JPMorgan Chase & Co. (JPM) 10-Q 2019 Q2 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the quarterly period ended Commission file

June 30, 2019 number 1-5805

JPMorgan Chase & Co.

(Exact name of registrant as specified in its charter)

Delaware	13-2624428
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

383 Madison Avenue, New York, New York 10179

(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	JPM	The New York Stock Exchange
Depositary Shares representing interests in shares of 5.45% Non-Cumulative Preferred Stock Series P	JPM PR A	The New York Stock Exchange
Depositary Shares representing interests in shares of 6.30% Non-Cumulative Preferred Stock Series W	JPM PR E	The New York Stock Exchange
Depositary Shares representing interests in shares of 6.125% Non-Cumulative Preferred Stock Series Y	JPM PR F	The New York Stock Exchange
Depositary Shares representing interests in shares of 6.10% Non-Cumulative Preferred Stock Series AA	JPM PR G	The New York Stock Exchange
Depositary Shares representing interests in shares of 6.15% Non-Cumulative Preferred Stock Series BB	JPM PR H	The New York Stock Exchange
Depositary Shares representing interests in shares of 5.75% Non-Cumulative Preferred Stock Series DD	JPM PR D	The New York Stock Exchange
Depositary Shares representing interests in shares of 6.00% Non-Cumulative Preferred Stock Series EE	JPM PR C	The New York Stock Exchange
Alerian MLP Index ETNs due May 24, 2024	AMJ	NYSE Arca, Inc.
Guarantee of Callable Step-Up FRNs due April 26, 2028 of JPMorgan Chase Financial Company LLC	JPM/28	The New York Stock Exchange
Guarantee of Cushing 30 MLP Index ETNs due June 15, 2037 of JPMorgan Chase Financial Company LLC	PPLN	NYSE Arca, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Number of shares of common stock outstanding as of June 30, 2019: 3,197,484,989

FORM 10-Q

TABLE OF CONTENTS

Part I – Financial information		Page
Item 1.	Financial Statements.
	Consolidated Financial Statements – JPMorgan Chase & Co.:
	Consolidated statements of income (unaudited) for the three and six months ended June 30, 2019 and 2018	80
	Consolidated statements of comprehensive income (unaudited) for the three and six months ended June 30, 2019 and 2018	81
	Consolidated balance sheets (unaudited) at June 30, 2019 and December 31, 2018	82
	Consolidated statements of changes in stockholders’ equity (unaudited) for the three and six months ended June 30, 2019 and 2018	83
	Consolidated statements of cash flows (unaudited) for the six months ended June 30, 2019 and 2018	84
	Notes to Consolidated Financial Statements (unaudited)	85
	Report of Independent Registered Public Accounting Firm	165
	Consolidated Average Balance Sheets, Interest and Rates (unaudited) for the three months ended June 30, 2019 and 2018	166
	Glossary of Terms and Acronyms and Line of Business Metrics	168
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	Consolidated Financial Highlights	3
	Introduction	4
	Executive Overview	5
	Consolidated Results of Operations	10
	Consolidated Balance Sheets and Cash Flows Analysis	15
	Off-Balance Sheet Arrangements	18
	Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures	19
	Business Segment Results	21
	Enterprise-Wide Risk Management	43
	Capital Risk Management	44
	Liquidity Risk Management	49
	Consumer Credit Portfolio	55
	Wholesale Credit Portfolio	60
	Investment Portfolio Risk Management	69
	Market Risk Management	70
	Country Risk Management	75
	Critical Accounting Estimates Used by the Firm	76
	Accounting and Reporting Developments	78
	Forward-Looking Statements	79
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	176
Item 4.	Controls and Procedures.	176
Part II – Other information
Item 1.	Legal Proceedings.	176
Item 1A.	Risk Factors.	176
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	176
Item 3.	Defaults Upon Senior Securities.	177
Item 4.	Mine Safety Disclosures.	177
Item 5.	Other Information.	177
Item 6.	Exhibits.	177

2

JPMorgan Chase & Co.

Consolidated financial highlights (unaudited)

As of or for the period ended, (in millions, except per share, ratio, headcount data and where otherwise noted)																Six months ended June 30,
	2Q19			1Q19			4Q18			3Q18			2Q18			2019			2018
Selected income statement data
Total net revenue	$	28,832		$	29,123		$	26,109		$	27,260		$	27,753		$	57,955		$	55,660
Total noninterest expense	16,341			16,395			15,720			15,623			15,971			32,736			32,051
Pre-provision profit	12,491			12,728			10,389			11,637			11,782			25,219			23,609
Provision for credit losses	1,149			1,495			1,548			948			1,210			2,644			2,375
Income before income tax expense	11,342			11,233			8,841			10,689			10,572			22,575			21,234
Income tax expense	1,690			2,054			1,775			2,309			2,256			3,744			4,206
Net income	$	9,652		$	9,179		$	7,066		$	8,380		$	8,316		$	18,831		$	17,028
Earnings per share data
Net income:    Basic	$	2.83		$	2.65		$	1.99		$	2.35		$	2.31		$	5.48		$	4.69
Diluted	2.82			2.65			1.98			2.34			2.29			5.46			4.66
Average shares: Basic	3,250.6			3,298.0			3,335.8			3,376.1			3,415.2			3,274.3			3,436.7
Diluted	3,259.7			3,308.2			3,347.3			3,394.3			3,434.7			3,283.9			3,457.1
Market and per common share data
Market capitalization	357,479			328,387			319,780			375,239			350,204			357,479			350,204
Common shares at period-end	3,197.5			3,244.0			3,275.8			3,325.4			3,360.9			3,197.5			3,360.9
Book value per share	73.88			71.78			70.35			69.52			68.85			73.88			68.85
Tangible book value per share (“TBVPS”)(a)	59.52			57.62			56.33			55.68			55.14			59.52			55.14
Cash dividends declared per share	0.80			0.80			0.80			0.80			0.56			1.60			1.12
Selected ratios and metrics
Return on common equity (“ROE”)(b)	16		%	16		%	12		%	14		%	14		%	16		%	14		%
Return on tangible common equity (“ROTCE”)(a)(b)	20			19			14			17			17			20			18
Return on assets(b)	1.41			1.39			1.06			1.28			1.28			1.40			1.32
Overhead ratio	57			56			60			57			58			56			58
Loans-to-deposits ratio	63			64			67			65			65			63			65
Liquidity coverage ratio (“LCR”) (average)	113			111			113			115			115			113			115
Common equity Tier 1 (“CET1”) capital ratio(c)	12.2			12.1			12.0			12.0			12.0			12.2			12.0
Tier 1 capital ratio(c)	14.0			13.8			13.7			13.6			13.6			14.0			13.6
Total capital ratio(c)	15.8			15.7			15.5			15.4			15.5			15.8			15.5
Tier 1 leverage ratio(c)	8.0			8.1			8.1			8.2			8.2			8.0			8.2
Supplementary leverage ratio (“SLR”)	6.4			6.4			6.4			6.5			6.5			6.4			6.5
Selected balance sheet data (period-end)
Trading assets	$	523,373		$	533,402		$	413,714		$	419,827		$	418,799		$	523,373		$	418,799
Investment securities	307,264			267,365			261,828			231,398			233,015			307,264			233,015
Loans	956,889			956,245			984,554			954,318			948,414			956,889			948,414
Core loans	908,971			905,943			931,856			899,006			889,433			908,971			889,433
Average core loans	905,786			916,567			907,271			894,279			877,640			911,146			869,410
Total assets	2,727,379			2,737,188			2,622,532			2,615,183			2,590,050			2,727,379			2,590,050
Deposits	1,524,361			1,493,441			1,470,666			1,458,762			1,452,122			1,524,361			1,452,122
Long-term debt	288,869			290,893			282,031			270,124			273,114			288,869			273,114
Common stockholders’ equity	236,222			232,844			230,447			231,192			231,390			236,222			231,390
Total stockholders’ equity	263,215			259,837			256,515			258,956			257,458			263,215			257,458
Headcount	254,983			255,998			256,105			255,313			252,942			254,983			252,942
Credit quality metrics
Allowance for credit losses	$	14,295		$	14,591		$	14,500		$	14,225		$	14,367		$	14,295		$	14,367
Allowance for loan losses to total retained loans	1.39		%	1.43		%	1.39		%	1.39		%	1.41		%	1.39		%	1.41		%
Allowance for loan losses to retained loans excluding purchased credit-impaired loans(d)	1.28			1.28			1.23			1.23			1.22			1.28			1.22
Nonperforming assets	$	5,260		$	5,616		$	5,190		$	5,034		$	5,767		$	5,260		$	5,767
Net charge-offs	1,403			1,361			1,236			1,033			1,252			2,764			2,587
Net charge-off rate	0.60		%	0.58		%	0.52		%	0.43		%	0.54		%	0.59		%	0.56		%

(a) TBVPS and ROTCE are non-GAAP financial measures. For a further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20.

(b) Quarterly ratios are based upon annualized amounts.

(c) The Basel III capital rules became fully phased-in effective January 1, 2019. During 2018, the required capital measures were subject to the transitional rules and as of December 31, 2018 and September 30, 2018, were the same on a fully phased-in and on a transitional basis. For additional information on these measures, refer to Capital Risk Management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K and pages 44–48 of this Form 10-Q.

(d) Excludes the impact of residential real estate purchased credit-impaired (“PCI”) loans, a non-GAAP financial measure. For a further discussion of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20, and the Allowance for credit losses on pages 67–68.

3

INTRODUCTION

The following is Management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) for the second quarter of 2019.

This Quarterly Report on Form 10-Q for the second quarter of 2019 (“Form 10-Q”) should be read together with JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”), to which reference is hereby made, and which is referred to throughout this Form 10-Q. Refer to the Glossary of terms and acronyms and line of business metrics on pages 168–175 for definitions of terms and acronyms used throughout this Form 10-Q.

This document contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. For a further discussion of certain of those risks and uncertainties and the factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties, refer to Forward-looking Statements on page 79 of this Form 10-Q and Part I, Item 1A, Risk factors, on pages 7–28 of the 2018 Form 10-K.

JPMorgan Chase & Co. (NYSE: JPM), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the United States of America (“U.S.”), with operations worldwide; JPMorgan Chase had $2.7 trillion in assets and $263.2 billion in stockholders’ equity as of June 30, 2019. The Firm is a leader in investment banking, financial services for consumers and

small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and many of the world’s most prominent corporate, institutional and government clients.

JPMorgan Chase’s principal bank subsidiary is JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), a national banking association with U.S. branches in 28 states and Washington, D.C. as of June 30, 2019. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities LLC (“J.P. Morgan Securities”), a U.S. broker-dealer. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The Firm’s principal operating subsidiary in the United Kingdom (“U.K.”) is J.P. Morgan Securities plc, a subsidiary of JPMorgan Chase Bank, N.A.

For management reporting purposes, the Firm’s activities are organized into four major reportable business segments, as well as a Corporate segment. The Firm’s consumer business segment is Consumer & Community Banking (“CCB”). The Firm’s wholesale business segments are Corporate & Investment Bank (“CIB”), Commercial Banking (“CB”), and Asset & Wealth Management (“AWM”). For a description of the Firm’s business segments and the products and services they provide to their respective

client bases, refer to Note 31 of JPMorgan Chase’s 2018 Form 10-K.

4

EXECUTIVE OVERVIEW

This executive overview of the MD&A highlights selected information and does not contain all of the information that is important to readers of this Form 10-Q. For a complete description of the trends and uncertainties, as well as the risks and critical accounting estimates affecting the Firm and its various lines of business, this Form 10-Q and the 2018 Form 10-K should be read together and in their entirety.

Financial performance of JPMorgan Chase
(unaudited) As of or for the period ended, (in millions, except per share data and ratios)	Three months ended June 30,								Six months ended June 30,
	2019			2018			Change		2019			2018			Change
Selected income statement data
Total net revenue	$	28,832		$	27,753		4	%	$	57,955		$	55,660		4	%
Total noninterest expense	16,341			15,971			2		32,736			32,051			2
Pre-provision profit	12,491			11,782			6		25,219			23,609			7
Provision for credit losses	1,149			1,210			(5	)	2,644			2,375			11
Net income	9,652			8,316			16		18,831			17,028			11
Diluted earnings per share	$	2.82		$	2.29		23		$	5.46		$	4.66		17
Selected ratios and metrics
Return on common equity	16		%	14		%			16		%	14		%
Return on tangible common equity	20			17					20			18
Book value per share	$	73.88		$	68.85		7		$	73.88		$	68.85		7
Tangible book value per share	59.52			55.14			8		59.52			55.14			8
Capital ratios(a)
CET1	12.2		%	12.0		%			12.2		%	12.0		%
Tier 1 capital	14.0			13.6					14.0			13.6
Total capital	15.8			15.5					15.8			15.5

(a) The Basel III capital rules became fully phased-in effective January 1, 2019. During 2018, the required capital measures were subject to the transitional rules. For additional information on these measures, refer to Capital Risk Management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K and pages 44–48 of this Form 10-Q.

5

Comparisons noted in the sections below are for the second quarter of 2019 versus the second quarter of 2018, unless otherwise specified.

Firmwide overview

JPMorgan Chase reported strong results in the second quarter of 2019, with record net income of $9.7 billion, or $2.82 per share, on net revenue of $28.8 billion. The Firm reported ROE of 16% and ROTCE of 20%.

• The Firm had record net income of $9.7 billion, up 16%, which reflects income tax benefits of $768 million related to the resolution of certain tax audits, higher net revenue and lower credit costs, partially offset by an increase in noninterest expense.

• Total net revenue increased 4%. Net interest income was $14.4 billion, up 7%, driven by balance sheet growth and mix, as well as the impact of higher rates. Noninterest revenue was $14.4 billion, up 1%, driven by several notable items, including:

– a gain from the IPO of a strategic investment in Tradeweb, and

– the impact of the prior-year adjustment of approximately $330 million to the credit card rewards liability

predominantly offset by

– MSR adjustments reflecting updates to model inputs, and

– net valuation losses on certain legacy private equity investments compared with net gains in the prior year.

Excluding these items, noninterest revenue was relatively flat, with strength in CCB, offset by lower investment banking fees in the CIB and CB, as well as lower Markets noninterest revenue.

• Noninterest expense was $16.3 billion, up 2%, driven by continued investments in the business and higher auto lease depreciation, partially offset by lower FDIC charges.

• The provision for credit losses was $1.1 billion, down 5%.

• The total allowance for credit losses was $14.3 billion at June 30, 2019, and the Firm had a loan loss coverage ratio of 1.39%, compared with 1.41% in the prior year; excluding the PCI portfolio, the equivalent ratio was 1.28%, compared with 1.22% in the prior year. The Firm’s nonperforming assets totaled $5.3 billion at June 30, 2019, a decrease from $5.8 billion in the prior year, reflecting improved credit performance in the consumer portfolio.

• Firmwide average total loans were $954.9 billion, up 2%.

Selected capital-related metrics

• The Firm’s CET1 capital was $189 billion, and the Standardized and Advanced CET1 ratios were 12.2% and 13.1%, respectively.

• The Firm’s supplementary leverage ratio (“SLR”) was 6.4% at June 30, 2019.

• The Firm continued to grow tangible book value per share (“TBVPS”), ending the second quarter of 2019 at $59.52, up 8%.

ROTCE and TBVPS are non-GAAP financial measures. For a further discussion of each of these measures, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20.

6

Business segment highlights

Selected business metrics for each of the Firm’s four lines of business are presented below for the second quarter of 2019.

CCB ROE 31%	• Average loans down 2%; Home Lending loans down 7% impacted by loan sales; credit card loans up 8% • Client investment assets up 16%; average deposits up 3% • Credit card sales volume up 11% and merchant processing volume up 12%
CIB ROE 14%	• Maintained #1 ranking for Global Investment Banking fees with 9.2% wallet share YTD • Total Markets revenue of $5.4 billion was flat, or down 6% adjusted(a)
CB ROE 17%	• Gross Investment Banking revenue of $592 million • Strong credit performance with net charge-offs of 3 bps
AWM ROE 27%	• Average loan balances up 7% • Assets under management (AUM) of $2.2 trillion, up 7%

(a) Adjusted Markets revenue excludes a gain from the IPO of a strategic investment in Tradeweb.

For a detailed discussion of results by business segment, refer to the Business Segment Results on pages 21–42.

Credit provided and capital raised

JPMorgan Chase continues to support consumers, businesses and communities around the globe. The Firm provided new and renewed credit and raised capital for wholesale and consumer clients during the first six months of 2019, consisting of:

$1.1 trillion	Total credit provided and capital raised
$119 billion	Credit for consumers
$14 billion	Credit for U.S. small businesses
$435 billion	Credit for corporations
$547 billion	Capital raised for corporate clients and non-U.S. government entities
$34 billion	Credit and capital raised for nonprofit and U.S. government entities(a)

(a) Includes states, municipalities, hospitals and universities.

7

Recent events

On July 24, 2019, JPMorgan Chase acquired InstaMed, a leading U.S. healthcare technology company that specializes in healthcare payments.

On July 10, 2019, JPMorgan Chase announced the launch of You Invest Portfolios, a new digital investing solution.

On June 27, 2019, the Federal Reserve informed the Firm that it did not object to the Firm’s 2019 capital plan, submitted under the Comprehensive Capital Analysis and Review (“CCAR”). As a result, the Firm announced that the Board of Directors intends to increase the quarterly common stock dividend to $0.90 per share (up from the current $0.80 per share), effective the third quarter of 2019 and has authorized gross common equity repurchases of up to $29.4 billion between July 1, 2019 and June 30, 2020 under a new common equity repurchase program.

On June 26, 2019, JPMorgan Chase announced that it will expand the Firm’s investment in Detroit’s economic recovery, committing to reach $200 million by the end of 2022. The announcement comes as the Firm exceeded its initial five year $150 million commitment.

On May 18, 2019, Chase Bank USA, National Association (“Chase Bank USA, N.A.”), a national bank which was the Firm’s principal credit card-issuing bank, merged with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A. as the surviving bank.

2019 outlook

These current expectations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. For a further discussion of certain of those risks and uncertainties and the other factors that could cause JPMorgan Chase’s actual results to differ materially because of those risks and uncertainties, refer to Forward-Looking Statements on page 79 of this Form 10-Q and Risk Factors on pages 7–28 of JPMorgan Chase’s 2018 Annual Report. There is no assurance that actual results in the full year of 2019 will be in line with the outlook set forth below, and the Firm does not undertake to update any forward-looking statements.

JPMorgan Chase’s current outlook for the remainder of 2019 should be viewed against the backdrop of the global and U.S. economies, financial markets activity, the geopolitical environment, the competitive environment, client and customer activity levels, and regulatory and legislative developments in the U.S. and other countries where the Firm does business. Each of these factors will affect the performance of the Firm and its lines of business. The Firm expects that it will continue to make appropriate adjustments to its businesses and operations in response to ongoing developments in the legal, regulatory, business and economic environments in which it operates.

Firmwide

• Management expects full-year 2019 net interest income, on a managed basis, to be $57.5 billion +/-, market dependent. This range reflects lower long-end rates and up to three federal funds rate cuts of 25bps each in July, September, and December 2019 by the Federal Reserve.

• The Firm takes a disciplined approach to managing its expenses, while investing for growth and innovation. As a result, management expects Firmwide adjusted expense for the full-year 2019 to be less than $66 billion.

• The Firm continues to experience charge-off rates at very low levels as credit trends across the consumer and wholesale portfolios remain favorable. Management expects full-year 2019 net charge-offs to be approximately $5.5 billion.

8

Business Developments

Expected departure of the U.K. from the EU

The U.K.’s expected departure from the EU, which is commonly referred to as “Brexit,” is scheduled to occur not later than October 31, 2019.

The Firm continues to execute the relevant elements of its Firmwide Brexit Implementation program with the objective of delivering the Firm’s capabilities to its EU clients on “day one” of any departure by the U.K. from the EU, whether or not an agreement has been reached to allow an orderly withdrawal.

The principal operational risks associated with Brexit continue to be the potential for disruption caused by insufficient preparations by individual market participants or in the overall market ecosystem, and risks related to potential disruptions of connectivity among market participants. Although legislative and regulatory actions taken by the EU and the U.K. have mitigated some of the significant market-wide risks, there continues to be regulatory and legal uncertainty with respect to various matters including contract continuity and access by market participants to liquidity in certain products, such as products subject to potentially conflicting U.K. and EU regulatory requirements in relation to eligible trading venues, including certain cross-border derivative contracts and equities that are listed on both U.K. and EU exchanges.

As discussed in Business Developments on page 46 of the 2018 Form 10-K, the Firm is focused on the following key areas to ensure continuation of service to its EU clients: regulatory and legal entity readiness; client readiness; and business and operational readiness. Following are the significant updates from the matters discussed in the 2018 Form 10-K.

Regulatory and legal entity readiness

The Firm’s legal entities in Germany, Luxembourg and Ireland are now prepared and licensed to provide services to the Firm’s EU clients, including after any departure by the U.K. from the EU.

Client readiness

The agreements covering a significant proportion of the Firm’s EU client activity have been re-documented to other EU legal entities to help facilitate continuation of service. The Firm continues to actively engage with clients that have not completed re-documentation to ensure preparedness both in terms of documentation and any operational changes that may be required. The Firm may be negatively impacted by any operational disruption stemming from delays of or lapses in the readiness of other market participants or market infrastructures.

Business and operational readiness

The Firm relocated certain employees during the first quarter of 2019. During the second quarter of 2019, the Firm has added specific employees to certain EU legal entities, where appropriate, to support the level of client activity that has been migrated. However, the Firm’s final staffing plan will depend upon the timing and terms of any withdrawal by the U.K. from the EU.

If Brexit is further delayed due to a transition deal or another mechanism, the Firm will continue to review the timing and extent of any further expansion of activities in its EU legal entities, as appropriate. The Firm continues to closely monitor legislative developments, and its implementation plan allows for flexibility given the continued uncertainties.

LIBOR transition

The Firm continues to develop and implement plans to appropriately mitigate the risks associated with the expected discontinuation of certain unsecured benchmark interest rates, including the London Interbank Offered Rate (“LIBOR”) and other Interbank Offered Rates (“IBORs”). In particular, the Firm:

• has implemented or is in the process of implementing fallback language for LIBOR-linked syndicated loans, securitizations, floating rate notes and bi-lateral business loans based on the recommendations of the Alternative Reference Rates Committee, and has started to introduce the Secured Overnight Financing Rate as a replacement benchmark rate for certain of these products;

• continues to monitor the transition relief being considered by the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) concerning the accounting for contract modifications and hedge accounting; and

• continues to engage with regulators and clients as the transition from IBORs progresses.

Refer to Business Developments on page 47 of the 2018 Form 10-K for a discussion of the Firm’s initiatives to address the expected discontinuation of LIBOR and other IBORs.

9

CONSOLIDATED RESULTS OF OPERATIONS

This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three and six months ended June 30, 2019 and 2018, unless otherwise specified. Factors that relate primarily to a single business segment are discussed in more detail within that business segment. For a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations, refer to pages 76–77 of this Form 10-Q and pages 141-143 of JPMorgan Chase’s 2018 Form 10-K.

Revenue
	Three months ended June 30,							Six months ended June 30,
(in millions)	2019		2018			Change		2019		2018			Change
Investment banking fees	$	1,851	$	2,168		(15	)%	$	3,691	$	3,904		(5	)%
Principal transactions	3,714		3,782			(2	)	7,790		7,734			1
Lending- and deposit-related fees	1,535		1,495			3		3,017		2,972			2
Asset management, administration and commissions	4,353		4,304			1		8,467		8,613			(2	)
Investment securities gains/(losses)	44		(80		)	NM		57		(325		)	NM
Mortgage fees and related income	279		324			(14	)	675		789			(14	)
Card income	1,366		1,020			34		2,640		2,295			15
Other income(a)	1,292		1,255			3		2,767		2,881			(4	)
Noninterest revenue	14,434		14,268			1		29,104		28,863			1
Net interest income	14,398		13,485			7		28,851		26,797			8
Total net revenue	$	28,832	$	27,753		4	%	$	57,955	$	55,660		4	%

(a) Included operating lease income of $1.3 billion and $1.1 billion for the three months ended June 30, 2019 and 2018, respectively and $2.6 billion and $2.2 billion for the six months ended June 30, 2019 and 2018, respectively.

Quarterly results

Investment banking fees decreased reflecting lower fees across products driven by declines in industry-wide fee levels, and when compared with a strong prior year. For additional information, refer to CIB segment results on pages 27–32 and Note 5.

Principal transactions revenue includes a gain in CIB from the IPO of a strategic investment in Tradeweb. Excluding this gain, principal transactions revenue decreased, reflecting:

• lower revenue in CIB primarily driven by derivatives in Equity Markets, largely offset by higher client activity in agency mortgage trading in Fixed Income Markets

• net valuation losses on certain legacy private equity investments in Corporate compared with net gains in the prior year

• losses on cash deployment transactions in Treasury and Chief Investment Office (“CIO”), which were more than offset by the related net interest income earned on those transactions

• lower revenue related to hedges on certain investments in AWM, which was more than offset by higher valuation gains on the related investments reflected in other income.

For additional information, refer to CIB, AWM and Corporate segment results on pages 27–32, pages 37–40 and pages 41–42, and Note 5.

Asset management, administration and commissions revenue increased primarily reflecting higher asset management fees in CBB from growth in client investment assets. For additional information, refer to CCB, AWM and CIB segment results on pages 22–26 , pages 37–40 and pages 27–32, respectively, and Note 5.

Lending- and deposit-related fees increased primarily reflecting higher deposit-related fees in CCB. For additional information, refer to CCB segment results on pages 22–26, CIB on pages 27–32 and CB on pages 33–36, respectively, and Note 5.

Investment securities gains/(losses) primarily reflect the impact of repositioning the investment securities portfolio. For additional information, refer to Corporate segment results on pages 41–42 and Note 9.

10

Mortgage fees and related income decreased driven by:

• lower net mortgage servicing revenue on lower MSR risk management results reflecting updates to model inputs, and lower operating revenue reflecting faster prepayment speeds on lower rates

predominantly offset by

• higher net mortgage production revenue reflecting higher mortgage production margins and volumes, as well as the impact of loan sales in Home Lending.

For further information, refer to CCB segment results on pages 22–26, Note 5 and 14.

Card income increased reflecting the impact of the prior-year adjustment of approximately $330 million to the credit card rewards liability. For further information, refer to CCB segment results on pages 22–26 and Note 5.

Other income increased reflecting:

• higher operating lease income from growth in auto operating lease volume in CCB, and

• higher investment valuation gains in AWM, which were largely offset by the impact of the related hedges reflected in principal transactions revenue

partially offset by

• lower other income in CIB associated with the increased amortization on a higher level of alternative energy investments. The lower income tax expense from the associated tax credits more than offset the impact of the higher amortization.

For further information, refer to Note 5.

Net interest income increased driven by the impact of balance sheet growth and change in mix, as well as higher rates, partially offset by lower CIB Markets net interest income. The Firm’s average interest-earning assets were $2.3 trillion, up $133 billion, and the net interest yield on these assets, on a fully taxable-equivalent (“FTE”) basis, was 2.49%, an increase of 1 basis point. The net interest yield excluding CIB Markets was 3.35%, an increase of 14 basis points. Net interest yield excluding CIB markets is a non-GAAP financial measure. For a further discussion of this measure, refer to Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20.

Year-to-date results

Investment banking fees decreased reflecting lower equity underwriting and advisory fees driven by declines in industry-wide fee levels.

Principal transactions revenue includes a gain in CIB from the IPO of a strategic investment in Tradeweb. Excluding this gain, CIB’s revenue was relatively flat, reflecting:

• favorable changes in funding spreads on derivatives in Credit Adjustments & Other, and higher revenue in agency mortgage trading in Fixed Income Markets

offset by

– lower client activity in derivatives in Equity Markets, and lower revenue in Currencies & Emerging Markets within Fixed Income Markets

the net increase in CIB was offset by

• losses on cash deployment transactions in Treasury and CIO, which were more than offset by the related net interest income earned on those transactions

• lower revenue related to hedges on certain investments in AWM, which was more than offset by higher valuation gains on the related investments reflected in other income.

Asset management, administration and commissions revenue decreased reflecting:

• lower asset management fees in AWM driven by a shift in the mix toward lower fee products and lower average market levels, and

• lower brokerage commissions in CIB on lower activity

partially offset by

• higher asset management fees in CBB from growth in client investment assets.

For information on lending- and deposit-related fees, refer to CCB on pages 22–26, CIB on pages 27–32 and CB on pages 33–36, respectively, and Note 5.

Investment securities gains/(losses) primarily reflect the impact of repositioning the investment securities portfolio.

11

Mortgage fees and related income decreased driven by:

• lower net mortgage servicing revenue on lower MSR risk management results reflecting updates to model inputs, and lower operating revenue reflecting lower servicing revenue on a lower level of third-party loans serviced and faster prepayment speeds on lower rates

predominantly offset by

• higher net mortgage production revenue reflecting higher mortgage production margins and volumes, as well as the impact of loan sales in Home Lending.

Card income increased reflecting the impact of the prior-year adjustment of approximately $330 million to the credit card rewards liability.

Other income decreased reflecting:

• lower other income in CIB associated with the increased amortization on a higher level of alternative energy investments. The lower income tax expense from the associated tax credits more than offset the impact of the higher amortization

partially offset by

• higher operating lease income from growth in auto operating lease volume in CCB, and

• higher investment valuation gains in AWM, which were largely offset by the impact of the related hedges reflected in principal transactions revenue.

The prior year included $505 million of fair value gains related to the adoption of the recognition and measurement accounting guidance for certain equity investments previously held at cost in the first quarter of 2018.

Net interest income increased driven by the impact of balance sheet growth and change in mix, as well as higher rates, partially offset by lower CIB Markets net interest income. The Firm’s average interest-earning assets were $2.3 trillion, up $122 billion, and the net interest yield on these assets, on an FTE basis, was 2.53%, an increase of 4 basis points. The net interest yield excluding CIB Markets was 3.39%, an increase of 22 basis points. Net interest yield excluding CIB markets is a non-GAAP financial measure.

Provision for credit losses
	Three months ended June 30,								Six months ended June 30,
(in millions)	2019			2018			Change		2019			2018			Change
Consumer, excluding credit card	$	(318	)	$	(56	)	(468	)%	$	(204	)	$	90		NM
Credit card	1,440			1,164			24		2,642			2,334			13
Total consumer	1,122			1,108			1		2,438			2,424			1
Wholesale	27			102			(74	)	206			(49		)	NM
Total provision for credit losses	$	1,149		$	1,210		(5	)%	$	2,644		$	2,375		11	%

Quarterly results

The provision for credit losses decreased driven by wholesale, with the prior year reflecting a higher provision from net portfolio activity, including new exposures and loan sales.

The total consumer provision was relatively flat reflecting:

• an increase in credit card due to

– a $200 million addition to the allowance for loan losses reflecting loan growth and higher loss rates, as anticipated, and

– higher net charge-offs on loan growth

offset by

• a decrease in consumer, excluding credit card due to

– a $400 million reduction in the allowance for loan losses in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies

partially offset by

– higher net charge-offs in the residential real estate portfolio as the prior year benefited from a recovery on a loan sale.

For additional information on the credit portfolio and the allowance for credit losses, refer to the segments discussions of CCB on pages 22–26, CIB on pages 27–32, CB on pages 33–36, the Allowance for Credit Losses on pages 67–68, and Note 12.

12

Year-to-date results

The provision for credit losses increased predominantly driven by wholesale, reflecting a net addition to the allowance for credit losses on select Commercial and Industrial (“C&I”) client downgrades. The prior period was a benefit, reflecting a reduction in the allowance for credit losses primarily driven by a single name in the Oil & Gas portfolio, partially offset by other net portfolio activity.

The total consumer provision was relatively flat reflecting:

• an increase in credit card due to

– a $200 million addition to the allowance for loan losses reflecting loan growth and higher loss rates, as anticipated, and

– higher net charge-offs on loan growth

offset by

• a decrease in consumer, excluding credit card due to

– a $400 million reduction in the allowance for loan losses in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies

partially offset by

– higher net charge-offs in the residential real estate portfolio as the prior year benefited from a recovery from a loan sale.

Noninterest expense
	Three months ended June 30,						Six months ended June 30,
(in millions)	2019		2018		Change		2019		2018		Change
Compensation expense	$	8,547	$	8,338	3	%	$	17,484	$	17,200	2	%
Noncompensation expense:
Occupancy	1,060		981		8		2,128		1,869		14
Technology, communications and equipment	2,378		2,168		10		4,742		4,222		12
Professional and outside services	2,212		2,126		4		4,251		4,247		—
Marketing	862		798		8		1,741		1,598		9
Other expense(a)(b)	1,282		1,560		(18	)	2,390		2,915		(18	)
Total noncompensation expense	7,794		7,633		2		15,252		14,851		3
Total noninterest expense	$	16,341	$	15,971	2	%	$	32,736	$	32,051	2	%

(a) Included Firmwide legal expense/(benefit) of $69 million and $0 million for the three months ended June 30, 2019 and 2018, respectively and $(12) million and $70 million for the six months ended June 30, 2019 and 2018, respectively.

(b) Included FDIC-related expense of $121 million and $368 million for the three months ended June 30, 2019 and 2018, respectively and $264 million and $751 million for the six months ended June 30, 2019 and 2018, respectively.

Quarterly results

Compensation expense increased driven by investments in the businesses, including front office hires, as well as technology staff, largely offset by lower performance-related compensation in CIB.

Noncompensation expense increased as a result of:

• higher investments in the businesses, including, technology, real estate and marketing

• higher depreciation expense from growth in auto operating lease volume in CCB

• higher outside services expense primarily due to higher volume-related brokerage expense in certain businesses in CIB

• higher legal expense, and

• a contribution to the Firm’s Foundation, whereas all prior-year contributions were made in the fourth quarter

largely offset by

• lower FDIC charges as a result of the elimination of the surcharge at the end of the third quarter of 2018, and

• the absence of a loss in the prior year on the liquidation of a legal entity of $174 million

For additional information on the liquidation of a legal entity, refer to Note 19.

Year-to-date results

Compensation expense increased driven by investments in the businesses, including front office hires, as well as technology staff, largely offset by lower performance-related compensation in CIB.

Noncompensation expense increased as a result of:

• higher investments in the businesses, including, technology, real estate and marketing

• higher depreciation expense from growth in auto operating lease volume in CCB, and

• contributions to the Firm’s Foundation, whereas all prior-year contributions were made in the fourth quarter

largely offset by

• lower FDIC charges as a result of the elimination of the surcharge at the end of the third quarter of 2018, and

• the absence of a loss of $174 million in the prior year in other expense on the liquidation of a legal entity in Corporate.

13

Income tax expense
	Three months ended June 30,								Six months ended June 30,
(in millions)	2019			2018			Change		2019			2018			Change
Income before income tax expense	$	11,342		$	10,572		7	%	$	22,575		$	21,234		6	%
Income tax expense	1,690			2,256			(25	)	3,744			4,206			(11	)
Effective tax rate	14.9		%	21.3		%			16.6		%	19.8		%

Quarterly results

The effective tax rate decreased due to the recognition of $768 million of tax benefits related to the resolution of certain tax audits and the change in the mix of income and expenses subject to U.S. federal, state and local taxes. The decrease was partially offset by a $189 million tax benefit recorded in the second quarter of 2018 resulting from a change in the estimate for the deemed repatriation tax on non-U.S. earnings. For additional information on the 2019 tax benefits, refer to Note 1.

Year-to-date results

The effective tax rate decreased due to the recognition of $874 million of tax benefits related to the resolution of certain tax audits and the change in the mix of income and expenses subject to U.S. federal, state and local taxes. The decrease was partially offset by a decrease in tax benefits related to the vesting of employee stock-based awards, as well as a $189 million tax benefit recorded in the second quarter of 2018 resulting from a change in the estimate for the deemed repatriation tax on non-U.S. earnings.

14

CONSOLIDATED BALANCE SHEETS AND CASH FLOWS ANALYSIS

Consolidated balance sheets analysis

The following is a discussion of the significant changes between June 30, 2019, and December 31, 2018.

Selected Consolidated balance sheets data
(in millions)	June 30, 2019			December 31, 2018			Change
Assets
Cash and due from banks	$	23,164		$	22,324		4	%
Deposits with banks	244,874			256,469			(5	)
Federal funds sold and securities purchased under resale agreements	267,864			321,588			(17	)
Securities borrowed	130,661			111,995			17
Trading assets	523,373			413,714			27
Investment securities	307,264			261,828			17
Loans	956,889			984,554			(3	)
Allowance for loan losses	(13,166		)	(13,445		)	(2	)
Loans, net of allowance for loan losses	943,723			971,109			(3	)
Accrued interest and accounts receivable	88,399			73,200			21
Premises and equipment	24,665			14,934			65
Goodwill, MSRs and other intangible assets	53,302			54,349			(2	)
Other assets	120,090			121,022			(1	)
Total assets	$	2,727,379		$	2,622,532		4	%

Cash and due from banks and deposits with banks decreased primarily as a result of a shift in the deployment of cash in Treasury and CIO into short-term instruments in trading assets. Deposits with banks reflect the Firm’s placements of its excess cash with various central banks, including the Federal Reserve Banks.

Federal funds sold and securities purchased under resale agreements reflected higher client activity in CIB, which was more than offset by the impact of netting, and the reduction in the deployment of cash in Treasury and CIO. For additional information, refer to Liquidity Risk Management on pages 49–53 and Note 10.

Securities borrowed increased driven by higher demand for securities largely related to client-driven market-making activities in CIB. For additional information, refer to Liquidity Risk Management on pages 49–53 and Note 10.

Trading assets increased compared with lower levels at year-end predominantly due to client-driven market-making activities in debt and equity instruments in CIB Markets, including prime brokerage. In addition, but to a lesser extent, trading assets increased in Treasury and CIO associated with the deployment of cash into short-term instruments. For additional information, refer to Notes 2 and 4.

Investment securities increased primarily reflecting net purchases of U.S. government agency mortgage-backed securities (“MBS”) and U.S. Treasuries in Treasury and CIO. For additional information on Investment securities, refer to Corporate segment results on pages 41–42, Investment Portfolio Risk Management on page 69, and Notes 2 and 9.

Loans decreased reflecting:

• lower consumer loans in the residential real estate portfolio, predominantly driven by loan sales in Home Lending, and

• lower loans in CIB, primarily driven by a loan syndication and net paydowns, partially offset by increases in CB and AWM.

The allowance for loan losses decreased largely driven by Consumer due to a $400 million reduction in the allowance for loan losses in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies, partially offset by a $200 million addition to the allowance in the credit card portfolio, due to loan growth and higher loss rates, as anticipated.

For a more detailed discussion of loans and the allowance for loan losses, refer to Credit and Investment Risk Management on pages 54–69, and Notes 2, 3, 11 and 12.

Accrued interest and accounts receivable increased reflecting higher client receivables related to client-driven market-making activities in CIB Fixed Income Markets, as well as higher receivables in CCB related to the timing of payment activities in Card Services, due to the end of the quarter falling on a weekend.

Premises and equipment increased due to the adoption of the new lease accounting guidance effective January 1, 2019. For additional information, refer to Note 16.

For information on Goodwill and MSRs, refer to Note 14.

15

Selected Consolidated balance sheets data (continued)
(in millions)	June 30, 2019		December 31, 2018		Change
Liabilities
Deposits	$	1,524,361	$	1,470,666	4	%
Federal funds purchased and securities loaned or sold under repurchase agreements	201,683		182,320		11
Short-term borrowings	59,890		69,276		(14	)
Trading liabilities	147,639		144,773		2
Accounts payable and other liabilities	216,137		196,710		10
Beneficial interests issued by consolidated variable interest entities (“VIEs”)	25,585		20,241		26
Long-term debt	288,869		282,031		2
Total liabilities	2,464,164		2,366,017		4
Stockholders’ equity	263,215		256,515		3
Total liabilities and stockholders’ equity	$	2,727,379	$	2,622,532	4	%

Deposits increased due to growth in CIB from client activity in Securities Services and Treasury Services, and net issuances of structured notes in Markets, as well as continued growth in new accounts in CCB. Deposits in CB and AWM were relatively stable. For additional information, refer to Liquidity Risk Management on pages 49–53 and Notes 2 and 15.

Federal funds purchased and securities loaned or sold under repurchase agreements increased primarily due to higher secured financing of trading assets-debt and equity instruments and client-driven market-making activities in CIB. For additional information, refer to Liquidity Risk Management on pages 49–53 and Note 10.

Short-term borrowings decreased reflecting lower short-term advances from Federal Home Loan Banks (“FHLB”) and commercial paper in Treasury and CIO primarily due to short-term liquidity management. For additional information, refer to Liquidity Risk Management on pages 49–53.

Trading liabilities increased modestly as a result of client-driven market-making activities in CIB, which resulted in higher levels of short positions in debt instruments in Fixed Income Markets, largely offset by a decline in short positions in equity instruments, primarily in prime brokerage. For additional information, refer to Notes 2 and 4.

Accounts payable and other liabilities increased reflecting:

• the impact of the adoption of the new lease accounting guidance effective January 1, 2019

• higher payables in CCB related to the timing of payment activities in Card Services, due to the end of the quarter falling on a weekend.

For additional information on Leases, refer to Note 16.

Beneficial interests issued by consolidated VIEs increased due to:

• higher levels of Firm-administered multi-seller conduit commercial paper issued to third parties

partially offset by

• maturities of credit card securitizations.

For further information on Firm-sponsored VIEs and loan securitization trusts, refer to Off-Balance Sheet Arrangements on page 18 and Notes 13 and 22.

Long-term debt increased primarily due to client-driven net issuances of structured notes in CIB Markets, and in Treasury and CIO, from the net issuances of senior debt, partially offset by lower FHLB advances. For additional information on the Firm’s long-term debt activities, refer to Liquidity Risk Management on pages 49–53.

For information on changes in stockholders’ equity, refer to page 83, and on the Firm’s capital actions, refer to Capital actions on pages 46–47.

16

Consolidated cash flows analysis

The following is a discussion of cash flow activities during the six months ended June 30, 2019 and 2018.

(in millions)	Six months ended June 30,
	2019			2018
Net cash provided by/(used in)
Operating activities	$	(94,734	)	$	576
Investing activities	27,424			(38,974		)
Financing activities	56,469			13,766
Effect of exchange rate changes on cash	86			(1,492		)
Net decrease in cash and due from banks and deposits with banks	$	(10,755	)	$	(26,124	)

Operating activities

• In 2019, cash used primarily resulted from higher trading assets-debt and equity instruments, securities borrowed, accrued interest and accounts receivable and other assets, partially offset by higher trading liabilities, and net proceeds from loans originated for sale.

• In 2018, cash provided primarily resulted from higher trading liabilities-debt and equity instruments and accounts payable and other liabilities, offset by higher trading assets-debt and equity instruments.

Investing activities

• In 2019, cash provided resulted from lower securities purchased under resale agreements, and net proceeds from the sale of loans held-for-investment, partially offset by net purchases of investment securities.

• In 2018, cash used resulted from higher securities purchased under resale agreements and net loans originated, partially offset by net proceeds from investment securities.

Financing activities

• In 2019, cash provided resulted from higher deposits and securities loaned or sold under repurchase agreements, partially offset by net payments on long-term borrowings.

• In 2018, cash provided resulted from higher securities loaned or sold under repurchase agreements, short-term borrowings and deposits, partially offset by net payments on long-term borrowings.

• For both periods, cash was used for repurchases of common stock and cash dividends on common and preferred stock.

* * *

For a further discussion of the activities affecting the Firm’s cash flows, refer to Consolidated Balance Sheets Analysis on pages 15–17, Capital Risk Management on pages 44–48, and Liquidity Risk Management on pages 49–53 of this Form 10-Q, and pages 95–100 of JPMorgan Chase’s 2018 Form 10-K.

17

OFF-BALANCE SHEET ARRANGEMENTS

In the normal course of business, the Firm enters into various off-balance sheet arrangements and contractual obligations that may require future cash payments. Certain obligations are recognized on-balance sheet, while others are disclosed off-balance sheet under accounting principles generally accepted in the U.S. (“U.S. GAAP”).

Special-purpose entities

The Firm has several types of off–balance sheet arrangements, including through nonconsolidated special-purpose entities (“SPEs”), which are a type of VIE, and through lending-related financial instruments (e.g., commitments and guarantees).

The Firm holds capital, as appropriate, against all SPE-related transactions and related exposures, such as derivative contracts and lending-related commitments and guarantees.

The Firm has no commitments to issue its own stock to support any SPE transaction, and its policies require that transactions with SPEs be conducted at arm’s length and reflect market pricing. Consistent with this policy, no JPMorgan Chase employee is permitted to invest in SPEs with which the Firm is involved where such investment would violate the Firm’s Code of Conduct.

The table below provides an index of where in this Form 10-Q a discussion of the Firm’s various off-balance sheet arrangements can be found. In addition, refer to Note 1 for information about the Firm’s consolidation policies.

Type of off-balance sheet arrangement	Location of disclosure	Page references
Special-purpose entities: variable interests and other obligations, including contingent obligations, arising from variable interests in nonconsolidated VIEs	Refer to Note 13	138-143
Off-balance sheet lending-related financial instruments, guarantees, and other commitments	Refer to Note 22	155-158

18

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

The Firm prepares its Consolidated Financial Statements in accordance with U.S. GAAP and this presentation is referred to as “reported” basis; these financial statements appear on pages 80–84.

In addition to analyzing the Firm’s results on a reported basis, the Firm also reviews and uses certain non-GAAP financial measures at the Firmwide and segment level. These non-GAAP measures include:

• Firmwide “managed” basis results, including the overhead ratio, which include certain reclassifications to present total net revenue from investments that receive tax credits and tax-exempt securities on a basis comparable to taxable investments and securities (“FTE” basis)

• Net interest income and net yield excluding CIB’s Markets businesses

• Certain credit metrics and ratios, which exclude PCI loans

• Tangible common equity (“TCE”), ROTCE, and TBVPS.

In addition, core loans is a key performance measure utilized by the Firm and its investors and analysts in assessing actual growth in the loan portfolio.

For a further discussion of management’s use of non-GAAP financial measures and key performance measures, refer to Explanation and Reconciliation Of the Firm’s Use Of Non-GAAP Financial Measures and Key Performance Measures on pages 57-59 of JPMorgan Chase’s 2018 Form 10-K.

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

	Three months ended June 30,
	2019								2018
(in millions, except ratios)	Reported results			Fully taxable-equivalent adjustments(a)		Managed basis			Reported results			Fully taxable-equivalent adjustments(a)		Managed basis
Other income	$	1,292		$	596	$	1,888		$	1,255		$	474	$	1,729
Total noninterest revenue	14,434			596		15,030			14,268			474		14,742
Net interest income	14,398			138		14,536			13,485			161		13,646
Total net revenue	28,832			734		29,566			27,753			635		28,388
Pre-provision profit	12,491			734		13,225			11,782			635		12,417
Income before income tax expense	11,342			734		12,076			10,572			635		11,207
Income tax expense	$	1,690		$	734	$	2,424		$	2,256		$	635	$	2,891
Overhead ratio	57		%	NM		55		%	58		%	NM		56		%
	Six months ended June 30,
	2019								2018
(in millions, except ratios)	Reported results			Fully taxable-equivalent adjustments(a)		Managed basis			Reported results			Fully taxable-equivalent adjustments(a)		Managed basis
Other income	$	2,767		$	1,181	$	3,948		$	2,881		$	929	$	3,810
Total noninterest revenue	29,104			1,181		30,285			28,863			929		29,792
Net interest income	28,851			281		29,132			26,797			319		27,116
Total net revenue	57,955			1,462		59,417			55,660			1,248		56,908
Pre-provision profit	25,219			1,462		26,681			23,609			1,248		24,857
Income before income tax expense	22,575			1,462		24,037			21,234			1,248		22,482
Income tax expense	$	3,744		$	1,462	$	5,206		$	4,206		$	1,248	$	5,454
Overhead ratio	56		%	NM		55		%	58		%	NM		56		%

(a) Predominantly recognized in CIB, CB and Corporate.

19

The following table provides information on net interest income and net yield excluding CIB’s Markets businesses.

(in millions, except rates)	Three months ended June 30,								Six months ended June 30,
	2019			2018			Change		2019			2018			Change
Net interest income – managed basis(a)(b)	$	14,536		$	13,646		7	%	$	29,132		$	27,116		7	%
Less: CIB Markets net interest income(c)	624			754			(17	)	1,248			1,784			(30	)
Net interest income excluding CIB Markets(a)	$	13,912		$	12,892		8		$	27,884		$	25,332		10
Average interest-earning assets(d)	$	2,339,094		$	2,206,005		6		$	2,319,105		$	2,196,675		6
Less: Average CIB Markets interest-earning assets(c)(d)	673,480			595,160			13		661,397			585,322			13
Average interest-earning assets excluding CIB Markets	$	1,665,614		$	1,610,845		3	%	$	1,657,708		$	1,611,353		3	%
Net interest yield on average interest-earning assets – managed basis(d)	2.49		%	2.48		%			2.53		%	2.49		%
Net interest yield on average CIB Markets interest-earning assets(c)(d)	0.37			0.51					0.38			0.61
Net interest yield on average interest-earning assets excluding CIB Markets	3.35		%	3.21		%			3.39		%	3.17		%

(a) Interest includes the effect of related hedges. Taxable-equivalent amounts are used where applicable.

(b) For a reconciliation of net interest income on a reported and managed basis, refer to the table above relating to the reconciliation from the Firm’s reported U.S. GAAP results to managed basis.

(c) For further information on CIB’s Markets businesses, refer to page 31.

(d) In the second quarter of 2019, the Firm reclassified balances related to certain instruments from interest-earning to noninterest-earning assets, as the associated returns are recorded in principal transactions revenue and not in net interest income. These changes were applied retrospectively and, accordingly, prior period amounts were revised to conform with the current presentation.

The following summary table provides a reconciliation from the Firm’s common stockholders’ equity to TCE.

	Period-end				Average
(in millions, except per share and ratio data)	Jun 30, 2019		Dec 31, 2018		Three months ended June 30,						Six months ended June 30,
					2019			2018			2019			2018
Common stockholders’ equity	$	236,222	$	230,447	$	233,026		$	228,901		$	231,547		$	228,261
Less: Goodwill	47,477		47,471		47,472			47,494			47,474			47,499
Less: Other intangible assets	732		748		741			822			741			833
Add: Certain Deferred tax liabilities(a)	2,316		2,280		2,304			2,221			2,296			2,216
Tangible common equity	$	190,329	$	184,508	$	187,117		$	182,806		$	185,628		$	182,145
Return on tangible common equity	NA		NA		20		%	17		%	20		%	18		%
Tangible book value per share	$	59.52	$	56.33	NA			NA			NA			NA

(a) Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating TCE.

20

BUSINESS SEGMENT RESULTS

The Firm is managed on a line of business basis. There are four major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management. In addition, there is a Corporate segment.

The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by the Firm’s Operating Committee. Segment results are presented on a managed basis. For a definition of managed basis, refer to Explanation and Reconciliation of the Firm’s use of Non-GAAP Financial Measures and Key Performance Measures on pages 19–20.

Description of business segment reporting methodology

Results of the business segments are intended to present each segment as if it were essentially a stand-alone business. The management reporting process that derives business segment results includes the allocation of certain

income and expense items. For further information about line of business capital, refer to Line of business equity on page 46. The Firm periodically assesses the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods.

Business segment capital allocation

The amount of capital assigned to each business is referred to as equity. On at least an annual basis, the assumptions and methodologies used in capital allocation are assessed and as a result, the capital allocated to lines of business may change. For additional information on business segment capital allocation, refer to Line of business equity on page 91 of JPMorgan Chase’s 2018 Form 10-K.

For a further discussion of those methodologies, refer to Business Segment Results – Description of business segment reporting methodology on pages 60–61 of JPMorgan Chase’s 2018 Form 10-K.

Segment results – managed basis

The following tables summarize the Firm’s results by segment for the periods indicated.

Three months ended June 30,	Consumer & Community Banking							Corporate & Investment Bank								Commercial Banking
(in millions, except ratios)	2019			2018			Change	2019			2018			Change		2019			2018			Change
Total net revenue	$	13,833		$	12,497		11	$	9,641		$	9,923		(3	)%	$	2,211		$	2,316		(5	)%
Total noninterest expense	7,162			6,879			4	5,487			5,403			2		864			844			2
Pre-provision profit/(loss)	6,671			5,618			19	4,154			4,520			(8	)	1,347			1,472			(8	)
Provision for credit losses	1,120			1,108			1	—			58			NM		29			43			(33	)
Net income/(loss)	4,174			3,412			22	2,935			3,198			(8	)	996			1,087			(8	)
Return on equity (“ROE”)	31		%	26		%		14		%	17		%			17		%	21		%

Three months ended June 30,	Asset & Wealth Management								Corporate								Total
(in millions, except ratios)	2019			2018			Change		2019			2018			Change		2019			2018			Change
Total net revenue	$	3,559		$	3,572		—		$	322		$	80		303	%	$	29,566		$	28,388		4	%
Total noninterest expense	2,596			2,566			1		232			279			(17	)	16,341			15,971			2
Pre-provision profit/(loss)	963			1,006			(4	)	90			(199		)	NM		13,225			12,417			7
Provision for credit losses	2			2			—		(2		)	(1		)	(100	)	1,149			1,210			(5	)
Net income/(loss)	719			755			(5	)	828			(136		)	NM		9,652			8,316			16
ROE	27		%	33		%			NM			NM					16		%	14		%

Six months ended June 30,	Consumer & Community Banking							Corporate & Investment Bank								Commercial Banking
(in millions, except ratios)	2019			2018			Change	2019			2018			Change		2019			2018			Change
Total net revenue	$	27,584		$	25,094		10	$	19,489		$	20,406		(4	)%	$	4,549		$	4,482		1	%
Total noninterest expense	14,373			13,788			4	10,940			11,062			(1	)	1,737			1,688			3
Pre-provision profit/(loss)	13,211			11,306			17	8,549			9,344			(9	)	2,812			2,794			1
Provision for credit losses	2,434			2,425			—	87			(100		)	NM		119			38			213
Net income/(loss)	8,137			6,738			21	6,186			7,172			(14	)	2,049			2,112			(3	)
ROE	31		%	26		%		15		%	20		%			18		%	20		%

Six months ended June 30,	Asset & Wealth Management								Corporate						Total
(in millions, except ratios)	2019			2018			Change		2019		2018			Change	2019			2018			Change
Total net revenue	$	7,048		$	7,078		—		$	747	$	(152	)	NM	$	59,417		$	56,908		4	%
Total noninterest expense	5,243			5,147			2		443		366			21	32,736			32,051			2
Pre-provision profit/(loss)	1,805			1,931			(7	)	304		(518		)	NM	26,681			24,857			7
Provision for credit losses	4			17			(76	)	—		(5		)	NM	2,644			2,375			11
Net income/(loss)	1,380			1,525			(10	)	1,079		(519		)	NM	18,831			17,028			11
ROE	26		%	33		%			NM		NM				16		%	14		%

The following sections provide a comparative discussion of the Firm’s results by segment as of or for the three and six months ended June 30, 2019 versus the corresponding periods in the prior year, unless otherwise specified.

21

CONSUMER & COMMUNITY BANKING

For a discussion of the business profile of CCB, refer to pages 62–65 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 173.

Selected income statement data
	Three months ended June 30,								Six months ended June 30,
(in millions, except ratios)	2019			2018			Change		2019			2018			Change
Revenue
Lending- and deposit-related fees	$	928		$	875		6	%	$	1,801		$	1,732		4	%
Asset management, administration and commissions	664			591			12		1,282			1,166			10
Mortgage fees and related income	279			324			(14	)	675			789			(14	)
Card income	1,257			910			38		2,425			2,080			17
All other income	1,312			1,048			25		2,590			2,120			22
Noninterest revenue	4,440			3,748			18		8,773			7,887			11
Net interest income	9,393			8,749			7		18,811			17,207			9
Total net revenue	13,833			12,497			11		27,584			25,094			10
Provision for credit losses	1,120			1,108			1		2,434			2,425			—
Noninterest expense
Compensation expense	2,672			2,621			2		5,380			5,281			2
Noncompensation expense(a)	4,490			4,258			5		8,993			8,507			6
Total noninterest expense	7,162			6,879			4		14,373			13,788			4
Income before income tax expense	5,551			4,510			23		10,777			8,881			21
Income tax expense	1,377			1,098			25		2,640			2,143			23
Net income	$	4,174		$	3,412		22		$	8,137		$	6,738		21
Revenue by line of business
Consumer & Business Banking	$	6,797		$	6,131		11		$	13,365		$	11,853		13
Home Lending	1,118			1,347			(17	)	2,464			2,856			(14	)
Card, Merchant Services & Auto	5,918			5,019			18		11,755			10,385			13
Mortgage fees and related income details:
Net production revenue	353			93			280		553			188			194
Net mortgage servicing revenue(b)	(74		)	231			NM		122			601			(80	)
Mortgage fees and related income	$	279		$	324		(14	)%	$	675		$	789		(14	)%
Financial ratios
Return on equity	31		%	26		%			31		%	26		%
Overhead ratio	52			55					52			55

Note: In the discussion and the tables which follow, CCB presents certain financial measures which exclude the impact of PCI loans; these are non-GAAP financial measures.

(a) Included operating lease depreciation expense of $959 million and $827 million for the three months ended June 30, 2019 and 2018, respectively, and $1.9 billion and $1.6 billion for six months ended June 30, 2019 and 2018, respectively.

(b) Included MSR risk management results of $(244) million and $(23) million for the three months ended June 30, 2019 and 2018, respectively and $(253) million and $(6) million for six months ended June 30, 2019 and 2018, respectively.

22

Quarterly results

Net income was $4.2 billion, an increase of 22%.

Net revenue was $13.8 billion, an increase of 11%.

Net interest income was $9.4 billion, up 7%, driven by:

• higher deposit margins and balance growth in CBB, as well as higher loan balances and margin expansion in Card,

partially offset by

• loan spread compression and lower loan balances in Home Lending.

Noninterest revenue was $4.4 billion, up 18%, including the impact of the prior-year adjustment of approximately $330 million to the credit card rewards liability, predominantly offset by lower MSR risk management results reflecting updates to model inputs. Excluding these notable items, noninterest revenue was up 16%, largely driven by:

• higher net mortgage production revenue reflecting higher mortgage production margins and volumes, as well as the impact of loan sales in Home Lending, and

• higher auto lease volume,

partially offset by

• lower operating revenue reflecting faster prepayment speeds on lower rates.

Refer to Note 14 for further information regarding changes in value of the MSR asset and related hedges, and mortgage fees and related income.

Noninterest expense was $7.2 billion, up 4%, largely driven by:

• technology, marketing and other investments in the business, as well as higher auto lease depreciation,

partially offset by

• expense efficiencies and lower FDIC charges.

The provision for credit losses was $1.1 billion, relatively flat compared with the prior year, reflecting:

• an increase in credit card due to

– a $200 million addition to the allowance for loan losses reflecting loan growth and higher loss rates, as anticipated, and

– higher net charge-offs, on loan growth

offset by

• a decrease in consumer, excluding credit card due to

– a $400 million reduction in the allowance for loan losses in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies

partially offset by

– higher net charge-offs in the residential real estate portfolio as the prior year benefited from a recovery on a loan sale.

Year-to-date results

Net income was $8.1 billion, an increase of 21%.

Net revenue was $27.6 billion, an increase of 10%.

Net interest income was $18.8 billion, up 9%, driven by:

• higher deposit margins and balance growth in CBB, as well as higher loan balances and margin expansion in Card,

partially offset by

• loan spread compression and lower loan balances in Home Lending.

Noninterest revenue was $8.8 billion, up 11%, including the impact of the prior-year adjustment of approximately $330 million to the credit card rewards liability, predominantly offset by lower MSR risk management results reflecting updates to model inputs. Excluding these notable items, noninterest revenue was up 10%, largely driven by:

• higher auto lease volume, and

• higher net mortgage production revenue reflecting higher mortgage production margins and volumes, as well as the impact of loan sales in Home Lending,

partially offset by

• lower operating revenue reflecting lower servicing revenue on a lower level of third-party loans serviced and faster prepayment speeds on lower rates.

Noninterest expense was $14.4 billion, up 4%, driven by:

• technology, marketing and other investments in the business, as well as higher auto lease depreciation,

partially offset by

• expense efficiencies and lower FDIC charges.

The provision for credit losses was $2.4 billion, flat compared with the prior year, reflecting:

• an increase in credit card due to

– a $200 million addition to the allowance for loan losses reflecting loan growth and higher loss rates, as anticipated, and

– higher net charge-offs, on loan growth

offset by

• a decrease in consumer, excluding credit card due to

– a $400 million reduction in the allowance for loan losses in the PCI residential real estate portfolio, reflecting continued improvement in home prices and delinquencies

partially offset by

– higher net charge-offs in the residential real estate portfolio as the prior year benefited from a recovery on a loan sale.

23

Selected metrics
	As of or for the three months ended June 30,						As of or for the six months ended June 30,
(in millions, except headcount)	2019		2018		Change		2019		2018		Change
Selected balance sheet data (period-end)
Total assets	$	550,690	$	552,674	—	%	$	550,690	$	552,674	—	%
Loans:
Consumer & Business Banking	26,616		26,272		1		26,616		26,272		1
Home equity	32,958		39,033		(16	)	32,958		39,033		(16	)
Residential mortgage	186,575		202,205		(8	)	186,575		202,205		(8	)
Home Lending	219,533		241,238		(9	)	219,533		241,238		(9	)
Card	157,576		145,255		8		157,576		145,255		8
Auto	62,073		65,014		(5	)	62,073		65,014		(5	)
Total loans	465,798		477,779		(3	)	465,798		477,779		(3	)
Core loans	418,177		419,295		—		418,177		419,295		—
Deposits	695,100		679,154		2		695,100		679,154		2
Equity	52,000		51,000		2		52,000		51,000		2
Selected balance sheet data (average)
Total assets	$	542,337	$	544,642	—		$	548,053	$	541,806	1
Loans:
Consumer & Business Banking	26,570		26,110		2		26,529		25,978		2
Home equity	33,676		39,898		(16	)	34,446		40,836		(16	)
Residential mortgage	191,009		201,587		(5	)	197,332		200,129		(1	)
Home Lending	224,685		241,485		(7	)	231,778		240,965		(4	)
Card	153,746		142,724		8		152,447		142,825		7
Auto	62,236		65,383		(5	)	62,498		65,622		(5	)
Total loans	467,237		475,702		(2	)	473,252		475,390		—
Core loans	418,470		414,120		1		423,315		412,145		3
Deposits	690,892		673,761		3		685,980		666,719		3
Equity	52,000		51,000		2		52,000		51,000		2
Headcount(a)	127,732		131,945		(3	)%	127,732		131,945		(3	)%

(a) During the third quarter of 2018, approximately 1,200 employees transferred from CCB to CIB as part of the reorganization of the Commercial Card business.

24

Selected metrics
	As of or for the three months ended June 30,								As of or for the six months ended June 30,
(in millions, except ratio data)	2019			2018			Change		2019			2018			Change
Credit data and quality statistics
Nonaccrual loans(a)(b)	$	3,142		$	3,854		(18	)%	$	3,142		$	3,854		(18	)%
Net charge-offs/(recoveries)(c)
Consumer & Business Banking	66			50			32		125			103			21
Home equity	(16		)	(7		)	(129	)	(16		)	9			NM
Residential mortgage	(12		)	(149		)	92		(17		)	(147		)	88
Home Lending	(28		)	(156		)	82		(33		)	(138		)	76
Card	1,240			1,164			7		2,442			2,334			5
Auto	42			50			(16	)	100			126			(21	)
Total net charge-offs/(recoveries)	$	1,320		$	1,108		19		$	2,634		$	2,425		9
Net charge-off/(recovery) rate(c)
Consumer & Business Banking	1.00		%	0.77		%			0.95		%	0.80		%
Home equity(d)	(0.25		)	(0.09		)			(0.12		)	0.06
Residential mortgage(d)	(0.03		)	(0.33		)			(0.02		)	(0.16		)
Home Lending(d)	(0.06		)	(0.29		)			(0.03		)	(0.13		)
Card	3.24			3.27					3.23			3.30
Auto	0.27			0.31					0.32			0.39
Total net charge-off/(recovery) rate(d)	1.19			1.00					1.18			1.10
30+ day delinquency rate
Home Lending(e)(f)	0.71		%	0.86		%			0.71		%	0.86		%
Card	1.71			1.65					1.71			1.65
Auto	0.82			0.77					0.82			0.77
90+ day delinquency rate — Card	0.87			0.85					0.87			0.85
Allowance for loan losses
Consumer & Business Banking	$	796		$	796		—		$	796		$	796		—
Home Lending, excluding PCI loans	1,003			1,003			—		1,003			1,003			—
Home Lending — PCI loans(c)	1,299			2,132			(39	)	1,299			2,132			(39	)
Card	5,383			4,884			10		5,383			4,884			10
Auto	465			464			—		465			464			—
Total allowance for loan losses(c)	$	8,946		$	9,279		(4	)%	$	8,946		$	9,279		(4	)%

(a) Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.

(b) At June 30, 2019 and 2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $1.8 billion and $3.3 billion, respectively. These amounts have been excluded based upon the government guarantee.

(c) Net charge-offs/(recoveries) and the net charge-off/(recovery) rates for the three months ended June 30, 2019 and 2018, excluded $39 million and $73 million, respectively, and for six months ended June 30, 2019 and 2018, excluded $89 million and $93 million, respectively, of write-offs in the PCI portfolio. These write-offs decreased the allowance for loan losses for PCI loans. For further information on PCI write-offs, refer to Summary of changes in the allowance for credit losses on page 68.

(d) Excludes the impact of PCI loans. For the three months ended June 30, 2019 and 2018, the net charge-off/(recovery) rates including the impact of PCI loans were as follows: (1) home equity of (0.19)% and (0.07)%, respectively; (2) residential mortgage of (0.03)% and (0.30)%, respectively; (3) Home Lending of (0.05)% and (0.26)%, respectively; and (4) total CCB of 1.14% and 0.93%, respectively. For six months ended June 30, 2019 and 2018, the net charge-off/(recovery) rates included impact of PCI loans were as follows: (1) home equity of (0.09)% and 0.04%, respectively; (2) residential mortgage of (0.02)% and (0.15)%, respectively; (3) Home Lending of (0.03)% and (0.12)%, respectively; and (4) total CCB of 1.13% and 1.03%, respectively.

(e) At June 30, 2019 and 2018, excluded mortgage loans insured by U.S. government agencies of $2.9 billion and $5.0 billion, respectively, that are 30 or more days past due. These amounts have been excluded based upon the government guarantee.

(f) Excludes PCI loans. The 30+ day delinquency rate for PCI loans was 8.71% and 9.40% at June 30, 2019 and 2018, respectively.

25

Selected metrics
	As of or for the three months ended June 30,								As of or for the six months ended June 30,
(in billions, except ratios and where otherwise noted)	2019			2018			Change		2019			2018			Change
Business Metrics
Number of branches	4,970			5,091			(2	)%	4,970			5,091			(2	)%
Active digital customers (in thousands)(a)	51,032			47,952			6		51,032			47,952			6
Active mobile customers (in thousands)(b)	35,392			31,651			12		35,392			31,651			12
Debit and credit card sales volume	$	281.5		$	255.0		10		$	536.6		$	487.4		10
Consumer & Business Banking
Average deposits	$	676.7		$	659.8		3		$	672.6		$	653.1		3
Deposit margin	2.60		%	2.36		%			2.61		%	2.28		%
Business banking origination volume	$	1.7		$	1.9		(9	)	$	3.2		$	3.6		(10	)
Client investment assets	328.1			283.7			16		328.1			283.7			16
Home Lending
Mortgage origination volume by channel
Retail	$	12.5		$	10.4		20		$	20.4		$	18.7		9
Correspondent	12.0			11.1			8		19.1			21.0			(9	)
Total mortgage origination volume(c)	$	24.5		$	21.5		14		$	39.5		$	39.7		(1	)
Total loans serviced (period-end)	$	780.1		$	802.6		(3	)	$	780.1		$	802.6		(3	)
Third-party mortgage loans serviced (period-end)	526.6			533.0			(1	)	526.6			533.0			(1	)
MSR carrying value (period-end)	5.1			6.2			(18	)	5.1			6.2			(18	)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end)	0.97		%	1.16		%			0.97		%	1.16		%
MSR revenue multiple(d)	2.69		x	3.31		x			2.77		x	3.22		x
Card, excluding Commercial Card
Credit card sales volume	$	192.5		$	174.0		11		$	365.0		$	331.1		10
Card Services
Net revenue rate	11.48		%	10.38		%			11.55		%	11.00		%
Merchant Services
Merchant processing volume	$	371.6		$	330.8		12		$	728.1		$	647.1		13
Auto
Loan and lease origination volume	$	8.5		$	8.3		2		$	16.4		$	16.7		(2	)
Average auto operating lease assets	21.3			18.4			16	%	21.1			18.0			17	%

(a) Users of all web and/or mobile platforms who have logged in within the past 90 days.

(b) Users of all mobile platforms who have logged in within the past 90 days.

(c) Firmwide mortgage origination volume was $26.3 billion and $23.7 billion for the three months ended June 30, 2019 and 2018, respectively, and $42.7 billion and $43.7 billion for six months ended June 30, 2019 and 2018, respectively.

(d) Represents the ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) divided by the ratio of annualized loan servicing-related revenue to third-party mortgage loans serviced (average).

26

CORPORATE & INVESTMENT BANK

For a discussion of the business profile of CIB, refer to pages 66–70 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 173.

Selected income statement data
	Three months ended June 30,								Six months ended June 30,
(in millions, except ratios)	2019			2018			Change		2019			2018			Change
Revenue
Investment banking fees	$	1,846		$	2,139		(14	)%	$	3,690		$	3,835		(4	)%
Principal transactions	3,885			3,666			6		8,048			7,695			5
Lending- and deposit-related fees	374			382			(2	)	735			763			(4	)
Asset management, administration and commissions	1,149			1,155			(1	)	2,250			2,286			(2	)
All other income	229			190			21		423			870			(51	)
Noninterest revenue	7,483			7,532			(1	)	15,146			15,449			(2	)
Net interest income	2,158			2,391			(10	)	4,343			4,957			(12	)
Total net revenue(a)	9,641			9,923			(3	)	19,489			20,406			(4	)
Provision for credit losses	—			58			NM		87			(100		)	NM
Noninterest expense
Compensation expense	2,698			2,720			(1	)	5,647			5,756			(2	)
Noncompensation expense	2,789			2,683			4		5,293			5,306			—
Total noninterest expense	5,487			5,403			2		10,940			11,062			(1	)
Income before income tax expense	4,154			4,462			(7	)	8,462			9,444			(10	)
Income tax expense	1,219			1,264			(4	)	2,276			2,272			—
Net income	$	2,935		$	3,198		(8	)%	$	6,186		$	7,172		(14	)%
Financial ratios
Return on equity	14		%	17		%			15		%	20		%
Overhead ratio	57			54					56			54
Compensation expense as percentage of total net revenue	28			27					29			28

(a) Includes tax-equivalent adjustments, predominantly due to income tax credits related to alternative energy investments; income tax credits and amortization of the cost of investments in affordable housing projects; and tax-exempt income from municipal bonds of $547 million and $428 million for the three months ended June 30, 2019 and 2018, respectively, and $1.1 billion and $833 million for the six months ended June 30, 2019 and 2018, respectively.

Selected income statement data
	Three months ended June 30,								Six months ended June 30,
(in millions)	2019			2018			Change		2019		2018			Change
Revenue by business
Investment Banking	$	1,776		$	1,949		(9	)%	$	3,521	$	3,536		—	%
Treasury Services	1,135			1,181			(4	)	2,282		2,297			(1	)
Lending	337			321			5		677		623			9
Total Banking	3,248			3,451			(6	)	6,480		6,456			—
Fixed Income Markets	3,690			3,453			7		7,415		8,006			(7	)
Equity Markets	1,728			1,959			(12	)	3,469		3,976			(13	)
Securities Services	1,045			1,103			(5	)	2,059		2,162			(5	)
Credit Adjustments & Other(a)	(70		)	(43		)	(63	)	66		(194		)	NM
Total Markets & Securities Services(b)	6,393			6,472			(1	)	13,009		13,950			(7	)
Total net revenue	$	9,641		$	9,923		(3	)%	$	19,489	$	20,406		(4	)%

(a) Consists primarily of credit valuation adjustments (“CVA”) managed centrally within CIB and funding valuation adjustments (“FVA”) on derivatives. Results are primarily reported in principal transactions revenue. Results are presented net of associated hedging activities and net of CVA and FVA amounts allocated to Fixed Income Markets and Equity Markets.

(b) Formerly Markets & Investor Services.

27

Quarterly results

Net income was $2.9 billion, down 8%.

Net revenue was $9.6 billion, down 3%.

Banking revenue was $3.2 billion, down 6%.

• Investment Banking revenue was $1.8 billion, down 9%, reflecting lower fees across products. The Firm maintained its #1 ranking for Global Investment Banking fees, according to Dealogic.

– Debt underwriting fees were $816 million, down 13%, driven by declines in industry-wide fee levels.

– Advisory fees were $525 million, down 16% and Equity underwriting fees were $505 million, down 11%, driven by declines in industry-wide fee levels and when compared to a strong prior year.

• Treasury Services revenue was $1.1 billion, down 4%, predominantly driven by deposit margin compression, largely offset by growth in operating deposits and higher fees on increased payments volume.

• Lending revenue was $337 million, up 5%, predominantly driven by higher net interest income reflecting growth in loan balances.

Markets & Securities Services revenue was $6.4 billion, down 1%. Markets revenue was $5.4 billion, flat compared to the prior year, and included a gain from the IPO of a strategic investment in Tradeweb. Excluding this gain, total Markets revenue and Fixed Income Markets revenue were down 6% and 3% respectively.

• Fixed Income Markets revenue was $3.7 billion reflecting relative weakness in EMEA across products, largely offset by increased client activity in North America Rates and agency mortgage trading due to the changing rate environment.

• Equity Markets revenue was $1.7 billion, down 12% compared to a strong prior year, predominantly driven by lower client activity in derivatives.

• Securities Services revenue was $1.0 billion, down 5%, driven by deposit margin compression and the impact of a business exit, partially offset by increased client activity.

The provision for credit losses was zero, compared with $58 million in the prior year.

Noninterest expense was $5.5 billion, up 2%, reflecting higher legal expense, largely offset by lower performance-related compensation expense.

Year-to-date results

Net income was $6.2 billion, down 14%.

Net revenue was $19.5 billion, down 4%.

Banking revenue was $6.5 billion, flat compared to the prior year.

• Investment Banking revenue was $3.5 billion, flat compared to the prior year, driven by lower equity underwriting and advisory fees, partially offset by higher debt underwriting fees. The Firm maintained its #1 ranking for Global Investment Banking fees with overall share gains, according to Dealogic.

– Equity underwriting fees were $770 million, down 16% and Advisory fees were $1.2 billion, down 3%, driven by declines in industry-wide fee levels.

– Although industry-wide fee levels declined, Debt underwriting fees of $1.8 billion were up 2%, driven by large acquisition financing deals.

• Treasury Services revenue was $2.3 billion, down 1%, reflecting deposit margin compression offset by growth in operating deposits and higher fees on increased payments volume.

• Lending revenue was $677 million, up 9%, predominantly driven by higher net interest income reflecting growth in loan balances.

Markets & Securities Services revenue was $13.0 billion, down 7%. Markets revenue was $10.9 billion, which included a gain from the IPO of a strategic investment in Tradeweb. In addition, prior year results included approximately $500 million of fair value gains related to the adoption of the recognition and measurement accounting guidance for certain equity investments previously held at cost. Excluding these gains, total Markets revenue and Fixed Income Markets revenue were down 8% and 6% respectively.

• Fixed Income Markets revenue was $7.4 billion reflecting lower revenue in Currencies & Emerging Markets and Rates. This decline was partially offset by higher revenue in agency mortgage trading due to the changing rate environment.

• Equity Markets revenue was $3.5 billion, down 13% compared to a strong prior year, predominantly driven by lower client activity in derivatives.

• Securities Services revenue was $2.1 billion, down 5%, driven by deposit margin compression and the impact of a business exit, partially offset by increased client activity.

• Credit Adjustments & Other was a gain of $66 million, compared with a loss of $194 million in the prior year.

The provision for credit losses was $87 million reflecting select C&I client downgrades. The prior year was a benefit of $100 million, reflecting a reduction in the allowance for credit losses primarily driven by a single name in the Oil & Gas portfolio, partially offset by net portfolio activity.

Noninterest expense was $10.9 billion, down 1%, reflecting lower performance-related compensation expense and lower FDIC charges partially offset by higher investments in technology and higher legal expense.

28

Selected metrics
	As of or for the three months ended June 30,						As of or for the six months ended June 30,
(in millions, except headcount)	2019		2018		Change		2019		2018		Change
Selected balance sheet data (period-end)
Assets	$	962,498	$	908,954	6	%	$	962,498	$	908,954	6	%
Loans:
Loans retained(a)	123,074		116,645		6		123,074		116,645		6
Loans held-for-sale and loans at fair value	6,838		6,254		9		6,838		6,254		9
Total loans	129,912		122,899		6		129,912		122,899		6
Core loans	129,747		122,574		6		129,747		122,574		6
Equity	80,000		70,000		14		80,000		70,000		14
Selected balance sheet data (average)
Assets	$	992,792	$	937,217	6		$	976,408	$	923,756	6
Trading assets-debt and equity instruments	421,775		358,611		18		401,656		356,750		13
Trading assets-derivative receivables	48,815		60,623		(19	)	49,707		60,393		(18	)
Loans:
Loans retained(a)	$	124,194	$	113,950	9		$	125,585	$	111,665	12
Loans held-for-sale and loans at fair value	7,763		5,961		30		8,186		5,722		43
Total loans	$	131,957	$	119,911	10		$	133,771	$	117,387	14
Core loans	131,792		119,637		10		133,596		117,090		14
Equity	80,000		70,000		14		80,000		70,000		14
Headcount(b)	54,959		51,400		7	%	54,959		51,400		7	%

(a) Loans retained includes credit portfolio loans, loans held by consolidated Firm-administered multi-seller conduits, trade finance loans, other held-for-investment loans and overdrafts.

(b) During the third quarter of 2018 approximately 1,200 employees transferred from CCB to CIB as part of the reorganization of the Commercial Card business.

Selected metrics
	As of or for the three months ended June 30,								As of or for the six months ended June 30,
(in millions, except ratios)	2019			2018			Change		2019			2018			Change
Credit data and quality statistics
Net charge-offs/(recoveries)	$	72		$	114		(37	)%	$	102		$	134		(24	)%
Nonperforming assets:
Nonaccrual loans:
Nonaccrual loans retained(a)	$	569		$	352		62	%	$	569		$	352		62
Nonaccrual loans held-for-sale and loans at fair value	370			175			111		370			175			111
Total nonaccrual loans	939			527			78		939			527			78
Derivative receivables	39			112			(65	)	39			112			(65	)
Assets acquired in loan satisfactions	58			104			(44	)	58			104			(44	)
Total nonperforming assets	$	1,036		$	743		39		$	1,036		$	743		39
Allowance for credit losses:
Allowance for loan losses	$	1,131		$	1,043		8		$	1,131		$	1,043		8
Allowance for lending-related commitments	807			828			(3	)	807			828			(3	)
Total allowance for credit losses	$	1,938		$	1,871		4	%	$	1,938		$	1,871		4	%
Net charge-off/(recovery) rate(b)	0.23		%	0.40		%			0.16		%	0.24		%
Allowance for loan losses to period-end loans retained	0.92			0.89					0.92			0.89
Allowance for loan losses to period-end loans retained, excluding trade finance and conduits(c)	1.27			1.27					1.27			1.27
Allowance for loan losses to nonaccrual loans retained(a)	199			296					199			296
Nonaccrual loans to total period-end loans	0.72		%	0.43		%			0.72		%	0.43		%

(a) Allowance for loan losses of $147 million and $141 million were held against these nonaccrual loans at June 30, 2019 and 2018, respectively.

(b) Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.

(c) Management uses allowance for loan losses to period-end loans retained, excluding trade finance and conduits, a non-GAAP financial measure, to provide a more meaningful assessment of CIB’s allowance coverage ratio.

29

Investment banking fees
	Three months ended June 30,						Six months ended June 30,
(in millions)	2019		2018		Change		2019		2018		Change
Advisory	$	525	$	626	(16	)%	$	1,169	$	1,201	(3	)%
Equity underwriting	505		570		(11	)	770		916		(16	)
Debt underwriting(a)	816		943		(13	)	1,751		1,718		2
Total investment banking fees	$	1,846	$	2,139	(14	)%	$	3,690	$	3,835	(4	)%

(a) Includes loan syndications.

League table results – wallet share
	Three months ended June 30, 2019			Full-year 2018
	Rank		Share	Rank		Share
Based on fees(a)
Long-term debt(b)
Global	#	1	7.3	#	1		7.2	%
U.S.	1		10.7	1			11.2
Equity and equity-related(c)
Global	1		9.7	1			9.0
U.S.	2		11.6	1			12.3
M&A(d)
Global	2		9.3	2			8.7
U.S.	2		9.7	2			8.9
Loan syndications
Global	2		8.9	1			9.5
U.S.	2		10.3	1			12.0
Global investment banking fees(e)	#	1	8.7	#	1		8.6	%

(a) Source: Dealogic as of July 1, 2019. Reflects the ranking of revenue wallet and market share.

(b) Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”); and exclude money market, short-term debt, and U.S. municipal securities.

(c) Global equity and equity-related ranking includes rights offerings and Chinese A-Shares.

(d) Global M&A excludes any withdrawn transactions. U.S. M&A revenue wallet represents wallet from client parents based in the U.S.

(e) Global investment banking fees exclude money market, short-term debt and shelf deals.

30

Markets revenue

The following table summarizes select income statement data for the Markets businesses. Markets includes both Fixed Income Markets and Equity Markets. Markets revenue comprises principal transactions, fees, commissions and other income, as well as net interest income. The Firm assesses its Markets business performance on a total revenue basis, as offsets may occur across revenue line items. For example, securities that generate net interest income may be risk-managed by derivatives that are

recorded in principal transactions revenue. For a description of the composition of these income statement line items, refer to Notes 5 and 6. For further information, refer to Markets revenue on page 69 of JPMorgan Chase’s 2018 Form 10-K.

For the periods presented below, the predominant source of principal transactions revenue was the amount recognized upon executing new transactions.

	Three months ended June 30,							Three months ended June 30,
	2019							2018
(in millions)	Fixed Income Markets		Equity Markets			Total Markets		Fixed Income Markets		Equity Markets			Total Markets
Principal transactions	$	2,431	$	1,608		$	4,039	$	2,214	$	1,664		$	3,878
Lending- and deposit-related fees	49		2			51		49		2			51
Asset management, administration and commissions	97		453			550		104		460			564
All other income	173		(19		)	154		171		(6		)	165
Noninterest revenue	2,750		2,044			4,794		2,538		2,120			4,658
Net interest income(a)	940		(316		)	624		915		(161		)	754
Total net revenue	$	3,690	$	1,728		$	5,418	$	3,453	$	1,959		$	5,412

	Six months ended June 30,							Six months ended June 30,
	2019							2018
(in millions)	Fixed Income Markets		Equity Markets			Total Markets		Fixed Income Markets		Equity Markets			Total Markets
Principal transactions	$	4,913	$	3,165		$	8,078	$	4,946	$	3,276		$	8,222
Lending- and deposit-related fees	98		4			102		96		3			99
Asset management, administration and commissions	200		887			1,087		217		918			1,135
All other income	392		(23		)	369		731		11			742
Noninterest revenue	5,603		4,033			9,636		5,990		4,208			10,198
Net interest income(a)	1,812		(564		)	1,248		2,016		(232		)	1,784
Total net revenue	$	7,415	$	3,469		$	10,884	$	8,006	$	3,976		$	11,982

(a) Declines in Markets net interest income were driven by higher funding costs.

31

Selected metrics
	As of or for the three months ended June 30,						As of or for the six months ended June 30,
(in millions, except where otherwise noted)	2019		2018		Change		2019		2018		Change
Assets under custody (“AUC”) by asset class (period-end) (in billions):
Fixed Income	$	13,056	$	12,611	4	%	$	13,056	$	12,611	4	%
Equity	9,352		8,791		6		9,352		8,791		6
Other(a)	3,042		2,782		9		3,042		2,782		9
Total AUC	$	25,450	$	24,184	5		$	25,450	$	24,184	5
Client deposits and other third-party liabilities (average)(b)	$	458,237	$	433,646	6	%	$	451,185	$	428,502	5	%

(a) Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and other contracts.

(b) Client deposits and other third-party liabilities pertain to the Treasury Services and Securities Services businesses.

International metrics
	As of or for the three months ended June 30,						As of or for the six months ended June 30,
(in millions, except where  otherwise noted)	2019		2018(c)		Change		2019		2018(c)		Change
Total net revenue(a)
Europe/Middle East/Africa	$	2,910	$	3,470	(16	)%	$	6,063	$	7,163	(15	)%
Asia/Pacific	1,296		1,341		(3	)	2,715		2,763		(2	)
Latin America/Caribbean	398		369		8		801		805		—
Total international net revenue	4,604		5,180		(11	)	9,579		10,731		(11	)
North America	5,037		4,743		6		9,910		9,675		2
Total net revenue	$	9,641	$	9,923	(3	)	$	19,489	$	20,406	(4	)
Loans retained (period-end)(a)
Europe/Middle East/Africa	$	24,665	$	26,342	(6	)	$	24,665	$	26,342	(6	)
Asia/Pacific	15,302		16,983		(10	)	15,302		16,983		(10	)
Latin America/Caribbean	7,090		5,621		26		7,090		5,621		26
Total international loans	47,057		48,946		(4	)	47,057		48,946		(4	)
North America	76,017		67,699		12		76,017		67,699		12
Total loans retained	$	123,074	$	116,645	6		$	123,074	$	116,645	6
Client deposits and other third-party liabilities (average)(b)
Europe/Middle East/Africa	$	175,189	$	164,735	6		$	169,694	$	162,124	5
Asia/Pacific	86,889		81,465		7		85,990		82,526		4
Latin America/Caribbean	28,869		27,747		4		28,180		26,620		6
Total international	$	290,947	$	273,947	6		$	283,864	$	271,270	5
North America	167,290		159,699		5		167,321		157,232		6
Total client deposits and other third-party liabilities	$	458,237	$	433,646	6		$	451,185	$	428,502	5
AUC (period-end)(b) (in billions)
North America	$	15,875	$	14,942	6		$	15,875	$	14,942	6
All other regions	9,575		9,242		4		9,575		9,242		4
Total AUC	$	25,450	$	24,184	5	%	$	25,450	$	24,184	5	%

(a) Total net revenue and loans retained (excluding loans held-for-sale and loans at fair value) are based on the location of the trading desk, booking location, or domicile of the client, as applicable.

(b) Client deposits and other third-party liabilities pertaining to the Treasury Services and Securities Services businesses, and AUC, are based on the domicile of the client.

(c) The prior period amounts have been revised to conform with the current period presentation.

32

COMMERCIAL BANKING

For a discussion of the business profile of CB, refer to pages 71-73 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on page 174.

Selected income statement data
	Three months ended June 30,						Six months ended June 30,
(in millions)	2019		2018		Change		2019		2018		Change
Revenue
Lending- and deposit-related fees	$	216	$	224	(4	)%	$	443	$	450	(2	)%
All other income(a)	333		409		(19	)	764		732		4
Noninterest revenue	549		633		(13	)	1,207		1,182		2
Net interest income	1,662		1,683		(1	)	3,342		3,300		1
Total net revenue(b)	2,211		2,316		(5	)	4,549		4,482		1
Provision for credit losses	29		43		(33	)	119		38		213
Noninterest expense
Compensation expense	438		415		6		887		836		6
Noncompensation expense	426		429		(1	)	850		852		—
Total noninterest expense	864		844		2		1,737		1,688		3
Income before income tax expense	1,318		1,429		(8	)	2,693		2,756		(2	)
Income tax expense	322		342		(6	)	644		644		—
Net income	$	996	$	1,087	(8	)%	$	2,049	$	2,112	(3	)%

(a) Effective in the first quarter of 2019, includes revenue from investment banking products, commercial card transactions and asset management fees. The prior period amounts have been revised to conform with the current period presentation.

(b) Total net revenue included tax-equivalent adjustments from income tax credits related to equity investments in designated community

development entities that provide loans to qualified businesses in low-income communities, as well as tax-exempt income related to municipal financing activities of $100 million and $106 million for the three months ended June 30, 2019 and 2018, respectively and $194 million and $209 million for the six months ended June 30, 2019 and 2018, respectively.

Quarterly results

Net income was $1.0 billion, a decrease of 8%.

Net revenue was $2.2 billion, down 5%. Net interest income was $1.7 billion, down 1%, predominantly driven by lower deposit balances. Noninterest revenue was $549 million, a decrease of 13%, largely driven by lower investment banking revenue due to the timing of large fee transactions.

Noninterest expense was $864 million, up 2%, driven by continued investments in banker coverage and technology.

The provision for credit losses was $29 million, compared with $43 million in the prior year.

Year-to-date results

Net income was $2.0 billion, a decrease of 3%.

Net revenue was $4.5 billion, an increase of 1%. Net interest income was $3.3 billion, an increase of 1%, driven by higher deposit margins partially offset by lower deposit balances. Noninterest revenue was $1.2 billion, up 2% driven by higher investment banking revenue, partially offset by lower deposit fees.

Noninterest expense was $1.7 billion, an increase of 3%, driven by continued investments in banker coverage and technology.

The provision for credit losses was $119 million, predominantly driven by a net addition to the allowance for credit losses on select C&I client downgrades. The prior year was an expense of $38 million.

33

Selected income statement data (continued)
	Three months ended June 30,								Six months ended June 30,
(in millions, except ratios)	2019			2018			Change		2019			2018			Change
Revenue by product
Lending	$	1,012		$	1,026		(1	)%	$	2,024		$	2,025		—	%
Treasury services	989			1,026			(4	)	2,018			1,998			1
Investment banking(a)	193			254			(24	)	482			438			10
Other	17			10			70		25			21			19
Total Commercial Banking net revenue	$	2,211		$	2,316		(5	)	$	4,549		$	4,482		1
Investment banking revenue, gross(b)	$	592		$	739		(20	)	$	1,410		$	1,308		8
Revenue by client segments
Middle Market Banking	$	939		$	919		2		$	1,890		$	1,814		4
Corporate Client Banking	709			807			(12	)	1,525			1,494			2
Commercial Real Estate Banking(c)	538			559			(4	)	1,085			1,119			(3	)
Other(c)	25			31			(19	)	49			55			(11	)
Total Commercial Banking net revenue	$	2,211		$	2,316		(5	)%	$	4,549		$	4,482		1	%
Financial ratios
Return on equity	17		%	21		%			18		%	20		%
Overhead ratio	39			36					38			38

(a) Includes CB’s share of revenue from investment banking products sold to CB clients through the CIB.

(b) For discussion of revenue sharing, refer to page 60 of the 2018 Form 10-K.

(c) Effective in the first quarter of 2019, client segment data includes Commercial Real Estate Banking which comprises the former Commercial Term Lending and Real Estate Banking client segments, and Community Development Banking (previously part of Other). The prior period amounts have been revised to conform with the current period presentation.

34

Selected metrics
	As of or for the three months ended June 30,						As of or for the six months ended June 30,
(in millions, except headcount)	2019		2018		Change		2019		2018		Change
Selected balance sheet data (period-end)
Total assets	$	220,712	$	220,232	—	%	$	220,712	$	220,232	—	%
Loans:
Loans retained	208,323		205,834		1		208,323		205,834		1
Loans held-for-sale and loans at fair value	1,284		1,576		(19	)	1,284		1,576		(19	)
Total loans	$	209,607	$	207,410	1		$	209,607	$	207,410	1
Core loans	209,475		207,238		1		209,475		207,238		1
Equity	22,000		20,000		10		22,000		20,000		10
Period-end loans by client segment
Middle Market Banking	$	56,346	$	58,301	(3	)	$	56,346	$	58,301	(3	)
Corporate Client Banking	51,500		48,885		5		51,500		48,885		5
Commercial Real Estate Banking(a)	100,751		98,808		2		100,751		98,808		2
Other(a)	1,010		1,416		(29	)	1,010		1,416		(29	)
Total Commercial Banking loans	$	209,607	$	207,410	1		$	209,607	$	207,410	1
Selected balance sheet data (average)
Total assets	$	218,760	$	218,396	—		$	218,530	$	217,781	—
Loans:
Loans retained	206,771		204,239		1		205,623		203,109		1
Loans held-for-sale and loans at fair value	701		1,381		(49	)	1,165		896		30
Total loans	$	207,472	$	205,620	1		$	206,788	$	204,005	1
Core loans	207,336		205,440		1		206,646		203,809		1
Average loans by client segment
Middle Market Banking	$	57,155	$	57,346	—		$	56,940	$	57,052	—
Corporate Client Banking	48,656		48,150		1		48,400		46,962		3
Commercial Real Estate Banking(a)	100,671		98,601		2		100,469		98,500		2
Other(a)	990		1,523		(35	)	979		1,491		(34	)
Total Commercial Banking loans	$	207,472	$	205,620	1		$	206,788	$	204,005	1
Client deposits and other third-party liabilities	$	168,247	$	170,745	(1	)	$	167,756	$	173,168	(3	)
Equity	22,000		20,000		10		22,000		20,000		10
Headcount	11,248		10,579		6	%	11,248		10,579		6	%

(a) Effective in the first quarter of 2019, client segment data includes Commercial Real Estate Banking which comprises the former Commercial Term Lending and Real Estate Banking client segments, and Community Development Banking (previously part of Other). The prior period amounts have been revised to conform with the current period presentation.

35

Selected metrics (continued)
	As of or for the three months ended June 30,								As of or for the six months ended June 30,
(in millions, except ratios)	2019			2018			Change		2019			2018			Change
Credit data and quality statistics
Net charge-offs/(recoveries)	$	15		$	34		(56	)%	$	26		$	34		(24	)%
Nonperforming assets
Nonaccrual loans:
Nonaccrual loans retained(a)	$	614		$	546		12	%	$	614		$	546		12	%
Nonaccrual loans held-for-sale and loans at fair value	—			—			—		—			—			—
Total nonaccrual loans	$	614		$	546		12		$	614		$	546		12
Assets acquired in loan satisfactions	20			2			NM		20			2			NM
Total nonperforming assets	$	634		$	548		16		$	634		$	548		16
Allowance for credit losses:
Allowance for loan losses	$	2,756		$	2,622		5		$	2,756		$	2,622		5
Allowance for lending-related commitments	274			243			13		274			243			13
Total allowance for credit losses	$	3,030		$	2,865		6	%	$	3,030		$	2,865		6	%
Net charge-off/(recovery) rate(b)	0.03		%	0.07		%			0.03		%	0.03		%
Allowance for loan losses to period-end loans retained	1.32			1.27					1.32			1.27
Allowance for loan losses to nonaccrual loans retained(a)	449			480					449			480
Nonaccrual loans to period-end total loans	0.29			0.26					0.29			0.26

(a) Allowance for loan losses of $125 million and $126 million was held against nonaccrual loans retained at June 30, 2019 and 2018, respectively.

(b) Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.

36

ASSET & WEALTH MANAGEMENT

For a discussion of the business profile of AWM, refer to pages 74–76 of JPMorgan Chase’s 2018 Form 10-K and Line of Business Metrics on pages 174–175.

Selected income statement data
(in millions, except ratios)	Three months ended June 30,								Six months ended June 30,
	2019			2018			Change		2019			2018			Change
Revenue
Asset management, administration and commissions	$	2,568		$	2,532		1	%	$	4,984		$	5,060		(2	)%
All other income	115			155			(26	)	292			257			14
Noninterest revenue	2,683			2,687			—		5,276			5,317			(1	)
Net interest income	876			885			(1	)	1,772			1,761			1
Total net revenue	3,559			3,572			—		7,048			7,078			—
Provision for credit losses	2			2			—		4			17			(76	)
Noninterest expense
Compensation expense	1,406			1,329			6		2,868			2,721			5
Noncompensation expense	1,190			1,237			(4	)	2,375			2,426			(2	)
Total noninterest expense	2,596			2,566			1		5,243			5,147			2
Income before income tax expense	961			1,004			(4	)	1,801			1,914			(6	)
Income tax expense	242			249			(3	)	421			389			8
Net income	$	719		$	755		(5	)	$	1,380		$	1,525		(10	)
Revenue by line of business
Asset Management	$	1,785		$	1,826		(2	)	$	3,546		$	3,613		(2	)
Wealth Management	1,774			1,746			2		3,502			3,465			1
Total net revenue	$	3,559		$	3,572		—	%	$	7,048		$	7,078		—	%
Financial ratios
Return on equity	27		%	33		%			26		%	33		%
Overhead ratio	73			72					74			73
Pre-tax margin ratio:
Asset Management	25			28					24			27
Wealth Management	29			28					27			27
Asset & Wealth Management	27			28					26			27

Quarterly results

Net income was $719 million, a decrease of 5%.

Net revenue of $3.6 billion was flat. Net interest income was $876 million, down 1%, driven by lower deposit revenue, largely offset by loan growth. Noninterest revenue of $2.7 billion was flat, as the impact of higher average market levels was predominantly offset by lower net investment valuation gains.

Noninterest expense was $2.6 billion, an increase of 1%, driven by continued investments in advisors and technology, partially offset by lower distribution fees.

Year-to-date results

Net income was $1.4 billion, a decrease of 10%.

Net revenue of $7 billion was flat. Net interest income was $1.8 billion, up 1%, predominantly driven by loan growth, offset by lower deposit revenue. Noninterest revenue was $5.3 billion, down 1%, driven by a shift in the mix toward lower fee products and lower average market levels, predominantly offset by higher net investment valuation gains.

Noninterest expense was $5.2 billion, an increase of 2%, largely driven by continued investments in technology and advisors, partially offset by lower distribution fees.

37

Selected metrics
	As of or for the three months ended June 30,								As of or for the six months ended June 30,
(in millions, except ranking data, headcount and ratios)	2019			2018			Change		2019			2018			Change
% of JPM mutual fund assets rated as 4- or 5-star(a)	63		%	59		%			63		%	59		%
% of JPM mutual fund assets ranked in 1st or 2nd quartile:(b)
1 year	78			65					78			65
3 years	75			71					75			71
5 years	82			85					82			85
Selected balance sheet data (period-end)
Total assets	$	172,149		$	161,474		7	%	$	172,149		$	161,474		7	%
Loans	149,877			138,606			8		149,877			138,606			8
Core loans	149,877			138,606			8		149,877			138,606			8
Deposits	136,225			131,511			4		136,225			131,511			4
Equity	10,500			9,000			17		10,500			9,000			17
Selected balance sheet data (average)
Total assets	$	167,544		$	158,244		6		$	167,452		$	156,305		7
Loans	146,494			136,710			7		145,953			134,683			8
Core loans	146,494			136,710			7		145,953			134,683			8
Deposits	140,317			139,557			1		139,282			141,865			(2	)
Equity	10,500			9,000			17		10,500			9,000			17
Headcount	23,683			23,141			2		23,683			23,141			2
Number of Wealth Management client advisors	2,735			2,644			3		2,735			2,644			3
Credit data and quality statistics
Net charge-offs	$	(3	)	$	(5	)	40		$	1		$	(4	)	NM
Nonaccrual loans	127			323			(61	)	127			323			(61	)
Allowance for credit losses:
Allowance for loan losses	$	331		$	304		9		$	331		$	304		9
Allowance for lending-related commitments	17			15			13		17			15			13
Total allowance for credit losses	$	348		$	319		9	%	$	348		$	319		9	%
Net charge-off rate	(0.01		)%	(0.01		)%			—			(0.01		)%
Allowance for loan losses to period-end loans	0.22			0.22					0.22			0.22
Allowance for loan losses to nonaccrual loans	261			94					261			94
Nonaccrual loans to period-end loans	0.08			0.23					0.08			0.23

(a) Represents the “overall star rating” derived from Morningstar for the U.S., the U.K., Luxembourg, Hong Kong and Taiwan domiciled funds; and Nomura “star rating” for Japan domiciled funds. Includes only Asset Management retail open-ended mutual funds that have a rating. Excludes money market funds, Undiscovered Managers Fund, and Brazil and India domiciled funds.

(b) Quartile ranking sourced from: Lipper for the U.S. and Taiwan domiciled funds; Morningstar for the U.K., Luxembourg and Hong Kong domiciled funds; Nomura for Japan domiciled funds and Fund Doctor for South Korea domiciled funds. Includes only Asset Management retail open-ended mutual funds that are ranked by the aforementioned sources. Excludes money market funds, Undiscovered Managers Fund, and Brazil and India domiciled funds.

38

Client assets

Client assets of $3.0 trillion and assets under management of $2.2 trillion were both up 7%, predominantly driven by net inflows into long-term and liquidity products as well as higher market levels globally.

Client assets
	June 30,
(in billions)	2019		2018		Change
Assets by asset class
Liquidity	$	481	$	448	7	%
Fixed income	543		452		20
Equity	441		435		1
Multi-asset and alternatives	713		693		3
Total assets under management	2,178		2,028		7
Custody/brokerage/administration/deposits	820		771		6
Total client assets	$	2,998	$	2,799	7
Memo:
Alternatives client assets (a)	$	177	$	172	3
Assets by client segment
Private Banking	$	617	$	551	12
Institutional	991		934		6
Retail	570		543		5
Total assets under management	$	2,178	$	2,028	7
Private Banking	$	1,410	$	1,298	9
Institutional	1,013		956		6
Retail	575		545		6
Total client assets	$	2,998	$	2,799	7	%

(a) Represents assets under management, as well as client balances in brokerage accounts

Client assets (continued)
	Three months ended June 30,						Six months ended June 30,
(in billions)	2019			2018			2019			2018
Assets under management rollforward
Beginning balance	$	2,096		$	2,016		$	1,987		$	2,034
Net asset flows:
Liquidity	4			17			(1		)	(4		)
Fixed income	37			(7		)	56			(12		)
Equity	(1		)	2			(7		)	7
Multi-asset and alternatives	—			9			(3		)	25
Market/performance/other impacts	42			(9		)	146			(22		)
Ending balance, June 30	$	2,178		$	2,028		$	2,178		$	2,028
Client assets rollforward
Beginning balance	$	2,897		$	2,788		$	2,733		$	2,789
Net asset flows	52			11			61			25
Market/performance/other impacts	49			—			204			(15		)
Ending balance, June 30	$	2,998		$	2,799		$	2,998		$	2,799

39

International metrics
	As of or for the three months ended June 30,						As of or for the six months ended June 30,
(in millions)	2019		2018		Change		2019		2018		Change
Total net revenue (a)
Europe/Middle East/Africa	$	680	$	692	(2	)%	$	1,342	$	1,418	(5	)%
Asia/Pacific	370		391		(5	)	728		784		(7	)
Latin America/Caribbean	219		234		(6	)	440		461		(5	)
Total international net revenue	1,269		1,317		(4	)	2,510		2,663		(6	)
North America	2,290		2,255		2		4,538		4,415		3
Total net revenue(a)	$	3,559	$	3,572	—		$	7,048	$	7,078	—	%

(a) Regional revenue is based on the domicile of the client.

	As of or for the three months ended June 30,						As of or for the six months ended June 30,
(in billions)	2019		2018		Change		2019		2018		Change
Assets under management
Europe/Middle East/Africa	$	381	$	371	3	%	$	381	$	371	3	%
Asia/Pacific	182		164		11		182		164		11
Latin America/Caribbean	68		65		5		68		65		5
Total international assets under management	631		600		5		631		600		5
North America	1,547		1,428		8		1,547		1,428		8
Total assets under management	$	2,178	$	2,028	7		$	2,178	$	2,028	7
Client assets
Europe/Middle East/Africa	$	448	$	431	4		$	448	$	431	4
Asia/Pacific	252		229		10		252		229		10
Latin America/Caribbean	171		160		7		171		160		7
Total international client assets	871		820		6		871		820		6
North America	2,127		1,979		7		2,127		1,979		7
Total client assets	$	2,998	$	2,799	7	%	$	2,998	$	2,799	7	%

40

CORPORATE

For a discussion of Corporate, refer to pages 77–78 of JPMorgan Chase’s 2018 Form 10-K.

Selected income statement and balance sheet data
	As of or for the three months ended June 30,								As of or for the six months ended June 30,
(in millions, except headcount)	2019			2018			Change		2019			2018			Change
Revenue
Principal transactions	$	(175	)	$	83		NM		$	(237	)	$	(61	)	(289	)%
Investment securities gains/(losses)	44			(80		)	NM		57			(325		)	NM
All other income	6			139			(96	)%	63			343			(82	)%
Noninterest revenue	(125		)	142			NM		(117		)	(43		)	(172	)
Net interest income	447			(62		)	NM		864			(109		)	NM
Total net revenue(a)	322			80			303	%	747			(152		)	NM
Provision for credit losses	(2		)	(1		)	(100	)%	—			(5		)	NM
Noninterest expense(b)	232			279			(17	)%	443			366			21	%
Income/(loss) before income tax expense/(benefit)	92			(198		)	NM		304			(513		)	NM
Income tax expense/(benefit)	(736		)	(62		)	NM		(775		)	6			NM
Net income/(loss)	$	828		$	(136	)	NM		$	1,079		$	(519	)	NM
Total net revenue
Treasury and CIO	$	618		$	87		NM		$	1,129		$	49		NM
Other Corporate	(296		)	(7		)	NM		(382		)	(201		)	(90	)%
Total net revenue	$	322		$	80		303	%	$	747		$	(152	)	NM
Net income/(loss)
Treasury and CIO	$	462		$	(153	)	NM		$	796		$	(340	)	NM
Other Corporate	366			17			NM		283			(179		)	NM
Total net income/(loss)	$	828		$	(136	)	NM		$	1,079		$	(519	)	NM
Total assets (period-end)	$	821,330		$	746,716		10	%	$	821,330		$	746,716		10	%
Loans (period-end)	1,695			1,720			(1	)%	1,695			1,720			(1	)%
Core loans(c)	1,695			1,720			(1	)%	1,695			1,720			(1	)%
Headcount	37,361			35,877			4	%	37,361			35,877			4	%

(a) Included tax-equivalent adjustments, driven by tax-exempt income from municipal bond investments, of $81 million and $95 million for the three months ended June 30, 2019 and 2018, respectively, and $167 million and $193 million for the six months ended June 30, 2019 and 2018, respectively.

(b) Included a net legal benefit of $(67) million and $(8) million for the three months ended June 30, 2019 and 2018, respectively, and $(157) million and $(50) million for the six months ended June 30, 2019 and 2018, respectively.

(c) Average core loans were $1.7 billion for both the three months ended June 30, 2019 and 2018, and $1.6 billion and $1.7 billion for the six months ended June 30, 2019 and 2018, respectively.

Quarterly results

Net income was $828 million, compared with a net loss of $136 million in the prior year.

Net revenue was $322 million, compared with $80 million in the prior year. This increase was driven by higher net interest income on higher rates and change in balance sheet mix, as well as an increase in investment securities gains due to the repositioning of the investment securities portfolio, partially offset by approximately $100 million of net valuation losses on certain legacy private equity investments compared to net gains in the prior year.

Noninterest expense was $232 million, compared with $279 million in the prior year. The current period included investments in technology as well as a contribution to the Firm’s Foundation, whereas all prior-year contributions were made in the fourth quarter. The prior year included a $174 million pretax loss on the liquidation of a legal entity.

The current period included tax benefits of $742 million related to the resolution of certain tax audits. The prior period reflected a benefit of $189 million resulting from a change in the estimate for the deemed repatriation tax on non-U.S. earnings, as well as other net tax adjustments that were predominantly offset by changes to certain tax reserves.

Year-to-date results

Net income was $1,079 million, compared with a net loss of $519 million in the prior year.

Net revenue was $747 million, compared with a net loss of $152 million in the prior year. This increase was driven by higher net interest income on higher rates and change in balance sheet mix, as well as an increase in investment securities gains due to the repositioning of the investment securities portfolio.

Noninterest expense was $443 million, compared with $366 million in the prior year. The current period included investments in technology and real estate as well as contributions to the Firm’s Foundation, whereas all prior-year contributions were made in the fourth quarter. The prior year included a $174 million pretax loss on the liquidation of a legal entity.

The current period included tax benefits of $825 million related to the resolution of certain tax audits. The prior period reflected changes to certain tax reserves, largely offset by changes in the estimate for the deemed repatriation tax on non-U.S. earnings and other tax adjustments.

41

Treasury and CIO overview

At June 30, 2019, the average credit rating of the Treasury and CIO investment securities comprising the portfolio in the table below was AA+ (based upon external ratings where available and, where not available, based primarily upon internal ratings that correspond to ratings as defined by S&P and Moody’s). Refer to Note 9 for further information on the Firm’s investment securities portfolio.

For further information on liquidity and funding risk, refer to Liquidity Risk Management on pages 49–53. For information on interest rate, foreign exchange and other risks, refer to Market Risk Management on pages 70–74.

Selected income statement and balance sheet data
	As of or for the three months ended June 30,							As of or for the six months ended June 30,
(in millions)	2019		2018			Change		2019		2018			Change
Investment securities gains/(losses)	$	44	$	(80	)	NM		$	57	$	(325	)	NM
Available-for-sale (“AFS”) investment securities (average)	$	248,612	$	200,232		24	%	$	237,669	$	202,266		18	%
Held-to-maturity (“HTM”) investment securities (average)	30,929		30,304			2		31,005		32,152			(4	)
Investment securities portfolio (average)	$	279,541	$	230,536		21		$	268,674	$	234,418		15
AFS investment securities (period-end)	$	274,533	$	200,434		37		$	274,533	$	200,434		37
HTM investment securities (period-end)	30,907		31,006			—		30,907		31,006			—
Investment securities portfolio (period-end)	$	305,440	$	231,440		32	%	$	305,440	$	231,440		32	%

42

ENTERPRISE-WIDE RISK MANAGEMENT

Risk is an inherent part of JPMorgan Chase’s business activities. When the Firm extends a consumer or wholesale loan, advises customers on their investment decisions, makes markets in securities, or offers other products or services, the Firm takes on some degree of risk. The Firm’s overall objective is to manage its businesses and the associated risks in a manner that balances serving the interests of its clients, customers and investors and protects the safety and soundness of the Firm.

The Firm believes that effective risk management requires:

• Acceptance of responsibility, including identification and escalation of risk issues, by all individuals within the Firm;

• Ownership of risk identification, assessment, data and management within each of the lines of business and Corporate; and

• Firmwide structures for risk governance.

The Firm strives for continual improvement through efforts to enhance controls, ongoing employee training and development, talent retention, and other measures. The Firm follows a disciplined and balanced compensation framework with strong internal governance and independent Board oversight. The impact of risk and control issues are carefully considered in the Firm’s performance evaluation and incentive compensation processes.

Firmwide Risk Management is overseen and managed on an enterprise-wide basis. The Firm’s risk management governance and oversight framework involves understanding drivers of risks, types of risks, and impacts of risks.

For a further discussion of Enterprise-wide risk management governance and oversight, refer to pages 79-83 of JPMorgan Chase’s 2018 Form 10-K.

Effective July 2019, the Board of Directors’ Risk Policy Committee (“DRPC”) was renamed the Risk Committee. The committee’s responsibilities were not changed. For a further discussion of the committee, refer to page 81 of JPMorgan Chase’s 2018 Form 10-K.

Governance and Oversight Functions

The following sections of this Form 10-Q and the 2018 Form 10-K discuss the risk governance and oversight functions in place to manage the risks inherent in the Firm’s business activities.

Risk governance and oversight functions	Form 10-Q page reference	Form 10-K page reference
Strategic risk		84
Capital risk	44–48	85–94
Liquidity risk	49–53	95–100
Reputation risk		101
Consumer credit risk	55–59	106-111
Wholesale credit risk	60–66	112-119
Investment portfolio risk	69	123
Market risk	70–74	124-131
Country risk	75	132–133
Operational risk		134-136
Compliance risk		137
Conduct risk		138
Legal risk		139
Estimations and Model risk		140

43

CAPITAL RISK MANAGEMENT

Capital risk is the risk the Firm has an insufficient level and composition of capital to support the Firm’s business activities and associated risks during normal economic environments and under stressed conditions.

For a further discussion of the Firm’s Capital Risk Management, including capital planning and stress testing, refer to pages 85-94 of JPMorgan Chase’s

2018 Form 10-K, Note 21 of this Form 10-Q, and the Firm’s Pillar 3 Regulatory Capital Disclosures reports,

which are available on the Firm’s website (https://jpmorganchaseco.gcs-web.com/financial-information/basel-pillar-3-us-lcr-disclosures).

The capital rules under Basel III establish minimum capital ratios and overall capital adequacy standards for large and internationally active U.S. bank holding companies (“BHC”) and banks, including the Firm and its insured depository institution (“IDI”) subsidiaries, including JPMorgan Chase Bank, N.A. Two comprehensive approaches are prescribed for calculating RWA: a standardized approach (“Basel III Standardized”), and an advanced approach (“Basel III Advanced”). Effective January 1, 2019, the capital

adequacy of the Firm is evaluated against the fully phased-in measures under Basel III and represents the lower of the Standardized or Advanced approaches. During 2018, the required capital measures were subject to the transitional rules and as of December 31, 2018 were the same on a fully phased-in and on a transitional basis. The Firm’s Basel III Standardized risk-based ratios are currently more binding than the Basel III Advanced risk-based ratios, and the Firm expects that this will remain the case for the foreseeable future.

Basel III also includes a requirement for Advanced Approach banking organizations, including the Firm, to calculate the SLR. For additional information on SLR, refer to page 91 of JPMorgan Chase’s 2018 Form 10-K.

In addition to meeting the capital ratio requirements of Basel III, the Firm and its IDI subsidiaries also must maintain minimum capital and leverage ratios in order to be “well-capitalized” under the regulations issued by the Federal Reserve and the Prompt Corrective Action requirements of the FDIC Improvement Act respectively.

The following tables present the Firm’s risk-based and leverage-based capital metrics under both the Basel III Standardized and Advanced Approaches. The Firm’s Basel III ratios exceeded regulatory minimums as of June 30, 2019 and December 31, 2018. For a further discussion of these capital metrics, refer to Capital Risk Management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K.

	June 30, 2019								December 31, 2018
(in millions)	Standardized			Advanced			Minimum capital ratios		Standardized(b)			Advanced(b)			Minimum capital ratios
Risk-based capital metrics:
CET1 capital	$	189,169		$	189,169				$	183,474		$	183,474
Tier 1 capital	215,808			215,808					209,093			209,093
Total capital	244,490			234,507					237,511			227,435
Risk-weighted assets	1,545,101			1,449,211					1,528,916			1,421,205
CET1 capital ratio	12.2		%	13.1		%	10.5	%	12.0		%	12.9		%	9.0	%
Tier 1 capital ratio	14.0			14.9			12.0		13.7			14.7			10.5
Total capital ratio	15.8			16.2			14.0		15.5			16.0			12.5
Leverage-based capital metrics:
Adjusted average assets(a)	$	2,692,225		$	2,692,225				$	2,589,887		$	2,589,887
Tier 1 leverage ratio	8.0		%	8.0		%	4.0	%	8.1		%	8.1		%	4.0	%
Total leverage exposure	NA			$	3,367,154				NA			$	3,269,988
SLR	NA			6.4		%	5.0	%	NA			6.4		%	5.0	%

(a) Adjusted average assets, for purposes of calculating the Tier 1 leverage ratio, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets.

(b) The Firm’s capital ratios as of December 31, 2018 were equivalent whether calculated on a transitional or fully phased-in basis.

44

Capital components

The following table presents reconciliations of total stockholders’ equity to Basel III CET1 capital, Tier 1 capital and Total capital as of June 30, 2019 and December 31, 2018.

(in millions)	June 30, 2019			December 31, 2018
Total stockholders’ equity	$	263,215		$	256,515
Less: Preferred stock	26,993			26,068
Common stockholders’ equity	236,222			230,447
Less:
Goodwill	47,477			47,471
Other intangible assets	732			748
Other CET1 capital adjustments	1,160			1,034
Add:
Deferred tax liabilities(a)	2,316			2,280
Standardized/Advanced CET1 capital	189,169			183,474
Preferred stock	26,993			26,068
Less: Other Tier 1 adjustments	354			449
Standardized/Advanced Tier 1 capital	$	215,808		$	209,093
Long-term debt and other instruments qualifying as Tier 2 capital	$	14,263		$	13,772
Qualifying allowance for credit losses	14,295			14,500
Other	124			146
Standardized Tier 2 capital	$	28,682		$	28,418
Standardized Total capital	$	244,490		$	237,511
Adjustment in qualifying allowance for credit losses for Advanced Tier 2 capital	(9,983		)	(10,076		)
Advanced Tier 2 capital	$	18,699		$	18,342
Advanced Total capital	$	234,507		$	227,435

(a) Represents certain deferred tax liabilities related to tax-deductible goodwill and identifiable intangibles created in nontaxable transactions, which are netted against goodwill and other intangibles when calculating CET1 capital.

Capital rollforward

The following table presents the changes in Basel III CET1 capital, Tier 1 capital and Tier 2 capital for the six months ended June 30, 2019.

Six months ended June 30, (in millions)	2019
Standardized/Advanced CET1 capital at December 31, 2018	$	183,474
Net income applicable to common equity	18,053
Dividends declared on common stock	(5,224		)
Net purchase of treasury stock	(8,934		)
Changes in additional paid-in capital	(803		)
Changes related to AOCI	2,386
Adjustment related to DVA(a)	458
Changes related to other CET1 capital adjustments	(241		)
Change in Standardized/Advanced CET1 capital	5,695
Standardized/Advanced CET1 capital at June 30, 2019	$	189,169
Standardized/Advanced Tier 1 capital at December 31, 2018	$	209,093
Change in CET1 capital	5,695
Net issuance of noncumulative perpetual preferred stock	925
Other	95
Change in Standardized/Advanced Tier 1 capital	6,715
Standardized/Advanced Tier 1 capital at June 30, 2019	$	215,808
Standardized Tier 2 capital at December 31, 2018	$	28,418
Change in long-term debt and other instruments qualifying as Tier 2	491
Change in qualifying allowance for credit losses	(204		)
Other	(23		)
Change in Standardized Tier 2 capital	264
Standardized Tier 2 capital at June 30, 2019	$	28,682
Standardized Total capital at June 30, 2019	$	244,490
Advanced Tier 2 capital at December 31, 2018	$	18,342
Change in long-term debt and other instruments qualifying as Tier 2	491
Change in qualifying allowance for credit losses	(111		)
Other	(23		)
Change in Advanced Tier 2 capital	357
Advanced Tier 2 capital at June 30, 2019	$	18,699
Advanced Total capital at June 30, 2019	$	234,507

(a) Includes DVA related to structured notes recorded in AOCI.

45

RWA rollforward

The following table presents changes in the components of RWA under Basel III Standardized and Advanced for the six months ended June 30, 2019. The amounts in the rollforward categories are estimates, based on the predominant driver of the change.

	Standardized									Advanced
Six months ended June 30, 2019 (in millions)	Credit risk RWA			Market risk RWA			Total RWA			Credit risk RWA			Market risk RWA			Operational risk RWA			Total RWA
December 31, 2018	$	1,423,053		$	105,863		$	1,528,916		$	926,647		$	105,976		$	388,582		$	1,421,205
Model & data changes(a)	(2,906		)	(8,941		)	(11,847		)	4,858			(8,941		)	—			(4,083		)
Portfolio runoff(b)	(2,900		)	—			(2,900		)	(3,000		)	—			—			(3,000		)
Movement in portfolio levels(c)	27,668			3,264			30,932			35,857			2,992			(3,760		)	35,089
Changes in RWA	21,862			(5,677		)	16,185			37,715			(5,949		)	(3,760		)	28,006
June 30, 2019	$	1,444,915		$	100,186		$	1,545,101		$	964,362		$	100,027		$	384,822		$	1,449,211

(a) Model & data changes refer to movements in levels of RWA as a result of revised methodologies and/or treatment per regulatory guidance (exclusive of rule changes).

(b) Portfolio runoff for credit risk RWA primarily reflects reduced risk from position rolloffs in legacy portfolios in Home Lending.

(c) Movement in portfolio levels (inclusive of rule changes) refers to: changes in book size, composition, credit quality, and market movements for credit risk RWA; changes in position and market movements for market risk RWA; and updates to cumulative losses for operational risk RWA.

Supplementary leverage ratio

For additional information, refer to Capital Risk Management on page 88 of JPMorgan Chase’s 2018 Form 10-K.

The following table presents the components of the Firm’s SLR as of June 30, 2019 and December 31, 2018.

(in millions, except ratio)	June 30, 2019			December 31, 2018
Tier 1 capital	$	215,808		$	209,093
Total average assets	2,739,055			2,636,505
Less: Adjustments for deductions from Tier 1 capital	46,830			46,618
Total adjusted average assets(a)	2,692,225			2,589,887
Off-balance sheet exposures(b)	674,929			680,101
Total leverage exposure	$	3,367,154		$	3,269,988
SLR	6.4		%	6.4		%

(a) Adjusted average assets, for purposes of calculating the SLR, includes total quarterly average assets adjusted for on-balance sheet assets that are subject to deduction from Tier 1 capital, predominantly goodwill and other intangible assets.

(b) Off-balance sheet exposures are calculated as the average of the three month-end spot balances during the quarter.

For JPMorgan Chase Bank, N.A.’s SLR ratios, refer to Note 21.

Line of business equity

Each business segment is allocated capital by taking into consideration a variety of factors including capital levels of similarly rated peers and applicable regulatory capital requirements. Effective January 1, 2019, line of business capital allocations have increased due to a combination of changes in the relative weights, with greater emphasis on Standardized RWA and stress, a higher capitalization rate, updated stress simulations, and general business growth. For additional information, refer to page 91 of JPMorgan Chase’s 2018 Form 10-K.

The following table represents the capital allocated to each business segment:

(in billions)	June 30, 2019		December 31, 2018
Consumer & Community Banking	$	52.0	$	51.0
Corporate & Investment Bank	80.0		70.0
Commercial Banking	22.0		20.0
Asset & Wealth Management	10.5		9.0
Corporate	71.7		80.4
Total common stockholders’ equity	$	236.2	$	230.4

Planning and stress testing

Comprehensive Capital Analysis and Review (“CCAR”)

The Federal Reserve requires large bank holding companies, including the Firm, to submit on an annual basis a capital plan that has been reviewed and approved by the Board of Directors. Through CCAR, the Federal Reserve evaluates each bank holding company’s (“BHC”) capital adequacy and internal capital adequacy assessment processes (“ICAAP”), as well as its plans to make capital distributions, such as dividend payments or stock repurchases.

On June 27, 2019, the Federal Reserve informed the Firm that it did not object to the Firm’s 2019 capital plan.

Capital actions

Preferred stock

Preferred stock dividends declared were $404 million and $778 million for the three and six months ended June 30, 2019.

On July 31, 2019, the Firm issued $2.25 billion of fixed-to-floating rate non-cumulative preferred stock, Series FF, and on August 2, 2019, the Firm announced that it will redeem all $880 million of its 6.30% non-cumulative preferred stock, Series W on September 1, 2019.

For additional information on the Firm’s preferred stock, refer to Note 17 of this Form 10-Q and Note 20 of JPMorgan Chase’s 2018 Form 10-K.

46

Common stock dividends

The Firm’s second quarter common stock dividend was $0.80 per share. On June 27, 2019, the Firm announced that its Board of Directors intends to increase the quarterly common stock dividend to $0.90 per share, effective the third quarter of 2019. The Firm’s dividends are subject to the Board of Directors’ approval on a quarterly basis.

Common equity

Effective June 27, 2019, the Firm’s Board of Directors authorized the repurchase of up to $29.4 billion of gross common equity between July 1, 2019 and June 30, 2020, as part of the Firm’s annual capital plan.

The following table sets forth the Firm’s repurchases of common equity, on a settlement-date basis, for the three and six months ended June 30, 2019 and 2018.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2019		2018		2019		2018
Total shares of common stock repurchased	47.5		45.3		97.0		86.7
Aggregate common stock repurchases	$	5,210	$	4,968	$	10,301	$	9,639

For additional information regarding repurchases of the Firm’s equity securities, refer to Part II, Item 2: Unregistered Sales of Equity Securities and Use of Proceeds and Part II, Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities on page 176 of this Form 10-Q and page 30 of JPMorgan Chase’s 2018 Form 10-K, respectively.

Other capital requirements

TLAC

The Federal Reserve’s TLAC rule requires the top-tier U.S. GSIB holding companies, including the Firm, to maintain minimum levels of external TLAC and eligible LTD effective January 1, 2019.

For additional information, refer to page 93 of JPMorgan Chase’s 2018 Form 10-K.

The following table presents the eligible external TLAC and LTD amounts, as well as a representation of the amounts as a percentage of the Firm’s total RWA and total leverage exposure.

June 30, 2019
(in billions, except ratio)	Eligible External TLAC			Eligible LTD
Total eligible TLAC & LTD	$	388.6		$	160.8
% of RWA	25.1		%	10.4		%
Minimum requirement	23.0			9.5
Surplus/(shortfall)	$	33.2		$	14.1
% of total leverage exposure	11.5		%	4.8		%
Minimum requirement	9.5			4.5
Surplus/(shortfall)	$	68.7		$	9.3

For information on the financial consequences to holders of

the Firm’s debt and equity securities in a resolution

scenario, refer to Part I, Item 1A: Risk Factors on pages

7-28 of JPMorgan Chase’s 2018 Form 10-K.

47

Broker-dealer regulatory capital

J.P. Morgan Securities

JPMorgan Chase’s principal U.S. broker-dealer subsidiary is J.P. Morgan Securities. J.P. Morgan Securities is subject to Rule 15c3-1 under the Securities Exchange Act of 1934 (the “Net Capital Rule”). J.P. Morgan Securities is also registered as a futures commission merchant and subject to Rule 1.17 of the Commodity Futures Trading Commission (“CFTC”).

For a discussion on J.P. Morgan Securities’ capital requirements, refer to Capital risk management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K.

The following table presents J.P. Morgan Securities’ net capital:

June 30, 2019
(in millions)	Actual		Minimum
Net Capital	$	20,858	$	3,446

J.P. Morgan Securities plc

J.P. Morgan Securities plc is a wholly-owned subsidiary of JPMorgan Chase Bank, N.A. and has authority to engage in banking, investment banking and broker-dealer activities. J.P. Morgan Securities plc is jointly regulated by the U.K. Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”).

For a further discussion on J.P. Morgan Securities plc, refer to Capital risk management on pages 85-94 of JPMorgan Chase’s 2018 Form 10-K.

Effective January 1, 2019, the Bank of England requires, on a transitional basis, that U.K. banks, including U.K. regulated subsidiaries of overseas groups, maintain a minimum requirement for own funds and eligible liabilities (“MREL”). As of June 30, 2019, J.P. Morgan Securities plc was compliant with the requirements of the MREL rule. For additional information on MREL, refer to Supervision and Regulation on pages 1-6 of JPMorgan Chase’s 2018 Form 10-K.

The following table presents J.P. Morgan Securities plc’s capital metrics:

June 30, 2019
(in millions, except ratios)	Estimated			Minimum ratios
Total capital	$	55,598
CET1 ratio	17.9		%	4.5	%
Total capital ratio	22.9		%	8.0	%

48

LIQUIDITY RISK MANAGEMENT

Liquidity risk is the risk that the Firm will be unable to meet its contractual and contingent financial obligations as they arise or that it does not have the appropriate amount, composition and tenor of funding and liquidity to support its assets and liabilities. For a further discussion of the Firm’s Liquidity Risk Management, refer to pages 95–100 of JPMorgan Chase’s 2018 Form 10-K and the Firm’s US LCR Disclosure reports, which are available on the Firm’s website at: (https://jpmorganchaseco.gcs-web.com/financial-information/basel-pillar-3-us-lcr-disclosures).

LCR and HQLA

The LCR rule requires the Firm to maintain an amount of unencumbered HQLA that is sufficient to meet its estimated total net cash outflows over a prospective 30 calendar-day period of significant stress. HQLA is the amount of liquid assets that qualify for inclusion in the LCR. HQLA primarily consist of unencumbered cash and certain high-quality liquid securities as defined in the LCR rule. The LCR is required to be a minimum of 100%.

Under the LCR rule, the amount of HQLA held by JPMorgan Chase Bank N.A. that is in excess of its standalone 100% minimum LCR requirement, and that is not transferable to non-bank affiliates, must be excluded from the Firm’s reported HQLA.

The following table summarizes the Firm’s average LCR for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018 based on the Firm’s interpretation of the finalized LCR framework.

	Three months ended
Average amount (in millions)	June 30, 2019			March 31, 2019			June 30, 2018
HQLA
Eligible cash(a)	$	219,838		$	216,787		$	362,608
Eligible securities(b)(c)	317,439			303,249			166,427
Total HQLA(d)	$	537,277		$	520,036		$	529,035
Net cash outflows	$	477,442		$	467,329		$	458,432
LCR	113		%	111		%	115		%
Net excess HQLA(d)	$	59,835		$	52,707		$	70,603

(a) Represents cash on deposit at central banks, primarily the Federal Reserve Banks.

(b) Predominantly U.S. Treasuries, U.S. Agency MBS, and sovereign bonds net of applicable haircuts under the LCR rules.

(c) HQLA eligible securities may be reported in securities borrowed or purchased under resale agreements, trading assets, or investment securities on the Firm’s Consolidated balance sheets.

(d) Excludes average excess HQLA at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates.

The Firm’s average LCR increased during the three months ended June 30, 2019, compared with the three-month period ended March 31, 2019, primarily from an increase in cash from unsecured long-term debt issuances.  Additionally, liquidity in JPMorgan Chase Bank, N.A. increased during the quarter due to growth in stable deposits and a reduction in loans, however this increase in excess liquidity is excluded from the Firm’s reported LCR under the LCR rule.

The Firm’s average LCR decreased during the three months ended June 30, 2019, compared with the prior year period.  The decrease in the LCR was driven by a decrease in the amount of HQLA in JPMorgan Chase Bank, N.A. that was determined to be transferable to non-bank affiliates based on a change in the Firm’s interpretation of amounts available for transfer during the three months ended December 31, 2018. This change in interpretation had no impact on the HQLA in JPMorgan Chase Bank, N.A. which had increased over the period.

The Firm’s average LCR may fluctuate from period to period, due to changes in its HQLA and estimated net cash outflows under the LCR as a result of ongoing business activity.

Other liquidity sources

As of June 30, 2019, in addition to assets reported in the Firm’s HQLA under the LCR rule, the Firm had approximately $277 billion of unencumbered marketable securities, such as equity securities and fixed income debt securities, available to raise liquidity, if required. This includes HQLA-eligible securities included as part of the excess liquidity at JPMorgan Chase Bank, N.A. that are not transferable to non-bank affiliates.

As of June 30, 2019, the Firm also had approximately $314 billion of available borrowing capacity at FHLBs, the discount window at the Federal Reserve Bank, and various other central banks as a result of collateral pledged by the Firm to such banks. This borrowing capacity excludes the benefit of securities reported in the Firm’s HQLA or other unencumbered securities that are currently pledged at the Federal Reserve Bank discount window. Although available, the Firm does not view the borrowing capacity at the Federal Reserve Bank discount window and the various other central banks as a primary source of liquidity.

49

Funding

Sources of funds

Management believes that the Firm’s unsecured and secured funding capacity is sufficient to meet its on- and off-balance sheet obligations.

The Firm funds its global balance sheet through diverse sources of funding including stable deposits as well as secured and unsecured funding in the capital markets. The Firm’s loan portfolio is funded with a portion of the Firm’s deposits, through securitizations and, with respect to a portion of the Firm’s real estate-related loans, with secured borrowings from the FHLBs. Deposits in excess of the amount utilized to fund loans are primarily invested by Treasury and CIO in the Firm’s investment securities portfolio or deployed in cash or other short-term liquid investments based on their interest rate and liquidity risk

characteristics. Securities borrowed or purchased under resale agreements and trading assets-debt and equity instruments are primarily funded by the Firm’s securities loaned or sold under agreements to repurchase, trading liabilities-debt and equity instruments, and a portion of the Firm’s long-term debt and stockholders’ equity. In addition to funding securities borrowed or purchased under resale agreements and trading assets-debt and equity instruments, proceeds from the Firm’s debt and equity issuances are used to fund certain loans and other financial and non-financial assets, or may be invested in the Firm’s investment securities portfolio. Refer to the discussion below for additional information relating to Deposits, Short-term funding, and Long-term funding and issuance.

Deposits

The table below summarizes, by line of business, the deposit balances as of June 30, 2019, and December 31, 2018, and the average deposit balances for the three and six months ended June 30, 2019 and 2018, respectively.

	June 30, 2019		December 31, 2018		Three months ended June 30,				Six months ended June 30,
Deposits					Average				Average
(in millions)					2019		2018		2019		2018
Consumer & Community Banking	$	695,100	$	678,854	$	690,892	$	673,761	$	685,980	$	666,719
Corporate & Investment Bank	523,364		482,084		512,098		475,697		502,280		470,788
Commercial Banking	169,100		170,859		168,194		170,665		167,688		173,081
Asset & Wealth Management	136,225		138,546		140,317		139,557		139,282		141,865
Corporate	572		323		793		815		878		839
Total Firm	$	1,524,361	$	1,470,666	$	1,512,294	$	1,460,495	$	1,496,108	$	1,453,292

Deposits provide a stable source of funding and reduce the Firm’s reliance on the wholesale funding markets. A significant portion of the Firm’s deposits are consumer and wholesale operating deposits, which are both considered to be stable sources of liquidity. Wholesale operating deposits are considered to be stable sources of liquidity because they are generated from customers that maintain operating service relationships with the Firm.

The table below shows the loan and deposit balances, the loans-to-deposits ratios, and deposits as a percentage of total liabilities, as of June 30, 2019 and December 31, 2018.

(in billions except ratios)	June 30, 2019			December 31, 2018
Deposits	$	1,524.4		$	1,470.7
Deposits as a % of total liabilities	62		%	62		%
Loans	$	956.9		$	984.6
Loans-to-deposits ratio	63		%	67		%

The Firm believes that average deposit balances are generally more representative of deposit trends than period-end deposit balances.

Average deposits increased for the three months ended June 30, 2019 in CIB, CCB and AWM, partially offset by a decline in CB.

• The increase in CIB reflects an increase in deposits in Treasury Services and Securities Services driven by growth in client activity, and an increase in the net issuances of structured notes in Markets. The increase in CCB was driven by growth in new accounts. The increase in AWM was driven by growth in time deposits, partially offset by migration predominantly into the Firm’s investment-related products.

• The decrease in CB was primarily driven by lower non-operating deposits.

Average deposits increased for the six months ended June 30, 2019 in CIB and CCB, partially offset by declines in CB and AWM.

• The increase in CIB reflects an increase in deposits in Treasury Services driven by growth in client activity, and an increase in the net issuances of structured notes in Markets. The increase in CCB was driven by growth in new accounts.

• The decrease in CB was primarily driven by lower non-operating deposits. The decrease in AWM was largely driven by migration predominantly into the Firm’s investment-related products.

For further information on deposit and liability balance trends, refer to the discussion of the Firm’s Business Segment Results and the Consolidated Balance Sheets Analysis on pages 21–42 and pages 15–17, respectively.

50

The following table summarizes short-term and long-term funding, excluding deposits, as of June 30, 2019, and December 31, 2018, and average balances for the three and six months ended June 30, 2019 and 2018, respectively. For additional information, refer to the Consolidated Balance Sheets Analysis on pages 15–17 and Note 10.

	June 30, 2019		December 31, 2018		Three months ended June 30,				Six months ended June 30,
Sources of funds (excluding deposits)					Average				Average
(in millions)					2019		2018		2019		2018
Commercial paper	$	25,268	$	30,059	$	26,030	$	27,143	$	27,373	$	26,571
Other borrowed funds(a)	9,762		8,789		11,818		11,840		11,037		11,993
Total short-term unsecured funding(a)	$	35,030	$	38,848	$	37,848	$	38,983	$	38,410	$	38,564
Securities sold under agreements to repurchase(b)	$	192,837	$	171,975	$	218,057	$	178,064	$	207,812	$	181,212
Securities loaned(b)	7,799		9,481		8,090		13,058		9,428		11,799
Other borrowed funds(a)(c)	24,860		30,428		27,840		23,356		31,690		21,420
Obligations of Firm-administered multi-seller conduits(d)	$	14,734	$	4,843	$	13,356	$	2,993	$	10,387	$	3,054
Total short-term secured funding(a)	$	240,230	$	216,727	$	267,343	$	217,471	$	259,317	$	217,485
Senior notes	$	170,626	$	162,733	$	167,376	$	151,047	$	165,176	$	150,635
Trust preferred securities	—		—		—		684		—		686
Subordinated debt	17,540		16,743		17,056		16,010		16,890		16,120
Structured notes(e)	66,377		53,090		62,284		48,674		59,853		47,842
Total long-term unsecured funding	$	254,543	$	232,566	$	246,716	$	216,415	$	241,919	$	215,283
Credit card securitization(d)	$	9,302	$	13,404	$	11,671	$	16,181	$	12,535	$	17,416
Federal Home Loan Bank (“FHLB”) advances	29,649		44,455		34,541		54,232		39,227		57,291
Other long-term secured funding(f)	4,677		5,010		4,680		4,998		4,785		4,741
Total long-term secured funding	$	43,628	$	62,869	$	50,892	$	75,411	$	56,547	$	79,448
Preferred stock(g)	$	26,993	$	26,068	$	26,993	$	26,068	$	27,059	$	26,068
Common stockholders’ equity(g)	$	236,222	$	230,447	$	233,026	$	228,901	$	231,547	$	228,261

(a) The prior period amounts have been revised to conform with the current period presentation.

(b) Primarily consists of short-term securities loaned or sold under agreements to repurchase.

(c) Includes FHLB advances with original maturities of less than one year of $5.6 billion and $11.4 billion as of June 30, 2019 and December 31, 2018, respectively.

(d) Included in beneficial interests issued by consolidated variable interest entities on the Firm’s Consolidated balance sheets.

(e) Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.

(f) Includes long-term structured notes which are secured.

(g) For additional information on preferred stock and common stockholders’ equity refer to Capital Risk Management on pages 44–48, Consolidated statements of changes in stockholders’ equity, and Note 20 and Note 21 of JPMorgan Chase’s 2018 Form 10-K.

Short-term funding

The Firm’s sources of short-term secured funding primarily consist of securities loaned or sold under agreements to repurchase. These instruments are secured predominantly by high-quality securities collateral, including government-issued debt and agency MBS, and constitute a significant portion of the federal funds purchased and securities loaned or sold under repurchase agreements on the Consolidated balance sheets. The increase at June 30, 2019, from December 31, 2018, reflected higher secured financing of trading assets-debt and equity instruments and client-driven market-making activities in CIB.

The balances associated with securities loaned or sold under agreements to repurchase fluctuate over time due to customers’ investment and financing activities, the Firm’s demand for financing, the ongoing management of the mix of the Firm’s liabilities, including its secured and unsecured financing (for both the investment securities and market-making portfolios), and other market and portfolio factors.

The Firm’s sources of short-term unsecured funding primarily consist of issuance of wholesale commercial paper. The decrease in commercial paper at June 30, 2019, from December 31, 2018, was due to lower net issuance primarily for short-term liquidity management.

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Long-term funding and issuance

Long-term funding provides additional sources of stable funding and liquidity for the Firm. The Firm’s long-term funding plan is driven primarily by expected client activity, liquidity considerations, and regulatory requirements, including TLAC. Long-term funding objectives include maintaining diversification, maximizing market access and optimizing funding costs. The Firm evaluates various funding markets, tenors and currencies in creating its optimal long-term funding plan.

The significant majority of the Firm’s long-term unsecured funding is issued by the Parent Company to provide maximum flexibility in support of both bank and nonbank subsidiary funding needs. The Parent Company advances substantially all net funding proceeds to its subsidiary, the Intermediate Holding Company (“IHC”). The IHC does not issue debt to external counterparties. The following table summarizes long-term unsecured issuance and maturities or redemptions for the three and six months ended June 30, 2019 and 2018. For additional information on the IHC and long-term debt, refer to Liquidity Risk Management and Note 19 of JPMorgan Chase’s 2018 Form 10-K.

Long-term unsecured funding
	Three months ended June 30,				Six months ended June 30,				Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018		2019		2018		2019		2018
(Notional in millions)	Parent Company(b)								Subsidiaries(b)
Issuance
Senior notes issued in the U.S. market	$	4,000	$	7,000	$	8,250	$	11,000	$	—	$	3,500	$	1,750	$	7,511
Senior notes issued in non-U.S. markets	—		1,175		2,248		1,175		—		—		—		—
Total senior notes	4,000		8,175		10,498		12,175		—		3,500		1,750		7,511
Structured notes(a)	631		829		1,816		1,660		9,016		7,267		15,132		14,225
Total long-term unsecured funding – issuance	$	4,631	$	9,004	$	12,314	$	13,835	$	9,016	$	10,767	$	16,882	$	21,736
Maturities/redemptions
Senior notes	$	4,157	$	3,928	$	7,907	$	17,987	$	1	$	2,899	$	1,816	$	2,964
Subordinated debt	—		—		146		—		—		—		—		—
Structured notes	331		1,068		959		1,883		4,327		3,918		8,160		8,630
Total long-term unsecured funding – maturities/redemptions	$	4,488	$	4,996	$	9,012	$	19,870	$	4,328	$	6,817	$	9,976	$	11,594

(a) Includes certain TLAC-eligible long-term unsecured debt issued by the Parent Company.

(b) The prior period amounts have been revised to conform with the current period presentation.

The Firm raises secured long-term funding through securitization of consumer credit card loans and advances from the FHLBs. The following table summarizes the securitization issuance and FHLB advances and their respective maturities or redemptions for the three and six months ended June 30, 2019 and 2018, respectively.

Long-term secured funding
	Three months ended June 30,								Six months ended June 30,
	Issuance				Maturities/Redemptions				Issuance				Maturities/Redemptions
(in millions)	2019		2018		2019		2018		2019		2018		2019		2018
Credit card securitization	$	—	$	1,396	$	4,125	$	1,725	$	—	$	1,396	$	4,125	$	6,125
FHLB advances	—		—		12,804		4,702		—		4,000		14,805		12,453
Other long-term secured funding(a)	18		74		207		6		53		195		453		22
Total long-term secured funding	$	18	$	1,470	$	17,136	$	6,433	$	53	$	5,591	$	19,383	$	18,600

(a) Includes long-term structured notes which are secured.

The Firm’s wholesale businesses also securitize loans for client-driven transactions; those client-driven loan securitizations are not considered to be a source of funding for the Firm and are not included in the table above. For further description of the client-driven loan securitizations, refer to Note 14 of JPMorgan Chase’s 2018 Form 10-K.

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Credit ratings

The cost and availability of financing are influenced by credit ratings. Reductions in these ratings could have an adverse effect on the Firm’s access to liquidity sources, increase the cost of funds, trigger additional collateral or funding requirements and decrease the number of investors and counterparties willing to lend to the Firm. The nature and magnitude of the impact of ratings downgrades depends on numerous contractual and behavioral factors, which the Firm believes are incorporated in its liquidity risk and stress testing metrics. The Firm believes that it maintains sufficient liquidity to withstand a potential decrease in funding capacity due to ratings downgrades.

Additionally, the Firm’s funding requirements for VIEs and other third-party commitments may be adversely affected by a decline in credit ratings. For additional information on the impact of a credit ratings downgrade on the funding requirements for VIEs, and on derivatives and collateral agreements, refer to SPEs on page 18, and liquidity risk and credit-related contingent features in Note 4.

The credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries as of June 30, 2019, were as follows.

	JPMorgan Chase & Co.			JPMorgan Chase Bank, N.A.(a)			J.P. Morgan Securities LLC J.P. Morgan Securities plc
June 30, 2019	Long-term issuer	Short-term issuer	Outlook	Long-term issuer	Short-term issuer	Outlook	Long-term issuer	Short-term issuer	Outlook
Moody’s Investors Service	A2	P-1	Stable	Aa2	P-1	Stable	Aa3	P-1	Stable
Standard & Poor’s	A-	A-2	Stable	A+	A-1	Stable	A+	A-1	Stable
Fitch Ratings	AA-	F1+	Stable	AA	F1+	Stable	AA	F1+	Stable

(a) On May 18, 2019, the Firm merged Chase Bank USA, N.A. with and into JPMorgan Chase Bank, N.A., with JPMorgan Chase Bank, N.A. as the surviving bank. The credit rating for JPMorgan Chase Bank, N.A. reflects the credit rating of the merged entity.

For a discussion of the factors that could affect credit ratings of the Parent Company and the Firm’s principal bank and non-bank subsidiaries, refer to page 100 of JPMorgan Chase’s 2018 Form 10-K.

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CREDIT AND INVESTMENT RISK MANAGEMENT

Credit and investment risk is the risk associated with the default or change in credit profile of a client, counterparty or customer; or loss of principal or a reduction in expected returns on investments, including consumer credit risk,

wholesale credit risk, and investment portfolio risk. For a further discussion of Credit Risk refer to pages 54–69.

For a further discussion of Investment Portfolio Risk, refer to page 69. For a further discussion of the Firm’s Credit and Investment Risk Management framework and organization, and the identification, monitoring and management, refer to Credit and Investment Risk Management on pages 102-123 of JPMorgan Chase’s 2018 Form 10-K.

CREDIT PORTFOLIO

Credit risk is the risk associated with the default or change in credit profile of a client, counterparty or customer.

In the following tables, reported loans include loans retained (i.e., held-for-investment); loans held-for-sale; and certain loans accounted for at fair value. The following tables do not include loans which the Firm accounts for at fair value and classifies as trading assets. For further information regarding these loans, refer to Notes 2 and 3. For additional information on the Firm’s loans, lending-related commitments and derivative receivables, including the Firm’s accounting policies, refer to Notes 11, 22, and 4, respectively.

For further information regarding the credit risk inherent in the Firm’s cash placed with banks, refer to Wholesale credit exposure – industry exposures on pages 62–64; for information regarding the credit risk inherent in the Firm’s investment securities portfolio, refer to Note 9 of this Form 10-Q, and Note 10 of JPMorgan Chase’s 2018 Form 10-K; and for information regarding the credit risk inherent in the securities financing portfolio, refer to Note 10 of this Form 10-Q, and Note 11 of JPMorgan Chase’s 2018 Form 10-K.

For a further discussion of the consumer credit environment and consumer loans, refer to Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K and Note 11 of this Form 10-Q. For a further discussion of the wholesale credit environment and wholesale loans, refer to Wholesale Credit Portfolio on pages 112–119 of JPMorgan Chase’s 2018 Form 10-K and Note 11 of this Form 10-Q.

Total credit portfolio
	Credit exposure						Nonperforming(d)(e)
(in millions)	Jun 30, 2019			Dec 31, 2018			Jun 30, 2019		Dec 31, 2018
Loans retained	$	947,728		$	969,415		$	4,469	$	4,611
Loans held-for-sale	4,852			11,988			221		—
Loans at fair value	4,309			3,151			180		220
Total loans–reported	956,889			984,554			4,870		4,831
Derivative receivables	52,878			54,213			39		60
Receivables from customers and other(a)	27,414			30,217			—		—
Total credit-related assets	1,037,181			1,068,984			4,909		4,891
Assets acquired in loan satisfactions
Real estate owned	NA			NA			325		269
Other	NA			NA			26		30
Total assets acquired in loan satisfactions	NA			NA			351		299
Lending-related commitments	1,079,762			1,039,258			465		469
Total credit portfolio	$	2,116,943		$	2,108,242		$	5,725	$	5,659
Credit derivatives used in credit portfolio management activities(b)	$	(15,292	)	$	(12,682	)	$	—	$	—
Liquid securities and other cash collateral held against derivatives(c)	(14,676		)	(15,322		)	NA		NA

(in millions, except ratios)	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
Net charge-offs	$	1,403		$	1,252		$	2,764		$	2,587
Average retained loans
Loans	945,209			932,042			950,852			926,268
Loans – reported, excluding residential real estate PCI loans	922,495			903,263			927,681			896,856
Net charge-off rates
Loans	0.60		%	0.54		%	0.59		%	0.56		%
Loans – excluding PCI	0.61			0.56			0.60			0.58

(a) Receivables from customers and other primarily represents prime brokerage-related held-for-investment customer receivables.

(b) Represents the net notional amount of protection purchased and sold through credit derivatives used to manage both performing and nonperforming wholesale credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. For additional information, refer to Credit derivatives on page 66 and Note 4.

(c) Includes collateral related to derivative instruments where an appropriate legal opinion has not been either sought or obtained.

(d) Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.

(e) At June 30, 2019, and December 31, 2018, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $1.8 billion and $2.6 billion, respectively, and real estate owned (“REO”) insured by U.S. government agencies of $56 million and $75 million, respectively. These amounts have been excluded based upon the government guarantee. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance issued by the Federal Financial Institutions Examination Council (“FFIEC”).

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CONSUMER CREDIT PORTFOLIO

The Firm’s retained consumer portfolio consists primarily of residential real estate loans, credit card loans, auto loans, and business banking loans, as well as associated lending-related commitments. The Firm’s focus is on serving primarily the prime segment of the consumer credit market. For further information on consumer loans, refer to Note 11 of this Form 10-Q and Consumer Credit Portfolio on pages 106–111 and Note 12 of JPMorgan Chase’s 2018 Form 10-K. For further information on lending-related commitments, refer to Note 22 of this Form 10-Q and Note 27 of JPMorgan Chase’s 2018 Form 10-K.

The following table presents consumer credit-related information with respect to the credit portfolio held by CCB, prime mortgage and home equity loans held by AWM, and prime mortgage loans held by Corporate. For further information about the Firm’s nonaccrual and charge-off accounting policies, refer to Note 12 of JPMorgan Chase’s 2018 Form 10-K.

Consumer credit portfolio
									Three months ended June 30,										Six months ended June 30,
(in millions, except ratios)	Credit exposure				Nonaccrual loans(f)(g)				Net charge-offs/(recoveries)(h)						Net charge-off/(recoveries) rate(h)(i)				Net charge-offs/(recoveries)(h)						Net charge-off/(recoveries) rate(h)(i)
	Jun 30, 2019		Dec 31, 2018		Jun 30, 2019		Dec 31, 2018		2019			2018			2019		2018		2019			2018			2019		2018
Consumer, excluding credit card
Loans, excluding PCI loans and loans held-for-sale
Residential mortgage	$	214,744	$	231,078	$	1,691	$	1,765	$	(13	)	$	(151	)	(0.02	)%	(0.27	)%	$	(16	)	$	(151	)	(0.01	)%	(0.14	)%
Home equity	26,017		28,340		1,209		1,323		(16		)	(7		)	(0.24	)	(0.09	)	(15		)	10			(0.11	)	0.06
Auto(a)(b)	62,073		63,573		108		128		42			50			0.27		0.31		100			126			0.32		0.39
Consumer & Business Banking(b)(c)	26,616		26,612		223		245		66			50			1.00		0.77		125			103			0.95		0.80
Total loans, excluding PCI loans and loans held-for-sale	329,450		349,603		3,231		3,461		79			(58		)	0.09		(0.07	)	194			88			0.11		0.05
Loans – PCI
Home equity	8,149		8,963		NA		NA		NA			NA			NA		NA		NA			NA			NA		NA
Prime mortgage	4,343		4,690		NA		NA		NA			NA			NA		NA		NA			NA			NA		NA
Subprime mortgage	1,857		1,945		NA		NA		NA			NA			NA		NA		NA			NA			NA		NA
Option ARMs	7,893		8,436		NA		NA		NA			NA			NA		NA		NA			NA			NA		NA
Total loans – PCI	22,242		24,034		NA		NA		NA			NA			NA		NA		NA			NA			NA		NA
Total loans – retained	351,692		373,637		3,231		3,461		79			(58		)	0.09		(0.06	)	194			88			0.11		0.05
Loans held-for-sale	1,030		95		31		—		NA			NA			NA		NA		NA			NA			NA		NA
Total consumer, excluding credit card loans	352,722		373,732		3,262		3,461		79			(58		)	0.09		(0.06	)	194			88			0.11		0.05
Lending-related commitments(d)	51,491		46,066
Receivables from customers	21		154
Total consumer exposure, excluding credit card	404,234		419,952
Credit card
Loans retained(e)	157,568		156,616		—		—		1,240			1,164			3.24		3.27		2,442			2,334			3.23		3.30
Loans held-for-sale	8		16		—		—		NA			NA			NA		NA		NA			NA			NA		NA
Total credit card loans	157,576		156,632		—		—		1,240			1,164			3.24		3.27		2,442			2,334			3.23		3.30
Lending-related commitments(d)	633,970		605,379
Total credit card exposure	791,546		762,011
Total consumer credit portfolio	$	1,195,780	$	1,181,963	$	3,262	$	3,461	$	1,319		$	1,106		1.04	%	0.86	%	$	2,636		$	2,422		1.03	%	0.95	%
Memo: Total consumer credit portfolio, excluding PCI	$	1,173,538	$	1,157,929	$	3,262	$	3,461	$	1,319		$	1,106		1.09	%	0.91	%	$	2,636		$	2,422		1.08	%	1.00	%

(a) At June 30, 2019, and December 31, 2018, excluded operating lease assets of $21.5 billion and $20.5 billion, respectively. These operating lease assets are included in other assets on the Firm’s Consolidated balance sheets. For further information, refer to Note 16.

(b) Includes certain business banking and auto dealer risk-rated loans that apply the wholesale methodology for determining the allowance for loan losses; these loans are managed by CCB, and therefore, for consistency in presentation, are included within the consumer portfolio.

(c) Predominantly includes Business Banking loans.

(d) Credit card and home equity lending-related commitments represent the total available lines of credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit would be used at the same time. For credit card commitments, and if certain conditions are met, home equity commitments, the Firm can reduce or cancel these lines of credit by providing the borrower notice or, in some cases as permitted by law, without notice. For further information, refer to Note 22.

(e) Includes billed interest and fees net of an allowance for uncollectible interest and fees.

(f) At June 30, 2019 and December 31, 2018, nonaccrual loans excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $1.8 billion and $2.6 billion, respectively. These amounts have been excluded from nonaccrual loans based upon the government guarantee. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status, as permitted by regulatory guidance issued by the FFIEC.

(g) Excludes PCI loans. The Firm is recognizing interest income on each pool of PCI loans as each of the pools is performing.

(h) Net charge-offs/(recoveries) and the net charge-off/(recovery) rates excluded write-offs in the PCI portfolio of $39 million and $73 million for the three months ended June 30, 2019 and 2018, respectively, and $89 million and $93 million for the six months ended June 30, 2019 and 2018, respectively. These write-offs decreased the allowance for loan losses for PCI loans. Refer to Allowance for Credit Losses on pages 67–68 for further information.

(i) Average consumer loans held-for-sale were $1.2 billion and $291 million for the three months ended June 30, 2019 and 2018, respectively, and $1.2 billion and $263 million for the six months ended June 30, 2019 and 2018, respectively. These amounts were excluded when calculating net charge-off/(recovery) rates.

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Consumer, excluding credit card

Portfolio analysis

Loan balances decreased from December 31, 2018 due to lower consumer loans in the residential real estate portfolio, predominantly driven by loan sales in Home Lending. The credit performance of the portfolio continues to benefit from a strong labor market and continued improvement in home prices.

The following discussions provide information concerning individual loan products, excluding PCI loans which are addressed separately. For further information about this portfolio, including information about delinquencies, loan modifications and other credit quality indicators, refer to Note 11 of this Form 10-Q.

Residential mortgage: The residential mortgage portfolio, including loans held-for-sale, predominantly consists of prime mortgage loans. The portfolio decreased from December 31, 2018 driven by loan sales in Home Lending as well as paydowns, partially offset by originations of prime mortgage loans that have been retained on the balance sheet. Net recoveries for the three and six months ended June 30, 2019 were lower when compared with the same periods in the prior year as the prior year benefited from a recovery on a loan sale.

At June 30, 2019, and December 31, 2018, the Firm’s residential mortgage portfolio included $21.8 billion and $21.6 billion, respectively, of interest-only loans. These loans have an interest-only payment period generally followed by an adjustable-rate or fixed-rate fully amortizing payment period to maturity and are typically originated as higher-balance loans to higher-income borrowers, predominantly in AWM. Performance of this portfolio for the three and six months ended June 30, 2019 was in line with the performance of the broader residential mortgage portfolio for the same period.

The following table provides a summary of the Firm’s residential mortgage portfolio insured and/or guaranteed by U.S. government agencies, including loans held-for-sale. The Firm monitors its exposure to certain potential unrecoverable claim payments related to government-insured loans and considers this exposure in estimating the allowance for loan losses.

(in millions)	June 30, 2019		December 31, 2018
Current	$	2,319	$	2,884
30-89 days past due	1,080		1,528
90 or more days past due	1,809		2,600
Total government guaranteed loans	$	5,208	$	7,012

Home equity: The home equity portfolio declined from December 31, 2018 primarily reflecting loan paydowns.

At June 30, 2019, approximately 90% of the Firm’s home equity portfolio consisted of home equity lines of credit (“HELOCs”) and the remainder consisted of home equity loans (“HELOANs”). The carrying value of HELOCs outstanding was $24 billion at June 30, 2019. This amount

included $10 billion of HELOCs that have recast from interest-only to fully amortizing payments or have been modified and $4 billion of interest-only balloon HELOCs, which primarily mature after 2030. The Firm manages the risk of HELOCs during their revolving period by closing or reducing the undrawn line to the extent permitted by law when borrowers are exhibiting a material deterioration in their credit risk profile.

For further information on the Firm’s home equity portfolio, refer to Note 11 of this Form 10-Q and Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K.

Auto: The auto loan portfolio predominantly consists of prime-quality loans. The portfolio declined when compared with December 31, 2018, as paydowns and charge-offs or liquidation of delinquent loans were predominantly offset by new originations.

Consumer & Business Banking: Consumer & Business Banking loans were flat when compared with December 31, 2018 as loan originations were offset by paydowns and charge-offs of delinquent loans. Net charge-offs for the three and six months ended June 30, 2019 increased when compared with the same period in the prior year due primarily to higher deposit overdraft losses.

Purchased credit-impaired loans: PCI loans represent certain loans that were acquired and deemed to be credit-impaired on the acquisition date. PCI loans decreased from December 31, 2018 due to portfolio run off. As of June 30, 2019, approximately 10% of the option ARM PCI loans were delinquent and approximately 70% of the portfolio had been modified into fixed-rate, fully amortizing loans. The borrowers for substantially all of the remaining option ARM loans are making amortizing payments, although such payments are not necessarily fully amortizing. This latter group of loans is subject to the risk of payment shock due to future payment recast. Default rates generally increase on option ARM loans when payment recast results in a payment increase. The expected increase in default rates is considered in the Firm’s quarterly impairment assessment.

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The following table provides a summary of lifetime principal loss estimates included in either the nonaccretable difference or the allowance for loan losses.

Summary of PCI loans lifetime principal loss estimates
	Lifetime loss  estimates(a)				Life-to-date liquidation losses(b)
(in billions)	Jun 30, 2019		Dec 31, 2018		Jun 30, 2019		Dec 31, 2018
Home equity	$	13.9	$	14.1	$	13.0	$	13.0
Prime mortgage	4.1		4.1		3.9		3.9
Subprime mortgage	3.3		3.3		3.2		3.2
Option ARMs	10.2		10.3		9.9		9.9
Total	$	31.5	$	31.8	$	30.0	$	30.0

(a) Includes the original nonaccretable difference established in purchase accounting of $30.5 billion for principal losses plus additional principal losses recognized subsequent to acquisition through the provision and allowance for loan losses. The remaining nonaccretable difference for principal losses was $487 million and $512 million at June 30, 2019, and December 31, 2018, respectively.

(b) Represents both realization of loss upon loan resolution and any principal forgiven upon modification.

Geographic composition of residential real estate loans

For information on the geographic composition of the Firm’s residential real estate loans, refer to Note 11.

Current estimated loan-to-value ratio of residential real estate loans

Average current estimated loan-to-value (“LTV”) ratios have declined consistent with recent improvements in home prices, customer paydowns, and charge-offs or liquidations of higher LTV loans. For information on current estimated LTVs of the Firm’s residential real estate loans, refer to Note 11.

Loan modification activities for residential real estate loans

The performance of modified loans generally differs by product type due to differences in both the credit quality and the types of modifications provided. Performance metrics for modifications to the residential real estate portfolios as measured through redefault rates, were not materially different from December 31, 2018. For further information on the Firm’s redefault rates, refer to Consumer Credit Portfolio on pages 106–111 of JPMorgan Chase’s 2018 Form 10-K.

Certain modified loans have interest rate reset provisions (“step-rate modifications”) where the interest rates on these loans generally began to increase commencing in 2014 by 1% per year, and will continue to do so, until the rate reaches a specified cap. The cap on these loans is typically at a prevailing market interest rate for a fixed-rate mortgage loan as of the modification date. At June 30, 2019, the carrying value of non-PCI loans and the unpaid principal balance of PCI loans modified in step-rate modifications, which have not yet met their specified caps, were $1.4 billion and $2.6 billion, respectively. The Firm continues to monitor this risk exposure and the impact of these potential interest rate increases is considered in the Firm’s allowance for loan losses.

The following table presents information as of June 30, 2019, and December 31, 2018, relating to modified retained residential real estate loans for which concessions have been granted to borrowers experiencing financial difficulty. For further information on modifications for the three and six months ended June 30, 2019 and 2018, refer to Note 11.

Modified residential real estate loans
	June 30, 2019				December 31, 2018
(in millions)	Retained loans		Non-accrual retained loans(d)		Retained loans		Non-accrual retained loans(d)
Modified residential real estate loans, excluding PCI loans(a)(b)
Residential mortgage	$	4,381	$	1,436	$	4,565	$	1,459
Home equity	1,954		946		2,012		955
Total modified residential real estate loans, excluding PCI loans	$	6,335	$	2,382	$	6,577	$	2,414
Modified PCI loans(c)
Home equity	$	2,012	NA		$	2,086	NA
Prime mortgage	3,024		NA		3,179		NA
Subprime mortgage	1,971		NA		2,041		NA
Option ARMs	6,080		NA		6,410		NA
Total modified PCI loans	$	13,087	NA		$	13,716	NA

(a) Amounts represent the carrying value of modified residential real estate loans.

(b) At June 30, 2019, and December 31, 2018, $2.6 billion and $4.1 billion, respectively, of loans modified subsequent to repurchase from Ginnie Mae in accordance with the standards of the appropriate government agency (i.e., Federal Housing Administration (“FHA”), U.S. Department of Veterans Affairs (“VA”), Rural Housing Service of the U.S. Department of Agriculture (“RHS”)) are not included in the table above. When such loans perform subsequent to modification in accordance with Ginnie Mae guidelines, they are generally sold back into Ginnie Mae loan pools. Modified loans that do not re-perform become subject to foreclosure. For additional information about sales of loans in securitization transactions with Ginnie Mae, refer to Note 13.

(c) Amounts represent the unpaid principal balance of modified PCI loans.

(d) At both June 30, 2019, and December 31, 2018, nonaccrual loans included $2.0 billion of troubled debt restructurings (“TDRs”) for which the borrowers were less than 90 days past due. For additional information about loans modified in a TDR that are on nonaccrual status, refer to Note 11.

57

Nonperforming assets

The following table presents information as of June 30, 2019, and December 31, 2018, about consumer, excluding credit card, nonperforming assets.

Nonperforming assets(a)
(in millions)	June 30, 2019		December 31, 2018
Nonaccrual loans(b)
Residential real estate	$	2,931	$	3,088
Other consumer	331		373
Total nonaccrual loans	3,262		3,461
Assets acquired in loan satisfactions
Real estate owned	247		210
Other	26		30
Total assets acquired in loan satisfactions	273		240
Total nonperforming assets	$	3,535	$	3,701

(a) At June 30, 2019, and December 31, 2018, nonperforming assets excluded mortgage loans 90 or more days past due and insured by U.S. government agencies of $1.8 billion and $2.6 billion, respectively, and REO insured by U.S. government agencies of $56 million and $75 million, respectively. These amounts have been excluded based upon the government guarantee.

(b) Excludes PCI loans, which are accounted for on a pool basis. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of individual loans within the pools, is not meaningful. The Firm is recognizing interest income on each pool of loans as each of the pools is performing.

Nonaccrual loans in the residential real estate portfolio at June 30, 2019 decreased to $2.9 billion from $3.1 billion at December 31, 2018, of which 23% and 24% were greater than 150 days past due, respectively. In the aggregate, the unpaid principal balance of residential real estate loans greater than 150 days past due was charged down by approximately 31% and 32% to the estimated net realizable value of the collateral at June 30, 2019, and December 31, 2018, respectively.

Nonaccrual loans: The following table presents changes in consumer, excluding credit card, nonaccrual loans for the six months ended June 30, 2019 and 2018.

Nonaccrual loan activity
Six months ended June 30, (in millions)	2019			2018
Beginning balance	$	3,461		$	4,209
Additions	1,082			1,575
Reductions:
Principal payments and other(a)	508			738
Charge-offs	209			246
Returned to performing status	435			666
Foreclosures and other liquidations	129			155
Total reductions	1,281			1,805
Net changes	(199		)	(230		)
Ending balance	$	3,262		$	3,979

(a) Other reductions includes loan sales.

Active and suspended foreclosure: For information on loans that were in the process of active or suspended foreclosure, refer to Note 11.

58

Credit card

Total credit card loans were relatively flat from December 31, 2018 reflecting increased sales volumes from existing customers and new account growth, offset by the impact of seasonality. The June 30, 2019 30+ day delinquency rate decreased to 1.71% from 1.83% at December 31, 2018, and the June 30, 2019 90+ day delinquency rate decreased to 0.87% from 0.92% at December 31, 2018, in line with expectations. Net charge-offs increased for the three and six months ended June 30, 2019 when compared with the same period in the prior year primarily due to loan growth.

Consistent with the Firm’s policy, all credit card loans typically remain on accrual status until charged off. However, the Firm establishes an allowance, which is offset against loans and reduces interest income, for the estimated uncollectible portion of accrued and billed interest and fee income.

Geographic and FICO composition of credit card loans

For information on the geographic and FICO composition of the Firm’s credit card loans, refer to Note 11.

Modifications of credit card loans

At June 30, 2019 and December 31, 2018, the Firm had $1.4 billion and $1.3 billion, respectively, of credit card loans outstanding that have been modified in TDRs. For additional information about loan modification programs to borrowers, refer to Note 11.

59

WHOLESALE CREDIT PORTFOLIO

In its wholesale businesses, the Firm is exposed to credit risk primarily through its underwriting, lending, market-making, and hedging activities with and for clients and counterparties, as well as through various operating services (such as cash management and clearing activities), securities financing activities and cash placed with banks. A portion of the loans originated or acquired by the Firm’s wholesale businesses is generally retained on the balance sheet. The Firm distributes a significant percentage of the loans that it originates into the market as part of its syndicated loan business and to manage portfolio concentrations and credit risk.

The credit performance of the wholesale portfolio remained favorable for the six months ended June 30, 2019, characterized by continued low levels of criticized exposure, nonaccrual loans and charge-offs. Refer to the industry discussion on pages 62–64 for further information. Loans held-for-sale decreased, driven by a loan syndication in CIB. The wholesale portfolio is actively managed, in part by conducting ongoing, in-depth reviews of client credit quality and transaction structure inclusive of collateral where applicable, and of industry, product and client concentrations.

In the following tables, the Firm’s wholesale credit portfolio includes exposure held in CIB, CB, AWM and Corporate, and excludes all exposure managed by CCB.

Wholesale credit portfolio
	Credit exposure						Nonperforming(c)
(in millions)	Jun 30, 2019			Dec 31, 2018			Jun 30, 2019		Dec 31, 2018
Loans retained	$	438,468		$	439,162		$	1,238	$	1,150
Loans held-for-sale	3,814			11,877			190		—
Loans at fair value	4,309			3,151			180		220
Loans – reported	446,591			454,190			1,608		1,370
Derivative receivables	52,878			54,213			39		60
Receivables from customers and other(a)	27,393			30,063			—		—
Total wholesale credit-related assets	526,862			538,466			1,647		1,430
Lending-related commitments	394,301			387,813			465		469
Total wholesale credit exposure	$	921,163		$	926,279		$	2,112	$	1,899
Credit derivatives used in credit portfolio management activities(b)	$	(15,292	)	$	(12,682	)	$	—	$	—
Liquid securities and other cash collateral held against derivatives	(14,676		)	(15,322		)	NA		NA

(a) Receivables from customers and other include $27.3 billion and $30.1 billion of prime brokerage-related held-for-investment customer receivables at June 30, 2019, and December 31, 2018, respectively, to customers in CIB and AWM; these are classified in accrued interest and accounts receivable on the Consolidated balance sheets.

(b) Represents the net notional amount of protection purchased and sold through credit derivatives used to manage both performing and nonperforming wholesale credit exposures; these derivatives do not qualify for hedge accounting under U.S. GAAP. For additional information, refer to Credit derivatives on page 66, and Note 4.

(c) Excludes assets acquired in loan satisfactions.

60

The following tables present the maturity and ratings profiles of the wholesale credit portfolio as of June 30, 2019, and December 31, 2018. The ratings scale is based on the Firm’s internal risk ratings, which generally correspond to the ratings assigned by S&P and Moody’s. For additional information on wholesale loan portfolio risk ratings, refer to Note 12 of JPMorgan Chase’s 2018 Form 10-K.

Wholesale credit exposure – maturity and ratings profile
	Maturity profile(d)												Ratings profile
	Due in 1 year or less			Due after 1 year through 5 years			Due after 5 years			Total			Investment-grade			Noninvestment-grade			Total			Total % of IG
June 30, 2019 (in millions, except ratios)													AAA/Aaa to BBB-/Baa3			BB+/Ba1 & below
Loans retained	$	131,542		$	203,512		$	103,414		$	438,468		$	337,188		$	101,280		$	438,468		77	%
Derivative receivables										52,878									52,878
Less: Liquid securities and other cash collateral held against derivatives										(14,676		)							(14,676		)
Total derivative receivables, net of all collateral	8,089			8,444			21,669			38,202			30,956			7,246			38,202			81
Lending-related commitments	79,456			304,412			10,433			394,301			286,247			108,054			394,301			73
Subtotal	219,087			516,368			135,516			870,971			654,391			216,580			870,971			75
Loans held-for-sale and loans at fair value(a)										8,123									8,123
Receivables from customers and other										27,393									27,393
Total exposure – net of liquid securities and other cash collateral held against derivatives										$	906,487								$	906,487
Credit derivatives used in credit portfolio management activities(b)(c)	$	(1,741	)	$	(10,747	)	$	(2,804	)	$	(15,292	)	$	(14,271	)	$	(1,021	)	$	(15,292	)	93	%

	Maturity profile(d)												Ratings profile
	Due in 1 year or less			Due after 1 year through 5 years			Due after 5 years			Total			Investment-grade			Noninvestment-grade			Total			Total % of IG
December 31, 2018 (in millions, except ratios)													AAA/Aaa to BBB-/Baa3			BB+/Ba1 & below
Loans retained	$	138,458		$	196,974		$	103,730		$	439,162		$	339,729		$	99,433		$	439,162		77	%
Derivative receivables										54,213									54,213
Less: Liquid securities and other cash collateral held against derivatives										(15,322		)							(15,322		)
Total derivative receivables, net of all collateral	11,038			9,169			18,684			38,891			31,794			7,097			38,891			82
Lending-related commitments	79,400			294,855			13,558			387,813			288,724			99,089			387,813			74
Subtotal	228,896			500,998			135,972			865,866			660,247			205,619			865,866			76
Loans held-for-sale and loans at fair value(a)										15,028									15,028
Receivables from customers and other										30,063									30,063
Total exposure – net of liquid securities and other cash collateral held against derivatives										$	910,957								$	910,957
Credit derivatives used in credit portfolio management activities(b)(c)	$	(447	)	$	(9,318	)	$	(2,917	)	$	(12,682	)	$	(11,213	)	$	(1,469	)	$	(12,682	)	88	%

(a) Represents loans held-for-sale, primarily related to syndicated loans and loans transferred from the retained portfolio, and loans at fair value.

(b) These derivatives do not qualify for hedge accounting under U.S. GAAP.

(c) The notional amounts are presented on a net basis by underlying reference entity and the ratings profile shown is based on the ratings of the reference entity on which protection has been purchased. Predominantly all of the credit derivatives entered into by the Firm where it has purchased protection used in credit portfolio management activities are executed with investment-grade counterparties.

(d) The maturity profile of retained loans, lending-related commitments and derivative receivables is based on the remaining contractual maturity. Derivative contracts that are in a receivable position at June 30, 2019, may become payable prior to maturity based on their cash flow profile or changes in market conditions.

61

Wholesale credit exposure – industry exposures

The Firm focuses on the management and diversification of its industry exposures, and pays particular attention to industries with actual or potential credit concerns. Exposures deemed criticized align with the U.S. banking regulators’ definition of criticized exposures, which consist

of the special mention, substandard and doubtful categories. The total criticized component of the portfolio, excluding loans held-for-sale and loans at fair value, was approximately $12 billion at both June 30, 2019, and December 31, 2018.

Below are summaries of the Firm’s exposures as of June 30, 2019, and December 31, 2018. The industry of risk category is generally based on the client or counterparty’s primary business activity. For additional information on industry concentrations, refer to Note 4 of JPMorgan Chase’s 2018 Form 10-K.

Wholesale credit exposure – industries(a)
											Selected metrics
											30 days or more past due and accruing loans		Net charge-offs/ (recoveries)			Credit derivative hedges(g)			Liquid securities and other cash collateral held against derivative receivables
					Noninvestment-grade
As of or for the six months ended	Credit exposure(f)		Investment- grade		Noncriticized		Criticized performing		Criticized nonperforming
June 30, 2019
(in millions)
Real Estate	$	144,699	$	119,826	$	23,637	$	1,143	$	93	$	103	$	—		$	(44	)	$	—
Individuals and Individual Entities(b)	97,637		86,094		11,041		300		202		764		3			—			(586		)
Consumer & Retail	97,121		54,267		40,876		1,874		104		151		49			(231		)	(8		)
Technology, Media & Telecommunications	65,859		38,262		25,062		2,415		120		10		20			(746		)	(32		)
Industrials	58,230		38,179		18,654		1,213		184		148		—			(507		)	(45		)
Banks & Finance Cos	50,598		35,203		15,012		378		5		26		—			(636		)	(2,175		)
Healthcare	46,669		34,880		11,097		605		87		74		12			(190		)	(156		)
Oil & Gas	46,209		27,476		17,149		869		715		7		17			(499		)	(11		)
Asset Managers	45,514		39,966		5,523		4		21		5		—			—			(4,985		)
Utilities	29,101		23,355		5,486		159		101		—		37			(361		)	(70		)
State & Municipal Govt(c)	27,286		26,754		529		3		—		3		—			—			(24		)
Metals & Mining	17,706		8,480		8,918		282		26		5		(1		)	(207		)	(3		)
Central Govt	16,947		16,534		413		—		—		1		—			(8,993		)	(2,486		)
Automotive	16,856		10,820		5,672		364		—		8		—			(157		)	—
Chemicals & Plastics	16,386		11,329		5,021		36		—		28		—			(10		)	—
Transportation	14,870		9,644		4,827		329		70		172		—			(37		)	(37		)
Insurance	12,913		10,079		2,800		20		14