UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2009           Commission file number 1-5805

JPMORGAN CHASE & CO.

(Exact name of registrant as specified in its charter)

Delaware		13-2624428
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
270 Park Avenue, New York, New York		10017
(Address of principal executive offices)		(Zip Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes þ No

Number of shares of common stock outstanding as of October 31, 2009: 3,940,654,134

 

 

FORM 10-Q

TABLE OF CONTENTS

		Page
Part I — Financial information
Item 1 Consolidated Financial Statements — JPMorgan Chase & Co.:
Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2009 and 2008			98
Consolidated Balance Sheets (unaudited) at September 30, 2009, and December 31, 2008			99
Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income (unaudited) for the nine months ended September 30, 2009 and 2008			100
Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2009 and 2008			101
Notes to Consolidated Financial Statements (unaudited)			102
Consolidated Average Balance Sheets, Interest and Rates (unaudited) for the three and nine months ended September 30, 2009 and 2008			176
Glossary of Terms and Line-of-Business Metrics			178
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations:
Consolidated Financial Highlights			3
Introduction			5
Executive Overview			7
Consolidated Results of Operations			11
Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures			15
Business Segment Results			19
Balance Sheet Analysis			49
Off-Balance Sheet Arrangements and Contractual Cash Obligations			52
Capital Management			54
Risk Management			59
Supervision and Regulation			91
Critical Accounting Estimates Used by the Firm			92
Accounting and Reporting Developments			95
Forward-Looking Statements			184
Item 3 Quantitative and Qualitative Disclosures About Market Risk			185
Item 4 Controls and Procedures			185
Part II — Other information
Item 1 Legal Proceedings			185
Item 1A Risk Factors			187
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds			187
Item 3 Defaults Upon Senior Securities			188
Item 4 Submission of Matters to a Vote of Security Holders			188
Item 5 Other Information			188
Item 6 Exhibits			188
EX-31.1
EX-31.2
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

JPMORGAN CHASE & CO.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(unaudited)																						Nine months ended
(in millions, except per share, headcount and ratios)																						September 30,
As of or for the period ended,		3Q09				2Q09				1Q09				4Q08				3Q08				2009				2008
Selected income statement data
Noninterest revenue		$	13,885			$	12,953			$	11,658			$	3,394			$	5,743			$	38,496			$	25,079
Net interest income			12,737				12,670				13,367				13,832				8,994				38,774				24,947
Total net revenue			26,622				25,623				25,025				17,226				14,737				77,270				50,026
Noninterest expense			13,455				13,520				13,373				11,255				11,137				40,348				32,245
Pre-provision profit(a)			13,167				12,103				11,652				5,971				3,600				36,922				17,781
Provision for credit losses			8,104				8,031				8,596				7,755				3,811				24,731				11,690
Provision for credit losses — accounting conformity(b)			—				—				—				(442	)			1,976				—				1,976
Income/(loss) before income tax expense and extraordinary gain			5,063				4,072				3,056				(1,342	)			(2,187	)			12,191				4,115
Income tax expense/(benefit)(c)			1,551				1,351				915				(719	)			(2,133	)			3,817				(207	)
Income/(loss) before extraordinary gain			3,512				2,721				2,141				(623	)			(54	)			8,374				4,322
Extraordinary gain(d)			76				—				—				1,325				581				76				581
Net income		$	3,588			$	2,721			$	2,141			$	702			$	527			$	8,450			$	4,903
Per common share data
Basic earnings(e)
Income/(loss) before extraordinary gain		$	0.80			$	0.28			$	0.40			$	(0.29	)		$	(0.08	)		$	1.50			$	1.14
Net income			0.82				0.28				0.40				0.06				0.09				1.52				1.31
Diluted earnings(e)(f)
Income/(loss) before extraordinary gain		$	0.80			$	0.28			$	0.40			$	(0.29	)		$	(0.08	)		$	1.50			$	1.13
Net income			0.82				0.28				0.40				0.06				0.09				1.51				1.30
Cash dividends declared per share			0.05				0.05				0.05				0.38				0.38				0.15				1.14
Book value per share			39.12				37.36				36.78				36.15				36.95
Common shares outstanding
Weighted average: Basic			3,937.9				3,811.5				3,755.7				3,737.5				3,444.6				3,835.0				3,422.3
Diluted(e)			3,962.0				3,824.1				3,758.7				3,737.5	(m)			3,444.6	(m)			3,848.3				3,446.2
Common shares at period end(g)			3,938.7				3,924.1				3,757.7				3,732.8				3,726.9
Share price(h)
High		$	46.50			$	38.94			$	31.64			$	50.63			$	49.00			$	46.50			$	49.95
Low			31.59				25.29				14.96				19.69				29.24				14.96				29.24
Close			43.82				34.11				26.58				31.53				46.70
Market capitalization			172,596				133,852				99,881				117,695				174,048
Financial ratios
Return on common equity (“ROE”)(i)
Income/(loss) before extraordinary gain			9	%			3	%			5	%			(3	)%			(1	)%			6	%			4	%
Net income			9				3				5				1				1				6				5
Return on tangible common equity (“ROTCE”)(i)(j)
Income/(loss) before extraordinary gain			13				5				8				(5	)			(1	)			9				7
Net income			14				5				8				1				2				9				8
Return on assets (“ROA”)
Income/(loss) before extraordinary gain			0.70				0.54				0.42				(0.11	)			(0.01	)			0.55				0.35
Net income			0.71				0.54				0.42				0.13				0.12				0.56				0.39
Overhead ratio			51				53				53				65				76				52				64
Tier 1 capital ratio			10.2				9.7				11.4				10.9				8.9
Total capital ratio			13.9				13.3				15.2				14.8				12.6
Tier 1 leverage ratio			6.5				6.2				7.1				6.9				7.2
Tier 1 common capital ratio(k)			8.2				7.7				7.3				7.0				6.8
Selected balance sheet data (period-end)
Trading assets		$	424,435			$	395,626			$	429,700			$	509,983			$	520,257
Securities			372,867				345,563				333,861				205,943				150,779
Loans			653,144				680,601				708,243				744,898				761,381
Total assets			2,041,009				2,026,642				2,079,188				2,175,052				2,251,469
Deposits			867,977				866,477				906,969				1,009,277				969,783
Long-term debt			254,413				254,226				243,569				252,094				238,034
Common stockholders’ equity			154,101				146,614				138,201				134,945				137,691
Total stockholders’ equity			162,253				154,766				170,194				166,884				145,843
Headcount			220,861				220,255				219,569				224,961				228,452

(unaudited)																						Nine months ended
(in millions, except ratios)																						September 30,
As of or for the period ended,		3Q09				2Q09				1Q09				4Q08				3Q08				2009				2008
Credit quality metrics
Allowance for credit losses		$	31,454			$	29,818			$	28,019			$	23,823			$	19,765
Allowance for loan losses to total retained loans			4.74	%			4.33	%			3.95	%			3.18	%			2.56	%
Allowance for loan losses to retained loans excluding purchased credit- impaired loans(l)			5.28				5.01				4.53				3.62				2.87
Nonperforming assets		$	20,362			$	17,517			$	14,654			$	12,714			$	9,520
Net charge-offs			6,373				6,019				4,396				3,315				2,484			$	16,788			$	6,520
Net charge-off rate			3.84	%			3.52	%			2.51	%			1.80	%			1.91	%			3.28	%			1.70	%
Wholesale net charge-off rate			1.93				1.19				0.32				0.33				0.10				1.13				0.12
Consumer net charge-off rate			4.79				4.69				3.61				2.59				3.13				4.36				2.78

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section of the Form 10-Q provides management’s discussion and analysis (“MD&A”) of the financial condition and results of operations for JPMorgan Chase. See the Glossary of Terms on pages 178-181 for definitions of terms used throughout this Form 10-Q. The MD&A included in this Form 10-Q contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. These risks and uncertainties could cause JPMorgan Chase’s actual results to differ materially from those set forth in such forward-looking statements. For a discussion of some of these risks and uncertainties, see Forward-looking Statements on pages 184-185 and Part II, Item 1A: Risk Factors on page 187 of this Form 10-Q, and JPMorgan Chase’s Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the U.S. Securities and Exchange Commission (“2008 Annual Report” or “2008 Form 10-K”), including Part I, Item 1A: Risk factors.

INTRODUCTION

JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the United States of America (“U.S.”), with $2.0 trillion in assets, $162.3 billion in stockholders’ equity and operations in more than 60 countries as of September 30, 2009. The Firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S. and many of the world’s most prominent corporate, institutional and government clients.

JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), a U.S. national banking association with branches in 23 states; and Chase Bank USA, National Association (“Chase Bank USA, N.A.”), a national bank that is the Firm’s credit card-issuing bank. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities Inc., the Firm’s U.S. investment banking firm.

JPMorgan Chase’s activities are organized, for management reporting purposes, into six business segments, as well as Corporate/Private Equity. The Firm’s wholesale businesses comprise the Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management segments. The Firm’s consumer businesses comprise the Retail Financial Services and Card Services segments. A description of the Firm’s business segments, and the products and services they provide to their respective client bases, follows.

Investment Bank

J.P. Morgan is one of the world’s leading investment banks, with deep client relationships and broad product capabilities. The clients of the Investment Bank (“IB”) are corporations, financial institutions, governments and institutional investors. The Firm offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, sophisticated risk management, market-making in cash securities and derivative instruments, prime brokerage and research. IB also selectively commits the Firm’s own capital to principal investing and trading activities.

Retail Financial Services

Retail Financial Services (“RFS”), which includes the Retail Banking and Consumer Lending reporting segments, serves consumers and businesses through personal service at bank branches and through ATMs, online banking and telephone banking, as well as through auto dealerships and school financial-aid offices. Customers can use more than 5,100 bank branches (third-largest nationally) and 15,000 ATMs (second-largest nationally), as well as online and mobile banking around the clock. More than 22,400 branch salespeople assist customers with checking and savings accounts, mortgages, home equity and business loans, and investments across a 23-state footprint from New York and Florida to California. Consumers also can obtain loans through 15,900 auto dealerships and nearly 2,400 schools and universities nationwide.

Card Services

Chase Card Services (“CS”) is one of the nation’s largest credit card issuers, with more than 146 million cards in circulation and more than $165 billion in managed loans. In the nine months ended September 30, 2009, customers used Chase cards to meet more than $241 billion worth of their spending needs. Chase has a market leadership position in building loyalty and rewards programs with many of the world’s most respected brands and through its proprietary products, including the Chase Freedom program.

Through Chase Paymentech Solutions, its merchant acquiring business, Chase is one of the leading processors of MasterCard and Visa payments.

Commercial Banking

Commercial Banking (“CB”) serves more than 26,000 clients nationally, including corporations, municipalities, financial institutions and not-for-profit entities with annual revenue generally ranging from $10 million to $2 billion, and approximately 30,000 real estate investors/owners. Delivering extensive industry knowledge, local expertise and dedicated service, CB partners with the Firm’s other businesses to provide comprehensive solutions, including lending, treasury services, investment banking and asset management to meet its clients’ domestic and international financial needs.

Treasury & Securities Services

Treasury & Securities Services (“TSS”) is a global leader in transaction, investment and information services. TSS is one of the world’s largest cash management providers and a leading global custodian. Treasury Services (“TS”) provides cash management, trade, wholesale card and liquidity products and services to small and mid-sized companies, multinational corporations, financial institutions and government entities. TS partners with the Commercial Banking, Retail Financial Services and Asset Management businesses to serve clients firmwide. As a result, certain TS revenue is included in other segments’ results. Worldwide Securities Services holds, values, clears and services securities, cash and alternative investments for investors and broker-dealers, and it manages depositary receipt programs globally.

Asset Management

Asset Management (“AM”), with assets under supervision of $1.7 trillion, is a global leader in investment and wealth management. AM clients include institutions, retail investors and high-net-worth individuals in every major market throughout the world. AM offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity products, including money-market instruments and bank deposits. AM also provides trust and estate, banking and brokerage services to high-net-worth clients, and retirement services for corporations and individuals. The majority of AM’s client assets are in actively managed portfolios.

EXECUTIVE OVERVIEW

This overview of management’s discussion and analysis highlights selected information and may not

contain all of the information that is important to readers of this Form 10-Q. For a complete description of events, trends and uncertainties, as well as the capital, liquidity, credit and market risks, and the critical accounting estimates affecting the Firm and its various lines of business, this Form 10-Q should be read in its entirety.

Financial performance of JPMorgan Chase

		Three months ended September 30,												Nine months ended September 30,
(in millions, except per share data and ratios)		2009				2008				Change				2009				2008				Change
Selected income statement data
Total net revenue		$	26,622			$	14,737				81	%		$	77,270			$	50,026				54	%
Total noninterest expense			13,455				11,137				21				40,348				32,245				25
Pre-provision profit			13,167				3,600				266				36,922				17,781				108
Provision for credit losses(a)			8,104				5,787				40				24,731				13,666				81
Income/(loss) before extraordinary gain			3,512				(54	)		NM					8,374				4,322				94
Extraordinary gain(b)			76				581				(87	)			76				581				(87	)
Net income			3,588				527			NM					8,450				4,903				72
Diluted earnings per share(c)(d)
Income/(loss) before extraordinary gain		$	0.80			$	(0.08	)		NM				$	1.50			$	1.13				33
Net income			0.82				0.09			NM					1.51				1.30				16
Return on common equity
Income/(loss) before extraordinary gain			9	%			(1	)%							6	%			4	%
Net income			9				1								6				5

Business overview

JPMorgan Chase reported third-quarter 2009 net income of $3.6 billion, compared with net income of $527 million in the third quarter of 2008. Earnings per share were $0.82, compared with $0.09 in the prior year. Return on common equity was 9%.

The increase in earnings from the third quarter of 2008 was driven by significantly higher net revenue, partially offset by an increase in the provision for credit losses and higher noninterest expense. Both revenue and expense were higher due to the impact of the acquisition of the banking operations of Washington Mutual Bank (“Washington Mutual”) on September 25, 2008. In addition, the increase in net revenue was driven by strong trading results and gains on legacy leveraged-lending and mortgage-related positions, compared with markdowns in the prior year in IB; gains on trading positions and higher net interest income in Corporate/Private Equity; and wider loan spreads across most businesses. The increase to the provision for credit losses resulted from a significant increase in the consumer provision, reflecting higher net charge-offs and an increase in the allowance for credit losses in the home lending and credit card loan portfolios. In addition to the impact of the Washington Mutual transaction, the increase in noninterest expense was driven by higher performance-based compensation expense, partially offset by lower headcount-related expense.

Net income for the first nine months of 2009 was $8.5 billion, or $1.51 per share, compared with $4.9 billion, or $1.30 per share, in the first nine months of 2008. The following factors that drove the 2009 third-quarter results also generally drove the increase in earnings from the comparable 2008 nine-month period: strong net revenue growth, driven by the Washington Mutual transaction; higher principal transactions revenue; and increased net interest income; partially offset by higher credit costs and higher noninterest expense. The first nine months of 2009 also reflected higher net revenue from mortgage servicing rights (“MSR”) risk management results in RFS and higher noninterest expense resulting from an accrual for an FDIC special assessment in the second quarter of 2009.

The U.S. and most other economies grew in the third quarter of 2009, with various industry sectors showing signs of stability. Conditions in financial markets also improved, as evidenced by the following: credit spreads have stabilized in the interbank term funding markets and continued to narrow for investment-grade borrowers; credit markets opened for noninvestment-grade borrowers; and the broader equity markets rose significantly. Activity in the housing sector increased, with new home construction picking up for the first time in three and a half years. Consumer spending stabilized, despite losses on household balance sheets and poor job market conditions, as the unemployment rate rose to 9.8% at the end of the third quarter. Business capital spending leveled out, aided by a slowing in the pace of inventory liquidation. Inflation remained low, and the Federal Reserve indicated that the federal funds rate would likely remain low for an “extended period,” reiterating its intent to continue to use a wide range of tools to promote economic recovery and maintain price stability.

JPMorgan Chase’s line-of-business results for the third quarter of 2009 reflected the broad-based nature of the economic improvement. Pre-provision profit remained strong at $13.2 billion, up by $9.6 billion from the prior year. Five of the six lines of business produced revenue growth, and the Investment Bank, Asset Management, Commercial Banking and the Retail Banking segment within Retail Financial Services grew net income. In contrast, Card Services and the Consumer Lending segment within Retail Financial Services reported net losses; in spite of initial signs of improvement, particularly in early-stage delinquencies, credit costs continued to be elevated in these businesses. Accordingly, the Firm increased its consumer allowance for credit losses by $2.0 billion, bringing the total allowance for credit losses to $31.5 billion, or 5.28% of total loans. This addition, combined with capital generation in the quarter, helped the Firm maintain a strong balance sheet, with a Tier 1 Capital ratio of 10.2% and a Tier 1 Common Capital ratio of 8.2%.

The Firm continued to help consumers and communities navigate the challenging economy by announcing a revamp of its overdraft policies to provide customers with more control over the fees they pay; developing new, innovative products in Card Services to enhance the way customers manage their spending and borrowing; and working with struggling mortgage customers to modify their loans. JPMorgan Chase has approved more than 262,000 new trial modifications under the U.S. Making Home Affordable Program and its own modification program, nearly 90% of which include a reduction in payments for the homeowner. Since 2007, the Firm has helped families by initiating approximately 782,000 actions to prevent foreclosure.

The discussion that follows highlights the current-quarter performance of each business segment compared with the prior-year quarter, and presents results on a managed basis unless otherwise noted. For more information about managed basis, see Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures on pages 15-19 of this Form 10-Q .

Investment Bank net income increased, reflecting higher net revenue partially offset by increases in both noninterest expense and the provision for credit losses. Fixed Income Markets drove the revenue growth, with strong results across most products and gains on legacy leveraged-lending and mortgage-related positions, compared with markdowns on these positions in the prior year. The increase in the provision for credit losses reflected deterioration in the credit environment compared with the third quarter of 2008. Noninterest expense increased, driven by higher performance-based compensation, partially offset by lower headcount-related expense.

Retail Financial Services net income declined, as an increase in the provision for credit losses was largely offset by the positive impact of the Washington Mutual transaction. Growth in net revenue was also driven by higher net mortgage servicing revenue, wider loan spreads and higher deposit balances, offset partially by lower mortgage production revenue and lower loan balances. The provision for credit losses rose significantly as weak economic conditions and housing price declines continued to drive higher estimated losses for the home equity and mortgage loan portfolios. Included in the third-quarter 2009 addition to the allowance for loan losses was an increase related to estimated deterioration in the Washington Mutual purchased credit-impaired portfolio. Noninterest expense increased, reflecting the impact of the Washington Mutual transaction and higher servicing expense, partially offset by lower mortgage reinsurance losses.

Card Services reported a net loss, compared with net income in the prior year. The decrease was driven by a higher provision for credit losses, partially offset by higher net revenue. The increase in net revenue was driven by the impact of the Washington Mutual transaction, wider loan spreads and higher merchant servicing revenue related to the dissolution of the Chase Paymentech Solutions joint venture. These benefits were offset partially by higher revenue reversals associated with higher charge-offs, lower average loan balances and a decreased level of fees. The provision for credit losses reflected a higher level of charge-offs and an increase in the allowance for loan losses. Noninterest expense increased due to the dissolution of the Chase Paymentech Solutions joint venture and the impact of the Washington Mutual transaction.

Commercial Banking net income increased, driven by higher net revenue, reflecting the impact of the Washington Mutual transaction, predominantly offset by a higher provision for credit losses and higher noninterest expense. Net revenue also increased due to wider loan spreads, a shift to higher-spread liability products, overall growth in liability balances and higher lending- and deposit-related fees. These benefits were offset predominantly by spread compression on liability products and lower loan balances. The increase in the provision for credit losses reflected continued deterioration in the credit environment across all business segments, particularly real estate-related segments. Noninterest expense rose due to the impact of the Washington Mutual transaction and higher FDIC insurance premiums.

Treasury & Securities Services net income decreased, driven by lower net revenue offset partially by lower noninterest expense. Worldwide Securities Services revenue declined, driven by lower securities lending balances, primarily as a result of declines in asset valuations and demand; lower spreads and balances on liability products; and the effect of market depreciation on certain custody assets. Treasury Services revenue declined as well, reflecting spread compression on deposit products offset by higher trade revenue driven by wider spreads, and higher card product volumes. Noninterest expense decreased, reflecting lower headcount-related expense, offset partially by higher FDIC insurance premiums.

Asset Management net income increased, due to higher net revenue and lower noninterest expense, offset partially by a higher provision for credit losses. Growth in net revenue was driven by gains on the Firm’s seed capital investments, wider loan spreads, higher deposit balances and net inflows. These benefits were partially offset by the effect of lower market levels, narrower deposit spreads, lower loan balances and decreased placement fees. The increase in the provision for credit losses reflected continued deterioration in the credit environment. Noninterest expense decreased due to lower headcount-related expense, offset by higher performance-based compensation and higher FDIC insurance premiums.

Corporate/Private Equity reported net income, compared with a net loss in the prior year, reflecting continued gains on trading positions, higher net interest income and private equity gains in the third quarter of 2009, compared with losses in the third quarter of 2008.

Firmwide, the managed provision for credit losses was $9.8 billion, up by $3.1 billion, or 47%, from the prior year. The prior-year quarter included a $2.0 billion charge to conform Washington Mutual’s allowance for loan losses, which affected both the consumer and wholesale portfolios. For the purposes of the following analysis, this charge is excluded. The consumer-managed provision for credit losses was $9.0 billion, compared with $4.3 billion in the prior year, reflecting an increase in the allowance for credit losses in the home lending and credit card loan portfolios. Consumer-managed net charge-offs were $7.0 billion, compared with $3.3 billion, resulting in managed net charge-off rates of 6.29% and 3.39%, respectively. The wholesale provision for credit losses was $779 million, compared with $398 million, reflecting continued deterioration in the credit environment. Wholesale net charge-offs were $1.1 billion, compared with $52 million, resulting in net charge-off rates of 1.93% and 0.10%, respectively. The Firm’s nonperforming assets totaled $20.4 billion at September 30, 2009, up from $9.5 billion. The allowance for credit losses increased by $1.6 billion during the quarter; this resulted in a loan loss coverage ratio at September 30, 2009, of 5.28%, compared with 5.01% at June 30, 2009, and 2.87% at September 30, 2008. The above mentioned net charge-off rates and allowance for loan loss ratios exclude loans accounted for at fair value and loans held-for-sale, and the impact of purchased credit-impaired loans. The allowance for loan loss ratios also excluded the impact of loans held by the Washington Mutual Master Trust, which were consolidated on the Firm’s balance sheet at fair value during the second quarter of 2009 and the $1.1 billion of allowance related to the purchased credit-impaired portfolio.

Business outlook

The following forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. These risks and uncertainties could cause the Firm’s actual results to differ materially from those set forth in such forward-looking statements.

JPMorgan Chase’s outlook for the fourth quarter of 2009 should be viewed against the backdrop of the global and U.S. economies, financial markets activity, the geopolitical environment, the competitive environment and client activity levels. Each of these linked factors will affect the performance of the Firm and its lines of business. The Firm continues to monitor the global and U.S. economic environments. The outlook for the capital markets remains uncertain, and further declines in U.S. housing prices in certain markets and increases in the unemployment rate, either of which could adversely affect the Firm’s financial results, are possible. In addition, as a result of recent market conditions, the U.S. Congress and regulators have increased their focus on the regulation of financial institutions; any legislation or regulations that may be adopted as a result could limit or restrict the Firm’s operations, or impose additional costs on the Firm in order to comply with such new laws or rules.

Given the potential stress on the consumer from rising unemployment and continued downward pressure on housing prices, management remains cautious with respect to the credit outlook for the consumer loan portfolios. Possible continued deterioration in credit trends could result in higher credit costs and require additions to the consumer allowance for credit losses. Based on management’s current economic outlook, quarterly net charge-offs could reach $1.4 billion for the home equity portfolio, $600 million for the prime mortgage portfolio and $500 million for the subprime mortgage portfolio over the next several quarters. The managed net charge-off rate for Card Services (excluding the Washington Mutual credit card portfolio) could approach 10.5% by the first half of 2010, and thereafter will remain highly dependent on unemployment levels. The managed net charge-off rate for the Washington Mutual credit card portfolio could approach 24% over the next several quarters. These charge-off rates are likely to move even higher if the economic environment deteriorates beyond management’s current expectations. Similarly, wholesale credit costs, and net charge-offs could increase over the next several quarters if the credit environment continues to deteriorate.

The Investment Bank continues to operate in an uncertain environment and, as noted above, results could be adversely affected if the credit environment deteriorates further. Trading results can be volatile and recent market conditions, which include elevated client volumes and spread levels, are not likely to continue. As such, management does not expect recent strong results in both Fixed Income and Equity Markets segments to continue at the same levels. Finally, if the Firm’s own credit spreads tighten, as was the case in the third quarter of 2009, the change in fair value of certain trading liabilities would also negatively affect trading results.

Although management expects underlying growth in Retail Banking, results will be under pressure from the credit environment and ongoing lower consumer spending levels. In addition, there could be further declines over the remainder of the year in average retail deposits due to anticipated downward repricing of certain legacy Washington Mutual deposits. Finally, as a result of recent changes in the Firm’s policies relating to non-sufficient funds and overdraft fees, management expects lower Retail Banking revenue in 2010. Although management estimates are, at this point in time, preliminary and subject to change, the impact of such changes could result in an annualized reduction in net income of approximately $500 million.

Card Services faces rising credit costs, as noted above, as well as continued pressure on both charge volumes and credit card receivables growth, reflecting continued lower levels of consumer spending. In addition, as a result of the recently-enacted credit card legislation, management estimates, which are preliminary and subject to change, are that Card Services’ annual net income may be adversely affected by approximately $500 million to $750 million. As a result of all these factors, management currently expects Card Services to have a net loss for the full year 2010.

Commercial Banking results could be negatively affected by rising credit costs, a decline in loan demand and reduced liability balances.

Earnings in Treasury & Securities Services and Asset Management will be affected by the impact of market levels on assets under management, supervision and custody. Additionally, earnings in Treasury & Securities Services could be affected by liability balance flows.

Private Equity results will likely be volatile and continue to be influenced by capital market activity, market levels, the performance of the broader economy and investment-specific issues. Net interest income levels will generally trend with the size of the investment portfolio in Corporate; however, the high level of trading gains in Corporate in the third quarter of 2009 is not likely to continue. In the near-term, Corporate quarterly net income (excluding Private Equity, merger-related items and any significant nonrecurring items) is expected to decline to approximately $500 million and continue trending lower through the course of 2010.

Lastly, on a Firmwide matter, the decision of the Firm’s Board of Directors regarding any increase in the level of common stock dividends will be subject to their judgment that the likelihood of another severe economic downturn has sufficiently diminished, and that overall business performance has stabilized. When, in the Board’s judgment, it is appropriate to increase the dividend, the likely result might involve an initial increase to a $0.75 to $1.00 per share annual payout level, followed by a subsequent return to the Firm’s historical dividend payout ratio of 30% to 40% of normalized earnings over time.

CONSOLIDATED RESULTS OF OPERATIONS

This section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis. Factors that relate primarily to a single business segment are discussed in more detail within that business segment. For a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations, see pages 92-94 of this Form 10-Q and pages 107-111 of JPMorgan Chase’s 2008 Annual Report.

Total net revenue

		Three months ended September 30,												Nine months ended September 30,
(in millions)		2009				2008				Change				2009				2008				Change
Investment banking fees		$	1,679			$	1,316				28	%		$	5,171			$	4,144				25	%
Principal transactions			3,860				(2,763	)		NM					8,958				(2,814	)		NM
Lending and deposit-related fees			1,826				1,168				56				5,280				3,312				59
Asset management, administration and commissions			3,158				3,485				(9	)			9,179				10,709				(14	)
Securities gains			184				424				(57	)			729				1,104				(34	)
Mortgage fees and related income			843				457				84				3,228				1,678				92
Credit card income			1,710				1,771				(3	)			5,266				5,370				(2	)
Other income			625				(115	)		NM					685				1,576				(57	)
Noninterest revenue			13,885				5,743				142				38,496				25,079				53
Net interest income			12,737				8,994				42				38,774				24,947				55
Total net revenue		$	26,622			$	14,737				81			$	77,270			$	50,026				54

Total net revenue for the third quarter of 2009 was $26.6 billion, up by $11.9 billion, or 81%, from the third quarter of 2008. For the first nine months of 2009, total net revenue was $77.3 billion, up by $27.2 billion, or 54%, from the equivalent period of 2008. The increase from both prior-year periods was driven by higher principal transactions revenue, primarily related to the strong results across most fixed income and equity products and the absence of markdowns on legacy leveraged lending and mortgage positions in IB, as well as higher levels of trading gains and investment securities income in Corporate. The results also benefited from the impact of the Washington Mutual transaction, which contributed to the increases in net interest income, lending- and deposit-related fees, mortgage fees and related income. These benefits were offset partially by reduced fees and commissions resulting from lower market levels on assets under management and custody. For the year-to-date comparison, an additional driver of the increase in revenue was higher net revenue from MSR risk management results, offset by the absence of proceeds from the sale of Visa shares in its initial public offering in the first quarter of 2008.

Investment banking fees for the third quarter and first nine months of 2009 increased from the comparable periods in 2008, reflecting higher equity and debt underwriting fees, offset partially by lower advisory fees. For a further discussion of investment banking fees, which are primarily recorded in IB, see IB segment results on pages 21-24 of this Form 10-Q.

Principal transactions revenue, which consists of revenue from the Firm’s trading and private equity investing activities, rose from the third quarter and first nine months of 2008. Trading revenue increased in the third quarter of 2009, driven by strong results across most fixed income and equity products; gains of approximately $400 million on legacy leveraged lending and mortgage-related positions, compared with markdowns of $3.6 billion in the prior year; and gains on trading positions in Corporate, compared with losses in the prior year of $1.0 billion on markdowns of Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) preferred securities. These benefits were offset partially by an aggregate loss of $1.0 billion in the quarter from the tightening of the Firm’s credit spread on certain structured liabilities and derivatives, compared with gains of $956 million in the prior year from the widening of the spread on those liabilities. For the first nine months of 2009, trading revenue rose as a result of the same drivers in the quarter, including significantly lower net markdowns on legacy leveraged lending and mortgage-related positions, compared with markdowns of $7.7 billion in the prior year; these benefits were offset partially by an aggregate loss of $1.9 billion from the tightening of the Firm’s credit spread on certain structured liabilities and derivatives, compared with gains of $2.8 billion in the prior year from the widening of spreads on those liabilities. The Firm’s private equity investments generated net gains in the third quarter of 2009, compared with net losses in the prior year. For the first nine months of 2009, the private equity investments produced net losses, compared with net gains in the prior year. For a further discussion of principal transactions revenue, see IB and Corporate/Private Equity segment results on pages 21-24 and 47-49 respectively, and Note 3 on pages 106-121 of this Form 10-Q.

Lending- and deposit-related fees rose from the third quarter and first nine months of 2008, predominantly reflecting the impact of the Washington Mutual transaction and organic growth in both lending- and deposit-related fees in RFS and IB, as well as in CB. For a further discussion of lending- and deposit-related fees, which are mostly recorded in RFS, CB and TSS, see the RFS segment results on pages 25-32, the CB segment results on pages 37-39, and the TSS segment results on pages 40-43 of this Form 10-Q.

The decline in asset management, administration and commissions revenue compared with the third quarter of 2008 reflected lower brokerage commissions revenue in IB, predominantly related to lower transaction volume; lower asset management fees in AM, from the impact of lower market levels on assets under management; and lower administration fees in TSS, driven by the effect of market depreciation on certain custody assets and lower securities lending balances. For the first nine months of 2009, the decline was largely due to lower asset management fees in AM from the impact of lower market levels on assets under management. Lower brokerage commissions revenue in IB and lower administrative fees in TSS also contributed to the decrease.

The decrease in securities gains compared with the third quarter of 2008 was due to lower gains from the repositioning of the Corporate investment securities portfolio, in connection with managing the Firm’s structural interest rate risk. For the first nine months of 2009, the decrease reflected lower gains from the sale of MasterCard shares, which totaled $241 million in 2009, compared with $668 million in 2008. For a further discussion of securities gains, which are mostly recorded in the Firm’s Corporate business, see the Corporate/Private Equity segment discussion on pages 47-49 of this Form 10-Q.

Mortgage fees and related income increased during the third quarter and first nine months of 2009, as higher net mortgage servicing revenue was offset partially by a production-related net loss in the third quarter of 2009. The increase in net mortgage servicing revenue was driven by growth in average third-party loans serviced as a result of the Washington Mutual transaction and higher MSR risk management results, reflecting primarily, for the nine-month period, the positive impact of a decrease in estimated future mortgage prepayments and positive hedging results. Mortgage production generated a net loss for the third quarter of 2009, and a decline from the first nine months of 2008, reflecting an increase in reserves for the repurchase of previously-sold loans, offset by wider margins on new originations. For a discussion of mortgage fees and related income, which is recorded primarily in RFS’ Consumer Lending business, see the Consumer Lending discussion on pages 29-32 of this Form 10-Q.

Credit card income, which includes the impact of the Washington Mutual transaction, was flat compared with the third quarter and first nine months of 2008, as lower servicing fees earned in connection with CS securitization activities, largely as a result of higher credit losses, were offset by wider loan margins on securitized credit card loans. Also partially offsetting the decline were higher merchant servicing revenue related to the dissolution of the Chase Paymentech Solutions joint venture and higher interchange income. For a further discussion of credit card income, see the CS segment results on pages 33-36 of this Form 10-Q.

Other income increased in the third quarter of 2009 due to the absence of a $375 million charge recognized in the third quarter of 2008 related to the repurchase of auction-rate securities at par. Also contributing to the increase in other income during the quarter were higher markups on certain investments, including seed capital in AM, and higher gains on the sale of certain assets, including other real estate owned. For the first nine months of 2009, other income decreased, due predominantly to the absence of $1.5 billion in proceeds from the sale of Visa shares in the first quarter of 2008 during its initial public offering, lower net securitization income in CS and the dissolution of the Chase Paymentech Solutions joint venture. These items were partially offset by the absence of a $423 million loss incurred in the second quarter of 2008, reflecting the Firm’s 49.4% share in Bear Stearns’ losses from April 8 to May 30, 2008, and the same items that drove the increase in the third quarter of 2009 results compared with the third quarter of 2008.

Net interest income increased $3.7 billion to $12.7 billion, and $13.8 billion to $38.8 billion, for the third quarter and first nine months of 2009, respectively, compared with the comparable periods in 2008. The increase from the prior year was driven by the Washington Mutual transaction, which contributed to higher average loans and deposits, and the impact of a wider net interest margin. For the quarter, the net yield on the Firm’s interest-earning assets of $1.6 trillion, on a fully taxable-equivalent (FTE) basis, was 3.10%, an increase of 37 basis points from 2008. For the first nine months, the net yield on the Firm’s interest-earning assets of $1.7 trillion, on an FTE basis, was 3.15%, an increase of 47 basis points from 2008. Excluding the impact of the Washington Mutual transaction, the increase in net interest income in the quarter and first nine months of the year was driven by the overall decline in market interest rates during the periods, which benefited the net interest margin as rates paid on the Firm’s interest-bearing liabilities declined faster relative to the decline in rates earned on interest-earning assets. The higher level of the investment securities portfolio also contributed to the increase in net interest income. The increase in net interest income was offset partially by lower loan balances, which included the effect of loan charge-offs.

Provision for credit losses		Three months ended September 30,												Nine months ended September 30,
(in millions)		2009				2008				Change				2009				2008				Change
Wholesale		$	779			$	962				(19	)%		$	3,553			$	2,214				60	%
Consumer			7,325				4,825				52				21,178				11,452				85
Total provision for credit losses		$	8,104			$	5,787				40			$	24,731			$	13,666				81

Provision for credit losses

The provision for credit losses in the third quarter and first nine months of 2009 rose compared with the equivalent 2008 periods due to increases in the consumer provision. The prior-year quarter included a $2.0 billion charge to conform Washington Mutual’s allowance for loan losses, which affected both the consumer and wholesale portfolios. For the purpose of the following analysis, this charge is excluded. The consumer provision reflected additions to the allowance for loan losses for the home equity, mortgage and credit card portfolios, as weak economic conditions, housing price declines and higher unemployment rates continued to drive higher estimated losses for these portfolios. Included in the third-quarter 2009 addition to the allowance for loan losses was a $1.1 billion increase related to estimated deterioration in the Washington Mutual purchased credit-impaired portfolio. The wholesale provision increased from the comparable 2008 periods, reflecting continued deterioration in the credit environment. For a more detailed discussion of the loan portfolio and the allowance for loan losses, see the segment discussions for RFS on pages 25-32, CS on pages 33-36, IB on pages 21-24 and CB on pages 37-39, and the Allowance for Credit Losses section on pages 81-84 of this Form 10-Q.

Noninterest expense

The following table presents the components of noninterest expense.

		Three months ended September 30,												Nine months ended September 30,
(in millions)		2009				2008				Change				2009				2008				Change
Compensation expense		$	7,311			$	5,858				25	%		$	21,816			$	17,722				23	%
Noncompensation expense:
Occupancy expense			923				766				20				2,722				2,083				31
Technology, communications and equipment expense			1,140				1,112				3				3,442				3,108				11
Professional & outside services			1,517				1,451				5				4,550				4,234				7
Marketing			440				453				(3	)			1,241				1,412				(12	)
Other expense(a)			1,767				1,096				61				5,332				2,498				113
Amortization of intangibles			254				305				(17	)			794				937				(15	)
Total noncompensation expense			6,041				5,183				17				18,081				14,272				27
Merger costs			103				96				7				451				251				80
Total noninterest expense		$	13,455			$	11,137				21			$	40,348			$	32,245				25

Total noninterest expense for the third quarter of 2009 was $13.5 billion, up $2.3 billion, or 21%, from the third quarter of 2008; for the first nine months of 2009, total noninterest expense was $40.3 billion, up by $8.1 billion, or 25%, from the comparable 2008 period. The increase was driven by the impact of the Washington Mutual transaction, higher performance-based compensation expense, the accrual of $0.7 billion for an FDIC special assessment recognized in the second quarter of 2009, higher FDIC insurance premiums and increased mortgage-related servicing expense. These items were offset partially by lower headcount-related expense, which includes salary and benefits (excluding performance-based incentives), and other noncompensation costs related to employees.

Compensation expense increased in the third quarter and first nine months of 2009 compared with the prior-year periods, reflecting higher performance-based incentives, as well as the impact of the Washington Mutual transaction. Excluding these two items, compensation expense decreased as a result of the reduction in headcount, particularly in the wholesale businesses and in Corporate.

Noncompensation expense increased from the third quarter of 2008, due predominantly to the following: the impact of the Washington Mutual transaction; higher litigation costs, partly as a result of benefits recognized in 2008 from certain litigation matters; higher mortgage servicing-related expense due to increased delinquencies and defaults, which included an increase in foreclosed property expense of $0.3 billion; higher FDIC insurance premiums; and the impact of the dissolution of the Chase Paymentech Solutions joint venture. These items were offset partially by lower headcount-related expense, particularly in IB, TSS and AM, and lower mortgage reinsurance losses. Noncompensation expense increased from the first nine months of 2008, primarily due to the drivers discussed for the third quarter and an accrual of $0.7 billion for an FDIC special assessment recognized in the second quarter of 2009. The increase was partially offset by lower credit card marketing expense.

For information on merger costs, refer to Note 10 on page 135 of this Form 10-Q.

Income tax expense

The following table presents the Firm’s income before income tax expense, income tax expense and effective tax rate.

		Three months ended September 30,								Nine months ended September 30,
(in millions, except rate)		2009				2008				2009				2008
Income/(loss) before income tax expense/(benefit)		$	5,063			$	(2,187	)		$	12,191			$	4,115
Income tax expense/(benefit)			1,551				(2,133	)			3,817				(207	)
Effective tax rate			30.6	%			97.5	%			31.3	%			(5.0	)%

The change in the effective tax rate for the third quarter and first nine months of 2009, compared with the same periods of 2008, was primarily the result of higher reported pretax income and changes in the proportion of income subject to federal, state and local taxes. In addition, the third quarter and first nine months of 2008 reflected the realization of benefits of $927 million and $1.1 billion, respectively, from the release of deferred tax liabilities associated with the undistributed earnings of certain non-U.S. subsidiaries that were deemed to be reinvested indefinitely. For a further discussion of income taxes, see Critical Accounting Estimates used by the Firm on pages 92-94 of this Form 10-Q.

Extraordinary gain

The Firm recognized a $76 million increase in the extraordinary gain in the third quarter of 2009 associated with the final purchase accounting adjustments for the September 25, 2008 acquisition of the banking operations of Washington Mutual, compared with a preliminary gain of $581 million in the third quarter of 2008. The transaction was accounted for under the purchase method of accounting in accordance with U.S. GAAP for business combinations. The adjusted net asset value of the banking operations after purchase accounting adjustments was higher than the consideration paid by JPMorgan Chase, resulting in these extraordinary gains. For a further discussion of the Washington Mutual transaction, see Note 2 on pages 102-106 of this Form 10-Q.

EXPLANATION AND RECONCILIATION OF THE FIRM’S USE OF NON-GAAP FINANCIAL MEASURES

The Firm prepares its consolidated financial statements using U.S. GAAP; these financial statements appear on pages 98-101 of this
Form 10-Q. 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. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications that assume credit card loans securitized by CS remain on the balance sheet, and it presents revenue on a FTE basis. These adjustments do not have any impact on net income as reported by the lines of business or by the Firm as a whole.

The presentation of CS results on a managed basis assumes that credit card loans that have been securitized and sold in accordance with U.S. GAAP remain on the Consolidated Balance Sheets, and that the earnings on the securitized loans are classified in the same manner as the earnings on retained loans recorded on the Consolidated Balance Sheets. JPMorgan Chase uses the concept of managed basis to evaluate the credit performance and overall financial performance of the entire managed credit card portfolio. Operations are funded and decisions are made about allocating resources, such as employees and capital, based on managed financial information. In addition, the same underwriting standards and ongoing risk monitoring are used for both loans on the Consolidated Balance Sheets and securitized loans. Although securitizations result in the sale of credit card receivables to a trust, JPMorgan Chase retains the ongoing customer relationships, as the customers may continue to use their credit cards; accordingly, the customer’s credit performance will affect both the securitized loans and the loans retained on the Consolidated Balance Sheets. JPMorgan Chase believes managed basis information is useful to investors, enabling them to understand both the credit risks associated with the loans reported on the Consolidated Balance Sheets and the Firm’s retained interests in securitized loans. For a reconciliation of reported to managed basis results for CS, see CS segment results on pages 33-36 of this Form 10-Q. For information regarding the securitization process, and loans and residual interests sold and securitized, see Note 15 on pages 147-155 of this Form 10-Q.

Total net revenue for each of the business segments and the Firm is presented on a FTE basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits is presented in the managed results on a basis comparable to taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to these items is recorded within income tax expense.

Tangible common equity (“TCE”) represents common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less identifiable intangible assets (other than MSRs) and goodwill, net of related deferred tax liabilities. ROTCE, a non-GAAP financial ratio, measures the Firm’s earnings as a percentage of TCE, and is in management’s view a meaningful measure to assess the Firm’s use of equity.

Management also uses certain non-GAAP financial measures at the business-segment level, because it believes these other non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the particular business segment and, therefore, facilitate a comparison of the business segment with the performance of its competitors.

The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.

		Three months ended September 30, 2009
		Reported				Credit				Fully tax-equivalent				Managed
(in millions, except per share and ratios)		results				card(d)				adjustments				basis
Revenue
Investment banking fees		$	1,679			$	—			$	—			$	1,679
Principal transactions			3,860				—				—				3,860
Lending- and deposit-related fees			1,826				—				—				1,826
Asset management, administration and commissions			3,158				—				—				3,158
Securities gains			184				—				—				184
Mortgage fees and related income			843				—				—				843
Credit card income			1,710				(285	)			—				1,425
Other income			625				—				371				996
Noninterest revenue			13,885				(285	)			371				13,971
Net interest income			12,737				1,983				89				14,809
Total net revenue			26,622				1,698				460				28,780
Noninterest expense			13,455				—				—				13,455
Pre-provision profit			13,167				1,698				460				15,325
Provision for credit losses			8,104				1,698				—				9,802
Income before income tax expense and extraordinary gain			5,063				—				460				5,523
Income tax expense			1,551				—				460				2,011
Income before extraordinary gain			3,512				—				—				3,512
Extraordinary gain			76				—				—				76
Net income		$	3,588			$	—			$	—			$	3,588
Diluted earnings per share(a)(b)		$	0.80			$	—			$	—			$	0.80
Return on assets(b)			0.70	%		NM				NM					0.67	%
Overhead ratio			51			NM				NM					47

		Three months ended September 30, 2008
		Reported				Credit				Fully tax-equivalent				Managed
(in millions, except per share and ratios)		results				card(d)				adjustments				basis
Revenue
Investment banking fees		$	1,316			$	—			$	—			$	1,316
Principal transactions			(2,763	)			—				—				(2,763	)
Lending- and deposit-related fees			1,168				—				—				1,168
Asset management, administration and commissions			3,485				—				—				3,485
Securities gains			424				—				—				424
Mortgage fees and related income			457				—				—				457
Credit card income			1,771				(843	)			—				928
Other income			(115	)			—				323				208
Noninterest revenue			5,743				(843	)			323				5,223
Net interest income			8,994				1,716				155				10,865
Total net revenue			14,737				873				478				16,088
Noninterest expense			11,137				—				—				11,137
Pre-provision profit			3,600				873				478				4,951
Provision for credit losses			3,811				873				—				4,684
Provision for credit losses — accounting conformity(c)			1,976				—				—				1,976
Income/(loss) before income tax expense/(benefit) and extraordinary gain			(2,187	)			—				478				(1,709	)
Income tax expense/(benefit)			(2,133	)			—				478				(1,655	)
Income/(loss) before extraordinary gain			(54	)			—				—				(54	)
Extraordinary gain			581				—				—				581
Net income		$	527			$	—			$	—			$	527
Diluted earnings (loss) per share(a)(b)		$	(0.08	)		$	—			$	—			$	(0.08	)
Return on assets(b)			(0.01	)%		NM				NM					(0.01	)%
Overhead ratio			76			NM				NM					69

		Nine months ended September 30, 2009
		Reported				Credit				Fully tax-equivalent				Managed
(in millions, except per share and ratios)		results				card(d)				adjustments				basis
Revenue
Investment banking fees		$	5,171			$	—			$	—			$	5,171
Principal transactions			8,958				—				—				8,958
Lending- and deposit-related fees			5,280				—				—				5,280
Asset management, administration and commissions			9,179				—				—				9,179
Securities gains			729				—				—				729
Mortgage fees and related income			3,228				—				—				3,228
Credit card income			5,266				(1,119	)			—				4,147
Other income			685				—				1,043				1,728
Noninterest revenue			38,496				(1,119	)			1,043				38,420
Net interest income			38,774				5,945				272				44,991
Total net revenue			77,270				4,826				1,315				83,411
Noninterest expense			40,348				—				—				40,348
Pre-provision profit			36,922				4,826				1,315				43,063
Provision for credit losses			24,731				4,826				—				29,557
Income before income tax expense and extraordinary gain			12,191				—				1,315				13,506
Income tax expense			3,817				—				1,315				5,132
Income before extraordinary gain			8,374				—				—				8,374
Extraordinary gain			76				—				—				76
Net income		$	8,450			$	—			$	—			$	8,450
Diluted earnings per share(a)(b)		$	1.50			$	—			$	—			$	1.50
Return on assets(b)			0.55	%		NM				NM					0.53	%
Overhead ratio			52			NM				NM					48

		Nine months ended September 30, 2008
		Reported				Credit				Fully tax-equivalent				Managed
(in millions, except per share and ratios)		results				card(d)				adjustments				basis
Revenue
Investment banking fees		$	4,144			$	—			$	—			$	4,144
Principal transactions			(2,814	)			—				—				(2,814	)
Lending- and deposit-related fees			3,312				—				—				3,312
Asset management, administration and commissions			10,709				—				—				10,709
Securities gains			1,104				—				—				1,104
Mortgage fees and related income			1,678				—				—				1,678
Credit card income			5,370				(2,623	)			—				2,747
Other income			1,576				—				773				2,349
Noninterest revenue			25,079				(2,623	)			773				23,229
Net interest income			24,947				5,007				481				30,435
Total net revenue			50,026				2,384				1,254				53,664
Noninterest expense			32,245				—				—				32,245
Pre-provision profit			17,781				2,384				1,254				21,419
Provision for credit losses			11,690				2,384				—				14,074
Provision for credit losses — accounting conformity(c)			1,976				—				—				1,976
Income before income tax expense/(benefit) and extraordinary gain			4,115				—				1,254				5,369
Income tax expense/(benefit)			(207	)			—				1,254				1,047
Income before extraordinary gain			4,322				—				—				4,322
Extraordinary gain			581				—				—				581
Net income		$	4,903			$	—			$	—			$	4,903
Diluted earnings per share(a)(b)		$	1.13			$	—			$	—			$	1.13
Return on assets(b)			0.35	%		NM				NM					0.33	%
Overhead ratio			64			NM				NM					60

Three months ended September 30,		2009												2008
(in millions)		Reported				Securitized				Managed				Reported				Securitized				Managed
Loans — Period-end		$	653,144			$	87,028			$	740,172			$	761,381			$	93,664			$	855,045
Total assets — average			1,999,176				82,779				2,081,955				1,756,359				75,712				1,832,071

Nine months ended September 30,		2009												2008
(in millions)		Reported				Securitized				Managed				Reported				Securitized				Managed
Loans — Period-end		$	653,144			$	87,028			$	740,172			$	761,381			$	93,664			$	855,045
Total assets — average			2,034,640				82,383				2,117,023				1,665,285				73,966				1,739,251

Average tangible common equity

		Three months ended																				Nine months ended September 30,
(in millions)		Sept. 30, 2009				June 30, 2009				March 31, 2009				Dec. 31, 2008				Sept. 30, 2008				2009				2008
Common stockholders’ equity		$	149,468			$	140,865			$	136,493			$	138,757			$	126,640			$	142,322			$	125,878
Less: Goodwill			48,328				48,273				48,071				46,838				45,947				48,225				45,809
Less: Certain identifiable intangible assets			4,984				5,218				5,443				5,586				5,512				5,214				5,845
Add: Deferred tax liabilities(a)			2,531				2,518				2,609				2,547				2,378				2,552				2,309
Tangible common equity (TCE)		$	98,687			$	89,892			$	85,588			$	88,880			$	77,559			$	91,435			$	76,533

Impact on ROE of redemption of TARP preferred stock issued to the U.S. Treasury