluted net income per share were $0.61 and $0.59, respectively. |
Page 10
Exhibit 99.2
PRESS RELEASE FINANCIAL SUPPLEMENT
FIRST QUARTER 2002
| J.P. MORGAN CHASE & CO. | ||||
| TABLE OF CONTENTS | ||||
| Page | ||||
| JPMorgan Chase Consolidated Statement of Income — Reported Basis |
3 | |||
Lines of Business Financial Highlights Summary |
4 | |||
Statement of Income — Operating Basis Excluding JPMorgan Partners |
5 | |||
Statement of Income — Operating Basis |
6 | |||
Reconciliation from Reported to Operating Basis |
7 | |||
| Segment Detail Investment Bank |
8 | |||
Treasury & Securities Services |
9 | |||
Investment Management & Private Banking |
10 | |||
| JPMorgan Partners | 11 | |||
Investment Portfolio — Private and Public Securities |
12 | |||
Retail & Middle Market Financial Services |
13 | |||
| Supplemental Detail Noninterest Revenue and Noninterest Expense Detail |
14 | |||
Consolidated Balance Sheet |
15 | |||
Condensed Average Balance Sheet and Annualized Yields |
16 | |||
Credit-Related Information |
17-18 | |||
Capital |
19 | |||
Glossary of Terms |
20 |
2
| J.P. MORGAN CHASE & CO. STATEMENT OF INCOME — REPORTED BASIS (in millions, except per share and ratio data) |
|
| 1QTR | 4QTR | 3QTR | 2QTR | 1QTR | |||||||||||||||||||||||||||||||||
| 2002 | 2001 | 2001 | 2001 | 2001 | |||||||||||||||||||||||||||||||||
REVENUE |
|||||||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 755 | $ | 931 | $ | 811 | $ | 929 | $ | 941 | |||||||||||||||||||||||||||
Trading Revenue |
1,299 | 355 | 1,301 | 1,261 | 2,001 | ||||||||||||||||||||||||||||||||
Fees and Commissions |
2,584 | 2,493 | 2,397 | 2,460 | 2,131 | ||||||||||||||||||||||||||||||||
Private Equity — Realized Gains (Losses) |
(10 | ) | 81 | 204 | (46 | ) | 412 | ||||||||||||||||||||||||||||||
Private Equity — Unrealized Gains (Losses) |
(228 | ) | (505 | ) | (311 | ) | (783 | ) | (285 | ) | |||||||||||||||||||||||||||
Securities Gains |
114 | 202 | 142 | 67 | 455 | ||||||||||||||||||||||||||||||||
Other Revenue |
157 | 151 | 218 | 280 | 252 | ||||||||||||||||||||||||||||||||
Total Noninterest Revenue |
4,671 | 3,708 | 4,762 | 4,168 | 5,907 | ||||||||||||||||||||||||||||||||
Interest Income |
6,286 | 6,823 | 7,709 | 8,469 | 9,180 | ||||||||||||||||||||||||||||||||
Interest Expense |
3,359 | 3,879 | 5,050 | 5,688 | 6,762 | ||||||||||||||||||||||||||||||||
Net Interest Income |
2,927 | 2,944 | 2,659 | 2,781 | 2,418 | ||||||||||||||||||||||||||||||||
Revenue before Provision for Loan Losses |
7,598 | 6,652 | 7,421 | 6,949 | 8,325 | ||||||||||||||||||||||||||||||||
Provision for Loan Losses |
753 | 1,468 | 745 | 525 | 447 | ||||||||||||||||||||||||||||||||
TOTAL NET REVENUE |
6,845 | 5,184 | 6,676 | 6,424 | 7,878 | ||||||||||||||||||||||||||||||||
EXPENSE |
|||||||||||||||||||||||||||||||||||||
Compensation Expense |
2,823 | 2,622 | 2,860 | 3,026 | 3,336 | ||||||||||||||||||||||||||||||||
Occupancy Expense |
338 | 334 | 339 | 327 | 348 | ||||||||||||||||||||||||||||||||
Technology and Communications Expense |
665 | 640 | 663 | 674 | 654 | ||||||||||||||||||||||||||||||||
Merger and Restructuring Costs |
255 | 841 | 876 | 478 | 328 | ||||||||||||||||||||||||||||||||
Amortization of Intangibles |
69 | 187 | 182 | 183 | 177 | ||||||||||||||||||||||||||||||||
Other Expense |
1,208 | 1,128 | 1,087 | 1,151 | 1,155 | ||||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
5,358 | 5,752 | 6,007 | 5,839 | 5,998 | ||||||||||||||||||||||||||||||||
Income (Loss) before Income Tax Expense and Effect of Accounting Change |
1,487 | (568 | ) | 669 | 585 | 1,880 | |||||||||||||||||||||||||||||||
Income Tax Expense (Benefit) |
505 | (236 | ) | 220 | 207 | 656 | |||||||||||||||||||||||||||||||
INCOME BEFORE EFFECT OF ACCOUNTING CHANGE |
982 | (332 | ) | 449 | 378 | 1,224 | |||||||||||||||||||||||||||||||
Net Effect of Change in Accounting Principle |
— | — | — | — | (25 | ) | |||||||||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 982 | $ | (332 | ) | $ | 449 | $ | 378 | $ | 1,199 | ||||||||||||||||||||||||||
NET INCOME (LOSS) PER SHARE (a) |
|||||||||||||||||||||||||||||||||||||
Basic |
$ | 0.49 | $ | (0.18 | ) | $ | 0.22 | $ | 0.18 | $ | 0.60 | ||||||||||||||||||||||||||
Diluted |
0.48 | (0.18 | ) | 0.22 | 0.18 | 0.58 | |||||||||||||||||||||||||||||||
PERFORMANCE RATIOS |
|||||||||||||||||||||||||||||||||||||
Return on Average Assets |
0.55 | % | NM | 0.24 | % | 0.21 | % | 0.67 | % | ||||||||||||||||||||||||||||
Return on Average Common Equity |
9.7 | NM | 4.2 | 3.5 | 11.6 | ||||||||||||||||||||||||||||||||
FULL-TIME EQUIVALENT EMPLOYEES (b) |
96,938 | 95,812 | 96,633 | 97,224 | 98,518 | ||||||||||||||||||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| 1QTR 2002 | |||||||||||||||||
| Over (Under) | |||||||||||||||||
| 4Q 2001 | 1Q 2001 | ||||||||||||||||
REVENUE |
|||||||||||||||||
Investment Banking Fees |
(19 | )% | (20 | )% | |||||||||||||
Trading Revenue |
266 | (35 | ) | ||||||||||||||
Fees and Commissions |
4 | 21 | |||||||||||||||
Private Equity — Realized Gains (Losses) |
NM | NM | |||||||||||||||
Private Equity — Unrealized Gains (Losses) |
55 | 20 | |||||||||||||||
Securities Gains |
(44 | ) | (75 | ) | |||||||||||||
Other Revenue |
4 | (38 | ) | ||||||||||||||
Total
Noninterest Revenue |
26 | (21 | ) | ||||||||||||||
Interest Income |
(8 | ) | (32 | ) | |||||||||||||
Interest Expense |
(13 | ) | (50 | ) | |||||||||||||
Net Interest Income |
(1 | ) | 21 | ||||||||||||||
Revenue before Provision for Loan Losses |
14 | (9 | ) | ||||||||||||||
Provision for Loan Losses |
(49 | ) | 68 | ||||||||||||||
TOTAL NET REVENUE |
32 | (13 | ) | ||||||||||||||
EXPENSE |
|||||||||||||||||
Compensation Expense |
8 | (15 | ) | ||||||||||||||
Occupancy Expense |
1 | (3 | ) | ||||||||||||||
Technology and Communications Expense |
4 | 2 | |||||||||||||||
Merger and Restructuring Costs |
(70 | ) | (22 | ) | |||||||||||||
Amortization of Intangibles |
(63 | ) | (61 | ) | |||||||||||||
Other Expense |
7 | 5 | |||||||||||||||
TOTAL NONINTEREST EXPENSE |
(7 | ) | (11 | ) | |||||||||||||
Income (Loss) before Income Tax Expense and Effect of Accounting Change |
NM | (21 | ) | ||||||||||||||
Income Tax Expense (Benefit) |
NM | (23 | ) | ||||||||||||||
INCOME BEFORE EFFECT OF ACCOUNTING CHANGE |
NM | (20 | ) | ||||||||||||||
Net Effect of Change in Accounting Principle |
NM | NM | |||||||||||||||
NET INCOME (LOSS) |
NM | (18 | ) | ||||||||||||||
NET INCOME (LOSS) PER SHARE (a) |
|||||||||||||||||
Basic |
NM | (18 | ) | ||||||||||||||
Diluted |
NM | (17 | ) | ||||||||||||||
PERFORMANCE RATIOS |
|||||||||||||||||
Return on Average Assets |
NM | (12 | )bp | ||||||||||||||
Return on Average Common Equity |
NM | (190 | ) | ||||||||||||||
FULL-TIME EQUIVALENT EMPLOYEES (b) |
1 | % | (2 | )% | |||||||||||||
Note: Prior periods have been restated to conform with current methodologies.
| (a) | Basic and diluted earnings per share have been reduced by $0.01 in the first quarter of 2001 due to the impact of the adoption of SFAS 133 relating to the accounting for derivative instruments and hedging activities. | |
| (b) | Represents actual period end amount for each respective quarter. |
Page 3
| J.P. MORGAN CHASE &
CO. LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY (in millions, except per share and ratio data) |
|
| 1QTR | 4QTR | 3QTR | 2QTR | 1QTR | |||||||||||||||||||
| 2002 | 2001 | 2001 | 2001 | 2001 | |||||||||||||||||||
OPERATING REVENUE |
|||||||||||||||||||||||
Investment Bank |
$ | 3,620 | $ | 3,088 | $ | 3,544 | $ | 3,716 | $ | 4,327 | |||||||||||||
Treasury & Securities Services |
935 | 941 | 974 | 964 | 953 | ||||||||||||||||||
Investment Management & Private Banking |
741 | 731 | 741 | 806 | 822 | ||||||||||||||||||
Retail & Middle Market Financial Services |
3,131 | 2,936 | 2,855 | 2,746 | 2,654 | ||||||||||||||||||
Corporate (a) |
(205 | ) | (328 | ) | (246 | ) | (123 | ) | (277 | ) | |||||||||||||
OPERATING REVENUE EXCLUDING JPMP |
8,222 | 7,368 | 7,868 | 8,109 | 8,479 | ||||||||||||||||||
JPMorgan Partners |
(303 | ) | (452 | ) | (177 | ) | (887 | ) | 87 | ||||||||||||||
OPERATING REVENUE (b) |
$ | 7,919 | $ | 6,916 | $ | 7,691 | $ | 7,222 | $ | 8,566 | |||||||||||||
EARNINGS |
|||||||||||||||||||||||
Investment Bank |
$ | 755 | $ | 367 | $ | 706 | $ | 791 | $ | 1,033 | |||||||||||||
Treasury & Securities Services |
141 | 164 | 178 | 158 | 168 | ||||||||||||||||||
Investment Management & Private Banking |
126 | 97 | 121 | 120 | 106 | ||||||||||||||||||
Retail & Middle Market Financial Services |
526 | 330 | 425 | 425 | 421 | ||||||||||||||||||
Corporate (a) |
(150 | ) | (257 | ) | (143 | ) | (98 | ) | (197 | ) | |||||||||||||
OPERATING EARNINGS EXCLUDING JPMP |
1,398 | 701 | 1,287 | 1,396 | 1,531 | ||||||||||||||||||
JPMorgan Partners |
(248 | ) | (345 | ) | (154 | ) | (610 | ) | (4 | ) | |||||||||||||
OPERATING EARNINGS (b) |
1,150 | 356 | 1,133 | 786 | 1,527 | ||||||||||||||||||
Special Items & Net Effect of Change in Acctng Principle |
(168 | ) | (579 | ) | (587 | ) | (312 | ) | (237 | ) | |||||||||||||
Amortization of Goodwill, Net of Taxes |
— | (109 | ) | (97 | ) | (96 | ) | (91 | ) | ||||||||||||||
NET INCOME (LOSS) (b) |
$ | 982 | $ | (332 | ) | $ | 449 | $ | 378 | $ | 1,199 | ||||||||||||
EARNINGS PER SHARE — DILUTED |
|||||||||||||||||||||||
OPERATING EARNINGS EXCLUDING JPMP |
$ | 0.69 | $ | 0.34 | $ | 0.63 | $ | 0.68 | $ | 0.74 | |||||||||||||
Impact of JPMP |
(0.12 | ) | (0.17 | ) | (0.08 | ) | (0.30 | ) | — | ||||||||||||||
OPERATING EARNINGS (b) |
0.57 | 0.17 | 0.55 | 0.38 | 0.74 | ||||||||||||||||||
Special Items & Net Effect of Change in Acctng Principle |
(0.09 | ) | (0.29 | ) | (0.29 | ) | (0.15 | ) | (0.12 | ) | |||||||||||||
Amortization of Goodwill, Net of Taxes |
— | (0.05 | ) | (0.04 | ) | (0.05 | ) | (0.04 | ) | ||||||||||||||
NET INCOME (LOSS) (b) |
$ | 0.48 | $ | (0.18 | )(c) | $0.22 | $ | 0.18 | $ | 0.58 | |||||||||||||
OPERATING RETURN ON COMMON EQUITY |
|||||||||||||||||||||||
Investment Bank |
15.9 | % | 7.6 | % | 15.2 | % | 16.8 | % | 20.8 | % | |||||||||||||
Treasury & Securities Services |
19.1 | 22.6 | 24.3 | 20.7 | 23.5 | ||||||||||||||||||
Investment Management & Private Banking |
8.4 | 6.2 | 7.7 | 7.5 | 6.4 | ||||||||||||||||||
Retail & Middle Market Financial Services |
21.5 | 14.2 | 18.6 | 19.3 | 19.9 | ||||||||||||||||||
OPERATING RETURN ON COMMON EQUITY (b) |
11.4 | 3.3 | 10.7 | 7.4 | 14.8 | ||||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| 1QTR 2002 | ||||||||||||||||||||
| Over (Under) | ||||||||||||||||||||
| 4Q 2001 | 1Q 2001 | |||||||||||||||||||
OPERATING REVENUE |
||||||||||||||||||||
Investment Bank |
17 | % | (16 | )% | ||||||||||||||||
Treasury & Securities Services |
(1 | ) | (2 | ) | ||||||||||||||||
Investment Management & Private Banking |
1 | (10 | ) | |||||||||||||||||
Retail & Middle Market Financial Services |
7 | 18 | ||||||||||||||||||
Corporate (a) |
38 | 26 | ||||||||||||||||||
OPERATING REVENUE EXCLUDING JPMP |
12 | (3 | ) | |||||||||||||||||
JPMorgan Partners |
33 | NM | ||||||||||||||||||
OPERATING
REVENUE (b) |
15 | (8 | ) | |||||||||||||||||
EARNINGS |
||||||||||||||||||||
Investment Bank |
106 | (27 | ) | |||||||||||||||||
Treasury & Securities Services |
(14 | ) | (16 | ) | ||||||||||||||||
Investment Management & Private Banking |
30 | 19 | ||||||||||||||||||
Retail & Middle Market Financial Services |
59 | 25 | ||||||||||||||||||
Corporate (a) |
42 | 24 | ||||||||||||||||||
OPERATING EARNINGS EXCLUDING JPMP |
99 | (9 | ) | |||||||||||||||||
JPMorgan Partners |
28 | NM | ||||||||||||||||||
OPERATING EARNINGS (b) |
223 | (25 | ) | |||||||||||||||||
Special Items & Net Effect of Change in Acctng Principle |
71 | 29 | ||||||||||||||||||
Amortization of Goodwill, Net of Taxes |
NM | NM | ||||||||||||||||||
NET INCOME (LOSS) (b) |
NM | (18 | ) | |||||||||||||||||
EARNINGS PER SHARE — DILUTED |
||||||||||||||||||||
OPERATING EARNINGS EXCLUDING JPMP |
103 | (7 | ) | |||||||||||||||||
Impact of JPMP |
29 | NM | ||||||||||||||||||
OPERATING EARNINGS (b) |
235 | (23 | ) | |||||||||||||||||
Special Items & Net Effect of Change in Acctng Principle |
69 | 25 | ||||||||||||||||||
Amortization of Goodwill, Net of Taxes |
NM | NM | ||||||||||||||||||
NET INCOME (LOSS) (b) |
NM | (17 | ) | |||||||||||||||||
OPERATING RETURN ON COMMON EQUITY |
||||||||||||||||||||
Investment Bank |
830 | bp | (490 | )bp | ||||||||||||||||
Treasury & Securities Services |
(350 | ) | (440 | ) | ||||||||||||||||
Investment Management & Private Banking |
220 | 200 | ||||||||||||||||||
Retail & Middle Market Financial Services |
730 | 160 | ||||||||||||||||||
OPERATING RETURN ON COMMON EQUITY (b) |
810 | (340 | ) | |||||||||||||||||
| (a) | Includes Support Units and the effects remaining at the corporate level after the implementation of management accounting policies. | |
| (b) | Represents consolidated JPMorgan Chase. | |
| (c) | Diluted EPS is reported as $(0.18) which is the same as basic EPS, instead of $(0.17), since using diluted average shares outstanding would cause antidilution. As a result, the net loss earnings per share does not foot by $(0.01). |
Page 4
| J.P. MORGAN CHASE &
CO. STATEMENT OF INCOME — OPERATING BASIS EXCLUDING JPMORGAN PARTNERS (in millions, except per share and ratio data) |
|
| 1QTR | 4QTR | 3QTR | 2QTR | 1QTR | ||||||||||||||||||||||||||||||||||||||
| 2002 | 2001 | 2001 | 2001 | 2001 | ||||||||||||||||||||||||||||||||||||||
OPERATING REVENUE |
||||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 755 | $ | 932 | $ | 812 | $ | 928 | $ | 942 | ||||||||||||||||||||||||||||||||
Trading-Related Revenue (Including Trading NII) |
1,710 | 896 | 1,608 | 1,587 | 2,148 | |||||||||||||||||||||||||||||||||||||
Fees and Commissions |
2,466 | 2,297 | 2,289 | 2,403 | 2,069 | |||||||||||||||||||||||||||||||||||||
Private Equity — Realized Gains (Losses) |
3 | (26 | ) | — | 10 | (8 | ) | |||||||||||||||||||||||||||||||||||
Private Equity — Unrealized Gains (Losses) |
14 | — | (5 | ) | (16 | ) | (4 | ) | ||||||||||||||||||||||||||||||||||
Securities Gains |
114 | 202 | 142 | 67 | 455 | |||||||||||||||||||||||||||||||||||||
Other Revenue |
133 | 157 | 206 | 285 | 249 | |||||||||||||||||||||||||||||||||||||
Net Interest Income (Excluding Trading NII) |
3,027 | 2,910 | 2,816 | 2,845 | 2,628 | |||||||||||||||||||||||||||||||||||||
TOTAL
OPERATING REVENUE |
8,222 | 7,368 | 7,868 | 8,109 | 8,479 | |||||||||||||||||||||||||||||||||||||
OPERATING EXPENSE |
||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
2,783 | 2,583 | 2,826 | 2,993 | 3,292 | |||||||||||||||||||||||||||||||||||||
Noncompensation Expense |
2,231 | 2,085 | 2,092 | 2,150 | 2,139 | |||||||||||||||||||||||||||||||||||||
TOTAL OPERATING EXPENSE |
5,014 | 4,668 | 4,918 | 5,143 | 5,431 | |||||||||||||||||||||||||||||||||||||
Credit Costs |
1,074 | 1,732 | 1,015 | 798 | 688 | |||||||||||||||||||||||||||||||||||||
Operating Income before Taxes |
2,134 | 968 | 1,935 | 2,168 | 2,360 | |||||||||||||||||||||||||||||||||||||
Income Taxes |
736 | 267 | 648 | 772 | 829 | |||||||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 1,398 | $ | 701 | $ | 1,287 | $ | 1,396 | $ | 1,531 | ||||||||||||||||||||||||||||||||
OPERATING BASIS |
||||||||||||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.69 | $ | 0.34 | $ | 0.63 | $ | 0.68 | $ | 0.74 | ||||||||||||||||||||||||||||||||
Return on Common Equity |
16.2 | % | 7.7 | % | 14.3 | % | 15.8 | % | 18.0 | % | ||||||||||||||||||||||||||||||||
Overhead Ratio |
61 | 63 | 63 | 63 | 64 | |||||||||||||||||||||||||||||||||||||
Compensation Expense as a % of Operating Revenue |
34 | 35 | 36 | 37 | 39 | |||||||||||||||||||||||||||||||||||||
Noncompensation Expense as a % of Operating Revenue |
27 | 28 | 27 | 27 | 25 | |||||||||||||||||||||||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| 1QTR 2002 | ||||||||||||||||||||||
| Over (Under) | ||||||||||||||||||||||
| 4Q 2001 | 1Q 2001 | |||||||||||||||||||||
OPERATING REVENUE |
||||||||||||||||||||||
Investment Banking Fees |
(19 | )% | (20 | )% | ||||||||||||||||||
Trading-Related Revenue (Including Trading NII) |
91 | (20 | ) | |||||||||||||||||||
Fees and Commissions |
7 | 19 | ||||||||||||||||||||
Private Equity — Realized Gains (Losses) |
NM | NM | ||||||||||||||||||||
Private Equity — Unrealized Gains (Losses) |
NM | NM | ||||||||||||||||||||
Securities Gains |
(44 | ) | (75 | ) | ||||||||||||||||||
Other Revenue |
(15 | ) | (47 | ) | ||||||||||||||||||
Net Interest Income (Excluding Trading NII) |
4 | 15 | ||||||||||||||||||||
TOTAL OPERATING REVENUE |
12 | (3 | ) | |||||||||||||||||||
OPERATING EXPENSE |
||||||||||||||||||||||
Compensation Expense |
8 | (15 | ) | |||||||||||||||||||
Noncompensation Expense |
7 | 4 | ||||||||||||||||||||
TOTAL OPERATING EXPENSE |
7 | (8 | ) | |||||||||||||||||||
Credit Costs |
(38 | ) | 56 | |||||||||||||||||||
Operating Income before Taxes |
120 | (10 | ) | |||||||||||||||||||
Income Taxes |
176 | (11 | ) | |||||||||||||||||||
OPERATING EARNINGS |
99 | (9 | ) | |||||||||||||||||||
OPERATING BASIS |
||||||||||||||||||||||
Diluted Earnings per Share |
103 | (7 | ) | |||||||||||||||||||
Return on Common Equity |
850 | bp | (180 | )bp | ||||||||||||||||||
Overhead Ratio |
(200 | ) | (300 | ) | ||||||||||||||||||
Compensation Expense as a % of Operating Revenue |
(100 | ) | (500 | ) | ||||||||||||||||||
Noncompensation Expense as a % of Operating Revenue |
(100 | ) | 200 | |||||||||||||||||||
Page 5
| J.P. MORGAN CHASE &
CO. STATEMENT OF INCOME — OPERATING BASIS (in millions, except per share and ratio data) |
|
| 1QTR | 4QTR | 3QTR | 2QTR | 1QTR | ||||||||||||||||||||||||||||||||||||||
| 2002 | 2001 | 2001 | 2001 | 2001 | ||||||||||||||||||||||||||||||||||||||
OPERATING REVENUE |
||||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 755 | $ | 931 | $ | 811 | $ | 929 | $ | 941 | ||||||||||||||||||||||||||||||||
Trading-Related Revenue (Including Trading NII) |
1,720 | 904 | 1,614 | 1,594 | 2,167 | |||||||||||||||||||||||||||||||||||||
Fees and Commissions |
2,493 | 2,340 | 2,297 | 2,422 | 2,082 | |||||||||||||||||||||||||||||||||||||
Private Equity — Realized Gains (Losses) |
(10 | ) | 81 | 204 | (46 | ) | 412 | |||||||||||||||||||||||||||||||||||
Private Equity — Unrealized Gains (Losses) |
(228 | ) | (505 | ) | (311 | ) | (783 | ) | (285 | ) | ||||||||||||||||||||||||||||||||
Securities Gains |
114 | 202 | 142 | 67 | 455 | |||||||||||||||||||||||||||||||||||||
Other Revenue |
137 | 138 | 209 | 280 | 257 | |||||||||||||||||||||||||||||||||||||
Net Interest Income (Excluding Trading NII) |
2,938 | 2,825 | 2,725 | 2,759 | 2,537 | |||||||||||||||||||||||||||||||||||||
TOTAL
OPERATING REVENUE |
7,919 | 6,916 | 7,691 | 7,222 | 8,566 | |||||||||||||||||||||||||||||||||||||
OPERATING EXPENSE |
||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
2,823 | 2,622 | 2,860 | 3,026 | 3,336 | |||||||||||||||||||||||||||||||||||||
Noncompensation Expense |
2,280 | 2,138 | 2,125 | 2,188 | 2,193 | |||||||||||||||||||||||||||||||||||||
TOTAL OPERATING EXPENSE |
5,103 | 4,760 | 4,985 | 5,214 | 5,529 | |||||||||||||||||||||||||||||||||||||
Credit Costs |
1,074 | 1,732 | 1,015 | 798 | 688 | |||||||||||||||||||||||||||||||||||||
Operating Income before Taxes |
1,742 | 424 | 1,691 | 1,210 | 2,349 | |||||||||||||||||||||||||||||||||||||
Income Taxes |
592 | 68 | 558 | 424 | 822 | |||||||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 1,150 | $ | 356 | $ | 1,133 | $ | 786 | $ | 1,527 | ||||||||||||||||||||||||||||||||
OPERATING BASIS |
||||||||||||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.57 | $ | 0.17 | $ | 0.55 | $ | 0.38 | $ | 0.74 | ||||||||||||||||||||||||||||||||
SVA |
(59 | ) | (915 | ) | (136 | ) | (481 | ) | 285 | |||||||||||||||||||||||||||||||||
Return on Managed Assets |
0.63 | % | 0.19 | % | 0.59 | % | 0.42 | % | 0.83 | % | ||||||||||||||||||||||||||||||||
Return on Common Equity |
11.4 | 3.3 | 10.7 | 7.4 | 14.8 | |||||||||||||||||||||||||||||||||||||
Overhead Ratio |
64 | 69 | 65 | 72 | 65 | |||||||||||||||||||||||||||||||||||||
Common Dividend Payout Ratio |
60 | 199 | 61 | 89 | 45 | |||||||||||||||||||||||||||||||||||||
Effective Tax Rate |
34 | 16 | 33 | 35 | 35 | |||||||||||||||||||||||||||||||||||||
Compensation Expense as a % of Operating Revenue |
36 | 38 | 37 | 42 | 39 | |||||||||||||||||||||||||||||||||||||
Noncompensation Expense as a % of Operating Revenue |
29 | 31 | 28 | 30 | 26 | |||||||||||||||||||||||||||||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
| 1QTR 2002 | ||||||||||||||||||
| Over (Under) | ||||||||||||||||||
| 4Q 2001 | 1Q 2001 | |||||||||||||||||
OPERATING REVENUE |
||||||||||||||||||
Investment Banking Fees |
(19 | )% | (20 | )% | ||||||||||||||
Trading-Related Revenue (Including Trading NII) |
90 | (21 | ) | |||||||||||||||
Fees and Commissions |
7 | 20 | ||||||||||||||||
Private Equity — Realized Gains (Losses) |
NM | NM | ||||||||||||||||
Private Equity — Unrealized Gains (Losses) |
55 | 20 | ||||||||||||||||
Securities Gains |
(44 | ) | (75 | ) | ||||||||||||||
Other Revenue |
(1 | ) | (47 | ) | ||||||||||||||
Net Interest Income (Excluding Trading NII) |
4 | 16 | ||||||||||||||||
TOTAL OPERATING REVENUE |
15 | (8 | ) | |||||||||||||||
OPERATING EXPENSE |
||||||||||||||||||
Compensation Expense |
8 | (15 | ) | |||||||||||||||
Noncompensation Expense |
7 | 4 | ||||||||||||||||
TOTAL OPERATING EXPENSE |
7 | (8 | ) | |||||||||||||||
Credit Costs |
(38 | ) | 56 | |||||||||||||||
Operating Income before Taxes |
311 | (26 | ) | |||||||||||||||
Income Taxes |
NM | (28 | ) | |||||||||||||||
OPERATING
EARNINGS |
223 | (25 | ) | |||||||||||||||
OPERATING BASIS |
||||||||||||||||||
Diluted Earnings per Share |
235 | (23 | ) | |||||||||||||||
SVA |
94 | NM | ||||||||||||||||
Return on Managed Assets |
||||||||||||||||||