2 q10 erf_supplement_7-14-10_final (3)

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2 q10 erf_supplement_7-14-10_final (3)

  1. 1. EARNINGS RELEASE FINANCIAL SUPPLEMENT SECOND QUARTER 2010
  2. 2. JPMORGAN CHASE & CO. TABLE OF CONTENTS Page(s) Consolidated Results Consolidated Financial Highlights Statements of Income Consolidated Balance Sheets Condensed Average Balance Sheets and Annualized Yields Reconciliation from Reported to Managed Summary 2-3 4 5 6 7 Business Detail Line of Business Financial Highlights - Managed Basis Investment Bank Retail Financial Services Card Services - Managed Basis Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity 8 9-11 12-18 19-21 22-23 24-25 26-29 30-31 Credit-Related Information 32-38 Market Risk-Related Information 39 Supplemental Detail Capital and Other Selected Balance Sheet Items Per Share-Related Information 40 41 Non-GAAP Financial Measures 42 Glossary of Terms Disclosure Change Summary 43-46 47 Page 1
  3. 3. JPMORGAN CHASE & CO. CONSOLIDATED FINANCIAL HIGHLIGHTS (in millions, except per share, ratio and headcount data) QUARTERLY TRENDS SELECTED INCOME STATEMENT DATA: Reported Basis Total net revenue Total noninterest expense Pre-provision profit Provision for credit losses Income before extraordinary gain Extraordinary gain (a) NET INCOME Managed Basis (b) Total net revenue Total noninterest expense Pre-provision profit Provision for credit losses Income before extraordinary gain Extraordinary gain (a) NET INCOME 2Q10 1Q10 4Q09 YEAR-TO-DATE 3Q09 2Q10 Change 1Q10 2Q09 2Q09 2010 2010 Change 2009 2009 $ 25,101 14,631 10,470 3,363 4,795 4,795 $ 27,671 16,124 11,547 7,010 3,326 3,326 $ 23,164 12,004 11,160 7,284 3,278 3,278 $ 26,622 13,455 13,167 8,104 3,512 76 3,588 $ 25,623 13,520 12,103 8,031 2,721 2,721 (9) % (9) (9) (52) 44 44 (2) % 8 (13) (58) 76 76 $ 52,772 30,755 22,017 10,373 8,121 8,121 $ 50,648 26,893 23,755 16,627 4,862 4,862 4 % 14 (7) (38) 67 67 $ 25,613 14,631 10,982 3,363 4,795 4,795 $ 28,172 16,124 12,048 7,010 3,326 3,326 $ 25,236 12,004 13,232 8,901 3,278 3,278 $ 28,780 13,455 15,325 9,802 3,512 76 3,588 $ 27,709 13,520 14,189 9,695 2,721 2,721 (9) (9) (9) (52) 44 44 (8) 8 (23) (65) 76 76 $ 53,785 30,755 23,030 10,373 8,121 8,121 $ 54,631 26,893 27,738 19,755 4,862 4,862 (2) 14 (17) (47) 67 67 PER COMMON SHARE DATA: Basic Earnings Income before extraordinary gain Net income 1.10 1.10 0.75 0.75 0.75 0.75 0.80 0.82 0.28 0.28 47 47 293 293 1.84 1.84 0.68 0.68 171 171 Diluted Earnings (c) Income before extraordinary gain Net income 1.09 1.09 0.74 0.74 0.74 0.74 0.80 0.82 0.28 0.28 47 47 289 289 1.83 1.83 0.68 0.68 169 169 Cash dividends declared Book value Closing share price Market capitalization 0.05 40.99 36.61 145,554 0.05 39.38 44.75 177,897 0.05 39.88 41.67 164,261 0.05 39.12 43.82 172,596 0.05 37.36 34.11 133,852 4 (18) (18) 10 7 9 0.10 40.99 36.61 145,554 0.10 37.36 34.11 133,852 10 7 9 COMMON SHARES OUTSTANDING: Weighted-average diluted shares Common shares at period-end 4,005.6 3,975.8 3,994.7 3,975.4 3,974.1 3,942.0 3,962.0 3,938.7 3,824.1 3,924.1 5 1 4,000.2 3,975.8 3,791.4 3,924.1 6 1 FINANCIAL RATIOS: (d) Net income: Return on equity ("ROE") (c) Return on tangible common equity ("ROTCE") (c)(e) Return on assets ("ROA") 12 17 0.94 % 8 12 0.66 CAPITAL RATIOS: Tier 1 capital ratio Total capital ratio Tier 1 common capital ratio (f) 12.1 (g) 15.8 (g) 9.6 (g) 11.5 15.1 9.1 % 8 12 0.65 11.1 14.8 8.8 % 9 % (a) 14 (a) 0.71 (a) 3 5 0.54 10.2 13.9 8.2 - % 10 15 0.80 % 4 6 0.48 % 9.7 13.3 7.7 (a) On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual. The acquisition resulted in negative goodwill, and accordingly, the Firm recognized an extraordinary gain. A preliminary gain of $1.9 billion was recognized at December 31, 2008. The final total extraordinary gain that resulted from the Washington Mutual transaction was $2.0 billion. For the third quarter of 2009, and based on income before extraordinary gain, return (c) Theon equity remained at2009 earnings per share includescommon non-cash was 13%$1.1 billion, or $0.27 assets was 0.70%. calculation of second quarter 9%, return on tangible a one-time, equity reduction of and return on per share, resulting from repayment of TARP preferred capital. (b) For further discussion of managed basis, see Reconciliation from Reported to Managed Summary on page 7. (c) The calculation of the second quarter 2009 earnings per share and net income applicable to common equity includes a one-time, noncash reduction of $1.1 billion, or $0.27 per share, resulting from repayment of Troubled Asset Relief Program (“TARP”) preferred capital. Excluding this reduction, the adjusted ROE and ROTCE for the second quarter 2009 would have been 6% and 10%, respectively. The Firm views the adjusted ROE and ROTCE, both non-GAAP financial measures, as meaningful because they enable the comparability to prior periods. (d) Ratios are based upon annualized amounts. (e) The Firm uses return on tangible common equity, a non-GAAP financial measure, to evaluate the Firm's use of equity and to facilitate comparisons with competitors. For further discussion of ROTCE, see page 42. (f) Tier 1 common capital ratio is Tier 1 common capital divided by risk-weighted assets. The Firm uses Tier 1 common capital along with the other capital measures to assess and monitor its capital position. For further discussion of Tier 1 common capital ratio, see page 42. (g) Estimated. Page 2
  4. 4. JPMORGAN CHASE & CO. CONSOLIDATED FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except per share, ratio and headcount data) QUARTERLY TRENDS YEAR-TO-DATE 2Q10 SELECTED BALANCE SHEET DATA (Period-end) (a) Total assets Wholesale loans Consumer loans Deposits Common stockholders' equity Total stockholders' equity 1Q10 4Q09 3Q09 2Q09 $ 2,014,019 216,826 482,657 887,805 162,968 171,120 $ 2,135,796 214,290 499,509 925,303 156,569 164,721 $ 2,031,989 204,175 429,283 938,367 157,213 165,365 $ 2,041,009 218,953 434,191 867,977 154,101 162,253 $ 2,026,642 231,625 448,976 866,477 146,614 154,766 232,939 226,623 222,316 220,861 220,255 Headcount LINE OF BUSINESS NET INCOME/(LOSS) Investment Bank Retail Financial Services Card Services Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity NET INCOME (a) $ $ 1,381 1,042 343 693 292 391 653 4,795 $ $ 2,471 (131) (303) 390 279 392 228 3,326 $ $ 1,901 (399) (306) 224 237 424 1,197 3,278 $ $ 1,921 7 (700) 341 302 430 1,287 3,588 $ $ 1,471 15 (672) 368 379 352 808 2,721 2Q10 Change 1Q10 2Q09 (6) % 1 (3) (4) 4 4 3 (44) NM NM 78 5 186 44 2010 (1) % (6) 8 2 11 11 2009 $ 2,014,019 216,826 482,657 887,805 162,968 171,120 $ 2,026,642 231,625 448,976 866,477 146,614 154,766 232,939 220,255 6 (6) NM NM 88 (23) 11 (19) 76 2010 Change 2009 $ $ 3,852 911 40 1,083 571 783 881 8,121 $ $ 3,077 489 (1,219) 706 687 576 546 4,862 (1) % (6) 8 2 11 11 6 25 86 NM 53 (17) 36 61 67 Effective January 1, 2010, the Firm adopted new guidance that amended the accounting for the transfer of financial assets and the consolidation of variable interest entities (“VIEs”). Upon adoption of the new guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related, adding $87.7 billion and $92.2 billion of assets and liabilities, respectively, and decreasing stockholders’ equity and the Tier I capital ratio by $4.5 billion and 34 basis points, respectively. The reduction to stockholders’ equity was driven by the establishment of an allowance for loan losses of $7.5 billion (pretax) primarily related to receivables held in credit card securitization trusts that were consolidated at the adoption date. For further details regarding the Firm's application and impact of the new accounting guidance, see Note 14 on pages 130-131, Note 15 on pages 131-142 and Note 22 on pages 149-152 of JPMorgan Chase's March 31, 2010, Form 10-Q. Page 3
  5. 5. JPMORGAN CHASE & CO. STATEMENTS OF INCOME (in millions, except per share and ratio data) QUARTERLY TRENDS REVENUE Investment banking fees Principal transactions Lending- and deposit-related fees Asset management, administration and commissions Securities gains Mortgage fees and related income Credit card income Other income Noninterest revenue Interest income Interest expense Net interest income TOTAL NET REVENUE Provision for credit losses NONINTEREST EXPENSE Compensation expense Occupancy expense Technology, communications and equipment expense Professional and outside services Marketing Other expense Amortization of intangibles Merger costs TOTAL NONINTEREST EXPENSE Income before income tax expense and extraordinary gain Income tax expense (a) Income before extraordinary gain Extraordinary gain (b) NET INCOME DILUTED EARNINGS PER SHARE Income before extraordinary gain (c) Extraordinary gain NET INCOME (c) 1Q10 $ 1,461 4,548 1,646 3,265 610 658 1,361 412 13,961 16,845 3,135 13,710 27,671 7,010 4Q09 $ 1,916 838 1,765 3,361 381 450 1,844 231 10,786 15,615 3,237 12,378 23,164 7,284 3Q09 $ 1,679 3,860 1,826 3,158 184 843 1,710 625 13,885 16,260 3,523 12,737 26,622 8,104 2Q09 $ 2,106 3,097 1,766 3,124 347 784 1,719 10 12,953 16,549 3,879 12,670 25,623 8,031 7,616 883 1,165 1,685 628 2,419 235 14,631 7,276 869 1,137 1,575 583 4,441 243 16,124 5,112 944 1,182 1,682 536 2,262 256 30 12,004 7,311 923 1,140 1,517 440 1,767 254 103 13,455 6,917 914 1,156 1,518 417 2,190 265 143 13,520 5 2 2 7 8 (46) (3) (9) 10 (3) 1 11 51 10 (11) NM 8 14,892 1,752 2,302 3,260 1,211 6,860 478 30,755 14,505 1,799 2,302 3,033 801 3,565 540 348 26,893 3 (3) 7 51 92 (11) NM 14 7,107 2,312 4,795 4,795 4,537 1,211 3,326 3,326 3,876 598 3,278 3,278 5,063 1,551 3,512 76 3,588 4,072 1,351 2,721 2,721 57 91 44 44 75 71 76 76 11,644 3,523 8,121 8,121 7,128 2,266 4,862 4,862 63 55 67 67 0.28 0.28 47 47 289 289 0.68 0.68 169 169 $ $ $ (a) (b) (c) (d) (e) 1.09 1.09 12 17 0.94 33 58 $ $ $ $ $ $ $ % 0.74 0.74 8 12 0.66 27 58 4,795 4,795 $ 1.09 1.09 $ $ $ $ $ $ % 0.74 0.74 8 12 0.65 15 52 3,326 3,326 $ 0.74 0.74 $ $ $ $ $ $ % 0.80 0.02 0.82 $ $ $ 9 % (b) 14 (b) 0.71 (b) 31 51 3,278 18 3,296 $ 0.74 0.01 0.75 $ $ $ 3 5 0.54 33 53 3,512 64 3,576 $ 0.80 0.02 0.82 $ $ $ $ $ $ $ % 2010 2,882 6,638 3,232 6,614 1,610 1,546 2,856 997 26,375 32,564 6,167 26,397 52,772 10,373 2010 Change 2009 (17) % 30 (6) 10 195 (35) (20) NM 7 (6) (27) 1 4 (38) 2Q10 $ 1,421 2,090 1,586 3,349 1,000 888 1,495 585 12,414 15,719 3,032 12,687 25,101 3,363 FINANCIAL RATIOS Net income: Return on equity (c) Return on tangible common equity (c)(d) Return on assets Effective income tax rate (a) Overhead ratio EXCLUDING IMPACT OF MERGER COSTS (e) Income before extraordinary gain Merger costs (after-tax) Income before extraordinary gain excl. merger costs Diluted Earnings Per Share: Income before extraordinary gain (c) Merger costs (after-tax) Income before extraordinary gain excl. merger costs (c) YEAR TO DATE 2Q10 Change 1Q10 2Q09 (3) % (33) % (54) (33) (4) (10) 3 7 64 188 35 13 10 (13) 42 NM (11) (4) (7) (5) (3) (22) (7) (9) (2) (52) (58) 44 44 76 NM 71 $ 0.28 0.02 0.30 47 47 289 NM 263 $ $ $ $ 1.83 1.83 10 15 0.80 30 58 2,721 89 2,810 $ $ $ % 2009 3,492 5,098 3,454 6,021 545 2,385 3,556 60 24,611 34,475 8,438 26,037 50,648 16,627 4 6 0.48 32 53 8,121 8,121 $ 1.83 1.83 $ $ $ % 4,862 216 5,078 67 NM 60 0.68 0.05 0.73 169 NM 151 The income tax expense in the first quarter of 2010 and fourth quarter of 2009 includes tax benefits recognized upon the resolution of tax audits. On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual. The acquisition resulted in negative goodwill, and accordingly, the Firm recognized an extraordinary gain. A preliminary gain of $1.9 billion was recognized at December 31, 2008. The final total extraordinary gain that resulted from the Washington Mutual transaction was $2.0 billion. For the third quarter of 2009, and based on income before extraordinary gain, return on equity remained at 9%, return on tangible common equity was 13% and return on assets was 0.70%. The calculation of the second quarter 2009 earnings per share and net income applicable to common equity includes a one-time, noncash reduction of $1.1 billion, or $0.27 per share, resulting from repayment of TARP preferred capital. For additional information on the reduction, see page 2, footnote (c). The Firm uses return on tangible common equity, a non-GAAP financial measure, to evaluate the Firm's use of equity and to facilitate comparisons with competitors. For further discussion of ROTCE, see page 42. Net income excluding merger costs, a non-GAAP financial measure, is used by the Firm to facilitate comparison of results against the Firm's ongoing operations and with other companies' U.S. GAAP financial statements. Page 4
  6. 6. JPMORGAN CHASE & CO. CONSOLIDATED BALANCE SHEETS (in millions) Jun 30 2010 ASSETS (a) Cash and due from banks Deposits with banks Federal funds sold and securities purchased under resale agreements Securities borrowed Trading assets: Debt and equity instruments Derivative receivables Securities Loans Less: Allowance for loan losses Loans, net of allowance for loan losses Accrued interest and accounts receivable Premises and equipment Goodwill Mortgage servicing rights Other intangible assets Other assets TOTAL ASSETS LIABILITIES (a) Deposits Federal funds purchased and securities loaned or sold under repurchase agreements Commercial paper Other borrowed funds $ 32,806 39,430 Mar 31 2010 $ 31,422 59,014 Dec 31 2009 $ 26,206 63,230 Sep 30 2009 $ 21,068 59,623 Jun 30 2009 $ 25,133 61,882 June 30, 2010 Change Mar 31 Jun 30 2010 2009 4 % (33) 31 % (36) 199,024 122,289 230,123 126,741 195,404 119,630 171,007 128,059 159,170 129,263 (14) (4) 25 (5) $ 317,293 80,215 312,013 699,483 35,836 663,647 61,295 11,267 48,320 11,853 4,178 110,389 2,014,019 $ 346,712 79,416 344,376 713,799 38,186 675,613 53,991 11,123 48,359 15,531 4,383 108,992 2,135,796 $ 330,918 80,210 360,390 633,458 31,602 601,856 67,427 11,118 48,357 15,531 4,621 107,091 2,031,989 $ 330,370 94,065 372,867 653,144 30,633 622,511 59,948 10,675 48,334 13,663 4,862 103,957 2,041,009 $ 298,135 97,491 345,563 680,601 29,072 651,529 61,302 10,668 48,288 14,600 5,082 118,536 2,026,642 (8) 1 (9) (2) (6) (2) 14 1 (24) (5) 1 (6) 6 (18) (10) 3 23 2 6 (19) (18) (7) (1) $ 887,805 $ 925,303 $ 938,367 $ 867,977 $ 866,477 (4) 2 237,455 41,082 44,431 295,171 50,554 48,981 261,413 41,794 55,740 310,219 53,920 50,824 300,931 42,713 73,968 (20) (19) (9) (21) (4) (40) Trading liabilities: Debt and equity instruments Derivative payables Accounts payable and other liabilities Beneficial interests issued by consolidated VIEs Long-term debt TOTAL LIABILITIES 74,745 60,137 160,478 88,148 248,618 1,842,899 78,228 62,741 154,185 93,055 262,857 1,971,075 64,946 60,125 162,696 15,225 266,318 1,866,624 65,233 69,214 171,386 17,859 272,124 1,878,756 56,021 67,197 171,685 20,945 271,939 1,871,876 (4) (4) 4 (5) (5) (7) 33 (11) (7) 321 (9) (2) STOCKHOLDERS' EQUITY (a) Preferred stock Common stock Capital surplus Retained earnings Accumulated other comprehensive income/(loss) Shares held in RSU trust, at cost Treasury stock, at cost TOTAL STOCKHOLDERS' EQUITY TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 8,152 4,105 96,745 65,465 2,404 (68) (5,683) 171,120 2,014,019 8,152 4,105 96,450 61,043 761 (68) (5,722) 164,721 2,135,796 8,152 4,105 97,982 62,481 (91) (68) (7,196) 165,365 2,031,989 8,152 4,105 97,564 59,573 283 (86) (7,338) 162,253 2,041,009 8,152 4,105 97,662 56,355 (3,438) (86) (7,984) 154,766 2,026,642 7 216 1 4 (6) (1) 16 NM 21 29 11 (1) (a) $ $ $ $ $ Effective January 1, 2010, the Firm adopted new accounting guidance that amended the accounting for the transfer of financial assets and the consolidation of VIEs. For further details regarding the Firm’s application and impact of the new guidance, see footnote (a) on page 3. Page 5
  7. 7. JPMORGAN CHASE & CO. CONDENSED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS (in millions, except rates) QUARTERLY TRENDS AVERAGE BALANCES (a) ASSETS Deposits with banks Federal funds sold and securities purchased under resale agreements Securities borrowed Trading assets - debt instruments Securities Loans Other assets (b) Total interest-earning assets Trading assets - equity instruments Trading assets - derivative receivables All other noninterest-earning assets TOTAL ASSETS LIABILITIES Interest-bearing deposits Federal funds purchased and securities loaned or sold under repurchase agreements Commercial paper Trading liabilities - debt instruments Other borrowings and liabilities (c) Beneficial interests issued by consolidated VIEs Long-term debt Total interest-bearing liabilities Noninterest-bearing deposits Trading liabilities - equity instruments Trading liabilities - derivative payables All other noninterest-bearing liabilities TOTAL LIABILITIES Preferred stock Common stockholders' equity TOTAL STOCKHOLDERS' EQUITY TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY AVERAGE RATES (a) INTEREST-EARNING ASSETS Deposits with banks Federal funds sold and securities purchased under resale agreements Securities borrowed Trading assets - debt instruments Securities Loans Other assets (b) Total interest-earning assets INTEREST-BEARING LIABILITIES Interest-bearing deposits Federal funds purchased and securities loaned or 2Q10 $ 1Q10 58,737 4Q09 $ 64,229 $ 189,573 113,650 245,532 327,425 705,189 34,429 1,674,535 95,080 79,409 194,623 2,043,647 $ 668,953 $ 49,705 $ 170,036 114,636 248,089 337,441 725,136 27,885 1,687,452 83,674 78,683 188,871 2,038,680 $ 677,431 $ % 62,248 $ 156,848 125,453 256,414 374,327 642,406 29,868 1,635,021 74,936 86,415 196,853 1,993,225 $ $ 68,001 $ 151,705 129,301 250,148 359,451 665,386 24,155 1,642,394 66,790 99,807 190,185 1,999,176 667,269 $ 660,998 283,263 42,290 63,048 119,374 16,002 268,476 1,459,722 203,092 8,372 63,423 93,939 1,828,548 8,152 156,525 164,677 2,038,680 0.60 2Q09 $ 271,934 37,461 65,154 123,321 98,104 262,503 1,535,908 200,075 5,728 59,053 73,670 1,874,434 8,152 156,094 164,246 2,043,647 0.63 3Q09 $ 273,614 37,557 72,276 131,546 90,085 256,089 1,530,120 209,615 5,216 62,547 68,928 1,876,426 8,152 159,069 167,221 $ % YEAR-TO-DATE $ % (14) % $ 142,226 122,235 245,444 354,216 697,908 36,638 1,666,668 63,507 114,096 194,101 2,038,372 11 (1) (1) (3) (3) 23 (1) 14 1 3 - $ $ 33 (7) (8) 1 (6) 50 (30) - 672,350 (1) (1) 1 $ % 11 7 (8) (2) 5 (9) 6 (6) 2 2 2,038,372 - - $ 78,237 $ 179,858 114,140 246,804 332,405 715,108 31,175 1,680,958 89,408 79,048 191,763 2,041,177 $ 151,554 121,498 248,753 318,019 712,353 32,050 1,662,464 63,130 128,092 198,980 2,052,666 19 (6) (1) 5 (3) 1 42 (38) (4) (1) $ 673,169 $ 704,228 (4) 258,217 35,543 41,690 180,309 12,138 266,571 1,498,696 198,531 13,036 86,503 87,071 1,883,837 30,138 138,691 168,829 6 6 65 (29) NM (3) 2 3 (58) (30) (18) (73) 14 (2) 2,052,666 (1) (6) 67 (20) NM (7) 2 5 (54) (20) (18) (71) 13 (1) 1.45 - % 2010 Change 2009 2009 61,468 289,971 37,371 43,150 164,339 14,493 274,323 1,495,997 199,221 11,437 78,155 84,359 1,869,169 28,338 140,865 169,203 1,999,176 0.83 2010 (9) % 303,175 42,728 47,467 131,518 19,351 271,281 1,476,518 191,821 12,376 75,458 85,383 1,841,556 8,152 149,468 157,620 1,993,225 0.95 2Q10 Change 1Q10 2Q09 272,779 37,509 68,735 127,455 94,072 259,279 1,532,998 204,871 5,470 60,809 71,287 1,875,435 8,152 157,590 165,742 $ 2,041,177 0.61 $ % 1.78 0.84 0.11 4.25 3.14 5.68 1.60 3.79 0.97 0.10 4.56 3.54 5.91 1.36 4.07 0.92 0.14 4.63 3.32 5.51 1.42 3.80 0.96 (0.09) 4.78 3.62 5.64 2.18 3.95 1.04 (0.32) 4.91 3.64 5.65 0.80 4.00 0.90 0.11 4.41 3.34 5.80 1.49 3.93 0.51 0.53 0.65 0.70 0.52 % 1.35 (0.02) 5.09 3.87 5.76 1.50 4.20 0.53 (21) % 0.82 (d) (d) sold under repurchase agreements Commercial paper Trading liabilities - debt instruments Other borrowings and liabilities (c) Beneficial interests issued by consolidated VIEs Long-term debt Total interest-bearing liabilities (0.07) 0.19 2.49 0.50 1.36 1.97 0.79 (0.05) 0.19 3.39 0.56 1.36 1.95 0.83 0.08 0.20 3.85 0.83 1.32 2.01 0.88 0.20 0.23 4.50 0.69 1.43 2.09 0.95 0.23 0.24 3.76 0.69 1.59 2.60 1.04 (0.06) 0.19 2.91 0.53 1.36 1.96 0.81 0.29 0.35 3.71 0.86 1.58 2.67 1.14 INTEREST RATE SPREAD NET YIELD ON INTEREST-EARNING ASSETS NET YIELD ON INTEREST-EARNING ASSETS ADJUSTED FOR SECURITIZATIONS 3.00% 3.06% 3.24% 3.32% 2.92% 3.02% 3.00% 3.10% 2.96% 3.07% 3.12% 3.19% 3.06% 3.18% 3.06% 3.32% 3.33% 3.40% 3.37% 3.19% 3.48% (a) (b) (c) (d) Effective January 1, 2010, the Firm adopted new accounting guidance that amended the accounting for the transfer of financial assets and the consolidation of VIEs. For further details regarding the Firm’s application and impact of the new guidance, see footnote (a) on page 3. Includes margin loans and the Firm's investment in asset-backed commercial paper under the Federal Reserve Bank of Boston's AML facility, which declined to zero during the third quarter of 2009. Includes securities sold but not yet purchased, brokerage customer payables and advances from Federal Home Loan Banks. Reflects a benefit from the favorable market environment for dollar-roll financings. Page 6
  8. 8. JPMORGAN CHASE & CO. RECONCILIATION FROM REPORTED TO MANAGED SUMMARY (in millions) The Firm prepares its consolidated financial statements using accounting principles generally accepted in the United States of America ("U.S. GAAP"). That presentation, which is referred to as "reported basis," provides the reader with an understanding of the Firm's results that can be tracked consistently from year to year and enables a comparison of the Firm's performance with other companies' U.S. GAAP financial statements. In addition to analyzing the Firm’s results on a reported basis, management reviews the Firm’s results and the results of the lines of business on a “managed” basis, which is a non-GAAP financial measure. For additional information on managed basis, including the effect of adopting, effective January 1, 2010, new accounting guidance that amended the accounting for the transfer of financial assets and the consolidation of VIEs, refer to the notes on Non-GAAP Financial Measures on page 42. QUARTERLY TRENDS CREDIT CARD INCOME Credit card income - reported Impact of: Credit card securitizations Credit card income - managed OTHER INCOME Other income - reported Impact of: Tax-equivalent adjustments Other income - managed TOTAL NONINTEREST REVENUE Total noninterest revenue - reported Impact of: Credit card securitizations Tax-equivalent adjustments Total noninterest revenue - managed NET INTEREST INCOME Net interest income - reported Impact of: Credit card securitizations Tax-equivalent adjustments Net interest income - managed TOTAL NET REVENUE Total net revenue - reported Impact of: Credit card securitizations Tax-equivalent adjustments Total net revenue - managed PRE-PROVISION PROFIT Total pre-provision profit - reported Impact of: Credit card securitizations Tax-equivalent adjustments Total pre-provision profit - managed PROVISION FOR CREDIT LOSSES Provision for credit losses - reported Impact of: Credit card securitizations Provision for credit losses - managed INCOME TAX EXPENSE Income tax expense - reported Impact of: Tax-equivalent adjustments Income tax expense - managed 2Q10 $ 1,495 1Q10 $ 1,361 4Q09 $ 1,844 3Q09 $ 1,710 YEAR-TO-DATE 2Q09 $ 1,719 $ N/A 1,495 $ N/A 1,361 $ (375) 1,469 $ (285) 1,425 $ $ 585 $ 412 $ 231 $ 625 $ $ 416 1,001 $ 411 823 $ 397 628 $ 371 996 $ 12,414 $ 13,961 $ 10,786 $ 13,885 $ N/A 416 12,830 $ N/A 411 14,372 $ (375) 397 10,808 $ (285) 371 13,971 $ 12,687 $ 13,710 $ 12,378 $ $ N/A 96 12,783 $ N/A 90 13,800 $ 1,992 58 14,428 $ 25,101 $ 27,671 $ $ N/A 512 25,613 $ N/A 501 28,172 $ 10,470 $ 11,547 $ N/A 512 10,982 $ (294) 1,425 2Q10 Change 1Q10 2Q09 10 % (13) % $ 2010 2,856 $ 2009 3,556 NM 10 NM 5 $ N/A 2,856 $ 10 42 NM $ 997 $ 60 $ 335 345 1 22 $ 827 1,824 $ 672 732 $ 12,953 (11) (4) $ 26,375 $ 24,611 7 $ (294) 335 12,994 NM 1 (11) NM 24 (1) $ N/A 827 27,202 $ (834) 672 24,449 NM 23 11 12,737 $ 12,670 (7) - $ 26,397 $ 26,037 1 $ 1,983 89 14,809 $ 1,958 87 14,715 NM 7 (7) NM 10 (13) $ N/A 186 26,583 $ 3,962 183 30,182 NM 2 (12) 23,164 $ 26,622 $ 25,623 (9) (2) $ 52,772 $ 50,648 4 $ 1,617 455 25,236 $ 1,698 460 28,780 $ 1,664 422 27,709 NM 2 (9) NM 21 (8) $ N/A 1,013 53,785 $ 3,128 855 54,631 NM 18 (2) $ 11,160 $ 13,167 $ 12,103 (9) (13) $ 22,017 $ 23,755 (7) $ N/A 501 12,048 $ 1,617 455 13,232 $ 1,698 460 15,325 $ 1,664 422 14,189 NM 2 (9) NM 21 (23) $ N/A 1,013 23,030 $ 3,128 855 27,738 NM 18 (17) 3,363 $ 7,010 $ 7,284 $ 8,104 $ 8,031 (52) (58) $ 10,373 $ 16,627 (38) $ N/A 3,363 $ N/A 7,010 $ 1,617 8,901 $ 1,698 9,802 $ 1,664 9,695 NM (52) NM (65) $ N/A 10,373 $ 3,128 19,755 NM (47) $ 2,312 $ 1,211 $ 598 $ 1,551 $ 1,351 91 71 $ 3,523 $ 2,266 55 $ 512 2,824 $ 501 1,712 $ 455 1,053 $ 460 2,011 $ 422 1,773 2 65 21 59 $ 1,013 4,536 $ 855 3,121 18 45 24 190 (834) 2,722 2010 Change 2009 (20) % NM 5 NM 23 149 N/A: Not applicable. Page 7
  9. 9. JPMORGAN CHASE & CO. LINE OF BUSINESS FINANCIAL HIGHLIGHTS - MANAGED BASIS (in millions, except ratio data) QUARTERLY TRENDS 2Q10 TOTAL NET REVENUE (FTE) Investment Bank (a) Retail Financial Services Card Services Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity (a) TOTAL NET REVENUE TOTAL PRE-PROVISION PROFIT Investment Bank (a) Retail Financial Services Card Services Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity (a) TOTAL PRE-PROVISION PROFIT NET INCOME/(LOSS) Investment Bank Retail Financial Services Card Services Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity TOTAL NET INCOME AVERAGE EQUITY (b) Investment Bank Retail Financial Services Card Services Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity TOTAL AVERAGE EQUITY RETURN ON EQUITY (b) Investment Bank Retail Financial Services Card Services Commercial Banking Treasury & Securities Services Asset Management (a) (b) $ $ $ $ $ $ $ $ 1Q10 6,332 7,809 4,217 1,486 1,881 2,068 1,820 25,613 $ 1,810 3,528 2,781 944 482 663 774 10,982 $ 1,381 1,042 343 693 292 391 653 4,795 $ 40,000 28,000 15,000 8,000 6,500 6,500 55,069 159,069 $ 14 15 9 35 18 24 $ $ $ $ % 4Q09 8,319 7,776 4,447 1,416 1,756 2,131 2,327 28,172 $ 3,481 3,534 3,045 877 431 689 (9) 12,048 $ 2,471 (131) (303) 390 279 392 228 3,326 $ 40,000 28,000 15,000 8,000 6,500 6,500 52,094 156,094 25 % (2) (8) 20 17 24 $ $ $ $ $ YEAR-TO-DATE 3Q09 4,929 7,669 5,148 1,406 1,835 2,195 2,054 25,236 $ 2,643 3,367 3,752 863 444 725 1,438 13,232 $ 1,901 (399) (306) 224 237 424 1,197 3,278 33,000 25,000 15,000 8,000 5,000 7,000 63,525 156,525 23 % (6) (8) 11 19 24 $ $ $ $ $ $ 2Q09 7,508 8,218 5,159 1,459 1,788 2,085 2,563 28,780 $ 3,234 4,022 3,853 914 508 734 2,060 15,325 $ 1,921 7 (700) 341 302 430 1,287 3,588 33,000 25,000 15,000 8,000 5,000 7,000 56,468 149,468 23 % (19) 17 24 24 $ $ $ $ $ $ 2Q10 Change 1Q10 2Q09 2010 7,301 7,970 4,868 1,453 1,900 1,982 2,235 27,709 (24) % (5) 5 7 (3) (22) (9) (13) % (2) (13) 2 (1) 4 (19) (8) $ 3,234 3,891 3,535 918 612 628 1,371 14,189 (48) (9) 8 12 (4) NM (9) (44) (9) (21) 3 (21) 6 (44) (23) $ (44) NM NM 78 5 186 44 (6) NM NM 88 (23) 11 (19) 76 $ 6 2 21 12 30 (7) 15 13 $ 1,471 15 (672) 368 379 352 808 2,721 33,000 25,000 15,000 8,000 5,000 7,000 47,865 140,865 18 % (18) 18 30 20 $ $ $ $ 2010 Change 2009 2009 14,651 15,585 8,664 2,902 3,637 4,199 4,147 53,785 $ 5,291 7,062 5,826 1,821 913 1,352 765 23,030 $ 3,852 911 40 1,083 571 783 881 8,121 $ 40,000 28,000 15,000 8,000 6,500 6,500 53,590 157,590 $ 19 7 1 27 18 24 $ $ $ $ % 15,672 16,805 9,997 2,855 3,721 3,685 1,896 54,631 (7) % (7) (13) 2 (2) 14 119 (2) 6,831 8,555 7,318 1,767 1,114 1,033 1,120 27,738 (23) (17) (20) 3 (18) 31 (32) (17) 3,077 489 (1,219) 706 687 576 546 4,862 25 86 NM 53 (17) 36 61 67 33,000 25,000 15,000 8,000 5,000 7,000 45,691 138,691 21 12 30 (7) 17 14 19 % 4 (16) 18 28 17 Corporate/Private Equity includes an adjustment to offset IB's inclusion of the credit reimbursement from TSS in total net revenue; TSS reports the reimbursement to IB as a separate line on its income statement (not part of total revenue). Equity for a line of business represents the amount the Firm believes the business would require if it were operating independently, incorporating sufficient capital to address economic risk measures, regulatory capital requirements and capital levels for similarly rated peers. Capital is also allocated to each line of business for, among other things, goodwill and other intangibles associated with acquisitions effected by the line of business. Return on common equity is measured and internal targets for expected returns are established as a key measure of a business segment’s performance. Effective January 1, 2010, the Firm enhanced its line of business equity framework to better align equity assigned to each line of business with the changes anticipated to occur in that line of business, as well as changes in the competitive and regulatory landscape. The lines of business are now capitalized based on the Tier 1 common standard, rather than the Tier 1 capital standard. Page 8
  10. 10. JPMORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS (in millions, except ratio data) QUARTERLY TRENDS 2Q10 INCOME STATEMENT REVENUE Investment banking fees Principal transactions Lending- and deposit-related fees Asset management, administration and commissions All other income (a) Noninterest revenue Net interest income TOTAL NET REVENUE (b) $ Provision for credit losses 1Q10 1,405 2,105 203 633 86 4,432 1,900 6,332 $ (325) 4Q09 1,446 3,931 202 563 49 6,191 2,128 8,319 $ (462) YEAR-TO-DATE 3Q09 1,892 84 174 608 (14) 2,744 2,185 4,929 $ (181) 2Q10 Change 1Q10 2Q09 2Q09 1,658 2,714 185 633 63 5,253 2,255 7,508 $ 2,239 1,841 167 717 (108) 4,856 2,445 7,301 379 (3) % (46) 12 76 (28) (11) (24) 871 2010 (37) % 14 22 (12) NM (9) (22) (13) 30 $ NM 2010 Change 2009 2009 2,851 6,036 405 1,196 135 10,623 4,028 14,651 $ (787) 3,619 5,356 305 1,409 (164) 10,525 5,147 15,672 (21) % 13 33 (15) NM 1 (22) (7) 2,081 NM NONINTEREST EXPENSE Compensation expense Noncompensation expense TOTAL NONINTEREST EXPENSE 2,923 1,599 4,522 2,928 1,910 4,838 549 1,737 2,286 2,778 1,496 4,274 2,677 1,390 4,067 (16) (7) 9 15 11 5,851 3,509 9,360 6,007 2,834 8,841 (3) 24 6 Income before income tax expense Income tax expense NET INCOME 2,135 754 1,381 3,943 1,472 2,471 2,824 923 1,901 2,855 934 1,921 2,363 892 1,471 (46) (49) (44) (10) (15) (6) 6,078 2,226 3,852 4,750 1,673 3,077 28 33 25 $ FINANCIAL RATIOS ROE ROA Overhead ratio Compensation expense as a percent of total net revenue (c) REVENUE BY BUSINESS Investment banking fees: Advisory Equity underwriting Debt underwriting Total investment banking fees Fixed income markets Equity markets Credit portfolio (a) Total net revenue REVENUE BY REGION (a) Americas Europe/Middle East/Africa Asia/Pacific Total net revenue (a) (b) (c) 14 0.78 71 37 $ $ $ $ $ % 25 1.48 58 35 355 354 696 1,405 3,563 1,038 326 6,332 $ 3,935 1,537 860 6,332 $ $ $ $ % 23 1.12 46 11 305 413 728 1,446 5,464 1,462 (53) 8,319 $ 4,562 2,814 943 8,319 $ $ $ $ % 23 1.12 57 37 611 549 732 1,892 2,735 971 (669) 4,929 $ 2,872 1,502 555 4,929 $ $ $ $ % 18 0.83 56 37 384 681 593 1,658 5,011 941 (102) 7,508 $ 3,850 2,912 746 7,508 $ $ $ $ % 19 1.12 64 36 393 1,103 743 2,239 4,929 708 (575) 7,301 16 (14) (4) (3) (35) (29) NM (24) (10) (68) (6) (37) (28) 47 NM (13) $ 4,118 2,303 880 7,301 (14) (45) (9) (24) (4) (33) (2) (13) $ $ $ $ % 19 0.86 56 38 660 767 1,424 2,851 9,027 2,500 273 14,651 $ 8,497 4,351 1,803 14,651 $ $ $ % 872 1,411 1,336 3,619 9,818 2,481 (246) 15,672 (24) (46) 7 (21) (8) 1 NM (7) 8,434 5,376 1,862 15,672 1 (19) (3) (7) Treasury & Securities Services ("TSS") was charged a credit reimbursement related to certain exposures managed within the Investment Bank (“IB”) credit portfolio on behalf of clients shared with TSS. IB recognizes this credit reimbursement in its credit portfolio business in all other income. Total net revenue included tax-equivalent adjustments, predominantly due to income tax credits related to affordable housing and alternative energy investments, as well as tax-exempt income from municipal bond investments of $401 million, $403 million, $357 million, $371 million and $334 million for the quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $804 million and $699 million for yearto-date 2010 and 2009, respectively. The second quarter and year-to-date of 2010 excludes a payroll tax expense related to the United Kingdom Bonus Payroll Tax on certain performance bonuses awarded between December 9, 2009, and April 5, 2010, to employees operating in the U.K. Page 9
  11. 11. JPMORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except headcount and ratio data) QUARTERLY TRENDS 2Q10 SELECTED BALANCE SHEET DATA (Period-end) Loans (a): Loans retained (b) Loans held-for-sale & loans at fair value Total loans Equity SELECTED BALANCE SHEET DATA (Average) Total assets Trading assets - debt and equity instruments Trading assets - derivative receivables Loans (a): Loans retained (b) Loans held-for-sale & loans at fair value Total loans Adjusted assets (c) Equity Derivative receivables Assets acquired in loan satisfactions Total nonperforming assets Allowance for credit losses: Allowance for loan losses Allowance for lending-related commitments Total allowance for credit losses Net charge-off rate (b)(e) Allow. for loan losses to period-end loans retained (b)(e) Allow. for loan losses to average loans retained (b)(e) Allow. for loan losses to nonperforming loans retained (b)(d)(e) Nonperforming loans to total period-end loans Nonperforming loans to total average loans (a) (b) (c) (d) (e) 4Q09 3Q09 2Q09 $ 54,049 3,221 57,270 40,000 $ 53,010 3,594 56,604 40,000 $ 45,544 3,567 49,111 33,000 $ 55,703 4,582 60,285 33,000 $ 64,500 6,814 71,314 33,000 $ 710,005 296,031 65,847 $ 676,122 284,085 66,151 $ 674,241 285,363 72,640 $ 678,796 270,695 86,651 $ 710,825 265,336 100,536 2 % (10) 1 - 2010 2010 Change 2009 2009 (16) % (53) (20) 21 $ 54,049 3,221 57,270 40,000 $ 64,500 6,814 71,314 33,000 (16) % (53) (20) 21 5 4 - 12 (35) $ 693,157 290,091 65,998 $ 721,934 269,146 112,711 (4) 8 (41) 53,351 3,530 56,881 527,520 40,000 $ 58,501 3,150 61,651 506,635 40,000 51,573 4,158 55,731 519,403 33,000 61,269 4,981 66,250 515,718 33,000 68,224 8,934 77,158 531,632 33,000 (9) 12 (8) 4 - (22) (60) (26) (1) 21 55,912 3,341 59,253 517,135 40,000 69,128 10,658 79,786 560,239 33,000 (19) (69) (26) (8) 21 26,279 Headcount CREDIT DATA AND QUALITY STATISTICS Net charge-offs Nonperforming assets: Nonperforming loans: Nonperforming loans retained (b)(d) Nonperforming loans held-for-sale and loans at fair value Total nonperforming loans 1Q10 YEAR-TO-DATE 2Q10 Change 1Q10 2Q09 24,977 24,654 24,828 25,783 5 2 26,279 25,783 2 433 (96) (94) 469 55 28 $ 697 $ 685 $ 750 $ $ 725 $ 1,926 2,459 3,196 4,782 3,407 (22) (43) 1,926 3,407 (43) 334 2,260 282 2,741 308 3,504 128 4,910 112 3,519 18 (18) 198 (36) 334 2,260 112 3,519 198 (36) 315 151 2,726 363 185 3,289 529 203 4,236 624 248 5,782 704 311 4,534 (13) (18) (17) (55) (51) (40) 315 151 2,726 704 311 4,534 (55) (51) (40) 2,149 564 2,713 2,601 482 3,083 3,756 485 4,241 4,703 401 5,104 5,101 351 5,452 (17) 17 (12) (58) 61 (50) 2,149 564 2,713 5,101 351 5,452 (58) 61 (50) 0.21 3.98 4.03 112 3.95 3.97 % 4.83 4.91 4.45 106 4.84 4.45 % 5.27 8.25 7.28 118 7.13 6.29 % 4.86 8.44 7.68 98 8.14 7.41 % 2.55 7.91 7.48 150 4.93 4.56 % 2.61 3.98 3.84 112 3.95 3.81 % 1.37 7.91 7.38 150 4.93 4.41 % Effective January 1, 2010, the Firm adopted new accounting guidance that amended the accounting for the transfer of financial assets and the consolidation of VIEs. For further details regarding the Firm’s application and impact of the new guidance, see footnote (a) on page 3. Loans retained included credit portfolio loans, leveraged leases and other accrual loans, and excluded loans held-for-sale and loans accounted for at fair value. Adjusted assets, a non-GAAP financial measure, is presented to assist the reader in comparing IB’s asset and capital levels to other investment banks in the securities industry. For further discussion of adjusted assets, see page 42. Allowance for loan losses of $617 million, $811 million, $1.3 billion, $1.8 billion and $1.6 billion were held against these non-performing loans at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively. Loans held-for-sale and loans at fair value were excluded when calculating the allowance coverage and net charge-off rate. Page 10
  12. 12. JPMORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio and rankings data) QUARTERLY TRENDS 2Q10 MARKET RISK - AVERAGE TRADING AND CREDIT PORTFOLIO VAR - 95% CONFIDENCE LEVEL Trading activities: Fixed income Foreign exchange Equities Commodities and other Diversification (a) Total trading VaR (b) Credit portfolio VaR (c) Diversification (a) Total trading and credit portfolio VaR MARKET SHARES AND RANKINGS (d) Global Investment Banking Fees (e) Global debt, equity and equity-related Global syndicated loans Global long-term debt (f) Global equity and equity-related (g) Global announced M&A (h) U.S. debt, equity and equity-related U.S. syndicated loans U.S. long-term debt (f) U.S. equity and equity-related U.S. announced M&A (h) (a) (b) (c) (d) (e) (f) (g) (h) $ $ 1Q10 64 10 20 20 (42) 72 27 (9) 90 $ $ 4Q09 69 13 24 15 (49) 72 19 (9) 82 June 30, 2010 YTD Market Share Rankings 8% #1 7% #1 10% #1 7% #2 8% #1 14% #4 12% #1 21% #2 11% #2 16% #1 22% #3 $ $ 121 14 21 17 (62) 111 24 (11) 124 YEAR-TO-DATE 3Q09 $ $ 182 19 19 23 (97) 146 29 (32) 143 2Q09 $ $ 179 16 50 22 (97) 170 68 (60) 178 2Q10 Change 1Q10 2Q09 (7) % (23) (17) 33 14 42 10 (64) % (38) (60) (9) 57 (58) (60) 85 (49) 2010 $ $ 2009 66 12 22 18 (46) 72 23 (9) 86 $ $ 168 19 73 21 (101) 180 77 (62) 195 2010 Change 2009 (61) % (37) (70) (14) 54 (60) (70) 85 (56) Full Year 2009 Market Share Rankings 9% #1 9% #1 8% #1 8% #1 12% #1 24% #3 15% #1 22% #1 14% #1 16% #2 36% #2 Average VaRs were less than the sum of the VaRs of their market risk components, which was due to risk offsets resulting from portfolio diversification. The diversification effect reflected the fact that the risks were not perfectly correlated. The risk of a portfolio of positions is usually less than the sum of the risks of the positions themselves. IB Trading VaR includes predominantly all trading activities in IB, as well as syndicated lending facilities that the Firm intends to distribute; however, particular risk parameters of certain products are not fully captured, such as correlation risk. IB Trading VaR does not include the debit valuation adjustments ("DVA") taken on derivative and structured liabilities to reflect the credit quality of the Firm. Credit portfolio VaR includes the derivative credit valuation adjustments (“CVA”), hedges of the CVA and mark-to-market (“MTM”) hedges of the retained loan portfolio, which are all reported in principal transactions revenue. This VaR does not include the retained loan portfolio. Source: Dealogic. Global Investment Banking fees reflects the ranking of fees and market share. The remaining rankings reflect transaction volume and market share. Global IB fees exclude money market, short term debt and shelf deals. Long-term debt tables include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities and mortgage-backed securities, and excludes money market, short-term debt, and U.S.municipal securities. Equity and equity-related rankings include rights offerings and Chinese A-Shares. Global announced M&A is based upon transaction value at announcement; all other rankings are based upon transaction proceeds, with full credit to each book manager/equal if joint. Because of joint assignments, market share of all participants will add up to more than 100%. M&A for year-to-date 2010 and full-year 2009 reflects the removal of any withdrawn transactions. U.S. announced M&A represents any U.S. involvement ranking. Page 11
  13. 13. JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratio and headcount data) QUARTERLY TRENDS 2Q10 INCOME STATEMENT REVENUE Lending- and deposit-related fees Asset management, administration and commissions Mortgage fees and related income Credit card income Other income Noninterest revenue Net interest income TOTAL NET REVENUE $ 1Q10 780 433 886 480 413 2,992 4,817 7,809 $ 4Q09 841 452 655 450 354 2,752 5,024 7,776 $ YEAR-TO-DATE 3Q09 972 406 481 441 299 2,599 5,070 7,669 $ 2Q10 Change 1Q10 2Q09 2Q09 1,046 408 873 416 321 3,064 5,154 8,218 $ 1,003 425 807 411 294 2,940 5,030 7,970 (7) % (4) 35 7 17 9 (4) - 2010 (22) % 2 10 17 40 2 (4) (2) $ 2010 Change 2009 2009 1,621 885 1,541 930 767 5,744 9,841 15,585 $ 1,951 860 2,440 778 508 6,537 10,268 16,805 (17) % 3 (37) 20 51 (12) (4) (7) Provision for credit losses 1,715 3,733 4,229 3,988 3,846 (54) (55) 5,448 7,723 (29) NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE 1,842 2,369 70 4,281 1,770 2,402 70 4,242 1,722 2,499 81 4,302 1,728 2,385 83 4,196 1,631 2,365 83 4,079 4 (1) 1 13 (16) 5 3,612 4,771 140 8,523 3,262 4,822 166 8,250 11 (1) (16) 3 Income/(loss) before income tax expense (benefit) Income tax expense/(benefit) NET INCOME/(LOSS) 1,813 771 1,042 34 27 7 45 30 15 NM NM NM NM NM NM 1,614 703 911 832 343 489 $ FINANCIAL RATIOS ROE Overhead ratio Overhead ratio excluding core deposit intangibles (a) SELECTED BALANCE SHEET DATA (Period-end) Assets Loans: Loans retained Loans held-for-sale and loans at fair value (b) Total loans Deposits Equity SELECTED BALANCE SHEET DATA (Average) Assets Loans: Loans retained Loans held-for-sale and loans at fair value (b) Total loans Deposits Equity Headcount (a) (b) 15 55 54 $ 375,329 $ % (199) (68) (131) $ (2) % 55 54 $ 382,475 (862) (463) (399) $ (6) % 56 55 $ 387,269 - $ % - 51 50 $ 397,673 $ % 7 55 54 51 50 $ $ 375,329 $ % 4 49 48 $ 94 105 86 % 399,916 (2) (6) 399,916 (6) 330,329 12,599 342,928 359,974 28,000 339,002 11,296 350,298 362,470 28,000 340,332 14,612 354,944 357,463 25,000 346,765 14,303 361,068 361,046 25,000 353,934 13,192 367,126 371,241 25,000 (3) 12 (2) (1) - (7) (4) (7) (3) 12 330,329 12,599 342,928 359,974 28,000 353,934 13,192 367,126 371,241 25,000 (7) (4) (7) (3) 12 381,906 393,867 395,045 401,620 410,228 (3) (7) 387,854 416,813 (7) 335,308 14,426 349,734 362,010 28,000 342,997 17,055 360,052 356,934 28,000 343,411 17,670 361,081 356,464 25,000 349,762 19,025 368,787 366,944 25,000 359,372 19,043 378,415 377,259 25,000 (2) (15) (3) 1 - (7) (24) (8) (4) 12 339,131 15,734 354,865 359,486 28,000 363,127 17,792 380,919 373,788 25,000 (7) (12) (7) (4) 12 116,879 112,616 108,971 106,951 103,733 4 13 116,879 103,733 13 Retail Financial Services uses the overhead ratio (excluding the amortization of core deposit intangibles ("CDI")), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation would result in a higher overhead ratio in the earlier years and a lower overhead ratio in later years. This method would therefore result in an improving overhead ratio over time, all things remaining equal. The non-GAAP ratio excludes Retail Banking's CDI amortization expense related to prior business combination transactions of $69 million, $70 million, $80 million, $83 million and $82 million for the quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $139 million and $165 million for year-to-date 2010 and 2009, respectively. Loans at fair value consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets. These loans totaled $12.2 billion, $8.4 billion, $12.5 billion, $12.8 billion and $11.3 billion at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively. Average balances of these loans totaled $12.5 billion, $14.2 billion, $16.0 billion, $17.7 billion and $16.2 billion for the quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $13.3 billion and $14.9 billion for year-to-date 2010 and 2009, respectively. Page 12
  14. 14. JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data) QUARTERLY TRENDS 2Q10 CREDIT DATA AND QUALITY STATISTICS Net charge-offs Nonperforming loans: Nonperforming loans retained Nonperforming loans held-for-sale and loans at fair value Total nonperforming loans (a) (b) (c) Nonperforming assets (a) (b) (c) Allowance for loan losses Net charge-off rate (d) Net charge-off rate excluding purchased credit-impaired loans (d) (e) Allowance for loan losses to ending loans retained (d) Allowance for loan losses to ending loans retained excluding purchased credit-impaired loans (d) (e) Allowance for loan losses to nonperforming loans retained (a) (d) (e) Nonperforming loans to total loans Nonperforming loans to total loans excluding purchased credit-impaired loans (a) (a) (b) (c) (d) (e) $ 1Q10 1,761 $ 4Q09 2,438 $ YEAR-TO-DATE 3Q09 2,738 $ 2Q10 Change 1Q10 2Q09 2Q09 2,550 $ 2,649 (28) % 2010 (34) % $ 2010 Change 2009 2009 4,199 $ 4,825 (13) % 10,457 10,769 10,611 10,091 8,792 (3) 19 10,457 8,792 19 176 10,633 11,907 16,152 217 10,986 12,191 16,200 234 10,845 12,098 14,776 242 10,333 11,883 13,286 203 8,995 10,554 11,832 (19) (3) (2) - (13) 18 13 37 176 10,633 11,907 16,152 203 8,995 10,554 11,832 (13) 18 13 37 2.11 % 2.88 % 3.16 % 2.89 % 2.96 % 2.50 % 2.68 2.75 4.89 3.76 4.78 4.16 4.34 3.81 3.83 3.89 3.34 3.26 4.89 3.53 3.34 5.26 5.16 5.09 4.63 4.41 5.26 4.41 128 3.10 124 3.14 124 3.06 121 2.86 135 2.45 128 3.10 135 2.45 4.00 4.05 3.96 3.72 3.19 4.00 % 3.19 Excludes purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis and the pools are considered to be performing. Certain of these loans are classified as trading assets on the Consolidated Balance Sheets. Nonperforming loans and assets exclude: (1) nonaccruing mortgage loans insured by U.S. government agencies of $10.1 billion, $10.5 billion, $9.0 billion, $7.0 billion and $4.2 billion at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively; (2) real estate owned insured by U.S. government agencies of $1.4 billion, $707 million, $579 million, $579 million and $508 million at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively; and (3) student loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program, of $447 million, $581 million, $542 million, $511 million and $473 million at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively. These amounts are excluded as reimbursement is proceeding normally. Loans held-for-sale and loans accounted for at fair value were excluded when calculating the allowance coverage ratio and the net charge-off rate. Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated management's estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of $2.8 billion, $2.8 billion, $1.6 billion and $1.1 billion was recorded for these loans at June 30, 2010, March 31, 2010, December 31, 2009 and September 30, 2009, respectively, which has also been excluded from applicable ratios. No allowance for loan losses was recorded at June 30, 2009. To date, no charge-offs have been recorded for these loans. Page 13
  15. 15. JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) QUARTERLY TRENDS 2Q10 RETAIL BANKING Noninterest revenue Net interest income Total net revenue Provision for credit losses Noninterest expense Income before income tax expense Net income $ $ Overhead ratio Overhead ratio excluding core deposit intangibles (a) BUSINESS METRICS (in billions) Business banking origination volume End-of-period loans owned End-of-period deposits: Checking Savings Time and other Total end-of-period deposits Average loans owned Average deposits: Checking Savings Time and other Total average deposits Deposit margin Average assets CREDIT DATA AND QUALITY STATISTICS Net charge-offs Net charge-off rate Nonperforming assets 1Q10 1,684 2,712 4,396 168 2,633 1,595 914 60 58 $ $ $ % 1.2 16.6 4Q09 1,702 2,635 4,337 191 2,577 1,569 898 59 58 $ $ $ % 0.9 16.8 3Q09 1,804 2,716 4,520 248 2,574 1,698 1,027 57 55 $ YEAR-TO-DATE $ $ % 0.7 17.0 2Q09 1,844 2,732 4,576 208 2,646 1,722 1,043 58 56 $ 2Q10 Change 1Q10 2Q09 $ $ % 0.5 17.4 1,803 2,719 4,522 361 2,557 1,604 970 57 55 $ (1) % 3 1 (12) 2 2 2 2010 (7) % (3) (53) 3 (1) (6) $ $ % 3,386 5,347 8,733 359 5,210 3,164 1,812 60 58 0.6 17.8 33 (1) 100 (7) $ 2010 Change 2009 2009 $ $ % 2.1 16.6 3,521 5,333 8,854 686 5,137 3,031 1,833 58 56 $ (4) % (1) (48) 1 4 (1) % 1.1 17.8 91 (7) 123.5 161.8 50.5 335.8 16.7 123.8 163.4 53.2 340.4 16.9 121.9 153.4 58.0 333.3 17.2 115.5 151.6 66.6 333.7 17.7 114.1 150.4 78.9 343.4 18.0 (1) (5) (1) (1) 8 8 (36) (2) (7) 123.5 161.8 50.5 335.8 16.8 114.1 150.4 78.9 343.4 18.2 8 8 (36) (2) (8) $ 114.0 151.2 74.4 339.6 2.99 28.1 $ 114.2 151.2 82.7 348.1 2.92 29.1 (2) (2) $ 121.7 160.7 53.5 335.9 3.03 28.7 $ 111.8 149.6 85.6 347.0 2.89 29.6 9 7 (38) (3) $ 116.4 153.1 60.3 329.8 3.06 28.2 8 8 (38) (3) $ 119.7 158.6 55.6 333.9 3.02 28.9 3 3 (8) 1 $ 123.6 162.8 51.4 337.8 3.05 28.4 168 4.04 920 $ 248 5.72 839 $ 208 4.66 816 $ 211 4.70 686 (20) $ 191 4.58 872 (12) $ 6 34 $ 359 4.31 920 $ 386 4.28 686 % % % % % % % % % % % % % (3) (7) % 34 RETAIL BRANCH BUSINESS METRICS Investment sales volume 5,756 5,956 5,851 6,243 5,292 (3) 9 11,712 9,690 21 Number of: Branches ATMs Personal bankers Sales specialists Active online customers (in thousands) Checking accounts (in thousands) 5,159 15,654 20,170 6,785 16,584 26,351 5,155 15,549 19,003 6,315 16,208 25,830 5,154 15,406 17,991 5,912 15,424 25,712 5,126 15,038 16,941 5,530 13,852 25,546 5,203 14,144 15,959 5,485 13,930 25,252 1 6 7 2 2 (1) 11 26 24 19 4 5,159 15,654 20,170 6,785 16,584 26,351 5,203 14,144 15,959 5,485 13,930 25,252 (1) 11 26 24 19 4 (a) Retail Banking uses the overhead ratio (excluding the amortization of CDI), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation would result in a higher overhead ratio in the earlier years and a lower overhead ratio in later years. This method would therefore result in an improving overhead ratio over time, all things remaining equal. The non-GAAP ratio excludes Retail Banking's CDI amortization expense related to prior business combination transactions of $69 million, $70 million, $80 million, $83 million and $82 million for the quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $139 million and $165 million for year-to-date 2010 and 2009, respectively. Page 14
  16. 16. JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) QUARTERLY TRENDS 2Q10 MORTGAGE BANKING & OTHER CONSUMER LENDING Noninterest revenue (a) Net interest income Total net revenue Provision for credit losses Noninterest expense Income before income tax expense Net income (a) $ $ Overhead ratio BUSINESS METRICS (in billions) End-of-period loans owned: Auto loans Mortgage (b) Student loans and other Total end-of-period loans owned Average loans owned: Auto loans Mortgage (b) Student loans and other Total average loans owned (c) 1Q10 1,256 792 2,048 175 1,243 630 364 61 $ $ $ % 47.5 13.2 15.1 75.8 4Q09 1,018 893 1,911 217 1,246 448 257 65 $ $ $ % 47.4 13.7 17.4 78.5 3Q09 801 802 1,603 242 1,163 198 266 73 $ YEAR-TO-DATE $ $ % 46.0 11.9 15.8 73.7 2Q09 1,201 834 2,035 222 1,139 674 412 56 $ 2Q10 Change 1Q10 2Q09 $ $ % 44.3 10.1 15.6 70.0 1,134 721 1,855 366 1,105 384 235 60 $ 23 % (11) 7 (19) 41 42 2010 11 % 10 10 (52) 12 64 55 $ $ % 2,274 1,685 3,959 392 2,489 1,078 621 63 42.9 8.9 15.7 67.5 (4) (13) (3) 11 48 (4) 12 $ 2010 Change 2009 2009 $ $ % 47.5 13.2 15.1 75.8 3,055 1,529 4,584 771 2,242 1,571 965 49 $ (26) % 10 (14) (49) 11 (31) (36) % 42.9 8.9 15.7 67.5 11 48 (4) 12 47.5 13.6 16.7 77.8 46.9 12.5 18.4 77.8 45.3 10.6 15.6 71.5 43.3 8.9 15.3 67.5 43.1 8.4 16.8 68.3 1 9 (9) - 10 62 (1) 14 47.2 13.0 17.6 77.8 42.8 8.0 17.2 68.0 10 63 2 14 CREDIT DATA AND QUALITY STATISTICS Net charge-offs: Auto loans Mortgage Student loans and other Total net charge-offs 58 13 150 221 102 6 64 172 148 92 240 159 7 60 226 146 2 101 249 (43) 117 134 28 (60) NM 49 (11) 160 19 214 393 320 7 135 462 (50) 171 59 (15) Net charge-off rate: Auto loans Mortgage Student loans and other Total net charge-off rate (c) 0.49 0.39 4.04 1.17 30+ day delinquency rate (d) (e) Nonperforming assets (f) (a) (b) (c) (d) (e) (f) $ 1.42 866 % 0.88 0.20 1.64 0.93 $ 1.47 1,006 % 1.30 2.59 1.36 $ 1.75 912 % 1.46 0.32 1.66 1.35 $ 1.76 872 % 1.36 0.10 2.79 1.52 $ 1.80 783 % 0.68 0.30 2.84 1.05 (14) 11 $ 1.42 866 % 1.51 0.19 1.84 1.43 $ % 1.80 783 11 Losses related to the repurchase of previously-sold loans are recorded as a reduction of production revenue. These losses totaled $667 million, $432 million, $672 million, $465 million and $255 million for the quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $1.1 billion and $475 million for year-to-date 2010 and 2009, respectively. The losses resulted in a negative impact on net income of $388 million, $252 million, $413 million, $286 million and $157 million for the quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $640 million and $292 million for year-to-date 2010 and 2009, respectively. Predominantly represents prime loans repurchased from Government National Mortgage Association (“Ginnie Mae”) pools, which are insured by U.S. government agencies. Total average loans owned includes loans held-for-sale of $1.9 billion, $2.9 billion, $1.7 billion, $1.3 billion and $2.8 billion for the quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $2.6 billion and $2.9 billion for year-to-date 2010 and 2009, respectively. These amounts are excluded when calculating the net charge-off rate. Excludes mortgage loans that are insured by U.S. government agencies of $10.9 billion, $11.2 billion, $9.7 billion, $7.7 billion and $5.1 billion at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively. These amounts are excluded as reimbursement is proceeding normally. Excludes loans that are 30 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program, of $988 million, $965 million, $942 million, $903 million and $854 million at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively. These amounts are excluded as reimbursement is proceeding normally. Nonperforming loans and assets exclude: (1) nonaccruing mortgage loans insured by U.S. government agencies of $10.1 billion, $10.5 billion, $9.0 billion, $7.0 billion and $4.2 billion at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively; (2) real estate owned insured by U.S. government agencies of $1.4 billion, $707 million, $579 million, $579 million and $508 million at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively; and (3) student loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program, of $447 million, $581 million, $542 million, $511 million and $473 million at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively. These amounts are excluded as reimbursement is proceeding normally. Page 15
  17. 17. JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in billions, except ratio data and where otherwise noted) QUARTERLY TRENDS 2Q10 MORTGAGE BANKING & OTHER CONSUMER LENDING (continued) Origination volume: Mortgage origination volume by channel Retail Wholesale (a) Correspondent (a) CNT (negotiated transactions) Total mortgage origination volume Student loans Auto $ Application volume: Mortgage application volume by channel Retail Wholesale (a) Correspondent (a) Total mortgage application volume Ratio of annualized loan servicing revenue to third-party mortgage loans serviced (average) MSR revenue multiple (c) (a) (b) (c) 15.3 0.4 14.7 1.8 32.2 0.1 5.8 $ 4Q09 11.4 0.4 16.0 3.9 31.7 1.6 6.3 $ 3Q09 12.3 0.6 20.0 1.9 34.8 0.6 5.9 $ 2Q09 13.3 0.7 21.1 2.0 37.1 1.5 6.9 $ 2010 14.7 0.7 21.9 3.8 41.1 0.4 5.3 34 % (8) (54) 2 (94) (8) 4 % (43) (33) (53) (22) (75) 9 $ 2010 Change 2009 2009 26.7 0.8 30.7 5.7 63.9 1.7 12.1 $ 28.3 2.3 39.9 8.3 78.8 2.1 10.9 (6) % (65) (23) (31) (19) (19) 11 27.8 0.6 23.5 51.9 20.3 0.8 18.2 39.3 17.4 0.7 25.3 43.4 17.8 1.1 26.6 45.5 23.0 1.3 29.7 54.0 37 (25) 29 32 21 (54) (21) (4) 48.1 1.4 41.7 91.2 55.7 3.1 58.9 117.7 (14) (55) (29) (23) 12.6 123.2 1,055.2 1,063.7 11.8 Average mortgage loans held-for-sale and loans at fair value (b) Average assets Third-party mortgage loans serviced (ending) Third-party mortgage loans serviced (average) MSR net carrying value (ending) Ratio of MSR net carrying value (ending) to third-party mortgage loans serviced (ending) SUPPLEMENTAL MORTGAGE FEES AND RELATED INCOME DETAILS (in millions) Production revenue Net mortgage servicing revenue: Operating revenue: Loan servicing revenue Other changes in MSR asset fair value Total operating revenue Risk management: Changes in MSR asset fair value due to inputs or assumptions in model Derivative valuation adjustments and other Total risk management Total net mortgage servicing revenue Mortgage fees and related income 1Q10 YEAR-TO-DATE 2Q10 Change 1Q10 2Q09 14.5 124.8 1,075.0 1,076.4 15.5 16.2 119.5 1,082.1 1,088.8 15.5 18.0 115.2 1,098.9 1,104.4 13.6 16.7 111.6 1,117.5 1,128.1 14.6 (13) (1) (2) (1) (24) (25) 10 (6) (6) (19) 13.5 124.0 1,055.2 1,070.1 11.8 15.3 112.5 1,117.5 1,141.6 14.6 (12) 10 (6) (6) (19) 1.12 $ % 9 1.44 $ % 1 1.43 $ % (192) 1.24 $ % (70) 1.31 $ % 1.12 284 NM (97) $ % 10 1.31 $ % 765 (99) 1,186 (620) 566 $ 1,107 (605) 502 1,221 (657) 564 1,220 (712) 508 1,279 (837) 442 7 (2) 13 (7) 26 28 2,293 (1,225) 1,068 2,501 (1,910) 591 (8) 36 81 (3,584) 3,895 311 877 886 (96) 248 152 654 655 1,762 (1,653) 109 673 481 (1,099) 1,534 435 943 873 3,831 (3,750) 81 523 807 NM NM 105 34 35 NM NM 284 68 10 (3,680) 4,143 463 1,531 1,541 5,141 (4,057) 1,084 1,675 2,440 NM NM (57) (9) (37) 0.45 2.49x $ % 0.42 3.43x $ % 0.44 3.25x $ % 0.44 2.82x $ % 0.45 2.91x % $ 0.43 2.60x $ % 0.44 2.98x % Includes rural housing loans sourced through brokers and correspondents, which are underwritten under U.S. Department of Agriculture guidelines. Prior period amounts have been revised to conform with the current period presentation. Loans at fair value consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets. Average balances of these loans totaled $12.5 billion, $14.2 billion, $16.0 billion, $17.7 billion and $16.2 billion for the quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $13.3 billion and $14.9 billion for year-to-date 2010 and 2009, respectively. Represents the ratio of MSR net carrying value (ending) to third-party mortgage loans serviced (ending) divided by the ratio of annualized loan servicing revenue to third-party mortgage loans serviced (average). Page 16
  18. 18. JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) QUARTERLY TRENDS 2Q10 REAL ESTATE PORTFOLIOS Noninterest revenue Net interest income Total net revenue Provision for credit losses Noninterest expense Income/(loss) before income tax expense/(benefit) Net income/(loss) $ $ Overhead ratio BUSINESS METRICS (in billions) LOANS EXCLUDING PURCHASED CREDIT-IMPAIRED LOANS (a) End-of-period loans owned: Home equity Prime mortgage Subprime mortgage Option ARMs Other Total end-of-period loans owned Average loans owned: Home equity Prime mortgage Subprime mortgage Option ARMs Other Total average loans owned PURCHASED CREDIT-IMPAIRED LOANS (a) End-of-period loans owned: Home equity Prime mortgage Subprime mortgage Option ARMs Total end-of-period loans owned Average loans owned: Home equity Prime mortgage Subprime mortgage Option ARMs Total average loans owned TOTAL REAL ESTATE PORTFOLIOS End-of-period loans owned: Home equity Prime mortgage Subprime mortgage Option ARMs Other Total end-of-period loans owned Average loans owned: Home equity Prime mortgage Subprime mortgage Option ARMs Other Total average loans owned Average assets Home equity origination volume (a) 1Q10 52 1,313 1,365 1,372 405 (412) (236) 30 $ 94.8 44.6 12.6 8.5 1.0 161.5 $ $ % 4Q09 32 1,496 1,528 3,325 419 (2,216) (1,286) 27 $ 97.7 46.8 13.2 8.6 1.0 167.3 $ $ % 3Q09 (6) 1,552 1,546 3,739 565 (2,758) (1,692) 37 $ YEAR-TO-DATE 101.4 47.5 12.5 8.5 0.7 170.6 $ $ % 2Q09 19 1,588 1,607 3,558 411 (2,362) (1,448) 26 $ 2Q10 Change 1Q10 2Q09 104.8 50.0 13.3 8.9 0.7 177.7 $ $ % 3 1,590 1,593 3,119 417 (1,943) (1,190) 26 $ 63 % (12) (11) (59) (3) 81 82 NM % (17) (14) (56) (3) 79 80 2010 $ $ % 84 2,809 2,893 4,697 824 (2,628) (1,522) 28 108.2 53.2 13.8 9.0 0.9 185.1 (3) (5) (5) (1) (3) (12) (16) (9) (6) 11 (13) $ 2010 Change 2009 2009 94.8 44.6 12.6 8.5 1.0 161.5 $ $ % (39) 3,406 3,367 6,266 871 (3,770) (2,309) 26 $ NM % (18) (14) (25) (5) 30 34 % 108.2 53.2 13.8 9.0 0.9 185.1 (12) (16) (9) (6) 11 (13) 96.3 45.7 13.1 8.6 1.0 164.7 99.5 47.9 13.8 8.7 1.1 171.0 103.3 48.8 12.8 8.7 0.7 174.3 106.6 51.7 13.6 8.9 0.8 181.6 110.1 54.9 14.3 9.1 0.9 189.3 (3) (5) (5) (1) (9) (4) (13) (17) (8) (5) 11 (13) 97.9 46.8 13.4 8.7 1.0 167.8 111.7 56.4 14.6 9.0 0.9 192.6 (12) (17) (8) (3) 11 (13) 25.5 18.5 5.6 27.3 76.9 26.0 19.2 5.8 28.3 79.3 26.5 19.7 6.0 29.0 81.2 27.1 20.2 6.1 29.8 83.2 27.7 20.8 6.4 30.5 85.4 (2) (4) (3) (4) (3) (8) (11) (13) (10) (10) 25.5 18.5 5.6 27.3 76.9 27.7 20.8 6.4 30.5 85.4 (8) (11) (13) (10) (10) 25.7 18.8 5.8 27.7 78.0 26.2 19.5 5.9 28.6 80.2 26.7 20.0 6.1 29.3 82.1 27.4 20.5 6.2 30.2 84.3 28.0 21.0 6.5 31.0 86.5 (2) (4) (2) (3) (3) (8) (10) (11) (11) (10) 26.0 19.1 5.8 28.2 79.1 28.2 21.3 6.6 31.2 87.3 (8) (10) (12) (10) (9) 120.3 63.1 18.2 35.8 1.0 238.4 123.7 66.0 19.0 36.9 1.0 246.6 127.9 67.2 18.5 37.5 0.7 251.8 131.9 70.2 19.4 38.7 0.7 260.9 135.9 74.0 20.2 39.5 0.9 270.5 (3) (4) (4) (3) (3) (11) (15) (10) (9) 11 (12) 120.3 63.1 18.2 35.8 1.0 238.4 135.9 74.0 20.2 39.5 0.9 270.5 (11) (15) (10) (9) 11 (12) 122.0 64.5 18.9 36.3 1.0 242.7 230.3 0.3 125.7 67.4 19.7 37.3 1.1 251.2 240.2 0.3 130.0 68.8 18.9 38.0 0.7 256.4 247.3 0.4 134.0 72.2 19.8 39.1 0.8 265.9 258.3 0.5 138.1 75.9 20.8 40.1 0.9 275.8 269.5 0.6 (3) (4) (4) (3) (9) (3) (4) - (12) (15) (9) (9) 11 (12) (15) (50) 123.9 65.9 19.2 36.9 1.0 246.9 235.2 0.6 139.9 77.7 21.2 40.2 0.9 279.9 274.7 1.5 (11) (15) (9) (8) 11 (12) (14) (60) Purchased credit-impaired loans represent loans acquired in the Washington Mutual transaction for which a deterioration in credit quality occurred between the origination date and JPMorgan Chase’s acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated lives of the loans as long as cash flows are reasonably estimable, even if the underlying loans are contractually past due. Page 17
  19. 19. JPMORGAN CHASE & CO. RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data) QUARTERLY TRENDS 2Q10 REAL ESTATE PORTFOLIOS (continued) CREDIT DATA AND QUALITY STATISTICS Net charge-offs excluding purchased credit-impaired loans (a) Home equity Prime mortgage Subprime mortgage Option ARMs Other Total net charge-offs Net charge-off rate excluding purchased credit-impaired loans (a) Home equity Prime mortgage Subprime mortgage Option ARMs Other Total net charge-off rate excluding purchased credit-impaired loans Net charge-off rate - reported Home equity Prime mortgage Subprime mortgage Option ARMs Other Total net charge-off rate - reported 30+ day delinquency rate excluding purchased credit-impaired loans (b) Allowance for loan losses Nonperforming assets (c) Allowance for loan losses to ending loans retained Allowance for loan losses to ending loans retained excluding purchased credit-impaired loans (a) (a) (b) (c) $ 1Q10 796 251 282 22 21 1,372 3.32 2.20 8.63 1.03 8.42 $ % 4Q09 1,126 453 457 23 16 2,075 4.59 3.84 13.43 1.07 5.90 $ % 3Q09 1,177 568 452 29 24 2,250 4.52 4.62 14.01 1.32 13.60 YEAR-TO-DATE $ % 2Q09 1,142 518 422 15 19 2,116 4.25 3.98 12.31 0.67 9.42 2Q10 Change 1Q10 2Q09 $ % 1,265 479 410 15 20 2,189 4.61 3.50 11.50 0.66 8.91 (29) % (45) (38) (4) 31 (34) 2010 (37) % (48) (31) 47 5 (37) $ % 1,922 704 739 45 37 3,447 3.96 3.03 11.12 1.04 7.46 $ % 2,363 786 774 19 35 3,977 4.27 2.81 10.69 0.43 7.84 3.34 4.92 5.12 4.62 4.64 4.14 3.63 2.73 9.41 0.25 5.90 3.35 3.59 3.28 9.49 0.30 13.60 3.48 3.38 2.85 8.46 0.15 9.42 3.16 3.67 2.53 7.91 0.15 8.91 3.18 3.13 2.15 7.76 0.25 7.46 2.82 (19) % (10) (5) 137 6 (13) % 4.16 2.62 1.56 5.98 0.24 8.42 2.27 $ 2010 Change 2009 2009 3.41 2.04 7.36 0.10 7.84 2.87 6.88 14,127 10,121 5.93 7.01 $ % 7.28 14,127 10,313 5.73 6.76 $ % 7.73 12,752 10,347 5.06 6.55 $ % 7.46 11,261 10,196 4.32 5.72 $ % 6.46 9,821 9,085 3.63 5.31 (2) % 44 11 $ 6.88 14,127 10,121 5.93 7.01 $ % 6.46 9,821 9,085 3.63 44 11 % 5.31 Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated management's estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of $2.8 billion, $2.8 billion, $1.6 billion and $1.1 billion was recorded for these loans at June 30, 2010, March 31, 2010, December 31, 2009 and September 30, 2009, respectively, which has also been excluded from the applicable ratios. No allowance for loan losses was recorded at June 30, 2009. To date, no charge-offs have been recorded for these loans. The delinquency rate for purchased credit-impaired loans was 27.91%, 28.49%, 27.79%, 25.56% and 23.37% at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively. Excludes purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. Page 18
  20. 20. JPMORGAN CHASE & CO. CARD SERVICES - MANAGED BASIS FINANCIAL HIGHLIGHTS (in millions, except ratio data and where otherwise noted) QUARTERLY TRENDS 2Q10 INCOME STATEMENT (a) REVENUE Credit card income All other income Noninterest revenue Net interest income TOTAL NET REVENUE $ 1Q10 908 (47) 861 3,356 4,217 $ 4Q09 813 (55) 758 3,689 4,447 $ YEAR-TO-DATE 3Q09 931 (46) 885 4,263 5,148 $ 916 (85) 831 4,328 5,159 2Q09 $ 921 (364) 557 4,311 4,868 2Q10 Change 1Q10 2Q09 12 % 15 14 (9) (5) 2010 (1) % 87 55 (22) (13) $ 2010 Change 2009 2009 1,721 (102) 1,619 7,045 8,664 $ 1,765 (561) 1,204 8,793 9,997 (2) % 82 34 (20) (13) Provision for credit losses 2,221 3,512 4,239 4,967 4,603 (37) (52) 5,733 9,256 (38) NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE 327 986 123 1,436 330 949 123 1,402 336 938 122 1,396 354 829 123 1,306 329 873 131 1,333 (1) 4 2 (1) 13 (6) 8 657 1,935 246 2,838 686 1,723 270 2,679 (4) 12 (9) 6 $ (1,068) (396) (672) NM NM NM NM NM NM 93 53 40 $ (1,938) (719) (1,219) NM NM NM $ (268) NM NM N/A $ (448) NM Income/(loss) before income tax expense/(benefit) Income tax expense/(benefit) NET INCOME/(LOSS) $ Memo: Net securitization income/(loss) Merchant acquiring business Bank card volume (in billions) Total transactions (in billions) (a) (b) (c) 9 34 % (467) (164) (303) N/A $ N/A FINANCIAL RATIOS (a) ROE Overhead ratio Percentage of average outstandings: Net interest income Provision for credit losses Noninterest revenue Risk adjusted margin (b) Noninterest expense Pretax income/(loss) (ROO) (c) Net income/(loss) BUSINESS METRICS Sales volume (in billions) New accounts opened (in millions) Open accounts (in millions) 560 217 343 $ (487) (181) (306) $ (1,114) (414) (700) $ 17 $ (43) (8) % 32 9.20 6.09 2.36 5.47 3.94 1.54 0.94 (8) % 27 9.60 9.14 1.97 2.43 3.65 (1.22) (0.79) (19) % 25 10.36 10.30 2.15 2.21 3.39 (1.18) (0.74) $ (18) % 27 10.15 11.65 1.95 0.45 3.06 (2.61) (1.64) 1 33 9.93 10.60 1.28 0.61 3.07 (2.46) (1.55) % (16) % 27 9.41 7.66 2.16 3.91 3.79 0.12 0.05 9.92 10.44 1.36 0.84 3.02 (2.19) (1.38) $ 78.1 2.7 88.9 $ 69.4 2.5 88.9 $ 78.8 3.2 93.3 $ 74.7 2.4 93.6 $ 74.0 2.4 100.3 13 8 - 6 13 (11) $ 147.5 5.2 88.9 $ 140.6 4.6 100.3 5 13 (11) $ 117.1 5.0 $ 108.0 4.7 $ 110.4 4.9 $ 103.5 4.5 $ 101.4 4.5 8 6 15 11 $ 225.1 9.7 $ 195.8 8.6 15 13 Effective January 1, 2010, the Firm adopted new accounting guidance that amended the accounting for the transfer of financial assets and the consolidation of VIEs. For further details regarding the Firm’s application and impact of the new guidance, see footnote (a) on page 3. Represents total net revenue less provision for credit losses. Pretax return on average managed outstandings. N/A: Not applicable. Page 19
  21. 21. JPMORGAN CHASE & CO. CARD SERVICES - MANAGED BASIS FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except headcount and ratio data) QUARTERLY TRENDS 2Q10 SELECTED BALANCE SHEET DATA (Period-end) Loans: Loans on balance sheets Securitized loans (a) Total loans $ Equity 1Q10 142,994 N/A 142,994 $ 4Q09 149,260 N/A 149,260 $ YEAR-TO-DATE 3Q09 78,786 84,626 163,412 $ 2Q10 Change 1Q10 2Q09 2Q09 78,215 87,028 165,243 $ 2010 85,736 85,790 171,526 (4) % NM (4) 67 % NM (17) $ 2010 Change 2009 2009 142,994 N/A 142,994 $ 85,736 85,790 171,526 67 % NM (17) 15,000 15,000 15,000 15,000 15,000 - - 15,000 15,000 - 146,816 156,968 184,535 192,141 193,310 (6) (24) 151,864 197,234 (23) 146,302 N/A 146,302 155,790 N/A 155,790 77,759 85,452 163,211 83,146 86,017 169,163 89,692 84,417 174,109 (6) NM (6) 63 NM (16) 151,020 N/A 151,020 93,715 85,015 178,730 61 NM (16) Equity 15,000 15,000 15,000 15,000 15,000 - - 15,000 15,000 - Headcount 21,529 22,478 22,676 22,850 22,897 (4) (6) 21,529 22,897 (6) (18) (15) SELECTED BALANCE SHEET DATA (Average) Managed assets Loans: Loans on balance sheets Securitized loans (a) Total average loans CREDIT QUALITY STATISTICS (a) Net charge-offs Net charge-off rate (b) $ Delinquency rates 30+ day (b) 90+ day (b) Allowance for loan losses (c) Allowance for loan losses to period-end loans (c) (d) KEY STATS - WASHINGTON MUTUAL ONLY Loans Average loans Net interest income (e) Risk adjusted margin (e) (f) Net charge-off rate (g) 30+ day delinquency rate (g) 90+ day delinquency rate (g) KEY STATS - EXCLUDING WASHINGTON MUTUAL Loans Average loans Net interest income (e) Risk adjusted margin (e) (f) Net charge-off rate 30+ day delinquency rate 90+ day delinquency rate (a) (b) (c) (d) (e) (f) (g) 3,721 10.20 4.96 2.76 $ $ $ 14,524 10.16 15,615 16,455 14.97 15.43 19.53 8.86 5.17 127,379 129,847 8.47 4.21 9.02 4.48 2.47 $ % % 5.62 3.15 $ % $ % $ % 4,512 11.75 16,032 10.74 17,204 18,607 15.06 2.47 24.14 10.49 6.32 132,056 137,183 8.86 2.43 10.54 4.99 2.74 $ % % 6.28 3.59 $ % $ % $ % 3,839 9.33 9,672 12.28 $ % % 5.99 2.76 $ % 19,653 $ 20,377 17.12 % (0.66) 20.49 12.72 7.76 143,759 142,834 9.40 2.62 8.64 5.52 3.13 $ % 4,392 10.30 9,297 11.89 $ % % 5.86 3.25 $ % 21,163 $ 22,287 17.04 % (4.45) 21.94 12.44 6.21 144,080 146,876 9.10 1.19 9.41 5.38 2.48 $ % 4,353 10.03 8,839 10.31 % (9) (9) (12) (4) (5) % 8,233 10.99 4.96 2.76 64 $ % 23,093 24,418 17.90 % (3.89) 19.17 11.98 6.85 148,433 149,691 8.63 1.34 8.97 5.27 2.90 $ % (32) (33) (14) (13) $ $ 14,524 10.16 15,615 17,525 15.02 8.59 21.97 8.86 5.17 127,379 133,495 8.67 3.30 9.80 4.48 2.47 $ % % 5.86 3.25 $ % $ % $ % 7,846 8.85 8,839 10.31 23,093 25,990 17.14 0.49 16.75 11.98 6.85 148,433 152,740 8.69 0.89 7.90 5.27 2.90 5 % % 64 % (32) (33) % (14) (13) % Effective January 1, 2010, the Firm adopted new accounting guidance that amended the accounting for the transfer of financial assets and the consolidation of VIEs. As a result of the consolidation of the credit card securitization trusts, reported and managed basis relating to credit card securitizations are equivalent for periods beginning after January 1, 2010. For further details regarding the Firm’s application and impact of the new guidance, see footnote (a) on page 3. Results reflect the impact of purchase accounting adjustments related to the Washington Mutual transaction and the consolidation of the Washington Mutual Master Trust. Net charge-off rate is not impacted in the quarter ended June 30, 2010. Delinquency rates for June 30, 2010 and March 31, 2010 are not impacted. Based on loans on the Consolidated Balance Sheets. Includes $1.0 billion, $3.0 billion and $5.0 billion of loans at December 31, 2009, September 30, 2009 and June 30, 2009, respectively, held by the Washington Mutual Master Trust, which were consolidated onto the Card Services balance sheet at fair value during the second quarter of 2009. No allowance for loan losses was recorded for these loans as of December 31, 2009, September 30, 2009 and June 30, 2009. Excluding these loans, the allowance for loan losses to period-end loans would have been 12.43%, 12.36% and 10.95%, respectively. As a percentage of average managed outstandings. Represents total net revenue less provision for credit losses. Excludes the impact of purchase accounting adjustments related to the Washington Mutual transaction and the consolidation of the Washington Mutual Master Trust. Net charge-off rate is not impacted in the quarter ended June 30, 2010. Delinquency rates for June 30, 2010 and March 31, 2010 are not impacted. N/A: Not applicable. Page 20
  22. 22. JPMORGAN CHASE & CO. CARD RECONCILIATION OF REPORTED AND MANAGED DATA (in millions, except ratio data) QUARTERLY TRENDS 2Q10 INCOME STATEMENT DATA Credit card income Reported Securitization adjustments (a) Managed credit card income Net interest income Reported Securitization adjustments (a) Managed net interest income Total net revenue Reported Securitization adjustments (a) Managed total net revenue Provision for credit losses Reported Securitization adjustments (a) Managed provision for credit losses $ $ $ $ $ $ $ $ BALANCE SHEETS - AVERAGE BALANCES Total average assets Reported Securitization adjustments (a) Managed average assets $ CREDIT QUALITY STATISTICS Net charge-offs Reported Securitization adjustments (a) Managed net charge-offs $ Net charge-off rates Reported Securitized (a) Managed net charge-off rate (a) $ $ 1Q10 908 N/A 908 $ 3,356 N/A 3,356 $ 4,217 N/A 4,217 $ 2,221 N/A 2,221 $ 146,816 N/A 146,816 $ 3,721 N/A 3,721 $ 10.20 N/A 10.20 $ $ $ $ $ $ % 4Q09 813 N/A 813 $ 3,689 N/A 3,689 $ 4,447 N/A 4,447 $ 3,512 N/A 3,512 $ 156,968 N/A 156,968 $ 4,512 N/A 4,512 $ 11.75 N/A 11.75 $ $ $ $ $ $ % 3Q09 1,306 (375) 931 $ 2,271 1,992 4,263 $ 3,531 1,617 5,148 $ 2,622 1,617 4,239 $ 102,748 81,787 184,535 $ 2,222 1,617 3,839 $ 11.34 7.51 9.33 YEAR-TO-DATE $ $ $ $ $ $ % 2Q09 1,201 (285) 916 $ 2,345 1,983 4,328 $ 3,461 1,698 5,159 $ 3,269 1,698 4,967 $ 109,362 82,779 192,141 $ 2,694 1,698 4,392 $ 12.85 7.83 10.30 2Q10 Change 1Q10 2Q09 $ $ $ $ $ $ % 2010 1,215 (294) 921 12 % NM 12 (25) % NM (1) $ 2,353 1,958 4,311 (9) NM (9) 43 NM (22) $ 3,204 1,664 4,868 (5) NM (5) 32 NM (13) $ 2,939 1,664 4,603 (37) NM (37) (24) NM (52) $ 111,722 81,588 193,310 (6) NM (6) 31 NM (24) $ 2,689 1,664 4,353 (18) NM (18) 38 NM (15) $ 12.03 7.91 10.03 % $ $ $ $ $ $ 1,721 N/A 1,721 $ 7,045 N/A 7,045 $ 8,664 N/A 8,664 $ 5,733 N/A 5,733 $ 151,864 N/A 151,864 $ 8,233 N/A 8,233 $ 10.99 N/A 10.99 2010 Change 2009 2009 $ $ $ $ $ $ % 2,599 (834) 1,765 (34) % NM (2) 4,831 3,962 8,793 46 NM (20) 6,869 3,128 9,997 26 NM (13) 6,128 3,128 9,256 (6) NM (38) 115,052 82,182 197,234 32 NM (23) 4,718 3,128 7,846 75 NM 5 10.15 7.42 8.85 % Effective January 1, 2010, the Firm adopted new accounting guidance that amended the accounting for the transfer of financial assets and the consolidation of VIEs. As a result of the consolidation of the credit card securitization trusts, reported and managed basis relating to credit card securitizations are equivalent for periods beginning after January 1, 2010. For further details regarding the Firm’s application and impact of the new guidance, see footnote (a) on page 3. N/A: Not applicable. Page 21
  23. 23. JPMORGAN CHASE & CO. COMMERCIAL BANKING FINANCIAL HIGHLIGHTS (in millions, except ratio data) QUARTERLY TRENDS 2Q10 INCOME STATEMENT REVENUE Lending- and deposit-related fees Asset management, administration and commissions All other income (a) Noninterest revenue Net interest income TOTAL NET REVENUE (b) $ Provision for credit losses 1Q10 280 36 230 546 940 1,486 $ 4Q09 277 37 186 500 916 1,416 $ YEAR-TO-DATE 3Q09 279 35 149 463 943 1,406 $ 2Q10 Change 1Q10 2Q09 2Q09 269 35 170 474 985 1,459 $ 270 36 152 458 995 1,453 2010 1 % (3) 24 9 3 5 4 % 51 19 (6) 2 (235) 214 494 355 312 NM NM NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE 196 337 9 542 206 324 9 539 183 351 9 543 196 339 10 545 197 327 11 535 (5) 4 1 (1) 3 (18) 1 Income before income tax expense Income tax expense NET INCOME 1,179 486 693 663 273 390 369 145 224 559 218 341 606 238 368 78 78 78 95 104 88 (1) 4 10 280 5 $ Revenue by product: Lending Treasury services Investment banking Other Total Commercial Banking revenue IB revenue, gross (c) Revenue by client segment: Middle Market Banking Commercial Term Lending Mid-Corporate Banking Real Estate Banking Other Total Commercial Banking revenue FINANCIAL RATIOS ROE Overhead ratio (a) (b) (c) $ $ $ $ $ 649 665 115 57 1,486 $ $ $ $ $ $ 658 638 105 15 1,416 333 $ 767 237 285 125 72 1,486 $ 35 36 $ % $ $ $ 639 645 108 14 1,406 311 $ 746 229 263 100 78 1,416 $ 20 38 $ % $ $ $ 675 672 99 13 1,459 $ 684 679 114 (24) 1,453 328 $ 301 $ 328 760 191 277 100 78 1,406 $ 771 232 278 121 57 1,459 $ 772 224 305 120 32 1,453 11 39 $ % 17 37 $ % 18 37 7 3 3 8 25 (8) 5 % 557 73 416 1,046 1,856 2,902 $ (21) 533 70 277 880 1,975 2,855 5 % 4 50 19 (6) 2 $ $ 2 605 NM 402 661 18 1,081 (5) (2) 1 NM 2 (1) 6 (7) 4 125 2 2010 Change 2009 2009 397 669 22 1,088 1 (1) (18) (1) 1,842 759 1,083 1,162 456 706 59 66 53 (3) (2) 18 NM 2 21 $ $ $ 1,307 1,303 220 72 2,902 $ 1,349 1,325 187 (6) 2,855 $ 644 $ 534 $ 1,513 466 548 225 150 2,902 $ 1,524 452 547 240 92 2,855 $ 27 37 $ % 18 38 (1) 3 (6) 63 2 % Revenue from investment banking products sold to Commercial Banking ("CB") clients and commercial card revenue is included in all other income. Total net revenue included tax-equivalent adjustments from income tax credits related to equity investments in designated community development entities that provide loans to qualified businesses in low-income communities as well as taxexempt income from municipal bond activity of $49 million, $45 million, $53 million, $43 million and $39 million for quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $94 million and $74 million for year-to-date 2010 and 2009, respectively. Represents the total revenue related to investment banking products sold to CB clients. Page 22
  24. 24. JPMORGAN CHASE & CO. COMMERCIAL BANKING FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio and headcount data) QUARTERLY TRENDS 2Q10 SELECTED BALANCE SHEET DATA (Period-end) Loans: Loans retained Loans held-for-sale and loans at fair value Total loans Equity SELECTED BALANCE SHEET DATA (Average) Total assets Loans: Loans retained Loans held-for-sale and loans at fair value Total loans Liability balances (a) Equity Average loans by client segment: Middle Market Banking Commercial Term Lending Mid-Corporate Banking Real Estate Banking Other Total Commercial Banking loans Net charge-off rate Allowance for loan losses to period-end loans retained Allowance for loan losses to average loans retained Allowance for loan losses to nonperforming loans retained Nonperforming loans to total period-end loans Nonperforming loans to total average loans (a) (b) 4Q09 3Q09 2Q09 2010 $ 95,090 446 95,536 8,000 $ 95,435 294 95,729 8,000 $ 97,108 324 97,432 8,000 $ 101,608 288 101,896 8,000 $ 105,556 296 105,852 8,000 - % 52 - $ 133,309 $ 133,013 $ 129,948 $ 130,316 $ 137,283 - (3) 108,750 288 109,038 105,829 8,000 (1) 32 (1) 3 - (12) 36 (12) 29 - 38,193 36,963 17,012 12,347 4,523 109,038 1 (3) (6) (3) (1) (10) (3) (30) (21) (15) (12) 2 14 181 (23) (3) 95,521 391 95,912 136,770 8,000 $ $ Headcount CREDIT DATA AND QUALITY STATISTICS Net charge-offs Nonperforming loans: Nonperforming loans retained (b) Nonperforming loans held-for-sale and loans at fair value Total nonperforming loans Nonperforming assets Allowance for credit losses: Allowance for loan losses Allowance for lending-related commitments Total allowance for credit losses 1Q10 YEAR-TO-DATE 2Q10 Change 1Q10 2Q09 96,317 297 96,614 133,142 8,000 34,424 35,956 11,875 9,814 3,843 95,912 $ $ 4,808 $ 99,794 386 100,180 122,471 8,000 33,919 36,057 12,258 10,438 3,942 96,614 $ $ 4,701 176 $ 103,752 297 104,049 109,293 8,000 34,794 36,507 13,510 11,133 4,236 100,180 $ $ 4,151 229 $ 36,200 36,943 14,933 11,547 4,426 104,049 $ $ 4,177 483 $ 4,228 291 $ (10) % 51 (10) - 2010 Change 2009 2009 $ 95,090 446 95,536 8,000 $ 105,556 296 105,852 8,000 $ 133,162 $ 140,771 (5) 111,146 292 111,438 110,377 8,000 (14) 18 (14) 22 - 39,453 36,889 17,710 12,803 4,583 111,438 (13) (2) (32) (21) (15) (14) 95,917 344 96,261 134,966 8,000 $ $ 34,173 36,006 12,065 10,124 3,893 96,261 $ $ 4,808 $ (10) % 51 (10) - 4,228 405 $ 14 315 29 3,036 41 3,077 3,285 2,947 49 2,996 3,186 2,764 37 2,801 2,989 2,284 18 2,302 2,461 2,090 21 2,111 2,255 3 (16) 3 3 45 95 46 46 3,036 41 3,077 3,285 2,090 21 2,111 2,255 45 95 46 46 2,686 267 2,953 3,007 359 3,366 3,025 349 3,374 3,063 300 3,363 3,034 272 3,306 (11) (26) (12) (11) (2) (11) 2,686 267 2,953 3,034 272 3,306 (11) (2) (11) 0.74 2.82 2.81 88 3.22 3.21 % 0.96 3.15 3.12 102 3.13 3.10 % 1.92 3.12 3.03 109 2.87 2.80 % 1.11 3.01 2.95 134 2.26 2.21 % 0.67 2.87 2.79 145 1.99 1.94 % 0.85 2.82 2.80 88 3.22 3.20 % 0.57 2.87 2.73 145 1.99 1.89 % Liability balances include deposits, as well as deposits that are swept to on—balance sheet liabilities (e.g., commercial paper, federal funds purchased, time deposits and securities loaned or sold under repurchase agreements) as part of customer cash management programs. Allowance for loan losses of $586 million, $612 million, $581 million, $496 million and $460 million were held against nonperforming loans retained at June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively. Page 23
  25. 25. JPMORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS (in millions, except headcount and ratio data) QUARTERLY TRENDS 2Q10 INCOME STATEMENT REVENUE Lending- and deposit-related fees Asset management, administration and commissions All other income Noninterest revenue Net interest income TOTAL NET REVENUE $ Provision for credit losses Credit reimbursement to IB (a) 1Q10 313 705 209 1,227 654 1,881 $ (16) (30) 4Q09 311 659 176 1,146 610 1,756 $ (39) (30) YEAR-TO-DATE 3Q09 330 675 212 1,217 618 1,835 $ 53 (30) 2Q10 Change 1Q10 2Q09 2Q09 316 620 201 1,137 651 1,788 $ 13 (31) 314 710 221 1,245 655 1,900 1 7 19 7 7 7 (5) (30) % 2010 - % (1) (5) (1) (1) 1,354 1,334 36 2,724 1,247 1,321 39 2,607 9 1 (8) 4 908 337 571 1,065 378 687 (15) (11) (17) 1,865 1,856 3,721 (3) (1) (2) 629 633 18 1,280 618 650 20 1,288 Income before income tax expense Income tax expense NET INCOME 468 176 292 440 161 279 361 124 237 464 162 302 587 208 379 6 9 5 (20) (15) (23) 934 966 1,900 5 9 7 (1) (1) (1) REVENUE BY BUSINESS Treasury Services Worldwide Securities Services TOTAL NET REVENUE $ $ FINANCIAL RATIOS ROE Overhead ratio Pretax margin ratio (b) SELECTED BALANCE SHEET DATA (Period-end) Loans (c) Equity SELECTED BALANCE SHEET DATA (Average) Total assets Loans (c) Liability balances (d) Equity Headcount (a) (b) (c) (d) 926 955 1,881 18 74 25 $ $ % 882 874 1,756 17 75 25 $ $ % $ 918 917 1,835 19 76 20 $ $ % $ 919 869 1,788 24 72 26 $ $ % 30 68 31 (2) % 2 (8) (1) (5) (2) 13 5 (10) 9 668 704 19 1,391 (55) (60) 639 1,336 418 2,393 1,328 3,721 6 5 6 657 650 18 1,325 $ $ (220) - 697 684 18 1,399 $ 624 1,364 385 2,373 1,264 3,637 59 - NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE $ $ 2010 Change 2009 2009 $ $ $ % (11) (60) $ 1,808 1,829 3,637 18 75 25 $ $ % 28 70 29 (400) - % $ 24,513 6,500 $ 24,066 6,500 $ 18,972 5,000 $ 19,693 5,000 $ 17,929 5,000 2 - 37 30 $ 24,513 6,500 $ 17,929 5,000 37 30 $ 42,868 22,137 246,690 6,500 $ 38,273 19,578 247,905 6,500 $ 36,589 18,888 250,695 5,000 $ 33,117 17,062 231,502 5,000 $ 35,520 17,524 234,163 5,000 12 13 - 21 26 5 30 $ 40,583 20,865 247,294 6,500 $ 37,092 18,825 255,208 5,000 9 11 (3) 30 27,252 3 3 27,252 3 27,943 27,223 26,609 26,389 27,943 IB credit portfolio group manages certain exposures on behalf of clients shared with TSS. TSS reimburses IB for a portion of the total cost of managing the credit portfolio. IB recognizes this credit reimbursement as a component of noninterest revenue. Pretax margin represents income before income tax expense divided by total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors. Loan balances include wholesale overdrafts, commercial card and trade finance loans. Liability balances include deposits, as well as deposits that are swept to on—balance sheet liabilities (e.g., commercial paper, federal funds purchased, time deposits and securities loaned or sold under repurchase agreements) as part of customer cash management programs. Page 24
  26. 26. JPMORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) TSS firmwide metrics include revenue recorded in the CB, Retail Banking and Asset Management ("AM") lines of business and excludes FX revenue recorded in the IB for TSS-related FX activity. In order to capture the firmwide impact of Treasury Services ("TS") and TSS products and revenue, management reviews firmwide metrics such as liability balances, revenue and overhead ratios in assessing financial performance for TSS. Firmwide metrics are necessary in order to understand the aggregate TSS business. QUARTERLY TRENDS 2Q10 TSS FIRMWIDE DISCLOSURES TS revenue - reported TS revenue reported in CB TS revenue reported in other lines of business TS firmwide revenue (a) Worldwide Securities Services revenue TSS firmwide revenue (a) TS firmwide liability balances (average) (b) TSS firmwide liability balances (average) (b) $ $ $ TSS FIRMWIDE FINANCIAL RATIOS TS firmwide overhead ratio (c) TSS firmwide overhead ratio (c) FIRMWIDE BUSINESS METRICS Assets under custody (in billions) Net charge-offs rate Allowance for loan losses to period-end loans Allowance for loan losses to average loans Allowance for loan losses to nonperforming loans Nonperforming loans to period-end loans Nonperforming loans to average loans (a) (b) (c) (d) (e) 926 665 62 1,653 955 2,608 $ 303,224 383,460 $ 54 64 $ Number of: US$ ACH transactions originated (in millions) Total US$ clearing volume (in thousands) International electronic funds transfer volume (in thousands) (d) Wholesale check volume (in millions) Wholesale cards issued (in thousands) (e) CREDIT DATA AND QUALITY STATISTICS Net charge-offs Nonperforming loans Allowance for credit losses: Allowance for loan losses Allowance for lending-related commitments Total allowance for credit losses 1Q10 $ % 14,857 4Q09 882 638 56 1,576 874 2,450 $ 305,105 381,047 $ 55 65 $ $ % 15,283 3Q09 918 645 57 1,620 917 2,537 $ 289,024 373,166 $ 54 66 $ YEAR-TO-DATE $ % 14,885 2Q09 919 672 63 1,654 869 2,523 $ 261,059 340,795 $ 52 62 $ 2Q10 Change 1Q10 2Q09 $ % 14,887 934 679 63 1,676 966 2,642 258,312 339,992 51 59 $ 5 4 11 5 9 6 (1) 1 % 2010 (1) % (2) (2) (1) (1) (1) $ 17 13 $ $ % 1,808 1,303 118 3,229 1,829 5,058 $ 304,159 382,260 $ 55 65 13,748 (3) 8 $ 2010 Change 2009 2009 $ % 14,857 1,865 1,325 125 3,315 1,856 5,171 273,892 365,584 52 61 $ (3) % (2) (6) (3) (1) (2) 11 5 % 13,748 8 970 30,531 975 29,493 965 28,604 978 28,193 2 6 (1) 8 1,919 59,200 1,956 55,379 (2) 7 58,484 526 28,066 $ 949 28,669 55,754 478 27,352 53,354 514 27,138 48,533 530 26,977 47,096 572 25,501 5 10 3 24 (8) 10 114,238 1,004 28,066 91,461 1,140 25,501 25 (12) 10 19 14 NM - 15 92 107 220 (26) 8 14 $ 48 68 116 0.20 0.22 343 0.06 0.06 14 $ 57 76 133 % 0.24 0.29 407 0.06 0.07 14 $ 88 84 172 % 0.46 0.47 NM 0.07 0.07 14 $ % 0.08 0.09 107 0.07 0.08 % - NM - 15 92 107 15 104 119 17 14 (16) (11) (13) 220 (26) 8 0.39 0.08 0.09 107 0.08 0.08 % $ 14 $ 48 68 116 0.20 0.23 343 0.06 0.07 % 0.20 0.08 0.08 107 0.08 0.07 % TSS firmwide revenue includes foreign exchange (“FX”) revenue recorded in TSS and FX revenue associated with TSS customers who are FX customers of IB. However, some of the FX revenue associated with TSS customers who are FX customers of IB is not included in TS and TSS firmwide revenue. The total FX revenue generated was $175 million, $137 million, $162 million, $154 million and $191 million for the quarters ended June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009 and June 30, 2009, respectively, and $312 million and $345 million for year-to-date 2010 and 2009, respectively. Firmwide liability balances include liability balances recorded in CB. Overhead ratios have been calculated based on firmwide revenue and TSS and TS expense, respectively, including those allocated to certain other lines of business. FX revenue and expense recorded in IB for TSS-related FX activity are not included in this ratio. International electronic funds transfer includes non-U.S. dollar Automated Clearing House (“ACH”) and clearing volume. Wholesale cards issued and outstanding include U.S. domestic commercial, stored value, prepaid and government electronic benefit card products. Page 25
  27. 27. JPMORGAN CHASE & CO. ASSET MANAGEMENT FINANCIAL HIGHLIGHTS (in millions, except ratio, ranking and headcount data) QUARTERLY TRENDS 2Q10 INCOME STATEMENT REVENUE Asset management, administration and commissions All other income Noninterest revenue Net interest income TOTAL NET REVENUE $ Provision for credit losses 1Q10 1,522 177 1,699 369 2,068 $ 4Q09 1,508 266 1,774 357 2,131 $ YEAR-TO-DATE 3Q09 1,632 191 1,823 372 2,195 $ 2Q10 Change 1Q10 2Q09 2Q09 1,443 238 1,681 404 2,085 $ 1,315 253 1,568 414 1,982 2010 1 % (33) (4) 3 (3) 16 % (30) 8 (11) 4 $ 2010 Change 2009 2009 3,030 443 3,473 726 4,199 $ 2,546 322 2,868 817 3,685 19 % 38 21 (11) 14 5 35 58 38 59 (86) (92) 40 92 (57) NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE 861 527 17 1,405 910 514 18 1,442 907 543 20 1,470 858 474 19 1,351 810 525 19 1,354 (5) 3 (6) (3) 6 (11) 4 1,771 1,041 35 2,847 1,610 1,004 38 2,652 10 4 (8) 7 Income before income tax expense Income tax expense NET INCOME 658 267 391 654 262 392 667 243 424 696 266 430 569 217 352 1 2 - 16 23 11 1,312 529 783 941 365 576 39 45 36 640 411 487 334 110 1,982 16 (23) 1 1 (3) 1,223 664 947 646 205 3,685 14 35 5 7 7 14 REVENUE BY CLIENT SEGMENT Private Bank Retail Institutional Private Wealth Management JPMorgan Securities (a) TOTAL NET REVENUE $ $ $ FINANCIAL RATIOS ROE Overhead ratio Pretax margin ratio (b) SELECTED BALANCE SHEET DATA (Period-end) Loans Equity SELECTED BALANCE SHEET DATA (Average) Total assets Loans Deposits Equity Headcount (a) (b) $ 695 482 433 348 110 2,068 24 68 32 $ $ % $ 698 415 566 343 109 2,131 24 68 31 $ $ % $ 723 445 584 331 112 2,195 24 67 30 $ $ % $ 639 471 534 339 102 2,085 24 65 33 $ $ % 20 68 29 9 17 (11) 4 4 $ $ $ % $ 1,393 897 999 691 219 4,199 24 68 31 $ $ % 17 72 26 % $ 38,744 6,500 $ 37,088 6,500 $ 37,755 7,000 $ 35,925 7,000 $ 35,474 7,000 4 - 9 (7) $ 38,744 6,500 $ 35,474 7,000 9 (7) $ 63,426 37,407 86,453 6,500 $ 62,525 36,602 80,662 6,500 $ 63,036 36,137 77,352 7,000 $ 60,345 34,822 73,649 7,000 $ 59,334 34,292 75,355 7,000 1 2 7 - 7 9 15 (7) $ 62,978 37,007 83,573 6,500 $ 58,783 34,438 78,534 7,000 7 7 6 (7) 14,840 5 8 14,840 8 16,019 15,321 15,136 14,919 16,019 JPMorgan Securities was formerly known as Bear Stearns Private Client Services prior to January 1, 2010. Pretax margin represents income before income tax expense divided by total net revenue, which is a measure of pretax performance and another basis by which management evaluates its performance and that of its competitors. Page 26
  28. 28. JPMORGAN CHASE & CO. ASSET MANAGEMENT FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio, ranking and headcount data) QUARTERLY TRENDS 2Q10 BUSINESS METRICS Number of: Client advisors Retirement planning services participants (in thousands) JPMorgan Securities brokers (a) % of customer assets in 4 & 5 Star Funds (b) % of AUM in 1st and 2nd quartiles: (c) 1 year 3 years 5 years CREDIT DATA AND QUALITY STATISTICS Net charge-offs Nonperforming loans Allowance for credit losses: Allowance for loan losses Allowance for lending-related commitments Total allowance for credit losses Net charge-off rate Allowance for loan losses to period-end loans Allowance for loan losses to average loans Allowance for loan losses to nonperforming loans Nonperforming loans to period-end loans Nonperforming loans to average loans (a) (b) (c) 1Q10 2,055 1,653 402 43 58 67 78 $ % 1,987 1,651 390 43 % % % 55 67 77 27 309 250 3 253 0.29 0.65 0.67 81 0.80 0.83 4Q09 $ % 261 13 274 0.31 0.70 0.71 55 1.28 1.30 3Q09 % 1,934 1,628 376 42 % % % 57 62 74 28 475 $ % YEAR-TO-DATE 269 9 278 0.38 0.71 0.74 46 1.54 1.61 2Q09 % 1,891 1,620 365 39 % % % 60 70 74 35 580 $ % 2Q10 Change 1Q10 2Q09 % 1,838 1,595 362 45 % % % 62 69 80 17 409 251 5 256 0.19 0.70 0.72 61 1.14 1.17 $ % 2010 % 3 % 3 - 12 % 4 11 (4) % % % 5 1 (6) (3) (3) 46 313 (4) (35) (41) (1) 226 4 230 0.54 0.64 0.66 72 0.88 0.91 (4) (77) (8) 11 (25) 10 % 2,055 1,653 402 43 58 67 78 $ 2010 Change 2009 2009 % 1,838 1,595 362 45 % 12 % 4 11 (4) % % % 62 69 80 % % % (6) (3) (3) 55 309 250 3 253 0.30 0.65 0.68 81 0.80 0.83 $ % 65 313 (15) (1) 226 4 230 0.38 0.64 0.66 72 0.88 0.91 11 (25) 10 % JPMorgan Securities was formerly known as Bear Stearns Private Client Services prior to January 1, 2010. Derived from Morningstar for the United States, the United Kingdom, Luxembourg, France, Hong Kong and Taiwan; and Nomura for Japan. Quartile ranking sourced from Lipper for the United States and Taiwan; Morningstar for the United Kingdom, Luxembourg, France and Hong Kong; and Nomura for Japan. Page 27

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