JPMorgan Chase & Co.
J P MORGAN CHASE & CO (Form: 8-K, Received: 04/19/2002 08:07:29)    
 
 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

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

     
Date of Report:   Commission file number
April 17, 2002   1-5805
 

J.P. MORGAN CHASE & CO.
(Exact name of registrant as specified in its charter)

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

Registrant’s telephone number, including area code: (212) 270-6000

 


 
 

Item 5. Other Events

         On April 17, 2002, J.P. Morgan Chase & Co. (NYSE:JPM) announced 2002 first quarter results. First quarter 2002 operating earnings were $0.57 per share, compared with $0.17 in the fourth quarter of 2001 and $0.74 in the first quarter of 2001. Operating earnings were $1,150 million in the first quarter 2002, compared with $356 million in the fourth quarter of 2001 and $1,527 million one year ago. Operating earnings for 2001 have been adjusted by adding back amortization of goodwill to present 2001 results on a basis comparable to this year’s first quarter, which included the impact of the implementation of SFAS 142.

         Reported net income, which includes special items such as merger and restructuring costs, was $982 million, or $0.48 per share, in the first quarter of 2002. This compares with a loss of $332 million, or $0.18 per share, in the 2001 fourth quarter and profits of $1,199 million, or $0.58 per share, in the first quarter of 2001.

         A copy of J.P. Morgan Chase & Co.’s press release is attached as an exhibit hereto. That press release contains statements that are forward-looking 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. These risks and uncertainties could cause our results to differ materially from those set forth in the forward-looking statements. Such risks and uncertainties are described in our 2001 Annual Report on Form 10-K, filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (http://www.sec.gov), to which reference is hereby made.  

Item 7. Financial Statements, Pro forma Financial Information and Exhibits

 
     
Exhibit Number   Description
12 (a)   Computation of Ratio of Earnings to Fixed Charges
12 (b)   Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements
99.1   Press Release – 2002 First Quarter Earnings
99.2   2002 First Quarter Financial Supplement

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SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  J.P. MORGAN CHASE & CO.
          (Registrant)

  By: /s/ Joseph L. Sclafani
                                           
Joseph L. Sclafani

        Executive Vice President
           and Controller
[Principal Accounting Officer]

Dated: April 19, 2002

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EXHIBIT INDEX

             
Exhibit No.   Description   Page
12 (a)   Computation of Ratio of Earnings to Fixed Charges     5  
12 (b)   Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividend Requirements     6  
99.1   Press Release – 2002 First Quarter Earnings     7  
99.2   2002 First Quarter Financial Supplement     8  

4


 
 
 
 

EXHIBIT 12(a)

J.P. MORGAN CHASE & CO.

Computation of Ratio of Earnings to Fixed Charges
(in millions, except ratios)

           
      Three Months Ended
      March 31, 2002
     
Excluding Interest on Deposits
       
Income before income taxes
  $ 1,487  
 
   
 
Fixed charges:
       
 
  Interest expense
    2,020  
 
  One-third of rents, net of income from subleases (a)
    57  
 
   
 
Total fixed charges
    2,077  
 
   
 
Less: Equity in undistributed income of affiliates
    (15 )
 
   
 
Earnings before taxes and fixed charges, excluding capitalized interest
  $ 3,549  
 
   
 
Fixed charges, as above
  $ 2,077  
 
   
 
Ratio of earnings to fixed charges
    1.71  
 
   
 
Including Interest on Deposits
       
Fixed charges, as above
  $ 2,077  
Add: Interest on deposits
    1,339  
 
   
 
Total fixed charges and interest on deposits
  $ 3,416  
 
   
 
Earnings before taxes and fixed charges, excluding capitalized interest, as above
  $ 3,549  
Add: Interest on deposits
    1,339  
 
   
 
Total earnings before taxes, fixed charges and interest on deposits
  $ 4,888  
 
   
 
Ratio of earnings to fixed charges
    1.43  
 
   
 

(a)  The proportion deemed representative of the interest factor.

 

 
 
 
 

EXHIBIT 12(b)

J.P. MORGAN CHASE & CO.

Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividend Requirements
(in millions, except ratios)

           
      Three Months Ended
      March 31, 2002
Excluding Interest on Deposits
       
Income before income taxes
  $ 1,487  
 
   
 
Fixed charges:
       
 
  Interest expense
    2,020  
 
  One-third of rents, net of income from subleases (a)
    57  
 
   
 
Total fixed charges
    2,077  
 
   
 
Less: Equity in undistributed income of affiliates
    (15 )
 
   
 
Earnings before taxes and fixed charges, excluding capitalized interest
  $ 3,549  
 
   
 
Fixed charges, as above
  $ 2,077  
Preferred stock dividends
    13  
 
   
 
Fixed charges including preferred stock dividends
  $ 2,090  
 
   
 
Ratio of earnings to fixed charges and preferred stock dividend requirements
    1.70  
 
   
 
Including Interest on Deposits
       
Fixed charges including preferred stock dividends, as above
  $ 2,090  
Add: Interest on deposits
    1,339  
 
   
 
Total fixed charges including preferred stock dividends and interest on deposits
  $ 3,429  
 
   
 
Earnings before taxes and fixed charges, excluding capitalized interest, as above
  $ 3,549  
Add: Interest on deposits
    1,339  
 
   
 
Total earnings before taxes, fixed charges and interest on deposits
  $ 4,888  
 
   
 
Ratio of earnings to fixed charges and preferred stock dividend requirements
    1.43  
 
   
 

(a)  The proportion deemed representative of the interest factor.

 

 
 
 

EXHIBIT 99.1

     
J.P. Morgan Chase & Co.    
270 Park Avenue, New York, NY 10017-2070
NYSE symbol: JPM
www.jpmorganchase.com
 

News release: IMMEDIATE RELEASE

JPMORGAN CHASE REPORTS 2002 FIRST QUARTER RESULTS

New York, April 17, 2002 – J.P. Morgan Chase & Co. (NYSE: JPM) today announced 2002 first quarter operating earnings per share of $0.57, compared with $0.17 in the fourth quarter of 2001 and $0.74 in the first quarter of 2001. Operating earnings were $1,150 million, compared with $356 million in the fourth quarter of 2001 and $1,527 million one year ago. Operating earnings for 2001 have been adjusted by adding back amortization of goodwill to present 2001 results on a basis comparable to this year’s first quarter, which included the impact of the implementation of SFAS 142.

Operating ROE was 11% and excluding JPMorgan Partners was 16%. The contribution to operating earnings per share of JPMorgan Partners was a loss of $0.12 in the first quarter compared to a $0.17 loss in the fourth quarter of 2001 and no impact in the first quarter of 2001.

Reported net income, which includes special items such as merger and restructuring costs, was $982 million, or $0.48 per share, in the first quarter of 2002. This compares with a loss of $332 million, or $0.18 per share, in the 2001 fourth quarter and profits of $1,199 million, or $0.58 per share, in the first quarter of 2001.

“First quarter results benefited from disciplined expense management and strong performance in our consumer businesses,” said William B. Harrison, Jr., Chairman and Chief Executive Officer. “In challenging markets, our Investment Bank posted a 16% ROE for the quarter and our Investment Management & Private Banking business showed margin improvement.”

Key events for the first quarter 2002

  Retail & Middle Market Financial Services posted record revenues of $3.1 billion and operating earnings growth of 25% from the first quarter of 2001, generating an operating ROE of 22%.
 
  The Investment Bank generated an operating ROE of 16% and an overhead ratio of 58% in a weak capital markets environment. For the first time, JPMorgan was the third-leading underwriter of stocks and bonds globally (per Thomson Financial).
 
  Investment Management & Private Banking pre-tax margin improved to 22%, driven by expense control.
 
  JPMorgan Partners had private equity losses of $255 million, driven primarily by the decline in the market price of Triton PCS.
 
  Credit costs declined from the fourth quarter of 2001 and equaled managed net charge-offs of $1,074 million in the first quarter of 2002.
 
  Commercial loans continued to decline, down 3% from year-end and down 10% from the first quarter of 2001. The Tier 1 capital ratio increased from year-end 2001 to 8.5%.


 
             
Investor Contact:   John Borden   Media Contact:   Jon Diat
    (212) 270-7318       (212) 270-5089
            Joe Evangelisti
            (212) 270-7438

 


 

J.P. Morgan Chase & Co.
News Release

Operating expenses in the 2002 first quarter were $5.1 billion, an 8% decline from first quarter of 2001 but a 7% increase from the 2001 fourth quarter. Expense growth from the fourth quarter included $106 million in non-merger related severance costs, $78 million related to the settlement of litigation with Sumitomo and $46 million in operating costs related to the acquisition of the credit card master trust of Providian. Given the weak market environment, management is continuing to take actions to reduce expenses and implement other productivity programs. Costs related to these initiatives that were not associated with previously announced programs were reported in operating results in the first quarter and will continue to be reflected in operating results going forward.

Business segment results

Retail & Middle Market Financial Services had record operating earnings of $526 million for the quarter, up 59% from the 2001 fourth quarter and an increase of 25% from the first quarter of 2001. Operating ROE for the first quarter was 22%, compared to 14% in the fourth quarter of 2001 and 20% for the first quarter of 2001.

Operating revenues of $3.13 billion (including $150 million of revenues from the card portfolio acquired from Providian) were up 7% and 18% from the fourth and first quarters of 2001, respectively. Credit card outstandings grew 31% to $49 billion (including Providian) and there were over 900,000 new accounts originated during the quarter, the sixth consecutive quarter of such additions. Mortgage originations totaled $33 billion in the quarter, down from $50 billion in the 2001 fourth quarter and up from the first quarter of 2001. Auto finance originations were $5.8 billion in the quarter, up 2% from the fourth quarter of 2001 and 34% over the first quarter of 2001. Total deposits were up 5% and 14% from the fourth and first quarters of 2001, respectively.

Operating expenses of $1.56 billion increased by 4% from the fourth quarter of 2001 and by 13% from the first quarter of 2001. The increases reflected the impact of the Providian acquisition as well as higher expenses related to production volumes. Partially offsetting these increases were savings related to Six Sigma productivity programs.

Credit costs of $726 million were 22% lower than the 2001 fourth quarter, which included $250 million in provision in excess of charge-offs. Credit costs were 22% higher than the first quarter of 2001, partially due to higher outstandings. The allowance for loan losses was higher than at year-end due to reserves established for the acquired card portfolio.

Investment Management & Private Banking had operating earnings of $126 million, up 30% from the 2001 fourth quarter and 19% better than the first quarter of 2001. Pre-tax margin in the first quarter was 22% compared with 16% in each of the fourth and first quarters of 2001.

Operating revenues of $741 million in the first quarter were 1% better than the 2001 fourth quarter but 10% lower than the first quarter of 2001. Operating expenses of $557 million for the first quarter were 5% lower than the 2001 fourth quarter and down 19% from the first quarter of 2001 reflecting the impact of cost

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J.P. Morgan Chase & Co.
News Release

reductions taken in 2001. Credit costs in private banking were lower than in the 2001 fourth quarter and higher than the first quarter of 2001.

Strong growth in retail mutual funds across all asset classes was more than offset by outflows within the institutional segment, primarily outflows from lower-fee money market funds. Total assets under management at quarter-end of $583 billion were 4% lower than in each of the fourth and first quarters of 2001. In the retail segment, JPMorgan Flemings international mutual funds received 82 awards for performance including Best Overall Group and Best-Mixed Asset Manager. 1

The Investment Bank had operating earnings of $755 million in the first quarter, more than double the fourth quarter of 2001 but 27% lower than the first quarter of 2001. Operating ROE was 16% for the quarter compared to 8% for the 2001 fourth quarter and 21% for the first quarter of 2001.

Operating revenues of $3.62 billion in the first quarter of 2002 were 17% better than the 2001 fourth quarter but 16% lower than the first quarter of 2001.

Trading revenues (including related net interest income) of $1.70 billion increased 66% from the fourth quarter of 2001 but were down 19% from the first quarter of 2001. The significant increase over the prior quarter reflected higher revenues across most businesses and was partly attributable to markdowns recorded against counterparty exposures in the fourth quarter of 2001. The decline from the first quarter of 2001 was primarily due to lower equity trading revenues as a result of lower client activity and lower volatility. Fixed income trading was lower compared to the first quarter of 2001 as strong credit trading results in the quarter were offset by lower interest rate trading, reflecting reduced opportunities from declining rates than existed one year ago.

Investment banking fees totaled $741 million in the first quarter, declining 21% from each of the fourth and the first quarters of 2001. The declines reflected continued weakness in M&A and equity underwriting markets as well as lower loan syndication activity during the quarter. For the quarter, leadership positions were maintained in syndicated lending (#1) and high-grade bonds (#2). 2

Fees and commissions of $380 million in the first quarter increased by 5% from the fourth quarter of 2001 but declined 10% from the first quarter of 2001. The year-on-year decline was primarily due to lower margins from equity brokerage activities.

Operating expenses for the first quarter of $2.12 billion increased by 14% from the fourth quarter of 2001 but declined 17% from the first quarter of last year. Expenses in the first quarter included the cost of the Sumitomo settlement and severance-related costs. The overhead ratio for the quarter was 58% reflecting ongoing productivity and expense management initiatives intended to allow the Investment Bank to make strategic investments despite the current revenue environment.


1 Source: Lipper, March 2002
 
2 Derived from Thomson Financial Securities Data, based on proceeds

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J.P. Morgan Chase & Co.
News Release

Treasury & Securities Services had operating earnings of $141 million, down 14% from the 2001 fourth quarter and down 16% from the first quarter of 2001. Operating ROE for the quarter was 19% compared to 23% in the 2001 fourth quarter and 24% in the first quarter of 2001.

Operating revenues were $935 million in the first quarter of 2002, down 1% from the 2001 fourth quarter and down 2% from the first quarter of 2001. Revenues in Investor Services were down 10% from the first quarter of 2001 to $393 million as a result of weak global equity markets and lower asset levels, reduced money flows and lower business activity. Investor Services revenues were flat from the fourth quarter. Institutional Trust Services revenues increased 6% from each of the fourth and first quarters of 2001. Treasury Services revenues were down 5% from the fourth quarter but up 4% from the first quarter of 2001, as the effect of lower interest rates was offset by higher overall deposit levels resulting from increased business volumes.

Operating expenses rose 4% from the 2001 fourth quarter and 3% from the first quarter of 2001.

JPMorgan Partners had an operating loss of $248 million for the quarter compared to an operating loss of $345 million in the 2001 fourth quarter and an operating loss of $4 million in the first quarter of 2001.

Total private equity gains were negative $255 million, of which net unrealized losses were $242 million. The decline in value of Triton PCS was the largest contributor to unrealized losses. Hedging put in place to partially offset fluctuations in the values of public securities contributed $47 million in gains in the first quarter. Total private equity gains were negative $398 million in the 2001 fourth quarter and $139 million positive in the first quarter of 2001. Although private equity exit opportunities remain muted, market conditions have started to improve across several industry sectors.

Credit

Commercial net charge-offs in the first quarter of 2002 were $320 million, compared to $433 million in the 2001 fourth quarter and $148 million in the first quarter of 2001. The charge-off ratio was 1.27% for the first quarter of 2002, 1.58% for the fourth quarter of 2001 and 0.50% for the first quarter of 2001.

Consumer net charge-offs on a managed basis (i.e., including securitized assets) were $754 million, up from $649 million in the fourth quarter of 2001 and $540 million in the first quarter of 2001. On a managed basis, the credit card net charge-off ratio, including the Providian assets acquired on February 1, 2002, was 5.87% in the first quarter of 2002, compared to 5.48% for the fourth quarter of 2001 and 5.05% for the first quarter of 2001. The Providian credit card receivables will contribute to a higher managed charge-off ratio over the remainder of the year.

Provisions equaled charge-offs in the quarter. In the fourth quarter of 2001, $650 million of provisions in excess of charge-offs were recorded.

Total Nonperforming Assets were $4.31 billion at March 31, 2002, which includes $1.13 billion related to the Enron surety receivables and letter of credit. Excluding this amount, which is the subject of litigation with credit-worthy entities, nonperforming assets totaled $3.18 billion. This compares to $2.79 billion at December 31, 2001 and $2.23 billion as of March 31, 2001.

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J.P. Morgan Chase & Co.
News Release

Total assets and capital

Total assets as of March 31, 2002 were $713 billion, compared with $694 billion at December 31, 2001 and $714 billion as of March 31, 2001. The increase over December 31, 2001 was largely driven by growth in trading assets. Commercial loans declined 3%, or $3.1 billion, from the fourth quarter of 2001 and 10%, or $11.5 billion, from the first quarter of 2001. Consumer loans were up slightly from year-end and increased 9% from the first quarter of 2001. The Tier 1 capital ratio was 8.5% at March 31, 2002, compared to 8.3% at December 31, 2001 and 8.7% at March 31, 2001.

Other financial information

Special Items in the first quarter of 2002 included $255 million (pre-tax) in merger and restructuring costs. Special items in the fourth quarter of 2001 included merger and restructuring costs of $841 million (pre-tax). Special items in the first quarter of 2001 included merger and restructuring costs (pre-tax) of $328 million and the cumulative effect of a transition adjustment of negative $25 million (after-tax) related to the adoption of SFAS 133 for the accounting for derivative instruments and hedging activities.

J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $713 billion and operations in more than 50 countries. With relationships with over 99% of the Fortune 1000 companies, the firm is a leader in investment banking, asset management, private banking, private equity, custody and transaction services and retail and middle market financial services. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers and the world’s most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the internet at www.jpmorganchase.com.

JPMorgan Chase will hold a presentation for the investment community on Wednesday, April 17, 2002 at 11:00 a.m. (Eastern Daylight Time) to review first quarter 2002 financial results. A live audio webcast of the presentation will be available on www.jpmorganchase.com. In addition, persons interested in listening to the presentation by telephone may dial in at (973) 872-3100. A telephone replay of the presentation will be available beginning at 1:00 p.m. (EDT) on April 17, 2002 and continuing through 6:00 p.m. (EDT) on April 23, 2002 at (973) 341-3080 pin #3183365. The replay also will be available on www.jpmorganchase.com. Additional detailed financial, statistical and business-related information is included in a financial supplement. The earnings release and the financial supplement are available on the JPMorgan Chase web site ( www.jpmorganchase.com ).

This press release contains statements that are forward-looking 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. These uncertainties could cause our results to differ materially from such forward-looking statements. Such risks and uncertainties are described in our 2001 Annual Report on Form 10-K, filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (http://www.sec.gov), to which reference is hereby made.

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J.P. MORGAN CHASE & CO.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in millions, except per share and ratio data)
 
                                                     
        1QTR           4QTR           1QTR        
        2002           2001           2001        
       
         
         
       
OPERATING INCOME STATEMENT (a) (b)
                                               
OPERATING REVENUE:
                                               
Investment Banking Fees
  $ 755             $ 931             $ 941          
Trading-Related Revenue (Including Trading NII)
    1,720               904               2,167          
Fees and Commissions
    2,493               2,340               2,082          
Private Equity — Realized Gains (Losses)
    (10 )             81               412          
Private Equity — Unrealized Gains (Losses)
    (228 )             (505 )             (285 )        
Securities Gains
    114               202               455          
Other Revenue
    137               138               257          
Net Interest Income (Excluding Trading NII)
    2,938               2,825               2,537          
 
   
             
             
         
   
TOTAL OPERATING REVENUE
    7,919               6,916               8,566          
OPERATING EXPENSE:
                                               
Compensation Expense
    2,823               2,622               3,336          
Noncompensation Expense
    2,280               2,138               2,193          
 
   
             
             
         
 
TOTAL OPERATING EXPENSE
    5,103               4,760               5,529          
Credit Costs
    1,074               1,732               688          
 
   
             
             
         
Operating Income before Taxes
    1,742               424               2,349          
Income Taxes
    592               68               822          
 
   
             
             
         
OPERATING EARNINGS
  $ 1,150             $ 356             $ 1,527          
Special Items & Net Effect of Change in Acctng Principle
    (168 )             (579 )             (237 )        
Amortization of Goodwill, Net of Taxes (c)
                  (109 )             (91 )        
 
   
             
             
         
NET INCOME (LOSS)
  $ 982             $ (332 )           $ 1,199          
 
   
             
             
         
OPERATING BASIS
                                               
Diluted Earnings per Share
  $ 0.57             $ 0.17             $ 0.74          
Shareholder Value Added
    (59 )             (915 )             285          
Return on Managed Assets
    0.63 %             0.19 %             0.83 %        
Return on Common Equity
    11.4               3.3               14.8          
Overhead Ratio
    64               69               65          
Common Dividend Payout Ratio
    60               199               45          
Compensation Expense as a % of Revenue
    36               38               39          
Noncompensation Expense as a % of Revenue
    29               31               26          
NET INCOME (LOSS) PER COMMON SHARE (d)
                                               
Basic
  $ 0.49             $ (0.18 )           $ 0.60          
Diluted
    0.48               (0.18 )             0.58          
COMMON SHARES OUTSTANDING
                                               
Basic Average Shares Outstanding
    1,978.2               1,969.6               1,966.6          
Diluted Average Shares Outstanding
    2,005.8               2,007.4               2,032.2          
Common Shares Outstanding — at Period End
    1,990.2               1,973.4               1,984.2          
CASH DIVIDENDS DECLARED PER SHARE
  $ 0.34             $ 0.34             $ 0.34          
BOOK VALUE PER SHARE
    20.16               20.32               21.17          
CAPITAL RATIOS
                                               
Tier I Capital Ratio
    8.5 %(e)             8.3 %             8.7 %        
Total Capital Ratio
    12.4 (e)             11.9               12.3          
Tier I Leverage
    5.4 (e)             5.2               5.4          

[Additional columns below]

[Continued from above table, first column(s) repeated]

 
                                     
        1QTR 2002        
        Over (Under)        
       
       
        4Q 2001           1Q 2001        
       
         
       
OPERATING INCOME STATEMENT (a) (b)
                               
OPERATING REVENUE:
                               
Investment Banking Fees
    (19 )%             (20 )%        
Trading-Related Revenue (Including Trading NII)
    90               (21 )        
Fees and Commissions
    7               20          
Private Equity — Realized Gains (Losses)
    NM               NM        
Private Equity — Unrealized Gains (Losses)
    55               20          
Securities Gains
    (44 )             (75 )        
Other Revenue
    (1 )             (47 )        
Net Interest Income (Excluding Trading NII)
    4               16          
 
                               
   
TOTAL OPERATING REVENUE
    15               (8 )        
OPERATING EXPENSE:
                               
Compensation Expense
    8               (15 )        
Noncompensation Expense
    7               4          
 
                               
 
TOTAL OPERATING EXPENSE
    7               (8 )        
Credit Costs
    (38 )             56          
 
                               
Operating Income before Taxes
    311               (26 )        
Income Taxes
    NM               (28 )        
 
                               
OPERATING EARNINGS
    223               (25 )        
Special Items & Net Effect of Change in Acctng Principle
    71               29          
Amortization of Goodwill, Net of Taxes (c)
    NM               NM        
 
                               
NET INCOME (LOSS)
    NM               (18 )        
 
                               
OPERATING BASIS
                               
Diluted Earnings per Share
    235               (23 )        
Shareholder Value Added
    94               NM        
Return on Managed Assets
    44 bp         (20 )bp    
Return on Common Equity
    810               (340 )        
Overhead Ratio
    (500 )             (100 )        
Common Dividend Payout Ratio
    (13,900 )             1,500          
Compensation Expense as a % of Revenue
    (200 )             (300 )        
Noncompensation Expense as a % of Revenue
    (200 )             300          
NET INCOME (LOSS) PER COMMON SHARE (d)
                               
Basic
    NM               (18 )%        
Diluted
    NM               (17 )        
COMMON SHARES OUTSTANDING
                               
Basic Average Shares Outstanding
    %             1          
Diluted Average Shares Outstanding
                  (1 )        
Common Shares Outstanding — at Period End
    1                        
CASH DIVIDENDS DECLARED PER SHARE
                           
BOOK VALUE PER SHARE
    (1 )             (5 )        
CAPITAL RATIOS
                               
Tier I Capital Ratio
    20 bp         (20 )bp    
Total Capital Ratio
    50               10          
Tier I Leverage
    20                        

Note: Prior periods have been restated to conform with current methodologies.

(a)   See page 10 for a reconciliation between reported results and operating results.
 
(b)   In the first quarter of 2002, the Firm implemented EITF 01-14, “Income Statement Characterization of Reimbursements Received for ‘Out-of-Pocket’ Expenses Incurred (Formerly EITF Abstracts, Topic D-103).” Consequently, prior period amounts have been restated.
 
(c)   Reported net income for the first quarter 2002 reflects the adoption of SFAS 142 and, accordingly, the Firm ceased amortizing goodwill effective January 1, 2002. There was no impairment of goodwill upon adoption of SFAS 142. Previously reported operating earnings for 2001 have been adjusted by adding back amortization of goodwill to make 2001 results comparable to 2002.
 
(d)   Basic and diluted earnings per share have been reduced by $0.01 in the first quarter of 2001 due to the impact of the adoption of SFAS 133 relating to the accounting for derivative instruments and hedging activities.
 
(e)   Estimated
 
bp  - Denotes basis points; 100 bp equals 1%

Page 6


 

     
J.P. MORGAN CHASE & CO.  

LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY
(in millions, except per share and ratio data)
 
                                                       
          1QTR           4QTR           1QTR        
          2002           2001           2001        
         
         
         
       
OPERATING REVENUE
                                               
Investment Bank
  $ 3,620             $ 3,088             $ 4,327          
Treasury & Securities Services
    935               941               953          
Investment Management & Private Banking
    741               731               822          
Retail & Middle Market Financial Services
    3,131               2,936               2,654          
Corporate (a)
    (205 )             (328 )             (277 )        
 
   
             
             
         
 
OPERATING REVENUE EXCLUDING JPMP
    8,222               7,368               8,479          
JPMorgan Partners
    (303 )             (452 )             87          
 
   
             
             
         
   
OPERATING REVENUE (b)
  $ 7,919             $ 6,916             $ 8,566          
 
   
             
             
         
EARNINGS
                                               
Investment Bank
  $ 755             $ 367             $ 1,033          
Treasury & Securities Services
    141               164               168          
Investment Management & Private Banking
    126               97               106          
Retail & Middle Market Financial Services
    526               330               421          
Corporate (a)
    (150 )             (257 )             (197 )        
 
   
             
             
         
   
OPERATING EARNINGS EXCLUDING JPMP
    1,398               701               1,531          
JPMorgan Partners
    (248 )             (345 )             (4 )        
 
   
             
             
         
   
OPERATING EARNINGS (b)
    1,150               356               1,527          
Special Items & Net Effect of Change in Acctng Principle
    (168 )             (579 )             (237 )        
Amortization of Goodwill, Net of Taxes
                  (109 )             (91 )        
 
   
             
             
         
     
NET INCOME (LOSS) (b)
  $ 982             $ (332 )           $ 1,199          
 
   
             
             
         
EARNINGS PER SHARE — DILUTED
                                               
OPERATING EARNINGS EXCLUDING JPMP
  $ 0.69             $ 0.34             $ 0.74          
Impact of JPMP
    (0.12 )             (0.17 )                      
 
   
             
             
         
OPERATING EARNINGS (b)
    0.57               0.17               0.74          
Special Items & Net Effect of Change in Acctng Principle
    (0.09 )             (0.29 )             (0.12 )        
Amortization of Goodwill, Net of Taxes
                  (0.05 )             (0.04 )        
 
   
             
             
         
NET INCOME (LOSS) (b)
  $ 0.48             $ (0.18 )(c)           $ 0.58          
 
   
             
             
         
OPERATING RETURN ON COMMON EQUITY
                                               
Investment Bank
    15.9 %             7.6 %             20.8 %        
Treasury & Securities Services
    19.1               22.6               23.5          
Investment Management & Private Banking
    8.4               6.2               6.4          
Retail & Middle Market Financial Services
    21.5               14.2               19.9          
OPERATING RETURN ON COMMON EQUITY (b)
    11.4               3.3               14.8          

[Additional columns below]

[Continued from above table, first column(s) repeated]

 
                                       
          1QTR 2002        
          Over (Under)        
         
       
          4QTR           1QTR        
          2001           2001        
         
         
       
OPERATING REVENUE
                               
Investment Bank
    17 %             (16 )%        
Treasury & Securities Services
    (1 )             (2 )        
Investment Management & Private Banking
    1               (10 )        
Retail & Middle Market Financial Services
    7               18          
Corporate (a)
    38               26          
 
                               
 
OPERATING REVENUE EXCLUDING JPMP
    12               (3 )        
JPMorgan Partners
    33             NM        
 
                               
   
OPERATING REVENUE (b)
    15               (8 )        
 
                               
EARNINGS
                               
Investment Bank
    106               (27 )        
Treasury & Securities Services
    (14 )             (16 )        
Investment Management & Private Banking
    30               19          
Retail & Middle Market Financial Services
    59               25          
Corporate (a)
    42               24          
 
                               
   
OPERATING EARNINGS EXCLUDING JPMP
    99               (9 )        
JPMorgan Partners
    28             NM        
 
                               
   
OPERATING EARNINGS (b)
    223               (25 )        
Special Items & Net Effect of Change in Acctng Principle
    71               29          
Amortization of Goodwill, Net of Taxes
  NM           NM        
 
                               
     
NET INCOME (LOSS) (b)
  NM             (18 )        
 
                               
EARNINGS PER SHARE — DILUTED
                               
OPERATING EARNINGS EXCLUDING JPMP
    103               (7 )        
Impact of JPMP
    29             NM        
 
                               
OPERATING EARNINGS (b)
    235               (23 )        
Special Items & Net Effect of Change in Acctng Principle
    69               25          
Amortization of Goodwill, Net of Taxes
  NM           NM        
 
                               
NET INCOME (LOSS) (b)
  NM             (17 )        
 
                               
OPERATING RETURN ON COMMON EQUITY
                               
Investment Bank
    830 bp         (490 )bp    
Treasury & Securities Services
    (350 )             (440 )        
Investment Management & Private Banking
    220               200          
Retail & Middle Market Financial Services
    730               160          
OPERATING RETURN ON COMMON EQUITY (b)
    810               (340 )        

(a)   Includes Support Units and the effects remaining at the corporate level after the implementation of management accounting policies.
 
(b)   Represents consolidated JPMorgan Chase.
 
(c)   Diluted EPS is reported as $(0.18) which is the same as basic EPS, instead of $(0.17), since using diluted average shares outstanding would cause antidilution. As a result, the net loss earnings per share does not foot by $(0.01).

Page 7


 

 
     
J.P. MORGAN CHASE & CO.
CONSOLIDATED BALANCE SHEET
(in millions)
 
                           
      Mar 31st   Dec 31st   Mar 31st
      2002   2001   2001
     
 
 
ASSETS
                       
Cash and Due from Banks
  $ 22,637     $ 22,600     $ 22,371  
Deposits with Banks
    9,691       12,743       7,979  
Federal Funds Sold and Securities
Purchased under Resale Agreements
    76,719       63,727       71,147  
Securities Borrowed
    40,880       36,580       37,264  
Trading Assets:
                       
 
Debt and Equity Instruments
    144,992       118,248       138,270  
 
Derivative Receivables
    63,224       71,157       78,907  
Securities
    61,225       59,760       69,731  
Loans (Net of Allowance for Loan Losses)
    209,541       212,920       213,116  
Goodwill
    7,924       8,205       8,667  
Other Intangibles:
                       
 
Mortgage Servicing Rights
    6,918       6,579       6,062  
 
Purchased Credit Card Relationships
    1,508       519       574  
 
All Other Intangibles
    327       44       48  
Private Equity Investments
    8,553       9,197       10,877  
Other Assets
    58,369       71,296       48,611  
 
   
     
     
 
TOTAL ASSETS
  $ 712,508     $ 693,575     $ 713,624  
 
   
     
     
 
LIABILITIES
                       
Deposits
  $ 282,037     $ 293,650     $ 272,572  
Federal Funds Purchased and Securities
Sold under Repurchase Agreements
    152,837       128,445       145,703  
Commercial Paper
    23,726       18,510       16,281  
Other Borrowed Funds
    16,968       10,835       28,716  
Trading Liabilities:
                       
 
Debt and Equity Instruments
    71,141       52,988       52,501  
 
Derivative Payables
    44,997       56,063       73,312  
Accounts Payable and Other Liabilities
(Including the Allowance for Credit Losses)
    36,910       47,813       33,575  
Long-Term Debt
    37,322       39,183       42,609  
Guaranteed Preferred Beneficial Interests in the Firm’s Junior Subordinated Deferrable Interest Debentures
    5,439       4,439       4,439  
 
   
     
     
 
TOTAL LIABILITIES
    671,377       651,926       669,708  
PREFERRED STOCK OF SUBSIDIARY
          550       550  
STOCKHOLDERS’ EQUITY
                       
Preferred Stock
    1,009       1,009       1,362  
Common Stock
    2,016       1,997       1,984  
Capital Surplus
    12,783       12,495       11,663  
Retained Earnings
    27,278       26,993       28,592  
Accumulated Other Comprehensive Income (Loss)
    (909 )     (442 )     (214 )
Treasury Stock, at Cost
    (1,046 )     (953 )     (21 )
 
   
     
     
 
TOTAL STOCKHOLDERS’ EQUITY
    41,131       41,099       43,366  
 
   
     
     
 
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND STOCKHOLDERS’ EQUITY
  $ 712,508     $ 693,575     $ 713,624  
 
   
     
     
 

[Additional columns below]

[Continued from above table, first column(s) repeated]

 
                                   
      Mar 31, 2002        
      Over (Under)        
     
       
      Dec 31, 01           Mar 31, 01        
     
         
       
ASSETS
                               
Cash and Due from Banks
    %             1 %        
Deposits with Banks
    (24 )             21          
Federal Funds Sold and Securities
Purchased under Resale Agreements
    20               8          
Securities Borrowed
    12               10          
Trading Assets:
                               
 
Debt and Equity Instruments
    23               5          
 
Derivative Receivables
    (11 )             (20 )        
Securities
    2               (12 )        
Loans (Net of Allowance for Loan Losses)
    (2 )             (2 )        
Goodwill
    (3 )             (9 )        
Other Intangibles:
                               
 
Mortgage Servicing Rights
    5               14          
 
Purchased Credit Card Relationships
    191               163          
 
All Other Intangibles
  NM           NM        
Private Equity Investments
    (7 )             (21 )        
Other Assets
    (18 )             20          
 
                               
TOTAL ASSETS
    3                        
 
                               
LIABILITIES
                               
Deposits
    (4 )             3          
Federal Funds Purchased and Securities
Sold under Repurchase Agreements
    19               5          
Commercial Paper
    28               46          
Other Borrowed Funds
    57               (41 )        
Trading Liabilities:
                               
 
Debt and Equity Instruments
    34               36          
 
Derivative Payables
    (20 )             (39 )        
Accounts Payable and Other Liabilities
(Including the Allowance for Credit Losses)
    (23 )             10          
Long-Term Debt
    (5 )             (12 )        
Guaranteed Preferred Beneficial Interests in the Firm’s Junior Subordinated Deferrable Interest Debentures
    23               23          
 
                               
TOTAL LIABILITIES
    3                        
PREFERRED STOCK OF SUBSIDIARY
  NM           NM        
STOCKHOLDERS’ EQUITY
                               
Preferred Stock
                  (26 )        
Common Stock
    1               2          
Capital Surplus
    2               10          
Retained Earnings
    1               (5 )        
Accumulated Other Comprehensive Income (Loss)
    (106 )             (325 )        
Treasury Stock, at Cost
    10             NM        
 
                               
TOTAL STOCKHOLDERS’ EQUITY
                  (5 )        
 
                               
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND STOCKHOLDERS’ EQUITY
    3                        
 
                               

Page 8


 

     

 
J.P. MORGAN CHASE & CO.
CREDIT-RELATED INFORMATION
(in millions, except ratios)
 
                                                               
                  Mar 31st           Dec 31st           Mar 31st        
                  2002           2001           2001  
                 
         
         
 
CREDIT-RELATED ASSETS:
                                                       
Commercial Loans
          $ 101,752             $ 104,864             $ 113,217          
Derivative and FX Contracts
            63,224               71,157               78,907          
 
           
             
             
         
 
Total Commercial Credit-Related Assets (a)
        164,976               176,021               192,124          
Managed Consumer Loans (b)
            136,019               134,004               120,196          
 
           
             
             
         
 
Total Managed Credit-Related Assets
          $ 300,995             $ 310,025             $ 312,320          
 
           
             
             
         
NET CHARGE-OFFS: (c)
                                                       
Commercial Loans
          $ 320             $ 433             $ 148          
 
           
             
             
         
Credit Card — Managed
            658               538               459          
All Other Consumer
            96               111               81          
 
           
             
             
         
Managed Consumer Loans
            754               649               540          
 
           
             
             
         
 
Total Managed Net Charge-offs
          $ 1,074             $ 1,082             $ 688          
 
           
             
             
         
NET CHARGE-OFF RATES — ANNUALIZED:
                                                       
Total Commercial Loans
            1.27 %             1.58 %             0.50 %      
Credit Card — Managed
            5.87               5.48               5.05          
Total Managed Loans
            1.82               1.80               1.17          
NONPERFORMING ASSETS:
                                                       
Commercial Loans
          $ 2,359             $ 1,997             $ 1,637          
Derivative and FX Contracts
            155               170               109          
Consumer Loans (b)
            534               499               377          
Assets Acquired in Loan Satisfactions
            130               124               111          
 
           
             
             
         
   
Total
            3,178               2,790               2,234          
Other Receivables (d)
            1,130               1,130                        
 
           
             
             
         
     
Total Nonperforming Assets
          $ 4,308 (e)         $ 3,920             $ 2,234          
 
           
             
             
         
SELECTED COUNTRY TOTAL EXPOSURE
(in billions)
Argentina
          $ 0.5 (f)       $ 0.6             $ 1.8          
Brazil
            2.7 (f)         3.3               1.9          
Turkey
            0.1 (f)         0.3               0.3          
Venezuela
            0.2 (f)         0.3               0.4          

[Additional columns below]

[Continued from above table, first column(s) repeated]

 
                                                       
          Mar 31, 2002                
          Over (Under)                
         
               
          Dec 31, 01                   Mar 31, 01                
         
                 
               
CREDIT-RELATED ASSETS:
                                               
Commercial Loans
    (3 )%                   (10 )%              
Derivative and FX Contracts
    (11 )                     (20 )                
 
                                               
 
Total Commercial Credit-Related Assets (a)
    (6 )                     (14 )                
Managed Consumer Loans (b)
    2                       13                  
 
                                               
 
Total Managed Credit-Related Assets
    (3 )                     (4 )                
 
                                               
NET CHARGE-OFFS: (c)
                                               
Commercial Loans
    (26 )                     116                  
 
                                               
Credit Card — Managed
    22                       43                  
All Other Consumer
    (14 )                     19                  
 
                                               
Managed Consumer Loans
    16                       40                  
 
                                               
 
Total Managed Net Charge-offs
    (1 )                     56                  
 
                                               
NET CHARGE-OFF RATES — ANNUALIZED:
                                               
Total Commercial Loans
    (31 )bp               77 bp          
Credit Card — Managed
    39                       82                  
Total Managed Loans
    2                       65                  
NONPERFORMING ASSETS:
                                               
Commercial Loans
    18 %                     44 %                
Derivative and FX Contracts
    (9 )                     42                  
Consumer Loans (b)
    7                       42                  
Assets Acquired in Loan Satisfactions
    5                       17                  
 
                                               
   
Total
    14                       42                  
Other Receivables (d)
                        NM                
 
                                               
     
Total Nonperforming Assets
    10                       93                  
 
                                               
SELECTED COUNTRY TOTAL EXPOSURE
(in billions)
Argentina
    (17 )                     (72 )                
Brazil
    (18 )                     42                  
Turkey
    (67 )                     (67 )                
Venezuela
    (33 )                     (50 )                

(a)   Unfunded commercial lending-related commitments totaled $245 billion at March 31, 2002, $248 billion at December 31, 2001 and $262 billion at March 31, 2001.
 
(b)   Includes credit card receivables that have been securitized.
 
(c)   Net charge-offs are presented for the quarter ended as of the date indicated.
 
(d)   This amount relates to the Enron-related surety receivables and letter of credit, which are the subject of litigation with credit-worthy entities.
 
(e)   Nonperforming assets have not been reduced for credit protection (single name credit default swaps and collateralized loan obligations) aggregating $42 million related to nonperforming counterparties at March 31, 2002.
 
(f)   Estimated

Page 9


 

     

 
J.P. MORGAN CHASE & CO.
RECONCILIATION OF REPORTED TO OPERATING RESULTS
(in millions, except per share data)
 
                                 
    FIRST QUARTER 2002
   
    REPORTED   CREDIT   SPECIAL   OPERATING
    RESULTS   CARD   ITEMS   BASIS
    (a)   (b)   (c)  
   
 
 
 
INCOME STATEMENT
                               
Revenue
  $ 7,598     $ 321     $     $ 7,919  
Expense
    5,034                   5,034  
Amortization of Intangibles
    69                   69  
 
   
     
     
     
 
Operating Margin
    2,495       321             2,816  
Credit Costs
    753       321             1,074  
 
   
     
     
     
 
Income before Merger and Restructuring Costs
    1,742                   1,742  
Merger and Restructuring Costs
    255             (255 )      
 
   
     
     
     
 
Income before Tax Expense
    1,487             255       1,742  
Tax Expense
    505             87       592  
 
   
     
     
     
 
Income before Effect of Acctng Change
    982             168       1,150  
Net Effect of Change in Acctng Principle
                       
 
   
     
     
     
 
Net Income
  $ 982     $     $ 168     $ 1,150  
 
   
     
     
     
 
NET INCOME PER SHARE
                               
Basic
  $ 0.49                     $ 0.57  
Diluted
    0.48                       0.57  

[Additional columns below]

[Continued from above table, first column(s) repeated]

 
                                                 
    FIRST QUARTER 2001
   
    REPORTED           CREDIT   SPECIAL   AMORTIZATION   OPERATING
    RESULTS           CARD   ITEMS   OF GOODWILL   BASIS
    (a)           (b)   (c)   (d)  
   
         
 
 
 
INCOME STATEMENT
                                               
Revenue
  $ 8,325             $ 241     $     $     $ 8,566  
Expense
    5,493                                 5,493  
Amortization of Intangibles
    177                           (141 )     36  
 
   
             
     
     
     
 
Operating Margin
    2,655               241             141       3,037  
Credit Costs
    447               241                   688  
 
   
             
     
     
     
 
Income before Merger and Restructuring Costs
    2,208                           141       2,349  
Merger and Restructuring Costs
    328                     (328 )            
 
   
             
     
     
     
 
Income before Tax Expense
    1,880                     328       141       2,349  
Tax Expense
    656                     116       50       822  
 
   
             
     
     
     
 
Income before Effect of Acctng Change
    1,224                     212       91       1,527  
Net Effect of Change in Acctng Principle
    (25 )                   25              
 
   
             
     
     
     
 
Net Income
  $ 1,199             $     $ 237     $ 91     $ 1,527  
 
   
             
     
     
     
 
NET INCOME PER SHARE
                                               
Basic
  $ 0.60 (e)                                   $ 0.77  
Diluted
    0.58 (e)                                     0.74  

                                         
    FOURTH QUARTER 2001
   
    REPORTED   CREDIT   SPECIAL   AMORTIZATION   OPERATING
    RESULTS   CARD   ITEMS   OF GOODWILL   BASIS
    (a)   (b)   (c)   (d)  
   
 
 
 
 
INCOME STATEMENT
                                       
Revenue
  $ 6,652     $ 264     $     $     $ 6,916  
Expense
    4,724                         4,724  
Amortization of Intangibles
    187                   (151 )     36  
 
   
     
     
     
     
 
Operating Margin
    1,741       264             151       2,156  
Credit Costs
    1,468       264                   1,732  
 
   
     
     
     
     
 
Income before Merger and Restructuring Costs
    273                   151       424  
Merger and Restructuring Costs
    841             (841 )            
 
   
     
     
     
     
 
Income (Loss) before Tax Expense
    (568 )           841       151       424  
Tax Expense (Benefit)
    (236 )           262       42       68  
 
   
     
     
     
     
 
Net Income (Loss)
  $ (332 )   $     $ 579     $ 109     $ 356  
 
   
     
     
     
     
 
NET INCOME (LOSS) PER SHARE
                                       
Basic
  $ (0.18 )                           $ 0.17  
Diluted
    (0.18 )                             0.17  

(a)   Represents condensed results as reported in JPMorgan Chase’s financial statements.
 
(b)   This column excludes the impact of credit card securitizations. For receivables that have been securitized, amounts that would have been reported as net interest income and as provision for loan losses are instead reported as components of noninterest revenue.
 
(c)   Includes merger and restructuring costs and special items. The 2002 first quarter includes $255 million in merger and restructuring expenses. The 2001 first quarter includes $328 million in merger and restructuring expenses. The 2001 fourth quarter includes $841 million in merger and restructuring expenses.
 
(d)   Reported net income for the first quarter 2002 reflects the adoption of SFAS 142 and, accordingly, the Firm ceased amortizing goodwill effective January 1, 2002. There was no impairment of goodwill upon adoption of SFAS 142. Previously reported operating earnings for 2001 have been adjusted by adding back amortization of goodwill to make 2001 results comparable to 2002.
 
(e)   Includes the effect of the accounting change. Excluding the accounting change, basic and diluted net income per share were $0.61 and $0.59, respectively.

Page 10

 
 
 

Exhibit 99.2

PRESS RELEASE FINANCIAL SUPPLEMENT

FIRST QUARTER 2002

 


 

         
J.P. MORGAN CHASE & CO.        
TABLE OF CONTENTS        
      Page
 
JPMorgan Chase Consolidated
Statement of Income — Reported Basis
    3  
Lines of Business Financial Highlights Summary
    4  
Statement of Income — Operating Basis Excluding JPMorgan Partners
    5  
Statement of Income — Operating Basis
    6  
Reconciliation from Reported to Operating Basis
    7  
 
Segment Detail
Investment Bank
    8  
 
Treasury & Securities Services
    9  
 
Investment Management & Private Banking
    10  
 
JPMorgan Partners     11  
Investment Portfolio — Private and Public Securities
    12  
 
Retail & Middle Market Financial Services
    13  
 
Supplemental Detail
Noninterest Revenue and Noninterest Expense Detail
    14  
Consolidated Balance Sheet
    15  
Condensed Average Balance Sheet and Annualized Yields
    16  
Credit-Related Information
    17-18  
Capital
    19  
 
Glossary of Terms
    20  

2


 

     
J.P. MORGAN CHASE & CO.  

STATEMENT OF INCOME — REPORTED BASIS
(in millions, except per share and ratio data)
 
                                                                           
      1QTR           4QTR   3QTR           2QTR           1QTR        
 
      2002           2001   2001           2001           2001        
     
         
 
         
         
       
REVENUE
                                                                       
Investment Banking Fees
  $ 755             $ 931     $ 811             $ 929             $ 941          
Trading Revenue
    1,299               355       1,301               1,261               2,001          
Fees and Commissions
    2,584               2,493       2,397               2,460               2,131          
Private Equity — Realized Gains (Losses)
    (10 )             81       204               (46 )             412          
Private Equity — Unrealized Gains (Losses)
    (228 )             (505 )     (311 )             (783 )             (285 )        
Securities Gains
    114               202       142               67               455          
Other Revenue
    157               151       218               280               252          
 
   
             
     
             
             
         
Total Noninterest Revenue
    4,671               3,708       4,762               4,168               5,907          
Interest Income
    6,286               6,823       7,709               8,469               9,180          
Interest Expense
    3,359               3,879       5,050               5,688               6,762          
 
   
             
     
             
             
         
Net Interest Income
    2,927               2,944       2,659               2,781               2,418          
 
   
             
     
             
             
         
Revenue before Provision for Loan Losses
    7,598               6,652       7,421               6,949               8,325          
Provision for Loan Losses
    753               1,468       745               525               447          
 
   
             
     
             
             
         
 
TOTAL NET REVENUE
    6,845               5,184       6,676               6,424               7,878          
 
   
             
     
             
             
         
EXPENSE
                                                                       
Compensation Expense
    2,823               2,622       2,860               3,026               3,336          
Occupancy Expense
    338               334       339               327               348          
Technology and Communications Expense
    665               640       663               674               654          
Merger and Restructuring Costs
    255               841       876               478               328          
Amortization of Intangibles
    69               187       182               183               177          
Other Expense
    1,208               1,128       1,087               1,151               1,155          
 
   
             
     
             
             
         
 
TOTAL NONINTEREST EXPENSE
    5,358               5,752       6,007               5,839               5,998          
 
   
             
     
             
             
         
Income (Loss) before Income Tax Expense
and Effect of Accounting Change
    1,487               (568 )     669               585               1,880          
Income Tax Expense (Benefit)
    505               (236 )     220               207               656          
 
   
             
     
             
             
         
INCOME BEFORE EFFECT OF ACCOUNTING CHANGE
    982               (332 )     449               378               1,224          
Net Effect of Change in Accounting Principle
                                                    (25 )        
 
   
             
     
             
             
         
NET INCOME (LOSS)
  $ 982             $ (332 )   $ 449             $ 378             $ 1,199          
 
   
             
     
             
             
         
NET INCOME (LOSS) PER SHARE (a)
                                                                       
Basic
  $ 0.49             $ (0.18 )   $ 0.22             $ 0.18             $ 0.60          
Diluted
    0.48               (0.18 )     0.22               0.18               0.58          
 
PERFORMANCE RATIOS
                                                                       
Return on Average Assets
    0.55 %           NM     0.24 %             0.21 %             0.67 %        
Return on Average Common Equity
    9.7             NM     4.2               3.5               11.6          
 
FULL-TIME EQUIVALENT EMPLOYEES (b)
    96,938               95,812       96,633               97,224               98,518          

[Additional columns below]


 


[Continued from above table, first column(s) repeated]

 
                                   
      1QTR 2002        
      Over (Under)        
     
       
      4Q 2001   1Q 2001        
     
   
       
REVENUE
                               
Investment Banking Fees
    (19 )%             (20 )%        
Trading Revenue
    266               (35 )        
Fees and Commissions
    4               21          
Private Equity — Realized Gains (Losses)
  NM           NM        
Private Equity — Unrealized Gains (Losses)
    55               20          
Securities Gains
    (44 )             (75 )        
Other Revenue
    4               (38 )        
 
                               
Total Noninterest Revenue
    26               (21 )        
Interest Income
    (8 )             (32 )        
Interest Expense
    (13 )             (50 )        
 
                               
Net Interest Income
    (1 )             21          
 
                               
Revenue before Provision for Loan Losses
    14               (9 )        
Provision for Loan Losses
    (49 )             68          
 
                               
 
TOTAL NET REVENUE
    32               (13 )        
 
                               
EXPENSE
                               
Compensation Expense
    8               (15 )        
Occupancy Expense
    1               (3 )        
Technology and Communications Expense
    4               2          
Merger and Restructuring Costs
    (70 )             (22 )        
Amortization of Intangibles
    (63 )             (61 )        
Other Expense
    7               5          
 
                               
 
TOTAL NONINTEREST EXPENSE
    (7 )             (11 )        
 
                               
Income (Loss) before Income Tax Expense and Effect
of Accounting Change
  NM             (21 )        
Income Tax Expense (Benefit)
  NM             (23 )      
                                   
 
                               
INCOME BEFORE EFFECT OF ACCOUNTING CHANGE
  NM             (20 )        
Net Effect of Change in Accounting Principle
  NM           NM        
 
                               
NET INCOME (LOSS)
  NM             (18 )        
 
                               
NET INCOME (LOSS) PER SHARE (a)
                               
Basic
  NM             (18 )        
Diluted
  NM             (17 )        
 
PERFORMANCE RATIOS
                               
Return on Average Assets
  NM             (12 )bp    
Return on Average Common Equity
  NM             (190 )        
 
FULL-TIME EQUIVALENT EMPLOYEES (b)
    1 %             (2 )%        

Note: Prior periods have been restated to conform with current methodologies.

(a)   Basic and diluted earnings per share have been reduced by $0.01 in the first quarter of 2001 due to the impact of the adoption of SFAS 133 relating to the accounting for derivative instruments and hedging activities.
 
(b)   Represents actual period end amount for each respective quarter.

Page 3


 

     
J.P. MORGAN CHASE & CO.  

LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY
(in millions, except per share and ratio data)
 
                                               
          1QTR   4QTR   3QTR   2QTR   1QTR
 
          2002   2001   2001   2001   2001
         
 
 
 
 
OPERATING REVENUE
                                       
Investment Bank
  $ 3,620     $ 3,088     $ 3,544     $ 3,716     $ 4,327  
Treasury & Securities Services
    935       941       974       964       953  
Investment Management & Private Banking
    741       731       741       806       822  
Retail & Middle Market Financial Services
    3,131       2,936       2,855       2,746       2,654  
Corporate (a)
    (205 )     (328 )     (246 )     (123 )     (277 )
 
   
     
     
     
     
 
   
OPERATING REVENUE EXCLUDING JPMP
    8,222       7,368       7,868       8,109       8,479  
JPMorgan Partners
    (303 )     (452 )     (177 )     (887 )     87  
 
   
     
     
     
     
 
   
OPERATING REVENUE (b)
  $ 7,919     $ 6,916     $ 7,691     $ 7,222     $ 8,566  
 
   
     
     
     
     
 
EARNINGS
                                       
Investment Bank
  $ 755     $ 367     $ 706     $ 791     $ 1,033  
Treasury & Securities Services
    141       164       178       158       168  
Investment Management & Private Banking
    126       97       121       120       106  
Retail & Middle Market Financial Services
    526       330       425       425       421  
Corporate (a)
    (150 )     (257 )     (143 )     (98 )     (197 )
 
   
     
     
     
     
 
   
OPERATING EARNINGS EXCLUDING JPMP
    1,398       701       1,287       1,396       1,531  
JPMorgan Partners
    (248 )     (345 )     (154 )     (610 )     (4 )
 
   
     
     
     
     
 
   
OPERATING EARNINGS (b)
    1,150       356       1,133       786       1,527  
Special Items & Net Effect of Change in Acctng Principle
    (168 )     (579 )     (587 )     (312 )     (237 )
Amortization of Goodwill, Net of Taxes
          (109 )     (97 )     (96 )     (91 )
 
   
     
     
     
     
 
     
NET INCOME (LOSS) (b)
  $ 982     $ (332 )   $ 449     $ 378     $ 1,199  
 
   
     
     
     
     
 
EARNINGS PER SHARE — DILUTED
                                       
OPERATING EARNINGS EXCLUDING JPMP
  $ 0.69     $ 0.34     $ 0.63     $ 0.68     $ 0.74  
Impact of JPMP
    (0.12 )     (0.17 )     (0.08 )     (0.30 )      
 
   
     
     
     
     
 
OPERATING EARNINGS (b)
    0.57       0.17       0.55       0.38       0.74  
Special Items & Net Effect of Change in Acctng Principle
    (0.09 )     (0.29 )     (0.29 )     (0.15 )     (0.12 )
Amortization of Goodwill, Net of Taxes
          (0.05 )     (0.04 )     (0.05 )     (0.04 )
 
   
     
     
     
     
 
NET INCOME (LOSS) (b)
  $ 0.48     $ (0.18 )(c)     $0.22     $ 0.18     $ 0.58  
 
   
     
     
     
     
 
OPERATING RETURN ON COMMON EQUITY
                                       
Investment Bank
    15.9 %     7.6 %     15.2 %     16.8 %     20.8 %
Treasury & Securities Services
    19.1       22.6       24.3       20.7       23.5  
Investment Management & Private Banking
    8.4       6.2       7.7       7.5       6.4  
Retail & Middle Market Financial Services
    21.5       14.2       18.6       19.3       19.9  
OPERATING RETURN ON COMMON EQUITY (b)
    11.4       3.3       10.7       7.4       14.8  

[Additional columns below]

[Continued from above table, first column(s) repeated]

 
                                       
          1QTR 2002        
          Over (Under)        
         
       
          4Q 2001           1Q 2001        
         
         
       
OPERATING REVENUE
                               
Investment Bank
    17 %             (16 )%        
Treasury & Securities Services
    (1 )             (2 )        
Investment Management & Private Banking
    1               (10 )        
Retail & Middle Market Financial Services
    7               18          
Corporate (a)
    38               26          
 
                               
   
OPERATING REVENUE EXCLUDING JPMP
    12               (3 )        
JPMorgan Partners
    33             NM        
 
                               
OPERATING REVENUE (b)
    15               (8 )        
 
                               
EARNINGS
                               
Investment Bank
    106               (27 )        
Treasury & Securities Services
    (14 )             (16 )        
Investment Management & Private Banking
    30               19          
Retail & Middle Market Financial Services
    59               25          
Corporate (a)
    42               24          
 
                               
   
OPERATING EARNINGS EXCLUDING JPMP
    99               (9 )        
JPMorgan Partners
    28             NM        
 
                               
   
OPERATING EARNINGS (b)
    223               (25 )        
Special Items & Net Effect of Change in Acctng Principle
    71               29          
Amortization of Goodwill, Net of Taxes
  NM           NM        
 
                               
     
NET INCOME (LOSS) (b)
  NM             (18 )        
 
                               
EARNINGS PER SHARE — DILUTED
                               
OPERATING EARNINGS EXCLUDING JPMP
    103               (7 )        
Impact of JPMP
    29             NM        
 
                               
OPERATING EARNINGS (b)
    235               (23 )        
Special Items & Net Effect of Change in Acctng Principle
    69               25          
Amortization of Goodwill, Net of Taxes
  NM           NM        
 
                               
NET INCOME (LOSS) (b)
  NM             (17 )        
 
                               
OPERATING RETURN ON COMMON EQUITY
                               
Investment Bank
    830 bp         (490 )bp    
Treasury & Securities Services
    (350 )             (440 )        
Investment Management & Private Banking
    220               200          
Retail & Middle Market Financial Services
    730               160          
OPERATING RETURN ON COMMON EQUITY (b)
    810               (340 )        
 
 
           
           


(a)   Includes Support Units and the effects remaining at the corporate level after the implementation of management accounting policies.
 
(b)   Represents consolidated JPMorgan Chase.
 
(c)   Diluted EPS is reported as $(0.18) which is the same as basic EPS, instead of $(0.17), since using diluted average shares outstanding would cause antidilution. As a result, the net loss earnings per share does not foot by $(0.01).

Page 4


 

     
J.P. MORGAN CHASE & CO.  

STATEMENT OF INCOME — OPERATING BASIS EXCLUDING JPMORGAN PARTNERS
(in millions, except per share and ratio data)
 
                                                                                     
        1QTR           4QTR           3QTR           2QTR           1QTR        
 
        2002           2001           2001           2001           2001        
       
         
         
         
         
       
OPERATING REVENUE
                                                                               
Investment Banking Fees
  $ 755             $ 932             $ 812             $ 928             $ 942          
Trading-Related Revenue
(Including Trading NII)
    1,710               896               1,608               1,587               2,148          
Fees and Commissions
    2,466               2,297               2,289               2,403               2,069          
Private Equity — Realized Gains (Losses)
    3               (26 )                           10               (8 )        
Private Equity — Unrealized Gains (Losses)
    14                             (5 )             (16 )             (4 )        
Securities Gains
    114               202               142               67               455          
Other Revenue
    133               157               206               285               249          
Net Interest Income (Excluding Trading NII)
    3,027               2,910               2,816               2,845               2,628          
 
   
             
             
             
             
         
   
TOTAL OPERATING REVENUE
    8,222               7,368               7,868               8,109               8,479          
 
   
             
             
             
             
         
OPERATING EXPENSE
                                                                               
Compensation Expense
    2,783               2,583               2,826               2,993               3,292          
Noncompensation Expense
    2,231               2,085               2,092               2,150               2,139          
 
   
             
             
             
             
         
   
TOTAL OPERATING EXPENSE
  5,014               4,668               4,918               5,143               5,431          
Credit Costs
    1,074               1,732               1,015               798               688          
 
   
             
             
             
             
         
Operating Income before Taxes
    2,134               968               1,935               2,168               2,360          
Income Taxes
    736               267               648               772               829          
 
   
             
             
             
             
         
OPERATING EARNINGS
  $ 1,398             $ 701             $ 1,287             $ 1,396             $ 1,531          
 
   
             
             
             
             
         
OPERATING BASIS
                                                                               
Diluted Earnings per Share
  $ 0.69             $ 0.34             $ 0.63             $ 0.68             $ 0.74          
Return on Common Equity
    16.2 %             7.7 %             14.3 %             15.8 %             18.0 %        
Overhead Ratio
    61               63               63               63               64          
Compensation Expense as a % of Operating Revenue
    34               35               36               37               39          
Noncompensation Expense as a % of Operating Revenue
    27               28               27               27               25          

[Additional columns below]

[Continued from above table, first column(s) repeated]

 
                                             
        1QTR 2002        
        Over (Under)        
       
       
        4Q 2001   1Q 2001        
           
     
       
OPERATING REVENUE
                                       
Investment Banking Fees
            (19 )%             (20 )%        
Trading-Related Revenue
(Including Trading NII)
            91               (20 )        
Fees and Commissions
            7               19          
Private Equity — Realized Gains (Losses)
            NM               NM        
Private Equity — Unrealized Gains (Losses)
            NM               NM        
Securities Gains
            (44 )             (75 )        
Other Revenue
            (15 )             (47 )        
Net Interest Income
(Excluding Trading NII)
            4               15          
 
                                       
   
TOTAL OPERATING REVENUE
            12               (3 )        
 
                                       
OPERATING EXPENSE
                                       
Compensation Expense
            8               (15 )        
Noncompensation Expense
            7               4          
 
                                       
   
TOTAL OPERATING EXPENSE
          7               (8 )        
Credit Costs
            (38 )             56          
 
                                       
Operating Income before Taxes
            120               (10 )        
Income Taxes
            176               (11 )        
 
                                       
OPERATING EARNINGS
            99               (9 )        
 
                                       
OPERATING BASIS
                                       
Diluted Earnings per Share
            103               (7 )        
Return on Common Equity
            850 bp         (180 )bp    
Overhead Ratio
            (200 )             (300 )        
Compensation Expense as a % of Operating Revenue
            (100 )             (500 )        
Noncompensation Expense as a % of Operating Revenue
            (100 )             200          

Page 5


 

     
J.P. MORGAN CHASE & CO.  

STATEMENT OF INCOME — OPERATING BASIS
(in millions, except per share and ratio data)
 
                                                                                     
        1QTR           4QTR           3QTR           2QTR           1QTR        
        2002           2001           2001           2001           2001        
       
         
         
         
         
       
OPERATING REVENUE
                                                                               
Investment Banking Fees
  $ 755             $ 931             $ 811             $ 929             $ 941          
Trading-Related Revenue
(Including Trading NII)
    1,720               904               1,614               1,594               2,167          
Fees and Commissions
    2,493               2,340               2,297               2,422               2,082          
Private Equity — Realized Gains (Losses)
    (10 )             81               204               (46 )             412          
Private Equity — Unrealized Gains (Losses)
    (228 )             (505 )             (311 )             (783 )             (285 )        
Securities Gains
    114               202               142               67               455          
Other Revenue
    137               138               209               280               257          
Net Interest Income
(Excluding Trading NII)
    2,938               2,825               2,725               2,759               2,537          
 
   
             
             
             
             
         
   
TOTAL OPERATING REVENUE
    7,919               6,916               7,691               7,222               8,566          
 
   
             
             
             
             
         
OPERATING EXPENSE
                                                                               
Compensation Expense
    2,823               2,622               2,860               3,026               3,336          
Noncompensation Expense
    2,280               2,138               2,125               2,188               2,193          
 
   
             
             
             
             
         
 
TOTAL OPERATING EXPENSE
    5,103               4,760               4,985               5,214               5,529          
Credit Costs
    1,074               1,732               1,015               798               688          
 
   
             
             
             
             
         
Operating Income before Taxes
    1,742               424               1,691               1,210               2,349          
Income Taxes
    592               68               558               424               822          
 
   
             
             
             
             
         
OPERATING EARNINGS
  $ 1,150             $ 356             $ 1,133             $ 786             $ 1,527          
 
   
             
             
             
             
         
OPERATING BASIS
                                                                               
Diluted Earnings per Share
  $ 0.57             $ 0.17             $