May 7, 2009 – 2:15 pm

JPMorgan Chase & Co. (JPMorgan Chase), incorporated in 1968, is a financial holding company. JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank, National Association (JPMorgan Chase Bank, N.A.), a national banking association with branches in 23 states, and Chase Bank USA, National Association (Chase Bank USA, N.A.), a national bank that is the Company’s credit card issuing bank. JPMorgan Chase’s principal non-banking subsidiary is J.P. Morgan Securities Inc., its United States investment banking firm. The bank and non-bank subsidiaries of JPMorgan Chase operate nationally, as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks.

The Company’s activities are organized into six business segments: Investment Bank, Retail Financial Services (RFS), Card Services (CS), Commercial Banking (CB), Treasury & Securities Services (TSS) and Asset Management (AM).

Its wholesale business comprises the Investment Bank, Commercial Banking, Treasury & Securities Services, and Asset & Wealth Management.

Its consumer business comprises Retail Financial Services and Card Services. It also has a corporate segment, which includes Private Equity, Treasury and Corporate operations.

Breakdown of the six business segments:

Investment Bank

The Investment Bank’s clients are corporations, financial institutions, governments and institutional investors. The Company offers a range of investment banking products and services in many capital markets, including advising on corporate strategy and structure, capital raising in equity and debt markets, risk management, market-making in cash securities and derivative instruments, and research. The Investment Bank also commits JPMorgan Chase’s own capital to investing and trading activities.

Retail Financial Services

RFS, which includes the Regional Banking, Mortgage Banking and Auto Finance reporting segments, serves consumers and businesses through bank branches, automated teller machines (ATMs), online banking and telephone banking. RFS serves customers through more than 5,400 bank branches, 14,500 ATMs and through relationships with more than 16,000 auto dealerships and 4,800 schools and universities. More than 21,400 branch salespeople assist customers, across a 23-state footprint from New York and Florida to California.

Card Services

CS is a credit card issuer. It has more than 168 million cards in circulation and $190 billion in managed loans. Customers used Chase cards for over $368 billion worth of transactions during the year ended December 31, 2008. Chase Paymentech Solutions, LLC, a joint venture with JPMorgan Chase and First Data Corporation, is a processor of MasterCard and Visa payments.

Commercial Banking

CB serves more than 26,000 clients, including corporations, municipalities, financial institutions and not-for-profit entities. In partnership with the Company’s other businesses, it provides solutions, including lending, treasury services, investment banking and asset management to meet its clients’ domestic and international financial needs.

Treasury & Securities Services

TSS is engaged in providing transaction, investment and information services. It also offers cash management and global custodian services. Treasury Services provides cash management, trade, wholesale card and liquidity products and services to small and mid-sized companies, multinational corporations, financial institutions and government entities. Treasury Services partners with the Commercial Banking, Retail Financial Services and Asset Management businesses to serve clients Company-wide. Worldwide Securities Services (WSS) holds, values, clears and services securities, cash and alternative investments for investors and broker-dealers, and manages depositary receipt programs globally.

Asset Management

Asset Management (AM) offers investment and wealth management services. AM clients include institutions, retail investors and high-net-worth individuals in various markets throughout the world. AM offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity, including both money market instruments and bank deposits. AM also provides trust and estate and banking services to high-net-worth clients, and retirement services for corporations and individuals. The majority of AM’s client assets are in actively managed portfolios.

2009-07-17 – Q2-Earnings Report:

J.P. Morgan had a profitable fiscal second quarter 2009. The bank was extremely busy on both fronts, it’s business front based on Wall Street and its influence peddling front based on K street. And as banking and lobbying converge J.P. Morgan emerges along with out the competition of Lehman Brothers and Bear Stearns.  But even as Morgans subprime writedowns abate the bank takes a $478 million hit in its prime mortgages, as charge-offs climbed to $1.3 billion, and credit cards lost $672 million compared to 250 million in the second quarter last year.

We tally it up below.

  1. Tally for Write-Downs/Charge-Offs: $18.442B + $2.45B = $20.89B
  2. Tally for cash raised Non Gov:                 $10.0B-$10B = 0.0
  3. Tally for cash raised for TARP:                 $25.0B
  4. Tally for cash raised for Gov Non-TARP:  $5.9B
  5. Current level of Level III assets:               $145.3B<—(pg 78 of 10-Q)
  6. Provision for credit losses                       $8.5B     <—(pg 3 of 10-Q)
  7. Provision for loan losses $8.6B      <—(note 15 of 10-Q)

Pain Total is $221.742

2009-06-16 Pay Back (TARP):

In an effort to get out from under TARP restrictions on exectuive bonous and the hiring of foreign workers JP Morgan repaid the TARP funds today that it accepted in October 2008.

JPMorgan Chase & Co. (NYSE: JPM) announced today that it repaid in full the $25 billion preferred stock investment it accepted through the Troubled Asset Relief Program (TARP). In addition to this principal amount, JPMorgan Chase has paid the U. S. Treasury an aggregate of $795,138,889 in dividends on the preferred stock, including dividends that had accrued through the redemption date. The company will also notify the U.S. Treasury today of its intent to repurchase the 10-year warrant issued to the Treasury in connection with the preferred investment.

The bank had to take a $1.1 million charge for it’s efforts. The real battle is brewing now over repayment of the warrants which were sold to the government along with the stock shares.

2009-06-16 Dividend Declared:

The Board of Directors of JPMorgan Chase & Co. declared a quarterly dividend on the outstanding shares preferred shares today.

– 6.15% Cumulative Preferred Stock, Series E – $3.075 per share (equivalent to $0.76875 per Depositary Share)

– 5.72% Cumulative Preferred Stock, Series F – $2.86 per share (equivalent to $0.715 per Depositary Share)

– 5.49% Cumulative Preferred Stock, Series G – $2.745 per share (equivalent to $0.68625 per Depositary Share)

The dividends for the Preferred Stock Series E, F and G are payable on July 15, 2009, to stockholders of record at the close of business on June 30, 2009.

– 6.15% Cumulative Preferred Stock, Series E – $3.075 per share (equivalent to $0.76875 per Depositary Share)
– 5.72% Cumulative Preferred Stock, Series F – $2.86 per share (equivalent to $0.715 per Depositary Share)
– 5.49% Cumulative Preferred Stock, Series G – $2.745 per share (equivalent to $0.68625 per Depositary Share)
The dividends for the Preferred Stock Series E, F and G are payable on July 15, 2009, to stockholders of record at the close of business on June 30, 2009.

2009-05-19 A Scarlet letter:

On October 28 J.P. Morgan excepted a $25 billion bailout from the federal government, today Jamie Dimon in his speech before shareholders called the handout a scarlet letter and vowed to pay it back.  We won’t argue with Mr. Dimon’s characterization, but in the speech it is clear he really thinks it’s an albatross of government restrictions.

The TARP comes with limits on executive compensation, which have many banks already angling to exit the program. Indeed, because it took part in the TARP, JPMorgan has to give its shareholders a nonbinding vote Tuesday on executive pay.

However, Mr. Dimon’s speech focused on a different aspect: The TARP’s restrictions on the hiring of foreign workers through the H1-B visa program, which he called a “complete and utter disgrace.”

In essence, the TARP legislation requires participating banks to show that they will not displace an American from a job filled by an immigrant.

How typical for Wall Street, Mr. Dimon wants the free lunch and you to pay for it.

2009-05-07 Stress Release:

JP Morgan reportedly passed the FED’s stress test to see if it was adequately capitalized, with no need to raise any more cash. You have to wonder what kind of test it was when all 19 insolvent banks passed it, some even needing more capital.

<>

2009-04-16 - Q1 Earnings:

JP Morgan used it’s fiscal first quarter earnings reporting session to ingratiated itself back into investor good graces with a combination of self promotion and propaganda (promogate). Did it work? No one knows, but the bank is certainly no healthier after one time gains on trades and it still needed FDIC to guarantee is it’s bonds that would otherwise be junk.

The bank claimed $147.7B of level 3 assets, but subtracted $3.4B for which it claims on exposure leaving $145.3B as the reported level-3 number, representing 7% of total assets. It’s a good thing for Morgan that there is a push to lossen fair value and mark-to-market accounting standards.

  1. Tally for Write-Downs/Charge-Offs: $18.14B + $302MB = $18.442B
  2. Tally for cash raised Non Gov:                 $10.0B
  3. Tally for cash raised for TARP:                 $25.0B
  4. Tally for cash raised for Gov Non-TARP:  $5.9B
  5. Current level of Level III assets:               $145.3B<—(pg 78 of 10-Q)
  6. Provision for credit losses                       $8.5B     <—(pg 3 of 10-Q)
  7. Provision for loan losses $8.6B      <—(note 15 of 10-Q)

Pain Total is $221.742

2009-01-15 - 2008-Q4 Earnings:

JP Morgan’s pedegriee delivered praise for the surprise fourth-quarter $1.3B profit the reported, but any child of a lesser God would have been unceremoniously kicked back to earth, with the market  seeing through the loser.  For JP Morgan our tally ramps up.

  1. Tally for Write-Downs/Charge-Offs: $15.24B + $2.9B = $18.14B
  2. Tally for cash raised Non Gov: $10B
  3. Tally for cash raised for TARP: $25B
  4. Current level of Level III assets at $7.3B,<—(use Q3 # as an estimate)
  5. Current level of loan loss reserves at $3.81B + $4.4B = $8.29B

Pain Total is $68.73B

2008-11-13 Loan Mod Feeding Frenzy:

Morals are of no matter when profit and survival are on the line. The feeding frenzy on mortgage borrowers and taxpayers never ends, and JP Morgan has just joined the fray. <>

2008-10-17 Q3 Earnings:

JP Morgan said today it sold $10 billion of shares at $40.50 apiece to raise capital.

  1. Tally for Write-Downs/Charge-Offs: $11.0B + $4.24B = $15.24B
  2. Tally for cash raised Non Gov:     $10.0B
  3. Tally for cash raised for TARP:     $25B
  4. Current level of Level III assets at $6.0B + $1.3B = $7.3B
  5. Current level of loan loss reserves at $3.81B

Adding 1.-4. we get the Misery Index = $*** B

2008-10-28 JP Morgan Crawls Under TARP:

JP Morgan got it’s greedy hands dirty with your money by  crawling under TARP for $25B. Did you hear any thank yous?

2008-08-25 Fannie & Freddie Bite:

Now we know the real reason Treasury Secretary Hank Paulson engaged in such a full sprint to prop up Fannie and Freddie before the Olympics. It wasn’t just to save the Chinese. Let’s take a look:

JP Morgan Chase estimated that its holdings of Fannie Mae and Freddie Mac preferred stock lost about half of their value the third quarter now underway, according to a regulatory filing with the Securities and Exchange Commission. JP Morgan says it owns preferred shares of Fannie and Freddie with a $1.2 billion par value that has been written down by $600 million.

It’s nice to see that Paulson is still in business taking care of his buddies on Wall Street. The Street certainly takes care of its own, but so far all the kings men can do little but catch a falling knife. Since the write-down has already been taken according to a regulatory filing, we’ll add $600M to JP Morgan’s total pain, bringing it to $20.1B.

2008-08-15 Morgan Settles:

JP Morgan will buy back $3B of peddled junk and pay a fine $25M for dumping without license. It’s the kind of thing that happens every day, and you don’t feel bad about it unless you get caught. JP Morgan feels bad.

JPMorgan agreed to buy back $3 billion of debt and pay a $25 million fine.

Regulators say brokerages misled investors into believing that auction-rate debt, which has rates that reset in periodic auctions, was safe and the equivalent of cash. Much of the $330 billion market has been frozen since February, when brokerages abandoned their traditional role as buyers of last resort.

Our twin tallies for Pain and ARS-Buyback now stand at $19.5B and $3B.

2008-08-12 Falling Faster:

It wasn’t JP Morgan that took down Bear Stearns. Rather it was the credit crunch, and now that same merciless disaster follows Morgan’s every move. In just two months, the bank has already exceeded its second quarter write-down total.

JPMorgan Chase & Co. had its biggest decline in six years after reporting a $1.5 billion loss on mortgage-backed assets in less than two months.

Could it be that the credit crisis offers no reprieve, not even to those whose CEOs squat at the Federal Reserve Board meetings? <>

2008-07-23 Q2 Earnings:

JP Morgan took $1.1B of write-downs due mainly to mortgages and leveraged buyout loans gone sour. The company reported earnings of over $2B in the second quarter, along with a sundry of write-downs and distresses which included a $1.25 billion increase in loan loss provisions. Using the company’s numbers of $1.1B as a low ball estimate of write-downs taken for its fiscal second quarter 2008, let’s do some math.

  1. Tally for Write-Downs/Charge-Offs: $9.9B + $1.1B = $11.0B
  2. Tally for cash raised: = $0.0
  3. Current level of Level III assets at $6.0 B
  4. Current level of loan loss reserves at $1.25 B + $1.25B = $2.5 B

Adding 1.-4. we get the Misery Index = $19.5 B

2008-06-23 Is Morgan in Trouble Again?:

JP Morgan devoured Bear Stearns in March, and was then spurned by Washington Mutual. Now the bank is making another high profile move, this time to acquire Wachovia.

2008-05-22 Write-Down Count of a Different Sort:

We have been keeping a running tally of write-downs and other credit-related distress taken by the major banks since 2007. But here comes a write-down count of a different sort: how much in write-downs and credit losses firms have written off per wholesale banking employee.

JPMorgan Chase – $9.8B, 25,000 employees, $392,000 per employee

2008-05-21 – Leaving London:

It is probability the best thing, maybe the only thing, JP Morgan can do, but now there is one less subprime lender in the UK. In fact, all the banks including JP Morgan have severely limited credit flow to all borrowers. Thus spreads a contagion.

2008-04-17: On The Sly

At its earnings release, JP Morgan CEO Jamie Dimon said the credit crisis is almost over, but then did something to make it seem like it’s just got off the ground. Like a politician seeking bribes, Dimon went with hat in hand in an attempt to collect $6B. Maybe it’s just for a rainy day? We are not making this up. As for the earnings reported, they included $2.6B in first quarter write-downs:

The New York-based bank set aside $4.42 billion for loan losses and took about $2.6 billion in write-downs tied to mortgages, loans to fund corporate buyouts and tight credit markets. Its allowance for credit losses rose $2.52 billion from the end of 2007 to $12.6 billion.

The company also set aside $1.1B in the first quarter for future home equity loan defaults, up by $395M from the fourth quarter of last year. Counting the loan loss provisions as a distress, we get

$3.7B + $5.1B +$1.1B = $9.9B

2008-04-16: JP Morgan Earnings Cut in Half

Don’t look now, but JP Morgan just gobbled up another $5.1B in write-downs.

JPMorgan Chase & Co., the third- biggest U.S. bank, said profit fell 50 percent after $5.1 billion of writedowns and provisions linked to subprime mortgages, bad home-equity loans and financing for leveraged buyouts.

Thats almost double the prior $3.7B to which we add.

$3.7B + $5.1B = $8.8B

2008-04-15 : Bear Stearns Pukes as Earnings Fall 79%

JP Morgan may have a bit of indigestion after swallowing whole Bear Stearns and its rotting balance sheet.

2008-04-13 : Leader of the Pack?

It may be that JP Morgan is sprinting to catch Goldman Sachs as the leader of the Wall Street pack. If they catch up, things will play out the old fashion way: buyouts. One thing is certain: Morgan has already surpassed Barclay’s in one important measure.

2008-03-26 (2):

Don’t look now, but Bloomberg reports in a long article on credit lines that JP Morgan has about $251B of undrawn credit line commitments (or at least, they did at year-end 2007). This is much worse a fact than it would seem in isolation, since now more than at any other time in living memory, borrowers need to draw down those credit lines (which is the main point of the article).

2008-03-26:

In “Grim Outlook for JP Morgan,” Yves Smith picks up a thread from Institutional Risk Analytics and discusses how JP Morgan is hardly bulletproof, despite their role as would-be savior of Bear Stearns and presumably of the financial economy by extension:

JPM is far from a financially strong institution. It has the highest gearing of any of the three large US banks (and remember, that includes the CDO-laden, walking wounded Citigroup) and by their measures, also has the highest level of economic risk per their metrics. JPM’s chickens have not yet come home to roost because its book is heavily weighed toward corporate business, and those problems are coming to the fore later….

Although IRA does not say so explicitly, the reasoning appears to be that the Fed pushed Bear into JPM’s arms as a way to shore up JPM. If asking a firm to take on a $13 trillion derivatives book, of which only $2 trillion is exchange traded, is a favor, I’d hate to see what punishment looks like.

Smith goes on to compare the current implicit consolidation strategy with a “martingale” gambling strategy. That’s nearly as bright as it sounds. God help us all.

Some more, quoted directly from IRA:

To understand the grim outlook for JPM, start the analysis with derivatives. Because of its huge market share in all manner of OTC derivatives, JPM represents a “super sample” of overall OTC market risk. In terms of total size vs the bank’s balance sheet, JPM’s derivatives book is more than 7 standard deviations above the large bank peer group.

Because of this huge OTC derivatives book, the $1.6 trillion asset bank can tolerate just a 15bp realized loss across its aggregate derivatives position before losing the equivalent of its regulatory Risk Based Capital (RBC). And much like the GSEs, JPM’s positions are too big to hedge – despite what Mr. Dimon may say to the contrary about laying off his bank’s risk. And note that we have not even mentioned subprime assets yet.

At the end of 2007, JPM aggregated 97bp of gross loan charge offs, 1.25 SDs above peer, and produced a Loss Given Default of 85%, likewise well above peer. The Exposure at Default calculated by the IRA Bank Monitor using data from the FDIC was 202%, more than 2 SDs above peer.

With Bear Stearns included, JP Morgan now has a $90T (yes, that is Trillion with a “T”) book of derivatives. Only $2T of Bear’s $13T were exchange-traded.

2008-02-20:

The beat goes on.

JP Morgan Chase was the bookrunner for $217B of US leveraged loans last year, has $26.4B of exposure to show for it, and came away with $1.3B in fees. But JP Morgan would have had to write down $1.5B of its leveraged loans if they had fallen at the same rate as the market.

We will have to see how much they write down and when or if they sweep it off their balance sheet in some shady accounting trick.

2008-02-04

JP Morgan has written down very little so far: $1.3B in the fourth quarter, and $2.4B in the third (due to subprime). However the money center bank still managed to turn a profit of almost $3B, leaving its stock to hold out better than most of its competitors (though most are rallying thanks to aggressive Fed rate cuts — which as we all know will solve all of the problems documented on this site!).

But according to pre-fourth quarter Deutsche Bank data, JP Morgan still has about $12B of subprime loans on its books, and $6.8B of subprime CDOs. They may also have considerable exposure to otherwise risky non-subprime mortgage loans (and other sorts of consumer loans). One area in specific is home equity loans, which falter as market values drop (per the article linked above):

Dimon and his team have underestimated the losses on the bank’s $95 billion portfolio of home equity loans.

Late last year, Dimon said home equity losses would be $250 million to $270 million per quarter over the next several quarters. On Wednesday during a conference call, the company said the losses could be $100 million more per quarter than its earlier forecast.

Home-equity losses also contributed to the 38 percent decline in fourth-quarter profit at Wells Fargo & Co, the first decline in more than six years.

Wow! That $95B is a huge source of write-down risk.

This certainly will not be helped by the trends of a recession (prime borrowers losing their jobs or failing to get raises and becoming unable to pay), inflation and people simply walking away from their homes when they are underwater. Home equity loans, as second liens, quickly become worthless in depreciating markets combined with short-sale or foreclosure situations.

We’d wager that the write-downs JP Morgan has taken so far will be dwarfed by the ones they take on these and other shaky consumer loans still on their books.

  1. 6 Responses to “JP Morgan Chase & Co. – $221.7B”

  2. Bear Stearns imploded on their reckless investment in subprime
    mortgages. Now, as part of JP Morgan Chase they are well on their way
    to imploding their new company as well. Plymouth Park Tax Services aka
    Xspand aka… a subsidiary of Bear Stearns is in the midst of spending
    multiple BILLIONS of dollars on tax liens in multiple florida
    counties. If you think subprime mortgages were risky you should study
    up on tax liens…..no less in the most depressed real estate market
    in the country. This is a competetive business and Bear/Chase is
    using their new found free money from the fed to buy GARBAGE just to
    generate fees. If anyone is truly concerned please look into it. They
    are buying under PPTS and are well in the $1 billion + range. The
    collateral is C- at best. So……who is going to bail out JP Morgan
    Chase???

    By Kieth on Jun 4, 2008

  3. I am working on a second that is a short sale with JP MORGAN chase they have decided to charge this second off and now I am dealing with a collection agency that says they will not send any deals into the bank unless they are getting 25 percent. This is crazy. What can or can be done? Is there any action i can take to get the ball rolling with the bank??

    Chris Gurnee
    ALLPRO
    Seattle WA

    By chris gurnee on Aug 11, 2009

  4. I would advise that no one uses Chase Bank. They have so much non-value added waste in their processes it is no wonder they needed government money. The majority of their CSR’s have no idea what they are talking about and I have spent hours being bounced back and forth from the same two departments (neither that I needed or requested). At any rate, I have taken my banking elsewhere and suggest everyone does the same.

    By Diane on Sep 14, 2009

  5. My name is Estela denney and am 64 years old my husban and i have been trying to modifi our home for all most for 3 years with CHASE BANK . we have conplied with all thire demands,bent backwards and forwards wiht out any ( progress ) ALL WE WHANT IS TO KEEP OUR HOME AND FOR THEM TO GET THERE MONEY WE HAVE TRYED EVERY THING TO WORK WHIT THE CHASES BANK.ALL THIS BANKS REMAINS ME OF A PARANOIAS,THEY WHANT YOUR BOOLD WELL MYBE ICAN’TGIVE THEM THAT BUT AM TRYING TO SELL MY KIDNEY TO AT LEAST PAY SOME OF THE LONE. HOPE YOU CAN GIVE YOU CEO’S A BIG PAY RAISE WITH THE MONEY YOU GET OFF MY KIDNEY.my god be with you.

    By ESTELA DENNEY on Jul 28, 2010

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