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Slide 1: FINANCIAL RESULTS 3Q09 October 14, 2009
Slide 2: 3Q09 Financial highlights Net income of $3.6B; EPS of $0.82; firmwide revenue of $28.8B1 Reported strong earnings in the Investment Bank; maintained #1 year-to-date rankings for Global Debt, Equity and Equity-related, and Global Investment Banking Fees Solid performance in Asset Management, Commercial Banking and Retail Banking Credit costs remain high Added $2.0B to consumer credit reserves Firmwide total credit reserves of $31.5B; loan loss coverage ratio of 5.3%2 Capital generation further strengthened Tier 1 Common to $101B Tier 1 Common3 ratio of 8.2% Tier 1 Capital ratio of 10.2% FINANCIAL RESULTS 1 Revenue is on a managed basis. See notes 1 and 2 on slide 20 note 3 on slide 20 3 See note 4 on slide 20 2 See 1
Slide 3: 3Q09 Managed results1 $ in millions $ in millions $ O/(U) 3Q09 Results excl. Merger-related items2 Revenue (FTE)1 Credit Costs1 Expense Merger-related items2 (after-tax) Reported Net Income Net Income Applicable to Common Reported EPS ROE3 ROE Net of GW 3 FINANCIAL RESULTS 2Q09 3Q08 $28,886 9,809 13,320 (70) $3,588 $3,240 $0.82 9% 13% 14% $1,095 114 (26) 88 $867 $2,168 $0.54 6% 10% 10% $12,801 5,125 2,340 665 $3,061 $2,922 $0.73 1% 2% 2% ROTCE3,4 1 Managed basis presents revenue and credit costs without the effect of credit card securitizations. Revenue is on a fully taxable-equivalent (FTE) basis. All references to credit costs refer to managed provision for credit losses. See notes 1 and 2 on slide 20 2 Merger-related items relate to the Bear Stearns and WaMu transactions 3 Actual numbers for all periods, not over/under. For the period 2Q09, net income available to common used to calculate ratios excludes the one-time, non-cash negative adjustment of $1.1B resulting from repayment of TARP preferred capital 4 See note 5 on slide 20 2
Slide 4: Investment Bank $ in millions $ in millions $ O/(U) 3Q09 Revenue Investment Banking Fees Fixed Income Markets Equity Markets Credit Portfolio Credit Costs Expense Net Income Key Statistics ($B)1 Overhead Ratio Comp/Revenue EOP Loans Allowance for Loan Losses NPLs Net Charge-off Rate2 ALL / Loans2 FINANCIAL RESULTS Net income of $1.9B on revenue of $7.5B Immaterial net impact on profits from the combination of: – Tightening of JPM and counterparty credit spreads5; and – Gains on legacy leveraged lending and mortgage-related positions IB fees of $1.7B up 4% YoY Maintained #1 year-to-date rankings for Global Debt, Equity and Equity-related, and Global Investment Banking Fees Fixed Income Markets revenue of $5.0B, reflecting: Strong performance across most products; and Approximately $400mm of gains on legacy leveraged lending and mortgage-related positions Equity Markets revenue of $941mm, reflecting: Solid client revenue, particularly in Prime Services, and strong trading results Credit Portfolio revenue of ($102mm), reflecting mark-to-market losses on hedges of retained loans, largely offset by the positive net impact of credit spreads on derivative assets and liabilities and net interest income on loans Credit costs of $379mm reflect net charge-offs of $750mm, partially offset by a reduction in allowance for credit losses of $371mm Expense up 12% YoY due to higher performance-based compensation, partially offset by lower headcount-related expense6 2Q09 $207 (581) 82 233 473 (492) 207 $450 3Q08 $3,442 65 4,196 (709) (110) 145 458 $1,039 $7,508 1,658 5,011 941 (102) 379 4,274 $1,921 57% 37% $60.3 $4.7 $4.9 4.86% 8.44% 23% $206 $33.0 56% 37% $71.3 $5.1 $3.5 2.55% 7.91% 18% $267 $33.0 94% 53% $90.0 $2.7 $0.4 0.07% 3.62% 13% $218 $33.0 ROE3 VAR ($mm) EOP Equity 1 4 Actual numbers for all periods, not over/under 2 Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage ratio and net charge-off rate 3 Calculated based on average equity; 3Q09 average equity was $33B 4 Average Trading and Credit Portfolio VAR 5 The net impact included losses of $497mm and $343mm in Fixed Income and Equity Markets, respectively, related to the tightening of JPM’s credit spreads on certain structured liabilities (DVA) 6 See note 6 on slide 20 3
Slide 5: Retail Financial Services—drivers Retail Banking ($ in billions) Retail Banking ($ in billions) 3Q09 Key Statistics Average Deposits Deposit Margin Checking Accts (mm) # of Branches # of ATMs Investment Sales ($mm) $339.6 2.99% 25.5 5,126 15,038 $6,243 $348.1 2.92% 25.3 5,203 14,144 $5,292 $210.1 3.06% 24.5 5,423 14,389 $4,389 2Q09 3Q08 Average deposits of $339.6B up 62% YoY and down 2% QoQ: QoQ decline partially due to the maturation of high rate WaMu CDs during the quarter Deposit margin expansion reflects disciplined pricing strategy and a portfolio shift to wider spread deposit products Branch production statistics: Checking accounts up 4% YoY and 1% QoQ Credit card sales down 16% YoY and 18% QoQ Mortgage originations up 152% YoY and 15% QoQ Investment sales up 42% YoY and 18% QoQ Consumer Lending ($ in billions) Consumer Lending ($ in billions) 3Q09 Credit Metrics: Net Charge-off Rate (excl. credit-impaired) ALL / Loans (excl. credit-impaired) Key Statistics Home Equity Originations FINANCIAL RESULTS Total Consumer Lending originations of $46.0B: Mortgage loan originations down 2% YoY and 10% QoQ 2Q09 3.84% 4.34% $0.6 $138.1 $41.1 $144.7 $1,118 $5.3 $43.1 3Q08 2.43% 2.50% $2.6 $94.8 $37.7 $53.5 $1,115 $3.8 $43.9 3.75% 4.56% $0.5 Auto originations up 82% YoY and 30% QoQ: – YoY increase driven by market share gains in Prime segments and new manufacturing relationships; – QoQ increase driven primarily by CARS program 3rd party mortgage loans serviced down 1% YoY Avg Home Equity Loans Owned Mortgage Loan Originations 1,2 1 $134.0 $37.1 $139.7 $1,099 $6.9 $43.3 Avg Mortgage Loans Owned 3rd Party Mortgage Loans Svc'd Auto Originations Avg Auto Loans 1 Includes 2 Does purchased credit-impaired loans acquired as part of the WaMu transaction not include held-for-sale loans 4
Slide 6: Retail Financial Services $ in millions $ in millions $ O/(U) 3Q09 Retail Financial Services Net income ROE 1,2 1 Retail Financial Services net income of $7mm down $57mm from 3Q08 and $8mm from 2Q09 3Q08 2Q09 Retail Banking net income of $1.0B up 44% YoY: Total revenue of $4.6B increased 61% YoY reflecting the impact of the WaMu transaction, higher deposit balances, higher deposit-related fees and wider deposit spreads Credit costs of $208mm up $138mm YoY, reflecting higher estimated losses in Business Banking Expense growth of 67% YoY reflecting the impact of the WaMu transaction, higher headcount-related expense3 and higher FDIC insurance premiums Consumer Lending net loss of $1.0B compared with a net loss of $659mm in the prior year: Total revenue of $3.6B, up 72% YoY, reflecting the impact of the WaMu transaction, higher servicing revenue and wider loan spreads, partially offset by lower loan balances and lower production revenue driven by higher repurchase reserves Credit costs of $3.8B reflect higher estimated losses and include an increase of $1.4B in the allowance for loan losses Expense growth of 29% YoY reflecting higher servicing expense due to increased delinquencies and defaults and the impact of the WaMu transaction, partially offset by lower mortgage reinsurance losses $7 $25 ($8) $25 ($57) 1% $25 EOP Equity ($B) Retail Banking Net Interest Income Noninterest Revenue Total Revenue Credit Costs Expense Net Income Consumer Lending Net Interest Income Noninterest Revenue Total Revenue Credit Costs FINANCIAL RESULTS 2,732 1,844 $4,576 208 2,646 $1,043 13 41 $54 (153) 89 $73 976 755 $1,731 138 1,066 $320 2,422 1,220 $3,642 3,780 1,550 ($1,036) 111 83 $194 295 28 ($81) 947 577 $1,524 1,794 351 ($377) Expense Net Income 1 2 Actual numbers for all periods, not over/under Calculated based on average equity; 3Q09 average equity was $25B 3 See note 6 on slide 20 5
Slide 7: Home Lending update Key statistics1 Key statistics1 3Q09 EOP owned portfolio ($B) Home Equity Prime Mortgage 2 Overall commentary Overall commentary 2Q09 $108.2 62.1 13.8 $1,265 481 410 4.61% 3.07% 11.50% $1,487 3,474 2,773 3Q08 $116.8 63.0 18.1 $663 177 273 2.78% 1.79% 7.65% $1,142 1,490 2,384 Some initial signs of stability in consumer delinquency trends, but we are not certain if this trend will continue Prime and subprime mortgage delinquencies impacted by foreclosure moratorium, extended REO timelines and trial modifications $104.8 60.1 13.3 $1,142 3 Subprime Mortgage Net charge-offs ($mm) Home Equity Prime Mortgage Subprime Mortgage Net charge-off rate Home Equity Prime Mortgage 3 525 422 4.25% 3.45% 12.31% $1,598 Outlook1 Outlook1 Home Equity – quarterly losses trending to approximately $1.4B over the next several quarters Prime Mortgage – quarterly losses trending to approximately $600mm over the next several quarters Subprime Mortgage – quarterly losses trending to approximately $500mm over the next several quarters Purchased credit-impaired loans Purchased credit-impaired loans Subprime Mortgage Nonperforming loans ($mm) Home Equity Prime Mortgage 1 2 3 3,974 3,233 Subprime Mortgage FINANCIAL RESULTS Excludes the impact of purchased credit-impaired loans acquired as part of the WaMu transaction Ending balances include all noncredit-impaired prime mortgage balances held by Retail Financial Services, including loans repurchased from Government National Mortgage Association (GNMA) pools that are insured by U.S. government agencies 3 Net charge-offs and nonperforming loans exclude loans repurchased from GNMA pools that are insured by U.S. government agencies Total purchased credit-impaired portfolio divided into separate pools for impairment analysis Added $1.1B to allowance for loan losses related to Prime Mortgage (non-Option ARM) pool 6
Slide 8: Card Services (Managed) $ in millions $ in millions $ O/(U) 3Q09 Revenue Credit Costs Expense Net Income Key Statistics Incl. WaMu ($B) ROO (pretax) ROE 2 1 Net loss of $700mm down $992mm YoY; decline in results driven by higher credit costs partially offset by an increase in revenue 3Q08 2Q09 $291 364 (27) ($28) $5,159 4,967 1,306 ($700) $1,272 2,738 112 ($992) Credit costs of $5.0B are due to higher net charge-offs and an increase of $575mm in the allowance for loan losses: Net charge-off rate (excluding the WaMu portfolio) of 9.41% in 3Q09 vs. 5.00% in 3Q08 and 8.97% in 2Q09 End-of-period outstandings (excluding the WaMu portfolio) of $144.1B down 10% YoY and 3% QoQ Sales volume (excluding the WaMu portfolio) declined 6% YoY Revenue of $5.2B up 33% YoY due to the impact of the WaMu transaction, and up 6% QoQ Managed margin (excluding the WaMu portfolio) of 9.10% up from 8.18% in 3Q08 and 8.63% in 2Q09 (2.61)% (19)% $15.0 (2.46)% (18)% $15.0 1.17% 8% $15.0 EOP Equity Key Statistics Excl. WaMu ($B)1 Avg Outstandings EOP Outstandings Charge Volume Net Accts Opened (mm) Managed Margin Net Charge-Off Rate 30+ Day Delinquency Rate FINANCIAL RESULTS 1 2 $146.9 $144.1 $78.9 2.4 9.10% 9.41% 5.38% $149.7 $148.4 $78.3 2.4 8.63% 8.97% 5.27% $157.6 $159.3 $93.9 3.6 8.18% 5.00% 3.69% Actual numbers for all periods, not over/under Calculated based on average equity; 3Q09 average equity was $15B 7
Slide 9: Commercial Banking $ in millions $ in millions $ O/(U) 3Q09 Revenue Middle Market Banking Commercial Term Lending Mid-Corporate Banking Real Estate Banking Other Credit Costs Expense Net Income Key Statistics ($B)1 Avg Loans & Leases EOP Loans & Leases Avg Liability Balances 2 Net income of $341mm up 9% YoY Excluding the WaMu portfolio, average loan balances were down 16% YoY, while average liability balances were up 9% YoY: Average loan balances were down 5% QoQ due to reduced client demand Revenue of $1.5B up 30% YoY due to the impact of the WaMu transaction Credit costs of $355mm are due to higher net charge-offs, reflecting continued deterioration in the credit environment across all business segments Expense up 12% YoY due to the impact of the WaMu transaction and higher FDIC insurance premiums; overhead ratio of 37% 2Q09 $6 (1) 8 (27) 1 25 43 10 ($27) $109.0 $105.9 $105.8 $3.0 $2.1 0.67% 2.87% 18% 37% $8.0 3Q08 $334 42 232 42 30 (12) 229 59 $29 $72.3 $117.6 $99.4 $2.7 $0.8 0.22% 2.30% 18% 43% $8.0 $1,459 771 232 278 121 57 355 545 $341 $104.0 $101.9 $109.3 $3.1 $2.3 1.11% 3.01% 17% 37% $8.0 Allowance for Loan Losses NPLs Net Charge-Off Rate3 ALL / Loans3 ROE4 FINANCIAL RESULTS Overhead Ratio EOP Equity 1 2 Actual numbers for all periods, not over/under Includes deposits and deposits swept to on-balance sheet liabilities 3 Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage ratio and net charge-off rate 4 Calculated based on average equity; 3Q09 average equity was $8.0B 8
Slide 10: Treasury & Securities Services $ in millions $ in millions $ O/(U) 3Q09 Revenue Treasury Services Worldwide Securities Svcs Expense Net Income Key Statistics 1 2 Net income of $302mm down 26% YoY and 20% QoQ Pretax margin of 26% Liability balances down 11% YoY and 1% QoQ 2Q09 ($112) (15) (97) (8) ($77) 3Q08 ($165) (27) (138) (59) ($104) $1,788 919 869 1,280 $302 $231.5 $14.9 26% 24% $2,523 $1,654 2 Assets under custody up 3% YoY and 8% QoQ Revenue of $1.8B down 8% YoY, primarily driven by: WSS revenue of $869mm down 14% YoY due to lower securities lending balances, lower spreads and balances on liabilities products as well as the effect of market depreciation on certain custody assets TS revenue of $919mm down 3% YoY, reflecting spread compression on deposit products, offset by higher trade revenue driven by wider spreads and higher card product volumes Expense down 4% YoY, due to lower headcount-related expense4, partially offset by higher FDIC insurance premiums Avg Liability Balances ($B) $234.2 $260.0 $13.7 31% 30% $14.4 29% 46% Assets under Custody ($T) Pretax Margin ROE 3 TSS Firmwide Revenue TS Firmwide Revenue TSS Firmwide Avg Liab Bal ($B) EOP Equity ($B) FINANCIAL RESULTS 1 Actual 2 $2,642 $2,672 $1,676 $1,665 $340.0 $359.4 $5.0 $4.5 $340.8 $5.0 numbers for all periods, not over/under Includes deposits and deposits swept to on-balance sheet liabilities 3 Calculated based on average equity; 3Q09 average equity was $5B 4 See note 6 on slide 20 9
Slide 11: Asset Management $ in millions $ in millions $ O/(U) 3Q09 Revenue Private Bank Institutional Retail Private Wealth Management Bear Stearns Private Client Services Credit Costs Expense Net Income Key Statistics ($B) 1 Net income of $430mm up 23% YoY Pretax margin of 33% 3Q08 $124 8 48 72 (13) 9 18 (11) $79 $1,153 $1,562 $39.8 $39.7 $65.6 30% 25% $7.0 2Q09 $103 (1) 47 60 5 (8) (21) (3) $78 $1,171 $1,543 $34.3 $35.5 $75.4 29% 20% $7.0 Revenue of $2.1B up 6% YoY Assets under management of $1.3T up 9% YoY due to net inflows, partially offset by the effect of lower market levels Net AUM inflows of $34B for the quarter; $113B for the past 12 months Good global investment performance: 74% of mutual fund AUM ranked in the first or second quartiles over past five years; 70% over past three years; 60% over one year Expense down 1% YoY Credit costs of $38mm reflect continued deterioration in the credit environment $2,085 639 534 471 339 102 38 1,351 $430 $1,259 $1,670 $34.8 $35.9 $73.6 33% 24% $7.0 Assets under Management Assets under Supervision Average Loans EOP Loans Average Deposits Pretax Margin FINANCIAL RESULTS 2 ROE 1 Actual EOP Equity numbers for all periods, not over/under 2 Calculated based on average equity; 3Q09 average equity was $7B 10
Slide 12: Corporate/Private Equity Net Income ($ in millions) Net Income ($ in millions) Private Equity $ O/(U) 3Q09 Private Equity Corporate Merger-related items $88 1,269 (70) 2Q09 $115 276 88 3Q08 $252 Private Equity gains of $155mm in 3Q09 Private Equity portfolio of $6.8B (6.0% of shareholders’ equity less goodwill) Corporate 2,150 665 Net income of $1.3B includes the following: Noninterest revenue of approximately $900mm (aftertax), primarily related to investment portfolio trading income Benefit of higher investment portfolio net interest income Net Income $1,287 $479 $3,067 FINANCIAL RESULTS 11
Slide 13: Capital Management $ in billions $ in billions 3Q09 Tier 1 Capital1 Tier 1 Common Capital1,2 Risk-Weighted Assets1 Total Assets Tier 1 Capital Ratio1 Tier 1 Common Ratio1,2 $127 $101 $1,241 $2,041 10.2% 8.2% 2Q09 $122 $97 $1,260 $2,027 9.7% 7.7% 3Q08 $112 $86 $1,261 $2,251 8.9% 6.8% Firmwide total credit reserves of $31.5B; loan loss coverage ratio of 5.3%3 January 1, 2010 implementation of FAS 166/167 expected to decrease Tier 1 Capital ratio by approximately 40bps FINANCIAL RESULTS 1 2 Estimated for 3Q09 See note 4 on slide 20 3 See note 3 on slide 20 Note: Tier 1 Capital for 2Q09 does not include the $25B of TARP preferred capital. Firm-wide Level 3 assets are expected to be 7% of total firm assets at 9/30/09 12
Slide 14: Outlook Investment Bank Investment Bank Expect Fixed Income and Equity Markets revenue to normalize over time as conditions stabilize Retail Financial Services Retail Financial Services Home lending quarterly losses (incl. WaMu) over the next several quarters trending to approximately: Home equity — $1.4B Prime mortgage — $600mm Subprime mortgage — $500mm Solid underlying growth in Retail Banking Card Services Card Services Chase losses of approximately 10.5% +/- by 1H10; highly dependent on unemployment after that Loss rates of 9.0% +/- in 4Q09 and 11.0% +/- in 1Q10 related to the timing effect of payment holiday WaMu losses could approach 24% +/- over the next several quarters FINANCIAL RESULTS Treasury & Securities Services Treasury & Securities Services Performance will be affected by market levels and liability balance flows Asset Management Asset Management Management and performance fees will be affected by market levels Corporate/Private Equity Corporate/Private Equity Private Equity Results will be volatile Corporate Expect continued elevated net interest income in the near-term Noninterest/trading revenue not likely to continue at 3Q level Expect continued pressure on charge volume and level of outstandings Commercial Banking Commercial Banking Strong reserves, but credit expected to weaken further 13 Overall Overall If economy weakens further, additional reserving actions may be required
Slide 15: Key investor topics Capital planning: Capital ratios are high Well-positioned for changes in regulatory capital and liquidity requirements Update on consumer initiatives: Mortgage modifications efforts Non-sufficient funds/Overdraft fees New credit card products FINANCIAL RESULTS 14
Slide 16: Agenda Page Appendix 15 FINANCIAL RESULTS 15
Slide 17: IB League tables League table results League table results YTD Sept 09 Rank Based on fees (per Dealogic): Global IB fees Based on volumes (per Thomson Reuters): Global Debt, Equity & Equity-related US Debt, Equity & Equity-related Global Equity & Equity-related US Equity & Equity-related Global Debt 3 2 2008 1 Ranked #1 in Global Fees for YTD Sept 2009, with 10% market share per Dealogic Ranked #1 for YTD Sept 2009 per Thomson Reuters in: Global Debt, Equity & Equity-related Global Equity & Equity-related Global Debt Global Long-term Debt Global Loan Syndications Share Rank Share #1 10.0% 2# 8.6% #1 #1 #1 #1 #1 10.0% 14.7% 15.0% 17.5% 9.4% 8.6% 14.0% 24.7% 32.9% 9.2% 23.4% #1 #2 #1 #1 #1 #3 #2 #2 #2 #1 #1 9.4% 15.0% 10.2% 11.0% 9.3% 8.8% 15.1% 27.5% 34.5% 11.4% 24.5% Global Long-term Debt US Long-term Debt 3 3 #1 #1 4 Global M&A Announced US M&A Announced 5 #4 #4 #1 #1 Global Loan Syndications US Loan Syndications APPENDIX 1 2 Global 3 Debt Source: 2008 data is pro forma for merger with Bear Stearns Equity & Equity-related includes rights offerings & Long-term Debt tables include ABS, MBS and taxable municipal securities 4 Global M&A for 2008 for Thomson Reuters includes transactions withdrawn since 12/31/08 5 US M&A for Thomson Reuters represents any US involvement; 2008 includes transactions withdrawn since 12/31/08 Note: Rankings for YTD September 30, 2009 run as of 10/01/09; 2008 represents full year 16
Slide 18: Consumer credit—delinquency trends Excluding credit-impaired loans Home Equity delinquency trend Home Equity delinquency trend 3.50% 30+ day delinquencies 30-89 day delinquencies Prime Mortgage delinquency trend Prime Mortgage delinquency trend 13% 11% 30+ day delinquencies 30-89 delinquencies 2.75% 9% 7% 2.00% 5% 3% 1.25% Mar-08 May-08 Aug-08 Nov-08 Mar-09 Jun-09 Sep-09 1% Mar-08 May-08 Aug-08 Nov-08 Mar-09 Jun-09 Sep-09 Subprime Mortgage delinquency trend Subprime Mortgage delinquency trend 35% 30% 25% 20% 15% 10% 5% Mar-08 May-08 Aug-08 Nov-08 Mar-09 Jun-09 Sep-09 30+ day delinquencies 30-89 day delinquencies Card Services delinquency trend1,2 (Excl. WaMu) Card Services delinquency trend1,2 (Excl. WaMu) 6.0% 30+ day delinquencies 30-89 day delinquencies 4.5% 3.0% 1.5% Mar-08 May-08 Aug-08 Nov-08 Mar-09 Jun-09 Sep-09 APPENDIX 1 2 On a managed basis “Payment holiday” in 2Q09 impacted 30+ day and 30-89 day delinquency trends in 3Q09 Note: For Home Lending graphs, 30+ day delinquencies prior to September ’08 are heritage Chase 17
Slide 19: Substantially increased loan loss reserves, maintaining strong coverage ratios $ in millions $ in millions Loan Loss Reserve/Total Loans1 54000 5.75% 45000 36000 Loan Loss Reserve Nonperforming Loans Loan Loss Reserve/NPLs1 5% 500% 4.60% 27,381 29,072 30,633 4% 400% 3.45% 27000 3% 300% 2.30% 18000 19,052 9,234 3,282 4Q07 4Q07 11,746 4,401 1Q08 1Q08 13,246 5,273 2Q08 2Q08 6,933 3Q08 3Q08 8,953 4Q08 4Q08 11,401 14,785 17,767 23,164 2% 200% 1.15% 9000 0 0.00% 1% 100% 8,113 2,490 3Q07 3Q07 0% 0% 1Q09 1Q09 2Q09 2Q09 3Q09 3Q09 Peer comparison Peer comparison 3Q09 JPM 1 Consumer LLR/Total Loans LLR/NPLs Wholesale LLR/Total Loans LLR/NPLs APPENDIX 2Q09 JPM 1 5.80% 234% 3.75% 144% 5.01% 198% Peer Avg.2 4.47% 176% 2.86% 74% 3.91% 131% $30.6B of loan loss reserves in 3Q09, up ~$22B from $8.1B two years ago; loan loss coverage ratio of 5.28% Strong coverage ratios compared to peers LLR/NPLs ratio naturally trends down as we move through credit cycle 6.21% 212% 3.76% 107% 5.28% 168% Firmwide LLR/Total Loans LLR/NPLs 1 2 See note 3 on slide 20 Peer average reflects equivalent metrics for key competitors. Peers are defined as C, BAC and WFC 18
Slide 20: Reconciliation of GAAP to Non-GAAP Results $ in millions $ in millions 3Q09 Revenue Reported Revenue Impact of Card Securitizations Tax Equivalent Adjustments Managed Revenue Merger-related Items Adjusted Revenue Credit Costs Provision for Credit Losses Impact of Card Securitizations Credit Costs Merger-related Items Adjusted Credit Costs Expense Reported Expense Merger-related Items Adjusted Expense $26,622 1,698 460 $28,780 106 $28,886 2Q09 $25,623 1,664 422 $27,709 82 $27,791 3Q08 $14,737 873 478 $16,088 (3) $16,085 8,104 1,698 $9,802 7 $9,809 8,031 1,664 $9,695 $9,695 5,787 873 $6,660 (1,976) $4,684 13,455 (135) $13,320 13,520 (174) $13,346 11,137 (157) $10,980 APPENDIX 19
Slide 21: Notes on non-GAAP financial measures and forward-looking statements This presentation includes non-GAAP financial measures. 1.Financial results are presented on a managed basis, as such basis is described in the firm’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009, and its Annual Report on Form 10-K for the year ended December 31, 2008. 2.All non-GAAP financial measures included in this presentation are provided to assist readers in understanding certain trend information. Additional information concerning such non-GAAP financial measures can be found in the above-referenced filings, to which reference is hereby made. 3.The ratio for the allowance for loan losses to end-of-period loans excludes the following: loans accounted for at fair value and loans heldfor-sale; purchased credit-impaired loans; the allowance for loan losses related to purchased credit-impaired loans; and, loans from the Washington Mutual Master Trust, which were consolidated on the firm's balance sheet at fair value during the second quarter of 2009. Additionally, Consumer Lending net charge-off rates exclude the impact of purchased credit-impaired loans. The allowance related to the purchased credit-impaired portfolio was $1.1 billion at September 30, 2009. 4.Tier 1 Common Capital ("Tier 1 Common") is calculated, for all purposes, as Tier 1 Capital less qualifying perpetual preferred stock, qualifying trust preferred securities, and qualifying minority interest in subsidiaries. 5.Tangible Common Equity ("TCE") is calculated, for all purposes, as common stockholders equity (i.e., total stockholders' equity less preferred stock) less identifiable intangible assets (other than MSRs) and goodwill, net of related deferred tax liabilities. The TCE measures used in this presentation are not necessarily comparable to similarly titled measures provided by other firms due to differences in calculation methodologies. 6.Headcount-related expense includes salary and benefits, and other noncompensation costs related to employees. Forward looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause JPMorgan Chase’s actual results to differ materially from those described in the forward-looking statements can be found in JPMorgan Chase’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009, and its Annual Report on Form 10-K for the year ended December 31, 2008, each of which has been filed with the Securities and Exchange Commission and is available on JPMorgan Chase’s website (www.jpmorganchase.com) and on the Securities and Exchange Commission’s website (www.sec.gov). JPMorgan Chase does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements. 20 APPENDIX