Exhibit 99.2
![(JPMORGANCHASE LOGO)](https://capedge.com/proxy/8-K/0000950123-07-013899/y40444y4044402.gif)
EARNINGS RELEASE FINANCIAL SUPPLEMENT
THIRD QUARTER 2007
THIRD QUARTER 2007
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JPMORGAN CHASE & CO. | ||
TABLE OF CONTENTS |
Page | ||||
Consolidated Results | ||||
Consolidated Financial Highlights | 2 | |||
Statements of Income | 3 | |||
Consolidated Balance Sheets | 4 | |||
Condensed Average Balance Sheets and Annualized Yields | 5 | |||
Reconciliation from Reported to Managed Summary | 6 | |||
Business Detail | ||||
Line of Business Financial Highlights – Managed Basis | 7 | |||
Investment Bank | 8 | |||
Retail Financial Services | 10 | |||
Card Services – Managed Basis | 14 | |||
Commercial Banking | 17 | |||
Treasury & Securities Services | 19 | |||
Asset Management | 21 | |||
Corporate | 24 | |||
Credit-Related Information | 26 | |||
Supplemental Detail | ||||
Capital | 31 | |||
Glossary of Terms | 32 |
Page 1
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JPMORGAN CHASE & CO. | ||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||
(in millions, except per share, ratio and headcount data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA | ||||||||||||||||||||||||||||||||||||||||
Total Net Revenue (a) | $ | 16,112 | $ | 18,908 | $ | 18,968 | $ | 16,193 | $ | 15,545 | (15 | )% | 4 | % | $ | 53,988 | $ | 45,806 | 18 | % | ||||||||||||||||||||
Provision for Credit Losses | 1,785 | 1,529 | 1,008 | 1,134 | 812 | 17 | 120 | 4,322 | 2,136 | 102 | ||||||||||||||||||||||||||||||
Total Noninterest Expense | 9,327 | 11,028 | 10,628 | 9,885 | 9,796 | (15 | ) | (5 | ) | 30,983 | 28,958 | 7 | ||||||||||||||||||||||||||||
Income from Continuing Operations (after-tax) | 3,373 | 4,234 | 4,787 | 3,906 | 3,232 | (20 | ) | 4 | 12,394 | 9,743 | 27 | |||||||||||||||||||||||||||||
Income from Discontinued Operations (after-tax) (b) | – | – | – | 620 | 65 | – | NM | – | 175 | NM | ||||||||||||||||||||||||||||||
Net Income | 3,373 | 4,234 | 4,787 | 4,526 | 3,297 | (20 | ) | 2 | 12,394 | 9,918 | 25 | |||||||||||||||||||||||||||||
PER COMMON SHARE: | ||||||||||||||||||||||||||||||||||||||||
Basic Earnings | ||||||||||||||||||||||||||||||||||||||||
Income from Continuing Operations | $ | 1.00 | $ | 1.24 | $ | 1.38 | $ | 1.13 | $ | 0.93 | (19 | ) | 8 | $ | 3.63 | $ | 2.81 | 29 | ||||||||||||||||||||||
Net Income | 1.00 | 1.24 | 1.38 | 1.31 | 0.95 | (19 | ) | 5 | 3.63 | 2.86 | 27 | |||||||||||||||||||||||||||||
Diluted Earnings | ||||||||||||||||||||||||||||||||||||||||
Income from Continuing Operations | $ | 0.97 | $ | 1.20 | $ | 1.34 | $ | 1.09 | $ | 0.90 | (19 | ) | 8 | $ | 3.52 | $ | 2.73 | 29 | ||||||||||||||||||||||
Net Income | 0.97 | 1.20 | 1.34 | 1.26 | 0.92 | (19 | ) | 5 | 3.52 | 2.78 | 27 | |||||||||||||||||||||||||||||
Cash Dividends Declared | 0.38 | 0.38 | 0.34 | 0.34 | 0.34 | – | 12 | 1.10 | 1.02 | 8 | ||||||||||||||||||||||||||||||
Book Value | 35.72 | 35.08 | 34.45 | 33.45 | 32.75 | 2 | 9 | 35.72 | 32.75 | 9 | ||||||||||||||||||||||||||||||
Closing Share Price | 45.82 | 48.45 | 48.38 | 48.30 | 46.96 | (5 | ) | (2 | ) | 45.82 | 46.96 | (2 | ) | |||||||||||||||||||||||||||
Market Capitalization | 153,901 | 164,659 | 165,280 | 167,199 | 162,835 | (7 | ) | (5 | ) | 153,901 | 162,835 | (5 | ) | |||||||||||||||||||||||||||
COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||||||||||||||||||
Weighted-Average Diluted Shares Outstanding | 3,477.7 | # | 3,521.6 | # | 3,559.5 | # | 3,578.6 | # | 3,574.0 | # | (1 | ) | (3 | ) | 3,519.6 | # | 3,572.3 | # | (1 | ) | ||||||||||||||||||||
Common Shares Outstanding at Period-end | 3,358.8 | 3,398.5 | 3,416.3 | 3,461.7 | 3,467.5 | (1 | ) | (3 | ) | 3,358.8 | 3,467.5 | (3 | ) | |||||||||||||||||||||||||||
FINANCIAL RATIOS: (c) | ||||||||||||||||||||||||||||||||||||||||
Income from Continuing Operations: | ||||||||||||||||||||||||||||||||||||||||
Return on Common Equity (“ROE”) | 11 | % | 14 | % | 17 | % | 14 | % | 11 | % | 14 | % | 12 | % | ||||||||||||||||||||||||||
Return on Equity-Goodwill (“ROE-GW”) (d) | 18 | 23 | 27 | 22 | 19 | 23 | 20 | |||||||||||||||||||||||||||||||||
Return on Assets (“ROA”) (e) | 0.91 | 1.19 | 1.41 | 1.14 | 0.98 | 1.16 | 1.02 | |||||||||||||||||||||||||||||||||
Net Income: | ||||||||||||||||||||||||||||||||||||||||
ROE | 11 | 14 | 17 | 16 | 12 | 14 | 12 | |||||||||||||||||||||||||||||||||
ROE-GW (d) | 18 | 23 | 27 | 26 | 19 | 23 | 20 | |||||||||||||||||||||||||||||||||
ROA (f) | 0.91 | 1.19 | 1.41 | 1.32 | 1.00 | 1.16 | 1.02 | |||||||||||||||||||||||||||||||||
CAPITAL RATIOS: | ||||||||||||||||||||||||||||||||||||||||
Tier 1 Capital Ratio | 8.4 | (h) | 8.4 | 8.5 | 8.7 | 8.6 | ||||||||||||||||||||||||||||||||||
Total Capital Ratio | 12.5 | (h) | 12.0 | 11.8 | 12.3 | 12.1 | ||||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEET DATA (Period-end) | ||||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 1,479,575 | $ | 1,458,042 | $ | 1,408,918 | $ | 1,351,520 | $ | 1,338,029 | 1 | 11 | $ | 1,479,575 | $ | 1,338,029 | 11 | |||||||||||||||||||||||
Wholesale Loans | 197,728 | 181,968 | 168,194 | 183,742 | 179,403 | 9 | 10 | 197,728 | 179,403 | 10 | ||||||||||||||||||||||||||||||
Consumer Loans | 288,592 | 283,069 | 281,571 | 299,385 | 284,141 | 2 | 2 | 288,592 | 284,141 | 2 | ||||||||||||||||||||||||||||||
Deposits | 678,091 | 651,370 | 626,428 | 638,788 | 582,115 | 4 | 16 | 678,091 | 582,115 | 16 | ||||||||||||||||||||||||||||||
Common Stockholders’ Equity | 119,978 | 119,211 | 117,704 | 115,790 | 113,561 | 1 | 6 | 119,978 | 113,561 | 6 | ||||||||||||||||||||||||||||||
Headcount | 179,847 | # | 179,664 | # | 176,314 | # | 174,360 | # | 171,589 | # | – | 5 | 179,847 | # | 171,589 | # | 5 | |||||||||||||||||||||||
LINE OF BUSINESS EARNINGS | ||||||||||||||||||||||||||||||||||||||||
Investment Bank | $ | 296 | $ | 1,179 | $ | 1,540 | $ | 1,009 | $ | 976 | (75 | ) | (70 | ) | $ | 3,015 | $ | 2,665 | 13 | |||||||||||||||||||||
Retail Financial Services | 639 | 785 | 859 | 718 | 746 | (19 | ) | (14 | ) | 2,283 | 2,495 | (8 | ) | |||||||||||||||||||||||||||
Card Services | 786 | 759 | 765 | 719 | 711 | 4 | 11 | 2,310 | 2,487 | (7 | ) | |||||||||||||||||||||||||||||
Commercial Banking | 258 | 284 | 304 | 256 | 231 | (9 | ) | 12 | 846 | 754 | 12 | |||||||||||||||||||||||||||||
Treasury & Securities Services | 360 | 352 | 263 | 256 | 256 | 2 | 41 | 975 | 834 | 17 | ||||||||||||||||||||||||||||||
Asset Management | 521 | 493 | 425 | 407 | 346 | 6 | 51 | 1,439 | 1,002 | 44 | ||||||||||||||||||||||||||||||
Corporate (g) | 513 | 382 | 631 | 1,161 | 31 | 34 | NM | 1,526 | (319 | ) | NM | |||||||||||||||||||||||||||||
Net Income | $ | 3,373 | $ | 4,234 | $ | 4,787 | $ | 4,526 | $ | 3,297 | (20 | ) | 2 | $ | 12,394 | $ | 9,918 | 25 | ||||||||||||||||||||||
(a) | The Firm adopted SFAS 157 in the first quarter of 2007. For additional information, see Note 3 of the Firm’s June 30, 2007, Form 10-Q. | |
(b) | On October 1, 2006, the Firm completed the exchange of selected corporate trust businesses for the consumer, business banking and middle-market banking businesses of The Bank of New York. The results of operations of these corporate trust businesses are reported as discontinued operations for each 2006 period. | |
(c) | Ratios are based upon annualized amounts. | |
(d) | Income from continuing operations and Net income applicable to common stock divided by total average common equity (net of goodwill). The Firm uses return on equity less goodwill, a non-GAAP financial measure, to evaluate the operating performance of the Firm. The Firm also utilizes this measure to facilitate comparisons to competitors. | |
(e) | Income from continuing operations divided by Total average assets less average assets of discontinued operations held-for-sale. | |
(f) | Net income divided by Total average assets. | |
(g) | Included the after-tax impact of discontinued operations, recoveries related to material litigation actions, tax audit benefits and merger costs. See Corporate Financial Highlights for additional details. | |
(h) | Estimated. |
Page 2
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JPMORGAN CHASE & CO. | ||
STATEMENTS OF INCOME | ||
(in millions, except per share and ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees | $ | 1,336 | $ | 1,898 | $ | 1,739 | $ | 1,565 | $ | 1,416 | (30 | )% | (6 | )% | $ | 4,973 | $ | 3,955 | 26 | % | ||||||||||||||||||||
Principal Transactions (a) | 237 | 3,566 | 4,471 | 2,591 | 2,737 | (93 | ) | (91 | ) | 8,274 | 8,187 | 1 | ||||||||||||||||||||||||||||
Lending & Deposit Related Fees | 1,026 | 951 | 895 | 895 | 867 | 8 | 18 | 2,872 | 2,573 | 12 | ||||||||||||||||||||||||||||||
Asset Management, Administration and Commissions | 3,663 | 3,611 | 3,186 | 3,173 | 2,842 | 1 | 29 | 10,460 | 8,682 | 20 | ||||||||||||||||||||||||||||||
Securities Gains (Losses) | 237 | (223 | ) | 2 | 35 | 40 | NM | 493 | 16 | (578 | ) | NM | ||||||||||||||||||||||||||||
Mortgage Fees and Related Income (b) | 221 | 523 | 476 | 75 | 62 | (58 | ) | 256 | 1,220 | 516 | 136 | |||||||||||||||||||||||||||||
Credit Card Income | 1,777 | 1,714 | 1,563 | 1,645 | 1,567 | 4 | 13 | 5,054 | 5,268 | (4 | ) | |||||||||||||||||||||||||||||
Other Income | 289 | 553 | 518 | 522 | 635 | (48 | ) | (54 | ) | 1,360 | 1,653 | (18 | ) | |||||||||||||||||||||||||||
Noninterest Revenue | 8,786 | 12,593 | 12,850 | 10,501 | 10,166 | (30 | ) | (14 | ) | 34,229 | 30,256 | 13 | ||||||||||||||||||||||||||||
Interest Income | 19,219 | 17,489 | 16,636 | 16,097 | 15,157 | 10 | 27 | 53,344 | 43,010 | 24 | ||||||||||||||||||||||||||||||
Interest Expense | 11,893 | 11,174 | 10,518 | 10,405 | 9,778 | 6 | 22 | 33,585 | 27,460 | 22 | ||||||||||||||||||||||||||||||
Net Interest Income | 7,326 | 6,315 | 6,118 | 5,692 | 5,379 | 16 | 36 | 19,759 | 15,550 | 27 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE | 16,112 | 18,908 | 18,968 | 16,193 | 15,545 | (15 | ) | 4 | 53,988 | 45,806 | 18 | |||||||||||||||||||||||||||||
Provision for Credit Losses | 1,785 | 1,529 | 1,008 | 1,134 | 812 | 17 | 120 | 4,322 | 2,136 | 102 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||||||||||||||||||||||
Compensation Expense | 4,677 | 6,309 | 6,234 | 4,985 | 5,390 | (26 | ) | (13 | ) | 17,220 | 16,206 | 6 | ||||||||||||||||||||||||||||
Occupancy Expense | 657 | 652 | 640 | 625 | 563 | 1 | 17 | 1,949 | 1,710 | 14 | ||||||||||||||||||||||||||||||
Technology, Communications and Equipment Expense | 950 | 921 | 922 | 997 | 911 | 3 | 4 | 2,793 | 2,656 | 5 | ||||||||||||||||||||||||||||||
Professional & Outside Services | 1,260 | 1,259 | 1,200 | 1,246 | 1,111 | – | 13 | 3,719 | 3,204 | 16 | ||||||||||||||||||||||||||||||
Marketing | 561 | 457 | 482 | 614 | 550 | 23 | 2 | 1,500 | 1,595 | (6 | ) | |||||||||||||||||||||||||||||
Other Expense (c) | 812 | 1,013 | 735 | 948 | 877 | (20 | ) | (7 | ) | 2,560 | 2,324 | 10 | ||||||||||||||||||||||||||||
Amortization of Intangibles | 349 | 353 | 353 | 370 | 346 | (1 | ) | 1 | 1,055 | 1,058 | – | |||||||||||||||||||||||||||||
Merger Costs | 61 | 64 | 62 | 100 | 48 | (5 | ) | 27 | 187 | 205 | (9 | ) | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE | 9,327 | 11,028 | 10,628 | 9,885 | 9,796 | (15 | ) | (5 | ) | 30,983 | 28,958 | 7 | ||||||||||||||||||||||||||||
Income from Continuing Operations before Income Tax Expense | 5,000 | 6,351 | 7,332 | 5,174 | 4,937 | (21 | ) | 1 | 18,683 | 14,712 | 27 | |||||||||||||||||||||||||||||
Income Tax Expense | 1,627 | 2,117 | 2,545 | 1,268 | 1,705 | (23 | ) | (5 | ) | 6,289 | 4,969 | 27 | ||||||||||||||||||||||||||||
Income from Continuing Operations (after-tax) | 3,373 | 4,234 | 4,787 | 3,906 | 3,232 | (20 | ) | 4 | 12,394 | 9,743 | 27 | |||||||||||||||||||||||||||||
Income from Discontinued Operations (after-tax) (d) | – | – | – | 620 | 65 | – | NM | – | 175 | NM | ||||||||||||||||||||||||||||||
NET INCOME | $ | 3,373 | $ | 4,234 | $ | 4,787 | $ | 4,526 | $ | 3,297 | (20 | ) | 2 | $ | 12,394 | $ | 9,918 | 25 | ||||||||||||||||||||||
DILUTED EARNINGS PER SHARE | ||||||||||||||||||||||||||||||||||||||||
Income from Continuing Operations (after-tax) | $ | 0.97 | $ | 1.20 | $ | 1.34 | $ | 1.09 | $ | 0.90 | (19 | ) | 8 | $ | 3.52 | $ | 2.73 | 29 | ||||||||||||||||||||||
Income from Discontinued Operations (after-tax) (d) | – | – | – | 0.17 | 0.02 | – | NM | – | 0.05 | NM | ||||||||||||||||||||||||||||||
Net Income | $ | 0.97 | $ | 1.20 | $ | 1.34 | $ | 1.26 | $ | 0.92 | (19 | ) | 5 | $ | 3.52 | $ | 2.78 | 27 | ||||||||||||||||||||||
FINANCIAL RATIOS | ||||||||||||||||||||||||||||||||||||||||
Income from Continuing Operations: | ||||||||||||||||||||||||||||||||||||||||
ROE | 11 | % | 14 | % | 17 | % | 14 | % | 11 | % | 14 | % | 12 | % | ||||||||||||||||||||||||||
ROE-GW | 18 | 23 | 27 | 22 | 19 | 23 | 20 | |||||||||||||||||||||||||||||||||
ROA | 0.91 | 1.19 | 1.41 | 1.14 | 0.98 | 1.16 | 1.02 | |||||||||||||||||||||||||||||||||
Net Income: | ||||||||||||||||||||||||||||||||||||||||
ROE | 11 | 14 | 17 | 16 | 12 | 14 | 12 | |||||||||||||||||||||||||||||||||
ROE-GW | 18 | 23 | 27 | 26 | 19 | 23 | 20 | |||||||||||||||||||||||||||||||||
ROA | 0.91 | 1.19 | 1.41 | 1.32 | 1.00 | 1.16 | 1.02 | |||||||||||||||||||||||||||||||||
Effective Income Tax Rate (e) | 33 | 33 | 35 | 25 | 35 | 34 | 34 | |||||||||||||||||||||||||||||||||
Overhead Ratio | 58 | 58 | 56 | 61 | 63 | 57 | 63 | |||||||||||||||||||||||||||||||||
EXCLUDING IMPACT OF MERGER COSTS (f) | ||||||||||||||||||||||||||||||||||||||||
Income from Continuing Operations | $ | 3,373 | $ | 4,234 | $ | 4,787 | $ | 3,906 | $ | 3,232 | (20 | ) | 4 | $ | 12,394 | $ | 9,743 | 27 | ||||||||||||||||||||||
Less Merger Costs (after-tax) | 38 | 40 | 38 | 62 | 30 | (5 | ) | 27 | 116 | 127 | (9 | ) | ||||||||||||||||||||||||||||
Income from Continuing Operations Excluding Merger Costs | $ | 3,411 | $ | 4,274 | $ | 4,825 | $ | 3,968 | $ | 3,262 | (20 | ) | 5 | $ | 12,510 | $ | 9,870 | 27 | ||||||||||||||||||||||
Diluted Per Share: | ||||||||||||||||||||||||||||||||||||||||
Income from Continuing Operations | $ | 0.97 | $ | 1.20 | $ | 1.34 | $ | 1.09 | $ | 0.90 | (19 | ) | 8 | $ | 3.52 | $ | 2.73 | 29 | ||||||||||||||||||||||
Less Merger Costs (after-tax) | 0.01 | 0.01 | 0.01 | 0.02 | 0.01 | – | – | 0.03 | 0.03 | – | ||||||||||||||||||||||||||||||
Income from Continuing Operations Excluding Merger Costs | $ | 0.98 | $ | 1.21 | $ | 1.35 | $ | 1.11 | $ | 0.91 | (19 | ) | 8 | $ | 3.55 | $ | 2.76 | 29 | ||||||||||||||||||||||
(a) | The Firm adopted SFAS 157 in the first quarter of 2007. For additional information, see Note 3 of the Firm’s June 30, 2007, Form 10-Q. | |
(b) | The Firm adopted SFAS 159 in the first quarter of 2007. As a result, certain loan origination costs have been classified as expense (previously netted against revenue) for the current-year quarters and nine months ended September 30, 2007. | |
(c) | Insurance recoveries related to settlement of the Enron and WorldCom class action litigations and for certain other material legal proceedings were $137 million and $17 million for the three months ended December 31, 2006 and September 30, 2006, respectively. Year-to-date insurance recoveries were $375 million for 2006. | |
(d) | On October 1, 2006, the Firm completed the exchange of selected corporate trust businesses for the consumer, business banking and middle-market banking businesses of The Bank of New York. The results of operations of these corporate trust businesses were reported as discontinued operations for each 2006 period. | |
(e) | Based on Income from continuing operations. | |
(f) | Income from continuing operations excluding merger costs, a non-GAAP financial measure, is used by the Firm to facilitate comparison of results against the Firm’s ongoing operations and with other companies’ U.S. GAAP financial statements. |
Page 3
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JPMORGAN CHASE & CO. | ||
CONSOLIDATED BALANCE SHEETS | ||
(in millions) |
Sep 30, 2007 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Sep 30 | ||||||||||||||||||||||
2007 | 2007 | 2007 | 2006 | 2006 | 2007 | 2006 | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Cash and Due from Banks | $ | 32,766 | $ | 35,449 | $ | 31,836 | $ | 40,412 | $ | 36,279 | (8 | )% | (10 | )% | ||||||||||||||
Deposits with Banks | 26,714 | 41,736 | 30,973 | 13,547 | 17,130 | (36 | ) | 56 | ||||||||||||||||||||
Federal Funds Sold and Securities Purchased under Resale Agreements | 135,589 | 125,930 | 144,306 | 140,524 | 156,194 | 8 | (13 | ) | ||||||||||||||||||||
Securities Borrowed | 84,697 | 88,360 | 84,800 | 73,688 | 89,222 | (4 | ) | (5 | ) | |||||||||||||||||||
Trading Assets: | ||||||||||||||||||||||||||||
Debt and Equity Instruments | 389,119 | 391,508 | 373,684 | 310,137 | 289,891 | (1 | ) | 34 | ||||||||||||||||||||
Derivative Receivables | 64,592 | 59,038 | 49,647 | 55,601 | 58,265 | 9 | 11 | |||||||||||||||||||||
Securities | 97,706 | 95,984 | 97,029 | 91,975 | 86,548 | 2 | 13 | |||||||||||||||||||||
Loans (Net of Allowance for Loan Losses) | 478,207 | 457,404 | 442,465 | 475,848 | 456,488 | 5 | 5 | |||||||||||||||||||||
Private Equity Investments | 6,929 | 6,898 | 6,788 | 6,359 | 5,905 | – | 17 | |||||||||||||||||||||
Accrued Interest and Accounts Receivable | 26,401 | 26,716 | 23,663 | 22,891 | 21,178 | (1 | ) | 25 | ||||||||||||||||||||
Premises and Equipment | 8,892 | 9,044 | 8,728 | 8,735 | 8,553 | (2 | ) | 4 | ||||||||||||||||||||
Goodwill | 45,335 | 45,254 | 45,063 | 45,186 | 43,372 | – | 5 | |||||||||||||||||||||
Other Intangible Assets: | ||||||||||||||||||||||||||||
Mortgage Servicing Rights | 9,114 | 9,499 | 7,937 | 7,546 | 7,378 | (4 | ) | 24 | ||||||||||||||||||||
Purchased Credit Card Relationships | 2,427 | 2,591 | 2,758 | 2,935 | 2,982 | (6 | ) | (19 | ) | |||||||||||||||||||
All Other Intangibles | 3,959 | 4,103 | 4,205 | 4,371 | 4,078 | (4 | ) | (3 | ) | |||||||||||||||||||
Other Assets | 67,128 | 58,528 | 55,036 | 51,765 | 53,181 | 15 | 26 | |||||||||||||||||||||
Assets of Discontinued Operations Held-for-Sale (a) | – | – | – | – | 1,385 | – | NM | |||||||||||||||||||||
TOTAL ASSETS | $ | 1,479,575 | $ | 1,458,042 | $ | 1,408,918 | $ | 1,351,520 | $ | 1,338,029 | 1 | 11 | ||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||
U.S. Offices: | ||||||||||||||||||||||||||||
Noninterest-Bearing | $ | 115,036 | $ | 120,470 | $ | 123,942 | $ | 132,781 | $ | 117,197 | (5 | ) | (2 | ) | ||||||||||||||
Interest-Bearing | 354,459 | 342,079 | 342,368 | 337,812 | 310,401 | 4 | 14 | |||||||||||||||||||||
Non-U.S. Offices: | ||||||||||||||||||||||||||||
Noninterest-Bearing | 6,559 | 5,919 | 8,104 | 7,662 | 3,761 | 11 | 74 | |||||||||||||||||||||
Interest-Bearing | 202,037 | 182,902 | 152,014 | 160,533 | 150,756 | 10 | 34 | |||||||||||||||||||||
Total Deposits | 678,091 | 651,370 | 626,428 | 638,788 | 582,115 | 4 | 16 | |||||||||||||||||||||
Federal Funds Purchased and Securities Sold under Repurchase Agreements | 178,767 | 205,961 | 218,917 | 162,173 | 188,395 | (13 | ) | (5 | ) | |||||||||||||||||||
Commercial Paper | 33,978 | 25,116 | 25,354 | 18,849 | 18,135 | 35 | 87 | |||||||||||||||||||||
Other Borrowed Funds | 31,154 | 29,263 | 19,871 | 18,053 | 16,252 | 6 | 92 | |||||||||||||||||||||
Trading Liabilities: | ||||||||||||||||||||||||||||
Debt and Equity Instruments | 80,748 | 93,969 | 94,309 | 90,488 | 106,784 | (14 | ) | (24 | ) | |||||||||||||||||||
Derivative Payables | 68,426 | 61,396 | 50,316 | 57,469 | 58,462 | 11 | 17 | |||||||||||||||||||||
Accounts Payable, Accrued Expenses and Other Liabilities (including the Allowance for Lending-Related Commitments) | 86,524 | 84,785 | 87,603 | 88,096 | 73,585 | 2 | 18 | |||||||||||||||||||||
Beneficial Interests Issued by Consolidated VIEs | 13,283 | 14,808 | 13,109 | 16,184 | 16,254 | (10 | ) | (18 | ) | |||||||||||||||||||
Long-Term Debt | 173,696 | 159,493 | 143,274 | 133,421 | 126,619 | 9 | 37 | |||||||||||||||||||||
Junior Subordinated Deferrable Interest Debentures Held by Trusts that Issued Guaranteed Capital Debt Securities | 14,930 | 12,670 | 12,033 | 12,209 | 13,309 | 18 | 12 | |||||||||||||||||||||
Liabilities of Discontinued Operations Held-for-Sale (a) | – | – | – | – | 24,558 | – | NM | |||||||||||||||||||||
TOTAL LIABILITIES | 1,359,597 | 1,338,831 | 1,291,214 | 1,235,730 | 1,224,468 | 2 | 11 | |||||||||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||||||
Common Stock | 3,658 | 3,658 | 3,658 | 3,658 | 3,658 | – | – | |||||||||||||||||||||
Capital Surplus | 78,295 | 78,020 | 77,760 | 77,807 | 77,457 | – | 1 | |||||||||||||||||||||
Retained Earnings (b) | 53,064 | 51,011 | 48,105 | 43,600 | 40,283 | 4 | 32 | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | (1,830 | ) | (2,080 | ) | (1,482 | ) | (1,557 | ) | (526 | ) | 12 | (248 | ) | |||||||||||||||
Treasury Stock, at Cost | (13,209 | ) | (11,398 | ) | (10,337 | ) | (7,718 | ) | (7,311 | ) | (16 | ) | (81 | ) | ||||||||||||||
TOTAL STOCKHOLDERS’ EQUITY | 119,978 | 119,211 | 117,704 | 115,790 | 113,561 | 1 | 6 | |||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,479,575 | $ | 1,458,042 | $ | 1,408,918 | $ | 1,351,520 | $ | 1,338,029 | 1 | 11 | ||||||||||||||||
(a) | On October 1, 2006, the Firm completed the exchange of selected corporate trust businesses for the consumer, business banking and middle-market banking businesses of The Bank of New York. As a result of this transaction, assets and liabilities of this business were reclassified and reported as discontinued operations for the period ended September 30, 2006. | |
(b) | The cumulative effect of changes in accounting principles increased retained earnings as a result of implementing SFAS 157, SFAS 159 and FIN 48 in the first quarter of 2007. For additional information see the Firm’s March 31, 2007, Form 10-Q. |
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JPMORGAN CHASE & CO. | ||
CONDENSED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS | ||
(in millions, except rates) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
AVERAGE BALANCES | ||||||||||||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||||
Deposits with Banks | $ | 39,906 | $ | 18,153 | $ | 16,224 | $ | 19,736 | $ | 31,291 | 120 | % | 28 | % | $ | 24,848 | $ | 30,424 | (18 | )% | ||||||||||||||||||||
Federal Funds Sold and Securities Purchased under Resale Agreements | 133,780 | 132,768 | 135,499 | 144,744 | 125,618 | 1 | 6 | 134,009 | 127,863 | 5 | ||||||||||||||||||||||||||||||
Securities Borrowed | 87,955 | 90,810 | 78,768 | 82,184 | 82,216 | (3 | ) | 7 | 85,878 | 84,385 | 2 | |||||||||||||||||||||||||||||
Trading Assets – Debt Instruments | 310,445 | 294,931 | 257,079 | 218,188 | 213,164 | 5 | 46 | 287,680 | 201,232 | 43 | ||||||||||||||||||||||||||||||
Securities | 95,694 | 96,921 | 95,326 | 89,962 | 78,029 | (1 | ) | 23 | 95,982 | 73,762 | 30 | |||||||||||||||||||||||||||||
Interests in Purchased Receivables (a) | – | – | – | – | – | – | – | – | 18,640 | NM | ||||||||||||||||||||||||||||||
Loans | 476,912 | 465,763 | 467,453 | 484,140 | 461,673 | 2 | 3 | 470,078 | 444,558 | 6 | ||||||||||||||||||||||||||||||
Total Interest-Earning Assets | 1,144,692 | 1,099,346 | 1,050,349 | 1,038,954 | 991,991 | 4 | 15 | 1,098,475 | 980,864 | 12 | ||||||||||||||||||||||||||||||
Trading Assets – Equity Instruments | 86,177 | 85,830 | 88,791 | 81,985 | 75,366 | – | 14 | 86,923 | 72,075 | 21 | ||||||||||||||||||||||||||||||
Goodwill | 45,276 | 45,181 | 45,125 | 45,163 | 43,386 | – | 4 | 45,194 | 43,437 | 4 | ||||||||||||||||||||||||||||||
Other Intangible Assets: | ||||||||||||||||||||||||||||||||||||||||
Mortgage Servicing Rights | 9,290 | 8,371 | 7,784 | 7,295 | 8,048 | 11 | 15 | 8,487 | 7,548 | 12 | ||||||||||||||||||||||||||||||
All Other Intangible Assets | 6,532 | 6,854 | 7,139 | 7,478 | 7,202 | (5 | ) | (9 | ) | 6,840 | 7,400 | (8 | ) | |||||||||||||||||||||||||||
All Other Noninterest-Earning Assets | 185,367 | 186,404 | 179,727 | 181,732 | 159,482 | (1 | ) | 16 | 183,853 | 163,964 | 12 | |||||||||||||||||||||||||||||
Assets of Discontinued Operations Held-for-Sale (b) | – | – | – | – | 23,664 | – | NM | – | 22,056 | NM | ||||||||||||||||||||||||||||||
TOTAL ASSETS | $ | 1,477,334 | $ | 1,431,986 | $ | 1,378,915 | $ | 1,362,607 | $ | 1,309,139 | 3 | 13 | $ | 1,429,772 | $ | 1,297,344 | 10 | |||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits | $ | 540,937 | $ | 513,451 | $ | 498,717 | $ | 487,368 | $ | 451,509 | 5 | 20 | $ | 517,856 | $ | 440,514 | 18 | |||||||||||||||||||||||
Federal Funds Purchased and Securities Sold under Repurchase Agreements | 206,174 | 209,323 | 199,252 | 198,166 | 192,674 | (2 | ) | 7 | 204,942 | 178,936 | 15 | |||||||||||||||||||||||||||||
Commercial Paper | 26,511 | 25,282 | 22,339 | 18,787 | 19,207 | 5 | 38 | 24,726 | 17,348 | 43 | ||||||||||||||||||||||||||||||
Other Borrowings (c) | 104,995 | 100,715 | 95,664 | 96,499 | 101,366 | 4 | 4 | 100,492 | 104,049 | (3 | ) | |||||||||||||||||||||||||||||
Beneficial Interests Issued by Consolidated VIEs | 14,454 | 13,641 | 15,993 | 15,769 | 13,630 | 6 | 6 | 14,691 | 32,993 | (55 | ) | |||||||||||||||||||||||||||||
Long-Term Debt | 177,851 | 162,465 | 148,146 | 140,515 | 133,279 | 9 | 33 | 162,929 | 126,011 | 29 | ||||||||||||||||||||||||||||||
Total Interest-Bearing Liabilities | 1,070,922 | 1,024,877 | 980,111 | 957,104 | 911,665 | 4 | 17 | 1,025,636 | 899,851 | 14 | ||||||||||||||||||||||||||||||
Noninterest-Bearing Liabilities | 287,436 | 289,058 | 282,559 | 290,741 | 262,843 | (1 | ) | 9 | 286,369 | 267,014 | 7 | |||||||||||||||||||||||||||||
Liabilities of Discontinued Operations Held-for-Sale (b) | – | – | – | – | 22,825 | – | NM | – | 21,107 | NM | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES | 1,358,358 | 1,313,935 | 1,262,670 | 1,247,845 | 1,197,333 | 3 | 13 | 1,312,005 | 1,187,972 | 10 | ||||||||||||||||||||||||||||||
Preferred Stock | – | – | – | – | – | – | – | – | 45 | NM | ||||||||||||||||||||||||||||||
Common Stockholders’ Equity | 118,976 | 118,051 | 116,245 | 114,762 | 111,806 | 1 | 6 | 117,767 | 109,327 | 8 | ||||||||||||||||||||||||||||||
TOTAL STOCKHOLDERS’ EQUITY | 118,976 | 118,051 | 116,245 | 114,762 | 111,806 | 1 | 6 | 117,767 | 109,372 | 8 | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY | $ | 1,477,334 | $ | 1,431,986 | $ | 1,378,915 | $ | 1,362,607 | $ | 1,309,139 | 3 | 13 | $ | 1,429,772 | $ | 1,297,344 | 10 | |||||||||||||||||||||||
AVERAGE RATES | ||||||||||||||||||||||||||||||||||||||||
INTEREST-EARNING ASSETS | ||||||||||||||||||||||||||||||||||||||||
Deposits with Banks | 5.06 | % | 4.56 | % | 4.65 | % | 5.18 | % | 4.46 | % | 4.85 | % | 4.42 | % | ||||||||||||||||||||||||||
Federal Funds Sold and Securities Purchased under Resale Agreements | 4.83 | 4.99 | 4.95 | 4.71 | 4.55 | 4.92 | 4.03 | |||||||||||||||||||||||||||||||||
Securities Borrowed | 5.60 | 5.31 | 5.42 | 4.56 | 4.28 | 5.45 | 3.89 | |||||||||||||||||||||||||||||||||
Trading Assets – Debt Instruments | 6.62 | 5.85 | 5.99 | 5.45 | 5.28 | 6.17 | 5.40 | |||||||||||||||||||||||||||||||||
Securities | 5.69 | 5.68 | 5.68 | 5.57 | 5.70 | 5.68 | 5.51 | |||||||||||||||||||||||||||||||||
Interests in Purchased Receivables | – | – | – | – | – | – | 4.68 | |||||||||||||||||||||||||||||||||
Loans | 7.80 | 7.65 | 7.53 | 7.35 | 7.37 | 7.66 | 7.23 | |||||||||||||||||||||||||||||||||
Total Interest-Earning Assets | 6.69 | 6.43 | 6.45 | 6.17 | 6.08 | 6.53 | 5.89 | |||||||||||||||||||||||||||||||||
INTEREST-BEARING LIABILITIES | ||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits | 4.13 | 4.17 | 4.06 | 3.99 | 3.93 | 4.12 | 3.68 | |||||||||||||||||||||||||||||||||
Federal Funds Purchased and Securities Sold under Repurchase Agreements | 5.18 | 5.19 | 5.09 | 4.86 | 4.63 | 5.16 | 4.30 | |||||||||||||||||||||||||||||||||
Commercial Paper | 4.68 | 4.92 | 4.89 | 4.76 | 4.78 | 4.82 | 4.39 | |||||||||||||||||||||||||||||||||
Other Borrowings (c) | 4.90 | 4.69 | 5.07 | 4.75 | 5.13 | 4.88 | 5.08 | |||||||||||||||||||||||||||||||||
Beneficial Interests Issued by Consolidated VIEs | 4.52 | 3.22 | 3.82 | 3.96 | 4.16 | 3.86 | 4.37 | |||||||||||||||||||||||||||||||||
Long-Term Debt | 3.99 | 3.77 | 3.85 | 4.34 | 4.08 | 3.87 | 4.21 | |||||||||||||||||||||||||||||||||
Total Interest-Bearing Liabilities | 4.41 | 4.37 | 4.35 | 4.31 | 4.26 | 4.38 | 4.08 | |||||||||||||||||||||||||||||||||
INTEREST RATE SPREAD | 2.28 | % | 2.06 | % | 2.10 | % | 1.86 | % | 1.82 | % | 2.15 | % | 1.81 | % | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS | 2.57 | % | 2.35 | % | 2.39 | % | 2.19 | % | 2.17 | % | 2.44 | % | 2.14 | % | ||||||||||||||||||||||||||
NET YIELD ON INTEREST-EARNING ASSETS ADJUSTED FOR SECURITIZATIONS | 2.89 | % | 2.68 | % | 2.73 | % | 2.54 | % | 2.54 | % | 2.77 | % | 2.57 | % | ||||||||||||||||||||||||||
(a) | As a result of restructuring certain multi-seller conduits the Firm administers, during the second quarter of 2006, JPMorgan Chase deconsolidated $29 billion of Interests in Purchased Receivables, $3 billion of Loans and $1 billion of Securities, and recorded $33 billion of Lending-Related Commitments. | |
(b) | As a result of the transaction with The Bank of New York, for purposes of the consolidated average balance sheet for assets and liabilities transferred to discontinued operations, JPMorgan Chase used Federal funds sold interest income as a reasonable estimate of the earnings on corporate trust deposits for the periods prior to the close of the transaction; therefore, JPMorgan Chase transferred to assets of discontinued operations held-for-sale average Federal funds sold, along with the related interest income earned, and transferred to liabilities of discontinued operations held-for-sale average corporate trust deposits. | |
(c) | Includes securities sold but not yet purchased. |
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JPMORGAN CHASE & CO. | ||
RECONCILIATION FROM REPORTED TO MANAGED SUMMARY | ||
(in millions) |
The Firm prepares its Consolidated financial statements using accounting principles generally accepted in the United States of America (“U.S. GAAP”). That presentation, which is referred to as “reported basis,” provides the reader with an understanding of the Firm’s results that can be tracked consistently from year to year and enables a comparison of the Firm’s performance with other companies’ U.S. GAAP financial statements. In addition to analyzing the Firm’s results on a reported basis, management reviews the Firm’s and the lines’ of business results on a “managed” basis, which is a non-GAAP financial measure. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications that assumes credit card loans securitized by Card Services remain on the balance sheet and presents revenue on a fully taxable-equivalent (“FTE”) basis. These adjustments do not have any impact on Net income as reported by the lines of business or by the Firm as a whole. The impact of these adjustments are summarized below. For additional information about managed basis, please refer to the Glossary of Terms on page 32.
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
CREDIT CARD INCOME | ||||||||||||||||||||||||||||||||||||||||
Credit Card Income – Reported | $ | 1,777 | $ | 1,714 | $ | 1,563 | $ | 1,645 | $ | 1,567 | 4 | % | 13 | % | $ | 5,054 | $ | 5,268 | (4 | )% | ||||||||||||||||||||
Impact of: | ||||||||||||||||||||||||||||||||||||||||
Credit Card Securitizations | (836 | ) | (788 | ) | (746 | ) | (726 | ) | (721 | ) | (6 | ) | (16 | ) | (2,370 | ) | (2,783 | ) | 15 | |||||||||||||||||||||
Credit Card Income – Managed | $ | 941 | $ | 926 | $ | 817 | $ | 919 | $ | 846 | 2 | 11 | $ | 2,684 | $ | 2,485 | 8 | |||||||||||||||||||||||
OTHER INCOME | ||||||||||||||||||||||||||||||||||||||||
Other Income – Reported | $ | 289 | $ | 553 | $ | 518 | $ | 522 | $ | 635 | (48 | ) | (54 | ) | $ | 1,360 | $ | 1,653 | (18 | ) | ||||||||||||||||||||
Impact of: | ||||||||||||||||||||||||||||||||||||||||
Tax-Equivalent Adjustments | 192 | 199 | 110 | 195 | 165 | (4 | ) | 16 | 501 | 481 | 4 | |||||||||||||||||||||||||||||
Other Income – Managed | $ | 481 | $ | 752 | $ | 628 | $ | 717 | $ | 800 | (36 | ) | (40 | ) | $ | 1,861 | $ | 2,134 | (13 | ) | ||||||||||||||||||||
TOTAL NONINTEREST REVENUE | ||||||||||||||||||||||||||||||||||||||||
Total Noninterest Revenue – Reported | $ | 8,786 | $ | 12,593 | $ | 12,850 | $ | 10,501 | $ | 10,166 | (30 | ) | (14 | ) | $ | 34,229 | $ | 30,256 | 13 | |||||||||||||||||||||
Impact of: | ||||||||||||||||||||||||||||||||||||||||
Credit Card Securitizations | (836 | ) | (788 | ) | (746 | ) | (726 | ) | (721 | ) | (6 | ) | (16 | ) | (2,370 | ) | (2,783 | ) | 15 | |||||||||||||||||||||
Tax-Equivalent Adjustments | 192 | 199 | 110 | 195 | 165 | (4 | ) | 16 | 501 | 481 | 4 | |||||||||||||||||||||||||||||
Total Noninterest Revenue – Managed | $ | 8,142 | $ | 12,004 | $ | 12,214 | $ | 9,970 | $ | 9,610 | (32 | ) | (15 | ) | $ | 32,360 | $ | 27,954 | 16 | |||||||||||||||||||||
NET INTEREST INCOME | ||||||||||||||||||||||||||||||||||||||||
Net Interest Income – Reported | $ | 7,326 | $ | 6,315 | $ | 6,118 | $ | 5,692 | $ | 5,379 | 16 | 36 | $ | 19,759 | $ | 15,550 | 27 | |||||||||||||||||||||||
Impact of: | ||||||||||||||||||||||||||||||||||||||||
Credit Card Securitizations | 1,414 | 1,378 | 1,339 | 1,319 | 1,328 | 3 | 6 | 4,131 | 4,400 | (6 | ) | |||||||||||||||||||||||||||||
Tax-Equivalent Adjustments | 95 | 122 | 70 | 53 | 57 | (22 | ) | 67 | 287 | 175 | 64 | |||||||||||||||||||||||||||||
Net Interest Income – Managed | $ | 8,835 | $ | 7,815 | $ | 7,527 | $ | 7,064 | $ | 6,764 | 13 | 31 | $ | 24,177 | $ | 20,125 | 20 | |||||||||||||||||||||||
TOTAL NET REVENUE | ||||||||||||||||||||||||||||||||||||||||
Total Net Revenue – Reported | $ | 16,112 | $ | 18,908 | $ | 18,968 | $ | 16,193 | $ | 15,545 | (15 | ) | 4 | $ | 53,988 | $ | 45,806 | 18 | ||||||||||||||||||||||
Impact of: | ||||||||||||||||||||||||||||||||||||||||
Credit Card Securitizations | 578 | 590 | 593 | 593 | 607 | (2 | ) | (5 | ) | 1,761 | 1,617 | 9 | ||||||||||||||||||||||||||||
Tax-Equivalent Adjustments | 287 | 321 | 180 | 248 | 222 | (11 | ) | 29 | 788 | 656 | 20 | |||||||||||||||||||||||||||||
Total Net Revenue – Managed | $ | 16,977 | $ | 19,819 | $ | 19,741 | $ | 17,034 | $ | 16,374 | (14 | ) | 4 | $ | 56,537 | $ | 48,079 | 18 | ||||||||||||||||||||||
PROVISION FOR CREDIT LOSSES | ||||||||||||||||||||||||||||||||||||||||
Provision for Credit Losses – Reported | $ | 1,785 | $ | 1,529 | $ | 1,008 | $ | 1,134 | $ | 812 | 17 | 120 | $ | 4,322 | $ | 2,136 | 102 | |||||||||||||||||||||||
Impact of: | ||||||||||||||||||||||||||||||||||||||||
Credit Card Securitizations | 578 | 590 | 593 | 593 | 607 | (2 | ) | (5 | ) | 1,761 | 1,617 | 9 | ||||||||||||||||||||||||||||
Provision for Credit Losses – Managed | $ | 2,363 | $ | 2,119 | $ | 1,601 | $ | 1,727 | $ | 1,419 | 12 | 67 | $ | 6,083 | $ | 3,753 | 62 | |||||||||||||||||||||||
INCOME TAX EXPENSE | ||||||||||||||||||||||||||||||||||||||||
Income Tax Expense – Reported | $ | 1,627 | $ | 2,117 | $ | 2,545 | $ | 1,268 | $ | 1,705 | (23 | ) | (5 | ) | $ | 6,289 | $ | 4,969 | 27 | |||||||||||||||||||||
Impact of: | ||||||||||||||||||||||||||||||||||||||||
Tax-Equivalent Adjustments | 287 | 321 | 180 | 248 | 222 | (11 | ) | 29 | 788 | 656 | 20 | |||||||||||||||||||||||||||||
Income Tax Expense – Managed | $ | 1,914 | $ | 2,438 | $ | 2,725 | $ | 1,516 | $ | 1,927 | (21 | ) | (1 | ) | $ | 7,077 | $ | 5,625 | 26 | |||||||||||||||||||||
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JPMORGAN CHASE & CO. | ||
LINE OF BUSINESS FINANCIAL HIGHLIGHTS – MANAGED BASIS | ||
(in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
TOTAL NET REVENUE (FTE) | ||||||||||||||||||||||||||||||||||||||||
Investment Bank | $ | 2,946 | $ | 5,798 | $ | 6,254 | $ | 4,860 | $ | 4,816 | (49 | )% | (39 | )% | $ | 14,998 | $ | 13,973 | 7 | % | ||||||||||||||||||||
Retail Financial Services | 4,201 | 4,357 | 4,106 | 3,728 | 3,555 | (4 | ) | 18 | 12,664 | 11,097 | 14 | |||||||||||||||||||||||||||||
Card Services | 3,867 | 3,717 | 3,680 | 3,750 | 3,646 | 4 | 6 | 11,264 | 10,995 | 2 | ||||||||||||||||||||||||||||||
Commercial Banking | 1,009 | 1,007 | 1,003 | 1,018 | 933 | – | 8 | 3,019 | 2,782 | 9 | ||||||||||||||||||||||||||||||
Treasury & Securities Services | 1,748 | 1,741 | 1,526 | 1,537 | 1,499 | – | 17 | 5,015 | 4,572 | 10 | ||||||||||||||||||||||||||||||
Asset Management | 2,205 | 2,137 | 1,904 | 1,947 | 1,636 | 3 | 35 | 6,246 | 4,840 | 29 | ||||||||||||||||||||||||||||||
Corporate | 1,001 | 1,062 | 1,268 | 194 | 289 | (6 | ) | 246 | 3,331 | (180 | ) | NM | ||||||||||||||||||||||||||||
TOTAL NET REVENUE | $ | 16,977 | $ | 19,819 | $ | 19,741 | $ | 17,034 | $ | 16,374 | (14 | ) | 4 | $ | 56,537 | $ | 48,079 | 18 | ||||||||||||||||||||||
NET INCOME (LOSS) | ||||||||||||||||||||||||||||||||||||||||
Investment Bank | $ | 296 | $ | 1,179 | $ | 1,540 | $ | 1,009 | $ | 976 | (75 | ) | (70 | ) | $ | 3,015 | $ | 2,665 | 13 | |||||||||||||||||||||
Retail Financial Services | 639 | 785 | 859 | 718 | 746 | (19 | ) | (14 | ) | 2,283 | 2,495 | (8 | ) | |||||||||||||||||||||||||||
Card Services | 786 | 759 | 765 | 719 | 711 | 4 | 11 | 2,310 | 2,487 | (7 | ) | |||||||||||||||||||||||||||||
Commercial Banking | 258 | 284 | 304 | 256 | 231 | (9 | ) | 12 | 846 | 754 | 12 | |||||||||||||||||||||||||||||
Treasury & Securities Services | 360 | 352 | 263 | 256 | 256 | 2 | 41 | 975 | 834 | 17 | ||||||||||||||||||||||||||||||
Asset Management | 521 | 493 | 425 | 407 | 346 | 6 | 51 | 1,439 | 1,002 | 44 | ||||||||||||||||||||||||||||||
Corporate (a) | 513 | 382 | 631 | 1,161 | 31 | 34 | NM | 1,526 | (319 | ) | NM | |||||||||||||||||||||||||||||
TOTAL NET INCOME (b) | $ | 3,373 | $ | 4,234 | $ | 4,787 | $ | 4,526 | $ | 3,297 | (20 | ) | 2 | $ | 12,394 | $ | 9,918 | 25 | ||||||||||||||||||||||
AVERAGE EQUITY (c) | ||||||||||||||||||||||||||||||||||||||||
Investment Bank | $ | 21,000 | $ | 21,000 | $ | 21,000 | $ | 21,000 | $ | 21,000 | – | – | $ | 21,000 | $ | 20,670 | 2 | |||||||||||||||||||||||
Retail Financial Services | 16,000 | 16,000 | 16,000 | 16,000 | 14,300 | – | 12 | 16,000 | 14,167 | 13 | ||||||||||||||||||||||||||||||
Card Services | 14,100 | 14,100 | 14,100 | 14,100 | 14,100 | – | – | 14,100 | 14,100 | – | ||||||||||||||||||||||||||||||
Commercial Banking | 6,700 | 6,300 | 6,300 | 6,300 | 5,500 | 6 | 22 | 6,435 | 5,500 | 17 | ||||||||||||||||||||||||||||||
Treasury & Securities Services | 3,000 | 3,000 | 3,000 | 2,200 | 2,200 | – | 36 | 3,000 | 2,314 | 30 | ||||||||||||||||||||||||||||||
Asset Management | 4,000 | 3,750 | 3,750 | 3,500 | 3,500 | 7 | 14 | 3,834 | 3,500 | 10 | ||||||||||||||||||||||||||||||
Corporate | 54,176 | 53,901 | 52,095 | 51,662 | 51,206 | 1 | 6 | 53,398 | 49,076 | 9 | ||||||||||||||||||||||||||||||
TOTAL AVERAGE EQUITY | $ | 118,976 | $ | 118,051 | $ | 116,245 | $ | 114,762 | $ | 111,806 | 1 | 6 | $ | 117,767 | $ | 109,327 | 8 | |||||||||||||||||||||||
RETURN ON EQUITY (c) | ||||||||||||||||||||||||||||||||||||||||
Investment Bank | 6 | % | 23 | % | 30 | % | 19 | % | 18 | % | 19 | % | 17 | % | ||||||||||||||||||||||||||
Retail Financial Services | 16 | 20 | 22 | 18 | 21 | 19 | 24 | |||||||||||||||||||||||||||||||||
Card Services | 22 | 22 | 22 | 20 | 20 | 22 | 24 | |||||||||||||||||||||||||||||||||
Commercial Banking | 15 | 18 | 20 | 16 | 17 | 18 | 18 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services | 48 | 47 | 36 | 46 | 46 | 43 | 48 | |||||||||||||||||||||||||||||||||
Asset Management | 52 | 53 | 46 | 46 | 39 | 50 | 38 |
(a) | Included the after-tax impact of discontinued operations, material litigation reserve charges/recoveries, tax audit benefits and merger costs. See Corporate Financial Highlights for additional details. | |
(b) | Net income included income from discontinued operations (after-tax) of $620 million and $65 million for the quarters ended December 31, 2006 and September 30, 2006, respectively, and $175 million for year-to-date September 30, 2006. There was no income from discontinued operations in 2007. | |
(c) | Each business segment is allocated capital by taking into consideration stand-alone peer comparisons, economic risk measures and regulatory capital requirements. The amount of capital assigned to each business is referred to as equity. |
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JPMORGAN CHASE & CO. | ||
INVESTMENT BANK | ||
FINANCIAL HIGHLIGHTS | ||
(in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees | $ | 1,330 | $ | 1,900 | $ | 1,729 | $ | 1,580 | $ | 1,419 | (30 | )% | (6 | )% | $ | 4,959 | $ | 3,957 | 25 | % | ||||||||||||||||||||
Principal Transactions (a) | (848 | ) | 2,178 | 3,126 | 2,327 | 2,548 | NM | NM | 4,456 | 7,185 | (38 | ) | ||||||||||||||||||||||||||||
Lending & Deposit Related Fees | 118 | 93 | 93 | 119 | 127 | 27 | (7 | ) | 304 | 398 | (24 | ) | ||||||||||||||||||||||||||||
Asset Management, Administration and Commissions | 712 | 643 | 641 | 569 | 512 | 11 | 39 | 1,996 | 1,671 | 19 | ||||||||||||||||||||||||||||||
All Other Income | (76 | ) | 122 | 42 | 91 | 159 | NM | NM | 88 | 437 | (80 | ) | ||||||||||||||||||||||||||||
Noninterest Revenue | 1,236 | 4,936 | 5,631 | 4,686 | 4,765 | (75 | ) | (74 | ) | 11,803 | 13,648 | (14 | ) | |||||||||||||||||||||||||||
Net Interest Income (a) | 1,710 | 862 | 623 | 174 | 51 | 98 | NM | 3,195 | 325 | NM | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE (b) | 2,946 | 5,798 | 6,254 | 4,860 | 4,816 | (49 | ) | (39 | ) | 14,998 | 13,973 | 7 | ||||||||||||||||||||||||||||
Provision for Credit Losses | 227 | 164 | 63 | 63 | 7 | 38 | NM | 454 | 128 | 255 | ||||||||||||||||||||||||||||||
Credit Reimbursement from TSS (c) | 31 | 30 | 30 | 31 | 30 | 3 | 3 | 91 | 90 | 1 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||||||||||||||||||||||
Compensation Expense | 1,178 | 2,589 | 2,637 | 1,880 | 2,093 | (54 | ) | (44 | ) | 6,404 | 6,310 | 1 | ||||||||||||||||||||||||||||
Noncompensation Expense | 1,200 | 1,265 | 1,194 | 1,325 | 1,151 | (5 | ) | 4 | 3,659 | 3,345 | 9 | |||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE | 2,378 | 3,854 | 3,831 | 3,205 | 3,244 | (38 | ) | (27 | ) | 10,063 | 9,655 | 4 | ||||||||||||||||||||||||||||
Income Before Income Tax Expense | 372 | 1,810 | 2,390 | 1,623 | 1,595 | (79 | ) | (77 | ) | 4,572 | 4,280 | 7 | ||||||||||||||||||||||||||||
Income Tax Expense | 76 | 631 | 850 | 614 | 619 | (88 | ) | (88 | ) | 1,557 | 1,615 | (4 | ) | |||||||||||||||||||||||||||
NET INCOME | $ | 296 | $ | 1,179 | $ | 1,540 | $ | 1,009 | $ | 976 | (75 | ) | (70 | ) | $ | 3,015 | $ | 2,665 | 13 | |||||||||||||||||||||
FINANCIAL RATIOS | ||||||||||||||||||||||||||||||||||||||||
ROE | 6 | % | 23 | % | 30 | % | 19 | % | 18 | % | 19 | % | 17 | % | ||||||||||||||||||||||||||
ROA | 0.17 | 0.68 | 0.95 | 0.62 | 0.62 | 0.59 | 0.55 | |||||||||||||||||||||||||||||||||
Overhead Ratio | 81 | 66 | 61 | 66 | 67 | 67 | 69 | |||||||||||||||||||||||||||||||||
Compensation Expense as a % of Total Net Revenue (d) | 40 | 45 | 42 | 38 | 42 | 43 | 43 | |||||||||||||||||||||||||||||||||
REVENUE BY BUSINESS Investment Banking Fees: | ||||||||||||||||||||||||||||||||||||||||
Advisory | $ | 595 | $ | 560 | $ | 472 | $ | 482 | $ | 436 | 6 | 36 | $ | 1,627 | $ | 1,177 | 38 | |||||||||||||||||||||||
Equity Underwriting | 267 | 509 | 393 | 327 | 275 | (48 | ) | (3 | ) | 1,169 | 851 | 37 | ||||||||||||||||||||||||||||
Debt Underwriting | 468 | 831 | 864 | 771 | 708 | (44 | ) | (34 | ) | 2,163 | 1,929 | 12 | ||||||||||||||||||||||||||||
Total Investment Banking Fees | 1,330 | 1,900 | 1,729 | 1,580 | 1,419 | (30 | ) | (6 | ) | 4,959 | 3,957 | 25 | ||||||||||||||||||||||||||||
Fixed Income Markets | 687 | 2,445 | 2,592 | 2,061 | 2,468 | (72 | ) | (72 | ) | 5,724 | 6,675 | (14 | ) | |||||||||||||||||||||||||||
Equity Markets | 537 | 1,249 | 1,539 | 958 | 658 | (57 | ) | (18 | ) | 3,325 | 2,500 | 33 | ||||||||||||||||||||||||||||
Credit Portfolio | 392 | 204 | 394 | 261 | 271 | 92 | 45 | 990 | 841 | 18 | ||||||||||||||||||||||||||||||
Total Net Revenue | $ | 2,946 | $ | 5,798 | $ | 6,254 | $ | 4,860 | $ | 4,816 | (49 | ) | (39 | ) | $ | 14,998 | $ | 13,973 | 7 | |||||||||||||||||||||
REVENUE BY REGION | ||||||||||||||||||||||||||||||||||||||||
Americas | $ | 1,016 | $ | 2,655 | $ | 3,366 | $ | 2,535 | $ | 2,803 | (62 | ) | (64 | ) | $ | 7,037 | $ | 7,066 | – | |||||||||||||||||||||
Europe/Middle East/Africa | 1,389 | 2,327 | 2,251 | 1,886 | 1,714 | (40 | ) | (19 | ) | 5,967 | 5,535 | 8 | ||||||||||||||||||||||||||||
Asia/Pacific | 541 | 816 | 637 | 439 | 299 | (34 | ) | 81 | 1,994 | 1,372 | 45 | |||||||||||||||||||||||||||||
Total Net Revenue | $ | 2,946 | $ | 5,798 | $ | 6,254 | $ | 4,860 | $ | 4,816 | (49 | ) | (39 | ) | $ | 14,998 | $ | 13,973 | 7 | |||||||||||||||||||||
(a) | The Firm adopted SFAS 157 and SFAS 159 in the first quarter of 2007. For additional information related to their impact to the Investment Bank (“IB”), see IB business segment results in the Firm’s June 30, 2007, Form 10-Q. | |
(b) | Total net revenue included tax-equivalent adjustments, primarily due to tax-exempt income from municipal bond investments and income tax credits related to affordable housing investments, of $255 million, $290 million, $152 million, $218 million, and $197 million for the quarters ended September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively, and $697 million and $584 million for year-to-date 2007 and 2006, respectively. | |
(c) | Treasury & Securities Services (“TSS”) was charged a credit reimbursement related to certain exposures managed within the Investment Bank credit portfolio on behalf of clients shared with TSS. | |
(d) | For 2006, the compensation expense to Total net revenue ratio was adjusted to present this ratio as if SFAS 123R had always been in effect. IB management believes that adjusting the Compensation expense to Total net revenue ratio for the incremental impact of adopting SFAS 123R provides a more meaningful measure of IB’s Compensation expense to Total net revenue ratio for 2006. |
Page 8
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JPMORGAN CHASE & CO. | ||
INVESTMENT BANK | ||
FINANCIAL HIGHLIGHTS, CONTINUED | ||
(in millions, except headcount, ratio and rankings data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS DATA (Average) | ||||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 710,665 | $ | 696,230 | $ | 658,724 | $ | 645,993 | $ | 626,245 | 2 | % | 13 | % | $ | 688,730 | $ | 648,101 | 6 | % | ||||||||||||||||||||
Trading Assets – Debt and Equity Instruments (a) | 372,212 | 359,387 | 335,118 | 295,317 | 283,915 | 4 | 31 | 355,708 | 268,256 | 33 | ||||||||||||||||||||||||||||||
Trading Assets – Derivative Receivables | 63,017 | 58,520 | 56,398 | 59,802 | 53,184 | 8 | 18 | 59,336 | 52,769 | 12 | ||||||||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||
Loans Retained (b) | 61,919 | 59,065 | 58,973 | 60,947 | 61,623 | 5 | – | 59,996 | 58,137 | 3 | ||||||||||||||||||||||||||||||
Loans at Fair Value & Loans Held-for-Sale (a) | 17,315 | 14,794 | 13,684 | 23,743 | 24,030 | 17 | (28 | ) | 15,278 | 21,072 | (27 | ) | ||||||||||||||||||||||||||||
Total Loans | 79,234 | 73,859 | 72,657 | 84,690 | 85,653 | 7 | (7 | ) | 75,274 | 79,209 | (5 | ) | ||||||||||||||||||||||||||||
Adjusted Assets (c) | 625,619 | 603,839 | 572,017 | 548,628 | 539,278 | 4 | 16 | 600,688 | 520,718 | 15 | ||||||||||||||||||||||||||||||
Equity | 21,000 | 21,000 | 21,000 | 21,000 | 21,000 | – | – | 21,000 | 20,670 | 2 | ||||||||||||||||||||||||||||||
Headcount | 25,691 | # | 25,356 | # | 23,892 | # | 23,729 | # | 23,447 | # | 1 | 10 | 25,691 | # | 23,447 | # | 10 | |||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS | ||||||||||||||||||||||||||||||||||||||||
Net Charge-offs (Recoveries) | $ | 67 | $ | (16 | ) | $ | (6 | ) | $ | 10 | $ | (8 | ) | NM | NM | $ | 45 | $ | (41 | ) | NM | |||||||||||||||||||
Nonperforming Assets: | ||||||||||||||||||||||||||||||||||||||||
Nonperforming Loans (d) | 265 | 72 | 92 | 231 | 420 | 268 | (37 | ) | 265 | 420 | (37 | ) | ||||||||||||||||||||||||||||
Other Nonperforming Assets | 60 | 47 | 36 | 38 | 36 | 28 | 67 | 60 | 36 | 67 | ||||||||||||||||||||||||||||||
Allowance for Credit Losses: | ||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses | 1,112 | 1,037 | 1,037 | 1,052 | 1,010 | 7 | 10 | 1,112 | 1,010 | 10 | ||||||||||||||||||||||||||||||
Allowance for Lending-Related Commitments | 568 | 487 | 310 | 305 | 292 | 17 | 95 | 568 | 292 | 95 | ||||||||||||||||||||||||||||||
Total Allowance for Credit Losses | 1,680 | 1,524 | 1,347 | 1,357 | 1,302 | 10 | 29 | 1,680 | 1,302 | 29 | ||||||||||||||||||||||||||||||
Net Charge-off (Recovery) Rate (a) (b) | 0.43 | % | (0.11 | )% | (0.04 | )% | 0.07 | % | (0.05 | )% | 0.10 | % | (0.09 | )% | ||||||||||||||||||||||||||
Allowance for Loan Losses to Average Loans (a) (b) | 1.80 | 1.76 | 1.76 | 1.73 | 1.64 | 1.85 | 1.74 | |||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Nonperforming Loans (d) | 585 | 2,206 | 1,178 | 461 | 253 | 585 | 253 | |||||||||||||||||||||||||||||||||
Nonperforming Loans to Average Loans | 0.33 | 0.10 | 0.13 | 0.27 | 0.49 | 0.35 | 0.53 | |||||||||||||||||||||||||||||||||
MARKET RISK – AVERAGE TRADING AND CREDIT PORTFOLIO VAR | ||||||||||||||||||||||||||||||||||||||||
Trading Activities: | ||||||||||||||||||||||||||||||||||||||||
Fixed Income | $ | 98 | $ | 74 | $ | 45 | $ | 51 | $ | 63 | 32 | 56 | $ | 72 | $ | 58 | 24 | |||||||||||||||||||||||
Foreign Exchange | 23 | 20 | 19 | 20 | 24 | 15 | (4 | ) | 21 | 23 | (9 | ) | ||||||||||||||||||||||||||||
Equities | 35 | 51 | 42 | 35 | 32 | (31 | ) | 9 | 43 | 29 | 48 | |||||||||||||||||||||||||||||
Commodities and Other | 28 | 40 | 34 | 35 | 46 | (30 | ) | (39 | ) | 34 | 48 | (29 | ) | |||||||||||||||||||||||||||
Diversification (e) | (70 | ) | (73 | ) | (58 | ) | (58 | ) | (82 | ) | 4 | 15 | (67 | ) | (74 | ) | 9 | |||||||||||||||||||||||
Total Trading VAR | 114 | 112 | 82 | 83 | 83 | 2 | 37 | 103 | 84 | 23 | ||||||||||||||||||||||||||||||
Credit Portfolio VAR (f) | 17 | 12 | 13 | 15 | 14 | 42 | 21 | 14 | 14 | – | ||||||||||||||||||||||||||||||
Diversification (e) | (24 | ) | (14 | ) | (12 | ) | (11 | ) | (8 | ) | (71 | ) | (200 | ) | (17 | ) | (9 | ) | (89 | ) | ||||||||||||||||||||
Total Trading and Credit Portfolio VAR | $ | 107 | $ | 110 | $ | 83 | $ | 87 | $ | 89 | (3 | ) | 20 | $ | 100 | $ | 89 | 12 | ||||||||||||||||||||||
September 30, 2007 YTD | Full Year 2006 | |||||||||||||||||||||||||||||||||||||||
Market | Market | |||||||||||||||||||||||||||||||||||||||
MARKET SHARES AND RANKINGS (g) | Share | Rankings | Share | Rankings | ||||||||||||||||||||||||||||||||||||
Global Debt, Equity and Equity-Related | 7 | % | # 2 | 7 | % | # 2 | ||||||||||||||||||||||||||||||||||
Global Syndicated Loans | 14 | % | # 1 | 14 | % | # 1 | ||||||||||||||||||||||||||||||||||
Global Long-Term Debt | 7 | % | # 2 | 6 | % | # 3 | ||||||||||||||||||||||||||||||||||
Global Equity and Equity-Related | 9 | % | # 1 | 7 | % | # 6 | ||||||||||||||||||||||||||||||||||
Global Announced M&A | 23 | % | # 4 | 23 | % | # 4 | ||||||||||||||||||||||||||||||||||
U.S. Debt, Equity and Equity-Related | 10 | % | # 2 | 9 | % | # 2 | ||||||||||||||||||||||||||||||||||
U.S. Syndicated Loans | 26 | % | # 1 | 26 | % | # 1 | ||||||||||||||||||||||||||||||||||
U.S. Long-Term Debt | 11 | % | # 2 | 12 | % | # 2 | ||||||||||||||||||||||||||||||||||
U.S. Equity and Equity-Related (h) | 11 | % | # 2 | 8 | % | # 6 | ||||||||||||||||||||||||||||||||||
U.S. Announced M&A | 26 | % | # 5 | 28 | % | # 3 |
(a) | As a result of the adoption of SFAS 159 in the first quarter of 2007, $11.7 billion of loans were reclassified to trading assets. Loans at fair value & loans held-for-sale were excluded when calculating the allowance coverage ratio and Net charge-off rate. | |
(b) | Loans retained included credit portfolio loans, leveraged leases and other accrual loans, and excluded loans at fair value. | |
(c) | Adjusted assets, a non-GAAP financial measure, equals total assets minus (1) Securities purchased under resale agreements and Securities borrowed less Securities sold, not yet purchased; (2) assets of variable interest entities (“VIEs”) consolidated under FIN 46R; (3) cash and securities segregated and on deposit for regulatory and other purposes; and (4) goodwill and intangibles. The amount of adjusted assets is presented to assist the reader in comparing the IB’s asset and capital levels to other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a company’s capital adequacy. The IB believed an adjusted asset amount that excluded the assets discussed above, which were considered to have a low risk profile, provided a more meaningful measure of balance sheet leverage in the securities industry. | |
(d) | Nonperforming loans included loans held-for-sale of $75 million, $25 million, $4 million, $3 million, and $21 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively, which were excluded from the allowance coverage ratios. Nonperforming loans excluded distressed loans held-for-sale purchased as part of IB’s proprietary activities and assets classified as trading assets. Loans elected under the fair value option and classified within trading assets are also excluded from nonperforming loans. | |
(e) | Average VARs were less than the sum of the VARs of their market risk components, which was due to risk offsets resulting from portfolio diversification. The diversification effect reflected the fact that the risks were not perfectly correlated. The risk of a portfolio of positions is usually less than the sum of the risks of the positions themselves. | |
(f) | Includes VAR on derivative credit valuation adjustments, hedges of the credit valuation adjustment and mark-to-market hedges of the retained loan portfolio, which were all reported in Principal Transactions revenue. The VAR did not include the retained loan portfolio. | |
(g) | Source: Thomson Financial Securities data. Global announced M&A was based on rank value; all other rankings were based upon proceeds, with full credit to each book manager/equal if joint. Because of joint assignments, market share of all participants will add up to more than 100%. | |
(h) | References U.S. domiciled equity and equity-related transactions, per Thomson Financial. |
Page 9
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JPMORGAN CHASE & CO. | ||
RETAIL FINANCIAL SERVICES | ||
FINANCIAL HIGHLIGHTS | ||
(in millions, except ratio and headcount data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||||||||||
Lending & Deposit Related Fees | $ | 492 | $ | 470 | $ | 423 | $ | 430 | $ | 406 | 5 | % | 21 | % | $ | 1,385 | $ | 1,167 | 19 | % | ||||||||||||||||||||
Asset Management, Administration and Commissions | 336 | 344 | 263 | 293 | 326 | (2 | ) | 3 | 943 | 1,129 | (16 | ) | ||||||||||||||||||||||||||||
Securities Gains (Losses) | – | – | – | (5 | ) | (7 | ) | – | NM | – | (52 | ) | NM | |||||||||||||||||||||||||||
Mortgage Fees and Related Income (a) | 229 | 495 | 482 | 111 | 67 | (54 | ) | 242 | 1,206 | 507 | 138 | |||||||||||||||||||||||||||||
Credit Card Income | 167 | 163 | 142 | 143 | 136 | 2 | 23 | 472 | 380 | 24 | ||||||||||||||||||||||||||||||
All Other Income | 296 | 212 | 179 | 176 | 170 | 40 | 74 | 687 | 381 | 80 | ||||||||||||||||||||||||||||||
Noninterest Revenue | 1,520 | 1,684 | 1,489 | 1,148 | 1,098 | (10 | ) | 38 | 4,693 | 3,512 | 34 | |||||||||||||||||||||||||||||
Net Interest Income | 2,681 | 2,673 | 2,617 | 2,580 | 2,457 | – | 9 | 7,971 | 7,585 | 5 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE | 4,201 | 4,357 | 4,106 | 3,728 | 3,555 | (4 | ) | 18 | 12,664 | 11,097 | 14 | |||||||||||||||||||||||||||||
Provision for Credit Losses | 680 | 587 | 292 | 262 | 114 | 16 | 496 | 1,559 | 299 | 421 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||||||||||||||||||||||
Compensation Expense (a) | 1,087 | 1,104 | 1,065 | 950 | 886 | (2 | ) | 23 | 3,256 | 2,707 | 20 | |||||||||||||||||||||||||||||
Noncompensation Expense (a) | 1,265 | 1,264 | 1,224 | 1,211 | 1,142 | – | 11 | 3,753 | 3,595 | 4 | ||||||||||||||||||||||||||||||
Amortization of Intangibles | 117 | 116 | 118 | 130 | 111 | 1 | 5 | 351 | 334 | 5 | ||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE | 2,469 | 2,484 | 2,407 | 2,291 | 2,139 | (1 | ) | 15 | 7,360 | 6,636 | 11 | |||||||||||||||||||||||||||||
Income Before Income Tax Expense | 1,052 | 1,286 | 1,407 | 1,175 | 1,302 | (18 | ) | (19 | ) | 3,745 | 4,162 | (10 | ) | |||||||||||||||||||||||||||
Income Tax Expense | 413 | 501 | 548 | 457 | 556 | (18 | ) | (26 | ) | 1,462 | 1,667 | (12 | ) | |||||||||||||||||||||||||||
NET INCOME | $ | 639 | $ | 785 | $ | 859 | $ | 718 | $ | 746 | (19 | ) | (14 | ) | $ | 2,283 | $ | 2,495 | (8 | ) | ||||||||||||||||||||
FINANCIAL RATIOS | ||||||||||||||||||||||||||||||||||||||||
ROE | 16 | % | 20 | % | 22 | % | 18 | % | 21 | % | 19 | % | 24 | % | ||||||||||||||||||||||||||
Overhead Ratio (a) | 59 | 57 | 59 | 61 | 60 | 58 | 60 | |||||||||||||||||||||||||||||||||
Overhead Ratio Excluding Core Deposit Intangibles (a) (b) | 56 | 54 | 56 | 58 | 57 | 55 | 57 | |||||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS (Ending) | ||||||||||||||||||||||||||||||||||||||||
Assets | $ | 216,754 | $ | 217,421 | $ | 212,997 | $ | 237,887 | $ | 227,056 | – | (5 | ) | $ | 216,754 | $ | 227,056 | (5 | ) | |||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||
Loans Retained | 172,498 | 166,992 | 163,462 | 180,760 | 188,549 | 3 | (9 | ) | 172,498 | 188,549 | (9 | ) | ||||||||||||||||||||||||||||
Loans at Fair Value & Loans Held-for-Sale (c) | 18,274 | 23,501 | 25,006 | 32,744 | 17,005 | (22 | ) | 7 | 18,274 | 17,005 | 7 | |||||||||||||||||||||||||||||
Total Loans | 190,772 | 190,493 | 188,468 | 213,504 | 205,554 | – | (7 | ) | 190,772 | 205,554 | (7 | ) | ||||||||||||||||||||||||||||
Deposits | 216,135 | 217,689 | 221,840 | 214,081 | 198,260 | (1 | ) | 9 | 216,135 | 198,260 | 9 | |||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS (Average) | ||||||||||||||||||||||||||||||||||||||||
Assets | $ | 214,852 | $ | 216,692 | $ | 217,135 | $ | 235,301 | $ | 225,307 | (1 | ) | (5 | ) | $ | 216,218 | $ | 230,307 | (6 | ) | ||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||
Loans Retained | 168,495 | 165,136 | 162,744 | 190,426 | 189,313 | 2 | (11 | ) | 165,479 | 186,852 | (11 | ) | ||||||||||||||||||||||||||||
Loans at Fair Value & Loans Held-for-Sale (c) | 19,560 | 25,166 | 28,235 | 21,228 | 13,994 | (22 | ) | 40 | 24,289 | 14,411 | 69 | |||||||||||||||||||||||||||||
Total Loans | 188,055 | 190,302 | 190,979 | 211,654 | 203,307 | (1 | ) | (8 | ) | 189,768 | 201,263 | (6 | ) | |||||||||||||||||||||||||||
Deposits | 216,904 | 219,171 | 216,933 | 211,915 | 198,967 | (1 | ) | 9 | 217,669 | 197,491 | 10 | |||||||||||||||||||||||||||||
Equity | 16,000 | 16,000 | 16,000 | 16,000 | 14,300 | – | 12 | 16,000 | 14,167 | 13 | ||||||||||||||||||||||||||||||
Headcount | 68,528 | # | 68,254 | # | 67,247 | # | 65,570 | # | 61,915 | # | – | 11 | 68,528 | # | 61,915 | # | 11 | |||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS | ||||||||||||||||||||||||||||||||||||||||
Net Charge-offs | $ | 350 | $ | 270 | $ | 185 | $ | 214 | �� | $ | 128 | 30 | 173 | $ | 805 | $ | 362 | 122 | ||||||||||||||||||||||
Nonperforming Loans (d) | 1,991 | 1,760 | 1,655 | 1,677 | 1,404 | 13 | 42 | 1,991 | 1,404 | 42 | ||||||||||||||||||||||||||||||
Nonperforming Assets | 2,404 | 2,099 | 1,910 | 1,902 | 1,595 | 15 | 51 | 2,404 | 1,595 | 51 | ||||||||||||||||||||||||||||||
Allowance for Loan Losses | 2,105 | 1,772 | 1,453 | 1,392 | 1,306 | 19 | 61 | 2,105 | 1,306 | 61 | ||||||||||||||||||||||||||||||
Net Charge-off Rate (e) | 0.82 | % | 0.66 | % | 0.46 | % | 0.45 | % | 0.27 | % | 0.65 | % | 0.26 | % | ||||||||||||||||||||||||||
Allowance for Loan Losses to Ending Loans (e) | 1.22 | 1.06 | 0.89 | 0.77 | 0.69 | 1.22 | 0.69 | |||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Nonperforming Loans (e) | 107 | 115 | 94 | 89 | 95 | 107 | 95 | |||||||||||||||||||||||||||||||||
Nonperforming Loans to Total Loans | 1.04 | 0.92 | 0.88 | �� | 0.79 | 0.68 | 1.04 | 0.68 |
(a) | The Firm adopted SFAS 159 in the first quarter of 2007. As a result, certain loan origination costs have been classified as expense (previously netted against revenue) for the current-year quarters and nine months ended September 30, 2007. | |
(b) | Retail Financial Services uses the overhead ratio excluding the amortization of core deposit intangibles (“CDI”), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation results in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this method would result in an improving overhead ratio over time, all things remaining equal. This non-GAAP ratio excluded Regional Banking’s core deposit intangible amortization expense related to The Bank of New York transaction and the Bank One merger of $116 million, $115 million, $116 million, $130 million, and $109 million for the quarters ending September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively, and $347 million and $328 million for year-to-date 2007 and 2006, respectively. | |
(c) | Loans included prime mortgage loans originated with the intent to sell, which, for new originations on or after January 1, 2007, were accounted for at fair value under SFAS 159. These loans, classified as Trading assets on the Consolidated balance sheets, totaled $14.4 billion, $15.2 billion, and $11.6 billion at September 30, 2007, June 30, 2007 and March 31, 2007, respectively. Average loans included $14.1 billion, $13.5 billion and $6.5 billion for the quarters ended September 30, 2007, June 30, 2007 and March 31, 2007, respectively, and $11.4 billion for the nine months ended September 30, 2007. | |
(d) | Nonperforming loans included Loans held-for-sale and Loans accounted for at fair value under SFAS 159 of $17 million, $217 million, $112 million, $116 million, and $24 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. Certain of these loans are classified as Trading assets on the Consolidated balance sheet. | |
(e) | Loans held-for-sale and Loans accounted for at fair value under SFAS 159 were excluded when calculating the allowance coverage ratio and the Net charge-off rate. |
Page 10
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JPMORGAN CHASE & CO. | ||
RETAIL FINANCIAL SERVICES | ||
FINANCIAL HIGHLIGHTS, CONTINUED | ||
(in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
REGIONAL BANKING | ||||||||||||||||||||||||||||||||||||||||
Noninterest Revenue | $ | 1,013 | $ | 977 | $ | 793 | $ | 678 | $ | 855 | 4 | % | 18 | % | $ | 2,783 | $ | 2,526 | 10 | % | ||||||||||||||||||||
Net Interest Income | 2,325 | 2,296 | 2,299 | 2,229 | 2,107 | 1 | 10 | 6,920 | 6,539 | 6 | ||||||||||||||||||||||||||||||
Total Net Revenue | 3,338 | 3,273 | 3,092 | 2,907 | 2,962 | 2 | 13 | 9,703 | 9,065 | 7 | ||||||||||||||||||||||||||||||
Provision for Credit Losses | 574 | 494 | 233 | 165 | 53 | 16 | NM | 1,301 | 189 | NM | ||||||||||||||||||||||||||||||
Noninterest Expense | 1,760 | 1,749 | 1,729 | 1,730 | 1,611 | 1 | 9 | 5,238 | 5,095 | 3 | ||||||||||||||||||||||||||||||
Income Before Income Tax Expense | 1,004 | 1,030 | 1,130 | 1,012 | 1,298 | (3 | ) | (23 | ) | 3,164 | 3,781 | (16 | ) | |||||||||||||||||||||||||||
Net Income | 611 | 629 | 690 | 619 | 744 | (3 | ) | (18 | ) | 1,930 | 2,265 | (15 | ) | |||||||||||||||||||||||||||
ROE | 21 | % | 21 | % | 24 | % | 21 | % | 29 | % | 22 | % | 30 | % | ||||||||||||||||||||||||||
Overhead Ratio | 53 | 53 | 56 | 60 | 54 | 54 | 56 | |||||||||||||||||||||||||||||||||
Overhead Ratio Excluding Core Deposit Intangibles (a) | 49 | 50 | 52 | 55 | 51 | 50 | 53 | |||||||||||||||||||||||||||||||||
BUSINESS METRICS (in billions) | ||||||||||||||||||||||||||||||||||||||||
Home Equity Origination Volume | $ | 11.2 | $ | 14.6 | $ | 12.7 | $ | 12.9 | $ | 13.3 | (23 | ) | (16 | ) | $ | 38.5 | $ | 39.0 | (1 | ) | ||||||||||||||||||||
End of Period Loans Owned: | ||||||||||||||||||||||||||||||||||||||||
Home Equity | $ | 93.0 | $ | 91.0 | $ | 87.7 | $ | 85.7 | $ | 80.4 | 2 | 16 | $ | 93.0 | $ | 80.4 | 16 | |||||||||||||||||||||||
Mortgage (b) | 12.3 | 8.8 | 9.2 | 30.1 | 46.6 | 40 | (74 | ) | 12.3 | 46.6 | (74 | ) | ||||||||||||||||||||||||||||
Business Banking | 14.9 | 14.6 | 14.3 | 14.1 | 13.1 | 2 | 14 | 14.9 | 13.1 | 14 | ||||||||||||||||||||||||||||||
Education | 10.2 | 10.2 | 11.1 | 10.3 | 9.4 | – | 9 | 10.2 | 9.4 | 9 | ||||||||||||||||||||||||||||||
Other Loans (c) | 2.4 | 2.5 | 2.7 | 2.7 | 2.2 | (4 | ) | 9 | 2.4 | 2.2 | 9 | |||||||||||||||||||||||||||||
Total End of Period Loans | 132.8 | 127.1 | 125.0 | 142.9 | 151.7 | 4 | (12 | ) | 132.8 | 151.7 | (12 | ) | ||||||||||||||||||||||||||||
End of Period Deposits: | ||||||||||||||||||||||||||||||||||||||||
Checking | $ | 64.5 | $ | 67.3 | $ | 69.3 | $ | 68.7 | $ | 59.8 | (4 | ) | 8 | $ | 64.5 | $ | 59.8 | 8 | ||||||||||||||||||||||
Savings | 95.7 | 97.7 | 100.1 | 92.4 | 86.9 | (2 | ) | 10 | 95.7 | 86.9 | 10 | |||||||||||||||||||||||||||||
Time and Other | 46.5 | 41.9 | 42.2 | 43.3 | 41.5 | 11 | 12 | 46.5 | 41.5 | 12 | ||||||||||||||||||||||||||||||
Total End of Period Deposits | 206.7 | 206.9 | 211.6 | 204.4 | 188.2 | – | 10 | 206.7 | 188.2 | 10 | ||||||||||||||||||||||||||||||
Average Loans Owned: | ||||||||||||||||||||||||||||||||||||||||
Home Equity | $ | 91.8 | $ | 89.2 | $ | 86.3 | $ | 84.2 | $ | 78.8 | 3 | 16 | $ | 88.8 | $ | 76.4 | 16 | |||||||||||||||||||||||
Mortgage Loans (b) | 9.9 | 8.8 | 8.9 | 40.8 | 47.8 | 13 | (79 | ) | 9.5 | 46.5 | (80 | ) | ||||||||||||||||||||||||||||
Business Banking | 14.8 | 14.5 | 14.3 | 14.0 | 13.0 | 2 | 14 | 14.5 | 12.9 | 12 | ||||||||||||||||||||||||||||||
Education | 9.8 | 10.5 | 11.0 | 9.9 | 8.9 | (7 | ) | 10 | 10.4 | 7.7 | 35 | |||||||||||||||||||||||||||||
Other Loans (c) | 2.4 | 2.4 | 3.0 | 2.7 | 2.2 | – | 9 | 2.6 | 2.6 | – | ||||||||||||||||||||||||||||||
Total Average Loans (d) | 128.7 | 125.4 | 123.5 | 151.6 | 150.7 | 3 | (15 | ) | 125.8 | 146.1 | (14 | ) | ||||||||||||||||||||||||||||
Average Deposits: | ||||||||||||||||||||||||||||||||||||||||
Checking | $ | 64.9 | $ | 67.2 | $ | 67.3 | $ | 65.5 | $ | 60.3 | (3 | ) | 8 | $ | 66.5 | $ | 61.9 | 7 | ||||||||||||||||||||||
Savings | 97.1 | 98.4 | 96.7 | 92.2 | 88.1 | (1 | ) | 10 | 97.4 | 89.1 | 9 | |||||||||||||||||||||||||||||
Time and Other | 43.3 | 41.7 | 42.5 | 43.0 | 39.0 | 4 | 11 | 42.5 | 35.6 | 19 | ||||||||||||||||||||||||||||||
Total Average Deposits | 205.3 | 207.3 | 206.5 | 200.7 | 187.4 | (1 | ) | 10 | 206.4 | 186.6 | 11 | |||||||||||||||||||||||||||||
Average Assets | 140.6 | 137.7 | 135.9 | 162.5 | 159.1 | 2 | (12 | ) | 138.1 | 160.3 | (14 | ) | ||||||||||||||||||||||||||||
Average Equity | 11.8 | 11.8 | 11.8 | 11.9 | 10.2 | – | 16 | 11.8 | 10.1 | 17 |
Page 11
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JPMORGAN CHASE & CO. | ||
RETAIL FINANCIAL SERVICES | ||
FINANCIAL HIGHLIGHTS, CONTINUED | ||
(in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
REGIONAL BANKING (continued) | ||||||||||||||||||||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS | ||||||||||||||||||||||||||||||||||||||||
30+ Day Delinquency Rate (e) (f) | 2.39 | % | 1.88 | % | 1.84 | % | 2.02 | % | 1.57 | % | 2.39 | % | 1.57 | % | ||||||||||||||||||||||||||
Net Charge-offs | ||||||||||||||||||||||||||||||||||||||||
Home Equity | $ | 150 | $ | 98 | $ | 68 | $ | 51 | $ | 29 | 53 | % | 417 | % | $ | 316 | $ | 92 | 243 | % | ||||||||||||||||||||
Mortgage | 40 | 26 | 20 | 21 | 14 | 54 | 186 | 86 | 35 | 146 | ||||||||||||||||||||||||||||||
Business Banking | 33 | 30 | 25 | 38 | 19 | 10 | 74 | 88 | 53 | 66 | ||||||||||||||||||||||||||||||
Other Loans | 23 | 52 | 13 | 27 | 1 | (56 | ) | NM | 88 | 21 | 319 | |||||||||||||||||||||||||||||
Total Net Charge-offs | 246 | 206 | 126 | 137 | 63 | 19 | 290 | 578 | 201 | 188 | ||||||||||||||||||||||||||||||
Net Charge-off Rate | ||||||||||||||||||||||||||||||||||||||||
Home Equity | 0.65 | % | 0.44 | % | 0.32 | % | 0.24 | % | 0.15 | % | 0.48 | % | 0.16 | % | ||||||||||||||||||||||||||
Mortgage | 1.60 | 1.19 | 0.91 | 0.20 | 0.12 | 1.21 | 0.10 | |||||||||||||||||||||||||||||||||
Business Banking | 0.88 | 0.83 | 0.71 | 1.08 | 0.58 | 0.81 | 0.55 | |||||||||||||||||||||||||||||||||
Other Loans | 1.01 | 2.32 | 0.55 | 1.15 | 0.05 | 1.28 | 0.36 | |||||||||||||||||||||||||||||||||
Total Net Charge-off Rate (d) | 0.78 | 0.68 | 0.43 | 0.37 | 0.17 | 0.63 | 0.19 | |||||||||||||||||||||||||||||||||
Nonperforming Assets (g) (h) | $ | 2,248 | $ | 1,968 | $ | 1,770 | $ | 1,725 | $ | 1,421 | 14 | 58 | $ | 2,248 | $ | 1,421 | 58 | |||||||||||||||||||||||
RETAIL BRANCH BUSINESS METRICS | ||||||||||||||||||||||||||||||||||||||||
Investment Sales Volume | $ | 4,346 | $ | 5,117 | $ | 4,783 | $ | 4,101 | $ | 3,536 | (15 | ) | 23 | $ | 14,246 | $ | 10,781 | 32 | ||||||||||||||||||||||
Number of: | ||||||||||||||||||||||||||||||||||||||||
Branches | 3,096 | # | 3,089 | # | 3,071 | # | 3,079 | # | 2,677 | # | 7 | # | 419 | # | 3,096 | # | 2,677 | # | 419 | # | ||||||||||||||||||||
ATMs | 8,943 | 8,649 | 8,560 | 8,506 | 7,825 | 294 | 1,118 | 8,943 | 7,825 | 1,118 | ||||||||||||||||||||||||||||||
Personal Bankers (i) | 9,503 | 9,025 | 7,846 | 7,573 | 7,484 | 478 | 2,019 | 9,503 | 7,484 | 2,019 | ||||||||||||||||||||||||||||||
Sales Specialists (i) | 4,025 | 3,915 | 3,712 | 3,614 | 3,471 | 110 | 554 | 4,025 | 3,471 | 554 | ||||||||||||||||||||||||||||||
Active Online Customers (in thousands) (j) | 5,706 | 5,448 | 5,295 | 4,909 | 4,717 | 258 | 989 | 5,706 | 4,717 | 989 | ||||||||||||||||||||||||||||||
Checking Accounts (in thousands) | 10,644 | 10,356 | 10,158 | 9,995 | 9,270 | 288 | 1,374 | 10,644 | 9,270 | 1,374 | ||||||||||||||||||||||||||||||
MORTGAGE BANKING | ||||||||||||||||||||||||||||||||||||||||
Production Revenue (k) | $ | 176 | $ | 463 | $ | 400 | $ | 215 | $ | 197 | (62 | )% | (11 | )% | $ | 1,039 | $ | 618 | 68 | % | ||||||||||||||||||||
Net Mortgage Servicing Revenue: | ||||||||||||||||||||||||||||||||||||||||
Loan Servicing Revenue | 629 | 615 | 601 | 598 | 579 | 2 | 9 | 1,845 | 1,702 | 8 | ||||||||||||||||||||||||||||||
Changes in MSR Asset Fair Value: | ||||||||||||||||||||||||||||||||||||||||
Due to Inputs or Assumptions in Model | (810 | ) | 952 | 108 | 38 | (1,075 | ) | NM | 25 | 250 | 127 | 97 | ||||||||||||||||||||||||||||
Other Changes in Fair Value | (377 | ) | (383 | ) | (378 | ) | (372 | ) | (327 | ) | 2 | (15 | ) | (1,138 | ) | (1,068 | ) | (7 | ) | |||||||||||||||||||||
Total Changes in MSR Asset Fair Value | (1,187 | ) | 569 | (270 | ) | (334 | ) | (1,402 | ) | NM | 15 | (888 | ) | (941 | ) | 6 | ||||||||||||||||||||||||
Derivative Valuation Adjustments and Other | 788 | (1,014 | ) | (127 | ) | (69 | ) | 824 | NM | (4 | ) | (353 | ) | (475 | ) | 26 | ||||||||||||||||||||||||
Total Net Mortgage Servicing Revenue | 230 | 170 | 204 | 195 | 1 | 35 | NM | 604 | 286 | 111 | ||||||||||||||||||||||||||||||
Total Net Revenue | 406 | 633 | 604 | 410 | 198 | (36 | ) | 105 | 1,643 | 904 | 82 | |||||||||||||||||||||||||||||
Noninterest Expense (k) | 485 | 516 | 468 | 354 | 334 | (6 | ) | 45 | 1,469 | 987 | 49 | |||||||||||||||||||||||||||||
Income (Loss) Before Income Tax Expense | (79 | ) | 117 | 136 | 56 | (136 | ) | NM | 42 | 174 | (83 | ) | NM | |||||||||||||||||||||||||||
Net Income (Loss) | (48 | ) | 71 | 84 | 34 | (83 | ) | NM | 42 | 107 | (51 | ) | NM | |||||||||||||||||||||||||||
ROE | NM | 14 | % | 17 | % | 8 | % | NM | 7 | % | NM | |||||||||||||||||||||||||||||
Business Metrics (in billions) | ||||||||||||||||||||||||||||||||||||||||
Third Party Mortgage Loans Serviced (Ending) | $ | 600.0 | $ | 572.4 | $ | 546.1 | $ | 526.7 | $ | 510.7 | 5 | 17 | $ | 600.0 | $ | 510.7 | 17 | |||||||||||||||||||||||
MSR Net Carrying Value (Ending) | 9.1 | 9.5 | 7.9 | 7.5 | 7.4 | (4 | ) | 23 | 9.1 | 7.4 | 23 | |||||||||||||||||||||||||||||
Avg Mortgage Loans at Fair Value & Loans Held-for-Sale (l) | 16.4 | 21.3 | 23.8 | 17.9 | 10.5 | (23 | ) | 56 | 20.4 | 11.1 | 84 | |||||||||||||||||||||||||||||
Average Assets | 31.4 | 35.6 | 38.0 | 29.8 | 22.4 | (12 | ) | 40 | 35.0 | 24.5 | 43 | |||||||||||||||||||||||||||||
Average Equity | 2.0 | 2.0 | 2.0 | 1.7 | 1.7 | – | 18 | 2.0 | 1.7 | 18 | ||||||||||||||||||||||||||||||
Mortgage Origination Volume by Channel (in billions) | ||||||||||||||||||||||||||||||||||||||||
Retail | $ | 11.1 | $ | 13.6 | $ | 10.9 | $ | 10.5 | $ | 10.1 | (18 | ) | 10 | $ | 35.6 | $ | 30.0 | 19 | ||||||||||||||||||||||
Wholesale | 9.8 | 12.8 | 9.9 | 9.0 | 7.7 | (23 | ) | 27 | 32.5 | 23.8 | 37 | |||||||||||||||||||||||||||||
Correspondent | 7.2 | 6.4 | 4.8 | 3.5 | 2.7 | 13 | 167 | 18.4 | 9.8 | 88 | ||||||||||||||||||||||||||||||
CNT (Including Negotiated Transactions) | 11.1 | 11.3 | 10.5 | 6.8 | 8.5 | (2 | ) | 31 | 32.9 | 25.8 | 28 | |||||||||||||||||||||||||||||
Total (m) | 39.2 | 44.1 | 36.1 | 29.8 | 29.0 | (11 | ) | 35 | 119.4 | 89.4 | 34 | |||||||||||||||||||||||||||||
AUTO FINANCE | ||||||||||||||||||||||||||||||||||||||||
Noninterest Revenue | $ | 140 | $ | 138 | $ | 131 | $ | 124 | $ | 110 | 1 | 27 | $ | 409 | $ | 244 | 68 | |||||||||||||||||||||||
Net Interest Income | 307 | 312 | 279 | 287 | 285 | (2 | ) | 8 | 898 | 884 | 2 | |||||||||||||||||||||||||||||
Total Net Revenue | 447 | 450 | 410 | 411 | 395 | (1 | ) | 13 | 1,307 | 1,128 | 16 | |||||||||||||||||||||||||||||
Provision for Credit Losses | 96 | 92 | 59 | 97 | 61 | 4 | 57 | 247 | 110 | 125 | ||||||||||||||||||||||||||||||
Noninterest Expense | 224 | 219 | 210 | 207 | 194 | 2 | 15 | 653 | 554 | 18 | ||||||||||||||||||||||||||||||
Income Before Income Tax Expense | 127 | 139 | 141 | 107 | 140 | (9 | ) | (9 | ) | 407 | 464 | (12 | ) | |||||||||||||||||||||||||||
Net Income | 76 | 85 | 85 | 65 | 85 | (11 | ) | (11 | ) | 246 | 281 | (12 | ) | |||||||||||||||||||||||||||
ROE | 14 | % | 15 | % | 16 | % | 11 | % | 14 | % | 15 | % | 16 | % | ||||||||||||||||||||||||||
ROA | 0.70 | 0.79 | 0.80 | 0.60 | 0.77 | 0.76 | 0.82 |
Page 12
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JPMORGAN CHASE & CO. | ||
RETAIL FINANCIAL SERVICES | ||
FINANCIAL HIGHLIGHTS, CONTINUED | ||
(in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
AUTO FINANCE (continued) | ||||||||||||||||||||||||||||||||||||||||
Business Metrics (in billions) | ||||||||||||||||||||||||||||||||||||||||
Auto Origination Volume | $ | 5.2 | $ | 5.3 | $ | 5.2 | $ | 5.0 | $ | 5.5 | (2 | )% | (5 | )% | $ | 15.7 | $ | 14.3 | 10 | % | ||||||||||||||||||||
End-of-Period Loans and Lease Related Assets | ||||||||||||||||||||||||||||||||||||||||
Loans Outstanding | $ | 40.3 | $ | 40.4 | $ | 39.7 | $ | 39.3 | $ | 38.1 | – | 6 | $ | 40.3 | $ | 38.1 | 6 | |||||||||||||||||||||||
Lease Financing Receivables | 0.6 | 0.8 | 1.2 | 1.7 | 2.2 | (25 | ) | (73 | ) | 0.6 | 2.2 | (73 | ) | |||||||||||||||||||||||||||
Operating Lease Assets | 1.8 | 1.8 | 1.7 | 1.6 | 1.5 | – | 20 | 1.8 | 1.5 | 20 | ||||||||||||||||||||||||||||||
Total End-of-Period Loans and Lease Related Assets | 42.7 | 43.0 | 42.6 | 42.6 | 41.8 | (1 | ) | 2 | 42.7 | 41.8 | 2 | |||||||||||||||||||||||||||||
Average Loans and Lease Related Assets | ||||||||||||||||||||||||||||||||||||||||
Loans Outstanding (n) | $ | 39.9 | $ | 40.1 | $ | 39.4 | $ | 38.7 | $ | 38.9 | – | 3 | $ | 39.8 | $ | 40.1 | (1 | ) | ||||||||||||||||||||||
Lease Financing Receivables | 0.7 | 1.0 | 1.5 | 1.9 | 2.5 | (30 | ) | (72 | ) | 1.1 | 3.2 | (66 | ) | |||||||||||||||||||||||||||
Operating Lease Assets | 1.8 | 1.7 | 1.6 | 1.5 | 1.4 | 6 | 29 | 1.7 | 1.2 | 42 | ||||||||||||||||||||||||||||||
Total Average Loans and Lease Related Assets | 42.4 | 42.8 | 42.5 | 42.1 | 42.8 | (1 | ) | (1 | ) | 42.6 | 44.5 | (4 | ) | |||||||||||||||||||||||||||
Average Assets | 42.9 | 43.4 | 43.2 | 43.1 | 43.8 | (1 | ) | (2 | ) | 43.1 | 45.6 | (5 | ) | |||||||||||||||||||||||||||
Average Equity | 2.2 | 2.2 | 2.2 | 2.4 | 2.4 | – | (8 | ) | 2.2 | 2.4 | (8 | ) | ||||||||||||||||||||||||||||
Credit Quality Statistics | ||||||||||||||||||||||||||||||||||||||||
30+ Day Delinquency Rate | 1.65 | % | 1.43 | % | 1.33 | % | 1.72 | % | 1.61 | % | 1.65 | % | 1.61 | % | ||||||||||||||||||||||||||
Net Charge-offs | ||||||||||||||||||||||||||||||||||||||||
Loans | $ | 98 | $ | 62 | $ | 58 | $ | 76 | $ | 63 | 58 | 56 | $ | 218 | $ | 155 | 41 | |||||||||||||||||||||||
Lease Receivables | 1 | 1 | 1 | 1 | 2 | – | (50 | ) | 3 | 6 | (50 | ) | ||||||||||||||||||||||||||||
Total Net Charge-offs | 99 | 63 | 59 | 77 | 65 | 57 | 52 | 221 | 161 | 37 | ||||||||||||||||||||||||||||||
Net Charge-off Rate | ||||||||||||||||||||||||||||||||||||||||
Loans (n) | 0.97 | % | 0.62 | % | 0.60 | % | 0.78 | % | 0.66 | % | 0.73 | % | 0.53 | % | ||||||||||||||||||||||||||
Lease Receivables | 0.57 | 0.40 | 0.27 | 0.21 | 0.32 | 0.36 | 0.25 | |||||||||||||||||||||||||||||||||
Total Net Charge-off Rate (n) | 0.97 | 0.61 | 0.59 | 0.75 | 0.64 | 0.72 | 0.51 | |||||||||||||||||||||||||||||||||
Nonperforming Assets | $ | 156 | $ | 131 | $ | 140 | $ | 177 | $ | 174 | 19 | (10 | ) | $ | 156 | $ | 174 | (10 | ) |
(a) | Regional Banking uses the overhead ratio excluding the amortization of core deposit intangibles (“CDI”), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation results in a higher overhead ratio in the earlier years and a lower overhead ratio in later years; this inclusion would result in an improving overhead ratio over time, all things remaining equal. This non-GAAP ratio excluded Regional Banking’s core deposit intangible amortization expense related to The Bank of New York transaction and the Bank One merger of $116 million, $115 million, $116 million, $130 million, and $109 million for the quarters ended September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, and $347 million and $328 million for year-to-date 2007 and 2006, respectively. | |
(b) | As of January 1, 2007, $19.4 billion of held-for-investment prime mortgage loans were transferred from Retail Financial Services (“RFS”) to Treasury within the Corporate segment for risk management and reporting purposes. The transfer had no impact on the financial results of Regional Banking. Balances reported for current-year quarter ends primarily reflected subprime mortgage loans owned. | |
(c) | Included commercial loans derived from community development activities and, prior to July 1, 2006, insurance policy loans. | |
(d) | Average loans included loans held-for-sale of $3.2 billion, $3.9 billion, $4.4 billion, $3.3 billion, and $2.5 billion for the quarters ended September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively, and $3.8 billion and $2.6 billion for year-to-date 2007 and 2006, respectively. These amounts were excluded when calculating the Net charge-off rate. | |
(e) | Excluded delinquencies related to loans eligible for repurchase as well as loans repurchased from Governmental National Mortgage Association (“GNMA”) pools that are insured by U.S. government agencies and U.S. government-sponsored enterprises of $979 million, $879 million, $975 million, $960 million, and $880 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(f) | Excluded loans that are 30 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program of $590 million, $523 million, $519 million, $464 million, and $462 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. These amounts are excluded as reimbursement is proceeding normally. | |
(g) | Excluded nonperforming assets related to (1) loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by U.S. government agencies and U.S. government-sponsored enterprises of $1.3 billion, $1.2 billion, $1.3 billion, $1.2 billion, and $1.1 billion at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively, and (2) education loans that are 90 days past due and still accruing, which were insured by U.S. government agencies under the Federal Family Education Loan Program of $241 million, $200 million, $178 million, $219 million, and $189 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. These amounts for GNMA and education loans are excluded, as reimbursement is proceeding normally. | |
(h) | Nonperforming assets included loans held-for-sale and loans accounted for at fair value under SFAS 159 related to mortgage banking activities of $17 million, $217 million, $79 million, $11 million, and $3 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. | |
(i) | Employees acquired as part of The Bank of New York transaction are included beginning June 30, 2007. This transaction was completed on October 1, 2006. | |
(j) | During the quarter ended June 30, 2007, RFS changed the methodology for determining active online customers to include all individual RFS customers with one or more online accounts that have been active within 90 days of period end, including customers who also have online accounts with Card Services. Prior periods have been restated to conform to this new methodology. | |
(k) | The Firm adopted SFAS 159 in the first quarter of 2007. As a result, certain loan origination costs have been classified as expense (previously netted against revenue) for the 2007 quarters and year-to-date period. | |
(l) | Included $14.1 billion, $13.5 billion and $6.5 billion of prime mortgage loans at fair value for the quarters ended September 30, 2007, June 30, 2007, and March 31, 2007, respectively, and $11.4 billion for year-to-date 2007. These loans are classified as trading assets on the consolidated balance sheets for 2007. | |
(m) | During the second quarter of 2007, RFS changed its definition of mortgage originations to include all newly originated mortgage loans sourced through RFS channels, and to exclude all mortgage loan originations sourced through IB channels. Prior periods have been restated to conform to this new definition. | |
(n) | Average loans included Loans held-for-sale of $943 million for the quarter ended September 30, 2006. Average Loans held-for-sale for the quarters ended September 30, 2007, June 30, 2007, March 31, 2007, and December 31, 2006, and year-to-date 2007 were insignificant. The year-to-date average Loans held-for-sale were $709 million for 2006. These amounts are excluded when calculating the Net charge-off rate. |
Page 13
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JPMORGAN CHASE & CO. | ||
CARD SERVICES – MANAGED BASIS | ||
FINANCIAL HIGHLIGHTS | ||
(in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||||||||||
Credit Card Income | $ | 692 | $ | 682 | $ | 599 | $ | 697 | $ | 636 | 1 | % | 9 | % | $ | 1,973 | $ | 1,890 | 4 | % | ||||||||||||||||||||
All Other Income | 67 | 80 | 92 | 111 | 126 | (16 | ) | (47 | ) | 239 | 246 | (3 | ) | |||||||||||||||||||||||||||
Noninterest Revenue | 759 | 762 | 691 | 808 | 762 | – | – | 2,212 | 2,136 | 4 | ||||||||||||||||||||||||||||||
Net Interest Income | 3,108 | 2,955 | 2,989 | 2,942 | 2,884 | 5 | 8 | 9,052 | 8,859 | 2 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE | 3,867 | 3,717 | 3,680 | 3,750 | 3,646 | 4 | 6 | 11,264 | 10,995 | 2 | ||||||||||||||||||||||||||||||
Provision for Credit Losses | 1,363 | 1,331 | 1,229 | 1,281 | 1,270 | 2 | 7 | 3,923 | 3,317 | 18 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||||||||||||||||||||||
Compensation Expense | 256 | 251 | 254 | 242 | 251 | 2 | 2 | 761 | 761 | – | ||||||||||||||||||||||||||||||
Noncompensation Expense | 827 | 753 | 803 | 915 | 823 | 10 | – | 2,383 | 2,429 | (2 | ) | |||||||||||||||||||||||||||||
Amortization of Intangibles | 179 | 184 | 184 | 184 | 179 | (3 | ) | – | 547 | 555 | (1 | ) | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE | 1,262 | 1,188 | 1,241 | 1,341 | 1,253 | 6 | 1 | 3,691 | 3,745 | (1 | ) | |||||||||||||||||||||||||||||
Income Before Income Tax Expense | 1,242 | 1,198 | 1,210 | 1,128 | 1,123 | 4 | 11 | 3,650 | 3,933 | (7 | ) | |||||||||||||||||||||||||||||
Income Tax Expense | 456 | 439 | 445 | 409 | 412 | 4 | 11 | 1,340 | 1,446 | (7 | ) | |||||||||||||||||||||||||||||
NET INCOME | $ | 786 | $ | 759 | $ | 765 | $ | 719 | $ | 711 | 4 | 11 | $ | 2,310 | $ | 2,487 | (7 | ) | ||||||||||||||||||||||
Memo: Net Securitization Gains (Amortization) | $ | – | $ | 16 | $ | 23 | $ | 32 | $ | 48 | NM | NM | $ | 39 | $ | 50 | (22 | ) | ||||||||||||||||||||||
FINANCIAL METRICS | ||||||||||||||||||||||||||||||||||||||||
ROE | 22 | % | 22 | % | 22 | % | 20 | % | 20 | % | 22 | % | 24 | % | ||||||||||||||||||||||||||
Overhead Ratio | 33 | 32 | 34 | 36 | 34 | 33 | 34 | |||||||||||||||||||||||||||||||||
% of Average Managed Outstandings: | ||||||||||||||||||||||||||||||||||||||||
Net Interest Income | 8.29 | 8.04 | 8.11 | 7.92 | 8.07 | 8.15 | 8.52 | |||||||||||||||||||||||||||||||||
Provision for Credit Losses | 3.64 | 3.62 | 3.34 | 3.45 | 3.56 | 3.53 | 3.19 | |||||||||||||||||||||||||||||||||
Noninterest Revenue | 2.03 | 2.07 | 1.88 | 2.17 | 2.13 | 1.99 | 2.05 | |||||||||||||||||||||||||||||||||
Risk Adjusted Margin (a) | 6.68 | 6.49 | 6.65 | 6.65 | 6.65 | 6.61 | 7.39 | |||||||||||||||||||||||||||||||||
Noninterest Expense | 3.37 | 3.23 | 3.37 | 3.61 | 3.51 | 3.32 | 3.60 | |||||||||||||||||||||||||||||||||
Pretax Income (ROO) | 3.31 | 3.26 | 3.28 | 3.04 | 3.14 | 3.29 | 3.78 | |||||||||||||||||||||||||||||||||
Net Income | 2.10 | 2.06 | 2.08 | 1.94 | 1.99 | 2.08 | 2.39 | |||||||||||||||||||||||||||||||||
BUSINESS METRICS | ||||||||||||||||||||||||||||||||||||||||
Charge Volume (in billions) | $ | 89.8 | $ | 88.0 | $ | 81.3 | $ | 93.4 | $ | 87.5 | 2 | 3 | $ | 259.1 | $ | 246.2 | 5 | |||||||||||||||||||||||
Net Accounts Opened (in thousands) (b) | 3,957 | # | 3,706 | # | 3,439 | # | 14,392 | # | 4,186 | # | 7 | (5 | ) | 11,102 | # | 31,477 | # | (65 | ) | |||||||||||||||||||||
Credit Cards Issued (in thousands) | 153,637 | 150,883 | 152,097 | 154,424 | 139,513 | 2 | 10 | 153,637 | 139,513 | 10 | ||||||||||||||||||||||||||||||
Number of Registered Internet Customers (in millions) | 26.4 | 24.6 | 24.3 | 22.5 | 20.4 | 7 | 29 | 26.4 | 20.4 | 29 | ||||||||||||||||||||||||||||||
Merchant Acquiring Business (c) | ||||||||||||||||||||||||||||||||||||||||
Bank Card Volume (in billions) | $ | 181.4 | $ | 179.7 | $ | 163.6 | $ | 177.9 | $ | 168.7 | 1 | 8 | $ | 524.7 | $ | 482.7 | 9 | |||||||||||||||||||||||
Total Transactions (in millions) | 4,990 | # | 4,811 | # | 4,465 | # | 4,968 | # | 4,597 | # | 4 | 9 | 14,266 | # | 13,203 | # | 8 |
(a) | Represents Total Net Revenue less Provision for Credit Losses. | |
(b) | Fourth quarter of 2006 included approximately 9 million accounts from the acquisition of the BP and Pier 1 Imports, Inc. private label portfolios. In addition, year-to-date 2006 included approximately 21 million accounts from the acquisition of the Kohl’s private label portfolio in the second quarter of 2006. | |
(c) | Represents 100% of the merchant acquiring business. |
Page 14
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JPMORGAN CHASE & CO. | ||
CARD SERVICES – MANAGED BASIS | ||
FINANCIAL HIGHLIGHTS, CONTINUED | ||
(in millions, except headcount and ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
SELECTED ENDING BALANCES | ||||||||||||||||||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||
Loans on Balance Sheets | $ | 79,409 | $ | 80,495 | $ | 78,173 | $ | 85,881 | $ | 78,587 | (1 | )% | 1 | % | $ | 79,409 | $ | 78,587 | 1 | % | ||||||||||||||||||||
Securitized Loans | 69,643 | 67,506 | 68,403 | 66,950 | 65,245 | 3 | 7 | 69,643 | 65,245 | 7 | ||||||||||||||||||||||||||||||
Managed Loans | $ | 149,052 | $ | 148,001 | $ | 146,576 | $ | 152,831 | $ | 143,832 | 1 | 4 | $ | 149,052 | $ | 143,832 | 4 | |||||||||||||||||||||||
SELECTED AVERAGE BALANCES | ||||||||||||||||||||||||||||||||||||||||
Managed Assets | $ | 154,956 | $ | 154,406 | $ | 156,271 | $ | 153,973 | $ | 148,272 | – | 5 | $ | 155,206 | $ | 146,192 | 6 | |||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||
Loans on Balance Sheets | $ | 79,993 | $ | 79,000 | $ | 81,932 | $ | 81,489 | $ | 76,655 | 1 | 4 | $ | 80,301 | $ | 71,129 | 13 | |||||||||||||||||||||||
Securitized Loans | 68,673 | 68,428 | 67,485 | 65,898 | 65,061 | – | 6 | 68,200 | 67,862 | – | ||||||||||||||||||||||||||||||
Managed Loans | $ | 148,666 | $ | 147,428 | $ | 149,417 | $ | 147,387 | $ | 141,716 | 1 | 5 | $ | 148,501 | $ | 138,991 | 7 | |||||||||||||||||||||||
Equity | $ | 14,100 | $ | 14,100 | $ | 14,100 | $ | 14,100 | $ | 14,100 | – | – | $ | 14,100 | $ | 14,100 | – | |||||||||||||||||||||||
Headcount | 18,887 | # | 18,913 | # | 18,749 | # | 18,639 | # | 18,696 | # | – | 1 | 18,887 | # | 18,696 | # | 1 | |||||||||||||||||||||||
MANAGED CREDIT QUALITY STATISTICS | ||||||||||||||||||||||||||||||||||||||||
Net Charge-offs | $ | 1,363 | $ | 1,331 | $ | 1,314 | $ | 1,281 | $ | 1,280 | 2 | 6 | $ | 4,008 | $ | 3,417 | 17 | |||||||||||||||||||||||
Net Charge-off Rate | 3.64 | % | 3.62 | % | 3.57 | % | 3.45 | % | 3.58 | % | 3.61 | % | 3.29 | % | ||||||||||||||||||||||||||
Managed delinquency ratios | ||||||||||||||||||||||||||||||||||||||||
30+ days | 3.25 | % | 3.00 | % | 3.07 | % | 3.13 | % | 3.17 | % | 3.25 | % | 3.17 | % | ||||||||||||||||||||||||||
90+ days | 1.50 | 1.42 | 1.52 | 1.50 | 1.48 | 1.50 | 1.48 | |||||||||||||||||||||||||||||||||
Allowance for Loan Losses | $ | 3,107 | $ | 3,096 | $ | 3,092 | $ | 3,176 | $ | 3,176 | – | (2 | ) | $ | 3,107 | $ | 3,176 | (2 | ) | |||||||||||||||||||||
Allowance for Loan Losses to Period-end Loans | 3.91 | % | 3.85 | % | 3.96 | % | 3.70 | % | 4.04 | % | 3.91 | % | 4.04 | % |
Page 15
JPMORGAN CHASE & CO. CARD RECONCILIATION OF REPORTED AND MANAGED DATA | ![]() | |
(in millions) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
INCOME STATEMENT DATA (a) | ||||||||||||||||||||||||||||||||||||||||
Credit Card Income | ||||||||||||||||||||||||||||||||||||||||
Reported Basis for the Period | $ | 1,528 | $ | 1,470 | $ | 1,345 | $ | 1,423 | $ | 1,357 | 4 | % | 13 | % | $ | 4,343 | $ | 4,673 | (7 | )% | ||||||||||||||||||||
Securitization Adjustments | (836 | ) | (788 | ) | (746 | ) | (726 | ) | (721 | ) | (6 | ) | (16 | ) | (2,370 | ) | (2,783 | ) | 15 | |||||||||||||||||||||
Managed Credit Card Income | $ | 692 | $ | 682 | $ | 599 | $ | 697 | $ | 636 | 1 | 9 | $ | 1,973 | $ | 1,890 | 4 | |||||||||||||||||||||||
Net Interest Income | ||||||||||||||||||||||||||||||||||||||||
Reported Basis for the Period | $ | 1,694 | $ | 1,577 | $ | 1,650 | $ | 1,623 | $ | 1,556 | 7 | 9 | $ | 4,921 | $ | 4,459 | 10 | |||||||||||||||||||||||
Securitization Adjustments | 1,414 | 1,378 | 1,339 | 1,319 | 1,328 | 3 | 6 | 4,131 | 4,400 | (6 | ) | |||||||||||||||||||||||||||||
Managed Net Interest Income | $ | 3,108 | $ | 2,955 | $ | 2,989 | $ | 2,942 | $ | 2,884 | 5 | 8 | $ | 9,052 | $ | 8,859 | 2 | |||||||||||||||||||||||
Total Net Revenue | ||||||||||||||||||||||||||||||||||||||||
Reported Basis for the Period | $ | 3,289 | $ | 3,127 | $ | 3,087 | $ | 3,157 | $ | 3,039 | 5 | 8 | $ | 9,503 | $ | 9,378 | 1 | |||||||||||||||||||||||
Securitization Adjustments | 578 | 590 | 593 | 593 | 607 | (2 | ) | (5 | ) | 1,761 | 1,617 | 9 | ||||||||||||||||||||||||||||
Managed Total Net Revenue | $ | 3,867 | $ | 3,717 | $ | 3,680 | $ | 3,750 | $ | 3,646 | 4 | 6 | $ | 11,264 | $ | 10,995 | 2 | |||||||||||||||||||||||
Provision for Credit Losses | ||||||||||||||||||||||||||||||||||||||||
Reported Basis for the Period | $ | 785 | $ | 741 | $ | 636 | $ | 688 | $ | 663 | 6 | 18 | $ | 2,162 | $ | 1,700 | 27 | |||||||||||||||||||||||
Securitization Adjustments | 578 | 590 | 593 | 593 | 607 | (2 | ) | (5 | ) | 1,761 | 1,617 | 9 | ||||||||||||||||||||||||||||
Managed Provision for Credit Losses | $ | 1,363 | $ | 1,331 | $ | 1,229 | $ | 1,281 | $ | 1,270 | 2 | 7 | $ | 3,923 | $ | 3,317 | 18 | |||||||||||||||||||||||
BALANCE SHEETS — AVERAGE BALANCES (a) | ||||||||||||||||||||||||||||||||||||||||
Total Average Assets | ||||||||||||||||||||||||||||||||||||||||
Reported Basis for the Period | $ | 88,856 | $ | 88,486 | $ | 91,157 | $ | 90,283 | $ | 85,301 | — | 4 | $ | 89,491 | $ | 80,395 | 11 | |||||||||||||||||||||||
Securitization Adjustments | 66,100 | 65,920 | 65,114 | 63,690 | 62,971 | — | 5 | 65,715 | 65,797 | — | ||||||||||||||||||||||||||||||
Managed Average Assets | $ | 154,956 | $ | 154,406 | $ | 156,271 | $ | 153,973 | $ | 148,272 | — | 5 | $ | 155,206 | $ | 146,192 | 6 | |||||||||||||||||||||||
CREDIT QUALITY STATISTICS (a) | ||||||||||||||||||||||||||||||||||||||||
Net Charge-offs | ||||||||||||||||||||||||||||||||||||||||
Reported Net Charge-offs Data for the Period | $ | 785 | $ | 741 | $ | 721 | $ | 688 | $ | 673 | 6 | 17 | $ | 2,247 | $ | 1,800 | 25 | |||||||||||||||||||||||
Securitization Adjustments | 578 | 590 | 593 | 593 | 607 | (2 | ) | (5 | ) | 1,761 | 1,617 | 9 | ||||||||||||||||||||||||||||
Managed Net Charge-offs | $ | 1,363 | $ | 1,331 | $ | 1,314 | $ | 1,281 | $ | 1,280 | 2 | 6 | $ | 4,008 | $ | 3,417 | 17 | |||||||||||||||||||||||
(a) | JPMorgan Chase uses the concept of “managed receivables” to evaluate the credit performance and overall performance of the underlying credit card loans, both sold and not sold; as the same borrower is continuing to use the credit card for ongoing charges, a borrower’s credit performance will affect both the receivables sold under SFAS 140 and those not sold. Thus, in its disclosures regarding managed receivables, JPMorgan Chase treats the sold receivables as if they were still on the balance sheet in order to disclose the credit performance (such as net charge-off rates) of the entire managed credit card portfolio. Managed results exclude the impact of credit card securitizations on Total Net Revenue, the Provision for Credit Losses, Net Charge-offs and Loan Receivables. Securitization does not change reported Net income versus managed earnings; however, it does affect the classification of items on the Consolidated Statements of Income and Consolidated Balance Sheets. |
Page 16
JPMORGAN CHASE & CO. COMMERCIAL BANKING FINANCIAL HIGHLIGHTS | ![]() | |
(in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||||||||||
Lending & Deposit Related Fees | $ | 159 | $ | 158 | $ | 158 | $ | 155 | $ | 145 | 1 | % | 10 | % | $ | 475 | $ | 434 | 9 | % | ||||||||||||||||||||
Asset Management, Administration and Commissions | 24 | 21 | 23 | 20 | 16 | 14 | 50 | 68 | 47 | 45 | ||||||||||||||||||||||||||||||
All Other Income (a) | 107 | 133 | 154 | 135 | 95 | (20 | ) | 13 | 394 | 282 | 40 | |||||||||||||||||||||||||||||
Noninterest Revenue | 290 | 312 | 335 | 310 | 256 | (7 | ) | 13 | 937 | 763 | 23 | |||||||||||||||||||||||||||||
Net Interest Income | 719 | 695 | 668 | 708 | 677 | 3 | 6 | 2,082 | 2,019 | 3 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE | 1,009 | 1,007 | 1,003 | 1,018 | 933 | — | 8 | 3,019 | 2,782 | 9 | ||||||||||||||||||||||||||||||
Provision for Credit Losses | 112 | 45 | 17 | 111 | 54 | 149 | 107 | 174 | 49 | 255 | ||||||||||||||||||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||||||||||||||||||||||
Compensation Expense | 160 | 182 | 180 | 174 | 190 | (12 | ) | (16 | ) | 522 | 566 | (8 | ) | |||||||||||||||||||||||||||
Noncompensation Expense | 300 | 300 | 290 | 296 | 296 | — | 1 | 890 | 883 | 1 | ||||||||||||||||||||||||||||||
Amortization of Intangibles | 13 | 14 | 15 | 15 | 14 | (7 | ) | (7 | ) | 42 | 45 | (7 | ) | |||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE | 473 | 496 | 485 | 485 | 500 | (5 | ) | (5 | ) | 1,454 | 1,494 | (3 | ) | |||||||||||||||||||||||||||
Income Before Income Tax Expense | 424 | 466 | 501 | 422 | 379 | (9 | ) | 12 | 1,391 | 1,239 | 12 | |||||||||||||||||||||||||||||
Income Tax Expense | 166 | 182 | 197 | 166 | 148 | (9 | ) | 12 | 545 | 485 | 12 | |||||||||||||||||||||||||||||
NET INCOME | $ | 258 | $ | 284 | $ | 304 | $ | 256 | $ | 231 | (9 | ) | 12 | $ | 846 | $ | 754 | 12 | ||||||||||||||||||||||
MEMO: | ||||||||||||||||||||||||||||||||||||||||
Revenue by Product: | ||||||||||||||||||||||||||||||||||||||||
Lending | $ | 343 | $ | 348 | $ | 348 | $ | 359 | $ | 335 | (1 | ) | 2 | $ | 1,039 | $ | 985 | 5 | ||||||||||||||||||||||
Treasury Services | 594 | 569 | 556 | 576 | 551 | 4 | 8 | 1,719 | 1,667 | 3 | ||||||||||||||||||||||||||||||
Investment Banking | 64 | 82 | 76 | 87 | 60 | (22 | ) | 7 | 222 | 166 | 34 | |||||||||||||||||||||||||||||
Other | 8 | 8 | 23 | (4 | ) | (13 | ) | — | NM | 39 | (36 | ) | NM | |||||||||||||||||||||||||||
Total Commercial Banking Revenue | $ | 1,009 | $ | 1,007 | $ | 1,003 | $ | 1,018 | $ | 933 | — | 8 | $ | 3,019 | $ | 2,782 | 9 | |||||||||||||||||||||||
IB Revenues, Gross (b) | $ | 194 | $ | 236 | $ | 231 | $ | 246 | $ | 170 | (18 | ) | 14 | $ | 661 | $ | 470 | 41 | ||||||||||||||||||||||
Revenue by Business: | ||||||||||||||||||||||||||||||||||||||||
Middle Market Banking | $ | 680 | $ | 653 | $ | 661 | $ | 661 | $ | 617 | 4 | 10 | $ | 1,994 | $ | 1,874 | 6 | |||||||||||||||||||||||
Mid-Corporate Banking | 167 | 197 | 212 | 198 | 160 | (15 | ) | 4 | 576 | 458 | 26 | |||||||||||||||||||||||||||||
Real Estate Banking | 108 | 109 | 102 | 120 | 119 | (1 | ) | (9 | ) | 319 | 338 | (6 | ) | |||||||||||||||||||||||||||
Other | 54 | 48 | 28 | 39 | 37 | 13 | 46 | 130 | 112 | 16 | ||||||||||||||||||||||||||||||
Total Commercial Banking Revenue | $ | 1,009 | $ | 1,007 | $ | 1,003 | $ | 1,018 | $ | 933 | — | 8 | $ | 3,019 | $ | 2,782 | 9 | |||||||||||||||||||||||
FINANCIAL RATIOS | ||||||||||||||||||||||||||||||||||||||||
ROE | 15 | % | 18 | % | 20 | % | 16 | % | 17 | % | 18 | % | 18 | % | ||||||||||||||||||||||||||
Overhead Ratio | 47 | 49 | 48 | 48 | 54 | 48 | 54 |
(a) | IB-related and commercial card revenues are included in All Other Income. | |
(b) | Represents the total revenue related to investment banking products sold to Commercial Banking (“CB”) clients. |
Page 17
JPMORGAN CHASE & CO. COMMERCIAL BANKING FINANCIAL HIGHLIGHTS, CONTINUED | ![]() | |
(in millions, except ratio and headcount data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS DATA (Average) | ||||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 86,652 | $ | 84,687 | $ | 82,545 | $ | 62,227 | $ | 57,378 | 2 | % | 51 | % | $ | 84,643 | $ | 56,246 | 50 | % | ||||||||||||||||||||
Loans and Leases (a) | 61,272 | 59,812 | 57,660 | 57,657 | 53,404 | 2 | 15 | 59,595 | 52,227 | 14 | ||||||||||||||||||||||||||||||
Liability Balances (b) | 88,081 | 84,187 | 81,752 | 79,050 | 72,009 | 5 | 22 | 84,697 | 71,781 | 18 | ||||||||||||||||||||||||||||||
Equity | 6,700 | 6,300 | 6,300 | 6,300 | 5,500 | 6 | 22 | 6,435 | 5,500 | 17 | ||||||||||||||||||||||||||||||
MEMO: | ||||||||||||||||||||||||||||||||||||||||
Loans by Business: | ||||||||||||||||||||||||||||||||||||||||
Middle Market Banking | $ | 37,617 | $ | 37,099 | $ | 36,317 | $ | 35,618 | $ | 32,890 | 1 | 14 | $ | 37,016 | $ | 32,418 | 14 | |||||||||||||||||||||||
Mid-Corporate Banking | 12,076 | 11,692 | 10,669 | 9,898 | 8,756 | 3 | 38 | 11,484 | 8,205 | 40 | ||||||||||||||||||||||||||||||
Real Estate Banking | 7,144 | 6,894 | 7,074 | 7,745 | 7,564 | 4 | (6 | ) | 7,038 | 7,505 | (6 | ) | ||||||||||||||||||||||||||||
Other | 4,435 | 4,127 | 3,600 | 4,396 | 4,194 | 7 | 6 | 4,057 | 4,099 | (1 | ) | |||||||||||||||||||||||||||||
Total Commercial Banking Loans | $ | 61,272 | $ | 59,812 | $ | 57,660 | $ | 57,657 | $ | 53,404 | 2 | 15 | $ | 59,595 | $ | 52,227 | 14 | |||||||||||||||||||||||
Headcount | 4,158 | # | 4,295 | # | 4,281 | # | 4,459 | # | 4,447 | # | (3 | ) | (6 | ) | 4,158 | # | 4,447 | # | (6 | ) | ||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS | �� | |||||||||||||||||||||||||||||||||||||||
Net Charge-offs (Recoveries) | $ | 20 | $ | (8 | ) | $ | (1 | ) | $ | 16 | $ | 21 | NM | (5 | ) | $ | 11 | $ | 11 | — | ||||||||||||||||||||
Nonperforming Loans | 134 | 135 | 141 | 121 | 157 | (1 | ) | (15 | ) | 134 | 157 | (15 | ) | |||||||||||||||||||||||||||
Allowance for Credit Losses: | ||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses | 1,623 | 1,551 | 1,531 | 1,519 | 1,431 | 5 | 13 | 1,623 | 1,431 | 13 | ||||||||||||||||||||||||||||||
Allowance for Lending-Related Commitments | 236 | 222 | 187 | 187 | 156 | 6 | 51 | 236 | 156 | 51 | ||||||||||||||||||||||||||||||
Total Allowance for Credit Losses | 1,859 | 1,773 | 1,718 | 1,706 | 1,587 | 5 | 17 | 1,859 | 1,587 | 17 | ||||||||||||||||||||||||||||||
Net Charge-off (Recovery) Rate (a) | 0.13 | % | (0.05 | )% | (0.01 | )% | 0.11 | % | 0.16 | % | 0.02 | % | 0.03 | % | ||||||||||||||||||||||||||
Allowance for Loan Losses to Average Loans (a) | 2.67 | 2.63 | 2.68 | 2.67 | 2.70 | 2.75 | 2.76 | |||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Nonperforming Loans | 1,211 | 1,149 | 1,086 | 1,255 | 911 | 1,211 | 911 | |||||||||||||||||||||||||||||||||
Nonperforming Loans to Average Loans | 0.22 | 0.23 | 0.24 | 0.21 | 0.29 | 0.22 | 0.30 |
(a) | Average loans included Loans held-for-sale of $433 million, $741 million, $475 million, $804 million, and $359 million for the quarters ended September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively, and $550 million and $321 million for year-to-date September 30, 2007 and 2006, respectively. These amounts are excluded when calculating the Net charge-off (recovery) rate and the allowance coverage ratio. | |
(b) | Liability balances include deposits and deposits swept to on-balance sheet liabilities. |
Page 18
JPMORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS | ![]() | |
(in millions, except ratio data and where otherwise noted) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||||||||||
Lending & Deposit Related Fees | $ | 244 | $ | 219 | $ | 213 | $ | 186 | $ | 183 | 11 | % | 33 | % | $ | 676 | $ | 549 | 23 | % | ||||||||||||||||||||
Asset Management, Administration and Commissions | 730 | 828 | 686 | 717 | 642 | (12 | ) | 14 | 2,244 | 1,975 | 14 | |||||||||||||||||||||||||||||
All Other Income | 171 | 184 | 125 | 133 | 155 | (7 | ) | 10 | 480 | 479 | — | |||||||||||||||||||||||||||||
Noninterest Revenue | 1,145 | 1,231 | 1,024 | 1,036 | 980 | (7 | ) | 17 | 3,400 | 3,003 | 13 | |||||||||||||||||||||||||||||
Net Interest Income | 603 | 510 | 502 | 501 | 519 | 18 | 16 | 1,615 | 1,569 | 3 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE | 1,748 | 1,741 | 1,526 | 1,537 | 1,499 | — | 17 | 5,015 | 4,572 | 10 | ||||||||||||||||||||||||||||||
Provision for Credit Losses | 9 | — | 6 | (2 | ) | 1 | NM | NM | 15 | 1 | NM | |||||||||||||||||||||||||||||
Credit Reimbursement to IB (a) | (31 | ) | (30 | ) | (30 | ) | (31 | ) | (30 | ) | (3 | ) | (3 | ) | (91 | ) | (90 | ) | (1 | ) | ||||||||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||||||||||||||||||||||
Compensation Expense | 579 | 609 | 558 | 555 | 557 | (5 | ) | 4 | 1,746 | 1,643 | 6 | |||||||||||||||||||||||||||||
Noncompensation Expense | 538 | 523 | 502 | 533 | 489 | 3 | 10 | 1,563 | 1,462 | 7 | ||||||||||||||||||||||||||||||
Amortization of Intangibles | 17 | 17 | 15 | 16 | 18 | — | (6 | ) | 49 | 57 | (14 | ) | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE | 1,134 | 1,149 | 1,075 | 1,104 | 1,064 | (1 | ) | 7 | 3,358 | 3,162 | 6 | |||||||||||||||||||||||||||||
Income before Income Tax Expense | 574 | 562 | 415 | 404 | 404 | 2 | 42 | 1,551 | 1,319 | 18 | ||||||||||||||||||||||||||||||
Income Tax Expense | 214 | 210 | 152 | 148 | 148 | 2 | 45 | 576 | 485 | 19 | ||||||||||||||||||||||||||||||
NET INCOME | $ | 360 | $ | 352 | $ | 263 | $ | 256 | $ | 256 | 2 | 41 | $ | 975 | $ | 834 | 17 | |||||||||||||||||||||||
REVENUE BY BUSINESS | ||||||||||||||||||||||||||||||||||||||||
Treasury Services | $ | 780 | $ | 720 | $ | 689 | 700 | $ | 697 | 8 | 12 | $ | 2,189 | $ | 2,092 | 5 | ||||||||||||||||||||||||
Worldwide Securities Services | 968 | 1,021 | 837 | 837 | 802 | (5 | ) | 21 | 2,826 | 2,480 | 14 | |||||||||||||||||||||||||||||
TOTAL NET REVENUE | $ | 1,748 | $ | 1,741 | $ | 1,526 | $ | 1,537 | $ | 1,499 | — | 17 | $ | 5,015 | $ | 4,572 | 10 | |||||||||||||||||||||||
FINANCIAL RATIOS | ||||||||||||||||||||||||||||||||||||||||
ROE | 48 | % | 47 | % | 36 | % | 46 | % | 46 | % | 43 | % | 48 | % | ||||||||||||||||||||||||||
Overhead Ratio | 65 | 66 | 70 | 72 | 71 | 67 | 69 | |||||||||||||||||||||||||||||||||
Pretax Margin Ratio (b) | 33 | 32 | 27 | 26 | 27 | 31 | 29 | |||||||||||||||||||||||||||||||||
FIRMWIDE BUSINESS METRICS | ||||||||||||||||||||||||||||||||||||||||
Assets under Custody (in billions) | $ | 15,614 | $ | 15,203 | $ | 14,661 | $ | 13,903 | $ | 12,873 | 3 | 21 | $ | 15,614 | $ | 12,873 | 21 | |||||||||||||||||||||||
Number of: | ||||||||||||||||||||||||||||||||||||||||
US$ ACH transactions originated (in millions) | 943 | # | 972 | # | 971 | # | 931 | # | 886 | # | (3 | ) | 6 | 2,886 | # | 2,572 | # | 12 | ||||||||||||||||||||||
Total US$ Clearing Volume (in thousands) | 28,031 | 27,779 | 26,840 | 26,906 | 26,252 | 1 | 7 | 82,650 | 77,940 | 6 | ||||||||||||||||||||||||||||||
International Electronic Funds Transfer Volume (in thousands) (c) | 41,415 | 42,068 | 42,399 | 41,007 | 35,322 | (2 | ) | 17 | 125,882 | 104,318 | 21 | |||||||||||||||||||||||||||||
Wholesale Check Volume (in millions) | 731 | 767 | 771 | 793 | 860 | (5 | ) | (15 | ) | 2,269 | 2,616 | (13 | ) | |||||||||||||||||||||||||||
Wholesale Cards Issued (in thousands) (d) | 18,108 | 17,535 | 17,146 | 17,228 | 16,662 | 3 | 9 | 18,108 | 16,662 | 9 |
Page 19
JPMORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS, CONTINUED | ![]() | |
(in millions, except headcount and ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
SELECTED BALANCE SHEETS (Average) | ||||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 55,688 | $ | 50,687 | $ | 46,005 | $ | 35,422 | $ | 30,558 | 10 | % | 82 | % | $ | 50,829 | $ | 30,526 | 67 | % | ||||||||||||||||||||
Loans | 20,602 | 20,195 | 18,948 | 19,030 | 15,231 | 2 | 35 | 19,921 | 14,396 | 38 | ||||||||||||||||||||||||||||||
Liability Balances (e) | 236,381 | 217,514 | 210,639 | 193,129 | 192,518 | 9 | 23 | 221,606 | 188,330 | 18 | ||||||||||||||||||||||||||||||
Equity | 3,000 | 3,000 | 3,000 | 2,200 | 2,200 | — | 36 | 3,000 | 2,314 | 30 | ||||||||||||||||||||||||||||||
Headcount | 25,209 | # | 25,206 | # | 24,875 | # | 25,423 | # | 24,575 | # | — | 3 | 25,209 | # | 24,575 | # | 3 | |||||||||||||||||||||||
TSS FIRMWIDE METRICS | ||||||||||||||||||||||||||||||||||||||||
Treasury Services Firmwide Revenue (f) | $ | 1,442 | $ | 1,354 | $ | 1,305 | $ | 1,333 | $ | 1,300 | 6 | 11 | $ | 4,101 | $ | 3,909 | 5 | |||||||||||||||||||||||
Treasury & Securities Services Firmwide Revenue (f) | 2,410 | 2,375 | 2,142 | 2,170 | 2,102 | 1 | 15 | 6,927 | 6,389 | 8 | ||||||||||||||||||||||||||||||
Treasury Services Firmwide Overhead Ratio (g) | 54 | % | 59 | % | 59 | % | 56 | % | 57 | % | 57 | % | 56 | % | ||||||||||||||||||||||||||
Treasury & Securities Services Firmwide Overhead Ratio (g) | 59 | 60 | 63 | 63 | 63 | 60 | 61 | |||||||||||||||||||||||||||||||||
Treasury Services Firmwide Liability Balances (Average) (h) | $ | 201,671 | $ | 189,214 | $ | 186,631 | $ | 168,321 | $ | 162,326 | 7 | 24 | $ | 192,560 | $ | 159,897 | 20 | |||||||||||||||||||||||
Treasury & Securities Services Firmwide Liability Balances (Average) (h) | 324,462 | 301,701 | 292,391 | 272,178 | 264,527 | 8 | 23 | 306,302 | 259,477 | 18 |
FOOTNOTES
(a) | TSS was charged a credit reimbursement related to certain exposures managed within the IB credit portfolio on behalf of clients shared with TSS. | |
(b) | Pretax margin represents income before income tax expense divided by total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors. | |
(c) | International electronic funds transfer includes non-US$ ACH and clearing volume. | |
(d) | Wholesale cards issued include domestic commercial card, stored value card, prepaid card, and government electronic benefit card products. | |
(e) | Liability balances include deposits and deposits swept to on-balance sheet liabilities. |
TSS FIRMWIDE METRICS
TSS firmwide metrics include certain TSS product revenues and liability balances reported in other lines of business for customers who are also customers of those lines of business. In order to capture the firmwide impact of Treasury Services (“TS”) and TSS products and revenues, management reviews firmwide metrics such as liability balances, revenues and overhead ratios in assessing financial performance for TSS. Firmwide metrics are necessary in order to understand the aggregate TSS business.
(f) | Firmwide revenue includes TS revenue recorded in the CB, Regional Banking and Asset Management (“AM”) lines of business (see below) and excludes FX revenues recorded in the IB for TSS-related FX activity. |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
TS Revenue Reported in CB | $ | 592 | $ | 569 | $ | 556 | $ | 576 | $ | 551 | 4 | % | 7 | % | $ | 1,717 | $ | 1,667 | 3 | % | ||||||||||||||||||||
TS Revenue Reported in Other Lines of Business | 70 | 65 | 60 | 57 | 52 | 8 | 35 | 195 | 150 | 30 |
TSS firmwide FX revenue, which included FX revenue recorded in TSS and FX revenue associated with TSS customers who are FX customers of the IB, was $144 million for the quarter ended September 30, 2007, and $395 million for year-to-date September 30, 2007. | ||
(g) | Overhead ratios have been calculated based upon firmwide revenues and TSS and TS expenses, respectively, including those allocated to certain other lines of business. FX revenues and expenses recorded in the IB for TSS-related FX activity are not included in this ratio. | |
(h) | Firmwide liability balances include TS’ liability balances recorded in certain other lines of business. Liability balances associated with TS customers who are also customers of the CB line of business are not included in TS liability balances. |
Page 20
JPMORGAN CHASE & CO. ASSET MANAGEMENT FINANCIAL HIGHLIGHTS | ![]() | |
(in millions, except ratio, ranking and headcount data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||||||||||
Asset Management, Administration and Commissions | $ | 1,760 | $ | 1,671 | $ | 1,489 | $ | 1,509 | $ | 1,285 | 5 | % | 37 | % | $ | 4,920 | $ | 3,786 | 30 | % | ||||||||||||||||||||
All Other Income | 152 | 173 | 170 | 192 | 120 | (12 | ) | 27 | 495 | 329 | 50 | |||||||||||||||||||||||||||||
Noninterest Revenue | 1,912 | 1,844 | 1,659 | 1,701 | 1,405 | 4 | 36 | 5,415 | 4,115 | 32 | ||||||||||||||||||||||||||||||
Net Interest Income | 293 | 293 | 245 | 246 | 231 | — | 27 | 831 | 725 | 15 | ||||||||||||||||||||||||||||||
TOTAL NET REVENUE | 2,205 | 2,137 | 1,904 | 1,947 | 1,636 | 3 | 35 | 6,246 | 4,840 | 29 | ||||||||||||||||||||||||||||||
Provision for Credit Losses | 3 | (11 | ) | (9 | ) | 14 | (28 | ) | NM | NM | (17 | ) | (42 | ) | 60 | |||||||||||||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||||||||||||||||||||||
Compensation Expense | 848 | 879 | 764 | 750 | 676 | (4 | ) | 25 | 2,491 | 2,027 | 23 | |||||||||||||||||||||||||||||
Noncompensation Expense | 498 | 456 | 451 | 512 | 417 | 9 | 19 | 1,405 | 1,201 | 17 | ||||||||||||||||||||||||||||||
Amortization of Intangibles | 20 | 20 | 20 | 22 | 22 | — | (9 | ) | 60 | 66 | (9 | ) | ||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE | 1,366 | 1,355 | 1,235 | 1,284 | 1,115 | 1 | 23 | 3,956 | 3,294 | 20 | ||||||||||||||||||||||||||||||
Income Before Income Tax Expense | 836 | 793 | 678 | 649 | 549 | 5 | 52 | 2,307 | 1,588 | 45 | ||||||||||||||||||||||||||||||
Income Tax Expense | 315 | 300 | 253 | 242 | 203 | 5 | 55 | 868 | 586 | 48 | ||||||||||||||||||||||||||||||
NET INCOME | $ | 521 | $ | 493 | $ | 425 | $ | 407 | $ | 346 | 6 | 51 | $ | 1,439 | $ | 1,002 | 44 | |||||||||||||||||||||||
REVENUE BY CLIENT SEGMENT | ||||||||||||||||||||||||||||||||||||||||
Private Bank | $ | 686 | $ | 646 | $ | 560 | $ | 528 | $ | 469 | 6 | 46 | $ | 1,892 | $ | 1,379 | 37 | |||||||||||||||||||||||
Retail | 639 | 602 | 527 | 541 | 456 | 6 | 40 | 1,768 | 1,344 | 32 | ||||||||||||||||||||||||||||||
Institutional | 603 | 617 | 551 | 624 | 464 | (2 | ) | 30 | 1,771 | 1,348 | 31 | |||||||||||||||||||||||||||||
Private Client Services | 277 | 272 | 266 | 254 | 247 | 2 | 12 | 815 | 769 | 6 | ||||||||||||||||||||||||||||||
Total Net Revenue | $ | 2,205 | $ | 2,137 | $ | 1,904 | $ | 1,947 | $ | 1,636 | 3 | 35 | $ | 6,246 | $ | 4,840 | 29 | |||||||||||||||||||||||
FINANCIAL RATIOS | ||||||||||||||||||||||||||||||||||||||||
ROE | 52 | % | 53 | % | 46 | % | 46 | % | 39 | % | 50 | % | 38 | % | ||||||||||||||||||||||||||
Overhead Ratio | 62 | 63 | 65 | 66 | 68 | 63 | 68 | |||||||||||||||||||||||||||||||||
Pretax Margin Ratio (a) | 38 | 37 | 36 | 33 | 34 | 37 | 33 | |||||||||||||||||||||||||||||||||
BUSINESS METRICS | ||||||||||||||||||||||||||||||||||||||||
Number of: | ||||||||||||||||||||||||||||||||||||||||
Client Advisors | 1,680 | # | 1,582 | # | 1,533 | # | 1,506 | # | 1,489 | # | 6 | 13 | 1,680 | # | 1,489 | # | 13 | |||||||||||||||||||||||
Retirement Planning Services Participants | 1,495,000 | 1,477,000 | 1,423,000 | 1,362,000 | 1,372,000 | 1 | 9 | 1,495,000 | 1,372,000 | 9 | ||||||||||||||||||||||||||||||
% of Customer Assets in 4 & 5 Star Funds (b) | 55 | % | 65 | % | 61 | % | 58 | % | 58 | % | (15 | ) | (5 | ) | 55 | % | 58 | % | (5 | ) | ||||||||||||||||||||
% of AUM in 1st and 2nd Quartiles: (c) | ||||||||||||||||||||||||||||||||||||||||
1 Year | 47 | % | 65 | % | 76 | % | 83 | % | 79 | % | (28 | ) | (41 | ) | 47 | % | 79 | % | (41 | ) | ||||||||||||||||||||
3 Years | 73 | % | 77 | % | 76 | % | 77 | % | 75 | % | (5 | ) | (3 | ) | 73 | % | 75 | % | (3 | ) | ||||||||||||||||||||
5 Years | 76 | % | 76 | % | 81 | % | 79 | % | 80 | % | — | (5 | ) | 76 | % | 80 | % | (5 | ) | |||||||||||||||||||||
SELECTED BALANCE SHEETS DATA (Average) | ||||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 53,879 | $ | 51,710 | $ | 45,816 | $ | 46,716 | $ | 43,524 | 4 | 24 | $ | 50,498 | $ | 42,597 | 19 | |||||||||||||||||||||||
Loans (d) | 30,928 | 28,695 | 25,640 | 28,917 | 26,770 | 8 | 16 | 28,440 | 25,695 | 11 | ||||||||||||||||||||||||||||||
Deposits | 59,907 | 55,981 | 54,816 | 51,341 | 51,395 | 7 | 17 | 56,920 | 50,360 | 13 | ||||||||||||||||||||||||||||||
Equity | 4,000 | 3,750 | 3,750 | 3,500 | 3,500 | 7 | 14 | 3,834 | 3,500 | 10 | ||||||||||||||||||||||||||||||
Headcount | 14,510 | # | 14,108 | # | 13,568 | # | 13,298 | # | 12,761 | # | 3 | 14 | 14,510 | # | 12,761 | # | 14 | |||||||||||||||||||||||
CREDIT DATA AND QUALITY STATISTICS | ||||||||||||||||||||||||||||||||||||||||
Net Charge-offs (Recoveries) | $ | (5 | ) | $ | (5 | ) | $ | — | $ | 2 | $ | (24 | ) | — | 79 | $ | (10 | ) | $ | (21 | ) | 52 | ||||||||||||||||||
Nonperforming Loans | 28 | 21 | 34 | 39 | 57 | 33 | (51 | ) | 28 | 57 | (51 | ) | ||||||||||||||||||||||||||||
Allowance for Loan Losses | 115 | 105 | 114 | 121 | 112 | 10 | 3 | 115 | 112 | 3 | ||||||||||||||||||||||||||||||
Allowance for Lending Related Commitments | 6 | 7 | 5 | 6 | 4 | (14 | ) | 50 | 6 | 4 | 50 | |||||||||||||||||||||||||||||
Net Charge-off (Recovery) Rate | (0.06) | % | (0.07) | % | — | % | 0.03 | % | (0.36) | % | (0.05) | % | (0.11) | % | ||||||||||||||||||||||||||
Allowance for Loan Losses to Average Loans | 0.37 | 0.37 | 0.44 | 0.42 | 0.42 | 0.40 | 0.44 | |||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Nonperforming Loans | 411 | 500 | 335 | 310 | 196 | 411 | 196 | |||||||||||||||||||||||||||||||||
Nonperforming Loans to Average Loans | 0.09 | 0.07 | 0.13 | 0.13 | 0.21 | 0.10 | 0.22 |
(a) | Pretax margin represents income before income tax expense divided by Total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors. | |
(b) | Derived from Morningstar for the United States; Micropal for the United Kingdom, Luxembourg, Hong Kong and Taiwan; and Nomura for Japan. | |
(c) | Quartile rankings sourced from Lipper for the United States and Taiwan; Micropal for the United Kingdom, Luxembourg and Hong Kong; and Nomura for Japan. | |
(d) | Held-for-investment prime mortgage loans that transferred from AM to Treasury within the Corporate segment during the third and first quarters of 2007 totaled $1.2 billion and $5.3 billion, respectively. There were no transfers during the second quarter of 2007 or the full year 2006. The transfer had no material impact on the financial results of AM. |
Page 21
JPMORGAN CHASE & CO. ASSET MANAGEMENT FINANCIAL HIGHLIGHTS, CONTINUED | ![]() | |
(in billions) |
Sep 30, 2007 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | June 30 | Sep 30 | ||||||||||||||||||||||
2007 | 2007 | 2007 | 2006 | 2006 | 2007 | 2006 | ||||||||||||||||||||||
Assets by Asset Class | ||||||||||||||||||||||||||||
Liquidity | $ | 368 | $ | 333 | $ | 318 | $ | 311 | $ | 281 | 11 | % | 31 | % | ||||||||||||||
Fixed Income | 195 | 190 | 180 | 175 | 171 | 3 | 14 | |||||||||||||||||||||
Equities & Balanced | 481 | 467 | 446 | 427 | 392 | 3 | 23 | |||||||||||||||||||||
Alternatives | 119 | 119 | 109 | 100 | 91 | — | 31 | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT | 1,163 | 1,109 | 1,053 | 1,013 | 935 | 5 | 24 | |||||||||||||||||||||
Custody / Brokerage / Administration / Deposits | 376 | 363 | 342 | 334 | 330 | 4 | 14 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION | $ | 1,539 | $ | 1,472 | $ | 1,395 | $ | 1,347 | $ | 1,265 | 5 | 22 | ||||||||||||||||
Assets by Client Segment | ||||||||||||||||||||||||||||
Institutional | $ | 603 | $ | 565 | $ | 550 | $ | 538 | $ | 503 | 7 | 20 | ||||||||||||||||
Private Bank | 196 | 185 | 170 | 159 | 150 | 6 | 31 | |||||||||||||||||||||
Retail | 304 | 300 | 274 | 259 | 228 | 1 | 33 | |||||||||||||||||||||
Private Client Services | 60 | 59 | 59 | 57 | 54 | 2 | 11 | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT | $ | 1,163 | $ | 1,109 | $ | 1,053 | $ | 1,013 | $ | 935 | 5 | 24 | ||||||||||||||||
Institutional | $ | 604 | $ | 566 | $ | 551 | $ | 539 | $ | 505 | 7 | 20 | ||||||||||||||||
Private Bank | 423 | 402 | 374 | 357 | 347 | 5 | 22 | |||||||||||||||||||||
Retail | 399 | 393 | 361 | 343 | 309 | 2 | 29 | |||||||||||||||||||||
Private Client Services | 113 | 111 | 109 | 108 | 104 | 2 | 9 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION | $ | 1,539 | $ | 1,472 | $ | 1,395 | $ | 1,347 | $ | 1,265 | 5 | 22 | ||||||||||||||||
Assets by Geographic Region | ||||||||||||||||||||||||||||
U.S. / Canada | $ | 745 | $ | 700 | $ | 664 | $ | 630 | $ | 596 | 6 | 25 | ||||||||||||||||
International | 418 | 409 | 389 | 383 | 339 | 2 | 23 | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT | $ | 1,163 | $ | 1,109 | $ | 1,053 | $ | 1,013 | $ | 935 | 5 | 24 | ||||||||||||||||
U.S. / Canada | $ | 1,022 | $ | 971 | $ | 929 | $ | 889 | $ | 855 | 5 | 20 | ||||||||||||||||
International | 517 | 501 | 466 | 458 | 410 | 3 | 26 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION | $ | 1,539 | $ | 1,472 | $ | 1,395 | $ | 1,347 | $ | 1,265 | 5 | 22 | ||||||||||||||||
Mutual Funds Assets by Asset Class | ||||||||||||||||||||||||||||
Liquidity | $ | 308 | $ | 268 | $ | 257 | $ | 255 | $ | 221 | 15 | 39 | ||||||||||||||||
Fixed Income | 46 | 49 | 48 | 46 | 45 | (6 | ) | 2 | ||||||||||||||||||||
Equity | 235 | 235 | 219 | 206 | 184 | — | 28 | |||||||||||||||||||||
TOTAL MUTUAL FUND ASSETS | $ | 589 | $ | 552 | $ | 524 | $ | 507 | $ | 450 | 7 | 31 | ||||||||||||||||
Page 22
JPMORGAN CHASE & CO. ASSET MANAGEMENT FINANCIAL HIGHLIGHTS, CONTINUED | ![]() | |
(in billions) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2007 | 2006 | ||||||||||||||||||||||
ASSETS UNDER SUPERVISION (continued) | ||||||||||||||||||||||||||||
Assets Under Management Rollforward | ||||||||||||||||||||||||||||
Beginning Balance | $ | 1,109 | $ | 1,053 | $ | 1,013 | $ | 935 | $ | 898 | $ | 1,013 | $ | 847 | ||||||||||||||
Flows: | ||||||||||||||||||||||||||||
Liquidity | 33 | 12 | 7 | 24 | 15 | 52 | 20 | |||||||||||||||||||||
Fixed Income | (2 | ) | 6 | 2 | 1 | 4 | 6 | 10 | ||||||||||||||||||||
Equities, Balanced & Alternatives | 2 | 12 | 10 | 5 | 3 | 24 | 29 | |||||||||||||||||||||
Market / Performance / Other Impacts | 21 | 26 | 21 | 48 | 15 | 68 | 29 | |||||||||||||||||||||
TOTAL ASSETS UNDER MANAGEMENT | $ | 1,163 | $ | 1,109 | $ | 1,053 | $ | 1,013 | $ | 935 | $ | 1,163 | $ | 935 | ||||||||||||||
Assets Under Supervision Rollforward | ||||||||||||||||||||||||||||
Beginning Balance | $ | 1,472 | $ | 1,395 | $ | 1,347 | $ | 1,265 | $ | 1,213 | $ | 1,347 | $ | 1,149 | ||||||||||||||
Net Asset Flows | 41 | 38 | 27 | 31 | 26 | 106 | 71 | |||||||||||||||||||||
Market / Performance / Other Impacts | 26 | 39 | 21 | 51 | 26 | 86 | 45 | |||||||||||||||||||||
TOTAL ASSETS UNDER SUPERVISION | $ | 1,539 | $ | 1,472 | $ | 1,395 | $ | 1,347 | $ | 1,265 | $ | 1,539 | $ | 1,265 | ||||||||||||||
Page 23
JPMORGAN CHASE & CO. CORPORATE FINANCIAL HIGHLIGHTS | ![]() | |
(in millions, except headcount data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||||||||||
Principal Transactions (a) (b) | $ | 1,082 | $ | 1,372 | $ | 1,325 | $ | 236 | $ | 195 | (21 | )% | 455 | % | $ | 3,779 | $ | 945 | 300 | % | ||||||||||||||||||||
Securities Gains (Losses) (c) | 128 | (227 | ) | (8 | ) | 18 | 24 | NM | 433 | (107 | ) | (626 | ) | 83 | ||||||||||||||||||||||||||
All Other Income | 70 | 90 | 68 | 27 | 125 | (22 | ) | (44 | ) | 228 | 458 | (50 | ) | |||||||||||||||||||||||||||
Noninterest Revenue | 1,280 | 1,235 | 1,385 | 281 | 344 | 4 | 272 | 3,900 | 777 | 402 | ||||||||||||||||||||||||||||||
Net Interest Income (Expense) | (279 | ) | (173 | ) | (117 | ) | (87 | ) | (55 | ) | (61 | ) | (407 | ) | (569 | ) | (957 | ) | 41 | |||||||||||||||||||||
TOTAL NET REVENUE | 1,001 | 1,062 | 1,268 | 194 | 289 | (6 | ) | 246 | 3,331 | (180 | ) | NM | ||||||||||||||||||||||||||||
Provision for Credit Losses | (31 | ) | 3 | 3 | (2 | ) | 1 | NM | NM | (25 | ) | 1 | NM | |||||||||||||||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||||||||||||||||||||||
Compensation Expense (b) | 569 | 695 | 776 | 434 | 737 | (18 | ) | (23 | ) | 2,040 | 2,192 | (7 | ) | |||||||||||||||||||||||||||
Noncompensation Expense (d) | 674 | 818 | 556 | 678 | 731 | (18 | ) | (8 | ) | 2,048 | 1,679 | 22 | ||||||||||||||||||||||||||||
Merger Costs | 61 | 64 | 62 | 100 | 48 | (5 | ) | 27 | 187 | 205 | (9 | ) | ||||||||||||||||||||||||||||
Subtotal | 1,304 | �� | 1,577 | 1,394 | 1,212 | 1,516 | (17 | ) | (14 | ) | 4,275 | 4,076 | 5 | |||||||||||||||||||||||||||
Net Expenses Allocated to Other Businesses | (1,059 | ) | (1,075 | ) | (1,040 | ) | (1,037 | ) | (1,035 | ) | 1 | (2 | ) | (3,174 | ) | (3,104 | ) | (2 | ) | |||||||||||||||||||||
TOTAL NONINTEREST EXPENSE | 245 | 502 | 354 | 175 | 481 | (51 | ) | (49 | ) | 1,101 | 972 | 13 | ||||||||||||||||||||||||||||
Income (Loss) from Continuing Operations before Income Tax Expense | 787 | 557 | 911 | 21 | (193 | ) | 41 | NM | 2,255 | (1,153 | ) | NM | ||||||||||||||||||||||||||||
Income Tax Expense (Benefit) (e) | 274 | 175 | 280 | (520 | ) | (159 | ) | 57 | NM | 729 | (659 | ) | NM | |||||||||||||||||||||||||||
Income (Loss) from Continuing Operations | 513 | 382 | 631 | 541 | (34 | ) | 34 | NM | 1,526 | (494 | ) | NM | ||||||||||||||||||||||||||||
Income from Discontinued Operations (after-tax)(f) | — | — | — | 620 | 65 | — | NM | — | 175 | NM | ||||||||||||||||||||||||||||||
NET INCOME (LOSS) | $ | 513 | $ | 382 | $ | 631 | $ | 1,161 | $ | 31 | 34 | NM | $ | 1,526 | $ | (319 | ) | NM | ||||||||||||||||||||||
MEMO: | ||||||||||||||||||||||||||||||||||||||||
TOTAL NET REVENUE | ||||||||||||||||||||||||||||||||||||||||
Private Equity (a)(b) | $ | 733 | $ | 1,293 | $ | 1,253 | $ | 250 | $ | 188 | (43 | ) | 290 | $ | 3,279 | $ | 892 | 268 | ||||||||||||||||||||||
Treasury and Other Corporate (c) | 268 | (231 | ) | 15 | (56 | ) | 101 | NM | 165 | 52 | (1,072 | ) | NM | |||||||||||||||||||||||||||
TOTAL NET REVENUE | $ | 1,001 | $ | 1,062 | $ | 1,268 | $ | 194 | $ | 289 | (6 | ) | 246 | $ | 3,331 | $ | (180 | ) | NM | |||||||||||||||||||||
NET INCOME (LOSS) | ||||||||||||||||||||||||||||||||||||||||
Private Equity (a) | $ | 409 | $ | 702 | $ | 698 | $ | 136 | $ | 95 | (42 | ) | 331 | $ | 1,809 | $ | 491 | 268 | ||||||||||||||||||||||
Treasury and Other Corporate (c) (d) (e) | 142 | (280 | ) | (29 | ) | 467 | (99 | ) | NM | NM | (167 | ) | (858 | ) | 81 | |||||||||||||||||||||||||
Merger Costs | (38 | ) | (40 | ) | (38 | ) | (62 | ) | (30 | ) | 5 | (27 | ) | (116 | ) | (127 | ) | 9 | ||||||||||||||||||||||
Income (Loss) from Continuing Operations | 513 | 382 | 631 | 541 | (34 | ) | 34 | NM | 1,526 | (494 | ) | NM | ||||||||||||||||||||||||||||
Income from Discontinued Operations (after-tax) | — | — | — | 620 | 65 | — | NM | — | 175 | NM | ||||||||||||||||||||||||||||||
TOTAL NET INCOME (LOSS) | $ | 513 | $ | 382 | $ | 631 | $ | 1,161 | $ | 31 | 34 | NM | $ | 1,526 | $ | (319 | ) | NM | ||||||||||||||||||||||
Headcount | 22,864 | # | 23,532 | # | 23,702 | # | 23,242 | # | 25,748 | # | (3 | ) | (11 | ) | 22,864 | # | 25,748 | # | (11 | ) |
(a) | The Firm adopted SFAS 157 in the first quarter of 2007. For additional information, see the Firm’s June 30, 2007, Form 10-Q. | |
(b) | Quarters ending in 2007 included the reclassification of certain private equity carried interest from net revenue to compensation expense. | |
(c) | Included a gain of $115 million in the third quarter of 2007 related to the sale of MasterCard shares. | |
(d) | Included insurance recoveries related to settlement of the Enron and WorldCom class action litigations and for certain other material proceedings of $137 million and $17 million for the quarters ended December 31, 2006, and September 30, 2006, respectively. Year-to-date insurance recoveries were $375 million for 2006. | |
(e) | Included a tax benefit of $359 million related to audit resolutions in the fourth quarter of 2006. | |
(f) | On October 1, 2006, the Firm completed the exchange of selected corporate trust businesses for the consumer, business banking and middle-market banking businesses of The Bank of New York. The results of operations of these corporate trust businesses were reported as discontinued operations for 2006. Included $622 million gain on sale in the fourth quarter of 2006. |
Page 24
JPMORGAN CHASE & CO. CORPORATE FINANCIAL HIGHLIGHTS, CONTINUED | ![]() | |
(in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
SUPPLEMENTAL | ||||||||||||||||||||||||||||||||||||||||
TREASURY | ||||||||||||||||||||||||||||||||||||||||
Securities Gains (Losses) (a) | $ | 126 | $ | (227 | ) | $ | (8 | ) | $ | 7 | $ | 24 | NM | % | 425 | % | $ | (109 | ) | $ | (626 | ) | 83 | % | ||||||||||||||||
Investment Securities Portfolio (Average) | 85,470 | 87,760 | 86,436 | 80,616 | 68,619 | (3 | ) | 25 | 86,552 | 57,545 | 50 | |||||||||||||||||||||||||||||
Investment Securities Portfolio (Ending) | 86,495 | 86,821 | 88,681 | 82,091 | 77,116 | — | 12 | 86,495 | 77,116 | 12 | ||||||||||||||||||||||||||||||
Mortgage Loans (Average) (b) | 29,854 | 26,830 | 25,244 | — | — | 11 | NM | 27,326 | — | NM | ||||||||||||||||||||||||||||||
Mortgage Loans (Ending) (b) | 32,804 | 27,299 | 26,499 | — | — | 20 | NM | 32,804 | — | NM | ||||||||||||||||||||||||||||||
PRIVATE EQUITY | ||||||||||||||||||||||||||||||||||||||||
Private Equity Gains (Losses) | ||||||||||||||||||||||||||||||||||||||||
Direct Investments | ||||||||||||||||||||||||||||||||||||||||
Realized Gains | $ | 504 | $ | 985 | $ | 723 | $ | 254 | $ | 194 | (49 | ) | 160 | $ | 2,212 | $ | 969 | 128 | ||||||||||||||||||||||
Write-ups / (Write-downs) (c) | 222 | 209 | 648 | 12 | (21 | ) | 6 | NM | 1,079 | (85 | ) | NM | ||||||||||||||||||||||||||||
Mark-to-Market Gains (Losses) | 5 | 81 | (127 | ) | (6 | ) | 25 | (94 | ) | (80 | ) | (41 | ) | 78 | NM | |||||||||||||||||||||||||
Total Direct Investments | 731 | 1,275 | 1,244 | 260 | 198 | (43 | ) | 269 | 3,250 | 962 | 238 | |||||||||||||||||||||||||||||
Third-Party Fund Investments | 35 | 53 | 34 | 27 | 28 | (34 | ) | 25 | 122 | 50 | 144 | |||||||||||||||||||||||||||||
Total Private Equity Gains (d) | $ | 766 | $ | 1,328 | $ | 1,278 | $ | 287 | $ | 226 | (42 | ) | 239 | $ | 3,372 | $ | 1,012 | 233 | ||||||||||||||||||||||
Private Equity Portfolio Information | ||||||||||||||||||||||||||||||||||||||||
Direct Investments | ||||||||||||||||||||||||||||||||||||||||
Publicly-Held Securities | ||||||||||||||||||||||||||||||||||||||||
Carrying Value | $ | 409 | $ | 465 | $ | 389 | $ | 587 | $ | 696 | (12 | ) | (41 | ) | ||||||||||||||||||||||||||
Cost | 291 | 367 | 366 | 451 | 539 | (21 | ) | (46 | ) | |||||||||||||||||||||||||||||||
Quoted Public Value | 560 | 600 | 493 | 831 | 1,022 | (7 | ) | (45 | ) | |||||||||||||||||||||||||||||||
Privately-Held Direct Securities | ||||||||||||||||||||||||||||||||||||||||
Carrying Value | 5,336 | 5,247 | 5,294 | 4,692 | 4,241 | 2 | 26 | |||||||||||||||||||||||||||||||||
Cost | 5,003 | 5,228 | 5,574 | 5,795 | 5,482 | (4 | ) | (9 | ) | |||||||||||||||||||||||||||||||
Third-Party Fund Investments | ||||||||||||||||||||||||||||||||||||||||
Carrying Value | 839 | 812 | 744 | 802 | 682 | 3 | 23 | |||||||||||||||||||||||||||||||||
Cost | 1,078 | 1,067 | 1,026 | 1,080 | 1,000 | 1 | 8 | |||||||||||||||||||||||||||||||||
Total Private Equity Portfolio — Carrying Value | $ | 6,584 | $ | 6,524 | $ | 6,427 | $ | 6,081 | $ | 5,619 | 1 | 17 | ||||||||||||||||||||||||||||
Total Private Equity Portfolio — Cost | $ | 6,372 | $ | 6,662 | $ | 6,966 | $ | 7,326 | $ | 7,021 | (4 | ) | (9 | ) | ||||||||||||||||||||||||||
(a) | Included a gain of $115 million in the third quarter of 2007 related to the sale of MasterCard shares. Losses reflected repositioning of the Treasury investment securities portfolio. | |
(b) | Held-for-investment prime mortgage loans were transferred from RFS and AM to the Corporate segment for risk management and reporting purposes. The transfer has no material impact on the financial results of Corporate. | |
(c) | The Firm adopted SFAS 157 in the first quarter of 2007. For additional information, see the Firm’s June 30, 2007, Form 10-Q. Quarters ending in 2007 included the reclassification of certain private equity carried interest from net revenue to compensation expense. | |
(d) | Included in Principal Transactions revenue. |
Page 25
JPMORGAN CHASE & CO. CREDIT-RELATED INFORMATION | ![]() | |
(in millions) |
Sep 30, 2007 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | June 30 | Sep 30 | ||||||||||||||||||||||
2007 | 2007 | 2007 | 2006 | 2006 | 2007 | 2006 | ||||||||||||||||||||||
CREDIT EXPOSURE | ||||||||||||||||||||||||||||
WHOLESALE (a) | ||||||||||||||||||||||||||||
Loans — U.S. | $ | 126,336 | $ | 111,082 | $ | 108,627 | $ | 118,686 | $ | 123,791 | 14 | % | 2 | % | ||||||||||||||
Loans — Non-U.S. | 71,392 | 70,886 | 59,567 | 65,056 | 55,612 | 1 | 28 | |||||||||||||||||||||
TOTAL WHOLESALE LOANS — REPORTED (b) | 197,728 | 181,968 | 168,194 | 183,742 | 179,403 | 9 | 10 | |||||||||||||||||||||
CONSUMER (c) | ||||||||||||||||||||||||||||
Home Equity | 93,026 | 90,989 | 87,741 | 85,730 | 80,399 | 2 | 16 | |||||||||||||||||||||
Mortgage (includes RFS and Corporate) | 47,730 | 43,114 | 46,574 | 59,668 | 60,075 | 11 | (21 | ) | ||||||||||||||||||||
Auto Loans and Leases | 40,871 | 41,231 | 40,937 | 41,009 | 40,310 | (1 | ) | 1 | ||||||||||||||||||||
Credit Card — Reported | 79,409 | 80,495 | 78,173 | 85,881 | 78,587 | (1 | ) | 1 | ||||||||||||||||||||
Other Loans | 27,556 | 27,240 | 28,146 | 27,097 | 24,770 | 1 | 11 | |||||||||||||||||||||
TOTAL CONSUMER LOANS — REPORTED (d) | 288,592 | 283,069 | 281,571 | 299,385 | 284,141 | 2 | 2 | |||||||||||||||||||||
TOTAL LOANS — REPORTED | 486,320 | 465,037 | 449,765 | 483,127 | 463,544 | 5 | 5 | |||||||||||||||||||||
Credit Card — Securitizations | 69,643 | 67,506 | 68,403 | 66,950 | 65,245 | 3 | 7 | |||||||||||||||||||||
TOTAL LOANS — MANAGED | 555,963 | 532,543 | 518,168 | 550,077 | 528,789 | 4 | 5 | |||||||||||||||||||||
Derivative Receivables | 64,592 | 59,038 | 49,647 | 55,601 | 58,265 | 9 | 11 | |||||||||||||||||||||
TOTAL CREDIT-RELATED ASSETS | 620,555 | 591,581 | 567,815 | 605,678 | 587,054 | 5 | 6 | |||||||||||||||||||||
Wholesale Lending-Related Commitments | 468,145 | 435,718 | 412,382 | 391,424 | 374,417 | 7 | 25 | |||||||||||||||||||||
TOTAL | $ | 1,088,700 | $ | 1,027,299 | $ | 980,197 | $ | 997,102 | $ | 961,471 | 6 | 13 | ||||||||||||||||
Memo: Total by Category | ||||||||||||||||||||||||||||
Total Wholesale Exposure (e) | $ | 730,465 | $ | 676,724 | $ | 630,223 | $ | 630,767 | $ | 612,085 | 8 | 19 | ||||||||||||||||
Total Consumer Managed Loans (f) | 358,235 | 350,575 | 349,974 | 366,335 | 349,386 | 2 | 3 | |||||||||||||||||||||
Total | $ | 1,088,700 | $ | 1,027,299 | $ | 980,197 | $ | 997,102 | $ | 961,471 | 6 | 13 | ||||||||||||||||
Risk Profile of Wholesale Credit Exposure: | ||||||||||||||||||||||||||||
Investment-Grade (g) | $ | 548,663 | $ | 532,134 | $ | 487,309 | $ | 490,185 | $ | 481,249 | 3 | 14 | ||||||||||||||||
Noninvestment-Grade: (g) | ||||||||||||||||||||||||||||
Noncriticized | 155,172 | 127,818 | 121,981 | 113,049 | 106,831 | 21 | 45 | |||||||||||||||||||||
Criticized Performing | 5,605 | 4,964 | 5,090 | 4,599 | 4,169 | 13 | 34 | |||||||||||||||||||||
Criticized Nonperforming | 414 | 252 | 263 | 427 | 674 | 64 | (39 | ) | ||||||||||||||||||||
Total Noninvestment-Grade | 161,191 | 133,034 | 127,334 | 118,075 | 111,674 | 21 | 44 | |||||||||||||||||||||
Loans at Fair Value & Loans Held-for-Sale | 20,611 | 11,556 | 15,580 | 22,256 | 18,889 | 78 | 9 | |||||||||||||||||||||
Purchased Nonperforming Wholesale Loans (h) | — | — | — | 251 | 273 | — | NM | |||||||||||||||||||||
Total Wholesale Exposure | $ | 730,465 | $ | 676,724 | $ | 630,223 | $ | 630,767 | $ | 612,085 | 8 | 19 | ||||||||||||||||
(a) | Includes Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management. | |
(b) | Includes Loans at fair value & loans held-for sale. As a result of the adoption of SFAS 159 in the first quarter of 2007, $11.7 billion of loans were reclassified to Trading assets and excluded from wholesale loans reported. | |
(c) | Includes Retail Financial Services, Card Services and residential mortgage loans reported in the Corporate segment to be risk managed by the Chief Investment Office. | |
(d) | As a result of the adoption of SFAS 159 in the first quarter of 2007, $11.6 billion of consumer loans were reclassified to Trading assets and excluded from consumer loans reported. | |
(e) | Represents Total Wholesale Loans, Derivative Receivables and Wholesale Lending-Related Commitments. | |
(f) | Represents Total Consumer Loans plus Credit Card Securitizations, excluding consumer lending-related commitments. | |
(g) | Excludes Loans at fair value & loans held-for-sale. | |
(h) | Represents distressed held-for-sale wholesale loans purchased as part of IB’s proprietary activities, which were excluded from nonperforming assets. During the first quarter of 2007, the Firm elected the fair value option of accounting for this portfolio of nonperforming loans. These loans were classified as trading assets for quarters ending on or after March 31, 2007. |
Note: | The risk profile is based on JPMorgan Chase’s internal risk ratings, which generally correspond to the following ratings as defined by Standard & Poor’s / Moody’s: Investment-Grade: AAA / Aaa to BBB- / Baa3 Noninvestment-Grade: BB+ / Ba1 and below |
Page 26
JPMORGAN CHASE & CO. CREDIT-RELATED INFORMATION, CONTINUED | ![]() | |
(in millions, except ratio data) |
Sep 30, 2007 | ||||||||||||||||||||||||||||
Change | ||||||||||||||||||||||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Sep 30 | ||||||||||||||||||||||
2007 | 2007 | 2007 | 2006 | 2006 | 2007 | 2006 | ||||||||||||||||||||||
NONPERFORMING ASSETS AND RATIOS | ||||||||||||||||||||||||||||
WHOLESALE LOANS (a) | ||||||||||||||||||||||||||||
Loans — U.S. | $ | 401 | $ | 190 | $ | 205 | $ | 309 | $ | 486 | 111 | % | (17 | )% | ||||||||||||||
Loans — Non-U.S. | 26 | 38 | 62 | 82 | 170 | (32 | ) | (85 | ) | |||||||||||||||||||
TOTAL WHOLESALE LOANS-REPORTED | 427 | 228 | 267 | 391 | 656 | 87 | (35 | ) | ||||||||||||||||||||
CONSUMER LOANS (b) | ||||||||||||||||||||||||||||
Home Equity | 576 | 483 | 459 | 454 | 400 | 19 | 44 | |||||||||||||||||||||
Mortgage (includes RFS and Corporate) | 1,224 | 1,034 | 960 | 769 | 588 | 18 | 108 | |||||||||||||||||||||
Auto Loans and Leases | 92 | 81 | 95 | 132 | 130 | 14 | (29 | ) | ||||||||||||||||||||
Credit Card — Reported | 7 | 8 | 9 | 9 | 10 | (13 | ) | (30 | ) | |||||||||||||||||||
Other Loans | 336 | 335 | 326 | 322 | 286 | — | 17 | |||||||||||||||||||||
TOTAL CONSUMER LOANS-REPORTED (c) | 2,235 | 1,941 | 1,849 | 1,686 | 1,414 | 15 | 58 | |||||||||||||||||||||
TOTAL LOANS REPORTED | 2,662 | 2,169 | 2,116 | 2,077 | 2,070 | 23 | 29 | |||||||||||||||||||||
Derivative Receivables | 34 | 30 | 36 | 36 | 35 | 13 | (3 | ) | ||||||||||||||||||||
Assets Acquired in Loan Satisfactions | 485 | 387 | 269 | 228 | 195 | 25 | 149 | |||||||||||||||||||||
TOTAL NONPERFORMING ASSETS | $ | 3,181 | $ | 2,586 | $ | 2,421 | $ | 2,341 | $ | 2,300 | 23 | 38 | ||||||||||||||||
TOTAL NONPERFORMING LOANS TO TOTAL LOANS | 0.55 | % | 0.47 | % | 0.47 | % | 0.43 | % | 0.45 | % | ||||||||||||||||||
NONPERFORMING ASSETS BY LOB | ||||||||||||||||||||||||||||
Investment Bank | $ | 325 | $ | 119 | $ | 128 | $ | 269 | $ | 456 | 173 | (29 | ) | |||||||||||||||
Retail Financial Services | 2,387 | 2,097 | 1,910 | 1,902 | 1,595 | 14 | 50 | |||||||||||||||||||||
Card Services | 7 | 8 | 9 | 9 | 10 | (13 | ) | (30 | ) | |||||||||||||||||||
Commercial Banking | 136 | 137 | 142 | 122 | 160 | (1 | ) | (15 | ) | |||||||||||||||||||
Treasury & Securities Services | — | — | — | — | 22 | — | NM | |||||||||||||||||||||
Asset Management | 28 | 21 | 35 | 39 | 57 | 33 | (51 | ) | ||||||||||||||||||||
Corporate (d) | 298 | 204 | 197 | — | — | 46 | NM | |||||||||||||||||||||
TOTAL | $ | 3,181 | $ | 2,586 | $ | 2,421 | $ | 2,341 | $ | 2,300 | 23 | 38 | ||||||||||||||||
(a) | Included nonperforming loans held-for-sale of $75 million, $25 million, $4 million, $4 million, and $21 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. Excluded purchased held-for-sale wholesale loans. | |
(b) | There were no nonperforming loans held-for-sale at September 30, 2007, while there were $215 million, $112 million, $116 million, and $24 million at June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. | |
(c) | Excluded nonperforming assets related to (1) loans eligible for repurchase as well as loans repurchased from GNMA pools that are insured by U.S. government agencies and U.S. government-sponsored enterprises of $1.3 billion, $1.2 billion, $1.3 billion, $1.2 billion, and $1.1 billion at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively, and (2) education loans that are 90 days past due and still accruing, which were insured by U.S. government agencies under the Federal Family Education Loan Program of $241 million, $200 million, $178 million, $219 million, and $189 million for the quarters ended September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. These amounts for GNMA and education loans are excluded, as reimbursement is proceeding normally. | |
(d) | Relates to held-for-investment prime mortgage loans transferred from RFS and AM to the Corporate segment. |
Page 27
JPMORGAN CHASE & CO. CREDIT-RELATED INFORMATION, CONTINUED | ![]() | |
(in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
GROSS CHARGE-OFFS | ||||||||||||||||||||||||||||||||||||||||
Wholesale Loans | $ | 101 | $ | 13 | $ | 17 | $ | 76 | $ | 48 | NM | % | 110 | % | $ | 131 | $ | 110 | 19 | % | ||||||||||||||||||||
Consumer (includes RFS and Corporate) | 403 | 321 | 241 | 266 | 186 | 26 | 117 | 965 | 536 | 80 | ||||||||||||||||||||||||||||||
Credit Card — Reported | 911 | 877 | 847 | 801 | 777 | 4 | 17 | 2,635 | 2,095 | 26 | ||||||||||||||||||||||||||||||
Total Loans — Reported | 1,415 | 1,211 | 1,105 | 1,143 | 1,011 | 17 | 40 | 3,731 | 2,741 | 36 | ||||||||||||||||||||||||||||||
Credit Card — Securitizations | 679 | 704 | 702 | 694 | 702 | (4 | ) | (3 | ) | 2,085 | 1,885 | 11 | ||||||||||||||||||||||||||||
Total Loans — Managed | 2,094 | 1,915 | 1,807 | 1,837 | 1,713 | 9 | 22 | 5,816 | 4,626 | 26 | ||||||||||||||||||||||||||||||
RECOVERIES | ||||||||||||||||||||||||||||||||||||||||
Wholesale Loans | 19 | 42 | 23 | 48 | 59 | (55 | ) | (68 | ) | 84 | 160 | (48 | ) | |||||||||||||||||||||||||||
Consumer (includes RFS and Corporate) | 49 | 48 | 53 | 52 | 58 | 2 | (16 | ) | 150 | 174 | (14 | ) | ||||||||||||||||||||||||||||
Credit Card — Reported | 126 | 136 | 126 | 113 | 104 | (7 | ) | 21 | 388 | 295 | 32 | |||||||||||||||||||||||||||||
Total Loans — Reported | 194 | 226 | 202 | 213 | 221 | (14 | ) | (12 | ) | 622 | 629 | (1 | ) | |||||||||||||||||||||||||||
Credit Card — Securitizations | 101 | 114 | 109 | 101 | 95 | (11 | ) | 6 | 324 | 268 | 21 | |||||||||||||||||||||||||||||
Total Loans — Managed | 295 | 340 | 311 | 314 | 316 | (13 | ) | (7 | ) | 946 | 897 | 5 | ||||||||||||||||||||||||||||
NET CHARGE-OFFS | ||||||||||||||||||||||||||||||||||||||||
Wholesale Loans | 82 | (29 | ) | (6 | ) | 28 | (11 | ) | NM | NM | 47 | (50 | ) | NM | ||||||||||||||||||||||||||
Consumer (includes RFS and Corporate) | 354 | 273 | 188 | 214 | 128 | 30 | 177 | 815 | 362 | 125 | ||||||||||||||||||||||||||||||
Credit Card — Reported | 785 | 741 | 721 | 688 | 673 | 6 | 17 | 2,247 | 1,800 | 25 | ||||||||||||||||||||||||||||||
Total Loans — Reported | 1,221 | 985 | 903 | 930 | 790 | 24 | 55 | 3,109 | 2,112 | 47 | ||||||||||||||||||||||||||||||
Credit Card — Securitizations | 578 | 590 | 593 | 593 | 607 | (2 | ) | (5 | ) | 1,761 | 1,617 | 9 | ||||||||||||||||||||||||||||
Total Loans — Managed | $ | 1,799 | $ | 1,575 | $ | 1,496 | $ | 1,523 | $ | 1,397 | 14 | 29 | $ | 4,870 | $ | 3,729 | 31 | |||||||||||||||||||||||
NET CHARGE-OFF RATES — ANNUALIZED | ||||||||||||||||||||||||||||||||||||||||
Wholesale Loans (a) | 0.19 | % | (0.07 | )% | (0.02 | )% | 0.07 | % | (0.03 | )% | 0.04 | % | (0.04 | )% | ||||||||||||||||||||||||||
Consumer (includes RFS and Corporate) (b) | 0.70 | 0.57 | 0.47 | 0.45 | 0.27 | 0.56 | 0.26 | |||||||||||||||||||||||||||||||||
Credit Card — Reported | 3.89 | 3.76 | 3.57 | 3.35 | 3.48 | 3.74 | 3.38 | |||||||||||||||||||||||||||||||||
Total Loans — Reported (a) (b) | 1.07 | 0.90 | 0.85 | 0.84 | 0.74 | 0.94 | 0.69 | |||||||||||||||||||||||||||||||||
Credit Card — Securitizations | 3.34 | 3.46 | 3.56 | 3.57 | 3.70 | 3.45 | 3.19 | |||||||||||||||||||||||||||||||||
Total Loans — Managed (a) (b) | 1.37 | 1.25 | 1.22 | 1.20 | 1.13 | 1.28 | 1.05 | |||||||||||||||||||||||||||||||||
Memo: Credit Card — Managed | 3.64 | 3.62 | 3.57 | 3.45 | 3.58 | 3.61 | 3.29 |
(a) | Average wholesale Loans at fair value & loans held-for-sale were $17.8 billion, $15.5 billion, $14.2 billion, $24.5 billion, and $24.4 billion for the quarters ended September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively, and $15.8 billion and $21.4 billion for year-to-date 2007 and 2006, respectively. These amounts were excluded when calculating the net charge-off rates. | |
(b) | Average consumer (excluding card) Loans at fair value & loans held-for-sale were $5.4 billion, $11.7 billion, $21.7 billion, $21.2 billion, and $14.0 billion for the quarters ended September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively, and $12.9 billion and $14.4 billion for year-to-date 2007 and 2006, respectively. These amounts were excluded when calculating the net charge-off rates. |
Page 28
JPMORGAN CHASE & CO. CREDIT-RELATED INFORMATION, CONTINUED | ![]() | |
(in millions, except ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||||||||||||||||||||||||
Beginning Balance | $ | 7,633 | $ | 7,300 | $ | 7,279 | $ | 7,056 | $ | 7,076 | 5 | % | 8 | % | $ | 7,279 | $ | 7,090 | 3 | % | ||||||||||||||||||||
Net Charge-Offs | (1,221 | ) | (985 | ) | (903 | ) | (930 | ) | (790 | ) | (24 | ) | (55 | ) | (3,109 | ) | (2,112 | ) | (47 | ) | ||||||||||||||||||||
Provision for Loan Losses | 1,693 | 1,316 | 979 | 1,085 | 768 | 29 | 120 | 3,988 | 2,068 | 93 | ||||||||||||||||||||||||||||||
Other (a) (b) | 8 | 2 | (55 | ) | 68 | 2 | 300 | 300 | (45 | ) | 10 | NM | ||||||||||||||||||||||||||||
Ending Balance | $ | 8,113 | $ | 7,633 | $ | 7,300 | $ | 7,279 | $ | 7,056 | 6 | 15 | $ | 8,113 | $ | 7,056 | 15 | |||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE FOR LENDING-RELATED COMMITMENTS | ||||||||||||||||||||||||||||||||||||||||
Beginning Balance | $ | 766 | $ | 553 | $ | 524 | $ | 468 | $ | 424 | 39 | 81 | $ | 524 | $ | 400 | 31 | |||||||||||||||||||||||
Provision for Lending-Related Commitments | 92 | 213 | 29 | 49 | 44 | (57 | ) | 109 | 334 | 68 | 391 | |||||||||||||||||||||||||||||
Other (b) | — | — | — | 7 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Ending Balance | $ | 858 | $ | 766 | $ | 553 | $ | 524 | $ | 468 | 12 | 83 | $ | 858 | $ | 468 | 83 | |||||||||||||||||||||||
ALLOWANCE COMPONENTS AND RATIOS | ||||||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||||||||||||||||||||||||
Wholesale | ||||||||||||||||||||||||||||||||||||||||
Asset Specific | $ | 53 | $ | 52 | $ | 54 | $ | 51 | $ | 101 | 2 | (48 | ) | |||||||||||||||||||||||||||
Formula — Based | 2,810 | 2,650 | 2,639 | 2,660 | 2,473 | 6 | 14 | |||||||||||||||||||||||||||||||||
Total Wholesale | 2,863 | 2,702 | 2,693 | 2,711 | 2,574 | 6 | 11 | |||||||||||||||||||||||||||||||||
Consumer (c) | 5,250 | 4,931 | 4,607 | 4,568 | 4,482 | 6 | 17 | |||||||||||||||||||||||||||||||||
Total Allowance for Loan Losses | 8,113 | 7,633 | 7,300 | 7,279 | 7,056 | 6 | 15 | |||||||||||||||||||||||||||||||||
Allowance for Lending-Related Commitments | 858 | 766 | 553 | 524 | 468 | 12 | 83 | |||||||||||||||||||||||||||||||||
Total Allowance for Credit Losses | $ | 8,971 | $ | 8,399 | $ | 7,853 | $ | 7,803 | $ | 7,524 | 7 | 19 | ||||||||||||||||||||||||||||
Wholesale Allowance for Loan Losses to Total Wholesale Loans (d) | 1.62 | % | 1.59 | % | 1.76 | % | 1.68 | % | 1.61 | % | ||||||||||||||||||||||||||||||
Consumer Allowance for Loan Losses to Total Consumer Loans (e) | 1.84 | 1.79 | 1.72 | 1.71 | 1.68 | |||||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Total Loans (d) (e) | 1.76 | 1.71 | 1.74 | 1.70 | 1.65 | |||||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Total Nonperforming Loans (f) | 314 | 396 | 365 | 372 | 348 | |||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES BY LOB | ||||||||||||||||||||||||||||||||||||||||
Investment Bank | $ | 1,112 | $ | 1,037 | $ | 1,037 | $ | 1,052 | $ | 1,010 | 7 | 10 | ||||||||||||||||||||||||||||
Retail Financial Services | 2,105 | 1,772 | 1,453 | 1,392 | 1,306 | 19 | 61 | |||||||||||||||||||||||||||||||||
Card Services | 3,107 | 3,096 | 3,092 | 3,176 | 3,176 | — | (2 | ) | ||||||||||||||||||||||||||||||||
Commercial Banking | 1,623 | 1,551 | 1,531 | 1,519 | 1,431 | 5 | 13 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services | 13 | 9 | 11 | 7 | 9 | 44 | 44 | |||||||||||||||||||||||||||||||||
Asset Management | 115 | 105 | 114 | 121 | 112 | 10 | 3 | |||||||||||||||||||||||||||||||||
Corporate (g) | 38 | 63 | 62 | 12 | 12 | (40 | ) | 217 | ||||||||||||||||||||||||||||||||
Total | $ | 8,113 | $ | 7,633 | $ | 7,300 | $ | 7,279 | $ | 7,056 | 6 | 15 | ||||||||||||||||||||||||||||
(a) | First quarter of 2007 primarily relates to the Firm’s adoption of SFAS 159, effective January 1, 2007. | |
(b) | Fourth quarter of 2006 reflects The Bank of New York transaction. | |
(c) | Includes RFS, Card Services and Corporate. | |
(d) | Wholesale Loans at fair value & loans held-for-sale were $20.6 billion, $11.6 billion, $15.6 billion, $22.5 billion, and $19.2 billion at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. These amounts were excluded when calculating the allowance coverage ratios. | |
(e) | Consumer Loans held-for-sale were $3.9 billion, $8.3 billion, $13.4 billion, $32.7 billion, and $17.0 billion at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. These amounts were excluded when calculating the allowance coverage ratios. | |
(f) | Nonperforming Loans held-for-sale were $75 million, $240 million, $116 million, $120 million, and $45 million at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, respectively. These amounts were excluded when calculating the allowance coverage ratios. | |
(g) | March 31, 2007 included $50 million associated with mortgages originated by RFS and AM and transferred to Corporate to be risk managed by the Chief Investment Office. |
Page 29
JPMORGAN CHASE & CO. CREDIT-RELATED INFORMATION, CONTINUED | ![]() | |
(in millions) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
PROVISION FOR CREDIT LOSSES | ||||||||||||||||||||||||||||||||||||||||
LOANS | ||||||||||||||||||||||||||||||||||||||||
Investment Bank | $ | 146 | $ | (13 | ) | $ | 35 | $ | 50 | $ | (36 | ) | NM | % | NM | % | $ | 168 | $ | 62 | 171 | % | ||||||||||||||||||
Commercial Banking | 98 | 10 | 17 | 86 | 55 | NM | 78 | 125 | 47 | 166 | ||||||||||||||||||||||||||||||
Treasury & Securities Services | 3 | (1 | ) | 4 | (2 | ) | 1 | NM | 200 | 6 | 1 | 500 | ||||||||||||||||||||||||||||
Asset Management | 4 | (13 | ) | (8 | ) | 12 | (29 | ) | NM | NM | (17 | ) | (42 | ) | 60 | |||||||||||||||||||||||||
Corporate | — | — | — | (2 | ) | 1 | — | NM | — | 1 | NM | |||||||||||||||||||||||||||||
Total Wholesale | 251 | (17 | ) | 48 | 144 | (8 | ) | NM | NM | 282 | 69 | 309 | ||||||||||||||||||||||||||||
Retail Financial Services | 688 | 589 | 292 | 253 | 113 | 17 | NM | 1,569 | 299 | 425 | ||||||||||||||||||||||||||||||
Card Services | 785 | 741 | 636 | 688 | 663 | 6 | 18 | 2,162 | 1,700 | 27 | ||||||||||||||||||||||||||||||
Corporate (a) | (31 | ) | 3 | 3 | — | — | NM | NM | (25 | ) | — | NM | ||||||||||||||||||||||||||||
Total Consumer | 1,442 | 1,333 | 931 | 941 | 776 | 8 | 86 | 3,706 | 1,999 | 85 | ||||||||||||||||||||||||||||||
Total Provision for Loan Losses | $ | 1,693 | $ | 1,316 | $ | 979 | $ | 1,085 | $ | 768 | 29 | 120 | $ | 3,988 | $ | 2,068 | 93 | |||||||||||||||||||||||
LENDING-RELATED COMMITMENTS | ||||||||||||||||||||||||||||||||||||||||
Investment Bank | $ | 81 | $ | 177 | $ | 28 | $ | 13 | $ | 43 | (54 | ) | 88 | $ | 286 | $ | 66 | 333 | ||||||||||||||||||||||
Commercial Banking | 14 | 35 | — | 25 | (1 | ) | (60 | ) | NM | 49 | 2 | NM | ||||||||||||||||||||||||||||
Treasury & Securities Services | 6 | 1 | 2 | — | — | 500 | NM | 9 | — | NM | ||||||||||||||||||||||||||||||
Asset Management | (1 | ) | 2 | (1 | ) | 2 | 1 | NM | NM | — | — | — | ||||||||||||||||||||||||||||
Total Wholesale | 100 | 215 | 29 | 40 | 43 | (53 | ) | 133 | 344 | 68 | 406 | |||||||||||||||||||||||||||||
Retail Financial Services | (8 | ) | (2 | ) | — | 9 | 1 | (300 | ) | NM | (10 | ) | — | NM | ||||||||||||||||||||||||||
Card Services | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Total Consumer | (8 | ) | (2 | ) | — | 9 | 1 | (300 | ) | NM | (10 | ) | — | NM | ||||||||||||||||||||||||||
Total Provision for Lending-Related Commitments | $ | 92 | $ | 213 | $ | 29 | $ | 49 | $ | 44 | (57 | ) | 109 | $ | 334 | $ | 68 | 391 | ||||||||||||||||||||||
TOTAL PROVISION FOR CREDIT LOSSES | ||||||||||||||||||||||||||||||||||||||||
Investment Bank | $ | 227 | $ | 164 | $ | 63 | $ | 63 | $ | 7 | 38 | NM | $ | 454 | $ | 128 | 255 | |||||||||||||||||||||||
Commercial Banking | 112 | 45 | 17 | 111 | 54 | 149 | 107 | 174 | 49 | 255 | ||||||||||||||||||||||||||||||
Treasury & Securities Services | 9 | — | 6 | (2 | ) | 1 | NM | NM | 15 | 1 | NM | |||||||||||||||||||||||||||||
Asset Management | 3 | (11 | ) | (9 | ) | 14 | (28 | ) | NM | NM | (17 | ) | (42 | ) | 60 | |||||||||||||||||||||||||
Corporate | — | — | — | (2 | ) | 1 | — | NM | — | 1 | NM | |||||||||||||||||||||||||||||
Total Wholesale | 351 | 198 | 77 | 184 | 35 | 77 | NM | 626 | 137 | 357 | ||||||||||||||||||||||||||||||
Retail Financial Services | 680 | 587 | 292 | 262 | 114 | 16 | 496 | 1,559 | 299 | 421 | ||||||||||||||||||||||||||||||
Card Services | 785 | 741 | 636 | 688 | 663 | 6 | 18 | 2,162 | 1,700 | 27 | ||||||||||||||||||||||||||||||
Corporate (a) | (31 | ) | 3 | 3 | — | — | NM | NM | (25 | ) | — | NM | ||||||||||||||||||||||||||||
Total Consumer | 1,434 | 1,331 | 931 | 950 | 777 | 8 | 85 | 3,696 | 1,999 | 85 | ||||||||||||||||||||||||||||||
Total Provision for Credit Losses | 1,785 | 1,529 | 1,008 | 1,134 | 812 | 17 | 120 | 4,322 | 2,136 | 102 | ||||||||||||||||||||||||||||||
Securitized Credit Losses | 578 | 590 | 593 | 593 | 607 | (2 | ) | (5 | ) | 1,761 | 1,617 | 9 | ||||||||||||||||||||||||||||
Managed Provision for Credit Losses | $ | 2,363 | $ | 2,119 | $ | 1,601 | $ | 1,727 | $ | 1,419 | 12 | 67 | $ | 6,083 | $ | 3,753 | 62 | |||||||||||||||||||||||
(a) | Includes amounts related to held-for-investment prime mortgages transferred from RFS and AM to the Corporate segment. |
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JPMORGAN CHASE & CO. CAPITAL | ![]() | |
(in millions, except per share and ratio data) |
QUARTERLY TRENDS | YEAR-TO-DATE | |||||||||||||||||||||||||||||||||||||||
3Q07 Change | 2007 Change | |||||||||||||||||||||||||||||||||||||||
3Q07 | 2Q07 | 1Q07 | 4Q06 | 3Q06 | 2Q07 | 3Q06 | 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||
COMMON SHARES OUTSTANDING | ||||||||||||||||||||||||||||||||||||||||
Weighted-Average Basic Shares Outstanding | 3,375.9 | # | 3,415.1 | # | 3,456.4 | # | 3,465.3 | # | 3,468.6 | # | (1 | )% | (3 | )% | 3,415.8 | # | 3,471.7 | # | (2 | )% | ||||||||||||||||||||
Weighted-Average Diluted Shares Outstanding | 3,477.7 | 3,521.6 | 3,559.5 | 3,578.6 | 3,574.0 | (1 | ) | (3 | ) | 3,519.6 | 3,572.3 | (1 | ) | |||||||||||||||||||||||||||
Common Shares Outstanding — at Period End | 3,358.8 | 3,398.5 | 3,416.3 | 3,461.7 | 3,467.5 | (1 | ) | (3 | ) | 3,358.8 | 3,467.5 | (3 | ) | |||||||||||||||||||||||||||
Cash Dividends Declared per Share | $ | 0.38 | $ | 0.38 | $ | 0.34 | $ | 0.34 | $ | 0.34 | — | 12 | $ | 1.10 | $ | 1.02 | 8 | |||||||||||||||||||||||
Book Value per Share | 35.72 | 35.08 | 34.45 | 33.45 | 32.75 | 2 | 9 | 35.72 | 32.75 | 9 | ||||||||||||||||||||||||||||||
Dividend Payout (a) | 39 | % | 31 | % | 25 | % | 27 | % | 37 | % | 31 | % | 37 | % | ||||||||||||||||||||||||||
NET INCOME | $ | 3,373 | $ | 4,234 | $ | 4,787 | $ | 4,526 | $ | 3,297 | (20 | ) | 2 | $ | 12,394 | $ | 9,918 | 25 | ||||||||||||||||||||||
Preferred Dividends | — | — | — | — | — | — | — | — | 4 | NM | ||||||||||||||||||||||||||||||
Net Income Applicable to Common Stock | $ | 3,373 | $ | 4,234 | $ | 4,787 | $ | 4,526 | $ | 3,297 | (20 | ) | 2 | $ | 12,394 | $ | 9,914 | 25 | ||||||||||||||||||||||
INCOME PER SHARE | ||||||||||||||||||||||||||||||||||||||||
Basic Earnings per Share | ||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 1.00 | $ | 1.24 | $ | 1.38 | $ | 1.13 | $ | 0.93 | (19 | ) | 8 | $ | 3.63 | $ | 2.81 | 29 | ||||||||||||||||||||||
Net Income | 1.00 | 1.24 | 1.38 | 1.31 | 0.95 | (19 | ) | 5 | 3.63 | 2.86 | 27 | |||||||||||||||||||||||||||||
Diluted Earnings per Share | ||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.97 | $ | 1.20 | $ | 1.34 | $ | 1.09 | $ | 0.90 | (19 | ) | 8 | $ | 3.52 | $ | 2.73 | 29 | ||||||||||||||||||||||
Net Income | 0.97 | 1.20 | 1.34 | 1.26 | 0.92 | (19 | ) | 5 | 3.52 | 2.78 | 27 | |||||||||||||||||||||||||||||
SHARE PRICE | ||||||||||||||||||||||||||||||||||||||||
High | $ | 50.48 | $ | 53.25 | $ | 51.95 | $ | 49.00 | $ | 47.49 | (5 | ) | 6 | $ | 53.25 | $ | 47.49 | 12 | ||||||||||||||||||||||
Low | 42.16 | 47.70 | 45.91 | 45.51 | 40.40 | (12 | ) | 4 | 42.16 | 37.88 | 11 | |||||||||||||||||||||||||||||
Close | 45.82 | 48.45 | 48.38 | 48.30 | 46.96 | (5 | ) | (2 | ) | 45.82 | 46.96 | (2 | ) | |||||||||||||||||||||||||||
Market Capitalization | 153,901 | 164,659 | 165,280 | 167,199 | 162,835 | (7 | ) | (5 | ) | 153,901 | 162,835 | (5 | ) | |||||||||||||||||||||||||||
STOCK REPURCHASE PROGRAM (b) | ||||||||||||||||||||||||||||||||||||||||
Aggregate Repurchases | $ | 2,135.4 | $ | 1,875.3 | $ | 4,000.9 | $ | 1,000.3 | $ | 900.0 | 14 | 137 | $ | 8,011.6 | $ | 2,935.8 | 173 | |||||||||||||||||||||||
Common Shares Repurchased | 47.0 | # | 36.7 | # | 80.9 | # | 21.1 | # | 20.0 | # | 28 | 135 | 164.6 | # | 69.5 | # | 137 | |||||||||||||||||||||||
Average Purchase Price | $ | 45.42 | $ | 51.13 | $ | 49.45 | $ | 47.33 | $ | 44.88 | (11 | ) | 1 | $ | 48.67 | $ | 42.22 | 15 | ||||||||||||||||||||||
CAPITAL RATIOS | ||||||||||||||||||||||||||||||||||||||||
Tier 1 Capital | $ | 86,096 | (c) | $ | 85,096 | $ | 82,538 | $ | 81,055 | $ | 79,830 | 1 | 8 | |||||||||||||||||||||||||||
Total Capital | 128,543 | (c) | 122,276 | 115,142 | 115,265 | 111,670 | 5 | 15 | ||||||||||||||||||||||||||||||||
Risk-Weighted Assets | 1,027,493 | (c) | 1,016,031 | 972,813 | 935,909 | 926,455 | 1 | 11 | ||||||||||||||||||||||||||||||||
Adjusted Average Assets | 1,423,171 | (c) | 1,376,727 | 1,324,145 | 1,308,699 | 1,257,364 | 3 | 13 | ||||||||||||||||||||||||||||||||
Tier 1 Capital Ratio | 8.4 | %(c) | 8.4 | % | 8.5 | % | 8.7 | % | 8.6 | % | ||||||||||||||||||||||||||||||
Total Capital Ratio | 12.5 | (c) | 12.0 | 11.8 | 12.3 | 12.1 | ||||||||||||||||||||||||||||||||||
Tier 1 Leverage Ratio | 6.0 | (c) | 6.2 | 6.2 | 6.2 | 6.3 | ||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS (PERIOD-END) | ||||||||||||||||||||||||||||||||||||||||
Goodwill | $ | 45,335 | $ | 45,254 | $ | 45,063 | $ | 45,186 | $ | 43,372 | — | 5 | ||||||||||||||||||||||||||||
Mortgage Servicing Rights | 9,114 | 9,499 | 7,937 | 7,546 | 7,378 | (4 | ) | 24 | ||||||||||||||||||||||||||||||||
Purchased Credit Card Relationships | 2,427 | 2,591 | 2,758 | 2,935 | 2,982 | (6 | ) | (19 | ) | |||||||||||||||||||||||||||||||
All Other Intangibles | 3,959 | 4,103 | 4,205 | 4,371 | 4,078 | (4 | ) | (3 | ) | |||||||||||||||||||||||||||||||
Total Intangibles | $ | 60,835 | $ | 61,447 | $ | 59,963 | $ | 60,038 | $ | 57,810 | (1 | ) | 5 | |||||||||||||||||||||||||||
(a) | Based on Net income amounts. | |
(b) | Excludes commission costs. | |
(c) | Estimated. |
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JPMORGAN CHASE & CO. Glossary of Terms | ![]() |
ACH:Automated Clearing House
Average Managed Assets:Refers to total assets on the Firm’s balance sheet plus credit card receivables that have been securitized.
Beneficial interest issued by consolidated VIEs:Represents the interest of third-party holders of debt/equity securities, or other obligations, issued by VIEs that JPMorgan Chase consolidates under FIN 46R. The underlying obligations of the VIEs consist of short-term borrowings, commercial paper and long-term debt. The related assets consist of trading assets, available- for-sale securities, loans and other assets.
Contractual Credit Card Charge-off:In accordance with the Federal Financial Institutions Examination Council policy, credit card loans are charged off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification of the filing of bankruptcy, whichever is earlier.
Corporate:Includes Private Equity, Treasury and Corporate Other, which includes other centrally managed expenses and discontinued operations.
Credit Card Securitizations:Card Services’ managed results excludes the impact of credit card securitizations on total net revenue, the provision for credit losses, net charge-offs and loan receivables. Through securitization, the Firm transforms a portion of its credit card receivables into securities, which are sold to investors. The credit card receivables are removed from the Consolidated balance sheets through the transfer of the receivables to a trust, and the sale of undivided interests to investors that entitle the investors to specific cash flows generated from the credit card receivables. The Firm retains the remaining undivided interests as seller’s interests, which are recorded in Loans on the Consolidated balance sheets. A gain or loss on the sale of credit card receivables to investors is recorded in Other Income. Securitization also affects the Firm’s Consolidated statements of income as the aggregate amount of interest income, certain fee revenue and recoveries that is in excess of the aggregate amount of interest paid to the investors, gross credit losses and other trust expenses related to the securitized receivables are reclassified into credit card income.
Discontinued operations:A component of an entity that is classified as held-for-sale or that has been disposed of from ongoing operations in its entirety or piecemeal, and for which the entity will not have any significant, continuing involvement. A discontinued operation may be a separate major business segment, a component of a major business segment or a geographical area of operations of the entity that can be separately distinguished operationally and for financial reporting purposes.
FIN 46(R):FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51.”
FIN 48:FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109.”
Interests in Purchased Receivables:Represent an ownership interest in cash flows of an underlying pool of receivables transferred by a third-party seller into a bankruptcy-remote entity, generally a trust.
Investment-grade:An indication of credit quality based upon JPMorgan Chase’s internal risk assessment system. “Investment-grade” generally represents a risk profile similar to a rating of a BBB-/Baa3 or better, as defined by independent rating agencies.
Managed Basis:A non-GAAP presentation of financial results that includes reclassifications related to credit card securitizations and taxable equivalents. Management uses this non-GAAP financial measure at the segment level because it believes this provides information to investors in understanding the underlying operational performance and trends of the particular business segment and facilitates a comparison of the business segment with the performance of competitors.
Managed Credit Card Receivables:Refers to credit card receivables on the Firm’s balance sheet plus credit card receivables that have been securitized.
Mark-to-market exposure:A measure, at a point in time, of the value of a derivative or foreign exchange contract in the open market. When the mark-to-market value is positive, it indicates the counterparty owes JPMorgan Chase and, therefore, creates a repayment risk for the Firm. When the mark-to-market value is negative, JPMorgan Chase owes the counterparty. In this situation, the Firm does not have repayment risk.
Merger:The July 1, 2004, merger with Bank One Corporation.
MSR Risk Management Revenue:Includes changes in MSR asset fair value due to inputs or assumptions in model and derivative valuation adjustments and other.
Net yield on interest-earning assets:The average rate for interest-earning assets less the average rate paid for all sources of funds.
NM:Not meaningful.
Overhead Ratio:Noninterest expense as a percentage of total net revenue.
Principal Transactions (Revenue):Realized and unrealized gains and losses from trading activities (including physical commodities inventories that are accounted for at the lower of cost or fair value) and changes in fair value associated with instruments held by the Investment Bank for which the SFAS 159 fair value option was elected. Principal transactions revenue also include private equity gains and losses.
Reported Basis:Financial statements prepared under accounting principles generally accepted in the United States of America (“U.S. GAAP”). The reported basis includes the impact of credit card securitizations, but excludes the impact of taxable equivalent adjustments.
SFAS:Statement of Financial Accounting Standards.
SFAS 123R:“Share-Based Payment.”
SFAS 140:“Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a replacement of FASB Statement No. 125.”
SFAS 157:“Fair Value Measurements.”
SFAS 159:“The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115.”
Tax-Equivalent Basis:Total net revenue for each of the business segments and the Firm is presented on a tax-equivalent basis. Accordingly, revenue from tax exempt securities and investments that receive tax credits is presented in the managed results on a basis comparable to taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenues arising from both taxable and tax-exempt sources. The corresponding income tax impact related to these items is recorded within income tax expense.
Unaudited:Financial statements and information included throughout this document that have not been subjected to auditing procedures sufficient to permit an independent certified public accountant to express an opinion.
U.S. GAAP:Accounting principles generally accepted in the United States of America.
Value-at-Risk (“VAR”):A measure of the dollar amount of potential loss from adverse market moves in an ordinary market environment.
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JPMORGAN CHASE & CO. Line of Business Metrics | ![]() |
Investment Banking
IB’S REVENUES COMPRISE THE FOLLOWING:
1. Investment banking feesincludes advisory, equity underwriting, bond underwriting and loan syndication fees.
2. Fixed income marketsincludes client and portfolio management revenue related to both market-making and proprietary risk-taking across global fixed income markets, including government and corporate debt, foreign exchange, interest rate and commodities markets.
3. Equities marketsincludes client and portfolio management revenue related to market-making and proprietary risk-taking across global equity products, including cash instruments, derivatives and convertibles.
4. Credit portfolio revenueincludes Net interest income, fees and loan sale activity for IB’s credit portfolio. Credit portfolio revenue also includes gains or losses on securities received as part of a loan restructuring, and changes in the credit valuation adjustment (“CVA”), which is the component of the fair value of a derivative that reflects the credit quality of the counterparty. Credit portfolio revenue also includes the results of risk management related to the Firm’s lending and derivative activities. In addition, Credit portfolio revenue includes an adjustment to the valuation of the Firm’s derivative liabilities measured at fair value that reflects the credit quality of the Firm, in conjunction with SFAS 157.
Retail Financial Services (continued)
MORTGAGE BANKING’S ORIGINATION CHANNELS COMPRISE THE FOLLOWING:
1. Retail —Borrowers who are buying or refinancing a home are directly contacted by a mortgage banker employed by the Firm using a branch office, the Internet or by phone. Borrowers are frequently referred to a mortgage banker by real estate brokers, home builders or other third parties.
2. Wholesale —A third-party mortgage broker refers loan applications to a mortgage banker at the Firm. Brokers are independent loan originators that specialize in finding and counseling borrowers but do not provide funding for loans.
3. Correspondent (including negotiated transactions) —Correspondents are banks, thrifts, other mortgage banks and other financial institutions that sell closed loans to the Firm.
4. Correspondent negotiated transactions (“CNT”) — Correspondent negotiated transactions exclude purchased bulk servicing transactions and occur when mid- to large-sized mortgage lenders, banks and bank-owned mortgage companies sell servicing to the Firm on an as-originated basis. These transactions supplement traditional production channels and provide growth opportunities in the servicing portfolio in stable and rising-rate periods.
Retail Financial Services
DESCRIPTION OF SELECTED BUSINESS METRICS WITHIN REGIONAL BANKING:
1. Personal bankers —Retail branch office personnel who acquire, retain and expand new and existing customer relationships by assessing customer needs and recommending and selling appropriate banking products and services.
2. Sales specialists —Retail branch office personnel who specialize in the marketing of a single product, including mortgages, investments and business banking, by partnering with the personal bankers.
MORTGAGE BANKING REVENUES COMPRISE THE FOLLOWING:
1. Production revenueincludes Mortgage Servicing Rights created from the sales of loans, net gains or losses on the sales of loans, and other production-related fees. Also includes revenue associated with originations of subprime mortgage loans.
2. Net mortgage servicing revenue
a) Servicing revenuerepresents all gross income earned from servicing third-party mortgage loans including stated service fees, excess service fees, late fees, and other ancillary fees.
b) Changes in MSR asset fair value due to:
— market-based inputssuch as interest rates and volatility, as well as updates to valuation assumptions used in the MSR valuation model.
— servicing portfolio runoff (or time decay)
c) Derivative valuation adjustments and other,which represents changes in the fair value of derivative instruments used to offset the impact of changes in the market-based inputs to the MSR valuation model.
3. MSR risk management resultsinclude changes in the MSR asset fair value due to inputs or assumptions and derivative valuation adjustments and other.
Card Services
DESCRIPTION OF SELECTED BUSINESS METRICS WITHIN CARD SERVICES:
1. Charge volume —Represents the dollar amount of cardmember purchases, balance transfers and cash advance activity.
2. Net accounts opened —Includes originations, purchases and sales.
3. Merchant acquiring business —Represents an entity that processes payments for merchants. JPMorgan Chase is a partner in Chase Paymentech Solutions, LLC.
4. Bank card volume —Represents the dollar amount of transactions processed for the merchants.
5. Total transactions —Represents the number of transactions and authorizations processed for the merchants.
Page 33
JPMORGAN CHASE & CO. Line of Business Metrics (continued) | ![]() |
Commercial Banking
COMMERCIAL BANKING REVENUES COMPRISE THE FOLLOWING:
1. Lendingincludes a variety of financing alternatives, which are often provided on a basis secured by receivables, inventory, equipment, real estate or other assets. Products include term loans, revolving lines of credit, bridge financing, asset-backed structures, and leases.
2. Treasury servicesincludes a broad range of products and services enabling clients to transfer, invest and manage the receipt and disbursement of funds, while providing the related information reporting. These products and services include U.S. dollar and multi-currency clearing, ACH, lockbox, disbursement and reconciliation services, check deposits, other check and currency-related services, trade finance and logistics solutions, commercial card, and deposit products, sweeps and money market mutual funds.
3. Investment bankingproducts provide clients with sophisticated capital-raising alternatives, as well as balance sheet and risk management tools through loan syndications, investment-grade debt, asset-backed securities, private placements, high-yield bonds, equity underwriting, advisory, interest rate derivatives, and foreign exchange hedges.
DESCRIPTION OF SELECTED BUSINESS METRICS WITHIN COMMERCIAL BANKING:
1. Liability balancesinclude deposits and deposits that are swept to on-balance sheet liabilities (e.g., commercial paper, Fed funds purchased, and repurchase agreements).
2. IB revenues, gross —Represents total revenue related to investment banking products sold to CB clients.
Asset Management
Assets Under Management:Represent assets actively managed by Asset Management on behalf of institutional, private banking, private client services and retail clients. Excludes assets managed by American Century Companies, Inc., in which the Firm has a 44% ownership interest.
Assets Under Supervision:Represents assets under management as well as custody, brokerage, administration and deposit accounts.
Alternative Assets:The following types of assets constitute alternative investments — hedge funds, currency, real estate and private equity.
AM’s CLIENT SEGMENTS COMPRISE THE FOLLOWING:
1. Institutionalbrings comprehensive global investment services — including asset management, pension analytics, asset-liability management and active risk budgeting strategies — to corporate and public institutions, endowments, foundations, not-for-profit organizations and governments worldwide.
2. Retailprovides worldwide investment management services and retirement planning and administration through third-party and direct distribution of a full range of investment vehicles.
3.ThePrivate Bankaddresses every facet of wealth management for ultra-high-net-worth individuals and families worldwide, including investment management, capital markets and risk management, tax and estate planning, banking, capital raising and specialty-wealth advisory services.
4. Private Client Servicesoffers high-net-worth individuals, families and business owners in the United States comprehensive wealth management solutions, including investment management, capital markets and risk management, tax and estate planning, banking, and specialty-wealth advisory services.
Treasury & Securities Services
Treasury & Securities Servicesfirmwide metricsinclude certain TSS product revenues and liability balances reported in other lines of business related to customers who are also customers of those other lines of business. In order to capture the firmwide impact of TS and TSS products and revenues, management reviews firmwide metrics such as liability balances, revenues and overhead ratios in assessing financial performance for TSS. Firmwide metrics are necessary, in management’s view, in order to understand the aggregate TSS business.
DESCRIPTION OF SELECTED BUSINESS METRICS WITHIN TREASURY & SECURITIES SERVICES:
Liability balancesinclude deposits and deposits that are swept to on-balance sheet liabilities (e.g., commercial paper, Fed funds purchased, and repurchase agreements).
Page 34