Document and Company Informatio
Document and Company Information (USD $) | |||
9 Months Ended
Sep. 30, 2009 | Oct. 31, 2009
| Jun. 30, 2008
| |
Document and Company Information [Abstract] | |||
Entity Registrant Name | J P MORGAN CHASE & CO | ||
Entity Central Index Key | 0000019617 | ||
Document Type | 10-Q | ||
Document Period End Date | 2009-09-30 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float (actual number) | $117,255,349,362 | ||
Entity Common Stock, Shares Outstanding (actual number) | 3,940,654,134 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) (USD $) | |||||||||||||||||||
In Millions, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |||||||||||||||
Revenue | |||||||||||||||||||
Investment banking fees | $1,679 | $1,316 | $5,171 | $4,144 | |||||||||||||||
Principal transactions | 3,860 | (2,763) | 8,958 | (2,814) | |||||||||||||||
Lending- and deposit-related fees | 1,826 | 1,168 | 5,280 | 3,312 | |||||||||||||||
Asset management, administration and commissions | 3,158 | 3,485 | 9,179 | 10,709 | |||||||||||||||
Securities gains | 184 | [1] | 424 | [1] | 729 | [1] | 1,104 | [1] | |||||||||||
Mortgage fees and related income | 843 | 457 | 3,228 | 1,678 | |||||||||||||||
Credit card income | 1,710 | 1,771 | 5,266 | 5,370 | |||||||||||||||
Other income | 625 | (115) | 685 | 1,576 | |||||||||||||||
Noninterest revenue | 13,885 | 5,743 | 38,496 | 25,079 | |||||||||||||||
Interest income | 16,260 | 17,326 | 50,735 | 51,387 | |||||||||||||||
Interest expense | 3,523 | 8,332 | 11,961 | 26,440 | |||||||||||||||
Net interest income | 12,737 | 8,994 | 38,774 | 24,947 | |||||||||||||||
Total net revenue | 26,622 | 14,737 | 77,270 | 50,026 | |||||||||||||||
Provision for credit losses | 8,104 | 5,787 | 24,731 | 13,666 | |||||||||||||||
Noninterest expense | |||||||||||||||||||
Compensation expense | 7,311 | 5,858 | 21,816 | 17,722 | |||||||||||||||
Occupancy expense | 923 | 766 | 2,722 | 2,083 | |||||||||||||||
Technology, communications and equipment expense | 1,140 | 1,112 | 3,442 | 3,108 | |||||||||||||||
Professional & outside services | 1,517 | 1,451 | 4,550 | 4,234 | |||||||||||||||
Marketing | 440 | 453 | 1,241 | 1,412 | |||||||||||||||
Other expense | 1,767 | 1,096 | 5,332 | 2,498 | |||||||||||||||
Amortization of intangibles | 254 | 305 | 794 | 937 | |||||||||||||||
Merger costs | 103 | 96 | 451 | 251 | |||||||||||||||
Total noninterest expense | 13,455 | 11,137 | 40,348 | 32,245 | |||||||||||||||
Income/(loss) before income tax expense/(benefit) and extraordinary gain | 5,063 | (2,187) | 12,191 | 4,115 | |||||||||||||||
Income tax expense/(benefit) | 1,551 | (2,133) | 3,817 | (207) | |||||||||||||||
Income/(loss) before extraordinary gain | 3,512 | (54) | 8,374 | 4,322 | |||||||||||||||
Extraordinary gain | 76 | 581 | 76 | 581 | |||||||||||||||
Net income | 3,588 | 527 | 8,450 | 4,903 | |||||||||||||||
Net income applicable to common stockholders | $3,240 | $318 | $5,825 | $4,492 | |||||||||||||||
Per common share data - Basic earnings per share | |||||||||||||||||||
Income/(loss) before extraordinary gain | 0.8 | -0.08 | 1.5 | 1.14 | |||||||||||||||
Net income | 0.82 | 0.09 | 1.52 | 1.31 | |||||||||||||||
Per common share data - Diluted earnings per share | |||||||||||||||||||
Income/(loss) before extraordinary gain | 0.8 | -0.08 | 1.5 | 1.13 | |||||||||||||||
Net income | 0.82 | 0.09 | 1.51 | 1.3 | |||||||||||||||
Weighted-average basic shares | 3937.9 | 3444.6 | 3,835 | 3422.3 | |||||||||||||||
Weighted-average diluted shares | 3,962 | 3444.6 | 3848.3 | 3446.2 | |||||||||||||||
Cash dividends declared per common share | 0.05 | 0.38 | 0.15 | 1.14 | |||||||||||||||
[1]Securities gains for the three and nine months ended September 30, 2009, included credit losses of $18 million and $202 million, respectively, consisting of zero and $880 million, respectively, of total other-than-temporary impairment losses, net of ($18) million and $678 million, respectively, of other-than-temporary impairment losses recorded in (reclassified from) other comprehensive income. |
1_Consolidated Statements of In
Consolidated Statements of Income (Parenthetical) (Unaudited) (USD $) | ||
In Millions | 3 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2009 |
Revenue | ||
Credit Losses | $18 | $202 |
Total Other Than Temporary Impairment Losses | 0 | 880 |
Other - than - temporary Impairment losses recorded in (reclassified from) other comprehensive income | ($18) | $678 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) (USD $) | ||
In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
Assets | ||
Cash and due from banks | $21,068 | $26,895 |
Deposits with banks | 59,623 | 138,139 |
Federal funds sold and securities purchased under resale agreements (included $18,931 and $20,843 at fair value at September 30, 2009, and December 31, 2008, respectively) | 171,007 | 203,115 |
Securities borrowed (included $5,458 and $3,381 at fair value at September 30, 2009, and December 31, 2008, respectively) | 128,059 | 124,000 |
Trading assets (included assets pledged of $54,077 and $75,063 at September 30, 2009, and December 31, 2008, respectively) | 424,435 | 509,983 |
Securities (included $372,840 and $205,909 at fair value at September 30, 2009, and December 31, 2008, respectively, and assets pledged of $95,959 and $25,942 at September 30, 2009, and December 31, 2008, respectively) | 372,867 | 205,943 |
Loans (included $1,931 and $7,696 at fair value at September 30, 2009, and December 31, 2008, respectively) | 653,144 | 744,898 |
Allowance for loan losses | (30,633) | (23,164) |
Loans, net of allowance for loan losses | 622,511 | 721,734 |
Accrued interest and accounts receivable | 59,948 | 60,987 |
Premises and equipment | 10,675 | 10,045 |
Goodwill | 48,334 | 48,027 |
Other intangible assets: | ||
Mortgage servicing rights | 13,663 | 9,403 |
Purchased credit card relationships | 1,342 | 1,649 |
All other intangibles | 3,520 | 3,932 |
Other assets (included $18,745 and $29,199 at fair value at September 30, 2009, and December 31, 2008, respectively) | 103,957 | 111,200 |
Total assets | 2,041,009 | 2,175,052 |
Liabilities | ||
Deposits (included $3,916 and $5,605 at fair value at September 30, 2009, and December 31, 2008, respectively) | 867,977 | 1,009,277 |
Federal funds purchased and securities loaned or sold under repurchase agreements (included $2,693 and $2,993 at fair value at September 30, 2009, and December 31, 2008, respectively) | 310,219 | 192,546 |
Commercial paper | 53,920 | 37,845 |
Other borrowed funds (included $5,043 and $14,713 at fair value at September 30, 2009, and December 31, 2008, respectively) | 50,824 | 132,400 |
Trading liabilities | 134,447 | 166,878 |
Accounts payable and other liabilities (at September 30, 2009, and December 31, 2008, included the allowance for lending-related commitments of $821 and $659, respectively, and $384 and zero at fair value, respectively) | 171,386 | 187,978 |
Beneficial interests issued by consolidated variable interest entities (included $1,995 and $1,735 at fair value at September 30, 2009, and December 31, 2008, respectively) | 17,859 | 10,561 |
Long-term debt (included $52,179 and $58,214 at fair value at September 30, 2009, and December 31, 2008, respectively) | 254,413 | 252,094 |
Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities | 17,711 | 18,589 |
Total liabilities | 1,878,756 | 2,008,168 |
Stockholders' equity | ||
Preferred stock ($1 par value; authorized 200,000,000 shares at September 30, 2009, and December 31, 2008; issued 2,538,107 and 5,038,107 shares at September 30, 2009, and December 31, 2008, respectively) | 8,152 | 31,939 |
Common stock ($1 par value; authorized 9,000,000,000 shares at September 30, 2009, and December 31, 2008; issued 4,104,933,895 and 3,941,633,895 shares at September 30, 2009, and December 31, 2008, respectively) | 4,105 | 3,942 |
Capital surplus | 97,564 | 92,143 |
Retained earnings | 59,573 | 54,013 |
Accumulated other comprehensive income/(loss) | 283 | (5,687) |
Shares held in RSU Trust, at cost (1,925,550 and 4,794,723 shares at September 30, 2009, and December 31, 2008, respectively) | (86) | (217) |
Treasury stock, at cost (166,184,844 and 208,833,260 shares at September 30, 2009, and December 31, 2008, respectively) | (7,338) | (9,249) |
Total stockholders' equity | 162,253 | 166,884 |
Total liabilities and stockholders' equity | $2,041,009 | $2,175,052 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $) | ||
In Millions, except Share data | Sep. 30, 2009
| Dec. 31, 2008
|
Assets | ||
Federal funds sold and securities purchased under resale agreements, at fair value | $18,931 | $20,843 |
Securities borrowed, at fair value | 5,458 | 3,381 |
Trading assets pledged | 54,077 | 75,063 |
Securities, at fair value | 372,840 | 205,909 |
Securities, assets pledged | 95,959 | 25,942 |
Loans, at fair value | 1,931 | 7,696 |
Other assets, at fair value | 18,745 | 29,199 |
Liabilities | ||
Deposits, at fair value | 3,916 | 5,605 |
Federal funds purchased and securities loaned or sold under repurchase agreements, at fair value | 2,693 | 2,993 |
Other borrowed funds, at fair value | 5,043 | 14,713 |
Allowance for lending-related commitments | 821 | 659 |
Accounts payable and other liabilities, at fair value | 384 | 0 |
Beneficial interests issued by consolidated variable interest entities, at fair value | 1,995 | 1,735 |
Long-term debt, at fair value | $52,179 | $58,214 |
Stockholders' equity | ||
Preferred stock, par value (actual number) | 1 | 1 |
Preferred stock, shares authorized (actual number) | 200,000,000 | 200,000,000 |
Preferred stock, shares issued (actual number) | 2,538,107 | 5,038,107 |
Common stock, par value (actual number) | 1 | 1 |
Common stock, shares authorized (actual number) | 9,000,000,000 | 9,000,000,000 |
Common stock, shares issued (actual number) | 4,104,933,895 | 3,941,633,895 |
Shares held in RSU Trust, shares (actual number) | 1,925,550 | 4,794,723 |
Treasury stock, shares (actual number) | 166,184,844 | 208,833,260 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders Equity and Comprehensive Income (Unaudited) (USD $) | ||||||||
In Millions | Stock held in RSU Trust
| Common stock
| Preferred stock
| Capital surplus
| Treasury stock, at cost
| Retained earnings
| Accumulated other comprehensive income/(loss)
| Total
|
Balance at Dec. 31, 2007 | $0 | $3,658 | $0 | $78,597 | ($12,832) | $54,715 | ($917) | |
Issuance of stock | 284 | 7,800 | 11,201 | |||||
Issuance of preferred stock - conversion of the Bear Stearns preferred stock | 352 | |||||||
Accretion of preferred stock discount on issuance to the U.S. Treasury | 0 | |||||||
Redemption of preferred stock issued to the U.S. Treasury | 0 | |||||||
Preferred stock issue cost | (54) | |||||||
Shares issued and commitments to issue common stock for employee stock-based compensation awards and related tax effects | 501 | |||||||
Net Change from the Bear Stearns merger - Reissuance of treasury stock and the Share Exchange agreement | 48 | |||||||
Net Change from the Bear Stearns merger - Employee stock awards | 242 | |||||||
Other | 0 | |||||||
Dividend declared: | ||||||||
Net income | 4,903 | 4,903 | ||||||
Dividend declared - preferred stock | (251) | |||||||
Dividend declared - Accelerated amortization from redemption of preferred stock issued to the U.S. Treasury | 0 | |||||||
Dividend declared - Common stock ($0.15 and $1.14 per share for 2009 and 2008, respectively) | (4,150) | |||||||
Resulting From the Bear stearns merger | (269) | |||||||
Reissuance from RSU Trust | 2 | |||||||
Reissuance from treasury stock | 2,174 | |||||||
Share repurchases related to employee stock-based compensation awards | (1) | |||||||
Net change from the Bear Stearns merger as a result of the reissuance of treasury stock and the Share Exchange agreement | 1,150 | |||||||
Other comprehensive income/(loss) | (1,310) | (1,310) | ||||||
Ending Balance at Sep. 30, 2008 | (267) | 3,942 | 8,152 | 90,535 | (9,509) | 55,217 | (2,227) | 145,843 |
Dividend declared: | ||||||||
Balance at Dec. 31, 2008 | (217) | 3,942 | 31,939 | 92,143 | (9,249) | 54,013 | (5,687) | |
Issuance of stock | 163 | 0 | 5,593 | |||||
Issuance of preferred stock - conversion of the Bear Stearns preferred stock | 0 | |||||||
Accretion of preferred stock discount on issuance to the U.S. Treasury | 1,213 | |||||||
Redemption of preferred stock issued to the U.S. Treasury | (25,000) | |||||||
Preferred stock issue cost | 0 | |||||||
Shares issued and commitments to issue common stock for employee stock-based compensation awards and related tax effects | 48 | |||||||
Net Change from the Bear Stearns merger - Reissuance of treasury stock and the Share Exchange agreement | 0 | |||||||
Net Change from the Bear Stearns merger - Employee stock awards | 0 | |||||||
Other | (220) | |||||||
Dividend declared: | ||||||||
Net income | 8,450 | 8,450 | ||||||
Dividend declared - preferred stock | (1,166) | |||||||
Dividend declared - Accelerated amortization from redemption of preferred stock issued to the U.S. Treasury | (1,112) | |||||||
Dividend declared - Common stock ($0.15 and $1.14 per share for 2009 and 2008, respectively) | (612) | |||||||
Resulting From the Bear stearns merger | 0 | |||||||
Reissuance from RSU Trust | 131 | |||||||
Reissuance from treasury stock | 1,930 | |||||||
Share repurchases related to employee stock-based compensation awards | (19) | |||||||
Net change from the Bear Stearns merger as a result of the reissuance of treasury stock and the Share Exchange agreement | 0 | |||||||
Other comprehensive income/(loss) | 5,970 | 5,970 | ||||||
Ending Balance at Sep. 30, 2009 | ($86) | $4,105 | $8,152 | $97,564 | ($7,338) | $59,573 | $283 | $162,253 |
2_Consolidated Statements of Ch
Consolidated Statements of Changes in Equity and Comprehensive Income (Parenthetical) (Unaudited) (Retained earnings, USD $) | ||
9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |
Dividend declared: | ||
Common stock, dividends, per share, declared | 0.15 | 1.14 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) (USD $) | ||
In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Operating activities | ||
Net income | $8,450 | $4,903 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Provision for credit losses | 24,731 | 13,666 |
Depreciation and amortization | 1,952 | 2,313 |
Amortization of intangibles | 794 | 937 |
Deferred tax benefits | (2,254) | (2,974) |
Investment securities gains | (729) | (1,104) |
Proceeds on sale of investment | 0 | (1,739) |
Stock-based compensation | 2,435 | 2,085 |
Originations and purchases of loans held-for-sale | (14,055) | (29,552) |
Proceeds from sales, securitizations and paydowns of loans held-for-sale | 23,082 | 32,197 |
Net change in trading assets | 115,081 | 18,933 |
Net change in securities borrowed | (3,978) | (12,605) |
Net change in accrued interest and accounts receivable | 1,141 | (33,480) |
Net change in other assets | 26,985 | (16,875) |
Net change in trading liabilities | (59,431) | (10,044) |
Net change in accounts payable and other liabilities | (20,521) | 79,090 |
Other operating adjustments | 7,201 | (13,346) |
Net cash provided by operating activities | 110,884 | 32,405 |
Investing activities | ||
Net change in deposits with banks | 78,436 | (15,162) |
Net change in federal funds sold and securities purchased under resale agreements | 31,698 | (76,166) |
Held-to-maturity securities: | ||
Proceeds | 7 | 8 |
Available-for-sale securities: | ||
Proceeds from maturities | 64,985 | 29,565 |
Proceeds from sales | 85,132 | 62,763 |
Purchases | (305,648) | (146,480) |
Proceeds from sales and securitization of loans held-for-investment | 28,620 | 26,430 |
Other changes in loans, net | 43,744 | (67,081) |
Net cash received in business acquisitions or dispositions | 60 | 2,162 |
Proceeds from asset sale to the FRBNY | 0 | 28,850 |
Net maturities (purchases) of asset-backed commercial paper guaranteed by the FRBB | 11,228 | (61,321) |
All other investing activities, net | (667) | (3,097) |
Net cash provided by (used in) investing activities | 37,595 | (219,529) |
Financing activities | ||
Net change in deposits | (172,478) | 81,989 |
Net change in federal funds purchased and securities loaned or sold under repurchase agreements | 116,550 | 46,908 |
Net change in commercial paper and other borrowed funds | (69,361) | 58,527 |
Proceeds from the issuance of long-term debt and trust preferred capital debt securities | 42,724 | 47,572 |
Repayments of long-term debt and trust preferred capital debt securities | (43,749) | (50,290) |
Excess tax benefits related to stock-based compensation | 8 | 135 |
Proceeds from issuance of preferred stock | 0 | 7,746 |
Redemption of preferred stock issued to the U.S. Treasury | (25,000) | 0 |
Proceeds from issuance of common stock | 5,756 | 11,500 |
Cash dividends paid | (2,933) | (4,027) |
All other financing activities, net | (6,075) | 1,625 |
Net cash (used in) provided by financing activities | (154,558) | 201,685 |
Effect of exchange rate changes on cash and due from banks | 252 | (355) |
Net (decrease) increase in cash and due from banks | (5,827) | 14,206 |
Cash and due from banks at the beginning of the year | 26,895 | 40,144 |
Cash and due from banks at the end of the period | 21,068 | 54,350 |
Cash interest paid | 11,755 | 27,552 |
Cash income taxes paid | $4,111 | $2,831 |
3_Consolidated Statements of Ca
Consolidated Statements of Cash Flows (Parenthetical) (Unaudited) (USD $) | |
In Billions, except Share data in Millions | Sep. 30, 2008
|
Noncash assets acquired in the merger with Bear Stearns | 288.2 |
Liabilities assumed in merger with Bear Stearns | 287.7 |
Approximate number of shares of common stock issued in connection with the Merger with Bear Stearns | 26 |
Common stock issued in connection with Bear Stearns Merger | 1.2 |
Noncash assets acquired in the acquisition of Washington Mutual Bank | 260.3 |
Liabilities assumed in the acquisition of Washington Mutual Bank | 260.1 |
Basis of Presentation
Basis of Presentation | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Basis of Presentation [Abstract] | |
Basis of Presentation | NOTE 1 BASIS OF PRESENTATION JPMorgan Chase Co. (JPMorgan Chase or the Firm), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the United States of America (U.S.), with operations worldwide. The Firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing and asset management. For a discussion of the Firms business segment information, see Note 25 on pages 172-175 of this Form 10-Q. The accounting and financial reporting policies of JPMorgan Chase and its subsidiaries conform to accounting principles generally accepted in the United States of America (U.S. GAAP). Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. The unaudited consolidated financial statements prepared in conformity with U.S. GAAP require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expense, and the disclosures of contingent assets and liabilities. Actual results could be different from these estimates. In the opinion of management, all normal recurring adjustments have been included for a fair statement of this interim financial information. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in JPMorgan Chases Annual Report on Form 10-K for the year ended December31, 2008, as filed with the U.S. Securities and Exchange Commission (the 2008 Annual Report). Certain amounts in prior periods have been reclassified to conform to the current presentation. |
Business Changes and Developmen
Business Changes and Developments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Business Changes and Developments [Abstract] | |
Business Changes and Developments | NOTE 2 BUSINESS CHANGES AND DEVELOPMENTS Decrease in common stock dividend On February23, 2009, the Board of Directors reduced the Firms quarterly common stock dividend from $0.38 to $0.05 per share, effective with the dividend paid on April30, 2009. Acquisition of the banking operations of Washington Mutual Bank Refer to Note 2 on pages 123-124 and 127 of JPMorgan Chases 2008 Annual Report for a discussion of JPMorgan Chases acquisition of the banking operations of Washington Mutual Bank (Washington Mutual) on September25, 2008, including its purchase price and the allocation of the purchase price to net assets acquired and the resulting extraordinary gain. The acquisition was accounted for under the purchase method of accounting in accordance with U.S. GAAP for business combinations. The final total purchase price to complete the acquisition was $1.9billion, which was allocated to the Washington Mutual assets acquired and liabilities assumed using their fair values as of September25, 2008. As the result of the final refinement of the purchase price allocation during the third quarter of 2009, the Firm recognized a $76 million increase in the extraordinary gain. The final summary computation of the purchase price and the allocation of the purchase price to the net assets of Washington Mutual are presented below. (in millions) Purchase price Purchase price $ 1,938 Direct acquisition costs 3 Total purchase price 1,941 Net assets acquired Washington Mutuals net assets before fair value adjustments $ 39,186 Washington Mutuals goodwill and other intangible assets (7,566 ) Subtotal 31,620 Adjustments to reflect assets acquired at fair value: Securities (16 ) Trading assets (591 ) Loans (30,998 ) Allowance for loan losses 8,216 Premises and equipment 680 Accrued interest and accounts receivable (243 ) Other assets 4,010 Adjustments to reflect liabilities assumed at fair value: Deposits (686 ) Other borrowed funds 68 Accounts payable, accrued expense and other liabilities (1,124 ) Long-term debt 1,063 Fair value of net assets acquired 11,999 Negative goodwill before allocation to nonfinancial assets (10,058 ) Negative goodwill allocated to nonfinancial assets(a) 8,076 Negative goodwill resulting from the acquisition(b) $ (1,982 ) (a) The acquisition was accounted for as a purchase business combination in accordance with U.S. GAAP for business combinations. This guidance requires the assets (including identifiable intangible assets) and liabilities (including executory contracts and other commitments) of an acquired business as of the effective date of the acquisition to be recorded at their respective fair values and consolidated with those of |
Fair Value Measurement
Fair Value Measurement | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Fair Value Measurement [Abstract] | |
Fair Value Measurement | NOTE 3 FAIR VALUE MEASUREMENT For a further discussion of JPMorgan Chases valuation methodologies for assets, liabilities and lending-related commitments measured at fair value and the fair value hierarchy, see Note 4 on pages 129-143 of JPMorgan Chases 2008 Annual Report. During the first nine months of 2009, there were no material changes made to the Firms valuation models. For a further discussion of the accounting for trading assets and liabilities, and private equity investments, see Note 6 on pages 146-148 of JPMorgan Chases 2008 Annual Report. The following table presents the financial instruments carried at fair value as of September30, 2009, and December31, 2008, by major product category and by the fair value hierarchy. Assets and liabilities measured at fair value on a recurring basis Fair value hierarchy Netting Total September 30, 2009 (in millions) Level 1 Level 2 Level 3 adjustments(g) fair value Federal funds sold and securities purchased under resale agreements $ $ 18,931 $ $ $ 18,931 Securities borrowed 5,458 5,458 Trading assets: Debt instruments: Mortgage-backed securities: U.S. government agencies(a) 37,560 5,544 319 43,423 Residential nonagency(b) 1,117 2,791 3,908 Commercial nonagency(b) 526 1,853 2,379 Total mortgage-backed securities 37,560 7,187 4,963 49,710 U.S. Treasury and government agencies(a) 25,570 269 25,839 Obligations of U.S. states and municipalities 8,110 2,189 10,299 Certificates of deposit, bankers acceptances and commercial paper 6,001 6,001 Non-U.S. government debt securities 32,798 30,797 766 64,361 Corporate debt securities 48,209 5,310 53,519 Loans 19,183 14,626 33,809 Asset-backed securities 1,434 8,824 10,258 Total debt instruments 95,928 121,190 36,678 253,796 Equity securities 60,888 3,318 1,905 66,111 Physical commodities(c) 7,348 574 7,922 Other 1,360 1,181 2,541 Total debt and equity instruments 164,164 126,442 39,764 330,370 Derivative receivables(d) 3,074 1,763,397 48,670 (1,721,076 ) 94,065 Total trading assets 167,238 1,889,839 88,434 (1,721,076 ) 424,435 Available-for-sale securities: Mortgage-backed securities: U.S. government agencies(a) 181,561 3,347 184,908 Residential nonagency(b) 11,721 42 11,763 Commercial nonagency(b) 4, |
Fair Value Option
Fair Value Option | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Fair Value Option [Abstract] | |
Fair Value Option | NOTE 4 FAIR VALUE OPTION For a discussion of the primary financial instruments for which fair value elections have been made, including the determination of instrument-specific credit risk for these items and the basis for those elections, see Note 5 on pages 144146 of JPMorgan Chases 2008 Annual Report. Changes in fair value under the fair value option election The following table presents the changes in fair value included in the Consolidated Statements of Income for the three and nine months ended September30, 2009 and 2008, for items for which the fair value election was made. The profit and loss information presented below only includes the financial instruments that were elected to be measured at fair value; related risk management instruments, which are required to be measured at fair value, are not included in the table. Three months ended September 30, 2009 2008 Total changes Total changes Principal Other in fair value Principal Other in fair value (in millions) transactions(b) income(b) recorded transactions(b) income(b) recorded Federal funds sold and securities purchased under resale agreements $ 161 $ $ 161 $ (28 ) $ $ (28 ) Securities borrowed 100 100 (13 ) (13 ) Trading assets: Debt and equity instruments, excluding loans 200 (4 )(c) 196 (354 ) (354 ) Loans reported as trading assets: Changes in instrument-specific credit risk 132 5 (c) 137 (3,099 ) (78 )(c) (3,177 ) Other changes in fair value 397 965 (c) 1,362 (197 ) 306 (c) 109 Loans: Changes in instrument-specific credit risk 29 29 (457 ) (457 ) Other changes in fair value (53 ) (53 ) (39 ) (39 ) Other assets (87 )(d) (87 ) (88 )(d) (88 ) Deposits(a) (313 ) (313 ) 264 264 Federal funds purchased and securities loaned or sold under repurchase agreements (19 ) (19 ) (1 ) (1 ) Other borrowed funds(a) (1,092 ) (1,092 ) 783 783 Trading liabilities (8 ) (8 ) 24 24 Beneficial interests issued by consolidated VIEs (277 ) (277 ) 337 337 Other liabilities (59 ) (59 ) Long-term debt: Changes in instrument-specific credit risk(a) (831 ) (831 ) 714 714 Other changes in fair value (1,002 ) (1,002 ) 10,945 10,945 Nine months ended September 30, 2009 2008 Total |
Derivative Instruments
Derivative Instruments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Derivative Instruments [Abstract] | |
Derivative Instruments | NOTE 5 DERIVATIVE INSTRUMENTS Derivative instruments enable end-users to transform or mitigate exposure to credit or market risks. Counterparties to a derivative contract seek to obtain risks and rewards similar to those that could be obtained from purchasing or selling a related cash instrument without having to exchange the full purchase or sales price upfront. JPMorgan Chase makes markets in derivatives for customers and also uses derivatives to hedge or manage risks of market exposures. The majority of the Firms derivatives are entered into for market-making purposes. Trading Derivatives The Firm transacts in a variety of derivatives in its trading portfolios to meet the needs of customers (both dealers and clients) and to generate revenue through this trading activity. The Firm makes markets in derivatives for its customers (collectively, client derivatives), seeking to mitigate or transform interest rate, credit, foreign exchange, equity and commodity risks. The Firm actively manages the risks from its exposure to these derivatives by entering into other derivative transactions or by purchasing or selling other financial instruments that partially or fully offset the exposure from client derivatives. The Firm also seeks to earn a spread between the client derivatives and offsetting positions, and from the remaining open risk positions. For more information about trading derivatives, see the trading derivatives gains and losses table on page 129 of this Form 10-Q. Risk Management Derivatives The Firm manages its market exposures using various derivative instruments. Interest rate contracts are used to minimize fluctuations in earnings that are caused by changes in interest rates. Fixed-rate assets and liabilities appreciate or depreciate in market value as interest rates change. Similarly, interest income and expense increase or decrease as a result of variable-rate assets and liabilities resetting to current market rates, and as a result of the repayment and subsequent origination or issuance of fixed-rate assets and liabilities at current market rates. Gains or losses on the derivative instruments that are related to such assets and liabilities are expected to substantially offset this variability in earnings. The Firm generally uses interest rate swaps, forwards and futures to manage the impact of interest rate fluctuations on earnings. Foreign currency forward contracts are used to manage the foreign exchange risk associated with certain foreign currencydenominated (i.e., non-U.S.) assets and liabilities and forecasted transactions, as well as the Firms net investments in certain non-U.S. subsidiaries or branches whose functional currencies are not the U.S. dollar. As a result of fluctuations in foreign currencies, the U.S. dollarequivalent values of the foreign currencydenominated assets and liabilities or forecasted revenue or expense increase or decrease. Gains or losses on the derivative instruments related to these foreign currencydenominated assets or liabilities, or forecasted transactions, are expected to substantially offset this variability. Gold forward contracts are used to manage the price |
Other Noninterest Revenue
Other Noninterest Revenue | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Other Noninterest Revenue [Abstract] | |
Other Noninterest Revenue | NOTE 6 OTHER NONINTEREST REVENUE For a discussion of the components of and accounting policies for the Firms other noninterest revenue, see Note 6 and Note 7 on pages 146149 of JPMorgan Chases 2008 Annual Report. The following table presents the components of investment banking fees. Three months ended September 30, Nine months ended September 30, (in millions) 2009 2008 2009 2008 Underwriting: Equity $ 681 $ 245 $ 1,938 $ 1,146 Debt 616 515 1,985 1,602 Total underwriting 1,297 760 3,923 2,748 Advisory 382 556 1,248 1,396 Total investment banking fees $ 1,679 $ 1,316 $ 5,171 $ 4,144 The following table presents principal transactions revenue. Three months ended September 30, Nine months ended September 30, (in millions) 2009 2008 2009 2008 Trading revenue $ 3,700 $ (2,587 ) $ 9,344 $ (3,052 ) Private equity gains/(losses)(a) 160 (176 ) (386 ) 238 Principal transactions $ 3,860 $ (2,763 ) $ 8,958 $ (2,814 ) (a) Includes revenue on private equity investments held in the Private Equity business within Corporate/Private Equity, and those held in other business segments. The following table presents components of asset management, administration and commissions. Three months ended September 30, Nine months ended September 30, (in millions) 2009 2008 2009 2008 Asset management: Investment management fees $ 1,283 $ 1,458 $ 3,538 $ 4,332 All other asset management fees 93 61 252 351 Total asset management fees 1,376 1,519 3,790 4,683 Total administration fees(a) 477 527 1,430 1,887 Commission and other fees: Brokerage commissions 726 892 2,175 2,400 All other commissions and fees 579 547 1,784 1,739 Total commissions and fees 1,305 1,439 3,959 4,139 Total asset management, administration and commissions $ 3,158 $ 3,485 $ 9,179 $ 10,709 (a) Includes fees for custody, securities lending, funds services and securities clearance. |
Interest Income and Interest Ex
Interest Income and Interest Expense | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Interest Income and Interest Expense | |
Interest Income and Interest Expense | NOTE 7 INTEREST INCOME AND INTEREST EXPENSE Details of interest income and interest expense were as follows. Three months ended September 30, Nine months ended September 30, (in millions) 2009 2008 2009 2008 Interest income(a) Loans $ 9,442 $ 8,450 $ 29,775 $ 26,165 Securities 3,242 1,522 9,280 4,099 Trading assets 2,975 4,469 9,143 13,125 Federal funds sold, securities purchased under resale agreements 368 1,558 1,386 4,498 Securities borrowed (30 ) 703 (40 ) 2,013 Deposits with banks 130 316 819 1,025 Other assets(b) 133 308 372 462 Total interest income 16,260 17,326 50,735 51,387 Interest expense(a) Interest-bearing deposits 1,086 3,351 3,937 11,551 Short-term and other liabilities(c) 941 2,722 2,908 8,632 Long-term debt 1,426 2,176 4,951 5,942 Beneficial interests issued by consolidated VIEs 70 83 165 315 Total interest expense 3,523 8,332 11,961 26,440 Net interest income 12,737 8,994 38,774 24,947 Provision for credit losses 8,104 3,811 24,731 11,690 Provision for credit losses accounting conformity(d) 1,976 1,976 Net interest income after provision for credit losses $ 4,633 $ 3,207 $ 14,043 $ 11,281 (a) Interest income and expense include the current-period interest accruals for financial instruments measured at fair value, except for financial instruments containing embedded derivatives that would be separately accounted for in accordance with U.S. GAAP absent the fair value option election; for those instruments, all changes in fair value, including any interest elements, are reported in principal transactions revenue. (b) Predominantly margin loans. (c) Includes brokerage customer payables. (d) The third quarter of 2008 included an accounting conformity loan loss reserve provision related to the acquisition of Washington Mutuals banking operations. |
Pension and Other Postretiremen
Pension and Other Postretirement Employee Benefit Plans | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Pension and Other Postretirement Employee Benefit Plans [Abstract] | |
Pension and Other Postretirement Employee Benefit Plans | NOTE 8 PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFIT PLANS For a discussion of JPMorgan Chases pension and other postretirement employee benefit (OPEB) plans, see Note 9 on pages 149155 of JPMorgan Chases 2008 Annual Report. The following table presents the components of net periodic benefit cost reported in the Consolidated Statements of Income for the Firms U.S. and non-U.S. defined benefit pension and OPEB plans. Defined benefit pension plans U.S. Non-U.S. OPEB plans Three months ended September 30, (in millions) 2009 2008 2009 2008 2009 2008 Components of net periodic benefit cost Benefits earned during the period $ 81 $ 64 $ 7 $ 11 $ 1 $ 1 Interest cost on benefit obligations 128 122 29 33 17 18 Expected return on plan assets (146 ) (179 ) (27 ) (38 ) (25 ) (24 ) Amortization: Net loss 76 11 6 Prior service cost (credit) 1 1 (3 ) (4 ) Net periodic benefit cost 140 8 20 12 (10 ) (9 ) Other defined benefit pension plans(a) 3 4 1 3 NA NA Total defined benefit plans 143 12 21 15 (10 ) (9 ) Total defined contribution plans 77 66 47 70 NA NA Total pension and OPEB cost included in compensation expense $ 220 $ 78 $ 68 $ 85 $ (10 ) $ (9 ) Defined benefit pension plans U.S. Non-U.S. OPEB plans Nine months ended September 30, (in millions) 2009 2008 2009 2008 2009 2008 Components of net periodic benefit cost Benefits earned during the period $ 238 $ 192 $ 21 $ 25 $ 3 $ 4 Interest cost on benefit obligations 384 366 85 109 48 55 Expected return on plan assets (438 ) (539 ) (79 ) (120 ) (73 ) (73 ) Amortization: Net loss 229 32 20 Prior service cost (credit) 3 3 (10 ) (12 ) Net periodic benefit cost 416 22 59 34 (32 ) (26 ) Other defined benefit pension plans(a) 10 10 9 12 NA NA Total defined benefit plans 426 32 68 46 (32 ) (26 ) Total defined contribution plans 231 202 169 232 NA NA Total pension and OPEB cost included in compensation expense $ 657 $ 234 $ 237 $ 278 $ (32 ) $ (26 ) (a) Includes various defined benefit pension plans, which are individually immaterial. The fair value of plan assets for the U.S. defined benefit pension and OPEB plans and the material non-U.S. defined benefit pension plans were $11.3billion and $2.3billion, respectively, as of Se |
Employee Stock Based Incentives
Employee Stock Based Incentives | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Employee Stock-Based Incentives [Abstract] | |
Employee Stock-Based Incentives | NOTE 9 EMPLOYEE STOCK-BASED INCENTIVES For a discussion of the accounting policies and other information relating to employee stock-based compensation, see Note 10 on pages 155157 of JPMorgan Chases 2008 Annual Report. The Firm recognized noncash compensation expense related to its various employee stock-based incentive plans of $763million and $697million for the quarters ended September30, 2009 and 2008, respectively, and $2.4billion and $2.1billion in the first nine months of 2009 and 2008, respectively, in its Consolidated Statements of Income. These amounts included accruals for the estimated cost of stock awards to be granted to full-career eligible employees of $192million and $159million for the quarters ended September30, 2009 and 2008, respectively, and $524million and $433million for the first nine months ended September30, 2009 and 2008, respectively. In the first quarter of 2009, the Firm granted 130million restricted stock units (RSUs), with a grant date fair value of $19.52 per RSU, in connection with its annual incentive grant. |
Noninterest Expense
Noninterest Expense | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Noninterest Expense [Abstract] | |
Noninterest Expense | NOTE 10 NONINTEREST EXPENSE Merger costs Costs associated with the Bear Stearns merger and the Washington Mutual transaction are reflected in the merger costs caption of the Consolidated Statements of Income. For a further discussion of the Bear Stearns merger and the Washington Mutual transaction, see Note 2 on pages 102106 of this Form 10-Q. A summary of merger-related costs is shown in the following table. 2009 Three months ended September 30, Washington (in millions) Bear Stearns Mutual Total 2008(c) Expense category Compensation $ 2 $ 26 $ 28 $ 24 Occupancy(a) (6 ) (6 ) 42 Technology and communications and other 8 73 81 30 Total(b) $ 10 $ 93 $ 103 $ 96 2009 Nine months ended September 30, Washington (in millions) Bear Stearns Mutual Total 2008(c) Expense category Compensation(a) $ (8 ) $ 239 $ 231 $ 150 Occupancy(a) (3 ) 17 14 42 Technology and communications and other 25 181 206 59 Total(b) $ 14 $ 437 $ 451 $ 251 (a) Represents partial reversals of merger costs accrued in prior periods. (b) With the exception of occupancy- and technology-related write-offs, all of the costs in the table required the expenditure of cash. (c) The 2008 activity reflects the Bear Stearns merger. Costs related to the Washington Mutual transaction for the three and nine months ended September30, 2008, were not material. The table below shows changes in the merger reserve balance related to costs associated with the Bear Stearns merger and the Washington Mutual transaction. 2009 2008 Three months ended September 30, Washington Washington (in millions) Bear Stearns Mutual Total Bear Stearns Mutual Total Merger reserve balance, beginning of period $ 69 $ 202 $ 271 $ 1,093 $ $ 1,093 Recorded as merger costs 10 93 103 96 96 Recorded as goodwill 363 363 Utilization of merger reserve (38 ) (165 ) (203 ) (592 ) (592 ) Merger reserve balance, end of period $ 41 $ 130 $ 171 $ 597 $ 363 $ 960 2009 2008 Nine months ended September 30, Washington Washington (in millions) Bear Stearns Mutual Total Bear Stearns Mutual Total Merger reserve balance, beginning of period $ 327 $ 441 $ 768 $ $ $ Recorded as merger costs 14 437 451 251 251 Recorded as goodwill (5 ) (5 ) 1,112 363 1,475 Utilization of merger reserve (295 ) (748 ) (1,043 ) (766 ) (766 ) Merger reserve balance, end |
Securities
Securities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Securities [Abstract] | |
Securities | NOTE 11 SECURITIES Securities are classified as AFS, held-to-maturity (HTM) or trading. For additional information regarding AFS and HTM securities, see Note 12 on pages 158162 of JPMorgan Chases 2008 Annual Report. Trading securities are discussed in Note 3 on pages 106121 of this Form 10-Q. Securities gains and losses The following table presents realized gains and losses and credit losses that were recognized in income from AFS securities. Three months ended September 30, Nine months ended September 30, (in millions) 2009 2008 2009 2008 Realized gains $ 283 $ 459 $ 1,436 $ 1,271 Realized losses (81 ) (35 ) (505 ) (167 ) Net realized gains(a) 202 424 931 1,104 Credit losses included in securities gains (18 )(b) (202 )(b) Net securities gains $ 184 $ 424 $ 729 $ 1,104 (a) Proceeds from securities sold were within approximately 1% of amortized cost. (b) Includes other-than-temporary impairment losses recognized in income for the three and nine months ended September30, 2009, on certain prime mortgage-backed securities and obligations of U.S. states and municipalities. The amortized costs and estimated fair values of AFS and HTM securities were as follows for the dates indicated. September 30, 2009 December 31, 2008 Gross Gross Gross Gross Amortized unrealized unrealized Amortized unrealized unrealized Fair (in millions) cost gains losses Fair value cost gains losses value Available-for-sale debt securities Mortgage-backed securities(a): U.S. government agencies(b) $ 181,110 $ 3,942 $ 144 $ 184,908 $ 115,198 $ 2,414 $ 227 $ 117,385 Residential: Prime and Alt-A 5,903 65 1,166 (d) 4,802 8,826 4 1,935 6,895 Subprime 35 35 213 19 194 Non-U.S. 6,744 294 112 6,926 2,233 24 182 2,075 Commercial 4,516 89 77 4,528 4,623 684 3,939 Total mortgage-backed securities $ 198,308 $ 4,390 $ 1,499 $ 201,199 $ 131,093 $ 2,442 $ 3,047 $ 130,488 U.S. Treasury and government agencies(b) 40,015 221 192 40,044 10,402 52 97 10,357 Obligations of U.S. states and municipalities 5,887 439 130 (d) 6,196 3,479 94 238 3,335 Certificates of deposit 6,227 9 1 6,235 17,226 64 8 17,282 Non-U.S. government debt securities 23,210 264 52 23,422 8,173 173 2 8,344 C |
Securities Financing Activities
Securities Financing Activities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Securities Financing Activities [Abstract] | |
Securities Financing Activities | NOTE 12 SECURITIES FINANCING ACTIVITIES For a discussion of accounting policies relating to securities financing activities, see Note 13 on pages 162163 of JPMorgan Chases 2008 Annual Report. For further information regarding securities borrowed and securities lending agreements for which the fair value option has been elected, see Note 4 on pages 121123 of this Form 10-Q. The following table details the components of collateralized financings. (in millions) September 30, 2009 December 31, 2008 Securities purchased under resale agreements(a) $ 170,660 $ 200,265 Securities borrowed(b) 128,059 124,000 Securities sold under repurchase agreements(c) $ 294,308 $ 174,456 Securities loaned 7,992 6,077 (a) Includes resale agreements of $18.9billion and $20.8billion accounted for at fair value at September30, 2009, and December31, 2008, respectively. (b) Includes securities borrowed of $5.5billion and $3.4billion accounted for at fair value at September30, 2009, and December31, 2008, respectively. (c) Includes repurchase agreements of $2.7billion and $3.0billion accounted for at fair value at September30, 2009, and December31, 2008, respectively. JPMorgan Chase pledges certain financial instruments it owns to collateralize repurchase agreements and other securities financings. Pledged securities that can be sold or repledged by the secured party are identified as financial instruments owned (pledged to various parties) on the Consolidated Balance Sheets. At September30, 2009, the Firm received securities as collateral that could be repledged, delivered or otherwise used with a fair value of approximately $631.1billion. This collateral was generally obtained under resale or securities-borrowing agreements. Of these securities, approximately $496.1billion were repledged, delivered or otherwise used, generally as collateral under repurchase agreements, securities lending agreements or to cover short sales. |
Loans
Loans | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Loans [Abstract] | |
Loans | NOTE 13 LOANS The accounting for a loan is based on whether it is originated or purchased, and whether the loan is used in an investing or trading strategy. The measurement framework for loans in the Consolidated Financial Statements is one of the following: At the principal amount outstanding, net of the allowance for loan losses, unearned income, unamortized discounts and premiums, and any net deferred loan fees or costs, for loans held-for-investment (other than purchased credit-impaired loans); At the lower of cost or fair value, with valuation changes recorded in noninterest revenue, for loans that are classified as held-for-sale; At fair value, with changes in fair value recorded in noninterest revenue, for loans classified as trading assets or risk managed on a fair value basis; or Purchased credit-impaired loans held-for-investment are initially measured at fair value, which includes estimated future credit losses. Accordingly, an allowance for loan losses related to these loans is not recorded at the acquisition date. For a detailed discussion of accounting policies relating to loans, see Note 14 on pages 163166 of JPMorgan Chases 2008 Annual Report. See Note 4 on pages 121123 of this Form 10-Q for further information on the Firms elections of fair value accounting under the fair value option. See Note 3 on pages 106121 of this Form 10-Q for further information on loans carried at fair value and classified as trading assets. The composition of the Firms aggregate loan portfolio at each of the dates indicated was as follows. (in millions) September 30, 2009 December 31, 2008 U.S. wholesale loans: Commercial and industrial $ 52,966 $ 68,709 Real estate 60,344 64,214 Financial institutions 17,125 20,615 Government agencies 5,765 5,918 Other 22,975 22,330 Loans held-for-sale and at fair value 2,516 4,990 Total U.S. wholesale loans 161,691 186,776 Non-U.S. wholesale loans: Commercial and industrial 21,829 27,941 Real estate 2,601 2,667 Financial institutions 11,694 16,381 Government agencies 1,047 603 Other 17,372 18,711 Loans held-for-sale and at fair value 2,719 8,965 Total non-U.S. wholesale loans 57,262 75,268 Total wholesale loans:(a) Commercial and industrial 74,795 96,650 Real estate(b) 62,945 66,881 Financial institutions 28,819 36,996 Government agencies 6,812 6,521 Other 40,347 41,041 Loans held-for-sale and at fair value(c) 5,235 13,955 Total wholesale loans 218,953 262,044 Total consumer loans:(d) Home equity senior lien(e) 27,726 29,793 Home equity junior lien(f) 77,069 84,542 Prime mortgage 67,597 72,266 Subprime mortgage 13,270 15,330 Option ARMs 8,852 9,018 Auto loans 44,309 42,603 Credit card(g)(h) 78,215 |
Allowance For Credit Losses
Allowance For Credit Losses | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Allowance For Credit Losses [Abstract] | |
Allowance For Credit Losses | NOTE 14 ALLOWANCE FOR CREDIT LOSSES The allowance for loan losses includes an asset-specific component and a formula-based component. The asset-specific component relates to risk-rated loans considered to be impaired and all loans restructured in troubled debt restructurings (except for certain purchased credit-impaired loans). An allowance is established when the loans discounted cash flows (or collateral value or observable market price) are lower than its carrying value. To compute the asset-specific component of the allowance, larger loans are evaluated individually, while smaller loans are evaluated as pools using historical loss experience for the respective class of assets. Risk-rated loans (primarily wholesale loans) are pooled by risk rating, while scored loans (i.e., consumer loans) are pooled by product type. An allowance for loan losses will also be recorded for purchased credit-impaired loans if there are probable credit-related decreases in expected future cash flows. Any required allowance would be measured based on the present value of expected cash flows discounted at the loans (or pools) effective interest rate. The formula-based component is based on a statistical calculation and covers performing wholesale loans and consumer loans, except for loans restructured in troubled debt restructurings and purchased credit-impaired loans. For risk-rated loans, the statistical calculation is the product of an estimated probability of default (PD) and an estimated loss given default (LGD). These factors are differentiated by risk rating and expected maturity. In assessing the risk rating of a particular loan, among the factors considered are the obligors debt capacity and financial flexibility, the level of the obligors earnings, the amount and sources for repayment, the level and nature of contingencies, management strength, and the industry and geography in which the obligor operates. These factors are based on an evaluation of historical and current information, and involve subjective assessment and interpretation. Emphasizing one factor over another or considering additional factors could impact the risk rating assigned by the Firm to that loan. PD estimates are based on observable external data, primarily credit-rating agency default statistics. LGD estimates are based on a study of actual credit losses over more than one credit cycle. For scored loans, the statistical calculation is performed on pools of loans with similar risk characteristics (e.g., product type) and generally computed as the product of actual outstandings, an expected-loss factor and an estimated-loss coverage period. Expected-loss factors are statistically derived and consider historical factors such as loss frequency and severity. In developing loss frequency and severity assumptions, the Firm considers known and anticipated changes in the economic environment, including changes in housing prices, unemployment rates and other risk indicators. A nationally recognized home price index measure is used to develop loss severity estimates on defaulted home loans at the MSA level. These loss severity estimates are regularly validated by actual losse |
Loan Securitizations
Loan Securitizations | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Loan Securitizations [Abstract] | |
Loan Securitizations | NOTE 15 LOAN SECURITIZATIONS For a discussion of the accounting policies relating to loan securitizations, see Note 16 on pages 168176 of JPMorgan Chases 2008 Annual Report. JPMorgan Chase securitizes and sells a variety of loans, including residential mortgage, credit card, automobile, student, and commercial (primarily related to real estate) loans. JPMorgan Chasesponsored securitizations use special-purpose entities (SPEs) as part of the securitization process. These SPEs are structured to meet the definition of a qualifying special-purpose entity (QSPE) (for a further discussion, see Note 1 on page 122 of JPMorgan Chases 2008 Annual Report); accordingly, the assets and liabilities of securitization-related QSPEs are not reflected on the Firms Consolidated Balance Sheets (except for retained interests, as described below). The primary purposes of these securitization vehicles are to meet investor needs and to generate liquidity for the Firm through the sale of loans to the QSPEs, which are financed through the issuance of fixed- or floating-rate asset-backed securities. The following table presents the total unpaid principal amount of assets held in JPMorgan Chasesponsored securitization entities, for which sale accounting was achieved and to which the Firm has continuing involvement, at September30, 2009, and December31, 2008. Continuing involvement includes servicing the loans, holding senior or subordinated interests, recourse or guarantee arrangements, and derivative transactions. In certain instances, the Firms only continuing involvement is servicing the loans. Principal amount outstanding JPMorgan Chase interest in securitized assets(e)(f)(g)(h) Assets held in QSPEs Total interests September 30, 2009 Total assets held by with continuing Trading AFS Other held by (in billions) Firm-sponsored QSPEs involvement assets securities Loans assets(i) JPMorgan Chase Securitization-related: Credit card $ 104.8 $ 104.8 (d) $ 0.1 $ 15.8 $ 14.9 $ 6.2 $ 37.0 Residential mortgage: Prime(a) 199.9 184.3 1.0 0.2 1.2 Subprime 52.0 44.9 Option ARMs 43.6 43.6 0.1 0.1 Commercial and other(b) 157.2 24.6 1.7 0.7 2.4 Student 1.1 1.1 0.1 0.1 Auto 0.3 0.3 Total(c) $ 558.9 $ 403.6 $ 2.8 $ 16.8 $ 14.9 $ 6.3 $ 40.8 Principal amount outstanding JPMorgan Chase interest in securitized assets(e)(f)(g)(h) Assets held in QSPEs Total interests December 31, 2008 Total assets held by with continuing Trading AFS Other held by (in |
Variable Interest Entities
Variable Interest Entities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | NOTE 16 VARIABLE INTEREST ENTITIES Refer to Note 1 on page 122 and Note 17 on pages 177-186 of JPMorgan Chases 2008 Annual Report for a further description of JPMorgan Chases policies regarding consolidation of variable interest entities (VIEs) and the Firms principal involvement with VIEs. Multi-seller conduits The following table summarizes Firm-administered multi-seller conduits. On May31, 2009, the Firm consolidated one of these multi-seller conduits due to the redemption of the expected loss note (ELN). There were no consolidated Firm-administered multi-seller conduits as of December31, 2008. September 30, 2009 (in billions) Consolidated Nonconsolidated December 31, 2008 Total assets held by conduits $ 5.2 $ 19.0 $ 42.9 Total commercial paper issued by conduits 5.2 19.0 43.1 Liquidity and credit enhancements Deal-specific liquidity facilities (primarily asset purchase agreements) 8.5 26.7 (b) 55.4 (b) Program-wide liquidity facilities 4.0 13.0 17.0 Program-wide credit enhancements 0.4 2.0 3.0 Maximum exposure to loss(a) 8.5 27.3 56.9 (a) Maximum exposure to loss, calculated separately for each multi-seller conduit, includes the Firms exposure to both deal-specific liquidity facilities and program-wide credit enhancements. For purposes of calculating maximum exposure to loss, the Firm-provided, program-wide credit enhancement is limited to deal-specific liquidity facilities provided by third parties. (b) The accounting for the guarantees reflected in these agreements is further discussed in Note 33 on pages 206-210 of JPMorgan Chases 2008 Annual Report. The carrying values related to asset purchase agreements were $115million and $147million at September30, 2009, and December31, 2008, respectively, of which $110million and $138million, respectively, represented the remaining fair value of the guarantee. The Firm has recorded this guarantee in other liabilities, with an offsetting entry recognized in other assets for the net present value of the future premium receivable under the contracts. Assets funded by nonconsolidated multi-seller conduits The following table presents information on the commitments and assets held by JPMorgan Chases nonconsolidated Firm-administered multi-seller conduits as of September30, 2009, and December31, 2008. September 30, 2009 December 31, 2008 Unfunded Commercial Liquidity Liquidity Unfunded Commercial Liquidity Liquidity commitments to paper-funded provided by provided commitments to paper-funded provided by provided (in billions) Firms clients assets third parties by Firm Firms clients assets third parties by Firm Asset types: Credit card $ 2.1 $ 3.9 $ $ 6.0 $ 3.0 $ 8.9 $ 0.1 $ 11.8 Vehicle loans and leases 1.5 5.9 7.4 |
Goodwill and All Other Intangib
Goodwill and All Other Intangible Assets | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Goodwill Intangible Assets And M S R Disclosure [Abstract] | |
Goodwill and All Other Intangible Assets | NOTE 17 GOODWILL AND ALL OTHER INTANGIBLE ASSETS For a discussion of accounting policies related to goodwill and other intangible assets, see Note 18 on pages 186-189 of JPMorgan Chases 2008 Annual Report. Goodwill and all other intangible assets consist of the following. (in millions) September 30, 2009 December 31, 2008 Goodwill $ 48,334 $ 48,027 Mortgage servicing rights 13,663 9,403 Purchased credit card relationships 1,342 1,649 All other intangible assets: Other credit card-related intangibles $ 711 $ 743 Core deposit intangibles 1,302 1,597 Other intangibles 1,507 1,592 Total all other intangible assets $ 3,520 $ 3,932 Goodwill The $307million increase in goodwill from December31, 2008, was largely due to purchase accounting adjustments related to the Bear Stearns merger; currency translation adjustments related to Canadian credit card operations; and the acquisition of a commodities business by IB. For additional information related to the Bear Stearns merger, see Note 2 on pages 102-106 of this Form 10-Q. Goodwill was not impaired at September30, 2009, or December31, 2008, nor was any goodwill written off due to impairment during either of the nine month periods ended September30, 2009 or 2008. Goodwill attributed to the business segments was as follows. (in millions) September 30, 2009 December 31, 2008 Investment Bank $ 4,961 $ 4,765 Retail Financial Services 16,832 16,840 Card Services 14,110 13,977 Commercial Banking 2,868 2,870 Treasury Securities Services 1,661 1,633 Asset Management 7,525 7,565 Corporate/Private Equity 377 377 Total goodwill $ 48,334 $ 48,027 Mortgage servicing rights For a further description of the MSR asset, interest rate risk management, and the valuation methodology of MSRs, see Notes 4 and 18 on pages 132 and 186-189, respectively, of JPMorgan Chases 2008 Annual Report. The fair value of MSRs is sensitive to changes in interest rates, including their effect on prepayment speeds. JPMorgan Chase uses, or has used, combinations of derivatives and trading instruments to manage changes in the fair value of MSRs. The intent is to offset any changes in the fair value of MSRs with changes in the fair value of the related risk management instruments. MSRs decrease in value when interest rates decline. Conversely, securities (such as mortgage-backed securities), principal-only certificates and certain derivatives (when the Firm receives fixed-rate interest payments) increase in value when interest rates decline. The following table summarizes MSR activity for the three and nine months ended September30, 2009 and 2008. Three months ended September 30, Nine months ended September 30, (in millions, except where otherwise noted) 2009 2008 2009 2008 Fair value at the beginning of the period $ 14,600 $ 11,617 $ 9,403 $ 8,632 |
Deposits
Deposits | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Deposits [Abstract] | |
Deposits | NOTE 18 DEPOSITS For further discussion of deposits, see Note 20 on page 190 in JPMorgan Chases 2008 Annual Report. At September30, 2009, and December31, 2008, noninterest-bearing and interest-bearing deposits were as follows. (in millions) September 30, 2009 December 31, 2008 U.S. offices: Noninterest-bearing $ 195,561 $ 210,899 Interest-bearing (included $1,074 and $1,849 at fair value at September30, 2009, and December31, 2008, respectively) 415,122 511,077 Non-U.S. offices: Noninterest-bearing 9,390 7,697 Interest-bearing (included $2,842 and $3,756 at fair value at September30, 2009, and December31, 2008, respectively) 247,904 279,604 Total $ 867,977 $ 1,009,277 On May20, 2009, the Helping Families Save Their Homes Act of 2009 was signed into law. The Act extends through December31, 2013, the Federal Deposit Insurance Corporations (FDIC) temporary standard maximum deposit insurance amount, which was increased on October3, 2008, from $100,000 to $250,000 per depositor per institution. On January1, 2014, the standard maximum deposit insurance amount will return to $100,000 per depositor for all deposit accounts except certain retirement accounts, which will remain at $250,000 per depositor. |
Other Borrowed Funds
Other Borrowed Funds | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Other Borrowed Funds [Abstract] | |
Other Borrowed Funds | NOTE 19 OTHER BORROWED FUNDS The following table details the components of other borrowed funds. (in millions) September 30, 2009 December 31, 2008 Advances from Federal Home Loan Banks(a) $ 36,452 $ 70,187 Nonrecourse advances FRBB(b) 11,192 Other(c) 14,372 51,021 Total other borrowed funds(d) $ 50,824 $ 132,400 (a) Maturities of advances from the FHLBs were $32.2billion, $2.6billion, and $717million in each of the 12-month periods ending September30, 2010, 2011, and 2013, respectively, and $930 million maturing after September30, 2014. Maturities for the 12-month periods ending September30, 2012 and 2014 were not material. (b) On September19, 2008, the Federal Reserve Board established a special lending facility, the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AML Facility), to provide liquidity to eligible U.S. money market mutual funds. Under the AML Facility, banking organizations must use the loan proceeds to finance their purchases of eligible high-quality asset-backed commercial paper (ABCP) investments from money market mutual funds, which are pledged to secure nonrecourse advances from the Federal Reserve Bank of Boston (FRBB). Participating banking organizations do not bear any credit or market risk related to the ABCP investments they hold under this facility; therefore, the ABCP investments held are not assessed any regulatory capital. The AML Facility is scheduled to end on February1, 2010. The nonrecourse advances from the FRBB were elected under the fair value option and recorded in other borrowed funds; the corresponding ABCP investments were also elected under the fair value option and recorded in other assets. (c) Includes zero and $30billion of advances from the Federal Reserve under the Federal Reserves Term Auction Facility (TAF) at September30, 2009, and December31, 2008, respectively, pursuant to which the Federal Reserve auctions term funds to depository institutions that are eligible to borrow under the primary credit program. The TAF allows all eligible depository institutions to place a bid for an advance from its local Federal Reserve Bank at an interest rate set by auction. All advances are required to be fully collateralized. The TAF is designed to improve liquidity by making it easier for sound institutions to borrow when markets are not operating efficiently. (d) Includes other borrowed funds of $5.0billion and $14.7billion accounted for at fair value at September30, 2009, and December31, 2008, respectively. |
Preferred Stock
Preferred Stock | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Preferred Stock [Abstract] | |
Preferred Stock | NOTE 20 PREFERRED STOCK JPMorgan Chase is authorized to issue 200million shares of preferred stock, in one or more series, with a par value of $1 per share. For a further discussion of preferred stock, see Note 24 on pages 193-194 of JPMorgan Chases 2008 Annual Report. The following is a summary of preferred stock outstanding as of September30, 2009, and December 31, 2008. Contractual Share value and Shares at Outstanding at rate in effect at redemption September 30, December 31, September 30, December 31, Earliest September 30, (in millions) price per share(b) 2009 2008 2009 2008 redemption date 2009 Cumulative Preferred Stock, SeriesE(a) $ 200 818,113 818,113 $ 164 $ 164 Any time 6.15 % Cumulative Preferred Stock, SeriesF(a) 200 428,825 428,825 86 86 Any time 5.72 Cumulative Preferred Stock, SeriesG(a) 200 511,169 511,169 102 102 Any time 5.49 Fixed to Floating Rate Noncumulative Perpetual Preferred Stock, SeriesI(a) 10,000 600,000 600,000 6,000 6,000 4/30/2018 7.90 Noncumulative Perpetual Preferred Stock, SeriesJ(a) 10,000 180,000 180,000 1,800 1,800 9/1/2013 8.63 Fixed Rate Cumulative Perpetual Preferred Stock, SeriesK 10,000 2,500,000 23,787 (c) NA Total preferred stock 2,538,107 5,038,107 $ 8,152 $ 31,939 (a) Represented by depositary shares. (b) Redemption price includes amount shown in the table plus any accrued but unpaid dividends. (c) Represents the carrying value as of December31, 2008. The redemption value was $25.0 billion. Redemption of SeriesK preferred stock On June17, 2009, the Firm redeemed all outstanding shares of SeriesK preferred stock issued to the U.S. Treasury pursuant to the Capital Purchase Program and repaid the full $25.0billion principal amount. Following discussions regarding the warrant that was issued to the U.S. Treasury in connection with its purchase of the SeriesK preferred stock, JPMorgan Chase notified the U.S. Treasury on July7, 2009, that it had revoked its warrant repurchase notice. JPMorgan Chase understands, based on public statements, that the U.S. Treasury intends to pursue a public auction of the warrant. The U.S. Treasury has advised JPMorgan Chase that the Firm will be permitted to participate in any such auction. During the period that the SeriesK preferred shares were outstanding, no dividends could be declared or paid on stock ranking junior or equally with the SeriesK preferred stock, unless all accrued and unpaid dividends for all past dividend periods on the Series K preferred stock were fully paid. Also, the U.S. Treasurys consent was required until October28, 2011, for any increase in dividends on the Firms common stock above $0.38 per share. In addition, the Firm could not repurchase or redeem any common stock or other equity s |
Earnings Per Share
Earnings Per Share | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE 21 EARNINGS PER SHARE For a discussion of the computation of basic and diluted earnings per share (EPS), see Note 26 on page 195 of JPMorgan Chases 2008 Annual Report. Effective January1, 2009, the Firm implemented new FASB guidance for participating securities, which clarifies that unvested stock-based compensation awards containing nonforfeitable rights to dividends or dividend equivalents (collectively, dividends) are participating securities and should be included in the EPS calculation using the two-class method. JPMorgan Chase grants restricted stock and RSUs to certain employees under its stock-based compensation programs, which entitle the recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities. Under the two-class method, all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities, based on their respective rights to receive dividends. EPS data for the prior periods were revised as required by the guidance. The following table presents the calculation of basic and diluted EPS for the three and nine months ended September30, 2009 and 2008. Three months ended September 30, Nine months ended September 30, (in millions, except per share amounts) 2009 2008 2009 2008 Basic earnings per share Income/(loss) before extraordinary gain $ 3,512 $ (54 ) $ 8,374 $ 4,322 Extraordinary gain 76 581 76 581 Net income 3,588 527 8,450 4,903 Less: Preferred stock dividends 163 161 1,165 251 Less: Accelerated amortization from redemption of preferred stock issued to the U.S. Treasury 1,112 (c) Net income applicable to common equity 3,425 366 6,173 4,652 Less: Dividends and undistributed earnings allocated to participating securities 185 48 348 160 Net income applicable to common stockholders(a) $ 3,240 $ 318 $ 5,825 $ 4,492 Total weighted-average basic shares outstanding 3,937.9 3,444.6 3,835.0 3,422.3 Per share Income/(loss) before extraordinary gain $ 0.80 $ (0.08 ) $ 1.50 $ 1.14 Extraordinary gain 0.02 0.17 0.02 0.17 Net income(b) $ 0.82 $ 0.09 $ 1.52 (c) $ 1.31 Three months ended September 30, Nine months ended September 30, (in millions, except per share amounts) 2009 2008 2009 2008 Diluted earnings per share Net income applicable to common stockholders(a) $ 3,240 $ 318 $ 5,825 $ 4,492 Total weighted-average basic shares outstanding 3,937.9 3,444.6 3,835.0 3,422.3 Add: Employee stock options and SARs(d) 24.1 13.3 23.9 Total weighted-average diluted shares outstanding(e) 3,962.0 3,444. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | NOTE 22 ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) Accumulated other comprehensive income/(loss) includes the after-tax change in unrealized gains and losses on AFS securities, foreign currency translation adjustments (including the impact of related derivatives), cash flow hedging activities and net loss and prior service cost/(credit) related to the Firms defined benefit pension and OPEB plans. Net loss and prior service costs/(credit) Accumulated Nine months ended Unrealized Translation of defined benefit other September 30, 2009 gains/(losses) on adjustments, pension and comprehensive (in millions) AFS securities(a) net of hedges Cash flow hedges OPEB plans income/(loss) Balance at January1, 2009 $ (2,101 ) $ (598 ) $ (202 ) $ (2,786 ) $ (5,687 ) Net change 4,983 (b) 549 (d) 293 (e) 145 (f) 5,970 Balance at September30, 2009 $ 2,882 (c) $ (49 ) $ 91 $ (2,641 ) $ 283 Net loss and prior service costs/(credit) Accumulated Nine months ended Unrealized Translation of defined benefit other September 30, 2008 gains/(losses) on adjustments, pension and comprehensive (in millions) AFS securities(a) net of hedges Cash flow hedges OPEB plans income/(loss) Balance at January1, 2008 $ 380 $ 8 $ (802 ) $ (503 ) $ (917 ) Net change (1,601 )(b) 5 (d) 202 (e) 84 (f) (1,310 ) Balance at September30, 2008 $ (1,221 ) $ 13 $ (600 ) $ (419 ) $ (2,227 ) (a) Represents the after-tax difference between the fair value and amortized cost of the AFS securities portfolio and retained interests in securitizations recorded in other assets. (b) The net change for the nine months ended September30, 2009, was due primarily to overall market spread and market liquidity improvement. The net change for the nine months ended September30, 2008, was due to price declines in asset-backed securities positions as a result of general increases in market spreads, and to net increases in interest rates and market spreads on agency mortgage-backed pass-through securities. (c) Includes after-tax unrealized losses of $(353) million not related to credit on debt securities for which credit losses have been recognized in income. (d) Includes $702million and $(470) million at September30, 2009 and 2008, respectively, of after-tax gains/(losses) on foreign currency translation from operations for which the functional currency is other than the U.S. dollar, partially offset by $(153) million and $475 million, respectively, of after-tax gains/(losses) on hedges. The Firm may not hedge its entire exposure to foreign currency translation on net investments in foreign operations. (e) The net change for the nine months ended September30, 2009, included $117million of after-tax gains recognized in income, and $410million of a |
Commitments and Contingencies
Commitments and Contingencies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | NOTE 23 COMMITMENTS AND CONTINGENCIES For a discussion of the Firms commitments and contingencies, see Note 31 on page 201 of JPMorgan Chases 2008 Annual Report. Litigation reserve The Firm maintains litigation reserves for certain of its outstanding litigation. JPMorgan Chase accrues for a litigation-related liability when it is probable that such a liability has been incurred and the amount of the loss can be reasonably estimated. When the Firm is named as a defendant in a litigation and may be subject to joint and several liability, and a judgment-sharing agreement is in place, the Firm recognizes expense and obligations net of amounts expected to be paid by other signatories to the judgment-sharing agreement. While the outcome of litigation is inherently uncertain, management believes, in light of all information known to it at September30, 2009, the Firms litigation reserves were adequate at such date. Management reviews litigation reserves at least quarterly, and the reserves may be increased or decreased in the future to reflect further relevant developments. The Firm believes it has meritorious defenses to the claims asserted against it in its currently outstanding litigation and, with respect to such litigation, intends to continue to defend itself vigorously, litigating or settling cases according to managements judgment as to what is in the best interests of stockholders. |
Off Balance Sheet Lending Relat
Off Balance Sheet Lending Related Financial Instruments and Guarantees | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Off-Balance Sheet Lending Related-Financial Instruments and Guarantees [Abstract] | |
Off-Balance Sheet Lending Related-Financial Instruments and Guarantees | NOTE 24 OFFBALANCE SHEET LENDING-RELATED FINANCIAL INSTRUMENTS AND GUARANTEES JPMorgan Chase utilizes lending-related financial instruments, such as commitments and guarantees, to meet the financing needs of its customers. The contractual amount of these financial instruments represents the maximum possible credit risk should the counterparties draw down on these commitments or the Firm fulfill its obligation under these guarantees, and the counterparties subsequently fail to perform according to the terms of these contracts. For a discussion of offbalance sheet lending-related financial instruments and guarantees, and the Firms related accounting policies, see Note 33 on pages 206210 of JPMorgan Chases 2008 Annual Report. To provide for the risk of loss inherent in lending-related contracts, an allowance for credit losses on lending-related commitments is maintained. See Note 14 on pages 146147of this Form 10-Q for further discussion regarding the allowance for credit losses on lending-related commitments. The following table summarizes the contractual amounts of offbalance sheet lending-related financial instruments and guarantees and the related allowance for credit losses on lending-related commitments at September30, 2009, and December31, 2008. The amounts in the table below for credit card and home equity lending-related commitments represent the total available credit for these products. The Firm has not experienced, and does not anticipate, that all available lines of credit for these products will be utilized at the same time. The Firm can reduce or cancel these lines of credit by providing the borrower prior notice or, in some cases, without notice as permitted by law. Offbalance sheet lending-related financial instruments and guarantees Allowance for lending-related Contractual amount commitments September 30, December 31, September 30, December 31, (in millions) 2009 2008 2009 2008 Lending-related Consumer: Credit card $ 584,231 $ 623,702 $ $ Home equity 64,762 95,743 Other 19,774 22,062 11 25 Total consumer $ 668,767 $ 741,507 $ 11 $ 25 Wholesale: Other unfunded commitments to extend credit(a)(b) 187,698 189,563 333 349 Asset purchase agreements 25,125 53,729 5 9 Standby letters of credit and other financial guarantees(a)(c)(d) 89,485 95,352 471 274 Unused advised lines of credit 35,911 36,300 Other letters of credit(a)(c) 4,916 4,927 1 2 Total wholesale 343,135 379,871 810 634 Total lending-related $ 1,011,902 $ 1,121,378 $ 821 $ 659 Other guarantees Securities lending guarantees(e) $ 174,675 $ 169,281 NA NA Residual value guarantees 670 670 NA NA Derivatives qualifying as guarantees(f) 88,233 83,835 NA NA |
Business Segments
Business Segments | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Business Segments [Abstract] | |
Business Segments | NOTE 25 BUSINESS SEGMENTS JPMorgan Chase is organized into six major reportable business segments the Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury Securities Services (TSS) and Asset Management (AM), as well as a Corporate/Private Equity segment. The segments are based on the products and services provided or the type of customer served, and they reflect the manner in which financial information is currently evaluated by management. Results of these lines of business are presented on a managed basis. For a definition of managed basis, see the footnotes to the table below. For a further discussion concerning JPMorgan Chases business segments, see Business Segment Results on pages 1920 of this Form 10-Q, and pages 4041 and Note 37 on pages 214215 of JPMorgan Chases 2008 Annual Report. Segment results The following tables provide a summary of the Firms segment results for the three and nine months ended September30, 2009 and 2008, on a managed basis. The impact of credit card securitization adjustments has been included in reconciling items so that the total Firm results are on a reported basis. Finally, total net revenue (noninterest revenue and net interest income) for each of the segments is presented on a tax-equivalent basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits are presented in the managed results on a basis comparable to taxable securities and investments. This approach allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to these items is recorded within income tax expense/(benefit). The following tables summarize the business segment results and reconciliation to reported U.S. GAAP results. Segment results and reconciliation(a) Three months ended September 30, 2009 Investment Retail Financial Card Commercial (in millions, except ratios) Bank Services Services(d) Banking Noninterest revenue $ 5,253 $ 3,064 $ 831 $ 474 Net interest income 2,255 5,154 4,328 985 Total net revenue 7,508 8,218 5,159 1,459 Provision for credit losses 379 3,988 4,967 355 Credit reimbursement (to)/from TSS(b) Noninterest expense(c) 4,274 4,196 1,306 545 Income/(loss) before income tax expense and extraordinary gain 2,855 34 (1,114 ) 559 Income tax expense/(benefit) 934 27 (414 ) 218 Income/(loss) before extraordinary gain 1,921 7 (700 ) 341 Extraordinary gain Net income/(loss) $ 1,921 $ 7 $ (700 ) $ 341 Average common equity $ 33,000 $ 25,000 $ 15,000 $ 8,000 Average assets 678,796 401,620 192,141 130,316 Return on average common equity 23 % % (19 )% 17 % Overhead ratio 57 51 25 37 Three months ended September 30 |