10-QPeriod: Q2 FY2009

JPMORGAN CHASE & CO Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 10, 2009For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

JPMorgan Chase & Co. reported strong financial performance for the second quarter of 2009, driven by record net revenue, largely influenced by the acquisition of Washington Mutual Bank. Despite a significant increase in the provision for credit losses and higher noninterest expenses, the company demonstrated resilience with a net income of $2.7 billion. Key drivers for the revenue growth included record Fixed Income Markets revenue and robust investment banking fees within the Investment Bank segment. However, the company's earnings per share saw a year-over-year decline, partly due to a one-time, non-cash reduction related to the repayment of TARP preferred capital. The firm maintained a strong balance sheet, with robust capital ratios, and continued its commitment to lending, providing substantial credit to consumers and corporations while actively engaging in foreclosure prevention efforts.

Financial Highlights

30 data points
Beta

Revenue

$25.62B

Net Income

$2.72B

10.6% Net Margin

EPS (Diluted)

$0.28

Total Assets

$2.03T

Free Cash Flow

$52.50B

Financial Statements
Beta
Revenue$25.62B
Interest Expense$3.88B
Net Income$2.72B
EPS (Basic)$0.28
EPS (Diluted)$0.28
Shares Outstanding (Basic)3.81B
Shares Outstanding (Diluted)3.82B

Key Highlights

  • 1JPMorgan Chase & Co. reported a net income of $2.7 billion for the second quarter of 2009, a notable increase from $2.0 billion in the prior year's second quarter, despite a $0.27 per share reduction due to the repayment of TARP preferred capital.
  • 2Total net revenue reached a record $25.6 billion, up 39% year-over-year, driven by strong performance in the Investment Bank, particularly record Fixed Income Markets revenue and investment banking fees.
  • 3The provision for credit losses significantly increased to $8.0 billion from $3.5 billion in the prior year's second quarter, reflecting continued deterioration in the credit environment, especially in consumer lending and card services portfolios.
  • 4Noninterest expense rose by 11% to $13.5 billion, largely due to the impact of the Washington Mutual acquisition, an accrual for the FDIC special assessment ($675 million), higher FDIC insurance premiums, and increased mortgage servicing expenses.
  • 5The company repaid its entire $25 billion TARP preferred capital, demonstrating improved financial health and access to equity capital markets.
  • 6Despite challenges, the firm maintained strong capital ratios, with a Tier 1 capital ratio of 9.7% and a Tier 1 common capital ratio of 7.7% as of June 30, 2009.
  • 7The net charge-off rate for managed credit cards increased significantly to 10.03% from 4.98% in the prior year, driven by economic conditions and the impact of the Washington Mutual acquisition.

Frequently Asked Questions

JPMorgan Chase reported a net income of $2.7 billion for the second quarter of 2009.

The acquisition of Washington Mutual significantly contributed to revenue growth, particularly in net interest income and lending/deposit-related fees. However, it also increased noninterest expenses and contributed to a higher provision for credit losses.

Yes, JPMorgan Chase redeemed all of its outstanding TARP preferred stock on June 17, 2009, repaying the full $25 billion principal amount. This repayment resulted in a one-time, non-cash reduction of approximately $1.1 billion in net income applicable to common stockholders, or $0.27 per share, impacting reported earnings per share.

The provision for credit losses significantly increased to $8.0 billion, up from $3.5 billion in Q2 2008. This was primarily driven by higher estimated losses in the home equity, mortgage, and credit card portfolios due to weak economic conditions and housing price declines. Net charge-offs also increased substantially across both consumer and wholesale portfolios.