EARNINGS RELEASE FINANCIAL SUPPLEMENT (REVISED AS OF AUGUST 9, 2012)
SECOND QUARTER 2012 On August 9, 2012, JPMorgan Chase & Co. (“the Firm”) restated its previously-filed interim financial statements for the first quarter 2012. The restatement had the effect of reducing the Firm’s reported net income for 2012 first quarter by $459 million. In addition, on August 8, 2012, the Firm received regulatory guidance that the Firm should amend its Basel I risk-weighted assets at both March 31, 2012 and June 30, 2012. The guidance related to an adjustment to the Firm’s regulatory capital calculations regarding a limited number of market risk models used for certain positions held by the Firm during the first half of the year, including the Chief Investment Office synthetic credit portfolio. As a result of such guidance, certain regulatory capital ratios and risk-weighted assets as of June 30, 2012 and March 31, 2012, were revised. The aforementioned revisions are disclosed in JPMorgan Chase & Co.’s Quarterly Reports on Form 10-Q and Form 10-Q/A for the quarterly periods ended June 30, 2012 and March 31, 2012, respectively. Both reports were filed with the SEC on August 9, 2012, and are available on the Firm’s website (http://investor.shareholder.com/jpmorganchase) and on the Securities and Exchange Commission’s website (www.sec.gov). The revisions to the Firm’s financial statements and capital ratios are reflected in this Earnings Release Financial Supplement.
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 Core Net Interest Income Reconciliation from Reported to Managed Summary
2-3 4 5 6 7 8
Business Detail Line of Business Financial Highlights - Managed Basis Investment Bank Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity
9 10-13 14-20 21-23 24-25 26-28 29-33 34-35
Credit-Related Information
36-41
Market Risk-Related Information
42
Supplemental Detail Capital and Other Selected Balance Sheet Items Mortgage Loan Repurchase Liability Per Share-Related Information
43 44 45
Non-GAAP Financial Measures
46
Glossary of Terms
47-51
Page 1
JPMORGAN CHASE & CO.
CONSOLIDATED FINANCIAL HIGHLIGHTS (in millions, except per share and ratio data)
QUARTERLY TRENDS SELECTED INCOME STATEMENT DATA Reported Basis Total net revenue Total noninterest expense Pre-provision profit Provision for credit losses NET INCOME Managed Basis (a) Total net revenue Total noninterest expense Pre-provision profit Provision for credit losses NET INCOME
2Q12 $
1Q12
22,180 14,966 7,214 214 4,960
$
4Q11
26,052 18,345 7,707 726 4,924
$
3Q11
21,471 14,540 6,931 2,184 3,728
$
2Q11
23,763 15,534 8,229 2,411 4,262
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
26,779 16,842 9,937 1,810 5,431
(15) % (18) (6) (71) 1
(17) % (11) (27) (88) (9)
(14) (18) (6) (71) 1
(16) (11) (25) (88) (9)
$
48,232 33,311 14,921 940 9,884
$
52,000 32,837 19,163 2,979 10,986
(7) % 1 (22) (68) (10)
49,649 33,311 16,338 940 9,884
53,201 32,837 20,364 2,979 10,986
(7) 1 (20) (68) (10)
22,892 14,966 7,926 214 4,960
26,757 18,345 8,412 726 4,924
22,198 14,540 7,658 2,184 3,728
24,368 15,534 8,834 2,411 4,262
27,410 16,842 10,568 1,810 5,431
1.22 1.21
1.20 1.19
0.90 0.90
1.02 1.02
1.28 1.27
2 2
(5) (5)
2.41 2.41
2.57 2.55
(6) (5)
0.30 48.40
0.30 47.48
0.25 46.59
0.25 45.93
0.25 44.77
2
20 8
0.60 48.40
0.50 44.77
20 8
Closing share price (c) Market capitalization
35.73 135,661
45.98 175,737
33.25 125,442
30.12 114,422
40.94 160,083
(22) (23)
(13) (15)
35.73 135,661
40.94 160,083
(13) (15)
COMMON SHARES OUTSTANDING Average: Basic Diluted Common shares at period-end
3,808.9 3,820.5 3,796.8
3,818.8 3,833.4 3,822.0
3,801.9 3,811.7 3,772.7
3,859.6 3,872.2 3,798.9
3,958.4 3,983.2 3,910.2
(1)
(4) (4) (3)
3,813.9 3,827.0 3,796.8
3,970.0 3,998.6 3,910.2
(4) (4) (3)
PER COMMON SHARE DATA Basic earnings Diluted earnings Cash dividends declared (b) Book value
FINANCIAL RATIOS (d) Return on common equity ("ROE") Return on tangible common equity ("ROTCE") (e) Return on assets ("ROA") Return on risk-weighted assets (f)
11 15 0.88 1.52
CAPITAL RATIOS Tier 1 capital ratio Total capital ratio Tier 1 common capital ratio (g)
11.3 14.0 9.9
(a) (b) (c) (d) (e) (f) (g)
%
11 15 0.88 1.57
11.9 14.9 9.8
%
8 11 0.65 1.21
12.3 15.4 10.1
%
9 13 0.76 1.40
12.1 15.3 9.9
%
12 17 0.99 1.82
%
11 15 0.88 1.55
%
13 18 1.03 1.86
%
12.4 15.7 10.1
For further discussion of managed basis, see Reconciliation from Reported to Managed Summary on page 8. On March 13, 2012, the Board of Directors increased the Firm’s quarterly common stock dividend from $0.25 to $0.30 per share. Share prices shown for JPMorgan Chase’s common stock are from the New York Stock Exchange. JPMorgan Chase’s common stock is also listed and traded on the London Stock Exchange and the Tokyo Stock Exchange. Ratios are based upon annualized amounts. ROTCE is a non-GAAP financial ratio, and it measures the Firm’s earnings as a percentage of tangible common equity. For further discussion of this ratio, see page 46. Return on Basel I risk-weighted assets is the annualized earnings of the Firm divided by its average risk-weighted assets. Basel I Tier 1 common capital ratio (“Tier 1 common ratio”) is Tier 1 common capital (“Tier 1 common”) 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 46.
Page 2
JPMORGAN CHASE & CO.
CONSOLIDATED FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio and headcount data)
QUARTERLY TRENDS
SELECTED BALANCE SHEET DATA (period-end) Total assets Wholesale loans Consumer, excluding credit card loans Credit card loans Total Loans Deposits Common stockholders' equity Total stockholders' equity
2Q12
1Q12
4Q11
3Q11
2Q11
$ 2,290,146 302,820 300,046 124,705 727,571 1,115,886 183,772 191,572
$ 2,320,164 290,866 304,770 125,331 720,967 1,128,512 181,469 189,269
$ 2,265,792 283,016 308,427 132,277 723,720 1,127,806 175,773 183,573
$ 2,289,240 259,483 310,235 127,135 696,853 1,092,708 174,487 182,287
$ 2,246,764 248,823 315,390 125,523 689,736 1,048,685 175,079 182,879
Deposits-to-loans ratio
153
Headcount LINE OF BUSINESS NET INCOME/(LOSS) Investment Bank Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity NET INCOME
%
157
262,882
$
$
1,913 2,267 1,030 673 463 391 (1,777) 4,960
%
156
261,453
$
$
1,682 1,753 1,183 591 351 386 (1,022) 4,924
%
157
260,157
$
$
726 533 1,051 643 250 302 223 3,728
%
152
256,663
$
$
1,636 1,161 849 571 305 385 (645) 4,262
250,095
$
$
2,057 383 1,110 607 333 439 502 5,431
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11 (1) % 4 (2) 1 (1) 1 1
2 % 22 (5) (1) 5 6 5 5
$ 2,290,146 302,820 300,046 124,705 727,571 1,115,886 183,772 191,572
%
153 1
14 29 (13) 14 32 1 (74) 1
5
(7) 492 (7) 11 39 (11) NM (9)
$ 2,246,764 248,823 315,390 125,523 689,736 1,048,685 175,079 182,879 %
152
262,882
$
$
3,595 4,020 2,213 1,264 814 777 (2,799) 9,884
2 % 22 (5) (1) 5 6 5 5 %
250,095
$
$
4,427 (16) 2,644 1,153 649 905 1,224 10,986
5
(19) NM (16) 10 25 (14) NM (10)
Page 3
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 (a) Amortization of intangibles TOTAL NONINTEREST EXPENSE Income before income tax expense Income tax expense NET INCOME PER COMMON SHARE DATA Basic earnings Diluted earnings FINANCIAL RATIOS Return on common equity (b) Return on tangible common equity (b)(c) Return on assets (b) Return on risk-weighted assets (c) Effective income tax rate Overhead ratio
(a) (b) (c) (d) (e)
$
$
2Q12 1,257 (427) 1,546 3,461 1,014 2,265 1,412 506 11,034 14,099 2,953 11,146 22,180
$
1Q12 4Q11 1,381 $ 1,133 2,722 750 1,517 1,620 3,392 3,337 536 47 2,010 725 1,316 1,359 1,512 (d) 369 14,386 9,340 14,701 15,054 3,035 2,923 11,666 12,131 26,052 21,471
$
3Q11 1,052 1,370 1,643 3,448 607 1,380 1,666 780 11,946 15,160 3,343 11,817 23,763
$
2Q12 Change 1Q12 2Q11 (9) % (35) % NM NM 2 (6) 2 (7) 89 21 13 105 7 (17) (67) (43) (23) (26) (4) (10) (3) (22) (4) (6) (15) (17)
2Q11 1,933 3,140 1,649 3,703 837 1,103 1,696 882 14,943 15,632 3,796 11,836 26,779
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011 2,638 $ 3,726 (29) % 2,295 7,885 (71) 3,063 3,195 (4) 6,853 7,309 (6) 1,550 939 65 4,275 616 NM 2,728 3,133 (13) 2,018 1,456 39 (10) 25,420 28,259 28,800 31,079 (7) 5,988 7,338 (18) (4) 22,812 23,741 48,232 52,000 (7)
214
726
2,184
2,411
1,810
(71)
(88)
940
2,979
(68)
7,427 1,080 1,282 1,857 642 2,487 191 14,966 7,000 2,040 4,960
8,613 961 1,271 1,795 680 4,832 193 18,345 6,981 2,057 4,924
6,297 1,047 1,282 2,021 814 2,872 207 14,540 4,747 1,019 3,728
6,908 935 1,248 1,860 926 3,445 212 15,534 5,818 1,556 4,262
7,569 935 1,217 1,866 744 4,299 212 16,842 8,127 2,696 5,431
(14) 12 1 3 (6) (49) (1) (18) (1) 1
(2) 16 5 (14) (42) (10) (11) (14) (24) (9)
16,040 2,041 2,553 3,652 1,322 7,319 384 33,311 13,981 4,097 9,884
15,832 1,913 2,417 3,601 1,403 7,242 429 32,837 16,184 5,198 10,986
1 7 6 1 (6) 1 (10) 1 (14) (21) (10)
2 2
(5) (5)
2.57 2.55
(6) (5)
$
1.22 1.21
11 15 0.88 1.52 29 67
$
%
$
1.20 1.19
11 15 0.88 1.57 29 70
$
%
0.90 0.90
8 % 11 0.65 1.21 21 (e) 68
$
$
1.02 1.02
9 % 13 0.76 1.40 27 (e) 65
$
$
1.28 1.27
12 17 0.99 1.82 33 63
%
$
$
$
2.41 2.41
11 15 0.88 1.55 29 69
$
%
13 18 1.03 1.86 32 63
%
Includes litigation expense of $0.3 billion, $2.7 billion, $0.6 billion, $1.3 billion and $1.9 billion for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $3.0 billion and $3.0 billion for the six months ended June 30, 2012 and 2011, respectively. Ratios are based upon annualized amounts. For further discussion of ROTCE and return on Basel I risk-weighted assets, see pages 2 and 46. Includes a $1.1 billion benefit from the Washington Mutual bankruptcy settlement. Reflects lower reported pretax income and changes in the proportion of income subject to U.S. federal and state and local taxes, as well as tax benefits associated with state and local income taxes.
Page 4
JPMORGAN CHASE & CO.
CONSOLIDATED BALANCE SHEETS (in millions)
Jun 30, 2012 ASSETS 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 Deposits Federal funds purchased and securities loaned or sold under repurchase agreements Commercial paper Other borrowed funds Trading liabilities: Debt and equity instruments Derivative payables Accounts payable and other liabilities Beneficial interests issued by consolidated VIEs Long-term debt TOTAL LIABILITIES STOCKHOLDERS' EQUITY Preferred stock Common stock Capital surplus Retained earnings Accumulated other comprehensive income Shares held in RSU Trust, at cost Treasury stock, at cost TOTAL STOCKHOLDERS' EQUITY TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
44,866 130,383
Mar 31, 2012 $
55,383 115,028
Dec 31, 2011 $
59,602 85,279
Sep 30, 2011 $
56,766 128,877
Jun 30, 2011 $
30,466 169,880
255,188 138,209
240,484 135,650
235,314 142,462
248,042 131,561
213,362 121,493
331,781 85,543 354,595 727,571 23,791 703,780 67,939 14,206 48,131 7,118 2,813 105,594 $ 2,290,146
370,623 85,010 381,742 720,967 25,871 695,096 64,833 14,213 48,208 8,039 3,029 102,826 $ 2,320,164
351,486 92,477 364,793 723,720 27,609 696,111 61,478 14,041 48,188 7,223 3,207 104,131 $ 2,265,792
352,678 108,853 339,349 696,853 28,350 668,503 72,080 13,812 48,180 7,833 3,396 109,310 $ 2,289,240
$ 1,115,886
$ 1,128,512
$ 1,127,806
261,657 50,563 21,689
250,483 50,577 27,298
213,532 51,631 21,908
70,812 76,249 207,126 55,053 239,539 2,098,574
71,529 74,767 204,148 67,750 255,831 2,130,895
7,800 4,105 94,201 95,518 2,272 (38) (12,286) 191,572 $ 2,290,146
7,800 4,105 94,070 91,888 2,645 (38) (11,201) 189,269 $ 2,320,164
Jun 30, 2012 Change Mar 31, Jun 30, 2012 2011 (19) % 13
47 % (23)
6 2
20 14
381,339 77,383 324,741 689,736 28,520 661,216 80,292 13,679 48,882 12,243 3,679 108,109 $ 2,246,764
(10) 1 (7) 1 (8) 1 5 (11) (7) 3 (1)
(13) 11 9 5 (17) 6 (15) 4 (2) (42) (24) (2) 2
$ 1,092,708
$ 1,048,685
(1)
6
238,585 51,073 29,318
254,124 51,160 30,208
4 (21)
3 (1) (28)
66,718 74,977 202,895 65,977 256,775 2,082,219
76,592 79,249 199,769 65,971 273,688 2,106,953
84,865 63,668 184,490 67,457 279,228 2,063,885
(1) 2 1 (19) (6) (2)
(17) 20 12 (18) (14) 2
7,800 4,105 95,602 88,315 944 (38) (13,155) 183,573 $ 2,265,792
7,800 4,105 95,078 85,726 1,964 (53) (12,333) 182,287 $ 2,289,240
7,800 4,105 95,061 82,612 1,638 (53) (8,284) 182,879 $ 2,246,764
4 (14) (10) 1 (1)
(1) 16 39 28 (48) 5 2
Page 5
JPMORGAN CHASE & CO.
CONDENSED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS (in millions, except rates)
QUARTERLY TRENDS AVERAGE BALANCES ASSETS Deposits with banks Federal funds sold and securities purchased under resale agreements Securities borrowed Trading assets - debt instruments Securities Loans Other assets (a) 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, short-term and other liabilities (b) 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 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 (a) Total interest-earning assets INTEREST-BEARING LIABILITIES Interest-bearing deposits Federal funds purchased and securities loaned or sold under repurchase agreements Commercial paper Trading liabilities - debt, short-term and other liabilities (b) Beneficial interests issued by consolidated VIEs Long-term debt Total interest-bearing liabilities INTEREST RATE SPREAD NET YIELD ON INTEREST-EARNING ASSETS
(a) (b) (c)
2Q12 $
1Q12
111,441
$
4Q11
110,817
$
3Q11
89,145
$
2Q11
116,062
$
75,801
242,184 129,390 235,990 366,130 725,252 33,240 1,843,627 110,718 89,345 222,606 $ 2,266,296
230,444 133,080 228,397 369,273 715,553 33,949 1,821,513 126,938 90,446 219,979 $ 2,258,876
230,494 143,745 241,645 358,698 706,856 37,343 1,807,926 116,720 94,925 243,578 $ 2,263,149
211,884 131,615 257,950 331,330 692,794 42,760 1,784,395 119,890 96,612 229,650 $ 2,230,547
202,036 124,806 285,104 342,248 686,111 48,716 1,764,822 137,611 82,860 207,250 $ 2,192,543
$
$
$
$
$
744,103
732,766
(2)
230,355 44,930 204,161 65,322 269,542 1,573,732 337,618 8,188 72,965 87,804 2,080,307 7,800 175,042 182,842
235,438 47,027 215,064 66,545 279,235 1,584,210 297,610 1,948 75,828 88,697 2,048,293 7,800 174,454 182,254
281,843 41,682 212,878 69,399 273,934 1,612,502 247,137 3,289 66,009 81,729 2,010,666 7,800 174,077 181,877
7 1 2 (8) (2) 3 (14) 3 (1) 2 2
$ 2,266,296
$ 2,258,876
$ 2,263,149
$ 2,230,547
$ 2,192,543
0.75
%
740,901
5 (3) 3 (1) 1 (2) 1 (13) (1) 1 -
233,415 48,359 199,588 65,360 255,246 1,561,052 339,398 14,060 76,069 82,786 2,073,365 7,800 177,711 185,511
%
759,422
1
249,186 48,791 203,348 60,046 250,494 1,555,968 349,143 12,096 78,704 81,564 2,077,475 7,800 181,021 188,821
0.49
759,084
0.63
%
0.76
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
-
%
47 20 4 (17) 7 6 (32) 4 (20) 8 7 3 2
%
$
$
56,584
236,314 131,235 232,193 367,702 720,403 33,594 1,832,570 118,828 89,896 221,292 $ 2,262,586
202,256 119,726 280,334 330,657 687,117 49,299 1,725,973 139,769 84,141 198,858 $ 2,148,741
$
$
(12) 17 (4) (13) (9) (4) 41 268 19 3 4 4 3
111,129
751,593
280,056 39,273 203,398 71,156 271,559 1,582,374 238,347 5,568 68,634 74,259 1,969,182 7,800 171,759 179,559
$ 2,262,586
$ 2,148,741
0.52
%
17 10 (17) 11 5 (32) 6 (15) 7 11 5
716,932
241,301 48,575 201,467 62,703 252,871 1,558,510 344,271 13,078 77,387 82,174 2,075,420 7,800 179,366 187,166
%
96 %
%
0.55
0.87
1.07 (0.04) (c) 3.96 2.42 4.96 0.74 3.12
1.14 0.11 4.30 2.60 5.14 0.83 3.28
1.19 0.04 4.22 2.57 5.22 1.51 3.34
1.28 0.05 4.32 2.66 5.28 1.47 3.40
1.20 0.10 4.23 3.10 5.36 1.30 3.58
1.10 0.04 4.13 2.51 5.05 0.78 3.20
1.14 0.13 4.27 3.00 5.49 1.25 3.66
0.40
0.38
0.43
0.53
0.61
0.39
0.58
0.26 0.18 0.66 1.10 2.47 0.76
0.15 0.15 0.61 1.12 2.71 0.78
0.18 0.13 0.67 1.06 2.15 0.74
0.18 0.16 1.05 1.05 2.10 0.84
0.29 0.19 1.26 1.17 2.31 0.94
0.21 0.16 0.63 1.11 2.59 0.77
0.23 0.20 1.34 1.18 2.35 0.94
2.36% 2.47%
2.50% 2.61%
2.60% 2.70%
2.56% 2.66%
2.64% 2.72%
2.43% 2.54%
2.72% 2.80%
5 (14) 24 (1) (12) (7) (2) 44 135 13 11 5 4 4 5
%
Includes margin loans. Includes brokerage customer payables. The negative yield on Securities borrowed during the second quarter of 2012 is a result of increased client-driven demand for certain securities combined with the impact of low interest rates.
Page 6
JPMORGAN CHASE & CO.
CORE NET INTEREST INCOME (in millions, except ratios)
In addition to reviewing JPMorgan Chase's net interest income on a managed basis, management also reviews core net interest income to assess the performance of its core lending, investing (including asset/liability management) and deposit-raising activities, excluding the impact of IB's market-based activities. The core data presented below are non-GAAP financial measures due to the exclusion of IB's market-based net interest income and the related assets. For a further discussion of these measures, see Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 76-78 of JPMorgan Chase’s 2011 Annual Report. 4Q11 3Q11 2Q11
QUARTERLY TRENDS CORE NET INTEREST INCOME DATA (a) Net interest income - managed basis (b) Impact of market-based net interest income Core net interest income Average interest-earning assets - managed basis Impact of market-based earning assets Core average interest-earning assets
Net interest yield on interest-earning assets managed basis Net interest yield on market-based activity Core net interest yield on interest-earning assets
(a) (b)
2Q12 11,341 1,345 $ 9,996
1Q12 11,837 1,569 $ 10,268
$
$ 1,843,627 505,282 $ 1,338,345
2.47 1.07 3.00
4Q11 12,288 1,800 $ 10,488
$
$ 1,821,513 490,750 $ 1,330,763
%
2.61 1.29 3.10
3Q11 11,950 1,866 $ 10,084
$
%
2.70 1.42 3.19
2Q11 11,957 1,829 $ 10,128
$
$ 1,807,926 502,312 $ 1,305,614
$
$ 1,784,395 512,215 $ 1,272,180
%
2.66 1.45 3.14
2Q12 Change 1Q12 2Q11 (4) % (5) % (14) (26) (3) (1)
$ 1,764,822 543,458 $ 1,221,364
%
2.72 1.35 3.33
1 3 1
%
4 (7) 10
$ $
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011 23,178 $ 23,981 (3) % 2,914 3,663 (20) 20,264 $ 20,318 -
$ 1,832,570 498,016 $ 1,334,554
2.54 1.18 3.05
$ 1,725,973 532,253 $ 1,193,720
%
2.80 1.39 3.43
6 (6) 12
%
Includes core lending, investing and deposit-raising activities on a managed basis, across Retail Financial Services, Card Services & Auto, Commercial Banking, Treasury & Security Services, Asset Management, and Corporate/Private Equity, as well as Investment Banking credit portfolio loans. For a reconciliation of net interest income on a reported and managed basis, see Reconciliation from Reported to Managed Summary on page 8.
Page 7
JPMORGAN CHASE & CO.
RECONCILIATION FROM REPORTED TO MANAGED SUMMARY (in millions, except ratios) The Firm prepares its consolidated financial statements using accounting principles generally accepted in the U.S. ("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, refer to the notes on Non-GAAP Financial Measures on page 46. 2Q11 1Q11 The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.
QUARTERLY TRENDS 2Q12 OTHER INCOME Other income - reported Fully taxable-equivalent ("FTE") adjustments (a) Other income - managed TOTAL NONINTEREST REVENUE Total noninterest revenue - reported Fully taxable-equivalent adjustments (a) Total noninterest revenue - managed NET INTEREST INCOME Net interest income - reported Fully taxable-equivalent adjustments (a) Net interest income - managed TOTAL NET REVENUE Total net revenue - reported Fully taxable-equivalent adjustments (a) Total net revenue - managed PRE-PROVISION PROFIT Pre-provision profit - reported Fully taxable-equivalent adjustments (a) Pre-provision profit - managed INCOME BEFORE INCOME TAX EXPENSE Income before income tax expense - reported Fully taxable-equivalent adjustments (a) Income before income tax expense - managed INCOME TAX EXPENSE Income tax expense - reported Fully taxable-equivalent adjustments (a) Income tax expense - managed OVERHEAD RATIO Overhead ratio - reported Overhead ratio - managed
(a)
$ $
$ $
$ $
$ $
$ $
$ $
$ $
1Q12
506 517 1,023
$
11,034 517 11,551
$
11,146 195 11,341
$
22,180 712 22,892
$
7,214 712 7,926
$
7,000 712 7,712
$
2,040 712 2,752
$
67 65
$
$
$
$
$
$
$
%
4Q11
1,512 534 2,046
$
14,386 534 14,920
$
11,666 171 11,837
$
26,052 705 26,757
$
7,707 705 8,412
$
6,981 705 7,686
$
2,057 705 2,762
$
70 69
$
$
$
$
$
$
$
%
3Q11
369 570 939
$
9,340 570 9,910
$
12,131 157 12,288
$
21,471 727 22,198
$
6,931 727 7,658
$
4,747 727 5,474
$
1,019 727 1,746
$
68 66
$
$
$
$
$
$
$
2Q11
780 472 1,252
$
11,946 472 12,418
$
11,817 133 11,950
$
23,763 605 24,368
$
8,229 605 8,834
$
5,818 605 6,423
$
1,556 605 2,161
$
%
65 64
$
$
$
$
$
$
$
%
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
882 510 1,392
(67) % (3) (50)
(43) % 1 (27)
$
14,943 510 15,453
(23) (3) (23)
(26) 1 (25)
$
11,836 121 11,957
(4) 14 (4)
(6) 61 (5)
$
26,779 631 27,410
(15) 1 (14)
(17) 13 (16)
$
9,937 631 10,568
(6) 1 (6)
(27) 13 (25)
$
8,127 631 8,758
1 -
(14) 13 (12)
$
2,696 631 3,327
(1) 1 -
(24) 13 (17)
$
63 61
%
$
$
$
$
$
$
$
2,018 1,051 3,069
$
25,420 1,051 26,471
$
22,812 366 23,178
$
48,232 1,417 49,649
$
14,921 1,417 16,338
$
13,981 1,417 15,398
$
4,097 1,417 5,514
$
69 67
$
$
$
$
$
$
$
%
1,456 961 2,417
39 9 27
28,259 961 29,220
(10) 9 (9)
23,741 240 23,981
(4) 53 (3)
52,000 1,201 53,201
(7) 18 (7)
19,163 1,201 20,364
(22) 18 (20)
16,184 1,201 17,385
(14) 18 (11)
5,198 1,201 6,399
(21) 18 (14)
63 62
%
Predominantly recognized in Investment Bank and Commercial Banking business segments and Corporate/Private Equity.
Page 8
%
JPMORGAN CHASE & CO.
LINE OF BUSINESS FINANCIAL HIGHLIGHTS - MANAGED BASIS (in millions)
QUARTERLY TRENDS 2Q12 TOTAL NET REVENUE (FTE) Investment Bank (a) Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity (a) TOTAL NET REVENUE TOTAL NONINTEREST EXPENSE Investment Bank Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity TOTAL NONINTEREST EXPENSE PRE-PROVISION PROFIT/(LOSS) Investment Bank (a) Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity (a) PRE-PROVISION PROFIT PROVISION FOR CREDIT LOSSES Investment Bank Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity PROVISION FOR CREDIT LOSSES NET INCOME/(LOSS) Investment Bank Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity TOTAL NET INCOME
(a)
$
$
$
$
$
$
$
$
$
$
1Q12
6,766 7,935 4,525 1,691 2,152 2,364 (2,541) 22,892
$
3,802 4,726 2,096 591 1,491 1,701 559 14,966
$
2,964 3,209 2,429 1,100 661 663 (3,100) 7,926
$
21 (555) 734 (17) 8 34 (11) 214
$
1,913 2,267 1,030 673 463 391 (1,777) 4,960
$
$
$
$
$
$
4Q11
7,321 7,649 4,714 1,657 2,014 2,370 1,032 26,757
$
4,738 5,009 2,029 598 1,473 1,729 2,769 18,345
$
2,583 2,640 2,685 1,059 541 641 (1,737) 8,412
$
(5) (96) 738 77 2 19 (9) 726
$
1,682 1,753 1,183 591 351 386 (1,022) 4,924
$
$
$
$
$
$
3Q11
4,358 6,395 4,814 1,687 2,022 2,284 638 22,198
$
2,969 4,722 2,025 579 1,563 1,752 930 14,540
$
$
$
1,389 1,673 2,789 1,108 459 532 (292) 7,658
$
272 779 1,060 40 19 24 (10) 2,184
$
726 533 1,051 643 250 302 223 3,728
$
$
$
$
2Q11
6,369 7,535 4,775 1,588 1,908 2,316 (123) 24,368
$
3,799 4,565 2,115 573 1,470 1,796 1,216 15,534
$
2,570 2,970 2,660 1,015 438 520 (1,339) 8,834
$
54 1,027 1,264 67 (20) 26 (7) 2,411
$
1,636 1,161 849 571 305 385 (645) 4,262
$
$
$
$
$
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
7,314 7,142 4,761 1,627 1,932 2,537 2,097 27,410
(8) % 4 (4) 2 7 NM (14)
(7) % 11 (5) 4 11 (7) NM (16)
$
4,332 5,271 1,988 563 1,453 1,794 1,441 16,842
(20) (6) 3 (1) 1 (2) (80) (18)
(12) (10) 5 5 3 (5) (61) (11)
$
2,982 1,871 2,773 1,064 479 743 656 10,568
15 22 (10) 4 22 3 (78) (6)
(1) 72 (12) 3 38 (11) NM (25)
$
(183) 994 944 54 (2) 12 (9) 1,810
NM (478) (1) NM 300 79 (22) (71)
NM NM (22) NM NM 183 (22) (88)
$
2,057 383 1,110 607 333 439 502 5,431
14 29 (13) 14 32 1 (74) 1
(7) 492 (7) 11 39 (11) NM (9)
$
$
$
$
$
$
14,087 15,584 9,239 3,348 4,166 4,734 (1,509) 49,649
$
8,540 9,735 4,125 1,189 2,964 3,430 3,328 33,311
$
5,547 5,849 5,114 2,159 1,202 1,304 (4,837) 16,338
$
16 (651) 1,472 60 10 53 (20) 940
$
3,595 4,020 2,213 1,264 814 777 (2,799) 9,884
$
$
$
$
$
$
15,547 12,608 9,552 3,143 3,772 4,943 3,636 53,201
(9) % 24 (3) 7 10 (4) NM (7)
9,348 10,171 3,905 1,126 2,830 3,454 2,003 32,837
(9) (4) 6 6 5 (1) 66 1
6,199 2,437 5,647 2,017 942 1,489 1,633 20,364
(11) 140 (9) 7 28 (12) NM (20)
(612) 2,193 1,297 101 2 17 (19) 2,979
NM NM 13 (41) 400 212 (5) (68)
4,427 (16) 2,644 1,153 649 905 1,224 10,986
(19) NM (16) 10 25 (14) NM (10)
Corporate/Private Equity includes an adjustment to offset Investment Bank’s (“IB”) inclusion of a credit allocation income/(expense) to Treasury & Securities Services (“TSS”) in total net revenue; TSS reports the credit allocation as a separate line on its income statement (not within total net revenue).
Page 9
JPMORGAN CHASE & CO.
INVESTMENT BANK FINANCIAL HIGHLIGHTS (in millions, except ratio data)
QUARTERLY TRENDS 2Q12 INCOME STATEMENT REVENUE Investment banking fees Principal transactions (a) Asset management, administration and commissions All other income (b) Noninterest revenue Net interest income TOTAL NET REVENUE (c)
$
Provision for credit losses
1Q12
1,245 3,063 499 235 5,042 1,724 6,766
$
21
4Q11
1,375 3,210 565 268 5,418 1,903 7,321
$
(5)
3Q11
1,119 364 477 309 2,269 2,089 4,358
$
2Q11
1,039 2,253 563 438 4,293 2,076 6,369
272
54
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
1,922 2,309 548 454 5,233 2,081 7,314 (183)
(9) % (5) (12) (12) (7) (9) (8)
(35) % 33 (9) (48) (4) (17) (7)
NM
NM
$
2,620 6,273 1,064 503 10,460 3,627 14,087
$
16
3,701 5,707 1,167 834 11,409 4,138 15,547
(29) % 10 (9) (40) (8) (12) (9)
(612)
NM
NONINTEREST EXPENSE Compensation expense Noncompensation expense TOTAL NONINTEREST EXPENSE
2,011 1,791 3,802
2,901 1,837 4,738
1,172 1,797 2,969
1,850 1,949 3,799
2,564 1,768 4,332
(31) (3) (20)
(22) 1 (12)
4,912 3,628 8,540
5,858 3,490 9,348
(16) 4 (9)
Income before income tax expense Income tax expense NET INCOME
2,943 1,030 1,913
2,588 906 1,682
1,117 391 726
2,516 880 1,636
3,165 1,108 2,057
14 14 14
(7) (7) (7)
5,531 1,936 3,595
6,811 2,384 4,427
(19) (19) (19)
$
FINANCIAL RATIOS ROE ROA Overhead ratio Compensation expense as a percent of total net revenue (d) REVENUE BY BUSINESS Investment banking fees: Advisory Equity underwriting Debt underwriting Total investment banking fees Fixed income markets (e) Equity markets (f) Credit portfolio (b)(g) Total net revenue
(a) (b) (c) (d) (e) (f) (g)
19 0.97 56 30
$
$
356 250 639 1,245 3,734 1,243 544 6,766
$
%
17 0.86 65 40
$
$
281 276 818 1,375 4,664 1,294 (12) 7,321
$
%
7 0.36 68 27
$
$
397 169 553 1,119 2,491 779 (31) 4,358
$
%
16 0.81 60 29
$
$
365 178 496 1,039 3,328 1,424 578 6,369
$
%
21 0.98 59 35
$
$
601 455 866 1,922 4,280 1,223 (111) 7,314
$
%
18 0.91 61 35
27 (9) (22) (9) (20) (4) NM (8)
(41) (45) (26) (35) (13) 2 NM (7)
$
$
637 526 1,457 2,620 8,398 2,537 532 14,087
$
%
22 1.08 60 38
$
$
1,030 834 1,837 3,701 9,518 2,629 (301) 15,547
%
(38) (37) (21) (29) (12) (3) NM (9)
Principal transactions included debit valuation adjustments (“DVA”) related to derivatives and structured liabilities measured at fair value. DVA gains/(losses) were $755 million, ($907) million, ($567) million, $1.9 billion and $165 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $(152) million and $119 million for the six months ended June 30, 2012 and 2011, respectively. All other income included lending- and deposit-related fees. In addition, IB manages traditional credit exposures related to Global Corporate Bank ("GCB") on behalf of IB and TSS, and IB and TSS share the economics related to the Firm’s GCB clients. IB recognizes this sharing agreement also within 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 $494 million, $509 million, $510 million, $440 million and $493 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $1.0 billion and $931 million for the six months ended June 30, 2012 and 2011, respectively. Compensation expense as a percentage of total net revenue excluding DVA was 33%, 35%, 24%, 41% and 36% for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and 34% and 38% for the six months ended June 30, 2012 and 2011, respectively. Fixed income markets primarily include revenue related to market-making across global fixed income markets, including foreign exchange, interest rate, credit and commodities markets. Includes DVA gains/(losses) of $241 million, ($352) million, ($135) million, $529 million and $64 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $(111) million and $159 million for the six months ended June 30, 2012 and 2011, respectively. Equity markets primarily include revenue related to market-making across global equity products, including cash instruments, derivatives, convertibles and Prime Services. Includes DVA gains/(losses) of $200 million, ($130) million, ($27) million, $377 million and $78 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $70 million and $6 million for the six months ended June 30, 2012 and 2011, respectively. Credit portfolio revenue includes net interest income, fees and loan sale activity, as well as gains or losses on securities received as part of a loan restructuring, for IB’s credit portfolio. Credit portfolio revenue also includes the results of risk management related to the Firm’s lending and derivative activities. Includes DVA gains/(losses) of $314 million, ($425) million, ($405) million, $979 million and $23 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $(111) million and $(46)million for the six months ended June 30, 2012 and 2011, respectively.
Page 10
JPMORGAN CHASE & CO.
INVESTMENT BANK FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except headcount and ratio data)
QUARTERLY TRENDS 2Q12 SELECTED BALANCE SHEET DATA (period-end) Total assets Loans: Loans retained (a) Loans held-for-sale and 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: Loans retained (a) Loans held-for-sale and loans at fair value Total loans Adjusted assets (b) Equity
$
1Q12 $
72,159 2,278 74,437 40,000
$
Headcount CREDIT DATA AND QUALITY STATISTICS Net charge-offs/(recoveries) Nonperforming assets: Nonaccrual loans: Nonaccrual loans retained (a)(c) Nonaccrual loans held-for-sale and loans at fair value Total nonaccrual loans
829,655
$
792,628 304,203 74,965
812,959
4Q11 $
67,213 5,451 72,664 40,000
$
789,569 313,267 76,225
3Q11
776,430
$
68,208 2,915 71,123 40,000
$
824,733
2Q11 $
58,163 2,311 60,474 40,000
790,644 313,005 76,786
$
803,667 329,984 79,044
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
809,630
2
%
2
56,107 3,466 59,573 40,000
7 (58) 2 -
29 (34) 25 -
841,355 374,694 69,346
(3) (2)
(6) (19) 8
%
$
829,655
$
72,159 2,278 74,437 40,000
$
791,099 308,735 75,595
$
809,630
2 %
56,107 3,466 59,573 40,000
29 (34) 25 -
828,662 371,841 68,409
(5) (17) 11
70,837 3,158 73,995 560,356 40,000
66,710 2,767 69,477 559,566 40,000
62,698 2,082 64,780 564,158 40,000
57,265 2,431 59,696 597,513 40,000
54,590 4,154 58,744 628,475 40,000
6 14 7 -
30 (24) 26 (11) -
68,774 2,963 71,737 559,961 40,000
53,983 3,995 57,978 619,805 40,000
27 (26) 24 (10) -
26,553
25,707
25,999
26,615
27,716
3
(4)
26,553
27,716
(4)
7
71
NM
130
NM
(10)
$
(35)
$
199
$
(168)
$
$
(45)
$
657
695
1,035
1,274
1,494
(5)
(56)
657
1,494
(56)
158 815
182 877
166 1,201
150 1,424
193 1,687
(13) (7)
(18) (52)
158 815
193 1,687
(18) (52)
Derivative receivables (d) 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
451 68 1,334
317 79 1,273
293 79 1,573
281 77 1,782
213 83 1,983
42 (14) 5
112 (18) (33)
451 68 1,334
213 83 1,983
112 (18) (33)
1,419 533 1,952
1,386 530 1,916
1,436 418 1,854
1,337 444 1,781
1,178 383 1,561
2 1 2
20 39 25
1,419 533 1,952
1,178 383 1,561
20 39 25
Net charge-off/(recovery) rate (a) Allow. for loan losses to period-end loans retained (a) Allow. for loan losses to nonaccrual loans retained (a)(c) Nonaccrual loans to total period-end loans
(0.06) % 1.97 216 1.09
(0.21) % 2.06 199 1.21
(a) (b) (c) (d)
1.26 2.11 139 1.69
%
(1.16) % 2.30 105 2.35
0.05 2.10 79 2.83
%
(0.13) % 1.97 216 1.09
0.49 2.10 79 2.83
%
Loans retained included credit portfolio loans, leveraged leases and other held-for-investment loans. Adjusted assets, a non-GAAP financial measure, is presented to assist the reader in comparing IB’s asset and capital levels with those of other investment banks in the securities industry. For further discussion of adjusted assets, see page 46. Allowance for loan losses of $201 million, $225 million, $263 million, $320 million and $377 million were held against these nonaccrual loans at June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively. Prior to the first quarter of 2012, reported amounts had only included defaulted derivatives; effective in the first quarter of 2012, reported amounts in all periods include both defaulted derivatives as well as derivatives that have been risk rated as nonperforming.
Page 11
JPMORGAN CHASE & CO.
INVESTMENT BANK FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio and rankings data)
QUARTERLY TRENDS 2Q12 MARKET RISK - 95% CONFIDENCE LEVEL AVERAGE TRADING AND CREDIT PORTFOLIO VAR Trading activities: Fixed income Foreign exchange Equities Commodities and other Diversification benefit to trading VaR (a) Total trading VaR (b) Credit portfolio VaR (c) Diversification benefit to trading and credit portfolio VaR (a) Total trading and credit portfolio VaR
$
$
1Q12
66 10 20 13 (44) 65
$
25 (15) 75
60 11 17 21 (46) 63 32 (14) 81
$
SIX MONTHS ENDED JUNE 30, 2012 MARKET SHARES AND RANKINGS (d) Global investment banking fees (e) Debt, equity and equity-related Global U.S. Syndicated loans Global U.S. Long-term debt (f) Global U.S. Equity and equity-related Global (g) U.S. Announced M&A (h) Global U.S.
(a) (b) (c) (d)
(e) (f) (g) (h)
Market Share 7.6
%
Rankings #1
4Q11
$
$
3Q11
56 12 19 20 (50) 57
$
39 (21) 75
48 10 19 15 (39) 53 38 (21) 70
$
2Q11
$
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
45 9 25 16 (37) 58 27 (8) 77
10 % (9) 18 (38) 4 3
47 % 11 (20) (19) (19) 12
(22) (7) (7)
(7) (88) (3)
$
$
63 11 19 17 (46) 64 29 (15) 78
$
$
47 10 27 15 (38) 61 27 (8) 80
34 % 10 (30) 13 (21) 5 7 (88) (3)
FULL YEAR 2011 Market Share 8.0
%
Rankings #1
7.1 11.3
1 1
6.7 11.1
1 1
9.9 18.2
1 1
10.8 21.2
1 1
7.0 11.2
1 1
6.7 11.2
1 1
8.2 11.1
3 4
6.8 12.5
3 1
20.0 20.7
2 2
18.2 26.7
2 2
Average portfolio VaR was less than the sum of the VaR of the components described above, due to portfolio diversification. The diversification effect reflects the fact that the risks are not perfectly correlated. Trading VaR includes substantially all market-making and client-driven activities, as well as certain risk management activities in IB. It also captures the credit spread sensitivities of certain mortgage products and syndicated lending facilities that the Firm intends to distribute. Notwithstanding, particular risk parameters of certain products are not fully captured, for example, correlation risk. Trading VaR does not include the DVA 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 the fair value of hedges of the retained loan portfolio, which are all reported in principal transactions revenue. This VaR does not include the retained loan portfolio, which is not reported at fair value. Source: Dealogic. Global Investment Banking fees reflects the ranking of fees and market share. The remaining rankings reflect transaction volume rank and market share. Global announced M&A is based on transaction value at announcement; because of joint M&A assignments, M&A market share of all participants will add up to more than 100%. All other transaction volume-based rankings are based on proceeds, with full credit to each book manager/equal if joint. Global investment banking fees rankings exclude money market, short-term debt and shelf deals. Long-term debt rankings include investment-grade, high-yield, supranationals, sovereigns, agencies, covered bonds, asset-backed securities and mortgage-backed securities; and exclude money market, short-term debt, and U.S. municipal securities. Global equity and equity-related ranking includes rights offerings and Chinese A-Shares. U.S. announced M&A represents any U.S. involvement ranking.
Page 12
JPMORGAN CHASE & CO.
INVESTMENT BANK FINANCIAL HIGHLIGHTS, CONTINUED (in millions)
QUARTERLY TRENDS 2Q12 INTERNATIONAL METRICS Total net revenue: (a) Europe/Middle East/Africa Asia/Pacific Latin America/Caribbean North America Total net revenue Loans (period-end): (b) Europe/Middle East/Africa Asia/Pacific Latin America/Caribbean North America Total loans
(a) (b)
$
$
$
$
1Q12
2,106 662 304 3,694 6,766
$
18,804 8,268 4,195 40,892 72,159
$
$
$
4Q11
2,400 758 339 3,824 7,321
$
16,358 7,969 3,764 39,122 67,213
$
$
$
3Q11
1,353 502 240 2,263 4,358
$
15,905 7,889 3,148 41,266 68,208
$
$
$
2Q11
1,995 948 175 3,251 6,369
$
15,361 6,892 3,222 32,688 58,163
$
$
$
2,478 762 337 3,737 7,314
15,370 6,211 2,633 31,893 56,107
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
(12) % (13) (10) (3) (8)
15 4 11 5 7
(15) % (13) (10) (1) (7)
22 33 59 28 29
$
$
$
$
4,506 1,420 643 7,518 14,087
$
18,804 8,268 4,195 40,892 72,159
$
$
$
5,070 1,884 664 7,929 15,547
15,370 6,211 2,633 31,893 56,107
(11) % (25) (3) (5) (9)
22 33 59 28 29
Regional revenue is based primarily on the domicile of the client and/or location of the trading desk. Includes retained loans based on the domicile of the client.
Page 13
JPMORGAN CHASE & CO.
RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratio and headcount data)
QUARTERLY TRENDS 2Q12 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
$
Provision for credit losses
1Q12
777 522 2,265 344 126 4,034 3,901 7,935
$
(555)
4Q11
748 527 2,008 315 126 3,724 3,925 7,649
$
(96)
3Q11
808 494 723 305 107 2,437 3,958 6,395
$
2Q11
833 513 1,380 611 136 3,473 4,062 7,535
$
813 499 1,100 572 131 3,115 4,027 7,142
NM
(10) (2) (6)
19 (27) (17) (10)
4,603 5,031 101 9,735
38 52 29
329 203 492
6,500 2,480 4,020
2,101 2,404 60 4,565
1,937 3,274 60 5,271
Income before income tax expense Income tax expense NET INCOME/(LOSS)
3,764 1,497 2,267
2,736 983 1,753
894 361 533
1,943 782 1,161
877 494 383
SELECTED BALANCE SHEET DATA (period-end) Total assets Loans: Loans retained Loans held-for-sale and loans at fair value (b) Total loans Deposits Equity SELECTED BALANCE SHEET DATA (average) Total assets Loans: Loans retained Loans held-for-sale and loans at fair value (b) Total loans Deposits Equity Headcount
(a)
(b)
34 60 59
$
264,320
%
27 65 65
$
269,442
%
8 74 73
$
1,525 1,049 4,273 659 252 7,758 7,826 15,584
(478)
2,130 2,534 58 4,722
FINANCIAL RATIOS ROE Overhead ratio Overhead ratio excluding core deposit intangibles (a)
$
994
2,305 2,653 51 5,009
$
(4) % 5 106 (40) (4) 30 (3) 11
1,027
2,298 2,378 50 4,726
$
4 % (1) 13 9 8 (1) 4
779
NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
274,795
$
%
18 61 60
$
276,799
$
%
6 74 73
$
$
(651)
$
%
31 62 62
$
264,320
$
%
1,549 984 611 1,109 242 4,495 8,113 12,608
(2) % 7 NM (41) 4 73 (4) 24
2,193
NM
3,813 6,238 120 10,171
21 (19) (16) (4)
244 260 (16)
-
NM NM NM
% 81 80
283,753
(2)
(7)
283,753
(7)
222,773 14,254 237,027 413,571 26,500
227,491 12,496 239,987 413,901 26,500
232,555 12,694 245,249 395,797 25,000
235,572 13,153 248,725 388,735 25,000
241,127 13,558 254,685 378,371 25,000
(2) 14 (1) -
(8) 5 (7) 9 6
222,773 14,254 237,027 413,571 26,500
$
241,127 13,558 254,685 378,371 25,000
(8) 5 (7) 9 6
268,507
271,973
278,497
283,443
287,235
(1)
(7)
270,240
292,557
(8)
225,144 17,694 242,838 409,256 26,500
230,170 15,621 245,791 399,561 26,500
233,958 16,680 250,638 389,519 25,000
238,273 16,608 254,881 382,202 25,000
244,030 14,613 258,643 378,932 25,000
(2) 13 (1) 2 -
(8) 21 (6) 8 6
227,657 16,658 244,315 404,408 26,500
247,218 16,058 263,276 375,379 25,000
(8) 4 (7) 8 6
134,380
134,321
133,075
128,992
122,728
-
9
134,380
122,728
9
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. This non-GAAP ratio excluded Consumer & Business Banking's CDI amortization expense related to prior business combination transactions of $50 million, $51 million, $58 million, $60 million and $60 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $101 million and $120 million for the six months ended June 30, 2012 and 2011, respectively. Predominantly consists 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.
Page 14
JPMORGAN CHASE & CO.
RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data)
QUARTERLY TRENDS 2Q12 CREDIT DATA AND QUALITY STATISTICS Net charge-offs Nonaccrual loans: Nonaccrual loans retained Nonaccrual loans held-for-sale and loans at fair value Total nonaccrual loans (a)(b)(c)(d) Nonperforming assets (a)(b)(c)(d) Allowance for loan losses Net charge-off rate (e) Net charge-off rate excluding purchased credit-impaired ("PCI") loans (e) Allowance for loan losses to ending loans retained Allowance for loan losses to ending loans retained excluding PCI loans (f) Allowance for loan losses to nonaccrual loans retained (a)(d)(f) Nonaccrual loans to total loans (d) Nonaccrual loans to total loans excluding PCI loans (a)(d)
(a) (b) (c) (d) (e) (f)
$
1Q12
795
$
4Q11
904
$
3Q11
1,009
$
2Q11
1,027
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
1,069
(12) %
(26) %
$
1,699
$
2,268
(25) %
7,835
8,191
7,170
7,579
8,088
(4)
(3)
7,835
8,088
(3)
98 7,933 8,645 12,897
101 8,292 9,109 14,247
103 7,273 8,064 15,247
132 7,711 8,576 15,479
142 8,230 9,175 15,479
(3) (4) (5) (9)
(31) (4) (6) (17)
98 7,933 8,645 12,897
142 8,230 9,175 15,479
(31) (4) (6) (17)
1.42
%
1.58
%
1.71
%
1.71
%
1.76
%
1.50
%
1.85
1.98 5.79
2.20 6.26
2.39 6.56
2.39 6.57
2.46 6.42
2.09 5.79
2.59 6.42
4.49
5.22
5.71
6.26
6.12
4.49
6.12
92 3.35 4.55
104 3.46 4.71
133 2.97 4.05
139 3.10 4.25
130 3.23 4.43
92 3.35 4.55
130 3.23 4.43
%
Excludes PCI loans. Because the Firm is recognizing interest income on each pool of PCI loans, they are all considered to be performing. Certain of these loans are classified as trading assets on the Consolidated Balance Sheets. At June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, nonperforming assets excluded: (1) mortgage loans insured by U.S. government agencies of $11.9 billion, $11.8 billion, $11.5 billion, $9.5 billion and $9.1 billion, respectively, that are 90 or more days past due; and (2) real estate owned insured by U.S. government agencies of $1.3 billion, $1.2 billion, $954 million, $2.4 billion and $2.4 billion, respectively. These amounts were excluded from nonaccrual loans as reimbursement of insured amounts is proceeding normally. At June 30, 2012 and March 31, 2012, includes $1.5 billion and $1.6 billion, respectively, of performing junior liens that are subordinate to senior liens that are 90 days or more past due; such junior liens are now being reported as nonaccrual loans based upon regulatory guidance issued in the first quarter of 2012. Of the total, $1.3 billion and $1.4 billion were current at June 30, 2012 and March 31, 2012, respectively. Loans held-for-sale and loans accounted for at fair value were excluded when calculating the net charge-off rate. An allowance for loan losses of $5.7 billion at June 30, 2012, March 31, 2012 and December 31, 2011 and $4.9 billion at September 30, 2011 and June 30, 2011 was recorded for PCI loans; these amounts were also excluded from the applicable ratios.
Page 15
JPMORGAN CHASE & CO.
RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted)
QUARTERLY TRENDS 2Q12
1Q12
4Q11
3Q11
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
2Q11
CONSUMER & BUSINESS 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 Business banking origination volume End-of-period loans End-of-period deposits: Checking Savings Time and other Total end-of-period deposits Average loans 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 Allowance for loan losses Nonperforming assets
1,646 2,680 4,326 (2) 2,742 1,586 946 63 62
$
$
$
$ %
1,787 18,218
1,585 2,675 4,260 96 2,866 1,298 774 67 66
$
$
$ %
1,540 17,822
1,603 2,714 4,317 132 2,848 1,337 802 66 65
$
$
$ %
1,389 17,652
1,952 2,730 4,682 126 2,842 1,714 1,023 61 59
$
$
$ %
1,440 17,272
1,889 2,706 4,595 42 2,713 1,840 1,098 59 58
$
4 % 2 NM (4) 22 22
(13) % (1) (6) NM 1 (14) (14)
$
$
%
3,231 5,355 8,586 94 5,608 2,884 1,720 65 64
1,573 17,141
16 2
14 6
$
$
$ %
3,327 18,218
3,646 5,365 9,011 161 5,512 3,338 1,991 61 60
$
(11) % (5) (42) 2 (14) (14) %
2,998 17,141
11 6
156,449 203,910 34,403 394,762 17,934
159,075 200,662 35,642 395,379 17,667
147,779 191,891 36,743 376,413 17,363
142,064 186,733 39,017 367,814 17,172
136,297 182,127 41,948 360,372 17,057
(2) 2 (3) 2
15 12 (18) 10 5
156,449 203,910 34,403 394,762 17,800
136,297 182,127 41,948 360,372 16,972
15 12 (18) 10 5
151,733 202,685 35,096 389,514 2.62 30,275
147,455 197,199 36,121 380,775 2.68 30,857
140,672 189,553 37,708 367,933 2.76 30,373
137,033 184,590 40,588 362,211 2.82 30,074
136,558 180,892 43,053 360,503 2.83 29,047
3 3 (3) 2
11 12 (18) 8 4
134,269 178,028 44,039 356,336 2.86 29,227
11 12 (19) 8
(2)
149,594 199,942 35,608 385,144 2.65 30,566
2
(16)
98 2.20 698 597
RETAIL BRANCH BUSINESS METRICS Investment sales volume Client investment assets % managed accounts
6,171 147,641 26
Number of: Branches Chase Private Client branch locations ATMs Personal bankers Sales specialists Client advisors Active online customers (in thousands) Active mobile customers (in thousands) Chase Private Clients Checking accounts (in thousands)
5,563 738 18,132 24,052 6,179 3,075 17,929 9,075 50,649 27,384
(a)
$
% $
% $
%
96 2.19 798 663
6,598 147,083 26
5,541 366 17,654 24,198 6,110 3,131 17,915 8,570 32,857 27,034
% $
% $
%
132 3.02 798 710
4,696 137,853 24
5,508 262 17,235 24,308 6,017 3,201 17,334 8,391 21,723 26,626
% $
% $
%
126 2.91 800 773
5,102 132,255 23
5,396 139 16,708 24,205 5,639 3,177 17,326 7,234 11,711 26,541
% $
% $
%
117 2.74 800 784
6,334 140,285 23
5,340 16 16,443 23,330 5,289 3,112 17,083 6,580 5,807 26,266
% $
% (13) (10)
(13) (24)
(6) -
(3) 5
%
102 3 (1) 1 (2) 6 54 1
4 NM 10 3 17 (1) 5 38 NM 4
$
194 2.19 698 597
12,769 147,641 26
5,563 738 18,132 24,052 6,179 3,075 17,929 9,075 50,649 27,384
% $
% $
%
236 2.80 800 784
12,918 140,285 23
% 5
(18) % (13) (24)
(1) 5 %
5,340 16 16,443 23,330 5,289 3,112 17,083 6,580 5,807 26,266
4 NM 10 3 17 (1) 5 38 NM 4
Consumer & Business Banking uses the overhead ratio (excluding the amortization of CDI), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. See footnote (a) on page 14 for further details.
Page 16
JPMORGAN CHASE & CO.
RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data)
QUARTERLY TRENDS 2Q12
1Q12
4Q11
3Q11
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
2Q11
MORTGAGE PRODUCTION AND SERVICING Mortgage fees and related income Other 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 FUNCTIONAL RESULTS Production Production revenue Production-related net interest & other income Production-related revenue, excl. repurchase losses Production expense Income, excluding repurchase losses Repurchase losses Income before income tax expense Servicing Loan servicing revenue Servicing-related net interest & other income Servicing-related revenue MSR asset modeled amortization Default servicing expense (a) Core servicing expense (a) Income/(loss), excluding MSR risk management MSR risk management, including related net interest income/(expense) Income/(loss) before income tax expense/(benefit) Net Income/(loss) SUPPLEMENTAL MORTGAGE FEES AND RELATED INCOME DETAILS Net production revenue: Production revenue Repurchase losses Net production revenue Net mortgage servicing revenue: Operating revenue: Loan servicing revenue Changes in MSR asset fair value due to modeled amortization 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
(a)
2,265 110 194 2,569 1 1,572 996 604 61
$
$
$
1,362 199 1,561 620 941 (10) 931
$
$ %
75
$
1,432 187 1,619 573 1,046 (302) 744
$
$ %
723 124 171 1,018 1 1,442 (425) (258) 142
$
859 210 1,069 518 551 (390) 161
$
$ %
1,380 118 204 1,702 2 1,360 340 205 80
$
1,090 213 1,303 496 807 (314) 493
$
$ %
1,100 106 124 1,330 (2) 2,187 (855) (649) 164
$
13 % (11) 10 11 NM (9) 71 31
106 % 4 56 93 NM (28) NM NM
$
$
%
4,273 233 371 4,877 1 3,296 1,580 1,065 68
767 199 966 457 509 (223) 286
(5) 6 (4) 8 (10) 97 25
78 62 36 85 96 226
$
2,794 386 3,180 1,193 1,987 (312) 1,675
$
$
611 210 395 1,216 2 3,933 (2,719) (1,779)
%
323
$
NM % 11 (6) 301 (50) (16) NM NM %
1,446 417 1,863 881 982 (643) 339
93 (7) 71 35 102 51 394
1,004 108 1,112 (327) 705 248 (168)
1,039 112 1,151 (351) 890 261 (351)
1,032 90 1,122 (406) 702 223 (209)
1,039 115 1,154 (457) 585 281 (169)
1,011 29 1,040 (478) 1,449 279 (1,166)
(3) (4) (3) 7 (21) (5) 52
(1) 272 7 32 (51) (11) 86
2,043 220 2,263 (678) 1,595 509 (519)
2,063 185 2,248 (1,041) 2,527 527 (1,847)
(1) 19 1 35 (37) (3) 72
233 65 604
191 (160) 461
(377) (586) (258)
16 (153) 205
25 (1,141) (649)
22 NM 31
NM NM NM
424 (95) 1,065
(1,211) (3,058) (1,779)
NM 97 NM
1,362 (10) 1,352
$
$
1,004
$
2,008 123 177 2,308 1,724 584 461
1,432 (302) 1,130
$
$
1,039
859 (390) 469
$
$
1,032
1,090 (314) 776
$
$
1,039
767 (223) 544
1,011
(327) 677
(351) 688
(406) 626
(457) 582
(478) 533
(1,117) 1,353 236 913 2,265
596 (406) 190 878 2,008
(832) 460 (372) 254 723
(4,574) 4,596 22 604 1,380
(960) 983 23 556 1,100
$
$
$
$
(5) 97 20
78 96 149
$
$
2,794 (312) 2,482
$
$
1,446 (643) 803
93 51 209
(3)
(1)
2,043
2,063
(1)
7 (2)
32 27
(678) 1,365
(1,041) 1,022
35 34
(16) 38 NM 64 106
(521) 947 426 1,791 4,273
(1,711) 497 (1,214) (192) 611
70 91 NM NM NM
NM NM 24 4 13
$
$
Default and core servicing expense include an aggregate of approximately $200 million and $1.0 billion for foreclosure-related matters for the three months ended March 31, 2012 and June 30, 2011, respectively.
Page 17
JPMORGAN CHASE & CO.
RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted)
QUARTERLY TRENDS 2Q12
1Q12
4Q11
3Q11
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
2Q11
MORTGAGE PRODUCTION AND SERVICING (continued) SELECTED BALANCE SHEET DATA End-of-period loans: Prime mortgage, including option ARMs (a) Loans held-for-sale and loans at fair value (b) Average loans: Prime mortgage, including option ARMs (a) Loans held-for-sale and loans at fair value (b) Average assets Repurchase liability (ending) CREDIT DATA AND QUALITY STATISTICS Net charge-offs/(recoveries): Prime mortgage, including option ARMs Net charge-off/(recovery) rate: Prime mortgage, including option ARMs 30+ day delinquency rate (c) Nonperforming assets (d)
$
17,454 14,254
$
17,478 17,694 60,534 2,997
0.02 3.00 708
$
17,238 15,621 58,862 3,213
1
$
17,268 12,496
% $
3.01 708
% $
16,891 12,694
$
14,800 13,153
15,733 16,680 60,473 3,213
14,451 16,608 59,677 3,213
1
2
0.03 3.15 716
% $
0.06 3.35 691
$
14,260 13,558
1 14
14,083 14,613 58,072 3,213
1 13 3 (7)
(2) % $
(0.06) % 3.30 662
%
22 5
%
$
24 21 4 (7)
NM
NM
-
7
$
17,454 14,254
14,260 13,558
22 5
17,358 16,658 59,698 2,997
14,060 16,058 59,704 3,213
23 4 (7)
1
2
(50)
0.01 3.00 708
$
% $
0.03 3.30 662
% 7
BUSINESS METRICS (in billions) Origination volume by channel Retail Wholesale (e) Correspondent (e) CNT (negotiated transactions) Total origination volume
26.1 0.2 16.5 1.1 43.9
23.4 14.2 0.8 38.4
23.1 0.1 14.9 0.5 38.6
22.4 0.1 13.4 0.9 36.8
20.7 0.1 10.3 2.9 34.0
12 NM 16 38 14
26 100 60 (62) 29
49.5 0.2 30.7 1.9 82.3
41.7 0.3 23.8 4.4 70.2
19 (33) 29 (57) 17
Application volume by channel Retail Wholesale (e) Correspondent (e) Total application volume
43.1 0.1 23.7 66.9
40.0 0.2 19.7 59.9
34.6 0.2 17.8 52.6
37.7 0.2 20.2 58.1
33.6 0.3 14.9 48.8
8 (50) 20 12
28 (67) 59 37
83.1 0.3 43.4 126.8
64.9 0.6 28.5 94.0
28 (50) 52 35
860.0 866.7 7.1
884.2 892.6 8.0
902.2 913.2 7.2
924.5 931.4 7.8
940.8 947.0 12.2
(3) (3) (11)
(9) (8) (42)
860.0 879.6 7.1
940.8 952.9 12.2
(9) (8) (42)
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) Ratio of annualized loan servicing revenue to third-party mortgage loans serviced (average) MSR revenue multiple (f)
(a) (b) (c) (d) (e) (f)
0.83 0.47 1.77x
%
0.90 0.47 1.91x
%
0.80 0.45 1.78x
%
0.84 0.44 1.91x
%
1.30 0.43 3.02x
%
0.83 0.47 1.77x
%
1.30
%
0.44 2.95x
Predominantly represents prime loans repurchased from Government National Mortgage Association (“Ginnie Mae”) pools, which are insured by U.S. government agencies. Predominantly consists 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. At June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, excluded mortgage loans insured by U.S. government agencies of $13.0 billion, $12.7 billion, $12.6 billion, $10.5 billion and $10.1 billion, respectively, that are 30 or more days past due. These amounts were excluded as reimbursement of insured amounts is proceeding normally. At June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, nonperforming assets excluded: (1) mortgage loans insured by U.S. government agencies of $11.9 billion, $11.8 billion, $11.5 billion, $9.5 billion and $9.1 billion, respectively, that are 90 or more days past due; and (2) real estate owned insured by U.S. government agencies of $1.3 billion, $1.2 billion, $954 million, $2.4 billion and $2.4 billion, respectively. These amounts were excluded from nonaccrual loans as reimbursement of insured amounts is proceeding normally. Includes rural housing loans sourced through brokers and correspondents, which are underwritten and closed with pre-funding loan approval from the U.S. Department of Agriculture Rural Development, which acts as the guarantor in the transaction. 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 18
%
JPMORGAN CHASE & CO.
RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data)
QUARTERLY TRENDS 2Q12
1Q12
4Q11
3Q11
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
2Q11
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 LOANS EXCLUDING PCI LOANS End-of-period loans owned: Home equity Prime mortgage, including option ARMs Subprime mortgage Other Total end-of-period loans owned Average loans owned: Home equity Prime mortgage, including option ARMs Subprime mortgage Other Total average loans owned PCI LOANS 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, including option ARMs Subprime mortgage Other Total end-of-period loans owned Average loans owned: Home equity Prime mortgage, including option ARMs Subprime mortgage Other Total average loans owned Average assets Home equity origination volume
13 1,027 1,040 (554) 412 1,182 717 40
$
$ $
$
$
$ $
$
$
$ $
$
$
$ %
8 1,073 1,081 (192) 419 854 518 39
72,833 42,037 8,945 675 124,490
$
74,069 42,543 9,123 684 126,419
$
21,867 14,395 4,784 21,565 62,611
$
22,076 14,590 4,824 21,823 63,313
$
94,700 77,997 13,729 675 187,101
$
96,145 78,956 13,947 684 189,732 177,698 360
$
$
$
$
$
$
$
$
$ %
(13) 1,073 1,060 646 432 (18) (11) 41
75,207 43,152 9,289 692 128,340
$
76,600 43,701 9,485 707 130,493
$
22,305 14,781 4,870 22,105 64,061
$
22,488 14,975 4,914 22,395 64,772
$
97,512 80,038 14,159 692 192,401
$
99,088 81,071 14,399 707 195,265 182,254 312
$
$
$
$
$
$
$
$
$ %
23 1,128 1,151 899 363 (111) (67) 32
77,800 44,284 9,664 718 132,466
$
79,106 44,886 9,880 729 134,601
$
22,697 15,180 4,976 22,693 65,546
$
22,872 15,405 5,024 23,009 66,310
$
100,497 82,157 14,640 718 198,012
$
101,978 83,300 14,904 729 200,911 187,651 277
$
$
$
$
$
$
$
$
$ %
20 1,197 1,217 954 371 (108) (66) 30
80,278 45,439 10,045 741 136,503
$
81,568 46,165 10,268 753 138,754
$
23,105 15,626 5,072 23,325 67,128
$
23,301 15,909 5,128 23,666 68,004
$
103,383 84,390 15,117 741 203,631
$
104,869 85,740 15,396 753 206,758 193,692 294
$
$
$
$
$
$
$
63 % (4) (4) (189) (2) 38 38
(35) % (14) (15) NM 11 NM NM
$
$
%
21 2,100 2,121 (746) 831 2,036 1,235 39
82,751 46,994 10,441 767 140,953
(3) (3) (4) (2) (3)
(12) (11) (14) (12) (12)
$
84,065 47,615 10,667 785 143,132
(3) (3) (4) (3) (3)
(12) (11) (14) (13) (12)
$
23,535 16,200 5,187 24,072 68,994
(2) (3) (2) (2) (2)
(7) (11) (8) (10) (9)
$
23,727 16,456 5,231 24,420 69,834
(2) (3) (2) (3) (2)
(7) (11) (8) (11) (9)
$
106,286 87,266 15,628 767 209,947
(3) (3) (3) (2) (3)
(11) (11) (12) (12) (11)
$
107,792 88,491 15,898 785 212,966 200,116 307
(3) (3) (3) (3) (3) (2) 15
(11) (11) (12) (13) (11) (11) 17
$
$
$
$
$
$
$
$
$ %
28 2,353 2,381 2,030 726 (375) (228) 30
72,833 42,037 8,945 675 124,490
$
75,334 43,122 9,304 696 128,456
$
21,867 14,395 4,784 21,565 62,611
$
22,282 14,783 4,869 22,109 64,043
$
94,700 77,997 13,729 675 187,101
$
97,616 80,014 14,173 696 192,499 179,976 672
$
$
$
$
$
$
$
(25) % (11) (11) NM 14 NM NM %
82,751 46,994 10,441 767 140,953
(12) (11) (14) (12) (12)
85,478 48,439 10,875 807 145,599
(12) (11) (14) (14) (12)
23,535 16,200 5,187 24,072 68,994
(7) (11) (8) (10) (9)
23,947 16,714 5,266 24,765 70,692
(7) (12) (8) (11) (9)
106,286 87,266 15,628 767 209,947
(11) (11) (12) (12) (11)
109,425 89,918 16,141 807 216,291 203,626 556
(11) (11) (12) (14) (11) (12) 21
Page 19
JPMORGAN CHASE & CO.
RETAIL FINANCIAL SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data)
QUARTERLY TRENDS 2Q12
1Q12
4Q11
3Q11
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
2Q11
REAL ESTATE PORTFOLIOS (continued) CREDIT DATA AND QUALITY STATISTICS Net charge-offs excluding PCI loans Home equity Prime mortgage, including option ARMs Subprime mortgage Other Total net charge-offs Net charge-off rate excluding PCI loans Home equity Prime mortgage, including option ARMs Subprime mortgage Other Total net charge-off rate excluding PCI loans Net charge-off rate - reported Home equity Prime mortgage, including option ARMs Subprime mortgage Other Total net charge-off rate - reported
30+ day delinquency rate excluding PCI loans (a) Allowance for loan losses Nonperforming assets (b)(c) Allowance for loan losses to ending loans retained Allowance for loan losses to ending loans retained excluding PCI loans
(a) (b) (c)
$
$
$
466 114 112 4 696
$
$
542 131 130 5 808
$
$
579 151 143 3 876
$
$
581 172 141 5 899
$
$
592 198 156 8 954
(14) % (13) (14) (20) (14)
(21) % (42) (28) (50) (27)
$
$
1,008 245 242 9 1,504
$
$
1,312 359 342 17 2,030
(23) % (32) (29) (47) (26)
2.53 1.08 4.94 2.35 2.21
%
2.85 1.21 5.51 2.84 2.49
%
2.90 1.33 5.74 1.63 2.58
%
2.82 1.48 5.43 2.83 2.57
%
2.83 1.67 5.85 4.01 2.67
%
2.69 1.14 5.23 2.60 2.35
%
3.09 1.50 6.33 4.29 2.81
%
1.95 0.58 3.23 2.35 1.48
%
2.20 0.65 3.63 2.84 1.66
%
2.25 0.72 3.81 1.63 1.73
%
2.20 0.80 3.63 2.83 1.72
%
2.20 0.90 3.94 4.01 1.80
%
2.08 0.62 3.43 2.60 1.57
%
2.42 0.81 4.26 4.29 1.89
%
5.16 12,179 7,340 6.51
%
5.32 13,429 7,738 6.98
%
5.69 14,429 6,638 7.29
%
5.80 14,659 7,112 7.20
%
5.98 14,659 7,729 6.98
%
5.98 14,659 7,729 6.98
%
5.20
$ %
6.01
$ %
6.58
$ %
7.12
$ %
6.90
(9) (5) %
(17) (5)
$
5.16 12,179 7,340 6.51 5.20
$ %
(17) (5) %
6.90
The delinquency rate for PCI loans was 21.38%, 21.72%, 23.30%, 24.44% and 26.20% at June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively. Excludes PCI loans. Because the Firm is recognizing interest income on each pool of PCI loans, they are all considered to be performing. Based on regulatory guidance issued in the first quarter of 2012, includes performing junior liens that are subordinate to senior liens that are 90 days or more past due. For further information, see footnote (d) on page 15.
Page 20
JPMORGAN CHASE & CO.
CARD SERVICES & AUTO FINANCIAL HIGHLIGHTS (in millions, except ratio data and headcount)
QUARTERLY TRENDS 2Q12 INCOME STATEMENT REVENUE Credit card income All other income Noninterest revenue Net interest income TOTAL NET REVENUE
$
Provision for credit losses
1Q12
1,015 231 1,246 3,279 4,525
$
4Q11
948 303 1,251 3,463 4,714
$
3Q11
1,053 232 1,285 3,529 4,814
$
2Q11
1,053 201 1,254 3,521 4,775
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
1,123 183 1,306 3,455 4,761
7 % (24) (5) (4)
(10) % 26 (5) (5) (5)
$
1,963 534 2,497 6,742 9,239
$
2,021 332 2,353 7,199 9,552
(3) % 61 6 (6) (3)
734
738
1,060
1,264
944
(1)
(22)
1,472
1,297
13
NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE
490 1,512 94 2,096
486 1,447 96 2,029
460 1,470 95 2,025
459 1,560 96 2,115
448 1,436 104 1,988
1 4 (2) 3
9 5 (10) 5
976 2,959 190 4,125
907 2,788 210 3,905
8 6 (10) 6
Income before income tax expense Income tax expense NET INCOME
1,695 665 1,030
1,947 764 1,183
1,729 678 1,051
1,396 547 849
1,829 719 1,110
(13) (13) (13)
(7) (8) (7)
3,642 1,429 2,213
4,350 1,706 2,644
(16) (16) (16)
$
FINANCIAL RATIOS ROE Overhead ratio SELECTED BALANCE SHEET DATA (period-end) Total assets Loans: Credit Card Auto Student Total loans Equity SELECTED BALANCE SHEET DATA (average) Total assets Loans: Credit Card Auto Student Total loans Equity Headcount
25 46
$
198,805
$
%
29 43
$
124,705 48,468 12,232 185,405 16,500 $
197,301
199,579
$
%
26 42
$
125,331 48,245 13,162 186,738 16,500 $
199,449
208,467
$
%
21 44
$
132,277 47,426 13,425 193,128 16,000 $
202,226
199,473
$
%
28 42
$
127,135 46,659 13,751 187,545 16,000 $
199,974
$
$
%
27 45
197,915
-
-
125,523 46,796 14,003 186,322 16,000
(7) (1) -
198,044
(1)
-
$
(1) 4 (13) 3
198,805
$
%
33 41
$
124,705 48,468 12,232 185,405 16,500 $
198,375
$
%
197,915
-
125,523 46,796 14,003 186,322 16,000
(1) 4 (13) 3
201,225
(1)
125,195 48,273 12,944 186,412 16,500
127,616 47,704 13,348 188,668 16,500
128,619 46,947 13,543 189,109 16,000
126,536 46,549 13,865 186,950 16,000
125,038 46,966 14,135 186,139 16,000
(2) 1 (3) (1) -
3 (8) 3
126,405 47,989 13,146 187,540 16,500
128,767 47,326 14,272 190,365 16,000
(2) 1 (8) (1) 3
27,563
27,862
27,585
27,554
26,874
(1)
3
27,563
26,874
3
Page 21
JPMORGAN CHASE & CO.
CARD SERVICES & AUTO FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted)
QUARTERLY TRENDS 2Q12 CREDIT DATA AND QUALITY STATISTICS Net charge-offs: Credit Card Auto Student Total net charge-offs Net charge-off rate: Credit Card (a) Auto Student Total net charge-off rate
$
Nonperforming assets (d) Allowance for loan losses: Credit Card Auto and Student Total allowance for loan losses Allowance for loan losses to period-end loans: Credit Card (b) Auto and Student Total allowance for loan losses to period-end loans
1,345 21 119 1,485 4.35 0.17 3.70 3.22
Delinquency rates 30+ day delinquency rate: Credit Card (b) Auto Student (c) Total 30+ day delinquency rate 90+ day delinquency rate - Credit Card (b)
1Q12
$
%
$
$
%
219
$
242
5.02 1.64 3.91
$
%
$
228
5.30 1.66 4.15
$
%
$
232
5.93 1.67 4.55
(3) % (36) 72 -
(26) % 11 (12) (24)
$
%
$
%
$
%
233
(10)
(6)
(12) (10)
(32) 15 (27)
$
219
4.41 1.66 3.51
(32) % (18) (13) (31) %
2.98 0.98 1.70 2.38 1.55 $
5,499 1,009 6,508
%
4,036 66 215 4,317 6.40 0.28 3.04 4.61
2.14 0.90 1.95 1.80 1.04
8,042 879 8,921 6.41 1.45 4.79
2,731 54 188 2,973 4.37 0.23 2.88 3.20
2.98 0.98 1.70 2.38 1.55
7,528 1,009 8,537 %
1,810 19 135 1,964 5.82 0.16 3.83 4.24
2.90 1.01 1.93 2.36 1.43
6,999 1,010 8,009 %
2Q11
1,499 42 93 1,634 4.70 0.36 2.66 3.47
2.81 1.13 1.78 2.32 1.44
6,251 1,010 7,261 %
3Q11
1,390 44 126 1,560 4.29 0.37 3.69 3.27
2.56 0.79 2.06 2.07 1.37
5,499 1,009 6,508 4.41 1.66 3.51
1,386 33 69 1,488 4.40 0.28 2.08 3.19
2.14 0.90 1.95 1.80 1.04
4Q11
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
%
233
(6)
8,042 879 8,921
(32) 15 (27)
6.41 1.45 4.79
%
BUSINESS METRICS Credit Card, excluding Commercial Card Sales volume (in billions) New accounts opened Open accounts
$
96.0 1.6 63.7
$
86.9 1.7 64.2
$
93.4 2.2 65.2
$
87.3 2.0 64.3
$
85.5 2.0 65.4
10 (6) (1)
12 (20) (3)
$
182.9 3.3 63.7
$
163.0 4.6 65.4
12 (28) (3)
Merchant Services Bank card volume (in billions) Total transactions (in billions)
$
160.2 7.1
$
152.8 6.8
$
152.6 6.8
$
138.1 6.1
$
137.3 5.9
5 4
17 20
$
313.0 13.9
$
263.0 11.5
19 21
$
5.8 -
$
5.8 0.1
$
4.9 0.1
$
5.9 0.1
$
5.4 -
NM
7 -
$
11.6 0.1
$
10.2 0.1
14 -
Auto and Student Origination volume (in billions) Auto Student
(a) (b) (c) (d)
Average credit card loans include loans held-for-sale of $782 million, $821 million, $97 million, $1 million and $276 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $801 million and $1.6 billion for the six months ended June 30, 2012 and 2011, respectively. These amounts are excluded when calculating the net charge-off rate. Period-end credit card loans include loans held-for-sale of $112 million, $856 million, $102 million and $94 million at June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011, respectively. No allowance for loan losses was recorded for these loans. These amounts are excluded when calculating delinquency rates and the allowance for loan losses to period-end loans. Excludes student loans insured by U.S. government agencies under the Federal Family Education Loan Program (“FFELP”) of $931 million, $1.0 billion, $989 million, $995 million and $968 million at June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, that are 30 or more days past due. These amounts are excluded as reimbursement of insured amounts is proceeding normally. Nonperforming assets exclude student loans insured by U.S. government agencies under the FFELP of $547 million, $586 million, $551 million, $567 million and $558 million at June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, that are 90 or more days past due. These amounts are excluded as reimbursement of insured amounts is proceeding normally.
Page 22
JPMORGAN CHASE & CO.
CARD SERVICES & AUTO FINANCIAL HIGHLIGHTS, CONTINUED (in millions)
QUARTERLY TRENDS 2Q12 CARD SERVICES SUPPLEMENTAL INFORMATION Noninterest revenue Net interest income Total net revenue Provision for credit losses Noninterest expense Income before income tax expense Net income
$
$
953 2,755 3,708 595 1,703 1,410 860
1Q12 $
$
949 2,928 3,877 636 1,636 1,605 979
4Q11 $
$
985 2,989 3,974 890 1,633 1,451 885
3Q11 $
$
957 2,984 3,941 999 1,734 1,208 737
2Q11 $
$
1,016 2,911 3,927 810 1,622 1,495 911
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11 - % (6) (4) (6) 4 (12) (12)
(6) % (5) (6) (27) 5 (6) (6)
$
$
1,902 5,683 7,585 1,231 3,339 3,015 1,839
$
$
1,798 6,111 7,909 1,036 3,177 3,696 2,254
6 % (7) (4) 19 5 (18) (18)
Page 23
JPMORGAN CHASE & CO.
COMMERCIAL BANKING FINANCIAL HIGHLIGHTS (in millions, except ratio data)
QUARTERLY TRENDS 2Q12 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)
$
1Q12
264 34 264 562 1,129 1,691
$
4Q11
276 36 245 557 1,100 1,657
$
3Q11
267 32 272 571 1,116 1,687
$
2Q11
269 35 220 524 1,064 1,588
$
281 34 283 598 1,029 1,627
Provision for credit losses
(17)
77
40
67
54
NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE
235 349 7 591
246 345 7 598
215 356 8 579
229 337 7 573
219 336 8 563
Income before income tax expense Income tax expense NET INCOME
1,117 444 673
982 391 591
1,068 425 643
948 377 571
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 Corporate Client Banking Real Estate Banking Other Total Commercial Banking revenue FINANCIAL RATIOS ROE Overhead ratio
(a) (b)
(c)
$
$
$
$
$
920 603 129 39 1,691
$
$
$
$
$
$
892 602 120 43 1,657
384
$
833 291 343 114 110 1,691
$
28 35
$
%
$
$
$
881 600 120 86 1,687
339
$
825 293 337 105 97 1,657
$
25 36
$
%
$
545 69 486 1,100 2,043 3,143
(1) % 1 5 2 9 7
60
101
(41)
1,010 403 607
14 14 14
11 10 11
2,099 835 1,264
1,916 763 1,153
10 9 10
3 8 (9) 2
5 8 (15) 4
$
6 10 (5) 24 7
13
(4)
1 (1) 2 9 13 2
350
$
320
$
442
810 299 326 115 137 1,687
$
791 297 306 104 90 1,588
$
789 286 339 109 104 1,627
%
$
9 4 (13) 6
$
28 36
NM
540 70 509 1,119 2,229 3,348
442 668 16 1,126
$
%
$
481 694 14 1,189
880 556 152 39 1,627
32 34
NM
(6) % (7) (6) 10 4
7 4 (13) 5
$
$
(4) % (6) 8 1 3 2
(4) 1 (1)
857 572 116 43 1,588
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
30 35
%
$
$
$
$
1,812 1,205 249 82 3,348
$
1,717 1,098 262 66 3,143
(13)
$
723
$
751
6 2 1 5 6 4
$
1,658 584 680 219 207 3,348
$
1,544 572 629 197 201 3,143
$
27 36
$
%
29 36
7 2 8 11 3 7
%
Commercial Banking (“CB”) client revenue from investment banking products and commercial card transactions 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 tax-exempt income from municipal bond activity of $99 million, $94 million, $123 million, $90 million and $67 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $193 million and $132 million for the six months ended June 30, 2012 and 2011, respectively. Represents the total revenue related to investment banking products sold to CB clients.
Page 24
JPMORGAN CHASE & CO.
COMMERCIAL BANKING FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except headcount and ratio data)
QUARTERLY TRENDS 2Q12 SELECTED BALANCE SHEET DATA (period-end) Total assets Loans: Loans retained Loans held-for-sale and loans at fair value Total loans Equity Period-end loans by client segment: Middle Market Banking Commercial Term Lending Corporate Client Banking Real Estate Banking Other Total Commercial Banking loans SELECTED BALANCE SHEET DATA (average) Total assets Loans: Loans retained Loans held-for-sale and loans at fair value Total loans Liability balances Equity Average loans by client segment: Middle Market Banking Commercial Term Lending Corporate Client Banking Real Estate Banking Other Total Commercial Banking loans
$
$
119,946 547 120,493 9,500
$
$
$
$
163,423
$
46,880 40,060 18,588 8,808 4,098 118,434
$
$
161,074
$
(9)
$
$
155,611
$
$
$
%
10
102,122 557 102,679 8,000
4 (38) 4 -
17 (2) 17 19
3 4 7 1 4 4
18 8 44 19 16 17
$
$
$
$
145,195
$
143,560
1
14
100,857 1,015 101,872 162,769 8,000
4 (32) 4 (3) -
17 (41) 16 19 19
40,012 37,729 13,062 7,467 3,602 101,872
4 3 6 6 2 4
17 6 42 18 14 16
5,140
4
14
40
NM
NM
$
$
41,540 38,198 14,373 7,465 3,761 105,337
$
$
5,417
99
1
40,530 38,012 13,097 7,409 3,631 102,679
104,705 632 105,337 180,275 8,000
43,215 38,679 16,116 7,936 3,962 109,908
148,662
$
5,520
12
$
42,365 38,539 15,100 7,470 3,944 107,418
109,328 580 109,908 199,138 8,000
45,047 38,848 17,514 8,341 4,010 113,760
2Q11
151,095 106,834 584 107,418 8,000
$
5,612
$
$
44,437 38,583 16,747 8,211 4,024 112,002
112,879 881 113,760 200,178 9,500
$
3Q11
158,040 111,162 840 112,002 8,000
$
5,862
$
$
46,040 39,314 17,670 8,763 4,060 115,847
117,835 599 118,434 193,280 9,500
$
4Q11
161,741 114,969 878 115,847 9,500
47,638 40,972 18,839 8,819 4,225 120,493
Headcount CREDIT DATA AND QUALITY STATISTICS Net charge-offs/(recoveries) Nonperforming assets: Nonaccrual loans: Nonaccrual loans retained (a) Nonaccrual loans held-for-sale and loans at fair value Total nonaccrual loans
1Q12
163,698
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
$
17
$
163,698
$
119,946 547 120,493 9,500
148,662
10
102,122 557 102,679 8,000
17 (2) 17 19
18 8 44 19 16 17
$
$
47,638 40,972 18,839 8,819 4,225 120,493
$
40,530 38,012 13,097 7,409 3,631 102,679
$
162,249
$
141,989
14
99,849 886 100,735 159,503 8,000
16 (16) 15 23 19
39,114 37,769 12,720 7,537 3,595 100,735
18 4 42 14 13 15
5,140
14
115,357 740 116,097 196,729 9,500
$
$
45,964 39,454 18,051 8,575 4,053 116,097
$
$
5,862
$
3
$
71
(96)
972
1,036
1,417
1,613
(9)
(45)
881
1,613
(45)
36 917
32 1,004
17 1,053
26 1,443
21 1,634
13 (9)
71 (44)
36 917
21 1,634
71 (44)
36 953
197 1,831
(82) (48)
2,638 209 2,847
2,614 187 2,801
1 12 2
36 953
60 1,064
85 1,138
168 1,611
197 1,831
(40) (10)
(82) (48)
2,638 209 2,847
2,662 194 2,856
2,603 189 2,792
2,671 181 2,852
2,614 187 2,801
(1) 8 -
1 12 2
Net charge-off/(recovery) rate (b) Allowance for loan losses to period-end loans retained Allowance for loan losses to nonaccrual loans retained (a) Nonaccrual loans to total period-end loans
(0.03) % 2.20 299 0.76
(b)
$
881
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
(a)
%
0.04 2.32 274 0.87
%
0.36 2.34 251 0.94
%
0.06 2.50 188 1.34
%
0.16 2.56 162 1.59
%
0.01 2.20 299 0.76
%
0.14 2.56 162 1.59
%
Allowance for loan losses of $143 million, $163 million, $176 million, $257 million and $289 million was held against nonaccrual loans retained at June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively. Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate.
Page 25
%
JPMORGAN CHASE & CO.
TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratio data) QUARTERLY TRENDS 2Q12 INCOME STATEMENT REVENUE Lending- and deposit-related fees Asset management, administration and commissions All other income Noninterest revenue Net interest income TOTAL NET REVENUE
$
1Q12
287 708 156 1,151 1,001 2,152
$
4Q11
286 654 127 1,067 947 2,014
$
3Q11
313 671 133 1,117 905 2,022
$
$
8 68
2 3
NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE
717 760 14 1,491
732 728 13 1,473
672 877 14 1,563
718 728 24 1,470
719 719 15 1,453
Income before income tax expense Income tax expense NET INCOME
721 258 463
542 191 351
380 130 250
467 162 305
513 180 333
FINANCIAL RATIOS ROE Pretax margin ratio Overhead ratio Pre-provision profit ratio REVENUE BY BUSINESS Worldwide Securities Services ("WSS"): Investor Services Clearance, Collateral Mgmt & Depositary Receipts Total WSS Revenue Treasury Services ("TS"): Transaction Services Trade Finance Total TS Revenue
(a)
25 34 69 31
$
%
19 27 73 27
$
%
14 19 77 23
(20) 9
314 726 143 1,183 749 1,932
Provision for credit losses Credit allocation income/(expense) (a)
$
19 (60)
2Q11
310 656 141 1,107 801 1,908
$
%
17 24 77 23
8 23 8 6 7
(2) 32
$
%
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
19 27 75 25
$
835 243 1,078
$
783 179 962
$
752 219 971
$
740 199 939
$
782 220 1,002
$
917 157 1,074
$
893 159 1,052
$
874 177 1,051
$
816 153 969
$
785 145 930
300 NM
%
(9) % (2) 9 (3) 34 11
$
NM 113
573 1,362 283 2,218 1,948 4,166
$
617 1,421 282 2,320 1,452 3,772
10 71
2 59
(2) 4 8 1
6 (7) 3
1,449 1,488 27 2,964
1,434 1,366 30 2,830
33 35 32
41 43 39
1,263 449 814
999 350 649
$
%
22 30 71 29
$
%
19 26 75 25
7 36 12
7 10 8
$
1,618 422 2,040
$
1,527 424 1,951
3 (1) 2
17 8 15
$
1,810 316 2,126
$
1,550 271 1,821
(7) % (4) (4) 34 10 400 20
1 9 (10) 5 26 28 25
%
6 5 17 17 17
IB manages traditional credit exposures related to GCB on behalf of IB and TSS, and IB and TSS share the economics related to the Firm’s GCB clients. Included within this allocation are net revenue, provision for credit losses and expenses. IB recognizes this credit allocation as a component of all other income.
Page 26
JPMORGAN CHASE & CO.
TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except headcount and ratio data, and where otherwise noted) QUARTERLY TRENDS 2Q12 SELECTED BALANCE SHEET DATA (period-end) Total assets Loans (a) Equity SELECTED BALANCE SHEET DATA (average) Total assets Loans (a) Liability balances Equity
3Q11
2Q11
67,758 42,558 7,500
$
66,732 41,173 7,500
$
68,665 42,992 7,000
$
62,364 36,389 7,000
$
55,950 34,034 7,000
2 3 -
$
66,398 42,213 348,102 7,500
$
64,559 40,538 356,964 7,500
$
63,686 39,289 364,196 7,000
$
60,141 35,303 341,107 7,000
$
52,688 33,069 302,858 7,000
3 4 (2) -
26 28 15 7
28,230
(1)
(3)
3
(20)
33
74 41 115
14 (36) 6
7 (78) (23)
27,462
$
27,765
4
$
79 9 88
Net charge-off rate Allowance for loan losses to period-end loans Allowance for loan losses to nonaccrual loans Nonaccrual loans to period-end loans WSS BUSINESS METRICS Assets under custody ("AUC") by asset class (period-end) (in billions): Fixed Income Equity Other (b) Total AUC
4Q11
$
Headcount CREDIT DATA AND QUALITY STATISTICS Net charge-offs Nonaccrual loans Allowance for credit losses: Allowance for loan losses Allowance for lending-related commitments Total allowance for credit losses
1Q12
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
0.19 NM 0.01
$
$
11,302 5,025 1,338 17,665
27,825
5
$
69 14 83 %
0.17 NM 0.01
$
$
11,332 5,365 1,171 17,868
28,157
4
$
65 49 114 %
0.15 NM 0.01
$
$
10,926 4,878 1,066 16,870
3
$
49 46 95 %
0.14 NM 0.01
$
$
%
10,871 4,401 978 16,250
0.22 NM 0.01
$
$
%
21 25 7
%
$
67,758 42,558 7,500
$
55,950 34,034 7,000
$
65,479 41,376 352,533 7,500
$
50,294 31,190 284,392 7,000
30 33 24 7
28,230
(3)
3
33
74 41 115
7 (78) (23)
27,462
$
4 79 9 88
%
0.19 NM 0.01
10,686 5,267 992 16,945
(6) 14 (1)
6 (5) 35 4
$
$
$
11,302 5,025 1,338 17,665
%
0.22 NM 0.01
$
$
21 % 25 7
%
10,686 5,267 992 16,945
6 (5) 35 4
Liability balances (average)
121,755
125,088
122,102
107,105
90,204
(3)
35
123,421
86,485
43
TS BUSINESS METRICS Liability balances (average) Trade finance loans (period-end)
226,347 35,291
231,876 35,692
242,094 36,696
234,002 30,104
212,654 27,473
(2) (1)
6 28
229,112 35,291
197,907 27,473
16 28
(a) (b)
Loan balances include trade finance loans and wholesale overdrafts. Consists of mutual funds, unit investment trusts, currencies, annuities, insurance contracts, options and nonsecurities contracts.
Page 27
JPMORGAN CHASE & CO.
TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except where otherwise noted) QUARTERLY TRENDS INTERNATIONAL METRICS Net revenue (a) Europe/Middle East/Africa Asia/Pacific Latin America/Caribbean North America Total net revenue Average liability balances (a) Europe/Middle East/Africa Asia/Pacific Latin America/Caribbean North America Total average liability balances Trade finance loans (period-end) (a) Europe/Middle East/Africa Asia/Pacific Latin America/Caribbean North America Total trade finance loans AUC (period-end) (in billions) (a) North America All other regions Total AUC TSS FIRMWIDE DISCLOSURES (b) TS revenue - reported TS revenue reported in CB TS revenue reported in other lines of business TS firmwide revenue (c) Worldwide Securities Services revenue TSS firmwide revenue (c)
2Q12 $
$
$
$
$
$
$ $
$
$
TSS total foreign exchange ("FX") revenue (c) TS firmwide liability balances (average) (d) TSS firmwide liability balances (average) (d) Number of: U.S.$ ACH transactions originated Total U.S.$ clearing volume (in thousands) International electronic funds transfer volume (in thousands) (e) Wholesale check volume Wholesale cards issued (in thousands) (f)
(a) (b) (c) (d) (e) (f)
1Q12
777 345 72 958 2,152
$
127,173 50,331 10,453 160,145 348,102
$
9,577 18,209 5,754 1,751 35,291
$
10,048 7,617 17,665
$
1,074 603 68 1,745 1,078 2,823
$
$
$
$
$
$
147 $
419,806 541,382
4Q11
668 353 82 911 2,014
$
127,794 50,197 11,852 167,121 356,964
$
9,972 18,140 6,040 1,540 35,692
$
9,998 7,870 17,868
$
1,052 602 69 1,723 962 2,685
$
$
$
$
$
$
137 $
432,299 557,142
3Q11
689 339 112 882 2,022
$
130,862 49,407 11,563 172,364 364,196
$
9,726 19,280 6,254 1,436 36,696
$
9,735 7,135 16,870
$
1,051 600 69 1,720 971 2,691
$
$
$
$
$
$
154 $
441,572 563,334
2Q11
648 321 61 878 1,908
$
129,608 42,987 12,722 155,790 341,107
$
6,853 16,918 5,228 1,105 30,104
$
9,611 6,639 16,250
$
969 572 68 1,609 939 2,548
$
$
$
$
$
$
179 $
414,485 521,383
691 299 80 862 1,932
16 % (2) (12) 5 7
12 % 15 (10) 11 11
$
125,911 42,472 13,506 120,969 302,858
(12) (4) (2)
1 19 (23) 32 15
$
6,184 15,736 4,553 1,000 27,473
(4) (5) 14 (1)
55 16 26 75 28
$
9,976 6,969 16,945
1 (3) (1)
1 9 4
$
930 556 65 1,551 1,002 2,553
2 (1) 1 12 5
15 8 5 13 8 11
$
7
(11)
375,432 465,627
(3) (3)
12 16
165 $
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
$
$
$
$
$
1,445 698 154 1,869 4,166
$
127,484 50,264 11,153 163,632 352,533
$
9,577 18,209 5,754 1,751 35,291
$
10,048 7,617 17,665
$
2,126 1,205 137 3,468 2,040 5,508
$
$
$
$
$
$
284 $
426,053 549,262
1,321 575 156 1,720 3,772
117,501 40,807 13,115 112,969 284,392
8 23 (15) 45 24
6,184 15,736 4,553 1,000 27,473
55 16 26 75 28
9,976 6,969 16,945
1 9 4
1,821 1,098 128 3,047 1,951 4,998
17 10 7 14 5 10
325 $
9 % 21 (1) 9 10
(13)
357,436 443,894
19 24
1,020 33,980
1,019 32,696
983 33,055
972 33,117
959 32,274
4
6 5
2,039 66,676
1,951 63,245
5 5
76,343 602 25,346
75,087 589 24,693
63,669 592 25,187
62,718 601 24,288
63,208 608 23,746
2 2 3
21 (1) 7
151,430 1,191 25,346
124,150 1,140 23,746
22 4 7
Total net revenue, average liability balances, trade finance loans and AUC are based on the domicile of the client. In the second quarter of 2012, the methodology for allocating the data by region was refined. Prior periods were not revised due to immateriality. TSS firmwide metrics include revenue recorded in CB, Consumer & Business Banking and Asset Management ("AM") lines of business and net TSS FX revenue (it excludes TSS FX revenue recorded in the IB). In order to capture the firmwide impact of Treasury Services ("TS") and TSS products and revenue, management reviews firmwide metrics in assessing financial performance of TSS. Firmwide metrics are necessary in order to understand the aggregate TSS business. IB executes FX transactions on behalf of TSS customers under revenue sharing agreements. FX revenue generated by TSS customers is recorded in TSS and IB. TSS total FX revenue reported above is the gross (pre-split) FX revenue generated by TSS customers. However, TSS firmwide revenue includes only the FX revenue booked in TSS, i.e., it does not include the portion of TSS FX revenue recorded in IB. Firmwide liability balances include liability balances recorded in CB. International electronic funds transfer includes non-U.S. dollar Automated Clearing House ("ACH") and clearing volume. Wholesale cards issued and outstanding include stored value, prepaid and government electronic benefit card products.
Page 28
JPMORGAN CHASE & CO.
ASSET MANAGEMENT FINANCIAL HIGHLIGHTS (in millions, except ratio and headcount data)
QUARTERLY TRENDS 2Q12 INCOME STATEMENT REVENUE Asset management, administration and commissions All other income Noninterest revenue Net interest income TOTAL NET REVENUE
$
Provision for credit losses
1Q12
1,701 151 1,852 512 2,364
$
4Q11
1,621 266 1,887 483 2,370
$
3Q11
1,606 232 1,838 446 2,284
$
2Q11
1,617 281 1,898 418 2,316
$
1,818 321 2,139 398 2,537
34
19
24
26
12
NONINTEREST EXPENSE Compensation expense Noncompensation expense Amortization of intangibles TOTAL NONINTEREST EXPENSE
1,024 655 22 1,701
1,120 586 23 1,729
1,046 674 32 1,752
999 775 22 1,796
1,068 704 22 1,794
Income before income tax expense Income tax expense NET INCOME
629 238 391
622 236 386
508 206 302
494 109 385
731 292 439
REVENUE BY CLIENT SEGMENT Private Banking Institutional Retail TOTAL NET REVENUE
$
$
$
FINANCIAL RATIOS ROE Overhead ratio Pretax margin ratio SELECTED BALANCE SHEET DATA (period-end) Total assets Loans (a) Equity SELECTED BALANCE SHEET DATA (average) Total assets Loans Deposits Equity Headcount
(a)
$
1,341 537 486 2,364
22 72 27
$
$
%
$
1,279 557 534 2,370
22 73 26
$
$
%
$
1,212 558 514 2,284
18 77 22
$
$
%
$
1,298 478 540 2,316
24 78 21
$
$
%
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
5 % (43) (2) 6 79
1,289 694 554 2,537
27 71 29
(6) % (53) (13) 29 (7)
$
183
3,322 417 3,739 995 4,734
$
3,525 634 4,159 784 4,943
53
17
(6) % (34) (10) 27 (4) 212
(9) 12 (4) (2)
(4) (7) (5)
2,144 1,241 45 3,430
2,107 1,303 44 3,454
2 (5) 2 (1)
1 1 1
(14) (18) (11)
1,251 474 777
1,472 567 905
(15) (16) (14)
5 (4) (9) -
4 (23) (12) (7)
2,606 1,237 1,100 4,943
1 (12) (7) (4)
$
$
$
%
$
2,620 1,094 1,020 4,734
22 72 26
$
$
%
28 70 30
%
$
98,704 70,470 7,000
$
96,385 64,335 7,000
$
86,242 57,573 6,500
$
81,179 54,178 6,500
$
78,199 51,747 6,500
2 10 -
26 36 8
$
98,704 70,470 7,000
$
78,199 51,747 6,500
26 36 8
$
96,670 67,093 128,087 7,000
$
89,582 59,311 127,534 7,000
$
82,594 54,691 121,493 6,500
$
78,669 52,652 111,090 6,500
$
74,206 48,837 97,509 6,500
8 13 -
30 37 31 8
$
93,126 63,202 127,811 7,000
$
71,577 46,903 96,386 6,500
30 35 33 8
17,963
1
-
18,042
17,849
18,036
18,084
18,042
17,963
-
Includes $6.7 billion and $4.5 billion of prime mortgage loans reported in the Consumer, excluding credit card loan portfolio at June 30, 2012 and March 31, 2012, respectively.
Page 29
JPMORGAN CHASE & CO.
ASSET MANAGEMENT FINANCIAL HIGHLIGHTS, CONTINUED (in millions, except ratio data and where otherwise noted) QUARTERLY TRENDS 2Q12 BUSINESS METRICS Number of: Client advisors (a) Retirement Planning Services participants (in thousands) % 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 Nonaccrual 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 nonaccrual loans Nonaccrual loans to period-end loans
(a) (b) (c)
1Q12
2,739 1,960 43
2,832 1,926 42
%
65 72 74
$
$
%
%
$
%
%
2,719 1,613 50
%
49 73 77
48 317 209 10 219 0.35 0.36 66 0.55
2Q11
2,864 1,755 47
48 72 78
27 263 209 5 214 0.18 0.32 79 0.41
3Q11
2,883 1,798 43
64 74 76
28 256 220 6 226 0.17 0.31 86 0.36
4Q11
$
%
(3) % 2
1 22
%
2,739 1,960 43
%
56 71 76
311 240 9 249 0.44 77 0.57
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
$
%
2,719 1,613 50
%
65 72 74
33 252
4 (3)
(15) 2
222 9 231 0.27 0.43 88 0.49
5 20 6
(1) (33) (2)
%
$
%
56 71 76
55 256 220 6 226 0.18 0.31 86 0.36
1 22
$
%
44 252
25 2
222 9 231 0.19 0.43 88 0.49
(1) (33) (2) %
Effective January 1, 2012, the previously disclosed separate metric for client advisors and JPMorgan Securities brokers were combined into one metric that reflects the number of Private Banking client-facing representatives. Derived from Morningstar for the U.S., the U.K., Luxembourg, France, Hong Kong and Taiwan; and Nomura for Japan. Quartile ranking sourced from: Lipper for the U.S. and Taiwan; Morningstar for the U.K., Luxembourg, France and Hong Kong; and Nomura for Japan.
Page 30
%
JPMORGAN CHASE & CO.
ASSET MANAGEMENT FINANCIAL HIGHLIGHTS, CONTINUED (in billions)
Jun 30, 2012 Change ASSETS UNDER SUPERVISION Assets by asset class Liquidity Fixed income Equity and multi-asset Alternatives TOTAL ASSETS UNDER MANAGEMENT Custody/brokerage/administration/deposits TOTAL ASSETS UNDER SUPERVISION
Assets by client segment Private Banking Institutional Retail TOTAL ASSETS UNDER MANAGEMENT Private Banking Institutional Retail TOTAL ASSETS UNDER SUPERVISION
Mutual fund assets by asset class Liquidity Fixed income Equity and multi-asset Alternatives TOTAL MUTUAL FUND ASSETS
Jun 30, 2012 $
$
$
$ $
$
$
$
Mar 31, 2012
466 359 401 121 1,347 621 1,968
$
297 702 348 1,347
$
816 702 450 1,968
$
408 119 160 7 694
$
$
$
$
$
Dec 31, 2011
492 355 417 118 1,382 631 2,013
$
303 732 347 1,382
$
830 732 451 2,013
$
434 116 167 8 725
$
$
$
$
$
Sep 30, 2011
515 336 372 113 1,336 585 1,921
$
291 722 323 1,336
$
781 723 417 1,921
$
458 107 147 8 720
$
$
$
$
$
Jun 30, 2011
464 321 356 113 1,254 552 1,806
$
276 673 305 1,254
$
738 674 394 1,806
$
409 101 139 8 657
$
$
$
$
$
Mar 31, 2012
Jun 30, 2011
476 319 430 117 1,342 582 1,924
(5) % 1 (4) 3 (3) (2) (2)
(2) % 13 (7) 3 7 2
291 708 343 1,342
(2) (4) (3)
2 (1) 1 -
776 709 439 1,924
(2) (4) (2)
5 (1) 3 2
421 105 176 9 711
(6) 3 (4) (13) (4)
(3) 13 (9) (22) (2)
Page 31
JPMORGAN CHASE & CO.
ASSET MANAGEMENT FINANCIAL HIGHLIGHTS, CONTINUED (in billions) QUARTERLY TRENDS 2Q12 ASSETS UNDER SUPERVISION (continued) Assets under management rollforward Beginning balance Net asset flows: Liquidity Fixed income Equities, multi-asset and alternatives Market/performance/other impacts Ending balance Assets under supervision rollforward Beginning balance Net asset flows Market/performance/other impacts Ending balance
$
1,382
$
(25) 5 9 (24) 1,347
$
$
2,013 (6) (39) 1,968
1Q12
$
1,336
$
(25) 11 6 54 1,382
$
$
1,921 8 84 2,013
4Q11
$
1,254
$
53 9 (4) 24 1,336
$
$
1,806 69 46 1,921
SIX MONTHS ENDED JUNE 30, 3Q11
$
1,342
$
(10) 3 (1) (80) 1,254
$
$
1,924 11 (129) 1,806
2Q11
$
1,330
$
(16) 12 7 9 1,342
$
$
1,908 12 4 1,924
2012
$
1,336
$
(50) 16 15 30 1,347
$
$
1,921 2 45 1,968
2011
$
1,298
$
(25) 28 18 23 1,342
$
$
1,840 43 41 1,924
Page 32
JPMORGAN CHASE & CO.
ASSET MANAGEMENT FINANCIAL HIGHLIGHTS, CONTINUED (in billions, except where otherwise noted)
QUARTERLY TRENDS INTERNATIONAL METRICS Total net revenue: (in millions) (a) Europe/Middle East/Africa Asia/Pacific Latin America/Caribbean North America Total net revenue Assets under management: Europe/Middle East/Africa Asia/Pacific Latin America/Caribbean North America Total assets under management Assets under supervision: Europe/Middle East/Africa Asia/Pacific Latin America/Caribbean North America Total assets under supervision
(a)
2Q12 $
$
$
$
$
$
1Q12
379 230 166 1,589 2,364
$
261 103 41 942 1,347
$
315 144 101 1,408 1,968
$
$
$
$
4Q11
405 236 175 1,554 2,370
$
282 112 41 947 1,382
$
339 152 101 1,421 2,013
$
$
$
$
3Q11
392 220 224 1,448 2,284
$
278 105 34 919 1,336
$
329 139 89 1,364 1,921
$
$
$
$
2Q11
395 248 168 1,505 2,316
$
255 104 32 863 1,254
$
306 140 87 1,273 1,806
$
$
$
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
478 257 251 1,551 2,537
(6) % (3) (5) 2 -
(21) % (11) (34) 2 (7)
$
298 119 37 888 1,342
(7) (8) (1) (3)
(12) (13) 11 6 -
$
353 161 94 1,316 1,924
(7) (5) (1) (2)
(11) (11) 7 7 2
$
$
$
$
784 466 341 3,143 4,734
$
261 103 41 942 1,347
$
315 144 101 1,408 1,968
$
$
$
$
917 503 416 3,107 4,943
(15) % (7) (18) 1 (4)
298 119 37 888 1,342
(12) (13) 11 6 -
353 161 94 1,316 1,924
(11) (11) 7 7 2
Regional revenue is based on the domicile of the client.
Page 33
JPMORGAN CHASE & CO.
CORPORATE/PRIVATE EQUITY FINANCIAL HIGHLIGHTS (in millions, except headcount data)
QUARTERLY TRENDS 2Q12 INCOME STATEMENT REVENUE Principal transactions Securities gains All other income Noninterest revenue Net interest income TOTAL NET REVENUE (a)
$
Provision for credit losses
(3,576) 1,013 159 (2,404) (205) (2,609)
1Q12
$
4Q11
(547) $ 449 1,111 (c) 1,013 16 1,029
324 54 75 453 245 698
3Q11
$
2Q11
(933) 607 186 (140) 8 (132)
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
745 837 265 1,847 218 2,065
NM % 126 (86) NM NM NM
NM % 21 (40) NM NM NM
$
(4,123) 1,462 1,270 (1,391) (189) (1,580)
$
2,043 939 343 3,325 252 3,577
NM % 56 270 NM NM NM
(11)
(9)
(10)
(7)
(9)
(22)
(22)
(20)
(19)
(5)
NONINTEREST EXPENSE Compensation expense Noncompensation expense (b) Subtotal Net expense allocated to other businesses TOTAL NONINTEREST EXPENSE
652 1,317 1,969 (1,410) 559
823 3,328 4,151 (1,382) 2,769
602 1,649 2,251 (1,321) 930
552 1,995 2,547 (1,331) 1,216
614 2,097 2,711 (1,270) 1,441
(21) (60) (53) (2) (80)
6 (37) (27) (11) (61)
1,475 4,645 6,120 (2,792) 3,328
1,271 3,240 4,511 (2,508) 2,003
16 43 36 (11) 66
Income/(loss) before income tax expense/(benefit) Income tax expense/(benefit) NET INCOME/(LOSS)
(3,157) (1,380) (1,777)
(1,731) (709) (1,022)
(222) (445) 223
(1,341) (696) (645)
633 131 502
(82) (95) (74)
NM NM NM
(4,888) (2,089) (2,799)
1,593 369 1,224
NM NM NM
796 1,426 (157) 2,065
61 NM (59) NM
(48) NM NM NM
$
1,495 2,249 (167) 3,577
(56) NM NM NM
444 670 (612) 502
47 NM NM (74)
(56) NM NM NM
$
827 1,026 (629) 1,224
(60) NM (31) NM
672,655
(6)
(1)
$
21,444
3
7
MEMO: REVENUE Private Equity Treasury and Chief Investment Office ("CIO") Other Corporate TOTAL NET REVENUE NET INCOME/(LOSS) Private Equity Treasury and CIO Other Corporate TOTAL NET INCOME/(LOSS) TOTAL ASSETS (period-end) Headcount
(a) (b) (c)
$
$
$
$
$ $
$
410 (3,434) 415 (2,609)
$
197 (2,078) 104 (1,777)
$
667,206 23,020
$
$ $
$
254 (233) 1,008 1,029
$
134 (227) (929) (1,022)
$
713,326 22,337
$
$ $
$
(113) 845 (34) 698
$
(89) 417 (105) 223
$
693,153 22,117
$
$ $
$
(546) 102 312 (132)
$
(347) (94) (204) (645)
$
693,597 21,844
$
$ $
$
$
$
$
664 (3,667) 1,423 (1,580)
$
331 (2,305) (825) (2,799)
$
667,206 23,020
$
$ $
672,655
(1)
21,444
7
Total net revenue included tax-equivalent adjustments, predominantly due to tax-exempt income from municipal bond investments of $118 million, $99 million, $92 million, $73 million and $69 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $217 million and $133 million for the six months ended June 30, 2012 and 2011, respectively. Includes litigation expense of $0.3 billion, $2.5 billion, $0.5 billion, $1.0 billion and $1.3 billion for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $2.8 billion and $1.6 billion for the six months ended June 30, 2012 and 2011, respectively. Includes a $1.1 billion benefit from the Washington Mutual bankruptcy settlement.
Page 34
JPMORGAN CHASE & CO.
CORPORATE/PRIVATE EQUITY FINANCIAL HIGHLIGHTS, CONTINUED (in millions)
QUARTERLY TRENDS 2Q12
1Q12
4Q11
3Q11
2Q11
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
SUPPLEMENTAL INFORMATION TREASURY and CHIEF INVESTMENT OFFICE ("CIO") Securities gains (a) Investment securities portfolio (average) Investment securities portfolio (ending) Mortgage loans (average) Mortgage loans (ending) PRIVATE EQUITY Private equity gains/(losses) Direct investments Realized gains/(losses) Unrealized gains/(losses) (b) Total direct investments Third-party fund investments Total private equity gains/(losses) (c) Private equity portfolio information Direct investments Publicly-held securities Carrying value Cost Quoted public value Privately-held direct securities Carrying value Cost Third-party fund investments (d) Carrying value Cost Total private equity portfolio Carrying value Cost
(a) (b) (c) (d)
$
$
$
$
$
1,013 359,130 348,610 11,012 10,332
(116) 589 473 (9) 464
863 436 909
$
453 361,601 374,588 12,636 11,819
$
(13) 349,750 355,605 14,089 13,375
$
$
66 179 245 83 328
$
58 (122) (64) (85) (149)
$
$
$
889 549 931
$
$
805 573 896
$
$
459 324,596 330,800 13,748 14,226
394 (827) (433) (7) (440)
709 779 778
$
$
$
$
837 335,543 318,237 12,731 13,243
124 % (1) (7) (13) (13)
21 % 7 10 (14) (22)
$
1,219 (726) 493 323 816
NM 229 93 NM 41
NM NM (4) NM (43)
$
670 595 721
(3) (21) (2)
29 (27) 26
4,931 6,362
4,944 6,819
4,597 6,793
4,322 6,556
5,680 6,891
(7)
(13) (8)
2,113 1,952
2,131 2,162
2,283 2,452
2,399 2,454
2,481 2,464
(1) (10)
(15) (21)
8,831 9,950
(1) (8)
(10) (12)
7,907 8,750
$
7,964 9,530
$
7,685 9,818
$
7,430 9,789
$
$
1,466 360,366 348,610 11,824 10,332
(50) 768 718 74 792
$
$
$
939 324,492 318,237 12,078 13,243
1,390 (356) 1,034 509 1,543
56 % 11 10 (2) (22)
NM NM (31) (85) (49)
Reflects repositioning of the Corporate investment securities portfolio. Unrealized gains/(losses) contain reversals of unrealized gains and losses that were recognized in prior periods and have now been realized. Included in principal transactions revenue in the Consolidated Statements of Income. Unfunded commitments to third-party private equity funds were $524 million, $571 million, $789 million, $853 million and $876 million at June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively.
Page 35
JPMORGAN CHASE & CO.
CREDIT-RELATED INFORMATION (in millions)
Jun 30, 2012 CREDIT EXPOSURE Wholesale (a) Loans retained Loans held-for-sale and loans at fair value Total wholesale loans
$
Consumer, excluding credit card (b) Loans retained, excluding PCI loans Home equity Prime mortgage, including option ARMs Subprime mortgage Auto Business banking Student and other Total loans retained, excluding PCI loans Loans - PCI Home equity Prime mortgage Subprime mortgage Option ARMs Total loans - PCI Total loans retained Loans held-for-sale (c) Total consumer, excluding credit card loans
298,888 3,932 302,820
Mar 31, 2012
$
283,653 7,213 290,866
Dec 31, 2011
$
278,395 4,621 283,016
Sep 30, 2011
$
255,799 3,684 259,483
Jun 30, 2011
$
244,224 4,599 248,823
Jun 30, 2012 Change Mar 31, Jun 30, 2012 2011
5 % (45) 4
22 % (15) 22
72,833 76,064 8,945 48,468 18,218 12,907 237,435
75,207 76,292 9,289 48,245 17,822 13,854 240,709
77,800 76,196 9,664 47,426 17,652 14,143 242,881
80,278 74,230 10,045 46,659 17,272 14,492 242,976
82,751 74,276 10,441 46,796 17,141 14,770 246,175
(3) (4) 2 (7) (1)
(12) 2 (14) 4 6 (13) (4)
21,867 14,395 4,784 21,565 62,611 300,046 300,046
22,305 14,781 4,870 22,105 64,061 304,770 304,770
22,697 15,180 4,976 22,693 65,546 308,427 308,427
23,105 15,626 5,072 23,325 67,128 310,104 131 310,235
23,535 16,200 5,187 24,072 68,994 315,169 221 315,390
(2) (3) (2) (2) (2) (2) (2)
(7) (11) (8) (10) (9) (5) NM (5)
Credit card Loans retained (d) Loans held-for-sale Total credit card Total consumer loans
124,593 112 124,705 424,751
124,475 856 125,331 430,101
132,175 102 132,277 440,704
127,041 94 127,135 437,370
125,523 125,523 440,913
(87) (1)
(1) NM (1) (4)
Total loans
727,571
720,967
723,720
696,853
689,736
1
5
Derivative receivables Receivables from customers and other (e) Total credit-related assets
85,543 20,131 105,674
85,010 21,235 106,245
92,477 17,561 110,038
108,853 25,719 134,572
77,383 32,678 110,061
1 (5) (1)
11 (38) (4)
419,641 62,438 534,267 1,016,346
401,064 63,121 533,318 997,503
382,739 62,307 530,616 975,662
379,682 64,581 528,830 973,093
365,689 64,649 535,625 965,963
5 (1) 2
15 (3) 5
$ 1,849,591
$ 1,824,715
$ 1,809,420
$ 1,804,518
$ 1,765,760
1
5
$
$
$
$
$
4 1
14 (2) 5
Lending-related commitments Wholesale Consumer, excluding credit card Credit card Total lending-related commitments Total credit exposure Memo: Total by category Wholesale exposure (f) Consumer exposures (g) Total credit exposure
(a) (b) (c) (d) (e) (f) (g)
828,028 1,021,563 $ 1,849,591
798,071 1,026,644 $ 1,824,715
775,693 1,033,727 $ 1,809,420
773,633 1,030,885 $ 1,804,518
724,573 1,041,187 $ 1,765,760
Includes IB, CB, TSS and AM business segments and Corporate/Private Equity. Includes loans reported in RFS, auto and student loans reported in Card, and residential real estate loans reported in the AM business segment and in Corporate/Private Equity. Represents prime mortgages for all periods presented. Includes accrued interest and fees net of an allowance for the uncollectible portion of accrued interest and fee income. Predominantly includes receivables from customers, which represent margin loans to prime and retail brokerage customers; these are classified in accrued interest and accounts receivable on the Consolidated Balance Sheets. Primarily represents total wholesale loans, wholesale lending-related commitments, derivative receivables and receivables from customers. Represents total consumer loans and consumer lending-related commitments.
Page 36
JPMORGAN CHASE & CO.
CREDIT-RELATED INFORMATION, CONTINUED (in millions, except ratio data)
Jun 30, 2012 NONPERFORMING ASSETS AND RATIOS Wholesale Loans retained Loans held-for-sale and loans at fair value Total wholesale loans
$
Consumer, excluding credit card Home equity (a) Prime mortgage, including option ARMs Subprime mortgage Auto Business banking Student and other Total consumer, excluding credit card
Mar 31, 2012
1,804 194 1,998
$
Dec 31, 2011
1,941 214 2,155
$
Sep 30, 2011
2,398 183 2,581
$
Jun 30, 2012 Change Mar 31, Jun 30, 2012 2011
Jun 30, 2011
3,011 176 3,187
$
3,362 214 3,576
2,615 3,139 1,544 101 587 83 8,069
2,766 3,258 1,569 102 649 105 8,449
1,287 3,462 1,781 118 694 69 7,411
1,290 3,656 1,932 114 756 68 7,816
1,308 4,024 2,058 111 770 79 8,350
1
1
1
2
2
Total consumer nonaccrual loans (b) Total nonaccrual loans
8,070 10,068
8,450 10,605
7,412 9,993
7,818 11,005
Derivative receivables (c) Assets acquired in loan satisfactions Total nonperforming assets (d) Wholesale lending-related commitments (e) Total (d)
451 878 11,397 565 11,962
317 1,031 11,953 756 12,709
297 1,025 11,315 865 12,180
285 1,178 12,468 705 13,173
Total credit card
$
Total nonaccrual loans to total loans Total wholesale nonaccrual loans to total wholesale loans Total consumer, excluding credit card nonaccrual loans to total consumer, excluding credit card loans NONPERFORMING ASSETS BY LOB Investment Bank (c) Retail Financial Services (a)(b) Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management (c) Corporate/Private Equity (f) TOTAL
(a) (b) (c) (d)
(e) (f)
1.38
$
$
$ %
1.47
$ %
1.38
$ %
1.58
$ %
8,352 11,928
(4) (5)
(3) (16)
217 1,290 13,435 793 14,228
42 (15) (5) (25) (6)
108 (32) (15) (29) (16)
5 (5) (10) (10) (20) (5) (8) (5)
(33) (5) (6) (48) 33 3 (22) (15)
1.73
0.91
1.23
1.44
2.69
2.77
2.40
2.52
2.65
$
1,273 9,008 242 1,064 5 286 75 11,953
$
$
1,573 7,961 228 1,138 4 336 75 11,315
$
$
1,782 8,444 232 1,611 3 322 74 12,468
$
$
100 (22) (25) (9) (24) 5 (3) (50)
0.74
$
(5) (4) (2) (1) (10) (21) (4)
(46) % (9) (44)
-
0.66
1,334 8,547 219 953 4 271 69 11,397
(7) % (9) (7)
1,983 9,033 233 1,831 3 264 88 13,435
%
Based on regulatory guidance issued in the first quarter of 2012, includes performing junior liens that are subordinate to senior liens that are 90 days or more past due. For further information, see footnote (d) on page 15. Excludes PCI loans. Because the Firm is recognizing interest income on each pool of PCI loans, they are all considered to be performing. Prior to the first quarter of 2012, reported amounts had only included defaulted derivatives; effective in the first quarter of 2012, reported amounts in all periods include both defaulted derivatives as well as derivatives that have been risk rated as nonperforming. At June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, nonperforming assets excluded: (1) mortgage loans insured by U.S. government agencies of $11.9 billion, $11.8 billion, $11.5 billion, $9.5 billion and $9.1 billion, respectively, that are 90 or more days past due; and (2) real estate owned insured by U.S. government agencies of $1.3 billion, $1.2 billion, $954 million, $2.4 billion and $2.4 billion, respectively; and (3) student loans insured by U.S. government agencies under the FFELP of $547 million, $586 million, $551 million, $567 million and $558 million, respectively, that are 90 or more days past due. These amounts were excluded from nonaccrual loans as reimbursement of insured amounts is proceeding normally. In addition, the Firm's policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance. issued by the Federal Financial Institutions Examination Council (“FFIEC”). Credit card loans are charged off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification about a specified event (e.g., bankruptcy of the borrower), whichever is earlier. Represent commitments that are risk rated as nonaccrual. Predominantly relates to retained prime mortgage loans.
Page 37
JPMORGAN CHASE & CO.
CREDIT-RELATED INFORMATION, CONTINUED (in millions, except ratio data)
QUARTERLY TRENDS 2Q12 GROSS CHARGE-OFFS Wholesale loans Consumer loans, excluding credit card Credit card loans Total consumer loans Total loans GROSS RECOVERIES Wholesale loans Consumer loans, excluding credit card Credit card loans Total consumer loans Total loans NET CHARGE-OFFS/(RECOVERIES) Wholesale loans Consumer loans, excluding credit card Credit card loans Total consumer loans Total loans
$
$
$
$
$
$
NET CHARGE-OFF/(RECOVERY) RATES Wholesale retained loans Consumer retained loans, excluding credit card (a) Credit card retained loans Total retained loans Consumer retained loans, excluding credit card and PCI loans Consumer retained loans, excluding PCI loans Total retained loans, excluding PCI loans Memo: Average retained loans Wholesale loans Consumer retained loans, excluding credit card Credit card retained loans Total average retained consumer loans Total average retained loans Consumer retained loans, excluding credit card and PCI loans Consumer retained loans, excluding PCI loans Total retained loans, excluding PCI loans
(a)
1Q12
73 1,054 1,583 2,637 2,710
$
64 130 238 368 432
$
9 924 1,345 2,269 2,278
$
0.01 1.23 4.35 1.27
$
$
$
%
$
$
$
92 1,134 1,627 2,761 2,853
$
87 138 241 379 466
$
5 996 1,386 2,382 2,387
$
0.01 1.31 4.40 1.35
1.55 2.51 1.40
4Q11
$
$
$
%
292,942 302,523 124,413 426,936 719,878
$
239,210 363,623 656,547
$
$
431 1,310 1,641 2,951 3,382
$
85 139 251 390 475
$
346 1,171 1,390 2,561 2,907
$
0.52 1.50 4.29 1.64
1.66 2.60 1.49
3Q11
$
$
$
%
$
241,885 368,679 645,423
$
$
$
249 133 266 399 648
$
(151) 1,159 1,499 2,658 2,507
$
$
$
$
(0.24) % 1.47 4.70 1.44
1.91 2.74 1.81
276,764 306,657 126,795 433,452 710,216
2Q11
98 1,292 1,765 3,057 3,155
265,758 308,980 128,522 437,502 703,260
$
242,670 371,192 636,923
$
$
134 1,357 2,131 3,488 3,622
(21) % (7) (3) (4) (5)
(46) % (22) (26) (24) (25)
$
54 144 321 465 519
(26) (6) (1) (3) (7)
19 (10) (26) (21) (17)
$
80 1,213 1,810 3,023 3,103
80 (7) (3) (5) (5)
(89) (24) (26) (25) (27)
$
0.14 1.53 5.82 1.83
1.88 2.84 1.60
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
$
$
$
%
$
244,337 370,872 620,974
$
$
$
151 268 479 747 898
$
14 1,920 2,731 4,651 4,665
$
0.01 1.27 4.37 1.31
1.96 3.25 2.04
250,145 312,341 126,535 438,876 689,021
165 2,188 3,210 5,398 5,563
$
$
$
%
6 (1) (2) (2) 1
23 (5) (4) 6
$
248,028 372,790 610,246
(1) (1) 2
(4) (2) 8
$
$
(57) % (22) (33) (29) (30)
142 275 726 1,001 1,143
6 (3) (34) (25) (21)
245 2,542 4,036 6,578 6,823
(94) (24) (32) (29) (32)
0.21 1.60 6.40 2.02
1.61 2.55 1.44
237,511 317,862 124,762 442,624 680,135
387 2,817 4,762 7,579 7,966
%
2.05 3.52 2.26
284,853 304,590 125,604 430,194 715,047
$
240,548 366,151 650,985
$
$
232,058 320,894 127,136 448,030 680,088
23 (5) (1) (4) 5
250,203 377,339 609,344
(4) (3) 7
To date, no charge-offs have been recorded for PCI loans.
Page 38
JPMORGAN CHASE & CO.
CREDIT-RELATED INFORMATION, CONTINUED (in millions)
QUARTERLY TRENDS 2Q12 SUMMARY OF CHANGES IN THE ALLOWANCES ALLOWANCE FOR LOAN LOSSES Beginning balance Net charge-offs Provision for loan losses Other Ending balance ALLOWANCE FOR LENDING-RELATED COMMITMENTS Beginning balance Provision for lending-related commitments Other Ending balance
ALLOWANCE FOR LOAN LOSSES BY LOB Investment Bank Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity Total
$
$
$
$
$
$
25,871 2,278 200 (2) 23,791
1Q12
$
$
750 14 764
$
1,419 12,897 6,508 2,638 79 220 30 23,791
$
$
$
27,609 2,387 646 3 25,871
673 80 (3) 750
1,386 14,247 7,261 2,662 69 209 37 25,871
4Q11
$
$
$
$
$
$
3Q11
28,350 2,907 2,193 (27) 27,609
$
686 (9) (4) 673
$
1,436 15,247 8,009 2,603 65 209 40 27,609
$
$
$
$
28,520 2,507 2,351 (14) 28,350
2Q11
$
$
626 60 686
$
1,337 15,479 8,537 2,671 49 240 37 28,350
$
$
$
29,750 3,103 1,872 1 28,520
688 (62) 626
1,178 15,479 8,921 2,614 74 222 32 28,520
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
(6) % (5) (69) NM (8)
(13) % (27) (89) NM (17)
$
11 (83) NM 2
9 NM 22
$
2 (9) (10) (1) 14 5 (19) (8)
20 (17) (27) 1 7 (1) (6) (17)
$
$
27,609 4,665 846 1 23,791
673 94 (3) 764
$
$
$
$
32,266 6,823 3,068 9 28,520
717 (89) (2) 626
(14) % (32) (72) (89) (17)
(6) NM (50) 22
Page 39
JPMORGAN CHASE & CO.
CREDIT-RELATED INFORMATION, CONTINUED (in millions, except ratio data)
Jun 30, 2012 ALLOWANCE COMPONENTS AND RATIOS ALLOWANCE FOR LOAN LOSSES Wholesale Asset-specific Formula-based Total wholesale Consumer, excluding credit card Asset-specific Formula-based PCI Total consumer, excluding credit card Credit card Asset-specific Formula-based Total credit card Total consumer Total allowance for loan losses Allowance for lending-related commitments Total allowance for credit losses CREDIT RATIOS Wholesale allowance to total wholesale retained loans Consumer, excluding credit card allowance, to total consumer, excluding credit card retained loans Credit card allowance to total credit card retained loans Total allowance to total retained loans Wholesale allowance to wholesale retained nonaccrual loans Consumer, excluding credit card allowance, to consumer, excluding credit card retained nonaccrual loans (a) Allowance, excluding credit card allowance, to retained nonaccrual loans, excluding credit card nonaccrual loans (a) Total allowance to total retained nonaccrual loans CREDIT RATIOS, excluding PCI loans Consumer, excluding credit card allowance, to total consumer, excluding credit card retained loans Total allowance to total retained loans Consumer, excluding credit card allowance, to consumer, excluding credit card retained nonaccrual loans (a) Allowance, excluding credit card allowance, to retained nonaccrual loans, excluding credit card nonaccrual loans (a) Total allowance to total retained nonaccrual loans
(a)
$
$
Mar 31, 2012
407 3,942 4,349
$
Dec 31, 2011
448 3,875 4,323
$
Sep 30, 2011
516 3,800 4,316
$
Jun 30, 2012 Change Mar 31, Jun 30, 2012 2011
Jun 30, 2011
670 3,632 4,302
$
749 3,342 4,091
(9) % 2 1
(46) % 18 6
1,004 7,228 5,711 13,943
760 8,826 5,711 15,297
828 9,755 5,711 16,294
1,016 10,563 4,941 16,520
1,049 10,397 4,941 16,387
32 (18) (9)
(4) (30) 16 (15)
1,977 3,522 5,499 19,442 23,791 764 24,555
2,402 3,849 6,251 21,548 25,871 750 26,621
2,727 4,272 6,999 23,293 27,609 673 28,282
3,052 4,476 7,528 24,048 28,350 686 29,036
3,451 4,591 8,042 24,429 28,520 626 29,146
(18) (8) (12) (10) (8) 2 (8)
(43) (23) (32) (20) (17) 22 (16)
1.46
$
%
1.52
$
%
1.55
$
%
1.68
$
%
1.68
4.65 4.41 3.29 241
5.02 5.02 3.63 223
5.28 5.30 3.84 180
5.33 5.93 4.09 143
5.20 6.41 4.16 122
173
181
220
211
196
185 241
189 249
210 281
192 262
175 243
3.47 2.74
3.98 3.11
4.36 3.35
4.77 3.74
4.65 3.83
102
113
143
148
137
127 183
134 194
152 223
147 216
133 201
%
The Firm’s policy is generally to exempt credit card loans from being placed on nonaccrual status as permitted by regulatory guidance. Under guidance issued by the FFIEC, credit card loans are charged off by the end of the month in which the account becomes 180 days past due or within 60 days from receiving notification about a specified event (e.g., bankruptcy of the borrower), whichever is earlier.
Page 40
JPMORGAN CHASE & CO.
CREDIT-RELATED INFORMATION, CONTINUED (in millions) QUARTERLY TRENDS 2Q12 PROVISION FOR CREDIT LOSSES BY LINE OF BUSINESS Provision for loan losses Investment Bank Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity Total provision for loan losses Provision for lending-related commitments Investment Bank Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity Total provision for lending-related commitments Provision for credit losses Investment Bank Retail Financial Services Card Services & Auto Commercial Banking Treasury & Securities Services Asset Management Corporate/Private Equity Total provision for credit losses
PROVISION FOR CREDIT LOSSES BY PORTFOLIO SEGMENT Provision for loan losses Wholesale Consumer, excluding credit card Credit card Total consumer Total provision for loan losses Provision for lending-related commitments Wholesale Consumer, excluding credit card Credit card Total consumer Total provision for lending-related commitments Provision for credit losses Wholesale Consumer, excluding credit card Credit card Total consumer Total provision for credit losses
$
$
$
21 (555) 734 (31) 10 33 (12) 200
-
$
$
$
$
$
$
30 (425) 595 170 200
$
13 1
$
$
$
$
$
$
$
$
80 5 (2) (2) (1) 80
$
(5) (96) 738 77 2 19 (9) 726
$
8 2 636 638 646
$
$
21 (555) 734 (17) 8 34 (11) 214
4Q11
(85) (96) 738 72 4 21 (8) 646
$
14 (2) 1 1 14
$
$
1Q12
81 (1)
$
$
$
$
$
1 14
43 (424) 595 171 214
$
$
$
(1) 80
89 1 636 637 726
$
$
$
3Q11
298 777 1,061 29 16 23 (11) 2,193
$
(26) 2 (1) 11 3 1 1 (9)
$
272 779 1,060 40 19 24 (10) 2,184
$
364 939 890 1,829 2,193
$
(11) 2 2 (9)
353 941 890 1,831 2,184
$
(7) 1,027 1,264 73 (25) 26 (7) 2,351
$
61 (6) 5 60
$
54 1,027 1,264 67 (20) 26 (7) 2,411
$
67 1,285 999 2,284 2,351
$
60
$
$
$
$
2Q11
$
$
$
$
$
$
60
$
$
127 1,285 999 2,284 2,411
$
$
$
(142) 994 944 73 5 7 (9) 1,872
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
NM % (478) (1) NM 150 57 (50) (69)
NM % NM (22) NM 100 371 (33) (89)
$
$
(41) (19) (7) 5 (62)
NM 180 NM NM (83)
NM NM 71 (80) NM NM
$
(183) 994 944 54 (2) 12 (9) 1,810
NM (478) (1) NM 300 79 (22) (71)
NM NM (22) NM NM 183 (22) (88)
$
(55) 1,117 810 1,927 1,872
275 NM (6) (73) (69)
NM NM (27) (91) (89)
$
(62) (62)
(84) NM NM (83)
NM NM NM NM
$
(117) 1,117 810 1,927 1,810
(52) NM (6) (73) (71)
NM NM (27) (91) (88)
$
(64) (651) 1,472 41 14 54 (20) 846
$
$
80
$
19 (4) (1) 94
$
-
$
$
$
16 (651) 1,472 60 10 53 (20) 940
$
38 (423) 1,231 808 846
$
$
$
94
$
94
$
$
$
132 (423) 1,231 808 940
$
$
(551) 2,193 1,297 124 12 12 (19) 3,068
88 % NM 13 (67) 17 350 (5) (72)
(61) (23) (10) 5 (89)
NM NM 60 NM NM
(612) 2,193 1,297 101 2 17 (19) 2,979
NM NM 13 (41) 400 212 (5) (68)
(414) 2,446 1,036 3,482 3,068
NM NM 19 (77) (72)
(89) (89)
NM NM
(503) 2,446 1,036 3,482 2,979
NM NM 19 (77) (68)
Page 41
JPMORGAN CHASE & CO.
MARKET RISK-RELATED INFORMATION (in millions)
QUARTERLY TRENDS 2Q12 95% CONFIDENCE LEVEL- AVERAGE IB TRADING VAR, CREDIT PORTFOLIO VAR AND OTHER VAR IB VaR by risk type: Fixed income Foreign exchange Equities Commodities and other Diversification benefit to IB trading VaR (a) IB trading VaR (b)
$
1Q12
66 10 20 13 (44) 65
$
4Q11
60 11 17 21 (46) 63
$
3Q11
56 12 19 20 (50) 57
$
2Q11
48 10 19 15 (39) 53
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
45 9 25 16 (37) 58
10 % (9) 18 (38) 4 3
47 % 11 (20) (19) (19) 12
$
63 11 19 17 (46) 64
$
47 10 27 15 (38) 61
34 % 10 (30) 13 (21) 5
Credit portfolio VaR (c) Diversification benefit to IB trading and credit portfolio VaR (a) Total IB trading and credit portfolio VaR
25
32
39
38
27
(22)
(7)
29
27
7
(15) 75
(14) 81
(21) 75
(21) 70
(8) 77
(7) (7)
(88) (3)
(15) 78
(8) 80
(88) (3)
Other VaR: Mortgage Production and Servicing VaR (d) Chief Investment Office VaR (e) Diversification benefit to other VaR (a) Total other VaR
15 177 (10) 182
11 129 (4) 136
44 69 (30) 83
40 48 (15) 73
20 51 (10) 61
36 37 (150) 34
(25) 247 198
13 153 (g) (7) 159
18 56 (12) 62
(28) 173 42 156
(44) 94
(19) 18
(27) 114
(51) 91
104
Diversification benefit to total IB and other VaR (a) Total IB and other VaR (f)
(a) (b) (c) (d) (e) (f)
(g)
$
(56) 201
$
(47) 170
$
(45) 113
$
(35) 108
$
$
(51) 186
$
Average portfolio VaR was less than the sum of the VaR of the components described above, due to portfolio diversification. The diversification effect reflects the fact that the risks are not perfectly correlated. For further information on IB trading VaR, see footnote (b) on page 12. For further information on Credit portfolio VaR see footnote (c) on page 12. Mortgage Production and Servicing VaR includes the Firm’s mortgage pipeline and warehouse loans, MSRs and all related hedges. CIO VaR includes positions, primarily in debt securities and credit products, used to manage structural and other risks, including interest rate, credit and mortgage risks arising from the Firm’s ongoing business activities. Total IB, Credit portfolio and other VaR does not include the retained Credit portfolio, which is not reported at fair value; however, it does include hedges of those positions. It also does not include DVA on derivative and structured liabilities to reflect the credit quality of the Firm, principal investments (mezzanine financing, tax-oriented investments, etc.), certain securities and investments held by Corporate/Private Equity, capital management positions and longerterm investments managed by CIO. Reference is made to Recent developments on pages 10-11 of JPMorgan Chase’s Form 10-Q for the quarterly period ended June 30, 2012 regarding the Firm’s restatement of its 2012 first quarter financial statements. The CIO VaR amount has not been recalculated for the first quarter to reflect the restatement. If it were, however, the Firm believes that the recalculated VaR amount for the six months ended June 30, 2012 would not be materially different from the amount shown in the table above.
Page 42
JPMORGAN CHASE & CO.
CAPITAL AND OTHER SELECTED BALANCE SHEET ITEMS (in millions, except ratio data)
Jun 30, 2012 CAPITAL (based on Basel I) Tier 1 capital Total capital Tier 1 common capital (a) Risk-weighted assets Adjusted average assets (b) Tier 1 capital ratio Total capital ratio Tier 1 leverage ratio Tier 1 common capital ratio (a) TANGIBLE COMMON EQUITY (period-end) (c) Common stockholders' equity Less: Goodwill Less: Other intangible assets Add: Deferred tax liabilities (d) Total tangible common equity TANGIBLE COMMON EQUITY (average) (c) Common stockholders' equity Less: Goodwill Less: Other intangible assets Add: Deferred tax liabilities (d) Total tangible common equity INTANGIBLE ASSETS (period-end) Goodwill Mortgage servicing rights Purchased credit card relationships All other intangibles Total intangibles DEPOSITS (period-end) U.S. offices: Noninterest-bearing Interest-bearing Non-U.S. offices: Noninterest-bearing Interest-bearing Total deposits
(a) (b) (c) (d) (e)
$
$
$
$
$
$
$
$
Mar 31, 2012
148,425 (e) $ 155,352 185,134 (e) 193,476 130,095 127,642 1,318,734 1,300,185 2,202,487 2,195,625 11.3 % 11.9 14.0 14.9 6.7 7.1 9.9 9.8
183,772 48,131 2,813 2,749 135,577
$
181,021 48,157 2,923 2,734 132,675
$
48,131 7,118 466 2,347 58,062
$
348,510 506,656
$
17,123 243,597 $ 1,115,886
$
$
$
Dec 31, 2011
$
%
181,469 48,208 3,029 2,719 132,951
$
177,711 48,218 3,137 2,724 129,080
$
48,208 8,039 535 2,494 59,276
$
343,299 521,323
$
16,276 247,614 $ 1,128,512
$
$
$
150,384 188,088 122,916 1,221,198 2,202,087 12.3 15.4 6.8 10.1
Sep 30, 2011
$
%
175,773 48,188 3,207 2,729 127,107
$
175,042 48,225 3,326 2,687 126,178
$
48,188 7,223 602 2,605 58,618
$
346,670 504,864
$
18,790 257,482 $ 1,127,806
$
$
$
147,823 186,510 120,234 1,217,548 2,168,678 12.1 15.3 6.8 9.9
Jun 30, 2011
$
%
174,487 48,180 3,396 2,645 125,556
$
174,454 48,631 3,545 2,639 124,917
$
48,180 7,833 668 2,728 59,409
$
323,058 484,640
$
14,724 270,286 $ 1,092,708
Jun 30, 2012 Change Mar 31, Jun 30, 2012 2011
148,880 187,899 121,209 1,198,711 2,129,510 12.4 15.7 7.0 10.1
(4) % (4) 2 1 -
- % (1) 7 10 3
%
175,079 48,882 3,679 2,632 125,150
1 (7) 1 2
5 (2) (24) 4 8
174,077 48,834 3,738 2,618 124,123
2 (7) 3
4 (1) (22) 4 7
48,882 12,243 744 2,935 64,804
(11) (13) (6) (2)
(2) (42) (37) (20) (10)
287,654 469,618
2 (3)
21 8
13,422 277,991 $ 1,048,685
5 (2) (1)
28 (12) 6
$
$
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
$
$
179,366 48,188 3,029 2,729 130,878
$
$
171,759 48,840 3,833 2,607 121,693
4 % (1) (21) 5 8
The Firm uses Tier 1 common capital along with the other capital measures to assess and monitor its capital position. The Tier 1 common capital ratio, a non-GAAP financial measure, is Tier 1 common capital divided by risk-weighted assets. For further discussion of the Tier 1 common capital ratio, see page 46. Adjusted average assets, for purposes of calculating the leverage ratio, include total quarterly average assets adjusted for unrealized gains/(losses) on securities, less deductions for disallowed goodwill and other intangible assets, investments in certain subsidiaries, and the total adjusted carrying value of nonfinancial equity investments that are subject to deductions from Tier 1 capital. For further discussion of TCE, see page 46. Represents deferred tax liabilities related to tax-deductible goodwill and to identifiable intangibles created in non-taxable transactions, which are netted against goodwill and other intangibles when calculating TCE. Tier 1 capital and Total capital as of June 30, 2012 no longer include approximately $9 billion of outstanding trust preferred capital securities, which will be redeemed as previously announced on June 11, 2012.
Page 43
JPMORGAN CHASE & CO.
MORTGAGE REPURCHASE LIABILITY (in millions)
QUARTERLY TRENDS 2Q12 MORTGAGE REPURCHASE LIABILITY (a)(b) Summary of changes in mortgage repurchase liability: Repurchase liability at beginning of period Realized losses (c) Provision (d) Repurchase liability at end of period Outstanding repurchase demands and unresolved mortgage insurance rescission notices by counterparty type: (e) GSEs Mortgage insurers Other (f) Overlapping population (g) Total Quarterly mortgage repurchase demands received by loan origination vintage: (e) Pre-2005 2005 2006 2007 2008 Post-2008 Total
(a) (b) (c) (d) (e) (f) (g) (h)
$
$
$
$
$
$
1Q12
4Q11
3,516 $ (259) 36 3,293 (h) $
3,557 (364) 323 3,516
$
1,646 1,004 981 (125) 3,506
$
1,868 1,000 756 (116) 3,508
$
28 65 506 420 311 191 1,521
$
41 95 375 645 361 124 1,641
$
$
$
$
$
$
3Q11
3,616 (462) 403 3,557
$
1,682 1,034 663 (113) 3,266
$
39 55 315 804 291 81 1,585
$
$
$
$
2Q11
3,631 (329) 314 3,616
$
1,666 1,112 467 (155) 3,090
$
34 200 232 602 323 153 1,544
$
$
$
$
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
3,474 (241) 398 3,631
(1) % 29 (89) (6)
1 % (7) (91) (9)
1,500 1,093 326 (145) 2,774
(12) 30 (8) -
10 (8) 201 14 26
32 57 363 510 301 89 1,352
(32) (32) 35 (35) (14) 54 (7)
(13) 14 39 (18) 3 115 13
$
$
$
$
3,557 (623) 359 3,293
$
69 160 881 1,065 672 315 3,162
$
$
$
3,285 (472) 818 3,631
47 102 521 891 550 183 2,294
8 % (32) (56) (9)
47 57 69 20 22 72 38
For further details regarding the Firm’s mortgage repurchase liability, see Mortgage repurchase liability on pages 115-118 and Note 29, on pages 283-289, of JPMorgan Chase's 2011 Annual Report and Mortgage repurchase liability on pages 38-41 and Note 21, on pages 150-154, of JPMorgan Chase’s first quarter 2012 Form 10-Q. Mortgage repurchase demands associated with private label securitizations are separately evaluated by the Firm in establishing its litigation reserves. Includes principal losses and accrued interest on repurchased loans, “make-whole” settlements, settlements with claimants, and certain related expense. Make-whole settlements were $107 million, $186 million, $237 million, $162 million and $126 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $293 million and $241 million for the six months ended June 30, 2012 and 2011, respectively. Includes $28 million, $27 million, $17 million, $12 million and $10 million of provision related to new loan sales for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and $55 million and $23 million for the six months ended June 30, 2012 and 2011, respectively. Excludes amounts related to Washington Mutual. Represents repurchase demands received from parties other than the GSEs that have been presented to the Firm by trustees who assert authority to present such claims under the terms of the underlying sale or securitization agreement, and excludes repurchase demands asserted in or in connection with litigation. Because the GSEs and others may make repurchase demands based on mortgage insurance rescission notices that remain unresolved, certain loans may be subject to both an unresolved mortgage insurance rescission notice and an outstanding repurchase demand. Includes $17 million at June 30, 2012 related to future repurchase demands on loans sold by Washington Mutual to the GSEs.
Page 44
JPMORGAN CHASE & CO.
PER SHARE-RELATED INFORMATION (in millions, except per share and ratio data) QUARTERLY TRENDS 2Q12 EARNINGS PER SHARE DATA Basic earnings per share: Net income Less: Preferred stock dividends Net income applicable to common equity Less: Dividends and undistributed earnings allocated to participating securities Net income applicable to common stockholders
$
$
Total weighted-average basic shares outstanding Net income per share Diluted earnings per share: Net income applicable to common stockholders
COMMON SHARES OUTSTANDING Common shares - at period end Cash dividends declared per share (c) Book value per share Dividend payout ratio SHARE PRICE (c) High Low Close Market capitalization COMMON EQUITY REPURCHASE PROGRAM (d) Aggregate common equity repurchased Common equity repurchased Average purchase price
(a)
(b) (c) (d) (e) (f) (g) (h)
4,960 158 4,802
$
168 4,634
$
3,808.9
4Q11
4,924 157 4,767
$
190 4,577
$
3,818.8
3Q11
3,728 157 3,571
$
146 3,425
$
4,262 157 4,105
$
169 3,936
$
1 1 1
206 5,067
(12) 1
%
(9) % (9) (18) (9)
$
$
9,884 315 9,569
$
359 9,210
$
(10) % (10)
468 10,203
(23) (10)
3,958.4
-
(4)
3,970.0
(4)
1.20
$
0.90
$
1.02
$
1.28
2
(5)
$
2.41
$
2.57
(6)
$
4,634
$
4,577
$
3,425
$
3,936
$
5,067
1
(9)
$
9,210
$
10,203
(10)
(21) -
(4) (53) (4)
3,970.0 28.6 3,998.6
(4) (54) (4)
2
(5)
$
2.55
(5)
(1) 2
(3) 20 8
$
3,910.2 0.50 44.77 19
(3) 20 8
$
$
1.21
3,796.8 0.30 48.40 24
$
$ %
$
46.35 30.83 35.73 135,661
$
1,437.4 (e,f) $ 46.5 (e,f) 30.88 (e,f) $
$
$
3,801.9 9.8 3,811.7
1.19
3,822.0 0.30 47.48 25
46.49 34.01 45.98 175,737
$
$ %
3,859.6 12.6 3,872.2
0.90
3,772.7 0.25 46.59 27
$
$ %
3,958.4 24.8 3,983.2
1.02
3,798.9 0.25 45.93 24
$
$ %
1.27
3,910.2 0.25 44.77 19
3,813.9
10,986 315 10,671
$
3,818.8 14.6 3,833.4
3,859.6
5,431 158 5,273
1.22
3,808.9 11.6 3,820.5
3,801.9
2Q11
$
Total weighted-average basic shares outstanding Add: Employee stock options, SARs and warrants (a) Total weighted-average diluted shares outstanding (b) Net income per share
1Q12
SIX MONTHS ENDED JUNE 30, 2012 Change 2012 2011 2011
2Q12 Change 1Q12 2Q11
3,813.9 13.1 3,827.0
%
2.41
3,796.8 0.60 48.40 25
$
$ %
%
$
37.54 27.85 33.25 125,442
$
42.55 28.53 30.12 114,422
$
47.80 39.24 40.94 160,083
(9) (22) (23)
(3) (21) (13) (15)
$
46.49 30.83 35.73 135,661
$
48.36 39.24 40.94 160,083
(4) (21) (13) (15)
216.1 (e,g) $ 5.5 (e,g) 39.49 (e,g) $
863.8 27.2 31.75
$
4,424.9 (h) $ 127.4 (h) 34.72 (h) $
3,479.8 80.3 43.33
NM NM (22)
(59) (42) (29)
$
1,653.5 (f,g) $ 52.0 (f,g) 31.79 (f,g) $
3,574.8 82.4 43.39
(54) (37) (27)
$
$
Excluded from the computation of diluted EPS (due to the antidilutive effect) were options issued under employee benefit plans and the warrants originally issued in 2008 under the U.S. Treasury’s Capital Purchase Program to purchase shares of the Firm’s common stock. The aggregate number of shares issuable upon the exercise of such options and warrants was 159 million,169 million, 197 million, 197 million and 53 million for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, and 164 million and 69 million for the six months ended June 30, 2012 and 2011, respectively. Participating securities were included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the calculation using the treasury stock method. For additional information on the dividends, listing and trading of JPMorgan Chase’s common stock, see page 2. On March 13, 2012, the Board of Directors authorized a new $15.0 billion common equity (i.e., common stock and warrants) repurchase program, of which up to $12.0 billion is approved for repurchase in 2012 and up to an additional $3.0 billion is approved through the end of the first quarter of 2013. The new program supersedes a $15.0 billion repurchase program approved on March 18, 2011. The Firm did not make any repurchases after May 17, 2012. The second quarter of 2012 includes $59.9 million of repurchases in March 2012, which settled in early April 2012; similarly, the first quarter of 2012 excluded these repurchases. Includes impact of aggregate repurchases of 18.5 million warrants during the three months ended June 30, 2012. Includes $86.2 million of repurchases under the prior common equity repurchase program in December 2011, which settled in early January 2012. Includes impact of aggregate repurchases of 10.2 million warrants during the three months ended September 30, 2011.
Page 45
JPMORGAN CHASE & CO.
NON-GAAP FINANCIAL MEASURES The following are several of the non-GAAP measures that the Firm uses for various reasons, including: (i) to allow management to assess the comparability of revenue arising from both taxable and tax-exempt sources, (ii) to assess and compare the quality and composition of the Firm’s capital with the capital of other financial services companies, and (iii) more generally, to provide a more meaningful measure of certain metrics that enables comparability with prior periods, as well as with competitors. (a)
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. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the business segments) on a FTE basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable investments and securities. This non-GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business.
(b)
The ratio for the allowance for loan losses to end-of-period loans excludes the following: loans accounted for at fair value and loans held-forsale; purchased credit-impaired (“PCI”) loans; and the allowance for loan losses related to PCI loans. Additionally, Real Estate Portfolios net chargeoff rates exclude the impact of PCI loans.
(c)
Tangible common equity (“TCE”), ROTCE, and Tier 1 common under Basel I and III rules are each non-GAAP financial measures. TCE represents the Firm's common stockholders' equity (i.e., total stockholders' equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. ROTCE measures the Firm's earnings as a percentage of TCE. Tier 1 common under Basel I and III rules are used by management, along with other capital measures, to assess and monitor the Firm's capital position. TCE and ROTCE are meaningful to the Firm, as well as analysts and investors, in assessing the Firm's use of equity. For additional information on Tier 1 common under Basel I and III, see Regulatory capital on pages 119-123 of JPMorgan Chase’s 2011 Annual Report and pages 42-44 of JPMorgan Chase’s first quarter 2012 Form 10-Q. In addition, all of the aforementioned measures are useful to the Firm, as well as analysts and investors, in facilitating comparisons with competitors.
(d)
TSS Firmwide revenue includes certain TSS product revenue and liability balances reported in other lines of business, mainly CB, RFS and AM, related to customers who are also customers of those lines of business.
(e)
Retail Financial Services uses the overhead ratio (excluding the amortization of core deposit intangibles ("CDI")) 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 Consumer & Business Banking's CDI amortization expense related to prior business combination transactions.
(f)
Adjusted assets equals total assets minus: (1) securities purchased under resale agreements and securities borrowed less securities sold, not yet purchased; (2) assets of consolidated VIEs; (3) cash and securities segregated and on deposit for regulatory and other purposes; (4) goodwill and intangibles; and (5) securities received as collateral. The amount of adjusted assets is presented to assist the reader in comparing IB’s asset and capital levels with those of other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a company’s capital adequacy. IB believes an adjusted asset amount that excludes the assets discussed above, which are considered to have a low risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry.
Page 46
JPMORGAN CHASE & CO.
GLOSSARY OF TERMS ACH: Automated Clearing House. Allowance for loan losses to total loans: Represents period-end allowance for loan losses divided by retained loans. Beneficial interests issued by consolidated VIEs: Represents the interests of third-party holders of debt/equity securities, or other obligations, issued by VIEs that JPMorgan Chase consolidates. The underlying obligations of the VIEs consist of short-term borrowings, commercial paper and long-term debt. The related assets consist of trading assets, available-for-sale securities, loans and other assets. Corporate/Private Equity: Includes Private Equity, Treasury and Chief Investment Office, and Corporate Other, which includes other centrally managed expense and discontinued operations.
MSR risk management revenue: Includes changes in the fair value of the MSR asset due to market-based inputs, such as interest rates and volatility, as well as updates to assumptions used in the MSR valuation model; and derivative valuation adjustments and other, which represents changes in the fair value of derivative instruments used to offset the impact of changes in the market-based inputs to the MSR valuation model. NA: Data is not applicable or available for the period presented. Net charge-off rate: Represents net charge-offs (annualized) divided by average retained loans for the reporting period. Net yield on interest-earning assets: The average rate for interest-earning assets less the average rate paid for all sources of funds. NM: Not meaningful.
Global Corporate Bank: TSS and IB formed a joint venture to create the Firm’s Global Corporate Bank. With a team of bankers, the Global Corporate Bank serves multinational clients by providing them access to TSS products and services and certain IB products, including derivatives, foreign exchange and debt. The cost of this effort and the credit that the Firm extends to these clients is shared between TSS and IB. Managed basis: A non-GAAP presentation of financial results that includes reclassifications to present revenue on a fully taxable-equivalent basis. Management uses this non-GAAP financial measure at the segment level, because it believes this provides information to enable investors to understand the underlying operational performance and trends of the particular business segment and facilitates a comparison of the business segment with the performance of competitors.
Overhead ratio: Noninterest expense as a percentage of total net revenue. Participating securities: Represents unvested stock-based compensation awards containing nonforfeitable rights to dividends or dividend equivalents (collectively, "dividends"), which are included in the earnings per share calculation using the two-class method. JPMorgan Chase grants restricted stock and RSUs to certain employees under its stock-based compensation programs, which entitle the recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities. Under the two-class method, all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities, based on their respective rights to receive dividends. Pre-provision profit: Pre-provision profit is total net revenue less noninterest expense. The Firm believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.
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JPMORGAN CHASE & CO.
GLOSSARY OF TERMS Pretax margin: Represents income before income tax expense divided by total net revenue, which is, in management’s view, a comprehensive measure of pretax performance derived by measuring earnings after all costs are taken into consideration. It is, therefore, another basis that management uses to evaluate the performance of TSS and AM against the performance of their respective competitors. Principal transactions revenue: Principal transactions revenue includes realized and unrealized gains and losses recorded on derivatives, other financial instruments, private equity investments, and physical commodities used in market-making and client-driven activities. In addition, principal transactions revenue also includes certain realized and unrealized gains and losses related to hedge accounting and specified risk management activities including: (a) certain derivatives designated in qualifying hedge accounting relationships (primarily fair value hedges of commodity and foreign exchange risk), (b) certain derivatives used for specified risk management purposes, primarily to mitigate credit risk, foreign exchange risk and commodity risk, and (c) other derivatives, including the synthetic credit portfolio. Purchased credit-impaired (“PCI”) loans: Represents loans that were acquired in the Washington Mutual transaction and deemed to be credit-impaired on the acquisition date in accordance with FASB guidance. The guidance allows purchasers to aggregate credit-impaired loans acquired in the same fiscal quarter into one or more pools, provided that the loans have common risk characteristics (e.g., product type, LTV ratios, FICO scores, past-due status, geographic location). A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Since each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, the past-due status of the pools, or that of the individual loans within the pools, is not meaningful. Because the Firm is recognizing interest income on each pool of loans, they are all considered to be performing. Charge-offs are not recorded on PCI loans until actual losses exceed estimated losses that were recorded as purchase accounting adjustments at the time of acquisition. PCI loans as well as the related charge-offs and allowance for loan losses are excluded in the calculation of certain net charge-off rates and allowance coverage ratios. To date, no charge-offs have been recorded for these loans.
Risk-weighted assets (“RWA”): Risk-weighted assets consist of on- and offbalance sheet assets that are assigned to one of several broad risk categories and weighted by factors representing their risk and potential for default. Onbalance sheet assets are risk-weighted based on the perceived credit risk associated with the obligor or counterparty, the nature of any collateral, and the guarantor, if any. Off-balance sheet assets such as lending-related commitments, guarantees, derivatives and other applicable off-balance sheet positions are risk-weighted by multiplying the contractual amount by the appropriate credit conversion factor to determine the on-balance sheet credit equivalent amount, which is then risk-weighted based on the same factors used for on-balance sheet assets. Risk-weighted assets also incorporate a measure for market risk related to applicable trading assets-debt and equity instruments, and foreign exchange and commodity derivatives. The resulting risk-weighted values for each of the risk categories are then aggregated to determine total riskweighted assets. Fully taxable-equivalent (“FTE”) basis: Total net revenue for each of the business segments and the Firm is presented on a fully taxable-equivalent basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits is presented in the managed results on a basis comparable to fully taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to these items is recorded within income tax expense. Troubled debt restructuring (“TDR”): Occurs when the Firm modifies the original terms of a loan agreement by granting a concession to a borrower that is experiencing financial difficulty. U.S. GAAP: Accounting principles generally accepted in the United States of America. Value-at-risk (“VaR”): A measure of the dollar amount of potential loss from adverse market moves in an ordinary market environment. Washington Mutual transaction: On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual Bank (“Washington Mutual”) from the FDIC. For additional information, see Glossary of Terms on page 311 of JPMorgan Chase’s 2011 Annual Report.
Receivables from customers: Primarily represents margin loans to prime and retail brokerage customers which are included in accrued interest and accounts receivable on the Consolidated Balance Sheets for the wholesale lines of business. Reported basis: Financial statements prepared under U.S. GAAP, which excludes the impact of taxable-equivalent adjustments. Retained loans: Loans that are held-for-investment excluding loans held-for-sale and loans at fair value.
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GLOSSARY OF TERMS INVESTMENT BANK (“IB”)
RFS (continued)
IB’s revenue comprises the following: Investment banking fees include advisory, equity underwriting, bond underwriting and loan syndication fees. Fixed income markets primarily include revenue related to market-making across global fixed income markets, including foreign exchange, interest rate, credit and commodities markets. Equity markets primarily include revenue related to market-making across global equity products, including cash instruments, derivatives, convertibles and Prime Services. Credit portfolio revenue includes net interest income, fees and loan sale activity, as well as gains or losses on securities received as part of a loan restructuring, for IB’s credit portfolio. Credit portfolio revenue also includes the results of risk management related to the Firm’s lending and derivative activities.
Mortgage Production and Servicing revenue comprises the following: Net production revenue includes net gains or losses on originations and sales of prime and subprime mortgage loans, other production-related fees and losses related to the repurchase of previously-sold loans. Net mortgage servicing revenue includes the following components: a) Operating revenue comprises: • All gross income earned from servicing third-party mortgage loans including stated service fees, excess service fees and other ancillary fees; and • Modeled MSR asset amortization (or time decay). b) Risk management comprises: • Changes in MSR asset fair value due to market-based inputs such as interest rates, as well as updates to assumptions used in the MSR valuation model; and • Derivative valuation adjustments and other, which represents changes in the fair value of derivative instruments used to offset the impact of changes in interest rates to the MSR valuation model.
RETAIL FINANCIAL SERVICES (“RFS”) Description of selected business metrics within Consumer & Business Banking: Client investment managed accounts – Assets actively managed by Chase Wealth Management on behalf of clients. The percentage of managed accounts is calculated by dividing managed account assets by total client investment assets. Active mobile customers – Retail banking users of all mobile platforms, which include: SMS text, Mobile Browser, iPhone, iPad and Android, who have been active in the past 90 days. Client advisors – Investment product specialists, including Private Client Advisors, Financial Advisors, Financial Advisor Associates, Senior Financial Advisors, Independent Financial Advisors and Financial Advisor Associate trainees, who advise clients on investment options, including annuities, mutual funds, stock trading services, etc., sold by the Firm or by third-party vendors through retail branches, Chase Private Client branches and other channels. Personal bankers – Retail branch office personnel who acquire, retain and expand new and existing customer relationships by assessing customer needs and recommending and selling appropriate banking products and services. Sales specialists – Retail branch office and field personnel, including Business Bankers, Relationship Managers and Loan Officers, who specialize in marketing and sales of various business banking products (i.e., business loans, letters of credit, deposit accounts, Chase paymentec, etc.) and mortgage products to existing and new clients. Deposit margin/deposit spread: Represents net interest income expressed as a percentage of average deposits.
Mortgage origination channels comprise the following: Retail – Borrowers who buy or refinance a home through direct contact with a mortgage banker employed by the Firm using a branch office, the Internet or by phone. Borrowers are frequently referred to a mortgage banker by a banker in a Chase branch, real estate brokers, home builders or other third parties. Wholesale – Third-party mortgage brokers refer loan application packages to the Firm. The Firm then underwrites and funds the loan. Brokers are independent loan originators that specialize in counseling applicants on available home financing options, but do not provide funding for loans. Chase materially eliminated broker-originated loans in 2008, with the exception of a small number of loans guaranteed by the U.S. Department of Agriculture under its Section 502 Guaranteed Loan program that serves low-and-moderate income families in small rural communities. Correspondent – Banks, thrifts, other mortgage banks and other financial institutions that sell closed loans to the Firm. Correspondent negotiated transactions (“CNTs”) – Mid- to large-sized mortgage lenders, banks and bank-owned mortgage companies sell servicing to the Firm on an as-originated basis (excluding sales of bulk servicing transactions). These transactions supplement traditional production channels and provide growth opportunities in the servicing portfolio in periods of stable and rising interest rates.
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GLOSSARY OF TERMS CARD SERVICES & AUTO (“Card”)
CB (continued)
Description of selected business metrics within Card: Sales volume – Dollar amount of cardmember purchases, net of returns. Open accounts – Cardmember accounts with charging privileges. Merchant Services business – A business that processes bank card transactions for merchants. Bank card volume – Dollar amount of transactions processed for merchants. Total transactions – Number of transactions and authorizations processed for merchants. Auto origination volume – Dollar amount of loans and leases originated. Commercial Card provides a wide range of payment services to corporate and public sector clients worldwide through the commercial card products. Services include procurement, corporate travel and entertainment, expense management services, and business-to-business payment solutions.
CB Revenue: 1. Lending includes a variety of financing alternatives, which are primarily provided on a basis secured by receivables, inventory, equipment, real estate or other assets. Products include term loans, revolving lines of credit, bridge financing, asset-based structures, leases, commercial card products and standby letters of credit. 2. Treasury services includes revenue from a broad range of products and services (as defined by Transaction Services and Trade Finance descriptions within TSS line of business metrics) that enable CB clients to manage payments and receipts, as well as invest and manage funds. 3. Investment banking includes revenue from a range of products providing CB clients with sophisticated capital-raising alternatives, as well as balance sheet and risk management tools through advisory, equity underwriting, and loan syndications. Revenue from Fixed income and Equity market products (as defined by Investment Banking line of business metrics) available to CB clients is also included. 4. Other product revenue primarily includes tax-equivalent adjustments generated from Community Development Banking activity and certain income derived from principal transactions.
COMMERCIAL BANKING (“CB”) CB Client Segments: 1. Middle Market Banking covers corporate, municipal, financial institution and not-for-profit clients, with annual revenue generally ranging between $10 million and $500 million. 2. Corporate Client Banking covers clients with annual revenue generally ranging between $500 million and $2 billion and focuses on clients that have broader investment banking needs. 3. Commercial Term Lending primarily provides term financing to real estate investors/owners for multi-family properties as well as financing office, retail and industrial properties. 4. Real Estate Banking provides full-service banking to investors and developers of institutional-grade real estate properties. 5. Other primarily includes lending and investment activity within the Community Development Banking and Chase Capital businesses.
Description of selected business metrics within CB: 1. 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. 2. IB revenue, gross represents total revenue related to investment banking products sold to CB clients.
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GLOSSARY OF TERMS TREASURY & SECURITIES SERVICES (“TSS”)
ASSET MANAGEMENT (“AM”)
Treasury & Securities Services firmwide metrics include certain TSS product revenue and liability balances reported in other lines of business related to customers who are also customers of those other lines of business. In order to capture the firmwide impact of Treasury Services 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 management's view, in order to understand the aggregate TSS business.
Assets under management – Represent assets actively managed by AM on behalf of Private Banking, Institutional, and Retail clients. Includes “committed capital not called,” on which AM earns fees. Excludes assets managed by American Century Companies, Inc. in which the Firm sold its minority ownership interest on August 31, 2011.
Description of a business metric within TSS: 1. 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. 2. Assets under custody represents activities associated with the safekeeping and servicing of assets on which WSS earns fees.
Multi-asset – Any fund or account that allocates assets under management to more than one asset class (e.g., long-term fixed income, equity, cash, real assets, private equity or hedge funds).
Description of selected products and services within TSS: 1. Investor Services includes primarily custody, fund accounting and administration, and securities lending products sold principally to asset managers, insurance companies and public and private investment funds. 2. Clearance, Collateral Management & Depositary Receipts primarily includes broker-dealer clearing and custody services, including tri-party repo transactions, collateral management products, and depositary bank services for American and global depositary receipt programs. 3. Transaction Services includes a broad range of products and services that enable clients to manage payments and receipts, as well as invest and manage funds. Products include U.S. dollar and multi-currency clearing, ACH, lockbox, disbursement and reconciliation services, check deposits, and currency related services. 4. Trade Finance enables the management of cross-border trade for bank and corporate clients. Products include loans directly tied to goods crossing borders, export/import loans, commercial letters of credit, standby letters of credit, and supply chain finance.
Assets under supervision – Represent assets under management, as well as custody, brokerage, administration and deposit accounts.
Alternative assets – The following types of assets constitute alternative investments – hedge funds, currency, real estate and private equity. AM’s client segments comprise the following: Institutional includes comprehensive global investment services – including asset management, pension analytics, asset/liability management and active risk budgeting strategies – to corporate and public institutions, endowments, foundations, not-for-profit organizations and governments worldwide. Retail includes worldwide investment management services and retirement planning and administration through third-parties and direct distribution of a full range of investment vehicles. Private Banking includes investment advice and wealth management services to high- and ultra-high-net-worth individuals, families, money managers, business owners and small corporations worldwide, including investment management, capital markets and risk management, tax and estate planning, banking, capital raising and specialty-wealth advisory services.
Pre-provision profit ratio represents total net revenue less total noninterest expense divided by total net revenue. This reflects the operating performance before the impact of credit, and is another measure of performance for TSS against the performance of competitors.
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