1
January 12, 1995
J.P. Morgan reports 1994 and fourth quarter results
J.P. Morgan & Co. Incorporated reported 1994 net income of $1.215 billion,
29% lower than the $1.723 billion earned in 1993, before the cumulative
effect of an accounting change. Earnings per share on the same basis were
$6.02 for 1994 compared with $8.48 a year earlier.
In the 1994 fourth quarter, net income was $193 million, down 51% from the
$392 million earned in the fourth quarter of 1993. Earnings per share for
the fourth quarter of 1994 were $0.96, compared with $1.92 in 1993's final
quarter.
Douglas A. Warner III, chairman, said: "The depth and diversity of our
business helped Morgan weather a difficult year in world markets well. We
begin 1995 with a clear focus on providing superior service to clients with
complex financial needs _ our long-standing strategy. And we are intent on
achieving disciplined growth in our global business."
SUMMARY OF EARNINGS
Year Fourth quarter
($ in millions, except per share data) 1994 1993 1994 1993
_____________________________________________________________________________
_____
Net interest revenue $ 1,981 $ 1,772 $ 518 $ 477
Noninterest revenue 3,536 4,499 710 1,158
Operating expenses (3,692) (3,580) (963) (1,023)
Income taxes (610) (968) (72) (220)
_____________________________________________________________________________
_____
Income before cumulative effect
of accounting change 1,215 1,723 193 392
Cumulative effect of accounting
change -- (137) -- --
_____________________________________________________________________________
_____
Net income 1,215 1,586 193 392
_____________________________________________________________________________
_____
PER COMMON SHARE
Year Fourth quarter
1994 1993 1994 1993
_____________________________________________________________________________
_____
Income before cumulative effect
of accounting change $6.02 $ 8.48 $0.96 $1.92
Cumulative effect of accounting
change -- (0.68) -- --
_____________________________________________________________________________
_____
Net income 6.02 7.80 0.96 1.92
_____________________________________________________________________________
_____
Dividends declared $2.79 $2.48 $0.75 $0.68
_____________________________________________________________________________
_____
2
SUMMARY OF RESULTS IN 1994:
- -Total revenue declined 12% to $5.517 billion from $6.271 billion in 1993.
- - Noninterest revenue was $3.536 billion, down 21% from $4.499 billion in
1993.
_ Trading revenue totaled $1.019 billion, 51% lower than the $2.059
billion in 1993. Debt instrument trading revenue declined sharply,
but activity in swaps and other interest rate contracts continued to
produce good results.
_ Corporate finance revenue was down 18% to $434 million from $532
million in 1993, reflecting lower underwriting activity.
_ Credit-related fees declined to $204 million from $224 million.
_ Gains were recorded in investment management and operational service
fees. Investment management fees rose 11% to $517 million from $464
million on an increase in assets under management. Operational service
fees rose 11% to $546 million from $491 million in 1993.
_ Net investment securities gains were $122 million; gains in 1993
totaled $323 million.
_ Other revenue totaled $694 million, mostly attributable to the
realization of gains on equity investment securities. This compared
with other revenue of $406 million in 1993.
- -Net interest revenue rose 12% to $1.981 billion from $1.772 billion in
1993, largely due to higher trading-related interest results.
- - Operating expenses rose slightly to $3.692 billion from $3.580 billion in
1993.
SUMMARY OF RESULTS IN THE 1994 FOURTH QUARTER:
- - Total revenue declined 25% to $1.228 billion from $1.635 billion in the
year-earlier quarter.
- - Noninterest revenue was $710 million, down 39% from the year-earlier
quarter's $1.158 billion.
_ Trading revenue declined to $153 million from $606 million in the
strong 1993 fourth quarter.
_ Corporate finance revenue declined to $122 million from $158 million.
_ Credit-related fees declined to $44 million from $57 million.
_ Investment management fees rose to $130 million from $123 million.
_ Operational service fees were $127 million compared with $132 million.
_ Net investment securities gains were $23 million; gains in 1993's
fourth quarter were $32 million.
_ Other revenue was $111 million compared with $50 million.
- -Net interest revenue rose 9% to $518 million from $477 million in the 1993
final quarter.
- - Operating expenses declined 6% to $963 million from $1.023 billion in
1993's fourth quarter.
# # #
The remainder of this release contains supplementary information on
specific areas of the results, a financial summary, and consolidated
financial statements.
3
NET INTEREST REVENUE
Net interest revenue rose 12% to $1.981 billion in 1994 from $1.772
billion in 1993, principally due to higher trading-related net interest
revenue. Excluding a total of $116 million in past due interest on Brazilian
and Argentine assets and interest on income tax refunds, net interest revenue
for the year was $1.865 billion. This figure compares with $1.571 billion
earned in 1993, excluding $201 million related to past due interest on
Brazilian and Argentine assets.
Net interest revenue in the fourth quarter totaled $518 million, 9%
higher than the $477 million in the year-earlier quarter. The 1993 fourth
quarter amount included $107 million of past due interest from Argentina,
received as part of the restructuring of that country's debt. Excluding this
item, net interest revenue in the 1994 fourth quarter increased 40% from the
1993 fourth quarter, reflecting higher trading-related net interest revenue.
AVERAGE INTEREST-EARNING ASSETS AND YIELDS
Year Fourth quarter
1994 1993 1994 1993
_____________________________________________________________________________
_____
Average interest-earning assets
($ in billions) $134.4 $126.9 $137.3 $129.7
Net yield 1.56% 1.51% 1.59% 1.55%
NONINTEREST REVENUE
Year Fourth quarter
($ in millions) 1994 1993 1994 1993
_____________________________________________________________________________
_____
Trading revenue $ 1,019 $ 2,059 $153 $606
Corporate finance revenue 434 532 122 158
Credit-related fees 204 224 44 57
Investment management fees 517 464 130 123
Operational service fees 546 491 127 132
Net investment securities
gains 122 323 23 32
Other revenue 694 406 111 50
_____________________________________________________________________________
_____
Total noninterest revenue 3,536 4,499 710 1,158
_____________________________________________________________________________
_____
Total noninterest revenue in 1994 was $3.536 billion, down 21% from $4.499
billion in 1993, primarily due to lower trading results. Total noninterest
revenue in the 1994 fourth quarter was $710 million, down 39% from the year-
earlier quarter's $1.158 billion.
Trading revenue in 1994 declined 51% to $1.019 billion from $2.059 billion
in 1993, which was an exceptionally strong year. Lower revenue from debt
instrument trading accounted for most of the decline. Swaps and other
interest rate contracts remained significant contributors to revenue,
benefiting from continued client demand for risk-management products. (For
details, see table of trading revenue by principal markets on page 19.)
Trading revenue does not include net interest revenue derived from the
4
firm's trading activities of approximately $300 million in 1994, up from $142
million in 1993. Trading-related net interest revenue was primarily
attributable to debt instruments.
Trading revenue in the 1994 fourth quarter declined 75% to $153 million
from $606 million in the year-earlier quarter, which included exceptional
results in trading of emerging market debt instruments. The 1994 fourth
quarter results include losses on debt
instrument trading. Lower revenue was posted for trading in equities,
commodities, and other instruments. Revenue from swaps and other interest
rate contracts was even with the strong 1993 fourth quarter, while revenue
from foreign exchange trading rose from the year-earlier period. Trading
revenue for the 1994 fourth quarter does not include net interest revenue
derived from trading activities of approximately $105 million, compared with
$53 million in the year-earlier quarter. Most trading-related net interest
revenue in the quarter was attributable to debt instruments.
Corporate finance revenue in 1994 was $434 million, down 18% from $532
million in 1993, reflecting the global slowdown in securities underwriting.
The 1994 total includes $124 million in underwriting revenue, versus $245
million in 1993. In the 1994 fourth quarter, corporate finance revenue
totaled $122 million, down 23% from $158 million in the corresponding 1993
quarter. Underwriting revenue fell to $32 million from $65 million in the
1993 fourth quarter. Fees from advisory services rose 8% in 1994 to $310
million from $287 million in 1993 and were $90 million in the 1994 fourth
quarter compared with $93 million in the year-earlier period.
Credit-related fees were $204 million in 1994, down 9% from $224 million
in 1993 because of lower fees earned from securities lending, standby letters
of credit, and commitments. For the 1994 fourth quarter, credit-related fees
declined to $44 million from $57 million in the 1993 fourth quarter.
Investment management fees in 1994 increased 11% to $517 million from $464
million in 1993, benefiting from an increase in assets under management. In
the 1994 fourth quarter, investment management fees grew 6% to $130 million
from $123 million in the year-earlier quarter.
Operational service fees in 1994 of $546 million were 11% higher than the
$491 million in 1993 and reflected growth in equity and futures brokerage,
custody, and clearing. Operational service fees for the 1994 fourth quarter
totaled $127 million compared with $132 million in the 1993 fourth quarter.
Net investment securities gains for 1994 were $122 million compared with
gains of $323 million reported in 1993. For the 1994 fourth quarter, net
investment securities gains were $23 million compared with gains of $32
million in the prior year's fourth quarter.
Other revenue rose to $694 million in 1994 from $406 million in 1993. The
1994 total reflected net equity investment securities gains of $606 million,
which included the realization of gains on a portion of the firm's holdings
in Columbia/HCA Healthcare Corporation common stock. Other revenue for the
1994 fourth quarter was $111 million, compared with $50 million in the year-
earlier period. Included in the 1994 fourth quarter were net equity
investment securities gains of $97 million.
5
OPERATING EXPENSES
Operating expenses totaled $3.692 billion in 1994, slightly above 1993
operating expenses of $3.580 billion. Fourth quarter operating expenses of
$963 million were down from the year-earlier quarter's $1.023 billion, which
included a special charge of $120 million related to real estate and
relocation initiatives. The increase in expenses for the year was primarily
due to growth in the number of employees, and higher technology and
communications costs associated with the firm's continued investments in its
swaps, emerging markets, and equities businesses. At December 31, 1994,
staff totaled 17,055 employees versus 15,193 employees at December 31, 1993.
INCOME TAXES
Income tax expense for the year was $610 million, a decline from $968
million in 1993. Income taxes for the 1994 fourth quarter were $72 million,
compared with $220 million in the 1993 fourth quarter. Income tax expense in
1994 is based on an effective tax rate of 33%, down from 1993's effective tax
rate of 36%. The lower effective tax rate in 1994 reflects the decline in
pretax income. The fourth quarter effective tax rate was 27%, compared with
a 36% rate in the year-earlier quarter.
ASSETS
Total assets were $155 billion at December 31, 1994, unchanged from
September 30, 1994. Nonaccrual loans increased by $7 million to $219 million
during the fourth quarter as new classifications exceeded charge-offs and
loan repayments. No provision for credit losses was deemed necessary in the
1994 fourth quarter or the year. The allowance for credit losses was $1.131
billion at December 31, 1994. (For details, see asset quality tables on page
20.)
On January 1, 1994, the firm adopted Financial Accounting Standards Board
Interpretation No. 39 (FIN No. 39), Offsetting of Amounts Related to Certain
Contracts, which increased both assets and liabilities by approximately $13
billion at December 31, 1994. While implementation reduced J.P. Morgan's
leverage and other asset-based ratios, net income and the risk-based capital
ratios were not affected.
CAPITAL
Dec. 31 Sept. 30 Dec.31
1994 1994 1993
_______________________________________________________________________
Stockholders' equity ($ in billions)$9.6 $9.7 $9.9
As a percent of total period-end
assets 6.2% 6.3 % 7.4%
Risk-based capital ratios:
Tier 1 9.6* 9.8 9.3
Total 14.2* 14.7 13.0
Leverage ratio 6.5 6.5 7.3
_______________________________________________________________________
*Ratios for December 31, 1994, are estimates. Effective December 31,
1994, the risk-based capital ratios reflect Federal Reserve Board
amendments to recognize risk-reducing benefits of bilateral netting
arrangements.
J.P. Morgan's risk-based capital and leverage ratios remain above the
minimum standards set by the Federal Reserve Board.
6
As of December 31, 1993, the firm adopted SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities, which requires that both
debt and marketable equity investment securities be carried at fair value.
At December 31, 1994, stockholders' equity included approximately $456
million, reflecting the unrealized appreciation on debt investment securities
of $154 million, and $576 million on marketable equity investment securities,
net the related deferred tax liability. The unrealized appreciation on debt
investment securities decreased $95 million from $249 million at September
30, 1994, mainly because of rising interest rates. The unrealized
appreciation on marketable equity investment securities decreased $162
million in the fourth quarter, reflecting both the realization of gains and a
decline in market value. The risk-based capital and leverage ratios stated
above do not reflect the increase in stockholders' equity caused by the
implementation of this standard.
In accordance with SFAS No. 107, Disclosures about Fair Value of Financial
Instruments,
J.P. Morgan estimates that the amount by which the aggregate net fair value
of all balance-sheet and off-balance-sheet financial instruments exceeded
associated net carrying values at December 31, 1994, was $2.2 billion,
compared with $2.4 billion at September 30, 1994, $2.5 billion at June 30,
1994, and $2.6 billion at March 31, 1994 and December 31, 1993. The
aggregate net fair value was primarily composed of net loans and asset and
liability management swaps.
As previously reported, the Board of Directors in December declared an
increase in the regular quarterly dividend to $0.75 per share from $0.68 per
share on the company's common stock for the quarter ended December 31, 1994.
The Board also approved the purchase of up to 7 million shares of J.P. Morgan
common stock to lessen the dilutive impact on earnings per share of the
firm's employee benefit plans. These purchases may be made periodically in
1995 or beyond in the open market or through privately negotiated
transactions. The firm purchased approximately 7 million shares in 1994.
# # #
J.P. Morgan is a leading global financial intermediary that has built its
business, over 150 years, on a commitment to serve the long-term interests of
clients with complex financial needs. Corporations, governments, financial
institutions, private firms, nonprofit institutions, and a limited number of
individuals throughout the world are our clients. We advise on corporate
financial structure; arrange financing in capital and credit markets;
underwrite, trade, and invest in an array of currencies and the full range of
securities and derivative instruments; serve as investment advisor; and
provide selected trust, agency, and operational services.
On the next two pages is the Financial Summary; financial statements, the
trading revenue table, and asset quality tables follow on pages 9 - 20.
7
FINANCIAL SUMMARY
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_____
Dollars in millions,
except per share data Three months ended
____________________________________
______
Dec. 31 Dec. 31 Sept. 30
1994 1993 1994
____________________________________
______
Net income $193 $392 $327
Stockholders' equity 9,568 9,859 9,733
Total assets 154,917 133,888 154,668
Dividends declared on common 140 132 129
stock
Dividends declared on preferred 5 5 5
stock
_____________________________________________________________________________
______
PER COMMON SHARE (a)
Net income $0.96 $ 1.92 $ 1.63
Dividends declared 0.75 0.68 0.68
Book value (b) 46.73 47.25 47.36
_____________________________________________________________________________
______
Weighted-average number of
common and 196,197,704 201,578,167 198,193,982
common equivalent shares
outstanding
_____________________________________________________________________________
______
SELECTED RATIOS
Annualized rate of return on
average 8.11 % 19.03 % 13.85 %
common stockholders' equity
(c):
As % of period-end total assets:
Common equity 5.86 6.99 5.97
Total equity 6.18 7.36 6.29
_____________________________________________________________________________
______
REGULATORY CAPITAL RATIOS (d)
Tier 1 risk-based capital ratio
(estimated for December 31, 9.6 % 9.3 % 9.8 %
1994)(e)
Total risk-based capital ratio
(estimated for December 31, 14.2 13.0 14.7
1994)(e)
Leverage ratio 6.5 7.3 6.5
_____________________________________________________________________________
______
Employees at period-end 17,055 15,193 16,514
_____________________________________________________________________________
______
<FN>
(a) Earnings per share amounts represent both primary and fully diluted
earnings per share.
(b) Excluding the impact of SFAS No. 115, book value per common share would
have been $44.39, $41.37 and $44.21 for the three months ended December 31,
1994, December 31, 1993 and September 30, 1994, respectively.
(c) Excluding the impact of SFAS No. 115, rate of return on average common
stockholders' equity would have been 8.64%, 19.06% and 15.00% for the three
months ended December 31, 1994, December 31, 1993 and September 30, 1994,
respectively.
(d) In accordance with Federal Reserve Board guidelines, these ratios exclude
the
equity, assets and off-balance-sheet exposures of J.P. Morgan Securities,
Inc. and the effect of SFAS No. 115.
(e) Effective December 31, 1994, the risk-based capital ratios reflect
Federal Reserve Board amendments to recognize risk-reducing benefits of
bilateral netting arrangements.
8
FINANCIAL SUMMARY
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
______
Dollars in millions,
except per share data Twelve months
ended
_____________________________
December December
31 31
1994 1993
_____________________________
Income before cumulative effect
of $1,215 $1,723
accounting change
Cumulative effect of change in
method
of accounting for - (137)
postretirement
benefits, net of related
income taxes
_____________________________________________________________________________
______
Net income 1,215 1,586
Dividends declared on common 530 479
stock
Dividends declared on preferred 20 18
stock
_____________________________________________________________________________
______
PER COMMON SHARE (a)
Income before cumulative effect
of $6.02 $ 8.48
accounting change
Cumulative effect of change in
method
of accounting for - (0.68)
postretirement
benefits, net of related
income taxes
_____________________________________________________________________________
______
Net income 6.02 7.80
Dividends declared 2.79 2.48
_____________________________________________________________________________
______
Weighted-average number of
common and 199,056,56 201,073,12
common equivalent shares 1 5
outstanding
_____________________________________________________________________________
______
SELECTED RATIOS
Rate of return on average common
stockholders' equity:
Before cumulative effect of
change 12.90 % 22.28 %
in method of accounting
(b)
After cumulative effect of
change
in method of accounting
for - 20.86
postretirement benefits,
net
of related income taxes
_____________________________________________________________________________
______
<FN>
(a) Earnings per share amounts represent both primary and fully diluted
earnings per share.
(b) Excluding the impact of SFAS No. 115, rate of return on average common
stockholders' equity would have been 14.18% and 22.29% for the twelve months
ended December 31, 1994 and December 31, 1993, respectively.
9
CONSOLIDATED STATEMENT OF INCOME
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
__________
In millions, except per share data Three months ended
___________________________________
_______
December December Increase
31 31
1994 1993 (Decreas
e)
___________________________________
_______
NET INTEREST REVENUE
Interest revenue $2,369 $1,830 $539
Interest expense 1,851 1,353 498
_____________________________________________________________________________
__________
Net interest revenue 518 477 41
NONINTEREST REVENUE
Trading revenue 153 606 (453)
Corporate finance revenue 122 158 (36)
Credit-related fees 44 57 (13)
Investment management fees 130 123 7
Operational service fees 127 132 (5)
Net investment securities gains 23 32 (9)
Other revenue 111 50 61
_____________________________________________________________________________
__________
Total noninterest revenue 710 1,158 (448)
Total revenue 1,228 1,635 (407)
OPERATING EXPENSES
Employee compensation and benefits 501 538 (37)
Net occupancy 74 178 (104)
Technology and communications 209 150 59
Other expenses 179 157 22
_____________________________________________________________________________
__________
Total operating expenses 963 1,023 (60)
Income before income taxes 265 612 (347)
Income taxes 72 220 (148)
_____________________________________________________________________________
__________
Net income 193 392 (199)
PER COMMON SHARE (a)
Net income $0.96 $ 1.92 ($0.96)
Dividends declared 0.75 0.68 0.07
_____________________________________________________________________________
__________
(a) Earnings per share amounts represent both primary and fully diluted
earnings per share.
10
CONSOLIDATED STATEMENT OF INCOME
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
__________
In millions, except per share data Three months
ended
___________________________________
_______
December September Increase
31 30
1994 1994 (Decreas
e)
___________________________________
_______
NET INTEREST REVENUE
Interest revenue $2,369 $2,142 $227
Interest expense 1,851 1,616 235
_____________________________________________________________________________
__________
Net interest revenue 518 526 (8)
NONINTEREST REVENUE
Trading revenue 153 282 (129)
Corporate finance revenue 122 108 14
Credit-related fees 44 49 (5)
Investment management fees 130 133 (3)
Operational service fees 127 135 (8)
Net investment securities gains 23 (27) 50
(losses)
Other revenue 111 226 (115)
_____________________________________________________________________________
__________
Total noninterest revenue 710 906 (196)
Total revenue 1,228 1,432 (204)
OPERATING EXPENSES
Employee compensation and benefits 501 576 (75)
Net occupancy 74 68 6
Technology and communications 209 162 47
Other expenses 179 135 44
_____________________________________________________________________________
__________
Total operating expenses 963 941 22
Income before income taxes 265 491 (226)
Income taxes 72 164 (92)
_____________________________________________________________________________
__________
Net income 193 327 (134)
PER COMMON SHARE (a)
Net income $0.96 $1.63 ($0.67)
Dividends declared 0.75 0.68 0.07
_____________________________________________________________________________
__________
(a) Earnings per share amounts represent both primary and fully diluted
earnings per share.
11
CONSOLIDATED STATEMENT OF INCOME
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
__________
In millions, except per share data Twelve months ended
___________________________________
_______
December December Increase
31 31
1994 1993 (Decreas
e)
___________________________________
_______
NET INTEREST REVENUE
Interest revenue $8,379 $7,442 $937
Interest expense 6,398 5,670 728
_____________________________________________________________________________
__________
Net interest revenue 1,981 1,772 209
NONINTEREST REVENUE
Trading revenue 1,019 2,059 (1,040)
Corporate finance revenue 434 532 (98)
Credit-related fees 204 224 (20)
Investment management fees 517 464 53
Operational service fees 546 491 55
Net investment securities gains 122 323 (201)
Other revenue 694 406 288
_____________________________________________________________________________
___________
Total noninterest revenue 3,536 4,499 (963)
Total revenue 5,517 6,271 (754)
OPERATING EXPENSES
Employee compensation and benefits 2,217 2,221 (4)
Net occupancy 275 391 (116)
Technology and communications 645 512 133
Other expenses 555 456 99
_____________________________________________________________________________
__________
Total operating expenses 3,692 3,580 112
Income before income taxes and
cumulative 1,825 2,691 (866)
effect of accounting change
Income taxes 610 968 (358)
_____________________________________________________________________________
__________
Income before cumulative effect of
accounting change 1,215 1,723 (508)
Cumulative effect of change in
method of
accounting for postretirement - (137) 137
benefits,
net of related income taxes
_____________________________________________________________________________
__________
Net income 1,215 1,586 (371)
_____________________________________________________________________________
__________
PER COMMON SHARE (a)
Income before cumulative effect of
accounting change $6.02 $ 8.48 ($2.46)
Cumulative effect of change in
method of
accounting for postretirement - (0.68) 0.68
benefits,
net of related income taxes
Net income 6.02 7.80 (1.78)
Dividends declared 2.79 2.48 0.31
_____________________________________________________________________________
__________
(a) Earnings per share amounts represent both primary and fully diluted
earnings per share.
12
CONSOLIDATED BALANCE SHEET
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_____________
Dollars in millions December December
31 31
1994 1993
________________________
___
ASSETS
Cash and due from banks $ 2,210 $ 1,008
Interest-earning deposits with banks 1,362 1,221
Debt investment securities available-for-sale
carried at fair value 22,657 19,547
Trading account assets 57,065 41,349
Securities purchased under agreements to resell
($21,170 in 21,350 22,706
1994 and $22,645 in 1993) and federal funds sold
Securities borrowed 12,127 10,818
Loans 22,080 24,380
Less: allowance for credit losses 1,131 1,157
_____________________________________________________________________________
_____________
Net loans 20,949 23,223
Customers' acceptance liability 586 406
Accrued interest and accounts receivable 5,028 4,938
Premises and equipment 3,318 2,978
Less: accumulated depreciation 1,302 1,125
_____________________________________________________________________________
_____________
Premises and equipment, net 2,016 1,853
Other assets 9,567 6,819
_____________________________________________________________________________
_____________
Total assets 154,917 133,888
_____________________________________________________________________________
_____________
LIABILITIES
Noninterest-bearing deposits:
In offices in the U.S. 3,693 4,681
In offices outside the U.S. 767 839
Interest-bearing deposits:
In offices in the U.S. 1,826 2,401
In offices outside the U.S. 36,799 32,481
_____________________________________________________________________________
_____________
Total deposits 43,085 40,402
Trading account liabilities 36,407 18,216
Securities sold under agreements to repurchase
($30,179 in 35,768 39,412
1994 and $36,306 in 1993) and federal funds
purchased
Commercial paper 3,507 2,573
Other liabilities for borrowed money 10,900 10,127
Accounts payable and accrued expenses 6,231 6,416
Liability on acceptances 586 413
Long-term debt not qualifying as risk-based capital 3,605 2,817
Other liabilities 2,063 1,194
_____________________________________________________________________________
_____________
142,152 121,570
Long-term debt qualifying as risk-based capital 3,197 2,459
_____________________________________________________________________________
_____________
Total liabilities 145,349 124,029
STOCKHOLDERS' EQUITY
Preferred stock (authorized shares: 10,000,000):
Adjustable rate cumulative preferred stock
(issued and 244 244
outstanding: 2,444,300)
Variable cumulative preferred stock (issued and
outstanding: 250 250
250,000)
Common stock, $2.50 par value (authorized shares:
500,000,000; 502 499
issued: 200,668,373 in 1994 and 199,531,757 in
1993)
Capital surplus 1,452 1,393
Retained earnings 7,044 6,386
Net unrealized gains on investment securities, net 456 1,165
of taxes
Other 367 250
_____________________________________________________________________________
_____________
10,315 10,187
Less: treasury stock (12,966,917 shares in 1994 and
6,445,226 shares in 1993) at cost 747 328
_____________________________________________________________________________
_____________
Total stockholders' equity 9,568 9,859
_____________________________________________________________________________
_____________
Total liabilities and stockholders' equity 154,917 133,888
_____________________________________________________________________________
_____________
13
CONSOLIDATED BALANCE SHEET
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_____________
Dollars in millions December September
31 30
1994 1994
________________________
___
ASSETS
Cash and due from banks $ 2,210 $ 1,524
Interest-earning deposits with banks 1,362 2,477
Debt investment securities available-for-sale
carried at fair value 22,657 18,681
Trading account assets 57,065 58,347
Securities purchased under agreements to resell
($21,170 in 21,350 25,819
December and $25,748 in September) and federal
funds sold
Securities borrowed 12,127 11,517
Loans 22,080 22,582
Less: allowance for credit losses 1,131 1,133
_____________________________________________________________________________
_____________
Net loans 20,949 21,449
Customers' acceptance liability 586 529
Accrued interest and accounts receivable 5,028 3,291
Premises and equipment 3,318 3,210
Less: accumulated depreciation 1,302 1,251
_____________________________________________________________________________
_____________
Premises and equipment, net 2,016 1,959
Other assets 9,567 9,075
_____________________________________________________________________________
_____________
Total assets 154,917 154,668
_____________________________________________________________________________
_____________
LIABILITIES
Noninterest-bearing deposits:
In offices in the U.S. 3,693 3,610
In offices outside the U.S. 767 299
Interest-bearing deposits:
In offices in the U.S. 1,826 1,848
In offices outside the U.S. 36,799 39,800
_____________________________________________________________________________
_____________
Total deposits 43,085 45,557
Trading account liabilities 36,407 37,709
Securities sold under agreements to repurchase
($30,179 in
December and $31,537 in September) and federal 35,768 33,023
funds
purchased
Commercial paper 3,507 4,304
Other liabilities for borrowed money 10,900 10,356
Accounts payable and accrued expenses 6,231 5,742
Liability on acceptances 586 529
Long-term debt not qualifying as risk-based capital 3,605 3,051
Other liabilities 2,063 1,428
_____________________________________________________________________________
_____________
142,152 141,699
Long-term debt qualifying as risk-based capital 3,197 3,236
_____________________________________________________________________________
_____________
Total liabilities 145,349 144,935
STOCKHOLDERS' EQUITY
Preferred stock (authorized shares: 10,000,000):
Adjustable rate cumulative preferred stock
(issued and 244 244
outstanding: 2,444,300)
Variable cumulative preferred stock (issued and
outstanding: 250 250
250,000)
Common stock, $2.50 par value (authorized shares:
500,000,000; 502 502
issued 200,668,373 in December and 200,667,623 in
September)
Capital surplus 1,452 1,456
Retained earnings 7,044 7,000
Net unrealized gains on investment securities, net 456 614
of taxes
Other 367 318
_____________________________________________________________________________
_____________
10,315 10,384
Less: treasury stock (12,966,917 shares in December
and 11,352,101 shares in September) at cost 747 651
_____________________________________________________________________________
_____________
Total stockholders' equity 9,568 9,733
_____________________________________________________________________________
_____________
Total liabilities and stockholders' equity 154,917 154,668
_____________________________________________________________________________
_____________
14
CONSOLIDATED AVERAGE BALANCES AND NET INTEREST EARNINGS
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_______________
Dollars in millions, Three months ended
interest and average rates ______________________________________________
_________
on a taxable-equivalent basis December 31, 1994 December 31, 1993
______________________________________________
_________
Avera Averag Avera Averag
ge e ge e
balan Intere rate balan Intere rate
ce st ce st
______________________________________________
_________
ASSETS
Interest-earning deposits with
banks, $2,07 $52 9.92 % $2,49 $57 9.06 %
mainly in offices outside 9 5
the U.S.
Debt investment securities in
offices in the U.S. (a):
U.S. Treasury 1,336 24 7.13 1,145 14 4.85
U.S. state and political
subdivision 2,205 66 11.88 2,191 69 12.49
Other 11,62 160 5.46 8,766 103 4.66
3
Debt investment securities in
offices 5,267 91 6.85 8,292 145 6.94
outside the U.S. (a)
Trading account assets:
In offices in the U.S. 15,13 270 7.08 13,45 187 5.51
4 8
In offices outside the 26,44 535 8.03 21,10 343 6.45
U.S. 5 0
Securities purchased under
agreements
to resell and federal funds 31,45 442 5.58 32,16 370 4.56
sold, 1 2
mainly in offices in the
U.S.
Securities borrowed in offices
in 16,70 213 5.06 14,32 94 2.60
the U.S. 3 9
Loans:
In offices in the U.S. 7,244 116 6.35 7,879 105 5.29
In offices outside the 16,14 265 6.51 16,99 314 7.33
U.S. 0 2
Other interest-earning assets
(b):
In offices in the U.S. 1,047 105 * 671 43 *
In offices outside the 607 61 * 173 16 *
U.S.
_____________________________________________________________________________
_______________
Total interest-earning assets 137,2 2,400 6.94 129,6 1,860 5.69
81 53
Allowance for credit losses (1,13 (1,16
3) 0)
Cash and due from banks 1,695 2,264
Other noninterest-earning 32,89 17,96
assets (c) 6 6
_____________________________________________________________________________
_______________
Total assets 170,7 148,7
39 23
_____________________________________________________________________________
_______________
<FN>
Interest and average rates applying to the following asset categories have
been adjusted to a taxable-equivalent basis: Debt investment securities in
offices in the U.S., Trading account assets in offices in the U.S., and Loans
in offices in the U.S. The applicable tax rate used to determine these
adjustments was approximately 41% for the three months ended December 31,
1994 and 1993.
(a) For the three months ended December 31, 1994, average debt investment
securities are computed based on historical amortized cost, excluding the
effects of SFAS No. 115 adjustments.
(b) Interest revenue includes the effect of certain off-balance-sheet
transactions.
(c) For the three months ended December 31, 1994, Other noninterest-earning
assets include the impact of adopting FIN No. 39 and SFAS No. 115.
* Not meaningful
15
CONSOLIDATED AVERAGE BALANCES AND NET INTEREST EARNINGS
J.P. Morgan & Co. Incorporated
______________________________________________________________________________
______________
Dollars in millions, Three months ended
interest and average rates ______________________________________________
_________
on a taxable-equivalent basis December 31, 1994 December 31, 1993
______________________________________________
_________
Avera Averag Avera Averag
ge e ge e
balan Intere rate balan Intere rate
ce st ce st
______________________________________________
_________
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing deposits:
In offices in the U.S. $ $ 23 4.76 % $ $ 30 5.01 %
1,918 2,375
In offices outside the 41,45 537 5.14 33,06 409 4.91
U.S. 4 4
Trading account liabilities:
In offices in the U.S. 8,703 153 6.97 8,351 100 4.75
In offices outside the 13,40 241 7.13 8,431 128 6.02
U.S. 4
Securities sold under
agreements to
repurchase and federal funds
purchased, mainly in offices 44,88 592 5.23 49,99 507 4.02
in 4 6
the U.S.
Commercial paper, mainly in
offices 4,084 55 5.34 2,603 21 3.20
in the U.S.
Other interest-bearing
liabilities:
In offices in the U.S. 9,020 124 5.45 8,010 68 3.37
In offices outside the 1,986 32 6.39 2,787 35 4.98
U.S.
Long-term debt,
mainly in offices in the 6,596 94 5.65 5,222 55 4.18
U.S.
_____________________________________________________________________________
_______________
Total interest-bearing 132,0 1,851 5.56 120,8 1,353 4.44
liabilities 49 39
Noninterest-bearing deposits:
In offices in the U.S. 3,384 4,858
In offices outside the 1,132 1,135
U.S.
Other noninterest-bearing
liabilities (a) 24,52 13,30
8 7
_____________________________________________________________________________
_______________
Total liabilities 161,0 140,1
93 39
Stockholders' equity 9,646 8,584
_____________________________________________________________________________
_______________
Total liabilities and
stockholders' 170,7 148,7
equity 39 23
Net yield on interest-earning 1.59 1.55
assets
_____________________________________________________________________________
_______________
Net interest earnings 549 507
_____________________________________________________________________________
_______________
(a) For the three months ended December 31, 1994, Other noninterest-bearing
liabilities include the impact of adopting FIN. No. 39.
16
CONSOLIDATED AVERAGE BALANCES AND NET INTEREST EARNINGS
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_______________
Dollars in millions, Twelve months ended
interest and average rates ______________________________________________
_________
on a taxable-equivalent basis December 31, 1994 December 31, 1993
______________________________________________
_________
Avera Averag Avera Averag
ge e ge e
balan Intere rate balan Intere rate
ce st ce st
______________________________________________
_________
ASSETS
Interest-earning deposits with
banks, $ $ 197 8.75 % $ $ 235 8.92 %
mainly in offices outside 2,252 2,636
the U.S.
Debt investment securities in
offices in the U.S. (a):
U.S. Treasury 1,282 79 6.16 2,541 117 4.60
U.S. state and political
subdivision 2,215 267 12.05 2,185 276 12.63
Other 10,56 547 5.18 8,811 448 5.08
9
Debt investment securities in
offices 6,010 409 6.81 9,257 696 7.52
outside the U.S. (a)
Trading account assets:
In offices in the U.S. 14,63 952 6.51 13,53 755 5.58
2 4
In offices outside the 24,03 1,838 7.65 16,98 1,240 7.30
U.S. 3 5
Securities purchased under
agreements
to resell and federal funds 32,24 1,593 4.94 29,86 1,408 4.71
sold, 7 9
mainly in offices in the
U.S.
Securities borrowed in offices
in 15,61 624 4.00 14,07 408 2.90
the U.S. 5 6
Loans:
In offices in the U.S. 7,754 438 5.65 8,295 447 5.39
In offices outside the 16,20 991 6.12 17,95 1,242 6.92
U.S. 1 4
Other interest-earning assets
(b):
In offices in the U.S. 913 269 * 594 199 *
In offices outside the 646 295 * 165 109 *
U.S.
_____________________________________________________________________________
_______________
Total interest-earning assets 134,3 8,499 6.33 126,9 7,580 5.97
69 02
Allowance for credit losses (1,14 (1,19
3) 9)
Cash and due from banks 1,790 2,355
Other noninterest-earning 37,56 18,12
assets (c) 5 2
_____________________________________________________________________________
_______________
Total assets 172,5 146,1
81 80
_____________________________________________________________________________
_______________
<FN>
Interest and average rates applying to the following asset categories have
been adjusted to a taxable-equivalent basis: Debt investment securities in
offices in the U.S., Trading account assets in offices in the U.S., and Loans
in offices in the U.S. The applicable tax rate used to determine these
adjustments was approximately 41% for the twelve months ended December 31,
1994 and 1993.
(a) For the twelve months ended December 31, 1994, average debt investment
securities are computed based on historical amortized cost, excluding the
effects of SFAS No. 115 adjustments.
(b) Interest revenue includes the effect of certain off-balance-sheet
transactions.
(c) For the twelve months ended December 31, 1994, Other noninterest-earning
assets include the impact of adopting FIN No. 39 and SFAS No. 115.
* Not meaningful
17
CONSOLIDATED AVERAGE BALANCES AND NET INTEREST EARNINGS
J.P. Morgan & Co. Incorporated
______________________________________________________________________________
______________
Dollars in millions, Twelve months ended
interest and average rates ______________________________________________
_________
on a taxable-equivalent basis December 31, 1994 December 31, 1993
______________________________________________
_________
Avera Averag Avera Averag
ge e ge e
balan Intere rate balan Intere rate
ce st ce st
______________________________________________
_________
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing deposits:
In offices in the U.S. $ $ 101 4.64 % $ $ 126 5.07 %
2,175 2,487
In offices outside the 37,76 1,845 4.89 31,90 1,793 5.62
U.S. 8 6
Trading account liabilities:
In offices in the U.S. 8,028 510 6.35 8,203 433 5.28
In offices outside the 11,10 778 7.00 7,052 483 6.85
U.S. 9
Securities sold under
agreements to
repurchase and federal funds
purchased, mainly in offices 48,37 2,196 4.54 49,32 2,055 4.17
in 2 2
the U.S.
Commercial paper, mainly in
offices 4,174 182 4.36 3,412 109 3.19
in the U.S.
Other interest-bearing
liabilities:
In offices in the U.S. 8,085 365 4.51 8,260 287 3.47
In offices outside the 2,315 132 5.70 2,908 156 5.36
U.S.
Long-term debt,
mainly in offices in the 5,901 289 4.90 5,420 228 4.21
U.S.
_____________________________________________________________________________
_______________
Total interest-bearing 127,9 6,398 5.00 118,9 5,670 4.77
liabilities 27 70
Noninterest-bearing deposits:
In offices in the U.S. 3,818 4,671
In offices outside the 1,395 1,265
U.S.
Other noninterest-bearing
liabilities (a) 29,68 13,26
4 4
_____________________________________________________________________________
_______________
Total liabilities 162,8 138,1
24 70
Stockholders' equity 9,757 8,010
_____________________________________________________________________________
_______________
Total liabilities and
stockholders' 172,5 146,1
equity 81 80
Net yield on interest-earning 1.56 1.51
assets
_____________________________________________________________________________
_______________
Net interest earnings 2,101 1,910
_____________________________________________________________________________
_______________
(a) For the twelve months ended December 31, 1994, Other noninterest-bearing
liabilities include the impact of adopting FIN. No. 39.
18
CONSOLIDATED STATEMENT OF CONDITION
Morgan Guaranty Trust Company of New
York
_____________________________________________________________________________
_____________
Dollars in millions December December
31 31
1994 1993
_______________________
____
ASSETS
Cash and due from banks $ 2,182 $ 943
Interest-earning deposits with banks 1,605 1,307
Debt investment securities available-for-sale
carried at fair value 21,292 17,306
Trading account assets 45,386 31,679
Securities purchased under agreements to resell
and federal funds sold 16,562 15,510
Loans 19,397 20,377
Less: allowance for credit losses 1,025 1,052
_____________________________________________________________________________
_____________
Net loans 18,372 19,325
Customers' acceptance liability 556 406
Accrued interest and accounts receivable 3,594 4,034
Premises and equipment 2,967 2,703
Less: accumulated depreciation 1,149 1,002
_____________________________________________________________________________
_____________
Premises and equipment, net 1,818 1,701
Other assets 7,360 3,521
_____________________________________________________________________________
_____________
Total assets 118,727 95,732
_____________________________________________________________________________
_____________
LIABILITIES
Noninterest-bearing deposits:
In offices in the U.S. 3,698 4,603
In offices outside the U.S. 770 854
Interest-bearing deposits:
In offices in the U.S. 1,480 1,917
In offices outside the U.S. 38,566 32,320
_____________________________________________________________________________
_____________
Total deposits 44,514 39,694
Trading account liabilities 30,730 12,894
Securities sold under agreements to repurchase
and federal funds purchased 22,099 22,310
Other liabilities for borrowed money 5,320 5,451
Accounts payable and accrued expenses 2,902 4,491
Liability on acceptances 556 413
Long-term debt not qualifying as risk-based 1,968 918
capital
Other liabilities 2,080 869
_____________________________________________________________________________
_____________
110,169 87,040
Long-term debt qualifying as risk-based capital 1,249 1,756
_____________________________________________________________________________
_____________
Total liabilities 111,418 88,796
STOCKHOLDER'S EQUITY
Preferred stock, $100 par value
(authorized shares: 2,500,000) - -
Common stock, $25 par value
(authorized and outstanding shares: 10,000,000) 250 250
Surplus 2,670 2,170
Undivided profits 4,266 4,042
Net unrealized gains on investment securities, 124 477
net of taxes
Foreign currency translation (1) (3)
_____________________________________________________________________________
_____________
Total stockholder's equity 7,309 6,936
_____________________________________________________________________________
_____________
Total liabilities and stockholder's equity 118,727 95,732
_____________________________________________________________________________
_____________
<FN>
Member of the Federal Reserve System and the Federal Deposit Insurance
Corporation.
19
TRADING REVENUE
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_____
Dollars in millions
Fourth Quarter Twelve months
1994 1993 1994 1993
_____________________________________________________________________________
_____
Swaps and other interest rate
contracts $144 $143 $663 $797
Debt instruments (72) 319 41 821
Foreign exchange, spot and
option contracts 78 48 131 179
Equities, commodities, and
other 3 96 184 262
_____________________________________________________________________________
_____
Total trading revenue 153 606 1,019 2,059
_____________________________________________________________________________
_____
20
ASSET QUALITY
J.P. Morgan & Co. Incorporated
_____________________________________________________________________________
_____
NONPERFORMING ASSETS
Dec. 31 Sept. 30 Dec. 31
Dollars in millions 1994 1994 1993
_____________________________________________________________________________
_____
Nonaccrual loans:
Commercial and industrial $136 $148 $182
Other 81 62 92
____________________________________
______________________________________________
217 210 274
Restructuring countries 2 2 8
_____________________________________________________________________________
_____
Total nonaccrual loans 219 212 282
Other nonperforming assets 1 2 13
_____________________________________________________________________________
_____
Total nonperforming assets 220 214 295
_____________________________________________________________________________
_____
ALLOWANCE FOR CREDIT LOSSES
Dec. 31 Sept. 30 Dec. 31
Dollars in millions 1994 1994 1993
_____________________________________________________________________________
_____
Allowance for credit losses $1,131 $1,133 $1,157
_____________________________________________________________________________
_____
Fourth Quarter Twelve Months
1994 1993 1994 1993
_____________________________________________________________________________
_____
Charge-offs:
Commercial and industrial ($7) ($16) ($37) ($82)
Restructuring countries (1) (3) (18) (37)
Other (5) (9) (17) (41)
Recoveries 11 22 45 60
_____________________________________________________________________________
_____