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| 8-K - 8-K - JPMORGAN CHASE & CO | jpmc4q14form8k.htm |
January 14, 2015 F I N A N C I A L R E S U L T S 4Q14
F I N A N C I A L R E S U L T S 4Q14 Financial highlights 1 See note 1 on slide 19 2 See note 2 on slide 19 3 See note 4 on slide 19 4 Basel III Advanced Fully Phased-In refers to the capital rules the Firm will be subject to as of January 1, 2019. See note 5 on slide 19 5 See note 5 on slide 19 6 See note 11 on slide 20 7 The repurchase amount is presented on a trade-date basis 8 Assumes a tax rate of 38% for items that are tax deductible 9 See note 8 on slide 20 4Q14 net income of $4.9B and EPS of $1.19 Revenue of $23.6B1, adjusted expense of $14.3B2 and ROTCE of 11%3 4Q14 results included as a significant item $1.0B (after-tax) Firmwide legal expense Fortress balance sheet Basel III Advanced Fully Phased-In Common Equity Tier 1 (“CET1”) of $165B4; ratio of 10.1%4 Firm Supplementary Leverage Ratio (“SLR”) of 5.6%5 Core loans up 8% YoY and 3% QoQ6 ~$3B of capital returned to shareholders in 4Q14 Repurchased $1.5B of common equity7 – $2B capacity remaining for 1Q15 Employee issuance of $0.3B Common dividend of $0.40 per share Significant items ($mm, excluding EPS1,9) Pretax Net income8 EPS8 Firmwide Legal Expense ($1,114) ($990) ($0.26) Other 4Q14 notable items9 EPS impact8 Tax Discrete items $0.13 Consumer LLR release 0.04 PE gains, net of goodwill 0.04 JPM Foundation Contribution (0.01) Refinements to FVA/DVA (0.03) Card Portfolio sales (0.05) Total $0.12 1
F I N A N C I A L R E S U L T S 4Q14 Financial results1 1 See note 1 on slide 19 2 Actual numbers for all periods, not over/(under) 3 See note 4 on slide 19 4 See note 2 on slide 19 $mm, excluding EPS $ O/(U) 4Q14 3Q14 4Q13 Revenue (FTE)1 $23,552 ($1,607) ($560) Credit costs 840 83 736 Expense 15,409 (389) (143) Reported net income $4,931 ($641) ($347) Net income applicable to common stockholders 4,488 (647) (450) Reported EPS 1.19 (0.17) (0.11) ROE2 9% 10% 10% ROTCE2,3 11 13 14 Memo: Adjusted expense 4 $14,295 ($441) ($319) Memo: Adjusted expense/revenue 4 61% 2
F I N A N C I A L R E S U L T S Full year 2014 financial results1 1 See note 1 on slide 19 2 See note 4 on slide 19 3 See note 2 on slide 19 $mm, excluding EPS $ O/(U) FY 2014 FY 2013 FY 2013 Revenue (FTE)1 $97,923 $99,798 ($1,875) Credit costs 3,139 225 2,914 Expense 61,274 70,467 (9,193) Reported net income $21,762 $17,923 $3,839 Net income applicable to common stockholders 20,093 16,593 3,500 Reported EPS 5.29 4.35 0.94 ROE 10% 9% ROTCE2 13 11 Memo: Adjusted expense 3 $58,391 $59,031 ($640) Memo: Adjusted expense/revenue 3 60% 59% 3
F I N A N C I A L R E S U L T S 4Q14 3Q14 4Q13 Basel III Advanced Fully Phased-In2 CET1 $165 $163 $151 CET1 ratio 10.1% 10.1% 9.5% Tier 1 Capital $185 $183 $162 Tier 1 Capital ratio 11.4% 11.3% 10.2% Total Capital $206 $201 $190 Total Capital ratio 12.7% 12.4% 11.9% Risk-weighted assets $1,625 $1,613 $1,591 Firm SLR3 5.6% 5.5% 4.7% Bank SLR3 5.9 5.7 4.7 HQLA4 $626 $572 $522 Total assets (EOP) $2,573 $2,527 $2,416 Tangible common equity $166 $165 $153 Tangible book value per share5 $44.69 $44.13 $40.81 $B, except where noted Fortress balance sheet and returns1 Estimated minimum TLAC6 based on FSB proposal represents ~15% of Basel III RWA Firm is compliant with final U.S. LCR7 and Basel final NSFR8 Firmwide total credit reserves of $14.8B; nonperforming loan loss coverage ratio (ex. credit card) of 106%9 FY14 issuance Preferred stock: $8.9B Subordinated debt: $5.0B ($2.0B in 4Q14) Note: Estimated for 4Q14 1 See notes on non-GAAP financial measures on slide 19 2 Basel III Advanced Fully Phased-In refers to the capital rules the Firm will be subject to as of January 1, 2019. See note 5 on slide 19 3 See note 5 on slide 19 4 High Quality Liquid Assets (“HQLA”) is the estimated amount of assets that qualify for inclusion in the Firm’s consolidated U.S. Liquidity Coverage Ratio (“LCR”) for 4Q14 and 3Q14 and in the Basel III LCR for 4Q13 5 See note 4 on slide 19 6 See note 10 on slide 20 7 In case of LCR, based on the Firm's current understanding of the U.S. final LCR rules, which became effective January 1, 2015 8 Estimate as of 3Q14 9 See note 3 on slide 19 4Q14 Basel III Advanced Transitional of 10.2% 4
F I N A N C I A L R E S U L T S Lines of business CCB CIB CB AM Corp / PE Total Firm Net interest income NII - previous methodolgy $7,020 $2,481 $1,089 $599 $135 $11,324 Plus: preferred stock dividends (pretax) 108 356 38 33 (535) -- Net interest income 7,128 2,837 1,127 632 (400) 11,324 Net income NI - previous methodology $2,113 $755 $670 $520 $873 $4,931 Plus: preferred stock dividends (after tax) 66 217 23 20 (326) -- Net income 2,179 972 693 540 547 4,931 Preferred dividend: (326) Net income applicable to common equity 2 (NIAC) $2,113 $755 $670 $520 $547 $4,605 ROE 16% 5% 19% 23% 3% 11% Overhead ratio Previous methodology 59% 79% 38% 73% Current methodology 59% 75% 38% 73% 4Q14 summary results by line of business ($mm) Preferred stock dividend allocation1 Change in reporting – impact to 4Q14 results 0 Historically, pretax preferred stock dividends were allocated from Corporate / Private Equity to the LOBs as interest expense As of 4Q14, we revised the methodology to allocate preferred stock dividends to the LOBs below the net income line, consistent with Firmwide income statement presentation For comparison purposes, prior period LOB results have been revised as described above Adjusted OH Ratio4: 61% Taxes 3 4Q14 CIB comp/revenue Previous: 29% Current: 27% No change 1 See note 1 on slide 19 2 Prior to deducting dividends and undistributed earnings allocated to participating securities 3 Total Firm ROTCE. See note 4 on slide 19 4 See note 2 on slide 19 Impact: No change to Firmwide results No change to LOB NIAC or ROE LOB revenue, net income and overhead ratio improve with a corresponding offset in Corporate / Private Equity 5
F I N A N C I A L R E S U L T S Consumer & Community Banking1 Leadership positions $mm Headcount Total headcount12 down ~12,000 YoY and ~32,000 since the end of 2011 Consumer & Business Banking #1 in deposit growth for the third consecutive year4 #1 in customer satisfaction among the largest U.S. banks for the third consecutive year, according to ACSI #1 most visited banking portal in the U.S.5 Mortgage Banking #2 in customer satisfaction for mortgage servicing by J.D. Power6 Card, Merchant Services & Auto #1 credit card issuer in the U.S. based on loans outstanding7 #1 U.S. co-brand credit card issuer8 #1 global Visa issuer9 #1 wholly-owned merchant acquirer10 with ~50% of U.S. eCommerce volume11 Chase cardholders accounted for over $600B, or ~16% of total U.S. credit and debit purchase volume10 1 See note 1 on slide 19 2 Actual numbers for all periods, not over/under 3 2014 includes $3.0B of capital held at the CCB level related to legacy mortgage servicing matters 4 Based on FDIC 2014 Summary of Deposits survey per SNL Financial 5 Per compete.com as of November 2014 6 Based on J.D. Power 2014 Mortgage Servicing Study 7 Based on disclosures by peers and internal estimates as of 3Q14 8 Based on Phoenix Credit Card Monitor for 12-month period ending September 2014; based on card accounts and revolving balance dollars 9 Based on Visa data as of 3Q14 for consumer and business credit card sales volume 10 Based on Nilson data as of 2013 11 Based on the Internet Retailer Top 500 for 2013 and JPMC internal merchant client data 12 Includes employees and contractors; 2013 headcount adjusted for ~1,250 reduction effective January 1, 2014 $ O/(U) 4Q14 3Q14 4Q13 Net interest income $7,128 ($25) ($47) Noninterest revenue 3,821 (393) (443) Revenue 10,949 (418) (490) Expense 6,411 106 (910) Credit costs 950 48 878 Net income $2,179 ($350) ($269) Key drivers/statistics ($B)2 EOP Equity3 $51.0 $51.0 $46.0 ROE 16% 19% 20% Overhead ratio 59 55 64 Average loans $394.2 $391.0 $391.0 Average deposits 497.7 492.0 461.1 Client invest ent assets (EOP) 213.5 207.8 188.8 Number of branch s 5,602 5,613 5,630 Active mobil customers (000's) 19,084 18,351 15,629 6
F I N A N C I A L R E S U L T S Consumer & Community Banking Consumer & Business Banking 1 Actual numbers for all periods, not over/(under) Financial performance Key drivers $mm Net income of $861mm, up 8% YoY, but down 7% QoQ Net revenue of $4.6B, up 3% YoY, but down 2% QoQ Expense flat YoY and QoQ Average total deposits of $482.8B, up 8% YoY and 1% QoQ Deposit margin of 2.11%, down 18 bps YoY and 9 bps QoQ Record client investment assets of $213.5B, up 13% YoY and 3% QoQ Business Banking loan originations up 18% YoY, but down 7% QoQ seasonally Average Business Banking loans up 6% YoY and 1% QoQ Added ~700,000 net households, up 3% YoY $ O/(U) 4Q14 3Q14 4Q13 Net interest income $2,733 ($74) $10 Noninterest revenue 1,826 (28) 106 Revenue 4,559 (102) 116 Expense 3,026 (6) (3) Credit costs 88 13 (20) Net income $861 ($66) $65 Key drivers/statistics ($B)1 EOP Equity $11.0 $11.0 $11.0 ROE 31% 33% 28% Average total deposits $482.8 $476.2 $446.0 Deposit margin 2.11% 2.20% 2.29% Client investment assets (EOP) $213.5 $207.8 $188.8 Net new investment assets 3.3 4.3 3.6 Business Banking loan originations 1.5 1.6 1.3 Business Banking l an balances (Avg) 19.8 19.5 18.6 CBB Househ lds (mm) 25.7 25.6 25.0 7
F I N A N C I A L R E S U L T S Consumer & Community Banking Mortgage Banking Financial performance $mm Mortgage Banking net income of $338mm Mortgage Production pretax income of $204mm Revenues, excl. repurchase, down 11% YoY – Originations up 8% QoQ, but down 1% YoY Production expense down 62% YoY Mortgage Servicing pretax income of $23mm Net servicing-related revenue of $624mm, down 11% YoY Servicing expense of $560mm, down 16% YoY Real Estate Portfolios pretax income of $339mm Revenue of $714mm, down 19% YoY Credit costs of $11mm – Net charge-offs of $111mm2 – Reduction in allowance for loan losses of $100mm versus reduction of $950mm in the prior year Total headcount7 down over 7,500 for the year 1 Includes the provision for credit losses 2 Excludes purchased credit-impaired (PCI) write-offs of $46mm, $87mm and $53mm for 4Q14, 3Q14, and 4Q13 respectively 3 Actual numbers for all periods, not over/(under) 4 Firmwide mortgage origination volume was $24.4B, $22.7B and $25.1B, for 4Q14, 3Q14 and 4Q13, respectively 5 Real Estate Portfolios only 6 Excludes the impact of PCI loans. The allowance for PCI loans losses was $3.3B, $3.7B and $4.2B at the end of 4Q14, 3Q14 and 4Q13, respectively 7 Includes employees and contractors; 2013 headcount adjusted for ~1,250 reduction effective January 1, 2014 $ O/(U) 4Q14 3Q14 4Q13 Mortgage Production Production-related revenue, excl. repurchase (losses)/benefits $447 $49 ($53) Production expense1 374 (7) (615) Income, excl. repurchase (losses)/benefits 73 56 562 Repurchase (losses)/benefits 131 69 (90) Income/(loss) before income tax expense/(benefit) $204 $125 $472 Mortgage Servicing Net servicing-related revenue $624 ($26) ($74) Default servicing expense 353 4 (121) Core servicing expense1 207 (21) 18 Servicing expense 560 (17) (103) Income, excl. MSR risk management 64 (9) 29 MSR risk management (41) (117) (17) Income before income tax expense $23 ($126) $12 Real Estate Portfolios Revenue $714 ($127) ($171) Expense 364 43 (47) Net charge-offs2 111 30 (56) Change in allowance2 (100) – 850 Credit costs 11 30 794 Income before income tax expense $339 ($200) ($918) Mortgage Banking net income $338 ($127) ($255) Key drivers/statistics ($B)3 EOP Equity $18.0 $18.0 $19.5 ROE 7% 10% 11% Mortgage originations4 $23.0 $21.2 $23.3 EOP third-party mortgage loans serviced 751.5 766.3 815.5 EOP NCI owned portfolio5 123.0 118.1 115.0 ALL/EOP loans5,6 1.76% 1.92% 2.23% Net charge-off rate2,5,6 0.36 0.27 0.57 8
F I N A N C I A L R E S U L T S 1 Actual numbers for all periods, not over/(under) 2 Excludes Commercial Card 3 See note 6 on slide 19 4 Revenue rate excludes loss on sale associated with portfolio exits; NCO rate excludes losses from portfolio exits Consumer & Community Banking Card, Merchant Services & Auto $mm Financial performance Key drivers Net income of $980mm, down 7% YoY Net income, excluding loan loss reserve releases3, up 2% YoY Revenue of $4.5B, down 4% YoY, including the impact of non- core portfolio exits Noninterest expense of $2.1B, down 6% YoY Credit costs of $849mm, up 14% YoY, driven by lower loan loss reserve releases, partially offset by lower net charge-offs Card Services Average loans of $127.4B, up 3% YoY and 1% QoQ Sales volume2 of $123.6B, up 10% YoY and 3% QoQ Net charge-off rate of 2.69%, down from 2.86% in the prior year and up from 2.52% in the prior quarter Merchant Services Merchant processing volume of $230.2B, up 13% YoY and 8% QoQ Transaction volume of 10.3B, up 7% YoY and 10% QoQ Auto Average loans up 3% YoY and 2% QoQ Originations up 8% YoY and 1% QoQ 4Q14 3Q14 4Q13 Revenue $4,515 ($164) ($201) Expense 2,089 95 (141) Net charge-offs 999 53 (47) Change in allowance (150) (50) 150 Credit costs 849 3 103 Net income $980 ($157) ($79) EOP Equity ($B)1 $19.0 $19.0 $15.5 ROE1 20% 23% 26% Card Services – Key drivers/statistics ($B)1 Average loans $127.4 $126.1 $124.1 Sales volume2 123.6 119.5 112.6 Net revenue rate 11.47% 12.17% 12.47% Net charge-off rate 2.69 2.52 2.86 30+ day delinquency rate 1.44 1.43 1.67 # of accounts with sales activity (mm)2 34.0 32.1 32.3 % of accounts acquired online2 62% 56% 59% Merchant Services – Key drivers/statistics ($B)1 Merchant processing volume $230.2 $213.3 $203.4 # of total transactions (B) 10.3 9.4 9.6 Auto – Key drivers/statistics ($B)1 Average loans $53.6 $52.7 $51.8 Originations 6.9 6.8 6.4 $ O/(U) 4Q14 ex-portfolio exits3,4 Net rev. rate: 12.20% NCO rate: 2.48% 9
F I N A N C I A L R E S U L T S Corporate & Investment Bank1 $mm Financial performance Pro forma results ($mm)7,8 Net income of $972mm on revenue of $7.4B ROE of 5%; excluding legal expense, ROE of 11%8 Banking revenue IB fees of $1.8B, up 8% YoY, primarily driven by record debt underwriting fees – Ranked #1 in Global IB fees for FY14 Treasury Services revenue of $1.0B, up 3% YoY Lending revenue of $264mm, down 33% YoY, primarily reflecting mark-to-market losses on securities received from restructurings compared to gains in the prior year period Markets & Investor Services revenue Markets revenue of $3.6B, down 13% YoY, largely driven by business simplification8; ex-business simplification, Markets revenue down 5%8 – Fixed Income Markets of $2.5B, down 23% YoY, on lower revenues in credit- related and securitized products; ex-business simplification8, down 14%8 – Equity Markets of $1.1B, up 25% YoY, primarily on higher derivatives and Prime Services revenue Securities Services revenue of $1.1B, up 6% YoY, driven primarily by higher fees and commissions as well as higher NII on increased deposits Credit Adjustments & Other loss of $452mm driven by net CVA losses, as well as refinements to net FVA/DVA valuation Expense of $5.6B, up 14% YoY, driven by higher legal expense, partially offset by lower compensation and noncompensation expense 1 See note 1 on slide 19 2 Actual numbers for all periods, not over/(under) 3 4Q13 ROE, excluding FVA/DVA, a non-GAAP financial measure, was 15% 4 Overhead ratio excluding FVA/DVA, a non-GAAP financial measure, was 60% for 4Q13 5 Compensation expense as a percentage of total net revenue excluding FVA/DVA, a non-GAAP financial measure, was 26% for 4Q13 6 ALL/EOP loans as reported was 1.07%, 1.13%, and 1.15% for 4Q14, 3Q14, and 4Q13, respectively 7 Pro forma results exclude certain refinements to net FVA/DVA valuation in 4Q14, and exclude total amounts of FVA/DVA, net of hedges, in 4Q13; 3Q14 reported results include FVA/DVA, net of hedges 8 See note 7 on slide 19 $ O/(U) 4Q14 3Q14 4Q13 Corporate & Investment Bank revenue $7,386 ($1,732) $1,229 Investment banking fees 1,811 269 140 Treasury Services 1,031 (23) 33 Lending 264 65 (129) Total Banking 3,106 311 44 Fixed Income Markets 2,533 (1,210) (748) Equity Markets 1,105 (147) 222 Securities Services 1,094 6 63 Credit Adjustments & Other (452) (692) 1,648 Total Markets & Investor Services 4,280 (2,043) 1,185 Expense 5,576 (459) 684 Credit costs (59) 8 (40) Net income $972 ($715) $31 Key drivers/statistics ($B)2 EOP equity $61.0 $61.0 $56.5 ROE3 5% 10% 6% Overhead ratio4 75 66 79 Comp/revenue5 27 31 35 EOP loans $102.0 $102.3 $107.5 Average client deposits 433.8 419.6 421.6 Ass ts under custody ($T) 20.5 21.2 20.5 ALL/EOP loans ex-conduits and trade6,8 1.82% 1.88% 2.02% Net charge-off/(recovery) rate (0.02) (0.01) (0.04) Average VaR ($ m) $40 $35 $42 $ O/(U) 4Q14 3Q14 4Q13 Corporate & Investment Bank revenue $7,579 ($1,539) ($574) Total Banking 3,106 311 44 Total Markets & Investor Services 4,473 (1,850) (618) Net income $1,09 ($59 ) ($1,087) ROE2 6% 10% 15% Overhead ratio2 74 66 60 Comp/revenue2 27 31 26 10
F I N A N C I A L R E S U L T S Commercial Banking1 Net income of $693mm, down 3% YoY and up 3% QoQ Revenue of $1.8B, down 6% YoY and up 4% QoQ Credit cost benefit of $48mm Net charge-off rate of 0.08%, 8th consecutive quarter of net recoveries or single digit NCO rate Expense of $666mm, up 2% YoY, driven by higher investment in controls Gross Investment Banking revenue of $557mm, up 11% YoY and QoQ Record FY revenue of $2B EOP loan balances of $148.5B, up 8% YoY and 3% QoQ C&I4 loans up 3% QoQ CRE5 loans up 4% QoQ Average client deposits of $208.4B, up 2% YoY and QoQ 1 See note 1 on slide 19 2 Actual numbers for all periods, not over/(under) 3 Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage ratio and net charge-off/(recovery) rate 4 CB’s Commercial and Industrial (C&I) grouping is internally defined to include certain client segments (Middle Market, which includes Government, Nonprofit & Healthcare Clients; and Corporate Client Banking) and does not align with regulatory definitions 5 CB's Commercial Real Estate (CRE) grouping is internally defined to include certain client segments (Real Estate Banking, Commercial Term Lending and Community Development Banking) and does not align with regulatory definitions $mm Financial performance 4Q14 3Q14 4Q13 Revenue $1,770 $67 ($106) Middle Market Banking 705 6 (53) Corporate Client Banking 511 22 17 Commercial Term Lending 313 1 9 Real Estate Banking 120 (4) (89) Other 121 42 10 Expense 666 (2) 13 Credit costs (48) 31 (91) Net income $693 $22 ($18) Key drivers/statistics ($B)2 EOP equity $14.0 $14.0 $13.5 ROE 19% 18% 20% Overhead ratio 38 39 35 Gross IB Revenue ($mm) $557 $501 $502 Average loans 145.7 142.8 135.6 EOP loans 148.5 143.8 137.1 Average client deposits 208.4 204.7 205.3 Allowance for loan losses 2.5 2.5 2.7 Nonaccrual loans 0.3 0.4 0.5 Net charge-off/(recovery) rate3 0.08% 0.01% 0.07% ALL/loans3 1.67 1.76 1.97 $ O/(U) 11
F I N A N C I A L R E S U L T S Asset Management1 1 See note 1 on slide 19 2 Actual numbers for all periods, not over/(under) $mm Financial performance Net income of $540mm, down 7% YoY and 8% QoQ Revenue of $3.2B, flat YoY and up 5% QoQ Record AUM of $1.7T, up 9% YoY and 2% QoQ AUM net inflows for the quarter of $37B, driven by net inflows of $10B to long-term products and $27B to liquidity products Client assets of $2.4T, up 2% YoY and 2% QoQ Excluding business simplification – exit of Retirement Plan Services – client assets were up 8% YoY Expense of $2.3B, up 3% YoY driven by infrastructure and controls, and up 11% QoQ largely due to seasonal performance-based compensation Record average loan balances of $103.3B, up 11% YoY and 2% QoQ Record average deposit balances of $152.0B, up 6% YoY and 1% QoQ Strong investment performance 76% of mutual fund AUM ranked in the 1st or 2nd quartiles over 5 years 4Q14 3Q14 4Q13 Revenue $3,200 $154 – Global Investment Management 1,740 131 ($59) Global Wealth Management 1,460 23 59 Expense 2,320 239 75 Credit costs 3 (6) (18) Net income $540 ($50) ($41) Key drivers/statistics ($B)2 EOP equity $9.0 $9.0 $9.0 ROE 23% 25% 25% Pretax margin 27 31 29 Assets under management (AUM) $1,744 $1,711 $1,598 Client assets 2,387 2,344 2,343 Average loans 103.3 101.4 92.7 EOP loans 104.3 102.4 95.4 Average dep sits 152.0 151.2 144.0 $ O/(U) 12
F I N A N C I A L R E S U L T S Private Equity Private Equity net income of $107mm Treasury and CIO Treasury and CIO net loss of $205mm, compared to a net loss of $333mm in 3Q14 Other Corporate Other Corporate net income of $645mm 1 See note 1 on slide 19 $mm Corporate/Private Equity1 Financial performance 4Q14 3Q14 4Q13 Private Equity $107 $36 $94 Treasury and CIO (205) 128 63 Other Corpor te 645 288 (207) Net income/(loss) $547 $452 ($50) $ O/(U) 13
Agenda Page F I N A N C I A L R E S U L T S 14 Appendix 14
A P P E N D I X $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 $500 $2,000 $3,500 $5,000 $6,500 $8,000 $9,500 $11,000 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 30+ day delinquencies 30-89 day delinquencies Consumer credit – Delinquency trends1 Note: Prime mortgages exclude Asset Management, Corporate/Private Equity and government-insured loans 1 Excluding purchased credit-impaired and held-for-sale loans Prime mortgage delinquency trend ($mm) Home equity delinquency trend ($mm) Subprime mortgage delinquency trend ($mm) 30 – 149 day delinquencies 150+ day delinquencies 30 – 149 day delinquencies 150+ day delinquencies 30 – 149 day delinquencies 150+ day delinquencies Credit card delinquency trend ($mm) 15
A P P E N D I X 2,075 1,372 1,214 1,157 1,076 954 899 876 808 696 595 520 448 288 204 167 174 111 81 111 4,512 3,721 3,133 2,671 2,226 1,810 1,499 1,390 1,386 1,254 1,116 1,097 1,082 1,014 892 891 888 885 798 797 $0 $1,000 $2,000 $3,000 $4,000 $5,000 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Real Estate Portfolios Card Services Real Estate Portfolios and Card Services – Coverage ratios1 Real Estate Portfolios and Card Services credit data ($mm) NCOs ($mm) 1 See note 9 on slide 20 2 Net charge-offs annualized (NCOs are multiplied by 4) 3 4Q10 adjusted net charge-offs for Real Estate Portfolios exclude a one-time $632mm adjustment related to the timing of when the Firm recognizes charge-offs on delinquent loans 4 2Q12 adjusted net charge-offs for Card Services were $1,254mm or 4.03%; excluding the effect of a change in charge-off policy for troubled debt restructurings, 2Q12 reported net charge-offs were $1,345mm or 4.32% 5 3Q12 adjusted net charge-offs for Real Estate Portfolios exclude the effect of an incremental $825mm of net charge-offs based on regulatory guidance 6 4Q12 adjusted net charge-offs for Real Estate Portfolios reflects a full quarter of normalized Chapter 7 Bankruptcy discharge activity, which exclude one-time adjustments related to the adoption of Chapter 7 Bankruptcy discharge regulatory guidance 7 4Q14 adjusted net charge-offs for Card Services were $797mm or 2.48% excluding losses from portfolio exits; 4Q14 reported net charge-offs were $858mm or 2.69% O/(U) 4Q14 3Q14 4Q13 4Q13 Real Estate Portfolios (NCI) Net charge-offs $111 $81 $167 ($56) NCO rate 0.36% 0.27% 0.57% (21) bps Allowance for loan losses $2,168 $2,268 $2,568 ($400) LLR/annualized NCOs2 488% 700% 384% Card Services7 Net charge-offs $797 $798 $891 ($94) NCO rate 2.48% 2.52% 2.86% (38) bps Allowance for loan losses $3,439 $3,590 $3,795 ($356) LLR/annualized NCOs2 108% 112% 106% 3 4 5 6 7 16
A P P E N D I X 10,609 10,296 9,578 9,027 8,317 8,123 7,634 7,241 7,017 21,936 20,780 19,384 17,571 16,264 15,847 15,326 14,889 14,185 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 0% 100% 200% 300% 400% 500% Firmwide – Coverage ratios $14.2B of loan loss reserves at December 31, 2014, down $2.1B from $16.3B in the prior year, reflecting improved portfolio credit quality Nonperforming loan loss coverage ratio (ex. credit card) of 106%1 1 See note 3 on slide 19 $mm Comments JPM Credit Summary Loan loss reserve Nonperforming retained loans Loan loss reserve/Total loans1 Loan loss reserve/NPLs1 4Q14 3Q14 4Q13 Consumer, ex. credit card LLR/Total loans 1.50% 1.58% 1.83% LLR/NPLs 58 58 57 Credit Card LLR/Total loans 2.69% 2.84% 2.98% Wholesale LLR/Total loans 1.14% 1.20% 1.30% LLR/NPLs 617 583 489 Firmwide LLR/Total loans 1.55% 1.63% 1.80% LLR/NPLs (ex. credit card) 106 105 100 LLR/NPLs 155 155 146 17
A P P E N D I X IB League Tables League table results – volumes League table results – wallet share Source: Wallet data from Dealogic Media Manager as of January 2, 2015 & Volume data from Dealogic Analytics as of December 31, 2014 1 Reflects ranking of revenue wallet and market share 2 Long-term debt rankings include investment-grade, high-yield, supranational, sovereigns, agencies, covered bonds, asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”); and exclude money market, short-term debt and U.S. municipal securities 3 Global Equity and equity-related ranking includes rights offerings and Chinese A-Shares 4 M&A and Announced M&A reflects the removal of any withdrawn transactions. U.S. announced M&A volumes represent any U.S. involvement ranking. US M&A revenue wallet represents wallet from client parents based in the U.S. 5 Global Investment Banking revenue wallet rankings exclude money market, short-term debt and shelf deals 6 Rankings reflect transaction volume rank and market share. Global announced M&A is based on transaction value at announcement; because of joint M&A assignments, M&A market share of all participants will add up to more than 100%. All other transaction volume-based rankings are based on proceeds, with full credit to each book manager/equal if joint FY2014 FY2013 Rank Share Rank Share Based on fees 1 : Global Debt, Equity & Equity-related 1 7.6% 1 8.3% U.S. Debt, Equity & Equity-related 1 10.7% 1 11.5% Global Long-term Debt2 1 8.0% 1 8.2% U.S. Long-term Debt 1 11.6% 1 11.6% Global Equity & Equity-related3 3 7.1% 2 8.4% U.S. Equity & Equity-related 2 9.6% 2 11.3% Global M&A4 2 8.2% 2 7.6% U.S. M&A 2 10.0% 2 8.8% Global Loan Syndications 1 9.5% 1 9.9% U.S. Loan Syndications 1 13.3% 1 13.8% Global IB fees1,5 1 8.1% 1 8.5% FY2014 FY2013 Rank Share Rank Share Based on volumes 6 : Global Debt, Equity & Equity-related 1 6.8% 1 7.3% U.S. Debt, Equity & Equity-related 1 11.8% 1 12.0% Global Long-term Debt2 1 6.7% 1 7.2% U.S. Long-term Debt 1 11.3% 1 11.7% Global Equity & Equity-related3 3 7.6% 2 8.2% U.S. Equity & Equity-related 2 11.0% 2 12.1% Global M&A Announced4 2 21.6% 2 23.5% U.S. M&A Announced 2 27.8% 2 36.4% Global Loan Syndications 1 12.4% 1 11.6% U.S. Loan Syndications 1 19.4% 1 17.8% 18
A P P E N D I X Notes on non-GAAP financial measures 1. In addition to analyzing the Firm’s results on a reported basis, management reviews the Firm’s results and the results of the lines of business on a “managed” basis, which is a non-GAAP financial measure. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the business segments) on a fully taxable-equivalent (“FTE”) basis. Accordingly, revenue from investments that receive tax credits and tax exempt securities is presented in the managed results on a basis comparable to taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business. 2. Adjusted expense, a non-GAAP financial measure, excludes Firmwide legal expense and expense related to foreclosure-related matters (“FRM”). Management believes this information helps investors understand the effect of these items on reported results and provides an alternate presentation of the Firm’s performance. 3. The ratios of the allowance for loan losses to end-of-period loans retained and allowance for loan losses to nonperforming loans exclude the following: loans accounted for at fair value and loans held-for-sale; purchased credit-impaired (“PCI”) loans; and the allowance for loan losses related to PCI loans. Additionally, net charge-offs and net charge-off rates exclude the impact of PCI loans. 4. Tangible common equity (“TCE”), return on tangible common equity (“ROTCE”) and tangible book value per share (“TBVPS”), are each non-GAAP financial measures. TCE represents the Firm’s common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. ROTCE measures the Firm’s earnings as a percentage of TCE. TBVPS represents the Firm’s tangible common equity divided by period-end common shares. TCE, ROTCE, and TBVPS are meaningful to the Firm, as well as analysts and investors in assessing the Firm’s use of equity and are used in facilitating comparisons of the Firm with competitors. 5. Common Equity Tier 1 (“CET1”) capital, Tier 1 Capital, Total Capital, risk-weighted assets (“RWA”) and the CET1, Tier 1 Capital and Total Capital ratios under the Basel III Advanced Fully Phased-In rules, and the supplementary leverage ratio (“SLR”) under the U.S. final SLR rule, are each non-GAAP financial measures. These measures are used by management, bank regulators, investors and analysts to assess and monitor the Firm’s capital position. For additional information on these measures, see Regulatory capital on pages 161-165 of JPMorgan Chase & Co.’s Annual Report on Form 10-K for the year ended December 31, 2013, and on pages 73-77 of the Firm’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014. 6. Within Consumer & Community Banking, Card, Merchant Services & Auto provides certain non-GAAP financial measures, as such measures are used by management to facilitate a more meaningful comparison with prior periods: The change in net income is calculated excluding the change in the allowance for loan losses (assuming a tax rate of 38%). The net charge-off rate and net revenue rate for Card Services are calculated excluding the impact of non-core portfolio exits. 7. The CIB provides certain non-GAAP financial measures, as such measures are used by management to assess the underlying performance of the business and for comparability with peers: The ratio of the allowance for loan losses to end-of-period loans is calculated excluding the impact of consolidated Firm-administered multi-seller conduits and trade finance loans, to provide a more meaningful assessment of CIB’s allowance coverage ratio. ROE for fourth quarter 2014 is calculated excluding legal expense. Prior to January 1, 2014, the CIB provided non-GAAP financial measures excluding the impact of FVA (effective fourth quarter 2013) and DVA on net revenue and net income. Beginning in the first quarter 2014, the Firm does not exclude FVA and DVA from its assessment of business performance, with the exception of certain refinements to net FVA and DVA in the fourth quarter 2014; however, the Firm continues to present these non-GAAP measures for the periods prior to January 1, 2014, as they reflected how management assessed the underlying business performance of the CIB in those prior periods. Within Markets & Investor Services revenue, the change in Markets revenue and Fixed Income Markets revenue excludes the decline related to business simplification, including the sales of the Physical Commodities and Global Special Opportunities Group businesses. Notes 19
A P P E N D I X Notes 8. The Firm presents pretax income, net income (assumes a tax rate of 38% for items that are tax deductible) and earnings per share excluding certain reported significant items and other notable items. These measures should be viewed in addition to, and not as a substitute for, the Firm’s reported results. Management believes this information helps investors understand the effect of these items on reported results and provides an additional presentation of the Firm’s performance. The table below provides a reconciliation of reported results to these non-GAAP measures: 9. Net charge-offs for Real Estate Portfolios and Card Services may be adjusted from time to time for significant items, as indicated. These adjusted charge-offs are non-GAAP financial measures used by management to facilitate comparisons with prior periods. Additional notes on financial measures 10. The estimate of Minimum Total Loss Absorbing Capacity (“TLAC”) reflects the Firm’s current understanding of the Financial Stability Board’s (“FSB”) November 2014 consultative document on “Adequacy of loss-absorbing capacity of global systemically important banks in resolution”. The estimate utilizes capital figures and risk-weighted assets based on Basel III Advanced Fully Phased-In rules. The estimate reflects certain assumptions regarding the inclusion or exclusion of certain liabilities, particularly with respect to items where further guidance is necessary, including but not limited to, notes governed outside of the local law of the resolution entity, holdings of other Global Systemically Important Banks’ (“GSIBs”) TLAC and structured notes as defined by the Firm. These assumptions may change as future regulatory guidance is received. In addition, while the current estimate includes a deduction in capital equal to the Firm’s 2.5% GSIB capital surcharge, the calculation will change to incorporate future deductions of capital equal to the incremental capital surcharges that may be required by the U.S. banking regulators in the future. These potential incremental capital surcharges are expected to be met through growth in the Firm’s CET1. 11. Core loans include loans considered central to the Firm’s ongoing businesses; core loans exclude runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. 20 Reconciliation of reported to adjusted results Three months ended December 31, 2014 (in millions, except per share) Reported results: 6,263$ 4,931$ 1.19$ Adjustments: Firmwide legal expense 1,114 990 0.26 Other notable items: Private Equity Gains, net of goodwill impairment (247) (153) (0.04) Consumer - Benefit from reduced loan loss reserves (250) (155) (0.04) Card - Exit of non-core portfolios 299 185 0.05 CIB - Impa t of refinements to net FVA / DVA valuation 193 120 0.03 Corporate - Contribution to the JPM foundation 149 35 0.01 Corporate - Benefit for tax discrete items - (485) (0.13) Total other notable items 144 (453) (0.12) Total adjustments 1,258 537 0.14 Adjusted results: 7,521$ 5,468$ 1.33$ Pretax income Net income EPS
A P P E N D I X Forward-looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of JPMorgan Chase & Co.’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 & Co.’s actual results to differ materially from those described in the forward-looking statements can be found in JPMorgan Chase & Co.’s Annual Report on Form 10-K for the year ended December 31, 2013, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, June 30, 2014, and September 30, 2014, which have been filed with the Securities and Exchange Commission and are available on JPMorgan Chase & Co.’s website (http://investor.shareholder.com/jpmorganchase), and on the Securities and Exchange Commission’s website (www.sec.gov). JPMorgan Chase & Co. 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. 21