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) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Page | ||||||||
Part I Financial information |
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Item 1 Consolidated Financial Statements JPMorgan Chase & Co.: |
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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 |
2
(unaudited) | ||||||||||||||||||||||||||||
(in millions, except per share, headcount and ratios) | Six months ended June 30, | |||||||||||||||||||||||||||
As of or for the period ended, | 2Q10 | 1Q10 | 4Q09 | 3Q09 | 2Q09 | 2010 | 2009 | |||||||||||||||||||||
Selected income statement data |
||||||||||||||||||||||||||||
Total net revenue |
$ | 25,101 | $ | 27,671 | $ | 23,164 | $ | 26,622 | $ | 25,623 | $ | 52,772 | $ | 50,648 | ||||||||||||||
Total noninterest expense |
14,631 | 16,124 | 12,004 | 13,455 | 13,520 | 30,755 | 26,893 | |||||||||||||||||||||
Pre-provision profit(a) |
10,470 | 11,547 | 11,160 | 13,167 | 12,103 | 22,017 | 23,755 | |||||||||||||||||||||
Provision for credit losses |
3,363 | 7,010 | 7,284 | 8,104 | 8,031 | 10,373 | 16,627 | |||||||||||||||||||||
Income before income tax expense and
extraordinary gain |
7,107 | 4,537 | 3,876 | 5,063 | 4,072 | 11,644 | 7,128 | |||||||||||||||||||||
Income tax expense |
2,312 | 1,211 | 598 | 1,551 | 1,351 | 3,523 | 2,266 | |||||||||||||||||||||
Income before extraordinary gain |
4,795 | 3,326 | 3,278 | 3,512 | 2,721 | 8,121 | 4,862 | |||||||||||||||||||||
Extraordinary gain(b) |
| | | 76 | | | | |||||||||||||||||||||
Net income |
$ | 4,795 | $ | 3,326 | $ | 3,278 | $ | 3,588 | $ | 2,721 | $ | 8,121 | $ | 4,862 | ||||||||||||||
Per common share data |
||||||||||||||||||||||||||||
Basic earnings |
||||||||||||||||||||||||||||
Income before extraordinary gain |
$ | 1.10 | $ | 0.75 | $ | 0.75 | $ | 0.80 | $ | 0.28 | $ | 1.84 | $ | 0.68 | ||||||||||||||
Net income |
1.10 | 0.75 | 0.75 | 0.82 | 0.28 | 1.84 | 0.68 | |||||||||||||||||||||
Diluted earnings(c) |
||||||||||||||||||||||||||||
Income before extraordinary gain |
$ | 1.09 | $ | 0.74 | $ | 0.74 | $ | 0.80 | $ | 0.28 | $ | 1.83 | $ | 0.68 | ||||||||||||||
Net income |
1.09 | 0.74 | 0.74 | 0.82 | 0.28 | 1.83 | 0.68 | |||||||||||||||||||||
Cash dividends declared |
0.05 | 0.05 | 0.05 | 0.05 | 0.05 | 0.10 | 0.10 | |||||||||||||||||||||
Book value |
40.99 | 39.38 | 39.88 | 39.12 | 37.36 | |||||||||||||||||||||||
Common shares outstanding |
||||||||||||||||||||||||||||
Weighted-average: Basic |
3,983.5 | 3,970.5 | 3,946.1 | 3,937.9 | 3,811.5 | 3,977.0 | 3,783.6 | |||||||||||||||||||||
Diluted |
4,005.6 | 3,994.7 | 3,974.1 | 3,962.0 | 3,824.1 | 4,000.2 | 3,791.4 | |||||||||||||||||||||
Common shares at period-end(d) |
3,975.8 | 3,975.4 | 3,942.0 | 3,938.7 | 3,924.1 | |||||||||||||||||||||||
Share price(e) |
||||||||||||||||||||||||||||
High |
$ | 48.20 | $ | 46.05 | $ | 47.47 | $ | 46.50 | $ | 38.94 | $ | 48.20 | $ | 38.94 | ||||||||||||||
Low |
36.51 | 37.03 | 40.04 | 31.59 | 25.29 | 36.51 | 14.96 | |||||||||||||||||||||
Close |
36.61 | 44.75 | 41.67 | 43.82 | 34.11 | |||||||||||||||||||||||
Market capitalization |
145,554 | 177,897 | 164,261 | 172,596 | 133,852 | |||||||||||||||||||||||
Selected ratios |
||||||||||||||||||||||||||||
Return on common equity
(ROE)(c) |
||||||||||||||||||||||||||||
Income before extraordinary gain |
12 | % | 8 | % | 8 | % | 9 | % | 3 | % | 10 | % | 4 | % | ||||||||||||||
Net income |
12 | 8 | 8 | 9 | 3 | 10 | 4 | |||||||||||||||||||||
Return on tangible common equity
(ROTCE)(c) |
||||||||||||||||||||||||||||
Income before extraordinary gain |
17 | 12 | 12 | 13 | 5 | 15 | 6 | |||||||||||||||||||||
Net income |
17 | 12 | 12 | 14 | 5 | 15 | 6 | |||||||||||||||||||||
Return on assets (ROA) |
||||||||||||||||||||||||||||
Income before extraordinary gain |
0.94 | 0.66 | 0.65 | 0.70 | 0.54 | 0.80 | 0.48 | |||||||||||||||||||||
Net income |
0.94 | 0.66 | 0.65 | 0.71 | 0.54 | 0.80 | 0.48 | |||||||||||||||||||||
Overhead ratio |
58 | 58 | 52 | 51 | 53 | 58 | 53 | |||||||||||||||||||||
Tier 1 capital ratio(f) |
12.1 | 11.5 | 11.1 | 10.2 | 9.7 | |||||||||||||||||||||||
Total capital ratio |
15.8 | 15.1 | 14.8 | 13.9 | 13.3 | |||||||||||||||||||||||
Tier 1 leverage ratio |
6.9 | 6.6 | 6.9 | 6.5 | 6.2 | |||||||||||||||||||||||
Tier 1 common capital ratio(g) |
9.6 | 9.1 | 8.8 | 8.2 | 7.7 | |||||||||||||||||||||||
Selected balance sheet data
(period-end)(f) |
||||||||||||||||||||||||||||
Trading assets |
$ | 397,508 | $ | 426,128 | $ | 411,128 | $ | 424,435 | $ | 395,626 | ||||||||||||||||||
Securities |
312,013 | 344,376 | 360,390 | 372,867 | 345,563 | |||||||||||||||||||||||
Loans |
699,483 | 713,799 | 633,458 | 653,144 | 680,601 | |||||||||||||||||||||||
Total assets |
2,014,019 | 2,135,796 | 2,031,989 | 2,041,009 | 2,026,642 | |||||||||||||||||||||||
Deposits |
887,805 | 925,303 | 938,367 | 867,977 | 866,477 | |||||||||||||||||||||||
Long-term debt |
248,618 | 262,857 | 266,318 | 272,124 | 271,939 | |||||||||||||||||||||||
Common stockholders equity |
162,968 | 156,569 | 157,213 | 154,101 | 146,614 | |||||||||||||||||||||||
Total stockholders equity |
171,120 | 164,721 | 165,365 | 162,253 | 154,766 | |||||||||||||||||||||||
Headcount |
232,939 | 226,623 | 222,316 | 220,861 | 220,255 | |||||||||||||||||||||||
3
(unaudited) | Six months ended | |||||||||||||||||||||||||||
(in millions, except ratios) | June 30, | |||||||||||||||||||||||||||
As of or for the period ended, | 2Q10 | 1Q10 | 4Q09 | 3Q09 | 2Q09 | 2010 | 2009 | |||||||||||||||||||||
Credit quality metrics |
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Allowance for credit losses(f) |
$ | 36,748 | $ | 39,126 | $ | 32,541 | $ | 31,454 | $ | 29,818 | ||||||||||||||||||
Allowance for loan losses to total retained loans(f) |
5.15 | % | 5.40 | % | 5.04 | % | 4.74 | % | 4.33 | % | ||||||||||||||||||
Allowance for loan losses to retained loans excluding
purchased credit-impaired loans(f)(h) |
5.34 | 5.64 | 5.51 | 5.28 | 5.01 | |||||||||||||||||||||||
Nonperforming assets |
$ | 18,156 | $ | 19,019 | $ | 19,741 | $ | 20,362 | $ | 17,517 | ||||||||||||||||||
Net charge-offs |
5,714 | 7,910 | 6,177 | 6,373 | 6,019 | $ | 13,624 | $ | 10,415 | |||||||||||||||||||
Net charge-off rate |
3.28 | % | 4.46 | % | 3.85 | % | 3.84 | % | 3.52 | % | 3.88 | % | 3.01 | % | ||||||||||||||
Wholesale net charge-off rate |
0.44 | 1.84 | 2.31 | 1.93 | 1.19 | 1.14 | 0.75 | |||||||||||||||||||||
Consumer net charge-off rate |
4.49 | 5.56 | 4.60 | 4.79 | 4.69 | 5.03 | 4.15 | |||||||||||||||||||||
(a) | 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. | |
(b) | On September 25, 2008, JPMorgan Chase acquired the banking operations of Washington Mutual Bank (Washington Mutual). The acquisition resulted in negative goodwill, and accordingly, the Firm recognized an extraordinary gain. A preliminary gain of $1.9 billion was recognized at December 31, 2008. The final total extraordinary gain that resulted from the Washington Mutual transaction was $2.0 billion. | |
(c) | The calculation of second-quarter 2009 earnings per share (EPS) and net income applicable to common equity includes a one-time, noncash reduction of $1.1 billion, or $0.27 per share, resulting from repayment of U.S. Troubled Asset Relief Program (TARP) preferred capital. Excluding this reduction, the adjusted ROE and ROTCE for the second quarter 2009 would have been 6% and 10%, respectively. The Firm views the adjusted ROE and ROTCE, both non-GAAP financial measures, as meaningful because they enable the comparability to prior periods. For further discussion, see Explanation and Reconciliation of the Firms use of Non-GAAP Financial measures on pages 15-19 of this Form 10-Q and pages 50-52 of JPMorgan Chases 2009 Annual Report. | |
(d) | On June 5, 2009, the Firm issued $5.8 billion, or 163 million shares, of its common stock at $35.25 per share. | |
(e) | Share prices shown for JPMorgan Chases common stock are from the New York Stock Exchange. JPMorgan Chases common stock is also listed and traded on the London Stock Exchange and the Tokyo Stock Exchange. | |
(f) | Effective January 1, 2010, the Firm adopted new guidance that amended the accounting for the transfer of financial assets and the consolidation of variable interest entities (VIEs). Upon adoption of the new guidance, the Firm consolidated its Firm-sponsored credit card securitization trusts, Firm-administered multi-seller conduits and certain other consumer loan securitization entities, primarily mortgage-related, adding $87.7 billion and $92.2 billion of assets and liabilities, respectively, and decreasing stockholders equity and the Tier I capital ratio by $4.5 billion and 34 basis points, respectively. The reduction to stockholders equity was driven by the establishment of an allowance for loan losses of $7.5 billion (pretax) primarily related to receivables held in credit card securitization trusts that were consolidated at the adoption date. | |
(g) | The Firm uses Tier 1 common capital (Tier 1 common) along with the other capital measures to assess and monitor its capital position. The Tier 1 common capital ratio (Tier 1 common ratio) is Tier 1 common divided by risk-weighed assets. For further discussion, see Regulatory capital on pages 82-84 of JPMorgan Chases 2009 Annual Report. | |
(h) | Excludes the impact of home lending purchased credit-impaired loans for all periods. Also excludes, as of December 31, 2009, September 30, 2009, and June 30, 2009, the loans held by the Washington Mutual Master Trust (WMMT), which were consolidated onto the balance sheet at fair value during the second quarter of 2009; such loans have been fully repaid or charged off as of June 30, 2010. See Note 15 on pages 198-205 of JPMorgan Chases 2009 Annual Report. |
4
5
6
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
(in millions, except per share data and ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Selected income statement data |
||||||||||||||||||||||||
Total net revenue |
$ | 25,101 | $ | 25,623 | (2 | )% | $ | 52,772 | $ | 50,648 | 4 | % | ||||||||||||
Total noninterest expense |
14,631 | 13,520 | 8 | 30,755 | 26,893 | 14 | ||||||||||||||||||
Pre-provision profit |
10,470 | 12,103 | (13 | ) | 22,017 | 23,755 | (7 | ) | ||||||||||||||||
Provision for credit losses |
3,363 | 8,031 | (58 | ) | 10,373 | 16,627 | (38 | ) | ||||||||||||||||
Net income |
4,795 | 2,721 | 76 | 8,121 | 4,862 | 67 | ||||||||||||||||||
Diluted earnings per share(a) |
$ | 1.09 | $ | 0.28 | 289 | $ | 1.83 | $ | 0.68 | 169 | ||||||||||||||
Return on common equity(b) |
12 | % | 3 | % | 10 | % | 4 | % | ||||||||||||||||
Capital ratios |
||||||||||||||||||||||||
Tier 1 capital |
12.1 | 9.7 | ||||||||||||||||||||||
Tier 1 common |
9.6 | 7.7 | ||||||||||||||||||||||
(a) | The calculation of second quarter 2009 EPS includes a one-time, noncash reduction of $1.1 billion, or $0.27 per share ($0.28 per share for the six months ended June 30, 2009), resulting from repayment of TARP preferred capital. For further discussion, see Impact on diluted EPS of redemption of TARP preferred stock issued to the U.S. Treasury on page 19 of this Form 10-Q. | |
(b) | The calculation of second quarter 2009 net income applicable to common equity includes a one-time, noncash reduction of $1.1 billion resulting from repayment of TARP preferred capital. Excluding this reduction, the adjusted ROE was 6% for the second quarter and first six months of 2009. For further discussion of adjusted ROE, see Explanation and reconciliation of the Firms use of non-GAAP financial measures on pages 15-19 of this Form 10-Q. |
7
8
9
10
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
(in millions) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Investment banking fees |
$ | 1,421 | $ | 2,106 | (33 | )% | $ | 2,882 | $ | 3,492 | (17 | )% | ||||||||||||
Principal transactions |
2,090 | 3,097 | (33 | ) | 6,638 | 5,098 | 30 | |||||||||||||||||
Lending- and deposit-related fees |
1,586 | 1,766 | (10 | ) | 3,232 | 3,454 | (6 | ) | ||||||||||||||||
Asset management, administration
and commissions |
3,349 | 3,124 | 7 | 6,614 | 6,021 | 10 | ||||||||||||||||||
Securities gains |
1,000 | 347 | 188 | 1,610 | 545 | 195 | ||||||||||||||||||
Mortgage fees and related income |
888 | 784 | 13 | 1,546 | 2,385 | (35 | ) | |||||||||||||||||
Credit card income |
1,495 | 1,719 | (13 | ) | 2,856 | 3,556 | (20 | ) | ||||||||||||||||
Other income |
585 | 10 | NM | 997 | 60 | NM | ||||||||||||||||||
Noninterest revenue |
12,414 | 12,953 | (4 | ) | 26,375 | 24,611 | 7 | |||||||||||||||||
Net interest income |
12,687 | 12,670 | | 26,397 | 26,037 | 1 | ||||||||||||||||||
Total net revenue |
$ | 25,101 | $ | 25,623 | (2 | )% | $ | 52,772 | $ | 50,648 | 4 | % | ||||||||||||
11
Provision for credit losses | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Wholesale |
$ | (572 | ) | $ | 1,244 | NM | $ | (808 | ) | $ | 2,774 | NM | ||||||||||||
Consumer |
3,935 | 6,787 | (42 | )% | 11,181 | 13,853 | (19 | )% | ||||||||||||||||
Total provision for credit losses |
$ | 3,363 | $ | 8,031 | (58 | )% | $ | 10,373 | $ | 16,627 | (38 | )% | ||||||||||||
12
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
(in millions) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Compensation expense(a) |
$ | 7,616 | $ | 6,917 | 10 | % | $ | 14,892 | $ | 14,505 | 3 | % | ||||||||||||
Noncompensation expense: |
||||||||||||||||||||||||
Occupancy |
883 | 914 | (3 | ) | 1,752 | 1,799 | (3 | ) | ||||||||||||||||
Technology, communications and equipment |
1,165 | 1,156 | 1 | 2,302 | 2,302 | | ||||||||||||||||||
Professional and outside services |
1,685 | 1,518 | 11 | 3,260 | 3,033 | 7 | ||||||||||||||||||
Marketing |
628 | 417 | 51 | 1,211 | 801 | 51 | ||||||||||||||||||
Other(b)(c)(d) |
2,419 | 2,190 | 10 | 6,860 | 3,565 | 92 | ||||||||||||||||||
Amortization of intangibles |
235 | 265 | (11 | ) | 478 | 540 | (11 | ) | ||||||||||||||||
Total noncompensation expense |
7,015 | 6,460 | 9 | 15,863 | 12,040 | 32 | ||||||||||||||||||
Merger costs |
| 143 | NM | | 348 | NM | ||||||||||||||||||
Total noninterest expense |
$ | 14,631 | $ | 13,520 | 8 | % | $ | 30,755 | $ | 26,893 | 14 | % | ||||||||||||
(a) | The second quarter and first six months of 2010 included a tax expense related to the U.K. Bank Payroll Tax on certain compensation awarded from December 9, 2009, to April 5, 2010, to relevant banking employees. | |
(b) | Includes litigation expense of $792 million and $3.7 billion for the three and six months ended June 30, 2010, compared with $14 million and a net benefit of $256 million for the three and six months ended June 30, 2009, respectively. | |
(c) | Includes foreclosed property expense of $244 million and $547 million for the three and six months ended June 30, 2010, respectively, compared with $294 million and $619 million for the three and six months ended June 30, 2009, respectively. For additional information regarding foreclosed property, see Note 13 on page 196 of JPMorgan Chases 2009 Annual Report. | |
(d) | The second quarter of 2009 included a $675 million Federal Deposit Insurance Corporation (FDIC) special assessment. |
13
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in millions, except rate) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Income before income tax expense |
$ | 7,107 | $ | 4,072 | $ | 11,644 | $ | 7,128 | ||||||||
Income tax expense |
2,312 | 1,351 | 3,523 | 2,266 | ||||||||||||
Effective tax rate |
32.5 | % | 33.2 | % | 30.3 | % | 31.8 | % | ||||||||
14
15
Three months ended June 30, 2010 | ||||||||||||||||
Fully | ||||||||||||||||
Reported | Credit | tax-equivalent | Managed | |||||||||||||
(in millions, except per share and ratios) | results | card(b) | adjustments | basis | ||||||||||||
Revenue |
||||||||||||||||
Investment banking fees |
$ | 1,421 | NA | $ | | $ | 1,421 | |||||||||
Principal transactions |
2,090 | NA | | 2,090 | ||||||||||||
Lending- and
deposit-related fees |
1,586 | NA | | 1,586 | ||||||||||||
Asset management, administration and commissions |
3,349 | NA | | 3,349 | ||||||||||||
Securities gains |
1,000 | NA | | 1,000 | ||||||||||||
Mortgage fees and related income |
888 | NA | | 888 | ||||||||||||
Credit card income |
1,495 | NA | | 1,495 | ||||||||||||
Other income |
585 | NA | 416 | 1,001 | ||||||||||||
Noninterest revenue |
12,414 | NA | 416 | 12,830 | ||||||||||||
Net interest income |
12,687 | NA | 96 | 12,783 | ||||||||||||
Total net revenue |
25,101 | NA | 512 | 25,613 | ||||||||||||
Noninterest expense |
14,631 | NA | | 14,631 | ||||||||||||
Pre-provision profit |
10,470 | NA | 512 | 10,982 | ||||||||||||
Provision for credit losses |
3,363 | NA | | 3,363 | ||||||||||||
Income before income tax expense |
7,107 | NA | 512 | 7,619 | ||||||||||||
Income tax expense |
2,312 | NA | 512 | 2,824 | ||||||||||||
Net income |
$ | 4,795 | NA | $ | | $ | 4,795 | |||||||||
Diluted earnings per share |
$ | 1.09 | NA | $ | | $ | 1.09 | |||||||||
Return on assets |
0.94 | % | NA | NM | 0.94 | % | ||||||||||
Overhead ratio |
58 | NA | NM | 57 | ||||||||||||
Three months ended June 30, 2009 | ||||||||||||||||
Fully | ||||||||||||||||
Reported | Credit | tax-equivalent | Managed | |||||||||||||
(in millions, except per share and ratios) | results | card(b) | adjustments | basis | ||||||||||||
Revenue |
||||||||||||||||
Investment banking fees |
$ | 2,106 | $ | | $ | | $ | 2,106 | ||||||||
Principal transactions |
3,097 | | | 3,097 | ||||||||||||
Lending- and
deposit-related fees |
1,766 | | | 1,766 | ||||||||||||
Asset management, administration and commissions |
3,124 | | | 3,124 | ||||||||||||
Securities gains |
347 | | | 347 | ||||||||||||
Mortgage fees and related income |
784 | | | 784 | ||||||||||||
Credit card income |
1,719 | (294 | ) | | 1,425 | |||||||||||
Other income |
10 | | 335 | 345 | ||||||||||||
Noninterest revenue |
12,953 | (294 | ) | 335 | 12,994 | |||||||||||
Net interest income |
12,670 | 1,958 | 87 | 14,715 | ||||||||||||
Total net revenue |
25,623 | 1,664 | 422 | 27,709 | ||||||||||||
Noninterest expense |
13,520 | | | 13,520 | ||||||||||||
Pre-provision profit |
12,103 | 1,664 | 422 | 14,189 | ||||||||||||
Provision for credit losses |
8,031 | 1,664 | | 9,695 | ||||||||||||
Income before income tax expense |
4,072 | | 422 | 4,494 | ||||||||||||
Income tax expense |
1,351 | | 422 | 1,773 | ||||||||||||
Net income |
$ | 2,721 | $ | | $ | | $ | 2,721 | ||||||||
Diluted earnings per share(a) |
$ | 0.28 | $ | | $ | | $ | 0.28 | ||||||||
Return on assets |
0.54 | % | NM | NM | 0.51 | % | ||||||||||
Overhead ratio |
53 | NM | NM | 49 | ||||||||||||
16
Six months ended June 30, 2010 | ||||||||||||||||
Fully | ||||||||||||||||
Reported | Credit | tax-equivalent | Managed | |||||||||||||
(in millions, except per share and ratios) | results | card(b) | adjustments | basis | ||||||||||||
Revenue |
||||||||||||||||
Investment banking fees |
$ | 2,882 | NA | $ | | $ | 2,882 | |||||||||
Principal transactions |
6,638 | NA | | 6,638 | ||||||||||||
Lending- and
deposit-related fees |
3,232 | NA | | 3,232 | ||||||||||||
Asset management, administration and commissions |
6,614 | NA | | 6,614 | ||||||||||||
Securities gains |
1,610 | NA | | 1,610 | ||||||||||||
Mortgage fees and related income |
1,546 | NA | | 1,546 | ||||||||||||
Credit card income |
2,856 | NA | | 2,856 | ||||||||||||
Other income |
997 | NA | 827 | 1,824 | ||||||||||||
Noninterest revenue |
26,375 | NA | 827 | 27,202 | ||||||||||||
Net interest income |
26,397 | NA | 186 | 26,583 | ||||||||||||
Total net revenue |
52,772 | NA | 1,013 | 53,785 | ||||||||||||
Noninterest expense |
30,755 | NA | | 30,755 | ||||||||||||
Pre-provision profit |
22,017 | NA | 1,013 | 23,030 | ||||||||||||
Provision for credit losses |
10,373 | NA | | 10,373 | ||||||||||||
Income before income tax expense |
11,644 | NA | 1,013 | 12,657 | ||||||||||||
Income tax expense |
3,523 | NA | 1,013 | 4,536 | ||||||||||||
Net income |
$ | 8,121 | NA | $ | | $ | 8,121 | |||||||||
Diluted earnings per share |
$ | 1.83 | NA | $ | | $ | 1.83 | |||||||||
Return on assets |
0.80 | % | NA | NM | 0.80 | % | ||||||||||
Overhead ratio |
58 | NA | NM | 57 | ||||||||||||
Six months ended June 30, 2009 | ||||||||||||||||
Fully | ||||||||||||||||
Reported | Credit | tax-equivalent | Managed | |||||||||||||
(in millions, except per share and ratios) | results | card(b) | adjustments | basis | ||||||||||||
Revenue |
||||||||||||||||
Investment banking fees |
$ | 3,492 | $ | | $ | | $ | 3,492 | ||||||||
Principal transactions |
5,098 | | | 5,098 | ||||||||||||
Lending- and
deposit-related fees |
3,454 | | | 3,454 | ||||||||||||
Asset management, administration and commissions |
6,021 | | | 6,021 | ||||||||||||
Securities gains |
545 | | | 545 | ||||||||||||
Mortgage fees and related income |
2,385 | | | 2,385 | ||||||||||||
Credit card income |
3,556 | (834 | ) | | 2,722 | |||||||||||
Other income |
60 | | 672 | 732 | ||||||||||||
Noninterest revenue |
24,611 | (834 | ) | 672 | 24,449 | |||||||||||
Net interest income |
26,037 | 3,962 | 183 | 30,182 | ||||||||||||
Total net revenue |
50,648 | 3,128 | 855 | 54,631 | ||||||||||||
Noninterest expense |
26,893 | | | 26,893 | ||||||||||||
Pre-provision profit |
23,755 | 3,128 | 855 | 27,738 | ||||||||||||
Provision for credit losses |
16,627 | 3,128 | | 19,755 | ||||||||||||
Income before income tax expense |
7,128 | | 855 | 7,983 | ||||||||||||
Income tax expense |
2,266 | | 855 | 3,121 | ||||||||||||
Net income |
$ | 4,862 | $ | | $ | | $ | 4,862 | ||||||||
Diluted earnings per share(a) |
$ | 0.68 | $ | | $ | | $ | 0.68 | ||||||||
Return on assets |
0.48 | % | NM | NM | 0.46 | % | ||||||||||
Overhead ratio |
53 | NM | NM | 49 | ||||||||||||
(a) | The calculation of second quarter 2009 EPS includes a one-time, noncash reduction of $1.1 billion, or $0.27 per share ($0.28 per share for the six months ended June 30, 2009), resulting from the repayment of TARP preferred capital. | |
(b) | See pages 36-40 of this Form 10-Q for a discussion of the effect of credit card securitizations on CS results. |
17
Three months ended June 30, | 2010 | 2009 | ||||||||||||||||||||||
(in millions) | Reported | Securitized(a) | Managed | Reported | Securitized(a) | Managed | ||||||||||||||||||
Loans Period-end |
$ | 699,483 | NA | $ | 699,483 | $ | 680,601 | $ | 85,790 | $ | 766,391 | |||||||||||||
Total assets average |
2,043,647 | NA | 2,043,647 | 2,038,372 | 81,588 | 2,119,960 | ||||||||||||||||||
Six months ended June 30, | 2010 | 2009 | ||||||||||||||||||||||
(in millions) | Reported | Securitized(a) | Managed | Reported | Securitized(a) | Managed | ||||||||||||||||||
Loans Period-end |
$ | 699,483 | NA | $ | 699,483 | $ | 680,601 | $ | 85,790 | $ | 766,391 | |||||||||||||
Total assets average |
2,041,177 | NA | 2,041,177 | 2,052,666 | 82,182 | 2,134,848 | ||||||||||||||||||
(a) | Loans securitized are defined as loans that were sold to nonconsolidated securitization trusts and were not included in reported loans as of or for the three and six months ended June 30, 2009. For further discussion of credit card securitizations, see Note 15 on pages 151-163 of this Form 10-Q. |
Three months ended | Six months ended | |||||||||||||||||||||||||||
June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||
(in millions) | 2010 | 2010 | 2009 | 2009 | 2009 | 2010 | 2009 | |||||||||||||||||||||
Common stockholders equity |
$ | 159,069 | $ | 156,094 | $ | 156,525 | $ | 149,468 | $ | 140,865 | $ | 157,590 | $ | 138,691 | ||||||||||||||
Less: Goodwill |
48,348 | 48,542 | 48,341 | 48,328 | 48,273 | 48,445 | 48,173 | |||||||||||||||||||||
Less: Certain identifiable intangible assets |
4,265 | 4,307 | 4,741 | 4,984 | 5,218 | 4,285 | 5,329 | |||||||||||||||||||||
Add: Deferred tax liabilities(a) |
2,564 | 2,541 | 2,533 | 2,531 | 2,518 | 2,553 | 2,562 | |||||||||||||||||||||
Tangible common equity (TCE) |
$ | 109,020 | $ | 105,786 | $ | 105,976 | $ | 98,687 | $ | 89,892 | $ | 107,413 | $ | 87,751 | ||||||||||||||
(a) | 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. |
Three months ended June 30, 2009 | Six months ended June 30, 2009 | |||||||||||||||
Excluding the | Excluding the | |||||||||||||||
(in millions, except ratios) | As reported | TARP redemption | As reported | TARP redemption | ||||||||||||
Return on equity |
||||||||||||||||
Net income |
$ | 2,721 | $ | 2,721 | $ | 4,862 | $ | 4,862 | ||||||||
Less: Preferred stock dividends |
473 | 473 | 1,002 | 1,002 | ||||||||||||
Less: Accelerated amortization from
redemption of preferred stock
issued
to the U.S. Treasury |
1,112 | | 1,112 | | ||||||||||||
Net income applicable to common
equity |
$ | 1,136 | $ | 2,248 | $ | 2,748 | $ | 3,860 | ||||||||
Average common stockholders equity |
$ | 140,865 | $ | 140,865 | $ | 138,691 | $ | 138,691 | ||||||||
Return on common equity |
3 | % | 6 | % | 4 | % | 6 | % | ||||||||
18
Three months ended June 30, 2009 | Six months ended June 30, 2009 | |||||||||||||||
Effect of TARP | Effect of TARP | |||||||||||||||
(in millions, except per share) | As reported | redemption | As reported | redemption | ||||||||||||
Diluted earnings per share |
||||||||||||||||
Net income |
$ | 2,721 | $ | | $ | 4,862 | $ | | ||||||||
Less: Preferred stock dividends |
473 | | 1,002 | | ||||||||||||
Less: Accelerated amortization from redemption
of preferred stock issued to the U.S.
Treasury |
1,112 | 1,112 | 1,112 | 1,112 | ||||||||||||
Net income applicable to common equity |
$ | 1,136 | $ | (1,112 | ) | $ | 2,748 | $ | (1,112 | ) | ||||||
Less: Dividends and undistributed earnings
allocated to participating securities |
64 | (64 | ) | 157 | (65 | ) | ||||||||||
Net income applicable to common stockholders |
$ | 1,072 | $ | (1,048 | ) | $ | 2,591 | $ | (1,047 | ) | ||||||
Total weighted average diluted shares
outstanding |
3,824.1 | 3,824.1 | 3,791.4 | 3,791.4 | ||||||||||||
Net income per share |
$ | 0.28 | $ | (0.27 | ) | $ | 0.68 | $ | (0.28 | ) | ||||||
19
Three months ended | Return | |||||||||||||||||||||||||||||||||||||||||||
June 30, | Total net revenue | Noninterest expense | Net income/(loss) | on equity | ||||||||||||||||||||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | 2010 | 2009 | Change | 2010 | 2009 | |||||||||||||||||||||||||||||||||
Investment Bank(b) |
$ | 6,332 | $ | 7,301 | (13 | )% | $ | 4,522 | $ | 4,067 | 11 | % | $ | 1,381 | $ | 1,471 | (6 | )% | 14 | % | 18 | % | ||||||||||||||||||||||
Retail Financial Services |
7,809 | 7,970 | (2 | ) | 4,281 | 4,079 | 5 | 1,042 | 15 | NM | 15 | | ||||||||||||||||||||||||||||||||
Card Services |
4,217 | 4,868 | (13 | ) | 1,436 | 1,333 | 8 | 343 | (672 | ) | NM | 9 | (18 | ) | ||||||||||||||||||||||||||||||
Commercial Banking |
1,486 | 1,453 | 2 | 542 | 535 | 1 | 693 | 368 | 88 | 35 | 18 | |||||||||||||||||||||||||||||||||
Treasury & Securities Services |
1,881 | 1,900 | (1 | ) | 1,399 | 1,288 | 9 | 292 | 379 | (23 | ) | 18 | 30 | |||||||||||||||||||||||||||||||
Asset Management |
2,068 | 1,982 | 4 | 1,405 | 1,354 | 4 | 391 | 352 | 11 | 24 | 20 | |||||||||||||||||||||||||||||||||
Corporate/Private Equity(b) |
1,820 | 2,235 | (19 | ) | 1,046 | 864 | 21 | 653 | 808 | (19 | ) | NM | NM | |||||||||||||||||||||||||||||||
Total |
$ | 25,613 | $ | 27,709 | (8 | )% | $ | 14,631 | $ | 13,520 | 8 | % | $ | 4,795 | $ | 2,721 | 76 | % | 12 | % | 3 | % | ||||||||||||||||||||||
Six months ended | Return | |||||||||||||||||||||||||||||||||||||||||||
June 30, | Total net revenue | Noninterest expense | Net income/(loss) | on equity | ||||||||||||||||||||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | 2010 | 2009 | Change | 2010 | 2009 | |||||||||||||||||||||||||||||||||
Investment Bank(b) |
$ | 14,651 | $ | 15,672 | (7 | )% | $ | 9,360 | $ | 8,841 | 6 | % | $ | 3,852 | $ | 3,077 | 25 | % | 19 | % | 19 | % | ||||||||||||||||||||||
Retail Financial Services |
15,585 | 16,805 | (7 | ) | 8,523 | 8,250 | 3 | 911 | 489 | 86 | 7 | 4 | ||||||||||||||||||||||||||||||||
Card Services |
8,664 | 9,997 | (13 | ) | 2,838 | 2,679 | 6 | 40 | (1,219 | ) | NM | 1 | (16 | ) | ||||||||||||||||||||||||||||||
Commercial Banking |
2,902 | 2,855 | 2 | 1,081 | 1,088 | (1 | ) | 1,083 | 706 | 53 | 27 | 18 | ||||||||||||||||||||||||||||||||
Treasury & Securities Services |
3,637 | 3,721 | (2 | ) | 2,724 | 2,607 | 4 | 571 | 687 | (17 | ) | 18 | 28 | |||||||||||||||||||||||||||||||
Asset Management |
4,199 | 3,685 | 14 | 2,847 | 2,652 | 7 | 783 | 576 | 36 | 24 | 17 | |||||||||||||||||||||||||||||||||
Corporate/Private Equity(b) |
4,147 | 1,896 | 119 | 3,382 | 776 | 336 | 881 | 546 | 61 | NM | NM | |||||||||||||||||||||||||||||||||
Total |
$ | 53,785 | $ | 54,631 | (2 | )% | $ | 30,755 | $ | 26,893 | 14 | % | $ | 8,121 | $ | 4,862 | 67 | % | 10 | % | 4 | % | ||||||||||||||||||||||
(a) | Represents reported results on a tax-equivalent basis. The managed basis also assumes that credit card loans in Firm-sponsored credit card securitization trusts remained on the balance sheet for 2009. Firm-sponsored credit card securitizations were consolidated at their carrying values on January 1, 2010, under the new consolidation guidance related to VIEs. | |
(b) | Corporate/Private Equity includes an adjustment to offset IBs inclusion of the credit reimbursement from TSS in total net revenue; TSS reports the reimbursement to IB as a separate line on its income statement (not part of total revenue). |
20
Selected income statement data | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Investment banking fees |
$ | 1,405 | $ | 2,239 | (37 | )% | $ | 2,851 | $ | 3,619 | (21 | )% | ||||||||||||
Principal transactions |
2,105 | 1,841 | 14 | 6,036 | 5,356 | 13 | ||||||||||||||||||
Lending- and deposit-related fees |
203 | 167 | 22 | 405 | 305 | 33 | ||||||||||||||||||
Asset management, administration
and commissions |
633 | 717 | (12 | ) | 1,196 | 1,409 | (15 | ) | ||||||||||||||||
All other income(a) |
86 | (108 | ) | NM | 135 | (164 | ) | NM | ||||||||||||||||
Noninterest revenue |
4,432 | 4,856 | (9 | ) | 10,623 | 10,525 | 1 | |||||||||||||||||
Net interest income(b) |
1,900 | 2,445 | (22 | ) | 4,028 | 5,147 | (22 | ) | ||||||||||||||||
Total net revenue(c) |
6,332 | 7,301 | (13 | ) | 14,651 | 15,672 | (7 | ) | ||||||||||||||||
Provision for credit losses |
(325 | ) | 871 | NM | (787 | ) | 2,081 | NM | ||||||||||||||||
Noninterest expense |
||||||||||||||||||||||||
Compensation expense |
2,923 | 2,677 | 9 | 5,851 | 6,007 | (3 | ) | |||||||||||||||||
Noncompensation expense |
1,599 | 1,390 | 15 | 3,509 | 2,834 | 24 | ||||||||||||||||||
Total noninterest expense |
4,522 | 4,067 | 11 | 9,360 | 8,841 | 6 | ||||||||||||||||||
Income before income tax expense |
2,135 | 2,363 | (10 | ) | 6,078 | 4,750 | 28 | |||||||||||||||||
Income tax expense |
754 | 892 | (15 | ) | 2,226 | 1,673 | 33 | |||||||||||||||||
Net income |
$ | 1,381 | $ | 1,471 | (6 | ) | $ | 3,852 | $ | 3,077 | 25 | |||||||||||||
Financial ratios |
||||||||||||||||||||||||
Return on common equity |
14 | % | 18 | % | 19 | % | 19 | % | ||||||||||||||||
Return on assets |
0.78 | 0.83 | 1.12 | 0.86 | ||||||||||||||||||||
Overhead ratio |
71 | 56 | 64 | 56 | ||||||||||||||||||||
Compensation expense as a
percentage of total net
revenue(d) |
37 | 37 | 36 | 38 | ||||||||||||||||||||
Revenue by business |
||||||||||||||||||||||||
Investment banking fees: |
||||||||||||||||||||||||
Advisory |
$ | 355 | $ | 393 | (10 | ) | $ | 660 | $ | 872 | (24 | ) | ||||||||||||
Equity underwriting |
354 | 1,103 | (68 | ) | 767 | 1,411 | (46 | ) | ||||||||||||||||
Debt underwriting |
696 | 743 | (6 | ) | 1,424 | 1,336 | 7 | |||||||||||||||||
Total investment banking fees |
1,405 | 2,239 | (37 | ) | 2,851 | 3,619 | (21 | ) | ||||||||||||||||
Fixed income markets |
3,563 | 4,929 | (28 | ) | 9,027 | 9,818 | (8 | ) | ||||||||||||||||
Equity markets |
1,038 | 708 | 47 | 2,500 | 2,481 | 1 | ||||||||||||||||||
Credit portfolio(a) |
326 | (575 | ) | NM | 273 | (246 | ) | NM | ||||||||||||||||
Total net revenue |
$ | 6,332 | $ | 7,301 | (13 | ) | $ | 14,651 | $ | 15,672 | (7 | ) | ||||||||||||
Revenue by region(a) |
||||||||||||||||||||||||
Americas |
$ | 3,935 | $ | 4,118 | (4 | ) | $ | 8,497 | $ | 8,434 | 1 | |||||||||||||
Europe/Middle East/Africa |
1,537 | 2,303 | (33 | ) | 4,351 | 5,376 | (19 | ) | ||||||||||||||||
Asia/Pacific |
860 | 880 | (2 | ) | 1,803 | 1,862 | (3 | ) | ||||||||||||||||
Total net revenue |
$ | 6,332 | $ | 7,301 | (13 | ) | $ | 14,651 | $ | 15,672 | (7 | ) | ||||||||||||
(a) | TSS was charged a credit reimbursement related to certain exposures managed within IB credit portfolio on behalf of clients shared with TSS. IB recognizes this credit reimbursement in its credit portfolio business in all other income. | |
(b) | The decrease in net interest income in the second quarter was primarily due to lower loan balance, lower Prime Services spreads and spread tightening and increased liquidity in rates markets. | |
(c) | Total net revenue included tax-equivalent adjustments, predominantly due to income tax credits related to affordable housing and alternative energy investments, as well as tax-exempt income from municipal bond investments of $401 million and $334 million for the quarters ended June 30, 2010 and 2009, respectively, and $804 million and $699 million for year-to-date 2010 and 2009, respectively. | |
(d) | The compensation expense as a percentage of total net revenue ratio for the second quarter and year-to-date of 2010 excludes payroll tax expense related to the U.K. Bank Payroll Tax on certain compensation awarded from December 31, 2009, to April 5, 2010, to relevant banking employees, which is a non-GAAP financial measure. IB excludes this tax from the ratio because it enables comparability with prior periods. If this tax were included in the ratio for the second quarter and year-to-date of 2010, the ratio would have been 46% and 40%, respectively. |
21
22
Selected metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except headcount and ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Selected balance sheet data (period-end) |
||||||||||||||||||||||||
Loans(a): |
||||||||||||||||||||||||
Loans retained(b) |
$ | 54,049 | $ | 64,500 | (16 | )% | $ | 54,049 | $ | 64,500 | (16 | )% | ||||||||||||
Loans held-for-sale and loans at fair value |
3,221 | 6,814 | (53 | ) | 3,221 | 6,814 | (53 | ) | ||||||||||||||||
Total loans |
57,270 | 71,314 | (20 | ) | 57,270 | 71,314 | (20 | ) | ||||||||||||||||
Equity |
40,000 | 33,000 | 21 | 40,000 | 33,000 | 21 | ||||||||||||||||||
Selected balance sheet data (average) |
||||||||||||||||||||||||
Total assets |
$ | 710,005 | $ | 710,825 | | $ | 693,157 | $ | 721,934 | (4 | ) | |||||||||||||
Trading assetsdebt and equity instruments |
296,031 | 265,336 | 12 | 290,091 | 269,146 | 8 | ||||||||||||||||||
Trading assetsderivative receivables |
65,847 | 100,536 | (35 | ) | 65,998 | 112,711 | (41 | ) | ||||||||||||||||
Loans:(a) |
||||||||||||||||||||||||
Loans retained(b) |
53,351 | 68,224 | (22 | ) | 55,912 | 69,128 | (19 | ) | ||||||||||||||||
Loans held-for-sale and loans at fair value |
3,530 | 8,934 | (60 | ) | 3,341 | 10,658 | (69 | ) | ||||||||||||||||
Total loans |
56,881 | 77,158 | (26 | ) | 59,253 | 79,786 | (26 | ) | ||||||||||||||||
Adjusted assets(c) |
527,520 | 531,632 | (1 | ) | 517,135 | 560,239 | (8 | ) | ||||||||||||||||
Equity |
40,000 | 33,000 | 21 | 40,000 | 33,000 | 21 | ||||||||||||||||||
Headcount |
26,279 | 25,783 | 2 | 26,279 | 25,783 | 2 | ||||||||||||||||||
Credit data and quality statistics |
||||||||||||||||||||||||
Net charge-offs |
$ | 28 | $ | 433 | (94 | ) | $ | 725 | $ | 469 | 55 | |||||||||||||
Nonperforming assets: |
||||||||||||||||||||||||
Nonperforming loans: |
||||||||||||||||||||||||
Nonperforming loans retained(b)(d) |
1,926 | 3,407 | (43 | ) | 1,926 | 3,407 | (43 | ) | ||||||||||||||||
Nonperforming loans held-for-sale
and loans at fair value |
334 | 112 | 198 | 334 | 112 | 198 | ||||||||||||||||||
Total nonperforming loans |
2,260 | 3,519 | (36 | ) | 2,260 | 3,519 | (36 | ) | ||||||||||||||||
Derivative receivables |
315 | 704 | (55 | ) | 315 | 704 | (55 | ) | ||||||||||||||||
Assets acquired in loan satisfactions |
151 | 311 | (51 | ) | 151 | 311 | (51 | ) | ||||||||||||||||
Total nonperforming assets |
2,726 | 4,534 | (40 | ) | 2,726 | 4,534 | (40 | ) | ||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||
Allowance for loan losses |
2,149 | 5,101 | (58 | ) | 2,149 | 5,101 | (58 | ) | ||||||||||||||||
Allowance for lending-related commitments |
564 | 351 | 61 | 564 | 351 | 61 | ||||||||||||||||||
Total allowance for credit losses |
2,713 | 5,452 | (50 | ) | 2,713 | 5,452 | (50 | ) | ||||||||||||||||
Net charge-off rate(b)(e) |
0.21 | % | 2.55 | % | 2.61 | % | 1.37 | % | ||||||||||||||||
Allowance for loan losses to period-end loans
retained(b)(e) |
3.98 | 7.91 | 3.98 | 7.91 | ||||||||||||||||||||
Allowance for loan losses to average loans retained(b)(e) |
4.03 | 7.48 | 3.84 | 7.38 | ||||||||||||||||||||
Allowance for loan losses to nonperforming loans
retained(b)(d)(e) |
112 | 150 | 112 | 150 | ||||||||||||||||||||
Nonperforming loans to period-end loans |
3.95 | 4.93 | 3.95 | 4.93 | ||||||||||||||||||||
Nonperforming loans to average loans |
3.97 | 4.56 | 3.81 | 4.41 | ||||||||||||||||||||
Market riskaverage trading and credit portfolio VaR 95%
confidence level |
||||||||||||||||||||||||
Trading activities: |
||||||||||||||||||||||||
Fixed income |
$ | 64 | $ | 179 | (64 | ) | $ | 66 | $ | 168 | (61 | ) | ||||||||||||
Foreign exchange |
10 | 16 | (38 | ) | 12 | 19 | (37 | ) | ||||||||||||||||
Equities |
20 | 50 | (60 | ) | 22 | 73 | (70 | ) | ||||||||||||||||
Commodities and other |
20 | 22 | (9 | ) | 18 | 21 | (14 | ) | ||||||||||||||||
Diversification(f) |
(42 | ) | (97 | ) | 57 | (46 | ) | (101 | ) | 54 | ||||||||||||||
Total trading VaR(g) |
72 | 170 | (58 | ) | 72 | 180 | (60 | ) | ||||||||||||||||
Credit portfolio VaR(h) |
27 | 68 | (60 | ) | 23 | 77 | (70 | ) | ||||||||||||||||
Diversification(f) |
(9 | ) | (60 | ) | 85 | (9 | ) | (62 | ) | 85 | ||||||||||||||
Total trading and credit portfolio VaR |
$ | 90 | $ | 178 | (49 | ) | $ | 86 | $ | 195 | (56 | ) | ||||||||||||
(a) | Effective January 1, 2010, the Firm adopted new consolidation guidance related to VIEs. Upon adoption of the new guidance, the Firm consolidated its Firm-administered multi-seller conduits. As a result, $15.1 billion of related loans were recorded in loans on the Consolidated Balance Sheets. | |
(b) | Loans retained include credit portfolio loans, leveraged leases and other accrual loans, and exclude loans held-for-sale and loans accounted for at fair value. | |
(c) | Adjusted assets, a non-GAAP financial measure, 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; (5) securities received as collateral; and (6) investments purchased under the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AML Facility). The amount of adjusted assets is presented to assist the reader |
23
in comparing IBs asset and capital levels to other investment banks in the securities industry. Asset-to-equity leverage ratios are commonly used as one measure to assess a companys capital adequacy. IB believes an adjusted asset amount that excludes the assets discussed above, which were considered to have a low risk profile, provides a more meaningful measure of balance sheet leverage in the securities industry. | ||
(d) | Allowance for loan losses of $617 million and $1.6 billion were held against these nonperforming loans at June 30, 2010 and 2009, respectively. | |
(e) | Loans held-for-sale and loans at fair value were excluded when calculating the allowance coverage ratio and net charge-off rate. | |
(f) | Average value-at-risk (VaR) was less than the sum of the VaR of the components described above, which is due to portfolio diversification. The diversification effect reflects the fact that the risks were not perfectly correlated. The risk of a portfolio of positions is therefore usually less than the sum of the risks of the positions themselves. For a further discussion of VaR, see pages 95-97 of this Form 10-Q. | |
(g) | Trading VaR includes predominantly all trading activities in IB, as well as syndicated lending facilities that the Firm intends to distribute; however, particular risk parameters of certain products are not fully captured, for example, correlation risk. Trading VaR does not include the debit valuation adjustments (DVA) taken on derivative and structured liabilities to reflect the credit quality of the Firm. See VaR discussion on pages 95-97 and the DVA Sensitivity table on page 97 of this Form 10-Q for further details. Trading VaR includes the estimated credit spread sensitivity of certain mortgage products. | |
(h) | Credit portfolio VaR includes the derivative credit valuation adjustments (CVA), hedges of the CVA and mark-to-market (MTM) hedges of the retained loan portfolio, which were all reported in principal transactions revenue. This VaR does not include the retained loan portfolio. |
Six months ended June 30, 2010 | Full-year 2009 | |||||||||||||||
Market shares and rankings(a) | Market Share | Rankings | Market Share | Rankings | ||||||||||||
Global investment banking fees(b) |
8 | % | #1 | 9 | % | #1 | ||||||||||
Global debt, equity and equity-related |
7 | #1 | 9 | #1 | ||||||||||||
Global syndicated loans |
10 | #1 | 8 | #1 | ||||||||||||
Global long-term debt(c) |
7 | #2 | 8 | #1 | ||||||||||||
Global equity and equity-related(d) |
8 | #1 | 12 | #1 | ||||||||||||
Global announced M&A(e) |
14 | #4 | 24 | #3 | ||||||||||||
U.S. debt, equity and equity-related |
12 | #1 | 15 | #1 | ||||||||||||
U.S. syndicated loans |
21 | #2 | 22 | #1 | ||||||||||||
U.S. long-term debt(c) |
11 | #2 | 14 | #1 | ||||||||||||
U.S. equity and equity-related |
16 | #1 | 16 | #2 | ||||||||||||
U.S. announced M&A(e) |
22 | #3 | 36 | #2 | ||||||||||||
(a) | Source: Dealogic. Global Investment Banking fees reflects ranking of fees and market share. Remainder of rankings reflects transaction volume rank and market share. | |
(b) | Global IB fees exclude money market, short-term debt and shelf deals. | |
(c) | Long-term debt tables 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. | |
(d) | Equity and equity-related rankings include rights offerings and Chinese A-Shares. | |
(e) | Global announced M&A is based on transaction value at announcement; all other rankings are based on transaction proceeds, with full credit to each book manager/equal if joint. Because of joint assignments, market share of all participants will add up to more than 100%. M&A for year-to-date 2010 and full-year 2009 reflects the removal of any withdrawn transactions. U.S. announced M&A represents any U.S. involvement ranking. |
24
Selected income statement data | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Lending- and deposit-related fees |
$ | 780 | $ | 1,003 | (22 | )% | $ | 1,621 | $ | 1,951 | (17 | )% | ||||||||||||
Asset management, administration
and commissions |
433 | 425 | 2 | 885 | 860 | 3 | ||||||||||||||||||
Mortgage fees and related income |
886 | 807 | 10 | 1,541 | 2,440 | (37 | ) | |||||||||||||||||
Credit card income |
480 | 411 | 17 | 930 | 778 | 20 | ||||||||||||||||||
Other income |
413 | 294 | 40 | 767 | 508 | 51 | ||||||||||||||||||
Noninterest revenue |
2,992 | 2,940 | 2 | 5,744 | 6,537 | (12 | ) | |||||||||||||||||
Net interest income |
4,817 | 5,030 | (4 | ) | 9,841 | 10,268 | (4 | ) | ||||||||||||||||
Total net revenue |
7,809 | 7,970 | (2 | ) | 15,585 | 16,805 | (7 | ) | ||||||||||||||||
Provision for credit losses |
1,715 | 3,846 | (55 | ) | 5,448 | 7,723 | (29 | ) | ||||||||||||||||
Noninterest expense |
||||||||||||||||||||||||
Compensation expense |
1,842 | 1,631 | 13 | 3,612 | 3,262 | 11 | ||||||||||||||||||
Noncompensation expense |
2,369 | 2,365 | | 4,771 | 4,822 | (1 | ) | |||||||||||||||||
Amortization of intangibles |
70 | 83 | (16 | ) | 140 | 166 | (16 | ) | ||||||||||||||||
Total noninterest expense |
4,281 | 4,079 | 5 | 8,523 | 8,250 | 3 | ||||||||||||||||||
Income before income tax expense |
1,813 | 45 | NM | 1,614 | 832 | 94 | ||||||||||||||||||
Income tax expense |
771 | 30 | NM | 703 | 343 | 105 | ||||||||||||||||||
Net income |
$ | 1,042 | $ | 15 | NM | $ | 911 | $ | 489 | 86 | ||||||||||||||
Financial ratios |
||||||||||||||||||||||||
Return on common equity |
15 | % | | % | 7 | % | 4 | % | ||||||||||||||||
Overhead ratio |
55 | 51 | 55 | 49 | ||||||||||||||||||||
Overhead ratio excluding core
deposit intangibles(a) |
54 | 50 | 54 | 48 | ||||||||||||||||||||
(a) | RFS uses the overhead ratio (excluding the amortization of core deposit intangibles (CDI)), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation would result in a higher overhead ratio in the earlier years and a lower overhead ratio in later years. This method would therefore result in an improving overhead ratio over time, all things remaining equal. The non-GAAP ratio excludes Retail Bankings CDI amortization expense related to prior business combination transactions of $69 million and $82 million for the quarters ended June 30, 2010 and 2009, respectively, and $139 million and $165 million for the six months ended June 30, 2010 and 2009, respectively. |
25
26
Selected metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except headcount and ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Selected balance sheet data (period-end) |
||||||||||||||||||||||||
Assets |
$ | 375,329 | $ | 399,916 | (6 | )% | $ | 375,329 | $ | 399,916 | (6 | )% | ||||||||||||
Loans: |
||||||||||||||||||||||||
Loans retained |
330,329 | 353,934 | (7 | ) | 330,329 | 353,934 | (7 | ) | ||||||||||||||||
Loans held-for-sale and loans at fair value(a) |
12,599 | 13,192 | (4 | ) | 12,599 | 13,192 | (4 | ) | ||||||||||||||||
Total loans |
342,928 | 367,126 | (7 | ) | 342,928 | 367,126 | (7 | ) | ||||||||||||||||
Deposits |
359,974 | 371,241 | (3 | ) | 359,974 | 371,241 | (3 | ) | ||||||||||||||||
Equity |
28,000 | 25,000 | 12 | 28,000 | 25,000 | 12 | ||||||||||||||||||
Selected balance sheet data (average) |
||||||||||||||||||||||||
Assets |
$ | 381,906 | $ | 410,228 | (7 | ) | $ | 387,854 | $ | 416,813 | (7 | ) | ||||||||||||
Loans: |
||||||||||||||||||||||||
Loans retained |
335,308 | 359,372 | (7 | ) | 339,131 | 363,127 | (7 | ) | ||||||||||||||||
Loans held-for-sale and loans at fair value(a) |
14,426 | 19,043 | (24 | ) | 15,734 | 17,792 | (12 | ) | ||||||||||||||||
Total loans |
349,734 | 378,415 | (8 | ) | 354,865 | 380,919 | (7 | ) | ||||||||||||||||
Deposits |
362,010 | 377,259 | (4 | ) | 359,486 | 373,788 | (4 | ) | ||||||||||||||||
Equity |
28,000 | 25,000 | 12 | 28,000 | 25,000 | 12 | ||||||||||||||||||
Headcount |
116,879 | 103,733 | 13 | 116,879 | 103,733 | 13 | ||||||||||||||||||
Credit data and quality statistics |
||||||||||||||||||||||||
Net charge-offs |
$ | 1,761 | $ | 2,649 | (34 | ) | $ | 4,199 | $ | 4,825 | (13 | ) | ||||||||||||
Nonperforming loans: |
||||||||||||||||||||||||
Nonperforming loans retained |
10,457 | 8,792 | 19 | 10,457 | 8,792 | 19 | ||||||||||||||||||
Nonperforming loans held-for-sale and loans at fair value |
176 | 203 | (13 | ) | 176 | 203 | (13 | ) | ||||||||||||||||
Total nonperforming loans(b)(c)(d) |
10,633 | 8,995 | 18 | 10,633 | 8,995 | 18 | ||||||||||||||||||
Nonperforming assets(b)(c)(d) |
11,907 | 10,554 | 13 | 11,907 | 10,554 | 13 | ||||||||||||||||||
Allowance for loan losses |
16,152 | 11,832 | 37 | 16,152 | 11,832 | 37 | ||||||||||||||||||
Net charge-off rate(e) |
2.11 | % | 2.96 | % | 2.50 | % | 2.68 | % | ||||||||||||||||
Net charge-off rate excluding purchased
credit-impaired loans(e)(f) |
2.75 | 3.89 | 3.26 | 3.53 | ||||||||||||||||||||
Allowance for loan losses to ending loans(e) |
4.89 | 3.34 | 4.89 | 3.34 | ||||||||||||||||||||
Allowance for loan losses to ending loans
excluding purchased credit-impaired
loans(e)(f) |
5.26 | 4.41 | 5.26 | 4.41 | ||||||||||||||||||||
Allowance for loan losses to nonperforming loans
retained(b)(e)(f) |
128 | 135 | 128 | 135 | ||||||||||||||||||||
Nonperforming loans to total loans |
3.10 | 2.45 | 3.10 | 2.45 | ||||||||||||||||||||
Nonperforming loans to total loans excluding purchased
credit-impaired loans(b) |
4.00 | 3.19 | 4.00 | 3.19 | ||||||||||||||||||||
(a) | Loans at fair value consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets. These loans totaled $12.2 billion and $11.3 billion at June 30, 2010 and 2009, respectively. Average balances of these loans totaled $12.5 billion and $16.2 billion for the quarters ended June 30, 2010 and 2009, respectively, and $13.3 billion and $14.9 billion for the six months ended June 30, 2010 and 2009, respectively. | |
(b) | Excludes purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. | |
(c) | Certain of these loans are classified as trading assets on the Consolidated Balance Sheets. | |
(d) | At June 30, 2010 and 2009, nonperforming loans and assets exclude: (1) mortgage loans insured by U.S. government agencies of $10.1 billion and $4.2 billion, respectively, that are 90 days past due and accruing at the guaranteed reimbursement rate; (2) real estate owned insured by U.S. government agencies of $1.4 billion and $508 million, respectively; and (3) student loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the Federal Family Education Loan Program (FFELP), of $447 million and $473 million, respectively. These amounts are excluded as reimbursement of insured amounts is proceeding normally. | |
(e) | Loans held-for-sale and loans accounted for at fair value were excluded when calculating the allowance coverage ratio and the net charge-off rate. | |
(f) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of $2.8 billion was recorded for these loans at June 30, 2010, which has also been excluded from applicable ratios. No allowance for loan losses was recorded for these loans at June 30, 2009. To date, no charge-offs have been recorded for these loans. |
27
Selected income statement data | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Noninterest revenue |
$ | 1,684 | $ | 1,803 | (7 | )% | $ | 3,386 | $ | 3,521 | (4 | )% | ||||||||||||
Net interest income |
2,712 | 2,719 | | 5,347 | 5,333 | | ||||||||||||||||||
Total net revenue |
4,396 | 4,522 | (3 | ) | 8,733 | 8,854 | (1 | ) | ||||||||||||||||
Provision for credit losses |
168 | 361 | (53 | ) | 359 | 686 | (48 | ) | ||||||||||||||||
Noninterest expense |
2,633 | 2,557 | 3 | 5,210 | 5,137 | 1 | ||||||||||||||||||
Income before income tax expense |
1,595 | 1,604 | (1 | ) | 3,164 | 3,031 | 4 | |||||||||||||||||
Net income |
$ | 914 | $ | 970 | (6 | ) | $ | 1,812 | $ | 1,833 | (1 | ) | ||||||||||||
Overhead ratio |
60 | % | 57 | % | 60 | % | 58 | % | ||||||||||||||||
Overhead ratio excluding core
deposit
intangibles(a) |
58 | 55 | 58 | 56 | ||||||||||||||||||||
(a) | Retail Banking uses the overhead ratio (excluding the amortization of CDI), a non-GAAP financial measure, to evaluate the underlying expense trends of the business. Including CDI amortization expense in the overhead ratio calculation would result in a higher overhead ratio in the earlier years and a lower overhead ratio in later years. This method would therefore result in an improving overhead ratio over time, all things remaining equal. The non-GAAP ratio excludes Retail Bankings CDI amortization expense related to prior business combination transactions of $69 million and $82 million for the quarters ended June 30, 2010 and 2009, respectively, and $139 million and $165 million for the six months ended June 30, 2010 and 2009, respectively. |
28
Selected metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in billions, except ratios and where | ||||||||||||||||||||||||
otherwise noted) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Business metrics |
||||||||||||||||||||||||
Business banking origination volume |
$ | 1.2 | $ | 0.6 | 100 | % | $ | 2.1 | $ | 1.1 | 91 | % | ||||||||||||
End-of-period loans owned |
16.6 | 17.8 | (7 | ) | 16.6 | 17.8 | (7 | ) | ||||||||||||||||
End-of-period deposits: |
||||||||||||||||||||||||
Checking |
$ | 123.5 | $ | 114.1 | 8 | $ | 123.5 | $ | 114.1 | 8 | ||||||||||||||
Savings |
161.8 | 150.4 | 8 | 161.8 | 150.4 | 8 | ||||||||||||||||||
Time and other |
50.5 | 78.9 | (36 | ) | 50.5 | 78.9 | (36 | ) | ||||||||||||||||
Total end-of-period deposits |
335.8 | 343.4 | (2 | ) | 335.8 | 343.4 | (2 | ) | ||||||||||||||||
Average loans owned |
$ | 16.7 | $ | 18.0 | (7 | ) | $ | 16.8 | $ | 18.2 | (8 | ) | ||||||||||||
Average deposits: |
||||||||||||||||||||||||
Checking |
$ | 123.6 | $ | 114.2 | 8 | $ | 121.7 | $ | 111.8 | 9 | ||||||||||||||
Savings |
162.8 | 151.2 | 8 | 160.7 | 149.6 | 7 | ||||||||||||||||||
Time and other |
51.4 | 82.7 | (38 | ) | 53.5 | 85.6 | (38 | ) | ||||||||||||||||
Total average deposits |
337.8 | 348.1 | (3 | ) | 335.9 | 347.0 | (3 | ) | ||||||||||||||||
Deposit margin |
3.05 | % | 2.92 | % | 3.03 | % | 2.89 | % | ||||||||||||||||
Average assets |
$ | 28.4 | $ | 29.1 | (2 | ) | $ | 28.7 | $ | 29.6 | (3 | ) | ||||||||||||
Credit
data and quality statistics (in millions, except ratio) |
||||||||||||||||||||||||
Net charge-offs |
$ | 168 | $ | 211 | (20 | ) | $ | 359 | $ | 386 | (7 | ) | ||||||||||||
Net charge-off rate |
4.04 | % | 4.70 | % | 4.31 | % | 4.28 | % | ||||||||||||||||
Nonperforming assets |
$ | 920 | $ | 686 | 34 | $ | 920 | $ | 686 | 34 | ||||||||||||||
Retail branch business metrics |
||||||||||||||||||||||||
Investment sales volume (in millions) |
$ | 5,756 | $ | 5,292 | 9 | $ | 11,712 | $ | 9,690 | 21 | ||||||||||||||
Number of: |
||||||||||||||||||||||||
Branches |
5,159 | 5,203 | (1 | ) | 5,159 | 5,203 | (1 | ) | ||||||||||||||||
ATMs |
15,654 | 14,144 | 11 | 15,654 | 14,144 | 11 | ||||||||||||||||||
Personal bankers |
20,170 | 15,959 | 26 | 20,170 | 15,959 | 26 | ||||||||||||||||||
Sales specialists |
6,785 | 5,485 | 24 | 6,785 | 5,485 | 24 | ||||||||||||||||||
Active online customers (in thousands) |
16,584 | 13,930 | 19 | 16,584 | 13,930 | 19 | ||||||||||||||||||
Checking accounts (in thousands) |
26,351 | 25,252 | 4 | 26,351 | 25,252 | 4 | ||||||||||||||||||
Selected income statement data | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratio) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Noninterest revenue(a) |
$ | 1,256 | $ | 1,134 | 11 | % | $ | 2,274 | $ | 3,055 | (26 | )% | ||||||||||||
Net interest income |
792 | 721 | 10 | 1,685 | 1,529 | 10 | ||||||||||||||||||
Total net revenue |
2,048 | 1,855 | 10 | 3,959 | 4,584 | (14 | ) | |||||||||||||||||
Provision for credit losses |
175 | 366 | (52 | ) | 392 | 771 | (49 | ) | ||||||||||||||||
Noninterest expense |
1,243 | 1,105 | 12 | 2,489 | 2,242 | 11 | ||||||||||||||||||
Income before income tax
expense |
630 | 384 | 64 | 1,078 | 1,571 | (31 | ) | |||||||||||||||||
Net income(a) |
$ | 364 | $ | 235 | 55 | $ | 621 | $ | 965 | (36 | ) | |||||||||||||
Overhead ratio |
61 | % | 60 | % | 63 | % | 49 | % | ||||||||||||||||
(a) | Losses related to the repurchase of previously-sold loans are recorded as a reduction of production revenue. These losses totaled $667 million and $255 million for the quarters ended June 30, 2010 and 2009, respectively, and $1.1 billion and $475 million for the six months ended June 30, 2010 and 2009, respectively. The losses resulted in a negative impact on net income of $388 million and $157 million for the quarters ended June 30, 2010 and 2009, respectively, and $640 million and $292 million for the six months ended June 30, 2010 and 2009, respectively. For further discussion, see Repurchase liability on pages 58-60 and Note 22 on pages 170-174 of this Form 10-Q, and Note 31 on pages 230-234 of JPMorgan Chases 2009 Annual Report. |
29
30
Selected metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in billions, except ratios and where otherwise noted) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Business metrics |
||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||
Auto loans |
$ | 47.5 | $ | 42.9 | 11 | % | $ | 47.5 | $ | 42.9 | 11 | % | ||||||||||||
Mortgage(a) |
13.2 | 8.9 | 48 | 13.2 | 8.9 | 48 | ||||||||||||||||||
Student loans and other |
15.1 | 15.7 | (4 | ) | 15.1 | 15.7 | (4 | ) | ||||||||||||||||
Total end-of-period loans owned |
75.8 | 67.5 | 12 | 75.8 | 67.5 | 12 | ||||||||||||||||||
Average loans owned: |
||||||||||||||||||||||||
Auto loans |
$ | 47.5 | $ | 43.1 | 10 | $ | 47.2 | $ | 42.8 | 10 | ||||||||||||||
Mortgage(a) |
13.6 | 8.4 | 62 | 13.0 | 8.0 | 63 | ||||||||||||||||||
Student loans and other |
16.7 | 16.8 | (1 | ) | 17.6 | 17.2 | 2 | |||||||||||||||||
Total average loans owned(b) |
77.8 | 68.3 | 14 | 77.8 | 68.0 | 14 | ||||||||||||||||||
Credit
data and quality statistics (in millions, except ratios) |
||||||||||||||||||||||||
Net charge-offs: |
||||||||||||||||||||||||
Auto loans |
$ | 58 | $ | 146 | (60 | ) | $ | 160 | $ | 320 | (50 | ) | ||||||||||||
Mortgage |
13 | 2 | NM | 19 | 7 | 171 | ||||||||||||||||||
Student loans and other |
150 | 101 | 49 | 214 | 135 | 59 | ||||||||||||||||||
Total net charge-offs |
221 | 249 | (11 | ) | 393 | 462 | (15 | ) | ||||||||||||||||
Net charge-off rate: |
||||||||||||||||||||||||
Auto loans |
0.49 | % | 1.36 | % | 0.68 | % | 1.51 | % | ||||||||||||||||
Mortgage |
0.39 | 0.10 | 0.30 | 0.19 | ||||||||||||||||||||
Student loans and other |
4.04 | 2.79 | 2.80 | 1.84 | ||||||||||||||||||||
Total net charge-off rate(b) |
1.17 | 1.52 | 1.05 | 1.43 | ||||||||||||||||||||
30+ day delinquency rate(c)(d) |
1.42 | % | 1.80 | % | 1.42 | % | 1.80 | % | ||||||||||||||||
Nonperforming assets (in millions)(e) |
$ | 866 | $ | 783 | 11 | $ | 866 | $ | 783 | 11 | ||||||||||||||
Origination volume: |
||||||||||||||||||||||||
Mortgage origination volume by channel |
||||||||||||||||||||||||
Retail |
$ | 15.3 | $ | 14.7 | 4 | $ | 26.7 | $ | 28.3 | (6 | ) | |||||||||||||
Wholesale(f) |
0.4 | 0.7 | (43 | ) | 0.8 | 2.3 | (65 | ) | ||||||||||||||||
Correspondent(f) |
14.7 | 21.9 | (33 | ) | 30.7 | 39.9 | (23 | ) | ||||||||||||||||
CNT (negotiated transactions) |
1.8 | 3.8 | (53 | ) | 5.7 | 8.3 | (31 | ) | ||||||||||||||||
Total mortgage origination volume |
32.2 | 41.1 | (22 | ) | 63.9 | 78.8 | (19 | ) | ||||||||||||||||
Student loans |
$ | 0.1 | $ | 0.4 | (75 | ) | $ | 1.7 | $ | 2.1 | (19 | ) | ||||||||||||
Auto |
5.8 | 5.3 | 9 | 12.1 | 10.9 | 11 | ||||||||||||||||||
31
Selected metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in billions, except ratios and where otherwise noted) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Application volume: |
||||||||||||||||||||||||
Mortgage application volume by channel |
||||||||||||||||||||||||
Retail |
$ | 27.8 | $ | 23.0 | 21 | % | $ | 48.1 | $ | 55.7 | (14 | )% | ||||||||||||
Wholesale(f) |
0.6 | 1.3 | (54 | ) | 1.4 | 3.1 | (55 | ) | ||||||||||||||||
Correspondent(f) |
23.5 | 29.7 | (21 | ) | 41.7 | 58.9 | (29 | ) | ||||||||||||||||
Total mortgage application volume |
$ | 51.9 | $ | 54.0 | (4 | ) | $ | 91.2 | $ | 117.7 | (23 | ) | ||||||||||||
Average mortgage loans held-for-sale and loans at fair
value(g) |
$ | 12.6 | $ | 16.7 | (25 | ) | $ | 13.5 | $ | 15.3 | (12 | ) | ||||||||||||
Average assets |
123.2 | 111.6 | 10 | 124.0 | 112.5 | 10 | ||||||||||||||||||
Third-party mortgage loans serviced (ending) |
1,055.2 | 1,117.5 | (6 | ) | 1,055.2 | 1,117.5 | (6 | ) | ||||||||||||||||
Third-party mortgage loans serviced (average) |
1,063.7 | 1,128.1 | (6 | ) | 1,070.1 | 1,141.6 | (6 | ) | ||||||||||||||||
MSR net carrying value (ending) |
11.8 | 14.6 | (19 | ) | 11.8 | 14.6 | (19 | ) | ||||||||||||||||
Ratio of MSR net carrying value (ending) to third-party
mortgage loans serviced (ending) |
1.12 | % | 1.31 | % | 1.12 | % | 1.31 | % | ||||||||||||||||
Supplemental mortgage fees and related income details |
||||||||||||||||||||||||
(in millions) |
||||||||||||||||||||||||
Production revenue(h) |
$ | 9 | $ | 284 | (97 | ) | $ | 10 | $ | 765 | (99 | ) | ||||||||||||
Net mortgage servicing revenue: |
||||||||||||||||||||||||
Operating revenue: |
||||||||||||||||||||||||
Loan servicing revenue |
1,186 | 1,279 | (7 | ) | 2,293 | 2,501 | (8 | ) | ||||||||||||||||
Other changes in MSR asset fair value |
(620 | ) | (837 | ) | 26 | (1,225 | ) | (1,910 | ) | 36 | ||||||||||||||
Total operating revenue |
566 | 442 | 28 | 1,068 | 591 | 81 | ||||||||||||||||||
Risk management: |
||||||||||||||||||||||||
Changes in MSR asset fair value due to inputs or
assumptions in model |
(3,584 | ) | 3,831 | NM | (3,680 | ) | 5,141 | NM | ||||||||||||||||
Derivative valuation adjustments and other |
3,895 | (3,750 | ) | NM | 4,143 | (4,057 | ) | NM | ||||||||||||||||
Total risk management |
311 | 81 | 284 | 463 | 1,084 | (57 | ) | |||||||||||||||||
Total net mortgage servicing revenue |
877 | 523 | 68 | 1,531 | 1,675 | (9 | ) | |||||||||||||||||
Mortgage fees and related income |
$ | 886 | $ | 807 | 10 | $ | 1,541 | $ | 2,440 | (37 | ) | |||||||||||||
Ratio of annualized loan servicing revenue to third-party
mortgage loans serviced (average) |
0.45 | % | 0.45 | % | 0.43 | % | 0.44 | % | ||||||||||||||||
MSR revenue multiple(i) |
2.49 | x | 2.91 | x | 2.60 | x | 2.98 | x | ||||||||||||||||
(a) | Predominantly represents prime loans repurchased from Government National Mortgage Association (Ginnie Mae) pools, which are insured by U.S. government agencies. See further discussion of loans repurchased from Ginnie Mae pools in Repurchase liability on pages 58-60 of this Form 10-Q. | |
(b) | Total average loans owned includes loans held-for-sale of $1.9 billion and $2.8 billion for the quarters ended June 30, 2010 and 2009, respectively, and $2.4 billion and $2.9 billion for the six months ended June 30, 2010 and 2009, respectively. These amounts are excluded when calculating the net charge-off rate. | |
(c) | Excludes mortgage loans that are insured by U.S. government agencies of $10.9 billion and $5.1 billion at June 30, 2010 and 2009, respectively. These amounts are excluded as reimbursement of insured amounts is proceeding normally. | |
(d) | Excludes loans that are 30 days past due and still accruing, which are insured by U.S. government agencies under the FFELP, of $988 million and $854 million at June 30, 2010 and 2009, respectively. These amounts are excluded as reimbursement of insured amounts is proceeding normally. | |
(e) | At June 30, 2010 and 2009, nonperforming loans and assets exclude: (1) mortgage loans insured by U.S. government agencies of $10.1 billion and $4.2 billion, respectively, that are 90 days past due and accruing at the guaranteed reimbursement rate; (2) real estate owned insured by U.S. government agencies of $1.4 billion and $508 million, respectively; and (3) student loans that are 90 days past due and still accruing, which are insured by U.S. government agencies under the FFELP, of $447 million and $473 million, respectively. These amounts are excluded as reimbursement of insured amounts is proceeding normally. | |
(f) | Includes rural housing loans sourced through brokers and correspondents, which are underwritten under U.S. Department of Agriculture guidelines. Prior period amounts have been revised to conform with the current period presentation. | |
(g) | Loans at fair value consist of prime mortgages originated with the intent to sell that are accounted for at fair value and classified as trading assets on the Consolidated Balance Sheets. Average balances of these loans totaled $12.5 billion and $16.2 billion for the quarters ended June 30, 2010 and 2009, respectively, and $13.3 billion and $14.9 billion for the six months ended June 30, 2010 and 2009, respectively. | |
(h) | Losses related to the repurchase of previously-sold loans are recorded as a reduction of production revenue. These losses totaled $667 million and $255 million for the quarters ended June 30, 2010 and 2009, respectively, and $1.1 billion and $475 million for the six months ended June 30, 2010 and 2009, respectively. For further discussion, see Repurchase liability on pages 58-60 and Note 22 on pages 170-174 of this Form 10-Q, and Note 31 on pages 230-234 of JPMorgan Chases 2009 Annual Report. | |
(i) | 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). |
32
Selected income statement data | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Noninterest revenue |
$ | 52 | $ | 3 | NM | $ | 84 | $ | (39 | ) | NM | |||||||||||||
Net interest income |
1,313 | 1,590 | (17 | )% | 2,809 | 3,406 | (18 | )% | ||||||||||||||||
Total net revenue |
1,365 | 1,593 | (14 | ) | 2,893 | 3,367 | (14 | ) | ||||||||||||||||
Provision for credit losses |
1,372 | 3,119 | (56 | ) | 4,697 | 6,266 | (25 | ) | ||||||||||||||||
Noninterest expense |
405 | 417 | (3 | ) | 824 | 871 | (5 | ) | ||||||||||||||||
Income/(loss) before income
tax expense/(benefit) |
(412 | ) | (1,943 | ) | 79 | (2,628 | ) | (3,770 | ) | 30 | ||||||||||||||
Net income/(loss) |
$ | (236 | ) | $ | (1,190 | ) | 80 | $ | (1,522 | ) | $ | (2,309 | ) | 34 | ||||||||||
Overhead ratio |
30 | % | 26 | % | 28 | % | 26 | % | ||||||||||||||||
33
Selected metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in billions) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Loans excluding purchased credit-impaired
loans(a) |
||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||
Home equity |
$ | 94.8 | $ | 108.2 | (12 | )% | $ | 94.8 | $ | 108.2 | (12 | )% | ||||||||||||
Prime mortgage |
44.6 | 53.2 | (16 | ) | 44.6 | 53.2 | (16 | ) | ||||||||||||||||
Subprime mortgage |
12.6 | 13.8 | (9 | ) | 12.6 | 13.8 | (9 | ) | ||||||||||||||||
Option ARMs |
8.5 | 9.0 | (6 | ) | 8.5 | 9.0 | (6 | ) | ||||||||||||||||
Other |
1.0 | 0.9 | 11 | 1.0 | 0.9 | 11 | ||||||||||||||||||
Total end-of-period loans owned |
$ | 161.5 | $ | 185.1 | (13 | ) | $ | 161.5 | $ | 185.1 | (13 | ) | ||||||||||||
Average loans owned: |
||||||||||||||||||||||||
Home equity |
$ | 96.3 | $ | 110.1 | (13 | ) | $ | 97.9 | $ | 111.7 | (12 | ) | ||||||||||||
Prime mortgage |
45.7 | 54.9 | (17 | ) | 46.8 | 56.4 | (17 | ) | ||||||||||||||||
Subprime mortgage |
13.1 | 14.3 | (8 | ) | 13.4 | 14.6 | (8 | ) | ||||||||||||||||
Option ARMs |
8.6 | 9.1 | (5 | ) | 8.7 | 9.0 | (3 | ) | ||||||||||||||||
Other |
1.0 | 0.9 | 11 | 1.0 | 0.9 | 11 | ||||||||||||||||||
Total average loans owned |
$ | 164.7 | $ | 189.3 | (13 | ) | $ | 167.8 | $ | 192.6 | (13 | ) | ||||||||||||
Purchased credit-impaired loans(a) |
||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||
Home equity |
$ | 25.5 | $ | 27.7 | (8 | ) | $ | 25.5 | $ | 27.7 | (8 | ) | ||||||||||||
Prime mortgage |
18.5 | 20.8 | (11 | ) | 18.5 | 20.8 | (11 | ) | ||||||||||||||||
Subprime mortgage |
5.6 | 6.4 | (13 | ) | 5.6 | 6.4 | (13 | ) | ||||||||||||||||
Option ARMs |
27.3 | 30.5 | (10 | ) | 27.3 | 30.5 | (10 | ) | ||||||||||||||||
Total end-of-period loans owned |
$ | 76.9 | $ | 85.4 | (10 | ) | $ | 76.9 | $ | 85.4 | (10 | ) | ||||||||||||
Average loans owned: |
||||||||||||||||||||||||
Home equity |
$ | 25.7 | $ | 28.0 | (8 | ) | $ | 26.0 | $ | 28.2 | (8 | ) | ||||||||||||
Prime mortgage |
18.8 | 21.0 | (10 | ) | 19.1 | 21.3 | (10 | ) | ||||||||||||||||
Subprime mortgage |
5.8 | 6.5 | (11 | ) | 5.8 | 6.6 | (12 | ) | ||||||||||||||||
Option ARMs |
27.7 | 31.0 | (11 | ) | 28.2 | 31.2 | (10 | ) | ||||||||||||||||
Total average loans owned |
$ | 78.0 | $ | 86.5 | (10 | ) | $ | 79.1 | $ | 87.3 | (9 | ) | ||||||||||||
Total Real Estate Portfolios |
||||||||||||||||||||||||
End-of-period loans owned: |
||||||||||||||||||||||||
Home equity |
$ | 120.3 | $ | 135.9 | (11 | ) | $ | 120.3 | $ | 135.9 | (11 | ) | ||||||||||||
Prime mortgage |
63.1 | 74.0 | (15 | ) | 63.1 | 74.0 | (15 | ) | ||||||||||||||||
Subprime mortgage |
18.2 | 20.2 | (10 | ) | 18.2 | 20.2 | (10 | ) | ||||||||||||||||
Option ARMs |
35.8 | 39.5 | (9 | ) | 35.8 | 39.5 | (9 | ) | ||||||||||||||||
Other |
1.0 | 0.9 | 11 | 1.0 | 0.9 | 11 | ||||||||||||||||||
Total end-of-period loans owned |
$ | 238.4 | $ | 270.5 | (12 | ) | $ | 238.4 | $ | 270.5 | (12 | ) | ||||||||||||
Average loans owned: |
||||||||||||||||||||||||
Home equity |
$ | 122.0 | $ | 138.1 | (12 | ) | $ | 123.9 | $ | 139.9 | (11 | ) | ||||||||||||
Prime mortgage |
64.5 | 75.9 | (15 | ) | 65.9 | 77.7 | (15 | ) | ||||||||||||||||
Subprime mortgage |
18.9 | 20.8 | (9 | ) | 19.2 | 21.2 | (9 | ) | ||||||||||||||||
Option ARMs |
36.3 | 40.1 | (9 | ) | 36.9 | 40.2 | (8 | ) | ||||||||||||||||
Other |
1.0 | 0.9 | 11 | 1.0 | 0.9 | 11 | ||||||||||||||||||
Total average loans owned |
$ | 242.7 | $ | 275.8 | (12 | ) | $ | 246.9 | $ | 279.9 | (12 | ) | ||||||||||||
Average assets |
$ | 230.3 | $ | 269.5 | (15 | ) | $ | 235.2 | $ | 274.7 | (14 | ) | ||||||||||||
Home equity origination volume |
0.3 | 0.6 | (50 | ) | 0.6 | 1.5 | (60 | ) | ||||||||||||||||
(a) | Purchased credit-impaired loans represent loans acquired in the Washington Mutual transaction for which a deterioration in credit quality occurred between the origination date and JPMorgan Chases acquisition date. These loans were initially recorded at fair value and accrete interest income over the estimated lives of the loan as long as cash flows are reasonably estimable, even if the underlying loans are contractually past due. |
34
Credit data and quality statistics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Net charge-offs excluding purchased
credit-impaired loans(a): |
||||||||||||||||||||||||
Home equity |
$ | 796 | $ | 1,265 | (37 | )% | $ | 1,922 | $ | 2,363 | (19 | )% | ||||||||||||
Prime mortgage |
251 | 479 | (48 | ) | 704 | 786 | (10 | ) | ||||||||||||||||
Subprime mortgage |
282 | 410 | (31 | ) | 739 | 774 | (5 | ) | ||||||||||||||||
Option ARMs |
22 | 15 | 47 | 45 | 19 | 137 | ||||||||||||||||||
Other |
21 | 20 | 5 | 37 | 35 | 6 | ||||||||||||||||||
Total net charge-offs |
$ | 1,372 | $ | 2,189 | (37 | ) | $ | 3,447 | $ | 3,977 | (13 | ) | ||||||||||||
Net charge-off rate excluding purchased
credit-impaired loans(a): |
||||||||||||||||||||||||
Home equity |
3.32 | % | 4.61 | % | 3.96 | % | 4.27 | % | ||||||||||||||||
Prime mortgage |
2.20 | 3.50 | 3.03 | 2.81 | ||||||||||||||||||||
Subprime mortgage |
8.63 | 11.50 | 11.12 | 10.69 | ||||||||||||||||||||
Option ARMs |
1.03 | 0.66 | 1.04 | 0.43 | ||||||||||||||||||||
Other |
8.42 | 8.91 | 7.46 | 7.84 | ||||||||||||||||||||
Total net charge-off rate excluding purchased
credit-impaired loans |
3.34 | 4.64 | 4.14 | 4.16 | ||||||||||||||||||||
Net charge-off rate reported: |
||||||||||||||||||||||||
Home equity |
2.62 | % | 3.67 | % | 3.13 | % | 3.41 | % | ||||||||||||||||
Prime mortgage |
1.56 | 2.53 | 2.15 | 2.04 | ||||||||||||||||||||
Subprime mortgage |
5.98 | 7.91 | 7.76 | 7.36 | ||||||||||||||||||||
Option ARMs |
0.24 | 0.15 | 0.25 | 0.10 | ||||||||||||||||||||
Other |
8.42 | 8.91 | 7.46 | 7.84 | ||||||||||||||||||||
Total net charge-off rate reported |
2.27 | 3.18 | 2.82 | 2.87 | ||||||||||||||||||||
30+ day delinquency rate excluding purchased
credit-impaired loans(b) |
6.88 | % | 6.46 | % | 6.88 | % | 6.46 | % | ||||||||||||||||
Allowance for loan losses |
$ | 14,127 | $ | 9,821 | 44 | $ | 14,127 | $ | 9,821 | 44 | ||||||||||||||
Nonperforming assets(c) |
10,121 | 9,085 | 11 | 10,121 | 9,085 | 11 | ||||||||||||||||||
Allowance for loan losses to ending loans retained |
5.93 | % | 3.63 | % | 5.93 | % | 3.63 | % | ||||||||||||||||
Allowance for loan losses to ending loans
retained excluding purchased credit-impaired
loans(a) |
7.01 | 5.31 | 7.01 | 5.31 | ||||||||||||||||||||
(a) | Excludes the impact of purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans were accounted for at fair value on the acquisition date, which incorporated managements estimate, as of that date, of credit losses over the remaining life of the portfolio. An allowance for loan losses of $2.8 billion was recorded for these loans at June 30, 2010, which has also been excluded from the applicable ratios. No allowance for loan losses was recorded for these loans at June 30, 2009. To date, no charge-offs have been recorded for these loans. | |
(b) | The delinquency rate for purchased credit-impaired loans was 27.91% and 23.37% at June 30, 2010 and 2009, respectively. | |
(c) | Excludes purchased credit-impaired loans that were acquired as part of the Washington Mutual transaction. These loans are accounted for on a pool basis, and the pools are considered to be performing. |
35
Selected income statement data- | ||||||||||||||||||||||||
managed basis(a) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Credit card income |
$ | 908 | $ | 921 | (1 | )% | $ | 1,721 | $ | 1,765 | (2 | )% | ||||||||||||
All other income |
(47 | ) | (364 | ) | 87 | (102 | ) | (561 | ) | 82 | ||||||||||||||
Noninterest revenue |
861 | 557 | 55 | 1,619 | 1,204 | 34 | ||||||||||||||||||
Net interest income |
3,356 | 4,311 | (22 | ) | 7,045 | 8,793 | (20 | ) | ||||||||||||||||
Total net revenue |
4,217 | 4,868 | (13 | ) | 8,664 | 9,997 | (13 | ) | ||||||||||||||||
Provision for credit losses |
2,221 | 4,603 | (52 | ) | 5,733 | 9,256 | (38 | ) | ||||||||||||||||
Noninterest expense |
||||||||||||||||||||||||
Compensation expense |
327 | 329 | (1 | ) | 657 | 686 | (4 | ) | ||||||||||||||||
Noncompensation expense |
986 | 873 | 13 | 1,935 | 1,723 | 12 | ||||||||||||||||||
Amortization of intangibles |
123 | 131 | (6 | ) | 246 | 270 | (9 | ) | ||||||||||||||||
Total noninterest expense |
1,436 | 1,333 | 8 | 2,838 | 2,679 | 6 | ||||||||||||||||||
Income/(loss) before income tax
expense/(benefit) |
560 | (1,068 | ) | NM | 93 | (1,938 | ) | NM | ||||||||||||||||
Income tax expense/(benefit) |
217 | (396 | ) | NM | 53 | (719 | ) | NM | ||||||||||||||||
Net income/(loss) |
$ | 343 | $ | (672 | ) | NM | $ | 40 | $ | (1,219 | ) | NM | ||||||||||||
Memo: Net securitization income/(loss) |
NA | $ | (268 | ) | NM | NA | $ | (448 | ) | NM | ||||||||||||||
Financial ratios |
||||||||||||||||||||||||
Return on common equity |
9 | % | (18 | )% | 1 | % | (16 | )% | ||||||||||||||||
Overhead ratio |
34 | 27 | 33 | 27 | ||||||||||||||||||||
(a) | Effective January 1, 2010, the Firm adopted new accounting guidance related to the transfer of financial assets and the consolidation of VIEs. For further details regarding the Firms application and impact of the new guidance, see Note 15 on pages 151-163 of this Form 10-Q. |
36
37
Selected metrics | ||||||||||||||||||||||||
(in millions, except headcount, ratios and where | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
otherwise noted) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Financial ratios(a) |
||||||||||||||||||||||||
Percentage of average outstandings: |
||||||||||||||||||||||||
Net interest income |
9.20 | % | 9.93 | % | 9.41 | % | 9.92 | % | ||||||||||||||||
Provision for credit losses |
6.09 | 10.60 | 7.66 | 10.44 | ||||||||||||||||||||
Noninterest revenue |
2.36 | 1.28 | 2.16 | 1.36 | ||||||||||||||||||||
Risk adjusted margin(b) |
5.47 | 0.61 | 3.91 | 0.84 | ||||||||||||||||||||
Noninterest expense |
3.94 | 3.07 | 3.79 | 3.02 | ||||||||||||||||||||
Pretax income/(loss) (ROO)(c) |
1.54 | (2.46 | ) | 0.12 | (2.19 | ) | ||||||||||||||||||
Net income/(loss) |
0.94 | (1.55 | ) | 0.05 | (1.38 | ) | ||||||||||||||||||
Business metrics |
||||||||||||||||||||||||
Sales volume (in billions) |
$ | 78.1 | $ | 74.0 | 6 | % | $ | 147.5 | $ | 140.6 | 5 | % | ||||||||||||
New accounts opened (in millions) |
2.7 | 2.4 | 13 | 5.2 | 4.6 | 13 | ||||||||||||||||||
Open accounts (in millions) |
88.9 | 100.3 | (11 | ) | 88.9 | 100.3 | (11 | ) | ||||||||||||||||
Merchant acquiring business |
||||||||||||||||||||||||
Bank card volume (in billions) |
$ | 117.1 | $ | 101.4 | 15 | $ | 225.1 | $ | 195.8 | 15 | ||||||||||||||
Total transactions (in billions) |
5.0 | 4.5 | 11 | 9.7 | 8.6 | 13 | ||||||||||||||||||
Selected balance sheet data (period-end) |
||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||
Loans on balance sheets |
$ | 142,994 | $ | 85,736 | 67 | $ | 142,994 | $ | 85,736 | 67 | ||||||||||||||
Securitized loans(a) |
NA | 85,790 | NM | NA | 85,790 | NM | ||||||||||||||||||
Total loans |
$ | 142,994 | $ | 171,526 | (17 | ) | $ | 142,994 | $ | 171,526 | (17 | ) | ||||||||||||
Equity |
$ | 15,000 | $ | 15,000 | | $ | 15,000 | $ | 15,000 | | ||||||||||||||
Selected balance sheet data (average) |
||||||||||||||||||||||||
Managed assets |
$ | 146,816 | $ | 193,310 | (24 | ) | $ | 151,864 | $ | 197,234 | (23 | ) | ||||||||||||
Loans: |
||||||||||||||||||||||||
Loans on balance sheets |
$ | 146,302 | $ | 89,692 | 63 | $ | 151,020 | $ | 93,715 | 61 | ||||||||||||||
Securitized loans(a) |
NA | 84,417 | NM | NA | 85,015 | NM | ||||||||||||||||||
Total average loans |
$ | 146,302 | $ | 174,109 | (16 | ) | $ | 151,020 | $ | 178,730 | (16 | ) | ||||||||||||
Equity |
$ | 15,000 | $ | 15,000 | | $ | 15,000 | $ | 15,000 | | ||||||||||||||
Headcount |
21,529 | 22,897 | (6 | ) | 21,529 | 22,897 | (6 | ) | ||||||||||||||||
38
Selected metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Credit quality statistics(a) |
||||||||||||||||||||||||
Net charge-offs |
$ | 3,721 | $ | 4,353 | (15 | )% | $ | 8,233 | $ | 7,846 | 5 | % | ||||||||||||
Net charge-off rate(d) |
10.20 | % | 10.03 | % | 10.99 | % | 8.85 | % | ||||||||||||||||
Delinquency rates(a)(d) |
||||||||||||||||||||||||
30+ day |
4.96 | % | 5.86 | % | 4.96 | % | 5.86 | % | ||||||||||||||||
90+ day |
2.76 | 3.25 | 2.76 | 3.25 | ||||||||||||||||||||
Allowance for loan losses(a)(e) |
$ | 14,524 | $ | 8,839 | 64 | $ | 14,524 | $ | 8,839 | 64 | ||||||||||||||
Allowance for loan losses to period-end
loans(a)(e)(f) |
10.16 | % | 10.31 | % | 10.16 | % | 10.31 | % | ||||||||||||||||
Key stats Washington Mutual only |
||||||||||||||||||||||||
Loans |
$ | 15,615 | $ | 23,093 | (32 | ) | $ | 15,615 | $ | 23,093 | (32 | ) | ||||||||||||
Average loans |
16,455 | 24,418 | (33 | ) | 17,525 | 25,990 | (33 | ) | ||||||||||||||||
Net interest income(g) |
14.97 | % | 17.90 | % | 15.02 | % | 17.14 | % | ||||||||||||||||
Risk adjusted margin(b)(g) |
15.43 | (3.89 | ) | 8.59 | 0.49 | |||||||||||||||||||
Net charge-off rate(h) |
19.53 | 19.17 | 21.97 | 16.75 | ||||||||||||||||||||
30+ day delinquency rate(h) |
8.86 | 11.98 | 8.86 | 11.98 | ||||||||||||||||||||
90+ day delinquency rate(h) |
5.17 | 6.85 | 5.17 | 6.85 | ||||||||||||||||||||
Key stats excluding Washington Mutual |
||||||||||||||||||||||||
Loans |
$ | 127,379 | $ | 148,433 | (14 | ) | $ | 127,379 | $ | 148,433 | (14 | ) | ||||||||||||
Average loans |
129,847 | 149,691 | (13 | ) | 133,495 | 152,740 | (13 | ) | ||||||||||||||||
Net interest income(g) |
8.47 | % | 8.63 | % | 8.67 | % | 8.69 | % | ||||||||||||||||
Risk adjusted margin(b)(g) |
4.21 | 1.34 | 3.30 | 0.89 | ||||||||||||||||||||
Net charge-off rate |
9.02 | 8.97 | 9.80 | 7.90 | ||||||||||||||||||||
30+ day delinquency rate |
4.48 | 5.27 | 4.48 | 5.27 | ||||||||||||||||||||
90+ day delinquency rate |
2.47 | 2.90 | 2.47 | 2.90 | ||||||||||||||||||||
(a) | Effective January 1, 2010, the Firm adopted new accounting guidance related to the transfer of financial assets and the consolidation of VIEs. As a result of the consolidation of the credit card securitization trusts, reported and managed basis relating to credit card securitizations are equivalent for periods beginning after January 1, 2010. For further details regarding the Firms application and impact of the new guidance, see Note 15 on pages 151-163 of this Form 10-Q. | |
(b) | Represents total net revenue less provision for credit losses. | |
(c) | Pretax return on average managed outstandings. | |
(d) | Results reflect the impact of purchase accounting adjustments related to the Washington Mutual transaction and the consolidation of the WMMT in the second quarter of 2009. Net charge-off rate for the three months ended June 30, 2010, and delinquency rates for the three and six months ended June 30, 2010 were not affected. | |
(e) | Based on loans on the Consolidated Balance Sheets. | |
(f) | Includes $5.0 billion of loans at June 30, 2009, held by the WMMT, which were consolidated onto the CS balance sheet at fair value during the second quarter of 2009. No allowance for loan losses was recorded for these loans as of June 30, 2009. Excluding these loans, the allowance for loan losses to period-end loans would have been 10.95%. | |
(g) | As a percentage of average managed outstandings. | |
(h) | Excludes the impact of purchase accounting adjustments related to the Washington Mutual transaction and the consolidation of the WMMT in the second quarter of 2009. |
39
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Income statement data |
||||||||||||||||||||||||
Credit card income |
||||||||||||||||||||||||
Reported |
$ | 908 | $ | 1,215 | (25 | )% | $ | 1,721 | $ | 2,599 | (34 | )% | ||||||||||||
Securitization adjustments |
NA | (294 | ) | NM | NA | (834 | ) | NM | ||||||||||||||||
Managed credit card income |
$ | 908 | $ | 921 | (1 | ) | $ | 1,721 | $ | 1,765 | (2 | ) | ||||||||||||
Net interest income |
||||||||||||||||||||||||
Reported |
$ | 3,356 | $ | 2,353 | 43 | $ | 7,045 | $ | 4,831 | 46 | ||||||||||||||
Securitization adjustments |
NA | 1,958 | NM | NA | 3,962 | NM | ||||||||||||||||||
Managed net interest income |
$ | 3,356 | $ | 4,311 | (22 | ) | $ | 7,045 | $ | 8,793 | (20 | ) | ||||||||||||
Total net revenue |
||||||||||||||||||||||||
Reported |
$ | 4,217 | $ | 3,204 | 32 | $ | 8,664 | $ | 6,869 | 26 | ||||||||||||||
Securitization adjustments |
NA | 1,664 | NM | NA | 3,128 | NM | ||||||||||||||||||
Managed total net revenue |
$ | 4,217 | $ | 4,868 | (13 | ) | $ | 8,664 | $ | 9,997 | (13 | ) | ||||||||||||
Provision for credit losses |
||||||||||||||||||||||||
Reported |
$ | 2,221 | $ | 2,939 | (24 | ) | $ | 5,733 | $ | 6,128 | (6 | ) | ||||||||||||
Securitization adjustments |
NA | 1,664 | NM | NA | 3,128 | NM | ||||||||||||||||||
Managed provision for credit losses |
$ | 2,221 | $ | 4,603 | (52 | ) | $ | 5,733 | $ | 9,256 | (38 | ) | ||||||||||||
Balance sheets average balances |
||||||||||||||||||||||||
Total average assets |
||||||||||||||||||||||||
Reported |
$ | 146,816 | $ | 111,722 | 31 | $ | 151,864 | $ | 115,052 | 32 | ||||||||||||||
Securitization adjustments |
NA | 81,588 | NM | NA | 82,182 | NM | ||||||||||||||||||
Managed average assets |
$ | 146,816 | $ | 193,310 | (24 | ) | $ | 151,864 | $ | 197,234 | (23 | ) | ||||||||||||
Credit quality statistics |
||||||||||||||||||||||||
Net charge-offs |
||||||||||||||||||||||||
Reported |
$ | 3,721 | $ | 2,689 | 38 | $ | 8,233 | $ | 4,718 | 75 | ||||||||||||||
Securitization adjustments |
NA | 1,664 | NM | NA | 3,128 | NM | ||||||||||||||||||
Managed net charge-offs |
$ | 3,721 | $ | 4,353 | (15 | ) | $ | 8,233 | $ | 7,846 | 5 | |||||||||||||
Net charge-off rates |
||||||||||||||||||||||||
Reported |
10.20 | % | 12.03 | % | 10.99 | % | 10.15 | % | ||||||||||||||||
Securitized |
NA | 7.91 | NA | 7.42 | ||||||||||||||||||||
Managed net charge-off rate |
10.20 | 10.03 | 10.99 | 8.85 | ||||||||||||||||||||
40
Selected income statement data | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Lending- and deposit-related fees |
$ | 280 | $ | 270 | 4 | % | $ | 557 | $ | 533 | 5 | % | ||||||||||||
Asset management, administration
and commissions |
36 | 36 | | 73 | 70 | 4 | ||||||||||||||||||
All other income(a) |
230 | 152 | 51 | 416 | 277 | 50 | ||||||||||||||||||
Noninterest revenue |
546 | 458 | 19 | 1,046 | 880 | 19 | ||||||||||||||||||
Net interest income |
940 | 995 | (6 | ) | 1,856 | 1,975 | (6 | ) | ||||||||||||||||
Total net revenue(b) |
1,486 | 1,453 | 2 | 2,902 | 2,855 | 2 | ||||||||||||||||||
Provision for credit losses |
(235 | ) | 312 | NM | (21 | ) | 605 | NM | ||||||||||||||||
Noninterest expense |
||||||||||||||||||||||||
Compensation expense |
196 | 197 | (1 | ) | 402 | 397 | 1 | |||||||||||||||||
Noncompensation expense |
337 | 327 | 3 | 661 | 669 | (1 | ) | |||||||||||||||||
Amortization of intangibles |
9 | 11 | (18 | ) | 18 | 22 | (18 | ) | ||||||||||||||||
Total noninterest expense |
542 | 535 | 1 | 1,081 | 1,088 | (1 | ) | |||||||||||||||||
Income before income tax expense |
1,179 | 606 | 95 | 1,842 | 1,162 | 59 | ||||||||||||||||||
Income tax expense |
486 | 238 | 104 | 759 | 456 | 66 | ||||||||||||||||||
Net income |
$ | 693 | $ | 368 | 88 | $ | 1,083 | $ | 706 | 53 | ||||||||||||||
Revenue by product |
||||||||||||||||||||||||
Lending |
$ | 649 | $ | 684 | (5 | ) | $ | 1,307 | $ | 1,349 | (3 | ) | ||||||||||||
Treasury services |
665 | 679 | (2 | ) | 1,303 | 1,325 | (2 | ) | ||||||||||||||||
Investment banking |
115 | 114 | 1 | 220 | 187 | 18 | ||||||||||||||||||
Other |
57 | (24 | ) | NM | 72 | (6 | ) | NM | ||||||||||||||||
Total Commercial Banking revenue |
$ | 1,486 | $ | 1,453 | 2 | $ | 2,902 | $ | 2,855 | 2 | ||||||||||||||
IB revenue, gross(c) |
$ | 333 | $ | 328 | 2 | $ | 644 | $ | 534 | 21 | ||||||||||||||
Revenue by client segment |
||||||||||||||||||||||||
Middle Market Banking |
$ | 767 | $ | 772 | (1 | ) | $ | 1,513 | $ | 1,524 | (1 | ) | ||||||||||||
Commercial Term Lending |
237 | 224 | 6 | 466 | 452 | 3 | ||||||||||||||||||
Mid-Corporate Banking |
285 | 305 | (7 | ) | 548 | 547 | | |||||||||||||||||
Real Estate Banking |
125 | 120 | 4 | 225 | 240 | (6 | ) | |||||||||||||||||
Other |
72 | 32 | 125 | 150 | 92 | 63 | ||||||||||||||||||
Total Commercial Banking revenue |
$ | 1,486 | $ | 1,453 | 2 | $ | 2,902 | $ | 2,855 | 2 | ||||||||||||||
Financial ratios |
||||||||||||||||||||||||
Return on common equity |
35 | % | 18 | % | 27 | % | 18 | % | ||||||||||||||||
Overhead ratio |
36 | 37 | 37 | 38 | ||||||||||||||||||||
(a) | Revenue from investment banking products sold to CB clients and commercial card fee revenue is included in all other income. | |
(b) | 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 $49 million and $39 million for the quarters ended June 30, 2010 and 2009, respectively, and $94 million and $74 million for year-to-date 2010 and 2009, respectively. | |
(c) | Represents the total revenue related to investment banking products sold to CB clients. |
41
42
Selected metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except headcount and ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Selected balance sheet data (period-end): |
||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||
Loans retained |
$ | 95,090 | $ | 105,556 | (10 | )% | $ | 95,090 | $ | 105,556 | (10 | )% | ||||||||||||
Loans held-for-sale and loans at fair value |
446 | 296 | 51 | 446 | 296 | 51 | ||||||||||||||||||
Total loans |
95,536 | 105,852 | (10 | ) | 95,536 | 105,852 | (10 | ) | ||||||||||||||||
Equity |
8,000 | 8,000 | | 8,000 | 8,000 | | ||||||||||||||||||
Selected balance sheet data (average): |
||||||||||||||||||||||||
Total assets |
$ | 133,309 | $ | 137,283 | (3 | ) | $ | 133,162 | $ | 140,771 | (5 | ) | ||||||||||||
Loans: |
||||||||||||||||||||||||
Loans retained |
95,521 | 108,750 | (12 | ) | 95,917 | 111,146 | (14 | ) | ||||||||||||||||
Loans held-for-sale and loans at fair value |
391 | 288 | 36 | 344 | 292 | 18 | ||||||||||||||||||
Total loans |
95,912 | 109,038 | (12 | ) | 96,261 | 111,438 | (14 | ) | ||||||||||||||||
Liability balances(a) |
136,770 | 105,829 | 29 | 134,966 | 110,377 | 22 | ||||||||||||||||||
Equity |
8,000 | 8,000 | | 8,000 | 8,000 | | ||||||||||||||||||
Average loans by client segment: |
||||||||||||||||||||||||
Middle Market Banking |
$ | 34,424 | $ | 38,193 | (10 | ) | $ | 34,173 | $ | 39,453 | (13 | ) | ||||||||||||
Commercial Term Lending |
35,956 | 36,963 | (3 | ) | 36,006 | 36,889 | (2 | ) | ||||||||||||||||
Mid-Corporate Banking |
11,875 | 17,012 | (30 | ) | 12,065 | 17,710 | (32 | ) | ||||||||||||||||
Real Estate Banking |
9,814 | 12,347 | (21 | ) | 10,124 | 12,803 | (21 | ) | ||||||||||||||||
Other |
3,843 | 4,523 | (15 | ) | 3,893 | 4,583 | (15 | ) | ||||||||||||||||
Total Commercial Banking loans |
$ | 95,912 | $ | 109,038 | (12 | ) | $ | 96,261 | $ | 111,438 | (14 | ) | ||||||||||||
Headcount |
4,808 | 4,228 | 14 | 4,808 | 4,228 | 14 | ||||||||||||||||||
Credit data and quality statistics: |
||||||||||||||||||||||||
Net charge-offs |
$ | 176 | $ | 181 | (3 | ) | $ | 405 | $ | 315 | 29 | |||||||||||||
Nonperforming loans: |
||||||||||||||||||||||||
Nonperforming loans retained(b) |
3,036 | 2,090 | 45 | 3,036 | 2,090 | 45 | ||||||||||||||||||
Nonperforming loans held-for-sale and
loans at fair value |
41 | 21 | 95 | 41 | 21 | 95 | ||||||||||||||||||
Total nonperforming loans |
3,077 | 2,111 | 46 | 3,077 | 2,111 | 46 | ||||||||||||||||||
Nonperforming assets |
3,285 | 2,255 | 46 | 3,285 | 2,255 | 46 | ||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||
Allowance for loan losses |
2,686 | 3,034 | (11 | ) | 2,686 | 3,034 | (11 | ) | ||||||||||||||||
Allowance for lending-related commitments |
267 | 272 | (2 | ) | 267 | 272 | (2 | ) | ||||||||||||||||
Total allowance for credit losses |
2,953 | 3,306 | (11 | ) | 2,953 | 3,306 | (11 | ) | ||||||||||||||||
Net charge-off rate |
0.74 | % | 0.67 | % | 0.85 | % | 0.57 | % | ||||||||||||||||
Allowance
for loan losses to period-end loans retained |
2.82 | 2.87 | 2.82 | 2.87 | ||||||||||||||||||||
Allowance for loan losses to average loans retained |
2.81 | 2.79 | 2.80 | 2.73 | ||||||||||||||||||||
Allowance for loan losses to nonperforming loans retained |
88 | 145 | 88 | 145 | ||||||||||||||||||||
Nonperforming loans to period-end loans |
3.22 | 1.99 | 3.22 | 1.99 | ||||||||||||||||||||
Nonperforming loans to average loans |
3.21 | 1.94 | 3.20 | 1.89 | ||||||||||||||||||||
(a) | Liability balances include deposits, as well as deposits that are swept to onbalance 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. | |
(b) | Allowance for loan losses of $586 million and $460 million were held against nonperforming loans retained at June 30, 2010 and 2009, respectively. |
43
Selected income statement data | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except headcount and ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Lending- and
deposit-related fees |
$ | 313 | $ | 314 | | % | $ | 624 | $ | 639 | (2 | )% | ||||||||||||
Asset management, administration and
commissions |
705 | 710 | (1 | ) | 1,364 | 1,336 | 2 | |||||||||||||||||
All other income |
209 | 221 | (5 | ) | 385 | 418 | (8 | ) | ||||||||||||||||
Noninterest revenue |
1,227 | 1,245 | (1 | ) | 2,373 | 2,393 | (1 | ) | ||||||||||||||||
Net interest income |
654 | 655 | | 1,264 | 1,328 | (5 | ) | |||||||||||||||||
Total net revenue |
1,881 | 1,900 | (1 | ) | 3,637 | 3,721 | (2 | ) | ||||||||||||||||
Provision for credit losses |
(16 | ) | (5 | ) | (220 | ) | (55 | ) | (11 | ) | (400 | ) | ||||||||||||
Credit reimbursement to IB(a) |
(30 | ) | (30 | ) | | (60 | ) | (60 | ) | | ||||||||||||||
Noninterest expense |
||||||||||||||||||||||||
Compensation expense |
697 | 618 | 13 | 1,354 | 1,247 | 9 | ||||||||||||||||||
Noncompensation expense |
684 | 650 | 5 | 1,334 | 1,321 | 1 | ||||||||||||||||||
Amortization of intangibles |
18 | 20 | (10 | ) | 36 | 39 | (8 | ) | ||||||||||||||||
Total noninterest expense |
1,399 | 1,288 | 9 | 2,724 | 2,607 | 4 | ||||||||||||||||||
Income before income tax expense |
468 | 587 | (20 | ) | 908 | 1,065 | (15 | ) | ||||||||||||||||
Income tax expense |
176 | 208 | (15 | ) | 337 | 378 | (11 | ) | ||||||||||||||||
Net income |
$ | 292 | $ | 379 | (23 | ) | $ | 571 | $ | 687 | (17 | ) | ||||||||||||
Revenue by business |
||||||||||||||||||||||||
Treasury Services |
$ | 926 | $ | 934 | (1 | ) | $ | 1,808 | $ | 1,865 | (3 | ) | ||||||||||||
Worldwide Securities Services |
955 | 966 | (1 | ) | 1,829 | 1,856 | (1 | ) | ||||||||||||||||
Total net revenue |
$ | 1,881 | $ | 1,900 | (1 | ) | $ | 3,637 | $ | 3,721 | (2 | ) | ||||||||||||
Financial ratios |
||||||||||||||||||||||||
Return on common equity |
18 | % | 30 | % | 18 | % | 28 | % | ||||||||||||||||
Overhead ratio |
74 | 68 | 75 | 70 | ||||||||||||||||||||
Pretax margin ratio |
25 | 31 | 25 | 29 | ||||||||||||||||||||
Selected balance sheet data (period-end) |
||||||||||||||||||||||||
Loans(b) |
$ | 24,513 | $ | 17,929 | 37 | $ | 24,513 | $ | 17,929 | 37 | ||||||||||||||
Equity |
6,500 | 5,000 | 30 | 6,500 | 5,000 | 30 | ||||||||||||||||||
Selected balance sheet data (average) |
||||||||||||||||||||||||
Total assets |
$ | 42,868 | $ | 35,520 | 21 | $ | 40,583 | $ | 37,092 | 9 | ||||||||||||||
Loans(b) |
22,137 | 17,524 | 26 | 20,865 | 18,825 | 11 | ||||||||||||||||||
Liability balances(c) |
246,690 | 234,163 | 5 | 247,294 | 255,208 | (3 | ) | |||||||||||||||||
Equity |
6,500 | 5,000 | 30 | 6,500 | 5,000 | 30 | ||||||||||||||||||
Headcount |
27,943 | 27,252 | 3 | 27,943 | 27,252 | 3 | ||||||||||||||||||
(a) | IB credit portfolio group manages certain exposures on behalf of clients shared with TSS. TSS reimburses IB for a portion of the total cost of managing the credit portfolio. IB recognizes this credit reimbursement as a component of noninterest revenue. | |
(b) | Loan balances include wholesale overdrafts, commercial card and trade finance loans. | |
(c) | 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. |
44
45
Selected metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios and where otherwise noted) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
TSS firmwide disclosures |
||||||||||||||||||||||||
Treasury Services revenue reported |
$ | 926 | $ | 934 | (1 | )% | $ | 1,808 | $ | 1,865 | (3 | )% | ||||||||||||
Treasury Services revenue reported in CB |
665 | 679 | (2 | ) | 1,303 | 1,325 | (2 | ) | ||||||||||||||||
Treasury Services revenue reported in other lines of
business |
62 | 63 | (2 | ) | 118 | 125 | (6 | ) | ||||||||||||||||
Treasury Services firmwide revenue(a) |
1,653 | 1,676 | (1 | ) | 3,229 | 3,315 | (3 | ) | ||||||||||||||||
Worldwide Securities Services revenue |
955 | 966 | (1 | ) | 1,829 | 1,856 | (1 | ) | ||||||||||||||||
Treasury & Securities Services firmwide
revenue(a) |
$ | 2,608 | $ | 2,642 | (1 | ) | $ | 5,058 | $ | 5,171 | (2 | ) | ||||||||||||
Treasury Services firmwide liability balances
(average)(b) |
$ | 303,224 | $ | 258,312 | 17 | $ | 304,159 | $ | 273,892 | 11 | ||||||||||||||
Treasury & Securities Services firmwide liability
balances (average)(b) |
383,460 | 339,992 | 13 | 382,260 | 365,584 | 5 | ||||||||||||||||||
TSS firmwide financial ratios |
||||||||||||||||||||||||
Treasury
Services firmwide overhead ratio(c) |
54 | % | 51 | % | 55 | % | 52 | % | ||||||||||||||||
Treasury & Securities Services firmwide overhead
ratio(c) |
64 | 59 | 65 | 61 | ||||||||||||||||||||
Firmwide business metrics |
||||||||||||||||||||||||
Assets under custody (in billions) |
$ | 14,857 | $ | 13,748 | 8 | $ | 14,857 | $ | 13,748 | 8 | ||||||||||||||
Number of: |
||||||||||||||||||||||||
U.S.$ ACH transactions originated (in millions) |
970 | 978 | (1 | ) | 1,919 | 1,956 | (2 | ) | ||||||||||||||||
Total U.S.$ clearing volume (in thousands) |
30,531 | 28,193 | 8 | 59,200 | 55,379 | 7 | ||||||||||||||||||
International electronic funds transfer volume
(in thousands)(d) |
58,484 | 47,096 | 24 | 114,238 | 91,461 | 25 | ||||||||||||||||||
Wholesale check volume (in millions) |
526 | 572 | (8 | ) | 1,004 | 1,140 | (12 | ) | ||||||||||||||||
Wholesale cards issued (in thousands)(e) |
28,066 | 25,501 | 10 | 28,066 | 25,501 | 10 | ||||||||||||||||||
Credit data and quality statistics |
||||||||||||||||||||||||
Net charge-offs |
$ | | $ | 17 | NM | $ | | $ | 19 | NM | ||||||||||||||
Nonperforming loans |
14 | 14 | | 14 | 14 | | ||||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||
Allowance for loan losses |
48 | 15 | 220 | 48 | 15 | 220 | ||||||||||||||||||
Allowance for lending-related commitments |
68 | 92 | (26 | ) | 68 | 92 | (26 | ) | ||||||||||||||||
Total allowance for credit losses |
116 | 107 | 8 | 116 | 107 | 8 | ||||||||||||||||||
Net charge-off rate |
| % | 0.39 | % | | % | 0.20 | % | ||||||||||||||||
Allowance for loan losses to period-end loans |
0.20 | 0.08 | 0.20 | 0.08 | ||||||||||||||||||||
Allowance for loan losses to average loans |
0.22 | 0.09 | 0.23 | 0.08 | ||||||||||||||||||||
Allowance for loan losses to nonperforming loans |
343 | 107 | 343 | 107 | ||||||||||||||||||||
Nonperforming loans to period-end loans |
0.06 | 0.08 | 0.06 | 0.08 | ||||||||||||||||||||
Nonperforming loans to average loans |
0.06 | 0.08 | 0.07 | 0.07 | ||||||||||||||||||||
(a) | TSS firmwide revenue includes foreign exchange (FX) revenue recorded in TSS and FX revenue associated with TSS customers who are FX customers of IB. However, some of the FX revenue associated with TSS customers who are FX customers of IB is not included in TS and TSS firmwide revenue. The total FX revenue generated was $175 million and $191 million for the three months ended June 30, 2010 and 2009, respectively, and $312 million and $345 million for the six months ended June 30, 2010 and 2009, respectively. | |
(b) | Firmwide liability balances include liability balances recorded in CB. | |
(c) | Overhead ratios have been calculated based on firmwide revenue and TSS and TS expense, respectively, including those allocated to certain other lines of business. FX revenue and expense recorded in IB for TSS-related FX activity are not included in this ratio. | |
(d) | International electronic funds transfer includes non-U.S. dollar Automated Clearing House (ACH) and clearing volume. | |
(e) | Wholesale cards issued and outstanding include U.S. domestic commercial, stored value, prepaid and government electronic benefit card products. |
46
Selected income statement data | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except ratios) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Revenue: |
||||||||||||||||||||||||
Asset management, administration
and commissions |
$ | 1,522 | $ | 1,315 | 16 | % | $ | 3,030 | $ | 2,546 | 19 | % | ||||||||||||
All other income |
177 | 253 | (30 | ) | 443 | 322 | 38 | |||||||||||||||||
Noninterest revenue |
1,699 | 1,568 | 8 | 3,473 | 2,868 | 21 | ||||||||||||||||||
Net interest income |
369 | 414 | (11 | ) | 726 | 817 | (11 | ) | ||||||||||||||||
Total net revenue |
2,068 | 1,982 | 4 | 4,199 | 3,685 | 14 | ||||||||||||||||||
Provision for credit losses |
5 | 59 | (92 | ) | 40 | 92 | (57 | ) | ||||||||||||||||
Noninterest expense: |
||||||||||||||||||||||||
Compensation expense |
861 | 810 | 6 | 1,771 | 1,610 | 10 | ||||||||||||||||||
Noncompensation expense |
527 | 525 | | 1,041 | 1,004 | 4 | ||||||||||||||||||
Amortization of intangibles |
17 | 19 | (11 | ) | 35 | 38 | (8 | ) | ||||||||||||||||
Total noninterest expense |
1,405 | 1,354 | 4 | 2,847 | 2,652 | 7 | ||||||||||||||||||
Income before income tax expense |
658 | 569 | 16 | 1,312 | 941 | 39 | ||||||||||||||||||
Income tax expense |
267 | 217 | 23 | 529 | 365 | 45 | ||||||||||||||||||
Net income |
$ | 391 | $ | 352 | 11 | $ | 783 | $ | 576 | 36 | ||||||||||||||
Revenue by client segment |
||||||||||||||||||||||||
Private Bank |
$ | 695 | $ | 640 | 9 | $ | 1,393 | $ | 1,223 | 14 | ||||||||||||||
Retail |
482 | 411 | 17 | 897 | 664 | 35 | ||||||||||||||||||
Institutional |
433 | 487 | (11 | ) | 999 | 947 | 5 | |||||||||||||||||
Private Wealth Management |
348 | 334 | 4 | 691 | 646 | 7 | ||||||||||||||||||
JPMorgan Securities(a) |
110 | 110 | | 219 | 205 | 7 | ||||||||||||||||||
Total net revenue |
$ | 2,068 | $ | 1,982 | 4 | $ | 4,199 | $ | 3,685 | 14 | ||||||||||||||
Financial ratios |
||||||||||||||||||||||||
Return on common equity |
24 | % | 20 | % | 24 | % | 17 | % | ||||||||||||||||
Overhead ratio |
68 | 68 | 68 | 72 | ||||||||||||||||||||
Pretax margin ratio |
32 | 29 | 31 | 26 | ||||||||||||||||||||
(a) | JPMorgan Securities was formerly known as Bear Stearns Private Client Services prior to January 1, 2010. |
47
48
Business metrics | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except headcount, ratios, | ||||||||||||||||||||||||
ranking data, and where otherwise noted) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Number of: |
||||||||||||||||||||||||
Client advisors |
2,055 | 1,838 | 12 | % | 2,055 | 1,838 | 12 | % | ||||||||||||||||
Retirement planning services participants
(in thousands) |
1,653 | 1,595 | 4 | 1,653 | 1,595 | 4 | ||||||||||||||||||
JPMorgan Securities brokers(a) |
402 | 362 | 11 | 402 | 362 | 11 | ||||||||||||||||||
% of customer assets in 4 & 5 Star Funds(b) |
43 | % | 45 | % | (4 | ) | 43 | % | 45 | % | (4 | ) | ||||||||||||
% of AUM in 1st and 2nd quartiles:(c) |
||||||||||||||||||||||||
1 year |
58 | % | 62 | % | (6 | ) | 58 | % | 62 | % | (6 | ) | ||||||||||||
3 years |
67 | % | 69 | % | (3 | ) | 67 | % | 69 | % | (3 | ) | ||||||||||||
5 years |
78 | % | 80 | % | (3 | ) | 78 | % | 80 | % | (3 | ) | ||||||||||||
Selected balance sheet data (period-end) |
||||||||||||||||||||||||
Loans |
$ | 38,744 | $ | 35,474 | 9 | $ | 38,744 | $ | 35,474 | 9 | ||||||||||||||
Equity |
6,500 | 7,000 | (7 | ) | 6,500 | 7,000 | (7 | ) | ||||||||||||||||
Selected balance sheet data (average) |
||||||||||||||||||||||||
Total assets |
$ | 63,426 | $ | 59,334 | 7 | $ | 62,978 | $ | 58,783 | 7 | ||||||||||||||
Loans |
37,407 | 34,292 | 9 | 37,007 | 34,438 | 7 | ||||||||||||||||||
Deposits |
86,453 | 75,355 | 15 | 83,573 | 78,534 | 6 | ||||||||||||||||||
Equity |
6,500 | 7,000 | (7 | ) | 6,500 | 7,000 | (7 | ) | ||||||||||||||||
Headcount |
16,019 | 14,840 | 8 | 16,019 | 14,840 | 8 | ||||||||||||||||||
Credit data and quality statistics |
||||||||||||||||||||||||
Net charge-offs |
$ | 27 | $ | 46 | (41 | ) | $ | 55 | $ | 65 | (15 | ) | ||||||||||||
Nonperforming loans |
309 | 313 | (1 | ) | 309 | 313 | (1 | ) | ||||||||||||||||
Allowance for credit losses: |
||||||||||||||||||||||||
Allowance for loan losses |
250 | 226 | 11 | 250 | 226 | 11 | ||||||||||||||||||
Allowance for lending-related commitments |
3 | 4 | (25 | ) | 3 | 4 | (25 | ) | ||||||||||||||||
Total allowance for credit losses |
253 | 230 | 10 | 253 | 230 | 10 | ||||||||||||||||||
Net charge-off rate |
0.29 | % | 0.54 | % | 0.30 | % | 0.38 | % | ||||||||||||||||
Allowance for loan losses to period-end loans |
0.65 | 0.64 | 0.65 | 0.64 | ||||||||||||||||||||
Allowance for loan losses to average loans |
0.67 | 0.66 | 0.68 | 0.66 | ||||||||||||||||||||
Allowance for loan losses to nonperforming loans |
81 | 72 | 81 | 72 | ||||||||||||||||||||
Nonperforming loans to period-end loans |
0.80 | 0.88 | 0.80 | 0.88 | ||||||||||||||||||||
Nonperforming loans to average loans |
0.83 | 0.91 | 0.83 | 0.91 | ||||||||||||||||||||
(a) | JPMorgan Securities was formerly known as Bear Stearns Private Client Services prior to January 1, 2010. | |
(b) | Derived from Morningstar for the U.S., the U.K., Luxembourg, France, Hong Kong and Taiwan; and Nomura for Japan. | |
(c) | Quartile rankings sourced from Lipper for the U.S. and Taiwan; Morningstar for the U.K., Luxembourg, France and Hong Kong; and Nomura for Japan. |
49
ASSETS UNDER SUPERVISION(a) (in billions) | ||||||||
As of June 30, | 2010 | 2009 | ||||||
Assets by asset class |
||||||||
Liquidity |
$ | 489 | $ | 617 | ||||
Fixed income |
259 | 194 | ||||||
Equities and multi-asset |
322 | 264 | ||||||
Alternatives |
91 | 96 | ||||||
Total assets under management |
1,161 | 1,171 | ||||||
Custody/brokerage/administration/deposits |
479 | 372 | ||||||
Total assets under supervision |
$ | 1,640 | $ | 1,543 | ||||
Assets by client segment |
||||||||
Institutional |
$ | 634 | $ | 697 | ||||
Private Bank |
177 | 179 | ||||||
Retail |
269 | 216 | ||||||
Private Wealth Management |
66 | 67 | ||||||
JPMorgan Securities(b) |
15 | 12 | ||||||
Total assets under management |
$ | 1,161 | $ | 1,171 | ||||
Institutional |
$ | 636 | $ | 697 | ||||
Private Bank |
469 | 390 | ||||||
Retail |
351 | 289 | ||||||
Private Wealth Management |
130 | 123 | ||||||
JPMorgan Securities(b) |
54 | 44 | ||||||
Total assets under supervision |
$ | 1,640 | $ | 1,543 | ||||
Assets by geographic region |
||||||||
U.S./Canada |
$ | 791 | $ | 814 | ||||
International |
370 | 357 | ||||||
Total assets under management |
$ | 1,161 | $ | 1,171 | ||||
U.S./Canada |
$ | 1,151 | $ | 1,103 | ||||
International |
489 | 440 | ||||||
Total assets under supervision |
$ | 1,640 | $ | 1,543 | ||||
Mutual fund assets by asset class |
||||||||
Liquidity |
$ | 440 | $ | 569 | ||||
Fixed income |
79 | 48 | ||||||
Equities and multi-asset |
133 | 111 | ||||||
Alternatives |
8 | 9 | ||||||
Total mutual fund assets |
$ | 660 | $ | 737 | ||||
(a) | Excludes assets under management of American Century Companies, Inc., in which the Firm had a 42% ownership at both June 30, 2010 and 2009. | |
(b) | JPMorgan Securities was formerly known as Bear Stearns Private Client Services prior to January 1, 2010. |
50
Assets under management rollforward | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in billions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Beginning balance |
$ | 1,219 | $ | 1,115 | $ | 1,249 | $ | 1,133 | ||||||||
Net asset flows: |
||||||||||||||||
Liquidity |
(29 | ) | (7 | ) | (91 | ) | 12 | |||||||||
Fixed income |
12 | 8 | 28 | 9 | ||||||||||||
Equities, multi-asset and alternatives |
1 | 2 | 7 | (3 | ) | |||||||||||
Market/performance/other impacts |
(42 | ) | 53 | (32 | ) | 20 | ||||||||||
Total assets under management |
$ | 1,161 | $ | 1,171 | $ | 1,161 | $ | 1,171 | ||||||||
Assets under supervision rollforward |
||||||||||||||||
Beginning balance |
$ | 1,707 | $ | 1,464 | $ | 1,701 | $ | 1,496 | ||||||||
Net asset flows |
(4 | ) | (9 | ) | (14 | ) | 16 | |||||||||
Market/performance/other impacts |
(63 | ) | 88 | (47 | ) | 31 | ||||||||||
Total assets under supervision |
$ | 1,640 | $ | 1,543 | $ | 1,640 | $ | 1,543 | ||||||||
Selected income statement data | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
(in millions, except headcount) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Principal transactions |
$ | (69 | ) | $ | 1,243 | NM | $ | 478 | $ | (250 | ) | NM | ||||||||||||
Securities gains |
990 | 366 | 170 | % | 1,600 | 580 | 176 | % | ||||||||||||||||
All other income |
182 | (209 | ) | NM | 306 | (228 | ) | NM | ||||||||||||||||
Noninterest revenue |
1,103 | 1,400 | (21 | ) | 2,384 | 102 | NM | |||||||||||||||||
Net interest income |
747 | 865 | (14 | ) | 1,823 | 1,854 | (2 | ) | ||||||||||||||||
Total net revenue(a) |
1,850 | 2,265 | (18 | ) | 4,207 | 1,956 | 115 | |||||||||||||||||
Provision for credit losses |
(2 | ) | 9 | NM | 15 | 9 | 67 | |||||||||||||||||
Noninterest expense |
||||||||||||||||||||||||
Compensation expense |
770 | 655 | 18 | 1,245 | 1,296 | (4 | ) | |||||||||||||||||
Noncompensation expense(b) |
1,468 | 1,319 | 11 | 4,509 | 1,664 | 171 | ||||||||||||||||||
Merger costs |
| 143 | NM | | 348 | NM | ||||||||||||||||||
Subtotal |
2,238 | 2,117 | 6 | 5,754 | 3,308 | 74 | ||||||||||||||||||
Net expense allocated to other businesses |
(1,192 | ) | (1,253 | ) | 5 | (2,372 | ) | (2,532 | ) | 6 | ||||||||||||||
Total noninterest expense |
1,046 | 864 | 21 | 3,382 | 776 | 336 | ||||||||||||||||||
Income before income tax expense |
806 | 1,392 | (42 | ) | 810 | 1,171 | (31 | ) | ||||||||||||||||
Income tax expense/(benefit)(c) |
153 | 584 | (74 | ) | (71 | ) | 625 | NM | ||||||||||||||||
Net income |
$ | 653 | $ | 808 | (19 | ) | $ | 881 | $ | 546 | 61 | |||||||||||||
Total net revenue |
||||||||||||||||||||||||
Private equity |
$ | 48 | $ | (1 | ) | NM | $ | 163 | $ | (450 | ) | NM | ||||||||||||
Corporate |
1,802 | 2,266 | (20 | ) | 4,044 | 2,406 | 68 | |||||||||||||||||
Total net revenue |
$ | 1,850 | $ | 2,265 | (18 | ) | $ | 4,207 | $ | 1,956 | 115 | |||||||||||||
Net income/(loss) |
||||||||||||||||||||||||
Private equity |
$ | 11 |